There is a new set of indices following the shipping sector. I have an in depth article over at my other site: The Shipping Stocks Blog. If you haven’t visited my other site yet, go on over and check it out. Sign up for an email or RSS feed while you are there.
Our 2009 investing ideas at midyear: Oops – MarketWatch.
After four months of taking somewhat of a break from writing here I am ready to start the 2nd half of 2009 focusing on investing and making money. We will start out with a some analysis of the self-analysis from MarketWatch.com linked above. The financial website recommended 10 investment ideas at the beginning of the year and now they are admitting that their recommendations were not so hot.
Although they do not give much in the way of real number returns it seems that MarketWatch had one winner out of their 10 suggestions: Consumer Staples stocks, and one that did OK: Investment Grade Corporate Bonds. Reading between the lines, it seems the other 8 suggestions have not done well so far in 2009.
It is nice to see the “professionals” admit their lack of foresight and the year is only half over, so their predictions may recover. The article is mostly how that could happen. Here is the original article so you can check for yourself at the end of 2009.
I point this stuff out because I will be trying to give real recommendations on this site and following up with how well they perform in real numbers. I have learned a lot in the two years (site birthday next week) I have been writing here and hopefully it will translate into interesting and useful information for the readers.
OK, I am about done discussing housing and real estate until the June numbers start to come out. I just found this article through the Sacramento Bee Real Estate blog and wanted to highlight a couple of points. The information in the article is from the Harvard Joint Center for Housing Studies. A couple of lines caught my eye and I wanted to comment.
First on possibilities of a housing recovery:
Any talk of a housing recovery is moot until foreclosed inventory shrinks, unemployment rates abate and banks make mortgages available for more buyers.
So if house prices do start to recover under current conditions, what will happen when these events actually occur?
Using the reports most pessimistic estimate of household growth the U.S. population will ad 12.5 million households from 2010 until 2020. That looks like 1.25 million per year to me and the homebuilders are continuing to churn out homes at a 500k per year rate.
The reason why the Joint Center doesn’t think less immigration would result in even lower household formation is because of its expectation that buyer demand among the Echo Boom generation—which is five million people larger than the Baby Boomers—will be high enough to drive the housing industry’s growth “for the next 10 years.” (emphasis added)
So if the bankers can control the amount of foreclosed properties they send into the market. And, believe it or not, they seem to be trying to do that. And if the federal government can keep mortgage rates near or under 5%: They control Freddie and Fannie, why wouldn’t they? 2009 may be the bottom in the current housing cycle.
Here are my quick thoughts on the National Association of Realtors existing home sales report for May. First, the numbers showed small but positive gains from April. Second, the national mean and median prices increased for the first time in a year. Here are the numbers:
Adjusted sales numbers for May were still 2.9% the total for 2008, but marks the 3rd increase month-over-month out of the last 4 months. The report shows the median sales price in the west fell by 3.2% vs. April but this is an improvement compared to the March to April decline of 10.2%. I have written earlier about the positive price numbers for May in California.
I often say the one month does not a trend make, so we will not read to much into these numbers. Nest month, maybe.
Linked above is one of the three sources I have read concerning the increase in home prices in May for the Sacramento region.
The Sacramento Association of Realtors reported that the median price in Sacramento County increased by 7.7% from April to May. Their report highlighted that 25% of sales were for cash compared to just 10% a year earlier.
The Sac Bee article above had the median prices increases ranging from 4% to 15% for the counties in the region. May was the 14th straight month of year over year sales numbers gains. Big news was the drop of foreclosure sales from 71% of total sales January to 59% in May.
Mike Lyon’s Trendgraphix report had a 7% sales number decrease from May 2008 for the 3 county region they track. The inventory of available homes was 45% lower than the previous year. Good news on the pricing front. This report tracks median per square foot prices and they increased by 2% to 9% for the 6 counties in the region.
All of the above reports are good news for sales numbers and prices in the region. Visible inventory is now less than 3 months supply which should further push up median prices. Of concern is the shadow inventory of properties held by banks and homes currently going through the foreclosure process. This unknown number of homes for sale could again depress prices. Let me make a prediction here: The sales over the last year have been in the smaller homes selling for well below $200k. The shadow inventory may be populated by larger homes with bigger mortgages and the banks will be reluctant to unload them at the prices we have seen over the last 6 months. I think the shadow inventory will be trickled onto the market and provide just enough inventory to continue to push up the median price range.