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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: TH who wrote (25806)12/10/2004 8:01:16 PM
From: Mike JohnstonRead Replies (6) of 306849
 
Thanks for the summary.
The CEO knew what he was talking about when he said a couple of weeks ago that "shorts will be destroyed". I wish i listened to him and went long the stock ( it would have made up some of my losses from shorting the s&p. ).

The high end market is growing and will continue to expand based on population and increases in households earning $100,000/year.

The problem with this explanation is that here in New Jersey if you are around 100k/year you would not be even close to being able to afford a Toll home, without bringing a 200 or 300K downpayment to the table. And only those moving up are able to put that much money down.

Can anybody explain to me how one can afford a 700K house on a gross income of 8k/month ?

My estimate would be that even with 20% down, it would take close to 100% of net income.

At this point it is not known if the upside explosion in homebuilders is a climax blowoff top/short squeeze or a beginning of new continuation leg up.

The markets are very perverse. Sometimes a $50 stock that is destined to go to 10, first goes to 200 before going to 10.

It is quite possible that before homebuilders collapse all the shorts have to be destroyed first. Then just when fundamentals turn down there are no more short sellers left to cushion the fall on the way down.
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