It’s not often that a top executive acknowledges that his company did a deal at the worst possible moment. But such rare candor was evident when Larry Sorsby, the chief financial officer of Hovnanian Enterprises, was asked at Monday’s Reuters Global Real Estate Summit about a costly move the company made into the market in Fort Myers-Cape Coral area of Florida in August 2005. “We were in the perfect timing in terms of ‘how not to do it’ because we bought in at the peak in a market that instantly collapsed upon our acquisition,” he said. The deal was Red Bank, New Jersey-based Hovnanian’s purchase of First Home Builders, a privately owned homebuilder that was the biggest in that part of Florida, for which it paid an undisclosed sum. 

The Fort Myers market, according to Sorsby, is not only by far the worst housing market that Hovnanian is in but perhaps “the worst housing market in the country.” He said that the company, the sixth-largest U.S. homebuilder, has had to mark down the value of finished lots of land it bought in 2005 to around $20,000 each from $80,000-$85,000. The company has also been cutting the price of single family homes it has built to around $225,000 from about $325,000. “The market has just dried up,” he said.