Weekend Open Discussion – 2k7 Predictions

This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing bubble, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.

For readers that have never commented, there is a link at the top of each message that is typically labelled “[#] Comments“. Go ahead and give that a click, you might be missing out on a world of information you didn’t know about. While you are there, introduce yourselves to everyone.

For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past year. The archives can be accessed by using the links found in the menus on the right hand side of the page.

This post will remain at the top of the page during the weekend, any new posts will be displayed below.

Some suggestions for discussion:

1. 2007 Predictions – Let’s hear them!

2. The following post written by Clotpoll.

Although our friend writes with the subtlety of a flying mallet, he’s probably one of many recent homebuyers who has realized that- despite the nonstop predictions of disaster around here- the sun keeps coming up every morning.

He is also dead-on in his assessment of the plethora of arbitrage and relentless minutiae-crunching within many threads here. It’s like a pack of vultures picking at a dead rabbit…not much meat there. And what a way to assess owner-occupied RE! Call me stuck in the ’50s, but I contend “home” is supposed to be about family, comfort and good times. The market goes sour? Stay in your home thru the down cycle. Nobody just wakes up one day and suddenly realizes NJ is expensive. And, even though there are thousands of the proverbial “500K POS Capes” out there, there are affordable, nice places to live all over NJ…if one is willing to compromise just a tad. RE is a game of compromise, because not even millionaires can “have it all”…there’s always a tradeoff among the three factors of price, location and amenities of homes buyers consider (I contend the best anyone can do is get 2 out of 3 of those factors…the third factor will be out of the buyer’s control and must be accepted). No matter how bad things get in NJ, a 450K 4 BR Colonial in a top school district on the Midtown Direct line ain’t in the cards. Sorry; location DOES matter.

I have tried to grasp the merit in the idea of renting, hoarding cash and waiting for the big market crash in order to swoop in and obtain maximum value. However, I can’t help but think that the element of putting your life on hold that this strategy requires also has significant costs. Renting- in and of itself- implies transience, impermanence and absence of commitment (please don’t read this as an accusation of renters being shiftless drones who have 400 FICO scores, leased Escalades and closets full of $300 jeans). You can be in a beautiful place…great landlord…below-market rent…but you are essentially “on hold”.

And on hold for what? It seems that for many here, the only x-factor left is when to call the bottom of the market. All but the blind agree it’s down; the only question is how much further it will fall. 5%? 10%? 20%? Is the benefit of catching the absolute bottom worth the wait and uncertainty? And, what if the bottom is in…and you’re missing it now? Are you so invested in the “big crash” theory that you can’t pull the trigger in a rising tide?

Cost/benefit analysis requires an evenhanded assessment of both sides of a proposition. I, for one, see a lot of attention here to the cost side…while the benefit side of the ledger gets lip service (or worse). This blog doesn’t get the attention that comes its way because homeownership isn’t highly desired and valuable.

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213 Responses to Weekend Open Discussion – 2k7 Predictions

  1. chicagofinance says:

    2007 Prediction: Housing prices will not remain the same. They will go up or down.

  2. chicagofinance says:

    2007 Prediction: grim’s ego will balloon to the size of Sting/Bono/Trump

  3. chicagofinance says:

    2007 Prediction: NJ RE Report will be hacked by a Moscow based Engineering student paid off by the NJAR, the moderator of kannekt.com, and Reechard. Once the FBI tracks down the connection, Reechard will claim that it was his other personality that was responsible under an insanity defense. Sally Field will reprise her role from the movie Sybil, and then become a transsexual and rename herself Reechard.

  4. Gigantor says:

    On hold? Perhaps. Waiting for what then? Hmm.

    How about waiting to see whether or not higher taxes drive jobs out of state? What’s the point in buy-and-hold if you’re not sure that you’ll have a job that can pay the mortgage, taxes and other living expenses? Costs of living in NJ are rising well beyond wage rises or inflation, so who wants to make a 30y commitment to that?

    Better to rent until you find a job and state that’s relatively stable before you go making a commitment to a mortgage. And frankly, even if you are going to live in a house for 30 years, why pay more than you have to?

    And frankly, buying a house is a false sense of security. What if the state raises taxes so high that you have to abandon the property? How secure are you that you won’t be paying $25-50k /yr in taxes in 5 years? Home is where the heart is, not where it lives.

  5. Richard says:

    clotpoll, a well thought out assessment that is spot on. if this was a RE investment board i would understand more of the comments but it seems most here want to buy a place to live in.

  6. Rich In NNJ says:

    “2007 Prediction: grim’s ego will balloon to the size of Sting/Bono/Trump”

    How can you call something a prediction when it’s already happened? ;-)

    2007 Prediction: The slow decline will continue as history repeats itself.

    Rich

  7. Take at least 25% off 2005 peak prices says:

    The Herald Tribune reports from Florida. “Sarasota-Bradenton home sellers are cutting prices so aggressively that the median sales price was 18 percent lower this November than last, the biggest drop in the state. The median sales price for Sarasota-Bradenton fell from $343,600 in November 2005 to $281,900 last month.”

    “After asking $549,000 for their Venice home starting in June, Cindy Gerber said she and her husband did a discount MLS listing of their own at $397,000. They really needed to sell, since they have purchased an English Tudor near Johnson City, Tenn.”

    “‘We needed to move on, and we said, ‘The only way to do it is to take a loss and go,’ she said.”

    Losses in Residential RE?

    hehehhehehehehe

  8. BklynHawk says:

    Clotpoll-
    You make it sound like living without owning a home isn’t really a path to happiness. I contend that living beyond your means in a house that constantly needs work and enduring a commute that is practically unbearable, or taking a chance on a neighborhood that may or may not be on the upswing is a clearer path to unhappiness.

    I grew up in a variety of situations. My parents rented and owned. Some of my happiest memories are from the time we lived in a rented home.

    Yes, there are some very strong emotions tied up in home ownership and there are some real benefits. Is someone missing out on life because they didn’t buy into the mass hysteria of home buying the last few years and know that the market is in for a correction? No, I don’t think so. When owning moves closer to historical affordability, then you may have a point.

    Happy New Year everyone,

    JM

    ps-JB/Grim, thank you for all the incredible work you’ve done this year. Please repost your Amazon wishlist on the home page so we can have a chance to really thank you.

  9. Take at least 25% off 2005 peak prices says:

    Richard Says:
    December 29th, 2006 at 11:20 am
    clotpoll, a well thought out assessment that is spot on. if this was a RE investment board i would understand more of the comments but it seems most here want to buy a place to live in.
    ————-
    WRONG!

    You can con some young folks but you ain’t going to con me. I soaked a few grubbers back in 1993-1994. Remember that last bubble pop smart guy?

  10. Take at least 25% off 2005 peak prices says:

    Clotpoll is just a salesperson. That’s all. The one poster above said it all. if you can’t afford it and are in over your head it is not a messy situation. The dream is a nightmare.
    Don’t do it owning a house can be exciting but it is expensive and has its surprises especially the escalating property tax bill.

  11. Take at least 25% off 2005 peak prices says:

    READ MY LIPS:

    SPRING MAGIC IS NOT COMING BACK!

    BOOOOOOOOOOOYAAAAAAAAAAAAAA

    Bob

  12. Take at least 25% off 2005 peak prices says:

    “The Charlotte County market has so frustrated Dave Bonham that he moved his family to Idaho. He has been trying to sell his house since August 2005, and so far all he has to show for it are four price reductions and one failed deal. ‘We just had a little bit of poor timing there,’ said Bonham. He got it appraised for $285,000 and listed it for $279,000. Two expired listings and an attempted auction later, his price is $219,000.”

    “‘Nothing has really changed as far as people moving here,’ said Bonham. ‘The difference, is where each buyer had three houses to choose from, suddenly each buyer has 30 houses to choose from.’”

    hehehehehhehehehe

  13. Take at least 25% off 2005 peak prices says:

    “‘Sellers are in a place where they haven’t been for a number of years — over a barrel,’ analyst Mike Larson said.”

    hehehehehehehe

  14. Take at least 25% off 2005 peak prices says:

    “Although prices have fallen, analyst Jack McCabe said, ‘it’s a much better time to rent. You can rent a property for 55 to 70 percent of the ownership costs would be, even factoring in your federal income tax deduction.’”

    “Besides, he said, ‘there’s a huge credit bubble out there right now’ with about $2 trillion worth of adjustable-rate mortgages that will have to be adjusted to current market rates in the next two years. That could trigger a wave of foreclosures as people have to give up houses they no longer can afford, McCabe said.”

    hehehehhehehehe

  15. metroplexual says:

    “Besides, he said, ‘there’s a huge credit bubble out there right now’ with about $2 trillion worth of adjustable-rate mortgages that will have to be adjusted to current market rates in the next two years. That could trigger a wave of foreclosures as people have to give up houses they no longer can afford, McCabe said.”

    We already went through $600 Billion worth of resets and we already see the market tide change. What happens next year when over twice that amount reset in a time when the Fed has no real control on interest rates and the dollar’s fall makes borrowing more expensive? If I am not mistaken most rates are tied to the 10 year so keep a watch on that number.

  16. dreamtheaterr says:

    “Richard Says:
    December 29th, 2006 at 11:20 am
    clotpoll, a well thought out assessment that is spot on. if this was a RE investment board i would understand more of the comments but it seems most here want to buy a place to live in.”

    Most here want to buy a place to live in? No, it’s a place to raise sheep.

  17. Brooklyner says:

    Hey Clotpoll, home prices are going down 30-50% in the north east. It happened during the last housing bubble of the 90’s and will certainly happen again. Homes only appreciate in value by the rate of inflation over the long term, not 10-20% a year.

    With renting at 1/2 the cost of owning in most places, anybody would be a fool to buy a house right now. When they can scoop up a good house at heavily discounted prices in a year or two.

  18. Richard says:

    BklynHawk, you’re missing clotpoll’s point entirely.

  19. Take at least 25% off 2005 peak prices for houses says:

    Brooklyner Says:
    December 29th, 2006 at 11:53 am
    Hey Clotpoll, home prices are going down 30-50% in the north east. It happened during the last housing bubble of the 90’s and will certainly happen again. Homes only appreciate in value by the rate of inflation over the long term, not 10-20% a year.

    With renting at 1/2 the cost of owning in most places, anybody would be a fool to buy a house right now. When they can scoop up a good house at heavily discounted prices in a year or two.

    ——————
    Houses were down about 20-25% last bubble from my experience, but this one is the biggest baddest ever. So expect 25-35% for houses.
    Condoshacks fell 50% in last bubble. this time who knows, but probably 50% is likely.
    last bubble took about 3-4 years to bottom
    this one will be a little shorter imo cuz of the massive leverage being used.

    just use some common sense.

    Take “at least” 25% off 2005 peak prices for houses

  20. RentinginNJ says:

    Clotpoll,

    While some on this board are trying to “swoop in” at the bottom, this isn’t the case for everyone. I have always said that I will buy a house when I can purchase something my family and I will be happy and comfortable in for many years and where I can make a reasonable payment without taking a risky mortgage or having to struggle to make the mortgage payment each month.

    if one is willing to compromise just a tad.

    I’m willing to compromise. I realize that NJ is an expensive place to live and I will never have here what I can have someplace else. That is okay. It’s important to be near family and friends. However, saying you need to compromise a “tad” is a major understatement. Buying a house today would essentially mean either buying a cracker box and becoming a slave to debt for the foreseeable future or rolling the dice on a risky mortgage.

    Nobody just wakes up one day and suddenly realizes NJ is expensive.

    Maybe not overnight, but this has happened over the course of just a few years. NJ was an expensive place to live in 2000 and then housing prices doubled along with runaway property taxes increases. As a result, people are leaving the state. 72k left NJ in 2006 up from about 25k in 2001.

