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$14.67 -0.02 (-0.14%)
7/3/2008 1:01 PM

Meritage Homes Corp (MTH)

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The Company is a designer & builder of single-family attached & detached homes in southern & western US. It offers a variety of homes that are designed to appeal to a range of homebuyers, including first-time, move-up, luxury & active adult buyers.

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Avatar TDRH (100.00) Submitted: 3/11/08 6:02 PM : Underperform Start Price: $14.20 MTH Score: -6.98

May pay the price after the next fed meeting on the 18th, but investors have to realize soon that the fed rate and the 30 year fixed mortgage are decoupled. (Bent's blog) Dropping the fed rate will not help borrowers facing foreclosure and will not offset the higher lending standards.

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Avatar Way2Risky (< 20) Submitted: 5/05/08 2:15 AM

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Interesting how this fellow is taking a such a beating on the home builders, yet still is #1.

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Avatar TDRH (100.00) Submitted: 5/05/08 9:50 PM

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Interesting is right, but I am just stubbornly waiting for the "irrational exhuberance" to end. A painful shift in the demand for housing is occuring due to tighter lending standards, decreasing disposable income, and the high level of debt serviced by the average American. Those companies with fixed costs of land will either need to devalue it on their books, and or sell it at a loss. They cannot develop it and hope to bring it to market.

This shift may in fact overshoot the downside, with increasing foreclosures, there could be some serious buying opportunities in the future, but in my mind, not until spring of 2010. Housing prices need to come into realistic levels relative to the median household income. Without the alternative financing mechanism, the demand curve is shifting. Banks/lenders want skin in the game to offset risk, and the median household does not have it.

I understood Floridabuilder to say that in June we should start to see some homebuilders start to crumble. Personally, I hope that he is wrong, and I am wrong, but in my mind this is the beginning of a painful corrective cycle.

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Avatar bigdividends (21.20) Submitted: 6/12/08 12:12 AM

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I believe you are correct in your assessment. The percentage of individuals that are upside down on their mortagage is alarming and only getting worse. Homebuilders are going to have a really tough time squeezing out any profits in the next two years with cost of supplies going up and home prices falling hard. If interest rates start to climb, this scenerio can get really ugly. I would not be surprised if a major builder folds before year end.

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Avatar TDRH (100.00) Submitted: 6/12/08 6:20 PM

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Floridabuilder is in the know and he would disagree with me, but I think there will be several majors go under between now and spring of 2010. There will be ups and downs as investors try to catch the bottom, but I sense that the overall trend is down and ugly.

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