Even Greenspan says it is not really explainable. The spread is about as narrow as it ever has been and ever will get. This means rough riding for REITS for the next year or so in terms of lower share price and dividends (although the return will still remain above 8%) . It is very hard to imagine the spread remaing this narrow in the future. For those who want to buy relatively low and hold for a while, they will probably be rewarded with higher dividends in the next year or two and a return on capital plus. Buy low--sell high is the mantra that few really follow. Right now and for the next year or so, the buy low period is in operation.
Only if you think there is some structural reason why the spread is going to remain this low for years to come do you think REITS are a bad buy right now. Most people buy what they wish they had bought a year or two ago. Two years from now folks will be saying "gosh I wish I had bought IMH, NLY, NFI, etc."
Because my Reit purchases are all in my Rollover IRA's where the high taxes on dividends are irrelevant and the DRIP is in operation, I am assuming a very healthy income stream in about 8 years from now when I retire.
The above point is of course not relevant to those who have a day trading mentality.
The spread has nothing to do with IMH's perception at this time. In the long term, you'll be fine, BUT why would anyone hang onto a stock at $18 when you can take profits and buy back in cheaper? Talk to NielDIStorts and he'll tell you how smart he was staying long at $22. He was SO cocksure that it would continue to move up. He could have booked profits and even if he bought back TODAY, into the rally, he'd have increased his wealth in IMH by TEN PERCENT! Goddamned fools