Toll CEO says speculators walking away from contracts

[ByLoSellHi]

I am in this industry.

You should see Miami, and some other areas of Florida, Phoenix, Nevada, et al.

In Florida, there are ghost towns of single family houses, where the development is maybe 2-3 years old, has 150-300 homes, and 90% of the homes are spec, waiting to be bought, or up for resale.

Mortgage fraud is huge, too, along with fraud appraisals of property values.

In Miami, new high rise condos are being listed for less than they cost to build right now, because of the fear of further price declines...


In Vegas and Arizona, Pulte, KB, Centex are all dropping deals on land and losing massive deposits, willingly.


Unless you actually get on a plane and go out there, you can't possibly imagine how bad things are getting.

The reason why KB and Centex are giving literally 100,000+ worth of extras is that they don't want to have to lower the price of the home, which would doom further sales in the development, because price cuts would hurt all appraisal values for people trying to obtain a mortgage. Even with this problem, they are offering cash back of over 100k after the closing.

And now, commercial is so oversupplied, it is crazy.

There are so many redundant store locations, it is mind boggling.

I try to keep an open mind, but I really think The Economist has it right, and that this is the biggest asset bubble in world history (70 trillion, I think, by their estimates - and that's just residential).


Here is the article - it's a must read.


http://www.economist.com/finance/displayStory.cfm?story_id=4079027

 

[ratboy88]

Quote from ByLoSellHi:

I am in this industry.

You should see Miami, and some other areas of Florida, Phoenix, Nevada, et al.

In Florida, there are ghost towns of single family houses, where the development is maybe 2-3 years old, has 150-300 homes, and 90% of the homes are spec, waiting to be bought, or up for resale.

Mortgage fraud is huge, too, along with fraud appraisals of property values.

In Miami, new high rise condos are being listed for less than they cost to build right now, because of the fear of further price declines...


In Vegas and Arizona, Pulte, KB, Centex are all dropping deals on land and losing massive deposits, willingly.........

i can put you in touch with a huge buyer. he is an "old timer" in the industry and is fading the current trend. i hear he has deep pockets and is willing to weather the storm. come to think of it i think he is on this board... goes by the name of "oldtrader" i believe.

 

[ElCubano]

Quote from ratboy88:

i remember "oldtrader" arguing with me about this appx 1 1/2 yrs ago telling me i was an idiot. i said give it a couple years and he laughed and reminded me he had been in the biz for years.... what i have noticed about real estate people, many are fools that rode a rising tide.

i remember this as well....but i believe oldtrader was reffering to long term outlook and only buying below market from a desperate seller...which i told him was hard to do in sellers market....

houses in my hood have had for sale signs going on 6 months and one is right next door to me and i know she is desperate becuase they just got divorced; even with that not one contract or even serious offer on the table....

 

[ElCubano]

we have buildings that working class families got kicked out of for future condo development; which now house nothing but crack and herion addicts...they kicked out the good and now have the bad...the city fined the developers and have asked them to tear down the older buildings

 

[Handsome]

Quote from ElCubano:

we have buildings that working class families got kicked out of for future condo development; which now house nothing but crack and herion addicts...they kicked out the good and now have the bad...the city fined the developers and have asked them to tear down the older buildings

That's messed up..it seems to me it is always the working class that gets kicked in the teeth every which way..

May I ask what state or area you live in ElCubano?
Also, I enjoy reading your postings.

 

[ratboy88]

Quote from Handsome:

That's messed up..it seems to me it is always the working class that gets kicked in the teeth every which way..

May I ask what state or area you live in ElCubano?
Also, I enjoy reading your postings.

he lives in lower alabama.

 

[ratboy88]

here's to you oldtrader.... i picked out the song just for you.

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[Hydroblunt]

Quote from Cutten:

TOL will hit single digits. US national median house prices will experience their first decline since the Great Depression. Leveraged speculators will get wiped out, and in the bubble areas, average time to sale will rise to 4-6 months at the worst point in the decline. I'd expect it will take another 2-3 years for the worst to be done with.

There - that's what you call a prediction. If I'm wrong, anyone can link to this post and call me on it. Unlike some people on here, I won't try and pretend I said anything different. I was bearish one year ago, I'm bearish now, and I'll continue to be bearish until real estate & the related stocks show action consistent with that which has occured during the end of bear markets in other financial assets. I.e. 90-99% stock price falls, widespread defaults, fraud revelations, speculators totally wiped out, the most die-hard longs either giving up or in bankruptcy hearings, and yet the market price staying resilient in the face of all this bad news, then beginning to rise when least expected. That is how bear markets end, with everyone desperate to get out at any price, or giving up totally - not with everyone saying "It's too late to sell" and still looking to play the long side.

What you and the doom sayers fail to understand is that the homebuilders are very low P/E PROFITABLE companies. They have net tangible assets & decent balance sheets.

TOL has $2 cash per share. Their inventory is $6 billion. I don't know how they price their inventory but I'm sure it's a bit inflated. Still, let's say they can dump their inventory at a discount, these guys can still easily have over $10 cash per share left after debt. So it is highly doubtful that TOL will ever see single digits. The company would have to stop doing business to justify that or the money supply would have to start contracting at a severe pace.

You people keep trying to judge the homebuilders like the no revenue no profit no cash flow dotcoms of 1999. It's been 2 years of selling off for the homebuilders and now the CEOs are claiming doom and gloom with statements that the bottom has not been put in yet. Please remind me the last time a CEO of a company was truthful and straight forward with publicly stated opinions. Once you do that, maybe you can figure out why the homebuilders go up every time another Toll Exec says something negative about the industry.

 

[OldTrader]

Quote from Cutten:

That is because most people do not know how to trade a prediction, even if they are 100% right about it.

Cutten:

You can't be "100% right" about a prediction when it rallies 70% first over the next 7 months, and is still 60% higher a year later. In fact, looking at KBH for example, it's basically a wash from January 2005. Anyone that made that prediction was wrong.

Now, if you're telling us that you "traded" this somehow, more power to you. I'll believe your statements, or some evidence of real time trades. Otherwise, this is little more than talk my friend.

OldTrader

 

[OldTrader]

Quote from ratboy88:

i can put you in touch with a huge buyer. he is an "old timer" in the industry and is fading the current trend. i hear he has deep pockets and is willing to weather the storm. come to think of it i think he is on this board... goes by the name of "oldtrader" i believe.

I guess I made a mistake in my post ratboy. You are an idiot...I misspoke.

Evidently you didn't read my post.

For a guy who was completely wrong for the next year after those predictions, you sure are doing some talking, aren't you? And what's funny is that the chances are you were predicting the same thing the year before that.

Nonetheless, you prove the idea that predict long enough, and often enough, and sooner or later you too will be right. We're still waiting, but who knows. And therein is why you're still a day trader. LOL! By the way, did you catch ANY of that decline? LOL, or were you burnt out TRYING to catch it by the time it occurred?

OldTrader