From the Record:
We’ve come a long way since the giddy heights of 2005, when the real estate market peaked.
Homeowners have seen their once-spiraling house values plummet back to earth. Sellers dreaming of cashing in on their ever-increasing investment have had to reduce their expectations along with their asking prices. And the recent subprime crisis, coupled with the rising number of foreclosures, has made the future even more murky.
These are challenging times for the housing industry as well. One New Jersey builder, Kara Homes, has filed for bankruptcy, and others are reporting losses. Red Bank-based Hovnanian Enterprises Inc., the nation’s sixth-largest home builder, has lost a total of more than $174 million for the past two quarters, its first losses in at least nine years.
Ara Hovnanian, the company’s 49-year-old CEO, has been there through it all. The publicly held company was founded by his father in 1959, and he joined it 20 years later after receiving his bachelor’s and MBA from the Wharton School of the University of Pennsylvania.
Q. How’s the outlook for housing for the rest of 2007?
My response is different today than it would have been a couple of months ago. Had you asked in January or February, I would have said it really looks like the market is stabilizing. Then this whole issue regarding the subprime mortgage industry came out, and that caused sales to dip. Now my prognosis is not as optimistic as it was. Obviously, the industry is still selling a lot of houses, but the recovery and spring bounce-back we had been hoping for seems to be stalled.
Q. When do you think things might start looking better?
My guess is at least a few quarters. I think we’re right near the bottom of the marketplace. I think it is likely to stay flat along the bottom for two to three quarters. The market needs to work off some of the excess inventory of housing.
Q. So we’re talking about the beginning of 2008?
That’s probably a reasonable guess at this point.
. How is demand for your houses in New Jersey?
New Jersey is not one of our best states today; it’s not one of our worst states. It’s somewhere in the middle. The things that are very close to New York City are doing well. As you get further out, it gets less of the benefit of New York City. New York City is driven a lot by the financial industry, and they’ve had a fabulous couple of years.