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Why Freddie’s Loss Didn’t Clear the Air
Bond Holdings Linked To Subprime Loans Fuel Worries of Write-Down
By JAMES R. HAGERTY
November 23, 2007; Page A8
Freddie Mac earlier this week reported a $2.03 billion loss for the third quarter and jacked up its provisions for loan losses. But that doesn’t mean all the potential bad news is out.
Questions remain about the value of the U.S. government-sponsored mortgage company’s securities backed by subprime mortgage loans. These are “nonagency” securities, issued by Wall Street firms rather than Freddie or its main rival, Fannie Mae. Freddie says it has $105.4 billion of these bonds, accounting for about 15% of its holdings of mortgages and related securities.
Freddie and, to a lesser extent, Fannie bought subprime mortgage bonds in recent years to take advantage of relatively high yields and to meet federal rules requiring the companies to devote increasing portions of their mortgage financing to low-income borrowers.
Whether Freddie eventually is forced to write them down matters because the company is short of capital. The third-quarter loss left its capital at just $600 million above the minimum required by its regulator, the Office of Federal Housing Enterprise Oversight, or Ofheo. That has forced Freddie to make plans to raise about $5 billion through a sale of preferred stock, likely to be launched early next week.
Moshe Orenbuch and Kerry Hueston, analysts at Credit Suisse Group in New York, warn that Freddie may need to write down the value of the subprime bonds by as much as $5 billion next year. Investors are so wary of such bonds that there is very little trading in them, making it hard to pin down the market value. But the analysts say the ABX indexes, a widely followed gauge of the value of subprime mortgage bonds, suggest the market value is between 75 and 90 cents on the dollar.
Also from the WSJ:
Adams Square Funding I
Is Forced to Liquidate
By AARON LUCCHETTI
November 23, 2007; Page C2
In another troubling sign for jittery investors, an additional mortgage-related investment vehicle battered by rising defaults among subprime borrowers is being forced into liquidation.
Bond-rating firm Standard & Poor’s said late Tuesday it had been informed that the controlling investors in Adams Square Funding I Ltd., a collateralized-debt obligation, had directed the sale of mortgage-backed securities held by the investment vehicle.
CDOs are investment vehicles that hold pools of mortgages and other assets and issue bonds to investors with different levels of risk and return. The controlling class in a CDO is the group of investors who hold the highest-rated securities issued by the CDO. In some circumstances, they can force liquidation to recoup their investment.
Adams, which had issued $487 million in notes to investors, is managed by Credit Suisse Alternative Capital Inc. S&P was notified Nov. 16. Two weeks earlier, a larger CDO known as Carina notified the rating firm that it was liquidating. As a manager, the Credit Suisse Group unit didn’t suffer losses in the CDO, according to a person familiar with the matter, but it could forgo fees it would have earned for managing the product. It isn’t clear who were the controlling investors that forced the liquidation.
The winding down of CDOs marks a new phase of the mortgage-securities crisis. The liquidations follow “events of default” that occur when certain terms of the CDO are breached. A breach can be caused when rating services like S&P downgrade their assessment of mortgage-backed securities held by the CDOs, undermining their standing as collateral. Since the summer, S&P, a unit of McGraw-Hill Cos., and Moody’s Corp.’s Moody’s Investors Service have slashed ratings on thousands of mortgage-backed securities and CDOs.
This article say’s it all!
From the New York Times:
Banks Gone Wild
By PAUL KRUGMAN
Published: November 23, 2007
“What were they smoking?” asks the cover of the current issue of Fortune magazine. Underneath the headline are photos of recently deposed Wall Street titans, captioned with the staggering sums they managed to lose.
The answer, of course, is that they were high on the usual drug — greed. And they were encouraged to make socially destructive decisions by a system of executive compensation that should have been reformed after the Enron and WorldCom scandals, but wasn’t.
In a direct sense, the carnage on Wall Street is all about the great housing slump.
This slump was both predictable and predicted. “These days,” I wrote in August 2005, “Americans make a living selling each other houses, paid for with money borrowed from the Chinese. Somehow, that doesn’t seem like a sustainable lifestyle.” It wasn’t.
But even as the danger signs multiplied, Wall Street piled into bonds backed by dubious home mortgages. Most of the bad investments now shaking the financial world seem to have been made in the final frenzy of the housing bubble, or even after the bubble began to deflate.
In fact, according to Fortune, Merrill Lynch made its biggest purchases of bad debt in the first half of this year — after the subprime crisis had already become public knowledge.
Now the bill is coming due, and almost everyone — that is, almost everyone except the people responsible — is having to pay.
From MarketWatch:
Japanese banks suffer 230 bln yen in subprime losses: report
Japanese financial institutions have had to write down about 230 billion yen ($2.13 billion) on holdings linked to the U.S. subprime mortgage market, according to reports. Japan’s financial regulator, the Financial Services Agency, released the figure late Thursday saying it represented losses suffered by major and regional banks, credit associations and credit cooperatives as of Sept. 30, the Nikkei News reported in its Friday morning edition. All combined, Japanese financial institutions are holding 1.3 trillion yen in assets linked to the riskiest portion of the U.S. residential mortgage market, the report said. The report said major banks had 1.2 trillion yen in subprime-related holdings while regional banks has 110 billion yen and credit associations and credit cooperatives reported 20 billion yen in exposure. The financial regulator added Japan’s six major banks are expected to report combined losses of 300 billion yen in subprime-related losses in the financial year ending March 31, 2008. The financial agency surveyed financial institutions on their holdings on asset-backed securities and collateralized debt obligations with subprime loans as underlying assets.
