This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Real Estate ETFs Need Jobs Boost

NEW YORK ( TheStreet) -- Over the past year, the real estate sector has been on somewhat of a roller coaster ride as the federal government has poured billions of dollars worth of incentives its way to add stability. However, recent data indicate the sector is far from being stable.

Most recently, the Commerce Department indicated that new-home sales slumped to an all-time low and the National Association of Realtors stated that sales of previously owned homes unexpectedly dropped 7.2% in January, after witnessing a record decline in the month before. This resulted in overall pending home sales seeing a decline of 7.6% in January.

Despite the extension of government-funded programs, like the first-time homebuyer tax credit, factors such as a weak job market, stricter lending standards, higher fees charged by lenders and a weak consumer sentiment over the health of the economy are taking their toll on the sector.

>>Want More ETFs? Visit Our ETF Screener Page

The Federal Reserve has pushed lending rates to near record lows, but many are unable or unwilling to make use of these rates. In fact, a recent study indicated that new refinance applications were at their lowest levels over the past year. The primary reason behind this is that homeowners just can't get refinancing because they have negative equity in their homes and no collateral to back the value of their homes. Also, the pain of falling home values doesn't seem to be easing.

As loan delinquencies skyrocketed over the past 18 months, lenders like Freddie Mac (FRE) have started to charge high fees to refinance or obtain new loans. In some cases, these fees can reach as high as 1% of the total loan amount. This low interest rate, high-fee environment has deterred homeowners from seeking refinancing.

To make things even more challenging, the Fed plans on ending its purchase of mortgage-backed securities program later this month, which will likely result in an increase in overall borrowing costs. In addition to the woes seen on the borrowing front, increases in foreclosures, which saw a 15% jump in January from a year earlier, are likely to have a negative impact on home values and the overall sector.

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
SRS $11.94 -0.67%
XHB $35.97 0.11%
REM $11.82 -0.42%
AAPL $126.41 -1.66%
FB $81.21 0.39%

Markets

DOW 18,135.72 +38.82 0.21%
S&P 500 2,101.04 +2.51 0.12%
NASDAQ 4,982.8090 +15.6680 0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs