Buy Real Estate ETF’s As Fitch Ratings Says Housing Bottom Is Here (URE, UMM, XHB, IYR)

house-shoppingA reason to get long the home-builder and real estate ETF’s may in our view, as Fitch Ratings says a bottom in US Housing is here.  With major new home metrics leveling off from fresh lows, the long-awaited bottom in U.S. housing may finally be in sight, according to Fitch Ratings in the latest edition of the ‘Chalk Line’. ‘Single family housing starts and new home sales seem to be indicating a trough, albeit at very low levels absolutely and by historical comparisons,’ said Managing Director and lead homebuilding analyst Bob Curran. ‘The early stages of this recovery may be more muted than average recoveries of the past.’

If updated forecasts for 2009 and initial forecasts for 2010 are correct (as highlighted in the latest edition of the report), public builders will continue to be challenged and need to maintain tight controls over costs and expenses during the balance of 2009 and next year despite having fewer competitors. Fitch will provide a recap of first quarter-2009 (1Q’09) as well as discuss the outlook for calendar 2009 and 2010 during a teleconference to be held on Friday, July 17, 2009 at 11:00 a.m. ET (separate press release to follow). The Fitch report, ‘U.S. Homebuilding: The Chalk Line – Quarterly Update: Summer 2009′ was published July 15, 2009,” BusinessWire Reports.

“Key updated and new features in this report include homebuilders’ quarterly growth trends and margin statistics for the first quarter of 2009, excluding the impact of non-recurring, non-cash real estate charges, and information about the calendar first quarter and fiscal year-to-date option write-offs and land value write-downs,” BusinessWire Reports.

“Fitch assesses actual reductions in inventories (excluding real estate write-downs) since peak levels and discusses the effect of the FAS 109 deferred tax valuation adjustment. The pace of past housing recoveries is analyzed with an eye to the possibilities for the next expansion. Challenges associated with the home appraisal process are explored. Problems of AD&C financing are discussed. The federal government’s latest efforts to support the financial system, housing and the mortgage sector are also discussed. And our economic and construction forecasts have been updated for 2009 and an initial projection for 2010 is provided,” BusinessWire Reports.

We found a few housing ETF’s for you to take a look at from the advice of Fitch Rating’s real estate bottom.  We have listed them below:

  • Ultra Real Estate ProShares (URE) The investment seeks daily investment results, before fees and expenses, which correspond to twice the daily performance of the Dow Jones U.S. Real Estate index.
  • Macroshares Housing up (UMM) The investment seeks to reflect the changes in the S&P/Case-Shiller Composite-10 Home Price Index, tracking home prices in the 10 largest U.S. cities.
  • SPDR S&P Homebuilders (XHB) The investment seeks to replicate, net of expenses, the S&P Homebuilders Select Industry Index.
  • iShares Dow Jones US Real Estate (IYR) The investment seeks investment results that correspond generally to the price and yield performance of the Dow Jones U.S. Real Estate Index.


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