Real Estate - Housing Woes Coming to an End?

With the mortgage crisis being the biggest news in the economy today, it's time to take a step back and see how it has affected the real estate industry. Home prices are finally starting to rebound, and that's a good sign for the economy.
It appears that the sun is starting to break through the clouds for the housing market. Housing prices saw their first week over week increases this quarter. Boston housing prices are leading the way, up 0.5% from last week after being down 1.2% in the last 90 days. Las Vegas, still the most effected cit, decreased 1.2% this week and is down 6.9% in the last 90 days.
Increasing housing prices are a positive sign across the board. Foundering mortgage companies benefit, as any potential foreclosure sales will yield higher revenues. In turn, this will decrease the losses the companies are forced to take. This news looks good for home builders, especially for the industry leaders such as DR Horton Inc. (DHI) and Toll Brothers Inc. (TOL).
The timing seems to be perfect for investing in Real Estate Investment Trusts (REIT). The combination of rising housing prices and decreasing interest rates makes for an optimal situation. Recently REIT's have traded at their relative bottoms and are extremely cheap at this point in time. This works to our advantage as investors in two ways: climbing stock prices and attractive dividend yields.
What makes REIT's different from normal publicly traded companies is that it gives investors a way to own business and their real estate holdings - without the liquidity issues that face private real estate ownership. In addition, REIT's pay out greater than 90% of their book profit in the form of a dividend.
Lower interest rates have had a detrimental effect on investor's cash reserves, whether they are in the form of savings accounts or CD's, which makes high-yielding stocks that much more attractive. As interest rates continue to be lowered by the Federal Reserve, more and more investors will be taking their cash out of savings instruments and buying up safe, dividend-yielding stocks to recoup their lost interest income. And what better place to invest than in REIT's. This week's average rate for a six month CD is 3.10%, while REIT's such as Simon Property Group (SPG), Post Properties Inc. (PPS), and Duke Realty Corp (DRE), are yielding as much as 4.1%, 5.8%, and, 7.9% respectively.
Realty corporations like Realogy Corp. should see the most immediate turn around, as rising home prices will hit their income statements the quickest.
The bottom line here for the individual investor is that the future looks bright, as the housing market appears to be rebuilding itself.