Some Objectivity on Housing
The state of the housing market is a hot topic for most people, and not just homeowners. Those making bearish forecasts on the economy and the stock market create scenarios that begin with a collapse in home prices. Those who are apologists for the home building industry also take extreme positions.
One source we have followed has been David Malpass, who has been consistently accurate in his forecasts about the limited effect of the housing decline on the overall economy.
Another favorite source is Scott Rothbort, founder of LakeView Asset Management and a major contributor to Street Insight, the premium publication of theStreet.com. While Scott has broad expertise, there are two special reasons to listen to what he says about housing.
- Without a preconceived theory he is free to act in the best interest of his investors and readers. He can and does change his mind with the evidence.
- He has covered hundreds of earnings reports and calls for Street Insight. He knows what to listen for and how to interpret it.
What is his analysis? He has posted a long and thoughtful piece at his blog, which should interest everyone. Here is the principal conclusion:
My opinion is that the cyclical decline in housing is near or at an
end. Furthermore, the big meaty shorts trades have already been booked.
We will continue to have a high level of volatility in the sector and
more trading opportunities will present themselves as the sub-prime,
housing and interest rate dramas continue to unfold. The next step for
this sector is going to be takeovers especially if the bears continue
to push shares lower.
Check out the full article to appreciate the reasoning and evidence Scott uses.