Housing bubble data point
This matters greatly. When companies like dataQuick release SF area price data, they rely on the SF Assessor's office for the data. Last month they announced that housing prices dropped 0.6%.
Considering that homes have risen 50% since 1/04 (31 months), that 0.6% drop is noise. In fact, SF area looks pretty resilient to the market crashing that we read about in Boston and San Diego (down 6% from the peak 11/05).
Or has it? The data for SF is 6 months old because the Assessor's have too few people to file the massive volume of data. That explains the discrepancy between the reported price movements and the anecdotal price drops of 10%.
So what happens next?
Given the rapid deceleration in housing sales volume, the Assessors will catch up. That will artificially inflate sales volume until for a while. Price drops will start to show up and will look more sudden.
In the meantime, be aware that things are actually much worse than they appear.
posted by Andrew at
9:26 PM
5 Comments:
NTRI seems to be at an attractive price given the explosive growth that lays ahead. Could be a good play over the next couple of months into the next earnings cycle. Comments? :)
So given the housing market is going to tumble (thanks for all the data showing this). what do we invest in to take advantage of this??? It would seem that buying PUTS in some of the housing stocks would seem the best choice, but at what terms (length, price, etc).. Any comments?
I can't sell my townhouse. It is only $539,000. It has been on the market 12 days. Where are all those Google millionaires?
NTRI hasn't executed on its marketing plans. I am sure that they are doing well, but the clock is running down. They feel fairly valued.
I have been predicting a housing downfall since last year.
Investors should move out of any construction related company, bank, or materials company.
They should go long on pawn shops (EZPW, CSH) - the laid off construction workers and real estate companies will be selling their toys.
It isn't too late to short the home builders (TOL, HAF), the construction companies (BMHC), and the suppliers (Home Dpeot, Lowes, Florida Rock, etc).
I do believe home furnishing companies are set to drop (CPWM, ETH, WHR).
Sothebys is another sitting duck.
Banks will be guilty by association. Every bank will be losing money in a crash.
For any of these, the pain will really kick in around December when expectations about a soft landing turn to a crash. I would be suggest going out to the January timeframe. Strike Price - 10% below where the current price is. That gives you more leverage.
Use CPWM as an example. When the market realized what was happening - they hit CPWM by 21% in one day. Your mission is to give yourself enough time for that effect on these other stocks
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