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 have this sent to your Blackberry or desktop email by signing up for our no-spam free email subscription service.

Quote of the Day- "Shouted From the Rooftops"

"We need to spend some time being introspective." - The executive vice-president of a major seller of subprime loans said recently at a conference of mortgage executives, admitting that his company knew better than to make these loans, but they couldn't stop themselves. (Realty Times, Apr. 17th)

Real Estate Sales and House Prices

• Options and Stable Prices Continue to Lure Greater Hartford Home Buyers in March (RIS Media, Apr. 17th): "From February to March, single-family home listings in Greater Hartford increased 41%, pending home sales rose 23% and closed sales climbed 37%... Inventory of homes for sale… increased 6% last month to 5,262 [vs.] 4,975 in February, the median home sale price [was] $253,000 (a 1% increase compared with $250,000 in February)… From 75 average days-on-market in February [homes sold in] 68 days in March… Between March 2006 and March 2007… decreases in new listings (-.33%), pending sales (-8.6%), closed sales (-12.51) and rising inventory (+16%). Y/o/y median home prices increased 3.31% last month to $253,000, from $244,900 in March 2006."

• Area Home Sales Slow in March (Commercial Appeal, Apr. 17th) Tennessee: "Memphis Area Association of Realtors: Home sales in Greater Memphis slowed again in March… According to MAAR's Multiple Listing Service, total home sales hit 1,487, down 8.8% from 1,632 last year… Monthly sales volume was $252.3 million, down 6.4% from $269.4 million last year. The median sale price for homes was $132,000, down from $132,500 last year."

• CME Housing Futures Show More Price Depreciation Expected (TickerSense in Seeking Alpha, Apr. 16th): "CME offers housing futures for investors... The contracts trade off of the S&P/Case-Shiller Home Price Index that tracks single-family home prices in a number of cities… Based on the January prices, the Chicago market is expected to fall the least by 3.3%. Boston is expected to fall the most at -6.2%. The Composite Index of all markets is expected to fall 5.6%, indicating investors believe a bottom will still not be in place by February of next year… In general, the contracts seemed to do a pretty good job of forecasting future housing prices five months out."

• Even The NAR Expects Further Housing Price Drops (Toro in Seeking Alpha, Apr.16th): "Since the subprime mortgage market began deteriorating late last year, investors and analysts have kept a close watch on Alt-A loans, worrying that problems in higher-grade loans would prove to be a greater threat to the housing market and the economy... Moody’s: Such loans made up about 10% of all mortgages outstanding at the end of 2006 and made up about 18% of home loans written last year. Together, subprime and Alt-A loans account for about 21% of loans outstanding and 39% of mortgages made in 2006."

• LA Mansion Might Set Record (The Real Deal, Apr. 13th): "An L.A. mansion has been put on the market for $125 million, making it the second-most expensive residential property currently for sale in the country, an honor it shares with a Palm Beach mansion Donald Trump is selling for the same price. The most expensive U.S. home currently on the market is a $135 million ranch in Aspen. The 45,000 sf L.A. property… is modeled on Versailles… The most expensive residential listing in New York is a triplex penthouse at the Pierre, which has a price tag of $70 million and has languished on the market since October 2004."

Real Estate Investing and Sentiment

• Mixed Messages for Real Estate Buyers (Realty Times, Apr. 17th): "The NY Times… concluded that "people who chose renting over buying in the last two years made the right move…" Real estate ownership is not a good short-term option because of the costs to acquire and sell property, but it routinely makes sense for those who expect to hold for a lengthy period, say eight to ten years. Indeed, the NY Times… says "most striking, perhaps, is the fact that prices may not yet have fallen far enough for buying to look better than renting today, except for people who plan to stay in a home for many years."

• No Audience: Blogging's Big Enemy (Inman News, Apr. 16th): "Blogging is publishing, which is driven by some business fundamentals… I think we will see more and more agents convert their Web pages to blogs. Blogs are a better way to emotionally connect to their customers, more like meeting someone in person. Then, you will see agents paying for ways to get traffic to their Blog sites, as they do their Web pages. They will also begin to spend more time thinking about conversion as they did with their Web pages, etc., etc. You see the cycle."

• Arizona Asks Zillow to Cease Real Estate Zestimates (Inman News, Apr. 16th): "The Arizona Board of Appraisal has issued two cease-and-desist letters to online home valuation and marketing company Zillow charging that the company's automated estimates for properties in that state are appraisals and require a license… The company has not complied with the notices and counters that it does not offer appraisals… Ray Ferrier, a real estate agent and [appraiser]: "[I] come across people who have used Zillow on almost a daily basis. They are typically under an assumption that they have been given an actual appraised value of the house. Those people believe that it's an accurate value."

