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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"

"We will need to be nimble." - Donald Kohn, the central bank's No. 2 policymaker. With the housing slump deepening, credit troubles persisting and Wall Street on edge, a growing number of investors and economists believe the Fed will lower its key Funds rate this week. (Associated Press, Oct. 29th):

Real Estate Sales and House Prices

  • State's Housing Market Off To Cool Fall Start (Buffalo Business First, Oct. 29th): "New York State Association of Realtors: Statewide September sales were off 20.5% and single family home prices fell 6.9% [from] September 2006. Charles Staro, executive director of NYSAR: "The New York state housing market had been experiencing a soft landing from the boom market, and continues to do so despite this September's drop in sales." Statewide, total single family home sales in September hit the 7,243 mark, down 20.5% from the 9,107 reported in September 2006, [and] 30.5% [down] from the 10,416 sales reported this August... Median home sale prices state-wide fell 6.9% year-over-year, from $229,500 to $213,600."

  • A Slow Motion Train Wreck (NJ Report, Oct. 29th): "In August, pending home sales dropped 6.5%, the lowest level since 2001. National Association of Realtors: More than 10% of August sales contracts fell through at the last moment, primarily owing to disappearing loan commitments from banks... There was a foreclosure filing for one of every 510 US households in August... An estimated more than 1.7 million foreclosures will occur in the country by the end of 2008... Federal Housing Finance Board: While nearly 35% of conventional mortgages in 2004 used ARMs, some 70.7% of jumbo loans—those above $333,700 (the jumbo threshold in 2004; it’s now $417,000)—did too."

  • Downturn a Plus for Newleyweds (Modesto Bee, Oct. 27th) California: "After years of watching the region's housing prices skyrocket, the [newlywed] Marino's were pleasantly surprised to discover the market downturn has made houses much more affordable. "We were able to get a really good mortgage interest rate (fixed at 5.87%) and a good price for a new home," Ofelia Marino said. In August they paid $325,000 for a 2,061-sf, 4BR home in Heartland at Crossroads in Riverbank. The builder, Morrison Homes, had reduced the price about $50,000, which made it a better deal than what was being asked for many older houses in the region."

  • For Sale: 2 Million Empty Homes (CNN Money, Oct. 26th): "Census Bureau: The number of vacant homes for sale is at 2.07 million in Q3, up about 2%from Q2, and 7% above year ago levels... For purposes of comparison... the Census Bureau estimated Detroit had 2.08 million households in its 2000 Census. Now picture virtually every house or condo empty... from inner-city Detroit... all the way to nearby cities such as Flint and Ann Arbor... Dean Baker, Center for Economic and Policy Research: About 2.8 million homeowners could see the payments on their subprime mortgages reset higher in the next two years... "It's certainly possible we could see 3 million, maybe 4 million (vacant homes on the market.)"

Mortgates and Real Estate Lending

  • Lenders Bail Out Home Sellers (News Press, Oct. 28th): "The Mortgage Forgiveness Debt Relief Act was passed Oct. 4 by Congress but still has not been passed by the Senate. The bill, passed by a 386-to-27 vote, would give a tax break to homeowners who have mortgage debt forgiven as part of a foreclosure, renegotiation of a loan [or short sale.] No taxes would be owed on the value of any debt forgiven/written off. Currently such debt forgiveness is taxable income. While the measure is anticipated to reduce taxes of some strapped homeowners by $650 million, government costs would be partly offset by limiting second homes tax breaks."

Subprime Fallout

  • Countrywide CEO: More Trouble Ahead For Housing Market (USA Today, Oct. 29th): "Countrywide Financial's (CFC) chairman/CEO Angelo Mozilo says he believes there's more trouble ahead for the nation's slumping housing market... He says a big problem is loans given to customers with poor credit history. Mozilo says the so-called subprime market will only worsen if home values continue to fall. He's calling on lawmakers to do more to help home buyers gain access to credit. The head of the country's largest mortgage lender made his comments during a panel discussion in Beverly Hills."

  • Lehman Raises Fund Targeting LBO Loans (Roy Mehta in Seeking Alpha, Oct. 29th): "Lehman Brothers [has] created a $3 billion fund [including $130 million from Lehman employees] to buy leveraged buyout loans for a discount from lenders... The Lehman Brothers Loan Opportunity Fund will... take advantage of "dislocations in the credit markets," Lehman says. As a result of the credit crunch, banks have about $300 billion in loans sitting on their books which they have not been able to sell. Lehman joins companies like Oaktree Capital and Blackrock who have targeted banks looking to unload debt."

  • Fitch Places $36.8B CDOs on Negative Rating Watch (Calculated Risk, Oct. 29th): "Following a comprehensive global review of the 431 Fitch-rated structured finance collateralized debt obligations (SF CDOs) representing $300.1 billion of outstanding debt, Fitch Ratings has placed $36.8B [worth], on Rating Watch Negative... Of the $23.9B of AAA rated securities on Rating Watch Negative, approximately two-thirds ($16B) represent 'AAA' rated tranches of mezzanine subprime deals, and CDO-squareds containing these tranches... These deals are expected to suffer the most severe downgrades... Preliminary indications are that a three-to-four rating category average downgrade is to be expected for most of this group, with the revised ratings in the range of 'BBB' to 'BB-'."

    >Reading Between The Lines: Countrywide Announces $1+ Billion Dollar Loss, Stock Soars (Dr. Housing Bubble, Oct. 29th): "Countrywide's (CFC) earned $485,000,000 in Q2'06, and [lost] $1,200,000,000 in Q3'07. Countrywide [said] it will be profitable again in Q4... Where exactly is this profitability going to come from? Countrywide has openly talked about cutting back 10,000-12,000 people... Where else are they going to recoup their losses? The market is not improving... the worst time for most U.S. housing markets is fall and winter... Subprime and high-risk loans are essentially gone and this was a huge source of income for the company... Each foreclosure is estimated to cost a lender $50,000... [A] business' largest expense will always be employees."

  • There Are HUGE Losses That Have Not Been Disclosed (Housing Bubble Blog, Oct. 28th): "Wall Street and investors refuse to modify [troubled] loans because they stand to lose more by working with a borrower or agreeing to some type of short sale. This situation is complicated by the fact that these mortgage-backed security holders have insured against defaults, and the insurance payout on a default is a better result for the investor than accepting reduced returns... In this circumstance, the investor can take the position that a mod goes against their best interests and threaten suit against the servicer if mods are undertaken."

  • MGIC Poised To Weather Storm (Journal Sentinel Online, Oct. 27th): "MGIC's main business is insuring mortgage-holders... MGIC (NYSE:MTG) tried to limit its risk [by] raising premiums in California and Florida... and also reinsuring many of those policies—buying insurance from another company to reimburse it should claims mount... MGIC is making investments overseas that are expected to become profitable, and as the housing market turns, so will demand for its product... In September, the insurance commissioner's office allowed MGIC's insurance subsidiaries to pay $100 million in extraordinary dividends to the parent company, indicating that it believes reserves are adequate... CEO Curt Culver on Friday invested about $1 million in MGIC, buying 50,000 shares."

  • Housing's Roof Is Intact Even as the Foundation Crumbles (Barron's, Oct. 26th): "Credit Derivatives Research, a unit ofGimme Credit: This week has seen a significant shift of relative risk in from the lowest-tier "equity" tranches to the top-grade "senior" and "super-senior" tranches of credit derivatives. The lower tranches are supposed to protect the top ones just as pawns protect the queen and king in chess. That way, low-quality assets can be packaged in such a way that a large portion gets top credit ratings... But if the bottom rung has more failures than assumed (under ideal conditions), the next grades start suffering... Credit Derivatives Research infers that the markets see risk becoming "systemic" -- that is, spread across the entire financial system."

Foreclosure Data

  • Lenders Linked To Foreclosures (The Real Deal, Oct. 29th): "Democratic State Senator Jeffrey D. Klein released a study that puts some lenders in a "subprime hall of shame." The study said Fremont Investment and Loan (FMT), WMC Mortgage, and the New Century Financial Corporation accounted for the highest number of foreclosures in Queens and Brooklyn in the year studied. From July 2006 to this year, the lenders issued 618 mortgages that resulted in foreclosure in New York City and Westchester."

  • Lenders Bail Out Home Sellers (News Press, Oct. 28th): "Realtor Association of Greater Fort Myers and the Beach: Almost one in five Lee County houses-- 32.5% of homes listed for sale at $150,000-200,000-- on the market right now is a short sale... Florida Association of Realtors: The median price of a single-family home in Lee County has fallen to $231,600 in September... down 28% from December 2005... In September, 1,220 foreclosures were filed in the county: [fivefold] the 237 recorded a year earlier... Jonas Elliott of Loss Mitigation Services of Southwest Florida: Banks are willing to take $0.50 on the dollar [in short sales] whereas before, they’d say 80, 90%.”

  • Real Estate Roller Coaster Plunges After A Thrilling Ride (Modesto Bee, October 28th): "In Stanislaus, San Joaquin and Merced counties...foreclosure auctions are held daily on county courthouse steps in Modesto, Stockton and Merced. Lenders have repossessed more than 5,400 homes in the past year. Thousands of other homeowners are in mortgage default... In Modesto, about 2,400 houses and condos are for sale, nearly six times more than in spring 2005. Only about 50 Modesto homes have been selling per week this fall... Developers have sliced new home prices repeatedly, often by $100,000 or more, to unload their finished-but-empty inventory... Sale prices have plummeted 10%-41% since the fall 2005 peak, depending on the city."

Global Opportunities

  • Mexican Housing Market Poised For Continued Strong Growth – Fitch (Forbes, Oct. 29th): "Victor Villarreal, a senior director at Fitch Ratings Mexico: The Mexican housing market is poised for continued strong growth underpinned by a developing mortgage market [and] has become one of the most dynamic industries in the Mexican economy... Macroeconomic stability in the last several years and support from government agencies has generated a favourable climate for providing mortgages and the purchase of new homes across all income segments in Mexico... During the last decade, more than 6 mln homes have been financed in Mexico and investment in the housing sector topped 223 bln pesos in 2006."

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

  • Fed Officials: Housing Slump to Drag On (Associated Press, Oct. 29th): "The Federal Reserve [says] the housing slump will drag on well into next year as credit problems linger. In recent speeches, Fed policymakers have stressed that the country is going through a period [of high] economic uncertainty... Since cutting a key rate last month for the first time in four years, Fed policymakers have pledged to "act as needed" to keep the economy growing and inflation in check. That... has left the door open to, among other things, another reduction to its key rate, holding that rate steady or taking more narrowly tailored action by slicing its lending rate to banks."

  • Real Estate Impacting Retail (Barry Ritholtz in Seeking Alpha, Oct. 29th): "Floyd Norris [NYT] points out [that] as the Housing stocks have fallen to new multi-year lows, they have dragged the department store stocks with them... Investors [are] predicting that consumers will severely cut back on spending... Since April, shares of J. C. Penney are down 33%, Macy’s by 27%, Kohl’s by 28% and Sears by 28%. In interviews, retail executives conceded that the slumping housing market was taking its toll... in recent years the amount of home equity loans rose by as much as $180 billion a year, with much of the money going to consumption."

  • What's Wrong with the New Government Plan to Solve the Subprime Mess? (Andrew Corn in Seeking Alpha, Oct. 29th): "Minnesota Senator Norm Coleman proposed legislation that would allow individuals who are [delinquent] on their mortgage payments to withdraw up to $100,000 from their 401(k) or IRA without a tax consequence... as long as the withdrawals are paid back within three years. It would be limited to borrowers making no more than $114,000, or $166,000 for joint filers... How does the government know where the money is going? After getting their back mortgage paid [what if] they lose their house 3-6 months later? Years from now, when participants can't retire or will lose their home to buy necessities-- who will pay for that bailout?"

  • Financial Crisis Rips Clothiers (Crain's NY, Oct. 27th): "Troubled Jones Apparel Group Inc. (NYSE:JNY) and Liz Claiborne Inc. (LIZ) have seen their shares tumble more than 35% since late April... Perennial industry stars Polo Ralph Lauren Corp. (NYSE:RL) and Phillips-Van Heusen Corp. (NYSE:PVH) have seen shares slip 28% and 18%, respectively. Accessories makers Coach Inc. (NYSE:COH), Steven Madden Ltd. (NASDAQ:SHOO), [and] clothier Kenneth Cole Productions Inc. (NYSE:KCP), have all seen... share price declines of more than 25% since the spring... Behind the rout looms a wall of worry that is expected to depress revenues and earnings for months to come. Higher gas prices, falling home values and tighter credit conditions are all holding back consumers' willingness to spend."

Homebuilders And Housing Stocks

  • Embattled First Home Cuts 200 Workers (News Press, Oct. 30th) Florida: "First Home Builders, Lee County's biggest residential contractor two years ago, with almost 1,200 employees, is down to about 50 today following its layoff of 200 workers... Hovnanian Enterprises (NYSE:HOV), which acquired the assets of First Home in August 2005 [said] the move was in response to the current sluggish real estate market... The low-end home sector, First Home's specialty, is in dire straits in Lee County with a huge inventory of vacant houses caused by waves of speculation and failed loans to buyers... The number of building permits issued in September fell to 121 from 698 in Sept. 2006."

  • Pulte Homes Director Buys Shares (Forbes, Oct. 29th): "A director of homebuilder Pulte Homes Inc. (NYSE:PHM), bought 10,000 shares of common stock, according to a SEC filing Friday. In a Form 4 filed with the SEC, David N. McCammon reported he bought the shares on Friday for $15 and $15.01 apiece. Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction."

  • KB Home CEO Sees California Home Prices Dropping (Reuters, Oct. 29th): "U.S. home builder KB Home (NYSE:KBH) CEO Jeffrey Mezger said on Monday that home prices in California could fall another 10-15% in the next 18 months. California State Treasurer Bill Lockyer said they all expected about 10% or more... As the prices of homes decline, large, publicly traded builders have been forced to take massive write-downs and write-offs for the land and inventory they hold. Last month, KB said that California accounted for 50% of the charges. Mezger later said that urban areas would not see as much price pressure as suburban ones, since areas with jobs would be stronger."

  • Louisiana-Pacific Posts Loss on U.S. Housing Slowdown (Bloomberg, Oct. 29th): "Louisiana-Pacific Corp. (NYSE:LPX), the biggest U.S. maker of oriented-strand board, reported its fourth consecutive quarterly loss as U.S. housing construction slowed and the Canadian dollar rallied. The third-quarter net loss was $67.8 million, or $0.65/share, vs. net income of $9.5M, or $0.09 in Q3'06... Sales fell 10% to $472.5M. North American makers of oriented-strand board, known as OSB, are shutting higher-cost mills and opening more efficient plants. Louisiana-Pacific [will] permanently close an OSB mill in Quebec [and] open a new mill in Alabama [by 2008]... OSB is a substitute for plywood used in floors, roofs and walls in home construction."

  • Meritage Homes Joins the Slide (Motley Fool, Oct. 29th): "Meritage's (NYSE:MTH) management team, which is now led by CEO Steve Hilton, one of the company's founders, is endeavoring to improve the balance sheet. Debt was reduced somewhat in the quarter, and a new, more flexible credit facility was negotiated with the company's banks... I notice that Centex CEO Tim Eller's compensation is now a fraction of its year-ago level. At the same time, Meritage's Hilton made $8.1 million last year. I'm wondering whether he'll now find it appropriate to make do with lots less until his company recovers... be well advised to steer very, very clear of the homebuilders."

  • Beazer Buys Breathing Room In Battle With Creditors (Atlanta Journal Constitution, Oct. 29th): "Troubled homebuilder Beazer Homes (NYSE:BZH) agreed to pay [its creditors] an additional $12.50 for every $1,000 in debt [or $18 million] in exchange for forgiveness of any violations on loan agreements of $1.5 billion, until May 15. [Last month] creditors claimed that Beazer's failure to file a certified Q2 financial report breached loan terms, triggering a request for full repayment... Beazer continues to insist... that the absence of the report was not a violation [and] is asking a judge to put a stop to the creditors' collection effort."

