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The Wall Street Greek blog is the sexy & syndicated financial securities markets publication of former Senior Equity Analyst Markos N. Kaminis. Our stock market blog reaches reputable publishers & private networks and is an unbiased, independent Wall Street research resource on the economy, stocks, gold & currency, energy & oil, real estate and more. Wall Street & Greece should be as honest, dependable and passionate as The Greek.



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Friday, May 20, 2016

Seeing Green Shoots in this Homebuilder Measure

green light
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).

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Friday, April 01, 2016

Real Estate - Fresh Data Dispels Housing Concern

summer
A sharp decrease in existing home sales for February recently raised concern about the state of the real estate market. I believe the cause of the decrease was anomalous in nature, and data reported on Wednesday seems to confirm my view. I believe this fresh data along with a report from earlier in the week should dispel concern about housing. See more of this report here: Fresh Data Dispels Concern About Housing.

Housing Relative Shares
03-31-16 Approx. Noon
SPDR S&P 500 (NYSE: SPY)
+0.2%
SPDR S&P Homebuilders (NYSE: XHB)
+0.7%
iShares US Real Estate (NYSE: IYR)
+0.5%
D.R. Horton (NYSE: DHI)
+0.2%
K.B. Home (NYSE: KBH)
+2.6%
J.P. Morgan Chase (NYSE: JPM)
-0.1%
Wells Fargo (NYSE: WFC)
+0.1%
MGIC Investment (NYSE: MTG)
+0.5%
Radian Group (NYSE: RDN)
+0.2%
Investors Title (Nasdaq: ITIC)
+0.0%
Home Depot (NYSE: HD)
+0.5%
iShares Mortgage Real Estate (NYSE: REM)
+0.7%
Invesco Mortgage Capital (NYSE: IVR)
+1.6%
New Residential Investment (NYSE: NRZ)
+1.1%

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. This article should interest investors in residential REITs like American Campus Communities (NYSE: ACC), American Capital Agency (Nasdaq: AGNC), Annaly Capital (NYSE: NLY), Apartment Investment and Management (NYSE: AIV), Apollo Residential Mortgage (Nasdaq: AMTG), ARMOUR Residential REIT (NYSE: ARR), Associated Estates Realty (NYSE: AEC), AvalonBay Communities (NYSE: AVB), BRE Properties (NYSE: BRE), Camden Property Trust (NYSE: CPT), Campus Crest Communities (NYSE: CCG), Colonial Properties Trust (NYSE: CLP), CYS Investments (NYSE: CYS), Education Realty Trust (NYSE: EDR), Equity LifeStyle Properties (NYSE: ELS), Equity Residential (NYSE: EQR), Essex Property Trust (NYSE: ESS), Hatteras Financial (NYSE: HTS), Home Properties (NYSE: HME), Maxus Realty Trust (OTC: MRTI.PK), Mid-America Apartment Communities (NYSE: MAA), New York Mortgage Trust (Nasdaq: NYMT), PennyMac Mortgage Investment Trust (NYSE: PMT), Post Properties (NYSE: PPS), Senior Housing Properties Trust (NYSE: SNH), Sun Communities (NYSE: SUI), Two Harbors Investment (NYSE: TWO) and UDR (NYSE: UDR).

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Wednesday, March 30, 2016

Existing Home Sales Collapsed - The Reason Not to Worry

take it easy
Last week provided some eye-catching real estate data, namely a severe dip in existing home sales for February. The National Association of Realtors (NAR) reports the data and speculated that the meaningful decline might be due to the tight inventory situation. However, I see a temporary issue at play in February that has since corrected. I expect that signals that the pace of home sales will be restored in short time. Real estate investors can rest easy, as I see this year’s expansion for housing intact. See more on why you can rest easy about the decline in existing home sales.

Housing Relative Shares
Year-to-Date
SPDR S&P 500 (NYSE: SPY)
+0.2%
SPDR S&P Homebuilders (NYSE: XHB)
-3.2%
iShares US Real Estate (NYSE: IYR)
+1.2%
Pultegroup (NYSE: PHM)
+2.2%
Toll Brothers (NYSE: TOL)
-13.9%
Bank of America (NYSE: BAC)
-18.8%
Wells Fargo (NYSE: WFC)
-9.7%
MGIC Investment (NYSE: MTG)
-17.2%
Radian Group (NYSE: RDN)
-12.0%
Investors Title (Nasdaq: ITIC)
-8.6%
iShares Mortgage Real Estate (NYSE: REM)
-1.4%
Invesco Mortgage Capital (NYSE: IVR)
-2.1%
New Residential Investment (NYSE: NRZ)
-3.7%

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).

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Friday, December 04, 2015

Media Wrong Again - This Time on Real Estate

no
During my time writing about the financial markets, I’ve often found myself correcting miscues of the business media. The most recent misread happened on Monday morning when the monthly Pending Home Sales data was reported poorly by both the business television media and the press. Thankfully, I don’t mind cleaning up the mess for my followers to better understand the true state of things, in this case for real estate. Where the media said the data showed a disappointing deterioration, I found the state of affairs was generally just fine. Though, there was one issue of concern. See the report here.

Real Estate Relative Shares
Monday 11-30-15
SPDR S&P 500 (NYSE: SPY) for Comparison
-0.4%
iShares U.S. Real Estate (NYSE: IYR)
-0.6%
Real Estate Select Sector SPDR (NYSE: XLRE)
+0.2%
SPDR Homebuilders ETF (NYSE: XHB)
-1.2%
MGIC Investment Corp. (NYSE: MTG)
+0.5%
PulteGroup (NYSE: PHM)
-0.9%
Investors Title (Nasdaq: ITIC)
NM
J.P. Morgan Chase (NYSE: JPM)
-0.7%

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. This article should interest investors in The New York Times (NYSE: NYT), Gannett Co. (NYSE: GCI), A.H. Belo (NYSE: AHC), Daily Journal (NYSE: DJCO), Journal Communications (NYSE: JRN), Lee Enterprises (NYSE: LEE), Media General (NYSE: MEG), E.W. Scripps (NYSE: SSP), McClatchy Co. (NYSE: MNI), The Washington Post (NYSE: WPO), Dex One (Nasdaq: DEXO), Martha Stewart Living (NYSE: MSO), Meredith (NYSE: MDP), Private Media (Nasdaq: PRVT), Reed Elsevier (NYSE: ENL), Reed Elsevier Plc (NYSE: RUK), Dolan Co. (NYSE: DN), Disney (NYSE: DIS), DreamWorks Animation (NYSE: DWA), Cinemark Holdings (NYSE: CNK), Regal Entertainment (NYSE: RGC), RealD (NYSE: RLD), Lions Gate Entertainment (NYSE: LGF), Rentrak (Nasdaq: RENT), Carmike Cinemas (Nasdaq: CKEC), LYFE Communications (OTC: LYFE.OB), New Frontier Media (Nasdaq: NOOF), Public Media Works (OTC: PUBM.OB), Independent Film Development (OTC: IFLM.OB), Point 360 (Nasdaq: PTSX), Seven Arts Pictures (Nasdaq: SAPX), Affinity Medianetworks (OTC: AFFW.OB), Time Warner (NYSE: TWX), News Corp. (Nasdaq: NWSA), Vivendi (Paris: VIV.PA), Liberty Starz Group (Nasdaq: LSTZA), McGraw-Hill (NYSE: MHP), Pearson Plc (NYSE: PSO), John Wiley & Sons (NYSE: JW-A, NYSE: JW-B), Scholastic (Nasdaq: SCHL), Courier (Nasdaq: CRRC), Noah Education (NYSE: NED), Peoples Educational Holdings (Nasdaq: PEDH), Barnes & Noble (NYSE: BKS), Amazon.com (Nasdaq: AMZN) and Books-A-Million (Nasdaq: BAMM).

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Don't Sweat Slippage in this Housing Measure

reading
This week’s report on builder sentiment showed slippage in November, and the Housing Market Index (HMI) missed economists’ expectations as well. The index still reflects positive sentiment among builders, but investors are starting to worry about housing given a stall seen in recent economic data and the outlook for higher interest rates. Here’s why I’m not so worried. See the housing report here.

Housing Relative Shares
52 Week Change
SPDR S&P Homebuilders (NYSE: XHB)
+9.6%
MGIC Investment (NYSE: MTG)
+2.7%
Investors Title (Nasdaq: ITIC)
+12%
Bank of America (NYSE: BAC)
+3.3%
PulteGroup (NYSE: PHM)
-12%
Toll Brothers (NYSE: TOL)
+6.2%
D.R. Horton (NYSE: DHI)
+26%

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).

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Tuesday, July 26, 2011

Don't Sweat Softer New Home Sales

home under construction
New Home Sales were reported lower in June, but I suggest you not read too much into the report. Sales were expected to be slow, and the new home market is seen lagging broader recovery. That said, there was also plenty of good news for those willing to read the report or Wall Street Greek.

nyc real estateOur 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.

Don't Sweat Softer New Home Sales



New Home Sales ran at an annual rate of 312K in June, down just slightly from May’s revised rate of 315K. Economists surveyed by Bloomberg had been forecasting for a sales pace between 309K and 342K, with the consensus sitting at 321K. Thus, the report was relatively disappointing, but the data effectively shows no change in activity nonetheless. While that was also less than enthusing, it was expected, as the new home market is especially burdened by the heavy inventory of distressed properties on the market and held by banks in so-called shadow inventory.

Distressed property inventory has driven down home prices generally, and put a good number of relatively new properties for sale below replacement cost or the price of a new home. Given the prudent management of most large better-capitalized builders and the capital-strapped positions of the smaller ones; and most importantly a generally light demand for housing in an uncertain economic environment, new home sales are not going to lead the real estate recovery. However, just as I’ve recently written, housing is on the road to recovery in a broader sense.

A closer inspection of the data shows June sales softness in the Northeast (-16%) and West (-13%) was partly offset by strength in the Midwest (+9.5%) and South (+3.4%). Good news was also seen in housing inventory, which showed that despite the slower pace of sales, new home inventory fell to 6.3 months from 6.4 months supply in May. The number of homes for sale continues to ease, which is a necessary pain to find solid support for the next growth market for new homes. At this level of activity, when new home demand revives, it should be akin to a big blue fish taking a hook - there’s no doubt about it when it happens.

More good news was found in the home price data. The median price of a new home increased 5.8% in June, to 235,200. The average price of a new home increased 1.8% to 269K. And while the quick-to-print popular press and investors are crying over S&P Case Shiller data for May that shows year-over-year price decline, they’re missing year-over-year price increase seen in June via this report. It’s pretty substantial too, with the median price of a home up 7.2% on a year-to-year basis.

So in conclusion, I suggest readers and real estate players not lose any sleep over June’s New Home Sales Slippage. All your nightmares should be about our Congress’ potential failure to raise the debt ceiling before a major rating agency downgrades American credit. I even continue to favor homebuilder shares for long-term investment, as when recovery is clearly seen, the stocks should outperform the broader market. However, I must continue to qualify these recommendations and forecasts on the passage of debt ceiling legislation and the maintenance of the AAA rating for the United States. A scenario that includes a failure to do so is one wildly different than most living Americans can ponder in my view.

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.

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Thursday, July 21, 2011

Real Estate Recovery on Track

real estate recovery
Many in the popular press and a good number of analysts saw this week’s housing data as either mixed or negative. That had a lot to do with the weak Existing Home Sales Report, but in my view, which is inclusive of that data, the week’s news was purely positive. In fact, I see the real estate recovery on track. Allow me to explain...

real estate expertOur 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.

Real Estate Recovery on Track



The current week offered several housing data points, including the Housing Market Index (home builder sentiment), Housing Starts (new construction), Existing Home Sales, Weekly Mortgage Activity and the FHFA House Price Index. Four of five reports showed improving trends, though each report showed the usual low level of activity on an absolute basis.

Students of securities markets will recall that it is the forward outlook which matters to markets, and so change in trend or the anticipation of it acts as catalyst to start securities higher. My articles this year have called for and reported that change in trend, oftentimes against the tide of overwhelmingly negative real estate market sentiment. That’s the same tide I faced on the way in, when I was forecasting the real estate bubble implosion and financial crisis.

Housing Market Index
Working from first to most controversial: We covered the Housing Market Index independently in an article earlier this week. We reported that homebuilder confidence, which is what is measured by the index, improved. We noted that the gains came solely on prospective hope for the next six months, and we theorized that homebuilders were simply looking forward to the improving real estate market that most economists and trade organizations are openly forecasting for the second half of this year. In the past, we have stated that even while new home activity should lag, the stocks of homebuilders might lead if real estate were to turn toward growth and price recovery, which is what we see through the second half of the year. Certainly, we view the current real estate environment as attractive for home purchase, barring new catastrophic event, which by the way is also not lacking in potential.

