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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Archie Meeties who wrote (97970)12/20/2007 4:35:01 PM
From: John VosillaRead Replies (1) of 306849
 
I think you are way too optimistic on the homebuilders. The strongest, best managed survivors will do very well like a PHM. LEN or MDC coming out of the 1990 crash in the stock prices. Most other builders basically went sideways till 2000 mirroring the sideways to down movement in land prices for much of that period.

Homebuilders were way overvalued based on the fake one time profits due to the explosion in lot values from 2003-05, sometimes going up 10 fold. By the second half of 2005 in order to keep playing they had to buy at astronomical prices which along with the leverage and the subsequent collapse will do many of them in. The PE of this cyclical industry is and always will be meaningless in the true value of a homebuilder IMHO..

Your look at regional banks in nonbubble areas has merits. Little in the way of a speculative housing mania or foreclosure problem resulting in large writeoffs in stable places like a New Hampshire or Iowa...
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