Wednesday, April 20, 2011

BTU International and Crocs Inc. - Zacks #1 Rank Top Performers: BTUI, CROX

BTU International (BTUI) was the top performing Zacks #1 Rank (Strong Buy) stock on Tuesday, jumping an impressive 7.9%.

BTU International manufactures thermal processing systems used in various manufacturing processes primarily in the electronics and alternative energy industries.

Estimates soared following an excellent Q4 report in which EPS came in at 24 cents, crushing the Zacks Consensus Estimate by 12 cents. Net sales were a record $27.4 million, up 127% over the same quarter in 2009.

Its alternative energy segment has been booming due to strong solar sales.

Analysts are projected strong growth for BTUI over the next two years. The 2011 Zacks Consensus Estimate is $0.61, representing a 163% increase over 2010 EPS. The 2012 consensus estimate is 45% higher at $0.88.

Despite these enormous growth projections, valuation is still reasonable with shares trading at 16.6x forward earnings, a slight premium to the industry average of 15.9x.

Crocs Inc. (CROX) showed some movement on Tuesday as well, posting a strong 6.0% gain.

Estimates have been steadily rising for the shoemakers, as the company has strung together 6 consecutive positive earnings surprises. Analysts expect big growth from CROX over the next two years too. The Zacks Consensus Estimate for 2011 is $1.06, representing a 40% increase over 2010 EPS.

The 2012 consensus estimate is currently $1.32, corresponding to 24% annual growth.

Shares trade at 17.3x forward earnings, a premium to the industry average of 14.9x. It sports a PEG ratio of 1.38 based on a 12.5% long-term growth rate.

Other notable top performing Zacks #1 Rank stocks from Tuesday include: Majesco Entertainment Co(COOL), which was up 5.8%, Chembio Diagnostics (CEMI), which rose 5.5%, and Andatee China Marine Fuel Services Corporation (AMCF), which gained 5.1%.

Rebirth of Online Travel Site Stocks: EXPE, OWW, PCLN

Online travel services like Expedia (EXPE), Orbitz (OWW), and Priceline (PCLN) have been flying in rough weather. But don’t count them out yet.

Hotel occupancy rates are improving, according to Smith Travel Research, a travel consultancy. The U.S. hotel industry reported higher occupancy rates the week ending April 9, according to its data.

In year-over-year comparisons, occupancy was up 4.8 percent to 62 percent, the average daily rate increased 4.7 percent to $101.22, and revenue per available room finished the week up 9.8 percent to $62.80.

That's good news for Expedia, Orbitz and Priceline, which offer hotel bookings on their sites.

Priceline’s business momentum, international growth opportunities, management, marketing strategy, and strong financial position are all likely to drive up its stock prices going forward, says Zacks Investment Research.

"With demand strengthening considerably following the recession, we remain optimistic. We therefore have an 'outperform' rating on PCLN shares," says the research firm.

Expedia, meanwhile, could be a good buy due to a recent business decision. The company said it would spin off its hotel and airline reviewer TripAdvisor into a separately traded company.

TripAdvisor revenue has risen about 34 percent year over year, while the core Expedia side of the business grew about 8 percent in 2010, Justin Patterson, an Internet and e-commerce analyst with Morgan Keegan, tells Reuters. "Between the two assets, the spin-out has largely been designed to realize value in TripAdvisor," Patterson said.

Other analysts have applauded the move, upgrading Expedia ratings on the news.

Orbitz, meanwhile, has taken a few hits lately: It's being sued by American Airlines, which claims in a civil antitrust lawsuit against Orbitz and part owner TravelPort arguing the two companies monopolize American's tickets.

Orbitz recently received a downgrade in its stock rating to hold from buy from the Benchmark Company.

Jim Rogers Comments On Triple Digit Silver And Issues Warning: "Parabolic Moves Always Collapse"

Jim Rogers commented on the recent move by the University of Texas to take delivery of $1 billion in gold, saying the decision is long overdue, and has only occurred because everyone else is now buying thereby taking metal out of circulation. He adds: "But where were these guys five, ten years ago? That’s when they should have been doing all of this." Indeed the momentum chasers never show up until it's too late. Then Rogers had some words of caution for silver bulls: "If silver continues to go up like it has been over the past 2 or 3 weeks, yes, then it would get to triple digits this year. And then we’ll have to worry. It’s not parabolic yet. I hope something stops it going up in the foreseeable future and we have a correction. " There is one caveat: "maybe the US dollar is going to become confetti in 2011, and if that’s the case and silver goes to $150, then obviously I wouldn’t sell my silver. It would be the US dollar which is collapsing. But if silver goes up the way you’re talking about without currency collapse, I would be very worried." So as usual, those long Precious Metals should not hate the Chairsatan but to urge him on to continue doing what he is doing so well: converting that once valuable combination of 75% cotton and 25% linen into "confetti."

From Financial Survival Radio

Financial Survival Radio: We just read that the second-largest university investment fund here in the US is buying physical gold. The University of Texas, which is where I live, is putting aside $1B worth of gold in a New York vault. Some have called this move a tipping point for the precious metals market. Do you agree?

Jim Rogers: Well, tipping point? Gold’s been going up for ten years in a row. I’d hardly call this a tipping point. Silver’s been skyrocketing…

FSR: Maybe a tipping point where we see more institutional mainstream demand.

JR: Well, again, that has been happening. If suddenly all the pension funds wake up and say, I’ve got to own gold, they may start thinking about it more and more. But the thing that’s been getting people’s attention is the fact that gold has been going up so much. That’s the wrong way to invest. Look, I own gold. I own silver. But where were these guys five, ten years ago? That’s when they should have been doing all of this. Unfortunately for all of us, most investors don’t notice something until there’s a good, nice bull market in place, such as with gold and silver. After ten years of price rises in gold, people are starting to notice. That’s what they’re noticing more than the fact that the University of Texas is buying gold. I’m glad they did, I own gold. And yes, there will be more people buying gold. Eventually, everybody’s going to be owning gold, and then we’ll all have to sell our gold. But that’s a long way from now.

FSR: Silver in particular has been of great interest to my family. It looks like $50 silver is going to happen very soon. But Jim, will we see a triple-digit silver price in 2011?

JR: If it does, we’ll all have to sell, because then you’ve got a bubble, a parabolic move and all parabolic moves end badly. I certainly hope it doesn’t happen because I own silver and want to buy more. My hope is, silver and gold and all commodities will continue to go up in an orderly way for another ten years or so, and eventually the prices will be very, very high. Yes, we’ll have triple-digit silver, but if it happens this year, Jay, I would probably start to think about selling.

FSR: But what we’ve seen so far, you wouldn’t consider parabolic?

JR: No, not yet. But I’m worried about silver. If silver continues to go up like it has been over the past 2 or 3 weeks, yes, then it would get to triple digits this year. And then we’ll have to worry. It’s not parabolic yet. I hope something stops it going up in the foreseeable future and we have a correction. There’s never one in history that hasn’t popped.

Now, maybe the US dollar is going to become confetti in 2011, and if that’s the case and silver goes to $150, then obviously I wouldn’t sell my silver. It would be the US dollar which is collapsing. But if silver goes up the way you’re talking about without currency collapse, I would be very worried.

FSR: So that’s the bottom line, those who have been holding on to precious metals for the long term need to watch where the Dollar is to decide whether it’s time to sell.

JR: That’s certainly part of it, yes. And you have to watch the price action. I remember when gold went parabolic in 1980. I shorted gold when it went parabolic in 1980, and it went higher for another two weeks after I shorted it. But it eventually collapsed. Silver eventually collapsed. All parabolic moves throughout history, there’s never been a parabolic move which hasn’t collapsed in any asset.

Silver and gold, yes, will be a bubble someday, Jay. There’s no question in my mind that all commodities will be a huge bubble someday. But I don’t think that bubble is going to happen in 2011. I think it’s going to be more likely 2017, or 2018…you know, a few years from now. I’m not picking a year, just saying it’s a few years away. It could happen sooner, but I hope not.

$5,000 Gold and $300 Silver are Credible Numbers

Q: What do CNBC, George Soros, Warren Buffet and every other mainstream investment commentator on the price of gold have in common for the last ten years?

A: They are all wrong.

All the time, every year, ten out of ten years in a row. If you continue to pay attention to such disinformation, you will lose money. Definitely. No question. Guaranteed.

Each and every year, their vapid comments on the future gold price prove to be complete bollocks, yet year after year, and day after day, millions of readers watchers and listeners tune in for another dose of horribly incorrect information.

These days, the number of perpetually inaccurate predictions forecasting an end to the gold boom are thoroughly drowned out by the now multitudinous voices screaming from the rooftops for gold to go much higher. About 90 percent of that is the herd mentality at work. Early predictions for $1,000 gold, which seemed extreme and outlandish just two years ago, turned out to be very conservative. So its easy now to lay claim to being “the one who predicted the gold bull market”.

Bandwagon riders aside, there are compelling reasons to support a much higher gold price, and more importantly, a narrowing of the ratio between the gold price and the silver price. One year ago, the silver to gold ratio was 63 ounces of silver for every ounce of gold. Today that ratio is 35:1. Its fallen by nearly half in one year.

In terms of pure performance, whereas gold has delivered a solid gain of 26.51% in the course of the last year, silver has outshone gold spectacularly, turning in a gain of 123.55%, making it the commodity trade of the year by far. The effect of that performance is to dramatically alter the perception of investors in terms of its desirability as a precious metal. Its long been a psychological barrier to silver’s progress, in my opinion, that a precious metal could be had so cheap.

But as the prices of both monetary metals grows, and their price differentials narrow, investors want an idea of where the future is heading in terms of these prices. Can they continue to grow so dramatically in price, or is there a point at which their price appreciation curve will level out and become more incremental? Or, is there a point at this the upward price curves will plunge steeply downward? And at what point, if every, will the price curves of silver and gold converge? What exactly is the appropriate ratio of gold versus silver? Do we buy bullion, coins, ETF’s, Gold Funds, Senior Miners or Junior Explorers? Which is safest? Which is riskiest?

First lets consider the ratio question. If the ratio suggested in the title were to become reality, that would mean a ratio of only ten ounces of silver to buy one ounce of gold. If the ratio curve were to continue climbing in favour silver at the present rate, it would approach 10:1 within another year.

But if the ratio were to reflect numbers pegged to certain fundamental realities, then perhaps we could deduce a more rational price differential with better certainty. According to John Stephenson’s Little Book of Commodity Investing, there is 16 times more silver in the earth’s crust than gold.

So on that basis alone, the correct price ratio is arguably 16:1. Silver bulls like to point out that silver is unique among monetary metals because of its wide ranging industrial applications, as well as in photography and jewelry. As the silver price continues to consolidate its price differential with gold, it is likely that process modification and substitution will occur wherever possible in the manufacturing supply chain to replace silver, which will dampen industrial demand. Thanks to silver’s unique chemical attributes, however, that effect will be muted.

2009 statistics from the Silver Institute show that global supply of silver was more or less equal to the global demand for silver from all classes including manufacturing and bullion minting. Government stocks of silver are estimated to have fallen by 13.7 million ounces over the course of 2009, to reach their lowest levels in more than a decade. Russia again accounted for the bulk of government sales, with China and India essentially absent from the market in 2009. Regarding China, Gold Fields Mineral Services states that after years of heavy sales, its silver stocks have been reduced significantly.

If the silver ratio is heading to 16:1, that implies a near term price range of $90 - $100 per ounce.

If gold goes to $5,000 an ounce, and the silver/gold price ratio remains 16:1, there’s silver at $312.50 per ounce.

And what, pray tell, is coming down the pike to support a gold price of $5,000?

First and foremost, the United States dollar.

The whole global financial system is trapped in a situation whereby we have no choice but to permit the United States to continue counterfeiting money. There is no single political force or voice or even prospect with the knowledge and the power to put a stop to the insanity into which we continue to spiral on a daily basis. That means, despite the unanimous chorus from the financial media mainstream, which anesthetizes the human race in an effort to thwart violent protest by design, the fabrication of electronic dollars will continue apace. For years.

In terms of strict nominal value, that implies a proportional increase in the prices of, well, everything. Inflation is the direct outcome of monetary expansion in the absence of economic growth. Therefore, gold and silver will be direct beneficiaries of such policy.

At the same time, sovereign and large capital pool (LCP) investors in U.S. debt are seeking to exit their holdings of U.S. dollars, The world’s largest bond fund, PIMCO, and its acerbic chief Bill Gross, are now shorting the U.S. dollar. China has stated repeatedly that it will reduce its holdings of U.S. debt. This is sending a signal to the rest of the sovereign wealth and LCPs that the U.S. dollar should be abandoned. That means, when the convulsions that seize the global financial system, such as that of 2008, manifest themselves, investors will flee less and less to the U.S. dollar, and more and more to other currencies – especially gold and silver.

So not only does the price of gold appreciate in strictly nominal terms, but demand for it is growing even as it grows exponentially in price. That’s why, given this illogical yet nevertheless existing stupidity, the more expensive gold and silver get, the greater will be their demand as a replacement for U.S. dollar denominated safe haven asset classes.

The third major factor that is going to drive gold to $5,000 and silver through $300 is related to the first two. Governments, always reactive and never proactive, will eventually start to ratify gold and silver as official currency alternatives as a result of public pressure.

The decision by the people of Utah to do just that was big news recently, even though technically and legally, it always was legal tender in that state. It is this final legitimizing step by regional governments that will open the eyes of the otherwise hypnotized American public. For now, the move is painted as fringe by the idiotic mainstream, who are unwitting pawns for the financial services industry – U.S. Federal Reserve – U.S. Treasury trio of economic under-miners.

But contrary to global public perception, this has been a recurring theme in the United States economy, pretty much from day 1.

The Daily Astorian, a newspaper of the day in Astoria, Oregon, on May 9th, 1876 published a story the following of which is an excerpt:

The people of this country are tolerably familiar with depreciated money. The great mass of them have had nothing else for the last fourteen years. We are accustomed to depreciated Greenbacks, National Bank Notes, Nickels and Silver, and there are those living who can recall the time when Gold was worth less than Silver.

The biggest perpetrators of what we, the people, must soon designate as criminals, else suffer the continuing consequences of no jobs and no future, are the United States Federal Reserve, the United States Treasury, The Commodities and Futures Trading Commission, and the Securities Exchange Commission.

“Oh but wait,” say some. “The United States Federal Reserve is not a government body….its private.” And? The Federal Reserve is nothing more and nothing less than the off-balance sheet entity of the U.S. Treasury that permits the illegal fabrication of dollars out of thin air without prosecution. Of course this off-balance sheet entity is not an official government body. It was designed that way, exactly as Enron set up LJM L.P., to hide losses and perform sundry distasteful and illegal acts in an effort to support its parent entity.

When an entity is formed specifically to operate outside of the publicly elected offices of government, but is given dominion over the most important property of the voting public – its money – and when that entity acts in direct opposition to the interests of the public to whom it owes a fiduciary duty, then its status as government or private really becomes irrelevant. All that matters in terms of its identity is its treasonous and fraudulent activity.

The management of Enron went to jail for their larcenous culture of hiding from shareholders the true extent of their losses, and the illegal nature of their everyday operations. With a bit of luck and perseverance, the same fate will yet befall Bernanke, Paulson, Summers, Rubin, Geithner, Gensler, Shapiro and the rest of the Ivy league thieves. In the meantime, the best defense against their intentional destruction of the United States currency is selling dollars to buy gold for capital preservation and silver for low-risk capital appreciation.

The day will come when, instead of teaching that these leaders were nobly trying to ease the pain of financial forces beyond their control, today’s politicians will instead be accurately portrayed as naïve, negligent, and just plain stupid populists whose ignorance of real economic matters was exactly the ingredient necessary to permit the psychopathic and misanthropic banking community to form the financial policies of their governments. Unfortunately, the only ones likely to be alive by the time that happens are now in diapers.

Lithium Powers the Green Revolution

The Energy Report: Jonathan, please tell us about lithium and its core uses.

Jonathan Lee: Lithium metal is used mainly in the glass and ceramics industry and in lithium-ion batteries, which, collectively, comprise about one-half of all lithium used. The other remaining uses are anything from greases, casting and aluminum production to pharmaceuticals. It's a very versatile metal.

TER: What is the investment thesis for lithium?

JL: Lithium is an important component of the batteries that power electric vehicles (EVs). We believe in the electrification of vehicles over time. It's a transition; Nissan's LEAF has come to commercial production, the Tesla Roadster has come out and the Chevy Volt also has come into commercial production. We focus on the metals that play a role in the electrification of our transportation mechanisms and associated infrastructure. Obviously, lithium came up as one of the key metals that will be used in this revolution.

TER: The green revolution?

JL: The green revolution is a nice way of saying it. Demand for lithium will continue to grow at a much higher rate than gross domestic product (GDP) over the next 10 years.

TER: What has lithium's supply/demand curve looked like during the past few years?

JL: Lithium experienced a dip in 2009, but production has been around 120,000 metric tons (120 Kt.) lithium-carbonate equivalent since 2008. That's equal to about 23 Kt. lithium metal. In 2009, lithium demand, along with many other materials, dropped pretty severely to under 100 Kt. Estimates for last year, 2010, range from less than 100 Kt. to about 120 Kt. It's hard to get very exact numbers because it's a fairly opaque market.

Four major players dominate the market: Sociedad Química y Minera de Chile S.A. (NYSE:SQM; SSX:SQM-B, SQM-A), FMC Lithium Corp. (NYSE:FMC), Chemetall, which is a unit of Rockwood Holdings Inc. (NYSE:ROC), and Talison Lithium Ltd. (TSX:TLH). We estimate there was about 108 Kt. tons in 2010. FMC, a large lithium miner in Argentina, estimates it at 100 Kt.

TER: Do you think the lithium market will become more transparent and perhaps trade on the LME, for example? (more)

BNN: Top Picks

Peter Brieger, Chairman and CEO, Globeinvest Capital Management shares his top picks.

Gold Tops $1,500 on Fears of Soaring US Debt

Gold futures rose to a record $1,500.50 an ounce as U.S. debt concerns weighed on the dollar, boosting demand for the precious metal as an alternative investment.

The greenback dropped against the euro on speculation that the European Central Bank will continue to raise borrowing costs as some nations struggle to contain sovereign debt. Standard & Poor’s yesterday revised its long-term outlook on U.S. debt to negative from stable. Gold has climbed 32 percent in the past year, and silver prices have more than doubled.

“The U.S. credit rating will undoubtedly be lowered in the next few years,” said Michael Pento, a senior economist at Euro Pacific Capital in New York. “This will mean much higher borrowing costs and a much lower currency. International investors have been using gold and silver as an alternative currency and an alternative to the dollar, and this will only exacerbate and accelerate that process.”

Gold futures for June delivery rose $2.20, or 0.1 percent, to settle at $1,495.10 at 1:38 p.m. on the Comex in New York. Earlier, the price climbed as much as 0.5 percent to the record.

Gold for immediately delivery was little changed at $1,495.35 at 2:33 p.m. New York time. Earlier, the price rose as much as 0.3 percent to an all-time high of $1,499.32.

Pento, who correctly predicted gold’s rally in the past three years, said the metal will reach $1,600 in 2011. The commodity has gained every year since 2001 on increased investment demand for raw materials.
‘Buy Hard Assets’

“The bullish trend becomes pronounced as more and more people get out of the dollar to buy hard assets,” said Lim Chae Myung, a Seoul-based trader with Hyundai Futures Co.

The Treasury Department projected that the government may reach the $14.3 trillion debt-ceiling limit as soon as mid-May and run out of options for avoiding default by early July.

The Federal Reserve has kept its benchmark interest rate at zero percent to 0.25 percent since December 2008 and has pledged to buy $600 billion in Treasuries through June to stimulate growth.

The ECB this month raised its main rate to 1.25 percent from a record 1 percent to stem inflation.

The Fed probably won’t risk damping economic growth by raising borrowing costs rapidly, Pento said.

S&P changed its long-term rating, citing “material risk” that policy makers won’t reach an accord on “medium- and long- term budgetary challenges.”

“There certainly has always been that lingering concern over U.S. debt and the S&P people are finally identifying the threat,” said Stephen Platt, an analyst at Archer Financial in Chicago. “The world is awash in liquidity. Gold’s slow, grinding action upward shows the deterioration in the dollar, excess liquidity and deficit problems are still in force.”

Silver futures for May delivery rose 95.7 cents, or 2.2 percent, to close at $43.913 an ounce. After the settlement, the price reached $43.95, the highest since 1980.

Jay Taylor: Turning Hard Times Into Good Times

Five Forces Driving Silver Higher & the Dollar Lower

click for audio hour #1 hour #2

Americans Shun Cheapest Homes in 40 Years as Owning Loses Appeal

Victoria Pauli signed a one-year lease last week to stay in her rental home in Fair Oaks, California. She had considered buying in the area, where property prices have slumped 57 percent since a 2005 peak.

In the end, she decided it wasn’t worth it.

“I know people who have watched their home values get cut in half, and I know people who are losing their homes,” said Pauli, 31, who works as a property manager for a real estate company. “It’s part of the American dream to want to own your own home, and I used to feel that way, but now I tell myself: Be careful what you wish for.”

The most affordable real estate in a generation is failing to lure buyers as Americans like Pauli sour on the idea of home ownership. At the end of 2010, the fourth year of the housing collapse, the share of people who said a home was a safe investment dropped to 64 percent from 70 percent in the first quarter. The December figure was the lowest in a survey that goes back to 2003, when it was 83 percent.

“The magnitude of the housing crash caused permanent changes in the way some people view home ownership,” said Michael Lea, a finance professor at San Diego State University. “Even as the economy improves, there are some who will never buy a home because their confidence in real estate is gone.”

Worse Than Depression

Historically, homes have been a safer investment than equities. During 2008, the worst year of the housing crisis, the median U.S. home price declined 15 percent, compared with a more than 38 percent plunge in the Standard & Poor’s 500 Index.

Americans stay in their homes for a median of eight years, according to the National Association of Realtors in Chicago. Someone who bought a home in 2002 and sold in 2010 saw a 4.8 percent increase in value, based on the annualized median price measured by the group. The average annual gain in the past 20 years was 4.2 percent.

Falling prices have made real estate the best buy in at least four decades. Housing affordability reached a record in December, according to National Association of Realtors data that go back to 1970. The group bases its gauge on property prices, mortgage rates and the median U.S. income.

The median U.S. home price tumbled 32 percent from a 2006 peak to a nine-year low in February, data from the Realtors show. The retreat surpassed the 27 percent drop seen in the first five years of the Great Depression, according to Stan Humphries, chief economist of Zillow Inc., a Seattle-based real estate information company.

Not Risk-Free

“If we’ve learned anything from this mess, it’s that housing is not a risk-free investment,” saidMichelle Meyer, a senior economist at Bank of America Merrill Lynch Global Research in New York. “Everyone knows someone underwater in their mortgage or struggling to sell a home.”

About 11 million U.S. homes were worth less than their mortgages at the end of 2010, according to CoreLogic Inc., a Santa Ana, California-based real estate information company. An additional 2.4 million borrowers had less than five percent equity, meaning they’ll be underwater with even slight price declines, according to the March 8 report. The two categories add up to 28 percent of residences with mortgages.

Future Plans

The share of Americans who said they plan to purchase a home in the next six months tumbled 23 percent in March, according to the Conference Board research firm in New York. The National Association of Realtors probably will say tomorrow that existing-home sales were at a 5 million annual rate in March, up 2.5 percent after a 9.6 percent plunge in February, according to the median estimate of 74 economists surveyed by Bloomberg.

Work began on 549,000 houses at an annual pace in March, up 7.2 percent from the prior month, figures from the Commerce Department showed today in Washington. The gain failed to make up for ground lost in February, when starts fell to the lowest level in almost two years.

The drop in homebuyer confidence may be temporary. Home sales probably will rise 4.1 percent to 5.1 million in 2011, with the biggest increases in the second half of the year, the Mortgage Bankers Association said in an April 14 report. In 2012, sales may climb 5.9 percent to 5.4 million, the highest pace since 2007, the Washington-based trade group estimated.

A rebound in home sales depends on the availability of jobs, the mortgage association said. Theunemployment rate probably will decline every quarter of this year and next, falling to 7.9 percent by 2012’s end, the trade group said. It was 8.8 percent last month, the lowest in two years.

Improving Employment

“We expect that purchase activity will pick up slowly as the improvement in the job market eventually leads to greater willingness to buy,” the mortgage bankers group said.

Borrowing costs are at historic lows. The average U.S. rate for a 30-year fixed mortgage was 4.69 percent last year, the lowest in annual data going back to 1972, according to mortgage financier Freddie Mac, based in McLean, Virginia. The rate in March was 4.84 percent, the company said.

By 2012’s fourth quarter, the average fixed rate may rise to 6 percent, according to the Mortgage Bankers Association.

“If you can jump through the hoops to get a mortgage, and there will be hoops, then this is an amazing time to purchase real estate,” said Robert Stein, a senior economist at First Trust Portfolios LP in Wheaton, Illinois, and the former head of the Treasury Department’s Office of Economic Policy. “There are going to be a lot of people kicking themselves a few years from now because they didn’t take advantage of the low prices and the low mortgage rates.”

Tighter Lending

Cheap financing hasn’t done enough to boost home sales in part because lenders are being more selective with applicants, according to Federal Reserve Chairman Ben Bernanke. Fed policy makers have described the housing market as “depressed” in statements following their last eight meetings.

“Although mortgage rates are low and house prices have reached more affordable levels, many potential homebuyers are still finding mortgages difficult to obtain and remain concerned about possible further declines in home values,” Bernanke said in Congressional testimony last month.

The share of banks reporting tighter mortgage standards in the first quarter rose to 16 percent, the highest since 1991, according to the Fed’s Senior Loan Officer Survey.

Federal regulators are proposing rules that may make lending even more stringent, including a requirement that banks and bond issuers keep a stake in home loans they securitize if the mortgage borrowers have imperfect credit and down payments of less than 20 percent. Borrowers who don’t meet the criteria would pay higher rates to compensate lenders for risk.

Fannie Phase-Out

As mortgage requirements rise, rates could follow as Congress and the Obama administration consider phasing out government-controlled Fannie Mae and Freddie Mac. The companies hold federal charters mandating they increase the availability of mortgages through securitization. In Fannie Mae’s case, that order goes back to the Great Depression, when it was created as part of President Franklin D. Roosevelt’s New Deal.

“There are a lot of unsettled policy issues on the table right now that, if they’re not handled right, could further set back the housing market,” said Richard DeKaser, an economist at Parthenon Group in Boston. “Fannie and Freddie have historically lowered interest rates, and eliminating them will increase the cost of home ownership.”

Lowest in Decade

The U.S. home ownership rate dropped to 66.5 percent in the fourth quarter, the lowest in more than a decade, according to the Census Department. The rate probably will retreat another percentage point by 2013, according to Meyer, of Bank of America Merrill Lynch, and Lea, the finance professor. That would put it back to a 1997 level.

“People will still aspire to own their own homes,” Lea said. “They’ll just be a lot more practical about it.”

Pauli, the California renter, said she has no such aspirations, at least for now. She pays $1,500 a month for her three-bedroom, single-family home with a two-car garage, granite kitchen countertops and stainless-steel appliances. Her neighbors who bought before the housing crash typically have mortgage payments of about $2,800 a month, Pauli said.

“I don’t see myself purchasing, even with all the great prices I see,” Pauli said. “Going to bed every night worrying about your home value doesn’t sound like a good time to me.”