The downturn in housing is not over until high-end house prices take a hit same as low-income housing has already. If you look in premium markets in California for instance, house prices have barely tracked downward, with flat to negative 10% since the summer. It is not possible for the high-end to escape punishment, just as it is not possible for many low-income workers to be fired without highly-paid Wall-Streeters also losing their jobs. High-end RE is still up over 100%, which is preposterous. To the extent TOL serves the middle class to high-income crowd, their stock has only suffered a drop from $23 to $17 in the Fall 2008 stock debacle. This is just as nuts as high-end RE maintaining pricing. In fact, volumes are very low on the high-end while the low-end RE has seen huge transaction increases year/year. This means that high-end RE must suffer a price decline in order for more normal transaction volumes to return to its market. TOL seems to be in the way, as more middle and high-end housing inventory is not a solution, even if Bush and Obama advisors think it is. You can't bail out RE without destroying the dollar, and they can't likely destroy the dollar quick enough to save falling high-end RE prices-- a phenomenon that's just begun and has at least another year of legs.
$17.21 (01/21/09)
