https://risksandreturns.com/category/real-estate/ In search of asymmetric trading opportunities… en-US https://risksandreturns.com/2014/10/20/buying-homebuilders-nyseitb/ https://risksandreturns.com/2014/10/20/buying-homebuilders-nyseitb/ Mon, 20 Oct 2014 05:31:29 +0000 My bullish view on single family housing starts (as detailed in a recent post), coupled with the recent sell off in homebuilders caused me to buy the iShares US Home Construction ETF (NYSE:ITB). I tweeted about it late Wednesday night and will track it in my portfolio page using that day’s closing price of $22.17 as my initial price. https://risksandreturns.com/2014/09/04/single-family-housing-starts-set-to-reaccelerate/ https://risksandreturns.com/2014/09/04/single-family-housing-starts-set-to-reaccelerate/ Thu, 04 Sep 2014 17:03:45 +0000 In my view, one of the most obvious secular growth stories is the rebound in single family home construction. Although single family housing starts increased off of exceptionally depressed levels in 2011, they have stopped growing over the past year and remain less than half of past cyclical peaks. https://risksandreturns.com/2009/02/02/foreclosures-are-the-solution-not-the-problem/ https://risksandreturns.com/2009/02/02/foreclosures-are-the-solution-not-the-problem/ Mon, 02 Feb 2009 11:45:32 +0000 In the WSJ, there is a well reasoned argument by Ramsey Su of why government attempts to prevent the current surge of foreclosures from occurring is actually harmful. A house is foreclosed on when either the homeowner is unable to make his mortgage payment or when he refuses to pay even if he has the capacity to make the payment because he has negative equity in his house. In the first case, a foreclosure relieves the homeowner of an expense that is too burdensome. In the second case, a foreclosure immediately improves his balance sheet because his mortgage debt is wiped out. https://risksandreturns.com/2008/08/25/a-tsunami-of-foreclosures-lies-ahead/ https://risksandreturns.com/2008/08/25/a-tsunami-of-foreclosures-lies-ahead/ Mon, 25 Aug 2008 12:00:43 +0000 Because this housing downturn ranks, by several measures, as the worst since the Great Depression, it’s quite likely we will see an unusually high number of foreclosures. It’s important to understand the magnitude of the defaults because that would provide color on the mortgage losses that banks will face. https://risksandreturns.com/2008/04/22/how-low-will-home-prices-fall/ https://risksandreturns.com/2008/04/22/how-low-will-home-prices-fall/ Tue, 22 Apr 2008 11:49:48 +0000 Until recently the bubble in the housing market played a major role in stimulating economic growth and, now that the bubble has popped, housing is again taking center stage but this time in contracting the economy. Therefore, in order to estimate where the economy and the stock market are headed it is necessary to formulate an opinion on how low home prices could fall. https://risksandreturns.com/2007/08/07/an-overview-of-mortgage-securitization/ https://risksandreturns.com/2007/08/07/an-overview-of-mortgage-securitization/ Tue, 07 Aug 2007 20:37:21 +0000 Here are a couple of simple graphical representations of the mortgage securitization process: https://risksandreturns.com/2007/07/27/residential-mortgage-backed-securitization-process/ https://risksandreturns.com/2007/07/27/residential-mortgage-backed-securitization-process/ Fri, 27 Jul 2007 18:40:21 +0000 Came across this graphic which depicts the securitization of RMBS: https://risksandreturns.com/2007/06/13/no-near-term-relief-for-housing/ https://risksandreturns.com/2007/06/13/no-near-term-relief-for-housing/ Wed, 13 Jun 2007 13:19:52 +0000 Last January, I wrote about how calls for a housing recovery this year were premature. As the following graphic illustrates, housing has resumed its downward spiral which is in early innings compared to the last bear market in housing. https://risksandreturns.com/2007/03/22/can-the-fed-save-housing/ https://risksandreturns.com/2007/03/22/can-the-fed-save-housing/ Thu, 22 Mar 2007 21:31:35 +0000 Yesterday the market got a lift from the FOMC statement which was interpreted to indicate that the Fed no longer held a tightening bias, setting the stage for a possible rate cut later this year. The expectation is that Fed easing will help the troubled housing sector by making it easier for people who are struggling to meet their mortgage payments to refinance at lower interest rates. https://risksandreturns.com/2007/03/20/will-the-subprime-turmoil-spread-upwards/ https://risksandreturns.com/2007/03/20/will-the-subprime-turmoil-spread-upwards/ Tue, 20 Mar 2007 21:29:39 +0000 While the recent rise in defaults on subprime mortgages has become front page news, the most common viewpoint is that this will not have a significant impact on the economy since prime and Alt-A mortgages represent 45% and 20%, respectively of all mortgages outstanding and we are yet to see significant defaults in theses loans. https://risksandreturns.com/2007/02/18/the-subprime-market-implosion-and-its-consequences/ https://risksandreturns.com/2007/02/18/the-subprime-market-implosion-and-its-consequences/ Sun, 18 Feb 2007 20:57:19 +0000 The subprime mortgage market has been dominating news lately with signs that rising defaults and delinquencies are wreaking havoc on the mortgage industry. Here are some of the headlines: https://risksandreturns.com/2007/01/04/housing-recovery-still-far-off/ https://risksandreturns.com/2007/01/04/housing-recovery-still-far-off/ Thu, 04 Jan 2007 20:33:58 +0000 Heading into the new year, the consensus seems to be that housing is bottoming. The people who hold this view point to the November housing data: https://risksandreturns.com/2006/12/05/increasing-subprime-mortgages-delinquencies/ https://risksandreturns.com/2006/12/05/increasing-subprime-mortgages-delinquencies/ Tue, 05 Dec 2006 12:22:47 +0000 The WSJ reports that delinquencies on subprime mortgages have been increasing at a troubling rate recently. https://risksandreturns.com/2006/10/16/how-much-does-housing-wealth-boost-consumption/ https://risksandreturns.com/2006/10/16/how-much-does-housing-wealth-boost-consumption/ Mon, 16 Oct 2006 19:35:53 +0000 No one will debate whether increasing home prices have had a positive effect on consumer spending. But there is considerable debate on how significant this effect is. I am in the camp that believes that the housing boom was the main contributor to consumer spending since 2001. https://risksandreturns.com/2006/09/27/dont-let-the-new-home-sales-data-fool-you/ https://risksandreturns.com/2006/09/27/dont-let-the-new-home-sales-data-fool-you/ Wed, 27 Sep 2006 12:15:30 +0000 The headlines on reports of the new home sales data highlight the fact that sales unexpectedly increased by 4.1%, the largest rise in 5 months. https://risksandreturns.com/2006/09/24/the-coming-bear-severe-recession-part-3/ https://risksandreturns.com/2006/09/24/the-coming-bear-severe-recession-part-3/ Sun, 24 Sep 2006 19:06:07 +0000 I will build on my conclusions from the first two parts of this series to analyze where the economy is headed. In the first part I discussed why interest rates are heading higher. As a consequence, in the second part of this series I argued that the housing market will experience falling prices. If my predictions turn out to be correct, the economy will suffer a recession that would be even more painful than that of 2001. https://risksandreturns.com/2006/09/17/stats-indicate-hard-landing-for-housing/ https://risksandreturns.com/2006/09/17/stats-indicate-hard-landing-for-housing/ Sun, 17 Sep 2006 12:03:55 +0000 Take a look at some recent housing numbers collected by Comstock Partners: https://risksandreturns.com/2006/08/31/the-coming-bear-real-estate-bust-part-2/ https://risksandreturns.com/2006/08/31/the-coming-bear-real-estate-bust-part-2/ Thu, 31 Aug 2006 18:51:14 +0000 In the first post of this series, The Coming Bear, I looked at interest rates and explained why I think they are heading higher. With that in mind let’s take a look at the housing market which has been the engine of growth for the economy in recent years — I will discuss how important the housing boom was on the economy in Part 3 of this series. https://risksandreturns.com/2006/08/28/10-housing-indicators-to-watch/ https://risksandreturns.com/2006/08/28/10-housing-indicators-to-watch/ Mon, 28 Aug 2006 18:01:10 +0000 There are a myriad of regularly released housing indicators. Which of these are worth following? Well, Dean Baker of the Center for Economic and Policy Research (CEPR) does a good job putting together a list of indicators and explaining why they are the most important.