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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (57156)	12/12/2004 6:45:53 PM
From: energyplay	Read Replies (2) \| Respond to of 74559

Hi Ramsey - Excellent post. This means for most builders, the peak profit quarter is not in yet - but there are HUGE short positions already. I expect these homebuilder stocks will hang in the air like KKD Krispy Kreme Doughtnuts stock did. Distrubution will occur slowly, dribbling it out to hungry shorts. I think there must be better sectors to short.

To: Ramsey Su who wrote (57156)	12/12/2004 7:33:34 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 74559

I'm sure you realize, the problems caused by lessened price appreciation (let alone price declines) is far worse than you suggest. While no builder is saying that they factor appreciation in their projections, it is unclear how they determine their estimates sales price for each tract. I suspect that if real estate stop appreciating, the profit margin has to come down substantially. I guess it depends on how the reader envisions the definition of the word "substantially". Home Builders have purchased land for future production at prices which will produce a profit only if the appreciation rate remains the same. If price appreciation stops, their future homes built on their current land inventory will result in losses. The historical solution to this problem has been for builders to not build on that particular land inventory. Instead they buy additional land at lower prices to build profitably. But this leaves them with their land inventory doubled just before the eventual decline. You and I know that it is not by accident that most home builders file for bankruptcy at the close of each real estate boom. .

To: Ramsey Su who wrote (57156)	12/13/2004 8:03:06 AM
From: GREENLAW4-7	Respond to of 74559

Incredible post!! I think HB's are also in for a rude awakining.

To: Ramsey Su who wrote (57156)	12/15/2004 3:10:56 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 74559

<I am certain that TOL has a much higher percentage of cash buyers than other builders. Bob Toll had repeated many times in the past the interest rate would not impact their sales. I think he is in for a rude awakening.> Even if ALL his buyers are cash, TOL will still be hit by interest rate increases and a resultant slump in housing construction because other companies will bid for the cash customers too = lower prices and fewer customers for the swarms of hungry builders. I am not saying I think there will be a housing slump. Mqurice PS: When are you going to get on your bike and come out here?