Lehman Brothers, the troubled US banker, currently fighting a ¥35.2bn fraud case in Japan is facing further troubles closer to home and is set announce a withdrawal from the UK mortgage market effective April 1st. 
Mortgage Solutions is claiming that Southern Pacific Mortgage Limited (SMPL) and Preferred Mortgages - both devisions of Lehman, have indicated they would effectively close their doors on Tuesday.
Mike Butcher has Red Herring's full list, I'm not sure how many or if any of the 100 companies are property related. The only name I recognize so far is Trovit, the Barcelona based search crawler that started about a year and a half ago. Trovit not only crawls the web for property, but also provide listings for cars and jobs.
We're lucky to have an exclusive screenshot of Nestoria's upcoming German search engine, following on the heels of its highly successful Spanish version. Although Lokku (parent company behind Nestoria) haven't officially said anything yet, the company is actively seeking employees in Germany and Italy via its blog, which indicates imminent activity in those markets.
Elsewhere in the search engine world, Douglas de Jagger of dotHomes is now claiming over a million listings on its US site according to Sellsius. The ambitious duo see the housing slump in the US as an opportunistic time to enter the market as opposed to a challenge, representing an 'alternative model' to traditional broker listings.
However, competition is big in the US and dotHomes is up against some heavyweights. When Artemi and I last spoke he mentioned the challenges and admitted that if he didn't tackle them somebody like Google would. Zillow, Redfin and Trulia are practically household brands in the US, and they represent strong competition too. But the downturn in the economy is based mainly on housing and I have to wonder how many consumers are likely to really care about searching for property online or 'Zillowing' their house to see that it's now worth nearly half of what is was worth last year? Depressing.
Notwithstanding, Art and Doug are full of energy and ambition and Sellsius claims they have now teamed up with a service called RealtyTrac to integrate 400,000 foreclosure listings into the dothomes database. Positive news for some I guess, however, again, my question is who will be doing the searching and why. Most consumers in the US now aren't in a position to buy, with the credit markets drying up and the investment banks going bust, things are likely to get worse before they get better. The successful 2.0 company that's likely to weather the storm is the one that has the most resources at its disposal. Right now (outside of the 'big three' Google, Yahoo, MSFT) it seems like Zillow is in pole position, followed closely by Trulia. Again, I pay very little attention to the US industry, following it mostly via FoREM and Inman, so I don't know the ins and outs. but if I remember correctly, Zillow is sitting on close to $80 mill and Trulia has about $20 mill and is growing rapidly in traffic and brand recognition. Dothomes / Byteplay have nowhere close to that, but what they claim to have is superior technology. However they don't have exclusive ownership of that technology which can easily be duplicated and has already happened in the US with a company called Roost, launching right around the same time as they did.
Meanwhile, although Nestoria's European expansion has received much less media attention, one has to appreciate the dynamics of the European housing markets, particularly in comparison with the US. For the moment it appears that things are much more stable in European housing than in the US. That may change in some markets, particularly the UK. But Germany on the other hand has been touted by many international property experts as the safest short to medium term bet.
This morning's FT has an informative article written by former Federal Reserve governor Alan Greenspan, where he describes the current crisis in financial markets as "the most wrenching since the end of the second world war" Greenspan feels that the crisis will end only when home prices stabilise and the equity value in homes supporting troubled mortgage securities also begin to stabalise. That could and most probably will take years, a process he describes as "inventory overhang".
Home prices have been receding rapidly under the weight of this inventory overhang. Single-family housing starts have declined by 60 per cent since early 2006, but have only recently fallen below single-family home demand. Indeed, this sharply lower level of pending housing additions, together with the expected 1m increase in the number of US households this year as well as underlying demand for second homes and replacement homes, together imply a decline in the stock of vacant single-family homes for sale of approximately 400,000 over the course of 2008.
The pace of liquidation is likely to pick up even more as new-home construction falls further. The level of home prices will probably stabilise as soon as the rate of inventory liquidation reaches its maximum, well before the ultimate elimination of inventory excess. That point, however, is still an indeterminate number of months in the future. [my emphasis]
Reprint from Renthusiast - May 10th 2006
This morning we read that gold has passed $700/ounce, just one month after reaching $600/ounce, and its value increasing more than 60% in the past year and over 250% in the last five years. How does this dramatic increase in gold value relate to the housing market? Actually, in relative terms, the "value" of gold remains constant, since gold supply hardly changes. Realistically, it is the value of the dollar that has decreased relative to gold, since the dollar supply changes constantly; as and when the Federal Reserve Bank decides whether or not to print more money. With regards to gold however, it has been argued that over 90% of all bullion ever mined is still in existence.
When analyzing from this perspective, we can appreciate a more direct link between the cost/value of gold and the global housing market. Since gold is priced and traded in dollars, and since dollars are the recognized international monetary standard, global property investors should not ignore the gold and precious metal market indicators and should pay as much attention to gold market movements as they do to interest rate changes and fiat currency trades.
A significant difference between property markets and other investment markets (such as gold, oil, bonds, stocks etc) is that property markets are extremely localized. For example take the current property boom and building frenzy in Dubai and compare that to what's happening in Zimbabwe No comparison. Yet both economies use dollars for their reserve currencies and both economies are directly and instantaneously affected by the current movement in gold.
Other aspects that affect housing markets are
Joel has been articulating for months about the importance and development of real estate video. Few people so far have gotten it right. But I think this video by estate agent and Telegraph writer Ed Mead has got it just about right. Oh and the house is quite nice too ... at £7.9 million, just a tad over my budget
A few weeks months ago I got an email press release sent to me from Selwyn Lim, Managing Director of Calnea Analytics, the team behind the Land Registry's House Price Index and the very impressive Mouseprice.net. Unfortunately the emails from the Calnea team got lost among other press releases and to be truthful, I hadn't paid much attention to Mouseprice ever since I first came across the site sometime last year. At the time (per my memory) Mouseprice appeared to offer a service similar to nethouseprices.com, essentially rehashing Land Registry sold prices data, information that was freely available at the time on the LR's old website. There a number of sites who offer a similar service for free including Hometrack and HousePriceReports.com.
A few weeks ago, some of my work colleagues (most of whom dont know / dont read / dont care about this blog) began raving about Mouseprice and how good it was, but I dismissed it, based on my previous experience, and of course as publisher of Renthusiast, I thought myself up to speed with every worthwhile '2.0' property service in the UK. Boy was I wrong.
Last week, for whatever reason while doing comparable research for a project we were bidding on, I went about my normal comparable research methodology, which starts with Land Registry data, moving on to Rightmove and finally Nestoria or Dothomes, depending on what mood I'm in. But I wasn't quite satisfied with the results from both sites and something told me "check with the Mouse" and I have to say I was impressed.
Not only does Mouseprice offer more up to date Land Registry Data than most of the other sites, but their free valuation tool is quite impressive (and fairly accurate) as well. In the coming weeks, I'm hoping to bag an interview with Selwyn Lim, but in the meantime, I'm sure I'll be using mouseprice.net more and more and also recommending to friends and associates. I may even engage in a little "property flirting" myself, who knows, I may even get lucky!
Rightmove PLC, the UK ’s number one property website, issued a press release following yesterday's disappointing budget by Alistair Darling. According to Rightmove, the decision to maintain stamp duty thresholds at the current level, means that nearly 50% of the UK’s current housing stock on the market come with a stamp duty fee of up to £2,500 attached. Over 25% of UK properties currently for sale come with a fee of up to £15,000. Only 16% of all homes on the market are priced under £125,000, and exempt from from the tax.
Rightmove co-founder Miles Shipside suggested that the Chancellor missed a "real opportunity to help First Time Buyers" and suggested that the stamp duty exemption threshold should have been raised "by a mere 4% to £130,000". If this were to happen, Shipside argues that first time housing buyers would have had access to an extra 14,211 properties currently for sale.
With tightening mortgage lending criteria, First Time Buyers are finding it hard enough to get onto the property ladder. Some saving on Stamp Duty would have helped them raise the larger deposit that is now a necessary prerequisite of getting onto the housing ladder.
In the buoyant market of previous years, sellers would have benefited from being able to raise prices as a result of buyers having more money at their disposal. In the current flat market, First Time Buyers would likely have benefited from all the savings the Chancellor would have handed to them."
Clearly the BoE's interest rate cuts are not particular effective in stimulating the overall economy in general and the housing market in particular. UK Consumer confidence is at its lowest point in recent years, coupled with rising food and fuel costs and an increased level of job insecurity. The Times claims that more that half of the 2500 consumers who responded to a recent survey said that they were "eating out in restaurants less often than a year ago" and that they were now more likely to check supermarket prices.
The decline in confidence is further illustrated by the 45 per cent of respondents who said that they were less likely to change their car and the 60 per cent of women who said that they were spending less on clothes. Only 12 per cent are more confident about their job security than they were a year ago.The RICS is reporting its 7th consecutive house price drop with 64.1% of its members reporting a fall in house prices, an increase from 54.7% in January. So what is the government to do? More importantly what will they do? all reports indicate that Mr Darling intends to introduce a 'green budget' with many stealth taxes on consumer goods that are perceived to do damage to the environment. But another recent survey suggests that consumers are 'bored with climate change'. Frankly it seems like the government is shoving this stuff down our throats with insufficient evidence to prove that what they're proposing will actually work. To make matters worse, the debate is still out on the real causes of climate change, or even if it's even a problem worth worrying about in the first place.
A few weeks ago at the height of Obamamania I wrote a post entitled Barack Obama vs. the US economy, which was described as "hogwash" by a close friend and strong Obama supporter in Los Angeles. I write badly especially when I'm in a rush, but the essential message I was trying to get across was the onesideness of Obama's campaign message. Change seems to be the central focus of his message, but change from what to what? That message appears to be lacking and Clinton is capitalizing on that. Nevertheless, Obama is proving himself a fighter and may well have some surprises in store for us yet ...BTW, what's happening to Ron Paul? He seems to be still in the race, but the media blackout is freaking strange. His message is "hope", but he's also got experience to back it up.
In other political news, Lee Jasper spectacularly quit his post yesterday as the London mayors "race adviser". I know some of my friends supported him and in a way it's kinda sad to see him go out like this. But lets face it, Lee was a victim of his own stupidity. You can't blame media for stuff like this. But at least he wouldn't have to be grilled by police into the investigation of how his former association spent taxpayers money. The question for Lee is what's he gonna do now? The bigger question for London, is how will this affect the upcoming mayoral election? More and more people seem to doubting Ken Livingstone and clearly he's standing on risky political ground. However Boris is no alternative, (doesn't he remind you of Borat; in other words trying to fit into someone and something he really isn't - total insincerity). But Brian Paddick does seem sincere and offers level headed proposals to tackle some of the cities problems. Rising crime is one of them, and being an ex-police officer goes a long way. Being gay may also be a great asset for the "equality/minority vote" (although being a fan of page 3 may cause some to raise questions towards his sexuality). However practically everybody in London is a minority in some way, it just seems that nobody really knows of him and more importantly his policies ... at least not yet.
Why is all this important for real estate? Well a stable political environment attracts a stable economy, and a stable economy supports a stable housing market. At the moment we don't have any of those things, neither in our city, country or the world. 2008 is a big year in the global political environment. Things can only get worse before they get better.
I think I shocked a few people when I spoke last month at Zoomf's 'Searching for Profits' seminar. In the midst of my shambolic presentation (compared with the other magnificent presenters) I blurted out that the current banking crisis was not necessarily reflective of a housing downturn - certainly not in the London market.
People seem to mix the two issues together and it can be quite easy to do so. The banks supported 'sub-prime' borrowing and got done for it. Sub-prime is automatically equated with housing mortgages, but the true definition of a sub-prime borrower is a lot broader than that. Anybody who doesn't have a prime credit rating is considered sub-prime. So you can still get a mastercard, just at a higher interest rate. You can still buy that car, it'll just cost you more money, and yes you can get financing, just at a higher interest and you will most certainly have to pay a bigger deposit than your prime rated counterpart and so on and so forth. The same principle applies to housing and the mortgage markets. This is not the first time we have suffered a 'credit crunch', there were very famous 'crunches' in the 1960's, 70's, and 80's
