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O.C. builder gets 43% less for Calif. homes

November 5th, 2009, 11:45 am · 24 Comments · posted by Jeff Collins

lyon-homes-logo-for-webWilliam Lyon Homes of Newport Beach reported that it’s getting closer to operating in the black, but it still wasn’t there in the third quarter.

The firm reported a net loss of $11.6 million during the three months ending on Sept. 30. That compares to a net loss of $41.1 million in the same period a year ago — a period that also included $21.9 million worth of “impairments,” or paper losses caused by the market downturn. There were no impairments in the just-completed third quarter, a company statement said.

In addition, the company reported:

  • The average home price was down but sales per development were up.
  • In California, the average selling price of a William Lyon home was $276,300 in the third quarter, down 43% from the same period a year ago.
  • The average price companywide — including homes sold in Arizona and Nevada — was $245,700, down 33.4%.
  • The overall number of sales was down because the number of developments with homes for sale dropped to 24 from 39 a year ago. The company sold 246 homes in the third quarter, compared to 264 a year ago.
  • But sales were up per development. The company averaged 10.3 sales contracts per development this past quarter, compared to 6.8 a year ago.

In a conference call later today, company officials said average prices have dropped due mainly to a switch to selling smaller, cheaper homes. Lyon Homes currently has no homes for sale above $500,000, one company official said, a trend that started several years ago.

“It’s definitely bearing some fruit in this market where jumbo (loan) financing is challenged,” said one official (hard to tell which one was speaking, company President Bill H. Lyon or Colin Severn, interim CFO/controller).

Company officials said also that Lyon Home’s Ivy development in Woodbury East has been so successful that they’ve raised the price by $10,000 in that project’s last release of homes and discontinued all discounts except for a financing incentive. The Ivy attached townhomes, with prices starting below $400,000, was relaunched last summer after a delay caused by the housing slump.

Nevertheless, the Ivy project won’t be a huge help to the company’s profit margins because of a profit-sharing arrangement with the Irvine Co.,  the company official said.

“I don’t think it had a huge impact on the numbers necessarily. The Irvine Co. deals are generally underwritten at 6%, and there’s a profit participation split with 70% going to the Irvine Co. over that. But honestly, (high sales there) helps a little bit. … Sales activity continue to be good there.”

(Update: Post expanded twice to include comments from today’s conference call.)

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 24 Comments

  • bloodinthestreets says:
    November 5, 2009 at 11 am

    The blog warez are killing this place . . .

  • shockg says:
    November 5, 2009 at 1 pm

    Nice. The dow is back over 10,000.

    • BOGEY says:
      November 5, 2009 at 3 pm

      I know, this is great news . . . the 2nd most ’shorting’ opportunity of a lifetime came to fruition today.

      I just went on a huge shopping spree… going to be laughing all the way to the bank AGAIN while the pool of greater fools flush their time/money down the drain on subsidized, illiquid assets such as RE. It’s too bad they don’t comprehend ‘personal income deflation’. .. but hey, as with all markets and money, someone has to be on the losing end.

      • shockg says:
        November 5, 2009 at 4 pm

        if you are trying to short you are going to be in for a rude awakening.

        • BOGEY says:
          November 5, 2009 at 5 pm

          I’m extremely happy to see your call.

          Both the technicals and fundamentals validate my short ‘positions’ and now, THE ULTIMATE CONTRARIAN INDICATER (shockg, a 2006 peak bubble-buyer) has chimed-in ‘bull’ = peak validation. Lol, I can’t wait to witness the carnage and now will be expecting even greater gains.

        • shockg says:
          November 5, 2009 at 5 pm

          Time will tell.

        • Liar Loan says:
          November 6, 2009 at 12 pm

          Bogey,
          What technicals are you specifically talking about?

    • aksteve says:
      November 5, 2009 at 5 pm

      Yes, and when you compare that to the weekness of the dollar and the price of gold, 10k Dow is awash or worse. Compared to foreign indexes, the US is still in the tank and is a drain on the world economy.

      And another thing: Extremely low interest rates and govt. incentives to buy homes were most of the reason we are suffering today. And what is the government doing to get us out? THE SAME THING BUT MORE OF IT!!!!! WTF?

    • Bill says:
      November 5, 2009 at 7 pm

      You’re always a day late and a dollar short.

      You finally notice the DOW after it climbs to 10,000.

      You buy a house after it climbs to 2006 prices.

      The herd mentality is for people too dense to think on their own.

      • shockg says:
        November 5, 2009 at 7 pm

        And 1998 prices are right around the corner right? let’s not forget 25,000 inventory. What else do you see in your crystal ball?

        • Bill says:
          November 6, 2009 at 6 am

          You seem to think that the current 10,500 OC defaults and the thousands of pending Option Arms are just going to disappear.

          You must also think that a 10.2% national unemployment rate and climbing is going to solve your problems.

          You really don’t have to constantly remind us of how dumb you really are!

  • Tony says:
    November 5, 2009 at 3 pm

    Enjoy it while it lasts. As soon as Bernanke has to rise interest rates due to inflation the post housing will be popped again

    • bloodinthestreets says:
      November 5, 2009 at 7 pm

      That’s a tired line . . . what inflation are you seeing?

      Oil is about it . . . and it is due for a correction here in a couple weeks. I bet it won’t go over 90, but will be back down to high 60’s before January.

  • SC2 says:
    November 5, 2009 at 4 pm

    now that’s what i call a strong housing market:

    Fannie Mae asks for $15 billion in US aid after posting $19.8 billion third-quarter loss

  • Carlos says:
    November 5, 2009 at 5 pm

    House price in California, Nevada, and other regions need to drop another 30 percent. Housing price correction is healthy and must be within affordability.
    The worst has yet to come. More foreclosure ahead. More job losses.

  • Jc says:
    November 5, 2009 at 6 pm

    Hey get this. I read today that the lenders will become “Landlords” So all those who can’t efford the mortgage, Or doesn’t qualify for modifications. They will come “Renters”
    Diana Olick (cnbc)

  • Mr NoSpin says:
    November 5, 2009 at 7 pm

    Just wait until next spring when the idiots in Sacramento try and balance a new budget. That’s when the real S is going to hit the fan.

    How many of you forgot the fact that to straighten out the 2008/2009 loss they kicked a months worth of state employee salaries in August into the 2009/2010 budget, by holding back the checks for a few days.

    What the money tree crops in the Central Valley were blooming and a windfall harvest of new Hundreds was going to be available in Late Winter 2010.

    Who’s been reading the papers lately. A 10% increase in payroll taxes and the spin masters in Sacramento telling everyone that its no big deal. “You will get it all back when you file your State taxes next spring.” Yeah, right! When the budget tanks there going to start sending everyone IOU’s.

    Oh and lest shall we forget the hundreds of thousands of ARM mortgages scheduled to adjust up in the next three months.

  • Jason says:
    November 6, 2009 at 3 am

    A survey by the California Association of Realtors found that sales of California real estate have actually increased from the end of 2008 to the beginning of 2009. Survey respondents indicated that attractive prices and low mortgage rates were the leading factors motivating them to buy. The glut of bank-owned properties on the market has kept California’s housing inventory stocked, giving buyers many options. First-timers are leading the market spurred on by record low interest rates and the greatest affordability. Using the internet and area papers, you can soon get an idea of the market worth for different types of homes in the area. Identifying the right market & finding the best property holds the key to success. In fact there is a tool through which you can research, compare & identify best places to invest. Look into http://www.smartzip.com/s/sz/info/offer for more information.