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alstry (35.64)

Shrink or Die

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September 25, 2008 – Comments (2)

First, let's get one point clear....we have too many fricken homes in America.

Home prices in America are crashing and will continue to crash until prices reflect incomes.

Next, Public Homebuilders are sitting on way too much debt and have way too much overhead for the current sales paces.

Homebuilders must contract their size or they will go bankrupt in the current environment.

The problem is that there is no way for homebuilders to liquidate assets to pay down debt and reduce overhead as assets are difficult to sell in this environment.

Managment's are inflating the value of the assets on the books.

Many homebuilders have more debt than they have assets.

When this becomes clear....many will realize the many many public homebuilders are insolvent.

How long will this take......

But until we recapitalize homebuilders to appropriate debt levels....they will simply keep overbuilding to kee this charade going.

 

2 Comments – Post Your Own

#1) On September 25, 2008 at 11:18 AM, lquadland10 (< 20) wrote:

Oh and don't Oct. 1 with pres bush signing new martial bill scaring the n.o.w people half to death because they don't understand the stock market if they don't get the bill pass or if the banks have a run on them. Then oct 1 is redemptions time again and more morage resets. Got to love this mess.

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#2) On September 25, 2008 at 12:29 PM, cbwang888 (26.09) wrote:

Housing can only come back when new generation or new immigrants can get a decent paid jobs. We know what happen already in the job market ...

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