  21. 2008 Buyer says:

    2007 Prediction: Home prices will continue to decline maybe another 5% to 10%.

    Look at Miami with hyper appreciation to see how it can quickly come back down. I am especially curious as to what’s going to happen with all the condos in the Gold Coast (Jersey City, Hoboken, etc.). As metroplexual mentioned… $2 trillion in ARMs reseting in 2007….the buyers in 04’ may be ok but the buyers in 05’ are in for a world of hurt. Subprime lenders have been tighten ( and will continue to tighten in 07) their underwriting guidelines, taking away products that enabled drug addicts (low FICO scores, no down payment, no reserves) to get into homes they never should have been in the first place. This will make it harder to refinance and also stop a lot of buyers on the fringe (maybe the ones who bid up some homes) out of the market further depressing home prices.

  22. Clotpoll says:

    BklynHawk (#7)-

    Correct me if I err, but my little piece doesn’t contain the word “happiness”. The suggestion that homeownership is a universal panacea for every adult capable of signing a mortgage application isn’t something you’ll ever hear coming from me.

    However, I also believe it is senseless- and counterproductive- for someone who has a commitment to family, job and community to play the rent-and-wait arbitrage game. As I’ve said in other threads, it’s a market of opportunity for SOME people out there, not everybody. The person who knows he’s in NJ for the long haul does not need to “call the bottom” in order to take advantage of opportunities that exist today.

  23. Take at least 25% off 2005 peak prices for houses says:

    Richard Says:
    December 29th, 2006 at 11:54 am
    BklynHawk, you’re missing clotpoll’s point entirely.
    ——————
    No he is not. Affordability is important. Buying more than you can afford is risky and could lead to financial/personal problems. I expect alot of people/families are being hurt by your type of shallow gibberish.

    BOOOOOOOOOOOYAAAAAAA

    Bob

  24. housingcrash says:

    I commented on the other blog about my situation and thought I would repeat it again since we are talking about affordability!

    My husband and i bought a house in 2003 and made it into our McMansion, My husband is a carpenter and does GREAT detail work that really brings up the value of a house. Anyway, we sold it in Nov 2005 and made a take home cash profit in hgih $500. Well the point of this info is because we lived way beyond our means and “argued” everyday about MONEY!!! We tried to compete with the Jones and were just “drowning” in debt.
    Then came the tax bill of high $15,000’s well that was it. It was HELL! We were two steps away from divorce. So we sold and have been renting a 3 bedroom for $1200 and month (our mortgage with taxes etc was $2500)

    WOw, wow, wow, living debt free is “heavenly”.
    We travel, go out for dinner etc, we actually like each other again!!! Now our goal is by the end of the the summer we would like to buy a simple cape/ranch in a GOOD school town in cash. And that to me is the american dream, living life not chocking in DEBT!!
    So the housing market and its direction is so important but living within you means is truly, truly the key!! Do not get sucked into the “hipe”
    One question to all is when do you think you will buy a home again. I hope thing really plung in spring/summer 2007. I have FOUR yes FOUR kids and we really need them to have stability. So whats your guess, when do we buy again?

    LOVE, this blog it is so inspirational!!

  25. BC Bob says:

    I’ll stick to what I said, about a year ago. We are in the beginning stages of possibly the biggest bust in US history. Yes bigger than the stock market crashes. You have to remember that you need cash to obtain a margin position in stocks, none in RE. Also, in stocks you have a margin clerk looking over your shoulder. In RE, the only margin clerk you have is the sheriff taking you out by the shoulder. Approx 15-20% of market participants own close to 65-75% of stocks. In RE you have almost 70% of the population, that “own” their house/condo/co-op. The multipler effect in RE is enormous as compared to the stock market.

    The credit bubble is astronomical.The banks can’t make $ with an inverted yield curve and the 15/30 year market is on sabbatical. Banks were forced to go where they really had no businees and didn’t really want to be there, the subprime. This is what this market has been built on for the past 3 years. A foundation of debt,debt,debt, built like a deck of cards.

    There is no way the fundamentals of this market support 2005 prices.If they did, why haven’t rental prices escalated the same?? We have gone from a P/E of 10 to approx 25!![cost of a property in relation to its rent] When RE evolved from a good solid investment, annual gains at or near inflation, to resemble a pork belly trade,it was clear, at least to me, that this was an unsustainable bubble/mania. Now with investors gone, flippers gone and the subprime getting squeezed, what’s left besides how long/how bad???

    As previously stated, 30-40% off 2005 highs in a 5-7 year time frame. There will be flurries of buying along the way. It may acttually appear that the bottom is in. Don’t be fooled. Too much excess to get wrung out in too short of a time period. I am actually quite suprised how fast this has unraveled in just the 1st year. I may be too conservative in my estimate. However, I will not flip flop like others.

  26. Jay Sam says:

    For the smart ones on this forum- Why is it that listed sale prices are not showing any meaningful reduction. For example, in Westfield, there are many many properties in the $1-$2M range (most of them new constructions by local builders). They have been on the market for quite some time now. One would think that a local builder, who arguably does not have deep pockets and is on the hook for the loan to the bank, would like to see activity sooner rather than later, sepecially before the spring listings hit the market. Just this morning a high end listing MLS # 2328456 reduced the price from $2.425M to $2.395M. What are they thinking, why even bother reducing it by $30K (1%). Any insights??

  27. Brian Nelson says:

    The real estate market in northeast Pennsylvania has actually held up pretty well so far after having been depressed for years. It’s almost as if there were no outside lines of communication informing these people that the housing bubble is ending. One of the little known peculiarities of this northeast PA market is the way the real estate brokers and agents have basically fenced this market for favored clients. As an outsider it is difficult to find a house without a leaking roof or other serious problems. Most of the time when the agent recognizes buying interest, one is told that the seller will not take one dollar less than list price. I can tell you that I have sold a few houses in my life and this is a grand deception, any realistic seller wants to know of any buyer interest. This can, however, be a vital ingredient involved in setting up an insider purchase on a property approaching expiration of brokerage sales contract. A cunning agent will allow the contract to expire and use a business acquaintance to make an offer without real estate commission knowing there is a ready market at a below list price.

  28. UnRealtor says:

    Prediction for 2007 — more pain for Greedy Grubber sellers. This mania was unsustainable, and there’s much more pain on the way:

    http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif

    Looks like about 5 years of pain, at least.

    Greedy sellers can’t wait out the decline. They grow old, die, divorce, etc. The owner of a vacant house has a life on hold as well.

    Many of the claims made that real estate is a “home” were true before about 2001. Since then (see chart above) it has become a trap into debt slavery, and financial ruin. Or, for those who must buy today, having a lengthy commute, or living in a town with poor schools.

    There’s no need to “find the bottom” — just avoid the top (see chart).

  29. housingcrash says:

    Wow BC bob

    I so, so, so, agree with you!!!

    YOU are the MAN!!!

  30. UnRealtor says:

    Housingcrash, #23, great post, thanks for sharing your story.

  31. BklynHawk says:

    Clotpoll-

    ‘You can be in a beautiful place…great landlord…below-market rent…but you are essentially “on hold”.’

    Maybe explain to me more of what someone is “on hold” from/for and then I can respond to that. I don’t think my life is “on hold” and I rent.

    If someone is renting in the neighborhood they eventually want to live in, then it really is a matter of shuffling some stuff around. Makes tons of sense to me.

    Clotpoll, I definitely don’t think you can completely predict a bottom. If the time is right for you and you find something you love and can afford it(factoring in increased property taxes after your reassessment and/or major repairs if the previous homeowner has let the house go). Go for it!

    JM

  32. Richie says:

    2007 will be the FOURTH best ever year to own a home according to the NAR.

    Rates are at historical lows.

    SELECTION SELECTION SELECTION!!!!

  33. BB says:

    Can anyone get me the steet address for this listing in Pequannock? Thanks.

    MLS ID#: 2345496

  34. Lindsey says:

    My thoughts are far from fully formed on this, but here is an idea of where I’m headed:

    In late 2007 Booyaa Bob will consider buying an investment property, but he will have a hard time choosing.

  35. BC Bob says:

    housingcrash,

    Good for you. When I sold, in late 2005, everybody said I was nuts, looked at me like I had two heads. Now??? At a recent party the same people were asking me, “what did I see that they didn’t??, What should I do now??? Others looked like deer in headlights!!

    About renting, I would never have imagined the freedom that comes with renting. I have owned since 1985, forgot what renting was like. No trips to Home Depot, no new roofs, no leaky pipes to fix, no landscaping, no water in the basement, etc….

    Life on hold???? Hardly, I’m in the same community/friends/job/church.I actually participate in more community events, the time away from the upkeeep of a house affords me this. On the contrary, how many homeowners lives are on hold??? Some have bought before selling their existing home, families are split up between properties,living distances apart, financial ruin is setting in. You have two income earners spinning their wheels trying to keep up with mortgage payments/taxes/energy costs/health benefits, etc… There are
    individuals in tears because they recently discovered their I/O’s are about to double, houses with no furniture, etc…

    A house, at least to me, is not a barometer of stability. The individuals living under the roof dictate what kind of life you lead. The question that arises; do you feel more comfortable renting that roof or would you rather rent mortgage $ at this time. You all work hard for your money. Make sure it works hard for you, don’t get taken by the hype. Your choice!!

    By the way, I’m not trying to pick a bottom. Just looking for this market to retrace back to its long term underlying fundamentals. When it does, everybody will be better for it. However, the pain to get there will be intolerable for many.

  36. BC Bob says:

    Lindsey,

    LOL!!! They’ll be so many at 25% off peak that BOOOOYAAAA won’t know what to do!!! You’re absolutely right!!!

  37. Pat says:

    Brian Nelson: NEPA is a different beast, and if you don’t know somebody who knows somebody, you’re really on your own.

    Because of its lack of high-paying jobs/big business, NEPA has been an aging population area for years – so it’s a secondary market (a defensive position.) Last to get the big box stores, and real-estate depressed as long as the bubble markets sucked buyers away.

    The market is tight up there right now for two reasons I can see. One is that equity snowbirds who’ve been supplementing their income for the past ten years by moving around (NC, FL, GA), and who have been able to sell their last southern properties, have been moving back “home” where they can live cheaply on their RE profits until RE stabilizes. Tax code made this the preferred income supplement of the Age 55 and over crowd.

    Also, watch the sales up there. Tons of immigrants – both legal and illegal, are moving there with cash or buying at 100% financing because the properties are relatively cheap to them after living in FL/NY/NJ. You’ll see two or three properties in one shot going to the same landlord wannabees.

    The immigrant last names will be buying in the towns.

    The Polish and Italian names [the re-runs I mentioned] will be in the mountains, buying up solid ranchers on big lots.

    You need to find the right agent.

  38. Seneca says:

    2007 Prediction: Agents who won’t deal with clients that need to see more than 3 properties before making an offer will have no buyers left to deal with.

  39. Home Seller says:

    My prediction:

    Direct from my crystal ball……

    Prices along with interest rates will either go up, down, or stabilize..

  40. syncmaster says:

    Post # 16 by Brooklyner:

    Homes only appreciate in value by the rate of inflation over the long term

    If that is true… then “over the long term”, whatever money I put into the house towards principal, I get back when I sell, inflation-adjusted. A checking or savings account at Bank of America would not give me inflation-rate returns. Stocks may, may not – depends on your portfolio.

    So if housing “over the long term” keeps my money growing with inflation, what is the true cost? Interest payments and property taxes (minus the 25-28% deduction), maintenance & upgrade costs (again, minus any deductions). Anything else I’m missing? Interest payments go down every year. Property taxes go up every year. I have no idea what the net is on that one.

    And what are the benefits of having a house? You have a place to stay. You don’t have to move. The benefit is a lifestyle benefit.

    Have I missed any costs and/or benefits here? I am disregarding principal payments since the assumption is you get that back “over the long term” anyway.

  41. njrebear says:

    more like a wish list for 2008. I hope it happens.

    1] No more exotic loans.
    2]breakdown of NAR .
    3]LieReh goes to jail.
    4]No more 6% (closing or buying). Maybe 2%.
    5]Merger of Foxtons and Zillow (vastly improved zestimates).

  42. UnRealtor says:

    These Jersey City flippers have abandoned their efforts, and are instead selling the gutted property:

    http://newjersey.craigslist.org/rfs/236399584.html

    “Approved plans for 3 luxury condos!”

    “Totally gutted and is ready for major renovations”

    “Perfect for the educated urbanite ready to build and design their new home in hot and happening downtown Jersey City”

    “Current owners are also builders, so they can complete the renovations to your specifications for an additional cost.”

  43. njrebear says:

    more 0n 40]
    improved zestimates can wait till 2011.

  44. SM says:

    If you own a house and have following symptoms please read on

    1. Can not sleep in the night or have nightmares about selling the house.
    2. You hate BC Bob and most other bloggers here.
    3. You feel like a BAGHOLDER.

    You may be suffering from HouseOwnershipSucks Syndrome. You can do following to feel better.

    Sell your house for 25% off of 2005 peaks and start renting until market stabilize.

    Disclaimer: This is not professional advise. Longer you wait, you may need to take more than 25% off, to get rid of your house.

  45. Zack says:

    My prediction
    By mid 2007, Iran explodes a nuclear weapon sending oil prices through the roof. Fed raises rates 50 basis points. Meanwhile, ARM resets have caused a surge in foreclosures and inventoy of homes in the market is making people’s eyeballs pop out. Median home prices show a decline of 7% YOY.

  46. Home Seller says:

    #43

    The flip side of that is thinking about the incredible profits you made in the last 7 years

  47. Poser says:

    I’m selling my home this spring market. I bought in 02 and added 200k of improvements to my little cape. basically redid the whole house inside and out and added a 2d floor. All I’m praying for is to walk away with my shirt at least. and be debt free. I asked a realtor for an honest list price and they gave me one that I thought was about 50-60k lower than what I think the house would have sold for in the peak 2005 market with all renovations. I”m going with that list price. I’ll let the board know what happens, if anyone is interested.

  48. njrebear says:

    poser]
    Where is your home located?

  49. Poser says:

    njrebear,
    house is in chatham,summit,madison area. i bought here thinking it would keep value if market ever turned down. my house is no mcmansion. i do not want to be greedy, i just want my shirt and recoup what i put into it.

  50. syncmaster says:

    Poser,

    If you could sell today for the list price recommended to you by the RE agent, would you recoup what you’ve put into it? If yes, what % below that list price do you start to “lose money”?

  51. Poser says:

    syncmaster,
    If I could sell today for RE agent’s recommended list price, yes I would recoup what I put into it.
    I would start to lose money if the list price was reduced by more than 10%. but that doesn’t factor the agent’s commission or transfer taxes. If I factor those in, I guess I would start to lose money if the list price is reduced below 5%.

  52. Zack says:

    Poser, timing is everything. If you had sold it last year, you wouldn’t be in this position. At this point, your only option(if you have to sell) is to wait for a buyer in white shining armor to come on a white stallion and rescue you from your mortgage. Next year, this time you will be underwater, guaranteed.
    Sell the house within the next couple of months even if you have to lose 2% of the money.

  53. BC Bob says:

    Home seller, #45,

    I do and realize I was lucky to ride an incredible wave. Never bought RE with that intention and will never buy again thinking that. Simply, the market presented an opportunity, some took, others bought clamoring for this rocket ship to keep going higher.

    SM,
    Why would they hate me?? Some of my best friends are home owners and they know exactly how I feel, some agree, others disagree with me. It’s what makes markets.

  54. Take at least 25% off 2005 peak prices for houses says:

    SM Says:
    December 29th, 2006 at 2:00 pm
    If you own a house and have following symptoms please read on

    1. Can not sleep in the night or have nightmares about selling the house.
    2. You hate BC Bob and most other bloggers here.
    3. You feel like a BAGHOLDER.

    You may be suffering from HouseOwnershipSucks Syndrome. You can do following to feel better.

    Sell your house for 25% off of 2005 peaks and start renting until market stabilize.

    Disclaimer: This is not professional advise. Longer you wait, you may need to take more than 25% off, to get rid of your house.
    ================================

    Boooooooooooyaaaaaaaaaaaa Bob approves this message.
    Re: #2 where’s BOOOOOOOOOYAAAAAAAA Bob? Plenty of the starving bunch, grubbers and re pimps hatred

    hehehhehehehehe

    BOOOOOOOOOOOOOOYAAAAAAAAAA

    Bob

  55. Take at least 25% off 2005 peak prices for houses says:

    hehehehehehehehehe………

    NO SPRING MAGIC……….!!!!

    SPRING HOUSING MASSACRE COMING TO A HOOD NEAR YOU.

    BABABABABABABA

    BOOOOOOOOOOOOOYAAAAAAAAAAA (half yell)

    Bob

  56. Home Seller says:

    #53

    Bob- Agree w/you. At the time I bought (in ’00) before the runup, I always realized (like most people) that RE was the best investment for the long term.

    I am looking to sell my home now and ‘bump up’ to a much nicer home down there. If I don’t make what I thought I would make last year, so what. I’m still way ahead of the game. The people who bought in the past year or so will be hurt because we all know it will take some time for home prices to appreciate from where they are right now…

  57. James Bednar says:

    Saddam to be executed tomorrow.

    Incredible. I read the words, but somehow the scenario just doesn’t seem to register. I have no reason to doubt that it won’t take place, but I just can’t seem to get over the disbelief of it.

    jb

  58. dreamtheaterr says:

    “There’s no need to “find the bottom” — just avoid the top”

    Unrealtor, well said!

    A few avoided the top (atleast those that didn’t throw in the towel and buy). Now wait for the many excesses of this RE maelstrom to play itself out, and then dip your toes in :)

  59. Brooklyner says:

    To #39 Syncmaster: My only point about properties appreciating by roughly the rate of inflation over the long run that the recent 20% yearly price increases are clearly unsustainable and price must return to the mean. Just like they always do. People seem to forget that housing goes through booms and busts just like most other assets. When you smooth out the price fluctuations over any 15-30 year period you’ll see that the average price gains coincide with the average rate of inflation.

    This recent housing boom is UNPRECEDENTED in its scope. According to what I read, there has never been 200-300% price increases over any 6 year period in the US. EVER. Exceptions of course are gentrified neighborhoods (ie Harlem) or instances when there’s a structural change in the local income/wealth base, like when a new factory opens up in town.

  60. Home Seller says:

    Poser- please be careful of listening to anyone who ‘guarantees’ where prices will be in a year from now (see #52). No one knows where exactly prices will be and your complete personal situation.

  61. dreamtheaterr says:

    “Saddam to be executed tomorrow.”

    Come to think of it, I’m not sure if Saddam being hanged or Dick Cheney being hanged is better; both are equally guilty of all the unnecessary bloodshed.

  62. Take at least 25% off 2005 peak prices for houses says:

    I sense a number of “Bitter” bagholders, starving bunch and other re related pimps are papapapPANICKING come January…..

    hehehehhehehehehe…(Muttley sick laugh)

    BOOOOOOOOOOOYAAAAAAAAA (half yell)

    Bob

  63. UnRealtor says:

    “Come to think of it, I’m not sure if Saddam being hanged or Dick Cheney being hanged is better; both are equally guilty of all the unnecessary bloodshed.”

    A sad display of moral equivalence.

  64. SM says:

    True JB. He looked more like invincible in year 2003 etc. He looks more like a goat these days.

    Can’t believe what a change 3 years of time bring in. Real estate looked the same in 2004. Wonder what will happen to all those grubbers by 2008. I can see vultures flying….

  65. Take at least 25% off 2005 peak prices for houses says:

    Where’s my annoyed Clone?

  66. Take at least 25% off 2005 peak prices for houses says:

    Beginning 2008 is going to be the depths of M-I-S-E-R-Y

    Vultures picking the carcasses of grubbing re experts. Not many will be boasting about Residential RE just like 1992-1994.

    hehehehehhehehehe

    BOOOOOOOOOOOOYAAAAAAAAAAA

    Bob

  67. Poser says:

    Zack and Home Seller,
    thanks for your input.
    I’m not worried just yet, because although I might “lose” money on the house in terms of not recouping 100% of what I put into it, my mortgage is less. The price would have to decline even further than the 10% before I’d be in a situation where I’d have more debt owed to the bank than the cash paid for the house.
    I might be the 1st fatality of this coming Spring 2007 market, lol, but I’ll post my experience as anecdotal evidence for the board.

  68. dreamtheaterr says:

    Unrealtor, it’s not a sad display. It’s an appropriate analogy – just as the other 90% of the world population. Or ask the hundreds of thousands of Iraqis killed due to the US’s misadventure. Go to Iraq and try sleep at night, knowing that your inocent a** might be bombed any minute.

    Sorry pal, but we (here) live in a world disconnected with reality.

    Here’s wishing everyone a prosperous 2007, and let’s try spread some love. As Mohandas Karamchand Gandhi once said “An eye for an eye makes the world blind”.

  69. Take at least 25% off 2005 peak prices for houses/more for Condoshacks says:

    It is going to be miserable for grubbers…..

    hehehehehehehe……

    Take at least 25% off 2005 peak prices for houses/more for Condoshacks

  70. dreamtheaterr says:

    Sorry; “just as the other 90% of the world population” should read “just ASK the other 90% of the world population”

  71. Take at least 25% off 2005 peak prices for houses/more for Condoshacks says:

    dreamtheaterr Says:
    December 29th, 2006 at 3:03 pm
    Unrealtor, it’s not a sad display. It’s an appropriate analogy – just as the other 90% of the world population. Or ask the hundreds of thousands of Iraqis killed due to the US’s misadventure. Go to Iraq and try sleep at night, knowing that your inocent a** might be bombed any minute.
    ========================
    90% of world population?…Nice spin…Are u a realtor?

  72. syncmaster says:

    One of the things I like about this blog is that we’re all bears, bulls or undecideds. There are no (open) Democrats or Republicans or conservatives of neocons or liberals or anything else. If I want to read a political sniping match, I’ll check out the IBM Yahoo! Message board :P

  73. dreamtheaterr says:

    LOL Booya Bob,

    I am a happy renter. My spin was unintended :)

    But I guess if you take the total world population, add the US population against the misadventure, and divide that total by the world total, you might be left with around 90%!!

  74. SM says:

    Home Seller Says:
    December 29th, 2006 at 2:49 pm
    Poser- please be careful of listening to anyone who ‘guarantees’ where prices will be in a year from now (see #52). No one knows where exactly prices will be and your complete personal situation.

    Yes, Be vey careful. It could go down 10% or 30%. Nobody can guarantee how much worse it could get.

  75. Home Seller says:

    #74

    It could get worse. It could get very bad. Or, it could stabilize somewhat.

    The point is, to make blanket predictions a year from now and ‘guarantee’ that prediction (whether its good or bad) makes no sense. Also, advising a person to sell ‘within a couple of months’ w/o knowing his entire personal siutation doesn’t make sense to me.

  76. njrebear says:

    from 48 by Poser]

    “njrebear,
    house is in chatham,summit,madison area. i bought here thinking it would keep value if market ever turned down. my house is no mcmansion. i do not want to be greedy, i just want my shirt and recoup what i put into it.

    chatham & summit!! I can visualize Reechard having a fit when he reads this post. On the other hand, since Reechard is in the denial mode, he will probably accuse evil Bob of posing as Poser.

  77. BC Bob says:

    Home Seller,

    Each individuals own personal situation is unique to itself. When I speak in terms, it’s always general. Also, I am looking at the big picture. Short term??? There could be a multitude of differet variables. I’ve seen two comprable houses; sg ft/bdrms/ bathrooms go for a 100k price difference in a matter of weeks. I was in both,the funny thing, I thought the house at 100k less was nicer. There is so much turmoil in the industry as we speak. You can only do what you feel is right, go with your gut. Everything else is of no consequence to you.

  78. Poser says:

    #76,
    LOL! No I am not Bob. I only post on occasion, enjoy reading posts rather than writing them. I can’t recall now what Richard’s usual posts are. Is he presuming the chatham summit area doesn’t have declining prices? I think it does based on the listings I view online and the open houses i’ve gone to. I’m no RE agent either. Just a humble home owner.

  79. SM says:

    Home Seller,

    Poser said,
    i do not want to be greedy, i just want my shirt

    With your advise though, he will loose his undergarments as well. Best advise is to sell before it gets too late, financial situation permitting.

  80. Richard says:

    nice to see the cult of the bear in full effect this holiday season. i see little point in anyone trying to convince you on the housing market. it’s religion to you and you’ll defend your opinions against anything and anyone that attempts any alternative viewpoint. maybe you should all pool your money and buy a place and you can all live together in a commune-like setting. none of you own so it’s a viable option.

  81. Home Seller says:

    #80

    How could he lose ‘his undergarments’ by my advice? I did not say definitely to hold or sell. I was responding to Zak’s ‘guarantee’ in post #52.

    Also, again you are assuming a large drop in prices by next year which we know might or might not happen.

  82. Home Seller says:

    #79

    Bob- I do the food shopping in my house and I don’t think prices OVERALL have gone up tremendously in the short term (some things have gone up and some have stayed the same or gone down (like butter and certain cold cuts) for instance). Bread, milk, eggs haven’t fluctuated all that much IMO.

    Now health insurance, gas, etc…that’s another story :)

  83. SM says:

    #81

    I can see how well your viable option has worked for you so far.
    So how much have you saved yourself with your viable option

  84. BC Bob says:

    “none of you own so it’s a viable option.”

    Richard,

    Do you mean your preference is not to own??? You never know I can flip flop in 2007.

  85. JohnSS says:

    My Prediction: Tomorrow Saddam gets executed.
    And after that it’s the homeowners
    of NJ who get the same. :)
    HAPPY NEW YEAR!!

  86. twice shy says:

    Poser,
    Thanks for speaking up from the other side of the trade.

    Is selling this spring a defensive measure? do you have to sell? If you like your house, and have upgraded it to your specs, why not just hang on, maybe for years, as long as you can carry the mortgage? You’ll still need a place to live once you sell. The market might recover or decline further, but why set yourself up for the “spring massacre” if you don’t have to? Should be a last resort, if you’re at all comfortable where you are.

    Anyway, best of luck, and keep us posted. Maybe someone here might be interested.

  87. BC Bob says:

    Home Seller,

    I was wondering what everybody else has seen. Our govt does not include home price appreciation but rather rents into their inflation equation. Who knows, they may decide to change this in 2007.

    Also, if a new computer comes out, which is priced the same as the previous,[let’s say $500] and it twice as fast, our govt data will show that prices have fallen. In this example by 50%, [2x as fast at same price] They calculate it at $250, it costs us $500.

  88. Home Seller says:

    Bob- good points. In the ‘small picture’ I just wanted to respond to the woman in your column who commented that food prices have escalated in the short term. That struck me because I have not seen it.

    One thing about home price appreciation, remember, our area (Metro NY/NJ) along w/parts of CA, AZ, & FL have seen skyrocketing appreciation. Much of middle america and smaller areas around the country haven’t been affected by the ‘bubble’.

  89. Peter says:

    Why is everyone so hard on the vultures? After all, these are the investors who are going to turn this market around. Remember the market has to hit bottom before it can begin to rebound. The way I see, the Vultures are the ones who are going to expedite the process for the benefit of everyone. Aww Aww Aww

  90. njrebear says:

    home seller,

    “Much of middle america and smaller areas around the country haven’t been affected by the ‘bubble’. ”

    Data as of 2003 –

    http://www.fdic.gov/bank/analytical/fyi/2005/021005fyi.html

    “Our count of 33 boom markets in 2003 is the highest witnessed at one time during the past 25 years—1988 ranks second, with 24 booms. Moreover, the 2003 boom markets account for roughly 40 percent of the nation’s population base, contributing to the impression that this is a nationwide phenomenon.”

    >>

    Again this is 2003 data. We have gone 30%+ since then!!! That’s a fdic report.

  91. Tom says:

    Most Housing Bears WILL miss the bottom and forget to get “back in”…guaranteed! The sun will rise tomorrow. I’ll take a rain-check on Armageddon.

  92. dreamtheaterr says:

    Inflation at 2-2.5% is an absolute joke. All we need to do it take the major expenses of our budget and see for ourselves. Real estate (rental equivalent is taken, which is cheating!), health insurance premiums, day care and gas are the big 4. Can someone tell what among these 4 has not increased ATLEAST double digits?!

    And we’re not even considering the smaller amount quietly being pushed by grocers for the same price. I think BC Bob accurately referred to the stealth inflation a while back. And some restaurants serve smaller portions too :(

  93. Tom says:

    I observed the stock market bears totally miss the 2002-03 bottom and they’re still missing it as of today. They’re still short and in bear funds! Same will happen in RE.

    LMAO!

  94. Take at least 25% off 2005 peak prices for houses/more for Condoshacks says:

    Happy New Year….unfortunately it is going to be miserable for some.

    BLEED”EM DRY!

    BOOOOOOOOOOOOOOOYAAAAAAAAAAA

    Bob

    Take at least 25% off 2005 peak prices for houses/more for Condoshacks

  95. skeptic says:

    As a regular reader but (very) infrequent poster, I take CP’s post as a reasonable framing of the whether-to-buy question faced by those who are not emotionally or financially invested in the RE market going one way or the other.

    I don’t have an answer. I will say that the relentness hehehes, LMAO, GF, booyaas, multiple exclamation points,jeers, and veiled insults are a turn-off and neither helpful nor convincing.

    No criticism intended of Grim. His selection of articles and comments are excellent.

    Flame away.

  96. commanderbobnj says:

    Dreamtheaterr says (#61):
    re: Saddam to be executed tomorrow

    “…Come to think of it,I’m not sure if Saddam being hanged or Dick Cheney being hanged is better. Both are equally guilty of all the unnecessary bloodshed…”

    Do you really believe that Mr. Dreamtheaterr ?——You HATE the Bush administration so much that you equate OUR vice-president with a HITLER who killed upwards of two million of his OWN people ??—I personally do not agree with how the war is dragging on but I do recommend that you put your brain in gear BEFORE you open your mouth. There is much that We the citizens do not know what OUR government is doing to protect us so that we can go-on with our day-to-day lives….

    Bob Reiss

  97. njrebear says:

    Tom says-
    “Most Housing Bears WILL miss the bottom and forget to get “back in”…guaranteed! The sun will rise tomorrow. I’ll take a rain-check on Armageddon.”

    We will know when you are up for foreclosure ;)

  98. syncmaster says:

    fight fight fight fight

    bears vs bulls, only on pay per view!

  99. gary says:

    dreamtheaterr,

    This is a real estate blog, dispense your anger to your doctor, not here.

  100. New in town says:

    ClotPoll:

    “stuck in the ’50s”

    Exactly. These posts fill me with nostalgia. There is an enormous wave of change under way. The current ripples are just the beginning.
    Booomers have driven the economy for decades and will continue to do so. Only now, they will be driving it in a way few seem to have expected.

  101. chicagofinance says:

    dreamtheaterr Says:
    December 29th, 2006 at 5:31 pm
    And we’re not even considering the smaller amount quietly being pushed by grocers for the same price. I think BC Bob accurately referred to the stealth inflation a while back. And some restaurants serve smaller portions too :(

    Dream/Index: be careful! Think about advances in technology and the cost of some basic things. Five years ago I finally broke down and got a cell phone. Now everyone has the latest Crackberry for free and pays $50 for unlimited time. Phone bills have dropped through the floor. The Wal-Mart/Targets of the world have forced prices down dramatically of a whole host of prepackaged crap. Just in time inventory and [finally] efficient uses of inofrmation technology have driven costs down. Off shoring is now logistically possible.

    You are just not appreciating now that everyone own a [uselessly] huge house which is [pointless over-]appointed with the latest in keeping up with the Smoth and the Jones. The latest sign of DE-flation is the flat-screen [energy wasting] TV.

  102. Home Seller says:

    #92

    I still don’t think the ‘bubble’ is a nationwide phenomenom.

    I’m curious for instance, where in the midwest has the ‘bubble’ affected? (and I mean a serious bubble)….how about the northwest? Pittsburgh? New England?

    Geographically, I think most of the country hasn’t been greatly affected. its mostly metro NY, FL, AZ and CA

  103. chicagofinance says:

    New in town Says:
    December 29th, 2006 at 8:00 pm
    ClotPoll:

    “stuck in the ’50s”

    Booomers have driven the economy for decades and will continue to do so.

    New: and their progeny

  104. njrebear says:

    home seller]

    Instead of saying ‘i don’t think there is nationwide bubble’ why don’t you post some data that proves your point. If you can find such data of course.

    I can’t help it if you don’t believe in fed reports. I presented a federal source that says a bubbble exists nationwide.

    Since you don’t believe in fed reports, try
    http://seattlebubble.blogspot.com/ for northwest bubble information hehehe

  105. Spelunker says:

    “maybe you should all pool your money and buy a place and you can all live together in a commune-like setting.”

    only if we can dress you up as our little french maid Richard. It is a viable option since you have nothing better to do than to poke people in the eye.

    2007 – The year Sadam and Castro are in the netherworld together. Iraq continues to spill new blood. Dow goes back under 12K. Rates will go up. Home prices will go down. A dip in and out of a recession. And last but not least; i will buy a house.

    I would just like to say that it isnt a matter of holding out for me. i am not holding out for bottom. I dont know that anybody here is waiting for bottom to buy so much as they just need to afford it. I believe 07 will bring more “deals” than we saw in 06.

    07 will also see more folks swaying into the housing bear camp. Just think back to what a small bear crowd it was back on new years day 06. The majority was still in the denial stage of it all. We have seen many people finally admit there was “something” going on.

  106. BklynHawk says:

    Here are predictions for 2007:

    1. Another major mortgage company will close up shop.
    2. More than one residential construction company will be bought up by investors.
    3. Inventories will continue to rise.
    4. Demand will be flat/decline. (Don’t think it will matter too much given #3)

    The above predictions and approximately $3.79 will buy you a tall (small) cappuccino at Starbucks.

    Cheers to all RE bulls and bears on the board!
    JM

  107. jack says:

    My wife just told me that sadaam put people in woodchopper shredders feet first. Maybe they should do that to him instead of hanging him.

  108. Spelunker says:

    he’s gotta feel pretty broken at the moment. It’s sort of strange to me that hanging is an official way to deal with this stuff. I would think it would be injection or gas. didnt one of the bible belt states want to bring back the chair?

  109. dreamtheaterr says:

    “Dream/Index: be careful!”

    Chifi, lol….. for the record, I do hold a couple of actively managed, low turnover funds :)

    Also, a very Happy New Year to you and your cute baby boy!!

  110. njrebear says:

    http://calculatedrisk.blogspot.com/

    CR has his predictions for 2007.

  111. Pat says:

    Here’s wishing all my NNJ friends a Happy New Year and sales results in a few months like those I’m seeing for my PA-tucky zip:

    melissadata.com
    Date
    Published # Average Price
    12/06 _16 _ $229,000 _(sold summer)
    11/06 __1 __ $60,000
    10/06 170 _ $388,000
    08/06 132 _ $375,000 _sold spring)
    07/06 _50 _ $405,000

    Maybe the trend will roll North for you. Prost!

  112. rhymingrealtor says:

    Sadaam has already been hung, and while I know the horrible acts he has been accused and found guilty of….. it did not give me a good feeling to read, something just not right. I can’t debate it , I can just feel it.

