Theory has it that smaller regional banks are expected to grow with the expected Fed increase in interest rates. As you wrote, only 1 Wall Street analyst recommends Cardinal as a buy and 5 are a Hold. Question is why the lack of confidence among the majority of analysts, do they have something to be concerned about?
Are we really out of the housing doldrums? Over the past 7 years, 2008, consumers for the most part have faced a much harder process in qualifying for a mortgage, and 0% down loans have become a thing of the past. This has obviously had a knock on effect in reducing the number of homes bought and sold in the last decade. Buy how is the US market really doing? Not great if we look at some other numbers.
According to Zillow's data from last year, the total value of U.S owner-occupied housing remained at $3.2 trillion below 2006 levels. In addition, around 10 million households (or 20% of all mortgaged homes) are under water on their loans owing more on their mortgages than the market value of their homes. Many Americans continue to be at risk of foreclosure, joining five million other households that have suffered the same fate since the real estate market collapse in 2007.
With interest rates having been relatively low for a number of years now it has been cheaper to get into home loans, this might all be coming to and end if the Fed puts up rates as expected sooner or later.
From your data, we can see foreclosure rates in NY were the highest in 2009, then fell for few a years and increased again in 2012/13 before dropping again last year. I would have expected foreclosures to continue to fall. Maybe the reason for the increase in foreclosures has been due to many consumers being enticed into jumping into mortgages that they couldn't afford to pay because of historically low interest rates, and only later defaulting when they were later unable to keep up payments.
The statistics don't lie. According to Zillow, around 10 million households are under water on their loans and still owe more on their mortgages than the market value of their homes, or 20% of all mortgaged homes. Many Americans continue to be at risk of foreclosure, joining five million other households that have suffered the same fate since the real estate market collapse in 2007. Where does the market go from here?
Perhaps a major reason why the recovery has not happened as expected is due to the government's tightening of mortgage regulations that were put into effect following the biggest mortgage default mess in America's history during the first decade from 2000. Consumers for the most part have faced a much harder process in qualifying for a mortgage, and 0% down loans have become a thing of the past. This has obviously had a knock on effect in reducing the number of homes bought and sold in the last decade.
According to Zillow's data from 2014, the total value of U.S owner-occupied housing remains $3.2 trillion below 2006 levels. In addition, Zillow says that around 10 million households are under water on their loans and still owe more on their mortgages than the market value of their homes, or 20% of all mortgaged homes. Many Americans continue to be at risk of foreclosure, joining five million other households that have suffered the same fate since the real estate market collapse in 2007.
To assume that the FED alone is able to effect house sales is missing the larger picture. Home sales are influenced by many other factors of which the FED's policies are only a part of the story. The cost of borrowing money and interest rates are a hugely important, no doubt. But we have to consider the following too: demographics, state of the economy, real estate as an investment choice vs the stock market, regional differences, supply and demand, rate of new construction, supply of jobs, and other factors. A big change happened after 2008 when new rules about 0% down payments were made by the Gov to avoid mortgage defaults. This has made it much more difficult for potential buyers to get into starter homes. This trickle down effect will last for years and is probably still affecting large numbers of buyers who decide to rent because they cant find the money for a down payment. Would be interesting to see a comparison between starter home purchases in the past decade vs prior to 2008?
Interesting historical perspective. Fascinating that Saudia Arabia considered Israel a military threat, but there go. Back in the 70's Saudia Arabia looked to the US for military protection against its neighbors because "it didn't have an army", it seems they have come a long way since then. According to Jane's Weekly, the Saudis are ranked 3rd in size in the Middle East. It also has the fourth-highest military spending of any country in the world. The country's arms buildup has largely been driven by sales from the US and other Western countries.
Does this perhaps nullify the Saudi dependence on the US for protection? If so, does it also nullify their part of the oil deal? A combination of oil power and military power is never a good mix!
Looking back at history, one can see why America truly needs to become energy independent. While the agreement made between the Saudis and the US with Kissinger seems to be pretty much holding up (Saudi Arabia has peaceful relations with the US and its neighbors for now). Perhaps the real bull in the China shop is Iran - possibly the biggest threat to the entire region. Who's gonna stand up to them when the sh## hits the fan?
What about hedging against cross currency volatility? This past year especially, there have been and continues to be lots of volatility with currencies including the rising dollar and falling euro etc. Do you have any thoughts on UUP, ERO, or currency hedged ETFs like HEZU, HEWG, DBEU? Or maybe we should just follow Buffett's advice and invest in European stocks?
Buying while gold is out of favor is a good idea. Once the tide turns and stocks turn south, gold will become the popular choice for investors as they flee from volatility towards the perceived stability of gold or silver. What do think about hedging with GLD and SLV? Are there better commodity investments out there? What about Copper? Palladium? Platinum?
I agree the stock seems to be stagnating this past few months. If we look at insider trades, it seems that in the last 6 months there were no insider buy trades on AAPL, but there were 13 sell transactions totaling 1,502,020 shares.
With Apples vast coffers of cash, I wonder if there are any mergers in their future?
Who knows the future of oil, its all up to Allah apparently anyway to quote the Saudi OPEC oil minister, but if oil prices continue to stay depressed for the foreseeable future, SDLP will see its cash flows decline significantly as it negotiates contracts with lower rates than the company has now. Lets see if OPEC will be making any drastic announcements about curtailing oil supply? Wouldn't put money on that horse!
Latest Comments
Cardinal Financial - All Time High
Theory has it that smaller regional banks are expected to grow with the expected Fed increase in interest rates. As you wrote, only 1 Wall Street analyst recommends Cardinal as a buy and 5 are a Hold. Question is why the lack of confidence among the majority of analysts, do they have something to be concerned about?
It’s Time To Invest In A Housing Recovery
Are we really out of the housing doldrums? Over the past 7 years, 2008, consumers for the most part have faced a much harder process in qualifying for a mortgage, and 0% down loans have become a thing of the past. This has obviously had a knock on effect in reducing the number of homes bought and sold in the last decade. Buy how is the US market really doing? Not great if we look at some other numbers.
According to Zillow's data from last year, the total value of U.S owner-occupied housing remained at $3.2 trillion below 2006 levels. In addition, around 10 million households (or 20% of all mortgaged homes) are under water on their loans owing more on their mortgages than the market value of their homes. Many Americans continue to be at risk of foreclosure, joining five million other households that have suffered the same fate since the real estate market collapse in 2007.
With interest rates having been relatively low for a number of years now it has been cheaper to get into home loans, this might all be coming to and end if the Fed puts up rates as expected sooner or later.
Why The Housing Market Collapse Is Set To Resume
From your data, we can see foreclosure rates in NY were the highest in 2009, then fell for few a years and increased again in 2012/13 before dropping again last year. I would have expected foreclosures to continue to fall. Maybe the reason for the increase in foreclosures has been due to many consumers being enticed into jumping into mortgages that they couldn't afford to pay because of historically low interest rates, and only later defaulting when they were later unable to keep up payments.
The statistics don't lie. According to Zillow, around 10 million households are under water on their loans and still owe more on their mortgages than the market value of their homes, or 20% of all mortgaged homes. Many Americans continue to be at risk of foreclosure, joining five million other households that have suffered the same fate since the real estate market collapse in 2007. Where does the market go from here?
The Housing Recovery's A Big Fat Lie
Perhaps a major reason why the recovery has not happened as expected is due to the government's tightening of mortgage regulations that were put into effect following the biggest mortgage default mess in America's history during the first decade from 2000. Consumers for the most part have faced a much harder process in qualifying for a mortgage, and 0% down loans have become a thing of the past. This has obviously had a knock on effect in reducing the number of homes bought and sold in the last decade.
According to Zillow's data from 2014, the total value of U.S owner-occupied housing remains $3.2 trillion below 2006 levels. In addition, Zillow says that around 10 million households are under water on their loans and still owe more on their mortgages than the market value of their homes, or 20% of all mortgaged homes. Many Americans continue to be at risk of foreclosure, joining five million other households that have suffered the same fate since the real estate market collapse in 2007.
The Fed's Failure: New Home Sales Back To 1960s Levels
To assume that the FED alone is able to effect house sales is missing the larger picture. Home sales are influenced by many other factors of which the FED's policies are only a part of the story. The cost of borrowing money and interest rates are a hugely important, no doubt. But we have to consider the following too: demographics, state of the economy, real estate as an investment choice vs the stock market, regional differences, supply and demand, rate of new construction, supply of jobs, and other factors. A big change happened after 2008 when new rules about 0% down payments were made by the Gov to avoid mortgage defaults. This has made it much more difficult for potential buyers to get into starter homes. This trickle down effect will last for years and is probably still affecting large numbers of buyers who decide to rent because they cant find the money for a down payment. Would be interesting to see a comparison between starter home purchases in the past decade vs prior to 2008?
The Evolution Of The Oil Weapon
Interesting historical perspective. Fascinating that Saudia Arabia considered Israel a military threat, but there go. Back in the 70's Saudia Arabia looked to the US for military protection against its neighbors because "it didn't have an army", it seems they have come a long way since then. According to Jane's Weekly, the Saudis are ranked 3rd in size in the Middle East. It also has the fourth-highest military spending of any country in the world. The country's arms buildup has largely been driven by sales from the US and other Western countries.
Does this perhaps nullify the Saudi dependence on the US for protection? If so, does it also nullify their part of the oil deal? A combination of oil power and military power is never a good mix!
Looking back at history, one can see why America truly needs to become energy independent. While the agreement made between the Saudis and the US with Kissinger seems to be pretty much holding up (Saudi Arabia has peaceful relations with the US and its neighbors for now). Perhaps the real bull in the China shop is Iran - possibly the biggest threat to the entire region. Who's gonna stand up to them when the sh## hits the fan?
Market Crash? Here's How I'm Starting To Protect My Profits
What about hedging against cross currency volatility? This past year especially, there have been and continues to be lots of volatility with currencies including the rising dollar and falling euro etc. Do you have any thoughts on UUP, ERO, or currency hedged ETFs like HEZU, HEWG, DBEU? Or maybe we should just follow Buffett's advice and invest in European stocks?
Good News: Investors Cut Gold Holdings To Six-Year Low; Good Timin'
Buying while gold is out of favor is a good idea. Once the tide turns and stocks turn south, gold will become the popular choice for investors as they flee from volatility towards the perceived stability of gold or silver. What do think about hedging with GLD and SLV? Are there better commodity investments out there? What about Copper? Palladium? Platinum?
AAPL Butterfly Trade For June
I agree the stock seems to be stagnating this past few months. If we look at insider trades, it seems that in the last 6 months there were no insider buy trades on AAPL, but there were 13 sell transactions totaling 1,502,020 shares.
With Apples vast coffers of cash, I wonder if there are any mergers in their future?
Seadrill Partners Could Offer An Intriguing High-Yield Opportunity
Who knows the future of oil, its all up to Allah apparently anyway to quote the Saudi OPEC oil minister, but if oil prices continue to stay depressed for the foreseeable future, SDLP will see its cash flows decline significantly as it negotiates contracts with lower rates than the company has now. Lets see if OPEC will be making any drastic announcements about curtailing oil supply? Wouldn't put money on that horse!