MLK,
This post is so full of fallacies that I can scarcely figure out where to begin. A housing company should make a profit no matter how many houses they sell? Not if they have infrastructure, ie salaries, offices, benefits, lawyers. Secondly, assuming they were able to turn a profit on 200 sales, there would be a difference to the pps if that profit were, say, 0.01 per share as opposed to 1.99 per share for 200k sales. Third, this housing boom has been based on so much air. Anyone with a pulse got a loan in this market. Now the gravy train has hit a wall. All these people who couldn't afford a conventional loan, cannot refinance into a conventional loans now on houses that is now worth less than they paid for them. They walk away. House goes on market. No buyers. Price goes down. More houses on market. Supply overwhelms demand. In the meantime, the builders are still cranking out new homes all over the country, based on last years assumptions. The crap has not even been launched towards the fan yet. WFC yesterday said they were stop purchasing subprime loans from third parties yesterday. That means fewer loans. Consequently, fewer buyers. Less demand. No one is poised to buy these faulty loans from these institutions because they are crap. The financial companies are stuck with them. They will be stuck with the houses soon. Then, they get dumped on the market. More supply.
The government has done a lousy job protecting the consumer from himself these last couple of years. Politicians of all stripes have taken contributions from these companies. Hence, no one said a peep when they started offering no money down, interest only, 2% percent balloons in three years crap loans. The bundled contributions from the financial companies certainly played a part in this as well. Now, the companies and politicians are SHOCKED SHOCKED to find out that there was gambling in the casino.
If i sound pissed, it's because I am. I'm in this business, tangentially, and I'm seeing a lot of people in pain or blindly about to be hit by a tidal wave.
BSD
