From CNN/Money:
Housing prices continued to fall in the latest reading on the battered real estate market released Tuesday from an industry trade group.
The median price of an existing home sold in January was down 3.1 percent from a year earlier, according to the National Association of Realtors.
It marked the sixth straight month that prices have shown that year-over-year drop, a relatively rare condition for home prices before the current slide. Before the Realtor’s price readings showed a year-over-year drop for August sales, it had gone more than 11 years without that kind of drop.
The median price, the price at which half the homes sell for more and half sell for less, is now down 8.5 percent from the record high reached in July 2006. And the three biggest year-over-year declines on record have now been recorded in the last four months, with January’s decline just behind the 4.4 percent drop in October and a 3.4 percent fall in November.
From Marketwatch:
Home prices fall in fourth quarter
U.S. home prices fell 0.7% in the fourth quarter, the fastest rate since 1992, and are up just 0.4% in the past year, Standard & Poor’s reported Tuesday in the inaugural release of the national Case-Shiller price index.
A year ago, home prices were rising 14.6% year-over-year.
“Annual changes in home prices are either in decline, flat or yielding negative returns across all markets,” said Robert J. Shiller, chief economist at MacroMarkets LLC, which produces the index for S&P. “All metro areas are showing smaller annual returns than those reported for November.”
“Given the overhang of supply and clear signs of deceleration in home prices, we continue to expect a nationwide home price decline of about 3% in 2007,” Goldman Sachs economists wrote in a research note. They called the Case-Shiller index “probably the highest-quality measure of home prices.”
Home prices in the top 10 metro areas fell 0.8% in December, the largest monthly drop since 1991. Prices in the 10 cities are unchanged for the year.
Home prices in the 20 metro areas fell 0.7% in December, the largest decline in the seven year history of the index. Prices in the 20 cities are up 0.5% in the past year.
On an inflation-adjusted basis, national home prices are down 1.6% in the past year. Prices in the 10 cities are down 2% and prices in the 20 cities are down 1.5%.
Nominal prices in 18 of 20 cities fell in the fourth quarter compared with the third. Only Seattle and Portland managed gains. Nine of the 20 cities showed lower prices at the end of the year than at the beginning: Detroit, Boston, San Diego, Washington, Cleveland, San Francisco, Minneapolis, Denver and New York.
Among the 20 cities, the biggest gains in the past year were in Seattle (up 12.1%), Portland (up 9.9%) and Charlotte (up 6.7%). The biggest losses in the past year were recorded in Detroit (down 5.9%), Boston (down 5.1%) and San Diego (down 4.2%.
From Bloomberg:
Existing-home sales rise 3% in January
Sales of existing U.S. homes rose 3% to a seasonally adjusted annual rate of 6.46 million in January, the highest in seven months, the National Association of Realtors reported Tuesday.
It was the largest percentage gain in two years.Sales were down 4.3% year-on-year.
Resales of single-family homes rose 3.5% to 5.69 million annualized, while condo resales fell 0.1% to 767,000 annualized.
The results were “surprisingly strong,” said David Lereah, chief economist for the real estate trade group. Lereah said he couldn’t be confident that the bottom had been reached, because unusually warm weather earlier helped to boost sales in January.
Inventories of unsold homes on the market rose 2.9% to 3.55 million, a 6.6-month supply.
The median sales price fell 3.1% year-over-year to $210,600. “The price correction is working,” Lereah said. Prices fell the most in the West, which had been the hottest region for price appreciation. Median prices are down 4.6% in the West, which could reflect slower sales in relatively high-priced California and faster sales in cheaper areas such as Utah, Idaho and New Mexico.
From Marketwatch:
Hovnanian Enterprises sees quarterly loss after charges
Hovnanian Enterprises said it delivered 3,266 homes in the first-quarter of 2007 while net contracts declined 23% to 2,570. Prior to charges of around $90 million related to Fort Myers-Cape Coral, operations in Florida, the company expects earnings per share to reach 20 cents, above a prior estimate of 5 cents to 10 cents a share. Net of charges, the company expects to report a loss for the first quarter.
Chinese Stock Prices Drop Nearly 9 Pct.
Chinese Stock Prices Plunge Nearly 9 Percent, Biggest Drop in a Decade
http://biz.yahoo.com/ap/070227/china_markets.html?.v=5
I think I’m in love with Regina Spektor, don’t tell my wife.
http://www.youtube.com/watch?v=SGTDRztaCCw
jb
Asian plunge due mainly to Shanghai cracking down on insider trading .
Interesting piece by Tim Iacono (of themessthatgreenspanmade fame):
How Youngsters Were Duped Into the Subprime American Dream
This hypothesis is surely correct – further corroborating data is not necessary.
Just ask any senior about how their grandkids are carrying on with their big houses, big cars, big TVs, and big debt loads – you’re likely to get the same answer, “I don’t know how they pay for all of that”.
Well, they don’t pay for a lot of it.
Never before has credit flowed so freely and never before has so much debt accumulated. Never before has it been easier to buy a house. That is, if you don’t mind non-traditional mortgage products where no money down is needed and not only can you avoid paying down the principle (interest-only), but you don’t even have to pay all the interest due (pay-option).
Of course, as a long-term plan, this looks like it may not work out so well now that housing prices are falling and subprime lenders are falling even faster.
The younger set has been fearless when it comes to taking on new debt over the last ten years. This is likely to change in the next ten years – all part of the Alan Greenspan legacy.
It’s too bad that Lemming suicide is a myth – it would have provided a fine analogy for the headlong rush by youngsters toward the dream of homeownership and sure riches. The trouble is that nontraditional mortgage products, subprime lending, short sales, and foreclosures are no myths.
Grim (3)-
Cute, but you can see lots of babushka potential there. Check back in about 10-15 years.
Women, look away.
OK, guys 39-50…one question poll…answers, please:
Helen Mirren. Do or don’t? Feel free to expound.
Cute, but you can see lots of babushka potential there.
Looks shmooks, it’s about the voice.
jb
Can’t argue with that.
“Asian plunge due mainly to Shanghai cracking down on insider trading .”
Sally,
Just dismiss valuations??
Freddie Mac Announces Tougher Subprime Lending Standards to Help Reduce the Risk of Future Borrower Default
Tuesday February 27, 8:10 am ET
Company Also to Develop Model Subprime Mortgages
MCLEAN, Va., Feb. 27 /PRNewswire-FirstCall/ — Freddie Mac (NYSE: FRE – News) today announced that it will cease buying subprime mortgages that have a high likelihood of excessive payment shock and possible foreclosure. First, Freddie Mac will only buy subprime adjustable-rate mortgages (ARMs) — and mortgage-related securities backed by these subprime loans — that qualify borrowers at the fully-indexed and fully-amortizing rate. The goal is to protect future borrowers from the payment shock that could occur when their adjustable rate mortgages increase.
hehehehhehee!
BRIGHT IDEA!
And these morons decide it is a good time now….
They should be slapped silly…….
BOOOOOOOOOOOOOOYAAAAAAAAAA
Bob
Credit meltdown.
Fast phoney money just gone POOOOOOOOOOOFFFFFFF!
Subprime Shock will Likely keep FED on Sidelines
NEW YORK (Reuters) – Rising delinquencies in the subprime mortgage market continue to reverberate through U.S. financial markets, reinforcing the view that the Federal Reserve will likely hold short-term interest rates steady in the months to come.
http://www.reuters.com/article/reutersEdge/idUSN2630252020070227
http://freddiemac.com/news/archives/corporate/2007/20070227_subprimelending.html
Freddie Mac (NYSE: FRE) today announced that it will cease buying subprime mortgages that have a high likelihood of excessive payment shock and possible foreclosure. First, Freddie Mac will only buy subprime adjustable-rate mortgages (ARMs) – and mortgage-related securities backed by these subprime loans – that qualify borrowers at the fully-indexed and fully-amortizing rate. The goal is to protect future borrowers from the payment shock that could occur when their adjustable rate mortgages increase.
Second, the company will limit the use of low-documentation underwriting for these types of mortgages to help ensure that future borrowers have the income necessary to afford their homes. In addition, Freddie Mac will strongly recommend that mortgage lenders collect escrow accounts for borrowers’ taxes and insurance payments.
In keeping with its statutory responsibility to provide stability to the mortgage market, Freddie Mac will implement the new investment requirements for mortgages originated on or after September 1, 2007, to avoid market disruptions.
jb
Regarding exisiting home sales, I don’t know why they’re comparing month to month…
Bergen County Only
SFH
Month Med$ #Sold
Dec’06 $495k 528
Jan’07 $480k 372
Condo, Co-op, Twnhse
Dec’06 $360k 255
Jan’07 $340k 162
SFH, Condo, Co-op, Twnhse
Dec’06 $465k 783
Jan’07 $450k 534
I show January 2007 sales being up slightly (-.05% SFH; 4.5% C,C,T; 1.7% All) compared to January 2006, but lower than the previous 5 years.
Units going under contract were definitely up in January 2007 (16% All).
Rich
From Bloomberg:
Orders for Durable Goods in U.S. Decreased 7.8% in January
Orders placed with U.S. factories for durable goods fell more than forecast in January as excess inventories prompted companies to limit spending.
The 7.8 percent decline reflected less demand for commercial aircraft and the biggest drop in business equipment orders in three years, the Commerce Department said today in Washington. Orders excluding transportation equipment dropped 3.1 percent, the most since July 2005.
The figures suggest reluctance among companies to invest carried into 2007 after fourth-quarter spending on equipment fell by the most in four years. Excess inventories at auto dealers and construction-equipment makers may restrain production early this year, Federal Reserve Chairman Ben S. Bernanke told Congress earlier this month.
“Orders started the year with a whimper, and this will tend to keep business investment subdued in the first quarter,” Nigel Gault, director of U.S. research at Global Insight In. in Lexington, Massachusetts, said before the report.
Second, the company will limit the use of low-documentation underwriting for these types of mortgages to help ensure that future borrowers have the income necessary to afford their homes.
This is even bigger than qualifying at the fully indexed rate.
Sorry guys, those McDonald’s workers that make $10,000/mo won’t be able to get a mortgage through you anymore.
Over the past month, all I hear from my mortgage buddies is “payment shock”. Lots of subprime lenders have already started qualifying with an eye on how well the borrower can handle the rate adjustment. Freddie Mac is late to the game on this one.
Expect to hear that phrase as much as “LTV”, “back ratio” or “middle score” in the coming months.
Volatility???
“Yen rallies sharply as investors unwind carry trade”
http://www.marketwatch.com/News/Story/yen-rallies-sharply-investors-unwind/story.aspx?guid=%7BF5E3BB89%2D1CA7%2D4960%2DB5DE%2DFBEF07736DA8%7D
Personally, I don’t feel that Freddie has any business providing liquidity to non-agency subprime securities in the secondary market. I really don’t understand the purpose of underwriting and product standards on their primary market purchases if those standards don’t apply to loans or securities purchased in the secondary market. Call a spade a spade and apply the same standards across all purchases.
As of January, they are currently holding $237 billion in non-Freddie non-agency paper, it makes up one third of their retained portfolio.
http://www.freddiemac.com/investors/volsum/pdf/0107mvs.pdf
I don’t know the breakdown of prime to subprime on the non-agency paper, but I’ve got to assume those loans aren’t up to agency standards, otherwise they’d have been pushed through Freddie/Fannie.
jb
In keeping with its statutory responsibility to provide stability to the mortgage market, Freddie Mac will implement the new investment requirements for mortgages originated on or after September 1, 2007, to avoid market disruptions.
Second, the company will limit the use of low-documentation underwriting for these types of mortgages to help ensure that future borrowers have the income necessary to afford their homes. In addition, Freddie Mac will strongly recommend that mortgage lenders collect escrow accounts for borrowers’ taxes and insurance payments.
I mean come on they can not dso this to us – Escrow accountfor taxes and insurance??, Limit Low-Doc Loans??
Next think you know they will actually not allow 110% LTV loand and require us to put at least 10% down!!!!
We should stop this horrible abuse!!! We are americant. We are entiteled to an easy loans so we can sell our house two years later and be tax free on gain – 200K which is more than we can save by working in 10 years!!! DO we have to work for living now??
Come on, we can not save anything because we spend so much on housing, and incomes are sooo low…. SO houses must rise in price forever.
On more serious note: I could see a crazy buying and selling season this spring/summer as all potential subprime/ self employed people rush in to be able to buy before credit tightening.
In the last statement: Freddie Mac will implement the new investment requirements for mortgages originated on or after September 1, 2007, to avoid market disruptions.
IS the essence of a bubble!!!! Think about it – they do not even require huge downpayment or elemination of the no-doc loans, all they are asking is very gentle changes and they are afraid of market interruptions.
I do not see a way out of current situation – credit can not be loose forever it will lead to huge inflation, the moment inflation picks up to let’s say 5-8%, rates will shooot through the moon…..
If credit tightens it will have the similar effect on home prices as higher rates (also less severe).
Next year will be interesting.
Again – if China and India will forgive US it’s National Debt we are in for another 6 years of run up… Chances of China doing this………They are not that stupid, but you never know.
If FNMA hasn’t made a similar announcement, expect it shortly.
How do you think Raines made his EPS targets at FNMA all those years? Fannie and Freddie have been buying all kinds of crap for years that they shouldn’t have been touching.
Some news on Fannie, just across the wires..
Fannie Mae delays 2006 annual report
Mortgage-financer Fannie Mae said Tuesday it will delay filing its 2006 annual report. The move had been expected as the company is continuing to catch up with financial reporting following a major earnings restatement.
Oouch !!! That’s the word for this transaction.
6 Mckay Dr, 08807 Mar 06 $1,200,000
6 Mckay Dr, 08807 Feb 07 $1,035,000
NET LOSS => $165,000
My wife and I are in our early 30s. Saturday, I went to take down the Christmas decorations on a friend’s flip gone bad. It goes to settlement next week.
I knew it was a bad sign when the builder was set to deliver the completed home to him 3 months before completion date. He has lost over $70,000 in commissions, carrying costs, and taxes. He has owned the house for 18 months and is selling it for $1,000 under purchase price.
So anyway, now my wife wants to drag me to open houses and showings because our house (which we worked very hard to pay off in 6 years, 24 years early) doesn’t have enough closet space or a two car garage.
I’ve dug my heels in. I’m not going to any open houses. The problem is that our friends are starting to see dramatic rises in their income. They seem to think that they need to buy the biggest homes and lease the nicest cars. I thought peer pressure would end in high school.
Sorry for the italics
Most recent Case-Shiller Home Price Index released this morning. Will post as soon as I get a link to the data.
jb
In the interim:
U.S. home prices fall 0.7% in fourth quarter, S&P says
U.S. home prices fell 0.7% in the fourth quarter and are up just 0.4% in the past year, Standard & Poor’s reported Tuesday. S&P unveiled its new national Case-Shiller price index, which compares sales on the same homes. Home prices in the top 10 metro areas fell 0.8% in the quarter and are unchanged for the year. Home prices in the top 20 metro areas fell 0.7% in the quarter and are up 0.5% in the past year. “Annual changes in home prices are either in decline, flat or yielding negative returns across all markets,” said Robert J. Shiller, chief economist at MacroMarkets LLC, which produces the index for S&P. “All metro areas are showing smaller annual returns than those reported for November.”
TO POst 26:
you should put your house for sale at 2005 +25% price, and hope that someone bites.
If they do, buy bigger house for less in 6 month….
After all we are in NJ!!! House is a great investement. People on TLC channel Shows make 60K for 30 days of work, while keeping their day jobs, with ease.
Shiller/Case index showing the classic RE Bust trend. These are numbers for Newyork region.
June 2006 215.83
July 2006 215.25
August 2006 214.35
September 2006 214.07
October 2006 214.08
November 2006 213.59
December 2006 212.47
The full historical chart available at,
http://www.geocities.com/skgala/shiller_case.JPG
Too bad they don’t give access to more granular data. I am sure the downturn is more in outskirts and moving inward to the city.
Shiller/Case index data available at,
http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,3,1,0,0,0,0,0.html
>>Just dismiss valuations??
you’re fishing bob. valuations have been ridiculous for years. today everyone woke up without the glasses on?
Richard,
I’ve been talking with “ChathamSteve” via email. Given what he has told me, I don’t have any real reason to doubt his story. I will not, however, post details.
jb
Clot: (Re: 7)
Have been smitten by Helen Mirren since I was in my teens (after seeing her in The Cook, the Thief, His Wife and His Lover).
Am now barely in your age bracket, but going on 20 years besotted. Man, she’s the bee’s knees.
go bonds. another 20bps and i’m going to refinance 2 properties. you have to love the herd mentality.
wait is it me or this is scary – what did I miss – is it happening because of the Yen Carry trade??
http://moneycentral.msn.com/investor/charts/chartdl.aspx?IntraDay=1&Symbol=%24INDU
-122 ????
today everyone woke up without the glasses on?
Looks like our markets woke up on the same side of the bed.
jb
Can’t wait to see Freddie Mac’s “model subprime mortgage”.
>>I’ve been talking with “ChathamSteve” via email. Given what he has told me, I don’t have any real reason to doubt his story.
how does someone make that kind of money and make such stupid decisions? the only reason that comes to mind is the wife ;)
>>Looks like our markets woke up on the same side of the bed.
that almost always the case today. it’s a global stage so you rarely see one side of the globe move in opposite direction.
JB,
The 10yr. yield is nose diving.
Unfortunately, it’s all to easy to make that kind of call in retrospect. I really wish the guy the best.
jb
S&P Composite Index Shows Prices of Single-Family Homes in U.S. Is Flat in December
Interesting excerpt…
“S&P index committee chairman, David Blitzer, compared the decline to that of the early 1990s but said this one could be even more pronounced.
“By most measures, the current slide is steeper,” he said. “It could outdo the 1989, ’90, ’91 event.”
http://biz.yahoo.com/ap/070227/home_price_index.html?.v=2
Jamey (35)-
Thanks. Was beginning to think it was some sort of early senile dementia onset on my part.
Gotta hand it to her. She even wore the color du jour the other night: gold.
Bill Gross looks like Nostradamus this morning.
Any predictions for January existing home sales at 10:00 a.m.?
If they come in below analysts’ expectations, hold on to your hat. Things could get really interesting with the markets.
6.24-6.25, higher than December, on-par with consensus estimates.
jb
“you’re fishing bob.”
Richard,
Great comedy. Thanks for your class on the global markets.
“today everyone woke up without the glasses on?”
Speak for yourself.
>>Unfortunately, it’s all to easy to make that kind of call in retrospect. I really wish the guy the best.
i’m sorry but buying a house for $1.6 million and you can’t get a bid higher than $900k in a short time = a paper loss of 55% is just plain stupidity. a similar example would be buying a house for $500k and a couple of years later highest bid is $275k.
bob, even a stopped clock is right twice a day.
that’s an old fashioned clock mind you ;)
6.28 million for dec
6.28 million for jan that is
A house I put an offer on last year just closed — at almost exactly what I offered.
The Greedy Grubber decided he needed 12+ months of carrying costs and a year of headaches.
At the time, my realtor said I shouldn’t “insult” the seller, because he “doesn’t want to give the house away.”
I guess reality set in for this seller, and he finally accepted an “insulting” offer from someone else.
In the end, I’m better off without the house, and without the realtor.
I’m going to send the link of this thread to all your wives!
-Richie
From MarketWatch:
U.S. Jan. existing-home sales rise 3% to 6.46 million
Sales of existing U.S. homes rose 3% to a seasonally adjusted annual rate of 6.46 million in January, the highest in seven months, the National Association of Realtors reported Tuesday. It was the largest percentage gain in two years. Sales were down 4.3% year-on-year. Resales of single-family homes rose 3.5% to 5.69 million annualized, while condo resales fell 0.1% to 767,000 annualized. Inventories of unsold homes on the market rose 2.9% to 3.55 million, a 6.6-month supply. The median sales price fell 3.1% year-over-year to $210,600.
“bob, even a stopped clock is right twice a day.”
Richard,
LOL. Can’t you be a little more original?? That’s SAS’s line. By the way, clocks go as they are set.
go ahead folks, spin the january numbers. bob you’re quite adept at it, take a shot.
SAS’s line? that line is about 100 years old. being correct isn’t enough? i didn’t realize there were points for originality.
The following is clipped- verbatim- from an e-mail I got from one of my neighbors this morning. I got one two weeks ago in which she actually said “vote for the school budget…it will keep our housing values high.” Unfortunately, I deleted it.
BTW…our mayor, mentioned in this article, is headed toward sure defeat next time out. Too bad. He’s got a lot of guts & stands up to the self-destructing s@ci&lists around here who think the only way to create value is to impoverish ourselves.
This year’s budget vote is absolutely critical to our kids. It is even more
important than the vote taken a few years ago to build the new school.
The Clinton Township budget was voted down 3 of the last 4 years. The votes
were very close and voter turnout was extremely low; only 1765 voters last
year. We have over 1800 students in the K-8 District and we must have
over 3000 parents of those children who can vote. If we can just get all
those parents out at the polls this year, the budget will most assuredly be
passed.
Why is this budget vote so important? Because of the recent budget vote
downs, the school budget is now cut to the bone. This year needed teachers
were not hired and class sizes have begun to swell above state averages. On
top of this, the School Board had to start laying off school employees
recently to stay on budget. School supplies and new textbooks are now in
scarce supply. The school budget is already at such a depleted point now
that more job cuts will likely take place next year if the budget is not
passed. This trend can’t continue and not impact the quality of our kids
education.
Finally, Clinton Township is trying to open a new school this year, we have
been granted a one-time budget exception by the state to raise our school
budget by more than the maximum 3% the state allows. This is significant
because it gives the School Board and us parents the ability to not only
open the new school, but also to put the K-8 budget back at the levels
necessary to again have adequate class sizes and proper teaching resources
for our kids. We get one shot to make this right because the “New School
Budget Exception” is only good for one year.
The consequences of this year’s school budget not passing could be dire as
the budget would then be handed over to the Town Council and Mayor to
decide. Anyone who has been going to school board meetings recently or
been reading the newspapers should realize that Mayor Corcodilos has been
very critical of our school board and a proponent of cutting the K-8 school
budget. The Mayor and his own School Budget Advisory Committee has even
fueled talk that, should the budget not pass, the option to close one of our
older schools to open the new one should get serious consideration. Such a
consequence defeats the whole purpose for building the new school. Out
School District is already 250 kids over capacity for our current schools.
Shutting down an old school to open the new one will just keep us on the
same trajectory of swelling class sizes and too few teachers for our
students. We can not leave this decision in the Mayor and Town Council’s
hands. We, as concerned and engaged parents, should decide this budget for
ourselves by getting out and voting on April 17th.
Speaking of clocks…don’t forget your daylight savings time change if you have any prescheduled meetings.
“go ahead folks, spin the january numbers”
Richard,
Nothing to spin. Month to month #’s[whether positive or negative] are a bunch of noise. The long term down trend remains intact.
lol, sure bob it’s all noise.
UnRealtor,
How much did you lowball on that house? Too bad for seller they didn’t come to grips w/ reality sooner. There’s a fair share of disillusioned sellers out there.
OMFG don’t talk about DST, it’s like a mini Y2k… Friggin Windows admins laughing about how Solaris admins have to reboot for the POSIX patch…
Oh, and:
Jane Seymour > Lindsey Duncan > Helen Mirren > Jenny Agutter > Charlotte Rampling
Just so you know.
No need to spin at all Rich, the news is fantastic for prospective new buyers.
Median prices are down 3.1% YOY, average prices down 3.2% YOY. In the Northeast median prices are down 1.2% YOY, and average prices down 0.8% YOY.
Looking at the breakdown numbers, SFH Nationwide, median prices are down 3.5% YOY, and average prices down 3.4% YOY. Median prices for SFH in the Northeast are down 2.1% YOY, and average prices down 1.8% YOY.
Like I said, fantastic news.
jb
The announcement by Freddie is a non-event, its a mere formality. Neither Fannie or Freddie have been the largest buyers of subprime product since their portfolio mandate was changed by the oversight committee. The street has been the main buyers. For the most part…last summer started buying ARMs where the borrower was qualified at the fully-indexed rate.
Richard Says:
lol, sure bob it’s all noise.
Richard – Below is data from the previous bust from 89 onward. The data point start from the peak. See how similar they are from the point today.
June 1989 82.95
July 1989 82.67
August 1989 82.63
September 1989 82.38
October 1989 82.36
November 1989 81.85
December 1989 81.32
January 1990 80.89
February 1990 80.53
March 1990 79.99
April 1990 79.34
May 1990 79.05
Here are recent data points
June 2006 215.83
July 2006 215.25
August 2006 214.35
September 2006 214.07
October 2006 214.08
November 2006 213.59
December 2006 212.47
The full historical chart available at,
http://www.geocities.com/skgala/shiller_case.JPG
If you consider same months, i.e. June to December, for both year 89 & 2006, The index declined 2% in 1989, and the index decline 1.58% in 2006.
The point is, you won’t see sudden drop, but the trend is going slowly down as BC Bob mentions.
Clotpoll Says:
February 27th, 2007 at 7:47 am
Grim (3)-Cute, but you can see lots of babushka potential there. Check back in about 10-15 years.
……this is comedy
#67 JB Do you really think that a decrease of 2.1% YOY in median price,and a 1.8% decrease in average price YOY in the northeast is good?
it would appear to me that prices have barely budged form their all tiem high. What am I missing?
fresh news for a stabilizing market. good for everyone. buyers will feel better about not buying at the top. existing homeowners seeing their equity stabilize. sellers can better price their properties.
>>A house I put an offer on last year just closed — at almost exactly what I offered.
hearing more of that. i heard of someone near me price their house feb ’06 at $679k. it sold in october for $570k. either they or their broker was considerably off in their assessment of the market. if the house was originally priced at $639k it probably would’ve sold around $620k.
I’m not suggesting that prospective buyers go out and buy a home right now, because of a 2% drop. Not at all.
However, this is the first evidence we’ve seen that “the air is coming out of the bubble”. Over the past year and a half we’ve seen the YOY appreciation rates moderate, but they weren’t yet turning over negative. Now we are seeing the first set of year over year declines reflected in national and regional statistics.
So I stand by what I said, these price declines are good news for prospective buyers.
jb
(FYI, I completely blew an old forcast where I said I expected to see YOY declines in Q3 of ’06. Timing is everything, and I was off.)
#61 Clot: we get the sam message evry year, vote yes for the budget, or home values will go down.
We too are opening a new wing on a school this Sept, so I imagine we get an even bigger tax increase than the 7% we have been getting over the last few years.
People do nto seem to understand that once you build it, you have to hire teachers,a nd teachers aides, and heating lighting etc.
Only now that construction is well along the way, are people starting to consider these issues.
I like your line about creating value by impovershing ourselves. i would say that applies to my town.
Richard Says:
February 27th, 2007 at 10:33 am
fresh news for a stabilizing market. good for everyone. buyers will feel better about not buying at the top. existing homeowners seeing their equity stabilize. sellers can better price their properties.
Actually wit existing rent to own discrepancy not raising prices should encourage people not to buy…. As long as it is a lot cheaper to rent than to buy (counting all the deductions, and substructing principle payments, not evem considering house upkeep costs!!! – it is cheaper by about 10-30% right now everywhere in the NJ) – you save a bunch of money, by waiting and saving.
Of course majority of people do nto think this way – they think – lower than last year??? Great!!!
#74 Jb I understand what you are saying now, it makes perfect sense. Perhaps with the sub-prime market blowing up, these numebrs will be accelerated; we are still in early 07.
>>Below is data from the previous bust from 89 onward.
this isn’t 1989 so i’m reticent to do too much comparisons still the trend is down slightly. after the extraordinary run up the last 5 years the downside so far is a rounding error.
CR has the EHS data graphed, I suggest taking a peek:
http://calculatedrisk.blogspot.com/2007/02/january-existing-home-sales.html
jb
I think NAR has deviced good way to give positive news out either in Buyers or Sellers market. In Buyer’s market the headline always talk about Median prices, and in Seller’s market the headline always talk about number of units sold.
This way they can always bury the bad news in details, and point good news in Headlines.
>>it is cheaper by about 10-30% right now everywhere in the NJ
if you live in any town with a decent commute to NYC you’re most likely paying a pretty penny in rent. where’s the room to save anything significant enough to alter your plans if you want to buy in the next year or so? example. south orange gaslight commons rental complex 1 bedrooms are $2100. course you could live in the basement of a split under a family with young kids for cheaper.
The announcement by Freddie is a non-event, its a mere formality. Neither Fannie or Freddie have been the largest buyers of subprime product since their portfolio mandate was changed by the oversight committee. The street has been the main buyers. For the most part…last summer started buying ARMs where the borrower was qualified at the fully-indexed rate.
Data/Source?
From Bloomberg:
Freddie Mac to Tighten Subprime Mortgage Standards
Freddie Mac mainly invests in subprime mortgages by buying top-rated securities backed by the loans, Cannon said. Together, Freddie Mac and Fannie Mae have bought about 25 percent of such AAA rated securities created in recent years, he said.
…
About 34 percent of Freddie Mac’s portfolio on Jan. 31 consisted of mortgage bonds not guaranteed by itself, Fannie Mae or government agency Ginnie Mae. The company has said most of the bonds are AAA rated subprime mortgage securities.
Emphasis added.
jb
“#67 JB Do you really think that a decrease of 2.1% YOY in median price,and a 1.8% decrease in average price YOY in the northeast is good?”
add 5% inflation.. comes to 7.2%?
http://money.cnn.com/2007/02/27/news/economy/homesales/index.htm?postversion=2007022710
The median price, the price at which half the homes sell for more and half sell for less, is now down 8.5 percent from the record high reached in July 2006.
>>
8.5% down fits with our estimates.
#73 richard How do you know?
#80, Actually, I have to take back my words here. I compared the press releases from 94 and today, they are similar.
Doesn’t the AMT negate significant tax advantages of owning? Every year this reaches more households in NJ. With property taxes so high here, wouldn’t this accelerate the rush to leave the state by the middle-class? Or prompt more families to rent vs. own? Being unable to deduct property taxes seems like a major factor that would affect the market here.
Richard Says:
February 27th, 2007 at 10:47 am
>>it is cheaper by about 10-30% right now everywhere in the NJ
if you live in any town with a decent commute to NYC you’re most likely paying a pretty penny in rent. where’s the room to save anything significant enough to alter your plans if you want to buy in the next year or so? example. south orange gaslight commons rental complex 1 bedrooms are $2100. course you could live in the basement of a split under a family with young kids for cheaper.
IF you can’t save anything significant with renting you probably should not be buying a house??
If you can save 20% of rent at 2100$ it will be 4000$. While you might say it is nto significant I’d say – it is 400) more money you have while buying price stayed the same/ dropped 1%.
Also whoever tells me 4K is not significant -just give it to me. it’s not significant right???
How much is it to buy this 1 bedroom condo???
How much total expenses a month??
DO not give one side fo the story, consider both sides.
For housing the situiation is even worse. TO rent a house in some cases 40% cheaper than to buy one at current price.
Also for buying condo/vs rental apartments: it is a lot easier to move out of the apartments at the end of you lease if you do not like your neighbours, than to sell the condo….. plus my favorite 6% realtor +1% NJ fee…. 7% wopping costs on the transaction.
If you take into account closing costs when you buy – it will be over 10%!!!!!!!! and that is 10% of Cost of the house/condo!!!!! So for you to just break even house/condo muast appreciate 10% before you sell….. not counting upkeep… So with -1-+1% appreciation in 5years you stand to loose…. let’s see 15% (in case of 1% average decline/year) ot 5% in case of small 1% gain……. And that is nominal money, not counting for inflation, upkeep and other expenses.
Foe being Glorified apartments, Condos are wayyyyyy overrated and overpriced.
How is this post for a spin on data, Richard???
This is getting old.. From Bloomberg:
Subprime Mortgage Index Tumbles an Eighth Day, Derivatives Show
The perceived risk of owning low- rated subprime mortgage bonds jumped to a record for an eighth straight day, according to an index of credit-default swaps on 20 securities rated BBB- and created in the second half of 2006.
The ABX-HE-BBB- 07-1 index fell 6.3 percent today to 63, according to New York-based derivatives broker GFI Group Inc. The index has fallen by more than a third since trading started Jan. 18, according to Markit Group Ltd. A decline in the index suggests investors expect credit quality to deteriorate.
“Sales of existing U.S. homes rose 3% to a seasonally adjusted annual rate of 6.46 million in January.”
6.46/12 = 0.538 mil house sold monthly rate
0.538 x 0.03 = 0.016 mil increase in monthly house sold
“Inventories of unsold homes on the market rose 2.9% to 3.55 million”
3.55 x 0.029 = 0.103 mil new unsold homes added.
… So during the time when sales went up by 16,000 homes, the unsold inventory grew by 103,000 homes?
huh? What’s wrong with my math? If unsold inventory is growing at 644% of sales in one month…
Sorry last line of #91 should read:
unsold inventory increasing at 644% the rate sale is increasing.
Robert Shiller is on Bloomberg today at 2PM….probably starts around 2:05PM or so.
Flick on your radio or go here…..
http://www.bloomberg.com/tvradio/radio/#
I have no idea how the stunning drop in prices doesn’t lead every story on this release. OK, I do have an idea, but the incompetence of reporters and their editors is such an old song and this kind of weak reporting is so glaring that I get tired of thinking it.
The plunge in sales prices (3.1% YOY, 5% over the previous month) is both dramatic and unprecedented, that is the very definition of news.
Also, calling an MTM increase a rise in terms of trends is of course misleading when the YOY trend is down, but considering how bad the rest of the reporting is on this, that’s basically nitpicking. Of course, it allows the Richards of the world to keep their head in the sand, or another dark place…
trying to turn the italics off.
did it work?
Richard, I guess the detente is over.
>>Richard Says:
>>February 27th, 2007 at 9:42 am
>>how does someone make that kind of money
>>and make such stupid decisions? the only
>>reason that comes to mind is the wife ;)
If you had ten more points in your IQ, you would be a rock and I would find your comment offensive.
There is a lot of chatter on this blog about “the wife pressuring me to do this or that”. Grow a pair fellas and stop blaming your wives and the wives of others for any man’s indecisiveness and lack of authority.
Men have proven their ability to make bad decisions from the time of Flavius Claudius Iulianus to Bill Clinton and beyond.
Knock it off!
I have to give props to Chris Isidore at CNN.Money for getting the story right.
Lereah said he couldn’t be confident that the bottom had been reached, because unusually warm weather earlier helped to boost sales in January.
Didn’t Lereah call bottom at least 4 times now?
I wonder what made him change his position?
from CR,
http://bp0.blogger.com/_pMscxxELHEg/ReRM77YT15I/AAAAAAAAAFY/0Bs7IJNUBhM/s1600-h/EHS1jan06.jpg
inventory shoooooting up.
# 81 Richard:
if you live in any town with a decent commute to NYC you’re most likely paying a pretty penny in rent. where’s the room to save anything significant enough to alter your plans if you want to buy in the next year or so? example. south orange gaslight commons rental complex 1 bedrooms are $2100.
Richard: Please…..Try Park Ridge, two blocks from train and I pay $1345. Dixon Mills in JC was less, when I left there it was $1300, now about $1500 or so. Plenty of cheap apartments all over NJ and nice too. Every time I hear the 2K quote I laff. Thanks!
My low-ball epxrience for starter home prices in central NJ:
Wanted to ut a low-ball offer on the extreme fixer-upper which was priced 10K below as the same year and model already upgraded houses on the same block – yes there are 3 houses being sold in ONE BLOCK!!!
That house needed new roof (20+ years old from disclosure, visible roof leaks in the celing of the room below, and new heating furnace (unfixable problems with gas heating furnace,again according to the disclosure, also seller said tat there is a buried oil tank on the property – deactivated but he was looking for the inspection, deactivation papers.), all walls had holes in them, there was no appliances, yard was 50×100. Driveway all grown in and cracked. From stairs falling apart.
So we go in and going to place our low bid, contingent on oil tank paperwork only. Selling agent is telling us that they are not interested in low balls – thay hav an offer right now they have an offer in attorney review, and somebody offered 10K below their asking price. So they are only interested in full price offer ot better.
We estimated that the appliances, new roof and heating furnace, and the materials to fix walls/ floors/kitchen cabinets alone will be more that 20K. Thats not counting any labor costs – upgrade it yourself. So someone is buying exactly the same cape cod, as the updated ones, putting extra money in it – why don’t just buy already updated one?????
Also competition for starter homes is severe…. Every house we were interested in had an offer on it, withing a week – they were all below full prices as the seller’s agent response to out low offer was only interested in full price offers at this time.
With some – only interested in 10K or more above listed price. Literally happened ion teh last week – it seem that buyers jumped in in the last week on February.
Of course, seller’s agent and seller might be lying because they wanted us to place a higher offer – we will know this by the end of this week – if all those houses disappear from listings after attorney review. For now we said – this is insane, and abandoned any idea of buying right now.
BTW – Prices of starter homes are at 3.5x multipliers of average household income in the cities we are looking for…
If you take average home prices they will be at 5x average household income ….
For median values situation is even worse – 4x and 5.5x.
James Bednar Said
Didn’t Lereah call bottom at least 4 times now?
I wonder what made him change his position?
——————————————–
Maybe he is starting to get called out on it, and he has to start being more careful about what he says in order to preserve at least a little integrity
njresident286 Says:
February 27th, 2007 at 11:52 am
James Bednar Said
Didn’t Lereah call bottom at least 4 times now?
I wonder what made him change his position?
He started to get life threats from people who listened to the first bottow call???
Now *this* is scary.
Chinese bet the house on share prices going through the roof
China’s stock market mania has reached the dowdy, two-room offices of the Tiancheng pawnshop in central Shanghai. At first sight the trade seems mundane: there are a few dusty cameras in a display cabinet and a middle-aged woman, talking loudly on a mobile phone, is pawning a necklace with a gold-plated heart.
But, unlike pawnshops in most countries, the real business is a steady stream of people putting their homes in hock. “This place is kept alive by people pawning their homes,” says Zeng Huiwen, the manager, brandishing the receipt for a Rmb500,000 ($64,000) loan she signed against an apartment.
When the pawnshops started accepting houses as collateral three years ago, most customers wanted quick cash to start a business. In recent months, however, they have started to borrow to invest in stocks.
After a five-year slump, China’s stockmarket surged 130 per cent in 2006 and caught the imagination of a new generation of investors. In January, 1.38m share trading accounts opened – 69,000 every working day.
According to a report in the official China Securities Journal, Beijing residents last year pawned houses valued at Rmb 1.5bn, much of it in order to buy shares.
Edit, not so scary, only about $200m USD..
jb
http://money.cnn.com/2007/02/27/markets/selloff/index.htm?postversion=2007022711
Market selloff: Year of the bear?
Fears of a slowdown in China and the U.S., and more violence in the Middle East spark a selloff. Is this just a correction or a sign of more bad news?
“Doesn’t the AMT negate significant tax advantages of owning?”
It certainly did in my case. I was able to use all of $500 in interest deductions my first year in the house because of AMT. From that day forward I threw every spare nickel I had at that mortgage. Mortgage free now.
Reuters: U.S. housing market close to bottom: ITW
http://www.reuters.com/article/Manufacturing07/idUSN2738218720070227?src=022707_1136_FEATURES_reuters_summits%3A_manufacturing
An inconvenient truth
if the Fed slows money growth enough to starve inflation, short-term interest rates will rise further, thereby exacerbating the decline in housing. If the Fed does nothing to rein in the money supply, it will have a credibility problem when it comes to inflation and long-term rates will soar.
Either way, it’s bad news for the economy and for the financial markets.
http://www.marketwatch.com/news/story/fed-facing-inconvenient-truth/story.aspx?guid=%7BC1BCBD83%2D698A%2D4476%2D8D46%2D39F66D9002F1%7D
Richard Says:
February 27th, 2007 at 10:47 am
>>it is cheaper by about 10-30% right now everywhere in the NJ
if you live in any town with a decent commute to NYC you’re most likely paying a pretty penny in rent. where’s the room to save anything significant enough to alter your plans if you want to buy in the next year or so? example. south orange gaslight commons rental complex 1 bedrooms are $2100. course you could live in the basement of a split under a family with young kids for cheaper.
I have to agree with Richard. We saw the gaslight commons when we moved to Jersey 2 years ago. We didn’t like it. It was “overpriced”.
We have a 2bed rental in Summit for 2k/month. Similar 2bed Condo cost about 750k http://www.realtor.com/Prop/1075619959
Similar 2bed co-op cost about 550k with over 1k monthly maintanence. http://www.realtor.com/Prop/1074930754
CC
Lindsey [94],
You absolutely right regarding the news and price declines. It’s hilarious, at least to me, how any bull can get all worked up with this report. Any crack is a slither of hope.
My guess regarding their heads?? That other dark place.
“huh? What’s wrong with my math?”
Duckweed [91],
Yeah it’s funny how that is overlooked. Where will we be, if we end the spring with a 5% increase in sales and a 10% increase in inventory. After all the noise, we will still be riding the trendline down.
JB,
Yes, there are positives in these reports, prices are declining. Can you imagine if median prices calculated all the incentives??
this blog is made up of a large population of people with no kids. if you had kids the responses and discussions would be far different. maybe the blog should be changed to Real Estate Report for SINKS and DINKS.
Richard,
come now, have another cup of coffee, and gather yourself.
I don’t think an intelligent bloke like yourself meant post #112.
SAS
this blog is made up of a large population of people with no kids
How do you know this?
jb
Richard Says:
February 27th, 2007 at 12:32 pm
this blog is made up of a large population of people with no kids. if you had kids the responses and discussions would be far different. maybe the blog should be changed to Real Estate Report for SINKS and DINKS.
People who pressured to buy house the most – is expecting parents….
Believe you me :)
Al #102:
That’s a good account that sums up the insanity of this market. In desirable towns there are desperate buyers, anxious to buy at any price on the lower end. Full price offers, you name it. The one baths will sit, but even a half bath added off the basement laundry room will command a decent offer, depending.
Anyway, thanks for the field report. I’ve seen much of the same here. I’m hunkering down in my below-market rental house (don’t tell Richard) until I can get a modest cape or ranch in a desirable town, with 3 beds and 2 baths for $375k 50 minutes by train from NY Penn. Otherwise, despite protests from my better half, I’ll keep renting.
I actually like renting. Few people I know understand me on this. Women seem predisposed to rent money and call it a home. Houses are money pits and headaches as far as I’m concerned, and the AMT is erasing a good bit of the tax advantages. If I weren’t married I’d happily rent for the rest of my life. Talk about anti-American, (or at least anti-NAR) I guess I’m the definition.
This down cycle has only just begun to play out. Watch.
Seneca (97)-
You are the Helen Mirren of Grimworld.
Girl fight!
When you say Girlfight, do you mean me and Richard ;-)
Still lurking here…
Can anyone get history, DOM and OLP for MLS #2359682
“this blog is made up of a large population of people with no kids”
Richard,
Does this mean buy or sell??
Scientific research with all types of evidence to corroborate this moronic statement??
In other girlfight news:
“Wimbledon agrees to equal prize money; USTA applauds”
WIMBLEDON, England (AP) — After years of holding out against equal prize money, Wimbledon bowed to public pressure Thursday and agreed to pay women players as much as the men at the world’s most prestigious tennis tournament.
The All England Club announced at a news conference that it had decided to fall into line with other Grand Slam events and offer equal pay through all rounds at this year’s tournament.
“Tennis is one of the few sports in which women and men compete in the same event at the same time,” club chairman Tim Phillips said. “We believe our decision to offer equal prize money provides a boost for the game as a whole and recognizes the enormous contribution that women players make to the game and to Wimbledon. Also, my wife made me do it.”
“this blog is made up of a large population of people with no kids”
Hah!!! If I stated how many children I had, I doubt anyone here would believe me!!
“How do you know this?”
Because he’s Richard. He’s knows everything.
TO post 116:
I actually like renting. Few people I know understand me on this. Women seem predisposed to rent money and call it a home.
It is funny – my wife is the one who is very much against buying a house – it’s just adds more uncertainty on costs and future finances (people in NJ seem to not understand, that taxes of 6K/year on the starter home are very scary for someone not from the area: It is getting close to 1/3 of mortgage???).
Our rent increases are capped to either 3.5% or CPI data whichever is bigger….
Our rent is not low, by any means, since we signed a new lease last year, at market going rate. But we are very dear tenants in our complex right now, as we are ones who pays market rate.
According to owner/manager they still have who never moved out of their apartments since they were build as high density housing in town. I don’t even want to know what is their rent right now.(hence cap on max rent increases in the whole complex for existing lease extentions whith litrally no way to kick the tenants out if they keep paying on-time.)
However I really believe that the emotions pushing people to buy in the last 2 years were JEALOCY, FEAR, AND GREED. And normally men are a lot more subject to these emotions than women. But it is just me.
MLS#2359682 – Mount Arlington
Sycamore Way
OLP: $359,900
LP: $359,900
DOM: 52
The prior sale was:
MLS#1663912
OLP: $324,900
SP: $325,000
Closed: 3/31/2004
Here are some similar sales
23 Sycamore
SP: $331,500
CD: 6/10/2005
(interior)
10 Sycamore
SP: $349,000
CD: 6/27/2005
19 Sycamore
SP: $367,000
CD: 7/21/2005
(interior)
#116 (Al):
I agree wholeheartedly about the renting sentiments. The AMT erasing my tax credit, the maintenance time and costs (like snow shoveling recently!), the higher utility bills, etc. No thank you, I’m not looking forward to it.
Also, I live in a garden apt in a top-notch town off the Midtown Direct and walk to the train every day. I pay a shade over $1000 (for Richard). I wouldn’t mind a bit more space, but why would I want to pay $500k for a condoshack to get a few more square feet and a hell of a lot more headaches?
Al, buddy. You forgot the gambling high. For a lot of guys, buying a house the last few years gave them the same rush as standing at a craps table.
Real estate was no longer the boring duty that family men did.
This was A HUNT! with COMPETITION!
#109
“Reuters: U.S. housing market close to bottom: ITW”
…chief executive of diversified manufacturer Illinois Tool Works Inc.
Why doesn’t this guy tell us who will win the Stanley Cup while he’s at it.
Thanks… the story checks out. They have to get LP or they take a bath when improvements and commissions are factored in.
Thanks… the story checks out. They have to get LP or they take a bath when improvements and commissions are factored in.
What improvements did they make? I’m comparing the pictures from the prior MLS listing to current, and as far as I can tell they only changed the stove, installed a ceiling fan in the kitchen, and painted.
jb
JB,
Freddie Mac and Fannie have bought 25 percent of such AA rated securities created in recent years. Therefore…investors purchased the other 75%.
The OFHEO placed limits on the size of the GSEs portfolios back in 05′ I think. Investors and the GSEs were already headed (informally) in that direction (qualifying borrowers at the fully indexed rates) based on the guidance that was coming out last year. The “announcement” is just a way of making it “formal”.
As long as there are no-doc/stated income loans
this will do nothing:
qualifying borrowers at the fully indexed rates
As the borrowers will just continue stating higher incomes and if they will be confronted they will say that they have counted private gifts from paretns/friends/family members in hteir application. When I first heard of stated income loans I could not believe that anybody would loan the money to people based on their word (basically).
I didn’t view it but there is supposed to be 15k worth.
From Reuters:
Subprime mortgage gauge has technical problems
Just how risky are subprime mortgage securities these days? A widely-used gauge of investor sentiment may not be running smoothly enough to tell you.
The so-called ABX derivatives index, where investors hedge their bets on the $575 billion subprime mortgage market, has plunged to record lows, pushing the cost of insurance on bonds backed by loans to riskier borrowers to dizzying heights.
But the ABX index isn’t tanking simply because of the spike in subprime loan delinquencies that is weighing on mortgage lenders’ bottom lines, it’s even more driven by technical factors.
The ABX is “disconnected from what it ought to be based on a fundamental analysis” of the subprime market, said Mark Adelson, head of structured finance research at Nomura Securities International in New York.
…
The index’s basic lack of liquidity is an “explanation (that) flies in the face of what all the people in the market want to say,” Adelson said. “As soon as you admit that your market is illiquid, then how do you rely on the prices?”
From Bloomberg:
Fed Says Real-Estate Loan Delinquencies Reach Four-Year High
The Federal Reserve said that delinquency rates on banks’ residential real-estate loans climbed last quarter to the highest level in four years.
The share of the loans on which payments were at least 30 days overdue rose to 2.11 percent, the highest since the fourth quarter of 2002, from 1.72 percent the previous three months, according to data posted on the Fed’s Web site today. The data aren’t adjusted for seasonal patterns.
The deteriorating credit quality comes in a period of strong economic growth and employment gains, a sign that weaker underwriting standards, not economic stress, may be behind the problem.
I have 2 kids.
Proud LOD member since September 2005
JM
Investments today……..f———–
This market is like chewing gum…..BIG RED that is :(
“a sign that weaker underwriting standards, not economic stress, may be behind the problem.”
[135],
The scary part; What if Greenspan and Soros are correct regarding a recession towards the end of 2007??
Twiceshy #116 –
“I actually like renting. Few people I know understand me on this. Women seem predisposed to rent money and call it a home.”
Stop with the woman bashing, plenty of stupid men out there who want to “own” because they have handyman fantasies, or think it makes them look manly and established.
Richard #112 –
I have 2 kids.
“NYSE imposes “trading curbs” after Dow tumbles more than 200 points, Reuters reports.”
cnn.money.com
Purchased summer of 1987 height of the last bubble, sold it in 1998 for $3,200 lest than I paid for it, and minus the improvements too.
Only good thing was since I was stuck there so long, I did heavy duty pre-pay on the mtg. Sicne I could not figure it was smart to pay ot down quickly.
happened before, can happen again. its differetn this tiem people will say, and yet I have not heard once convincing arguement as to why it is different this time.
For the record, I HATE renting. I hate not being able to make improvements to this place. I hate worrying that the landlord will want to sell this place before we are ready to move. I hate not feeling truly settled. That said, I hate being financially foolish even more, and I’m not up to risking our livelihoods for the “American Dream.” I’m just not going to buy something I can’t afford. By the way, I have 3 kids (we rent a house).
3-Month 5.14
10-Year 4.54
60 bps inversion……..f———————
Shiller is going to be on Bloomberg in about 20 mintues
Been religiously lurking for quite a while.
Female, married, mid 40’s, renter (NYC for 20 years – same apartment), 1 child – with cerebral palsy so lots of $$$$ for medical expenses. Fiscally prudent. : )
Sorry – not buying the 2 car garage, ARM, etc… blame it on wifey stuff. Good try though!
Lisoosh..phew..been biting my tongue just about all day. Thanks.
2 kids if you count my husband.
We rent.
3 kids plus one on the way and renting. At least until April. Next we will hear that the majority of the posters here are jewish, or that they are mostly democratic or mostly ____(fill in the blank).
its nonsense.
this blog is made up of a large population of people with no kids.
I have no kids for another 3-4 weeks.
To be fair, the expectation to own at whatever cost is certainly stronger with kids.
It’s about working till death to put the kids in the biggest house (for that Zelda on 42″), Abercrombie (so s/he doesn’t bullied), trips to Europe (so he doesn’t get laughed at), private school, violin, karate, soccor, chinese lessons.
Against that expectation, financial balancing comes across as “not willing to sacrifice for kids.” The pressure/thinking is there. On the other hand, folks here seem able to shake off that pressure and think apart from the Jones’s, even with kids.
Shiller on Bloomberg any minute
go here….
http://www.bloomberg.com/tvradio/radio/index.html
and hit….launch audio player
Radio or TV?
radio
Here’s a dilema:
Bought in October for waaaaay under market value. But bought out in the Jersey burbs.
Have since started making lots more money and want to move back to Hoboken.
(The commute is killing me.)
Now, do I just suck it up and stay in our place and save money and argue with me wife about being home after 9:30 every night?
Or do I try and get out now and buy in Hoboken?
Because, I don’t see the prices going down there over the next couple of years the way they will in the burbs.
Oh, and let the insults begin!
Thanks in advance.
Gary.
From CNN…
Putting a limit on the declines, the New York Stock Exchange said it imposed trading curbs meant to limit the market selloff, CNN has confirmed.
Has a predetermined sell-off trigger level been reached or has the President’s “Working Group on Financial Markets” had a little get together?
Are we in 5 year sluggishness
Shiller: Prices have been declining from 2005. Its not easy to figure out how long downturn will last. London has been going up after some declines. Continuation of trend. Futures market changed dramatically, now only showing small drop. Futures market is less pessimistic, but price is dropping. Price should be more important, then number of units. Humans are affected by context. Price decline can change the way we think.
Lot of talk on Behaviour Economics.
“its nonsense.”
Spelunker [147],
Richard’s post was simply degrading to women. He then one upped himself with his cockeyed statement about those on this site and kids. I can’t decipher if the statements are just misguided or completely scornful??
Gary,
Asking prices are currently down 5% in my building from their peak selling prices. I am expecting prices to continue to drop.
Hi Gary, I post as “gary”! Ha. Just to let the folks know there are multiples. I can adjust my handle. :)
Man, I was at a meeting just now that I bet some of you would have loved to have participated. I could not do your representation justice. Our company is still trying to convince people to move to NJ so they invited people here today and brought in RE agents from Morris, Sussex and Essex counties, and the school supers from Moris,Warren, Essex and Passaic. I asked the nasty question to the supers- so why would I pay such high taxes to pay for your pension plans (well kind of asked it like that- not quite). His answer was the problem of high taxes was due to the state and the Abbott (?) plan- something to do with the gov paying more of the taxes to some counties than others? But he did say that they needed to address many issues, including higher pension plans. But he finished off saying- if you have two kids in school it is probably costing the county $20,000 so $10,000 in taxes is a bargain. Translated- stop whining and deal with the high taxes and the $75,000 pension to the janitor. And by the way the high taxes are the states fault not ours.
I also told the morris county realtor that I was going to rent for two years and he thought I was nuts as house prices were starting to increase in NJ again……
This was on the heals of a woman living in Bergen county that said she bought there 4 years ago as the house prices in Bergen have never gone down and never will……(I have no idea if they have or have not but sounds silly to me)
And this was on the heals of a guy that lives in Hacketstown(?) that enjoys his 75 min plus commute to work.
Sorry folks, I just could not bring any blazing guns as it was a work environment, but I know it would have been an interesting meeting for some of you to open fire.
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 says 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.
“this blog is made up of a large population of people with no kids”.
true here. no kids. single, 30s. professional. but I have to compete with all the yuppie transplant couples from hoboken/nyc who breed the next generation of entitled brats. why do single people have to buy condoshacks/townhouses? I want a small single family home, 3br, 1.5 bath, yard for a garden, attached garage, and I don’t want to leverage the whole thing. And pay $9k a year in property taxes to fund a school system I don’t use. Is that too much to ask?
Yes it is, in this state.
When I picked up my kid from daycare yesterday (he’s almost 5 – refuses to be called 4), first thing he says is he wants to go to Karate cuz some other kid in his class is going.
I say no way.
I don’t want him using it against his sister – which he most likely will – considering she’s his target practise for everything else.
I want him to learn to put away his shoes first.. then mine before I pay for Karate.
btw, whatsup with Karate and Taekwando in every corner?!
NJBound,
What was the feeling among your co workers? Were they swayed by the meeting or still highly skeptical of moving to NJ? What happens if too many people decline to go?
Sorry Gary. How about Gary G?
Hobokenite, thanks for the numbers.
