Beware the Bubble in Homebuilders as Housing Prices Rise

Beware the Bubble in Homebuilders as Housing Prices Rise

Forbes (9/26, Fontevecchia, 928K) reports, "Clichés form very quickly in markets, and the nascent housing recovery has every sign of being the next one. Data over the last few months has pointed to an improvement in economic indicators, particularly in the housing market, and Tuesday's Case-Shiller index put the latest brick in the wall." Although it appears the sector has bottomed out, investors should be cautious in case another housing bubble is created. The piece says that homebuilders are "seeing 'uncomfortably high' valuations, according to Barclays, as markets ignore a still large shadow inventory and a shortage of high-quality homes."