Wednesday, November 12, 2008

Toll Brothers is still seeing declining sales

Home builder Toll Brothers is continuing to see declining sales:
Troubles in the home-building industry keep getting worse. Toll Brothers Inc. said Tuesday that customer traffic and sales hit record lows last month, as the financial meltdown spooked an already weak market and triggered a wave of contract cancellations.

Chief Executive Robert Toll said signs of stabilizing conditions through the summer and into early September were "upended by the past month's financial crisis" and the fear of job and stock-market losses.
Don't worry, Messrs. Toll, the housing recovery is right around the corner. I know because people have been saying it's right around the corner for three years now.

Tomorrow, tomorrow, I love you, tomorrow! The recovery is always a day away!


  1. The homebuilders fascinate me. Clearly, they are delaying the recovery by building more homes when there is already too much existing home inventory out there to absorb demand.

    At the same time, if all the homebuilders were to stop building completely, they would go out of business, job losses would mount and that would be negative pressure on the economy.

    So im curious, which would be worse for the overall economy? Continue to build, keep people employed, and keep vacancy rates high, OR Stop building, lay off everyone, and then job losses make vacancies rise. Thoughts?

  2. Toll Bros is as out of touch with reality as Bubbleheads and Housing Bulls.

    Dear Everyone, the economy is changing. The suburbs are becoming a thing of the past. There will be no recovery of suburban McMansion-building businesses.

    One idea that's been difficult to put across in the past few years is that oil prices are increasing. Every time the price drops from eighty to fifty, or from ninety to seventy, or from $150 to $60, there's a chorus of people all saying, "See, they're on their way back down."

    Now that we have about five years of data behind us, we can discuss it in different terms. Prior to 2000, the price of oil fluctuated between about $12 and $30 a barrel. This year it's moved between $60 and $150. In other words, the price band (both the highs and the lows) has quintupled this decade.

    Viewed that way, any lingering confusion about whether oil prices are marching upward or just in a bubble should be dispelled.

  3. "Whats good for General Motors is good for America." Who hasn't heard that one before?

    Well, GM is now a warm corpse, and people are snidely blogging and speculating about when Toll Brothers will see a turnaround?

    ITS OVER FOLKS. Everything from 1955 up to now was a blip in human history.

  4. 'Tis the season to be jolly, fah-la-la-la-la, La-la-la-la..

    Widespread job cuts expected in NASCAR

    The moves by big NASCAR team owners Rick Hendrick and Joe Gibbs in the past few days to start paring their giant rosters of crewmen set off a wave of frantic job searching by a large number of crewmen over the weekend at Phoenix International Raceway.

    The fear is that next week, after the Homestead finale to the 10-month season, even more NASCAR job cuts will be made.

  5. "The suburbs are becoming a thing of the past."

    Yeah, you're out of touch with reality, buddy.

    Dream on.

  6. The Next Slum?

    The subprime crisis is just the tip of the iceberg. Fundamental changes in American life may turn today’s McMansions into tomorrow’s tenements.

    Strange days are upon the residents of many a suburban cul-de-sac. Once-tidy yards have become overgrown, as the houses they front have gone vacant. Signs of physical and social disorder are spreading.

    At Windy Ridge, a recently built starter-home development seven miles northwest of Charlotte, North Carolina, 81 of the community’s 132 small, vinyl-sided houses were in foreclosure as of late last year. Vandals have kicked in doors and stripped the copper wire from vacant houses; drug users and homeless people have furtively moved in. In December, after a stray bullet blasted through her son’s bedroom and into her own, Laurie Talbot, who’d moved to Windy Ridge from New York in 2005, told The Charlotte Observer, “I thought I’d bought a home in Pleasantville. I never imagined in my wildest dreams that stuff like this would happen.”

    In the Franklin Reserve neighborhood of Elk Grove, California, south of Sacramento, the houses are nicer than those at Windy Ridge—many once sold for well over $500,000—but the phenomenon is the same. At the height of the boom, 10,000 new homes were built there in just four years. Now many are empty; renters of dubious character occupy others. Graffiti, broken windows, and other markers of decay have multiplied. Susan McDonald, president of the local residents’ association and an executive at a local bank, told the Associated Press, “There’s been gang activity. Things have really been changing, the last few years.”

    The rest is here:

  7. "Yeah, you're out of touch with reality, buddy. "

    Yep, big box stripmall retailers located on super-congested former farm roads near sprawling clusters of mcmansions located on former cow pastures (these are Toll Bros speciality) are the WAVE OF THE FUTURE!

    Just wait until the suburban McMansion industry turns around, then we'll see who is dreaming!

  8. "Dear Everyone, the economy is changing. The suburbs are becoming a thing of the past. There will be no recovery of suburban McMansion-building businesses."