That’s the real rub. As Hoboken decreases, I think my place in Little Falls will descreaes exponentially.
When do I pull the plug?
Or am a f*cked?
Hate wasting this $600 bones a month on commuting costs when I could be putting it into a property.
Thanks.
Gary G.
CREDIT MELTDOWN………
ACTING RATIONAL HAS ITS REWARDS IN THE END.
BLEED”EM DRY!!!!!!!!!!!!
BOOOOOOOOOOOOYAAAAAAAAAAAA
Bob
Holy Cow !!!
Dow Down 476.75 (3.77%)
Big sell of on the Dow; down 531 now.
One quick question, guys: what exactly is this ATM that people say is killing them financially? What do the letters stand for? Is it another way of saying property tax?
thanks,
Mario
YEAH!!!!!!!!
FACE REALITY….IT AIN’T PRETTY….PHONEY PONZI LOANS GOING BELLYUP…
Your patience will be rewarded.
BOOOOOOOOOOOOYAAAAAAAAAAAAAA
Bob
dow down 500 points. youch!
What the hell was that
Nasdaq down 101 – S&P down 57 – DJUSHB down 25.
Re: AMT, I have to say the situation here is out of hand- actually penalizing people for paying lots of taxes to their bloated, corrupt and nearly bankrupt state. Indexing for inflation? Nah. Exempting property tax from the calculation? Course not!
We’ll give you a tax cut, and steathily take it away at tax time (of course most people don’t find out they’re AMT until TurboTax time). The pols strategy- wait until it affects enough people to cause serious trauma, people will scream, then they’ll have political cover to “fix” it. What a great plan. To have it hit people making $50k-$75k, that’s just plain wrong in my book.
As if we needed yet another reason not to buy in NJ…. unforunately, the whole tri-state area it’s pretty much the same story. I often wonder how people starting out here, on anything resembling a modest income, can do it, esp w/ kids et al. Scary stuff. Either prices come down significantly, families live in apts for 2/3 of their lives… or we just become 3 states full of the very rich.
Mario
http://en.wikipedia.org/wiki/Alternative_Minimum_Tax
YOU AIN’T SEEN REAL MISERY GRUBBERS UNTIL EARLY 2008….THAT ARROGANT GREEDY SMIRK WILL BE LONG GONE…
GRIND!
BRING IT ON……..
Holy Sh#$
You go work for 4 hours, come back to check the Dow and it is down 500????
I did not sign up for this – with the last two days drops it is almost 700…
What do the letters stand for?
Alternative Minimum Tax
The idea is that if you make a lot of money, you don’t need/deserve extra tax write-offs like the mortgage interest deduction.
The problem is that the cut-off level is not indexed for inflation, so more people get sucked in every year. Because NJ is a high income, but high cost of living state, many people get sucked into the AMT who would be considered upper middle class; who were not intended to be targeted by the AMT.
KICK AROUND A FEW STARVING REALTORS AND GREEDY GRUBBERS..
You MUST be rewarded for your patience.
BOOOOOOOOOOOYAAAAAAAAA
Bob
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 says has not seen any price declines in this area for past year. I think she is lying to me. Is she ?
She is not lying. I am looking at the same region. Prices are not dropping – houses sitting on the market for 300-400 days…. And they do sell at 10K off listings and people who buy’s them believe it is bargain..Wonder why….
What the hell was that
A couple of the big hedgies unloading ?
Okay, I have a teenage daughter. Richard, you’ve outed all of us ‘rents.
Lisoosh, sorry if my comment about women preferring to own caused offense. I meant it as an anecdotal observation based on experience, and the sentiments of other posters here. A sexist generalization? I hope not. I don’t equate the desire to own with “stupid.” I agree that handyman masculine fantasies are stoopid. Much better things to fantasize about. Like that charming Cape asking $389 on a quiet street with the daffodils blooming off the front porch.
Richard, were you having a bad day in the markets to make a comment like that re. DINKs? You should be licking your chops to buy stocks cheaper tomorrow.
As a side comment…..the 10% drop in China is not surprising. When clueless farmers in villages pawns everything to put into stocks because they only go up, they will lose their shirts. And in emerging markets, when panic sets in, liquidity dries up quicker than you can take a p*ss.
Been there, seen it happen too many times in Asia.
#179 Al:houses are sitting 300 to 400 days,a nd people are still not dropping prices?
So why there was a 200 drop at 3 pm??? and now rebounding big??? Computer glitch?? what is happening at 3 pm ET?? Whih international market open/closes???
Does anyone have data on how many shares traded hands during that blip, my (free) source is showing somewhere around 37 million.
Program trade selloff? A hell of alot of stop-losses triggered?
jb
Richard (112):
I have three kids: one of each. (h/t Woody Allen)
Actually, I have two kids … whom I gladly would make sleep in bunkbeds if Helen Mirren would agree to move in. A fetching English nanny: no clearer sign of a man who’s made it. Now if I can only get the wife to sign off on this scheme.
Poser: You want what you cannot have. Boo hoo.
its down 415 points now, as of 3:15
“Stock selloff picks up steam
Dow tumbles 200, broader market slumps as investors eye China, thwarted attack on Cheney, drop in durable orders.”
http://money.cnn.com/2007/02/27/markets/markets_0130/index.htm?cnn=yes
Question: If the Taliban had successfully plunked Darth Cheney, would the markets have gone up?
people i said most on here have no kids not nobody. funny how i hit a nerve though.
in regards to today’s market, i’ve already stepped in and did some buying. frankly i’m surprised by the knee jerk reaction. then again sheeple are just that. i’m in it for the long term and the strategy of select buying has not failed me once yet.
bergenbubbleburst Says:
February 27th, 2007 at 3:16 pm
#179 Al:houses are sitting 300 to 400 days, and people are still not dropping prices
Believe it or not – they do not.
There are still people buying. I thik there are some big money neing made: someone organize people with so-so credit who do not care if they have a FK on their record, they inflate house price, get cash back from seller, and in 60 days miss first payment.
You can easilly make 60-100K like that, on one transaction. The more you pay for the house the better. Let’s say you are croocked lender, got 100 people liek this, split money with them 50/50…. You got 3 millions..
As long as nobody cares and it seems like nobody does because this is widespread all over the country, after about 3 month of lending you declare chapter 11 like many small lenders do. Move out of state or out of the country. And here you go – do not need to work for the rest of your life…
They withdraw after about 150 days, and after a month/sometimes immediatelly, relist at 5-10K above, after that quikly reduce price by 10K so it shows as price reduced.
could it be that 1 of the traders made a mistake like a few years ago?
hang on people. it can get really ugly.
$158 NJ Bound That women in BC who bought 4 years ago, is clueless. Prices went down before in BC,a nd they will and are going down now, it is as simple as that. What is sad however, is that if she is a realtor, she should know this, if she does not it is astounding, but I guess not surprising, but criminal.
I love these reale sate newbies, who thinkt hey know it all. Cluelss, but scary that they are giving advice to people.
I wish I bought that option to sell a DJIA Index fund last month. Today would be the day to do it.
As far as traiding volume at 3 pm:
http://moneycentral.msn.com/investor/charts/chartdl.aspx?PT=0&D5=0&D2=0&showchartbt=Redraw+Chart&CA=1&compsyms=&MA0=0&MA1=0&CF=1&D7=&D6=&C5=1&C6=&C7=1&C8=&symbol=%24INDU&nocookie=1
Would this help??? It seems that automatic filters to buy were triggered at 3 pm , not filters to sell.
BC Bob,
Good call again on the international stocks :)
“people i said most on here have no kids”
Corroborating evidence??
Next spike of activity will be – 12000…..
For right now – OUCH….
I am tempted to move my House Downpayment to stocks when it will go below 12000…..
When was the last day like this???
bear,
I didn’t make any call. Just exited.
#163 RentL0rd
“btw, whatsup with Karate and Taekwando in every corner?!”
That’s THE organized activity for your son’s age. They get their black belt by 9 or 10 and then proceed to forget a lot of what they learned. Once they get to 2nd or 3rd grade, THE organized activity is soccer and/or lacrosse.
With so many kids playing soccer, there are a lot of disappointed kids when they get to high school and realize that everyone doesn’t make the team and they have to find something else to occupy their time.
add to your position folks. just a little. these opportunities are few and far between.
Disclaimer
The information on this site is provided for discussion purposes only. Under no circumstances does this information constitute a recommendation to buy or sell securities, assets, or otherwise.
i’m watching the trades and buyers are stepping in realizing the opportunity. don’t miss it like you missed the real estate run-up (sorry had to jab ;)
I’m selling my starter home, and not until I see the ink dry on the sale will I move up. I’m thinking that any percentage drop in my starter home will be less money than the same percentage drop in the type of home I plan to buy. Any pitfalls to look out for in this approach?
Willow.. you’r right about organized activities.. but Karate is NOT for my kid. He gets his share of ‘beating up other ppl’ (self defence or not) from tv.
BC Bob, I have to bow to you.
You made the call on International funds a couple of days ago.. right here.
I dread to look at JAOSX tomorrow.
Richard [203],
You mean those that missed selling the top?? [sorry had to jab]
Hey Gary who wants to move to Hoboken – why? Do you plan to have kids? Would you like to spend the rest of your days in a 2 bed/2 bath apt. with them? I understand the commute is great – believe me, my current 40 minute door to door versus the 1.5 hour I am contemplating – well, it’s a big consideration. But really, there is so much more to that decision than the commuting costs, like the huge private school tuition you will pay to send your kids (or future kids) to school in Hoboken.
That’s the tradeoff of urban life, and has been for years, whether Hoboken or NYC proper – let me tell you, 25K a year on private school, or $600 a month on commute? Hmmm.
Of course, if you have no kids and never plan to, I don’t know why you would live suburban – people I know like that do apt./country house.
By the way, does your wife work? If not, and you’re bringing in enough money to buy a place on your own, sorry, as a woman saying that, she has no right to complain. There are ALWAYS tradeoffs to lifestyle choices, and when she married you, she knew what you did and how long you worked right?
RentLOrd,
Please. I did not make any call.
The ponzi debt holders pointing the finger at each other….oh no!
hehehehehehe
renting in NJ 164 and bergenbubble burst
The employees are not happy-very few want to move from CT to NJ. So…they are upping the relo package. But the crazy thing is, to make the offer better, they are increasing the HOD- home owners differential to 1.5 or so. IOW, if you have a $500K home in CT you can buy a $750K home in NJ and they will pay the interest on the mortgage for x years. Great, but what if you don’t want to buy a home at the moment, or you don’t want to pay the taxes on a $750k home. So I think that they are offering the wrong incentive. Should be offering cost of living adjustments as a lump sum and salary increases. Then people can decide themselves what to do.
As far as the Bergen woman, she was a SWF, employee that may not have a clue about what is happening out there. Actually my impression is that no one in the room has any idea what is going on in the real estate market
who said anything about a top and bottom. such things aren’t measured that way. it’s whether you profit or not. a profit is a profit is a profit. i lightened up my international positions end of last year after the impressive run up. i’m half what i once was.
HOUSING MASSACRE!
BRING IT ON….THAT FRIGGEN ARROGANT BUNCH NEED TO BE SLAPPED AROUND AWHILE.
