Some builders who have been through booms and busts say their companies' safest cushion might be a business model that dotes on customers and keeps in check the arrogance and complacency that led to past excesses. “We all thought we were infallible, but for 15 years I've managed my business with the mind-set that a recession could be around the corner,” says Webb of John Laing Homes, which expects to close 2,850 homes and generate $1.5 billion in revenue in 2005. Case in point: The company got into land development to have more control and to assume more of the entitlement risk, Webb says. “I'm more cautious today because I don't want to make the same mistakes.”

John Caulfield is a freelance writer based in Old Bridge, N.J.

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SOURCE: OFHEO

BOUNCE BACK: The Office of Federal Housing Enterprise Oversight's House Price Index measures changes in the average price in repeat sales or refinancings. The index shows that California's prices dipped more than 12 percent between the fourth quarters of 1991 and 1994 and then stagnated for several more years before moving upward. It took Texas—whose economy in the mid-1980s fell into near depression—more than seven years before home prices returned to 1986 levels. Connecticut slogged through a six-year economic downturn from 1988 to 1994 during which prices tumbled nearly 18 percent. California and Connecticut have experienced robust appreciation during the latest price run-up, but Texas prices have risen only modestly, primarily because developable land there is still plentiful.

BOUNCE BACK: The Office of Federal Housing Enterprise Oversight's House Price Index measures changes in the average price in repeat sales or refinancings. The index shows that California's prices dipped more than 12 percent between the fourth quarters of 1991 and 1994 and then stagnated for several more years before moving upward. It took Texas—whose economy in the mid-1980s fell into near depression—more than seven years before home prices returned to 1986 levels. Connecticut slogged through a six-year economic downturn from 1988 to 1994 during which prices tumbled nearly 18 percent. California and Connecticut have experienced robust appreciation during the latest price run-up, but Texas prices have risen only modestly, primarily because developable land there is still plentiful.