December 12, 2009

Stock Market Views On The Housing Recovery


Investors can bet on the direction of home prices based on the Case Shiller 10 MSE using exchange-listed securities designed to mimic home prices.

The UMM or MacroShares Major Metro Housing Up will rise when U.S. housing prices climb.The DMM or MacroShares Major Metro Housing Down, profits when real estate values fall.

Housing Markets Today

While there is evidence that the worst is over, doubters persist. They point to 4 million homeowners either in foreclosure or at least three payments behind on their mortgages.

Even if a quarter of those borrowers are able to stay in their homes, there's a lot of potential inventory coming into the market next year, said Jay Brinkmann, chief economist with the Mortgage Bankers Association to cbsmarketwatch.com.

Stock Markets On The Direction Of Home Prices

A short look at how the stock markets view the housing market recovery. The Micro Market ETFs, which allow you to bet on the direction of home prices provides us with a view of how people are viewing the real estate recovery.

The chart shows us market consensus on home prices based on the Case shiller 10 MSE index. The MacroShares Major Metro Housing Up (UMM) had been on a tear as optimism about a stabilization in residential real estate prices. But they have been drifting downward ever since they peaked at 40%. The DMM (red)shares have stabilized and are not showing much directional conviction.

Its Still Fragile Out There
Its anybodys guess as to why the consensus is obviously that home prices have seen there best times, at least for now. Still the optimists are in charge, the UMM has almost doubled in the last six months.

Thanks for Reading
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