Housing Rolling Along 2

that photo's at low tide when all that acreage is exposed and flood insurance might be a little high - don't forget to sign the boat wake addendum

 

HOV guides down today. Hits 52 week lows....as the great unwinding of the building machine continues. OWP

 

the bubble hype...

“South Florida,'’ he said, ‘’is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05


fast forward to the reality...

JACKSONVILLE, Fla.--(BUSINESS WIRE)--May 2, 2006--The St. Joe Company (NYSE:JOE - News) today announced that its Net Income for the first quarter of 2006 was $3.7 million, or $0.05 per share, compared to $15.4 million, or $0.20 per share, for the first quarter of 2005. All per share references in this release are presented on a diluted basis.


St. Joe (biggest private Florida landholder) net income down 75%! lol...OWP

 

now would be a good time to hedge, imo.

the irony of the housing bubble is that i havent seen anyone really be able to cash out of it. ive seen houses double or triple, and people selling, but then they move into an even bigger house. its like during the tech bubble selling out of csco to load up on juniper... or they buy a new benz... and they pay transaction costs buying and selling. in the end im almost sure many people will have lost money.

 

Boneheads that can't think outside the box always move to a bigger house or use entire equity buying the new place. Nothing says you have to trade one overpriced asset for another more expensive overpriced asset?

What's wrong with renting for a few years with a ton of cash in the bank? I've done exactly that and VERY happy with the results.

 

Ameriquest Parent to Lay Off 3,800 Workers

http://news.google.com/news?hl=en&n...ent+to+Lay+Off+3,800+Workers&btnG=Search+News

 

I think part of the move has a great deal to do with their business model. Contact centers are key to effectively doing business as a mortgage company, rather than maintaining a large number of branch offices.

 

Very good point, this is something that I see all the time. I've frequently seen realtors quoted as saying that you can't really cash in on housing appreciation, they conveniently forget about the option to rent instead of own.

 

Exactly..

 

Historically home builder stocks have a low PE ratio, even during the last few years of this recent mania. But there is good reason for this, they get roundly clobbered during the enviable busts that follow in this cyclical industry. Imagine Procter and Gamble announcing soap sales were off 30% to 45%...unthinkable! Where did the "demand" go again??? lol... OWP

http://www.marketwatch.com/News/Sto...E608-4DEA-8E5E-02197A921780}&siteid=mktw&dist

"Toll Brothers has some numbers out. “Toll Brothers, the Horsham, Pa.-based luxury home builder, said the value of signed contracts declined 29% in the quarter ended April 30. Toll Brothers also cut its estimate of home deliveries for the year, as speculative buyers quit the market and ordinary demand slackens on concerns about the direction of house prices.”

“Toll Brothers Inc. on Friday cut its forecast for the number of homes it expects to sell in fiscal 2006, as quarterly orders fell 32 percent. It was the third time since November that Toll slashed its forecast for the number of homes it expected to sell in the year.”

“‘I think the Street was looking for weakness, just not this weak,’ said (analyst) John Tomlinson.”

“The decline in orders reflects softening demand and a build up of homes on the market, especially by speculators who are unloading their investments as their anticipated profit evaporates.”

“Orders fell sharply in Toll’s biggest market, the Mid-Atlantic states of Delaware, Maryland, Pennsylvania and Virginia, where they were off 45 percent.

http://www.rockymountainnews.com/drmn/real_estate/article/0,1299,DRMN_414_4675068,00.html
“The number of unsold homes on the Denver-area market hit a record 29,045 in April, according to reports released Thursday. Rising foreclosures were the driving force for the skyrocketing inventory, which is 19.2 percent higher than a year ago, experts said.”

“Buyer representatives are telling (realtor) Ed Jalowsky that about half the homes priced under $250,000 are either in foreclosure, are owned outright by a lender or the U.S. Department of Housing and Urban Development, or are selling for less than the amount owed on the mortgage.”

“Jalowsky blames rising payments on adjustable-rate mortgages, which are squeezing home owners.”

“‘The logjam of homes is increasing each month,’ said (realtor) Steve McGuire in Highlands Ranch. ‘It is similar to back in the 1980s when we had a high number of foreclosures. The market was impacted greatly.’ In Denver said he urges potential sellers to be realistic about the price they can get or expect to spend a long time on the market.”

“‘Foreclosures definitely are having an impact,’ said McGuire.”

“Competition from foreclosures will drive down prices in the lower- end market, ultimately causing more homes to end up in foreclosure, Jalowsky said. ‘It is a real shame,’ said. ‘It’s a battlefield out there for homes under $200,000. I just hope the blood flow will slow.’”