[SDbear]

I agree with you Bugs. We all have a hidden (or open Agenda) in expressing a particular opinion. If Realtors are doing it for their gains people can also claim that we are trying to propose the possibility of a burst so that we can get cheaper homes sooner. Any idea when accepted by a critical mass will be difficult to roll back from the masses and thats what all of us try to do. Blogs like this provide platform for more people to express their IDEAS and the stress should be on the content alone.

Why don’t we look at all this objectively? We can actually view this as another leading indicator. According to my understanding volumes lead prices. After some extended time of low volumes prices start going down. When the prices are falling volumes will be pretty high. Then there will be an extended period of low volumes and low inventory before prices start going up and during the runup to peak price there will be high volumes again. Realtors make money on the volumes. We have already seen the high volume, high price stage. It is actually in their best interest that prices start coming down to increase the volume and their income. I’m sure at some point of time NAR will start drumming the need for sellers to reduce prices so as to increase the turnover and business for their members (to stay true to their motto). This can actually help hasten the fall. At the end of the day we all do things for our personal gains. This is the idea behind the great capitalist society of ours and our founding fathers knew well to harness this tendency of the human mind to build this great nation. We just have to tune ourselves to harness the same tendency of others for our good. We won’t achieve anything by being or getting personal about it.

[SDbear]

Powayseller,
Vanguard’s CA tax exempt Money Market does not contain any MBSs or Agency securities (Freddie Mac, Fannie Mae et.al). I checked with Vanguard on their exposure to real estate. They mentioned that 17.36% of their funds are invested in private ..(something).. bonds (bonds issued by CA govt to build private assets like stadiums). But they are still debt instruments that the CA govt is liable for. So I think they have the same risk exposure as the T-bills from treasury direct.

[SDbear]

When I said valuations I meant stocks of REIT might have had a run up due to speculation. When I said they are not exposed to the malaise, I meant they might be less leveraged than individual home owner.

Powayseller,
You are right when you said that their occupancy rates would decrease heavily if economy grinds to a halt. But I’m not so bearish on the economy.
Chris,
You gave a good insight on the local REIT performance during the last downturn.

I was looking at their performance nationally. May be performance of the MSCI REIT Index. I was wondering if anyone has researched on their financial state.

Powayseller,
I would appreciate it if you would give us a summary of the report you read.

I was looking at the Vangaurd REIT index fund. But it’s inception was in 1996. So I could’nt figure out how the fund performed during the last downturn. I could’nt get the index performance during the downturn too. All I found was that the index had an annualized return of 15.40% in the past 10yrs.

If they do not go down in value too much and have decent yield, I could have some exposure to it. An annualised 10% return is still a very good option.
Thanks in advance.

[SDbear]

Docteur,
I did a quick comparison between the vanguard funds and equivalent IFA funds. For the large cap funds IFA had smaller expense ratios with lesser returns than Vanguard. For small caps IFA had much higher expense ratios than vangaurd but a higher return. I agree vanguard funds are not the cheapest index funds available. But I found IFA funds expensive too. For instance Spartan’s S&P500 fund had only 0.07% expense ratio as against vanguard 0.18% or IFA’s 0.15%. Am I missing something here? Also the index growth both websites quoted for the same indices were different. Is there any specific reason you chose IFA over Vanguard?

Powayseller mentioned that the vanguard money market can contain GSEs. I have some money in Vanguard’s CA tax exempt money market. I get slightly better returns here than from the T-Bills that treasurydirect offers (after tax considerations). But if they have exposure to the GSEs, I would prefer to move them over. The Vanguard prospectus said that the fund contains mainly california municipal securities. Their holdings also does’nt explicitly state GSEs or related derivatives / MBSs. How do I recognize these in any fund’s holdings?
Thanks in advance,
SDBear

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