by Calculated Risk on 7/25/2008 11:14:00 AM

From the NY Post: ANOTHER RETAILER'S CLOSE TO COLLAPSE (hat tip Kurt)

Boscov's, a Reading, Pa.-based department-store chain, is scrambling to keep itself afloat as a drop in consumer spending across the Mid-Atlantic region has hammered its sales and drained its cash, sources told The Post.

About half of the major suppliers to the 97-year-old, family-owned chain - which operates about 50 midprice stores in six states that sell clothing, appliances, electronics and furniture - have halted merchandise shipments for lack of payment, sources said.

In addition, big commercial lenders including CIT, GMAC and Milberg have stopped guaranteeing deliveries to Boscov's stores ...

Just another potential headache for mall owners.

by Calculated Risk on 7/25/2008 10:00:00 AM

Note: the graphs will be posted this weekend when I return home from the real estate conference.

From the Census Bureau: New Residential Sales in June 2008

Sales of new one-family houses in June 2008 were at a seasonally adjusted annual rate of 530,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.6 percent (±11.3%)* below the revised May rate of 533,000 and is 33.2 percent (±8.8%) below the June 2007 estimate of 793,000.

Seasonally adjusted inventory declined to 426 thousand, and the months of supply is down slightly to 10 months.

I'll have much more this weekend. Note that sales for last month were revised up from 512,000 to 533,000. This is not a horrible report for sales and inventory.

I miss my graph tools! Best to all.

by Calculated Risk on 7/25/2008 09:42:00 AM

AP reports on the new Realty Trac foreclosure data.

739,714 homes received at least one foreclosure-related notice during the quarter, or one in every 171 U.S. households

This is more than double from the 2nd quarter of 2007.

by Calculated Risk on 7/25/2008 01:49:00 AM

From CNN: 2.2 million vacant homes for sale

The percentage of vacant homes available for sale remained relatively flat in the second quarter, but still hovered in record territory.

Some 2.8% of homes, excluding rental properties, were empty and on the market from April through June, according to Census Bureau figures released Thursday. The vacancy rate hit a record high of 2.9% in the first quarter of 2008. It was 2.6% a year ago.

I'll have much more on vacancies this weekend after I return home.

Here is the Census Bureau release. The rental vacancy rate is at 10.0%, essentially unchanged from last quarter.

by Calculated Risk on 7/24/2008 07:00:00 PM

From HousingWire: Fitch Updates Ratings Model; Projects Steep Housing Price Declines

Fitch Ratings said Thursday that it had enhanced its U.S. residential mortgage loss mode ... Fitch’s revisions suggest ... a very bearish take on housing prices over the next five years: Fitch said in its report that it is expecting home prices to decline by an average of 25 percent in real terms at the national level over the next five years, starting from the second quarter of 2008.

And that’s the base case scenario.
...
Fitch will also roll out new 25 MSA-level risk factors influencing frequency of foreclosure and loss severity estimates, the agency said; the 25 MSAs chosen are those that have exhibited strong non-conforming mortgage lending activity in the past.

“Some MSAs such as San Diego and San Francisco, CA are expected to experience home price declines by as much as 47 percent and 33 percent over the next five years, while home prices in MSAs such as San Antonio, TX are expected to appreciate by 7 percent,” [Huxley Somerville, group managing director and head of Fitch’s U.S. RMBS group said].

It's important to note these are real prices - adjusted for inflation. A 7% increase in 5 years, with 3% inflation per year, is a nominal price decline of about 8%.

[sarcasm]That is strange about San Francisco - a number of people at the Inman conference told me San Francisco is special - and immune - and prices won't decline here. [/sarcasm]

by Calculated Risk on 7/24/2008 05:39:00 PM

From MarketWatch: National City swings to loss, but shares rise

[T]he company reported a second-quarter loss of $1.76 billion ... "Credit quality deteriorated, but there are some signs of stabilization in the nonprime mortgage book," wrote BMO Capital Markets analyst Lana Chan

From the NY Times: Stocks Drop Sharply; Banks Lead Decline

Financial shares ... plunged after the regional bank National City and Washington Mutual, the nation’s biggest savings and loan, were besieged by gloomy analyst reports.

WaMu was forced to take the unusual step of issuing a public statement about its financial strength, for the second time in a week.

National City shares ... reported a $1.8 billion loss for the second quarter.

Sorry - a little late, I'm somewhat out of touch while at the real estate conference in San Francisco. Having a great time ... I've met several people that comment frequently, including having lunch today with Nemo!

by Calculated Risk on 7/24/2008 02:37:00 PM

From Bloomberg: WaMu Slumps as Gimme Credit Cites Liquidity Concern

... Gimme Credit LLC said unsecured creditors were ``pulling funds'' from the biggest U.S. savings and loan.
...
``We won't use the phrase `run on the bank,' but we would be remiss if we did not observe that many creditors have quietly been pulling funds,'' wrote [Gimme Credit analyst Kathleen Shanley], based in Chicago. Their actions are ``presenting an increasing funding challenge,'' she wrote.

by Calculated Risk on 7/24/2008 02:21:00 PM

From PIMCO's Gross: Mooooooo!

PIMCO estimates a total of 5 trillion dollars of mortgage loans are in risky asset categories and that nearly 1 trillion dollars of cumulative losses will finally mark the gravestone of this housing bubble. The problem with writing off 1 trillion dollars from the finance industry’s cumulative balance sheet is that if not matched by capital raising, it necessitates a sale of assets, a reduction in lending or both that in turn begins to affect economic growth, creating what Mohamed El-Erian fears as a “negative feedback loop.”

I still think $1 trillion in mortgage losses is pretty much the worst case. But we have definitely come a long way since last December when I first projected $1 trillion in possible losses.

Last December from the WSJ:

... recent prediction from Barclays Capital that losses from the subprime-mortgage meltdown could hit $700 billion. That would top Merrill Lynch’s recent estimate of $500 billion. The Australian newspaper notes that a $700 billion “bloodbath” — potentially leading the U.S. economy into “the blackest year since the Great Depression” — would top the GDPs of all but 15 nations.

Back in the U.S., the Calculated Risk blog sidestepped the colorful language and went straight for the big number: “The losses for the lenders and investors might well be over $1 trillion.”

by Calculated Risk on 7/24/2008 12:59:00 PM

From the Atlanta Journal-Constitution: Industrial, commercial development planned for Buford (hat tip Justin)

Just 198,450 square feet of industrial space is currently under construction in the northeast Atlanta market, which includes Gwinnett, according to CoStar Group, a real estate tracking firm.

That area hasn't seen anything less than 2 million square feet under construction at any one time in the last two years, said Richard Poland, a CoStar analyst.

"It's just a screeching halt on construction," he said.

The CRE bust is here.

by Calculated Risk on 7/24/2008 11:26:00 AM

From MarketWatch: Freddie Mac: 30-yr fixed-rate mortgage up on inflation woes The 30-year fixed-rate mortgage average was up to 6.63% from 6.26% last week.

"Market concerns about rising inflation, further weakness in the housing market and greater probability that the Federal Reserve will raise short-term rates this year all combined to push mortgage rates higher this week."
Frank Nothaft, Freddie Mac's chief economist

The ten year treasury yield has been rising, plus investors are concerned about MBS.

BTW, the housing bill now goes to the Senate and will probably be signed into law pretty quickly: House Approves Sweeping Effort to Help Housing

The White House, citing an urgent need to restore market confidence in the two mortgage giants, Fannie Mae and Freddie Mac, said President Bush would sign the measure despite his opposition to the inclusion of nearly $4 billion in grants for local governments to buy and refurbish foreclosed properties.

Mr. Bush’s support assures that the bill will become law after final passage by the Senate, possibly on Saturday.

It will be interesting to see if the spread between the 30 year fixed rate mortgage and the ten year treasury declines after passage of the housing bill.