California Foreclosures Have Shot Through The Ceiling
25 February 2008California foreclosures continue their rising spell through 2007 and into 2008. Apart from homeowners, the other people hit are homebuilders. The largest inland homebuilder in California, KB Home, suffered a major setback on Tuesday with its loss spiraling to almost $773 million. This clearly reflects the downsizing that is taking place in the home building industry and can be attributed to the large number of California foreclosure homes.
In fact, the rate at which, California foreclosures are being filed, it seems that in the near future, there will be more California foreclosure homes up for sale than prime real estate. This will definitely have a negative impact on homebuilders, real estate market in California, and the nation.
The main reason behind the losses suffered by KB Home is contributed to declining sales, which will naturally bring down the generation of revenue. All these factors put together have caused the land value to fall considerably across some top cities of California like Fresno, Anaheim, Oakland, Los Angeles, San Diego, San Jose, San Francisco, and Sacramento.
As a result of California foreclosures, KB Homes losses were not just restricted to revenue and sales; their shares also tumbled in the stock market by almost 9% and are now valued at $16.78 per share. Some of the other companies that reported similar fate include Hovnanian Enterprises Inc., which is one of the leading national homebuilders. They reported a loss in revenue in the fourth quarter by almost $1.4 billion, which is a loss of 20.3% as compared to their earnings a year back. Following the footsteps is Toll Brothers; another national builder of repute in the luxury homes industry also reported a 4th quarter loss. Their net loss is to the tune of $81 million.
Therefore, the bottom line is that it is not only the homeowners who are losing their homes but also the homebuilders who have become the new victims of California foreclosures.
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