CFC @ $9.42. Angelo, welcome to your new work space – a center cubical in the call center at Bank of America.
From Bloomberg:
Freddie Mac Risks Larger Declines Than Forecast, Moody’s Says
Freddie Mac, the second-largest U.S. mortgage-finance company, may have to report wider losses than it forecast as the slump in credit markets worsens, according to Moody’s Investors Service.
Freddie Mac reported this week a record loss of $2.02 billion for the third quarter and said it expects “credit losses to continue to increase for the remainder of 2007 and in 2008.” The company projected that 0.11 percent of the debt it guarantees will go bad in the next two years, Moody’s analysts Brian Harris and Craig Emrick said in a report.
“In Moody’s view, continued deterioration in the mortgage market, resulting in further decline in these books, may lead to credit losses in excess of their 11 basis point loss forecast,” New York-based Harris and Emrick wrote in the Nov. 21 report.
Freddie Mac, based in McLean, Virginia, and the larger Washington-based Fannie Mae guarantee 40 percent of the $11.5 trillion U.S. home-loan market. The government-chartered companies have lost $57 billion in market value because of writedowns caused by record U.S. mortgage foreclosures. Credit Suisse Group analysts said this week that Freddie Mac may lose as much as $5 billion on its subprime holdings next year.
The NY State Thruway is backed up for miles at exit 16. Woodbury Commons mall has a three hour wait just to get into the parking lot. The last time the Thruway was this bad, they closed it for this little event called Woodstock. Yup, this liquidity thing is really hurting people.
Gary [7],
Well the retailers are on sale. Are investors lined up to buy the retailers on the discount rack?
Gary,
Heard that on Bloomberg this morning. They were one of the first area malls to open, I believe they opened at midnight last night.
Keep in mind though, Woodbury is an “outlet” mall. I don’t recall such a big fuss there last year. Are the shoppers out looking for big discounts and avoiding the larger retailers?
“NO LONGER can the credit crunch be dismissed as a blip or an isolated phenomenon. Every other financial wobble since 2003 has lasted just a few weeks. This time, even two rate cuts by the Federal Reserve have failed to do the trick.”
“But it is not just the banks. Investors are trying to guess where the credit crunch will have the greatest knock-on effect. George Cooper, a strategist at JPMorgan, says: “It seems quite clear that the credit problem is becoming systemic.” For a while investors thought the credit markets were ignoring the reality of strong economic growth; in fact, that growth was the result of previous credit excesses. Now the economy will have to deal with the consequences of tighter lending standards; the subprime effect is starting to be replicated in car loans and may soon crop up in credit cards.”
http://www.economist.com/finance/displaystory.cfm?story_id=10191738
‘Secondary Market Says:
November 23rd, 2007 at 8:10 am
CFC @ $9.42. Angelo, welcome to your new work space – a center cubical in the call center at Bank of America.”
With a $9.42 hour wage?:-)
Wouldn’t that be sweet.
Are investors lined up to buy the retailers on the discount rack?
Not yet, but soon. I don’t see as much doom and gloom out there as one would expect based on the media sensationalism.
grim,
The plebs are merely consumption junkies.
Gary – if the economy is so hot, why are stores reduced to gimmics like free MP3 player handouts to get people in the doors?
Of course there is mobbing this morning – prices have been slashed through the floor during a 7/8 hour window in order to CAUSE PEOPLE TO MOB.
If this level of activity is sustained in any way over more than a day or so, I will be flabbergasted.
From yesterday’s star ledger, i don’t see bubble or bubble burst. it is just a normal market: some place are up and some place are down a little bit. for example, the media price in trenton-princeton area is up over 6%. if you don’t like median price measurement, which is the most robust in statistics, you have to dig hard for any structural change.
“Home prices were mixed in the five statistical regions of New Jersey covered in the NAR report. The Wayne and White Plains, N.Y, region, which includes Bergen, Hudson and Passaic counties, posted a 3.6 percent increase in the average home price, and the Newark region, which includes Essex, Somerset, Hunterdon, Morris, Sussex and Union counties, was up 0.9 percent. The Trenton-Ewing region of Mercer County jumped 6.0 percent. “
Gary,
Is the line backed up for miles, to buy the house down the street?
“…the media price in trenton-princeton…”
bi, that’s a great alternate phrase to show that you’ve been looking at statistics with a calculating eye.
Media price.
i have been talking to bunch of local realtors last few weeks. my impression is a lot of pant-up buyers over there. they are just waiting for any price reduction in spring. but i doubt it will happen.
grim, your 24 hour ban of prediction lifted?
“pant-up.” You’ve been with those people in the goofy suits again?
http://15minutelunch.blogspot.com/2007/10/strap-in-shut-up-and-hold-on-were-going.html
BC Bob,
There are two houses up the street from me that sold within a few weeks; One is under contract and one was in attorney review as of last week. Yesterday, I had dinner with about 30 friends and family; nobody is unemployed and everbody appears to be doing quite well. What am I supposed to expect? This is what I’m observing. Where’s the doom and gloom? Until I see carnage first hand, how could I believe otherwise?
“i have been talking to bunch of local realtors last few weeks.”
I’ve was talking to a few stockbrokers yesterday. They state, now is the best time to buy stocks.
Sellers, I want you all to spend some quality time this long weekend taking down some of that hideous wallpaper that you’ve decided to cover every inch of your house with.
Regarding the Princeton prices, I thought that price increase only happened in Princeton proper. There was no spillover into any nearby towns, they saw price reductions.
Gary,
Not proposing doom and gloom, just 30-40% off 2005.
I was out at a Ferrari dealership the other afternoon, talking to the owner and some salespeople.
They tell me that pent-up demand is very high for Ferraris and other luxury-sport automobiles. “Everyone wants one,” they tell me. Only one thing missing from the equation, the means and conviction to actually purchase one.
What is “pent-up demand”? How do you even measure this elusive beast? Walk around asking people if they’ll ever consider buying a home? The majority will probably say yes. Heck, I’ll buy anything at the right price. I have a few questions for these pent-up demanders. Do they actually have the means to buy? If so, at what price will they buy? Lastly, would their purchase be burdened with contingencies?
Measuring any kind of consumer demand is fraught with problems. People don’t say what they do, and they certainly don’t do what they say. Demand for housing is even more difficult to measure than demand for simple consumer goods.
Realize that there is a basis for that ol’ real estate saying, “Buyers are liars”.
22#, with S&P came erased all the gains for the year, thoes stock brokers may be right this time.
Spent yesterday evening in Little Neck with some friends. After quite a few drinks (Indian whisky and Kosher wine!), the topic turned to RE. Two friends started bitching about how their realtors refused to put in lowballs in the Little Neck and Great Neck area. And after the two guys refused to up their offer price, the realtors had the cheek to call their respective wives a couple of times and say the husband wants them to be homeless and does not care about them since they refused to up their bid price, and to get the wives to request the husbands to up the price. How ludicrous is that?!
Is that a new marketing tactic to get the wife (prey on her emotions) to convince the husband (trying to make a calculated decision) to buy a house before they get priced out?
Want some insight into the things Realtors have been saying lately?
http://inman.com/inmannews.aspx?ID=65303
Is that a new marketing tactic to get the wife (prey on her emotions) to convince the husband (trying to make a calculated decision) to buy a house before they get priced out?
I thought this was one of the oldest tricks in the book.
What is ludicrous is that even after being insulted, they’ll continue to use that agent to represent them.
#29, Grim so it is an old tactic. I had absolutely no idea….. maybe I need to brush up a little on standard realtor tactics.
It’s good to know them and be ready with a response, just like the standard quotes/tricks car salesmen use.
From the Inman link above, I like the last paragraph:
We need to BAN together to get the positive news out there. Write letters to the editor, post the news on your blog, use it in your marketing materials, and talk about the good news to everyone you know. Realtors are a positive force for good in this country — let’s harness our energies to jointly respond to the attacks on our industry and to renew the hope and optimism of the homeowners in this country.
Could anyone pull the info on MLS 2735634
I don’t know if it went into ACT or the listing got pulled.
Thanks as always.
Anyone else working in a near empty office?
Appeal to emotion, make a credible financial argument, and create a sense of urgency.
31#, for NAR, if the price can be pushed down by media, it doesn’t matter that much. it hates stagnant stage like today. since msm had change to try for 2 years but they failed, why don’t give NAR a fair opportunity?
Dream #27 —
Your post had me choking from the beverage list on down.
Woe to any realtor who tried that cr@p on hubby and me, they’d be out on their ear in a heartbeat.
And that’s quite apart from the fact that my spouse is the one who is more susceptible to sales tactics like that one, not me. It would SO backfire.
27#, in my opinion, 99% of lowballs (over 10%) is just waste of time. i would save that half hour of paper work.
“Home prices were mixed in the five statistical regions of New Jersey covered in the NAR report.
The NAR numbers are probably the worst of the lot (versus Case-Shiller or OFHEO). Look back at the previous numbers and look how much they bounce around.
New York-Wayne-White Plains, NY-NJ
2006 3rd $531.9k
2006 4th $505.2k
2007 1st $521.4k
2007 2nd $558.7
2007 3rd $550.9k
27#, in my opinion, 99% of lowballs (over 10%) is just waste of time. i would save that half hour of paper work.
Explain to me how you would have any idea what the percentage of successful low offers is?
My clients don’t seem to think low offers are a waste of time, especially those whose low offers have been accepted.
A lowball isn’t defined by the total percentage off list, at least not anymore. In a time when market prices were relatively in-line, across the board, it was easy to put a number on the deal. Lately, prices are all over the map. I’ve seen some 25% off OLP lowballs that I still considered overpriced. At the same time, I’ve seen some 5% off deals that have undercut recent comps tremendously. The real lowball was the 5% deal, not the 25%.
I’m not sure why anyone would bother trying to make offers at some preset percentage reduction. Well, I’m sure that some subset of the consumerist market drools over the prospect of getting something at 10% off list, regardless of how inflated the list was.
IMHO, the “percent off” figure has very little impact on the success or failure of a low offer.
#18 bi: So the pant up buyers are waiting to buy in the Spring, but they need a price reduction to buy? But according to you they will not get that reduction?
So is it the pant down buyers in the Spring who will be scooping up all that inventory without the price reduction of course?
#bi I would save that half hour of paper work.
So you would save that 1/2 hour paper work, but you are the same guy who does not think over paying by 50k is a big deal?
bi Says:
November 23rd, 2007 at 10:22 am
i would save that half hour of paper work.
Bi, are you a quant, realtor, or part-time peddler of both?
#24 BC Bob: Exactly, and that will be a good thing once all is said and done.
We have to keep trying to get gary away from the dark side.
#21 gary Not ot beat you up. But they all appear to be doing well, that is the key word, appear. Maybe they are, maybe they are not, but at the end of the day you only know what you see.
2 houses sold, well what did they sell for, full price?
And will they close, that is the key.
I have seen quite a few houses go ACT, and then in a few weeks they are back on the market. The credit situation is tightening more and more everyday.
Doubting gary move away for the dark side.
38#, i cannot comment on percentage off from OLP. but for LP, i think 10% is kind of psycological number. the same is true for round lot. if the price is listed at $550K, the sellers will have hard time to acept an offer under $500K. just opinion.
43#, 3b, you always think only you can get mortgage and anybody else is a subprime arm borrower. guess what, most buyers in my area put 50% down.
#45 Actually bi, when I buy again I will not need a mtg, unless I choose to, but that is beside the point.
Perhaps you can tell us how you know how much people put down in your area?
I think you let the realtor out of the bag.
Come clean bi admit it you are a realtor?
guess what, most buyers in my area put 50% down
Really? And you know this for certain? How do you come upon this information?
47, maybe a little bias. most folks i know in this category either have significant savings (looking since 2002) or equity (trade-up). and they don’t want to get jumbo rate.
.
Careful with this one, don’t read if you tend toward self-destruction.
http://hypertiger.blogspot.com/
bi,
From now on I’m going to have to ask you to cite the source of any numerical data you post.
Normally, I don’t mind, but lately you’ve been incredibly cavalier about posting numbers.
Please provide the source of your 50% down payment figure immediately.
bi,
Do most folks “you know” think and execute the same way as you?
3b,
I’ve always been sort of the black sheep of the family, that’s why I gravitate to the dark side. :) One house went within 5% of asking and I’m not sure about the other but I do know they both went for more than I thought they would.
Just for fun – we should get some of these people on this blog as I like cranky people as they say all sorts of amusing horrible things.
Occupations with the highest concentrations of bad jobs
Hosts and hostesses, restaurant, lounge, and coffee shop — 87.0% bad jobs
Counter attendants, cafeteria, food concession, and coffee shop — 87.0%
Ushers, lobby attendants, and ticket takers — 85.4%
Fabric and apparel patternmakers — 82.2%
Lifeguards and other protective-service workers — 81.6%
Waiters and waitresses — 80.4%
Tour and travel guides — 79.4%
Models, demonstrators, and product promoters — 79.2%
Dishwashers — 78.8%
Motion picture projectionists — 78.1%
50#, as i said in 48#. that number is from people i know who made recent purchase. it may have some bias. but consumers do not believe all these gloom and dooms. check out all the headlines you will find a lot of shopping enthusiasms today. here is my source of number: dow up 133 pts.
bi Says: check out all the headlines you will find a lot of shopping enthusiasms today. here is my source of number: dow up 133 pts.
bi: concurrence is no proof of causation you simpleton….
I don’t need a price cut in the spring to make holding off buying till then work. Why pull your money out of your short term CD/Money Market where you have been saving up your downpayment that is making close to 5% when houses prices are not moving up. Plus each month you are putting 3K in the downpayment savings account and over the life of a loan you pay tripled borrowed back so that 3K saved each month long term is 9K saved. Until housing proves to me it not only has hit bottom but it is not capable of rising in value each year not buying makes sense. The two or three people I know who are thinking of trading up feel the same way. The trade up crowd can hold off for years at a time. We are not like the first time buyer with a kid or two on the way living in a studio apartment. Plus why pay an extra $500 a month in taxes and extra heat. The wat I look at it in 4-5 years I could buy the trade up house cash if the Fortune prediction of NJ/NY houses falling 15-25% over next five years comes true.
In 2002-2006 several neighbor left and traded up but since then it has grinded to a halt in my neighborhood.
bi Says:
November 23rd, 2007 at 10:22 am
27#, in my opinion, 99% of lowballs (over 10%) is just waste of time. i would save that half hour of paper work.
bi: in my opinion, 99% of job interviews (especially those where you are looking for more than a 10% raise) are a waste of time. i would save that half hour of talking and hours to research and prepare.
DEAD POOL – They are still alive, but shall we have a guess at who will die first and in what order?
Countrywide Financial
ComUnity Lending
Secured Bankers Mortgage Company (SBMC)
Delta Financial Corp
Meridias Capital
Option One
Ocwen Loan Servicing
Doral Financial Corp.
Evergreen Investment/Carnation Bank
Coast Financial Holdings, Inc.
Residential Capital, LLC
57#, chifi, not true. it may be true in your area since most of those jobs are obtained by networking. most IT jobs i know are through interviews. I don’t think on average you need 100 interviews to land one offer successfully. grim, sorry no source here.
bi,
(47) How many “folks i know in this category”?
1, 2, 20, 50, 100?
60#, between 20 to 50
BC (22)-
My cousin, who trades commercial paper at C (a very exciting job these days, he says) and I spent a lot of time talking yesterday.
He and his partner have actually been able to somehow up their profitability this year…but he’s nervous as hell.
He thinks the next 3 months will see a credit seizure along the magnitude of August’s.
x
#56 John: prediction of NJ/NY houses falling 15-25% over next five years comes true.
I do not think it will take close to that long for prices to fall, heck I am starting to see 04 asking prices back again already.
John Says:
November 23rd, 2007 at 12:03 pm
same thing with financial stocks….why buy-in now when you have no clue where this is going?
Look at the financial services sector stocks in the last year (January to now) and draw a possible (I didn’t say probable) parallel to the performance of RE in this area, using 2005 as the equivalent of January 2007 and dragging out to 2010-2011 or so. If so, we are sitting about July/August….whethter we have an Oct/Nov in the cards for NYC real estate remains to be seen……but don’t be cavalier about it either…..
Amount of asset based commercial paper has decreased for the last 15 weeks now. In certain areas, now is worse than August. If things don’t turn around in the credit markets in the next couple of weeks, it will be very ugly for anyone that is long anything.
Clotpoll Says:
November 23rd, 2007 at 12:19 pm
BC (22)- My cousin, who trades commercial paper at C (a very exciting job these days, he says) and I spent a lot of time talking yesterday. He thinks the next 3 months will see a credit seizure along the magnitude of August’s.
clot: did he say where he is strategically placing paper….Feb 2008 and out? Do you have to pay up to cross into 2008? Are they getting any volume at the one-year note level?
3b Priceing is all over the place in my area sometimes as much as 10 to 15% dif for same type of home.Some of the lower ones are newer & updated.It is a very confused market already lower priced homes are just a hair above 04.Brand new price below some old pos.Large homes priced same as small ranch.As I’m way out in Sussex Cty.this market will get hit first.But will travel inward towards NYC.Not to worry all you buyers in waiting affordable prices are coming to a neighborhood near you.
“here is my source of number: dow up 133 pts.”
Holiday session, the bears are out of the office, traveling. The bulls, could not afford to go away. They are stuck in the office buying.
which major public housing builder will file
a Chapter first? I’m betting HOV
#63,
Since when did C become so smart? if they knew anything, they would not have lost $14B. Don’t listen to them.
Furter: C is unweildy and was run by a bureaucrat….lots of smart people there that are also permanently hamstrung….
Technical Olympic will be the first “major” homebuilder to file.
Frank Doesn’t mean they will be wrong all the time either.
The market is getting a bit stingy. Talking to a firm that is doing an IPO today and they were ramping up key positions. They actually were not giving across the board 100K increases with guaranted six figure sign-ons and big cuts of the equity. What is the world coming to? They actually said we don’t want to take on too much headcount. They want to watch out for the huge salaries of people in cost centers.
It is not American not to have overpaid midlevel managers pushing paper all day. Who is going to buy in the pseudo trade up neighborhoods. You know above middle class but way below rich. Those three bedroom 80oK ho ho kus homes.
My friend is CONDO shopping this weekend in Lower NYC (wall street), will hit all the new devlopements, wants a large one bedroom or a small two bedroom and is on a limited one million budget. Figures slow weekend combined with down wall street maybe she can wheel and deal, wonder what she can get for that price?
Grim #9,
Outlet centers are probably the best type of US real estate to own right now. It is the property type that benefits the most from the weak $ and explosive growth in global wealth.
Outlet centers near big cities (New York, LA) and international tourist cities (Orlando, Las Vegas) attract enormous #s of foreign visitors, more than offsetting softer sales to US consumers.
Plus, compared to 10 years ago, retailers are doing a lot better job with merchandising their outlet stores. And a bigger # of fashion-oriented retailers has an outlet presence today. For instance, Abercrombie just began rolling out outlet stores a year ago.
Tanger (symbol: SKT) is a REIT and is the only publicly traded company focused exclusively on owning outlet centers. The stock has outperformed the REIT universe by 27% this year, so the market clearly believes in this real estate.
From the Herald News:
Letters to the Editor
Lamenting the mess made by lenders
I blame greedy people for the collapse of the mortgage market that shakes the U.S. economy. These are clever hawkers who cast their “get rich” spiels onto the multitudes — buy houses with little or no money down, sell almost immediately at a profit (without paying taxes), then do it again and again.
Housing prices kept going up and up and up. Local and state officials elated. As house prices rose, so did property taxes. Money was flowing almost endlessly to fewer and fewer people until one day it was learned there was no money for those holding the empty bags — it was just a damn paper dream.
Mortgages were not being amortized and lenders began foreclosures, but there were no more buyers for inflated house prices. Mortgage-lender lobbyists now persuade legislators to bail them out with taxpayer money. Local, state, federal governments are already shoulder deep in debt.
News media need good investigative reporters to straighten this mess.
Joseph Hicswa, Passaic
Since we’re talking about yesterday’s dinner conversations…
One of mine was with a KHovnanian employee. He mentioned that his division would be starting no new projects in 2008, none.
