Over the past 3 or 4 years I have watched with keen interest (and participated) in the ups and downs of the American and Canadian real-estate markets.  Recently published stats have fueled a bit of media frenzy which has become an interesting study in conflicting market noise.

In the Canadian market there are those pointing to sustained or increased property values and a market that is bloated with high unaffordable prices ripe for a correction and the other side that says sales are sustaining and even growing and we are and there should be no correction on the horizon.

The US market is even more interesting, there seem to be two themes in the US market one that says the market has bounced off lows and although it has recovered somewhat in certain areas it is still undervalued. The other theme points to the market coming up too fast and is now ahead of sustaining fundamentals. Since the US market had been in a several year slump let’s look at that market as viewed by some recently published statistics.

Bull

Case Shiller composite index of 20 metropolitan areas climbed 10.9 percent year over year, beating expectations for 10.2 percent.

Institutions like the Blackstone Group have spent more than $4billon for 24k homes in the U.S housing market that it plans on renting out.

A recent analyst forestry report cited housing starts that are 29% above year ago level and inventories of new homes for sale near 50yr lows and is predicting a cumulative housing deficit of 2.8M units in 2014

Last year, Realogy Holdings Corp who is a franchisor of six of the most recognized brands in the real estate industry:, CENTURY 21®, Coldwell Banker®, Sotheby’s International Realty® etc. (NYSE:RLGY) had revenue of $4.7 billion and a gross profit of $1.0 billion. In the first quarter of this year compared to last year and EBITDA was up 34%.

The Keller Group, an engineering specialist, has reported a near doubling of full-year profits as it benefited from an improvement in the US house building market. 

Bear

The Federal Reserve housing affordability index has declined 13% since the beginning of the year. And about 22 million Americans may lack enough home equity to move, keeping property listings tight and limiting sales as the housing market recovers.

Shadow inventory John Burns Real Estate Consulting, estimates approx. 10.0M housing units have negative equity and an estimated 53% are keeping their mortgage payment current,

Lender prosessing services reports in May 2013 over 9% of outstanding mortgages in the us were either delinquent or in forclosure.

According to the Campbell/Inside Mortgage Finance Housing Pulse Tracking Survey, the average American Joe isn’t participating in the U.S. housing market. In April first time homebuyers accounted for 29% of home purchases in the U.S housing market, 17% lower than April 2012.

A recent IPO filing of American Homes 4 Rent provided some interesting information on the market: total US home inventory was 133M units, of which 12.6m were vacant.

Some companies are hedging both sides of the market a recent IPO  American Residential Properties (NYSE: ARPI) feels they are ideally positioned f if there is more appreciation in markets like phoenix where there properties have gone up, and conversely they enjoy upside if the market falters and more foreclosures result in more prospects for their rental properties.

Which to believe?

My view based on these stats is that these is still the start of a long recovery…..If you have a longer time horizon of 5 – 10 years then enter at any time.  If you want to try and time the market then there “may” be a short-term pullback over the next 3 – 12 months, but trying to time the bottom and the extent of a pullback is risky and one could miss the opportunity altogether.  Do your research and know your marker….not just compared to other home or real estate in that area, but also the macro trends that creates an environment where the market you invest in should outpace the greater real estate market.

Chad Wasilenkoff is the CEO of Fortress Paper and a regular contributor to MoneyTalks

On Monday, China will report GDP growth figures for the second quarter.

Market economists expect the government to announce an annual growth rate of anywhere between 7.3% and 7.8%, with the median estimate at 7.5%.

With a forecast of 7.6% year-over-year GDP growth in the Q2, BofA Merrill Lynch economist Ting Lu is relatively bullish on China.

In a note to clients today, he asserts….

……read it all HERE

QUESTION:

“So Deutsche Bank is bankrupt and US investment and commercial banks are at big risk from rising yields, but all the stock prices are still going up because people will trust owning Goldman or Barclays stocks over owning government bonds???”

ANSWER: I seriously doubt that bank stocks will do well. During the Sovereign Debt Crisis of 1931, over 3,000 US banks failed. Roosevelt declared a Bank Holiday. Cash was king. Commodities, including silver, collapsed into its 13 year low in 1932.

It was the devaluation of the dollar that forced inflation just as Japan finally tried but still fails to grasp the real issues suppressing Japan. Roosevelt confiscated gold to make sure he funded his programs with the devaluation of the dollar and to end hoarding. When people do not have confidence, they simply hoard cash and do not invest.

This is why there was such a shortage of money that cities were forced to start printing their own. People accepted this scrip because there was NO OTHER CHOICE! Over 400 cities issued their own money and that too was omitted from the history books.

You can go on Ebay and buy bonds that were defaulted upon as you can with Depression scrip. Government hid the 1931 Sovereign Debt Crisis and it was omitted from the history books as well as Gailbraith’s Great Crash. This was all to support socialism. They lied! Surprised?

The problem is, politicians and economists had to sell the New Deal. Read the newspapers before 1929 and after the New Deal. Previously, stocks rose when interest rates rallied because that was bullish showing there was still a demand for money. Just look at the facts. Rates decline sharply with every depression and recession. They rise with booms. With the New Deal, the thinking flipped and became higher interest rates are bearish BECAUSE government wants to see stocks decline because they now dictate the economy. Analysts did not pick-up the rug and investigate anything. Everyone adopted the New Deal thinking and Keynesianism. They fashioned their theories on facts that were flat out right bogus propaganda, intervention, and manipulations. Sorry, but the confusion people experience today is because they fail to see the world as it is and prefer to see government as the demigod of Wall Street. The analysis is NOT free market, it is what will they do to us next!

The popular myth that gold will rise to $30,000 because of hyperinflation is just nonsense.Germany ended the hyperinflation not with gold, but with real estate backing to the banknotes. Unfortunately, people WANT to believe this stuff about hyperinflation and constantly send me emails only trying to argue points like brainwashed terrorists expecting to get their 72 virgins. Who would want that many anyhow I do not know for they would come with 72 mother-in-laws. There is not a single incident of any established major government going into hyperinflation. They all die by their own hand committing financial suicide because they attack the people in search of wealth precisely as they are doing now. Liquidity is off by 50% from 2007. They are destroying the world economy and are brain-dead. They are TOO STUPIDto see that they are collapsing civilization by destroying all the very reasons that brought people together in the first place. Someone from a foreign land cannot open an account with Merrill Lynch and deal with a broker of choice. He must only go through their international desk because they have to report to everyone what he is doing in the USA. There are custodians who will not accept REITS because they do not want the problem of trying to value them for regulators. With every step we take, we are destroying more and more of our economy not to mention losing all our human rights.

Another post by Martin:

Most now target Gold in the 1050 range – You Are Your Biggest Adversary

With gold and silver plunging, the US dollar strengthening, and oil still above $100 a barrel, today Marc Faber told King World News this will “end in disaster.”  This is part I of a series of written interviews that will be released today on KWN in which Faber discusses the end game, government theft, how investors can protect themselves, gold, silver, bail-ins, central planner actions, global markets, and much more.

Eric King:  “Marc, you were talking there about the endless printing of money.  Obviously it’s going to end in disaster, but when is that going to end?

Faber:  “I agree with you, it’s going to end in disaster.  But it’s not going to end at the hand of central bankers because I know very well how they think….

….Presses Gold To 3 Yr Weekly Low Close.  Silver futures for September delivery tumbled 4.9 percent to $18.736 an ounce on the Comex, the biggest decline since June 20. The metal has dropped 38 percent this year, the most among the 24 raw materials in the Standard & Poor’s GSCI Spot Index.

The greenback climbed as much as 1.6 percent against a basket of major currencies, eroding the appeal of gold as an alternative investment.

Non-farm payrolls growth came in at 195,000 against consensus forecasts of 165,000.

The US jobless rate stayed at 7.6% however, rather than slipping as forecast. But average hourly earnings rose 2.2% annually against the 2.0% analysts predicted. 

Dollar Chart:

Weekly Gold Chart:

Monthy Gold Chart:

The DOLLAR PRICE of gold dropped $20 per ounce lunchtime Friday in London, briefly dropping through $1220 per ounce after the release of June’s US non-farm payrolls data.

“With the US economy improving, US interest rates rising and the Dollar no longer perceived to be at risk,” says the latest Commodities Weekly from French investment and bullion bank Natixis, “the need for a safe haven against currency debasement and inflation dissipated.”

“Should the Dollar continue to strengthen, so gold prices will remain under pressure,” says the note, as Western investors continue to sell exchange-traded gold funds.

ETF gold sales since February now total 572 tonnes, says Natixis – “equivalent to increasing annual gold [mining] production by almost 13%.”

Chinese gold buyers, in contrast, imported the second-largest volume of bullion on record in May, new data showed Friday.

Net imports of gold bullion to China through Hong Kong totaled almost 109 tonnes, the Hong Kong Census Bureau said, greater by more than one third from April.

Over the 1st five months of the year, China’s net gold imports stood at twice the level of 2012.

Across in India meantime – likely to be overtaken by China this year as the world’s No.1 gold consumer – “It is difficult to sell even 5 kilograms per day as the marriage season is almost over,” said Chennai wholesalers MNC Bullion to Reuters on Friday.

Fighting both the typical gold summer lull of Chaturmas and new government curbs on imports of gold bullion, India’s major retail chains “are aggressively promoting diamond jewellery” says the newswire, as well as expanding overseas in Singapore and Dubai.

“Gold has been the traditional form of savings among Indian households for many years,” says B.Venkatesh, founder of financial advisors Navera Consulting, writing in The Hindu.

“Buying gold gives you a feeling of comfort…Gold is accepted at all times, [giving] you feeling that it is a ‘safe’ asset.”

European stock markets meantime failed to follow Asian shares higher on Friday, while weaker Eurozone bonds recovered more of the week’s drop.

Silver prices fell faster than gold, losing some 3.0% for the week after the non-farm payrolls data.

Both gold and silver neared the end of London trade Friday with lowest weekly finish against the Dollar since August 2010.

The US Dollar also rose Friday against the Euro and Sterling after the non-farms jobs data, touching 6 and 17-week highs respectively.

The European Central Bank and Bank of England had confirmed their record-low interest rates for the foreseeable future on Thursday.

By Friday afternoon in London, both Euro and Sterling gold prices had cut their earlier gains, but were heading for their first weekly gain in six.

“The stronger Dollar is adding to the downward drag in metal prices,” says Standard Bank’s daily note.

“Even if the NFP data [had come] out below expectations, we would look for rallies in gold and other precious metals to fade.”

By Adrian Ash 
BullionVault.com