July 2, 2009

REITS Move Over

With job loss at over 450,000 for the month and still no end in site and house prices still declining, although at a slower rate we are at a telling moment.

Last year it looked as if we were going down a dark tunnel into an economic reality we have only read about. Now we have better news, yesterday Ford and Toyata called a bottom. The stock market called a bottom a few months back, in March. Housing has not really called a bottom yet. We see sales actually turning up, but home prices are still declining.

There is a lot of pent up demand for property and yes more are buying, but many are still on the sidelines. I blogged about REITS as a real estate investment that is liquid and wont take the big dollars of a down payment. Much like a mutual fund with real estate as its portfolio, you can invest and make money if you are right and if not you can get out in minutes.


Now we have a new paper investment to use. Most of us are familiar with MSA markets and the S&P Case Shiller index. This index is very useful because it is based on sales price not listing price. The index tracks the repeated sales of homes going back more than twenty years.

MicroShares has created an investment based on the Case Shiller index. For the first time, the housing industry will have bench marks and transparency. The MacroShares Major Metro Housing Up is designed to rise with housing prices. Its opposite, MacroShares Major Metro Housing Down, profits when real estate values fall.

Whats it Good For

For many people who would like to buy, but are still not sure, you can invest in MicroShares and test your theories about real estate markets.

For the investor in a multi family unit, you could hedge your bets by buying the MicroShares Down Major Metro Housing Down shares. If you were early in your real estate investment, you would see some profit in the paper real estate investment and put a floor under your real world loss. Their stock market ticker symbols are: UMM and DMM

Of course, some will become expert in picking the direction of the housing rices and do well with no insurance costs, mortgage interest of roof leaks.
*Chart source: cbsmarketwatch.com
Howard Bell
A web site of over 450 articles related to real estate focused primarily on property management.

No comments: