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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

or

[  ] Transition Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934

Commission file number 0-7616

I.R.S. Employer Identification Number 23-1739078

Avatar Holdings Inc.

(a Delaware Corporation)
201 Alhambra Circle
Coral Gables, Florida 33134
(305) 442-7000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   [X]        No   [   ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes   [X]        No   [   ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 8,400,900 shares of Avatar’s common stock ($1.00 par value) were outstanding as of May 9, 2003.

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AVATAR HOLDINGS INC. AND SUBSIDIARIES

INDEX

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AVATAR HOLDINGS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)

See notes to consolidated financial statements.

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AVATAR HOLDINGS INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Three months ended March 31, 2003 and 2002
(Unaudited)
(Dollars in thousands except per share data)

See notes to consolidated financial statements.

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AVATAR HOLDINGS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
For the Three months ended March 31, 2003 and 2002
(Dollars in Thousands)

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AVATAR HOLDINGS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
For the Three months ended March 31, 2003 and 2002
(Dollars in Thousands)

See notes to consolidated financial statements.

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AVATAR HOLDINGS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollars in thousands)

Basis of Statement Presentation and Summary of Significant Accounting Policies

     The consolidated balance sheets as of March 31, 2003 and December 31, 2002, and the related consolidated statements of operations for the three months ended March 31, 2003 and 2002 and the consolidated statements of cash flows for the three months ended March 31, 2003 and 2002 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statement presentation. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted only of normal recurring items. Interim results are not necessarily indicative of results for a full year.

     For a complete description of Avatar’s other accounting policies, refer to Avatar Holdings Inc.’s 2002 Annual Report on Form 10-K and the notes to Avatar’s consolidated financial statements included therein.

Reclassifications

     Certain 2002 financial statement items have been reclassified to conform to the 2003 presentation.

Land and Other Inventories

     Inventories consist of the following:

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Notes to Consolidated Financial Statements (Unaudited) – continued

Other Assets

     Other assets are summarized as follows:

Warranty Costs

     Generally, the homebuyer is provided a limited warranty that is underwritten through a third party warrantor. This limited warranty covers defects in materials and workmanship for the first year after closing and defects in electrical, plumbing and mechanical systems for the first two years after closing. This limited warranty also covers major structural defects for up to 10 years after closing. Avatar may have recourse against the subcontractors for claims relating to workmanship and materials. Estimated warranty costs are recorded at the time of closing.

     During the three months ended March 31, 2003 changes in the warranty accrual consisted of the following:

Earnings Per Share

     Avatar presents earnings per share in accordance with SFAS No. 128, “Earnings Per Share”. Earnings per share is computed based on the weighted average number of shares outstanding of 8,625,548, and 8,738,867 for the three months ended March 31, 2003 and 2002, respectively. Basic earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of Avatar.

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Notes to Consolidated Financial Statements (Unaudited) – continued

Earnings Per Share - continued

     Earnings per share amounts are calculated as follows for the three months ended March 31 (income and share amounts in thousands):

     In accordance with SFAS No. 128, the computation of earnings per share for 2003 and 2002 did not assume the conversion of the 7% Convertible Subordinated Notes (Notes) and the exercise of employee stock options because the effect of both is antidilutive. There is no difference between basic and diluted earnings per share for 2003 and 2002.

Repurchase and Exchange of Common Stock and Notes

     From January 1 through March 7, 2003, Avatar repurchased $5,225 of its common stock representing 229,758 shares and $7,585 principal amount of its Notes under its previous $20,000 authorization. On March 20, 2003, Avatar’s Board of Directors authorized the expenditure of up to $30,000 to purchase, from time to time, shares of its common stock and/or Notes in the open market, through privately negotiated transactions or otherwise, depending on market and business conditions and other factors. As of May 9, 2003 Avatar repurchased $3,650 of its common stock representing 150,000 shares, and the balance of the authorization is $26,350.

     During the first quarter of 2002, Avatar exchanged 193,000 shares of its common stock for Notes with a face value of $4,667. These transactions were not induced exchanges.

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Notes to Consolidated Financial Statements (Unaudited) – continued

Stock-Based Compensation

     Avatar has accounted for stock-based compensation using the intrinsic value based method in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations. For stock options granted, no compensation expense has been recognized because all stock options granted have exercise prices greater than the average market value of Avatar’s stock on the date of the grant. For restricted stock units granted, compensation expense of $344 and $306 has been accrued for the three months ended March 31, 2003 and 2002, respectively.

     Compensation cost of the stock options using the fair value method would have been $9 and $147 at March 31, 2003 and 2002, respectively. The following table summarizes pro forma income (loss) from continuing operations, net income (loss) and earnings per share in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation” for the three months ended March 31, 2003 and 2002:

Joint Venture

     In late-December 2002, Avatar entered into a joint venture (the “Joint Venture”) in which it has committed to fund up to $25,000 for the development of a 3.5 acre site and construction of a 38-story oceanfront condominium of up to 250 units in Hollywood, Florida. Avatar has a 50% voting interest in the Joint Venture. Accordingly Avatar is accounting for its investment in the Joint Venture under the equity method as it evaluates the impact of FASB Interpretation No. 46 (Interpretation No.46) “Consolidation of Variable Interest Entities” as discussed below. As of March 31, 2003, Avatar funded $12,920 of its commitment to fund the Joint Venture. As of May 12, 2003, Avatar funded an additional $2,496.

     The following is the Joint Venture’s balance sheet as of March 31, 2003:

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Notes to Consolidated Financial Statements (Unaudited) – continued

Joint Venture - continued

     Avatar’s share of the net loss from the Joint Venture is $304 and is included in real estate expenses in Avatar’s accompanying consolidated statements of operations for the three months ended March 31, 2003. The following is the Joint Venture’s statement of operations for the three months ended March 31, 2003:

Recently Issued Accounting Pronouncements

     In January 2003, the FASB issued Interpretation No. 46 (Interpretation No. 46), “Consolidation of Variable Interest Entities”. Interpretation No. 46 expands upon and strengthens Accounting Research Bulletin No. 51, “Consolidation of Financial Statements” that addresses when a company should include in its financial statements the assets, liabilities and activities of another entity. The Interpretation requires the consolidation of entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Interpretation No. 46 also requires expanded disclosures by the primary beneficiary, as defined, of a variable interest entity and by an enterprise that holds significant variable interest in a variable interest entity but is not the primary beneficiary. Interpretation No. 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. Avatar continues to evaluate the Joint Venture and the potential impact of Interpretation No. 46 and cannot conclude definitively whether consolidation of the Joint Venture will be required until this evaluation is complete.

Contingencies

     Avatar is involved in various pending litigation matters primarily arising in the normal course of its business. Although the outcome of these matters cannot be determined, management believes that the resolution thereof will not have a material effect on Avatar’s business or financial statements.

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Notes to Consolidated Financial Statements (Unaudited) – continued

Financial Information Relating To Industry Segments

     The following table summarizes Avatar’s information for reportable segments for the three months ended March 31, 2003 and 2002:

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands except per share data)

RESULTS OF OPERATIONS

     In the preparation of its financial statements, Avatar applies accounting principles generally accepted in the United States of America. The application of generally accepted accounting principles may require management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying results. For a description of Avatar’s accounting policies, refer to Avatar Holdings Inc.’s 2002 Annual Report on Form 10-K.

     The following discussion of Avatar’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Form 10-Q.

     Data from primary residential and active adult communities homebuilding operations for the three months ended March 31, 2003 and 2002 is summarized as follows:

     Results for Avatar’s active adult community, Solivita, included in the above table for the three months ended March 31, 2003 and 2002, are: 154 and 125 contracts written with an aggregate sales volume of $30,970 and $21,232, respectively; 60 and 82 homes closed, generating revenues from Solivita homebuilding operations of $10,906 and $12,987, respectively. Backlog at March 31, 2003 and 2002 totaled 446 units at $81,655 and 229 units at $38,746, respectively.

     Net income (loss) for the three months ended March 31, 2003 and 2002 was $2,022 or $0.23 per share and ($1,705) or ($0.20) per share, respectively. The increase in net income for the three months ended March 31, 2003, as compared to the same period in 2002, was primarily attributable to an increase in real estate operating results, partially mitigated by a decrease in interest income and an increase in general and administrative expenses.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands except per share data) – continued

RESULTS OF OPERATIONS - continued

     Real estate revenues for the three months ended March 31, 2003 increased $15,164 or 44.3% when compared to the same period in 2002. The increase in real estate revenues is generally a result of increased revenues generated from primary residential communities operations and commercial and industrial land sales, partially mitigated by reduced active adult community operations. Revenues from primary residential communities increased $13,542 or 72.5% for the three months ended March 31, 2003 due to increased closings at Poinciana, Harbor Islands and Rio Rico. Revenues from active adult community operations for the three months ended March 31, 2003 decreased $1,850 or 13.5% due primarily to reduced closings when compared to the same period in 2002.

     Real estate expenses for the three months ended March 31, 2003 increased $7,776 or 22.3% when compared to the same period in 2002. The increase in real estate expenses for the three months ended March 31, 2003 when compared to the same period in 2002 is generally a result of increased expenses from primary residential communities operations associated with the increased closings at Poinciana, Harbor Islands and Rio Rico, partially mitigated by reduced expenses from active adult community operations.

     Interest income for the three months ended March 31, 2003 decreased $336 or 41.6% when compared to the same period in 2002. This decrease is attributed to lower interest rates and lower interest income earned on declining principal balances of contracts receivable.

     General and administrative expenses for the three months ended March 31, 2003 increased $917 or 35.5% as compared to the same period in 2002. The increase is primarily due to increases in executive compensation, professional fees and insurance.

     Income tax expense (benefit) was provided for at an effective tax rate of 35.3% and 39.7% for the three months ended March 31, 2003 and 2002, respectively.

