Centex to Take a 1 Billion Dollar Writedown in Assets
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Centex Corp. announced that it will be taking a billion dollars in charges for it’s second quarter in writing down land and inventory holdings. While this is a huge number, it is also a very healthy move for the company and the industry.
We all know every player in the housing industry overextended. Land contracts and ambitions plans are now deadwood hanging over the heads of these companies as sales are down in the double digits and their is no sign of a quick recovery. Instead of playing the ostrich role and sticking their heads in the sand the companies are finally writing off some of their assets and reducing their exposure.
And this is good for the consumer. Instead of new housing projects popping up and putting additional pressure on the marketplace, the large builders are pulling back and allowing the market to absorb the present inventory. One of the great difficulties was that with the speculators retreat from the market and builders continuing a torrid building pace it was impossible for demand to catch supply.
Now that the builders have backed off we can find a level of equilibrium and find out where the market really is. And that is good for all homeowners and buyers.
The company expects to record a $850 million impairment on its neighborhood and land inventory, a $40 million write-off on land held by its joint ventures.
The company also expects to write off option deposits and pre-acquisition costs of about $40 million and record a $65 million goodwill impairment.
In addition, Centex’s financial-services unit will record a $60 million provision for future mortgage market losses and credit exposures.
In the second quarter, Centex recorded pretax impairments and other land charges of $193 million. via WSJ.com.
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Comment by elmo the real estate web expert on 4 January 2008:
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God Bless,
Elmo
Real Estate Professional