Posts Tagged ‘House prices’
Analyze point of view the housing market in the U.S., which is directly transferable to other world regions, such as the Spanish market.
The housing market still looks pretty bleak in some areas of the world: In the U.S. there was a record one million foreclosures last year, house prices are falling in many regions and the number of properties “subprime” is at a record level.
And things did not look much better in other areas of real estate. The number of construction jobs continued to decline, as well as other parts of the economy has added jobs.
Mortgage rates have moved higher than Treasury yields long-term studies have supported in recent months. Basically, the housing market remains a disaster. The property covers a wide range of markets – houses, apartments, hospitals, office buildings, shopping centers, residences and other properties. But for our purposes we will focus on residential real estate or homes. Here are four reasons to think about residential real estate could be a business – with a big caveat.
Everyone hates the residential real estate investments.
The houses are probably the most hated asset class in the country. That’s what happens when a bubble bursts. People avoid thinking about the value of your home. Vendors complain about not receiving any offers, buyers complain lending requirements almost impossible. Hatred of an asset is often the precursor of a conflict of interest, and being contrary is at the heart of many investment strategies. To paraphrase Warren Buffett, be fearful when others are greedy and greedy when others are fearful. Buffett to back up that idea when investing in the stock market in the teeth of the financial crisis in late 2008 and early 2009. Of course, being contrary by itself is not wise to invest. The gold was hated by many years (“dead money”) before it recently became an attractive asset class. Still, a lot of good ideas begin with the question: Why all the hate?
Smart people are buying real estate.
This group is led by John Paulson, the hedge fund manager who made 20 billion U.S. dollars by betting against the housing bubble. Last fall, said in a speech: “If you do not own a home buy one, if you own a house, buy another, and if you own two houses, buy a third and give his family the money to buy a house .. “why Mr. Paulson, is being so strong? Because he believes that interest rates in the long run are not going to go much lower. They have, in fact, has increased since she gave that speech, but remain very low by historical standards. The best prices and the expectation that housing prices will rise is their argument. For his part, Mr. Buffett has predicted the bottom of the housing market this year.
The housing market is performing well in inflation.
No inflation in these days, but when buying a home should have a more long term. The economy has enjoyed a period of disinflation since the beginning of 1980. A number of people think that the cycle is slowly reversed. If that is the case, then tenure Convention active advocate who do well in an inflationary environment. That includes Treasury Inflation Protected Securities, commodities and real estate. Remember that during the stagflation nightmare of the 1970′s, real estate had a strong race. Inflation is not a major problem in the U.S., but is a growing problem in other places. China and India have taken steps to combat inflation, euro area inflation and defend the United Kingdom has had unusually higher prices (above 3%) for an extended period of time. If the cycle is turning slowly, real estate makes more sense.
Demand can be rotated
The offer is not so out of control as it used to be. In late November, home builders reported 197 000 new homes on the market, the lowest level since 1968. The National Association of Realtors provides inventory reports of existing homes for sale fell 4% to 3.71 million homes, representing a 9.5 months supply at current sales pace, down from a supply of 10 5 months in October.
Those who are not sufficient numbers, of course, but they are moving in the right direction. That may be one reason that many home builder stocks have emerged from their lows in recent weeks. It comes down to jobs. There are a zillion warnings to any positive thesis in residential investment, but most is unemployment. If the economy is not creating jobs, the possibility of a rebound in the housing decreases. It is difficult to buy a home without work and not working people will not take long-term risks. The labor market remains the fight and the debate is hot about when recovered. Optimists see the recovery of this year. Pessimists see the pain for several years ahead. How this is resolved X factor will say a lot about whether the housing will recover.
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