I GOT SOMETHING EYED UP DOWN SOUTH AND THIS SUCKA GOING TO BE BLED DRY! they just do not realize it yet.
BOOOOOOOOOOOYAAAAAAAAAAAAA
Bob
gold getting hammered also. nowhere is safe except bonds and cash.
From MarketWatch:
Housing slowdown challenges loan growth: FDIC
The slowdown in residential construction may reduce the demand for real estate and construction loans and banks should carefully manage risk amid the slump, a federal banking regulator said Tuesday.
“The effects of the slowdown are clearly visible,” said Federal Deposit Insurance Corp. Chairman Sheila Bair, in a statement.
“Going forward, insured banking institutions should pay careful attention to risk-management processes in this slower-growth environment,” Bair said in a statement accompanying an FDIC report about banking conditions nationwide.
Marketwatch’s list of most popular stories tells a good tale. My favorite? #7 – Strip-club stocks rise on Wall Street.
1. U.S. stocks dive on China jitters
2. Global markets tumble as China fear spills over
3. Tuesday’s biggest stock gainers and decliner
4. China shares plunge almost 9%; regional markets lower
5. Will Asian markets’ sell-off lead U.S. stocks lower?
6. Stock futures tumble on China weakness, disappointing data
7. Strip-club stocks rise on Wall Street
8. Home prices fall at fastest rate in 14 years
9. Dow drops over 500 points
10. Gold futures close lower for first time in three sessions
http://www.conference-board.org/economics/consumerConfidence.cfm
Confidence Index Hits Five-and-a-Half Year High
although number 8 is pretty good too:
8. Home prices fall at fastest rate in 14 years
Home-Price Index Slides, With ‘No Sign of Bottom’ (CNBC)
http://www.cnbc.com/id/17361391
The slide at this point is a good deal steeper then we saw at the beginning of the decade and we don’t see any sign of a bottom,” David Blitzer, S&P Index committee chairman, told CNBC. “These are the worst numbers in at least ten years.”
Blitzer also told CNBC that the impact of the subprime mortgage market could further depress home prices: “The damage from the subprime mortgage market probably hasn’t shown up in home prices yet,” Blitzer said. “That will take a lot of buyers out of the market, and fewer buyers probably means weaker prices and less hope of a turnaround.”
Gary 154 –
How on earth can a bunch of strangers give you an answer to something so personal as where to live?
Pat, interesting contrast between our posts…
“who said anything about a top and bottom”
Richard,
Was only talking about RE. This was in response to your post[203]suggesting not to miss this[stocks]like you missed the RE run. Total garbage.
“gold getting hammered also. nowhere is safe except bonds and cash.”
More rubbuish. PUTS. By the way, at one time you stated it was arrogant being in cash. Another flip-flop??
Yeah, Jay. It’s like the David vs. Goliath post.
Which one is Goliath?
People: please draw a distinction between “international” and “emerging markets”…..BIG DIFFERENCE
flip flop by no means. i said nowhere is safe today except bonds and cash. you should also always have a bit of cash lying around to buy into dips. bonds are for panzies.
Burst (163)-
Martial arts get sold to parents whose kids are uncontrollable. They’re big on the “self-discipline” pitch.
Ka-ching.
Reechard: I backed off bothering you because you were acting like a rational human being. However, today you have reinstated your abject moron status. If you forget your meds again, I will personally kick your a55.
To quote Scooby-Doo: “ruh-roh!”
from Bloomberg
The yield on 10-year notes was 61 basis points below that of three-month bills, more closely aligned with the Fed’s target rate. The gap was the most inverted since 2001.
Short term treasuries are looking good right now. Bought some 28 day notes at today’s auction. Yield is 5.26%, exempt from NJ income tax…
For anyone interested, you can buy these commission free at treasurydirect.gov
OK so over on housing panic Keith says the NARs numbers on existing home sales are bogus. Granted, they do not jive with everything else going on, but can’t the big jump just be due to an increase in contracts in Jan after a warm Dec, and therefore Feb should be ugly? I am interested in what you guys think, and if you agree that they are bogus- how are they doctering trhe numbers?
how are they doctering trhe numbers?
Seasonal adjustments. Unadjusted January sales were significantly lower than December sales.
Tom Keane mentioned this site supported by S&P and Shiller……do people follow it here?
http://www.macromarkets.com/index.shtml
also this item….
http://www.macromarkets.com/recent_news/articles/2007/02212007_marketwatch.pdf
People: please draw a distinction between “international” and “emerging markets”…..BIG DIFFERENCE
All things considered, I actually did quite nicely on my Vanguard Developed Markets fund, which invests heavily in Western Europe & Japan. The Euro and Yen rallied against the dollar today.
fyi
Tight Gasoline Supply in Toronto
Up tp 30% of gas stations in Toronto are now out of gasoline. Those that have it are selling for over $4.00U.S./gallon.
Richard Says:
December 16th, 2006 at 5:37 pm
i hope all the permbear RE folks on this site weren’t so arrogant as to be in 100% cash and metals this year.
Richard,
Arrogant to be in cash a little more than 2 months ago,prudent today?? Like I stated, another Richard flip-flop.
So, does the market rally or does the sell-off continue tomorrow?
RentinginNJ Says:
February 27th, 2007 at 4:45 pm
So, does the market rally or does the sell-off
continue tomorrow?
Make the call at 10:30AM tomorrow – not in the first 30 minutes.
It certainly will help if the Asian/European markets hold it together overnight. Australia down 3.0% currently.
Nothing like sharp moves to remind people what risk feels like. Tonite is probably a double scotch and ambien kind of night for many.
jb
On tap for tomorrow is:
8:30am Preliminary Q4 GDP
9:45am Chicago PMI
10:00am New Home Sales
jb
Renting in NJ
said in response to:
how are they doctoring the numbers?
Seasonal adjustments. Unadjusted January sales were significantly lower than December sales.
___
Ok do they always report seasonal, or do they cherry pick and some months report unadjusted, whatever looks better?
#210 True many don’t have a clue what is going on, and others are straight out liars.
Dr Shuller on Bloomberg. Listen to Audio at,
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vWDtE0uM7d94.asf
lisoosh.
I’m asking from a real estate perspective.
Emotionally, I’d move in a second.
But, does one sit on a property that might not appreciate over the next few years and might actually collapse in value…
OR
Does one sell now for more than they paid and jump to a market that is still volatile, but arguably substantially less volatile?
Just curious.
Probably a trickier question than I’m posing it, but I don’t want to write an entire thesis.
I’m sure people get the idea of what’s doing.
Thanks.
All this talk from Shiller about Behaviourial Finance, got me started looking for how Emotions are effecting RE decisions. Came across this good article,
http://realtytimes.com/rtcpages/20060303_emotions.htm
Buying or selling a house — or at least the decision to do so — is fraught with emotional bombshells.
A University of Florida study on emotions and their effects on the buying process, headlined that “Americans More Likely to Let Their Emotions Do the Buying.” The study contends that “emotions were nearly twice as important as knowledge in buying decisions.”
As you walk through houses for sale, the old hand agents will still tell you, “You’ll just know when you’ve walked into ‘your’ house.” And they are exactly right. The commonsense side of the decision is: can I afford it, does it meet within our financial limitations? (The logical approach.) Meanwhile, there should be the balance of: “Wow … this is the place because I feel at home.” (The emotional response.)
a technical glitch?!!
this was a rough day, but we should remember the old chinese folk tale about Pang and his neighbor Li the flutist.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEiH91tGSnh0&refer=home
Apparently the Dow point decline is real, but some trades weren’t published until 3:00pm and when all the trades show up it appeared as a sudden drop.
This is depressing, Union advocate Corzine just made adeal with the teachers union, to give them a full ride on their healthcare after they retire.
What gives??? They already make good $$$ with tenure and summers off.
If NJ goes into a mild recession we are screwed as taxpayers,
read all about it here http://www.nj.com/statehouse/ledger/index.ssf?/base/news-0/1172554754283840.xml&coll=1
SG (244)-
That article understates it. Emotion trumps logic about 8:1. Buyers buy on emotion, then use facts to justify the action taken.
Some very nice, glittery securities out there tonight…lonely and looking for a new home in the next few days…I love big, nasty, (hopefully) quick corrections!!!
China syndrome, carry trade unwinds, Western Europe says ho-hum, US bonds invert like it’s 9/11 again, subprime all the time on CNBC. Maybe Cramer will stab himself tonight…gotta watch.
BC, the rocket’s on the pad, and the fuse is about to be lit.
All disclaimers apply. Buying this dip is like grabbing a tiger by the tail.
Prof (246)-
What’s the punch line?
BC/ChiFi-
What time are you waking up tomorrow AM?
“this blog is made up of a large population of people with no kids”.
Although, this is sheer speculation, I think he may have a point in re “expecting parents”.
We bought in the suburbs and a large part of that decision was the arrival of our son. But for him and the space he needed we would still be paying crazy rent in Manhattan.
http://www.businessweek.com/investor/content/feb2007/pi20070227_897788.htm?campaign_id=yhoo
S&P Upgrades Countrywide Financial to Sell from strong sell
LOL
Richard Says:
February 27th, 2007 at 4:25 pm
bonds are for panzies.
But bonds are what keeps some people’s sanity on days like today.
A bedtime story from MarketWatch:
Asian stocks continue slide
Asian stocks continued sharp declines in early trading Wednesday. Japan’s Nikkei 225 dropped as much as 3.23%, or 584.86 points, to 17,535.06 shortly after the market opening in Tokyo. South Korea’s Kospi was down as much as 3.93%, while Australia’s S&P/ASX 200 dropped 3.06% and New Zealand’s NZSX-50 dropped 2.68%. Markets had not yet opened in Shanghai, where the Composite Index’s 8.8% loss Tuesday triggered a global selloff.
#248 Jim: NJ is already in a recession, and has been for several years, and that makes this is even scarier, what happens when the whole country goes into recession, thats a depression for NJ
Thanks Bergenbubble. Finally somebody said it.
http://bp1.blogger.com/_pMscxxELHEg/ReSOTLYT19I/AAAAAAAAAGE/sP1UO2CJ-1U/s1600-h/Investmentq406.jpg
It looks like recession every time resedential and nonresedential real estate investments turns negative. Resedential RE is negative. NonResedential is starting to go down.
>> source CR
Thanks bergenbubble, I just get frustrated when I read how the unions run nj.
It may run nj into bankruptcy.
Especially if people keep voting with their feet.
Jim
Cramer: How the System Failed Us Today
http://www.thestreet.com/_tscana/markets/activetraderupdate/10341324.html
We totally collapsed between 2 p.m. and 3 p.m. ET, dropping 200 points. All the circuit breakers and all of the rules that were put into place years ago after 1987 just utterly failed.
Richard Says:
February 27th, 2007 at 12:32 pm
this blog is made up of a large population of people with no kids. if you had kids the responses and discussions would be far different. maybe the blog should be changed to Real Estate Report for SINKS and DINKS.
Hunter (a.k.a. chicago jr.): what do you think of Reechard?
https://njrereport.com/images/Picture_170_Prip.jpg
Clotpoll Says:
February 27th, 2007 at 6:41 pm
BC/ChiFi-
What time are you waking up tomorrow AM?
I’m not going to sleep tonight? :(
#161
Tom, look in Monmouth county, prices are down 20% from Jan, 2006, don’t let them fool you, just look around. There’s a lot of people looking for suckers, but you can find some great deals 20% off.
