The bust is just beginning

From Bloomberg:

Housing Slump May Force Fed to Pare Annual U.S. Growth Estimate

The U.S. may be saddled with more sluggish growth than the Federal Reserve expects as the economy struggles to shake off a lingering hangover from the housing bubble.

“We’re in the midst of a classic boom-bust credit cycle in housing,” says Andy Laperriere, managing director at International Strategy & Investment Group in Washington. “And the bust is just beginning.”

The worst case: Distress already evident in the riskiest part of the mortgage-lending industry turns into a full-scale credit crunch that cripples the housing market and the economy.

More likely, say forecasters at ISI, UBS AG and Deutsche Bank AG, is an economy stuck at about a 2 percent growth rate in coming quarters, down from 3.4 percent in 2006, as housing demand remains in the doldrums.

“The ultimate extent of the housing-market correction is difficult to forecast and may prove greater than we anticipate,” he said.

Hopes for an early revival took a knock on Feb. 16 with news that housing starts plunged 14.3 percent in January to an annual pace of 1.408 million. That was the lowest level since 1997 and well below economists’ forecasts of a 1.6 million rate. In response, St. Louis-based Macroeconomic Advisers LLC shaved its forecast of first-quarter growth to 2.8 percent from 3 percent.

“There’s a high probability that we’re going to get another tranche down in housing” as banks and other lenders make it harder for buyers to take out mortgages, says Ivy Zelman, housing analyst for Credit Suisse Group in Cleveland.

The financial fallout from the housing slump delivers a one- two punch to the industry and the economy.

It increases supply as homeowners with adjustable-rate mortgages can’t meet the higher loan payments and are forced out of their houses. Mortgage foreclosures monitored by Irvine, California-based research firm RealtyTrac jumped 19 percent in January.

The credit squeeze also depresses demand as prospective buyers find it more difficult to obtain loans. According to a Fed survey published on Feb. 5, more U.S. banks toughened lending requirements for home loans in the final three months of 2006 than in any quarter since the early 1990s.

The financial stresses are most evident in the subprime mortgage market for the riskiest borrowers. The segment accounts for 13 percent of the $10 trillion in home loans outstanding, according to Inside Mortgage Finance, a trade publication.

Some 20 percent of the roughly $1.2 trillion in subprime loans made during the past two years will end in foreclosure, with owners losing their homes, says the Center for Responsible Lending in a study. The center, located in Durham, North Carolina, is a nonprofit organization financed by the Ford Foundation and Rockefeller Foundations, among others.

The strains, though, aren’t isolated in the subprime market. Delinquencies on adjustable-rate loans to prime borrowers rose to a three-year high of 3.1 percent in the third quarter of 2006 from 2.3 percent a year earlier, according to the Mortgage Bankers Association. Lenders are slated to reset as much as $1.5 trillion in ARMs this year.

“I would expect credit performance to slide in other sectors besides subprime,” says Richard Brown, chief economist at the Federal Deposit Insurance Corp. in Washington.

What’s particularly troubling is that many borrowers are having problems making payments at a time when the job market is strong and the unemployment rate is near a six-year low, says Nouriel Roubini, chairman of Roubini Global Economics and professor of economics at New York University.

“This a taste of what could happen,” says Joshua Rosner, managing director of research firm Graham Fisher & Co. and co- author with Drexel University Associate Professor Joseph Mason of a paper on mortgage-backed securities. “The housing market could take another leg down as the credit cycle turns.”

This entry was posted in Economics, National Real Estate. Bookmark the permalink.

222 Responses to The bust is just beginning

  1. anon says:

    could investors demand higher interest rates to offset higher insurance costs? and will this cause 30 yr to diconnect from 10yr treasury?

  2. SG says:

    MarketWatch
    A flood of foreclosures, but should you invest?
    By Amy Hoak
    Experts caution potential buyers to do their homework

    CHICAGO (MarketWatch) — The number of homes in or nearing foreclosure is growing, and some investors are taking advantage of the bargains created. But even with a steady stream of distressed properties coming on the market, jumping into foreclosure investing is dangerous, especially if you are not familiar with the process or new to real-estate investing.

    http://biz.yahoo.com/cbsm/070218/39842941302942a3be702cf6a3614af8.html?.v=1&.pf=real-estate

  3. x-underwriter says:

    could investors demand higher interest rates to offset higher insurance costs? and will this cause 30 yr to diconnect from 10yr treasury?

    I wouldn’t be suprised if this results in increased mortgage rates, especially in the B-C area. Those mortgages are totally underpriced to begin with

  4. James Bednar says:

    Contrarians take notice..

    Max out savings before cashing out the house

    A financial planner recommended we cash out 70 percent to 80 percent of our house value and invest that money while carrying an interest-only loan. The planner’s idea is that you should always carry a mortgage, never pay it off and instead use the money to invest elsewhere.

    I am not 100 percent sure what he is proposing to invest in exactly, but it is going to be in stock. He is going to open an account for us and he will be managing the money. He doesn’t guarantee results, but says we can expect 10 percent average annual returns. What are your thoughts on this? This guy is using the title of financial planner, but he sounds like a real salesman.

  5. njrebear says:

    jb or others,
    Article on subprime credit crunch on WSJ
    CR has part of the story posted on his blog.
    >>
    Home Lenders Cut the Flow Of Risky Loans

    http://online.wsj.com/google_login.html?url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB117245665740318975.html%3Fmod%3Dgooglenews_wsj

  6. Tom Mul says:

    The financial “planner” has plans for YOUR money. He will generate income, for him/her self, investing YOUR money. (Risking would be a better word.)
    Of course he recommends always having a mortgage, (that frees up money for him to use).
    For your safety, look at it this way:
    A 7% mortgage on 200,000 = 14,000 interest annually on an Interest-only mortgage. If you are in a 30% tax bracket, it’s costing you 14K to save 4,200 in taxes.
    Yes, you are dealing with a salesman, and I suggest that in times like these, keep your home safe and paid for, cash is king.

  7. BC Bob says:

    “The housing market could take another leg down as the credit cycle turns.’’

    The market flips the switch when nobody is paying attention, buyers are non existent, inventories explode, prices come down. Free plasma’s, free closing cost, price drops and then a flurry of buying. The bottom is in. Subsequently, the credit cycle turns, liquidity starts to dry up or premiun rates are paid for paper. More price drops and major incentives, then a flurry of buying. Another bottom is in. Sh*t this is worse than anybody expected, maybe a recession, a major builder goes down, consumer confidence is at a low. Bam, bam, prices fall hard. A flurry of buying?? Maybe not, now everybody is scared s*itless. What’s so hard about this picture?? It’s unfolding exactly as you have all stated for the past year. Be patient.

  8. BC Bob says:

    “He is going to open an account for us and he will be managing the money.”

    Total disaster in the making, unless they are investing in the NJ Vulture Fund.

  9. njrebear says:

    Bob or others,
    We talk about more money being printed and credit crunch at the same time. Can the two co-exist?

  10. BC Bob says:

    bear,

    When I refer to liquidity drying up, I meant the subprime, rates rising rapidly for this sector. The subprime is not going away, the question is what rate over benchmark will investors demand.

  11. njrebear says:

    thanks bob.

  12. James Bednar says:

    From the AP via Yahoo Finance:

    Greenspan Warns of Likely U.S. Recession

    Former U.S. Federal Reserve Chairman Alan Greenspan warned Monday that the American economy might slip into recession by year’s end.

    He said the U.S. economy has been expanding since 2001 and that there are signs the current economic cycle is coming to an end.

  13. njrebear says:

    http://biz.yahoo.com/ap/070226/hong_kong_us_greenspan.html?.v=4


    Greenspan Warns of Likely U.S. Recession

    Alan Greenspan Warns That U.S. Economy May Slip Into Recession by End of Year

  14. njrebear says:

    A quick U-turn by Mr Greenspan after having called a bottom couple of months back.

  15. Richard says:

    after an impressive 5 year run a slowdown of GDP even going flat is not bad. you have to look at the whole cycle not pick some point.

  16. njrebear says:

    Reeeeechard,
    Recession is not ‘flat’.

  17. AntiTrump says:

    50K price drop for this POS !

    MLS 2362213

    http://tinyurl.com/33pf7j

    Looks like this home is not going to participate in the *spring rebound*. Asking $810K for this POS. They’d have to pay me to live in this one.

  18. njrebear says:

    AntiTrump,
    I don’t understand why they post pictures of the garrage. Where is the picture of the house?

  19. AntiTrump says:

    Actually it’s just the Tool shed. The house is hidden behind.

  20. Seneca says:

    njrebear – cul de sac dude, CUL DE SAC!!! That’s worth another 200k right there.

  21. inverstorDavid says:

    AntiTrump,

    Is the house listed under GSMLS? or NJMLS?

    I couldn’t find it under NJMLS. and under GSMLS, I don’t know how to search for it using the MLS number.

    What town is the house in? does it have a big land? I have a hard time believing that that POS is listed at $810K.

  22. UnRealtor says:

    That “charming custom home” is in glorious Summit, NJ:

    MLS 2362213
    http://www.realtor.com/Prop/1074267469

    The bright yellow door alone is worth $100K easy.

  23. Richie says:

    A financial planner recommended we cash out 70 percent to 80 percent of our house value and invest that money while carrying an interest-only loan. The planner’s idea is that you should always carry a mortgage, never pay it off and instead use the money to invest elsewhere.

    Let me guess, the financial planner is also recommending a mortgage company for this loan as well, right?

    Tell the financial planner to screw him her/self. If you’re going to mortgage your house for the rest of your life, you might as well RENT. It’s cheaper, and you’re not responsible for upkeep and repairs. It only pays to carry a mortgage on a property if it is generating income (ie: multifamily, apartments, etc).

    Think about it, if you pay interest only the rest of your life; what is your gain when you sell the house? Most of the proceeds will go to the mortgage company. If you owned your house outright, and net a profit of $500k in the sale, most of that would be tax free with the current tax laws. The 10% you make on investments WILL be taxed.


    I am not 100 percent sure what he is proposing to invest in exactly, but it is going to be in stock. He is going to open an account for us and he will be managing the money. He doesn’t guarantee results, but says we can expect 10 percent average annual returns. What are your thoughts on this? This guy is using the title of financial planner, but he sounds like a real salesman.

    How can you “expect” 10% if it’s not guaranteed? Can you imagine taking a 10% hit on your investment if it goes down? Let’s say you cashed out $300k. That’s a $30k loss, and you owe even more on your house.

    Remember; you can only claim $3,000 of losses a year in investments.

    Ask him for some references. Speak to some of his clients before you do any business with him. It’s your money, don’t make it his.

    I would agree that I don’t have the time to look into where my money should be invested for my IRA (self-employed), so any recommendation that my FP gives me is always researched by me to see how it has done.

    -Richie

  24. SG says:

    Not sure about outcome, but this site makes person-to-person lending/borrowing easier for many. It does not take away the risk though.

    http://www.prosper.com/

  25. Richie says:

    Not sure about outcome, but this site makes person-to-person lending/borrowing easier for many. It does not take away the risk though.

    http://www.prosper.com/

    I wonder if this company is taking the “PayPal” approach and avoiding all cases of fraud.

    I’d be weary of borrowing/lending $$ to anyone over the internet.

    -Richie

  26. Richard says:

    no duh. i expect any recession if one happens to be short lived. the global engine is chugging along.

  27. DE says:

    #22 Maybe it comes with a life time supply of crack….You know the owners are on it….

  28. MJ says:

    China Tipped To Buy Euro,Asian Currencies In FX Reserves

    http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=5617bd70-7620-43c3-adae-03dff5c5e37f

    He said China’s forex reserves have suffered “extremely serious losses” in recent years and the government needs to ensure their appreciation by improving management.

  29. DE says:

    #13

    Greenspan also said he has seen no economic spillover effects from the slowdown in the U.S. housing market.

    “We are now well into the contraction period and so far we have not had any major, significant spillover effects on the American economy from the contraction in housing,” he said.
    ———————————————–
    If this is true this is going to be bad, real bad….This is just the start of the housing collapse.

  30. dreamtheaterr says:

    Mass psychology has turned sour for RE since it’s hit the MSM only recently…it takes a LOT to turn a herd of elephants the other way. The elephants (flippers, i/o, ARM buyers, spec builders) have been getting drunk for the last 3-4 years, don’t expect the hangover to last just a few months. This mess is going to take time to unravel. There will be plenty of false bottoms (fingers, toes, hair and ears crossed won’t help) and plenty of diapers are going to be wet along the way.

  31. 2008 Buyer says:

    Almanac of American Wealth…. NJ ranks #1

    Sadly, I’m not part of the millionaire club.

    http://money.cnn.com/magazines/fortune/almanacamericanwealth/2007/flash/?cnn=yes

  32. SG says:

    WSJ Article,

    Home Lenders Cut the Flow Of Risky Loans
    Default Fears Drain Subprime Pool, Adding
    To Pressures on Prices

    By RUTH SIMON, JAMES R. HAGERTY and MICHAEL CORKERY
    February 26, 2007; Page C1

    • The News: Default jitters are making investors less willing to fund risky mortgages.

    • The Result: Some Americans who want to buy homes will have to save money first.

    • The Outlook: Tougher lending practices are likely to add downward pressure on home prices.

    http://online.wsj.com/public/article/SB117245665740318975-vZcJs5vU2OnI4bpPkxOtQj_nhBQ_20070304.html?mod=mktw

  33. Duckweed says:

    “any recession if one happens to be short lived. the global engine is chugging along.”

    #26 brings up a question I’ve had for a while: how can one tell if local economic condition should move with a larger economy or move contrary to the larger economy?

    What if US-lead recession slows down the global engine? Then where do we go? Just a year ago people say the correction in bubble area housing won’t affect the rest of the country. Then 6 months ago people say the weakness in housing sector is temporary since the rest of the industry sectors/asset class are going well. What indicators should I look for to find out if a US-lead recession will setoff more wide-spread recession, or if global economic strength will lift US out of a recession? (I know this is still premature, and I’m not sure if US recession is in order).

    I’m wondering in the abstract since people here come from both camps–and I’m curious what rationale support either camp.

  34. chaoticchild says:

    A financial planner recommended we cash out 70 percent to 80 percent of our house value and invest that money while carrying an interest-only loan. The planner’s idea is that you should always carry a mortgage, never pay it off and instead use the money to invest elsewhere.

    Grim,

    it is so 2000. He is borrowing it from Rich Dad Poor Dad by that salesman Robert Kiyosaki link.

    The ideas is keep as much house or “good debt” as possible. Get the max tax deduction with house appreciation and invest the rest. Never pay towards the house because the equity in the house can’t grow.

    If housing market goes way above inflation every year the Rick Dad would work. However……

    RK is another keep rich quick scheme salesman.

    CC

  35. lowball says:

    from the Economist:

    Although Wall Street has been taking some subprime lenders under its wing, it has been helping to push others towards bankruptcy. As the market has turned in the past year, the big banks have started scrutinising loans offered up for securitisation far more closely–and are throwing far more than they used to back at the subprime lenders. Moreover, they can force the lenders to repurchase securitised loans if they turn sour in their first few months of life. Merrill Lynch has been on both sides of this tussle: it had a 15% stake in Ownit, the firm that went bust last week.

    Are Wall Street firms profiting from the subprime debacle by knocking off competitors of their newly acquired subprime lending units to gain market share and shorting them as they spiral toward bankruptcy. IOW, are Wall Street firms orchestrating and profiting from the subprime meltdown OR are they simply cleaning house?

  36. BC Bob says:

    “Carl Tash, a portfolio manager of Cliffwood Partners, a long/short real estate securities hedge fund that does not own shares in mortgage lenders, expects the “Alt-A” market to be the next issue in the mortgage sector”

    “Everyone says these problems are contained in subprime,” Tash said in a recent interview with TheStreet.com. “If you think about it logically, what is the difference [between subprime and Alt-A] ? Some arbitrary difference in FICO scores.”

    http://www.thestreet.com/_googlen/newsanalysis/banking/10340628.html

  37. Duckweed says:

    To further add, I suppose we could also have a self-contained recession due to completely local reasons (like that negative saving rate)–a long local recession that doesn’t drag down the rest of the world or getting any lift from the rest of the world.

    Just to cover all three possibilities. I have no convincing reason to think one scenario is more likely than another, but would appreciate enlightenment for those who have made up their minds about it.

  38. thatbigwindow says:

    Tons of young millionaires at the World Gym in Paramus. Everyone in their early 20’s has the latest i-gadget, and a BMW, Caddie, Mercedes, Land Rover, etc to match. Amazing!

  39. BC Bob says:

    “• The Result: Some Americans who want to buy homes will have to save money first.”

    From SG [32],

    What an outlandish statement. Save first??

  40. chaoticchild says:

    UnRealtor Says:
    February 26th, 2007 at 9:35 am
    That “charming custom home” is in glorious Summit, NJ:

    MLS 2362213
    http://www.realtor.com/Prop/1074267469

    The bright yellow door alone is worth $100K easy.

    It is in Brayton School / Memorial Field district of Summit. What is the so good about this area. I know somes houeses can walk to the train in 10 mins!!! But most houeses are smaller older homes with maintenance.

    Anyway I went to a few open houses in this area last summer, and house in area normally go for 800k-1m for not a lot of house!!!

    Anyway, a few more for you entertainment.

    link 1 (by owner)

    link 2

    Link 3 (1.5 bath)

  41. Clotpoll says:

    Grim (4)-

    That advice comes from a CFP? Jesus, it sounds like worse than a late-night infomercial. That strategy would maybe be appropriate for the .01% of the homeowners out there who have the “T” gene (the “thrill-seeking, can’t percieve risk” gene).

  42. James Bednar says:

    Reminds me of the SNL “Don’t buy stuff you can’t afford” skit.

    jb

  43. Clotpoll says:

    BC (8)-

    Is there still time for the vulture fund to buy some more defaulted & discounted 3rd world debt?

  44. Clotpoll says:

    Grim (4)-

    And while that CFP’s at it, why should he buy stocks with the borrowed money?

    He should lever up again and play options instead. LOL!!!!

  45. James Bednar says:

    That CFP story is pretty bad, but I can’t imagine it to be a common scenario. At least I hope that it isn’t.

    Now, cashing out equity to lever up and make real estate investments? Pretty common.

    I know of someone who just this past week took out a massive HELOC to buy a teardown and build a spec.

    God bless, I wish them the best.

    jb

  46. James Bednar says:

    They played the game two years back and did very well. The decision to go forward on this deal was a “no brainer”.

    jb

  47. Clotpoll says:

    Duckweed (33)-

    Not sure about how I feel about how to read regional vs. national economic stats, especially on making comparisons of the severity of downturns. However, I feel that there is enough evidence out there to prove that rolling, sector-specific recessions are plausible and possible within a context of overall economic health. I think that’s one of the big permanent changes brought about by globalization.

    Yet, I have a hard time believing that a major, widespread housing downturn won’t have significant spillover effect. Housing is just too tied into many other areas of the economy.

    Guess we’re about to find out, huh?

  48. HEHEHE says:

    Greenspan also said he has seen no economic spillover effects from the slowdown in the U.S. housing market.

    “We are now well into the contraction period and so far we have not had any major, significant spillover effects on the American economy from the contraction in housing,” he said.

    Unless you hold Home Depot, Loews, or a subprime lender stock or you’ve been laid off by one of them.

  49. 2008 Buyer says:

    I would be very surprised if a long term (if this happens) downturn in the housing market doesn’t affect other markets. Some people feel their wealth based on their investments (namely their house). And if they feel pressured due to what ever reasons (need to sale, need to refinance, can’t afford to buy, etc.) it will affect what other goods (outside of necessities) they buy. Never really understood how “consumer confidence” is measured. Funny thing is..for some it is a necessity to have a BMW and $300 jeans.

  50. lowball says:

    first-hand info straight from the horse’s mouth…

    Greenspan: Recession later in 2007 is possible

    translation: Recession later in 2007 is as sure as death and taxes.

