Monday, June 12, 2006

Real estate wrap up.

I've seen a lot of interesting stuff on the real estate market over the past week. I'm going to include some articles and brief comments on what I've read so that we might get a decent sense of what's going on at the bigger picture level.

The first thing that comes to mind by the way, is Marc Faber mentioning a year or two ago in a Barron's roundtable that there were good opportunities for real estate investment in Berlin. There was another article on the pick up in property transactions and investments in Berlin in the weekend edition of the Financial Times and it just goes to show you, as I mentioned in the last post, that Marc really uses a broad scope when viewing the investment arena.

The first full article I'm going to include comes from John Rubino of and is entitled, "Look Out Below". John has picked up on the news that noted entrepreneur and real estate investor Marcel Arsenault has sounded the alarm for a drop in overheated real estate prices. Arsenault's arguments are reproduced in the article and his overview of the real estate market concludes by drawing out his firm's strategy for investing during the next few years of an expected market drop. In short, Arsenault is not only looking to liquidate some of his holdings, he is also hoping to form a "vulture fund" to pick up distressed properties in the not too distant future.

In contrast to the views expressed by Messrs. Rubino and Arsenault, David Lareah of the National Association of Realtors says there is no bubble in real estate. Check out Mish's blog for a link to the original article and a deconstruction of Lareah's arguments.

Here's a thought: Richard Russell of the Dow Theory Letter has been agonizing over the housing index and stock charts for some time now. He's been noting the recent breakdowns in chart patterns that seem to be taking place across the board in most of the leading housing stocks. What gives? Does this signal big trouble for the national housing market and the shares of leading home builders who are running into problems with more unsold inventory? Russell seems to think so, and I wouldn't doubt that he's going to be right on this one.

And while we're persuing this line of thought, I see another post at Mish's blog that might suggest added problems for Lennar. The homebuilder is being accused of shoddy work by a Florida broker who adds that the problems will not be limited to the homes built in his state. This could spell trouble in the form of lawsuits for some of the other homebuilders who have employed similar shortcut methods.