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I dont think the housing market is really getting better. Do you????
- Thread starter jucesar2005
- Start date
Quote from drsteph:
He means the dumb money that is buying up foreclosures now that is bargain hunting. Once this money gets blown out and flushed out of the system, THEN housing MAY be a buy. Emphasis on the MAY.
Why dumb money if the price is right? I understand homes are considered overappreciated now...but a foreclosure could be at a good price if it is selling for 30% less than homes in ithe same neighborhood. That would be good for someone who is buying to stay and live in it for 5 years or more. But for flippers, it is risky yes?
Quote from moondog:
Goldman says the worst is over and they are more reliable than anyone these days
They mean for them. It's just getting ugly for the people that are trying to sell their homes. This selling season is critical for many people.
The problem is the rules of the game have changed. Now you have to have down payments, documented income, and good credit to go along with a median prices to median income ratio much higher then the norm. Here is San Diego the median price to income ratio is still 11 while the norm nation wide is around 4.
Changing the rules in qualifying for mortgages this drastically would be the equivalent in the trading world of overnight doing away with margin and turning all trading accounts into cash accounts.
John
Quote from HedgefundTrader2:
Just look at the home builder stocks CTX, HOV, TOL, and the XHB they are all in an uptrend clearing above 50 day moving averages and that is now flattening out and rising..even HD is in an uptrend..!
These stocks start taking off 6 months earlier than the markets itself.. so you can know because construction and revenues come is 6 months later when the cycle turns up.. pretty smart way to Judge real estate cycles.
The homebuilder stocks rallied last year and also in 2006 only to be decimated afterwards. Some of the same pundits calling a bottom in housing back then are at it once again. At least Stephen Kim was fired so we no longer have to listen to his drivel. In late 2006 he put a target price on BZH of over $70 and recommended buying TOUSA (they filed for bankruptcy).
Here is some great insight from Stephen Kim on December 6, 2006:
"While many wait for an improvement in fundamental data such as prices or inventory to signal an 'entry point' in the stocks, we urge investors to look back to prior cycles, when the group rallied far ahead of fundamentals," analyst Stephen Kim wrote in a note to clients Wednesday.
The Citigroup analyst said he expects home-order trends to turn around by the first quarter of 2007, therefore "the time to buy the stocks is now" even if profit estimates continue to decline.
"The rally thus far has already occurred sooner than many expected, and we believe the group is about to accelerate its ascent," Kim wrote.
This is precisely your argument for why housing has bottomed. You bought homebuilder shares back in 2006 didn't you?
Housing is not improving and the homebuilder stocks have much further to fall. Once everybody is forced to face the reality that the spring selling season is a disaster fundamentals will once again come into play. A few of the builders are probably insolvent now but a major bankruptcy has been avoided because the banks are keeping them on life support.
Quote from trendlover:
Miami is in a stalemate...sellers won't budge on price..buyers holding out.
This is true over most of America.
Prices have come back to admittedly now sensible levels.People who have over-paid and are now struggling with heavy payments are walking,but just because it's been foreclosed doesn't automatically mean the bank will give it away,they still want their money back - and if it's really cheap there's usually a reason.
The price of property can only fall when the sellers actually start accepting low bids but not every home for sale is a 'distressed seller' and if a seller wants to move but needs to shift his/her property first why the hell would they accept one of these low bids when they can't get the equivalent 'deal' on the home they want to buy - hence a stalemate and dead market but it doesn't necessarily mean prices are going lower.