  51. rhymingrealtor says:

    ((((They played the game two years back and did very well. The decision to go forward on this deal was a “no brainer”.)))))

    That is a sentiment that is very common. I have friends, I’m sure I’ve mentioned before. Invested in condo to resell 10-05 3rd buyer of same unit. They are still sitting with it borrowing monthly to pay a mortgage “they were’nt going to make one payment on”
    Won’t walk away. Digging further and further into hole, brand new construction across street selling for less than they paid for year old unit. But most important point is… If they had sold it by some miracle in the time period they thought for the amount they thought, after taxes they would have made about 40,000 not alot of money to risk so much but… Here’s the thing.
    They would have done it again. That would have been to great a deal to not try again. So either way they would have lost.

    That is the nature of greed.

    KL

  52. James Bednar says:

    Is Greenspan saying he sees a recession coming?

    or

    Is Greenspan saying that he thinks Ben and Crew should cut rates preemptively to keep the party going?

    jb

  53. chaoticchild says:

    or

    Is Greenspan saying that he thinks Ben and Crew should cut rates preemptively to keep the party going?

    oh boy, we know what preempting can do.

    CC

  54. James Bednar says:

    Links don’t work right.

    jb

  55. Judicious1 says:

    “credit squeeze” “housing slump” “financial stresses”

    I wasn’t expecting to see these expressions used by the MSM until much later in ’07 as hundreds of billions in ARMs reset. The amount of weakness we’re already seeing is a little unsettling. (and to be honest, I was kind of looking forward to it!)

  56. James Bednar says:

    Question for the securitization/finance gurus.

    At what point will investors shy away from utilizing ABX as “insurance”? At some point the cost of this “insurance” will become prohibitively expensive. I can only make a very naive assumption that some will opt to “swim naked”, while others abandon these instruments in search for alternative hedges.

    jb

  57. gary says:

    We went to an open house (somewhere in West Essex) yesterday and the realtor told us that we’d probably be the only ones he’d see today (yesterday). Anyone care to translate this?

  58. BC Bob says:

    “Anyone care to translate this?”

    Gary,

    Maybe there is another Super Bowl in 2-3 weeks??

  59. lisoosh says:

    Clot/KL, any other Real Estate Agent –

    Of the people out there who are buying, are they first timers/ contingency free, or trade ups? Just curious.

  60. gary says:

    BC Bob,

    Why, of course! :)

  61. rhymingrealtor says:

    Lisoosh,

    I have been encountering only these two types of buyers:

    1)Trade-ups w/contingincy
    2)First time buyers without money.

    The trade-ups are moving out of town. The no- moneys are moving in.

    KL

  62. x-underwriter says:

    I work at Chase Mortgage in I.T. I just noticed this on the internal homepage:

    When people lose their homes because they can’t make their mortgage payments, nobody wins. Couples are more likely to split under severe financial stress. Children might have to change schools. Other houses in the neighborhood may lose value. Banks lose income and customers, and their reputations suffer.
    To avoid outcomes like these, Chase helped set up a hotline in Colorado, where one in every 408 households is in some stage of foreclosure—the highest rate in the U.S. in 2006. Nearly 9,000 people have called the hotline since it was launched last October.

    The number?
    1-877-601-HOPE

    Maybe if these people hadn’t dialed 1-800-I’M-DUMB two years ago, we wouldn’t have to have this number up now

  63. chicagofinance says:

    dreamtheaterr Says:
    February 26th, 2007 at 10:43 am
    This mess is going to take time to unravel. There will be plenty of false bottoms (fingers, toes, hair and ears crossed won’t help) and plenty of diapers are going to be wet along the way.

    dream/index: yes – and well put

  64. chicagofinance says:

    James Bednar Says:
    February 26th, 2007 at 11:17 am
    That CFP story is pretty bad, but I can’t imagine it to be a common scenario. At least I hope that it isn’t.

    grim:

    #1 is this revenge for all the Polish jokes :(

    #2 stop leaping across important distinctions…….there is a difference between a financial advisory, which is a subset of financial planning. Also a CFP crtificant is also a different animal.

    http://chicagofinance.blogspot.com/

    There is also a big uproar in the community about CFP’s and their responsibility to function as fiduciaries, but allowing essentially stockbrokers (who carry the CFP moniker) to be exempt under the SEC umbrella – a big sack of bull—–

    If said advisor was a CFP, and the Board caught wind of this behavior, he would be admonished or worse.

    http://www.cfpboard.org/media/release.asp?id=152

  65. RentinginNJ says:

    x-underwriter,

    What do you get by calling this number? So far, most of the “help” offered by lenders sees to be in the form of refinancing into a new teaser loan, for a small fee of course, and adding the fee along with penalties and late fees to the balance. Borrowers basically seem to get a little more time on life support, a bigger loan balance, but no real sustainable way of keeping a house they couldn’t really afford.

    At the end of the day, if you borrow more than you can afford to pay back, you are in trouble. Getting creative with the terms of repayment only serves to delay the hangman.

  66. James Bednar says:

    Give it a call, role play a bit.

    jb

  67. chicagofinance says:

    grim: un-moderate me

  68. Richie says:

    We went to an open house (somewhere in West Essex) yesterday and the realtor told us that we’d probably be the only ones he’d see today (yesterday). Anyone care to translate this?

    Yes, I have several explanations for this.

    1. People were to busy preparing for the Oscars. People had to stop before 5:00pm so they can see the Red Carpet walk throughs.

    2. People were still mourning Anna Nicole’s death.

    3. People were frightened that between 1:00-4:00pm NJ would be entrenched in 12″ of snow.

  69. bairen says:

    #34 I had a realtor on sunday preach to me the benefits of no money down I/O. Any down payment/principal is “money that is stuck in the walls and can’t grow”. I smiled and fled holding one hand over my wallet and the other over my rear.

  70. bergenbubbleburst says:

    Another sign of the time perhaps? A house in my town has fallen out of contract 3 times since mid Dec-06. In all 3 instances the buyers were paying full asking price, no money down.

    House is now back on the market at the same asking price.

  71. x-underwriter says:

    RentinginNJ Says:
    x-underwriter,
    What do you get by calling this number?

    Beats me. I hightly doubt they will be giving you anything. Maybe they say a prayer with you that you’ll get a job or win the lottery (1 800-HOPE). Maybe some kind of refi. Once you have recent mortgage lates on your credit report (30 days or more), you’re like a blind date with aids though. Nobody can give you a decent loan

  72. James Bednar says:

    CF,

    Thanks for the correction.

    jb

  73. Tom Mul says:

    I own a paid-for in Northvale, and the house next door, (paid-for too)’93 , and another rental in Norwood, purchased in ’86, 84K mortgage.
    The only things holding prices together are the school systems.
    I’m presently building a vacation/retirement home in the Catskills.
    It’s unreal how many people tell me not to spend too much, as I’ll never get any return on my dollar.
    My answer is this: Every moment I spend in the house I build is the payback.

    I’m 54, have lived frugally since I met my wife in ’82, don’t drink or eat at restaurants, and pay cash for everything except housing.

  74. Judicious1 says:

    rhymingrealtor;

    Just curious, have you ever experienced a first-time buyer in a really good financial position? Like, let’s say, a couple buying first home with $400K to put down on an $800K house, $350K annual income and 800-ish credit scores?

    If you haven’t, you may be seeing some of these in a few years once it’s safe to go back in the water. Thoughts?

  75. Tom Mul says:

    #4, is the financial planner’s first name Casey ???

  76. NJGal says:

    Ooh, with the exception of the 400K down (since we have been paying student loans, and mommy and daddy didn’t give me any money and we didn’t own prior to 2001), judicious1 you just decribed hubby and I to a tee, and we’re currently looking (and yes, my credit score is over 800 – his is only a few points lower).

    We actually went out this weekend and surprisingly, found something we love. We are waiting for comps, etc. from the broker, and plan to offer about 100K off the asking (give or take and depending on what the comps are – I’m realistic in my lowballs). Frankly, the house is more than I thought I would get and less than I planned to spend. However, I am not getting attached, because it was only one of about 15 houses in the town in that range, and I didn’t see even half of them. The seller will KNOW that they aren’t the only game in town and that it’s no skin off of our backs to wait it out for something better. And I found a real estate agent I like – go figure.

  77. bairen says:

    #22 Unrealtor

    I looked at cape cods in madison and Chatham and was pretty disgusted. You would think for 500k in one of those towns a cape would look like an after picture on HGTV. no. Tiny, ancient kitchens, unfinished basements, awful carpeting. Panelling, yes that ugly 70’s crap everywhere. No yards. Virtually anything under 529k is along the train tracks, electric transformers, or across from light industrial buildings.

    I think some of these sellers could do better holding onto their house and rezoning it as a bad taste museum. Scary stuff to look at.

  78. twice shy says:

    I read in a newspaper RE supplement the other day that in Millburn the median income is $143k, and the median home value about $935k. This struck me as impossible. I’m quoting the numbers from memory but they are ballpark.

    For you statistics folks, how does a median inc. of 143 support house prices at $935? I guess the houses have appreciated, but– I can’t see 150k income buying an 800k house, let alone over 900. Can anyone shed light on the relationship to published median income in Millburn and current house values? Something seems seriously out of whack, but maybe it is just my math.

  79. bairen says:

    I don’t unerstand how rundown, tiny cape cods and ranches can sell for 500k with 7k annual taxes. Only someone making over 100k would have a chance to carry that mtg. Yet I think the people who do make over 100k a year for the most part have at least above average intelligence. So why would someone with above average itelligence pay 500k for a poorly mainatained house simply because its in a fancy town? Its frightening how financially ignorant people are.

  80. chaoticchild says:

    NJGal,

    I know you subscript to the existence of RE bubble. Why would you want to purchase at this time.

    Do you think 100k below comp would give you better insultion???

    If it is ok. can you tell us what % is 100k in OLP??

    What is your % break-even point? 10%, 15% off OLP??

    CC

  81. Beans says:

    #82 Twice shy:

    My guess is that these people bought when their homes were worth a LOT less. We are looking at houses in the 800-1M range and the tax records indicate that they were bought in 1999 for 400-700K. Moreover, a lot of the really “nice” houses we’ve seen that were bought a long time ago are actually pretty crappy on the inside, so the “home value” may be off as well.

    -Beans

  82. chaoticchild says:

    RE: twice shy

    $143k and 934K is everyone in Millburn owns houses. Most of these folks owned before 2001.

    The comp between Median income and home value before 01 is probably not too out of whack.

    CC

  83. chaoticchild says:

    RE #81 Bairen,

    At present home listing price, anything below 750k is trush in Short Hills/Millburn, Summit, Madison or Chatham.

    From 750k – 900k, you get mixed bag. (crappy house on a good block or decent house on a ok block.)

    It is what it is. I know it is crazy but it is reality.

    I hope it gets better in couple of years.

    CC

  84. bergenbubbleburst says:

    #87 It will get better, it already is. Watch the Spring market unfold.

  85. bairen says:

    #87 chaoticchild

    It’s insanity. I think we’ll go to Atlanta for a family vacation to see what it’s like. We looked at Charlotte last year and liked it.

    A realtor called me last night and asked me what I thought of a house I had viwed last week. I told her the thought of paying over 3k a month and be on the hook for 500k to own that place made my stomach churn and we are going to rent till the bubble pops or we move out of state. Stunned silence. Then was told this is an expensive area. I told her its not just expensive, its way over priced.

  86. Judicious1 says:

    NJGal – I knew there were couples out there like you and your husband. My wife and I are in a really good place financially, but we’re still going to wait for a while (at least 2 years, maybe longer) before seriously considering our first home purchase. Good luck to you.

  87. NJGal says:

    Chaotic said:

    “I know you subscript to the existence of RE bubble. Why would you want to purchase at this time.

    Do you think 100k below comp would give you better insultion???

    If it is ok. can you tell us what % is 100k in OLP??

    What is your % break-even point? 10%, 15% off OLP??”

    I was never a 50% drop believer, and I do worry more about personal circumstances. 100K off would definitely give me insulation. The house is listed for 769, so it would be a little over 10% off, and in Westchester, where prices nominally have already fallen almost 5%. Plus, I’m not certainly buying. I’m making an offer, and will walk away if I don’t feel comfortable.

    But I’m a long termer, and this house is almost as large as my parents’ house (over 3000 sq. ft.), where they raised two kids (in fact, land wise, it’s much bigger – an acre). It could easily be expanded, and is on a cul de sac in a good school district in a town we love. Plus structurally the condition is pretty good (cosmetic work needed). And since I was prepared to spend up to 900K, well, it’s a heck of a deal for me, and below the conservative estimate of 2.5x the gross salary. But again, nothing is for certain yet!

  88. NJGal says:

    PS – Judicious, we’ve been working on this since ’04, and we’re almost married 4 years. It’s not a rush decision, so I’m more comfortable with it. And yet, I still may end up waiting another year! We’ll see!

  89. Richard says:

    mls #2355932 in summit. i know this section well as i have some friends that live in it. this house would’ve sold for $610-$615k at the ’05 peak as i know a few that did. its about 8% off and still on the market. everything i’m seeing in the ‘top’ towns is showing a similar difference in price from peak.

  90. Beans says:

    #88:

    Not sure if it’s better at all yet in those “blue ribbon” towns: a house we looked at this weekend went under contract in 3 days. And we thought it was overpriced even for the current market! I guess not many people even look at comps anymore?

  91. Michelle says:

    #81
    Things aren’t any better in Montain Lakes. Just saw a 3 bed cape this weekend listed for 649k – last renovated in 1970. Taxes are 10 grand!

  92. skep-tic says:

    I really think the next 6 months will determine whether a soft or hard landing emerges…. I have gone back and forth, but at this point I really don’t see any upside to buying before we see how this turn in the credit cycle plays out

    there is no shortage of inventory. why not wait?

  93. Judicious1 says:

    NJGal – my advice…and I’m no “expert”…at least wait out ’07. Good luck.

  94. NJGal says:

    Judicious, I may. But it all depends.

  95. Beans says:

    Skep-tic:

    We had the same conversation in our household this weekend. Things will either stay the same or get better for buyers. So, unless it’s our ultimate dream house, we’re waiting until the fall at the absolute earliest. It’s still complete madness out there.

  96. NJGal says:

    PS – folks I only have one more year allowed in my rental – being converted to condo. hence the reason we have started looking – I expect the process to take awhile (even though we found this one place)

  97. bergenbubbleburst says:

    #99 NJGAL: there are still condo conversions going on?

  98. chicagofinance says:

    NJGal Says:
    February 26th, 2007 at 2:29 pm
    PS – folks I only have one more year allowed in my rental – being converted to condo. hence the reason we have started looking – I expect the process to take awhile (even though we found this one place)

    NJGal: if that is an eviction conversion, then you should be given proper compensation (you are in NYC – yes?

  99. NJGal says:

    ChiFi, I am in Hoboken! I don’t mind getting booted though – we’ve been there 7 years. We’re tired of Hoboken. SO tired of it.

    And by the by, the conversion is NOT going well – either one or no renters bought and nothing is selling. Boo hoo to the greedy developers, huh?

  100. Richard says:

    >>I don’t unerstand how rundown, tiny cape cods and ranches can sell for 500k with 7k annual taxes.

    easy, location of the land. some will tell you forget what sits on the property you’re paying for a parcel and its proximity. you can always build up/out/tear down but you can’t move the land.

  101. Lincoln78 says:

    NJGal [103],

    I hear you about being SO tired of Hoboken, and i’ve only been here for 5 1/2 years.

    I pass by realtors row on Washington Street and keep seeing $400k+ for shoddy 1Br’s.

    The puzzing thing to me is that rents keep going upupup… not only in Hoboken, but in JC, Weehawken, Union City (Blvd E) etc. I know it’s a “desirable” area but come on!

  102. NJGal says:

    Lincoln, remember this – those rents in hoboken still won’t cover most of those mortgages! You can’t walk on Washington without seeing a realtor – uh, yeah, that town has SUCH character!

    And my rent is good because we’ve been there so long.

  103. Richard says:

    >>We are waiting for comps, etc. from the broker, and plan to offer about 100K off the asking (give or take and depending on what the comps are – I’m realistic in my lowballs).

    good luck. realistic and lowball don’t belong in the same sentence. if you lowball long enough and have a wide tolerance level you might be able to find a nugget.

  104. James Bednar says:

    From Bloomberg:

    Moody’s, McGraw-Hill Shares Reduced by Credit Suisse

    Shares of McGraw-Hill Cos Inc., the owner of Standard & Poor’s, and Moody’s Investors Service were cut by Credit Suisse on concern that rising subprime mortgage defaults will slow demand for ratings of securities backed by home loans.

    Credit Suisse lowered McGraw-Hill to “neutral” from “outperform” and reduced its price target on the shares to $71 from $77. The firm downgraded Moody’s to “underperform” from “neutral.” Both companies are based in New York.

    Shares of Moody’s, whose largest investor is billionaire Warren Buffett’s Berkshire Hathaway Inc., dropped 3.20, or 4.75 percent, to $64.24 at 2:24 p.m., their biggest slump in 10 months. The shares have tumbled about 16 percent since reaching an all-time high of $76.09 earlier this month as delinquency rates on loans to riskiest borrowers rose. McGraw-Hill shares have declined to $65.38 from the high this month of $69.74.

    “This is the first real threat to a major source of growth the ratings agencies have had in a long time, so we think the stocks may have a difficult time until we have more clarity into the implications for these issues,” Credit Suisse analyst Brandon Dobell in Chicago wrote in a research note dated today.

  105. njresident286 says:

    From nj.com chatham forum –

    this guy had posted about not being able to sell his house, and now he is posting about his offer.

    http://www.nj.com/forums/chatham/index.ssf?artid=1381

  106. James Bednar says:

    Cutting/Pasting that text here for “posterity”, those things have a way of disappearing at the nj.com forums.

    First let me say thanks to the good people on here who gave me advice and encouragement. We had an offer this weekend on our house, but it was only for $900,000. Unfortunately, at that number, I would end up owing the bank over $200K, not to mention having lost all the money ($500K) we put down on our 1.6 mil dream house. We were hoping to get $1.2 for the house and chalk it up as a lesson learned. We are still scheduled to move in March, so we will see what happens. In speaking with my realtor, she told me that the $900K was just a lowball, but suggested that we counter for just over a million. My wife and I passed on that advice. My realtor tells me their are over 175 houses on the market now and there will be several hundred more in the coming months due to spring selling season.
    I have to tell you, we have become real cynical over this whole process. We read realtors in the paper talking about “the worst is over” and “we are seeing an upturn in interest”, what a bill of goods that is. My realtor’s office in Chatham has lost several reps who are looking for a career change and she is constantly asking if we know anyone else looking to sell. I guess more listings means more short to sell “a” house. This realtor also said that our house would “fly off the market” when she was trying to get the listing. She talked about big wall street bonuses etc. Guess what, I work on the street and the people who got good bonuses were few and far between. Alot of my neighbors are feeling the pinch. One guy, seeing the trouble I am having, said he plans to be in his Chatham house for the next 30 years, just so he can be sure of not taking the beating i am getting. I will survive, but its a lesson learned. We bought the Bullspit that realtors spun us and overpaid for our house and now we got drilled on the reassessment. I am up $7K since I bought this house.

    Sorry to rant on, but its frustrating as all hell. The buyers are not out there now, my old realtor made her big fee and selling a house in Chatham after overpaying is leaving me holding the bag.

    The realtors and banks have me and many other Chathamites buried alive in our house. Its a sad reality.

  107. Richard says:

    >>NJGal – my advice…and I’m no “expert”…at least wait out ‘07. Good luck.

    i’ve heard wait out ’05, then ’06 now ’07? njgal will have to move once the conversion goes forward. she’ll have to make a choice on whether to uproot and move into another rental or get settled into a more ‘permanent’ situation. my money’s on the latter unless the finances completely make no sense. everyone is at a different place in life and those circumstances are what ultimately drive decisions even if you feel you are spending more today than you would tomorrow.

  108. NJGal says:

    Why was that guy in Chatham moving so soon after buying?

    I wonder if the failure of bonuses to magically bring buyers is common all over the tri-state area…making me want to really lowball this place I’m looking at!

  109. twice shy says:

    #110:

    Pass me the tissues, my heart is breaking.

    re: My Millburn median inc. vs. median values conundrum. Thanks for the responses. I’ll go with longer-term buyers sitting on huge cap gains. Who then steps up to buy today with a median income of 143k in these pricey towns? These prices have become unhinged from fundamentals and still are.

  110. NJGal says:

    “i’ve heard wait out ‘05, then ‘06 now ‘07?”

    Well, ’05 and ’06 turned out to be the right advice…’07 we’ll have to see.

    I would prefer a more permanent situation after this rental goes away…although it’s interesting, wondering if it will indeed go away, since the conversion is going so badly. I’m out by ’08 either way.

  111. Richard says:

    >>this guy had posted about not being able to sell his house, and now he is posting about his offer.

    sounds like a fictitious entry by a bubble believer. note the lack of any verifiable facts.

  112. BC Bob says:

    [110],

    This guy is hoping, at best, to get out at a 25% loss, before realtor’s commissions.

    Perception vs. Reality;

    1)Real Estate values never go down.
    2)Wall Street bonuses will save this market. What a bunch of crap, despite the 5 that bought in Westfield.
    3) Top towns will be immune to this bust.

  113. Renting says:

    So what do you guys think about towns like West Orange and Livingston?

    Are they good choices?

    Livingston has a great school system and West Orange is much cheaper

  114. BC Bob says:

    “she’ll have to make a choice on whether to uproot and move into another rental or get settled into a more ‘permanent’ situation”

    Richard,

    What’s permanent about renting adjustable money??

  115. Richie says:

    There’s plenty of rentals out there; as well as empty houses. Don’t rush yourself.

    It’s just like the fascination with buying the latest fad. Everyone wants it at first, then the fad dies down and eventually the people who bought in at the top can’t get what they paid for it (think of all the people who bought Elmos & Playstations this past Christmas season thinking they would double or triple their investment).

    Just look at the last boom-bust cycle (1987-1992) and figure out where we are in this cycle. History has a funny way of repeating itself.

    If you want a refresher, read Jim’s article about the last bust:

    http://njrereport.com/80sbubble.htm

    I just glanced over it again, and find it amazing how the verbage that was used back then is being used to describe today’s market..

    -Richie

  116. skep-tic says:

    “i’ve heard wait out ‘05, then ‘06 now ‘07?”

    waiting out 05 and 06 was smart. those who bought during these years at best have seen their investments eroded by inflation. at worst, the comps have deteriorated substantially as well.

    perpetual bears are annoying, but there has been little to like about RE during the past 12-15 months.

    there is a slightly better argument for buying now than a year ago, but the balance still tips in favor of waiting for most people. even the realtors are saying prices will be flat this year

  117. James Bednar says:

    sounds like a fictitious entry by a bubble believer. note the lack of any verifiable facts.

    Could be, but it would be quite an elaborate hoax, that user started posting around 5/31/05.

    I’ve been looking through the MLS listings and tax records to try to find the match.

    jb

  118. RentinginNJ says:

    ChiFi, I am in Hoboken! I don’t mind getting booted though – we’ve been there 7 years. We’re tired of Hoboken. SO tired of it.

    NJGal,

    Are there 3 or more units in your building? If so, you are entitled to 3 years notice after recieving the conversion plan.

    http://www.lsnjlaw.org/english/placeilive/irentmyhome/tenantsrights/chapterfourteen/#vacatenot

  119. RentinginNJ says:

    offoff

  120. RentinginNJ says:

    end italics end italics…

  121. bairen says:

    #111

    Chathamsteve’s story is sad, but WTF was he thinking when he bought the place for 1.6 million? how can someone who makes big bucks working on Wall Street not understand value and risk? He must be a subscriber to the efficient market theory.

    I think Chatham prices need to fall 30-40% more to get me interested. I’d rather move to Texas then buy a 500-600k house in Chatham at today’s prices.

  122. NJGal says:

    Rentinginnj, ’08 will mark the end of the 3 year entitlement. So that’s why we’re definitely out!

  123. UnRealtor says:

    For posterity, “The Chatham Offer”:

    309. Finally an offer (see 298)
    by ChathamSteve, 2/25/07 23:51 ET
    First let me say thanks to the good people on here who gave me advice and encouragement. We had an offer this weekend on our house, but it was only for $900,000. Unfortunately, at that number, I would end up owing the bank over $200K, not to mention having lost all the money ($500K) we put down on our 1.6 mil dream house. We were hoping to get $1.2 for the house and chalk it up as a lesson learned. We are still scheduled to move in March, so we will see what happens. In speaking with my realtor, she told me that the $900K was just a lowball, but suggested that we counter for just over a million. My wife and I passed on that advice. My realtor tells me their are over 175 houses on the market now and there will be several hundred more in the coming months due to spring selling season.

    I have to tell you, we have become real cynical over this whole process. We read realtors in the paper talking about “the worst is over” and “we are seeing an upturn in interest”, what a bill of goods that is. My realtor’s office in Chatham has lost several reps who are looking for a career change and she is constantly asking if we know anyone else looking to sell. I guess more listings means more short to sell “a” house. This realtor also said that our house would “fly off the market” when she was trying to get the listing. She talked about big wall street bonuses etc. Guess what, I work on the street and the people who got good bonuses were few and far between. Alot of my neighbors are feeling the pinch. One guy, seeing the trouble I am having, said he plans to be in his Chatham house for the next 30 years, just so he can be sure of not taking the beating i am getting. I will survive, but its a lesson learned. We bought the Bullspit that realtors spun us and overpaid for our house and now we got drilled on the reassessment. I am up $7K since I bought this house.

    Sorry to rant on, but its frustrating as all hell. The buyers are not out there now, my old realtor made her big fee and selling a house in Chatham after overpaying is leaving me holding the bag.

    The realtors and banks have me and many other Chathamites buried alive in our house. Its a sad reality.

    http://www.nj.com/forums/chatham/index.ssf?artid=1381

  124. Willow says:

    #118

    Livingston definitely over West Orange. Schools in Livingston are top notch and the taxes are better than West Orange. It has good services/recreation. It doesn’t really have a town center although they are building one – don’t know how that will work out for those who don’t live nearby.

  125. Richard says:

    jim the whole blog entry just doesn’t smell right let alone the fact that to buy something for $1.6 million, put $500k down and now the only offer you have would have you shelling out an additional $200k. i smell a rat.

  126. UnRealtor says:

    Post 298 referenced in “The Chatham Offer”:

    298. Cant sell my house

    by ChathamSteve, 2/10/07 22:23 ET

    I have had my house in town listed since the summer. I get alot of lookers/tire kickers but no offers. My realtor has had me reduce the price from the more than $1.6 mil I paid by several hundred thousand and still no interest. Unfortunately, we bought a house in princeton (I had a job transfer) and I cant afford two mortgages. We move next month as I just closed (after much stalling on our part waiting to sell). I am afraid our life savings will run out. We can probably handle 6 months before we exhaust our money. We are taking a beating as it is.

    Does anyone think there will be a turnaround soon to make this a sellers market again? My realtor keeps spinning that the market is heating up again. Of course she said that in september as well and we are still sitting on this house.

    http://www.nj.com/forums/chatham/index.ssf?artid=1315

  127. BC Bob says:

    “perpetual bears are annoying”

    Skeptic,

    Just bearish from 2005- maybe 2010?? What do you term the persistent rhetoric from the NAR??

  128. NJGal says:

    I don’t think it sounds suspicious…there are situations out there like that Richard, in any market…you always say the bubbleheads make stuff up but to ignore something bad that’s true is stuffing your head in the sand as well.

  129. bairen says:

    #129

    People who work on Wall St like to brag about how much they spend, what their home or vacation cost. Of course you very rarely hear them talking about the stocks they own that tanked.

  130. BC Bob says:

    “i smell a rat.”

    Richard,

    I did also. That’s why I got out.

  131. njrebear says:

    Options running out for short sellers!

    >>
    NYC’s largest homeless shelter closing

    http://news.yahoo.com/s/ap/20070226/ap_on_re_us/nyc_homeless_camp

    Every day, a bus picks up homeless men off the streets of New York City and takes them 70 miles out into the countryside to a shelter, in a practice that has been going on quietly since the Depression, when homeless people were called Bowery bums and fresh air was the solution to just about all ills.

    The 1,001-bed Camp LaGuardia is New York City’s biggest homeless shelter — and the only one surrounded by farms and trees — but its very existence is probably a surprise to many lifelong New Yorkers.

    Now the city is closing it down.

  132. chaoticchild says:

    Could this be Chatham Steve’s house Link

    CC

  133. skep-tic says:

    BC–

    perpetual bulls are just as annoying

    re: 2010– do you think it’s reasonable to make predictions so far out?

    what if prices go down 10% this year?

  134. Richard says:

    >>you always say the bubbleheads make stuff up but to ignore something bad that’s true is stuffing your head in the sand as well.

    one must prove it’s true first. i’m not saying it couldn’t happen just this particular blog entry smacks of deception, and a poor one at that.

  135. bairen says:

    #137

    skp-tic, if prices go down 10% this year they would still be way overpriced.

  136. James Bednar says:

    Richard,

    Call him on it, post a reply there.

    jb

  137. NJGal says:

    “one must prove it’s true first. i’m not saying it couldn’t happen just this particular blog entry smacks of deception, and a poor one at that.”

    Not really…just got an email from my husband about someone who could lose a lot of money on a place they bought last year in NY because of a job transfer. It sounds like a tough but not uncommon situation.

  138. BC Bob says:

    skeptic,

    It’s reasonable to me, 4-5 years. Price adjustments in RE take a long time. Look at the last decline, starting in 1988.

    “what if prices go down 10% this year?”

    It won’t change my thinking regarding the severity/length of the decline.

