I'm basing my guess on real estate stocks performing well long term on a few things...

1. The housing index $HGX hasn't made a lower low in over 3 years. It is also very close to breaking it's 2010 high after failing to make a lower low in 2011. I'm big on chart technicals and that screams being close to long term bottom to me (if it's not in already)

2. The increase in building permits. Which as you hint, isn't definite proof, but is another "data point." I should add here that building permits have lead the CS home prices by 6-12 months.

3. The amount of real estate stocks outperforming the market the last four months by wide margins.

I'm not in real estate yet but look to rotate out of commodities and into real estate in the next year or two. If in the next significant correction in the market (which could be 1 year + away) we don't see new lows in real estate stocks it'll be time to buy IMO.

This post was edited on 3/27/12 at 2:25 pm

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Posted by kfizzle85

Member since Dec 2005

22022 posts

Posted on 3/27/12 at 3:08 pm to LSU0358

I'm not much for technicals so I won't offer any counterpoint to that and I already offered my counterpoint to the real estate/outperforming market stuff, but I'd like to see your data about building permits leading the CS by 6-12 months. No doubt that CS is a trailing indicator, I just have absolutely no faith in building permit data and given its literal constant revision I find it incredibly hard to believe that there is much to glean out of that information on a forward looking basis. All of that is also to say that I was asking why you think housing prices will go up and by what amount, not necessarily why you think real estate stocks will perform well.

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