BANKRUPTCY UPDATES

• Minnesota Distillery of Fine Vodkas Files Chapter 7 Bankruptcy (February 10, 2012)
• Court Approves Newspaper Magnate Lee Enterprises’ Bankruptcy Plan (February 07, 2012)
• Suspected Felon Filed for Bankruptcy Shortly Before Untimely Death (February 09, 2012)
• Ireland Overhauls Bankruptcy Laws (February 06, 2012)
• IL State Representative Files for Chapter 13 Bankruptcy (February 08, 2012)

Housing Market Industries Show Signs of Turnaround

But many mortgages still in danger

While on the whole analysts are certainly hesitant to make any broad-sweeping statements about the housing market, it may be that some economic indicators are suggesting improvements in certain areas, according to CNNMoney.

The home improvement retailer Lowe’s, for example, has released a report that included fourth quarter profits that were better than many expected. Lowe’s is the second-largest home improvement seller in the country. The company also suggested that 2010 would be a better year for the housing market, which is news that many are eager to hear, but which should probably be taken with a grain of salt.

This comes on the heels of a trend towards good news in the housing market. The CNNMoney report, though, cautions against what it calls “simply another head fake—‘The boy who cried housing recovery!’” In other words, beware of predictions about an improving economy before they are necessarily justified.

A recent report from First American CoreLogic shows that 24 percent of all American mortgages had negative equity. Otherwise known as underwater mortgages, this happens when the loan on a house is worth more than the home itself. In some places, the percentage of negative equity loans is striking, with 70 percent of mortgages underwater in Nevada because of mortgage distress.

Still, Paul La Monica, editor at large for CNNMoney, thinks that we may finally be getting to a point when we can say that the market is slowly getting better.

Lowe’s CEO Robert Niblock said in a statement that “the worst of the economic cycle is likely behind us.” He is making that statement on the strength of the Lowe’s report from the fourth quarter, in which they now anticipate a 4 to 6 percent increase in sales this year. The expectation had initially been that they would experience a 3 percent increase in sales this year.

Home Depot, Lowe’s rival and number one home supply seller, will announce report its fourth quarter results soon, which should provide more material for analysts to consider when evaluating the state of the home market.

According to the report, there are additional homebuilding companies that have reported profits in the fourth-quarter. These companies include homebuilders Lennar, D.R. Horton and KB Home. Some of the profits “were a result of a tax law that benefited the builders,” however some of those builders told CNNMoney that there had been a rise in new home orders.

In light of what appear to be improvements in the homebuilding industry, one exchange-traded fund that tracks companies in the housing sector is up more than 6 percent. CNNMoney compares these positive results to the flat rate of growth of the S&P 500.

Economists are still waiting on the government’s new-home sales figures for January. They are expecting an increase of 4 percent, following an 8 percent drop in December. Ted Parrish, the co-manager of the Henssler Equity fund, talked to CNNMoney.

“New-home sales are pretty anemic still,” he said. “I’m not expecting robust growth for a couple of years.” He cited the first-time homebuyer tax credit expiring as something that might soften the housing market. Mortgage rates, he said, might also start to rise later in the year as the Federal Reserve considers hiking interest rate hikes. Bankruptcy rates are also still high.

In this continued spirit of reserved optimism, Lowe’s CEO Niblock also said in his statement that “consumers are gaining the confidence to take on more discretionary projects.” La Monica pointed out that “that’s not the same thing as consumers gaining confidence to buy a house.”