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After a 72% Y/Y rise in the XHB, the housing recovery rates the cover at Barron's. "We're in the...

After a 72% Y/Y rise in the XHB, the housing recovery rates the cover at Barron's. "We're in the early stages," says Lennar (LEN) President Rick Beckwith. The industry could triple in size to 1.8M housing starts in the next 3-4 years, says Ivy Zelman, who thinks Lennar could earn $5.30/share in FY15 vs. $0.48 last year. A more speculative play is Beazer (BZH), which isn't yet profitable, but has eased short-term liquidity fears with recent capital raises.
Comments (57)
  • The housing starts to total nonfarm payroll employment averaged 1.17% in the 1990' it is .56%


    The range in the 1990's was .73% to 1.40%
    8 Sep 2012, 09:50 AM Reply Like
  • The housing recovery accelerates as doomers get crushed shorting the underlying equities....
    8 Sep 2012, 12:33 PM Reply Like
  • To improve the housing market, we would need a catalyst to turn around the employment numbers. Last month alone we had 368,000 folks quit looking for jobs and go on food stamps, or re-training, or disability or early retirement. That is why we were able to produce only 90,000 jobs and still show a bogus improvement in the unemployment figure. If that keeps up, you get a depression, not a housing boom.
    8 Sep 2012, 11:20 AM Reply Like
  • "If that keeps up, you get a depression, not a housing boom." Unless those in "re-training" can fill the multitude of open positions companies are unable to fill due to lack of education and training for our modern age.
    9 Sep 2012, 01:59 PM Reply Like
  • That is a dream number Zelman is imaging, with the current employment reports don't look for more than 5% GROWTH IN STARTS FOR THE NEXT TWO YEARS. Maybe when Romney is in office we can see 1 million units a year. Remember, at the height we had 2 million units, with absolutely no credit standards and many investors. That is all gone now.
    8 Sep 2012, 11:22 AM Reply Like
  • Year over year % change in single family housing starts...


    2012 07 17.016317016317000%
    2012 06 21.218961625282200
    2012 05 25.427872860635700
    2012 04 21.739130434782600
    2012 03 12.383177570093500
    2012 02 19.592875318066100
    2012 01 18.013856812933000
    2011 12 21.21212121212120
    8 Sep 2012, 11:43 AM Reply Like
  • 133.3 million nonfarm payroll employment times .73% = 973,000
    housing starts......times 1.17% = 1,559,000 housing starts....whoever
    wins this election is going to look like an economic genius....that is why political parties are desperate to win this election....


    8 Sep 2012, 11:36 AM Reply Like
  • bbro: Silly me- Thought it was a war between private enterprise / self-reliance and pure socialist-style income redistribution and massive unionization.
    8 Sep 2012, 11:55 AM Reply Like
  • Housing DEAD until 2015 and builder stocks will drop 50% in the next 3-6 months. Earnings NO WAY near current PE. Fools are buying DHI at $20 and PHM at $14 and KBH at $12 and LEN at $33. It will be a trap door drop when Qtr 3 orders drop again.
    8 Sep 2012, 11:42 AM Reply Like
  • So what, have PHM at 11 and NCS at 9 -- if have to sell will sell. No biggie.
    9 Sep 2012, 02:39 PM Reply Like
  • Agreed, the stocks are way ahead of themselves, TOL 2X book?, 50X earnings, and that is the darling of the street. BBRO, we still have about 1.67 million hidden inventory to work through, although the investors have done a good job so far. Wish I bought more properties in Florida.
    8 Sep 2012, 12:02 PM Reply Like
  • I'm waiting for more auctions .


    I've bought 12 apartments in the last year , and am looking for another 10


    I always hear about hidden inventory , but never about "shadow buyers " . Wonder if anyone follows such a number
    8 Sep 2012, 12:31 PM Reply Like
  • giving a machine gun to a bunch of monkeys
    8 Sep 2012, 12:17 PM Reply Like
  • I would love to know who buys the houses when the economy is not creating jobs and there are a significant amount of homes held off market.
    8 Sep 2012, 01:03 PM Reply Like
  • One error I see made, repeatedly, whether assessing the overall economy or a sector, like housing, is that the pessimists become infected with the outlook inspired by the media, which always takes the most pessimistic, "victimized" view of everything, the lowest common denominator. It's always the "guy without a job," the family losing their house," etc.


    The problem with the foregoing is that for 85-90% of the population, things are just fine. They have jobs, promotions, raises, houses, new cars, vacations, etc., all the normal aspects of life. Once that group emerges from the harrowing fear that gets engendered by a 2008-like event, then, their behaviors gradually return to normal, and, as they represent the overwhelming majority, they effectively control how the economy does.


    So, one has to decide whether one's own personal outlook is aligned with the "losers" or with the "winners." If one adopts the pessimistic outlook, constantly promoted by the media, then, one will likely make poor decisions.


    It's that simple.
    8 Sep 2012, 01:30 PM Reply Like
  • Here in Phoenix, Fannie Mae has been a huge buyer. Go figure, they're not only the seller, they're also the buyer.



    "The sale of the Fannie Mae foreclosure homes became apparent to data guru Tom Ruff of AZBidder on Wednesday night, when he tracked metro Phoenix's REO inventory -- homes taken back by banks that haven't been resold -- and realized it had dropped by 5 percent.


    In the latest sales filings, he discovered that a group called SFR 2012-1 US West LLC, located at 135 N. Los Robles Ave., fourth floor, in Pasadena, Calif., purchased 275 foreclosure homes from Fannie Mae that day. Each deal was individually recorded. Fannie Mae's Dallas office is listed as the seller.


    More research shows the buyer is an LLC created by Fannie Mae."
    8 Sep 2012, 05:07 PM Reply Like
  • Isn't the media going completely positive right now? All we are hearing about this week is the 7% increase in home prices this year. Even Barron's, the most pessimistic of all financial mainstream media, is now on the 7% "everything is great" bandwagon.


    The math is less than inspiring. If housing prices are down about 40% since the five year period beginning 2007, then a 7% increase this year means owners from 2007 are really up only 4.2% since the trough.


    What that means to those homeowners is that you are still down 35.75%, a significant amount below your purchase price. This is why the majority of mortgages are still deeply underwater. This has been widely reported in August, but with September's newly announced 7% increase, apparently now everything is okay.


    In the meantime, for that 85-90% for whom "things are just fine"... at the current rate of "improvement", they will need over 25 years to break even on the largest investment of their lives.


    8 Sep 2012, 07:35 PM Reply Like
  • Fam:


    I miss entirely the rationale of your comment, not to mention noting some faulty arithmetic, but that's less relevant. The important thing is that things are moving up, as in getting better, not worse. That usually leads to positive things happening with the economy and with realty-related share issues. Isn't that the point, as investors?


    What's to be gained by constant moaning that things aren't as good as they appear or should be, etc., etc? This constant wallowing in pessimistic thinking is a self-defeating outlook for investors. It's not even working for traders.
    8 Sep 2012, 07:41 PM Reply Like
  • Tack;


    Again, you nailed it!
    8 Sep 2012, 09:12 PM Reply Like
  • Tack,


    You are the one who used a 85 to 90% number of people who are "just fine" , not me.


    The drop in home values at 40% since 2007 is completely accurate.


    The rest of my calculations about what a person has really lost in spite of the recent 7% increase are basic math. If you lose 40% of your value in the investment and then it goes up 7%, you are still down 35.25% from your starting point.


    I am not relying upon the media. To use your phrase "It's that simple".


    8 Sep 2012, 10:34 PM Reply Like
  • Housing in San Diego is really tight. Prices are back up and inventory is very low. Friends who have been looking aren't finding anything they can afford (and yes, they're well off). At least around here, it's a sellers' market right now.
    9 Sep 2012, 12:06 AM Reply Like
  • azblackbird, as i understand it, the idea is for Fannie to auction off that LLC as a way of doing a bulk sale of their inventory. I think the transfer just means that they're moving inventory into the LLC so that it can be included in the auction.
    9 Sep 2012, 12:11 AM Reply Like
  • Why would they spend $34mm on properties they were going to bundle and auction anyways. Just doesn't add up. Call me crazy, but I think this is another BS scam by Fannie to pay back favors to their insiders by wrapping "cream of the crop" properties that are income producing, and letting them go for pennies on the dollar. If somebody really wanted to follow the money trail, I presume they'd lead to the typical beltway cronies.
    9 Sep 2012, 01:12 AM Reply Like
  • The 90% of working people taking advantage of low interest rates and super bargains. A no brainer!
    9 Sep 2012, 02:40 PM Reply Like
  • Exactly. I hold Whole Foods stock and have been reading these past few years how people won't pay more for groceries during recession. Not true. WFM has been my best and most steadily growing position; a worry free stock.
    9 Sep 2012, 02:43 PM Reply Like
  • So why did you disappear yesterday when the bad jobs number came out like you did during the Spring selloff?
    8 Sep 2012, 01:36 PM Reply Like
  • DU:


    Is that question for me? Disappeared in spring? Hardly. Was here advising everybody to stay the course and buy. Ignored by the doom set, as usual.


    Believe it or not, I have a life outside SA and investment management. As I posted elsewhere, yesterday I was out restocking the wine supply.


    Also, if you have read many of my previous posts on the subject (apparently not), I hardly pay attention to the unemployment/jobs numbers, as I see them as having little to do with the overall economic performance, for same reasons as I just iterated, above. In fact, when employment really gets fired up, it's usually a sign we're approaching an economic and market top. So, as far as I am concerned, it can meander along in a mildly positive manner.


    Stay negative. Don't worry. One day you'll be able to celebrate. You just won't be any richer when it arrives.
    8 Sep 2012, 01:43 PM Reply Like
  • Tack,


    You are the one that started this not me with snarky statements like this one.


    "Stay negative. Don't worry. One day you'll be able to celebrate. You just won't be any richer when it arrives."


    You tend to follow myself and others around SA without providing any factual basis for your opinions appearing on up days and disappearing on down days.


    I do do seem to notice that many posts follow mine pointing out where I am supposedly wrong yet you offer no facts to back up your statements.


    If you understood what it meant to be contrarian it is not being negative to be cool. Part of it is pointing out the inconsistencies between what is being reported/not reported in the press and what is actually happening in reality and how those inconsisencies can be exploited for profit or to take profits.


    As for your strategy many here would like to know because nobody has seen an article from you.


    Just remember that I was you who dug through my profile not the other way around.


    The passive aggressiveness of your comments is really quite insulting to many people here.
    8 Sep 2012, 06:57 PM Reply Like
  • DU:


    I started this? Quote:


    "So why did you disappear yesterday when the bad jobs number came out like you did during the Spring selloff?"


    Not only sarcastic, but false. Also, it's in your imagination that I run away on down days. And, I was here all spring, virtually every day, too. On the contrary, I am typically here, probably too much, trying to counter the usual SA hysteria, so people don't might avoid ill-conceived investment decisions.


    Perhaps, if you placed me on your follow list, you'd have had ample opportunity to understand very specifically what I do, as it's been outlined too many times to count. In summary, as per my profile, I am a high-yield, deep-value investor. I buy out-of-favor issues and sectors, always with a significant yield component. I don't trade or short. I, also, don't write articles. I've also stated for many months that the sectors I presently favor are financials, real estate, energy and select European issues. It's been a pretty good choice, I'd say.


    I am here, almost all the time, except when traveling, busy or otherwise involved with family. Your assertion that I disappear on down days is utter nonsense. Go check my post records; try to find my some pattern to my absences.


    If you want to make disagreement over economic views a personal matter, feel free, but it doesn't make your opinions hold any more veracity. I stand by my comments on the economy, markets and investment suggestions. It's a free world, so you may differ.


    If you wish to debate the economy or markets, I'm open to further discussion, but this is my final comment on the personal assertions.
    8 Sep 2012, 07:18 PM Reply Like
  • DU:


    P.S. Just to show how unfounded your claim is, I checked my post log, and I posted on SA every single day during the May selloff, even weekends and holidays. So much for "disappearing."
    8 Sep 2012, 07:33 PM Reply Like
  • Tack;


    You have no explaining to do. Your well reasoned and counter-hysteria, doomsday eminent comments are excellent.


    I have found your comments well written, to the point and informative. You and BBRO are able to cut through the SA doom and gloom crowd, and not in a Poliana way.
    8 Sep 2012, 09:26 PM Reply Like
  • Tack, I would be forever in thanks to you. You gave me some pretty good stocks at the start of the year.


    Keep doing what you are doing.
    9 Sep 2012, 12:22 PM Reply Like
  • We may have seen a housing dead cat bounce as mortgage rates were artificially suppressed. What will happen when yields start soaring and unemployment remains dangerously high?

    8 Sep 2012, 09:29 PM Reply Like
  • Stock prices have gone up considerably. No one can argue that. We have made it all the way up to 1999 levels. So 13 years of no growth. Housing prices have started to rebound (debatable but lets go with it). Where are we with housing, 2003? Anyone saving in the bank is guaranteed a 0% growth rate (okay maybe 0.5%). Bonds paying slightly higher with considerable risk at this point. If gold serves as anything it is the canary in the coal mine and if you take a look the canary dropped dead a while back.


    Go ahead now and wow me with how despite no growth going on anywhere in REAL (not optomistic or pessimistic) terms, everyone has made so much money. Kinda depends a bit, no? Maybe some people got lucky with timing. The buy and hold guy has gone nowhere. The stats back that up. It's not even debatable. This is to no one in particular. I would love to see a response to the macro point and spare me the "if you just bought apple" garbage.
    8 Sep 2012, 10:11 PM Reply Like
  • Anyone who dollar cost averaged over the last 13 years and reinvested their dividends made considerably more than your "no growth" description would suggest. I'm not going to look up the figure. So it goes with secular bears. What's your point?
    9 Sep 2012, 02:05 AM Reply Like
  • I am using the indexes as the proxy here. They are stuck in the same place they were 10 plus years ago. Add in dividends if you want and subtract inflation. My point is everyone throws around bulls and bears and optomism and pessimism around here too much. Just look at the numbers.
    9 Sep 2012, 06:49 AM Reply Like
  • I'm aware that you're just looking at the indexes, and that's exactly the point. That's not what any real person's performance has been, so I don't know why you would do that.
    9 Sep 2012, 12:05 PM Reply Like
  • Have to agree with Sean. Market indices don't tell the true story as these "averages" have changed a lot.


    Since I started investing, it always has been a stock picker market, selecting just a handul good companies in which their underlying equities were below the target I appreciated.


    We can't just say because the Dow Jones was flat, not one made money....
    9 Sep 2012, 12:18 PM Reply Like
  • Please define "any real person". I realize this site is more for traders and therefore individual stocks. However most people's retirement funds etc. are in either index funds or actively managed funds, which have a hard time beating the index...and we seem to agree the indexes have gone nowhere.
    9 Sep 2012, 12:19 PM Reply Like
  • Most small investors do not have the time to stock pick the market and instead choose to invest in index funds.


    The indices going nowhere just confirms a long-term technical pattern that goes back around 100 years where the markets move in patterns close to 16 years upwards and then close to 16 years sideways.
    9 Sep 2012, 03:07 PM Reply Like
  • We can say the dow jones was flat, anyone who owned some of the dow jones companies made money, others did not (hence flat). However the trillions in 401(k) plans that only have access to the index funds, or actively managed funds that, in most cases, did not even match the flat index, did not make money. Thats my point. With DB plans gone away and DC plans here and now....many people will not get to the numbers they need. That, I guess, is my point. That is not a bull/bear or optomist/pessimist conversation. It is reality
    9 Sep 2012, 04:14 PM Reply Like
  • FF


    Ironically, DB plans were/are no less risky than DC plans because if the managers don't make the returns, the benefits often don't get paid. In fact, it might even be argued that DB plans are even more dangerous, as they promote complacency on the part of recipients that their actual returns and payments are not at risk.
    9 Sep 2012, 04:23 PM Reply Like
  • Hey tack, I assume you are talking about private DB plans? The public ones get help from Joe taxpayer. Correct?


    But you do make a good point.
    9 Sep 2012, 06:05 PM Reply Like
  • FF


    Actually, both. You may have noticed CA recently reworking DB plans.
    9 Sep 2012, 06:14 PM Reply Like
  • Tack. Come on. Show me a government employee who has taken a pay cut on their pension on CA and I will show you a riot in progress. Maybe future generations will get screwed. They will have to suffer 90k/yr pensions instead of 100k. I will shed a tear for them.


    Same goes for the rest of the country. You are correct that pension plans are in trouble. Many of them are probably re-working them. That will translate to future benefits perhaps being a bit less. But while the private sector has absolutely handed some pensions to the pbgc, the public sector has not suffered the same fate.
    9 Sep 2012, 06:27 PM Reply Like
  • FF:


    Do a Google on "California pensions" and "rework" and you'll see numerous instances of plans being revised and renegotiated. If you think that the public-sector stuff is locked in stone and that the taxpayers are just going to eat it, you are mistaken. Even the payees realize they're in trouble.
    9 Sep 2012, 06:33 PM Reply Like
  • Tack:


    I agree they realize they are in trouble. I also believe that since the banks got their bailouts, the government pensions will get theirs as well. The rest of us will all foot the bill. I find your viewpoint on this interesting. If you think the DC plans have troubles as well as DB plans, that seems to indicate the economy as a whole has major problems. Outside of QE etc. etc. what makes you so positive on the economy when your views here seem to contradict that?


