Houston home sales fell a record 30.2 per cent in September, according to the Houston Association of Realtors, which largely blames Hurricane Ike shutting down real estate offices for a couple of weeks. Many pending property transactions were delayed as sellers made repairs. The report says the housing market continues to be affected by the ongoing credit crisis and weakened economy. Home values, on the other hand, are rising. The median price rose five per cent to $157,000—an all-time high for September.
The 30th annual PricewaterhouseCoopers Urban Land Institute Emerging Trends in Real Estate report ranks Houston as the sixth-best commercial real estate major market in the United States. Seattle, San Francisco and Washington are the top investment targets, beating out traditional leader New York. The energy industry is credited for Houston's placement.
A preliminary report says Hurricane Ike caused about $8.5 billion in damage to Harris County houses, apartments and mobile homes. The Houston Chronicle says the Harris County Housing Authority's report indicates that Ike will be far costlier than any other Houston-area storm in recent memory. Among the preliminary findings: single-family homes accounted for most of the damage, with a midrange estimate of $7.6 billion; apartments sustained about $830 million in damage and mobile homes about $1.7 million; total residential and commercial damage from Hurricane Alicia in 1983 was estimated at $2 billion--about $4.11 billion adjusted for inflation. Officials said the Ike study will help local and federal officials project funding needs for housing assistance programs.
Governor Rick Perry says Hurricane Ike caused $11 billion in damage to Texas and he wants the Feds to extend some 100 per cent recovery payments. Perry announced he's asked the Federal Emergency Management Agency to extend, for 18 months, its full payment of Ike emergency protective measures and debris removal costs. Full federal payment is set to end October 27th. In some disasters, FEMA pays 75 per cent reimbursement and the remainder comes from local jurisdictions. Perry notes the federal share was expanded to 100 per cent reimbursement after the 2005 hurricane season for Louisiana, which suffered from Katrina and Rita. Ike struck southeast Texas on September 13th. Perry also announced disbursement of $650,000 in Texas disaster relief fund grants, including $125,000 to the Southeast Texas Food Bank.
Lloyd's of London says Hurricanes Gustav and Ike will cost it at least $2.34 billion in damages claims. The world's biggest insurance market says the estimate covers on- and offshore claims for both storms, which hit the Caribbean and the United States last month. It says analysts had estimated the hurricanes will cost the insurance industry as a whole about $20 billion to $25 billion. However, it stresses that based on the current estimate, there would be negligible impact on Lloyd's capital and no exposure for its central fund. That's a reserve used to cover insurance liabilities when members have insufficient funds to meet them. London-based Lloyds is a society of corporate underwriters and individuals that make insurance transactions through agents and syndicates. It currently makes 40 per cent of its premium income in the United States, but it's signaled plans to diversify by moving deeper into emerging markets in Asia, Latin America and the Gulf.
AAA says a gallon of regular gasoline fell more than three cents overnight to a new national average of $2.89. OPEC is planning a meeting Friday in Vienna. The cartel's president said the group is planning to announce an output reduction that analysts believe could total at least one million barrels a day. Experts are divided over how much impact on OPEC cut will have on prices. Some believe waning global demand for energy will push prices as low as $50 a barrel, while others say a significant supply reduction could halt the downward the momentum.
Iran's oil minister says the Islamic Republic, Russia and Qatar discussed the formation of an OPEC-style cartel of gas exporting countries. Iranian oil minister Gholam Hossein Nozari says that the top three countries with natural gas reserves will "seriously pursue the formation of an organization of gas exporting countries." Nozari spoke on state television after a joint meeting with his Qatari counterpart Abdulla Bin Hamad al-Attiya and the head of Russia's Gazprom Alexei Miller. The idea of formation of the gas cartel was first raised by Iran when then-president of Russia Vladimir Putin visited Tehran in 2007.
The government has selected two major accounting firms to help it manage the $700 billion rescue program for the financial system. The Treasury Department said Tuesday it had chosen PricewaterhouseCoopers to be the auditor for the program. Ernst & Young will provide general accounting support. The two firms will work on the part of the rescue program that is handling the purchase of troubled assets from banks as a way of encouraging them to resume more normal lending.
The new chief executives of Fannie Mae and Freddie Mac are trying do more to stop the home foreclosures hammering the housing market. But they say it still might take years for real estate to recover in some cities. David Moffett and Herbert Allison were hired after the government bailed out Freddie Mac and Fannie Mae, which own or guarantee about $5 trillion of the nation's outstanding mortgages. They spoke at the Mortgage Bankers Association's annual convention. Protesters rallied outside the San Francisco convention to urge more foreclosure relief. One woman managed to slip past security to confront Allison and Moffett. After calling for a moratorium on all foreclosures, the woman was escorted off the stage.
The Federal Reserve says that it will provide up to $540 billion in financing to bolster the money market mutual fund industry, its latest effort to get credit flowing more freely again. The Fed's new program will be used to support a private-sector initiative designed to provide cash to money market investors. The Fed plans to back purchases of short-term debt including certificates of deposit and commercial paper that expire in three months or less from money market mutual funds. The funds are large buyers of commercial paper and CDs, which historically are considered safe investments. However, the credit crisis, which took a turn for the worse last month, has put money market mutual funds under pressure as skittish investors demand withdrawals. The Fed hopes to take pressure off the funds and to improve credit conditions so banks and other financial institutions will be more inclined to lend to each other, and to consumers and businesses. In a separate program that launches on October 27th, the Fed will buy vast amounts of commercial paper from an array of companies.
The lending rates between banks in both the U.S. and Europe have dropped to the lowest levels in over a month as credit markets continue to improve. The rate on three-month loans in dollars has slumped 0.23 percentage points to 3.83 per cent. The so-called European Interbank offered rate for three-month euro-denominated loans has fallen 0.03 percentage points to 4.968 per cent. That's the first time the euro rate has dipped below five per cent since September 18th, when it shot higher after U.S. investment bank Lehman Brothers collapsed. Interbank rates are important because they affect the cost of loans to businesses and individuals. They skyrocketed in recent months as banks worried other lenders might collapse and are falling following government intervention.
Cricket Broadband is now available in the Houston area. The service provides unlimited high-speed wireless Internet access. As with Cricket's cellphone plans, customers are offered a flat rate without a contract.
The South Dakota Supreme Court is the likely next step for a legal challenge to rezoning of Union County land for an oil refinery. Circuit Judge Steven Jensen ruled that ED Cable, an opponent of the proposed $10 billion Hyperion Resources refinery, does not have legal standing in his lawsuit. Dallas-based Hyperion wants to build an oil refinery and power plant on land that had been zoned for agriculture. The company seeks to turn Canadian tar sands crude oil into gasoline and diesel. Cable, who does not own the land on which he lives, testified that because he lives about three miles from the site--he would be more greatly affected than county residents who live farther away. County Attorney Bill Garry argued that cable does not have standing--and the judge agreed. Cable says he's disappointed and will appeal. Meanwhile, the South Dakota Department of Environment and Natural Resources will accept public comments until November 14th on Hyperion's draft air permit.
Prince William Sound commercial fishermen have waited 19 years for punitive damages against ExxonMobil in the nation's worst oil spill. Now another delay may be coming. Seattle-based Sea Hawk Seafoods, which ran a fish-processing plant in Valdez, is objecting to the allocation plan and wants a version that conforms to a U.S. Supreme Court ruling in June. The high court awarded up to $507.5 million in punitive damages to nearly 33,000 commercial fishermen, cannery workers, land owners, Alaska natives and others. Lawyers later worked out a partial settlement for Irving-based ExxonMobil to release $383 million. Sea Hawk says the Supreme Court decided that the size of punitive damage awards must be proportional to compensatory damage awards already paid to plaintiffs. The company argues the current plan assigns some plaintiffs larger or smaller shares than they deserve. ExxonMobil says it will fight Sea Hawk's effort.
Defense contractor Lockheed Martin says its third-quarter earnings rose two per cent as the company recorded strong sales in its information technology business, along with one-time gains from the sale of a rocket launch business. The Bethesda, Maryland-based defense contractor says its third-quarter earnings totaled $782 million compared with $766 million in the same quarter last year. The latest quarter included a gain of $44 million from the sale of the rocket launch business. Revenue was $10.58 billion--a drop of about 4.5 per cent from $11.1 billion in the same quarter a year ago. Analysts polled by Thomson Reuters were expecting third-quarter revenue of $10.74 billion.