Housing Bubble and Real Estate Market Tracker

|
 |  Includes: AMB, CFC, HD, LOW, MAS, MTH, MTW, NFI, OHB, SHLD, SNA, SWK, TOL, WFC, WHR
by: Judy Weil

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"

"Given the current state of the market, we no longer expect to achieve the most recent guidance we provided when we announced first quarter earnings on Feb. 22/07. However, even at the upper end of our range of second quarter write-downs, we expect to report a profit for our second quarter." – CEO Robert Toll on Q1'07 Results, (Toll Bros. Conference Call Transcript in Seeking Alpha, May 9th)

Real Estate Sales and House Prices

  • A Spec Slump In Real Estate (Minnesota Star Tribune, May 10th): "Some of the investors and speculators who once helped drive new-home sales to record highs are now shifting their affections to the stock market, and many Twin Cities-area builders and developers are struggling with the aftermath as the market catches up with the shift in demand… Builders Association of the Twin Cities: Building permit activity in the metro area was down 27% in April, vs. April 2006, while the number of planned units fell 24%."
  • Home Sales Up in April But Below '06 Levels (NJ.com, May 10th): "Lehigh Valley Association of Realtors: Home sales up 2.6% last month from March, but down 11.3% against last year… The average sales price increased 4.2% to $222,000 last month, compared with $213,000 in March. Y/o/y, prices rose 2.3% against April 2006, when homes sold on average for $217,000. The median sales price rose 2.7% to $190,000, up from $185,000 in March, [same as] April 2006… On average, homes lasted 55 days until sale, down 8.3% from 60 days in March… 17% more than April 2006, when it took 47 days on average for a home to sell."
  • Maui Home Prices Flat, Sales Up (MSN Money, May 9th): "Realtors Association of Maui: Prices of single-family homes on Maui last month were flat while prices for condominiums fell. The median price of a single-family home on Maui in April was $690,000, just 1% less than the $700,000 median price in April 2006. There were 102 homes sold last month, up from 72 sold during the same month last year. The median price of a condo on Maui in April was $465,000, a 14% decline from April, 2006 when the price was $539,500. The number of units sold was 99, down from 116 units sold in April 2006."
  • House Prices Dropping in Jackson...Hmmm, Wonder Why? (Loaded Orygun Blog, May 9th): "Appraiser Roy Wright: 184 single-family homes were sold in Jackson County last month — 11 more than in April 2006. It's the first time since August 2005 that more homes were sold in a month compared to the same month in the previous year. Southern Oregon Multiple Listing Service: The jump in sales was accompanied by a 7.1% drop in the median sales price… There are roughly 2,350 homes on the market, up 41% from a year ago. That reflects a larger housing stock and the return of sellers who took their homes off the market during the winter."
  • Home Sales Dip 9% in March (New Haven Register, May 9th): "Warren Group: The 2,740 homes sold in March marked an 8.6 % decline from the 2,998 sold in March 2006. The median sales price fell 2.8%, from $272,250 a year ago to $270,000 in March… In New Haven County… sales were down 2%... But the county’s median sales price rose 4.7%, from $235,000 to $246,000. Middlesex County… prices rose 4.5% from $245,900 to $257,000… Statewide, March’s drops in sales and prices hurt Connecticut’s Q1 performance. Despite a relatively strong start to the year, sales fell 2.2% in Q1, to 7,126 from 7,286 last year."
  • Silicon Valley Haves-Have-Nots Rift Widens (Realty Times, May 9th): "Silicon Valley's record April median home price of $868,406 is $38,000 higher than March and nearly $100,000 higher than April 2006… Forbes.com named it the 10th most overpriced housing market in the nation… Silicon Valley's trend of high and rising median home prices is being driven by an unusually large share of higher end home purchases… Richard Calhoun, publisher of the Bay Area Real Estate Market Newsletter: The higher priced Mountain View-Palo Alto northwest quadrant of Silicon Valley typically represents 10% of all transactions. In April that rose to 25%... The less expensive Central, East And South San Jose areas typically account for 16%of [sales]. That dropped to 11% in April."

Mortgates and Real Estate Lending

  • Countrywide Reports April 2007 Operational Results (PR Newswire, May 9th): David Sambol, CEO (CFC): "April, 2007 residential mortgage loan production increased 11% over April 2006. Refinance activity remains elevated, accounting for 61% of total monthly activity, vs. 54% one year ago. Indicative of underwriting guideline tightening, nonprime production declined to 4% of monthly origination volume, vs. 9% in April 2006. Reflecting a pick-up in mortgage activity, mortgage loan application volume and ending pipeline were up 20% and 8%, respectively, vs. April 2006. Strong y/o/y improvement in all other business lines… The loan servicing portfolio… increased by 18%; Banking Operations assets rose 9%; Capital Markets trading volume rose 10%; and Insurance net earned premiums increased by 20%."
  • Group Sues NovaStar for Alleged Discriminatory Lending (Kansas City Business Journal, May 9th): "The National Community Reinvestment Coalition filed a lawsuit against NovaStar Financial Inc. on Wednesday, alleging that the company has discriminatory lending practices. The civil rights lawsuit, filed in D.C. U.S. District Court, also names NovaStar Mortgage Inc., a subsidiary of NovaStar Financial (NFI), as a defendant. The plaintiffs claim NovaStar violated the Fair Housing Act of 1968… "NovaStar intentionally structured its underwriting to exclude Native American tribal communities, persons with disabilities and row house neighborhoods where African Americans and Latinos reside," NCRC President John Taylor said."
  • Lawmakers Talk Mortgage Reforms (Bradenton Herald, May 9th): "Cara Heiden, president of Wells Fargo & Co.'s (NYSE:WFC) mortgage lending division, testified Tuesday in favor of federal lending standards and national regulation of mortgage brokers. Wells Fargo, she said, already has a ban on risky lending practices, including, for example, loans on which the principal balance can increase over time. Big financial institutions and Wall Street investment firms have in recent years increasingly bought home loans in bulk from banks and other lenders and bundled them into securities to be sold to investors, theoretically spreading risk and helping provide more funds for lending."

