R.e.a Share Discussion Threads

[energyi] 26/9/2006 03:16

Metro area...(6/2006): nov'06 / feb'07 / may'07 / aug'07 / 09/25 (op.int)
Boston....... 177.90 : 176.80 , 172.20 , 167.40 , 164.20 - 7.7% ( 000)
Denver....... 139.46 : 139.60 , 137.20 , 131.60 , 131.60 - 5.6% ( 000)
Las Vegas.... 233.75 : 231.60 , 225.40 , 218.60 , 215.00 - 8.0% ( 000)
San Diego.... 249.60 : 248.40 , 239.00 , 232.80 , 229.80 - 7.9% ( 000)
10 Cities.... 225.96 : 224.20 , 218.60 , 212.00 , 210.20 - 7.0% ( 000)

[energyi] 26/9/2006 02:59

US REAL ESTATE FUTURES - 10 Locations, plus composite

Main index:

Prediction: Housing prices are going down across the nation.
If the sentiment of traders is a valid indication, housing markets will be a lot lower next year.

Metro area...(6/2006)(8/2007) Diff. (at Sep.19th):
Boston....... 177.90 : 164.40 -7.6%
Chicago...... 167.10 : 157.20 -5.9%
Denver....... 139.46 : 131.60 -5.6%
Las Vegas.... 233.75 : 214.60 -8.2%
Los Angeles.. 273.22 : 255.00 -6.7%
Miami........ 278.22 : 259.20 -6.8%
New York..... 212.79 : 202.00 -6.0%
San Diego.... 249.60 : 230.00 -7.9%
San Francisco 218.13 : 202.40 -7.2%
Washington... 250.39 : 233.00 -6.9%
10-City...... 225.96 : 211.40 -6.4%

Source:Chicago Mercantile Exchange
Note: All cities were assigned a base of 100 in 2000. An index of 177.90 means prices have risen 77.9 percent since then.

= = =

Home futures: Price-drop seen for 10 top markets
Trading in residential housing futures is more evidence that housing markets may be in decline.

By Les Christie, CNNMoney.com staff writer ... Sep. 19, 2006

NEW YORK (CNNMoney.com) -- Home prices will be lower a year from now in the nation's leading markets - at least that's what investors speculating on residential real estate believe.

Trading in housing futures on the Chicago Mercantile Exchange point to declines by next August of at least 5 percent for 10 leading markets; speculators are betting the biggest decline will be in Las Vegas, with a drop of 8.2 percent.

Prediction: Housing prices are going down across the nation.
If the sentiment of traders is a valid indication, housing markets will be a lot lower next year.
Metro area Index
(6/2006) Futures - (8/2007) Diff.
10-City 225.96 211.40 -6.4%


The S&P CME Housing Futures and Options, launched this past spring, enable investors to hedge against a drop in the value of residential properties in the future or to bet that those values will go up.

The investments are tied to the the Case-Shiller Home Price Indices. According to Robert Shiller, author of "Irrational Exuberance," the results of the trading in housing futures have substantial predictive value. "It gives us a finger on the pulse of the markets," he says. "We've never had that before."

Before the launch, there had been little opportunity for real estate speculators to invest in housing markets short of going out and buying actual properties.

Still, the investment vehicles may be too new to have the same predictive power as other derivatives products.

"The [trading results] have some predictive value and I would not expect them to be off investors' expectations by some order of magnitude," says Richard DeKaser, chief economist for National City Corp who compiles his own market valuations. "But it is not a very deep market. It is traded very thinly. I would be reluctant to attach too much importance to the numbers right now."

So far, however, those doing the trading seem to be betting correctly. Trading yielded results earlier in the summer that came "fabulously close'" to where the actual index wound up in August, according to Fritz Siebel, director of property derivatives for Tradition Financial Services, which brokers the S&P CME Housing Futures and Options.

