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Strategies & Market Trends : WCI Communities, Inc. (WCI)
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To: Dan3 who wrote (46)2/12/2007 7:14:44 AM
From: Dan3   of 56
 
Notes to graphs:

1 – Listings fell by 15% but this is not that significant. This is a seasonal effect coming off the bounce up after the New Year. Unfortunately, we are still running 20% above new listings for November-December. More disturbing is the growing number of spec homes that builders do not list. There are a variety of names for these homes, but bottom line is they are still spec homes regardless of what they are called.

2 – Pending Sales are off about 10%. Once again this is not significant in and of itself except that pending sales are up almost 100% from Q3 of 2006. Don’t get too excited however. Q1 is Florida's peak selling season, so the numbers should be much higher than Q3, which is typically one of our slowest quarters. If I was the Wall Street Journal, I could write a headline about Pending Sales UP 100% or I could write a headline that Pending Sales Fall 50%.

3 – Actual sales are worrisome. Sales are off 37% and we are now back to Q3 numbers. This number should be spiking now but it is not. How does that correlate with the rise in Pending Sales? Easy. Many Pending Sales do not close. And we are now seeing much tighter credit requirements for mortgages.

4 – Price Drops are basically flat but four times what it was a year ago. Needless to say, we have not seen the bottom.

5 – New Listings to Sold are up 35%. This is yet another disturbing number. This means inventory continues to grow. The number would be much worse, except that people that are pulling homes off the market and renting them. The other factor is that builders have not been listing inventory.

6 – New Listings to Pendings are relatively unchanged, but still more than 3:1.

7 - Total Inventory is up 1.2%. This is not a good sign in our selling season.

As an aside, it is becoming quite clear that WCI has several projects that will fail and Corus Bank will need to rethink their 65% safety net number. Prices are dropping in towers and sales have come to a halt with the exception of a couple of Miami hotshots that still seem to be able to bring in new speculators for flips.

In addition to the inventory, price, mortgage and other issues you read about daily, another issue that will effect tower closings is multiple units. People that bought Mosaic and Colony and Hammock Bay are now stuck. How much more they can handle is a big question. Another big question is how many multiple buyers will be able to close on Bal Harbour and other towers. Reading about all of this is useless. You need to see it ground level and hear both sides – the sales offices – and the local real estate offices with resales.
Much more (and graphs) at: globaleconomicanalysis.blogspot.com
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