DR Horton is doing what I have predicted builders would do: offset falling housing prices by building more, not less (as housing bulls suggested). Their reported earnings fell 85%. Not much of a surprise.
Here comes the best quote, related to DR Horton’s cancellation policy:
Unlike other home builders, Horton said it has no plans to weed out potential buyers who may not be able to qualify for a loan in order to bring down the cancellation rate.
“As I’ve said to all our salespeople, if a buyer is warm and has a pulse, we want to put them on paper,” he said.
You could tell the whole story in that single phrase.
Excellent post! And, very telling!! I worked with an appraiser a during this whole boom. He told me crazy stories of how lenders and brokers would reject his appraisals saying they weren’t high enough!!
Wacky stuff. I suspect that more than a few of them will end up in jail…
Andrew
Also,
A buddy and I started a new podcast to try and chronicle these crazy investor times. It’s called the Investor Review Podcast. Come check us out:
http://www.InvestorReviewPodcast.com
Andrew
Read Business Week – April 11, 2005 issue. It called the top of the housing bust back then too…
right, as if they would turn down a zombie..
Wow, I think they HAVE raised their standards: it used to be the buyer had to be warm OR have a pulse, but now they demand BOTH warmth and a pulse!
Such low standards for selling/lending: isn’t that how we got into this mess in the first place?