I don’t have any real numbers from Hovnanian yet, but the spin abounds. The head of PR for the homebuilder’s Northeast region claims it was a huge success, thousands of people visited homes and one area at least sold out. Again, I have no real numbers, and Hovnanian says they’re not releasing any numbers until tomorrow earliest.
I have, however, received an email to the Realty Check from someone who attended the fire sale. I don’t want to paste it until I have a few more, but let’s just say this potential buyer wasn’t sold. Now I don’t want to get into the quality and pricing of Hovnanian in particular, but I would like to rant a bit on this particular sale.
I think it takes some big you-know-whats to get out there and tell the world that you as a major publicly traded US corporation are desperate enough to cut the cost of your product by 25%. Look, I know Bloomingdales has bigger sales, percentage-wise, but they’re selling bedding and handbags, not bricks and mortar. When the price point is as high as it is for a home, I think it’s pretty drastic to do what Hovnanian did without taking a hit to the viability of the company’s future.
I spoke to several analysts last Friday, while covering the Hovnanian story, and one said that Hovnanian simply hasn’t been managing cash flow as well as some of the other builders during this downturn, so it had to get serious to raise cash immediately. But it’s a short-term fix for one quarter arguably, and they’re going to continue to run into the same problems if they don’t start selling their homes at market prices.
I’ve always liked the company CEO, Ara Hovnanian, because he’s not afraid to get out there to the media and tell it like it is. The others tend to blame us for the entire housing downturn (does CNBC have a mortgage division?? Ok, I know GE does…), and then cower from our cameras when we ask them to mix it up. But Mr. Hovnanian also tends to be a bit too optimistic about the future of new home building, especially given his own back yard. What I really want to know is, was this event worth it? Fiscally and from a public relations standpoint. Is the cash they got this weekend equal to the value of the black eye the company has to take by telling the world of its desperation?
Also, if any of you readers attended a Hovnanian sale site over the weekend, please write in and give me your impressions. I’d like to post a bunch.