No relief for first time buyers

From USA Today:

First rung on property ladder gets harder to reach

Headlines about skidding home sales and prices portray a buyer’s market for real estate. For first-time buyers, though, the view is quite different. For them, the market is more challenging now than at any time since the early 1990s.

Rising mortgage rates have eroded almost all the financial relief that buyers might have derived from the slight decline in prices in most areas. On top of that, lenders are now demanding that customers produce larger down payments, more cash reserves in the bank, higher credit scores and less debt — all of which many first-time buyers lack, especially in high-cost states such as California, New York and Florida.

Nearly half of first-time home buyers nationwide last year put down no money, according to the National Association of Realtors, compared with fewer than one in five repeat buyers. The remaining first-time buyers put down a median of just 2% of the purchase price.

“I could put anybody in a loan last year,” says Stephanie Gagnon, a senior loan officer at First Capital Mortgage in San Diego. But, “In the last six months, all of the big lenders are shutting down all special programs they were working with because they’ve realized it’s bitten them.”

Now, she says, “I’m turning away 50% of my first-time home buyers. They just can’t qualify.”

As lenders raise their standards for borrowers, the squeeze on first-time home buyers is constricting the broader real estate market and slowing the recovery. That’s because about one in three homes sold last year went to a first-time buyer. As these first-timers are shut out of the market, sellers ready to move up to bigger houses have a harder time selling their homes.

“The decrease in sales at the lower end of the market has been kind of a surprise,” Shuffield says. “That’s usually where we have the greatest number of buyers. It’s tougher for first-time buyers to save deposits and come up with the cash necessary to close” a sale.

Which is why Chad Moskal, 33, an account executive at a printing company, gave up his apartment on the beach in Miami last summer and moved back in with his parents in Chicago. He and his brother Paul, 34, who’s working two jobs as a cardiovascular technologist and has also been living at home, are buying their first house together this month. A home in Chicago, Chad Moskal decided, would be cheaper to buy than a similar one in Miami.

The number of people who are moving in with friends or family, or sharing apartments or houses to save money, has caught economists at the Realtors association off-guard. The growth in “new households” — first-time buyers or first-time renters — has plunged 70% from last year’s rate.

“This is very unusual,” says Lawrence Yun, the NAR’s senior economist. “Even during a recession, household formations do not slow to this current level.”

Last year, about one in 10 first-time home buyers tapped their fledgling retirement or pension accounts to help come up with a down payment, according to the NAR. And that was back when mortgage companies seemed to be giving loans to anyone with a pulse.

To scrounge up a 5% down payment, Rey and his wife sold their cars and cashed out the entire $36,000 Rey had socked away in his 401(k). To keep their monthly payments low, they took out a loan that lets them pay only the interest for the first five years. They’re taking a calculated risk, though, that the value of their condo will rise. With their interest-only loan, Rey and his wife will owe the same principal balance in five years. And their mortgage will reset, possibly to a higher interest rate.

“You’re wiping out your retirement, and if that’s the only money you have for a home, maybe you shouldn’t be buying a home,” says Ed Slott, an accountant and IRA expert in Rockville Centre, N.Y. And after that money is gone, “What if the roof leaks, then what are you going to do? This is just the beginning” of the expenses of owning a home.

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357 Responses to No relief for first time buyers

  1. James Bednar says:

    Everyone loves “best” lists..

    Montville ranked 13th best place to live in U.S.

    Their ‘secret’ is out
    Unsung Sayreville makes list of best places to live

    I admit, I did get a kick out of this part…

    To some, the magazine’s decision to make Sayreville No. 47 was a bit perplexing.

    “Apparently, Money magazine has never been to Sayreville,” said Robert Spiegel, the director of Edison Wetlands Association, an environmental organization in Middlesex County. “It’s a nice town, but it has a beautiful view of Edgeboro Landfill … Superfund sites, a possible cancer cluster and ash from a steel plant dirtying the air in several neighborhoods.”

  2. James Bednar says:

    Money magazine ranks Emmaus as the 87th best place to live in America…

    ”We always knew Emmaus was a great place to live,” said Gene Clock of Iobst Travel and president of the Emmaus Main Street program. ”Now the world will know.”

  3. James Bednar says:

    From the New York Post:

    EPSTEIN’S SUBPRIME EXPOSURE

    Jeffrey Epstein, one of the world’s most reclusive investors, appears to have gotten his ultra-rich clientele tangled up in one of the now infamous Bear Stearns hedge funds, Securities and Exchange Commission documents show.

    Known for hobnobbing with everyone from Bill Clinton to leading scientists and mathematicians, Epstein’s Virgin Islands-based Financial Trust Co. is listed as a beneficial owner of 10 percent of the equity of the High-Grade Structured Credit Strategies Enhanced Leverage Fund.

    The SEC documents are not clear on the financial exposure that Epstein and his clients have to the Bear fund. Epstein is said to have fewer than two dozen clients, each of whom is worth at least $1 billion.

    While the fund’s recent performance figures have not been released, many rivals assume that the fund’s capital might have been completely wiped out, given margin calls and collateral seizures.

  4. James Bednar says:

    Also from the NY Post:

    HEDGE DOUGH NO GO FUND $$ DRY UP

    Big Wall Street firms’ love affair with lending cash to hedge funds specializing in trading mortgage-backed securities is officially over as margin requirements are getting tougher, making an already brutal market even more costly.

    For the past five years, hedge funds specializing in trading mortgage- and asset-backed bonds have borrowed as much as 15 times their capital base, making their positions – and profits – larger.

    It was a symbiotic relationship: the hedge funds got easy funding on generous terms and the investment banks guaranteed themselves plenty of new-issue business and order flow for their trading desks.

    Portfolio managers at three New York mortgage hedge funds told The Post that over the past week, however, large investment banks like Lehman Brothers, Merrill Lynch and Bear Stearns ended the party.

    It is the latest in a string of blows striking both the mortgage-bond market and the hedge funds that have been buying securities-backed subprime mortgage loans. With a number of hedge-fund stumbles already making headlines, Wall Street is bracing for more bloodshed as hedge funds rocked by the woes in the subprime-loan sector begin reporting their performance to investors.

    A partner of an $850 million mortgage arbitrage fund said he received a demand for almost $50 million of additional collateral from Lehman and Bear Stearns early last week.

    “To keep my existing positions I had to come up with that much within 48 hours. None of the positions were in trouble, either in price or with respect to underlying collateral. [But] they should know, [Lehman and Bear] structured and sold me the deals,” the manager said.

  5. James Bednar says:

    Not sure who this outlet is, but they seem to be popping up in my searches frequently. From In These Times:

    Tranche Warfare

    Now that the real estate bubble seems poised to go the way of its dot-com predecessor, a new narrative has taken hold in the business press. Where once reporters breathlessly touted double-digit, year-on-year gains in home prices, they now warn darkly of the “meltdown” underway in the class of exotic mortgages that added so much punch to the party.

    After months of dismal reports for the real estate industry—declining sales, rising inventories, softening prices, rising foreclosure rates—the news took a sharp turn for the worse in late June, when the investment bank Bear Stearns shut down two hedge funds whose holdings were laden with securities backed by subprime mortgages.

    Suddenly, finance pundits and insiders were speculating about just how far the damage of bad subprime loans would spread. Could it be “contained”? Were more hedge funds on the verge of implosion? Was the debacle about to touch off a system-wide credit crunch?

    Meanwhile, a bemused public was wondering what the rarefied world of hedge funds had to do a bunch of poor suckers who had bought more house than they could afford. How many of these loans could there be—and how many defaults—that a Wall Street powerhouse like Bear Stearns was taking it on the chops? And what’s the story behind all these subprime loans, anyway? Whose idea was all that funky lending?

  6. BC Bob says:

    “all of the big lenders are shutting down all special programs”

    No surprise. The door is now shut. Stop complaining. You’ve had happy hour for the past 5 years. Now live with it. Everything old becomes new again. How revolutionary, you want to buy a house you must have skin in the game. Bring back Goldilocks.

    50% of first timers put down zero, the remainder an avg of 2%. This bust may be worse than I had anticipated. How does the ladder function with the first fews steps missing? All steps will be lowered to compensate.

  7. AL says:

    The number of people who are moving in with friends or family, or sharing apartments or houses to save money, has caught economists at the Realtors association off-guard. The growth in “new households” — first-time buyers or first-time renters — has plunged 70% from last year’s rate.

    Sometimes I wonder – what world do the so called “economists” live in?? ON htis site people are mostly educated with good jobs and good salaries. If you are a single person in NJ working at the restaurant – there is no way you can afford even a studio-apartment. People are triplign up in one bedroom. Families living together and still struggling to pay mortgage.

    Economists and wall-streeters are living in Fantasy world.

    I guess negative savings rate for the country as whole does not tell them anything???

  8. James Bednar says:

    From the Wall Street Journal:

    Subprime Woes Still a Worry
    Investor Caution Boosts Treasurys; ABX Index Drops
    By DEBORAH LYNN BLUMBERG and ANUSHA SHRIVASTAVA
    July 17, 2007; Page C6

    A record low on a closely watched derivative index that measures risk of home loans made to borrowers with patchy credit histories pushed U.S. Treasurys sharply higher as investors sought a haven for their funds.

    A lack of economic data meant there was little to distract investors, but concerns continue to deepen that subprime woes will spread further to the far corners of the credit markets.

    The riskiest, BBB-minus slice of the subprime derivative index, known as the ABX.HE 07-1, hit a record low of 45 cents in yesterday’s trade, according to Alex Pritchartt, a trader at UBS. The index, which stood at 49 cents late Friday, edged back up to 46 cents in heavy afternoon trade, but the mood in the market remained dour.

    “People are panicked,” Mr. Pritchartt said, noting that there was no specific news driving the declines.

    The ABX index, which contains slices of risk ranging from the safest AAA-rating to the riskiest BBB-minus, is renewed every six months and measures the credit risk of select loans originated in the prior six-month period. The current index is influenced by mortgages originated in the last six months of 2006 when lending standards were especially lax.

  9. James Bednar says:

    From MarketWatch:

    Producer prices unexpectedly fall 0.2% in June

    Wholesale prices fell 0.2% in June as food and energy prices declined after four months of hefty increases, the Labor Department reported Tuesday. The producer price index fell for the first time since January, confounding economists’ expectations for a 0.2% increase in prices for goods at the wholesale level. The PPI is up 3.3% in the past 12 months. Food prices sank 0.8%. Energy prices fell 1.1%. Excluding volatile food and energy prices, the core PPI rose 0.3%, a tenth higher than the 0.2% gain expected. The larger-than-expected gain in core prices was largely due to large increases in car and truck prices.

  10. Cobradriver says:

    R.E. #6/BC BOB…

    “This bust may be worse than I had anticipated. How does the ladder function with the first fews steps missing? All steps will be lowered to compensate.”

    Bob,

    How many times do you think this happened ??
    NJ resident HELOC’s/refi’s all the equity out of his house.
    Brings equity to SW Florida. Purchases three houses in the 200-240k range in North Port. Can’t flip em,cant find renters,unable to sell his place up north so he unloads the properties in Florida.

    A guy i work with makes a cash offer of 300k for ALL three. When it is all said and done i am gonna guess the guy lost on the order of 320k – 360k . Yikes. That will leave a mark.

    Like i said,How much did dumb “investing” like this happened ??? I am going to go out on limb and guess he is not the only one screwed like this.

    Chris

  11. john says:

    FYI – Ed Slott is a CPA in Rockville Centre Long Island has been the voice of reason during the whole housing boom, he has some great, IRA, AMT, TAX and housing income articles all over the web. I like that that they are quoting a real source in the article not some Bull who is now a Bear.

    “You’re wiping out your retirement, and if that’s the only money you have for a home, maybe you shouldn’t be buying a home,” says Ed Slott, an accountant and IRA expert in Rockville Centre, N.Y. And after that money is gone, “What if the roof leaks, then what are you going to do? This is just the beginning” of the expenses of owning a home.

  12. BC Bob says:

    Cobra [10],

    “Everything that dies someday comes back”
    -Bruce.

    Florida RE? If you just change the dates and the $ amounts, the below article can be describing today.

    “Market crashes always occur in the same manner. Regardless of the market, the same simple psychological underpinnings are always at work. People who are caught up in a bubble never look back for historical examples. For this folly, they become paupers.”

    “Those who cannot remember the past are condemned to repeat it.”

    http://www.stock-market-crash.net/florida.htm

  13. Chuchundra says:

    What’s happened is that the mortgage industry has been eating its seed corn. A lot of people who should have waited a couple more years or so to buy a home, saving money and getting their finances in order, were able to jump in early because of these sub-prime programs. Many of those people who should be looking to buy now but jumped the gun and bought early and are either struggling to make the payments or facing foreclosure. Either way, now that a lot of those programs are gone, your going to see fewer first timers for the next couple years.

    When my first wife and I bought our first home, we spent almost a year saving for the down payment and paying off all our bills. We skipped a honeymoon, had a very small wedding and saved every penny we got for wedding presents. Once the first-timers figure out that that’s what got to be done to get into a house, we’ll see those numbers come up again.

  14. john says:

    RE ; James Bednar Says:
    July 17th, 2007 at 7:39 am
    Everyone loves “best” lists..

    Even Better Baldwin Long Island is rated the best town on Long Island in that article. They claim it is racialy diverse, but in realty north of sunrise is a shooting gallary boarding roosvelt and freeport with frequent gun fire. South of Sunrise to a bit south of Merrick is a blue collar haven of capes and down by the water is a wealthy jewish enclave of million dollar homes on water. Those three groups don’t get along and the High School is a terror Zone and there are boarded up stores all over the place. The article sites all the nearby stores within a short distance but they are in RVC and O-side. None are in Baldwin. You even have to go to the town next door to see a doctor or dentist. What al

  15. DoughBoy says:

    Its looking like those of us in the position to be or soon-to-be FHB that can figure out what they really need to do with the (supposed) tightening lending standards will be able to significantly benefit from the current RE fiasco.

    Soon enough the bag holders will have to let go and face the reality that their flips are flops and their grandmother’s house just isn’t worth the bazillion dollars that they’re asking based on 2005 sales prices. They’ll just have to make 150k on grammy’s old place instead of 200k.

    For FHB looking in the 250-350 range, it might be that a year or two will bring the much-needed relief to those first few rungs of that ladder.

  16. SG says:

    So news today on MSM is that First Time buyer cannot afford. Duh !!!

    I think much blame is to be given to MSM. They have just cut and pasted press releases from NAR, MBA etc… During the boomtime I have rarely saw intelligent analysis reported in MSM. To me, MSM should be critical of news releases coming out of Companies & Associations. By nature they represent a group and their news will be tilted toward their benefits.

  17. James Bednar says:

    14k today?

    jb

  18. make money says:

    #17 JB

    Yes sir. make money money money.

  19. Orion says:

    What does 14K mean?

  20. Orion says:

    Never mind, I got it.

  21. Richie says:

    It means we’re all getting jewelry..

    woohoo!! 14k!!!

  22. Outofstater says:

    #7 Al – You are so right. A lot of people are struggling. I think of the economy not as a house of cards, but as a tower of bricks. The foundation is made up of average income Joe who spends his paycheck at Target on shoes for the kids and goes out to eat at Ruby Tuesday. Income levels rise as you go up the tower til you get to the tippy top. There, in the attic are the hedge fund guys and derivatives junkies who take crazy chances and do wild things the way nutty attic inhabitants have done for generations. As they’ve swayed in the high winds of high altitude and high finance, Joe down below has usually been ok. Except that now, Joe is up to his eyeballs in credit card debt, his mortgage is about to re-set, his biggest asset, his house, is dropping in value and inflation is rising dramatically. (I see 20% increases at the grocery store with alarming reguarity and with oil pushing toward $80, there is no way it will be contained.) So, check out the parking lot at Ruby Tuesday – if it seems a little empty, watch out below.

  23. James Bednar says:

    From Bloomberg:

    U.S. Industrial Production Rose 0.5% in June; Capacity at 81.7%

    Industrial production in the U.S. rose last month by the most since February as factories turned out more automobiles, computers and electronics.

    The 0.5 percent increase in production at factories, mines and utilities followed a 0.1 percent decrease in May that was initially reported as unchanged, a Federal Reserve report showed today. Capacity utilization, which measures the proportion of plants in use, rose to 81.7 percent, the highest in eight months.

  24. Cobradriver says:

    BC Bob Says:
    July 17th, 2007 at 8:52 am …

    Bob,
    I had never read about in depth about the RE crash here in Florida before a couple of years ago. I got my free education by being stationed at MCAS El Toro in SoCal in 1985. I watched prices double/triple/quadruple in about 5 years. When it crashed a friend bought 300k for 112k.

    I arrived in Florida 3 years ago and said “These people are frikin nuts” . The number of people i work with who have a 400-500k nut in my building really freaks me out. Average wage, 55-65k per year. Oh well…I am cash heavy and can wait indefinitly…

    Chris

  25. Richard says:

    >>When my first wife and I bought our first home, we spent almost a year saving for the down payment and paying off all our bills. We skipped a honeymoon, had a very small wedding and saved every penny we got for wedding presents. Once the first-timers figure out that that’s what got to be done to get into a house, we’ll see those numbers come up again.

    agree 100%. we live in an instant gratification society. why delay pleasure by hunkering down and saving when you can have it now for a low monthly payment and/or no interest for 5 years? the fact that all you had to do was fog a mirror to get a home loan the last few years fed into this warped sense of entitlement. the persistently high housing prices might just have a silver lining that nothing valuable in life comes quickly or easily.

  26. Richard says:

    >>Like i said,How much did dumb “investing” like this happened ???

    out of the gazillion people i know only 2 people lost money on RE transactions. maybe most were smart enough to know when the worm turned.

  27. john says:

    Joe should not be eating at Ruby Tuesdays or buying shoes at Target. Joe drives a big SUV when gas is high and has a pot belly even though food is expensive. Joe buys his things on 18% interest when he only gets 3% raises.

    Joe sees his neigbors blowing out their houses and even though all his kids are out of house in a few years does it oo cause he can borrow 100K at 4%. He bangs out his disney card and uses some points to pay for a bit of Disney trip he can’t afford and while he is down their he is talked into buying a time share he can’t aford so he can save hotel bills on the next trip to Disney.

    Joe does not need a raise or for prices to go down. Last time that happened when GM had “employee procing” and lowered Yukon Denallis from 55K to 40K Joe ran out and bought one, when rates were low he borrowed more than he could afford and when his boss gave hime a 3K bonus he went out an bought a Plasma TV instead of paying down credit cards. Joe plans on sticking us with his kids college tuition via financial aid and for us to pay for his nursing home cause he is broke. Joe is a lost cause and the Joes of the world hurt us all as they are the fools who ran up the price of housing and will cause it’s collaspe.

  28. RayC says:

    #26 That’s right. Not a lot of people lost real money. Yet. That is because they watched their $200k paper profit turn into $150k and are not going to take that “loss” so they will wait to sell. When their “profit” hits zero, there might be some panic.

  29. 3b says:

    Exactly,and I for one have no sympathy. Suck it now creampuffs.

    “they are the fools who ran up the price of housing and will cause it’s collaspe.”

  30. 3b says:

    #28 No I think they are panicing now. When you think your house is worth 500K, and your neighbor who has the same house lists his or hers for 450K, you are panicing now.

    The panic will grow as the prices decline.

  31. 3b says:

    #29 Actually should read suck it up now creampuffs.

  32. lostinny says:

    3b- 29
    I like suck it now better. But that’s because I’m a bitter renter who can’t afford anything. Ho hum.

  33. 3b says:

    #32 You will. Just be patient, the tide is finally rapidly turning.

  34. lostinny says:

    3b I was being sarcastic. But in all honesty, I was never one to run with the herd and I won’t buy an over-priced POS just because everyone else is. I can rent, vacation, fully fund retirement and still save. And when prices come back to reality, I can buy. And if its 5 years from now, I don’t care. I must have missed out on the “must buy a house now” gene. Lucky me.

  35. HEHEHE says:

    “Excluding volatile food and energy prices, the core PPI rose 0.3%, a tenth higher than the 0.2% gain expected.”

    I love how our government comes up with these crazy names for their figures. How the hell you can call something “core inflation” and not include food and energy boggles the mind. Wouldn’t it be better to call it “non-core inflation” considering people need to eat, heat their homes and drive to work.

  36. Sapiens says:

    14K! Appart from share repurchases, where is that cash coming from?

  37. Sapiens says:

    Apart… darn kbrd.

  38. 3b says:

    #34 It will nto take 5 years, IMHO, 2 yers, with significant opportunities (price declines) nexyt year.

    And your life style, silimiar to mine will become very fashionable. howver, ontly the elites like us will be able to live it.

  39. t c m says:

    #10

    “Like i said,How much did dumb “investing” like this happened ???”

    Can’t say for sure – but i do know one woman who used the equity in her primary residence to buy 2 other investment houses to fund her and her husband’s retirement. she was already in her early 60’s. – her plan was to sell her primary, and move into one of the investment houses (in another state) in retirement.

    when the time came to sell the primary, the offer came in at significantly less than what she owed. in order to get the money to bring to the table, she tried to get a home equity on the others, but was unable, because she did not have enough equity.

    bottom line – a couple in their 60’s, who now want to retire to another state, has to stay in town and wait for prices to come up (and this was about 1 1/2 years ago, when everyone was still saying prices can only go up)

    so for those who keep saying that we should buy to “start” our lives, please let us know how these people can start their dream retirement. yes, they went out on a limb and owned 3 houses, but even if you own one house under water, it can alter/stifle major life plans, causing you to stop going forward – or force you to go forward in a direction that you don’t want to go in.

  40. lostinny says:

    3b. I may be exaggerating on time but like I said, I’m not in a rush. If it took that long, it would still be ok with me. But I’m not sure the declines will come so quickly. I think they are happening, but they are happening slowly.
    Now I feel special that I’m setting a trend.

  41. Jill says:

    When I decided last year to reface my perfectly good kitchen cabinets (3/4″ solid pine) and redo the kitchen a piece at a time with decent laminate countertops and a laminate floor, done as we could afford it with ready cash instead of taking a $50K equity loan and filling it up with particleboard “custom” cabinets and granite countertops, people said I was nuts. But with my DH having been laid off 3 times in 3 years after getting companies’ tin-cans-and-string computer networks running like clockwork and then they decide they don’t need a full-time guy, it’s nice to not have a ton of debt sitting over our heads. We bought in 1996, and even if the value of the house dropped in half from 2005 prices, we would still walk out with some cash. Our cars are paid for and we have no CC debt. These days, that’s the way you have to do it because no one knows if they’ll even have a job tomorrow.

  42. twice shy says:

    Frankly I’m surprised Richard knows even two out of a bazillion that actually lost money in real estate. The 2000 – 2005 buying frenzy seems like ancient history now. The days where you “had to get in or be priced out forever” have passed. Too bad the whole thing was fueled by funny money, as many of us suspected, not to mention artificially low interest rates which were the match that set things off.

    I’ve read some of the links to the subprime fiasco that have been posted here. These are extraordinarily complex financial instruments. I have a hard time understanding what they are, who holds the paper, which firms are most at risk, what happens when the collaterialized assets lose 50% or more of their value. I believe we will witness the effects play out over the next year, but a lot of the true cost is buried and too difficult to understand for most lay people. For now, as this article illustrates, subprime financing is just about drying up and the first time buyers are the first to feel the effects.

  43. ParTeeRT says:

    Can anyone supply info on 2 Westfield listings. 766 Oak (MLS2420767) and 822 Harding (MLS2424833). Thanks for your help.

  44. john says:

    what first time buyers? People who put nothing down did not buy a house, the bank bought a house and when they pay back with interest three times when the bank paid for it over 30 years they can call it their own.

    Not many people remember this but back in the 1970’s leased and rental cars in New York all started with the letter Z on the plate. Everyone knew you did not own the car but the bank did. When they took the “Z” off people who leased a Benz could not pretend they own it. I guess zero down financing is the same thing it lets people pretend they own a house and they can lease two cars to put in the driveway and pretend they also own them. Too bad their is no way to pretend you have a six figure 401K plan so you wont be eating dogfood in 30 years.

  45. James Bednar says:

    I’m wondering how many people would go around advertising the fact that they made a poor investment.

    jb

  46. 3b says:

    #39 tcm: You see, you are thinking it out, and being totally rational. The whole idea was to get int, do what it takes,forget about any thing else. These thinges end badly, they always have they always.

  47. BC Bob says:

    “why delay pleasure by hunkering down and saving when you can have it now for a low monthly payment and/or no interest for 5 years?”

    Pleasure derived by hunkering down with an I/O. Priceless.

  48. James Bednar says:

    822 Harding

    MLS# 2272227
    List Date: 04/27/2006
    Original List Price: $659,000
    Reduced to: $600,000
    DOM: 67
    Withdrawn (was rented)

    Relisted as: MLS# 2424833
    OLP/LP: $615,000
    DOM: 6

  49. t c m says:

    #46- 3b

    well, 3b, i am thinking it out, but unfortunately, it is also because i’ve been around long enough to see it all play out in the past, and to have made my own financial missteps.

  50. Possiblebuyer says:

    agree 100%. we live in an instant gratification society. why delay pleasure by hunkering down and saving when you can have it now for a low monthly payment and/or no interest for 5 years? the fact that all you had to do was fog a mirror to get a home loan the last few years fed into this warped sense of entitlement. the persistently high housing prices might just have a silver lining that nothing valuable in life comes quickly or easily.

    Hmm, Richard, what happened to your instruction last week for all of us renters (and savers) to take our lumps and buy already? I thought life was passing us by and our neighbors looked down on us.

  51. UnRealtor says:

    Some jackass in my company just bought a crapbox for $1M — said it was now a “buyers market” and was happy to get a $15K credit from the seller.

    The mark thinks they’re in-the-know and on top of the world. Funny.

  52. UnRealtor says:

    Possiblebuyer #50, I was wondering the same thing.

    Schizophrenia?

  53. Zack says:

    I am in my early 30’s and everday when I walk to work through Times Square, I see a wide variety of people walk along side of me. What baffles me is that there are quite a number of old people who still walk to work, their faces tired after years of working. I agree that there are some who love their jobs and are itching every morning to get to work. But a vast majority of them are forced to work. They don’t have a choice. Old age should techincally be the golden age where you enjoy the things that you couldn’t while you were too busy working. You know WHY, probably they made poor financial decisions during their younger years. I pity them and I hope I don’t follow their path.

  54. James Bednar says:

    From the Conference of State Bank Supervisors (CSBS):

    State Financial Regulators Issue Joint Statement On Sub-prime Lending For State-Licensed Mortgage Lenders

    The Conference of State Bank Supervisors (CSBS), the American Association of Residential Mortgage Regulators (AARMR), and the National Association of Consumer Credit Administrators (NACCA) today issued a Statement on Sub-prime Lending to state agencies that regulate residential mortgage brokers and companies.

    The Statement was developed in response to the federal financial regulatory agencies’ Statement on Sub-prime Mortgage Lending that was released June 29. At that time, state regulators endorsed the statement and announced plans to issue a similar statement to cover lenders not regulated by the federal financial regulatory agencies.

    The three state regulatory groups encourage the state regulatory agencies to adopt the guidance and issue it for use by their regulated entities.

    The state regulatory organizations will be orchestrating a campaign to implement the guidance in all states. The following 26 mortgage regulators have stated they intend to expedite implementation: Alabama, California, Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Idaho, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New Hampshire, New York, North Carolina, North Dakota, Pennsylvania, Rhode Island, South Dakota, Vermont, Washington, and Wyoming.

  55. James Bednar says:

    You might have noticed that New Jersey is absent from that list.

    For those that feel that NJ should consider expedited adoption of the CSBS subprime statement, please email NJ Department of Banking and Insurance Commissioner Steven Goldman at:

    Steven.Goldman@dobi.state.nj.us

    As well as Director Terry McEwen at:

    Terry.McEwen@dobi.state.nj.us

    jb

  56. t c m says:

    # 53 –

    “I am in my early 30’s and everday when I walk to work through Times Square, I see a wide variety of people walk along side of me. What baffles me is that there are quite a number of old people who still walk to work, their faces tired after years of working.”

    Maybe they’re in their early 30’s too. They may just look that way from commuting to NYC everyday.

  57. Sassy says:

    My Dad was joking that I, the sole renter, was able to afford a family vacation this summer. All my siblings will not be vacationing…yep, i/o loans on their non-furnished mcmansions.

    And, during the last RE downturn, NYC was the last major city to tumble, and was the last to have prices come back.

  58. Richard says:

    >>Can anyone supply info on 2 Westfield listings. 766 Oak (MLS2420767) and 822 Harding (MLS2424833). Thanks for your help.

    i know the 822 harding house and have seen the inside personally. if you want more info on my take you can ask james bednar for my email address.

  59. Richard says:

    >>And when prices come back to reality, I can buy. And if its 5 years from now, I don’t care. I must have missed out on the “must buy a house now” gene. Lucky me.

    you’re assuming today isn’t the new reality. may i ask do you have a spouse and kids?

  60. Richard says:

    >>Hmm, Richard, what happened to your instruction last week for all of us renters (and savers) to take our lumps and buy already? I thought life was passing us by and our neighbors looked down on us.

    you should buy if you can afford it. if you are waiting around trying to time the market you better have a lot of patience and flexibility on what you want cause that’s what it will take.

  61. NNJJeFF says:

    Could someone confirm what Sassy claim on #57 about “during the last RE downturn, NYC was the last major city to tumble, and was the last to have prices come back”

    Any articles or references will be welcomed

  62. dreamtheaterr says:

    “Rey and his wife sold their cars and cashed out the entire $36,000 Rey had socked away in his 401(k). To keep their monthly payments low, they took out a loan that lets them pay only the interest for the first five years. They’re taking a calculated risk”

    Calculated risk? Call it financial suicide instead.

    You’ve cashed out your 401k for almost 60 cents on the dollar (after withholding and penalties) and thrown it into a house. You’ve just moved your entire net worth into your house, and taken out an IO loan to finance it. In five years, when they (most probably) won’t be able to afford the higher mortgage payments and lose their house, they’ll be in a pickle. No house, no retirement savings. And 5 years of money that could have compounded have been lost. I am not even assuming that the house will depreciate in 5 years.

    How can people be so reckless? Or clueless? I don’t know which description would be more apt.

  63. 3b says:

    #61 I can tell you that I know many people that lived through it including family members, and lost money, alot of money.

  64. 3b says:

    #60 Ricahrd; Becasue you say so? or is that what you hope for? Based on perhaps a recent house purchase ?

  65. NNJJeFF says:

    #63
    3b, I read through jb’s collection of NYT articles, but I just want to have a more definite timeline in terms of how the NYC area collapse with regards to the rest of the country and also the recovery time too.

  66. t c m says:

    #60 –

    “you should buy if you can afford it.”

    not necessarily true. i don’t like what i can afford. in addition, what i can afford would DOUBLE my monthly outlay (figuring in all tax benefits) – not to mention the cost of upgrades, and maintenance, and lost interest on the huge down payment. The truth about many people’s situations is that, although probably not their “dream” house/apt., renting is much cheaper than buying. Besides, i could never afford to buy my “dream” house anyway (at least not in this market).

  67. Richard says:

    word to the wise. never ever ever touch your 401k/ira money. once it’s there consider it gone. that’s just my opinion of course ;)

  68. make money says:

    3B says “And your life style, silimiar to mine will become very fashionable. howver, ontly the elites like us will be able to live it.”

    What makes you think that you are “the elite”????? what makes you elite 200 -400K in you cash position if that?

    most of us here are nothing but average and you my friend are probably below average.

    my 2 cents,

    a lack of recession and significant interest rates increase will cause this market to decrease in single digits for the next 3-5yrs. Can you imagine the panic if people actually lost jobs? 30yr fixed at 9%?
    subprime mess? Alt A mess? credit tightening and all time high prices. It would be a depression for housing.

    Now it’s a slowly correcting market and guys like myself are forced at the sidelines. I have no choice but to wait or find something else to do. I’m smart enough to know my limitations.

  69. Richard says:

    3b i bought my properties years ago.

  70. RentinginNJ says:

    you’re assuming today isn’t the new reality.

    When you hear things like “new reality”, or for that matter, “new paradigm”, “it’s different this time”, “permanently high plateau”, “permanent prosperity”, run the other way as fast as you can.

  71. 3b says:

    #59 “Today the new reality”? Based on what? You are hoping that today is the new reality hoping that it is indeed different this time, although that has never been the case before.

    At least we have history on our side.

    And yet even now with everything going on out there,a nd with price declines, soem significant, you still pooh-pooh it all.

    Who is more delusional, those that you acccuse of trying to time the market and putting their life on hold, or yourself who belives that the housing market will not go down.

  72. 3b says:

    #69 Richard: If you bought your property years ago, then you of all people should know that prices fell significantly in the past.

    You should be offering wise counsel to those here that never experienced a bust, and warn them just how painful it can be.

  73. Tom says:

    Please Help..Help…in trouble with Builder

    Hi Friends

    POSTING THIS AGAIN TODAY IN HOPE OF FINDING HELP

    I have been reading your very useful blogs for past few months. Thanks for all the precious advice. I have got into a situation where i really need your help.

    We signed up for a new home with a very reputed builder 3 months back. Few days after the original contract was signed, we were told that the construction would begin. But few more days after that builder sent some more papers requesting us to sign which were addendums to the original contract and which authorized them to make major construction changes to the exterior of the home. They said they would pay for the changes.

    The changes would have altered the look of the home totally, so we told them we do not aggree with the changes and they should deliver the home as signed in the contract or they should cancel the contract and return deposit ($25k) + 10% downpayment promissary note cancelled back to us asap. They said they cannot deliver the home as per the original contract because of the township restrictions and they refused to cancel the contract. so I had my Attorney send them the cancellation request letter. To our surprise, Builder’s Attroney replied claiming that one of their sales agent had explained orally to us the upcoming changes before the contract we signed the contract. We told him that we are 100 % sure that none of these changes were discussed with us before and nothing regarding this was written in the original contract and the contract clearly states “Oral Promises are void”.

    Last Friday after exchange of few letters, Builder’s Attorney sent our Attorney an intimidating letter mentioning that we are in Material Breach of contract and if we do not aggree to take the home with changes in 7 days they would cancel the contract, keep our $25k deposit + enforce 10% down payment note and sell the lot/home to other buyers !!!

    I met our Attorney today and explained to him that we are not in breach of contract and would take the home if delivered as per the original contract. I was bit disappointed with my Attorney because although he says our side is very strong but he says they have a lot of money to fight and we don’t. I told him I am willing to litigate to get justice, he says he is willing to work on it only if its hourly wage. I told him I can work with him for flat rate or a % of returned deposit but only if he gives in writing that he gets paid only if
    we get our deposit back + 10% downpayent note cancelled. He says the litigation could take forever and in the mean time he needs to take care of his family and cannot afford to work on my flat / % conditions but would fight for a hourly wage.

    Friends, I have following questions for you guys
    1>. I am bumped and not sure What can i do ?
    Is there any government agency who would look at my case and tell the builder they cannot make people’s life difficult and destry dreams just because they have so much more money they have earned during the boom. Can DA or AG office help ?

    I am not a rich person and cannot really afford big Attorney fees. I am not sure what my options are at this point.

    2>. Can anyone please recommend an NJ Attorney who will be willing to look at my case and if necessary litigate it for a flat fee or a % of deposit money. But winning should be a part of the deal because I read online that if
    they get paid hourly then they would not work hard to win the case.

    3>. If we find an Attorney who would litigate our case, any idea on how much they charge (what % or flat fee). Money in question is $ 25k deposit and cancellation of 10% downpayment promissary note.

    Please help.
    Thanks so much.

  74. James Bednar says:

    NNJJeFF,

    This was one of the better summaries out of the NYT:

    New York Housing: Sellers Finally Sell
    http://query.nytimes.com/gst/fullpage.html?res=990CE6DC153BF935A15751C0A963958260
    By NICK RAVO
    Published: February 26, 1995

    OWNERS of residential real estate in New York City, particularly those with co-ops, may look back on 1994 as the year when it once again became possible to sell their homes — even studios and one-bedroom apartments. It still wasn’t easy, and the big profits of the 1980’s remained only a memory, but the increased demand and stable prices were a substantial improvement over the early 1990’s, when market activity slowed drastically and prices fell.

    I have very little data on the NYC market.

    jb

  75. DoughBoy says:

    Isn’t that the same thing from yesterday? Ban for spam?

  76. lostinny says:

    59- Richard
    I KNOW today isn’t the new reality. May I ask you what a spouse or kids have to do with buying something unreasonably priced? If you must know, we’re DINKS.

  77. make money says:

    #62, Dream

    In 5 yrs the house could increase in value by 50%. How do you know it will decrease?

    Did you have this crystal ball when housing was going up 10K a month in 2004 and 2005?

    why didn’t you cash in? You have to put the money on the table to bet on black and you don’t know if it’s gonna hit black until the wheel stops spinning. Everyone told me that my investments where bad and I was a gonna work untill I’m 100yrs old to pay off my debts. I’m retired! Guess who was wrong?

    you can convince yourself that you’re smart for not investing or taking risk and that’s fine but don’t bash someone who actually had the balls that you don’t have.

  78. Richard says:

    >>The truth about many people’s situations is that, although probably not their “dream” house/apt., renting is much cheaper than buying.

    while that might be true, since when did the cost become the only factor in making a decision on buying? the first question is can you afford it. by affording i don’t mean the exact same lifestyle you have by renting. renting has always been cheaper than buying, that’s the nature of it. people typically struggle when they buy a house. nature of the beast but over time as your income grows and assuming you’ve fixed your mortgage you start getting ahead via inflation adjusted dollars with a fixed mortgage payment and ever higher monthly principal payoffs. you have to get in the game to start playing.

  79. pretorius says:

    Sassy #57,

    First, the “tumble” experienced in the New York City area was mild in comparison to the genuine bust that happened in the Oil Patch, California, and New England. Prices around here, on balance, were merely flat for several years.

    Second, prices still haven’t come back in several major cities throughout this country, such as Detroit and Cleveland.

  80. 3b says:

    #68 MM: Elite in that we will actually have money. Elite in that we will be comfortably able to afford our monthly mtg pymt.

    Elite in that we will not be weighed down by credit car debt and or high lease or car payemnts.

    Elite in that we can max out all our retirement vechicles.

    Elite in that we can put down 20% or more etc.

    As far as a recession, that is still very much a real possibility, sooner rather than later, and at some point it has to happen. The longer delayed, the more severe it will become.

    As far as single digit declines in prices IMHO I do not think so.

    To have had this huge run up in prices, with all this toxic financing and loose to no lending standards, and then to think it will just slowly defalte, is wishful thinking.

    As noted above, in many instances now, the first time buyer is rapidly being emiminated from the market.

    Without them there is no market. Prices will have to decline significantly to reverse that.

  81. make money says:

    Richard says,

    “you have to get in the game to start playing.”

    AMEN

  82. dreamtheaterr says:

    “Nearly half of first-time home buyers nationwide last year put down no money, according to the National Association of Realtors, compared with fewer than one in five repeat buyers. The remaining first-time buyers put down a median of just 2% of the purchase price.”

    50% put nothing down, and are already upside down. The remaining 50% put down around 2%.

    Cocktail party conversation:

    Buyer to loser renter: I bought a house

    Renter: I rent and will wait a bit.

    What buyer did not say: I financed it IO and am upside down
    What renter did not say: I have saved 10-20% down payment and can buy tomorrow, but will wait it out a bit

    Anyway, with the tightening of lending standards, just where is the plankton going to come from? Mars?

  83. 3b says:

    #79 pretorius: Yeah tell that to family memebrs and friends I know that sold condos/coops for 30 to 50% less than what they paid for them.

    Or the houses in my ppremier Bergen County town that were going for 250k to 350K, that could be had for 125K to 250k.

    Tell that to all the people who bough in 87/88 who sold their houses 10 years later for what they paid for them,and in many cases less, and minus all the improvements.

    May not have been as bad as the NE bust , but it ws bad;real bad.

  84. dreamtheaterr says:

    jb, pl unmoderate

  85. make money says:

    3B says:

    “Elite in that we can put down 20% ”

    I’m sorry but I have to laugh at this. 3B you are officially a Turkey.

    Add sigle digit declines for the next 3-5yrs and you have a huge decline from 2005 highs. My point is that it will be slow and gradual at these conditions.

    trust me I wish it was a lot faster cause that would allow me to make money again.

  86. 3b says:

    #81 Now is not the time to play, simple as that.

  87. BC Bob says:

    “you have to get in the game to start playing.”

    Not true. You can retire and come back; Michael Jordan.

  88. 3b says:

    #85 MM knock yourself out Buddy, it went right over you head, which is not surprising.

  89. dreamtheaterr says:

    “You have to put the money on the table to bet on black and you don’t know if it’s gonna hit black until the wheel stops spinning.”

    Make money, sorry I don’t gamble nor speculate. I would not cash out an IRA or 401k to put down on a house, even if I had a crystal ball and knew house prices would appreciate 50%.

  90. NNJJeFF says:

    jb #74,

    Thanks for the article. I guess my question is why NYC area (or NNJ area) is the last to fall in prices and latest to recover?

  91. john says:

    If I was putting down 20% on a house in a tony neighborhood with a upper middle class income the realtor and owner would be laughing. Once the house is over 800K it is impossible to pay a mortgage even on a 250K salary. I see people all the time putting down 800K on a 1.3 million dollar home, a 500K mortgage is all they can afford and they are rolling equity from that junk house bought in the 1990s.

  92. make money says:

    3B,

    #81 Now is not the time to play, simple as that.

    And you know this how? Did you know six months ago that DOW will be at 14K? Did you know that .com would send NASDAQ to all time highs in “94? Did you buy RE in 2000-2004? Why NOT?

    No one really knows untill it plays out and then you can say I knew it and I got TEN MILLION to show for it. That’s whn I’ll listen to something you post.

  93. 3b says:

    #93 Well one can certainly see how the real estate market would play out, why would some one follow ididots and bid up house prices,w hen the fundamentals did not support it.

    As far as the stock markett, I am positioned to make money in either a down or up market, with none of the risk and expense of real estate.

  94. dreamtheaterr says:

    Make money said “In 5 yrs the house could increase in value by 50%. How do you know it will decrease? ”

    Make money, I actually said “I am not even assuming that the house will depreciate in 5 years”. Please parse through sentences before jumping to conclusions. I never said prices will decrease.

  95. make money says:

    Not true. You can retire and come back; Michael Jordan.

    True. Didn’t he win another two championships?

    he tried Basebal and realized it’s basketball that he’s good at. lesson learned.

  96. make money says:

    dream,

    My point is that you never know if it was a good investment untill cards play out. Don’t judge. No one really knows.

  97. make money says:

    I am positioned to make money in either a down or up market, with none of the risk and expense of real estate.

    How is this possible? teach me.

    My understanding is that you have to take a position either the stock will go up or it will go down. You can hedge and minimize the losses but you can’t make money both ways.

  98. chicagofinance says:

    Richard Says:
    July 17th, 2007 at 9:39 am
    >>Like i said,How much did dumb “investing” like this happened ???
    out of the gazillion people i know only 2 people lost money on RE transactions. maybe most were smart enough to know when the worm turned.

    Emu: That number will be exponentially larger by the time the calendar hits 2010. Further, as we all know, most people calculate housing gains as [price sold] less [price purchased], which is entirely improper accounting. Although it must power the Reech-O-Meter just fine.

  99. Sassy says:

    #79 During the last RE downturn…My folks home was on the market for 4 years, top $$$ neighborhood (Upper Westchester), top public schools, well built picturesque center hall brick Georgian…ended up selling with a 200K price cut = 30%, talking about catching a falling knife…yep, for the same low ball price offered 4 years earlier – which at the time was considered a ridiculous offer, and my parents were advised against accepting it – could have saved them 4 years of agony. And their story was typical for the area. Our house was not the only one with this sales history. Of course, at the time, they were told don’t worry about the RE downturn, this town, this price point, there are always buyers. Those with money always have money, and able to purchase what they want, when they want it.

  100. Possiblebuyer says:

    you should buy if you can afford it. if you are waiting around trying to time the market you better have a lot of patience and flexibility on what you want cause that’s what it will take.

    Well fortunately I have both patience and flexibility, although I need less of the latter every month as more and more houses fall into my price range from above. Since I am buying a house to live in for 25+ years, I want to love it.

    What’s so wrong with patience and flexibility? It’s not like I’m picking a restaurant for lunch. This is a major life purchase.

  101. chicagofinance says:

    Sapiens Says:
    July 17th, 2007 at 9:55 am
    14K! Appart from share repurchases, where is that cash coming from?

    Homo: the cash fairy…..didn’t your parents tell you?

  102. Richard says:

    >>59- Richard
    I KNOW today isn’t the new reality. May I ask you what a spouse or kids have to do with buying something unreasonably priced? If you must know, we’re DINKS.

    have a couple of kids lets see if your attitude remains the same.

  103. HEHEHE says:

    chicagofinance Says:
    July 17th, 2007 at 11:42 am
    Sapiens Says:
    July 17th, 2007 at 9:55 am
    14K! Appart from share repurchases, where is that cash coming from?

    Homo: the cash fairy…..didn’t your parents tell you?

    The liquid has to flow somewhere.

  104. njpatient says:

    “you’re assuming today isn’t the new reality.”

    This is the funniest thing I’ve read on this blog in a long time.

    Make Money, you sound like a RE investor who needs a few suckers to unload your last couple of bad investments on.

  105. 3b says:

    #96 Yep just like we learned that there are good times and bad times to buy real estate, lesson learned.

  106. njpatient says:

    Have I asked recently when everyone thinks oil will hit $100/barrel? I’ll go with a year from today.

  107. 3b says:

    #103 So again you are assuming people are huddled in apartments, with new borns sleeping in bureau draws?

    On a day to day basis what is the difference between renting a 3 bed 2 bath house, or paying a mortgage on it?

    Did we not have this discussion last week? Oh yes we did, and you accused us of beiong community cast offs, not tethered I believe was the words you used.

  108. lostinny says:

    103- Richard
    Would you please answer my question. What does having a spouse or kids have to do with buying an unreasonably priced home, or anything else for that matter? As a matter of fact, having children should make one more concerned that every penny he or she spends is spent rationally and logically. And if one cannot afford it, one doesn’t get it. A lesson all children should be taught.
    Yeah sure. I’ll get right on that having kids thing.

  109. HEHEHE says:

    Barring a recession I do not believe your oil prediction to be too far out of the question.

  110. James Bednar says:

    What does having a spouse or kids have to do with buying an unreasonably priced home

    Emasculation..

    jb

  111. dreamtheaterr says:

    Make Money, don’t confuse strategy with outcome. Strategy is forward-looking. Outcomes are only known after the fact; in fact they are crystal clear.
    The quality of the strategy cannot necessarily be inferred only from the outcome. Say I take your $10 million to Las Vegas, placed it on a red square and win. Am I a genius? My results are better than 99% of the financial advisors on the planet. Would you hire an advisor that took that type of risk? If you didn’t understand the strategy, you might be pretty impressed. You might even recommend me to all of your friends.

  112. 3b says:

    #101 Patience and flexibility hurts the current home sellers, and current home owners, because it drives prices down.

    That is what some posters are trying to avoid. If everybody would just buy (even those who cannot get financing now?), we would not be having this silly discussion, and the party would continue.

    Some people just do not know when its time to go home so to speak (party over).

  113. make money says:

    NJ,

    Good observation, I have one 4F on the market and it’s barely breaking even month after month. One apt continues to stay emty for some reason. I owned this house since 2002 and I’ve never rented 2B. My wife put it on the market behind my back cause she thinks it cursed.

    I must have shown this apartment to at least 50 people, I even had the bathroom redone and nothing. It’s a little weird.

    It’s a two bedroom apt and I figured it would be rented at $1250. The other three apt’s cover mortgage, taxes and all the maintance but I’m not making any money and have somewhere between 350-450K in equity with a couple of hundred a month in return.

  114. lostinny says:

    111- Stay strong Grim, stay strong!

  115. 3b says:

    #98 A well diversified portfolio, including stock, bonds mutal funds,and some foregin currencies.

    Structured and reallocated by a good buddy of mine former equity guy from my days at GS.

  116. RentinginNJ says:

    #81 Now is not the time to play, simple as that.

    And you know this how? Did you know six months ago that DOW will be at 14K? Did you know that .com would send NASDAQ to all time highs in “94? Did you buy RE in 2000-2004? Why NOT?

    Trying to time a market is just gambling. It’s not investing. Getting lucky doesn’t make you a good investor…it just makes you lucky. You were in the right place at the right time. By the way, I am doing quite well in the stock market now, so this isn’t a case of sour grapes.

    Investing is based on evaluating the fundamentals. It means investing when the research and analysis says the time is right and staying away when your analysis points to it being overvalued. Taking a “you have to get in the game to start playing” strategy is better suited for slot machines and lottery tickets.

  117. Poser says:

    Can someone explain how the current real estate downturn, is going to unfold the way the late 1980’s did. I guess I don’t understand what happened in the 80’s. Interest rates were much higher then, I remember my folks buying their house at 12 or 14%. What happened in the 80’s and how does it parallel today, where we have low interest rates? I’m asking because I see a lot of posters commenting on the last real estate bust.

  118. Don Mattingly says:

    Hey Richard – how many kids do you have?

  119. chicagofinance says:

    OT: There is a microcap stock I’ve been following. Anyway, I registered for Google Finance and posted a classic chicagofinance diatribe on their board yesterday. Someone must have complained and they have disabled the board. I didn’t know that Google adopted kannekt’s policy manual.

    Ahhhh….the discipline of the market…some people can’t handle it.

  120. 3b says:

    #118 rent: Something they will just not understand. Sometimes you need to be a combination footbal player, and chess player. Probably will not understand that either.

  121. pretorius says:

    #119,

    The current housing downturn is a national event. The 1980s downturn was limited to areas exposed to the oil sector, particularly Texas, Louisiana, Oklahoma, and Alaska.

  122. pretorius says:

    Another New Jersey-focused landlord reducing his New Jersey footprint.

    http://blog.nj.com/gloucester/2007/07/mackcali_sells_two_office_buil.html

  123. James Bednar says:

    Can someone explain how the current real estate downturn, is going to unfold the way the late 1980’s did.

    I don’t think anyone is saying that the current cycle will unfold in the same way. History doesn’t repeat, but is sure does have a way of rhyming.

    The fact that so many of us point to the prior bust isn’t to draw a direct comparison, but to show precedent that real estate busts can and do take place. This is important, because it serves as counterpoint to the what the media and industry lead homeowners/buyers/sellers to believe. The old adage/meme that “real estate never goes down”, just isn’t true. However, many folks take it as gospel, “Real estate always goes up because it never goes down”. The first step in correcting the myth is to show and understand that precedent.

    jb

  124. LeeorS says:

    Next to none would admit a bad investment. I’m about to step into 275k worth of debt after having had 2 years of bad experiences with landlords, just so I can get the hell into my own home. All I can say is, if you’re lucky enough to have a good landlord, stay put and sock away what you can. Oh my lord, the aggrevation…

  125. James Bednar says:

    Pre,

    When I’m talking about the late 80s/early 90’s bust, I’m talking specifically about the Northeast, not the Oil Patch bust which began in the early 80’s and had a very different dynamic.

    jb

  126. chicagofinance says:

    HEHEHE Says:
    July 17th, 2007 at 11:43 am
    chicagofinance Says:
    July 17th, 2007 at 11:42 am
    Sapiens Says:
    July 17th, 2007 at 9:55 am
    14K! Appart from share repurchases, where is that cash coming from?
    Homo: the cash fairy…..didn’t your parents tell you?
    The liquid has to flow somewhere.

    http://www.bloomberg.com/apps/news?pid=20601103&sid=aesTROkNlTiw&refer=us

  127. James Bednar says:

    For those who need concrete examples of the prior real estate bust in New Jersey:

    New Jersey Condos – A Look At The Last Crash

    jb

  128. Poser says:

    Pre, I remember the late 80s bust in NJ. I wasn’t of age to buy a home then, but I had a relative, a contractor who was a subcontractor for a mcmansion type development in northern nj. They all lost their shirts. My relative declared personal bankruptcy, but got to keep his own home which he built himself.
    My folks tried to sell their first starter home. It took forever to sell.

  129. Richard says:

    >>First, the “tumble” experienced in the New York City area was mild in comparison to the genuine bust that happened in the Oil Patch, California, and New England. Prices around here, on balance, were merely flat for several years.

    correct. we haven’t seen a nationwide real estate crash since the great depression so i doubt we’ll see one soon. also today you have numerous factors that differentiate today from the last crash the biggest being globalization which has changed so many variables. the worst a RE bear could expect is flat to slightly declining prices for a few years due to the forces of market segmentation. to think otherwise is grasping for straws.

  130. Poser says:

    Thanks JB,
    I guess my question now is, do we know what caused the real estate run-up in the mid to late 80s, just before the crash? It wasn’t low interest rates. Like I said my folks and relatives were paying double digit interest rates. What caused the boom in the mid-80’s?

  131. Richard says:

    >>Would you please answer my question. What does having a spouse or kids have to do with buying an unreasonably priced home, or anything else for that matter?

    i won’t bother. it’s like trying to explain what being unemployed is like to someone that’s never been unemployed. as my dad used to say you have to fall down by yourself.

  132. john says:

    Part of the reason Stock is rising is Private Equity. Two things are happening, when they bid above current share price it raises the price of the stock and when they take the company private it reduces the amount of publicly traded companies and the big chunk of cash that was paid out needs to be put to work so that cash is put right back into the stock market to buy other shares which in turn raises their prices. Also certain BDS have CSE status where if they are appropriately hedged they can have lower net capital requirements where they can put money to work. The hedge funds and private equity boys know the trend is their friend, the market is up five years straight and the bears have taking a beating while the bulls are running. If you get 40% of the profits and zero percent of the losses and you nail it five years in a row you just keep beating that puppy till the tires come off cause by then you have enough cash to retire or you renewed your contract based on your great performance and you can let them fire you while you cash the severance checks while you wait till the next bull market. Finally, the bull is getting near the end and we are almost near capitulation, the idiot retail Schwab folks who have been sitting on the side lines are jumping in and this thing will hit 14,500 soon before the crash hits while the professional options traders are betting SPDRS are going to be down six months from now. Joe Blow in Indiana is betting against the Goldman Black Box as to where the SPDRs are going to be six months from now. Good Luck!!

  133. NJGal says:

    “Once the house is over 800K it is impossible to pay a mortgage even on a 250K salary. I see people all the time putting down 800K on a 1.3 million dollar home, a 500K mortgage is all they can afford and they are rolling equity from that junk house bought in the 1990s.”

    That seems to be true, at least from our friends – we have one who sold his Brooklyn place and banked about 800K. He and his wife and 2 kids are currently renting because he thinks prices are ridiculous and is going to wait a bit. But they’re not planning to buy a place for more than 1.2 or 1.3 – even with 800K down he doesn’t want a huge mortgage, and is hoping to get into a multi-family to boot. And he’s an attorney at a huge NYC firm making great money, but even then why bite off more than you can chew?

  134. RentinginNJ says:

    It wasn’t low interest rates. Like I said my folks and relatives were paying double digit interest rates.

    Poser,

    Everything is relative. Interest rates hit over 20% in the early 80’s. By the late 80’s 12% was considered pretty good. In fact, I read an article somewhere (Time Magazine maybe) from the mid 1980’s citing low interest rates as a reason for the boom.

    Also, the stock market was on a tear in the mid 1980’s until 1987. Stock market money flowed into housing.

    At least during the late 80’s bubble burst, interest rates still had room to fall in the early 1990’s, which likely cushioned the fall. I don’t think the market has the luxury this time around.

  135. pretorius says:

    Poser #132,

    The home price boom that this area experienced in the mid 1980s was caused primarily by a substantial improvement in local economic conditions compared to the late 1970s and early 1980s.

  136. lostinny says:

    Richard if you can’t explain what you mean then please stay out of my posts.
    And while your father is right, people do have to fall down by themselves, that saying has nothing to do with this. That saying means that people have to make their own mistakes. It doesn’t have anything to do with not understanding a situation or not being able to explain one.

  137. make money says:

    Dream, #112

    You can have the best strategy in the world backed by award winning research and proven diversified portfolio theory of investments that won a nobel prize etc etc and if you outcome is in the red YOU SUCK as an investor and you’re just as broke as they guy in vegas.

    Now everyone and their mother made money in NASDAQ in 1994-1999, RE 1998-2005, DOW post 9/11/2001-today. If you were agressive you could retire in either one. if you were agressive in all three you’d be stinky rich.

    Why aren’t you stinky rich? Didn’t you see the signs, even my detist make 100K on a flip.

  138. dreamtheaterr says:

    #139, make mummy, are you for real?

  139. chicagofinance says:

    make: I’m being really generous here…..you are a phucking clown…..I am ashamed that you are Albanian :(

  140. James Bednar says:

    HMI falls across the board, more to come..

    Northeast
    Jun 36
    Jul 31

    Midwest
    Jun 20
    Jul 19

    South
    Jun 31
    Jul 26

    West
    Jun 28
    Jul 25

  141. James Bednar says:

    From MarketWatch:

    Home builders’ confidence plunges again in July

    With interest rates moving higher, a glut of homes sitting unsold, and the problems in the subprime mortgage market worsening, U.S. home builders’ confidence in the housing market plunged further in July, according to a monthly survey released by the National Association of Home Builders.

    The NAHB/Wells Fargo housing market index dropped four points to 24 in July, the lowest since the 20 recorded in January 1991 and the third lowest reading in the 22-year history of the survey.

    The index was at 39 a year ago and peaked at 72 in June 2005, when nearly three-fourths of builders were upbeat about the market.

    The decline in the home builders’ index mirrors the massive slump in home building and home sales seen in the past two years. Starts of single-family homes are down 36% from the peak, while sales are down 20%.

    Economists surveyed by MarketWatch were expecting the builders’ index to fall to 27 in July.

  142. James Bednar says:

    From Bloomberg:

    U.S. Homebuilder Confidence Fell to 24 in July, 16-Year Low

    Confidence among U.S. homebuilders fell this month to the lowest level in 16 years, signaling the housing market continues to tumble.

    The National Association of Home Builders/Wells Fargo sentiment index declined to 24 this month, the lowest since January 1991, from 28 in June, the Washington-based association said today. Readings less than 50 mean most respondents view conditions as poor.

    Builders are pulling back on construction of new homes as inventories remain high as sales haven’t recovered. Housing probably will be a drag on economic growth the rest of this year, economists said.

    “Higher inventory levels would suggest that builders are going to have slow down their activity,” said Jeffrey Roach, chief economist at Horizon Investments in Charlotte, North Carolina, before the report. “We still expect to see, for the next couple of months, building being a drag on economic growth.”

  143. BC Bob says:

    “the worst a RE bear could expect is flat to slightly declining prices for a few years”

    Also, please give me a wake call when the 10 year exceeds 5 %.

    OK. We have experienced a moon shot, 80-100% gains, triggered by an unprecendented credit bubble. The architect’s of the industry, H-B’s, have seen their stocks get hit anywhere from 40-75%, peak-trough. The BBB- tranche is down approx 50%. The IB’s are reeling with this crap, investors in these CDO’s have been pummeled. Now the spigot is closed for the nothing down/questionable credit. The first few steps of the ladder are busted.

    The existing home/box seller gets away unscathed as the dominos are crashing all around them? I guess that’s your definition of the new paradigm.

  144. john says:

    Does new housing really matter much around here. This isn’t south beach.

  145. make money says:

    #145 JB,

    Since we are close to reacing the low of 1991 what is your analysis of the chart?

  146. Richard says:

    there goes chickago again with his wholesome uplifting posts. go away joker.

  147. newbienomore says:

    Hi JB – Can you help me find the stats for Middlesex please ?

  148. make money says:

    #146, John

    New housing is a leading indicator of existing housing market.

  149. Read my Lips:Fall 2007 Spring 2008 Nightmare says:

    “You’re wiping out your retirement, and if that’s the only money you have for a home, maybe you shouldn’t be buying a home,” says Ed Slott, an accountant and IRA expert in Rockville Centre, N.Y. And after that money is gone, “What if the roof leaks, then what are you going to do? This is just the beginning” of the expenses of owning a home.

    I agree Ed, but so many bagholders out there which is now drying up with the sub-prime crash.
    Welcome to debt slavery.

    babababa

  150. newbienomore says:

    How does one ask for rebates of a builder. Do you come out and say – are you offering a discount ?

  151. njpatient says:

    # 131 Richard, you make a fool of yourself by stating the following so closely after JB’s post at #129 showing actual, significant price declines:

    “the worst a RE bear could expect is flat to slightly declining prices for a few years due to the forces of market segmentation. to think otherwise is grasping for straws.”

    You were proven wrong before you even opened your mouth.

  152. 3b says:

    #132 Poser, Pretorius forgot to mention the big ddecline in interest rates from the late 70’s early 80’s. Much like the situation we have had 2001 through 2005.

  153. make money says:

    http://blogs.marketwatch.com/greenberg/2007/07/novastar-nons-1.html

    Novastar gets 150M…What does this really mean? Is the company making a comeback in a terrible market? Or did it just get enough blood supply to stay alive?

    All this confusing reverse stock splits make me feel like I didn’t study at Stern?

  154. 3b says:

    #131 Richard again if youa re a long time property owner, you will know that last time prices did not merely stay flat.

    Revisonist history here, lets re-write what happened last time, to suit this time and moment. Damn the people that actually lived it, what do they know.

  155. john says:

    I don’t think it is much of a indicator in a good part of Bergen County for single family homes. Makes more since in NC where they throw up houses left and right. But it is what it is. Novastar sucks, they got the cash in turn for issuing news shares to the people who loaned them the cash causing dilution and leaving current shareholders holding the bag. Stay away.

    make money Says:
    July 17th, 2007 at 1:15 pm
    #146, John

    New housing is a leading indicator of existing housing market.

  156. 3b says:

    #129 JB in River Edge 1 bed room coops were selling for 125k at the peak.

    A couple of yeas later, they were going for 25k cash, as many lenders at the time would not finance coops/condos.

  157. Donald says:

    “How does one ask for rebates of a builder. Do you come out and say – are you offering a discount?”

    Yes. Sometimes builders will advertise rebates. Be cautious. Many builder incentives are merely featutres that they have been offering as standard all along.

  158. make money says:

    3B,

    You never answered my question please do so.

    “I am positioned to make money in either a down or up market, with none of the risk and expense of real estate.”

    How is this possible? teach me.

    My understanding is that you have to take a position either the stock will go up or it will go down. You can hedge and minimize the losses but you can’t make money both ways.

  159. make money says:

    Thanks John.

  160. 3b says:

    #123 pretorius it happend in the northeast as well. Please stop with the misinformation.

  161. pigpen says:

    #131 Richard:
    the worst a RE bear could expect is flat to slightly declining prices for a few years due to the forces of market segmentation. to think otherwise is grasping for straws.

    are you delusional???
    There have been numerous posts on this very board of MLS listings that were already lowered by 20, 30 and 40%.

    Nevermind the actual first and second-hand accounts we all have of big reductions

  162. pretorius says:

    3b,

    Interest rates are not a major driver of home prices.

    Between 1980 and 1985, interest rates were volatile during, often exceeded 17% and never dropping below 11%. During the same period, New Jersey home prices rose 8.2% per year.

    Between 2002 and 2005, home prices increased by 2.7% in the Denver metro area and 12.8% in the New York metro area. Why? Because economic conditions were bad in Denver and improving in New York. Interest rates were the same in both areas.

  163. 3b says:

    #159 What I loose on onw end, I make up in another, and stay away from the crap. It is as simple as that.

    I may read water at times, and at worst losses are minimal.

    And yes I have left money on the table, and there were times I should have been more aggressive, but I have others depending on me,and so I am cautious.

  164. James Bednar says:

    There have been numerous posts on this very board of MLS listings that were already lowered by 20, 30 and 40%.

    It’s much too easy to argue that those listings were largely overpriced to begin with.

    jb

  165. 3b says:

    #163 pretorius: Rates were much higher in the the early 80’s end of Carter begining of Regan, than they were in the mid-80’s.

    I had a cousin who bought in 1980 with an almost 20% interest rate. Not syaing they were not high, but there is a big difference between 11% and 17% or higher.

    As rates started to come down, more people started to purchase, the market was booming in 1987 when 30 yre FRM’s were around 10%.

    The difference between then and now, is back then you still had to qualify for a mortgage, something that was missing in the last few years of this now ending bubble.

    And no money down was unheard, for the rank and file every day home buyer. To be in the gam beack then, you had to haev seom skin in the game.

    Artifically low interest rates, loose to no lending standards, fear and greed drove this housing bubble, not the economic fundamentals.

    You and I can argue until we are blue in the face, but those are the facts.

  166. newbienomore says:

    # Donald Says:
    >>>> Thanks Donald !!!! Just Curious Do you know if the sales agents are Authorized to offer you a discount or are you better off asking for their managers ? Any idea anyone.

  167. newbienomore says:

    CAN SOMEONE RESPOND tO POST 149 PLEASE>>>>>>>

  168. 3b says:

    #167 JB they willl deny and rationalize it to the bitter end.

    I mean we have some posters denying that there was a down turn last time. Its incredible!! And we are called delusional?

  169. James Bednar says:

    newbie,

    What do you want to know?

    jb

  170. make money says:

    Economic conditions are a major driver of hoese prices. Period.

    The small decline that you see today is due to slight credit crunch and all time high prices.

    the market was due for a pause. (ala 2002)

    Now the psychology has changed and the rates are resetting with a slight credit crunch and the subprime is dryed up.

    This alone will lead to single digit decline in the next 3-5 yrs. For the market as a whole, you may however find a house that needs to sell in below the market price but a few houses that are listed here does not paint a picture of real life market.

    Again, Without a recession and/or significant interest rate hikes there is no downward pressure on prices. PERIOD.

    People are Ok with paying 50-60% of their incomes for next 3-5yrs and will not sell at a major discount, but if one them looses their Job and now the family income doesn’t even add up to the mortgage then all bets are off.

    Richard is right in these market conditions don’t expect double digit declines annual declines.

    I hate to burst your bubble for you who think that in 2008 you’ll get a center hall colonial in BC for 450K.

  171. Poser says:

    3b, thanks for the info. I didn’t realize there was such a big swing in rates from 20% to 11% back then. I guess it is all relative. And u are right about putting $$ down in the 80s. I distinctly remember my folks saving up enough for 20% down.

  172. pretorius says:

    3b #163,

    You described my post 123 about the 1980s as “misinformation” without bothering to cite any information that supported your point.

    The OFHEO data show clearly that home prices stagnated in the Oil Patch during the 1980s, while home prices increased dramatically in the Northeast during the same period.

    Total % change in home prices, 1Q1980 to 4Q1989:

    Texas 16.8%
    Louisiana 2.3%
    Oklahoma 1.3%
    Alaska -1.1%

    New Jersey 245.5%
    New York 286.4%
    Pennsylvania 197.5%
    Massachusetts 316.6%

    http://www.ofheo.gov/media/pdf/1q07hpi.pdf

    Please back up your contention that the Northeast home prices were in a downturn during the 1980s.

  173. john says:

    Favorite Coop wipe out was Blvd Gardens in Woodside Queens, in 1988 one bedrooms were going for 40K each from Sponsor, after sponsor bankruptcy and several attempts at auctions firesales etc. they were sold at auction for $1 dollar each in late 1992, guess what, they are 100K each now! My bigest peronal reqret was a coop bankruptcy sale in Southampton, 1br Units were 100k at peak and at auction after coop banruptcy they were expected to go for 25K each. I did the tour and signed up to go to auction but did not get tellers check and it was sunny that day. Next week I find out they sold for 3K each!! Now those units can be subletted and a three day weekend fetches $500 a night so in six days of rental you can make back your whole investment. People keep asking how low it can go, well I bought my first unit in early 1992 for 27k and in 1988 they were going for 107k, that is a 75% drop in 48 months. I don’t think it will get that ugly this time but when people stop buying they stop buying. The coop I bought into had rent stablized tennants who smartly turned the insider price for 80K on a 100K unit in 1988 and then came 1992 and the RTC offered them their apts at 3K each. My rent stablized neighbor told me why should I throw 3K down the drain, PS she had a three bedroom that is today worth 400K. People stopped buying completely in 1991/1992 even at firesale prices.

  174. James Bednar says:

    pre/3b,

    You guys are talking about two completely different events. The Oil Patch Boom and Bust happened in the early 80’s. The Northeast Boom and Bust took place in the late 80’s to early 90’s. The Oil Patch bust saw price declines in the mid 80’s, the Northeast bust saw price declines in the early 90’s.

    jb

  175. 3b says:

    #173 MM Another RE Expert/Bull, simply because you say so.

    Where are all the buyers now?, Explain that one away.

    As far as center hall colonials.

    Well one just came on the marekt yesterday in prestigious Blue Ribbon River Edge, 4 beds 1.5 baths LR, DR, FR, finished basement on dead end street, with 8 and change taxes, for drum roll please >>>>>>>> 499K.

    These same house were selling for 550k to 600k in 05, 06. So 450k is not that far off from 499K.

    And this new listing puts pressure on all the other listings, capes, ranches, smaller colonials that have been molding on the market for months.

    As far as people not caring about paying 50 to 60% of their income to a mtg payment, well that insanity cannot last, surely even you can see that.

    And if many of them have funky interest rate reset financing, many of them much as they may wnat to, will not be able to continue to make the pymt every month.

    It really is that simple.

  176. make money says:

    Coops are different now John. Not that people are different it’s that the Boards are a lot more strict to allow you to get in. for the most part they don’t allow and interest only loan for 107% of the sales price.

    They actually do an income check and you have to prove that you can pay the mortgage and the maintance. This will back fire in the down market if you have to move but most people do not foreclose on COOP’s.
    Condo’s are a whole different story.

  177. 3b says:

    #177 JB That is the whole point, pretorius denies there awas a bust in the late 80’s, ealry 90’s. He says prices were just flat, no matter what the people who actually lived it say.

  178. Clotpoll says:

    dream (82)-

    No plankton anywhere. Dried up. Bigger fish getting hungry. Sept. 1 approaches.

    The game hasn’t even started yet. But, the seller panic is settling in. I can sense it in every call and e-mail I get from a seller. All I do is go on listing appointments…every single day!

    That’s not supposed to happening in July.

  179. make money says:

    3b,

    That’s what I’m saying, there is just enough buyers to buy that colonial that’s priced 50K below the rest. It will be off the shelfs soon.

    It is a downmarket, prices are coming down but by single digits only. It’s the size of the decline that I’m saying and not the decline itself.

    Wake up turkey!!!

  180. 3b says:

    #176 John Due to all the reckless financing I certainly think, and I will emphasize that it COULD get just as bad as last time.Perhaps even worse.

  181. BC Bob says:

    “The game hasn’t even started yet. But, the seller panic is settling in.”

    Clot,

    Concern or panic?

  182. James Bednar says:

    From MarketWatch:

    U.S., states to conduct subprime-lender reviews in Q4

    U.S. and state regulators will begin reviewing subprime-lending practices of non-depository institutions and mortgage brokers in the fourth quarter, federal and state bank overseers said Tuesday. Agencies including the Federal Reserve and the Conference of State Bank Supervisors will review companies’ underwriting standards and risk-management practices to make sure institutions are complying with consumer-protection laws. Both federal and state regulators have recently issued guidance aimed at mitigating the subprime-mortgage crisis, in which foreclosures have jumped and lenders have gone bust.

  183. 3b says:

    #183 MM Numb numb wake up, thats my whole point, the decline is just really getting under way now. The decline will be only single digits? Says who?

    Were you not the one who said good luck getting a colonial in Bergen for 450K, well here is one for 499K, that could very easily go for 450K, so ther you go.

    Further more if it goes for 450K and you were the poor soul who purchased the one down the block and across the street that sold for 600k in 2005, than you are down 25%, which of course is far greater than single digits.

  184. Everything's 'boken says:

    re 182
    500k -> 450k = -10% = not single digit decline.

  185. James Bednar says:

    From Bloomberg:

    Bernanke Chips Away at Greenspan’s Free-Market Legacy

    Federal Reserve Chairman Ben S. Bernanke is mobilizing to placate Democrats in Congress who claim he isn’t doing enough to crack down on predatory lending.

    Bernanke begins two days of testimony to Congress tomorrow, and he is already anticipating the questions. The Fed and state regulators today announced a pilot program to collaborate on supervision and enforcement of non-bank supbrime lenders. The central bank, which House Financial Services Committee Chairman Barney Frank has threatened to strip of some regulatory powers, also plans an overhaul of lenders’ disclosure standards.

    The steps that Bernanke, 53, is being pushed into amount to rolling back at least part of the free-market legacy bequeathed to him by predecessor Alan Greenspan. During Greenspan’s 18-year reign, the central bank was loath to meddle with banks’ business practices, relying on guidelines instead of enforceable public rules.

    “They did not use the supervisory authority they had sufficiently,” said Alan Blinder, who was vice chairman under Greenspan and taught with the current Fed chief at Princeton University. Bernanke needs to tell lawmakers that policy makers “learned something from it and they will do better in the future,” said Blinder, who called Greenspan “the great anti- regulator.”

  186. 3b says:

    #175 I am not talking about the oil patch, I am talking about the north east NYC metro are including NNJ specifically. Where the real estate boom ended in 87, 88, and prices dropped dramatically in the early 90’s and then stayed flat for years.

    I and many others rememebr it well. If I misunderstodd your post, I do apologize.

  187. Clotpoll says:

    pretorius (123)-

    That is patently false. The RTC ended up operating- and disposing of properties for pennies on the dollar- all over the US. The tab come to over 120 billion, and I had a ringside seat at the whole shindig…in a state where oil has never been struck.

  188. Mike NJ says:

    Make Money,

    It is called an option straddle. You can make money either way.

    Now if the stock sits for a while you can kiss that cash goodbye!

  189. lostinny says:

    If you have the option to have your investments in a guaranteed fixed plan, wouldn’t you be gaining interest no matter what happened with trading? I mean the kind that is federally guaranteed at an x% return.

  190. Clotpoll says:

    make (156)-

    reverse split= beginning of death spiral

  191. ac says:

    There is basically no free lunch. You either make a directional bet or long/short vols. You always have to take a view. As Mike NJ has pointed out, you can lose a decent chunk of change maintaining an option straddle.

  192. ac says:

    Also, a diversified portfolio does not mean that yoy make money no matter what happens.

  193. gary says:

    Clotpoll 181,

    Is that just in the region where you do most of your business or does that go for North and Central Jersey, also?

  194. Clotpoll says:

    BC (184)-

    Papapapapap…panic.

  195. syncmaster says:

    Since when is Somerset county not “central jersey”?

  196. Looking on the Water says:

    Re: Whether or not to buy now …

    yes, nobody knows what will happen. But JB has linked up a chart tracking real estate for the last 100 years. After every run-up, there has been a decline.

    The most recent run-up was the GREATEST IN THE HISTORY OF US REAL ESTATE. It’s safe to say prices will come back to earth. Probably sooner than later.

    Patience is the answer. In the meantime, I’m going to target homes i want and watch as the price drops each month.

  197. 3b says:

    #195 Like I said treading water at times, I am comfortable with that.

  198. Looking on the Water says:

    There have been numerous posts on this very board of MLS listings that were already lowered by 20, 30 and 40%.

    It’s much too easy to argue that those listings were largely overpriced to begin with.

    jb

    JB – Overpriced to begin with, or priced at what their neighbor sold for in 2005? Ahhh, the eternal question. I totally get your point, just playing devil’s advocate…

  199. Clotpoll says:

    (196)-

    Everywhere in NJ, except South Jersey (don’t know it, but it seems to be a decent market) and- maybe- the Gold Coast (but they will fall in the end, too).

  200. Clotpoll says:

    Any house that fails to sell is overpriced.

  201. gary says:

    202,

    Thanks.

  202. john says:

    Actually, coop boards were just as strict back them. Problem then like today is the sponsor is exempt from the rules and does not need board approval. He sold it to evey tom dick and harry and could care less. Then Coop boards still allow refinancing and cash outs. You might have cashed out at the peak. Also coops still alow variable rate mortgages. Plus coops who are tough on subletting when there are no buyers got squeezed when the owner bought a new house when he had kids and could not sublet or sell and could only protect one house in bankrupty. Lets see protect his 5 bedroom colonial or his POS studio he bought at the peak that is now underwater. My building got nailed everywhich way. When the sponsor was going bankrupt do you think he was paying maint on the empty units?

  203. chicagofinance says:

    make money: can you provide an explanation of a “naked straddle” option position?

  204. 2010 Buyer says:

    No one on the street wants to know what these assets are really worth.
    ———–

    BEAR STEARNS Investors Await Tally on Losses,” said the Wall Street Journal two weeks ago. The two-week deadline, set by America’s fifth-largest securities firm itself in an email to investors, came and went yesterday.

    So far, no news from Bear Stearns, nor from the WSJ. No news either from the co-chief executive officer and director of the two funds in question. Which is odd. For Ralph Cioffi did so love to talk!

    http://news.goldseek.com/GoldSeek/1184691832.php

  205. BC Bob says:

    “Papapapapap…panic.”

    Clot,

    What %, off 2005, are they asking?

  206. make money says:

    205 John,

    What is the sponsor? And what’s his role. I don’t get it.

  207. James Bednar says:

    2010,

    Conference call at 4pm.

    jb

  208. make money says:

    206 Chicago,

    I never heard of it. And I took an Options course back in college. I know of Puts and calls, futures etc but never heard of straddle.

    I’m a little confused as to how this works also. I guess you don’t bet that the stock will go up or down you bet that it won’t stay flat.

  209. skep-tic says:

    all of this talk of capitulation remains hypothetical. the sales that are closing currently are not that far off the peak (within 10%).

    the dropoff in transactions suggests that sellers are not meeting the market, but we are not seeing actually comps plummet yet.

    I agree with the suggestion made by MM and others that this will not happen until there is an outright recession. Most sellers simply do not have to sell and seem strangely contain to let their properties sit and sit and sit at ridiculous prices.

  210. bairen says:

    #211

    I think a naked straddle is when you write a put and a call on a stock you do not own.

  211. skep-tic says:

    that is, sellers are content to let their properties sit. typing too fast

  212. James Bednar says:

    the sales that are closing currently are not that far off the peak (within 10%).

    How are you measuring this?

    jb

  213. bairen says:

    #212

    The key is most sellers don’t need to sell. Just takes a few sellers that have to sell due to transfer, job loss, arms reset, divorce, to set the new comps. Then another group has to sell and the comps drop once more, followed by a rush to the exits. But by then it will be like threading a needle with a fire hose. Too late for for the homeowner/bagholder.

  214. Read my Lips:Fall 2007 Spring 2008 Nightmare says:

    The Death spiral begins…first to panic wins.

    hehehehehehe

  215. NNJJeFF says:

    JB,

    condos in towns that I am tracking is 20% off from peak prices. I have data to back it up if you are interested I can send you through your email, maybe you can post it for illustrative purpose

  216. ADA says:

    Bairen
    I agree with skep. The number of seller who absolutely have to sell is a relatively small portion of the total market. However, if that is not the case then have you considered that the reverse may also be true:

    Just takes a few sellers that to sell to the often described bag-holders to set new comps.


    “Just takes a few sellers that have to sell due to transfer, job loss, arms reset, divorce, to set the new comps.”

  217. SG says:

    As Clot says Sept 1 is key, the inventory should have dropped drastically. But GSMLS has steadily kept count as 35K+. If you want to move before Sept 1, you should have atleast put in offer by now, as it takes at least 2 months to close.

  218. James Bednar says:

    What about folks that purchased years ago?

    I’m sure I could point out a few grandma’s that purchased in 1948 and know absolutely nothing about the boom that took place.

    They could underprice the market significantly and still feel they are walking away with a small fortune.

    You are telling me these folks are going to hold out? Put their retirement on hold? You don’t think they’ll pick up and sell because they are ticked off about NJ property taxes?

    My hunch is that the group that can’t or won’t sell is significantly smaller than the group that hasn’t followed pricing or doesn’t care about getting peak pricing.

    jb

  219. make money says:

    #212,

    Market prices are not set by a 5% of sellers who have to sell. You need average historical sales volume to set a market price.

    There is no downward pressure on prices besides marginal credit crunch and arm resets and the subprime and speculators disapearance, and which are already being priced in.

    Market is currently in a stagnation period with low sales and wait and see mentality.

    Wait and see for the next 3-5yrs.

    Forclosures are up but still marginal and they are not being sold for pennies either.

    Owners are content to wait. This will cause small price declines over this pause period of single digits and when you factor 5-7yrs of single digits declines+inflation will make up a sizable real dollars correction.

    A recesion or sizable interest rate hikes in the next 3-5yrs will cause that panic death spiral that everyone here is hoping for, otherwise it will be more like chinese water torture.

    my two cents

  220. make money says:

    “What about folks that purchased years ago?”

    JB,

    On average people move every 7yrs. If you look at the sales volume the last 5yrs you’ll se that majority of the people moved within the last 7yrs.

    That’s the market.

  221. Looking on the Water says:

    Skeptic –
    “Most sellers simply do not have to sell …”

    Where are you getting this from? Have you polled sellers? I don’t have evidence to the contrary, but I’m sure you’ve read the dozens of stories JB has posted about where in NJ the most risky loans were taken out over the last few years.

    If i had to guess, and it’s based on nothing but talking to a few realtors at a few houses we were interested in … but it’s 55/45 WANT to sell (cash out) vs. NEED to sell.

  222. dreamtheaterr says:

    I have been observing townhome prices adjacent to where I now rent when I moved to NJ from Queens in end 2005. Asking prices are down 15-17% in the past 18 months. There are around 15-18 units chasing each other down.

    This drawdown isn’t in the single digits anymore. It’s picking up steam and coming to a neighbourhood near you.

  223. James Bednar says:

    On average people move every 7yrs. If you look at the sales volume the last 5yrs you’ll se that majority of the people moved within the last 7yrs.

    What percentage of homeowners have lived in the same residence for 5 years? 10? 15? 20?

    jb

  224. Clotpoll says:

    BC (208)-

    Now asking close to 20% off ’05 prices (I pretty much won’t take a listing where the seller expects more)…still not enough!

  225. syncmaster says:

    dream 225-

    Yup. In my neck of the woods 3 br townhomes used to ask 400-415 in 2005. Today the brand new ones are closing for 350-360 and the 15-year old models have asking prices down at 320-330k. Things have taken quite a tumble, especially with older townhomes. The new constructions are down too, but proportionately less.

  226. twice shy says:

    skep [112] is as good a description of the current market as any I’ve seen. For the most part sellers are not meeting the market and many listings are sitting for a long time.

    This has been the dynamic for the past year, from my observations. I do however think it may finally shift this fall, and that it won’t necessarily take a recession. High inventory along with declining sales may be enough to force those who want to unload to come to the table.

    Everyone involved with the industry–from RE agents, to speculators, to contractors, to building supply stores and builders–has got to be feeling the pressure.

  227. chicagofinance says:

    make money Says:
    July 17th, 2007 at 3:40 pm
    #212,

    Market prices are not set by a 5% of sellers who have to sell.

    albani: huh?

  228. chicagofinance says:

    make money Says:
    July 17th, 2007 at 3:40 pm
    #212,

    There is no downward pressure on prices besides marginal credit crunch and arm resets and the subprime and speculators disapearance, and which are already being priced in.

    mm: errr…that sounds like a shload of stuff to me

  229. Read my Lips:Fall 2007 Spring 2008 Nightmare says:

    PRICES ARE TANKING….ALOT OF DOUBLE TALK ON THIS BOARD.

    I SENSE A FEW FRISKIE EATERS ARE POSTING.

    PRICES ARE WAY TO HIGH. BOUGH LIKE MAD IN EARLY 1990’S AND GOT GREAT DEALS. NO SUCH THING YET BUT PRICES ARE DROPPING TO OK LEVELS. NOT CHEAP.

    GOOD LUCK AND BLEED’EM DRY!

    BOOOOOOOOOOOOOOOYAAAAAAAAAAA

    Bob

  230. BC Bob says:

    “Now asking close to 20% off ‘05 prices”

    Clot,

    I guess those that repeatedly state that at worst we will have flat prices or small price declines are delusional or obstinate, probably both.

  231. 3b says:

    #221 JB AGreed, this is soemthing the uber bulls cannot or refuse to understand.

    In my own small area ther oare over 50 SFH’s for sale, plus anoterh 15 condos (6 new construction)

    Am I supposed to believe that the overwhelming majority of these people do not have to sell, and are just testing the market?

    I am sure some will give up and remove their homes and hunker down and wait and or add on.

    Quite a few othere will sell once they have accepted that things have changed.

  232. Read my Lips:Fall 2007 Spring 2008 Nightmare says:

    TSUNAMI WAVE 2 COMING TO A HOOD NEAR YOU!

    PRICES ARE TANKING AND SELLERS ARE IN DESPAIR FROM THE FRONT LINES.

    HEHEHEHEHE

    BLEED’EM DRY!

  233. Clotpoll says:

    make (222)-

    Put down that crack pipe! I cannot believe you actually wrote this:

    “There is no downward pressure on prices besides marginal credit crunch and arm resets and the subprime and speculators disapearance, and which are already being priced in.”

    In other words, there’s no downward pressure on the market…other than the 10-ton rock that’s laid across the top of it.

    How many more factors need to be present before you would become concerned?

  234. make money says:

    There is no downward pressure on prices besides marginal credit crunch and arm resets and the subprime and speculators disapearance, and which are already being priced in.

    mm: errr…that sounds like a shload of stuff to me

    ChiFi,

    They are already being priced in.

    silly

  235. 3b says:

    #230 No! They are set by the 95% of people who do nto haev to sell?

    There you go up is down, and down is up, and we are delusional? Talk about a tortured arguement.

  236. make money says:

    Clot,

    Marginal factors, marginal pressure on prices will result in moderately low decline.

    .

  237. make money says:

    TSUNAMI WAVE 2 COMING TO A HOOD NEAR YOU!

    I must have missed Tsunamy wave number one!!!

  238. Donald says:

    “Now asking close to 20% off ‘05 prices (I pretty much won’t take a listing where the seller expects more)…still not enough!”

    Maybe that is why you only have 5 listings while other agents have dozens.

  239. make money says:

    All you historians, have we ever had a major RE correction without a recession as one of the factors?

    My point exactly.

  240. James Bednar says:

    I SENSE A FEW FRISKIE EATERS ARE POSTING.

    Classic..

    I hate to bring Otteau up again, but he has routinely mentioned 10% price declines. He has also mentioned that the reported statistics are not capturing the declines being seen.

    As an insider, I’m sure he’s taken alot of flac for making statements like this. I don’t believe there would be any reason for him to fabricate this kind of information, as he has nothing to gain from it.

    jb

  241. john says:

    The owner of a large rental property wants to go coop in NYC, since NYC is rent stablized he can’t kick them out. So he offers a deal for insiders to buy, once they buy they can flip at full market price or enjoy their instant equity and tax deduction. Meanwhile if an owner is going to go COOP in the year or so up to his announced conversion he stops renting units as they go vacant. So when the building goes coop he sells at the inside price coops to all the rent stablized tennants who want in and he sells all his vacant units. He keeps the rent stablized units of the owners who did not want to purchase in his name and as they slowly move out he either re-rents them in an unrent-stablized lease if market is weak or sells them if market is hot. Since the sponsor wrote the original prospectus he makes his units exempt from board approval. So some coops had landlords who did not sell units from 1992 to 2004 and now that re is red hot they have been unloading and bypassing the board so who knows the subprime time bond. Key words in a sponsor unit in NY times is the words “no board approval required”.

    In fact a good lawyer will look to see on a coop you are buying that there are no sponsor units left. My buildings problems were a result of a sponsor with 43 units going bankrupt and he stop making monthly maint. payments on all the units. A good coop will have no sponsor units and will not allow tenants to own more than one unit. That way in a 100 unit building all 100 would have to go bankrupt to get a meltdown. Remember in a coop when your neighbor goes bankrupt and stops paying maint the neigbhors have to pick up the tab. Also don’t think this is a coop problem, there was an infamous Long Beach Long Island Condo where the owner sold only 20 of the 100 units in the high rise and went under. The condo owners could not get kicked out but when the owner stopped making the CC on 80% of the building and all maint, heat, lighting in the common areas died the owners were basically living in an abandoned building.

    make money Says:
    July 17th, 2007 at 3:08 pm
    205 John,

    What is the sponsor? And what’s his role. I don’t get it.

  242. Clotpoll says:

    make (237)-

    The “pricing in” has just begun. If these factors- plus the ones you didn’t mention- were fully-discounted, sales volume would be rising.

    I’m having a hard time believing you are a rich person.

  243. 3b says:

    #236 Clot Heck what do you know, you only do it for a living every day? But yep even you are wrong!

    Amazing you are in the business, you see it better than any of us as it unfolds, and you are still wrong?

    Are you on crack ?

  244. Donald says:

    ““Most sellers simply do not have to sell …”

    Where are you getting this from? Have you polled sellers?”

    I have. I just had a nice 90 minute chat with a seller last night. They want to move abroad, but are ready to sit on the house indefinitely.

  245. syncmaster says:

    make money 242,

    How many recessions have been preceded by bull markets and inverted yield curves?

    Just because we’re not in recession at this moment doesn’t mean one can’t be around the corner.

  246. Clotpoll says:

    make (239)-

    Would you call 2005/06 ABX “marginal” pressure?

  247. par4156 says:

    Did people always move every 7 years, or is that a feature of the recent housing market…and perhaps driven by easy access to credit???

  248. dreamtheaterr says:

    Make Mummy,

    “They are already being priced in.”

    Pick one:

    1. It is already priced in

    2. It is being priced in

    3. It is to be priced in

    You can’t have it both ways.

  249. 3b says:

    #242 MM: Have we ever had a period where people could buy houses with no money down, with no income verification, etc. etc.

    Recession first and the real estate decline, or the real eststae decline, and then the recession, which will be made worse by the real estate decline.

    There is no question there will be a recession, the question is severe, shallow? Time will tell, but it is coming.

    But we do already have a recession in the real estate market. Clot can tell you, but of course you know better.

  250. BC Bob says:

    “They are already being priced in.”

    Make [237],

    LMAO. The existing seller pricing in underlying factors? Just hilarious. They would not know what factors are driving this market if they appeared on their front door step. In other words, existing sellers are anticipatory not reactionary. OK, Joe 6 Pack has priced in the next shoe to drop. Please stop the nonsense.

    Anticipatory sellers? Those that sold in 2005/2006 and stashed it. The other 90-95%, caught looking behind, market wisked right by them.

  251. bairen says:

    I received an email from a real estate agent showing its better to buy now, then buy after a 5% drop if interest rates move up half a point (monthly nut crowd strikes again). Other agents have told me about 10% + price drops in my area. When agents are talking about drops, not “stabilization” or “softening” look out below.

  252. Clotpoll says:

    BC (253)-

    These are the best arguments that the uber-bulls can produce now. They’re all just talking out their a**es (probably another sign of impending free-fall, in and of itself). Just inane gibberish. At least you can almost choke down the NAR stuff you hear on those 3-second radio spots…until you stop and think for a minute.

  253. skep-tic says:

    I am looking at the official realtor numbers for price. They are showing minor single digit drops thus far. Now you can say that the numbers aren’t accurate for whatever reason. There is a lag, or they don’t take into account incentives or cash back. Fine. But even taking these into account we are not in 20% off territory yet. You can look at closed sales and see that desireable properties are still moving at high prices.

    The fact that inventory remains high, transactions are low and that actually housing is getting less affordable due to higher interest rates and stricter lending standards leads me to believe that there is still a long way to go down.

    But the point I am making is that sellers are not for the most part falling over themselves to unload their houses in this area. Maybe they are just delusional and dumb or maybe they just really do not need to sell. Hard to tell which.

  254. Clotpoll says:

    skep (257)-

    20% off what? Asking? When I say 20% off…it’s off 2005 selling prices.

    Asking price does not matter. The only thing that matters are sales.

    That being said, every single listing I have is offered at, or close to, 20% off 2005 selling prices. And, not all my listings are sold yet.

  255. make money says:

    #255

    I love this method. Can someone explain why we need Clot now and his 6% Fee. 5K is 1%.

  256. john says:

    People on average always move every seven years, in fact 30 year mortgages are tied to the ten year rate not the 30 year rate as most people would have paid off their 30 year mortgage by year ten when they have sold and moved on.

    My brother in law recently bought a POS teeny weenie ranch and no-one from 35 to 60 lives on his block, there are a bunch of old times who bought as newlyweds in the 1950 to 1970s and lived their forever and all the young couples who bought in the 1980s and 1990s had the starter home mentality and move on. The days of ploping down in a starter home and living in it till you die are long gone.

  257. BC Bob says:

    “Marginal Pressure”

    Make,

    -Everquest’s IPO
    -United Capital,Redemptions
    -High Grade Structured Credit Strategies Enhanced Leverage Fund
    -H-B’s puking out billions in options
    -H-B’s stock down 40-75% from peak
    -Credit default swaps spreads widening

    Does Joe 6 Pack have this priced into his present selling model?

  258. James Bednar says:

    Almost across the board declines in the ABX today, only uptick being the 06-2 AAA. The other AAA indicies, 06-1 and 07-1, saw declines.

    jb

  259. dreamtheaterr says:

    Skep,

    Who capitulates first? Does the seller who, over time, realize that his house is a cash-burning machine sell? Or does the renter get fed up renting and bite the bullet? My guess is that the one who is haemorrhaging cash will cave in first.

  260. Clotpoll says:

    make (259)-

    Yep, tossing your home onto Ebay with a 5K bird-dogging fee is going to bring you top dollar. Wow; why didn’t I think of that?

    Please, everyone: I have now seen the light. Do not seek out agents to help you sell your homes. Just put them on Ebay with a finder’s fee. That’s the ticket!

  261. Clotpoll says:

    make (259)-

    Hey, Einstein…1% of WHAT?

  262. make money says:

    BC,

    I see your point.

    The Credit crunch itself is marginal. You can still get a 100% financing Arm in the 5%’s.

    Stated income loans are still outthere by the bundle. IO loans are out there. Not to mention jumbo loans where you don’t even have to make the pmnt on mortgage only part of the loan.

    What is there to factor? Fixed rates went up 50 points and Arms went up 100. that is being factored as we speak.

  263. Clotpoll says:

    dream (263)-

    The potential buyer can remain solvent longer than the hopeful seller can remain oblivious.

  264. NJGal says:

    My question is at what point do the sellers who don’t “have” to sell stop putting their lives on hold? If renters are supposedly putting their lives on hold by not buying, what about all these people stuck in houses they don’t want to be in? Aren’t they also putting their lives on hold, whether they are want a bigger or smaller house, to retire, to leave the state or the country, etc?

    I think they’re in a worse position than renters, being tied to something that will prevent them from doing what they want with their lives.

  265. Clotpoll says:

    Gal (268)-

    Precisely.

  266. skep-tic says:

    dreamtheater–

    I agree that sellers will capitulate, I just think that some people are breaking out the champagne a little early. Housing is still wildly expensive.

    Clot-

    This is interesting info, thanks. So are saying that there is a massive lag in the official numbers? Will 3Q show big drops?

  267. pretorius says:

    Clotpoll #190,

    I wrote:
    “The current housing downturn is a national event. The 1980s downturn was limited to areas exposed to the oil sector, particularly Texas, Louisiana, Oklahoma, and Alaska.”

    You responded:
    “That is patently false. The RTC ended up operating- and disposing of properties for pennies on the dollar- all over the US. The tab come to over 120 billion, and I had a ringside seat at the whole shindig…in a state where oil has never been struck.”

    I added post 175 which contained data from an authoritative source that supported my case.

    You provided zero evidence to back up your claim that my position was false, with the exception of citing the RTC which is hilarious because the RTC happened in the 1990s, not the 1980s.

  268. James Bednar says:

    Some 1980’s data from NJMLS.

    Bergen County

    Average Sold Price
    1988 – $262,070
    1989 – $254,622
    1990 – $229,132

    Median Sold Price
    1988 – $220,000
    1989 – $209,000
    1990 – $195,000

    jb

  269. make money says:

    pret,

    Clot is a clown. better yet he’s a clown who thinks he’s a financial professional.

  270. make money says:

    NJGal Says:
    July 17th, 2007 at 4:32 pm
    My question is at what point do the sellers who don’t “have” to sell stop putting their lives on hold? If renters are supposedly putting their lives on hold by not buying, what about all these people stuck in houses they don’t want to be in? Aren’t they also putting their lives on hold, whether they are want a bigger or smaller house, to retire, to leave the state or the country, etc?

    You should talk!!!!!!!!

  271. pretorius says:

    JB #273, thanks for providing relevant data. I think it is important to note that the national economy was significantly weaker during that period than it is today.

  272. syncmaster says:

    make 275,

    that response sounds like it belongs on a yahoo message board.

  273. hoodafa says:

    Reuters: Subprime woes spread to loans; stocks next:James Saft

    By James Saft

    LONDON (Reuters) – It may not be dramatic, it almost certainly will not be quick, and it definitely will not be pretty. A fundamental factor supporting the astonishing recent performance of global markets — the super easy availability of credit — is in the process of reversing.

    The credit pullback has spread from the mortgage market for subprime, or less creditworthy, borrowers to the most aggressive sectors of corporate and buyout lending — in part because the hedge funds and complex financing vehicles that extend credit to both have taken a hit in housing finance.

    More at: http://www.reuters.com/article/reutersEdge/idUSL1778758520070717?pageNumber=1&src=071707_1245_INVESTING_reuters_columns

  274. make money says:

    The free flow and abundance of information that internet has created has eliminated the middleman/broker from the picture.

    Travel agent…bye bye
    Insurance broker…bye bye
    Stockbroker out of HS…Bye Bye

    RE agent is next…it’s just a matter of time.

    Used Car salesman are respected more than the current RE agents.

  275. make money says:

    sync,

    she just bought a house. that says it all.

  276. syncmaster says:

    There are still tons of insurance brokers out there. The suitcase salesmen are gone; brokers these days provide more ‘value add’ services to supplement modern online self-service capabilities.

  277. syncmaster says:

    I was referring to your response to her.

  278. NJGal says:

    “You should talk!!!!!!!!”

    What on earth are you talking about? I own my house, loser.

  279. NJGal says:

    So what does my having bought a house have anything to do with it? Let me tell you, if I had to sell, I wouldn’t be so dumb as to hold onto something just in hopes of some mythical “price increase” that I hoped for in the future?

    I just don’t see you point.

  280. john says:

    RE: Used Car salesman are respected more than the current RE agents.

    You are right, they at least have skin in the game, they have to first shell out their own cash to buy car, then find a buyer and if the damm thing breaks while they have it or shortly afterwards they are on the hook. The RE sticks the seller with a lot of financial risk and then still takes a profit. Mind you Used Car salesmen are still scum.

  281. Pooch123 says:

    Can we please calm down and just ignore make money’s inane comments?

  282. NJGal says:

    Yes, Pooch, you are right. Uncalled for childishness on my part – I shall ignore.

  283. Kurt says:

    MM: “Travel agent…bye bye
    Insurance broker…bye bye
    Stockbroker out of HS…Bye Bye
    RE agent is next…it’s just a matter of time”

    Amen. Taped and watched Bought and Sold last night, reminded me of my agent following me around as I tour homes:
    “and look at the exposed brick!”
    “here is a closet!”
    “this door leads goes downstairs!”

    Next house tour I will ask her to wait on the porch, I’ll call her if I need her. Then again, our contract expires Sept 1st, so the next house I tour will likely be just me….

  284. BC Bob says:

    “The RE sticks the seller with a lot of financial risk and then still takes a profit.”
    [285]

    Hedge funds. Profits, 2% and 20-40% of profits. Losses? You take the losses, including the 2% management fee.

  285. make money says:

    NJ gal,

    You are saying that owners will capitulate first, and you just bought a house.

    You were a renter who got tired of renting and decided to buy in this inflated market.

    There is nothing wrong with buying, but don’t go around parading that renters will hold off, and that sellers have to sell when you yourself capitulated nad caved in.

    I agree name calling is childish but so is hypocricy.

  286. make money says:

    Kurt,

    This is already happening. Try streeteasy.com and here you can actually see all the houses that sold and for sale and make an informed decision of your own.

    It will take some time but a fool and their entitled six% will be separated.

  287. Clotpoll says:

    skep (270)-

    The lag may go until Q4. Remember, there will still be these overhangs:

    1. Some frustrated sellers will exit the market.

    2. Many capitulating sellers will re-list at lower prices and eventually sell. You’ll have to dig up the history on those properties to see the original asking prices.

  288. scribe says:

    Make, you said, re that eBay ad:

    # make money Says:
    July 17th, 2007 at 4:24 pm

    #255

    I love this method. Can someone explain why we need Clot now and his 6% Fee. 5K is 1%.

    Scroll down that ad, towards the bottom:

    “The owner / seller is a licensed Realtor. The home is the realtors primary residence.”

    And what he/she is offering is $5,000 to the person who can bring in a qualified buyer.

    He/she is *not* selling the house itself on eBay.

  289. NJGal says:

    “You are saying that owners will capitulate first, and you just bought a house.

    You were a renter who got tired of renting and decided to buy in this inflated market.

    There is nothing wrong with buying, but don’t go around parading that renters will hold off, and that sellers have to sell when you yourself capitulated nad caved in.

    I agree name calling is childish but so is hypocricy.”

    Actually, you’re wrong. You haven’t been around long enough to know that I have never been to the extreme in my bubble beliefs – I have always expressed my thought that a home was a home, and that even in this market there were times that buying could be right for certain people. I have been looking for a place for years, even when the market was at its height.

    So I didn’t actually “cave” as you like to say, because I never stated that I would “hold out” forever. I’m in a different boat then many people in that I was never priced out of the market. I just needed something right for me, that was a good deal at the time, which I got (and within the traditional 28% of gross income parameter).

    That doesn’t mean, however, that I don’t believe it’s much easier for someone renting not to buy a place than it is for someone selling to decide to hold on and not sell. Sellers are in a much worse position – even if they bought a long time ago, if they really want to sell and can’t, it will be much tougher for them to move onto a new stage in their life. Renters clearly have more freedom and only someone in total denial would argue that.

  290. Clotpoll says:

    pretorius (271)-

    I stand by my original statement. BTW, the RTC was chartered in 1989…and operated until 1995, cleaning up the mess wrought by the S & L industry:

    http://en.wikipedia.org/wiki/Resolution_Trust_Corporation

    I guess I must’ve been hallucinating that I attended all those auctions of vacant office buildings. Please pardon my temporary bout of insanity.

    Yutz.

  291. Clotpoll says:

    make (274, 279)-

    Looks like your uber-bull arguments have run out a little early today.

    When you start taking shots at RE agents, that’s usually the sign there’s no more bullets in your gun.

    BTW, I agree with you (and am laughing all the way to the bank).

    Any insult you hurl my way is the highest compliment I can receive.

  292. pretorius says:

    Did the RTC sell homes?

  293. scribe says:

    That’s a realtor who can’t find a buyer who’s willing to pay a bounty to someone who can.

  294. Clotpoll says:

    (297)-

    Not one at a time. However, they did move townhome/condo complexes and other residential packages that were- mostly- built and financed based on voodoo projections and bogus appraisals.

  295. Clotpoll says:

    (300)-

    Actually, there were a handful of SF home dispositions done by RTC. Almost every kind of RE type was handled.

  296. The other doyle says:

    re #207

    Looks like 9 cents on the dollar.

    Ouch.

  297. 2010 Buyer says:

    A story I heard from an old timer about what was happening during the RTC days.

    He lived in FL and had a mortgage on the house for a little over 100k. He was working at a bank and making his payments. He found out that the S&L that held his mortgage was taken over by the RTC. Long story short….he bid and won the purchase of the mortgage (on his own house) from the auction for 70 cents on dollar. What a lucky B!!!

    Doubt this will happen today but I love hearing stories like that. Also goes to show you that even in a down market…there’s always smart investments to be had.

  298. BC Bob says:

    [301],

    Where did you get that #? I certainly believe it. Is this published?

  299. 2010 Buyer says:

    The assets in Bear’s more levered fund, the High-Grade Structured Credit Strategies Enhanced Leverage Fund, are worth virtually nothing, according to people familiar with the matter. The assets in the other larger, less-levered fund are worth roughly 9% of the value since the end of April, these people said. The April valuations weren’t immediately available but in March, before their sharp losses, the enhanced leverage fund had $638 million in investor money, while the other fund had $925 million.

    http://money.cnn.com/news/newsfeeds/articles/djf500/200707171734DOWJONESDJONLINE000700_FORTUNE5.htm

  300. BC Bob says:

    2010,

    Thanks.

    Zero and 9%, since the end of April. Wow. Who was the bull talking about marginal pressure today?

  301. 2010 Buyer says:

    9% of the value? Is anyone else willing to admit they have assets that are underwater? I don’t think we have seen (or felt) the implications of this yet.

    And that’s a hedge fund that’s known or actually “admitted” to having problems.

  302. hoodafa says:

    Has this been posted already?

    Making McMansion Owners Pay

    As bloated homes and McMansions continue to sprout up across the country, Boulder, Colorado, may have come up with a lucrative approach to contain what detractors call the plague of Garage Mahals and Big-Hair Houses. At a July 10 meeting, where more than 70 citizens spoke, Boulder county commissioners preliminarily approved a system of development rights transfers that would extract mega-bucks from builders of mega-homes.

    More at: http://www.time.com/time/nation/article/0,8599,1643151,00.html?cnn=yes

  303. UnRealtor says:

    RE: Bear Stearns mortgage fund in post #304

    The “sources” cited in that article are laughable for “professional journalism”:

    * “according to people familiar with the matter”

    * “these people said”

    http://money.cnn.com/news/newsfeeds/articles/djf500/200707171734DOWJONESDJONLINE000700_FORTUNE5.htm

    Kate Kelly/The Wall Street Journal can hopefully do better than hearsay when reporting “news.”

  304. James Bednar says:

    From Reuters:

    Moody’s may cut Bear Stearns, IndyMac ABS

    Moody’s Investors Service on Tuesday said it may cut its ratings on some asset-backed securities sold by Bear Stearns Cos. and IndyMac Bancorp Inc. in 2006, citing higher-than-expected delinquencies in the loans backing the deals.

    The collateral backing the securities under review consists of primarily first lien, fixed and adjustable-rate and Alt-A mortgage loans, Moody’s said in a statement.

    Moody’s is reviewing 13 pieces of 8 deals sold from the Bear Stearns Alt-A Trust Series and Bear Stearns Asset Backed Securities I Trust Series, all of which are backed by loans issued in 2006.

  305. BC Bob says:

    “Chrysler increased the interest rates on $12 billion of loans it is seeking to fund a buyout by Cerberus Capital Management LP after investors balked at the money-losing carmaker’s original terms, lenders said.”

    “Chrysler’s struggle to find lenders reflects a sudden slump in demand from loan investors, who are pushing back against a record amount of debt being sought by lower-rated borrowers. At least 16 companies have been forced to rework or cancel loan or bond offerings. Auburn Hills, Michigan-based Chrysler, being sold by DaimlerChrysler AG, would pay an extra $70 million a year in interest under the new terms.”

    ” The failure of banks to find financing for buyouts has left them on the hook for more than five takeovers in the past month, data compiled by Bloomberg show. Bear Stearns Cos. strategists estimate that about $290 billion of deals still need to get funded, including Chrysler, and Greenwood Village, Colorado-based credit-card processor First Data Corp. and TXU Corp. of Dallas.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aEhcVLBwB2cs&refer=home

  306. James Bednar says:

    Unreal,

    http://njrereport.com/files/bear.pdf

    Fund managers and account executives have been informing the Funds’ investors of the significat deterioration in performance for May and June. The preliminary estimates show there is effectively no value left for the investors in the Enhanced Leverage Fund and very little value left for the investors in the High-Grade fund as of June 30, 2007.

  307. Pooch123 says:

    Wow,

    That is insane.

    NASDAQ only declined 80% from peak to trough. I could not imagine losing over 90% of an investment, let alone effectively everything. Of course, this is highly leveraged and presumably everyone who lost could afford to lose, but wow. How is this not all over the news?

  308. James Bednar says:

    From Bloomberg:

    Bear Stearns Warns Hedge Fund Investors of Total Loss

    Bear Stearns Cos. told investors in one of its hedge funds that they won’t get any money back after creditors forced it to sell assets at depressed prices, according to a letter sent by the firm.

    While a second fund still contains “sufficient assets” to cover the $1.4 billion it owes the New York-based firm, there’s “very little value left for the investors,” Bear Stearns said in the two-page letter, a copy of which was obtained by Bloomberg News from a person involved in the matter. Bear Stearns bailed out that fund last month with $1.6 billion in emergency funding.

    The situation underscores the severity of the shakeout in collateralized debt obligations, securities that the funds used to bet on subprime mortgage loans. Bear Stearns said in the letter that the funds faced “unprecedented declines” in bonds that were rated AAA or AA, the two top investment grades.

    “That has implications for credit weakness in the next several days and weeks,” said Peter Plaut, an analyst at New York-based hedge fund Sanno Point Capital Management. “There’s going to be more risk aversion.”

  309. James Bednar says:

    Pooch,

    The scoop only hit the wires a little over an hour ago.

    jb

  310. BC Bob says:

    “The scoop only hit the wires a little over an hour ago.”

    S&P futures [Sep], down 9.80 in electronic trading.

  311. t c m says:

    #133 Richard

    “Would you please answer my question. What does having a spouse or kids have to do with buying an unreasonably priced home, or anything else for that matter?”

    “i won’t bother. it’s like trying to explain what being unemployed is like to someone that’s never been unemployed. as my dad used to say you have to fall down by yourself.”

    What the heck are you talking about? Because you have kids, you’ve become Dr. Spock? Families can be very stable without owning a house, and ofcourse, they can be very unstable if they own a house. In fact, I think it would be much more harmful for children to live in a home that was full of stress because parents are in over their heads – financial stress can ruin marriages and hurt families –

    I have kids, and I have owned and rented. I’ve also moved a few times. I was concerned about uprooting them, but, I felt it would be best to move. At first they balked and made me feel a little guilty, but they quickly got used to it (in fact now they say they are glad we moved). Kids can adapt – some would argue it makes them stronger to learn to adapt. Maybe it’s because the constant in their lives is our family, not our house.

  312. chicagofinance says:

    um…gulp…

    Jim: I have only been skimming most of the stuff you have been posting in this area. Once the initial news broke, I was trying to make sure that I focused on the pertinent and was trying to avoid all the detail. The latest is pretty bad stuff.

    Before everyone loses their lunch, just remember that this situation is not a death blow, but it damn sure is yet ANOTHER big red flag. The theme is still intact, but there is only so many times you can go to the well and expect to get bailed out.

    You should read the Cerberus/Chrysler piece in conjunction with this BS Hedge fund stuff. We are talking about different instruments, but ultimately the same conditions for fixed income capital markets. What you want to avoid is a shut-down….essentially no market available regardless of price offered. Similar to BC Bob’s everyone heading to the back door at the same time and realizing that it is too small or simply closed.

    In reality, Bear is more important for real estate, but the Cerberus story is more important for NYC real estate.

    If banks cannot syndicate debt for leveraged takeouts, you are building the base for an unraveling of deal flow. If the spigot is turned off pending deals and future deals, that hits bankers right in the W-2’s…..and you know what that means…..the plot thickens….the dramatic music rises in the background.

  313. chicagofinance says:

    jim: the wsj has a scanned copy of the letter

  314. chicagofinance says:

    what a laugh!

  315. chicagofinance says:

    jim: put that piece of crap letter as the front page of the site tomorrow

  316. James Bednar says:

    Posted the letter above, #311. I wanted to save a copy of that for myself, so I moved it to the site.

    jb

  317. Pat says:

    “…I could not imagine losing over 90% of an investment, let alone effectively everything…”

    Happened to me once. Just once.

    You just gotta flush the toilet and quit staring at the poop like it’s gonna do a jig.

  318. chicagofinance says:

    sorry…..anyway I liked the part about “…certianly uncharacteristic of BSAM’s overall strong record of performance…”…..ya’ think?

    This is how the fund returns worked
    INVEST SUM
    +1
    +1
    +1
    +1
    +1
    +1
    +1
    +1
    +1
    +1
    +1
    +1
    – EVERYTHING = 0

    classic i-bank

    remember…bankers get paid in cash, and they don’t give the money back

  319. UnRealtor says:

    JB #311, it’s pretty much a given the fund is hosed, but that wasn’t my point.

    My point was that the Wall Street Journal can do better than “these people” when citing sources.

  320. James Bednar says:

    BC,

    Watchin’ the dollar?

    jb

  321. Pat says:

    If you’ve been watching pending deals…count those trading under offer.

    Drying up was priced in days and days ago.

  322. chicagofinance says:

    Pat…always the case until closing…it is the low tech version of arb-ing

  323. UnRealtor says:

    JB #311, that letter from Bear is brutal.

  324. dreamtheaterr says:

    The MSM headlines will magnify the fund is wiped out, how can a ‘hedge fund’ lose 100%??!! Simply do the calculation how much one needs to be down on a 1:10 leverage for a blow up….. not that much.

    No black swans here, just stubbornness to not mark-to-market even though the sh1t was hitting the fan quite a bit earlier but the fund managers instead decided to stand upside down and observe.

    Chifi, wasn’t that letter an absolute joke?! Like they were writing it to some 3rd grade kids….geez.

  325. James Bednar says:

    That letter is rough, investors have got to be fuming tonite. I can’t imagine there won’t be a wave of lawsuits.

    jb

  326. Pat says:

    I don’t know. Maybe.

  327. James Bednar says:

    Dear Client of Bear, Stearns & Co. Inc.

    Dear Former Client of Bear, Stearns & Co. Inc. (Technically, as your investments are worthless, the relationship is no longer necessary)

    Let me take this opportunity to provide you with an update on the status …

    Let me thank you for the opportunity to screw you …

    A team at BSAM has been working diligently to calculate …

    The BSAM team has been too busy to spending their mangement fees so they’ve assigned interns to look busy while they play golf …

    As you know, in early June, the Funds were faced with investor redemtion requests …

    As you know, in early June, when you tried desparately to realize losses and withdraw the few dollars left in the fund …

    The Funds’ reported performance, in part, reflects the unprecedented declines in the valuations of a number of highly-rated (AA and AAA) securities.

    Sue the ratings agencies, I swear it wasn’t our fault.

    The preliminary estimates show there is effectively no value left for the investors …

    BSC is going to liquidate whatever remaining assets are left to cover our own losses. You scum can fight over whatever scraps might be left

    Bear Stearns has been working to achieve the best possible outcome for investors …

    We tried, but we had that golf game we mentioned above. We couldn’t find another sucker to buy this toxic waste, so we dumped it at a loss. It’s true there isn’t anything left for you, but hey! We tried!

    Throughout this time, we have appreciated the support of our loyal client base …

    Absolutely, do not attempt to withdraw any funds from BSAM, as we’re desperately attempting to prevent a run on a number of other funds

    Our highest priority is to continue to earn your trust and confidence each and every day …

    Suckers

  328. UnRealtor says:

    There’s a WSJ article on these Bear developments, apparently with free access:

    http://online.wsj.com/article/SB118470713201469384.html?mod=home_whats_news_us

  329. bruiser says:

    #14 – john
    “Even Better Baldwin Long Island is rated the best town on Long Island in that article. They claim it is racialy diverse, but in realty north of sunrise is a shooting gallary boarding roosvelt and freeport with frequent gun fire. South of Sunrise to a bit south of Merrick is a blue collar haven of capes and down by the water is a wealthy jewish enclave of million dollar homes on water. Those three groups don’t get along and the High School is a terror Zone and there are boarded up stores all over the place. The article sites all the nearby stores within a short distance but they are in RVC and O-side. None are in Baldwin. You even have to go to the town next door to see a doctor or dentist. ”

    Up until March 2006 I was a lifelong Baldwin resident…born & raised. All I have to say is “bwaaahahaahahaha!” Best town on Long Island? It isn’t exactly the shooting range you described, but you sure wouldn’t confuse Norf Baldwin with Dix Hills or Manhasset. Sadly, it used to be a great place to live but it got to the point where I felt uncomfortable walking to the bars around town late at night, and I spent my college nights in New Brunswick!

  330. Pat says:

    RE Private Equity: If you were standing at the deli, number 4, and the only things left were unwrapped Wunderbar bologna of unknown date or Land-o-Lakes Processed Cheese Food Product, and both were priced at $10 bucks a pound, would you buy?

  331. Clotpoll says:

    It must really PO the investors to know they could’ve taken their loot to Vegas and done better with it.

  332. bairen says:

    I have no pity for these clowns whose “investments” went to zero at Bear. Anyone who agees to give up 2% of their assets and 20% of the profits is in the hole from the start. you need to beat the market by 5% just to stay even after fees.

    Hedge funds are usually a great way to make money… if you own/work for them. Lousy way if you invest in them.

  333. dreamtheaterr says:

    It’ll be interesting to see what the dollar does in Japan in a few hours and into Europe session in the wee hours while the Bear investors are in their private bars puking after their late night drinking.

  334. bairen says:

    #336

    They might not have done better in Vegas, but would almost definitely had a better time!!

  335. BC Bob says:

    JB [325],

    Getting smacked all over. The Japanese commuters must have been busy this morning[Wed] on their blackberry’s. They may be in store for a bigger jolt at lunch time. It may be a very interesting night/morning.

  336. BC Bob says:

    Bairen [337],

    Bingo.

  337. Pat says:

    http://www.cnn.com/2007/TECH/07/16/wearable.power.prize/index.html

    That’s pretty cool.

    Anybody interested? I’m thinking it’s gonna be a circular gadget that can strap around a body part.. with a central slim vertically balanced core (like up the back).

    Note: this was off topic just for creativity.

  338. chicagofinance says:

    The dollar is selling off because foreign investors are assuming the Fed will cut. No way.

    Reech Emu…time for you to start spinning another story about being short the USD.

  339. BC Bob says:

    Chi,

    Also, broader economy issues. In addition to this, some may be moving [small right now] out of the carry.

  340. bairen says:

    #341 BC Bob

    If investors want great money managers with a long track record of success in both bull and bear markets I can think of 5 publicly traded companies I would rather own (well actually I do own) then put $1 into a hedge fund. I pay my $20 commission to buy, reinvest the dividends for free, and beat 90% of the hedge funds.

  341. Richard says:

    >>That being said, every single listing I have is offered at, or close to, 20% off 2005 selling prices. And, not all my listings are sold yet.

    tells you what towns you represent.

  342. James Bednar says:

    Pat,

    I wish all teams good luck with that.

    That battery has got to be capable of delivering 480 watt hours per kilogram (Whr/kg). Your everyday sealed lead acid (SLA) rechargeable battery does about 30 Whr/kg). To put it in perspective, it would take more than 70lbs of SLA battery to meet the power requirements, and they want it at 1/10th the weight.

    I really doubt a non-corporate team would even be able to come close, university team perhaps.

    jb

  343. Richard says:

    the market really sucks right now. a house went on the market a few weeks ago at the end of my block. under contract in 12 days at 3% above asking. yes that’s right above asking and it’s priced near 2005 prices. 20% off 2005 prices? lol give it a rest.

  344. Richard says:

    hey chikago aka the self annointed smartest man on earth, the fed ain’t cuttin interest rates anytime soon. i’ll venture to say you won’t see a raise or cut well into 2008.

  345. bairen says:

    #348

    Richard, who wouldn’t want to pay a premium to live close to you.

  346. pretorius says:

    Chicagofinance,

    Do you think the Dow will close above 14,000 tomorrow?

  347. scribe says:

    From the WSJ:

    Project Set to Monitor Lenders
    By DAMIAN PALETTA and BENTON IVES-HALPERIN
    July 18, 2007

    WASHINGTON — A day before Federal Reserve Chairman Ben Bernanke’s scheduled appearance before a House panel expected to criticize the Fed’s consumer-protection record, the central bank and other regulators unveiled a pilot program to more closely monitor certain subprime-mortgage lenders.
    [Ben Bernanke]

    Critics say such companies have slipped through the cracks of state and federal oversight, and helped fuel the rapid expansion of the subprime mortgage market during the recent housing boom. Subprime mortgages are home loans typically made to borrowers with troubled credit histories.

    As many of these adjustable-rate mortgages reset into higher rates, a record number of homeowners entered the foreclosure process, sparking a political backlash.

    The monitoring project is slated to begin in the fourth quarter and will focus on the mortgage practices of roughly a dozen “nondepository subsidiaries of bank and thrift holding companies, as well as mortgage brokers doing business with, or working for, these entities,” the regulators said yesterday. In addition, states “will conduct coordinated examinations of independent state-licensed subprime lenders and their associated mortgage brokers.”

    http://online.wsj.com/article/SB118470325673669236.html?mod=home_whats_news_us

  348. scribe says:

    From the WSJ:

    Is Slip in Homeowner Costs a Trend?
    By GREG IP
    July 18, 2007

    WASHINGTON — A big reason that inflation measures that exclude food and energy have decelerated lately is a slowdown in growth in the government’s measure of the cost of owning a home.

    Economists have been wondering if that is a durable trend or a temporary statistical quirk. The uncertainty is a reason that the Federal Reserve has said that a “sustained moderation” in inflation hasn’t been “convincingly demonstrated” and thus still sees inflation as its principal policy concern.
    [Renting]

    New research at the Bureau of Labor Statistics suggests the slowdown in homeownership costs reflects fundamental features of the housing market, and thus is likely to persist. That’s a potential source of comfort to the Fed, which has been briefed on the BLS’s findings. “It’s something that, behind closed doors, has got to be making them more confident that the improvement in core inflation can be sustained,” said David Greenlaw, economist at Morgan Stanley.

  349. scribe says:

    From the WSJ:

    Subprime Staple Is Phased Out
    Firms Stop Offering
    Popular Mortgage
    As Investors Retreat
    By JAMES R. HAGERTY
    July 18, 2007

    Some lenders are eliminating what until recently was the most popular type of home-mortgage loan for subprime borrowers, or borrowers with weak credit histories.

    Countrywide Financial Corp., Option One Mortgage Corp. and Merrill Lynch & Co.’s First Franklin Financial unit told employees and mortgage brokers this week that they would no longer offer so-called 2/28 subprime loans, ones that carry a relatively low fixed rate for the first two years and then jump to a much higher, floating rate, often more than 10%.

    A spokesman for Countrywide, the nation’s largest home-mortgage lender in terms of lending volume, said investors’ demand for such loans is “very, very limited.” A spokesman for Wells Fargo & Co., the No. 2 mortgage lender, said the company is “reassessing our product mix” and expects an announcement on 2/28 loans soon.

    http://online.wsj.com/article/SB118470952306469435.html?mod=home_whats_news_us

  350. scribe says:

    Whoops, forgot the link in the earlier post.

    Is Slip in Homeowner Costs a Trend?
    By GREG IP
    July 18, 2007

    http://online.wsj.com/article/SB118471869888569682.html?mod=home_whats_news_us

  351. chicagofinance says:

    Richard Says:
    July 17th, 2007 at 10:31 pm
    hey chikago aka the self annointed smartest man on earth

    Reech Emu: on a relative basis to you I agree, but in reality, the only concept I contend is that you are one of the stupider people posting on this blog

    honestly, you are more erratic than stupid, hence, I accost you with accusations of trolling

  352. bruiser says:

    Leave it to Reech to determine the strength of the entire market based upon the sale of one house on his block. I guess his kid could retire from teeball as a self-proclaimed Hall-of-Famer if his kid smacks a homerun on his first at-bat.

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