Housing downturn has silver lining for builders
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#1 Sep 27, 2007
The national builders are sending a signal by this write off of land options, that the future is not very bright for the New Housing Market going forward.
National builders usually purchase land well in advance of need so that they do have the lot availability to meet demand, what they are doing now with the impairment charges is counter productive to a brighter market. This purchase programs usually is projected out 5 years. The signal the National Builders are sending out is that do not look for any improvement in the new housing market for at least a minimum of 3 years, maybe 5 years.
The balance sheet question should now be, how many of these national builders are going to be able to weather the financial turmoil in the markets?
Rumors are already popping up bankruptcy, by whom, who knows. Shorts or just investors that really know what is going on.
The Bond Traders need to start looking into the CDD BONDS that are so prevalent in New Home Developements in Florida, are these Bonds going to be the next "mini" sub-prime mess or are they already included in the debacle.
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