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 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"

"We knew that this was coming. We just didn't know it would come as quickly as it came." - Alphonso Jackson, the secretary of housing and urban development, on the crisis in the subprime/high-risk mortgage market. (MSNBC, June 4th)

Real Estate Sales and House Prices

• Owner of Sept. 11 Property Wants $10-Million (Tampa Bay.com, June 6th): "Mike Svonavec, who owns property at the site where Flight 93 crashed has demanded $10 million for his 273-acre property in Somerset County where a memorial is planned and has installed a donation box near a temporary memorial to help pay for security…Victims' families believe he is overcharging... Patrick White, vice president for Families of Flight 93: Svonavec's demanding far more than the per-acre amount paid for nearby land... Svonavec said… he would accept no money for the exact site where 40 passengers and crew members died when the hijacked United Airlines flight crashed on Sept. 11, 2001."

• Declining Home Prices Help Boost Sales in Massachusetts (Foster's Online, June 5th): "After more than a year of plunging sales, lonely open houses, and proliferating for-sale signs, realtors said many sellers are finally willing to lower prices. As a result, houses sell… In many places sales are still slow… hurt by the rising number of foreclosed homes. But the Boston [area is] reviving… Massachusetts Association of Realtors: In April, the state had a 10.3-month supply of single family homes [down from last month but still high] compared with 9 months in 2005 and 7.3 months in 2004."

• Billy Joel's Movin' Out - to Sagaponack (NY Newsday, June 5th): "Songman Billy Joel [bought] actor Roy Scheider's home… the 1-acre Hampton's property was last listed at $18.75 million… Both stars have felt the pinch of the softer real estate market... Joel originally asked for $37.5m last September, when he put his home on the market. Scheider originally asked for $20m in April 2006 and went down by $1.25m last March. Scheider and his family are waiting for a new home to be built, not far from their temporary quarters at Sag Harbor's The American Hotel, an 1846 landmark."

Real Estate Investing and Sentiment

• Venture Capital Deals (Mercury.com, June 6th): "Trulia.com, a San Francisco-based residential real estate search engine, raised $10 million in a third-round of funding led by Sequoia Capital, which also included previous venture investors Accel Partners and Fayez Sarofim & Co. The round brings Trulia's total funding to $17.7 million."

• Florida Foreclosures Increase 7 Percent in One Month (PR.com, June 6th): "Default Research CEO Serdar Bankaci proudly points out the accuracy of his foreclosure statistics… A recent Los Angeles Times article hinted that some foreclosure reporting firms may be inflating statistics for self gain. Bankaci: “I have known for years that many firms report the same property in their statistics between five to ten times, which severely over inflates their numbers. Default Research only reports a specific property once as it proceeds through the foreclosure process… Florida pre-foreclosure rates increased by approximately 7%...“Even though foreclosure rates in Orange County had remained relatively stable, May showed an increase [there] of approximately 27%."

• Critics Come Down on Commissions (Inman News, June 5th): "Real estate commissions once again are at the center of debate... The Internet has enabled some brokerage firms to instill efficiencies… allowing them to cut costs and pass savings onto consumers. But industry critics… argue that… many discount firms… cut costs by shoving the workload onto the agent working the opposite side of the deal… Recent data indicates the median income of Realtors has decreased. Some research has concluded that traditional commission structures and few barriers to entry for new agents create billions of dollars of waste in the real estate industry -- and neither consumers nor agents benefit."

• Not-So-Real Estate: Investigation Reveals that Home-flipping Show May Have Sold Bill of Goods to Viewers (RIS Media, June 5th): "An investigation by… Fox 5 Atlanta this month alleged that real estate developer Sam Leccima, who was featured on… A&E's "Flip This House," had staged phony house sales for the TV show. The report… went on to say that Leccima's real estate license had been revoked by the state of Georgia before A&E filmed its first episode with him. Russell also found investors who claimed they had been defrauded by Leccima in transactions unrelated to the TV show. Leccima wasn't invited back for the current season, although the network continued airing reruns of his episodes until the broadcast of Russell's investigation."

Mortgates and Real Estate Lending

• Lenders Starting to Offer No-Closing-Cost Mortgages (Maryland Gazette, June 6th): "More home mortgage lenders, still buoyed by near historically low rates, are now dangling no-closing-cost deals to spark cool home sales… The practice, which seems to be picking up steam in Maryland and nationally, lures buyers who have little cash. But other lenders call it a gimmick that will end up costing homeowners more in the long run in the form of a higher interest rate. David Wexler, principal with ChoiceFinance Company in Rockville, said the no-closing-cost deal could make sense for buyers who plan to keep the house for only a short time… Choice offers no-closing-cost mortgages, but at a slightly higher rate than conventional mortgages."

Subprime Fallout and Foreclosure Impact

• Fannie, Freddie May Enrich Shareholders in Subprime's Shakeout (Bloomberg, June 5th): "Inside Mortgage Finance: Fannie Mae (FNM) and Freddie Mac (FRE) accounted for 46.9% of all mortgage bonds sold through April… up from 37.3% in last year's Q2. The [housing] slump is reviving FRE and FNM, after $11.3 billion of accounting errors led to the ousters of their CEO's and the threat of tighter government regulation. Now, the companies are getting praised in Congress after promising to spend at least $20 billion to keep the mortgage market afloat by purchasing loans made to people with poor credit or high debt… FNM and FRE together own or guarantee about $4.5 trillion of residential mortgage assets."

• Subprime's Deals, Dow Jones's Lesson, $1 Trillion Club: Timshel (Bloomberg, June 5th): "Accredited Home Lenders Holding Co. (LEND) agreed to a $15.10/share bid from Lone Star Funds… Cerberus Capital Management LP [will] buy H&R Block's (HRB) Option One subprime unit… [Bankrupt] ResMae Mortgage Corp… is looking to sell its assets for $180 million to Citadel Investment Group, a hedge-fund manager… Accredited may attract more attention... Farallon Capital Management LLC held acquisition talks with Accredited in March before making a $200m loan. The hedge fund [has] a 7% stake… Credit Suisse Group (CS) agreed to buy Lime Financial Services for an undisclosed price in April… Bigger profits, or at least smaller losses, may lie ahead for investors in subprime stocks."

• Hedge Fund Bear-ish on Subprime Relief (NY Post, June 5th): "Paulson & Co., an $11 billion hedge fund, has written regulators over concerns that Bear and other investment banks may be engaged "in market manipulation" when the banks' mortgage-issuance units modify loans so that homeowners can avoid foreclosure… Also signing at least one letter were representatives from hedge funds Hayman Capital Partners and Elliott Associates."

• Whitney Tilson's Notes From Berkshire Hathaway's Annual Meeting (Whitney Tilson in Seeking Alpha, June 5th): "When someone only has to make a $3,000 down payment to someone who gets a $6,000 payment [the salesperson’s commission], then… you’ll see a lot of bad behavior. Securitization accentuated the problem. A local banker wouldn't [allow this behaviour], but when the loans are bundled and sold by Wall Street, that discipline disappears. It will be at least a couple of years before real estate recovers. In some areas of the country, the [housing] inventory overhang is huge. The people who were counting on flipping the homes are going to get flipped, but in a different way."

• HUD Boss Wants Rules to Slow Subprime Mess (MSNBC, June 4th): "HUD chief Alphonso Jackson: "About 20% of all subprime mortgages "are headed for trouble." One way to get in front of the problem is by Congress enacting the long-standing proposal to overhaul HUD's Federal Housing Administration. It was not specifically written to respond to… the subprime mortgage market [crisis], but… could help tens of thousands of families with subprime home loans who are looking to refinance them. The proposal would allow FHA to raise the maximum mortgage amount it can insure in higher-cost areas such as the Northeast, California and the mid-Atlantic. It is backed by the White House and has garnered [congressional] support."

Global Impact and Alternatives To The Housing Slump

• CB Richard Ellis Charts Growth Abroad (Wall St. Journal, June 6th): "CB Richard Ellis bolsters its international exposure -- from approximately 24% of its $5 billion in revenue now to what CEO Brett White predicts over the next 20 years will be a 50-50 split between Europe and Asia on the one hand and the Americas on the other. With its $1.9b acquisition of Trammell Crow Co. last December, CBRE moved to shield itself from the industry's cyclical swings by beefing up its corporate-services and [global] property-management capabilities… CBRE intends to focus on buying boutique firms around the world in an industry traditionally dominated by specialty and regional players."

• GE Buys Dundee's Eastern Properties (The Toronto Star, June 5th): "Toronto-based Dundee REIT's announces a $2.4 billion deal ($1.5b in equity and $900 million in debt) [with] GE Real Estate– one of the largest property transactions this year. The deal involves Dundee's eastern portfolio of assets that are mainly in Ontario, Quebec and Newfoundland. Dundee will continue to own $1.5b of real estate in western Canada… GE Real Estate (GE) is one of the world's largest real estate companies with more than US$59b in assets. GE will also invest $165m (Canadian) in Dundee REIT giving it an 18% share."

• Getting Away: A Second Home in France (North Jersey.com, June 3rd): "Prices in Paris can vary greatly by neighborhood: from $125,000 for a modest studio or one-bedroom flat in a working-class area, such as near Saint-Germain-des- Prés in the 18th Arrondissement, to $1 million to $2 million for a luxury multiroom apartment in the heart of Paris’ 5th Arrondissement. Foreigners make up about 8% of all buyers in Paris…Adrian Leeds, French Property Insider newsletter editor: "Alot of Americans tend to buy in the chic 6th and 7th arrondissements and in Le Marais, the old Jewish quarter, which tend to be overpriced compared to other districts… Keep an open mind by looking for properties which need a bit of renovation or those in less gentrified areas can yield some hidden gems.”

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

• Bernanke Foresees Rebound (Monterey Herald, June 6th): "Federal Reserve Chairman Ben Bernanke predicted Tuesday the economy will rebound from its anemic start of the year even if the housing slump persists… Economic growth in Q1'07 nearly stalled, logging just a 0.6% pace… The worst quarterly showing in more than four years… Bernanke [said] the painful residential real-estate bust, which started last year, "appears likely to remain a drag on economic growth for somewhat longer than previously expected… Residential construction will likely remain "subdued for a time" until builders can pare down a backlog of unsold new homes… But, thus far, the housing market's problems haven't spread through the broader economy in a significant way."

Homebuilders And Housing Stocks

• Executives Cashing In Shares At NVR (Washington Post, June 6th): "At the end of April, Dwight C. Schar, Homebuilder NVR's (NVR) chairman sold 259,193 shares in eight days… for $211 million… representing about 80% of his stake in NVR... He still holds about $160m in deferred-compensation stock… Controller Robert W. Henley sold 4,250 shares April 24 for $3.3m. The same day, CEO Paul C. Saville sold 5,000 shares for $4.2m. A few days later, William J. Inman, president of NVRM Finance, sold 12,500 shares for $10.3m… Last year, NVR bought back $287.1m shares, and in April, it announced plans to repurchase an additional $300 million… This year, the stock of the nation's seventh-largest home builder by revenue has gained 17%."

• Builders to Forgive Home Loans (Charlotte Observer, June 5th): "State regulators: Three Charlotte-area builders [Dixie Homes LLC of Gastonia and MCE Properties Inc. and Evans-Davis Inc. of Kings Mountain] will forgive almost $2 million in mortgage loans they made as part of a scheme to sell homes that the buyers couldn't afford… These loans, ranging from $24,000-$37,000… set up without the knowledge of the borrowers… allowed the recipients to qualify for larger loans from other companies [to pay] for homes… All three builders also will cooperate in the state's investigation of the company that arranged the large and small loans, Hall Financial Services of Matthews."

• Bed Bath & Beyond Warns of Weak Profits, Same-Store Sales (Seeking Alpha, June 5th): "Bed Bath & Beyond Inc. (BBY) warned Monday its Q1'07 profits would be $0.36-0.38, missing analyst estimates of $0.40. It also guided same-store sales down to 1.6% y/o/y/ growth, from a prior 3-5%. It will report full Q1 results on June 27. It said sales in the retail sector, particularly of home-related merchandise, have been challenging. Lowe's, second to BBY in U.S. home-improvement sales, lowered its 2007 earnings forecast in May and said its Q1 profits fell 12%. Jefferies' Timothy Allen: "We're to the point where the drag on housing activity is definitely going to have an impact."

• Home Depot Is Poised For A Turnaround (Hilary Kramer in Seeking Alpha, June 5th): "Home Depot (HD) has suffered under poor management and the downturn in the housing market. New management is tops… CEO Frank Blake's focus [is] back on the stores… restaffing them and including specialists in the staff… People are buying fewer homes and are tightening their wallets… same store sales fell 8% in HD's Q1'07 results. However, HD has [also] started an installation business targeting retiring baby boomers who are increasingly wanting others to do their projects for them... Currently trading at $39.21, I'd… pick up HD in a market pullback… [It] could swing back up to the $60's."

• HNI Corporation Appoints Eugene Sung as President, Allsteel (Business Wire, June 4th): " HNI Corporation (HNI) announced today the appointment of Eugene Sung as President, Allsteel and Executive Vice President, HNI Corporation, reporting to Stan Askren, Chairman, President and CEO, HNI Corporation… HNI Corporation is a NYSE traded company providing products and solutions for the home and workplace environments. HNI Corporation is the second largest office furniture manufacturer in the world and is also the nation’s leading manufacturer and marketer of gas- and wood-burning fireplaces."

• Black & Decker VP Exercises Options (Chron.com, June 4th): "The treasurer of tool maker Black & Decker Corp. (BDK) exercised options for 10,000 shares of common stock, according to a SEC filing. In a Form 4 filed with the SEC Friday, Mark M. Rothleitner reported he exercised options for 10,000 shares on Thursday and Friday for $49.31 apiece. He then sold the shares on Thursday and Friday for $94.15 to $95 apiece. Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction."

Commercial Real Estate and REITs

• AvalonBay Spotlights Multifamily Investment in Big Apple Projects (Multi-Housing News, June 5th): "Long Island City, N.Y.--On its first weekend of leasing (June 2-3), AvalonBay’s (AVB) 602-unit Riverview North high rise in… Long Island City signed 78 apartment leases, exceeding company expectations… Chairman & CEO Bryce Blair: AVB now owns over $3 billion worth of NYC multifamily assets and surrounding communities, up dramatically from $750 million just two years ago. AvalonBay is placing a large focus on New York City, Jersey City, southern Westchester and Long Island in keeping with its strategy to develop in high barrier-to-entry markets."

• REIT Buys Flatiron Space; Religious HQ Moves East (The Real Deal, June 5th): "Philips International Holding Corp. recently purchased the Flatiron District headquarters of an international Jewish synagogue association for $26.5 million. The REIT is looking to possibly rent all of 155 Fifth Avenue to a tenant in the fashion industry. The United Synagogue of Conservative Judaism, which sold the property, acquired the six-story building in 1974. Founded in 1913, United Synagogue is the association of Conservative congregations in North America, with 760 synagogue affiliations. The association is moving to 820 Second Avenue, near 44th Street, in late December."

• Capital Improvements for Capital Hilton (Slatin Report, June 4th): "The new owners of the 1,119-room Hilton Washington began their $100 million renovation of the dowdy property before they even closed on the deal… Getting this fusty convention hotel up to speed with speed will be critical, as a presidential election year and its attendant round of lucrative meetings and parties looms on the horizon. Hilton Hotels Corp. (HLT) is selling the D.C. hotel to a powerful Los Angeles joint venture of Canyon-Johnson Urban Fund [CJUF] and Lowe Enterprises Investors for $280 million."

• US Real Estate [REIT] ETFs (Seeking Alpha, June 4th): An Investors Guide on REITs and ETFs in the US housing market.

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