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

To: ahhaha who wrote (94616)	11/13/2007 11:27:45 AM
From: GraceZ	Read Replies (1) \| Respond to of 306849

Whether there will be a recession or not in the general economy isn't totally irrelevant but close to irrelevant. There is and will continue to be a recession in the new housing market even while the economy expands. I expect at least 2 to 3 more years of declining unit volume with flat to stagnating prices. RE cycles are long. You can expect RYL to give back the previous two years of earnings in losses in the next year or two. And I don't mean paper losses where they write down the value of this or that but real losses, gross margin losses, where they spend more to make what they sell. In the last quarter the only thing that kept their gross margin from being negative is that they gave out sales incentives instead of lowering prices which moved that cost down to SG&A. As to the stock, the price could reach 40 before it backs off because there will be enough people who think, "Well, gee, they went from 33 to 60 the last time they rose out of a low, so maybe they'll double off the low again." Ugh, I don't want to play that game, it's a bet that others are dumber than I am. I want a company whose prospects are improving, their prospects are not improving they are getting worse. They haven't even started the major layoffs at corporate they need to make. This leads me to believe they got converted to "permanently high plateau" thinking.