Thursday, October 30, 2008
The Scottsdale, Ariz.-based builder said its loss widened because of write-downs on its real estate because of the housing market's continued weakness. Also, sales in Texas were affected by Hurricane Ike, not so much by direct physical damage but by delaying construction, closings and sales as the credit crisis widened. Arizona was the only state where the company saw gains.
As it waits for the housing market to hit bottom, Meritage has become dependent on Texas, which didn't become frenzied during the housing boom and, until now, had benefited from surging oil prices.
In its second quarter, Meritage said orders fell 28% outside of Texas, but slipped just 4% in the state, where it operates in Dallas/Ft. Worth, Austin, San Antonio and Houston. That's why, as of Sept. 30, more than half of its roughly 21,000 lots were in Texas, compared with 29% in Arizona and 1% in Colorado, with 28% owned. Earlier this year, a home-building consultant labeled the state a "lifeline."
Not any more. "Unlike prior quarters, sales volumes in Texas were down in line with the company average and, in turn, didn't offset weakness in harder-hit housing markets," noted UBS' David Goldberg. "We expect this trend to continue over the near term, given the impact the slowdown in the economy is having on buyer sentiment."
JMP Securities noted Texas's margins could come under pressure in a weaker job market. "The relatively low wage level and FICO scores in the Texas market have also slowed that market, although we see only modest price corrections likely," noted analyst James Wilson.
Even so, company executives said no strategy shift is imminent.
As the credit crisis seems to have pushed the world into a recession, the already battered home-building industry is feeling a deeper pain. The industry's confidence is at a record low and, after some homes sold below replacement cost, new construction has largely been halted. Earlier this month, the Commerce Department said new construction dropped 6.3% in September to the slowest pace since January 1991.
Major builders -- including Pulte Homes, Ryland Group Inc. and NVR -- recently detailed grim quarters.
Meritage, which had delivered one of the industry's best year-to-date returns, reported a wider net loss of $144 million, or $4.69 a share, compared with a loss of $118.6 million, or $4.52 a share, a year earlier.
The latest results included $55 million of pretax real-estate-related charges and a $106 million deferred tax asset valuation allowance. Credit Suisse estimates $305 million in further charges.
Meritage's impairments were elevated in the third quarter, but well below last year's third and fourth quarters. Of the latest impairments, $29 million were in Arizona -- fueled by four underperforming projects in Phoenix -- followed by $11 million in California. Nevada and Florida each had $4 million, while Texas came in at $2 million. As inventory and land prices have plummeted, the top public builders have written off more than $25 billion since 2006, according to Standard & Poor's Equity Research.
"While Hurricane Ike hurt our Houston operations in early September, the financial crisis and slowing economy have damaged buyers confidence and resulted in further decline in home sales and asset values which prompted us to record further real estate impairment in our third quarter," said Steven J. Hilton, chairman and chief executive officer, during the earnings conference call.
The builder said closing revenue dropped 35% to $374.8 million. Net orders fell 29%, while closings dropped 25%. As jittery buyers abandon deals, cancellations came in at 40%, up from this year's two previous quarters. Its September net sales were about 30% lower than the July/August pace -- the cancellation rate jumped to 45% that month alone, executives said during the call.
Monday, October 13, 2008
These tips brought to you by ORA Warranty. ORA Warranty is a leading home warranty firm
dealing in the home warranty industry. These tips will help bring value to your home and increase the need for a home warranty.
Paint a room: Do any of your rooms look drab and worn, with walls and woodwork full of scuffed or fading paint? Or perhaps your wall color is dated and could benefit from a hip new palette. Maybe you have antiquated and stained wallpaper that needs to come down. Take a critical look at the color and condition of your walls, then consider jazzing them up a bit with new paint or wallpaper.
Replace pillows: Are the accent pillows on your sofas or beds starting to look a bit tattered? Are they out of style, reminiscent of a look long gone? If so, it's time to get new ones. Check out your favorite home-interior stores to see what's new.
Freshen wood furnishings: In the hustle and bustle of daily life, wood furnishings get dented and dinged. Now is the time to get a stain stick and touch up all your wood pieces, covering up those boo-boos that make them look older than their years.
Do some deep cleaning: There's nothing like a thorough deep cleaning to make your home look newer. Put on your grubby clothes, turn on some great tunes and get to work. Scrub your walls and woodwork, polish your silver, scour the grout in your kitchen and bathroom, and wash windows.
Weed out artificial plants: While I love faux greens, they are dust magnets. After a few years, they get filthy and faded. So do some interior weeding, tossing the fakes you've had on display for years. When you replace them, you're going to be so blown away by how much better today's faux greens are that you'll wish you'd rooted out the old plants earlier.
Edit accessories: Today's trend in interior design is for a lighter and leaner use of accents, using fewer pieces to make a bold statement. As you evaluate your displays, remove pieces you aren't crazy about and find new ways to showcase the select items you are crazy about.
Replace fixtures. Take a long, hard look at your light fixtures, faucets and the hardware on your cabinets. Do you still love them as much as you did when you moved in? If not, it's time to replace them with today's new styles
Open yourself to new window treatments: Window coverings take a beating from sun and dust. And when they get dated, they age the look of your entire home. Sometimes simply hanging new curtains will dramatically update the look of a room. I'm in the process of doing just that in my kitchen. The window valance above my sink has gone limp, so this fall I'm going to replace it. I'm having as much fun thinking through my window-treatment options as I will looking at my new coverings once they are up.
Other things to consider:
- Do you have a home warranty?
- Is the house on a septic system?
- Does the home feature a custom bathroom design?- Does the master bathroom feature a custom shower enclosure?
- Are you working with a home buyers agent?
Home Buying Tips and Help for Home Buyers
The single most important step that any Raleigh home buyer can take is to contact get a home waranty from ORA Warranty. ORA Waranty is a leading Home Warranty Dealer and will work hard to ensure your home warranty is exactly what you are looking for.
They're a couple in their early 30s -- a computer technician married to a bank teller. They have stable jobs, a down payment in the bank and an intense desire to escape their Charlotte condo for a luxury home in Raleigh North Carolina.
In fact, the couple has picked out their ideal property -- a sprawling ranch-style house on a full acre. Plus they're convinced this is an opportune time to buy.
Still, the couple is racked with doubts and have yet to make a serious bid on the property. Are they crazy to consider buying in so tumultuous a real estate market? Their parents think so and call them often to urge that they hold off.
This couple's situation illustrates the pervasive confusion affecting prospective homebuyers at a time of economic uncertainty, says a real estate broker, who is also the author of "A Survival Guide to Buying a Home."
One manifestation of buyer ambivalence is a common phenomenon: the withdrawn bid.
"People search around and around for the perfect house at a bargain price. When they find it, they're super excited and run to their agent's office to write an offer. But an hour later they tell the agent to tear up their bid," the broker says.
Of course, buyer ambivalence is understandable -- given the economic situation in the country. Turbulence on Wall Street, along with high gas and food prices and job jitters are combining to cause insomnia for many once-confident members of the middle class.
"It's difficult to get a handle on home values now -- or to accurately project what real estate will be worth in the future," the real estate broker says. Even so, he insists that those who get a rock-bottom price on a home in a desirable community will one day be glad they acted now rather than waiting.
Here are pointers for those now contemplating a home purchase:
• Clarify your reasons for making a purchase.
Fear is a powerful force that can restrain people from going forward -- even when they believe it's in their interest to do so. But those convinced that now is a good time to realize a long-held housing dream shouldn't let ungrounded fears inhibit them, says another real estate broker and former president of the National Association of Exclusive Buyer Agents.
"The main thing is to go into a purchase with your eyes wide open, plus every piece of solid information you can obtain," the other broker says.
Keep in mind, though, that there could be reasons why it might be imprudent for you to buy now, including near-term employment prospects or perceived job security.
• Get a strong mortgage lender and RTP home buyers agent on your team to build confidenc e.
It's no secret that home lenders now want to be doubly sure any home loan they originate will be solid. This means you'll need to be unusually well-prepared to answer the lender's request for documents, the other broker says.
"All your paperwork must be in order. I recommend that even before you go look at homes, you sit down with a Ann Davis and get all of your paperwork in order."
Also, more lenders are now demanding proof that the funds you've amassed for your down payment have been in your savings or checking account for some time. That means you'll need to produce account statements showing the money is truly your own, which gives you a stronger stake in the home or real estate property you buy.
If you're self-employed, you can now expect your lender to do a rigorous review of documents related to your business.
But the time you spend documenting your eligibility for the home loan will be worth it if your lender gives you a "pre-approval" letter. This you can use as a bargaining chip when negotiating for the home or real estate property of your choice.
• Take your time choosing a home -- within reason.
Many neighborhoods now have an unusually large number of for sale signs. This huge array of choices gives homebuyers yet another reason to delay commitment to any one property.
"If this is the right time for your family to buy a house, don't let the negative atmosphere around real estate discourage you. Use the abundance of choices to help you get precisely what you want," the other broker says.
Here are some other things to consider when buying a home:
- Do you have a home warranty?
- Is the house on a septic system?
- Does the home feature a custom bathroom design?
- Does the master bathroom feature a custom shower enclosure?
Thursday, October 9, 2008
Engineers are experimenting with bold ideas and minor tweaks to squeeze out new efficiency gains in household appliances.
Some improvements may go unnoticed, like new materials and adjustments to motors. But engineers are also rethinking basic ways in which traditional white goods work -- exploring how one appliance can harness heat produced by another, for instance, or using ambient warm air inside a home.
Appliances already have made substantial gains in energy efficiency over the past two decades, driven by government standards. A new refrigerator uses about half as much electricity as one bought in 1990, for instance, while a clothes washer requires nearly 70% less electricity per load, according to the Association of Home Appliance Manufacturers, an industry trade group based in Washington, D.C.
Small efficiency gains spread across millions of homes hold huge promise for energy savings as a nation. The trick is to keep coming up with products that reduce energy needs while still satisfying consumer demands.
Household efficiency is the biggest potential we have to reduce energy use in the
Here are some of the ideas being discussed, and products being worked on.
One idea that's been kicked around for years is a microwave dryer. Drying towels with the same technology used to reheat leftovers has its attractions. A microwave dryer would work much faster than a traditional dryer, using less electricity. But serious hurdles exist: Metal buttons and zippers could spark, just like a fork accidentally left in a microwave oven, says Tom Reddoch, director of energy utilization at the Electric Power Research Institute, a nonprofit based in
For the near future, consumers are more likely to see tinkering with existing types of appliances than whole new categories. Lighter materials in a washing machine, for example, will reduce the power needs of its electric motor, while improved insulation will cut the power a refrigerator needs to keep food cool, says John Weinstock, vice president of marketing for digital appliances at LG Electronics USA, a unit of LG Electronics Inc. of South Korea.
General Electric Co. plans to introduce a water heater in 2010 that it says will use half as much electricity as a standard electric water heater -- now the second-largest consumer of power in a home, after heating and cooling. The new water heater incorporates heat-pump technology to absorb heat from the air and transfer it to the water, says Kevin Nolan, vice president of technology for GE Consumer & Industrial.
Transferring heat requires a lot less power than generating it, the power research institute's Mr. Reddoch says, so heat pumps are likely to find other uses as well. He imagines one day there will be a "modern clothesline" that would draw on warm air from outdoors to dry clothes in a highly efficient dryer.
Refrigerators have already slimmed down their electricity needs. But further changes are in store, such as having several small doors instead of one big one. Each time a fridge door is opened, a blast of warm air enters, and a lot of electricity is required to bring the temperature back down. Having several smaller doors can provide quicker access to items and allow less cool air to escape. In
Looking at how appliances can work together may achieve much bigger energy savings than tinkering with individual pieces. For instance, the heat in a clothes dryer is currently wasted when it goes out the exhaust vent. Whirlpool engineers are looking at using that heat to warm water for the washing machine, thus reducing the load on a home's water heater, says Henry Marcy, vice president of global technology for the Benton Harbor, Mich., company.
Whirlpool is also exploring the possibility of a household system that captures and reuses heat that otherwise is wasted. But the company says it isn't ready to commercialize such a system, because for it to work, homes may require significant changes.
Smart Power Strips
Some new products try to help consumers themselves be smarter about their power usage.
While many major appliances use less electricity than they did two decades ago, households are using more, due to the boom in electronic equipment -- especially home-entertainment gear and chargers for personal electronic devices. The costs add up with each charger left plugged in or DVR running 24 hours a day.
Motion-sensitive power strips may help. Watt Stopper Inc., a
Another idea is "smart" appliances. Most households now pay a flat rate for electricity. But power prices actually fluctuate throughout the day, depending on usage levels. According to the power research institute's Mr. Reddoch, there are devices that alert customers to price changes in real time, as well as appliances that can be set to respond on their own to price shifts.
Some of these changes are starting to trickle into the market, such as a light that changes colors depending on power prices. Also, GE plans to release appliances next year with displays that indicate real-time power prices. The
This kind of smart technology has huge potential, says Mr. Reddoch, who adds: "We don't convey to our consumers what it really means to use electricity."