In a call with investors late today, M/I Homes CEO Bob Schottenstein weighed in with his feelings on the heavily discussed issue of impairments. When asked if he would speculate as to whether the majority of impairments are behind his company, and public home builders as a whole, he chided others who have made predictions during earnings season.
"There has been a lot of interest in that, and there are a lot of opinions. I think there is way too much uncertainty to speculate. The notion that prices can't be reduced...I don't understand that. They can, they do, and in some of our markets, they are."
The company also announced that it remains committed to its current markets, especially the Midwest, despite the number of builders exiting, and in some cases, failing.
"Our goal is to be the last man standing in every one of our markets," Schottenstein said, before adding that the benefit is that "as markets diminish, there are less horses at the trough. I think that when things begin to improve, they will generally begin to improve in all our markets at about the same time."
Executives also publicly announced that the company plans to open its first Chicago community toward the end of the second quarter. Last summer, the company announced its entry into the market, and since that time, it has been cautiously evaluating opportunities. "In the last several weeks, we moved toward inking our first deal," said Schottenstein. The development is a Crown Development community located in Elgin, Illinois called Highland Woods.
Schottenstein confirmed the deal pencils at margins higher than today's traditional Midwest projects.
In 2008, the company plans to deploy roughly $30 million into new land deals, but according to CFO Phil Creek, "We don't see a significant amount of capital going into Chicago." Instead, most will be allocated to the Mid-Atlantic region.
M/I shares (NYSE:MHO) closed down 4.9% at $17.15 on slightly higher volume on Wednesday.