Best of the Week
Most Popular
1.Is the Stocks Bull Market Over? Dow Trend Forecast into End January 2015 - Nadeem_Walayat
2.Gold and Silver Stocks Apocalypse Now, Bear Market Review - Rambus_Chartology
3.NHS Baldrick Plan to Spread Ebola Across UK - Sheffield, Newcastle, Liverpool, London Hospitals - Nadeem_Walayat
4.Ebola Terror Threat Suicide Bio-Weapons Threatens Multiple 9/11's, Global Plague - Nadeem_Walayat
5.Second-Richest Man Says Mortgages Now a "No Brainer" - Dr. Steve Sjuggerud
6.Gold And Silver Still No End In Sight - Michael_Noonan
7.NHS Baldrick Plan to Spread Ebola Across UK - Sheffield, Newcastle, Liverpool, London Hospitals - Nadeem_Walayat
8.The Gold Bug is Set to Bite Back - EWI
9.How Alibaba Could Capitalize on the EBay-PayPal Split - Frank_Holmes
10.The Consequences of the Economic Peace - John_Mauldin
Last 5 days
How Will We Know That the Gold & Silver Price Bottom Is In? - 21st Oct 14
Is Gold as Dead as Florida Hurricanes? - 21st Oct 14
First Swiss Gold Poll Shows Pro-Gold Side In Lead At 45% - 21st Oct 14
The Similarities Between Germany and China - 21st Oct 14
The REAL Reason Why the Stock Market Turned Down - 21st Oct 14
Petrobras is a 'Scheme, Not a Stock' - 21st Oct 14
Stocks Bear Market Indicator Is Off the Mark - 20th Oct 14
Stock Market Ideal Turning Point is at Hand - 20th Oct 14
Investors Quit Complaining, The Environment is Perfect Right Now - 20th Oct 14
Ebola Armageddon Could Trigger a Rebirth in Gold and Silver Prices - 20th Oct 14
Gold vs Euro Risk Due To Possible Return of Italian Lira - Drachmas, Escudos, Pesetas and Punts? - 20th Oct 14
Stocks Rebounded Following Recent Sell-Off, But Will It Last? - 20th Oct 14
U.S. Responsible for West Africa Ebola Outbreak Says Liberian Scientist - 20th Oct 14
Stock Market Intermediate B Wave has Started - 20th Oct 14
Gold Stocks Analysis – FNV, CG, NCM, SBM - 19th Oct 14
Stock Market Primary IV Wave Counter Trend Rally - 19th Oct 14
Gold And Silver - Financial World: House Of Cards Built On Sand - 18th Oct 14
Anatomy of a Stock Market Sell-Off - 18th Oct 14
Why OPEC Has Declared an Oil War on Russia - 18th Oct 14
Gold and Silver Extreme Shorting Peaks - 18th Oct 14
Bitcoin Price Fall to $350? - 18th Oct 14
Tesco Supermarket Crisis Worse To Come as Customers Vanish! - 18th Oct 14
Sheffield Roma Crisis School Place Application's Fraud Perfect Storm - 17th Oct 14
Stock Markets, Commodities and Indicators - 17th Oct 14
“Save Our Swiss Gold ” - Game Changer For Gold? - 17th Oct 14
How to Trade the Ebola Stock Market Sell-Off - 17th Oct 14
When... Not if... Crude Oil Price Drops Below $70 - 17th Oct 14
Either You're The Butcher or You're The Cattle - 17th Oct 14
Gold Benefits from Market Uncertainty - 17th Oct 14
Stock Market Pullback Underway, Euro downside, Commodities - 17th Oct 14
Stock Market Seven Year Cycle and A Correction Ahead? - 17th Oct 14
Three Ways to Play Uranium: Top Stock Picks - 17th Oct 14
America Flirts With Deflation - 17th Oct 14
Why the Fed Should Consider Delaying the End of QE - 16th Oct 14
Gold Prices Since 9-11 - 16th Oct 14
The Inflation Imputation, Dear Saver, May You RIP - 16th Oct 14
Flight To Safety - Gold Rises As Stocks, European Bonds Sink - 16th Oct 14
The March Of History And The End Of Nations - 16th Oct 14
Stocks Bear Markets Move Fast and Are Intensely Emotional - 16th Oct 14
Stocks Got Their Piece – Now It’s Our Turn - 16th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

Is the U.S. Housing Market Shortage Just a Mirage?