That's not good news for homeowners in Boston, New York and other big markets - every one of the 10 cities covered by the indexes is showing a drop. The smallest loss is in Denver, where trading activity forecasts a decline of 5.6 percent. The 10-city cumulative index shows a drop of 6.4 percent.

According to Shiller, the numbers may exaggerate the extent of the decline because there is a risk premium that has to be taken into account. In other words, more traders are interested in protecting themselves against loss than are interested in investing in a growing market.

"As a result the predicted decline might be a bit bigger than the actual one," says Shiller.

As the market for these derivatives grows and investors enter into it who are willing to take the opposite position, that risk premium should shrink.

Even taking all that into account, the trading still indicates a fairly substantial turnaround. It joins a host of other indicators, both statistical and anecdotal, that seem to agree that housing prices will not only soften but actually decline.

As Siebel puts it, "It sounds like the housing market is set up for a fall; I think we've reached a tipping point."


@:

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LINKS:
updated quotes:

[shoee62] 11/4/2006 08:21

there was something in the FT saying that palm oil prices have been coming off. (was it Plantation and general's results?)

might be the reason for recent price weakness

[promethean] 01/4/2006 18:29

Really like this stock as an excellent way to play the coming soft commodities boom...

[lafiamma] 18/11/2005 11:25

I reckon these are ripe for a big move up, what do you think energyi, a good time to go long on the US Homebuilders??

[scarface01] 30/9/2005 16:03

Hedge funds that have been short, booking profits onto their books today.

Will be a good short at EOD

[energyi] 28/9/2005 07:15

(A Good article on Greenspan's abysmal forecasting ability):

In 1996, Greenspan fretted aloud about the frothy stock market. But by 2000, he was praising a productivity revolution that seemed to validate the elevated share prices of the day. THAT is when the bubble burst and
the stock market cratered.

On December 5, 1996, as you may recall, Greenspan uttered his infamous "irrational exuberance" remark. During a speech at the American Enterprise Institute for Public Policy Research in Washington, D.C., Greenspan mused, "How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?" To all the world, Greenspan's remark seemed a clear declaration that share prices had risen to excessive levels. (Greenspan never argued this inference, nor retracted the comment).

Over the ensuing three years, the Nasdaq Composite Index quadrupled. But instead of worrying more about soaring stock prices, the Chairman worried less. In early 2000, with the Nasdaq levitating just below 5,000, the Chairman seemed to decide that share prices weren't so high after all.

REMEMBER WHEN STOCKS PEAKED?

On March 6, 2000, Greenspan assured a Boston College conference on the "New Economy" that the Internet-based economy would continue to foster productivity, technology innovation and enduring wealth creation.

"I see nothing to suggest that these opportunities will peter out anytime soon," Greenspan predicted. "Indeed, many argue that the pace of innovation will continue to quicken in the next few years as companies exploit the still largely untapped potential for e-commerce..."

Alas, the Nasdaq topped out almost immediately after Greenspan stepped away from the podium.

As we fast-forward to August 27, 2005, we find Chairman Greenspan musing aloud once again about asset values. But this time the topic is housing, not stocks.

"Nearer term, the housing boom will inevitably simmer down," the Chairman declared last month at the Jackson Hole confab of economic mucky-mucks. "As part of that process, house turnover will decline from currently historic levels, while home price increases will slow and prices could even decrease. As a consequence, home equity extraction will ease and with it some of the strength in personal consumption expenditures..."

It's true; the housing boom will "inevitably simmer down," just as the Chairman predicts, but maybe it will not do so over the "near term." Indeed, yesterday's home sales report suggests that the housing market has absolutely no intention of simmering down. Sales of previously owned homes in August posted their second-highest level on record, while home prices increased by the largest amount in 26 years. Median house prices climbed to a record of $220,000 in August, a gain of 15.8 percent from the same month a year ago. That was the biggest 12-month increase since July 1979.

So what might keep the U.S. housing boom humming along for much longer than most of us can imagine?
Maybe a confluence of factors...

Specifically, the price of oil and most other commodities might "simmer down" for a while, thereby allowing consumer confidence to perk up. Quiescent commodity prices might also allow interest rates to dip again. And we all know what confident consumers do with low interest rates: They borrow and buy...especially houses. A drop in interest rates would also help mortgage lenders to help home-buyers to buy "more home" than they could otherwise afford.

The housing boom will end, but it may not end exactly on Greenspan's cue.

(OR they might COLLAPSE down, rather than simmering down)

[energyi] 02/9/2005 16:00

Alpine's Lieber Still Hopeful on Housing

By Gregg Greenberg
TheStreet.com Staff Reporter ... 9/2/2005

Hurricane Katrina could buoy plummeting homebuilding stocks and REIT funds.

The average REIT fund is down 6% over the past month, according to Morningstar, and the Philadelphia housing sector index has fallen more than 9%. The severe downdraft has got real estate investors on edge, wondering if the end of the so-called housing bubble is finally at hand.

One voice of calm in an otherwise worried marketplace is Sam Lieber, portfolio manager for the $900 million Alpine U.S. Real Estate Equity fund. Lieber says the latest pullback is not unusual and certain sectors could even benefit from rebuilding projects associated with Hurricane Katrina.

Lieber's fund, which is heavy on homebuilding stocks like KB Home (KBH:NYSE - commentary - research - Cramer's Take), Lennar (LEN:NYSE - commentary - research - Cramer's Take) and Toll Brothers (TOL:NYSE - commentary - research - Cramer's Take), has lost over 10% in the past month, but is still up more than 11% this year.

TheStreet.com checked in with Lieber to get his views on housing bubbles and hurricanes.

REITs and homebuilders have been hit pretty hard in the past month. What's behind the big downturn?

You have to remember that these stocks have had a very good run. From March through the end of July, REITs and homebuilders rose 26% and 43% respectively. So to see a pullback makes sense. The stocks were due for a correction.

On top of that, there are general fears about higher interest rates. Obviously, that hasn't happened yet, but the strong Aug. 5 employment report hit the stocks too.

Fed Chairman Alan Greenspan alluded to a housing bubble recently, which also didn't help real estate stocks. What's your position on the so-called bubble?

The world is certainly awash in liquidity. There are significant amounts of investment dollars looking for a home in real estate as well as a huge amount of investment dollars looking to finance real estate. Our view is that the world has not changed. There may be less of a cushion now, but overall there is less of a cushion in the economy whether it's the government or current account deficit.

In terms of the risk premium in housing, Greenspan is certainly correct that low returns in other areas have pushed investors to take on more risk for incremental return.

Your fund is top heavy when it comes to homebuilders and it's benefited you greatly. Is there any chance that you hit the brakes on the group soon?

Since February 2000 through July 2005, the homebuilding group has gained 812%. During that time period, the companies also averaged 33.5% annual earnings growth. Hence, it's not surprising that their multiples only increased from 4.5 PE on a forward-looking basis to about 6.5 times.

Given the huge order backlogs for these companies and their demonstrated capacity to increase market share at a double-digit pace and their financial strength, it suggests to me that these stocks will continue to provide revenue and earnings growth.

...MORE:

[scarface01] 25/8/2005 15:02

shorted toll today right at the top when it opened after results, it quickly reversed a buck and a half for a very quick profit.

[energyi] 24/8/2005 17:11

THIS (from Header still looks right)

BUT the peak stretched to July.2005.
Next Low in Dec.2006, then?