Mortgates and Real Estate Lending

• Fannie Mae and Freddie Mac to Help Subprime Borrowers – WSJ (Seeking Alpha, Apr. 17th): "Government-backed mortgage finance companies Fannie Mae and Freddie Mac: Fannie Mae is expected to announce giving borrowers the option of refinancing out of the kind of adjustable-rate mortgages that characterize subprime loans. Fannie Mae will also ease its credit requirements to allow more borrowers to qualify. In addition, Fannie Mae will buy 40-year loans as well as 30-year loans in the secondary market, which should "shave the monthly payment by about 5%." Freddie Mac is expected to announce it will be putting 30- and 40-year subprime loans with reduced margins and longer fixed-rate periods into the market by the summer."

Subprime Fallout and Foreclosure Impact

• Home Foreclosures Double (Washington Post, Apr. 17th): "The number of U.S. homes entering foreclosure doubled in the first quarter from a year earlier as property prices stagnated and owners struggled to refinance mortgages. Owners of 168,829 homes in 2007's first three months were notified that lenders had filed for foreclosure because of failure to pay loans or liens, up from 83,154 homes in 2006's first quarter, Foreclosures.com said. The firm's announcement came as the National Association of Home Builders/Wells Fargo index of homebuilders' confidence fell to the lowest level of the year."

• Fremont General Lands Buyer for $2.9 Billion in Subprime Loans (Seeking Alpha, Apr. 17th): "Shares of mortgage lender Fremont General surged 33% yesterday to $9.62 after Fremont announced the sale of approximately $2.9 billion of its subprime mortgages at a pretax loss of $100 million… The buyer also plans to purchase Fremont's residential real estate business… Though unidentified, some analysts speculate the buyer could be Fortress Investment Group LLC. Fremont has already sold $4 billion of subprime loans to an unnamed buyer, for which it took a pretax loss of $140 million. The company retains its profitable commercial real estate business, with a $6.42 billion commercial loan portfolio concentrated in California, New York and Florida."

• Mortgage Default Rates in California Near Decade High (Monster & Critics.com, Apr. 16th): " DataQuick Information Systems report: The number of mortgage default notices sent to California homeowners last quarter rose to its highest in nearly 10 years as home prices stagnated and rates on adjustable loans pushed higher... Mortgage lenders filed 46,760 notices of default from January through March, marking an increase of 23.1% from the previous quarter and 148% from the year-earlier period...The first quarter's default level was the highest for the most populous U.S. state since Q2'97."

• Is the Bronx Still on the Rise (The Real Deal, Apr. 16th): "The Bronx--and the South Bronx in particular--has spent the last couple of years poised to assume the title of the comeback kid of New York real estate. But all may not be completely rosy in the city's northernmost borough. Despite gentrification, brokers say the rising specter of foreclosures, low returns on investment properties and slowing development in previously active areas like Riverdale pose challenges. "The Bronx is consistently seeing increases in property values, but that increase is much slower than in the [Manhattan] market," said Adrian Thompkins of the Corcoran Group."

• Deal That Was Too Good To Be True (Sun Chronicle, Apr. 15th): "In Massachusetts, foreclosure filings by banks and finance companies have nearly doubled in the past year, with an 87% increase in Bristol County, alone. "People who fell for seemingly cheap, adjustable rate mortgages probably account for about 50% of the people we see in trouble out there," said Mary Ellen Rochette of Pro-Home Inc., which provides homebuyer and foreclosure counseling to consumers in the Attleboro-Taunton area… Although Massachusetts home sales have begun to pick up lately, the modest resurgence hasn't been enough to rescue many of those who were counting on price appreciation to bail them out."

• Foreclosures Mean Windfall for Auction Firm (Macomb Daily, Apr. 15th): "A six-fold revenue increase for Writs Inc. due to a record number of mortgage foreclosures in Macomb County...Writs, which handles the weekly auctions of foreclosed homes for the Macomb County Sheriff's Department, is paid $50 for each property presented for sale. Foreclosures… have skyrocketed from 705 in 2001 to 3,962 in 2006. That tally from last year generated more than $198,000 for the company. Writs also receives revenue from thousands of foreclosure adjournments --- $8 for each --- and for serving notice to those named in civil cases or personal protection orders. The fees are mandated by state law."

• Foreclosures Keep Deputy on his Toes (IndyStar, Apr. 15th) South Carolina: "In the last three months of 2006, about one of every 14 of those adjustable-rate mortgages in the state was in foreclosure, according to the Mortgage Bankers Association. One consumer advocate group predicts that rate will increase to 17% for those loans made in South Carolina last year."

