October S&P/Case Shiller Home Price Indicies

From Bloomberg:

S&P/Case-Shiller Home Prices Fell 4.4% in August, Index Shows

Home prices in 20 U.S. metropolitan areas were down from a year earlier for an eighth straight month in August, a private survey showed today.

Values dropped 4.4 percent in the 12 months ended August, the most since records began in 2001, according to the S&P/Case- Shiller home-price index.

More lending restrictions and higher mortgage costs are prolonging the housing slump, now entering its third year. Near- record inventory levels suggest sellers will continue to feel pressure to lower prices in coming months.

“Buyers have the upper hand, given the massive overhang of homes for sale,” Lehman Brothers Holdings Inc. senior economist Drew Matus said in a note to clients. “Since buyers generally expect prices to continue to fall, they will likely wait to purchase. We expect home prices to continue to fall.”

Economists forecast the gauge would decrease 4.2 percent, according to the median of 11 estimates in a Bloomberg News survey.

The group’s 10-city composite index, which has a longer history, dropped 5 percent in the 12 months ended in August, the most since June 1991.

Compared with July, home prices in the 20-city index fell 0.7 percent after a 0.4 percent decline the month before. The figures aren’t seasonally adjusted, so economists prefer to focus on the year-over-year change.

“The fall in home prices is showing no real signs of a slowdown or turnaround,” said Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, in a statement. “There is really no positive news in today’s report.”

From S&P:

Further Weakening in Home Prices According to the S&P/Case-Shiller® Home Price Indices

Data through August 2007, released today by Standard & Poor’s for its S&P/Case-Shiller® Home Price Indices, the leading measure of U.S. home prices, show further declines in the prices of existing single family homes across the United States, marking the 8th consecutive month of negative annual returns and the 21st consecutive month of decelerating returns.

“At both the national and metro area levels, the fall in home prices is showing no real signs of a slowdown or turnaround,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “Year-over-year and monthly price returns are continuing to either move deeper into negative territory or are experiencing persistent diminishing returns. There is really no positive news in today’s report, as most of the metro areas are showing declining or vanishing returns on both an annual and monthly basis. Only two metro areas – Denver and Detroit – showed improvement in their annual returns and even those were reports of slightly less negative numbers.”

The S&P/Case Shiller Home Price Indicies are due out at 9:00am this morning. These indicies are quickly becoming the standard for measuring home price movement in the areas that are tracked. S&P/Case Shiller seems to be a bit more respected than the Realtor data, mainly because it is provided by an unbiased third-party, Standard and Poors. Likewise, it is gaining share on OFHEO, due to the numerous limitations caused by the OFHEO methodology.

For those interested in the methodology behind the S&P/Case Shiller Home Price Indicies:
S&P/Case Shiller HPI Index Methodology

An executive review for those who don’t particularly care about the methodological details:
S&P/Case Shiller HPI Factsheet

The last S&P/Case Shiller HPI release on September 25th:
Summer Swoon Evident in the S&P/Case-Shiller® Home Price Indices

As well as the historical dataset:
September 25, 2007: Historical Values

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

189 Responses to October S&P/Case Shiller Home Price Indicies

  1. grim says:

    From Bloomberg:

    UBS Reports SF830 Million Loss on Debt Writedowns

    UBS AG, Europe’s largest bank by assets, reported its first quarterly loss in almost five years after declines in the U.S. subprime mortgage market led to $4.4 billion in losses and writedowns on fixed-income securities.

    The third-quarter net loss was 830 million Swiss francs ($712 million), or 49 centimes a share, compared with net income of 2.2 billion francs, or 1.07 francs, a year earlier, Zurich- based UBS said in a statement today. The loss exceeded the 683 million-franc estimate of nine analysts surveyed by Bloomberg.

    The slumping U.S. housing market, which cost the world’s biggest securities firms and banks more than $30 billion in bad loans and trading losses in the quarter, may lead to further writedowns, UBS reiterated today. Chief Executive Officer Marcel Rohner, who replaced Peter Wuffli four months ago, said losses at the investment bank outweighed record earnings at UBS’s wealth management operation, the world’s biggest.

    “They didn’t have very good control over what was happening at their investment bank,” said Mark Glazener, a fund manager at Rotterdam-based Robeco, which holds about $65 million of UBS shares. “It’s still not very clear what is going on.”

  2. grim says:

    From Bloomberg:

    O’Neal Writedown Erased 20% of Equity, Earnings From Debt Boom

    At Merrill Lynch & Co., a lot more was lost than the $2.24 billion, or $2.82 a share, Chief Executive Officer Stan O’Neal said would be subtracted from the third quarter.

    The real damage to shareholders came with Merrill’s $8.4 billion writedown. It is the biggest in the history of Wall Street and wiped out four quarters of growth in shareholders’ equity, according to Merrill’s published figures. The charge, mostly for collateralized debt obligations and subprime mortgages, left the New York-based company with $38.8 billion of assets minus liabilities.

    Losing “20 percent of shareholders’ equity in one fell swoop is a serious blow,” said Robert Willens, the accounting analyst at Lehman Brothers Holdings Inc. in New York. “It might take them two to three years to earn that capital back.”

  3. grim says:

    From MarketWatch:

    Mortgage insurer PMI posts $87 million loss

    PMI Group said it swung to a loss of $86.8 million, or $1.04 a share, after $348 million in paid claims, loss adjustment expenses and additions to the reserve for losses in the U.S. mortgage operations and negative mark-to-mark adjustments on insured credit derivative portfolio. It earned $104 million, or $1.16 a share, in the year-ago quarter. Net premiums written rose to $276.7 million from $212.4 million, the mortgage insurer said. Analysts polled by Thomson Financial expected a 67 cents a share loss.

  4. grim says:

    From MarketWatch:

    UBS sees further investment-banking loss

    Swiss giant UBS said Tuesday its investment-banking arm probably won’t return to profit in the fourth quarter after the division took around $3.6 billion of write-downs on its subprime mortgage exposure in the latest period.

    The statement came as UBS detailed a third-quarter net loss of 830 million francs ($713 million), compared to a year-ago profit of 2.2 billion francs. The pretax operating loss was 726 million francs, in line with a warning it issued in early October and reiterated on Monday.

  5. mikeinwaiting says:

    Opened executive review “measure growth in value” of re not value interesting mind set.Does this explan sellers denial of market down turn.Not a very objective statement.Everyones mind set is set for growth even Case & Schiller.The sellers will take some time.

  6. BC Bob says:

    [4],

    Came across my desk, no link.

    “The Useless Bank Of Switzerland continues its uselessness. UBS is strong in its core business of Private Banking and Wealth Management but just like all the other highly diversified investment banks is lost in the woods. Dead woods.”

    “We hate to see people on the streets but the soup kitchens will be full of previously overpaid, productive-lite bankers. When boom times happen, empires grow and bankers play with new toys. When times get tough, the toys are put back on the shelves and the consultants come in and tell them to stick to what they have always done best”

  7. PGC says:

    Anyone planning to attend the Sheldon Good NJ auction.

    http://www.sheldongood.com/njah.php

    I’m not sure if registering (andf paying the $10) for the property list is worth the effort.

    Although this could be the Forums night out in Bergern … :*)

  8. BC Bob says:

    “Treasury Secretary Henry Paulson said it’s too soon to call an end to the U.S. housing slump, as the Federal Reserve meets to discuss cutting interest rates in the world’s biggest economy.”

    “We haven’t hit the bottom yet in housing,” Paulson said today at a conference in New Delhi. Still, he added “there is enough strength in the economy that we can grow through this.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=ao4KrwWklMNs&refer=home

  9. grim says:

    “[The] housing market is at or near the bottom”
    – Henry Paulson, April 20th, 2007

    “We haven’t hit the bottom yet in housing”
    – Henry Paulson, October 29th, 2007

  10. chicagofinance says:

    dreamtheaterr Says:
    October 29th, 2007 at 9:36 pm
    To all those contemplating buying gold, look how quickly it went from $700 to almost $800. Don’t forget that the reverse could occur too.Allocations to gold should not be replacing cash held in a portfolio. It’s a commodity that pays no dividends. Think why you have commodities in your portfolio, how much exposure you have, how much you might want, and your exposure to gold should be somewhere in there.

    Yan: stop talking sense please

    FYI – how stupid does money in your mattress sound? how is holding physical gold in your home any different?

  11. chicagofinance says:

    Remember what Gene Fama Jr. says upon introducing himself…..”They call Gene Fama Sr. the father of modern finance. That does not make me Modern Finance.”

    Glitter Me This

    Gold has been a hot commodity lately, but that doesn’t make it a good investment.

    By By Gene Fama Jr.

    October 2, 2007- Gold has been getting a lot of attention lately, as investors skittish about the mortgage meltdown and its economic ripple effects start to seek safer harbors. Gold always seems to capture the popular imagination when markets seem most uncertain. With the war in Iraq, a possible nuclear Iran and significant worries about the U.S. economy and stock market, a growing number of investors are again betting that gold can offer shelter in the event of impending doom. But are they right?

    Recent history might suggest that gold glitters when the going gets rough. In the late 1970s, for example, inflation zoomed out of control (coming in at more than 13% in 1979), oil prices climbed and currencies slumped. But gold prices soared—in part because the commodity was finding its market price after its deregulation in 1975. More recently, we’ve been living with a weak dollar, high oil prices and chatter about inflation. And again, gold prices have risen, returning roughly 23% last year.

    But if you think gold is a way to sidestep economic disaster, think again: Gold is far from stable. Its annualized standard deviation since 1970 is 19.7%—versus 15.2% for the Standard & Poor’s 500 index over the same period. Yet despite its greater volatility, gold returned just 8.1% annually over that time, versus 11.2% for the S&P 500.

    Of course past returns are one thing, but good investors have a more important focus: financial principles. Decisions should be based not on historical returns but on what we know about portfolio theory and economic logic.

    Modern financial theory tells us that each primary component of a diversified portfolio should have a positive expected return—and that only earnings growth can generate expected return. To truly be expected to increase in value over time, an asset has to have growth prospects. The stocks and bonds that make up the bulk of a serious investment portfolio have positive expected return because the corporations—and, to a lesser extent, the governments—that issue them have the ability to create things and grow. The securities they issue in exchange for capital therefore have legitimate reasons to be worth more tomorrow than today. As corporations, gold mines can do this—and therefore generate expected returns. But the metal itself cannot.

    Gold doesn’t produce earnings. It’s just a metal. It can’t improve itself or the world in general. And with no prospects for earnings, gold can’t have much expected return. After all, unlike stocks and bonds, there’s no economic reason for gold to be worth more tomorrow than it is today. That’s not to say it won’t happen—just that there’s no reason to expect it. All you can do is hope. This is the essence of speculating and in a sense, the antithesis of investing.

    NOT SO PRECIOUS
    There is the argument that, in spite of its speculative qualities, gold can serve as a diversifier. Usually the focus here is on gold as a hedge against inflation and currency devaluation. Sure, there are times in the past when economic uncertainty might have corresponded with gold’s doing well, but most advisors would balk at putting major chunks of an allocation into a precious metal. So let’s say you place a more reasonable amount, maybe 2% to 3% of a portfolio, in gold. How would such a small position really protect your client?

    For gold to protect your clients in any real way, you would have to be able to predict when it was about to rise and move a big chunk of your clients’ assets into it at the perfect time. Then, you would have to predict perfectly when it was about to tank and move out of it. Given gold’s enormous volatility, this would be worse than folly. Anyway, in my view, short-term bets are not the legitimate task of the modern investment advisor.

    Some investors may even see gold as de facto currency. They may believe the metal is something tangible that will hold its value in the event of economic collapse, when money and stock certificates become so much birdcage lining. But here again, principles of modern finance should be our guide. Let’s suppose, for argument’s sake, that gold is some kind of permanent currency. Well, currencies themselves have no expected return because—you guessed it—currencies don’t produce things or generate earnings. The notion that gold is an insurance policy against economic collapse seems to be based mainly on the popular myth of gold’s “eternal” qualities—not on what we know about how markets actually work.

    LIVING WITH UNCERTAINTY
    With a much lower return of roughly 4.3% through July 2007, gold may have lost some of its luster. But with the recent media focus on the impending market Armageddon, ads proclaiming gold as the only investment that “retains its value” are sure to loop all the more furiously on a radio station near you. And for all we know, this time they may be right. Or not. That’s how uncertainty works. None of us knows how the future will play out. And the truth is, there’s nothing wrong with putting some assets in gold or any other commodity, so long as the position is not a reaction to recent markets. A little speculation is no crime, if you see it for what it is.

    In the end, sticking with a philosophy that’s grounded in the principles of modern finance gives us clarity. It helps you guide your clients toward becoming true investors—and to avoid the perils of “gold rushes” and other speculation along the way.

    Gene Fama Jr. is vice president at Dimensional Fund Advisors.

  12. grim says:

    From Bloomberg:

    U.S. Tosses Lifeline to Mortgage Lenders Using Home Loan Banks

    Banks shut out of the market for short-term loans are finding salvation in a government lending program set up to revive housing during the Great Depression.

    Countrywide Financial Corp., Washington Mutual Inc., Hudson City Bancorp Inc. and hundreds of other lenders borrowed a record $163 billion from the 12 Federal Home Loan Banks in August and September as interest rates on asset-backed commercial paper rose as high as 5.6 percent. The government- sponsored companies were able to make loans at about 4.9 percent, saving the private banks about $1 billion in annual interest.

    To meet the sudden demand, the institutions sold $143 billion of short-term debt in August and September, according to the FHLBs’ Office of Finance. The sales pushed outstanding debt up 21 percent to a record $1.15 trillion, an amount that may become a burden to U.S. taxpayers because almost half comes due before 2009.

    The government is “taking a lot of risks through the Federal Home Loan Banks that are unnecessary,” according to Peter Wallison, a fellow at the American Enterprise Institute, a Washington-based organization that analyzes public policy, and general counsel at the Treasury Department from 1981 until 1985.

    The home loan banks, known as FHLBs, are increasing risks to taxpayers by assuming the role as a lender of last resort, said Wallison. That’s the job of the Federal Reserve, he said.

  13. BC Bob says:

    “Gold has been a hot commodity lately, but that doesn’t make it a good investment.”

    Chi [11],

    I guess it depends on one’s definition of an investment. Mr. Fama, a bunch of garbage. I wish I had more time.

    Who cares what it has done since 1970. I was selling calls from 1990-2001. What’s more important is what has it been doing lately.

    From the putrid jobs report on Aug, 31, the yellow metal has been up approx 20%, futures, approx 400% [based on margin]. Now suppose one has been long and subsequently locked in those gains. How’s that not a good investment Mr. Fama? Much better than stuffing a faith and a prayer in your mattress. You have to predict perfectly? What about taking the opposite side of the trade, versus the fed, and then picking up a chart. It goons like this that will continue to hold worthless dollars. Volatility? Gold futures traders rely on risk management principles. They are not IB’s with BB providing the risk management.

  14. njpatient says:

    #9
    When will these folks learn that, in the era of the internets (or is that tubes?), their idiot comments will not lightly be forgotten.

  15. BC Bob says:

    By the way, I’m sure Mr. Fama said the same thing as Gold surpassed $500, $600, $700 and now close to $800. Why don’t all these analysts, commentators step up to the plate and short the futures. Stop talking about it and take your position.

  16. BC Bob says:

    One other thing Mr Fama. Please chart the Dow/Gold since 2001. Come back to me with your response.

  17. grim says:

    From MarketWatch:

    U.S. Aug. Case-Shiller 10-city home price index down 5%

    U.S. Aug. .Case-Shiller 20-city home price index down 4.4%

  18. grim says:

    NY Metro Area home prices down 3.8% YOY

  19. Hard Place says:

    See the article in the WSJ about burying St. Josephs and home sales? If that is not a symbol of seller’s wishful thinking, I don’t know what is. It absolutely smacks of desperation when sellers are reverting to idol worship to get a home sale. Hope my cash & commodity portfolio holds up.

  20. grim says:

    From the AP:

    Home Prices Fall in August for 8th Month

    U.S. home prices fell nationwide in August for the eighth consecutive month, according to the S&P/Case-Shiller index released Tuesday.

    And things could get worse, said Yale economist Robert Shiller, who helped create the index.

    “There is really no positive news in today’s report,” said Shiller, chief economist for MacroMarkets LLC which collaborated with S&P on the indicator.

    Home prices as measured by the index have fallen by more every month since the beginning of the year. August is the 21st month of decelerating returns.

    An index of 10 U.S. cities fell 5 percent in August from a year ago. That was the biggest drop since June 1991. The lowest ever was a decline of 6.3 percent in April 1991.

    A broader index of 20 cities fell 4.4 percent in August over last year, with 15 of 20 cities reporting that prices fell.

    Housing prices have been a key worry for consumers, and the effect of the slowdown alongside the summer’s steep decline in credit availability, has many worried that the economy will go into recession.

  21. grim says:

    NY Metro Area home prices are down 4.4% from the peak price set in June of 2006.

  22. kettle1 says:

    CHiFI, BcBob etc

    I agree that gold is not necessarily a good “investment” i have linked to articles on this board before that put forth a good argument that gold is not always a hedge against inflation, it is a hedge only in limited circumstances.

    Gold is currently close to an all time high, so why would you want to consider owning bullion or futures? First what is gold (gold/platinum/silver etc? Gold is a universal commodity that has always been accepted as a form of payment throughout human history. Golds value certainly does fluctuate but it is not a fiat currency, it will NEVER devaule to 0.
    Consider the current outlook for the US dollar. Inflation is running away, unless of course you only look at CORE inflation, but any other measure of total money supply shows a worrying situation. Also consider that yesterday OPEC announced that they are officially considering a currency basket for oil at the next meeting. When(not if) the petro-dollar dies the value of US currency is going to take a very bad hit. Countries will have huge sums of greenbacks that they want to replace with the next petro-currancy (most likely the euro). Still another factor is china. Consider that China alone holds approximately 800 BILLION US dollars in reserves and has already announced plans to reduce that number ( i.e more dollars in circulation… inflation).

    SO whats the point here? The point is that most signs point to the dollar becoming significantly weaker then it is now, consider that GW bush, cheney, Warren Buffet, bill gates, Greenspan, have all made statements to the effect that they have already diversified a substantial amount of money out of US dollars. Diversification just makes sense. Gold by itself does not count as smart diversification, but a well calculated portion of your portfolio in liquid non US dollar assets is a reasonable precaution. Consider that if you ever really needed access to your liquid assets, having them held by a storage facility or only on paper may make access to them difficult. SO in the true Eagle Scout manner, Be Prepared!

    Note: that while gold is near an all time high and if a national bank decided to dump a large amount of bullion on the market prices could drop quickly, the overall condition of the US dollar will most likely push gold to a new all time high. Also consider your purpose in owning gold. Is it an investment or a rainy day liquidity hedge? The answer to that question should be a prime driver in determining how much or how little of you portfolio should be placed into gold or any other precious metal

  23. gary says:

    “NY Metro Area home prices are down 4.4% from the peak price set in June of 2006.”

    So that $729,000 POS is now listed at $697,000. Wow, what a bargain!

  24. kettle1 says:

    Interesting chart of gold price VS M3

    http://tinyurl.com/yv5b6j

  25. BC Bob says:

    kettle,

    Don’t have time now. The banks/commercials have been dumping, how about if they are selling 2,3,4 x’s their physical? What happens when a buyer steps up and states, please deliver? Who’s in a more vulnerable position, the shorts or longs? That said, if you have been long this for awhile and are not hedged, then you are a lumpen. One other item, on a real basis, we are not close to all time highs, more like $2,250.

    All disclaimers.

  26. njrebear says:

    Aren’t the big banks trying to solve this problem?? Now we are allowing smaller banks to do the same mistake?

    >>

    U.S. Tosses Lifeline to Lenders Using Home Loan Banks

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a_l2_kTFSFGU&refer=home

    To meet the sudden demand, the institutions sold $143 billion of short-term debt in August and September, according to the FHLBs’ Office of Finance. The sales pushed outstanding debt up 21 percent to a record $1.15 trillion, an amount that may become a burden to U.S. taxpayers because almost half comes due before 2009.

  27. chicagofinance says:

    Fama jr.’s point is that gold is a speculative position not an investment. Gold stocks are an investment. I don’t think he is saying the gold has no place in a portfolio. I think the issue is that there is no expected return from it. As a result, placing funds into gold is pure timing, and as such, is pure speculation.

    He cites volatility and return and identifies it as an inferior investment class in rank order of risk-adjusted return.

    Bost….yes?

  28. 3b says:

    #23 gary (doubting) Be patient, the tide is turning. Just as an aside 3 new houses came on the market in my town yesterday, to join all the others that are just sitting there.

    And we are just about in November.

  29. kettle1 says:

    BC Bob,

    I dont know if i have come across the wrong way or what…. I am certainly not a gold bug by any means. I see gold the same way i see the emergency trunk i have in the basement.
    In case of natural disaster i have a trunk in my basement with food for 3-5 days, water, basic tools etc. consider it my “katrina trunk”, it is only meant to aid me and family in an emergency situation, i do not store a years worth of food and supplies there. In my personal opinion holding 1% of my portfolio in gold/silver/platinum is the same thing. it is not meant to preserve my wealth (if you can even call it that)in an emergency situation, only to allow breathing space.

  30. Secondary Market says:

    i just sent the s&p report to my realtor who claims monmouth county has been “lucky” with it’s home values. i would love to know when realtors will become obsolete.

  31. kettle1 says:

    #27 cHIfI,

    You have said it more simply then i have. In my mention of gold since last night, i have been referring to basic worst case speculation, not an investment. Any money i put into gold, by default i do not plan on seeing it again as it will most likely sit in a safe until i die then be given to the kids

  32. gary says:

    3b,

    I relish the day when you can tell me, “see, I told you so!” :)

  33. 3b says:

    #32 gary: No problem, just make sure you bring enough money to buy us all drinks.

  34. waters says:

    “All disclaimers.”

    Just out of curiousity, is this necessary? I see it all the time on this blog. Is there really a threat of someone acting on anonymous blog investment advice, then when it doesn’t pan out, tracking down the anonymous blogger and suing them successfully? And if so, would “all disclaimers” prevent them from suing successfully?

  35. stuw6 says:

    The answer depends on how much you want to spend on a lawyer.

  36. grim says:

    From MarketWatch:

    U.S. Oct consumer confidence lowest in two years

    U.S. consumer confidence continued to slide in October, the Conference Board said Tuesday, hitting its lowest level since October 2005 after Hurricane Katrina hit. The consumer confidence index fell to 95.6 in October from a revised 99.5 in September. Overall, consumers were less upbeat about the job market, according to the Conference Board. Economists had expected the index to slip to 98.0. The present situation index in October fell to 118.8 from 121.2 in the prior month, while the expectations index declined to 80.1 from 85.0. The present situation and expectations indexes also hit their lowest levels since late 2005.

  37. gary says:

    3b,

    I’ve already said, I’m buying you all a round when (if) the predictions come through.

  38. grim says:

    Gary,

    Meanwhile, Clifton continues to crumble..

    65 Friar
    Purchased 8/2006
    Purchase Price $481,000

    Currently for sale at $429,000

  39. HEHEHE says:

    GLD is like anything else. You watch it go up and move your sell stop up accordingly. It’s the beauty of ETF’s that have a lot of volume. That’s the only thing you need to keep an eye on, the ability to be able to get out.

  40. John says:

    “I think the housing market has got another year of very weak sales, falling construction and lower home prices. And all of that assumes that the economy holds together reasonably well and we don’t have a recession,”
    – Mark Zandi, chief economist at Moody’s Economy.com

  41. 3b says:

    #37 gary Dude!! A round is not going to do it. We are talking old school partying here, better bring the plastic.

  42. grim says:

    Most of the high-profile economists have been chanting the same mantra, “All bets are off if we’re in a recession.”

  43. Hard Place says:

    Anyone know what the original ask was on this house? I remember it being over $900k, this seller is in need of a wakeup call.

    http://new.gsmls.com/public/detailLst.do?mlsNum=2434014

  44. grim says:

    Hard,

    $899,500

  45. bi says:

    while i am not suggesting you buy any of these etfs, you may want to take a look if you want to get higher leverage.

    http://njrereport.com/index.php/2007/10/30/october-spcase-shiller-home-price-indicies/#comments

  46. lisoosh says:

    Question for Clot:

    What is it with the spreadsheet people? I’ve been frequenting some RE forums and there is a special species that is putting together spreadsheets in order to “prove” to seller that they really only deserved 4% appreciation since (arbitrary date) 1999 and that this is a reason why they should expect price X.

    Are there really people out there who believe that this will work? That some seller will suddenly jump up and say “Golly gosh, you’re right, what folly of me to expect to profit as much as possible from the sale, I’ll lower it to that immediately”?

  47. skep-tic says:

    Case/Shiller measures declines in real terms right? If so, that 4.4% decline for the NY metro area is almost entirely due to inflation

  48. grim says:

    Skep,

    Nominal, indicies aren’t adjusted for inflation.

  49. grim says:

    From CR:

    http://calculatedrisk.blogspot.com/2007/10/option-arm-performance.html

    Looks like we’ve got some spillover into Alt-A and Option..

  50. gary says:

    grim,

    I want to see Upper Haughtyville crumble as well.

  51. gary says:

    3b,

    Oh, I get it, you’re talking 20 ounce plastic cups and a keg of Bud. Don’t forget the cigars. An El Rey Del Mundo will do.

  52. grim says:

    So is a quarter point cut “in-the-bag” for tomorrow?

  53. #52 – Grim.

    Thanks for that link. The note at the bottom about the big decrease in pre-payment speeds is of particular interest. I’m wondering if this is indicative of “everyone who can get out did” for the OA products. The next 6 months should be very interesting.

  54. Orion says:

    Question on square foot price:

    New construction condo in Asbury Park asking $375 sq.ft. Is this low? high? market price?
    Any input is appreciated. Thanks.

  55. bi says:

    today’s consumer confidence index and SPCS housing number strengthen the case for fed to cut interest rate further. i believe they will not stop before it reaches 4%.

    very soon the highlights of major media will replace “housing bubble” by “commodity bubble”. housing is going to recover quietly in the same fashion the equity market did in 2003. hot money is going to rotate back to tech and biotech, espcially wireless communication area.

    This is my thought of the day

  56. Jamey says:

    47: Presented with objective data, as well as subjective advice from other parties (like realtors), some sellers might be pursuaded. Are spreadsheets wonk-y? Sure. Does assault by information overload sometimes seem arrogant? Perhaps. But there are times when hard data trump impassioned pleas. And more numerous are the times when hard data actually compound the effectiveness of impassioned pleas. And I know for a fact that the latter approach has worked at least once in the past six months.

    And let’s not forget the palliative effect of rational and orderly data applied to an arbitrary phenomenon. Makes the spreadsheet maker happy when the buyer yet again rejects logic.

  57. Imus says:

    Upper Haughtyville still looking pretty darn stable.

  58. dreamtheaterr says:

    The spreadsheet is a good idea to have (if you don’t have a finance calculator) when you go car hunting, especially when you enter the dreaded F&I room. Print out the monthly payment numbers, etc based on different interest rate charged and the financed amount, and compare it to what the F&I dude blabbers. It will prevent you from walking out with a 60 month lease :)

    I think the only impact the spreadsheet has on the house seller is for him to tell you to wipe your *ss with it, since he doesn’t give a hoot to your reasoning regarding your offer price.

  59. Homer says:

    very soon the highlights of major media will replace “housing bubble” by “commodity bubble”. housing is going to recover quietly in the same fashion the equity market did in 2003.

    Um I guess you missed my post that the last bubble lasted from 1985-1997 until it finally recovered in 2007. And wait average income in NJ is 56-65k who are these people you think will save the housing market? Keep fantasizing about it. People are not buying because they cannot afford these prices not because they are cheap. This is why everyone on her mocks you because you do not think before you speak, nor do you have any common sence

  60. Homer says:

    ntil it finally recovered in 2007
    I mean 97 is whne it recoverd

  61. stuw6 says:

    What a Homer…

    “I mean 97 is whne it recoverd”

  62. Homer says:

    Sorry I was busy eating a doughnut and laughing at how foolish Bi is

  63. grim says:

    Plenty of cracks in the Upper Haughtyville market..

    95 Rivervale Rd – Park Ridge
    Purchased: 7/14/2005
    Purchase Price: $592,000

    Currently listed at: $545,000 (Reduced from $612,000)

  64. BklynHawk says:

    #57-
    Seems incredibly high! You could probably build something very nice for $150-$250 per square foot. Are the fixtures all platinum?

  65. Zack says:

    #67 , you should have asked..Are the fixtures all Gold?

  66. Zack says:

    that should have been #69

  67. gary says:

    grim #68,

    When you get a spreadsheet full of “haughty” declines, then we’ll be cooking!

  68. grim says:

    From Reuters:

    NY state sees lower tax revs, Wall St bonuses

    New York state has cut tax revenue forecasts and projected bigger budget gaps for the next few years due to the slowdown in the real estate market and the financial industry’s “turbulence,” which likely will cause bonuses to drop, the state budget chief said on Tuesday.

    The state now expects to get $500 million less from tax collections in the current fiscal year, which ends on March 31, and $650 million less than expected in the following year, Budget Chief Paul Francis said in a statement.

    New York state draws about 20 percent of its revenues from Wall Street, either indirectly or directly, Francis noted. “The recent turbulence in this sector attributable to serious problems in the subprime mortgage market is expected to have a major impact on the budget,” he added.

  69. skep-tic says:

    #50

    thanks for the clarification, grim.

    so decent decline so far, albeit at a slower pace than the last RE downturn, where prices declined about 6% per year.

    2008 could easily double the 2007 rate of decline, I think

  70. Orion says:

    Zack, Bklyn,

    No gold, no platinum. SS appliances and granite.
    Is $150-250 the average? Is $250 what it would cost to build today? The bldg. is steel & concrete built 2006.

  71. 3b says:

    #61 Imus:
    If you call stable lots of inventory that is not selling, than I guess that is stable

    Single Family homes for sale in the Upper Haughtyville areas of Bergen County:

    Allendale 39
    Closter 105
    Creskill 53
    Demarest 58
    Englewood Cliffs 72
    Franklin Lakes 115
    Ridgewood 101
    Saddle River 75
    Upper Saddle River 128
    Wyckoff 100
    Wood Cliff Lake 42

    All available for sale and here we are in November.

    Then of course there are all the wannabe Upper Haughtyville towns with lots of inventory for sale too.

  72. 3b says:

    355 grim 25 cut is done, although I truly believe the Fed would rather not cut at all.

    The now becoems will they cut again on Dec 11, because after Dec 11, they do not meet again until end of Jnuary,2008.

  73. 3b says:

    #54 gary Exactly.

  74. lisoosh says:

    Jamey Says:
    October 30th, 2007 at 11:20 am

    “47: Presented with objective data, as well as subjective advice from other parties (like realtors), some sellers might be pursuaded.
    And let’s not forget the palliative effect of rational and orderly data applied to an arbitrary phenomenon. Makes the spreadsheet maker happy when the buyer yet again rejects logic.”

    But it is not logical, nor is it relevant data to the seller. In the example it is like offering $250k to someone asking $500k whose neighbour got $450k two months ago, because of some arbitrary percentage gain over 1998 prices. Is his price unreasonable? Yes. Is the offer likely to solicit the wished for response? No.
    Data in the form of recent comps, other houses in the area for sale (especially ones that may appear nicer on paper), decreases in the market, are all useful and persuasive. They tell the seller that the buyer has done his or her homework, has other options but has chosen to bid on that particular house and is very likely to buy given the right circumstances. It also shows the seller that the buyer is backing up a realistic price and that hopes of getting more may be difficult to realize. In other words, you want the seller to be happy to find a buyer and that the money they will be getting is the best they are going to get.

    dreamtheaterr Says:
    October 30th, 2007 at 11:22 am
    “I think the only impact the spreadsheet has on the house seller is for him to tell you to wipe your *ss with it, since he doesn’t give a hoot to your reasoning regarding your offer price.”

    I agree. Telling a seller that he should get X based on purchase price and “normal” appreciation is like telling a buyer that he should pay X because the seller wants to cover his credit card debt.

    Why should either give a d@mn if the price it outwith reasonable market rates?

  75. Rich In NNJ says:

    This is shaping up to be the worst October in Bergen County NJMLS history:

    Year Sold U/C*
    1995 720 706
    1996 792 832
    1997 826 786
    1998 845 830
    1999 799 616
    2000 785 828
    2001 897 749
    2002 793 850
    2003 976 923
    2004 887 935
    2005 830 797
    2006 725 763
    2007 476 538**

    *Under Contract
    **Numbers not final

  76. bergenbuyer says:

    #72 gary Says:
    October 30th, 2007 at 11:51 am
    grim #68,

    When you get a spreadsheet full of “haughty” declines, then we’ll be cooking!

    Gary, take a look at Grim’s lowball from September. Lots of Bergen County declines.

  77. Rich In NNJ says:

    Who am I kidding, this is the worst October in Bergen County NJMLS history

  78. x-underwriter says:

    More $hit to worry about;

    If banks start to crank down on credit card debt as well, the economy is really going to slow.

    The $915B bomb in consumers’ wallets

    http://money.cnn.com/2007/10/29/magazines/fortune/consumer_debt.fortune/index.htm?postversion=2007103007

    if bankc

  79. dreamtheaterr says:

    Fot those interested, Bill Gross of PIMCO has his (my monthly fix) column up….

  80. reinvestor says:

    This thing has really gotten bad and I blame everyone on this blog for this state of affairs. The market has been destroyed by all the negative doom and gloom talk.

    There was a time not too long ago when buyers bid on houses. Now they’ve been scared away by all of this bad talk and the problems in getting a mortgage. On top of that, we have these stinking vultures out here trying to take advantage of the situation. Guess what? They’ll never buy my house on the cheap. Sellers need to refuse to give their damn house away. If they want it, make them pay. We can turn this thing around if we take a stand and refuse to lower asking prices. Do not let these buyers get the upper hand here and do not give away your house. They need a place to live and have to buy a house at some point. Homeowners and real estate investors must unite to fight off the scourge.

  81. thatBIGwindow says:

    reinvestor: This thing got to where it is by the greed exhibited by everyone who made massive profits in the last 5 years. Houses appreciate but not at the rate they have appreciated. True, some on this blog are ridiculous and will probably never buy a house.

  82. John says:

    To show how truly desparate it is a homeowner had an ad out this weekend that if you paid full market price for his home he will refund 100% of the money paid for the house back to you in his will.

    The married owners who are both 65 claim they are pretty good investors and the income stream they can receive off the value of the home plus their other assets is more than enough for them.

  83. zieba says:

    And the award for stupid post of the tread goes TO!………DRUMROLL……..CYMBAL!!……reinvestor…..
    *Applause*

  84. BC Bob says:

    “This thing has really gotten bad and I blame everyone on this blog for this state of affairs. The market has been destroyed by all the negative doom and gloom talk.”

    Quite funny.

    What happened to 101 or 50.5? I agree, the market is s*it, no argument on my end. It’s actually a crime that those that bought in 2006/2007, didn’t listen to those on this site. By the way, if you think it’s bad now, get ready for 2008/2009. So far, it’s been quite tame.

    I have a place to live and don’t ever have to buy. I rent my place. I don’t rent $ for a depreciating asset that sits on a foundation of crumbling debt/credit. Can’t imagine what it will be like if we have a cold winter.

  85. grim says:

    From the Street:

    GE Cuts Most Mortgage Staff

    General Electric’s crippled subprime mortgage business, WMC Mortgage, laid off most of its workers on Monday afternoon, TheStreet.com has learned.

    All loan processors, underwriters and loan officers have left the business. A customer service operator at the lender said it’s still operating with a “skeleton crew.”

    “They’re working the pipeline that is here,” said the operator. “They are taking originations, but we’re down to minimal staff levels as of yesterday afternoon.”

  86. Jamey says:

    Lisoosh:

    I was using the word “logic” facetiously. (As if it matters one good god-damn that the spreadsheet maker is happy.)

    But the point is, a well-supported argument sometimes carries the day — and part of the support is provided by listing comparable property sales prices. The spreadsheet my new neighbor presented (the successful one I alluded to in my earlier post) listed comps going back five years — and the yoy gain in price, expressed as an annual percentage of real gain.

    Logical? Not by definition. Relevant? Most certainly.

  87. Clotpoll says:

    ChiFi (27)-

    Look at a gold miner like Barrick (ABX), and tell me again that gold stocks are the investment and not the speculation. At the least, many mining companies employ improper (sometimes, even illegal) hedges that often wipe out huge profits. The sector is rife with everything from naked shorting to outright securities fraud.

    Individual gold mining stocks must be selected with great care. Only a handful are worth owning. As popular as ETFs are, these are the places where short squeezes and sucker rallies in the USD can obliterate the individual investor.

    Physical gold, OTOH, is what it is (to paraphrase BC). It is a de facto, non-fiat currency…and is nowhere near its inflation-adjusted alltime high.

  88. Clotpoll says:

    lisoosh (47)-

    Those spreadsheets are an utter waste of time. True as the info might be, they represent the ultimate form of horse-trading when used in in a RE negotiation.

    Unless, that is, you’re negotiating with a robot. That’s why quant types have such a hard time in RE. They can’t tap into the emotional nature of the asset. Sadly, they keep getting tripped up by the facts.

  89. Homer says:

    Reinvestor
    Go ahead don’t sell your house. The only reason there were bidding wars becuase there were ridiculous mortages. Where are these people now, scraping to get buy or in forclosure. The bubble crashed in 1997 to decrease 50% and prices werent even as high as they are now. Average income in NJ is about 65k give or take. Thats why people are not buying. You and Bi have a combined IQ of 5. Use your common sense. Hold off on selling, no one wants to buy your POS anyways

  90. Clotpoll says:

    bi (59)-

    “This is my thought of the day.”

    Well…are you going to clean it up now, or just sit there?

  91. John says:

    If I am causing the market to crash and I am that important I hope it falls 99% in the next 12 months. I have my eye on a five million dollar home waterfront home in Southampton and if I can get it for $50,000 dollars that would be way cool. Think I could have Jerry Seinfeld, Martha Stewart as P-Diddy as neighbors.

    RE can and will crash. Heck out in Detroit they got homes selling for less than a Chevy Tahoe.

    FYI it is not a crash in my book if we go back to pre-bubble prices. A roll back to 2002 prices is enough for me and I would hardly call it a crash.

  92. BC Bob says:

    “Well…are you going to clean it up now, or just sit there?”

    Clot,

    I have pains.

  93. BC Bob says:

    “FYI it is not a crash in my book if we go back to pre-bubble prices. A roll back to 2002 prices is enough for me and I would hardly call it a crash.”

    John,

    If we go back to pre bubble prices, we’re talking approx 50% off the highs. Not a crash? What’s your definition of a crash, 70-90% off highs?

  94. 3b says:

    #85 reinvestor: Thank you foe recognizing what power you think we have. The party is over, get your aot, its time to go home.

    Oh and by the way I just convinced another would be buyer to resign their lease for another year.

    No hurry to buy, we are going to get much lower prices, and low interst rates just like last time.

  95. grim says:

    From MarketWatch:

    Tetragon says $68 mln in mortgage securities worth nothing

    Tetragon Financial Group Ltd. said on Tuesday that a $68 million investment in securities tied to U.S. residential mortgage-backed securities (RMBS) is now worth nothing. Tetragon, a closed-end fund listed on the Euronext Amsterdam exchange, said it recently had $68 million of exposure to RMBS through collateralized debt obligations. Recent downgrades by Moody’s Investors Service and Standard & Poor’s persuaded Tetragon to write down the value of these investments to zero, the fund explained. Tetragon also noted that it will still be able to pay dividends in line with previous guidance and expects to return to profitability in November.

  96. kettle1 says:

    Reinvestor:

    Whatever happened to a house being worth whatever price a buyer is willing to pay??? remember that phrase? So i guess buyers aren’t willing to pay 800K for your 3 Br/1Ba POS split level, so according to the the logic used in the runup, you house is no longer worth 800K…. to bad:(

  97. ricky_nu says:

    #85

    is he serious?

  98. ricky_nu says:

    #85

    is this guy serious? If so, he needs to learn something about free markets.

    perhaps he just long and wrong!

  99. Clotpoll says:

    BC (98)-

    I’m just in pain.

  100. Kurt says:

    sometimes I can’t resist checking out those freakin terrible “What’s My House Worth?” shows. Lately have been noticing more and more where the “appraisal” comes in less than the seller wants and/or needs. Only somewhat ashamed to say that I look forward to their dissapointed faces when the “low” price hits (a few have even been below what they paid a few years ago, forgetting about those with inflated “upgrade” prices)

    When HGTV/Bravo/Etc start airing flippers/dreamers getting crushed the end is really nigh!

  101. BC Bob says:

    ricky [104],

    How about all of the above.

  102. bi says:

    oil down 2% for the day, stock little change and bond flat waiting for fed decision tomorrow. i won’t be surprised to see gold and oil down for a few days from here.
    since buyers and sellers are so desprerate now i guess it is truly turning point for local real estate

  103. TJ says:

    reinvestor,

    What you do not understand is that anyone doing their own RE research or reading this blog is an “educated” buyer. The NJ RE market has consumed all of the suckers and those willing to over-extend themselves. The buyers left in NJ are educated, rationale and not willing to give into your greed.

    So as it stands, you are bitter and I am bitter I am waiting for prices to drop b/c I can’t afford anything. You are bitter because you can’t sell for your ridiculous asking price.
    The difference
    You are paying a mortgage on a depreciating asset. I am NOT. I WIN!!!

  104. 3b says:

    #109 TJ Bravo!!!

  105. schabadoo says:

    #85

    Excuse me, but I believe I’ve read that before…

  106. gary says:

    reinvestor,

    That’s nothing. I stuff thousands and thousands of glossy, colorful information packets in the screen doors of unsuspecting, would-be home sellers in the middle of the night outlining the housing crash in great detail with a zillion reasons why they need to drop their prices drastically or be priced in forever. (Insert Evil Laugh Here)

  107. gary says:

    reinvestor,

    tick…. tick…. tick….

  108. Richie says:

    This thing has really gotten bad and I blame everyone on this blog for this state of affairs. The market has been destroyed by all the negative doom and gloom talk.

    The only one to blame is yourself. A true investor knows when to buy, hold and sell.

    There was a time not too long ago when buyers bid on houses. Now they’ve been scared away by all of this bad talk and the problems in getting a mortgage. On top of that, we have these stinking vultures out here trying to take advantage of the situation.

    There was also a time where banks required 20% down. They got stupid-drunk in the past few years, and gave mortgages away like they were candy. They are paying now.

    Don’t bad mouth the vultures, they are part of the food chain. If they didn’t exist, this situation could be MUCH worse.

    Guess what? They’ll never buy my house on the cheap.

    They will if you can’t keep up your mortgage payments.


    Sellers need to refuse to give their damn house away. If they want it, make them pay. We can turn this thing around if we take a stand and refuse to lower asking prices. Do not let these buyers get the upper hand here and do not give away your house.

    Go get’em tiger!

    It’s supply and demand genius. You won’t need to give buyers the upper hand, the mortgage companies will HAVE to sell the foreclosed properties as they are nothing but liabilities (depreciating ones) to them.

    They need a place to live and have to buy a house at some point. Homeowners and real estate investors must unite to fight off the scourge.

    Yes, and with so many homes and rental units on the market, they have many choices.

    Listen, you can demand all you want for your house, but it’s only worth what someone is willing to pay for it, not what you’d like to get.

    Blaming other people for your misfortunes is the American way. It’s great that you can blame everyone that posts here, I hope that makes you feel better. The fact that you are miserable sure puts a smile on my face though, I always love a sob story.

  109. John says:

    4x income is what the Bergan crowd paid pre 2002. So if income is 65K then 260K for an average home would be about right.

    Heck the NASDAQ reached 5K at its peak. Where is it now? Good luck seeing March 2000 numbers anytime soon.

    If you paid 600K for house that is now worth 300K your monthly payment is still the same. Am I supposed to bail out a paper loss? If you bought a coop for 600K in 1989 by 1992 it was worth 300K and no one bailed you out. The only way out back then was bankruptcy and they kicked your butt out on the street and RTC auctioned off your home. If you had assets and could not wiggle out of your mortgage you had to wait all the way to 2000 for that damm coop to be worth 600K again. I say lets do it again.

    50% off peak is simply a normalization of housing prices – it is in no way shape or means a crash. 70% to 90% off is a crash, a nice one at than.
    Re BC Bob Says:
    October 30th, 2007 at 1:30 pm
    “FYI it is not a crash in my book if we go back to pre-bubble prices. A roll back to 2002 prices is enough for me and I would hardly call it a crash.”

    John,

    If we go back to pre bubble prices, we’re talking approx 50% off the highs. Not a crash? What’s your definition of a crash, 70-90% off highs?

  110. Clotpoll says:

    Reinvestor 50.5 emerges again…with a posting of mind-shattering stupidity.

  111. Zack says:

    Reinvestor bought his house after reading Rich Dad and now he cannot pay his bills.
    HAHAHAHAhHEHEHEHE
    What a moron

  112. Secondary Market says:

    any thoughts as to why Philadelphia is not apart of S&P’s index? you would think since NJ is a suburb of both NY and Philly (up until this year philly was the 5th largest city); computations would need to be valuated for both city’s outlining areas in NJ. surely values in the 908 area code are much different from 609.

  113. grim says:

    Regarding funny money loans.. From the WSJ

    Countrywide’s Profit Vow
    May Call for Closer Look
    By JAMES R. HAGERTY
    October 30, 2007; Page C2

    (snip)
    Countrywide said last week that under its new, more-conservative lending policies, 89% of the option ARM loans it made last year would no longer pass muster. Home-equity loans also are risky because they usually are second in line to a first-lien loan if a homeowner defaults.
    (snip)

  114. TJ says:

    gary,

    HAHAHAHA!!! I stuff thousands and thousands of glossy, colorful information packets in the screen doors of unsuspecting, would-be home sellers…
    When are you going out next? Can I join you? I am very stealthy

  115. gary says:

    TJ,

    Do you have an evil laugh?

  116. schabadoo says:

    Reinvestor

    Is Duck going to sue you for plagiarism?

  117. TJ says:

    gary,

    No, that would compromise my stealth angle. However, I can grow a handlebar moustache and caress it with my pointer finger and thumb as necessary.
    Something along these lines.
    http://entimg.msn.com/i/gal/Meet_the_Robinsons/MEET_THE_ROBINSONS_400.jpg

  118. bi says:

    physical real estate is slow moving asset. acctually you can make money when we are discussing housing related topics here: srs, homebuilders, oil, gold, banks and etc.

    by the way, oil down over $3 when i was falling sleep, home builders up 1.5%

  119. schabadoo says:

    by the way, oil down over $3 when i was falling sleep

    Yep, should hit $40 any second…

  120. gary says:

    TJ,

    That’ll do. Now, to hatch our evil plan….

  121. BC Bob says:

    “by the way, oil down over $3 when i was falling sleep,”

    I’m sure when you were shorting it in the 70’s your margin clerk was waking you up. One of these days, you will be right. That’s the luxury of throwing s*it against the wall. One day it may stick. However, if you were trading your BS, you would have been carried out. Stop talking about it and short the damn thing.

  122. PGC says:

    My reply to this email was a very nice, “the place is still only worth $450K to me. Wish the owner well and I’ll revisit in six months.” but I really love the “Buying Power” comment. Makes me think of He-Man “By the power of Greenspan”.

    Dear XXX,

    It was nice to meet you yesterday at the open house – thanks for coming! Thank you for your feedback on the property; it is always helpful for the homeowner to know the reaction of prospective buyers.

    While I do not believe that the owner is flexible to the mid-400’s at this time, I do have some great homes available in that price range which I can show you. In order to save some time, if you let me know what you are specifically looking for (i.e., number of bedrooms/bathrooms, location, style etc) I would be happy to email some homes for you to preview. Then we could just look at the ones you are really interested in seeing which would certainly be easier for you and your kids. There are some great houses available – espescially for families with small children!

    Also, I have someone in my moffice who can help you determine your buying power in today’s market and also explain some other real estate services Weichert can offer.

    Let me know what you would like to see. Thanks again for your feedback!

  123. Doyle says:

    Can anyone pull an address / history on NJMLS# 2743573?

    I appreciate any help.

    Thanks

  124. bi says:

    by my black box model, optimal fed fund rate should be between 2.72% and 3.14%. but i guess it will take benenke one year to get there.

  125. bi says:

    128#, bob, a lot of wall street analysts agree with me on oil: its fair price should be between 40 and 60 a barrel. i am on the lower end. i am not a person who is carring loss forever waiting for something coming back.

    disclaimer: any of my views here is very short-term so don’t follow my idea if you are a long-term person or if you cannot cut loss

  126. Mike says:

    Reinvestor:
    Nothing perpetuates a Ponzi scheme like a combination of greed and optimism.

    I could be wrong. You can stand shoulder to shoulder with lenders who own houses and hope they don’t lower their prices.

    http://consumerist.com/consumer/subprime-meltdown/255129-foreclosed-homes-went-unsold-in-2007-and-are-now-owned-by-lenders-316741.php

  127. kettle1 says:

    Bi # 132

    by my black box model, optimal fed fund rate should be between 2.72% and 3.14%. but i guess it will take benenke one year to get there.

    so have you shorted the dollar? at this point the lower the fed goes the lower the dollar goes…. hope you brought a snorkel :)

  128. bi says:

    134#, kettle, i know a lot of mbas or cfa candidates on this board but some of them just apply what they learned for exam to real life market. the market is not like that, dollar has already factored in many rate cuts. it will strengthen from here once flying to quality start to play

  129. TJ says:

    PGC,

    That is a great e-mail. Actually I have another great one for everyone. I looked at a way over price FSBO, described as a condo alternative, a few months back in a great town. I made a offer, but stated some facts about the price and affordability. It was a very civil e-mail exchange. The owner paid 30K 15 years ago for what can be described as a complete knock down, and was FSBO for $395. This was the final outcome and response from the owner.
    all the best to you !
    you guys should put your names on the affordable housing lists for bernards twsp and bedminster!

    Mind you that these towns affordable housing income levels are at 70-80K combined income and below. Needless to say I alone do not qualify. Jaded, so freakin’ jaded.

  130. Aaron says:

    You do realize bi that your thesis about interest rates contradicts the one about oil.

  131. kettle1 says:

    Bi,

    could you briefly explain to me why oil should be between $40-60?

    we generally disagree on this, but consider the following info

    World oil output struggling, say Arab experts

    http://tinyurl.com/2f73rj
    LONDON, Oct 30 (Reuters) – Leading figures from the Middle East oil industry added their voices on Tuesday to those warning that the world is struggling to sustain rising oil production.

    “There is a real problem — that supply may not be possible to increase beyond a certain level, say around 100 million barrels,” Libya’s National Oil Corporation chairman Shokri Ghanem said at an industry conference.

  132. kettle1 says:

    I will call that oil breaks $100 before Xmas

  133. Hehehe says:

    138,

    Output struggling, demand increasing, and majority of oil located in unstable regions…hmm I can see the price halving

  134. TJ says:

    bi,

    Yes the rates cuts have been factored in so much that every time the fed lowers rates the dollar drops again. Must be that that on-the-fly pre-factoring rationale.

    1 U.S. dollar = 0.958200423 Canadian dollars

  135. kettle1 says:

    Bi,

    Maybe Clot had a point (i think it was clot)when he said that numbers people like quants ( or engineers) do not do as well in real estate because they do not incorporate the emotional aspect as well.
    I am a numbers guy and tend to focus on more long term, you have stated that you are a short term focus,i really am curious what short term factors might push oil 30%-40% below its current price.

  136. TJ says:

    I wonder if Canadians are going to cross the U.S. border to purchase books and magazines since technically they cost a whole lot more in their own country:)

    US – 5.95
    Canada – 7.50

  137. kettle1 says:

    US in recession????

    From the Telegraph(UK):

    Jim Rogers, the veteran investor who predicted the 1999 commodities rally, declared that the US economy was “in recession” as he said he would take flight from the dollar and switch his investments into currencies including the Chinese yuan.

    http://tinyurl.com/2r4qfv

  138. kettle1 says:

    TJ,

    a recent headline…

    With the Canadian Dollar now worth more than the American Dollar, Canada is “A nation consumed by retail” (theglobeandmail)

  139. bi says:

    142#, i don’t think it will go down 30% in next few weeks either. as i said here many times this run-up is based on emotion (fear and greed). you alredy win the first round and it may go through $100 but i am playing short-term volatility. back to RE: now i heard more and more talk heads saying rate cut will help re market even right now at bloomberg radio

  140. Rich In NNJ says:

    Doyle,

    There is no prior listing history for this property. The info in the tax records are also very slim.
    Deed $1 5/14/1996
    Deed $0 10/1/2003
    Taxes: $13,975

  141. 3b says:

    Can somebody please address #146 re” rate cut will help re market even right now at bloomberg radio.

    I have banned myself from addressing items posted by that poster.

  142. Doyle says:

    #147 Thanks Rich, is there an address?

    Much appreciated.

  143. BC Bob says:

    TJ [143],

    That damn loonie bird. It’s causing a problem for the strip clubs. US strippers are going to Canada while Canadian’s are visiting clubs in the US. All the result of the bird.

  144. kettle1 says:

    #148 3B

    Actually Bi may be right! by further depressing the dollar, the housing slip will be accelerated into a slid and we may get the 50-60% cuts that some have suggested! and technically, the sooner we hit bottom, the sooner the market levels itself :) but hey no pain no gain right

  145. Rich In NNJ says:

    Doyle,

    No problem

    162 FAIRVIEW AVE

    Rich

  146. 3b says:

    #151 Kettle: I do nor believe he is looking at it that way.

  147. BC Bob says:

    Is bi really bia?

  148. John says:

    Cutting rates will grow the US economy which in turn will grow the stock market which in turn will attract foreign investors which in turn will cause a demand for green backs.

    But what is wrong with a cheap dollar? Our big manufacturers and exporters have been getting screwed for years with rates. I would love to see the Authbahn flooded with cheap Caddie northstars, Mustang GTs and Vettes.

    Hey maybe I should be buying houses in Detroit and maybe just maybe Mercedes sold Chrysler right before the turnaround!!!

  149. BC Bob says:

    “The chief executives of Countrywide Financial Corp. and KB Home predicted more trouble ahead for the nation’s slumping housing market on Monday, calling on lawmakers to expand financing for home buyers.”

    “Mezger, also KB Home’s president and director of the board, offered a similarly downbeat outlook.”

    “We anticipate things are going to stay tough for quite some time,” he said.

    “Ross DeVol, director of regional economics for the Milken Institute, said the combination of declining home sales, rising oil prices and the credit crunch has brought the nation to the brink of recession.”

    “We’re right there,” DeVol said. “If anything else goes wrong, we’re probably in a recession.”

    http://biz.yahoo.com/ap/071029/subprime_fallout.html?.v=2

  150. Rich In NNJ says:

    From MarketWatch (audio):

    Robert Shiller: Home prices ‘like accident in slow motion’

    “It’s like an accident in slow motion,” says Robert Shiller of watching home prices spiral downward. The co-creator of the S&P’s Case-Shiller home prices index says, “I think that at this point, it looks like the market is getting worse and worse.” His index found home prices falling for the 13th straight month in August, and the 20-city index dropped 4.4%.

  151. 3b says:

    #156 And how will it affect real estate?

  152. MJ says:

    Bi,
    Why don’t you start a blog like “counter intuitive scalping strategies based on hidden patterns” and let like minded people join..

  153. 3b says:

    #157 BC Bob: And reinvestor says we are doom and gloom. More people for him/her to be mad at.

  154. kettle1 says:

    JOhn,

    look at some of my previous posts. A weak dollar as a general concept is not inherently bad. However Look at M3 (http://tinyurl.com/2fdk7g)
    real inflation is at 10%. OPEC is set to discuss dropping the dollar as the petrocurrency at its next meeting and the middle east oil producers are un-pegging their currencies from the dollar. You dont take these steps just because a strong currency has weakened somewhat. You take these steps when you have lost faith in a currency. we are approaching a tipping point. When (not if) the US dollar is no longer the petrocurrency there will be a fairly large destabilization of the dollars value only accelerating the a;ready weak position of the dollar. This is just the tip of the iceburg, you also have to consider our debt levels. its not a pretty picture and even greenspan has admitted that the dollar could be in trouble

  155. grim says:

    Sir Richard!

    I hath proclaimed, Westfield has fallen!

    922 Coolidge, Westfield NJ

    MLS# 2065644
    Purchased: 9/23/2005
    Purchase Price: $825,000

    MLS# 2425756
    Listed: 07/13/07
    Original List Price: $899,000
    Reduced to: $799,000

  156. grim says:

    Listed with a 6% commission, a sale at the current asking price would mean a loss of approximately $75,000 for the seller.

  157. kettle1 says:

    America is # 1 right?….. right?

    1 in 10 schools are ‘dropout factories’
    http://tinyurl.com/2fwp3s

  158. HEHEHE says:

    “We’re right there,” DeVol said. “If anything else goes wrong, we’re probably in a recession.”

    Dude we’re already there what’s the fear about facing it.

  159. ADA says:

    I think reinvestor’s post is a spoof. Nobody is that dumb.

  160. Joeycasz says:

    To show how truly desperate it is a homeowner had an ad out this weekend that if you paid full market price for his home he will refund 100% of the money paid for the house back to you in his will.

    I drive by a house every day in Maywood that has a standard for sale sign on it but what strikes me as weird is the “man made” sign on the lawn that reads:

    “but this house with no money down!”

    Couldn’t help but do a double take and now i want to take a picture and give it to Grim.

  161. BC Bob says:

    What’s wrong with a cheap dollar? Nothing if you are exporting. However, if you are a US consumer, your purchasing power is evaporating. How do you like paying $90 for a barrel of crude while the chaps, across the pond, pay $45 a barrel.

    Stop kidding yourself. Lowering rates are a bailout for the banks. How does John Q benefit? If they have an adjustable, it’s probably pegged to libor. If they are refinancing, to a fixed, how does a lower ffr help them. Unless there some crisis, the 10 year yields will trace higher with a lower ffr.

    The US economy is not inhibited by high rates. It’s debt/credit problem.

  162. BC Bob says:

    “I think reinvestor’s post is a spoof. Nobody is that dumb.”

    ADA [167],

    It is consistent with his past posts.

  163. grim says:

    From Reuters:

    Moody’s to complete ratings of 500 CDOs this week

    Moody’s Investors Service will cut or may consider cutting ratings on about 500 collateralized debt obligations by the end of this week, a spokesman said on Tuesday.

    The latest action comes as rivals Standard & Poor’s and Fitch Ratings begin another round of reassessing misjudged ratings on subprime mortgage loans.

    Moody’s on Tuesday began its second series of rating cuts or warnings for further cuts on at least 15 more collateralized debt obligations, including top-rated repackaged debt known as CDOs, after similar moves on Friday.

    A Moody’s spokesman said rating action on about 500 CDOs may be completed by Friday at the latest, including 41 CDOs in Europe. Last week, the review was expected to be completed by Wednesday, the last day of the month.

  164. make money says:

    Kettle1,

    Jim Rogers, the veteran investor who predicted the 1999 commodities rally, declared that the US economy was “in recession” as he said he would take flight from the dollar and switch his investments into currencies including the Chinese yuan.

    “Make Money a veteran investor who made millions in the biggest housing bubble in US history declared that he hasn’t bought a peace of property since fall 2005 due to inflated prices. After blogging on the internet(njrereport), he has realized that Spring 2007 fever never materialized and since late June he has flew the US Dollar into Swiss Francs and Euro’s. Make Money hasn’t made any serious money since 2005 and declares that the US is “in a recession” and Feds have “forgot” to tell us about it. He predicts a huge inflation where our fiat currency will be devalued 30-50% in the next two years.(sarcasm off)”

    Why post that? Who cares about Jim Rogers and who knows exactly what his financial motives are for making a statement like that. Ex. Goldman was shorting subprime staff while pushing through the front door. Stan O’neal just filed for Unemployment.

