833079--2/27/2009--Meritage_Homes

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{condition, economic, financial}

{debt, indebtedness, cash}

{loan, real, estate}

{operation, natural, condition}

{financial, litigation, operation}

{cost, contract, operation}

{regulation, change, law}

{tax, income, asset}

{cost, operation, labor}

{competitive, industry, competition}

{stock, price, operating}

{investment, property, distribution}

{personnel, key, retain}

{acquisition, growth, future}

{loss, insurance, financial}

{cost, regulation, environmental}

Risk Factors Related to our Business If the current downturn becomes more severe or continues for a longer-than-anticipated period of time, it would have continued negative consequences on our operations, financial position and cash flows. Mortgage availability decreases and interest rate increases may make purchasing a home more difficult and may cause an increase in the number of new and existing homes available for sale. If home prices continue to decline, potential buyers may not be able to sell their homes, which may negatively impact our sales. Continued high cancellation rates may negatively impact our business. A reduction in our sales absorption levels may force us to incur and absorb additional community-level costs. The value of our real estate inventory may continue to decline, leading to additional impairments and reduced profitability. Reduced levels of sales may impair our ability to recover pre-acquisition costs and may cause further impairment charges. Our joint ventures with independent third parties may be illiquid, and we may be adversely impacted by our joint venture partners failure to fulfill their obligations. If we are unable to successfully compete in the highly competitive housing industry, our financial results and growth may suffer. Our strategies to weather the current economic and homebuilding downturn have met with limited success and the continued execution of these strategies may not have a positive impact on our business Some homebuyers may cancel their home purchase contracts with us because their deposits are generally a small percentage of the purchase price and are potentially refundable. We face reduced coverage and increased cost of insurance. We are subject to construction defect and home warranty claims arising in the ordinary course of business, which may lead to additional reserves or expenses. Our income tax provision and other tax liabilities may be insufficient if taxing authorities are successful in asserting tax positions that are contrary to our position. Additionally, continued loss from operations in future reporting periods may require us to continue to adjust the valuation allowance against our deferred tax assets. Our net operating loss carryforwards could be substantially limited if we experience an ownership change as defined in the Internal Revenue Code. As a participant in the homebuilding industry, we are subject to its fluctuating cycles and other risks that can adversely impact the demand for, cost of and pricing of our homes. The loss of key personnel may negatively impact us. Shortages in the availability of subcontract labor may delay construction schedules and increase our costs. Our lack of geographic diversification could adversely affect us if the homebuilding industry in our market declines. Our future operations may be adversely impacted by high inflation. We experience fluctuations and variability in our operating results on a quarterly basis and, as a result, our historical performance may not be a meaningful indicator of future results. Our substantial level of indebtedness may adversely affect our financial position and prevent us from fulfilling our debt obligations. Our financial leverage may place burdens on our ability to comply with the terms of our debt and may restrict our ability to complete certain transactions. We may need to amend our existing debt instruments or raise new equity in order to fund our future operations. We may not be successful in integrating future acquisitions. We are subject to extensive government regulations that could cause us to incur significant liabilities or restrict our business activities. Acts of war may seriously harm our business. Our business may be negatively impacted by natural disasters. Special Note of Caution Regarding Forward-Looking Statements

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833079--2/27/2009--Meritage_Homes_CORP