December New Home Sales

December New Home Sales to be released at 10:00am EST. Consensus estimates put December New Home Sales at 1.055m, up from November’s 1.047m.

New Home Sales data will be available via the U.S. Census Bureau, and can be found here:

New Residential Sales

From MarketWatch:

New-home sales rise to highest level since April

Sales of new U.S. homes jumped by 4.8% in December to a seasonally adjusted annual rate of 1.12 million, the highest level since April, the Commerce Department reported Friday. Warm weather, low interest rates and aggressive discounting by builders boosted sales far beyond the 1.07 million rate expected by economists. Sales have risen in four of the past five months. Compared with December 2005, December 2006 sales were down 11%. For all of 2006, sales plunged 17.3% to 1.061 million, the largest percentage loss since 1990. In December, the number of unsold new homes on the market fell 0.9% to 537,000. The median sales price of $235,000 in December was down 1.3% compared with a year earlier.

From the AP:

Sales of New Homes Plummet in 2006

Sales of new homes plunged in 2006 by the largest amount in 16 years as the nation’s housing industry suffered through a sharp contraction after five boom years.

The Commerce Department reported that sales of new single-family homes totaled 1.06 million units for all of 2006, down 17.3 percent from the all-time high for sales of 1.28 million units set in 2005.

After setting sales records for five straight years, sales of both new and existing homes suffered sharp declines last year, and that has caused ripple effects throughout the whole economy.

This entry was posted in Economics, General. Bookmark the permalink.

188 Responses to December New Home Sales

  1. James Bednar says:

    From the Star Ledger:

    2006 housing sales end with a dud

    Sales of existing homes fell in December, capping off a year in which home sales showed the largest decline in 17 years, according to the National Association of Realtors.

    The decrease of 0.8 percent in December, to an annual rate of 6.22 million units, was worse than many economists expected and was dragged down by an especially poor showing in the West. It also came after two consecutive months of sales gains.

    For the year, home sales fell 8.4 percent, to 6.48 million units, the biggest annual decline since 1989, when existing home sales plummeted 14.8 percent, the NAR said.

    The numbers seemed to accentuate the dour mood of a year in which the once soaring housing market screeched to a halt. There is always a dash of good with the bad, however, and economists were predicting yesterday that the numbers, at the very least, show the bottom is near.

    “To me, this was a reasonably encouraging report in the respect that while the monthly number was down a little more than you’d want to see, this number is bouncing around, and the trend down is only down slightly, rather than coming down significantly,” said Joel Naroff, chief economist for Commerce Bank.

    “We’re still weak,” Naroff said. “We’re still falling. But we’re no longer plummeting. And we’re beginning to get to the point where the bottom may be reachable.”

    The problem is that when the market does recover, it will likely do so gradually, said James Hughes, dean of the Bloustein School of Planning and Public Policy at Rutgers University.

    “We’re still in the midst of a very significant readjustment of the housing market,” Hughes said. “It’s possible we could bottom out this year. But even if we bottom out, the upward movement will be very slight.”

    While higher energy costs and interest rates have played a role in the slowing housing market, Hughes said a more volatile force is also at work: consumer sentiment.

    “There’s a housing psychology involved, from a can’t lose investment to a risky proposition,” Hughes said. “It has a significant impact on the market.

  2. pesche22 says:

    Does it ever stop? Corzine sent Katz’s brother-in-law for a job at the Turnpike Authority.

    Then the guy has to resign.

    Done in the midst of contract negotigations .

    Only in NJ.

    And how much was your property taxes?

  3. curiousd says:

    Highest rental market increases YoY – Newark #4
    Highest overal rental costs – Nassau-Suffolk #9 (but the rest are mostly california)

    “The rest of the Top 25 most expensive are filled out by some metro areas in California, Connecticut, Hawaii, Massachusetts, New Hampshire, New Jersey and New York. ”

    http://tinyurl.com/39xnzr

  4. pesche22 says:

    And now the Gov. want to help unionize 3000
    employees at Rutgers.

    We may have no hope at all here in NJ.

    Oh well, lets wait for New Homes at 10.

  5. pesche22 says:

    And the give-a-ways may prop it up.

    What do you think Jim , its the give-a-ways?

  6. BC Bob says:

    Pesche,

    I think it will be higher. Free Plasma TV’s, free appliances,nice weather, free, free….. If that doesn’t work , then they are pulling all kind of tricks out of their hat.

    1.067 mil. However, what is the real # once cancellations hit????

  7. 2008 Buyer says:

    PMI: Risk of Home Price Declines Rising
    Slowing home price appreciation and decreased affordability have boosted the risk of home price declines in the nation’s 50 largest housing markets, according to PMI Mortgage Insurance Co., Walnut Creek, Calif. The average score in the PMI U.S. Market Risk Index rose from 328 to 342 in the fourth quarter, the company reported. This means the company’s estimate of the probability of experiencing a home price decline in the next two years has risen from 32.8% to 34.2% in the 50 largest metropolitan statistical areas. According to the index, there are now 19 markets with a greater than 50% chance of price declines over two years, up from 18 in the third quarter. “Years of rapid appreciation have made homes less affordable in many areas, and that’s not sustainable over the long term, so that what we are seeing is not unexpected,” said Mark F. Milner, chief risk officer of PMI Mortgage Insurance. “Over time, moderating appreciation will bring prices back in line with economic fundamentals, particularly incomes, bringing the market back to a healthy balance.” PMI can be found online at http://www.pmigroup.com.

  8. pesche22 says:

    SEC opens a formal investigation at KB HOmes
    on the stock options . Just what they need
    in the middle of all this.

  9. 2008 Buyer says:

    RealtyTrac Releases 2006 Year-End Foreclosure Data
    Payton Oldham | 01.25.07
    RealtyTrac today released its U.S. Foreclosure Market Report containing year-end data for 2006. Nationwide, 1.2 million properties entered some stage of foreclosure during 2006, a 42-percent jump from 2005. The report also indicates that one of every 92 households across the country filed for foreclosure.

    “While foreclosures are not at historically high levels, 42-percent year-over-year increase is certainly noteworthy,” said James J. Saccacio, chief executive officer of RealtyTrac. “The increase in the number of properties in foreclosure was driven partly by the general slowing of overall housing sales and partly by the impact of monthly mortgage payments increasing dramatically for homeowners who held some of the riskier types of adjustable-rate and subprime mortgages. As more and more of these loans reset, we saw a surge to finish the year, with the fourth quarter producing more foreclosure filings than any of the three previous quarters.”

    Total foreclosure filings jumped to 1,259,118 in 2006, up from 885,000 in 2005. Although foreclosures show significant spikes, Saccacio says it’s still within the range of normal averages.

    “It’s true that foreclosures could have a negative impact on the housing market if they continue to increase at this rate, and in some of the more problematic local markets, they already may be contributing to slowing home price appreciation and a glut of homes for sale,” said Saccacio. “However, most markets have been able to reabsorb foreclosure homes without seeing any major damage to the local economy.”

  10. Billy says:

    Does it ever stop? Corzine sent Katz’s brother-in-law for a job at the Turnpike Authority.

    The problem is that we have no set of checks and balances in NJ right now. We have a 1 party system where the governor, assembly, senate and courts are all controlled by Democrats.

    I’m not just Democrat bashing either. I was equally concerned with the Republicans on a Federal level controlling the White House, House & Senate. I think we are now better off with a more balanced government. It forces compromise and prevents radicalization of the agenda.

    The entire NJ assembly is up election in November. If want to see change, we need to vote in Republicans & give control of the assembly to the Republicans. This will force compromise. One party systems simply don’t work. The special interests (NJ public sector unions for example) take over.

  11. thatbigwindow says:

    I don’t believe Republicans have a chance in NJ. Too many people equate voting Republican with voting for Bush.

  12. Richard says:

    things aren’t so glum folks, regardless of what this report says (i’m going to estimate 1.025 million starts).

    inventory y-o-y last year was 1 million. now it’s down to about 650k. new starts are off 30% from their peak. the numbers have been steady since july even seeing some gains the last 3 of 4 months. these are the #’s the soft landing crowd looks at. with today’s release we’ll see the y-o-y comparisons and it will look glum but the last 2 quarters things seem to be bottoming out.

  13. gary says:

    So, things have bottomed out? Ok, I guess we’ll start seeing at least 6% appreciation YOY now, correct? Great! As a homeowner, I guess I’ll be retiring in my mid 50’s since my cape will be worth about 850K by then.

  14. ADA says:

    http://www.nytimes.com/2007/01/26/nyregion/26york.html

    Mayor Sees $3.9 Billion Surplus Fed by Booming Real Estate Market

    With New York City’s treasury flush with unexpected revenue from an extraordinary surge in the real estate market, Mayor Michael R. Bloomberg projected yesterday that the city would have a $3.9 billion surplus to carry over into its $57.1 billion budget next fiscal year, allowing him to cut taxes and set aside money for future expenses.

  15. Doyle says:

    chicagofinance Says:
    January 25th, 2007 at 4:56 pm
    Doyle: Unlike many states, the NJ plan is identical whether it is broker sold or direct [some states do not have broker sold option, many states have different broker versus direct]. It is not a complicated product, so if you understand the basics, and are willing to monitor it for your mom, go for it. CAVEAT: if you are NOT willing to monitor it for her, use the auto-pilot option “Age Based Allocation”. No matter who offers the product, it is identical for everyone.

    Sorry for the delayed responsce, but thanks for your advice yesterday Chicago!

  16. BC Bob says:

    Holy s*it, I have a higher estimate than Richard?? Why are you so bearish with your #?? You are well below the consensus. Actually your # is pretty glum. Not following the pundits anymore???

  17. dreamtheaterr says:

    Lierah’s comment will be “Existing-Home Sales Continuing to Stabilize In Terms of Plummeting”

  18. Doyle says:

    MovingBackAtTheBottom Says:
    January 25th, 2007 at 3:55 pm
    #124

    Who is the brokerage firm? Please don’t tell me it’s a bank. The firm matters because most of the time they try to sell thier own junk funds. And I don’t think the NJ 529 is that great. You don’t have to use your own states 529 plan. Other states have much better plans, not sure off hand.

    MovingBack: I’m not sure what the firm was, but I know it was not a bank. I am going to look into some other state plans as well.

    Thanks for your thoughts.

  19. njrebear says:

    Reechargd,
    “inventory y-o-y last year was 1 million. now it’s down to about 650k. new starts are off 30% from their peak. ”

    Current inventory numbers does not include cancellations which are running at the 30-40% level!!!

  20. thatbigwindow says:

    I think we can all agree that Richard enjoys getting a rise out of the posters here :)

  21. BC Bob says:

    bear,

    How about the expired/withdrawn listings?? I see a ton of for rent signs, previously listed.

  22. njrebear says:

    Bob,
    I agree. In my township, a SFH can be rented at the same price as an apartment (1br 1 bath).

    Recently, I’ve also seen rental listings on realtor.com jump by a big margin.

  23. RentinginNJ says:

    Someone posted the other day that Mandalay Mortgage bit the dust. They just confirmed it on their website.

    On January 24, 2007, Mandalay Mortgage, an operating series of Mandalay Mortgage LLC exited the non-prime wholesale mortgage business. Mandalay will no longer accept new loan applications effective immediately. Loans that have loan documents either out for signing or already signed will continued to be processed and funded; all other loan applications will be returned. The last day to fund new loans in January 31, 2007

    http://www.mandalaymortgage.com/index.html

    Is anyone keeping a “RIP” list?

  24. 2008 Buyer says:

    A Rate Hike Will Put A Stop To Any Hopes in 2007

    WASHINGTON — Surprisingly solid economic growth hasn’t only persuaded investors that the Fed won’t cut interest rates, it also has prompted some to predict that an overheating economy will trigger rate increases before long.

    http://online.wsj.com/article/SB116977369843488466.html?mod=todays_us_page_one

  25. RentinginNJ says:

    Recently, I’ve also seen rental listings on realtor.com jump by a big margin.

    Just from driving around, I have noticed more SFH rentals in some decent towns where you normally don’t see many SFH rentals (i.e Pequannock & nice sections of Wayne). In Wayne, one house had both a “for sale” and “for rent” sign.

  26. njrebear says:

    U.S. new home sales post 17.3% drop in 2006, biggest drop since 1990, Reuters reports. Details soon.

  27. MJ says:

    dont be surprised by the higher numbers. People are scared of loosing money on home and are buying in December to reduce the risk.

  28. NJGal says:

    But they did jump for the month, so the discounts are definitely luring some people in. Of course, that means that anyone who purchased BEFORE the builder discounted is screwed but I guess that’s the risk you take.

  29. James Bednar says:

    Bittersweet results for both the bull and bear camps.

    Bears will undoubtedly embrace the significant yearly decline in sales

    Bulls will embrace the strong uptick seen in December.

    Lereah will dance naked through the streets yelling “soft landing” over and over again.

    jb

  30. NJGal says:

    “Lereah will dance naked through the streets yelling “soft landing” over and over again.”

    Did we really need that image for a Friday morning? Ugh.

    I completely believe the uptick is attributable to extreme discounting by builders. If they continue to discount that heavily, they will continue to sell. But that in turn will kill the existing home sales market – I am all for charm, but if you can have a brand new fully upgraded home for less money, why not?

  31. Rich In NNJ says:

    I didn’t realize HOW warm it’s been this past two months… until today!

    JB,

    You get my email?

    Rich

  32. Richard says:

    dancing naked. that’s pretty funny jim.

  33. Richard says:

    the numbers are definitely strong folks. it’s not hard to imagine the unseasonable weather having an impact to the upside though we’ll never really know.

  34. chicagofinance says:

    Richard Says:
    January 26th, 2007 at 10:24 am
    dancing naked. that’s pretty funny jim.

    No it’s not —-grim what the hell is wrong with you? :(

  35. chicagofinance says:

    Richard Says:
    January 26th, 2007 at 10:25 am
    the numbers are definitely strong folks. it’s not hard to imagine the unseasonable weather having an impact to the upside though we’ll never really know.

    Reechard: yes we will……all it does is borrow demand from the future….if the numbers come in level over the next couple of months, then you can imply even greater strength from it. BUT BEWARE THE…………..fill in blank

  36. Richard says:

    sounds like your reaching njgal. the numbers are positive, leave it at that. the next 4-6 months IMO should tell the story. so far we have 6 months of ‘stability’ for lack of a better term.

  37. chicagofinance says:

    Reech: after reading your posts, I have “5 minutes of irritability”

  38. NJGal says:

    Richard, how an I reaching? In areas where there are a ton of new homes, especially those at a discounted, there is less demand for existing homes. I don’t think it’s reaching, and I don’t see the numbers as a positive, especially when they’re still down YOY. I agree with ChiFi – totally stealing demand for the future (and I think, from existing homes). Think about it – bulls brag all the time on homeownership being at 70%. And if that’s so, and people are still buying, after a few more months or years, who’s left to buy?

  39. James Bednar says:

    Those grumblings about rate hikes seem to be growing louder..

    Fed funds market sees small chance of rate hike by March end

    The fed funds futures market was pricing in a slight chance of an interest rate hike by the end of the first quarter as a jump in durable goods orders and strong new homes sales lifted bond yields to fresh 5-month highs. April fed funds futures were last down 0.005 points at 94.745, which implies a 2% chance that the Federal Reserve will raise its target for overnight rates to 5.5% from 5.25% by its policy setting meeting in late March. Through its meeting in late June, the fed funds futures market is pricing in a 2% chance of a rate cut. Earlier, the U.S. Commerce Department said December durables goods orders rose 3.1% and that sales of new homes increased 4.8%, the highest level seen since April. The data sent the yield on the 10-year Treasury note to a high of 4.906%, the highest yield seen since mid-August.

  40. James Bednar says:

    Interesting poll over at Yahoo Finance:

    2007 Housing Poll (jpg)

    jb

  41. thatbigwindow says:

    From that poll, looks like the division between what people think is very close

  42. James Bednar says:

    From Salon.com:

    Dear Cary:

    I am 35 years old, and we recently bought our first house. I have cried every day since. Our house is an older fixer-upper. All I could see when we looked at it was lots of potential. Most of my TV time is spent watching shows like “Flip This House” or “Designed to Sell.” They make it look so easy. There were so many red flags, but for some reason I persisted. I was determined I could do it, and now I am consumed by guilt and regret. My fiancé did not want to buy this house but agreed to because he wanted to make me happy.

    We were able to get a mortgage, with no money down, that covered the closing costs. We have no savings and love to spend money. I had it in my mind that this would be a good way for us to get our finances in order, as we would have to start saving money. I know this sounds ridiculous, but I was so consumed with the American dream of owning a house to raise my son in and having the dog, garage, etc., that I lost sight of the true picture.

    This dream has turned into a nightmare. I think too much emphasis is put on the ultimate dream of being a homeowner. Along with being a homeowner comes great, great responsibility, and this is a very scary thing. I now feel that maybe I am not cut out to be a homeowner. I doubted myself along the way, but everyone kept saying, “You will be so happy,” and, “It is the best investment you will ever make.”

    We have the finances to make the payments and start saving, but I still cannot get past the sadness I feel. Looking back, I never had a great feeling about this, but I blamed it on the amount of work we needed to do on the house and the overwhelming task of moving.

    I think we could sell and make what we have put into the house so far, and at this point, I am even willing to take a loss. This is a heavy, heavy burden that has left me feeling so empty. Is this something that will pass, or should I try to get out now so I can get my sanity back? I know I used poor judgment and made a mistake that will not be easily fixed, but I don’t want to spend the rest of my life in this lonely, sad place that I am at right now. Please help.

    Sincerely,

    “Melissa”

  43. BC Bob says:

    Richard,

    The worm is turning again. You have stated, in the past,that new home sales were not a proper indicator since they only represented approx 15%.
    The theme now is, “six months of stability?? I see yoy, a decline of 17%. If that’s your definition of stabilizing, then it’s a pretty bleak outlook going forward

    The higher # is not any suprise to me. H-B’s do not want to sit around,[like existing sellers] with inventory on their books. Whatever it takes to move inventory, they will do. Don’t underestimate year end closing of books.

    This is actualy quite positive to those on the sidelines. Prices are coming down. I would not want to be an existing seller competing with a H-B. They are more concerned, at this time, with cash flow and possible debt downgrade from Moody’s than profits. Those on the sidelines will be able to take advantage of this situation. Those that bought recently??? Maybe it’s catch up in 2014????

  44. James Bednar says:

    From the Mercury News:

    Congress may push for loan `suitability’

    For the American mortgage market, it could be the hottest buzzword of the year: suitability.

    That’s because Congress has a new top legislator for mortgage matters, Rep. Barney Frank, who believes “you shouldn’t lend (home buyers or refinancers) more than they can afford to pay back, and you don’t lend them more than their house is worth.”

    Frank, a 14-term Massachusetts Democrat, is the new chairman of the House Financial Services Committee — the primary originator of banking and mortgage-related federal legislation. In an interview, he made it clear that a top priority this year will be enactment of a nationwide lending-standards law designed to protect consumers from deceptive, unfair and predatory mortgage practices.

    With foreclosures rising and many credit-stressed homeowners facing imminent rate resets on controversial “payment-option” and other adjustable-rate loans, pressure is building on Capitol Hill for tougher rules for mortgage brokers and lenders.

    Proponents of a suitability standard would require loan officers — whether mortgage brokers or retail lenders — to make certain that applicants are financially capable of handling a particular loan before and after payment increases, and that they fully understand the cons as well as the pros of the mortgage type they select.

    “It’s nothing more than an appropriateness test,” said John Taylor, chief executive of the National Community Reinvestment Coalition. “Lenders need to be absolutely certain that the loan they’re putting somebody into really makes sense . . . not just that it makes money for the lender or broker.”

  45. lurkerA says:

    #41 – that was entertaining.

    Just b/c something is easy on TV doesn’t mean it’s easy in real life. I wonder if she has jumped off the roof in attempts to fly, since Superman makes it look so easy.

    Sadly, I’m sure there are tons of people just like the writer of that letter. I wonder what sort of advice she was actually looking for?

  46. BC Bob says:

    JB [41],

    Very sad. I really feel for these people that got sucked into this charade/mania.

  47. RentLord says:

    I really feel for gullible first-time buyers in this market. There is a huge spin-machine out there (media, home-improvement shows, NAR pouring money into ads, slimy realtors) along with everyone’s mother-in-law putting pressure to buy ‘a dream’.

    A blog like this needs to have its own pod-cast and TV time to balance the hype of homeownership.

  48. Willow says:

    On Long Island, More Are Priced Out of the Housing Market

    http://www.nytimes.com/2007/01/26/nyregion/26long.html?th&emc=th

    In 2000, 60 percent of the homes sold on Long Island could be classified as “affordable” for families earning up to $100,000 a year, under the old rule of thumb that buyers should spend no more than 2.5 times their income on places to live.

    Unaffordable Suburbs Last year, according to a new report, just 2 percent of the houses sold on Long Island were in that range for families with such earnings, which make up more than 60 percent of Long Island households.

    The staggering drop over six years, according to the Long Island Index, an annual study of local economic and social trends, is the result of sluggish income growth and soaring housing costs, among other factors that have made the area increasingly unaffordable and driven many people away.

  49. James Bednar says:

    From the NY Times:

    Tremors at the Door

    The once booming market for home loans to people with weak credit — known as subprime mortgages and made largely to minorities, the poor and first-time buyers stretching to afford a home — is coming under greater pressure. The evidence can be seen in rising default rates, increasingly strained finances at mortgage lenders and growing doubts among investors.

    Now, Wall Street firms, which had helped fuel the growth in the market by bankrolling and investing in subprime mortgage lenders, have begun to pinch off the money spigot.

    Several mortgage lenders have recently collapsed. While the failures so far are small in number, some industry officials are concerned that they could be the first in a wave. The subprime sector, which produced loans worth more than $500 billion in the first nine months of last year, could shrink significantly.

    A sharp contraction in subprime mortgages would have ripple effects, reducing consumers’ access to credit and affecting investors like foreign central banks, pensions and mutual funds that have been big buyers of mortgage-backed securities.

  50. njrebear says:

    Intersting article on subprime meltdown.

    Tremors at the Door

    http://www.nytimes.com/2007/01/26/business/26mortgage.html?_r=1&oref=slogin

    For his part, Mr. Dallas acknowledges that standards were lowered, but he placed the blame at the feet of investors and Wall Street, saying they encouraged Ownit and other subprime lenders to make riskier loans to keep the pipeline of mortgage securities well supplied.

    “The market is paying me to do a no-income-verification loan more than it is paying me to do the full documentation loans,” he said. “What would you do?”

    >>
    from CR

  51. njrebear says:

    from 48

    For his part, Mr. Dallas acknowledges that standards were lowered, but he placed the blame at the feet of investors and Wall Street, saying they encouraged Ownit and other subprime lenders to make riskier loans to keep the pipeline of mortgage securities well supplied.

    “The market is paying me to do a no-income-verification loan more than it is paying me to do the full documentation loans,” he said. “What would you do?”

  52. UnRealtor says:

    Willow, that’s a powerful statistic.

    All these twits / realtors / economists railing on about how the real estate market was in any way “healthy” these past few years is clueless.

    But there’s no bubble, and soon, the market will “return to normal” and 1% of people earning $100K can afford a home. Sounds normal to me.

  53. Lindsey says:

    While my tendency is to look for the cloud behind every silver lining, this report does seem to point to a stabilizing new home market.

    I’d like to believe it, but I just can’t — yet. There’s a lot of noise in these monthly numbers so I will reserve judgement for two more months. If things are still solid off the Feb. report (due in March, obviously) than maybe ’07 will merely suck rather than be horrendous.

    For those who don’t read too far down:

    The numbers for October and September were adjusted downward and November’s was adjusted upward. There are two more adjustments for Nov. coming and one more for Oct.

    Here is the Sept. NSA number:

    Oct. 26: 85
    Nov. 29: 82
    Dec. 27: 83
    Jan. 26: 80

    In the annual SA number that translated into a difference of 53K. The first report was sales of 1.075M the last was 1.022M.

    Please note that the recent revision to October put annual SA sales below 1M (995K) during a month for the first time since… February 2003.

    Also, In October the YOY decline in sales for September was reported at 14.2%, the latest revision puts the decline at 18.4%.

  54. UnRealtor says:

    From the NY Times in post #47:

    In 2000, 60 percent of the homes sold on Long Island could be classified as “affordable” for families earning up to $100,000 a year, under the old rule of thumb that buyers should spend no more than 2.5 times their income on places to live.

    Last year, according to a new report, just 2 percent of the houses sold on Long Island were in that range for families with such earnings…

    http://www.nytimes.com/2007/01/26/nyregion/26long.html?_r=1&th&emc=th&oref=slogin

  55. profuscious says:

    Re #41 Carey

    “Along with being a homeowner comes great, great responsibility, and this is a very scary thing.”

    So I guess growing up is a very scary thing. God forbid we ever have another depression in this country, or the Carey’s of our world would never survive.

  56. James Bednar says:

    Lindsey,

    If you have’t already seen it, CR has the 2003-2006 NSA numbers graphed:

    http://photos1.blogger.com/x/blogger/2825/754/1600/995303/NHS2dec06.jpg
    (http://calculatedrisk.blogspot.com)

    Frankly, it doesn’t look like 2006 varied too much from the seasonal patterns set from 2003 to 2005.

    jb

  57. dreamtheaterr says:

    I have a friend who bought a mother-daughter shack for $450K a year back, with the intent of selling it in 2008 when he returns to India. I pity him now. Why did he do it? Because his friend bought a house in Long Island for $300K, sold it for $700K last year and returned to India to retire at 32.

    Never underestimate peer pressure….

  58. RentinginNJ says:

    Bid to unionize at Rutgers adds heat to a feud
    Corzine and Democrats go toe to toe with McCormick

    After two failed attempts to unionize in the past 15 years, mid-level administrators leading a new drive at Rutgers University say they are battling a “chilling” anti-union campaign by the school’s leadership.

    This time, though, the workers and the American Federation of Teachers have some high-powered help: Gov. Jon Corzine and top Democratic lawmakers. A handful of other lawmakers actually threatened to cut state funding to the university if Rutgers President Richard McCormick doesn’t cease his “anti-union” activities.

    The unusual feud reached new heights this week when the governor confirmed plans to attend a union rally on campus next week.

    Rutgers political science professor Ross Baker, a long-time observer of New Jersey politics, called Corzine’s on-campus appearance “an unusual step” and said he could not “remember a New Jersey governor actually going to a rally for the purpose of promoting union organizing.”

    “It is somewhat interesting that a big discussion of the governor has been pensions and benefits and how those costs are more of a weight to government than it should be,” Gregg said. “Unions are driving those costs up. I think the governor’s time would be better spent on property taxes than rallying for union workers at Rutgers.”

    http://www.nj.com/news/ledger/index.ssf?/base/news-11/1169791556108280.xml&coll=1&thispage=1

  59. chicagofinance says:

    James Bednar Says:
    January 26th, 2007 at 11:40 am
    Frankly, it doesn’t look like 2006 varied too much from the seasonal patterns set from 2003 to 2005.
    jb

    grim: err..I don’t know about that….not that I think the December numbers reflect underlying strength, but I don’t agree with your observation

  60. Rich In NNJ says:

    Um… nor do I

  61. James Bednar says:

    cf,

    Now that I re-read what I wrote, I agree. I was entirely unclear, and what I said wasn’t what I was thinking.

    I was referring to the pattern of sales from November to December over those years, not the entire seasonal pattern.

    jb

  62. James Bednar says:

    Rich,

    I did get your email, sorry it took me so long to respond.

    jb

  63. James Bednar says:

    I took the New Jersey real estate salesperson exam earlier this morning (yes, I passed). The majority of the early morning test takers were sitting for the salesperson exam. Two or three of them we re-taking the exam. I was actually surprised at the number of people there going for the test. I’m usually a quiet guy, but I couldn’t keep my mouth shut talking to these people. I’ve done guerilla interviews before, usually by staking out the real estate section at a Barnes and Noble. My favorite target is the younger generation (not that I’m that old) with a stack of real estate books (which always seem to include a Kiosaki book). If psychology is shifting in the market, you wouldn’t know it by talking to these folks.

    I really want to comment on my impression of the folks there, but I’ll bite my tongue (fingers?) and not say a word (“Judge not, lest ye be judged”).

    jb

  64. thatbigwindow says:

    James – When I got my Realtor license two summers ago I felt like I was in a GED prep course. I guess most of the people there had their GED.

  65. RentinginNJ says:

    I really want to comment on my impression of the folks there, but I’ll bite my tongue (fingers?) and not say a word (”Judge not, lest ye be judged”).

    That’s not fair. You can’t start with an interesting story like that and not finish it.

    Can you tell us about the nature of the conversation and their (the exam takers) thoughts on become Realtors(r) in a non-judgemental way?

  66. RentLord says:

    Grim, tell us how it is out there.. don’t hold back. After all what’s a blog without the juicy details.

    How is this new crop of RE agents different from the ones a few years ago – who now call themselves ‘experienced’?

    Try hard as I might, I just cannot get into most realtors heads. More than once, I have come across a realtor that I thought I could trust – but disappointed.

  67. AntiTrump says:

    #11 thatbigwindow:

    Unless the corrupt senators are routed from power in the next election, the future of NJ can be written off. As long as our state is led by these corrupt tax and spend, pay to play senators and congressmen we have no hope.

  68. Jay says:

    From Bankrate.com:

    New home sales plunge

    Thursday, Jan. 26
    Posted 9:30 p.m. CST
    ARISE: Mortgage rates have risen about a quarter of a percentage point since Monday. There was a steep rise Thursday and a further rise this morning.

    Let’s look at the 10-year Treasury. That note yields 4.89 percent this morning, up from closing at 4.87 percent Thursday. On Monday, the 10-year closed at 4.75 percent.

    Freddie Mac’s 30-day required net yields have risen faster. The required net yield can be thought of as the interest rate that the ultimate buyer of the mortgage requires when the loan is sold on the secondary market. The number I track — the 30-day RNY — is for mortgages that are scheduled to be closed within 30 days. This is a good indicator of the day-to-day direction of mortgage rates.

    On Monday, Freddie’s 30-day RNY for 30-year, fixed-rate conforming loans was 5.99 percent. This morning it is 6.2 percent. An increase of 21 basis points in four days. The RNY jumped 9 basis points Thursday.

    I don’t know why this is happening. The implication is that investors are selling their mortgage-backed securities to buy Treasury notes. But why? Concerns about credit quality? Worries that owners are going to go into a refinancing frenzy? A combination of those two factors is probably part of it.

    http://www.bankrate.com/brm/story_content.asp?story_uid=20957&prodtype=mtg

  69. AntiTrump says:

    The thing to note about new construction is that inventory is managed well by builders. They will put only limited of all units as units available for sale. Additional units will be added as the ones on sale gets sold. This is not illegal. It helps builders manage the perception of too much inventory out there.

  70. James Bednar says:

    Let me offer my impressions of the class..

    I took the class at William Paterson. I didn’t know it at the time, but this was the first time they were offering the class. As a result, our class size was very small, only 7 of us in total. It was a Saturday-only style course, so we met for 8 hours a week, over about 14 weeks total. The class was pretty informal and close, so everyone did get to know each other well. We had plenty of off-topic discussions about the NJ real estate market, foreclosures, risky lending, unethical agent tactics, etc. While I was outspoken about most of those topics, I didn’t ever make this site known to anyone (Sorry guys, I know you are all reading this now). I was the only male in the class, aside from the instructor.

    The instructor was great, while it was coincidence that I got him (as I could have picked any of 100 different places to take the course), I’m glad I did. He is the owner/broker of a large Bergen Co. agency and has been in the business longer than I’ve been alive. I know agents/brokers tend to get alot of flak around here, but this guy proved to me that there were ‘good people’ in this business. Halfway through the course he told us a great story about lowballing (remember, I made no mentioned) and how he requires his agents to present all offers, regardless of what the agent might think.

    Anyhow, the class was made up of everyday regular folks. If you randomly picked 6 people off the street you might get a similar demographic. Now, realize that most people simply take the course at a Weichert or at a “Business School”, places that are nothing more than “class factories”. The fact that these folks chose to take the course at a University might have altered the demographic a bit.

    Radically different from the folks I met. My best description? Younger, primarily female, at best a semester in college. I really hate to use the jeans stereotype, but all with very expensive handbags, jeans, cellphones, and sunglasses. One gem of a quote was, “I’ll be great at this, I can sell anybody anything.” Like I said, everyone primed to become a millionaire. About half of those folks I talked to sounded eerily similar to “Melissa” above. Most expressed desire to “fix up and sell houses”, to which I responded “OHMYGOD! Did you see last nights Flip This House!” (Yeah, yeah, I know, I lead them on).

    Clot, KL, the class of 2007 is nothing to worry about.

    jb

  71. James Bednar says:

    I’m a jerk for making the girl waiting next to me feel bad though. She had already told me that she was there retaking the exam, she had failed by 1 or 2 questions. We were chit-chatting a bit (she was telling me about kitchen remodelling) when one of my classmates walked in. She sat down next to me, was still studying, looking a bit worried. I said something along the lines of “You know this thing is a piece of cake, you’ll be out of there in 20 minutes” (I said it a bit *too* loudly). When I turned back, hoping to finish our discussion on tumbled marble, I got a dirty look right before she turned back to studying.

    jb

  72. Richie says:

    I’m not surprised that the December numbers are higher then Novembers. After all, any company that is public HAS to sell homes to make $. They can’t hold on to inventory. Most companies had a fiscal year end in Decemberm putting more pressure on selling homes.

    December numbers are higher because the builders now have to lower prices or increase incentives to sell a home, therefore they are selling more then the existing homes. Sellers in existing homes don’t have to sell, but builders HAVE to sell.

    In any case, the part that makes this interesting is while they may have sold more newer homes in December, most of the Q4 results I’ve been reading about are losses from the builders. That’s a pretty bad sign.

    -R

  73. Pat says:

    Yeah, that was totally uncalled for.

    [Think kind thoughts…think kind thoughts…]

    You could’ve been NICE and asked what kind of glamour shots they were thinking about for their business cards….maybe an over-the-shoulder one?

  74. chicagofinance says:

    grim: you pig!

  75. profuscious says:

    the tumbled marble buzz killer

  76. SG says:

    Homebuilders Hammered. Time for M&A?
    Home sales in 2006 suffered their steepest decline in 17 years. Is the battered sector headed for consolidation?

    http://www.businessweek.com/bwdaily/dnflash/content/jan2007/db20070125_479840.htm?chan=top+news_top+news+index_businessweek+exclusives

  77. Clotpoll says:

    Grim (60)-

    Allow me to fill in the blanks for you:

    Mouth-breathing, pusillanimous, drooling, three-chromosomed, knuckle-dragging, land-walking plankton.

