HomeBuilders

[mlkrborn]

FRE remarkable historical recovery--- Insolvent and profitable..Backbone of housing sector alive and kicking! First profitability..
Restructuring (reorganization) of FNM and FRE will be announced in feby. One alternative : private again..great news for equity owners..

ap
Freddie Mac's loss narrows, eschews federal aid
Freddie Mac posts quarterly loss of $374 million, seeks no new government aid for now

* By Alan Zibel, AP Real Estate Writer
*
WASHINGTON (AP) -- Freddie Mac escaped the second fiscal quarter without asking the government for any new financial aid, but still expects to need more federal help in the future.
Related Quotes
Symbol Price Change
FNM 0.66 -0.13
Chart for FANNIE MAE
FRE 0.74 -0.10
Chart for FREDDIE MAC
{"s" : "fnm,fre","k" : "c10,l10,p20,t10","o" : "","j" : ""}

The government-controlled mortgage finance company on Friday posted a quarterly loss of $374 million, or 11 cents a share, including $1.1 billion in dividends paid to the government.

Excluding those payments, the company would have earned $768 million. In the year-ago period, Freddie lost $1.05 billion, or $1.63 a share.

The McLean, Va.-based company was able to maintain a positive net worth of $8.2 billion in the quarter ended June 30. As a result, it did not need to seek funding from the Treasury Department, which has provided Freddie Mac with $51 billion since the takeover last September.

The government has pledged up to $400 billion in aid for Freddie Mac and its sibling Fannie Mae. The two companies play a vital role in the mortgage market by purchasing loans from banks and selling them to investors. Together, they own or guarantee almost 31 million home loans worth about $5.4 trillion. That's about half of all U.S home mortgages.

"While we are seeing some early signs pointing to a housing recovery -- including a modest uptick in house prices in some markets -- our outlook remains cautious due to rising foreclosures, growing unemployment, tight lending standards and buyers' reluctance to re-enter the market," John Koskinen, Freddie Mac's interim CEO, said in a statement.

Revenue for the quarter totaled $7.5 billion, compared with $1.6 billion a year earlier.

Reeling from losses from the housing bust, Fannie Mae and Freddie Mac have tapped a combined $96 billion in taxpayer aid, including nearly $11 billion requested by Fannie Mae this week. That's surpassed only by insurer American International Group Inc., which has received $182.5 billion in financial support from the government.

And it's unclear how much Fannie and Freddie will repay taxpayers.

"I don't see at this point how they could pay it all back," said James Lockhart, director of the agency that regulates the two companies.

Despite recent signs of stabilization in the housing market, loans backed by Fannie and Freddie continue to fall into trouble. At Freddie Mac, 2.8 percent of borrowers were at least three months behind on their mortgages, triple last year's levels. The company owned about 35,000 foreclosed properties at the end of June, up from about 29,000 in March.

After nearly a year under federal control, the future of the two companies remains unclear. The Obama administration is expected to unveil its plans until early next year.

Options being considered include keeping the companies private, winding down their operations, merging them into a federal agency or separating out their bad mortgage assets into a new company backed by the government.

[mlkrborn]

Has the Housing Market Hit Bottom? 31 comments
by: Tim Iacono July 30, 2009 | about: DHI / PHM / TOL
Tim Iacono



Now that a number of recent housing reports are generating some incredibly positive headlines and the global economy appears to be slowly digging its way out of an enormous hole that was created last fall when the world nearly came to an end, the burning question on the minds of millions of people is ... Has the housing market hit bottom?

There is no shortage of answers.

Unfortunately, most of them are far too simple and, in most cases, the individual or organization providing the answer has a bias of some sort.

I'm no exception.

We sold our house about five years ago and have been renting ever since.

We plan to buy again, but not until at least next year and we hope to get a lot more house for our money than we could today.

That's the soonest that I think the bottom in home prices is likely to occur around here in the price range we're looking, though a bottom in home sales may already be behind us, and this is what makes the recent discussion of a housing bottom so complicated - "hitting bottom" means different things to different people living in different parts of the country.

The discourse on this subject is full of misinformation and deception from parties with vested interests that will inevitably lead people to make horrendously bad decisions that they'll regret in another year or two while others may postpone decisions that would be best made today.

With my biases out of the way, a few thoughts on a housing market bottom are offered here. In this article, regional differences will largely be set aside and the focus will be on three sets of national housing data - new home sales, existing home sales, and existing home prices.

New Home Sales Have Bottomed

First, let's look at the home building industry, which, up until a couple years ago had accounted for about 10 to 15 percent of all home sales. Then, the homebuilders' share gradually sank to about half that amount as waves of foreclosures started hitting the market at much lower prices, cutting into their business dramatically.

Ironically, many of these foreclosure sales were homes that the builders had built and sold a couple years prior. Disgruntled home buyers who, in 2006 and 2007, complained about how builders were slashing prices on Phase III after they bought in Phase II ultimately had the last laugh in 2008 and 2009 when they walked away from their almost-brand-new home and the bank sold it at a 40 percent discount to the going prices for Phase III.

Don't feel too sorry for the homebuilders - they had a few very good years.

Anyway, things have gotten so bad in the new home construction business over the last year or so that they really can't get any worse - not only did new home sales set new all-time lows for a data series that goes back more than 40 years, they simply obliterated every other housing downturn over that period in population-adjusted terms.
IMAGE The annual rate of 329,000 units seen in January of this year was not only less than the 1981 low in nominal terms, but, after accounting for the increase in population, it was not much more than half that level.

Interestingly, there couldn't have been two different eras for the homebuilders as far as the cost of money is concerned - back then they were sending truck loads of sawed up two-by-fours to the Federal Reserve building in Washington D.C. because Paul Volcker was on a mission to squash inflation with interest rates approaching 20 percent, whereas, today, the Fed has interest rates pegged at zero.

And speaking of the central bank, their legions of economists might think that housing has bottomed when looking at new home construction because this has a direct impact on economic growth - residential construction has been a drag on GDP for about four years now and, from a direct macro-economic perspective, the worst is probably behind us.

For the homebuilders, it's hard to imagine how things could get any worse than they were in January, so, unless this downturn morphs back into the Great Depression II, things have got to get better. In this case, it's probably fair to say that the bottom is already behind us.

Existing Home Sales Have Probably Bottomed

If you're in the business of selling real estate, then you've got to be thinking that you've seen the worst of the housing bubble's mean side and you may be correct in this assessment now that banks are realizing they're not going to get 2006 prices for all those foreclosed homes that have been sitting on their books for the last year or so.

There's a booming business in distressed property sales that have buoyed existing home sales for months now (much to the dismay of the homebuilders). Foreclosures and short sales accounted for some 70 percent of all home sales in Las Vegas last month and that's a good thing.

The "market" is doing what it is supposed to do - price discovery - and the fact that a lot of prices these days are being discovered through auctions is just part of that process.

And those who dismiss the lower prices fetched on distressed property sales as some sort of a temporary phenomenon should realize that they are doing so at their own peril - there's a lot more of this inventory in the pipeline as the next wave of bad loans wash up on the shores of mortgage lenders and ultimately appear on Realtor.com or Auction.com where, eventually, they'll lower their reserve prices and make a few more sales.

Though it's not as clear-cut as in the case of new home sales, existing home sales probably made a bottom back in January although the same caveats about the Great Depression II apply.
IMAGE The fact that there have been a few false starts before (circled in blue above) should be some cause for concern (particularly the one in late-2008 as it relates to the possibilities of another Great Depression), but, as long as the central bank keeps pumping money into the system and as long as the government continues to guarantee the vast majority of mortgages via the wards of the state - Fannie Mae and Freddie Mac - eventually, all the excess housing inventory will be worked down and the bottom in existing home sales is probably behind us.

Before moving on to the next section on a bottom in home prices, it's important to remember that there's a big difference between home sales and home prices along with the timing of their respective bottoms.

Generally speaking, real estate agents (those who survived the last few years) are now a much happier lot than they were earlier in the year because they're making more sales. No sales means no commissions, and whether those commissions are large or something less than large makes little difference.

A real estate agent would be much more willing to help you buy or sell a house at $250,000 rather than not make that transaction at all and the fact that the home may have fetched $400,000 a couple years ago or that it may only be worth $200,000 next year doesn't really matter - they'll help you make the sale at the price you agree to and they'll try to make you feel good about it because, if they don't make the sale, they don't get paid.

A sale is a sale, but a bottom in home sales is quite different than a bottom in home prices.

Home Prices Will Not Bottom for Some Time

The vast majority of people in the world today are neither home builders or real estate sales agents, so, despite everything you hear and read about home sales - up, down, or flat - they really aren't all that relevant to most of us.

If you're like all the other prospective home buyers or sellers out there today, the only thing that you should be concerned about are home prices - whether they'll keep going down or if they've already reached a bottom.

The financial world has been buzzing over the last week as rising new home sales and rising existing home sales were followed up by yesterday's blockbuster report from the folks who run the Case-Shiller Home Price Index that - GASP! - home prices ROSE from April to May.

There it is for all to see in the colorful graphic below - the housing boom and bust in all its glory along with those little squiggles upward on the right-hand side, a sort of resurrection of the housing market by the sounds of some of the press coverage.
IMAGE Yes, unfortunately, Detroit is still off the chart - a much bigger bust than boom...

More than a few anxious housewives have no doubt been elbowing their hubbies in recent days to cancel that golf game on Saturday and schedule a house-hunting expedition because the news is once again full of reports about rising home prices.

As can be seen clearly in China today, nothing excites people more than when prices rise.

While the first increase in the Case-Shiller Home Price Index in three years is a seminal event to be sure, it's probably not quite what it's being played up to be in your local real estate sales office where, remember, folks are more interested in sales than prices.

Combining the excitement people feel when prices rise with the excitement real estate agents feel when sales volume rises is a big part of the reason for the enormous rise and fall depicted above.

Just as there was virtually no experience with home prices that rose as fast as they did from 2002 to 2006 or falling as fast as home prices fell between 2007 and 2009, there is little background that anyone can draw on to predict what a "bottom" in home prices might look like, but you can just about be guaranteed that the price bottom will lag the sales bottom by at least a year as it did during the peak.

Shown below is evidence of such as the National Association of Realtors' existing home sales are plotted on the same chart as the Case Shiller 20-City Home Price Index - a 13 month lag.
IMAGE Those who think that the relationship between sales and price at the bottom will somehow be different than the relationship between these two at the peak have virtually no data to back that claim.

Unfortunately, as Ben Bernanke famously said a few years ago, home prices have not declined nationally since the Great Depression.

If the bottom in sales occurred in January, why couldn't the May Case Shiller price data indicate a bottom in price?

Well, anything's possible, but this particular scenario is quite unlikely.

While there is no national data to draw on for housing price bottoms, there is one case study that provides some valuable information and it should help to put Tuesday's Case-Shiller report on rising home prices into a little better perspective - the Los Angeles housing market in the 1990s.

As shown below, housing bottoms can be long, drawn-out affairs with lots of false signals.
IMAGE In the case of Los Angeles in the 1990s, it was almost two full years from the first positive reading in the price index in June 1994 until the ultimate low in February 1996. And lest anyone get too excited about that bottom in 1996, another one occurred a year later in 1997.

From what little experience there is with housing price bottoms, the odds don't favor a lasting reversal in prices in the near-term and when it comes, the rebound won't be that impressive. You'll know when home prices hit bottom when people stop talking about them.

It is important to note that in some low-priced areas where subprime loans began souring a couple years ago and foreclosure sales have been brisk for some time, the bottom in prices may be near, if not already here. Also, in parts of the country where there was never much of a boom or bust, higher prices may be seen in the near-term, but, those are about the only exceptions.

For people like you and me (at least, most of you), don't look for a bottom in prices until at least sometime next year.

[up-down]

Thats a lot of foreclosures!

Jul 20, 2009

"...Foreclosure filings jumped to a record 1.9 million on more than 1.5 million properties in the first six months of the year, RealtyTrac said earlier this month..."

http://finance.yahoo.com/tech-ticker/article/285683/Barney-Frank-Don't-Blame-Me-for-the-Housing-Bubble?tickers=len,fnm,fre,kbh,tol,xhb,hd

[up-down]

Home prices may be stabilizing, market tracker shows

May is a busy month for home sales, which usually bumps prices up. The S&P/Case-Shiller index of home prices in 20 metropolitan areas was up slightly in May over its April level for the first time since 2006. Seasonally adjusted, the index for May was down by nine-tenths of a percentage point from April.

The S & P/Case-Shiller index of prices in 20 major cities rose in May over its April level for the first time since 2006. Analysts say it's too early to declare that the free fall in prices is over.

By Peter Y. Hong
July 29, 2009
Another sign emerged that the nation's struggling housing market may be nearing its bottom as a widely followed national home-price index posted its first gain in nearly three years.

The S&P/Case-Shiller index of home prices in 20 metropolitan areas was up slightly in May over its April level for the first time since 2006.



Chart: Home prices New-home sales in U.S. up 11% in June

Cleveland, Dallas and San Francisco showed the largest gains in May figures released Tuesday, but Los Angeles prices continued to fall. The index was the latest surprise following reports showing monthly gains in new-home sales and housing starts nationwide, and higher median home sales prices in California.

"The data do show for the first time in quite a few years some potential signs of turnaround," said Maureen Maitland, vice president of index services at Standard & Poor's.

But "in terms of a sustained recovery, we're not out of the woods yet," Maitland cautioned. "What we need is for this to continue for quite a few months."

The nationwide index of house prices was still down 17% in May from the same month last year. the rapid deterioration in prices has slowed since January

Many housing market analysts agree that cheers over a few bright spots in the data must be weighed against a more complex range of indicators. Home prices are still falling in many areas with high unemployment and looming foreclosures likely to weigh down real estate for the foreseeable future.

Even the May index rise over April -- by a half-percentage point -- turns out to be a decline when adjusted for seasonality.

May is a busy month for home sales, which usually bumps prices up. Seasonally adjusted, the index for May was down by nine-tenths of a percentage point from April.

The slowing decline in home prices means "the free fall housing has been in is clearly over," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. "But I'm not confident at all we're seeing the end of the period of price declines."

Mortgage interest rates and unemployment are rising, and "we continue to have a massive oversupply of houses by every measure," he said.

Such mixed signals are prompting confusion for homeowners and potential home buyers, and it brought warnings from veteran housing market observers.

"We are extremely concerned that policymakers, banking and real estate industry executives, investors and others will use misleading home price data to conclude that home prices have stabilized. They have not," John Burns, a widely followed Irvine consultant to home builders, wrote in a recent note to clients.

The glut of unsold homes was the mostly overlooked part of a report Monday that new-home sales jumped 11% in June over May. New-home sales were so low in May, however, that even with the double-digit percentage increase, June's new-home sales total was still the lowest for the month since 1982.

The median home sales price is another point of confusion. It has been rising in California and Southern California recently. The California median was up 7% in June from May, to $246,000, according to San Diego-based MDA DataQuick.

But the rise in median price actually reflected falling prices of homes in more expensive neighborhoods, not an end to the downturn. That prompted more sales of relatively pricey properties, changing the mix of all homes sold to a higher-value grouping.

Because the median is the middle of all values, it rises when the group is made up of higher-valued members. So the median can rise even as prices fall -- as long as the prices are falling at the higher end of the market.

Until January, the Case-Shiller index had been declining at a record pace for 16 straight months. Since then, the slide has slowly become less severe.

The index compares the latest sales of detached houses with previous sales and accounts for factors such as remodeling that might affect a house's sale price over time. From those data, an index score is used to show price changes. An index score of 100 reflects January 2000 prices.

The Los Angeles index, which includes Orange County, was down 19.8% in May from the year-ago month. In April, the Los Angeles area decline had been 21% from the same month in 2008.

Los Angeles prices are now 42% below their 2006 peak.

The largest year-over-year declines were in Phoenix (34.2%) and Las Vegas (32%).

Other cities showing sharp declines were:
San Francisco (26.1%);
Miami (25.2%);
Detroit (24.5%);
Minneapolis (21.7%);
Tampa, Fla., (20.8%);
and Chicago (17.5%).

Despite the likelihood of further price declines, many home buyers are deciding prices have fallen enough. Baker of the Center for Economic and Policy Research is among them; he just purchased a house in Washington, D.C., after renting for five years.

"I didn't think I was hitting the bottom, but I figured I wouldn't get killed," he said. "If prices fall another 5% or 10% I'll be OK. If they fall 20% I'll be upset," he said.

http://www.latimes.com/business/la-fi-home-prices29-2009jul29,1,482970.story

[mlkrborn]

4th in row; still decline in values and prices yet a bit better stabilization?

WASHINGTON (MarketWatch) - U.S. home prices rose on a monthly basis for the first time since July 2006, according to the national Case-Shiller home price index released Tuesday. "This could be an indication that home price declines are finally stabilizing," said David Blitzer, chairman of the index committee for Standard & Poor's, which compiles the Case-Shiller index. Sales slipped 0.9% in April. On a year-to-year basis, prices in 20 selected cities fell 17.1%. This is a slower pace of decline than the 18.1% drop in April.

[mlkrborn]

Dont blame Frank for housing bubble?
Barney Frank: Don't Blame Me for the Housing Bubble
Posted Jul 20, 2009 08:00am EDT by Peter Gorenstein in Recession, Banking, Housing
Related: len, fnm, fre, kbh, tol, xhb, hd

Who’s to blame for the subprime housing bubble? A popular answer – especially on the right side of the aisle - is Massachusetts Democrat, Barney Frank.

Why?

The argument, best summed up in an Investor's Business Daily editorial published in March 2009, goes like this: "Starting in the early 1990s," Rep. Barney Frank "(and other Democrats) stood athwart efforts by regulators, Congress and the White House to get the runaway housing market under control." It goes on to say in, "2002, Frank nixed reforms" of Fannie Mae and Freddie Mac and that in 2003, "led by Frank, Democrats stood as a bloc against any changes" that President Bush proposed making to Fannie and Freddie.

Is it true? Frank doesn't think so.

Here are some of the main points the current Chairman of the House Financial Services Committee made to Tech Ticker's Aaron Task during their interview last week on Capitol Hill.

First, and it's a point Frank returned to several times, is he and the Democrats did not have the power to call the shots since they were in the minority during most of the Clinton and Bush years. "Tom Delay was running the House of Representatives. So I take responsibility for what I do but I don't take responsibility for Newt Gingrich and Tom Delay’s policies," he protests. Making a broader point, he says, "if I really had the power to stop the Republicans from doing anything you know what I would have done first? I would have stopped the war in Iraq. I would have stopped the impeachment of Bill Clinton. I would have stopped tax breaks for people making millions of dollars a year."

Continuing along that line, when it comes to the problems at Fannie Mae and Freddie Mac, Frank not only denies it, he shifts the blame to the Bush administration. When it came to a Republican bill to reform Fannie and Freddie, President Bush gave his own party "the one finger salute," he colorfully says.

Second, Democrats not only did not cause the crisis, they were aginst subprime lending all together: "The Bush administration made a big mistake; they were the ones that pushed home ownership for very poor people. Liberals wanted rental housing, we thought that was more appropriate," he claims.

Finally, the real estate crash was not something even the experts saw coming. "No one I know of - except Robert Shiller - saw the drop in conventional housing prices," he says.

Agree with him or not, it still doesn't change our current situation. Foreclosure filings jumped to a record 1.9 million on more than 1.5 million properties in the first six months of the year, RealtyTrac said earlier this month. Perhaps it's time lawmakers like Rep. Frank and his Republican colleagues find a working solution instead of pointing fingers.

[mlkrborn]

OT; BIGGEST IPO of the World: china state construction and housing Co.
July 21 (Bloomberg) -- China State Construction Engineering Corp. will raise as much as 50.2 billion yuan ($7.3 billion) in the world’s biggest initial public offering since March 2008.

China’s largest housing contractor plans to sell as many as 12 billion shares at 3.96 yuan to 4.18 yuan each, according to a filing to the Shanghai Stock Exchange today. The sale of a 40 percent stake values State Construction at as much as 125.5 billion yuan.

State Construction’s IPO is almost 28 times larger than the second-biggest sale in mainland China this year, testing a rally that’s pushed the benchmark Shanghai Composite 79 percent higher since Dec. 31. The company plans to use proceeds to expand in residential construction, as a surge in bank lending drives a pickup in the housing market.

“The market won’t have any problem holding up the State Construction sale,” Yu Yang, a Guangzhou-based strategist at Guotai Junan Securities Co., said before the filing. “There’s so much money around after the relatively loose monetary policy.”

The IPO values State Construction at as much as 51.3 times 2008 profit, the company said. Companies in the China SE Shang’s Industrial Index trade at an average 26 times estimated full- year earnings, according to data compiled by Bloomberg.

State Construction’s profit fell 44 percent in 2008 to 4.92 billion yuan because of the slowing property market, rising raw material prices and higher tax payments. The company and its advisers are predicting a recovery this year, as the government’s 4 trillion yuan stimulus package begins to revive the world’s third-largest economy.

Home Prices

New home prices in 36 medium-sized and large Chinese cities rose 6.3 percent in June from a year earlier, the National Development and Reform Commission said today. Nationwide property sales jumped 53 percent last month from a year earlier by value, and investment in real estate development increased 9.9 percent, the statistics bureau said July 10.

“Earnings will remain strong as China’s economic growth picks up,” said Luo Guo, a Shanghai-based analyst at Orient Securities Co. “Their construction business is linked to the real estate sector, so investors are pretty positive on the fundamentals.”

For China’s securities regulator, which began approving IPOs last month after halting sales in September last year following a stock market rout, State Construction will provide a test of investors’ ability to digest new equity.

State Construction’s offering is the biggest in China since PetroChina Co. raised 66.8 billion yuan in October 2007. Worldwide, it is the largest IPO since Visa Inc. collected more than $19 billion in March last year.

Investment Plan

Underpinning the return of IPOs in China, the Shanghai Composite rose today to a 13-month high. The gauge is the world’s second-best performing benchmark this year, according to Bloomberg data.

State Construction is the fifth company to get final approval to sell shares since the IPO moratorium ended last month, following Guilin Sanjin Pharmaceutical Co., Zhejiang Wanma Cable Co., Your-Mart Co., and Sichuan Expressway Co. Sanjin, Wanma and Your-Mart surged on their debuts; Sichuan Expressway hasn’t yet begun trading.

The company owns about 34.3 million square meters of land reserves and plans to use them to expand in real estate development, according to its prospectus. State Construction plans to use as much as 8 billion yuan of the IPO proceeds for 24 commercial housing projects requiring a total investment of 15.8 billion yuan.