• Foreclosures Are Up In Santa Clarita (Daily News, Apr. 15th): "From December through February, 401 notices of default were issued to Santa Clarita Valley homeowners, compared with 193 for the same three-month period last year, according to... DataQuick. The more than twofold increase in notices of default, the first step in the foreclosure process, comes as home prices are faltering. "Yes, it's up, and it'll probably even increase some more, but as far as the total number of homeowners, it's still an extremely small percentage," said Larry Gasinski, president of the Santa Clarita division of the Southland Regional Association of Realtors.

• Foreclosures Surging in Local Suburbs (Courier Journal, Apr. 15th): "Louisville, [Kentucky] foreclosures: The hardest-hit parts of the city are suburbs from Pleasure Ridge Park to Jeffersontown, an indicator that the rash of foreclosures has spread beyond urban areas into middle-income and affluent neighborhoods… Through March, Louisville has logged 915 foreclosures and could surpass 3,600 by the year's end. The number of foreclosures climbed from 437 in 1996 to an estimated 2,800 in 2006... In eastern Louisville, 32 Middletown… properties entered foreclosure this year. Among the houses being sold next month by Jefferson Circuit Court is a $259,000 house in Middletown and a $640,000 house near Indian Hills."

• Foreclosures On the Rise Due to Katrina (Sun Herald, Apr. 15th): "Jay Brinkmann, VP, Mortgage Bankers Association: "Before Katrina the state had been running at 1,600 foreclosures a quarter. That dropped down to 500-600 a quarter after Katrina. "During Q3'06 foreclosures climbed to 1,400 and Q4, foreclosure filings were at 2,200... Part of it is there are more home loans, but mainly it's catching up after Katrina… Following the hurricane, many lenders offered grace periods to borrowers in areas affected by the storm, [but that ends for many in October.] Mortgage Bankers Association: 10.64% of Mississippians with mortgages missed a payment, making them delinquent."

• Subprime Woes Take Toll On GE Results (Euro2day, Apr. 13th): "Subprime mortgages... wiped $373m from GE's Q1 profits, and took a $500 million markdown [on lower asset values]… and warned of an incipient "bubble" in global credit markets. GE said it had replaced the senior management team at its mortgage unit, [will fire] 1,000 people, or 40%… and also cut by half the loans it makes to less than $15bn this year - a sign of its belief that the subprime market has yet to hit the bottom... Mark Begor, CEO, GE Money, Americas, [said] subprime woes would have smaller impact, about $50m, on Q2 results."

Global Investment, Global Impact of the Housing Slump

• O.C. Builder a Drag on its Dubai Owner's Results (OC Register, Apr. 16th): "Reuters reports that Dubai bulder Emaar says this about its O.C.-based John Laing homebuilder unit [purchased for $1.05 billion in June]: Revenue for Q1'07 was lower than Q4'06 due to a drop in sales by John Laing Homes, USA.… Annualized sales of new homes in the U.S. fell in February for a second straight month, to their lowest level since 2000. "We were expecting margins to be lower in Q1 compared to Q1'06, and they came in even lower than that," said Roy Cherry, an analyst at Dubai-based Shuaa Capital investment bank. "We have estimated no contribution from U.S. operations."

• Morgan Stanley Real Estate Makes Strategic Investment in Brazilian Residential Real Estate Company Abyara Planejamento Imobiliario S.A. (PR Newswire, Apr. 16th): "Morgan Stanley Real Estate and Abyara Planejamento Imobiliario S.A, a residential real estate broker and co-developer in Brazil, announced today that Morgan Stanley Real Estate Special Situations Fund III [will] acquire a 14.29% stake in Abyara… Morgan Stanley Real Estate Special Situations Fund III acquired 4,138,845 shares from Artesia Equity Investments LLC and Marcelo Faria de Lima, which are bound by the Abyara Shareholders Agreement. Additionally, Morgan Stanley Real Estate Special Situations Fund III acquired 3,129,056 shares held by Emilio Jose Westermann, Celso Minoru Tokuda and Arnaldo Curiati, which are not subject to the shareholders agreement."

Homebuilders And Housing Stocks

• Subprime Woes Deflate April Home Builder Index (USA Today, Apr. 17th): "National Association of Home Builders: Subprime woes pushed…the NAHB/Wells Fargo Housing Market Index [down] to 33 in April from 36 in March, its second consecutive monthly fall and its lowest since December's 33… September's 30 was a 15-year low… Readings below 50 indicate more builders view market conditions as poor rather than favorable… The index gauging current single-family home sales fell three points to 33 in April from… 36 in March. The component measuring the traffic of prospective buyers fell one point to 27 in April. The index gauging sales expectations for the next six months dropped six points to 44 in April."

