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- "From the House's Mouth"

"One of the big problems with securitization is it splits the process into so many pieces. Accountability gets lost." – Alan White, a lawyer with Community Legal Services in Philadelphia, about a secondary blame lawsuit against Credit Suisse that claims CS provided a market for subprime loans to be securitized, thereby enabling an environment of predatory lending." (Reuters, Apr. 30th)

Real Estate Sales and House Prices

• Oahu Home Sales, Prices Rise (Pacific Business News, May 2nd): "Honolulu Board of Realtors: There were 342 homes sold in April… a 3% increase, over April 2006. March 2007… sales were down 16% from March 2006… The median price of a single-family home in April was $665,000, more than 8% higher than April 2006 ($615,000)… and higher than the March median price of $643,500… The median price of a condominium for April, $325,000, was up almost 10% over April 2006 ($296,500). Condo resales fell nearly 10% to 527 units sold in April, down from 584 units sold during April '06… The inventory on the market rose slightly in April to 1,726 single-family homes and 2,301 condos."

• Home Prices Climb in Broome and Tioga (Press Connects, May 2nd): "New York State Association of Realtors: The Broome County median home price jumped to $107,450, up from $84,505 one year ago… vs. $79,900 in 2005… A 17% decline in the number of homes sold in Broome County… 116 homes sold in March, down from 140 a year ago, but up from 109 in March 2005… A 30% y/o/y increase in median price in Tioga County... The median priced single-family home… of $126,000, is up from $86,000 one year ago and $91,500 in March of 2005… Statewide, the median priced home sold for $252,500 in March 2007, up 5.2% from a year ago. Thirty-seven counties reported sales gains in y/o/y comparisons."

• Home Values Drop 7.4 Percent (Sacramento Business Journal, May 2nd): "Median home values in the Sacramento area dropped 7.4% in Q1'07 from Q1'06… Yolo County endured the region's largest decline in value, at 13.2% to $394,990, according to Zillow.com… Sacramento County had the region's second-largest drop at 8.1% to $354,681. Existing home prices in El Dorado and Placer counties fell 6.4% and 3.5%, respectively. Placer County had the region's highest-valued homes at $461,698, almost $86,000 more than Sacramento County, the most affordable market. All 35 communities in the four-county region -- from Antelope to Woodland -- reported declines in price."

• Brooks Building Townhomes, More are on Drawing Board (Santa Cruz Sentinel, May 2nd) Santa Cruz, California: "The single-family median home price stood at $747,000 in March, and the townhouse/condo median was $509,000, according to real estate agent Gary Gangnes. Median home prices have been stubbornly rising despite tenfold increase in homes sold at foreclosure auctions in the county compared to this time last year… Seattle-based Zillow.com: The median value in Santa Cruz County is at $698,659 for Q1'07… down 7% from $750,764 a year ago and down 2.5% from Q4'06's $716,361."

• Rhode Island Home Sales, Prices Decline in 1st Quarter (Boston Herald, May 1st): "The Warren Group: In Rhode Island… sales of single-family homes plummeted 17.7% in March, dragging down overall sales for the quarter by 3% compared with Q1'06. The median sales price fell 2.7%, to $255,000 from $262,000 during Q1'06. Condo sales fell 4.3% for Q1, although sales rose 3% in March. The median sales price fell to $220,500, compared with $235,000 in 2006… Sales of single-family homes increased in January and February. Timothy Warren, CEO Warren Group: "March’s decline could just be a blip. We’ll have to wait and see what happens in coming months to determine that."

• Area Still Trying to Shake off Housing Slump (Loudon County Times, May 1st) Washington D.C.: "The number of homes in Loudoun that sold in March 2007 nosedived 20% from 12 months earlier, according to the Dulles Area Association of Realtors. The average sale price also dropped from $543,515 in March 2006 to $513,066 this year. Prince William County saw a more drastic decline in the number of homes that sold in March at 41%. In Fairfax, Arlington and Alexandria, sales dropped about 6%… In Loudoun, 3,254 homes were on the market in March, and those that sold were taking about 130 days to do so, eight weeks longer than last year."

Real Estate Investing and Sentiment

• Apple Puts in its Bid to Play in Real estate Market (Computer World, May 2nd): "Property group, McGrath Estate Agents, has developed Australia's first search criteria-based real estate podcast, allowing buyers to request properties based on their specific requirements which is then sent to their Apple (AAPL) iPod. McGrath CEO John McGRath: This capability will enable consumers to automatically subscribe to receive podcasts via McGrath's advanced search mechanism in a mobile form. "The Internet has become a part of every buyer's search process and I have no doubt that the ability to download their search results to their iPod will be the next big trend in the fast moving real estate marketing revolution."

• Foreclosures Bring Opportunity (North Jersey.com, May 2nd): "As reports of a nationwide mortgage meltdown roll in, an industry is growing up around homeowners in distress… A seminar sponsored by an Oradell company, American Foreclosures, which collects court data on delinquent mortgages and sells the information for $29.95/month. The company encouraged the agents to buy this information to find business prospects among homeowners eager to sell before the bank swoops in… Several real estate agents said they [wanted to] learn more because investors are calling, asking for bargains on foreclosed property. Others said homeowners in distress have called, asking how to handle a mortgage they can't afford."

Mortgates and Real Estate Lending

• Private Mortgage Insurance has Comeback (Mercury News, May 2nd): "Lenders have tightened their loan standards, many [homeowners] are choosing traditional fixed-rate mortgages backed by private mortgage insurance [as opposed to second subprime mortgages]… Lenders [are] more hesitant to make piggyback loans because of problems selling them to investors… Companies underwriting mortgage insurance: MGIC Investment (MTG), PMI Group (PMI), and Triad Guaranty (TGIC). Mortgage insurers' trade association: Housing sales have dropped [but] 118,214 borrowers used PMI to buy or refinance a home in February, up from 104,146 a year earlier. The dollar volume of insurance written increased to nearly $17 billion in February from $15.2b a year earlier."

• American Capital Increases Q2 Dividend 11% to $0.91 (MSN Money, May 1st): "American Capital Strategies (ACAS) CFO John Erickson: "Defaults and non-performing loans remain at very low levels in our portfolio as well as in the overall commercial finance industry. During our Q1 valuation meetings we… saw no signs that the residential mortgage market or foreclosures in the housing market was having an impact outside of the housing sector. We are also pleased to have rolled out our first managed CLO totaling $400 million… We delivered a 22% earnings return on equity over the past twelve months and an 18% earnings return on equity over the past five years."

Subprime Fallout and Foreclosure Impact

• Fannie Picks New CFO, Announces 26% Boost in '05 Profit (USA Today, May 3rd): "Fannie Mae (FNM) reported Wednesday that its profit rose 26% in 2005, but it expects lower earnings for 2006. It also named a new CFO and raised its dividend… The government-sponsored FNM… earned $6.3 billion, or $6.01/share, in 2005, up from $5b, or $4.94/share, in 2004… Analysts had expected 2005 earnings of $5.80/share. Interest income fell sharply in 2005, to $11.5b from $18.1b the year before, but income from the guaranty fees charged to banks and other lenders from which FNM buys mortgages in bulk rose 5%, to $3.8 billion. FNM expects its credit losses "will increase and serious (mortgage) delinquencies may trend upward" as a result of the slumping housing market."

• Marijuana Grow-Ops, Gutted Houses are Banks' Collateral (Credit Bubble Stocks Blog, May 2nd): "California: A major boom in large-scale marijuana cultivation operations run from inside homes... in middle-class and upscale suburbs... pot growers took advantage of cheap home financing — and minimal credit checks — to purchase homes and remodel them into sophisticated farms... Since August, officials in Northern California have arrested 16 people and seized 50 suburban[indoor] pot homes... linked to an Asian organized crime syndicate..." It's left unstated, but when these houses get found the operators stop making the Option ARM payments and they end up being foreclosed."

• Foreclosures Through the Roof in Manatee (Bradenton Herald, May 2nd) Florida: "Manatee County Clerk of Court's Office: Lenders have filed 573 foreclosure actions in Manatee County… through Jan-Apr. 2007… 156 in April alone. "We used to get, like, five (foreclosures) a day; Now it's sometimes as many as 15 a day," Very Reyna, a court clerk… Foreclosures.com: Manatee's 97% spike in foreclosures is high… [But] the number of Lee County homes in foreclosure as of Monday is nearly 1,900% higher than at the same time last year, and…in six other counties… [foreclosures] have more than quadrupled. Statewide, the number of homes in foreclosure rose to more than 49,000 as of Monday."

• H&R Block Obtains Mortgage Financing (Chron.com, May 2nd): "SEC: H&R Block said Citigroup (C). and Greenwich Capital Financial Products. extended credit lines to the company's subprime mortgage lender, Option One… which H&R Block agreed last month to sell to private equity investor Cerberus Capital Management… Previously, Bank of America. reduced the amount of money it was willing to provide H&R Block to $2 billion from $4b… Merrill Lynch cut the company off from a $1.5b credit line, and UBS reduced its credit facility to $750 million from $1.5b. But Citigroup extended a $1.5b credit line through the end of July, and Greenwich Capital Financial Products extended $3b in financing through April 2008."

• Big US Mortgage Firms Won't Back Subprime Principles (Reuters, May 2nd): "Representatives from Countrywide Financial Corp. (CFC) and Wells Fargo & Co. (WFC), the two largest mortgage lenders in the U.S. both attended a mid-April 'subprime summit' organized by the chairman of the Senate Banking Committee, but those companies did not endorse the seven principles, which were formalized after that meeting. On Wednesday, U.S. Sen. Chris Dodd, the chairman, congratulated the 12 companies, trade and consumer groups who endorsed his principles to help troubled subprime borrowers avoid foreclosure. Dodd's statement did not mention Countrywide, Wells Fargo or EMC Mortgage Corp."

• GMAC Profit Hurt by Mortgage Unit (MSN Money, May 2nd): "GMAC Financial Services (GM) posted a Q1 loss on Wednesday. The US subprime mortgage crisis forced it to take charges at its housing finance unit, Residential Capital… A quarterly loss of $910m more than offset gains from its insurance and auto finance divisions, which earned $605m. ResCap's severe losses were [from] risky subprime mortgages…GMAC: "Amid the sharp downturn in the US mortgage market, many of ResCap's [subprime] assets were liquidated at a loss. Mortgage loans that were not sold were accounted for at substantially lower prices, "to reflect the severe illiquidity and depressed valuations in the prevailing market environment."

• Military Families Among Those Hit with Home Foreclosures (Winston Salem Journal, May 1st): "Defaulted home mortgages in the state have risen sharply in recent years. About a third of foreclosure auctions in the Fayetteville area have involved active-duty military families or veterans… The Fayetteville Observer: Covering 2001-2005… 1,770 out of 4,979 foreclosure auctions in Cumberland County involved loans guaranteed by the U.S. Department of Veterans Affairs… Borrowers were active-duty military families or retired veterans… Foreclosure auctions in the county featured between about 800-1,200 homes each year between 2001-2005. The property was worth more than $316.6 million. Of the nearly 5,000 home foreclosures, almost half were bought or refinanced less than four years before."

• JPMorgan to Adopt Dodd's Subprime Lending Principles (Market Watch, May 1st): "JPMorgan Chase & Co. (JPM) said Tuesday it would adopt… Senate Banking Committee Chairman Christopher Dodd's subprime lending principles… Dodd initially received a lukewarm industry response to his plan. The principles include an agreement that lenders will seek to restructure a loan's terms if a borrower can't afford to make the monthly payments after an adjustable-rate mortgage resets upward; Lenders agree to contact a borrower before the rate resets to discuss whether a borrower will be able to afford the new rate; And an agreement to offer low-cost refinancing. Citigroup Inc. (C) has also reportedly expressed support."

• Subprime CDO Pricing Getting Perilous, Managers Say (Reuters, May 1st): "Pricing of collateralized debt obligations, or CDOs… debt securities created by compiling slices of existing asset-backed bonds -- don't yet reflect the strong likelihood of downgrades by rating companies such as Moody's Investors Service. But vast disagreements over what a CDO is worth based on expected delinquencies or losses is keeping traders from trading at all in many cases... Market prices on bonds typically reflect delinquencies and losses two to three years earlier than rating downgrades... The CDOs in question are loaded with subprime mortgage asset-backed securities whose values have been socked this year by soaring delinquencies on the underlying loans… Christopher Flanagan of JPMorgan Chase: The expected downgrades may arrive sooner than 2-3 years since the rating companies have more inputs to consider than in past crises… like the credit default swap market… [Where] investors hedge their holdings and express opinions on the value of a bond."

• Subprime Lenders Made Record Exceptions: Analysts (Reuters UK, Apr. 30th): "Michael Youngblood, of FBR Investment Management: "So-called "exceptions" to loans were made as written standards did not change much… Wholesale" relaxation of underwriting practices sent delinquencies to a business cycle high of about 11.4%... Mark Milner, chief risk officer, PMI Mortgage Insurance (PMI): Subprime lenders… paid scant attention to "soft" guidelines, such as how they analyze "FICO" credit scores for each applicant… Relying on a credit score that was generated by an applicant paying back bills to a doctor and securing a $200 credit line "is just not enough." PMI chose not to insure many of the subprime loans outstanding."

• Homeowners Aim at Wall St to Combat Woes (Reuters, Apr. 30th): "Homeowners are suing Credit Suisse Group (CSGN) and J.P. Morgan Chase (JPM) as well as sellers, lenders, appraisers, and other parties involved in… subprime mortgages... Richard Neiman, New York's acting banking superintendent: "[Investment banks] are facilitators and earned fees at multiple stages in the process." Claim[s] against Credit Suisse: The bank helped the other defendants by providing a secondary market for the lender to sell its risky mortgage loans… Steve Kolyer, of law firm Clifford Chance, which represents asset managers… "A lot of CDO investors view themselves as postured against loan originators. From the street perspective, it's the lenders themselves whose practices have to be looked at again."

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

• Credit Index Shows a U.S. Manufacturing Rebound (Reliable Plant, May 2nd): "The seasonally adjusted Credit Manager's Index (CMI), released May 1, rose 1.6% in April, recouping last month's losses as eight of the 10 components of the Index rose. "While overall the report was positive, there was a disparity between the manufacturing sector, which rose 3.3%, and the service sector, which was unchanged,” said Euler Hermes ACI chief economist Dan North… Comments from the respondents echo a familiar refrain that the demise of the housing market has been a major drag on distributors of goods into that industry."

• April's Auto Sales Weakness: It's the Economy, Stupid (Barry Ritholtz in Seeking Alpha, May 2nd): "Last week, we looked at the impact of the housing slowdown on various economic sectors. [With] automobiles, one of the common responses was that it's GM (GM)/Ford (FORD) specific, and Toyota (TM) was doing just fine in the U.S… [Well,] total car and light-truck sales fell 7.6%... How did other automakers fare? Ford reported an April U.S. sales decline of 13% y/y. Ford car sales declined 23.6%: Truck sales declined nearly 6%. GM fared marginally better -- sales declined only 9.5%. Daimler Chrysler (DCX) sales actually increased 1.2%... Toyota down -4.3% -- their first monthly decline in 2 years; Honda (HMC) slipped -9.1%; Nissan (NSANY) dropped a whopping -18%... Growth continues to decelerate, and with the housing ATM ebbing, car sales are being impacted."

• Owens Corning Earnings: As Expected (Todd Sullivan in Seeking Alpha, May 2nd): "Owens Corning (OC): As expected, a lousy quarter. As value investors, we buy businesses when they are hopefully at their worst. Owen's clearly is at that level, yet it is still making money. The really important takeaways is that full year guidance was unchanged. The St. Gobian merger will go through later this year. An active (or even moderate) hurricane season will really bolster the stock and any revival in housing will help. Essentially all business segments (except composites) are bottoming. As value investors, this is the perfect spot to be in as we will ride the wave when they rebound later this year."

• Can Subprime Mortgage Problems Crash the Car Business? (Business Week, May 2nd): "[Will] the housing market slowdown… coupled with variable-rate mortgages resetting to fully indexed rates for millions of homeowners, have a negative impact on automobile sales? General Motors Vice Chairman Bob Lutz became perhaps the first high profile car industry executive to make that connection "official…" Ian Beavis, VP Marketing at Kia Motors America: April would show a downward blip for many brands. But he is not ready to blame it all on housing… A drop in home values… could also be crimping consumer spending… Some in the auto industry say the real boogeyman is lurking 60 or 72 months out: growing loan terms."

Homebuilders And Housing Stocks

• Roush Not Concerned by Pulte's Pull-out (San Pedro Valley News, May 3rd) Arizona: "City Manager Martin Roush [isn't] concerned about developer Pulte Homes (PHM) pulling out of a 13,750-home project in Benson, citing other prospects… Last week Pulte representative John Ward said the national homebuilder would be pulling out of the Whetstone Ranch development because of a slowdown in the housing market. Benson mayor: "With all the delays that Pulte has had over the last six months, I kind of expected it. This is a national decision and I don't think it necessarily reflects the housing market in Benson…" Besides Pulte, the Smith Ranch project proposed by Tucson developer Diamond Ventures was nixed."

• Buy When There's Blood in the Streets (Motley Fool, May 2nd): "Baron Rothschild, the quintessential banking opportunist, is said to have advised that the best time to buy is when there is "blood in the streets." I agree. An investor who embraces this axiom casts aside the bears and turns bullish in times of maximum pessimism... Homebuilder MDC Holdings (MDC) has seen a number of steep declines this year. Yet it's a solid company with growth prospects, good management, and a superior product. The falls just means it's gotten cheaper."

Commercial Real Estate and REITs

• Dallas Tower Under Contract to LA Investor (Dallas Morning News, May 3rd): "Los Angeles-based investor Younan Properties Inc. is negotiating to purchase its third skyscraper in downtown Dallas… The real estate firm has a contract to buy the 30-story One Dallas Centre tower on Bryan Street. Built in 1979, the 615,000-sf office building is only about 40% leased.The property has been marketed for sale since last year on behalf of its New York owners. Zaya Younan said he plans to spend $10 million in the first phase of renovations of the tower… One Dallas Centre was designed by I.M. Pei & Associates."

• REITs Broadway Play (New York Post, May 2nd): "SL Green REIT, should pull in well over $300 million from the sale of 1372 Broadway… The 550,000-foot Fashion Center building,100% leased to Ann Taylor, Ross Stores… and others [is] between Times Square and Herald Square and has over 40,000 sf. Area rents are escalating… [After] its $1.8 billion purchase of 666 Fifth Ave., Kushner Cos. has decided to [sell] the majority of its residential portfolio to amass a $2 billion war chest for future office building purchases… Kushner is selling multi-family properties in New Jersey, Pennsylvania, Delaware and New York state totaling 18,500 units… keeping 6,500 residential units plus 6.5 million feet of office, industrial, hotel and retail facilities."

• TCB Development Group Breaks Ground of 150,000-SF Distribution Center in Chicago (Commercial Property News, May 2nd): "TCB Development Group has announced that it has broken ground for a new, speculative, 150,000-sf distribution facility in… Du Page Business Park in West Chicago, Ill. Crossroads of Du Page Building Two is scheduled for delivery in the fall of 2007. It sits on a 10-acre site... The 24-acre Crossroads of Du Page Business Park consists of the 150,000-sf building under construction, as well as a 37,000-sf 11-unit industrial condominium building. To-date, two units have been sold in that facility and 29,000 sf remains available. Additionally, there are four speculative buildings scheduled for future development in the park."

• Wells Starts Timberland REIT (Atlanta Business Chronicle, May 2nd): "Wells Real Estate Funds Inc. is branching out into a new area of investment – timberland. Norcross, Ga.-based Wells Real Estate Funds is starting what it says is the first public, nontraded real estate investment trust that invests in timberland -- Wells Timberland REIT. The company said Wells Timberland REIT will generate revenue and income by selling timber harvesting rights, leasing land-use rights and selling land. The fund will acquire and invest in geographically diverse timberland properties in U.S. timber-producing regions, but may also invest in international timber-growing regions."

Web Site of the Day

James Nicholson, a regular Seeking Alpha contributor, and his so-called 'real estate geek' buddies from CNET started up Your Street.com. The site is, well, I'd say a hybrid Zillow-Curbed-DataQuick-RealtyTrac-HUD-and-the-kitchen-sink-type website(!).

All jokes aside, it works. Launched just last month, the site features a comprehensive real estate picture for the cities it covers: Los Angeles, New York, Pheonix, San Francisco and Seattle. Boston, Chicago, Dallas and San Diego are going online soon, and ultimately about 50 top metros should be covered.

What distinguishes YourStreet from the pack is that while it offers the Zillow-type of info—like the price info and comparisons that are so important to home buyers/sellers and investors alike—it offers it (and other anecdotal info) on a neighborhood level a la Curbed. The "social features" that YourStreet offers range from where to shop or pray, to blogs and wikis about what a certain neighborhood is like, right down to the street level.

Photos galore add to the sites utility, but what I like best, from an investors standpoint, are the evaluations of whether that particular area/market is a buyers or sellers market—even to what degree: Pheonix is "moderate buyers market" this week, while New York is a "weak sellers market," and so on. It's based on local assessments as well as aggregated data about prices and inventory.

Essentially you're getting a week-to-week update on the market, and a good feel for when things are about to turn.

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.