Reasons behind Housing Slump
Amidst the strong US economy and DOW industrial sectors, the housing slump persist, at times looking to derail the economic freight train.
Falling home sales, declining existing home prices with the glut of unsold housing developments, creeping subprime mortgage default rates, combine to form the perfect storm in real-estate terms. The housing bubble of '03-'05 popped as predicted towards early '06, though more with the grace of a feather than a half-ton rock.
The National Association of Realtors has predicted that home sales will fall by 2.2% for '07. As sub-prime mortgage default rates climb at the same alarming rate that is causing mortgage lenders and resellers to offload their mortgage bonds faster than they could lower their lending standards at the height of the housing boom.
So how are construction stocks doing? Major homebuilders like KBHome has seen their mkt caps reduce by half since the peak in '05 and mirroring that fall is the overall Dow Jones Home Construction index.
Has this 2 year slide lost slippery ground? Has housing hit bottom? Is it time for bargain hunters to join the queue for construction stocks? We will take a closer look at the mortgage sector, construction sector and home retail sector in the coming weeks...
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment