Is the iShares Dow Jones US Real Estate an alternative way to play the RE market? Is it the only way that I can profit from the failing RE prices?
Maybe Home Builders IYR, surety and title insurers, national, regional or local lenders with real estate exposure as your thinking dictates (banks AND mortgage companies), mortgage insurers and home furnishers. Many are squawking that Freddie and Fannie Mae are toast though I think they might be in better shape than some banks that are holding the loans inside.
Real estate is a slow moving behemoth and it doesn't just stop and roll over like one might think from reading about the bubble areas. An example - I got fried late last year shorting FAF in the 45s, a huge title insurer I thought I knew well. The break I believed was coming in their fundamentals didn't materialize for months. Have used IYR to generate income intraday every once in awhile based on what I think news or an eco report might prompt.
There is no evidence whatever that real estate prices have fallen significantly. Reported drops appear to be modest as a percentage of the runup of recent years. The only thing that can be said is we are at the stage where unsold inventory is clearly rising. Could be into 07 before everyone's cards are shown. Also, I would pay less attention to interest rates and more attention to stories you see about lending standards being tightened and regulations along those lines being imposed which started last fall. Those that say the Fed and regulators are going to talk this thing down if they can are correct imo.