Case-Shiller home price index declines again

Posted on December 1, 2011 by xdnus

If you're new here, be sure to sign up for free foreclosure listing alert emails.
Thanks for visiting!

While financial pundits keep calling a bottom in home prices, they just keep falling.  Case-Shiller’s latest September home price index shows a 5th consecutive month of year over year drops in home prices.  In addition, the non-seasonally adjusted index fell for the first time month over month since February.  The drop itself wasn’t a surprise, analysts were estimating  a -3.1% year over year drop – however, the drop was more extreme than expected at -3.9%.

To put the numbers in perspective, the index is now back at April 2003 levels.  Given the recent rise in mortgage delinquencies to record levels, we can only assume more downside to come. Results were mixed across regions.  Prices fell sharply in Atlanta (-4.1% month over month, seasonally adjusted) and declined in 15 of the 20 surveyed cities.  As we’ve reported before – the fact that out of control government spending is the only thing propping up the economy showed up again in the index results as Washington DC had the best results at +1% year over year.

Posted in Housing Market | Tagged , | Leave a comment

Foreclosures Doubled

Posted on November 10, 2011 by xdnus

According to the latest release from Fitch Ratings, U.S. foreclosures have doubled from this time last year.  This generally lines up with the numbers we are seeing on our end as well.  Good news for those of you looking to buy or invest in property is that the increased foreclosure activity is likely to push down prices as much as another 10%.

Fitch measures foreclosure activity with what they call the RMBS (residential mortgage-backed security) Performance Metric.  While the rate is nearly double last year at around 10 percent per month, this figure is below the 14 percent average over the last decade.  Additionally, foreclosure rates were artificially low last year due to many banks putting foreclosures on hold while the robo-signing scandal was unfolding.  To sum it up – there are still a ton of foreclosure out there – but we’re still off the record levels of the past few years.

Posted in foreclosure stats | Tagged , | Leave a comment

Home prices up in half of the country

Posted on October 27, 2011 by Liz

According to the Standard & Poor’s/Case-Shiller index released Tuesday, home prices increased in August in half of the 20 metro areas covered by the survey.  This marks the fifth straight month that at least half the metro areas covered by the survey have shown price appreciation.

Home prices increased the most in Washington (thanks to government spending), Chicago and Detroit. The biggest price declines were found in Atlanta and Los Angeles.  The heavily hit Midwest cities have seen the biggest price resurgence dating back to May – a good sign that manufacturing may be rebounding.

Though home prices were up in many areas, taken as a whole, national home prices remain relatively flat and even down when compared year over year.

Even with home prices in many areas at their lowest points since the downturn began and mortgage rates at historical lows, buyers are still reluctant to purchase homes.  Political and economic uncertainty continue to have consumers spooked.  Sales of previously owned homes are on track for the lowest figure in recorded history and short sales and foreclosures continue to drive prices lower.

Posted in Housing Market | Tagged , , | Leave a comment

Turn Key Foreclosure Investing with Texas Cash Cow Investments

Posted on September 29, 2011 by xdnus

Phillip Carter of Texas Cash Cow Investments is scaling foreclosure investing in a way that most people only dream of.  He’s providing a turn-key investment model to foreign investors with estimates of 20% cash returns on most investments.

Texas Cash Cow Investments buys foreclosure in bulk from banks, REO’s, and rehabs them and packages them with property management.  Foreign investors who hold currencies that have appreciated against the dollar are flocking to such investments.  Not only do they get cash flow from rental income and the prospect of long term price appreciation, holding dollar denominated assets also promises them compelling foreign exchange returns.  The price appreciation factor of the profit equation is at least 5 years off, but for those with longer term investing horizons, turn-key real estate investments like this are a no brainer.

The business model is clearly a winner for Carter as well.  He certainly has an interesting approach with transferring the risk and ownership of the underlying asset off to investors while retaining a portion of the rent premium with his bundled property management service.  Check out his site at the link in the first paragraph for more ideas on how his business model is structured.

Posted in Investing | Tagged , , | Leave a comment

Could a new refinancing program be on the way?

Posted on September 26, 2011 by xdnus

The Federal Reserve released a report last week claiming that 2.3 million homeowners could have refinanced their homes last year if lending standards weren’t so stringent.

With the Fed launching “operation twist” last week, a program to replace short dated treasuries on the Fed’s balance sheet with longer dated one’s in an attempt to push down long term interest rates, the Fed is doing everything it can to get every last one of us to refinance.