For Related News and Information: Top Stories: TOP<GO> China State Construction News: 601668 CH <Equity> CN <GO> Equities Calendar: ECDR <GO>
Last Updated: July 20, 2009 12:00 EDT

[mlkrborn]

582k not 586k.. correction..
market pulse

Jul 17, 2009, 8:30 a.m. EST
U.S. housing starts up 2nd straight month in June
Explore related topics
Banks
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Alert Email Print Share By Greg Robb

WASHINGTON (MarketWatch) - New construction of U.S. houses expanded for the second straight month in June after hitting a record low in April, the Commerce Department estimated Friday. Starts rose 3.6% in June to a seasonally adjusted 582,000 annualized units stronger than the 531,000 pace expected by economists surveyed by MarketWatch. This is the highest level of starts since last November. Starts of new single-family homes rose by 14.4% to 470,000 in June, while starts of large apartment units fell 29.4% to 101,000. Building permits, a leading indicator of housing construction, rose 8.7% to a seasonally adjusted annual rate of 563,000. This is the highest level of permits since December.

[Bull Trader]

ya but thats not for multi-family homes and i believe its hosuing FINISHES and HOUSING LOANS that matter most. jmo

[mlkrborn]

June 09 housing starts; 586k better than May starts.. Good sign. Worst is over?

[mlkrborn]

FNM and FRE will refinance loans to homes/properties underwater by 25 percent.. good break for distressed homeowners..

[mlkrborn]

House Price Crash Rate Finally Beginning to Ease
Posted Jun 30, 2009 09:58am EDT by Henry Blodget

From The Business Insider, June 30, 2009:

Good news! The rate of the price decline in the housing crash has finally begun to ease.

Bad news! Prices are still falling 18% year over year.

Specifically, in April, according to the Case Shiller index, the rate of decline in nationwide house prices eased slightly in April--to 18% from 19% in March. The rate of decline has hovered around 19%-20% for the last several months. And prices have now declined a staggering 33%-34% from the peak.

As we've noted over this period, before house prices can start recovering, they have to stop falling. And the first step toward prices stopping falling is a decline in the RATE at which they are falling. And we are finally beginning to see that.

But we're still talking about an astonishing rate of collapse. And we're still looking at a peak-to-trough decline of at least 40% and probably closer to 50% nationwide, which would be unprecedented. And even today, with prices down 33%-34% from the peak, prices are still above fair value.

So the folks who use this slight moderation in the rate of decline to spin tales of a "bottom" or, worse, a "recovery" are smoking something. Prices have at least another 10%-15% to fall, and they'll likely be falling for at least another year or two.

Here's the small uptick in the rate of decline:

Prices have now rolled back to mid-2003 levels. They'll likely be back to 2000 levels before we're through.

And here's the positive spin from the S&P press release (always look on the bright side!):

The 10-City and 20-City Composites declined 18.0% and 18.1%, respectively, in April compared to the same month in 2008. These are improvements over their returns reported for March, down 18.7% for both indices. For the past three months, the 10-City and 20-City Composites have recorded an improvement in annual returns. Record annual declines were reported for both indices with their respective January data, -19.4% for the 10-City Composite and -19.0% for the 20-City Composite.


“The pace of decline in residential real estate slowed in April,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “In addition to the 10-City and 20-City Composites, 13 of the 20 metro areas also saw improvement in their annual return compared to that of March. Furthermore, every metro area, except for Charlotte, recorded an improvement in monthly returns over March. While one month’s data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions. We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here."

[Keep dreaming]

As of April 2009, average home prices across the United States are at similar levels to where they were in the middle of 2003. From the peak in the second quarter of 2006, the 10-City Composite is down 33.6% and the 20- City Composite is down 32.6%.

In terms of annual declines, the three worst performing MSAs continue to be the same three from the Sunbelt. Phoenix was down 35.3% in April, Las Vegas declined 32.2% and San Francisco fell 28.0%. Denver, Dallas and Boston continue to fare the best in terms of annual declines down 4.9%, 5.0% and 7.7%, respectively. Charlotte, Chicago, Cleveland, New York, Portland and Seattle posted record annual declines in April. For the month Dallas was the best performer returning +1.7%, while Las Vegas was the worst performer down 3.5%.

Looking at the data from relative peaks-through-April 2009, Dallas has suffered the least, down 9.6% from its peak in June 2007; while Phoenix is down 54.1% from its peak in June of 2006. Excluding Dallas, all of the 20 metro areas are in double digit declines from their peaks, with 10 of the MSAs posting declines of greater than 30% and two of those – Phoenix and Las Vegas – in excess of 50%.

[mlkrborn]

NEW DATA for home sales:
By Ruth Mantell

WASHINGTON (MarketWatch) -- U.S. home prices were down 18.1% in the year ended April, according to the national Case-Shiller home price index released Tuesday. On a month-to-month basis, prices in 20 selected cities fell 0.6% in April, with declines in 11 cities. Still, the overall pace of decline slowed in April, said David Blitzer, chairman of the index committee for Standard & Poor's, which compiles the Case-Shiller index. "Every metro area, except for Charlotte, recorded an improvement in monthly returns over March," Blitzer said. "While one month's data cannot determine if a turnaround has begun, it seems that some stabilization may be appearing in some of the regions."

[mlkrborn]

May construction jumps..
May Housing Construction Jumps by 17.2 Percent- AP

Construction of new homes has jumped in May by the largest amount in three months, providing an encouraging sign that the nation's deep housing recession was beginning to bottom out. The Commerce Department says that construction of new homes and apartments jumped 17.2 percent last month to a seasonally adjusted annual rate of 532,000 units. That was better than the 500,000-unit pace that economists had expected and came after construction had fallen in April to a record low of 454,000 units.

[mlkrborn]

Sentiment and activity lower in building sector!
By Patrick Rucker Patrick Rucker – Mon Jun 15, 1:25 pm ET

WASHINGTON (Reuters) – U.S. homebuilder sentiment slipped in June, a private survey showed on Monday, as higher mortgage rates and an ongoing credit crunch damped expectations for the sector.

The National Association of Home Builders/Wells Fargo Housing Index slipped to 15 from 16 in May. Analysts had expected the index to climb by one point.

The deep slump in the U.S. housing market has shown some signs of abating. However, the NAHB said consumer anxiety over jobs and the economy's health has created an uncertain picture for the sector's recovery.

"Home builders are facing a few headwinds, including expiration of the tax credit at the end of November; a recent upturn in interest rates; and especially the continuing lack of credit for housing production loans," Joe Robson, the chairman of the trade association, said in a statement.

Earlier this year, Congress authorized an $8,000 tax credit for first-time home buyers and home builders have called for that credit to be expanded beyond this year.

While rates on 30-year mortgages touched record lows in April, they have climbed since then on hints the U.S. recession, now in its 18th month, may be drawing to a close.

Rates on 30-year mortgages rates, which touched a low of 4.78 percent in April, reached 5.59 percent last week, the highest level since November, according to mortgage finance company Freddie Mac.

On a bright note, the swollen stock of new homes has been shrinking. In April, the inventory of homes available for sale fell 4.2 percent to 297,000, or the lowest level since May 2001. New data will be available on Tuesday.

The overall housing market has been crippled since a five-year boom turned into a record number of defaults in 2006.

Many homeowners have rushed to refinance, and potential buyers have been nudged off the fence by the low mortgage rates of recent months but that spree is coming to an end.

An index of mortgage activity fell to a four-month low in early June as climbing rates turned consumers away, the Mortgage Bankers Association said.

(Editing by Kenneth Barry)

[mlkrborn]

New data on housing index and prices: 20% down!
S&P: Home Prices Fall by Record 19.1 Percent in Q1- AP
The home price slide accelerated during the first three months of 2009, according to a report issued Tuesday. The S&P Case-Shiller National Home Price index, a bellwether of real-estate market direction, plunged a record 19.1% during the quarter compared with the first three months of 2008. That followed an 18.2% drop last quarter.

[mlkrborn]

Is housing sector recovering or not?
http://www.businessweek.com/investor/content/may2009/pi20090519_897813.htm?campaign_id=mag_May21&link_position=link39

[mlkrborn]

Commercial RE sector loans are eligible plus weak housing data
Providing another potential boost to banks, the U.S. Federal Reserve widened its safety net for the downtrodden commercial property sector by making older loans eligible for an emergency program set up to revive dormant credit markets. [ID:nN19432017]

But a report showing U.S. housing starts and permits fell to record lows in April revived concerns about the health of the U.S. real estate market, which touched off the financial crisis in 2007 when complex securities tied to mortgages suddenly turned sour. [ID:nN19408037]

[mlkrborn]

Better profit by LOEW second largest builder --plus finance sector--moved markets up!

[mlkrborn]

DATA SUGGESTS a bit better better activity; Markets up!
Two new economic nuggets added to demand for stocks. Construction spending rose unexpectedly in March after five straight declines, and pending U.S. home sales rose more than expected.

The Commerce Department said construction spending rose 0.3 percent, the best showing since a similar rise last September. Economists surveyed by Thomson Reuters had expected spending to drop 1.5 percent.

Separately, the National Association of Realtors said its index of pending sales for previously occupied homes rose 3.2 percent to 84.6 on strength in nonresidential projects and government building. The report was well ahead of the 82.1 economists had been expecting.

[mlkrborn]

Good essay!

Housing Data: A View From the Bottom of the Cliff 3 comments
by: Individual Global Investor April 28, 2009 | about stocks: DHI / FNM / FRE / KBH / TOL / XHB


I am writing this on the eve of the release of the S&P/Case-Shiller Index of housing prices. While the index is the last of the monthly housing data to be released in April, I am quite certain the data won’t change the conclusion: home prices are still falling. At least as measured by Case-Shiller, this will continue well into next year with declines likely to be smaller as the year progresses. The rest of the data: housing starts, inventories, new home sales, existing home sales, foreclosures, etc. all seem to reinforce a different conclusion. We have landed hard at the bottom of the cliff.

Optimists will say that the “recovery is underway” and pessimists will say that “we are far from a healthy housing market.” Both are right, of course, but those views imply different assessments of the trajectory ahead. So far, there are no indications that the near term (between now and the end of the summer) we will do much more than bounce along the bottom. The best that can be said based on the latest housing data is the freefall is over because we have smacked hard against the bottom. As described at the end, hitting the bottom however forcefully and painfully has a silver lining. But first the data (click to enlarge):

New home sales were up, no down, no up. Numbers for new home sales were both up and down depending on your reference. Let me explain. The sales figures for February reported that sales had increased to an annual rate of 337,000 homes (up from 322,000). Ahead of last Friday’s report, analysts were forecasting 340,000 to be reported. In fact, the rate was 356,000 but February was adjusted to 358,000 such that March sales were a “drop” from February. Taken as a whole, though, it was a positive report. All revisions were up and the inventory numbers improved.

At one time we thought inventories represented 13.3 months of supply. Taking into account all revisions, that figure peaked at 12.5 months of supply and now stands at 10.7.

In absolute terms, the inventory of new homes for sale: 311,000 is at its lowest since the last recession in 2001. The stocks in homebuilders have rallied significantly with KB Homes (KBH) and DH Horton (DHI) both up over 50% YTD and up 30% since the beginning of April. If you missed the rally, I would be cautious to think that homebuilders are about to become growth stocks from here. Purchasing a quality builder like these or Toll Brothers (TOL) and selling out of the money call options might be the best play for the coming months.

Existing home sales fell by 3% from February to March to an annual pace of 4.57 million homes. The best that can be said for this figure is that the sales are bouncing along the bottom. When graphed (as shown below), there is a fair bit of month to month fluctuation and the drop this month is within that. I would be hard pressed to make the case that a recovery is underway.

Mortgage Rates is holding below 5% and has leveled off at 4.8%. Freddie Mac’s (FRE) reading on 30-year fixed rate mortgages has continued to drop but it does appear to be flattening out. The Federal Reserve is doing its part to push buy mortgage debt in the open market and force rates low. While targets of 4.5% and lower have been bantered around, it is unclear if rates will go any lower. It is equally unclear whether it matters. Mortgage rates are historically low but will buyers be more willing to come to the market at 4.6% interest rate that weren’t tempted at 4.8%? Unlikely. It is probably best for the Fed (which meets this week) to imply, “We won’t keep driving these rates down forever. Lock in now, while you can.” Might they go lower? Maybe but at least such a call by the Fed would get on-the-fence shoppers to think, “I had better lock in and buy now.”

