High-End Homes' Wobble Is Trouble
This column was originally published on RealMoney on Nov. 17 at 8:55 a.m. EST. It's being republished as a bonus for TheStreet.com readers.
"High-end homes always hold up." There's a bogus shibboleth. However, the data about how expensive homes are really selling right now are scarce, and as many commentators have noted, you can't get a straight answer out of the realty business.
But take a look at a release that came out Wednesday from a small company, American Real Estate Partners (ACP), a Carl Icahn-controlled company that builds expensive homes, among other real estate ventures:
AREP has been marketing for sale portions of its net lease portfolio, and accordingly, carries such properties as "discontinued operations" in its financial statements. For the three months ended September 30, 2005, AREP sold no properties. For the three months ended September 30, 2004, AREP sold 12 properties for proceeds of $13.9 million and recorded a gain from discontinued operations of $9.3 million.At first, I thought that perhaps the company simply might not have put any lots up for sale. But my source close to the company says actually, the company just isn't getting any new sales -- particularly in the $2 million range, where AREP has homes for sale in Westchester County. "It almost stopped cold" this quarter, my source tells me. Remember, it's been the prediction of Capital Growth Management's Ken Heebner that the expensive home cohort is the place where the most damage might be done, and where the most speculation has occurred. This little brief from AREP may be the tell that Heebner, who nailed the long leg up in the group for his fund family, may be well on his way to nailing the downside, too. Random musings: Have some fun, check out how I have done on "Mad Money." We had some folks in from The Wall Street Journal Wednesday, all trying to get "the real skinny" on the show. They didn't know about my "Mad Money Performance" page! Hoo-hah! P.S. from TheStreet.com Editor-in-Chief, Dave Morrow:
It's always been my opinion that it pays to have more -- not fewer -- expert market views and analyses when you're making investing or trading decisions. That's why I recommend you take advantage of our free trial offer to TheStreet.com RealMoney premium Web site, where you'll get in-depth commentary and money-making strategies from over 50 Wall Street pros, including Jim Cramer. Take my advice -- try it now.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV