Hovnanian CEO: Past Housing Cycles Show Way Forward (Really?)
I’ve been listening to the web cast of today’s UBS Building and Building Products Conference (interestingly no cameras allowed this year, despite the fact that we were invited with open arms last year).
Anyway, Ara Hovnanian, CEO of Hovnanian Enterprises , whose company reported some not-too-positive quarterly earnings guidance this morning, is trying to make the case that this housing recession is going to turn around pretty quickly.
Mr. Hovnanian, whom I respect because he’s not afraid to talk about this stuff on our air, spent much of his presentation comparing today’s housing downturn to previous corrections. “If you look at the years where we had sharp downward corrections...the ’75 and ‘81 period, the good news is the corollary is sharp upward correction afterwards.” He says that the absence, so far, of a wider economic recession bodes well, and household formation is still climbing with demand continuing to increase. He says he believes we’re seeing a trough in starts, based, again, on previous cycles.
Here’s my question: Given the unique characteristics of this particular housing boom, the new mortgage arena that fueled it and the subprime borrowers and investor speculators who were brought into the game, can you use any previous corrections as a gauge?
Stay tuned, I’ve got more CEOs to hear from the conference, so I’ll post a bit later.
Questions? Comments? RealtyCheck@cnbc.com