4 ETFs Hit By Falling Home Values

According to the S&P/Case-Shiller index of property values in 20 major cities, the housing sector continues to face headwinds and remains in a slump.

The index fell 3.6 percent from March 2010 to March 2011, marking the largest year-over-year decline since November 2009 and reached its weakest point since March 2003.  Furthermore, pending sales of previously owned homes dropped a whopping 12 percent in April from the prior month, forcing many home builders to be wary of when a recovery could be in sight.  Read more of this post

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4 Commercial Real Estate ETFs To Watch

As the US economy continues to show signs of improvement and corporate America is slowly starting to increase headcount, a ray of light may shine on the commercial real estate sector supporting the iShares Dow Jones US Real Estate (IYR), SPDR Dow Jones REIT (RWR), the Vanguard REIT Index ETF (VNQ) and the iShares Cohen & Steers Realty Majors (ICF). 

The first indicator that the sector is improving can be seen in the drop in U.S. office vacancies coupled with an increase in rents, in the most recent quarter.  This trend has not been seen in nearly three years.    More specifically, according to the property research firm, Reis Inc., the national vacancy rate fell to 17.5 percent in the first quarter of the year from 17.6 percent in the prior quarter, reports Bloomberg News.   Furthermore, office buildings gained a net 4.7 million square feet of occupied space during the quarter, while rents increased by $0.11 per square foot to $22.20 during the same time period.  Read more of this post

Foreclosure Inventory Could Hinder Real Estate ETFs

As the number of foreclosures around the nation continues to climb, a massive flooding of these homes into the market could result in a supply shock which could eventually depress real estate prices, effecting the iShares Dow Jones US Home Construction (IYB), PowerShares Dynamic Building & Construct (PKB) and the SPDR S&P Homebuilders (XHB).

According to Clea Benson of Businessweek, the inventory of foreclosed homes that government-controlled Fannie Mae (FNMA) and Freddie Mac (FMCC) currently have has quadrupled over the past three years and stands at a whopping $24 billion.  Furthermore, the physical number of homes that these two companies own has increased to nearly 242,000 and is likely to continue going up.  In fact, RealtyTrac, a data company specializing in compiling data on residential real estate, expects the number of homes subject to foreclosure filings to rise by as much as 20 percent this year.  Read more of this post

Two ETFs Likely To Be Hit By Increased Foreclosures

Despite a slowdown in foreclosure filings in December 2010, Irvine-based real estate database seller and tracker, RealtyTrac, expects the number of US households receiving foreclosure notices to significantly jump in 2011, putting additional stress on the US economy, homebuilders and the SPDR S&P Homebuilders (XHB) and the PowerShares Dynamic Building & Construct (PKB).

The total number of foreclosure filings in December totaled 257,747, marking the lowest monthly tally since June 2008 and an eight percent decrease from the prior month.  Furthermore, RealtyTrac suggests that this decline was driven by increased scrutiny over lenders and their practices.   Lenders in all 50 states are being investigated on whether or not banks and loan servicers used faulty documents and signatures on loan documents to execute and issue loans for those who did not qualify.  Read more of this post

Four ETFs To Play Commercial Real Estate

Despite a stubbornly weak labor market and insignificant increases in consumer sentiment and spending, commercial real estate and the exchange traded funds (ETFs) which track the sector have fared relatively well this year and are expected to continue to do so.

Commercial real estate values appear to be stabilizing as rents are no longer falling, vacancies for apartment buildings, office buildings and retail malls are no longer rising.  A major driver behind this stabilization is improved credit markets, which have enabled many real estate investment trusts (REITs) to refinance debt and issue equity which can be used to pay down debt early or buy more properties at cheap valuations.  Read more of this post

Three REIT ETFs That Are Shining

As the residential real estate market continues to remain volatile and highly dependent on the strength of the labor force, some signs of prosperity have emerged in real estate investment trusts (REITs) enabling the iShares Dow Jones US Real Estate (IYR), the iShares Cohen & Steers Realty Major (ICF) and the Vanguard REIT ETF (VNQ) to perform relatively well this year. 

One reason these ETFs have been trending upward is because they offer an opportunity to debt that traditional financing institutions like banks and insurance companies are unwilling to take on.  Increases in foreclosures, a weak job market and other recessionary factors have put extreme pressure on income producing properties leading to increased stress on the loans that these properties support.  As a result, an opportunity has arisen for REITs to lend, either through debt or equity financing, to the owners of these income properties.  Read more of this post

Three ETFs Influenced By Chinese Real Estate

As China continues to witness exponential economic growth, its real estate sector is following and the Chinese government is taking measures to curb the real estate boom potentially influencing the Guggenheim China Real Estate (TAO), the iShares FTSE EPRA/NAREIT Dev Asia Idx (IFAS) and the Guggenheim China All-Cap (YAO).

China’s Finance Ministry recently announced that it will speed up the introduction of a trial property tax in certain cities before implanting the levy across the nation.   The Ministry further stated that the tax rate will be 1 percent for units that are 90 square meters or smaller and will end an income-tax exemption on profits from the sale of real estate reinvested within one year.  Read more of this post