U.S. Homebuilder Cycle Timing

Sym. .High- Low. : .High- Low. : .High- Low. : .High- Low. : .High- Low.
Peaks #1........ : #2......... : #3......... : #4......... : #5.........
CTX: Q1'72-q4'74 : Q1'80 q2'82 : Q3'86-q4'87 : Q1'94-q4'94 : Q4'98-q1'00

Ave. Timing : Years.....: Ave. : Quarters..........: Ave
High-to-High: 8+6+8+4.. = 6.5yr: 32+26+22+19...= 99: 25
Low -to Low : 8+5+7+6.. = 6.5yr: 30+22+28+21...=101: 25
High-to- Low: 2+2+1+0+2 = 1.4yr: 11+ 9+ 5+ 3 +5= 33: 6.6
Low -to-High: 6+4+7+4.. = 5.2yr: 21+21+25+20...= 87: 22
: #6.?Current?..
: Q1/Q2'05-q3/q4'06

WHAT IS INTERESTING: ... Is the rapid SPEED of the Drop.
The typical cycle was something like: 5yrs UP, 1.5yrs DOWN.
ALSO: the cycles seem to be speeding up, especially the UP phase.
THUS:
We might expect: a 24/5 qtr. UP phase/#6 Peak: to Q1/Q2'05 &
...............: a 6 qtr. Fall to LOW of maybe q3/q4'05 (ideally: Oct.2006)
18 qtr. DOWN phase would mean a #6 Peak Q1/Q2.2005, a Low maybe: Q3/Q4'06

10-12 YEAR CYCLE?:
US Property showed peaks in: 1972?, 1983?, 1993, 2005?

[energyi] 24/8/2005 17:05

Right. A bounce from oversold

[scarface01] 24/8/2005 16:58

short covering today

[energyi] 24/8/2005 14:00

The boom may be cooling
Existing home sales fall more than expected though prices keep rising;
are housing's best days over? August 23, 2005: 2:37 PM EDT
By Chris Isidore, CNN/Money senior writer
NEW YORK (CNN/Money) - Sales of existing homes slowed in July from
their record pace as the latest reading on the strength of the real estate
market came in below Wall Street forecasts.

The National Association of Realtors (NAR) said sales of existing homes
fell to an annual rate of 7.16 million in July from the revised 7.35
million sales rate in June. The pace of sales in July was still the third
strongest month on record. Economists surveyed by Briefing.com had
forecast the pace of home sales would slip to 7.25 million in July.

"This is a big number any way you slice it, and housing is continuing
to stimulate the overall economy," said a statement from David Lereah,
the trade group's chief economist. The 7.16 million sales pace trailed
only June and April 2005, when sales came in a 7.18 million rate. Still,
the weaker-than-forecasted number, coupled with growing attention about
the importance of the real estate market to consumer spending and the
economy, sent stocks lower on Wall Street.

"Reading through the housing tea leaves suggests that the housing boom
is becoming a bit long in the tooth," said Anthony Chan, senior
economist with JP Morgan Asset Management. "And while this outcome does not
necessarily signal a collapse in activity just around the corner, it does
suggest that the housing sector's best days are probably behind us."

[energyi] 09/8/2005 13:58

America's riskiest real estate

Report: Watch out Bostonians; rest easy Seattleites.
August 4, 2005: 3:47 PM EDT
By Les Christie, CNN/Money staff writer

NEW YORK (CNN/Money) - Some of the nation's frothiest housing markets are at growing risk of price declines, according to the most recent survey from PMI Mortgage Insurance Corporation.

The PMI Risk Index is based on economic activity and other conditions that PMI thinks are predictive of home-price declines over the next two years.

Factors used to derive the index include home prices, employment conditions and the affordability of homes.

At a 55.3 percent chance, the index singles out Boston as the area most at risk for a decline. That's up from 53.4 percent three months earlier.

The Nassau and Suffolk County area, in suburban New York, is right on Boston's heels. The probability of a decline, according to PMI, is 54 percent, up from 51.1 percent.

The metro area that had the biggest increase in risk is Riverside-San Bernadino, east of Los Angeles, which rose 8.3 points to 42.2 percent.

Some areas got a little safer during the quarter. Among them, Detroit had the biggest drop from 37.9 percent to 29.5 percent while New York's risk score fell from 33.1 percent to 32.6 percent.