#125 Al Says:
“It is funny – my wife is the one who is very much against buying a house”
Al, my wife is against buying too. When we owned a home, I spend too much home in Home Depot and Lowes and doing stuff around the house. Now that we are renting a townhouse, I just call the management company if stuff needs to be fixed and I have time to spend with my family in the evenings and weekends.
NIKKEI down approx 3.5%
Sent: Monday, February 26, 2007 8:36 PM
To: Western Division Loan Officer; Bill Bent’s Region; PacCrest Former Employees
Cc: Choice Support West; Choice Support East; Anne Jorgensen; Robert Trahan; Risk Grp I; Western Div Ops Mgrs
Subject: Choice Platinum & Premiere – Important Notice
Attention All Loan Officers:
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The following is a summary of some of the guideline changes. Please carefully review the attached program updates for complete details.
Choice Platinum:
1. 100% SIFA Primary residence now requires a minimum 680 FICO score (was 660 previously).
2. 100% SIFA Primary residence maximum loan amount now $200,000 (was $300,000 previously).
3. 100% No Ratio Primary residence now requires a minimum 700 FICO score (was 660 previously).
4. 100% No Ratio Primary residence maximum loan amount now $200,000 (was $300,000 previously).
5. SISA Primary residence maximum CLTV now 95% with minimum 680 FICO (was 100% with 660 FICO).
6. No Doc Primary residence maximum CLTV now 95% with minimum 680 FICO (was 100% with 720 FICO).
7. Maximum DTI 45% (was 50% with underwriter discretion)
8. Please review all 2nd Home and Investor cut-offs for further loan amount and CLTV restrictions.
Choice Premiere:
1. SIFA Primary residence maximum CLTV now 95% with minimum 640 FICO (was 100% with 620 FICO).
2. No Ratio Primary residence maximum CLTV now 95% with minimum 660 FICO (was 100% with 660 FICO).
3. SISA Primary residence maximum CLTV now 95% with minimum 660 FICO (was 100% with 660 FICO).
4. No Doc Primary residence maximum CLTV now 90% with minimum 680 FICO (was 100% with 720 FICO and 95% with 680 FICO).
5. Maximum loan amount $100,000 on SIFA, No Ratio, SISA and No Doc (was $200,000).
6. Investor 2nds no longer available on No Ratio, SISA and No Doc (was previously offered on all doc types).
7. Please review all 2nd Home and Investor cut-offs for further loan amount and CLTV restrictions.
Please contact Choice Support west with any questions.
>>
Source CR
#161 “north brunswick, south brunswick, princeton, monroe townships”
Inventory levels in these towns are much than in 2005. Ask you agent to explain why there are about twice the number of homes on the market compared to last year?
Subprime lender Fremont delays results,shares sink
http://yahoo.reuters.com/news/articleinvesting.aspx?type=companyNews&storyid=28210
what….. me worry?
SAS
vol glitch…
looks like someone is on the banker’s treadmill….
SAS
For the last two months, I started hoarding cash. I havent’ really pulled anything out of the stock funds that I bought in 2005 but stopped putting any more money into stocks.
going forward, I plan to only keep cash until I see light at the end of this tunnel. I don’t want to be in bonds or commodities either. Happy with cash for now. I don’t plan on buying into this dip.
AntiTrump
keep in mind.
cash is still paper.
SAS
SAS:
What’s that sleep remedy? Warm milk and cognac, or is that warm cognac and milk?
he he… my sleep remedy is warm milk & cognac…
a little trick I learned sometime ago from a beautiful exotic women in the south pacific…
works like a charm.
SAS
“The Australian and New Zealand dollars plunged the most in more than nine months against the yen as investors reduced so-called carry trades by selling higher- yielding assets bought with money borrowed in Japan.”
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aeXMjX4ppVPg
For Manufacturing, a Recession Has Arrived
http://www.nytimes.com/2007/02/28/business/28leonhardt-web.html?_r=1&oref=slogin
f———— people are panicing a bit :(
Al #22
Speaking of inflation. My breakfast went up 20% overnight. Lunch 12.5% and an afternoon softdrink up 8%. All hit yesterday.
Fed has to get real and realize these energy and commodity prices are here to stay. Forget this core stuff…what could be more core than eating and providing heat and electric.
ChiFi (264)-
Full-court press is on, now, eh? Still, this is the time to be a trader. Today is gonna be a big overhang on the market well into this year. Lots of moves are going to be measured against today’s news and subsequent reactions. There are going to be new hedges and plays that really veer into uncharted waters (e.g.- massive ETF shorting…the new version of “jump the shark”). Weirdest of all: the rush to the Euro (!?!?!?) in the flight to safety.
How many unexecuted orders await the bell in the morning? Will the session open with curbs in? Where’s the support levels?
And, how are fundamentally-superior companies any different today than they were yesterday? And if they’re not- and they have massive buybacks in place- won’t they be the big winners when all the smoke clears? Crimp the float, pump the EPS through nothing more than buying back stock AND average down…what an opportunity!
All disclaimers apply. I sell houses for a living and trade stocks out of a deep and pitiful need for action. Anyone who thinks I have any idea about what stocks, bonds or commodities will do next is itching to lose a lot of money, fast.
Generally at the corporate level, things are much more deliberate than your last paragraph. You generally don’t have the Coporate Treasury with standing orders to “buy on the dips”. There are a series of “powers of authority” throughout the organization. Generally, the CEO/CFO doesn’t just pick up the phone and say “hey, buy a bunch of shares out of the market”. The big companies must turn the Titanic and the small companies end up looking like pikers by jumping around in that manner.
When you see a big company being “shrewd”, the logical reaction should be “WTF are you doing? Go run your goddamned company and stop screwing around with pennies of EPS.” Seriously, companies that are that level of market focused have names such as “Enron, Worldcom, HealthSouth, FannieMae”. I’m not saying that there are not companies out there doing what you suggest, but they are long term losers from an operational perspective.
Has anyone seen the reality tv series “Buy Me” on HGTV? Even though its a reality series, the script seems very similar to what has been discussed on this blog.
On the episode tonight (10:30 to qq:00 pm EST) there was this lady undergoing a divorce trying to sell her home (olp 225k) , which had water seeping in through the foundation because it had settled and had cracks in three places.
She got one offer for 152k on the fifth open house and she countered it with 200k.
They never really ended up with showing if she sold her house, but she did say that if she will not get an offer for 200k she will take it off the market and re-list it in the SPRRRRRRING. Then she proceeded to fire her Agent…. pretty hilarious and sad at the same time.
chifi, no kidding. My employer takes a few months to process the paperwork to invest in a software product they’ve already decided they’re gonna buy. The multiple levels of checks-and-balances and bureaucracy is amazing. I can’t imagine what the ‘process document’ must look like to authorize using company money to buy some stock. I wonder which ISO methodology covers that lol.
JB, My comment dated February 27th, 2007 at 11:22 pm is awaiting moderation. I messed up on typing my name maybe thats why?
MBA Questions Freddie Mac’s New Underwriting Standards for for Subprime Lending
http://www.mortgagebankers.org/NewsandMedia/PressCenter/48715.htm
“Today’s announcement by Freddie Mac that it will only purchase subprime mortgages – and mortgage-related securities backed by these subprime loans – that qualify borrowers at the fully-indexed rate will limit the product options and the access to credit for those individuals most in need, many of whom are first time, underserved or minority homebuyers.
The mortgage products that these new standards target are important financial instruments, crucial to helping borrowers get into homes and repair their credit. Regulation that further limits consumer choice is unwarranted.”
ChiFi (283)-
Thanks for the insight. Just one question, though: don’t companies that have an large, ongoing buyback in place plot their strategies well in advance (like the MSFT Dutch tender)? I, as you, shudder at the Enrons of the world whose fortunes mostly rode on manipulations of the stock price. I’m also aware of the companies out there now who are engaged in sham buybacks that are nothing but self-serving ruses.
And what about the financials and brokers? Guys like Goldman should be able to manage their own buybacks during coffee breaks.
Agreed that a company should have its core business as first priority. But when you have a great business, and the street hands you a crapola multiple (like Goldman), it seems as though an aggressive buyback is both prudent…and possibly even a protection against an unwelcome raid by private equity.
Gary, can I ask why you think prices in the suburbs will fall more than Hoboken? Hoboken is all condo, and condos have always fared worse than traditional SFH in real estate downturns. Plus, Hoboken is filled with “starter condos” – if those who bought them can’t sell, what then?
NJGal!
Sorry for the confusion.
I’m talking about our particular apartment in the suburbs vs. a similar apartment in Hoboken. Definitely not oranges to apples.
I think that Hoboken, JC, etc. will continue to rise because of New York spillover.
And I worry that all the new construction near the city (Secaucus Transfer, 360 in the Meadowlands, etc.) will hurt the prices of similar apartments that are farther away.
But what the hell do I know?
That’s why I’m asking…
As for Hoboken condos, I think they’re probably a safe bet. People who turned their noses up to it years ago are now moving there because Brooklyn’s blown up so much.
Hell. Queen’s is now crazy expensive.
I have to disagree as to Hoboken, but I do think that suburban apartments will fare worse, because if housing prices fall, suburban apartments sort of become an unnecessary first stop in the housing market. That said, perhaps retiring baby boomers might buy them, but who knows.
As to Hoboken, I think you’ve seen all the run-up there will be in those areas. Say you buy for 550 today (which you can do – a 2bed/2bath in a so-so building, sort of updated, one parking spot). Do you really think you’d be able to sell it for more than 550 in 5 years? There’s only so much to do with a condo and if people could afford a home, I think they’d go that way first. The other issue is the easy money that allowed for those Hoboken condo price rises – even a double income couple making 200K combined is pushing it to buy a 600K condo in the ‘boken (and many paid more). I would love to see how many I/O loans and “mommy/daddy” money built up Hoboken.
But if you’re willing to hang for 5-7 years, and can really afford it, perhaps the rents will catch up and you can rent out the condo if you can’t sell it for more.
Another 20% drop and the market should level out. As I see it homes that are around $500K should be worth maybe $400K then. Without dropping another 20% the first time home buyer will not return to NJ any time soon. They might not even then because the job markets are going to decline in NJ since other areas are becoming more desirable. KY, NC, FL, GA, WI, OH. Not to mention the re-assesed tax values put onto homes during the mass rise. Companies already realize they can pay 20% less in outside areas for the same person and not need them in NJ. Too many companies too are cutting back so much and contracting agencies cutting into salaries so bad that people are still going to get fed up and leave.
Hoboken will be on a major decline. NY Spillover wont help it as down here in NC were already seeing them elminating NY positions for NC positions.
Interesting takes on Hoboken.
Is it Jersey perception that will continue to make Hoboken and JC lag behind Brooklyn, Harlem, etc?
They’re just as close, but still substantially cheaper.
And Iredell, I’d love it if the prices went down there. It’d be nice to know that I live just as close to the office as my company’s COO, but live in a bigger apartment that costs about 1/3 or more as much.
My issue with JC is the size – it’s too big to see the same pick up at that Hoboken did. There are certain areas that are nice and will get nicer, but after that, can it really go anywhere else, especially if it’s (a) no longer a bargain and (b) prices are lower in more desirable areas?