Homebuilders Are Peaking

The recent rally in the Homebuilders and REITs might have taken some investors by surprise. But what is even more surprising is the current valuation of these equities. A quick look at a chart of a trailing P/E for NVR over the last 44 months (or so) reveals an unusual spike:

The current valuations could be justified if indeed we are in for a quick and robust economic rebound. Investors that consider a slightly longer recovery period might also consider revaluing these equities to more historical norms. And in case the rebound does not work out as well as these current valuations might suggest: These investors will have plenty of time to do just that.

Disclosure: Short NVR, Short REITs

Comments

[HardwoodFlo...:]

The idea that the wall street builders will participate in the new housng turnaround or build is insane! People don't want what these guys are building. They abviously did a terrible job managing the housing builds in this country. They are an abosolute joke. It's back to the future- small builders- what wall street calls "mom and pop shops".

Apr 27 08:21 PM

[Landbuyer:]

Amen

Apr 27 11:14 PM