Jimmy Lathrop

What the Homebuilders Are Telling Us

The market is digesting the sales reports from the summer. Home sales drop after Labor Day when children need to be registered in schools and do not pick up again until the end of the school year. Add in the cool weather pattern of La Nina with a cold winter with new homebuilders being forced to expend more of their own money to heat their new homes which will be sitting vacant and things are looking bleak. Meanwhile, municipalities, strapped for cash, will be raising local property tax rates, followed by a wallop of insurance premiums rebounding from the last five years when the industry was underpricing everything. Every potential homebuyer and speculator is sitting and waiting for the spring when home sellers will be desperate. Hot market real estate attorneys, title companies and settlement agencies are sitting at their computers playing solitaire waiting for the phone to ring. Real estate brokers are watching their Mercedes get reposessed. It is going to be a cruel, cruel winter as homebuyers try and save as much as they can for the upcoming inevitable mortgage rate increase by next summer. I would not gamble my worst enemy's money on a homebuilder ETF. It is strictly an eyes-glued-to-the-term... trader game, and I spend enough time in front of the computer as it is.