So where are homeowners all but guaranteed to not go through a bubble burst?

They can breathe easiest, according to the PMI listing, in Pittsburgh (5.6 percent), Memphis (5.8 percent), and Indianapolis (5.9 percent). Among western cities, Seattle scored the safest, at 6.4 percent.


@:

[energyi] 09/8/2005 11:25

REASSURING? Not to me:

Stronger housing market seen

Mortgage Bankers group ups its home sales outlook, although it still sees cooling in '06 and '07.
July 14, 2005:
NEW YORK (CNN/Money) - The Mortgage Bankers Association raised its outlook for home sales through 2007 on Tuesday, although the trade group still sees a slowing in the real estate market in 2006 and 2007.

"Housing will continue to be a major contributor to economic growth," said a statement from Doug Duncan, the group's chief economist. "We expect the string of record-high home sales to continue for a fifth consecutive year."

The group's forecast said that it now expects existing home sales to be up 2 percent this year, then fall 3 percent in 2006 and decline another 2 percent in 2007. New home sales also are expected to post a 2 percent gain in 2005, then decline by 4 percent in 2006 and about another 3 percent in 2007.

In the group's original forecast in January it projected declines in both types of homes sales this year, followed a sharper fall offs in 2006 and 2007, with 2007 sales levels then seen as falling to the 2002 pace of sales.

The new forecast projects a stronger employment outlook and a more modest rise in mortgage rates than originally projected, both of which can support continued strength in the housing market.

The forecast now calls for the average 30-year fixed-rate mortgage edging up to 5.7 percent in the fourth quarter of 2005 from the current 5.6 percent level. It then sees mortgages at 6.2 percent during the fourth quarter of 2006, and 6.3 percent in late 2007.

"Despite a moderate increase from a currently low rate environment, interest rates will still be quite low by historical standards."

...MORE:

[energyi] 09/8/2005 11:24

The Hurrah seems to have ended, killed off in July.

[hvs] 07/8/2005 14:57

HiTday,

Just joined in with a purchase on Friday

[energyi] 05/8/2005 23:37

BIG DROPS today... down to support.
We should know next wedek if the top is in

Watch support levels like:
CTX-$71
DHI-$40

[scarface01] 31/7/2005 00:01

Greenspan resists arrest before being handcuffed
WASHINGTONâ€"Alan Greenspan was arrested on Monday at the US Federal Reserve and formally charged with killing off large sections of the American middle class after police read the new book “Greenspan’s Fraud” by best-selling author and Economics Professor Ravi Batra.

“I have no regrets,” snarled Greenspan as he was led away in handcuffs. “I was only following orders.” Yet the Fed Chairman later broke down and confessed to the crimes, pleading guilty.

Greenspan has been killing off the middle class under a succession of US presidents from Ronald Reagan to George W. Bush, according to the new book. He helped extract trillions of dollars from the middle class to sharply enrich the rich and big business. Greenspan catered to the rich and powerful to maintain his lavish appointment as Chairman of the Federal Reserve, helping them shape government and economic policy in their favor.

Batra explains how Greenspan’s policies on Social Security, income tax cuts, and the minimum wage are reducing the middle class and leading toward perilous times.

Strangely, even as he harmed the middle class and created many economic crises, Greenspan has been worshiped like an oracle or wizard, and adored because he was seen as saving America from various economic crises.

Although overall taxes have been reduced since Ronald Reagan, taxes have increased on the poor and been greatly reduced on the wealthy, in a robber baron taxation policy.

“Greenspan’s fraud” is mainly a social security fraud which started in 1983 and continues until this day. It was based on Greenspan’s desire to raise revenues for the government without raising overall income taxes, which had been cut sharply mainly to benefit the rich in 1981. Instead of building up a trust fund with money invested on behalf of retired folks, it was used to reduce the Federal deficit.

