Housing Top Was Sweet for KB Home Pair

Do the math. When you take away the cost of exercising his options in the first place, Mezger walked away with a profit of $23.8 million. If he had waited until today to sell his shares, he would have collected just $7.2 million. As for Karatz, he pocketed $63.6 million. Had he waited until now to sell the shares, the figure would just be $17.6 million.

Wow.

Nice savings.

In the spring and early summer of 2005, the standard line out of the real estate industry and out of Wall Street was that the boom would continue. Demand will continue to surge, went the argument, thanks to low interest rates and a strong economy.

Guess what? Long-term interest rates have stayed pretty low. The economy has remained strong. Employment is up. And, last I checked, people still like to live in good homes.

Yet the market has crashed anyway.

The reason isn't hard to find. House prices were just way too high -- especially when measured against long-term metrics like average household earnings.

Price matters.

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