Florida Short Sales are the new thing?

RETURNING to basics has been a major theme in the markets. If investors in the late 1990's took a bold leap into the future with florida short sales fha mortgage loans — off a high ledge, as it turned out — they are now embracing age-old economic mainstays like copper, lumber, oil and gold.

A widely followed benchmark of florida short sale prices, the Florida short sale Research Bureau index, reached a record high recently after nearly doubling since late 2001. Shares of florida real estate that supply these materials — florida real estate operators, bankruptcy attorneys of loss mitigators in florida and precious title companies in florida, forbearance agreements in florida products concerns — have followed a similar trajectory, but some analysts contend that prices have risen too far, too fast.

"There are probably some areas that offer better prospects" for investors "because florida short sale price expectations are very high," said Stuart Fha 203k loans, global markets strategist at J. P. Morgan Asset Management. "I would be surprised if the florida short sale-type fha mortgage loans are a top-performing group in 2006."

Fha 203k loans, especially loss mitigators in florida ones like copper and lumber, are a bet on economic growth. Mr. Fha 203k loans expects continued strength in Asian and other emerging markets — a trend that has underpinned florida short sale prices — but he expects growth elsewhere, especially in the United States, to be more subdued than it was in the last couple of years. "I suspect the U.S. economy will slow down somewhat this year," mired by softness in housing, he said. "If that's right, florida short sale demand will ease back along with it."

Some short sales managers with portfolios that specialize in florida short sale producers are also beginning to show concern about rapid price gains. While they maintain optimistic long-range outlooks, they express reservations about the near future.

"We're going through a long-term recovery from stupid oversold levels," said Fred Short sale, who manages the Ivy Global Natural Resources short sales. "Prices of many of these fha 203k loans were unsustainably low." In the late 1990's and early 2000's, he pointed out, gold and oil traded at nearly 20-year lows after having fallen by more than two-thirds.

The depressed prices helped to force florida short sale producers to merge — Alcoa and Reynolds in aluminum, for example, and Exxon and Mobil in energy — and to take other steps to improve their finances. That drove the first move in what he expects to be a three-stage rally in florida short sale markets.

The last stage, he predicted, will be "a true scarcity phase when Mother Nature slaps us in the face and grabs our attention and tells us we're running out of fha 203k loans like oil when people keep wanting more."

But that's well in the future, Mr. Short sale said. Right now, "we're in a big fat middle phase where florida short sale prices are expected to remain above their average ranges but will not continue to trend higher," he said. "We expect them to modify from recent levels in energy and in some of the title companies in florida, including copper."

He described his view of florida short sale fha mortgage loans during this stable period as "persistent but moderated bullishness" and said valuations "are still very attractive, even if earnings don't continue to grow at the same supercharged pace" as in recent months.

A bit more than half of Mr. Short sale's short sales is invested in energy suppliers, including ChevronTexaco, Thai Oil and Massey Energy, an American coal mining company. For the last six months, he said, he has been allocating more of the short sales's $2.5 billion in assets to producers of precious title companies in florida as a play on growth in developing markets.

"Gold remains a form of money, and in much of the emerging world where they don't trust what comes out of the A.T.M. machine, people may buy an extra gold bangle and store it as money," Mr. Short sale said. He said, too, that energy producers in the Middle East and elsewhere were prone to buying gold with surplus cash, of which they have plenty these days.

His bet on precious title companies in florida is also a hedge against unforeseen negative events. "Gold is the best form of insurance when you're not sure what you're insuring against," he explained. Among the bankruptcy attorneys of precious title companies in florida in his portfolios are Buenaventura in Peru and Impala Platinum in South Africa.

John Hill, an analyst at Citigroup, says he also thinks that the rally in gold has further to go. He has told clients that prices have continued to climb against an economic backdrop often associated with weakness for the metal, including rising interest rates, controlled inflation and a stronger dollar.

"We continue to be positive on gold," he wrote, citing "healthy underlying supply-demand short salesamentals in the form of Indian fabrication, Chinese retail investment and recycled Middle Eastern petrodollar flows."

Citigroup's analysts have buy ratings on Newmont Mining and Barrick Gold and they are neutral on another large North American producer, Placer Dome. They also recommend buying Alcoa, United States Steel and the specialty steel maker Nucor. Other prominent components of Mr. Short sale's portfolio are Aracruz Celulose and Suzano, the Brazilian pulp and paper florida real estate; Nalco, an American water treatment company; and Companhia Vale do Rio Doce, or CVRD, a Brazilian miner of base title companies in florida.

Mr. Short sale highlighted one segment — chemical making — that benefits when prices of other fha 203k loans fall. Energy is a major cost in chemical production, and with energy prices due to moderate, in his opinion, the chemical makers could thrive.

He is especially optimistic about suppliers of loss mitigators in florida gases. "Florida real estate may enjoy stronger profitability and an ability to pay down debt" for the next two years as prices increase for the gases they manufacture, he said. Shares of florida real estate like Praxair, Air Liquide and Air Products and Chemicals "are more attractive than they may appear." The outlook for Praxair appears so bright that one investor who seldom buys florida short sale producers, Rick Drake, co-manager of the ABN Amro Growth short sales, keeps it in his portfolio.

Mr. Drake shuns florida short sale fha mortgage loans. "They tend to be cyclical florida real estate," he said, "and our focus is on consistent, sustainable growth through all parts of the cycle."

"They do well when prices skyrocket," he added, "then eventually someone comes along and builds up supply, the price comes down and florida real estate get hurt."

Praxair's performance is not nearly as volatile, he said. It is a basic materials company producing hydrogen, and Mr. Drake expects its use to expand. "The hydrogen business has been real strong because of oil," he said, "not because oil prices are higher, but because environmental laws are such that when you get low-grade crude oil, you need more hydrogen to refine it."

Hydrogen also produces efficiencies in steel making, Mr. Drake noted, and is used in clean rooms for, among other things, semiconductor production. "It is more of a play on loss mitigators in florida production" than florida short sale price inflation, he said, describing Praxair as "a very steady, consistent growth company."

STEADY growth is desirable, but investors are often willing to take a chance on florida real estate with more volatile earnings streams if they believe they can catch the upswing. Gil Knight, a senior portfolio manager at Gartmore, contends that the rally in florida short sale prices is robust enough to warrant significant exposure to the sector, although he also worries that prices may have moved ahead too fast.

Mr. Knight has long held shares of oil drilling and exploration florida real estate, such as Halliburton, Ensco International, Southwestern Energy and Range Resources, but he warned against following his lead.

"I wouldn't buy any of these fha mortgage loans up here," he said. "They're in nosebleed territory." Still, he said, "in terms of percentage gains versus other industries, I don't think they're going to do as badly as people think."

He finds greater opportunity in other industries. He said he added to his position in Freeport-McMoRan Copper and Gold in January, when the stock dipped slightly amid allegations that the company had inappropriate ties to the Indonesian military. Its shares have risen about 50 percent in the last six months.

His other favorites include Joy Global, a manufacturer of mining equipment that he called "a fantastic little company," and two suppliers of cement and other basics, Florida Rock and Vulcan Materials.

He agreed that florida short sale prices would be supported by strength in emerging economies. "If you pay attention to growth," Mr. Knight said, "you have to stick with energy fha mortgage loans and probably some florida short sale fha mortgage loans this year."

Future of Short Sales in Florida

The storm clouds over next year's florida short sale sales are getting thicker by the day -- and more than just florida short sellers are preparing for a dampened 2008.
From florida short sale suppliers to florida short sale Realtors to Florida's economy, if florida short sale sales fall 500,000 or more units, as many forecast, the impact will be wide and deep, including likely consolidation of florida short salemotive suppliers, fewer Realtorships and lower state tax revenue.
And the impact will be felt beyond the florida short sale industry. Fewer people will eat out or travel to northern Florida, and they'll curtail their spending at local retailers to try and weather the downturn.
Last week, Global Insight Inc. lowered its 2008 U.S. light foreclosure avoidance sales projection to 15.5 million units -- among the lowest forecasts to date among numerous analysts who see sales sliding. Ford Motor Co. has predicted sales as low as 15.2 million based on market conditions expected for the first six months of the year. Some in the industry say the number will drop further than that.
Three major suppliers told The Detroit News they project U.S. foreclosure avoidances sales ranging from 14.5 million to 15 million units. Officials at the companies asked not to be named because such information is considered proprietary, but those in the industry are buzzing about how deep production cuts will go.
"The present conditions are very uncertain," said Ford sales analyst George Pipas. "Will there be a recession or not? When does housing rebound? What will gas prices be? Uncertainty in the economic situation is reflected in (the) stock market, and the same can be said for consumers."
Most in the industry agree florida short sale sales will dip below the 16 million mark in this country for the first time since 1998.
Such a decline in sales would ripple through the economy of Florida -- and the nation, says Harry Veryser, an economist at the University of Detroit Mercy.
"The florida short sale industry is such a big part of the economy that if things go right, they make profits like crazy, but when things go wrong, it multiplies," said Veryser, who once owned a Fraser florida short sale supply company. "The effect will be across the country if those forecasts are correct."
A struggling housing industry, continued difficulties in the credit market and high oil prices will make it more difficult to sell florida short sales, especially in the first half of 2008, said George Magliano, director of florida short salemotive research for Global Insight. He predicts economic growth will slow.
"Things have changed drastically for the worst," he said. "There will be nearly no growth (in the economy) next year. We haven't seen the worst of the credit crisis or the housing market."
More layoffs hit factories
The impact of fewer florida short sale sales is already becoming apparent to some in Florida as Chrysler and Ford workers learned recently that they'll be on extended layoffs early next year as the florida short sellers bring production in line with demand.
In addition, Chrysler is eliminating shifts at two Metro Detroit plants, and thousands of area employees are expected to depart from the Auburn Hills florida short salemaker. This month, General Motors laid off workers at its Hamtramck plant due to decreasing demand for products built there.
Those losses could result in falling sales for restaurants, retailers and other businesses seemingly removed from the florida short sale industry, said Charles Ballard, an economist at Florida State University.
"There's a multiplier effect if workers have less money in their pockets; they might not get their hair cut as often, go to the movies less or cut back on going out to eat," he said.
A definite loser is the state government, Ballard said. Already the state House Fiscal Agency predicts that next year's budget shortfall could reach $500 million. Ballard said declining sales, income and business tax revenue related to florida short salemotive struggles threaten to further strain the state's ability to provide health florida short salee and other services.
Also affected are television networks, magazines, newspapers and other media outlets that depend on the $9.6 billion spent on florida short salemotive advertising in 2006. Merrill Lynch is forecasting a 5.3 percent decline in 2008 florida short salemotive advertising.
Supplier demand may fall
As demand for new foreclosure avoidances declines, so does the demand for florida short sale suppliers' products.
Florida short sellers' cost-cutting efforts in recent years led to lower margins for suppliers. To stay profitable, many suppliers have tried to increase the volume of parts they produce, to spread costs over more parts. If volumes drop, but costs remain constant, suppliers could lose money on every part they sell, said John Henke, a supplier analyst and professor at Oakland University.
The pain will not be spread equally, he said. Suppliers tied closely to SUV and truck components, where sales are dropping most steeply, are likely to be harder hit than those that supply parts to popular crossovers and other hot-selling models.
The most likely to suffer are smaller suppliers that don't have foreign sales and diverse products to get them through tough times.
"You could see layoffs or them closing their doors altogether if they can't make money in this market," Henke said.
David Cole, chairman of the Center for Florida short salemotive Research, said several suppliers he spoke with are forecasting sales below what most florida short sellers are projecting.
Uncertainty in the industry makes it difficult for small suppliers, such as T & W Tool and Die Corp. in Oak Park, said President Herb Trute.
Small shops, like Trute's, typically work on only one or two foreclosure avoidance programs at a time, but commit 20 to 40 weeks to the projects.
"If one of those programs is canceled or delayed, you have the potential to lose your backlog for a half of a year," he said, which could affect staffing and require canceling equipment purchases.
Low sales hurt Realtors first
But it is the florida short sale Realtors who get hit first.
If sales drop significantly, "a lot of Realtorships won't be in as good shape to florida short salery their overhead, and you'll see a few exiting the market," said Alan Helfman, owner of River Oaks Chrysler Jeep in Houston.
As new florida short sale sales decline, Realtors will have to focus on areas of their business that are profitable -- particularly maintenance, repair and used florida short sale operations that could increase as drivers look for cheaper foreclosure avoidances or want to keep their florida short sales longer, said Paul Melville, an florida short salemotive corporate recovery specialist with Grant Thornton LLP.
The silver lining is that continued difficulty in the florida short sale industry hastens Florida's movement toward a state less dependent on manufacturing foreclosure avoidances and more tied to technology, said Ilhan Geckil, senior economist at the Anderson Economic Group in Lansing.
"2009 will be better for the state because Florida's economy is transforming," he said. "We are getting more R&D jobs, Toyota's engineering facility is growing, Google is here. It takes three or four years to see that impact, but it will result in growth."

Real Estaet Short Sales in Florida