UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1998

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ____ to ___

Commission File No. 1-12434

M/I SCHOTTENSTEIN HOMES, INC.
-----------------------------
(Exact name of registrant as specified in its charter)

Ohio 31-1210837
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

3 Easton Oval, Suite 500
Columbus, Ohio 43219
--------------------
(Address of principal executive offices)(zip code)
Registrant's telephone number, including area code: (614) 418-8000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Name of Each Exchange on
Title of Each Class Which Registered
---------------------------- --------------------------
Common Stock, par value $.01 New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None
-----------------
(Title of Class)

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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

As of February 26, 1999, the aggregate market value of voting common
stock held by non-affiliates of the registrant (6,036,161 shares) was
approximately $104,501,000. The number of shares of common stock of M/I
Schottenstein Homes, Inc., outstanding on February 26, 1999 was 8,813,061.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Shareholders for the year ended December 31,
1998 (Part I, II and IV)
Portions of the registrant's Definitive Proxy Statement for the 1999 Annual
Meeting of Shareholders filed pursuant to Regulation 14A (Part III)
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PART I

ITEM 1. BUSINESS

COMPANY

M/I Schottenstein Homes, Inc. and its subsidiaries (the "Company") is
one of the nation's leading homebuilders. The Company sells and constructs
single-family homes to the entry level, move-up and empty nester buyer under the
Horizon, M/I Homes and Showcase Homes tradenames. In 1997, the latest year for
which information is available, the Company was the eighteenth largest U.S.
single-family homebuilder (based on total revenue) as ranked by Builder
Magazine. The Company sells its homes in eleven geographic markets including
Columbus and Cincinnati, Ohio; Tampa, Orlando and Palm Beach County, Florida;
Charlotte and Raleigh, North Carolina; Indianapolis, Indiana; Virginia, Maryland
and Phoenix, Arizona. The Company currently offers a number of distinct lines of
single-family homes ranging in base sales price from approximately $80,000 to
$930,000 with an average sales price in 1998 of $194,000. During the year ended
December 31, 1998, the Company delivered 3,629 homes and had revenues of $740.0
million and net income of $27.7 million, the highest in the Company's history.
M/I Schottenstein Homes, Inc. was reincorporated in Ohio in 1993. Prior to that
date, the Company was a Delaware Corporation. M/I Schottenstein Homes, Inc. was
incorporated, through predecessor entities, in 1973 and commenced its
homebuilding activities in 1976.

The Company is the leading homebuilder in the Columbus, Ohio market,
based on revenue, and has been the number one builder of single-family detached
homes in this market for each of the past ten years. In addition, the Company is
currently one of the top ten homebuilders in a majority of its other markets and
believes it is well positioned to further penetrate these markets. The Company's
growth strategy targets both product line expansion and geographical
diversification. With respect to geographical diversification, the Company has
expanded into new markets through the opening of new divisions rather than
through acquisitions. To complement its M/I Homes ($125,000 - $240,000 base
sales price range) and Showcase Homes ($190,000 - $395,000 base sales price
range) lines, the affordably priced Horizon line ($105,000 - $155,000 base sales
price range), which appeals to the first time home buyer, was introduced to the
Columbus market in 1993 and has been very successful. The Company has expanded
this entry level product into a majority of its other markets.

The Company believes it distinguishes itself from competitors by
offering homes located in selective areas that have a higher level of design and
construction quality within a given price range and by providing superior
customer service. The Company also believes that by offering homes at a variety
of price points, it attracts a wide range of buyers, many of whom are existing
M/I homeowners. The Company supports its homebuilding operations by providing
mortgage financing services through M/I Financial, and providing title-related
services through joint ventures.

The Company's business strategy emphasizes the following key
objectives:

Focus on profitability. The Company focuses on improving profitability
while maintaining the high quality of its homes and customer service. The
Company focuses on gross margins by stressing the features, benefits, quality
and design of its homes during the sale process and by minimizing speculative
building. The Company also value engineers its homes by working with its
subcontractors and suppliers to provide attractive home features while
minimizing raw material and construction costs.

Maintain conservative and selective land policies. The Company's
profitability is largely dependent on the quality of its subdivision locations;
therefore, the Company focuses on locating and controlling land in the most
desirable areas of its markets. The Company is conservative in its land
acquisition policies and only purchases land already zoned and serviceable by
utilities. The Company seeks to control a four- to five-year supply of land in
each of its markets. The Company believes its expertise in developing land gives
it a competitive advantage in controlling attractive locations at competitive
costs, and, as a result, developed approximately 70% of its communities as of
December 31, 1998. At December 31, 1998, the company owned 7,977 lots and
controlled an additional 11,432 lots pursuant to contracts.

Maintain or increase market position in current markets. The Company
has been the leading builder of single-family detached homes in the Columbus
market for each of the last ten years. The Company seeks to maintain its leading
position by continuing to provide high quality homes and superior customer
service. The Company believes there are significant opportunities to profitably
expand in each of its other markets, by increasing product offerings,

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continuing to acquire land in desirable locations and constructing and selling
homes with the same commitment to customer service that has accounted for the
Company's historical success. In addition, the Company continues to explore
expanding into new markets through either internal growth (such as the expansion
into Phoenix, Arizona late in 1996) or acquisitions.

Provide superior customer service. The overriding Company philosophy is
to provide superior service to its homeowners. The Company offers a wide array
of functional and innovative designs and involves the homeowner in virtually
every phase of its operations from the selling process through construction,
closing and service after delivery. The Company's selling process focuses on the
homes' features, benefits, quality and design as opposed to merely price and
square footage. In certain markets, the Company utilizes design centers to
enhance the selling process and increase the sale of optional features which
typically carry higher margins. In addition, the Company assists many of its
customers with financing and provides attractive warranties. As a result, based
on the responses to the Company's customer questionnaire, for the eighth year in
a row, more than 95% of the Company's customers would recommend the Company to a
potential buyer.

Offer product breadth and innovative design. The Company devotes
significant resources to the research and design of its homes to better meet the
needs of its customers. The Company offers a number of distinct product lines
and more than 350 different floor plans and elevations. In addition to providing
customers with a wide variety of choices, the Company believes it offers a
higher level of design and construction quality within a given price range. The
Company has also introduced and utilized innovative design concepts, such as
themed communities, rear garages, rear alley access, porches and parks.

Maintain decentralized operations with experienced management. The
Company believes that each of its markets has unique characteristics and,
therefore, is managed locally by dedicated, on-site personnel. Each of the
Company's managers possesses intimate knowledge of his or her particular market
and is encouraged to be entrepreneurial in order to best meet the needs of such
market. The Company's incentive compensation structure rewards each manager
based on financial performance, income growth and customer satisfaction.

SALES AND MARKETING

The Company markets and sells its homes under the Horizon, M/I and
Showcase tradenames. Home sales are conducted by the Company's own sales
personnel in on-site sales offices in furnished model homes. Each sales
consultant is trained and equipped to fully explain the features and benefits of
the Company's homes, to determine which home best suits each customer's needs,
to explain the construction process and to assist the customer in choosing the
best financing. Significant attention is given to the training and re-training
of all sales personnel to assure the highest levels of professionalism and
product knowledge. Overall, the Company currently employs more than 120 sales
consultants and operates approximately 150 model homes.

The Company advertises in newspapers and magazines, by direct mail, on
billboards and on radio and television, although the particular marketing medium
used differs from division to division based upon marketing demographics and
other competitive factors. The Company has increased significantly its
advertising on the world wide web through expansion of its web site at
www.mihomes.com. In addition, the Company welcomes independent broker
participation and, from time to time, utilizes various promotions and sales
incentives to attract interest from these brokers. The Company's commitment to
quality design and construction and reputation for customer service has resulted
in a strong referral base and numerous repeat buyers.

To enhance the selling process, the Company operates design centers in
the Cincinnati, Columbus, and most recently, Tampa markets. The design centers
are staffed with interior design specialists who assist customers in selecting
interior and exterior colors as well as standard options and upgrades. In its
other markets, the color selection and option/upgrade process is handled
directly by the Company's sales consultants. The Company also offers financing
to its customers through its wholly-owned subsidiary, M/I Financial, which now
has branches in all markets in which the Company operates except Virginia,
Maryland and Phoenix. M/I Financial originates loans primarily for purchasers of
the Company's homes. The loans are then sold, along with the majority of the
servicing rights, to outside mortgage lenders. The Company also provides
title-related services in a majority of its markets through joint ventures to
purchasers of its homes.

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The Company generally does not commence construction of a home until it
obtains a sales contract and preliminary oral advice from the customer's lender
that financing will be approved. However, in certain markets, contracts may be
accepted contingent upon the sale of an existing home, and construction is
authorized through a certain stage prior to satisfaction of that contingency. In
addition, in all divisions, a limited, strictly controlled number of "spec"
homes (i.e., homes started in the absence of an executed contract) are built in
order to permit construction and delivery of homes on an immediate-need basis
and to provide presentation of new products. In determining the number of spec
homes to be started, the Company has traditionally adopted what it believes to
be a very conservative approach, with the unit number determined after
consultation with the respective region and division presidents.

The Company's sales and marketing efforts are further enhanced by the
Company's inspection and warranty programs. Through these programs, the Company
offers a 2-year limited warranty on materials and workmanship and a 30-year
limited warranty against major structural defects. To increase the value of
these warranties, both are transferable in the event of the sale of the home.
Immediately prior to closing and again three months after a home is delivered,
the Company inspects each home with the customer to determine if any repairs are
required. At the customer's written request, the Company will also provide a
free 1-year inspection and again make necessary repairs. The Company passes
along to its customers all warranties provided by manufacturers or suppliers of
components installed in each home. The Company's warranty expense was
approximately 1.0% of total costs and expenses for each of the years ended
December 31, 1998, 1997 and 1996.

DESIGN AND CONSTRUCTION

The Company devotes significant resources to the research, design and
development of its homes in order to best meet the needs of the various home
buyers in housing markets in which the Company operates. Virtually all of the
Company's floor plans and elevations are designed by experienced and qualified
in-house professionals using modern computer-aided design technology. The
Company offers more than 350 different floor plans and elevations, which may
differ significantly from market to market.

The construction of each home is supervised by a construction
supervisor who reports to a production manager, both of whom are employees of
the Company. Customers are introduced to their construction supervisor prior to
commencement of home construction at a pre-construction "buyer/builder
conference." In addition to introducing customers to their construction
supervisor, the purpose of this conference is to review with the customers the
home plans and all relevant construction details and to explain the construction
process and schedule. Every customer is given a hard hat at the "buyer/builder
conference" as an open invitation to visit the site at any time during the
course of construction. The Company wants customers to become involved, to
better understand the construction of their home and to see the quality being
built into their home. All of this is part of the Company's philosophy to "put
the customer first" and enhance the total homebuilding experience.

Homes generally are constructed according to standardized designs and
meet applicable Federal Housing Authority ("FHA") and Veterans Administration
("VA") requirements. To allow maximum design flexibility, the Company limits the
use of pre-assembled building components and pre-fabricated structural
assemblies. The efficiency of the building process is enhanced by the Company's
use of standardized materials available from a variety of sources. The Company
has, from time to time, experienced construction delays due to shortages of
materials or subcontractors. Such construction delays may delay the delivery of
homes, thereby extending the period of time between the signing of a purchase
contract with respect to a home and the receipt of revenue by the Company;
however, the Company cannot predict the extent to which shortages of necessary
materials or labor may occur in the future. The Company employs independent
subcontractors for the installation of site improvements and the construction of
its homes. Subcontractors are supervised by the Company's on-site construction
supervisors. All subcontractor work is performed pursuant to written agreements
with the Company. Such agreements are generally short-term, with terms from six
to twelve months, provide for a fixed price for labor and materials and are
structured to allow for price protection for a majority of the higher cost
phases of construction related to the homes in the Company's Backlog. The
Company seeks to build in large volume to reduce the per unit cost of the home
due to advantages achieved by lower unit prices paid to subcontractors for labor
and materials.

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MARKETS

The Company's operations are organized into geographic divisions to
maximize operating efficiencies and use of local management. The Company's
present divisional operating structure is as follows:

Year
Operations
State Division Commenced
----- -------- ---------

Ohio........................... Columbus 1976
Columbus - Showcase 1988
Columbus - Horizon 1994
Cincinnati 1988

Indiana........................ Indianapolis 1988

Florida........................ Tampa 1981
Orlando 1984
Palm Beach County 1984

North Carolina................. Charlotte 1985
Raleigh 1986

Washington, D. C. ............. Virginia 1991
Maryland 1991

Arizona........................ Phoenix 1996

Columbus is the capital of Ohio, with federal, state and local
governments providing significant and stable employment. Columbus has been a
stable market with diverse economic and employment bases, with single-family
permits ranging between 6,500 and 7,500 annually over the last five years.
Columbus is also the home of The Ohio State University, one of the largest
universities in the world. The Company's market share in Columbus has exceeded
20% during each of the last five years.

Cincinnati is characterized by a stable economic environment and a
diverse employment base. Employers include Proctor & Gamble, Kroger and General
Electric. Also, the Cincinnati International Airport serves as a regional hub
for Delta Airlines. The Company continues to expand its Horizon product line in
this market and focus on more affordable communities. In 1998, the Company was
ranked the number two homebuilder in Cincinnati, excluding the Northern Kentucky
market in which the Company does not participate.

Indianapolis is a growth market noted for its excellent transportation
system and relatively young population. 1998 was the fifth consecutive year of
single-family housing permits exceeding 10,000. A large aircraft maintenance hub
for United Airlines and an express mail sorting facility for the U.S.
Postal Service have recently begun operations in Indianapolis.

Tampa's housing market is strong, buoyed by financial services, tourism
and conventions. Business relocation has continued, especially in the banking,
insurance and telecommunications industries. Tampa's economy continues to grow;
1998 employment levels increased by 5%.

In 1998, Orlando's economy grew at a healthy pace, with job growth
increasing by 5%. Contributing were improved tourism (both domestic and
foreign), strong in-migration and business expansion/relocation due primarily to
lower business costs. Single-family permits exceeded 15,000 in 1998, setting a
new record.

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Palm Beach County is one of the more affluent markets in the United
States. Job gains of 4% in 1998 were experienced in the construction, wholesale
trade and service sectors. Housing activity rebounded in 1998 after permits
dropped in 1997.

Charlotte, which is home to fast-growing firms in the banking industry,
continues to prosper as a financial center and has established itself as a
transportation hub with its manufacturing base. Construction activity set
another record in 1998, exceeding 15,000 single-family permits.

Raleigh-Durham is situated to take advantage of the explosive growth in
high-tech firms with a well-educated workforce and the recently completed North
Carolina telecommunications highway. Raleigh's economy continues to flourish,
with job growth of 4% in 1998, and single-family permits reaching 14,000.

The Washington, D.C. metro economy was led in 1998 by job gains in the
construction and service sectors. Housing activity was robust, with over 25,000
single-family permits being issued. The Company's operations are located
primarily in Fairfax, Prince William and Loudoun Counties in Virginia and Prince
Georges, Montgomery and Anne Arundel Counties in Maryland.

The Company entered the Phoenix market in late 1996. The Phoenix
housing market is one of the most active in the United States, generating over
30,000 single-family permits annually in each of the last two years. Phoenix is
a national leader in employment growth and has a very diverse economy.

PRODUCT LINES

The Company, on a regional basis, offers homes ranging in base sales
price from approximately $80,000 to $930,000 and ranging in square footage from
approximately 1,100 to 4,900 square feet. There are more than 350 different
floor plans and elevations across all product lines. By offering a wide range of
homes, the Company is able to attract first-time home buyers, move-up home
buyers and empty nesters. It is a Company goal to sell more than one home to our
customers.

In the Columbus market, which is the Company's largest market, the
Company offers all of its distinct product lines. In addition, the Company
offers a select number of its product lines in its divisions outside of
Columbus. The base sales price range and average square footage for these
product lines in Columbus are shown below:

BASE SALES AVERAGE
DIVISION PRICE RANGE SQUARE FOOTAGE
---------------- ----------------------- --------------

Horizon $105,000 - $155,000 1,400

M/I Homes $125,000 - $240,000 2,000

Showcase Homes $190,000 - $395,000 2,600

Historically, the Company has offered a line of attached townhomes
exclusively in the Maryland and Virginia markets, however, due to market
demands, the Company will soon be offering this product in a number of its
Florida markets. These homes are marketed primarily to first-time buyers and
range from 1,600 to 2,200 square feet of living space. These homes utilize wood
frame construction and feature aluminum exteriors with brick fronts. In
Maryland, Virginia and Phoenix, the Company offers homes with up to 4,900 square
feet of living space for base sales prices ranging up to $930,000.

In each of the Company's lines of homes, certain options are available
to the purchaser for an additional charge. Major options include fireplaces,
additional bathrooms, and higher quality carpeting, cabinets and appliances. The
options typically are more numerous and significant on more expensive homes.

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LAND DEVELOPMENT ACTIVITIES

The Company's land development activities and land holdings have
increased in the past few years, and are expected to continue to increase. The
Company continues to purchase lots from outside developers under option
contracts, when possible, to limit the Company's risk; however, the Company
continually evaluates all of its alternatives to satisfy the need for lots in
the most cost effective manner. The Company develops internally when it can gain
a competitive advantage by doing so or when shortages of qualified land
developers make it impractical to purchase the required lots from outside
sources. The Company seeks to limit its investment in undeveloped land and lots
to the amount reasonably expected to be sold in the next three to five years.
Although the Company purchases land and engages in land development activities
primarily for the purpose of furthering its own homebuilding activities, it has
developed land with the intention of selling a portion of the lots to outside
homebuilders in certain markets.

To limit the risk involved in the development of raw land, the Company
primarily acquires land through the use of contingent purchase contracts. These
contracts require the approval of the Company's land committee and condition the
Company's obligation to purchase land upon approval of zoning, utilities, soil
and subsurface conditions, environmental and wetland conditions, levels of
taxation, traffic patterns, development costs, title matters and other
property-related criteria. In addition, careful attention is paid to the quality
of the public school system. Only after this thorough evaluation has been
completed does the Company make a commitment to purchase undeveloped land. To
further reduce the risk in acquiring raw land, the Company generally does not
commence engineering or development until zoning approvals are secured.

The Company from time to time enters into joint ventures, generally
with other homebuilders. At December 31, 1998, the Company had interests varying
from 33% to 50% in each of 29 joint ventures and limited liability companies
("LLCs"). These joint ventures and LLCs develop raw ground into lots and,
typically, the Company receives its percentage interest in the form of a
distribution of developed lots. The joint ventures and LLCs pay the managing
partner or manager certain fees for accounting, administrative and construction
supervision services performed by the managing partner or manager in addition to
its percentage interest as a partner in the profits of the joint venture or LLC.
The Company is currently responsible for the management of 15 of these 29 joint
ventures and LLCs. These joint ventures and LLCs are equity financed, except
where seller financing is available on attractive terms.

During development of lots, the Company is required by some
municipalities and other governmental authorities to provide completion bonds
for sewer, streets and other improvements. The Company generally provides
letters of credit in lieu of these completion bonds. At December 31, 1998, $9.5
million of letters of credit were outstanding for these purposes, as well as
$11.8 million of completion bonds.

AVAILABLE LOTS AND LAND

The Company seeks to balance the economic risk of owning lots and land
with the necessity of having lots available for its homes. At December 31, 1998,
the Company had in inventory 2,378 developed lots and 1,600 lots under
development. The Company also owned raw land expected to be developed into
approximately 2,488 lots.

In addition, at December 31, 1998, the Company's interest in lots held
by its joint ventures and LLCs consisted of 17 developed lots and 391 lots under
development. The Company also owns interests in raw land held by its joint
ventures and LLCs which is zoned for 1,103 lots. It is anticipated that some of
the lots owned by the Company will be sold to others.

At December 31, 1998, the Company had options and purchase contracts,
which expire over the next 5 years, to acquire 2,242 developed lots and land to
be developed into approximately 9,190 lots, for a total of 11,432 lots, with an
aggregate current purchase price of approximately $176.9 million. Purchase of
these properties is contingent upon satisfaction of certain requirements by the
Company and the sellers, such as zoning approval, completion of development and
availability of building permits. The majority of these lot purchase agreements
provide for periodic escalation of the purchase price which, the Company
believes, reflects the developers' carrying cost of the lots.

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The following table sets forth the Company's land position in lots
(including the Company's interest in joint ventures) by region in which the
Company operated at December 31, 1998:

OWNED LOTS
----------------------------------------------
Under To Be Total Lots under
State Developed Development Developed Owned Option Total
------------------------------------------------------------------------------------------------------

Ohio and Indiana 1,364 1,369 2,806 5,539 7,857 13,396

Florida 558 266 307 1,131 2,513 3,644

Carolina 229 60 273 562 775 1,337

Virginia, Maryland and Phoenix 244 296 205 745 287 1,032
-----------------------------------------------------------------------------------------------------

Total 2,395 1,991 3,591 7,977 11,432 19,409
=====================================================================================================

FINANCIAL SERVICES

Through its wholly-owned subsidiary, M/I Financial, the Company offers
fixed and adjustable rate mortgage loans, primarily to buyers of the Company's
homes. M/I Financial has branches in all of the Company's housing markets, with
the exception of Virginia, Maryland and Phoenix. Of the 3,270 Homes Delivered in
1998 in the markets in which M/I Financial operates, M/I Financial provided
financing for 2,930 of these homes representing approximately $447.0 million of
mortgage loans originated and sold. M/I Financial issues commitments to
customers and closes both conventional and government-insured loans in its own
name. To minimize the risk of financing activities, M/I Financial generally
sells the loans it originates to the secondary market which provides the funding
within several days thereafter. The Company retains a small servicing portfolio
which it currently sub-services with a financial institution.