They will however be looking to rebid every contract for the subs and suppliers for the projects currently under way.
That anecdote is in line with builder confidence surveys, but the subs are really getting squeezed. I believe the square foot construction cost mentioned yesterday was just a shade over $50 right now.
124 Bedford Ave, Teaneck
Purchased: 7/2004
Purchase Price: $354,900
Purchased: 2/2005
Purchase Price: $375,000
MLS# 2725185
Listed: 6/19/2007
OLP: $399,00
LP: $299,000
DOM: 367
Active
——————————-
204 Chestnut St, Englewood
Purchased: 6/2004
Purchase Price: $3,900,000
MLS# 2725185
Listed: 1/2/2007
OLP: $5,600,000
LP: $3,400,000
DOM: 367
Active Review
let’s cut rates again !!!!
Iran president calls U.S. dollar ‘worthless’
OPEC members consider converting cash reserves into non-dollar currency
http://www.msnbc.msn.com/id/21870271/
“They get our oil and give us a worthless piece of paper,” Ahmadinejad told reporters after the close of the summit in the Saudi capital of Riyadh. He blamed U.S. President George W. Bush’s policies for the decline of the dollar and its negative effect on other countries.
Oil is priced in U.S. dollars on the world market, and the currency’s depreciation has concerned oil producers because it has contributed to rising crude prices and has eroded the value of their dollar reserves.
All participating leaders showed an interest in changing their hard currency reserves to a credible hard currency,” Ahmadinejad said. “Some said producing countries should designate a single hard currency aside from the U.S. dollar … to form the basis of our oil trade.”
Venezuelan President Hugo Chavez echoed this sentiment Sunday on the sidelines of the summit, saying “the empire of the dollar has to end.”
“Don’t you see how the dollar has been in free-fall without a parachute?” Chavez said, calling the euro a better option.
#54 bi
“here is my source of number: dow up 133 pts.”
“What goes up, must come down” Yes it’s a slow market, but between now and the end of the year, the market usually rises on the retail bounce and then falls as the year end approachs as the tax sell offs happen.
If the retail bounce fails to happen, the market should head south ( and I’m not talking Charlotte….. :*))
Love the bounce a certain big NJ based pharma enjoyed today…..Love…Love…Love it.
You buy puts on the bounce, got some retail puts and more housing puts today, good time to buy to get a nice Christmas present from the housing market. Booooooooo the housing market.
When the levee breaks
“While the headlines have been full of stories on the credit crunch, subprime mortgage mess and the real estate bubble, a lot of ordinary homeowners have figured they were immune from the problems.”
http://www.marketwatch.com/news/story/even-average-homeowners-feel-rising/story.aspx?guid=%7B8FE4C101%2D1774%2D4AAA%2D87F6%2DCD7DC0FFFF02%7D&dist=TNMostRead
Went to my parents’ house in Long Island for Thanksgiving. A few years back, it seemed as if every house on the block was for sale, and they sold in a very short time span, and each sold for more than the previous sale. $350K. Then $400K. Then $425K. Everyone thought they were real estate geniouses, including my parents. They stuck around, figuring that if they could wait a few more years, Dad could make enough $$$ and the house would sell higher that they could retire comfortably in Florida with the boat and a future travel fund. They also took long vacations in places like Tuscany, Belize, and Costa Rica during this “saving” period.
Now, Dad is disabled (freak accident) and can no longer work. Still fighting the disability lawyers, still living in NY. The same houses I saw on the market Easter visit home are still for sale this Thanksgiving. Mom & Dad now see that housing market is crashing, and so are their big plans. At least if Dad was still working, they’d still have a chance to get away but it looks like they are there for the really long haul now. I really feel bad for them, but I’m also taking this whole experience as a learning experience.
Hey Bruiser….well if it is any consolation…my folks ‘are’ in Florida but it is no longer to affordable place it once was….insurance and taxes combine for a hefty monthly fee….so FL is quickly pricing itself out of the reach of many retirees.
grim (38)-
Thanks for the common sense.
ChiFi (67)-
He’s mostly trolling to pick up mispriced paper that he can take to maturity at par (amazingly, there’s a lot of babies that are getting thrown out with the bathwater).
He’s had the time to delve into these mispriced orphans, because all the 1-year notes and short maturities are seized up, big time.
Chi (67)-
Needless to say, the fact that he has carte blanche to dig around for stuff that’s not really his bailiwick is a telling statement, in and of itself.
My cousin has 10+ years of an exemplary track record in short-term stuff, mostly built with Lehman. C dangled a better deal in front of him a few years ago & lured him away.
He’s mostly regretted that ever since. Right before Prince got canned, he dumped some options and about 7,000 shares of C, and his in-house broker spent 30 minutes trying to talk him out of it.
So, does anyone else ever find themselves deeply disturbed when they actually contemplate the ultimate end of our fiat system, (Sapiens link # 49). I am not referring just to his link. Once you really understand how our monetary system is debt based, not asset based, and how it is ultimately a fancy pyramid scheme, i found it fairly terrifying. I am not saying that i think that the sky is going to fall tomorrow, but when the system does crash you are looking at a civilization effecting event, not just a bad day at the stock market….
#86 Bruiser – Sorry to hear about your dad. Reminds me that the only money we can be fairly sure of is the money we already have.
Anecdotal info on Black Friday – local family-owned store’s business was down 60% from last year’s day after Thanksgiving. Ouch.
“Hey Nicky, didn’t I tell you to send that f*ckin’ memo? And quit bogarting and pass that joint!!”
http://homes.realtor.com/realestate/wayne+twp.-nj-07470-1091559865/
Another question for the group…
If the average person had a basic understanding of how the US/Global money system (i.e fiat) worked, would “consumer confidence” still exist. That is, would the average joe be willing to trust fiat currency if they really understood the principle involved? I have seen several surveys done that show that most people still think that dollars are backed by gold…. scary!
By brother-in-law went to Circuit City at 3:00 AM. When the store opens, bunch of guys waiting for ‘hot’ laptop deals walk to the laptop section. They were made to wait till 8:00 AM to claim laptops that didn’t get picked up by coupon holders. Guys wait till 8AM. Store attendant comes over at 8 Am and tells them that laptops are ready for pickup but at ‘regular’ price. Bunch walk out.
Best Buys near Rt 1 had nearly 100 customers by 10 PM yesterday.
One of the waiting customers sat in a tent that had an electric cord running back to a truck!
91 pot/black
Probably just you and me.
I find vodka helpful.
Speaking of meaningless personal experiences and worthless anecdotes (and we were), I was in an outlet town this morning and by 11 am the place was empty (sorry – wife won’ let me say where.
I don’t understand – is it worth sacrificing an entire night’s sleep to save a couple hundred bucks on Black Friday and jostle with the crowd? Just go work an extra day instead and buy what you need online after spending 5 minutes doing some comparison shopping.
Any guesses on where inventory will be next summer? Given we’ve are around 35k on the GSMLS, I’m seeing us breaking 40k by the summer.
My wife and I drive past Garden State Plaza around 8:30 last night, it didn’t look crowded at all.
From the WSJ:
NovaStar Offered Early Clues
To Looming Mortgage Tumult
By HERB GREENBERG
November 24, 2007; Page B3
Now that we know what we should have been looking for, it is easy to spot signs that the mortgage morass was occurring long before it actually happened.
Some warnings were more obvious than others, even if they went unheeded. Take, for example, the matter of insurance at NovaStar Financial, once one of the leading independent subprime-mortgage lenders.
In its heyday, as its stock was spiraling higher with a dividend yield exceeding 10%, insurance was a big part of the NovaStar story. It was so big that whenever I would raise red flags over its business, which I often did, investors would pepper me with emails that said the company couldn’t lose because its loans were insured.
But that assumed its loans were done properly. If they weren’t, according to the fine print in NovaStar’s regulatory filings, the insurers didn’t have to pay on any claims. That was boilerplate, of course, but sometimes boilerplate is there for a reason.
As it turns out, as far back as 2003, insurer PMI started refusing to pay on claims on NovaStar loans that had defaulted. That, in retrospect, was the first of three insurance-related matters that should have been a clue that the mortgage industry was starting to spin out of control.
The second was that NovaStar started reducing the amount of insurance it bought, claiming that it decided to self-insure by taking more risk as prices of mortgage insurance started to rise. Rising prices, by themselves, should have been a sign of looming trouble. Insurers only raise prices as they perceive higher risk.
Third, PMI started curtailing its subprime coverage. Among the reasons, it said, were that routine audits had resulted in a “meaningful” amount of claims on defaulted loans that were denied.
NovaStar responded by suing PMI over the unpaid claims. This was the first time, the company said on an earnings call, that it had sued an insurer. But as the mortgage market heated up, and the appetite for pools of subprime loans seemed to become increasingly insatiable, concerns about insurance — or a lack thereof — were soon forgotten.
From the WSJ:
Rising Rates to Worsen Subprime Mess
Interest Payments Set
To Grow on $362 Billion
In Mortgages in 2008
By RUTH SIMON
November 24, 2007
The subprime mortgage crisis is poised to get much worse
Next year, interest rates are set to rise — or “reset” — on $362 billion worth of adjustable-rate subprime mortgages, according to data calculated by Bank of America Corp.
While many accounts portray resetting rates as the big factor behind the surge in home-loan defaults and foreclosures this year, that isn’t quite the case. Many of the subprime mortgages that have driven up the default rate went bad in their first year or so, well before their interest rate had a chance to go higher. Some of these mortgages went to speculators who planned to flip their houses, others to borrowers who had stretched too far to make their payments, and still others had some element of fraud.
Now the real crest of the reset wave is coming, and that promises more pain for borrowers, lenders and Wall Street. Already, many subprime lenders, who focused on people with poor credit, have gone bust. Big banks and investors who made subprime loans or bought securities backed by them are reporting billions of dollars in losses.
The reset peak will likely add to political pressure to help borrowers who can’t afford to pay the higher interest rates. The housing slowdown is emerging as an issue in both the presidential and congressional races for 2008, and the Bush administration is pushing lenders to loosen terms and keep people from losing their homes.
Banc of America Securities, a unit of the big Charlotte, N.C., bank, estimates that $85 billion in subprime mortgages are resetting during the current quarter, and the same amount will reset in the first quarter of 2008. That will rise to a peak of $101 billion in the second quarter. The estimates include loans packaged into securities and held in bank portfolios.
