Boy, this seems exactly like the telecom wipeout of 2001. Right when they ramped up production to meet surging demand, WHAM!, the bottom fell out of the market and all the orders got cancelled.
You just know massive layoffs, billions in write-offs and desperation pricing are next.
Check out the 43% cancellation rate for MDC, and the write offs, cancellations and use of incentives at the growing more desperate by the day D.R. Horton.
D.R.: "The current home-sales environment is characterized by an increase in both existing and new homes available for sale, higher-than-normal cancellation rates, and an increase in the use of sales incentives in many of our markets," Horton said at the time.
MDC: The cancellation rate surged to 43% from 19% the prior year, reflecting jitters over the housing slowdown.
"The cancellation rate is the highest we have seen from the publicly traded builders due to M.D.C.'s high concentration in weakening markets," said Banc of America Securities analyst Daniel Oppenheim in a research note.
July 21, 2006
Posted by blogger at 7/21/2006