13 replies to this topic

[.Blizzard]

CRISIS?

http://stockcharts.com/c-sc/sc?s=$REIT&p=W&b=3&g=0&i=p93806672267&r=8660.png

[eminimee]

but then you have things like this...VNO looks like it's rolling over...

..not to mention the hgx I've posted numerous times..

http://stockcharts.c...6097&r=2442.png

[IndexTrader]

What you're missing is that the "crisis" is centered in residential real estate (single family homes). This index has a heavy emphasis in commercial real estate (office buildings and apartment buildings). Vornado above for instance does nothing in residential real estate. Then there is Sam Zell's company Equity Office Properties, which operates 130mm approximately in office space around the country, and is currently being bought out. IndexTrader

[jawndissedi]

Residential investment leads, nonresidential follows:



Exhibit A is the purchase of Equity Office Properties, the country's biggest owner of office buildings, by the real-estate arm of the Blackstone Group, a private equity firm. What you need to know about this $36 billion deal is that 80 percent of the purchase price will be financed with debt, and that the "cap rate" -- the rate of return from next year's rental income -- is an estimated 5.5 percent.

What, exactly, does that mean?

First of all, it means that the lessons of the past five real estate crashes have, once again, been forgotten, and real estate has once again become a highly leveraged investment class. So, when the inevitable downturn finally happens and the price falls by more than 20 percent, there's a pretty good chance the value of the collateral will fall below the value of the loans, which in financial circles is considered a no-no. To make things even worse, it's a good probability that these are interest-only loans, which means that even in good times, the borrower is not paying down principal. -- Washington Post

Blackstone bid has since been raised to $38.3 billion -- you do the math. Not even with IT's money . . .

[IndexTrader]

Residential investment leads, nonresidential follows:

Are you short something in the REIT area?

IT

[jawndissedi]

Residential investment leads, nonresidential follows:

Are you short something in the REIT area?

IT

NDE

[briarberry]

New Home Sales adjusted for 30% cancellations

The figures aren't adjusted for cancellations
http://www.census.go...cellations.html

Jan. 9 (Bloomberg) -- D.R. Horton Inc., the largest U.S. homebuilder. Order cancellations fell to 33 percent from 40 percent in the fourth quarter
http://www.bloomberg...id=alZi3a_wcafo



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[jawndissedi]

New Home Sales adjusted for 30% cancellations

The figures aren't adjusted for cancellations
http://www.census.go...cellations.html

Jan. 9 (Bloomberg) -- D.R. Horton Inc., the largest U.S. homebuilder. Order cancellations fell to 33 percent from 40 percent in the fourth quarter
http://www.bloomberg...id=alZi3a_wcafo



.

Also consider vacancy rates, up 34% from Q405 to Q406:

Census data

[briarberry]

found this, just for reference

if the housing market is still weak in the summertime, I guess we'll all be worried



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[pdx5]

I think Index Traader has got it covered. Commercials are doing still OK because corporations are still doing OK. People are chasing yields and REIT's have very decent yields. And so do Junk bonds, but too close to Treasury yields IMO based on risk. As briarberry said, if the housing market does not recover by summer, we should be in worry mode.