R.e.a Investors - RE.

R.e.a Investors - RE.

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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
R.e.a. Holdings Plc RE. London Ordinary Share GB0002349065 ORD 25P
  Price Change Price Change % Stock Price Last Trade
0.50 0.95% 53.00 16:35:06
Open Price Low Price High Price Close Price Previous Close
52.00 52.00 52.00 53.00 52.50
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johnrxx99: And a write up in Momentum Investor. Low peg and good fundamentals although the borrowing is higher than I would like.
energyi: US REAL ESTATE FUTURES - 10 Locations, plus composite Main index: http://www.cme.com/clearing/clr/list/contract_listings.html?type=hng 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." @: http://money.cnn.com/2006/09/19/real_estate/futures_trading_indicates_housing_drop/index.htm = = = = = LINKS: updated quotes: http://www.cme.com/trading/dta/del/product_list.html?ProductType=hng http://forum.globalhousepricecrash.com/index.php?showtopic=9160&st=0&gopid=53264&
energyi: 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: http://www.thestreet.com/_yahoo/funds/gregggreenberg/10240802.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
energyi: 2/ THE COMING CRASH in the Housing Market Higher interest rates and debt are significant factors, March 25, 2005 Reviewer: D. Nishimoto "Golden Lion" (North Ogden, Ut United States) Many homeowners are highly leveraged in real estate debt. Furthermore, there is no good model for valuating a home's price except supply and demand. Price is a supported or resisted by the level of the market demand. Market demand correlates with investment volume and if people are buying then price is rising. However, reduction in consumer confidence dampers demand. The fed knows this and countered by reducing fed rates effectively creating lower interest rates for mortgages with the design to reduce investment barriers and provide a profit motivation to invest. The last few years have been a perfect time to invest in real estate and investors have realized double fold or more profits on their investments, but the opportunities for this type of leverage can not last forever as interest rates are expected to rise. For example, one third of 2004 real estate investments were second homes. People were taking advantage of the low interest rates, home price appreciation, and used their equity to make a second purchase. In a hot market it is perfectly rationale to buy with the expectation of making a profit. However, I encourage investors to start thinking about the ramifications of higher interest rates and stop believing low interest rates will last forever. Does 34 years of progressive house prices increases provide the single convincing factor compel investors too make the jump into real estate ownership? In the last 34 years, home prices have increased eight fold. Is this a false sense of security? Who can say the house prices are overvalued? One can see that there are no historical facts supporting the claim that national home prices are too high; even though in the last few years have home prices have doubled with only one area of the country, San Jose, experiencing a price decline. One can not find answers by studying price movement alone. The unpredictablity factor makes investing in real estate seem very predictable. There just is not enough data on price to determine whether the price trend will damper in the next year or years. However, I think the following arguments are compelling reasons to reflect on whether one should strengthening their positions in real estate. Why have home price increased so significantly? One answer is home have large amounts of square footage. The larger homes have the effect of driving up the cost. However, when looks at the ability to make the house payment then consider that price can not be expected to climb consistently faster than the home owners incomes and their ability to make the payment and at the point the economy can not support the price then a correction will occur. Leverage requires appreciating price and time. So, investors were willing too invest a small portion of their equity and get a loan. Suppose the investment was 2k and the increase over 34 years was 70 fold then the total money would be 140k. Leveraging is a way to make a lot of money with very little investment. Take a more realistic scenario and suppose a home owner has 70k of equity in his home, so at age 45 he decides to purchase a second 300,000 dollar home; his cost will be 15,000 dollars down payment plus as much of the remain 55,000 dollars the bank can get its hands on. The positive side is that the home might double its value in a few years. One can see that the scenario seems rationale. If force to sell the second home the owner must face an appraisal price that may be aligned a different market and the 300,000 dollar home selling for 240,000 dollars, as the appraisal price. The claim is that the housing market is not a real economy. The scenario describe is similar to the way investors trade options using other peoples money to make money. Banks are not motivated to control risks, instead, they are motivated to loan money. Price value is a function of demand and supply and investment volume. Real Estate advocates argue location, location, and location which is another way of saying marketing and marketing is design too attract investment volume. Local investment means real estate price is a function of a healthy robust economy and the desire to own homes. Foreign investment into a community will increase investment volume and profit taking has the potential of money at the peak and leaving homes on the market with a price that local investment can not purchase. Suppose an investor purchases a home with the expectation of price appreciation, he knows the rent income will not match the mortgage payment but factors in tax deductions, inflation, and appreciation anticipating a profit. If the investor purchase while an investment volume is high leveraging his investment and then foreign investment profit takes and moves out causing the price too fall then the investor can not unload the home without taking a loss and holding onto the property represents a gradual month loss as the rent fee gap increases the pain. If the prices drop suddenly and drastically the investor takes on more debt to hold the property. It seems that in this case real estate becomes very similar in behavior to stocks. The killer factors against real estate are increasing consumer debt, higher interest rates, and price