Saw several articles/TV talking heads since late May talking about the correlation between lumber prices and home prices and home builder stocks prices. Specifically lumber prices going into a bear market has traditionally (over 40 years) meant that 11 to 13 months later a downturn in housing prices and home builder stocks will follow. Wondering what the piggs think of this, as I’m sure ya’ll have heard it before. Seems taking just one indicator like that is dangerous, plus applying national home price movement to San Diego might be a dangerous thing.
Bonus points for anyone that can give me the ticker they are using to build the charts.
IMO maybe not in this case,
The way I understand it Lumber prices were rising until last month mainly because many of the lumber mills were put into mothballs during the housing crash and are just now starting up again.
I doubt there is a correlation. Sounds a bit like trickle down economics, which sounds good until looked at closely. Personally I would prefer a house built from concrete, stainless steel, and glass (or polycarbonate).
Yes, I’ve been watching it and agree that it could certainly be a leading indicator. During the last bubble, I shorted most of the public homebuilders, banks, some retailers, etc., and did very well; but all of the short-selling restrictions that they imposed throughout the downturn (making the market rise in response), in addition to all of the Fed and govt manipulation, made it a very scary ride. I would love to be short right now, but that last roller coaster ride has kept me from taking large positions.
Good luck to you if you’re short. I think it’s the right bet, but there are many forces that can work against you.
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