Thursday, May 04, 2006

Home builders

I follow seven of the major home builders. All seven are either breaking down or close to breaking down. I gather that the inventory of single homes and condos is building. From what I hear, New England has the largest build-up of unsold homes in the nation. In rapidly-growing Las Vegas ten major projects have been halted or put on hold.

On top of this, defaults are increasing -- in San Diego County defaults are climbing with a vengeance. Interest rates are pushing ever-higher, putting pressure on home-owners with variable rate mortgages. I'm just saying that the stocks of the big home-builders appear to be topping out. If this means anything, we should know about it in the next few months. Let me put is this way -- I'm not ready to go out and buy a second home as an investment at this time.

I suspect that if the real estate industry is in trouble, then the economy of the US will shortly be in trouble.


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