Ciara at Columbus Grove
Newport Beach-based William Lyon Homes reported that its losses in the first quarter of the year was 86-times greater than in the same period of 2008 as prices and sales of its new homes continued to fall.
The increase in red ink also was due in part to $37.9 million in land-purchase write-offs where development no longer is viable, a company statement said.
The privately owned firm, which builds homes in California, Arizona and Nevada, reported that:
- Its net loss for the first three months of the year totaled $69 million, compared to a loss of just $806,000 in the first three months of 2008.
- Paper losses due to decreased asset values fell by $1 million from the year before, but land-purchase write-offs increased by $37.8 million, up from just $100,000 in land-purchase write-offs a year ago. The company lost its deposits and lost the money it spent in pre-acquisition costs for land where development is “not currently economically viable.”
- Lyon Homes had about half as many developments this year so far as in the same period last year: 29 developments this year, compared to 56 a year earlier. According to its Web site, the company has just three developments now selling homes in Orange County, all of them at the former Tustin Marine air station.
- The average number of homes sold per development decreased to 6.3 from 6.6 in the year-earlier period.
- The number of homes sold totaled 182 in the first quarter, about half of the 371 sold in the first quarter of 2008.
- The average price per home was $300,000, down 19% from Q1 2008’s $372,000. The price drop was only partly attributable to falling price tags. Sales in the first quarter this year included a higher mix of lower-priced homes than in the same period a year ago.
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Read more …
- Dimes-on-dollar bid by O.C. builder ignored
- Lyon Homes offers bondholders a short sale
- O.C. builder buys its own debt at 77% discount
- Lyon building spec homes despite losses
- Lyon Homes says stimulus is working
- Local building legend’s son named Lyon Homes president
- With $104 million lost, what is $7.6 million more?
- Are O.C. builders regaining pricing power?
- Buena Park has hottest-selling new homes in O.C.
- Fed upgrades housing in West to feeble
- Home price up in only 5 O.C. ZIPs in late March
- O.C. home-sale dollars take 1st dip in 8 months
- O.C. home affordability back at 2001 level
How about dropping new home prices? That will certainly increase sales.
However William Lyon Homes keeps sending gimmicky marketing emails every week instead of being serious about selling homes.
If you look at recent Dataquick numbers for OC, new home sales are still down 38% from last year because prices are down only 10%. On the other hand, for previously owned houses, sales are up 19% since prices are down 24%.
If they sell 100 more homes in a quarter, that could mean roughly additional (assuming mix of OC and non-OC houses) 25 million dollars in sales.
New home market is not going to turn around anytime soon. So longer these builders stay in denial, bigger the red ink.
I would love to see a builder build green homes, you know, ones that are not cheaply build, ones that are super energy efficient. During the whole building fiasco, not one builder emphasized that as their strong point. They were put these boxes together too fast, usually with illegals doing most of the work. I could see those, even in this market do ok.
The Depot Walk townhomes in Orange are LEED Silver rated, and they (Olson) actually managed to sell all of them.
I just read up on those. I didn’t know about these. Thanks.
Why didn’t more builders go there?
I think the demand for green homes just “sprouted” towards the end of the bubble, for one thing. For another, there is usually a premium for these homes, and in a competitive market, that can be a hard sell. There was a blog post from Lansner, I think, at the time these went on sale, and a bunch of people slammed those places for various reasons.
In the next building boom, whenever that will be, we’ll probably see more green homes being built, and that will be the big selling point.
I hope so Josh….
SEC Poised to Charge Mozilo With Fraud from the WSJ.
Here is an interesting item about jumbo mortgages
http://www.thetruthaboutmortgage.com/realtors-jumbo-mortgages-stalling-housing-recovery/
A “loss” such as this “calls for” an “executive-sized” bonus” payment — does it not?” As I recall, the internal William Lyon Homes “compensation clause” “requires” the “larger the quarterly loss, the bigger the executive bonus provided” — right?! I thought so…….
They may have been a bit late taking their land deal write downs…Lennar and many others already have done this…a little late to that party.
You’re right mulli, most did this over a year ago.
New home prices are wayyyyyy too high compared to resale homes. I can’t fathom why anyone would spend $700K on a 3bdrm/2bath 2000 sqft new house on a 3000sq ft property with only a tiny courtyard for a private outdoor space. Plus the $200/mo HOA and of course melloroos for the rest of your ownership lifetime.
Contrast that to a 2600 sq ft 4bdrm, 3car garage, on 5700 sqft view lot in a cul-de-sac with a $100HOA in an established neighborhood for for the same price.
Did you see that development in Cornerstone in Laguna Niguel with the “Tuscan inspired courtyard homes”? They are more like dinky joints squeezed together.
I can’t imagine paying that price for anything….lol
Right! And people ignore the real cost of an 80% mortgage on this sort of house…one has to look at the interest cost over the life of the mortgage to see what the house actually costs. This figure is easily in the millions!
hey mulligan- I never accused you of making a “mistake”-
I accused you of fabricating a story about selling a trump condo
in hawaii- I stand by that accusation– as for admitting to mistakes
theres another lie- youve never acknowledged there was a housing bubble and youve never acknowledged you were wrong about it-
I could drudge up some of the past posts to prove it- but honestly
youre not worth the time
Time for developers to use creative seller-financed solutions if they want to take this off the books and turn liabilities into “assets”
I have no idea what I am talking about.
yep yep yep
nope nope nope
duh duh duh
Getting desperate, huh?