I am retired and take educated guesses on all things financial.

February 14, 2008

February 15, 2008: Real Estate, some interesting data.

I ahve reviewed several "hot off the press" professional articles pertaining to the broad real estate industry. One stat report that caught my eye was an up to the minute comparison of home values in the 125 Metropolitan Statistical Areas (MSAs) representing 43 million homes produced by Zindex. This interesting and useful information can be found at:

To generate the quarterly reports for the homebuilding industry, Zindex, the sponsor and creator of this site, calculates more than ten years of historical data.Top notch in every respect.

The situation regarding home vales is grim for owners, but excellent for new buyers with cash or good credit. There is a consensus amongst contributors to the reports I reviewed that the upcoming spring home shopping season will see marked improvement that is above most expectations. They will be buying existing inventory for the most part, which will create opportunities for new homebuilers later in the cycle (late 2009).

Sadly, more foreclosers are expected as homeowners who bought poorly find themselves in over their head with negative equity. One comment indicated that if "they thought home foreclosures were bad, wait until repossessed autos hit the markets driving down the cost of used vehicles". This makes sense to me. If you can't pay for the house, the car default will not be far behind.

I could go on and on with data, but this post is meant to be a few random thoughts taken from respected industry publications.

From an investor standpoint, I really like IShares' Mortgage ETF, REM. I also like Lowes (LOW) as likely to rebound nicely as those buying foreclosures, renovating apartments or fixing their own residence discover that other home improvement stores have cut too many corners and product lines to offer merchandise that appeals to the contractor, men and, importantly, women. It is too early to buy apartmet and mall REITs, homebuilders and narrowly focused home renovation production companies like Masco.