From the beginning, the surplus from the social security trust fund was used to fund the operating expenses of the government, but that was not the intent of the original legislation. These funds were to be collected for retirement, not for the government’s expenses, but the government looted the Trust Fund surplus the moment it appeared. So Greenspan’s fix for social security was a fraud because the public was convinced that the money would be saved in the trust fund while his intentions were to use additional social security revenues to balance the budget.

Greenspan also cut interest rates and sharply expanded credit and debt. Wages are the main source of demand. Productivity is the main source of supply. So when wage growth lags productivity growth, there is inadequate demand. And so to shore up demand, debt must be created. Wages can be raised or debt can be created, but raising wages is something the establishment hates, and so they create more and more debt.

Thus people borrow huge amounts of money. The debt culture is so strong that despite wages lagging behind productivity, there is an explosion of demand, and so demand is ahead of supply, and that causes the enormous trade deficit in America. But in addition to the wage gap, the big reason for the US trade deficit is that the manufacturing base has been destroyed in the US, and one reason for that is Greenspan’s program of financial deregulation.

This financial deregulation enables foreign countries, particularly China and Japan, and foreign nationals to send money into America without any problems, which they couldn’t do in the past. All that money coming into America finances the trade deficit, and allows foreigners to buy government debt, making it possible for Americans to keep on consuming as much as they want. But in the process, because of the trade deficit, US manufacturing is destroyed. And since the US doesn’t manufacture much in America now, this trade deficit is really going to grow over time until there is some major disruption.

This process leads to sharply rising corporate profits initially, and such a profit rise creates a stock market bubble, which eventually crashes because one day debt growth slows down. After the recent stock market crash, Batra claims that Greenspan went back to his old machinations to create even more debt. He did that by slashing interest rates drastically.

The end result was the economy did stabilize but a real estate bubble developed in the process, and he thinks this bubble will also burst in the next two or three years or maybe even sooner. It is bound to burst because since wages continue to lag productivity, exponential growth in debt is needed for demand-supply balance, and that is simply impossible. So he thinks the next bubble to pop will be the real estate bubble.

Batra believes the Iraq war has helped keep the economy going by way of increased spending. He thinks that the US government has now used almost all its defenses against a credit collapse. The 2000 stock market crash occurred because of the falling government deficit. The government began to create a surplus in its budget, and because it shifted from a deficit to the surplus, there was a big fall in debt growth. There is a time when debt growth falls and then there is a crash.

Now they have re-inflated the market to another dose of debt creation. In fact there could soon be an inflationary depression resulting from a credit collapse all over the world. It would start out as a recession, but then quickly evolve into a depression because of the bursting of the real estate bubble as well as the Dow.

Real estate is now a very serious problem, and Batra believes there is a real estate bubble now. In order to support the economy in the aftermath of a stock market crash,

All the increase in the price of houses has enabled households to borrow a lot more money on the basis of their home equity. They are digging themselves into more debt, which means that a larger and larger portion of the income they are going to have to devote to servicing that debt is going to have to continue to rise.

What is more likely according to Batra is that there will be a housing default. There will be a crunch in the economy and the politicians will want debt forgiveness but the banks will not go along with that. A depression could be worse than the 1930s. Because every market, every area is in an imbalance.

Batra thinks an inflationary depression is a bigger possibility than a major deflation. Inflation is picking up now. Consumer prices are rising at the rate of 4% or 5% per year, and so inflation is coming back. The dollar is under pressure, so he thinks we are likely to see inflation along with a stagnant economy for the rest of this decade.

Batra doesn’t think there is going to be a deflation, at least not prior to the collapse. He believes oil prices are going to stay high. Money supply will keep expanding because of Greenspan’s policies, so he doesn’t foresee a deflationary scenario.

But he does think a housing collapse could lead to a deflationary collapse in the economy, two years or so after the housing collapse perhaps, but not right away.

[energyi] 29/7/2005 17:36

took profits on 40pct - nice move