Seeing Green Shoots in this Homebuilder Measure

Homebuilder sentiment was measured this week, and it showed that while builders are generally feeling positive about their sector, they are not as giddy as they were a few months back. So what does the Housing Market Index say for real estate? See the whole story at Latest Homebuilder Measure Offers Reason to Believe.

Housing Relative Shares	05-17 to 05-19 Close
SPDR S&P Homebuilders (NYSE: XHB)	-0.5%
PulteGroup (NYSE: PHM)	-2.1%
D.R. Horton (NYSE: DHI)	-0.7%
K.B. Homes (NYSE: KBH)	-0.8%
Toll Brothers (NYSE: TOL)	-0.4%
Hovnanian (NYSE: HOV)	+0.6%
Lennar (NYSE: LEN)	-0.8%

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only. Editor's Note: Article should interest investors in Investors Title (Nasdaq: ITIC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), UltraShort Real Estate ProShares (NYSE: SRS), Ultra Real Estate ProShares (NYSE: URE), ING Clarion Global Real Estate Income Fund (NYSE: IGR), Xinyuan Real Estate Co. (NYSE: XIN), Rydex Real Estate Fund H (Nasdaq: RYHRX), T. Rowe Price Real Estate Fund (Nasdaq: TRREX), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), D.R. Horton (NYSE: DHI), Beazer Homes (NYSE: BZH), Lennar (NYSE: LEN), K.B. Homes (NYSE: KBH), Pulte Homes (NYSE: PHM), NVR Inc. (NYSE: NVR), Gafisa SA (NYSE: GFA), MDC Holdings (NYSE: MDC), Ryland Group (NYSE: RYL), Meritage Homes (NYSE: MTH), Brookfield Homes (NYSE: BHS), Standard Pacific (NYSE: SPF), M/I Homes (NYSE: MHO), Orleans Homebuilders (AMEX: OHB), Vanguard REIT Index ETF (NYSE: VNQ), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), Hooker Furniture (Nasdaq: HOFT), Ethan Allen (NYSE: ETH), Pier 1 Imports (NYSE: PIR), Williams Sonoma (NYSE: WSM), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Nasdaq: XNFZX, Nasdaq: FSAZX, Avatar Holdings (Nasdaq: AVTR), Apartment Investment & Management (NYSE: AIV), Equity Residential (NYSE: EQR), Avalonbay Communities (NYSE: AVB), UDR Inc. (NYSE: UDR), Essex Property Trust (NYSE: ESS), Camden Property Trust (NYSE: CPT), Senior Housing Properties (NYSE: SNH), BRE Properties (NYSE: BRE), Home Properties (NYSE: HME), Mid-America Apartment (NYSE: MAA), Equity Lifestyle Properties (NYSE: ELS), American Campus Communities (NYSE: ACC), Colonial Properties (NYSE: CLP), American Capital Agency (Nasdaq: AGNC), Sun Communities (NYSE: SUI), Associated Estates (NYSE: AEC), PennyMac Mortgage (NYSE: PMT), Two Harbors (AMEX: TWO), Simon Property Group (NYSE: SPG).

Extraordinary Mortgage Application Activity

Published January 13

Followers of mine know I have been bullish real estate for some time and that I remain so for 2016. But I cannot sit idly by and allow for misconception about an extraordinary mortgage applications surge. It is not representative of anything fundamentally extraordinary for real estate, but rather reflects an anomaly. See more on the extraordinary mortgage application activity here.

Real Estate Relative Stocks	Wednesday 2:00 PM ET
SPDR S&P 500 (NYSE: SPY)	-1.5%
iShares US Real Estate (NYSE: IYR)	-0.1%
iShares Mortgage Real Estate  Capped (NYSE: REM)	-2.2%
SPDR S&P Homebuilders (NYSE: XHB)	-2.7%
PulteGroup (NYSE: PHM)	-1.9%
MGIC Investment (NYSE: MTG)	-2.1%
Investors Title (Nasdaq: ITIC)	-0.0%
Bank of America (NYSE: BAC)	-2.1%

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only. Editor's Note: Article should interest investors in Investors Title (Nasdaq: ITIC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), UltraShort Real Estate ProShares (NYSE: SRS), Ultra Real Estate ProShares (NYSE: URE), ING Clarion Global Real Estate Income Fund (NYSE: IGR), Xinyuan Real Estate Co. (NYSE: XIN), Rydex Real Estate Fund H (Nasdaq: RYHRX), T. Rowe Price Real Estate Fund (Nasdaq: TRREX), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), D.R. Horton (NYSE: DHI), Beazer Homes (NYSE: BZH), Lennar (NYSE: LEN), K.B. Homes (NYSE: KBH), Pulte Homes (NYSE: PHM), NVR Inc. (NYSE: NVR), Gafisa SA (NYSE: GFA), MDC Holdings (NYSE: MDC), Ryland Group (NYSE: RYL), Meritage Homes (NYSE: MTH), Brookfield Homes (NYSE: BHS), Standard Pacific (NYSE: SPF), M/I Homes (NYSE: MHO), Orleans Homebuilders (AMEX: OHB), Vanguard REIT Index ETF (NYSE: VNQ), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), Hooker Furniture (Nasdaq: HOFT), Ethan Allen (NYSE: ETH), Pier 1 Imports (NYSE: PIR), Williams Sonoma (NYSE: WSM), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Nasdaq: XNFZX, Nasdaq: FSAZX, Avatar Holdings (Nasdaq: AVTR), Apartment Investment & Management (NYSE: AIV), Equity Residential (NYSE: EQR), Avalonbay Communities (NYSE: AVB), UDR Inc. (NYSE: UDR), Essex Property Trust (NYSE: ESS), Camden Property Trust (NYSE: CPT), Senior Housing Properties (NYSE: SNH), BRE Properties (NYSE: BRE), Home Properties (NYSE: HME), Mid-America Apartment (NYSE: MAA), Equity Lifestyle Properties (NYSE: ELS), American Campus Communities (NYSE: ACC), Colonial Properties (NYSE: CLP), American Capital Agency (Nasdaq: AGNC), Sun Communities (NYSE: SUI), Associated Estates (NYSE: AEC), PennyMac Mortgage (NYSE: PMT), Two Harbors (AMEX: TWO), Simon Property Group (NYSE: SPG).

Home Builders - Why So Blue?

The National Association of Home Builders (NAHB) reported its Housing Market Index (HMI). The HMI is a measure of homebuilder sentiment, and it showed homebuilders were blue about February. The shares of the SPDR S&P Homebuilders (NYSE: XHB) came down off a gap-open higher open once the HMI report was released. The report showed the HMI fell in February to 53, from 55 in January. Readings above 50 indicate a generally positive mood, but the decrease in the HMI was the third consecutive decline and it is approaching that breakeven mark. See my full report on housing here.

Homebuilder Shares	03-16-15
Pultegroup (NYSE: PHM)	+0.2%
D.R. Horton (NYSE: DHI)	+1.0%
K.B. Home (NYSE: KBH)	-0.4%
Toll Brothers (NYSE: TOL)	-0.6%
Beazer Homes (NYSE: BZH)	-0.7%
Ryland Group (NYSE: RYL)	+0.3%
Lennar (NYSE: LEN)	+0.2%
Hovnanian (NYSE: HOV)	-1.5%

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Ignore the Home Builder Pessimism

By The Greek:

Earlier this week, the National Association of Homebuilders’ (NAHB) Housing Market Index showed an intensified level of pessimism for homebuilders. Yet, I’m telling you not to worry about it, because it doesn’t matter.

The NAHB’s Housing Market Index (HMI) dropped 2 points in March, after shedding a point in February. The HMI fell to a mark of 44 in March, from 46 the month before, and made fools of economists who on average were expecting the index to improve by one point to 47.

The NAHB explained the falloff and the third straight month of flat to deteriorating data on ancillary issues. The industry group said that builders were still seeing increasing demand for new homes, but were frustrated by “bottlenecks in the supply chain for developed lots along with rising costs for building materials and labor.” And despite what seems like a better capital position for housing lenders like Bank of America (NYSE: BAC), according to the Federal Reserve, credit availability was reported as an ongoing problem. The NAHB also regularly mentions faulty appraisals, which include the values of sold distressed properties as comparables.

Yet, I’m telling you that there’s nothing to worry about. This index has remained underwater since the real estate market collapse, despite the nascent success of the nation’s largest builders. That’s the issue here. The NAHB is made up of builders, large and small, liquid and insolvent. Many small builders remain constrained by an inability to access capital. However, the large publicly traded builders including those listed herein are doing fine and dandy and are on an optimistic high today. They have access to capital, and the ability to steal market share from their humbled brothers. The evidence of their success is clear here.

Publicly Traded Builder	Year-to-Date Gain Thru 03/21/13
SPDR S&P Homebuilders (NYSE: XHB)	+13%
K.B. Homes (NYSE: KBH)	+40%
D.R. Horton (NYSE: DHI)	+26%
PulteGroup (NYSE: PHM)	+16%
Ryland Group (NYSE: RYL)	+14%
NVR (NYSE: NVR)	+14%
Toll Brothers (NYSE: TOL)	+10%
Lennar (NYSE: LEN)	+10%
MDC Holdings (NYSE: MDC)	+5%

They are not all higher on the year though. Beazer Homes (NYSE: BZH) and Hovnanian (NYSE: HOV) are in the red. Some of the difference has to do with regional variation. Some of the once hottest markets fell far from their peaks, but those same markets are on fire today again, including Phoenix, Las Vegas, California and Florida. K.B. Homes’ (KBH) west coast operations are a big reason for its performance this year. The HMI Report showed that the three-month moving average for the West Regional Index was up four points in March, and was easily in positive territory above 50 at a mark of 58. The Northeast Index was unchanged at 39, while the Midwest and South Indexes skidded by a point each to 47 and 46, respectively.

The part of the report I’ve always found most interesting is where builders are asked to report on current sales conditions, forward expectations and actual prospective buyer traffic. I find the first two measures are purely perceptional, and that the measure of real traffic tells a different and truer story for the majority of builders, who are mostly small. The index measuring current sales conditions fell by four points to reach a mark of 47. The measure of sales expectations for the next six months rose by one point to 51. However, the measure of prospective buyer traffic rose three points, and still measured deeply under breakeven sentiment at a mark of 35. Remember, though, it doesn’t matter because the real estate recovery is underway nonetheless. It’s just being enjoyed by a select few publicly traded companies which have garnered a good deal of market share from the least among their peers.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Home Builder Confidence Devastated, So Buy Housing Stocks Now

The National Association of Home Builders, in conjunction with Wells Fargo (NYSE: WFC), released its tally of builder confidence for June Wednesday morning. A relatively new factor acted like the last nail in the coffin of home builder confidence this month, sending almost all component measures toward record lows. Yet, “The Greek” still loves the shares of the best publicly traded home builders.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers: Nasdaq: ITIC, NYSE: BAC, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: SRS, NYSE: URE, NYSE: IGR, NYSE: XIN, Nasdaq: RYHRX, Nasdaq: TRREX, NYSE: TOL, NYSE: HOV, NYSE: DHI, NYSE: BZH, NYSE: LEN, NYSE: KBH, NYSE: PHM, NYSE: NVR, NYSE: GFA, NYSE: MDC, NYSE: RYL, NYSE: MTH, NYSE: BHS, NYSE: SPF, NYSE: MHO, AMEX: OHB, NYSE: VNQ, NYSE: PNC, NYSE: JPM, Nasdaq: HOFT, NYSE: ETH, NYSE: PIR, NYSE: WSM, NYSE: HD, NYSE: LOW, AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Nasdaq: AVTR, NYSE: AIV, NYSE: EQR, NYSE: AVB, NYSE: UDR, NYSE: ESS, NYSE: CPT, NYSE: SNH, NYSE: BRE, NYSE: HME, NYSE: MAA, NYSE: ELS, NYSE: ACC, NYSE: CLP, Nasdaq: AGNC, NYSE: SUI, NYSE: AEC, NYSE: PMT and AMEX: TWO, NYSE: SPG.

Home Builder Confidence Devastated, So Buy Housing Stocks Now

Piling on home builder misery, rising construction materials costs simply took the pressure from intense to unbearable for home builders in June. The NAHB/Wells Fargo Housing Market Index fell 3 points to a reading of 13, as a softer than hoped for spring selling season also deflated builder mood moving into the summer.

We blamed it on the rain in April, the wettest on record. We looked toward gasoline prices in May, as they breached the point of no return for consumer spending impact. In June, we’ve still got wild weather in portions of the country, though arguably not any wilder than any other year now. We still have tough comparable property costs from heavy existing home inventory, weighed down by distressed property sales. And now, inflation everywhere but in housing offers the latest blow.

"It’s truly scary that the component replacement cost of homes - construction materials (plus labor) - might provide the ultimate floor for home prices."

With home prices still on the decline, prospective first-time buyers have little incentive to enter the market. Current home owners can’t get enough value from their existing home to leverage to a step up new home. On a relative basis, existing homes offer a better deal to most prospective buyers. Gasoline prices are on the decline, but construction materials costs are on the rise. It’s truly scary that the component replacement cost of homes - construction materials (plus labor) - might provide the ultimate floor for home prices. Builders certainly aren’t feeling good about that.

The NAHB reports that its surveyed home builders, which include many smaller builders who have borne the brunt of this downturn and have little capital access to emerge from it, noted declines in current sales conditions and in the traffic of prospective buyers in June; these component indices dropped 2 points each to index measures of 13 and 12, respectively. This thus led builders’ forward hopes back into despair, with the latest measure of sales expectations for the next six months dropping four points, to its lowest in history, at 15. The last time builders’ forward confidence marked this floor was in the heat of economic battle in March of 2009.

Looking across the nation’s regions, there was one bright spot, the Northeast, which saw its HMI rise 2 points to 17 in June. Across the West (down 4 points to index value of 12), Midwest (down 3 to 11) and South (down 2 to 14) there was nothing but bleakness. Most publicly traded builders have broad nationwide exposure, with important interests in the faster growing regions of the nation. Thus, Toll Brothers (NYSE: TOL), Pulte (NYSE: PHM), Hovnanian (NYSE: HOV), Beazer (NYSE: BZH), Lennar (NYSE: LEN) and D.R. Horton (NYSE: DHI) all have a presence in the Northeast.

Looking forward, we remind securities investors that there should be a divergence between real estate investment and homebuilder share investment in the earliest stages of recovery. It’s very important to understand that the NAHB’s survey includes many devastated smaller builders in its query, which explains the depth of despair; a mark of 50 signifies the break between a “good” or “poor” marketplace. The strife of the smaller builders, and the tightening of the capital markets, including bank funding, provides an improved landscape for large publicly traded builders. Capital access and market share are available to them. Thus, I expect that at the slightest sign of turn, homebuilder shares will take off. So they will precede broad real estate market recovery. The bar for real estate sales growth is now very low, and so we can expect it in the second half of this year, barring any new interfering extraordinary factor.



Editor's Note: Article should interest investors in Investors Title (Nasdaq: ITIC), Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), UltraShort Real Estate ProShares (NYSE: SRS), Ultra Real Estate ProShares (NYSE: URE), ING Clarion Global Real Estate Income Fund (NYSE: IGR), Xinyuan Real Estate Co. (NYSE: XIN), Rydex Real Estate Fund H (Nasdaq: RYHRX), T. Rowe Price Real Estate Fund (Nasdaq: TRREX), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), D.R. Horton (NYSE: DHI), Beazer Homes (NYSE: BZH), Lennar (NYSE: LEN), K.B. Homes (NYSE: KBH), Pulte Homes (NYSE: PHM), NVR Inc. (NYSE: NVR), Gafisa SA (NYSE: GFA), MDC Holdings (NYSE: MDC), Ryland Group (NYSE: RYL), Meritage Homes (NYSE: MTH), Brookfield Homes (NYSE: BHS), Standard Pacific (NYSE: SPF), M/I Homes (NYSE: MHO), Orleans Homebuilders (AMEX: OHB), Vanguard REIT Index ETF (NYSE: VNQ), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), Hooker Furniture (Nasdaq: HOFT), Ethan Allen (NYSE: ETH), Pier 1 Imports (NYSE: PIR), Williams Sonoma (NYSE: WSM), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Nasdaq: XNFZX, Nasdaq: FSAZX, Avatar Holdings (Nasdaq: AVTR), Apartment Investment & Management (NYSE: AIV), Equity Residential (NYSE: EQR), Avalonbay Communities (NYSE: AVB), UDR Inc. (NYSE: UDR), Essex Property Trust (NYSE: ESS), Camden Property Trust (NYSE: CPT), Senior Housing Properties (NYSE: SNH), BRE Properties (NYSE: BRE), Home Properties (NYSE: HME), Mid-America Apartment (NYSE: MAA), Equity Lifestyle Properties (NYSE: ELS), American Campus Communities (NYSE: ACC), Colonial Properties (NYSE: CLP), American Capital Agency (Nasdaq: AGNC), Sun Communities (NYSE: SUI), Associated Estates (NYSE: AEC), PennyMac Mortgage (NYSE: PMT), Two Harbors (AMEX: TWO), Simon Property Group (NYSE: SPG).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Mortgage Activity Pickup on Lower Rates and Better Weather

Real Estate

The Mortgage Bankers Association today reported on mortgage activity for the week ending March 18, 2011. The period marked improvement over the week just prior to it, and we believe we know why.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers: NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: PNC, NYSE: JPM, NYSE: BBT, NYSE: CIT, NYSE: BKU, Nasdaq: UBSI, NYSE: BK, Nasdaq: MBFI, NYSE: AF, NYSE: NYB, Nasdaq: HCBK, Nasdaq: PBCT, Nasdaq: FNFG, Nasdaq: CFFN, Nasdaq: WFSL, Nasdaq: ISBC, Nasdaq: NWBI, Nasdaq: STSA, NYSE: OCN, NYSE: FBC, NYSE: PFS, Nasdaq: COLB, Nasdaq: KRNY, Nasdaq: BRKL, Nasdaq: DCOM, Nasdaq: FFIC, Nasdaq: DNBK, OTC: FCNCA.PK, NYSE: SNV, Nasdaq: UBSI, Nasdaq: HMPR, Nasdaq: WSBC, Nasdaq: CHCO, Nasdaq: SASR, OTC: FCBN.OB, Nasdaq: SCBT, NYSE: WL, Nasdaq: WSFS, Nasdaq: SBSI, Nasdaq: STEL, Nasdaq: UBSH, Nasdaq: EGBN, Nasdaq: FBNC, Nasdaq: ABCB, Nasdaq: TBBK, Nasdaq: FCBC, Nasdaq: CCBG, Nasdaq: FISI, Nasdaq: NKSH, Nasdaq: CZNC, Nasdaq: CHFN, Nasdaq: SBCF, Nasdaq: TIBB, Nasdaq: AMNB, Nasdaq: UCBI, Nasdaq: MBRG, Nasdaq: HBOS, Nasdaq: ZION, Nasdaq: EWBC, NYSE: CYN, NYSE: BOH, Nasdaq: SIVB, Nasdaq: WABC, Nasdaq: CATY, Nasdaq: UMPQ, Nasdaq: GBCI, Nasdaq: PCBC, Nasdaq: PACW, NYSE: WAL, OTC: FBAK.OB, Nasdaq: FIBK, Nasdaq: NARA, Nasdaq: WCBO, Nasdaq: TCBK, Nasdaq: TBNK, Nasdaq: WCBO, Nasdaq: BMRC, Nasdaq: HAFC, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ

Mortgage Activity Pickup on Lower Rates and Better Weather

The Mortgage Bankers Association (MBA) reported on mortgage activity for the March 18 period. While mortgage rates did not change much from the prior week, the recent decline from higher February and early March periods certainly drove business. Last week we noted a pickup in refinance activity, and suggested that mortgage activity tied to home purchases are less nimble but should also pick up. We think that is exactly what happened this week, and we expect activity also benefited from a warm weather spurt that started spring cleaning, and home shopping during the period.

The average contracted rate on 30-year and 15-year fixed rate mortgages inched higher to 4.8% (from 4.79%) and 4.02% (from 4.03%), respectively last week. However, the approximate 20 basis point drop from recent levels continued to drive refinancing activity. This past week, we believe, aided by warm weather as well, purchase activity picked up too.

The Market Composite Index of overall mortgage activity rose 2.7% on a seasonally adjusted basis (2.8% unadjusted). The modest gain was driven by a 2.7% increase in the Refinance Index, as refinancing activity stuck at 66.4% of total activity. The Purchase Index also gained this week, rising 2.7% on a seasonally adjusted basis.

While Existing and New Home Sales data reported this week for the month of February offered distressing news, this mortgage data covering a more recent period offers a more relevant and hopeful message. As long as the global investment community remains concerned about events in the Middle East and Asia, demand for safe-haven and concerns about global economic growth should help keep interest rates tamed. As the spring selling season begins now that spring itself is officially upon us, soon followed by regularly warmer days, we believe today's data shows housing growth also lies in store.



Editor's Note: Article should interest investors in Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), BB&T (NYSE: BBT), CIT (NYSE: CIT), Bank United (NYSE: BKU), First Citizens (OTC: FCNCA.PK), Synovus (NYSE: SNV), United Bankshares (Nasdaq: UBSI), Hampton Roads Bankshares (Nasdaq: HMPR), WesBanco (Nasdaq: WSBC), City Holding (Nasdaq: CHCO), Sandy Spring (Nasdaq: SASR), First Citizens (OTC: FCBN.OB), SCBT Financial (Nasdaq: SCBT), Wilmington Trust (NYSE: WL), WSFS Financial (Nasdaq: WSFS), Southside Bancshares (Nasdaq: SBSI), Stellar One (Nasdaq: STEL), Union First Market (Nasdaq: UBSH), Eagle Bancorp (Nasdaq: EGBN), First Bancorp (Nasdaq: FBNC), Ameris (Nasdaq: ABCB), The Bancorp (Nasdaq: TBBK), First Community (Nasdaq: FCBC), Capital City (Nasdaq: CCBG), Financial Institutions (Nasdaq: FISI), National Bankshares (Nasdaq: NKSH), Citizens & Northern (Nasdaq: CZNC), Charter Financial (Nasdaq: CHFN), Seacoast Banking (Nasdaq: SBCF), TIB Financial (Nasdaq: TIBB), American National (Nasdaq: AMNB), United Community (Nasdaq: UCBI), Middleburg Financial (Nasdaq: MBRG), Heritage Financial (Nasdaq: HBOS), Zions Bancorp (Nasdaq: ZION), East West Bancorp (Nasdaq: EWBC), City National (NYSE: CYN), Bank of Hawaii (NYSE: BOH), SVB Financial (Nasdaq: SIVB), Westamerica (Nasdaq: WABC), Cathay General (Nasdaq: CATY), Umpqua (Nasdaq: UMPQ), Glacier Bancorp (Nasdaq: GBCI), Pacific Capital (Nasdaq: PCBC), PacWest (Nasdaq: PACW), Western Alliance (NYSE: WAL), First National Alaska (OTC: FBAK.OB), First Interstate Bancsystem (Nasdaq: FIBK), Nara (Nasdaq: NARA), West Coast (Nasdaq: WCBO), TriCo (Nasdaq: TCBK), Territorial (Nasdaq: TBNK), Washington Banking (Nasdaq: WCBO), Bank of Marin (Nasdaq: BMRC), Hanmi (Nasdaq: HAFC), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), United Bankshares (Nasdaq: UBSI), Bank of New York Mellon (NYSE: BK), MB Financial (Nasdaq: MBFI), Astoria Financial (NYSE: AF), New York Community (NYSE: NYB), Hudson City (Nasdaq: HCBK), People’s United (Nasdaq: PBCT), First Niagra (Nasdaq: FNFG), Capitol Federal (Nasdaq: CFFN), Washington Federal (Nasdaq: WFSL), Investor’s Bancorp (Nasdaq: ISBC), Northwest Bankshares (Nasdaq: NWBI), Sterling Financial (Nasdaq: STSA), Ocwen (NYSE: OCN), Flagstar (NYSE: FBC), Provident (NYSE: PFS), Colombia Banking (Nasdaq: COLB), Kearny (Nasdaq: KRNY), Brookline (Nasdaq: BRKL), Dime Community (Nasdaq: DCOM), Flushing Financial (Nasdaq: FFIC), Danvers (Nasdaq: DNBK).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Disturbing Housing Data Not a Bother

Real Estate

On Monday, Existing Home Sales were reported running at a significantly slower annual pace. Tuesday morning, the FHFA House Price Index showed further home price decline. That one-two punch has housing stocks hunching over. The S&P Homebuilders SPDR (NYSE: XHB) was off about a percentage point Tuesday, and down further after hours. Now let me tell you why I still see growth for the real estate market in 2011, and appreciation for homebuilders' shares too.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers: NYSE: BAC, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: SRS, NYSE: URE, NYSE: IGR, NYSE: XIN, Nasdaq: RYHRX, Nasdaq: TRREX, NYSE: TOL, NYSE: HOV, NYSE: DHI, NYSE: BZH, NYSE: LEN, NYSE: KBH, NYSE: PHM, NYSE: NVR, NYSE: GFA, NYSE: MDC, NYSE: RYL, NYSE: MTH, NYSE: BHS, NYSE: SPF, NYSE: MHO, AMEX: OHB, NYSE: VNQ, NYSE: PNC, NYSE: JPM, Nasdaq: HOFT, NYSE: ETH, NYSE: PIR, NYSE: WSM, NYSE: HD, NYSE: LOW, AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Nasdaq: AVTR, NYSE: AIV, NYSE: EQR, NYSE: AVB, NYSE: UDR, NYSE: ESS, NYSE: CPT, NYSE: SNH, NYSE: BRE, NYSE: HME, NYSE: MAA, NYSE: ELS, NYSE: ACC, NYSE: CLP, Nasdaq: AGNC, NYSE: SUI, NYSE: AEC, NYSE: PMT and AMEX: TWO, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ

Disturbing Housing Data Not a Bother

The annual pace of Existing Home Sales fell 9.6% in February, to a rate of 4.88 million, down from an upwardly revised 5.4 million pace in January (revised from 5.36 million). Since existing home sales measures completed contracts, we thought there might be a good chance it was weather impacted, given the massive snowfall that blanketed the country in the December to January span, when these contracts would have been first entered into.

The problem is that the drop in the rate of sales activity was not isolated to the weather battered Northeast and Midwest, which showed sales declines of 7.2% and 12.2%, respectively. Sales activity in the warmer South and West regions of the country also posted declines of 10.2% and 8.0%, respectively. It's not as if weather was perfect in those regions of the country either, but it's harder to apply that specific explanation across the whole of the country nonetheless.

Given the fact that sales were down a lesser 2.8% when compared against the pace from the prior year period, the seasonal factor may still carry some weight. We have not forgotten, though, that the economic well-being of the nation was far worse at that time than the January 2011 period we are otherwise comparing against. So, neither can we prove this theory to explain the weakness with certainty.

While interest rates have since come down, during the span measured in this report, Freddie Mac (Nasdaq: FMCC.OB) discloses the average contracted mortgage rate on 30-year fixed rate contracts rose to 4.95% in February, from 4.76% in January. This rate change certainly played a role in curbing activity on a national scale.

The representatives of the National Association of Realtors (NAR), interviewed in conjunction with the latest data release, listed all the usual suspects as factors behind the latest dip. There's a checklist that is regularly run down by industry experts discussing real estate weakness. Credit availability tops that list, as lending standards are significantly tighter these days then the boon years of free money. Gurus also point to the appraisal conflict against supply/demand determined pricing, as appraisals often include distressed property sales as comparables. Of course, distressed property sales are special events and not indicative of the broad market pricing scheme. That said, given the great inventory of distressed properties, there's an argument to be made for their inclusion now.

The NAR report showed the median price of a home fell to $156,100, which was 5.2% below the median price in February of 2010. Tuesday's FHFA House Price Index concurred generally, showing a 0.3% month-over-month drop in January. Over the trailing twelve months, prices were 3.9% lower in January. Despite being down 16.5% since their April 2007 peak, it seems home prices are still trying to find bottom. Indeed, that’s being aided by the distressed property overhang and the large lender owned shadow inventory. The percentage of distressed property sales increased in February to 39%, up from 37% in January, though that may have only been due to a decrease in overall sales activity. Yet, existing home sales still remain 26% higher than the low established in July of last year.

I continue to believe we will see growth in the housing market this year, albeit to a still depressing absolute level. Certainly, stresses remain on the real estate marketplace, and I also believe much of the country is still suffering through a stealth recession, based on my personal interactions with small businessmen and the observations I have made. We continue to face important risks and threats, including rising gasoline prices and likely higher food prices, and real inflation as cost of production and delivery increases feed through to finished goods. Yet, our economy also has natural drivers for growth working in its favor, and growth is not so difficult to attain from recent levels.

Finally, while the current situation is bad, it is not one that can in and of itself keep our great nation down. While I recognize and even look for other factors to help keep us relatively down, we must recognize that there is a change occurring in housing, from consolidation to growth. This supports the publicly traded and decently capitalized homebuilders' shares, as a light is finally visible that should lead long lost capital to flow their way. Market share also beckons them as smaller builders are strangled from capital.



Editor's Note: Article should interest investors in Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), UltraShort Real Estate ProShares (NYSE: SRS), Ultra Real Estate ProShares (NYSE: URE), ING Clarion Global Real Estate Income Fund (NYSE: IGR), Xinyuan Real Estate Co. (NYSE: XIN), Rydex Real Estate Fund H (Nasdaq: RYHRX), T. Rowe Price Real Estate Fund (Nasdaq: TRREX), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), D.R. Horton (NYSE: DHI), Beazer Homes (NYSE: BZH), Lennar (NYSE: LEN), K.B. Homes (NYSE: KBH), Pulte Homes (NYSE: PHM), NVR Inc. (NYSE: NVR), Gafisa SA (NYSE: GFA), MDC Holdings (NYSE: MDC), Ryland Group (NYSE: RYL), Meritage Homes (NYSE: MTH), Brookfield Homes (NYSE: BHS), Standard Pacific (NYSE: SPF), M/I Homes (NYSE: MHO), Orleans Homebuilders (AMEX: OHB), Vanguard REIT Index ETF (NYSE: VNQ), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), Hooker Furniture (Nasdaq: HOFT), Ethan Allen (NYSE: ETH), Pier 1 Imports (NYSE: PIR), Williams Sonoma (NYSE: WSM), Home Depot (NYSE: HD), Lowes (NYSE: LOW), AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Avatar Holdings (Nasdaq: AVTR), Apartment Investment & Management (NYSE: AIV), Equity Residential (NYSE: EQR), Avalonbay Communities (NYSE: AVB), UDR Inc. (NYSE: UDR), Essex Property Trust (NYSE: ESS), Camden Property Trust (NYSE: CPT), Senior Housing Properties (NYSE: SNH), BRE Properties (NYSE: BRE), Home Properties (NYSE: HME), Mid-America Apartment (NYSE: MAA), Equity Lifestyle Properties (NYSE: ELS), American Campus Communities (NYSE: ACC), Colonial Properties (NYSE: CLP), American Capital Agency (Nasdaq: AGNC), Sun Communities (NYSE: SUI), Associated Estates (NYSE: AEC), PennyMac Mortgage (NYSE: PMT), Two Harbors (AMEX: TWO).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Catastrophe Abroad Supports Lower Mortgage Rates at Home

Real Estate

The sky is falling, but so are mortgage rates. The catastrophic earthquake that struck at the heart of the third largest economy in the world has had a profound impact upon mortgage rates, and thus adds a new support to the spring housing market.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers: NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: PNC, NYSE: JPM, NYSE: BBT, NYSE: CIT, NYSE: BKU, Nasdaq: UBSI, NYSE: BK, Nasdaq: MBFI, NYSE: AF, NYSE: NYB, Nasdaq: HCBK, Nasdaq: PBCT, Nasdaq: FNFG, Nasdaq: CFFN, Nasdaq: WFSL, Nasdaq: ISBC, Nasdaq: NWBI, Nasdaq: STSA, NYSE: OCN, NYSE: FBC, NYSE: PFS, Nasdaq: COLB, Nasdaq: KRNY, Nasdaq: BRKL, Nasdaq: DCOM, Nasdaq: FFIC, Nasdaq: DNBK, OTC: FCNCA.PK, NYSE: SNV, Nasdaq: UBSI, Nasdaq: HMPR, Nasdaq: WSBC, Nasdaq: CHCO, Nasdaq: SASR, OTC: FCBN.OB, Nasdaq: SCBT, NYSE: WL, Nasdaq: WSFS, Nasdaq: SBSI, Nasdaq: STEL, Nasdaq: UBSH, Nasdaq: EGBN, Nasdaq: FBNC, Nasdaq: ABCB, Nasdaq: TBBK, Nasdaq: FCBC, Nasdaq: CCBG, Nasdaq: FISI, Nasdaq: NKSH, Nasdaq: CZNC, Nasdaq: CHFN, Nasdaq: SBCF, Nasdaq: TIBB, Nasdaq: AMNB, Nasdaq: UCBI, Nasdaq: MBRG, Nasdaq: HBOS, Nasdaq: ZION, Nasdaq: EWBC, NYSE: CYN, NYSE: BOH, Nasdaq: SIVB, Nasdaq: WABC, Nasdaq: CATY, Nasdaq: UMPQ, Nasdaq: GBCI, Nasdaq: PCBC, Nasdaq: PACW, NYSE: WAL, OTC: FBAK.OB, Nasdaq: FIBK, Nasdaq: NARA, Nasdaq: WCBO, Nasdaq: TCBK, Nasdaq: TBNK, Nasdaq: WCBO, Nasdaq: BMRC, Nasdaq: HAFC, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ

Catastrophe Abroad Supports Lower Mortgage Rates at Home

As capital runs to safety due to the events in Japan, its destination is often US Treasuries. Increasing demand for treasuries raises the price and drops the yield. Also, the expected drop-off of the Japanese economy, the third largest globally, serves to relieve pressure from commodity prices and interest rates across the board.

So this week, when the Mortgage Bankers Association (MBA) reported on mortgage activity for the period ended March 11, average contracted rates on 30-year and 15-year fixed rate mortgages were reported lower to 4.79% (from 4.93%) and 4.03% (from 4.17%), respectively. Of course there is no morbid pleasure enjoyed from the suffering of others, but housing investors should still note that this does serve to support the American housing market nonetheless.

For the week measured, the Market Composite Index (of mortgage activity) still fell fractionally, by 0.7% on a seasonally adjusted basis. Yet, the Refinance Index increased 0.9% on the rate change, and now stands at a level not seen since December 2010. Purchase Activity, which is less nimble, still fell by 4.0% in the reported period. The refinance share of the mortgage market increased to 66.4%, from 65.5% a week earlier.

As the weight of the Japanese economic stumble is born, rates should continue to benefit, and thus, the American spring fling for housing gains a bit of energy. So, even despite today's weak Housing Starts data for the month of February, there's a factor working in the favor of housing today that was not a part of the equation last week.



Editor's Note: Article should interest investors in Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), BB&T (NYSE: BBT), CIT (NYSE: CIT), Bank United (NYSE: BKU), First Citizens (OTC: FCNCA.PK), Synovus (NYSE: SNV), United Bankshares (Nasdaq: UBSI), Hampton Roads Bankshares (Nasdaq: HMPR), WesBanco (Nasdaq: WSBC), City Holding (Nasdaq: CHCO), Sandy Spring (Nasdaq: SASR), First Citizens (OTC: FCBN.OB), SCBT Financial (Nasdaq: SCBT), Wilmington Trust (NYSE: WL), WSFS Financial (Nasdaq: WSFS), Southside Bancshares (Nasdaq: SBSI), Stellar One (Nasdaq: STEL), Union First Market (Nasdaq: UBSH), Eagle Bancorp (Nasdaq: EGBN), First Bancorp (Nasdaq: FBNC), Ameris (Nasdaq: ABCB), The Bancorp (Nasdaq: TBBK), First Community (Nasdaq: FCBC), Capital City (Nasdaq: CCBG), Financial Institutions (Nasdaq: FISI), National Bankshares (Nasdaq: NKSH), Citizens & Northern (Nasdaq: CZNC), Charter Financial (Nasdaq: CHFN), Seacoast Banking (Nasdaq: SBCF), TIB Financial (Nasdaq: TIBB), American National (Nasdaq: AMNB), United Community (Nasdaq: UCBI), Middleburg Financial (Nasdaq: MBRG), Heritage Financial (Nasdaq: HBOS), Zions Bancorp (Nasdaq: ZION), East West Bancorp (Nasdaq: EWBC), City National (NYSE: CYN), Bank of Hawaii (NYSE: BOH), SVB Financial (Nasdaq: SIVB), Westamerica (Nasdaq: WABC), Cathay General (Nasdaq: CATY), Umpqua (Nasdaq: UMPQ), Glacier Bancorp (Nasdaq: GBCI), Pacific Capital (Nasdaq: PCBC), PacWest (Nasdaq: PACW), Western Alliance (NYSE: WAL), First National Alaska (OTC: FBAK.OB), First Interstate Bancsystem (Nasdaq: FIBK), Nara (Nasdaq: NARA), West Coast (Nasdaq: WCBO), TriCo (Nasdaq: TCBK), Territorial (Nasdaq: TBNK), Washington Banking (Nasdaq: WCBO), Bank of Marin (Nasdaq: BMRC), Hanmi (Nasdaq: HAFC), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), United Bankshares (Nasdaq: UBSI), Bank of New York Mellon (NYSE: BK), MB Financial (Nasdaq: MBFI), Astoria Financial (NYSE: AF), New York Community (NYSE: NYB), Hudson City (Nasdaq: HCBK), People’s United (Nasdaq: PBCT), First Niagra (Nasdaq: FNFG), Capitol Federal (Nasdaq: CFFN), Washington Federal (Nasdaq: WFSL), Investor’s Bancorp (Nasdaq: ISBC), Northwest Bankshares (Nasdaq: NWBI), Sterling Financial (Nasdaq: STSA), Ocwen (NYSE: OCN), Flagstar (NYSE: FBC), Provident (NYSE: PFS), Colombia Banking (Nasdaq: COLB), Kearny (Nasdaq: KRNY), Brookline (Nasdaq: BRKL), Dime Community (Nasdaq: DCOM), Flushing Financial (Nasdaq: FFIC), Danvers (Nasdaq: DNBK).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Builder Confidence Gains in March 2011

Real Estate

The National Association of Home Builders' latest survey produced a slightly better Housing Market Index (HMI) for March 2011. Still, the result in absolute terms continues to reflect poorly for housing. That said, I think the makeup of the survey itself serves to skew the reading, and dampens an important message.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Builder Confidence Gains in March 2011

The HMI gained a point, to a reading of 17, showing slightly improved builder confidence in March 2011. The subtle improvement reflects the best absolute position for the index since May of 2010, when the market was still benefiting from the First-Time Homebuyer Tax Credit. Like many other economic surveys, the HMI measures current conditions and future expectations, and all of this month's overall improvement was driven by hope for a better tomorrow.

The component index gauging expectations for the forward six month span gained 2 points, rising to a mark of 27. Prospective buyer traffic was reported about the same, and still scarce, with that component index sitting at a reading of 12. The index measuring current sales conditions stuck at 17. Considering that the threshold for a positive market is a reading of 50, not one of the measures reflects anywhere near a positive situation in absolute terms. That said, the stock market rewards change and increase to the rate of change, so the improvement is still important to a degree.

Also, in recent months, I advised that the Housing Market Index is skewed by the small builder inclusive makeup of the National Association of Home Builders, which is important for an accurate accounting, but misleads stock investors. Again the survey included an interview of one such smaller builder, who pointed out ongoing difficulties with attaining credit. If a small builder cannot attain credit, he is significantly less likely to build homes. The larger companies and especially the publicly traded builders in the market have wider access to capital that reaches beyond bank borrowing. I have talked about how this will help publicly traded players take market share in the early stages of housing recovery.

So, with smaller builders feeling the heat more acutely than the larger ones, and with their heavy inclusion in this index, the HMI has a natural bias to the negative end. Over recent months, much of the chatter from the executives who run the large publicly traded builders has offered news of better ordering trends than is reflected by the HMI.

Indeed, the weight of lender-owned shadow inventory and the ongoing effects of distressed properties on pricing and on the supply/demand equation are important, but population aging and graduation into the buyer pool, and population growth, also help to raise demand. As the economy improves, and employment with it, we must accept that at some point housing will grow and housing stocks will profit.

Most of the major forecasters of the real estate market are forecasting growth (from tough bottoms) this year. Just as the bubble was built by euphoria, negative sentiment seems to me overdone now. For these reasons, I am looking for homebuilder shares to record a good year for 2011. Today the industry is mostly higher, with Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV) and Pulte (NYSE: PHM) up fractionally; DHI (NYSE: DHI) up 1.2% and K.B. Home (NYSE: KBH) down fractionally.



Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Mortgage Activity Dips BUT Housing Opportunity Prime

Real Estate Analysis

Long rates subsided some last week, but mortgage activity still tailed off a bit. While the long-term outlook for rates seems to point to rise, now may be an opportune time to buy your home.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers: NYSE: BAC, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: SRS, NYSE: URE, NYSE: IGR, NYSE: XIN, Nasdaq: RYHRX, Nasdaq: TRREX, NYSE: TOL, NYSE: HOV, NYSE: DHI, NYSE: BZH, NYSE: LEN, NYSE: KBH, NYSE: PHM, NYSE: NVR, NYSE: GFA, NYSE: MDC, NYSE: RYL, NYSE: MTH, NYSE: BHS, NYSE: SPF, NYSE: MHO, AMEX: OHB, NYSE: VNQ, NYSE: PNC, NYSE: JPM, Nasdaq: HOFT, NYSE: ETH, NYSE: PIR, NYSE: WSM, NYSE: HD, NYSE: LOW, AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Nasdaq: AVTR, NYSE: AIV, NYSE: EQR, NYSE: AVB, NYSE: UDR, NYSE: ESS, NYSE: CPT, NYSE: SNH, NYSE: BRE, NYSE: HME, NYSE: MAA, NYSE: ELS, NYSE: ACC, NYSE: CLP, Nasdaq: AGNC, NYSE: SUI, NYSE: AEC, NYSE: PMT and AMEX: TWO, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ

Mortgage Activity Dips, but Housing Opportunity Prime

The Mortgage Bankers Association reported on mortgage activity through the week ending February 25 today. While the average contracted fixed rates on 30-year and 15-year fixed rate mortgages fell, mortgage activity still decreased in the week measured.

The average contracted rate on 30-year mortgages fell to 4.84%, from 5.0% the week before, and 15-year mortgage rates dropped to 4.17%, from 4.28%. When rates fall, mortgage activity usually rises, especially in refinancing transactions. This week, the Market Composite Index of mortgage activity declined 6.5% on a seasonally adjusted basis. The Purchase Index, which measures mortgages taken out on residential structure acquisitions, fell by 6.1% on a seasonally adjusted basis (3.5% unadjusted).

A simple perspective of the Refinance Index would have expected to see an improvement in this kind of activity this week. However, as rates have seen an extended period much lower than current levels, a relatively low number of debtors remain to benefit through refinancing at current rates. Thus, the Refinance Index also declined by 6.5% this latest week. It will take much lower rates to spur a burst in refinancing activity in the near-term. Refinances accounted for a smaller amount of total applications this past week as well, dropping to 64.9%, from 65.7%.

The four-week moving average of activity also highlights a soft current market, with the Market Index down 2.5% through that span. Both purchase and refinance activity were down at levels nearly equally to the composite index through the period as well (Purchases down 2.2%; Refis down 2.7%).

We can venture to say why activity is down generally, and many are blaming rising gasoline prices. Theories weigh that since the cost of transportation is rising, speculative and prospective activity is being nixed by cost conscious consumers. One might add, and I am, that the draw of interest in global unrest has Americans glued to their televisions and gadgets, watching history unfold before them.

Influential bond investor Bill Gross just published his monthly insights, within which he discusses the possibility of Treasury Yields rising once quantitative easing concludes. Inflation and other risks and threats are poised to pressure all lending rates in the months and years ahead. Home prices have continued to ease in recent months and are nearing recently marked bottoms. For these reasons, I would have to agree with other voices pointing to the current housing market as perhaps best (maybe best of worst) to buy a home in for those prepared to, when considering potentially rising financing costs.



Editor's Note: Article should interest investors in Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), UltraShort Real Estate ProShares (NYSE: SRS), Ultra Real Estate ProShares (NYSE: URE), ING Clarion Global Real Estate Income Fund (NYSE: IGR), Xinyuan Real Estate Co. (NYSE: XIN), Rydex Real Estate Fund H (Nasdaq: RYHRX), T. Rowe Price Real Estate Fund (Nasdaq: TRREX), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), D.R. Horton (NYSE: DHI), Beazer Homes (NYSE: BZH), Lennar (NYSE: LEN), K.B. Homes (NYSE: KBH), Pulte Homes (NYSE: PHM), NVR Inc. (NYSE: NVR), Gafisa SA (NYSE: GFA), MDC Holdings (NYSE: MDC), Ryland Group (NYSE: RYL), Meritage Homes (NYSE: MTH), Brookfield Homes (NYSE: BHS), Standard Pacific (NYSE: SPF), M/I Homes (NYSE: MHO), Orleans Homebuilders (AMEX: OHB), Vanguard REIT Index ETF (NYSE: VNQ), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), Hooker Furniture (Nasdaq: HOFT), Ethan Allen (NYSE: ETH), Pier 1 Imports (NYSE: PIR), Williams Sonoma (NYSE: WSM), Home Depot (NYSE: HD), Lowes (NYSE: LOW), AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Avatar Holdings (Nasdaq: AVTR), Apartment Investment & Management (NYSE: AIV), Equity Residential (NYSE: EQR), Avalonbay Communities (NYSE: AVB), UDR Inc. (NYSE: UDR), Essex Property Trust (NYSE: ESS), Camden Property Trust (NYSE: CPT), Senior Housing Properties (NYSE: SNH), BRE Properties (NYSE: BRE), Home Properties (NYSE: HME), Mid-America Apartment (NYSE: MAA), Equity Lifestyle Properties (NYSE: ELS), American Campus Communities (NYSE: ACC), Colonial Properties (NYSE: CLP), American Capital Agency (Nasdaq: AGNC), Sun Communities (NYSE: SUI), Associated Estates (NYSE: AEC), PennyMac Mortgage (NYSE: PMT), Two Harbors (AMEX: TWO).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Why Lacking Home Builder Confidence Conflicts with Anecdotal Evidence of Traffic