LIQUIDITY AND CAPITAL RESOURCES

     Avatar’s real estate business strategy is designed to capitalize on its distinct competitive advantages and emphasize higher profit margin businesses by concentrating on the development and management of active adult communities, semi-custom and mid-priced homes and communities, and commercial and industrial properties in its existing community developments. Avatar also seeks to identify additional sites that are suitable for development consistent with its business strategy and anticipates that it will acquire or develop them directly or through joint venture, partnership or management arrangements. Avatar’s primary business activities are capital intensive in nature. Significant capital resources are required to finance planned primary residential and active adult communities, homebuilding construction in process, community infrastructure, selling expenses and working capital needs, including funding of debt service requirements, operating deficits and the carrying cost of land.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands except per share data) – continued

     Subsequent to the issuance of the Notes in 1998 and sales of substantial non-core assets in 1999, Avatar has funded its operations through internal sources. From time to time Avatar invests some portion of its cash in marketable securities or considers potential business opportunities that may require use of available cash resources.

     Avatar’s operating cash flows fluctuate relative to the status of development within its existing communities, development expenditures for new and/or planned communities or other real estate activities and sales of various homebuilding product lines within those communities. From time to time Avatar has generated, and may continue to generate, additional cash flow through sales of non-core assets.

     From January 1 through March 7, 2003, Avatar repurchased $5,225 of its common stock representing 229,758 shares and $7,585 principal amount of its Notes under its previous $20,000 authorization. On March 20, 2003, Avatar’s Board of Directors authorized the expenditure of up to $30,000 to purchase, from time to time, shares of its common stock and/or Notes in the open market, through privately negotiated transactions or otherwise, depending on market and business conditions and other factors. As of May 9, 2003 Avatar repurchased $3,650 of its common stock representing 150,000 shares, and the balance of the authorization is $26,350.

     As of March 31, 2003, cash and cash equivalents totaled approximately $99,419. We anticipate that after expenditures for completion of development of Solivita, expenditures related to development at Harbor Islands, development expenses at Bellalago and Cory Lake Isles and the balance of our commitment to fund development and construction of Ocean Palms, we will have sufficient liquidity to enable us to realize opportunities on existing landholdings. However, depending upon new real estate or other business opportunities, available liquidity may not be sufficient to fund new ventures, develop and realize the potential of our existing landholdings, fund operating activities and repay debt. Therefore, we are considering financing alternatives which may include the use of real estate assets as collateral for future borrowings.

     For the three months ended March 31, 2003, net cash used in operating activities amounted to $6,207, primarily as a result of increases in other assets of $13,401 and inventories of $1,296, partially offset by an increase in accounts payable and accrued and other liabilities of $6,260. Net cash used in investing activities of $403 resulted from investments in property, plant and equipment. Net cash used in financing activities of $12,810 resulted from the repurchase of $7,585 of Notes and the purchase of $5,225 of treasury stock.

     For the three months ended March 31, 2002, net cash used in operating activities amounted to $6,167, primarily as a result of an increase in inventories of $3,814 and receivables of $1,653, partially offset by an increase in accounts payable and accrued and other liabilities of $1,861. Net cash used in investing activities of $108 resulted from investments in property, plant and equipment. Net cash used in financing activities of $666 resulted from the repayment of notes payable.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands except per share data) — continued

FORWARD – LOOKING STATEMENTS

     Certain of the matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: the successful implementation of Avatar’s business strategy; shifts in demographic trends affecting demand for active adult communities and other real estate development; the level of immigration and in-migration to Avatar’s regional market areas; international (in particular Latin America), national and local economic conditions and events, including employment levels, interest rates, consumer confidence, the availability of mortgage financing and demand for new and existing housing; access to future financing; geopolitical risks; competition; changes in, or the failure or inability to comply with, government regulations; and other factors as are described in greater detail in Avatar’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2002.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

     There have been no material changes in Avatar’s market risk during the three months ended March 31, 2003. For additional information regarding Avatar’s market risk, refer to Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in Avatar’s 2002 Annual Report on Form 10-K.

Item 4. Controls and Procedures

     a)     Based on their evaluation of Avatar’s disclosure controls and procedures conducted within 90 days of the date of filing this report on Form 10-Q, Avatar’s principal executive officer and principal financial officer have concluded that, as of the date of their evaluation, Avatar’s disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) promulgated under the Securities Exchange Act of 1934, as amended) are effective.

     b)     There have been no significant changes in Avatar’s internal controls or in other factors that could significantly affect the internal controls subsequent to the date of their evaluation in connection with the preparation of this quarterly report on Form 10-Q.

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PART II — OTHER INFORMATION

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Report on Form 8-K

		No reports on Form 8-K were filed during the quarter ended March 31, 2003.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gerald D. Kelfer, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Avatar Holdings Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls;

6.     The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles L. McNairy, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Avatar Holdings Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls;

6.     The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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Exhibit Index

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Exhibit Index - continued

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