Bob Toll, CEO of homebuilder Toll Brothers, expounded on the horrific state of the housing market yesterday. As the NYT’s Floyd Norris points out, Bob offered several reasons why buyers are cancelling orders in droves, including:
- “Buyers inability to sell their old property, their used home.” [catch that? “Used home.” Is this man a homebuilder, or what?] 18% of cancellations came from existing homes not sold.
- 29% were the result of in changed financial position [translation: suddenly impoverished], job loss, relocation, divorce, medical issues, buyer deceased; Military has impacted us just slightly.
- 11% were for mortgage-related reasons [as in, can’t get one anymore]
- “17% coming from unfortunately those who just wanted to walk from the product, they didn’t like the value any longer. Translation, they have read one too many Times articles and decided now is not the time to buy a home.”
So there you have it: the housing bust is partly the New York Times’s fault. Which means that the New York Times is also responsible for Cisco’s weak outlook (because the housing and credit crunch is causing businesses to postpone tech spending), the advertising gloom that dominated most panels at the DJ conference yesterday, and the gut-wrenching plummets in the stock market of late.
As for grading the specific markets. Mr. Toll put together a handy crib-sheet, which he whipped out when asked. We are pleased to report that New York City gets a “B.” Northern California, meanwhile, gets a “D”…
OK. Massachusetts, Rhode Island is an F. Connecticut is a B, which is strange, except that most of the Connecticut that we build in funnels down into the New York and suburb and New York market.That’s probably the reason. New York suburbs: Putnam and Dutches are C-plus. Our city living division in New York City is a B. Our city living in New Jersey, that’s Hoboken, New Jersey city, is a B-plus. New Jersey itself is a D, with the exception of the Princeton area, which is a B.
Michigan is an F-minus, while Illinois, Chicago, is just an F. Minnesota is all the way up from an F-minus to an F. Mid-Atlantic states, the Philadelphia suburbs have slipped down to a D. The Pocono’s are an F-minus. Delaware is a B. Maryland shore its offerings are on F-minus.
Washington, DC, Maryland is a D. Virginia is a D-plus. West Virginia is a D-minus. That’s actually better than most of our margins, unfortunately. Raleigh is a D-plus now. That’s a serious slip for Raleigh. And Charlotte has gone all the way down, in our experience, to an F, and that’s probably due to the two banks laying off. Hilton Head has gone way down for us to an F-minus.
Atlanta, Georgia right now is an F-minus, but we’re really not a good judge. We are cutting roads and we have a trailer. It’s tough to get to the trailer. We have nothing to show, so that might account for the F-minus. But it’s definitely the market as well.
Florida Central, let’s see, Orlando primarily is D-minus. Florida East Coast, F. Florida north, Jacksonville, et cetera, F. Florida Tampa, F-minus, and Florida West, a C. That’s a significant change recently. We’ve had 24 deposits in the last four weeks.
I’m not sure that it’s not due to more aggressive discounts that we gave on some of the spec homes as the spec homes neared completion. Austin, Texas is a C. Dallas, Texas is a C. And San Antonio, Texas, I’m sorry to say, has gone down to a flunk, F.
West territory. Northern California is a D. Southern California is an F. That’s surprising. Even Orange County, where we have some pretty neat offerings have slipped seriously down. California, Palm Springs, F-minus. That could be seasonal.
We can’t tell, except the season should be starting now. Arizona is an F. Vegas has its own special category along with Tampa. It’s got an F-minus-minus. Reno is an F. Colorado was a C-minus. The fact that I differentiate between, I don’t think there were any F-pluses.
But the fact that I differentiate between F, F-minus and F-minus-minus, shows you that the drop in the market and to the extent that we’ve gone to in order for me to give you gradations, I go from miserable to outright purgatory. Thank you.