In the first three months of 2008, Irvine-based homebuilder Standard Pacific Corp. reported this morning before markets opened that it boosted its cash supply and paid down its debt in the face of a $216.4 million first-quarter loss. The average price of homes the company sold in Southern California fell 10% in a year to $629,000, according to the company press release. In the first 45 minutes of stock trading this morning, Standard Pacific shares fell 21% to $2.99, a low not seen since January.
Why the squeamish investors?
- A quarterly net loss that was up 431% from the $41 million it posted in red ink for the first quarter a year ago.
- “Impairments,” or losses due to the declining value of land and homes the company owns, totaled $192.3 million before taxes.
- Homebuilding revenues were little better than half of the amount generated in the first quarter last year.
- Closed escrows fell 38% from the year-ago period to 1,036.
- New sales contracts fell 30% to 1,245 new home orders.
On the plus side, however:
- The company’s cash position increased to nearly $329 million, up form $219 million at the end of 2007. This will allow Standard Pacific to fund its short-term cash needs, the company said.
- The quarterly loss, while up significantly from last year, was less than half the amount of red ink in the fourth quarter of 2007.
- Although the company continued to be in violation of covenants with lenders, its bank group agreed to extend a previous waiver of any default to Wednesday. It has a tentative agreement to extend that waiver until August.
Jeffrey V. Peterson, who became the company’s new chairman, CEO and president in March, said:
“In the first quarter, the Company’s management team pursued, with a heightened sense of urgency, initiatives to reduce inventories, carefully manage cash and reduce debt. The Company continued to make progress with these initiatives in the first quarter, increasing our cash position and improving net new home orders and quarter-end backlog from year end. We also paid down $22.5 million of the Company’s notes and $127 million of joint-venture debt.”
Interesting story about people who will not roll over and give away their homes.
Well, someone is selling out there for 20% below the peak and it is not me.
Still buying the median? It was skewed HIGH at the peak, and is skewed LOW now!
Can you losers get a life PLEASE!!!
Still “buying” that the price per-square-foot isn’t falling nearly as fast as the median is falling? (It IS falling, and actually ACCELLERATING in decline in many areas).
Have a bloody good day !
(We now return to your smiley faces brought to you by Thoughtful, Mulligan, Cyber, = Realtors (Registered Trade Mark). )
Here is a nice quote for you Mr. Thoughtful from National Bubble’s linked article.
” Keith Myers, who runs a large ReMax agency in the San Fernando Valley, says that a third of his sales now fall apart after going into escrow.”
Go and tell your buddy Steve Thomas that he needs to subtract about a third of his homes out of his index as they are about to fall out of escrow.
“skewed LOW”? I think there is room for it to move lower. Without qualified buyers, sellers and banks have no choice but to lower asking prices. Remember, it is not about buyers wanting to buy - there is a boatload of them waiting in line - the problem continues to be getting these buyers funding. As long as banks continue to play hardball with borrowers, the market will continue to be slow until prices reach a point that banks feel comfortable with.
How paranoid are the banks? Homes that are currently listed in the Huntington Seacliff area for around $1.8 million are getting appraisals from banks for $1.2 million. Good luck getting a loan if your a buyer without a $600K downpayment. I imagine this is happening throughout all of O.C. The reason I find this neighborhood interesting is that median sales prices in that area has been relatively resistant (15% drop at most) to the corrections in other parts of O.C. (yep, Beach City immunity), but the banks really don’t care. If it’s O.C., it’s poison.
Great article very detailed. I like how it discusses various situations.
It seems clear that the problem is still affordability. That the banks were loaning money to people requiring that they use up to 68% of their income. That is insane.
It seems that most people out there selling just cant find a buyer. The banks are having a hard time finding buyers or at least ones that can afford the loans on their terms.
Interesting story about people who will not roll over and give away their homes.
“Give Away” LoL
Come on … you mean to say that people still believe we’re back in 2005 when fantasy prices roamed throughout The O.C. Well, those days are O.V.E.R.!
Meanwhile, comp killers are now all over Orange County … slowly sucking the very life out of our vastly overpriced real estate market. Welcome back to the real word … my world! :)
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[...] Pacific got into a financial pickle by, among other things, losing $216 million in its first quarter after losing $767 million in 2007 and having its long-time CEO “retire.” Like this [...]