Thursday, January 31, 2008

No More Builder Incentives?

Read this snippet from a transcript of builder Centex’s recent conference call with Wall Street analysts (Thank you, Seeking Alpha!) …

Alex Barron - Agency Trading: Hey, guys. Wanted to ask you questions on this transparent pricing strategy. I guess, I am just trying to understand it seems to be obviously working and it seems pretty logical so I am trying to figure out why do you suppose other builders aren’t copying what you are doing and if they did what would you do compared to that or relative to that?

Timothy Eller - Chairman and Chief Executive Officer: Well I don’t know the answer to that. I would speculate that from standpoint of some private builders they may just not have the ability to do that. And based on the further question, what we are seeing is increasingly more and more of the public builders doing… doing just that because it’s it really is the reality of where the mortgage markets are today.

Cathy R. Smith - Executive Vice President and Chief Financial Officer: And then that’s a good thing we compete on community locations in our product. And that’s a good thing for us.

Alex Barron - Agency Trading: But, basically what your saying is rather than, let’s say, as an example instead of selling at $250,000 home with $50,000 incentive, all you doing is doing that your are selling it for $200,000. Is that basically the idea?

Timothy Eller - Chairman and Chief Executive Officer: That’s the idea. That’s basically… that… it’s back, its back to the way it used to be.

Centex is a nationwide builder currently selling homes in Orange (pictured at right.) To read the rest of the transcript, CLICK HERE

No comments: