To: GraceZ who wrote (94639 ) 11/13/2007 2:15:01 PM From: ahhaha Read Replies (1) | Respond to They were strong in the 90s as well but RE still floundered for most of the decade. People will need those strong incomes to pay for the houses they already bought considering a lot of people already spent their future higher incomes. Tell me households are forming faster, raising the number of units required and then maybe I'll buy into a more rosy scenario for new housing. Give me another 1/2 billion in inventory write downs and a price 70% of THAT book and maybe I'll be converted. As I've said in the past, I like the company and I think they survive. In order to survive they need to lay off some of those 20 something Jessicas, Trishes and Heathers they hired during the boom. They need to cut back until they get to combat hardened troops that have lived through stagnant RE prices. Prices might, but unit sales are limited by household formation and it's units that make the real difference as to whether the company grows or contracts even though profit comes mainly from the rising value of held land. RYL is price indifferent to some extent, in that they have a wide range of product. Still, to be profitable near term, they are limited on the downside by the cost of the land they already own or control. Write it down again and it's a new ball game. I don't think prices are going back to where they were before the boom but land prices standing still would still require a different business model for all the HBs. They made the bulk of their profit in the last five years on the difference between the price they paid for land and what they were able to sell it for (underneath their houses).
