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

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couldn’t have predicted the sour market when it startec planningthe 87-unit development, called Estates at The model home opened in giving prospective buyers a taste for what Toll Brothers, of Pa., does with 3,400 square feet of living space. Priced at the model features a 20-foot vaulted ceiling above the family gourmet kitchen withEnergy Star-rated huge master bedroom closet, whirlpool bath, walk-out hardwood floors, crown molding, chair rails, four bedrooms and a three-ca r garage. On a recent day, contractors were hydro-seeding the lawn near the white vinyl fence surroundingthe property, which measure about two-thirds of an acre.
Many trees have been preserved onthe 130-acrre parcel off Vosburgh Road where the homes will be built. A 15-minute drivee from Northway Exit 8A, the planned developmeng is the sortof luxury-meets-convenience communityu that was in high demand during the real estate boom yearsa of the early 2000s. There is still demand today, but it has lessened comparedto 2006, the peak year for local home That year, 511 homes costinf more than $450,000 sold in the region, compared to 390 homes last year, a 23 percent decline, according to the . The overalp market is also weaker.
Total sale of new and existing homes in the region fell 21 percent in February compared to the year and the median price was down5 percent, to according to GCAR. In Saratogaz County, where Estates at Halfmoon is located, total sales were down 17 percengin February, and the median prics fell 9 percent to $230,000. Toll Brotherd officials know they’re trying to sell a new brand and productg in the region at a time when peoplwe are concerned about their jobs and the overall Many buyers are also reluctant to sell theird existing homes today becausethey don’t believe they will get as much as the properth is worth.
The company touts the qualit y of its homes as its mainsellinf point. Some local contractors declineds to work for Toll becaused of the rigorous stipulations inits contracts, said Jonathan Hove, senior project manager. Every few someone from the corporate office visits all the constructionm sites to do athoroughy inspection. They check every detail, from the craftsmanshi p of the crown molding towhether there’s any dust on the boiler in the basement, he said. The model home in Halfmoonj has drawn an average of 20 visitors per week sincdit opened, Hove said. So far, threr sales contracts have been signed.
The compangy expects it will take four years to sell and buildc all ofthe units. Toll Brothers sees the Capital Regionm as a safe harbor inthe nation’ s stormy housing market. Although fewer homes are sellingb locally, median prices fell by only 1 percentlast “There are markets in the Southwest that have seen a 40 percentr depreciation in values,” Hove said. Toll Brotherds (NYSE: TOL) has been hit hard by the The company posted its first loss infiscal 2008, $297.8 after 22 consecutive profitable years. The slowere pace of sales has forced Toll Brothers to cut the numbefr ofdevelopments it’s building.
The company expects to end the 2009 fiscal year with about255 developments, down 22 percent from a peak of 325 developmentes in the second quarter of 2007. Danie l Oppenheim of said in an analyst’es report that the sales environment in keymarketz “remains challenged” for Toll Brothers and that a recentg 3.99 percent mortgage promotion didn’t spur many sales.