The subprime mortgage fiasco cuts into consumer spending and the revenue lenders receive from interest. It has been about 6 months now that this issue has effected the market. As the market reached all time highs just a couple weeks ago, what would the say is the overall health of the market? The subprime issue has taken its toll on the real estate market as well. Some say that it will last into mid 09. In this case, would real estate rental markets be in higher demand? Also, if the real estate market is in a slump, why are REITs looking like a spectulative buy right now for a lot of people? Simply diversification?
Thanks everyone for their thoughtful input!
we’re in a correction that will last at least the next several months which has the potential of becoming a bear market for the next year or two. the problem looks like its not contained as major foreign banks have recently acknowledged related investment losses and mutual funds are selling profitable investments in emerging markets in favor of security of US dollars/treasuries. even the chinese government has come out to say they believe in the safety of the US dollar. all debt is being repriced not only bcas of subprime mess but bcas debt from already announced LBOs will soon hit the credit market as well. classic case of over supply. future M&A will have to be driven by cash but in an economic slowdown, you would think most would preserve cash until they see a light at the end of the tunnel (i.e. some competitors may not survive a bear market/recession).
as for ur question re reits, the following article may shed some light. further evidence the mortgage market is shaky.
April 1st, 2010 at 12:43 am
The mortgage/real estate sectors will be wild for at least another year, maybe 2. This is backlash from skyrocketing prices in the past 5 years. It’s just a standard correction, so i wouldn’t worry too much. But there will be LOTS of volatility in the meantime.
References :
April 1st, 2010 at 1:01 am
This mess will have a stranglehold on our market for 2 to 3 years! Hang On!!
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References :
April 1st, 2010 at 1:25 am
we’re in a correction that will last at least the next several months which has the potential of becoming a bear market for the next year or two. the problem looks like its not contained as major foreign banks have recently acknowledged related investment losses and mutual funds are selling profitable investments in emerging markets in favor of security of US dollars/treasuries. even the chinese government has come out to say they believe in the safety of the US dollar. all debt is being repriced not only bcas of subprime mess but bcas debt from already announced LBOs will soon hit the credit market as well. classic case of over supply. future M&A will have to be driven by cash but in an economic slowdown, you would think most would preserve cash until they see a light at the end of the tunnel (i.e. some competitors may not survive a bear market/recession).
as for ur question re reits, the following article may shed some light. further evidence the mortgage market is shaky.
References :
http://www.marketwatch.com/news/story/mortgage-reit-fund-hammered-credit/story.aspx?guid=%7BCB96DAF8-280C-4F7E-B090-A656EA7444A9%7D