Real Estate Sales and House Prices
- Broward Home Prices Decline, Year-Over-Year (South Florida Business Journal, September 6th): "Folks who waited a month to sell their single-family home in Broward County saw no difference in the median sales price of $375,000 from July to August. However, those who sold their homes in August of last year received a median $390,000. The Realtor Association of Greater Fort Lauderdale said 805 single-family homes sold in Broward in August, up 3 percent from 778 homes sold the month before, but down 29 percent from 1,139 homes for August last year..."
- Going Once... (Boston Globe, September 6th): "The developer of a new luxury condominium project in Boston's financial district is resorting to a tactic last seen in the real estate bust of the 1990s: It's holding an auction for the 34 remaining, unsold condominiums. The units on Broad Street -- 11 of them penthouses -- will be sold in a live auction at the Seaport Hotel in South Boston on Oct. 7... A minimum bid will be required for each unit. A one-bedroom currently offered for sale at $480,000 will be sold at or above its $325,000 minimum price. The most expensive unit to be auctioned, a $1.76 million, two-bedroom with a wraparound terrace on the 14th floor with a waterfront view, has a $1.025 million minimum price."
- Expensive Homes Go Up for Lease (ABC 12, September 6th): "Upper middle class neighborhoods in Genesee County are starting to see some "for lease" or "for rent" signs posted in front yards of homes... A number of $200,000 homes in the county's more upscale neighborhoods are for lease... In Genesee County, a record 7,500 homes are on the market... Recent GM and Delphi cuts are playing a major role. People who are relocating to other areas are burdened with two mortgages for months or even longer."
- City Real Estate [St. Paul, Minneapolis] Retains its Value (Pioneer Press, September 7th): "The total value of all real estate in the city will rise by an estimated 9.4 percent next year, slightly above the growth in residential value, thought to be near 9 percent for next year. The 71,000 homes in the city represent about half of the county's housing and about three-quarters of the city's total real estate value. "It's less than we've seen in recent years, when we saw double-digit growth," said Chris Samuel, who calculates taxes for Ramsey County, including St. Paul. "But even if it's slower, it's still pretty healthy," he said, after a presentation Wednesday to the St. Paul City Council on tax and real estate value trends."
Australian, UK, Canadian and Other Non-US House Prices and Real Estate Investing Markets
- [UK] House Prices Rise Strongly (Reuters, September 7th): "HBOS plc, the country's largest mortgage lender, said [house] prices rose 1.0 percent last month, leaving them 8.2 percent higher in the three months to August on a year ago. The figures chime with data from rival lender Nationwide, which also reported strong house price growth last month... "The robust 1.0 percent increase in August adds to evidence that house prices have recently regained upward momentum after faltering in the second quarter," said Howard Archer, chief UK economist at Global Insight."
- Central Bank Warns Over [Canadian] House Prices (Globe and Mail, September 7th): "the central bank said yesterday that one of the key risks to the Canadian economy is that housing prices will continue to climb steeply here, exerting inflationary pressure, even as the entire U.S. economy is dragged down by its crumbling real estate market. The Bank of Canada surprised no one and left its key interest rate unchanged yesterday... Average home prices are expected to reach an all-time high in 2006, although the increase from 2005 is not as big a leap as the year before, said Gregory Klump, chief economist of the Canadian Real Estate Association. He expects average prices to rise 6.1 per cent in 2006 and 4.7 per cent in 2007. The Canadian Mortgage and Housing Corp. is forecasting a 12-per-cent increase in housing prices this year and 6.4 per cent in 2007."
- Real Estate Market [Australia] Still Strong (ABC Tropical North Queensland, September 7th): "The latest property valuation figures show the Mackay real estate market remains strong, despite some segments cooling off. Paul Krause from J D Dodds property valuers says the market for homes under $350,000 is still very active, but demand for residential properties over $500,000 has slipped. Mr Krause says the commercial property market is continuing to thrive."
- B.C. [British Columbia] Housing Bubble May be Deflating (The Leader, September 6th): "There are signs that Vancouver’s elevated real estate prices may ease back in a soft landing, rather than a burst bubble... In a report released Thursday, [TD Economics] says the recent dramatic price gains in Vancouver and Calgary are “unsustainable over the long term” and “warning lights” of a possible bubble continue to flash... The report notes housing demand in Vancouver has been softening since the beginning of the year while listings have risen – a shift toward a more balanced market that “might augur for a soft landing if it continues.” But it notes Greater Vancouver’s average resale homes continue to sell for more than $500,000 – up more than 20 per cent from a year ago – and home ownership costs have climbed to about 50 per cent of household wages."
Mortgates and Real Estate Lending
- Victims of Foreclosure, Predatory Mortgages on the Rise California Foreclosure Attorney Cites Reasons and Troubling Statistics (Press release, September 7th): "According to San Diego County records, mortgage defaults have skyrocketed an astounding 219% since the same time last year. In July 2005 there were 345 defaults. In July 2006 there were 756 defaults, a first step toward a lender’s foreclosure on a property. In July 2005 there were 91 trustee sales of homes. In the same month this year there were 299 trustee sales, more than three times the year before. California foreclosure attorney John F. Brady, who specializes in rescuing homeowners from mortgages in default, credits the rise in defaults and trustee sales to the influx of inexperienced real estate agents, aggressive new mortgage brokers, naïve first time buyers, little or no money down below-market adjustable interest rate loans and predatory mortgage lending practices."
