Monday, February 05, 2007

Triple Whammy
Today's Wall Street Journal has three interesting articles. Vornado has offered to accelerate its cash payment schedule in its bid for Equity Office Properties (EOP). EOP rejected Vornado's bid last week for the lower, but more secure, Blackstone bid. Simon Property and a hedge fund have upped the ante for Mills Corp. The hedge fund, Farallon Capital Management, is Mills' largest shareholder and wants a higher price for Mills than Brookfield offered several weeks ago. These two articles show the strength of the commercial market.

The third article in the Journal presents data that the perceived rebound in residential real estate may be premature. Homes for sale that are vacant hit the highest level in forty years. The vacancy figures include existing homes that are for sale and are vacant, and new homes that have not been occupied. Speculators have played a large part, according to the article, as "flippers" got caught in a slow and falling market. From the article:

Meantime, J.P. Morgan economist Haseeb Ahmed said the overhang of vacant housing stock could erode existing home values as sellers slash prices to move their vacant properties. Economists fear that many vacant homes are owned by speculators who are stuck with investment properties that they can't sell and may be under increasing pressure to drop their prices. "We are concerned that there could be downward pressure on prices for awhile," Mr. Ahmed says.

Such worries could cloud hopes for a swift housing rebound. Those hopes have been bolstered recently by signs that the market may be stabilizing. Sales, which fell sharply through much of last year, have leveled off in many metropolitan areas and mortgage applications have been rising.

One amazing point is that 11% of the condos for sale are vacant. Save cash because bargins are coming.

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