    On another note

    2007 Prediction: Agents who won’t deal with clients that need to see more than 3 properties before making an offer will have no buyers left to deal with
    Come on that’s all they show on that show House hunters!!

    KL

  113. Home Seller says:

    #107

    njrebear- I’m not disputing the ‘numbers’, I’m just talking from live experience. I’ve talked to people over the past year or so from TX, New England, St. Louis, Pittsburgh, and they all haven’t experienced a real estate bubble.

  114. Pat says:

    KL, you don’t have to debate your feelings. Remember from Psych 101…feelings are feelings and not right or wrong.

    But if what you are saying is that you are internally analyzing the possible outcomes from this event, then debate might actually help. There will be a great deal of analysis of the event in the future, but right now, the unknowns are just that: unknowns.

  115. James Bednar says:

    From CNN:

    Hussein executed with ‘fear in his face’

    Saddam Hussein, the former Iraqi dictator who spent his last years in captivity after his ruthless regime was toppled by a U.S.-led coalition, was hanged before dawn Saturday for crimes committed during his reign.

    Hussein’s death came in “a blink of the eye” after his executioner activated the gallows just after 6 a.m. (10 p.m. Friday ET), said Iraq’s national security adviser, Mowaffak al-Rubaie, who witnessed the hanging.

    “This dark page has been turned over,” al-Rubaie said. “Saddam is gone. Today Iraq is an Iraq for all the Iraqis, and all the Iraqis are looking forward. … The [Hussein] era has gone forever.”

  116. James Bednar says:

    From the MLN site:

    MLN’s production goal for 2006 is over $12.1 Billion. We anticipate our mix of business to include approximately 80% Alt-A/Non-Conforming product and 20% Conforming product. Loans are sold to a variety of investors with the expectation of selling 81% whole loans and 19% Conforming mortgage backed securities. MLN’s servicing portfolio is expected to grow to $15.6 Billion with over 127,000 accounts in 2006. The portfolio at year-end will consist of $1.2 Billion of sub-servicing for a national bank, $2.9 Billion of agency servicing, $9.4 Billion, which will be under a sub-servicing arrangement with Emax Financial Group, $39.2 Million from our private label securitizations and $2.0 Billion of warehouse loans.

  117. Common Cent$ says:

    CR Post is a must read, best synopsis yet of the RE market I’ve seen.

  118. James Bednar says:

    From the Tampa Tribune:

    Appraisers’ Valuations Under Review

    Frank Gregoire, a St. Petersburg property appraiser, couldn’t help but chuckle when an appraisal request came through his fax machine this month.

    It was sent by a California loan originator, and the message was clear: “Please call if unable to attain this value BEFORE INSPECTION.” Photos of the property, the request said, could not include “unfinished construction or damage.”

    Gregoire knew right away that the loan company was trying to influence his valuation of the home and it would be unethical to take on the work.

    “It was the most blatant request I’ve seen,” said Gregoire, who is chairman of the Florida Real Estate Appraisal Board. He said he’s seen a recent spike in unethical requests like the one from California.

    With the real estate market bottoming out and mortgage fraud on the rise, professional appraisers say they’re under more pressure to value homes at specific, and often inflated, amounts.

    As a result, some big national lenders and law enforcement officials say they are taking a harder look at the role of appraisers in questionable loan deals.

    It’s against state law for an appraiser to agree to value a home at a predetermined amount or intentionally omit information that could mislead a lender about the value of a home.

    Home sales involving a mortgage typically can’t move forward without an appraisal showing the lender that the home is valued at close to the sales price.

  119. James Bednar says:

    CR Post is a must read, best synopsis yet of the RE market I’ve seen.

    http://calculatedrisk.blogspot.com/2006/12/housing-in-2007.html

    I agree. Although after reading the above article I’m surprised that CR didn’t make a statement about the appraisal industry in ’07. The same goes for the subprime market, CR has been following the non-traditional mortgage guidance over the past few months.

    jb

  120. dreamtheaterr says:

    “This is a real estate blog, dispense your anger to your doctor, not here.”

    Gary, I have no anger; life is too short to harbor negativity.

    Is it a coincidence that Saddam was hanged on the holiest day in Islam’s calendar? Even though a horrific chapter in Iraq’s life was closed, I am afraid the seeds of further animosity were sown; even Islamic moderates will misconstrue it as a direct attack at a faith, not a person.

    Back to RE, anyone going looking at open houses this weekend?

  121. James Bednar says:

    From the Herald Tribune:

    Kolbe associate gets 18 months

    The sentencing of Taya Parodo closed the judicial door on Todd Kolbe’s scheme of artificially inflating property prices to defraud lenders.

    Parodo, who acted as title and closing agent in more than two dozen of Kolbe’s bogus real estate deals, got 18 months last week from U.S. District Court Judge Susan Bucklew.

    Only the ringleader, Kolbe, and his boyfriend, Kirk McVey, received longer sentences for the crimes they committed from 1999 to 2002.

    Members of the Kolbe gang conducted a series of fraudulent real estate deals, in which properties in Sarasota and Manatee counties were purchased for one price and sold to other members of the gang at much higher prices, enabling Kolbe to secure mortgage loans that greatly exceeded the value of the underlying real estate.

    In the process, Kolbe and other members of his gang produced fraudulent appraisals, earnings statements, income tax returns and rental agreements.

    The bogus loans were ultimately exposed by Fannie Mae, the giant government-backed mortgage company, after the loans had been sold in the secondary mortgage market.

    Home Star Mortgage Services, a New Jersey-based mortgage lender that Kolbe worked for, was forced to repurchase the loans, foreclose on the underlying properties and sell them at a $1.8 million loss.

  122. njrebear says:

    from #117 Home Seller says,
    “I’ve talked to people over the past year or so from TX, New England, St. Louis, Pittsburgh, and they all haven’t experienced a real estate bubble.

    I see that north west is no longer on your list of non-bubble cities :)

    During early fall when we were vacationing in New hampshire (near kangamangus highway ) i saw tons of properties for sale.

    http://www.ecorealty.org/housing_bubble_in_new_england.htm

    All i can say is you are asking the right question to the wrong people. Drive around Boston (which i did )and you will know.

    www dot bostonbubble dot com

    Certain parts of St louis are part of the nationwide bubble. google it.

    More than 50% of US population lives on the coast line. There is a nationwide housing bubble if more than 50% of the population is affected.

  123. Clotpoll says:

    NJrebear (#41)-

    Combine Foxtons and Zillow? That’s like rolling Beavis and Butthead into one.

  124. njrebear says:

    #120

    That would be like the 4th or 5th subprime lender going down this month. The number ‘5’ again.

    I have an equation,
    For every wall streeter who buys a house using bonus money, there exists a subprime lender who will eat dust.

    ‘5’ is the number of the month :)

  125. Home Seller says:

    #127

    Again, if you get away from the computer and actually talk to people outside of big metro areas you would see that a good chunk of the US has not been affected. Also still, a majority of the top 100 US markets are set to RISE this year (not our area of course!).

    I do admit a good portion of the US has been affected, I just don’t consider anything between NY & LA as (flyover country) like you’re implying.

  126. James Bednar says:

    Does anyone really take Zillow seriously?

    Zillow is clearly a one trick pony that can’t even perform that trick well. I had high hopes that Zillow would be the one to change the business model, but it’s clear that simply isn’t the case. Where did the money go? Zillow would have done well if they had released during the dot.com boom.

    All they need now is a sock puppet.

    jb

  127. PeaceNow says:

    Someone many posts ago said they felt they’d gotten their life back after they sold their house, became debt-free and started renting. This is a healthy attitude. For too many people in this country, the “good life” has become confused with conspicuous displays of wealth and status. What else are McMansions and Sub-Zero refrigerators about, after all?

    I enjoy reading this blog, though I post very sparingly. (Thanks, JB, for all your work, and I hope your coral is doing well.)

    Renting doesn’t make you a fool or an idiot. I did it for twenty years in NYC. Then I bought in ’93 (at the bottom of the market), sold in ’05 (at the tippy-top). My attorney says I must be psychic, although neither of those moves had anything to do with studying the RE market. I was just doing what I needed to do for my life at the time. But, on the odd chance that I am psychic…I predict the bottom in ’08, so that Hillary can run for Prez under the same mantra as Bill: “It’s the economy, stupid.”

    Happy New Year to everyone. Buyers, sellers, owners, renters and bloggers.

  128. njrebear says:

    130]
    Big metros have 3/4th of US population. If 3/4th are affected then it doesn’t matter what happens to bettles, Alaska.

    I have travelled to New England (NH,MA) thrice in the last six months.

    “Also still, a majority of the top 100 US markets are set to RISE this year (not our area of course!).

    Can you please post a reference?

  129. James Bednar says:

    Just snapped this picture of the little tank..

    http://njrereport.com/images/torchclown.jpg

    Sorry for the terrible picture, the tank lights aren’t on yet and I used my little point and shoot.

    jb

  130. njrebear says:

    jb says,
    “Does anyone really take Zillow seriously? ”

    IMO, zillow still has a chance if they combine their map interface with home inventory and updated previous sales. That whole zestimate is a sham.

    I know the general location where i want to buy. It will be of great to see an aerial view of the inventory and run comps :)

  131. chicagofinance says:

    WSJ Editorial

    The Risk Business
    December 30, 2006; Page A10

    The Dow Jones Industrial Average closed yesterday near an all-time high, up 17% for the year. Long-term bond yields rose this year but remain remarkably low given the Federal Reserve’s short-term rate ratchet to 5.25% from a low of 1%. Economic growth has slowed but remains solid. And by some measures financial market volatility is at lows not seen in a decade — the Dow, for example, is still adding to its longest stretch (910 days) without a one-day decline of 2% or more since 1900.

    All of this stability naturally fills people with dread. It has led to a round of questioning about why, in an undeniably dangerous world, risk premiums seem to have drained out of whole classes of financial assets. Has Mr. Market become complacent, and so set himself up for a fall? What is everyone missing?

    When someone tells us that the old rules don’t apply anymore, we tend to check our wallets. But this is not to say that nothing ever changes. One of the things that has changed over the past 30 years is the extraordinary extent of financial innovation. When it comes to the decline of risk premiums and financial stability, securitization and the use of derivatives have both played an unsung role.

    The very word “derivatives” produces a remarkable range of reactions, not all of them polite or rational. Warren Buffett has long described them in apocalyptic terms. Regulators think “risky” and dream of untilled pastures to monitor. The average newspaper reader, meanwhile, sees the word and understandably moves on to the next story.

    Derivatives can be very complex, but they are fundamentally a tool for hedging financial risk. Say your business has borrowed money with a floating interest rate. Rates go down, and you decide you’d rather lock in today’s rates than risk having them move against you in the future. You could borrow new money at a fixed rate and pay off your debt.

    Or you could engage in a form of derivative known as a “swap.” In a swap, you exchange your obligation to pay a floating rate for a commitment to pay a fixed rate of interest. Your actual debt doesn’t change, but the other party in the swap has contracted with you to pay you the difference between the floating-rate interest and the fixed rate you’ve agreed upon — if rates move higher. Likewise, if rates go down further, you would pay your swap counterparty the difference.

    Through this basic mechanism, all kinds of risk in an economy can be shifted around, often to everyone’s benefit. The risks haven’t disappeared, but almost by definition they tend to shift toward whoever feels they can best bear them. Perhaps, in the example above, the counterparty has a reason for wanting exposure to interest-rate movements. Perhaps he has a risk of his own he is trying to mitigate. Perhaps he simply disagrees about where rates are going.

    Take another, very real, example of a small-town bank in the mortgage business. By the nature of things, it is heavily exposed to the shifting fortunes of the local economy. If a plant nearby closes, it could be hit with defaults that could overwhelm its capacity to lend. To compensate for this risk, it may raise interest rates, or lend less, or both. But suppose it can sell the mortgages on its books to another bank or some other party. It gives up the income from the mortgages, but it gets new capital in return while also lowering its exposure to the local economy.

    The purchaser may then hold the mortgages, or package them into securities with thousands of other mortgages and sell them to investors. These “securitized” mortgages are less exposed to any one town than that small bank was, which may make the security less risky overall. The small bank, meantime, has more money to lend, or to invest in assets that are less likely to crash along with the local economy. The buyers of the securities get the income from the mortgage interest and the bank gets money to lend.

    The sum of a myriad of these transactions over the economy means that everything moves a little faster. Credit becomes marginally cheaper and more plentiful. Risk is dispersed to those who feel they can better afford it. Thus does the supposedly non-productive financial sector of the economy provide fuel for future growth. Seemingly obscure transactions lower the cost of capital to businesses and consumers and spread risk in a way that decreases the danger of catastrophic financial accidents.

    None of which means financial accidents won’t happen. Market players sometimes bet wrong — there are always two sides to a transaction, and one party can always miscalculate its ability to withstand an adverse event. Just ask the investors in Amaranth Advisers, which bet wrong on energy prices.

    More broadly, danger always exists from abrupt government policy shifts, especially from monetary mismanagement; think of the Asian crisis of the late 1990s. Another such danger can come when government subsidies push too much risk from a single sector such as housing into just two companies (Fannie Mae and Freddie Mac). Two of the biggest current risks, in our view, are the chance of U.S. tax increases and that the Fed may still have underestimated the inflationary pressures it let loose in 2004 and 2005.

    But these are not reasons to fear derivatives and other financial innovations. Risk is still out there. But as we leave a successful financial year and enter a new one, take comfort in the fact that all that buying, selling, swapping, trading and securitization of risk has actually made the financial system less risky.

  132. pesche22 says:

    zillow will make it big time. the money boys
    will not let it fail.

    money talks.

  133. lacey says:

    #99 I couln’t have said it better myself. THANK YOU!

  134. PeaceNow says:

    Thanks for snapshot, JB. Can’t understand how you can maintain this blogs and your tanks at the same time. Hope you have a restful New Year’s Eve, and an absolutely flourishing 2007.

  135. Pat says:

    J.B. – nice shot and break for me on a working Saturday.

    Have you seen the newest in upscale home remodeling projects? Great for the space- deficient tank lover. It was listed in our local paper’s home section today in a lookback article on 2007 trends.

    http://www.fishnflush.com/

  136. Pat says:

    RE: Investments/”Reasonable” fees described below

    http://money.cnn.com/galleries/2006/moneymag/0612/gallery.outrageous.fees/19.html

    30-32: Mutual fund fees
    “Average annual fees on stock mutual funds fell 4% in 2005, according to the Investment Company Institute. The outrage? Some funds still charge two or three times more than similar funds do.

    30. Index funds: You’re being overcharged if you pay more than 0.25% for an S&P 500 index fund.

    31. Large U.S. stock funds: The fee for actively managed stock funds should also be relatively low, and yet many funds routinely charge more than 1.5%.

    32. Target-date retirement funds: These popular new savings vehicles often layer fees on top of the fees for the underlying stock and bond funds. These funds are meant to be your entire portfolio, so that’s especially damaging. “It’s imperative to get one cheap or you’ll jeopardize your retirement date,” notes Russ Kinnel, director of fund research at Morningstar.”

    ——
    This article almost makes me as itchy as reading about title insurance costs. For all the technological innovation, time reductions and risk reductions made over the last ten years, investment fees are way high.

    Anybody have any comments on selecting a fund (within a range) strictly by fee? For example, if you take a look at a ten like funds, within a five year performance band, and then pick the one with the lowest fees, how often do you actually beat the pack on fees..4 out of 10 years, 6 of 10?

  137. BC Bob says:

    bear, #129,

    Good one. Play that #.

    I don’t get what some are trying to say about New England not being affected??? They must be kidding/sarcastic. The Boston area has been hit harder than here. I have many friends, from school, in that area. You can buy at 20-30% off 2005, right now. I know someone who recently purchased a new condo on the harbor for 568K. Last year they were selling for 850-875K. My friend recently took a job in Dallas, has a house in a beautiful community about 10 minutes outside Foxboro, a number of the Patriots live in the community. He has it LISTED at 20% off 2005, there is noboby showing up at the open house. He is starting to drop the price by 2% a week. No bubble in New England???

    By the way, very ironic that last year there was no bubble, now some on this site are claiming you’ll miss the bottom. I’m not tying to buy the “bottom”. Where is that elusive bottom?? Only looking to get back in when prices are in line with the fundamentals. Not interested in buying when prices are at 25X annual rent.

  138. Home Seller says:

    #133

    http://money.cnn.com/2006/12/20/magazines/fortune/bestmarkets.fortune/index.htm?postversion=2006122106

    I would not consider the state of Texas “Bettles, AK”…:)

  139. Home Seller says:

    Guys, this is not intended to be an argument, I was just pointing out that collectively there are a bunch of “markets” nationwide that hasn’t been affected by the bubble. Sure, you can say a majority of the population has, but I wouldn’t consider it overwhelming on a national scale.

  140. njrebear says:

    143]
    I didn’t know about Texas. Thank you for the information.

    However, the housing bubble is being felt by a majority of the population is a true fact.

    You look at the nationwide bubble as one that affects most of US in terms of area.
    I look at it in terms of affected population.

  141. James Bednar says:

    Thanks go out to all those who gave me a gift from my wish list!

    My Amazon.com Wish List

    jb

  142. LookingInEdisonNJ says:

    Here is a little weekend story –

    I lowballed a property, asking price 385k, I offered 335k with a 20% downpayment ~13% below asking.

    My realtor called me said the owner felt insulted. They had bought for 375k and would go for atleast that much. No counter offer. I told her “Whatever… I’m in no hurry either”

    I just don’t get it! The realtors and the owners are still living in the la-la land. The owner bought this property for 375k at the top of the bubble in 05 and thinks that he would get the same price TODAY??? The home is sitting in the market for about 3 months now.

    When would the prices come down?

  143. chicagofinance says:

    Looking: forgive me for sounding rather callous, but this is exactly the kind of owner you need to extract a lowball eventually – someone who bought in 2005, and is already in a position where they are feeling the pressure

    all you need to do is wait them out

    if they never come back, fine, you have been unsuccessful

    but ultimately, you have the potential scenario you want – if nothing materilaizes by the later part of March, expect a call, probably much sooner – if you never get the call – you have won the game anyway, because you would have overpaid

    Insulted? – as they say around here, that’s so 2005…..

  144. RentLord says:

    Saddam’s execution video:

    http://www.youtube.com/watch?v=vhcsnaf4148

    Someone said earlier that this is a blog for RE and not politics… and I hope this execution stays that way. ie., does not affect RE in NJ.

    That said, we all know very well how global events can affect RE (especially out here in the north-east).

    I hope there’s more peace in 2007!

  145. RentLord says:

    Also, I think its appropriate to mute your speakers when you watch this video.

  146. LookingInEdisonNJ says:

    Thanks for your thoughts Chifi. But there are still some bagholders and “bubble supporting” realtors who are feeding these sellers by offering/buying at 3-4% below the asking. I hope they come to this blog once and feel what they are piling onto themselves.

    Cheers!

  147. chicagofinance says:

    Pat Says:
    December 30th, 2006 at 12:12 pm
    ——
    Anybody have any comments on selecting a fund (within a range) strictly by fee? For example, if you take a look at a ten like funds, within a five year performance band, and then pick the one with the lowest fees, how often do you actually beat the pack on fees…4 out of 10 years, 6 of 10?

    Pat: this is one of those topics that quickly becomes exponentially complex in a very short period of time

    Without giving away the store you need to consider [concept: comparing apples to apples – not people who cheat against the category constraints]:

    1. fees

    2. length of time the mutual fund has persisted at roughly the same portfolio size [e.g., Fidelity Magellan was once a nimble and shrewdly managed fund before it lost its ability to maneuver]

    3. track record of portfolio manager

    4. track record of fund family

    5. track record of consistency in following stated objectives [serial style drift cheaters]

    6. difficulties inherent in managing that particular asset class [e.g., small cap/emerging market]

    7. performance in many different types of market conditions [hint: portfolio manager turnover means that your ability to track is impaired]

    8. fund family/asset manager’s strategy, customer service, and fiduciary reputation [one of the largest asset managers out there with a massive marketing machine and retail presence basically turns over many of their portfolio managers in their fund line-up as a method of on-the-job training – you really want to participate in this situation?]

    9. availability of investment/bait and switch [some funds are closed, but the asset manager will offer another fund with higher expenses and a similar sounding name or the same fund in a different class with higher expenses]

    ugh…sorry

  148. RentLord says:

    Guys, if you are like me and wondered how to get over a hangover quick… some good pointers here:

    http://health.howstuffworks.com/hangover6.htm

    :)

  149. Pat says:

    Thanks, CF.

    You know, this all started because of your d**n college savings question anyway, so feel free to type away.

    Went to the bank the other day to open the little one up her own account. She had her piggy bank.

    Of course, I ended up in the cubical with the bored goddess of possibilities and came home with a box of stuff to read. She’s calling me soon.

    We’ve previously limited ourselves to 401(k) offerings for this purpose. Worse, the funds have done so well over the last three years), and have such low fees (.5-1), that I hate to diversify out of them.)

    Anyway, too many options breeds non-action over here. Sometimes I think, if it ain’t broke…

  150. scribe says:

    #151 LookinginEdisonNJ

    Why don’t you look for the homes that were purchased back in the early 90’s – during the last crash – or even earlier than that?

    If you want to lowball, someone who’s been in place for 15 to 20 years would have paid considerably less, and I think they’d be more likely to consider your offer.

  151. Pat says:

    Too many options breeds non-action in the home buying arena, too.

    We were happy to wait for a nice, solid 3/2 on a half acre.

    Now, I’m thinking new construction/same price 2/08.

  152. Seneca says:

    scribe – I have found that the ’04-’05 buyers who are now flipping won’t sell because they can’t afford to lose money and the longtime owners won’t sell because they want what their next door neighbor got last year. The only way to go right now is with an estate where the kids inherited a house and already have their own homes and property taxes to deal with. Even some of those sellers are being obstinate.

    Looked at a house three months ago, homeowners had already moved out two months prior. Every month I watch an empty house sitting on the market with an asking price thats about 100k too high and I think, next month they are gonna bite the bullet. Prop taxes are 13k… I guess they think come spring they will get the full price to more than cover the taxes for the full year.

  153. chicagofinance says:

    Pat:
    Just have grim give you my info – I’ll help you to the extent that I can with my opinion – I’ll bet you are doing just fine.

  154. scribe says:

    Seneca,

    What you’re talking about – I think – are sellers who might want to sell – if they get the right price – but don’t really need to sell.

    I’ve noticed the number of ads where houses have been sitting for months and months without prices being lowered.

    I’m wondering how many are people who are testing the waters to see if they can still sell at bubble prices, but if not, they’ll just let the listings expire – and continue to live there.

  155. Pat says:

    Thx, CF…just have some soul-searching to do on risk.

  156. njrebear says:

    New Jersey makes it to the top 10 list of foreclosures!!!

    http://www.dsnews.com/view_story.cfm?id=677
    RealtyTrac: Foreclosure Rate Highest in November

    By Foreclosure Rates –
    Rounding out the top 10 states with the highest foreclosure rates are Ohio, Texas, Michigan, California, New Jersey/B>, Indiana, and Tennessee

    By Number of Foreclosure Filings –
    Taking the fourth through 10th spots of states with the highest number of foreclosures are Ohio, Michigan, Georgia, Illinois,
    New Jersey, Colorado, and New York, respectively.

    >>>
    Sorry if this was already posted.

