You might be right, I might be right. But I'm probably just early.
So far I'm up just under 20% YTD in my PA... and I was up 65% last year. My cost is down to $9 and I think this a great buy here. Remember, we're already over 4 years in to the housing mess... no quick fix is right, but we're probably at the tail end of the trough.
But population growth only one leg of the stool. Other conditions for HB stock to grow MUST be present as well, its not optional. We have to have positive employment numbers, growth in real incomes, and eventually non-subsidized growth in GDP. Otherwise HB's do not have a profitable business model, or perhaps one with very limited profitability potential. I have read Graham years ago. Mr. Graham would be the first to realize that without price discovery in the housing market PHM's book value is entirely opaque. You really don't believe their assets are marked to market do you? If anything in 18 months we will be contending with the dumping of the huge shadow inventory of the ongoing foreclosure fiasco.
If you want to read something useful try "A History of Money and Banking in the United States" by Rothbard. You won't make it more than the first three chapters before you realize there will be no easy or quick fix to the current real estate maelstrom under current FED policy and economic stress. Perhaps you can cost average all the way down to $5.00. At that point three to five years from now, if the income and employment condition improve, I may be a buyer as well. Currently the opportunity cost of holding this dog is just too great.
Go read some Benjamin Graham. I'll buy it at or around book value any day. I just keep buying. Bought more today.
Housing starts can't stay this low for much longer than 18 months.
We have population growth to contend with.
Meredith has been singing that song for several years. She was right at first. I doubt she will continue to be right. Actually, I am investing on the other side, so I do not believe she will continue to be right. Some people just cannot change their opinion.
I agree with Meredith, look at the level of foreclosed homes on the market. Many of these homes are a great buy, many of these owners upgraded their appliances and made nice additions when cash was easy to obtain. These nice options you would die for. Adding these to a new home would still cost you an arm and a leg today from a new home builder.
The laws of supply and demand are defintely ruling the market right now. There is way too much supply of available homes on the market which drives down selling prices, which means lower profitability for builders, which also means,lower stock prices for all builders.
My guess is we have 2 more years of pain before we see any substantial profits from builders.
Now if you are a long term holder and want to wait it out for a stock double then buy it and wait 3-4 years, but there are many good quality stocks out there that will triple before housing stocks rebound.
Housing stocks are not a good investment at this time.
My take is to stay away from the building sector.