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Homebuilding stocks have been on a tear now for over a year now, with leaders like KB Home...

Homebuilding stocks have been on a tear now for over a year now, with leaders like KB Home (KBH), PulteGroup (PHM), Lennar (LEN), and Toll Brothers (TOL) all racking up solid gains. With such a big move already underway in the sector, today's $200M IPO announcement by William Lyon Homes (WLH), along with the $602M Taylor Morrison (TMHC) IPO due out later this week, may be viewed by some contrarians as a sign of a top in the market.
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Comments (18)
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Since when has anything not be a sign of a top in the market? Let's sell everything and buy gold.
    9 Apr 2013, 08:49 PM Reply Like
  • StockTrader7
    , contributor
    Comments (22) | Send Message
     
    With these pending IPO's and TOL just pricing $300,000,000 of 10-year Notes last week at 4.375%, one should be very careful in this sector.
    Obviously it is always great to raise cash, or borrow cheaply like TOL appears to be doing, but with 90 million people not in the labor pool I cannot help but wonder who is buying newly built homes (other than federal workers in Washington DC or silicon valley newly minted millionaires).
    Are retiring baby-boomers going to build a new house? Gen Y/Millenials must be hungry to take on new debt because most Gen X'ers should know how this will play out and are thus risk-averse when it comes to housing.

     

    With the FED's ZIRP I suppose a brilliant CFO can navigate the lousy employment picture and deploy cash for a decent ROIC. What am I missing?
    9 Apr 2013, 09:13 PM Reply Like
  • rasanders22
    , contributor
    Comments (544) | Send Message
     
    From what I've heard, and I stress I have no data to back this up, foreign investors are buying up property. In AZ houses last only 1-2 days before being bought up by investors as a rental.
    9 Apr 2013, 11:22 PM Reply Like
  • blackswans
    , contributor
    Comments (155) | Send Message
     
    To put that in perspective, people who bought KBH from 2002-2008 probably aren't too happy with their gains either. (if they have any)
    9 Apr 2013, 09:21 PM Reply Like
  • WMARKW
    , contributor
    Comments (10466) | Send Message
     
    Tell me how you rekindle a bull market in housing with stagnant real wages, flat employment, declining work force participation, and higher taxes?
    9 Apr 2013, 10:59 PM Reply Like
  • rasanders22
    , contributor
    Comments (544) | Send Message
     
    The market bottomed out and you have people buying up investment homes. Afriend of mine has 4 houses. Also there is a publicly traded company I read about on SA that owns 2500 single family residences. They wouldn't be buying these homes if they didnt have people to rent them to though.
    9 Apr 2013, 11:24 PM Reply Like
  • blackswans
    , contributor
    Comments (155) | Send Message
     
    If you consider where the low was and where we were in 2007 is it really a bull market?
    10 Apr 2013, 12:01 AM Reply Like
  • Nolesince87
    , contributor
    Comments (258) | Send Message
     
    That would be a sign of a TOP in the market... now, all you have to do is show me a market?

     

    What we have now is a phony simulation of a market, and one that could go exponentially higher since it is being bought 4 days a week, every week, by private institutions using fake but FREE FED money!
    9 Apr 2013, 11:05 PM Reply Like
  • blackswans
    , contributor
    Comments (155) | Send Message
     
    It's pretty arrogant of you to jump to conclusions on what money is going where.... like you know. lol
    10 Apr 2013, 12:03 AM Reply Like
  • ZBNW
    , contributor
    Comments (138) | Send Message
     
    No money is any more fake than it is real. I think the decrease in ownership by an increase in rentals is a pretty negative feedback cycle as it leaches money from those trying to make the leap to ownership (assuming people are going from paying to own to paying for rent). On the other hand converting to a rental takes property off of the market and opens more doors for a new home to be built. I am one of those trying to get to ownership and feel pretty confident that this is a good time to invest (not buy something already overvalued of course) but to get cheap land, build something with quality before prices of everything go up even more and I don't see how that wont gain value over the next 10-20 years? Still a somewhat safe investment unless its anywhere really near sea level. As for these Co's, I'd like to see the fed's work pay off and at least create accessible jobs like construction/mfg.
    9 Apr 2013, 11:47 PM Reply Like
  • Ed Haines
    , contributor
    Comments (16) | Send Message
     
    @macro. Gold does not strike me as a good place to invest. No product to generate profits. No intrinsic value other than the emotional response of humans to the pretty gold color. Worst of all is that the stuff lasts for a very long time and more is mined each year leading to increasing supplies. Home builders, on the other hand manufacture a product with a life expectancy of several decades and that there is continuing demand for. Profits, employed persons to help the economy, and a better world in which to live.
    9 Apr 2013, 11:59 PM Reply Like
  • blackswans
    , contributor
    Comments (155) | Send Message
     
    Ed, the same could've been said in 1997 but it was a pretty good investment at that point. Not saying you should buy it now, though.
    10 Apr 2013, 12:05 AM Reply Like
  • ZBNW
    , contributor
    Comments (138) | Send Message
     
    I'd agree and in a total financial collapse, gold will only be one of many means of bargaining, and being only inert metal in a declining tech apocalypse which few have access to, I can't see it holding $1500 per ounce or see it fitting into that situation really. It's interesting how the market creates that value though, indeed it is tied to the value of other currencies though so total failure is a no-win.
    10 Apr 2013, 12:18 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    "No intrinsic value other than the emotional response of humans to the pretty gold color."

     

    Are we not always supposed to invest based on emotions?
    10 Apr 2013, 02:04 PM Reply Like
  • ksu
    , contributor
    Comments (64) | Send Message
     
    I don't think it is the top of housing market yet. I am in the Bay area and almost every house will receive multiple offers (sometimes, hundreds) and the trend still going on. Yes, it is crazy but the hype is there.
    10 Apr 2013, 01:27 AM Reply Like
  • WhartonMBAAlum
    , contributor
    Comments (29) | Send Message
     
    Taylor Morrison IPO only the 2nd IPO in almost A DECADE. (Last big one was Dec. 2004: Comtock IPO - down 85% since today.(
    http://bit.ly/10Skjg8

     

    Is this a sign the US housing market is definitely back?
    10 Apr 2013, 03:21 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    The market action today clearly shows that this is the top. Clearly.

     

    Go triple short equities and buy gold. No easier way to lose money.
    10 Apr 2013, 02:04 PM Reply Like
  • tony.yu
    , contributor
    Comment (1) | Send Message
     
    just eyeballing construction around orange county, its continuous, i imagine similar to pre-2008 levels. the big push here is from chinese investors (real estate jobs now list mandarin as a plus) since they have a strong hold in orange county property, and property values have increased up to 50% from the previous year, it seems like this would be a good buy, assuming the housing market is sustainable.

     

    my only concern would be any slow down of new construction projects, as that wont be quite evident until a year after these projects in construction are completed and habited
    13 May 2013, 03:24 PM Reply Like
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