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Ooops There It Goes

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Dude, you sound like a broken record

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Both MDC Holdgs. (MDC) and Standard Pacific (SPF) released new order numbers last night, and aside from the headlines regarding the permanent plateau of prosperity reached by the residential real estate industry, here are the lowlights:

MDC: New orders and backlog in the hottest markets in the country were all down - and not by an insignificant amount: CA was down 55%, NV 65%, and VA 35. For the entire 2004 year (vs. 2003), CA was down 5%, NV was flat and VA was down 20%.

Even more strikingly, company wide the cancellation rate for Q4 '04 vs. Q4 '03 jumped to 32% from 26.5%. An acceptable cancellation rate is somewhere in the high 'teens / low 20's. Add to this that the Y/Y backlog was down in CO, CA, MD, NV, and VA, and I suspect that there might be a bit of hand ringing as to whether / how MDC will make its '05 numbers. The one hot spot appears to be AZ, which I have heard is becoming the object of affection of the speculators who got burnt in NV. From the "what am I missing file", despite the developing CA train wreck, MDC is planning to add all kinds of supply in that state over the next quarter. Of course that's partly why CA is developing into a train wreck.

The news was basically the same from SPF - which has 70% of its operations in CA. So. CA was down 35% on 10% higher community count, while No. CA continues relatively well. FL orders were flat despite a 20% increase in community count. SPF blamed October hurricanes for the FL sluggishness.

With this kind of data points I fully expect a buying orgy in the homies . . .of course.
Positions in SPF
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