Is The New Housing Bill The Antidote Homebuilders Needed?
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The new federal housing bill offers a little to everyone hurt by the downturn. There is a boon to lenders, another to borrowers, and something for the homebuilders.
But while the lenders and borrowers still have some uncertainty in their future, homebuilders have suffered most of their pain already. With stock prices down nearly 75 percent for the sector, they are ripe for a rebound.
The Wall Street Journal agrees with this sentiment:
For everyone else, the smart play is probably to invest in the homebuilding stocks. They’re already flat on their backs. The sector overall has fallen by about three quarters from its 2005 peak, and history says that after a bubble has burst that’s usually a good time to buy. It’s like buying the Nasdaq near the lows in 2002.
Valuation measures have to be taken with a pinch of salt in these markets, because net asset values are so volatile, but on current numbers Toll Brothers is trading for about 90% of book value; Hovnanian for about 60%; Lennar, 50%; and DR Horton, 80%. These are rough figures. via R.O.I. - WSJ.com.
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Pingback by False Positives In The Housing Rescue Plan on 1 August 2008:
[…] people have been studiously searching for positive aspects about the recent Housing Rescue Plan. As my regular readers know, I feel that this plan is an absolute bust in every way, and ultimately […]
Comment by Gustavion on 1 August 2008:
Homebuilding stocks must be a good buy now. Can they even go much lower?