Housing Sector

S

StockKJay

Hey All,

New Home Sales and other economic stats have consistanly been stacking up against the housing stocks. DHI, KBH, PHM, LEN etc have all dropped significantly over the last few quarters. I am curious how some of you are approaching this sector. Housing is becoming less and less what it was in 2001,2002,2003. Are housing stocks going to be able to maintain the levels that they have moved to over the past 5 years?

I myself have opened small positions in the sector. I for one am uncertain of its next major move. If things start going really bad for housing, which bad could be just not very good... I wouldnt be suprised to see 30,40% discounts on share prices.

Taking another approach? Lets hear it.

Thanks
 
I think an argument could made either way. Is this just a lull in a 20 year bull market? Or is it the beginning of the end? Who knows. I never thought interest rates would stay this low for so long. My bet is that this is at least and intermediate bottom in the housing sector, but the housing stocks probably won't reflect this right away.
 
If you look at share dillution among major homebuilders, they are, in reality, still close to all time highs.

As an example: There are 4 times as many Toll Brother shares now as there were in 2002.

The same is roughly true of Pulte and Centex.

These stocks have much firther to fall despite their apparent haircut.
 
I think the homebuilders have plenty of room to fall, they may look cheap but I think most of them fall another 10-15%, the housing boom is over and will be for quite sometime. If there is a recession in 2007 you can just forget about the homebuilders all together, that could easily knock off another 30-50%. Best thing to do is stay away from the homebuilders for now. However, if you really want in and want to diversify within that sector i would suggest XHB, its an ETF made up of homebuilders. Less volatile and very diversified.
 
Quote from StockKJay:

That is very true. Thanks for the opinions gentlemen.
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Kjay, when you get a chance, go to the charts and check out the stock splits on the top 5 homebuilders.
 
Quote from ByLoSellHi:

Kjay, when you get a chance, go to the charts and check out the stock splits on the top 5 homebuilders.
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Yep, already have done that. A lot of splits :)

The rail transportation sector is the hot one. Just found out about it a month or two late.
 
Splits are shown and accounted for in stock charts, hope you realize that.

You want to look for dilution through warrants and stock option grants. I know TOL had a ton, not sure bout the others.
 
Quote from Hydroblunt:

Splits are shown and accounted for in stock charts, hope you realize that.

You want to look for dilution through warrants and stock option grants. I know TOL had a ton, not sure bout the others.
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Yes I am aware of that. Just asking for some other perspectives. Housing sector will make another move soon. Right now it has me fooled as to which way it will head. Numbers are telling me it should be headed down, gut tells me its going up... at least 10% avg.

I guess the next month or two will show a thing or two.

Thanks guys,
 
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