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"

"I don't want to be too sophisticated here, but 2007 is going to suck, all 12 months of the calendar year. Our future is not as bright as what we would like it to be."-- D.R. Horton's CEO Donald J. Tomnitz, the second-largest builder by revenue, announcing that D.R. Horton will likely miss its internal goals for 2007 home closings. Seeking Alpha, Mar. 8th

Real Estate Sales and House Prices

• Housing market strong in February (Puget Sound Business Journal, Mar. 8th): "Housing prices rose last month, nearly 15% from February 2006…The February Northwest Multiple Listing Service (NWMLS) survey of Puget Sound home sales: The median home sale price in King County rose to $393,250, up from $344,950 a year earlier. In all the 19 counties surveyed, the median price last month jumped by 14.41%. Condominium prices in King County kept rising last month, increasing to a median of $285,250 from $228,950 a year earlier, or nearly a 25% increase. In Kitsap County, the median price paid for a condo jumped nearly 45% to $347,475 last month, compared with $240,000 in 2006."

• Metro Area's Median Home Price Drops (Rocky Mountain News, Mar. 7th): "The median price of a single-family home sold and closed in February was $235,000, compared with $236,000 in January and $238,500 in February 2006. The average price of a single- family home sold was $292,143, compared with $297,368 in January and $305,017 a year earlier. Metrolist monthly report: "The number of foreclosures is definitely starting to impact the prices of homes, especially in some specific neighborhoods…" The average asking price of a home for sale was $265,272 in February, compared with $276,746 a year earlier."

• Don't Bank on Your House (Fort Wayne, Mar. 7th): "The implication for Fort Wayne is simple: Don’t count on your house being the financial asset that powers your retirement. House prices here increased only about 1% in the last year, compared with 2.3% for Indiana and 5.9% nationally… When housing prices are in the doldrums, it can indicate a faltering economy instead of an economy vigorous enough to increase housing demand."

• Home Sales Slide in February (Denver Post, Mar. 6th): "Sales and prices of existing homes continued to slide in February, largely a result of inclement weather and a high foreclosure rate. Independent real estate analyst Gary Bauer: The number of homes sold last month dropped to 3,090, compared with 3,540 in January. The median price for a single family home dropped to $235,000, from $236,000 in January. For condos, the median price dropped to $144,950, compared to $154,900 in the previous month… Foreclosures are still having their impact."

• Brooklyn Home Prices Jump 16 Percent, Beat U.S. Trend (Bloomberg, Mar. 5th): "Over the last two years the city granted 9,191 building permits in Brooklyn, more than in any other part of New York, according to U.S. Census data. That has brought new condominiums and cooperative apartments to neighborhoods including Williamsburg, Greenpoint and Park Slope. Brooklyn is known for distinctive neighborhoods that range in character from the working class Russian enclave of Brighton Beach to the Heights, where Wall Street titans buy townhouses overlooking downtown Manhattan."

• Housing Market Steady as Other Areas in Nation Slump (Rapid City Journal, Mar. 5th) Wyoming: "The median price for homes sold through the Black Hills Board of Realtors last year was $147,900, up just 2.7% over 2005’s median price. The average price, just under $164,000, was up about the same. The number of townhouses, summer homes, Realtor-sold mobile homes and single-family houses that sold last year numbered 2,344, down about 1% from last year… Houses were selling faster than they have in some time: 73 days, on average. In 2005, it took 112 days to sell a house."

Real Estate Investing and Sentiment

• Foreclosures, Foreclosures, Foreclosures…(National Ass'n of Residential Reat Estate Investment Advisors, Mar. 7th): "Market conditions for Denver, Littleton and Englewood, Colorado: If these foreclosed properties keep coming on the market, as all indications seem to show… It will overwhelm this market [with] unavoidable long term effects. Prices will have to come down... Sales will take 6 to 10 months on the average. New home sales will be seriously hurt: Lots of houses, few buyers, tough loans… Second mortgages on zero down purchases [will] be eliminated… too risky. Buyers… need to be aggressive and… wait for that great deal. It is their only protection against this coming real estate market."

• BidSell.ca Launches "The eBay of Real Estate'' (Business Wire, Mar. 7th): "BidSell.ca, a wholly-owned subsidiary of Idea Labz, today launched Canada’s first auction site targeting residential and commercial properties for sale. Called "The eBay of real estate," BidSell.ca enables property owners, banks, and real estate agents to list commercial and residential properties for free, giving potential buyers the opportunity to vie for new living spaces within the context of the popular online auction format. The company plans to keep the service free to both sellers and buyers while focusing more on generating revenue from advertising."