Housing Starts
Housing Starts, which measure the beginning of new construction, were reported next and offered what we thought was just delightful news for real estate investors. Housing Starts rose 14.6% in June, to an annual pace of 629K. The rate of Starts in this year’s period also marked an impressive 16.7% increase over the June 2010 pace. We expected some improvement here, given the comparison against the prior year period within which the First-Time Homebuyer Tax Incentive had just become ineffectual. New construction tied to the deal would have had to have begun earlier than June, which was when sales were to have been completed.

More good news arrived in Building Permitting activity, which rose 2.5% over May, to 624K, and stood 6.7% over the prior year period. This offered some evidence that Starts would remain higher than the prior year period in the months ahead as well. Finally, single family home starts (+9.4%) and permits (+0.2%) both rose over May. The single-family structure market is often viewed as the purest metric of the real estate market. Thus, Housing Starts data clearly offered a positive catalyst for real estate and housing stock investment in my view.

Weekly Mortgage Activity
Jumping over the Existing Home Sales data for now, we note that Weekly Mortgage Activity improved dramatically in the period ending July 15. However, the move was due to anomaly in my view. Last week, we theorized that the holiday period was not adequately adjusted for, as seasonal adjustments accounted for the July 4th holiday, but could not perfectly account for the soft business activity that precedes and immediately follows the holiday. That can be seen clearly in the data, as the unadjusted Market Composite Index of mortgage activity gained 43.9%, but still rose 15.5% on an adjusted basis.

We believe we were proven correct this week in our holiday impact theorizing, as both Mortgage Activity and Weekly Jobless Claims moved in counter directions to the prior week, seemingly balancing out the impact from the prior week change. Mortgage activity mysteriously gained robustly over the immediately preceding week despite mortgage rates basically holding steady. Average contracted rates on 30-year and 15-year fixed rate mortgages improved to 4.54% (from 4.55%) and 3.66% (from 3.68%). The Mortgage Bankers Association’s Refinance Index improved 23.1%, while the adjusted Purchase Index, which measures mortgage applications tied to the purchase of a home, declined fractionally. Due to the holiday, we cannot give weight to this weekly data point, but it has been proven that the prior week’s bad news was equally negligible.

FHFA House Price Index
On Thursday, the Federal Housing Finance Agency (FHFA) reported its House Price Index for May. The FHFA reported that American house prices rose 0.4% in May, marking the second consecutive month of price increase. The index benefited from a downgrading of April’s average pricing, making that month’s rise only 0.2%, versus the 0.8% increase initially reported. Thus, the bar was lowered for May, but that doesn’t change the fact that home prices have increased for two months in a row. While prices varied across the nine regions measured, only 2 of those posted price decline in May. This is clearly good news, and supports my case that the bottom in housing has just been established (barring catastrophic event, like S&P downgrading the American sovereign rating).

Existing Home Sales
The only real estate report that offered deterioration in data this week was the Existing Home Sales Report for June. Unfortunately, this was the most important report, based on the vision of the masses. Worse yet, the report was misunderstood, and drove a decline in housing stocks Thursday that countered earlier week strength. However, the drop in the SPDR S&P Homebuilders (NYSEArca: XHB) was just $0.03 at the day’s close of trading, and the security is higher Thursday. So, clearly the market understood something differently than the popular press once it had a chance to analyze beyond the headline.

Looking at the report in more detail, and thinking about it a bit, leads one to realize the decline is not too weighty to the real estate outlook. The big reason why I say this is because the Existing Home Sales Report measures completed transactions. Thus, its 8.8% shortfall against the prior year count is due to the advantage gained a year ago; June of 2010 marked the final month for completed transactions to qualify for the First-Time Homebuyer Tax Break. Still, that doesn’t explain the month-over-month shortfall of 0.8%.

What does is the same factor that impeded April’s Pending Home Sales, the weather. April of 2011 was the rainiest month on record, and very likely kept home shoppers indoors. May’s Pending Sales showed nice improvement, but those would not likely be reflected in Existing Home Sales until July. June’s sales pace of 4.77 million was also impacted by multi-family structure sales weakness. Single-family home sales ran at about the same pace as in May, about 4.24 million. Existing condominium and co-op sales fell 7.0% from May. Finally, cancellations impacted the figure, and this may be the result of a pending (Oct. 1) unfavorable change to FHA loan limits that some banks may be already implementing. This relative legislation needs to be renewed if Congress really wants real estate recovery.

Housing inventory increased to 9.5 months from 9.1 months in May, but this is impacted by the pace of sales, which was lower in June. It acts as the denominator in the calculation, and so the monthly supply figure is ratcheted up as a result. Good news was discovered within the pricing data, and it coincides with the data seen on a lag from Standard & Poor’s and the FHFA. The median existing single family home price was up 0.6% from a year ago, to roughly $184,600.

In conclusion, when considering that the dip in Pending Home Sales seen in April should have allowed for expectations for the decline in Existing Home Sales seen in June, then the housing data reported this week is absolutely positive. We saw price improvement, new construction growth, better sentiment among homebuilders, mortgage application improvement and we have good reason to expect June’s Existing Home Sales disappointment to prove short-lived. Thus, the data continues to come in supportive of my case for the bottom being already set in real estate. The real estate recovery is on track! However, I continue to qualify that statement with the risk notation that the environment should deteriorate dramatically if a catastrophic downgrade occurs to the American sovereign debt rating.

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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.

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Tuesday, July 19, 2011

Home Builder's Enthused by Economists' Forecasts

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The latest Housing Market Index data reported by the National Association of Home Builders (NAHB) in conjunction with Wells Fargo (NYSE: WFC) seems to reflect a more hopeful mood among residential builders. While this report does not yet illustrate a healing new home market, it still offers positive reinforcement for real estate prices and sales growth views.

MarkosOur 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’s Enthused by Economists’ Forecasts



After dipping three points in June, on spring buying season hopes that went unfulfilled, the Housing Market Index rose two points in July, to a mark of 15. It’s still a sad level on an absolute basis, as 50 marks break-even between good and bad conditions and expectations. Yet, as students of securities markets know, change in trend and velocity of growth matter to stock movement, so investors in the shares of home builders should also find the opportunity I see for hard real estate. That said, as far as the home builders go, I still believe nimble trading and selective stock investment are appropriate. In other words, stock performance may vary from builder to builder, especially around earnings season when reality is compared against hope. Still, generally, I also see rise for the industry’s shares in 2011, barring catastrophic U.S. government failure to pass debt ceiling legislation in time.

It should be understood that new construction may lag existing home sales growth, given the constraints that are now well-embedded in the marketplace (tight lending, distressed property inventory). Still, it appears to me that home builders are prospectively contemplating a housing outlook that is shifting from contraction to growth, albeit miniscule year-to-year appreciation from a low relative base of housing sales.

This seems apparent based on the details of the Housing Market Index Report, which shows builders reporting the traffic of prospective buyers at about the same level as in June (component index reading of 12). The important driver of the overall index gain is the same one that drove early year improvement, hope. The HMI component gauging expectations over the next six months jumped seven points to a mark of 22 in July. My feeling is that this also pulled the view of current conditions higher among builders, as that component inched upward two points to 15. So I think builders are well aware of the many economists and industry organization forecasts seeing a turn toward year-over-year sales growth in or around the second half of 2011.

As far as regional results go, the most confidence was found in the South and West parts of the nation. Each of the two regional indexes saw two point improvement, with the South doing a bit better at a mark of 17 and the West still languishing at 14. The Northeast actually posted a two point decline to a mark of 15, and the Midwest improved just a point to 12. So, the most prospective markets exhibited the greatest change in hope.

As always, I remind readers that this index includes many smaller builders who are in a tougher spot than large well-capitalized builders. Their mood is going to be inherently worse than the larger builders, yet their voice is loudly heard in this data. This must be kept in mind when looking at the absolute level of misery the readings announce. In conclusion, I view the positive change here the most important takeaway, and believe it is supportive of my case for improving home prices and home sales through the rest of the year, as it is based on informed survey participants. Finally, I continue to qualify all positive forecasts against the risk tied to the U.S. government’s negligent handling of our nation’s credit rating, which is tied to the debt ceiling legislation and pending default on debt payments.

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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.

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Wednesday, July 13, 2011

Beware the Unaccounted for Post Holiday Impact on Mortgage and Other Data

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The Mortgage Bankers Association (MBA) produced its Weekly Applications Survey this morning, which is a measure of mortgage applications. The MBA reported that in the week ending July 8, 2011 mortgage activity declined 5.1% from the immediately preceding period. But be careful, because there’s a fly in the ointment.

economy bloggerOur 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

Beware the Unaccounted for Post Holiday Impact on Mortgage and Other Data



The MBA’s Market Composite Index was adjusted to compensate for the July 4th holiday. Its adjusted index fell 5.1%, while the unadjusted measure dropped 24% because of the day off. While the holiday itself is accounted for by economic data counters, the lull in business activity that occurs the day after a long holiday is of course not captured and may be partly to blame for the weekly adjusted decline in mortgage activity.

Interest rates were certainly conducive to activity, as contracted rates on 30-year and 15-year fixed rate mortgages improved to 4.55% (from 4.69%) and 3.68% (from 3.79%) during the week. This should have been supportive to refinancing activity, but the holiday and also saturation of the refi market led the MBA’s Refinance Index to instead decline by 6.2% through the period.

Purchase activity, or mortgage applications tied to the purchase of a home, decreased 2.6% on a seasonally adjusted basis and was down 21.9% when not adjusting for the holiday. Again, I think the general malaise that impacts the days immediately following July 4th, which are not adjusted for, drove the softness.

Now the four-week moving averages of these measures should offer better insight, but those are also impacted by the week’s noise. That said, the four-week moving average for the seasonally adjusted Market Index was off 4.7% in this latest reporting. Refinance Activity led the trend, with a decline of 6.3%, while the four-week average for Purchase Activity eased 1.0%.

The take-away here is that because of the difficulty in adequately adjusting for holidays, we would be best served not to base any avoidance of real estate on this week’s mortgage activity data. Also, any economic data that compares sequential week periods should be likewise discounted. Instead we suggest investors look towards the longer term factors, trends and outlook, and assemble a mosaic basis for investment decision making.

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.

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Wednesday, July 06, 2011

Latest Days' Real Estate Malaise May Blind Your View of the Housing Turnaround

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Be careful or you may end up like the same cattle that got herded into capital loss when the housing bubble burst. The latest days' housing malaise may cause you to miss the housing turnaround now before you.

geniusOur 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.

Latest Days' Real Estate Malaise May Blind Your View of the Housing Turnaround



The Weekly Applications Survey, produced by the Mortgage Bankers Association (MBA), today offered bad news on the headline but a mixed message for those interested in a fuller read. I suppose that’s what you have me for...

The Mortgage Bankers Association’s weekly report of mortgage activity showed another decline. Last week’s data produced a decline as well, which came even despite improved mortgage rates. This week, a sharp spike in mortgage rates drove down refinancing activity and the overall metric. We suspect this nascent rising rate trend from a June trough could also be behind last week’s drop in mortgage activity, as the interest rate data are derived by a simple average of contracted fixed rate mortgages. The rise in rates likely began during the prior week period and affected activity then as well. Several resources we surveyed for daily mortgage rate trends turned up short (Freddie Mac (OTC: FMCC.OB)). While a decline in average contracted rates defined the period, where the weekend fell and other factors might still skew activity in a dynamic rate environment.

This week’s reported data reflects the period ending July 1. The MBA’s Market Composite Index fell 5.2% through the week, driven by refinancing fizzle. The Refinance Index declined 9.2%, as mortgage rates spiked higher. Average contracted rates on 30-year and 15-year fixed rate mortgages increased to 4.69% (from 4.46%) and 3.79% (from 3.64%), respectively. For those contemplating mortgage refinancing, that kind of change is a real turn-off.

Here’s the good news for the patient among you:

The MBA’s Purchase Index, which measures mortgage applications tied to the purchase of a home, rose 4.8% against the immediately preceding week on seasonally adjusted basis. Considering the direction of mortgage rates, it would seem there may be some pent-up demand in the housing market chasing rates now. After all, the same change in rates had two different impacts on the two different segments of the market, if it had any impact on the more determined purchasers of homes at all.

There was more good news for real estate enthusiasts found in the year-to-year comparison. The Purchase Index was up 11.7% versus the year ago period. Last week, we saw the Pending Home Sales Index achieve year-over-year growth and home price rise as well; and so we called the bottom for the real estate market. This latest year-over-year trend seen now in many data-points should also show up when second half Existing Home Sales data reach the wire. Recall that the Pending Index measures contract signings, and that closures occur one to two months afterward. This latest mortgage application data seems to offer evidence that housing is finding momentum, because it reflects applications for the purchase of homes sought in late June.

The one caveat we have is that last year’s comparable period now also reflects a deflated market that saw demand drawn forward by the tax-incentive provided by the federal government for first time buyers. Still, I believe natural drivers will allow for housing market growth thereafter. We remind readers that all bets are off if the American government drops the ball on the debt ceiling legislation or even if the euro-zone blows up… or some other catastrophe presents itself. Otherwise, there are natural drivers such as population growth, net job creation and housing affordability that should not be ignored when one gets too comfortable with the latest days’ real estate malaise.

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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).

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