News & Opinions
The latest news and insights from Hanley Wood’s outspoken experts and key thought-leaders throughout the residential and commercial design and construction industry.
NAHB HMI… Signal vs. noise
John McManus / BIG BUILDER / September 17, 2013
This morning, a fresh reading comes through on home building’s closest approximation of changes in confidence among those who make a living doing it. Signal or noise? Clearly, housing’s data trends are forming quite the Hell’s Gate of tricky, swift and difficult-to-navigate currents and cross-currents. Here, we explore less about what you need to know–given that so much is either contradictory or uncertain–and more about a few things you may need to do.
Our simplest, most elegant, and best sense of what’s changing in the market is not the noise interest rates rising, price increases slowing, volatile data prints, etc. The change is that institutional investors–who were making the market for a solid 12 months or more–are dialing back their transactions in for-sale homes, and retail buyers–you and me–are slowly, slowly taking the place of the bulk purchasers.
Does this shift distort the data? We believe so. Critically, don’t take eyes off the prize of winning your retail buyers’ hearts and minds, even as headline risk plays havoc with mood indicators and monthly indices.
There’s an expression, apocryphally attributed as “the Chinese curse,” that sounds like a positive wish for another and is actually a veiled hex: “may you live in interesting times.” Chatting with one of housing’s strategic leaders a couple of days ago, he said, “boring times were always better days for us, but exciting times seem like they’re here to stay for a while.”
I also caught up with Woodside Homes ceo Joel Shine for a few minutes, who had some good news to share about operating results for a company he guided out of bankruptcy in 2009.
“Woodside Homes commented on its results of operations for the last quarter ended and certain recent developments, including closing its offering of $220 million aggregate principal amount of 6 ¾ percent senior unsecured notes.
“For the quarter recently ended, Woodside’s revenue increased by 25 percent compared to the prior year period and during this quarter, Woodside experienced positive growth in each of our markets,” said Joel Shine, Chief Executive Officer of Woodside Homes. The company’s home closings increased by 44 percent in 2012 as compared to 2011 and have grown by over 25 percent in the first half of 2013 versus the same period in 2012. Additionally, net sales have improved year-over-year in each of the last eight quarters.
The joint bookrunners of the unsecured notes offering were Credit Suisse Securities (USA), Moelis & Company, Citigroup and Wells Fargo Securities. “Despite being a private company, Woodside was able to access the debt capital markets for its financing. We are pleased that the offering provides Woodside with additional capital to pursue growth opportunities” noted Shine.
Approximately $140 million of the net proceeds from the issuance and sale of unsecured notes were used to refinance the company’s existing senior secured notes and pay fees and expenses relating to the offering and refinancing and the remainder will be used for general corporate purposes. The notes are due 2021.”