David Lentz

Another Absurd Homebuilder Rally

"Stephen Kim sounds like a guy you should listen to if you want to lose two-thirds of your money."

ONLY two-thirds?

I think that a much better indicator of when to buy would be when the holders of hundreds of thousands (millions?) of repo'd homes that they are unable to re-sell, begin bulldozing them and writing down the losses.

Similar to the time during Nixon's Adventure with Wage and Price controls in the 1970's when I saw TV news video of farmers burning trays of baby chicks alive, as it was the cheapest way to avoid the huge losses incurred by raising them to a marketable size, where they couldn't be sold for even a fraction of what it took to raise them. I knew then that the end of wage & price controls was at hand.

When the holders of all these repo'd homes destroy them to get them off their books (selling them at auction for any price would create unrealistic expectations for home prices and further retard the housing recovery with a significant number of homes being traded at sub-market prices), then a recovery will finally be able to begin. What all the families that formerly occupied those homes will do, I can't imagine.