In the part of Atlanta I live in, we are fairly built out, but other parts such as South Fulton county are seeing huge developments  going in. But these homes are not in the 200–400 thousand dollar range, they are  90 thousand to 125 thousand dollar starter homes. And  they are built in a  rapid fire method. And they are sold  to renters who were qualifying with sub prime  paper.

So what is the  point, these homes have been the key numbers in  housing starts. A million dollar  home and a 90 thousand dollar home each count as a housing start. The  million dollar home is worth 11 90 thousand dollar homes in housing costs, but in housing starts they are equals. 

So when  the bottom falls out of the low end market and these homes have  no buyers since writing bad paper has ended, these developments will shut down starting new builds. And that is why the housing starts number will collapse, but not the real estate industry as the mid to top end will continue to go strong.

Confidence among U.S. builders retreated this month, however, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
The national HMI slipped 3 points to 36, from February’s eight-month high of 39 points. (Fifty is the neutral level; higher levels indicate more builders see sales conditions as good than as poor.) In the Northeast, where confidence was highest, the HMI slipped 2 points to 41.
“Builders are uncertain about the consequences of tightening mortgage lending standards for their home sales down the line, and some are already seeing effects of the subprime shakeout … [But] The fundamentals of today’s housing market still are relatively strong,” said NAHB Chief Economist David Seiders.   via Providence Business News.

If you are an investor in both real estate and the stock market, these are interesting times. Data coming out this week by the NAR and NAHB will be key indicators on how the stock market will be moving. 

Last Tuesday, the Dow Jones industrials dropped more than 240 points when the New York Stock Exchange said it was moving to delist New Century Financial Corp.; Accredited Home Lenders Holding Co. said it was low on cash, and the home loan units of GMAC Financial Services and H&R Block indicated they’re struggling.
The subprime mortgage industry isn’t a huge portion of the U.S. economy, but some market sages (including former Fed Chairman Alan Greenspan) are saying troubles could escalate and spill into other sectors if home prices drop off significantly, making mortgages impossible to refinance.
On Friday, the markets will find out if homes lost value in February, when the National Association of Realtors reports last month’s median home price. January’s report — which came out Feb. 27, when the Dow Jones industrials plummeted more than 400 points — showed that the median home price fell for the sixth straight month. The data will also include existing home sales and inventories; economists are expecting February sales to slip to 6.35 million, after jumping to 6.46 million in January.
Investors this week should also get a better idea of how the sluggish housing market is affecting the industries that depend on it. Today, the National Association of Home Builders will release its index on builders’ perceptions of new singlefamily home sales and nearterm sales prospects. And Tuesday, the Commerce Department reports on February housing starts and building permits; the market is expecting housing starts to have risen to 1.450 million from 1.408 million in January, and building permits to have slipped to 1.56 million from 1.57 million. Via the Buffalo News.

MSM interpretations are coming in thick and fast. I’ve got a couple of links to these in the [...]

I still think this a good local investment if you are hands on and willing to get dirty. College students in some ways are hard on properties, but you will typically get paid and with the university budget crisis and high growth in students, demand is high.

SCOTT JAGOW: This morning, we’ll get the latest numbers on existing home sales. Probably yet another sign about the cooling housing market. Buying up a bunch of homes or several apartment buildings may no longer seem like a sure-fire investment. But we’re here to tell you about a place in the real estate market that’s fairly certain to pay off. Here’s Alex Cohen:

SANDY POPE: This is considered a loft, even though it has a separate bedroom, so when you come in your front door you’ve got your storage . . .
ALEX COHEN: Realtor Sandy Pope shows off a condo in Austin, Texas. This unit lists for $200,000 dollars even though it’s only 750 square feet.

But it’s perfect for students. It comes with a high-speed Internet connection, there’s a pizza place on the ground floor, a bus stop right outside and the University of Texas campus is just a few blocks away.  via Marketplace

Listen to the Interview (via Realplayer)

In my eyes this is a frivilious suit, but I may be missing something. The other real estate companies can sell inside the property, they just can not use the official tag and have a sales office inside the gates. This is a typical arrangement that is replicated across the country.

If for some crazy reason the suit is successful, what does this do to the method developers use to sell their new homes across the country? What would it do to your local market?

Wintergreen Resort and Roy Wheeler Realty joined Sept. 1 to form Wintergreen Resort Premier Properties, which has the exclusive rights to advertise as the “official real estate company of Wintergreen Resort,” operate an office on resort property and distribute marketing materials there. Other real estate firms can sell property at Wintergreen Resort, but not with the preferred treatment of Wintergreen Resort Premier Properties.
The exclusive dealing contract has given Wintergreen Resort Premier Properties a “dominant position” in the home sales market at the resort, driven out at least three competitors and left Mountain Area Realty with only a portion of the sales it normally would receive, Mountain Area Realty’s attorney said.
Wintergreen Resort Premier Properties “is charging sellers 6 percent commissions,” said Allen Foster, attorney for Mountain Area Realty. “Mountain Area Realty was charging 5 to 51/2 percent. So we know consumers are being harmed.”
The lawsuit accuses Wintergreen Resort of violations under the 1890 Sherman Antitrust Act, the Virginia Antitrust Act and the Consumer Protection Act, as well as conspiracy and fraud. The $6 million in damages represents lost commissions, Mr. Foster said. via The Washington Times

While some sections of the city and surrounding areas have lost value, there are pockets that saw over 20 percent increases last year. Is this surprising, maybe is you are thinking the sky is falling. However,  those that watch markets work know that buying and selling real estate know that moving over a couple of streets can change the characteristics of the marketplace.

So buying a home in a part of town that has appreciated greatly may not make a whole lot of financial sense right now, but look around and you may find a part of town that is gentrifying or is transforming and tremendous profits may be out there for you.

Areas with declines were generally expensive, with homes costing $500,000 on average, while many of the fast-appreciating communities were more affordable, according to a Sun analysis of home sales data that offers the first detailed look at the post-housing-boom landscape. Half of the region’s 10 most costly ZIP codes in 2005 saw a drop in average price last year, from Monkton in Baltimore County to Davidsonville in Anne Arundel.

Local real estate agents say they believe the market is on an upswing after months of sluggishness. January seemed to bear that out, with sales rising for the first time in more than a year just before the all-important spring season. But even last year, average prices increased at least 10 percent in a third of Baltimore’s suburban communities — and in a remarkable three-quarters of city neighborhoods.

Prices in half of the city’s neighborhoods, in fact, jumped at least 20 percent.

“That just confirms what I see and what I hear,” said Joseph T. “Jody” Landers III, executive vice president of the Greater Baltimore Board of Realtors. “We see pockets where there have been some slight declines … but you continue to see some strong gains. … You also have to put that into some historic context: For two decades, there was no price appreciation in many of these neighborhoods.” via baltimoresun.com