Foreclosure Rates are back on the rise. March data from RealtyTrac showed foreclosures are now shifting into full gear as banks and government sponsored entities (GSEs like Fannie (FNM) and Freddie) have done away with moratoria and dumping foreclosed houses on the market. This makes up a good portion of the existing home sales in recent months. Even more concerning was that rates for defaults, the first stage of the foreclosure process (above), resumed an upward trend.

Socially, this is a terrible development but for the economics of the housing market, it is likely akin to finally ripping a Band-Aid off quickly. For much of last year, there have been calls for dropping prices to fire sale levels to allow for a “clearing of the market”. Data from western states, particularly California, demonstrates that at a low enough price, there are buyers.

Valuation of toxic assets might soon be possible. A clearing of the market, if that is what is happening, has one important silver lining. U.S. housing is at the epicenter of the global financial crisis, not because U.S. home builders or the construction industry are so important to the global economy. Such companies can hurt or help U.S. GDP by a percentage point or two but they are not the trillion-dollar problem. The trillion-dollar problem is that banks and other financial companies around the globe hold financial assets that are tied and leveraged in some way to U.S. mortgages.

These assets which are bundles are mortgages or bundles of options on mortgages or bundles of insurances contracts (CDS) on mortgages. Ultimately, the value of these bundles will be determined by the number of underlying mortgages that prove worthless. It is not that everyone has defaulted on the underlying mortgages, simply the fear that everyone might. Selling a home at whatever the price for whatever the reason closes out the mortgage and brings much needed certainty to the market.

Reaching and passing the peak in defaults and foreclosures will finally allow for the pricing of these assets to take place with reasonable assumptions. This might mean some bundles, like highly leveraged collateralized debt obligations (CDO), truly are worthless. Other bundles, such as residential mortgage backed securities (RMBS) that hold mostly mortgages directly might be worth 35¢ on the dollar. This will be good or bad news depending on who is holding them and what price it has been marked to already. In the worst case, though, bad news will replace uncertainty, a good development for markets.

The silver lining is that: with a clearing process, however painful that is, price discovery of toxic assets becomes possible.

From the latest monthly data, it is hard to argue yet that the housing market has started to recover. Recovery can’t start, though, without first stopping the freefall. Most major indicators except Case-Shiller are pointing to the fact that the bottom of the cliff has broken the fall. That does not mean that recovery will be fast and furious. The recent run up in the price of homebuilders is probably overdone but this isn’t the point. With so many global financial assets tied to the default rates and payments from mortgage and other U.S. real estate related assets, finding out the hard way where the bottom is has benefits beyond the housing market itself.

Disclosure: No positions

[mlkrborn]

Home prices still dropping at slower pace!
NEW YORK (AP) -- Home prices dropped sharply in February, but for the first time in 25 months the decline was not a record, another sign the housing crisis could be bottoming.

The Standard & Poor's/Case-Shiller index released Tuesday showed home prices in 20 major cities tumbled by 18.6 percent from February 2008. That was slightly better than January's 19 percent and the first time since January 2007 the index didn't set a record.

The 10-city index slid 18.8 percent, the first time in 16 months its decline was not a record.

But the good news was mixed. All 20 cities in the report showed monthly and annual price declines, but half recorded annual records. Prices fell by more than 10 percent in 15 cities, including Las Vegas, San Francisco and Phoenix. In fact, Phoenix home prices have lost more than half their value since peaking in July 2006.

Yet, nine of the metros -- including Dallas, Denver and Boston -- showed improvement in their yearly losses compared to the month before.

"We will certainly need a few more months of data before we can determine if home prices are finally turning around," said David M. Blitzer, chairman of the S&P index committee.

Last week, data for March home sales also offered a conflicting picture of the housing market. Existing home sales fell 3 percent from February to March, while new home sales seemed to have hit bottom.

Prices in the 20-city index have plunged 30.7 percent from their peak in the summer of 2006, and the 10-city index has lost more than 31.6 percent.

[mlkrborn]

Home builders rising!

By John Spence
Last update: 11:01 a.m. EDT April 27, 2009
Comments: 8
BOSTON (MarketWatch) -- Shares of home builder Beazer Homes USA Inc. (BZH:
Beazer Homes USA, Inc
News , chart , profile , more
Last: 2.71+0.53+24.22%
2:43pm 04/27/2009

BZH 2.71, +0.53, +24.2%) stretched their rally on Monday morning, rising more than 30% in recent action. The stock, which gained about 24% on Friday, was up for the fifth straight session. Elsewhere in home builders Monday, Hovnanian Enterprises Inc. (HOV:
Hovnanian Enterprises, Inc
News , chart , profile , more
Last: 2.66+0.29+12.24%
2:42pm 04/27/2009

HOV 2.66, +0.29, +12.2%) gained 17% and Lennar Corp. (LEN:
Lennar Corp
News , chart , profile , more
Last: 10.16+0.19+1.91%
2:43pm 04/27/2009
Delayed quote data
Add to portfolio

LEN 10.16, +0.19, +1.9%) added 7%. The iShares Dow Jones U.S. Home Construction Index Fund (ITB:
iShares Dow Jones U.S. Home Construction Index Fund
News , chart , profile , more
Last: 11.08-0.11-0.98%
2:41pm 04/27/2009
Delayed quote data

Financials
Sponsored by:
ITB 11.08, -0.11, -1.0%) , a basket of builder stocks, is up 30% so far in April. End of Story

[up-down]

US housing sales near bottom -Freddie Mac official

04.18.09, 05:06 PM EDT
USA/HOUSING (URGENT):US housing sales near bottom -Freddie Mac official


NASHVILLE, Tenn (Reuters) - U.S. housing sales are near a bottom, and a third of sales are now of foreclosed properties, the chief economist of Freddie Mac, Frank Nothaft, said on Saturday.

But Nothaft, speaking on a panel at a conference in Nashville, Tennessee, also said there were delinquency risks ahead. Unemployment is the main trigger for prime borrowers becoming delinquent and house price declines add to foreclosure risk, he said.

Nothaft said loan modifications in private-label securities are key to foreclosure reduction.

He noted that Federal Housing Administration lending is up sharply, with FHA loans at the largest share of the U.S. housing market since 1942, and mortgage rates are at a 50-year low.

Freddie Mac is the second largest provider of home financing in the United States.

Copyright 2009 Reuters, Click for Restriction

[mlkrborn]

FRE and FNM still backbone of housing finance no matter in which form!
By Dawn Kopecki

April 15 (Bloomberg) -- Fannie Mae and Freddie Mac are under pressure from lawmakers to revamp their operations as the mortgage-finance companies tap more government money to survive.

Among the options under discussion are combining the companies, breaking them up or reshaping their missions.

“It’s highly unlikely that they would return to the way they used to be,” said Ira Jersey, the head of U.S. interest rate strategy at RBC Capital Markets in New York.

Regulators seized Fannie and Freddie in September amid a rise in mortgage delinquencies that led to a combined net loss of $108.8 billion last year at the companies, the largest sources of financing for new U.S. home loans. The Treasury Department has injected $59.8 billion in emergency funds into the companies, including $46 billion issued two weeks ago.

Executives at Washington-based Fannie have discussed internally the possibility of taking over McLean, Virginia-based Freddie’s operations, according to people familiar with the matter. A formal approach isn’t imminent, said the people, who asked not to be named because the discussions are private.

The Treasury has agreed to give the two government- sponsored enterprises, or GSEs, as much as $400 billion through Dec. 31. That agreement probably will need to be extended by Congress before year-end, said Karen Shaw Petrou, a managing partner of Federal Financial Analytics Inc., a Washington-based research firm.

‘New Structure’

“There will be a massive re-write of the GSEs into some new structure,” though probably not this year, Petrou said.

House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, is exploring ways to separate the companies’ private and public missions, said Steve Adamske, a Frank spokesman.

A merger would be the quickest way for regulators to cut costs by reducing Fannie and Freddie’s combined 11,000-person workforce, shedding underperforming mortgage assets and reducing the bureaucracy of running two companies with identical functions, said Christopher Whalen, co-founder of Institutional Risk Analytics in Torrance, California.

Substantial movement toward a merger may not come quickly. James Lockhart, who oversees the companies as director of the Federal Housing Finance Agency, has said they will remain under government control until the housing market recovers, and the Obama administration has ordered Fannie and Freddie to focus on helping homeowners meet their mortgage payments.

Public Mission

“It’s got to happen; we’re not going to put them back the way they were,” Whalen said of a merger. “The only way we’re going to be able to manage them is if we squeeze every last ounce of savings out of the administrative side and just focus on trying to keep the loss number under control.”

Brian Faith, a Fannie spokesman, and Michael Cosgrove, a spokesman for Freddie, declined to comment on the possibility of a merger or other restructuring.

Fannie, created by the government in 1938, and Freddie, formed in 1970 to be a competitor, ensure that banks have cash available to make loans by buying mortgages or guaranteeing securities they help create from the debt. Together they own or guarantee about 56 percent of all U.S. home loans.

Freddie has received $44.6 billion in federal aid, about three times as much as Fannie. Freddie’s tab at the Treasury will cost it at least $4.6 billion in annual interest payments, almost triple what Fannie owes.

“With both of them as wards of the state, do you need two of them?” said Joshua Rosner, an analyst with Graham Fisher & Co. in New York.

Ousted Management

Lockhart’s agency put Fannie and Freddie under its control and forced out executives after examiners said the two may be at risk of failing, threatening further damage to the housing market.

Top management of the companies remains in flux. Freddie Chief Executive Officer David Moffett unexpectedly quit last month. Fannie CEO Herb Allison emerged this week as the leading candidate to run the $700 billion U.S. bank-rescue program, according to a person familiar with the matter.

Under Frank’s plan, a government trust fund would assume the companies’ responsibilities to subsidize rental housing and a remaining company would continue to do business in the private mortgage market, according to Adamske, the lawmaker’s spokesman. He said it’s too soon to say what the final structure would look like.

To make Frank’s proposal work, regulators may need to put one company into receivership, a process similar to bankruptcy, said Armando Falcon, who was Fannie and Freddie’s government supervisor from 1999 through mid-2005. The fastest way would be for “one to buy all the assets and assume all the liabilities of the other, place the rest of it into receivership and wind it down,” he said.

Home Loan Banks

The solution is to “break them up,” said Representative Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee. “One possibility that I’ve looked at is letting the Federal Home Loan Banks take over some of their obligations and operations.”

The Federal Home Loan Banks are 12 government-chartered cooperatives that lend money for mortgages at below-market rates to their membership of more than 8,100 thrifts, commercial banks, insurance companies and credit unions.

Daniel Mudd, ousted as Fannie’s CEO after the government’s Sept. 6 takeover, said too much is being demanded of the companies, and that lawmakers should rethink the idea of shareholder-owned firms with public missions.

‘Robust’ Debate

“We need to have a robust policy debate,” Mudd, 50, said in an interview. “Do you want large companies to be focused exclusively on housing finance, albeit prone to produce the result -- just like we’ve seen recently -- that when the housing market goes down, there will be blood?”

Falcon, now an industry consultant at Canonbury Advisors in Alexandria, Virginia, said a public-private hybrid doesn’t work. He has advised other nations to avoid following the Fannie and Freddie example in developing their secondary mortgage markets, he said.

“There are just too many inherent risks in following the U.S. model,” he said. “All that has been proven out.”

[mlkrborn]

New Housing starts data came a bit weak!
U.S. housing starts dive 10.8% in March to 510,000 pace
By Rex Nutting
Last update: 8:30 a.m. EDT April 16, 2009
Comments: 3
WASHINGTON (MarketWatch) - Building permits fell to a record-low level and construction on new homes dropped sharply again in March after a big gain in February had raised hopes of a recovery, the Commerce Department estimated Thursday. Housing starts fell 10.8% in March to a seasonally adjusted annual rate of 510,000 from 572,000 in February. It's the second-lowest rate since the 1940s. It was much weaker than the 550,000 annual rate expected by economists surveyed by MarketWatch. Meanwhile, building permits dropped 9% to a 513,000 seasonally adjusted annual pace, the lowest on record. Permits for single-family homes fell 7.4% to a 361,000 annual rate, the second-lowest on

It's a surprise anyone is even thinking of new housing start. We don't know what to do with the old ones.

[mlkrborn]

Rally over construction news:
Wall Street resumes rally following housing report


By STEPHEN BERNARD and TIM PARADIS, AP Business Writers Stephen Bernard And Tim Paradis, Ap Business Writers – 8 mins ago
Business update: Asian shares gain Play Video Reuters – Business update: Asian shares gain


NEW YORK – Investors restarted Wall Street's rally Tuesday, buying financial and homebuilder stocks following a surprisingly upbeat report on home construction.

Major market indicators jumped more than 2 percent, including the Dow Jones industrial average, which added 179 points. The technology-heavy Nasdaq surged more than 4 percent after sliding Monday. Stocks have risen five out of the past six sessions.

The government's report that housing starts rose unexpectedly in February more than offset news that Alcoa Inc. is slashing its dividend.

The upbeat construction report provided the latest glimmer of hope for Wall Street and revived interest in the long-suffering housing industry. Stocks began rallying a week ago after Citigroup Inc. said it operated at a profit in the first two months of the year.

Similarly upbeat assessments from other troubled banks and better-than-expected readings on retail sales have led some investors to believe the market has been too pessimistic about the economy.

Stocks surged last week in a four-session rally that left market barometers up about 10 percent — the type of gains they might normally take a year to assemble. Buyers stepped in again Tuesday after stocks posted moderate declines on Monday.

Brett D'Arcy, chief investment officer at CBIZ Wealth Management, said relatively quiet trading the past two days is "a great sign" because it means investors are holding on to gains from week and aren't trying to grab quick profits. He said that indicates a base could be forming in the market. A week ago the Dow jumped 379 points in one session.

According to preliminary calculations, the Dow rose 178.73, or 2.5 percent, to 7,395.70.

Broader stock indicators also advanced. The Standard & Poor's 500 index rose 24.23, or 3.2 percent, to 778.12, while the Nasdaq composite index rose 58.09, or 4.1 percent, to 1,462.11.

The Russell 2000 index of smaller companies rose 17.23, or 4.5 percent, to 403.59.

Four stocks rose for every one that fell on the New York Stock Exchange, where volume came to a light 1.49 billion shares. Light volume indicates less conviction behind the market's moves.

D'Arcy said technology companies got an extra boost as investors moved back into those stocks after they fell sharply Monday.

The market has established a clear shift in tone over the past week. Jittery traders had blown apart earlier rallies this year by selling just as stocks managed to advance. A 20 percent run-up from late November until the start of the year fizzled as worries grew about the tattered balance sheets at large banks and signs that consumers will pulling back on their spending.

Renewed signs of balance in the economy since then have led investors to become more comfortable owning shares again.

Analysts caution that risks remain but investors embraced the data on home construction that came in well ahead of what economists had been expecting. Building permit applications, a key measure of future activity, also rose unexpectedly.

Tim Courtney, the chief investment officer at Burns Advisory Group, said the report was encouraging and could be part of an initial recovery in the housing market.

"We could be in the very early stages of some kind of normalization" in housing, he said. Many analysts say home prices have to stabilize before worried consumers will begin to increase their spending and the economy will begin to pick up speed.

In a rare burst of enthusiasm for anything related to the housing market, traders snapped up homebuilder stocks following the report. Pulte Homes Inc. rose 64 cents, or 6.7 percent, to $10.16, while Lennar Corp. jumped 68 cents, or 8.7 percent, to $8.52. Toll Brothers Inc. advanced 95 cents, or 5.9 percent, to $17.06.

Stocks of home supply retailers like Home Depot Inc. and Lowes Cos. rose more than 6 percent.

Financial shares, which led the rally last week, put up big gains again Tuesday. Banks have been hard-hit by souring mortgage debt so any pick-up in housing could help their balance sheets. Citigroup rose 18 cents, or 7.7 percent, to $2.51, while PNC Financial Services Group Inc. rose $1.19, or 4.4 percent, to $28.51. JPMorgan Chase & Co. rose $2.05, or 8.9 percent, to $25.14.

The KBW Bank Index, which tracks 24 of the nation's largest banks, jumped 6.1 percent.

Traders looked past much of the day's bad news and also awaited the outcome of a two-day meeting of the Federal Reserve's interest rate committee that ends Wednesday. The central bank is widely expected to leave rates at their current historically low level, but the market will be keen to see how the Fed sizes up the economy in its statement that accompanies the decision on rates.

Craig Peckham, a market strategist at Jefferies & Co. Peckham, said he was encouraged that the decision by aluminum producer Alcoa to reduce its payout didn't send "shockwaves" through the market as he contends it would have just weeks ago.

"Investors are able to brace themselves for this kind of news" now, he said.

Alcoa became the latest of the 30 companies that make up the Dow Jones industrial average to lower its dividend to conserve cash. The company said it was cutting its quarterly dividend 82 percent to 3 cents. It also said it plans to sell stock and debt to help reduce annual costs by more than $2.4 billion. Alcoa fell 53 cents, or 8.7 percent, to $5.59 and was one of only three stocks in the Dow to lose ground.

Not all the corporate news was grim. Technology giants Apple Inc. and Dell Inc. were detailing new products. Apple is releasing a version of software for its iPhone device, while Dell is introducing laptop computers.

Apple jumped $4.24, or 4.4 percent, to $99.66. Dell rose 44 cents, or 4.9 percent, to $9.34.

Bond prices fell as stocks gained. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.00 percent from 2.96 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.24 percent from 0.23 percent.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose $1.81 to settle at $49.16 a barrel on the New York Mercantile Exchange.

Overseas, Britain's FTSE 100 fell 0.2 percent, Germany's DAX index fell 1.4 percent, and France's CAC-40 slid 0.9 percent. Japan's Nikkei stock jumped 3.2 percent.

[mlkrborn]

new better activity in construction
Housing starts surge 22% on apartment building

Single-family building permits rise 11% in February
By Rex Nutting, MarketWatch
Last Update: 9:15 AM ET 3/17/09

WASHINGTON (MarketWatch) - Boosted by an 82% increase in construction of apartment buildings, U.S. housing starts surged 22% in February to a seasonally adjusted annual rate of 583,000, the Commerce Department estimated Tuesday.

It was the largest percentage gain in 19 years and was the first increase in eight months in the sector that was at ground zero in the global economic recession. The housing data in winter months are especially volatile because of the weather.

Building permits, which are less volatile than the starts data, rose 3% in February to a 547,000 annual rate. Permits for single-family units rose 11% to a 373,000 rate, the largest percentage gain in 18 years.

"We're inclined to write this off as a weather-related fluke for now," wrote economists for Wrightson ICAP. "If the permits series can hold onto its gains in next month's March report, though, we'll take it as a sign that new construction has finally found a floor (albeit a very low one)."

"We hold to the view that the level of housing construction is becoming so low in absolute terms that starts will bottom out in the months ahead," wrote John Ryding and Conrad DeQuadros of RDQ Economics.

Construction of new housing units had plunged 38% in the previous three months before February's unexpected jump. Economists surveyed by MarketWatch had forecast a further drop to 456,000, despite an expected surge in multifamily construction.

But despite February's gain, housing starts are down 47% from a year ago, and are down 74% from the peak in early 2006. Permits are down 44% in the past year.

Builders are trying to reduce their inventories of unsold homes as they face relentless competition from older homes thrown on the market by foreclosures or short-sales.

"With new home sales still falling and the months' supply at a record there is no reason for homebuilding to rise," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics.

The mood of home builders' has rarely been worse. The National Association of Home Builders reported Monday that its sentiment index was stuck at 9 on a scale of 1 to 100 in March. See full story.

The government cautions that its monthly housing data are volatile and subject to large sampling and other statistical errors. In most months, the government can't be sure whether starts increased or decreased. In February for instance, the standard error for starts was plus or minus 13.8%. Large revisions are common.

It can take four months for a new trend in housing starts to emerge from the data. In the past four months, housing starts have averaged 568,000 annualized, down from 614,000 in the four months ending in January.

Details

February's housing start rate of 583,000 was the highest since November. January's starts were revised higher to a 477,000 pace, a record low dating back to the 1940s.

Completions of housing units rose 2.3% to a seasonally adjusted annual rate of 785,000. Completions of single-family homes fell 8.2% to a record-low 505,000.

The number of units under construction fell 2.7% to a 762,000 annual rate. Single-family homes under construction dropped 3.4% to 370,000, the lowest in 38 years.

Starts rose 89% in the Northeast, rose 58% in the Midwest, rose 30% in the South and fell 25% in the West.

[mlkrborn]

HOUSING SENTIMENT INDEX
Housing sentiment index stuck at 9 in March
By Rex Nutting
Last update: 1:00 p.m. EDT March 16, 2009
Comments: 24
WASHINGTON (MarketWatch) - U.S. home builders remained extremely discouraged about their business in early March, according to a monthly survey released Monday by an industry trade group. The housing market index stayed at 9 on a scale of 1 to 100 in March, the National Association of Home Builders said, just above the all-time low of 8 reached in January. The index has been either 8 or 9 in the five months since November. At the current level, the index shows that about one in 12 builders says business is good. End of Story

[MWM]

A few cheap Homebuilders I've got on watch...

[mlkrborn]

Chair up and/or down ; pacific standard is only 1 dollar. A bit above 0.76 52 weeks low.
They got equity capital investment. still low. Any opinion?
i am trying to test bottoms?? with either HOV or Standard pacific ?
do u know them?
"Earlier Wednesday, Standard Pacific named John M. Stephens chief financial officer and John P. Babel general counsel and secretary. Both are company veterans, who replace Andrew Parnes and Clay A. Halvorsen, respectively, who both resigned.

The builder cited a change of control agreement triggered when MatlinPatterson Global Advisers LLC, a private equity firm, invested more than $575 million in the company last year. Parnes and Halvorsen cited those agreements when leaving and company officials settled, executives said in an interview."
tia

[up-down]

Home sales sink unexpectedly, lowest since 1997

Home sales sink unexpectedly in Jan. to lowest level since 1997; rebound hinges on jobs, banks

Alan Zibel, AP Real Estate Writer
Wednesday February 25, 2009, 4:43 pm EST

WASHINGTON (AP) -- Sales of existing homes sank unexpectedly last month to the lowest level in nearly 12 years as potential buyers worried about their jobs and awaited details of President Barack Obama's plans to stabilize the housing market.


AP - Chart follows the number of existing and single-family existing homes sold by month in millions of units; two ...

But the banking industry's teetering fortunes and mounting job losses could stall any recovery. Falling prices and low mortgage rates don't make much of a difference for people who are out of work -- or fearful of losing their jobs.

The most optimistic outlook is for a spring revival as home prices plummet. Government officials, hoping to spur demand, on Wednesday rolled out the details of a new $8,000 tax credit for first-time buyers. About 40 percent of all home sales last year were from first-time buyers.

Treasury Secretary Timothy Geithner said the tax credit should help provide an "immediate response to the current crisis."

The government response may help, but many consumers are still in wait-and-see mode.

"Buyers are sitting back," said real estate agent Sandra Lipmann of Prudential Centennial Realty in Westchester County, N.Y., home to the upscale properties of many Wall Street workers. "They don't have the full story of what's going to happen in this economy."

Sales of existing homes fell 5.3 percent to an annual rate of 4.49 million last month, from 4.74 million in December, the National Association of Realtors said Wednesday. It was the weakest showing since July 1997. And some analysts don't see sales bottoming out until later this year as prices sink further. Economists had expected sales to rise to an annual pace of 4.79 million homes.

Without adjusting for seasonal factors, sales nationwide fell 7.6 percent from a year earlier. The West was the only region to show increased sales.

The median sales price in January plunged to $170,300, from $199,800 a year earlier and $175,700 in December. It was the lowest price since March 2003 and the second-largest drop on record.

And the Mortgage Bankers Association said Wednesday that applications for new loans and refinances both fell last week as rates inched up.

Sinking home prices and soaring foreclosures have forced major banks like Citigroup Inc. and Bank of America Corp. to record huge losses on the value of their mortgage-related assets.

On Capitol Hill for a second day, Federal Reserve Chairman Ben Bernanke warned lawmakers that the big glut of unsold homes could "put us in real danger" of even sharper declines in home prices.

The Fed chief fielded tough questions about bank-rescue efforts and again spurned speculation that the government may seize control of Citigroup or other large financial institutions.

Asked about Citigroup Inc., Bernanke said nationalization "is when the government seizes the bank and zeros out its shareholders ... we don't plan anything like that."

Wall Street ended an erratic session with a loss. The Dow Jones industrial average fell about 80 points, and the Standard & Poor's 500 index and the Nasdaq composite index also declined.

Some hopes for the long-awaited housing market rebound had returned last month after the Realtors group reported a surge in sales for December. But economic fears are now paramount in the minds of many consumers, and lending standards remain tight.

John Seidensticker, 37, has been trying to sell a two bedroom, roughly 1,100 square foot condominium north of Miami's downtown. He started out asking for $279,000 and has lowered his price by $90,000 but still hasn't found a buyer.

"I can't buy until I sell this one," Seidensticker said. "Half the buyers can't qualify, and there aren't that many buyers out there."

The number of unsold homes on the market fell almost 3 percent last month to 3.6 million, the lowest inventory level in two years, the Realtors group said. But due to the slumping sales pace, it would still take 9.6 months to rid the market of all of those properties, up from 9.4 months in December.

The number of properties languishing on the market likely would be even higher if sellers weren't so reluctant to list their properties as prices sink rapidly, Joshua Shapiro, chief U.S. economist with MFR Inc., wrote in a note Wednesday.

"With supply overhang still huge and mortgage financing difficult to obtain, home prices are likely to decline considerably further in the quarters ahead," he wrote.

Prices have been falling as thousands of Americans lose their jobs every week. Employers took an especially large ax to their payrolls last month, the Labor Department said Wednesday, and the cuts are likely to get worse over the next few months.

Mass layoffs, or job cuts of 50 or more by a single employer, increased to 2,227 in January, up almost 50 percent from the same month last year. More than 235,000 workers were fired in last month's cuts.

The labor market pain persists this week. The NFL said Wednesday that commissioner Roger Goodell has taken a 20 percent pay cut and the league dropped 169 jobs through buyouts, layoffs and other reductions. Spartanburg, S.C.-based textile maker Milliken & Co. said it would cut 650 jobs at facilities worldwide, and jeweler Zale Corp. said it will close 115 stores and eliminate 245 positions.

As layoffs mount, foreclosures have swamped the housing market -- especially in particularly distressed states like California, Florida, Nevada and Arizona. About 45 percent of sales nationwide are foreclosures or other distressed properties.

Joel Rodriguez, owner of Global Investments Realty in Miami, estimates that 70 percent of his business comes from foreclosures, but says sales are picking up. "The banks have finally gotten realistic and started accepting some of the offers," he said.

Lawrence Yun, chief economist for the Realtors, predicted that the new tax credit would help boost home sales by late spring or early summer. Buyers "did not want to jump into the market until they were certain" what the government would do to resuscitate the housing market and that clearly dampened January sales, he said.

But other analysts say the government's actions will provide a far more modest boost, largely because the economic picture remains so gloomy.

Patrick Newport, an economist with IHS Global Insight, said sales are likely to sink further and not stabilize until the summer. Prices aren't likely to hit bottom until the first quarter of 2010 and should remain flat for another year, he said.

"At some point, prices will drop so much that sales will start to pick up," Newport wrote in a note Wednesday. "So far, this has yet to happen."

AP Business Writers J.W. Elphinstone, Adrian Sainz, Martin Crutsinger, Christopher S. Rugaber and Jeannine Aversa contributed to this report.

http://finance.yahoo.com/news/Home-sales-sink-unexpectedly-apf-14470537.html

[mlkrborn]

Two california builders change their donkeys!
Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- Amid the worst residential downturn in decades, two California-based home builders announced executive changes Wednesday.

After the market closed, Ryland Group Inc. (RYL) said R. Chad Dreier, 61, will retire as chief executive May 29. President Larry Nicholson will add the title of CEO. Ryland didn't comment further.

The news follows a shakeup at Standard Pacific Corp. (SPF) that replaced its chief financial officer and general counsel.

Such leadership transitions aren't likely to be the last at builders, which have seen their shares tumble as the widening financial crisis leaves buyers paralyzed on the sidelines. The Dow Jones US Home Construction Index has been shaved by nearly half in the last year.

"My guess is the job of being a home builder CEO is a lot less fun than it was a few years ago" during the boom, said Rob Stevenson, an analyst at Fox-Pitt Kelton. The barrage of grim statistics, quarterly losses and job cuts "would wear on you after a while."

Dreier, who will continue as Ryland's chairman, joined the company in 1993 as president and chief executive and added the title of chairman a year later. He is respected for his sense of humor and willingness to answer tough questions.

Nicholson, who first joined Ryland in 1996 as vice president of operations, also served as president for the Southeast region in 2004 before being promoted to chief operating officer in 2007 and president last September.

"It's going to be an interesting transition at this point in time. Chad Dreier was a dynamic guy. Nicholson's a little lower key," Stevenson said. "Its going to fall on him to be the guy who goes out and rallies the troops."

Earlier Wednesday, Standard Pacific named John M. Stephens chief financial officer and John P. Babel general counsel and secretary. Both are company veterans, who replace Andrew Parnes and Clay A. Halvorsen, respectively, who both resigned.

The builder cited a change of control agreement triggered when MatlinPatterson Global Advisers LLC, a private equity firm, invested more than $575 million in the company last year. Parnes and Halvorsen cited those agreements when leaving and company officials settled, executives said in an interview.

Vicki Bryan, an analyst at Gimme Credit, pointed out the contrasting departures.

Ryland "is a more orderly, well-executed transition ... which is critically important these days to skittish investors," she said. "There is plenty of time for the change at Ryland to occur, the old guard will remain in a key capacity, and the new man is a known commodity who is ready and waiting."

So far this year, Ryland's stock has fallen 10.13%, compared with Standard Pacific's 44% plunge.

Wednesday, Ryland's shares saw a 5.98% decline, while Standard Pacific closed down 9.09%. The index ended the day with a 2.07% drop.

-By Dawn Wotapka, Dow Jones Newswires; 201-938-5248; [e-mail]

(John Kell contributed to this report.)

[mlkrborn]

Larger Role for Fannie & Freddie

Within the "Homeowner Affordability and Stability Plan" announced yesterday, the Government laid out expanded role for the two mortgage finance giants, Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), in the housing markets. The Treasury doubled the preferred stock back-stop funding for these two Government Sponsored Enterprises (GSEs) to $200 billion each, with the hope that this should enable them to maintain a positive net worth, as the losses will continue to rise in the coming months.

The Treasury will continue the purchase of mortgage-backed securities issued by them. At the same time, they were also allowed to increase the size of their retained mortgage portfolios by $50 billion to $900 billion along with corresponding increases in the outstanding debt.


Analyst's view at Zacks

[mlkrborn]

home prices 2: Case-shiller home price index
Home prices off record 18.5% in past year, data show

Case-Shiller's December figures show broad-based retreat for prices
By Ruth Mantell, MarketWatch
Last Update: 12:40 PM ET 2/24/09

WASHINGTON (MarketWatch) -- Underscoring the widespread weakness in the U.S. housing market, home prices in 20 major cities dropped 2.5% in December from the prior month and were down a record 18.5% from the final month of 2007, according to the Case-Shiller home price index published Tuesday by Standard & Poor's.

Years of appreciation have been wiped out, with average home prices standing back at levels similar to those seen late in 2003.

Prices in eight of the areas are down more than 20% from the prior year. And for the original 10-city index compiled by Case-Shiller, prices fell by a record 19.2% for the year, and by 2.3% in December.

"There are very few, if any, pockets of turnaround that one can see in the data," said David Blitzer, chairman of the index committee at Standard & Poor's.

"Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and eight of those now with negative rates exceeding 20%," he said.

Prices have fallen in all 20 cities compared with last month and a year ago.

The largest declines in December and for the year were in Phoenix, with price drops of 5.1% and 34%, respectively. Las Vegas prices are down 33% from the prior year, and San Francisco prices are down 31%. See full S&P release for breakdown of all 20 metropolitan areas.

"Obviously these are the regions that saw the largest build-up during the boom so it isn't surprising to see them hit the hardest on the way down," said Dan Greenhaus of the equity strategy group at Miller Tabak. "The unfortunate reality is that the 'way down' is impacting people who were either prudent in their housing choices or simply not involved at all to begin with.

"But as long as home prices continue to decline, and they should, prospective buyers have reason to stay on the sidelines," he said.

Click here to read why you should stay on the housing sidelines in 2009.

Click here to read why now is a good time to buy a house.

Also Tuesday, the Federal Housing Finance Agency reported that prices on homes sold across the U.S. fell 8.2% in the fourth quarter from the year-earlier period and skidded 3.4% from the third quarter. Prices have tumbled 10.9% from their April 2007 peak, FHFA said.

For December, prices rose a seasonally adjusted 0.1% from November, but they were down 8.7% from the prior year. The government survey, which reviews a broader geographical area than Case-Shiller, only covers conforming mortgages.

The White House recently unveiled a plan to help 9 million "at risk" homeowners modify their mortgages, and committed $75 billion of taxpayer money to back the initiative. Read more on the mortgage plan.

[mlkrborn]

Home prices again: FHFA
UPDATE:FHFA: US Home Prices Fell Record 3.4% In 4Q

(Update with more details, context and comment from FHFA chief economist)
By Jessica Holzer
Of DOW JONES NEWSWIRES


WASHINGTON -(Dow Jones)- U.S. home prices fell a record 3.4% on a seasonally-adjusted basis during the fourth quarter of 2008, according to a government index released Tuesday.

The drop surpassed the 2.0% decline reported for the third quarter and was the largest decrease in the index's 18-year history, the Federal Housing Finance Agency said.

However, home prices rose by a seasonally-adjusted 0.1% in December, after a downward adjustment for November, possibly indicating the first sign of a turnaround.

The quarterly data show "weak conditions virtually across the entire U.S.," said Federal Housing Finance Agency senior economist Andrew Leventis.

However, he noted that the price declines would improve affordability: "For people on the sidelines, these data are good news."

Home prices plunged most sharply in the bubble states of California, Arizona, Nevada, Florida and Georgia as well as in the Upper Midwest during the fourth quarter. All told, 22 states saw price declines of more than 5%, while eight states saw prices slide by more than 10%.

The index includes sales prices of home purchases only, not appraisals for refinancings. Those data are reflected in FHFA's broader "all-transactions" home price index, which posted a more modest 0.2% drop in the fourth quarter of last year.

-By Jessica Holzer, Dow Jones Newswires; 202-862-9228; [e-mail]

[mlkrborn]

Chair;
test site is Cool!

[up-down]

XHB chart (home builders ETF)



mlkr, to post a chart (or any pic) the code looks like this...

[*chart]stockcharts.com/c-sc/sc?s=XHB&p=w&b=2&g=0&i=p75161958009&r=4944[*/chart]

remove the *'s for it to work. Make sure you don't have the http:// in the url address. Play around with it on the TEST #board-107

p=D is period=day (W is for week)
when p=D the following b's are...
b=1 is 18 months
b=2 is 9 months
b=3 is 6 months
b=4 is 5 months
b=5 is 4 months
b=6 is 3 months


Developers Diversified Realty Corporation (DDR)


Developers Diversified Realty Corporation (DDR) operates as a real estate investment trust (REIT) in the United States. The company engages in acquiring, developing, redeveloping, owning, leasing, and managing shopping centers, mini-malls, and lifestyle centers. As of February 5, 2007, it owned or managed approximately 461 shopping centers and 7 business centers, as well as 1,170 acres of undeveloped land. The company qualifies as a REIT for federal income tax purposes. As a REIT, the company would not be subject to federal income tax to the extent that it distributes at least 90% of its taxable income to its shareholders. DDR was founded in 1965 and is headquartered in Beachwood, Ohio.

OS: 120M
DEBT: 6B
REV's: 1B
CASH: 30MBookValue/share: $19

[mlkrborn]

XHB
http://stockcharts.com/h-sc/ui?s=XHB&p=DAILY&b=5&g=0&id=p75161958009

[mlkrborn]

HOV 0.91 ; Heavily shorted builder.

[mlkrborn]

New home sales?
New Home Sales, Durable Goods Probably Fell as Economy Worsened

By Courtney Schlisserman

Feb. 22 (Bloomberg) -- Sales of new homes in the U.S. probably plunged to a record low in January while durable goods orders dropped for a sixth month, economists said before reports this week.

A Feb. 26 Commerce Department report will show new-home sales fell to 324,000 on an annual basis, according to the median estimate of economists surveyed by Bloomberg News. The same day, the department may report demand for goods meant to last several years dropped 2.5 percent, economists said.

A surge in foreclosures and plummeting demand for homes has depressed prices, sending the S&P/Case-Shiller 20-city home price index down 18.3 percent in December from a year earlier, according to a separate Bloomberg survey. Meanwhile, shrinking household worth pushed auto sales in January to the lowest level in more than 26 years, and factories are scaling back production as demand from consumers and businesses erodes.

“Housing is going to be declining for a good, long time yet,” said Derek Holt, an economist at Scotia Capital Inc. in Toronto. “This is not going to be a market where builders put new supply into the market this year because of the sharp overhang.”

At the December sales pace of 331,000 new homes, it would take a record 12.9 months to whittle down the number of houses builders are holding, more than twice the five-to-six months supply the National Association of Realtors has said is consistent with a stable market.

U.S. home foreclosures rose 17.8 percent in January from a year earlier, according to a report this month from RealtyTrac Inc.

Stimulus Plan

President Barack Obama last week said his administration will use $75 billion to bring down mortgage rates and encourage loan modifications to keep Americans in their homes. He also signed into law a $787 billion stimulus package that includes tax breaks and increases in government spending designed to resuscitate the economy.

Excluding bookings for transportation equipment such as cars, trucks and airplanes, durable goods orders probably fell 2.2 percent in January, according to economists surveyed.

“The decline in global demand has fundamentally kicked out the final leg of support for the economy,” said Joseph Brusuelas, director of Moody’s Economy.com, referring to domestic and overseas demand for manufactured goods.

Revised GDP Drop

The U.S. economy probably contracted at a 5.4 percent annual pace in the fourth quarter, weaker than previously estimated and the worst slump in 26 years, according to the median forecast in a Bloomberg survey. Commerce is scheduled to release its first revised report on Feb. 27, after saying on Jan. 30 that the economy shrank at a 3.8 percent pace.

Economic weakness and 13 consecutive months of job losses have hurt Americans’ outlook. Economists say the Conference Board will report on Feb. 24 that its consumer confidence index fell this month to 35, a record low. The Reuters/University of Michigan final index of consumer sentiment, scheduled to be released on Feb. 27, probably fell to 56, according to the Bloomberg survey.

U.S. sales of cars and light trucks plunged to a 9.6 million annual rate in January, according to industry data. General Motors Corp. said Feb. 3 it will reduce North American first-quarter production 57 percent amid flagging demand.

‘Unusually Uncertain’

Other industries have seen a pullback in sales as consumers and companies try to save money. Deere & Co., the world’s largest maker of farm equipment, said Feb. 18 that first-quarter profit fell 45 percent and cut its full-year earnings forecast.

“Ongoing higher material costs, the deepening global recession, and volatile foreign exchange rates have put downward pressure on our financial results,” Deere Chief Executive Officer Robert Lane said in a statement, adding the “unusually uncertain” outlook led him to delay a quarterly forecast.

Still, there are signs the housing market is bottoming out, which many economists say is the necessary precondition for economic recovery. While new-home sales are forecast to drop for a sixth straight month, the estimate for January would represent the smallest decline since a gain in July.

Also, sales of existing homes, scheduled to be reported by the National Association of Realtors on Feb. 25, probably increased to a 4.8 million annual rate in January, according to the survey median. Foreclosure-driven declines in prices have given resales a lift since reaching a record-low 4.45 million pace in November.

Bloomberg Survey

================================================================
Release Period Prior Median
Indicator Date Value Forecast
================================================================
Case Shiller Monthly YO 2/24 Dec. -18.2% -18.3%
Consumer Conf Index 2/24 Feb. 37.7 35.0
Exist Homes Mlns 2/25 Jan. 4.74 4.80
Exist Homes MOM% 2/25 Jan. 6.5% 1.3%
Durables Orders MOM% 2/26 Jan. -3.0% -2.5%
Durables Ex-Trans MOM% 2/26 Jan. -3.9% -2.2%
New Home Sales ,000’s 2/26 Dec. 331 324
New Home Sales MOM% 2/26 Dec. -14.7% -2.1%
Initial Claims ,000’s 2/26 Feb. 21 627 625
Cont. Claims ,000’s 2/26 Feb. 14 4987 5011
GDP Annual QOQ% 2/27 1Q P -3.8% -5.4%
Personal Consump. QOQ% 2/27 1Q P -3.5% -3.7%
GDP Prices QOQ% 2/27 1Q P -0.1% -0.1%
Core PCE Prices QOQ% 2/27 1Q P 0.6% 0.6%
Chicago PM Index 2/27 Feb. 33.3 33.0
U of Mich Conf. Index 2/27 Feb. F 56.2 56.0
================================================================

To contact the report on this story: Courtney Schlisserman in Washington [e-mail]
Last Updated: February 22, 2009 00:01 EST

[mlkrborn]

A bit mo details:
Pieces falling into place for U.S. crisis repair
Thu Feb 19, 2009 3:44pm EST

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More Business & Investing News...

By Emily Kaiser - Analysis

WASHINGTON (Reuters) - U.S. officials are finally tackling the three main economic trouble spots at once, and while it may not be enough to resolve the crisis, it could give them the ammunition they need to ask Congress for more money.

With the $275 billion that President Barack Obama committed on Wednesday to help support housing, there are now large-scale programs in the works to address the housing market, banking mess, and the broader recession.

The biggest complaint among economists is that the plans lack sufficient funding to fully arrest the slide and will take precious time to implement.

But if they show the early progress that is expected, that may help Obama sway some lawmakers who are dead-set against handing over any more money.

"While the amounts that have been specified so far seem inadequate in comparison to the size of the problem, once these programs are established their size can be increased if they prove successful," said Goldman Sachs economist Alec Phillips.

"It seems likely that the Treasury will ultimately need to request additional resources from Congress beyond the $700 billion that has already been authorized, and we suspect Congress would be more willing to provide the funds if there is a commitment to provide additional support to borrowers and housing," he said.

Obama faces a major political headache that makes it very difficult for him to ask for more money now, and it would no doubt spook investors if he made the request and was rebuffed.

When he took office last month, it was clear that more drastic measures were needed to stabilize the economy. But lawmakers from both political parties were still seething over how former President George W. Bush's administration used the first half of a hastily arranged $700 billion bailout package.

Debate over Obama's nearly $800 billion stimulus plan devolved into an ideological battle in Congress that ended with only a handful of Republicans voting in favor.

Republicans preferred tax cuts over spending and thought Democrats were loading up on pet projects, while Democrats accused Republicans of intentionally short-changing Obama's rescue efforts for political gain.

HOW MUCH WILL IT TAKE?

At $75 billion, Obama's foreclosure plan amounts to about 8 percent of the $1 trillion in residential mortgage losses that Goldman Sachs expects outside of the loans backed by mortgage finance companies Fannie Mae and Freddie Mac.

Fannie and Freddie are also getting $100 billion each in additional Treasury Department backing and are being allowed to expand their mortgage portfolios, which will free them up to support more lending.

But Deutsche Bank economist Peter Hooper said that still won't be enough to arrest the housing market decline. He doesn't expect home prices to bottom until early 2010, and thinks prices have another 10 percent or so to fall, on top of a 22 percent decline since the June 2006 peak.

"These efforts are up against still considerable pressures going the other way," he said, ticking off a list of ailments including a huge supply of vacant homes, rising unemployment, and a spike in default and foreclosure rates.

What Obama's plan may do is reduce the risk that the housing correction goes too far, overshooting the level of losses that economists deem reasonable. If he can show that the plan is indeed keeping millions of homes out of foreclosure, that would earn him a warmer reception in Congress.

It is a similar story with the stimulus package. Economists have little hope that the $787 billion program that Obama signed into law earlier this week will be enough to patch the hole in the economy this year.

Perhaps the most important piece of the rescue effort is the bank bailout that Treasury Secretary Timothy Geithner sketched out last week. While he disappointed many on Wall Street by offering too little detail, many economists now say his ideas are on the right track.

What is missing, once again, is sufficient money to pull off everything he aims to do.

One key aspect of Geithner's plan is a "stress test" of banks to see whether they have enough capital to withstand a deeper recession.

He has not clearly spelled out what will be done with banks that fail the test, although many economists, investors and even some lawmakers think the logical steps would be to nationalize them, remove bad assets and recapitalize.

That is an expensive process.

Morgan Stanley economist Richard Berner said he liked Geithner's plan but its success would hinge on "details, incentives, execution and more funding."

"The Obama Administration seems hesitant to ask Congress for more money, perhaps because the votes aren't there to provide it," he said.

If they can show that they've got the right programs in place, the votes may eventually come.

(Editing by Leslie Adler)

[mlkrborn]

New housing program aiming at : stabilizing housing values; easing credit crunch with over 200 billion dollars additional resources in FRE and FNM,and helping 4-5 million home owners facing foreclosures and lowering mortgage cost ..
Will it help building sector?

[up-down]

Home-Builder Index Edges Higher; First Rise in Five Months

The Wall Street Journal
FEBRUARY 17, 2009
By JEFF BATER

WASHINGTON -- The confidence of U.S. home builders, while still in the dumps, managed something in February it hasn't done in five months: It rose.

The National Association of Home Builders released Tuesday results of a monthly survey of builders' thoughts on market prospects. Its latest index for sales of new, single-family homes climbed to 9, up from an all-time low of 8 in January.

The last time the housing market index, or HMI, showed an increase was September.

But conditions are awful. The latest government data show new-home sales dropped by about 15% to 331,000 in December. Year over year, sales were around 45% lower. Builders don't want to break new ground because the market is awash in unsold property. Bloated inventories are driving down prices. Falling prices, in turn, and a recession that's throwing people out of work have combined to undercut demand.

"The market for new single-family homes remains very weak at this time," NAHB Chairman Joe Robson said.

Congress has approved a $787 billion plan to stimulate the slumping economy. The legislation includes an $8,000 first-time home buyer tax credit. Builders hope the package excites moribund demand for housing.

"Looking forward, we are certainly hopeful that the newly passed economic stimulus bill, which includes some favorable elements for first-time home buyers and small businesses, will have a positive impact that will help get housing and the economy back on track," said Mr. Robson, a builder from Tulsa, Okla.

A component within the housing market index that measures current sales conditions rose to seven during February, up from six. An index gauging traffic of prospective buyers rose by three points to 11. But the index gauging sales expectations in the next six months fell to a new record low of 15 from 17.

"Home builders are especially concerned about the continually rising number of foreclosures and short sales, which are flooding the market with excess inventory and undermining overall home values," said David Crowe, NAHB's chief economist. "This is one reason that home builder expectations for the next six months declined in the February HMI even though traffic of prospective buyers has improved somewhat and present sales conditions were basically unchanged."

The NAHB's overall housing market index for February was based on a survey of 421 home builders, who answer questions about sales prospects now and in the near term. When the Housing Market Index exceeds 50, it means the number of builders who see "good" sales outnumber the number who see "poor" sales. The numbers used in compiling the index are adjusted for seasonal variations.

http://online.wsj.com/article/SB123489382498101527.html?mod=googlenews_wsj

[up-down]

The 3 D's of Real Estate
Posted by Donald J. Trump on 2/2/2009 at 3:03 PM
Posted in Real Estate

The real estate market is such these days that one thing has become apparent: If someone is selling in this market it’s usually because of the 3 D’s: Death, Divorce, Debt

When the value of property is low, it is common sense not to sell it. You hold onto it until the realty market changes. Therefore it’s common sense to notice that those who are selling are encountering one of the 3 D’s just mentioned. Otherwise, their actions would be nonsensical.

It doesn’t take a sixth sense to figure out what is going on. Maybe it’s clearer to me because I’m experienced in real estate and I’ve seen these market cycles before, and when one of the 3 D’s surfaces in someone’s life, there’s usually a fallout of some sort to be expected.

The consequences of departures, divisions and deficits can be dealt with successfully if one is prepared for them, and if one is not, then one has to learn to deal with them. One way to view life is to see it as a learning process. If we remain students who are teachable and open to what is out there--which will include the good and the bad--we’ve got a much better chance of success.

Lawyers are highly educated and yet they practice law. I always found that term interesting. They know it’s a practice, just as doctors have a medical practice. That means no one knows everything, although they can be very accomplished and do tremendous things. They can see things because of their knowledge and experience that might not be so obvious to the untrained eye or mind.

Let’s keep our minds on our learning curve and we’ll all be the better for it.



Related Posts:
A Proposal to Solve the Subprime Mortgage Crisis & Real Estate Glut
How Credit Scoring Works
Real Estate 101: Why Banks Short Sell Pre-Foreclosure
Real Estate Investors Seek New Options


Related Training:
Real Estate Investing
Real Estate Coaching
Profit From Foreclosure Investing

Donald J. Trump is Chairman of Trump University.

http://www.trumpuniversity.com/blog/post/2009/02/the-3-ds-of-real-estate.cfm

[up-down]

Trump Entertainment Resorts Receives Delisting Notice From NASDAQ


ATLANTIC CITY, N.J., Feb. 20, 2009 (GLOBE NEWSWIRE) -- Trump Entertainment Resorts, Inc. (Nasdaq:TRMP) (the "Company") announced today that it received notification from the NASDAQ Stock Market indicating that the staff of the NASDAQ Stock Market had determined, in accordance with NASDAQ Marketplace Rules 4300, 4450(f) and IM-4300, that the Company's common stock will be delisted from the NASDAQ Stock Market in light of, among other things, the Company's announcement that it filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code. NASDAQ trading in the Company's common stock will be suspended at the opening of business on February 26, 2009 unless the Company requests an appeal of NASDAQ's delisting decision. The Company does not intend to appeal NASDAQ's delisting decision. The Company expects that following delisting, the Company's common stock will not be immediately eligible to trade over the OTC Bulletin Board or in the "Pink Sheets," however, the common stock may become eligible for such trading if a market maker makes application to quote the common stock in accordance with Securities and Exchange Commission Rule 15c2-11, and such application is cleared.


http://www.msnbc.msn.com/id/29299324/

[up-down]

US builder NVR's founder sells $139 mln of its stock

Tue Feb 17, 2009
NEW YORK, Feb 17 (Reuters) - The founder and chairman of NVR Inc (NVR.N) recently sold $139 million of the home builder's stock, U.S. Securities and Exchange Commission filings show.

Dwight Schar sold 339,059 shares, including many after he exercised stock options, the filings show. Following a sale of 13,406 shares on Feb. 11, he retained a direct stake in just 8,608 of the Reston, Virginia-based company's shares.

Several other NVR officials also sold shares in recent weeks, including Chief Executive Paul Saville, other SEC filings show.

The company did not immediately return a call seeking comment. Schar, who is also a part-owner of the Washington Redskins football team, stepped down this month as executive chairman, but retained the chairman's title.

The Wall Street Journal earlier reported the share sales on its website. It quoted a specialist in insider transactions who said the sales patterns suggest "cluster selling on weakness."

Many analysts have said that stock sales by insiders after a period of weakness suggests negative sentiment.

NVR shares closed Tuesday down $13.07 at $375.14. They have fallen 45 percent from their 52-week high set last April 21, but are 18 percent above their 52-week low set last Nov 21. (Reporting by Jonathan Stempel; Editing by Gary Hill)


http://www.reuters.com/article/marketsNews/idINN1739689120090218?rpc=44

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Housing stocks: No bottom yet

If you think the sector has gone as low as it can, think again, says housing guru Ivy Zelman.

By Mina Kimes, reporter
January 22, 2009: 12:06 PM ET

Zelman: "There's still a tsunami of expected foreclosures, and that has to abate before there's a recovery."

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NEW YORK (Fortune) -- With another dismal read Thursday on new home construction, it looks like 2009 will be a rough year for homebuilders. But recent rallies in housing stocks suggest that investors think otherwise.

Don't bet on it, says housing analyst Ivy Zelman.

Housing permits and starts both tumbled to record lows in December, according to a Commerce Department report on Thursday. With foreclosures surging and a glut of homes on the market, Zelman believes the overall pain will continue well into 2010 - and that the market won't bounce back until 2012.

Zelman, who decried speculation earlier than most other analysts, is known for her candor. Before starting her own research company, Zelman & Associates, in 2007, she spent ten years at Credit Suisse, where she began warning about speculation in 2004. Zelman called for a sell off of all builders in 2006 - well before many other analysts urged their clients to dump homebuilder stocks.

Two years ago, when Toll Brothers' CEO Robert Toll said in an earnings call that there was pent-up demand for housing, Zelman famously told him, "I'm wondering which Kool-Aid you're drinking - because I want some." The next year, Toll Brothers posted a 95% drop in profits.

Signs of a recovery?
Few in the housing industry are still drunk with optimism, but recent upswings suggest that investors are dipping their toes back in market. The S&P Homebuilders' Index rose 15% in December (it fell 36% in 2008). Toll Brothers and Pulte Homes, two major building companies, were, respectively, the 12th and 14th best stock performers in the Fortune 500 last year.

But according to Zelman, it's way too soon for a rebound. "The economics don't make sense," she says. "There's still a tsunami of expected foreclosures, and that has to abate before there's a recovery." Credit Suisse forecasted in December that, over the next four years, 8.1 million mortgages would go into foreclosure.

When foreclosures hit, cheap houses that banks are eager to unload flood the market. The oversupply and the lack of demand pushes prices down; the S&P Case Schiller Home Price Index showed an 18% year-over-year drop in October, (the most recent data available). As home values fall, homeowners owe more in mortgages than their properties are worth and are more likely to default - and then the cycle begins all over again.

While declining home prices hurt homeowners, they can boost sales - as evidenced in Southern California, where new home sales were up 50% in December compared with last year, according to MDA DataQuick, a real estate research firm.

But Zelman casts a critical eye on those who think cheap houses signal a revival. "Affordability is being paraded as the best thing," she says. "That may be so nationally, but it's skewed to areas where prices overshot."

She points to Fort Myers, Fl., where she says 80% of sellers are listing their homes at prices that are still 20% higher than they should be. Zelman believes that prices must overshoot on the way down, just as they did on the way up - and price deflation, she says, has a long way to go.

What to look for
Instead of affordability, Zelman sees new home sales per neighborhood as a leading indicator for the housing market. Of the 19,926 homes sold in Southern California last month, for example, just 1,813 were newly-built, compared with a December average of 4,926.

Most of the houses being scooped up are foreclosed houses, which Zelman believes are being bought by investors. When new home sales go up, she says, it will be a sign that homeowners are selling their existing homes.

The other indicator that Zelman is watching is the consumer balance sheet, or the average home buyer's debt level. "The consumer has terrible, crazy credit right now," she says. "And there's a negative psyche towards their deflating asset - that keeps homeowners on the sidelines, because foreclosures are driving prices lower, jobs are being lost, and 401(ks) are being eroded."

Signs of a consumer recovery, says Zelman, include an increase in personal savings rate and higher lending levels.

Zelman doesn't believe that any of the proposed stimulus measures on the federal or state level, aside from "the government bulldozing foreclosed houses or buying them up," are substantial enough to stop the downward spiral. She projects that just under half of all private homebuilders - which compose 75% of the industry - will go out of business by the time the market bottoms. That creates market opportunity for the surviving builders, but not for several more years.

"Right now, I don't like the builders as investments," says Zelman. The only "investable company" right now, she says, is Virginia based NVR, which she believes is better suited to weather the storm because it's positioned in healthier markets such as Washington D.C. Other relatively healthy markets, she says, include Texas and Salt Lake City.

For now, Zelman remains bearish towards the rest of the sector - just as she has been for four years. "There's still a lot of false optimism," she says. "Some economists believe that we're close to a bottom, but we're just more than halfway there."

http://money.cnn.com/2009/01/22/magazines/fortune/investing/investor_daily.fortune/

NVR, Inc. operates as a homebuilder in the United States. It engages in the construction and sale of single-family detached homes, town homes, and condominium buildings. The company sells home buildings under the Ryan Homes, NVHomes, Fox Ridge Homes, and Rymarc Homes trade names primarily to first-time homeowners and first-time move-up buyers. It markets its products in Maryland, Virginia, West Virginia, Pennsylvania, New York, North Carolina, South Carolina, Ohio, New Jersey, Delaware, and Kentucky. The company also offers mortgage banking services to its homebuilding customers, including broker title insurance; and performs title searches in connection with mortgage loan closings. The company was founded in 1979. It was formerly known as NVHomes, Inc. and changed its name to NVR, Inc. The company is based in Reston, Virginia.

[mlkrborn]

YEP

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wow, this is one sad mess

the accumulation shows pee[ps are buying the selloff


Bank of america, the largest bank in America, bought out countrywide, the largest US mortgage lender