D.R. Horton, Inc. (DHI)

cubanstockpicker (72.68) Submitted: 5/16/08 2:21 PM

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Marko, I have to disagree with you opinion why we might have hit bottom on housing prices. Specifically on the margins argument. Margins in your scale showed improvement because builders figured they can keep raising prices in the big homebuilding boom.

They picked this trend up from "flippers" that sold their contracts way above the preconstruction prices. The average preconstruction home in 2002 went through a couple of hands before finally being built and then closed. Banks were only more than happy top offer loans. Builders caught on and raised prices building anything and everything they could to take advantage of the boom.

Now, that prices have deflated, the builders have to drop margins in order to move inventory. They also have to "pay closing costs" or down payment assistance programs to move their escalating inventory.

Now they have another competitor, the ever expanding foreclosure market, where anyone in the "hot zones" can pick up recently built homes at at 60% of value.

The builders also have another reason to be worried.
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