drops. Interest rates will increase as a function of national debt, higher taxes, and inflation. Historically interest rate increases have been a function of inflation and higher taxes. Debt is the crushing force that destroys investment. Debt only works in a fast growth model. The problem with debt is that when the economy slows down, it can not be unload immediately and equally with the acquire amount. Some investors will become lucky and get out before a correction occurs. As home prices increase more people will prefer rental property. A shift toward rental demand will cause strong demand for construction of rental properties and eventually lead to oversupply and lower rental prices. The gap between the home mortgage payment and rental price for equivalent square footage is a good way to measure overvaluation. Interestingly, industrial construction is slowing down suggesting that newer and bigger businesses are not being built, the heart of employment and salaries. Industrial construction trends are slowing down. The end game of leveraging is foreclosure. Foreclosures of 1.2 are manageable but a 2.0 percent rate adversely affects the banking system. Banks have started to rely more on ATM fees and late fees for their income. Job loses and excessive debt cause foreclosures. The number of bankruptcies has exploded in the last few years. High priced homes and easy debt have caused a surge in the number of bankruptcies. Banks are seeking to hedge against their risk by making it more difficult for the consumer to declare bankruptcy and often force installment repayments after defaulting on the loan. The trend has been sale prices increasing as a ratio of the owner's income and house payments taking a larger portion of the income leaving less for savings. The solution has been double income homes increasing working women to 60 percent and reducing working men to 80 percent. A 35 year old could be expected to have 10k, 44 Year old 66k, 65 to 75 year old 150k. This fact seems to suggest that price reversal would destroy all of the 35 years old money and serious set back the 50 year old. Not everyone is making money in real estate. A majority of mortgages are held by commercial banks. Bank loan ratios to equity are significantly prone to loss, if the real estate market becomes unstable. Three of the largest mortgage purchasers hold or guarantee mortgages equal to between 71 to 116 times their total equity (Fannie Mae and Freddie Mac). Is government involvement and assurances preventing these companies from properly evaluating their risks? Fannie Mae and Freddie Mac are driven to increase earnings and increasing stock price. Fannie Mae and Freddie Mac have an implied government guarantee that encourages risky behavior. Banks are experiencing an increasing number of foreclosures. Each year banks are charging off billions of dollars in bad loans each year. Commercial Banks hold $1.5 trillion in home mortgages but have aggregate book equity of less than $500 billion. Mortgage insurance is leveraged with 70 percent of the private mortgage insurance (PMI) market composed of five small firms who guarantee $530 billion of property with only $11 billion equity. PMI failure represents vulnerability for Fannie Mae and Freddie Mac. Higher interest rates will make a crash likely. @: http://www.amazon.com/gp/product/customer-reviews/007142220X/ref=dp_nav_0/104-1775344-8356724?%5Fencoding=UTF8&n=283155&s=books
energyi: 3.27.05 - Weekend Link Roundup The New York Times likens the current real estate boom to the tech stock mania of yore. My favorite part is the breathless claim that South Florida "is working off of a totally new economic model," compliments of, you guessed it, a real estate agent in South Florida. "New economic model"... that sounds familiar; where have I heard that before? Similar themes are explored in a sobering LA Times article on the rush into real estate on the part of what are clearly very naive investors. One gentleman who was burned in the tech bust justifies his sight-unseen purchase of an expensive Colorado duplex by claiming, "Real estate is different. People are always going to need homes." Our beloved SDUT notes that PMI is backing away from insuring speculators. Only the most blatant speculators--those with more than four mortgages--will be affected, so I don't expect much of an effect in San Diego. However, this is a trend to keep on the radar screen. CNN claims that San Diego is overpriced by 28%. Economic pundit Michael Shedlock features some Econo-Almanac content in an interesting comparison between the American and Japanese real estate bubbles. The graph of Japanese real estate prices should be a wakeup call to anyone who claims that San Diego real estate will go up ad infinitum due to the fact that there is a limited supply of land. @: http://www.piggington.com/
energyi: BUBBLE TROUBLE - Barron Article, Mar.21, 2004 (pg.17) "As the housing cycle ages, home builders- and their shareholders are facing greater risks" SUMMARY / notes: + The Philex Housing Sector Index (HGX) has rallied 122% over Two Years HGX charts .. + NA of Realtors sees a 3.2% drop in sales of existing homes in 2005 to 6.57million, and a 0.7% decline in housing starts to 1.94 million. + Backlog of unsold new homes has risen steadily: in Jan.2005 approached a 5year high of 4.7 months' supply. + Long term rates remain near rockbottom levels: 30year rates: 5.91% versus an alltime low of 5.25% , and an average of 9.45% over the past three decades. + Median house prices have risen about 30% since March 2001, well ahead of an 11% gain in personal income. + In 27 US cities- including: Santa Barbara, Calif., Boston, L.A., NYC, SF, and San Diego, the ratio of median house prices to per capita incomes is at or near a 30-year peak + Household real-estate assets now equal near 140% of gross domestic product, the highest proportion in two decades (and close to the ratio of stock portfolios to GDP at the bubble peak in 2000.) + In Feb.2005, a Univ.Michigan survey registered a 25-year high in the number of people who believe it is a good time to buy a house + The American dream, updated version, now involves owning several homes + Some analysts expect the largest builders to fare best in a downturn, because they are expected to gain market share by acquiring the smaller ones. They also have investment grade credit ratings and geographic diversification. + Not everyone believes the muddle-through scenario, Bearish investors have sold short 20% of the sector's publicly-quoted shares
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