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Most housing stocks up at least 10% since 14/15th.
Link back to post.
Now that's a bold statement, "shares could hit around $43 in 12 months." Who knows, RIMM might just join the 2x club along with Sprint and Nokia.
I find it hilarious how they never own up to their mistakes. It's just like Bill Cara said, they develop a sudden case of "amnesia" lol. All that CNBC is good for these days are headlines, nothing else.
It's beyond me how someone can hold a Harvard degree and be wrong half the time (no exaggeration) - Jimmy, I hope you're reading this.
Congrats on RIMM, I never played it - it was one of those that you see it drop so much you either take a short position or forget about it all together. Apparently, I should have never forgotten about it lol.
ANF still going up, nice! I sold all my shares into the close, it's time for me to move on even if there might still be more room to grow.
Would you look at that, look who came out of hiding LOL.
Great article: "Housing = Jobs?"
Hovnanian Expects Job Growth as Housing Rebounds
Published: Tuesday, 13 Nov 2012
By: Drew Sandholm
The housing rebound could cause the unemployment rate to drop significantly in the next few years, said Ara Hovnanian, CEO of Hovnanian Enterprises, one of the nation's largest builders of single-family homes.
“We are undoubtedly well on the recovery route. It’s not a question of are we beginning it. I’d say it began at the beginning of this year and that’s not just for Hovnanian Enterprises [HOV 4.668 -0.212 (-4.34%) ]. That’s for the entire industry,” Hovnanian said, noting that net sales orders for the 10 public homebuilders have increased 30 percent year-over-year.
Speaking on CNBC's “Futures Now,” Hovnanian said there are other signs the housing market is turning around, too. The hottest markets for new construction currently include Florida, Phoenix, San Francisco, Orange Country, Calif., Dallas and Houston. Across the board, new home price increases are “significant.” Prices are rising in most every market, he said.
Still, Hovnanian cautioned the housing recovery will take a while. To put it in baseball terms, he said we’re only in the second inning...
Hey bud Just checking up to see how things are going here.
Hopefully some green lighting up your portfolios despite the market well off the highs (those were the days).
ANF...holy $@#!!#
NUGT up nearly 50% since alert. I dumped 70% of my positions for this one and it paid off...but I'm never doing that again...gold is always iffy and way too sensitive on economic news. Note to self, never have more than 30% of your funds tied up in a single play...this took 2 years off my life watching it move (way too stressful).
Hey brig, FINL is down simply because the retail market is down for the past week. I wouldn't worry too much since it still has a buy rating from many analysts.
Nice chart, it finished strong there with 6% gains yesterday congrats.
Greatest Month Ever! Whoever said September was the worst month needs to be spade or neutered.
100%+ gains this month all due to QE3 Now that October is right around the corner, I'm looking forward to more nice gains - I'm expecting at least 30% this month since October is usually a strong month for the markets.
-------------------------------------------------------------
Stocks End Lower, but Log Best Q3 Since 2010
Published: Friday, 28 Sep 2012
By: JeeYeon Park
Stocks closed out the final trading session of the quarter with modest losses, but all three major averages posted robust gains for the month and the third quarter, boosted by a flood of central bank actions.
The Dow Jones Industrial Average slipped 48.84 points, or 0.36 percent, to close at 13,437.13. Cisco [CSCO 19.095 0.30 (+1.6%) ] led the blue-chip gainers, while Intel [INTC 22.655 -0.43 (-1.86%) ] lagged. The blue-chip index was down nearly 120 points at session lows.
The S&P 500 fell 6.48 points, or 0.45 percent, to finish at 1,440.67. The Nasdaq slumped 20.37 points, or 0.65 percent, to end at 3,116.23.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed above 15.
While September is historically the worst performing month for stocks, the Dow rallied 2.7 percent this month, logging the third largest gain in 2012. (Read More: What Happened to the ‘Worst Month of the Year?’)
And for the quarter, the Dow jumped 4.32 percent, the S&P 500 rallied 5.76 percent, and the Nasdaq soared 6.17 percent. Home Depot [HD 60.37 0.49 (+0.82%) ] was the biggest gainer on the blue-chip index for the quarter, while H-P [HPQ 17.06 -0.165 (-0.96%)] was the worst performer. Most key S&P sectors posted gains for the quarter, led by energy, while utilities sagged...
Morning everyone...and time to go back to bed. Trading with only one hour of sleep is a recipe for disaster.
Tennis! The one sport I can hit balls at other people's cars and call it an "accident"...
I always have your weekly event posts on my desktop (sticky notes) lol. Thanks Stuffit! It's always very detailed - looking forward to Wednesday for those housing reports
Stocks to Hit Record High Next Year—Eventually
Published: Friday, 14 Sep 2012
By: John Melloy
Wall Street is already beginning to look ahead to next year. In one of the first market forecasts for 2013, Bank of America Merrill Lynch’s chief U.S. equity strategist sees stocks having a bumpy ride next year before ending with the S&P 500 [.SPX 1465.77 5.78 (+0.4%)] up 10 percent to an all-time high.
“Although there may be more can-kicking by policymakers, some uncertainty is likely to be removed by the end of next year,” said Savita Subramanian in the note to clients Friday. “Given our house view that the U.S. avoids a recession and that GDP growth modestly accelerates into next year, we assume steady mid-single digit earnings growth this year and next, with a slight pick-up in 2013.”
The S&P 500 surged this week to its highest since the breakout of the housing crisis in 2007. The benchmark jumped after Federal Reserve Chairman Ben Bernanke surprised even the biggest bulls with an open-ended program to purchase mortgage-back securities — the so-called QE3.
But Subramanian doesn’t see a straight line to her 2013 S&P 500 target of 1,600. Rather, the strategist is standing by her prediction that the S&P 500 eventually pulls back before the end of this year to 1,450.
“We see an unusually high number of macro risks in the upcoming months that should cap upside or even trigger a correction,” said Subramanian. “Economic growth could disappoint in the second half and early next year, as uncertainty weighs on business and consumer spending in anticipation of the fiscal cliff.”
But after Congress eventually tackles the hard decisions needed to avoid the fiscal cliff, and as tensions calm in the Middle East and Europe muddles through a recession, Subramanian sees a stock market next year driven by pure fundamentals.
As these uncertainties lift, she predicts an expansion in the market’s multiple and S&P 500 earnings to grow by about seven percent, getting her to the 1,600 target. The S&P 500’s previous record close was 1,565, reached in October 2007.
“I think it's a definite possibility that stocks make new highs in 2013,” said Jim Iuorio of TJM Institutional Services, in reaction to the Bank of America report. “The most important thing to remember is that there is tremendous cash on the sidelines and current Fed policies aim to make that a very uncomfortable position.”
“Wall Street’s consensus equity allocation has been a reliable contrary indicator over time,” states the report. “In other words, it has been a bullish signal when Wall Street strategists were extremely bearish, and vice versa.”
Currently, Wall Street strategists recommending putting just 44 percent of one’s portfolio in equities, which is near a 27-year low, according to Bank of America data.
Top 7 Earnings to Watch Next Week
Published: Friday, 14 Sep 2012
By: Robert Weinstein
After a brutally slow week in earnings, the week of Sept. 17 delivers two scoops of volatility into the market. While technology leads in terms of influence, FedEx’s report is likely to give us a closer look into the overall health of the economy.
FedEx
Background: FedEx [FDX 90.15 -0.21 (-0.23%) ] is a global transportation and logistics enterprise that offers customers a one-stop source for global shipping, logistics, and supply chain solutions. The company was founded in 1971 and is headquartered in Memphis, Tenn. FedEx trades an average of 2.2 million shares per day with a market cap of $28 billion.
52-Week Range: $64.07-$97.19
Book Value: $46.46
Price to Book: 1.91
FedEx is forecast to report significantly weaker first-quarter earnings before the market opens on Sept. 18. The consensus estimate is currently $1.40 a share, falling 6 cents (4.1 percent) from $1.46 during the same period last year.
Fifteen out of 21 analysts (70-percent-plus) rate FedEx a “buy” or “strong buy.” The company has six “holds” and not a “sell” rating to be found. The average analyst target price for FedEx is $104.59.
From a technical perspective, the chart on FedEx looks interesting. After U.S. Federal Reserve Ben Bernanke and the Fed announced a refill of the cool-aid, FedEx stock took off running higher (along with the rest of the market). FedEx is now above the 200-day moving average again.
The trailing 12-month price-to-earnings ratio is 13.6, the mean fiscal year estimate price-to-earnings ratio is 12.7, based on earnings of $7.02 per share this year.
Shareholders receive 56 cents annually in dividend payments. The yield based on a recent price is 0.63 percent. The dividend has grown by an average of 7.6 percent in the last five years.
Even after the increase following the quantitative easing announcement, shares are slightly lower in the last month of trading. Shares are about break even at 0.5 percent less than a month ago.
In the previous FedEx’s earnings release on June 19, the closing price was $91.01. In comparison to a recent price of $90.47, shares are down 0.6 percent.
The last reported short interest is small at 1.7 percent.
Tibco Software
Background: Tibco Software [TIBX 31.435 0.415 (+1.34%) ] is a leading provider of software solutions that enable businesses to integrate internal operations, business partners and customer channels in real time. Through the company’s products and services, they enable computer applications and systems to communicate efficiently across local or wide area networks, including the Internet. The company was founded in 1985 and is headquartered in Palo Alto, Calif. Tibco trades an average of 3.1 million shares per day with a market cap of $5 billion.
52-Week Range: $20.04 to $34.67
Book Value: $4.80
Price to Book: 6.56
Strong third-quarter earnings growth is expected by Wall Street after the market closes on Sept. 20. The consensus mean is 20 cents a share, a gain of 3 cents (15 percent) from 17 cents during the corresponding quarter last year.
Analysts approve the direction Tibco is headed. Eleven of the 17 analysts covering the company give a “buy” recommendation, and none of the analysts give a “sell” rating. The average analyst target price for Tibco is $34.66.
The 60-day moving average after dipping below the 200-day moving average and $28, is now once again trending higher. Trading volume exploded this week and overall the outlook looks good for an earnings beat.
The trailing 12-month price-to-earnings ratio is 34.8, the mean fiscal year estimate price-to-earnings ratio is 33, based on earnings of 94 cents per share this year.
The last month has been very good for investors, the stock has leaped higher with an 11.5 percent increase.
Currently, the short interest based on the float is somewhat small and not a big concern. Short interest is 4.9 percent.
ConAgra Foods
Background: ConAgra Foods [CAG 25.59 -0.37 (-1.43%) ] has transformed itself into an industry-leading, branded, and value-added food company. ConAgra Foods recently announced its realignment from three operating channels to two, with the previous ConAgra Foodservice merging with ConAgra Food Ingredients to form ConAgra Foods Commercial Products. The company was founded in 1919 and is headquartered in Omaha, Neb. Conagra trades an average of 3.3 million shares per day with a market cap of $10.4 billion.
52-Week Range: $22.39 to $27.34
Book Value: $10.89
Price to Book: 2.34
First-quarter earnings is highly anticipated by hopeful investors expecting an earnings growth report before the market opens on Sept. 20. The analysts’ mean appraisal is presently 36 cents a share, a gain of 7 cents (19.4 percent) from 29 cents during the corresponding quarter last year.
The trailing 12-month price-to-earnings ratio is 14.4, the mean fiscal year estimate price-to-earnings ratio is 12.9, based on earnings of $1.98 per share this year. The average analyst target price for ConAgra is $28.
Shareholders receive 96 cents annually in dividend payments. The yield based on a recent price is 3.76 percent. Looking back at the three-year history of declared dividends, this company has paid on average 88 cents per share each year in dividend payments.
