Aug/100
Real Estate Shows Further Declines: DR Horton (DHI), Great Wolf (WOLF), MGM Resorts (MGM) By Carolyn Austin
Original Post: http://wallstcheatsheet.com/trading-markets/real-estate-shows-further-declines-dr-horton-dhi-great-wolf-wolf-mgm-resorts-mgm/?p=15807/
Economic data has not been so encouraging lately. The Commerce Dept reported personal income and consumer spending unchanged in June following recent advances, causing Treasury Secretary Tim Geithner to proclaim that unemployment may rise again. And today the NAR reported sales of existing homes lagging 18.6 percent below sales for this period last year.
The economic environment for real estate continues its downward slide. DR Horton met expectations with its third-quarter earnings report today, but a tax benefit of $152.7 million accounts for 60 percent of income reported.
In the commercial sector, Great Wolf and MGM resorts fared poorly. WOLF reported a narrower-than-expected loss of $0.41 per share (excluding nonrecurring charges) but MGM surprised to the downside with a loss of $0.35 per share (again, excluding nonrecurring charges) vs. an expected loss of $0.24 per share.
Here’s a closer look.
DR Horton (NYSE: DHI)
DHI, the largest homebuilder in the US, reported net income of $50.5 million for $0.16 earnings per share on 50.7 percent higher revenues. In the year-ago period, the company reported a loss of $0.45 per share.
Sales orders declined 3 percent in the third quarter – an indication that the stimulus allowed the company to unload excess inventory. The company reported a 60 percent increase in closings over the year-ago quarter to 6,805 homes. For the first nine months of FY 2010, homes closed increased 40 percent to 16,594; for fiscal year 2009, the company closed a total of 16,703 homes.
The company reported write-downs in inventory and land options to the tune of $30.3 million for the third quarter, or about 8.75 percent of equity.
For the first nine months of FY 2010, the company reported net income of $253.9 million or $0.78 per diluted share. A tax benefit of $152.7 million accounts for 60 percent of income reported.
Recognizing the deteriorating fundamentals in the homebuilding industry, Donald R Horton, Chairman of the Board, stated:
“As we expected, market conditions in the homebuilding industry have become more challenging after the expiration of the tax credit at the end of April. Our net sales orders declined significantly in May and improved modestly in June and July. However, we will continue to focus on providing affordable homes for the first-time buyer, controlling our costs and contracting for new communities with attractively priced finished lots while maintaining our strong balance sheet.”
Comments: DHI continues to write-off assets with “inventory impairments” accounting. While this may improve earnings in future quarterly reports, reducing equity weakens its book value and debt-to-equity ratios. In fact, its LT debt is just shy of total equity and total debt exceeds it. Although the company improved gross margins and reduced overhead, its debt ratios need improvement. With home sales slowing and unemployment rising, the company is not likely to outperform in the current economic environment. If we assume the stimulus was contributed about 25 percent to the increase in closed homes, then closings could drop 25 percent or more next quarter. And the $0.15 per share yearly dividend is not worth the risk.
Great Wolf Resorts (NASDAQ: WOLF)
WOLF reported a second-quarter net loss of $(12.8) million, or $(0.41) per diluted share (excluding nonrecurring items), compared to a net loss $(5.7) million, or $(0.18) per diluted share for the same period a year earlier. Analysts had predicted a $0.49 per share loss.
Revenues the 2010 quarter totaled $68.4 million compared to $68.6 million for the 2009 quarter. Despite expansion plans, the company continues to struggle with occupancy at Great Wolf resorts with same-store revenues and occupancy declining, although revenue per occupied room increased.
The company claims that the boost in revenue per available room “has substantially outperformed the overall U.S. hotel industry during the recession over the past two years.”
Comments: WOLF restructured its debt to improve its balance sheet, but debt levels still remain high. The company is highly leveraged. It has a debt/asset ratio of .68x and a debt/equity ratio of 2.64x. Further slowdowns in the economy could maim this company.
MGM Resorts International (NYSE: MGM)
MGM bucked the trend and got a boost following its early-morning earnings, but ended the day slightly lower.
In its second-quarter earnings report released today, MGM recorded a diluted loss per share of $2.00 compared to a $0.60 loss for the year-ago quarter. Net revenue decreased 2 percent compared to the 2009 quarter, reflecting lower occupancy, a lower average daily rate, and lower revenue per room.
The company wrote-off more than $1.12 billion in impairments (or $1.69 per share) in the quarter. The company also retired debt, reducing equity by another $0.11 per share.
The company is touting its new program, Mlife. “M life, our new customer loyalty program, was introduced two weeks ago at Beau Rivage and the response has been outstanding,” said Mr. Murren. “We are very excited about the opportunity M life presents to our Company, especially when coupled with the superior assets in our portfolio.”
Comments: MGM’s operating results aren’t stellar, and its debt/equity ratio stands at 3.36x. A recent insider purchase may have tipped the scales to bring investors back to the table. Still, short interest remains high at over 34 percent of float. The company has a beta of 4 so you could get a technical bounce on a good trading day.
Disclosure: No positions.
More on this topic (What’s this?)
Bulls Eye Options on MGM Resorts International Ahead of Q2 Earnings (Phil’s Stock World – Members S…, 7/27/10)
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(DHI) U.S. Housing Starts Still Weak (Stock Blog Hub, 8/17/10)
(MGM) MGM Mirage to Report Earnings Loss (Stock Blog Hub, 4/18/10)
Read more on D.R. Horton, MGM Resorts International at Wikinvest
SHARING IS COOL
Aug/100
What’s my thoughts on the market?
I was asked this question by one of my clients and I figured I would share with all as well….
I think the stock market is affecting the RE market overall….
Here’s my opinion of what’s happening.
In the US the unemployment numbers gave bad results which slowed any minor momentum on the market. With China just reported weaker retail sales and Japan having a moderate outlook didn’t help. The bank of England is not doing well and the Feds just announced that “the economic recovery is going to be more modest in the near term”. Oil is down and Gold is starting to go up….
With all that said, the DOW took a dive yesterday as I’m sure you’ve seen…
This is a true sign that people are starting to get nervous about the economy again….
So what’s the heart beat of the Austin Market?
Right now I’m getting a ton of negative feedback from tenants…. I’ve had 4 people report this month that they don’t have any work. These are your lower paying jobs which are the people that feel the crunch first. In the corporate world, these are the jobs that they start cutting first before they cut into the “meat” of the company.
The house market is slowing…. I was talking to an Austin Broker two days ago, and he has been experiencing a huge slow down in his incoming calls and listings as well. I’ve noticed that my listings are starting to get less attention unlike others a month ago.
Although this is a lot of negative, this may have a reverse effect on the Austin buying market going forward. (I hope)
We may have a lot of influx of people coming to Austin in search of higher paying jobs… Up to this point we’ve been able to keep the unemployment numbers lower than most other areas. This is attractive to people wanting to move out of those other areas and come here.
I hope that this helps…
Aug/100
August 2010 Statistics
Hello All,
I want to open up and let you all know that I’m normally a very positive person!! Well I’ve been reviewing all the markets and I have to say that I’m going to predict a down draft in all markets going forward. In the RE world we’ve noticed a major lag in the latter part of this month and the beginning of August we started noticing that people are calling in and saying that there in trouble and need to do something quick.
I hope my predictions are not true, but all the leading indicators (Precious Metals, Stocks, RE, Job Reports) are pointing in a very bad direction.
If you’ve been on the fence about listing any of your RE, you may want to review for yourself and call us today.
Here is the current statistics from the Austin Market….
Aug/100
10100 Hibiscus Cv Austin Texas – Circle C – $269,500
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Jul/100
Austin’s Identity Crisis for Downtown Austin Real Estate
Excerpt: http://www.keyoffinancial.com/austins-identity-crisis-for-downtown-austin-real-estate.html
I don’t know if you’ve noticed— it’s positively tough to miss— though a landscape around Austin is changing. As is a skyline. As is the… well, a feel of a city. The flavor.
Some Austinites have been not vehement about a changes starting on. The corporations relocating in, a family-owned as good as operatedbusinesses go down whilst a thirty-six story condos go up. People who have lived here all their lives (or even usually some-more than 10 years) contend which this is a opposite city than a the single they remember. Back when they competence not even have called Austin a “city.”
There was a time when Motorola was usually a sort of phone people had, not a place where they worked. When video games were a thing people played, not designed. Where Dell was a thing from a strain about a farmer, not a mechanism company. In short, there was a time when Austin was a big, accessible encampment where everybody seemed to know everyone.
Now, it’s tough to see a sky though seeing a foresight structure of a body of an incoming common ownership projects or a derrick in your periphery. Developers have been shopping up land as good as displacing internal businesses in sequence to get a many appropriate mark downtown for a tall climb which will dwarf all a others, which will sell for some-more money, which will be nicer as good as closer to all a downtown Austin attractions.
But what have been those attractions?
There will regularly be a Congress Bridge, as good as so there will regularly be bats. But will people wish to travel from a Sheraton to see them, afterwards get a splash during a Coyote Ugly Saloon franchise? Will they wish to eat during a Baby Acapulco’s? What will have a locale special when Las Manitas is gone, when all a tiny businesses which got us to this indicate have been gone, as good as a usually choices for restaurants have been in a lobbies of a newest hotels?
What will have Austin Austin? It’s a great question.
It’s easy to see which a city has mislaid a little a appeal. Its uniqueness, a originality. Big commercial operation has a approach of you do that. But is it so bad? Is it unequivocally loyal which there will be zero left?
Those small, internal places brought people here, it’s true. And they positively gave Austin a flavor. But millions some-more people have been here now. The city has grown by leaps as good as bounds. People still need places to live. And a some-more people there are, a some-more income is being spent. There is many to be grateful for when you consider about this latest “bigger” Austin. The Austin genuine estate marketplace values go up. Many businesses prosper. The city has some-more income to urge infrastructure as good as city services similar to parks. Its tough to concede it to shift a little of what you love, as good as a little of a changes I’m not happy with. But altogether you consider it will be okay.
The pass is which a people have been still here. The same people which done Austin a coolest city in the… well, in my perspective in a complete nation —are still here. They’re still fluttering during you from their yard, still smiling during you upon a street. The buildings aren’t a celebrity in a city —the people in them are. So let’s have certain those people don’t go anywhere, as good as we’re all gonna be usually fine. Yes, you might have to partial with a integrate businesses as good as landmarks dear to a hearts, though as prolonged as Austinites keep loyal to what you adore about this city, you will keep a partial of a temperament which is a many important.
Ki Gray functions for Austin Real Estate a tiny association in Austin Texas. Their website provides a poke of a Austin MLS along with report upon Austin Condominium
Jun/100
Austin Area Market Statistics
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Austin area home sales continue to climb; Statistics indicate sustained growthAustin Board of REALTORS® releases April 2010 real estate statistics “The considerable increase in sales and pending sales indicates increased activity among buyers trying to beat the April 30 tax credit deadline,” said John Horton, Chairman of the Austin Board of REALTORS®. “Although the tax credit has expired, we are entering a growing economic, real estate and seasonal cycle which we hope will continue to provide momentum to carry our market upward.” Sales of condos and townhouses remained strong in April 2010, increasing 63 percent to 213 sales as compared to April 2009. Also during the same period, pending sales for condos and townhouses increased 70 percent to 338. Mr. Horton continued, “The significant increase seen in the condo and townhouse market can most likely be attributed to the first-time homebuyer tax credit. The median price for condos and townhouses is approximately $30,000 less than the median price for a single-family home; and therefore, these properties can be a more affordable alternative for first-time buyers.” In April 2010, the days on the market for single-family homes decreased 13 percent to 69 days as compared to April 2009. Additionally, the month’s supply of inventory in April was approximately 6.5 months, which represents a balanced market. Horton concluded, “People buy homes because they want to be homeowners. The tax credits have made it more attractive for some buyers to purchase now, but there are a lot of buyers who have been waiting to purchase until they were confident in the economy. Now that we are seeing recovery in the economy and real estate market, in combination with historically low interest rates, those potential buyers who have been on the fence are now taking the leap and entering the housing market.” April 2010 Statistics
The Austin Board of REALTORS® is a non-profit, voluntary organization representing more than 8,000 licensed REALTORS® in Central Texas. For more information, please contact Angela Brutsché at 512-454-7636. Info Provided by https://www.abor.com/news_media/statistics.cfm? |
May/100
Is Now A Good Time To Buy?
