According to a UBS AG report released this week, the global housing bubble is on the cusp of collapse in six cities.
- UBS: Housing Bubble Is About to Burst in These 6 Cities Across the Globe
- How to Buy Prime Manhattan Real Estate for Less Than $100
- Big Banks May Be Forced to Buy Back Bad Mortgage Loans
- The Headline You Never Expected: Foreign Growth Could Bail Out the U.S. Economy
- Money Morning Mid-Year Forecast: Why China's Economy Will Exceed Expectations in the Second Half of 2010
- Why the Eurozone Debt Contagion is Telling Us That It's Time to Buy Dividend Stocks, REITS and MLPs
- Chinese Real Estate: Four Ways to Profit From the Biggest Urban Migration in History
- China Draws Plan to Reduce Risk While Continuing Economic Growth
- Mortgage Markets Show Increased Stability, But Limited Opportunity
- Plans to Hide Commercial Real Estate Losses Won't Avert a Double-Dip Downturn
- Ignore the Crowd ... It's Time to Invest in Commercial Real Estate
Unless you own a home in each of America's 20 biggest cities - or you're an economist - a 12.4% increase in the S&P/Case-Shiller Index doesn't mean much.
You can't make money from a nationwide statistic. Not in real estate...
Cleveland, for example, may have seen a 3.4% increase from July 2012 to July 2013. But that's nothing compared to Los Angeles, where prices jumped 20.8%. Or San Francisco, which posted a 24% year-over-year increase.
Las Vegas prices jumped even higher, up more than 27%.
And then there's New York, where you can make a killing on some prime Manhattan real estate right now...
There's a hassle-free way to do it, too. So you'll never have to worry about tenants, taxes, insurance, maintenance...
You won't need a million-dollar down payment, either.
In the latest effort, a group of investors with roughly $500 billion invested in 2,300 mortgage securities is trying to force the large banks that originated or are now servicing faulty subprime-mortgage loans to repurchase or modify them, The Wall Street Journal reported.
Some investors "had no idea that their money was being invested in mortgage-backed securities," Dallas-based attorney Talcott Franklin told The Journal. "And yet somehow these people are now the ones being punished, and that's just not right."
The rest of the world appears to be doing much better than we are.
In the long run, that's good news for the United States. Rapid world growth will eventually rekindle the economic fires here, producing a growth that is more balanced than the bubbles of 1995-2008.
Still, getting to that point will be a challenge, since - economically speaking - the home fires don't appear to be burning all that brightly.
To see how foreign growth could bail out the U.S. economy, please read on...
But the fact is that while most of the world was struggling to keep the engine of economic recovery from sputtering to a halt, China spent the first half of 2010 with its foot on the brake. And now that the Red Dragon has reigned in growth, the second half of 2010 will likely look very different from the first.
Money Morning Chief Investment Strategist Keith Fitz-Gerald says nearly everyone felt the first quarter's 11.9% growth in Chinese gross domestic product (GDP) was "too hot." But the 10.3% growth China saw in the second quarter will likely be topped in the second half.
The reasons for that are simple:
- Exports remain strong.
- Chinese stocks are oversold.
- China's property market isn't the ticking time bomb many analysts believe it is.
- And policies implemented to cool growth in the first half of the year will likely be relaxed in the next six months.
The powerful bull cycle that grew out of the early March 2009 market lows - the quickest and strongest stock-market rebound of the past 50 years - has been losing some of its youthful verve as it matures. That means we can expect the pace of gains to moderate as asset classes (stocks, bonds, currencies, commodities) begin to differentiate themselves.
But that doesn't mean the profit opportunities are gone. As that differentiation plays out, such income-oriented plays as high-yielding dividend stocks, real estate investment trusts (REITS) and master-limited partnerships (MLPs) will prove to be major beneficiaries, experiencing a handsome run-up in price. Shrewd investors will move into those investments before their prices increase.
And so are the institutional investors I've run into during my latest investment-research visit to this country. These institutional players want to lock up some valuable land parcels before 2020. That's the date by which 500 million Chinese citizens are expected to have moved into China's cities as part of the greatest urban migration ever recorded.
You can do the math: We're talking about a group that's 1.6 times the entire U.S. population ... moving from China's countryside to its cities in the next 10 years.
The remarks came during Wen's annual report to the National People's Congress in Beijing - which is the equivalent of the United States' State of the Union speech - and they highlight the central government's determination to promote responsible levels of growth.
The call for 8% annual economic growth is the same goal that has been maintained since 2005 - and one that was easily passed last year with the implementation of a sprawling $586 billion stimulus package.
It doesn't have four letters, but "mortgage" has definitely been a dirty word in the financial world the past few years. That's especially true when the word "mortgage" is paired up with such other terms as "subprime," "delinquent," and "foreclosures."
Little wonder that mortgages - along with the derivative securities backed by them and the often-unseemly practices of the people pushing them - have gotten much of the blame for precipitating the economic meltdown from which the American economy is now struggling to recover.
There's still plenty of woe in the mortgage world. But in recent months there have also been some signs that the real-estate-financing markets are at least regaining some semblance of stability, with foundations being poured for a rebuilding phase that might not be too far down the road.
The major problem is that lawmakers and regulators are setting up investors into believing that commercial real estate (CRE) losses are being effectively addressed. The truth is that escalating losses are being hidden as part of a campaign of optimism in a desperate gamble that a robustly reviving economy will save the day.
To protect yourself from another investment beating, here's what you need to know.
Although he's steadfastly bearish, no matter the climate - like those codgers you see wearing heavy coats on sunny days in Florida - the Canadian analyst has lasted so long because he's quick with colorful phrases, and his research is amusing and insightful.
Just last week, Mamis recounted a conversation he had enjoyed years ago at the table of his new boss, the legendary analyst/historian/portfolio manager Don Coxe: "At dinner, [Coxe] would lean back in his chair in that professorial manner of his and "remind" the guests that the Sanhedrin, the Hebrew Court of Law, had a rule that if every member voted the same way, the decision went the other way," Mamis wrote. "Unanimity had to be misguided."
That story got me thinking: What is one investment theme that the public and/or pros could agree on today?