Housing Bubble and Real Estate Market Tracker

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

• Housing Numbers Will Give Glimpse Of Future Direction (Seeking Alpha, Nov. 17th): "The Commerce Dept. today reports on housing starts and building permits: Consensus estimates are that starts fell 5.6%, but that permits are up 0.1%. If correct, that would be the first up month since February. Yesterday, the National Association of Homebuilders reported that its "builders' assessment" number, while still low, rose for the second straight month. Recently, the University of Michigan saw a sharp swing higher in the number of consumers who say now is a good time to buy a house."

• Auction To Unload New Condos, Homes (Detroit Free Press, Nov. 16th): "In a dramatic sign of southeast Michigan's lagging housing market, properties with opening bids as low as $30,000 will be offered in the largest-ever auction of its kind in Michigan. Neumann Homes, one of the nation's largest homebuilders, says Michigan's sagging economy -- with the nation's highest unemployment rate and job cuts at Detroit's automakers -- has saddled them with excess inventories and limited options to make a profit or merely break even."

• All That Bubble Talk Isn’t Coming From Nowhere (Housingbubbleblog.com, Nov. 16th): "New Jersey Record: “In Demarest, builder American Properties of Iselin is offering to park a Maserati (worth about $125,000) in the garage for any buyer who forks over $2.2 million to $3.6 million for a new luxury town house.”... Atlantic CityPress: “The region is seeing more sheriff’s sales. New Jersey has seen 23,272 foreclosures so far this year, or about 63 percent more than all of last year." The Hartford Courant. “In Connecticut, business has slowed considerably and prices have flattened in many areas. Home construction is slowing. Now, there’s a new specter: foreclosure.” The Hamptons Online from New York: “In the Hamptons, inventory and time on the market both increased in the first three quarters of 2006... Of the high-end ($13-15 million) ocean front properties, those with motivated sellers and recent $1 million or more price reductions have found buyers at the ready."

• How Overpriced Is The Typical Home? (The Sun Herald.com, Nov. 16th) Western Florida: "The [local] real estate market has slipped into low gear because most homes are overpriced. Could we quantify exactly how overpriced? In general terms, the typical home that sold was sold for 108 percent of its certified just value. The typical unsold home is priced at 132 percent of its just value. This indicates that, in this area, the typical home is currently overpriced by 22 percent. That's quite a stalemate."

• In A Downswing, Looking Up (Washingtonpost.com, Nov. 16th): "The Washington area remains one of the most expensive places in the nation to buy a home. Over the past year, as the number of available homes for sale has climbed, prices have flattened or fallen. That has propelled some buyers toward homes that had slipped beyond their reach. It has allowed them more time to shop and afforded them a greater selection. It has also made sellers much more willing to help with such things as closing costs."

Real Estate Investing and Sentiment

• Housing Peak Now A Losing Streak (OCRegister.com, Nov. 15th): "There have been 17 four-month periods since 1988 where price depreciation was even larger than the 3.25 percent drop we've experienced during our current slump... These 17 slumps may have some predictive powers. On just 10 of these occasions, prices continued lower in the following year. So history says more declines are likely, but not guaranteed. One year after these weakest four-month periods, home prices were on average 0.2 percent higher since 1988. Comparatively, one-year gains for all the rest was 8 percent."

• High Profits Even In Slumping Markets (Businessweek.com, Nov. 15th): "In October, the average San Diego home sold for $485,000, a 5.5% decline from October of 2005... But the average home seller in San Diego made a profit of $243,000 that month. That's the difference between the price they bought it at, five years ago on average, and what they sold it for today. The data is a reminder that many people still have a tremendous amount of equity in their homes, even if some of their neighbors had to lower their asking prices."

• Will Housing Bring Down The Economy? (Ed Hynes in Seeking Alpha, Nov. 13th): "What are the futures on Home Prices market telling us? The new Chicago Futures market gives a mixed, but mostly negative message. On one hand, the futures contracts project home prices in 10 major metropolitan markets will fall 7.5 percent from the quarter ending last June to 2007’s second quarter... The market is only slightly more pessimistic than it was a few months ago. Looking at individual markets, investors are becoming more negative on New York, Washington D.C. and Miami; and more positive on Boston and Denver."

Mortgates and Real Estate Lending

• Freddie: Worst Of Housing Slump Has Passed (Washington Business Journal, Nov. 16th): "Freddie Mac says the biggest slowdown in the housing market may be past, and falling mortgage rates should help stimulate the market. The mortgage giant's weekly mortgage rate report shows 30-year fixed-rate mortgages fell to an average 6.24 percent this week, below year-ago levels. Although it may not have entirely bottomed out yet," says Freddie Mac chief economist Frank Nothaft, "lower mortgage rates should help stimulate activity in the housing market."

• Grim Outlook For Foreclosures Numbers In Massachusetts (DSNews.com, Nov. 14th): "Foreclosure data provider report: "Foreclosure numbers in the state are at record-breaking highs... From January 1 to September 30 the state posted 12,945 foreclosures. With three months left in 2006, foreclosure filings have already surpassed previous year totals by 1,452. September's foreclosure filings, were estimated at 60 per day, everyday including weekends and holidays."

• Bubble Markets Inventory Tracking (Bubbletracking.blogspot.com, Nov. 14th): "Stats detailing when subprime borrowers will hit their first rate reset: -Q3 2006: 6.6% of subprime borrowers have first reset:-Q4 2006: 8.1%; -Q1 2007: 9.4%; -Q2 2007: 11.8%. Subprime borrowers who borrowed with just ARMs will experience a 24% payment increase at the 1st reset and Interest Only borrowers will experience 40-50% increase in payments if their Interest only period is ending. These are averages based on current subprime mortgage pools... I estimate that California has $200-$250 Billion in outstanding subprime ARMs."

• New Jersey Home Foreclosure Indicator Rises 44% Yrom Year Ago Quarter (Emediawire.com, Nov. 14th): "Lis pendens filings, a major home foreclosure indicator, jumped substantially from from the year-ago quarter. Upcoming mortgage rate "resets" could make the New Jersey foreclosure situation much worse. According to the state's leading online foreclosure data service the number of lis pendens filed in New Jersey has risen 44% -- from 2,486 in the third quarter of 2005 to 3,577 in the third quarter of 2006."

• Ah, That Ugly "Reversion Toward The Mean" - Looks Like 5.1% Of Americans Are Due To Lose Their Homes (Housingpanic.blogspot.com, Nov. 14th): "5% would be about 4 million homedebtors. At an average debt of say $200,000 each, that'd be about 1 Trillion in defaulted debt. China's foreign exchange surplus (that they'll be unwinding out of dollars) FYI just hit $1 Trillion."

Macro Impact, And Will The Housing Slump Cause A Recession?

• Expert: Housing Market Drag On State Until 2008 (The Desert Sun, Nov. 16th) Sacramento: "The downturn in the housing industry will continue to depress the state's economy for most of next year before stabilizing in 2008, the Legislature's top budget analyst predicted Wednesday... The slowdown in this industry was the largest single factor in a sharp decline in personal income growth, resulting in a drop in withholding tax payments from over ten percent in the first half of 2006 to less than five percent in the third quarter... ''California has been hard hit by what has happened in the overall real estate sector."

• Banks Told To Predict Effects Of A 40% Crash In House Prices (The Timesonline, Nov. 16th): "Banks in the UK have been ordered by financial regulators to assess how they would cope in the event of a house price crash... The Financial Services Authority said yesterday that an “appropriate” benchmark was to assume property prices fell by 40 per cent and that 35 per cent of mortgages in default ended with homes being re-possessed. It stressed that this was not a forecast but a “severe but plausible scenario” and one that banks should examine when deciding how robust their balance sheets were."

• Will Housing Bring Down The Economy? (Ed Hynes in Seeking Alpha, Nov. 13th): "The seasonal spring bounce in home prices was missing this year, according to the CSI Home Price Indexes. This [last] happened in 1990 and 2001. In 1990 housing prices fell during the next 12 months... in 2001 price increases slowed... The impact of a weak housing market is already slowing the economy. Residential housing construction fell at an annual rate of 17.4 percent, GDP rose only 1.6 percent. Importantly for most investors, the stock market does not seem overly concerned with the housing sector’s problems. Most of the major indexes are trading near multi-year highs. Since we are well into the housing correction, I read the market’s action as saying the economy will be just fine in 2007."

Housing Stocks, and Hedging Your House Price

• Home Depot Stalls Despite Strong Growth in its Supply Unit (George Gutowski in Seeking Alpha, Nov. 15th): "Home Depot (HD) announced surprising financial results. Total sales are up 11.3% but net earnings are essentially flat... They will be moving to a richer store staffing model. Duh! How much money has walked out of the store because you could not get service? HD Supply with its huge growth does not seem to be driving the bottom line up. If the retail consumer is not enticed back, put this stock on the dead money list. Housing cycle excuses aside (don't people renovate instead of moving?)."

Commercial Real Estate and REITs

• Denver REIT Set To Buy Into Harlem (Commercial Property News, Nov. 16th): "Aimco has closed on a $100.1 million transaction that will, if certain conditions are fulfilled, allow the Denver-based REIT to acquire a portfolio of apartment buildings in West Harlem in New York City. "The properties in Harlem are a good fit for us because of the area's high-growth potential," a spokeswoman from Aimco told CPN. "The expansions of Columbia University and Harlem Hospital especially will be important drivers of multifamily growth."

• REITs Trading At Big Premium To Book Value (Stock Reply in Seeking Alpha, Nov. 16th): "The strangest stocks in the US market are REITs. Property companies traditionally traded at a discount to book but, with a wave of the tax wand, they have outperformed the market greatly in the past seven years. This is going to be somebody's big mistake. Don't let it be yours."

• JPMorgan Real Estate Fund Gains From Record REIT Acquisitions (Bloomberg.com, Nov. 16th): "The JPMorgan U.S. Real Estate Fund is beating the S&P's 500 Index for a seventh straight year... Mergers and acquisitions have... propelled the fund to a 30 percent gain in 2006. The fund avoids homebuilders, whose shares fell 27 percent this year as the inventory of unsold houses climbed to an all-time high-- and is now focusing on REITs of offices and apartments because rents are rising in metropolitan regions such as New York and San Francisco. Apartment vacancies are falling as costs to own a home have shot up with the increase in interest rates. Vacancies in the 25 biggest U.S. markets dropped to 5.2 percent in the second quarter."

Web Site of the Day

HUD Homes For Sale The US Department of Housing and Urban Development's website offers mainly foreclosed homes for sale through several government agencies, from the IRS to the Dept. of Agriculture Rural Development.

Click through it to see some of the empty fancy subdivisions that have fallen victim to the housing slump.

The website offers homeowner help in all areas of buying and selling such as approved lender lists, homebuyer counseling and even tips to avoid mortgage fraud. Worth a look for a homebuyer or seller, whether you think the market has hit bottom or not.

Tracking the Housing Market and Homebuilder Stocks You can track developments in the housing market and homebuilder stocks by bookmarking our Housing coverage or subscribing to our free email service. If you have a blog or website of your own, you can track developments in the sector and provide great content for your readers with our Housing Market widget (left). It's simple to add -- just select "Housing Market" from the drop-down menu here.

Comments

[Daniel Casey:]

Your website of the day link is malformed

http//www.hud.gov/home.../

Should be

www.hud.gov/homes/home...

2006 Nov 17 03:00 PM

[Judy Weil_:]

Thanks for the heads up!

2006 Nov 18 12:44 PM

[Scott Pasinski:]

Homeowners need assistance with the complex foreclosure process; it is no different than the assistance 1st time home buyers may receive. The obvious reason would be most people do not know where to turn for help.

The numbers of foreclosures are at all time highs throughout the whole United States with no end in sight for the numbers to slow.

Fortunately, for the people that had a documented hardship and can document that they have over come that adversity - there is still an answer.

It seems that more and more community organizations are getting together to assist people going thru a foreclosure and there are other resources that homeowners need to be aware of.

This nationwide specialty program is run by an ex Department of HUD commissioner and has extensive knowledge on 'how to stop foreclosure'. Please see if this can make sense for you if you are faced with a pre foreclosure or foreclosure situation, www.1staaahardmoney.co...

Credit scores, home values, the size of the mortgage compared to the value (LTV) - DO NOT MATTER.

Often times, banks foreclosure policies differ from that of the actual law and consumers need to be aware that there is help out there. The foreclosure process and how to get assistance is as complicated as obtaining a mortgage but loosing your home is 10 times more stressful.

2006 Dec 01 11:33 PM