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 Market Gets a 'D' for 2006 (Denver Business Journal, Feb. 14th): "Genesis Group market research firm: In spite of continued job growth and other signs of general economic improvement, Metropolitan Denver's resale and new housing markets suffered from declining sales volume, rising inventories and flat or declining home prices in 2006… An "alarming" number of home contract cancellations… in Q3&4'06, with cancellations increasing nearly 23% for Q4… For-sale housing permits were down 20% in metro Denver in 2006 as compared to the previous year… New home communities reported less consumer traffic during Q4'06 than in any quarter since 1994."

• City Home Prices, Sales Decline (AZ Central, Feb. 14th) Arizona: "Gilbert's median sales price for an existing home was $319,000, down 5% from the previous year, according to the latest monthly real estate figures. December's median sales price was $328,000. There were 280 Gilbert houses sold in January, down 30% from the previous year... [But] Jay Butler, director of Arizona State University's Realty Studies, cautioned that resale prices for existing homes in January and February are the worst predictors for the year because those months have the lowest numbers of sales."

• Real Estate Prices Fall in Center City (Black Enterprise, Feb. 14th) Philadelphia: "Prudential Fox & Roach: Center City residential real estate prices fell 2.8% in 2006 to a median $362,000, but two areas -- Rittenhouse Square and the Avenue of the Arts -- saw sharper drops… Median prices in Rittenhouse Square declined 13.4% to $485,000 in 2006, according to an analysis of sales by zip code… Median prices fell 16.6% on the Avenue of the Arts to $372,500. Center City also saw a 24.3% boost in the number of home sales in 2006… 1,752 homes sold in 2006, compared with 1,409 in 2005."

• Local Housing Market Sluggish (NJ.com, Feb. 14th) New Jersey: "Lehigh Valley Association of Realtors: Home sales down 20.3% (437) from December's 548 and down 15.6% from 518 in January 2006… The average home price was $215,000, down 5.3% from December's average of $227,000… and higher than January 2006 ($212,000)... The median sales price was $190,000 last month, down 7.3 % from $205,000 in December. It took 61 days on average to sell a home in the Lehigh Valley during January, [up] from 50 in December... Construction [starts] on 387,000 homes, down 7% from the 416,000 starts recorded in December."

• Demand Cools for Nashville Real Estate (Inman News, Feb. 13th): "Greater Nashville Realtor's Ass'n: Home sales in the Nashville, Tennessee metro area were down 3.4% in January compared to January 2006… 2,289 property sales last month, vs. 2,371 in January 2006… Figures include single-family, condos, multifamily, farms, land and lots. Inventory [as] of January 31st totaled 17,264, a gain of 26.8% from January 2006 with 13,611 properties… Single-family homes sold last month spent an average of 72 days on the market… The median price for a single-family home rose to $172,900 in January, up 6.7% from $162,000 a year earlier. For condos, the median held steady at $150,000."

Property Tax Impact

• Higher Property Taxes, More For-Sale Signs in Villas (Press of Atlantic City, Feb. 13th): "Bernie Pomykacz [bought a house in] the Villas section of Atlantic City for $67,000 in 1987… His new property assessment is $361,000... Now the house is for sale… More and more for sale signs are popping up along the bayshore since the property revaluation… New Jersey has the highest property taxes in the nation. Local realtor: “Its…impact on the real estate business: Some people simply can't afford their properties, especially people who retired down here. A lot of people are… relocating. Second homes [are] no longer feasible to hold onto." This has created a lot of inventory."

Foreclosure Trends

• Hawaii Foreclosure Rates Soars, Yet Still Low (Pacific Business News, Feb. 13th): "Hawaii had 90 properties in one stage or another of foreclosure during January, compared to 34 a year ago, RealtyTrac reports. Despite the tripling of foreclosures, the state remained in the bottom 10 for foreclosures per households, and well below the national rate… of one new foreclosure filing for every 886 U.S. households, compared to one per 5,117 in Hawaii. "January's foreclosure number represented the highest monthly number we've seen since we began issuing this report two years ago," said RealtyTrac CEO James Saccacio."

• Texas Foreclosures Continue to Rise (Houston Business Journal, Feb. 13th): "In Texas, 14,728 new foreclosure filings were reported over the course of January -- the highest number of new foreclosures posted by any state in the U.S., according to RealtyTrac. To date, Texas is averaging one foreclosure for every 547 households -- making it the state with the sixth-highest foreclosure rate… Those 14,728 new foreclosure filings represent a less than 1% increase from the number of filings posted in Texas in January 2006."

Real Estate Investing and Sentiment

• Prudential Rand Predicts Hudson Valley Home Prices Will Rebound (Westchester.com, Feb. 14th): "Prudential Rand Realty: Home prices in Westchester, Rockland and Orange counties are likely to bottom out amidst strong sales this spring, with values plateauing and possibly slowly rising by the end of the year, [according to] the region’s [2006] sales statistics. Pent-up demand and purchasers seeking to take advantage of prices that in parts of Hudson Valley now are 5% or 10% lower than… at the market’s peak two years ago will lead to a strong spring sales market… Low interest rates and a robust regional economy also will contribute to strong sales."

Mortgates and Real Estate Lending

• Accredited Home Loss Three Times Larger Than View (Reuters, Feb. 14th): "Accredited Home Lenders Holding Co. (LEND) reported a quarterly loss three times larger than Wall Street expected as more homeowners defaulted on mortgages. The net loss for the San Diego-based subprime mortgage lender, which makes loans to Americans with poor credit histories, totaled $37.8 million, or $1.49/share, compared with a year-earlier profit of $43.3 million, or $1.96. Analysts had forecast a loss of $0.48/share… Accredited said it set aside $42 million more reserves at year-end than in September because delinquencies are rising, and investors are forcing it to buy back more soured loans."

• Lenders Brace for Huge Increase in Reverse Mortgages (New York House, Feb. 14th): "The number of federally insured reverse mortgages made in the U.S. last year jumped 77%, and legislators and lenders are bracing for another huge increase in 2007. Reverse mortgages allow [senior] homeowners to turn the equity in their home into cash without having to move or make a monthly mortgage payment… The Federal Housing Administration, a branch of the HUD, insured 76,351 Home Equity Conversion Mortgages (HECMs) in 2006 compared with 43,131 for 2005. The HECM is the most popular reverse-mortgage program and accounts for nearly 85% of the reverse market."

• Fox Chase Bancorp (FXCB) Announces Earnings for the Fourth Quarter and Year (PR Newswire, Feb. 13th): "Loans decreased due to: (1) A decrease in construction loans, as management continued to reduce the portfolio of acquisition, development and construction loans originated by former management in the southern New Jersey shore area; (2) The sale of $24.9 million in longer-term fixed-rate loans in the secondary market in an effort to manage interest rate risk; and (3) The presence of a Cease and Desist Order, which prohibited the Bank from making commercial loans and certain types of consumer loans until Q1'06."

• Sub-Prime Lender to Drop 2nd Mortgages (ABC Money, Feb. 13th): "Fremont General Corp… is a sub-prime mortgage lender that issues both first mortgages and second, or 'piggyback' mortgages, that supply the 20% of the purchase price for those who want to finance 100%... The second mortgage loans account for a small portion of Fremont's total lending -- 8.7% in 2005 and 8.1% through September 2006… The market for investing in second mortgages has dried up in recent months because holders of the first mortgage are first in line to get paid if a homeowner defaults, leaving many second mortgages worthless."

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

• HNI Corporation Announces 208th Consecutive Quarterly Dividend (Business Wire, Feb. 14th): "HNI Corporation (HNI) announced Wednesday a 8.3% increase to its quarterly dividend to $0.19.5 cents per share on its common stock. “Our decision to further increase the dividend demonstrates our commitment to shareholder value and our confidence in the future growth of HNI Corporation,” said CEO Stan A. Askren. This is the 208th consecutive dividend the Corporation has paid since its first dividend in 1955… HNI Corporation is the second largest office furniture manufacturer in the world and is also the nation’s leading manufacturer and marketer of gas- and wood-burning fireplaces."

• The True Story on Housing (Brian Hozian, Feb. 14th): "Now is the time to start buying the strong home builders… Ken Fisher of Forbes: "You can see right through the housing crash story by looking at the prices of housing stocks… In the last six months housing stocks are up 24%... If housing were destined to fall apart in 2007 these stocks wouldn't be so strong now…Housing sales are up in the last few months, not down… inventories are lower than six months ago… We're accelerating, not landing. This is true not just in housing but also pretty much across the board."

• Real Estate Slowdown Shakes up Relo Benefits (Inman News, Feb. 14th): "GMAC Global Relocation Services report on the impacts of the softening real estate market on the corporate relocation industry cautions: "Longer inventory times and diminished transferee home appreciation can result in employee dissatisfaction, reluctance to relocate and increased relocation costs for the corporation…Putting pressure on both the corporation to provide more financial support and the transferee to accept a lower price and a potential loss on a property. In many instances, the transferee simply cannot afford to accept the relocation."

• Deere & Co. Beats Estimates, Maintains Guidance (Seeking Alpha, Feb. 14th): "Deere & Co. reported an increase in both earnings and revenue for 1Q07... The world's largest maker of agricultural and building equipment reported a profit of $239 million… up from a profit of $224 million a year earlier. Revenue rose 5% to $4.43 billion from the year earlier period. Analyst estimates were for revenue of $3.85 billion. Despite an ongoing housing slump impacting Deere's sales volume to U.S. homebuilders, higher volumes outside the region from the company's agricultural equipment, construction and forestry operations more than made up for it."

• Toll, Tharpe go Separate Ways on Bealeton Home Proposal (Fauquier Times Democrat, Feb. 13th): "Until a few weeks or so ago, Don Tharpe of Midland planned to sell 63 acres on U.S. 17 near Bealeton to Toll Brothers Inc., one of the nation's biggest luxury homebuilders. Toll and Tharpe wanted rezoning approval for 111 high-end homes for the Colonial Crossing proposal. But Tharpe, who owns the property, and Toll Brothers recently parted ways… Lee District supervisor Chester Stribling: "I don't know if Toll backed out of it. I personally think Toll was looking for areas to pull back on."

• Newell Rubbermaid Downgraded to "Martket Perform" (New Ratings, Feb. 12th): "Barrington Research downgrades Newell Rubbermaid Inc. (NWL) from "outperform" to "market perform." The 12-month target price is set to $34… The company has reported 8.5% net sales growth and 17.5% EPS growth for FY06. Newell Rubbermaid’s gross margins in FY06 expanded by 260bps, boosted by robust productivity, pricing and beneficial mix. The company has revised its EPS guidance for FY07 to $1.69-$1.75, representing a 7%-10% y/y decline. The company’s share price has appreciated by 26% in the last 12 months."

Homebuilders and Housing & Lenders Stocks

• Jim Cramer on KB Home (Seeking Alpha, Feb. 14th): "KB Home (KBH): Cramer says that KBH's strong performance is proof that negativity on housing is excessive, since the company reported a rise in revenues and a 4% gain in the price of a typical house over last year. In spite of the 4% rise in the stock, people are "so busy burying" KBH, which Cramer considers an attractive takeover target."

• New Subprime Hedge Tool to Zero in on Layered Risks (Reuters, Feb. 13th): "A new version of a derivatives index that lets investors hedge U.S. subprime mortgage exposure on specific layers of risk [in] the U.S. asset-backed securities market… Some investors doubt whether the latest index will become a popular hedge tool for investors… Mike Kagawa of Payden & Rygel: "I don't know if this thing will ever get off the ground. You've got two of the worst-performing indexes and you're going to create another product off of that? I just don't know if that's going to fly."

Commercial Real Estate and REITs

• Ultra-Swank Offices Go Fast as Hedge Funds Splurge on Space (NY Sun, Feb. 15th): "As office vacancies plummet and rents spike across Manhattan, real estate firms managing lucrative properties in the Plaza district have successfully marketed luxury products to well-heeled hedge fund clients, often leasing office space for more than three times the Class A average… Class A office vacancy fell to 6% from 7.4% on the year… In stark contrast to the citywide average of $41.99 at year's end, consider that new leases in the GM Building and 9 W. 57th St. have been inked for as much as $200 a square foot… These top firms are driving their rents through the roof."

• Shorenstein Buying EOP’s Portland-Area Portfolio (Globe St., Feb. 14th): "SF-based Shorenstein Properties is acquiring Equity Office Properties’ 4.2-million-sf portfolio in and around Portland, OR. Sources say… the portfolio is under contract for a price in the mid-$200s per Sq.ft., which would put it on the plus side of $1 billion… The Blackstone Group closed on its $39-billion purchase of Equity Office Properties last week and quickly began selling it off in smaller pieces. The company borrowed nearly $32 billion for the deal, including a $3.5-billion bridge loan necessary to outbid Vornado Realty Trust."

• NYC Readies Garment Industry for Rezoning (Crain's NY Business, Feb. 14th): "The Bloomberg Administration will soon unveil a rezoning plan for the garment industry that will relax restrictions on conversion of manufacturing space into offices, Planning Commission Chairman Amanda Burden said… City officials will be working with Unite Here and other textile unions to balance sewing and design uses with affordable, Class B and C office space. She said the plan would rule out residential conversions because of the city's need for less expensive office space."

• Investment Firm Building $49M Hilton Hotel (Globe St., Feb. 13th): "Minnesota: W.P. Carey is financing a 255-room Hilton hotel here for $49 million, through a real estate fund titled Corporate Property Associates 16-Global Inc., which will own the hotel upon completion. Mortenson Development Inc. is the developer, and Milwaukee-based Marcus Hotels and Resorts has been selected as the operator of the property. W.P. Carey: "In our mind this market is in prime need of a new, modern business hotel. The competitors in the area are older."

Web Site of the Day

Grow-a-Brain.com is an acerbically funny blog written by Hanan Levin of Riverside, California. Levin is a self-described "real estate investor, business man, inventor, entrepreneur", who has lived all over the world and speaks several languages.

As a homage to his multi-cultural background, Levin's blog essentially aggregates links to other real estate blogs all over the U.S. From Maui to Maine, Tennessee to The Hampton's—whatever city you're interested in, Grow-a-Brain seems to have a link to a blog about it.

The best part: Aside from the Riverside area homes that Levin's trying to sell, Grow-a-Brain has pictures of dream homes-- and some nightmares too—from all over the U.S. and even around the world, for sale. The pictures are accompanied by frank (read: biting) commentary about the homes. Some of them are really wacky—house on the moon anyone?

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.