And you thought a bailout of Detroit's Big Three was too much? General Motors (NYSE:GM), Ford (NYSE:F), and Chrysler have nothing on Toll Brothers (NYSE:TOL). This one-star builder and its peers are asking for as much as $250 billion in relief.

The bank bailout, I get. A frozen credit market freezes out, well, everyone. But a builder bailout really does feel like a sucker punch. Why should I have to pay to get someone into a home they can't afford? I've been dumber than your average consumer at times, but at least I was smart enough to take a 15-year fixed loan when rates fell to historic lows seven years ago.

Builders, for their part, act as if home ownership is central to the economic recovery. They're asking for a tax credit of as much as 10% of a new home's purchase price, capped at $22,000, and a subsidy that could cut mortgage rates to as low as 3%.

I can see the logic in the latter, sort of. Lower interest rates enough, and you'll encourage both homebuyers and existing owners looking to cut costs through refinancing. But the tax credit is silly.

Think about it. To get a $22,000 credit, you'd have to buy a $220,000 home. In many parts of the country, that means a McMansion. The U.S. median home price fell to $200,500 in the third quarter, the National Association of Realtors reports.

Is this really what it's come to? Builders can't survive unless consumers spend beyond their means? The question's at least worth asking, which means it's also worth having a look at the top homebuilders in our 120,000-strong Motley Fool CAPS database. Here, in order, are their five favorite homebuilders right now:

Top Homebuilders

Recent Price

CAPS Stars (out of 5)

1-Year Return

Homex Development (NYSE:HXM)

$16.31

****

(63.7%)

Gafisa SA (NYSE:GFA)

$8.56

***

(72.3%)

MDC Holdings (NYSE:MDC)

$31.02

**

(2.2%)

Toll Brothers

$20.17

*

11.2%

D.R. Horton (NYSE:DHI)

$7.52

*

(27.3%)

Source: CAPS, Yahoo! Finance.

A builder to bet on?
What's the best strategy for would-be vulture investors shellshocked by the U.S. housing market? Go abroad. Or at least south of the border, where Mexican builder Homex operates.

At this time last year, CAPS All-Star slbutton wrote: "I'm 'short' (in CAPS) quite a few homebuilders myself, but I think Homex is a different story: earnings of 2.80/share, growth forecasts of 22% for the next five years, ROE > 20%, debt higher than I like to see, but under control (0.443 debt/equity), strong insider ownership."

The majority of those following Homex in our 120,000-strong Motley Fool CAPS community would appear to agree:

Metric

Homex

CAPS stars (5 max)

****

Total ratings

290

Bullish ratings

277

Percent Bulls

95.5%

Bearish ratings

13

Percent Bears

4.5%

Bullish pitches

26

Bearish pitches

1

Data current as of Nov. 28, 2008.

Foolish colleague Tim Hanson is, too, but for different reasons. As he wrote in a recent analysis: 

The majority of mortgages in Mexico are issued by the government instead of private lenders (as is true in the U.S.). That's particularly true in the entry-level or affordable-home market, where Homex is dominant. And because government mortgage issuers are able to deduct payments directly from the paychecks of registered workers, they have been able to grow mortgage originations over the past five years while substantially decreasing exposure to nonperforming loans.

Color me intrigued. But that's me. I'm more interested to know what you think. Would you buy Homex at today's prices? What about MDC Holdings, which remains an active Motley Fool Hidden Gems recommendation? Let us know by signing up for CAPS today. It's 100% free to participate.

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