There is an article discussing much of what I said above that just came up on CBSMarketwatch.com a few minutes ago about first-time homebuyers being house poor.
Two proposals. Puts on homes not stocks. how do I sell puts to owners of homes and be protected from the downside when I get wiped out. I would like to blame my computer models and not got to jail. Or How do I buy puts for my home own from someone who will still be standing. Finally were a good souce of being able to structure some good put spreads or back spreads in these stocks.
I think you would be the only trader in NYC that compares NVR with MSFT. Like I said New Traders Stay away from NVR
HOV is the one I've been playing. There isn't just a housing bubble, there is a debt bubble. I have never seen or read about another period in history where the individual consumer was so buried in debt. check out fannie may. There is a good reason that it has been going down. Defaults and late payments are rising
I would think that the one that handles student loans would be in a similar situation as well. Brandon
DJ Hovnanian Sept Orders -2: Calif New-Home Orders Up 900% RED BANK, N.J. (Dow Jones)--Hovnanian Enterprises Inc. (HOV) September new home orders rose 94.3% to 851, with orders in California especially strong. In a press release Thursday, the homebuilder said new home orders increased 900% last month in California to 360. In dollar value, total new home orders grew 110.6% to $218.1 million. In California the increase was 833.8% to $87.7 million. Hovnanian also saw increases in the Northeast, Texas and North Carolina but a 9.9% decline in new home orders in metro D.C. But new home orders in the region increased 16.3% on a dollar-value basis. At the end of the month, the number of active selling communities increased 6.1% to 190 communities from 179 communities a year earlier. The number of active selling communities in California, including the effect of the forecast homes acquisition, grew 311%. Company Web site: http://www.khov.com -Lisa Reynolds; Dow Jones Newswires; 201-938-5400 (END) DOW JONES NEWS 10-03-02 06:13 AM- - 06 13 AM EDT 10-03-02
I agree that these stocks look very heavy. However, shorting a stock that thinly traded(NVR) makes the hair on the back of neck standup!
I'm not so sure I would call it a "Bubble". A bubble, or mania, implys people buying ONLY because its going up....the greater fool theory. The fundamentals are strong. Namely household formation (immigrants, Echo boomers, empty nesters downsizing etc...) and low inventory. I do belive, however that a good deal of the recent appreciation is due solely to very low interest rates. A $100,000 loan for 30 years @ 8% is $733.76/month. The same loan @ 6% is $599.55. Few people pay cash so it becames a question of "how much down and how much a month". So you could see a pullback in prices nationally and probably some regional horror stories (like Houston in the oil bust). Also, they ain't making any more land. Its getting harder and harder to get land zoned for houses. In the county I live in, they just voted to raise the "proffers" builders pay to $9,000 per house. This helps the locality pay for schools, roads etc...This is in a market with average new homes around $150,000. That's a pretty steep increase. The two things to watch are interest rates and supply.