Toll Brothers Updates Tell the Tale of Housing

I vote for Bob Toll, the CEO of Toll Brothers, to be the posterboy of this particular bust.

In 2000 and 2001, as the dot-com boom was busting, that title was held by John Chambers, CEO of Cisco Systems, who used to say during the conference calls every quarter something like, “things still look cloudy out there.”

Aka, we have no idea what is going on with the tech industry but we’re hoping for the best.

Cisco, of course, survived and thrived (as did John Chambers, who is still CEO of Cisco today.)

Why do I vote for Bob Toll? Because he tells it like it is.

Yesterday, Toll Brothers released preliminary fourth quarter numbers (through December 31, 2007.)

The numbers were, frankly, awful. But they’ve been that way for nearly two years now. Toll Brothers builds “luxury” homes. During the boom, that meant homes averaging over $800,000. Now, as prices decline, the average home price for Toll has also declined: into the $600k range. (Toll says that’s because they’re building more townhouses than houses, which are cheaper in price.)

Either way- the numbers out weren’t good.

Contracts in the western states such as California were down 76% from a year ago period. That is stunning. The North was down 57%. The Mid-Atlantic 37% and the South was down 26%.

Here’s what Bob said about the current housing market:

He still doesn’t see “much light at the end of the tunnel” in the housing malaise.

On Wednesday, Toll Brothers said home building revenue fell by 22 percent in the first quarter, its seventh consecutive quarterly decline. Toll said that despite historically low mortgage rates and falling home prices, a slowing economy could be spooking buyers.

“Buyers seem to be hiding,” Toll said. “The market’s problem is a lack of confidence, not just regarding the direction of home prices, but … the overall economy.”

He usually has even more to say on the conference call - which won’t be until the end of the month.

Bob Toll tells it like it is. For several quarters he has been saying he sees no bottom to the housing bust.

Much like Chambers said “things were cloudy” quarter after quarter for seemingly forever- eventually Cisco saw the sun.

Eventually.

Toll Brothers will too. Question is: when?