– John Williams, Shadowstats.com I have written several articles property management companies in baltimore which explain why the true fundamentals of the housing market show that, after a bounce in home sales on account of a massive amount of the stimulus injected into the housing market by the Fed and the Government, the brief recovery is coming to an end and the bear market that started over five years ago is reasserting itself. Data on new home sales for August released today and by KB Homes ( KBH ) yesterday reinforce my thesis. On the basis of the latter, I used yesterday’s spike up in the homebuilder stocks established a short position in KBH stock to go along with my short position in DR Horton ( DHI ). The Census Bureau released new home sales for August (pdf link), which were reported to be at a seasonally adjusted, annualized pace of 421,000. This was an increase of 14.6% over July’s 390,000 seasonally adjusted annualized rate.
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Why The Real Estate Market Is Topping Out
Insane good, you ask, or insane bad? Well, Justsold! Things are
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Of course, the accommodative monetary policy adopted by the Federal Reserve has been the primary reason for the advance in home builds, sales, and selling pricesthe evidence behind the so-called housing market recovery. But be careful. Its true that the financing costs for homes could likely stay historically low for a few more years, which would help add support to the housing market. However, I feel there could be a sort of bubble on the horizon. Chart courtesy of http://www.StockCharts.com Let me explain. The upward move in the housing market has largely been driven by foreclosures, short sales, and very affordable mortgage rates. The problem now is that financing rates are not going to stay at these low levels indefinitely.
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