St. Joe announced a $32 million profit for the first quarter of 2008. The chief executive Peter Rummell said their new task is to "retrain" buyers that home purchases can't be deferred.Florida's largest private landowner, St. Joe and Company, suggests that the real estate market may have bottomed. The company owns abour 638,000 acres in the state.
St. Joe announced a $32 million profit for the first quarter of 2008. The chief executive Peter Rummell said their new task is to "retrain" buyers that home purchases can't be deferred.
The company has weathered the housing slump by selling off backwoods parcels that were deemed as "nonstrategic." In the first three months of 2008 the company made $91 million on the sale of 57,435 acres to sportsmen, investors, conservationists and other buyers.
Peter Rummell said home prices are "starting to firm" after deteriorating 20 to 30 percent from their peaks in August 2005. The inventory of homes for sale has stopped rising in St. Joe markets, hinting at a slow recovery.
I have to say that the comments from the CEO that the company has to "retrain" buyers that home purchases cannot be deferred are laughable. The U.S. consumer for the most part is tapped out - loaded with debt - and now facing job losses. We as a country have been consuming more than we produce and now the gig is up. It's time to pay down debt, consume less, and start saving more.
People are deferring purchases of much smaller and less expensive items than new homes. And now with the economy slipping further more signs of job weakness are showing up, which will make it hard for people to meet their debt obligations, let alone pay for higher gas and food costs.
The soon-to-be departing Mr. Rummel can try and "retrain" all the people he wants, but it won't amount to anything for those who don't have the cash.
ToddinFL
St. Joe also exited the home building business altogether (which was a money loser), sold an additional 17 million shares to and then used it to pay down debt, and eliminated the 2% dividend they were paying previously.
Until the market turns around, they won't have much in the way of a revenue driver. But at least they won't have any debt to service, which in a tightening credit market is HUGE. St. Joe management has quickly taken the necessary steps which will allow them to survive this downturn.
Any real estate and home building companies that have high debt to equity ratios will get creamed in the next 12 months, IMO.