SPDR Homebuilders (XHB)

All Comments on XHB

  • commenter
    David K
    Sep 08 04:45 PM
    Housing Nowhere Near Bottom [view article]
    The impending bottom of the housing market is a wishful fantasy that all participants want to come true sooner rather than later. The housing boom was fueled by 10 years of cheap money, poor economic policies and the idea that prices only go up. Take a look at Robert Schiller's work (irrationalexuberance.... From the the period of 1890 to 1997, U.S. Real Home Prices had a median value of 103 (100 is the base index). The index peaked at the end of 2006 at 203 and was at 167 at the end of June 2008. Just to get back to the historical median housing prices still need to depreciate by another -38%! Reply
  • commenter
    AJ30
    Sep 08 04:39 PM
    Home Inventories Soaring? Not Exactly [view article]
    It seems to me that one metric that most pundits are missing but that is known to us "commoners", is that everybody has to live somewhere! If someone bought 5 condos at pre construction "deals" hoping to "flip" they are in a world of hurt, but that wasn't the big chunk. Most housing is bought by renters moving up. Unless divorce intervenes they will fight hard to stay in something. They may have to "downsize" but they have to live somewhere.
    Reply
  • commenter
    evergreen16
    Sep 08 04:39 PM
    Home Inventories Soaring? Not Exactly [view article]
    Here is also something to consider. I hear people whine about high RE prices. Consider for example prices in Europe, even the 'cheap' easter Europe. Prices of houses in small towns there are higher than comparable properties in metro area of Seattle, Chicago, Denver... Now, where would you rather live? Reply
  • commenter
    staria
    Sep 08 04:39 PM
    Housing: Did We Learn Nothing from the Dotcom Bust? [view article]
    I think there is a lot of value in the Homebuilders sector longer term. Value the sector at Price to Sales. I assume that at the bottom of the cycle homebuilders are going to build let say 800tsd. homes p.a. The average price nationwide is around 200 tsd. USD. Makes around 160bn USD Top Down Sales. You pay for the sector as a whole right now ca. 40bn USD market cap (~ the same you pay for Merrill Lynch....). The average margin for the sector longer term is 8-10%. And for such a margin the stock market shold pay ca. 1 Price to Sales.... Buy the whole homebuilder sector right now ... and if you want an alpha trade, sale Merrill againts it.... Reply
  • commenter
    notsosmart
    Sep 08 04:00 PM
    My Website
    Housing: Did We Learn Nothing from the Dotcom Bust? [view article]
    the only bottom i know is the one i sit on.nothing is ever learned when greed is involved.the s& l mess of a few years ago was supposed to teach us things so this would not happen again.it will continue as long as there are people who are not held accountable.they un ethically make big bucks & run to the bank.who cares about decent folks left holding the bag. Reply
  • commenter
    gimmesomecof
    fee
    Sep 08 03:24 PM
    Housing Prices: Bottom or Temporary Bear Break? [view article]
    The Feds know they need to let house prices come back to fundamentals, but they have to let the bubble down slowly. But they can't let the value of those mortgage security products collapse, (lest we have a general cataclysmic economic collapse).

    So, to avoid a cataclysmic economic collapse, the Govt is now officially backing the securitizations of Freddie/Fannie.

    And, to let the bubble deflate slowly, the Govt now has direct control over Freddie/Fannie "conforming loan criteria." I think they will slowly tighten this conforming loan spigot, and meanwhile they will keep the fed funds rate low in order to let inflation catch up to the over-inflated house prices.

    I think the Fed will be orchestrating a slow recovery (several years yet). With the takeover of Freddie/Fannie, the Fed now has both reins of this runaway horse. (loan criteria and Fed interest rates)     Reply
  • commenter
    ReEconomist
    Sep 08 03:05 PM
    My Website
    Housing: Did We Learn Nothing from the Dotcom Bust? [view article]
    Home prices got way disconnected from their fundamentals. In some areas they reached 10 times income levels. Now prices are correcting to be no more than 4 times income levels.

    Another phenomena that might cause prices to over-correct on the downside is the waning enthusiasm for buying and owning a house.

    With prices falling and not likely to appreciate anytime soon, a lot of people will be asking themselves why are they paying such a high premium for ownership over the cost of renting a comparable property? Up until the bust, most people would justify a premium for ownership cause they were getting a healthy amount for appreciation.

    It's more expensive to rent assets that depreciate rather they buy them. Houses have been cheaper to rent than purchase because of the appreciation component. What happens to prices when the appreciation component buyers assign to a purchase is zero?

    These days it's gotten difficult to ascertain whether there is a bottom forming or the bubble still has more to deflate. There will be a bottom and it could be the point where it becomes cheaper to rent then purchase.

    Check out the home value forecasting tools based on time-tested fundamentals. Sell the Ceiling and buy the Floor. The Ceiling is the top level of prices where the income to home price ratio exceeds the historical norm for the area. So when prices reach or exceed the Ceiling, you'd be financially wise to sell and definitely not buy.

    The Floor is the price level where buying makes sense due to the yield the rental income of the house could generate. If you buy the Floor there is limited downside risk to further price declines. UsHousingMeltdown.org/...
     Reply
  • commenter
    portame
    Sep 08 11:12 AM
    Housing Prices: Bottom or Temporary Bear Break? [view article]
    Looking at figure 2, I noticed something interesting. According to what I read recently Fannie Mae was 'privatized' in 1968 and Freddie Mac was created in 1970 to compete with the privatized Fannie Mae. Figure 2 shows that after privatization of Fannie Mae that the median price of existing homes went from about 2 1/2 times the household income to about 3 1/2 times household income over a period of about 10 years. Really knowing very little about the mechanics of the mortgage market, I wonder if the government takeover of Fannie Mae and Freddie Mac will take us back toward 1968 in terms of mortgage market mechanics and make for a house price floor more in line with the 2 1/2 times income rather than the more recent 3 1/2 times income valuations. Reply
  • commenter
    billddrummer
    Sep 08 10:15 AM
    Home Inventories Soaring? Not Exactly [view article]
    I still think that median prices will fall to the level seen in 2003, before the boom began. When that happens, we'll see inventory getting cleared much more quickly.

    As far as people holding their homes off the market waiting for prices to improve, they'll have to keep waiting. I don't think prices post-boom will start to rise until the inventory level becomes more balanced. Which could take another year or two.     Reply
  • commenter
    john s.
    gordon
    Sep 08 08:33 AM
    Housing: Did We Learn Nothing from the Dotcom Bust? [view article]
    you're right we learned nothing.

    i remember 1999 when all the boiler room 'brokers' were calling me (wall street journal sold mailing lists to anyone with a boiler romm over their head) saying jack you gotta buy this dotcom that dotcom etc. i always asked does this turkey have any earnings? they always said earnings don't matter jack at which point i hung up the phone.
    > jack     Reply
  • commenter
    fxtrader07
    Sep 08 05:07 AM
    Home Inventories Soaring? Not Exactly [view article]
    Tom, I don't know whether it is smart to dismiss inventories measured in months so quickly. After all, the number of units don't telle you anything about how fast this overhang might disappear. Second, I see from your graphs that supply is up or going sideways AND number of transactions has come hsrply down. But this is the state of affairs amid a 30% drop in prices from the peak, as you said. So that 30% drop obviously was only sufficient to let the situation not deteriorate too much. I wonder what price drop will be needed to clean things up again... Reply
  • commenter
    Stanley
    Sep 08 02:43 AM
    My Website
    Housing Prices: Bottom or Temporary Bear Break? [view article]
    remember also that much of the 'historical mean' included periods where no doc, interest only, zero down and neg-am loans were being offered. these loans were creating additional demand that was pushing up prices. now these loans are gone, if not for good, for a good number of years at least. (demand destruction! ) Reply
  • commenter
    The hand
    Sep 08 02:20 AM
    My Website
    Home Inventories Soaring? Not Exactly [view article]
    i am thinking that tom's statistics suck but they are real data points on housing. orange county is not an average american county, and i would not project the orange county situation to the rest of the usa. in fact, each area seems to have a different dynamic.

    i have a few houses i would like to unload and i would like this analysis to be correct. i just cannot shake the feeling things are going to get worse.     Reply
  • commenter
    Kunst
    Sep 07 11:02 PM
    Theoretical Declines of a Bursting Oil Bubble [view article]
    "Declension; I invest, you speculate, he gambles."

    Just keep in mind that the root word is 'decline', as in, 'Decline the verb to invest.'

    The happy solution to the oil problem would be an unpredictable breakthrough like fusion power.     Reply
  • commenter
    Kunst
    Sep 07 08:14 PM
    Home Inventories Soaring? Not Exactly [view article]
    Your chart says unit sales are up 14% or so Y/Y. That's a meaningful data point. So who is buying these houses? It's not a good environment for home buyers, especially first-timers.

    While inventory may only be "slightly" higher than two years ago, it is more than double three years ago. And there are a lot of houses being held off the market "until prices improve".

    It would be nice to believe the housing market is coming back, but this article leaves me unconvinced. I have a feeling there is more to the story than meets the eye here.     Reply
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