Toll Brothers Chairman and CEO Robert Toll says nobody asks him anymore if the market has hit bottom or turned the corner.
“I think that is a granted,” Toll said during the company’s fourth quarter preliminary earnings call Wed., Nov. 11. “The housing depression ended in March of ’09.”
With signed sales contracts up 42% in number and 62% in dollars from last year’s, Toll Brothers’ numbers certainly supports that. Still, Toll said he isn’t convinced subsequent quarters will be as fruitful. Since Labor Day, demand has been “volatile,” according to the CEO.
But that’s to be expected, Toll said, adding that this recovery seems to be similar to the pattern of improvement during the last downturn in the late 1980s to early 1990s.
“I think we are in the same place as we were in May or June of 1991,” he said, adding: “It (recovery) will come in fits and starts. There will be months when we feel lousy. There will be months when we feel back on top. But it feels to me that we are going to work our way out of it and into success again.”
Toll said the company’s business has improved in New York, Connecticut, Dallas, and Northern California. “Oddly enough, this is pretty close to the order of things as we came out of the recession,” he said.
In answer to a question about land deals that might be coming to market, Toll said that there are deals now, but that they are being bid up beyond what should be reasonable.
“What we think is happening is you are getting land funds bidding” on properties, he said. Recently Toll came in eighth in a bid for some California land. “After 40-something years in the business, I would have hoped that we would have come closer than eighth,” he said.
While Toll acknowledged that, at some point Toll Brothers will need to buy land, he also suggested the company would be cautious about such purchases. “We’ve got to do it, but we have to make sure we don’t get caught up in a bidding war,” he said.
Teresa Burney is a senior editor for BUILDER and BIG BUILDER magazines.
Learn more about markets featured in this article: Philadelphia, PA.