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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Elroy Jetson who wrote (54635)5/22/2006 4:21:14 PM
From: Wyätt GwyönRead Replies (3) of 306849
 
well, the difference in the land price on the books is a "sunk cost" and once the land is used up that part of the large builders' advantage goes away.

however, a difference of $135 vs. $300 per sf in construction costs does not go away. that is huge. i wonder how small-time builders can even compete.

perhaps in the unfolding housing bust, the small builders will be wiped out for good and the large builders will gain a much larger market share (isn't it only around 30%?).

that secular bullish factor--plus the low PE multiples--has kept me from wanting to short builders. maybe the best move here is to figure out which ones will survive and thrive, and be positioned to buy them at low prices a few years down the line.
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