It's a great time to buy or sell a home

The Dow Jones U.S. Home Construction Index is showing a YTD fall of 30.7%. The September 2006 U.S. Foreclosure Market Report shows that foreclosures are up more than 63 percent from September 2005.

High end home builder Toll Brothers (TOL) report tomorrow and have seen their shares fall 18.5% in the same period.

In August Toll said the number of new contracts in its fiscal Q3 fell 48% year on year. Chief Executive Robert Toll has said the slowdown has been triggered by an inventory oversupply and a decline in confidence, but that the market should firm up since interest rates are still relatively low and the economy is in generally good shape.

But today , Comstock Homebuilding Cos. (CHCI) said it swung to a quarterly loss of $5.8 million, from profit of $11.5 million in the year-ago quarter. The company said in the third quarter ended Sept. 30 it recorded a non-cash pre-tax charge of $1.8 million as a result of impairments to its real-estate inventory.”

“Total quarterly revenue fell to $35.3 million from $78.4 million a year earlier, as net new orders dropped 21%. The company said home-building gross margin for the quarter decreased to 6.8% from 30%.”

On October 24th the Bank of America (BAC) reported a note of default on approximately US$200 Mn was contested by the company and arbitration proceedings have commenced.

Accredited Home Lenders Holding Co., are second tier residential mortgage lenders, and announced Q3 earnings slumped 55% and the company booked a lower premium on loans sold and higher provisions for repurchases.

Net income dropped from US$41.3 Mn to US$18.4 Mn on revenue which fell 25 % from US$ 152 Mn to US$114.3 Mn well below analysts projections.

Total net revenue and gains disappeared from US67.2 Mn last year to US$52,000 this year....net interest was US$ 47.3 Mn and fell to US$18Mn.

"Our recent performance has been negatively impacted by fierce pricing competition, ongoing product contraction, anticipated higher delinquencies and losses, and activities associated with the acquisition of Aames Investment Corp.," the company said.

Accredited closed the $235 million acquisition of Aames Investment on Oct. 1.

On Friday real estate investment trust (REIT) Saxon Capital Inc. (SAX)published a Q3 loss as a result of

1. Higher short-term interest rates 2. Continued price competition 3. Increased loan delinquencies.
The company elects to be treated as a real estate investment trust (REIT) for federal tax purposes. From profits of US$32 Mn Saxon posted a loss of US $26.4 million a loss of 53 cents per share, compared with earnings for Q3 2005 of 63 cents per share.

Total net revenue and gains disappeared from US67.2 Mn last year to US$52,000 this year....net interest was US$ 47.3 Mn and fell to US$18Mn.

Saxon is in the process of being acquired by Morgan Stanley Mortgage Capital Inc. for $14.10 per share in cash, or a total of about $706 million. Shares closed today @ US$13.87 (= Market Cap of US$692) Saxon shareholders voted on Tuesday to approve the deal, which is expected to close in December.

Speaking at the recent annual conference of the Mortgage Bankers Association,(MBA) the chairmen and CEOs of Freddie Mac, Fannie Mae and IndyMac predicted rising delinquency and a cooling mortgage market as rates reset. "Obviously we're going to have a period where delinquencies and foreclosures are going to exponentially grow," one of the executives said. "It's going to be a fairly tough correction," another added.

The MBA Weekly Mortgage Applications Survey for the week ending October 27showed the index down 11.2 % percent year on year.

Former Federal Reserve Chairman Alan Greenspan said yesterday at a conference organized by financial services firm Charles Schwab....

" The U.S. housing market will weaken further, but the sharpest decline is over as inventories of unsold homes thin".

"This is not the bottom, but the worst is behind us,"

he added.

...and you make of that what you want, houses not being built, mortgage applications declining , mortgage providers making losses, delinquency rates rising and set to rise more, sounds like the worst is just round the corner to me.

He also said in another of his meaningless Delphic utterances which serve to conceal ignorance more than they cloak penetrating insight ..."forces such as a flood of new workers into the world economy after the collapse of communism and the global integration of China were one-time events that will eventually stop playing a role in keeping long-term interest rates as persistently low."

"There is a turning point but I don't know where it is," he said.(WAPO)

Presumably Schwab pay him good money for this sort of crap.

But ... help is at hand standby for the housing rush ! The National Association of Realtors launched a major ad campaign this week to convince buyers that "It's a Great Time to Buy."... even if in Los Angeles County, prices fell 31% year on year and in Loudoun County, Washington, DC, the dollar value of property sold has fallen 44% from last September.

There is an excellent analysis of this wonderful ad @ The Big Picture

e.g Take the proposition "It's a great time to buy or sell a house" .
to ... er ....... "It's a great time to buy or sell shares in Google"