840216--3/15/2006--CALIFORNIA_COASTAL_COMMUNITIES

related topics

{condition, economic, financial}

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{operation, natural, condition}

{financial, litigation, operation}

{regulation, change, law}

{personnel, key, retain}

{loan, real, estate}

{customer, product, revenue}

Factors may affect our future results (Cautionary Statements Under the Private Securities Litigation Reform Act of 1995). Our homebuilding operations lack geographic diversification. Our business is cyclical and downward changes in economic conditions generally or in the market regions where we operate could decrease demand and pricing for new homes in these areas. Supply shortages and other risks related to the demand for skilled labor and building materials could increase costs and delay deliveries. Inflation may result in increased costs that we may not be able to recoup if demand declines. Tax law changes could make home ownership more expensive or less attractive. Severe weather conditions and natural disasters could delay deliveries, increase costs and decrease demand for new homes in affected areas. The homebuilding industry has not experienced an economic downturn in many years, which may have resulted in land and new homes being overvalued. When mortgage-financing costs are high, or as credit quality declines, customers may be unwilling or unable to purchase our homes. Some homebuyers may cancel their home purchases because the required deposits are small and generally refundable, if new home prices decline, interest rates increase or there is a downturn in the economy. Competition for homebuyers, labor and materials could reduce our deliveries or decrease our profitability. Slow or no growth initiatives have been or may be adopted in regions where we operate, which could adversely affect our ability to build or timely build in these areas. We may not be able to acquire land suitable for residential homebuilding at reasonable prices, which could increase our costs and reduce our revenues, earnings and margins. We are subject to substantial legal and regulatory requirements regarding the development of land, the homebuilding process and protection of the environment, and compliance with federal, state and local regulations related to our business could have substantial costs both in time and money, and some regulations could prohibit or restrict some homebuilding projects. Changing market conditions may adversely impact our ability to sell homes at expected prices, which could reduce our margins. Home prices and sales activity in the particular markets and regions in which we do business impact our results of operations because our business is concentrated in these markets. Product liability litigation and warranty claims that arise in the ordinary course of business may be costly, which could adversely affect our business. We could be hurt by the loss of key management personnel. Future terrorist attacks against the United States or increased domestic or international instability could have an adverse effect on our operations.

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840216--3/15/2006--CALIFORNIA_COASTAL_COMMUNITIES_INC