Housing Bubble and Real Estate Market Tracker

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 get 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"

"Frankly, we've seen macroeconomic headwinds, including higher energy prices, slower housing sales, impact of the volatility in subprime lending rates and declining consumer confidence that we believe -- in combination with our internal changes -- will contribute to a significant loss in the first half." - Circuit City CEO Phil Schoonover. (Circuit City F4Q07 (Qtr End 2/28/07) Earnings Call Transcript in Seeking Alpha, Apr. 4th)

Real Estate Sales and House Prices

* Homebuilding Figures Skid (Dallas News, Apr. 10th): "Metrostudy: Dallas-Fort Worth Q1 [homebuilding] starts down almost 35%. Local housing production totaled less than 8,000 single-family units – the lowest quarterly total since 2001… Pre-owned home sales dropped 5%... Purchases of new houses were down 7% from a year ago… Inventories of homes for sale have been rising, forcing builders to cut prices and curtail starts… The median home sales price last month was $149,000, up 2% from a year ago… There were 11% more pre-owned homes on the market in March than a year earlier… about a 7 ½ -month supply."

* High-Rise Condos to Go on Auction Block (WFAA.com, Apr. 10th): "Dallas: "Thirty-four [luxury] living units… were purchased in late 2005 by Centennial Real Estate Corp. of Dallas and GEM Realty Capital of Chicago. The rental units were converted into condominiums and have sold for more than $500,000 to almost $3 million… Five of the units will be sold without a minimum bid… Suggest[ed] opening bids for the high- rise properties start between $250,000 and $500,000 for the condominiums, which range from 1,362 sf to 5,164 sf… Dallas housing analyst Mike Puls: "The planned auction is a sign that the high-rise condo market has softened."

* East Coast Condo Prices Falling (RIS Media, Apr. 9th): "The Warren Group: Rhode Island's statewide median price of a condo in February was down nearly 15%, to $219,500, compared with $258,000 a year earlier… Condo sales since January have fallen nearly 9% during the same period... In February, the statewide median price of a single-family house fell about 4%, to $249,250, compared with $260,000 during the same month last year. Meanwhile, single-family house sales were up about 4% in February — and nearly 8.5% so far this year."

* Median Home Prices Rise (Poughkeepsie Journal, Apr. 9th): "Ulster County Board of Realtors: The median home prices in Dutchess and Ulster Counties rose in March compared to a year ago for all types of homes. Attached homes in Dutchess saw a median price of $345,000 in March 2007, up 1.5% from a year ago while detached homes saw their median price rise to $235,000 — a 27% increase…. In Ulster, the median price climbed 8.4% from $237,450 to $257,450… Dutchess saw 138 detached homes sell and 45 attached homes sell in March, down 8% and up 28.6% respectively."

* Experts: Record Housing Inventory Temporary, Not Sign of Impending Slump (Henry Daily Herald, Apr. 8th) Atlanta: "Job losses, like the closing of Hapeville’s Ford plant…have led to a [housing] cooling in some areas, particularly the south side, where many of those workers live…The cooling has led some builders to offer considerable buying incentives, particularly in high-priced homes in areas where inventories are at a peak. One Henry builder, for example, is offering a $20,000 incentive on a $390,000 home… In Henry, there’s nearly a 10-month supply of homes in the $201,000-225,000 range. In Clayton, it’s nearly 18 months. Metro Atlanta’s average inventory for homes in the same range is about eight months."

Real Estate Investing and Sentiment

* Yonkers To Explore Limits On 'McMansions' (Westchester.com, Apr. 10th): "Moving to address a "growing" phenomenon in neighborhoods across Yonkers, Mayor Phil Amicone has proposed tightening local zoning codes in order to curb the influx of so-called “McMansions”—large new homes that appear inconsistent with the size and architectural character of surrounding homes… A dearth of buildable land and consumer desire for bigger houses have made McMansions more and more common in older suburban communities across the country. The results are often new homes built on previously vacant lots that literally dwarf other houses on the same block."

* Homebuyers Hit By $100B in Crazy Fees Each Year (TPM Café, Apr.9th): "Real estate agents tend to charge a flat percent of the sale price of a home, typically about 6%. This figure is the same regardless of how much work the agent does or the results he or she achieves. Instead it is largely determined by the prevailing property prices in the area... Double pay for the same work? For buyers, this is fee structure is particularly senseless, since it incentivizes the agent to get the highest possible sale price, which is directly contrary to her customer's interests."

Mortgates and Real Estate Lending

* Citigroup Tightens Mortgage Lending Standards (Reuters, Apr. 9th): "Citigroup Inc. (C), the largest U.S. bank and one of the largest U.S. mortgage lenders, is telling brokers that on Monday it will stop making some riskier home loans… The move follows decisions by Countrywide Financial Corp. (CFC), Wells Fargo & Co. (WFC) and other major mortgage lenders to tighten their underwriting standards as homeowner delinquencies and defaults increase… The changes at Citigroup's main home loan unit, CitiMortgage Inc., would limit no-money-down second mortgages and raise the minimum credit scores needed to obtain them. Borrowers take out second mortgages when they cannot get 100% financing from a single lender."

* Subprime Crisis Shines Light on Mortgage Brokers (Market Watch, Apr. 9th): "A controversial fee called a Yield Spread Premium, which is paid by the lender to the broker [and often not revealed to the borrower], has come in for particular criticism and is the subject of a class-action lawsuit against NovaStar Financial (NFI) one of the largest subprime mortgage originators… As the housing market boomed, mortgage brokers' influence grew as they became involved in arranging the majority of home loans. Now the broking business should bare some of the blame for the ensuing crisis, say critics, including some who are brokers themselves… The YSP… averages almost $2,000."

Subprime Turmoil Spreading?

* Defaults Rise in Next Level of Mortgages (NY Times, Apr. 10th): "Alt-A loans… made up about 10% of all mortgages outstanding at the end of 2006 and made up about 18% of home loans written last year, according to Moody’s Economy.com. Together, subprime and Alt-A loans account for about 21% of loans outstanding and 39% of mortgages made in 2006. The delinquency rate for Alt-A mortgages… has been rising. In February, 2.6% of Alt-A loans were delinquent by 60 or more days, up from 1.22% a year before, according to FirstAmerican Loan Performance. By comparison, 12.44% of subprime loans were delinquent by more than two months, up from 7.84%."

* Mortgage Fallout Hits Area's Largest Bank (Evening Sun, Apr. 9th): "Buffalo, N.Y.-based M&T Bank, which has 23 branches in the county, Friday reported that it expects a $7 million decrease in its first-quarter earnings even though it is not in the subprime lending business…When M&T took its Alternative-A loans to the secondary market to sell to investors, there was "very little interest" and bids for the mortgages were lower than anything the bank had seen in the past, M&T spokesman Michael Zabel said… M&T officials believe secondary-market pricing for its Alternative-A loans are irrational and a result of subprime turbulence."

* Sector Snap: Mortgage Lenders (Business Week, Apr. 9th): "Shares of mortgage lenders sank Monday…A week after M&T Bank Corp. said it was having trouble selling its Alt-A loans, American Home Mortgage Investment Corp. said yesterday it faced far fewer buyers bidding materially lower prices in an auction of Alt-A mortgage debt last month… IndyMac Bancorp Inc., which generated $70.2 billion in Alt-A loans in 2006 representing 78% of total volume, fell $0.67, or 2.1%, to $31.13 on the NYSE… Impac Mortgage Holdings Inc., which issued $11.6b in Alt-A loans last year representing 92% of total volume, fell $0.31, or 6.4%, to $4.54 on the NYSE."

* HSBC Mortgage Services to Close its Call Center in Orlando (Bradenton Herald, Apr. 9th): "HSBC Mortgage Services plans to close its collections call center in Orlando, eliminating about 110 local jobs… HSBC's local cutback is the latest corporate downsizing in central Florida this year related to the turmoil in the subprime-mortgage business… "That market has virtually ceased to exist," said William Weaver, a real estate professor at the University of Central Florida. HSBC, the nation's biggest subprime lender as of late last year, has survived so far - but only after increasing its bad-debt reserves to $10.6 billion in February, a 125% increase from 2006, to cover anticipated losses in its subprime portfolio."

* Mortgage Market Dries Up For American Home (Forbes, Apr. 9th): "Along with the rising defaults, an interest rate increase by the Bank of Japan may have discouraged hedge funds from borrowing in yen and then reinvesting in dollar-denominated assets, putting added pressure on the mortgage-backed securities market. In February, the Japanese central bank raised its overnight lending rate to 0.5% from 0.25%; up until last summer, the rate had been near zero. While the yen rate remains low by absolute and relative standards, the idea that it might rise further could be encouraging so-called carry-trade investors to begin unwinding their positions or at least to limit new ones."

Subprime Fallout and Foreclosure Impact

* MLN Gone, Site Work Goes On (Hartford Courant, Apr. 10th): "When Mortgage Lenders filed for bankruptcy Feb. 5, it left the building's Michigan-based developer, Workstage, with a 300,000 sf building that was about a quarter complete and without a tenant… Cushman & Wakefield of Connecticut: Workstage may still lease the building to one tenant, and it has received some "very preliminary" inquiries from two potential tenants that could lease the entire building… Workstage has also drawn interest from six smaller tenants that might want to lease 60,000 to 100,000 sf… The project's construction cost, once pegged at $100 million, has shrunk to about $60 million."

* Bankruptcy Trustee Opposes New Century’s Sale of Mortgages (NY Times, Apr. 10th): "New Century Financial (NEWC) should not be allowed to sell about 2,000 mostly defaulted mortgages, or [$50 million worth to Greeenwich Capital,] a subsidiary of the Royal Bank of Scotland, U.S. trustee Joseph J. McMahon said yesterday… Before the sale is approved, NEWC should be forced to eliminate or reduce a $1 million breakup fee associated with the deal and to say how it will protect consumer financial data… NEWC said Carrington Capital Management had offered about $133 million for [NEWC's] loan servicing unit, which collects and manages mortgage payments."

* Subprime Fallout: Good For Countrywide, Bad For Choicepoint, Bankrate (Faisal Laljee in Seeking Alpha, Apr. 9th): "I believe Bankrate's EPS for Q1 will come in closer to the lower end of analyst estimates… The stock will be in the 20's before year end… I am of the opinion that Choicepoint (CPS) was very heavily levered towards subprime. In fact, I believe over 75% of their business in the financial services sector… was biased towards the subprime market… I recommend shorting the stock ahead of earnings… One company that has been oversold as a result of the knee-jerk reaction to the subprime headlines is Countrywide (CFC)… Over 90% of Countrywide's business is prime…While competition falls… Countrywide stands to gain market share as one of the few players that will be left standing."

* House Schedules Hearing on Subprime Lending (Inman News, Apr. 9th): "The House Financial Services Committee will hold a hearing this month on subprime mortgage lending, Chairman Barney Frank announced Friday. Frank said the April 17 hearing will "explore possible responses to recent increases in home mortgage foreclosure rates" and include representatives from Fannie Mae, Freddie Mac, the Federal Housing Administration, the mortgage industry and consumer organizations. Frank, D-Mass., told lawmakers in a March 29 letter that the committee was drafting legislation to address predatory lending that will be introduced later this session."

* Jobs, Not Subprime, Continue To Drive Foreclosure Rates (Investors.com, Apr. 9th): "So far, the Golden State has avoided the spike in foreclosures gripping Midwest states such as Michigan and Ohio and those in the South such as Louisiana that were hit by Hurricane Katrina. California's new foreclosure rate was just 0.43%. But Indiana, Michigan and Ohio all topped 1%. Subprime foreclosures and delinquency data tell a similar story. Economists say the reason is clear. California's economy continues to create jobs. That helps people keep their homes, propping up prices and letting homeowners with adjustable rate mortgages refinance before rate increases boost their payments."

* California Foreclosure Auctions Reach Record High (Default Servicing News, Apr. 9th): "Foreclosure Radar, a foreclosure listings and software company, says… California has experienced a 264% increase in the number of foreclosed homes sold at auction in just the last six months. “Foreclosures sold at auction now account for 15% of all home sales in California and continue to rise,” said Sean O'Toole, CEO, Foreclosure Radar… "At the current pace, foreclosures will be a significant part of the real estate economy." The company also said 5,316 foreclosures were auctioned in March — a 27% increase when compared to a month prior."

* Number of Yorkers in Mortgage Trouble Rises (York Dispatch, Apr. 9th) Buffalo: "The number of residents in York County and across the state asking for government help with mortgage payments increased by about 10% last year… In York County, the number of requests increased from 268 in 2005 to 298 last year. The number of requests statewide jumped from 9,081 in 2005 to 9,929 last year."

* MMNEWS-ABX Subprime Mortgage Index Little Changed (Reuters, Apr. 9th): "The benchmark ABX derivatives index opened mostly unchanged on Monday, a trader said. The ABX 2006-2 "BBB-minus" index, which references home loans made to risky borrowers in 2006's first half, ended Friday's session at 70.34, according to Markit.com. The index remains about 24% lower than where it began the year."

* Foreclosures on the Rise in Suburbs of Baltimore (Baltimore Sun, Apr. 8th): "Foreclosure filings rose four times faster last year in Baltimore's suburbs than in Baltimore - up 15% versus less than 4% in the city, court records show. To the south in Montgomery, one of the nation's wealthiest counties, filings were up more than 30%... Suburban Baltimore foreclosure cases are increasing even more quickly this year... Statewide, nearly 45,000 mortgages had late payments at the end of last year, according to the Mortgage Bankers Association. The share of delinquent loans rose more than 10% from 2005, the biggest y/o/y jump since the last recession."

* Few Homeowners are Immune to Detroit Area's Foreclosure Pain (Seattle Times, Apr. 7th) :"Detroit is evidence that even borrowers with good credit aren't immune to the risk of default. Mortgage Bankers Association: The percentage of prime loans in Michigan that were overdue by at least 90 days was 0.67% in Q4'06… A year ago, the Michigan rate was 0.59%. About 78% of Michigan mortgages are prime, given to the most creditworthy borrowers, just above the 77% national rate… The Detroit median home price fell 5.8% in the past three years… The median price of a house in the Detroit area was $154,600 in Q4, trailing the U.S. median of $219,300."

Global Alternatives To The Housing Slump

* U.S. Investors Bullish on Indian Real Estate (Little India, Apr.9th): "At last count, international funds had reportedly invested some $2.5b in Indian real estate. Nearly two dozen domestic funds have raised another $3.5b for similar investments, including Wall Street powerhouses such as J. P. Morgan, Warburg Pincus, Morgan Stanley Real Estate Funds, Merrill Lynch, Lehman Brothers, Warren Buffett's Berkshire Hathaway, the Blackstone Group, Colony Capital, Starwood Capital, etc."

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

* Subprime Mess Hurts Even Harley-Davidson (Blogging Stocks, Apr. 9th): "Even Harley-Davidson (HOG) is having trouble with bad loans… Harley has a credit subsidiary, HDFS, which makes about half of the loans to new customers. Delinquencies on loan payments at HDFS are on the rise. In the first quarter of 2005, delinquencies were 3.6% of outstanding loans. By the fourth quarter, delinquencies had risen to 5.18%. This increase in delinquencies looks a lot like the situation in the mortgage market. And just like mortgages, loans made by the HOG are packaged and sold to investors. So bad loans will hurt more than Harley."

* Mortgage Lenders, Builders Pick up Pace of Job Cuts (Inman News, Apr. 9th): "Challenger, Gray & Christmas, a New York-based outplacement job consulting firm: Announced job cuts in the real estate industry totaled 1,149 during Q1, about the same as the 1,152 tracked during Q1'06. There were 3,490 announced job cuts in real estate in 2006… Mortgage lenders announced 6,138 job cuts in Q1'07, compared with 3,497 in the same period last year… There were 12,874 announced job cuts in mortgage lending last year. Announced job cuts in housing construction totaled 13,958 during Q1 -- more than double the 6,450 positions eliminated in all of 2006. Announced Q1 job cuts in all three housing related industries -- real estate, mortgage lending and construction -- totaled 21,245, rivaling the 22,814 jobs lost in all of 2006."

* Copper Rises on Expectations That U.S. Demand Will Strengthen (Bloomberg, Apr. 9th): "Copper prices in New York rose to a five-month high on expectations that demand in the U.S., the world's second-biggest user after China, will strengthen as inventories decline. Labor Department: U.S. employers added more workers than forecast in March and the jobless rate matched a five-year low... U.S. homebuilders, major copper users, increased hiring. Inventories… fell 2.6% in Q1… Prudential Equity Group LLP: The U.S. buys about 13% of the 17 million metric tons of copper sold annually, while China accounts for about 20% of global demand... Copper prices have surged 26% in the past month."

Homebuilders And Housing Stocks

* UK's Largest Construction Company Completes Acquisition of Centrex Construction (AZO Build, Apr. 10th): "Balfour Beatty plc, UK's largest construction company, has completed the acquisition of Centex Construction… a leading U.S. construction-management company… from the Centex Corporation, a leading-U.S. homebuilder… for… $367 million… The addition of Centex Construction to Balfour Beatty's portfolio gives the company now total annual U.S. revenues of approximately $3.5 billion... Centex is also a major player in the military-housing market. Centex Construction will have total revenues of over $2.2 billion this year, with backlog at record levels and profits growing… Balfour Beatty has a nearly 100-year history focused on commercial- and institutional-building construction."

* KB Faces Suit Alleging ERISA Violations (NWI.com, Apr. 10th): "KB Home Inc. disclosed Monday that a lawsuit was filed against it alleging violations of the Employee Retirement Income Security Act, related to option backdating… The Los Angeles-based homebuilder announced last year that it had found errors in options granted between 1998 and 2005, and that it will have to restate its past results to record up to $41 million in additional non-cash compensation expense."

* Ten Stock Picks From Barbara Marcin of Gamco Investors (Forbes Investor Advisory Institute in Seeking Alpha, Apr. 9th): "The housing companies were talking two months ago about possibly seeing a bottoming out. But, within the last few weeks, all reissued outlooks saying that things still look bad and that the upturn is not in sight… maybe that won’t be until 2008 or 2009. Nevertheless, these stocks typically bottom out in price a year before the worst outlook for the housing industry. A year before their own operations begin to pick up. So, if you think we're within 12 months of the bottom of housing, which I feel very confident we are, even though I think things will continue to get worse, these are very good buys here. We could have a 50% return over the next year or two. The ones I like best there are D.R. Horton (DHI), Ryland (RYL) and Centex (CTX)."

* Jim Cramer Stock Picks, April 9 (Miriam Metzinger in Seeking Alpha, Apr. 10th): "D.R. Horton (DHI) and Pulte (PHM): Cramer praised Ivy Zelman of Credit Suisse for her downgrade of DHI and PHM and called her report "eye opening." In brief, her research indicated DHI and PHM "could go much lower, and book value seems to mean nothing." Zelman predicts a 15%-20% decline for homebuilders who haven't sufficiently reduced their land holdings."

* Homebuilder CCI Files for Bankruptcy (Southwest Florida Herald Tribune, Apr. 9th): " Construction Compliance Inc., the failed St. Petersburg-based homebuilder that left hundreds of unfinished homes across Southwest Florida and contributed to the recent huge losses at Bradenton's Coast Bank of Florida, has filed for bankruptcy protection from its creditors in a Tampa Federal Court says Alan Tannenbaum, an attorney for about 150 CCI customers from around the nation. The Chapter 11 petition was filed on April 3."

* Looking To Short Real Estate Via ETF (Trade Radar Operator in Seeking Alpha, Apr. 9th): "The real estate mess is not yet spilling over into the general economy. If we can't find significant impact in the ETFs most closely associated with real estate then we are probably not going to see real estate as the cause of the next recession… Using various shorting strategies with XHB since the beginning of February would have yielded the best return. Directly shorting the ETF or using options would both have produced winning trades. Unfortunately, these are not the easiest techniques for the individual investor."

* Alt-A Reality and the Subprime Rescue Mission (Blogger News Network, Apr.9th): "Beazer Homes (BZH) built a great many low income starter homes in Mecklenburg County, North Carolina. The county with the highest foreclosure rate in the state…In March, the Charlotte Observer… analyzed county records, showing “35 Mecklenburg developments of low-priced homes built in the last decade with foreclosure rates of 20% or higher”. Ten Beazer subdivisions had a rate of 20 to 34%... [In] Southern Chase, a Beazer subdivision of 406 homes in Cabarrus County [where] most of the homes were financed through Beazer. Of a total of 75 homes in foreclosure, 45 were FHA-insured. To date, the FHA has paid out $5 million to cover foreclosures in Southern Chase alone."

Commercial Real Estate and REITs

* Florida REIT Buys Wild Waves in Seven-Park Deal (Puget Sound Business News, Apr. 9th) Seattle: "CNL Income Properties Inc. has completed its acquisition of Wild Waves & Enchanted Village in Federal Way as part of a seven-park deal worth $312 million, the company disclosed in regulatory filings Monday. CNL, a REIT based in Orlando, Fla., on April 6 bought the parks from an affiliate of PARC Management LLC. CNL then leased the properties back to PARC Management, which will operate the facilities, according to CNL filings with the Securities and Exchange Commission… Earlier this year… Six Flags Inc. sold the seven parks to PARC Management of Jacksonville, Fla."

* Farallon offers $1.84 billion for Englewood REIT (Denver Post, Apr. 9th): "Farallon Capital Management LLC today said it offered to buy Affordable Residential Communities Inc.'s home community business for $1.84 billion in cash. Affordable Residential is an Englewood, Colo.-based REIT... Farallon, a San Francisco-based investment firm, also reported today that it holds a 10% stake in Affordable Residential. Farallon beneficially owns 5.7 million shares of Affordable Residential, up from a previously reported 4.6m-share stake in the REIT. Farallon said its offer doesn't include Affordable Residential's property and casualty holding company, NLASCO Inc."