SteveD64

Homebuilders Face More Tough Times in 2009

The big public homebuilders are dinosaurs.....they are ill suited to being a public company...better off going private...

Their biggest danger is that they have no moat around their business....the small local/regional homebuilders will run circles around them in the future.

They simply can no longer compete in the forseeable future

Toll Brothers' October Surprise

I think by the end of 2009 most if not all public homebuilders will be gone. The home building business is one that does not lend itself to being a public company.

They make a lot of money being able to produce a large amount of homes and sell them at a nice price. Those large developments are so overbuilt now it will take a decade for that need again, if ever. Also, the cities are going to be very reluctant to allow such massive development and then they are left to adminster the downside of the results.

The Toll Bros., Centex, Beazer, etc cannot compete with the smaller local builder who can move quicker and is established in the local area.
Their overhead/management levels add too much to the cost.

Homebuilding is one of the few industries that a small local guy can compete with a national public company on an equal basis. Each house is unique unto itself.

I think they are better to "hookup" with a hedge fund as a private company. This provides them with a large financial partner and removes the unreliable public financing sources.

Also, always remember, homebuilders are not in the real estate business. They are in the manufacturing business. No different than Sony, Dell, or Toyota