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Georgia Economy Facing Risks from Housing Market

Dr. Rajeev Dhawan, director of the Economic Forecasting Center at… Georgia State University: "The state's default rate on home loans, especially in the subprime market, is below the national average, [but] we've seen a steady rise in foreclosures… The damage has begun and only time will tell… how much of an impact it will be on the region. This is undoubtedly the biggest risk factor for the local and state forecast…" Atlanta's total housing permits fell 5.2% in 2006. Permits will drop 21.3% in 2007, but will rise 3.1% in 2008 and increase 6.1% in 2009.

» washington.bizjournals.com [ Contribute: submit link / submit article / submit company ]

NY probe into alleged attempts to inflate property values

As part of a New York state investigation into whether mortgage brokers pressure appraisers to inflate property values, First American Corp. (FAF)… A borrower who gets a home loan based on an inflated appraisal and falls behind on payments would have difficulty selling or refinancing for enough to pay off the mortgage… EAppraiseIT, which values up to 15,000 homes a year in NY… appraiser Mitchell, Maxwell & Jackson and broker Manhattan Mortgage Co… were subpoenaed for information about NY appraisals… In a study last year by October Research Corp. of Richfield, Ohio, 90% of appraisers said they felt influenced to write bogus appraisals. Four years ago, that number was 55%. Seventy-one percent said mortgage brokers asked them to do it.

» latimes.com [ Contribute: submit link / submit article / submit company ]

Manhattan Condos Tighten the Rules

Historically, condos have cost more, partly because they had looser rules, and partly because of their scarcity. Although both are changing, the price differential between condos and co-ops has remained roughly the same. Nor has the shift toward co-op-style behavior so far seemed to affect condo prices. The average sales price for Manhattan condos in the first quarter of this year was $1.45 million, 28% more than the average sales price for co-ops, which was $1.13m, according to sales data from Prudential Douglas Elliman.

» nytimes.com [ Contribute: submit link / submit article / submit company ]

Silver lining in the housing bubble

Bubbles have silver linings because the infrastructure built during bubbles — the physical infrastructure and the cultural infrastructure — doesn't get torn down after they pop… All that new construction and renovation (fueled by home equity lines of credit) has upgraded the nation's housing supply… Towers of unsold condos in Miami won't be torn down. They'll be turned into hotels or office buildings… New services… like mortgage websites where lenders compete for the business of individuals, or Zillow.com, the wildly popular service that uses public data and sophisticated algorithms to appraise home values… empower consumers and contribute to greater transparency in the housing market.

» latimes.com [ Contribute: submit link / submit article / submit company ]

California: Marin is 1st County With Million-Dollar Median Homes

Marin County's median for resale houses reached $1,010,000 last month, the first time any California county passed the million-dollar mark… The median price paid for a Bay Area home increased last month to $659,000, a new peak. That was up 3.1% from $639,000 for March, and up 3.8% from $635,000 for April 2006… Prices have increased the last three months. DataQuick: "With sales this slow, prices would decline if there were a huge number of motivated sellers listing their homes. That doesn't appear to be the case. It's likely that potential buyers are biding their time, as are sellers.

» ocregister.com [ Contribute: submit link / submit article / submit company ]

Housing Permits Tumble, Starts Improve

The Department of Commerce said Wednesday morning construction permits fell to a ten-year low of 1.429 million. The 8.9% drop was the most severe in 17 years, and was well below the seasonally adjusted rate of 1.51 million forecasted by economists. Conversely, housing starts were unexpectedly up 2.5% to a seasonally adjusted annual rate of 1.528 million, ahead the 1.48 million pace forecasted.

[ PDF ] view document » census.gov [ Contribute: submit link / submit article / submit company ]

Housing's Roof Won't Cave In

Homeowners may well spend through the slump. With builders, lenders, and realtors slashing jobs, the housing bust is a serious drag on the economy. But there's a case to be made that despite the weakness in home prices, homeowners will keep spending enough to keep the economy on solid ground.

Here's the bullish case for the American consumer: First, people have new sources of spending money from rising wages and salaries and a booming stock market. Second, the drop in home prices so far has been small. And third, even if there is a big hit to housing wealth, research suggests that consumer spending may not drop. Builders have borne the brunt of the slump by cutting the supply of new homes. Their cutbacks are keeping the growing backlog of unsold houses from getting completely out of control.

» businessweek.com [ Contribute: submit link / submit article / submit company ]

Mortgage Woes Force Banks To Take Hits to Sell Homes

An auction of nearly 100 foreclosed homes here Saturday showed that mortgage lenders are having to accept huge discounts in some cases to unload such properties.

A surge of foreclosures over the past year or so has left lenders struggling to sell a growing backlog of homes. Rather than relying on real-estate agents, the usual practice, some are turning to large-scale auctions to speed up the sale process.

Real Estate Disposition Corp., the Irvine, Calif., company that organized Saturday's auction of lender-owned homes, plans similar sales May 19 in Los Angeles and May 20 in Riverside, Calif.

At the San Diego sale, houses and condos typically sold for about 30% below the previous sale or appraisal prices. In a few cases, the discounts were around 50%.

A four-bedroom home in Oceanside, Calif., attracted a high bid of $495,000 at the auction, 33% below the sale price recorded in November 2005 for the property. One condo in San Diego sold for $120,000, less than half of its previous value.

» wsj.com [ Contribute: submit link / submit article / submit company ]

The Real Estate Industry, though Volatile, Offers Riches to Those Who Know Where to Look

While many Americans are worried that real estate prices have flattened and may even turn downward, some of the country's top commercial developers say there always is opportunity for those who manage their projects efficiently in a global market, focus on areas with growing demand and have the staying power to wait out the downturns.

After record growth in 2006, how does the commercial market look today? "Let's just hang on and hope these times continue," said William L. Mack, referring to the current era of low-interest rates, rising rents and soaring real estate investment. Mack is managing partner of Apollo Real Estate Advisors, a New York-based real estate firm with office, retail, hotel and other projects in 20 countries.

[ mp3 ] listen or download / » wharton.upenn.edu

Steve Forbes on US housing

“Housing construction was crackling before 2004 because of Congress' virtual elimination of the capital gains tax on primary residences in 1997. But the Fed-fed inflation fired up the housing boom to white-hot levels. Flush with cash, lenders lowered loan standards, and new players entered the mortgage market. Fraud blossomed--why examine too closely a borrower's 1040 when rising prices will bail you out if the borrower gets in trouble? Speculators paid people to file mortgage applications to buy houses and apartments and quickly flip them. Now the sale price of houses is falling in many parts of the country. To add insult to injury, property taxes continue to climb as assessments catch up with housing values.”

» forbes.com

U.S. housing slump has hit New York City's richest suburbs

MLS: The average price in Westport, Connecticut, fell 8.2% to $1.56 million in Jan.-April 2007, from Jan.-Apr. 2006.... In Chappaqua, New York… properties sit on the market an average of seven months before they sell, up from five months a year ago… The tightening of credit in response to rising subprime defaults has disrupted the real estate food chain… Prices fell as much as 18.8% this year in areas of… New Jersey, Connecticut and New York's Westchester County… Larchmont and Mamaroneck experienced a drop of 18.8% to $1.08m… In Bronxville, the slide was 12.4% to $1.34m. Home prices continue to climb in the wealthiest California suburbs, at a much slower pace.

» bloomberg

Realtors: Housing Cheers Turn Gloomy

We're in a real estate recession, said David Lereah, chief economist, National Association of Realtors, who surprised many this week when he announced he would leave the Chicago-based trade group in May. "I'm projecting the first [nationwide] price drop since the Great Depression. We're going to have negative home prices in 2007. His comments seemed uncharacteristic for Lereah, whose mostly blue-sky forecasts have long been criticized for stoking the fire as home sales bubbled to stunning -- and unsustainable, even by his own account -- levels. He had been the public face for the Realtors since the housing boom began in 2001.

» chicagotribune.com

Consumers Boost Borrowing Despite Prices

Consumers boosted their borrowing in March… showing resilience in the face of rising energy prices and a painful housing slump. The Federal Reserve's report, released Monday, showed consumer credit increased at a brisk annual rate of 6.7% in March… Up from February's 2.8% growth rate and the biggest increase since November… The Fed's measure of consumer borrowing does not include mortgages or other loans secured by real estate. The March increase pushed total consumer debt up by… $13.46 billion to a record $2.43 trillion… Economists were expecting consumer borrowing to rise by $4.5b in March.

» kiplinger.com

Lennar Tries Web Auction To Battle Housing Slump

Last year as the housing market weakened, Lennar was among the first U.S. home builders to aggressively discount homes in order to move inventory; now the Miami-based company is placing another potentially trend-setting bet by testing eBay-style Internet sales in the housing market.

Online auctions for homes are on the rise nationwide, but they are typically held by desperate homeowners or banks unloading foreclosed properties, not by major builders pushing blocks of brand-new dwellings.

The experiment in Indio is proving that changing home buyers' habits isn't easy. During the set auction period, the 14 Lennar homes garnered 692 bids but not one that met undisclosed reserve prices, the minimum price Lennar deemed acceptable. Mr. Harper's $386,000 tender was the highest received for houses with list prices of up to $460,000.

» wsj.com

Where Home Prices Are Hot Now

The housing news isn't all grim. Even as prices sag nationwide, there are several cities in the country where home values are climbing smartly.

Portland, Ore., Boise, Idaho, Seattle, Salt Lake City, Houston, Austin, and Charlotte and Raleigh, N.C., are among the cities bucking the national trend. Homes' appreciation there between the fourth quarters of 2005 and 2006 far exceeded the national average of 5.9%, according to the Office of Federal Housing Enterprise Oversight. In some markets, like Boise and Seattle, the appreciation jumped well into the double digits.

"All real estate is local, despite the headlines," says Lawrence Yun

» wsj.com

Home Equity to Home Options

A San Francisco-based company is offering a new way to tap your home's equity that doesn't involve a loan. REX gives you money now in exchange for a percentage share of the future appreciation.

The next big thing in loans isn’t a loan at all.The REX Agreement is not a loan, but a real estate investment agreement in the form of a purchase option. It gives homeowners a portion of their home’s equity in cash today—in exchange for the right of REX & Co. to share in a specified percentage of the future increase or decrease in the home’s value.

For the right to share in an agreed upon percentage of the future change in value of the home, REX & Co. pays the homeowner what is called an Option Exercise Price—equal to the current value of the home multiplied by the percentage of the future change in value granted to REX & Co. If the home increases in value, REX & Co. shares in the gain. If the home declines in value, REX & Co. shares in the loss. Simply stated, there is nothing like the REX Agreement in home finance.

» rexandco.com [ Contribute: submit link / submit article / submit company ]

Tighter Mortgage Market Shuns Bad Credit

Rising interest rates and dropping home prices have squeezed a market that had been propped up by risky loans and easy credit during the housing boom. As mortgage bills came due, foreclosures rose, and the easy credit dried up for families like the Shieldses.

"Now we're stuck in the apartment," said Shields, 31, a firefighter who lives in Manifee, Calif. His wife gave birth to baby Gabriella at the end of March, and they are running out of space without options for a house.

» washingtonpost.com

Vix: Subprime psychology of market volatility

Volatility is not something usually associated with bricks and mortar, observes Lex. But since late February when investors woke up to the problems in the US subprime mortgage market, Vix (a measure of implied stock market volatility) has risen from its eerily low levels of late last year. Having remained largely below 12 for that period, it bounced briefly to about 20 and is still above recent lows.

Part of that is heightened concerns about the risk of contagion. These surged again on Monday following a stark profit warning from American Home Mortgage Investment Corp.

» alphaville

Housing Decline: Quantifying the Impact of Tightening Credit

Everyone wants to know about housing and the economy. Is the sub-prime lending issue something that will extend to other mortgage classes? How much might home prices fall? Will the impacts lead to reduced consumer spending and an even greater economic effect?

Doug Kass, the popular hedge fund manager noted for his skill in short selling, has been one of the leading voices on this topic. His view is that this is a major economic problem and one that will affect the home prices and portfolios of individual investors.

Quantifying the Impact of Tightening Credit
I would conservatively estimate that about 55% of the subprime borrowers, 25% of the Alt-A borrowers and 15% of the prime mortgage lending borrowers will no longer be able to secure financing for new homes because of tightened conditions. (This will produce about a 25% drop in housing demand). Speculators and investors - who were responsible for nearly 20% of all home purchases in 2004-06 - will also find it more difficult to secure borrowings and it is likely that this buying category will revert back close to their historical demand role of about five percent of all homes. (This will result in another 10%-15% drop in housing demand). Finally, end of economic cycle conditions (lower consumer confidence, slowing economic growth and moderating job growth) should contribute to another 10% drop in housing demand - as it has done historically. In total (adding the above three influences), new home demand should fall off by almost 50% (vs. the rolling 12- month average showing a 17% drop off in 2007) - even before the effect of a market inundated by record foreclosures is considered.

http://usmarket.seekingalpha.com/article/30779
http://www.thestreet.com/i/dps/te/theedge1.html

Big surge in US mortgage delinquencies

The surge in mortgage delinquencies in the past few months is squeezing lenders and unsettling investors world-wide in the $10 trillion US mortgage market. The pain is most apparent in subprime mortgages…[but] there are signs it is spreading to other parts of the mortgage market. Subprime mortgage originations climbed to $625 billion in 2005 from $120 billion in 2001… Like other types of mortgages, subprime home loans are often packaged into securities and sold to investors, helping lenders limit their risks.

Subprime mortgages are loans made to borrowers who are considered to be higher credit risks because of past payment problems, high debt relative to income or other factors. Lenders typically charge them higher interest rates -- as much as four percentage points more than more-credit-worthy borrowers pay -- one reason subprime mortgages are among the most profitable segments of the industry.

The Journal says that they have also have been among the fastest-growing segments. Subprime mortgage originations climbed to $625 billion in 2005 from $120 billion in 2001, according to Inside Mortgage Finance, a trade publication. Like other types of mortgages, subprime home loans are often packaged into securities and sold to investors, helping lenders limit their risks.

» Search RealEstate-Specific Tags: mortgage delinquencies - mortgage markets - subprime mortgages
» Wall Street Journal / Finfacts

[mp3] Opportunities in the Housing Slowdown

If you flip channels late at night, you probably see the infomercials that portray investing in foreclosed houses as a sure thing. But talk to people doing it, and they'll tell you that buying a foreclosed home to flip or rent out isn't an easy, quick, cheap or surefire route to wealth. The pitch for foreclosures seems timely, with all the talk about homeowners overburdened with rising ARM payments and little or no equity who will throw their keys back at the bank. But the typical deal comes with more problems than the average do-it-yourselfer can handle.

Investing in a foreclosure can be rewarding if you're willing to do your homework. Compared with a year ago, foreclosures are up more than 60% nationally, according to RealtyTrac, an online marketplace for foreclosed properties. And the chance of obtaining a bargain is likely to rise as the slowing housing market forces foreclosing lenders to offer bigger discounts to lure a smaller pool of buyers.

» [mp3] Listen or Download Opportunities in the Housing Slowdown
» Kiplinger

US housebuilding slows dramatically. New home construction projects plunging 15 per cent to 1.5m - a level 27 per cent below the same month a year ago.

The US housebuilding sector slowed dramatically last month as new home construction tumbled to a six-year low, according to figures released on Friday which contained troubling signs for the economy.

The fall in permits for new homes suggests the housing market has reached a critical point as builders abandon speculative residential developments to curb oversupply. The largest US homebuilders do not expect the market to recover until early 2008, and have ended virtually all speculative building in a bid to clear inventories which extend more than seven months for single-family homes and more than eight months for condos.

» Search RealEstate-Specific Tags: US housebuilding - Housing Market
» Financial Times

Grim Outlook For Foreclosures Numbers In Massachusetts

Foreclosure data provider report: "Foreclosure numbers in the state are at record-breaking highs... From January 1 to September 30 the state posted 12,945 foreclosures. With three months left in 2006, foreclosure filings have already surpassed previous year totals by 1,452. September's foreclosure filings, were estimated at 60 per day, everyday including weekends and holidays."

» Search RealEstate-Specific Tags: Foreclosures - MA Foreclosures
» foreclosuresmass.com

Releated:

New Jersey Home Foreclosure Indicator Rises 44% From A Year Ago Quarter
"Lis pendens filings, a major home foreclosure indicator, jumped substantially from from year-ago quarter. Upcoming mortgage rate "resets" could make the New Jersey foreclosure situation much worse. According to the state's leading online foreclosure data service the number of lis pendens filed in New Jersey has risen 44% -- from 2,486 in the third quarter of 2005 to 3,577 in the third quarter of 2006."
» NewsWire

Looks Like 5.1% Of Americans Are Due To Lose Their Homes
"5% would be about 4 million homedebtors. At an average debt of say $200,000 each, that'd be about 1 Trillion in defaulted debt. China's foreign exchange surplus (that they'll be unwinding out of dollars) FYI just hit $1 Trillion."
» housingpanic.blogspot.com

Once Locked Out by High Prices, Aspiring Buyers Now Find Reason for Hope

"The Washington area remains one of the most expensive places in the nation to buy a home. Over the past year, as the number of available homes for sale has climbed, prices have flattened or fallen. That has propelled some buyers toward homes that had slipped beyond their reach. It has allowed them more time to shop and afforded them a greater selection. It has also made sellers much more willing to help with such things as closing costs."

» Search RealEstate-Specific Tags: Washington Homes - New Home Buyer
» washingtonpost.com

Auction To Unload New Condos, Homes

"In a dramatic sign of southeast Michigan's lagging housing market, properties with opening bids as low as $30,000 will be offered in the largest-ever auction of its kind in Michigan. Neumann Homes, one of the nation's largest homebuilders, says Michigan's sagging economy -- with the nation's highest unemployment rate and job cuts at Detroit's automakers -- has saddled them with excess inventories and limited options to make a profit or merely break even."

» Search RealEstate-Specific Tags: Home Auctions - Neumann Homes - Housing Market
» Detroit Free Press

JPMorgan Real Estate Fund Gains From Record REIT Acquisitions

The JPMorgan U.S. Real Estate Fund is beating the Standard & Poor's 500 Index for a seventh straight year because mergers and acquisitions in the property industry have reached a record.

The takeovers of real estate investment trusts, including Chicago-based Trizec Properties Inc. and Shurgard Storage Centers Inc. in Seattle, propelled the JPMorgan fund to a 30 percent gain in 2006, topping the S&P 500's 13.5 percent advance. The fund avoids homebuilders, whose shares fell 27 percent this year as the inventory of unsold houses climbed to an all-time high. "Wall Street has been reluctant to recognize'' the value of REITs, said Kevin Bedell, 50, a money manager at Chicago-based Security Capital Research & Management Inc., who oversees the $917 million mutual fund for JPMorgan Chase & Co." We got in the way of a lot of those undervalued securities.

» Search RealEstate-Specific Tags: REIT - Mutual Fund - Homebuilders
» Bloomberg

The 30-year fixed-rate mortgage averaged 6.31% nationally for the week, down from 6.40% last week.

  

The drop reversed increases that occurred in two of the last three weeks and left the 30-year loan at the level it was a year ago.

"With mortgage rates down this week, we may see a spurt of refinancing by those who want to get out of ARMs that are scheduled to reset in the next year while interest rates are still comparatively low."

 » Search RealEstate-Specific Tags: Mortgage Rates - ARM - Refinancing
» MarketWatch

U.S. home sales should "coast" at a somewhat lagging pace next year and prices should remain flat

Overall home price gains should be modest in 2007 while sales will hold steady, David Lereah, the association's chief economist said in a statement from the NAR annual meeting in New Orleans.

While some regions have seen a decline in home prices, the national median existing-home price should increase a modest 1.9 percent in 2006 to $223,700 and then 1.7 percent next year to $227,500, the statement said.

» Search RealEstate-Specific Tags: Home Sales - Home Price - Realtors
» Reuters

Housing Bubble and Real Estate Market Tracker

Home Sales Slid Again In October (The Capital, Nov. 12th) Annapolis, Maryland: "County home sales slid nearly 30 percent for a second consecutive month... But while high-end buyers are still scooping up million-dollar waterfront properties, homes stayed on the market an average 81 days - 97 percent longer than this time a year ago... Middle-class homeowners trying to sell off a home for around $400,000 are having the most difficulty. They want to purchase a more expensive home but must sell off their current home first."

Bottom Fishing (Marketwatch.com, Nov. 10th): Realtor's Association: "Several "signs of recovery" in the housing market: inventories of new and existing homes for sale is falling, home builders are cutting production, mortgage applications have stabilized, mortgage rates have fallen and remain historically attractive, housing affordability is improving and price declines appear to luring buyers back into the market...The hot boom cities are the problem. But these were the boom markets because they had good economic fundamentals, and for the most part that is still true. This is a temporary correction in these hot markets -- but how you define temporary I just don't know."

North County Home Prices Mellow (San Diego Business Journal, Nov. 10th): "The median price for all homes in North County — single-family detached and single-family attached — declined from $557,500 in September to $545,000 in October, according to the monthly report of the North San Diego County Association of Realtors."

Sales Of Existing Homes Decline (Star Telegram, Nov. 8th) "Existing-home sales in North Texas slipped again in October. The 4 percent drop from year-ago levels was the seventh down month this year.

Mortgates and Real Estate Lending

Homeowners Are Going Underwater As Loans Pass Home Values (Statesman.com, Nov. 12th) "In the next couple of years, a combination of rising mortgage interest rates and falling or slow-growing home value could plunge thousands of homeowners underwater-- meaning owing more than the house is worth. It's especially risky for people with interest-only mortgages and pay-option adjustable-rate mortgages... Some might be able to refinance or sell their houses. Still others will lose their houses to foreclosure. Assess your situation... If possible, refinance. There are plenty of loans from which to choose — from plain-vanilla 30-year, fixed-rate mortgages to 40-year loans to hybrid ARMs to more esoteric programs. Or get out."

London House Prices Force Group Buying (Homesgofast.com, Nov. 11th) UK: "Group buying of homes in London seem to be the only way forward for those stepping onto the property ladder. HSBC UK says it has seen a 50 per cent increase in group mortgage applications this year alone. More and more people are getting round high property prices by clubbing together with friends or family to buy a home and this is a trend which is expected to continue. Most group buyers opt to become "tenants in common" which means that each party holds separate shares in the property."

Macro Impact

Economics: U.S. Spending Strong Despite Housing Slide (International Herald Tribune, Nov. 13th): "Combined with falling energy prices and a pickup in job and income growth, [the consumer's] buying spree heralds robust holiday sales and economic momentum heading into the new year...Housing is a major negative for the economy, but the consumer is still the best defense against recession in 2007... Most of the recent slowdown came from a drop in construction spending and a wider trade deficit; consumer spending rose at a 3.1 percent rate during the quarter after growing at a 2.6 percent clip the previous three months... "The 95 percent of the economy outside of housing remains on good footing," said Michael Moskow, [Chicago Fed Reserve president.]"

Barron's Interview With Richard Arvedlund, Cypress Capital Management ( Barron's Summary in Seeking Alpha, Nov. 12th) "Recession: The preconditions are in place: (1) Housing drop of 10-20% (which usually signals a recession of unusual length). (2) Weak auto sales. (3) Inverted yield curve. Where we had been looking for a slowdown, we now think there's a 40% to 50% probability of a recession. Next year could be a very difficult time in the U.S. economy."

Local Economic Slowdown Continues (VoiceofSanDiego.org, Nov. 10th) San Diego: "The county's leading economic indicators sustained a sixth straight month of declines in September, attributed primarily to a drop of more than 30 percent in residential building permits issued compared to the previous year... The September data, compounded with the indexes of the previous five months, were cause for concern but not enough to forecast a recession... One of the big risks to the economy right now is the indirect effect-- that consumers are spending more than they earn... The increase in home value acted like a check on the table in some people's minds... Nationwide, personal savings rates have been negative for the past 18 months... The last time [the savings rate] was negative was in the Great Depression."

Euro Rates Mimic U.S., Sparking Global Slowdown Fear (Marketwatch, Nov. 10th) "The currently rapidly slowing US housing market not only poses severe risks to the U.S. economy but might also become a threat for some European countries... In the U.S., long-term rates have been nearly equal to or below short-term rates for over a year... Many economists, including Federal Reserve Chairman Ben Bernanke, believe that this time the yield curve inversion might be the result of an excess of savings in many countries... Interest rates are determined in the bond market, where a bond yield, or its interest rate, rises or falls inversely to its price... Nouriel Roubini of the Stern School of Business at New York University is convinced that this time-tested market mechanism of predicting the direction of the economy is signaling a recession, as it always has."

Housing Slowdown Forces Wolf To Lay Off 28 (The York Dispatch, Nov. 9th) Pennsylvania: "The Wolf Organization announced it is laying off 28 people because of a slowdown in the housing industry. The building products company, which employs about 600 people locally, has been in operation for more than 160 years... The outlook is that the housing industry might be at a halt until the third quarter of 2007, when the market adjusts to the large number of houses available on the market... Major home builders are off 30, 40 or 50 percent of their income from a year ago, and large dealers are just walking away from land options."

Hedging Your House Price

"Home Prices Plunge!" (Motley Fool, Nov. 10th) "Builders are really the ones that will lead the price drops because they'll lower prices until someone buys. In order to compete, homeowners are also going to have to lower their prices. It's worth thinking about builders, because lower prices for new homes means their profits will be threatened. Some top builders include KB Home (KBH), Hovnanian Enterprises (HOV), Pulte Homes (PHM), DR Horton (DHI), Toll Brothers (TOL), Lennar (LEN), and Beazer Homes (BZH)."

ZipRealty Cuts Forecast As Earnings Plunge 80% (L.A, Times, Nov. 9th) "Online brokerage ZipRealty (ZIPR) lowered its full-year forecast and said the slowing housing market prompted third-quarter profit to plunge 80%. The Emeryville-based company said net income fell to $622,000, or 3 cents a share, from $2.9 million, or 11 cents, a year earlier. Sales fell 7% to $26.2 million. ZipRealty charges a reduced commission to home sellers and gives cash rebates to buyers."

» Search RealEstate-Specific Tags: Home Sales - Housing Bubble - Real Estate Market
» SeekingAlpha

Housing Bubble and Real Estate Market Tracker

Hovnanian Sees Q4 Net Loss, $300 Million Charge (Reuters.com, Nov 7): "Hovnanian Enterprises Inc. (HOV) reported a net loss in the fourth quarter due to land related charges, and sees 2006 earnings excluding these charges at the lower end of its previous outlook. The luxury home builder expects to incur $300 million in inventory impairment and land option deposit write-off charges."

U.S. Home Builders Say Housing Slowdown Continues (Washington Post, Nov. 7th) "Luxury homebuilder Toll Brothers Inc. said it expects to report a 10 percent drop in quarterly home-building revenue, and warned of continuing softness in formerly booming markets such as Northern California and parts of Florida... Toll Brothers said quarterly total contracts suffered from a higher-than-normal 585 cancellations, one-fourth of which came in the Orlando and Northern California markets. The company lowered its land position by around 6,500 lots, ending the quarter with around 74,000 lots owned or controlled, a decline of 19 percent."

Mortgates, Real Estate Lending And Foreclosures

U.S. Mortgage Rates Reverse, Rise In Latest Week (Reuters.com, Nov. 9th) "Average interest rates on U.S. 30-year mortgages rose to 6.33 percent from 6.31 percent in the latest week, and rates on 15-year mortgages also increased, to 6.04 percent from 6.02 percent, Freddie Mac said on Thursday. Mortgage rates had surged earlier in the week after the Labor Department reported the unemployment rate dropped in October. The jobless rate, at 4.4 percent, was the lowest since May 2001.

Macro Impact, and Will a Housing Crash Cause a Recession?

Faster U.S. Growth And Elevated Inflation To Keep Fed On Guard (Bloomberg, Nov. 10): "Economic growth in the U.S. will pick up and inflation will remain elevated through early next year, leaving the Federal Reserve little room to reduce interest rates, according to a survey of economists. The forecasts confirm the view of some Fed policy makers that the expansion may not slow fast enough to cool inflation. Low unemployment, rising incomes and cheaper energy will help consumers sustain the spending that makes up two-thirds of the economy, limiting the damage from the housing slump... Economists are predicting the pace of growth will pick up in the course of next year as the housing market starts to recover."

» Search RealEstate-Specific Tags: Home Sales - Housing Bubble - Real Estate Market
» SeekingAlpha