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.

Real Estate Sales and House Prices

• Housing Resales Slow But Prices Climb (Montreal Gazette, Nov. 20th): "Montreal housing resales slowed during the third quarter, though prices continued to rise. A total of 7,213 properties were sold between July and October, a five-per-cent decrease compared with the previous year. The slowdown occurred in all housing types: multi-family buildings (-11%), condos (-6%) and the single-family segment (-4%). Prices rose across the board, with the average single-family price hitting $246,244, a nine-per-cent hike. The average condo price rose three per cent to $208,869 and the average plex edged up two per cent to $305,645."

• Dublin Property Prices Falling By €4,500 A Month (The Sunday Times, Nov. 19th): "In Ireland investors have been relying on capital-value growth for so long that rents have almost become irrelevant. This has led to investors acquiring properties that they have been content to leave vacant. The Economic and Social Research Institute recently reported that 20% of homes built in the past four years remain vacant. "Capital value increases are all that investors have been worried about in recent years. But as the market continues to slow down rent yields will once again emerge as the strongest reasons to buy.”

• Real Estate Agents Are Buffeted By A New Market (San Diego Union Tribune, Nov. 19th): "Our economy is still pretty good in San Diego. We may be in a trough at this point and popping back out in the next year... The market remains strong compared with the slump of the mid-1990s"... "The inventory of homes for sale, while high, peaked in July and has been slowly falling." Realty research firm: "On Nov. 1 the county's inventory of unsold detached resale homes was 13,580, compared with 14,615 on July 31"... “This is probably the best time in the last five or six years to buy a house.”

• Sagging sales, appreciation proof housing boom over (Dailynews.com, Nov. 18th): "The number of "For Sale" signs across the San Fernando Valley soared earlier this year and many now feature "Price Reduced" banners. Monthly sales of houses and condominiums have been consistently about 20 percent below their 2005 levels, and prices are now increasing by the smallest amount in years. Home sales counts have totaled fewer than 1,000 units every month since October 2005. And the year is expected to end that way for the first time since 1996."

Realtors and the Changing Real Estate Market

• Technology Gives Real Estate Agents, Buyers New Tools (Boston Globe, Nov. 19th): "A recent National Association of Realtors survey showed that 80 percent of home buyers used the Internet to search for a home in 2006 compared with 2 percent a decade earlier. Web sites are replacing paper listings, and in the newest technological twist, some real estate agents offer podcasts of their properties as well... The Internet is the future of the real estate business."

• “Lawsuit Rumblings Are Starting” (The Housing Bubble Blog, Nov. 19th): "The Arizona Republic: “Complaints against real estate agents are on the rise, with consumers accusing them of everything from selling property without a license to cutting corners to make a sale. As of June, the number of complaints opened with the Arizona Department of Real Estate had jumped 53 percent since 2003. Complaints forwarded for discipline increased 150 percent in that same time." Elaine Richardson, the state’s real estate commissioner, said she was alarmed by the trend of new complaints exceeding the number of new brokers and agents."

• For Real Estate Agents, A New Reality Setting In (Dallas Morning News, Nov. 19th) Missouri: "Real estate agents are having a tough time dealing with the new reality. Anyone in the business less than eight years has never experienced a normal market. A Minnesota real estate agent: "I've been in business since 1999, and this has by far been the slowest market. There is a large inventory on the market. A lot of that inventory we can blame ourselves for — we have overpriced it." The 1.3 million-member NAR predicts that the shakeout in the housing market will run thousands of [experienced and inexperienced] agents out of the business."

• Home sellers Seek An Edge By Using Technology, Stunts (Chicago Tribune, Nov. 19th): "The Internet is playing a bigger role in how the industry interacts with clients and prospective home buyers. Coldwell Banker Real Estate Corp., for example, parent company of Florida's largest residential real-estate agency, recently launched an online service that allows potential customers to receive personalized listings and daily mortgage updates... The transition favors agents who are nimble and tech-savvy. It also extends the marketing reach of individuals and small agencies, putting them on a more even footing with larger competitors."

Real Estate Investing and Sentiment

• Blackstone to Buy Equity Office for $20 Billion (Bloomberg, Nov. 20th): "U.S. vacancy rates drop and rents climb to a record. "Demand for office space and commercial property in the U.S. has been firm. With office properties, you get the rental income and that generates a nice stable yield.'' U.S. office vacancy rates fell in the third quarter to 12.96 percent from 14.13 percent a year earlier, and rents for so- called Class A space in Manhattan rose last month to a record $63.26 per square foot, according to Colliers International. New construction has lagged behind an increase in demand as the economy adds jobs, pushing up rents."

• Housing Starts Chart: No Bottom Apparent (Rich Vanden Boogard in Seeking Alpha, Nov. 19th): "The pink line below is a smoothed expected price, based on a long-run average of inflation + 1.5%. The blue line is the actual pricing data, adjusted by inflation. I start both lines at 100, and see where prices are vs. where they should be. In the background... raw housing starts data. The pink line ends where there is no more data - later data is my prediction. One's got to think there's no bottom yet."

Mortgates and Real Estate Lending

• Oregon Is “Participating” In National Housing Downturn (The Housing Bubble Blog, Nov. 19th): “Mortgage broker: ‘The old rule-of-thumb was not to pay more than 29 percent of gross income for housing, and not to have total debt, including housing, of more than 41 percent of gross income. Now many lenders are financing 100 percent of the sales price of a house, with an overall debt of 63 percent."

• Colorado's Home Foreclosure Sales Hit 9.2 Percent (Denver Business Journal, Nov. 16th): "Foreclosure sales made up 9.2 percent of all home sales in Colorado in the first half of 2006, above the national average of 3.1 percent but far below the rate seen in other states... Pennsylvania had the highest "foreclosure prevalence," or the percentage of total sale properties that were sold by a foreclosing lender. Pennsylvania's rate was 34.1 percent in the first half of the year. Oregon's rate was 22.8 percent, Tennessee came in at 20.4 percent, South Carolina at 17.6 percent, Indiana at 15.4 percent, Kansas at 13.1 percent and Texas at 10.1 percent."

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

• Bursting the Housing Bubble (Caleb Sevian in Seeking Alpha, Nov. 20th): "The anecdotal information from the industry is that the worst is not yet behind us... The effect of downturn on the real American family is still undetermined. The Fed seems to be becoming increasingly comfortable with the interest rate policy with Fed minutes and comments made this week suggesting that rates seem appropriate for market conditions and further action is unlikely in the short term. The Fed has continued to make it abundantly clear that inflation is their chief concern and growth will be sacrificed if necessary."

• Money Saved Here (St. Louis Dispatch, Nov. 19th): "Commentary following the retail sales reports has been that consumer spending is holding up well. How can that be? Retail sales fell 0.2 percent in October after a decline of 0.8 percent in September. Sales at gas stations fell 6 percent and 11.1 percent, respectively." If consumers are using the savings from the sharp fall in gasoline prices to purchase other items, overall sales should not be declining. "It's clearly not a one-for-one swap out of gas [and] into everything else. "The drop in spending on gas since July is $6.7 billion. Spending on everything else is up $2.9 billion. The housing malaise is starting to bite."

• Drop In Home Construction Called Recession, Economist Says (Ventura County Star.com, Nov. 19th): "Faint hints of a turnaround: Builder sentiment was up in November for the second straight month, the first back-to-back gains since mid-2005. David Seiders, chief economist for the builders' group, said he still believed what was occurring was a correction in the housing market with builders moving aggressively to cut back on production and move finished homes by offering a raft of incentives... Consumer confidence rose to a two-month high in early November, reflecting solid job prospects and lower energy prices.

• U.S. Economy: Housing Starts Tumble to Six-Year Low (Bloomberg, Nov. 17th): "Housing starts in the U.S. tumbled in October to the lowest level in more than six years, raising the prospect that the economy will be further weakened after growing last quarter at the slowest pace since 2003. [New Housing Starts] at an annual rate of 1.486 million, down 14.6 percent from September, the Commerce Department said Friday. Building permits dropped to a 1.535 million pace, a record ninth straight decline and the lowest since December 1997. The larger-than-expected drop raises the prospect that the worst isn't over for the residential property market."

Hedging Your House Price By Shorting Stocks

• Home Depot's Dividend Increase: Not What Bob Nardelli Wants You To Believe (George Gutowski in Seeking Alpha, Nov. 20th): "On Thursday, Home Depot announced a 50% dividend increase, saying the "increase this year is a major testament to Home Depot’s strength." Quite the bluff. Last week Home Depot announced poor earnings. That’s where dividends come from. In the past few years the level of long term debt has risen from $856 million at year end 01 Feb. 2004 to $6,671 million on 29 Oct. 2006. Long term debt provides cash but hangs around for a long time and eventually becomes a drag on earnings. At the same time many board members are retiring due to age. Much expertise and valuable perspective is walking out the door. Home Depot is becoming a bigger bet."

• MGIC Invesment: Living On Borrowed Time (Barron's Summary in Seeking Alpha, Nov. 19th): "The bullish case: Rising short-term interest rates have made personal mortgage insurance an attractive alternative to secondary loans to home buyers who can't afford down payments of up to 20% (piggyback mortgages). The bearish case: Assuming a 5% decline in home prices and a modest rise in MGIC's frequency rate, the company's 2007 earnings could fall 50% from analysts' current forecasts, to around $3.50 a share."

Commercial Real Estate and REITs

• Blackstone Acquiring Trust In Richest Buyout (International Herald Tribune, Nov. 20th): "The Blackstone Group, a private investment firm, said Sunday that it had agreed to acquire Equity Office Properties Trust. Worth $36 billion, it is the largest leveraged buyout in history. Equity Office, with some 590 buildings and over 105 million square feet of office space in major metropolitan markets, was created in 1976 by Sam Zell, one of the richest men in America, who built the business through dozens of acquisitions. For Zell, the sale is an opportunity to cash out of part of the empire he built... but may also signal that he believes the market may have peaked. Bear Stearns: "REIT's have outperformed the broader market in each of the past seven years, putting valuations at the high end of historical ranges."

• Carr Empire's Changing Skyline (Washingtonpost.com, Nov. 20th): "This summer, Blackstone Group L.P., paid $5.6 billion, or $44.75 per share, for CarrAmerica's Realty Corp.'s (CRE) empire... Blackstone saw the CarrAmerica deal as a short-term commodity play... and sold off the most liquid assets -- the D.C. portfolio -- for which investors were willing to pay top dollar. Blackstone could use those profits to pay down debt on the West Coast buildings it bought from CarrAmerica. Some said Blackstone is likely to hang onto CarrAmerica's California assets, as it expects that market to continue to improve, and consider selling later."

• Banking on value of REIT's mergers and acquisitions (Philadelphia Inquirer, Nov. 19th): "REIT mergers and acquisitions doubled this year to $98 billion, according to Bloomberg. The JPMorgan's fund holds 26 stocks that the managers perceive as cheap relative to the companies' earnings potential. More than half of the fund's assets are in office and multifamily-housing properties; malls represent 12 percent; and hotels account for 11 percent of the fund's holdings."

Web Site of the Day

360 Digest is a Seattle Real Estate Blog written by local realtor Marlow Harris "for those interested in Seattle real estate, popular culture, news and opinion."

Aside from selling real estate, Harris is also interested in art and architecture and mixes that in with a range of tidbits from the local market, in-depth discussions of internet real estate wars, to details about old Seattle homes and quirky observations about popular American culture.

Harris offers maps of all kinds to illustrate her points about the local market. She updates you on local news, and offers her own little twist on it. We think this is a great site for local and national investors who want to get a true sense of what Seattle is really like.

Tracking the Housing Market and Homebuilder Stocks You can track developments in the housing market and homebuilder stocks 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.