mikeylikesit41

Are Homebuilders a Buy?

Okay, if you want someone who was calling the bubble then listen to me and my previous comment.

I bought right before the bubble because I saw the fundamentals shifting. I was renting at the time and it started to be a no-brainer to buy. That was at the end of 2000.

I sold that place in 2005 at the peak. Everyone told me I should rent it out when I move but I did the fundamentals again and said 'no way, it can only go down from here'. I peaked the market in my old neighborhood in MD and it has gone down from there after a brief stagnating of price.

Before that happened, I bought my upgrade house 40 miles away where there was a booming economy but the housing prices had not caught up yet. That was in 2003.

That's just the short history, I won't bore you with the 1990's. I did pretty well in that market also.

So, here is where I'm sitting today.

Doubled my money on the home bought in 2000.
Still up 10% on my current home even with the drop in prices (my neighbors aren't so lucky).
Looking for a home in AZ and you can read my analysis in my previous comment.

When you see home prices stagnate for a good 6 months, that is when the bottom has hit.

Check the local tax office for sales prices and do some leg work. Then relax and don't jump at the first deal. Monitor the area. You will see that the pundits calling for more housing price drops are correct.

Again, wait til you see prices stagnate for at least 6 months before calling a bottom.

Also, don't buy just because of a 'bottom'. Sit around and do the math. Does it make sense to buy a home vs rent.

If it doesn't, then the builders will have a longer flat price on their homes and their stock.

Only when it makes sense to buy a home again will the builders be ready to rally for another 5 years and you'll make money.

'nuf said.