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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (74917)	12/6/2006 1:20:59 PM
From: Ramsey Su	Respond to of 110194

I have been listening to these presentations all morning: Message 23076278 The level of optimism is really quite surprising. The extreme is of course Stephen Kim's projections today. His target prices are taking all builders far beyond their all time highs. How is that possible without another around of margin growth due to real estate appreciation? In either case, the stage is set. The peak season for new home orders is Feb-March. If orders pick up during that period, then bears must concede the corner has indeed turned. If orders decline, or simply remain at current levels, then it could be free fall for the builders. At this moment, reality is that all major builders have land coming out of their ears. (the following numbers are a month or two old and has not been updated based on more recent company guidances, all lots include owned and optioned) Using 2006 deliveries to calculate yrs of supply is generous to the builders since none is predicting same level of deliveries for FY 07. If the market absorption rate deteriorates from here, the builders would have no choice but to reduce inventory one way or another. With such huge supply overhang, price wars may be very bloody. BZH 95,000 lots 18,000 2006 deliveries 5.3 yr supply CTX 200,000 lots 37,000 2006 deliveries 5.39 supply DHI 314,000 51,000 2006 deliveries 6.14 yrs supply HOV 89,000 lots 15,700 deliveries 5.7 yr supply TOL 72,000 8,300 deliveries 8.66 yrs supply