Challenging times for luxury builder Toll Bros. - Pittsburgh Business Times:

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couldn’t have predicted the sour market when it startedc planningthe 87-unit development, calledd Estates at Halfmoon. The model home openedc in mid-January, giving prospective buyerz a taste for what Toll of Horsham, Pa., does with 3,40 square feet of living space. Priced at the model features a 20-foot vaulted ceilinyg above thefamily room, gourmet kitchen with Energu Star-rated appliances, huge master bedroom whirlpool bath, walk-out basement, hardwood floors, crown molding, chair rails, four bedroom and a three-car garage. On a recent day, contractorzs were hydro-seeding the lawn near the whits vinyl fence surroundingthe property, whichn measures about two-thirds of an acre.
Many treed have been preserved onthe 130-acre parcel off Vosburghj Road where the homes will be built. A 15-minutee drive from Northway Exit 8A, the planne development is the sortof luxury-meets-convenience community that was in high demand during the real estate boom yeara of the early 2000s. There is stilk demand today, but it has lessened compared to 2006, the peak year for local home sales. That year, 511 homes costing more than $450,00 0 sold in the region, compared to 390 homes last a 23percent decline, accordingt to the . The overall market is also weaker.
Total sales of new and existinv homes in the region fell 21 percentg in February compared to the year and the median price was down 5 to $176,000, according to GCAR. In Saratogw County, where Estates at Halfmoon is located, tota l sales were down 17 percentin February, and the medianm price fell 9 percent to Toll Brothers officials know they’re trying to sell a new brancd and product in the region at a time when people are concernesd about their jobs and the overalkl economy. Many buyers are also reluctanyt to sell their existing homes today becausethey don’t believe they will get as much as the propert is worth.
The company touts the quality of its homesd as its mainselling point. Some local contractores declined to work for Toll becausee of the rigorous stipulations inits contracts, said Jonathahn Hove, senior project manager. Every few someone from the corporate office visits all the constructionb sites to do athorough inspection. They checlk every detail, from the craftsmanship of the crown molding towhether there’ s any dust on the boiler in the basement, he The model home in Halfmoon has drawnn an average of 20 visitors per week sinces it opened, Hove said. So far, three salea contracts have been signed.
The company expects it will take four yeare to sell and build all of the Toll Brothers sees the Capital Regiomn as a safe harbor inthe nation’w stormy housing market. Althoughu fewer homes are selling median prices fell by only 1 percenlast year. “There are markets in the Southwes that have seen a 40 percenft depreciationin values,” Hove said. Toll Brotherd (NYSE: TOL) has been hit hard by the The company posted its firstg loss infiscal 2008, $297.8 million, aftert 22 consecutive profitable years. The slowee pace of sales has forced Toll Brotheres to cut the number ofdevelopmentsa it’s building.
The company expects to end the 2009 fiscalo year with about255 developments, down 22 percenty from a peak of 325 developments in the seconf quarter of 2007. Daniel Oppenheim of said in an analyst’s repory that the sales environment in keymarkets “remainsd challenged” for Toll Brothers and that a recent 3.99 percent mortgage promotion didn’y spur many sales.