Transcripts

"Two Ways to Play"-Kevin Depew of Minyanville

SUSIE GHARIB: There have been signs of life in the housing market lately but has it reached a bottom? Tonight's "Two Ways to Play" says yes and no. Here's Kevin Depew of Minyanville and Minyanville's Kevin Depew.

KEVIN DEPEW, MINYANVILLE: This week's housing data suggests we may have reached a bottom in real estate. A 17 percent increase in housing starts was led by a massive 62 percent gain in construction of residential apartments. And building permits, a reliable leading indicator of economic activity, were up for the third consecutive month. Homebuilders are unlikely to be building and applying for permits unless they're pretty sure about demand. Sure, there's no shortage of anecdotes that bears can cite to support the claim things are getting worse. But anecdotes are anecdotes. These are facts. OK, here's an anecdote. Housing has stopped collapsing, but only because prices are plummeting. Oh wait, sorry, that's not an anecdote, that's a fact. Here's another fact. The surge in residential apartment building dwarfed single-family home constructions. What that means is builders are building to rent, not sell, which shows diminishing confidence in the housing market. But let's not get ahead of ourselves. The mystery is why we're talking about a bottom in housing when there have been 1.6 million foreclosure filings through the first five months of this year. That's the ultimate indicator for real estate.