The Phaserl


Short Seller’s Journal: More On Housing

by Dave Kranzler, Investment Research Dynamics:

The only data that gets more statistically distorted and incompetently analyzed than the housing data is the Government inflation, GDP and employment numbers. In some cases it’s a toss-up. The builder sentiment index is bordering on retardation. Builders are always optimistic, especially because they use other people’s money and take fees off the top. The “sentiment” index always seems to peak at the top of the market.

Housing starts and permits are are almost equally as useless, especially seasonally adjusting and annualizing the data. Literally, a start is counted with a builder sticks shovel in the ground on land which has a permit attached.

Homebuilders will always file permits on land they own because it costs next to nothing. “Starts and permits” do not necessarily translate into revenue producing events. If anything, homebuilders always load up on too much land and end up writing it down and unloading a lot of it when the market turns.

Just to show you I’m not on drugs, I wanted to share a some comments I received today and yesterday about my views on housing:

Been reading your take on the housing market for some time and I agree completely. I sold my house located in a neighborhood of McMansions and downsized in April. This action freed-up a bunch of cash and also reduced my real estate taxes big time. I moved out to the sticks where neighbors are few, I can do whatever I want w/ my property (no HOA), and taxes lower. Considered following your advice and just renting, but the rental market here is not very good (high rents, few options) and I found a place I was able to pick-up on the cheap since I was a cash buyer and could act quickly.

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