Who said real estate is dead? Home builders may be hurting, but several other real estate sectors are enjoying handy returns, based on the latest numbers from the National Association of Real Estate Investment Trusts.
Among the top first-quarter performers in the FTSE NAREIT U.S. Real Estate Index:
- Self-storage: +20.23%.
- Residential: +11.2% (The apartment subsector rose 11.48%, manufactured homes were up 5.02%.)
- Shopping centers: +4.94%
- Regional malls +2.16%.
Not all, however, was rosy in REITland in the first quarter. The Mortgage REIT Index plunged 21.35% with the home financing subsector diving 21.35% and commercial financing falling 20.5%.
Among the first-quarter, hard-luck equity REITs:
- Specialty: -7.71%
- Lodging/resorts: - 6.79%
- Free-standing retail: -6.42%
However, REITs, which lagged the other markets in 2007, appeared to be gaining strength overall as the quarter went on. Among equity REITs, only lodging/resorts — down 2.04% — were in the red in March. The Ides of March did not bode well for the Mortgage REIT Index, which continued its ugly descent, down 24.11% for the month.
The total return of the U.S. REIT market edged down 0.42% in the first quarter but that looked good in comparison to other markets like the Dow (-7.55%), the S&P 500 (-9.44%) and the Russell 2000 (-9.90%). The NASDAQ fell 14.07%.
CLICK HERE for the full FTSE NAREIT report.
Bubble, your posts remind me of one of my favorite Hanna Barbera cartoons, Lippy the Lion and Hardy Har Har.
“Oh dear, Oh my. OOOhhh Lippy, we’ll never get out of this mess.”
the next time I see someone post
“bernanke says,,,,,” I’m gonna puke
first off the guys obviously clueless…
he said last year that “sub-prime”
was contained… 8 months later he’s
bailing out bear stearns… and secondly
even if he knew the truth theres a fat
chance he’d tell us anyway…
I like the postivity. chin up and it will get better eventually…but first things first we will need to crash a lot further.
Keeping with the details, what motivates me is the per square footage selling and listing prices.
just one year ago, you could do a search in OC for any property that was listed under 300/sq ft…nothing.
now, the majority are in that price range…and that is the listing, not the selling price.
once we return to a ceiling of 200/sq foot for the nicest areas (not includinge beach front of course) we will be at a nice stabilization point and ready for the 1-1.5% annual increases that are the norm for housing.
if you consider this you would be paying 1mil for a 5000 sq foot beauty in lets say nellie gail? turtle ridge? dove canyon? Covenant Hills?
just a few years back a million dollar home was a nice home…do we dare to remember?
the jones’s will be selling their trackitos at 150/sq foot so a 2000 sq footer in mission viejo would be asking 300k…reasonable i think.
then the middle ground 3000 sq footer at 175 sq foot in quail, dana, ladera proper, upscale irvine would be in the 525 range…again reasonably higher than the rest of the country.
now for the individual with very good credit and a reasonable down, we would be talking for example with the 525 range a down of about 15k, a payment of about 4000 with principal, interest, taxes and assoc - less tax benefits. you add in the monthly bills and if you are bringing in a household income of 200k then you are in the desired 46% debt to income ratio.
this is also inline with the fundamentals of the last 50 years…your house should be 2.5 times your household income…funny how it worked for 50+ years?
this would leave out most wage earners and therefore business owners would congregate in the appropriate communities along with select professionals (doctors, select group of lawyers, perhaps a CPA would weasel in there) and then wage earners would move back to mission viejo central / el toro region or over the hills to temecula.
this is our past, this is our future. the last few years are going to be written off as bizarre.
From what I hear from a number of clients all over the county and around oc, the number of multi families living in SFR has increased and is still on the rise… which might go with the rise in self storage.
Storage is up??? Probably because people are now living in them.
Wonder how many multi-families are living in self storage?
Maybe then they could afford gas & food?
See–lots of good news, just like I said!
