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"

“All of the old-timers knew that subprime mortgages were what we called neutron loans — they killed the people and left the houses. The deals made in 2005 and 2006 were going to run into trouble because the credit pendulum at the time was stuck at easy."- Louis S. Barnes, a partner at the Boulder West mortgage banking firm in Colorado, on the fact that there were signs of trouble in the subprime market long before the current crisis. Few were looking for them. (NY Times, Aug. 19th)

Real Estate Sales and House Prices

• City of Gold (NY Times, Aug. 19th) Manhattan: "Miller Samuel Inc., the Manhattan appraisal company: [Q2'07] Sales of new and existing apartments more than doubled, [dropping one-third of inventory]… to 5,237 units, despite the influx of several thousand new condos… After a boom with annual price increases of 20% or more ended in mid-2005, prices have continued to rise over all, but not as sharply. Miller-Samuel: In Q2'07, the average sale price of a Manhattan studio climbed 16.5% compared with Q2'05. The average for a 1BR climbed by 18.4% and a 2BR by 5.9%. [3BRs] which make up about 6% of the market… rose by 17.9% in Q2… Miller: “If we didn’t have new development coming on at the pace we did, we’d have a chronic shortage across all sectors."

• Portland Home Prices Bucking National Trends (KOMO TV, Aug. 19th): "Portland region's median home sales hit $300,000 in July, up 9% from July 2006 [and] exactly double… February 1998's [median]… Portland region MLS: In July, the region had enough home supply to last nearly six months, the highest figure since January. With more sellers competing for fewer buyers, homeowners who must sell quickly could be forced to drop their prices. The Regional MLS's information from July covered nearly 15,000 new and existing houses and condominiums in Clackamas, Columbia, Multnomah, Washington and Yamhill counties."

• A Harbor In Housing Tempest (The Columbian, Aug. 19th) Washington: "Riley & Marks appraisers: Sales of new and pre-owned homes were off 19.3% last month with just 719 homes sold, the lowest number for July in five years. But only in the past two months has the median monthly sales price been lower than a year ago, down 2.9% in July from 2006…Washington State University RE research center: Q2 home sales statewide were down 11.6%... [From Jan-July,] homebuilding activity, while also slower, continues at a steady pace with builders taking out permits for construction of 833 single-family homes worth $156.08 million, down from 1,007 permits last year."

• Condo, Multi-Family Prices Fall In 2Q (Providence Business News, Aug. 17th): "Rhode Island Association of Realtors: Q2 condominium sales increased 5.37% vs. Q2'06, while prices declined 5.93% for the same period. Although days on the market increased – to 98, from 76 during Q2'06… the median condo price decreased to $222,000 from $236,000 last year. For the same period, multi-family homes saw a precipitous drop in sales, as 340 homes were sold, 31.4% fewer than in April-June 2006. The median sale price for multi-family homes fell as well, 8.9% to $265,000. The time spent on market increased 20% to 84 days."

• City's Home Values Chill (News OK, Aug. 16th): "Oklahoma City Metro Association of Realtors… July ended with 9,328 houses for sale in the Oklahoma City area, a 5.6-month supply based on average monthly sales the past 12 months — a five-month inventory if July's sales pace were maintained. That's up from a 4.8-month supply at the end of 2006.The Q2 median home sales prices in the metro area… was $129,300, up 3.1% from Q2'06's $125,400 [but] down 3.8% from the Q1 median price of $134,400… It took 76 days on average to sell a house last month… two days longer than in June and nine days longer than in July 2006."

Real Estate Investing and Sentiment

• For Sale By Owner Might Not Be Smart Home Sales Strategy (Sun Sentinel, Aug. 20th): "National Association of Realtors: Today, one in eight homes is sold by owner. And almost half of successful FSBO sellers knew the buyer before the sale and didn't try to sell the home on the open market... Fewer than half of FSBO sellers said they would sell another house by themselves… Some FSBO home sellers might be under the impression they can save the entire 5%-6% commission for selling a house. [But] unless your buyer doesn't have an agent, you'll have to pay 2.5%-3% to the buyer's agent. So commission savings on a $250,000 home sale would be $6,250-$7,500."

• Bidders Snap Up Bargains At Home Foreclosures Auction (Inland News, Aug. 19th): "First-time buyers, investors, mortgage lenders and real estate agents… attend[ed] an auction of Southern California homes repossessed by lenders… DataQuick Information Systems: Foreclosures… are up eight-fold in a year in Riverside and San Bernardino counties… The market downturn is a benefit for Kathy Van Pelt, a third-grade teacher, [who] paid $210,000 in cash, including a 5% auction fee, for a doublewide mobile home and a two-car garage with an apartment over it in Wildomar… [But] Greg Norris, a VP with The Norris Group, a Riverside real estate investment company [said]: "We were here to buy, but there is nothing here worth buying yet."

Mortgates and Real Estate Lending

• Home Loans Finding Lenders (Daily Pilot, Aug. 19th): "California's First Capital, has done steady business… while other mortgage brokers have closed shop or suffered layoffs… First Capital broker Tim Sibley: "As other brokers are going out of business… We're picking up the pieces a bit and being able to fund some loans that other mortgage companies were having trouble with… Sibley, whose firm is housed within Coldwell Banker, said brokers are more likely to stay in business if they have an established name, have made prudent loans in the past, and have a direct connection with a real estate agency. Many of the brokers withdrawing from the field [had] granted too many subprime loans."

• Radian Draws on Credit, Faces Lawsuits (AM NY, Aug. 17th): "SEC filing: Debt insurer Radian Group (RDN) said it's getting $200 million from a $400m unsecured revolving credit facility expiring in 2011… for "greater financial flexibility and adequate liquidity…" This week, at least four securities lawsuits were filed against Radian [for allegedly covering up] the [true] financial health of affiliated Credit-Based Asset Servicing and Securitization LLC… C-BASS has been hard hit by margin calls… MGIC, the country's largest mortgage insurer, and Radian each own 46% of C-BASS… [Both] have acknowledged that they could lose their entire investment in C-BASS. Last week, MGIC fully tapped a $300m, five-year revolving credit line… Since the meltdown at C-BASS, MGIC wants to back out of its $5.5 billion acquisition of Radian."

Subprime Fallout

• Lender Lays off 6,000, Closes Offices (Free Market News Network, Aug. 19th): "First Magnus Financial Corp., a national mortgage lender that is suspending operations, has laid off 99% of its nearly 6,000 employees nationwide and closed all of more than 300 offices… The Tucson-based company that originated home loans and then sold bundled loans into the secondary loan market expects to retain only about 60 of its employees… Company officials said [First Magnus] was caught in the credit liquidity crunch… even though [it] was not engaged in selling "sub-prime" mortgages that sparked the recent crisis. First Magnus… funded more than $30 billion in loans in 2006."

• Did Countrywide Get a Hand from the Fed? (BusinessWeek, Aug. 20th): "A bankruptcy filing by the largest U.S. mortgage lender would have jolted the economy, squeezing Countrywide's (CFC) many creditors and tormenting the already wounded mortgage and housing markets… On Aug. 17, [the Fed] temporarily cut the primary discount-window rate by 50 basis points… Was the Fed action on Aug. 17 effectively a Countrywide bailout, saving a company many saw as too big to fail? [Or] to the conditions that put the lender in such deep trouble… Though Countrywide made its share of risky loans, it also handles billions of dollars in conventional and prime loans… The credit markets seemed to be panicking, punishing all mortgage lenders."

• Thornburg Sells Securities to Revive Home Lending (Bloomberg, Aug. 20th): "Thornburg Mortgage Inc. (TMA), forced to stop taking home-loan applications earlier this month because of a cash crunch, said it sold $20.5 billion of mortgage-backed securities as part of a plan to return to "business as usual.'' The sales will result in a "capital loss'' of about $930 million this quarter, [Thornburg said.] Thornburg also made about $40m by terminating "interest rate hedging instruments.'' Home lenders are finding new sources of capital after investors stopped buying their mortgages and bankers cut off credit. Luminent Mortgage Capital Inc., an investor in home-loan securities, lined up about $125m today from Arco Capital Corp. Delta Financial Corp., a subprime residential lender, found investors last week to provide $70m."

• On Borrowed Time (Barron's, Aug. 20th): "Folks queued up to withdraw their money from Countrywide's bank subsidiary. Among them was Bill Ashmore, president of Impac Mortgage Holdings (IMH), a mortgage REIT, who took out $500,000 and promptly wired it to Bank of America (BAC.) "It's because of the fear of bankruptcy," the Times quoted Ashmore… Impac's shares have plunged from $10 to $1.85 this year as the REIT has… shut down virtually all its lending. But Countrywide, [unlike] Impac, or New Century, a subprime-mortgage REIT that went under early this year, or [bankrupt] American Home Mortgage... is the nation's biggest mortgage lender, originating $245 billion in H1'07, or more than 17% of the total national home loans."

• Mortgage Crisis Squeezing Lending Standards And Keeping Utahns Out Of The Home-Buying Arena (Salt Lake Tribune, Aug. 19th): "In recent weeks, lending guidelines have been changing so rapidly that even some veteran lenders are having trouble keeping up. Traditionally, lending standards have changed several times a year. Now they can change several times a week… But last week, Wells Fargo (WFC), one of the largest U.S. mortgage lenders, said it had raised by more than one full percentage point its rate on 30-year jumbo loans… Other lenders have followed Wells' policy, substantially raising the monthly payments for borrowers of higher-priced homes. Bankrate.com reported that 30-year mortgages last week averaged 6.2%. Jumbo 30-year mortgages averaged 7.1%."

• How Missed Signs Contributed to a Mortgage Meltdown (NY Times, Aug. 19th): "Some of these [subprime] players now find themselves in a dual role as both enabler and victim… The credit analysts at brokerage firms now being pummeled were among the Cassandras whose warnings were not heeded. “I’m one guy in a research department, but many people in our mortgage team have been suggesting that there was froth within the market,” said Jack Malvey, the chief global fixed income strategist for Lehman Brothers. “This has really been progressing for quite some time.”

• The Subprime Contagion Of John Edwards (Salon.com, Aug. 17th): "[Presidential candidate] John Edwards has ties to subprime mortgage lending firms… In 2005-06 he worked for a private equity firm, Fortress Investments, that owns several subprime lenders. He also has around $16 million invested in Fortress funds. Since he's been one of the most vocal Democratic candidates criticizing how subprime lenders have run amok, the juxtaposition has offered his political opponents a classic "gotcha" opportunity. [Though] Edwards [defenders say] he's been campaigning specifically against "predatory" lenders… Friday's WSJ article… makes a good case that Fortress' subprime lenders may fit into the predatory category."

• S&P Downgrades Securities Backed by Alt-A Mortgages (Wall St. Journal, Aug. 17th): "Standard & Poor's cut its investment rating on a small portion of U.S. residential mortgage-backed securities that are backed by near-prime loans. The securities being cut by S&P… are backed by first mortgages issued from October 2005 through the end of 2006. They had an original total balance of about $660 million and represented 0.13% of the nearly $455.4 billion in residential MBS backed by Alt-A loans that S&P rated in those 15 months. The firm [also] affirmed the ratings on 82 other classes of MBS that S&P had been reviewing for possible downgrade, as well as all other previously rated Alt-A classes."

Foreclosure Impact

• Area Faces ‘Perfect Storm’ As Foreclosures Hit Record Levels (Northwest Florida Daily News, Aug. 20th): "In Okaloosa County, foreclosures jumped by nearly 70% from 2005-2006. And if the foreclosure rate maintains its current pace, the total in 2007 will be 83% higher than 2006… In Santa Rosa County, foreclosures increased 72% from 2005-2006. This year’s January-August foreclosures have already surpassed 2006 totals by 36 filings. In Walton County, foreclosures increased 63.7% from 2005-2006. Thus far in 2007, foreclosures have surpassed 2006 totals by 66 filings. Northwest Florida’s foreclosures mirror a similar trend in Central and South Florida."

• Corn Belt Gets Rich, Quietly (Chicago Daily Herald, Aug. 19th): "Amid the subprime mortgage [crisis], a recent study of foreclosures in Nebraska found a strong correlation between urban markets and troubled mortgages. “It’s not as big an issue in rural areas,” says Kelly Edmiston, a senior economist at the Federal Reserve Bank of Kansas City, who conducted the study… The region’s three main commodities — beef, corn and wheat — are fetching high prices simultaneously... To add to the blessing, an extraordinary level of rainfall has produced magnificent yields. Then there are the dividend payments that will start arriving soon from ethanol plants, owned largely by local farmers."

• S.D. Housing Market May Only Be In Eye Of Storm (Sign On San Diego, Aug. 19th): "It might be premature to say we're hitting a “balance” [in San Diego] especially because the median price reflects an upwardly skewed picture of the market. The real price declines are much worse, says real estate broker Bob Schwartz. “One thing that those numbers don't show is the amount of incentives people have to give to get someone to buy their house,” Schwartz says. “On a $500,000 home, you might have to give $15,000 in concessions, which doesn't show up on the median price.” RealtyTrac: The number of defaults, foreclosures and bank takeovers in San Diego County… jump[ed] from 5,401 in H1'06 to 18,409 in H1'07."

• Where's The 'Equity Cushion' When You Need It? (Tim Iacono in Seeking Alpha, Aug. 17th): "First American CoreLogic, a housing and mortgage data supplier: Nearly 7% of 32 million U.S. households studied as of December owed more than their homes were worth, based on computer estimates of the property values. An additional 4% had home equity of 5% or less. Since then, house prices have edged down in much of the country, erasing more home equity… Partly as a result, foreclosures are surging. Moody's Economy.com, projects that lenders will acquire about 760,000 homes through foreclosure this year and 935,000 in 2008, up from an average of about 440,000 a year from 2000 through 2006."

Global Impact and Alternatives To The Housing Slump

• London House Prices Fell for the First Time in a Year in August (Bloomberg, Aug. 20th): "Rightmove Plc, Britain's largest RE website: London house prices fell for the first time in a year this month, a sign higher interest rates are cooling Britain's property boom… The average asking price for a home in the U.K. capital slipped 0.1% from July, the first drop since August 2006, to 394,268 pounds ($777,575)… [Rightmove] measured almost 150,000 properties listed for sale in the four weeks through Aug. 11… Turmoil in global financial markets may erode confidence further among buyers in London, where demand from bankers has helped drive a tripling of U.K. home values in the past decade.

• Europe's Housing Market Sheltered From US Mortgage Crisis (France 24, Aug. 19th): "The hot Spanish and British housing markets are cooling slightly with a slower pace of price increases, economists say, and they are far from a crisis as the demand for housing is unabated in Spain and in Britain the high-employment economy underpins the housing sector… The French housing market appears not to be facing any serious concerns… Landsbanki-Kepler analyst: The Italian housing market is seen as solid with strong demand competing for a short supply of offers and prices are still very high."

• German Bank Sachsenlb Gets 17.3 Bln Eur Bailout Over Subprime Exposure (Forbes, Aug. 19th): "German publicly-owned regional bank SachsenLB said it had to be bailed out to the tune of €17.3 billion by the country's savings banks because of its exposure to the troubled US subrime loans market… Friday, the bank said due to 'ongoing market disruption in selling asset backed commercial papers', it had problems refinancing its Ormond Quay, a fund set up in Dublin by the bank's wholly owned subsidiary Sachsen LB Europe PLC. SachsenLB previously had denied that Ormond Quay has invested directly in the US subprime mortgage market."

• SNB's Roth Says US Subprime Crisis Not To Affect Switzerland Significantly (Forbes, Aug. 19th): "Swiss National Bank [SNB] president Jean-Pierre Roth said the current subprime market crisis in the US is unlikely to have a significant effect on the Swiss economy. 'The information we currently have show a rather positive picture." The Swiss economy is broad based with support coming from domestic demand, particularly consumption and investments and to a lesser degree from the construction sector, Roth said… it is likely to remain dynamic 'even though we expect it to slow down somewhat in the second half of the year', he added. 'However, the contribution coming from the financial sector may shrink,' Roth warned."

• Campbell, John Henry Get Losses on Carry Trade Exit (Bloomberg, Aug. 20th): "A doubling in currency volatility since June has [hurt the profitable] "carry trade" strategy in foreign exchange, hurting investors from John W. Henry & Co. to Campbell & Co…The fallout from losses on [subprime] loans… is spreading so fast that investors are selling any asset smacking of high risk around the globe, causing wide swings in exchange rates that weren't anticipated. JPMorgan Chase & Co.'s index of volatility on options for the most-traded currencies reached 13.4% last week, the highest since 1999… Campbell's biggest fund, with $9 billion in assets, lost 10.8% in July, the most since 1990. John W. Henry's $122 million Financial and Metals Portfolio fell 11.7% in July, its worst month since March."

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

• Bernanke's 'Rookie Mistake' Forces Fed to Shift Focus to Market (Bloomberg, Aug. 20th): "Stocks rallied after the [Fed Discount Rate cut] announcement, but credit markets remained unsettled. The Standard & Poor's 500 Index climbed 2.5%, the biggest rally in four years. By contrast, asset- backed commercial paper yields jumped the most since the Sept. 11, 2001, terrorist attacks. Top-rated paper maturing Aug. 20 yielded 5.99% late on Aug. 17, up 39 basis points in a day. A basis point is 0.01 percentage point… The decision to keep the benchmark overnight lending rate unchanged -- for now -- may be a sign that the central bank is still wary of bailing out bad bets by financial institutions and investors."

• American's Debt Could Be A Danger (Int'l Herald Tribune, Aug. 19th): "A research paper co-written by the vice chairman of the Federal Reserve says that consumer debt soared in the past six years mainly because of the rapid increase in house prices in the US. Consumers then used this debt to finance more spending, helping to keep the economy growing at a healthy pace since the last recession ended in 2001… [The study] noted that the average household now owes more money than it makes in annual income. In the early 1980s, the debt-to-income ratio was below 60%... Among non-homeowners, debt has not risen significantly since the early 1980s."

• Shoppers Lose Steam As Housing, Credit Woes Take Their Toll (CNN Money, Aug. 19th): "Shoppers have already adjusted their spending to accommodate climbing energy prices and interest rates, but the housing slump and problems obtaining and affording credit are proving too tough to juggle for many, according to some of the nation's largest retailers, who are bracing for a tough second half of the year… On Friday, the widely watched index of consumers sentiment about the economy conducted by the University of Michigan and Reuters posted a sharp drop to 83.3 from 90.4 in July… Fears were heightened this week by disconcerting quarterly earnings and forecasts out of Wal-Mart Stores Inc. (WMT) and Macy's Inc. (M)."

• Drywall As An Economic Yardstick (Kentucky Post, Aug. 18th): "Lafarge spokesman: Although U.S. drywall manufacturers are suffering through one of the worst slumps in recent memory… Lafarge completed work on a second [drywall] production line at a cost of $120 million in May and has added employees in the last few months at the plant… USG Corp. (USG), one of the largest manufacturers in the country, said its price for 1,000-sf of drywall could fall to about $95, a little more than half the peak price of about $188 per thousand in Q3'06. USG has cut more than 1,000 of its 15,000 jobs and cut production by 18% … Lafarge [said] modernization [has] "enabled us to manage our way through the current down cycle in a stronger position than before."

Homebuilders And Housing Stocks

• Lowe's Cos 2Q Net Up 9%; Revenue Up 5.8% (CNN Money, Aug. 20th): "Lowe's Cos.'s (LOW) second-quarter net income rose 9% to $1.02 billion, or $0.67/share, from $935 million, or $0.60/share, a year earlier as revenue grew 5.8%.The home improvement retailer's revenue grew to $14.17b from $13.39b in Q2'06. On average, analysts expected per-share earnings of $0.61 on revenue of $ 14.13b… The company expects Q3 per-share earnings of $0.43- $0.45, with sales up 7% to 8% from a year earlier. For the fiscal year ending Feb. 1, the company expects per-share earnings of $1.97-$2.01, down from its prior view of $1.99-$2.03/share, and expects sales to rise 6% from the prior fiscal year."

• Friday's Rate Cut: A Sign Things Are Really Bad (Dr. Enzio von Pfeil in Seeking Alpha, Aug. 20th): "The next wave will be even tighter credit markets... Banks may have ample funds - but they are suspicious of each other. Nobody is lending, and that is going to pervade the economy. Thus, even if the Fed has lowered the rates that it charges when lending to banks so that they can replenish their required reserves at the Fed… The [real] issue is that banks don't want to lend. Period… I am tempted to buy a "short" ETF on the US market, and… I also am tempted to buy put options on the rating agencies [who are suspected] of conflict of interest."

• 'Double Dip' Stock-Buying Opportunities Emerge as Shares Fall (Bloomberg, Aug. 20th): "Pedro Alves started buying Sallie Mae Corp.'s (SLM) shares at $41.60 in February and sold them for a 35% gain four months later after the largest U.S. student- loan provider became a takeover target. Now, the fund manager at Braga, Portugal-based Spot Gestao Financeira is looking to profit on the stock again. A global rout in equities helped send SLM 20% below the $60/share offered by J.C. Flowers & Co., the buyout firm led by former Goldman Sachs Group Inc. partner Christopher Flowers. Despite the tumble, Alves is convinced the deal will go through."

• Beazer Shuts Columbia Office, Cuts Jobs (The State.com, Aug. 18th): "Beazer Homes (BZH) has closed its Columbia office, cutting more than two dozen jobs here as it moves the administrative work to Charleston… Frank Finlaw, president of the Beazer division that encompasses the Columbia, Charleston and Savannah markets: The area’s sixth-largest home builder, is responding to a downturn in the national housing market… the worst Finlaw has seen since the late 1980s… Beazer Homes had 29 employees last spring and 43 in 2006. The company is keeping open its 22-employee Beazer Mortgage office… Beazer built about 250 houses in the Columbia area last year and is on track to build about 220-225 houses this year."

• Home Depot Settles Waste Dumping Suit (Yahoo! Finance, Aug. 18th): "Home Depot (HD) agreed Friday to pay nearly $10 million… to settle a lawsuit alleging it mishandled hazardous waste from its California stores… The world's largest home improvement store chain came under investigation after a hazardous waste container exploded at HD's Marina Del Rey store in May 2004… The government probe concluded HD routinely collected hazardous waste accumulated at its stores across California and placed them in large buckets for offsite disposal. Haulers sometimes improperly stored and labeled the waste and did not keep good records of materials about to be transported… The settlement… also requires that HD contribute to environmental… initiatives benefiting the state."

• Housing Starts At 10-Yr. Lows: Cue The Tumbleweeds (Tim Iacono in Seeking Alpha, Aug. 17th): "The ten-year low in housing starts really is worse than reported. Permits for new construction dropped 2.8% to an annual rate of 1.373 million units, following June's total of 1.413 million. The June data for both housing starts and permits were revised up slightly, a break from the pattern established over the last year or so… With growing inventory from foreclosures now hitting the market and the beginning of price capitulation for Bank-Owned real estate, there seems to be little hope for any sort of rebound in homebuilding anytime soon… Homebuilders are now competing with banks that are dumping foreclosed homes that were built just a year or two ago."

Real Estate ETFs

• New Etfs Capture Foreign Real Estate Stocks (MarketWatch, Aug. 19th): "Investors are… pursuing international realty stocks from a trio of low-cost, diversified exchange-traded funds… State Street Global Advisors launched this first ETF [with an expense ratio of 0.6%,] tracking foreign real-estate stocks in December 2006, and it has gotten a warm reception, recently breaking through $1 billion in assets… On June 5, WisdomTree Investments Inc (WSDT) listed WisdomTree International Real Estate Fund (DRW) on the American Stock Exchange, with fees of 0.58%. And earlier this month, Barclays Global Investors got into the game with iShares S&P World ex-U.S. Property Index Fund (WPS), which levies 0.48% and trades on the NYSE."

Commercial Real Estate and REITs

• Commercial Real Estate Performing Well: Rent Prospects Help Sales (San Jose Mercury News, Aug. 19th): "Investment in commercial real estate is gaining strength in the East Bay, experts say. Edward Del Beccaro, managing partner with Colliers International in Walnut Creek: "Commercial is doing well, with rates rising in all areas except small pockets in the East Bay and Central Valley." Del Beccaro calls it "the Blackstone effect," named after the Blackstone Group purchased Equity Office Properties and sold it off piece-by-piece for a profit because of raised rents. Previously buildings were sold because of their value; now buildings are being sold based on future rents that their owners will inevitably raise for better returns."

• Dissecting Annaly Capital Management (Guru Focus, Aug. 19th): "Since [the] Fed’s August 17 discount rate cut… Annaly Capital Management's (NLY) may benefit from a rate cut… Annaly has at least 75% of their total assets in high-quality Mortgage Backed Securities … The associated risk is that [Annaly's] MBS's can’t easily be [valued]… Will the reset of rates on these MBS and a slowing economy affect even good credit consumers ability to pay their mortgages? With the rate of defaults rising and possible credit crunch moving up the credit food chain, will you want to pay for a company with a current market cap of $4.77 billion and an estimated revenue of $392 million for 2007 [of which] Yahoo! Finance estimates a book value of about $10.5/share?"

• Pay It Forward: More Hoteliers Build, And Get Out Of The Way (The Real Deal, Aug. 2007): "In New York's booming hotel market, it pays to build and then get out of the way. With about 10,000 rooms in the pipeline, watch for more "forward sales," in which a developer builds the hotel, and another entity -- either a hotel operating company or investment group -- commits to buying the finished product. Jeffrey Davis, an executive VP in the hotels division of Jones Lang LaSalle: The number of forward sales is growing because developers… recognize the potential profit in hotels… Sources of investment capital these days are less often public funds and REITs… More often they are private-equity funds, opportunity funds or pension funds."

Web Site of the Day

Here's the Onion's take on the subprime mortgage crisis and how financially troubled homeowners are dealing with the problem. Not very useful I admit, but funny nonetheless.

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