Subprime Fallout and Foreclosure Impact

  • Sub-Prime Woes Not Spilling Over To Over Other Credit Areas (Chad Brand in Seeking Alpha, May 10th): "An excerpt from the Q1 earnings press release of a [non-mortgage] consumer lender that serves lower end customers, including 'sub-prime borrowers'. "Factors adversely affecting our Q1 results included lower than expected fee assessments due to lower than expected delinquencies..." No, that is not a typo. For all of those people who were expecting the sub-prime mortgage mess to spill over into other areas of credit such as credit cards and student loans, it appears the worries (and subsequent share price declines) were unfounded. Delinquencies were lower than expected! The sub-prime spillover effect is being greatly exaggerated."
  • Foreclosures Expected to Climb 25% in Colo. (Denver Business Journal, May 9th): "Colorado Division of Housing: There were 9,254 foreclosures in Q1'07, vs. 28,453 foreclosures during all of 2006… There is no comparable data for the prior-year quarter… Foreclosure filings in Colorado increased 31% from 2005-2006 and 110% between 2003-2006. Barring major changes in economic conditions, foreclosure filings in Colorado could increase to approximately 36,000 for 2007… Adams and Arapahoe counties project [possible] increases of about 30%... Denver foreclosures may increase more than 35%. Weld, Larimer, El Paso, and Pueblo counties are likely to see 20% increases. Jefferson, Boulder and Broomfield counties may see smaller gains of 5-10%."
  • Foreclosure Woes Continue in April (Tampa Bay Business Journal, May 9th) Florida: "Foreclosures.com: The Sunshine State posted 12,049 pre-foreclosure fillings in April, with another 3,364 auction filings and 2,370 bank-owned real estate filings. But pre-foreclosures decreased by 27% when compared with March, while auctions were down 29% and bank-owned filings dropped 9%… While the National Association of Realtors reported an 8.4% drop in March existing home sales in the nation, sales plummeted 28% in Florida during March, according to the Florida Association of Realtors."
  • Moody’s Outlines Credit Factors of Subprime Securities Performance for House Subcommittee (Business Wire, May 9th): "Moody's Investors Service Team Managing Director Warren Kornfeld: “Bonds issued in 2006 and rated by Moody’s have greater amounts of credit enhancement when compared to similarly rated bonds that were issued in prior years… While the employment outlook today is stronger than in the post-2000 period, the outlook for other major drivers of mortgage losses – home price appreciation, interest rates and refinancing opportunities – is less favorable. “As a result, Moody’s is currently projecting that cumulative losses for loans backing 2006 subprime securitizations will generally range between 6% and 8%, though particularly strong or poor performing pools may fall outside of this range.”
  • HUD Secretary Announces Housing Aid (St. Louis Today, May 9th): "Housing and Urban Development Secretary Alphonso Jackson announced Tuesday the release of nearly $1.8 billion to promote affordable housing and home ownership around the U.S.. The $1.75 billion in HUD funds will be used to build affordable housing units and help first-time homeowners with down payment and closing costs. The city of St. Louis will get more than $4.2 million, HUD announced."
  • Maricopa County (AZ) Foreclosures Increase 300% in One Year (PR Newswire, May 9th): "Serdar Bankaci, President/CEO of Default Research: Maricopa County has seen an increase in foreclosure activity of 300% since April of 2006… 87% of the homes for sale in the area are single family homes with a median market value of $245,000. These are a result of sub prime loans, decreasing home values and adjustable interest rates… The Arizona Daily Star had 9,925 homes listed for sale on Sunday, May 6. Bankaci: "With 1281 Notice of Trustees Sales filed in April 2007, investors have an opportunity... Many of the 'great' deals are made prior to the auction."

Global Impact and Alternatives To The Housing Slump

  • Borrowing Binge Fuels U.K. Economic Worries (Wall St. Journal, May 10th): "The U.K.'s so-called buy-to-let revolution… took off in 1996… Red-hot housing price gains, shaky government pension plans and… a steady supply of tenants in the form of immigrants or young professionals priced out of the property market have made buy-to-let landlords a fundamental feature of the housing market. Today, buy-to-let owners make up 9% of mortgages outstanding by value… London, where house prices have more than tripled over the past decade, has been the fulcrum of the property boom in recent years. Now, in parts of the city's gritty, immigrant-heavy east, "To Let" signs [testify] to an apartment glut."
  • W. P. Carey Reports First Quarter Financial Results (PR Newswire, May 9th): "Total revenues for Q1'07 were $45.9 million, vs. $47.8m for Q1'06… Funds from operations [FFO] for Q1'07 were $0.47/share, or $18.6m, vs. $0.57/share, or $21.8m, for Q1'06… [Current] assets valued at approximately $7.5 billion… an increase of $900m or 14% from Q1'06. Since 2001, (NYSE:WPC)'s assets under management have [grown] 25% annualy... In February 2007, we formed CPA[R]:17 - Global, for the purpose of investing in a diversified portfolio of income-producing commercial properties and other real estate assets both domestically and internationally. We expect to launch the up to $2.5 billion offering later this year."
  • KKR Circles £4.6bn Hammerson in Race for Property Giant (The Business Online, May 9th) UK: "Private equity group KKR is… examining a bid for Hammerson… the £4.6bn ($9.2bn, E6.7bn) British commercial property REIT… Any bidder taking Hammerson private on its own would forfeit the long-term tax advantages of its REIT status. Analysts said that a joint private equity-Reit bid would make much more sense… A second source said that Vornado Realty Trust has been [considering] a possible move on a British property target. Industry observers suggest it would be a logical move for Vornado to team up with KKR for Hammerson. Other names said to be looking at Hammerson include GE Real Estate."
  • London Tops List of Prime (and Pricey) Property (The Globe and Mail, May 9th): " British estate agency Knight Frank and Citigroup's Citi Private Bank Wealth Report 2007: Britain's capital beat the glamour of Monaco, New York, Hong Kong and Tokyo to become the world's most expensive place to buy prime residential property. Prime residential property in the British capital of London costs on average €3,382 ($5,066)/sf, or €36,800/sq.m. That beat nearest competitor Monaco, where such property costs an average of €3,218/sf or €35,000/sq.m."

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

  • Things Look Better for Home Improvement (Barron's, May 9th): "Low expectations for… Black & Decker (BDK), Stanley Works (NYSE:SNA) and Masco Corp. (NYSE:MAS) resulted in strong price moves following good Q1 results led by strong international sales… Whirlpool (NYSE:WHR): Q1 results continue to be impacted by weak U.S. demand… expected to continue through Q2 with a gradual improvement in the back half. This… supports our thesis of a stabilization in Q3-4'07 followed by an acceleration in 2008… Q1 show modest market share shifts with Lowe's (NYSE:LOW) taking share in tools and Home Depot (NYSE:HD) in major appliances. Lowe's gained 160 basis points while Home Depot donated 100 basis points in the tools category. Stanley Works: Sequential improvement from Q4'06-Q1'07…Major appliances: Home Depot gained 70 basis points, Lowe's gained 20 basis points. Sears Holdings (NASDAQ:SHLD) [market] share down negative 80 [basis points] y/o/y."

Homebuilders And Housing Stocks

  • Toll Brothers F2Q07 (Qtr End 4/30/07) Preliminary Earnings Call Transcript (Seeking Alpha, May 9th): "Robert I Toll: Market by market: Massachusetts and Rhode Island are F markets, Connecticut: B-plus. New York ex the suburbs: B-plus; New York urban: B-plus-A; New Jersey City and Hoboken: B-plus… New York suburbs: B-plus. In New Jersey, same proximity to the same metropolis: an F... Michigan: F, but blessedly we sell 3-4 homes there a week… Chicago: F. Minnesota: C-minus... Philadelphia suburbs: B... The Poconos, F. Delaware: C-plus…Washington, D.C., northern Virginia: D-plus. Raleigh, Charlotte: B … South Carolina is [now] a D, as in dog. Florida central, Orlando: F. Florida East Coast: F-plus. Florida North, Jacksonville: F to F-plus. Tampa, Florida west coast: F… Austin, Dallas, B. San Antonio: C… but [should be] a B. Northern California: C… some pockets are Bs and some are Ds. California southern market: C. California Palm Springs: C. Arizona, other than for the new special Wingate Ranch community: D-minus. Vegas, Reno: F. Colorado: C."
  • Subprimes Take a Toll (Forbes, May 9th): "Toll Brothers' rate of cancellations seems to indicate early progress in adjusting to the industry conditions. The Q2 cancellation rate was 19%, up from 9% a year ago but still easing from 30% in Q1. Cancellations on signed contracts had been rising as buyers fled deals to avoid buying homes they perceived as losing value. The company released preliminary Q2 results Wednesday that did not include quarterly net income. Toll, however, said it expects to report a profit for Q2. Analysts polled by Thomson Financial are expecting EPS of $0.40."
  • Orleans Homebuilders Announces Amendment to Revolving Credit Facility (MSN Money, May 9th): "Fiscal Q3'07 residential property revenue decreased 38% to $128.9 million vs. $207.8m for fiscal Q3'06. Fiscal Q3'07 new orders increased 2% to $201.1m, vs. $196.8m, for Q3'06. Fiscal Q3'07 net loss was $51.9m ($2.81/share), including charges related to inventory impairments, goodwill and land deposits and pre-acquisition costs for abandoned projects of $45.9m, vs. a net income of $12.8m ($0.68/share) for Q3'06. Excluding impairments, net loss for fiscal Q3'07 was $6.0m ($0.32/share) EBITDA decreased to ($5.0m) vs. $25.1m for Q3'06. Backlog at March 31, 2007 decreased 38% to $362.1m (724 homes) vs. $588.0m (1,298 homes) at March 31, 2006… Cancellation rates [were at] 20%."
  • Meritage Homes Corporation Names New Rocky Mountain Region President (Prime Newswire, May 8th): "Meritage Homes Corporation (NYSE:MTH), announced the appointment of Liesel Cooper as Rocky Mountain Region President, reporting to Steven J. Hilton, CEO of Meritage. In her new role, Ms. Cooper will oversee the Company's Meritage, Monterey and Metropolitan divisions in Colorado and Arizona, and will be based in the Company's headquarters in Scottsdale, Arizona. Ms. Cooper brings to Meritage over 21 years of experience in the homebuilding industry, having worked in many functional areas including operations, construction, product development, project analysis, sales, marketing and merchandising."