    I too think the McMansions are dead, but not necessarily because of oil. I think the case of the exurban meltdown due to gas prices was overstated. Gas made a difference, but not as big a diference as the demographic trends.

    Fact of the matter is, years ago, EVERYONE wanted to move to suburbia for the ilillic life - leaving the problems of the cities behind. This isnt the case anymore, now while MOST want to chase the suburban ideal, SOME now want to live in the cities.

    The reasons are diverse, for the environmentally conscious crowd, its because of the lesser carbon foot print.

    for the uber busy where time is their most valualbe commodity, its the proximity to their jobs.

    for the cultural seekers who abhors the sameness that McCulture provides, its the ability to eat somewhere other than a chilis, applebees, or carabbas, shop at somewhere other than walmart, linens & things, or Talbots, and socialize other than at the mall.

    All these things play a factor and were present since about 1998, back when gas was still uber cheap. To be sure, high gas prices has exacerbated that trend, but even if gas goes back to 1.00 a gallon, the appeal of the city for all these other reasons to SOME (not all but SOME) shall continue.

  9. The Big Three automakers, all functionally bankrupt, are now lined up for bail-outs from the treasury's bottomless checking account. Personally, I believe the age of Happy Motoring is over. Many Americans have already bought their last car -- they just don't know it yet. The current low-ish price of oil is a total fake-out, having to do much more with asset-dumping in the paper markets than the true resource supply-demand equation. Most of the world (the media for sure) has ignored preliminary leaks from the International Energy Agency's (IEA) forthcoming report which forecasts global oil depletion to be 9.1 percent in 2009. This is a staggering figure, very likely to offset whatever slack we see in global demand from the worldwide economic crisis. In fact, the global oil markets are poised for the most severe dislocations ever seen, meaning it's a toss-up what happens first in the USA: a major leg back up in oil prices, or shortages, hoarding, and rationing.

  10. By the way, Oil is now down another $5 since we spoke last. The good thing is that it does look like a floor is being established.

    Also, it looks like the very influential IEA will raise its price guidance, such that we'll be back to where we were by 2015 - only a 7 year setback isnt much, much less than the potential 50 year setback I thought was conceivable.

    I will say, its encouraging too that they raised their the guidance to $120 a barrel in 2030 (in constant dollars). A far cry from the post about the "headfake before $1000 oil", but hey its progress!

  11. Yes, and the IEA was so very prescient previously. They didn't see any of this coming. Yet we are docile and continue to believe that which we are fed....

  12. Today, the world's energy 'watchdog', the International Energy Agency (IEA) published their long awaited annual World Energy Outlook (WEO) for 2008. In stark contrast to bland-to-cornucopian supply commentary in past reports, the initial language in this years Executive Summary is of an urgent nature. This report is a step in the right direction for conveying our rapidly deteriorating energy situation to world policymakers - the IEA should be commended for making the turn and finally acknowledging: costs, investment limitations, new capacity requirements, steep decline rates of existing wells, and externalities (in this case GHGs). In effect, this report shatters the global illusion that oil resources magically turn into cheap flow rates. However, at first glance, the report's details do not support the urgent tone of the beginning paragraphs.

  13. For the uninitiated, following is a very brief excerpt from the IEA report which Gay Oil Guru derives comfort. "...prices that consumers will need to pay for it (oil) are extremely uncertain, perhaps more than ever. "

    The first two paragraphs of the IEA report follow, in their entirety. Read them and see if they give you a warm fuzzy:

    "The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable — environmentally, economically, socially. But that can — and must — be altered; there’s still time to change the road we’re on. It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply. What is needed is nothing short of an energy revolution. This World Energy Outlook demonstrates how that might be achieved through decisive policy action and at what cost. It also describes the consequences of failure.

    Oil is the world’s vital source of energy and will remain so for many years to come, even under the most optimistic of assumptions about the pace of development and deployment of alternative technology. But the sources of oil to meet rising demand, the cost of producing it and the prices that consumers will need to pay for it are extremely uncertain, perhaps more than ever. The surge in prices in recent years culminating in the price spike of 2008, coupled with much greater short-term price volatility, have highlighted just how sensitive prices are to short-term market imbalances. They have also alerted people to the ultimately finite nature of oil (and natural gas) resources. In fact, the immediate risk to supply is not one of a lack of global resources, but rather a lack of investment where it is needed. Upstream investment has been rising rapidly in nominal terms, but much of the increase is due to surging costs and the need to combat rising decline rates — especially in higher-cost provinces outside of OPEC. Today, most capital goes to exploring for and developing high-cost reserves, partly because of limitations on international oil company access to the cheapest resources. Expanding production in the lowest-cost countries will be central to meeting the world’s needs at reasonable cost in the face of dwindling resources in most parts of the world and accelerating decline rates everywhere."

