Real Estate Big Bear For July 9

As housing prices fall, lending practices tighten, and unemployment rises, the U.S. housing sector is in for continued tough times ahead. According to Tom Zimmerman, head of mortgage research at UBS Securities, the shutting down of the subprime and Alternative-A mortgage backed security markets has forced lenders to cut back their business due to lack of capital - this is hampering any comeback in the real estate market. Essentially, if a home buyer cannot access the capital needed to purchase a home, houses do not sell. This adds to the already troubled markets as inventory increases even further, it has already been estimated that home prices are dropping at an annualized rate of 20%.

It's hard to find a home builder or developer, a real estate investment company, or a construction materials provider that hasn't been hurt badly over the past year. Here are five that have done especially badly over the past month - lets take a closer look to see if there is some opportunity here.

Company	One Month Loss*	Market Capitalization
Perini (NYSE:PCR)	33.1%	$663.3 million
Capital Trust (NYSE:CT)	31.8%	$382.7 million
CRH PLC (NYSE:CRH)	27.6%	$13.4 billion
Gafisa SA ADS (NYSE:GFA)	26.9%	$3.9 billion
Forestar Real Estate Group (NYSE:FOR)	22.0%	$634.0 million
Data as of market close July 8, 2008

Hey, Where Did The Market Cap Go?
Perini has lost almost 70% of its market capitalization since hitting its 52-week high of $75.43. Capital Trust has lost almost 55%, and Forestar has seen a drop of almost 40% from their respective 52 week highs of $38.84 and $29.49. With so much money just disappearing, investors are running to the hills, which just causes even more declines in share price.

But, what about CRH PLC? CRH is a building materials manufacturer and distributer based in Europe and the Americas. Yes, it has lost a lot of market cap as well (54% since its 52 week high of $52.25), but wow, there is still a lot left! At the present time, the company's market cap is about $13.4 billion, so that means that its 50%+ share price declines from its 52-week high have removed about $15 billion of market value from the company. That is a lot of money lost!

Who Has Been Selling
Taking a quick look at who is holding the outstanding shares of CRH PLC, you can see the problem. Only 0.2% of shares are held by insiders! When even the executives has no faith in a company, it is not surprising that the public does not either. Even institutions are keeping their distance, with institutional ownership of only 3.2%. (For further reading on this topic, be sure to check out our related article Keeping An Eye On The Activities Of Insiders And Institutions.)

I think that the only thing keeping its current investors in is the 5.9% dividend yield that has come from such a low stock price. For me, the yield wouldn't keep me involved, as it only takes a couple of bad quarters before the board could decide to stop distributing those dividends.

There may be a turnaround in the next year, as credit markets come back on line, and buyers return to the market; however, I do not see this happening any time soon. I have tried to call the bottom in the real estate market many times over the last year, and have been wrong every time. Losses in the sector just this past month have proved just how difficult that task is! This will be an area to continue to watch, as opportunity will be there eventually... just not today.

Add Your Two Cents
What do you think will happen with the real estate sector going forward? Will it turnaround in the near future, providing astronomical gains to those that hopped in at all-time lows? Be sure to join me (aytonmm) in the FREE Stock Picking Community to share your thoughts and see what other investors are saying.

Owning property isn't simple, but there are plenty of perks. Find out how to buy in, by reading Investing In Real Estate.