August 15, 2008
The CEO of Toll Brothers drew attention in his recent quarterly report for talking about pent-up demand. This is one of the silent forces that power recoveries. In a harsh downturn, it sometimes seems that buyers are completely gone, when in truth there’s a lot of household formation (see yesterday’s Cramer posting – he talks about household formation) due to a growing population. And household formation creates demand.
“Our third-quarter results for revenues, contracts and backlog reflect the continued weakness in most of our markets,” said Robert Toll, chief executive. “However, we believe there is growing pent-up demand from those who have postponed buying during the past three years. For example, when we run promotions and work the phones for a market, our rate of deposits improves significantly.”
May 30, 2008
WSJ reports “investors return to riskier assets”.
Investors have shifted into sectors such as mortgage bonds and corporate debt. Investment-grade firms have capitalized on the demand by borrowing a record $123 billion this month, says Dealogic.
May 28, 2008
A pretty upbeat perspective on the housing market from Jim Cramer, who when last seen was bashing homebuilder stocks. He’s doing the same kind of root analysis that we do here at Frothing Developer
- 865,000 new homes purchased normally.
- Lots of pent-up demand.
- Price matters, and the price drops are having an impact.
- Federal action to prevent foreclosures
- April sales are up over March because of these factors
- Typical bad 2/28 loans are coming to an end. Last quarter of 2006 was the end of those. By end of 2008, those loans will all have reset.
“Why no one thinks these things matter is beyond me”.
“How anyone could think things could get much worse is beyond me and flies in the face of reality….This is coming to a conclusion….maybe less than a year.”