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To: Donald Wennerstrom who wrote (23128)	5/2/2005 1:53:21 PM
From: Proud_Infidel	Respond to of 95480

Overextended Investors Could Cause Correction In Housing (Dow Jones 04/13 17:34:47) By Janet Morrissey Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Raymond James analyst Rick Murray believes there may be a glut of overextended real estate investors in the housing market, which may lead to a price correction and pullback in demand. "Investment sales have been a key driver of the housing market in the past few quarters, and, in fact, the past two to three years," said Murray, in a note. He said this "inflated level of demand" has been driving home prices up in recent years. Murray estimates there are more than 5.1 million vacant housing units either for rent or for sale, and as many as 6.5 million homes that are vacant for part of the year because they are second homes. This represents a "potential inventory overhang" - which contradicts the home builders' argument that inventories are low and the industry is facing a housing shortage. "With nearly 12 million empty housing units in the U.S., we find it implausible to conclude that there is a housing shortage of the magnitude that would drive the recent levels of price escalation," he said. Murray suspects a large number of these owners are inexperienced or overextended investors in the single-family rental market. "The investor has overpaid in anticipation of future price appreciation," he said. If they can't get high enough rents to cover mortgage, taxes and insurance costs, he predicts a "significant" amount of housing may return to the for-sale market. This would affect prices, as well as demand for new housing, he said. This "hidden inventory" is larger than at any time in the past 10 years, Murray said. He maintains a cautious stance on the sector.

To: Donald Wennerstrom who wrote (23128)	5/2/2005 2:28:13 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 95480

Gotta love how they write this stuff.....isn't this same rule applicable to everything? Be it houses, commodities, or stocks? They make it sound like it just applies to stocks. When you buy a stock, you're buying a valuation. Even if a dividend is paid, you're essentially betting on the greater fool theory, hoping that at some point over the "long haul" someone else will come along and buy the shares at a higher price. yahoo.smartmoney.com