How's this for a relic? A business columnist for MSN on December 7, 2006, wrote the following, under the headline "Time to buy horrible homebuilder stocks":
"The outlook for homebuilders is miserable, so it's time to buy these beaten-down issues before others sniff a recovery."
At the time, the stock prices of such major national homebuilders as Toll Brothers, Ryland and Pulte Homes had been beaten down by the emergent problems in Florida, Las Vegas and Phoenix. Ryland, for example, was selling at about $54 per share, Toll at $33 and Pulte at $34.
If you had followed the columnist's advice - okay, it was Jon Markman - your portfolio would be in worse shape than others who had the good luck not to read Markman's column or take his advice.
As you may have read, housing starts are down 31.1% year over year and homebuilder confidence has dropped to new lows. And amid all this carnage, the stock prices of the major homebuilders have plummeted as well. Below are comparisons of October 2007 with closing prices on Friday. Of course, at these prices, the survivors, whomever they are, might be bargains.
October 2007 - 2008 share prices
Pulte Homes 18.93 - 14.30
Beazer Homes 12.50 - 3.36
Toll Brothers 28.00 - 15.49
Centex 30.29 - 8.58
Lennar 23.21 - 5.29
D.R. Horton 17.95 - 6.47
Hovnanian 13.50 - 4.06
Ryland Group 37.85 - 16.51
