This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Rough Water for Real Estate ETFs

NEW YORK ( TheStreet) -- Demand for housing has taken a major hit, evident by the record 17% decline in existing-home sales recorded in December.

Many observers suggest that downward price pressures are imminent.

According to the S&P/Case-Shiller Home Price Index, home prices have gained roughly 4% from their 2009 lows. Although this appears promising, and the index has been moving in the right direction, there are plenty of market forces that likely will work against the index and bring prices down.

First, inventory levels remain elevated and are likely to trend upward. According to the National Association of Realtors, the monthly supply of existing homes increased nearly 11% to 7.2 months in December 2009 from November 2009. These numbers are much lower than inventory numbers witnessed a year earlier, but they remain well above the six-month threshold.

To add to the inventory woes, foreclosures are expected to flood the market. Some real estate experts suggest that nearly 2 million foreclosures will take place in 2010 as the backlog in distressed properties is released. This will put downward price pressures on existing homes and increase inventories.

From a lending perspective, mortgage rates have been driven down by the Fed's decision to keep interest rates at exceptionally low levels. Although this is great for mortgage seekers, lending still remains relatively tight, and these favorable rates are generally only available to those who have hefty down payments and high credit scores.

To make things even worse, an optimistic economic assessment released by the Federal Reserve yesterday failed to repeat its assertion that the housing market is improving.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ITB $26.59 0.00%
IYR $76.56 0.00%
XHB $33.66 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs