Builder Sentiment Improves

Latest news from Reuters via Yahoo.com. Perhaps we are ready to call a "bottom".

U.S. home builder sentiment rises in May
On Monday May 18, 2009, 1:01 pm EDT

WASHINGTON (Reuters) - U.S. homebuilder sentiment jumped to its highest level in eight months in May, a private survey showed on Monday, supporting views that the three-year housing slump might be close to an end.

The National Association of Home Builders/Wells Fargo Housing Market Index rose to 16 from 14 in April, in line with market expectations.

The NAHB attributed the second consecutive monthly increase in the gauge -- which measures builder confidence in the market for newly built, single family homes -- to "the best home buying conditions of a lifetime."

"This continued increase indicates that home builders feel we're at or near the bottom of the market and that positive signs lie ahead for builders and potential home buyers, provided that builder access to production credit significantly improves," said NAHB chief economist David Crowe.

Other housing indicators have recently shown a sharp slowing in the pace of the market's decline, raising optimism a bottom was not too far away.

The collapse of domestic house prices and the subsequent global credit crisis were the main catalysts for the U.S. recession, now in its 17th month.

The report also showed two out of three subindexes of the Housing Market Index rising in May. The current sales conditions gauge climbed two points to 14, while the sales expectations measure for the next six months rose three points to 27. The traffic of prospective buyers index was unchanged at 13 in May.

Housing Market...Signs of Improvement?

This is an article from "Real Money by TheStreet.com". I don't know about you but for me...any glimmer of improvement is worth taking a look at!

RealMoney by TheStreet.com
Housing Could Bottom Sooner Than You Think
Tuesday November 25, 10:00 am ET
ByDavid Sterman, RealMoney Contributor

If you took a snapshot of the current housing market, you would find little reason for cheer. A flood of "for sale" signs blight many a front yard in neighborhoods all across America, and buyers looking for foreclosed properties seem to be the only visible signs of support. Also, as Jim Cramer recently noted, it is not helpful that homebuilders keep adding to supply.

Nevertheless, the total supply of unsold homes is steadily dropping. As Tony Crescenzi points out, the rate of new household formation handily exceeds the amount of genuinely new homes on the market. (Some construction is the result of tear-downs or storm-damaged properties.)

Importantly, a number of indicators suggest that the worst of the housing slump may have passed. For starters, the steady drop in home prices is beginning to moderate. Home prices had been slumping 2% sequentially for a good portion of 2007, but those drops are now in the 0.50% to 1.00% range. While home prices may fall a bit more over the next few months, they may finally flatten later this winter.

In addition, mortgage rates are on the decline. After hitting 6.63% last July, the average 30-year mortgage has fallen to around 6%, and rates could head yet lower: 10-year T-bill yields have plunged to around 3.15% (at the time of this writing), which implies that 30-year mortgage rates could fall toward the 5% mark.

More telling is the historical relationship between owning and renting a home. From 1975 to 2000, that ratio was fairly constant, but in recent years, it has been far cheaper to rent than buy a home in many markets, as home prices shot up and rental costs rose only modestly. Now, the stunning drop in home prices has pricked a hole that bubble.

As recently as 18 months ago, the cost of owning was far above historical trends (more than 20%) in 16 out of the 20 cities surveyed by Case-Shiller. Now, only four out of the 20 markets surveyed show a 20%-plus gap. In the other 16 markets, the cost to own has reverted back toward the historical mean and, in some cases, is even below the cost of renting.

So many people insist that there are no buyers out there ready to pounce, but that's not the problem. There are plenty of potential homeowners waiting in the wings, most of whom simply want to see some stabilization in housing prices. When sentiment turns among these folks, the housing market will show real signs of life. We do not need to wait for the glut of unsold homes to fall to zero; we just need buyers' confidence to return.

To be sure, rising unemployment does not instill confidence, and this thesis may not play out until unemployment appears to have peaked, which may not happen until later in 2009. Before then, however, the combination of low mortgage rates and a continuing increase in the economic merit of owning vs. renting is bound to start bringing some buyers back into the housing market.

Of course, the latest read on existing home sales wasn't exactly encouraging, and that's likely to be the case for the next couple of months. That being said, investors should closely scrutinize subsequent readings for clues that this ultra-important segment of the economy begins to show signs of getting off the mat.
Following the old saying "it's always darkest before the dawn," sector share prices have been hitting new lows. The S&P Homebuilders Index hit new lows last week after having fallen more than 75% in the past three years. Many of the stocks in the index are selling not far above tangible book value at this point. For example, Pulte Homes sports a market value of about $2.2 billion yet has tangible book value in excess of $3 billion.

The question for many investors is whether that book value will erode further. That may happen if real estate carried on the books needs to get written down even further, which, again, relies on home prices finding a bottom. As a result, a floor in home prices may bring this sector back into the spotlight in the context of impressive price-to-book-value ratios.

Net-net: While many think that the housing bottom is several years away, it could come within the next two to three quarters.

Another View...How to keep your sanity in an insane market.

Editors Note: I am always looking to share other people's views and insights as well as my own. As many of you know, the people who work in the Real Estate market are trying to make sense of what they are going through. This week I am posting the thoughts of a special guest writer. Nicole Abele is a Sales Manager with Lakewood Homes. She shares her insight on how she is coping with this dysfunctional housing market without becoming dysfunctional. RB

2002-Control it
2003-Work for it
2004-I think I am working for it (But it seems too easy)
2005-Now I think I have it
2006-Got it
2007-Trying to hold on to it
2008-Lost it

I just realized today I am the youngest person still employed by my company. Funny, I am 28 (what is considered a seasoned age at some companies) and it drives me nuts when people play the age game with me. My dad always said that you will graduate college thinking you know everything and will enter your thirties knowing you know nothing. I know nothing!

“Growing up” professionally in this industry has been such an experience. I went from being a nursing student to being part of prosperous company that sold 1,800 homes in a year. It was all about timing. I was a successful sales person mostly because I was here at the right time. For most of us (from 2002-2006) in the new home industry all we had to do is show up and know how to work fast. By doing that, we were successful.

Reality, however, kicked us in the ass in June 2006. I was just promoted to a sales manager. Lucky for me, just in time to maintain my old salary as the market took a hard hit. Unlucky for me, I had no idea what was to lie ahead.

I went from literally taking orders to “what the hell is wrong with me? I have not sold anything for a month.” All the skills I had (working quick, being efficient and creating urgency) were rendered obsolete by our housing recession. I resisted at first, thinking that this was a fluke and that if I kept doing what I did so well in the past everything would fall back into place. WRONG!

Then something happened. I sat last Saturday and listened to a client say that she was buying here because of my partner. She said and I quote “I loved his personality and his selling style. That is why I am here”. Shit, I almost fell out of my chair! “It works” I thought. Being there, being present and willing to try new things got us a sale! If I would have heard this in 2006 I would have thought “Oh how sweet”. But for all of us out there selling now…know that this kind of occurrence could just be our tipping point.

I have to say my mindset has completely changed. I always was looking at what can this market do for me. Now I am thinking… “what opportunities do I have in this market?” People, more than ever, are looking for guidance during this “housing crisis”. People still want to move, they want a new home and a safe community to raise their family. What they are lacking is the security to do so. They listen to all the negative talk on the news about the declining market. Yet, they still get in their cars and drive to our communities in hope of finding answers. What we need to do is have the right mindset and be there to give them the answers they need. Hell, we are all scared right now and our lives reflect that. This market has affected our paychecks, lifestyles and attitude. Yet we are still here and so is our opportunity. Helping people get into the home they want and can afford is still a strong desire for most people in our line of work. For us, sales people that love their jobs, we can still do this.

Making 150 to 200K a year is long gone…for now. Making 70K is a challenge but still realistic. You can choose to bail out right now…this an option. If you do not love what you do then you should probably go. If you love what you do…then stay. Try crazy things, do what you never thought you would do and for god-sake have some fun! Try it, it just might work. What you do right now may not bring immediate results (sales), but it will position you and your company for a great future.

An aside…

This past month has inspired me. Like golf, you can play so poorly for so long and think you suck. However, all you need is that one good hit (the right swing, mindset and contact with the ball) to keep you in the game. Despite layoffs, confusion and uncertainty I find myself drawn back. I feel something is happening. I do not know what it is, but I know that it is good. Take me off your list of people to worry about. One thing about me…I am always ok. I may float between extremes but it is the only way I find common ground. I like that about me (because it works for me)!

Here are some inspirational quotes and words of wisdom that Nicole likes to remember:

Terra firma ain’t so firma.

All structures are unstable.

Wisdom is knowing that I am nothing…Love is knowing that I am everything…and in between my life moves.

This too shall pass.

Whatever you resist…persists.

Chin up, shoulders back, strut a little. Don’t lick your wounds. Celebrate your scars. You are in a lion’s war. Just because you did not win doesn’t mean you don’t know how to roar. (Ok, it is from Grey’s Anatomy but I liked it. LOSER)

When you do not know what to do…do nothing.
The answer will come at the time when you have to make a decision. (That’s from Grandma got to love her)

Final Note: In the future I will be trying to strong-arm more of my friends, family, and colleagues into sharing their views. If you have some thoughts to share on leadership, life, motivation, self-improvement, sales, real estate, politics or any other worthwhile topic please let me know!

What is a hero?

As I contemplate the theme of my site I am reminded of the words of Joseph Campbell. The sound of his words still echo in me. "Follow your bliss" he said. The simplicity of those words and that philosophy still captivate me. The road map for any hero on a quest was simple...the hero was always following his or her "bliss". I laugh now at how elusive that road map is to find in our everyday lives.

We are often looking at the world without a map to follow. Instead we usually focus on landmarks and familiar sites to help guide us on our journey. For many people leaders, mentors, teachers, parents, politicians, or even celebraties serve as their guides. For me, a hero is the most reliable guide to follow.

But what then is a hero? What makes a hero so enduring and transformational?

I look at my world. I look at my community and I see heroes every day. I believe we are all capable of being a hero. A hero is, as Joseph Campbell puts it, someone who "follows (his or her) bliss". Despite all the obstacles...the hero continues to follow the path that leads them to their "bliss".

I have always yearned to understand heroes...John Wayne to John Kennedy...Thomas Jefferson to Martin Luther King...Mother Theresa to my mom...Moses to Jesus to Buddha to Muhammed. I seek stories of heroes as a way to find my way on my journey. They serve as my landmarks. I may not know my own bliss as clearly as I should but if I can understand other heroes and their quests perhaps I will stumble toward my ultimate destination.

I may not be a hero but I'll know one when I see one...I'll let you know what I find on my journey.