Van Posted August 28, 2013 Report Share Posted August 28, 2013 US HomeBuilders Thread Opening a new thread for the US homebuilders. Many of them are now break down from stage 3 to stage 4 - an ideal time to start shorting them. This is a volatile sector - we saw how they lost 85% of their value between 2005-2008, and then how they have rallied to triple your money in the last 2 years. Get on the right side of the market and the rewards can be huge. Sector components: http://bigcharts.mar...asp?symb=DJUSHB Sector Chart: http://bigcharts.mar...DJUSHB&x=46&y=2 Link to comment Share on other sites More sharing options...
Van Posted August 28, 2013 Author Report Share Posted August 28, 2013 Bet shorting candidate charts imo. All these should be shorted/added on breaks below the recent lows. BRP: DHI GFA (Brazilian homebuilder, apparently): HOV: KBH: LEN: MDC: MHO: MTH: NVR: PHM: RYL: SPF: TOL: Link to comment Share on other sites More sharing options...
drbubb Posted August 28, 2013 Report Share Posted August 28, 2013 Pulte Homes is my favorite bellwether in the US Builder sector It peaked in March at $24.47, and at yesterday's close of $15.38, was already 37.1% off the high. This shows how volatile these stocks can be. PHM - daily chart PHM - weekly chart Link to comment Share on other sites More sharing options...
drbubb Posted August 28, 2013 Report Share Posted August 28, 2013 Here's what I heard in a recent podcast: Many institutional investors got the idea that it might be a smart idea to buy foreclosed homes from banks. + They quickly acquired large portfolios of empty homes, mostly in the suburbs + They did some basic refurbishment, and then tried to rent them out + They found that few people could afford the rents they were asking + Many of the homes are still sitting empty, because in the ruined economy, people's incomes are too low to absorb the homes at the desired rents The sad news was that this institutional investment meant that too few cheap homes were bought by individuals - The homes were empty, held by banks, and now they are empty, held by institutions. Few can afford them now. And many of those who could afford them, bought new homes instead - being less willing to take the "risk" of buying a foreclosed home unless they were really cheap. With rates jumping, the interest in buying new homes has waned. Before a "final" low is made, all those empty homes, many now held by investors along with those still held by banks, may need to find long term tenants or owner/occupiers. A drop in rents may be coming... especially in the suburbs, where people are less willing to live, now that they have woken up to the dangers of high gasoline prices, and they are watching the quality of suburban roads deteriorate as government finances get more strained. Link to comment Share on other sites More sharing options...
drbubb Posted August 28, 2013 Report Share Posted August 28, 2013 Backing up my point about the suburbs... Suburbia is over: === This could be Excellent news! It was inevitable. But I don't think Suburbia will just disappear. It will become a slum, where the poor can be left and forgotten, since there will be little money to help them, or police them in the large areas of suburbia. JHK may be right: The future is in small towns in Agricultural areas Link to comment Share on other sites More sharing options...
Van Posted August 28, 2013 Author Report Share Posted August 28, 2013 30 yr mortgage rates: Longer term: Link to comment Share on other sites More sharing options...
Van Posted August 28, 2013 Author Report Share Posted August 28, 2013 Mortgage rates have spiked from 3.35% in May to 4.58% now. On a typical $200k mortgage that would mean an increase in payments of $205/month. Now we are seeing the results of a market that is so leveraged up and sensitive to interest rates - a small change in the rate (4.58% is still very low historically) has a very large impact on repayments. I imagine that a move to 5% would see a new leg down in house prices, and a move to 6% would pretty much be cataclysmic. Link to comment Share on other sites More sharing options...
drbubb Posted August 29, 2013 Report Share Posted August 29, 2013 Mortgage rates have spiked from 3.35% in May to 4.58% now. On a typical $200k mortgage that would mean an increase in payments of $205/month. Now making that home unaffordable for many (who have limited Monthly incomes.) Another point is that recent buying was increased by those who bought sooner rather than later, because they wanted to Beat the inevitable rise in rates. Link to comment Share on other sites More sharing options...
drbubb Posted September 3, 2013 Report Share Posted September 3, 2013 HOUSING TURNING POINTS are pretty clear on this chart HGX / The PHLX Housing Index ... update Link to comment Share on other sites More sharing options...
Van Posted September 25, 2013 Author Report Share Posted September 25, 2013 The DJUSHB index has had a 10% bounce off the back of falling yields, but I reckon it's still in an overall down trend, and that this is just a good chance to reshort. http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=XX%3ADJUSHB&insttype=Index Link to comment Share on other sites More sharing options...
drbubb Posted September 26, 2013 Report Share Posted September 26, 2013 ... this is just a good chance to reshort. http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=XX%3ADJUSHB&insttype=Index Probably. Here's HGX ... update Link to comment Share on other sites More sharing options...
Van Posted October 7, 2013 Author Report Share Posted October 7, 2013 Staying short, The bounce is fading now. Friday action: DJUSHB Percent Change: -2.43% 418.48 Very negative, given the bounce in the market overall. Should have a further lurch down today based on pre-market data. Link to comment Share on other sites More sharing options...
Van Posted October 8, 2013 Author Report Share Posted October 8, 2013 A recent peak in sentiment? http://www.marketwatch.com/story/home-builders-most-confident-in-almost-eight-years-2013-09-17?siteid=bigcharts&dist=bigcharts Compared to Q1: Starts are lower... ... but confidence is higher... while rates are higher Link to comment Share on other sites More sharing options...
drbubb Posted October 8, 2013 Report Share Posted October 8, 2013 Starts are lower... ... but confidence is higher... while rates are higher === = More Vulnerable Link to comment Share on other sites More sharing options...
drbubb Posted October 11, 2013 Report Share Posted October 11, 2013 This one looks highly vulnerable PHM / Pulte Homes could get cut in half ... update Now $15.86 If support at $14.50 or so is broke, we could see a quick drop to $8 Link to comment Share on other sites More sharing options...
drbubb Posted October 23, 2013 Report Share Posted October 23, 2013 The Old Same Place ? PHM / Pulte Homes ... update Link to comment Share on other sites More sharing options...
Van Posted October 28, 2013 Author Report Share Posted October 28, 2013 Pending home sales FALL in Sept: http://www.marketwatch.com/story/higher-rates-prices-cut-pending-home-sales-2013-10-28?siteid=bigcharts&dist=bigcharts Link to comment Share on other sites More sharing options...
Van Posted January 14, 2014 Author Report Share Posted January 14, 2014 Just bumping this thread. Homebuilders have rallied as part of the wider market rally. Avg 30yr mortgage rate is back to 4.5% I see... Link to comment Share on other sites More sharing options...
Van Posted February 20, 2014 Author Report Share Posted February 20, 2014 Just bumping this thread. Homebuilders have rallied as part of the wider market rally. Avg 30yr mortgage rate is back to 4.5% I see... Haven't gone near the homebuilders for several months now, since the stage 3 to stage 4 breakdown scenario didn't play out. They are plainly not fruitful shorting material at the moment - throwing in the towel and accepting that in Q4 last year has saved me a lot of time, effort, and capital. Link to comment Share on other sites More sharing options...
drbubb Posted February 21, 2014 Report Share Posted February 21, 2014 The Rental Bubble Is Also Bursting Submitted by Tyler Durden on 02/20/2014 Even as the primary housing market was slowly circling the drain, the one silver lining was that the US rental market, largely dominated by several Wall Street investment firms, most notably Blackstone, was doing relatively well. It was doing so well that equity sponsors such as Blue Mountain couldn't wait to offload their prized REIT property to the public, culminating with last August's IPO of American Homes 4 Rent, the second-largest US homes-for-rent operator after Blackstone. And since the stock price of all these corporations was performing admirably or at all time highs, supported by the record fungible liquidity sloshing among the world's interconnected markets, nobody was very concerned. It is time to get concerned... . . . Rents collected on the collateral for the first U.S. rental-home securities declined by 7.6 percent from October to January, according to Morningstar Inc. Payments declined as expiring leases and early tenant departures left residences backing the bonds of Blackstone (BX) Group LP’s Invitation Homes vacant, Becky Cao and Brian Alan, analysts at Morningstar’s credit-ratings unit, said in a report. While 8.3 percent of the properties were vacant or occupied by delinquent renters in January, renewals on 78.5 percent of leases that expired the prior month exceeded the analysts’ expected rate of 66.7 percent. The deal’s performance is being watched as Wall Street bankers and institutional property investors seek to follow Blackstone’s $479.1 million transaction in November with additional offerings. Initial lease expirations for the 3,207 homes are scheduled to peak from January through March, Morningstar said. To woo investors and rating firms in the new market, the transaction started with all of the units leased, unlike bonds backed by apartment-building loans. == > http://www.zerohedge.com/news/2014-02-20/rental-bubble-also-bursting Link to comment Share on other sites More sharing options...
drbubb Posted February 27, 2014 Report Share Posted February 27, 2014 (duplicate post from DrB's Diary): New Homes sales - "the best in 5 1/2 years" "... possibly easing fears of a sharp slowdown in the US housing market." Sales jumped 9.6 percent, to a seasonally adjusted 468,000 units, highest since July 2008. And Dec. sales were revised up from 414,000 to 427,000 PHM / Pulte Group ... update // TOL I think this rally may be reversed VERY SOON. Maybe it is bad data. If housing is so strong, why JPM cutting jobs in their mortgage origination unit ? JPMorgan to cut 8000 jobs, lowers 2014 profit target Reuters-25 Feb 2014 (Reuters) - JPMorgan Chase & Co (JPM.N), the largest U.S. bank, announced thousands of job cuts on Tuesday as the mortgage lending ... Link to comment Share on other sites More sharing options...
Van Posted February 27, 2014 Author Report Share Posted February 27, 2014 (duplicate post from DrB's Diary): New Homes sales - "the best in 5 1/2 years" "... possibly easing fears of a sharp slowdown in the US housing market." Sales jumped 9.6 percent, to a seasonally adjusted 468,000 units, highest since July 2008. And Dec. sales were revised up from 414,000 to 427,000 PHM / Pulte Group ... update // TOL I think this rally may be reversed VERY SOON. Maybe it is bad data. If housing is so strong, why JPM cutting jobs in their mortgage origination unit ? JPMorgan to cut 8000 jobs, lowers 2014 profit target Reuters-25 Feb 2014 (Reuters) - JPMorgan Chase & Co (JPM.N), the largest U.S. bank, announced thousands of job cuts on Tuesday as the mortgage lending ... We may not like it, but that TOL chart is a clearance of long term overhead and should be a BUY. Think I'll just stay on the sidelines. The builders have been a great buy for the last 2 years. They will be an equally great short at some point, but that time is not now. Link to comment Share on other sites More sharing options...
drbubb Posted March 5, 2014 Report Share Posted March 5, 2014 May 2012 Build Costs - Apartments==>source: Link to comment Share on other sites More sharing options...
drbubb Posted March 24, 2014 Report Share Posted March 24, 2014 Why millennials love apartments By Mike Tarson @CNNMoney VIDEO Apartments are the hottest thing in housing, but the rest of the market could also get a boost when this trend fades. == > http://money.cnn.com/video/news/2014/03/13/n-millennials-housing-effect.cnnmoney/index.html?iid=MKT_Taboola At they end, they suggest Millennials will eventually go back to Suburban living. Now they won't ! I think they have learned hate enslavement to automobiles, at long last ! Link to comment Share on other sites More sharing options...
drbubb Posted May 12, 2014 Report Share Posted May 12, 2014 HOUSING : A Planned takedown ?? That's what "john galt" claims at the beginning of this video: John Galt -- "War and Peace" Can Russia Break the Dollar? ~ The Plane Truth ~ PTS3100 = = Let's look at the chart for Pulte Homes PHM ... update : 4-yrs-W Link to comment Share on other sites More sharing options...
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