Two Ways: Home Sales Spike on Fire-Sale Prices
Strengthen your portfolio in good times and bad.
The National Association of Realtors said today that home resales rose 5.1% to an annual rate of 4.72 million, up from January's figure of 4.49 million. Consensus expectations for February called for a drop, to around 4.45 million.
But according to the Wall Street Journal, the high number of distressed property sales are pushing prices lower. The median price for an existing home plunged 15.5% in February to $165,400. This is contributing to a vicious cycle of lower prices, higher inventory, and declining demand.
In fact, inventories of previously owned homes rose 5.2% at the end of last month to 3.8 million available for sale. At this pace, it would take 9.7 months to exhaust supply.
For more on real estate, see Professor John Mauldin's Buy a Home, Get a Green Card.
From the Bull Pen: Could we see a rotation out of the favored-recession plays into the most beaten-down names? If so, continue to consider housing plays. The real-estate ETF (IYR) is one option; a 2% sell stop can be set below entry.
From the Bear Cave: Continuing on with the rotation out of recession-favorite names, Professor Steve Smith mentioned a downside play in Family Dollar (FDO). He's using a bearish calendar spread involving the July and April puts.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter