Tag Archive | Real Estate

Foreclosure Inventory Could Hinder Real Estate ETFs

As the number of foreclosures around the nation continues to climb, a massive flooding of these homes into the market could result in a supply shock which could eventually depress real estate prices, affecting the iShares Dow Jones US Home Construction (IYB), PowerShares Dynamic Building & Construct (PKB) and the SPDR S&P Homebuilders (XHB).

According to Clea Benson of Businessweek, the inventory of foreclosed homes that government-controlled Fannie Mae (FNMA) and Freddie Mac (FMCC) currently have has quadrupled over the past three years and stands at a whopping $24 billion.  Furthermore, the physical number of homes that these two companies own has increased to nearly 242,000 and is likely to continue going up.  In fact, RealtyTrac, a data company specializing in compiling data on residential real estate, expects the number of homes subject to foreclosure filings to rise by as much as 20 percent this year.  Read More…

Two ETFs Likely To Be Hit By Increased Foreclosures

Despite a slowdown in foreclosure filings in December 2010, Irvine-based real estate database seller and tracker, RealtyTrac, expects the number of US households receiving foreclosure notices to significantly jump in 2011, putting additional stress on the US economy, homebuilders and the SPDR S&P Homebuilders (XHB) and the PowerShares Dynamic Building & Construct (PKB).

The total number of foreclosure filings in December totaled 257,747, marking the lowest monthly tally since June 2008 and an eight percent decrease from the prior month.  Furthermore, RealtyTrac suggests that this decline was driven by increased scrutiny over lenders and their practices.   Lenders in all 50 states are being investigated on whether or not banks and loan servicers used faulty documents and signatures on loan documents to execute and issue loans for those who did not qualify.  Read More…

Four ETFs To Play Commercial Real Estate

Despite a stubbornly weak labor market and insignificant increases in consumer sentiment and spending, commercial real estate and the exchange traded funds (ETFs) which track the sector have fared relatively well this year and are expected to continue to do so.

Commercial real estate values appear to be stabilizing as rents are no longer falling, vacancies for apartment buildings, office buildings and retail malls are no longer rising.  A major driver behind this stabilization is improved credit markets, which have enabled many real estate investment trusts (REITs) to refinance debt and issue equity which can be used to pay down debt early or buy more properties at cheap valuations.  Read More…

Three REIT ETFs That Are Shining

As the residential real estate market continues to remain volatile and highly dependent on the strength of the labor force, some signs of prosperity have emerged in real estate investment trusts (REITs) enabling the iShares Dow Jones US Real Estate (IYR), the iShares Cohen & Steers Realty Major (ICF) and the Vanguard REIT ETF (VNQ) to perform relatively well this year. 

One reason these ETFs have been trending upward is because they offer an opportunity to debt that traditional financing institutions like banks and insurance companies are unwilling to take on.  Increases in foreclosures, a weak job market and other recessionary factors have put extreme pressure on income producing properties leading to increased stress on the loans that these properties support.  As a result, an opportunity has arisen for REITs to lend, either through debt or equity financing, to the owners of these income properties.  Read More…

Three ETFs Influenced By Chinese Real Estate

As China continues to witness exponential economic growth, its real estate sector is following and the Chinese government is taking measures to curb the real estate boom potentially influencing the Guggenheim China Real Estate (TAO), the iShares FTSE EPRA/NAREIT Dev Asia Idx (IFAS) and the Guggenheim China All-Cap (YAO).

China’s Finance Ministry recently announced that it will speed up the introduction of a trial property tax in certain cities before implanting the levy across the nation.   The Ministry further stated that the tax rate will be 1 percent for units that are 90 square meters or smaller and will end an income-tax exemption on profits from the sale of real estate reinvested within one year.  Read More…

Homebuilder ETFs Likely To Fall

The Commerce Department recently announced that housing starts rose 10.5% last month to an adjusted annual rate of 598,000, giving positive price support to the SPDR S&P Homebuilders ETF (XHB), the iShares Dow Jones Home Construction (ITB) and the PowerShares Dynamic Building/Construction ETF (PKB).  

In general, housing starts are an important indicator of activity in the real estate markets and as starts increase, future construction generally remains healthy.  However, the opposite in this recent surge in new home construction is likely to prevail due to supply and demand imbalances and eventually hinder the real estate markets.  Read More…

Three Real Estate ETFs Worth A Look

Despite woes in residential real estate, the commercial real estate sector appears to be showing signs of stabilization shinning a light on the iShares Dow Jones US Real Estate (IYR), the Vanguard REIT ETF (VNQ) and the iShares Cohen & Steers Realty Majors (ICF) .

In the month of July, vacancies in apartment buildings, office complexes, retails malls and self-storage facilities showed no significant signs of rising indicating that the sector could be starting to stabilize.   In fact, occupancy rates for apartment buildings are currently around 92 percent and around 84 for office buildings, much higher than a year ago.  Additionally, rents on commercial properties are no longer falling and numerous real estate investment trusts, known as REITs, are reducing debt on their balance sheets. Read More…


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