Post by unlawflcombatnt on May 23, 2014 11:01:35 GMT -6
from Marketwatch vis Patrick.net
www.marketwatch.com/story/big-investors-are-betting-against-housing-2014-05-22?source=Patrick.net&pagenumber=1
Big investors are betting against housing
Fri, May 23, 2014
By Ben Eisen
"Some of Wall Street’s most vocal investors are betting against housing, saying the recovery has fizzled out.
Earlier this month, DoubleLine Capital founder Jeffrey Gundlach took to the podium at a highly watched investment conference to suggest shorting the popular SPDR S&P Homebuilders exchange traded fund (NAR:XHB). He pointed to a concern, cited by others, that would-be young buyers are shunning mortgages.
BlackRock CEO Laurence Fink said Tuesday that the housing market is “ structurally more unsound ” than prior to the financial crisis due to its reliance on Fannie Mae...and Freddie Mac..., according to news reports....
Real-estate investor Sam Zell says he expects the Homeownership rate to drop as low as 55% as more people delay marriages." [the previous high was 69% in the mid-2000's]
"But there are also some long bets out there.
Former Legg Mason Chief Bill Miller, a housing bull, said last week that the bearish positions of Gundlach and Zell are wrong....
As investors take sides, Federal Reserve officials are doing so too . Charles Plosser, president of the Fed Bank of Philadelphia says housing fundamentals “remain sound”....
while New York Fed Bank President Charles Dudley said later that day he believes there’s a “deep and protracted” housing downturn.
For market participants, the current time period reflects uncertainty — and a touch of fear — about whether the housing market is improving fast enough to push broader U.S. economic growth toward liftoff. Investors are taking the pulse of business conditions after a cold winter to gauge when and how the Fed will normalize its monetary policies, in turn guiding the future of the five-year-old bull market in stocks and the direction of bond yields. That’s making housing a key factor that could aid or stifle growth.
Because the housing market is a cyclical driver of the economy, it tends to lead the way in the wake of a recession. Butas if growth picks up, it usually cedes its influence to other sectors. That handoff is an event investors are waiting for.
“Housing typically leads the economic recovery because it is the most durable of all expenditures that consumers make,” said Kirk Barneby, portfolio manager of the Centre Active U.S. Treasury Fund.
Others see the very foundation upon which the housing recovery was built as a factor adding to questions about the path forward.
“In this cycle we’ve had enormous price increases before we had the demand, which was a function of institutional buying of homes,” said Joe Carson, U.S. economist at AllianceBernstein.
Home prices have recovered from the recession in many areas, with the S&P/Case-Shiller 20-City Composite Home Price Index showing prices were around the same levels as in 2004 in February, though still down from their peak in 2006. But questions remain about whether that teetering rebound can last. For the broader economy to pick up, the housing market needs to remain on stable footing, according to Millan Mulraine, deputy head of U.S. research & strategy at TD Securities.
“When you’re running a race, you have to be running along with the athlete you hand the baton off to,” he said.
Given the lookout for that transmission mechanism, the housing numbers this week hold particular importance, according to Mulraine, who said: “If home prices start declining, it will probably bring into question that handoff to key investment activity.”
Sales of existing homes rose 1.3% in April to a seasonally adjusted annual rate of 4.65 million, the National Association of Realtors reported Thursday. The rate was slightly under forecasts. On Friday, the Commerce Department said sales of new single-family homes rose 6.4% to a seasonally adjusted annual rate of 433,000 last month, topping expectations."
To put these numbers in perspective,
annualized peak Existing Home Sales were 7.28 million in Aug 2005.
Meanwhile, annualized New Home Sales peaked at 1.346 million in Oct 2005.
Adding these 2 together puts current, total home sales at ~3.5 million less than peak 2005 numbers.
Below is a photocopy of Briefing.com's report on Existing Home Sales in 2005, copied on 6-23-06:
--------------------
Below is a photocopy of Briefing.com's report on New Home Sales in 2005, copied on 8-24-06:
www.marketwatch.com/story/big-investors-are-betting-against-housing-2014-05-22?source=Patrick.net&pagenumber=1
Big investors are betting against housing
Fri, May 23, 2014
By Ben Eisen
"Some of Wall Street’s most vocal investors are betting against housing, saying the recovery has fizzled out.
Earlier this month, DoubleLine Capital founder Jeffrey Gundlach took to the podium at a highly watched investment conference to suggest shorting the popular SPDR S&P Homebuilders exchange traded fund (NAR:XHB). He pointed to a concern, cited by others, that would-be young buyers are shunning mortgages.
BlackRock CEO Laurence Fink said Tuesday that the housing market is “ structurally more unsound ” than prior to the financial crisis due to its reliance on Fannie Mae...and Freddie Mac..., according to news reports....
Real-estate investor Sam Zell says he expects the Homeownership rate to drop as low as 55% as more people delay marriages." [the previous high was 69% in the mid-2000's]
"But there are also some long bets out there.
Former Legg Mason Chief Bill Miller, a housing bull, said last week that the bearish positions of Gundlach and Zell are wrong....
As investors take sides, Federal Reserve officials are doing so too . Charles Plosser, president of the Fed Bank of Philadelphia says housing fundamentals “remain sound”....
while New York Fed Bank President Charles Dudley said later that day he believes there’s a “deep and protracted” housing downturn.
For market participants, the current time period reflects uncertainty — and a touch of fear — about whether the housing market is improving fast enough to push broader U.S. economic growth toward liftoff. Investors are taking the pulse of business conditions after a cold winter to gauge when and how the Fed will normalize its monetary policies, in turn guiding the future of the five-year-old bull market in stocks and the direction of bond yields. That’s making housing a key factor that could aid or stifle growth.
Because the housing market is a cyclical driver of the economy, it tends to lead the way in the wake of a recession. But
“Housing typically leads the economic recovery because it is the most durable of all expenditures that consumers make,” said Kirk Barneby, portfolio manager of the Centre Active U.S. Treasury Fund.
Others see the very foundation upon which the housing recovery was built as a factor adding to questions about the path forward.
“In this cycle we’ve had enormous price increases before we had the demand, which was a function of institutional buying of homes,” said Joe Carson, U.S. economist at AllianceBernstein.
Home prices have recovered from the recession in many areas, with the S&P/Case-Shiller 20-City Composite Home Price Index showing prices were around the same levels as in 2004 in February, though still down from their peak in 2006. But questions remain about whether that teetering rebound can last. For the broader economy to pick up, the housing market needs to remain on stable footing, according to Millan Mulraine, deputy head of U.S. research & strategy at TD Securities.
“When you’re running a race, you have to be running along with the athlete you hand the baton off to,” he said.
Given the lookout for that transmission mechanism, the housing numbers this week hold particular importance, according to Mulraine, who said: “If home prices start declining, it will probably bring into question that handoff to key investment activity.”
Sales of existing homes rose 1.3% in April to a seasonally adjusted annual rate of 4.65 million, the National Association of Realtors reported Thursday. The rate was slightly under forecasts. On Friday, the Commerce Department said sales of new single-family homes rose 6.4% to a seasonally adjusted annual rate of 433,000 last month, topping expectations."
To put these numbers in perspective,
annualized peak Existing Home Sales were 7.28 million in Aug 2005.
Meanwhile, annualized New Home Sales peaked at 1.346 million in Oct 2005.
Adding these 2 together puts current, total home sales at ~3.5 million less than peak 2005 numbers.
Below is a photocopy of Briefing.com's report on Existing Home Sales in 2005, copied on 6-23-06:
--------------------
Below is a photocopy of Briefing.com's report on New Home Sales in 2005, copied on 8-24-06: