Housing Takes Another Header by Seth Jayson

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Think we’ve seen the worst from housing? Think again.

The latest S&P/Case-Shiller Home Prices Index shows that home prices are not only dropping like rocks, in many places, the rate of drop is increasing. The figures, which cover the period ending July, 2007, detail a 4.5% year-over-year drop in the index’s 10-city composite, and a 3.9% drop in the 20-city composite.

That’s the worst performance since 1991, which is why you should click that link and see the whole story. Previously hot markets like Phoenix and Tampa were among the worst tracked, but areas that sat out the bubble, like Detroit, are also suffering. Near Fool HQ, the argument I often hear about home prices never falling (because there’s reliable government spending, big influx of population, blah, blah, blah …) is shown to be a complete fiction, as D.C. area prices tumbled 7.2% year over year.

Remember, the Case-Shiller index tracks differences in sale prices for the same homes, and it screens out data that would compromise the comparisons, such as major renovations and non-arms-length sales. It looks at existing home prices in a more detailed way than the likes of the National Association of Realtors, which today reported a year-over-year increase in median prices that is directly at odds with the slow pace of sales.

It’s going to be a long time before the excesses are wrung out of this market, and I anticipate more investors getting stung. We’ve already seen that the prices of new homes are just as vulnerable in the current market. Hovnanian Enterprises (NYSE: HOV) recently had a well-publicized “Fire Sale,” which knocked about 20% off the price of new homes.

With foreclosures on the rise, more fire sales are likely in the existing and new home markets. I expect to see builders like Pulte Homes (NYSE: PHM), D.R. Horton (NYSE: DHI), Beazer Homes (NYSE: BZH), Centex (NYSE: CTX), and Lennar (NYSE: LEN) resort to similar desperate moves.

Stocks of Calif. homebuilder Standard Pacific shed 10.8 percent; analysts predict more bad news for the sector.
Housing stocks down - Sep. 24, 2007

Housing stocks posted sharp losses Monday ahead of sector data and two major earnings reports scheduled for Tuesday and Thursday.

Standard Pacific Corp (Charts). led the losses, shedding 87 cents, or 10.8 percent, to $7.23 in midday trading.

Investors sold the stock lower after the California homebuilder said it would stop paying a quarterly dividend and instead use the estimated $10 million a year to pay down debt.

The company also said it was issuing $100 million in convertible debt in a move to refinance existing obligations.

Meanwhile, existing home sales data for August is due Tuesday.

Bank of America analyst Daniel Oppenheim expects a 3 percent decline. He also expects inventory levels will rise sharply, meaning further price cuts are likely.

Also Tuesday, Lennar Corp (LEN). reports fiscal third-quarter earnings. Analysts expect the company to post a loss on major charges to write down the value of inventory.

Lennar shares hit a 52-week low of $24.43 Monday, and were off 56 cents to $24.76 in midday trading.

On Thursday, an industry group reports data on sales of new homes — which directly reflects homebuilder results.

Oppenheim expects an 8 percent decline because of tightness in the credit markets that made it difficult to get a loan.

KB Home (KBH) reports quarterly results later that day.

Wall Street anticipates a loss of 75 cents per share, also because of impairment charges.

KB shares slid 70 cents, or 2.6 percent, to $26.57 in midday trading.

Stocks surge after Fed rate cut by 0.5%

Stocks surged this afternoon after the Federal Reserve’s half-point interest rate cut.

The Dow Jones industrial average gained 335.97 points, or 2.5%, to close at 13,739.39. The Standard and Poor’s 500 stock index rose 43.13 points, or 2.9%, to 1,519.78. The Nasdaq composite index gained 70.00 points, or 2.7%, to 2,651.66.

Stocks had risen in the morning on widespread expectations that the Fed would cut rates. There had been some worry, however, that a quarter-point rate cut would disappoint investors and spark a sell-off.

Those fears were alleviated by the Fed announcement, and stocks bounded upward immediately. Bank and brokerage stocks, which are especially sensitive to rate fluctuations, led the advance.

Investors are betting that lower interest rates will ease the recent credit crunch tied to problems with sub-prime mortgage defaults, as well as stimulate the beleaguered housing market.

In a potential economic warning sign, however, bond yields climbed after the Fed action. That’s a signal that fixed-income buyers worry that a strengthening economy could trigger inflation. The yield on the two-year Treasury bond rose to 4.49% from 4.47% on Monday.

Hopefully this Fed rate cut will lead to better Real Estate Market through Next Year.

How to check California Real Estate Agent License status online.

Before you hire an agent to sell your home, you should check the status of real estate salesperson, broker, company, and corporate licensees online. California Depart of Real Estate, also known as DRE, maintains records of past, current and future (Licensee’s renewal date) information available to public.

All you need is last & first name or license number to search the records. You can also lookup a company by DBA and find out who and how many agents are registered under the particular company. This is very useful for both consumers & real estate professionals.

CA Licensee Status Inquiry

Public License Information

You can find following information:

1. Name, former name or company name
2. License type & status
3. Business & mailing address
4. Original license date & expiration date
5. Any disciplinary action

If a real estate agent keep telling you about his or her 10 years of experience, you know where to look and verify the information, right?

If you have a tax question, what do you do? Visit the IRS web site? www.irs.gov ? Yes, of course. I’ve searched whole IRS web site but couldn’t find an answer. I clicked on the Call Us With Your Tax Question Wow~!!! I didn’t know about IRS telephone service. Very easy to memorize this phone number Toll-Free 1-800-829-1040.

Live Telephone Assistance

Monday – Friday, 7:00 a.m. – 10:00 p.m. your local time (Alaska & Hawaii follow Pacific Time). When calling, you may ask questions to help you prepare your tax return, or ask about a notice you have received.

Telephone Assistance for Individuals
Toll-Free, 1-800-829-1040.

Guess what? I didn’t expect to wait this long… 23 Minutes & 38 Seconds~!!!

Just another bad customer service by US Government. Sigh~