The housing market is in shambles, as we all know, and the abundance of foreclosures on the market continues to serve as an anchor, weighing down home values and keeping the market depressed. That will not last forever, though, and while the market has been in a steady decline, many – including real estate investors - are expecting a turnaround in the foreseeable future.
To identify the general consensus on how others view the market and expect it to increase, it is useful to look at one telling metric: Insider trading. Insider trading data basically gives you a picture of what traders within investment companies are doing in the market – what moves they are making, what trades they are placing, and what they expect the market to do.
A cursory glance at several trading institutions reveals that several players in the market are betting on the market's eventual rise. Texas Industries Inc., for example, a construction material supplier, bought nearly 345,000 shares of its stock in the expectation that it would appreciate over the coming months due to an increased demand in construction.
Avatar Holdings, a real estate holding company in Arizona and Florida (two states with high proportions of home foreclosures), had its insiders purchase almost 11,000 shares. And The PennyMac Mortgage Investment Trust similarly bought tons of insider shares.
These three companies – and more – suggest that traders are secure enough in the future prospects of the residential real estate market – foreclosure properties and all – that they are putting their money where their mouths are and betting on the recovery, in a manner of speaking. But why?
We've been pointing to the future landscape of the foreclosure market for some time now, and all signs point to an avalanche of foreclosure listings set to hit the market from 2012 to mid-2013, with no real, consistent gains to be consistently realized until 2014. That provides the market with more room for already-depressed prices to sink even further, creating more leverage for investors who want to make the most out of foreclosure investing and traditional real estate investing.
Get ahead of the game today and stay ahead of the curve as the market starts to look even more like an overloaded buyer's market. The best way to do that and read the tea leaves of an uncertain market? Follow the money.