rsinvestor

Bad News for Housing

Todd,
I respect your opinion, but you haven't presented a whole ton of data to back it up. Just because 20% of home mortgages may be underwater, that doesn't say much about the market's expectations for a recovery. The truth is that many of those homes are hurting because the mortgages were too big to begin with. If you only put 5% or less down on a house, and buy it at the peak or near, you can expect to be underwater at some point.

From a technical standpoint, I think the home builders are at the bottom, and should be bought. During the last housing downturn, the residential construction stocks peaked 20 months before the S&P 500 (1998 vs. 2000). This time, the difference is 27 months, between mid-2005 and October 2007.

In 2000, the home builders bottomed and stabilized just as the general market was peaking. In 2007, the same group bottomed near the market peak, and has pretty much traded sideways since then, vs. a market down over 40%.

I don't know if we are allowed to post links here, but I did analysis on this group twice already this year:

www.rsinvestor.com/Hom...
www.rsinvestor.com/Hom...

Good luck,
RSInvestor