According to luxury builder Toll Brothers, not even affluent buyers are immune to second thoughts these days.
"When we have held promotions, buyers have come out to play and put down deposits. Often, however, lack of confidence in the direction of home prices overcomes their enthusiasm, and they don't take the next step of going to contract," CEO Robert I. Toll told analysts today while discussing the public builder's preliminary second-quarter results. "They, like all of us, read the papers and watch TV, both of which keep advising them that home prices are declining."
Those aren't the only figures sliding. Toll today reported it expects $817.9 million in revenue for the quarter, a 30 percent drop compared to the same period last year. Deliveries also took a tumble, falling 28 percent to 1,212, according to unaudited numbers. (The company expects to release final second-quarter figures June 3.)
Toll also plans to record impairments this quarter; company executives estimated write-downs to be between $225 million and $375 million, with the final amount released in June.
Still, Toll retains access to a considerable amount of cash ($1.23 billion) and credit ($1.27 billion in bank credit), which gives it more stability and flexibility than many of its private and public counterparts. "With over $2.5 billion of available capital, we hope to be able to take advantage of opportunities that we expect will arise from today's distress," Toll said. However, he added, "nothing has excited us yet."
Alison Rice is senior editor, online, for BUILDER magazine.