Continue reading Chasing Value: 43% Gain to Build a Position in KB Homes

Chasing Value: 43% Gain to Build a Position in KB Homes originally appeared on BloggingStocks on Wed, 17 Mar 2010 16:40:00 EST. Please see our terms for use of feeds.

Sales of existing homes plunged 17% in December, the sharpest drop since records began in 1968. The sales pace fell to 5.45 million annual rate from 6.54 pace the previous month.

Part of the reason for the drop was attributed to the termination of the first $8,000 tax credit for first time buyers. That kept buyers away from the market. Since then Congress has extended the tax credit. Realtors expect a pick up in sales going into the Spring season.

Continue reading Existing Home Sales Plunge 17% in December

Existing Home Sales Plunge 17% in December originally appeared on BloggingStocks on Mon, 25 Jan 2010 16:40:00 EST. Please see our terms for use of feeds.

• Second quarter home prices fell 9.9% from a year earlier resulting in 29% of homeowners getting negative equity;
• Forty-five percent of homeowners who bought at the peak of the market in 2006 are underwater;
• Overall, U.S. home values in the second quarter posted the largest year-over-year decline in the past 12 years;
• The median U.S. home value has not been this low since the fourth quarter of 2004;
• Nationwide, nearly one in four (23.7%) homes sold during the past year sold for a loss while nearly 15% of sales were foreclosures.

These figures are unbelievable. They underscore that the housing market is nowhere near a bottom. The effects of the downturn will be felt for years to come since the biggest asset of many Americans is their home. You have to pity people who are trying to move closer to their jobs because of high gas prices. They are screwed no matter what they do.

"For homeowners who need to sell, this is a gravely serious situation," Zillow's Stan Humphries said in an interview with Bloomberg. "It can also be harmful to communities where the number of unsold homes adds more to inventory and puts downward pressure on prices."

The housing market won't improve until the huge amount of unsold inventory is cleared out, including "spec homes" being put up by builders in the hopes of luring buyers. Things are going to remain ugly for a while.

Many homeowners owe more than their homes are worth originally appeared on BloggingStocks on Tue, 12 Aug 2008 11:00:00 EST. Please see our terms for use of feeds.

Investors in Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) must be applauding the government bailout. To my knowledge, it is unprecedented for the government to trade this openly in the stock of a private company. It is as if the government has become Goldman Sachs Group Inc. (NYSE: GS) which is not surprising since the Treasury Secretary, Hank Paulson, used to run Goldman.

Based on what has happened it looks to me like the Administration is trying to prove just how incompetent government is so we will agree to cut its budget. There are two possibilities: either the government knew how bad things were and did nothing or it didn't know. If it did know how bad things were, it should have done something to fix the problem, such as requiring Fannie and Freddie to raise more capital a year or two ago.

Perhaps it knew last week how bad things are and did not release data supporting its claim that they were in good shape because such data did not exist. If they were in good shape, the government should have been able to release comforting data and the problem would have gone away. The need to announce the bailout plan as a way to save them suggests an amazing lack of insight into their ability to cover their liabilities years or a realization that they were bankrupt and needed to be bailed out.

Continue reading Fannie, Freddie spike following unprecedented government bailout

Fannie, Freddie spike following unprecedented government bailout originally appeared on BloggingStocks on Mon, 14 Jul 2008 09:15:00 EST. Please see our terms for use of feeds.

Continue reading U.S. home prices plunge 1.7% in Q1 - biggest drop in 17 years

U.S. home prices plunge 1.7% in Q1 - biggest drop in 17 years originally appeared on BloggingStocks on Thu, 22 May 2008 13:00:00 EST. Please see our terms for use of feeds.

AP reports that Countrywide Financial Corp (NYSE: CFC) lost $893 million in the first quarter. That $1.60 a share loss was not exactly what analysts had forecast -- they were looking for a profit of two cents a share.

Meanwhile the LA Times reports that Countrywide CEO Angelo Mozilo took in $10.8 million and cashed out $121.5 million in stock gains as his company got hammered by losses on sub-prime loans in 2007. Mozilo also enjoyed perks worth $176,513, including $44,454 in rides on the company's jet; $23,755 in automobile use; $8,581 in country club dues; and $31,238 in company-paid tax and investment advice. Mozilo faces an informal U.S. inquiry into his stock sales.

And Countrywide's financial condition is deteriorating fast. It set aside a $1.5 billion reserve to cover loan up 62% from $925 million in the fourth quarter of 2007. Moreover charge-offs totaled $606 million during the first quarter. Fortunately, Countrywide has an exit strategy. In January, Countrywide agreed to sell itself to Bank of America (NYSE: BAC) for about $4 billion in stock. The question is whether Bank of America will pull out of the deal now that it sees the rising costs it will incur if it moves forward. Since Countrywide trades 15% below that takeout price, the market has its doubts.

Investors don't seem happy with today's announcement -- the stock was down 5% in premarket trading.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Countrywide's red ink doesn't stop Mozilo's gravy train originally appeared on BloggingStocks on Tue, 29 Apr 2008 09:33:00 EST. Please see our terms for use of feeds.

Continue reading Proposed, higher conforming mortgage limits seen aiding housing sector

Proposed, higher conforming mortgage limits seen aiding housing sector originally appeared on BloggingStocks on Thu, 31 Jan 2008 15:00:00 EST. Please see our terms for use of feeds.

Mortgage application volume increased 7.5% for the week ended Jan. 25, 2008, the Mortgage Bankers Association's announced Wednesday.

The MBA's application index rose to 1,054.9 from 981.5 the previous week. The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom.

Refinance volume pushed the index higher. Refinance application volume increased 22.1%, while purchase volume tumbled 17.7%. Refinance applications accounted for 73% of total applications.

An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume. A reading of 1,054.9 means mortgage application activity is 10.549 times higher than it was when the MBA began tracking the data.

The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50% of all residential retail mortgage originations each week.

Continue reading Mortgage applications rise with refinance activity

Mortgage applications rise with refinance activity originally appeared on BloggingStocks on Wed, 30 Jan 2008 11:52:00 EST. Please see our terms for use of feeds.

Continue reading U.S. consumer confidence hits 6-year low

U.S. consumer confidence hits 6-year low originally appeared on BloggingStocks on Fri, 11 Jan 2008 12:20:00 EST. Please see our terms for use of feeds.

Continue reading U.S. mortgage delinquencies hit 20-year high

U.S. mortgage delinquencies hit 20-year high originally appeared on BloggingStocks on Thu, 06 Dec 2007 14:40:00 EST. Please see our terms for use of feeds.

Continue reading May 2007 new home sales not a confidence-builder for GDP bulls

May 2007 new home sales not a confidence-builder for GDP bulls originally appeared on BloggingStocks on Wed, 27 Jun 2007 10:09:00 EST. Please see our terms for use of feeds.