From Bloomberg:
Home Prices Fall in Rich New York Suburbs Once Immune to Slump
The U.S. housing slump has hit New York City’s richest suburbs.
The average price in Westport, Connecticut, home of chief executive officers Herbert Allison of TIAA-CREF and Jeffrey Kindler of Pfizer Inc., and actor Paul Newman, fell 8.2 percent to $1.56 million in the first four months of 2007 from the same period last year, according to multiple listing service data. In Chappaqua, New York, where Bill and Hillary Clinton live, properties sit on the market an average of seven months before they sell, up from five months a year ago.
Wealth and excellent credit have until now spared bedroom communities in New Jersey, Connecticut and New York’s Westchester County from declines in home prices. Now the tightening of credit in response to rising subprime defaults has disrupted the real estate food chain, bringing the national housing slump to Manhattan’s doorstep. Prices fell as much as 18.8 percent this year in 15 of the 24 areas in which data was collected.
“People who may have bought their first home may not be able to do so now, and that stops some of the movement,” said Doug Werner, a broker at William Pitt Sotheby’s International Real Estate in Darien, Connecticut. “Whales eat plankton. If the plankton disappears, what will happen to the whales?”
Data on home prices and time on the market for Jan. 1 to April 30 were obtained from listing services in New York, New Jersey and Connecticut. Realtors report sales to the listing services and the listing services then share those numbers with the Washington-based National Association of Realtors. The realtors group will release its data for April on May 25.
…
First-time home buyers are more likely to be subprime borrowers. Every purchase of an existing house by a first-time buyer triggers four other sales in the housing market, said Jeffrey Otteau, president of Otteau Valuation Group in East Brunswick, New Jersey.“They are largely trade-up purchases,” Otteau said. “The buyer of the $300,000 house enables the seller of that home to buy a $450,000 house, and up the line until you get to a luxury home. None of that can happen unless the first-time buyer makes the purchase.”
The number of homes in Bergen, Passaic, Morris, Essex and Union counties of New Jersey that sold for less than $400,000 in the first quarter of 2007 fell 27 percent from the same period in 2005, Otteau said. Some of that decline can be pinned on rising home prices. Still, it provides evidence that fewer first-time buyers are entering the market, Otteau said.
…
In Connecticut, Stamford’s price decline of 0.8 percent to $825,049 comes after 12 consecutive annual increases in home values from 1994 to 2005, said John Clapp, professor of real estate at the University of Connecticut in Storrs. Norwalk prices gained 1 percent to $704,302, but the time houses sit on the market there has increased to 100 days from 87.“It doesn’t take reduction in demand from many buyers to ripple through the market,” Clapp said.
…
“Inventory is quite high,” said Cheryl Scott-Daniels, chairwoman of the board of Consolidated Multiple Listing Service in Westport. “The homes that are selling are selling because they’re very well priced.”
…
The biggest price declines are along the Metro-North Railroad line in Westchester County, New York, just north of New York City. Prices fell in eight of the 11 areas in which data was collected. In some towns, the number of homes sold was too small to draw conclusions.Larchmont and Mamaroneck experienced a drop of 18.8 percent to $1.08 million. In Armonk, prices declined 17.3 percent to $1.39 million. In Bronxville, the slide was 12.4 percent to $1.34 million. Prices also fell in New Rochelle (4.3 percent), Scarsdale (6 percent) and the Jefferson Valley-Shrub Oak- Yorktown-Yorktown Heights area (6.9 percent).
…
Along the New Jersey Transit rail tracks in the northern part of the state, where housing prices rose 230 percent from 1992 to 2005, price declines are narrower than in Westchester or Fairfield counties, according to Otteau of the Otteau Valuation Group.In Montclair, the average price fell 6 percent to $623,000. To the south, in Millburn and Short Hills, the average sale price declined 2.5 percent to $1.19 million. In Fair Lawn, where first-time buyers might find a starter home, the average price fell 4 percent to $450,000.
…
Otteau said his favorite statistic is months of inventory, or the length of time required to sell off all the homes that are currently for sale.At the peak of the northern New Jersey real estate boom in 2005, the inventory was between one and three months, meaning that the ratio of buyers to sellers was about one to one, Otteau said. A year ago, inventory had swelled to 5.6 months of homes, and now it’s 7.3 months.
“Some sellers took their homes off the market,” Otteau said. “That’s made the picture look brighter than it actually may be.”
Remember the 3rd law, “An object in motion will remain in motion unless acted upon by a net force.”
Tolls Brothers warns; second-quarter contracts down 25%
http://www.marketwatch.com/news/story/tolls-brothers-warns-second-quarter-contracts/story.aspx?guid=%7BC471409F%2D29C5%2D4293%2D97A4%2D2646BBD606F3%7D&dist=TQP_Mod_mktwN
While it said it believes fewer than 2% of its buyers are use sub-prime loans, the impact of stricter lending standards arising from problems in the sub-prime market is “negatively affecting affordability at lower price points.”
From the Wall Street Journal:
Supply of Homes Continues to Grow
By JAMES R. HAGERTY
May 9, 2007; Page D3
The supply of houses and condominiums available for sale continues to grow quickly in much of the U.S., reflecting weak sales.
The number of homes listed for sale in 18 major metropolitan areas at the end of April was up 7% from March, according to data compiled by ZipRealty Inc., a national real-estate brokerage firm in Emeryville, Calif. The data cover listings of single-family homes, condos and town houses on local multiple-listing services.
The increase was above the seasonal norm. Over the past 22 years, home inventories nationwide have increased an average of 4.5% in April from March, according to Credit Suisse Group. Spring is the busiest time of year for home shopping, as families with children try to get settled ahead of the next school year.
Some of the biggest increases last month were in the metro areas of San Francisco, up about 19%; Washington, 17%; Orange County, Calif., 15%; and Seattle, 14%. Inventories declined nearly 1% in the Los Angeles area, according to Zip.
In a report issued yesterday, Ivy Zelman, a Cleveland-based housing analyst for Credit Suisse, said her building-industry contacts have been surprised by the weakness of sales recently, “given the typical seasonal bounce that occurs at this time of year.” She added, “Our contacts have officially declared the spring selling season a bust.” Many people who had expected a recovery by year end “now believe the market rebound will be pushed out until 2008 at the earliest,” Ms. Zelman wrote.
After booming in the first half of this decade, the housing market began cooling in much of the country in 2005. Since then, prices have been flat to declining in many areas. In recent months, an abrupt tightening of lending standards has further sapped the market by preventing some potential buyers from getting loans.
More on Toll from Marketwatch:
Toll Brothers Q2 backlog down 32% to $4.15 billion
Toll Brothers Q2 home-building revenue down 19% to $1.17 bln
Toll Brothers: Difficult conditions in most of our markets
Toll Brothers writedowns before tax seen $90 mln to $130 mln
Toll Brothers: Traffic down 20% on a per-community basis
Toll Brothers: Traffic this quarter flat on gross basis
Toll Brothers: Stricter lending hitting affordability
(4)
and no mention of Hoboken.
From MarketWatch:
Purchase mortgages rise to 4-month high
Applications for new mortgages to buy a home rose last week to the highest level since early January as mortgage rates fell, the Mortgage Bankers Association reported Wednesday.
The total number of applications filed including purchase loans and refinancing loans was 3.6% higher on a week-to-week basis, and up about 21% compared with the same week a year ago.
Loan applications for mortgages to purchase a home rose by 2.6% week-to-week and are up about 5% from a year ago.
By comparison, U.S. home sales through March were down about 13% from the same time last year.
Loans to refinance an existing loan increased by 4.9% in the past week and are up about 48% from a year ago.
Applications for a loan backed by the Federal Housing Administration increased to a two-year high as the private-sector subprime market continues to dry up.
The MBA’s data do not indicate how many applications were accepted. Lenders have reported tightening their standards for loans, especially for subprime and exotic alt-A loans. Some borrowers may have to apply several times before they are accepted.
I think we can all agree that prices only go one way in Westfield. Up.
In fact, I have a friend of a cousin who knows a lady who has a son that paid triple the asking price for a Westfield home. Apparently, people smart enough to purchase a home in Westfield know that they have to be competitive to beat out other offers. I am sure that house could have sold for more, but the seller probably got tired of the bidding wars and let the house go for triple the asking price. So yeah, Westfield is truly a unique town.
njrebear Says:
May 9th, 2007 at 6:47 am
(4)
and no mention of Hoboken.
Bear: I can’t stand the bastard. I’d love to ring his neck. Little sawed off jerk.
From MSNBC:
http://www.msnbc.msn.com/id/18560939/
Report: Realtors, state laws stifle competition
WASHINGTON – State laws and realtor business practices are preventing consumers from getting the full benefit of the competition that the Internet was expected to bring to the real estate industry, federal regulators said Tuesday.
….
A sharp increase in realtor fees — brokers earned $60 billion in commissions in 2005 — reflect the run-up in residential property values and underscore the importance of competition, the report said.
>>>>
Yet some states still ban rebates in real estate, whether by law or regulation. In addition, some realtor groups discriminate against fee-for-service listings by keeping them off national real estate Web sites.
“These practices can lead to substantial consumer harm through reduced choice of real estate brokerage services, higher fees, and limitations on the ability to access information about real estate listings,” the FTC/DOJ report said.
Ten states still prohibit rebates, by law, including Alabama, Alaska, Kansas, Louisiana, Mississippi, Missouri, New Jersey, North Dakota, Oklahoma, and Oregon. Eight states have laws requiring brokers to perform a minimum level of services: Alabama, Idaho, Illinois, Indiana, Iowa, Missouri, Texas and Utah.
FTC and DOJ recommend that states repeal the laws and regulations that limit competition and both agencies are doing what they can to counteract anticompetitive behavior in the business.
In an e-mailed response, Pat Combs, president of the National Association of Realtors, said the real estate industry is “dynamic, entrepreneurial and fiercely competitive.”
The Justice Department sued state real estate commissions in Kentucky, South Dakota, West Virginia and Tennessee, charging that rebate bans limited competition. The states agreed to lift the bans.
I believe there was a bill floating around that was attempting modify legislation to allow for commission rebates. Haven’t heard anything on it recently.
jb
“Applications for new mortgages to buy a home rose last week to the highest level since early January as mortgage rates fell, the Mortgage Bankers Association reported Wednesday.”
WTF… when would April/May mortgage aps be below January’s? Hilarious that MBA positively note mortgage rates falling… try SEASONALITY.
Has January ever sold more than April/May in the history of residential real estate?
While applications data is interesting, I really wish the MBA published statistics on mortgage acceptances.
Criticisms about this data being misleading due to the fact that some borrowers need to submit multiple applications are becoming commonplace now. A few months back you wouldn’t have seen this caveat included, but now it’s in every release.
The MBA’s data do not indicate how many applications were accepted. Lenders have reported tightening their standards for loans, especially for subprime and exotic alt-A loans. Some borrowers may have to apply several times before they are accepted.
The fact that we don’t have historical data on how many mortgage applications are submitted on behalf of a single individual makes interpreting this data very difficult.
It’s arguable that the YOY rise seen in the MBA purchase index is not a sign of an improving market, but of a deteriorating mortgage market. How else do you explain an increase in purchase *applications* in the face of year over year declines in sales?
jb
“Prices fell as much as 18.8 percent this year in 15 of the 24 areas in which data was collected.”
About half way there.
I guess the big $, sloshing around in these areas, happens to be somewhere else.
Clot has been saying this forever. If the 1st time home buyer is priced out, the chain then does not work. The chain is only as strong as the weakest link. The RE ladder will still function. However, all steps will be lowered. This will result in a more stable, balanced ladder. The one negative, there will be height restrictions.
As Market Cools, Home Buyers Seek a Way Out
http://finance.yahoo.com/loans/article/102987/As-Market-Cools-Home-Buyers-Seek?a-Way-Out?mod=oneclick
It will be fairly soon when NYC comes down as well. I can’t remember exact numbers, but I read a real estate report that there were 28k+ condos coming to market this year and recent year sales were something like 13k. Manhattan is an island, but it is not bubble proof. Apartment glut is apparent from those numbers. Also think of all the absentee owners, who buy in Manhattan sight unseen. Reminiscent of the recent wave of buyers in Miami who did the same. History repeating itself in a matter of a couple years.
Here is a link to article about Irish buyers in Manhattan…
http://www.amny.com/news/local/wire/newyork/ny-bc-ny–irishmanhattan0508may08,0,1985827.story?track=mostemailedlink
tbw [8],
Triple? So a house asking 500K was bought for 1.5 mil? You can plug in any #’s. I just randomly picked 500K.
The FOMC is in session, the party starts at 2:00 eastern.
jb
But, but wait! Westchester is one of the richest counties in the US, it CAN’T drop.
Ha. Speaking of Westchester, our offer was accepted on this house. Having done the comparables, it is clearly the nicest house available in our price range based on size, location and condition (totally move in – only a few cosmetic changes). Way better than the one we pulled our offer on. We can live in it easily for 10 years or more, and it’s about 5 minutes from 2 train stations, which is great, and 3 minutes from all shopping. We found a good one.
Now here’s my question. We’re paying the same price for it that the current owners paid 3 years ago. Obviously, there was no nominal “price drop” so to speak, but I am wondering what the real drop is – they did work on it, nicely landscaped it and I think finished the basement. In real terms, I would estimate a 7-10% loss. Does that sound about right?
19 NJGal-
Did they live in it or was it a flip(flop)?
Does anybody know how the HOV giant project
in Clifton , W.Paterson is doing?
Prices seem to be holding up.
Drive around this joint , goodness
they got em packed in.
From #3 above, you’ve got to love Ivy..
“Our contacts have officially declared the spring selling season a bust.” – Ivy Zelman, CSFB, May 8, 2007
I was up in the Stamford area a month or 2 ago. While driving along a fairly large St. near the train station that was filled with Mansions (not really the McMansion variety), it seemed that 10%+ of them were for sale. Driving along the smaller back roads (w/o Mansions of any variety), I hardly saw any for sale signs. My interpretation was there was a lot of speculative activity fishing for Wall St. bonus $.
The other theory that occurred to me was that the smart money was getting out while the getting was good.
From the Record:
Remodeling follows trend set by home market
After setting a record in 2006, remodeling activity will level off this year and next, the National Association of Home Builders said Tuesday.
“Our remodeling market index started to lose momentum in late 2006, and in the first quarter of this year, there has been some further weakening,” David Seiders, chief economist of the builders trade association, said at a press conference.
Remodeling revenues rose 8 percent in 2005 and 6 percent in 2006. This year, remodeling revenues will rise slightly to $232 billion. But after adjusting for inflation, that actually represents a decline of about 1.5 percent. In 2008, revenues are expected to decline by about 0.5 percent, after inflation.
“Historically, the remodeling market moves in the same direction as the new home market and the overall economy,” Seiders said. Home sales have weakened over the past year, after prices climbed past affordability for many buyers.
Kermit Baker of the Joint Center for Housing Studies at Harvard said homeowners have pulled back on renovation spending, fearing that softening house values mean they won’t get their remodeling dollars back when they sell later.
#19 njgal-
i think it would be very hard to tell as it is possible that the deal the sellers got three years ago was one of those cash back arrangements – only a possibility
does anyone know if there is anyway to find out?
d2b – they totally lived in it. I think it was a situation where there was a job transfer – our agent is trying to find out. It’s possible they couldn’t afford it, or possible that they came into real money and moved up, but who knows. I don’t think they intended to sell it so soon, b/c even the listing price spoke of need to sell quickly (and at a loss, after time and commission), and our closing will be fast.
tcm, I guess they could have gotten cash back, but I doubt it – it was the height of the market and they probably, seeing the location, condition, etc., had to fight for it, likely in a bidding war.
I am so curious to know why they are selling – if it’s an inspection issue, we’ll know, but I doubt it.
Now here’s my question. We’re paying the same price for it that the current owners paid 3 years ago.
Spoke to a very humble would-be flipper the other day. I called him after seeing the FSBO sign on his lawn. He purchased the house in 2004, intending to flip it, but ultimately never got around to doing so because of work and other obligations. I haven’t seen it yet, but it doesn’t look like any work was done.
I looked back at the tax records to see what he paid, turns out his asking is only a few thousand over his 2004 purchase price.
jb
See, JB, to me that screams loss – if he was a flipper, he was carrying it this whole time. These people at least lived in it, with their kids and cute dog. But a loss is a loss – they had some use of it, sure, but that’s a big price to pay to move so soon.
#26 NJGAL: Good luck with your purchase.
#26 njgal –
i guess they don’t HAVE TO tell you why they are moving – but can’t you put pressure on them to let you know? afterall, it’s a huge investment – what if there’s some issue that has nothing to do with the condition of the house?
on the other hand, i guess they could just tell you anything – how are you to know?
Thank God!! Mortgage applications are up! Thank God this housing recession is over! Now we can get back to the normal 10% YOY appreciation. Whew! I was worried there for a few months but as usual, these realtors were right, real estate always goes up. Hey, what do you guys think of Westfield, I hear that’s a pretty desirable location?
I recently had a change in plans. Currently renting a 2BR in NYC and will just stay here even if we have two kids (currently have one). In the interim we’ll keep an eye out for homes in NJ as a weekend house. I’ll just go further out like Mendham/Bernardsville for a weekend house instead of buying a house in Short Hills/Millburn/Summit/Chatham. Sure it’s a little tight on space in NYC, but who needs all that extraneous stuff.
tcm, you’re right – they don’t HAVE to tell us. But I think we will find out, because I do strongly suspect they are moving, possibly out of state. That’s nothing to be ashamed of and nothing to hide. I don’t think it’s the condition, but we have an excellent inspector we really like and he is very honest and very much on our side – he kind of helped us realize that the last house sucked. So we trust him, and he is very thorough. The contract will be contingent on inspection, so we can pull out no problem.
And this time, after our well issues, we found a house with municipal water. Thank god.
NJGal – sounds like you are really happy with your prospective purchase. Congrats. Hope it all works out for you.
Pesche # 21 I Mtn Bike in rifle camp park if you know the back trails you can see the whole complex. That project is immense. I don’t know how they are going to find buyers for those units.
JB If I ever remember my camera I’ll have some pics for you
I’ve got some snapshots of the quarry prior to construction, would make for an interesting before/after.
jb
NJGAL
How are you feeling otherwise, hope your enjoying this special time.
KL
There is a very wide range of pricing in that Hov. development, from $400 to $700+.
jb
Audio clip from MarketWatch:
Joel Naroff: Subprime woes could last “another year or two”
The subprime woes plaguing the housing market and builders like Toll Brothers could persist for “another year or two.” And it’s “possible” the problem could last the rest of the decade. So says Joel Naroff, chief economist at Commerce Bank. He tells John Wordock we may not see a brighter housing picture until sometime next year.
KL, feeling good otherwise. Lots of stress right now not pregnancy related but trying to take it easy. Hopefully the home inspection will go well and that will give me something to be happy about!
“They are largely trade-up purchases,” Otteau said. “The buyer of the $300,000 house enables the seller of that home to buy a $450,000 house, and up the line until you get to a luxury home.
What $300,000 house? Who is Otteau kidding? The problem isn’t that tightening lending standards are squeezing first time buyers, it’s that there aren’t any decent quality $300k houses for first time buyers to buy. What should be a $300K house is being listed at $450k.
Many first time buyers are subprime not because their credit is so terrible, but because they are stretching way beyond their means to get into that $450k starter home.
off italics off
The Metro North line towns do seem to be dropping in price quickly. Townhome/condo prices have gone back to 2004 levels. I know of several anecdotes of families with 200-250k incomes getting into prime ARMs to buy 1.5-2M houses, and now are facing foreclosures in the priciest towns of Scarsdale, Chappaqua and Pleasantville.
Prices have to go down, there is no doubt, even several well meaning realtors around here are advising buyers to hold off until 2008.
I don’t want to sound like a 20-20 hindsight/Monday morning quarterback, but where the hell is Reech today with his insipid “silly rabbits” comments and other troll-y vitriol.
You are a massive clown who is either disingenuous, or is suffering from a massive case of confirmation bias.
From Bloomberg:
Bank of America’s Lewis Says Credit Market Needs `More Sanity’
Bank of America Corp. Chief Executive Officer Ken Lewis said a so-called “credit bubble” is about to break after six years of historically low interest rates and relaxed lending criteria.
“We are close to a time when we’ll look back and say we did some stupid things,” Lewis said, speaking at a lunch at the Swiss-American Chamber of Commerce in Zurich. “We need a little more sanity in a period in which everyone feels invincible and thinks this is different.”
Does anyone know about the condos in Mahwah in Bergen County?
Are the prices rising, falling, or remaining the same?
Any idea where I can get statistics on it?
That’s correct. You can’t even purchase a POS starter dump in a rat infested, crack induced, gun toting section of Urbana for $300,000. Who’s kidding who? That’s THREE HUNDRED THOUSAND DOLLARS folks!! I’ll say it again: people have become kool aid injected sheep. 10 years ago everyone would’ve puked if I said a POS cape in a questionable area would cost more than 300K. $400,000 plus for a starter home?? Do you know how many scams, schemes, Ponzi tricks and biliking has been going on in the last 7 years? And yet, the ball in our neck of the woods keeps on rolling because Tiffany and her husband just need “that” house in Upper Orgasma, NJ or they’ll just die.
I think I found a case of a flip gone bad, but the seller is still trying to make a profit. Drove by this house and it caugt my attention, so I stopped to pick up a flyer. It is a 4-bd, 2-ba colonial on the north side of Dunellen listed at $415k. When I went home to look for a listing on the web I couldn’t find anything, so I emailed my agent and asked her to see if she could find anything. She responds and tells me that it had been sold, and sends me the listing from last year. It sold for $350k in December 2006, after 157 days on the market (list was $369k). So I call the selling agent, whose number is listed on the flyer and ask why I can’t find it on MLS. She says it is definitely available and it is an exclusive listing. The funny thing is the flyer only mentions newly refinished hardwood floors and a new first floor bath. Apparently the seller thinks this justifies a $65k price increase. And, the seller has let the yard get out of control. The photo of the place from the old listing looks way nicer than it is now.
Anyway, what is meant by an exclusive listing? My agent says that means that the selling agent will only show the house herself and will be buyers agent as well. Is that really the case? I love the location and the outside of the house, so if the inside is nice I plan to make a lowball offer. I figure if it is not accepted, which I anticpate it won’t be, I will wait 3 or 4 months for the seller to get desparate. There is no way they will sell that house for $415k or anything near it.
AK
Any idea where I can get statistics on it?
Here, but give us some more information to work with.
jb
Here is some pricing data for Mahwah via GSMLS. These aren’t condos or townhomes, they are simply 1 or 2 bedroom properties.
April 2006
1 Bedroom
Avg. Sold Price $311,250
Med. Sold Price $300,000
2 Sold
2 Bedroom
Avg. Sold Price $433,222
Med. Sold Price $395,000
9 Sold
April 2007
1 Bedroom
Avg. Sold Price $280,000
Med. Sold Price $280,000
1 Sold
2 Bedroom
Avg. Sold Price $406,143
Med. Sold Price $370,000
7 Sold
#46 M: There are currently 75 Coop/condos on the njmls in Mahwah, with prices ranging from 244k for one bedroom all the way up to over 1,300,000.00.
I cannot tell you if prices are dropping, perhaps JB or tbw or Rich in NNJ can help you with that.
Off topic-
Can anyone suggest B&B places on the NJ shore that are toddler friendly?
Thanks!
pretty please :)
Tony towns with favorable commutes on rail lines are dropping in price. Guess it’s not “different here.”
#23: “The other theory that occurred to me was that the smart money was getting out while the getting was good.”
In 2005, smart.
In 2007, not so smart.
Full-text of that FTC/DOJ Report:
http://www.ftc.gov/reports/realestate/V050015.pdf
I was looking predominately for 3 bedroom condos townhomes sold in Mahwah in the last six months.
Particularly in Paddington Square.
Thanks,
M
Full-text of that FTC/DOJ Report
Just gave it a quick once-over, looks very interesting.
jb
House of denial
http://www.marketwatch.com/news/story/gurus-corner-commentary-confronting-housing/story.aspx?guid=%7BF7C7F56C%2DEEB1%2D460E%2D9F42%2DD91AE0D47077%7D&dist=hplatest
A crumbling housing market and an overextended consumer could result in an ugly ending for this economic party.
I’m typically not that bearish an investor, but these days there appears to be plenty to worry about, and though the financial markets continue to soar I believe the signs point to tougher times ahead for investors. A weaker housing market will likely be the lynchpin.
Yeah but…
The explanations as to why everything is going to turn out rosy just don’t hold water with me. I find the market’s tendency to credit a sector for its positive contributions while downplaying its negative potential a bit unbalanced. This psychological phenomenon — commonly referred to as complete and utter denial — has resulted in the current lack of appreciation for the truly negative impact of this housing downturn.
#53 Except in Westfield, otherwise known as Brigadoon.
AK
Yes it is true to an extent, your agent should however call and ask to co-broke. In today’s market agents are willing to share exclusive listings much more than before – actually in today’s market agents are willing to almost anything if you’ll bring them a buyer, having a buyer makes me feel like a queen (-:
KL
While it said it believes fewer than 2% of its buyers are use sub-prime loans, the impact of stricter lending standards arising from problems in the sub-prime market is “negatively affecting affordability at lower price points.”
Dear Toll Brothers:
To me, ‘affordability’ means lower prices, not easy credit.
Regards,
Home Buyer
NJGal (19)-
Sounds close. It also sounds like you got a nice deal. Good luck! Everything about this one seems better than that last POS you walked on.
Weekly Inventory Update
GSMLS
Ber, Ess, Hud, Mor, Pas, Som, Sus, Uni, War
5/2/2007 – 18,776
5/9/2007 – 19,138 (2% weekly increase)
5/3/2006 – 16,111
NJMLS
Ber, Ess, Hud, Pas
5/2/2007 – 8,763
5/9/2007 – 8,859 (1.1% weekly increase)
5/3/2006 – 7,792
RICKEY: GIVE RICKEY A SHOT LIKE CLEMENS
By MARK HALE
May 9, 2007 — SAN FRANCISCO – Rickey Henderson, 48 years old, believes he can play and wishes to prove it.
“Seeing Roger [Clemens] come back, all the seed that it plants is ask Rickey to come back one time,” Henderson told the AP yesterday.
“I’m going to look at it at the end of the year. I might come out with some crazy stuff, a press conference telling every club, ‘Put me on the field with your best player and see if I come out of it.’ If I can’t do it, I’ll call it quits at the end.”
Henderson, though, is certainly different from Clemens. The Rocket has played in the majors the last few years, while Henderson’s last year in the majors was 2003 with the Dodgers.
The Mets don’t have any interest in letting Henderson – who is a special instructor with them – play in their minor league system.
“I see Roger can come back and play. I can come back and play,” Henderson said. “They say I’ve done too much. What’d he accomplish?”
Added Henderson, “I’m through, really. I’m probably through with it now. It’s just one of those things. I thank the Good Lord I played as long as I played and came out of it healthy. I took a lot of pounding.”
Henderson is the career leader in runs scored (2,295) and stolen bases (1,406) and is second behind Barry Bonds in walks with 2,190. He also has 3,055 career hits, 297 home runs, won the 1990 AL MVP award and made 10 All-Star games. He won an AL Gold Glove in 1981 as an outfielder with Oakland.
Henderson is four months younger than Mets infielder Julio Franco.
“Julio’s out there. I know I can play with Julio,” Henderson said.
Renting (41)-
Exactly. And now, all the toxic programs that could jump a 300K buyer into a 450K home are gone…or so expensive that they defeat the purpose.
M,
Here is data for ALL of Mahwah 3 bedroom Condo & Townhouses Sales for the last 6 months (along with the same period last year)
November 1, 2005 – April 30, 2006
Avg. Sold Price: $583,680
Med. Sold Price: $560,000
Units Sold: 30
November 1, 2006 – April 30, 2007
Avg. Sold Price: $516,042
Med. Sold Price: $486,000
Units Sold: 19
ChiFi (64)-
Thanks! That made my day. Funny thing is, the minute I saw Clemens make his announcement, I knew we’d be hearing from Rickey. I guess we know him too well.
I also think 4-5 teams could put him in the lineup and legitimately call it an upgrade. I don’t know what that says about the state of the game…
“Rickey wants to play baseball.”
Thanks!
Do you know where I can get a list of properties sold?
Or must I ask a real estate agent for a list?
Or must I ask a real estate agent for a list?
You’ll find a handful of those here as well.
jb
A must-read over at Calculated Risk:
Is the MBA Index Currently Useless?
Deja vu.. all over again..
Unrealtor (54)
In general, I agree with you. But many were holding on to the “NYC is different” theory (and still do in some areas). Bear in mind, this was 1-2 months ago, before it was obvious that the “spring selling season” was a bust.
Speaking of…
What ever happened to those big Wall Street bonuses that were supposed to save the market this Spring?
jb
“I think we can all agree that prices only go one way in Westfield. Up.”
I think this is one of my favorite posts here. Ever.
#72 JB: As i saod earlier in the year, the majority who received those big bonus checks, already own their own homes.
njrebear Says,
I find the market’s tendency to credit a sector for its positive contributions while downplaying its negative potential a bit unbalanced. This psychological phenomenon … has resulted in the current lack of appreciation for the truly negative impact of this housing downturn.
I’d even go a step further. Bad news is often spun into good news to fit the Goldilocks economy story.
– Good news is good news
– Bad news is an opportunity for the Fed to cut rates…which is good news
If today’s FOMC policy statement emphasizes slowing GDP (normally a bad thing) more than inflation, I wouldn’t be surprised to see the markets rally.
From MarketWatch:
House of denial
Commentary: Confronting housing market myths
A crumbling housing market and an overextended consumer could result in an ugly ending for this economic party.
I’m typically not that bearish an investor, but these days there appears to be plenty to worry about, and though the financial markets continue to soar I believe the signs point to tougher times ahead for investors. A weaker housing market will likely be the lynchpin.
Yeah but…
The explanations as to why everything is going to turn out rosy just don’t hold water with me. I find the market’s tendency to credit a sector for its positive contributions while downplaying its negative potential a bit unbalanced. This psychological phenomenon — commonly referred to as complete and utter denial — has resulted in the current lack of appreciation for the truly negative impact of this housing downturn.
Can someone list some details regarding inventory for Cranford. I would also be interested in knowing on a monthly basis how the # of sold homes compares there as well. IOW, how do they compare month-month and also monthly from a year’s perspective.
Thanks in advance
#66 Rich: those are some ugly numbers, if you bought in 05.
M,
Paddington Square Info
Sold
$460,000 TWNHS 1026 CASTLE RD Jun/2006 3bd/3bth
$425,000 TWNHS 1094 DEVON CT Aug/2006 3/2
$390,000 TWNHS 1270 PADDINGTON RD Sep/2006 3/3
$425,000 TWNHS 1377 YORK ST Sep/2006 3/2
$405,000 TWNHS 1305 PADDINGTON RD Oct/2006 3/2
$495,000 TWNHS 1466 CORNWALL RD Oct/2006 3/2.5
$405,000 TWNHS 1209 RICHMOND RD Jan/2007 3/2
$485,000 TWNHS 1470 CORNWALL RD Feb/2007 3/2.5
$410,000 TWNHS 1422 YORK ST Feb/2007 3/3
$526,000 TWNHS 1489 CORNWALL RD Mar/2007 3/2.5
No active 3 bedroom listings in Paddington at this time.
One unit Under Contract:
$515,000 TWNHS 1474 CORNWALL RD Est Close May/2007 3/2.5
Thanks James.
if anyone can supply me a list of recent sales of 3br 3 bath condos in Mahwah I would greatly appreciate it!
Thanks,
M
What ever happened to those big Wall Street bonuses that were supposed to save the market this Spring?
Regarding Wall Street’s impact on housing prices; why didn’t local housing prices fall after 2000 after the tech bubble burst and aggregate nominal Wall Street fell by 50% over the next 2 years.
If Wall Street bonuses are a factor in local RE prices, then prices should have fallen in 2001 & 2002, instead they went up.
Total Average
2006 $23.9 billion $137,580
2005 $20.5 billion $119,390
2004 $18.6 billion $113,450
2003 $15.8 billion $99,930
2002 $9.8 billion $60,900
2001 $13.0 billion $74,140
2000 $19.5 billion $100,530
1999 $13.5 billion $75,010
1998 $9.1 billion $53,040
1997 $11.2 billion $67,800
#74
Agree.
Also, these Wall St. people have access to a lot of news that the ordinary guy doesn’t have. They read Bloomberg, AP etc. , watch interest rates, the fed, and hear from a lot of economists and money managers. Many of them were also probably aware of the mortgage mess before the general population. Not saying that these guys are geniuses-they just have a lot of info available to them and it may have caused them to stay out for a while.
Cranford Inventory Absorption
April 2004 – 3.0mo
(81 Active, 27 Sold)
April 2005 – 6.3mo
(95 Active, 15 Sold)
April 2006 – 7.1mo
(113 Active, 16 Sold)
April 2007 – 8.6mo
(112 Active, 13 Sold)
Interesting, the following listing from above is also, I should say still available for rent.
$526,000 TWNHS 1489 CORNWALL RD Mar/2007 3/2.5
ACT 1489 CORNWALL RD $2,950 3/6/2007
PCH 1489 CORNWALL RD $3,150 3/10/2007
PCH 1489 CORNWALL RD $3,050 4/11/2007
RentL0rd…how expensive or fancy-schmancy? Some of the most toddler-friendly places might look ..um..err…a little like dives to you, so I’m hesitant to recommend any of the places we used to stay.
For example, there’s a condo place with a nice pool right behind the boardwalk/beach in Seaside. (Yeah, Pesche, I know, Seaside ain’t what it used to be, but there are rides and no walking to the beach).
Except Westfield, prices are officially dropping (only) 1% this year as mentioned by chameleon Lereah. Add inflation of 3%, selling costs of 6%, NJ Realty tax and any buyer is at least 10% in the hole in real terms if they buy today.
Question for the group:
does the 2.5-3x your income rule of thumb apply to the mortgage amount or the purchase price?
thanks
From reading various posts, it looks like anything priced at or near 2004 comps might attract a bid. I’ve heard this before, even from a realtor, so this trend may be gathering momentum. Good to know for those looking to lowball.
Also, consensus indicates that the spring RE market in NNJ is moribund. Is this premature? Why don’t we wait till the end of May before performing the autopsy? I’d be happy to hear from agents, buyers and sellers in early June on this subject. From my observations there has been a little pick up in sales, at least in the famous Westfield, over the past month or two, but that may be attributed to seasonal factors and long-time price holdouts finally coming down.
Also, consensus indicates that the spring RE market in NNJ is moribund. Is this premature? Why don’t we wait till the end of May before performing the autopsy?
Absolutely, we really should wait until the spring season is officially over..
However, contracts do give us some insight into future sales. So we do have a leading indicator to let us gauge the remainder of the spring season.
April Contracts – GSMLS
Morris
2006 – 542
2007 – 488
Essex
2006 – 480
2007 – 438
Passaic
2006 – 287
2007 – 277
Bergen
2006 – 178
2007 – 159
Somerset
2006 – 414
2007 – 378
Union
2006 – 417
2007 – 367
These numbers are not at all positive for the remainder of the Spring season. There is no way to spin these positive.
jb
From reading various posts, it looks like anything priced at or near 2004 comps might attract a bid.
I’ll take that one step further, anything priced at 2004 comps will sell, and will likely sell quickly.
jb
Wow JB,
Breaking out those GSMLS contract figures sure provides graphic evidence of a tough market. Union Co. shows a 12% decline from 4/06. We’ll see what the next three weeks brings, but it is getting harder to argue a recovery scenario. With the tightening lending standards not yet reflected in the contracts and pending, later on this summer could be problematic.
2x Shy (88)-
Go ahead, crack the sternum and get the autopsy started…no Spring market this year. Don’t need to wait til the end of May.
I’m already telling my listing clients to put a 1- 1.5% per month depreciation rate on their homes for every month we remain on the market after June 1.
ts,
Keep in mind that I’m not saying that agents are lying or trying to be deceptive. I know a handful of agents that are doing very well right now. Likewise, a handful of towns are seeing brisk activity in comparison. However, data based on activity at an agency or town level is generally more volatile due to the smaller sample sizes. It’s impossible to see any kind of trend unless you aggregate the data.
jb
I’ve been unable to perform diligently my usual lurking duties the past few days, so please ignore this if its been posted/discussed already….
Bank of America Offers No-fee Home Mortgages
NEW YORK (Reuters) – Bank of America Corp. said on Monday it is offering no-fee mortgages nationwide for Americans buying homes.
The second-largest U.S. bank said it won’t charge for applications, appraisals, loan originations, title insurance and flood certifications. It also won’t charge for private mortgage insurance — often required for borrowers who put less than 20 percent down.
More at: http://www.reuters.com/article/domesticNews/idUSN0726506220070507
My take on the market on Maplewood/South Orange this spring. Made three offers, got outbid on the first two. The right house at the right price is getting action.
The second-largest U.S. bank said it won’t charge for applications, appraisals, loan originations, title insurance and flood certifications. It also won’t charge for private mortgage insurance — often required for borrowers who put less than 20 percent down.
This is wildly misleading, sure, they won’t charge you up-front, but they’ll roll it into the principal and gladly let you pay interest on those fees for the next 30 years.
What is better than collecting a fee?
Collecting a fee every month for the next 30 years.
No free lunch.
jb
Can any of the Bergen folks in the know:
Do you know of — or can you give me information about 240 Paramus Rd?
I know it’s not in a great area (near a highway exit) and has some other problems but it’d be worth the headache in getting and fixing as it fits our needs.
The RE I spoke to says he gets “lots of calls about the place” but so far no offers.
Any insight would be most appreciated,
thanks, in advance,
sl
What a novel idea!
Long-Term Capital’s Rosenfeld Starts Hedge Fund, Person Says
Eric Rosenfeld, co-founder of Long- Term Capital Management LP, and two of his former colleagues are starting a hedge fund that uses computers to pick investments, said a person with knowledge of the plan.
If at first you don’t succeed, try try again…
jb
Bank of America is pile of trash. Although they are my personal bank, I can tell you with confidence that virtually every financial product they offer is uncompetitive, or worse, a complete ripoff.
I hold $25,000 in a Quick & Reilly brokerage account so I get a Platinum Account and can sidestep their evil nickel and diming pickpocketing.
From MarketWatch:
Fed holds rates steady as expected
The Federal Reserve decided Wednesday to hold short-term interest rates steady. Following a one-day meeting of the Fed’s policy-making Open Market Committee, the central bank indicated that its target for the key federal-funds interest rates, at which banks lend each other money overnight, remains 5.25%. The vote to hold rates steady was 10-0. In its policy statement, the Fed repeated that it could choose to move rates in either direction depending on the data even though inflation risks remain the paramount concern. The Fed said growth has slowed in the first part of the year, but was likely to expand at a moderate pace in the coming quarters. The Fed’s language on inflation was unchanged, that core inflation remained somewhat elevated and high resource utilization had the potential to sustain those pressures.
Fed leaves rates unchanged – still wary on inflation.
From the Federal Reserve:
FOMC Statement
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.
Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to expand at a moderate pace over coming quarters.
Core inflation remains somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.
In these circumstances, the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
Still-Looking,
Are you sure about the address?
The only active SFH listings for Paramus Road in (I assume) Paramus are: 331, 480, 562 and 617
Ridgewood?
(I am off to work — will f/u tomorrow a.m.)
Tx for looking for me!
sl
Rich,
Thanks a bunch!
“Eric Rosenfeld, co-founder of Long-Term Capital Management LP, and two of his former colleagues are starting a hedge fund that uses computers to pick investments, said a person with knowledge of the plan.”
Screw up and move up…maybe he can team up with that guy from Amaranth who pi$$ed away 6 MIL in a week.
(107)-
Oops…6 BIL!
(107)-
I am starting an army that will use robots to control the world.
How much should one offer on a townhome that is listed at 169k? It’s been on the market 49 days.
Ask yourself why….mortgage foreclosure rates are so high
May 8, 2007: With more than one million American homes in jeopardy of foreclosure, Common Cause is taking a look the nearly $210 million spent by the mortgage lending industry on lobbying in Washington and on federal campaign contributions, and its success in blocking Congress from curbing lending abuses that have led to this crisis. You can read the report, titled Ask yourself why mortgage foreclosure rates are so high, here at CommonCause.org.Read the report…Read the press release…
re: BoA loan terms
They’ll fold the fees and PMI, where applicable, into the interest rate which might cost an extra .25% versus more competitive terms. I don’t think that’s such a bad deal. Most people move within 7 years, so it’s unlikely you’ll carry the loan to term. Second, you always can refi. (Well, at least you used to be able to.) Not paying PMI or taking out a piggyback if your DP is less than 20% is a convenience I don’t mind paying for. The after tax cost of capital for someone in the 25% bracket on the 6.75% they’re quoting for prime rates is 5.06%. I can generally beat that in the capital markets. Factor in monetary inflation and I don’t mind the terms at all.
RE: JB (91),
2005 prices getting attention too. Noticed a few homes in my town priced similarly to 2005 comps going under contract suddenly over the past few months. However, I did read somewhere here that 2005 prices really amount to a real drop of about 6% and most sp’s were somewhat below asking.
” know of several anecdotes of families with 200-250k incomes getting into prime ARMs to buy 1.5-2M houses, and now are facing foreclosures in the priciest towns of Scarsdale, Chappaqua and Pleasantville.”
Ack, WHY???? It’s making me want to break out into a cold sweat. What on earth would prompt someone making 200-250K to buy a house over a million dollars? Here we are, making more than that, and I am up at night wondering how we are going to afford to pay the mortgage, childcare, etc. and our place is going to cost WAY less than that! Some people really must be giant risk takers. I’m not one of them, at least not with my own family’s shelter.
And Clot, I am so much more content just thinking about this place. That last POS is still on the market, no price drops. But my mother was looking and they “updated” the kitchen with some paint and a table clearly rented from a stager. But it doesn’t help – it’s still crappy. So it remains on the market, priced about 125K over what it’s worth considering the work needed. Ugh.
i must’ve stumbled onto the comedy blog. you people are too much. who out there is buying houses at significant discounts from last year or even the year before? didn’t think so. for all your gabbing about the end of the world as we know it sellers aren’t capitulating. yeah i know they will it just hasn’t happened yet. in the meantime let’s hope your landlord doesn’t make a decision that affects you negatively. nice when such an important aspect of your life is out of your control.
>>I can tell you with confidence that virtually every financial product they offer is uncompetitive, or worse, a complete ripoff.
why i’m responding to a clown is beyond me but here goes. can you find better than a 7.24% APR HELOC?
SL,
will f/u tomorrow a.m.
Ummm, you’re gonna what me tomorrow…?
Consumers better off???
The shakeout of the market could have positive benefits, some housing advocates say. Ira Rheingold, executive director of the National Association of Consumer Advocates, said people won’t qualify for loans they can’t afford.
“People will have the opportunity to buy homes they can sustain, not the absurdities we’ve been seeing,” he said. “What’s going to happen is only good for homeowners and consumers.”
Some people who got into trouble with loans they couldn’t afford have since refinanced with better rates.
Osvaldo Rodriguez, a 40-year-old postal worker, purchased a three-family house in Newark, N.J., last June with about $1,000 down and $300,000 broken into two mortgage loans. His monthly payment was about $2,200, and rising, more than he could afford on an annual income of about $60,000, including veterans disability payments.
“It was tight, very tight,” he said, sitting on a couch with a clear plastic slipcover in his living room near downtown Newark. “I was paying it, but I was kind of struggling.”
Rodriguez’s home didn’t go into foreclosure because he sought help from ACORN Housing Corp., a housing advocate. He said he had a good credit rating, and he recently refinanced to a lower mortgage rate from a bank, which made his payments more affordable. He also now has tenants to boost his cash flow.
entire article here – http://www.suburbanchicagonews.com/couriernews/business/375380,3_3_EL08_FALLOUT_S1.article
#118: I have been saying this for a while. Mucha s some people will get hurt, in the ned thiw will be a very good thing. You need to have a cleansing process.
James,
Much appreciated for the Cranford details. My wife and I are very interested in Cranford area. We could certainly afford a POS cape at $400k but heck.. I feel we are wasting our money if we were to purchase now.
What are your thoughts, especially for this area? Having gone to many open houses of late, I have noticed many young couples (us included) frequenting them; even admidst this whole real estate debacle.
Lastly, what are your thoughts on foreclosing homes? And REOs, etc..
Thanks so much
JN
par (113)-
The early 2005 price is enough to get ’em in the door. Then the house gets taken down for a 2004 sale price.
This has been an eerily-consistent trend for months in my area.
James, or anyone else –
Can you get information on inventory and pricing for homes in Monroe, NJ?
#115 Richard: Did you see NJ Gal’s post on the house she has just went to contract to purchase, at a 2004 price? So yes some sellers are capitulating, and this in a premier NW Westchester town.
Its a process Richard, the decline in prices a process, smae thing happened last time around. Perhaps you were too young to remember it.
With over 200 hundred listings in Westfield, its only a matter of time.
Reech (116)-
Uh, yeah. At pretty much any community bank in NJ. I have one at exactly 7.24% thru Sun National Bank.
SL,
Ahhh, Ridgewood, found it.
No reason to f me tomorrow.
Interesting tax info on this place
Mortgage $140,000 5/19/1995 MIDLANTIC BANK
Deed $200,000 5/24/1995 ROBERT F——
Deed $640,000 7/12/2004 ROBERT F——
to RALPH V—— JR
Mortgage $512,000 7/23/2004 FLEET NATIONAL BANK
Deed $100 12/18/2006 1/31/2007 SHERIFF OF THE COUNTY OF BERGEN to WELLS FARGO BANK NA
Sold $200,000 5/22/1995
Sold $640,000 7/12/2004
(Listed as land as well)
ACT 240 PARAMUS RD $825,000 11/10/2005
PCH 240 PARAMUS RD $925,000 1/27/2006
EXP 240 PARAMUS RD $925,000 4/21/2006
(Same owner & agent, listed as land as well)
ACT 240 PARAMUS RD $925,000 5/3/2006
ACT* 240 PARAMUS RD $925,000 7/7/2006
U/C 240 PARAMUS RD $925,000 7/18/2006
BOM 240 PARAMUS RD $925,000 1/24/2007
EXP 240 PARAMUS RD $925,000 11/2/2006
(“New” owner, original contract listing for
My apologies for sounding so ignorant. What is the hype over the town of Westfield? Aside from the fact that it has a very nice downtown and excellent schools the taxes are astronomical.
#114 NJGal,
“ARMs to buy 1.5-2M houses”
They are probably not firsy time home buyers. Then again, they gave a grape picker in California a $700K mortgage, so what do I know :)
Ooops
(”New” owner, original contract listing for 1 month)
ACT 240 PARAMUS RD $550,900 4/11/2007
EXT 240 PARAMUS RD $550,900 5/1/2007
My apologies for sounding so ignorant. What is the hype over the town of Westfield?
No hype at all, more of an inside joke. One of our regulars purchased a home in Westfield at the peak of the bubble and has since convinced himself that the town is immune to any downward price movements. “Bubblewrapped”, so to speak.
jb
Rich…
Richard,
I’m thinking about selling my holdings and buying in Westfield. We barrons have to stick together, you know. Do they have any modest dwellings in the 2.5 range?
rmb…
Re: 121
Clotpoll,
that could amount to a 10-20 percent drop from peak in some locations! It did seem to me though that new construction fueled alot of the run up in prices…pulling along existing homes (anyone kind enough to show data supporting or disproving this?) So…2004 prices for the most part for resales (in western essex county specifically) may “only” be 5% or so below peak.
Oops.. I was just looking at that listing.. Its wetlands I guess the guy bought thinking he could develope on it.
BOST / CLOT!!!!!
“Everybody was asking me for the ball. I said, ‘You’re not getting this ball. I always wanted to get a foul ball. This one’s going on a shelf at home.”
— Rickey Henderson
http://sports.espn.go.com/mlb/news/story?id=2865084
Grim (129)-
Submit “bubblewrapped” to Wikipedia.
#120 JN: The difference is you have an idea as to what is going on. In the case of the others out there looking, it is a reasonable assumption that most of them are clueless.
I have to admit … as a NYC renter looking to move to NNJ in the next 6-18 months, I’m getting excited. Not due to the misfortunes of others, but because it’s going to be a good time to be a buyer real soon.
We’re willing to spend up to 375k, and ideally, we’ll find a nice house in Ridgewood. Dreaming, I know, but it’s got the best schools in North Jersey, and the place we buy (hopefully with a 15 year mortgage) will be a place we live for a long time.
Rickey on MLB 2007 and Clemens
“I see Roger can come back and play. I can come back and play,” the 48-year-old Henderson said. “They say I’ve done too much. What’d he accomplish? … The players they put on the field nowadays, they couldn’t make it in my day. They’d get sent back to Triple-A.”
Frustrated (138)-
Ridgewood? 375K? I can certainly understand your handle. You are dreaming.
If prices get that low, we’ll all be selling pencils in the subway and singing Woody Guthrie songs around barrel fires.
ChiFi (135)-
Rickey in the Pro Bass Tour? OMG…the quotes will be priceless.
The wrong way to lend to the poor
By John Gapper
Published: March 18 2007 18:06 | Last updated: March 18 2007 18:06
For confirmation of the old adage that the rich get richer and the poor get poorer, take a look at the US housing market. Lavish Wall Street bonuses mean that apartments and houses for the well-off in New York are still rising smartly in price. Meanwhile, in the poor US city districts where many blacks and Latinos live, something very nasty is going down.
Global stock markets shuddered last week at the prospect that an implosion in the subprime mortgage market would pull the US into recession and crimp world growth. Subprime mortgage lenders such as New Century Financial are in trouble because so many borrowers have defaulted on their mortgages as interest rates have risen and homes have fallen in value.
ADVERTISEMENT
Since I had never heard of subprime mortgages until recently, I spent some time last week discovering what they are. This is what I was told.
Imagine a man who is married with two children and who has a low-paying job as, say, a school janitor. It is 2004. He rents an apartment and has watched enviously as property prices and rents have risen sharply in the US housing boom. He decides that, for the first time, he should be able to make money by owning property too.
He does not go to see his bank because he had trouble with his bills in the past and he is afraid of being humiliated. Instead, he walks into the office of a mortgage broker who got one of his friends a loan. He explains that he does not get paid a lot and has hardly any savings but he wants to buy a house. “No problem,” the broker says, “take a seat.
“Your credit score’s not great and your income’s not high but we can deal with all that. The first thing to decide is what mortgage you want. Everybody used to choose 30-year fixed rate loans but you might prefer one that starts off with low payments. You need to buy furniture, and paint the place, so it gives you breathing room for a couple of years.
“As for the income, don’t worry: just tell me you’re paid rather than coming up with the paperwork. There are some fees but we can just wrap all of those up in the loan so you don’t have to pay the money upfront. Here’s what your monthly payments will be. Not bad, is it? Just sign here, here, and, oh, here, and we can get things going with the bank.”
If all this sounds ominous, it is. Our janitor has just acquired an exploding Arm (adjustable-rate mortgage) which is as painful as it sounds. His interest payments were fixed at 7 per cent for two years, since short-term interest rates were low in 2004, but he got into arrears on property taxes, because the bank did not follow the customary practice of collecting them monthly.
“No problem,” says the broker, when he returns the next year with his tale of woe. “Great to see you again. You were wise to buy that house because it’s gone up in value. We’ll just refinance the mortgage to cover some of these bills. Just sign here, here, and, oh, here.”
By 2006, house prices have started dropping in his city and, in the middle of the year, the mortgage payments are reset. His 6 per cent fixed rate jumps to 10 per cent, with a further rise to 12 per cent in prospect: his Arm has exploded. He cannot pay and goes back to his broker. But he is not greeted warmly this time: there is no home equity left to support another refinancing.
Bye-bye, home. The mortgage securitisation trust that diced up the credit risk of his mortgage into tranches for different pools of credit investors calls the bank that made the loan and tells it to repossess the property. The house is boarded up and auctioned, which pushes down the sagging prices of houses on the same street even further.
It adds up to a sorry tale of human nature and financial incentives. The broker earned a higher fee for selling our janitor an exploding Arm rather than a fixed-rate loan and by getting him to self-certify his income (which involved him paying a higher interest rate). By not escrowing taxes, the bank made it more likely that he would incur a prepayment penalty of 3 per cent of the mortgage.
As long as prices rose, equity could be extracted by the mortgage broker and the lender (and the Wall Street banks that securitised the mortgages) each time the janitor had to refinance. Indeed, they had a vested interest in his loan being unaffordable and in him requiring a new one. The credit risk had been securitised away and they gained another round of fees.
When the property market dipped, the music stopped. Here are some figures to reflect upon. Some 52 per cent of loans made to black people in 2005 were subprime and 80 per cent of these subprime loans were exploding Arms. About 70 per cent of subprime loans were booked by brokers who had no fiduciary responsibility to the borrowers they advised.
Martin Eakes, chief executive of Self-Help, a lender and credit union, has estimated that 2.2m families could lose their homes to foreclosure because they are unable to pay their mortgages. He thinks it could become “the largest loss of African-American wealth in American history”, one that was largely avoidable if borrowers had been better advised and had been given more suitable loans.
Poor people will always pay more than rich ones for credit because they are more likely to default. The cost of sound advice, which they need, can add to fees. Nor can those who took out loans be absolved of responsibility for their plight. But, examining what has happened in the US mortgage market, even the staunchest advocate of caveat emptor must despair.
BBB, I just about to point that out – and apparently our sellers aren’t the only ones, hence the article above. And since I would think Scarsdale and Chappaqua to be wealthier areas than Westfield, and with better and similar commutes, respectively, I don’t know why a single town in NJ should be “bubblewrapped” versus those places.
Reech – I just went into my account at BOA and checked the offers – nice stuff – 7% no fee 30Y fixed mortgage – WOWEE
MLS#: 2400420,
example of a home that would sell in warp time if priced at 2004 prices (i.e. 10% lower)
#137 bergenbubbleburst: Thanks for the compliment. It is sad to think/know that the one person(s) most adversely affected by this whole boom/bust are the Buyers (and the Sellers who recently Bought). IMHO, I think the ignorance that exists (in the public’s mind) regarding the current and future status of the real estate market is not an isolated issue. Associating myself with the Gen. X or Y (or whatever one I’m in …) does anyone have any idea where we went wrong with our ideology regarding saving and being thrifty? The image of my grandparents seems to portray something much more conservative regarding finances… opinions anyone?
NJGal [144],
You hit it out. WF does not come close to Chappaqua nor Scarsdale.
…and willing to negotiate…
RE: MLS 2400420
Surprisingly tasteful. I’ve got to commend them on those photos, very nice. It’s amazing how many listings have bad photographs attached. Something as simple as good quality photos go a long way.
jb
#144 NJ Gal: That is because Westfield is actually Brigadoon, a magical mythical place that appears only once every 100 years out of the central NJ highlands, where prices cannot go down.
NJGal Says:
May 9th, 2007 at 4:03 pm
And since I would think Scarsdale and Chappaqua to be wealthier areas than Westfield, and with better and similar commutes, respectively, I don’t know why a single town in NJ should be “bubblewrapped” versus those places.
NJG: I just listened to the fiscal 2Q07 forecast call of Toll Brothers – they listed suburban NY [not LI] and CT as B+ on a grade scale. They listed suburban NJ [NYC only] as an F. Philly suburbs are a B. Caveat: this data is Toll-centric.
ngwira (143)-
No sympathy here. Unless you’ve been declared mentally incompetent and cannot legally enter into agreements, ignorance/stupidity are not excuses. The way to cease being poor is to quit doing the things that poor people do…like succumbing to scams. Poor is not automatically synonomous with stupid.
Caveat emptor!
“There’s a sucker born every minute”- PT Barnum.
Chi,
re: It’s Rickey’s ball and Rickey will take it home.
LOL! I read on the Path this morning and almost lost it. I knew you would post. Gotta love Rickey.
By the way, maybe we can get Flutie back.
#142 Clot: I agree 375K may not become common place in Ridgewood, but hey you never know.
Current Ridgewood listing njmls #2716633, asking price $399, ugly, and I am sure a real POS.
But I woudl guess it has been some time since there has been anything in Ridgewood with a 3 handle on it.
What are your thoughts, especially for this area? Having gone to many open houses of late, I have noticed many young couples (us included) frequenting them; even admidst this whole real estate debacle.
Are you asking whether I think one area is going to fare better than another? Sorry, but my crystal ball doesn’t allow me that kind of resolution. The pompous prognostications I have made in the past are for the entire North Jersey region. Most of those, I admit, are no better than wild a$$ guesses. Those thinking they can divine the price movements of individual towns must have one hell of a good crystal ball.
jb
Re #150.
yes, to me too. Bloomfield seemed to be on the right track a month or so ago, but now sellers seem to be making the same mistake of pricing a bit too high all over again. pricing this home in the $430-$440 range would almost certainly ensure some serious compitition with first time buyers and city transplants looking for some outdoor space…maybe netting $460-$470. Instead it’ll probably sit for a while and sell for $420-$440…jus my 2 cents
But I woudl guess it has been some time since there has been anything in Ridgewood with a 3 handle on it.
There have been a handful of sales this year in the $400-$450k range. It wouldn’t take much of a price decline to push some of the overpriced $400k inventory down near that $375k mark.
The question is, what does anyone expect for $375k in Ridgewood? A 6br mansion? Don’t hold your breath.
jb
and yes, photos do make a big difference. house on my street…good photos…UC in less than a month sold for $30,000 under asking. Another home, lousey photos, on market for 3 months…UC currently after asking price dropped over $50,000 so good photos in this case (assuming similar $30,000 under asking) may have helped the sellers gain a net $50,000.
btw – both homes had similar curb appeal, SF and conditions inside.
lousy
NJGAL:
I am also looking at Westchester County. It sounds like you like your inspector. Would you mind refer him/her to us? We used one last time we put a bid on a house (it did not go through at the end). Also, if you can also refer a lawyer, that would be great. Can you email me at grace_chris at yahoo.com
thank you
#15* JB Probably a 3 bed 1 to 1.5 bath in the “Lawns” section of town.
For anyone looking for a Ridgewood, Glen rock etc experience…i’d suggest taking a look at the Caldwells, verona, Roseland or Livingston. The schools are as good, access to job centers just a good, and quality of life somewhat similar. I know it could be hard for a bergen county lifer to image a similar quality of life in essex county, but it may be worth your while if you want to pay $50-100,000 less…
Clot, Bubble, JB
Of course we’re not expecting a 6 br mansion. But as you pointed out, there have been sales this year in the 400s, and there are a few decent (key word, DECENT) places in the 400-500 range now.
The hope here is that one of them will fall into the 375 range. Definitely not out of the realm.
Also should have mentioned that Ridgewood is the TOP destination choice … obviously we’re not locked in there as our only option. I work in the city, so we want a place that won’t be longer than 45min/1 hr commute … plus, we want good schooling.
Any towns you’d advise on, send em my way!
#162
maybe Brookdale or Oakview. still overpriced IMO though…
Grim (158)-
But all the LODs here tell me marketing is worthless. How many times have we heard, “it’s all about price, nothing else”.
What do you think? Does good marketing add value? Does it show up on the bottom line?
My position is well-known. I want to know what everyone else thinks.
Not to harp on this but can anyone get me the info on Monroe?
I don’t get what all the fuss is about. I bought my new construction townhouse in north jersey last year for 340k. Someone across the street with the same townhouse sold for 375k last week. (According to GSMLS) So why should I be worried?? I keep reading about how homes are priced and selling at 2005/2004 levels but am I not in the bubble? I live in essex county. Just wondering if this website is painting an accurate picture. Thx.
Bought [168],
How much down? What type of financing?
#166 Clot: All else being equal, I definitely think good marketing makes a difference, as in many areas. Some Realtors just slap a sign on the lawn,and than just expect it to sell.
The shakeout of the market could have positive benefits, some housing advocates say. … people won’t qualify for loans they can’t afford.
“People will have the opportunity to buy homes they can sustain, not the absurdities we’ve been seeing,” he said. “What’s going to happen is only good for homeowners and consumers.”
Toxic mortgages are akin to steroids in baseball.
Everything else being equal (talent, ability etc.), players on steroids will gain a competitive advantage at the risk of their own health. This puts other players in the position of either choosing to harm themselves with steroids in the pursuit of remaining competitive or, not performing as well as their steroid taking counterparts, which will mean a lower paycheck and perhaps getting dropped all together.
Getting rid of steroids in baseball puts everyone on a level playing field and doesn’t force players into a position of deciding between baseball or their health.
Reducing the availability of cheap and easy toxic loans will benefit those of us who want to afford a home without choosing to risk our financial futures.
#168, so a sample size of 1 (your neighbor) is a better gauge of the market than all the stats that are being spewed on this site and even the media now?
Clot, since you asked –
my observations:
All things being equal(including price)…
Bad marketing does NOT sell.
No marketing (just an mls listing) and good marketing sell.
In fact I think most realtors do “bad marketing” – they don’t post a direct number on the for sale sign, don’t have a direct URL to get information on the house, try to push another house when a buyer approaches, etc.
168 – Congrats on your new place. But we’re not really interested in a townhouse. I’m a city guy; the wife is a suburbs woman. And you know what the women want, they get; so we’re moving to the burbs.
If i wanted a townhouse, I’d just buy in Brooklyn (not for 340, but you get the point).
We’re looking for a yard, garage, backyard, etc.
“NJG: I just listened to the fiscal 2Q07 forecast call of Toll Brothers – they listed suburban NY [not LI] and CT as B+ on a grade scale. They listed suburban NJ [NYC only] as an F. Philly suburbs are a B. Caveat: this data is Toll-centric”
Interesting. I didn’t realize Toll even really had a presence in CT. I had heard mention from our broker of Toll developments in Mt. Kisco and Somers, I believe, which also surprised me, as I thought they were mainly a NJ/PA co. NJ as an F is really pretty bad. Philly too. Their mainstays failing them.
Grace, I will email you.
http://www.tollbrothers.com/homesearch/servlet/HomeSearch?app=search&s_state=CT&Submit=+Search+&s_county=&s_area=&f_type=
FYI – quick delivery homes = cancellations = spec
BOA…excluding certain fees from closing.
This is a good product for a BANK that has a balance sheet to portfolio these loans. The discounted fees are probably factored into interest rate. My guess is that once you you have a loan with them, you are more than likely open up another account (checking, trading cc) with the company. I believe its only offer to prime customers right now so its a safe bet for them
Clot asks: (#166)
“Does good marketing add value? Does it show up on the bottom line?”
It certainly can. There is no excuse for taking bad photos / no photos in 2007 if you are marketing a home. The photos don’t sell the home, they hopefully bring traffic.
More traffic = more viewings = more potential bids on a home.
That being said, any traffic you drive from quality photos will be completely negated by poor pricing.
A home priced right with good marketing behind it could result in multiple bids and most likely, extra dollars in the final purchase price. Even in this market.
I am certain there are homes I have not bothered to see because the one photo of the front door taken in poor light with dead shrubs showing in the background doesn’t bring me in. Maybe with some additional interior shots and an attempt at staging, I would have realized this was the home for me and made the call.
I frequently see interior shots with enough clutter in the photos to fill three dumpsters. Why? So much for pride of ownership.
http://new.gsmls.com/media/getImage.do?mlnum=2404349&res=highres&num=3
#156,
I predicted that the median sales price in 3 municipalities (Weehawken, Hoboken, Jersey City) would rise by 10% in 2006 compared to 2005, and I was right.
http://www.hobokenx.com/html/modules/newbb/viewtopic.php?topic_id=12164&viewmode=flat&order=ASC&start=0
I’m calling for -5% to 5% in these 3 towns in 2007.
I also read the early 2007 lumber rebound as a sign that the situation in the US housing market would bounce back quickly, but I was wrong.
Predicting local home price trends is easier than predicting nationwide trends, in my view.
Chi-Fi
I took a look at the toll link, specifically at their windhaven estates in monroe, nj. It looks like they have only the model remaining to sell in that community (won’t last long they say (okay, whatever, I say). But this brought up a question.
Now if this one house ends up selling below asking, will this necessitate a drop in selling prices for a future resale in the community? Will it show up as a comp even tho it is a model home?
thanks.
AFE
Bought Last Year,
I bought my new construction townhouse in north jersey last year for 340k. Someone across the street with the same townhouse sold for 375k last week. (According to GSMLS) So why should I be worried??
You have access to the agent’s version of GSMLS and you’ve only researched one property other than your own?
Unless you’re looking at the public version of the GSMLS, which only shows asking price adn may have confused it for the selling price.
Rich
Nice catch..
jb
Bought Last Year,
Just wondering if this website is painting an accurate picture.
Forgot this question.
Yes, it is.
All the data is from the agents version of the GSMLS or NJMLS.
Bit of a stretch to consider a clear photo as “marketing.”
An address, a photo, and a price are all I need to determine interest in a property.
If the vast majority of realtors are incapable of taking a clear photo, well, that’s telling.
Here’s how one goofball realtor decided to present a $2M house:
http://newmls.gsmls.com/media/getImage.do?mlnum=2382066&num=0&res=highres&imgcnt=10
But all the LODs here tell me marketing is worthless. How many times have we heard, “it’s all about price, nothing else”.
What do you think? Does good marketing add value? Does it show up on the bottom line?
My 2 cents. The marketing only works on First time buyers. Most RE marketing is done still in the way things were sold in 60’s. i.e. High Pitch (Don Trump) & High Pressure (Now is the best time to buy). The rookie RE Agents don’t really understand that marketing/selling in 2007 is vastly different then 1960’s.
((in the meantime let’s hope your landlord doesn’t make a decision that affects you negatively. nice when such an important aspect of your life is out of your control.))
I usually don’t comment Richard, but being I am the Renter/rhymingrealtor I must. Your above comment means you don’t realize just how much control you have as a renter. You are definitly not aware of renter’s rights, we are not at a landlords whim. In NJ a lease overrides a sale and I can move from a bad neighbor so much easier than you. I dont experience unexpected expenses from a broken furnace, waterheater, plumbing apperatus, leaking roof, flooded basement, etc, etc. Now that’s an important aspect of your life in which you have no control.
My monthly expenses are probaly 25% of most homeowners around here anyway.
I’ve been both a Homeowner and a Renter they both have there pros and cons, but a lack of control is not one of this renter’s cons
KL
The $200-250,000 couples buying $1.5-2MM houses does not surprise me at all.
I think there are 5 wannabe households in every NYC suburb for every truly wealthy household
“I also read the early 2007 lumber rebound”
[181],
More comedy. Are you the same bull from last year? Your so called rebound can’t even qualify for a dead cat bounce. Not to worry, one of these years you’ll be right. Are you dollar cost averaging?
http://charts3.barchart.com/chart.asp?jav=adv&vol=Y&grid=Y&org=stk&sym=LBK7&data=H&code=BSTK&evnt=adv
BC Bob (190),
The thrust of this website is New Jersey real estate prices, and I was right in 2006 when most people here were wrong. It is notable that you ignored my New Jersey real estate post, instead choosing to comment on my lumber post.
You’re hostility isn’t appreciated.
NJ Gal, what town did you just buy your house (or accepted offer) in Westchester? That is really interesting that you are buying at the same price as the owner 3 years ago.
#168 Sold price or listing price? To know the sold price you would have to have access to the gsmls, in other words you would have to be a realtor, or know a realtor to get the sold price.
Pre [191],
You were the one that stated that lumber prices had rebounded. My reply was not hostile at all. All I did was post a chart that proves this market is approx 40% off its 2004 highs. I wasn’t sure if you meant rebound or loose ball on the floor. Is hostility taking your foot and placing it into your mouth? What a bull market! Since you are in tune with this market, what is vol/delta indicating?
Rickey, Clemens, Julio Franco;
http://sports.espn.go.com/ncf/news/story?id=2865093
You’re hostility isn’t appreciated.
A kannekt regular complains about hostility!
The poor dear.
2008 Buyer Says:
May 9th, 2007 at 5:43 pm
My guess is that once you you have a loan with them, you are more than likely open up another account (checking, trading cc) with the company.
2008: BOA are relentless pitchmen and it is one of the worst things about them. I just want to deposit a check, I don’t need a credit card, a HELOC, a CD, to wire funds to El Salvador, GET AWAY FROM ME!!! A stuff your yankee doodle sheet cake where the sun don’t shine.
BC Bob,
How would you like to comment on Weehawken, Hoboken, and Jersey City prices during 2006?
Pretorius
pretorius,
Interesting that you claim prices went up. This report seems to indicate that $/sq. ft. went from $550 at the start of the year to $500 at the end of the year.
http://www.hobokensbesthomes.com/blog/
Pre [198],
Don’t know anything about prices there. However, it’s hard for me to believe that prices are up 20% in JC. Supporting data? Hobokenite shows an approx 10% decline. Now, if your propensity for being bullish the lumber market is any indication of your RE views, the market may be in trouble. However, I would never be hostile to you or those like you. I thank my stars every day, that there are irrational, delusional, moronic supporters of this market. Kudos to you.
Pre,
Back to my favorite topic, lumber. Technical indicators versus the lumber bull;
http://quote.barchart.com/texpert.asp?sym=LBK7
pretorius Says:
May 9th, 2007 at 5:49 pm
#156,I predicted that the median sales price in 3 municipalities (Weehawken, Hoboken, Jersey City) would rise by 10% in 2006 compared to 2005, and I was right.
http://www.hobokenx.com/html/modules/newbb/viewtopic.php?topic_id=12164&viewmode=flat&order=ASC&start=0
I’m calling for -5% to 5% in these 3 towns in 2007.
predictorius: personally I don’t care what your forecast is in particular.
What I do want to know is what are your criteria for prediction? How did you specifically build your forecast for 2006, and similarly, how does that exercise suggest that your 2007 range be equally predicitve?
Up 20%?,
“THIS SELLER IS A DIRECT LENDER AND CAN OFFER FINANCING AND FREE CLOSING COSTS. SELLER WILL PAY ONE YEAR FREE PARKING.”
http://newyork.craigslist.org/jsy/rfs/323651891.html
KL (188), Very well said! I think the traditional American homeownership “dream” needs to be deconstructed. Once you put emotions on the back burner, it seems to me that too many people think “magically” when it comes to the decision to rent vs. own. As if owning a home will somehow alter who you are and you will forevermore live in some kind of blissful “homeowners” state. The truth is, it’s expensive, it’s a lot of work and it’s not for everyone, especially if you have to sacrifice your financial future to do it. I’m starting to think that maybe I fall into this latter category.
NJGal, congratulations on the new Westchester home! Everytime I drive up there I’m always in awe of how beautiful it is and how peaceful it appears. Enjoy your new home.
#197 chicago
why don’t you just switch banks?
Pre,
Back to reality a bit in JC. First, I grant that if you’re buying a brownstone or multi-family (of which quality ones are in short supply), those prices have remained firmer on a relative basis, but they’re certainly not zooming upward on any type of bubble-like trajectory.
The areas of better “value” are still quite crime-ridden, and if you’re buying there either you accept that as status quo or hope/agitate for improvement (but just do a bit of research on the JCPD, City Hall or any part of the rotten to the core JC gov). The mayor? Photographed drunk and naked on his front porch prior to the election. Or getting arrested in a fight at the Jersey Shore. Yeah, serious quality there.
But the overwhelming mass of housing under construction in JC are tens of thousands high density, crap construction condoshacks with ridiculous taxes, many on “remediated” brownfields. Think the PATH is crowded now?? Wait till all those investment-geniuses move in. Master planning? Green space? Ahh, well, there’s green alright, but it’s more likely to be bundled in unmarked bags.
The implication that buying now in JC for an “investment” is going to pay off anything remotely like the last 5 years strains credulity. There are of course some great historic neighborhoods and it’s extremely convenient to the city. A decent trade as a place to live, as long as you don’t have school age kids.
Highly improbable as a money making endeavor for years to come. I know plenty of instances where the drops have be much steeper than 5% in 2006. I certainly didn’t see anyone who bought in 05 gloating over new-found riches – more like worried, looking over their shoulder and hoping they could flip before their Pay Option ARM came calling.
With the supply glut coming, throw in a few hiccups in the economy, and those condos with a great view of the homeless at the Grove PATH will see their comps cut pretty damn fast.
SG #1,
To be precise, the law of inertia is Newton’s first law of motion.
Newton’s third law of motion is however still extremely relevant… for every action, there is an equal and opposite reaction.
JN #120,
You may already know this. But just in case you don’t (and if you care), I think Cranford is a designated flood zone. You might be shelling out more in home insurance. It’s probably worth finding out more.
I meant some areas of Cranford.
“NJ Gal, what town did you just buy your house (or accepted offer) in Westchester? That is really interesting that you are buying at the same price as the owner 3 years ago.”
Bedford/Katonah area, which you may know because Ms. Martha Stewart a) lives in Bedford, and b) is currently trying to trademark the name Katonah for her furniture line, and the residents are fighting her on it. So it’s a very nice area, and many residents are very wealthy, which is why it’s strange to be buying at earlier prices – most listings are not priced so well.
Apparently, the reason the sellers is leaving is “personal” – they don’t want to say yet. They COULD be hiding something, but I suspect divorce or family illness.
t c m Says:
May 9th, 2007 at 11:11 pm
#197 chicago
why don’t you just switch banks?
TCM – out of circumstance, they happen to have a branch that is two blocks from my office and is right next to the main branch of the post office. Also, the BOA thing has only been an issue for the last year. I was originally Summit because I could use BankBoston branches up in NE, then it became Fleet. It has only been the last 18 months that BOA, which bought Fleet, has fully integrated and ramped up this nonsense.
Realize something else. BOA is a highly acquisitive company, in fact it is a serial acquirer. The problem is that they have just bumped up against the statutory limit for anti-trust regulations in the US. As a result, they are not allowed to make any more domestic acquisitions [assuming LaSalle bank] becuase they would control more than 10% of domestic deposits. The CEO has stated publicly that they are going after their current customer base for new revenue streams since they can no longer depend on artificial means for growth.
JN (#147): Blame it on HGTV. :) I’m only half kidding. I’m a boomer who couldn’t afford to buy till we were 40, having missed out on the 80’s boom and buying in 1996 at nearly the bottom of the market. But we bought less house than we qualified for, but as much house as we needed. BUT….we did not rush out and gut the kitchen, put on a deck, and the millions of other things we needed. It is now 10 years later and aside from the year we did the siding and windows (after saving 5 years so we could pay cash) we have done $2000-$3000 worth of work each year.
I work with a young woman age 37, who I guess qualifies as either Gen-X or Gen-Y, and she cannot understand why we didn’t want to just take a home equity loan for $100,000 and do everything we wanted when we wanted it — new kitchen, granite counters, waterfall shower bath, Trex deck, etc., etc. Well, here we are on track to pay the house off by the time we’re 64 and when one of us has a layoff, it’s not catastrophic. So we live with the ugly yellow sheet vinyl floor and ugly yellow laminate countertops that are delaminating for a few more years; it won’t kill us.
That’s not to say that we don’t want to make updates, and that’s where WE differ from my parents’ generation (the generation from whom we bought the house. They never updated anything and only replaced things that were shot beyond repair — like furnaces, water heaters, and waiting to tear out the carpet and replace it until the steps are worn down to the backing.
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