Hovnanian reported today, and the numbers were all--this is a homebuilder, you see--excellent.
Except for one small piece of the business, which happens to be Hovnanian's captive finance business.
"Due to the falloff in the re-finance business, Hovnanian is experiencing competition from third-party mortgage lenders who have been reducing their margins in order to originate more new business."
Seems also that there's an increasing demand for adjustable rate mortgages, which are less profitable than the old-fashioned fixed-rate kind--and this too hurt the finance arm.
ARM's were--get this--45% of origination volume in the quarter. That's right: almost half of all Hovnanian's mortgage volume is of the let's-take-the-lowest-monthly-payment-mortgage-because-otherwise-I-can't-afford-this-house variety.
But not to worry: "According to the Brookings Institute," the company reported on their conference call, "new housing starts should average 2 million a year for the next 25 years."
Phew! Thank goodness. If somebody at the Brookings Institute says so, it's gotta be true!
Seems to me the Housing Bubble is here. But not to stay.
I'm Not Making This Up