Bankruptcies of Major Homebuilders and Real Estate prices

Port1385 · Apr 4, 2009

Im surprised to see that none of the major homebuilders has filed for bankruptcy during this entire time despite incredible economic conditions. I have not gone through their earnings reports or listened to any conference calls, but just a quick browse of their financial sheets indicates massive losses and incredible debt.

I have always been taught that the bottom to any market usually starts with a few high-profile bankruptcies and single digit stock prices where fear is at an extreme high. This hasnt occurred amongst the builders.

TOL has been trading in a defined range since 2007 which might indicate a base, but price can easily fall out of that range like it did with Countrywide Financial.

I can only surmise that we are not quite yet at the bottom with either housing prices or home builders. When one of the majors finally goes Chapter 11 then I think such etfs as the XHB will become attractive and real estate prices will finally bottom.

However, it seems like the majors can take a beating for a while and so this will be a long, grinding process....

navigateqd · Apr 4, 2009

Quote from Port1385:

Im surprised to see that none of the major homebuilders has filed for bankruptcy during this entire time despite incredible economic conditions. I have not gone through their earnings reports or listened to any conference calls, but just a quick browse of their financial sheets indicates massive losses and incredible debt.

I have always been taught that the bottom to any market usually starts with a few high-profile bankruptcies and single digit stock prices where fear is at an extreme high. This hasnt occurred amongst the builders.

TOL has been trading in a defined range since 2007 which might indicate a base, but price can easily fall out of that range like it did with Countrywide Financial.

I can only surmise that we are not quite yet at the bottom with either housing prices or home builders. When one of the majors finally goes Chapter 11 then I think such etfs as the XHB will become attractive and real estate prices will finally bottom.

However, it seems like the majors can take a beating for a while and so this will be a long, grinding process....

good point

Sky123987 · Apr 4, 2009

Quote from Port1385:

Im surprised to see that none of the major homebuilders has filed for bankruptcy during this entire time despite incredible economic conditions. I have not gone through their earnings reports or listened to any conference calls, but just a quick browse of their financial sheets indicates massive losses and incredible debt.

I have always been taught that the bottom to any market usually starts with a few high-profile bankruptcies and single digit stock prices where fear is at an extreme high. This hasnt occurred amongst the builders.

TOL has been trading in a defined range since 2007 which might indicate a base, but price can easily fall out of that range like it did with Countrywide Financial.

I can only surmise that we are not quite yet at the bottom with either housing prices or home builders. When one of the majors finally goes Chapter 11 then I think such etfs as the XHB will become attractive and real estate prices will finally bottom.

However, it seems like the majors can take a beating for a while and so this will be a long, grinding process....

wow, home to think of it yes. Very good point +2

Cutten · Apr 5, 2009

Yeah I am also surprised how long it takes. It was similar with dot.coms in 2001-02.

As for real estate prices, don't expect them to bottom when homebuilders do. In Japan residential prices fell 13 years in a row. The West had a big property bubble and 5 years of consecutive price falls would not be unusual.

athlonmank8 · Apr 5, 2009

Quote from Port1385:

Im surprised to see that none of the major homebuilders has filed for bankruptcy during this entire time despite incredible economic conditions. I have not gone through their earnings reports or listened to any conference calls, but just a quick browse of their financial sheets indicates massive losses and incredible debt.

I have always been taught that the bottom to any market usually starts with a few high-profile bankruptcies and single digit stock prices where fear is at an extreme high. This hasnt occurred amongst the builders.

TOL has been trading in a defined range since 2007 which might indicate a base, but price can easily fall out of that range like it did with Countrywide Financial.

I can only surmise that we are not quite yet at the bottom with either housing prices or home builders. When one of the majors finally goes Chapter 11 then I think such etfs as the XHB will become attractive and real estate prices will finally bottom.

However, it seems like the majors can take a beating for a while and so this will be a long, grinding process....

Why are you even posting? You don't have any clue what the fuck you're talking about.