  157. njrebear says:

    oops

  158. njrebear says:

    to all you gurus]

    What happens to loans on foreclosure properties given out by Subprime lenders who themselves go belly up? Who takes responsibility for the loan?

  159. d2b says:

    read the wishlist. no jackass 2 video?

  160. sv says:

    WSJ Reports.

    B Toll sold 15 million worth of shares last week.

    Not that 1 sales makes a trend but that was one of the biggest trade reportd.

    Also first half of 2005 Robert toll sold lot of stocks.

  161. Rich In NNJ says:

    njrebear,

    Did Grim get forward my email from earlier this (Saturday) morning?

    Rich

  162. Rich In NNJ says:

    You too can help Don “provide a steady stream of insights to inform your decisions and paint a comprehensive picture of where the local homes market might be headed.”

    Rich

  163. mitphd says:

    The key for understanding why the end of the housing bubble will be very bad lies in this picture:

    http://photos1.blogger.com/x/blogger/2825/754/1600/877707/GDPMEW2006.jpg

    My view is that home equity withdrawls will slow down significantly as borrowers have used up their lines and should be less likely to borrow given the reduced price appreciation, and this will have an economically large impact on aggregate consumption.

    There are a lot of important things to think about in the background (foreclosures on ARM resets; tougher underwriting standards; deprecation of the dollar and the 10-year rate), but my view is that none of these are big enough to bring the market down by itself.

    The housing market will not collapse on it self because sellers have the option to stay and many do not have the equity to reduce prices. Big price declines will only happen with a significant weakening of the economy that causes regular people to lose their jobs and banks to foreclose on their homes.

  164. njrebear says:

    166 to Rich]
    I just checked my mail. It’s there… thanks :)

  165. hon says:

    it looks like houses are starting to sell, atleast in monmouth county. i think the enormous bonus wealth is seeping into the real estate mkt. i would be a buyer at these levels.

  166. Frank says:

    To answer a question above….
    Most of the mortgages these days are sold in the secondary market and securitized. Securitization is a bankruptcy remote vehicle, it does not matter that the originator of the mortgage is out of business. Securitization terms spell out multiple servicers, if one goes belly up, the other will collect the payments, it may not be as good as the first one but it will do the job. So don’t worry, you’ll still have to pay that sub-prime mortgage regardless.

  167. James Bednar says:

    The housing market will not collapse on it self because sellers have the option to stay and many do not have the equity to reduce prices. Big price declines will only happen with a significant weakening of the economy that causes regular people to lose their jobs and banks to foreclose on their homes.

    mitphd,

    Thanks for the response, many here agree with that conclusion. It’s been often said here that if the consumer and economy feel no pain, than the housing market will feel no pain either. As Chicago has so succinctly stated in the past, “No pain = no pain”.

    That supposition leads me to constantly question whether my views of the macro and local economies are biased. It would be very easy to fall into the confirmation bias trap, viewing any small weakness in the NJ, regional, or national economies as confirmation of the necessary economic slowdown to support the position.

    Housing has typically be viewed as a lagging indicator of the economy. As the economy went, so did housing. Local or regional economies seeing a downturn would inevitably see that weakness make it’s way into housing. However, the current environment seems strangely backward. Much of the strength seen in the macroeconomy has been due to the strength in housing. So perhaps things are indeed different this time. As goes housing, so goes the economy?

    jb

  168. njrebear says:

    Frank]
    “Securitization terms spell out multiple servicers, if one goes belly up, the other will collect the payments, it may not be as good as the first one but it will do the job.”

    Are loses distributed the same way? If a foreclosure property fetches less than the loan price, will one of the multiple services grab the loss as well?

    and

    If say someone has a subprime loan, how will they know who their other servicers are?

  169. Take at least 25% off 2005 peak prices for houses/more for Condoshacks says:

    READ MY LIPS:

    NO SPRING MAGIC…..SPRING 2007 HOUSING MASSACRE

    NOTICE THE PICK UP IN FORECLOSURES IN THE SNOOT RAISED TOWNS………
    HEHEHEHEHEHEHE (MUTTLEY SICK LAUGH)

    COUNT ON IT!

    MAKE’EM PAY BABY…

    BOOOOOOOOOOOOOOYAAAAAAAAAAA (half moaning yell)

    Bob

  170. Take at least 25% off 2005 peak prices for houses/more for Condoshacks says:

    hon Says:
    December 31st, 2006 at 8:27 am
    it looks like houses are starting to sell, atleast in monmouth county. i think the enormous bonus wealth is seeping into the real estate mkt. i would be a buyer at these levels.
    ===============

    GO AHEAD BUY BAGHOLDER…….markets consolidate and have short bursts (rallies) on the way to the bottom…Need bagholders to take it down….

    BOOOOOOOOOOYAAAAAAAAA (half moaning yell)

    Bob

  171. chicagofinance says:

    mitphd Says:
    December 31st, 2006 at 1:25 am
    My view is that home equity withdrawls will slow down significantly as borrowers have used up their lines and should be less likely to borrow given the reduced price appreciation, and this will have an economically large impact on aggregate consumption.

    doc: I agree with you. However, the trouble is that in NJ there is a lot of slack to use. I just talked to a couple who make $110K combined and own a $375K home. They spend enough that they needed to re-fi their house with a $215K mortgage. At these levels, in a pinch, I could see these guys going back for another $50K-75K somewhere in the future. People just don’t want to cut back, and will not if they have an avenue to continue.

  172. lowball says:

    It takes a little time for denial to turn into FRUSTRATION/PANIC,this one fresh from FLA:

    “BELLEAIR BEACH – Bruce Sparks painted a bright red “4 SALE” sign on his home’s roof in September, hoping to attract a buyer for his waterfront home.”

  173. Tom says:

    “No Soup For You!!!”

  174. Home Seller says:

    #177

    You think the bubble is bad up here in NJ, the west coast of FL is worse….

  175. njrebear says:

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a7mYQ1ZBi_EQ&refer=home

    Employment Growth Slowed in December: U.S. Economy Preview

    Employers in the U.S. added 115,000 workers to their payrolls in December, ending a quarter in which job creation was the slowest in three years, according to a survey of economists before a government report this week.

    Construction companies shed 29,000 workers in November, the most since February 2003, bringing to 54,000 the number of jobs eliminated in the last three months.

    Factory employment has shrunk by 95,000 in the last five months.

  176. njrebear says:

    Rich In NJ]
    I looked at the data you sent me. If possible, can you please provide the following data as well?

    We need data for both SFH and condo from Jan to June.

    For July – Condo & Townhouse only data.
    For Aug – Condo & Townhouse only data.
    For Sep – Condo & Townhouse only data.

    Grim]
    Can you please do the data transfer? :)
    you can give my email address to Rich, if he wants it.

  177. Rich In NNJ says:

    JB,

    Go ahead and forward my email to NJREBear so he’ll(?) have my email address.

    Thanks, Rich

    PS NJREBEar, I’ll probably collect that data tomorrow after my hangover subsides.

  178. twice shy says:

    Here’s a question for the board:

    Given NJ’s high tax status, if one has to stay within commuting distance of Midtown, would a move to NY or CT yield any savings? Just a ballpark is all I’m asking, from any who might have experience in our sister tri-states.

    My sense is it won’t really pay off: both NY and CT are high on the tax pain list and any savings might not justify a move. Ideas?
    thanks

  179. Home Seller says:

    #183

    I’m assuming you’re living in Manhattan now (or brooklyn).

    to answer your question, you need to advise what your looking to spend in a house, (burbs or urban location), etc…kids? DINK’s?

    Please provide a more complete pic

  180. njrebear says:

    http://www.latimes.com/business/la-fi-ownit30dec30,1,2686895.story?coll=la-headlines-business&ctrack=1&cset=true

    Ownit seeks bankruptcy protection –
    The sub-prime lender, a casualty of the changing mortgage market, owes more than $165 million.
    ..
    He said if he had not filed the Chapter 11 petition, his 800 former employees would never receive the wages and commissions they are owed.

    Ownit sold its loans on the condition that it would have repurchased them if the borrowers missed payments in the early months.

    Merrill Lynch demanded that Ownit repurchase mortgages totaling $93 million.

    Merrill Lynch was Ownit’s chief backer on Wall Street, having bought a 20% stake in the company for $100 million in September 2005.

    Merrill also had provided a large credit line to Ownit and purchased two-thirds of its loans to convert into mortgage-backed securities.

    A Merrill spokesman declined to comment Friday on the filing.

    >>
    thanks to CR blogspot

  181. twice shy says:

    re: my #183 post.

    We’re renting in suburban NJ. One child 10th grade.
    Would need a commute, I guess Metro North? about 50 minutes to Penn Station. Suburban location, but would wait til kid finishes HS. Could pay 450 – 500. Modest Cape or Ranch fine, 3/1.5.

    Would NY or CT in the above parameters represent any improvement over NNJ in tax/cost of living? thanks again.

  182. twice shy says:

    P.S.
    Make that commute to Grand Central.

  183. James Bednar says:

    From MarketWatch:

    Mortgage ‘tricks’

    Brian Diez, a former military man, entered the mortgage business after a career as a stockbroker, figuring the field would offer him an altruistic benefit — helping families buy their first homes. He learned quickly, however, that not every one of his fellow brokers had their clients’ best interests at heart.

    “What became clear to me is every company was really interested in selling as many loans as they can, and not really helping clients,” said Diez, sales manager for First Class Equities in Oceanside, N.Y. His quest to inform consumers recently prompted him to create a blog on the topic [link removed -jb].

    The “dirty tricks” he has seen and heard of range from brokers steering clients into products clearly unsuited for them to shady switcheroos at the closing table.

    You may never find that altruistic mortgage lender: It’s rare when commission-earning individuals — whether the product is a mortgage, stocks or an automobile — can completely divorce their self interests from a sale, said Joseph Badal, senior executive vice president at Santa Fe, N.M.-based Thornburg Mortgage.

  184. ADA says:

    twice shy,

    I live in weschester in the bronxville/pelham area. There are 2 metro north train stations (on 2 separate lines) within 2 miles of our house and the commute into GCT is less than 30 minutes from each. I work in midtown across the street from GCT and the commute door to door is about 45 minutes.

    We have a 3 bedroom/2bath tudor in a good school district and taxes are about 9500 per year. Prices in our neigborhood are a bit higher than you stated. 550K to about 750K for what you are looking for.

    Hope this helps.

  185. twice shy says:

    thanks, ADA. that is helpful.

    You’re situation is about comparable to staying put and buying in my suburban NNJ town (which we like). Would save maybe 25 minutes on the commute time, but with one commuter that’s not enough to undertake a major relocation.

  186. Pat says:

    mitphd

    Thanks for the graph. It’s very helpful as we plan for the next few years.

    I’m just pondering your chicken and egg argument about prices not coming down without economic-related job losses.

    Hasn’t your graph shown that an inversion has occurred in the cause/effect?

    How can you believe that the traditional role of economy on prices still holds?

  187. Frank says:

    In Monmouth Co. NJ you can get a 4 bedroom with a pool on a acre for under 400K, it’s 1 hour on the bus or train. If you need specific zip codes, please let me know.

  188. Frank says:

    Re Securitization…
    The funny thing is, losses are paid by the other borrowers in the pool, unless they get really bad than the investors that bought the bonds end up with a loss.
    I would not worry about the servicer, they change all the time and servicer rights can be sold as well. If the servicer goes belly up, the bankcruptcy court will decide what happens next.

  189. twice shy says:

    Frank,

    I like many areas in Monmouth Co. and know parts of it. I will definetly investigate further as I didn’t realize the price differential was that great. Thanks for the tip.

  190. Arr Elle says:

    Oh my goodness!! Talking about desperate to sell their home. You can get a car when you buy this house. Please see copy and paste link into your browser..LOL

    http://newjersey.craigslist.org/rfs/255704916.html

  191. mitphd says:

    Re #172

    James

    The impact of the housing market on the real economy over the last five years seems to have been unprecedented.

    Not so long ago, economists were worried about the impact that the popping of the stock market bubble would have on consumption, but we avoided paying that bill due offseting increases in wealth from the housing bubble.

  192. njrebear says:

    195]
    Even throwing in their shirt may not help them sell that piece for 430K.

    Looks like they bought it for 174K in 2001.

  193. RentLord says:

    Regarding the house in #195…
    I first looked at it 5 months ago – listed at $530K and at that time it was what every other fsbo house with those specs was listed for.

    What a change in 5 months!

    Happy New Year everyone!

  194. njrebear says:

    Grim,

    http://www.housingwire.com/2007-rebas/available-categories-and-nominees/

    It might be a good idea to get your blog listed here. I don’t know what it takes but it would certainly be benificial.

  195. njrebear says:

    happy new year!

    By the way, vote for your best RE blog site!

    http://www.housingwire.com/2007-rebas/

    You can ‘write-in’ your entry if your favorite is not part of the existing list.

  196. njrebear says:

    I graphed data provided by ‘Rich In NJ’ for Bergen county.

    http://www.geocities.com/njrebear/

    Things to look for –
    1] The all important median price is skewed because the total percentage of condos sold in 2006 is way less than last year. 41% of all sales in 2005 Dec was Condo. The percent of condo sales in Dec 2006 is 29%. A 30% YOY decrease in condo sales has caused the median prices to be artificially hold up!!!
    2] As expected condos are crashing.
    3] Sales of SFH is at record lows. Note as per Rich, 1995 numbers may not be complete!

    >>
    These numbers are extremely preliminary as we still have the remainder of today, tomorrow and agents will still be entering data next week for December.

    For Bergen County ONLY, here is the NJMLS average & median price along with the number of homes sold and number under contract in December (12/1-31) for the past 11 years. This is for residential SFH listings; this does NOT include Condos/Co-ops & Twnhs.

    Year Avg$ Med$ Sold UnderContract

    1995 $255,370 $210,000 550 335*

    1996 $265,510 $210,000 511 384

    1997 $280,948 $211,000 654 412

    1998 $287,281 $224,000 685 518

    1999 $326,463 $249,500 617 381

    2000 $361,174 $282,000 577 353

    2001 $415,826 $320,000 538 435

    2002 $490,473 $383,000 598 414

    2003 $490,249 $390,000 678 479

    2004 $551,835 $455,000 683 472

    2005 $649,047 $500,000 528 398

    2006 $663,172 $505,000 455 409 as of 12/29/06

    And here is the same data for Condos/Co-ops, Townhouses ONLY.

    Year Avg$ Med$ Sold UnderContract

    1995 $170,456 $152,500 135 110*

    1996 $157,664 $127,500 151 93

    1997 $169,574 $149,000 163 117

    1998 $173,921 $155,000 227 158

    1999 $198,511 $176,900 214 155

    2000 $212,531 $178,000 266 127

    2001 $240,783 $189,000 197 165

    2002 $283,812 $250,000 229 172

    2003 $313,139 $259,900 271 188

    2004 $356,790 $315,000 311 212

    2005 $488,079 $443,100 370 285

    2006 $394,760 $332,500 192 140 as of 12/29/06

    And here is the all inclusive data (SFH, Condos/Co-ops, Townhouses).

    Year Avg$ Med$ Sold UnderContract

    1995 $238,635 $193,500 685 445*

    1996 $240,911 $188,000 662 477

    1997 $258,728 $198,000 817 529

    1998 $259,065 $205,000 912 676

    1999 $293,512 $230,000 831 536

    2000 $314,271 $255,000 843 480

    2001 $368,909 $291,000 735 600

    2002 $433,248 $342,000 827 586

    2003 $439,673 $369,000 949 667

    2004 $490,810 $416,000 994 684

    2005 $582,724 $480,000 898 683

    2006 $583,969 $465,000 648 549 as of 12/29/06

    *1995 data may be incomplete as I believe this is the first year this data becomes available.

    Yearly SFH Only

    1995 $256,865 $215,000 4452 4737*

    1996 $268,192 $220,000 6040 6776

    1997 $281,978 $223,000 6665 6790

    1998 $301,504 $235,000 7203 7648

    1999 $327,674 $255,000 7301 7184

    2000 $371,299 $281,000 6,669 7,086

    2001 $402,781 $315,000 6,712 6,957

    2002 $457,456 $360,000 7,092 7,358

    2003 $501,658 $399,000 7,287 7,680

    2004 $565,882 $450,000 7,632 7,962

    2005 $649,841 $510,000 7,294 7,650

    2006 $681,829 $515,000 5,970 6,870 as of 12/29/06

  197. Jay says:

    njrebear, great charts. The trend in Rich’s numbers becomes apparent.

    Jay

  198. Richard says:

    >>Currently, there are 27,170 properties advertised for sale in NJ on our site.

    it dropped over a thousand once 2007 hit. must be a bunch of end of year automatic expired listings. let’s see how this # trends over the next couple of months. i believe it eclipsed 33k not too long ago.

  199. James Bednar says:

    Richard,

    GSMLS Expirations this morning.

    Single Family/Condo/Coop: 613
    Multifamily: 184
    Land: 52
    Commercial/Industrial: 63
    Total: 912

    jb

  200. chicagofinance says:

    condo#’s
    2003 $313,139 $259,900 271 188
    2004 $356,790 $315,000 311 212
    2005 $488,079 $443,100 370 285
    2006 $394,760 $332,500 192 140 as of 12/29/06

    oh my lord?!?!

  201. lostinny says:

    re: the house in post 195
    Yet another example of how if there was no bubble, half the asking price might seem like a fair price.

  202. Lindsey says:

    I am embarrassingly late with this, but here goes:

    Recession is a near certainty (85%) and even without it, the housing industry will be off noticeably.

    Based on my recession take, I believe there will be an actual nominal decline not just in prices paid for housing, but in asking prices of at least 10%. (Sorry Booyaa Bob, while I think you may be able to buy at 25% off 2005 peak, that won’t be where asking prices are in 07). For the record, stats I have been keeping since July indicate that median asking prices in most of Monmouth County are already down about 5%.

    Staying with the probability phrasing, my currency call for 07 is an 80% chance the Euro goes for at least $1.36 per and 30% chance it reaches $1.41 per. There is a 1% chance it reaches $1.48.

    There is a 1-4% chance the US has a female president by March of 2008.

    Inventory of existing homes for sale in Monmouth and Ocean counties will surpass 18K before August. (It topped out at about 16K this year.)

    Everyone you know will know someone who goes through a forced sale/foreclosure situation.

    If we do have the non-recession scenario, inflation tops an annual rate of 6.5% in at least one month and tops 4.5% for the year.

    JB looks at foreclosures as he considers buying a house.

    There is a 2% chance Booyaa Bob is a bidder against JB for the house.

  203. Jman says:

    http://money.cnn.com/popups/2006/moneymag/bestidea_2007/2.html

    Best idea for home buyers
    It’s a buyer’s market. Drive a hard bargain.
    Real estate in 2006 turned a corner – and not a good one. In the past year, home prices have dropped 2.2%. In this kind of a market, once you’ve found the house you want, start the bidding at least 15% below the asking price. Barry Miller, a broker and owner of Denver-based Buyers Only America Realty, says that’s the average discount his clients are getting.

    Paying a buyer’s agent an agreed-upon fee, if you can in your area, makes sense as well. Having a negotiator who is working for you will probably lead to a lower price.

    Other ideas

    Buy from a builder. Many homeowners will wait out the bust. Builders can’t afford to. Besides a lower price, many are offering thousands in upgrades. Skip the stuff and ask the builder to buy down your mortgage rate. That’s worth more than any perk in the long run.

    Get a second opinion. If you are still not sure you got the best deal, spend $350 to hire your own appraiser. Often the appraiser brought in by the lender is motivated to inflate the price so the bank can make the largest loan possible. If your appraisal comes in at less than the agreed price, renegotiate. And if the seller won’t budge, walk. You can find another house.
    – Stephen Gandel, Money Magazine senior writer

  204. Lindsey says:

    I’m not sure where Frank is looking, but I know of nowhere in Monmouth County where you can commute sanely and get a 4br on 1 acre with a pool for under $400K.

    In Middletown that house would be a bare minimum of $650K.

    The only possible place where the 4br/pool/1 acre lot might exist is Howell, and I doubt that.

  205. Lindsey says:

    Additional prediction:

    Whatever else happens, things are going to be far worse in Florida, Arizona, Nevada and probably California.

  206. Lindsey says:

    This is long, but I thought David Lereah should have his say too:

    Existing-Home Sales In 2007 Expected To Recover From Cyclical Low
    WASHINGTON, December 11, 2006 –

    Existing-home sales are expected to rise gradually in 2007 from current levels, with annual totals comparable to 2006, while new-home sales will continue to slide, according to the latest forecast by the National Association of Realtors®.

    David Lereah, NAR’s chief economist, said there are mixed conditions around the United States. “Roughly three-quarters of the country will experience a sluggish expansion in 2007, while other areas should continue to contract for at least part of the year,” he said. “Most of the correction in home prices is behind us, but general gains in value next year will be modest by historical standards.”

    “Buyers, especially first-time buyers, with the combined benefits of seller flexibility and an unexpected drop in mortgage interest rates, have a window of opportunity. These conditions will persist in many areas until early spring when inventory supplies are likely to become more balanced,” Lereah said.

    Existing-home sales, finishing the third-best year on record, are projected for 2006 at 6.47 million, a decline of 8.6 percent. In 2007, they’re expected to rise steadily from the current cyclical low and reach an annual total of 6.40 million, which would be 1.0 percent lower than this year’s total.

    “By the fourth quarter of 2007, existing-home sales will be 4.6 percent higher than the current quarter,” Lereah said.

    New-home sales in 2006 are expected to fall 17.7 percent to 1.06 million, the fourth highest total on record, before sliding an additional 9.4 percent in 2007 to 957,000. Much of the contraction in the new housing market results from cuts in builder construction to support pricing for current inventories. In addition, high construction costs in many areas are minimizing potential profits.

    Total housing starts for 2006 are likely to drop 12.3 percent to 1.82 million units, with another 15.1 percent decline in 2007 to 1.54 million.

    The 30-year fixed-rate mortgage is forecast to gradually increase to 6.7 percent by the fourth quarter of 2007. Last week, Freddie Mac reported the 30-year fixed rate dropped to 6.11 percent.

    The national median existing-home price for all of 2006 is projected to rise 1.4 percent to $222,600, with another 1.0 percent gain next year to $224,700. The median new-home price should ease by 0.5 percent to $239,700 this year, then rise by 0.8 percent in 2007 to $241,700.

    “Keep in mind that overall home prices were still appreciating at double digit rates in the first quarter of this year – prices in this buyer’s market are temporarily a little below a year ago when we were in a strong seller’s market,” Lereah said. “This correction is one of the factors drawing buyers into the current market, but most sellers are still seeing very healthy long-term gains.”

    The unemployment rate is expected to be 4.8 percent in 2007, after averaging an estimated 4.6 percent this year. Inflation, as measured by the Consumer Price Index, is forecast to be 3.4 percent for 2006 and 2.3 percent in 2007, while growth in the U.S. gross domestic product is likely to be 3.3 percent for all of this year and 2.3 percent in 2007. Inflation-adjusted disposable personal income is projected to grow 2.6 percent for 2006 and 3.5 percent next year.

  207. Lindsey says:

    OK, I can’t believe I didn’t pit myself against Lereah on the volume issues, so here goes:

    Existing sales: 5.8-6.1M in 2007, a decline of 6-10%

    New: 880K, a drop of about 12% (This call assumes that the cancelled sales of 06 don’t get double counted )

    Median price: $202K existing, 219K new

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