Use access key #2 to skip to page content.

alstry (36.32)

The END of Public Home Builders-Kool-Aid Anyone?

Recs

9

June 07, 2008 – Comments (3)

Or at least the shriveling to a raisin.

I have been hearing some primate squawking about public homebuilders are about to take market share from the privates as this downturn progresses.  The argument goes something like this: publics are less than 20% of the homebuilding market and their stronger capitalization is going allow them to consolidate the little guys as they go outta business.

What a croc of monkey dung!!!!

In case you baboons havn't noticed, the financial condition of the large publics are deteriorating quicker than my staying power with Raquel Welch at any age.

I gotta tell you, be careful when a chimp offers you Kool-Aid, you may not like the hangover.  And thinking that most public HBs are going to surive this mess is like taking a drink from Jim Jones and thinking the party is just about to start.

Has anyone noticed where most publics build?  The build right around each other.  Not only that, the build in areas where there are large tracts of land available.  And guess where that is?.......you guessed it......way out in the sticks where there are lots of sheep and some cornfields to play in.

Well guess where the last place people want to move right now is....you guessed it again......some place where you have to drive 100 miles to get to work paying $5 a gallon for gas.

Many private builders build just a few homes per year.  They build in "infill" areas "close in" where large tracts are not available.  They build the onesie twosies in the desireable areas where there is still some decent demand.

The tract builders on the other hand don't have the business model that allows them to build on such a small scale.  And for the foreseeable future, especially as fuel prices remain high and more and more people are going to want to live closer in....expect any idiot continuing to over build on the outskirts simply speeding up their demise.

Look at the areas that are experiencing the most distress...inland empire, outlying AZ, NV, Florida, Louden County, VA....and we could go on and on.  It is the areas where public HBs and  larger privates congregated and simply manufactured the foundation for ghost towns for many decades to come.

Our nation never experienced the nonsense of reckless overbuilding that transpired over the last seven years.  The building took place in areas without sufficient jobs in place to support the residents

The public executives didn't give a damm.  It wasn't their money, it came from Wall Street who extracted it from our pension funds.  As long as things looked good in the short term, they could snow everyone and cash in before anyone was the wiser.  The result: now we have abandoned communities littering the landscape all around our nation. 

Not only that, it is destroying many many families that guzzled the kool-aid the builders well selling no money down.  At the same time, the executives were cashing in their stock options and lying to shareholders about their outlook for business.

Publics are now stuck in the mud with no place to go.  They are not geared for the economics of homebuilding for the next 10 years with building focused in closer areas and construction on a much smaller scale. 

As gas prices continue to rise, the value of being closer to work increases.  There ain't much work where the corn grows.  At this point, we have consumed enough land for housing in America at least for the next decade or two.....that pretty much sticks a nail in the coffin of most publics holding HUGE land commitments in outlying areas.  It may also hurt millions of American families that are stuck out there with nobody to sell to and no work to be found.

Becareful of chimps offering you kool-aid.....you may end up being the chump.  A lot of guys bragged about their one or two year track record in the dot.com days.  How many lived to make it a good five years.  Living in glory days may relive great performance, but does little for figuring out what is going to happen tomorrow. 

Today, we are experiencing the decay of communities that were created over the last seven years.  As long as this decay continues....all those dependant on those communities are likely to suffer.  Today, a lot of publics are stuck in decaying communities with no place to go!!!!!

So what is the argument now, consolidate enough monkey dung in a pile and it morphs into valuble fertilizer?  The only thing being fertilized is the person sipping the Kool-Aid....drink anyone?

 

And by the way, if you think this private equity fund is really going to stick over $600 million dollars into SPF which is a CA focused HB losing hundreds of millions per quarter and burdened with about $2 Billion in debt as land is being liquidated at pennies on the dollar.......I have a supension bridge in the Sahara I can sell ya.

 

3 Comments – Post Your Own

#1) On June 08, 2008 at 1:59 PM, cubguy1 (< 20) wrote:

Alstry -  I can't handle reading FB anymore and his 'the sun will come out tormorrow' drivel. He's directly involved in the RE business and with his distressed debt purchases he's got his hands out reaching for that falling knife. The question isn't if he's going to lose any fingers, but how many. When home prices dipped in the late 80's, how long did it take for prices to get back to that level? According to case-shiller, 10 years.

Back in April at the height of the bear market rally, FB was sniveling like a little biatch about how unfair the markets are. "I'm going on a blogging strike until I get my 15% back!! Waaaah!". ROTFLMAO. Anyone who thinks that the markets go straight down (or up) needs their head examined. 

Then when you started challenging some of his theses on his blog, he again demonstrates how he can't handle the heat and goes whining to mom & dad (the forum moderators). 

That guy is the perfect contrarian indicator.  His rationale for buying ITB? "It's gone down so much it can't possibly go any lower!". Oh yeah? Go talk to CFC, IMB, NCC, and BKUNA shareholders. Additionally, he's totally ignoring the other macroeconomic factors, all of which will put further pressure on real estate (skyrocketing oil, higher unemployment, struggling local and state budgets, treasury sell off). 

The guy has a tenuous grip on reality and needs to make sure he stays on his meds.  You're going to have to take it easy on him since he is clearly riding on the shortest of the short busses.

  

 

Report this comment
#2) On June 08, 2008 at 2:01 PM, cubguy1 (< 20) wrote:

Alstry -  I can't handle reading FB anymore and his 'the sun will come out tormorrow' drivel. He's directly involved in the RE business and with his distressed debt purchases he's got his hands out reaching for that falling knife. The question isn't if he's going to lose any fingers, but how many. When home prices dipped in the late 80's, how long did it take for prices to get back to that level? According to case-shiller, 10 years.

Back in April at the height of the bear market rally, FB was sniveling like a little biatch about how unfair the markets are. "I'm going on a blogging strike until I get my 15% back!! Waaaah!". ROTFLMAO. Anyone who thinks that the markets go straight down (or up) needs their head examined. 

Then when you started challenging some of his theses on his blog, he again demonstrates how he can't handle the heat and goes whining to mom & dad (the forum moderators). 

That guy is the perfect contrarian indicator.  His rationale for buying ITB? "It's gone down so much it can't possibly go any lower!". Oh yeah? Go talk to CFC, IMB, NCC, and BKUNA shareholders. Additionally, he's totally ignoring the other macroeconomic factors, all of which will put further pressure on real estate (skyrocketing oil, higher unemployment, struggling local and state budgets, treasury sell off). 

The guy has a tenuous grip on reality and needs to make sure he stays on his meds.  You're going to have to take it easy on him since he is clearly riding on the shortest of the short busses.

  

 

Report this comment
#3) On June 08, 2008 at 3:48 PM, alstry (36.32) wrote:

FB is an excellent  blogger with an excellent track record  and high point score.  Certainly a lot higher than mine.

As one who belives in meritocracy, FB deserves all the accolades he has earned.

Just because I have a different opinion doesn't make me necessarily right.  Although I have a  lot  of confidence in my position, at the end of the day if is just my opinion.

These boards let us exhange ideas.  Hopefully, the exchanges back and forth will give us a better perspective to make CAPS and real life decisions.

FB has taught me a lot about the emotional side of the market.  He provides great insight into that area....and that is a very important area when trying to ascertain short term perspectives.

FB is a wonderful asset to CAPS and quite frankly to me in my thinking.  The fact that he and I have diverging perspectives actually enhances this from  my viewpoint.

I view Bellard in a similar light, but he is no FloridaBuilder.  FB is in a class by himself.  Period. 

Even if we disagree....CAPS and the world is much better off with him around providing his excellent insight and perspective.

 

Report this comment

Featured Broker Partners


Advertisement