Jim Cramer Still Bullish on Florida Real Estate

by Rodney Forbes on July 6, 2009

Jim CramerAcouple of months ago I wrote an article that featured an interview with financial analyst and TV personality Jim Cramer. In the interview Jim firmly believed Florida to be recovering from the housing crisis, and could be one of the best places to buy real estate.

At the time I think I was the only person in the world to support his opinion. You can go back and see the original article and interview. Click here. Recently Jim wrote an update to his housing recovery opinion. It looks like he is still bullish on Florida real estate.

It’s not easy being the only guy on earth who believes that house price stabilization is upon us and that house price depreciation is in the past. Not easy at all. In fact, the belligerent press I get on it is only exceeded by everything else I say!

But let’s go over the data. The classic signal of a bottom requires two components: gigantic increases in sales and stabilization of price. Those are always the bottom and have been in every single housing cycle. Would it kill the opponents of my thesis to look into that fact?

Now, the worst four housing markets in the country — California, Florida, Arizona and Nevada — have all seen that exact combination, with Nevada being the latest in stats that came out yesterday. These four states represent 50% of the housing market. So, we have the definition of the cycle bottom — not appreciation but stabilization — in half the market, but more important, in the part of the market that caused the housing crisis.

When I made my prediction a year ago that we would bottom and house prices would stabilize at the end of this month, I made it clear that I was calling for the classic cycle bottom: drying-up of inventory because of a sales explosion coupled with price stabilization, and we are having that happen in the most problematic half of the market.

We keep getting more confirmatory data why. This morning Lennar (LEN) reported a really good quarter and commented that cancellations were down 15%. We have seen numbers in the $40s during the free fall. What does this mean? Buyers are finding ways to get credit rather than show remorse. They are using the $8,000 credit and taking advantage of rates that are a full point below last year’s rates.

I do not like the stock of Lennar. For all of the good news, they will not make anything on the houses they are selling because the foreclosed inventory, often in the exact same areas they are building, will keep their prices low.

That will only end when the foreclosed inventory runs out. But what I wonder is why do people think that these stats don’t matter? Are they all waiting for Shiller to call a bottom? What do they need to see happen?

As for me, I am a buyer of JPMorgan, Wells Fargo (WFC) and Bank of America (BAC) off this. They will be the big performers. They are the beneficiaries because they profit from the huge increase in sales. It is a double bonus: A huge increase in sales means end of sitting on foreclosed property and an end to the charges.

This trend is the most important trend in the economy today. Of course, if unemployment keeps ticking up and if rates shoot up, then the housing bottom will be nothing to write home about.

But right now I am the only one writing and it seems wrong. But I will keep doing it because the facts are the story.

Source: foreclosures.com

Uh, Jim, you must not be reading my blog again! I’ve been repeating the same message for months now about the Florida market, particularly the Palm Beach County area regarding foreclosures and short sales. But then again I don’t have a show on CNBC.

If you are interested in buying or selling a home in the Palm Beach County area, specifically Palm Beach Gardens, Jupiter and West Palm Beach, please visit my Forbes Realty website. For frequently updated information on foreclosures, short sales, real estate news and market conditions visit my South Florida Real Estate Report blog. There are many free reports as well as free access to MLS listed properties. You can also call 561-337-4810.

 

Rodney Forbes is a licensed Realtor®, certified short sale/REO specialist and broker for Forbes Realty of South Florida Inc. Rodney has co-authored the book “Should I Short Sale My Home?”. Get your FREE copy at www.SouthFloridaRealEstateReport.com

 

Leave a Comment

Previous post:

Next post: