Friday, December 14, 2012

Hovnanian CEO Comments on Homebuilding Market

From the fourth quarter earnings call,

"An amusing anecdote is that it's not uncommon for one of our operating associates to complain that the builder we lost a land opportunity to must be assuming home price increases, otherwise they wouldn't have been able to offer so much money for our land parcel. I'm sure that when we win a land parcel that the other builders bidding on it must say the same thing about us, but the reality is we all use different assumptions on what type of home to build, what finishes to include, the price versus velocity trade-off, the mix of different size homes, et cetera. It's part art and part science, leading to slightly different views on land value on any given parcel. At the end of the day, everyone loses more land deals than they win, but that was also true during the bull market run of 2002 to 2005."
Who would've thought?

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