Toll Brothers Inc (TOL)

hikingchik thinks if Toll Brothers Inc were a classic videogame character, it would be Super Mario.

heitmaj thinks if Toll Brothers Inc were a historic sports franchise, it would be Chicago Cubs.

By: Erica Feldkamp, WeSeed Writer Wall Street might get a swift reality check as high profile social elites show off their empty pockets and soon to be empty houses. Two weeks ago, despite quarterly losses, high-end home builders have maintained Wall Street's confidence. Toll Brothers (TOL) and Hovnanian (HOV) stock had gone up more than 2 and 6 percent, respectively. However, this week Ed McMahon and Evander Holyfield made the shocking announcement that they are facing foreclosure on their multi-million dollar homes, leaving homebuilders and homeowners with little hope for a housing market recovery. And they're not alone: Foreclosure filings in the first three months of 2008 rose more than 112% over last year, and more than 160,000 families have lost their homes. While housing foreclosures have taken the greatest toll on middle to lower income home owners who didn't have any savings, more homeowners in the upper echelon of society are boarding up their windows as well. This is a bad omen for the luxury home builders. With little or no movement in luxury home sales, Toll and Hovnanian aren't making any plans for any 109 room, 17 bathroom, bowling alley-equipped estates such as Holyfield's. In fact, the number of housing contracts is down significantly. Toll's net contracts dropped 58 percent to $496.5 million from $1.17 billion. Hovnanian is under the same dismal roof with contracts dipping 29 percent from last year, according to HOV's second quarter report. Builder KB Home is also struggling as one of their real estate partners failed to pony up their portion of the financing for KB's lastest California residential development, which are exclusively multi-million dollar units. With builders and prospective homeowners being denied loans, especially loans in excess of several million dollars, KB Home has announced a renewed focus on modestly-sized and priced homes rather than castle build outs. McMahon and Holyfield are the first to watch their kingdom crumble, but they probably won't be the last. As more stars go for broke, homebuilders are unhappily hot on their heels.

by Carlos Portocarrero, WeSeed Writer OK let's face it: the housing market is like Lindsay Lohan's career - always in the news but for the wrong reasons. So why even mess with battered housing stocks right now? Buying low is one reason, but don't forget that housing is cyclical and things are bound to get better again (at least for some housing stocks). People have to live somewhere, right? The trick is knowing when housing stocks will finally emerge from the doghouse and which ones will avoid being blown away by the Big Bad Wolf of subprime mortgages. Just a few years ago, I remember checking out open houses with my girlfriend just for kicks. We were always shocked at the prices. Who could afford to buy? We couldn't figure it out - and now we know few people really could. That's why, today, folks are losing their homes left and right (Believe it or not, even Ed McMahon faced foreclosure). Well, now we're married and it feels like we've moved to a different city: the one on the other side of the tracks. But seriously, prices are way lower now so we're seriously considering buying a place. We aren't alone either - the real-estate market calls us "first-time home buyers" and right now we're in the driver's seat. Builders, meanwhile, better adjust if they want to keep up. KB Home (KBH) is one builder that is going back to basics: big, expensive (and hard to sell) McMansions are out and smaller, less extravagant "starter homes" are in. With prices falling so hard and fast, prospective buyers like us are finally seeing affordable prices. KB isn't alone - Hovnanian (HOV) says they're "going back to Mortgage Lending 101." There is some good news too: while Toll Brothers (TOL) did lose $90 million last quarter, it still wasn't as bad as Wall Street expected. So there is hope. If Congress winds up giving home buyers a tax credit, it will inspire more of us to take the dip and put in an offer. And builders have learned their lesson, too, and will likely "build smart" from here on out. Keeping an eye on these companies and the industry as a whole could be a very rewarding experience.