Housing Market Showing Signs of Stability? Puh-lease!

The mainstream press would have us to believe a real estate market rebound is imminent. They keep glomming onto any data that shows the slightest sign of stability.

For instance, Bloomberg jumped all over the July 1 report from the National Association of Realtors that showed pending sales for previously owned homes rose for the fourth consecutive month. Other outlets had a field day with the news out of the Mortgage Bankers Association that refinancings hit a three-month high in early July. And ditto for the news that foreclosures dropped 11% in the second quarter.

But these “signs of stabilization” are bogus. Or to beg, borrow and steal from value-investing legend, Whitney Tilson, they are the “mother of all head fakes.”

Fact is, these short-term improvements were fabricated. They materialized because of temporary factors like the $8,000 first time homebuyer tax credit (set to expire November 30),

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The U.S. Housing Market: Three (More) Reasons Real Estate Isn’t Rebounding

by Louis Basenese, Advisory Panelist

Editor’s Note: Yesterday we heard from Martin Denholm, the managing editor at Smart Profits, one of our affiliate publications which will be joining us over the next few weeks. We’ll be adding their experts to our esteemed panelists to give you the best investing ideas and advice out there. Today we follow Martin with outspoken favorite, Louis Basenese, who also gives us his take and concern for investors, on the housing market.

If ever an off-the-wall indicator existed to predict the fate of the U.S. housing market, I found it… You see, business is booming in one particular niche of the real estate industry - shrink-wrap.

That’s right. Contractors and developers are wrapping mothballed building projects in plastic, literally - from single-family homes to 25,000 square foot commercial properties.

The beneficiary? Privately-held Fast Wrap

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Ongoing turmoil in the financial markets has resulted in a highly challenging environment for the U.S. insurance industry, a trend that is expected to continue in 2009. We also expect further consolidation in the industry.

Life Insurers

Increased losses in the investment portfolio and lower income from the variable annuity business will continue to hurt earnings. The Industry's statutory capital levels have fallen sharply in 2008, and some companies are trying to raise capital through the Troubled Assets Relief Program (TARP). We are not sure whether the lawmakers will allow the insurers access to TARP money. Further, many life insurers have substantial exposure to commercial-real-estate-backed securities, which will result in further losses during FY09.

Property & Casualty Insurers

Insurers' losses from natural disasters surged in 2008, with maximum losses resulting from Hurricane Ike (insured losses of approximately $15 billion). Six named storms -- Dolly, Edouard, Fay, Gustav, Hanna and Ike hit the

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Ongoing turmoil in the financial markets has resulted in a highly challenging environment for the U.S. insurance industry, a trend that is expected to continue in 2009. We also expect further consolidation in the industry.Life InsurersIncreased losses in the investment portfolio and lower income from the variable annuity business will continue to hurt earnings. The Industry's statutory capital levels have fallen sharply in 2008, and some companies are trying to raise capital through the Troubled Assets Relief Program (TARP). We are not sure whether the lawmakers will allow the insurers access to TARP money. Further, many life insurers have substantial exposure to commercial-real-estate-backed securities, which will result in further losses during FY09.  Property & Casualty InsurersInsurers' losses from natural disasters surged in 2008, with maximum losses resulting from Hurricane Ike (insured losses of approximately $15 billion). Six named storms -- Dolly, ...

Ongoing turmoil in the financial markets has resulted in a highly challenging environment for the U.S. insurance industry, a trend that is expected to continue in 2009. We also expect further consolidation in the industry.

Life Insurers

Increased losses in the investment portfolio and lower income from the variable annuity business will continue to hurt earnings. The Industry's statutory capital levels have fallen sharply in 2008 and some companies are trying to raise capital through the Troubled Assets Relief Program (TARP). We are not sure whether the lawmakers will allow the insurers access to TARP money. Further, many life insurers have substantial exposure to commercial-real-estate-backed securities, which will result in further losses during FY09.

Property & Casualty Insurers

Insurers' losses from natural disasters surged in 2008, with maximum losses resulting from Hurricane Ike (insured losses of approximately $15 billion). Six named storms -- Dolly, Edouard, Fay, Gustav, Hanna and Ike hit the

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With the first bit of distance from which to view the U.S. government’s bailout of government-sponsored entities (GSEs) Fannie Mae (FNM) and Freddie Mac (FRE), we wanted to find out from Zacks senior finance industry analyst Neena Mishrahow much of a game-changer this is for the housing market, Wall Street overall and the U.S. economy as a whole.

What sort of immediate impact do you expect among financial companies in your coverage now that Fannie and Freddie will officially be bailed out?

The move was overall positive for the housing market and the wider economy, as it removed the uncertainty related to the government support of the GSEs, and is also likely to help bring mortgage rates down. Yet we do not expect it to lead to a recovery in the housing markets. The housing situation in the country continues to be quite grim as there is still

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Jeff Immelt gets some bad press these days. But I am not convinced he is all that bad. In the financials area (the area which I know well) he is brilliant.

He sold FGIC (a competitor to Ambac). It has since imploded and S&P rate it as junk.

He sold/spun out his mortgage insurer. Also a good deal.

He sold the crappy business of insuring people against the need to go into nursing homes. (It went with the mortgage insurer – and it is the best player in a very bad space.)

He has got rid of his business taking long term litigation risk. That will probably be OK.

He has however made some head-scratching purchases – particularly in medical. Jeff Matthews points out a beauty.

In the last results – much pilloried – the finance business did poorly (but way better than it would …