Last year I spoke to some builders who were concerned about a shortage of lots in prime areas. Here are two deals from Carolyn Said at the San Francisco Chronicle: Toll Brothers buys Shapell’s homebuilding business
[H]ome builder Toll Brothers agreed to pay Shapell Industries $1.6 billion for its homebuilding business, primarily consisting of 5,200 sites in affluent coastal California markets, including the Bay Area, Los Angeles, Orange County and Carlsbad.
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More than 97 percent of the Shapell sites are entitled, meaning they have received local permits for construction to proceed. … “The key word there is ‘entitlement,’ ” said Christopher Thornberg, principal of Beacon Economics.
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In the Bay Area, the deal includes 1,500 lots at Shapell’s Gale Ranch master-planned community in San Ramon, 350 lots at Alamo Creek in Danville, and a few dozen lots in Gilroy, San Jose and Orinda. In Southern California, Porter Ranch in Los Angeles with more than 1,700 lots is the largest community included.
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In another major deal this week, Tri Pointe Homes Inc. of Irvine (Orange County) bought Weyerhaeuser Corp.’s homebuilding division for $2.7 billion. That purchase included 27,000 lots, about 16,000 of them in California, primarily southern California.
“Entitlements” are valuable! I expect these builders will ramp up production fairly quickly.
Friday:
• At 8:30 AM ET, the Employment Report for October. The consensus is for an increase of 120,000 non-farm payroll jobs in October, down from the 148,000 non-farm payroll jobs added in September. The consensus is for the unemployment rate to increase to 7.3% in October, although the rate could spike higher to 7.4% or 7.5% due to the government shutdown based on the BLS method.
There will probably also be a significant increase in the number of people working part time for economic reasons. Any sharp increase in the unemployment rate – and part time for economic reasons – due to the shutdown should be reversed in the November report.
• Also at 8:30 AM, the Personal Income and Outlays report for October. The consensus is for a 0.3% increase in personal income, and for a 0.2% increase in personal spending. And for the Core PCE price index to increase 0.1%.
• At 10:00 AM, the Reuter’s/University of Michigan’s Consumer sentiment index (preliminary for November). The consensus is for a reading of 75.0, up from 73.2 in October.