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"

"In some cases we felt that we were potted plants."- Keith Johnson, president of Clayton Holdings, Inc. (CLAY), a large due-diligence firm based in Connecticut. In the heyday of subprime securitization, many due-diligence firms prepared reports on the credit condition of mortgage pools which were largely ignored by lenders and rarely passed on to investors. (Reuters, July 27th)

Real Estate Sales and House Prices

• Home Prices Are Up, So Should I Sell? (Mortgage 101, July 30th): "The median price of homes sold in the San Francisco Bay area was up 6.6% in April 2007 vs. April 2006. Is it [time to sell]? Changes in median price do not necessarily reflect changes in home values… The April increase in median sale price for the SF Bay Area represented an increase in the number of higher-priced homes sold relative to the number of lower-priced homes sold. In this area of the country, the price range that has been hardest hit by the slowdown in the home-sale market has been the lower end, not the higher end of the market."

• Billionaire Quietly Snags Oceanfront Land (Chicago Daily Herald, July 29th): "Billionaire hedge-fund manager Bruce Kovner paid about $70 million earlier this year for a swath of oceanfront properties in Carpenteria, a coastal community in… California's Santa Barbara County. Taken as a whole, the purchases… are believed to rank among the largest U.S. residential real-estate deals… The most expensive home deals in the U.S. include investor Ron Baron's $103 million purchase earlier this year of 40 acres in East Hampton, N.Y., and in 2001, a $94 million Bel Air, Calif., estate acquired by Gary Winnick, Global Crossing's former chairman."

• Every Penny Counts (NY Times, July 29th): "Miller Samuel appraisal company: Today, $450,000 is nearly the average price of a Manhattan studio. The number of Manhattan apartments that sold for less than that has shrunk… to 13% of total sales in Q2'07, down from 44% in Q2'02. About 15% of the Manhattan apartments currently listed by the Corcoran Group and Citi Habitats, and about 30% of those in Brooklyn, are less than $450,000. Bronx-Manhattan North Association of Realtors: In the Bronx, 38% of the listings are under $450,000; Local realtors board: On Staten Island, the figure is 43%; Multiple Listing Service of Long Island: In Queens, 17%."

Affordability Remains a Problem

• Most Builders Stay Away From Workforce Housing (The Concord Monitor, July 29th): "New Hampshire Housing Finance Authority: In Merrimack County, the median rent for a two-bedroom apartment this year is $1,020 a month, including utilities. That means a family would need to earn $40,800/year for the median apartment to be considered affordable… Tamara Saxby, program manager for the Friends Emergency Housing Program, said her average client at the shelter is a single mother with two or three children… earning about $18,000 a year… New Hampshire Housing Finance Authority: The median purchase price for a Merrimack County home is $230,000. To afford [that], a family would need to be making $80,000."

Real Estate Investing and Sentiment

• Subprime Troubles Crushing Second Life Real-Estate Values (Unconfirmed Sources.com, July 29th): "Mark Zandi, chief economist for Moody's Virtual Economy.com reports: The Second Life financial markets are in peril from more than $1 trillion in risky virtual mortgages…A total Second Life Real-estate meltdown is likely… [Zandi says] the Second Life housing crisis in Linden could be deeper and last longer than investors now believe. With iconic structures like the Budweiser virtual pavilion and associated housing complex sitting empty and nearly bankrupt, the problems are spreading into other virtual worlds… Second Life is reeling from lower than announce traffic and a growing online credit crunch, centered on the subprime arena, and in Linden's corporate debt market."

Mortgates and Real Estate Lending

• Banks Asking For A Bit Less In Interest (The Olympian Online, July 29th): "Rates on 30-year mortgages dipped slightly last week as evidence grew of more troubles in the slumping housing market. Freddie Mac (FRE), the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.69% last week, down from 6.73% the week before. The high point for this year was a rate of 6.74% hit in mid-June… Rates on five-year adjustable-rate mortgages averaged 6.30% last week, down from 6.35% the week before. Rates on one-year adjustable-rate mortgages edged down to 5.69%, compared with 5.72% the prior week."

Subprime Fallout

• American Home Mortgage Investment Hit with Margin Calls (Judith Levy in Seeking Alpha, July 30th) "Mortgage lender American Home Mortgage Investment (AHM)-- whose clients generally have prime or near-prime credit histories -- is delaying dividend payments and might also delay payments on its preferred shares. The lender has been hit with margin calls following a steep write-down of the value of its loan and security portfolios. AHM said the delays are necessary "in order to preserve liquidity…" American Home Mortgage has $4.01 billion in debt outstanding under its warehouse lines of credit, total liabilities of $19.3b, and assets worth $20.6b. Earlier in July, the lender's shares took a 20% hit on a rumor, later denied, that a bank had pulled one of its credit facilities. At the end of June, the company warned [of] a Q2 loss and retracted its earnings guidance for 2007."

• Deutsche Bank Payday Burgeons on Subprime Mortgage Trading Bets (Bloomberg, July 30th): "Deutsche Bank AG analyst Eugene Xu recognized a financial train wreck in the making two years ago when he predicted "quite probable'' losses from the least creditworthy home loans in America's runaway property market. Now Germany's largest bank is poised to reap [between] $270m- $540 million from a strategy that enabled its traders to sell subprime mortgage loans with derivatives contracts that appreciated as the U.S. housing market suffered its worst slump in 16 years… While mortgage-related losses staggered UBS AG and HSBC Holdings Plc, [analysts say] Deutsche Bank may report Aug. 1 that Q2 net income rose 19%."

• Corporate Bond Risk Surges as IKB Reports Subprime-Loan Losses (Bloomberg, July 30th): "The risk of owning European corporate bonds soared to the highest in at least three years after Germany's IKB Deutsche Industriebank AG reported losses on U.S. subprime mortgages, credit-default swap prices show. Contracts on 10 million euros ($13.8 million) of debt included in the iTraxx Crossover Series 7 Index of 50 European companies increased 60,000 euros to 504,000 euros at 11:45 a.m. in London, according to JPMorgan Chase & Co... Credit-default swaps are used to speculate on the ability of companies to repay debt and an increase indicates worsening perceptions of credit quality."

• Sub-Prime Woes Cast Spotlight On Escrows (Chicago Daily Herald, July 29th): "Lenders price loans on the assumption that borrowers will include taxes and insurance premiums in their monthly mortgage payments. These payments are placed in an escrow account under the lender's control. On a payment date, the amount due is paid by the lender. The escrow requirement protects the lender. If the taxes are not paid, the tax authority could place a lien on the property that would have a higher priority than the lender's lien… In the sub-prime market… there is no requirement [for escrow accounts]… With the recent jump in sub-prime foreclosures, this feature of the sub-prime market has emerged as one contributor to the problem."

• Md. Bubble Economy Feels Chill Wind From Nation's Credit Crisis (Baltimore Sun, July 29th): "Countrywide Financial Corp. (CFC), which handles nearly a fifth of all U.S. mortgages, reported soaring delinquencies, falling profits and increased default risk last week. Baltimore's First Mariner Bancorp (FMAR) disclosed similar problems… Half of First Mariner's problem loans were in Northern Virginia, home of a defense-spending spree since 2001… First Mariner had sold the loans to New York investment house Bear Stearns Cos., but it was required to repurchase them when borrowers began missing payments."

• Mortgage Lenders Pull Some Arms Off Market (Seattle PI, July 27th): "Deborah Goldstein, executive VP, Center for Responsible Lending: Many borrowers are not going to be able to refinance… The most common type [preferred by 60% of subprime borrowers] of subprime loan has been an adjustable-rate mortgage known as the 2/28 ARM. Since mid-July, five of the six biggest subprime mortgage lenders stopped offering 2/28 ARMs... Goldstein: "It doesn't mean they'll stop offering subprime loans." A 2/28 subprime ARM has a low initial rate that lasts two years. For the 28 years after that, the loan resets… the rate can climb 2 to 6 percentage points, causing monthly payments to skyrocket."

• Emerging Debt To Remain Volatile After Selloff (Reuters, July 29th): "Emerging sovereign debt markets should eventually rebound from Thursday's subprime-related meltdown but it might be too early to call a bottom this week. Despite the massive sell-off that left bonds with losses of more than 1% year-to-date, dedicated emerging market investors have not yet capitulated, but are possibly waiting for an opportunity to buy on dips, fund managers and analysts said. JP Morgan analysts: "Although real-money accounts are obviously also feeling the pain, they still believe that at some point this will be an opportunity to add (risk)."

• Wall Street Often Shelved Damaging Subprime Reports (Reuters, July 27th): "Investment banks that bundle and sell home mortgages often commissioned reports showing growing risks in subprime loans to less creditworthy borrowers but did not pass much of the information to credit rating agencies or investors, Wall Street sources said… "Due-diligence firms", were hired by investment banks to make sure blocks of mortgages conform to the mortgage seller's own standards. The studies provided a first glimpse of loan quality for ratings agencies and investors who do not normally see the full reports… Several due diligence firm executives said that they reported a slide in loan quality to their investment bank clients but that those mortgages were still bought up and passed on to investors."

• With Subprime Mortgages, The Contagion Has Already Arrived (Globe on Mail, July 27th): "Harry Koza, senior Canadian markets analyst at Thomson Financial: CDO sales dropp[ed] to a mere $9.1-billion so far this month, from $42b in June (and a whopping $251b in Q1)… At the other end of the subprime food chain, I see that mortgage lenders are no longer making "2 & 28" option-arm loans… but they are still making 3 & 27 loans. I wonder if the 2 & 28 mortgagees are rolling into the 3 & 27 ones, which would at least allow the lenders to pretend for another year that the loans are still good."

• Hidden U.S. Subprime Losses May Mirror Japan Bank Crisis-Report (Reuters, July 27th): "Graham Fisher investment research firm report: Investors and banks holding on to U.S. subprime mortgage bonds in hopes of a recovery in value may make losses worse, mirroring the Japanese banking crisis in the 1990s… The Japanese banking crisis, triggered in the early 1990s by a slumping property market and brokerage collapses, led to a decade-long credit crunch. The government subsequently had to step in to stabilize the banking system… The "Financial Services Exposures to Subprime" [report] said "There are many institutions with significant levels of embedded losses that have not yet been recognized as a result of questionable valuations."

Foreclosure Impact

• Nevada Once Again Tops Foreclosure Market (PR Web, June 30th): "ForeclosureDeals.com research team: One in every 171 homes in Nevada were in some stage of foreclosure during June. In the Las Vegas area, the rate hovered around one in every 135 homes. While this data refers to both homes that have just recently gone into default and homes that are currently scheduled for auction sales, it points to the clearly overarching problem that homeowners in the Las Vegas are having keeping up with their mortgage payments."

• Foreclosures Spread To Gulf Condos (Alabama.com, July 29th): "RealtyTrac: Foreclosures have hit the condominium market at the Gulf… Foreclosures are on the rise in Mobile and Baldwin counties [in all] price ranges. From a manufactured home in Wilmer to an upscale condo unit in Fort Morgan… Mobile County has more foreclosed properties than any of the state's other metropolitan areas. There were 1,317 foreclosures listed in Mobile County as of July 27… There were 501 properties to be auctioned in Mobile. In Baldwin County, there were 160 foreclosures and seven properties to be auctioned. In June, there was one foreclosure for every 704 U.S. households, a total of 164,644 filings."

• Subprime Pain: A Spreading Woe (Philly.com, July 29th): "Lenders made nearly 48,000 high-cost, risky mortgages totaling $6.54 billion in the eight-county Philadelphia area in 2005, according to the most recent detailed federal data on home loans. Poor, heavily minority neighborhoods in Philadelphia were not the only hot spots for subprime-mortgage loans… There was also particularly fertile ground in South Jersey. In sections of Pemberton, Winslow and Willingboro Townships, half the 2005 mortgages bore a significantly higher cost for borrowers than prime loans. In Philadelphia's Pennsylvania suburbs, Norristown, Coatesville, Darby and Yeadon had high proportions of subprime mortgages."

• Foreclosures Flood Inland Housing Market (Press Enterprise, July 29th) California: "Mortgage default notices in the Inland region have almost tripled since last year. Home foreclosures have increased almost eightfold. And home sales last month were the worst in a decade… In the past six months, almost 22,000 Inland homeowners received notices of default, [while] 6,367 homes were taken through foreclosure. Christopher L. Cagan of American Corelogic… expects another 60,000 foreclosures in the Inland region in the next 4-6 years. He identified about 221,700 adjustable-rate mortgages sold in Riverside and San Bernardino counties from 2004 through the first half of 2006."

• Mcallen Largely Avoiding Home Foreclosures - But For How Long? (The Monitor, July 28th) Texas: LoanPerformance: Hidalgo County has the highest rate of subprime mortgages in the country… More than 27% of all of McAllen’s loans are subprime…WSJ: McAllen has the second highest mortgage delinquency rate in the entire country at 6.78% in Q2'07… [Though] subprime lending [sh]ould be wreaking havoc on area residents and forcing thousands to lose their homes, local foreclosure rates are still among the lowest in the country — primarily thanks to a growing economy, dropping unemployment and a real estate market that continues to defy the national trend."

• NYC Braces For Foreclosure Surge (Crain's NY Business, July 27th): "The number of New York City homeowners facing foreclosure is on track to reach the highest point in more than a decade. Lenders have started foreclosure actions on 7,000 homes since January, according to the Neighborhood Economic Development Advocacy Project [NEDAP]. By the end of the year, the number is expected to exceed 14,000, which would represent a 60% increase over 2006… NEDAP: Three of the hardest hit neighborhoods are in Brooklyn: Bedford Stuyvesant, Flatbush and East New York. Two are in Queens: Rochdale and Jamaica."

• Foreclosures Impact Region (Hattiesburg American, July 29th): "Mortgage Bankers Association: Mississippi already leads the nation in mortgage delinquencies and ranks the fourth highest in foreclosure inventory… There are 45 properties under foreclosure on the Hattiesburg market, Coldwell Banker real estate agent Chip Grenn said. He believes more than half of those properties are on the market because of subprime loans… About 20% of Mississippi's subprime loans are delinquent and 7.2% of them are in the foreclosure process."

Global Impact and Alternatives To The Housing Slump

• Asian Stocks Rebound From 1-Month Low; JFE Gains, Hon Hai Falls (Bloomberg, July 30th): "Asian stocks rebounded from a one- month low after higher profits at JFE Holdings Inc. and Nippon Steel Corp. helped offset concerns of a slump in U.S. housing. Toyota Motor Corp., the world's largest automaker by market value, and Hon Hai Precision Industry Co., the biggest contract manufacturer, led declines after a report showed a decline in U.S. housing investment."

• U.K. House-Price Growth Slows to 18-Month Low, Hometrack Says (Bloomberg, July 30th): "Hometrack Research Ltd: U.K. house prices increased at the slowest pace since January 2006 this month... The average cost of a home in England and Wales rose 0.1% from June to £176,300 ($358,000)… Price gains in the capital also slowed to the weakest in 18 months, slipping to 0.2% from 0.7%.Today's report adds to evidence that five interest-rate increases in the past year have discouraged buyers, cooling a property market that has tripled in value in the past decade. Investors expect the BOE… to lift the key rate again [this week] from the current six-year high later in 2007."

