Here's our summary of articles and data points on the housing market. It's part of Seeking Alpha's coverage of the real estate market and homebuilder stocks. Like all other topics and stock coverage from Seeking Alpha, you can get this sent to your blackberry or desktop email by signing up for our no-spam free email subscription service.
Real Estate Sales and House Prices
- Area Realty Market Turning Soft (Monterey Herald, September 4th): "According to the most recent figures available from the Monterey County Association of Realtors, July's single-family home inventory was at an all-time high of 2,502. Median home prices dropped to $659,000 in July, down from $687,5000 the previous month, according to numbers provided by the real estate association. That median home price for July also slipped behind the median price of $698,000 for the same month a year ago... That drop in the median home price for July represented a change of 4.1 percent from the previous month, and a figure down 5.6 percent from the previous year's median home price. But the county's percent change in sales year-to-year places it at the top of the state in terms of sales volume shifts. Statewide, house sales dropped by 29.9 percent from a year ago, according to the California Association of Realtors. That translates to an unsold inventory index statewide of 7.5 months, compared to an index of 2.9 a year ago... For Monterey County, July's unsold inventory index was 14 months; Salinas was 15. Last year in July, Monterey County had an unsold inventory index of just under 4..."
- Gold Coast Not So Golden (Hartford Courant, September 5th): "Home sales are slowing all over, but on the Gold Coast the market has plummeted, with sales down by nearly 20 percent through the end of June, compared with last year. There's no panic, but a lot of people are wondering... There are about 540 homes for sale in the town of Fairfield, double the figure from a year ago. Meanwhile, homes are selling more slowly than a year ago. Through July, [sales vice president at William Raveis in Fairfield] Tetreau said that the number of closings had dropped 23 percent from last year."
- Buyers, Sellers Seek Stability in Erratic Housing Market (AZ Central, September 3rd): "New homes on the Valley's fringes, particularly in Pinal County, are selling with big discounts. Buyers are asking some sellers to cut prices by $50,000 to $75,000. Properties in good shape in good neighborhoods are selling for 97 to 98 percent of the list price."
- Escalating Aspen Real Estate Values Astound Even Experts (ABC7 News, September 4th): "Even veteran real estate agents used to Aspen's stratospheric property prices find the latest trend amazing: up to 60 percent appreciation on several homes and condos in less than a year... Real estate broker Tim Estin said he believes the hot prices are due to the perception that Aspen is a safe market. The town's natural and cultural amenities drive demand and slow-growth policies and restrictive zoning keep supply in check."
- Hot Real Estate Market Gets Chilly in Bakersfield (MarketWatch, September 5th): "Just 12 months ago, this... Southern California city was one of the hottest real-estate markets in the country... While average prices have yet to tumble, concern mounts that an ever-increasing housing inventory, coupled with coming hikes for variable rate mortgage holders, could send the market south in a hurry... At Lennar Corp.'s (NYSE:LEN) Artisan/Terra Vista tract on the city's west side, about 20 homes only a year old are back on the market... According to the Office of Federal Housing Enterprise Oversight, Bakersfield edged out Las Vegas in the first quarter of 2005 for highest average property growth with a 33.7% increase. Las Vegas was up 33.3%. More recently, OFHEO ranked Bakersfield 19th and Las Vegas 83rd during its survey for the first quarter of 2006. For the first quarter of 2006, OFHEO said Bakersfield's average home price rose nearly 27% when compared with the year before... Gary Crabtree, a local appraiser who compiles a monthly report on Bakersfield market trends, says median home sale prices in the region rose 2% in July compared with the year before."
- House Hunting? Here's How to Find a Great Deal in Today's Market (Rutland Herald, September 4th): "Three-quarters of the 369 homebuilders recently surveyed by the National Association of Home Builders said that they are now including once-expensive extras at no additional cost to help sell their homes. One-third reported that they are now also absorbing such costs as financing points on mortgages to help move unsold properties. Several even admitted to offering free vacations... Buyers purchasing lots in the high-end subdivisions of Bavarian Woods, in Germantown, and Weston Highlands, in Brookfield, through Wisconsin-based Simon Group, can choose between a brand new Mazda Miata convertible or a $20,000 rebate."
- $6 Million SoHo Condos Go Bust (Louisville, Kentucky Courier-Journal, September 2nd): "The developers of the downtown SoHo Condominiums have run out of money and are walking away from the $6 million project six months after selling their first unit. SoHo Development LLC filed a voluntary petition for Chapter 7 bankruptcy liquidation this week, saying it can't keep up the payments on its bank loan because it hasn't sold a unit in five months... The last sale closed in June, and that month SoHo paid more than $315,000 to its primary lender, 1st Independence Bank in Louisville [owned by 1st Independence Financial Group, Inc. (FIFG)]. But with no more sales in the pipeline, the company missed interest payments in July and August, Small said, and the developers knew it was time to give up. SoHo owes Independence about $2.7 million. In all, SoHo reported $3.07 million in debts and $3.4 million in assets. But the assets are the 24 unsold condominiums."
Commercial Real Estate and REITs
- The Future Of Downtown Real Estate Looks Bright (NY1 News, September 5th): "The attacks on the World Trade Center destroyed more than 15 million square feet of office space, forcing companies to move to Midtown or across the river. But now, with the recent opening of 7 World Trade Center and other new construction, many companies are making the move, and it's slowly driving up the prices. "Just in the last month, according to CB Richard Ellis, rents jumped considerably a few dollars per square foot. And now, the average asking prices is over $38 per square foot, which is significant," says Nicole LaRusso of The Alliance for Downtown New York. And that's a bargain, considering Midtowners pay upwards of $50, $60, $70 dollars per square foot. And tenants Downtown are finding that new construction helps get them more for their money."
European, Asian and Other Real Estate Markets
- London Luxury Home Prices Hit New Highs (AP, September 3rd): "London's luxury homes are now the most expensive in the world, experts say, with foreign buyers, salary bonuses and steady interest rates driving prices up in the capital's overheated property market. Prime residential property in London now costs around 1,200 pounds ($2,300) per square foot, compared to 1,000 pounds ($1,900) in New York, according to CB Richard Ellis Hamptons International. And the so-called "super prime properties" in London are going for up to 3,000 pounds ($5,715) per square foot, compared with 2,700 pounds ($5,100) per square foot in New York... Prices for central London homes worth more than 1.5 million pounds ($2.9 million) climbed 21 percent for the year ended Aug. 31, according to Knight Frank. Foreign buyers own 51 percent of the 2 million-pound-plus ($3.8 million) market in London, Knight Frank research shows, compared to 34 percent of the equivalent market in New York and 27 percent in Paris."
- Indicator of the Week: House Prices (The Sunday Times, September 3rd): "House prices rose by 0.8% last month, according to the latest figures from Nationwide building society, and were up by 6.6% on a year earlier, compared with a 5.9% increase in the 12 months to July. The latest annual increase was the fastest since April last year. The average house price in the UK is now £167,721 according to Nationwide data."
- Plenty of Green in Irish Real Estate These Days (Seattle Times, September 3rd): "Tracing the country's spectacular rise from scenic basket case to economic powerhouse, Ireland's storied green fields are now among the most sought-after in Europe. The property boom has reached from one end of the island to the other, with home values on average soaring by 270 percent in the last decade, according to the government, one of the world's fastest rates. The average Irish house now goes for about $450,000; in Dublin, the capital, the figure exceeds $600,000. In the United States, prices rose only 57 percent in about 10 years by a somewhat different measure, the median price of a single-family house, according to the National Association of Realtors. The figure of $147,100 at the end of 1996 had increased to $231,200 by this July, it reports. With Ireland's population growing by more than 8 percent in four years — by far the fastest rate in the European Union — and incomes rising steadily as well, many people who are not used to feeling rich suddenly are... A recent Bank of Ireland study concluded that among the eight largest countries in the Organization for Economic Cooperation and Development, Ireland has the second-highest per-capita wealth, about $192,000 per person. Only Japan was higher. The report said net wealth has grown 350 percent in the past decade, and 71 percent of that new money is invested in property."
- Northern Ireland House Prices Keep On Rising (Ulster University, September 4th): "The boom in house prices in Northern Ireland shows no signs of weakening, according to the latest Quarterly House Price Survey from the University of Ulster. The survey... shows that prices continued to grow at around 25% a year during the second quarter of this year (April-June). It means that over a year the average price of a home rose more than £31,000, a figure just above the median income of £30,000 a year per household with a mortgage in Northern Ireland. The average house price now stands at £162,821, up 24.7% over a year and by 6.4% over the previous quarter."
- Speculation Has Not Altered [Irish] House Prices- IIB (RTE Business, September 4th): "According to the IIB report 'Irish housing market outlook 2006/7', house prices will increase by 13% this year and 7% next year... he increases will take into account : continuing demand, a favourable population profile, a still healthy economy, appropriate government policy, the maturity of SSIAs and a limited rise in borrowing costs."
- Brazil Real-Estate Developer Tecnisa To Launch IPO (Easy Bourse, September 4th): "Brazilian real-estate developer Tecnisa SA is planning an initial public offering of shares on the Brazilian Stock Exchange, or Bovespa, the company said Monday. Brazilian real-estate industry players are optimistic about growth prospects for the Brazilian industry. Inflation is under control and the Brazilian Central Bank continues to reduce the benchmark Selic interest rate. Lower rates should spur sales of houses and apartments. Currently, the Selic rate stands at 14.25%, after the central bank reduced it for the 10th consecutive time at its meeting last week. In less than one year, Gafisa SA, Cyrela Brazil Realty SA, Rossi Residencial SA, Company SA and Abyara Planejamento Imobilario SA raised money from primary and secondary share offerings. Earlier this year, Klabin Segall and Brascan Residential - other local real-estate firms - also registered IPO intentions with the CVM."
Real Estate Investing and Sentiment
- Real Estate Agent Aids Time Share Cast-Offs (Charleston Post & Courier, Septmber 4th): "Pendleton... spends almost all of her time collecting time share cast-offs and matching them up with savvy buyers, bargain hunters happy to snap up a time share unit for thousands of dollars less than developers are selling them for. Not all of Pendleton's sellers are thrilled to hear how much money they will lose on their investment, but Pendleton is a realist about the dismal resale value of time shares... Developers don't want to lose market share and don't want word to get out that their time share units can be had for 30 percent to 50 percent less, on average, than the prices they set. They often don't let Pendleton on their properties, and they try to scare consumers away from the resale market by telling them "used" time shares don't come with the same perks and reservation clout."
- Telstra Pays $386M for Chinese Real Estate Site (Computer World, September 5th): "Telstra has paid US$254 million (NZ$386 million) for a controlling stake in SouFun Holdings Limited, which runs one of China's largest real-estate and home improvement websites. Telstra, Australia's largest telecommunications company, now owns a 51% stake in SouFun, and plans to use the acquisition to beef up its advertising business in China. SouFun makes money by selling advertising on its website. Telstra's advertising arm, Sensis, will help manage SouFun going forward... SouFun, which is already cashflow positive, is expected to post revenue of A$52 million (US$39.7 million) in 2007, with a profit of A$18 million after excluding income tax, depreciation and amortization..."
- Desperate Home Sellers Turning to Auctions (The Ledger, September 4th): "Nationally, residential real estate auctions are the fastest-growing segment of the U.S. auction business, according to the National Auctioneers Association. Last year, auctioneers sold $14.2 billion worth of homes in 2005, up 8.4 percent from a year earlier, the group reports. Full-year 2006 sales will show another strong increase."
- Matches Made in Real Estate Heaven (Florida Sun-Sentinel, September 4th): "Aventura-based Motivated Seller LLC recently launched an online listing service at www.MotivatedSellerNetwork.com that is geared toward sellers of "gotta sell" real estate and buyers looking for a bargain. The site is a matchmaking service between highly motivated sellers of real estate and active buyers. For a flat fee, sellers can list their properties, complete with a 500-word description and up to four photos. Introductory rates start at $111.75 for a 90-day listing... Using Web site CraigsList.com as a model, Saecker created a site that would help match motivated sellers and buyers. Anyone who's interested in a property on the site can submit a name, e-mail address and a brief message, and all will be forwarded to the seller... Another site catering to the anxious seller is CondoFlip.com... Desperate sellers can hit the site's panic button, and three choices emerge. Most sellers start out at "Level 1," listing their condo at a price that would produce a profit. At any time, however, a seller can change the listing to Level 2 or 3. When this happens, Zilbert alerts his database of prospective buyers that a price drop has occurred, hopefully stimulating buyer interest in the unit. At Level 2, the condo's price is lowered to a break-even point for the seller -- the seller's original contract price plus an 8 percent commission. If sellers push the Level 3 panic button, they agree to give up half of their deposit, thereby reducing their price to less than what they paid for it."
Mortgates and Real Estate Lending
- City's Home Loans Among Worst in U.S. (Montgomery Advertiser, September 4th): "Montgomery ranks 17th out of 130 cities in the number of high-cost home equity and refinancing loans, according to a recent report by the Association of Community Organizations for Reform Now, or ACORN... Homebuyers and homeowners often turn to "subprime" loans when their credit precludes them from getting a standard bank-rate loan. The number of such loans that come with adjustable rates has increased 20 percent to 30 percent over the past six years, according to the ACORN report. The report ranked Montgomery one of the cities at greatest risk for "rate shock," its term for what happens to areas with high concentrations of non-prime loans when interest rates rise. Nearly 33 percent of the 3,635 home loan applicants in Montgomery took out high-cost loans last year. Detroit was ranked No. 1 because nearly half the home loans obtained there last year were high-cost. Birmingham was ranked No. 10. At the other end of the spectrum was San Francisco, where only 7.5 percent of home loans were high-cost."
Macro Impact of Housing Market
- When Will the Tsunami of Foreclosures Hit? (Business Week, September 5th): "According to a new study by RealtyTrac, which publishes the nation's largest database of pre-foreclosure and foreclosure properties, the situation is not all that bad -- yet. In their survey of foreclosure rates in the 100 largest metropolitan statistical areas (MSAs) in the U.S., the second quarter of 2006 actually saw fewer foreclosures than in the first quarter. While Indianapolis, Atlanta and Dallas saw the nation's three highest metropolitan foreclosure rates, other areas, such as Chicago and Portland, Ore., saw a 60% and 188% decline, respectively, from the first quarter."
- Will a Housing Market Collaps Push the US into Recession? (Cross Profit in Seeking Alpha, September 5th): "while we expect some cooling in the demand for credit in response to the uncertain housing outlook, the supply and availability of credit remains ample so far. We would be more reluctant to advance this argument if the yield curve were substantially inverted in an environment where risk spreads had widened in a major way. In such a case, the credit supply from both the banks and the markets would tend to be more restricted and the risks to the economy would be greater."
- Construction Spending Falls in July (David Andrew Taylor in Seeking Alpha, September 3rd): "There was a -1.2% decline in July's construction spending, as per the U.S. Census Bureau. In the decline, both private and public spending fell."
- Waiting for the Market to Tumble on Weakening Housing, Consumer Spending (Investing the Middle Way, September 4th): "...a look at the historic fixed rate and ARM rates from HSH Associates reveals that even if home owners were able to refi into another loan, they will still be looking at a large increase in monthly payments. According to BankRate.com, the current average 30-yr FRM is at 5.94%, while the 5/1 ARM is at 5.69%. The current spread betwen 1, 3 and 5-yr ARMs are negligible. Compared with the lows of 3.56% for 1-yr ARM in the spring of 2004 (my guess the 3-yr ARM was about 4% then) or 4.6% in last summer, the increase is still significant. Note that March-June 2004 was the peak of sales in much of California, and last summer was probably the peak in housing overall."
- U.K. Pound Logs Weekly Gain on Signs House Prices Accelerating (Bloomberg, September 2nd): "The pound posted a second week of gains against the euro and dollar on speculation the Bank of England will lift interest rates further to cool a housing boom. The U.K. currency rose to its highest against the euro since December after the Nationwide Building Society said house prices gained last month at the fastest annual rate since April 2005. The pound climbed to a three-week high versus the dollar this week after the central bank said the number of home loan approvals rose to a six-month high in July."
Web Site of the Day
Housing Tracker provides free single family home and condo inventory and average price data for local markets.
Data are derived from asking prices from Realtor MLS listings.
It's a great tool for house buyers and sellers, and also investors tracking the deflating of the housing bubble.