Are we going to face another financial crisis?

[Frank Boet]

This is not to alarm anyone, but just to be diligent. Aside from being a business owner, I'm also a stock trader and I don't like the action on Wallstreet. I'm a technical trader and simply use charts for trading. I saw a breakdown in the market in August 2015 and proceeded to trade with caution. To gauge the paulse of the RE market I like to look at the stock price action of home builders like DHI, KBH, TOL. KBH and TOL ahve alredy began to breakdown and DHI is starting to break below support. George Soros recently said that we may be facing a crisis like 2008. http://finance.yahoo.com/news/soros-2008-crisis-ov...

Another red flag is that there are so many real estate gurus promoting their "systems" all over the place. Even Armando Montelongo. Where has he been? Every time the masses are positive about something, whether it is precious metals, oil, real estate, stocks, even baseball cards, it usually signals a top. I think I'm seeing a top, at least in the Miami area. Now, I am new to real estate investing and I have not made a single deal, aside from my current resident that we bought in 1990, but I'm 53 years old and have experienced many economic cycles.  As I type this, the market is down over 250 points and down 1,500 points in a little over week.  I'm going to continue my real estate education and prepare for a great buyer's market coming soon to a town near you. When? I don't know, but the charts will give me the sign. This only my two cents worth.

[Dion DePaoli]

The dip in home builder's stock is probably more of a re-positioning than a sign of doom and gloom. Not to say that caution shouldn't be exercised but rather careful what you consider the indications.

The big boys gobbled up lots of property on the cheap over the last couple years and some of those assets are being let go. Some contracts are being abandoned and obviously that creates some fines and losses. That said, the general approach was stick a toe in many markets and see which one pops off then run with it. So, to some degree it seems like they are shedding those markets where they don't see good growth over the long term.

On the flip side, those markets where they did do well have started to slow and so the impact of those lower cost market entries on their margins is wearing or has worn off. I say "slow" but really I mean, the fire sale inventory is used or mostly used. So they are returning, in those markets, to a pre-crisis land price which brings downward margins.

Obviously weather patterns play into the game the big boy builders play to as well. I don't dissect their portfolios but with some of the recent extreme weather, turning attention to those markets that have had those types of events, which also means tapping into insurance claims to re-build, is a way to deploy product that has a higher rate of absorption. So do you want to play the urban sprawl game or go build where a couple thousand homeowners were displaced? Probably the latter.

The other influencing agent somewhere in the background is the rate hike. While the impact of the hike was not all that loud, there is one there and it will be a slow grind on consumption of product as borrowing costs start to inch up.

Is there a downward trajectory? Hard to say just yet going into one of the slowest parts of the year. It is probably more flat than a decline per se. Certainly keep an eye on it but I don't think it signifies bad things to come in the near term necessarily.