Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Has the U.S. Housing Market Finally Bottomed?

Housing-Market / US Housing Feb 27, 2012 - 09:36 AM GMT

By: Money_Morning

Housing-Market

Best Financial Markets Analysis ArticleMartin Hutchinson writes: It was the most atrocious bubble in U.S. history pushing tens of millions of Americans into financial misery.

Even today, the last of the lawsuits have yet to be filed.

But five years later it's finally coming back.


The housing market has bottomed and there's money to be made on its return.

The evidence of this case continues to build.

Signs of a Housing Bottom
For instance, the National Association of Homebuilders' Housing Market Index rose five points to 29 in February marking its fifth consecutive monthly increase.

Admittedly, 50 is supposed to be a neutral level for the index. Even still, the current level of 29 is up 20 points off of the low, and is the highest it has been since 2007.

Then there are housing starts, which rose in January to an annualized 699,000 units.

Again, that's not very impressive compared to 2005's total of 2,068,000. But it's still a hell of a lot better than 2009's average of 554,000 and 2010's 586,000.

Incidentally, there's some important data in the details here. Multi-family starts were 175,000, up more than 70% over 2009, while single-family starts of 508,000 were only modestly above the 2009 average.

Meanwhile foreclosures in January 2012 were down 19% from a year earlier.

Since the "robosigning" scandal and the delays that followed it now seem to have passed through the system, that decline suggests that the level of troubled mortgage borrowers is also trending downwards.

The bottom line: Housing has found a bottom and is trending back up again.

Yes, prices are still declining slowly - the S&P-Case-Shiller index of house prices was down 3.7% in November 2011 from the previous year.

But that's mostly downward momentum and the effect of the still large inventory of homes either going through the foreclosure process or waiting for better sale conditions.

Housing's Upward Trajectory
With building activity and builder confidence increasing, and mortgage rates close to record lows, the overall trajectory is clearly upwards.

Of course, a rise in interest rates could derail this. But Federal Reserve Chairman Ben Bernanke has said he is keeping short-term rates close to zero until late 2014.

While short-term rates are so low, any rise in long-term rates would just make it even more profitable for banks and mortgage REITS to borrow short-term and invest in mortgages.

That means mortgage rates won't go up far, and won't derail the housing recovery.

Of course, a surge in inflation could derail Bernanke's plans, but that would make houses more affordable, since wages would rise in nominal terms with prices.

What's more, both political parties are practically committed to continuing a system in which government policy favors housing, with interest tax deductible and many mortgages guaranteed by the government.

Now that we have reached what looks like a solid housing bottom, investors are right to wonder how to invest.

Within housing, the important trend is that towards apartment building rather than single-family homes.

That too makes sense since home ownership is in decline but the population continues to increase and job creation is quite healthy.

Thus the rental market seems stronger than the housing market as a whole.

That's confirmed by the details in the February consumer price index, which show that rents have risen by 2.4% in the year to January, compared to a decline in the Case-Shiller home price index.

How to Invest in the Housing Bottom
For investors there are two possible ways to play it.

First, if the area where you live is in decent economic shape, you should consider taking advantage of current low prices and good mortgage availability to purchase either rental homes or ideally a small apartment block.

With financing cheap and rents rising, the economics of this are especially favorable at the moment.

Of course, you will either need to be good at home maintenance or have good repair people available, because your tenants will need their plumbing fixed. But if you can handle that, local rental real estate, bought cheaply, can be a good use of spare investment capacity.

That doesn't mean you should rush off to North Dakota, which has the nation's lowest unemployment rate.

Not only is it remote, but the costs are much higher, and the chances of being ripped off by the unscrupulous are very great. Buying an apartment in the heart of the "fracking boom" in the Bakken Shale may give you great "cred" at parties but don't get too tempted.

With these types of investment, it's usually a good idea to keep it local.

Another way to invest in this trend is with an apartment REIT such as UDR Inc. (NYSE: UDR).

UDR specializes in middle-market apartment developments, with 60,465 apartments including 2,626 under development as of the end of 2011.

The company recently announced fourth quarter earnings, which showed funds from operations were up 25% from the previous year. UDR also increased its dividend to $0.88 per share for 2012, giving it a 3.5% yield.

For investors UDR offers an attractive mixture of increasing income and capital growth along with rental market strength and incipient inflation both helping its performance.

It's been a long hard road but the worst of the housing bubble has come and gone.

Source http://moneymorning.com/2012/02/27/has-the-housing-market-finally-bottomed/

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules