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

• Some Terribly Ugly Housing News From Phoenix Arizona As Investors Flee Like Cockroaches (Housing Panic, Jan. 12th): "Sales off 40%, prices tumbling, investors scrambling, foreclosures mounting... Like here in Britain, people in Phoenix were buying homes regardless of the fundamentals, betting on future price appreciation. Once that became dubious, the rush for the exits was swift and brutal. As it will be here in Britain eventually. The rapid growth of sales activity and prices of the last few years has been due largely to the ever-increasing involvement of investors in the market. Thus, the slowdown in the investor market can be a relevant reason for the overall market slowdown and the increase in trouble properties."

• December Housing Supply and Demand (Voice of San Diego, Jan. 11th): "Real estate resale activity staged a decent rebound in December, with combined sales coming in at 8.0 percent above November sales and 7.4 percent below last year's number. This latter figure compares to recent y/o/y declines of 20-25 percent and thus represents a substantial improvement over prior months… inventory was down 11.6 percent from the prior month… My guess is that buyers have begun to return to the market due to declining interest rates and extensive propagandizing at both the local and national levels... The pickup in volume hasn't yet exerted any upward pressure on pricing power."

• Housing Market Still Slowing (New Haven Register, Jan.11th): "The number of single-family homes sold in Connecticut fell 14.5 percent in November compared with a year ago according to the Warren Group, a New England residential real estate tracker … Connecticut will continue to experience double-digit drops in the number of homes sold in the coming months, but prices will remain relatively stable... Statewide, the median sales price in November was $263,700, down 2.3 percent from a year earlier. The year-to-date median price of $276,500 was 1.5 percent higher than a year ago."

• Housing Takes Slight Dip In Harris County (Ledger Enquirer, Jan. 11th) Ohio: "Drop in Harris County permits last year because of three factors: higher cost of construction materials and land, and higher interest rates. The yearly valuation was pulled down by lower numbers in the four months of 2006, with the lowest monthly value for permitted houses dipping to $4.09 million in December, the lowest monthly figure since values hit $3.86 million in November 2004…The average value for a new house remained high at $230,274 in 2006…The county requirement not to allow houses on less than two-acre lots has impacted construction as the cost of land climbs."

• Assessed Value Of Many Homes Being Reduced (Las Vegas Sun, Jan. 9th): "Prompted by falling home prices, the Clark County assessor's office has reduced the assessed value of some homes by more than 10 percent… There were a few reductions as high as 30 percent… For much of the past decade, property values have jumped double digits each year… But don't expect tax breaks: The taxes most homeowners pay are based on assessed values that were set in 2004 and which, by state law, were increased only by 3 percent annually - even though market prices appreciated significantly more."

Real Estate Investing and Sentiment

• 7-Year Low For Home Permits (Milwaukee Journal Sentinel, Jan. 10th): "MTD Marketing: New-home sales hit a seven-year low in metro Milwaukee last year. Only 1,934 residential permits were issued in 2006 - 600 fewer than any year this decade… Meanwhile, Milwaukee builder Bill Wesela is hedging his bets. This month, his company launched a sideline remodeling business. "Construction is slow and besides, I've been hearing from a lot of my past customers - people who built in the last five years or so. Instead of selling and buying a bigger place, they've decided to finish the lower level or put in an extra bedroom instead."

Mortgates and Real Estate Lending

• The Mortgage Lender Implode-O-Meter (Bubble Markets Inventory Tracker, Jan. 11th): "Top 25 Subprime lender list, demised lenders in bold, (as of Q2 2006; from the Mortgage Banker's Assoc.): 1. Wells Fargo 2. HSBC Household Finance [rumored to be up for sale] 3. New Century 4. Countrywide 5. Fremont 6. Option One [H&R Block; up for sale] 7. Ameriquest [owned by Argent; in major lawsuits] 8. WMC [subsidiary of GE Money] 9. Washington Mutual [shuttered 80 branches in late 2006] 10. CitiFinancial 11. First Franklin [acquired by Merrill Lynch from National City for $1.3bln] 12. GMAC 13. Accredited Home 14. BNC [Lehman bros. subsidiary] 15. ChaseHome Finance 16. Novastar 17. OwnIt, 2006-12-07 [partially-owned by BofA] 18. Aegis [just closed two subprime operations centers] 19. MLN, 2006-12-29 20. EMC 21. ResMae 22. FirstNLC 23. Decision One [owned by HSBC; rumored to be up for sale] 24. Encore [being acquired by Bear-Stearns] 25. Fieldstone [closing 7 of 16 ops centers, debt renegotiated through 2007-01-31]"

• Bankrate: Mortgage Rates Dawdle Despite Jobs Report (Builderonline, Jan. 11th): "Mortgage rates were flat this week even as concerns about inflation began to percolate. The average 30-year fixed rate mortgage remained at 6.24 percent. According to Bankrate.com's weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.23 discount and origination points."

• Foreclosures Skyrocket (Mountain Mail, Jan. 10th): "Foreclosure filings in Chaffee County increased 57 percent from 2005 to 2006, representing one foreclosure for every 152 pieces of commercial and residential property… Judge William Alderton reported a noticeable increase in collection cases on his civil docket in 2005... Although lenders can stand to profit from a foreclosure, it's a time consuming process to which no lender looks forward… Remax Realtor: Buyers can sometimes benefit from foreclosures, often foreclosed properties do sell for less than market value, but not always. Homes with a lower price tag might also come with a significant amount of work."

• The Fed’s Role In The Housing Crash Of ‘07 (Atlantic Free Press, Jan. 8th): "In late 2007, $1 trillion in Adjustable Rate Mortgages will “reset” triggering massive foreclosures and plunging the country into a deep recession… In just 6 years the total value of real estate jumped from $11 trillion to $21 trillion! (“From 2001 through 2005, outstanding mortgage debt rose 68% from $5293 billion to $8888 billion”)… Equally worrisome, is the amount of money which will stop flowing into the economy because of the declining home values. In 2005, Americans pulled $732 billion out of their home equity to spend on consumer items. By Q2'06 that number was down to $327b."

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

• Globally, U.S. Housing Market Hits Home (American Public Media Radio, Jan. 10th): "American consumers got into the habit of using their home equity as savings accounts, even credit cards… using this cash for vacations, college tuitions, swimming pools and groceries to gasoline. Analyst Lindsey Piegza: Buying helped fuel growth in countries like China, which are exporting the stuff American consumers are busy acquiring… Falling house prices could have a huge impact on borrowing and consumers' willingness to spend those dollars, slowing down the global economy. It grew 3.8 percent last year. U.N.: Lower housing prices could make growth drop to 3.2 percent this year."

• Real Estate Gauge: Private Residential Investment As A Percentage Of GDP (Eddy Elfenbein in Seeking Alpha, Jan. 10th): "Here's a graph showing private residential investment [PRI] as a percentage of GDP. It's a good gauge of how well the real estate market is doing. The number averages about 4.7%, with a standard deviation of about 0.7%. Last year, it got up to 6.3% which was the highest level in over 50 years.Since then, it's started to plunge. And as you can see, historically, the downtrends are pretty severe."

• A Dozen Reasons To Worry (Forbes, Jan.10th): "Unlike earlier U.S. housing booms and busts that were driven by local business cycles, such as the rise and fall of the oil patch along with oil prices in the 70s-80s, this [housing bust] is national and, indeed, global. And since houses are much more widely owned than stocks, the bubble’s likely demise will shake the economy more than the earlier bear market in stocks. A major housing prices decline will precipitate a full-blown U.S. recession, sending corporate profits down… China will suffer a hard landing due to domestic cooling measures and U.S. recession."

• Big Party After 84 Lumber Job Cuts Raises Eyebrows (Pittsburgh Post-Gazette, Jan. 10th): "84 Lumber Co. laid off 25 to 30 people in Washington County last month… Job cuts around the country as new home construction related professions have felt the combined force of higher interest rates, a slower-than-expected start in rebuilding hurricane-devastated regions, excess inventory of new homes and falling prices of materials such as dry wall and framing lumber. Yet the private company continues to gain market share, reporting nearly $4 billion in sales in 2005… 84 Lumber plans to add more than 20 new stores this year and about 10 plants to build housing components. It now operates about 460 stores and 20 component plants."

• Economist Sticking To Gloomy 2007 Forecast (Denver Business Journal, Jan. 9th): "Colorado economist Tucker Hart Adams continues to foresee a 75% chance of a Colorado recession in 2007 -- with a 40% chance of a severe recession, 30% chance of a "soft landing" and a 5% chance of disaster. National GDP growth will average 2.1 percent in 2007, with at least one quarter of contraction. U.S. housing starts will fall by 12-13%… Housing permits will fall 11%, down for the third consecutive year, "but that's good news, because it means we do not have the housing bubble in Colorado and metro Denver that many parts of the country have."

Housing Affordability And The Housing Slump

• Should City Aid Housing Renters -- Or Owners? (Miami Herald Jan. 11th): "Which is better for North Miami: helping renters make ends meet or giving them a leg up to becoming homeowners? It's become a controversy as the city begins to spend more redevelopment money intended to provide decent housing to thousands of families in overcrowded, substandard apartments... Redevelopment director Tony Crapp has proposed buying or leasing a 45-unit apartment building on Northeast Sixth Avenue… But objectors fear it could cause the city to be blamed for slum conditions. ''Crime is higher in the central area because that's where the renters are."

• Has Florida Exodus Begun?: Firm's Vans Move More Out Than In (Builderonline, Jan. 11th): "For the first time in 30 years, United Van Lines says it moved more people out of Florida (17,019) than in (16,212)…Underscoring a recent trend in which Floridians are moving in part to escape rising property taxes and insurance rates. North Carolina, Oregon and South Carolina were the top destination states in 2006. Michigan, North Dakota and New Jersey saw the most people leave…The run-up in home values during the past five years sent property-tax rates soaring. Many residents now say they can't afford to move elsewhere in Florida because of the huge hit they'd take on taxes."

• Rallies Fault Bush For Public Housing Cuts (Post Gazette.com, Jan.11th): "The Philadelphia Housing Authority announced 350 layoffs Tuesday… This year's federal allocation is 76 percent of the amount the federal government's own formula says a housing authority needs to operate. In 2005 it was 85 percent, in '04, 89 percent. Pittsburgh Housing Authority "Subsidies continue to get cut, and prices go up…We're avoiding [layoffs] for as long as possible…The federal cutbacks will cause an ever expanding economic ripple. We employ 480 people who pay taxes, and we have a very large vendor list" of people the authority pays for services."

• Locked Out Of Housing Market (Milwaukee Journal Sentinel, Jan. 10th): "The nation's $248,000 median-priced house last fall required an $84,957 annual income - well above the going salary for nurses, physical therapists and nursing assistants, according to the Center for Housing Policy and Homes for Working Families. In Metro Milwaukee registered nurses and physical therapists in the area earn the required $61,320 a year to buy a $179,000 median-priced house, but the pay of most licensed practical nurses, nursing aides and home health aides falls short. "Wages have simply not kept pace with rising housing costs."

• Prosperous Mass. Is Losing Its Labor Force (CBS News, Jan. 9th): "Massachusetts: where the jobs are cutting edge, the incomes are high — and the workers are leaving… because housing has become unaffordable for young people… Massachusetts' has a highly educated workforce, ranks third in R&D dollars, and garnered nearly 11 percent of the nation's total venture investments in 2005. But a Northeastern University study found a 1.7 percent labor-force contraction between 2003-2005. Boston Globe: Half of those who recently left Massachusetts cited the cost of housing as a major factor in their decision. "If the labor force keeps shrinking, your house is going to be worth less in the future."

Homebuilders And Hedging Your House Price By Shorting Stocks

• Housing Stocks: Is the Worst Over? (Ted Allrich in Seeking Alpha, Jan. 11th): "Keep an eye on land-related write downs for the next clue in the direction for housing stocks. When they're announced (and each builder will have its own numbers, according to geographic location or market sector), investors will be buying the stocks with the lowest write-downs, selling the stocks with the highest ones… [Inventory] decreased from 7.2 months in July '06 to 6.3 months in November… Probably the best indicator for investors will be when the builders stop incentives and/or cutting prices. That says demand is increasing to a point where those incentives are no longer needed."

Commercial Real Estate and REITs

• Equity Office May Get Takeover Bid From Cerberus (Bloomberg, Jan. 11th): "Cerberus Capital is considering a bid for Equity Office Properties, that may top Blackstone's Nov. 19th $20 billion offer, the largest LBO in history. Equity Office… has been selling office buildings in weaker markets such as Atlanta and buying in markets such as New York where rents are rising and vacancy rates are dropping. U.S. office vacancy rates fell to 13.6% in 2006, from 14.6% in '05. Grubb & Ellis: "Companies like Blackstone and Cerberus are "anxious to acquire properties in markets that are supply-constrained, areas like Manhattan, Southern California, and San Francisco, places where it's hard to build and rents are likely to rise."

• Sears Tower to Lease 225,000-SF by February (Globe St.com, Jan. 11th) Chicago: "Sears Tower owner American Landmark Properties says the building will close about 225,000-sf of new or expanded office leases in the next couple weeks. The 3.5 million Sq.f. tower has suffered since Sept. 11, 2001 and with the lackluster office market the past two years. ALP: "We're about 80% occupied right now, this will bring us up to about 84%... Vacancies are getting down below 15%, and if you look at vacancies above the 30th floors, [probably] lower than 6%..." Lease rates are also going up in major buildings."

• 2 Park Ave. Sells For $519M (Globe St. com, Jan. 9th): "Morgan Stanley Real Estate’s Prime Property Fund bought 2 Park Ave. for $519 million from L&L Holding Co. LLC… L&L purchased the building in the third quarter of 2006 for $450 million… Morgan Stanley: “With Midtown Manhattan’s vacancy at 4.4%, the lowest of any submarket in the United States, we believe we have acquired a high-quality, well-located asset in a market poised for material rental rate growth over the next several years." The almost one-million-sf building is 95% leased with a variety of tenants and located between 32nd and 33rd streets."

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.