Real Estate

US retailers bloated from big box binge

3 Jan 2008

Retail floor space has grown over 20% in the past decade, and now far exceeds other developed nations per capita. The housing bust, tapped consumers and internet competition are causing indigestion. With December sales down, the consequences of the glut are becoming apparent.

UK commercial property proves hard to price

19 Dec 2007

Only £5bn of transactions are expected this fourth quarter, down 75% from last year. Big deals have almost dried up completely. Markets are shifting so quickly that buyers and sellers can t easily find common ground. When they do, it could be at significantly lower prices.

UK housebuilders tarred by US brush

17 Dec 2007

The big UK housebuilders shares are down twothirds from their 2007 peak. Sure, the UK housing market is slowing rapidly. The markdown is as deep for their US peers, which have much more on their plate. That seems excessive.

Fannie Mae and Freddie Mac should be privatised

12 Dec 2007

The US mortgage giants have outlived their public usefulness. They ve also proved themselves no more prudent than competitivelydisadvantaged freemarket rivals. Their subsidies should go, and they should be left to live or die on level terms with other financial institutions.

A really useful mortgage bailout toll-free number

6 Dec 2007

The Bush administration thinks some 1.2m adjustablerate mortgage holders could be helped by its new plan to freeze teaser rates for five years. But all those borrowers may swamp its tollfree phone counselling service. Here s a proposal to automate it and speed things along.

Would Goldman want Paulson back?

5 Dec 2007

Maybe not. The Wall Street powerhouse isn t known for putting up with failure. And the Treasury secretary hasn t been much of a success so far. Granted, a bank is easier to run than an economy. But his misguided efforts on SIVs and mortgage resets risk tarnishing his reputation.

Paulson’s subprime bailout faces long odds

30 Nov 2007

His new scheme to head off defaults on resetting adjustable rate subprime mortgages makes more sense than his SuperSIV project. That only addressed a symptom of the mess; the new effort tackles a cause. But it s far more complex than the SIV bailout and faces longer odds.

US housing: worse than in 1991, and still falling

30 Nov 2007

US house prices have already declined more than during the last housing crisis. But too many used homes are still up for sale. The average price is down 8% from the peak. A sharper fall will be needed to get the market back into balance. The means more mortgage pain.

UK listed property stock sell-off has gone far enough

28 Nov 2007

Sure, the UK commercial property market is in bad shape. As the hot money exits the sector, the spectre of firesales is depressing prices and activity. But current share prices are discounting up to 25% falls in asset values and 6%plus yields. That looks too gloomy.

UK housing market could be unravelling

23 Nov 2007

The value of new mortgage approvals in October was 27% lower than the monthly average for the previous six months. It s not just a fallout from Northern Rock. Rather, it looks like the credit crunch is hitting home, literally. Rate cuts might not be enough to reverse this trend.

Land Securities three-way demerger makes sense

14 Nov 2007

The proposed breakup of the UK s largest property group goes further than expected. But specialisation is likely to be the way of the future for quoted real estate. Even so, it takes courage to make the first move in the face of a market downturn and with little prospect of any immediate boost to value.

The worst-timed financial product launch ever?

9 Nov 2007

Bonds backed by reverse mortgages are certainly in the running for that title. After all, they depend on home prices, and on confidence in rating agencies, appraisers and Wall Street. And they ve got mortgage in the name. That s five big nails in the coffin.

Could US mortgage debacle cost $1 trillion?

2 Nov 2007

That s more than pessimists are talking about, but it s not impossible. Start with the market s expected 50% loss on subprime mortgages. Add in 30% losses on other unconventional loans, and an extra $100bn caused by falling house prices. The sum is a round trillion.

Housing bailout squawking will probably work

30 Oct 2007

Countrywide chairman Angelo Mozilo s call for a housing bailout is selfserving, since lenders created the mess. However electionyear images of sympathetic defaulters facing foreclosure in a declining market makes public support inevitable. The later, the better.

The house price slip might soon be quick

29 Oct 2007

UK house prices fell by a tiny amount in October, and by a little more in London and other expensive markets. But vanishing buyers and dropping asking prices suggest the market s slip could easily turn into a slide.

Fed’s decision-making pain may be increasing

17 Oct 2007

Inflation ticked up in September and foreign investors have become unreliable, suggesting the Fed should raise rates. Housing is still weakening and could have some way to go, suggesting rates should fall further. The Fed is on the horns of an eversharpening dilemma.

UK buy-to-let loses fizz

28 Sep 2007

Buytolet investors have enjoyed fabulous returns in recent years. But as rates rise and house prices wobble the feast is over. Yet the sector s plight does not look desperate. Leverage is low and rising rents should allow most landlords to sit out harder times.

Lenders gain ground in debt-equity tug-of-war

26 Sep 2007

Not long ago, shareholder friendly tactics, which boiled down to leveraging up to enrich shareholders, pummelled lenders. But a new convertible bond deal by Standard Pacific shows this trend may anecdotally be reversing.

Crunch shatters commercial property’s shine

21 Sep 2007

The stellar returns of UK commercial property have taken a sudden downturn, with the sector making a zero return in August. It s probably only the beginning. Capital values are going to fall. But the decline shouldn t be as bad as in the early 1990s.

Radian faces uphill struggle

7 Sep 2007

The housing crisis ought to play to the mortgage insurer s strengths. Instead, Radian is being punished for its boomtime expansion. Its merger with MGIC is off, and any more ratings downgrades could scare off customers and hit earnings.