Beazer Homes In Trouble

Here we go again. Beazer Homes Inc., one of the top U.S. homebuilders, announced that cancellations nearly doubled in its fiscal fourth quarter to 68% from the previous quarter. Whoa, this is what I call troubled business. With prices dropping absolutely everywhere and record high inventory of unsold homes on the market, it’s only natural that buyers will cancel their orders, even if it means losing a deposit of tens of thousands of dollars. Brace yourself, this company is headed for more turmoil, if not insolvency. This is sad, and Beazer is not the only homebuilder in trouble. In fact, they’re all in trouble, and the situation is unlikely to improve in the near future.

Furthermore, an internal investigation at Beazer found violations of federal housing regulations and accounting errors, which means that the homebuilder will be restating financial results dating back to 2004, no good for its reputation and stock price. Fines and penalties from the government are highly likely as well. Fitch Ratings downgraded Beazer to BB-minus from BB, which is junk-bond area and essentially means the company’s creditworthiness is, well, somewhat shaky. Fitch also said further downgrades are possible.

And by the way, Lone Star completed the acquisition of Accredited Home Lenders Holding Co. Happy end to the soap opera.