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We're an independent research provider and consulting firm focused on the housing industry. We compile and analyze an unprecedented volume of information to keep our clients informed. Utilizing our trusted analysis, our clients can:
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Last week, NVR borrowed $600 million for 10 years at 3.95%, and Toll borrowed $250 million for 20 years at 0.5% with a bondholder option to convert the debt to equity at a price that is 50% above today’s stock value. To our knowledge, there are no restrictions on the use of this cash.
In the meantime, private equity requires a minimum 20% annual return for their equity investment, and debt costs most private builders 6% – 16%.
How in the world is a private builder supposed to compete with a builder whose cost of capital is that low? The answer – they can’t compete head-to-head.
Homebuilders Finally Reclaiming Market Share
September 6, 2012
After six long years, homebuilders are back in business - literally. New home sales are up 25% year-over-year and 36% from the 2011 bottom. As shown in the chart below, homebuilders are also finally reclaiming market share.
Homeownership Plunges to Lowest Rate in Almost 50 Years
August 27, 2012 The "real" homeownership rate, which we define to be the percentage of households who own a home and are not 90 days or more delinquent on their mortgage, has fallen to 62.1%, which is the lowest level in almost 50 years. The 65.5% homeownership rate published by the U.S. Census Bureau greatly overstates the real level of homeownership in the country, as the Census Bureau counts all 3.8 million homeowners who are 90+ days delinquent on their mortgage as homeowners. Despite herculean efforts by the Administration to save homeownership for these people, most of them are really just renters in waiting.