Joe Friday

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?