  • More Layoffs From Levitt and Sons (Builder Online, Oct. 29th): "Embattled builder Levitt and Sons notified the state of Florida that it is laying off 158 construction employees in Fort Lauderdale by year's end. The layoffs come less than a week after the builder received four default notices totaling more than $300 million from two of its lenders. In September, Levitt slashed its payroll by 200 employees, and two weeks ago... temporarily halted all projects as it tries to renegotiate its massive debt. The builder's parent company, the Levitt Corp. (LEV), has [stated] it would no longer funnel money to the company unless it obtains restructuring agreements from its lenders."

  • HUD Settles Captive Reinsurance Claims For $1.4 Million (Inman News, Oct. 29th): "Without admitting wrongdoing, six major homebuilders: Pulte Homes Inc.(PHM), KB Home (KBH), Beazer Homes USA (BZR)., The Ryland Group (NYSE:RYL)., Technical Olympic USA (TOA), and Meritage Homes (MTH)... have agreed to pay nearly $1.4 million to settle charges that subsidiary companies they created to "reinsure" home buyers' title insurance policies violated the Real Estate Settlement Procedures Act [RESPA]. The settlements, [with] the U.S. Department of Housing and Urban Development, follow two earlier settlements [where] five major homebuilders and one lender agreed to pay $3.55M to settle charges that payments they received under captive reinsurance schemes violated RESPA."

  • Small Builders Say Opportunities from the Fallout Are Rare (Builder Online, Oct. 28th): "The Orange County Business Journal [reported that] local builders now have land opportunities that weren't available to them 12-18 months ago. Randy Blanchard, CEO of Ranco Realty Group... paid $37.5 million for properties that Centex (CTX) reportedly bid on for $58 million... [But] most builders around the country don't report similar opportunities... Sellers have not come down in their expectations of the land's value... Sean Doughtie, president of Mayfield Homes: "Most local banks won't write construction loans today... "The banks want to see builders move some inventory... I don't see credit opening up until March or April of next year."

  • Homebuilders To Benefit From SoCal Fires? Not Likely (Herb Greenberg in Seeking Alpha, Oct. 25th): "The most ridiculous thing I’ve heard... is that homebuilders (as in the public ones) will benefit from the southern California fires. The only builders likely to benefit will be private contractors. And the biggest single tract builder in San Diego, Pardee Homes, is own by Weyerhaeuser (NYSE:WY). The obvious cast of characters will benefit, including appliance makers and furniture retailers/makers. Would be interesting to see how Ethan Allen (NYSE:ETH), as a proxy for the furniture industry, has done in the wake of other home-destroying disasters."

Commercial Real Estate and Real Estate Investment Trusts (REITs)

  • SKB Acquires 255,000-SF Project for $85M (Globe St., Oct. 29th): "Scanlan Kemper Bard Cos. of Oregon has acquired the 254,639-sf Pacific Park Plaza office complex in Honolulu from Transpacific Development Co. for $85 million. The complex... includes a 214,465-sf class A office tower of 15 stories, a 40,174-sf two-story class B building and a five-story parking garage with 557 spaces... The complex, which was developed in the 1980s, was 95% leased at the time of the sale. SKB says that the high level of leasing reflects the fundamentals of the Kapiolani Corridor submarket, near the central business district of Honolulu."

  • SDS Procida Borrows $94M For Condo (The Real Deal, Oct. 29th) New York: "Chicago-based Corus Bank (CORS) has provided $93.5 million in construction financing for SDS Procida Development's new 85-unit luxury condominium, the Dillon. Smith-Miller + Hawkinson Architects designed the 204,400-square-foot project, which is set to rise at 425 West 53rd Street."

  • Hilton Adds Nassetta as President, CEO (Globe St., Oct. 29th): "Hilton Hotels Corp. (HLT-OLD) and the Blackstone Group today confirmed the appointment of Christopher Nassetta as president and CEO of Beverly Hills-based Hilton (HLT-OLD). The appointment comes just five days after the Blackstone Group's real estate and corporate private equity funds wrapped up its $26 billion acquisition of Hilton. A source at locally based Blackstone [says] Nassetta will be based in Beverly Hills, CA. He also notes that the transition will be completed in the next three to four weeks."

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