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Builders losing confidence in housing market

By Patrick following x   2018 May 17, 5:22pm 587 views   3 comments   watch   sfw   quote     share    


We heard repeatedly over the two-and-a-half days of HLS that, although times are good now, and demand is solid for whatever builders can deliver to an inventory-starved market, clouds of uncertainty have begun roiling up on the not-too-distant horizon. This uncertainty makes bigger builders queasy about the investment of capital they have to make to secure inventory turns beyond the next 18 to 24 months. Uncertainty, in its early manifestations, becomes a telltale inflection point that signals it may be time to reduce leverage, to harvest cash, and preserve money as dry powder for leaner days, weeks, months, and possibly years ahead.

Although the onset of the last downturn--the Great Recession that took down housing--is more than a decade hence, home builders, their investment partners, and their associated business ecosystem remember one aspect of it as if it were yesterday. They remember that their early-warning systems failed, and they remember that the models to detect what was really going on versus what was "fake news" of demand were broken.
1   Strategist   ignore (2)   2018 May 17, 7:46pm   ↑ like (2)   ↓ dislike (0)   quote   flag        

Patrick says
Builders losing confidence in housing market

The more confidence they lose, the less they will build.
The less they build, the greater will be the shortage.
The greater the shortage of homes, the higher will be the price.
The higher the price of homes, the higher will be the profits.
The higher the profits, the more they will build.
The more they build, the higher will be the stock price of home builders.
It's really that simple.
Thank You.
2   HEYYOU   ignore (25)   2018 May 17, 8:24pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

Glad to be in my last house. They may not be Golden Years but they are good years based on not having to keep up with the Jones.
3   bob2356   ignore (3)   2018 May 18, 4:09am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Patrick says
They remember that their early-warning systems failed, and they remember that the models to detect what was really going on versus what was "fake news" of demand were broken.

They just didn't listen. Plenty of people were showing how it was all smoke and mirrors. People who bought into the hucksters instead of looking at the hard numbers deserve to think they were taken in by fake news. The simple fact that something like 60% of home sales in 2006/2007 were non owner occupied should have been a huge red flag to anyone with more than 2 brain cells. . It sure was to me, I sold out of 2 bubbly markets (ne pa and portland or) and stayed in the market that was stable (south tx). Worked out great. Scooped up properties in vegas 2011/12 with terrific roi. I'm getting out of vegas over the next 2 years. Prices are going crazy causing roi to drop like a rock. Great opportunities right now in the rust belt.

A house is a big wooden box. Nothing more.

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