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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

  • Bitterroot Staves Off National Real Estate Slump (Missoulian, Dec. 21st) Montana: “Transactions at the highest end of residential real estate aren't necessarily trend indicators, but other factors also point to a relatively healthy [local] housing market. Homes in the $100,000-to-$180,000 range slowed a little, at least in the past four months, but market fluctuations won't have a huge effect on multimillion-dollar properties... The Bitterroot Valley Board of Realtors doesn't see a big drop in sales, nor a big drop in price. [Locally] the market slowed in the 1990s, but picked up again in 2000 and continues to grow. The Realtors Board doesn't expect Bitterroot to experience a crash, but also doesn't believe the valley will escape unscathed from the national downward turn either.”
  • Valley Home Sales Fall Again (Idaho, Dec. 19th): "Treasure Valley home sales in November have dropped again... Builders are pulling fewer and fewer permits... they're not confident that the market has touched bottom yet... In Meridian, once the hottest real estate market in Idaho, the 43 building permits issued last month were 79% fewer than in 2005, 78% below 2004. Boise authorized only 35, down 61% from 2005. Don Hubble, owner of Meridian-based Hubble Homes, said November sales were 50% below a year ago. "A lot of (sales) contracts that were cancelled."

Real Estate Investing and Sentiment

  • Council Expands Affordable Housing Rule (Newsday, Dec. 21): "The City Council voted to expand a program requiring developers to include affordable housing in their buildings to be eligible for city tax breaks. Currently, those tax breaks are only applied in Manhattan between 14th-96th streets. The bill expands the zone to Lower Manhattan, parts of Harlem and large parts of Brooklyn including Prospect Heights and Park Slope. "This bill will create even more affordable housing, encourage development in communities where it is still needed, and protect taxpayer dollars from over-subsidizing new luxury development," said Council Speaker Christine Quinn.
  • The Corporate Housing Solution (NY Times, Dec. 20th): "Corporate housing — generally apartments leased to companies that furnish them, equip them with linens and dishes and rent them out for a month or more — is mainly intended as an alternative to hotels for executives or employees either on temporary assignment or in the midst of relocating. But it can also be a boon for developers during a building’s transition from rental to condominium or for condominium investors facing a sluggish market… Not surprisingly, corporate housing’s performance is closely tied to economic growth."
  • Bidding Nears $17B For Harrah’s (, Dec. 19th) Las Vegas: "Apollo Management and Texas Pacific Group have upped the ante in their bid for Harrah’s Entertainment Inc. Information circulated over the weekend and swelled on Monday that the pair could buyout the gaming company for nearly $17 billion. Sources have the latest offering at $90 a share--about $16.7 billion."

Mortgates and Real Estate Lending

  • Defaults On Rise In Housing Market (Whittier Daily News, Dec. 21st): “RealtyTrac's November 2006 U.S. Foreclosure Report: More than 19,000 California properties entered foreclosure, a 19% increase from October and more than three times over Nov. ‘05… But mortgage rates remain very low… the recent dip in interest rates, combined with relatively low unemployment in most areas of the country, should keep foreclosures from accelerating to the point where they impact the entire housing market… Percentage-wise, California ranks seventh in the country in terms of foreclosures. Nevada, Colorado and Georgia are the three worst markets at present, with Vermont, Maine and New Hampshire the three best.”
  • Foreclosure Threat Ominous for Subprime Borrowers (WSB in Seeking Alpha, Dec. 20th): "NPO Center for Responsible Lending study: 2.2 million subprime housing loans, or 15% of the total, will end in foreclosure. In 1998, subprime loans represented 24% of the total, today they account for 62%. The excessive distribution of subprime loans has created a dangerous scenario: borrowers won't be able to make higher monthly payments, won't be able to refinance since the value of their homes will have declined, and won't be able to sell, since they will owe more on the houses than they are worth. [It] could contribute to an overall recession."

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

  • Shelter In A Storm (Market Watch, Dec. 21st): "In many areas the correction wasn't as harsh as some had feared. But sales will slow further…In this housing correction, economic fundamentals -- a poor job market, for example -- often isn't to blame. In fact, areas with strong job markets -- including Florida, Washington, D.C., Nevada, Arizona and California -- are experiencing the largest price adjustments. People have jobs, but are not buying homes because of the affordability factor.”
  • The Housing Market is Hitting Demand for Flat Panel TVs (David Jackson in Seeking Alpha, Dec. 20th): "Barry Ritholtz writes: "My friend owns a very high end Audio Video store on Park Avenue. I ask: How's biz? "Way way off from last year. We typically see about $10-15k in walk in business, plus all the installs we do. Some of those are $100k plus jobs. This year, we are seeing $3k a day walk in business… nothing remotely like last year." He blames… the housing slow down. He was doing so many installs into new or renovated condos, Hampton homes and Long Island / Westchester /CT / NJ residences, he could barely keep up. He was booked months in advance. Today? "We can do an install in 2 weeks."
  • New Home Construction Rises, But Inventory Levels Still High (WSB in Seeking Alpha, Dec. 20th): "Permits for new building fell 3% to a nine-year low, suggesting ongoing weakness in the new home market that may pressure the overall economy for at least the next quarter. Yet the slowdown in building hasn't depleted unsold inventory: the Commerce Dept. reports the glut of unsold homes remains equivalent to a 7-month supply, up from 4.5 months a year ago. Most economists don't expect the housing weakness to require the Fed to cut interest rates in the near term, however, given ongoing inflationary concerns exacerbated by Tuesday's PPI report."
  • Housing Realism Enters the Mainstream Media (Tim Iacono, Dec. 20th): "Housing has peaked, and housing cycles are very long… It will likely be years until home prices exceed their 2005 highs. BusinessWeek surveyed real estate economists on the 2007 housing market outlook: Home prices will continue to fall in some markets and the rate of price appreciation will slow in most places. Declines in homes sales, which directly influence price trends, will set the stage for another year of price decreases in 2008. Foreclosures will continue to increase. For those struggling to hold onto their homes, their net worth will shrink as homes lose value. Long-term mortgage rates will rise. Housing starts will see double digit depreciation."
  • Housing Starts Perk Up in November (, Dec. 19th): "Housing starts exhibited faint signs of revival last month. The U.S. Census Bureau's reported on Dec. 19, total starts edged up 6.7% in November to a seasonally adjusted annual rate of 1.59 million units. The November news—though far from momentous—offsets the grim mood set in October, when starts on new homes plummeted 14.6% to 1.49 million. It would still be premature to call this an upswing, due to the very wide margin of error for government housing data. The November, 2006, rate marks a 25.4% year-over-year decline from November, 2005."
  • Builder Confidence Sinks In December (Inman News, Dec. 19th): "The NAHB/Wells Fargo Housing Market Builder Confidence Index dropped to 32 in December compared to November (33), and was substantially lower, compared to the index in December 2005 (57). An index rating above 50 indicates that more builders view sales conditions as good, while a rating below 50 indicates that more builders view conditions as poor… The Midwest region posted a seven-point gain to 22 on the confidence scale, while the Northeast remained at 37, the South dropped a point to 39 and the West declined four points to 31."
  • Cement Makers' Capital Projects May Exceed $2B In '07 (Reliable, Dec. 19th): "In the United States, there are currently 65 active projects at cement manufacturing plants totaling more than $1.8 billion, which began construction in 2006. Projects range from grassroot plant construction to new import terminals to major maintenance shutdown work. Interesting enough, for 2007, Industrial Info is tracking 125 projects totaling $2.7 billion scheduled to begin construction. Taking into consideration an industry-wide confidence factor of 70 percent (this factor is based on 58-month historical spending trend analysis), project spending for the cement sector is forecast to remain above 2006 levels and could easily exceed 2006 by 10 to 25 percent."
  • Feds Cut Check For Furniture Makers (Roanoke Times, Dec. 19th): "Vaughan-Bassett Furniture made total investments in 2006 of $13.4 million in capital improvements and increased inventory to improve its seven-day delivery program, a program designed to counter imports traveling on container ships from Asia... Stanley Furniture announced last week plans to lay off 200 workers at a North Carolina plant, attributing the move to an industry-wide slowdown and lower sales."

Global Trends And Impact Of The US Housing Market

  • Housing Prices In 70 Major Cities Up 5.8% In November (China Daily, Dec. 21): "The average housing prices for newly-built apartments in China's 70 major cities rose 5.8 percent. Housing prices in Fuzhou, capital city of southeastern Fujian Province, posted the fastest increase of 10.4 percent in November, followed by Beijing with a rise of 10.3 percent. Real estate prices in Shanghai have been in decline since last December. Housing prices in Beijing again rose by double-digits for the sixth successive month.
  • Canada's Housing Affordability Continues To Erode, But Next Year Should Yield Improvements (CNW Telbec, Dec. 20th): "RBC Economics: Across Canada, housing affordability further eroded as rising house prices outpaced income growth in the third quarter of 2006. However, affordability is likely to improve slightly next year as the lagged effects of fourth quarter mortgage rate declines, easing energy price pressures and a topping out of home price appreciation will have a positive impact for home buyers. The RBC Affordability Index measures the proportion of pre-tax household income needed to service the costs of owning a home."

Homebuilders And Housing Stocks

  • State Street Launching Real Estate ETF (, Dec. 20th): "State Street Global Advisors have launched a new exchange-traded fund based on the Dow Jones Wilshire exU.S. Real Estate Securities Index. SSgA said the Street Tracks DJ Wilshire International Real Estate ETF (NYSEARCA:RWX) is the first ETF to track the performance of publicly traded international global real estate securities and is meant to measure non-U.S. real estate securities that serve as a proxy for direct foreign real estate investing. The fund invests in real-estate stocks in both emerging and developed countries, but that the majority targets European economies."
  • Hovnanian Enterprises Suffers Gruesome Fourth Quarter (WSB in Seeking Alpha, Dec. 20th): "Luxury homebuilder Hovnanian Enterprises posted a huge Q4 loss, dampening the ray of optimism cast by this week's report of a 6.7% jump in new-home construction in November. This loss, the result of steep inventory impairment charges and land write-offs, stands in stark contrast to the company's $165.4 million, or $2.53 per share, profit in the same quarter last year… Hovnanian's CFO, J. Larry Sorsby, expects the sector to bottom in H1 2007, but also expects the market to "bounce along the bottom for several quarters before pricing and sales [improve]."
  • Eye On LoopNet: Internet Real Estate To Benefit From Housing Recovery (Deepak Singh in Seeking Alpha, Dec. 19th): "With the soft landing of the US economy becoming a more likely scenario, technology plays servicing the housing market have become attractive with their relative under-valuation… Internet and technology companies servicing the real estate sector will benefit from any recovery in the homebuilding sector. LOOPNet, for example, needn’t concern itself with the slowdown. The commercial real estate sector this far has been impervious to the factors that brought on the homebuilders’ woes. Au contraire, any expected up tick in residential real estate market bodes well for commercial real estate, a segment on which Loopnet maintains primary focus."
  • New Real Estate ETF Is A Globe-Trotter (Market Watch, Dec. 19th): "State Street's new ETF has a low correlation to U.S. stocks and only about a 0.6 correlation to U.S. REIT's... The U.S. REIT sector is poised to outperform the stock market for the seventh straight year in 2006, leading many to warn that the rally is getting long in the tooth and that the stocks are overvalued. "[Foreign REIT] valuations are lower than the United States and this could represent a real opportunity..." State Street has seen "a huge amount of pent-up demand" for a foreign real-estate ETF."

Real Estate Mergers And Acquisitions

  • Ifil Buys Two-Thirds Stake In Cushman Wakefield (, Dec. 20th): "Italy's Ifil will pay $563 million for a 67.5 percent stake in Cushman & Wakefield. Ifil, the holding company of the Fiat SpA Agnelli. The deal underscores the consolidation and globalization of the real estate services business. Cushman intends to expand its businesses in Asia and also give a boost to its plan to create and manage funds that invest in real estate… Cushman CEO: "We look at China and India as major marketplaces…No additional leverage will be assumed by Cushman & Wakefield ... ensuring that it retains complete financial flexibility with respect to its future growth objectives."
  • Apollo Group's Bid For Realogy Undervalues The Company (Brian Harper In Seeking Alpha, Dec. 19th): "In $9b Apollo/Realogy deal, Realogy management conceded that: "The valuation takes into account the substantial pressures and uncertainties facing the residential real estate markets that may well continue for some time." We didn't hear such pessimism when they were promoting the break up of Cendant… Shareholders are being offered a near fire-sale price. Realogy's enterprise value represents around 11 times pro-forma 2006 EBITDA… down 30% year over year… Fortunately, Realogy is free to entertain offers from other suitors, subject to a break up fee of around $99 million, or around $0.45/share. The market expects a higher price, with shares trading above the $30 buyout price. We would be disappointed in anything less than $36."
  • Realogy CDS May Widen Further On Bid War (, Dec. 19th): "After agreeing to be bought by Apollo Group for $6.65 billion plus debt and other liabilities, the news sent default swap spreads of the former real estate arm of Cendant Corp. spiraling out by around 195 basis points to about 265 basis points on Tuesday, or $265,000 per year for five years to insure $10 million in debt… Realogy Corp.'s credit default swap spreads may face further widening if a bidding war erupts for the real estate firm. Standard & Poor's on Monday cut Realogy's corporate credit rating into junk territory, and said it may cut them again, on the buyout."
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