The housing gloom deepened this week as prices plunged the most in 20 years. Is there a real estate trade?
It’s the last day of 2007, which means everyone and their broker are busy with predictions for 2008, but I’d caution you in using today’s numbers from the National Association of Realtors as any basis for prediction.
I've never claimed to be an economist (just play one on TV), but I have held a few yard sales in my time, so this I know: If something isn't selling, lower the price. So how can new home sales be reportedly dropping 9 percent while the price of a new home rose month-to-month from $229,500 to $239,100?!
I'm out of the office today, but I'll be back -- and blogging -- on Wednesday. Happy Holidays!
The folks at HUD felt that my blog of yesterday left out some key points, namely, their side of the story, so I am happy to post a reply directly from them.
Betting on real estate these days is not for the faint of heart. Between the housing correction, economic uncertainty, the credit crisis and predicted softening in the commercial property markets, determining where to invest for future returns requires an extra dose of due diligence and, let's face it, good old-fashioned courage.
Shares of home builders soared on Monday as a frenzy of short sellers bought stock to cover their positions, giving the overall housing stock index its greatest one-day gain in about five years.
The slump in housing stocks to new four-year lows is hurting some well-known investors who recently added home builders and housing-related stocks such as KB Home and Pulte Homes to their positions.
We reported some pretty nasty numbers from the Mortgage Bankers Association yesterday: A 51% rise in new foreclosures nationwide to the highest rate in the history of the MBA survey. And it’s a big bad number like that that is going to add more fuel to the fire in Washington among all those folks who have been bandying about the idea of some kind of government...
With stocks in rally mode, it's appropriate to drill down for answers as well as take a look at some key sectors.
The July earnings forecasts are starting to roll in, and I don’t care what the temps are hitting this month, home builders have to be in a cold sweat. Today Meritage Homes reported preliminary sales, closings and backlog for the second quarter, and honey, it ain’t pretty. Sales down 37%, closings down 28% and backlog down 39% from a year ago. And if that weren’t bad enough, cancellations rose to 37% compared to 32% a year ago and 27% in the first quarter of this year (that was pre-subprime fury when everyone thought the market would take a quick bounce back).
Susan Wachter, professor of real estate and finance at Wharton Business School, told CNBC’s “Power Lunch” that the housing market has yet to hit bottom.
Pulte Homes, the second-largest U.S. home builder, on Wednesday posted a quarterly net loss, chiefly because of charges related to impairments and the lower value of land in the sagging U.S. housing market.
Shares of home builders each gained more than 1%, with the overall Dow Jones Home Construction index gaining 10 points, or 1.4%, to 729.58. The index has lost 21% this year, and is down about 35% from its high in July 2005.