patrick.net

Very surprising to me.
I would have thought this is the one sector with a lot of demand in front of it.

Heraclitusstudent says

I would have thought this is the one sector with a lot of demand in front of it.

It was just over hyped last year, that's it

Trend sales are at cycle highs, but people were paying way too much for the builders in 2015 ... (Value) that's the point I made on CNBC last year because the builders were the favorite trade for 2015

Logan Mohtashami says

It was just over hyped last year, that's it

I don't think the need for building to happen is hype. Your own graph shows that.

Logan Mohtashami says

Heraclitusstudent says

I don't think the need for building to happen is hype. Your own graph shows that.

It's price you pay for the company

We are selling new homes at recessionary level markets, so the profits have to be very high..

There is a reason why the Builders got smacked in 2013 and 2015 because those 2 years everyone was over hyping the story line to show top line revenue was going to be booming ...

It was impossible for that to happen in this cycle

Logan Mohtashami says

It was impossible for that to happen in this cycle

Why is it impossible to build more and make a profit when prices are ultra high?

Do you think, we will continue the slow sales at recessionary level until the next cycle?

Something has to give. You can't have prices go up forever and no one answering demand for cheaper structures, while people go increasingly homeless.

Heraclitusstudent says

Why is it impossible to build more and make a profit when prices are ultra high?

You don't have the proper demand curve this cycle. Which was my thesis from day 1, years 2020-2024 will be better though.

For the the most part the builders knew this, I always give them kudos that they tried their best to manage this cycle because they know their homes are too expensive compared to existing homes

Mass supply of cheaper homes is a problem for them

Heraclitusstudent says

I doubt anything will be better in 2020-24

College educated dual Income Americans will buy more homes then just based on the supply of more of them

Logan Mohtashami says

It won't happen

It will happen. Just not in the US. But the US will not be left unaffected.

Heraclitusstudent says

It will happen. Just not in the US. But the US will not be left unaffected.

We don't import recessions only export them.

Demographic economics is going to get better for us soon, No Great Depression, it will be a normal recession and we will have better household formation capacity for better trend growth for a mature country in the next cycle

Logan Mohtashami says

We don't import recessions only export them.

What we are looking at is a deep change in financial conditions, of the way finance works world wide.

Heraclitusstudent says

What we are looking at is a deep change in financial conditions, of the way finance works world wide.

?

XHB still under $30 it's a deal at 2013 levels anyone?

FCX is at 1998 level.
BID at 1989 level.
TOL at 2004 level.
Deal?
I mean look at the max chart and ignore the big crazy bumps in the middle... What's a deal in this background?
I have no idea.

Logan Mohtashami says

We don't import recessions only export them.

We import deflation.

Heraclitusstudent says

We import deflation.

Core CPI inflation has been rising for over 1 year now

Yes we can import deflation ... Kind of

Short term, did we reach the bottom? Or more to go?

Heraclitusstudent says

Short term, did we reach the bottom? Or more to go?

I would say a lot of these stocks have hit a short term bottom because 2012/2013 pricing had a lot less sales into the market place

To me now more than ever because we will have over 500K in sales this year, it's all about profit margins and people forget on the earning call for TOL they had some profit margin issues

That's what you want to do with the builders hear the earning calls and get a good idea on profit margin .. much lower levels on some of these stocks are pointing to a peak builder cycle, don't believe we are there yet

Last year was just doomed to fail all due to the over hyping, we don't have that anymore this year and a lot of these stocks and index are in bear market territory, much better value for $ now that last year's madness

TOL had it's earning and it's not going down stock price?

Almost back to 27! :-)

I'd venture we have a bit more to go downward.
Oil is still accumulating and storage is disappearing fast.

Heraclitusstudent says

I'd venture we have a bit more to go downward.

It wasn't the best report and the CEO looked very unsure on CNBC ... but the price action wasn't too bad even though the stocks really didn't to much

New homes median sale price (SA) was $282,600, down 3.2% from Dec and down 4.6% from a year earlier. Lowest median sale price since Sep '14

This is what I was talking about, you have to know look to see if we have profit margin hits or is the falling median price a function of lower priced homes

https://finance.yahoo.com/news/theres-reason-excited-u-housing-152551847.html

When the brothers toll start pumping away a large decline in sales, it's time to be cautious.

mell says

When the brothers toll start pumping away a large decline in sales, it's time to be cautious.

You can side why I targeted TOL first outside all the builders last year on CNBC

Ironman says

Sales in the West dropped -32%.

Even more expensive out west.

Some people might believe the Median Price peak or slight decline is very bad, I say it's more a bullish factor since the cycle was so high end

But companies like KBH are trading at liquidation value under $10 when we talked about it before

Logan Mohtashami says

Not an inflection point, but a continuation of what started in 2012.......Massive price increases.

Strategist says

Massive price increases.

I know you guys on Pat.net care so much about price, which isn't the main thing with me because everyone talking about Price were Housing bubble pushers in the last cycle

However, look at it this way a

If you can't even match sales expectations with rates below 4% and rising inventory, then what is a builder to do

Hence why value is their for KHB since it's selling at liquidation but TOL need more demand convictions for TOL and others

Logan Mohtashami says

This is what I was talking about, you have to know look to see if we have profit margin hits or is the falling median price a function of lower priced homes

Profit margins are one thing. Profits an other.

Logan Mohtashami says

If you can't even match sales expectations with rates below 4% and rising inventory, then what is a builder to do

Build more basic, lower priced home. Stop focusing on the overpriced luxury.

Heraclitusstudent says

Profit margins are one thing. Profits an other.

If it was only that easy ;-)

Heraclitusstudent says

Build more basic, lower priced home

DHI is trying to get into that market

But I believe the new century long push to build bigger homes has caught up to the builders, this is a core thesis of mine over the years on why new homes wasn't going to have Nirvana escape velocity that some on wall street had predicted

The fact year 8th of the economic cycle, 5.8 months of inventory and under 4% rates, to even have a Year over Year Miss with a baseline 500K total home sales year last year

(*$#@)_#@(*#@ ;-)

Next 4 months revisions and median price will be telling, if we can get growing sales with low price inflation, = more smaller homes coming into the market place and this is what is needed

Need to see a in line number tomorrow for new homes 510 with no negative revisions.

Then we can work on getting some growth in the next 4 months year over years. The Comps year over year get a lot easier after tomorrows report

Notice the builders are acting better!

Logan Mohtashami says

Notice the builders are acting better!

At this time next year, ITB will be 50% higher at $40.00. IMHO.

Strategist says

At this time next year, ITB will be 50% higher at $40.00. IMHO.

Ughhhh

You better had picked up some shares with the recent dip!

Logan Mohtashami says

Strategist says

At this time next year, ITB will be 50% higher at $40.00. IMHO.

Ughhhh

You better had picked up some shares with the recent dip!

Have enough shares on ITB. Picked up 100 option contracts (leaps) on the dip. I'm very very confident.

Strategist says

Picked up 100 option contracts (leaps) on the dip

fair enough