    Reading a Robert Kiyosaki book should be an automatic disqualifier for pursuit of a career in RE. I will stop an interview with a new licensee cold if he even mentions Kiyosaki.

  78. Zac says:

    self-righteous judgement says: look what they do.
    righteous judgement says: I will not do that.

  79. BC Bob says:

    “Let’s look at the 10-year Treasury. That note yields 4.89 percent this morning, up from closing at 4.87 percent Thursday. On Monday, the 10-year closed at 4.75 percent.”

    Jay,

    I post a 10 year chart, showing lower prices/higher yields and I get labelled as a Born Again Christian??? Now I know there are bulls, bears and pigs, never heard born again. LOL. No laughing my *ss off.

  80. BklynHawk says:

    Clot-

    You’re not John Reed are you?

    http://www.johntreed.com/Kiyosaki.html

    JM

  81. Clotpoll says:

    Hawk (78)-

    No, I’m not Mr. Reed, but his excellent site skewers all the RE pimps, hucksters and charlatans.

  82. BklynHawk says:

    Clot-

    It wasn’t just the Kiyosaki mention that made me think that. You also have a somewhat similar tone in your writing.

    JM

  83. Jay says:

    Had a conversation with a co-worker who rents a SFH home. He is in his late 30’s and has always been a renter.

    I was suprised to learn that he recently inherited about $1 mil from a relative and is ready to jump in and buy a house, and plans to pay cash and spend the full amount on a property.

    I tried to explain that the market has still got a way to fall, and a potential 10-15% drop over the next year or two could save him a real $100,000-$150,000 on a $1 Mil home.

    I also mentioned that in the meantime he could live rent free because his inheritance safely invested at a 5% would pay for his $4,000 p/month rental (he rents a fairly large house).

    He said his wife really wants to have her own home. Plus he’s got this idea (from the mainstream media?) that the market has bottomed out, and he thinks I’m unreasonably bearish. It still surprises me that many still don’t recognize what’s obvious.

  84. Willow says:

    #81

    I guess I’m very conservative but I would never spend the entire amount on a house. I would probably spend half and then invest the other half for a rainy day. My husband and I are very familiar with rainy days and are way too gun-shy to be any other way than conservative.

  85. Clotpoll says:

    Hawk (80)-

    One cannot be too strident in bringing criminals like Kiyosaki to the light of day.

    It is an unfortunate sign of the financial illiteracy of the American public that MLM shysters like him are lauded as “visionaries” and promoted as financial experts by media sources as trusted as PBS. You can lay much of blame for the rampant RE speculation of the past five years right at his doorstep.

    Unfortunately, I fear that Kiyosaki’s new alliance with the notorious deadbeat, Donald Trump (don’t think he’s a deadbeat?…just talk to one of the institutions who backed his casino ventures), has permanently established his bonafides.

    It is a sad day when the credentials of a hack are confirmed by association with a deadbeat.

    These are the endtimes.

  86. Lindsey says:

    RE post 53:

    JB,

    Thanks for the heads up. I had seen the chart, and it’s one of my favorites (how sick is a guy who has favorite charts?) If any particular year was a bit of an outlier it was 05.

    The real picture there is volume. Looking at that graph I think you can see the builders kidding themselves all the way into June, but July socked them in the gut. I would imagine August was when the first serious price cuts started, but keep in mind the numbers don’t include cancellations, which by all accounts were through the roof.

    As those “new” homes get resold, they are going to take a big bite out of new sales, so on that front Spring should be pretty disappointing. Don’t be surprised to see the ratio of existing/new home sales to shift a bit.

    BTW, for another of my favorite charts, check out:

    Household Debt as a % of Assets at Prudent Bear

    http://www.prudentbear.com/Bear%20Case%20Library/chart_library_images/chart_library/HHDebt.html

  87. James Bednar says:

    My two favorite Trump pieces, savor the contrast. From the NYT:

    Pre-bubble

    THE EMPIRE AND EGO OF DONALD TRUMP
    By MARYLIN BENDER
    Published: August 7, 1983

    He made his presence known on the island of Manhattan in the mid 70’s, a brash Adonis from the outer boroughs bent on placing his imprint on the golden rock. Donald John Trump exhibited a flair for self-promotion, grandiose schemes – and, perhaps not surprisingly, for provoking fury along the way.

    Senior realty titans scoffed, believing that braggadocio was the sum and substance of the blond, blue-eyed, six-footer who wore maroon suits and matching loafers, frequented Elaine’s and Regine’s in the company of fashion models, and was not abashed to take his armed bodyguard-chauffeur into a meeting with an investment banker.

    Post bubble

    Where’s The Cash, Mr. Trump?
    June 17, 1990, Sunday
    By FLOYD NORRIS

    Is Donald a deadbeat? Is Donald a deadbeat? Donald J. Trump’s failure to come up with a measly $30 million to pay bondholders at Trump’s Castle, which he bought five years ago on amazingly generous, less-than-no-money-down, credit terms, is far from the final chapter of the Trump saga….

  88. dreamtheaterr says:

    Kiyosaki is a Quackosaki…nuff said.

  89. Jay says:

    I post a 10 year chart, showing lower prices/higher yields and I get labelled as a Born Again Christian???

    BC,
    That’s really silly. When it comes to current market data and the very clear trend, blind faith is what’s required to be a housing bull.

  90. skep-tic says:

    interesting dynamic between the new home sales numbers and the existing home sales numbers…

    new homes surprise on the upside; existing surprise on the downside.

    not too hard to see what’s going on here: builders are cannibalizing sales from existing homeowners.

    it’s rather like the effect on Ford when GM comes out with a new incentive program. Makes GM look good by comparison, but the reality is that both are heading down fast

  91. skep-tic says:

    also, let’s not forget the roughly 50% cancellation rate the HBs are sporting

  92. James Bednar says:

    not too hard to see what’s going on here: builders are cannibalizing sales from existing homeowners.

    I’m not saying that isn’t the case, lord knows the builders still have plenty of margin to cut, it’s a tough one to prove. Keep in mind the dramatic difference in scale between the two.

    Existing Home Sales in December was estimated to be 470,000, New Home Sales in the same month were estimated to be 76,000. Given that the NHS numbers don’t take into account contract cancellations (New homes are sold when contracts are signed), the actual number of new homes sold is somewhat lower.

    jb

  93. Better lower your prices fast THE RACE TO THE BOTTOM IS ON says:

    a tidal wave of inventory is coming.
    watch it the next month.

    Better snap back into reality grubbers cuz the ride to the bottom is not going to be fun. Get ahead of the wave. lower your price fast and get out.

    BOOOOOOOOOOYAAAAAAAAAAAAAAAA
    Bob

  94. skep-tic says:

    Grim,

    Interestingly, 0.8% of 470,000 is 4.9% of 76,000.

    So the decline in existing homesales is almost exactly reflected in the uptick in new homes sales

  95. Better lower your prices fast THE RACE TO THE BOTTOM IS ON says:

    Good after noon crabby bunch.

    BOOOOOOOOYAAAAAAA

    Bob – a satisfied home(s)owner even as home prices deflate sssssssssssss….sssssssss….sssssssssssss

  96. pesche22 says:

    Countrywide Bank of America getting together

  97. Zack says:

    To Jay #81

    Give a man a million dollars and he turns stupid in no time. I wonder why all these stupid people get this inheritance. Maybe his forefathers thought that was the only way for his survival.

  98. James Bednar says:

    pesch,

    This is exactly the kind of reason I don’t play in the lender/hb sandbox anymore. Up almost 11% on the news.

    jb

  99. skep-tic says:

    Interesting comment from a Mass realtor on Ben Jones’ blog (do you think there’d be more sales if all realtors were honest like this?):

    “Jim Gibbons, an agent in Stoughton, said that in some communities in his territory prices were down more than the 5.4 percent statewide average, as much as 7 percent or 8 percent. ‘It’s going to be the same story this year, big inventories, big selection,’ he said. ‘Your house has to be the best house out there in the best condition and priced aggressively, or it’s going to sit.’”

    “Gibbons said the current situation, a flood of houses for sale, is unique because there are so many types of sellers in the market. In addition to those who want to trade up, there are investors trying to dump properties purchased three or four years ago at higher prices, homeowners unable to meet rising payments on adjustable-rate mortgages or threatened with foreclosure, and empty-nesters eager to downsize.”

    “‘We’ve never had that at the same time,’ he said.”

  100. BC Bob says:

    Worldwide rates moved down in tandem after 9/11. Will the same occur on the udside?? If the ECB continues to raise and we don’t, what is the fate of our dollar?? Where are our M3 #’s???

    “European Central Bank council member Axel Weber said the bank must continue raising interest rates to combat inflation amid the fastest economic growth in six years.”

    “If the growth scenario is confirmed, not adapting interest rates would mean excessively increasing liquidity,’

    M3 money-supply growth, which the ECB uses as a gauge of future inflation, accelerated to 9.7 percent in December, the fastest pace since February 1990, the ECB said today.

    “Generally low interest rates are still one of the main reasons for dynamic money supply,” Weber said. The data confirm the ECB’s analysis “that there are inflation risks in the medium-to long-term.”

    http://www.bloomberg.com/apps/news?pid=20601170&sid=aDm_SweY.5LQ&refer=home

  101. BC Bob says:

    That’s upside.

  102. Richard says:

    >>When it comes to current market data and the very clear trend, blind faith is what’s required to be a housing bull.

    blind faith? i’ll repost from earlier. these are facts folks. all you can do is spin them.

    inventory y-o-y last year was 1 million. now it’s down to about 650k. new starts are off 30% from their peak. the numbers have been steady since july even seeing some gains the last 3 of 4 months. these are the #’s the soft landing crowd looks at. with today’s release we’ll see the y-o-y comparisons and it will look glum but the last 2 quarters things seem to be bottoming out.

  103. BC Bob says:

    “‘We’ve never had that at the same time,’ he said.”

    Skeptic[97],

    He is right. We are in unchartered waters. An unfortunate perfect storm.

  104. James Bednar says:

    Are futures still looking for two hikes from the ECB this year?

    jb

  105. Michelle says:

    #81 Jay – “It still surprises me that many still don’t recognize what’s obvious.”

    Shocks me almost every week. Same thing has happened to so many houses I have been following. One was listed for 900K, price drops to $850k after 2 months on the market. I think it’s worth $700k and not a penny more so I wait for the next price drop. Meanwhile somebody comes along and makes almost a full price offer and the house sells. Are you kidding me? Why on earth would you pay so much for that house? Other buyers are driving me crazy! Oh well, these are the same people who buy clearance stuff at 20% in Target when it would be 75% off if they just left it on the shelf for 2 weeks. :)

  106. skep-tic says:

    “inventory y-o-y last year was 1 million. now it’s down to about 650k. new starts are off 30% from their peak. the numbers have been steady since july even seeing some gains the last 3 of 4 months.”

    I agree that barring some major catastrophe such as a credit crisis (not impossible), we have already seen the sharpest decline.

    The fact that we’re seeing Carl Icahn and Bill Gates diving headfirst into FL condos should give any bear pause.

    Re: inventory– there is little indication that this problem will be solved anytime soon.

    First, although starts are way down, completions remain close to all time highs.

    Second, the new home inventory that already exists is understated due to substantial cancellations.

    Third, there is new inventory coming on board due to sharply rising mortgage defaults.

    Fourth, there is the more long term demographic problem of retiring baby boomers.

    Each of these is in addition to all of the more typical reasons people sell homes.

    As the Mass realtor noted above, there has never been such a confluence of factors bringing inventory onto the market. Expect high inventory to persist for a long time

  107. 2008 Buyer says:

    Just caught the tail end of a story on CNBC

    BOA and Countrywide may be entertaining merger talks

  108. njrebear says:

    As we have seen layoffs are happening even in banks (mortgage units).

    Are the effects of a slowdown still contained within 6% of GDP (Home builders). I don’t think so.

    Add interest rate hike to this mix and you will see more bag holders turning up at bubble blogs.

  109. chicagofinance says:

    response to 104

  110. pesche22 says:

    Shorts had a ball, now their may not be a deal
    on cfc /boa

  111. Richard says:

    >>Are you under the impression that this unwinding of capacity comes at no cost? That all related industries will continue to hum along at normal speed?

    no, but the sky isn’t falling either. the job and jobless statistics are showing that things are humming along quite nicely considering such a drop. people will roll out of construction and find something else to do. sure we can’t account for the impact to illegal immigrants. sorry a news story here or there isn’t enough for me. the best measures we can use are already available (e.g. jobless claims, employment growth, gdp, etc.)

  112. Richard says:

    when the facts that support your conclusion change, find a new set of facts. perfect motto for the bears ;)

  113. BklynHawk says:

    ChiFi(107)-

    Yes, it will definitely be a great time to buy furniture the next year or two. I look for one of these companies to implode. As volume drops wayoff, they’ll have to cut prices to the bone to move inventory and then margins will get killed.

    JM

  114. Rich In NNJ says:

    OR

    When the conclusion comes to purchase a home, change the facts to support your decision.

  115. James Bednar says:

    Richard,

    Need I remind you of the impact to NJ construction jobs the last downturn caused? NJ lost approximately 50,000 construction jobs in the 2 years following 80’s boom. It took almost 10 years to recover those jobs.

    http://njrereport.com/constjobs.jpg

    people will roll out of construction and find something else to do.

    Maybe Wall Street has room for another 50,000?

    jb

  116. BC Bob says:

    I’m still waiting for Richard to give me one valid, concrete reason why I should purchase today rather than live rent free,interest???

    Wait until the existing sellers realize that they are in competition with the H-B’s. That will be a dandy.

  117. James Bednar says:

    Too bad it’s so far out, otherwise I’d suggest we all get together for some hors d’oeuvres courtesy of Bob (and Bruce).

    jb

  118. Rich In NNJ says:

    “Too bad it’s so far out, otherwise I’d suggest we all get together for some hors d’oeuvres courtesy of Bob (and Bruce).”

    MEN’S NIGHT OUT at “The Estates at Hilltown”

    Ahhh-hooo-gaaa!

  119. James Bednar says:

    Cuts in Citi’s future?

    Citigroup to Cut More Than $1 Billion in Costs, Person Says

    Citigroup Inc., the biggest U.S. bank, plans to cut more than $1 billion in costs this year as part of Chief Executive Officer Charles Prince’s effort to boost profit growth, a person with direct knowledge of the matter said.

    The New York-based company probably will eliminate some jobs, shift others to less-expensive locations and streamline its risk-management department, said the person, who declined to be identified because Citigroup hasn’t made the decision public.

  120. Lindsey says:

    My normal operation is to ignore clowns like Richard, but his stupid linguistic games are too much for me to take some time.

    Everytime someone notes something negative, they are not saying the sky is falling. As a matter of fact, no one ever says the sky is falling because the sky doesn’t fall. Putting those words into someone else’s mouth is a way to avoid the subject, kind of like comparing someone to Hitler.

    I’m a bear on housing because everything I can see in the sector — except the stunning amount of liquidity in financial markets — indicates it is headed for a crack-up. I was wrong about this for two years (early = wrong on this count), but when the CEO of every major builder in the country says they won’t make a dime in the next three months, I think it’s reasonable to say that housing is in trouble.

    People are going to get hurt in this market. Not everyone, but lots of people. As the jump in foreclosures at the end of 06 indicates, many already have.

    Finally, what in heaven’s name does this correlate to:
    inventory y-o-y last year was 1 million. now it’s down to about 650k.?

    I can’t figure out what your point is.

  121. Richard says:

    >>NJ lost approximately 50,000 construction jobs in the 2 years following 80’s boom

    it’s real hard to compare something 20 years ago to today. it’s a much different economy in so many respects.

  122. BC Bob says:

    “I can’t figure out what your point is.”

    Lindsey,

    I am just as confused.

  123. UnRealtor says:

    “I agree that barring some major catastrophe such as a credit crisis (not impossible), we have already seen the sharpest decline.”

    Can’t agree with that.

    Once market psychology fully turns, look out below.

    There are still many dreamers out there asking 2005 Wish Prices, and there are still a few last Greater Fool dummies paying up.

    No, once it’s “a terrible time to buy a house,” that’s when it’s time to buy a house. Swoop in and pick from the bloated inventory.

    All I heard on every news report last night was “Housing market is the worst it’s been in 17 years.” Watch the market psychology continue to shift.

    I was border-line on a house awhile ago (planning a “lowball” @ 4% appreciation from what the owner paid 20 years ago), and then this week a house down the street, far more substantial, just came on the market and blew the first seller out of the water.

    That first house now looks like junk.

    This party is just getting started.

    Lots of negative equity for grubbers to realize in the next year or two.

  124. Richard says:

    >>Wait until the existing sellers realize that they are in competition with the H-B’s. That will be a dandy.

    not within spitting distance of NYC bc. the farther you go out sure there’s competition but for most of us that isn’t relevant.

  125. BC Bob says:

    “it’s real hard to compare something 20 years ago to today. it’s a much different economy in so many respects.”

    Richard,

    That is true, today in NJ, we are creating lower paid service jobs along with govt workers.

  126. NJGal says:

    Lindsey, I wish you commented around here more often, because you’re smart and seem to know your stuff.

    But don’t expect an answer from Richard. He comes here accusing everyone of looking at facts and molding them to support their views…but does the same thing himself. He bought a house and has changed position to justify his purchase. To each his own, but I wouldn’t expect much from him.

  127. BC Bob says:

    “not within spitting distance of NYC bc. the farther you go out sure there’s competition but for most of us that isn’t relevant.”

    What about all the condos on the “gold” coast. Do we just dismiss them???

  128. Richard says:

    >>inventory y-o-y last year was 1 million. now it’s down to about 650k.?

    um, it’s comparing inventory differntials by month y-o-y. except for one month it’s been narrowing since july and indicates a move to a more stable level. there’s definitely more room to go but the trend is there.

  129. Richard says:

    yes lindsey come spend more time with all the non-partisan people on this blog. if you have a contrary opinion facts or no, you’re either delusional, have blind faith, are a stupid bagholding fool or trying to concoct any excuse to justify having a difference of opinion. the religious zealousness is quite overbearing.

  130. RentLord says:

    REechard – your a waste of RE on this page

  131. Zack says:

    Richard is a RE agent at Century 21.

  132. Zac says:

    This should be the quote of the year: “once it’s ‘a terrible time to buy a house,’ that’s when it’s time to buy a house.”

  133. Rich In NNJ says:

    “not within spitting distance of NYC bc. the farther you go out sure there’s competition but for most of us that isn’t relevant.”

    Richard Says:
    October 6th, 2005 at 9:21 am
    njgal, maplewood is crazy. i’m renting in south orange in the village so i know the market well. many DINKS (double income no kids) are buying properties way over asking because of the nice village and the proximity to the city. the houses will always maintain some value because of the train line but i don’t see how much higher they can go once the market really cools down.

    You’ve changed… we hardly know you anymore.

    I know, I know. It’s not you. Someone posted like you in the past knowing you would show up someday in the future.

  134. Zac says:

    hey Zack -cool name.

  135. Rich In NNJ says:

    A little over a year ago (before you decided to make that house purchase) you thought 2007 would be a better time to purchase…

    “Richard Says:
    January 23rd, 2006 at 10:28 pm
    everyone, inventory is building up rapidly. there are decent houses on the market at still high but not outrageous asking prices just sitting. this market is coming to a crawl. i expect this week’s home data to show further weakening and this will only continue. as inventory continues to build next stop is lowered prices. sellers haven’t seen a more normalized market in at least 5 years so give it some time to let the reality sink in. if you’re in the market to buy a house, wait until 2007. i’d stake my down payment prices and selection will be better than 2006.”

    Are you not confident in your decision?
    Do you feel you need to justify it by telling others they are “dooms-dayers” for not following your lead?

  136. Zac says:

    Dayum Richard -you been faced.

  137. MJ says:

    “inventory y-o-y last year was 1 million. now it’s down to about 650k.?”
    I too have noticed the inventory vanish away.. surely not because things are selling…may be its because the flippers cant stand people laughing at them..

  138. BC Bob says:

    Richard Says:
    October 6th, 2005 at 9:21 am

    “Rich In NNJ”

    The same Richard??? The guy that wants a wake up call??? The guy that labeled me as a Born Again Christian??? WOW!!

    Richard,
    Just enjoy your house. No need to beat yourself over the head justifying your/your wife’s [if applicable] decision. Don’t worry about what everybody else is doing. Only worry about what your exposure is to whatever market.

  139. BC Bob says:

    “i’d stake my down payment prices and selection will be better than 2006.””

    Rich in NNJ,

    This is one post by Richard that I agree with 1000%. You really can’t make this s*it up. Maybe he should have stayed asleep after that post. Very entertaining stuff.

  140. 2008 Buyer says:

    20 years ago the workers in construction were probably legal Americans…fast forward to today…a good amount of construction workers are illegal immigrants…

    Do you think there will be a valid registered dip in employment? Meaning since these workers are illegal they are not necessarily counted and the unemployment figures that look somewhat strong or consistant, are in fact overstated?

  141. Pat says:

    Well, the employment numbers would have been correspondingly overstated – a wash. I don’t know how long these guys stay unemployed anyway. Carpenters went non-union. They have guys falling from the roof, no-doc. There’ll still be workholes to hide in.

  142. skep-tic says:

    in fairness, Richard does raise some valid points which shouldn’t be dismissed just because he chose to buy a house recently (if he in fact did)

    the decline in housing is clearly not as precipitous right now as it was in the first half of 2006 (even if we have not “stabilized” yet)

  143. skep-tic says:

    “Do you think there will be a valid registered dip in employment? Meaning since these workers are illegal they are not necessarily counted”

    this is an interesting point.

    more likely the housing recession will effect “official” employment in terms of lost sales jobs (mortgage brokers and RE agents) an all of the collateral retail industries to housing

  144. chicagofinance says:

    Bost:
    I’d be born again if Flutie made that Hail Mary when I was in school there!

  145. chicagofinance says:

    Bost: by the way, and new news on “Rickey”?

  146. Jay says:

    We shouldn’t mind Richard’s postings. He actually performs a valuable service.

    It’s helpful to have someone constantly challenge posters with contrary opinions, so as not to become to comfortable and rigid in one’s position. It also motivates posters to dig deeper and find information and data that supports one’s conclusions.

    I have read some of the best postings in response to housing bulls. So Richard, thanks for being a contrarian, and please continue to challenge.

  147. Clotpoll says:

    Talking about inventory numbers in the Q4 to Q1 cusp- and trying to extrapolate a trend- is useless. This is a time in during which inventory always drops, good market or bad.

    I have a feeling that the “surge” in Iraq won’t be the only one we’ll be hearing about in the upcoming weeks. And, my sellers feel the same. Significant price drops this week on all my listings that haven’t already sold.

  148. Zac says:

    Clot, would that be 25% off 2005 prices?

  149. njrebear says:

    yo Reachard,
    “inventory y-o-y last year was 1 million. now it’s down to about 650k.”

    I know you are always trying to twist data but i didn’t know you would try to ‘reach’ this far.

    New home inventory in December 2005 was ~410K. The current inventory is ~550K and this number does not include the 20-30% cancellations that HB’s are experiencing. We cannot apply the cancellation rate to Dec 2005 number because the high cancellation trend started in mid 2006.

    Moreover we are building at the rate of 1.5Mil homes a year and selling at the rate of 1.06 mil (800K including cancellations). That’s right, even at the current pace we are adding about 500K-700K new houses to the inventory.

    http://calculatedrisk.blogspot.com/2007/01/december-new-home-sales-112-million.html

    Where did you get your data from? The same subprime lender from who originated your ARM?

  150. Hard Place says:

    Article in WSJ of weekend journal “The Chill at Luxury’s Low End”. Regarding houses in metro areas that are priced in 750k – 1.25mm.

    One quote stated, “Indeed, a surfeit of new homes in central New Jersey is partly responsible for the significant price declines in Edison, where prices of starter luxury houses fell 6.7% in the fourth quarter from the year earlier. Coldwell Banker has a $949,900 listing of a “new” five-bedroom brick house that was actually built in 2005, but interested buyers are few. “People are going for less house,” says Joe Thomas, an agent with Coldwell Banker. “They’re not stretching any more.”

    Sounds like the bell is tolling for the McMansion…

  151. Clotpoll says:

    Zac (156)-

    I can only speak to my area, Hunterdon/Somerset.

    Condoshacks, close to 25% off 2005 peak is close at hand.

    SF/detached homes, no. It’s a much wider range of discount; as little as 5%, and as much as 15% off, depending on location, price range and quality.

  152. AntiTrump says:

    Richard:

    I fees sorry for you !. This is my last post to you.

    Good luck and enjoy your house. Put the past in the behind.

  153. njrebear says:

    http://www.brokeruniverse.com/hearing/

    What We’re Hearing

    One subprime executive we know described the current state of affairs (for subprime non-depositories) as “horrendous,” saying it’s tantamount to a “liquidity crunch.” He said many Wall Street warehouse providers are looking at the cash positions of their clients “hard and heavy”…

  154. BC Bob says:

    “I’d be born again if Flutie made that Hail Mary when I was in school there!”

    Chi,

    Richard may be onto something??? I was at that game. .06 to go Flutie back to pass, rolls right, avoids the rush, heaves it into the end zone, Gerald Phelan??? Gerald Phelan touchdown!!! BC Bob is Born Again!!!

  155. BC Bob says:

    “Significant price drops this week on all my listings that haven’t already sold.”

    Clot,

    What % off 2005 highs?? Thanks as usual!!

  156. Hard Place says:

    njbear,

    With that piece of news it looks like the housing market will be feeling the squeeze on both ends.

    low end market – inability of buyers to get financing due to tightened lending standards

    high end market – large amounts of inventory with some areas over 2 years of absorption projected on current sales.

    Knowing this buyers should definitely consider holding out unless absolutely necessary. Not a necessity for me as I sit in my NYC apt until prices come down to a level I feel comfortable to buy.

  157. Lindsey says:

    re posts 136 and 157,

    Richard,

    I’m trying to take you as an honest information broker. The numbers 1M and 650K,
    What are you talking about in terms of places and dates? The US? The Northeast? Existing, new, or both? Where are the numbers coming from.

    Every stat I’ve seen in every market says existing inventory is up YOY during the last 12 months. According to the Census stats New home inventory nationwide was 14K higher at the end of Dec. 06 than in 05.

    What time and place do your numbers correlate to?

  158. BC Bob says:

    Clot,

    Sorry, didn’t see #159.

  159. Clotpoll says:

    BC Bob-

    The real miracle is that Phelan got an NFL contract.

  160. Clotpoll says:

    BC Bob (163)-

    Sorry, missed your question. 8-10% off ’05 highs, but these are exceptional houses that will go at the top of their ranges (whatever that’s gonna be).

  161. njrebear says:

    FirstFed seems to be enjoying their little game. What’s the gurantee that ‘added interest’ will ever be recovered? These guys are in for a rude shock.

    Information supplied for discussion purposes only. All disclaimers apply.

    >
    http://biz.yahoo.com/bw/070126/20070126005133.html?.v=1

    Negative amortization, which results when unpaid interest earned by the Bank is added to borrowers’ loan balances, totaled $215.8 million at December 31, 2006, and was $62.6 million at December 31, 2005.

    … Negative amortization has increased over the last two years due to an increase in short-term interest rates.

  162. dreamtheaterr says:

    What happened to this weekend’s discussion thread? Did JB hit the scotch a little early to celebrate passing the exam??!! Wait, there are 7 other girls who were there too, right? Ahem….

  163. BC Bob says:

    “The real miracle is that Phelan got an NFL contract.”

    Clot,

    How about the dog and pony show your man “The Donald” pulled with the signing of Flutie with the NJ Generals. Another great investment by The Donald. To clarify, I mean the USFL, not Flutie.

  164. Clotpoll says:

    BC Bob (171)-

    As a Memphis native (and possibly one of the few people on Earth that remembers the USFL Memphis Showboats), I remember the “showdown” lawsuit vs the NFL that was supposed to force a merger of the handful of solvent USFL franchises with the venerable old league.

    Instead, the trial ground to a draw (Trump and the USFL won $1 in damages), the NFL absorbed 0 franchises and pretty much everybody associated with the USFL lost whatever meager equity they had remaining in that sham of a league. Memphis was also forever ruined as a potential NFL city.

    I can’t even watch one minute of The Apprentice, in my mind the most revolting show on TV (and I include Real S*x in the list of candidates). If you examine Trump’s life- outside of the sanitized version he pumps to the American public- it is littered with the debris of bungling on a massive scale. I honestly believe that you could send Johnny Knoxville to get an MBA…and he’d make better decisions than Trump.

  165. Clotpoll says:

    Five minutes of Warren Buffett on CNBC is more informative- and entertaining- than a lifetime of viewing Donald Trump.

  166. chicagofinance says:

    WSJ
    CREDIT MARKETS
    Mortgage-Default Risks Rattle Bond Investors
    By JAMES R. HAGERTY and MICHAEL HUDSON
    January 27, 2007

    The bond market is signaling heightened fears about the ability of America’s more financially stretched borrowers to keep up their mortgage payments.

    The weak U.S. housing market has cut the value of some homes to below the amount the owners owe on their mortgages, making them prone to default. The risk is showing up in the subprime-mortgage market, which serves borrowers with the worst credit histories. Default rates in this market are rising. Meanwhile, hopes that the Federal Reserve would cut interest rates soon, easing pressure on borrowers, have faded in recent days.

    Wall Street’s worry about mortgage defaults is showing up in a set of indexes called ABX-HE, administered by Markit Group Ltd. These indexes track the cost of using financial contracts known as credit default swaps to buy insurance against defaults on securities backed by subprime mortgages.

    Friday afternoon, the ABX-HE 06-2 index for buying protection on low-rated, or BBB-minus, subprime mortgage bonds stood at 90.34, down from 95.25 at the end of December and 98.2 at the end of November. It was the lowest level since this version of the index began trading in July. A decline signals that sellers of these insurance contracts are demanding larger payments to compensate for what they see as a higher risk of mortgage defaults, which would reduce the value of mortgage securities.

    The turmoil is notable because credit markets otherwise look stable. Treasury bond yields remain low and capital is abundant for corporate borrowers.

    Mark Adelson, head of structured-finance research at Nomura Securities International Inc. in New York, said the market is “worried about the potential of an approaching storm.” He said weak home-sales numbers reported Thursday were one immediate cause of the latest downward lurch in the ABX indexes.

    “There has been a wake-up call this month,” says Alan Fournier, managing member of Pennant Capital Management LLC, a hedge-fund manager based in Chatham, N.J. Mr. Fournier says his firm has been buying protection against subprime-mortgage defaults since mid-2006. Hedge funds are believed to have been among the big buyers of this protection, a way of betting that defaults will increase.

    At the end of 2006, borrowers were two months or more behind in payments on nearly 6% of the subprime home loans packaged into mortgage securities last year, according to David Liu, a mortgage analyst at UBS AG in New York. The first-year delinquency rate was about three times the rate on such loans packaged in 2003 and 2004, when home prices were soaring.

    When home prices are rising rapidly, people who fall behind on their loans often can sell their houses for enough money to pay off their debt or else refinance into a less costly loan. In a weak housing market, it becomes harder to sell homes quickly or refinance. More people lose their homes to foreclosure.

    Mr. Liu says many subprime lenders, faced with slowing demand and shrinking profit margins, tried to maintain volume by making riskier loans even as the housing market was faltering in late 2005 and 2006. Many borrowers with relatively low credit scores were able to borrow as much as 95% or 100% of the home’s estimated value without having to provide pay stubs and tax documents to prove how much money they make.

  167. d2b says:

    Clot (#172)-
    I watched some re-run of The Apprentice on CNBC the other night while traveling. I just caught the last 5 minutes.
    Some lady was quitting because he was making the losing team sleep in the yard in some tent. She said that she had enough. Thanks, but no thanks.
    He and his dopey offspring, who have never done a hard day’s labor, are talking to this woman about never quitting.
    It was a bit condescending to see three winners of the ‘gene pool lottery’ lecture someone else about quitting. He has made a living, using his celebrity to restructure his debts.

  168. rhymingrealtor says:

    (((the religious zealousness is quite overbearing)))

    Without sounding like a broker record, Richard why are you at this church??

    KL

  169. Clotpoll says:

    BC Bob (174)-

    Funny, most of the things I really remember about the USFL involved suspicious (and very exciting) endgame situations that- I think not coincidentally- affected the outcomes vs. the spread. Knowing now the precarious payroll situation of some of the weaker teams only solidifes my belief that points were regularly shaved. In fact, I am to this day convinced the 1985 Baltimore-Oakland championship game was fixed.

    I didn’t live in Memphis then, although I visited a lot and caught many Showboats games on the then-fledgling ESPN.

    I do remember attending several games and watching teams try every trick in the book to stop Reggie White from killing their QB. Nothing worked. He is still the only d-lineman I have ever seen triple-teamed.

    The only other athlete I’ve ever seen dominate in this way was Julius Erving in his first year out of UMass, playing against the old ABA Memphis Pros. He dropped 59 points in three quarters on a series of slow white guys who couldn’t even see him, much less stop him. They held him out for the whole 4th quarter, because he’d already drawn two flagrant fouls, and the game had nearly devolved into a riot. When my Dad and I realized Julius wasn’t going back in, we got up and exited the building. Nothing left to watch.

  170. Clotpoll says:

    BC, I don’t remember your friend Ice Cube. I do remember that team, Jim Kelly, Mouse Davis and the Run & Shoot. Complete jail-break football. Very fun to watch.

  171. BC Bob says:

    Clot,

    Speaking of the great Dr.J, is the selling off of him for a fire sale, as a result of a contract dispute with Roy Boe the second biggest blunder is sports history??? One that has haunted the Nots for years.

    Of course, we know # 1, the Bambino to the Yanks to finance No-No Nanette [spelling ??].

  172. Clotpoll says:

    Up there with Ryan for Fregosi, Brock for Broglio and Sosa for Manrique (Dubya still calls it “the biggest mistake of my adult life”…although he may be topping that soon).

    Before Dr J got sold off, he came back to Memphis with the Nets (Lou Carnesecca coaching!). By the end of the 1st quarter, the entire crowd was behind him. Just unbelievable.

    I remember that night being the point at which the fantasy of becoming a professional ballplayer completely exited my mind. Forever.

  173. Rich In NNJ says:

    Reeeechard…..?

    I thought so……….

  174. SAS says:

    This RE ship is about to sink.

    SAS

  175. att says:

    Can someone pull up the sale history as well as listing history of following mls on realtor website:

    709428

  176. njrebear says:

    #176 cf, thanks.

  177. BC Bob says:

    “There has been a wake-up call this month,”

    Post 176,

    Wake up call???? HMMMMMNNNNN.

  178. BC Bob says:

    “I think not coincidentally- affected the outcomes vs. the spread. ”

    Clot,

    You are the king of the spreads.

Comments are closed.