In 2008, the stock market crashed and in 2009 in bounced back hard. The real estate market has been doing a slower, version of that same song and dance too. But here's the thing: By and large, GAAP accounting rules only let homebuilders mark their assets down, not back up (unlike firms that own stocks, for instance). So as home prices make a slow ascent, the folks who buy homebuilders now are going to get bigger realized gains as a result of that one-way street in accounting. The big names also tend to be better at owning a niche. Take Toll Brothers, for example. The $5.6 billion firm focuses on building high-end homes -- last year, the average selling price was more than $500,000. That positioning gives Toll Bros. access to a market that's filled with qualified, bargain-hungry buyers. While the recession did shake out the weaker-handed homebuyers, it's left a group of consumers who are more apt to take on mortgages at record-low rates, and are more likely to relocate for new job opportunities. Toll has been one of my favorite homebuilders for the last year -- and it's still the one that tops my list. NVR is another strong choice, especially for investors who are still a little queasy about homebuilder stocks. The firm didn't have to take the same sized write-downs that many peers ate because they didn't over-leverage themselves with speculative land in the first place. Instead, NVR was consistently one of the best-run homebuilders leading into the housing bubble, and today the firm carries essentially no debt on its balance sheet, a rarity for the industry. Better still, NVR's business is focused around one of the strongest housing markets in the country: the Baltimore-Washington corridor. That geographic positioning spared NVR from taking severe write downs to its existing inventory. Plus, the company thinks it's cheap too. The firm has been aggressively buying back shares in the last couple of years, deploying significant free cash to eat up almost 20% of its outstanding shares. Meanwhile, Lennar is the value proposition in the homebuilder business. It sells homes that are skewed toward the low to middle end of the spectrum, focusing on first-time homebuyers and move-up purchasers. One important factor in Lennar right now is its short-interest ratio: with so many people betting against LEN this stock could be a prime short squeeze candidate.