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Has The Home (Stock) Owner 'Recovery' Run Its Course?"

Tyler Durden's picture





 

Green shoots, growth off a small base, and self-reported awesomeness notwithstanding, the crux of many investors' thesis for believing in a housing recovery is the fact that homebuilder stocks have risen so magnificently; after all the stock market is a 'discounting mechanism' right? (aside from September 2000 and October 2007) The funny thing is - we've seen this kind of 'rally' in homebuilder stocks before, and somewhat remarkably we are following its trajectory almost to the day. 284-days from the March 2009 trough, XHB (the homebuilder ETF) peaked and then lost 30% in the next 45 days. Today marked Day-285 of the current homebuilder rally (coincidentally running at around the same 120% annualized return and exhibiting similar short-squeeze tendencies). Add to that worrying analog, the third divergence between homeowner 'comfort' and renter 'comfort this year - each prior time ending in a rapid collapse in homeowner confidence; and we remain skeptical that the 'market' knows best in this case.

 

We've seen this homebuilder-rally before...to the day!

 

The 2009-rally saw two jumps in short-interest which both were squeezed to provide just the fuel to keep the miracle alive (until the short-interest ratio fell back to around 1.3x)...

 

The 2012-rally has shown very similar jumps in short-interest and the recent rally has squeezed shorts out providing all the ammunition to extend the run to over 110% (leaving the short-interest-ratio back at around 1.3x once again)...

 

And combine that with the divergence between renter-confidence and owner-confidence (which has twice before this year ended with homeowners losing their 'hope')...

 

And we can't help but feel any 'real' recovery in housing necessitates the kind of influx of supply and movements off larger numbers (i.e. easy comps are over) that equities more than reflect the exuberant belief that this time is different at a debt saturation point.

 

Charts: Bloomberg

 


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Wed, 11/21/2012 - 23:41 | Link to Comment killallthefiat
killallthefiat's picture

NAR's Yun just tweeted "A turkey in every pot, a three car garage for every NINJA applicant"

Thu, 11/22/2012 - 00:30 | Link to Comment onelight
onelight's picture

Yeah and those would be Mutant Ninja's....but without the fun personality..

Thu, 11/22/2012 - 00:37 | Link to Comment markmotive
Thu, 11/22/2012 - 01:30 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

What if the excess inventory never comes to market?

Thu, 11/22/2012 - 02:45 | Link to Comment azblackbird
azblackbird's picture

You nailed it BR... a lot of excess inventory is currently being bought up by sub corps of Fannie. They just bought 275 homes here in Phx in one transaction, and then immedately flipped them to some asian investors. All off the books. I'm sure they're doing the same all over. We just don't hear about it.

Thu, 11/22/2012 - 07:56 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

All off the books.

 

It's resting on the bottom of the sea.....hope you brought scuba gear.

Thu, 11/22/2012 - 09:33 | Link to Comment spanish inquisition
spanish inquisition's picture

Looks like DeBeers is doing the marketing to the Asians!

Thu, 11/22/2012 - 03:14 | Link to Comment onelight
onelight's picture

Well that is the big question, indeed. AZblackbird's call is probably a big part of it, and things like that -- stealth forms of what the RTC did back in earlier cycle. They won't do it overtly, too much market/media impact.

I figure they dribble some of it back in, like a shrewd market-maker would, since now they can monitor local markets and economics on such a granular basis, ie. holding back foreclosure inventory away from the front end, buying the backend MBS, keeping rates low for incented banks, and thereby controlling the housing supply chain to keep the absorption factor managed. Big data and big government, working hand in hand. Whoopee.

But that assumes all the bad-doc fraud aspects get cleaned up. Dunno about that part. Maybe that gets washed in the kinds of deals that AZB mentioned.

Thu, 11/22/2012 - 00:47 | Link to Comment vast-dom
vast-dom's picture

just be a good sheeple eat your turkey and shop till you drop on friday.

Thu, 11/22/2012 - 08:11 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

It's 5 o'clock Friday morning and the stench of cheap perfume. wet diapers, and shrieks of desperation permeate the atmosphere. War is hell.

Thu, 11/22/2012 - 01:23 | Link to Comment Never One Roach
Never One Roach's picture

I prefer putting my money in a safe and solid 'segregated account.'

Wed, 11/21/2012 - 23:50 | Link to Comment knukles
knukles's picture

Stocks are no longer an effective discounting mechanism.

EOC

 

 

Thu, 11/22/2012 - 05:05 | Link to Comment Ropingdown
Ropingdown's picture

Stocks never were a discounting mechanism.  WB said it best "In the short term the market is a voting machine.  In the long term it is a weighing machine."  The standard lecture about stock valuations as measures of discounted future earnings has always seemed silly, phony spreadsheet rationalization. We get to assess the actual recent earnings track of a company, its balance sheet structure, and its apparent prospects given present management and product.  If we notice the market seems to be paying too much today, we don't buy the name.  Maybe we'll be wrong. 

