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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.

Related posts:

1. Subprime Loss Causes Writedown of 380 Billion Dollars of Assets
2. Centex Sells 8.500 Homes and Lots For A Loss (But Gets a Big Dividend)
3. Centex Lays Out The Red Carpet For Realtors in Dallas
4. Housing Starts Decreased in May 2.1 Percent, Down 24 Percent Year over Year
5. Carlyle Group Raising 3 Billion For A NEW Real Estate Fund