They AREN'T going bankrupt. Not even close yet. I'll let you know when the scare comes, but it's a ways off. Do some homework before you post. PLEASE.

NazSpaz · Apr 5, 2009

Quote from athlonmank8:

Why are you even posting? You don't have any clue what the fuck you're talking about.

They AREN'T going bankrupt. Not even close yet. I'll let you know when the scare comes, but it's a ways off. Do some homework before you post. PLEASE.

Yeah, for real. Only THIS GUY should post. Ever. Please everyone do us all a favor and send all posts and all threads to this guy first for his approval, he has done all the homework on every topic and only he will decide when you should discuss anything. I wouldn't even take a piss or feed your dog without checking with him if you know what's good for you.

Even though Port1385 makes a very good point, and might have created a valuable discussion on the topic which seems both timely and informative - how dare he put something on these boards without athlonmank8 first giving a seal of approval. Wow.

jnorty · Apr 5, 2009

This is the 64k question and one of the most suprising aspects of the past 2 years. HOW THE HELL CAN WE BE IN A HOUSING DEPRESSION AND NO TOP 10 BUILDER HAS GONE UNDER YET? TO BOOT BUILDERS HAVE HAD AT LEAST 5 DIFFERENT 50-100% RUNS THE PAST 2 YEARS . Thats why the bottom in real estate nor the mkt is here. We also were supposed to get massive bk's in the retail space and so far we've got very few. To heal we must get a huge decrease in # of companies to reduce future supply.

lolatency · Apr 5, 2009

Quote from jnorty:

This is the 64k question and one of the most suprising aspects of the past 2 years. HOW THE HELL CAN WE BE IN A HOUSING DEPRESSION AND NO TOP 10 BUILDER HAS GONE UNDER YET? TO BOOT BUILDERS HAVE HAD AT LEAST 5 DIFFERENT 50-100% RUNS THE PAST 2 YEARS . Thats why the bottom in real estate nor the mkt is here. We also were supposed to get massive bk's in the retail space and so far we've got very few. To heal we must get a huge decrease in # of companies to reduce future supply.

It's still in the pipe, coming at us. SPG has a few units that have defaulted on debt payments and they diluted their stock to raise cash to pay off debt. There is irrational hope for commercial real estate, but, really, it's just a matter of time before consumer spending contracts more. As to when the market will acknowledge it? I imagine another earnings cycle or so.

Eight · Apr 5, 2009

Quote from Cutten:

In Japan residential prices fell 13 years in a row. The West had a big property bubble and 5 years of consecutive price falls would not be unusual.

The Japanese property bubble was bigger. At the top they had 150 year mortgages too. Five years of price declines in the US would not surprise me though.

flytiger · Apr 5, 2009

Quote from NazSpaz:

Yeah, for real. Only THIS GUY should post. Ever. Please everyone do us all a favor and send all posts and all threads to this guy first for his approval, he has done all the homework on every topic and only he will decide when you should discuss anything. I wouldn't even take a piss or feed your dog without checking with him if you know what's good for you.

Even though Port1385 makes a very good point, and might have created a valuable discussion on the topic which seems both timely and informative - how dare he put something on these boards without athlonmank8 first giving a seal of approval. Wow.

I agree 100%. doesn't do much for discourse, does it?

Don't like it? Move on. Lots of topics.

BTW., same with insurers. Only AIG has taken the pipe. Check out HIG, MET, LNC........... Huge problem for States, because they regulate and provide the bailout funds. And you know as well as I, the cruds at the State level couldn't keep their hands off that money. It's in somebody's pocket.

A friend of mine was going to buy another annuity with 7 1/2 % yield. I told him I should have kept my license, and I would have made 35 grand. Except, I told him, I'd talk him out of it. When he asked why, i told him that for three years, he's been dead right about everything. Collapse of pensions, the brokers, the economy.......... Did he want to bet that annuity would be solvent everyday for the next seven years?

It's a war out there, and you'd better fight mean, and to win. Or you won't be a survivor. I have to buy P and C. I don't have to buy "products".