Commercial Real Estate and REITs

  • American Real Estate Partners, L.P. Reports First-Quarter Financial Results and a 50% Increase in its Quarterly Distribution Policy (PR Newswire, May 9th): "American Real Estate Partners (NYSE:ACP) today reported Q1'07 earnings of $96.6 million, or $1.53/share, compared to Q1'06 earnings of $49.7m, or $0.79/share. AREP also increased AREP's quarterly [dividends] from $0.10 to $0.15/share. [In Q1] AREP's… rental real estate, property development and resort operations revenues of $27.9m, increased 34.8% from Q1'06, operating income of $4.3m, an increase of 22.9% from Q1'06, and depreciation and amortization of $1.6 million. … On April 22, 2007, subsidiary American Entertainment Properties [agreed] to sell to… to Whitehall Street Real Estate Funds… affiliated with Goldman Sachs [all of] ACEP, [AREP's] gaming operations, for $1.3 billion, plus debt."
  • AMB Buys Four Buildings in Baltimore Area (East Bay Business Times, May 9th): "AMB Property Corp. (NYSE:AMB) said Wednesday that it bought four industrial facilities in the Baltimore-Washington corridor as part of its ongoing strategy to acquire industrial properties that facilitate global trade… Gene Reilly, AMB's president of North America: "AMB Baltimore Beltway Industrial park is in a land constrained, infill submarket with significant barriers to entry… making it difficult to develop facilities of similar size." The fully leased facilities of 709,000-sf are close… to the Baltimore-Washington International Airport and Baltimore port... The Baltimore-Washington-Northern Virginia region has the nation's fourth-largest economy in terms of population and jobs."
  • Medical Properties Trust Announces $50 Million Healthcare Real Estate Investment (Business Wire, May 9th): "Medical Properties Trust, (NYSE:MPW) announced Wednesday that it is investing $50 million in healthcare real estate in the San Diego, California market. With [this purchase] of the campus of Paradise Valley Hospital, operated by Prime Healthcare Systems, MPT’s largest tenant … MPT has invested $141 million in 2007. The new investment includes a sale/leaseback and a loan collateralized by real estate in equal amounts of $25m. CEO Edward K. Aldag, Jr.: “We have [now] completed more than 70% of our full year target of acquiring at least $200m of healthcare real estate assets in 2007.”
  • Monmouth Real Estate Investment Corporation Reports Six-Month Earnings (MSN Money, May 9th): "Monmouth Real Estate Investment Corporation (MNRTA), reported net income of $2,978,000 or $0.11/share for the six months ended March 31, 2007, as compared to $3,324,000 or $0.17/share for the six months ended March 31, 2006… FFO of $ 2,177,000 3,184,000… FFO/Share (1) $ .11 $ .16… Eugene W. Landy, President: "Management is pleased with the results for the six month period. The decrease in net income is due mainly to the decreased gains on our REIT securities portfolio."
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.

Click to enlarge