- Option ARMs Bring Pain to Borrowers and Mortgage Industry (AccountingWeb, September 7th): "Banks are permitted by generally accepted accounting principles to carry Option ARMs at the highest option of payment, as current revenue, the fully amortized amount. But James Grant of Grant’s Interest Rate has called negative-amortization accounting a “fraudulent gambit,” BusinessWeek says. The Financial Accounting Standards Board (FASB), although standing by its standard, has expressed concern that the “disclosures associated with these types of loans [are] not providing enough transparency relative to their associated risks... As the reset date approaches, Countrywide Home Loans (CFC), the largest mortgage originator in the U.S., is sending letters to borrowers who have been making only the minimum payments on their Option ARMs, warning them of a coming increase... Countrywide provides an example of a California homeowner who has been paying less than the minimum on a 7.6 percent loan, facing a payment that is twice what he or she is currently paying... Countrywide advises borrowers to: - Switch their payment option out of the minimum if they can and move to either a 15-year or a 30-year standard-amortization plan. - Switch to an interest-only option if full payments are not feasible at the moment. - Explore alternative refinancing options sooner rather than later.”
- Home Equity Borrowers on the Edge (Dallas Morning News, September 5th): "Last week, Moody's Investors Service reported that the delinquency rate in the home equity loan market rose 11 percent for the quarter ended in April from the same period a year earlier. The figure was up from a 9 percent rate for the quarter ended in March over the comparable period in 2005... "This is the 11th consecutive month that the home equity delinquency growth rate has risen," Moody's Ben Garber said. To give you an idea how quickly the market turned, the delinquency growth rate was falling at a 27 percent annualized rate in the quarter ended May 2005. In the space of 11 months, we've rotated from vast improvement to sharp deterioration. According to Moody's, delinquent loans now represent nearly 7 percent of the total existing pool of home equity loans."
Realtors, and Buying and Selling Real Estate
- Foreclosures Listing Firm Celebrates High Growth (MarketWatch, September 6th): "RealtyTrac, an online marketplace for foreclosure properties, said Wednesday it has been listed in the top 500 fastest-growing private U.S. companies by Inc. magazine. The Irvine, Cal.-based firm ranked 53 on the list with a three-year growth rate of 1,158%. RealtyTrac publishes a national database of foreclosures, the legal proceedings by which a bank or other creditor sells or repossesses property due to the owner's failure to make mortgage payments. Recently, the firm said that while U.S. foreclosures had dropped 16% to 272,109 in the second quarter from the previous quarter, the number was still 25% above the year earlier."
Macro Impact of Housing Market
- Financial Stability Forum Worried by High Household Debt, House Prices (Forbes, September 6th): "The FSF [Financial Stability Forum], which met in Paris today, said its main concerns include 'the capacity of households in some countries to manage rising debt levels and possible adjustments in housing markets'. The FSF was established in 1999 by G7 finance ministers and central bank governors to promote international financial stability... high levels of debt run up by households relate particularly to house purchases in many countries, but the exposure of households to rising interest rates varies widely between countries depending on how the purchases are financed. Housebuyers in the US and UK have generally borrowed at variable rates and are therefore more exposed to rising interest rates than buyers in continental Europe, who rely much more on fixed rate loans."
Homebuilder Stocks, and Hedging Your House Price By Shorting Stocks
- Homebuilders Lower Forecasts on Weak Demand and Cancellations (Eli Hoffmann in Seeking Alpha, September 7th): "Home builder KB Home (NYSE:KBH) cited declining orders and weak new-home demand in lowering its earnings forecast yesterday to between $8 and $8.50 a share annually, down from estimates of $10 a share in June. It expects net orders for the quarter to fall 43% from a year earlier. Home builder Hovnanian Enterprises Inc. (NYSE:HOV) reported a 34% decline in Q3 profits citing higher costs, slower-paced orders, and increased cancellations. Revenue rose 18% to $1.55 billion; costs rose 26% to $1.43 billion. Net contracts for Q3 declined 19%, and their dollar value decreased nearly 24%. Hovnanian's contract-cancellation rate rose to 33% from 24%."
- Merc to Add Real Estate Futures (Chicago Tribune, September 7th): "The Chicago Mercantile Exchange said Wednesday that it will offer futures and options on commercial real estate... The contracts, based on indexes developed by San Francisco-based Global Real Analytics LLC, will begin trading in the first quarter of 2007, the Merc said. The exchange will list 10 cash-settled contracts: a composite index, five regional indexes and contracts based on retail, office, apartments and warehouse properties... About 3,200 residential housing futures contracts have changed hands since their inception four months ago. That compares with trading in the Merc's interest-rate contracts, where about 3.1 million contracts trade each day."
Web Site of the Day
Sustain Lane, "the Web's best community resource for healthy and sustainable living", has published a ranking of US cities by risk of natural disaster. Obviously relevant to home owners...
The list is a little confusing. It's numbered from the bottom up, with the highest risk cities at the top of the list with the highest numbers.
The most risky cities? Miami, New Orleans and Oakland.
Perhaps the most significant ommission is terrorism risk, which is far harder to quantify from historical data than natural disaster risk. New York, for example, is number 32 in the natural disaster ranking, but would fare worse if terrorism was included.
Sign up for Seeking Alpha's Housing Bubble and Real Estate Market Tracker by email here (free, no-spam guarantee).