Housing Market Tracker - Homebuilder Review

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

"This sends a strong message that somebody is willing to part with land at a significant loss." - John Burns, a home-building consultant based in Irvine, Calif., who consulted with Morgan Stanley on its purchase of 11,000 home sites from homebuilder Lennar at bargain prices. (Wall St. Journal, Dec. 3rd)

Homebuilders, Housing Stocks and Housing-Related Stocks

• Troubled Builders, Bargain Seekers United (Wall St. Journal, Dec. 3rd): "Lennar Corp. (LEN) has sold about 11,000 home sites to... the real-estate arm of Morgan Stanley (MS) for $525 million... signaling that investors have begun to pounce on bargain deals. The sites... were valued on Lennar's books at $1.3 billion as of Sept. 30. The low price the venture paid [shows] how land values have plummeted... in some markets between 40% and 60%... Lennar, which will have a 20% ownership stake in the venture, will have the option to buy back certain home sites... The Lennar deal comes just weeks after D.R. Horton Inc. (DHI), sold nearly 7,000 acres outside Phoenix for $70M."

• Not Covering My Homebuilder Shorts Yet (Colin Peterson in Seeking Alpha, Dec. 3rd): "Another reason for the [current] rally is the eager anticipation of another Fed Funds rate cut. Bespoke did a post showing the reaction of various sectors to the last three Federal Reserve interventions in our markets. Oops! Similar results in the homebuilding sector, of course. Rate cuts aren't going to keep the lights on if you're a real business that made bad investment decisions... You can see that Fed interventions and mistaken bullishness have caused sharp rallies, but they are fleeting and reality quickly catches up with the market."

• Homes Out, Industrial Projects In (Palm Beach Post, Dec. 3rd) Florida: "In November, Centex Homes (CTX) asked the St. Lucie County Commission to rezone 104 acres [in St. Lucie] for light industrial development. Commissioners unanimously agreed to the change for the property, Hawk's Reserve. Centex got approval two years ago to build 531 homes at the spot, but the weak housing market meant it never started construction. The company decided to try for the switch several months ago, when the Economic Development Council of St. Lucie County suggested [it], said Ken DeLaTorre, director of land entitlement for Centex: "Who's going to know if the market is going to turn around or not?"

• Land Deal Could Bring Mega-Store To SE Side (AZ Starnet, Dec. 2nd): "A deal is in the works... to sell or lease as much as 100 acres of the University of Arizona's Tech Park to commercial developer Vestar Development Co. Vestar would build nearly 1 million square feet of retail... John Bremond, president of KB Home's Tucson division: Some of the land for the retail center would come from UA, with the remaining property — between 40-70 acres — being sold by KB Home (KBH). KBH had planned to build nearly 600 homes on 124 acres at the park. KB still plans to build 600 homes on the land remaining after the sale, in the form of higher-density residential areas."

• Hawthorne Stands Strong During Real Estate Bust (Southwest Florida News Press, Dec. 2nd): "Robin Willis, an associate at the sales center [of] the gated community Hawthorne in Southwest Florida on Old U.S. 41: "We're right on track. We have 51% of our homes sold." The Centex Homes community, located between Old 41 and Imperial Parkway, rests on approximately 220 acres. At build-out, the community will have 443 homes... "The market started to slow down in November 2005, but we've kept on doing well," Willis said. "It's been a pleasant surprise. We sold nine homes in the past three weeks. We even started selling preconstruction homes again."

• How To Spot Signs The Housing Crisis Is Nearing Bottom (CNN Money, Dec. 2nd): "Builder stocks are another sector that may tip investors off to better times, since they tend to rally before the housing market itself rebounds. Shares of residential builders have been pummeled this year as the companies have suffered losses and huge impairment charges to write down land values. Industry ETF iShares Dow Jones U.S. Home Construction (ITB), was down about 60% so far this year as of Nov. 28. Stephen Kim, Citigroup real estate analyst: "Homebuilders will rally first... [when] the housing situation is less worse than initially feared." Bob Doll, global CIO for equities at BlackRock Inc.: "Before we actually see a housing rebound, home-builder stocks will recover."

• K. Hovnanian Terminates Wildwood Project (Cape May County, Dec. 1st) New Jersey: "K. Hovnanian (HOV), the developer the city named as a re-development partner in 2003, announced on Nov. 21 it is withdrawing and terminating its designation as redeveloper of Sunset Cove, a residential village proposed for the city's back-bay redevelopment. “This decision was not made lightly, given the substantial investment of time and money Hovnanian, its associates and consultants have made pursuing the development of Bayside,” wrote Lewis Kurland, legal counsel for Hovnanian... According to reports, K. Hovnanian paid $18 million for the municipally owned land and $2.5M for the self-storage facility. The plan was to build 298 homes."

• The Fast Track (IndyStar, Dec. 1st): "Recent hirings in Indianapolis real estate: Cara Gray hired as marketing manager; Jeff Forey and Barry Wilkins hired as new home consultants by M/I Homes (MHO)."

• Zacks Analyst Blog Highlights: Lennar, Toll Brothers, Countrywide, MGIC and Washington Mutual (Reuters, Nov. 30th): "From Thursday's Zack's Analyst Blog: New Home Sales There has been some improvement on the inventory front, with SAAR inventories down 2.3% for the month and down 6.7% y/y. However, even within that number there is some cause for concern: inventories of completed houses are actually up 13.7% y/y. It is the inventories of houses under construction that are down most sharply, down 17.3% y/y and the inventory of not-started houses (basically improved lots) is down 9.5% y/y. Still, based on the as-yet-unrevised October selling rate, the months of supply dipped to 8.5 months from 9.0 months in September, but still up from 7.1 months a year ago."

Tracking the Housing Market and Homebuilder Stocks You can track developments in the housing market, homebuilder/housing stocks and review subprime news 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.