• Homebuilder Ashton Woods' Net Income Declines (Atlanta Business Chronicle, Apr. 16th): "Ashton Woods USA LLC's profit dropped 64% in Q3… The private… homebuilder posted net income of $6.2 million on $129.4m in revenue, compared with net income of $17.4m on $157.6m in revenue in Q3'06. Home closings fell 19.9% to 442 during Q3, while net new home orders dropped 26.6% to 433… CEO Tom Krobot: "The high levels of new and used inventory on the market [and] sub-prime mortgage lending troubles continue to cast a cloud over the market for new homes… We have focused on maintaining a conservative balance sheet using… sales incentives to improve sales absorptions and maintain existing backlog."

• Ryland Shakes up Senior Management (Central Valley Business Times, Apr. 13th): "A week after it announced it expected to lose $0.50- $0.60/share in Q1, two top executives of homebuilder Ryland Group Inc. (RYL) have left the building. Kip Scott “is leaving” his position as chief operating officer of the company and Mark Beisswanger “is leaving” his position as president of Ryland's West region, the company says. No reasons were given for the “leavings.”

Commercial Real Estate and REITs

• Apollo Investment To Buy Innkeepers USA Trust For $1.5 Billion (Seeking Alpha, Apr. 17th): "U.S. hotel REIT Innkeepers USA Trust agreed yesterday to a $800 million all-cash buyout offer from Apollo Investment Corp., valuing each of its shares at $17.75. Innkeepers, which is the owner of the Residence Inn, Hampton Inn and Summerfield Suites chains and owns 74 hotels nationwide, saw its shares jump more than 9% on the news from a closing price of $16.45 Friday to a close of $17.96 yesterday. Including debt, the deal is valued at $1.5 billion. Innkeepers will pay its Q1 dividend on April 24 after which it will suspend further dividend payments."

• Bixby Paying $345 Million for 5 O.C. Office Complexes (OC Register, Apr. 16th): "Seems to be no shortage of buyers for O.C. commercial properties: Bixby Land Company announced today that it has entered into an agreement with Maguire Properties, Inc. to purchase a portfolio of office properties and a 3.5 acre development site with locations in Newport Beach, Irvine, and Seal Beach. The purchase price is approximately $345 million. The portfolio encompasses 11 buildings at 5 locations totaling 816,000 sf — plus a 3.5 acre development site — that are strategically located in high-demand areas with significant restrictions to development."

• REIT Buyers Undeterred by Subprime Deal (Barron's, Apr. 16th): "Newcastle Investment Executives… ChairmanWesley R. Edens and Secretary Randal A. Nardone each bought 432,400 shares for $12 million, or $27.75/share, on April 11… part of a secondary offering of 4.6m shares Newcastle announced on April 5. Edens now beneficially owns 2.5m shares, a 4.7% stake, while Nardone beneficially owns 2.3m shares, a 4.3% stake. CIO Phillip Evanski [bought] 2,500 shares [on April 12], now beneficially owns 10,400 Newcastle shares… Newcastle's shares fell in February-March along with other financial and real-estate stocks [over subprime worries]… [But] on March 19, Newcastle announced… it had purchased a $1.7 billion portfolio of about 7,300 subprime mortgages."

• Newmark Knight Frank Acquires Gale GFS (Globe St., Apr. 16th): "Newmark Knight Frank, together with management of the real estate services firm, has acquired a majority controlling interest in Gale Global Facility Services… Locally based, GFS had been functioning as a subsidiary of Mack-Cali Realty Corp. recently, having been added in the REIT’s acquisition of the Gale Co. in 2006… Newmark Knight Frank Global Management Services' (GMS)… combined leasing and management portfolios now add up to more than 100 million sf of office, retail and industrial properties in 49 states and more than 40 countries."

Web Site of the Day

Future of Real Estate Marketing: Monday's post about Extate, a British property search engine with amazing new features like video house tours and mutli-layered real estate activity heat maps to rival Trulia and Zillow, et al, made me realize that real estate is alive and well-- at least in marketers minds.

As Zillow-backed Future of Real Estate Marketing's author Joel Burslem says: Extate's upgrades and "lack of competition here may mean the reigning kings of the Real Estate 2.0 search game grow complacent (as was the case with Realtor.com before them) - but also means there’s a huge opportunity for new players to come into the game."

The site offers up links and comments on the latest in web-based real estate content, from a wide variety of new search sites to local blogs. And for real estate bulls—the Future looks bright.

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.

Comments

[futureofrea...:]

Thanks for the shout out. Just to clarify, my blog (Future of Real Estate Marketing) is not back by Zillow. I am an independent blogger who covers developments in online real estate.

2007 Apr 18 02:12 PM

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Apr 25 12:32 AM