KB Homes finalizes numbers, Indymac warn

KB Homes has finalized its writedowns ($255 million) and walkaways ($88 million). Indymac lowered its forecast from $1.35 to $0.97, this is nearly so interesting as some of the reasons they gave for the lowered earnings:

• "An increase in credit costs related to the loan loss provision, secondary market reserve, and marking-to-market delinquent loans held-for-sale and residuals and non-investment grade securities"- Setting aside more money for bad loans and selling bad loans "at market" (presumably for a even greater loss).
• "A reduction in net interest margin related to loans held-for-sale and the thrift investment portfolio due to yield curve inversion and the fact that our loan production mix shifted more toward fixed rate and intermediate term fixed rate loans;" - Making less per loans due to interest rates and the fact that people aren't nearly as willing to take out those more profitable short term ARMs

Credit tightening will be THE significant factor in any downturn, so it watching the lenders is always a good step for market directions. Once they start taking losses the easy money spigot will be shut off.

Simi Valley "hot" housing market.

Perusing the website of Runkle Canyon in Simi Valley it sure sounds like a wonderful housing development soon to come to Simi Valley. With such a "glowing" review, it is hard to see how anyone could have a problem with such a development. Well it turns out that back in 1959 the Santa Susana Field Laboratory nuclear reactor had itself a meltdown. Now Simi Valley residents and others are claiming the ground is contaminated with strontium-90 (among other things) and any development would cause these contaminants to be released. The Department of Energy says everything is fine, but the California Department of Health Services said ""found that, despite testing irregularities, the land was still reading high for Sr-90". Recently some work has been going on up in the Canyon but Mayor Paul Miller insists it isn't for development but instead for taking more soil samples.


The entrance for the Runkle Canyon development is at the very south end of Sequoia Avenue, it currently has a guard sitting at its entrance 24/7. Here is a picture of the entrance from earlier today:



It will be interesting to see if/when this development goes forward if this information of this incident will be disclosed to potential home buyers. You can find the plans for Runkle Canyon here. KB Homes and Lennar will be the developers of this project.