Spanish, UK- And Now Canadian Housing Stress [Housing Tracker]

Quote of the Day

"We can only attend to 300 a day. Hundreds are being turned away." - An official at the Águeda Díez jobless-claims center in Madrid's Carabanchel district. The district is home to many immigrants who found, then lost, jobs in Spain's construction sector. (Wall St. Journal, July 16th)

Global Home Prices

Spain Girds for More Pain as Housing Stalls. “Analysts say a glut of unsold new homes, tighter credit conditions and fears of a looming recession will likely further weaken the Spanish housing market, [already in a slump.] They predict it will be one of the hardest-hit housing markets in Europe. Martinsa-Fadesa -- which primarily built hotels, shopping centers and condominiums -- filed for protection from creditors Tuesday. The news sparked a selloff in the stocks of other construction-related companies and homebuilders on fears that Martinsa-Fadesa could be the first of many distressed firms in the real-estate sector. Shares of Sacyr-Vallehermoso and Inmobiliaria Colonial, both large residential developers, fell 8.4% and 12%, respectively.” (Wall St. Journal, July 16^th)

Brazil Stocks Gain, led by Homebuilders; Mexico Bolsa Rises.  “Brazilian stocks gained for a third day, led by homebuilders, after agreements to buy houses jumped and a slide in oil prices sent airlines higher. Rossi Residencial SA jumped the most in more than two months after it said second-quarter presales contracts more than doubled. Tecnisa SA rose after saying its contracts increased more than fourfold. Banco Itau Holding Financeira SA gained on a report it plans to merge brokerage operations with a Japanese securities firm.” (Bloomberg, July 16^th)

Canada Home Resale Prices Ebb for First Time in Almost a Decade. “The fall in home prices is a sizeable dip in this indicator, given that not too long ago the Canadian housing market was witnessing double-digit price gains.” - Millan Mulraine, an economist at TD Securities in Toronto. (Bloomberg, July 15^th)

Deloitte Administrates Home Builders Squeezed By Crunch. “Deloitte has been called in to administrate a house-builder in South Wales, which was forced to abandon building projects halfway due to the credit crunch. Ballantyne Homes has left 15 homes incomplete at Vivian Park in Port Talbot, with 20 other plots in varying stages of construction in Pembrey. Deloitte said it will take advice on how to dispose of the unfinished homes and will be in touch with people involved in the developments, the BBC reported.” (Financial Director, July 15^th)

Homebuyers Get A Break As B.C. House Prices Flatten. “While British Columbia bucked a trend that saw Canadian home prices fall for the first time this decade, the province's real estate market is squarely in the buyer's court with inventory up and the volume of sales dropping by 36% in June compared to June 2007. Despite B.C.'s strong economy that has so far helped it stay ahead in the real estate market, buyers here can expect to see prices flatten or even decline slightly, according to Cameron Muir, chief economist for the B.C.Real Estate Association.” (Vancouver Sun, July 15^th) 

Housing Transactions Slump to Lowest in 30 Years, Says RICS.  UK: “The number of homes changing hands has slumped to its lowest level since records began 30 years ago. Royal Institute of Surveyors [RICS], estate agents sold an average of just 15 properties each during the three months to the end of June - the lowest level since RICS began collecting data in 1978. RICS said that stricter lending criteria from banks and building societies have left many people unable to get a mortgage. Estate agents now have an average of 84 unsold properties on their books, compared with just under 90 in May, after new instructions fell for the sixth month in a row.” (UK Telegraph, July 15^th)

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

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Comments

[johnthebear]

Please give an update on CMBS and CDO for commercial properties. Also, your insight on price trends on shopping centers, office buildings and warehouse properties, USA and world markets.

How much effect has raising lending standards to past norms affected the number and size of commercial loans? Did standards decline in Europe as much as they have in the US?

How long do you think that it will take for securitizing commercial mortgages to reach 50% of the level that existed prior to 2006?

Is the LBO market dead without securitized mortgages?

How will the big investment banks make it without the securitized securities market?

Will we every believe in the ratings agencies again?

Thanks for your thoughts.

[Judy Weil,SA Editor]

Dear John the Bear,

While I'd like to be able to answer all your questions, I fear I'm not qualified to answer authoritatively on any of those subjects. The first three are interesting and give me an idea of what subjects to research for upcoming Housing Trackers, which, as you know, is a compilation of excerpts from internet articles written on various aspects of the real estate market.

I don't think I or anyone else can prophecy what will happen in the commercial real estate market. I know from what I've read that there wasn't as much overbuilding in commercial real estate because of the previous downturn, but that doesn't mean lending standards necessarily stayed high. I will do some research, but I do not know the answer to that. I have even less an idea as to the lending standards for commercial re in Europe.

Off the top of my head, some of the sources I use for commercial real estate research are: Globe St.com, Default Servicing News, Originator Times, Housing Wire, Commercial Property News, CoStar Group, Inman News, Property Shark, Curbed and more. They are all excellent sources of news in this area. Looking at them might give you some more insight to your questions.

Good luck, and thanks for the research ideas,
Judy

[johnthebear]

Judy Weil, SA Editor

Thank you I appreciate your column and response to my questions. You do a very good job.

[Judy Weil,SA Editor]

Dear John the Bear,

Thanks for the kind words. Just wanted to give you a heads up. At your suggestion, one of today's Housing Tracker's is about the state of the commercial real estate market, containing some information about CMBS and CDOs. seekingalpha.com/artic...

All the best,
Judy