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Ryland Group Inc. Message Board

  • db333p db333p Aug 4, 2010 11:59 AM Flag

    RYL summary

    The last few threads are interesting, and bring up good points.

    1) RYL business is in the tank and has not improved year to year, but continues to deteriorate. Costs can only be cut so far; lack of demand is thr crucial problem. So, when and how is that going to improve anytime soon?

    2) RYL is indeed a trading oppurtunity, it has been versus a long term buy and hold strategy for last few years. Long or short though, volatility has diminished as it bumps along the bottom of its trading range.

    Imo, the macro problem of housing will weigh on this comapny, and the industry, for years to come. New housing starts have no impetus to accelerate, given the still high historic cost of home ownership, the state of the economy and job creation, and US mental shift toward rental as an option vs home ownership in the low and middle income areas.

    There is still way too much supply in the home building industry. Consolidation and mergers, with further cost savings, or actual big builders either going BK or willingly leaving the industry, are the only options to quickly downsize to match supply with demand. Otherwise I think the sleeping trading range bumping along the bottom will continue.

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    • This is not the bottom.
      The clear-cut developer business model of the 2000 decade relied on artificially-incentivized demand that cannot be recreated. The nation needs fewer corporate homebuilders and the government didn't let them go under the past couple of years - some need to be biting the dust. The homebuilder tax giveaway and the homebuyer tax credits just postponed this eventuality.

 
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