September 24, 2007 at 1:25 pm by Tom Lydon
For those exchange traded fund (ETF) investors invested in real estate, the forecast for the sector, according to the Chicago Mercantile Exchange (CME), is bleak. Earlier this week, the CME extended the futures market on the S&P Case-Shiller Home Prices Indexes from one to five years, says Matt Hougan for Index Universe. The table below shows what investors think the real estate market will look like over the next four years, and it isn’t pretty. It shows the estimated percentage change in real estate prices in 10 cities based on the most recent futures sale on the CME.
Not to beat a dead horse, but these projections correlate to the rut in which SPDR S&P Homebuilders (XHB) seems stuck. Currently, it’s down 37.5% year-to-date. In addition, housing stocks posted dramatic losses today, reports the Associated Press. Some of the larger losses that also happen to be holdings in XHB included: D.R. Horton (DHI) fell 2.1%, Toll Brothers fell 2.4% (TOL) and Centex (CTX) dropped 4.1%.
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CUMULATIVE % CHANGE IN HOME PRICES, NOVEMBER-NOVEMBER |
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|
CITY |
2007-2008 |
2007-2009 |
2007-2010 |
2007-2011 |
|
Boston |
-5.0% |
-10.3% |
-13.3% |
-16.3% |
|
Chicago |
-6.2% |
-6.2% |
-10.1% |
-3.2% |
|
Denver |
-5.0% |
-11.0% |
-14.5% |
-18.1% |
|
Las Vegas |
-13.5% |
-13.5% |
-16.4% |
-8.2% |
|
Los Angeles |
-6.8% |
-10.9% |
-11.9% |
-13.4% |
|
Miami |
-8.3% |
-15.1% |
-19.7% |
-25.6% |
|
New York |
-6.3% |
-11.6% |
-11.5% |
-10.6% |
|
San Diego |
-7.3% |
-13.5% |
-15.7% |
-17.6% |
|
San Francisco |
-6.8% |
-14.2% |
-20.3% |
-24.4% |
|
Washington, DC |
-6.8% |
-11.7% |
-16.3% |
-19.4% |
|
Data as of September 20, 2007. Note that these contracts cover prices with a two-month lag, and that they average prices over three months, so the November 2007 contract actually covers prices from July-September 2007. |
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Tags | Gas, Homebuilders, Real Estate
September 24th, 2007 at 3:17 pm
where is Seattle on this list?
September 24th, 2007 at 4:50 pm
Many REIT ETF’s mostly invest in commercial real estate, such as shopping centers and medical facilities. Their dividends have small correlation to the residential housing market. Maybe general housing concerns will create a buying opportunity for funds such as DCA, RSF, NRI, NRO, JRS, to name a few?
September 25th, 2007 at 4:38 pm
Sorry C, Seattle was left out of the data.