Interested in others take on this. My question is not whether the worst is over in the housing market. My question is: is the worst case scenario priced into the homebuilders already?? Thanks in advance for your response!
Every answer you may get is a useless opinion. Just follow the price. Any position you take has risks which once handled you have nothing to worry about.
Hello, I have been actively trading the builders for quite some time now(since shorting last spring) so I have some insight into the sector. I do not believe the worst is over for this sector(and is not priced in) and my money is predominantly on the short side. Although I have made dozens of short term entries on the long side for intraday and swing trades when the markets provide opportunities. Builders are toxic. Earnings are no where to be found. There will be bankruptcies. No light at the end of the tunnel for housing crisis. Economy is tanking. Builders are going to suffer a lot more and from my analysis the worst is yet to come. I would advise caution to you as it is a tricky sector and if you don't have your finger on the pulse of the sector you can get hurt. Lots of swings and short squeezes. case in point....today the sector and many builders were up despite the market selling off. It does that from time to time. Good Luck
Bankruptcies are coming, its a given. The amount of houses on the market is climbing every single day. Builders are not going to stop building which is a problem since there is nearly a year of unsold houses on the market at this very moment. Homebuilders are facing problems all over the place, how they can keep building is beyond me, the demand is no where to be found and wont be for many years. Homebuilders are facing a glut of inventory and existing housing sales continue to slide due to arms adjusting and foreclosures rising. Until foreclosures peak housing is going to fall.
Builders have stopped building. They ALL are struggling to survive and they are selling off land and doing everything they can to preserve capital and remain in existence. As an example (and I clearly realize my area view is not endemic of the rest of the country, but....) CBG has a development of McMansions that they have been building for over a year where I live Reno/Tahoe. The project should have could have been done a year ago. A few dozen trucks just sitting there. I'd say that is the case elsewhere. Foreclosures have yet to peak and as I see it we aren't even midway through the whole financial/credit/housing mess. Factor in that the economy IS JUST GETTING STARTED in its downturn. OUCH!!!! I believe the economy is just getting started to the downside/ we are just getting to see TRUE GDP NUMBERS and the markets have not yet even priced (The markets have been Blind lately/my opinion) in the loss of jobs we will be seeing shortly and other deteriorating economic factors. Personally I Try and stay a step ahead of the herd. A word of caution to any traders looking to make a buck off the builders on the short side(which I do believe there is further downside) from right here. Tread carefully in this sector. You need to do your (TRADING) homework a bit here. This area is for savvy experienced traders shorting financials and builders etc from here. Good Luck! Happy Trades! 1Flyfisher
Fly, Very insightful post. I made some money in XHB, RYL, & DHI earlier in the year and you are right. This is not a sector to be cavalier about; it will eat you up. Happy trading. BA
Homebuilders remind me of Gold Stocks.. trade them often if you can.. Hold in either direction and you'll see profits come and go.
I don't think it is, simply because everyone is looking for a bottom in the homebuilders. I think its hard to say you've bottomed out when you have litterally thousands of investors standing on the sideline waiting to buy.
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