Luxury Developers Hopeful on High-End Housing
Horsham, Penn.-based Toll Brothers (TOL) said it signed more contracts during the third quarter of its fiscal year 2009 than it did in the year-ago quarter, even though it has fewer selling communities. The lift in signed contracts along with a drop in cancellations has the luxury homebuilder cautiously optimistic that upscale housing may be rebounding, despite the company's $472.3m quarterly loss. Toll Brothers has 22% fewer selling communities in Q309 than in Q308, but same-store net-signed contracts were up 32% year-over-year, the first yearly increase since the builder’s fiscal Q405. The builder reported 78 cancellations during Q309, a rate of 8.5%. That’s better than 161 (21.7% cancellation rate) in Q209 and 195 (19.4% cancellation rate) in the year-ago period. It’s the builder’s lowest cancellation rate since fiscal Q206. “We believe declining cancellations and more solid demand indicate that the housing market is stabilizing. We are reducing incentives and raising prices in selected communities,” chairman and CEO Robert Toll said in a statement. “We believe that customers are recognizing that now is the time to get into the market to take advantage of near-record affordability and what is still, for now, a buyer's market.” Some luxury condominium builders are sharing in Toll Brothers’ optimism. The ELAD Group is making a push for buyers in its 24-story Carlyle Residences luxury condominium tower in Los Angeles, offering financing through its construction lender, HSBC, and promoting amenity offerings like concierge services, health clubs and luxury-decorated common areas. “Buyers are back -- but expectations are higher. No longer in a wait-and-see position, they are ready to buy but want better quality and a stronger investment value, which has forced the marketplace to re-evaluate, adjust and deliver on its promises,” said Valerie Fitzgerald, luxury real estate broker and head of sales at The Carlyle Residences, in a statement. “In real estate, true luxury stems from a combination of Location, Space and Finishes," Fitzgerald added. "Properties that can deliver on all three are seeing buyers returning, ready to make a purchase.” Write to Ausitn Kilgore.