By: Ki Gray
Have home prices hit rock bottom? Probably not in some areas and maybe not as a whole. Nonetheless, now could be the best time to buy a house. Even with the homebuyer’s tax credit due to expire at the end of the month, there are compelling reasons to buy a house in the current economy.
This recession made a good case for the renting over buying argument. But as the country tentatively enters the recovery phase, buying a house makes sense in many circumstances. The rent versus buy analysis has many considerations, including home prices, how long you planning on staying, the down payment, interest rates, and the future rise or fall of home values. Some of these are easy to evaluate and for others it would be nice to own a crystal ball.
According to a recent The New York Times articles, the consideration really is how are current home prices relative to pre-bubble prices. “(T)he situation is getting more complicated because the housing bust has been playing out unevenly across the country.” Some places, like San Francisco, home prices are still higher than they were before the housing bubble. Other places, like Las Vegas, prices are comparable to those of pre-boom years.
However, the purveyors of doom are warning that house prices are still falling. According to a recent Associated Press article, the government index of home prices shows a 0.2 percent decline in February, continuing a three month trend. That coupled with a stagnant national median home sales price is cause for concern. Some economists speculate that home prices could fall as much as another 20 percent.
Even with the bad numbers, home sales nationally are up 18 percent from the lowest point during the recession (AP). Home sales across the country rose in all regions, including 6 percent in the Northeast. For sale signs are coming up like spring flowers in neighborhoods across the country, which is a reassuring sight.
Short of owning that crystal ball, timing the housing market perfectly is part luck and part research. Knowing the local market and using an experienced real estate agent are the best ways to navigate the buying versus renting conundrum. Are home prices holding steady or rising? How are prices compared to five years ago? Two years ago? Fortunately, the Internet and real estate agents have a wealth of price information to evaluate.
Then there are the personal factors: How long do you plan to stay in the area? Can you afford to own a house in the neighborhood where you are renting? Do you like the rental enough to stay awhile longer? There is no crystal ball and there is probably not a “perfect” time to buy. The best a person can do is crunch the numbers and be realistic about both the hard numbers and the softer realities.
Read more: http://www.articlesnatch.com/Article/Is-Now-A-Good-Time-To-Buy-/1128596#ixzz0niI4oWeW
Under Creative Commons License: Attribution No Derivatives
May/100
Rates Mostly Unchanged This Week
30-year fixed-rate mortgage: Averaged 5.06 percent with an average 0.7 point for the week ending April 29, 2010, down slightly from last week when it averaged 5.07 percent. Last year at this time, the 30-year FRM averaged 4.78 percent.
The 15-year fixed-rate mortgage: Averaged 4.39 percent with an average 0.7 point, unchanged from last week when it averaged 4.39 percent. A year ago at this time, the 15-year FRM averaged 4.48 percent.
Five-year indexed hybrid adjustable-rate mortgages ARMs: Averaged 4.00 percent this week, with an average 0.6 point, down from last week when it averaged 4.03 percent. A year ago, the 5-year ARM averaged 4.80 percent.
One-year Treasury-indexed ARMs: Average 0.5 point, up from last week when it averaged 4.22 percent. At this time last year, the 1-year ARM averaged 4.77 percent.
Freddie Sayz
Mortgage rates on 30-year fixed loans have averaged about 5 percent over the first four months of this year, staying within a band of roughly a quarter percentage point and virtually matching 2009s annual average, said Frank Nothaft, Freddie Mac vice president and chief economist. These low rates have been helping to moderate house price declines over the course of the year.
Prices on existing homes showed a 12-month increase of 0.7 percent in February, which was the first annual increase since December 2006, according to the S&P/Case-Shiller® 20-city composite index [PDF]. In addition, nine cities experienced positive growth, matching the number in January. Further, the Census Bureaus Constant Quality price index showed that new home prices rose 2.5 percent in the first quarter on an annual basis.
