In a housing market that few consider anything but wretched, a few players are making a fortune playing Builder Bingo.
If you made a down payment of $40,000 on a new house on Jan. 1, you probably haven't made a dime on your real estate investment.
But if you bought $40,000 worth of stock from the very same builders, you'd have hit the jackpot.
I'll pass on the property; just give me the paper.
Check out two builders active in the Tampa Bay area. A $40,000 investment in
M/I Homes stock at the start of the year would have been worth about $63,000 on Thursday. A similar Jan. 1 investment in Beazer Homes stock would have swollen to $57,000 four months later.
Pulte stock is up a frothy 27 percent since Jan. 1. Ryland's stock has risen a market-beating 13 percent.
Something's not quite right with this picture. In the business quarter that ended March 31, Tampa area builders reported new-home closings were off 47 percent from a year earlier. Good deals abound, thanks to all the price cuts, but that's not helping builder profits.
Last week, Centex Homes reported it lost $910-million in the first three months of 2008. That followed a loss of more than $2-billion in 2007. Its stock rose 7 percent on the news, of course.
It seems like Wall Street is throwing ticker tape parades for a bunch of losing teams.
Why are stocks of these bruised builders kicking derriere? Some suggest housing pessimism has driven stocks too low and the stock market is making belated amends. Others say the rise suggests the worst is over and a recovery is within sight.
Or maybe it's temporary insanity: Stock traders are just feeding off the froth and will soon seek sustenance elsewhere.
Metrostudy, a consultant for the housing industry, sees the Tampa new-home market stabilizing in 2009. Strong immigration and family formation suggest the future is secure for builders that survive the downturn. Though it's not the only destination, Florida remains a prospective favorite with baby boomer retirees looking to grow wrinkly in the sun.
But it's hard to believe the path to riches this year lies in squirreling away home builder stocks. Could it all be an overreaction based on a misreading of the market? Naaahhh! That's never happened in real estate before.