Investing in Housing: Foreclosure of Dreams...
By Ian L. Cooper
Despite recent housing data bullishness, we’re not out of the woods yet. And like I’ve said in the past, please don’t even start looking for a housing bottom until spring 2008 and the very earliest. Do it now and you’re just spinning your wheels.
According to RealtyTrac, foreclosures shot up some 7% since February to 149,150 and were up some 47% since March 2006. That’s huge, and means there was one foreclosure for every 775 homes in the U.S. in a year.
Thankfully, the “foreclosure” effect on home values hasn’t hit “home.” But as the number of “forced sales,” continues, there’s the fear that home prices will suffer, and eventually, according to pessimistic crowds, the overall economy.
And there are even fears that the sub-prime market melee may force some big U.S. homebuilders toward Chapter 11 by 2008, according to Bloomberg.com. In fact, according to Ronald Greenspan, a lawyer and financial adviser (as referred to by Bloomberg.com), “The value of shareholder's equity for some companies equals or exceeds the value of the undeveloped land the companies have under contract. As the housing downturn continues, that land will fall in value.”
Don’t believe the hype. The worst, my friends, is far from over.
Take care,
Ian L. Cooper, Editor, Death Cross Trader
| |