By Jim Cramer
Forget the crummy quarter that KB Home just reported. Forget that they still have plenty of liquidity, so, unfortunately for the housing market, they can still pump out new homes just when we want them to cut back.
The real takeaway of the conference call was the housing bottom that they saw in Southern California. It's huge. They said sales are up by hundreds of percent -- that's the term they used -- because the affordability is the best in 20 years, and rates are the best in 47 years.
Two years ago, KBH's Southern California (KBH- commentary- Cramers Take) home business hit a retaining wall going 200 miles an hour. It has seen nothing but price cuts and foreclosures and cancellations in its projects ever since ... UNTIL THIS QUARTER.
In this quarter, they saw month-to-month-to-month stronger sales, as housing prices are down as much as 45% in some of their sales areas (you can see all of them by going to their Web site).
I think the case can be made that it is time to buy there. You don't get a sense from the call that any other place in their network has bottomed. In fact, they almost all have further to go down.
But not Southern California, where they are selling out, particularly of the $200,000 homes. Oh, and they made very clear that there is ample FHA money available to buy there.
It's just a remarkably positive housing story within the house of gloom, and a perfect harbinger of what will happen later this year with price declines in the rest of the country.
Get this: KB Home is actually running out of inventory and selling new homes at the same price as foreclosed homes. Hence the fabulous affordability.
No wonder the stock is up!
At the time of publication, Cramer had no positions in the stocks mentioned.