Housing-Market / US Housing May 08, 2013 - 11:58 AM GMT

By: DailyGainsLetter

Housing-Market

John Whitefoot writes:Thanks to the near-record-low interest rates, many Americans are ready to jump back into the housing market. Unfortunately, many are running into one obstacle—there aren’t enough homes for sale. That’s a good sign, though! After all, a leading indicator of economic growth is a healthy housing market, and a lack of housing should mean that builders can’t keep up with demand.


Part of the reason there is a lack of supply is that many people don’t want to sell. Many homeowners lost a lot of equity in 2006 when the housing market collapsed. Today, 21.5% of all residential homes in the U.S. are worth less than their mortgages. (Source: Panchuk, K.A., “CoreLogic: 10.4 million mortgages still in negative equity,” HousingWire.com, March 19, 2013, last accessed May 7, 2013.)

While housing prices have begun to rebound, they are still down 27.5% from their April 2006 peak. With that much room to grow just for homeowners to break even, you can see why many don’t want to unload their property, and why many first-time buyers are competing for a small number of homes. But homebuilders are stepping in to fill the void.

In 2013, U.S. homebuilders are expected to create one million homes, which will be the fastest pace at which homes were built since 2008. Apartment construction is leading the way, up almost 31% to an annual rate of 417,000, the fastest pace since January 2006. Single-family home building, which makes up nearly two-thirds of the market, fell almost five percent to an annual rate of 619,000. (Source: “New Residential Construction in March 2013,” United States Census Bureau web site, April 16, 2013, last accessed May 7, 2013.)

But much of that construction could be for naught. In late April, the U.S. Census Bureau noted that the number of housing units for sale in the first quarter of 2013 was 1.6 million, up from 1.49 million in the fourth quarter of 2012, but down from 1.65 million one year earlier. (Source: “Residential Vacancies and Homeownership in the First Quarter 2013,” United States Census Bureau web site, April 30, 2013, last accessed May 7, 2013.)

Perhaps most interesting is that the report observed that the number of housing units held off the market in the first quarter was 7.6 million, up from 7.29 million in the fourth quarter and down slightly from 7.63 million a year ago.

What does this mean? That banks are keeping more than seven million homes off the market, letting just enough homes trickle onto the market to make it look as if supply is tight.

While you can’t argue that there is a shortage of homes, you can certainly challenge where that shortage is coming from. For now, tightfisted banks are telling Americans who would like to purchase homes that they have to be content with renting.

That doesn’t mean investors can’t benefit from the current housing situation. In fact, there are two places investors can turn to if they want to add real estate holdings to their retirement portfolio.

Apartment Investment and Management Company (NYSE/AIV) is a self-managed real estate investment trust (REIT), with one of the largest portfolios of apartment properties in the U.S. The company manages over 520 properties, comprising more than 93,700 units targeting the largest multifamily markets in the U.S, namely Philadelphia, Chicago, and Washington, DC. The company’s share price is up 14% year-to-date and 18.4% year-over-year. It also provides an annual dividend of 3.2%.

Jacksonville, Florida-based Rayonier, Inc. (NYSE/RYN) owns and manages timberlands, grows and sells timber, and manufactures Southern pine lumber. The company is currently trading near $59.00 per share, has seen its share price climb 36.3% year-over-year, and is up more than 13.7% year-to-date. The company also provides an annual dividend of three percent.

Even though the housing shortage is an illusion and we have a long way to go before we can call it a “recovery,” there is still plenty of opportunity for investors wanting to capitalize on the housing sector. In fact, with the Federal Reserve keeping interest rates artificially low and banks keeping housing inventory artificially tight, the number of (potentially unnecessary) new construction starts could be robust for quite some time.

Source: http://www.dailygainsletter.com/real-estate/is-the-housing-shortage-just-a-mirage/834/

Copyright © 2013 Daily Gains Letter – All Rights Reserved

Bio: The Daily Gains Letter provides independent and unbiased research. Our goal at the Daily Gains Letter is to provide our readership with personal wealth guidance, money management and investment strategies to help our readers make more money from their investments.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014