Apr/100
Circle C Ranch
http://blog.skyrealtyaustin.com/circle-c-ranch/
by PATTI SIMON on APRIL 21, 2010 · 0 COMMENTS
in FUN STUFF IN CENTRAL TEXAS, NEIGHBORHOODS AND TOWNS
Have you made it to the Circle C Ranch area lately? If you are like some North Austin folks, you probably have not made it down to Southwest Austin in the last couple of years. Well if it’s been a while since you’ve been in the area, you might want to check it out. All types of businesses have popped up over the last few years which now makes it so convenient for those living in Circle C to have these amenities close by.
Within walking distance from the master planned community of Circle C Ranch, is the retail shopping center, Escarpment Village, that was the first true “green building” retail development in the Austin area. Did you know that the shopping center has a green roof with native Texas plants from the Lady Bird Johnson Wildlife Center, that provides insulation and a reduction in heat? How great is it that Escarpment Village uses solar panels for electricity and for heating and has cisterns that are used for harvesting rainwater?
There are some great places to shop and dine at Escarpment Village and you can even book a massage, get your teeth cleaned, as well as pick up your dry cleaning and do your banking. One of my favorite places to dine is the Satelite Cafe. They moved their original location from The Y in Oak Hill to Escarpment Village when the center first opened. I will put their fish tacos up against any in Austin as the best I have ever eaten. An HEB is across the street and is a huge grocery store with a cooking connection as well as a great selection of gourmet foods and wines.
If walking to the shopping center is not enough exercise for you, then walk on over and check out this beautiful park just down W.Slaughter Lane. It’s Metropolitan Park, on Slaughter Creek, in Circle C Ranchand has approximately 545 acres and almost 7 miles of walking trails. A nice playground for the kids and places to have a picnic under the huge trees makes this neighborhood park special. Circle C residents love their soccer and have created 7 soccer fields in their neighborhood park. In the midst of it all is a 21 basket Disc Golf Course, a couple of basketball courts and volleyball courts.
There’s much to see in Austin and Southwest Austin has some awesome places to check out.
Tagged as: Circle C Ranch
Apr/100
Austin Sees Improvement in Unemployment Rate
Posted by Jim Olenbush on Monday, April 5th, 2010 at 6:45pm.111 Views
http://www.jimolenbush.com/blog/austin-sees-improvement-in-unemployment-rate.html
One of the biggest draws to living in the Austin area is the fact that employment opportunities are quite abundant when compared to many other metropolitan areas throughout the country. While there is no doubt that Austin unemployment rates did take a bit of a hit during these difficult economic times, the city has managed to do quite well when compared to national averages and even when compared to the rest of the state. Furthermore, according to some data recently released by the Texas Workforce Commission, unemployment rates in the Austin-Round Rock-San Marcos area are only getting better.
According to the Texas Workforce Commission, unemployment rates in the Austin-Round Rock-San Marcos area jumped from 7% in December to 7.6% in January. Things got better in February, however, when rates fell back down to 7.2%. Although this is still higher than the 6.6% unemployment rate that the area experienced in February of 2009, Austin residents are certainly happy to see things moving back in the right direction.
Things aren’t quite as chipper throughout the state, however, as the statewide unemployment rate has remained stable at 8.2%. Despite the fact that the statewide workforce added 40,200 jobs, the non-agriculture industries lost 13,000 jobs in February while gaining 12,600 in January. Of course, this rate is still far better than the national unemployment rate, which hit 9.7% in February.
“While it is encouraging to see job gains in February across several major employment sectors, our job market remains tight for those seeking new opportunities in the Lone Star State,” said Ronny Congleton, who is the Workforce Commissioner Representing Labor, in an Austin Business Journals article.
When looking specifically at the Austin area, transportation, trade and utilities lost the most jobs within the non-agriculture jobs sector when comparing February 2009 to February 2010. In all, this sector lost 4,000 jobs. The manufacturing sector lost the second greatest number of jobs, with a total of 2,900 jobs lost in that same time period. The leisure and hospitality sector, on the other hand, enjoyed the greatest amount of growth after adding 5,000 positions during this same time frame.
When comparing employment figures on a month-to-month basis, the trade and transportation sector lost the greatest number of jobs from January to February with a total loss of about 800 positions. The government, on the other hand, added the most jobs with 3,300 jobs added from January to February. Adding 2,200 positions, the education, health, leisure and hospitality sectors added the second greatest number of positions.