The market for luxury homes isn’t as bad as it appears, Robert Toll, CEO of Toll Brothers told CNBC.
“I guess the luxury end isn’t dead as it’s been observed to be," Toll said in a taped interview. "The information from today is more indicative than anecdotal...It could be that this market follows the fortunes of the general public that’s invested—the stock market is going up.”
The home builder said earlier Wednesday that quarterly net signed contracts had increased for the first time in four yearsas home buyers appeared more confident and less concerned about prices. The company said preliminary results for the third quarter ended July 31 showed a 42 percent drop in homebuilding revenue to $461.3 million.
The number of housing foreclosures will start to narrow and the company does not have an inclination to compete with them, said Toll. Additionally, he said the company's cancellation rates are close to reaching its normal levels.
“We’re almost back to a normal cancellation rate and the reason is, you’re seeing a different kind of buyer,” he said. “The cancellations come out of people who were speculators in the market…that’s been supplanted pretty strongly by buyers who were for real.”
In terms of the economic situation, Toll said the economy bottomed 2 to 3 months ago, indicating that the homebuilders market is going to be better both in short and long-term.
“If we are lucky enough not to have a ‘W-shaped’ recovery, it would seem to us that we might be on the way up now,” he said. “Our pricing has been going up in the last few weeks—the incentives are being taken down. Some margins are increasing. That’s after all, the strongest sign of all of what the market’s doing.”
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