The "BSI" Index...From An Article On The Street By Darren Fisher

[John Thedford]

The single-family housing market looks like it might be doomed all over again. Well, if not doomed, then the Death Star is bearing down on Alderaan.

Why the pessimism? There are two reasons.

First, there appears to be a spike in "Bandit Sign Index." Second, there are many real estate professionals who are trying to become traders.

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Both indicate that the housing market is in bad shape.

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Let's start with the "BSI." OK There is no actual BSI, but if such an index did exist, it could replace the Case-Shiller Home Price Index as a viable real estate indicator.

Anecdotally speaking, the number of signs that say something to the effect of "Real Estate Investor Seeks Apprentice, $5K to $10K per month" seems to be reaching epic proportions.

It is easy, by the way to calculate a local "BSI" to determine how close to the cliff a city is. Just drive to a high-traffic intersection and count the number of these hastily made plastic signs.

The "BSI" matters because it is direct evidence of under-capitalized amateurs trying to get into the game. When amateurs get into the game, it is generally because the professionals are getting up and walking out of the room.

How do we know that the professionals are leaving the room? Just take a look at the real estate sector in general, as measured by the iShares US Real Estate Exchange-Traded Fund (IYR) .

IYR data by YCharts

This is part of the article. Gloom and doom all over again. If you are leveraged 100% and stuff blows up, I can see losing it all. If you are well capitalized, have reserves, and don't have to collect the rent every month to make the mortgage payments, taxes, insurance, etc what's there to worry about?