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"
"I suspect that like any market, the subprime market will ebb for a time, but as long as there are people with less than sterling credit out there who want to buy a home and as long as there are banks willing to lend them money, then the market will survive. Junk bonds survived Michael Milken, derivatives survived Orange County, hedge funds survived Long Term Capital Management and subprime mortgages will survive New Century Financial."- Wall Street Journal's Tim Annett. (The Ticker, May 7th)
Real Estate Sales and House Prices
- The News Isn't All Bad in Florida Real Estate (Int'l Herald Tribune, May 7th): "In Miami… inventory of unsold homes in April was up 58% over April 2006, but brokers say… smaller condo units in prime locations and large luxury condos are in demand… especially those designed by a star architect and loaded with hotel services. Prices for homes on prime waterfront lots, including exclusive islands like Hibiscus and Sunset… are also stable… Florida Association of Realtors: Statewide, condo sales fell 32% in March and single-family existing homes were off 28% compared with March 2006... Jacksonville and Gainesville in the north… which did not experience rampant overdevelopment, have not felt the impact of the downturn."
- King County Home Prices Keep Rising, Bucking National Trend (Seattle Times, May 7th): "Northwest Multiple Listing Service: For the fourth month in a row, the price of King County houses has risen, reaching a median $465,000 in April… Windermere Real Estate analysis: The majority of single-family homes sold within Seattle last month went for more than asking price… Three bedrooms houses… on average sold for 100.25% of asking. Five-bedroom houses sold for… 97.6% of asking. Some 64% of all Seattle houses sold within 30 days… House and condominium inventory is up sharply from year-ago totals. In King County, [condo inventory] was up 74% last month, while the number of houses increased 38%."
- Statistics Show Home Prices are Soaring (Pacific Daily News, May 5th): "Market tracker The Captain Company The median price of Guam homes has soared to $195,450 during Q1'07, a whopping increase from $170,000 the previous quarter… Nearly double the 2003 median price of $106,000… The new median price has been boosted primarily by sales of higher-priced properties, such as brand-new homes and better-than-average homes… [and] is about five times the $39,317 annual median income of Guam households… The number of units sold increased from 182 to 196 homes between Q4'06- Q1'07... Median condominium prices dropped from $115,125 to $90,000 between Q4'06-Q1'07… The number of condo units sold increased from 84 to 119."
- Early 2007 Reports Indicate Softening in Some House Prices (Brooklyn Daily Eagle, May 3rd): "Brooklyn appraisal firm HMS: Brooklyn home prices in 16 communities rose almost 9% in Q1'07 to $757,000 from $696,000 in Q1'06… Single-family houses increased from $607,000 to $688,000, multi-family from $989,000 to $1.164 million, and condos from $437,000 to $551,000 within 12 months… Bed-Stuy, Bushwick and Brownsville were not included in this report. This could have statistical significance because those three communities have a high volume of house sales [and subprime loans] every year… Five neighborhoods showed increases — Williamsburg, Bay Ridge, Park Slope, Crown Heights and Boerum Hill — five others showed declines — Greenpoint, Carroll Gardens, Clinton Hill, Brooklyn Heights in Sheepshead Bay."
Real Estate Investing and Sentiment
- Where Real Estate and IT Meet (IT Management, May 7th): "Buying, building, leasing or managing facilities… generates an abundance of transactions. [Poor management] results in millions draining out of a large corporation's coffers… The Financial Accounting Standards Board (FASB) is considering changes to lease accounting [such as] "moving leases to the balance sheet." Addressing the real estate blindness of traditional ERP and business process management suites, Accruent's real estate management software offers a centralized view of the data produced by the many entities involved (finance, legal, facilities management, etc.)… filtering it through a business intelligence platform derived from Business Objects... [Among] Accruent's customer base: Morgan Stanley, Boeing, and Pfizer."
- Eight Real Estate Sites Break into Hitwise Top 100 (Inman News, May 7th): "Hitwise, which ranks sites according to their market share of total visits based on a sample of 10 million Internet users, reported an 8% "churn" among the top 100 real estate Web sites in April. That means eight of the top 100 real estate Web sites in March were ousted by newcomers in April. Making the top 100 list is a significant achievement because those sites hog more than two-thirds of traffic in the category, or 69.6%. Two sites that came out of nowhere to break into the top 100 were eppraisal.com and the MRMLS Central Site."
- Home Buying Institute for Sale -- Large Real Estate Website With Strong Search Engine Performance (EMediawire, May 7th): "HomeBuyingInstitute.com, one of the Internet's largest libraries of home buying tips and advice, is now available for purchase… Brandon Cornett began building the website at the end of 2005, with the goal of making it one of the largest home-buying resources on the Web. Cornett: "We have worked hard to create a website that serves home buyers with quality information... HBI appears in search engines alongside such home buying 'heavies' as HUD.gov and Money.CNN.com."
Housing Affordability Impact
- Another Round of Beach Cleanups Ahead (Honolulu Star Bulletin, May 7th): "Much attention on Hawaii's homeless has focused on Ala Moana, Waikiki and Waianae… The North Shore [has] a growing number of homeless people… camping on beaches or living in their cars because they cannot afford the skyrocketing housing prices. Property tax increases in recent years hit the North Shore the hardest, and new expensive vacation rentals are driving rents up. North Shore Regional Group Realtors: Within the last three years, rental prices have almost tripled... The cheapest price for a one-person studio is about $450 to $650 a month… even those are extremely hard to find."
Mortgates and Real Estate Lending
- Bank of America Launches No-Fee Home Mortgages (Reuters, May 7th): "Bank of America Corp. (NYSE:BAC) on Monday said it is offering no-fee mortgages nationwide… The second-largest U.S. bank won't charge for applications, appraisals, loan originations, title insurance and flood certifications… nor for private mortgage insurance -- often required for borrowers who put less than 20% down… The program does not cover refinancings. Borrowers would still be responsible for transfer taxes, recording fees, their own title insurance, and legal fees, among other charges… BAC hopes its No Fee Mortgage PLUS program will add customers amid the current U.S. housing slowdown… Its launch generated a record number of applications to buy homes."
- Sluggish Night for Real Estate Rates (Inman News, May 7th): "Long-term mortgage interest rates barely moved Friday, and the benchmark 10-year Treasury bond yield slipped to 4.64%. The 30-year fixed-rate average rose slightly to 5.77%, and the 15-year fixed rate held at 5.5%. The 1-year adjustable gained to 5.61%. The 30-year Treasury bond yield decreased to 4.81%. Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5."
Subprime Fallout and Foreclosure Impact
- House Hunters With Weak Credit Get Shut Out (Cincinatti Enquirer, May 7th): "Jay Brinkmann, vice president, Mortgage Bankers Association: This year, the volume of subprime mortgages is expected to drop by about 30%… Over the last few months, Calif. Mortgage broker Louis Allee, said he's seen fewer clients qualify for 100% home financing… Jim Gardner, New Jersey's Department of Banking and Insurance: In April, [NJDBI] barred two companies, Atlanta-based SouthStar and LoanCity of San Jose, Calif., from doing business in the state because they lost financial backing and weren't able to fulfill existing loan obligation."
- Foreclosure Epidemic in Minneapolis: Who's Behind This Mess? (Colin Peterson in Seeking Alpha, May 7th): "10.9% of the houses in North Minneapolis have already gone through a foreclosure sale…This is an undesirable part of town… As you can see, Mortgage Electronic Registration System [MERS] is the most common listing for the mortgagee. However, MERS is just… a clearinghouse for loans, allowing mortgage bankers to trade loans electronically without having to record the trade in the county land records… Rounding out the list are… Fremont (FMT), HSBC (HBC), WaMu (NYSE:WM), Option One, and New Century (NEW)… Surprisingly, Deutsche (NYSE:DB), US Bank (NYSE:USB), and Wells Fargo (NYSE:WFC) made quite a few bad loans in North Minneapolis. I would be very interested to know who originated the loans that are now being serviced by MERS."
- Report Says Foreclosures Dropped in April (DS News, May 7th): "ForeclosureS.com: Foreclosures in April dropped 14.3% to 100,000 pre-foreclosure filings compared to 115,700 filings in March… Also, the number of REO or bank-owned property filings dropped 14% to 40,000 properties when compared to March… California led the nation in pre-foreclosures after recording 65,208 foreclosure filings and 33,045 auction filings. Meanwhile, the Lone Star state achieved the number one spot in REO filings after Texas recorded 19,399 REO filings in April -- a number that is 22% higher when compared to April 2006… On a per-capita basis Colorado had the most REO filings after calculating 8.1 REO filings per every 1,000 households."
- Buffett on the Subprime Mortgage Meltdown (FP Trading Desk, May 6th): "Warren Buffett said [Friday at the Berkshire Hathaway annual meeting in Omaha] further "screw ups" in the subprime mortgage sector in the United States could be an opportunity for those with buying power. However... the world's most famous investor added that the subprime meltdown need not spread like a contagion as long as bond rates and the unemployment rate remain low."
- Subprime Fallout Hits General Motors (Eddy Elfenbeing in Seeking Alpha, May 4th): "How’s this for subprime fallout? Profits at General Motors Corporation (NYSE:GM) dropped 90% from last year due to bad loans at its GMAC unit… GM was improving so nicely. Last year, the company only lost $2 billion compared with the $10b it lost in 2005. But now the subprime mess has caught up with GM. Last year, GMAC’s Residential Capital earned $201 million. This year, it lost $905 million. GM had recently sold 49% of its stake in GMAC to Cerberus Capital Management. Bloomberg noted that the yield on GM bonds due in 2033 fell to 9.2%."
- UBS Scraps Costas's Hedge Fund After Mortgage Losses (Bloomberg, May 3rd): "UBS AG, the world's biggest asset manager, is winding down John Costas's hedge-fund, Dillon Read Capital Management after 11 months of trading and returning client money because of losses of 150 million Swiss francs ($124m), attributed to the U.S. subprime mortgage market… DRCM was slow to start the fund and raise capital, and its challenges culminated with… the subprime lending market [crisis], Costas said… More than 50 [subprime] lenders… have gone bankrupt or sought buyers since early 2006… The unit managed about $3.5 billion of UBS's own money and another $1.2b raised from outside clients last year. Closing DRCM will cost $300m and save $200m a year."
Global Impact and Alternatives To The Housing Slump
- Canada Building Permits Grow at Fastest Pace Ever (Bloomberg, May 7th): "Statistics Canada: Reflecting contractors' plans for new housing and commercial developments, the value of permits issued by municipalities rose 27% to a seasonally adjusted C$6.12 billion ($5.54 billion), rebounding from a 23% decline a month earlier… Canada, which sits on the largest pool of oil reserves outside the Middle East, has escaped the brunt of the U.S. housing slowdown as high global energy prices spur domestic job growth and consumer spending. Canadian home prices rose to a record in March, according to… the nation's realtor association... Canada's economy grew 0.4% in February… double the pace that economists had expected."
- US Falling House Prices - Impact on Global Economy (Financial Mirror, May 3rd): "Jürgen Michels, Director, Economic and Market Analysis at Citigroup: In Spain, Italy and France the increases in ECB rates have had an impact on domestic demand, leading to a slowdown in housing activity and probably also consumption. Housing starts have fallen rapidly in Spain and France and the Spanish market has been particularly hit because of the high proportion of borrowers on floating-rate mortgages… “Germany did not have this huge boom in housing that was credit-financed…" House prices in fact fell and may stabilise this year for the first time in many years."
Macro Impact, And Will The Housing Slump Cause A Recession?
- Black & Decker Sees Record Quarter (The Examiner, May 7th): "Black & Decker, (BDK) the home improvement and power tool company announced record Q1 sales… selling $1.6 billion worth of merchandise… John Kearney, Morningstar Analyst: “While only 20% of the firm’s sales are directly tied to new residential construction, the U.S. housing slump has forced BDKs large retail customers to reduce inventory [due to] lower consumer spending. By shifting 70% of its production to low-cost countries, BDK has been able to reduce overhead and expand operating margins.” At the end of Q1, BDK reported assets totaling about $5.28 billion, up from $5.25 billion in Q1'06."
- Metals Bubble Poised to Burst on Increasing Supplies (Bloomberg, May 7th): "The metals bears are convinced that consumption may drop partly because China, the biggest user, is attempting to reduce investment through interest-rate increases and lending curbs after the economy expanded 11.1% in Q1. Stephen Roach, chief economist at Morgan Stanley: Demand is also weakening because of a slowing U.S. economy and a consumer-driven pursuit of alternatives to historically expensive copper and nickel… World supplies of copper outpaced demand by about 50,000 tons in Q1, Stockholm-based copper producer Boliden AB said May 3. Global output rose 8% in the period, twice as much as demand."
- Hey Buddy Can You Spare a Listing? (Mike Thomas' Orlando Sentinel Blog, May 7th): "A good chunk of Central Florida's job growth since 2004 has been in… real estate! Building houses. Selling houses. Inspecting house. Financing houses. Then people took the money they made from real estate and bought houses. So when the business of houses takes a hit, a… sizable chunk of the economy takes a hit, which, impacts the cost of housing… Not only do house prices have to get back to a sustainable level, but the percent of the workforce in real estate has to return to its proper share of the economic mix."
- Dallas Fed President Fisher: Dead Wrong On Subprime Woes Not Spreading (Michael Panzner in Seeking Alpha, May 4th): "Reuters: S&P says: "The sector is now about 1 1/2 years into what we believe may be a roughly three-year downturn. Our home-builder rating bias is emphatically negative..." About 13% of U.S. home builders were on review for a possible downgrade by S&P at the end of Q1, while 22% had negative outlooks, meaning a downgrade is likely over the next two years. Ratings weakness is concentrated in junk-rated home builders; all eight investment-grade home builders have stable outlooks. WSJ: Over the past two weeks, Moody's Investors Service cut credit ratings on more than 30 bonds that were issued in 2006 and backed by pools of "subprime" mortgages."
- PIMCO: We're in the Middle of Housing Downturn (Libby Mihalka in Seeking Alpha, May 3rd): "PIMCO Research analysts: [The subprime crisis] is a meaningful source of risk to the housing market, since defaulting buyers have starter homes (less expensive homes) which are the first rung on the housing-market food chain… Rising delinquencies in a high-growth part of the market could be a serious concern…The reason the spill over effects on the economy and corporate earnings aren’t more severe becomes clear when you break the U.S. consumer into quintiles. The bottom 20% of U.S. consumers generate only 8% of consumer spending. These are the very consumers that are caught in the sub-prime lending squeeze and could lose their homes. Conversely, the top 10% represents about 40% of consumer spending and these consumers are unaffected."
Homebuilders And Housing Stocks
- Investing in Last-Man-Standing Companies (Larry MacDonald in Seeking Alpha, May 5th): "Last-Man-Standing investing: When firms in a beleaguered industry exit or cutback production, their market share defaults to the survivors. The survivors, in a sense, are growth companies in the unlikeliest of places -- a declining sector… The forestry industry in Canada is so cheap… that member companies are trading at 3-6 P/E and below book value. No one wants to go near lumber suppliers when the U.S. housing sector is imploding and Canadian dollar is rising; paper suppliers are outcasts because the world is switching to the Internet… The “last-man-standing” companies in this sector should include Catalyst Paper Corp., Canfor Corp., and Abitibi Consolidation Inc. (ABY)."
- Hovnanian Says Q2 Losses Will Exceed Forecasts (Seeking Alpha, May 4th): "Hovnanian Enterprises said its Q2 loss would come in at $0.30/share, far worse that the company's original guidance of a $0.05-0.20/share loss. It said it expects a $15-20 million loss on abandoning deposits on land it would not develop, which will increase its per-share loss to $0.45-0.50. The #6 U.S. homebuilder said, "Adverse subprime publicity has damaged homebuyers' psychology, lowering demand and raising use of sales incentives." Hovnanian delivered 3,196 homes, down from 4,555 last year. Cancellations fell from 36% to 32% q/q. Net contracts were down 21% to 3,116. Shares gained 1.1% Thursday to $24.57; they have fallen 38.2% over the past year."
- Homebuilder Panitz Closes its Doors (Jacksonville Daily News, May 3rd): "Panitz Signature Homes [will close]. The company will sell 11 homes, 25 home sites and 32 townhome sites during a May 19 auction… The family-owned, third generation luxury homebuilder has built thousands of homes in the Northeast Florida area since opening in Jacksonville in 1980 as Panitz Homes. In 1994, Panitz Homes became the first builder in Jacksonville to sell to a public homebuilder, Beazer Homes. After operating for nine years as a division of Beazer, Lee and Sandra Panitz — along with son Rob Hamby — left Beazer to return to custom home building."
Commercial Real Estate and REITs
- California REIT Buys Three Senior Living Communities (Memphis Daily News, May 7th): "Nationwide Health Properties, a REIT specializing in senior housing and long-term care facilities, has bought three Memphis retirement communities for nearly $30 million… Nationwide bought the properties under the limited liability company NHP SH Tennessee LLC. The seller, HRT of Tennessee Inc., is affiliated with Nashville-based Healthcare Realty Trust Inc., a REIT specializing in outpatient healthcare facilities… Kennington Pointe sold for $11m… Heritage Place sold for $11.6m… Franklin Park, which sold for $7.1m… In addition to the sales, HRT assigned its rights as landlord to NHP. "
- CapLease Reiterates 1Q Guidance (Forbes, May 7th): "Capital Lease Funding Inc., a REIT that owns single-tenant commercial properties, said Monday it expects Q2 funds from operations in the range of $0.21- 0.23/ share, which includes about $2.6 million of expenses related to the company's April 18 acquisition of a $364.4 million 18-property net lease portfolio. FFO, which adds items such as amortization and depreciation back to net income, is considered a key measure of REIT strength. CapLease said it swung to a loss in Q1, reported FFO of $0.24/share… and continues to expect full year 2007 FFO in the range of $1.05-$1.08/share.
- Accredited Home Lenders Announces Amendment to Agreement with Wachovia (Street Insider, May 4th): "Accredited Home Lenders, Inc. ("AHL") and Accredited Mortgage Loan REIT Trust, an indirect subsidiary of AHL Holding Co, entered into a Master Repurchase Agreement with Wachovia Bank, (NASDAQ:WB)… The Company guaranteed AHL's and REIT's obligations under the Wachovia Master Repurchase Agreement... AHL and REIT may sell and Wachovia must purchase certain mortgage loans...The maximum amount under the Wachovia facility has been increased from $500 million to $750 million, of which the entire $750 million is committed at the date of the Amendment."
- REIT Meets Expectations of Analysts (Denver Business Journal, May 4th): Apartment Investment and Management Co. (NYSE:AIV) REIT -- called AIMCO-- hit analysts' projections with Q1 funds from operations of $74.1 million, or $0.74/share. [Up] from $66m, or $0.68, in FFO for Q1'06. Analysts anticipated FFO of $0.73-$0.74/share… AIMCO posted $25.2m, or $0.9/share, in net income for Q1'07… [down] from $84.1m, or $0.63/share, in Q1'06 earnings... AIMCO attributed the income drop to lower gains on property sales of $92.7m...The apartment owner's revenue for Q1 inched up roughly 7% to $430.8m from $402.9m in Q1'06… The company expects to have FFO of $0.78-82/share for Q2'06. For 2007, AIMCO predicts FFO of $3.25-$3.40/share."
Tracking the Housing Market and Homebuilder Stocks |
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.