Wednesday, January 9, 2008
New Blows Hit Housing Industry
--More than two years into the housing downturn, unpleasant surprises and market rumors are continuing to wreak havoc in an industry that may be leading the economy into a recession. --The market received its first jolt on 01 08 2008 from KB Home, a leading home builder that investors have viewed as well-positioned to ride out the downturn. KB posted a net loss of $772.7 million, or $9.99 a share, for its fourth quarter ended Nov. 30, more than nine times wider than the loss that analysts expected. --The other home-related stock taking a battering yesterday was Countrywide Financial Corp., a leading provider of mortgages. Its shares dropped 28% amid growing anxiety among investors about falling house prices and the surge in foreclosures. --The write-downs are spooking investors and forcing some builders, including KB, to renegotiate the terms of their revolving credit lines with lenders. That's because the tax-asset charges, coupled with continued write down of land and home values, could cause many builders to fall below a minimum tangible net worth level required by their lenders.