The problem isn’t interest rates though – its that nearly 11 million homeowners are underwater on their homes – in other words, they owe more on their current mortgage than the home is worth.  And banks won’t refinance a mortgage that’s underwater.  There is, however, a Federal Housing Finance Agency program called HARP (Home Affordable Refinance Program) that is supposed to help homeowners who are up to 20% underwater refinance their mortgages.  To date only 838,000 homeowners have taken part in the program – a far cry from the 11 million homeowners who the Fed would love to have participate.

Don’t be surprised if the Federal government launches a new program to up participation or at least tweaks the existing rules in order to allow more homeowners to qualify.  Last week’s Fed action makes it clear they want us all to refinance to free up more cash to spend to prop up the flagging economy.

Posted in Housing Market | Tagged , , , , | Leave a comment

Hedge real estate exposure with reverse ETF’s

Posted on September 14, 2011 by xdnus

If you’re like most Americans, the majority of your household wealth is probably tied to your principle home or other real estate investments.  With the recent economic uncertainty and talk of a possible double dip recession, its important to know that you have options to hedge against the risk of further downside in the real estate market.

Before we get started though, please know that these investment instruments come with their own high degree of risk and the opinions given here should not be construed as professional investment advice.

Reverse Sector ETF’s

At the beginning of August as the battle over raising the debt ceiling raged and S&P ultimately downgraded US debt, two Proshares Double Short ETFs broke out:

SKF – Proshares UltraShort Financials (2x short)

SRS – Proshares UltraShort Real Estate (2x short)

Both of these funds strive for a return that is 2x the inverse of their respective Real Estate and Financial ETFs.  In other words if financials go down 2% – SKF goes up 4%.  It is in effect a double short position on the market.  Being a double short position inherently implies double the risk, so if you’re not comfortable managing your own trading account, then these ETFs aren’t for you.

My personal preference as a real estate hedge is the Proshares Ultrashort Financials (SKF).  SRS , the Real Estate tracking version of this, is too heavily weighted towards commercial real estate.  On the other hand, the financials are moving lower largely due to residential lending woes- whether its write-offs from foreclosures or potential litigation related to underwriting and foreclosure practices.  Bank of America – I’m looking at you.

SKF peaked at 1000.28 on March 2, 2009.  The closing price as of today is 77.93.  Let’s do some math.

Let’s assume your home is worth $300k.  Let’s also assume the economy weakens and another round of serious home price declines knocks 25% off of home prices and sets off another round of bank failures.  Now your home is only worth $225k and you’re sitting on a $75k hit to your net worth.  But what if you put $10k into an ETF like SKF that will soar in such a scenario?  If the March 2009 peaks are reached again, that $10k would be worth $128k – not only covering the loss in home value, but leaving you $53k better off than you are today.  Granted, this assumes perfect market timing, but you get the point.  If you truly believe that we may face another correction, take action now to hedge your real estate investments.  With a little proactive action now, you can turn any impending crisis into an opportunity.

In interest of fair disclosure, I don’t own this ETF now, but will be buying at any price under 72.57 and would divest the investment as a failed thesis should it break below the 65 level.  Should it hold at or above these levels, I will likely add to the position on any pull backs.

Posted in Investing | Tagged , , , | Leave a comment

Reevaluate your investing strategy

Posted on September 2, 2011 by xdnus

While real estate investments, principally rental property, make up the core of our investing strategy, its important to hedge risk by employing your capital across a diverse set of asset classes.  As active stock market participants, we’re big fans of the people over at PowerTradingRadio.com. They’re investment education specialists who believe that everyone can take control of their entire spectrum of investments  with the proper education and cut out financial servicers as middle men.  After all, who has a more vested interest in your capital appreciation – you or a financial adviser who is paid based on fees generated and assets under management?

Generally speaking, the daily podcast and radio show by Power Trading Radio focuses on stocks or foreign exchange markets.  However, yesterday’s show featured real estate investment expert Diana Hill.  Her segment on the different strategies that can be employed to make money with real estate is one of the most sophisticated and concise pieces on the full potential of real estate investing that we’ve come across in a long time.

Check out the below link for the MP3 download of the Podcast:

Power trading radio Real Estate Podcast – September 1st, 2011

Diana couldn’t go into depth on the different strategies in the brief segment on the show, but hopefully these ideas will get the juices flowing and cause you to step back and reevaluate the way you’re approaching your current investments.  Are there revenue or funding streams you may be missing?  Does your return time frame match with your purchasing strategy?

Posted in Investing | Tagged , , , | Leave a comment