A smart hedgie pinged me with the following:
Finally this homebuilder rally (XHB up 6% YTD) is making sense.
A buddy I know who is a seasoned real estate veteran says the down payment assistance program is creating quite a sense of urgency. BUT it expires on 10/1/2008. Consumer awareness that this program is going away in less than 30 days is causing alot of buyers to get in and get in NOW... They are pulling out all the stops to get these deals done. But outside of that... there really isn't any other demand in the pipeline.
I read an article recently that talked about the fact that 75% of the new home buyers in the Phoenix area are using this down payment assistance.
This is causing alot of current demand that is being mistaken for the real turn in real estate. Beware, because after Oct 1st... this demand will evaporate and the real decline will start, and it will be sharp. It wouldn't be outside the realm of possibility to see sales fall off a cliff this fall.
As anecdotal home sales data is being released over the next 30days the news will be good and the builders will likely go higher, and cramer can declare victory... so don't try to fight this... YET.
The easy money will be made on the other side.
Fyi
Finally this homebuilder rally (XHB up 6% YTD) is making sense.
A buddy I know who is a seasoned real estate veteran says the down payment assistance program is creating quite a sense of urgency. BUT it expires on 10/1/2008. Consumer awareness that this program is going away in less than 30 days is causing alot of buyers to get in and get in NOW... They are pulling out all the stops to get these deals done. But outside of that... there really isn't any other demand in the pipeline.
I read an article recently that talked about the fact that 75% of the new home buyers in the Phoenix area are using this down payment assistance.
This is causing alot of current demand that is being mistaken for the real turn in real estate. Beware, because after Oct 1st... this demand will evaporate and the real decline will start, and it will be sharp. It wouldn't be outside the realm of possibility to see sales fall off a cliff this fall.
As anecdotal home sales data is being released over the next 30days the news will be good and the builders will likely go higher, and cramer can declare victory... so don't try to fight this... YET.
The easy money will be made on the other side.
Fyi
Between this and the recent fnm news wouldn't this be a perfect time for puts?
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