The Rip-Roarin' REITS Report!
The commercial sector has been fairly stable over the past 2 weeks. There are no major events taking place and companies maintain a positive outlook. The sector only dipped slightly due to the recent sell-offs ravaging through all the markets. Since revenues are primarily from leases, this REIT sector is more sheltered from the delinquent sub-primes and from the FOMC meeting today.
The residential sector, on the other hand, looks like it will continue to take a beating for at least a few quarters due to a tightening debt market and defaulting sub-primes. Construction of new homes actually rebounded by 9 percent in February to a seasonally adjusted annual rate of 1.525 million units-a better than expected rebound after a 14.3% fall in construction in January-its lowest pace in over 9 years. Builders' applications for new permits, however, fell by 2.5% in February to an annual rate of 1.532 units-the 12th decline in the past 13 months. The 9% construction growth is also not as positive when considering the fact that it was rebounding from a major drop in January.
In the northeast, construction fell by a whopping 29.7%-the biggest drop since 1990. The National association of Home Builders announced that the builders confidence index continued to drop to 36, from 39 in February. Economists believe the overall outlook in January of a bottoming out in the housing market may be too optomistic-as the defaulting sub-primes toll on the markets continues to take effect. If the FOMC keeps rates at 5.25%, the housing market will likely be insecure for at least two more quarters.
Jesse
The residential sector, on the other hand, looks like it will continue to take a beating for at least a few quarters due to a tightening debt market and defaulting sub-primes. Construction of new homes actually rebounded by 9 percent in February to a seasonally adjusted annual rate of 1.525 million units-a better than expected rebound after a 14.3% fall in construction in January-its lowest pace in over 9 years. Builders' applications for new permits, however, fell by 2.5% in February to an annual rate of 1.532 units-the 12th decline in the past 13 months. The 9% construction growth is also not as positive when considering the fact that it was rebounding from a major drop in January.
In the northeast, construction fell by a whopping 29.7%-the biggest drop since 1990. The National association of Home Builders announced that the builders confidence index continued to drop to 36, from 39 in February. Economists believe the overall outlook in January of a bottoming out in the housing market may be too optomistic-as the defaulting sub-primes toll on the markets continues to take effect. If the FOMC keeps rates at 5.25%, the housing market will likely be insecure for at least two more quarters.
Jesse
posted by Jesse Phillips at
1:50 PM
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