Housing Analysis

The latest take of builder confidence indicates it remains in the doldrums, despite recent anecdotal evidence otherwise. We suspect the difference is due to the inclusion of many small builders in the NAHB survey, and so the data here should not reflect some of the traffic pickup larger builders have reported.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers: NYSE: BAC, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: SRS, NYSE: URE, NYSE: IGR, NYSE: XIN, Nasdaq: RYHRX, Nasdaq: TRREX, NYSE: TOL, NYSE: HOV, NYSE: DHI, NYSE: BZH, NYSE: LEN, NYSE: KBH, NYSE: PHM, NYSE: NVR, NYSE: GFA, NYSE: MDC, NYSE: RYL, NYSE: MTH, NYSE: BHS, NYSE: SPF, NYSE: MHO, AMEX: OHB, NYSE: VNQ, NYSE: PNC, NYSE: JPM, Nasdaq: HOFT, NYSE: ETH, NYSE: PIR, NYSE: WSM, NYSE: HD, NYSE: LOW, AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Nasdaq: AVTR, NYSE: AIV, NYSE: EQR, NYSE: AVB, NYSE: UDR, NYSE: ESS, NYSE: CPT, NYSE: SNH, NYSE: BRE, NYSE: HME, NYSE: MAA, NYSE: ELS, NYSE: ACC, NYSE: CLP, Nasdaq: AGNC, NYSE: SUI, NYSE: AEC, NYSE: PMT and AMEX: TWO, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ

Why Lacking Home Builder Confidence Conflicts with Anecdotal Evidence of Traffic

The National Association of Home Builders (NAHB) issued its monthly Housing Market Index (HMI) for February. The HMI stuck at 16 for the fourth month in a row, which is confounding if you have been following the chatter from the large builders. However, I think I understand why there is a variance between the two.

The NAHB surveys builders of all sorts, including large and small. Well, there is a big difference between the large builders and the small ones, and that is access to capital. Large publicly traded homebuilders like Toll Brothers (NYSE: TOL), K.B. Home (NYSE: KBH), D.R. Horton (NYSE: DHI), Beazer Homes (NYSE BZH), Hovnanian (NYSE: HOV) and others can raise money in the capital markets. Thus, these larger builders have more flexibility than the smaller private firms, who rely almost solely on banks for important construction loans. This limitation, given the current real estate environment, is a significant disadvantage for small builders. I expect that this is the reason why they are reporting back about a harsher operating environment than the news we hear from the big builders, which have noted improvement.

The HMI has three component indexes, and two of the three showed improvement through the February recording date. Current Sales Conditions was noted better, with that component index up two points to a mark of 17. The reading that measures builders' sales expectations for the next six months also gained in February, rising one point to a mark of 25. The component that measures traffic of prospective buyers stayed put at 12. Small builders do not see traffic, because they are less likely than large builders to have active sample homes in the current environment; and they are going to have fewer of them, which could also be skewed to poorer markets. Something certainly does not add up. Last week, even as Beazer Homes (NYSE: BZH) reported a poor fiscal first quarter, its CEO still noted a 50% sequential month increase in new home orders in January, and said the rate was about equal to the prior year.

Some of the commentary reported by the NAHB is telling as well. One respondent complained that, "... an extremely tight lending environment continues to make it almost impossible to obtain credit for viable new and existing projects, and most do not see that situation improving anytime soon." While certainly true, this illustrates the composition of the NAHB survey, and its significant inclusion of small builders.

Therefore, the NAHB survey's HMI Index should lag in showing the recovery that larger, publicly traded builders will report first. Since we can only trade the shares of publicly traded companies, this report gets in the way of our trading profits. It blurs the reading of the situation with noise and knots up decision making, which might lead investors to miss the recovery in those shares.



Editor's Note: Article should interest investors in Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), UltraShort Real Estate ProShares (NYSE: SRS), Ultra Real Estate ProShares (NYSE: URE), ING Clarion Global Real Estate Income Fund (NYSE: IGR), Xinyuan Real Estate Co. (NYSE: XIN), Rydex Real Estate Fund H (Nasdaq: RYHRX), T. Rowe Price Real Estate Fund (Nasdaq: TRREX), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), D.R. Horton (NYSE: DHI), Beazer Homes (NYSE: BZH), Lennar (NYSE: LEN), K.B. Homes (NYSE: KBH), Pulte Homes (NYSE: PHM), NVR Inc. (NYSE: NVR), Gafisa SA (NYSE: GFA), MDC Holdings (NYSE: MDC), Ryland Group (NYSE: RYL), Meritage Homes (NYSE: MTH), Brookfield Homes (NYSE: BHS), Standard Pacific (NYSE: SPF), M/I Homes (NYSE: MHO), Orleans Homebuilders (AMEX: OHB), Vanguard REIT Index ETF (NYSE: VNQ), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), Hooker Furniture (Nasdaq: HOFT), Ethan Allen (NYSE: ETH), Pier 1 Imports (NYSE: PIR), Williams Sonoma (NYSE: WSM), Home Depot (NYSE: HD), Lowes (NYSE: LOW), AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Avatar Holdings (Nasdaq: AVTR), Apartment Investment & Management (NYSE: AIV), Equity Residential (NYSE: EQR), Avalonbay Communities (NYSE: AVB), UDR Inc. (NYSE: UDR), Essex Property Trust (NYSE: ESS), Camden Property Trust (NYSE: CPT), Senior Housing Properties (NYSE: SNH), BRE Properties (NYSE: BRE), Home Properties (NYSE: HME), Mid-America Apartment (NYSE: MAA), Equity Lifestyle Properties (NYSE: ELS), American Campus Communities (NYSE: ACC), Colonial Properties (NYSE: CLP), American Capital Agency (Nasdaq: AGNC), Sun Communities (NYSE: SUI), Associated Estates (NYSE: AEC), PennyMac Mortgage (NYSE: PMT), Two Harbors (AMEX: TWO).

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