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A lot Wall Street people lead investors to believe there was a escape velocity thesis when all it was was a slow and steady rise for a post WWII low level
A lot Wall Street people lead investors to believe there was a escape velocity thesis when all it was was a slow and steady rise for a post WWII low level
It was always obvious we would go through years of slow building, after such a massive building boom.
But we are now getting under built.
This is being controlled. It was kept slow because they wanted prices to rebound. Now this is done, the incentive will align on the "build more" side.
If all this is true, this is probably the best buying opportunity right now.
It is unlikely rates will be a problem considering the rest of the economy.
If all this is true, this is probably the best buying opportunity right now.
It is unlikely rates will be a problem considering the rest of the economy
The reason I mentioned median price falling is good, is because it means they're selling smaller priced homes
We have over 5 months inventory for new homes and they still missed sales by double digit, this is a demand problem only
they still missed sales by double digit, this is a demand problem only
Demand is low because prices are too high.
They should have plenty of room to lower price/focus on more basic homes/apartments.
Still grow.
They should have plenty of room to lower price/focus on more basic homes/apartments.
Profit margins
Bread and Butter are single family homes that sell big, that's their issue, even their lower end homes that don't have the bells and whistles ... they can sell them but it isn't as profitable
That gets into a complicated game with the builders, I minded everyone to just keep an eye out on conference calls, and when DHI the new wall street darlings began to speak their stock went down too.
So demand is one things but how much $$$$$$$$$$$$ you can make is the other factor
Bread and Butter are single family homes that sell big, that's their issue, even their lower end homes that don't have the bells and whistles ... they can sell them but it isn't as profitable
No one says they can't continue to sell luxury houses for the same margin. The question is whether they address the demand for more basic homes thus making an extra profit.
Profits growth trump margin.
The question is whether to buy CVX with a pe 17, a profit margin of 3%, and revenues down 35% in an environment where oil prices are FUCKED.
OR I could buy DHI with a pe of 9, a margin of 7% and revenues up 5% in an environment where housing is rare and expensive.
Hummm....
OR LGIH, pe 6.5, margin 8%, revenue growth 88%.
Stock down 35% from October.
In Yahoo, the show book value at 35.50B, market cap at 9B. If true why no one buys them and sell them in pieces?
If true why no one buys them and sell them in pieces?
Its never that easy or that fast.
KB Homes stock chart looks like a walking dead going down the hill
However, if you want value, there it is right there
In Yahoo, the show book value at 35.50B, market cap at 9B. If true why no one buys them and sell them in pieces?
I think you're looking at the wrong stock, it's KBH vs KB (which has more debt than cash).
Very surprising to me.
I would have thought this is the one sector with a lot of demand in front of it.
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
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.
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
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.
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
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
It won't happen
It will happen. Just not in the US. But the US will not be left unaffected.
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
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.
What we are looking at is a deep change in financial conditions, of the way finance works world wide.
?
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.
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?
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.
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.
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
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
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http://loganmohtashami.com/2016/01/25/home-builders-new-homes-sales-and-the-affordability-myth/