Thu, 11/22/2012 - 06:37 | Link to Comment Dry Drunk
Dry Drunk's picture

Hey Zippy. How is Griffy? When are you two going to be dwarfs in the Hobbit film?

Thu, 11/22/2012 - 00:08 | Link to Comment Magnum
Magnum's picture

We Got Green Shoots!!  Look at all the green shoots we got--

http://www.youtube.com/watch?v=KWu-efNN8PM

Thu, 11/22/2012 - 00:18 | Link to Comment Future Jim
Thu, 11/22/2012 - 00:38 | Link to Comment Manipuflation
Manipuflation's picture

+1 for walstreetpro2 discovery.  An all time classic in so many ways.

Thu, 11/22/2012 - 08:15 | Link to Comment negative rates
negative rates's picture

GM car designers suck, as do the cars they build. If you want some REAL green shoots, click here.    http://www.youtube.com/watch?v=NbKEDQ_oNfE&feature=relmfu

Thu, 11/22/2012 - 09:20 | Link to Comment FreedomCostsaBu...
FreedomCostsaBuck-o-Five's picture

Where's Walstreetpro2 been for the last three years anyway? Did TPTB have a 'discussion' with him (water board style)??

Thu, 11/22/2012 - 00:23 | Link to Comment Spitzer
Spitzer's picture

And to think that the housing crash has not even happened in Canada or Australia yet.

How do we short that shit ?

Thu, 11/22/2012 - 02:04 | Link to Comment Midas
Midas's picture

Careful, this time is different.

Thu, 11/22/2012 - 08:05 | Link to Comment JimmyCDN
JimmyCDN's picture

If you are waiting for a crash, it won't happen.  Canadians are not asleep at the wheel...

 

http://www.remonline.com/?p=14099

 

Besides, we have Mark Carnage and Jim Flatulence.

Thu, 11/22/2012 - 11:45 | Link to Comment Mark Carney
Mark Carney's picture

Please report to the Prime Minister's office, they would like a word with you.

Thu, 11/22/2012 - 00:24 | Link to Comment Midwest Prepper
Midwest Prepper's picture

Time for Prepping, Bitchezzz

http://www.squidoo.com/what-is-a-prepper

Thu, 11/22/2012 - 00:34 | Link to Comment not fat not stupid
not fat not stupid's picture

or ... bad cycle was so large-scale that current smaller scale home recovery floats past 2015.

Thu, 11/22/2012 - 00:47 | Link to Comment Seasmoke
Seasmoke's picture

why do i get a strange feeling that no one is paying their mortgage , yet no one wants to say a word to anyone else about it .....

Thu, 11/22/2012 - 08:06 | Link to Comment Alcoholic Nativ...
Alcoholic Native American's picture

When I go to the rent office every 1st of the month I get the same strange feeling because I'm the only one ever there.

Thu, 11/22/2012 - 00:56 | Link to Comment Manipuflation
Manipuflation's picture

Pretty slow here tonight as well as other boards.  Time to fire up and relax.

Thu, 11/22/2012 - 00:59 | Link to Comment lolmao500
lolmao500's picture

Black swan... North Korean strike on South Korean border island tomorrow?

http://english.yonhapnews.co.kr/news/2012/11/22/0200000000AEN20121122001...

N. Korea warns of another shelling on S. Korean border island

North Korea threatened on Thursday to launch bomb attack on South Korean soil as Seoul prepares to hold events marking the second anniversary of the North's deadly shelling of a South border island two years ago.

A memorial service, a naval firing drill and other commemorative events are to take place to commemorate the deaths of two soldiers in the North's artillery bombardment of Yeonpyeong Island in the Yellow Sea on Nov. 23, 2010.

Thu, 11/22/2012 - 01:25 | Link to Comment Never One Roach
Never One Roach's picture

My neighborhood is loaded with empty houses and yet the builders are buidling over 6,000 more houses just north of here.

 

Sounds fishy. They must be expecting a massive landing of Aliens.

Thu, 11/22/2012 - 02:32 | Link to Comment ebworthen
ebworthen's picture

They're taking out loans to fund the construction, in anticipation of the buyers, who if they buy will be funded by the TBTF banks or the TBTF government, and when that doesn't work another crisis, more bailouts for the borrowers who aren't individual households, more taxes, more debt, lower prices, less employment yet continued bonuses and cushy healthcare and pensions for CONgress, the Supine Court and the rest of the machine.

Thu, 11/22/2012 - 05:11 | Link to Comment Ropingdown
Ropingdown's picture

As for an earlier comment about homebuilders building near empty homes: Why shouldn't we have bought the HB shares for the short-term?  Banks are afraid to lend to anyone that doesn't have a popular mandate for bailouts or for subsidized subprime FHA/GNMA style lending. And FHA/GNMA/VA people much prefer new houses they can't afford vis a vis old houses they can't afford. 

Thu, 11/22/2012 - 01:36 | Link to Comment Kasperfx
Kasperfx's picture

I think more and more people are beginning to see that the lights the government, NAR and media/paid blogers are propagandizing about or not the end of the tunnel, but rather a 100 ton locomotive steaming our way.

Thu, 11/22/2012 - 02:25 | Link to Comment dojufitz
dojufitz's picture

Here in Melbourne Australia people believe homes double every seven years.....every seven years.................every seven years....................

Thu, 11/22/2012 - 02:29 | Link to Comment ebworthen
ebworthen's picture

"This time is different" until it isn't.

I really can't wait for the collapse; so many lies and som much bullshit - so many good people completely fucked over - I will pop a bottle of champagne when I see the bloodsuckers on Wall Street jump from the tops of their penthouses and towers or blow their brains out in their BMW's.

Thu, 11/22/2012 - 02:35 | Link to Comment CCanuck
CCanuck's picture

Ya right, and miss the bailout...sheeeeeeit ain't nobody jump'n no more.

That's the bernack's contibrution to humanity, do you now how many lives he has saved??

 

Thu, 11/22/2012 - 02:42 | Link to Comment ebworthen
ebworthen's picture

You are sadly likely correct, but I can dream, can't I?

Thu, 11/22/2012 - 03:15 | Link to Comment CCanuck
CCanuck's picture

I have bottle of 25 year old hooch I'll be swill'n while watching the youtube of a real banker jumping due to a heavy concious.

What a day, what dream, we can only hope.

Thu, 11/22/2012 - 02:31 | Link to Comment q99x2
q99x2's picture

They should offer subprime lending and bundle single family homes into mortgage backed securities and sell them all over again. What the hell. It worked once. Look at the retards going for the Spanish debt. They are bankers and hedge fund managers they don't care. You could sell them used baby diapers. They are STUPID! The faster they drive their TBTFs into the ground the more money they make shorting them. It works if you work it.

Thu, 11/22/2012 - 02:51 | Link to Comment Lord Of Finance
Lord Of Finance's picture

This calls for a bond market rebellion!

Thu, 11/22/2012 - 03:46 | Link to Comment Floodmaster
Floodmaster's picture

Bank of England holds interest rates at 0.5%,the lowest level in its 316-year history. Recovery = A return to a normal condition, or +- 6%,we are not waiting for a recovery but for the Bernanke's Frankenstein awakening.

Thu, 11/22/2012 - 06:08 | Link to Comment Monedas
Monedas's picture

Have a Happy Turkey Day, Black Friday and Xmas ?  Socialism and PC suck all the joy out of life !  HUD sweet HUD !     As a consolation, CNN is covering the bombing of hospitals in Syria again .... that precision bombing in Gaza was boring .... only color was provided by Hamas shooting fellow Gazians as spies and dragging their bodies through the streets behind motorcycles ?

Thu, 11/22/2012 - 06:59 | Link to Comment AGoldhamster
AGoldhamster's picture

It will get even better - or much worse - have a look at this mind blowing trading opportunity - USDJPY monthly starting from 1980

And it has just started ... the first baby steps: http://4.bp.blogspot.com/-ER4CFmX4Tvc/UK4Djxkw6II/AAAAAAAAA4Y/AUSfGTUb3G4/s1600/USDJPY_20121122.png

Thu, 11/22/2012 - 07:00 | Link to Comment sabra1
Thu, 11/22/2012 - 07:03 | Link to Comment AGoldhamster
AGoldhamster's picture

The last parabolic leg - before the final currency plunge taking down the whole house of cards as we know it? ... http://3.bp.blogspot.com/-qAv-_pbB8V4/UK1m8LGVZ1I/AAAAAAAAA34/GvfKOozAskI/s1600/XAUJPY_20121122.png

Thu, 11/22/2012 - 08:30 | Link to Comment northerngirl
northerngirl's picture

The question is where do we go from here?

Thu, 11/22/2012 - 09:31 | Link to Comment negative rates
negative rates's picture

Here's where i'm goin.   http://www.youtube.com/watch?v=EisXJSsULGM

Thu, 11/22/2012 - 11:32 | Link to Comment Trimmed Hedge
Trimmed Hedge's picture

Years ago a few a people at work used to make fun of me for renting..

The still-crashing housing crash certainly tempered that

 

And now? My employer consolidated branches.. closed up mine, and moved us all to another location 40 miles away

Being a "lowly" renter, I simply packed up & moved a lot closer to the new office

And those house-"owners" who used to bust my chops are now stuck commuting 3 hrs a day round-trip @ 4-dollar gas -- cuz they're now underwater on those houses & "can't" sell/move

 

BUWAHAHAHA!!!

(I only gloat a little to them.. just enough of a friendly reminder)

Fri, 11/23/2012 - 03:21 | Link to Comment nastaking
nastaking's picture

Nokia has launched a new version of its Transport application, which E420 Android 4.0 Tablet PC with 7 inch GPS DVB-T presents directions in a new way and counts down to when the bus or train will leave.

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