I agree, homebuilders tend to carry more debt than most companies. It is the nature of the beast. First, most of them build in developments and don't get paid for the homes until they are completed and the buyer's mortgage pays it off. Typically, a builder might have a 400K loan on a $500K home but he turns it over in about 6 months. It's not a high risk proposition especially when they have a buyer in the wings waiting for it to be finished.
They also need to have a large inventory of lots for building homes. Most builders have a 5 to 8 year supply of lots. Developing tracts of land into building lots can also take years and require large investments and/or loans.
I am a retired homebuilder myself and played the game for 30 years. If the market tanks ala' 2008, then these guys are going to be hurting. But I don't see that happening now. Many of them have the opposite problem. Homes in many areas are selling like hotcakes with record low interest rates. Imcreasing regulations also limit the supply of lots and increase the costs. The biggest problem right now for many is a shortage of qualified tradesmen to build them. Many left the field after the crash of 2008. To keep them and bring in more tradesmen to cover the increased demand they have to pay more. That is why many are actually showing reduced margins. They have committed to a fixed price with a buyer but their cost of construction has increased.
Over time, that problem corrects itself as they raise their prices. Still, that is a much better situation than sitting on homes that aren't selling. Bottom line is I think many of these builders are oversold and are too cheap now.
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