“The crisis”

From Reuters:

Enough subprime, let’s talk housing debacle:James Saft

Troubles are surfacing with loans made to better-off U.S. homebuyers in a worrying trend that indicates what’s been termed “The subprime crisis” may need to be rebadged “The housing crisis” and eventually maybe just “The crisis.”

While signs are tentative so far, credit rating downgrades and payment delinquencies are happening more frequently in what is called the “Alt-A” mortgage loan market, the slice just above subprime in creditworthiness.

The upshot is more pain for investors in mortgages, less appetite for other risky credits, such as leveraged buyouts, falling U.S. house prices, and the big one, a threat to consumption in the United States.

In the past week, both Moody’s and S&P have announced downgrades and reviews for downgrades for securities backed by Alternative-A loans, which are typically made to borrowers with less proof of their finances than prime borrowers or who have small credit problems in their past.

Delinquencies on Alt-A have been rising faster than for subprime, though at much lower levels. Between January and March, delinquencies for Alt-A rose by 17 percent, to 3.05 percent of loans, while subprime deliquencies rose by about 3.5 percent, to 14.83 percent, according to First American LoanPerformance data.

Fitch Ratings, too, has said it is “very concerned” about Alt-A loans, especially those with low early repayments which aren’t even sufficient to pay all of the interest.

The idea that problems in subprime were contained and would not spread to the general economy has been maintained by U.S. central bankers and policy makers. It has also been the market’s central assumption and underpinned the dizzying rise of stocks to new highs.

If Alt-A follows the path of subprime, there will be more forced sellers of U.S. houses, less available finance to buy that increased supply and an ever-growing number of homeowners who will realise, even if they are “prime” borrowers, that their largest single asset is worth less than they thought.

The U.S. economy has been the beneficiary of a self-reinforcing cycle in recent years, as easy credit and rising house prices combined to fuel economic and consumer confidence, making lenders and borrowers alike think the tide would continue to rise and float everyone over the risks they had taken on.

But signs of weakness in U.S. housing are weakening that trust, according to Robert Shiller, an economics professor at Yale, whose S&P/Case-Shiller Home Price index is showing a yearly loss of 2.1 percent.

“This is likely to eventually have a greater impact on the economy than we now see in subprime and Alt-A, for it can have an effect on general economic confidence,” said Shiller.

Subprime may have been the first area to roll over, but pain has, is and will continue to spread to the Alt-A and Prime sectors of the U.S. housing market,” RBS credit strategist Bob Janjuah said in a research note on Monday.

And while Alt-A losses are still modest in percentage terms, the overall numbers are huge, with estimates of Alt-A lending at $386 billion in 2006, as against $640 billion in subprime.

If, or perhaps when, this all translates into a retrenchment by the U.S. consumer, the damage could be very large.

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

375 Responses to “The crisis”

  1. James Bednar says:

    From the WSJ:

    Credit Markets
    Expedia Is Knocked for a Loop
    Online Travel Firm
    Amends Buyback
    After Funding Woes
    By SPENCER JAKAB
    July 24, 2007; Page C6

    The giant looming supply calendar and slowing demand from key buyers is taking a big toll on the leveraged loan market, where valuations have sunk to their lowest level in at least five years.

    Companies, the vast majority being leveraged buyout targets, will attempt to raise more than $200 billion in the months ahead — an unprecedented amount for the market to absorb.

    Yet, weakening demand from collateralized loan obligations — structured financial products backed by loans — has fueled ongoing concerns that investors will continue to demand higher premiums to finance some of the biggest leveraged buyouts ever.

    CLOs, which have been primary buyers of new loans for at least five years, are necessary to help the deals clear.

    Standard & Poor’s Leveraged Commentary & Data unit’s gauge of loan performance in the secondary market, where such debt is traded hit 97 cents on the dollar on Friday, held at that level yesterday. This is “as low as it’s been in five years,” said Steve Miller, managing director of LCD.

    “In 18 years being involved in the loan market, this is the worst technical, nondefault related correction, that we’ve seen,” he said.

  2. James Bednar says:

    From Bloomberg:

    Homebuilder Shares Fall on Deutsche Bank Report

    Shares of U.S. homebuilders tumbled, led by Hovnanian Enterprises Inc. and Meritage Homes Corp., after a Deutsche Bank report said new home demand deteriorated further.

    A Standard & Poor’s index of home construction companies fell 3.4 percent after Deutsche Bank analysts Nishu Sood, Lou Taylor and Rob Hansen wrote in a report released today that demand is falling as potential buyers have trouble obtaining mortgages.

    “Our recent conversations with builders around the country find that housing demand has continued to wilt in the summer heat, with conditions sequentially worsening in the past 4-6 weeks,” the analysts wrote.

    Builders are struggling in the second year of a slump in housing demand as inventories of unsold homes reach records. Lenders also are tightening credit standards because of the rising defaults among subprime mortgage borrowers with poor or limited credit histories.

    “The impact of mortgage market contraction appears to have accelerated in recent months, with builders reporting greater rates of sales loss due to the inability of buyers to qualify for mortgage products currently available,” the analysts wrote.

  3. James Bednar says:

    I’ll be heading off to Europe for a few weeks on Friday. As always, a bit of business and a bit of pleasure. My wife is coming along this time, it’ll be the first time she has ever been to Europe.

    I’ve yet to figure out the easiest way to blog. We’ll be traveling quite a bit, so I’m sure blogging is going to be spotty. I don’t have internet at my place in Krakow, but my friends and neighbors do. I’m sure I’ll be able to piggyback onto a wifi, or just run down to a cafe. Just a warning. I haven’t asked anyone to serve as “guest bloggers” yet, it might be a good idea.

    On another note, for the cyclists here, I was considering changing our flights so we could fly into Paris on Saturday, to catch the last day of the Tour and the laps around the Champs-Élysées on Sunday. Phoned a friend in Paris yesterday, he told me I was crazy to try. I should have left earlier in the week to try to catch the start of the Stage 19 time trial in Cognac. I’ve never been to Le Tour, and it’s always been a dream of mine to go. Oh well, maybe next year.

    jb

  4. ricky_nu says:

    I habe a dumb question – when people refer to a mls number on here, what website are they using to look up the property? I try to use NJMLS.COM and seldom see the property that people are referring to.

    also – is there a source online of recent sales (whereby you can request all sales in town X for time period Y?)

  5. Everything's 'boken says:

    My sister and husband were there for the last Lance win. They had missed out on the final time-trial. Oh, the envy!

  6. BC Bob says:

    It’s amazing, we went from no bubble to a healthy correction, to dancing along the bottom to present day, a crisis. All in a very short period of time. Wait until this thing really starts to unravel. We are much closer to the top, prices, than even a slight hint of a bottom.

    What is the real distinction between Alt A and subprime, 40 fico points? Six of one, half a dozen of another. Is it akin to the difference of a .300 hitter and a .299 hitter? We tend to be immersed with subprime. IMO, just one cog in the wheel. What is the end result when the prime borrower, with some form of an arm, tries to refinance and the lending institution tells him/her that they need to bring 100k to closing. Do they throw good money after bad, or just walk. It will not happen to prime borrowers? If you bought into this insanity with teaser financing, this bust will not discriminate. If a prime borrower put down $ with a fixed rate, they’ll be OK. However, the left side of their ledger will be much lighter. Also, they better hope that they don’t have a life changing event and have to sell in the near future.

    Subprime, alt a, prime. IMO, not the main issue. If the industry offers free s*it, all the pigs will get dirty.

  7. James Bednar says:

    I habe a dumb question – when people refer to a mls number on here, what website are they using to look up the property?

    It is easier to use the http://realtor.com “Advanced Search” to hunt down an MLS when you don’t know which system it is on.

    MLS is a concept, it doesn’t refer to any single system. In fact, NJ has a good number of them. Just covering North/Central NJ, we’ve got New Jersey MLS, Garden State MLS, MoMLS (Monmouth/Ocean), MCMLS (Middlesex), and MLS Guide (Hudson).

    A full list can be found here:

    http://www.njar.com/mlspub2.shtml

    jb

  8. BC Bob says:

    Will someone from our Treasury Dept, Hank, please step up and support our dollar before we are all screwed. How about intervening and buying? Print to buy, Yikes. At least try to head fake the world, throw them a curve ball. Just do something.

  9. James Bednar says:

    Talk only goes so far…

    US’s Paulson says backs strong U.S. dollar

    U.S. Treasury Secretary Henry Paulson repeated on Monday that a strong dollar was in the U.S. interest and currency values should be set in markets.

    “We feel very strongly, I do, that a strong dollar is in our nation’s interest,” Paulson said on CNBC television. “The dollar’s value should be determined in a competitive marketplace, baseds upon underlying economic fundmaentals.”

  10. James Bednar says:

    From Reuters:

    Countrywide profit falls

    Countrywide Financial Corp, the largest U.S. mortgage lender, said on Tuesday second-quarter profit fell as mortgage banking pre-tax earnings declined by about half.

    Net income for the Calabasas, California-based company fell to $485.1 million, or 81 cents per share, from $722.2 million, or $1.15, a year earlier.

    Countrywide also cuts its full-year earnings forecast to a range of $2.70 to $3.30 per share from a previous range of $3.50 to $4.30 per share.

  11. BC Bob says:

    JB [9],

    Mental m………..

  12. James Bednar says:

    From Bloomberg:

    Countrywide’s Profit Declines 33 Percent as Late Payments Rise

    Countrywide Financial Corp., the biggest U.S. mortgage lender, reported its third straight decline in quarterly profit on increases in late loan payments and reduced its forecast for earnings this year.

    Countrywide said profit was hurt by $388 million, or 40 cents a share, by impairment charges on securities backed by prime home-equity loans. The lender also made less selling subprime loans to investors. Chief Executive Officer Angelo Mozilo has tightened standards for approving new subprime loans in a bid to cut their contribution to as low as 4 percent of total loans it originates, down from 8 percent in the fourth quarter.

  13. James Bednar says:

    Just because it deserves repeating:

    Countrywide said profit was hurt by … impairment charges on securities backed by prime home-equity loans

  14. BC Bob says:

    “The dollar’s value should be determined in a competitive marketplace, baseds upon underlying economic fundmaentals.”

    [9],

    OK, Hank. We are facing a weakening credit market, lagging world growth and foreign central banks have been, and will continue, diversifying. In a competitive marketplace, the dollar is getting raked to the coals. Every damn time you open your mouth traders around the world are selling more, testing your resolve. What now Hank?

    IMO, this present a problem of much greater magnitude than a busted housing market.

  15. RentinginNJ says:

    Countrywide said profit was hurt by … impairment charges on securities backed by prime home-equity loans

    Countrywide down 8.7% before the bell. Ouch.

  16. 3b says:

    JB Can I please have the details on njmls 2729795, when you get a moment. Thanks in advance.

  17. James Bednar says:

    Perhaps this is just another case of, “Watch what he does, not what he says.” Are we sure the U.S. really wants a strong dollar?

    A weak dollar would go far to stem the economic trauma. No doubt we’ll see the price of auto imports start to move upwards. Could be helpful for the U.S. auto industry.

    A weak dollar also makes dollar denominated assets more attractive to foreign investors. Just look at NYC real estate priced in Euros. Prices are falling, just not for those who only have dollars to spend.

    Weak dollar also supports U.S. manufacturing, could go far to stem the loss of jobs to China. Nothing like import inflation to make substandard import goods a little less attractive.

    Weak dollar also goes far to support weak U.S. equity markets. Again, price the DOW, Nasdaq, or S&P in foreign currencies and you get a radically different picture.

    jb

  18. thatBIGwindow says:

    3b: taxes are 6600. Not bad for Oradell. 4 bedroom, 60×126 lot…not bad, no pic though

  19. thatBIGwindow says:

    ooooh, it has oil heat…I would avoid oil.

  20. curiousd says:

    JB, been a while. Sur le sujet de Le Tour… I think its worth it. I have seen 2 finishes (including Lance’s last). You likely will not see them cross on Champs Elysees unless you get up early in the AM…but going down that way is still a pleasure. And, you only see them for a split second anyway racing past you…its more to be a part of it.

    Enjoy Europe.

  21. James Bednar says:

    3b,

    Looks like it might be a flip.

    2634956
    ACT $419,900 9/6/2006
    PCH $399,900 9/30/2006
    ACT* $399,900 10/16/2006
    U/C $399,900 10/27/2006
    BOM $399,900 11/1/2006
    PCH $384,900 1/4/2007
    EXP $384,900 1/7/2007

    Relisted:

    2700837
    ACT $384,900 1/6/2007
    ACT* $384,900 1/11/2007
    U/C $384,900 1/17/2007
    SLD $372,000 7/9/2007

    New owner listed:
    2729795
    ACT $449,000 7/22/2007

  22. BC Bob says:

    “The Wall Street money-machine known as collateralized debt obligations is grinding to a halt, imperiling $8.6 billion in annual underwriting fees and reducing credit for everyone from buyout king Henry Kravis to homeowners.”

    “Banks are becoming more skittish about providing credit lines, called warehouse financing, managers use to buy assets that go into CDOs in the months before the securities are issued, said James Finkel, chief executive officer of Dynamic Credit Partners. The New York-based company manages $7 billion in 10 CDOs and a hedge fund.”

    “It’s dangerous to call the end of a market, but there are concerns,” said Jeroen Van den Broek, credit strategist at ING Groep NV in Amsterdam. “Private equity firms are going to have to pay up. The cost of debt is significantly higher than it was two years ago.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a5N1O2zRUVNs&refer=home

  23. john says:

    Alt A – is junk – Look at American Home Mortgage in Melvile Long Island, they never did subprime just Alt A and their stock is crashing and they are firing employees left and right with no notice, just right out the door.

    The HSBC rep told me he has a boat load of IO Baloons from rich neighborhoods where people got in over their head on a non confirming loan, Alt – A and now the Balloons are coming due, I am talking about Five Year Ballons from 2002-2006. People figured their careers would take off or houses would appreciate so much as long as the house rose 20% they could refi into a confirming loan with no PMI, instead the whole damm thing is due and the banks cut off that type of loans. Also remember in 2004/2005 neg am loans popped up again and those people are way way underwater,every month they make a payment they owe more.

    Plus I had a seminar this week and a senior partner from PwC was speaking on upcoming concerns in the economy. He threw out a brand new issue called “EQUITY HARVESTING” It seems certain people who are in trouble have looked to the stock market to rescue them from the Real Estate fall out. What they are doing is Cashing out all the equity they can in the house which is called equity harvesting and throwing it into the stock market in hopes to double the cash by the time they reset. They figure rather then lose it all lets double down. This Equity Harvesting might work out but if the Stock Market tanks the Equity Harvesters will be tanked and their massive margin calls will result in heavy sales volume which can help tank the stock market.

  24. RentinginNJ says:

    I’ll be heading off to Europe for a few weeks on Friday.

    Have a nice trip. That exchange rate has got to sting a little though.

  25. BC Bob says:

    John [23],

    Double down. Never have seen this work, long term. Sounds like an impending fiasco.

  26. scribe says:

    Ricky,

    Here’s the link to the Courier News’ database on property sales:

    http://www.c-n.com/specialsections/datauniverse/

    The Star Ledger also had home sales for the last 18 months on its site, NJ.com. But they did a site redesign and it wasn’t working very well the last time I looked.

    But with that one, it used to be that when you went to houses for sale or rent, there was a link to the right-hand side for recent home sales.

    The online versions lag the hard copy newspaper by a couple of months.

    So the quickest way to get sales data is to get the hard copy version of the Star Ledger. Find out when they run the weekly column on houses bought and sold. Other papers also publish records of home sales, too.

  27. 3b says:

    #21 Thanks JB, would you be able to provide the street name, if possible? Thanks.

  28. 3b says:

    JB I think it might be Garden, but wnated to be sure.

  29. Don Mattingly says:

    Last month we lowballed 20% off on a POS cape – worst house on a very nice block in a great town. House was on sale for a year and we were the first and only offer. The sellers said no thanks. The listing just expired and they’re taking the house off the market temporarily, hoping that the market will heat up again in a few months.

  30. thatBIGwindow says:

    3b: You are correct on the street name

  31. RentinginNJ says:

    What is the real distinction between Alt A and subprime, 40 fico points?

    And really, what is prime anyway? Especially for a first time buyer, prime means making your car & credit card payments on time & not getting in over your head on credit cards.

    Taking on a loan that requires 50% of your income to service changes the whole equation. I have a friend in this boat. Before buying had excellent credit. Got in over their head with too much house and now have to decide which bills to pay every month. They are barely holding it together. If they need to refinance, they probably don’t qualify as prime any more.

  32. James Bednar says:

    3b,

    Yes, 244.

    jb

  33. BC Bob says:

    Donnie Baseball [29],

    They are looking for a nice hanging curve ball. Unfortunately, only fast balls, high and in, are forthcoming.

  34. James Bednar says:

    We’ve put too much faith in FICO and numerical credit scores as an indicator of the propensity to pay back a loan. Especially given the recent news stories discussing FICO-enhancement techniques.

    I’m really beginning to wonder whether the next set of lawsuits are going to be directed at Fair Isaac, Experian, and Equifax for “overstating” borrower credit quality.

    jb

  35. 3b says:

    #29 Don: Very foolish on their part IMHO

  36. 3b says:

    JB I thought it was even less than 40 on FICO scores, I thought 600-620 was Alt A, and any thing below 600 was sub-prime.

  37. 3b says:

    #30 tbw, Thanks, I will take a drive buy tonight.

  38. thatBIGwindow says:

    “I will take a drive buy tonight.”

    3b: is that a hint?

  39. JLB says:

    Once again it might be nice to have that drink and do a little dance at your doomsday party but the reality is just because you want the real estate market to tank it will not. There has been a decline and there might be a little more in certain areas with certain properties but your across the board decline is not happening and will not happen. People who took out prime or subprime loans with risky terms can reset them with just a slight sting right now or sell and break even or even lose a little. The economy is good (jobs, income, spending, rates, etc.,etc.) The story here is that it will take an EVENT to make the market plunge the way this board wants it to. Inventory is not supporting your gloomy outlook (at least in north new jersey). Party On Dude!

  40. scribe says:

    Ricky,

    Here’s the new link from NJ.com, the “NJ by the numbers” page:

    http://www.nj.com/news/bythenumbers/

  41. BC Bob says:

    “Party On Dude!”

    [39],

    I did exactly that, in early Sept, 2005, when I walked out of closing.

  42. Richard says:

    the US has been espousing a strong dollar vocally but doing everything it can to promote a weak dollar. been going on for years.

  43. James Bednar says:

    The demarcation between prime/alt-a/subprime isn’t based solely on FICO. More often, it is loan features and risk-layering that determine the the classification of an Alt-A and Prime loan. To give you an example, a prime borrower taking an I/O loan with stated income and assets will likely fall into an Alt-A pool.

    It is a mistake to view Alt-A as the middle range of the continuum between Prime and Subprime (whether that continuum is loan risk, or buyer qualification).

    Alt-A really stands alone as a classification.

    From Nomura Fixed Income Research:

    A Journey to the Alt-A Zone

    II. Defining the Alt-A Sector

    The alt-A mortgage sector has always been difficult to define. However, events of the past few years have made the task even more vexing. The boundaries of today’s alt-A mortgage sector are faint and vague.

    The dominant approach for defining the alt-A mortgage loans makes reference to the characteristics (or combinations of characteristics) that would have disqualified a loan from traditional conforming or jumbo loan programs. Perhaps the most important of such characteristics is “documentation.” A substantial proportion of traditional alt-A loans were those where a borrower would not provide
    complete documentation of his assets or the amount or source of his income. As discussed below, a whole vocabulary has developed for describing loans with different levels of documentation.

    Other characteristics that might cause a loan to fall into the alt-A classification include the following: (i) a loan-to-value ratio (LTV) in excess of 80% but lacking primary mortgage insurance, (ii) a borrower who is a temporary resident alien, (iii) secured by non-owner occupied property, (iv) a debtto- income ratio above normal limits, (v) secured by a non-warrantable condominium unit or a
    condominium hotel, or (vi) an LTV above permitted thresholds in combination with other factors.1 The foregoing approach for defining alt-A loans is gradually becoming less useful. In large measure, the approach defines alt-A loans by what they are not; that is, not eligible for regular conforming or jumbo loan programs. However, in recent years, the regular programs have expanded the scope of their offerings, with the result that many of the loans that would not have qualified several years ago would qualify today.

    In addition to loans that possess “traditional” alt-A characteristics, today’s alt-A loan pools often include a portion of loans from the strong end of the “sub-prime” range. Formerly, such loans were sometimes called “A-minus” loans. Such loans are especially likely to be classified in the alt-A category if they have less than full documentation. In broad terms, a “sub-prime mortgage loan” is a first-lien mortgage loan to a sub-prime borrower. There is no universally accepted definition of a subprime borrower. However, a borrower who has made all of his rent or mortgage payments on time during the preceding year and who has a FICO score above 620 generally can qualify for an ordinary (i.e., “prime” or “A quality”) conforming or jumbo mortgage loan. Thus, a typical sub-prime borrower either has been delinquent on his housing payments at least once during the preceding year or has a FICO score below 620.

    Most recently, anecdotal evidence suggests that lenders sometimes classify loans as alt-A and include them in alt-A loan pools simply because they can. Such loans often have interest rates slightly higher than ordinary prime-quality loans, but they may be otherwise indistinguishable. In essence, this new species of alt-A loans includes whatever lenders – or issuers of alt-A MBS – choose to include in the category from time to time. Various companies have branded themselves as alt-A players either by issuing alt-A MBS or by highlighting alt-A loan products in their product lineups. Examples include Wells Fargo, Countrywide, GMAC-RFC (RALI), Washington Mutual, Greenpoint Mortgage, and Impac Funding Corporation.2 Such players can readily include a small proportion of regular loans in their alt-A pools, and they have an incentive to do so because of the favorable pricing that alt-A loans command. However, if they include too many regular loans in their alt-A pools, they will create visible performance distortions and lose their credibility as alt-A players. Thus, the majority of loans in virtually all alt-A pools either possess recognizable alt-A features or come from the A-minus genre.

  44. Don Mattingly says:

    BC Bob #33 – Ha! Very clever.

    Regarding credit scores – A friend of mine declared bankruptcy in April 2003. He and his wife just went to see about a mortgage and they said his FICO score was 709!!! He hasn’t owed more than $1K since then and has paid all his bills on time, but STILL! I thought that was a black mark on your credit rating for at least 7 years.

  45. pigpen says:

    #39 JLB – you sound like Baghdad Bob

    Any other rosy news to report? Is the earth actually cooling? Do cigarettes kill cancer?

  46. 3b says:

    343 Thanks JB

  47. Richard says:

    the FICO methodology has a number of flaws when evaluating someones creditworthiness. you actually get penalized for having too many credit inquiries or not carrying enough rollover debt to show your ability to pay bills on time. stupid.

  48. JLB says:

    I notice Paulson’s comments on the dollar are reported on this board but what about when he said the housing market has bottomed?
    Oh and for the reality seekers, check out the inventory column on housingtracker.net and notice nationally where it used to be all green there is RED and if you notice the median price has not declined dramatically. Oh and for New Jersey what a surprise Newark and Edison inventory is negative week over week—wow, might that signal an upward curve in a true indicator?

  49. James Bednar says:

    Once again it might be nice to have that drink and do a little dance at your doomsday party but the reality is just because you want the real estate market to tank it will not.

    JLB,

    Please be careful that you aren’t stereotyping the entire group based on the schadenfreude expressed by a small minority of participants.

    I’ve said it many times before, what good is betting on armageddon? You never get to spend your profits should it happen.

    We all have to live here, who in their right mind sits around hoping for an economic collapse? I’ll bet that those who aren’t homeowners here have family that are. You really think people would be wishing harm on their own friends and family?

    It’s just as likely that the fallout will hurt renters as well as homeowners. It’s just as likely that family and friends will be hurt.

    Don’t mistake concern and discussion for “wishful thinking”.

    jb

  50. make money says:

    http://www.marketwatch.com/news/story/countrywides-shares-fall-9-quarterly/story.aspx?guid=%7B88821AE2%2D27FE%2D4E74%2DA96A%2D0FE326B14B29%7D&siteid=yhoof

    Countrywide shares tumble as profit stink

    Angelo Mozilo has sold close to 200 Million worth of stock in the past 18 months.

    Why does it take soooooo long for credit to get expensive and tighten up?

  51. James Bednar says:

    I notice Paulson’s comments on the dollar are reported on this board but what about when he said the housing market has bottomed?

    Paulson’s comments on housing bottoming have lost credibility after he has “called bottom” incorrectly on a number of occasions.

    IMHO, Paulson’s comments on housing deserve the same credibility as David Lereah of the NAR does.

    jb

  52. lostinny says:

    44 Don
    Actually if his credit was very good before the bankruptcy and hes paid everything on time since, it’s not surprising at all. I remember someone telling me one could get a mortgage 2 years after filing bankruptcy- that person may pay higher interest but the loans were available. At this time, however, given what’s been going on with foreclosures and defaulting, it may become more difficult to get a one.

  53. RentinginNJ says:

    The story here is that it will take an EVENT to make the market plunge the way this board wants it to.

    What “event” caused the NASDAQ to plunge in 2000 or the Dow to plunge in 1929? Many theories have popped up, but there really no solid, “of course”, reason why May 10, 2000 was the particular day the NASDAQ started its crash. Bubbles just collapse under their own weight. You don’t need an event to bring down a bubble.

    If, as you say, the economy is so good right now, then why are we seeing so many problems with subprime? What event caused that? Why aren’t people just selling or refinancing into better loans?

  54. James Bednar says:

    the US has been espousing a strong dollar vocally but doing everything it can to promote a weak dollar. been going on for years.

    As evidenced by the steep rise in commodities, metals, and energy.

    jb

  55. Richard says:

    >>You really think people would be wishing harm on their own friends and family?

    along the same lines i wasn’t too upset when jose valentin of the mets broke his leg and is likely out for the rest of year the way he’s been performing ;)

  56. john says:

    A person who has declared bankruptcy is a GREAT credit risk. Remember in bankruptcy you can protect your furniture, tools, primary car, primary house sometimes, 401Ks pension plans etc. But if you go belly up less then seven years after bankruptcy you can’t turn to the courts for protection. Your creditor can take nearly everything you owe right away with no worries about lengthy legal fees. Party on dude.

  57. Richard says:

    An ‘event’ never seems to be what anyone expected when looking for predictions. Don’t discount an exogenous occurrence either.

  58. James Bednar says:

    JLB,

    Paulson’s comments about housing are nothing more than jawboning. He’s attempting to stabilize the market in the midst of a downturn.

    Paulson began his “bottom calling” campaign in April:

    Paulson urges China to make yuan more flexible

    “All the signs I look at” show “the housing market is at or near the bottom,” Paulson said. The U.S. economy is “very healthy” and “robust,” he said.

    It’s clear that his call of “bottom” was premature, as the market has continued to deteriorate since that point.

    We all know it’s impossible to call “bottom” until that bottom can be displayed, unarguably, in data. Unfortunately, that means a bottom can only be called in retrospect. Much too late to actually be useful in determining that bottom. Markets don’t move in clear, linear fashion, so it’s easy to misclassify short-term volatility as a change in trend. Those who realize this also realize that attempts to call “bottom” during a correction are futile.

    Just as you can’t time the market, likewise, you can’t call bottom.

    jb

  59. 3b says:

    #39 You are incredibly funny;so much for you to lean grasshopper? Have you checked out the inventory lately ah never mind my child.

  60. James Bednar says:

    Likewise, Paulson’s comments on housing are probably more closely related to his commentary on the dollar than about housing directly. The subprime shakeout has had a significant impact on credit markets and the dollar. It’s in the best interest of the country and the economy to attempt to downplay these events.

    Housing isn’t in the middle of a recession, it’s just in a banana.

    jb

  61. JLB says:

    #49 I didn’t realize I had to specify that I was refering to those that thought and espoused the market was going to tank (kinda thought that was a given) and I’m starting to wonder about you JB as I think my positive comments are as valid as some posters negative ones and if you read through the previous posts on many threads there are people not just suggesting but actively promoting the market decline. Just one example might be a participant with the name “Bloodbath in winter 2007”, come on JB if you want to caution me in my outlook maybe you should be commenting on every post?

  62. bi says:

    JLB, 48#,
    good link. I cannot comment on Newark area. but for edison area it sells fast if the price is priced right. for a decent house, i do see increase from last spring. i did see some new constructions reduced to 800K range from 900K+ in last winter. but similar houses are listing around 1M now. one reason i guess is there is a big influx of IT professionals from India and other countries.

  63. Mike Elliott says:

    Countrywide missed expectations by 11 percent even when the expectations were low to begin with. Trading down almost 9 percent as of 10:15. This is likely to get worse before it gets better.

  64. James Bednar says:

    come on JB if you want to caution me in my outlook maybe you should be commenting on every post?

    There are more than enough outlets whose primary focus is cheerleading the real estate market. Most of those outlets have significantly deeper reach into the population than this site. The goal of this site has always been to provide counterpoint to, and be critical of, those opinions.

    jb

  65. bi says:

    40#, scribe, good link. i think all of us make this blog interesting

  66. BC Bob says:

    JB [58],

    How about his statement regarding the masses become savers. This is our bullet? OK, you strengthen your yuan, lose value in your US securities, and we, as a nation, will become net savers. We would have benn better of sending Jack Nicholson, “Here’s Johnny”.

  67. SG says:

    Sales of the securities — used to pool bonds, loans and their derivatives into new debt — dwindled to $9.1 billion in the U.S. this month from $42 billion in June, analysts at New York-based JPMorgan Chase & Co. said in a report yesterday. The market, which was “virtually shut” earlier this month, is showing “signs of life,” the bank said.

    Investors are demanding yields 10 percentage points higher than benchmark rates to compensate for the risk of losses on some of the lower investment-grade rated parts of CDOs, up from 4 percentage points at the start of the year, according to data compiled by Morgan Stanley in New York.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a5N1O2zRUVNs&refer=home

  68. JLB says:

    #64 JB: OH thank you for clarifying that someone with a position different than yours is not welcome on this site? I am not a cheerleader and I think I have used reason and reality in my comments. The goal of this site is supreme negativity? I think you might want to change your mind on that as it gets really boring to hear 3b continually espouse a bust in the hopes that he/she will be able to afford something someday.

  69. 3b says:

    #61 JLB: You mean your positive rhetoric.

  70. make money says:

    JLB, 48#,
    good link. I cannot comment on Newark area. but for edison area it sells fast if the price is priced right. for a decent house, i do see increase from last spring. i did see some new constructions reduced to 800K range from 900K+ in last winter. but similar houses are listing around 1M now. one reason i guess is there is a big influx of IT professionals from India and other countries.

    It’s the polish, russian and Albanian Immigrants that love are moving in. People with the same background love to live close to each other and are willing to pay a little extra to live in that community.

    Edison has become a prstigious area in the minds of above masses hence you don’t see any inventory. Ones perception is one’s reality.

  71. skep-tic says:

    #39

    “There has been a decline and there might be a little more in certain areas with certain properties but your across the board decline is not happening and will not happen. People who took out prime or subprime loans with risky terms can reset them with just a slight sting right now or sell and break even or even lose a little. The economy is good (jobs, income, spending, rates, etc.,etc.”

    ************

    JLB– you have identified 1 area where widespread decline does not appear to be occurring (Manhattan).

    Everywhere else in the tri-state area, inventory is up 20-30% YoY (and in many cases 50% over 2 yrs), transactions are down 20-30% YoY and prices are down 5-10% YoY. How is this not widespread decline?

    You say people who took out risky loans can just refinance– why do you think this is so? If these people could afford their homes with fixed mortgages, then why didn’t they just finance in this manner in the first place, esp when rates were at historic lows?

    If they are underwater now on their mortgages (as many who bought in the last 2 yrs certainly are), do you think these people have money to bring to the table to close on these refis? Again, these people took out these dodgy “affordability product” loans for a reason.

    Jobs are good now, but what is really frightening is how this unraveling despite this fact. If people start losing jobs in a widespread manner housing will be in freefall

  72. make money says:

    3b is a joke and his comments should not be taken seriously.

  73. 3b says:

    368 JLB I guess I make you uncomfortable, becasue you cannot debat anything that I have posted, and you continue to peddle…… rhetoric.

    One instance of this jobs? Where in NJ? Hey if you do not believe me, read the latest Rutgers study.

    Another instance inventory, it is rising, and yet you cite inventory levels as a reason that all is well.

    As far as what I can afford or not afford, you ahave no idea child, absolutely no idea.

    As far as some of my family and friends getting hurt, sad, but its their own fault. I tried they did not listen. They are big boys and girls, they will have to live with the consequences.

  74. 3b says:

    #72 Nice MM, another uber bull with personal attacks. Don’t shoot the messenger old man.

  75. JLB says:

    #69 3b: okay, here we go again with the rhetoric comments. Forget apathy in NJ regarding property tax hikes which JB said he agreed with yesterday. The problem with NJ is people like 3b and others on this board that think they can complain and wish life different and don’t think they have to take any action for change. Listen, it doesn’t matter how low house prices go or interest rates go if you can’t pull the trigger anyway.
    It is not rhetoric to disagree and when you listen to different viewpoints you can actually develop a healthier and sometimes more positive actionable position that can improve your life. SECRETS!!!!!!!haha

  76. make money says:

    As far as some of my family and friends getting hurt, sad, but its their own fault. I tried they did not listen. They are big boys and girls, they will have to live with the consequences.

    You’re dying to say I told you so. aren’t you. You’re a miserable and depressing person hence wishing ill among family and friends.

  77. 3b says:

    Paulson has been saying the housing amrket has bottomed for months.

  78. James Bednar says:

    OH thank you for clarifying that someone with a position different than yours is not welcome on this site?

    Why? Because I’ve questioned your own opinons and comments? Arguement and discussion is the point of this site. What use would this site be without the comments and arguments that make up the discussions here? This topic is emotionally charged and most every discussion here is going to border on being a heated argument. It’s impossible to separate housing and emotion. Instead, I welcome and embrace that debate. However, I have no patience for tit-for-tat arguments, immature behavior, poorly thought out arguments, or those who simply wish to use this forum as their own soap box.

    The goal of this site is supreme negativity?

    No, it’s to challenge the status-quo. I’ve already said that the main focus of this site is to serve as counterpoint to the commonly held beliefs about real estate. Like I said before, there are more than enough outlets that are content with “cheerleading”.

    I think you might want to change your mind on that as it gets really boring to hear 3b continually espouse a bust in the hopes that he/she will be able to afford something someday.

    Why do you feel you need to lower yourself to personal attacks to make a point?

    jb

  79. t c m says:

    A little off topic but in need of advice:

    For anyone who has knowledge of the NYC rental market (you helped with my last question) – just a few questions:

    Is there any reason why a management co. would offer a property for a lower rent through a realtor rather than directly? I see a property that is listed substantially cheaper with a realtor than the mgt. co. (even if you factor in the fee).

    Does anyone have any experience with the NYTimes online real estate ads. They all look better than what we’ve seen in person. We looked over the weekend with a realtor, and all she showed us was stuff we already saw,without a realtor, no fee, on craigs list. Just wondering if this was just a bad realtor, or if the ads in the Times are more bait and switch.

    Any other advice is appreciated.

  80. lurkerA says:

    does anyone have ocean county MLS access? do you have an address for 20725729?

  81. lostinny says:

    TCM
    Regarding the property being priced lower through a realtor then directly- that is your bait and switch. I can promise you that if you go see the property, they will tell you the cheaper price is for another apartment and the one you want costs x. Also, it could be when the property is listed. I got my apartment for a discount because of the time of year we rented.

  82. JLB says:

    #71 skep-tic: How do you know that people are underwater? And how do you know who has refinanced or has not? And I would suggest more than Manhattan is strong as evidenced by week over week inventory because that is what tells you current happenings, year over year is bound to be higher as things have slowed but weekly will tell you if it is building aggressively and frankly it is not right now!

  83. SG says:

    JLB – At the end of the day, Affordability plays very important part. You will always have exceptions like young DINK Ivy League type who start with huge salaries and buy big first house. But you have to quantify all of that, as their numbers are significantly smaller compared to vast majority.

    See the affordability chart that I made for NNJ for last 25 years.

    http://www.geocities.com/skgala/affordability.htm

    Other aspect is most people want to believe data points that support their theory. So, when market was going up, every seller believed in Comp, today if it does not favour them individually, they blame on sub-prime & foreclosure. If you do simple analysis on MLS, 80%+ houses on market are asking prices not based on recent comps.

  84. 3b says:

    Market Conditions for Edison, New Jersey

    Reported by realtor.com

    As of July 5, 2007. Quote from local realtor.

    Anecdotally, there’s been a noticeable drop in activity in the last few weeks. The probable cause is due to a rise in mortgage rates and slower summer days. Statistically, the number of new single-family listings dropped by nearly 30% in June and the number of closings were up by an equal percentage. Consequently, the number of available homes dropped slightly. There are about 320 single family homes for sale priced between $240,000 and 2.5 million dollars.

    Buyers are nervous and trying to anticipate the market bottom. But, they would be wise not to be so cautious as to overlook obvious opportunities that this market is presenting. Nothing lasts forever and Edison has faired better than many other communities in this market.

    ZIP Codes: 08817, 08820, 08837

  85. skep-tic says:

    TCM– in my experience looking for apts in Manhattan, NY Times ads are almost always bait and switch. They will tell you the place that was advertised was just rented… in reality, it probably never existed

    The NYC RE market is very corrupt and unfortunately, the liklihood of finding a decent apt w/o an agent is very small

  86. UnRealtor says:

    A bagholder experiences The Crisis first-hand:

    MLS 2264758
    27 Barnsdale Rd, Short Hills
    Listed April 4, 2006 @ $2,295,000, went under contract 26 days later, closed @ $2,285,000.
     

    MLS 2421654
    27 Barnsdale Rd, Short Hills
    Listed $1,995,000 June 28, 2007, raised price to $2,095,000 July 4th.
     

    If someone pays full asking, and that’s a big if, this bagholder hopes to lose $325,700 in 12 months.

  87. BC Bob says:

    “Listen, it doesn’t matter how low house prices go or interest rates go if you can’t pull the trigger anyway.”

    JLB,

    Total nonsense. Many on this board are not in this situation. There are many sellers, now sitting out the insanity. Others, with a significant dp, waiting. The gun is loaded. However, Russian Roulette is of no interest. Leave that to others.

  88. bi says:

    One think I noticed in my area is that there are fewer high-end for sale but more condo and town houses coming out to the market in recent weeks. Not clear it is bearish or bullish sign.

  89. JLB says:

    #78 JB: I would suggest that I am not personally attacking anyone when I have a different opinion and address the person that disagreed. 3b has not hidden the fact that he/she wants the market to decline and would like to own at a lower price, what am I missing JB are YOU 3b?
    Okay, I am glad you clarified your position on what you have no patience for as I haven’t done any of those things so I still feel welcome here.
    Oh and one other thing, I would say the current status quo seems to be that the real estate market is tanking so if we want to challenge that on this site we should all swing to positive assertions on the market rising, right?

  90. Pooch123 says:

    TCM – sometimes property management firms use an exclusive agent to rent their apartments out, and then get a portion of the brokers fee paid as a kickback. Alternatively, its conceivable that the management firm wants to keep a healthy relationship with an agent and so offers them the ability to rent the apt at a low price.

  91. 3b says:

    #76 MM When you out no money down, and took a liar loan, I/O neg amorization, when you sucked out all of your equity to pay 100K for a house remodel, and a big SUV in the drive way, no I do not have sympathy for you.

    And yes some family and quite a few friends did this Saying I told you so, gives me no pleasure, and so I do not say it, but no I do not have sympathy.

    I do have sympathy for the people who saved a down payment including closing costs, plus additional savings, who lived a modest life style, all in an attempt to buy a house,in my opinion the right way.

    Many of them were closed out, because they would not play that reckless game. Those are the people I feel for.

  92. Jamey says:

    JB:

    Was studying abroad in ’89 and was in Paris to see the final ITT stage (Versailles to Paris), in which Greg LeMond overcame a seemingly insurmountable :50 lead, winning the Tour by :08. Not just the greatest sporting event I’ve ever seen, but possibly the greatest event, period. And I was in Berlin when the wall was coming down.

    Give it a shot in Paris–but, yeah, the penultimate stage might be a better bet.

  93. skep-tic says:

    #82

    Why is week-over-week the relevant inventory figure? Do you really expect inventory to be rising quickly at the end of summer? The point is that the inventory buildup that has developed since late 2005 has not been dented outside of Manhattan. There is still a supply inbalance and I would be interested to hear an argument about how this will not drive prices lower.

    As for people who bought recently being underwater– I admit it is impossible to say with certainty just how many there are. I do not have local numbers on downpayments, but I do know that nationally, median 1st time homebuyer put down 2% last year. If there is a similar dynamic in place in the NE (and I don’t see any reason why this area of the country would be drastically diff’t in this regard), then it is not a stretch to say that many recent buyers are underwater.

  94. SG says:

    JB: I don’t know if it’s possible to see Inventory change over last few years broken into home price ranges.

    I think the RE downturn would normally start at high end and move downward. Potentially such an analysis can point if we have stabilized in high end market or not. I am amazed at glut of 1M+ homes and the pace at which new ones keep getting built.

  95. Richard says:

    >>Everywhere else in the tri-state area, inventory is up 20-30% YoY (and in many cases 50% over 2 yrs), transactions are down 20-30% YoY and prices are down 5-10% YoY. How is this not widespread decline?

    what’s a fair measure for price comparisons? does 1 person buying a house at the highest price mean all other prices should be measured against this one? we’ve had an unprecedented rise in prices the last few years. what’s the right interval? seems to me it might be different on whether you’re a buyer, seller and if a seller how long you’ve been in the home and/or you’re equity. there’s are many ways to look at the data instead of saying the market is down 10% y-o-y as it doesn’t really tell you all that much that’s meaningful for your own purposes.

  96. James Bednar says:

    Oh and one other thing, I would say the current status quo seems to be that the real estate market is tanking so if we want to challenge that on this site we should all swing to positive assertions on the market rising, right?

    I will absolutely take the pro-real estate counterpoint once public sentiment shifts negative. However, I will not take that position until it is clear that sentiment has shifted. It has not.

    Here is a recent Boston Consulting Group survey:

    http://www.bcg.com/news_media/news_media_releases.jsp?id=2307&yearpub=

    55% of Americans say their home would sell for more money now than it would have a year ago. (Last summer, 59% of American homeowners felt that way.)

    Nearly three-quarters (74%) of homeowners say they’re confident they could sell their home within the next six months at a price they think it’s worth.

    85% of Americans believe their house will be worth more five years from now than it is today.
    The majority – 63% – of Americans think real estate is a good or excellent investment.

    Most Americans (52%) believe the residential real estate slump will last two years or less. Only 22% believe it will last for five or more years.

    Other recent surveys have shown similar results.

    jb

  97. skep-tic says:

    #96

    Richard– of course we all have our own subjective sense of value– there’s no point in arguing about that. Prices got very high very fast, but that is what happened, and when we assess the extent of the decline, that is where we must measure from.

    If your point is that someone who has owned for a long time shouldn’t care about a 10% haircut from the 2005 peak, then I agree.

  98. Pooch123 says:

    Just read an interesting, though not particularly useful, paper by Robert Shiller, “Historic Turning Points in Real Estate,” credit to the librarians at the diehards.org forum

    See http://papers.ssrn.com/sol3/papers.cfm?abstract_id=991107#PaperDownload

    Abstract: This paper looks for markers of ends of real estate booms or busts. The changes in market psychology and related indicators that occurred at real estate market turning points in the United States since the 1980s are compared with changes at turning points in the more distant past. In all these episodes changes in an atmosphere of optimism about the future course of home prices, changes in public interpretation of the boom, as well as evidence of supply response to the high prices of a boom, are noted.

  99. JLB says:

    #94 Skep-tic: I wouldn’t expect week over week to be aggressively building in July,August and that would really signal trouble but that is what I will be watching in Sept, the take home though is that week over week is declining in July and it didn’t in May,June.
    #97 JB: the percentage of Americans that believe their house would sell for more dropped and don’t forget they may be polling people that don’t need to sell and in that case may be feeling more positive. I think the most important note is that 52% agree that residential real estate is in a slump.

  100. dreamtheaterr says:

    Pooch123, thanks for the link. I’m a regular at the Diehards site too.

  101. bi says:

    We all agree that RE price moved up very fast from 2001 to 2005. But if you look at it with longer time frame and include 2006, 2007 and from 1990, do you still it is so outrageous? Assume anual return of 6%, here is the table:

    Years Return (%)

    7 50
    8 59
    9 69
    10 79
    11 90
    12 101
    13 113
    14 126
    15 140
    16 154
    17 169

  102. pesche22 says:

    always remember

    “the titantic had a band”

  103. Pooch123 says:

    And HOV hits another 52 week low upon sour housing news. And more news to come tmrw re existing home sales and the following day re new home sales.

  104. 3b says:

    #97 JB What % of those surveyed could be in denial?

    I agree sentiment has not shifted completely yet, but it is certainly IMHO getting there.

    Having been on both sides I can tell you it is tough to accept that you house is worth less than you thought,a nd that you may be under water,and loose money

    Because even during the last bust, the conventinal wisdom was you do not loose money in real estate, well the reality was then that you could, and many did.

    Perhaps that is why I become emotional when I see that same old statement dragged out time and again, especially when many times it is from people who do not remember, were too young, or deny the last bust.

    I will do a better job of keeping my emotions in check going forward,and if that means ignoring posts, than so be it.

    As always, thank you for all the time and effort you put into this site. I for one deeply appreciate it.

  105. bergenbuyer says:

    Is there a way to manipulate a FICO score? On a no documentation loan I can say I make $100K when I only make $50K, is there a way that I can fake my way out of subprime and into Alt-A and so on up the ladder? If so, maybe this is a contributing factor to Alt-A delinquencies who really should have been subprime.

    Another thing to consider, just because you have great credit doesn’t mean you didn’t overextend yourself. And just becuase someone may make less than the median income doesn’t mean they automatically have $20K in credit card debt and are behind on every other debt they have.

    High earners in expensive houses can have low fico scores and low earners in cheaper houses can have high fico scores. Don’t think for one second that only subprime minimum wage workers owning starter homes will be affected.

    Clot: with this news I’m thinking Sept 1st may be too late, August seems to be possible.

  106. Clotpoll says:

    Grim (9)-

    “The dollar’s value should be determined in a competitive marketplace, baseds upon underlying economic fundmaentals.”

    It is, Hank. It is.

  107. bi says:

    Since there are so many bears here, i would recommend shorting lenders. There is still big room for profit. but shorting homebuilders may be a little too late.

  108. James Bednar says:

    Is there a way to manipulate a FICO score?

    The easiest way to game FICO is to simply add the low-FICO holder as an “authorized user” on a credit card account that has a long and clear payment history. The low-FICO holder will get the benefit of the longer credit history, as well as the payment history.

    You don’t need the same addresses or even last name for this to work. This method is almost always used for newlyweds that are a combination of good and terrible credit. I’ve also seen this used for parents/children.

    Keep in mind that the “authorized user” need not have access to the physical card, in almost all cases, a card is never given to the authorized user.

    This issue gained media attention when companies began to advertise these services and good credit cardholders began to sell this benefit to low-FICO borrowers looking for a quick boost in score.

    I believe Fair Isaac and a number of other credit scoring bureaus have already stated that they will eliminate this as part of the new FICO calculation. I believe that this benefit will still be available, however, only to those added as “joint cardholders”. This is less prone to abuse as “joint cardholders” are responsible for any debt incurred.

    jb

  109. Richard says:

    >>Is there a way to manipulate a FICO score?

    there was a recent story about people with good credit selling their status to those with lower credit to get better rates on loans. why this isn’t illegal i can’t understand but it’s going on.

  110. James Bednar says:

    This trick also works with good credit newlyweds. If both the husband and wife have a good credit history, but not necessarily prime, they can both add each other as “joint cardholders” or “authorized users”, and in many cases bump FICO up enough to qualify for better terms.

    jb

  111. BC Bob says:

    “It is, Hank. It is.”

    Clot [107],

    I second that.

  112. Richard says:

    Here’s the scoop on how people can get good credit instantly.

    http://www.techdirt.com/articles/20070425/100619.shtml

  113. Pooch123 says:

    Um, Richard, that’s the kinda thing JB was talking about with paying to become an authorized user on someone w. solid credit’s account, and Fair Isaac and Experian and Transunion are now hip to that plan. It had a pretty solid run, though…

  114. john says:

    Remember, LTC, Asian Meltdown or Rubble Collaspe?

    It is the BLACK SWAN we are all waiting one!!!!

    When it hits it will hit hard in a leveraged model.

  115. john says:

    Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult to predict. This term was popularized by Nassim Nicholas Taleb, a finance professor and former Wall Street trader.

    Black swan events are typically random and unexpected. For example, the previously successful hedge fund Long Term Capital Management (LTCM) was driven into the ground as a result of the ripple effect caused by the Russian government’s debt default. The Russian government’s default represents a black swan event because none of LTCM’s computer models could have predicted this event and its subsequent effects.

  116. James Bednar says:

    I believe that Fair Isaac estimated that approximately 25% of FICO scores were elevated due to “piggybacking”. Realize, however, that it is most common among family members. This was never a secret.

    jb

  117. Clotpoll says:

    bergen (106)-

    For all intents and purposes, it IS Sept. 1 right now. The elements are in place, the sentiment is beginning to move in lockstep, and the news is all downbeat. I’m still looking for a bit of a flashpoint or catalyst that will trigger the death spiral…but, let me tell you: a LOT of sellers have their eyes on the door.

    The minute traffic thru listings and internet hits slow down- right around Labor Day- it’s off to the races. Every seller of mine is on notice right now that the goal is to be under contract and off the market on Sept. 1.

  118. hoodafa says:

    Basis Hires Blackstone to Limit Losses on Hedge Funds

    By Laura Cochrane

    July 24 (Bloomberg) — Basis Capital Fund Management Ltd., the Australian hedge fund manager battered by losses in the U.S. subprime mortgage market, hired Blackstone Group LP as an adviser to help avoid a fire sale of assets.

    Blackstone, already helping Bear Stearns Cos. liquidate two hedge funds, will advise Basis Capital “to prevent adverse pricing and selling of assets,” the Sydney-based firm said in a statement today. Basis Capital, which had assets of $1 billion as recently as May, said July 18 that the value of its Yield Alpha fund may fall more than 50 percent if assets are sold at distressed prices.

    More at: http://www.bloomberg.com/apps/news?pid=20601087&sid=ap7JtsDev48k&refer=home

  119. James Bednar says:

    Here is an older piece from AZ Republic:

    Piggyback credit lift won’t work anymore

    Yet the practice is deceptive, and the industry has started to crack down. Fair Isaac announced last month it would change its FICO-scoring formula so that authorized-user accounts no longer factor into scoring decisions.

    That means people listed as authorized users no longer will receive a scoring benefit, although the new policy will take awhile to phase in after it begins in September. The company estimates credit reports for about 30 percent of consumers list them as authorized users.

    Eventually, many authorized users will see their scores drop, warns Credit.com, an online credit education/services firm.

  120. James Bednar says:

    why this isn’t illegal i can’t understand but it’s going on.

    I’m no JD, but it seems plausable that it could be argued that this practice is evidence of “fraud for property”/mortgage fraud if the borrower used this practice in order to qualify for a loan they would have otherwise not have qualified for.

    jb

  121. James Bednar says:

    From Reuters:

    Subprime mess spreading to junk bonds-PIMCO’s Gross

    Soaring defaults in the subprime mortgage market are spreading into the U.S. credit markets, producing a “sudden liquidity crisis” in the high-yield bond sector, according to widely followed bond manager Bill Gross.

    A lack of confidence has “frozen” the markets for lending and backed up new junk-bond offerings, and the tide appears to be going out for leveraged equity investors, Gross, manager of the world’s largest bond fund at Pacific Investment Management Co., or PIMCO, said in an August investment outlook letter.

    Gross also said the U.S. economy will come under pressure from increased cost of financing.

    “Stuffed!” he said of the current state of the credit markets.

    “Both borrowers and lenders may have bitten off more than they can chew, and even those that swallow their hot dogs whole — Nathan’s Famous Coney Island style — are having a serious bout of indigestion.”

  122. dreamtheaterr says:

    Latest commentary for Aug 2007 by Bill Gross of PIMCO here

    http://tinyurl.com/24h2lc

  123. BC Bob says:

    John [117],

    Today’s CDO’s, CLO’s, etc. Milken’s junk bonds of 1987?

  124. RentinginNJ says:

    The minute traffic thru listings and internet hits slow down- right around Labor Day- it’s off to the races. Every seller of mine is on notice right now that the goal is to be under contract and off the market on Sept. 1.

    A friend of mine has been FSBO all summer with no luck. He just listed with a broker, who made it very clear to him that he needs to be under contract and off the market by Sept. 1 or he would be in trouble. The broker pushed him to lower his price.

    I wonder if we will see another rally in sales for August like we saw in January. In January sellers were looking to beat the spring tidal wave. Now the informed sellers, at least, know they seed to get out before fall.

  125. thatBIGwindow says:

    “Why do you feel you need to lower yourself to personal attacks to make a point?”

    Anger. It is the simplest of human emotions.

  126. Donald says:

    “#39 You are incredibly funny;so much for you to lean grasshopper? Have you checked out the inventory lately ah never mind my child.”

    I have and there is a grand total of ONE HOUSE for sale in Alpine for under $1 million! So what music will you guys be playing at your gloom and doom party? I think I will go to the “We are rich party” in Manhattan instead. They have lots of reasons to celebrate: Apartment prices are up 8.5% in the second quarter.

  127. bi says:

    My prediction is average price in desirable towns will be 10% higher next year from here

  128. James Bednar says:

    From MarketWatch:

    Delinquencies rising in all mortgage classes-Countrywide CEO

  129. make money says:

    rent,

    A friend of mine has been FSBO all summer with no luck. He just listed with a broker, who made it very clear to him that he needs to be under contract and off the market by Sept. 1 or he would be in trouble. The broker pushed him to lower his price.

    Why not just lower the price on FSBO? You have a lot more room that way since you don’t have to pay the fees.

  130. t c m says:

    Thanks to all who replied on nyc rental situation. VERY HELPFUL –

    Bait and switch sounds like it’s happening in my situation. I’ve called on one…..

    “oh, that’s gone, but, here’s another” which happens to be the same price as the no fee one i could get through the mgt. co.

    going out now to nyc to check some out.

  131. njpatient says:

    #48 JLB
    “I notice Paulson’s comments on the dollar are reported on this board but what about when he said the housing market has bottomed?”

    True – we discussed Paulson’s comments on the dollar and noted that he is an idiot. His saying that RE has bottomed confirms the conclusion that he’s an idiot.

  132. RentinginNJ says:

    Why not just lower the price on FSBO? You have a lot more room that way since you don’t have to pay the fees.

    He didn’t even get a nibble over the summer, so he doesn’t think he can pull it off even if he lowers the price.

    I told him from the begining it was overpriced and he should price it better. I just got the ol’ this house is special because….speech.

  133. Pooch123 says:

    Yeah, bait and switch is the most likely situation. Its unfortunate that the nature of the business is such, but I’m pretty sure (based on unreliable anecdotal evidence) that this is how a super-majority of rental agents conduct their business. I mean, how would rental agents get clients without bait and switching?

  134. skep-tic says:

    #128

    do you think average prices in these towns will be higher due to a change in the mix of properties sold (i.e., more high end sales), or do you think prices will rise across the board? In other words, what is the catalyst for such a big rise?

  135. Lindsey says:

    Re Post 48:

    I wouldn’t put a lot of faith in the numbers from that site. The Edison MSA is Middlesex, Ocean and Monmouth and Monmouth by itself has nearly 7K sfh/condos as of July 20. I’ve got a feeling the Middlesex numbers are higher and Ocean’s got to be pretty close.

    Also, while inventory is definitely not coming on line as fast as it was earlier in the year, it is still significantly higher than it was last year.

    Anecdotally, it seems like there are for sale signs everywhere in my neighborhood.

  136. Donald says:

    tcm,

    Bait and switch is HUGE in Manhattan. I tried looking for a 2 bedroom rental for under $3,000 a month a few years ago. I called up the realtors I saw listed in the NY Times classifieds, and none of the cheap apartments listed existed. There was one agent who actually tried to convicnce me to rent a 3 bedroom apartment they had for $10,000 a month! I have no idea how she thinks I can afford such an apartment. Perhaps my phone number had a Beverly Hills area code on her caller ID. If she knew I was calling from Jersey, she should have known that I could not even afford half that rent!

  137. Donald says:

    #133

    Forget lowering the price on an FSBO. It is a thousand times better to keep the price the same and list with a realtor.

  138. Hobokenite says:

    justbought,

    regarding your comment from last night:

    Just because you can’t find the statistics I was talking about doesn’t mean they aren’t true. Go read the Miller Samuel report.

    If you want, I can even provide a direct quote. That should make searching for it in adobe much easier for you in case you have trouble reading a 4 page report in its entirety.

    I didn’t say the entire market was declining. I was pointing out that the average sale price in certain segments was below what it was a year ago. If you have a problem with these facts, take it up with Miller Samuel.

  139. Pooch123 says:

    Donald, you couldn’t find a 2 BR rental for under 3K a few years ago? Did the places you looked at have golden appliances? Outside of the new lux buildings, I dont think I know anyone in a 2 BR paying more than 3K now, and this is on the upper west side…

  140. bi says:

    135#. it is a natual money flow similar to flight to quality in bond market. There are many different forces for this: the housing price is still cheap if you lived in London; people in less desirable area can move up with large equity; schools; …

  141. thatBIGwindow says:

    mls# 2005818 anyone? 62,000/year taxes

    that is only 5,100 a month

    a great investment in Alpine, Donald

  142. Donald says:

    #140

    All the 2 “bedrooms” I found were converted one bedrooms where they just threw up some sheet rock to make a second bedroom. They call these junior 2 bedrooms. I did not want one. I wanted a REAL 2 bedroom. And I did not want to live in a 5th floor walk up. I do not need a 5 star building like the Time Warner Center, but I want something decent.

  143. Donald says:

    #142,

    Yes, that is a great investment. Now if I can only find a bank to give me a mortgagae for $9.5 million so that I can afford the house!

  144. Donald says:

    Hobokenite,

    You do not have to find the statistics. I found them right here:

    NYC co-op, condo sales prices rose 8%

    The average sales prices for New York City cooperatives and condominiums climbed 8.1% during the second quarter, according to a report from the Real Estate Board of New York.

    Co-op and condo prices rose to $831,000 in the second quarter, compared with $769,000 in the year-earlier period. The median sale price for city apartments surged 16% to $525,000 during the latest three-month period

    The average sales price per square foot for New York City co-ops rose 6% to $708, while the average sales price per square foot for city condos rose 8% to $877.

    http://newyorkbusiness.com/apps/pbcs.dll/article?AID=/20070723/FREE/70723004/-1/rss01&%20ssfeed=rss01

  145. Pooch123 says:

    There was some discussion about REIT stocks before, I believe Clot identified a few by name [i apologize if I’m wrong], and read something interesting re investing in them recently, namely, that one person didnt view them as a good deal until their prices fell enough such that their yield is about ~5.5% which is what its been historically. At the peak of the recent run-up (and subsequent decline) the typical yield was about 2.5% to 3%, and now its roughly 3.5% to 4%. I’d never heard of using historic yield as a basis for valuing a security so that it was interesting. If a reversion to the mean actually occurs in this regard, the stocks still have a ways to fall…

  146. BC Bob says:

    “Forget lowering the price on an FSBO. It is a thousand times better to keep the price the same and list with a realtor.”

    From post # 138,

    Clot, in your camp?

  147. 3b says:

    #128 If that makes you fell better, who am I to rain on your parade.

  148. 3b says:

    #128 feel better

  149. make money says:

    Forget lowering the price on an FSBO. It is a thousand times better to keep the price the same and list with a realtor.

    reason being?

  150. njpatient says:

    #73
    In Shakespeare, the fool is the one who speaks the truth.
    Lay on, 3b!

  151. Donald says:

    #150

    “Reason being?”

    EXPOSURE! That is why. What type of exposure can you get with FSBO? A lousy sign in the front lawn? You need to be listed in the MLS, which, in this case, stands for “Must List to Sell”

  152. Donald says:

    In keeping with the tradition of this blog, I should have said “POS sign” My mistake.

  153. njpatient says:

    #76 JLB
    This is really beyond the pale:

    “The problem with NJ is people like 3b and others on this board that think they can complain and wish life different and don’t think they have to take any action for change. Listen, it doesn’t matter how low house prices go or interest rates go if you can’t pull the trigger anyway.”

    3b does take action, as do you; we’re all merely debating what action should be taken. In a plunging real estate market, the action that you apparently take is to invest in real estate. I and others “pull the trigger” on investments other than those in RE’s tanking bubble.

    We’re just arguing about which trigger is appropriate to pull. You say RE, and folks like john (see #62), who do actual math, disagree (as do I and 3b and BC Bob and many, many others). But to pretend that you “take action” and we don’t, that you “pull the trigger” and we don’t, is merely childish.

  154. RentinginNJ says:

    EXPOSURE! That is why. What type of exposure can you get with FSBO? A lousy sign in the front lawn?

    I hate to agree with Donald, but this is a big reason my friend ended up listing with a broker.

    In 04 – 05, there were so many buyers, you could do an FSBO and easily find a buyer. They would seek you out. Why fork over 6%?

    With so fewer buyers today, and so many homes on the market, you can’t afford to just write off a huge segment (probably the majority) of the shrinking home buying population (i.e. those who will only search the realtor sites and look at what their broker sends them). Buyers don’t need to scour every avenue for acceptable homes for sale anymore. There are more than enough in the MLS.

  155. njpatient says:

    #90 JLB
    “I would say the current status quo seems to be that the real estate market is tanking so if we want to challenge that on this site we should all swing to positive assertions on the market rising, right?”

    Wrong. JB refers to the status quo in the media treatment of the tanking RE market. For too long, this was one of only a VERY small number of media outlets (if I can call it that) that were telling the real story – the story that the Reuters article at the head of this thread is finally telling in the MSM.

    Or should I read your statement as being that the RE market is, in fact, tanking?

  156. chicagofinance says:

    YOU KEEP YOUR EYE ON THIS STUFF!

    BC Bob Says:
    July 24th, 2007 at 9:01 am
    “The Wall Street money-machine known as collateralized debt obligations is grinding to a halt, imperiling $8.6 billion in annual underwriting fees and reducing credit for everyone from buyout king Henry Kravis to homeowners.”

    “Banks are becoming more skittish about providing credit lines, called warehouse financing, managers use to buy assets that go into CDOs in the months before the securities are issued, said James Finkel, chief executive officer of Dynamic Credit Partners. The New York-based company manages $7 billion in 10 CDOs and a hedge fund.”

    “It’s dangerous to call the end of a market, but there are concerns,” said Jeroen Van den Broek, credit strategist at ING Groep NV in Amsterdam. “Private equity firms are going to have to pay up. The cost of debt is significantly higher than it was two years ago.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a5N1O2zRUVNs&refer=home

  157. njpatient says:

    #121 JB re FICO fluffing
    “I’m no JD, but it seems plausable that it could be argued that this practice is evidence of “fraud for property”/mortgage fraud”
    I’ve always felt the same way about “refreshing” a real estate listing. The seller is lying to the buyer about the number of days on market and the original list price with the hope of increasing the likelihood of getting a bid.
    Sounds like classic fraud in the inducement to me.

  158. skep-tic says:

    Pooch-

    1 BR apts in Manhattan are regularly over $3000 now. A friend of mine who just had a baby just did a search for 2 BRs on the UES and UWS and couldn’t find anything with an elevator for under $4000 per month. Rents have skyrocketed in the last year

  159. chicagofinance says:

    BC Bob Says:
    July 24th, 2007 at 9:24 am
    Donnie Baseball [29], They are looking for a nice hanging curve ball. Unfortunately, only fast balls, high and in, are forthcoming.

    Bost: I don’t know about that. I’d say more a Mariano cutter on the hands with an 0-2 count.

  160. chicagofinance says:

    Take it for strike three, or swing and shatter your bat.

  161. skep-tic says:

    NEW YORK, July 24 (Reuters) – Countrywide Financial Corp. (CFC.N: Quote, Profile, Research) Chief Executive Angelo Mozilo said the U.S. housing market is unlikely to recover before 2009

    http://www.reuters.com/article/bondsNews/idUSN2421140420070724

  162. njpatient says:

    #159

    That may be correct, but I can say with certainty that “a few years ago” a 2br in a decent elevator/doorman building could be had for $3K and under, since that was what I was looking for (and found plenty of) in 2003

  163. bairen says:

    #128 bi,

    I got to strongly disagree that the better towns will be 10% higher this time next year.

    Go to a playground in a desirable town and watch how the parents and childeren interact. Most of the parents seem to ignore their children. Every time i take y son to a playground I see 2-3 year olds climbing 5 ft ladders with the parent atleast 30 ft away, 2 year olds playing on the edge of the lake with mommy or daddy sitting on a bench yapping on the phone or readin a book, all with their backs to their little darlings.

    Today I saw something even dumber. A mother was bouncing a tennis ball to her toddler. This is in Pleasnat Valley Park in Basking Ridge. There was an empty basketball court, a few tennis courts, so where does mommy of the year play with the kid? In the parking lot!

    Now if people in the “better towns” are so clueless to to the risks their actions or inactions are placing their children in, myabe, just maybe they are just as clueless to personal finance?

    thee towns I’ve been to are Basking Ridge, Liberty Corner, Chatham, and Morristown. All “better towns” all have equally clueless parents.

  164. 3b says:

    #163 Except for premier NNJ towns that are going to appreciate by 10% next year, but hey every one is entitled to their opinion.

    Even if they do not have to back it up, with any semblance of any kind of rational arguement.

  165. chicagofinance says:

    THINGS AIN’T THAT BAD…THE MARKETS HAVE OPENED AGAIN, ALBEIT AT USURY PRICES. THE DAY THEY STAY SHUT IS WHEN THE GUAN HITS THE FAN.

    SG Says:
    July 24th, 2007 at 10:19 am
    Investors are demanding yields 10 percentage points higher than benchmark rates to compensate for the risk of losses on some of the lower investment-grade rated parts of CDOs, up from 4 percentage points at the start of the year, according to data compiled by Morgan Stanley in New York.

  166. njpatient says:

    Market’s been swinging like Dave Kingman (or maybe Rob Deer) the last few days. More and more I find myself with Clotpoll – I plan to have plenty of batteries, water and canned food on September 1.

  167. chicagofinance says:

    skep-tic Says:
    July 24th, 2007 at 10:27 am
    Jobs are good now, but what is really frightening is how this unraveling despite this fact. If people start losing jobs in a widespread manner housing will be in freefall

    skep: the financial masters keep taking body blows….sooner or later some heads are going to roll….just not 2007….I agree, you get a round of layoffs and a TON of people are going to start sweating bullets…..Manhattan Real Estate? Start brushing up on your Arabic, German and Mandarin.

  168. Rich In NNJ says:

    Sales from today’s “Hotsheet”:

    Closter:
    SLD FARRINGTON AVE $888,000 10/22/2004
    Less than 1% year return
    SLD FARRINGTON AVE $905,000 7/23/2007

    New Home
    ACT HIGHLAND AVE $1,895,000 4/14/2006
    SLD HIGHLAND AVE $1,300,000 7/23/2007

    Ridgewood:
    ACT HILLCREST RD $849,000 3/7/2006
    SLD HILLCREST RD $617,500 7/23/2007

    Westwood:
    SLD ASH ST $475,000 12/9/2005
    Just about 2%/year return
    SLD ASH ST $495,000 7/23/2007

    Wyckoff:
    SLD PARK AVE $720,000 2/4/2005
    About 6%/year return, not bad
    SLD PARK AVE $810,000 7/23/2007

  169. JLB says:

    #154 NJ Patient: Whoa, I wasn’t saying that everyone on this board who isn’t buying can’t pull the trigger and I am sorry you read it that way. I was refering to those who think their pushy opinion alone will change the market/sentiment and don’t reference the facts like inventory, economy,etc. Those people that don’t base their opinions in fact tend to be people that don’t pull the trigger and unless this is you I wouldn’t say my comment was directed at you.

  170. 3b says:

    #154T That is what kills me so to speak with these uber bulls (all is well because I say so).

    Without beating the word to death, they employ rhetoric. Wishing life was different, what does that mean? take a position, have skin in the game, and all these other silly little expressions or motivational sound bites.

    When asked to explain, then the personal attacks etc.

    I have owned and lievd through both booms and busts, thats the way lif is;I have seen it on both ends.

    Then there is the how can you wish bad things on your family, friends,neighbors, etc.

    What does that mean? That there should not be a correction, becasue people might get hurt?

    So all those people who have been dilligent in their savings, investing, and prudent in thir life style, you now have to pay full asking price, because somebody else will be hurt if you don’t.

    Where is the logic in that? Does that apply to just real estate, or to all markets?

    So if it all works out prices always go up (the ownwer)), than thats fine for me, too bad for you (potential home buyer), but if prices go down it will hurt me (the owner), so prices cannot go down, and still too bad for you (potential home owner)?

  171. Rich In NNJ says:

    The house I listed above in Ridgewood got a lot of “EXPOSURE”. A year and a quarter’s worth.

  172. chicagofinance says:

    Clotpoll Says:
    July 24th, 2007 at 11:43 am
    Every seller of mine is on notice right now that the goal is to be under contract and off the market on Sept. 1.

    clot: I’ll be stocked up on water, batteries and plywood. Hurricane Chip!

  173. Richard says:

    >>Go to a playground in a desirable town and watch how the parents and childeren interact. Most of the parents seem to ignore their children.

    i don’t see this at the playgrounds in my town however i do see this more with older kids. parents are busy doing their own thing working and/or playing so they buy their kids nice cars and give them $ to keep them busy. just the other day i saw what looked like a 14 year old drive down my block with a buddy in a mercedes CLS550 coupe. there’s values for ya.

  174. njpatient says:

    #173 Chifi

    JINX!!

    (to me at #167)

  175. njpatient says:

    Chi, I’ll trade you some of my canned food for some of your plywood.

  176. JLB says:

    #171 3b: THIS IS NOT A PERSONAL ATTACK OR RHETORIC!
    I suggest that the market is not tanking because the weekly inventory number came down in the Edison mls region per the data collection website http://www.housingtracker.net. This is based on data from last week (real numbers!). I noticed you posted info. from July 5th realtor.com which was an opinion from a realtor? Now, who is basing their opinion on fact? Its not uber bull its uber reality!

  177. njpatient says:

    3b’s point is that if realtors are bearish, there’s a problem out there.

    Inventory is supposed to be falling by July.

  178. BC Bob says:

    “I was refering to those who think their pushy opinion alone will change the market/sentiment and don’t reference the facts like inventory, economy,etc.

    JLB,

    I doubt anyone, bull or bear, feels this way.

    Chi,

    Maybe like Mutombo, waving his finger, after he slaps it back.

  179. JLB says:

    #171 3b: Oh and by the way you hurt my feelings that you made fun of the way I speak and called what I say silly expressions. I feel this was a personal attack and possibly negative rhetoric.

  180. Donald says:

    This September 1st date is being over-exaggerated. Yes, many sellers want to be off the market by then, but not by selling for pennies on the dollar. They will withdraw their listings and wait for next year.

  181. 3b says:

    #170 Economy? Inventory? we discussed this yesterday. Inventory is up over all from this time last year.

    If you do not believe me than check with others on this site.

    Economy? NYC? NJ? where NYC yes, (for now).

    NJ, its not there,again I refer you to the Rutgers report. Can the NYC economy continue to support all of north, central, west and parts of south Jersey?

    As well as NYC itself, and Westchester, LI, Rockland Co and parts of southern Conn? Seems like a tall order to me.

    Pushy opinions? That the kettle calling the pot black.

    To paraphrase one of your comments, the market is not going down, unless there is some major event. Pushy? Dare I say rhetoric? Yet there are so many indicators out there that say otherwise.

    It apperars to me you have only lived through a bull real estate market, once you have lived through a bear market, you might see things a little differently.

  182. JLB says:

    #179 Of course realtors are bearish but that doesn’t mean the market is starting to tank, it means you already have the negative sentiment and are in capitulation. Yes inventory should come down in July but the point is it was building in May,June and just started to come down in the last three weeks.

  183. 3b says:

    #181 JLB: I could not have made fun of the way you speak,as I have not heard you speak.

    As far as your “silly expressions” I apologize.

    As far as negative rhetoric, well I suggest you look up the definition of rhetoric.

  184. Rich In NNJ says:

    I suggest that the market is not tanking because the weekly inventory number came down in the Edison mls region per the data collection website

    Inventory levels were SO last year.

    Sorry, I just had to type it that way.

    Anyway, my point. Inventory levels can continue to drop but have no effect on “months to sell inventory” as sales continue to slow.
    So at this point I feel you want to look at sales.

  185. Lindsey says:

    Re post 128:

    Can I short your prediction?

    I’d love to hear what it’s based on.

    I’m also wondering what is going on in your 6% post, what does the list of numbers indicate?

  186. JLB says:

    #183 You have no idea how old I am but you love to pull that card out that you have lived through boom and bust. Wouldn’t it level the field if I said so had I, and then we could just stop you refering to me as a child and deal in the real facts. What indicator is more important than inventory when talking about real estate? And yes I have pushy opinions but the point is they come from somewhere other than just what I want to happen. I am farming facts and developing my opinions not just basing it on my years above ground!

  187. Rich In NNJ says:

    Donald Says:
    July 24th, 2007 at 1:55 pm

    This September 1st date is being over-exaggerated. Yes, many sellers want to be off the market by then, but not by selling for pennies on the dollar. They will withdraw their listings and wait for next year.

    Yes, some will.
    They’ll be taking the risk that the market will not only continue to drop but will need to see some upward tick in order to stay on pace with inflation.

    What will you do?

  188. 3b says:

    #178 JLB You win Buddy.

  189. JLB says:

    #186 OH my G….! Are you kidding? Please tell me you are. Wouldn’t inventory include sales? Inventory would be those properties added and those properties subtracted leaving those on the market.

  190. James Bednar says:

    I was refering to those who think their pushy opinion alone will change the market/sentiment and don’t reference the facts like inventory, economy,etc.

    If Paulson can’t sway the market with his Jawboning, does anyone think anonymous arguments on a blog are going to have any effect at all?

    Said it before, but maybe I should say it more often:

    Those looking to ‘sway the market’ by posting here are wasting their time. Decisions were made long before anyone found this site.

    jb

  191. 3b says:

    #191 Ducky; You are joking right?

    This is what you got? Look a little closer at those numbers would you, please for your sake, not mine.

  192. chicagofinance says:

    Yan posted the Bill Gross link. His last paragraph points out some items that may be of interest to you.

    1. Any veteran of the fixed income markets understands that the Rating Agencies are merely a piece of third party information that is not necessarily entirely objective OR market based. If any investors got “BURNED” then they are newbies…..meaning foreign investors [e.g., Chinese, Asian, South Asian, Arab-oil and their agents], and hedgies that weren’t around in force in 1997 & 2001.

    2. Keep your eye on all of “high-yield”

    3. Bear in mind the issue of “flight to quality” and spreads blowing out. Just because you see the 10 Year at sub-5% doesn’t imply that there is a market for high-yield paper or that any such access is available at attractive prices. There are many indicators that are simply not tracked or published anywhere except with Bloomberg’s box or proprietary reads offered by desks to potential borrowers.

    4. Bill Gross needs to STFU about how government is a better place to send rich people’s money. I beginning to wonder if he is over-the-hill. His recent results give support. Maybe he and JoePA need to hit the highway.

    Over the past few weeks much of that has changed. The mistrust of rating service ratings, the constipation of the new issue market and the liquidity to hedge the obvious in CDX markets has led to current high yield CDX spreads of 400 basis points or more and bank loan spreads of nearly 300. The market in the U.S. seems to be looking towards this week’s large and significant placing/pricing of the Chrysler Finance and Chrysler auto deals to determine what the new level for debt should be. In the U.K., a similarly large deal for BOOTS promises to be the bell cow for European buyers. But the tide appears to be going out for levered equity financiers and in for the passive owl money managers of the debt market. And because it has been a Nova Scotia tide, rising in increments of ten in a matter of hours, it promises to have severe ramifications for those caught in its wake. No longer will double-digit LBO returns be supported by cheap financing and shameless covenants. No longer therefore will stocks be supported so effortlessly by the double-barreled impact of LBOs and company buybacks. The U.S. economy in turn will not benefit from this tidal shift and increasing cost of financing. The Fed tightens credit by raising short-term rates but rarely, if ever, have they raised yields by 150 basis points in a month and a half’s time as has occurred in the high yield market. Those that assert that this is merely an isolated subprime crisis should observe very closely the price and terms that lenders are willing to accept with Chrysler finance this week.

  193. bairen says:

    #178 JLB,

    Did you click on the link for
    Edison at that site? Well i did and here’s what I saw

    Date Inventory
    7/23 13,224
    7/16 13,239
    7/09 13,219
    7/02 13,276
    6/25 13,123
    6/18 13,086
    6/11 12,894
    6/04 12,819
    5/28 12,767
    5/21 11,471

    Also a 10k drop in list price for 25th, 50th, and 75th percentile from 5//21 to 7/23

    A drop in 15 houses or 10 basis points of inventory is statistically insignificant for a 1 week time frame. Note the 1,700+ increase in homes and a 10k drop in asking price over 2 months. Those are statistically more relevant.

    If the 15 homes a week drop happens every week for the next few months your theory will have more merit, but you would also need to seen increases in prices too.

  194. Donald says:

    JB #192

    You are definitely correct. Those with the power to sway the market are not on this blog. They are on Pennsylvania Avenue, Wall Street, and K Street.

  195. Donald says:

    3b,

    I looked a the numbers and all I see is that buyers paid MORE than peak prices. And don’t start talking to be about inflation and all that other nonsense. I am solely comapring 05 prices to today’s prices.

  196. Rich In NNJ says:

    Donald Says:
    July 24th, 2007 at 2:05 pm

    Post 191

    Do you understand the concept of inflation?
    And I’m excluding closing costs and commisions.

    Using an average 3%:

    SLD FARRINGTON AVE $888,000 10/22/2004
    Less than 1% year return, -2% return
    SLD FARRINGTON AVE $905,000 7/23/2007

    Westwood:
    SLD ASH ST $475,000 12/9/2005
    Just about 2%/year return, -1% return
    SLD ASH ST $495,000 7/23/2007

    Wyckoff:
    SLD PARK AVE $720,000 2/4/2005
    About 6%/year return, not bad, 3% return
    SLD PARK AVE $810,000 7/23/2007

  197. Clotpoll says:

    BC (147)-

    I dunno. Anybody can make a sale. A FSBO, a builder, whatever. If all somebody wants is to make a sale, it can be done. When it’s FSBO, price is the only lever to get action going. By definition, FSBO properties are not professionally marketed.

    If the seller feels that he’s deserving of having his home marketed to the right buyer (instead of just any buyer), a good (emphasis on “good”) Realtor can do it. In the hands of a good Realtor, the quality of marketing determines the quality of the deal obtained. It does not all just boil down to price.

  198. James Bednar says:

    The change in inventory pace has been well documented and discussed here.

    I really don’t make up these graphs for fun.

    From the June Residential Sales report:

    https://www.njrereport.com/images/jun07_invpace.gif

    jb

  199. Donald says:

    #198,

    I am looking at these sales from a buyer’s perspective, not a seller’s. Commissions and closing costs are irrelevant to the buyer. Only the price matters. And they are paying much more than what you think because interest rates are higher today than what they were in 2005.

  200. JLB says:

    #195 I respectfully disagree because as you can see (and by the way Newark looks the same) no matter how small the number the fact that the inventory level is lower from the week before is important and of course the price drop is too but that is expected (no one expects prices to not drop at all). My point is it looks promising in that the inventory is not stacking like it had been, that’s all.

  201. Rich In NNJ says:

    JLB Says:
    July 24th, 2007 at 2:07 pm

    #186 OH my G….! Are you kidding?

    No Marcia, I’m not.

    Inventory can drop due to withdrawals and expirations, not just sales.

    In your thinking, if the house is no longer on the market it must have been sold. But the Sold and Under Contract data does not support your theory.

  202. 3b says:

    #201 Ducky: “God Love em.”

  203. bairen says:

    #195

    Correction, there was actually a 20k drop in price for the 75th% for houses. Doesn’t sound like a hot market to me.

  204. JLB says:

    #200 JB: Honestly I want to get on your horse and ride it but you keep forgetting your saddle. How can you post June Inventory graphs and say inventory has been well discussed and documented when we are headed into August and year over year is a moot point right now because we need to be living week to week if we are looking for this illusive bottoming of the market (not bottom, bottoming). Let’s saddle up JB!

  205. Donald says:

    #203

    That is true. Inventory will drop this winter, perhaps dramatically. Very rarely do I see for sale signs when there is snow on the ground. Nobody is shopping for a house during the holidays.

  206. ac says:

    Forget about Sept 1st, the impending liquidity drought may just be the event that home buyers are waiting for.

    http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2007/IO+August+2007.htm

    It will be interesting to see who is willing to pull the trigger then.

  207. James Bednar says:

    #206 – Inventory in NNJ has traditionally displayed significant seasonal variation. It’s difficult to compare two points in time without seasonal adjustment or a YOY comparison of the monthly change.

    The only non-adjusted comparison that can be made is YOY.

    https://njrereport.com/images/jun07_salesinv.gif

    jb

  208. JLB says:

    #203 Rich: I hear ya, but I would argue that I don’t care why their house isn’t included in my inventory number but that number is a driver in the market and it is important. I will say come Sept. we will be watching and i have said that from the beginning

  209. pesche22 says:

    jb:

    a quick scan tells me you taking a beating
    around here today.

    housing stocks at new lows., other
    than that everything in housing is fine.

    Bergen County: they can’t go down.

  210. bergenbuyer says:

    bi Says:
    July 24th, 2007 at 12:19 pm
    My prediction is average price in desirable towns will be 10% higher next year from here

    NO PRICE RANGE IS IMMUNE!
    NO TOWN IS IMMUNE!

    Just as all towns and all levels were affected on the way up, they will be on the way down. Plain and simple.

    I don’t know when the bottom will be or how far down it will go, but we ain’t there yet.

  211. bairen says:

    #202 JLB

    I think what happens from 9/01 to end of year will be more telling. If clot is right invntory will explode and prices will crash as people rush for the exits. If you are right inventory would drop not too sure of your pricing level, although from your last post it seems another 10k drop wouldn’t be out of the question.

  212. Donald says:

    Prices for luxury condos on the Gold Coast will at least 5% higher next year.

  213. JLB says:

    Did anyone hear they have a rat infestation in Chatham? Quick maybe you can get a good deal on a house. haha

  214. Rich In NNJ says:

    JLB #210 Thanks. I hear you too.

    But, I LOVE to repeat myself!
    The number that is used is “Months to Sell”, meaning months to sell the current inventory using today’s pace of sales.
    So inventory can drop but if sales drop as well, “Months to Sell” remains the same.
    Ya dig?
    Watch the sold data…

  215. 3b says:

    #211 pesche: But they already are.

  216. 3b says:

    #216 Rich: Why do you bother? Its like hitting your head against a wall. Nothing will convince some people, real estate cannot and will not go down, even it is, its not.

  217. BC Bob says:

    “Prices for luxury condos on the Gold Coast will at least 5% higher next year.”

    Donald,

    Step up and buy, then flip.

  218. shawn says:

    3b – kind of feels like this commercial.

    http://www.youtube.com/watch?v=0HeddM_zavw

  219. James Bednar says:

    What is Mozillo up to?

    From Reuters:

    Countrywide CEO sees 5 major US mortgage lenders

    Countrywide Financial Corp. Chief Executive Angelo Mozilo expects the number of U.S. mortgage lenders with large market shares to fall to five from 10.

    On a Tuesday conference call, Mozilo said consolidation will take place because it requires more scale and capital to compete effectively.

    He noted that many smaller lenders have quit the industry in the U.S. housing slump, and pointed to recent consolidation among larger lenders.

  220. bergenbuyer says:

    To the RE Bulls on this board, Donald, JLB, bi, etc. Why are you here?

    If you think everything is great in RE, then go live in the house you already own and enjoy the life that you tell us renters long for. Or, if you’re looking to buy, buy now it’s never been a better time in your eyes, or heck buy a second one if you think prices are going up. If you’re selling, why sell now? You should wait. Prices will be up 10% or more next year, right? Why even sell at all, we’re going to see 10% every year for eternity, you should buy buy buy NOW!

    I came here to find information about what the market was doing because I had a gut feeling that something was out of whack. JB and others confirmed that with statistical facts.

    You bring nothing valuable to the discussion, no real life examples, no stats, just off the cuff remarks that are out in left field. You’ve changed this blog from having a comments section of 100 quality posts a day to 300 posts a day with 150 useless comments and then another 50 of people responding to your nonsense. Stop it, please leave, or start bringing facts. I’ll be more than happy to look at bullish RE reports, but rarely do you ever provide them. Stop wasting our time.

  221. James Bednar says:

    From Bloomberg:

    Defaults on Some `Alt A’ Loans Surpass Subprime

    Defaults on some so-called Alt A mortgages packaged into bonds last year are now outpacing those from subprime loans, according to Citigroup Inc.

    The three-month constant default rate for 2006 Alt A hybrid adjustable-rate mortgages is 2.3 percent, compared with 2.2 percent for subprime ARMs, New York-based Citigroup analysts led by Rahul Parulekar wrote in a July 20 report. The figures represent the percentage of balances in a mortgage-bond pool expected to default in the next year based on 90-day trends.

    The speed at which Alt A hybrid ARMs are being paid off due to home sales or refinancing has also fallen to about the same level as for subprime ARMs, which typically prepay more slowly, the analysts said. Slower prepayments can make the same rates of defaults more damaging by leaving more of the initial balances outstanding to eat into bond-investor protections.

    The combination of challenges mean 2006 bonds backed by Alt A mortgages, a credit grade above subprime loans, may need “lower loss severities to still come out with lower cumulative losses than subprimes,” the Citigroup analysts wrote.

    More than $800 billion of subprime mortgage bonds and $700 billion of Alt A bonds are outstanding, with ARM bonds totaling more than $600 billion and $450 billion, respectively, according to a March report by Zurich-based Credit Suisse Group.

    Severities represent the size of losses incurred after borrowers stop making payments. The losses can include the difference between what a seized home is sold for and the loan amount if a homeowner can’t sell or catch up on payments; legal and other foreclosure and sales costs; and reimbursement of advances made for a time in which a borrower isn’t paying.

    The Citigroup analysts are working on a report related to default severities, Parulekar said yesterday.

    The three-month constant default rates were measured with loans in 2006 bonds at an average age of 16 months. The level for the Alt A ARMs was a record.

    Alt A bonds offer investors less protection against loan losses than subprime bonds with the same ratings. Before last year, the previous worst “vintage” for non-prime mortgage bonds was 2000, which has produced 4.5 percent loan losses so far for subprime bonds and 0.5 percent in Alt A, Citigroup said.

    In a typical Alt A ARM transaction this year, buyers of the BBB bonds were protected against loan losses of about 3 percent by having lower-rated or unrated bonds hurt first, according to a June report by Bear Stearns Cos. In a subprime deal, the level was 7 percent. At the AAA level, some Alt A bonds were protected against 10 percent losses, compared with 25 percent for subprime.

    Between June 1 and July 17, typical spreads on BBB rated Alt A securities widened by 125 basis points to 475 basis points, while spreads for similar subprime securities rose 200 basis points to 450 basis points, according to Citigroup.

  222. john says:

    Why does there have to be an event that would cause the housing downturn. My company paid out a big bonus this year and not one person said lets go out and buy a house. Housing is now viewed as a bad investment. That is all it takes. I mentioned to my wife I would like to trade up but it is a bad time to buy a house.

  223. JLB says:

    #218 3b: Ouch! I think you hurt my feelings again. What do you mean you cant convince me, I just gave you a hot tip on a house in Chatham, I hear it’s a great town with nice houses and some rats

  224. Donald says:

    Nobody is running for the exits. Most people WANT to sell, they do not NEED to sell.

  225. JLB says:

    #222 bergenbull: ouch! I feel like I’m getting bruised here. listen, tomorrow I won’t be on the board because I just have a day off of my job due to the bad weather yesterday. As a state worker I am looking forward to getting out there and earning my living from all these high tax paying nj residents. Do you know for sure that I own and I am a bull on real estate? Speaking of bringing facts, where are yours?

  226. bi says:

    john, bergenbuyers,
    it may be a good investment when everyone said it was a bad investment. I agree we may find bargain these days. For example, people may lower the price to significantly lower than market value due to relo, devoice, fear of foreclosure and etc. RE is always best investment for long run.

  227. Donald says:

    “Donald,

    Step up and buy, then flip.”

    I can’t. I do not have the money to buy a $30,000 parking spot.

  228. 3b says:

    #220 shawn: Good one, thanks for the laugh ( I think I have that tie somwhere)!!

  229. Hobokenite says:

    Donald,

    Rather than quoting some homogenized newspaper clipping look at the raw data supplied in the Miller Samuel report.

    http://www.millersamuel.com/reports/pdf-reports/MMO2Q07.pdf

    Average Sale price:
    Current quarter: $1,333,316
    Last Quarter: $1,290,391
    Last Year Quarter: $1,386,193
    Change – 3.8% yoy

    First line of the report…you can’t miss it.

    Most of the statistics look good for Manhattan, but it’s not all roses. Like I said, if you don’t like the #’s, go argue with Miller Samuel, the real estate appraisal firm.

  230. pesche22 says:

    which major housing company will break
    single digits.

    tol, hov, bzh

    very sad

  231. bi says:

    222#,
    I am just wondering how you can make good investment with this kind of mentality.

  232. JLB says:

    here we go, finally something we can all find useful.. http://activerain.com/blogsview/154386/How-to-write-a
    sellers beware

  233. pesche22 says:

    i think we have a little fear.
    oh well, get your check books out.

    we will see some motivated sellers.

  234. bergenbuyer says:

    JLB- I’ve said multiple times on this board the examples of homes that I saw priced at $X and watched as they dropped. I’ve given examples of homes I’ve bid on and what the counter offers I’ve rec’d and what’s transpired.

    I’ve posted articles, but for the most part I rarely do that as JB does such an outstanding job of posting information timely that it’s already up by the time I go to post it.

    I’m not against opinions, I welcome them and I think everything needs a devils advocate. But if you’re going to argue a point back it up with a reason.

    “bi” said he expected prices in desirable towns to be up 10% next year. OK, why?

    I previously said that I thought that Labor Day was a time when we’ll see more price drops as it is a catalyst for people that realize that they missed the spring/summer selling season and the winter is a tougher time to sell. I think you’ll agree that the spring is a more active market than the winter and there is no argument there. I then said that I noticed this last year when the market mentality wasn’t as bad as this year. When Sept came all of the houses that I made lowball offers on called me back and came down to my offer price from 3 months ago.

    I saw prices drop 10-15%, I think this year will be worse than last year as the market is worse, the mentality is worse and there are still people that are trying to sell their house from last year. So I think another 10-15% is definitely reasonable come september.

    I’d love to hear your opinion. Do you think prices will drop as people try to sell before the winter months? If not, what do you think they will do? Stick it out for another spring in hopes of higher prices? If yes, do you agree that is a smart move? Why is it a smart move?

  235. JLB says:

    #236 bergenbuyer: thank you for your reasonings, it makes better sense why you are upset with people who think the market is going to dive. This is the thing prices will go down but don’t try to catch the bottom. Right now you have a great chance to pick up a bargain. Reference that article on Active Rain I just posted for how to lowball and get it done. I think you might see the most opportunity this fall but you need to be ready to act and then don’t look at this board so you can live in your house and not question yourself daily, if you are in a house you love you don’t care if another house dips 10%. Don’t shop the spring market!!!!!

  236. JLB says:

    #237 bb: sorry I meant people who think the market is NOT going to dive (next time I will proofread)

  237. bergenbuyer says:

    bi Says:
    July 24th, 2007 at 3:13 pm
    222#,
    “I am just wondering how you can make good investment with this kind of mentality.”
    “RE is always best investment for long run.”

    Historically RE only appreciates just above inflation. Only in the past 5 years has it exceeded that. All other times in history that RE has appreciated above inflation significantly it was then followed by a period of correction to get it back to the norm. Guess where we are today.

    Do I want to buy a house, yes. Do I have the money, yes. Have I owned previously, yes.

    Why aren’t I buying now? Because I think prices will come down further, why would I buy something that I believe, based on the facts I’ve gathered, will drop in price further. I make investments based on facts.

    Also, when I buy, it won’t be for the investment, it will be for a roof over my head. I’m just waiting until I feel the time is right so I don’t overspend for that roof.

  238. BC Bob says:

    “Most people WANT to sell, they do not NEED to sell.”

    Donald,

    Many wanted to sell pet.com at 100. However, they did not need to sell. Where is the data supporting your theory?

  239. bergenbuyer says:

    JLB, if I found something for a price that was at a level I thought was appropriate, I would buy tomorrow. Right now, that hasn’t happened.

  240. bi says:

    Historically RE is 5 to 6% and stock is about 10% compound. But it doesn’t take other factors into accounts: big tax benefits, rents, schools, lower volatility and etc.

  241. dreamtheaterr says:

    This market will not collapse. All to-be sellers were simply testing the market this year and they will simply take their houses off the market this Fall and relist next Spring. Why ? Because it costs them nothing to do. There is no opportunity cost between now and next spring, there are no mortgage payments or property taxes to be paid on the property. No bills to pay for having the heating running, leaves raked, or snow ploughed.

    People who have to sell because of divorce will patch up, people relocating because of jobs will rescind the offer, and houses to be sold because of death will be converted to mini-Graceland’s.

    All you RE bears are wasting your time….go home and write your rent checks for next month. And while mailing the check, do a little back of the envelope calculation: calculate how much cash some folks are burning through EACH DAY because of the enormous carrying costs of RE that they refuse to acknowledge.

  242. BC Bob says:

    “Historically RE is 5 to 6%”

    bi,

    What other time period have we witnessed 80-100% gains in RE over a 5 year time frame?

  243. mifune says:

    DJI down 200
    IXIC down 50
    SPX down 28
    DJUSHB down 23 (and under 500 for the first time this year I think)
    Not a massive correction today, but noticable.

  244. SG says:

    America’s Fastest-Growing Suburbs

    http://www.forbes.com/forbeslife/2007/07/16/suburbs-growth-housing-forbeslife-cx_mw_0716realestate_2.html

    Unfortunately, not a single suburb from NJ, NY, CT, PA qualify.

  245. Hobokenite says:

    On another topic, it looks like the workers at the 2 new construction sites near me have vanished again. They are both “open”, but almost no workers to be found. One of them there were some workers I could see (2), but no “illegals” to be found. The other one I couldn’t see any workers at.

    Maybe they are all off working somewhere else. Or maybe the “hidden” decline in housing construction is here as well.

  246. JLB says:

    #241 bb: Listen, the absolute best advice you are going to get (I know because I was given it and it rocks!) is you go right now and find a property you like in the BEST location you can afford and you present a nice lowball (bring it to your appropriate level) using the technique from Active Rain….be really nice and a little pathetic and say you love the house but can’t afford more and I promise you the climate is right you will get that property. Don’t let a realtor convince you to not put a lowball in because that is what many of them do and you need to go get another realtor if that is the case (and don’t tell the realtor you are looking to lowball, just give them the same story you give the seller). Now is a great time to buy if you need to…imagine if you needed to buy in 2004. You are in good shape.

  247. Jim says:

    RE# 222

    Well said bergen buyer, time will prove JB and gang correct.

    These other guys are a bunch of phonies trying to prove themselves.

    But reality is showing otherwise, by the way what ever happened to Sally…a true TROLL.

    JIM

  248. Rob says:

    JLB, tomorrow just say “No” to that 4th strawberry daiquiri at lunch…

  249. bi says:

    245#, 10 yr up 7/32. yield will move to under 4.5% by year end.

  250. make money says:

    having his home marketed to the right buyer (instead of just any buyer)

    Clot,

    Right buyer=dumb buyer, and you call yourself a financial professional. If the same home can be had for 60K cheaper on FSBO but you convince(market) the dumb buyer into paying extra cause RE never goes down, how does that make your profession respectable?

    You’re profession is going extict and your doing it yourself.

  251. Pooch123 says:

    bi (251) who knows where the 10y is headed. All I know is that the cheapest mortgage I can find from a not-incredibly-shady-lender is 6.875%, a full 1 point over where it was6-8 months ago.

  252. john says:

    Donald, it does not matter it people need to sell or not. Their house will still be worth less. Look at Bear, they refused to mark to market their illiquid securities and when the real price came out everyone was shocked. In theory you can sell below market price as the definition of market price is what someone is willing to pay you for a house. Unless you plan to swindle little old ladies if a house was MLS advertised in two or three papers and had one or two open houses and you bought it you paid the highest price that any buyer offered for the house and that is the market price.

    Donald Says:
    July 24th, 2007 at 2:58 pm
    Nobody is running for the exits. Most people WANT to sell, they do not NEED to sell.

  253. BC Bob says:

    “10 yr up 7/32. yield will move to under 4.5% by year end.”

    bi,

    Pretty ominous assessment of the market/risk. If risk adversion results in this, how do you think it will play out in the RE market?

    See Chi’s post, # 194.

    Also, what other time frame have we witnessed 80-100% RE gains in a 5 year period?

  254. bergenbuyer says:

    I have a smart realtor who is on the same page as me and is willing to submit any offer. He’s more optimistic about the market than I am, but if I asked him to put in a lowball offer on the White House, he’d do it. (Notice I didn’t say the Governors mansion, I wanted it to sound more unrealistic, as you never know, that could actually be sold along with the Tpke and GSP).

  255. dreamtheaterr says:

    BCBob, the dollar is really having fun against the Yen, isn’t it?!

  256. SG says:

    What other time period have we witnessed 80-100% gains in RE over a 5 year time frame?

    From 84 to 88, RE in NNJ area had over 100% growth. Then market went down a little from 89 to 92 and flat till 98.

    Historically RE is 5 to 6% and stock is about 10% compound.

    I think that is probably correct, except that the growth is not uniform, its jarred with Boom & Bust.

  257. make money says:

    “We are experiencing home price depreciation almost like never before, with the exception of the Great Depression,” Mozilo said during a three-hour conference call with investors. He said it would take all of next year for the mortgage market to “turn this battleship around,” before demand rebounds in 2009.

    What’s gotten into Mozillo? He is the biggest bull of RE I know of. Bigger than David Lereah.

    Don’t the teach you in CEO school that when talking to investors don’t compare current market conditions with the ones during the great depressions.

    As ma matter of fact DO NO USE THE WORD GREAT DEPRESSION AROUND NERVOUS INVESTORS.

    Bernanke did you hear this? Hurry up and bail him out with a well deserved rate cut. It’s OK to burry the dollar as long as you keep telling everyone who will listen that you favor a strong dollar.

  258. scribe says:

    I think we should all go to the Jersey Shore.

    njrereport Beach Blanket Bingo.

    I want to see Boyaa Bob in a Speedo.

  259. Pooch123 says:

    Richard

    I invested half my saved up down payment in the Ivy mutual fund you recommended and half its 10 biggest holdings are down over 6%. This is the last time I take financial advice from an internet forum!!!

    [sarcasm off]

  260. 3b says:

    3258 The market went down a lot from 89092, Many of us lived it.And than yes it stayed flat till 97/98. Then just like now, the market got out of control and as such the correction, only worse this time IMHO.

  261. make money says:

    I want to see Boyaa Bob in a Speedo.

    me too, 3B could be wearing a thong as he’s a prudent consumer and bought whatever was on sale. Just thing of all the everyone can save by wearing thongs.

    Then he’ll wish ill on myself and he’s friends who bought $100 brand name swimwear to wear to the beach.

    It would be fun.

  262. skep-tic says:

    I don’t try to hide the fact that I’m less bearish than many on this board, but the posts by the bulls today are just weak.

    JLB is making a big deal about a 1 week decrease in inventory that is not statistically significant during the last week in July. This is evidence of a market bottom?

    bi is talking about 10% increases in top towns by next year– but provides no explanation. Doesn’t even attempt to refute all of the negative data points that are out there.

    I really do try to take a balanced view of things and I am certainly not one who is pinning his hopes on a 95% decline to buy a 5th Ave penthouse.

    But it would be nice if the bulls on this board could provide even 1 bit of relevant data.

  263. bi says:

    Pooch123, 261#, 15 yr or 30 yr? I can get 15 year less than 6%

  264. make money says:

    But it would be nice if the bulls on this board could provide even 1 bit of relevant data.

    I’m a Bull and there isn’t any. Even Mazillo said that this shit is bad and it’s not ending until 2009.

  265. JLB says:

    #264 Septic: Never said the decrease in inventory was a bottom, read much?
    Maybe you would wear a mankini to the beach?

  266. BC Bob says:

    “Shares of U.S. homebuilders tumbled, led by Hovnanian Enterprises Inc. and Meritage Homes Corp., after a Deutsche Bank report said new home demand deteriorated further.”

    “Our recent conversations with builders around the country find that housing demand has continued to wilt in the summer heat, with conditions sequentially worsening in the past 4-6 weeks,” the analysts wrote.

    “The impact of mortgage market contraction appears to have accelerated in recent months, with builders reporting greater rates of sales loss due to the inability of buyers to qualify for mortgage products currently available,” the analysts wrote.

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aYKunRcovVio

  267. Pooch123 says:

    Bi

    i was talking about 30 yr, 15 you can get for 6.5, but do tell, where can i get a 15 for under 6 bc I’d like to know

  268. chicagofinance says:

    Donald Says:
    July 24th, 2007 at 2:15 pm
    3b,I looked a the numbers and all I see is that buyers paid MORE than peak prices. And don’t start talking to be about inflation and all that other nonsense. I am solely comapring 05 prices to today’s prices.

    Guan: Are you aware of the inherent stupidity of this comment?

  269. Pooch123 says:

    Haha “inflation and all that other nonsense”

    That one takes the cake!

  270. 3b says:

    #266 MM: Just as long as your not wearing one, (now there is a scary thought)

    But yes I could buy the designer swim wear at a deep discount.

    These people are going to need all the help they can get.

  271. chicagofinance says:

    bi Says:
    July 24th, 2007 at 3:35 pm
    Historically RE is 5 to 6% and stock is about 10% compound. But it doesn’t take other factors into accounts: big tax benefits, rents, schools, lower volatility and etc.

    bi: You list all the “pros”….how about the cons? of course not, that would require objectivity

  272. Hobokenite says:

    I think 1 year from now, monkeys will fly out of bi’s butt.

  273. chicagofinance says:

    James Bednar Says:
    July 24th, 2007 at 2:47 pm
    What is Mozillo up to?
    From Reuters:
    Countrywide CEO sees 5 major US mortgage lenders
    Countrywide Financial Corp. Chief Executive Angelo Mozilo expects the number of U.S. mortgage lenders with large market shares to fall to five from 10.
    On a Tuesday conference call, Mozilo said consolidation will take place because it requires more scale and capital to compete effectively.
    He noted that many smaller lenders have quit the industry in the U.S. housing slump, and pointed to recent consolidation among larger lenders.

    grim: He’s saying that the weak hands are going to be expunged, and he is crowing because he will survive and buy everyone else’s bone pile and pennies on the dollar.

  274. chicagofinance says:

    Note: he is already wealthy due to his peak price stock sales, so as long as they remain solvent, he could not give less of a damn where his stock and spreads go.

  275. Read My Lips: Price are going down down down says:

    Hey panhandling bunch. what go’in on?

    heheheheheheh

    I CAN FEEL IT.

    BLEED’EM DRY.

    BOOOOOOOOOOOOOOOYAAAAAAAAAA

    Bob

  276. Hobokenite says:

    Or maybe he’s hoping that countrywide is bought out.

  277. Read My Lips: Price are going down down down says:

    FALL 2007 HOUSING PAPAPAPANIC COMING TO A HOOD NEAR YOU.

    it’s payback time baby! to many young homebuyers have been abused taken advantage of and it’s payback time baby.

    Make’em pay.

    hehehehehhe

  278. skep-tic says:

    “we need to be living week to week if we are looking for this illusive bottoming of the market (not bottom, bottoming).”

    JLB– excuse me if I mistook “bottoming” for “bottom.” Can you clarify what the difference is?

    While we’re on the topic, why is the relevant timeframe weekly for judging the RE market?

    It would be nice if you could add something to the discussion besides meaningless semantics and name calling

  279. par4156 says:

    Home Loan Benifits for State Employees –

    http://www.nj.gov/oag/newsreleases07/pr20070724c.html

  280. ac says:

    I think bi makes a valid point about the spread widening between quality and marginal towns, though I wouldn’t go so far to say that it will go up by 10%. I’m not sure if I’m speaking for everybody, but if I were buying now, I would certainly be more discerning for the same $X.

    It’s analogous to other markets, higher risk (volatility) investments net larger profits. In a down market, the higher grade investments generally tend to hold up better. But you sacrifice the upside in a strong bull market.

  281. par4156 says:

    JLP,
    need to make more money? take a look at #281. How can we get deals like that?

  282. Clotpoll says:

    Rich (216)-

    Precisely. All the pinheads will point to the seasonal decline in inventory and shout that the pain is over.

    However, if sales relative to inventory plunge further, the pain will be worse. It’s all about absorption rate!

    I also believe that there will be many more homes available this Winter than usual. The YOY comps should be dramatic. For too many sellers, time’s up.

  283. NJGal says:

    Well, I am convinced I have wasted my time here – Zillow says my house is worth 65K more than I paid for it. Woo hoo, I am rich and I know it because Zillow told me! See, the market is clearly back! You guys think I should take out some equity and buy a new BMW?

    Sarcasm off.

  284. Clotpoll says:

    Furthermore, the number of vacant homes offered for sale is at an all-time high. The percentage of unsold homes that are vacant is staggering. What’s the use of pulling these houses off the market…at ANY time?

  285. Donald says:

    #237

    That is the funniest article I have ever read. Present a lowball and a letter to the seller? Take a guess what the seller is going to do with that letter. I wish someone presented me a lowball with a letter begging me to accept the offer. I would rip up the letter right in front of the buyer’s agent.

  286. NJGal says:

    “Present a lowball and a letter to the seller?”

    Well, it’s probably better to do something to explain your offer to the seller and not have to deal with the agents. You would be unreasonable not to at least consider every offer – reading a letter doesn’t mean you have to accept it.

  287. UnRealtor says:

    BJ #128 writes:

    “My prediction is average price in desirable towns will be 10% higher next year from here”
     

    Tell that to the $300K bagholder illustrated in post #87:

    https://njrereport.com/index.php/2007/07/24/the-crisis#comment-110303

  288. chicagofinance says:

    #287 Guan: Your described action is called hubris.

  289. Donald says:

    And good luck in even getting your lowball offer presented. Many agents will not present lowballs because they can damage their reputation.

  290. Hobokenite says:

    ac,

    I might buy the argument that spreads will widen between good and bad towns. But I don’t quite buy the argument that “good towns” will be up 10% a year from now, and everything else will be down.

    Besides, why wouldn’t “good towns” have gone up more with all the easy money? Good and bad towns have been tightly coupled during the boom phase. Why should they de-couple during the bust? Perhaps if the “correction” was only going to be 5-10%, I might buy the idea that spreads would widen. I think a more likely scenario is that “good towns” will lose value more slowly (maybe 5% first year instead of 10%), but the overall decline will be approximately the same in both good and bad towns.

  291. Donald says:

    #291

    If an offer is completely insane and is $100,000+ below asking price, there is nothing to consider.

  292. Clotpoll says:

    Donald (266)-

    Do you think the owner of a vacant home in this market doesn’t NEED to sell?

    Yeah, right…if things don’t work out with the sale, the owner can rent it out. At a major negative cash flow, along with accelerated depreciation thru wear-and-tear.

    Perhaps that owner can even rent it out for a really long time, have tenants beat the crap out of it, then blow his 2 years-in-5 exemption and be subject to capital gains.

    Would that be your idea of “not need to sell”?

    BTW…NJ is littered with real life examples of the above. Right now.

  293. NJGal says:

    “Many agents will not present lowballs because they can damage their reputation.”

    Agents are required to present all offers – at least, sellers agents are. And there is always a buyers agent out there who will – after all, if they are willing to present all offers, that actually helps their reputation among buyers.

  294. Donald says:

    The only place that will be 10% higher next year is Manhattan. Alpine and Cresskill are not going to be 10% higher next year.

  295. Hobokenite says:

    Donald,

    I thought you were going to curse at anyone giving you a lowball offer. Actually, I think your agent was going to curse at him if I recall correctly. Has the market changed so dramatically that you will now only tear up such offers?

  296. Donald says:

    “Agents are required to present all offers – at least, sellers agents are.”

    So what? It does not mean that agents are going to present ALL offers. A lot of times they will make lowball offers verbally so that they do not have to present it since it’s not in writing. A countless number of people on this blog have made lowball offers that were never presented to the seller.

    If you remeber, I had a lowball “presented” to me. My agent cursed the buyer out and never presented the offer. I only found out about it by accident when I called up the buyer’s agent. Had I not callen, I would have never known about the offer.

  297. UnRealtor says:

    Donald #137 writes:

    “here was one agent who actually tried to convicnce me to rent a 3 bedroom apartment they had for $10,000 a month! I have no idea how she thinks I can afford such an apartment. Perhaps my phone number had a Beverly Hills area code on her caller ID. If she knew I was calling from Jersey, she should have known that I could not even afford half that rent!”
     

    She knows you’re a high roller shopping for a house in Alpine — $10K a month is chump change.

  298. James Bednar says:

    From Reuters:

    Centex posts quarterly loss

    Centex Corp., the fourth-largest U.S. home builder, posted a fiscal first-quarter loss on Tuesday, as the U.S. housing market continued to decline.

    For the quarter ended June 30, the company posted a net loss of $128.0 million, or $1.05 per share, versus a profit of of $160.3 million, or $1.27 per share.

    Centex posted a loss from continuing operations of $131 million, or $1.08 a share, compared with a profit of $172 million, or $1.37 per share, in the year-earlier quarter.

    First-quarter home-building sales fell 32 percent to $1.8 billion, as home sales declined 27 percent to 6,095. The average selling price of a home fell 5.5 percent to $291,179.

    New orders, which are not a factor in this quarter’s earnings, fell 22 percent during the quarter to 6,474, with the Southeast and Central regions showing the greatest decline, Dallas-based Centex said.

  299. Donald says:

    #302

    Yeah, I am a high roller shopping for a POS 2 family duplex in Alpine for $949,000 where everyhting is outdated and needs to be nuked, I mean renovated.

  300. NJGal says:

    #298 – Well, then the agent is doing something illegal, and certainly not in your favor. If they don’t present even lowball offers, how do you know that they are in fact presenting ALL offers? Maybe an offer comes in 10K over ask, one comes in 10K under. But the agent doesn’t present the 10K over because it requires splitting commission, whereas she found the buyer that came in 10K under ask? You would care a lot more then.

    Not looking at lowballs only hurts you. You need to get over yourself – it’s just an offer.

  301. njpatient says:

    #182 Duck

    I know what it means to exaggerate, but what does it mean to “over-exaggerate”?

  302. Kurt says:

    Donald wrote: “That is the funniest article I have ever read. Present a lowball and a letter to the seller? Take a guess what the seller is going to do with that letter. I wish someone presented me a lowball with a letter begging me to accept the offer. I would rip up the letter right in front of the buyer’s agent.”

    The sellers of the home I toured in Perrineville on Sunday might have done the same with an $800k offer on their $950k home when it went on the market 18 months ago. But then it would have been even more embarrassing to call them back now and ask them if the offer is still good…
    It’s now listed at $729k.
    MLS 20729034

  303. Donald says:

    My agent is so desperate to sell the house, I seriously doubt he will neglect to present an offer for over asking that requires him to split the commission. Most of the homes he is selling are in the $400-$500k range so I am sure that he wants to sell a $900k home and make a larger commission.

  304. ac says:

    hobokenite,

    Yes, this is essentially what I am saying. The good towns should hold value better. I’m not advocating a 10% increase at all.

    If a significant credit event plays out, and liquidity dries out, it’s a totally different scenario altogether of course (see the PIMCO link on my previous post).

  305. NJGal says:

    #305 – if he was so desperate, he would probably rather sell for 800 or 850 and GET a commission rather than have the house sit forever and get nothing.

    It’s up to you, but it is shortsighted to automatically dismiss an offer because it’s lowball – that doesn’t mean it’s the final offer, and selling for 850K now is better than not selling, or having to lower the price – it only means the lowballs will get lower.

  306. chicagofinance says:

    Donald Says:
    July 24th, 2007 at 5:18 pm
    so I am sure that he wants to sell a $900k home and make a larger commission.

    guan: you mean a $750,000 home

  307. Donald says:

    “And there is always a buyers agent out there who will – after all, if they are willing to present all offers, that actually helps their reputation among buyers.”

    Agents would rather have a better reputation among sellers because that is who pays them. And if they get them a good price, they make a second commission when the seller goes to buy their next house.

  308. Donald says:

    #310

    Who said that I am not willing to sell for $850k? I will gladly sell for that price. My asking price is $869k. Where is this $850k offer? I will grab it right now!

  309. Clotpoll says:

    make (252)-

    “If the same home can be had for 60K cheaper on FSBO but you convince (market) the dumb buyer into paying extra cause RE never goes down, how does that make your profession respectable?”

    Questions:

    1. So the benefit of selling your home FSBO is???

    2. When I represent a seller, my chance of personally obtaining a buyer for that listing is about 6%. I don’t meet a lot of buyers of my listings until the day of closing. When, I ask, do I have the opportunity to make the “RE never goes down” speech to a buyer for one of my listings?

    3. Are all potential buyers for a home inclined to pay the same price for it? Would some not naturally value it more than others? Is the only way to make a sale to tell buyers that “RE never goes down” (which is tantamount to saying that the only way a Realtor can make a sale is via fraudulent representation of the market)?

    4. Is the mechanism of superior marketing a fraud, in and of itself? Has a buyer been defrauded when he realizes that a well-marketed home that catches his eye may have generated a larger, more-motivated buyer pool than the festering FSBO around the corner that gets no attention?

    People like YOU are going extinct…thru the process of natural selection.

  310. Donald says:

    “guan: you mean a $750,000 home”

    Huh?

  311. NJGal says:

    “Agents would rather have a better reputation among sellers because that is who pays them. And if they get them a good price, they make a second commission when the seller goes to buy their next house.”

    Maybe so, but if an agent refused to present my offer, I wouldn’t even consider them in selling the home later, because it just makes me not like them. And that means a lot too.

    Frankly, my agent presented all offers and I still wouldn’t use her when selling because well, I just didn’t like her all that much.

  312. NJGal says:

    “Who said that I am not willing to sell for $850k? I will gladly sell for that price.”

    You keep claiming it’s a 900K home. Obviously it’s not if it’s listed for 869K, so I don’t know where that number came from.

    Either way, it’s still stupid not to look at all offers – a 750K offer can become one for 800K easily.

  313. njpatient says:

    #207 Duck
    “That is true. Inventory will drop this winter, perhaps dramatically. Very rarely do I see for sale signs when there is snow on the ground. Nobody is shopping for a house during the holidays.”

    Exactly. Falling inventory doesn’t help sellers at all if demand is falling even faster than supply. And it is.

  314. Rich In NNJ says:

    …I am sure that he wants to sell a $900k home and make a larger commission.

    I’m sure he does too.
    Now if he only had a client that HAD a house worth that…

    ZINGO!

  315. Donald says:

    “Maybe so, but if an agent refused to present my offer, I wouldn’t even consider them in selling the home later, because it just makes me not like them. And that means a lot too.”

    An agent could not care less that a buyer will not use them when they go to sell because it could be years before you sell. It could be 4 years, 5 years, 7 years, 20 years, etc. A seller who goes under contract needs to buy RIGHT NOW. That is where their loyalty is.

  316. Rich In NNJ says:

    Damn Chi! Leave me one!

  317. Donald says:

    “Either way, it’s still stupid not to look at all offers – a 750K offer can become one for 800K easily.”

    In this market? Yeah right. A buyer offering $50k above asking price? Even I don’t beleive that nonsense. Your arguments are quickly falling apart.

  318. James Bednar says:

    Interesting $1.5m lowball in Millburn:

    MLS# 2216670
    Listed: 11/14/05
    OLP: $4,800,000
    LP: $4,800,000
    DOM: 365
    Expired

    MLS# 2355947
    Listed: 12/22/06
    OLP: $4,800,000
    LP: $3,999,000
    DOM: 143
    Expired

    MLS# 2407800
    Listed: 05/17/07
    OLP: $3,999,000
    LP: $3,999,000
    DOM: 20

    Sold: 07/23/07
    Price: $3,285,000

    If we’re looking only at the current listing, we’ve got a $700,000 lowball. If we look at the OLP of the original listing, we’ve got a $1.5m lowball. 31% off the initial listing, 18% off the current listing. We also have 528 days on market, I’m sure someone will point to the current listing as a sign of strength in the high-end. “Look! It sold in only 20 days!”

    jb

  319. Clotpoll says:

    Duck (291)-

    How does discharging your legal responsibility damage your reputation? Please explain.

    When you read a post here, do your eyes spin and light up like Ren & Stimpy’s? Do you just type the first impulsive utterance that comes into your head?

    It seems that way.

  320. Donald says:

    “Now if he only had a client that HAD a house worth that…”

    Don’t be jealous Rich. Go buy your $300,000 home in North Carolina and let me do what I do best. The last time I sold, conditions were much worse. I put my apartment in lower Manhattan on the market only a few weeks before the 9/11 terror attacks.

  321. njpatient says:

    #226 Duck
    “Nobody is running for the exits. Most people WANT to sell, they do not NEED to sell.”
    Why do most people want to sell if, as you say, it’s such a great time to buy?
    I’d say the folks being foreclosed NEED to sell. The folks being relocated NEED to sell. The houses being sold out of probate NEED to be sold. And they’ll be the new comps.
    Sit there making unsubstantiated assertions about growth in “nice towns”, the gold coast or chatham all you want, but you’ll lose an arm and a leg when the comps continue to plummet.

  322. JLB says:

    donald where is your house and what are the amenities? You never know where you might find your buyer

  323. Clotpoll says:

    Donald (305)-

    I’m sure he would do anything…to get away from you.

  324. Clotpoll says:

    (326)-

    Isn’t that Michael Vick’s house?

  325. Donald says:

    I sold an apartment only a few blcoks from Ground Zero. I was in the wrong place at the wrong time, and I still sold. Please do not insult muy intelligence Clot. I prevailed in a very difficult real estate transaction that most sellers will never come close to dealing with in the current market. When most sellers would have waved the white flag and gave up, I did not and I was eventually rewarded.

  326. UnRealtor says:

    #326, is that the back, or the front of the house?

  327. Donald says:

    JLB:

    Pass it on to who?

  328. Everything's 'boken says:

    ‘what I do best’

    Are you a furnace of some kind?

  329. Pooch123 says:

    To me, of course, but only if Bi can hook me up with one of those 15 yr fixed mortgages for under 6%

  330. Clotpoll says:

    Duck (329)-

    So you held out until the biggest RE bull market of all time was underway? Great.

    How does that- in any way- parallel your current situation? Manhattan after 9-11 had buyers. Today, where you are, you have none.

  331. James Bednar says:

    Q2 Otteau Reports just released..

    jb

  332. Donald says:

    “Manhattan after 9-11 had buyers.”

    Well they were not in lower Manhattan. If there were buyers, I would not have had to sit on the place for 2.5 years!

  333. Pooch123 says:

    Donald, I hope your realtor doesnt read this blog. I’d be very annoyed if someone I was representing told everyone and his cousin that my profession would be extinct.

  334. Pat says:

    O.K. Everybody play nice.

    3b, good job on that patience. Lotsa question marks going on though.

    Rich, your logic on the true meaning of sales, is today’s wake-up moment. Your font touches were nice, too.

    NJGal, Zillow knows when cute litte babies are pending in a case. Easy 30k advantage, house.

    CF, you get minus ten for the smack-down on JoePa.

    Duck, you need to ask JLB out on a date. (S)he is looking to buy right now, and I can tell by the attitude your house might be a fit.

  335. The other doyle says:

    I’m in an interesting position–I am a bear, planning to join much of the clan in Cape May in the next 2-3 years.

    We own our home here in north Jersey, and eventually expect to sell our home here and pay off the mortgage on the home we buy in Cape May.

    We made a lowball offer last year on one home that was rejected–we got a reasonable counteroffer, but it was still more than we thought the house was worth; we did not make an offer on another that we thought might be too low–the 1st home was pulled off the market, the 2nd one is now listed at less than we considered offering last August.

    So now we get to play the game again. The difference now is that there are more homes to choose, and prices are dropping.

    We are likely to make an offer this weekend on a home that’s been on the market for a year. It’s vacant. Another house we were considering just dropped in price this week.

    We don’t want to “bleed ’em dry”, but we also don’t want to get slashed by a falling knife. We’re in no hurry.

    I’ll keep the board posted.

  336. The other doyle says:

    re: Q2 Otteau Report

    And the verdict is…?

  337. njpatient says:

    #293 Duck
    “If an offer is completely insane and is $100,000+ below asking price, there is nothing to consider.”
    This past spring I offered $100K below asking, and the seller didn’t respond. Until a month later. Seller tried to accept, but my offer was no longer on the table because the market had deteriorated that much further.
    I now will not be buying until fall/winter of ’08 at the earliest.

  338. UnRealtor says:

    It’s different in X town?

    Housing sales for spring, usually the busiest buying season, didn’t bloom quite as well this year for Long Island and Queens market, according to a report from Miller Samuel, a residential appraisal company based in Manhattan.

    The biggest drop in prices came from North Shore’s luxury market, an 11.3 percent fall over a year ago in the top fifth of sales prices.

    “There’s this underlying weakness in the market, as evidence by rising inventory and slipping sales,” said company president Jonathan J. Miller. “The second quarter, that’s the spring market, the most active of the year, and we saw a fall off . . . You put those two elements together, and it basically says we probably have more weakness to go.”

    http://www.newsday.com/business/ny-bzhous0724,0,2007250.story?coll=ny-business-leadheadlines

    Welcome to The Crisis.

  339. chicagofinance says:

    guan: before you hit submit….wait 30 seconds…exhale….the randomly delete the post 3 out of 4 times….you will save us all a lot of space…ultimately the cumulative value of your posts will not be reduced.

  340. James Bednar says:

    And the verdict is…?

    Still looking over the graphs, this isn’t the eNewsletter, but the actual town by town reports.

    jb

  341. REBear says:

    Duck
    “I will gladly sell for that price. My asking price is $869k. Where is this $850k offer? I will grab it right now!”

    Are you saying that you will sell for less than purchase price??

  342. James Bednar says:

    Here is a snippet (as the site seems to be down):

    “Company is seeing home price depreciation at levels not seen since the Great Depression”

    -Previously, the company had stated they expected a turnaround in mid-2008; now, they say they are not sure when housing declines will cease. Refuse to rule out house price declines in 2009;

    -Expects to hear mergers and people going out of business in the near future;

  343. njpatient says:

    #342 jb – just dropped some change in the tip jar, and so feel entitled to say “hurry up!”

  344. JLB says:

    why are my comments in moderation? I guess I’m not being cruel to a guy trying to sell his house so I can’t post? wow this is an interesting bubble blog

  345. njpatient says:

    JLB
    When I hear someone hype an investment, I assume either that they’ve just bought or that they are dumb.
    If person X believes that item Y is a good investment, then X is dumb to hype Y prior to buying it. So one concludes that if X is not dumb, X must have bought Y prior to buying it.

    You’re on here hyping real estate. I hope that this means that you were a recent buyer and are fluffing your holdings, because the other possibility is unflattering.

    Donald annoys at times, but at least he has the stones to admit that he’s currently a seller.

  346. njpatient says:

    ?

  347. 007 says:

    Sorry, off topic:
    Have a finised basement but no license (did not know when I brought it). Trying to sell the house (in Edison) and was told need a license (for the basement).
    I think the township is trying to make more money.
    Does any one know if it worth the money and time to apply for a license?
    If it fail the inspection, do I need to take it off?
    My basement only have walls + ceiling + one light + several socket (4 feet from ground).

    Thanks,

    007

  348. Clotpoll says:

    007 (350)-

    UR f—ed.

    Worth the money? You can’t close without a full permit package and final inspection. Your buyer’s attorney will probably ask for evidence of permits once he sees your home has a finished basement.

    Oh…you’re also probably subject to a fine, and- possibly- a small amount of unpaid back taxes on the improvement.

  349. James Bednar says:

    Donald/JLB,

    I’ve sent you both an email that includes the requested contact information.

    All,

    If you would like to be introduced to another poster, please send me an email requesting introduction. Do not post any contact information publically. Once the alternate party has agreed, I’ll provide contact information in both directions.

    jb

  350. syncmaster says:

    Edison sucks.

  351. Cassandra says:

    JB [3]

    I nominate Clot as guestblogger.

    Have a great time in Krakow.

    ~ Cass

  352. New in Town says:

    If this was a democracy I would second that.

  353. UnRealtor says:

    I’ll nominate BC Bob and John as guest bloggers.

    Look at posts #6 and #23 — things of beauty.

  354. UnRealtor says:

    Look at this poor bastard chasing the market down:

    Apr 19, 2006 – $729,900 (MLS 2268702)

    May 03, 2006 – $699,900

    May 25, 2006 – $689,000

    Jul 06, 2006 – $684,000

    Jul 22, 2006 – $679,000

    Jul 26, 2006 – WITHDRAWN

    Jul 27, 2006 – $659,000 (MLS 2303464)

    Sep 02, 2006 – $639,000

    Oct 26, 2006 – $630,000

    Nov 08, 2006 – WITHDRAWN

    Jul 17, 2007 – $639,900 (MLS 2426942)

    Jul 24, 2007 – WITHDRAWN

    I almost feel sorry for him — almost.

  355. UnRealtor says:

    The property in #357 is:

    72 Meadowbrook Rd
    Short Hills, NJ

  356. startingover inNJ says:

    I haven’t heard much about sellers who have withdrawn and are renting until the market picks up. That’s the story with my new landlords. The house had been empty since winter so, instead of lowering a pretty outrageous asking price, they have leased their house for a monthly rental far below the carry if someone had bought the place. It’s my gain but, frankly, a little weird.

  357. Frank says:

    #359,
    It’s better to loose a thousand than 100K in one month, that’s their logic.

  358. cliffy says:

    My agent sent me this bizaare listing in Paramus. It is realy weird. Here is the actual description. They show mold in the photos!

    MLS 2729998
    ATTENTION ALL BUILDERS/INVESTORS. IMPROVE OR BUILD. BASEMENT TAKES ON WATER. WILL BE OBTAINING ESTIMATES FOR FRENCH DRAINS, MOLD AND ASBESTOS TILES REMEDIATION. THERE ARE FIVE CATS LIVING HERE AND A VERY STRONG ODOR OF CAT URINE. THIS IS NOT FOR THE WEAK HEARTED. ALL THE CARPETING NEEDS TO BE REMOVED AND THE HARDWOOD FLOORS NEED TO BE REFURBISHED. THE REAR DECK HAS NO BACK RAILINGS AND THE LANDSCAPING IS OVERGROWN AND NEGLECTED. PLEASE DO NOT WALK PROPERTY, FOR IT IS UNSAFE AND DANGEROUS.

  359. Everything's 'boken says:

    361
    This is the definitiion of ‘POS’. And 542k, where did they dream up that number? The loan balance?

  360. Rich In NNJ says:

    A couple more from today’s”Hotsheet”:

    Cresskill
    ACT PARK AVE $639,000 8/9/2006
    SLD PARK AVE $490,000 7/24/2007

    Ridgewood
    ACT MADISON PL $1,605,000 3/6/2007
    SLD MADISON PL $1,260,000 7/24/2007

  361. Everything's 'boken says:

    361
    Not for the weak of heart (or strong of mind).

  362. Clotpoll says:

    Cassandra (354)-

    Only if I can talk about the NBA (LOL!).

  363. bi says:

    “Company is seeing home price depreciation at levels not seen since the Great Depression”

    if you believe him, you should line up cash and ready to buy. get in when blood on the street.

  364. PeaceNow says:

    007, Clotpoll (350 & 351)

    I don’t know, you can sell a house without a CO; I see it all the time in ads in Monmouth County. So I think you can sell a house with an un-permitted basement. It would have to be disclosed, and buyer would want a discount, of course. Yes, the town can fine you for not having a permit…but charge you back taxes? I don’t see it. Wouldn’t it constitute “spot assessing”? (as I think it’s called)

  365. TJ says:

    http://www.nj.com/news/bythenumbers/

    Home Sales –> Home sales in your town

    Edison (Middlesex) – 2007 Numbers – JLB

    Bernards (Somerset) – 2007 Numbers, I can’t wait to see the 2008 numbers.

    Why aren’t these numbers shouting doom and gloom in highly overpriced towns?

  366. Punch My Ticket says:

    Donald, you say you wouldn’t look at an offer 100k below ask. I’m sorry for you. You will end up like every loser in a bear market, unable to bear the small pain and letting it turn into something absolutely huge.

    The house I live in today, I paid 750k for. I originally bid 700 against an 895 ask. It had been for sale for five years and I have a copy of the first listing sheet at 1395. My agent told me that the vendor chased the market down, as so many vendors do, turning down an even million two years before I showed up. Poor shmuck would have been better off taking the first bid at 400 off his wishing price than waiting another two years and having to settle for another 250 less.

    But I guess it will never happen to you.

    BWAHAHAHAHAHAHAHAHA.

  367. James Bednar says:

    if you believe him, you should line up cash and ready to buy. get in when blood on the street.

    IMHO, still much too early.

    jb

  368. chicagofinance says:

    TJ Says:
    July 24th, 2007 at 11:42 pm
    Why aren’t these numbers shouting doom and gloom in highly overpriced towns?

    Teej: You flick on the Weather Channel and see that Hurricane Chip is bearing down on your state. It is windy outside and you see video coverage of other places being pummelled. You have no rain on the ground, but people are boarding up their windows.

    Your reaction – No damage I can see shouting doom and gloom?

    OK – fine, I can’t disagree.

  369. bergenbuyer says:

    #350- “Have a finised basement but no license (did not know when I brought it).”

    If it was already finished when you bought it, try to tell the town that and if they say you still need something ask why this didn’t happen when you bought the house. If they say something like it’s a new rule, say that your place must be grandfathered in.

    Maybe when the basement was finished a permit wasn’t even required.

  370. john says:

    CO is bull. Half the time the bank does not catch it in appraisal so it is no big thing, seller does not have to tell buyer just has to tell him I am unsure if it needs a permit. Plus the 5K off asking beats the hell out of paying 2K ten years ago to get the permit and then pay $500 extra in taxes for ten years.

    I saw a house on Sunday with an illegal garage conversion to a bedroom, Illegal Deck, Illegal Pool, Illegal Shed, Illegally converted to Mother Daughter, Illegal second kitchen and illegal third bathroom.

    The realtor confessed this to me upfront, I already knew anyhow. And told me the bank financing he has lined up is cool with it and the seller is paying all closing costs if I use that bank. Otherwise he wants cash as the COs won’t be fixed and the buyer must sign a legal document saying the sale is non-contingent upon any CO issue and that COs won’t be granted.

    My current house had two illegal decks, illegal third bathroom, illegal sunroom and the guy raised the whole roof of the house on the top floor without a permit. Me I would be a little nervous taking the roof off my house for a blowout with no permit but hey that is just me. He put the money in escrow to get the COs after close and my bank Chase could care less and closed on the house, big deal.

  371. 3b says:

    #370 JB 6 months?

  372. 007 says:

    bergenbuyer, john,
    Thansk very much for the info.
    It is funny that buyer ask for lower price with the unpermitted finished basement which they can use, but not for the un-finished basement. I am living in a townhouse and next door (unfinished basement) was sold for 380K last month and my buyer is giving out 365K + some deduction due to permit. But this is the way…
    Thanks,
    007

Comments are closed.