Posts filed under “Valuation”

Earlier today on Real Money’s columnist conversation, Tony Crescenzi noted earlier
that "It would be extraordinarily unusual for the combined figures on
new and existing home sales to continue falling in the face of
increases in mortgage applications."

I have to disagree.

Based on our interviews with our Real Estate clients (commercial
builders, RE brokers) and especially residential Mortgage Brokers,
there appears to be a dramatic rise in multiple applications for both
new purchases, refis, and home equity lines.

As many of the ARM resets come up over the next 18 months, I would
surmise these multiple mortgage apps will increase — especially
amongst the more desperate marginal homeowners.

Meanwhile, we see Defaults on ‘Alt A’ loans surpassing Subprime ones,  according to Citibank:

"Defaults on some so-called Alt A
mortgages packaged into bonds last year are now outpacing those
from subprime loans, according to Citigroup Inc.         

The three-month constant default rate for 2006 Alt A hybrid
adjustable-rate mortgages is 2.3 percent, compared with 2.2
percent for subprime ARMs, New York-based Citigroup analysts led
by Rahul Parulekar wrote in a July 20 report. . . "          

More than $800 billion of subprime mortgage bonds and $700
billion of Alt A bonds are outstanding, with ARM bonds totaling
more than $600 billion and $450 billion, respectively, according
to a March report by Zurich-based Credit Suisse Group."         

And, as we mentioned yesterday, its NOT just Alt A and Subprime, according to Countrywide CEO Angelo Mozila:

"Countrywide Financial, the nation’s largest mortgage lender, said yesterday that more borrowers with good credit were falling behind on their loans and that the housing market might not begin recovering until 2009 because of a decline in house prices that goes beyond anything experienced in decades."

Incidentally, I was on Kudlow with Mr. Mozila about a year ago. Nice guy, he gets credit in my book for being a bluntly candid  speaker. As it turns out, he is also a canny seller of his own stock — a net of $380 million, according to Thomson Financial.

As I said at the time, it was smart they were diversifying away from Housing, but I wouldn’t touch Countrywide Financial (CFC) with a 10 foot pole — and that’s still true today.

UPDATE: July 25, 2007 12:34 pm


"Home resales in the U.S. fell for a fourth straight month in June, a sign housing remained mired in the worst slump in 16 years going into the second half.

Purchases last month declined 3.8 percent to an annual rate of 5.75 million, the slowest pace since November 2002, from a revised 5.98 million in May that was less than initially reported, the National Association of Realtors said today in Washington.

Rising borrowing costs are discouraging buyers, leaving a glut of unsold homes on the market and dimming prospects for a quick recovery in housing. Federal Reserve policy makers last week trimmed their economic growth forecast amid persistent weakness in home building."

When even the NAR start revising forecasts diownward, you know that we are nowhere near that elusive bottom . . .


Defaults on Some `Alt A’ Loans Surpass Subprime Ones
Jody Shenn
Bloomberg, July 24 2007

Top Lender Sees Mortgage Woes for ‘Good’ Risks
NYTimes, July 25, 2007

Home Resales in U.S. Fall 3.8% to 5.75 Million Rate
Joe Richter
Bloomberg, July 25 2007

Category: Credit, Economy, Markets, Psychology, Real Estate, Valuation

Can You Judge a Homebuilder By Its Book Value?

Category: Data Analysis, Investing, Real Estate, Short Selling, Technical Analysis, Valuation

Category: Economy, Investing, Markets, Quantitative, Valuation

Category: Economy, Investing, Markets, Quantitative, Valuation

Cheapest Stocks in Two Decades based on Flawed Fed Model

Category: Data Analysis, Earnings, Investing, Markets, Psychology, Valuation

Small or Large Cap?

Category: Markets, Valuation

Earnings Streak Snapped; How Pricey Are Stocks?

Category: Earnings, Investing, Markets, Psychology, Valuation

Countries GDP as US States

Fascinating stuff: Carl Størmer points us to this amazing map of the United States. Each state’s economic output is analogized to another country’s GDP. click for larger chart: Notable omissions: U.K., Japan, Germany, China, Russia, Italy. I cannot vouch for the precision of this, but by eyeball, it looks about right. Carl adds: “When seeing…Read More

Category: Currency, Economy, Finance, Valuation

Not Expensive vs cheap

Category: Data Analysis, Financial Press, Investing, RR&A, Valuation

Stock Prices Adjusted for Inflation

Category: Data Analysis, Technical Analysis, Valuation