From Forbes:
By a margin of almost 2-to-1, economists surveyed by WSJ.com last month judged that the worst of the residential real estate slump was history. House prices will soften in 2007, the sages predicted, but by only a little bit. In fact, 20 of the 49 respondents forecast a rise.
Ebenezer Scrooge was a mortgage banker, and the arguments I am about to marshal for a hard landing in housing might sound un-Christmaslike. But during the just-pricked bubble, it wasn’t the Scrooges and the Marleys who lent more than 100% of the purchase price of a house without bothering to verify the income or employment of the applicant, or even to insist that he or she pay down a little bit of the principal now and then. House prices soared on the wings of the modern, optimistic, growth-obsessed mortgage industry.
All can agree that the housing data are grim enough today. From their recent respective peaks, single-family home sales are down by 15%, single-family housing starts by 35% and single-family home prices by 3.5%. The question is whether the stock market and the famously resilient U.S. economy will continue to shrug off the bad news.
…
The fundamental problem, Gordon observes, is that the typical American home buyer can’t afford a home at today’s prices. “We Americans have tested the limits of affordability over the past five years,” he says. “Since the end of 2001, disposable personal income is up about 25% and mortgage rates are little changed. That argues for 25% higher home prices. Instead, home prices rose by an average of 50% and in many markets by 100% or more.” In fact, according to data compiled by Yale economist Robert Shiller, inflation-adjusted house prices in the past five years logged the second-fastest cumulative growth since the administration of William McKinley 110 years ago (the late 1940s hold the record for the fastest rise in real house prices over a half-decade).Falling house prices in isolation would constitute no grave peril. A housing-induced downturn in job growth is what would cause a bear’s pulse to race. Gordon insists it’s coming, because the formerly potent stimulus of above-trend borrowing growth is about to be removed. Consider, he notes: “Americans pulled out nearly $500 billion of equity in their homes last year in order to buy other stuff. That number shot up from about $100 billion in 2001.” The source of this borrowing? Why, the 12%–or $2 trillion–bump-up in the appraised value of the 2005 U.S. housing stock, double the 2002 increase. Reduce or reverse this appreciation and you stymie the borrowing boom.
…
Already, despite a still low jobless rate, delinquencies, foreclosures and other signs of distress are surfacing in the subprime segment of the nonagency market. Even a mild business downturn could cause a revulsion against the kind of easy credit that put so many houses within financial reach (or seemed to).
From Wealth Daily:
Animal House Lending
For Scott Greenlaw, CEO of Merit Financial in Washington State, 2004 was one great year. His mortgage company was closing deal after deal and he had been selected by the Puget Sound Business Journal as one of its distinguished “40 Under 40,” a group of young entrepreneurs and rising stars in the business community.
Choosing Greenlaw for the distinction must have been easy, because his story was one so common among successful entrepreneurs.
He started Merit Financial as nothing but a dream in 2001. He leveraged his house, he raided his savings, and he maxed out all of his credit cards to get the $225,000 dollars he needed to start the venture. And when he finally opened his doors, he was licensed to loan in five states and had 16 employees.
From that humble beginning, Merit Financial began to skyrocket as it caught the lightning when the mortgage industry began to reap the huge windfall of business from the lowest rates in fifty years.
In three short years, Merit’s revenues had grown more than 400% and its loan volume increased more than 1,800%. By that time Greenlaw was employing more than 300 people and had closed over $1 billion in loans. And in that magical year, Merit Financial bought a 59,000-square-foot office building for $13.5 million.
But it didn’t stop there. By 2006, Greenlaw employed 400 people and went on to close some $2 billion in mortgages.
It was the kind of meteoric rise, like so many others, that led to riches for the young businessman. He bought properties, cars and artwork. Sure, his first wife had left him, but he had clearly made it. The ex-football star had it all, and it looked like it would last forever.
But higher interest rates and the housing bubble had other ideas. His refinance-heavy business had begun to seriously sag under the weight of rising rates, and overhead costs had begun to eat his company up.
In spring 2006, the bottom fell out. On May 5, Merit Financial fired all but 80 of its 410 employees without warning and immediately sought bankruptcy protection.
There was “an absolute retraction in our marketplace-residential refinancing and second mortgages-of about 40%,” explained Merit chief financial officer Ryan Kidd. “We sustained a number of months of losses. The revenue was not there to support the business, and we don’t see that turning around in the near term.”
So they are saying the worst is over but at the same time saying: The fundamental problem, Gordon observes, is that the typical American home buyer can’t afford a home at today’s prices.
I wonder…. It’s like after 2001 we were told – do not worry for massive outsourcing and job loss – get a crappy paid jobs and keep borrowing money/buying stuff, and we did.
Is worst really over?
Ownit a victim of sub-prime shakeout
The mortgage lender closes suddenly amid a cooling housing market and funding troubles.
December 7, 2006
Ownit Mortgage Solutions, an Agoura Hills-based wholesale lender, has ceased operations and laid off 800 employees nationwide, part of the shakeout in the sub-prime lending business.
…
Two people with knowledge of the funding arrangement said JPMorgan Chase & Co. cut off Ownit’s funding Monday, leaving the lender unable to issue loans. JPMorgan couldn’t be reached for comment.
…
“These are companies that depend almost exclusively on new loans for their earnings. That market grew rapidly in the last 10 years, but it couldn’t last forever,” he said. “Eventually you reach just about every marginally qualified borrower you can.”
http://www.latimes.com/business/la-fi-ownit7dec07,1,6041977.story?ctrack=1&cset=true
/////////
Do any of new know what JP morgan’s take is on the real estate slump? Do they believe the worst is over? If so, monday’s action seems to contradict their claim.
http://www.startribune.com/535/story/858043.html
Layoffs hit hard at Andersen
Andersen Windows confirmed that it’s cutting 440 jobs because home construction has slowed.
McDonough said. “Housing starts are down 12 percent year-to-date and industry experts are forecasting a further decline of about 10 to 12 percent in 2007.” She said the decline is not considered temporary “but rather a long-term correction. Because we don’t expect a quick rebound, it’s clear that we have more capacity than we need to meet demand. So unfortunately … we need to reduce the size of our workforce.”
From Marketwatch:
New Century Nov. mortgage loan production at $4.5 bln
New Century Financial Corp. Friday said its total mortgage loan production was $4.5 billion, a drop of 11.8% from the equivalent year-ago period. On a sequential basis, November’s production slid 10% from October levels. “The decline in our loan production volume in November was in line with our expectations, particularly in light of overall mortgage market declines this quarter,” said Brad Morrice, the company’s president and CEO, in a statement. Shares of the Irvine, Calif., real estate investment trust and mortgage financing provider closed Thursday at $35.71, down 30 cents.
From the Star Ledger:
Economist highlights growing income
The New Jersey economy may show a face of weak job growth to the world, but a gold mine of strong personal income growth lies just beneath the surface, according to Rutgers University economist Joseph Seneca.
The state’s work force of about 4 million will gain a mere 21,000 jobs this year, well below the national pace, Seneca forecast yesterday in a speech to the New Jersey chapter of the American Banking Association Marketing Network.
That gold mine may lie just below the surface, but we’re sure having trouble getting those deposits out of the ground and up to the surface where we can benefit from them.
But personal income tells a different story. New Jersey has seen income grow by a strong 7 percent this year through October, in line with the 7.3 percent national pace. This has driven the state’s median household income to $62,000, the highest in the nation, or about a third above the national figure.
They key here is that we grew at a pace slower than what was seen nationally.
And a few paragraphs on the housing bubble for good measure..
Seneca also said the “jury is still out” on the severity of the housing decline.
“The biggest wild card currently is the unwinding of the housing sector, and whether that will turn into a rout and drag the overall economy down for an extended period of time,” Seneca said. He said the decline in the housing market, “has taken an estimated 1 percentage point from (national) Gross Domestic Product growth this year, and that is a distinct change from the recent past, when this sector was a large contributor to growth.”
Seneca said that while “some forecasters are saying the worst of the housing slump is nearly over, I think the jury is still out and hous ing remains a wild card in the forecast. I think there is some further unwinding ahead of us in terms of sales activity and prices.”
Is it just me, or did that headline seem a bit misleading?
jb
Does anyone have any information on the TD Waterhouse/JC layoffs scheduled for January?
http://www.newjersey.gov/labor/warn/11-06warn.htm
3 years too late
About lay-offs: In chemical industry/big pharma in NJ. There are many public lay-offs like recent J@J and Merc – few hunderds of employees, but the real decline in employment lays in hiring freezes.
Almost all those companies have hiring freeze – either complete or informal in effect. They let people retire and redistrubute/eliminate their duties all together instead of hiring new employees.
So there are a lot of hidden lay-offs in Big Pharma’s and Chemical manufqacturing in NJ. and now Lay-offs starting to hit finance sector as well…
I just do not understand where the govermental figures are coming from??? All I hear from my friends/Family members, all over US – is lost jobs, layoffs, companies closing/relocating to china/india… But we have strong employment???
I know my experience is not general, and not representative but it makes me think…..
“Since the end of 2001, disposable personal income is up about 25% and mortgage rates are little changed”
…..and what % are real incomes up. By the way, why does every shopper (necessities) have a different version of inflation as compared to what our govt tell us.
“Eventually you reach just about every marginally qualified borrower you can.”
Good find V.
Regarding trends, you don’t have to even look at a chart, (that will be a welcome relief to some) to determine the amount of activity in the mortgage lending area. They are all sucked in and trapped. Who’s applying for a mortgage??? The #’s are teetering on the edge, just off their lows. I guess the cash buyer be the savior.
youallwanthouses,
Are you the same person that used to post under the name “thatbigwindow”?
jb
a lot of seasonal work this time of year.
w/r/t the lending industry, I would love to believe there’s a credit crunch underway, but it’s still ridiculously easy to get a scam loan. just do a search for no doc, payment option, interest only loans and you will have hundreds of choices.
I agree that credit is incredibly easy to get this days…
As far as seasonal work is considered – it pay’s crap 8-15$/hour no benefits, often not even full time. But hey, you are employed.
From Bloomberg:
November U.S. Payrolls Jump 132,000; Jobless Rate Rises to 4.5%
Employers in the U.S. added a greater- than-expected 132,000 workers to their payrolls in November, giving the economy a much-needed charge to help it recover from downturns in housing and manufacturing.
The gain in employment followed a 79,000 increase in October that was less than previously estimated, the Labor Department reported today. The jobless rate rose to 4.5 percent from 4.4 percent the previous month.
…
Economists expected payrolls to rise by 100,000 last month following a previously reported increase of 92,000 in October, according to the median estimate of 79 forecasts in a Bloomberg News survey. Estimates ranged from increases of 40,000 to 190,000. Economists also projected a 4.5 percent unemployment rate.
…
Builders eliminated 29,000 jobs, the most in more than three years, after cutting 24,000 jobs in the prior month. Cooling home sales are prompting homebuilders to reduce projects and hire fewer workers. Cutbacks at U.S. automakers are also restraining growth in payrolls.
And also can anybody make sense of current economic reports at all right now – everyday there are reports which are very opposite – one week Unemployment claims have a huge gain (last week) second week they are dipping greatly (yhis week), one week consumer spending raising, next week it is falling, one week inflation curbed another week – it is not, one week there is strong gain in wages, next week inflation is not a concern since companies were able to control wages growth…..
Anybody to comment on this one???
Some links to prove it form MSNBC web site:
November layoffs rise by 11 percent
http://www.msnbc.msn.com/id/16053624/
Jobless claims fall by largest amount in months
http://www.msnbc.msn.com/id/16090738/
Weekly jobless claims jump
http://www.msnbc.msn.com/id/15967787/
Consumer borrowing plunged in October
http://www.msnbc.msn.com/id/16096002/
Consumer spending rebounds in October
http://www.msnbc.msn.com/id/15967727/
U.S. manufacturing sector contracts
http://www.msnbc.msn.com/id/15986850/
Rising costs take toll on consumers
http://www.msnbc.msn.com/id/14590264/
Energy price drop makes Fed’s job easier
http://www.msnbc.msn.com/id/14906805/
This links are from last 2 weeks???? You think REaltors can not get their story straight?? At least they are consistent!!!
And finally interesting paper on how the goverment defines unemployed:
The “household” survey, for example, asks if someone is “actively” looking for work, and if the answer is that they’ve given up looking, they’re excluded from the count of the total labor force. In a sense, they’re invisible.
http://www.msnbc.msn.com/id/15768195/
Wow!!
Service related (retailers,banks, govt) increased 172K. Manufacturers shed 15k, builders eliminated 29K. Crank up the deficit, hire more govt workers!!
From the Big Picture:
http://bigpicture.typepad.com/comments/2006/12/nfp_watch_the_c.html
Last month, we retired the Over/Under bet. The monthly and annual BLS revisions have conspired to make the initial numbers all but worthless. As an economic indicator, the monthly NFP data is wanting (Household Survey is worth even less). If we take these revisions at face value, the initial number is so unreliable by such a large factor as to be meaningless noise.
The initial BLS data’s does retain some merit, however, in that it is now a form of entertainment. Perhaps the Bureau should consider releasing the reports on YouTube.
From the BLS:
http://www.bls.gov/news.release/pdf/empsit.pdf
Construction employment declined by 29,000 in November, following a loss of similar size in October.
The November decline was spread across all component industries. Since peaking in February of this year, employment in residential specialty trades was down by 109,000. Employment in nonresidential specialty
trades edged down in November, after trending up during the first 10 months of the year.
“Service related (retailers,banks, govt) increased 172K”
Is this a seasonal thing? Were retailers anticipating a good ‘shopping season’ in November & December and therefore hired more ( more minimum wage jobs)?
“But personal income tells a different story. New Jersey has seen income grow by a strong 7 percent this year through October, in line with the 7.3 percent national pace.”
number of working hours in a week decreased by ~5.7% thus negating income growth!
From the Asbury Park Press:
Insurance company sues Kara owner for $4M
A New York-based insurance company is suing Kara Homes Inc.’s owner, Zuhdi Karagjozi, for $4 million, saying he hasn’t lived up to a personal guarantee he made to obtain two bonds.
The lawsuit filed by Westchester Fire Insurance Co. amounts to a contract dispute with Karagjozi, but it also demonstrates that at least three down payments made by home buyers could be returned to them.
…
Westchester Fire said it issued two bonds worth $2 million each in 2004 to insure the deposits of home buyers at The Landings at Manahawkin, a housing development in Stafford, and Karagjozi made a personal guarantee to cover the losses in case buyers made claims.
The bonds were designed to protect buyers’ deposits — as long as it was spelled out in their contracts with Kara. And the bonds would have allowed Kara to take the deposit money out of escrow and use it for operating expenses.
Kara, however, didn’t complete some of the homes in the development as scheduled, prompting at least three customers to demand their deposits back. They have filed claims with Westchester totaling $128,576, and a fourth lawyer has indicated his clients are likely to file a claim as well, according to the lawsuit.
One of the buyers, Nancy Radwin, signed a contract to buy a home at The Landings in August and deposited $30,495. Her contract called for the money to be held in escrow in an account at Amboy National Bank, which was secured by a Westchester Fire bond until the deal closed, according to a letter written by her lawyer, Ralph W. Chandless Jr.
But by Oct. 3, it became clear Kara wasn’t financially strong enough to complete the home, and Radwin’s lawyer sent a letter to Westchester to get her money back.
Westchester filed the lawsuit against Karagjozi last week, saying he had made a personal guarantee to cover the claims, but “failed and refused” to take steps to reimburse the insurer.
I wonder about these income figures. Seems like there is high skill wage inflation but low skill wage deflation. Question is what are the wage gains among those who are likely to buy homes?
# James Bednar Says:
December 8th, 2006 at 7:56 am
Does anyone have any information on the TD Waterhouse/JC layoffs scheduled for January?
http://www.newjersey.gov/labor/warn/11-06warn.htm
TD Waterhouse is cutting 385 jobs in Jersey City. But i suppose these folks could take makemoremoney’s advice and buy up some of the 1000s of condo’s that will be completed next year on the Jersey City water front and flip them the in a few months for a tidy profit. It’s a no brainer. I have no idea why everyone doesn’t just do this for a living instead of working.
make more money’s get rich quick rules:
Rule 1. Housing never declines.
Rule 2. You will always profit if you buy a house regardless of the market conditions.
No, apparently this typical homebuyer can’t afford a home. Five days later, we finally heard about the house we put an offer on. Our offer was higher, but the other offer had a bigger downpayment (ours was 10%; there’s was 30%!). The agent never bothered to call our agent, so we’ve been waiting around all week. Now there is little chance we’ll get into a house over the winter. Ugh. I really hate this.
FirstTime,
This too shall pass. You’ll laugh about it next year when you buy something similar for less. Who wants to shovel driveways anyway?
FTB, you’re kidding? I thought the consensus was that from the seller’s POV, financing has no impact on offer consideration, only bid price?
Huh. Go figure.
All you educated professionals who have real important jobs and don’t have time for anything
because your career takes all your time, how much do you make 90K-115K?
And you feel good about yourselves right?
How much is that a month after taxes, transportation cost, clothing etc?
6k-7K a month if that.
Ask yourselves this how would you feel if you set yourselves up with proper investments and now you make 3 times that much and you don’t have to go to work or do anything.
Who the stupid one now?
Pat,
From the sellers POV the one who puts more money down is more likely to get approved for a mortgage hence a better chance to actually go to closing.
Dude. Get some counseling.
Life and happiness do not equal get-rich-quick.
You gotta love what you do, while you’re doing it. Rich or Poor.
#9 Al,
re: big pharma
You are correct on big pharma. My wife works for one as a contractor and there are rumors of a hiring freeze coming very soon and then a possible reduction in contractors. She’s actually accepting a perm position today…
just yesterday I learned that my firm is going to be transfering most of its internal acct & finance to India. Most of the layoffs will be in Dallas, but some here as well.
Thanks for the support guys. It’s not just the house — it’s two shady deals that fell through in a row (first was a bad disclosure).
According to our agent, financing has an impact if a seller is going lower — they don’t want to pull their house off the market below asking unless they’re sure the deal will go through. These sellers were relocating — they didn’t want any variables.
We learned to regret our offer on this particular house anyway. Our offer was higher than we wanted. So it’s good. We’ve just had two bad experiences in a row.
Pat,
Life and happiness?
I thought this was about real estate and making money.
Or about real estate and NOT making money.
#27 – “Ask yourselves this how would you feel if you set yourselves up with proper investments and now you make 3 times that much and you don’t have to go to work or do anything.”
make money, what’s the difference between you and the cow on the hill?
Both don’t work,
You only see one thing – green.
Get a life, do a real job. Be “productive”.
we all have a roof on our heads
I’ll be 30 next month. A job is nothing but work.
It’s very rare that people find the job they love so much that they’d do it 40 hours a week for free.
Ask yourself this would you wake up in this cold and go to work if you didn’t have to.
Now, I have a wife and a beutiful daughter and we spent a lot of time together. Is that bad?
I work out, season ticket holder for NY Knicks and Yankees and take enginering classes at NYIT.
and it’s all thanks to real estate.
I’m loving it.
From MarketWatch:
U.S. Dec. UMich consumer sentiment 90.2 vs 92.1 in Nov.
Consumer sentiment eroded slightly in December, according to researchers at the University of Michigan on Friday. The consumer sentiment index fell to 90.2 in December from 92.1 in November. The decrease was unexpected. The consensus forecast of Wall Street economists who had expected sentiment to rise to 92.4.
From MarketWatch:
Countrywide Financial falls after downgrade
Countrywide Financial fell 2.2% to $40.15 after Stifel Nicolaus downgraded shares of the mortgage giant to hold from buy. “Recent developments in the mortgage industry have significantly increased the risks in the sector,” Stifel Nicolaus said in a note to clients. Analysts cited severe credit deterioration, decreased secondary market appetite and tightening underwriting standards. “We expect trends to worsen given our belief that housing has yet to bottom or even fully impact credit trends,” analyst Chris Brendler said.
make money Says:
December 8th, 2006 at 9:55 am
All you educated professionals who have real important jobs and don’t have time for anything
because your career takes all your time, how much do you make 90K-115K?
And you feel good about yourselves right?
How much is that a month after taxes, transportation cost, clothing etc?
6k-7K a month if that.
Ask yourselves this how would you feel if you set yourselves up with proper investments and now you make 3 times that much and you don’t have to go to work or do anything.
Who the stupid one now?
There is very simple answe to this:
All people I know who where successifull in investment/making big$ would not be on this blog right now – if you were good at investing you’d go and buy more, and more, and more and so on… Thats how Donald Trump made it. The fact that you are here indicated that you really do not see a way to make money right now, and probably need to unload some property you bought recenttly and now it is eating al of your savings/equity…
Last thing people who found a way to make money are going to do is to share it with everybody.
Soo all of the real estate seminars on how to make money – do make money for people who teaches these seminars – lets say 100$/per person, 1000 people a month – thats easilly 100,000$/month with minimum investment (may be 10,000 for the conference room rental for a month)!!!
And I know that, on Donals trump seminars series in year 2003 he would easilly get course fee of 2000$+/per person and teach to over 500 people at the time (seminar course would take 3 days)….. thats 1,000,000$ for 3 days of work!!! lets say he teaches 4 courses a month and his overhead is 50% – it is still 2,000,000$!!
Forget real estate investing!!! Mere 6-7k/month according to Make Money
Just plainly lame….
From today’s Wall Street Journal, a story titled “Mortgage Industry Starts to Roil Bond Markets”:
Michael Youngblood, a housing analyst with Friedman, Billings, Ramsey & Co., said the news that Ownit was closing shop sparked a “great deal of hand wringing and anxiety” yesterday among investors, but the problems in the subprime market go even deeper.
Mr. Youngblood said 2007 is potentially shaping up to be the worst year for the subprime mortgage sector since 2000. Despite the weakening housing sector, he said, subprime originators liberalized their underwriting practices this year, making loans based on weaker credit histories to borrowers with higher debt loans and less equity in their homes. “It doesn’t make any sense to me,” he said.
At the same time, Mr. Youngblood said, industry observers are nervous about what will happen when as much as $266 billion of adjustable-rate mortgages made last year begin to reset in 2007, possibly kicking homeowners into higher monthly payments they can’t afford.
(I think you need a subscription to access this link)
http://online.wsj.com/article/SB116554342393744199.html?mod=home_whats_news_us
And to the last post of Make Money – there was time real Estate had hidden deals. It is not now. RIght now it is impossible to even find a positive Cash Flow Properties – thats the top of the bubble for you.
In addition most people do not have significant amount of money to buy investment properties.
Real estate is always a lottery – just like any other buisness – you either make it or not. In the last 5 years it was blown by people like Donalsd Trump to be a Magic Area where all you need to do is buy and you will become rich. Why did he do it?? – see my post # 38
Al,
You’re right most investors don’t know where to stop. However I did.
Why did I stop flipping houses because my dentist was doing it. It’s not something that’s simple, it’s like every other business it has it’s ups and downs.
However, I don’t aspire to be like Trump. I just crave a comfortable living. I’m there now and I’m a little bored…
Anyone have any investment ideas…
Make Money,
Hmmm, 100K downpayment on a building on Madison Avenue in 1998? Was that 1% down? Did the Bank of John Gotti give you the mortgage loan considering you supposedly had 100K in outstanding student loans and a 58k salary? You are as believable as those Kannekt Klowns. Go back there and keep trying to pump up the quickly deflating Hoboken/JC bubbles:)
From CR:
http://calculatedrisk.blogspot.com/2006/12/november-employment-report_08.html
IMHO, this datapoint deserves close attention in the coming year:
http://photos1.blogger.com/x/blogger/2825/754/1600/902475/Jobs2Nov06.jpg
jb
“By a margin of almost 2-to-1, economists surveyed by WSJ.com last month judged that the worst of the residential real estate slump was history.”
OK. Three guys are standing on a corner in front of Shea after a subway series game. You roll up and ask which way to the nearest gas station. You’re on E.
One guy says call triple-A. No need to move. Let the gas come to you. (You have AAA!)
The other two guys say, hey, we’re from Queens. There’s a gas station right down by the Holiday Inn. No prob.
hehehehe,
I know more about real estate when I’m sleeping than when you’re awake…
It was a four floor building and I purchased it at $870,000. Getting a mortgage loan is a lot easier than you think.
