During Tuesday night's investor conference call, M/I Homes CEO Robert H. Schottenstein stated that the housing sector's "challenging conditions" are caused by a number of factors including a difficult mortgage market, discounting by home builders, a lack of job growth (especially in the Midwest), high cancellation rates, and negative media coverage. He added that M/I Homes' $21.7 million net loss in the third quarter is "a reflection of the difficulty in home building today."
The Columbus, Ohio-based builder, which operates in Columbus and Cincinnati, Ohio; Chicago; Indianapolis, Indiana; Tampa, Orlando and West Palm Beach, Florida; Charlotte and Raleigh, North Carolina; Delaware; and the Virginia and Maryland suburbs of Washington, D.C., doesn't anticipate the housing industry to improve until 2009. Schottenstein says the company will focus on reducing costs and generating more cash flow.
M/I Homes, which was ranked No. 21 in the 2006 BUILDER 100, experienced a 38 percent cancellation rate for the third quarter, an 11 percent decline in sales, and delivered 15 percent fewer homes.
So far in 2007, the builder has posted a net loss of $64.5 million compared with net income of $49.8 million year-to-year. In addition, for the year, M/I Homes has taken $109.3 million in pretax charges including $33.4 million for the third quarter.
During the teleconference, Schottenstein also projected that the company will deliver roughly 3,000 houses this year; a decline of 27 percent from 2006, which saw 4,109 deliveries.
Some good news was delivered during M/I Homes' conference call - the Raleigh, N.C. market "continues to grow" according to Schottenstein. The region experienced a 55 percent sales increase year-to-year.