Make us your home page
Instagram

Stocks of several builders are rising sharply

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.

FAST FACTS

Stock value change since Jan. 1:

M/I Homes up 57 percent to $16.55.

Beazer up 42 percent to $10.55.

Pulte up 27 percent to $13.26.

Ryland up 13 percent to $31.14.

Stocks of several builders are rising sharply 05/08/08 [Last modified: Monday, May 12, 2008 9:02am]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Appointments at the Tampa Metropolitan Area YMCA and the Straz Center highlight this week's Tampa Bay business Movers & Shakers

    Business

    Charities

    The Tampa Metropolitan Area YMCA has named Matt Mitchell its new chief executive officer, effective Oct. 16. Selected by the Y's CEO Search Committee following a five-month search, Mitchell will succeed Tom Looby, who is retiring. Looby has served the Y Movement for 37 years, the past 10 …

    The Tampa Metropolitan Area YMCA has named Matt Mitchell as its new Chief Executive Officer. [Handout photo]
  2. Rep. Larry Ahern gets roughed up by Clearwater City Council

    State Roundup

    It seemed innocuous enough: an "end of session report" from state Rep. Larry Ahern, R-Seminole, to the Clearwater City Council.

    Then Ahern got taken to the woodshed.

    Rep. Larry Ahern is vying for a seat on the Pinellas commission.
  3. There's a bar in Tampa where you can roller skate and eat sushi

    Food & Dining

    Roller skating, it's not just for kids birthday parties and the 1970s anymore.

    The exterior of Pattinis features this mural by Art Aliens! [Pattinis South Tampa via Facebook]
  4. Lockdown: Florida's 97,000 prison inmates confined through weekend

    State Roundup

    All of Florida's 97,000 state prison inmates are on lockdown — and will remain confined to their dorms at least through the weekend — in response to unspecified threats about possible uprisings, officials from the Florida Department of Corrections confirmed Thursday.

    Blackwater River Correctional Facility. [Florida Department of Corrections]
  5. Carnival announces five more cruises from Tampa to Cuba

    Tourism

    TAMPA — Carnival Cruise Line is adding five more cruises from Tampa to Cuba in 2018, Port Tampa Bay announced Thursday.

      Carnival Cruise Line announced additional cruises to  Cuba. Pictured is its Paradise cruise ship departing on its inaugural voyage to Cuba from Tampa. | [MONICA HERNDON | Times]