The time seems to be drawing nigh when M.D.C. Holdings' strategy moves from the defensive to the offensive. Following its 3Q2008 earnings call, the company seemed less the marathoner that management had characterized it as and more of a sprinter in a crouched position waiting for the starting gun to go off.

Despite a net loss of $118.0 million for the quarter, its $1.37 billion cash position appeared to be fueling a competitive fire while management's continued scaling back of operations and inventory suggested that the company was toning its corporate muscles in an anticipated burst of action.

In fact, company chairman and CEO Larry Mizel showed some early signs of a shift in management tactics. Whereas Mizel has shied away from taking on more than two years of land inventory and balked at joint venture opportunities in the past, during the call, he sounded more open to exploring the possibilities given the depressed state of the housing market.

"I don't think it's reasonable to assume the world is the same now as it has been in the past," Mizel said. "We are very open to evaluating other opportunities. We have an open mind for whatever might come our way."

During the quarter, management took the company down another weight class, reducing headcount by 10%, exiting the Illinois market, drastically scaling back its position in California, and reducing its overall owned lot inventory by 14% from 2Q2008. Much of the reduction in land inventory was owed to tax-benefit-motivated land sales that totaled $12.3 million for the quarter.

Management's paring down of the company's land pipeline appears to be a move to clear out old stock to make room for new.

"There are billions of dollars of assets for sale, and we expect to increase our exposure when pricing justifies it," Mizel said.

However, Mizel noted that he didn't expect to be able to close on any significant transactions before mid-2009 as banks holding repossessed land from underwater builders have been slow to take the necessary write-downs on the assets out of fear of triggering a cash crisis.

"Until they do that, they're stuck in between how they are going to deal with borrowers, with regulators, and with their own capital needs," he said.

But when the logjam loosens, Mizel said he expected to be able to snag some attractive deals in this buyer's market where buyers are few and far between.

"Our land preference is simple: I want to put up no money; I'd like to have it cheap," Mizel said, adding, "I'd like to have lots fully finished, and I'd like to pay for lots after I build the homes or concurrently."

But for all Mizel's optimism about the future of M.D.C., there was still plenty on the balance sheet to be depressed about. The company closed 1,116 homes during the quarter compared to 1,963 units a year ago; the average selling price dropped by approximately $30,000 in the same period to roughly $301,700.

New orders came in at 667 for the quarter, down nearly 46% from 2Q2007. Also at 46% was the company's cancellation rate, although that was an improvement from the 56% can rate the company experienced the previous quarter. Management attributed the elevated cancellation rates to buyers' inability to get financing. Units in backlog also tumbled from 1,947 homes in 2Q2007 to 1,127 homes.

Moreover, while SG&A fell 33% in dollar value from a year ago to $51.6 million, it was up sequentially from the previous quarter.

But Mizel said that he anticipated buyer demand could pick up post-presidential election. He noted that many home builders were working with members of Congress to resurrect some housing stimulus strategies from the 1970s, including a beefed up home buyer tax credit and a government-sponsored buy down of mortgage interest rates. Moreover, he said he expected the foreclosure issue to abate.

Mizel acknowledged that housing's troubles recently had taken a back burner to turmoil in the financial markets, but, he said, "I feel confident Congress will deal with the housing issues next."