GLG News by Current or Former Chief Financial Officers in the Banking Industry

The housing bust is not over and trends continue to be negative.  The only positive activity is that homebuilding stocks have gone up, without a good reason.  We still have a ways to go to work through all this.

Not capitalizing interest in inventory causes acceleration of losses and deterioration of book value.

Recently, stock prices of most public homebuilders have increased 20-30 percent.  This despite no visible signs of improvement in the overall housing industry.  It seems early in the cycle for these stock price upward movements, as it appears the housing market has not yet found bottom. ...

Homebuilders have recorded large inventory impairments over the last couple of years.  Most of these impairments have been for land and lots.  As these previously impaired lots are built on and a completed home is delivered, the land component as a percentage of Cost of Goods Sold may decline...

There are risks associated with homebuilding assets and contingent obligations.  This article alerts the reader to areas of interest.

Homebuilding impairments and tax valuation reserves provide future accelerated income streams, when the recovery occurs.

Issues associated with loss of income tax benefits result in accelerated reduction of book value in homebuilders.

Unforseen risks associated with homebuilder joint venture agreements and accompanying completion agreements.

What will happen in 2008 for the homebuilding industry? Will cash be generated? Will there be failures? Will there be profits?

What are the econonmic and cash impacts from a tax standpoint of large impairment losses recorded by homebuilders?  How/when can cash be recovered from these losses?