Dig puts in perspective and gets it right. No one should expect more than they can afford (unlike the last few years), that’s where the pricing fundamentals are headed and the banks/lenders know this. We have already easily reached 04 asking prices in many of the areas he mentioned, perhaps the decline will slow (I actually hope it does as it is TOO fast on the way down, as it was on the up) as this will allow adjustments to absorb the losses.
“Bernanke actually thinks we’ll hit bottom this year, as Jon posted yesterday.” - RealtorDave
Dave,
You actually believe anything that chump says? I would suggest that FED Officials are the LAST people you should listed to about the likeliehood that we are in recession. Their inability to see what is in front of them is well established:
For the recession that started in April 1960:
“By and large, however, the economy seems quite solid.”
Federal Open Market Committee, May 1960
“[Chairman Martin] was by no means convinced that the situation was serious.”
Federal Open Market Committee, July 1960
“The Chairman reiterated his views … There was a declining picture, … but the economy was not going over a precipice by any means.”
Federal Open Market Committee, October 1960
For the recession that began in July 1990:
“In the very near term there’s little evidence that I can see to suggest the economy is tilting over [into recession].”
Chairman Greenspan, July 1990
“…those who argue that we are already in a recession I think are reasonably certain to be wrong.”
Greenspan, August 1990
“… the economy has not yet slipped into recession.”
Greenspan, October 1990
Source: “Booms, Busts, and the Role of the Federal Reserve” by David Altig
“And it looks like Congress got an earful while on Spring Break, and now they’re falling over each other in a bipartisan effort to fix things. Of course, that could be good news or bad news, depending on what they finally come up with, but at least they’re starting to work together.” - Realtor Dave
You think the government can solve this? These are politicians and 99% of them do not actually even understand how the monetary system works.
Bernanke is supposed to be a cheer leader for our economy
he is not supposed to mention words like “Recession” which he just did the other day
he is not supposed to talk about his massive concerns over our banking system failing on a grand scale…………..
our economic cheer leader has been vocal about both of these issues, so you can pretty much take it to the bank that our economy is headed south
I have another anecdote I will share — though its not real estate related. In the last 2 days I have 2 identical conversations. The first was from my insurance agent, and the 2nd was from a random chick at a bar. While neither is college educated or has any particular knowledge of finance, both proceeded to corner me into listening to their rants about international finance. I got to hear from these 2 geniuses about how the US is screwed and the dollar is going to keep plummeting and gold is going to keep going up. This is very reminiscent of listening to rants about Cisco stock in 1999 or Investment property in 2004.
So hear is my prediction. Gold Permabulls such as Peter Schiff and his blowhard lemmings will be the Gary Watts of the next decade. I’m thinking that when the dumb money starts to buy, smart money needs to start taking chips off the table.
Roger,
I agree with your conclusion…………and prediction. One of the thing that boggles my mind is how long the momentum will take a market. It was clear by 1998 that the tech sector was headed for trouble. It was clear by 2003 that real estate was headed for trouble. However, from the first warning signs it seems to take 2 or 3 years for the markets to turn.
So I wouldn’t be surprised if the gold speculation goes on for another 2 or 3 years…….but eventually it will turn south and there will be a lot of lemmings stuck with the asset.
Roger Rabbit,
I agree with you in regards to gold. I think Schiff will be wrong about gold, but he will be right about everything else.
The main thing holding up our economy is that foreign countries are still lending us money and still holding our currency. Our country has a large appetite for debt…… I see foreign creditors shutting off this valve in the future and I also see global markets moving to the Euro.
I’m just glad that somebody else is old enough to rmember Har de har har. Nice one VOR.
Roger Rabbit’s observation sounds like a modern version of the story that JP Morgan (if I recall that right) knew it was time to get out of the stock market when the shoeshine boy was giving him tips. Sounds apt to me.
Gold has peaked. That is yesterday’s story. I just heard on the news that the Senate is preparing a $15 Billion (with a B) to “help” housing. Oh man. When will they ever learn.
Mikey,
in the 1930s JP Morgan proceeded to try to prop up the Stock Market with mass buying, it did not work out to well for them back then……… so even if the had their hunches that things were awry…… they still had kook aid residue……. at least they are alive and well buying Bear in 2008.
i meant to say “kool aid” obviously….. shiny don’t jump all over me for my typo
Here’s an interesting article from Northern California:
“Real estate’s fifth best year
Richard Dorn Article Launched: 03/27/2008 01:27:28 AM PDT
The fifth best year in the last 50 years … not bad. I am referring to our real estate market. Although there has been a great deal of media attention lately about the real estate market, let’s take a look at a few facts, presented in plain English, without the addition of sensationalized headlines.
The bottom line? We sold 5.67 million homes in the U.S. in 2007 compared to 6.48 million in 2006. Over the years we have seen a 50 percent increase in home values nationally compared with a 1.5 percent decrease in home values nationally over the past 18 months.
Homes sales actually peaked in the summer of 2005, and 2007 was the first time home prices have dropped since the 1930s. Many believe that the slight drop in home sales in 2007 was the balancing of our free market economy
Further research indicates that not all real estate markets in the U.S. are experiencing a slowdown. Salt Lake City, for example, is still rapidly appreciating, as are Salem, Seattle, San Antonio, Buffalo, Raleigh and many other cities.
When considering the current condition of the real estate market, it is important to consider the impact that all the recent press regarding home loans has had on the market.
Let’s look at the real numbers: 35 percent of the homes in the United States are owned free and clear. Prime loans are still a great product for the investor and continue to be solid, with very few foreclosures.
Only 9 percent of the homes in this country have a subprime loan, less than one in 10. However, if you have a poorly created subprime loan, you are in a less than desirable position. I was just speaking with someone who, unfortunately, refinanced with a subprime loan and can no longer make the payments. After asking many questions, it was quite clear that the loan should never have been made in the first place.
What does 2008 have in store for us? A return to a rational and reasonable real estate market. There will be a great deal of pent up buyer demand.
The proof of this begins with the fact that the number of homes for sale is shrinking (remember the balancing of our free market economy). We have seen this in our local market in the last quarter, with the total number of homes for sale dropping approximately 15 percent. First-time home buyers will also re-enter the market, as they have been waiting in the wings for the market to equalize.
Furthermore, home loans will be revamped and restructured. In turn, buyers can feel more secure in purchasing a home without so much worry of foreclosure. One big benefit of the recent mortgage crisis is that the consumer is more aware of the pitfalls of some loans.
One of the largest groups of buyers actively purchasing and projected to continue to purchase in greater numbers is the international buyer. With the dollar continuing to fall against the euro dollar and the pound, it makes sense that international investors would be looking at our market.
The top markets that the international buyer is looking at are Florida, California and Texas. The top three countries which these buyers are from are Mexico, the United Kingdom and Canada.
The current market, and the market in the foreseeable future, offers an outstanding opportunity for home sellers who are moving up to a larger or more expensive home to potentially save tens of thousands of dollars. All in all, we are forecast to sell 5.69 million homes in the U.S. in 2008, and prices should stabilize.
As I mentioned earlier, this is the first year home prices have dropped since the 1930s. If past history is any indication of the future, right now is a great time to get back into the real estate market. Whether buying your first home, or expanding your real estate portfolio, 2008 will be a solid year for real estate and one of the best opportunity years in recent times.
Richard Dorn is a local Realtor and a member of the College of the Redwoods Board of Trustees. He resides in Eureka.” ( End of Article.)
Sounds a bit less dramatic, or dreadful, than most of the unqualified claptrap bearish “statements” being tossed about by self titled stock & bond market gurus, doesn’t it? Of course, without all those doom & gloom “experts” NationalBubble would have to fold his “Bubble” tent and go back to his day job.
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