Home Builders Stock Prices Plummet Due to Mortgage Crisis
Posted on | November 2, 2008 | 1 Comment
Please use Subprime Blogger to get your daily mortgage rates. Knowing what current mortgage rates are could save you a lot of money when it comes to refinancing.
To no surprise, home builders stock prices plummet due to the mortgage crisis. Prior to the mortgage crisis, many “market mavens” were suggesting to strongly buy home builders. CNBC was littered with analysts pointing out how great the American housing market was and that companies like Beazer, Standard Pacific, Hovnanian, and Meritage were strong buys. What these so-called analysts did not realize is that many of the homes sold by these companies were bought with subprime credit. Today, many of these former S&P 500 giants have lost over three fourths of their value. The following list shows the stock returns since the beginning of 2006 of some of the larger home builders:
Beazer: -95.68%
Pulte: -72.65%
Standard Pacific: -92.34%
Meritage: -78.78%
Hovnanian: -91.46%
DR Horton: -79.62%
An age old adage that I feel will always remain true of any type of investment is to buy when “everyone” says it will never get better and sell when “everyone” is suggesting that investment vehicle. I am not sure the home builders are currently in the “it will never get better” state yet, but they are getting close. The irony of it all is that I purchased www.homebuilderscollapse.com a few months ago, but I have just not had the time to build it yet. Any thoughts on when these dogs will bottom?
Related Posts:
Vacant Homes up 3 Million Since 2006
The ENTIRE Mortgage Market Collapse of ’09
April 2005 – Jim Rogers Calls it a “Housing Bubble”
Homeowners in Miami have seen their home prices plummet even though the Miami Heat have been highly successful in the last few years. The Heat are in the NBA Playoffs again but this does not mean that diehard fans are going to move to the area. It may be the case that some of these fans spend more money on basketball tickets rather than buying or paying off a home.
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One Response to “Home Builders Stock Prices Plummet Due to Mortgage Crisis”
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November 2nd, 2008 @ 9:00 pm
Agreed. We got into this mess because of the housing market; it’s going to be our ticket out, too. There’s still a growing population- the need for houses isn’t going away. There’s still inherent value in a house. It’s not like a tech bubble. We saw a 5.5% rise in Aug-Sept. existing home sales, and 1.4% over last year.. not great, but a ray of hope. As soon as we get the labor market stabilized those houses will get snatched up. Where’s the first “buy a foreclosed home” agent? Screw HUD!
-Stephen