Posted on 07/15/2011 6:59:41 AM PDT by SeekAndFind
Well, what about housing? It’s been dead for so many years that its blood long ago stopped flowing. Surely this famous piece of advice from Nathan Rothschild doesn’t apply to that sector?
Don’t be too quick to dismiss the possibility.
Consider the iShares Dow Jones U.S. Real Estate Index fund, an ETF that is designed to represent the real-estate sector. Just one week ago, it traded at a 52-week high. The same goes for the iShares Cohen & Steers Realty Majors.
What does the market know that the rest of us don’t?
For answers, I turned to an investment service called Sound Advice, which is edited by Gary Cardiff and Steve Horwitz. The service regularly devotes a couple of pages of each issue to an in-depth analysis of the real-estate market.
And we should pay attention to their analysis because their service has a superb long-term record: Over the last 15 years, according to the Hulbert Financial Digest, it has outperformed a buy-and-hold by two percentage points per year on an annualized basis.
According to Cardiff and Horwitz, there are several good fundamental reasons for not dismissing the real-estate market out of hand.
A key one is the steady decline in foreclosure rates. They say that this is an early indication that the real-estate recovery is about to begin. Indeed, they point out, “in the late 1980s [in the wake of the S&L crisis], this was the best indicator for knowing when the recovery was near. As foreclosure rates dropped, the ensuing recovery began.”
(Excerpt) Read more at marketwatch.com ...
Foreclosures were up 47% in March from a year ago, and up 7% from last month alone, according to RealtyTrac. While foreclosure rates leveled off last year in the second and third quarters, many economists and industry insiders are predicting foreclosures to surge again in coming months.
http://realestate.msn.com/article.aspx?cp-documentid=13107798
bump
Foreclosure Rates are Climbing
All across the country, foreclosure rates are reaching historic highs. The current upward trend in the home foreclosure rate can be attributed to many factors. Perhaps the biggest factors include rising unemployment and strict lending qualifications. Homeowners are finding it hard to pay their mortgage as unemployment increases and their wages decrease. Plus, many homeowners are now faced with adjustable rate mortgages that are creating large payment increases. Unfortunately, they cannot refinance their loans because of strict lending guidelines.
http://www.foreclosuredeals.com/foreclosure-rates/
From Cardiff and Horwitz’s mouth to God’s ears...
maybe I’ll sleep better tonight...
*Obama still running things*
Maybe not....
(Thanks for the post, though...)
One other point. I looked at quite a few foreclosure properties and all I can say is that they were disgusting. These people had no idea what it was like to take care of their houses. This is what happens when you just hand out money to people to buy houses that never had to work for it. They were in no way prepared.
In the meantime, NAR, and MAR are harassing their membership with ‘calls to action’ to contact reps and tell them to Keep Mortgages affordable (interpret: make the banks give out more bad loans with no down payment). It's disgusting.
I see the same in my area. REO’s are running 38-48% of the sales with a decline in some of our counties running at 23% less values than the previous year. No recovery here....
“What does the market know that the rest of us don’t? “
That many REO properties have deteriorated to the point they are no longer saleable.
That was an easy way to deal with the excess inventory- destroy it.
RE: I have been experiencing it first hand here in Texas
Try doing that in California....
Texas is experiencing a huge MIGRATION from many states because a lot of people perceive the Lone Star State to be the nation’s main job growth engine (close to 40% of the jobs created in this recession are in Texas).
It stands to reason that there WILL be more people (new migrants from other states) who will be buying property.
Also note: If you come from California or the North East, property values in Texas are realtively more affordable.
BPOs (broker price opinion) are keeping me afloat (since last year) but there have been lulls of 2-3 weeks where orders are not coming in but in the past 2 weeks I’ve completed about 15; most of which were homes that already went under. Most of the time, orders were placed before properties were foreclosed on and were still occupied. This tells me that the inventory of empty homes is exploding. They’ve not been listed on the open market and the lender is hanging on to them hoping that the market will rebound; it’s not.
REO appraisals are keeping us afloat - most of the homes are in poor condition and have had everything (including fuse boxes) stripped from them - we, too, are seeing empty home volumes increasing rapidly. I am also an MLS director - we have an emergency meeting in 45 minutes - new data available....
“If you come from California or the North East, property values in Texas are realtively more affordable.”
True, my son always says that he sold a shack in Conn. and bought a mansion in Texas.
I’m so glad our paths crossed. Would you mind letting me know some of the details on the MLS meeting? Emergency...sounds ominious.
The MLS was a great tool but ours is now dictatorial; releasing warnings and fines about what is and what is not allowed. They are constantly changing it (always on the premise that hey...this will help the agents). Plus the dues/expense of it. It’s turned into a regular little money generator.
Some of the REOs are like you say but some that I’ve done, are on huge homes as well. Beautiful homes. This blight has crossed all economic lines and all classes of people are being hit.
It’s depressing.
Will let you know the details....should be interesting....
Thank you very much illiac.
House prices are still 4 or 5 times the value of the cost of building houses. Until that drops to perhaps 1.5 or 2 times, buying a house is just silly.
Actually, the high is bad too.
We have a large housing surplus.
I don’t believe that’s true in a large portion of our Country. However, in some prior bubble locations, values are still higher than replacement costs, and falling.
The key is buyers, always has been. Without a buyer’s ability to obtain financing, as is the case currently, there’s little chance values stop declining.
Checking in. How was the meeting yesterday?
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