  139. Renting says:

    #128
    Willow,
    Thanks for the reply. Do you think the prices in Livingston will come down? Is there a chance to get a decent house between $350k-$450k

  140. skep-tic says:

    I’m not saying that a substantial multi-year decline won’t happen. In fact, it does seem more likely than a few other scenarios I can think of (such as sudden collapse or rebound to the upside)

    However, I cringe somewhat at the thought of planning my life for the next half-decade around such an idea

    If it really will take that long, I will not be waiting for the bottom

  141. njrebear says:

    yet another one goes down
    >>
    http://forum.brokeroutpost.com/loans/forum/2/97465.htm

    Here is the e-mail I just recieved:
    INTEROFFICE MEMORANDUM

    To: All Ivanhoe Mortgage Employees
    From: John Cassell
    Date: February 26, 2007
    Subj: Closure of the Ivanhoe Division

    Over the past several months we have informed you of the struggles Central Pacific has had with retaining adequate cash to fund its operations. Those struggles have continued to worsen and I regret to inform you that the Company is unable to fund the end of month payroll for the Ivanhoe Division.

    As a result, Ivanhoe Mortgage will be closed, effective today. Funding of Ivanhoe loans will not occur today or in the future.

    I’m sorry.
    >
    Ivanhoe Mortgage. is a well-capitalized, full service mortgage banking firm specializing in the origination, purchase, sale, and servicing of residential mortgage loans. The company is headquartered in Orlando, Florida, with retail branch offices throughout the Eastern United States.

    Ivanhoe is a significant player in the mortgage banking industry with mortgage loan production in excess of $2 Billion annually. The Company employs over 300 mortgage professionals .

  142. BC Bob says:

    re: Chatham house.

    Richard,

    Why all the skepticism?? I have no idea if it’s true or not. If it is, the potential buyer is bidding at a little more than 40% off asking price. What’s so peculiar about that??

  143. UnRealtor says:

    njrebear #145, love juxtaposition of the e-mail content against the boilerplate email signature:

    • “the Company is unable to fund the end of month payroll for the Ivanhoe Division”

    • “Ivanhoe Mortgage. is a well-capitalized… player in the mortgage banking industry with mortgage loan production in excess of $2 Billion annually”

  144. bergenbubbleburst says:

    #108 Richard: realistic based on what? On what some clueless uninformed no money down buyer paid, for a house back in 04 or 05, and now today’s sellers want that same fantasty price, and as such we should pay that? Why?

    There would be no need for low balling, if sellers were realistic, in their asking prices.

    Markets change

  145. RentinginNJ says:

    However, I cringe somewhat at the thought of planning my life for the next half-decade around such an idea
    If it really will take that long, I will not be waiting for the bottom

    If this doesn’t play out in a reasonable timeframe, I will be looking to relocate.

    I’m not necessarily looking for the bottom either, just an opportunity to buy a reasonably comfortable middle class home at a reasonable price. No starter homes, no suicide loans & no sweating at night choosing between Ramen Noodles or the mortgage payment.

  146. BC Bob says:

    Skeptic [144],

    Just my opinion. Everybody will act according to their own best interests. Noboby says you have to buy the bottom. It’s impossible to time.

  147. chaoticchild says:

    I’m not necessarily looking for the bottom either, just an opportunity to buy a reasonably comfortable middle class home at a reasonable price. No starter homes, no suicide loans & no sweating at night choosing between Ramen Noodles or the mortgage payment.

    amen

  148. njrebear says:

    Unrealtor,
    I picked the bottom half of the post about “Ivan In a Hole” mortgage from their webpage.

    http://www.ivanhoemortgage.com/aboutus_background.htm

  149. gary says:

    We actually went to three open houses yesterday. I’m so busy in work today I can’t get a chance to get my njrereport fix. The realtor at this open house as I stated earlier really surprised us when he said we’d probably be the only ones there. I wish I would’ve followed up with the “why” question but I didn’t. I guess I was still trying to digest all the things we talked about while we were there. It was a dated split going for 630K and even the realtor said it was over-priced. It was clean but needed new everything. The fair market price for this one: 430K.

    The 2nd house was an expanded stone cape with a little water falls and pond on the property that was really charming but not practical if you have a family. It had a little additional cottage (about 350 sq. ft.) on the property which was kind of beat up but cute nonetheless. The main house itself was very tastefully done and everything was pretty much upgraded in recent years. It wasn’t huge and had an open floor plan with no real dinning room or living room to speak of but was open all the way through giving the appearance of a DR and LR. That’s why I say it wasn’t practical. It really was charming with a fireplace in the main living area and a fireplace upstairs in the master bedroom suite. The other bedrooms were on the main floor. It looked like some of those expanded stone capes you see in Saddle River or parts of Ho Ho Kus. Picture Shrek’s house but kicked up a few notches. This one had a lot of action but still no takers. The asking price is 780K and like everything else, absurdly over-priced. The realtor actually called me last night and I sort of like her even though she was laying down the talking points pretty thick. I told her to save the speech (in a nice way) and told her that it’s a 30 yr. fixed and 25% below 2005 comps before I even take a whiff at anything. The fair market price for this one: 525K.

    House number three was me and my wife’s favorite. A true center hall expanded cape with 5 bedrooms and 3 full baths. The basement was clean and bone dry, the kitchen and baths were tastefully done and very recent with ceramic tile floors, granite counters, newer windows, freshly painted and spotless. The owner was a single guy in his late 50’s who just got married for the first time (I think I need to talk to him). I love this house but….. asking price: 880K with a recent 30K reduction. Sorry, drop another 100K and maybe you’ll reel some sucker in. I would offer 650K for this beauty.

    So, there you have it. If there are any sellers out there who actually want to sell their house, give me the general location where you live and description and I’d be happy to give you the price at which it will sell within days. Not the fantasy-I-want-to-get-rich-price but the real 4% to 5% normal appreciation price.

  150. Duckweed says:

    #144

    “If it really will take that long, I will not be waiting for the bottom.”

    Chasing the chart is a scary game. As scary as timing the top.

    I’d plan out my own price point–my own tolerable $/sqft, location, etc. And I’d act on that when I find something triggering my price/preference point.

    Sometimes we spend so much time finding fault with what’s out there that we don’t recognize the right thing when it comes along.

    To prevent that, I have 3 numbers taken down to remind myself: payable in 6 years, 1200sq, 30 min. commute.

  151. BC Bob says:

    “If there are any sellers out there who actually want to sell their house”

    [153],

    Record blog #’s tomorrow??

  152. waitingwatching says:

    gary #153,

    out of curiousity, what towns were the houses in?
    on the second one, perhaps they could use your shrek comparison and pitch it as a disney experience. but given the pricing, it’s more of a horror flick.

  153. gary says:

    BC Bob – Exactly.

    waitingwatching – Fairfield, Roseland and West Caldwell.

  154. Judicious1 says:

    #140 and #129 – JB and Richard:

    that blog post on NJ.com doesn’t look like a hoax. If you search on his name “chathamsteve”, he has been posting concerns on this property since May ’05.

  155. lostinny says:

    I don’t necessarily want to wait for market bottom either but with the way prices are, it might take the bottom for me to be able to afford to buy/want to take the plunge. I’d rather be funding my retirement by putting away 20% of my salary at 8% return then pay 3 times what I’m paying in rent at 6% interest. Oh and the taxes. That just makes more financial sense to me. Am I wrong?

  156. bergenbubbleburst says:

    Market started getting crazy in 03, out of control by 05, flat prices 06, declines have started in 07. Bottom over the next 2 years;very similar to how it played out late 80’s early 90’s.

    Before people start throwing out hope that prices will go down (and they are), perhaps we should wait and see how this Spring 07 market turns out.

    Are we seeing pre-Spring activity, I think so, will we see follow through going forward into March, April and May,? That is what we need to wait and see how it unfolds.

    I do not expect to buy at the absolute bottom, but I do expect a 20% or more discount to 05 prices, and my deadline is to be in my Fall of 08.

    If we Bears are wrong, and I do not believe we are,and prices do not come down, then the question that has to be asked, is is it worth it, and as much as I would like to own my own home again, I would have to answer that it is not.

    If I have to pay 500k and 10k in taxes, for a cruddy colonial, a crappy cape, or a rancid ranch, then I am not going to do it.

    There is no upside in my opinion, except and I will allow that it is a powerful instinct, and thatis psychological, wanting to say this house is mine.

    I have the proceeds from the sale of my last house, all invested, and performing nicely. I am debt free,and I save over 30% a month, with one child in college. How can I give that up, and convince myself that it is worth it, and the answer is I cannot, much as I would like my own place again.

    So I certainly do not see any downside to waiting a little more (12to 18 months) at this point.

    One thing for sure, prices will not be going up.

  157. waitingwatching says:

    gary, thanks.
    i hit a few open houses this weekend in union county. the lower price ones had fairly good traffic, but the others seemed pretty quiet, although we weren’t the only ones. what’s suprising in the areas we’ve been looking in is that there have been so few open houses in recent weeks (figured to see a post super bowl surge) and can’t tell if inventory has ticked back up as we were expecting.
    anyone out there with knowledge of union country towns have any thoughts on inventory situation there?

  158. Pat says:

    Based on J.B.’s last lowball spreadsheet, this guy’s story sounds very plausible to me.

    Speaking of lowballs?????

  159. HEHEHE says:

    “NJGal Says:
    February 26th, 2007 at 2:45 pm
    ChiFi, I am in Hoboken! I don’t mind getting booted though – we’ve been there 7 years. We’re tired of Hoboken. SO tired of it.

    And by the by, the conversion is NOT going well – either one or no renters bought and nothing is selling. Boo hoo to the greedy developers, huh?”

    NjGal, what building are you in? Hudson Tea?

  160. BC Bob says:

    Pat [162],

    I guess it boils down to one’s perception regarding the state of this market. If you view the market as an unrealistic, irrational, overbought mania, then it’s more than reasonable. On the other hand, if you bought in 2004-2005, very unsettling, at best.

