Its cyclical. Its just that we have been in a very long up cycle. Just because there have been 10 great years in a row, doesn't mean that year 11 won't be awful. Past history means little. I think you would benefit from some forward looking research. Such as recent order trends and snap shots of some of the local RE markets. Go to realtytimes.com and you will find more and more descriptions of buyers markets.
If you look at Nevada operations of many of the HB's, you would see 60-80% decline in orders in 2'nd half of 2004 from the first half of 2004. This as Las Vegas speculators all dumped at same time after huge run up.
I don't think that KO could ever see a drop of this magnitude in one market of even 10%.
I agree that Home Builders deserved a higher PE over the last 3 years. But now I think they deserve a super low PE because there is a lot of evidence that 2004 was the PEAK. Most notably a large drop in orders in Q3 and Q4. Also home prices tracking flat to slightly down in many of the top markets.
The stocks were way too low in the summer. BZH under $100 didn't make much sense. But now they may be too high given the poor Q4 orders reported by nearly every builder except SPF and maybe KBH.
When Q1 and Q2 2005 orders are reported, I expect many HB's to have negative comps. Now that homes are not appreciating they are not selling out nearly as fast.
HB's were too cheap in the summer. But now the low PE's may be finally warranted.