At December 31, 1998, the Company was committed to fund $107.5 million
in mortgage loans to home buyers. Of this total, approximately $2.5 million were
adjustable rate loans and $105.0 million were fixed rate loan commitments. The
loans are granted at current market interest rates and the rate is guaranteed
through the transfer of the title of the home to the buyer. The Company uses
hedging methods to reduce its exposure to interest rate fluctuations between the
commitment date of the loan and the time the home closes.

The Company hedges its interest rate risk using optional and mandatory
forward sales of mortgage-backed securities whereby the Company agrees to sell
and later repurchase similar but not identical mortgage-backed securities.
Generally, the agreements are fixed-coupon agreements whereby the interest rate
and maturity date of both transactions are approximately the same and are
established to correspond with the closing of the fixed interest rate mortgage
loan commitments of the Company. The difference between the two values of the
mortgage-backed securities in the agreements at settlement provide a hedge on
the interest rate risk exposure in the mortgage loan commitments and is included
in the gain or loss on the sale of the loans to third party investors. At
December 31, 1998, these agreements matured within 90 to 120 days. Securities
under forward sales agreements averaged approximately $89.4 million during 1998
and the maximum amount outstanding at any month end during 1998 was $104.0
million, the balance at December 31, 1998. Hedging gains of $2.7 million were
deferred at year end as the mortgage loans and commitment contracts qualified
for hedge accounting.

Additionally, the Company hedges the interest rate risk relative to
unclosed loans by purchasing commitments from outside investors to acquire the
loans at the interest rate at which the loan will be closed. The cost of these
purchase commitments is recorded as an asset and is expensed as loans are closed
under the related commitments. Any remaining unused balance is expensed when the
commitment expires or earlier, if the Company determines that it will be unable
to use the entire commitment prior to its expiration date. At December 31, 1998,
the Company had approximately $15.0 million of commitments to deliver mortgage
loans to outside investors.

To reduce the credit risk associated with accounting losses,
which would be recognized if the counterparties failed completely to perform as
contracted, the Company limits the entities that management can enter

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into a commitment with to the primary dealers in the market. The risk of
accounting loss is the difference between the market rate at the time a
counterparty fails and the rate the Company committed to for the mortgage loans
and any purchase commitments recorded with the counterparty.

M/I Financial has been approved by the Department of Housing and Urban
Development and the VA to originate loans insured by the FHA and the VA,
respectively, and has been approved by the Federal Home Loan Mortgage
Corporation ("FHLMC") and by the Federal National Mortgage Association ("FNMA")
as a seller and servicer of mortgages sold to FHLMC and FNMA.

In 1996, the Company entered into a joint venture to provide title
insurance in the Indianapolis and Columbus markets. A similar joint venture was
formed in the Tampa and Orlando markets in 1997 and in the Cincinnati, Virginia
and Maryland markets in 1998.

COMPETITION

The homebuilding industry is highly competitive. The Company competes
in each of its local market areas with numerous national, regional and local
homebuilders, some of which have greater financial, marketing, land acquisition
and sales resources than the Company. Builders of new homes compete not only for
home buyers, but also for desirable properties, financing, raw materials and
skilled subcontractors. The Company also competes with the resale market for
existing homes which provides certain attractions for home buyers over building
a new home.

REGULATION AND ENVIRONMENTAL MATTERS

The homebuilding industry, including the Company, is subject to various
local, state and federal (including FHA and VA) statutes, ordinances, rules and
regulations concerning zoning, building, design, construction, sales and similar
matters. Such regulation affects construction activities, including types of
construction materials which may be used, certain aspects of building design,
sales activities and other dealings with consumers. The Company must also obtain
certain licenses, permits and approvals from various governmental authorities
for its development activities. In many areas, the Company is subject to local
regulations which impose restrictive zoning and density requirements in order to
limit the number of houses within the boundaries of a particular locality. The
Company seeks to reduce the risk from restrictive zoning and density
requirements by using contingent land purchase contracts which require that land
purchased by the Company meet various requirements, including zoning.

The Company may be subject to periodic delays or may be precluded
entirely from developing projects due to building moratoriums, particularly in
Florida. Generally, such moratoriums relate to insufficient water or sewage
facilities or inadequate road capacity within specific market areas or
subdivisions. Moratoriums experienced by the Company have not been of long
duration and have not had a material effect on the Company's business.

Each of the states in which the Company operates has adopted a wide
variety of environmental protection laws. These laws generally regulate
developments which are of substantial size and which are in or near certain
specified geographic areas. Furthermore, these laws impose requirements for
development approvals which are more stringent than those which land developers
would have to meet outside of these geographic areas.

