GLG News by Homebuilders Industry Accounting Experts

John BurnsPresidentJOHN BURNS REAL ESTATE CONSULTING, LLC

Message to Fed: Housing is Falling Much Faster than Reported

May 11, 2007

Analysis of:Home sales: Worst drop in 18 years | money.cnn.com

Housing is Falling Much Faster than Reported

David KellerFormer Chief Executive OfficerUNITED SUBCONTRACTORS, INC.

Beazer Homes Mortgage Woes

April 11, 2007

Analysis of:Feds Probe Beazer Homes | www.msnbc.msn.com

There has been considerable recent press coverage about alleged mortgage abuses by Beazer Homes.

This appears to be compounded by overall concerns about subprime mortgage activities.

It is important to maintain perspective on this issue as it relates to Beazer

David KellerFormer Chief Executive OfficerUNITED SUBCONTRACTORS, INC.

HOMEBUILDING: DEPOSIT AND PREACQUISITION COSTS

April 9, 2007

Analysis of:Ryland Announces Preliminary Results for the Quarter Ended March 31, 2007 | www.marketwatch.com

 

Recent slowdowns in the absorption of housing inventories have resulted in a series of earnings charges from writeoff. of land deposits, preacquisition costs, goodwill and other intangibles, and the creation of valuation reserves for land, work in process and finished homes.

This article explores issues associated with land/option deposits and preacquisition costs.

John BurnsPresidentJOHN BURNS REAL ESTATE CONSULTING, LLC

Builder Confidence

March 27, 2007

Analysis of:Builder Confidence Remains Low, Especially in the Midwest | www.marketwatch.com

 

The NAHB's monthly survey of home building communities trended down again this month, after increasing over the last several months. The beleaguered Midwest showed some improvement, but remained that worst region in the country. The West also improved slightly this month.

Nationally, the Housing Market Index – a measure of builder confidence through new home sales and traffic in comparison to expectations – reversed recent trends by falling in March. The national index had been making a steady comeback in recent months since reaching a 15-year low in September of last year.

On a regional basis, builder confidence in the Midwest, which had declined to the lowest level of all regions, is making the strongest comeback. The West region has only started to turn around this year. The South and the Northeast are now the highest among the four regions, but declined in March, dragging down the national average.

John BurnsPresidentJOHN BURNS REAL ESTATE CONSULTING, LLC

Vacancy Glut Will Prolong the Recovery

March 26, 2007

Analysis of:Vacancy Glut Will Prolong the Recovery | www.realestatejournal.com

A glut of 800,000 excess vacant homes will prolong the recovery for approximately one year. The recent surge in resale listings and completed new homes offered for sale includes a record level of unoccupied homes. The surge is both the result of investor activity earlier this decade as well as the result of new home sales cancellations. Approximately 2.1 million of the homes offered for sale today are vacant. The average over the last 10 years has been 1.3 million vacant homes for sale. We expect more vacant homes to be put up for sale in 2007 because all categories of vacancy have risen significantly in the last few years. With only 6 - 7 million new and resale homes expected to be sold this year, we believe it will take about one year for the excess vacancy to return to normal. In certain tertiary markets, the excess supply will probably linger for years.

Eli BartovProfessorNEW YORK UNIVERSITY

Stock option grants' backdating and stock prices

April 21, 2006

Analysis of:Next CO2 Worry: Less Absorption | online.wsj.com

Anecdotal and academic evidence indicates stock option grants’ backdating has been widespread in recent years. Many companies have already acknowledged the occurrence of backdating. Others will announce soon. Stock prices responded negatively when companies announce backdating has occurred. There is little doubt that many companies that had been engaged in backdating are yet to acknowledge the problem. However, based on publicly available information investors should be able to identify quite accurately companies that had been engaged in this practice.

Eli BartovProfessorNEW YORK UNIVERSITY

Proposed change in pension accounting and its consequence

April 6, 2006

Analysis of:FASB's Exposure Draft on Postretirement Benefit Plans | www.fasb.org

The new standard will require a company:

a. To recognize in its statement of financial position the overfunded or underfunded status of a defined benefit postretirement plan measured as the difference between the fair value of plan assets and the benefit obligation. For a pension plan, the benefit obligation would be the projected benefit obligation; for any other postretirement benefit plan, such as a retiree health care plan, the benefit obligation would be the accumulated postretirement benefit obligation.

b. To recognize as a component of other comprehensive income, net of tax, actuarial gains and losses and the prior service costs and credits that arise during the period but pursuant to FASB Statements No. 87, Employers’ Accounting for Pensions, and No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions, are not recognized as components of net periodic benefit cost. Amounts recognized in accumulated other comprehensive income would be adjusted as they are subsequently recognized as components of net periodic benefit cost pursuant to the recognition and amortization provisions of Statements 87 and 106.

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