Wall Street, says Ivy Zellman of Credit Suisse, doesn't like good will. "Companies that buy other companies today and show good will are being penalized," says Zellman, adding that she'd rather see public builders take a more conservative approach and maximize their return on capital.

Zellman's remarks, made at an invitation-only seminar that preceded June's Pacific Coast Builders' Conference in San Francisco, registered with the two builders on the panel. Don Tomnitz, the CEO of D.R. Horton, acknowledged that the company took on quite a bit of good will when it bought Schuler Homes -- $441.9 million over the net assets' fair value.

"We thought it was good for shareholders," says Tomnitz. "Wall Street didn't. In the future, we're going to be adding as little good will as possible."

Tomnitz added that D.R. Horton expects to slow its rate of growth. It had increased its consolidated revenue to 34 percent, but now expects only 10 percent to 15 percent growth.

"We've always been very sensitive to good will," said Stuart Miller, CEO of Lennar. He noted that the only way two big companies could come together today would be at a discount to book values. "Obviously, that's not going to happen. Good will is probably the most dilutive element to return on capital."