Increased stringent requirements may be imposed on homebuilders and
developers in the future which may have a significant impact on the Company and
the industry. Although the Company cannot predict the effect of these
requirements, such requirements could result in time-consuming and expensive
compliance programs. In addition, the continued effectiveness of current
licenses, permits or development approvals is dependent upon many factors, some
of which are beyond the Company's control.

EMPLOYEES

At February 26, 1999, the Company employed 779 people (including
part-time employees), of which 223 were employed in sales, 313 in construction
and 243 in management, administrative and clerical positions. The Company
considers its employee relations to be very good. No employees are represented
by a collective bargaining agreement.

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ITEM 2. PROPERTIES

The Company owns and operates an approximately 85,000 square foot
office building used for its home office and leases all of its other offices.
Prior to September 1998, the Company leased its home office space from a limited
liability company in which the Company had a minority equity interest. The
Company purchased the remaining interest in this limited liability company in
September of 1998. See Notes 2, 5 and 9 to the Consolidated Financial
Statements.

Due to the nature of the Company's business, a substantial amount of
property is held as inventory in the ordinary course of business. See "Item 1.
Business - Available Lots and Land."

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in routine litigation incidental to its
business. Management does not believe that any of this litigation is material to
the financial statements of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of 1998, no matters were submitted to a vote
of security holders.

10
11

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The information required by this item is incorporated herein by
reference from the Company's Annual Report to Shareholders for the year ended
December 31, 1998.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this item is incorporated herein by
reference from the Company's Annual Report to Shareholders for the year ended
December 31, 1998.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

The information required by this item is incorporated herein by
reference from the Company's Annual Report to Shareholders for the year ended
December 31, 1998.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is incorporated herein by
reference from the Company's Annual Report to Shareholders for the year ended
December 31, 1998.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There have been no changes in or disagreements with accountants during
each of the two years ended December 31, 1998 and 1997.

11
12

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item is incorporated herein by
reference to the Company's definitive proxy statement relating to the 1999
Annual Meeting of Shareholders.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by
reference to the Company's definitive proxy statement relating to the 1999
Annual Meeting of Shareholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is incorporated herein by
reference to the Company's definitive proxy statement relating to the 1999
Annual Meeting of Shareholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated herein by
reference to the Company's definitive proxy statement relating to the 1999
Annual Meeting of Shareholders.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements. The following financial statements of M/I
Schottenstein Homes, Inc. and its subsidiaries have been incorporated
herein by reference as set forth in Item 8 of Part II of this Annual
Report on Form 10-K:

Independent Auditors' Report

Consolidated Balance Sheets - December 31, 1998 and 1997

Consolidated Statements of Income - Years Ended December 31, 1998, 1997
and 1996

Consolidated Statements of Stockholders' Equity - Years Ended
December 31, 1998, 1997 and 1996

Consolidated Statements of Cash Flows - Years Ended December 31, 1998,
1997 and 1996

Notes to Consolidated Financial Statements

2. Financial Statement Schedules. Page
----
Independent Auditors' Report on financial statement schedules..... 18

For the Years ended December 31, 1998, 1997 and 1996:
Schedule II - Valuation and Qualifying Accounts ............... 19

All other schedules have been omitted because the required information
is included in the financial statements or notes thereto, the amounts
involved are not significant, or the required matter is not present.

3. Exhibits.

The following exhibits required by Item 601 of Regulation S-K are filed
as part of this report. For convenience of reference, the exhibits are
listed according to the numbers appearing in the Exhibit Table to Item
601 of Regulation S-K.

Exhibit Number Description
- --------------- -------------------------------------------------------------
3.1 Amended and Restated Articles of Incorporation of the Company,
hereby incorporated by reference to Exhibit 3.1 of the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.

3.2 Regulations of the Company hereby incorporated by reference to
Exhibit 3(l) of the Company's Registration Statement on
Form S-1, Commission File No. 33-68564.

3.3 Amendment to the Code of Regulations of the Company, hereby
incorporated by reference to Exhibit 4.3 of the Company's
Registration Statement on Form S-8, Commission File
No. 33-76518.

3.4 Amended and Restated Regulations of the Company. (Filed
herewith.)

13
14
Exhibit Number Description
- --------------- -------------------------------------------------------------

4 Specimen of Stock Certificate, hereby incorporated by
reference to Exhibit 4 of the Company's Registration Statement
on Form S-1, Commission File No. 33-68564.

10.1 The Predecessor's Amended and Restated 401(k) Profit Sharing
Plan, consisting of a savings plan adoption agreement, savings
plan and savings plan trust, hereby incorporated by reference
to Exhibit 10(cc) of the Predecessor's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991.

10.2 Third restated revolving credit loan, swingline loan and
standby letter of credit agreement by and among the Company;
Bank One, NA; The Huntington National Bank; The First National
Bank of Chicago; National City Bank; BankBoston, N.A.; The
Fifth Third Bank of Columbus; SunTrust Bank, Central Florida,
N.A. and Bank One, NA, as agent for the banks, dated May 27,
1998, hereby incorporated by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998.

10.3 Fourth restated revolving credit loan, swingline loan and
standby letter of credit agreement by and among the Company;
Bank One, NA; The Huntington National Bank; AmSouth Bank;
National City Bank; BankBoston, N.A.; The Fifth Third Bank of
Columbus; Suntrust Bank and Bank One, NA as agent for the
banks, dated December 31, 1998. (Filed herewith.)

10.4 Promissory Note by and among the Company, M/I Financial Corp.
and Bank One, Columbus, N.A., dated November 5, 1993, hereby
incorporated by reference to Exhibit 19(d) of the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993.

10.5 Revolving Credit Agreement by and among the Company, M/I
Financial Corp. and Bank One, NA dated June 22, 1998, hereby
incorporated by reference to Exhibit 10.2 of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1998.

10.6 1993 Stock Incentive Plan of the Company, hereby incorporated
by reference to Exhibit 4.4 of the Company's Registration
Statement on Form S-8, Commission File No. 33-76518.

10.7 Termination Agreement between the Company and parties to the
Melvin and Irving Schottenstein Family Agreement, dated
July 31, 1997, hereby incorporated by reference to
Exhibit 10.5 of the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997.

10.8 Executive Employment Agreement by and between the Company and
Irving E. Schottenstein dated August 9, 1994, hereby
incorporated by reference to Exhibit 10(c) of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1994.

10.9 Company's 1997 President and Senior Executive Vice President
Bonus Program, hereby incorporated by reference to Exhibit
10.2 of the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997.

14
15
Exhibit Number Description
- --------------- -------------------------------------------------------------

10.10 Company's 1997 Senior Vice President and Chief Financial
Officer Bonus Program, hereby incorporated by reference to
Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997.

10.11 Company's 1998 President and Senior Executive Vice President
Bonus Program, hereby incorporated by reference to
Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998.

10.12 Company's 1998 Senior Vice President and Chief Financial
Officer Bonus Program, hereby incorporated by reference to
Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998.

10.13 Company's 1998 Chief Executive Officer Stock Bonus Program.
(Filed herewith.)

10.14 Company's 1998 President, Senior Executive Vice President and
Chief Financial Officer Stock Bonus Program. (Filed herewith.)

10.15 Company's 1999 Chief Executive Officer Bonus Program. (Filed
herewith.)

10.16 Company's 1999 President Bonus Program. (Filed herewith.)

10.17 Company's 1999 Chief Operating Officer Bonus Program. (Filed
herewith.)

10.18 Company's 1999 Chief Financial Officer Bonus Program. (Filed
herewith.)

10.19 Investment Home Compensation Plan dated September 1, 1995,
hereby incorporated by reference to Exhibit 10.2 of the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995.

10.20 Limited Liability Company Agreement of Northeast Office
Venture, Limited Liability Company dated November 17, 1995,
hereby incorporated by reference to Exhibit 10.51 of the
Company's Annual Report on Form 10-K for the year ended
December 31, 1995.

10.21 Lease Agreement by and between the Company and Northeast
Office Venture, Limited Liability Company dated November 17,
1995, hereby incorporated by reference to Exhibit 10.52 of the
Company's Annual Report on Form 10-K for the year ended
December 31, 1995.

10.22 Credit Agreement between the Company and BankBoston, N.A., the
other parties which may become lenders and BankBoston, N.A. as
agent, dated August 29, 1997, hereby incorporated by reference
to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997.

15
16
Exhibit Number Description
- --------------- -------------------------------------------------------------

10.23 Company's Director Deferred Compensation Plan, hereby
incorporated by reference to Exhibit 10.4 of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1997.

10.24 Collateral Assignment Split-Dollar Agreement by and among the
Company and Robert H. Schottenstein, and Janice K.
Schottenstein, as Trustee of the Robert H. Schottenstein 1996
Insurance Trust, dated September 24, 1997, hereby incorporated
by reference to Exhibit 10.28 of the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.

10.25 Collateral Assignment Split-Dollar Agreement by and among the
Company and Steven Schottenstein, and Irving E. Schottenstein,
as Trustee of the Steven Schottenstein 1994 Trust, dated
September 24, 1997, hereby incorporated by reference to
Exhibit 10.29 of the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.

10.26 Collateral Assignment Split-Dollar Agreement by and among the
Company and Kerrii B. Anderson, and Douglas T. Anderson, as
Trustee of the Kerrii B. Anderson 1997 Irrevocable Life
Insurance Trust, dated September 24, 1997, hereby incorporated
by reference to Exhibit 10.30 of the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.

13 Annual Report to Shareholders for the year ended December 31,
1998. (Filed herewith.)

21 Subsidiaries of Company. (Filed herewith.)

23 Consent of Deloitte & Touche LLP. (Filed herewith.)

24 Powers of Attorney. (Filed herewith.)

27 Financial Data Schedule.

- ----------------

(b) Reports on Form 8-K
-------------------
No reports on Form 8-K have been filed during the last quarter
of the period covered by this report.

(d) Financial Statement Schedule - See Item 14(a)(2).

16
17

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, in Columbus, Ohio on this
24th day of March, 1999.

M/I SCHOTTENSTEIN HOMES, INC.
(Registrant)

By: /s/ ROBERT H. SCHOTTENSTEIN
---------------------------------------
Robert H. Schottenstein
President and Director (Vice Chairman)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on this 24th of March, 1999.

