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.

Quote of the day- From the House's Mouth:

"Whether the hull is the size of a Boston Whaler or the Queen Mary has yet to be seen."-- Homebuilder Hovnanian's (HOV) CEO Ara Hovnanian characterizing this recovery as potentially a boat hull, or a long period of flatness before a gradual rise. Seeking Alpha, Mar. 6th

Real Estate Sales and House Prices

• Phoenix Home Prices Drop, but Freefall Unlikely (Arizona Republic, Mar. 7th): "Office of Federal Housing Enterprise Oversight shows Arizona home prices were up 10% during Q4'06 compared with Q4'05… Cities like Yuma, Prescott and Flagstaff posted double-digit gains in 2006. The Valley's home prices climbed 3% during the same period… Metro Phoenix led the nation for home price run-ups in 2005 with an almost 50% jump, according to FHEO. The Valley's median resale home price fell about 5% last year."

• Home Prices Ease a Tad (Baltimore Sun, Mar. 7th): "The Maryland Association of Realtors' housing affordability index improved slightly to 45.7 in January… which means that the typical first-time buyer still had less than half the income needed to afford a typical starter home in the state. A reading of 100 would mean a first-time buyer had exactly enough income to buy, assuming a 5% down payment and a monthly mortgage payment that consumed no more than a quarter of pretax household income. In December, the affordability index stood at 45.3. The improved picture reflects weaker home prices and low interest rates."

• Broome Home Prices Rise 7.8 Percent (PressConnects, Mar. 6th): "Broome County homes sold in January at median prices 7.8% greater than the year before, according to data released this month by the New York State Association of Realtors. The median sales price for a single-family home in the county was $95,400 in January. Sales that month totaled 99 houses, unchanged from a year ago. In Tioga County, the median sales price was $87,750 in January, down 19.9% from the previous year. Sales totaled 22 houses, up from 20 houses last year. The statewide median sales price was $300,000 in January, up 1.7% from the previous year."

• Rhode Island Home Sales Rise in January, Prices Still Inching Downward, The Warren Group Reports (Business Wire, Mar. 6th): "Sales across Rhode Island up by 12.8% in January, compared with year-before numbers. The median sale price of single-family homes was $256,500 in January, down from $264,000 the year before. January’s price was also up slightly compared to the month before. In December 2006, the median sale price was $255,750... Condominium prices also dropped in January by 2.2% compared to the year before, from $235,250 in January 2006 to $230,000 in January 2007. Sales remained steady, with 175 sold in January 2007 compared with 174 the year before, an increase of 0.6%."

• Old Borough of Brooklyn is the New Boulevard of Brokers' Dreams (New York Post, Mar. 6th): "Last month, the Real Estate Board released a report on Manhattan sales that showed that the median price of an apartment there last year was $775,000. The East Side led the Manhattan price jump in 2006, with median sale prices rising 17%, to $930,000. Median prices for East Side condos rose 32%, to $1.12 million, and prices for co-ops increased 9%, to $816,000."

Real Estate Investing and Sentiment

• Timing Puts Spin on Prices (OC Register, Mar. 7th): "DataQuick: February [is] the 17th straight month where the number of buyers failed to meet the previous year's total. Who's exited the market? …Folks [who] likely buy lower-priced homes: Condos, for first timers; cheaper homes in a neighborhood... They hope homes will only get cheaper, or… aggressive financing they might once have used is no longer readily and cheaply available. So who's buying? This decidedly shrinking group is a better-financed crowd than we've seen previously. This type eyes trendier condos or the nicest home in a tract… These wealthier buyers may be inflating price indexes."

• Despite Housing Slump, Builder Wants to Develop 400 Acres Over Next 8 Years
  (Connecticut Post, Mar. 6th): "Bridgeport-based Primrose Cos. is again bringing forward a 283-lot subdivision in Naugatuck, betting middle- class workers are ready to buy homes they can afford after years of watching the real estate market outstrip their means. "My feeling has been there is not a slump in the market," said Primrose CEO and President John N. Guedes on Monday. That's because Primrose's target buyers have been underserved… Guedes said he concentrates on building homes that cost between $200,000 and $450,000 because it makes good business sense."

• AIA Releases Q4 Home Design Trend Survey (Interior Design, Mar. 6th): "The American Institute of Architects' Q4 Home Design Trend Survey… for Q4'06: Homeowners are pursuing larger kitchens and bathrooms with luxurious features, with more thought on accessibility and eco-friendly materials. The most popular kitchen extras include high-end appliances, additional pantry space, renewable flooring material, island work stations, wine storage areas, and recycling centers. In the bathroom, radiant heated floors, multi-head and doorless showers, and accessibility are on the rise. "

• Banks Licensed to Trade U.S. Property Derivatives (Reuters, Mar. 5th): "Credit Suisse (CSGN), Merrill Lynch (MER), Goldman Sachs (GS) and Bank of America (BAC) have been granted three-year licenses to trade U.S. commercial property derivatives… Credit Suisse was granted an exclusive NCREIF trading license two years ago but… failed to build market liquidity... Financial Times: Lehman Brothers (LEH) and Morgan Stanley (MS) were also close to signing up for licenses… The NCREIF licenses are for trading swaps based on its indexes, including the quarterly NCREIF Property Index (NPI), which tracked 5,333 U.S. properties with a market value of $247 billion at the end of 2006."

Mortgates and Real Estate Lending

• PMI, MGIC Investment: Subprime Trouble for Mortgage Insurance Companies (Wall St. Mayhem in Seeking Alpha, Mar. 7th): "PMI’s profits dropped 7% in Q4 compared to the year ago period. MGIC has had a decline in profits for three straight quarters… PMI is still trading within 10% of a 52 week high… MGIC is still trading above its recent low in August before the subprime lenders started experiencing problems… We believe that PMI and MTG are both promising short sell trades at this point due to exposure to subprime mortgages and a deteriorating environment for the growth of mortgage insurance due to the underlying weakness in real estate markets throughout the US."

• Wachovia: Homebuilder Sales Trends Erratic (Notable Calls, Mar. 6th): "Wachovia: The spring selling season "a mild disappointment for most; traffic levels seem firm, but sales activity soft." The exception is CA, which several companies mentioned as rebounding nicely (SPF, TOL, CTX). FL: the state with the most widespread weakness. Opinions were mixed but biased towards signs of stabilization in the DC metro and mixed but biased towards weakness in TX. DHI seemed more pessimistic about conditions; SPF more optimistic…Downturn duration expectations extending… Builders making headway in labor cost savings. Several builders reported increasing concessions from trade subcontractors, on the order of 5-7% labor cost reductions in select markets, which should begin bolstering margins in 2H07."

• A Subprime Checklist (The Street, Mar. 6th): "If we are looking for a bottom in one of these subprime lenders – [for example] IndyMac (NDE), because that one's the most adamant that it shouldn't be lumped into the parade of horribles -- we need to see: 1. No surge of bad loans 2. No costly obligations to buy back loans 3. Adequate reserves 4. No regulatory probes 5. No massive insider selling before the decline… I'm going to see which of the subprimes can take that five-part challenge. I bet none of them can, but if they can they're certainly worth taking a shot at down here."

• NovaStar: Not Exactly Pennies From Heaven (Herb Greenberg in Seeking Alpha, Mar. 6th): "With Novastar's (NFI) fall 28% Monday to $5.16, you could argue that it is officially a penny stock -- at least it is if the stock stays where it is and if the company pays its dividend for last year. Stocks fall by the amount of their dividends; a $5 dividend, which is about what the company would now pay based on numbers it has presented, would result in a stock that trades for pennies."

• Home Equity Loans Remain Buoyant (Builder Online, Mar. 6th): "[Despite] housing market slowdown [and] mortgage delinquencies… the fate of home equity loans and lines of credit [HELOCs] has yet to become an area of concern. American Bankers Assn: Borrowers of HELOCs tend to have much better-than-average credit, and underwriting standards are much higher… the rate of default on home equity loans actually decreased in Q3'06, to 1.79% from 1.89% in Q2 and 2.33% a year earlier. Delinquencies for HELOCs, which are very minimal to begin with, rose to a rate of 0.57% in Q3'06 from 0.52% in Q2 and 0.46% a year earlier."

• Tells I'll Be Watching This Week (Greg Newton in Seeking Alpha, Mar. 5th): "That stuff about how the subprime problem wouldn’t spread was always a pack of lies, and can now be seen for what it is. How far can it spread? Well, it’s already in General Motors (GM), the bank with an attached automaker, to the tune of something in the neighborhood of $1 billion. It seems likely that the boys and girls at Cerberus, among the largest hedge fund/private equity players, aren’t standing around the water-cooler saying what a great idea it was to buy half of GMAC last year."

• New Century Subprime Bondholders Buck Stock's Fall (Reuters, Mar. 5th): "Deutsche Bank: Credit default swaps spreads, used by money managers to insure holdings or bet against a security, on New Century Home Equity Loan Trust "Baa3"-rated issues have widened 29% to 630 basis points since Feb. 8. That compared with a 121% surge in the estimated cost to insure Fremont issues, to 1,245 basis points, and an 80% jump on CDS on issues from Washington Mutual... New Century's stock, however, dove nearly 69% to $4.56 on the New York Stock Exchange after NEW said Friday federal prosecutors and securities regulators were examining accounting errors and stock trading."

• Lawsuits Targeting Mortgage Schemes (Arizona Republic, Mar. 4th): "Banks are going to force mortgage brokers to buy back bad loans, and mortgage brokers don't have the money so they are going to go under," said Richard Hagar, a national mortgage and real estate fraud expert with American Home Appraisals based in the Seattle area. "This is the beginning of the wave of lawsuits, lost licenses and criminal indictments in Arizona."

• Homeowners Stuck as Lenders Cinch Standards (USA Today, Mar. 4th): "So far, the deepening crisis seems confined to lenders who made riskier loans and hasn't spread to the broader financial markets, which hold up to $1.5 trillion in subprime loans. Chris Flanagan, a managing director for JPMorgan: As many as 7% of those loans will go into foreclosure, resulting in losses as high as $70 billion."

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

• Bernanke Says Fannie, Freddie Need to Reduce Assets (Bloomberg, Mar. 6th): "Federal Reserve Chairman Ben S. Bernanke: Fannie Mae and Freddie Mac, the largest sources of money for U.S. home loans, should sell most of their $1.4 trillion in assets to refocus on homeownership among low-income Americans. The companies could destabilize financial markets should they fail to hedge their assets against risks like shifts in interest rates… Bernanke cited data from regulators showing that less than 30% of the government-chartered companies' mortgage assets, or about $420 billion, promotes affordable housing."

• As Housing Goes Bust, Lenders Become Predators? (Bloomberg, Mar. 6th): "We've created an unproductive asset,'' says Joe Carson, director of global economic research at AllianceBernstein. "A house doesn't produce income. Mortgage debt rose by $4.7 trillion from the end of 2000 through Q3'06, according to the Fed's Flow of Funds report. We created as much debt in housing in the last six years as we did in the prior 50…After the late 1990s stock market bubble, the economy recovered with a combination of interest-rate relief and income growth… That rate relief was the cause of the current housing bubble... How can the cause also be the cure?

Homebuilders And Housing Stocks

• Housing Rebound Elusive as Abandoned Deposits Mount (Bloomberg, Mar. 7th): "Buyers who wrote a deposit check to reserve a Toll Brothers house -- at an average price of $676,139, three times the national median -- declined 5.8% during mid-February's Presidents Day holiday weekend, usually the busiest time, the CEO said... While homebuilders track the number of visitors they get at their model units, they typically don't divulge the data. Toll Brothers broke with that tradition. The company said it took 276 deposits during the holiday weekend, Feb. 17 to Feb. 19, down from 293 deposits in the same period last year. "That's disappointing,'' Toll told investors."

• Home Depot Overpunished For Talking About Earnings Decline (David Neubert in Seeking Alpha, Mar. 6th): "Even with Home Depot's new guidance, I'm still buying the stock at a reasonable p/e ratio [I bought at $39.45]. And: 1.Revenues are still expected to be up 2%. 2. So much room for improvement in stores which currently look like hell. 3. New CEO has to prove himself and will work hard to correct the mistakes of the last (overpaid) one. 4. Home Prices declining will mean that people will do home fix-up projects instead of selling. 5. Home Depot pledged to not sell wood from endangered forests.

• Asset-Backed Insecurities: Containing the Subprime Mortgage Collapse (Adrian Ash in Seeking Alpha, Mar. 6th): "Stock in Merrill Lynch has dropped 15% from its top of January; Morgan Stanley (MS) and Citigroup (C), down13%; Goldman Sachs (GS) is off nearly 10% last week alone… In Bonds: Since the start of January… the cost of CDS insurance on Goldman's debt has risen by 52%... Bloomberg: "Their own traders are valuing the three biggest securities firms as barely more creditworthy than junk bonds"… Why are investment bankers so nervous about their own debt after a record year? With global asset values tumbling [and] the flood of easy money drying up… The risk of mortgage default only got shared… Investment banks also kept back a little of these asset-backed insecurities for themselves, too. CreditSights: At Bear Stearns, MBS junk equals some 13% of the firm's "tangible equity". Lehman holds 11% of its worth in such bonds."

• California and the West; Builders See Some Growth in Residences (Housing Zone, Mar. 6th): "Standard Pacific Corp. said preliminary new-home orders in January and February rose 40% in California from the same period a year earlier… A builders trade group reported that permits for single-family homes in January rose 18% compared with December... The two-month gain by SP was the direct result of… deeper discounts and better incentives to lure buyers. Overall, however, SP said its orders for the period fell 19% compared with a year earlier, tugged down by weakness in Arizona and Florida… SP also reported some shrinkage in the [cancellation] rate… D.R. Horton said its California sales were improving."

Commercial Real Estate and REITs

• Four Lower Midtown Buildings Sell for $71M (Globe St. Mar. 6th): "An unidentified buyer has purchased four Midtown buildings for a total of $70.9 million… The buying entities: 252 W. 37th St. was purchased by Sheva 7 LLC... It was sold jointly with 256 W. 38th St. for $56 million. 256 W. 38th St. purchased by Chanukka 26 LLC... In a separate transaction, the Steinberg family sold 39 W. 38th St and 43 West 38th St. for $14.9 million. 39 W. 38th St. was purchased by Magen 26 LLC... 43 W. 38th St. was purchased by Halascha 26 LLC."

• Lexington Realty Trust Announces Offering of $100 Million of 5.45% Exchangeable Notes (Earth Times, Mar. 5th): "Lexington Realty Trust ("Lexington") , a real estate investment trust (REIT) focused on single-tenant real estate investments, today announced that its subsidiary, The Lexington Master Limited Partnership, has commenced a private follow-on offering, subject to market conditions, of $100.0 million aggregate principal amount of The Lexington Master Limited Partnership's previously established series of 5.45% exchangeable guaranteed notes due January 15, 2027. Interest on the notes is payable semi-annually beginning July 15, 2007."

Web Site of the Day

Home Insight's Property Value & Home Price Check is a Zillow-type service offering property valuations or estimations, and also a weekly update that covers topics like: "What is the supply of unsold homes in my neighborhood? How do selling prices compare to listing prices? How fast are homes selling right now?"

For Las Vegas, Nevada or Alpharetta, Georgia and hundreds more-- a click will tell you what factors will affect the home values in your area. Everything from median home price to property crime risk factor, median household income, how many schools and libraries and importantly, the state tax rates. Good for the homeowner and for the investor looking for potential markets that are desirable places to live in.

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.