Joe Friday

As Housing Market Struggles, Homebuilders Focus on Survival

Good Article. The one remaining piece of the puzzle after one analyzes the cash position of each builder, is determining when their loans mature and the cash balances start to decline. The cash builds are really the result of the homebuilders selling their inventory and not reinvesting the proceecds. Rather they are buidling cash in the hopes it will last long enough to get them through the storm. It is the equivalent of "burning the furniture to stay warm'. The builders who have large debt maturities in these next couple of years, may find it hard to survive.

Downside For KB Homes Not Necessarily Priced In

dhk. can you share your insight as a builder as to the realistic decline in lot values in your area, and to the extent that you can, comment on the lot inventory of KB. It seems to me that, for the most part, putting a real value on the lot inventory is the key question in determining the realistic value of the homebuilders.

Homebuilder ETF Rises Despite More Bad Housing News

I am on the bear side of this debate as well. One would not buy this index today unless you thought we were near a bottom in the housing decline. Even if you are a long term holder, you still want to enter your position when it is most advantageous (ie cheapest). There is no indication that the housing market is anywhere near a bottom. All indicators show that there is much more pain to come, and many of these homebuilders will default on their loans, resulting in the total elimination of their 'equity'. Buy the index if you believe we are close to a bottom, otherwise, avoid it.
I beleive many of these HB stocks will not survive.
Question for discussion, which one of them is most likely to default. My premlinary thought is CTX. Lots of land inventory in terrible markets, and 60% leverage on the balance sheet. Other thoughts?

Shorting the Homebuilders as Their Stocks Surge

there is absolutely no evidence to show that the housing market is starting to improve. The factual evidence from the marketplace indicates that the market is still declining, and the inventory numbers would suggest that it will decline for the foreseeable future. Buying or shorting based on historical patterns that someone believes will repeat is pure folly. The market is dynamic place, no patterns repeat precisely.
Those homebuilders that survive will be great buys one day, but there is no reason to buy them yet.