Shareholders continue to receive higher dividends. The company’s distributions have increased 5.7 percent a year, during the last five years.
As the company moves closer toward the earnings release, shares have transformed from a highly bearish trend, toward an almost bullish trend. Shares have moved 3.7 higher in the last month.
In the previous ConAgra earnings release on June 21, the closing price was $25.26. In comparison to a recent price of $25.98, shares are up 2.9 percent.
The last reported short interest is negligible. Short interest is 1.2 percent.
Rite Aid
Background: Rite Aid [RAD 1.33 0.03 (+2.31%) ] is a retail drugstore chain in the U.S. serving customers in numerous states across the country and in the District of Columbia. The company sells prescription drugs and a range of front-end products. Rite Aid trades an average of 3.3 million shares per day with a market cap of $1.2 billion.
52-Week Range: $0.85 to $2.12
Book Value: $-2.90
Second-quarter earnings is highly anticipated by hopeful investors expecting an improving report before the market opens on Sept. 20. The analysts’ mean appraisal is presently looking for a loss of 8 cents a share, a somewhat better result compared to the loss of 12 cents during the corresponding quarter last year.
Right now, Rite Aid has zero “buy” recommendations out of four analysts covering the company, three “holds” and one “sell” recommendation. The average analyst target price for Rite Aid is $1.35.
I would not be surprised if the price target gets raised after the earnings release. Walgreens [WAG 36.02 --- UNCH ] has done a great job at running circles around Rite Aid, but after following Rite Aid on and off for over a year, it appears to regaining its footing.
In the last month, the stock performed well with a 7.5 percent increase. Last quarter Rite Aid’s earnings release was held on June 21 and the previous closing price was $1.25. Relative to a current price of $1.28, shares are up 2.4 percent.
The current proportion sold short based on the float is 7.5 percent. While 7.5 percent is high by normal standards, the short interest is now near the 12-month low. Bottom line, Rite Aid might blast higher from here. With a significant beat, we may witness a serious short squeeze.
General Mills
Background: General Mills [GIS 38.89 -0.57 (-1.44%) ] is one of the leading producers of packaged consumer foods and markets its products primarily through its own sales organizations, supported by advertising and other promotional activities. Such products are primarily distributed directly to retail food chains, cooperatives, membership stores, and wholesalers. The company was founded in 1928 and is based in Minneapolis, Minn. General Mills trades an average of 4 million shares per day with a market cap of $25.5 billion.
52-Week Range: $36.75 to $41.06
Book Value: $9.90
Price to Book: 3.7
General Mills is forecast to report slightly lower first-quarter earnings before the market opens on Sept. 19. The consensus estimate is currently 62 cents a share, falling 2 cents (3.1 percent) from 64 cents during the same period last year.
The last date General Mills released earnings was June 27 and the closing price was $37.55. Based on a recent price of $39.44, shares are up 5 percent.
The company currently pays $1.32 per share in dividends for a yield of 3.36 percent. Examining the dividend history of a company is a great way to help understand what we may expect in the future. Of course, the past doesn’t guarantee future dividends, but it does paint a useful picture. The three-year average amount they have distributed to shareholders per year is $1.10. General Mills has a strong history of raising the dividend level. Dividends have moved up 11.1 percent on average per year during the last five years.
Shares are slowly but steadily climbing in the last 30 days. Shares are now 2.5 percent higher than last month. The last reported short interest is tiny at 1.9 percent.
Over half the analysts covering General Mills rate it as a “buy” or “strong buy.” Eleven of the 17 analysts covering the company give a “buy” recommendation. Six analysts rate it a “hold,” and none of the analysts recommend selling. The average analyst target price for General Mills is $41.36.
The trailing 12-month price-to-earnings ratio is 15.4, the mean fiscal year estimate price-to-earnings ratio is 14.8, based on earnings of $2.65 per share this year.
Adobe Systems
Background: Adobe Systems [ADBE 33.34 0.53 (+1.62%) ] is a provider of graphic design, publishing, and imaging software for Web and print production. It offers a market-leading line of application software products for creating, distributing, and managing information of all types. Adobe trades an average of 4.4 million shares per day with a market cap of $15.9 billion.
52-Week Range: $22.89 to $34.78
Book Value: $12.35
Price to Book: 2.64
Third-quarter earnings are highly anticipated by Wall Street, expecting a favorable report after the market closes on Sept. 19. Analysts’ mean appraisal is presently 47 cents a share, a gain of 3 cents (6.4 percent) from 44 cents during the corresponding quarter last year.
The last date Adobe released earnings was June 19 and the closing price was $32.89. Based on a recent price of $32.85, shares are down 0.1 percent. The average analyst target price for Adobe is $34.27.
The trailing 12-month price-to-earnings ratio is 17.6, the mean fiscal year estimate price-to-earnings ratio is 16.3, based on earnings of $1.98 per share this year.
Shares have traded slightly lower in the last month of trading. Shares are about break even at 1.5 percent less than a month ago. This doesn’t give us much insight as to what to expect, but it’s a fair statement to say that investors should not expect to get the legs knocked out from under them this release.
Currently, 2.9 percent short interest based on the float is small and not a big concern.
Oracle
Background: Oracle [ORCL 32.95 0.33 (+1.01%) ] is one of the world's leading suppliers of software for information management. Oracle trades an average of 19 million shares per day with a market cap of $157 billion.
52-Week Range: $24.91 to $33.81
Book Value: $8.91
Price to Book: 3.64
Wall Street is optimistic about Oracle’s first-quarter earnings after the market closes on Sept. 20. Analysts’ mean appraisal is presently 51 cents a share, a gain of 6 cents (11.8 percent) from 45 cents during the corresponding quarter last year.
The last time Oracle released earnings was June 18, and the closing price was $27.12. Based on a recent price of $32.71, shares are up 20.6 percent.
Analysts approve the direction Oracle is headed. Twenty-four of the 35 analysts covering the company give a “buy” recommendation, 11 analysts rate it a “hold” and none give it a “sell” rating.
Twenty out of 35 analysts now rate Oracle a “strong buy” up from 19 analysts a month ago. Compared to three months ago, even more analysts are rating this company as a “strong buy.” The average analyst target price for Oracle is $33.86.
Oracle is in a classic bull trend. The moving averages are moving higher and shareholders are happy. The 60-day moving average is above the 200-day moving average, which is highly bullish right along with the price traveling higher. Trend followers love this pattern and will hold a position until a technical break results in a signal to exit.
The trailing 12-month price-to-earnings ratio is 13.7, the mean fiscal year estimate price-to-earnings ratio is 12.6, based on earnings of $2.57 per share this year.
Oracle currently has an annualized dividend of 24 cents, yielding 0.74 percent. Not enough to influence a buying decision, but a nice bonus none the less.
I use SEC.gov, Zacks.com, WSJ.com, Tradestation, and Reuters for my data. PE is generally adjusted price-to-earnings based on an average number of shares.
Upcoming Events
MONDAY: Empire state mfg survey, GM temporarily halts Volt production, McDonald's new menu launch
TUESDAY: Fed's Evans speaks, current account, Treasury int'l capital, housing market index, Fed's Lacker speaks, Ford Fusion launch; Earnings from FedEx
WEDNESDAY: Weekly mortgage apps, housing starts, existing home sales, oil inventories; Earnings from AutoZone, General Mills, Adobe Systems, Bed Bath & Beyond
THURSDAY: Jobless claims, Philadelphia Fed survey, leading indicators, Fed's Kocherlakota speaks; Earnings from CarMax, ConAgra, Rite Aid, Oracle
FRIDAY: Quadruple witching, Fed's Lockhart speaks, iPhone 5 shipping date
Everything is showing double-digit gains, let's keep this going!!!!!!!!
YESSSSSSSS, goodbye summer and here we come 14000+ (according to the analysts out there).
Yup, it was screaming "buy me" after it broke pass $20. Definitely a great way to end the summer.
Nice charts Legs. I normally don't follow other's posts (I'm following only 2 people on iHub lol), but I'll definitely keep a look out for yours; there's some hidden gems there. Thanks for sharing and keep it up
MGM and WYNN continuing the rally! Time to sell soon.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=79345881
Having a tough time deciding which one I want...the beer or the woman...see you next week Dan
I went to bed when Pre-Market opened lol (I stayed up doing some due diligence on next week's plays). I set my alarm for 6:30 a.m. PST but apparently I slept right through it...need a louder alarm clock.
NUGT up 10%! It's on the move and this freight train can't be stopped.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=79305726&txt2find=nugt
MGM and WYNN both up! Grabbed MGM at the open
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=79306990
Wow...40% drop...tomorrow is going to be a fun day for tankers that's for sure lol. From my experience, tankers tends to give a nice bounce while the market is treading higher.
DOW closes at highest level since Dec. 2007!!!
Stocks End at Multi-Year Highs, Fueled by ECB
Published: Thursday, 6 Sep 2012
By: JeeYeon Park
Stocks surged across the board to finish at multi-year highs Thursday, propelled by a batch of upbeat economic reports and after ECB President Mario Draghi said the central bank agreed on a new bond-buying program.
The Dow Jones Industrial Average surged 244.52 points, or 1.87 percent, to close at 13,292.00, logging its best close since December 2007. Cisco [CSCO 19.725 0.825 (+4.37%) ] and BofA [BAC 8.35 0.40 (+5.03%) ] led the blue-chip gainers.
The S&P 500 soared 28.68 points, or 2.04 percent, to end at 1,432.12, posting its highest finish since January 2008. The Nasdaq jumped 66.54 points, or 2.17 percent, to finish at 3,135.81, logging its best close in 12 years.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, tumbled 10 percent to end below 16. (Read More: Stocks at Four-Year Highs, But What's Next?)
All key S&P sectors ended firmly in positive territory, led by financials and materials.
“There’s no ambiguity about the rally today—every economic data point we got was positive and the market liked Draghi’s comments,” said Brian Gendreau, market strategist at Cetera Financial Group. “We don’t know if this new program is going to succeed, but the ECB seems to be squarely in the camp of taking positive action.”
Poll: Will the New Bond Buying Program Work?
ECB President Mario Draghi said the new bond-buying program, aimed at the secondary market, would "safeguard the monetary policy transmission in all countries in the euro zone area." (Read More: Nearly Half of Germans Don't Trust Draghi)
"People have been fatigued and cynical about Europe so that leaves a lot of room for upside," said Gendreau.
Still, the ECB said it expects a very gradual economic recovery in the euro zone and slashed its GDP forecasts for the year. The euro initially erased gains against the dollar but soon rebounded, while European shares rallied. Earlier, the ECB kept interest rates unchanged at 0.75 percent.
“The market’s telling you that it’s dying for this [European] crisis to be over, but the fact is, [Draghi’s] news is not new,” said Kenny Polcari, managing director of ICAP Equities. “I want to be bullish about [the rally], I want the market to go higher, but the fact is that once again, the pendulum always swings too far to the left or to the right and it’s going to come back a bit.”
On the economic front, the pace of growth in the services sector rose in August, according to the Institute for Supply Management's non-manufacturing report.
Private businesses added 201,000 jobs in August, according to a closely watched report from ADP and Macroeconomic Advisors, easily topping expectations for a gain of 145,000. And Jobless claims last week declined to its lowest level in a month, according to the Labor Department.
Also, planned job cuts in August hit a 20-month low, according to a report from consultants Challenger, Gray & Christmas.
The flurry of jobs data come ahead of Friday's widely-watched monthly government report for August, which is projected to show nonfarm payrolls rose by a modest 125,000, while the unemployment rate is expected to hold steady at 8.3 percent.
Yea, spotted it about a minute ago lol.
Down -10% AH, nice, could be a nice play tomorrow.
