Lennar best short for 2010 and 2011 - how is that working so far? Facts are these, 5 million more 25 to 29 year olds will be looking to purchase in the next 10 years. 30 million more americans in the next 30 years. Buying a home in most markets is now cheaper than renting and with employment stabilizing, we will finally get new household formation. First rule of thumb to investing when people are angry and read the headlines how housing is dead, this is when you buy. The tax gift given to builders last year was a billion dollar gift. Lennar has stated they can earn 20 percent margin on these lots in Florida. Anyone in the housing market knows this is unheard of with most profit margins coming in at 7 to 15 at best. Finally, price of lumber increasing although a higher cost is indicative of a strong market 12 months from now.
Jeff, there's an opposite spin to your post. Those new buyers can't find a good enough job to buy. And if they do, home prices falling to meet the buyer means a slim profit margin. Lastly, rail transport numbers show lumber still very depressed. I like the home builders over the next couple months. By summer though I'll be gone from here. JKP