The luxury home builder Toll Brothers had some good news for shareholders today. Revenues for the quarter ending in October shot up by 29 percent. Strong demand, especially on the West Coast, boosted the company’s sales.
This past year Toll Brothers has been aggressively expanding on the West Coast. In southern California alone it’s developing five new communities.
But the strong quarterly showing from Toll may not say much about a wider housing market recovery. Toll focuses on the higher end of the homebuilding market, something that many homebuilders have been doing the past few years.
“Homebuilders have been serving the part of the market that’s been the healthiest, which has been older, move-up buyers that have home equity, that have more wealth,” says Robert Dietz, an economist with the National Association of Homebuilders.
That trend has been reinforced by lenders chasing wealthy buyers, offering them surprisingly low rates on large “jumbo” mortgages. The rates, in some cases, are even lower than those for standard loans. Housing economist Brad Hunter at Metrostudy hopes by next year, there will be signs of a broader recovery in the housing market.
“Our take is that rents are getting so high and job formations are getting better,” says Hunter.
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