Residential R/E

This morning I found myself wanting to say something -- anything -- contrarian about real estate. The bubble is about to pop, but maybe, just maybe, there is some kind of last thrash in it...

Note that the April figures came out yesterday and sales of new homes were up 4.9% when a decline was generally expected.

A few possibilities that crossed my mind:

• Uncancelled contracts and various people who didn't want to lose deposits


• Massive incentivization -- builders in FL are offering everything from copious amounts of cold hard cash to Cooper Minis if you buy a new home. Everything's included by Lennar, E-I-E-I-O.


• The increased backlog of available new homes and flattening of prices may be leading some sheeple to think a buyer's market has emerged.

The condo-flipping idiocy was long-sustained, and if you think this delusory "buyer's market" will be sustained, you could always, say, buy WCI (30% short interest) and hope for a short squeeze or something. I was lucky enough to catch it in that stock last summer. I won't be trying again, but maybe you're braver, riskier or perhaps more insane than I am.

As an aside, we walked by a fine piece of property the other night and picked up a flyer. After checking the records, we learned that out-of-town investors paid $449,000 in March 2006 and now have it listed for $555,000 two months later. I don't expect it to sell for that, but it is apparent that as far as the popping of the bubble goes, not everyone has gotten the memo.