NEW YORK (Aug. 8) - Luxury home builder Toll Brothers Inc. said on Wednesday that it expected to report a decline in quarterly home-building revenue as the U.S. housing crisis deepened.
Pending completion of an impairment analysis, Toll estimates its pretax write-down for operating communities, land and land options for the quarter at $125 million to $175 million.
Looking to indicators of future revenue results, Toll said net signed contracts were down 31 percent from a year earlier to $727.1 million.
The third-quarter cancellation rate was 23.8 percent compared with the prior quarter's rate of 18.9 percent.
Toll Brothers Builders specializes in building 5,000 sq.ft. chipboard-and-vinyl suburban palaces, mostly on the east coast. As anyone can plainly see, they are in the dumper, probably for good. The thing that seems to be killing them is "...operating communities, land and land options..." What this means is that--in anticipation of this sprawl boom continuing unabated, forever--they have put out huge amounts of money to buy up farmland and other exurban tracts, with plans to keep selling tract mansions to people with big dreams, skinny down payments and access to cheap cheap cheap mortgage money.
Now that one of every four "buyers"-- people who put down earnest money and told the Tolls to build 'em a house--have backed out during the last three month reporting period, the Tolls are carrying an unsustainable burden of debt. All that land, all those options they purchased on more land, all the half-finished subdivisions are killing them.
The ugly part is that these high rollers will escape with their personal fortunes intact, their kids' trust funds untouchable. Their employees and sub-contractors and suppliers are the ones that will live and die and bleed.
Their corporations and partnerships will go belly-up, but the masterminds will be able to slink off to Caribbean hideaways, while all the working people get stiffed.
But, why would Waterblogged give a rip about a bunch of suits named Toll, in Horsham, Pennsylvania? Waterblogged does NOT, truth to tell, give rip about them. But the clones of the Toll trolls who operate here in Waukesha County do worry him. And, they ought to worry all of us.
Working people: carpenters and masons and plumbers, rockers and landscapers, electricians and roofers, real estate agents--all the people who have put their faith in the housing boom are about to get hammered.
And it is Pabst Farms that is absolutely emblematic of what happens when the feckless clowns and greedy speculators who spin fantasy scenarios of Waukesha sprawl run up against reality.
Waterblogged is doing some close research on the Pabst Farms progress. Early indications are that the kind of results that Toll Brothers are reporting on the east coast are being duplicated here in Waukesha County.