  161. AntiTrump says:

    NJGal,

    If your price range is 700K and above, most of these homes have already corrected quite a bit from the peak. In 2005 the mantra was price it 100K more than a comp sale, but now I see much more value in in the 700K+ range. If you plan to buy and hold, I think you can find value this year.

  162. James Bednar says:

    Existing home sales due out at 10am tomorrow, should make for an exciting morning.

    jb

  163. chicagofinance says:

    NjGal, what building are you in? Hudson Tea?

    Hehehe: I’m in Hudson Tea. That conversion is official. The building is about 65% sold out. Most of the remaining studio/1BR units are still rented, hence unavailable, or else are 2BR/3BR, hence ubiquitous and unsellable (at least at Toll ripoff levels).

  164. HEHEHE says:

    I still can’t believe Toll is getting the prices they’ve been asking on any of those places. It has to be mostly flippers buying those things.

  165. chicagofinance says:

    The studios and 1BRs are selling.

    Not too many of those that have parking, elevator, gym, and waterfront.

    It doesn’t take much for two married 30 year olds to pull off a $450K place, or have dad co-sign your loan. Just check the tax records.

    BTW – Bob Toll is such a jacka55. He talks about the prices that these apartments are fetching and to paraphrase “…it’s not as if these are really luxurious places, these kids just have to pay a lot for them…..”

  166. sas says:

    anyone catch the Israel RE protest yesterday in Teaneck?

    must of been something…

    SAS

  167. NJGal says:

    Hey guys, I’m not in Hudson Tea – mine is midtown, smaller, you probably wouldn’t know it. But it’s a conversion nonetheless. They were a day late and a dollar short, so to speak, and they didn’t do much to the units. Plus, there was nothing outstanding about the units – at least the Hudson Tea has NYC views from some areas, and it’s in a desireable location uptown. Mine, not so much. Great rental, poor condo, lacking normal amenities for the prices they asked. Naturally, they are flexible now, but not enough to give anyone a good value in comparison to all of the new buildings on the market and even slightly older resales. Got a desperate letter just a few months ago offering a larger discount on our unit, blah, blah. But no thanks.

    And to whoever asked, I was willing to look at houses up to 900. So for me to pay low 7’s is good for me – as I said before, it’s below the 2.5x gross income that you are supposed to use to determine house price. And I do think there have been more reductions in this range, because I think for most people (since, despite the belief of many, not everyone works on Wall St.) this is the move up range (although frankly, unless I feel super secure this is the price range I’ll stay in for a while thanks!)

  168. UnRealtor says:

    JB #173, it’s “different.”

  169. njrebear says:

    http://forum.brokeroutpost.com/loans/forum/2/97624.htm

    Please be aware of the following: effective March 02, 2007, New Century Mortgage will no longer offer Interest Only loans* in the states listed below that have adopted the Guidance:

    New Jersey

    The change in product offering is limited to the states above and does not apply to any of the remaining states. This list will be updated as states change their requirements in connection with Nontraditional Mortgage Products.
    *We are still able to offer the 10-Year Alt-A Interest Only product.

  170. UnRealtor says:

    An article (PDF format) worth printing:

    “The New Road to Serfdom – An Illustrated Guide to the Coming Real Estate Collapse”
    http://www.shloky.com/files/housing%20boom.pdf

  171. UnRealtor says:

    njrebear, looks like lending is starting to tighten with each passing day. When will Wells Fargo, and the other big lenders follow suit? Right now, aspiring Debt Serfs still have numerous options.

  172. Frank says:

    Greenspan should be lacked up with Enron, Tyco and WorldCom guys for what he has done to the ordinary working people.

  173. Clotpoll says:

    KL (51)-

    More important, that’s the nature of stupid.

  174. Clotpoll says:

    Lisoosh (60)-

    No credible breakdown to give you, only anecdote. And anecdote isn’t an accurate answer to your question.

  175. Clotpoll says:

    Those guys at The Tribune Corp. in Chicago had better check their wallets.

    Sam Zell’s at the table with an offer.

  176. HEHEHE says:

    Chifi,

    I can understand a couple being able to buy a 1BR for 450K, funny thing is in 2003 that would have been a 2br/2ba with parking. How these RE bulls can’t see that as unsustainable price growth boggles my mind.

    In regards to flippers I was more referring to Harborside and Maxwell Place, though from reading those boards on Kannekt it looks like Toll has wised up and not allowed resales for one year after closing so they don’t have competition for their unsold units.

  177. Clotpoll says:

    2x Shy (82)-

    Not everybody in Millburn bought yesterday. And, guess what?

    Most long-time homeowners in NJ couldn’t afford to buy their own homes at today’s prices.

    Go figure.

  178. Commercial Real Estate Consultant says:

    twice shy Says:
    February 26th, 2007 at 1:34 pm
    I read in a newspaper RE supplement the other day that in Millburn the median income is $143k, and the median home value about $935k. For you statistics folks, how does a median inc. of 143 support house prices at $935? I guess the houses have appreciated, but– I can’t see 150k income buying an 800k house, let alone over 900. Can anyone shed light on the relationship to published median income in Millburn and current house values?

    Yea real simple… houses are way over priced in relationship to income. Oh yea New Jersey is full of risky idiots!

  179. Clotpoll says:

    NJGal (various)-

    Put a kill date on that offer. You don’t want that listing agent using your offer as a springboard to get some other interested party up and over your level. And, if you don’t think your offer is being “shopped” to other parties right now…think again.

  180. hobokenite says:

    Lincoln78 (106)

    “The puzzing thing to me is that rents keep going upupup… not only in Hoboken, but in JC, Weehawken, Union City (Blvd E) etc. I know it’s a “desirable” area but come on!”

    I used to wonder about that as well, but if you think about it, it makes sense.

    1. Recently, lots of “rental” properties have been converted to condos. Hence, the supply of rentals is much lower than it was a few years ago.

    2. The “smart” money has figured out that buying at the peak is stupid, so they’re choosing to rent. Hence, increased demand.

    3. The NYC market is very supply constrained in general, so the vacancy rate in general is quite low. The switch from a “must buy something” mindset to a “maybe I’ll wait” mindset is easily affecting the buy/rent balance. Kind of like a short squeeze if you will.

    4. The “must buy” mentality has kept rents artificially low for the last couple of years, so they’re just catching up.

    5. Rent control (at least in Hoboken) serves to artificially constrain the market for rental units. People who are already renting have minimal increases in rent, so have very little reason to move out.

    6. Stubborn sellers. There are at least 2 empty condos in my building that are on the market. This also artificially constrains the market for housing.

    Ultimately, prices will go down, or condo owners will become reluctant landlords when they have to move. This will increase the supply of housing, which will drive down rents further.

  181. chicagofinance says:

    sas Says:
    February 26th, 2007 at 7:41 pm
    anyone catch the Israel RE protest yesterday in Teaneck?
    must of been something…
    SAS

    SAS…this is better
    http://sports.yahoo.com/top/news?slug=ap-israelbaseballleague&prov=ap&type=lgns

  182. chicagofinance says:

    HEHEHE Says:
    February 26th, 2007 at 8:38 pm
    Chifi,
    In regards to flippers I was more referring to Harborside and Maxwell Place, though from reading those boards on Kannekt it looks like Toll has wised up and not allowed resales for one year after closing so they don’t have competition for their unsold units.

    Hehehe: not enforce in court….it is a scare tactic….I have examples of people that flipped at Hudson Tea and Toll did nothing

  183. Zac says:

    Clot (186)
    That’s a fastball.

  184. James Bednar says:

    Please be aware of the following: effective March 02, 2007, New Century Mortgage will no longer offer Interest Only loans* in the states listed below that have adopted the Guidance:

    New Jersey

    Very interesting

  185. Clotpoll says:

    Your weekly reminder:

    A person cannot be said to have “overpaid” for his home UNLESS AND UNTIL he attempts to sell it and either cannot do so or receives an offer that would result in minimal gain or a net loss.

    Other statements concerning “overpriced” are simply that…statements of opinion.

  186. hobokenite says:

    I should add that prices in my building are down about 5% (asking) from peak comps.

    Oh, and at least one of the empties has been on the market and empty since June. If it’s still on the market in June, I might make a lowball offer on it.

    The other one was on the market last summer (don’t know if it was pulled or not) for $1.2 million. Now they’re asking $900k for it.

  187. Zac says:

    And thats most buyers of the years 2004,5,6.

  188. lowball says:

    Brits to follow the US leadership:

    “First-time buyers turn to 100%-plus mortgages”

    http://money.guardian.co.uk/property/firsttimebuyers/

  189. UnRealtor says:

    Two capes on a street — similar lot size, condition, and square footage.

    One person paid $250K in 2001, the person next door paid $500K in 2005.

    The 2005 bagholder “overpaid.”

  190. sas says:

    “A person cannot be said to have “overpaid” for his home UNLESS AND UNTIL he attempts to sell it and either cannot do so or receives an offer that would result in minimal gain or a net loss”

    your getting academic on me.

    re. “overpaid”

    tell that to two neighbors in a condo unit:

    Neighbor x bought in summer 05 for 650,00.
    Neighbor y bought same cookie cutter condo last week for $550,000.

    Now, tell neighbor x your weekly reminder of “overpriced” and see if he agrees with you.

    Within a year, I would imagine the delta would be a ballpark 70,000.

    But, on the other hand, I do agree with you in the sense that… nobody makes a dime until you got the jack in the bank.

    Keep up the good work.
    ;)
    SAS

  191. sas says:

    “Brits”

    god damn brits. I lost my shirt on a flat in London thinking I was savy flipper.

    some bloke lowballed me, and I caved because its hard to manage long distance RE, let alone overseas.

    SAS

  192. Home Seller says:

    Anyone know what a 1br garden apt. (ie parsippany’s knoll gardens or equal) goes for today? paid 850/mth back in ’00

  193. sas says:

    although, I do know a certain people whom manage long distance RE pretty good actually, especially along the shores.

    some know what I mean.

    SAS

  194. waitingwatching says:

    Richard,
    #93, re 2355932, where in summit is that? was wondering as you said you knew the area.
    thanks

  195. WickedQuiver says:

    I think Syracuse just made it to the dance. Maybe they can make through the first round this year.

  196. what bubble? says:

    gary:

    would you consider nutley? if so, email me at aandclaw@yahoo.com and we can talk. we are considering selling (for a host of reasons, none of which are really real estate market related) and i think our thinking on the price is fair. we can discuss more details via email if you are interested.

  197. Clotpoll says:

    Un (73)-

    Let me go at this another way. RE is not an asset that’s marked to market. Your 2005 bagholder may feel bad. He may even be in negative equity right now…on paper.

    However, Mr. Bagholder may live in this home thru the entire downcycle, then sell on a market upswing in, say, 2012.

    If Mr. Bagholder is happy with his profit (assuming that there is a profit), how do you prove that he’s overpaid? Perhaps the profit did not track or beat the underlying rate of inflation over the years of occupancy- or did not perform well vs some other index- but there is profit, nonetheless.

    When RE is sold, there’s either a profit or a loss. And, since it is not marked to market, the only proof- or test- of a house’s value is a closed sale of same.

  198. Clotpoll says:

    SAS (74)-

    Well put. And, to paraphrase you, nobody KNOWS jack…until the jack’s in the bank.

  199. chicagofinance says:

    WSJ
    AHEAD OF THE TAPE
    By JUSTIN LAHART
    Housing Sector May Be Knocked By Mortgages

    February 27, 2007

    Investors looking to see whether trouble in risky mortgages will spill over into the broader housing market could find solace in today’s home-sales report.

    But such complacency would come at a heavy price. Economists polled by Dow Jones Newswires estimate that today’s report will show that an annualized 6.24 million existing (that is, previously owned) homes were sold in January, up from December’s 6.22 million pace. Taken on its own, that would suggest that the housing market is holding its ground, allowing the glut of unsold homes on the market to get worked off in an orderly way.

    Let’s put that number in some perspective. With lenders tightening standards on the subprime mortgages they offer to high-risk borrowers, home sales will have to take a hit, says Goldman Sachs economist Andrew Tilton. He estimates that loose lending standards boosted home sales for the past three years by about 200,000 homes a year. If lenders ratchet their standards up to normal levels, those sales will go away, he says. That represents 3.1% of last year’s existing-home sales.

    The total fallout could be even broader. When banks trip up by lending too freely, their usual reaction has been to overcompensate and put standards in place that are far more stringent than the banks otherwise would deem necessary. Having discovered that they took on far more risk than they thought they were, lenders need to go through a period of taking on less risk. Those subprime-mortgage lenders that have ceased operations won’t be taking on any more risk.

    The good news is that despite the subprime shakeout, default and delinquency rates for prime mortgages remain low. The worry is that fresh declines in the housing market could spur lenders to be more cautious even with low-risk borrowers.

  200. Home Seller says:

    #201

    Wow, I can’t believe prices are still in the low 800’s at that place. Used to live there 7-8 years ago.

    I tell ya, anyone in their mid 20’s and married w/no kids can save a ton of money right now for a nice downpayment later on…rent is cheap.

  201. UnRealtor says:

    True, the profit/loss occurs at time of sale.

    But one neighbor making those double-sized mortgage payments each month isn’t just about ‘on paper’ — it’s a genuine financial drain felt every 30 days.

    He’ll be feeling that burn all the way until 2012.

  202. Home Seller says:

    #209

    Actually, its approx 20-30% more per month. And its not a financial drain if he can afford it.

    100K more at 30yrs fixed at todays interest rate equates to about approx 7200/yr. (little less factoring the deduction).

    Even though you prob don’t like the answer, Clot is 100% correct. If his intentions are to live in the house long term (or short term), and he’s comfortable w/the monthly mortgage payments, then the end result is what matters most.

  203. sas says:

    “nobody KNOWS jack…until the jack’s in the bank”

    I like that one.

    SAS

  204. NJGal says:

    Clot, I will do that – how long do you think I should keep it out there? There is an open house this Sunday, I may make the offer today.

  205. Clotpoll says:

    NJ Gal-

    I wish I had some insight on that. There’s no hard & fast rule on these things. If you give it 48-72 hours, it’s some sort of lever to prod the seller to respond to you rather than direct his agent to “shop” your offer.

    If the seller gets back to you with any kind of counter (IMO, very unlikely) or any dialogue gets started, you can rescind the kill date.

    If you’re dropping down 100K in that price range, expect the seller to tell you to pis* off. I’d suggest bracing yourself for a wait-it-out, test-of-nerves sort of process. In the end, absent other offers, your only available play may be to walk away and continue waiting out the seller.

    Lowballing is not really a negotiation process, anyway. It’s a power play in which you’re telling the seller that he’s full of crap. And all the comps and reasoned thought in the world don’t really matter…if the seller is not in imminent financial trouble, he’s going to tell you to bugger off. Lowballing is about the seller, not the house.

    Along those lines, have you checked the seller’s financial health? Is there a lis pendens @ the county clerk’s office? Has the seller already closed on another home? How much equity is there?

    If this guy is veering toward financial ruin, 100K off may not be enough. I’d be looking to offer no better than 25% off the 2005 tops to anyone in that position.

    Good luck. And if this one doesn’t work out, consider working that pre-foreclosure market. It’s where the real gems are…and people in ritzy towns get in trouble, too.

  206. HEHEHE says:

    HEHEHE Says:
    February 26th, 2007 at 8:38 pm
    Chifi,
    In regards to flippers I was more referring to Harborside and Maxwell Place, though from reading those boards on Kannekt it looks like Toll has wised up and not allowed resales for one year after closing so they don’t have competition for their unsold units.

    Hehehe: not enforce in court….it is a scare tactic….I have examples of people that flipped at Hudson Tea and Toll did nothing

    ChiFi: I would have to agree it would be unenforceable. Much like the guarantee they tried to give some friends of mine who were looking at 700 Grove that no future buildings would block their city views. That’s laughable to begin with but even more so considering it is Hoboken.

  207. NJGal says:

    Thanks Clot, much appreciated. I have no knowledge of his financial situation. Perhaps I will see if my agent can look into that – it’s not in foreclosure, I know that much. He seems to be a retiring NYC cop. In that case, I suspect he’s in no hurry – it’s been on the market a few months and he’s still there. So unless he has a contingency contract on another house, he’s probably in no hurry. I would suspect 100K off would not work. We will probably offer 675 because the comps would put it in that range – he’s clearly overpriced where he is now.

    I am still so up in the air about this, but I appreciate your help. Since there is an open house on Sun., should the offer expire before then or is it pointless?

  208. Tom says:

    Guys,

    Anyone knows what is happening to prices in central NJ like north brunswick, south brunswick, princeton, monroe townships. We looked around some open houses and the asking prices on many homes is more than 2005 peak.

    My agent says that houses will sell for the same price or 10k less than asking price as she has not seen any price declines in this area for past year. I think she is lying to me. Is she ?

    Anyone knows a good site to check the latest selling prices on homes closed in an area ?

    Thanks,
    – Tom.

  209. UnRealtor says:

    “100K more at 30yrs fixed at todays interest rate equates to about approx 7200/yr.”

    Right, so multiply that $7,200 several times, because houses have doubled in the last 5 years.

    This whole notion of “if you stay long term it doesn’t matter” is total hogwash. You’ll be buried in debt for 10-15 years, and after all that time you may “break even” which means you’ve lost hundreds of thousands $$$ in opportunity costs.

    It does matter when you buy, and it does matter if you buy at a 100-year-peak or not:

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

  210. par4156 says:

    chaoticchild,
    I (I really mean – my wife) actually have a preference for this type of house.
    Link 3 (1.5 bath) (If this link doesn’t work, see comment #40)
    I can understand paying a little bit more for a house with charecter. However, these prices do seem a bit crazy. I wonder what would happen if people start buying somewhere cheaper and paying the 5-10K a year for private school? Oh…wait…that IS happening all over northern NJ. It’s a classic example of the town I’m looking to move to…great elementry schools, as safe as the Summits and Livingstons of NJ and lots of young families that are willing to put the savings from buying a cheaper house toward the education of their kids once they get to the 9th grade. The public school district has noticed this and is determined to keep improving – a win win for everyone. The bottom line is – unless you’re one of those millionaires at the World Gym in Paramus…it makes no sense to think traditionally about public schools when buying a house.

  211. bergenbubbleburst says:

    #217 Unrealtor: Youa re absolutley right, people have great trouble understandingt his simpel concept.

    If you over pay by 100k, you will have always over paid, no matter what happens. Plus all the additional interest you will have pid on that extra 100k. It does not matter of at the end of 15, 20 or 30 years, you sell at a so called profit, you will still have over paid.

    It most csrtainly deos matter when you buy. those that purchased in the 2002- to 2006 are going to learn that the hard way.

  212. par4156 says:

    THIS IS FOR THE FIRST TIME BUYERS
    Doesn’t anyone stay in a house for 15, 20 or 30 years anymore? Are we so fixated on “moving up” materially that we only think of our first home as some magic stepping stone? 15 years is more than enough time to negate most housing price risk. There are homes out there that are priced fairly, just not always the totally finished and updated ones that we seem to feel we deserve by right. If you want a bigger space, want to stop paying someone else’s mortgage or just see a home you like, and can comfortably make the mortgage payments…do it!…didn’t anyone’s parents or grandparents buy real, down to earth starter homes? We can do the same thing. I really hope this generation (Xers) aren’t a bunch of cry baby spoilt brats. Good thing we weren’t born in the 1910’s.

  213. syncmaster says:

    I really hope this generation (Xers) aren’t a bunch of cry baby spoilt brats. Good thing we weren’t born in the 1910’s.

    I’m a GenXer. You know, if we were born in the 1910’s, we wouldn’t be cry baby spoiled brats. But fortunately for us, we were born in better times. Don’t hate us cuz we’re lucky (so far, fingers crossed LOL).

  214. Home Seller says:

    #217

    It is not hogwash. How can you Make outlandish statements like “he’ll be buried in debt for 10-15 years”?

    You just assume and don’t know the person’s financial situation, you’re just throwing statements out there…

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