• Lereah Blames Declining Sales on 'Weather Disruptions (David Lereah Watch, Mar. 6th): "We are seeing temporary near-term weather disruptions in much of the country, but there is an underlying pattern of stabilization in the housing market, … As a result of these weather disruptions, it may take a couple months for the picture to fully clarify, but a modest recovery is likely. Housing remains a great long-term investment. The rapid shift in January to frigid air in much of the country had a cooling affect on home shopping that went beyond normal seasonal factors…Weather disruptions have continued since.”

• Bloggers: Blogging Bears Fruitful Leads (Inman News, Mar. 6th): "The number of blogs focusing on real estate has increased dramatically over the last year. Real estate agents and companies are using blogs to inform and connect with potential customers and to network with one another. Clients who are blog readers tend to buy faster than the average online consumer... NYC Broker Noah Rosenblatt: Local content can be key for Realtors who are seeking to drum up business in their market areas… Real estate is local. (Consumers) need that insight into the market. Tell them what's going on in your local market via your daily experiences."

Mortgates and Real Estate Lending

• What Would Happen if Bank of America Acquired Countrywide Financial? (Brian Revis in Seeking Alpha, Mar. 7th): "To explore the potential impacts of a merger, we compared the number of people shopping (a.k.a. researching) for a mortgage or home equity loan on both websites from July through December of 2006...We discovered that very few people were visiting both Bank of America (BAC) and Countrywide’s (CFC) websites… By acquiring CFC, BAC would almost double the number of people shopping for a mortgage on its website every month. So what does this mean in your state? In 25 states CFC receives a larger share of online home lending shoppers."

• Is the Collapsing Credit Bubble Contagious?(Michael Panzner in Seeking Alpha, Mar. 7th): " Recent developments in the subprime finance sector and elsewhere suggest that the collapse of the biggest bubble of them all, credit, is beginning to gather pace. According to the Credit Slips blog, bankruptcy filings [were] up 18% in February 2007…" The increasing numbers of filings are completely consistent with the "word on the street." Privately, bankruptcy attorneys have told me they have seen increased numbers of consumers seeking bankruptcy… make the conservative... assumption that there will be no further increases in the filing rate for the rest of the year, and then add the numbers we already know from January and February, there will be approximately 765,000 total bankruptcy filings in the U.S. during 2007. There were approximately 585,000 total bankruptcy filings in 2006."

• Refinancings Jump (Inman News, Mar. 7th): "The market composite index, a measure of total home loan application volume, gained 7.3% last week, rising to 671.6 on a seasonally adjusted basis from 626.1 one week earlier. The refinancing index climbed 15%, boosting the refi share of mortgage activity to 46.1% from 43.2% the previous week. Loan applications to purchase homes were up 1% on a seasonally adjusted basis from the end of February… The average rate on 30-year fixed-rate mortgages sank to 6.04%, the 15-year fixed rate falling to 5.73%, and the rate on the 1-year ARM is down at 5.79%."

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

• Lack of Housing Threatens NJ's Future (New Jersey Real Estate Report, Mar. 6th): "In 2006, the Brookings Institution called the lack of affordable housing the top threat to New Jersey’s future. BI fellow Bruce Katz reported that New Jersey "faces the toughest housing challenges of any state in the nation… The significant lack of affordable housing available to New Jersey’s low-, moderate- and middle-income households prevents many nurses, teachers, police officers, security guards and home health aides from living here. If we cannot house such people or if they cannot live near where they work, our state’s economic well-being and quality of life will suffer."

• Service Sector Growth Slower Than Expected (Worcester Telegram, Mar. 6th): "The Institute for Supply Management: The index of business activity in the service sector was 54.3, down from 59.0 in January... A reading above 50 indicates expansion… below that indicates contraction... The nine industries reporting growth in February were health care; professional, scientific and technical services; educational services; utilities; transportation; real estate; accommodation and food services; information; and other services. The other nine industries reported decreased activity from January to February: Mining; agriculture, forestry, fishing and hunting; arts and entertainment; construction; retail trade; management and support services; public administration; finance and insurance; and wholesale trade."

• After Down Year, Homebuilders Optimistic for '07 (WILX 10, Mar. 6th): "Michigan Homebuilder Dave Schertzing: "We're having a phenomenal amount of traffic." Contrast that to a tough 2006 for builders: Although condo sales grew, sales of new, single-family homes for Schertzing were down 40%. Greater Lansing Homebuilders Ass'n: "Housing starts were down about 30% in the Lansing region… Last year's slowdown left a glut of lots on the open market. That should bring their cost down… Even if it's a less-than-perfect year for homebuilders, there could be economic benefit for the region. That's because a bad year for builders can be a good year for home remodelers."

• Real Estate Remodeling Stagnant in Fourth Quarter (Inman News, Mar. 6th): "Real estate remodeling activity was steady in Q4'06, as the two indexes that make up the National Association of Home Builders' Remodeling Market Index (RMI) grew at a snail's pace. The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects, with any number over 50 indicating that the majority of remodelers view market conditions as improving. The current market conditions index edged up slightly from 47.8 to 48.2 on a seasonally adjusted basis, and future expectations moved up to 46 from 45.4."

Homebuilders And Housing Stocks

• Toll: Housing Slump Almost Done; Horton: Not So Fast (Seeking Alpha, Mar. 8th): "Toll Brothers CEO Robert Toll said yesterday TOLL could "burn off" much of its excess inventory within five months. D.R. Horton CEO Donald J. Tomnitz does not see a sector recovery before 2008. Over the past five weeks, Toll's order cancellations have dropped to 16% from a 36% high. Tomnitz believes the inventory glut is too severe for a recovery in the near term. D.R. Horton Treasurer Stacey Dwyer: "This selling season is not meeting our expectations." Street.com's Brett Arends: TOLL CEO's brother Bruce Toll has cashed out $47 million worth of Toll stock since September-- "The best forward-looking indicator of all."

• Home Builders Tighten Their Belts (MarketWatch, Mar. 7th): "The key to the analysis of where home builders are is the amount of speculative inventory still remaining on the market,’ said Robert Toll, CEO of Toll Brothers Inc. ‘There’s the most speculation right before the market cracks,’ Toll said. Although the shakeout has driven many flippers from the market, it’s remarkable we still have speculative investment in the market even today."

• A Couple of Retail Recommendations from Goldman: Bed Bath & Beyond, Kellogg (FP Trading Desk in Seeking Alpha, Mar. 7th): "Goldman Sachs: Home furnishings retailer Bed Bath & Beyond (BBBY) shares, pulled down amid recent turmoil in the broader markets, is a great buy now at 8% off its most recent high of $43 on Feb. 22… "A solid company selling at a a cheap relative valuation, which is poised to benefit from upward earnings revisions, a $1-billion share buyback … and an expected lift from Q4 earnings. Y/o/y growth [is forecast] for 14%-17%, up from GS's present forecast of 13%... GS reiterated a "buy" recommendation [with a 45$ share target]."

Commercial Real Estate and REITs

• REITs: Don't Invest Unless You Understand (Roger Nusbaum in Seeking Alpha, Mar. 7th): "The first time I ever mentioned my fear of mortgage REITs was in December 2004, and I have reiterated the same sentiment several times since. The big driver for my dislike of these stocks is very simple: I view them as being very complicated businesses, even the healthy ones. Complicated as it pertains to selling money and managing interest rates makes for volatile stocks as has been the history with these."

• Herald Square Garage Site To Become 300-Key Hotel (Globe St. Mar. 7th): "Brack Capital Real Estate USA has purchased the Herald Square six-story parking garage at 63-67 W. 35th St. for $31 million. The firm plans to build an upscale hotel on the site... “The price attained… is commensurate with the pricing achieved for other such centrally located Midtown properties with development potential,” says Eastern Consolidated’s Brian Ezratty. “Zoned to accommodate any type of residential or commercial development, the new buyer’s choice of hotel use should bode well at a time when there is a distinct dearth of hospitality properties in the city."

• Boston Properties Wins Russia Wharf for $100M (Globe St., Mar. 7th): "Boston Properties [bought] Russia Wharf, a trophy waterfront asset that is permitted for mixed-use development… [Reportedly for] $100 million. The property… is among the most expensive waterfront assets acquired in recent years… It might even be the most expensive piece of developable land in the city’s history. Russia Wharf was acquired by the Blackstone Group last month as part of the $23-billion buy-out of Chicago-based Equity Office Properties Trust. It is the first local asset sold off by Blackstone."

• Franchot to Change Policy on REIT Rents (Baltimore Sun, Mar. 6th): "State Comptroller Peter Franchot will join other states in changing a policy that's costing Maryland "tens of millions" of dollars in taxes… Wal-Mart has avoided paying millions in taxes to multiple states by having its locations pay rent to a real-estate investment trust, or REIT, that's 99% owned by a Wal-Mart subsidiary. That set up a "captive rent" relationship, which allows the discount giant to pay rent to itself, then deduct those payments as a business expense from its taxable income in Maryland. It was a largely ignored legal shelter until a Wall Street Journal article last month."

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