I'm currently looking into casino's at the moment, such as WYNN, MGM, etc. but haven't bought any yet. Still looking into, but I figured I throw it out there for you guys to check out also.
I'm officially stumped, I have no idea what to buy at these levels - I just sold my positions today on this crazy rally, who wouldn't right? Everything is overbought, I guess that leaves me with just shorting...
Going to take a look at today's tankers, maybe there's a few good ones there.
NUGT on the move since $8...maybe next time, maybe next time.
lol sadly we aren't...most days we just go there to drink our Frappuccino's and call it a successful work out haha.
lol It's funny you should say that, because my buddies and I were talking about the same thing. Almost everyone we see at the gym, women that is, is sporting Lululemon clothing.
Normally I would jump in and play LULU since it's such a strong company, but I missed the boat on clothing retails rallying since beginning of August...I'm a bit hesitant jumping in at these prices haha, I'll probably hold off until the pullback.
Zillow (Z) headed for a Triple-Top formation on that news.
Anytime!
I'll repost it on craigslist, that'll get their attention
Home Builders Don't Have Enough Workers to Meet New Demand
Published: Thursday, 6 Sep 2012
By: Diana Olick
After losing 70 percent of their business in the housing crash, the nation's home builders are breaking ground again. New orders for homes are rebounding strongly, and housing starts have shown sustained growth over the past year. The demand is there; unfortunately, in some areas, the workers to build these homes are not.
"This industry has had a tough time in the last five years, and lot of people have left it and I guess gone into other things. We need ‘em back," says Dallas, home builder Don Dykstra, president of Bloomfield Homes.
Dykstra sees buyers taking advantage of low interest rates and low home prices. He is building about forty houses a month now, but says he would build sixty if he had enough labor and contractor support. (Read More: Homebuilders Most Confident in More Than 5 Years)
It's the same for Stephen Brooks, CEO of Grand Homes, also in Dallas. The shortage of skilled workers is hitting his bottom line.
“The cost of housing going up very, very fast,” says Brooks. "You sell a house, and you typically could deliver it within 6 months; now the cycle time, today, with the shortage of labor it takes 9 months. Instead of being 6 months of overhead, now your overhead is 9 months overhead for the same the house, so not only has the increased cycle time effect your margin, but the increase in labor cost effects your margin.”
Labor prices in some markets have increased as high as 10 percent with the median hike at 4 percent, according to Ted Wilson of Residential Strategies. He did a survey of Dallas/Ft. Worth builders.
"We lost over half of our production builder companies, and the subcontractors were enormously gutted as well," notes Wilson. It’s not like these guys are waiting by the phone. It’s been six years. These guys have moved on and found other jobs."
Many former construction workers moved on to facilities maintenance work or remodeling, or whatever jobs they could find. Replacing them is difficult because today's market demands highly skilled workers, and there is simply no available base. In the past, builders would hire workers and train them on the job.
"They don’t have the luxury of that now," says John Courson, CEO of the Home Builders Institute, an industry training group. "They want workers that are available to them, that come out trained with a skill, and ready to hit the ground working. They don’t want the expense of on the job training.”
Home construction technology has changed dramatically just in the past decade, as builders must adhere to green building standards. Dykstra says it is especially important that his homes be built with the latest energy-efficient features because that gives him a leg up on his biggest competition, which is cheaper, foreclosed homes. Due to that competition, he can't raise his prices much.
"Charging higher prices is a challenge because it can be difficult to get appraised values right now, so there’s a lot of pressure between being able to raise prices versus the need to increase what we are paying the labor," says Dykstra.
The shortage is across the spectrum, but especially in need are framers, concrete workers, plumbers, roofers and painters. The shortage is also felt most in areas where housing is coming back strongest, and permitting is easiest, like Texas and much of the West. The situation is not nearly as dire in the Northeast, where home building volume is smaller, and it can take years to get a project off zoned and ready to build. Still, as construction across the nation pulls itself off life support, the bitter irony persists. After years of nobody knocking on the door, suddenly this industry is struggling to meet demand.