    Here is a quick google search return: "In our opinion, Brown needs to make pension reform a top political priority if he hopes to have his tax measures pass in November. It's hard to tell the voting public they have to be willing to pay more in taxes if the governor is not willing to go to the mat and wrestle with one of the largest issues facing California's economic future.


    It certainly will not be easy. Public employee unions carry a lot of weight, not to mention cash"


    Same as it ever was?
    9 Sep 2012, 07:03 PM Reply Like
  • FF


    On the contrary, the fact that the problem is recognized by all and various negotiations and revisions are in progress is entirely positive and a sign that the system is adjusting to reality. Those that think everything will collapse, no matter what the issue, will be in error once again.
    9 Sep 2012, 07:27 PM Reply Like
  • Tack, since you seem to be pretty clear headed, let me ask you....why does every conversation on here have to be reduced tro "collapse"?


    It would seem that if the revisions you speak of actually go through, the people recieving these benefits will have a reduced standard of living. If these types of revisions start taking place across the board (and I agree they need to take place) then you have a hit to GDP and the economy as a whole. The economy would go through a pretty severe recession. That would actually be healthy and hopefully lead to growth. But not until the medicine is actually swallowed. Your unbridled enthusiasmin the face of this is kind of odd. It seems like you are just trying to thumb your nose at some doomsdayers on here instead of looking at reality.
    9 Sep 2012, 07:41 PM Reply Like
  • FF


    If excess unearned monies aren't paid, then somebody else will benefit, no?


    Things get worked out. Life goes on. The only people that pessimists screw are themselves.
    9 Sep 2012, 07:53 PM Reply Like
  • Okay Tack, I see you don't like the reality game. I see that you don't like looking at two sides of a coin. Or calling a spade a spade. You had no actual reply. Recessions happen Tack. They are actually a normal function of the business cycle. It you can identify the signs of one coming (like a lot of people did in countless recessions before) and you seem to admit to here, you can profit, or at least mitigate the damage. But no, let's chalk it up to permenant optomism over dommsdayer collapse types.....
    9 Sep 2012, 08:00 PM Reply Like
  • The government is the housing market.


    Fannie and Freddie back most of the mortgage. FHA gives out loans 3 1/2% down payment, federal reserve buys mortgage-backed securities to the of trillions and the making homes affordable which actually raise the price houses.


    And and all the money printing to raise the price of housing is causing some serious inflation. I don't know where they get less 2%. Even the price of clothes is rising. Food gasoline Health care going stratospheric


    So if we get hyperinflation Price of houses might actually go up, they won't go up in in terms of gold or Silver oil copper Etc. etc.
    9 Sep 2012, 02:10 AM Reply Like
  • Sooooo tired of housing fools. Guess what, the oldest boomers are approaching their peak mortality years...they will be dying in unprecedented numbers. Obviously, that real estate will wind up back on the market, alongside a massive hidden inventory the banks want you to pretend does not exist.
    9 Sep 2012, 02:51 PM Reply Like
  • $1.8M starts represent somewhere near the 2008 peak (


    These lofty projections are unlikely unless there are new "affordable housing" programs. We all know where those got us in the last ramp up. Just who will be buying these many new homes and with what capital/savings? Rates cannot remain low and teaser rates are yet another caveat to systemic risks. Building costs are also likely to rise significantly.
    9 Sep 2012, 07:10 PM Reply Like
  • Digging a hole in the ground and calling it a "start" for reporting purposes does not mean this is a recovery. Multi family housing popping up everywhere because people cannot afford single family homes anymore does not mean this is a recovery. But it certainly can mean profits for homebuilders in the short term.
    9 Sep 2012, 07:22 PM Reply Like
  • You guys are great, really enjoy the SA community. Very insightful analysis and getting to know everyone. I would love to watch a sitdown with Archman Investor and phemale60. Heck, throw joe kelly in there for a bonus.
    9 Sep 2012, 11:44 PM Reply Like
  • Here in California home prices are going up, a lot of activity going on. Construction picking up, my brother who was unemployed just got a job. There is a feel that we are growing again.
    10 Sep 2012, 02:22 AM Reply Like
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