Emotions are running high in housing and real estate, certainly more so than in most other sectors.

No other stories that I have written have touched nerves like the ones on

St. Joe

(JOE) - Get Report

and

Beazer Homes

(BZH) - Get Report

. The funny thing is that the hate mail I received was equal in volume and fury, even though I took a

bullish stance on Beazer and a

bearish one on St. Joe.

I was caught a little off guard by the response to my positive story on Beazer, which has admittedly been my worst call to date. The basic premise was that the bad news was already baked into the stock price and that it should eventually recover. Clearly, I've been wrong so far, and I'm certainly taking a close look at whether I will continue to be. Meanwhile, here's what some of you had to say:

J.G. wrote:

This sound(s) like a similar story we heard in 2000 about technology. Wake up. You are deluding yourself and your readers. Housing is so far above the trendline for appreciation from a historical perspective it is insane. Do your homework and you will find that asset class bubbles are brutal as they deflate. 40% of all homes purchased in 2005 were for investment/second homes, and a significant percent were with no principal. This will obviously not continue as rates continue to hit multiyear highs.

While I don't disagree with the notion that housing became a bubble, I was not and still am not expecting an utter collapse in home prices. The difference as I see it between the tech bubble and housing bubble is that many more people have acknowledged the current bubble and expect it to pop. That wasn't so during the late 1990s and 2000. And again, with people talking about it, I believed that the news was in the share price.

J.K. of San Diego opined:

Dude, you do not live in the real world.Homes are now on the market for over six months. New homes come with "perks" or incentives attached, and they still don't sell.I personally know of people who are literally living on their lines of credit. Homes are way overpriced, and wages have not kept up. I respectfully disagree. I would be a contrarian to the contrarians, i.e., short on the housing stocks for a good long while.

No doubt about it that homebuilders are having a tough time moving inventory, although unsold supply dropped to a three-month low in April. It was the second consecutive monthly decline but still above levels seen in the past two years.

And then there was this gem from H.F.:

Nice job calling BZH ... got any other hot stock tips? Do they pay you to throw darts at a board? When you get canned, you can cut my grass and clean my pool.

No, H.F., they pay me to write contrarian stock ideas. Not all of my (or anyone else's) ideas will work. Perhaps you'd rather read someone who simply cheerleads the current hot trend. And you wouldn't want me to cut your grass and clean your pool. I'd probably tell you something that you didn't want to hear, like you should switch grass seed or your pH is too high.

The initial reaction to my story on St. Joe was quite hostile. I was accused of being "irresponsible" for publishing my piece without ever having traipsed along the beaches or in the bogs of northwest Florida. I was labeled an elitist Yankee who didn't understand the area.

Manny piped in:

I think you are terribly wrong. Personally I think your article doesn't even make any sense. If you have done your homework, you should find major Fortune 500 companies buying property up and down Bay County. With a new international airport coming soon and being only minutes away from one of the most beautiful beaches in the world, you would be foolish not to buy property there now. You probably don't have the money anyway.

I don't believe that the new airport is going to be the savior for housing in the region. The name of the game is job creation, and I haven't seen any evidence that there is going to be a jobs boom in the area. As far as not having the money to buy property there, maybe you can talk to H.F. about giving me a raise for mowing his grass and cleaning his pool.

Not surprisingly, once St. Joe came out with horrible numbers for the quarter, the vitriolic defenders retreated, and most of the feedback was supportive of my argument.

A.H. said:

I suppose you saw JOE's updated land analysis yesterday. It's humorous to hear management say that they no longer consider ANY of their land holdings suitable for timber. Come to Florida and take a look at the land. It won't be developable for generations. It's nothing more than an attempt to have Wall Street adjust their models to justify the absurd stock valuation.

I couldn't have said it better.

A reader who wished to remain anonymous but who claims to live in the panhandle of Florida is even more bearish than me:

Your analysis is spot on, however you may only be scratching the surface of the problems JOE faces. There are no sales occurring in their primary, high-profile projects, even though we are well into the spring selling season in this area. There is no indication that they can do better in 2Q than the $0.05/eps of 1Q, and the deficit to make it to the new guidance will be just too great to overcome. $1.20/share would be an absolute best-case scenario, and only if activity picks up in 3Q, which is unlikely. This market is just at the beginning of a two-year correction.JOE's statement of product mix change is a sham. Their newest projects are self-described as modeled on WaterColor (a St. Joe development) -- the "one-trick pony" referred to in the conference call. I could go on, but you appear to be on the right track. Your $31.00 call may prove to be too optimistic.

A representative from St. Joe did not directly address Anonymous' contention that no sales were occurring in the company's high-profile projects. Rather, I was referred to the company's first-quarter earnings release, which acknowledged slow resort sales along with a comment from the spokesman that said, "This addresses the broader point. ... Florida is certainly not a single real estate market, but rather many, many individual markets."

Whether the emotional volatility around these stocks translates to further stock price volatility remains to be seen. I remain steadfastly bearish on St. Joe and cautiously and uneasily bullish on Beazer.

In keeping with TSC's editorial policy, Lichtenfeld doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships.

Marc Lichtenfeld was previously an analyst at Avalon Research Group and The Weiss Group and a trader at Carlin Equities. He holds NASD 86,87, 7 and 63 licenses. His prior journalism experience includes being a reporter/anchor for On24 in San Francisco and a managing editor of InvestorsObserver, a personal finance Web site. He is a graduate of the State University of New York at Albany. He appreciates your feedback;

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