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September 18, 2007

Comments

Bob

nice work.

Mrs. Real

This is absolutely incredible. Hovnanian should be on the front cover of every tabloid and biz mag in the country. You just can't trust your average CEO these days...

Reggie

From Bloomberg, to put the blog post above in perspective:

Hovnanian Chief Says Housing Bottom Is `Very Near' (Update6)

By Kathleen M. Howley and Carol Massar

Sept. 14 (Bloomberg) -- Hovnanian Enterprises Inc. Chief Executive Officer Ara Hovnanian said the U.S. housing market is near the bottom and won't recover until 2009. The shares rose 9.7 percent.

Hovnanian, whose family has been building homes since 1959, said a three-day sale starting today may help boost revenue in the company's slowest markets, including California and Florida. The builder, based in Red Bank, New Jersey, hopes to sell 1,000 homes this weekend, Hovnanian said in an interview.

New home sales have fallen 37 percent from their peak two years ago as buyers back out of contracts, wait for prices to decline further or find mortgages difficult to secure. Hovnanian's stock has lost almost three-quarters of its value this year on concern the two-year-old housing decline may extend into next year.

``The bottom is very near but I think it's going to stay along the bottom for a while before a recovery,'' the 50-year- old Hovnanian said today.

Moody's Investors Service, Standard & Poor's and the National Association of Realtors said this week the housing decline will extend into next year as tighter loan standards and falling prices cut demand.

Hovnanian shares rose 97 cents to $11 at 4 p.m. in New York Stock Exchange composite trading. The stock was down 70 percent this year through yesterday. The company is the sixth-largest U.S. homebuilder by revenue and New Jersey's biggest builder.

Adequate Credit

Ara Hovnanian, who heads the third-worst performer in the 16-member Standard & Poor's Supercomposite Homebuilding Index this year, said the credit crunch hasn't limited the ability of prime borrowers to get mortgages.

``If you've got reasonable credit and are willing to show income documents and you're not trying to put zero down, there is really an adequate supply of credit,'' Hovnanian said.

Hovnanian shares have dropped to the lowest since 2001 and the builder has reported four consecutive quarters of losses. The company has vowed to generate $175 million to $250 million of cash flow in the fiscal quarter ending in October.

Hovnanian's net loss for the fiscal third quarter was $77.9 million, or $1.27 a share. Revenue slid 27 percent to $1.13 billion as a third of buyers canceled contracts.

The company's sale, dubbed the ``Deal of the Century,'' will be held in 18 states including California, New Jersey, New York, Arizona, Ohio and Illinois. Hovnanian is offering discounts of up to almost $150,000 on homes.

Discounts Planned

Buyers will ``realize unprecedented savings'' with incentives of up to $100,000 in some California developments and more elsewhere, the company said in statements issued this week.

At its Vinsanto development in Phoenix, Hovnanian is offering $5,000 toward closing costs; gift cards worth $250 to $500 for Home Depot Inc., Target Corp. and Ashley Furniture; a 42-inch plasma TV; a garage upgrade package with epoxy flooring; and free landscaping and an appliance package with refrigerator, washer and dryer, according to its Web site. Prices there start at about $150,000.

Asked whether the sales event was an act of desperation, Ara Hovnanian said it was a ``logical thing to do'' in the current market.

Pulte, Ryland

Pulte Homes Inc., the third-largest homebuilder by revenue, advertised in the Chicago Tribune a three-day offer starting today for zero interest, principal, mortgage insurance and tax payments for six months for homes bought at its developments in suburban Chicago.

Ryland Group Inc., based in Calabasas, California, ran an advertisement in today's Chicago Tribune offering a free finished basement and a plasma television to buyers who purchase now.

At least five public homebuilders in the last three months have asked their banks for more lenient terms on loans because they are struggling to meet their earnings targets.

WCI Communities Inc.'s lenders agreed last month to amend the terms of the company's credit lines to help avoid a default. Also negotiating new loans terms with creditors were Miami-based Lennar Corp., the biggest U.S. homebuilder by revenue; Bloomfield Hills, Michigan-based Pulte; Los Angeles-based KB Home, the fifth; and Irvine, California-based Standard Pacific Corp.

`Got a Problem'

``Unless you're reducing your debt commensurate with your profits going down -- which they're not -- you've got a problem,'' said Robert Curran, managing director responsible for coverage of homebuilding and building materials companies at Fitch Ratings in New York.

``As long as the housing markets do not weaken materially further, we do not expect to have any problem managing our cash flows and debt levels to remain in compliance with the covenants in our credit facilities,'' said Hovnanian Chief Financial Officer Larry Sorsby.

To contact the reporters on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net ; Carol Massar in New York at cmassar@bloomberg.net .

newport coast homes for sale

Then he has the nerve to call a bottoming in the residential real estate industry, when he KNOWS better - and if you read further I will prove without a doubt that he know better.

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