• Uncertainty Hits Bonds, Equity & Real Estate Funds (India Economic Times, July 29th): "The uncertainty emanating from the US sub-prime mortgage market and global credit markets took its toll on high yield bond funds, financial and real estate sector funds and — to a lesser extent — US equity funds [last week]… The bonds were primarily hit due to concerns of a credit crunch and higher corporate financing costs using high yield debt instruments. The high yield bond funds were hit with their worst week of net outflows since the March sell-off as investors pulled $672 million out of these funds with $76.4 billion in total assets, or 0.86% of total assets."

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

• Credit Is Tightening—And That's Fine (BusinessWeek, August 6th): "The [credit] adjustment so far has been orderly and without the sharp tightening in overall credit conditions often associated with an outright credit crunch. Spreads remain relatively narrow compared with historical experience… The markets and the economy seem capable of absorbing the emerging downshift in investors' appetite for risk without great pain. The extent of the subprime problem remains small. In his testimony, [Fed chief] Bernanke estimated the losses to holders of subprime loans so far at $50b-$100 billion… In a nearly $14 trillion economy, even losses twice that size are hardly a major burden."

• Economy Exuding Optimism Despite Subprime Credit Woes (Day Trading, July 30th): "The underlying U.S. economic fundamentals are quite strong, as was evident by stronger than expected growth reported for the second quarter… U.S. consumers are still upbeat despite the subprime crisis ripping through the credit market. The University of Michigan's consumer sentiment index rose to 90.4 in July from 85.3 in June… construction spending is likely to have improved in June notwithstanding the continuing weakness in residential construction. The optimism is based on expectations of solid performance by non-residential and public constructions…. Economists expect spending on construction of residential, non-residential and public projects to have risen 0.3% in the month."

• New Orleans Home Sellers High And Dry (Shreveport Times, July 30th): In coastal Louisiana and Mississippi, a glut of higher-end homes points to soaring property insurance costs that are pricing many people out of the market. It also speaks to the legions of doctors and other professionals who have left the area [since Hurricane Katrina] and have yet to return… Economic development experts warn that if these professionals stay away en masse, it could cripple the region's recovery… The costlier the homes, the thicker the glut. The area includes a 10-month inventory of homes priced from $300,000 to $325,000. That compares with a 23-month supply of homes priced from $750,000 to $1 million."

• Why the Gold Sell-Off is Unlikely to Last (Jason Hamlin, July 29th): "I agree that the housing sector will worsen in the U.S., but commodity demand from China, and India should more than make up for the housing slump in America. And while this argument might make sense for base metals (silver to some degree), it does not really explain the recent sell-off in gold, which is used as a store of value, investment and jewelry, not for home construction."

• Investors See Spillover From Subprime Loans (Chicago Tribune, July 29th): "In a sign that the housing recession is hurting other companies, DuPont (DD), which makes products such as countertops for homes, reported that profits were weaker than investors were expecting. The stock fell 6.3% in a day. Besides the concern that a slowdown in home building could affect other companies, and that financially stressed consumers will be reluctant to shop, investors also worried that lenders will cut off financing for leveraged corporate buyouts. Those buyouts have been propelling the market, especially mid-cap stocks, to record-breaking levels for months."

• Newspapers Hit By Loss Of Real-Estate Ads (Columbus Dispatch, July 29th): "A cratering housing market is leading to a slump in real-estate advertising at newspapers… A significant chunk of those advertising dollars are moving… online. Several real-estate executives say they are… mov[ing] money out of newspapers and onto the Internet as that medium grows in importance as a tool for researching home-buying decisions… Last week, Tribune Co., the No. 2 publisher by circulation, posted a 24% drop in Q2, while industry leader Gannett Co. has reported a 9.9% decline and McClatchy Co. reported a 19% decline, citing big losses in California and Florida… Newspapers classifieds… make up more than 35% of their revenue."

Homebuilders And Housing Stocks

• A Big Market Selloff Without a New Surprise (Barron's, July 30th): "Shawn Collins, a risk-arbitrage strategist at Citigroup, sees the market's reaction to Home Depot (HD) as opportunity. Over the past decade, less than 10% of such stocks have traded below the offer range just before the tenders expire. Each eventually was completed -- with 80% at the low end of the range and 20% higher than that…HD's descent [was driven by] panic over housing and mortgage weakness… the uncertainty over how the tender might be pro-rated, and worries about how the stock will trade once the tender is over. HD plans to finance about half of its $22.5 billion buyback by selling HD Supply to private equity investors. Citigroup analyst Deborah Weinswig: "[But] the tender is not contingent upon the sale of HD Supply, as committed financing is in place."

• Countrywide Financial and the Broad Market: Just Don't Panic (Chad Brand in Seeking Alpha, July 27th): "I would not try to bottom fish in the mortgage area. [But] the reason why Countrywide Financial (CFC) will be a buy at some point in the future is because of the valuation. Unlike the brokerage stocks, which could be facing peak earnings, Countrywide is staring at trough earnings and the stock still trades at a 10 P/E… CFC's recently reduced 2007 guidance of $3.00/share might be too high. Who knows, maybe they'll earn $2.00 when it's all said and done, which means there is plenty of downside left. Until housing stabilizes for a long period of time and inventories diminish, I would stay away."

• Ryland Group Q2 2007 Earnings Call Transcript (Seeking Alpha, July 27th): R. Chad Dreier - Chairman, President and CEO: "Our capture rate [The sales or leasing rate of a real estate development compared to the sales or leasing rate of all developments in the market area.- Ed.] for Q2 was 80%. Of these loans, 95% were originated using the Ryland mortgage loan program, and 5% brokered out to other lenders… The cumulative loan to value ratio was 90%. Interest only loans accounted for 17% of the total, compared to 23% last year. Adjustable rate loans made up only 13% of the total, compared to 24% last year. All of these credit statistics are in line with or slightly better than our historic leverage, and our mortgage company has done an excellent job working with Countrywide, and responding to mortgage market [changes]… We ended Q2 with a debt to total capital ratio of 42%, because we continue to build homes at a profit."

• WCI Shares Plunge After No Bid Materializes (Judith Levy in Seeking Alpha, July 27th): "Florida homebuilder WCI Communities announced Thursday it has not found a buyer [after it] had previously rejected as insufficient an offer from activist investor Carl Icahn to buy the company for $22/share. Icahn, whose offer expired in May, planned to oust WCI's management… Bank of America debt analyst Andrew Brausa [said] the tightening credit markets will make it "difficult for the company to sell large amounts of land in the near term and/or recapitalize." WCI builds homes in planned communities in Florida, where mortgage loan payments that are 1-3 months past due increased 30% in Q1'07 from Q4'06. WCI shares closed at $10.02 on Friday."

• Feeling Vindicated By This Sell-Off - And Looking At Toll Brothers (Keith Lenger in Seeking Alpha, July 27th): "We don’t think the sell-off is over yet. There are a few bright spots that appeared as the market sold off. It was evident that people ran toward treasuries yesterday. The upshot is that the cost of getting a cheap mortgage rate is better. As long as they stay low, maybe this will aid in clearing excess housing inventory a bit quicker. In turn, the homebuilders could be a buy, which we still continue to monitor very closely. We would love to get our hands on Toll Brothers (TOL) below $20."

• 10 Stock Picks For a Kid Investor (Lloyd Sakazaki in Seeking Alpha, July 27th): "A glance at headlines and price charts of major homebuilders--D H Horton (DHI), Pulte Homes (PHM), Lennar (LEN), Centex (CTX)--reveals just how much their stock prices have sagged since nationwide home prices and new construction peaked about a year and a half ago. It is important to note, however, that homebuilding is a cyclical industry and the bottom has to be somewhere, perhaps nearby. Patient investors willing to buy homebuilder stocks at today's prices and hold on over the years to come ought to realize substantial profits once the next real estate cycle gets underway."

