If you’re at all interested in the housing market, then you’ve probably heard the sound from yesterday’s webcast of a Citigroup homebuilder conference. Donald Tomnitz, CEO of D.R. Horton , the nation’s largest homebuilder by volume, said, “I don't want to be too sophisticated here, but '07 is going to suck, all 12 months of the calendar year.”
Well ring the fire alarms! Call the cops! A CEO finally spoke the truth. So all the bosses here at CNBC get all up in arms. Fire up the “Alert” desk, get it on the air asap. Then this morning they all want me to report all day long on just what it means that a CEO of such a major company would use such, well, unseemly language about his own sector.
My producer and I decided to go over some old tape and see what other homebuilder CEO’s had said over the past few months, what language in particular they chose. It didn’t take but ten minutes to find a tape of a UBS homebuilder conference in November at which the CEO of Toll Brothers , Robert Toll said, “The accepted intelligence is that '07 will suck and '08 will do OK, and I don't see any reason for that being any better than any other prognostication you can event.”
Now yesterday, when Mr. Tomnitz said the word, Jim Cramer opined that perhaps D.R. Horton was harder hit by the housing downturn because the company builds lower-priced homes and may be particularly hurt by the subprime implosion. But guess what? Toll Brothers is the largest luxury homebuilder in the nation, and the adjective is the same.
Here’s my issue: the last time I looked, “suck” while a four-letter word, is not exactly a four-letter word. Granted, I don’t want my toddlers running around saying it, but I don’t think it’s all that offensive to America’s ears. What it is, is blatantly honest. It’s anti-spin. I would think that seasoned investors and shareholders of the big public homebuilders would rather get the truth than a bunch of hooey about how cancellation rates are coming down, inventories are stabilizing and we’re all going to survive just fine.
And I’m guessing those same investors and shareholders heard a lot worse words last week, when the market tumbled hundreds of points in a matter of minutes.
Questions? Comments? RealtyCheck@cnbc.com