Home Builder Stocks Tank
After a nervous rally yesterday, Wall Street is throwing in the towel on the home builders after the starts decline. Down numbers again. Toll Bros. 4.2%, KB Home 3.95%, Ryland 3%, Pulte 3.9%, Lennar 2%.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole. ATTENTION: Backup Blog at: http://thehousingbubble2.blogspot.com/
Wednesday, April 20, 2005
Previous Posts
- Ryland: The Top Is In
- Using Home Equity For A Car
- GMAC Profits Get "Write-Up", Liquidity Squeezed
- Savings "Glut" Created Bubble: Bernanke
- Mortgage Aps Down 8.7%
- Miami "Bombed" By Speculation
- Home Builder: Steep Falloff Reflects Caution
- Berkshire Downgraded, Credit Bubble Collapsing
- Let Fannie Run Free: NAR
- No Wonder They Are Leaving LA
Links
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- Inman News
- US Treaasury
- BlogKits-Building Blog Relationships
- House Price Crash UK
- The Money Files
- San Diego Real Estate Chrono-Collapsometer
- Bay Area Housing Crash Continues
- HouseBubble.com
- Vancouver Housing Market Blog
- housingbubble.com
5 Comments:
While I hate to dance upon anyone's grave, I'm heartened that the street in now skeptical of the builders' pablum. The way that KBH in particular has been a brazen cheeleader of late is simply disgusting.
These guys are even more creative than the NAR or the MBA in spinning a story. The latest slowdowns were due to "weather" and they all have an incredibly rosy outlook for the rest of the year.
Meanwhile they are all significantly slowing production. Hmmmmmmm.....
Well, the homebuilders have always been cyclical, and the classic pattern is that their earnings peak when the fed begins tightening.
My real concern is that an overall bear market can burst the housing bubble faster than anything else, because it can destroy consumer confidence, increase the risk premium on corporate bonds and mortgage backed securites, and possibly lead to recession or a depression. My personal view is that the stock market bubble of the nineties didn't fully pop. We had a parabolic run from 1995 to 2000, and the bear market of 2000-2002 only took us back to 1998 levels before real estate took off and the housing ATM came to the rescue. I think with the major averages crossing below the 200 DMA, we are now beginning a 2-3 year bear market that will burst both the housing bubble and the tech bubble and bring prices of both back to 1996 levels, where I will personally be a big buyer of each. Until then, I will be in treasuries, gold mining stocks, and out-of-the-money index puts on a monthly basis.
(My personal view is that the stock market bubble of the nineties didn't fully pop)
I agree, the Dow should head much lower.
"My real concern is that an overall bear market can burst the housing bubble faster than anything else, because it can destroy consumer confidence, increase the risk premium on corporate bonds and mortgage backed securites, and possibly lead to recession or a depression. My personal view is that the stock market bubble of the nineties didn't fully pop. We had a parabolic run from 1995 to 2000, and the bear market of 2000-2002 only took us back to 1998 levels before real estate took off and the housing ATM came to the rescue. I think with the major averages crossing below the 200 DMA, we are now beginning a 2-3 year bear market that will burst both the housing bubble and the tech bubble and bring prices of both back to 1996 levels, where I will personally be a big buyer of each. Until then, I will be in treasuries, gold mining stocks, and out-of-the-money index puts on a monthly basis."
This is probably the best summation of my position on the entire situation. Excellent post Anon.
I noticed that the stock price chart of Toll Brothers looks a lot like Cisco did a few years ago. A 45 degree angle from $9 to $80.
I'm thinking of buying puts on a homebuilder. Any suggestions? Which builder is the most vulnerable? How far out the money should the options be? Which expiration date would be best? Any recommendations would be appreciated. Thanks.
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