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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (1091)	11/29/2001 6:22:40 PM
From: Tradelite	Read Replies (1) \| Respond to of 306849

Say what? Do you think I'm that smart? Someone on this thread asked me several weeks ago where I thought interest rates would be in three months. Sorry.....these things are out of my control and not covered in the instructions that came with my crystal ball. All I know for sure is that real estate---and the economy---go thru cycles. Cycles are as inevitable as the fact that grass turns green sometimes and the sky is blue sometimes. What goes up eventually comes down to "correct." But in real esate, as in stocks--for as long as anyone has kept records--the long-term trend ...and I know some people don't want to accept this....is UP. I recall an interesting article from Washingtonian Magazine about the heyday real estate days of the 1980s. By 1990-92, that article seemed humorous. But today, the homes featured in that article as selling for fabulous prices before the last recession, and which soon fell dramatically in price.... are now much more expensive than ever. During the last recession, builders were anyone who knew how to hammer a nail, so a lot of cowboys were putting up speculative homes. (In fact, a very large home exists in my area that was built on a crummy lot on a busy four-lane road-----by the time it sold at a terrific loss, it had about 8 loans on it and the builder was penniless----this builder had migrated from depressed Texas to our hot area and got caught building a rookie house on crummy land that no one else would have touched. Today, home builders are big, well-capitalized businesses, and are having a hard time finding enough land to build on to suit demand. It's not a good time to hold your breath and wait for housing prices to be cut in half in heavily populated areas of this country, in my opinion.

To: ild who wrote (1091)	11/30/2001 9:58:47 AM
From: ild	Respond to of 306849

From SSB analysts: November 29, 2001 SUMMARY * We are upgrading several homebuilders this morning, in anticipation that a long-term multiple expansion in the group is about to begin. * Our recommendation is founded on the belief that the structure of the homebuilding industry radically improved in the mid-'90s -- yet valuations have yet to reflect any such "new reality". * We believe the need for a revised investment approach is now too compelling to ignore, due to the builders' unprecedented resilience during this recession. * Although the builders might appear vulnerable to a potential upturn in rates, we believe the current environment looks very similar to the late-'87 to mid-'89 period, during which time the group rallied while the Fed was raising rates. * We recognize that the stocks will likely remain volatile over the near-term, due to the market's obsession with near term trends in rates; but we also believe that a persistent upward trend in multiples will emerge over the next year.