Que,
I do not believe you're late to the homebuilding party. I shorted RYL earlier during the summer and had a nice time. Later in August I shorted HOV TOL WLT and AHMH; I haven't covered them yet, in fact, I see no rush to cover.
The countervailing force is the dropping of mortgage rates which, during normal or even better than normal times will make the cost of housing go down and bring more new buyers and trader uppers into the market, thereby supporting market pricing, bidding and speculative building of the housing market. Check out
Subject 51347
for the last month or so to get a feel. Some of the posters there are looking for long entries, I think they're S.O.L. I've outlined my thesis before here and there, BWDIK?
I basically think the lowering of interest rates is only going to cause, vis a vis the housing market, the refinancing of existing mortgages and help stave off the very high default rate we're seeing (which itself is a result of individuals' financial overextension).
The only long play in housing is going to come in 1-3 years when you'll be able to buy that really fine house in the neighborhood that sold in 1999 for $850,000 for about $345,000. JimP in Houston might have a comment or two about the ability of high end housing to crash (the old 1980s joke: what is the difference between a pigeon and an oil man, the pigeon can still make a deposit on a Mercedes--substitute housing and there you are).
High end housing will be a buyers' market soon enough, but not before a lot of 1998 and 1999 I'll-be-rich-forever types feel pain they never imagined.
Kb |