• Pulte Homes Q2 2007 Earnings Call Transcript (Seeking Alpha, July 26th): "CEO Richard Dugas: "Our immediate goal during this downturn was and is to return our core operations to profitability… We are projecting a modest operating profit in Q3, excluding any additional impairments and land related charges… This guidance includes 7200 plus closings expected in Q3 along with expected SG&A savings. Also during Q2, we lowered pricing in most of our markets in order though move inventory. While we still feel that a balanced blend of price and pace is the right way to drive the best results possible, it was increasingly difficult to move inventory during the quarter without price concessions."

• DR Horton F3Q07 (Qtr End 6/30/07) Earnings Call Transcript (Seeking Alpha, July 26th): "Bill Wheat - EVP & CFO: "Financial Services pretax income was $18.2 million for Q2 compared to $27.5m in Q2'06. And $52.7m for the nine-month period compared to $74.7m in the year ago period. The pretax income decreases in both periods were driven primarily by a reduction in the origination volume at our mortgage company, as our Financial Services operating margin has remained relatively flat as a percentage of revenues in the mid 30% range; 95% of our mortgage company revenue was captive during the quarter and our company-wide capture rate was approximately 64% compared to 67% a year ago."

Commercial Real Estate and REITs

• U.S. REITs Rolling Over! Foreign Financials Flying! (Mike Larson in Howe St.com, July 29th): "Real Estate Investment Trusts [are] rolling over. The benchmark exchange-traded fund for this sector, the iShares Dow Jones U.S. Real Estate Index Fund (IYR), just broke through critical technical support… Investors are voting with their feet and saying the bubble in commercial real estate is finito… The IYR is already down 16% from its early February high. And I'm expecting even deeper losses in the months ahead. What will fuel such a move? Tighter debt and financing markets, that's what."

• Subprime Pain Spreads Into Office Market (Chicago Tribune, July 28th): "Many housing-related businesses that for years have buoyed this slice of [Northwest Chicago] suburban offices have been giving back space they leased, industry experts said. Doug Shehan, of Cushman & Wakefield Illinois: "The downturn in the residential sector has spilled over into the commercial side as the mortgage lenders, title companies, real estate and mortgage brokers shut down or downsize…" About 1 million-sf was put back on the market in the first six months of the year by real estate-related businesses, including Argent Mortgage Co. LLC, a division of the large subprime lender ACC Capital Holdings; and WMC Mortgage, a unit of General Electric Capital Corp… So far this year Schaumburg-area firms have laid off at least 1,500 employees, according to state records."

• Brookfield Properties 2Q Results Soar (MSN Money, July 27th): "Office REIT Brookfield Properties Corp. (BPO) said Friday its Q2 results jumped nearly 58%… Funds from operations, [FFO] increased in Q2 to $167 million, or $0.42/share, from $106m, or $0.30/share, in the year-ago period… Analysts expected FFO of $0.35/share. FFO, which adds such items as amortization and depreciation back to net income, is considered a key gauge of REIT strength. Net income in Q2 surged more than doubled to $79m, or $0.20/share, from $30m, or $0.09/share. Quarterly revenue rose 71% to $722m from $422m on higher commercial property net operating income from the REIT's U.S. office fund, which was fully invested at the end of 2006."

• West 57th Building May Fetch $200M (The Real Deal, July 27th) New York City: "An 11-story office building at 10-14 West 57th Street is on the market and could sell for up to $200 million because of its redevelopment value. The 84,000-sf building could be redeveloped to 113,000 feet with no height restriction. The property used to house Henri Bendel; Sharper Image and MacKenzie-Childs now occupy its retail spaces."

• Massive 30 Rock Lease Available (The Real Deal, July 27th): "Tishman Speyer is looking to lease 220,000-sf at 30 Rockefeller Plaza, where asking rents go for between $130- $150/foot. A tenant would pay in the neighborhood of $30 million a year for the entire space, which a Tishman Speyer executive calls "one of the prized spaces available in Manhattan and in Tishman Speyer history." The company is leasing floors 22-27 at 30 Rock following its recent $222 million purchase of several floors in the skyscraper from NBC."

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