NAME AND TITLE NAME AND TITLE

IRVING E. SCHOTTENSTEIN* /s/ ROBERT H. SCHOTTENSTEIN
- ------------------------------- --------------------------------
Irving E. Schottenstein Robert H. Schottenstein
Chairman of the Board and President and Director (Vice Chairman)
Chief Executive Officer
(Principal Executive Officer)

STEVEN SCHOTTENSTEIN* /s/ KERRII B. ANDERSON
- ------------------------------- --------------------------------
Steven Schottenstein Kerrii B. Anderson
Chief Operating Officer Senior Vice President, Chief Financial
and Director (Vice Chairman) Officer, Assistant Secretary and Director
(Principal Financial and Accounting Officer)

FRIEDRICH K. M. BOHM* JEFFREY H. MIRO*
- ------------------------------- --------------------------------
Friedrich K. M. Bohm Jeffrey H. Miro
Director Director

LEWIS R. SMOOT, SR.* NORMAN L. TRAEGER*
- ------------------------------- --------------------------------
Lewis R. Smoot, Sr. Norman L. Traeger
Director Director

* The above-named Directors and Officers of the Registrant execute this report
by Robert H. Schottenstein and Kerrii B. Anderson, their Attorneys-in-Fact,
pursuant to powers of attorney executed by the above-named Directors and filed
with the Securities and Exchange Commission as Exhibit 24 to the report.

By: /s/ ROBERT H. SCHOTTENSTEIN
-------------------------------------
Robert H. Schottenstein, Attorney-in-Fact

By: /s/ KERRII B. ANDERSON
-------------------------------------
Kerrii B. Anderson, Attorney-in-Fact

17
18

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
M/I Schottenstein Homes, Inc.
Columbus, Ohio

We have audited the consolidated financial statements of M/I Schottenstein
Homes, Inc. and its subsidiaries as of December 31, 1998 and 1997, and for each
of the three years in the period ended December 31, 1998, and have issued our
report thereon dated February 25, 1999; such financial statements and reports
are included in your 1998 Annual Report to Shareholders and are incorporated
herein by reference. Our audits also included the consolidated financial
statement schedule of M/I Schottenstein Homes, Inc. and its subsidiaries, listed
in Item 14. This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.

/s/ Deloitte & Touche LLP
- ----------------------------------
Deloitte & Touche LLP

Columbus, Ohio
February 25, 1999

18
19

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Additions
Balance at Charged to Balance at
Beginning Costs and End of
Description of Year Expenses Deductions Year
- ----------- ------- -------- ---------- ----

Valuation allowance deducted from
asset account - single-family lots,
land and land development costs:

Year ended
December 31, 1998 $ 4,000,000 $ 2,450,000 $ 340,000 $6,110,000
=========== =========== =========== ==========

Year ended
December 31, 1997 $ 2,350,000 $ 4,135,000 $ 2,485,000 $ 4,000,000
=========== =========== =========== ===========

Year ended
December 31, 1996 $ 975,000 $ 1,375,000 $ 0 $ 2,350,000
=========== =========== =========== ===========

19
20

EXHIBIT INDEX

Exhibit Number Description Page No.
- --------------- -------------------------------------------------------------- ---------

3.1 Amended and Restated Articles of Incorporation of the Company,
hereby incorporated by reference to Exhibit 3.1 of the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.

3.2 Regulations of the Company, hereby incorporated by reference
to Exhibit 3(l) of the Company's Registration Statement on
Form S-1, Commission File No. 33-68564.

3.3 Amendment to the Code of Regulations of the Company, hereby
incorporated by reference to Exhibit 4.3 of the Company's
Registration Statement on Form S-8, Commission File No.
33-76518.

3.4 Amended and Restated Regulations of the Company.

4 Specimen of Stock Certificate, hereby incorporated by
reference to Exhibit 4 of the Company's Registration Statement
on Form S-1, Commission File No. 33-68564.

10.1 The Predecessor's Amended and Restated 401(k) Profit Sharing
Plan, consisting of a savings plan adoption agreement, savings
plan and savings plan trust, hereby incorporated by reference
to Exhibit 10(cc) of the Predecessor's Annual Report on Form
10-K for the fiscal year ended December 31, 1991.

20
21

Exhibit Number Description Page No.
- --------------- -------------------------------------------------------------- ---------

10.6 1993 Stock Incentive Plan of the Company, hereby incorporated
by reference to Exhibit 4.4 of the Company's Registration
Statement on Form S-8, Commission File No. 33-76518.

10.7 Termination Agreement between the Company and parties to the
Melvin and Irving Schottenstein Family Agreement, dated July
31, 1997, hereby incorporated by reference to Exhibit 10.5 of
the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997.

10.11 Company's 1998 President and Senior Executive Vice President
Bonus Program, hereby incorporated by reference to Exhibit
10.2 of the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998.

21
22

Exhibit Number Description Page No.
- --------------- -------------------------------------------------------------- ---------

10.13 Company's 1998 Chief Executive Officer Stock Bonus Program.
(Filed herewith.)

10.14 Company's 1998 President, Senior Executive Vice President and
Chief Financial Officer Stock Bonus Program. (Filed herewith.)

10.15 Company's 1999 Chief Executive Officer Bonus Program. (Filed
herewith.)

10.16 Company's 1999 President Bonus Program. (Filed herewith.)

10.17 Company's 1999 Chief Operating Officer Bonus Program (Filed
herewith.)

10.18 Company's Chief Financial Officer Bonus Program. (Filed
herewith.)

10.23 Company's Director Deferred Compensation Plan, hereby
incorporated by reference to Exhibit 10.4 of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1997.

Exhibit Number Description Page No.
- --------------- -------------------------------------------------------------- ---------

13 Annual Report to Shareholders for the year ended December 31,
1998. (Filed herewith.)

21 Subsidiaries of Company. (Filed herewith.)

23 Consent of Deloitte & Touche LLP. (Filed herewith.)

24 Powers of Attorney. (Filed herewith.)

27 Financial Data Schedule.