10-Q: HOMEFED CORP – MarketWatch

As of March 31, 2009, the aggregate balance of deferred revenue for all real estate sales was $3,700,000, which the Company estimates will be substantially recognized as revenue during 2009. The Company estimates that it will spend approximately $1,100,000 to complete the required improvements, including costs related to common areas. The Company will recognize revenues previously deferred and the related cost of sales in its statements of operations as the improvements are completed under the percentage of completion method of accounting.

As of March 31, 2009, the remaining land at the San Elijo Hills project to be developed and sold or leased consisted of the following:

 Single family lots to be developed and sold        441
 Multi-family units                                 171
 Square footage of commercial space              60,000

As more fully discussed in the 2008 10-K, residential property sales volume, prices and new building starts have declined significantly in many U.S. markets, including California and the greater San Diego region, which have negatively affected sales and profits at the San Elijo Hills project. The slowdown in residential sales has been exacerbated by the turmoil in the mortgage lending and credit markets, which has resulted in stricter lending standards and reduced liquidity for prospective home buyers. Sales of new homes and re-sales of existing homes have declined substantially from the early years of the project’s development; there have been no residential lot sales at the San Elijo Hills project since June 2006.

The Company has substantially completed development of its remaining residential single family lots at the San Elijo Hills project, many of which are “premium” lots which are expected to command premium prices if, and when, the market recovers. The Company is not actively soliciting bids for its remaining inventory of single family lots and is unable to predict when local residential real estate market conditions might improve. The Company believes that by exercising patience and waiting for market conditions to improve it can best maximize shareholder value with its remaining residential lot inventory. However, on an ongoing basis the Company evaluates the local real estate market and economic conditions in general, and updates its expectations of future market conditions as it continues to assess the best time to market its remaining residential lot inventory for sale.