    The report goes on to literally downplay the tone set by the opening paragraphs.

  14. "How many parents want to send their kids to attend DC public schools?"

    This question belies the notion that DC public schools are the only option available to parents. That notion is erroneous.

  15. Has anyone been paying attention to what is happening to the state and local budgets in VA and MD? They are deep underwater, and their cash flow problems have just begun.

    Their luxurious central high schools, utterly addicted to their yellow school bus fleets, will be left as a problem for the states and municipalities. I don't believe they can be rescued, and they are already failing in many other ways, not least, educating and properly socializing young humans.

  16. "IEA report"

    uh-huh...IEA, is one, unusally bearish, and two, never accurate.

    Please go back to posting 2 year old CIA reports on energy demand.

  17. "James said...

    How many parents want to send their kids to attend DC public schools?"

    Not many, but in a way, thats not the point. Demographic trends also point to a lower birth rate among city residents. Look at our friend Gay Oil Maven who is childless as exhibit A.

    The city has actively recruited high income child free kids for years, and they came. Now, some of those (again some not all) are going to have children - so the city is now trying to reinvent its schools to match the lessened - but still there - demand.

    By the way, I think heard this morning on TV that the obama kids will attend a public school - it will be interesting to see if that really pans out.

  18. anonymous said...
    Not many, but in a way, thats not the point.

    Hi Anonymous. Yes, that is the point. I'm not saying that DC isn't a nice place to live. I'm responding to the guy who said the suburbs are becoming a thing of the past. As long a people have kids (and most Americans do have kids), they will have to send their kids to school. For middle class families in the DC area, that means either paying high costs for a private school or moving to the suburbs. Most parents will choose the latter.

    "By the way, I think heard this morning on TV that the obama kids will attend a public school - it will be interesting to see if that really pans out."

    I strongly doubt that will happen. Obama doesn't even send his girls to public school in Chicago. Furthermore, Bill Clinton was also unwilling to let his daughter attend a DC public school.

    Democratic politicians believe in private schools for the rich, and a declining public school monopoly for everyone else.

  19. "James said...

    I strongly doubt that will happen. Obama doesn't even send his girls to public school in Chicago. Furthermore, Bill Clinton was also unwilling to let his daughter attend a DC public school."

    Respectfully, I think you are still missing the point. The fact that you would even bring this up is proof positive. Of course Clinton wouldnt send his kids to DC schools - no one one in their right mind would ever consider that - IN 1992.

    I sit here writing this in my little abode in the "turning over" part of DC. In 1992 the crack epidemic in DC was at is full fury. Had I been here in 1992 I feel certain some of the local population would mug me and then chop my head off.

    Thanks to the work of some urban pioneers, much of that questionable element was gone when I moved here in 2000, but still, it wasnt good. My parents were so scared for me. When they saw it, my mom cried for a week - then called weekly for a year. In 2000 the head chopping element was gone, the mugging part was still here, - and I almost did get mugged once...

    Its now 2008. Much of the mugging element is now gone too. So much so that my parents who 8 years ago were terrified for my safety are now considering moving here too.

    Whats my point - MASSIVE SYSTEMATIC CHANGE. Both in the population and in the services they want from the city. In 16 years, this neighborhood went from the wretched ghetto to a trendy place for the upper middle class to live - the type now threatening to price ME out.

    This change is now causing the local populaiton with kids to demand that much more of our schools - and they are getting it. The work that the Rhee chick is doing is nothing short of miraculous.

    I understand you live pretty far out. The city has very little use for you. Even if you do come in now and again, chances are, you are not totally cognizant of how much this place has changed. I wasnt when I lived in the burbs and just worked here - or came in for a night out. It was only when I lived here that I really got to see it - the change is astounding.

    So, as I see it, THE point is, you said, "what about the schools" as if no one would ever ever consider them. In 1992, you would be absolutely right. In 2000 you would probably be right. Are you still right in 2008? Maybe - but the fact that there is even some speculation as to whether Obama will or wont put his kids in them is utterly remarkable.

    Now, I dont think he will - I still think its a bit to early. But it will not shock me if he does. Also, if the trend of the last 16 years contnues - if the urban pioneers continue their relentless desire to improve the place, I feel 100% certain, putting your kids in the public schools here wont be that big an issue much longer.

  20. I believe Jimmy Carter was the last Prez to send his kid to DC public schools. It is the one in Burleith near the corner of Reservoir and Foxhall Roads. I don't even know if it is still open, but it would be great to watch Hussein follow in the footsteps of the Great Jimmy Carter. Bwahahahahahaha!

  21. DC resident here, about to have kids, and not leaving. The public schools are a mess, but the charter schools have performed very well. Some nice bi-lingual Montessori schools as well. Small church-run schools too, especially for the elementary years. Neither private school options I just mentioned are cost-prohibitive.