“eight-nine easy payments”
recline back, get a Bud & popcorn and view:
http://www.youtube.com/watch?v=TxylHPnoloI
You’re right most investors don’t know where to stop. However I did.
It is not when you stop… It’s where do you start and wit what. I am out of the college and I do nto have 100K to invest…. I have student loans…. I have job in which I can save about 1K/month. so to get to 100K it will take me about 8 years by that time I will be almost 40. So it is easy to tell RE sagas if you got money from someone/somewhere. OR got lucky. I’d surely buy investment properties in 1998 if I hadn’t being in college, 20 years old and 12000/year income from part time job. At that time If I am to go to the lender – you know what they would say????? No docs appeared in 2003 and at that time it was all over for real estate investor as secretaries where buying 2nd and 3rd homes and quitting their job to become next Donald Trump.
So before you come here and sare you “wisdom” and luck – what you are saying is that you were lucky, had money and bought low.
CONGRATULATIONS!!!
SO what is you point right now???
Should we buy??? should we not buy?? Any Miracle ways to get free 100K from somewhere???
And one last point – if everybody quits their jobs and become real estate investor – what are you going to eat?? Who will refine oil for your car?? Who will fix the road you are driving on?? Who will Cure you baby when it is sick?? Who will stop me from coming ovber to your home and killing you and taking all your money??? – Remember all police quit according to your advice since they did not wanted to be loosers who are actually have to work for living??
Think about it, before you post.
make money Says:
December 8th, 2006 at 10:39 am
hehehehe,
I know more about real estate when I’m sleeping than when you’re awake…
It was a four floor building and I purchased it at $870,000. Getting a mortgage loan is a lot easier than you think.
In addition I do not believe a single word yuor are saying. Successful people do not have a need to brag. You are overspent investor who is desperatly trying to unload his investments.
You are so desperate that you would come to this web site :) and post as many post as I do.
Make Money,
From your postings I am having a hard time believing you know anything about real estate whether you are awake or asleep.
My favorite thing about our most recent “make money” troll is his assumption that professionals only make 90-115K. Try again my friend. No one in their right mind would work doctor, lawyer or businessman hours for such low pay. And no, I do not think those are small salaries by any means – but the people I know that work the long hours contemplated by mr. make money are making quite a bit more dough than that. And if they make those amounts, they aren’t working those hours!
By the way, the second episode of Flipper Nation has come out…
FTB, you’re kidding? I thought the consensus was that from the seller’s POV, financing has no impact on offer consideration, only bid price?
Huh. Go figure.
Pat
Sorry I have said the same myself but of course there are exeptions, Cash is better over 10% or less down payment ( unless were talking significantly less cash thats tough)
And a small increase in purchase price will not be out a 30% downpayment. Especially if there’s any chance the house won’t appraise at the higher price less down payment offer. So there going practical.
FTB
Except for this recent client (5 offers not takers) our luck has always been 3 times a charm !
Wait till this things plays out a little further.
KL
Apologies for all my typos in the past and in the future.
KL
ditto
“By a margin of almost 2-to-1, economists surveyed by WSJ.com last month judged that the worst of the residential real estate slump was history.”
To start with, how many of these economists believe that there can be a downturn in housing? I guess there is a tendency to confirm to expectation. (Rosenthaol effect)
So the question is, if everyone here already believes in the bubble then what purpose does this blog serve? The obvious answer to me is it has to try to convince those that don’t believe in the bubble. That’s easier said than done I think. You don’t see James getting all upset when someone posts some stupid stuff, so why do some of you feed into it? Some people will see what they want to see, so don’t bother replying to their posts. It makes threads so much longer and more difficult to read.
“FirstTimeBuyer Says:
December 8th, 2006 at 9:33 am
No, apparently this typical homebuyer can’t afford a home. Five days later, we finally heard about the house we put an offer on. Our offer was higher, but the other offer had a bigger downpayment (ours was 10%; there’s was 30%!).”
Maybe someone can fill me in here. Why would the seller care about the size of the buyer’s downpayment? As long as there is a mortgage commitment, what difference does it make to the seller?
The seller is probably worried that the person with the 10% may have some problem arise with their mortgage lender before the deal closes.
I guess blogs can attract hecklers. I second the opinion that anyone who has truly cashed out to the tune of $10 million would not likely be spending any time amongst us peons.
Any regular posters with a net worth over $10 million? Come on guys and gals, ‘fess up! Don’t be afraid to admit it even if you’re over thirty.
HEHEHE Says:
December 8th, 2006 at 11:32 am
The seller is probably worried that the person with the 10% may have some problem arise with their mortgage lender before the deal closes.
Sorry for being dense — been over 10 years since I bought a house. Don’t most people come to the table with a mortage commmitment up for a certain dollar amount?
Any regular posters with a net worth over $10 million? Come on guys and gals, ‘fess up! Don’t be afraid to admit it even if you’re over thirty.
You would be surprised, I’ll say nothing more.
jb
“By a margin of almost 2-to-1, economists surveyed by WSJ.com last month judged that the worst of the residential real estate slump was history.”
wasn’t the ratio about the same just last year where they said there wasn’t a bubble?
“if everyone here already believes in the bubble then what purpose does this blog serve?”
If you already read the newspaper today why buy another one tomorrow? No?
make money Says:
December 8th, 2006 at 10:12 am
I’ll be 30 next month. A job is nothing but work.
No wonder you think you are just a hotshot.
You want a challenge tough guy
http://www.wharton.upenn.edu/mbaresource/curriculum/real/
I’m sure you don’t have the credentials – sorry my bad
go back to eating chocolate bon-bon’s and watching soap operas
M. Baldwin
Most come with a preapproval not a commitment. Some preapprovals are not worth the paper there are written on. A prequal is definitly garbage.
Commitment prior to signed contract and appriasial might be available , I have never seen it.
There are very strong preapprovals but not commitments, and since the sellers chose the lessor offer I assume it was a very strong preapproval also.
Don’t discount the appraisal factor here, they are not going with the numbers as often as they used to. They are not, so to speak a “slam Dunk”
Just like they used to blackball the appraiser for not hitting the number now they are doing the same for appraisers constantly over appraising.
Amazing how things turn on a dime. The best guy in town just became the worst!
KL
guys,
I don’t believe in a fixed supply and increasing demand bubble. As long as there isn’t a recession and intersest rates are below double digits.
chicagofinance,
I’m taking something similar at NYIT. I don’t mean to come across as a hotshot, but telling me real estate investors are stupid pisses me off.
“Anyone have any investment ideas…”
Make,
Well,Well,Well!!! First of all, there are a lot of people on this blog that have made tremendous amounts of $ buying and selling properties over the years. However, this blog is not about self boasting, it concerns the state of the RE market today. No one cares where you went to school,how old you are or where you sit your *ss for a sporting event.
I have a great investment idea. Why don’t you drag your sorry *ss down to the commodity pits. Before you could say *sshole, you’ll have a new one ripped. Traders on the floor love trolls like yourself. It makes sense that you are a Knick season holder, the worst running show in NY, just plain old s*it by association.
Making Money – “I’m taking something similar at NYIT” ….with all your $$$ shouldn’t you be teaching the class?
$10 million isn’t all that much. if you have that and 30 then it is.
Make Money:
Do you want a challenge? Why don’t you buy the Newark Bears? Maybe you can get Rickey back on the payroll?
jayb, Re #56
Contrary to your belief that this blog serves to “try to convince those that don’t believe in the bubble”, IMO this blog does no such thing. I believe people on this site are intelligent enough to make independent conclusions, regardless of what is presented. This site is loaded with informational links that would take endless time to research and is intended for educational/reference purposes. People will take from it what they want and disregard the rest. There’s no “feeding the bubble” going on here, just an exchange of ideas, experiences, references, and, sometimes even entertainment (i.e.,boooyaaa).
I, for one, am appreciative of the info available here. My opinion of the RE market has not been swayed. However, I am more informed. Nothin’ wrong with that.
Chi,
He wouldn’t know the difference between Rickey and Jose Canseco!!!
JB,
Whether your readers are mass affluent, middle income or ultra rich is irrelevant to me as long as the discussion is lively and the opinions well-founded. Since visiting this site I’ve learned how much I don’t know about the intricacies of real-estate buying/investing and I’ve picked up a few tools to give me an edge against the manipulative realtors who try to keep buyers in the dark.
An amazing wealth of information to be found here, and for that I’m grateful.
I have said this before, and i will say it again, how many of these so called economists, were around in the early 90’s,and at a time when there was none of the exotic financing, and you really did have to qualify for a mortgage
The worst is over? it is just starting. When it scomes to all of this, I have been more right over the years, far more right then wrong. Why? Becasue it is just simple common sense, nothing more.
When people tell you housing does not go down, and you ask why, and they cannot answer , or they say something that basically transaltes as because I said so, then there you go, it is all just common sense.
Waching this community develop has really been the most meaningful part of blogging. Initially, traffic was one of my main motivators. However, more recently, building the community and seeing it flourish has been even more satisfying.
The fact that we have such diversity of both character and opinion is just amazing. To me, it’s the comments that are the most important part of the blog.
jb
“The seller is probably worried that the person with the 10% may have some problem arise with their mortgage lender before the deal closes. ”
Nope. We’re totally approved for a mortgage and the seller’s agent even confirmed with our bank. Also, we’re renting and don’t have a house to sell. Our credit is excellent and our income is high for the price we offered.
rhymingrealtor —
Thanks for clarifying the downpayment issue for me.
I’m not saying that I’m smarter than everyone else on thi site.
All I’m saying is that I’m a RE investor who loves what he does and does well at it.
There is a stereotype that it’s easy to be an RE investor and everyone can do it.
that’s BS.
Because us RE investors have done extremely well during the past 6 years, people blame us for the “bubble” and want us to go broke during the next year or so.
Am I wrong to believe this?
make money
78>
Do you think just our wishing will make you go broke?
You should be more afraid of your fellow ARMed investors. We feel your fellow ARMed investors will buckle next year and bring all of you investors down. In a way we are on your side. We both want RE to be stable so that ‘real’ investors are rewarded and flippers shown the door. I would suggest that you join us in chasing these phony investors out of the maket so that real once like you can succeed.
BC Bob and Chi,
Why is it that you guys are so hostile to make money? He has his point of view, you guys have yours, yet there are all these insults and drama. Bob, if you are such a clever successful trader you must be making a lot of money too – and you still find time offer your opinion on this site. Is the problem that make money claims to be younger than you guys, or more successful? Even JB seems to be much more hostile and opinionated than usual. I just don’t get it – it’s not like you guys actually “know” what will happen to the real estate market in the future.
FTB- Can you share with The Kid, what areas you are looking for purchase?
The Kid
“Because us RE investors have done extremely well during the past 6 years, people blame us for the “bubble” and want us to go broke during the next year or so.”
Make,
There are a lot of individuals on this site in the same boat. To come here and boast about it speaks volumes about your character. I have owned many properties over the last 20 years, you’re right, it’s not easy. However what happened in the past is of ZERO importance to most on this site. The topic of interest is the market today, what drives the market, fundamentals/technicals, migratiion trends,etc..
I think you may be a little self concious stating that people on this site want you to go broke. I guess that depends whether you are a long term investor or a flipper. The only people on this blog that demonstrated any ill will towards me have been the flippers. The same ones who laughed at me last year when I liquidated.
Do yourself a favor, speak on the topics and take your right hand and place it over your left shoulder and tap yourself on the back. Maybe this will confirm your thoughts about yourself.
Devil’s advocate,
Who said I was a trader??? By the way, many markets are closed for the day. I have no problem with anybody making $. However, speak softly and carry it.
There is a stereotype that it’s easy to be an RE investor and everyone can do it.
I don’t think it is a stereotype. The truth is that from about 2001 – 2005, it has been easy. All you had to do was buy a house, slap on a coat of paint, put in some granite countertops and stainless appliances; wait 6 months and poof! You just made a big profit. There are even television series dedicated to the sport.
It’s like 1999 all over again. Just buy any stock with a “dot.com” in its name and you were on the path to an early retirement. I don’t see too many day traders left today.
Some “investors” will exit the market in time and truly get rich. Most, however, will roll the dice one too many times or ride the train wreck all the way to the bottom in hopes of a bounce back, which won’t materialize and wind up losing everything.
Renting,
You are right. When I mentioned it wasn’t easy, I was referring to pre 2001 and being a real, long term investor.
BC Bob,
You often boast about how much money you’ve made in RE, your market timing, etc. I don’t see you speaking/carrying it softly.
Also, do you really think that the only reason the RE in NJ went up as much as it did is due to flippers? Did they buy all remaining inventory and force the rest of us buy houses at exaggerated prices? This is the world according to BC Bob?
Devil’s advocate,
Wrong. Never once mentioned how stated much $. I may be passionate about my feelings toward this market but never threw $ amounts out like make money. Also, I never talked about timing this market. As a matter of fact, I explicitly stated that you can not time real estate. I also said that I was lucky, never in my wildest dreams thought this market would go where it did. All I did was recognize an extremely overbought market that could not be sustained by the underlying fundamentals. I did not know if this market had another year or two on the upside, just knew I wanted out. That’s not timing the market. Market timers are usually opportunities missed.
Why are you telling me what I said??? I never said it was just flippers. It is much more involved/deeper than that.
Make money = hot air
Devil’s Advocate = hotter air
makemoney:
If you take you trumpet out of your mouth for a second and your head out of your a__. You will notice that most people who blog here try to give information/opinions on the RE market.
You are trying to convince people to jump into realestate by providing us some *facts* about your life. How successful, wealthy, intelligent and married to a super-model you are.
Get a life man !!
I have rarely met a wealthy and truly successful man who needs to go on a blog and show off to prove things to people he doesn’t even know.
I feel sorry you.
After the allure of women, mansions and villas on the French Riviera wear off, blogs are the final frontier of frolic for the wealthy land barons.
the people who come on this site to present reasonable arguments are mostly engaged and debated in a fair way.
the people who come here to brag and jeer get the same in return.
if it’s important for your self esteem to be taken seriously, then act like a serious person
“FTB- Can you share with The Kid, what areas you are looking for purchase?”
Kid, we’re looking in Bloomfield (west of GSP) (west) West Orange, Verona, Cedar Grove, etc.
After the allure of women, mansions and villas on the French Riviera wear off, blogs are the final frontier of frolic for the wealthy land barons.
Ahaha!
Devil’s advocate Says:
December 8th, 2006 at 2:19 pm
BC Bob and Chi,
Why is it that you guys are so hostile to “make money”? He has his point of view, you guys have yours, yet there are all these insults and drama.
Dev: Here is my issue. I have no problem at all with Make Money. However, he did come here and insult most of us first – go look back at the posts. Further, this situation reminds me of a “terrible” story from about 10 years ago at Caesar’s Casino in Atlantic City.
A guy on his 21st birthday came in with his friends to gamble. He started with $100 at the Black Jack table. I saw him the next day as we both ended up being there for the weekend. He had turned that $100 into about $5,500. He was boozed up and just having a great time. He was a college kid, so having that much money seemed like all the money in the world. I sat down where he was playing, and after about 30 minutes, I realized something really disconcerting. He had no idea what the phuck he was doing. He was just getting hooked up with cards, and was on a roll like no tomorrow. I only ever have seen this once before [in Indiana]. He bet “table max”, the dealer had a face up. The kid was dealt a 12. He double down and was given a 9. He also was lecturing everyone else at the table how to play, and berating those less successful than him that they “didn’t know how to play.”
Why is this a terrible story? Because he is exactly the kind of guy who: (1)looks down on other people without recognizing that luck [while usually by design] can also be “by luck”; (2)ostensibly is a success, but if you emulate him, you will statistically [strongly] likely end up as a failure; (3)has a strong possibility of developing a lifetime of outsized expectations based on an unfortunate happenstance of immediate success; (4)after a period of time, there appears a hollowness in perception as a drug addict coming off a high, or a 30-year old, bored, and sitting at home.
OR
the guy is a friggin’ troll lying through his teeth, and he is just an 19 engineering student in the computer lab messing around with us
chicago finance – The guy is a troll.
I’ll go with “The Latter” for $500 Alex.
jb
no doubt, more likely a Kannekt Klown
I agree, sounds like a Kannekt klown, all they talk about on that board is how much money they make, how much they have in savings, etc.
Chi.,
Still would like to know if he has any idea who Rickey, Newark Bears, is??? I agree with JB.
James Bednar Says:
December 8th, 2006 at 3:34 pm
I’ll go with “The Latter” for $500 Alex.
jb
Is $500 “table max” at your game?
OK – what the hell inflated MSFT at the close?
Where’s Booyaa Bob today? It’s not quite the same without him…
Where’s Booyaa Bob today?
He’s really make money in disguise, tomorrow he’ll be back as BOOOOOYAAAAA.
This?
Nice Rebound
In November, Microsoft Corp. sold 511,000 units of its Xbox 360, which began selling a year ago, according to NPD.
The Redmond, Washington-based company may exceed its forecast to sell 10 million Xbox 360s by the end of the year, on a “very strong Thanksgiving holiday,” Peter Moore, a vice president, said on Dec. 5.
The Xbox 360 “rebounded nicely” from a slow summer because of Sony’s problems and Microsoft’s release of “Gears of War,” Pacific Crest’s Wilson said. That was the top-selling console game in November, with 1 million units sold, according to NPD.
I saw the show on HBO last night with Charles Barkley defending his gambling addiction.
Anybody else see that one?
Wonder if flippers would agree with some of his points [not verbatim/not his exact words]:
1. It’s my money…so I’ve lost between X and 10 million.
2. No, I don’t feel bad about the alternate uses…. I’ve give 4M of my own money to charity.
3. Hey, I’m not alone in there…I look around and see lots of other people in the room when I’m gambling.
4. Political statement: If you don’t gamble, don’t vote for me…if you do, vote for me and I win.
kind of reminds me of this guy who tried to sell me an Amway membership in the subway. He tried a similar approach.
If you work for a living you are a loser. You need to have your own *Amway* business.
They key to succesfull Ponzi business is to get convince more people to get into the game so you can profit from them. You start by sweet talking, then you try a little “Immigrants will eat you lunch if you don’t buy now” fear tactic. And if that doesn’t work, try the “You renter’s are looser’s. Look at my expensive suit and cigar” approach.
Chi,
I liked your story, very touching. Regardless of who the guy is and what his motives are, what is so obvious that most of the regulars on this blog responded with insults and nonsensical statements (Bob, Pat and Al seem to have cornered the market on that).
I also enjoy discussions about “serious” RE investors, as if “seriousness” is determined by one’s declared intentions of holding on to the asset for the long haul.
It seems that almost every day someone posts some anecdote about a recent RE transaction that resulted in a loss and I don’t hear any outrage regarding enjoying someone else’s misery. The morals of those bloggers are never questioned.
The blog continues to be one-sided, with mud being thrown at anyone who disagrees with the majority’s conclusion about real estate.
“The blog continues to be one-sided, with mud being thrown at anyone who disagrees with the majority’s conclusion about real estate.”
like the radio, you can always change the dial no? I mean if you dont like it maybe there are blogs that would provide the level of objectivity you are looking for. Many have mentioned kannekt to be such a blog site. the folks there may be more your speed.
Someone named Devil’s Advocate calling everyone immoral, ironic?
Spelunker,
I guess if the idea is to only get like-minded people to be participanting in the conversation, then you are correct, i shouldn’t voice my opinion regarding the blog…
“The blog continues to be one-sided, with mud being thrown at anyone who disagrees with the majority’s conclusion about real estate.”
What do you mean?
People have posted useful information which is for or against the information. Rarely does someone like your buddy come along and say:
Look at me i am rich. I got rich on realestate and you should BUY too. Renters are loosers, etc, etc.
This kind of bs can never be verified, secondly it is of no use to the majority of readers who are trying to get some information on the RE Market.
There’s got be some blog out there for people who have no friends and want online social contact.
Devil’s advocate,
When somebody boasts that he made $10 million, makes $ in his sleep, if you don’t clear 10K a month you are a peasant, beautiful wife, etc…. what the hell do you think he deserves. He asked for investment ideas???? Is he really that incompetent that he is asking for this??? He deserved everything anybody threw at him and more. I didn’t disagree with what he said concerning the present state of the market, because he never did comment on this, only self serving BS. OK, please tell me why now is a good time to buy and back it up with market facts. Maybe I’m missing something??
Anti,
The exact opposite of this information is presented all the time, and it can’t be verified either, and it does not create the same kind of outbursts…
Remember that 80’s poster of a guy dressed in British hunting attire, standing in front of a Rolls with the caption above declaring “Poverty Sucks”? Some people really are that way.
Money,(if real), is very fortunate and has received substantial validation already!
Let’s lighten up and go hang Christmas lights!
O.K., let’s be thoughtful. I’m crying over here cause Devil told me I insulted Money and provided nonsensical comments. Now, Money didn’t say that – Money started to open up a bit, I thought.
Money told CF he was taking some classes. Could be.
Now, what would be the best way for a bright, young student to do research on a particular topic? What if that topic was the psychology of the real estate bubble?
When I first started reading blogs, I posted weirdly. It’s like adjusting to a new culture, with no inherent trust of anyone’s motives. C’mon. Many of us are from around these born-skeptical parts and don’t want to be taken in by the next huckster that comes along.
Ever notice how some topics discussed here end up being nice little articles down the road? A couple of weeks ago, I asked if anybody new if the Linden on Second Life was pegged to the dollar, and wondered if getting a nice loan for some SL RE might be a good inflation hedge.
Now, today, there on CNN money was my info, and I didn’t even have to go get a login over there.
So, you never truly know who’s doing what. Right?
Devil’s advocate Says:
“The exact opposite of this information is presented all the time, and it can’t be verified either, and it does not create the same kind of outbursts…”
Which of these you want proof about?
1. The housing market has slowed drastically.
2. The immigrant growth theory in NJ is a myth.
3. The supply of homes in the NJ market is almost double the supply since last year in many towns.
4. Homes are staying on the market much longer than they did last year.
5. The age of bidding wars has gone.
6. Many sellers are having to cut down asking prices to rational levels to get into contract.
I think enough evidence has been provided to verify the above points.
What no one here can be sure of is:
1. How long the slump will last?
2. How steep will the price decline be?
3. Does it make sense bo buy now?
4. How does the outlook on the ecomonomy affect housing etc.
Amongst other things, we are trying to find answers to these questions and the opinions vary greatly on this.
Some of you who are bullish on the realesate should try to give more evidence rather than try to deride posters and readers here as loosers who rent because they can’t afford a house. I think we are beyond this.
Make Money:
Here my advice…Go get a job. Go get one tomorrow. Go out to work to stay sharp. In reality 10M isn’t really that much money. You can lose half of that on one bad deal. Someone with a sharp attorney can slip and fall on your sidewalk and come after you hard.
Like you, my brother made a fortune before he was 25. He was very lucky. He became cocky and quit his job. Someone ‘rich’ like him was too good to work. It’s funny because he went to the gym and had Devils season tickets. He stayed home to be with his two small boys.
A few bad deals and he was no longer wealthy. He is still comfortable, but he is soft. He doesn’t know how to work anymore. He quit college because he was making too much money.
If everything you say is true, you wouldn’t have found that building without your regular job. If you get back into the market you will find your next opportunity.
What the hell are you doing with Knicks tickets anyway? Just get HD cable and send me the extra cash.
OK, enough advice…off my soapbox.
Grim,
Were you able to get any info on 55 Warwick Street in Iselin, 08830?
That’s the new house that’s listed on realtor.com as having been sold on 8/4/2006 for $636,920, but it was still in the MLS with an asking price of about $699,000 as recently as early or mid-November.
I posed the question a while ago, but didn’t see a response.
When houses are sold – to the point where there’s a closing – do the ads sometimes stay online in the MLS long after the fact?
I was trying to find out if that one was sold once in August and re-listed for more – someone trying for a flip – or whether the $699,000 number was the original asking price and someone bought it with a lowball of about $637,000 …and maybe the ad wasn’t removed until much later (?)
The MLS number was back in the original posting but I’ve lost track of what thread.