    Enough said.

  165. BC Bob says:

    “The total inventory of vacant homes increased about 8 percent in the third quarter compared to the same quarter last year, while the home-ownership rate remained unchanged in the third quarter after three consecutive quarterly declines, the U.S. Census Bureau reported today.”

    “Meanwhile, the total inventory of vacant housing units grew from an estimated 16.6 million in third-quarter 2006 to 17.9 million [EDIT-WOW] in third-quarter 2007, a gain of 7.8 percent, according to Census Bureau estimates.”

    http://www.inman.com/inmanstories.aspx?ID=65039

  166. grim says:

    From Reuters:

    Traders bet commercial mortgages to follow subprime

    Traders who bet against the U.S. residential mortgage market ahead of the subprime crisis and won are now setting their sights on the commercial real estate sector.

    Hedge funds and other traders that have profited from huge drops in an index tied to home mortgage loans made to people with weak credit are now aiming at sister indexes based on loans for office buildings and hotels.

    That strategy challenges the view of other analysts and investors who maintain that commercial real estate’s fate will not follow that of the battered residential sector.

    Expectations of rising defaults in the $850 billion commercial real estate market (CMBS) amid some looser underwriting in recent years has become a common refrain, giving investors a reason to short the market, analysts said. CMBS underwriters until recently were selling securities with fewer protections for bondholders, leaving investors vulnerable to the kind of losses that hit home mortgage buyers.

    Among hedge funds and other speculators, the strategy used with ABX-HE subprime mortgage derivative indexes is now being applied to the “CMBX” index, pushing yields on the index sharply higher this month as data on U.S. housing worsened.

  167. grim says:

    From the Star Ledger:

    Steep toll hike possible for NJ-NY crossings

    The Port Authority plans to seek a toll hike of at least $2 on its Hudson River crossings and an increase in PATH rail fares after next week’s state legislative elections, The Star-Ledger has learned.

    Current peak-hour tolls of $6 per vehicle at the George Washington Bridge and Lincoln and Holland tunnels are expected to jump to at least $8 early next year – the first hikes since 2000, according to officials who spoke on the condition of anonymity because of the sensitive nature of the subject.

    While a toll and fare hike proposal likely will be presented at the Port Authority’s Nov. 15 board meeting, the agency’s leadership has not yet settled on the exact amount of the increases, the officials said.

    They explained there are some within the agency who would like a $3 increase, while others want to limit the hike to $2 on the Hudson River crossings and the Staten Island bridges – the Outerbridge Crossing and the Goethels and Bayonne bridges. Tolls are charged only one way.

    There also is talk of eliminating the $1 E-ZPass discount for drivers.

    No decision has been reached on a PATH increase, though a 25- to 50-cent jump on the current $1.50 fare is being discussed, they said.

  168. Heart breaker comp breaker says:

    Shiller “People who have to sell would be best served taking whatever they can get before prices drop even further”

    Stunning reversal.

  169. Heart breaker comp breaker says:

    grim Says:
    October 30th, 2007 at 11:37 am
    Plenty of cracks in the Upper Haughtyville market..

    95 Rivervale Rd – Park Ridge
    Purchased: 7/14/2005
    Purchase Price: $592,000

    Currently listed at: $545,000 (Reduced from $612,000)
    ==
    now just subtract another 100k and just maybe someone will bid.

  170. schabadoo says:

    I think reinvestor’s post is a spoof.

    Wasn’t it Duck’s first post?

  171. Frank says:

    “Steep toll hike possible for NJ-NY crossings”

    I would love this, raise them up to $50. How soon can they do it?

  172. bi says:

    They should come to read this blog.

    “Bidding wars seem to be alive and well in Randolph. Everyone talks about the terrible market and how it is a buyers market–but it seems very competitive in Morris county to get houses. Does anyone know if things are really slowing down? The prices in Morris county still seem pretty high.”

    “Yes-you are right. It was a house in a very nice open and quiet neighborhood, that had not been upgraded in 50 years. Very mid sixties style kitchen and basement. No central AC. No gas line. 3 beds, 2 baths. All floors needed to be refinished. A very old furnace and oil tank. 11 year old roof. Exterior needed cosmetic work. Needed landscaping. But it was a very spacious feeling house selling for 439. I bid 430, because of all the work that it would take to get it up to date-easily 40 thousand. Houses in the area were for 460–470. I had a cut off amount-kind of sorry I lost it but relieved about doing all that work as I don’t make a high salary.”

  173. grim says:

    Bidding wars in Randolph? You’ve got to be kidding me..

    Here are the sales from the last month..

    Address OLP Sales Price DOM
      33 Sandra Ln. 499900 416000 57
      60 HIGH AVE 529000 371000 500?
      245 DOVER CHESTER ROAD 424900 424000 29
      77 Center Grove Road 569000 450000 320?
      61 RIDGEWOOD DR 499999 475000 50
      121 PARK AVE 599000 485000 360?
      8 Beaver Dam Road 549900 510000 360?
      73 LAWRENCE RD 624000 556000 82
      59 Calais Rd. 595000 575000 108
      5 Calais Road 699900 583000 280?
      16 JAY DR 689000 630000 180?
      5 LEWIS HOLLOW RD 928000 903500 40
      14 TROUT BROOK LN 1288000 1040000 87

  174. BC Bob says:

    Tell this dunce to raise his/her price. After all, they are bidding up in Randolph. Why reduce your price?

    http://newjersey.craigslist.org/rfs/455767044.html

  175. chicagofinance says:

    just a great headline “A CEO gets “marked to market.””

  176. Fencesittingjack says:

    October 30th, 2007 at 9:05 pm
    Bidding wars in Randolph? You’ve got to be kidding me..

    Thanks for correcting the misinformation gang on the mb.
    It appears from my standpoint that prices are starting the next leg down, the the spring leg is just around the corner. It will be un watching the prices spiral downward.

  177. Clotpoll says:

    Just put a home I started at 449K in July under contract for 355K.

    Seller is thrilled, BTW. Thirty other competitors sit there tonight with no offer at all.

  178. zieba says:

    Eight bucks to cross the Hudson?!

    Are you F[BLEEEEEEP] kidding me?!

    NYC 2012
    English is now a second language….
    subway fare: $5
    Verrazanno bridge crossing: $20
    Bridges and tunnels: $15
    Starbucks latte: $6
    Milk: $9 gal
    Gas: $4
    quality of life: none

    and oh yeah check this out….

    “Oops. We’re sorry, we goofed. Please invest with us in the future.”

    http://www.marketwatch.com/news/story/tetragon-says-68-mln-mortgage/story.aspx?guid=%7B52BD7F16%2D0415%2D4056%2D9280%2D434CC9F30E3C%7D

  179. njpatient says:

    Reinvestor 85
    I think that may be the funniest post I’ve ever seen on this blog. My favorite bit: “They need a place to live and have to buy a house at some point.”
    We can’t rent anymore? I didn’t get the memo.
    “Homeowners and real estate investors must unite”

    Too dang funny.

  180. Otis Wildflower says:

    #186: Might be time to Escape?

  181. Trader says:

    Reinvestor (85)

    The bloggers on this site didn’t create Alt A, Interest Only, Sub-prime, and Negative AM. You’ve just gone through a period of time when you’ve had a whole society forget about sales prices and instead focus only on the immediate monthly payment of homes. On a Negative AM, anyone can buy a nice place in Greenwich CT. So prices haven’t reflected ability to pay since everyone believed that real estate can’t go down. Now that it has and Wall Street has lost billions, lending standards have tightened and PRICE and DOWN PAYMENTS magically matter again.

    In the long run, real estate should yield about 8 percent per year on a comparative basis to renting the equivalent home. Thus, if you look at a place that would rent for 3,000 (36,000 per year) per month and a similar home has taxes of 6,000 per year, it’s present value should be equal to a 30 year annuity of 2,500 per month using an 8 percent discount rate. This works out to a price of $340,000. If the place costs less, it’s cheap relative to the long run equilibrium; if it’s more it’s expensive.

    If you look around, I think you will find property is extremely overvalued relative to rents and over time things revert to the mean. All the complaining in the world about bloggers won’t change this fact and attempts by the fed to cut rates won’t make 30 year mortgages cheaper because they will inject inflation into the economy and thereby reduce affordability for people who purchase homes prudently and fix their rates.

    Before you make a comment like you did, you might want to consider educating yourself a bit about the markets.

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