Housing Bubble Bursting?

[Dee Dee]

He says about 63 percent of the homes in the region now up for sale are owned by investors.

Gee...who'da thunk it!?

 

[KYLECODY]

as of the past six months in the Phoenix area its been estimated roughly 50% of listed homes are investor owned. Amazing to look at MLS listings and see most of them vacant or tenant occupied.

 

[Couch Potato]

Nice article, Moh. To bad the reaction of most to the article will be similar to the reasons such policies are allowed to exist.

 

[moh malekpour]

Gloom settles over housing market

http://www.marketwatch.com/news/sto...C8B-0D3E-4F57-9F12-016996D7830E}&siteid=yhoof

WASHINGTON (MarketWatch) -- The spring housing market is turning out to be something of a dud, dashing hopes of a turnaround.
The spring season typically sets the tone for the last half of the year. This year, that tone is pretty gloomy.
"The housing market is struggling to get back on its feet," according to Sal Guatieri, economist at BMO Nesbitt Burns Inc.
"The spring-selling season is coming well below expectations," agreed Mario Ricchio, a housing analysts with Zacks.com.
At the beginning of the year, there was hope that housing had turned the corner. But these expectations seem to have faded away. "We were seeing signs of recovery last year, but a lot of that reflected warmer than usual weather," Guatieri said.
Economists say housing is bumping down near the bottom. "We think the housing market will remain weak right through this year. It probably won't be until early next year that we see a stabilization and some recovery," he added.
Many factors are at work. Buyers are hesitant to buy a home if they think prices are falling. Sellers have pulled homes off the market, waiting for prices to rebound.
"It is a buyers' market and except for certain places, not too much of good property is available to be sold," said Rajeev Dhawan, director of the Georgia State Economic Forecasting Center.
In addition, tightening lending standards are hurting home buyers. At the same time, speculators are fleeing the market, Ricchio pointed out.
New-home sales are expected to fall 0.1% to 857 million units in April. New-home sales fell 2.6% in the previous month and are down 23.5% compared with March 2006.
Existing-home sales are expected to only inch higher by 0.5% to 6.15 million units in April, after a sharp 8.4% decline in March -- the biggest decline in 18 years.
Numbers on new-home sales will be released Thursday at 10 a.m. Eastern, while existing-home sales data will come out at 10 a.m. Friday.
The other main indicator of the week comes on Thursday, the durable-goods report.

 

[moh malekpour]

Cheaper homes seem to sell slower

http://www.ocregister.com/ocregister/money/article_1701127.php

Housing's no longer "cooling" or "in a lull" or "returning to normal."

The start of Orange County real estate's 2007 has been a major disappointment, at best.

Hopes had circled that buyers would shed last year's indifference and get their shopping patterns reinvigorated by the generous selection of homes for sale, a growing flock of somewhat motivated sellers and relatively affordable financing.

Instead, buyers are increasingly saying "No, thank you."

DataQuick stats show 10,661 O.C. homes of all stripes sold in the first four months of this year. (CLICK HERE to see the sortable chart) That's down 21 percent from 2006 after a 21 percent year-over-year drop in 2005. That puts 2007's buying pace 22 percent behind the 1988-2007 average.

This is not some small statistical sliver. We're talking about one third of an entire year here.

And this year's sales pace is so sluggish that only two years – 1993 and 1995 – started any slower for homebuying in DataQuick's two decades of O.C. sales history.

Yes, 1993 and 1995 – right smack in the heart of the last painful real estate slump in this town. Not that I'm saying present conditions are on par with that dark era – or that we're headed toward such a debacle.

But let's be honest: This is a significant sales slump we're living through. Nobody expected the market to keep up with the hectic sales pace of a few years back. But few folks expected such extended balking by buyers.

The slowdown, according to some fresh stats DataQuick whipped up for me, seems in some ways pretty broad based. Comparing January through April sales for this year and 2005 we find that only two of 82 O.C. ZIP codes – Laguna Woods 92637 (plus 16 percent) and Villa Park 92861 (plus 5 percent) – saw sales increase the past two years. That's not much of an uplift, as their combined home sales equal less than 2 percent of the countywide total.

When you slice the data further, the cheaper end of the market looks to be taking a heftier brunt of the sales drop. That makes some sense considering the huge affordability challenges buyers face after a house-rally that essentially triples the cost of a local residence in the past decade. The loss of subprime mortgages and other aggressive lending likely helped to ground the budget-challenged home shopper

 

[Randolph Kinney]

Credit Suisse Will Pay More for Subprime, Alt A Mortgages to Expand Share

http://www.bloomberg.com/apps/news?pid=20601206&sid=aJZ06Jdb19Vg&refer=realestate

May 21 (Bloomberg) -- Credit Suisse Group plans this week to increase what it pays brokers and lenders for certain so- called subprime and Alt A mortgages.


Credit Suisse, Switzerland's second-largest bank, will release new prices on May 23 aimed at helping the firm gain market share in the U.S., Michael Marriott, a managing director at the firm, said at a Mortgage Bankers Association conference today in New York.


``What we're targeting is the product that we want,'' Marriott said during a panel at the conference. He declined in an interview to elaborate.
Marriott's comments demonstrate that companies are attempting to take advantage of the failures of lenders by focusing on loans causing the fewest defaults.


Since December, at least six lenders that make loans that don't meet ``prime'' guidelines set by government-chartered mortgage companies Fannie Mae and Freddie Mac have filed for bankruptcy protection. Dozens more were closed or sold as late payments and defaults rose.


Marriott said Credit Suisse has generally become more selective when the debt on homes approaches their full value and when loans contain certain risk factors. Even as Credit Suisse intends to pay more for subprime and Alt A mortgages, the firm seeks to tighten other guidelines more, he said.

Looks like a competitor is coming in the market for that subprime and ALT-A loan business. Just testing the waters, maybe the shark has gone away.

 

[Randolph Kinney]

Home Builders In A Hole

http://www.businessweek.com/magazine/content/07_21/b4035053.htm?campaign_id=rss_magzn

Battered by the bust, they're filing for Chapter 11 and begging hedge funds for help

[FONT=arial,helvetica,univers]The downturn in the housing market has caught the nation's home builders by surprise, leaving many overextended with costly land they can't develop and unfinished homes they can't sell. The financial strain is starting to show. From Arizona to Arkansas, dozens of small- and midsize builders have filed for bankruptcy over the past six months.

[/FONT][FONT=arial,helvetica,univers]And in late April, credit analysts at Moody's Investors Service (MCG ) warned that a number of large home builders could fall out of compliance with their debt agreements later this year, leaving them at risk of default unless lenders come to their rescue by granting a waiver or reworking their loans. Some builders are so desperate, in fact, that they're even running into the arms of hedge funds to bail them out with fresh loans at high rates and onerous terms.

[/FONT][FONT=arial,helvetica,univers] But for the industry as a whole, there may be even more problems just below the surface since many builders entered into land deals with partners, amassing billions in debt that doesn't show up on their balance sheets. "I think we're going to see a lot more [bankruptcy] filings in the next 6 to 12 months," says Tucson attorney Eric Slocum Sparks, who is representing one local builder, AmericaBuilt Construction Inc., in Chapter 11. "I've got a couple of clients who want to see me next week, and I know these aren't social visits."

[/FONT][FONT=arial,helvetica,univers] For some, the white knights may be hedge funds. Consider the plight of Dominion Homes Inc. (DHOM ), an Ohio-based builder that sold $257 million worth of homes last year. When Dominion fell close to default last August on $216 million in bank debt, hedge fund Silver Point Finance bought the loans and negotiated tough terms. Some $90 million of the refinancing came with an interest rate of 15%, vs. the 9.25% Dominion had been paying. The deal also stipulated that Silver Point could receive 15% of Dominion's stock if it wants it. "The [fund was] willing to go where no other regulated institution would go," says Ronald F. Greenspan, an attorney and restructuring adviser for FTI Consulting Inc. Dominion CFO William Cornely admits the new rates are high, but says it "affords us the opportunity to continue operations during the downturn and positions us for the rebound."

[/FONT][FONT=arial,helvetica,univers] If business doesn't stabilize, more builders could find themselves in the same hole in the ground as Dominion. Already, some analysts are concerned about the pace at which many builders have been burning through cash. Moody's credit analyst, Joseph A. Snider, notes that 11 of the 21 large builders whose debt his firm rates had negative cash flow in 2006 as many were stuck with higher-than-expected inventories of homes they couldn't sell.

[/FONT][FONT=arial,helvetica,univers] More bloodletting may be ahead. Many large builders also took minority stakes in joint ventures, allowing them to stockpile land for future needs while keeping billions in debt off their balance sheets. Alisa Guyer Galperin, an analyst at the Center for Financial Research & Analysis, estimates that Lennar Corp. (LEN ) is on the hook for up to $910 million of $5.6 billion in debt through partnerships not on its books.

[/FONT][FONT=arial,helvetica,univers] One fear is that if a partner runs into financial trouble, Lennar and other home builders could find themselves battling with lenders that demand they make good on the partnership's total outstanding debt. Florida builder Technical Olympic USA Inc. (TOA ) is embroiled in a lawsuit with one of its lenders, Deutsche Bank (DB ), which claims the builder is in "multiple potential defaults" on $675 million in debt owed by joint venture partners that failed. For its part, CFO Bruce Gross says Lennar has mitigated risk by partnering with strong institutional investors like the pension fund CalPERS and has structured the deal to make sure it isn't liable for partners. "Our joint ventures are very strategic and are designed to share the upside opportunity and downside risk with other investors," says Gross. For now, Wall Street is thinking largely about the downside.[/FONT]

 

[Tim The Enchanter]

Just testing the waters, maybe the shark has gone away.

Yes, To breed.

 

[Terrel L. Shields]

From Arizona to Arkansas, dozens of small- and midsize builders have filed for bankruptcy over the past six months.

from our paper today.

2 service co. vs builders
a bank vs builder
an appraiser vs state board
Lumber Co. vs builder
Lawn Service vs Investor(?)
There were 6½ pages of foresclosure notices in a recent paper.

 

[Steve Owen]

Info from a realtor

Kind of hard to read, but still pretty interesting:

http://appraisersforum.com/1378513-post12.html