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Beazer Homes to Investors: “Yes, It Can Get Worse…”
By Sherman Ragland | August 7, 2007
Earlier this year, one of the leading financial newsletters was advocating buying heavily into REITS of homebuilders.
REITS are of course Real Estate Investment Trusts, or the stocks of publicly traded real estate firms.
Personally, I am not a big fan of REITS. Mainly because the shares of publicly traded real estate investment trusts behave much more like stocks then the private investment in a real estate deal, and therefore, are much more susceptible to the whims and emotionalism of the stock market then the fortunes of private investors in good real estate deals.
The reason for even discussing REITS in my blog post is that the current fortunes of the BIG Homebuilders, along with the turmoil in the Mortgage Markets spells SERIOUS Trouble for “PRETTY HOME” Investors, as well as REALTORS(r) and other real estate professionals who make money from “PRETTY HOME” investing.
As with all publicly traded industries, when one firm catches a cold, it has a ripple effect throughout the entire investment sector. Again, another reason I HATE REITS. You can actually have an investment with a good company, but if the industry “falls from favor”, then it does not matter if you hold the stock of the only “good guy” in the bunch, everyone’s shares are gonna fall.
So this is all preable to say, the WOES of BEAZER HOMES could not possibly come at a worse time then right now for the entire homebuilding and mortgage markets. WORSE, the problems are bound to spill across the entire economy and be a drag on the entire stock market.
Specifically, it was announced on August 1, 2007, that BEAZER is under investigation by the SEC, HUD and FBI. In addition the company’s CFO for the past seven years announced the day after that he was stepping down. Well, today the other shoe fell for BEAZER as it was announced that its BILLION DOLLAR line of credit has been WHACKED in Half!
It is getting VERY UGLY right now in the Homebuilding, Mortgage and Real Estate Sales (as in Pretty Houses) Business, and UNFORTUNATELY (for some) it is going to Get Much Much Worse…
So, for those of you who are thinking ENOUGH DOOM AND GLOOM ALREADY!
You are ALMOST RIGHT.
I promised I would spell out both WINNERS and LOSERS.
Over the next few days I will be finishing with the list of LOSERS, and shifting to the Winners on Saturday.
THERE WILL BE WINNERS. In fact the Winners Will MAKE MILLIONS, as they always do in times of turmoil.
… and if you are thinking – “HOW IN THE HECK DOES HE KNOW THIS…?”
It’s not just me, but anyone who actually had a “FRONT ROW SEAT” in the early 90’s during the days of the RTC.
There is a Bush In the White House, and its 1992 ALL OVER AGAIN…
… Stay Tuned.
p.s. – for more on our RTC experience, please see also: http://www.WeGetThingsDone.com
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Tags: beazer homes, george bush, george w bush, homebuilders, mortgage markets, real estate investment trusts, sherman ragland
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