…
More than half of the subprime delinquencies and foreclosures this year involved loans that hadn’t yet reset, and thus were due to factors such as weak underwriting and falling home prices, according to Rod Dubitsky, an analyst with Credit Suisse.
The majority of subprime ARMs due to reset next year are so-called 2-28 loans, which carry a fixed rate for two years, then adjust annually thereafter. In a speech earlier this month, Federal Reserve Governor Randall Kroszner explained how a typical 2-28 subprime loan issued in early 2007 might work. He said the interest rate on the loan would start at 7%, then jump to 9.5% after two years. For a typical borrower, that would add $350 to the monthly payment.
Besides the $362 billion of subprime ARMs that are scheduled to reset during 2008, $152 billion of other loans with adjustable rates are set to reset, according to Banc of America Securities. The other resetting loans include “jumbo” mortgages of more than $417,000 and Alt-A loans, a category between prime and subprime. The latter category is the riskier, in part because it includes borrowers who provided little or no documentation of their income or assets.
…
Falling home prices mean that many borrowers have little or no equity in their home, making it tougher for them to get out from under their loans.
…
Federal Reserve Chairman Ben Bernanke told Congress earlier this month, “A sharp increase in foreclosed properties for sale could…weaken the already struggling housing market and thus, potentially, the broader economy.”
The big concern is a vicious cycle in which foreclosures push down home prices, making it more difficult for borrowers to refinance and causing more defaults and foreclosures.
Real-estate agents, who look at prices for comparable homes, or comps, say the sale of bank-owned properties can have a big impact. “One month the comps are showing one price and then a bank comes in and sells a property for $30,000 less,” says Randal Gibson, a real-estate agent in Henderson, Nev. “All of the sudden, that’s the new comp. It hurts everyone in the neighborhood.”
The Judicial Integrity of the United States Court is “Priceless” – 27 More Foreclosures Dismissed
http://tinyurl.com/253wrx
“One month the comps are showing one price and then a bank comes in and sells a property for $30,000 less,” says Randal Gibson, a real-estate agent in Henderson, Nev. “All of the sudden, that’s the new comp. It hurts everyone in the neighborhood.”
Do we need to revise the Short Sale disclaimer?
Securitization is Illegal by Michael Nwogugu
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=883300
Kettle 91 It scares the crap out of me.I would think that the current problems have put this debt on top of debt system under considerable presure and if oil producers depeg from dollar
watch out.
If I were Osama I would hit us in the next 6 to 12 months just to put more presure on our already bad sit.They are cunning & patient 9-11
worked better than they could have hoped.
US armed forces stretched out
banking system big trouble
US debt ever mounting
foreign policy a joke
Do not think that either party up to task of stabilizing problems.You have a front row seat for the decline of US as dominent country in world.The RE decline is just a piece in the puzzle.
This comment sums up Black Friday for me:
“We’re just browsing, to see what’s out here, to see if there’s anything that would be worth it”
While my wife did spend a small fortune at 4AM in Kohls, I think the stores emptied after the Early Bird specials were done. I stopped in ToyRus on my way home fm work and the comment from the shop staff was that there was a lot of restacking when the crowds died down at Noon.
I think over all Sale items are shifting and not much else. People seem to be watching the pennies.
http://www.nytimes.com/2007/11/24/business/24shop.html
Could someone pull the info on
MLS 2735634.
This may determine if I kick my buyers agent to the curb and start shopping for a new one.
Cheers
PGC,
Under Contract as of 11/20, estimated closing is 12/30.
PGC (104)-
We all know the score. Don’t tell me that an appraiser will go to assess a home, see three short sale/foreclosures in the neighborhood, and not think twice about his final valuation.
Even if those three foreclosures don’t show up on the report as direct comps, they will get baked into the cake…somehow.
Remember, appraisal is an art, not a science. Appraisers can also use various adjustment tools and time “depreciators” to ratchet down their final assessments, too.
Thanks JB. He’s gone. I had asked him to let me know if that buyer upped their offer. I would have expected a call before they went into contract. As this listing is in his office, there should be no excuse.
I’ll keep an eye on it, if the financing falls through, it might still come back to me.
Sapiens 103 Leave it to the courts to put some more wood on the fire.Now how do they collect on that paper.It will take months for lawyers to put in order.
Mean while Ben will keep air droping money & cuting rates while Paul gets lenders to forgive seconds,ban resets & set up his super fund.Who said are gov couldn’t act in time of crisis.
Its the actions that are in quetions.
!@#t 112 question
Re: Black Friday shopping – I went to Target in East Hanover yesterday afternoon to pick up some lamps. The store was not much more crowded than normal and I only had two people ahead of me in line. Cosco’s parking lot next door was not bad at all, unusual for a weekend.
“Ok, I’ll drop it $5,000 but that’s all! I’m not giving my house away! This is a custom house, you know! Now go get me a beer!”
http://homes.realtor.com/search/listingdetail.aspx?ctid=27365&mnp=32&typ=7&sid=ae986cd217c545c89e0cbd5def45b668&sdir=1&sby=2&pg=2&lid=1080894840&lsn=12&srcnt=45#Detail
As the clock struck 9 p.m., the doors flung open and hundreds of shoppers dashed inside, ransacking displays and overwhelming the staff. Fifteen minutes later, the employees began delivering the bad news: most of the best deals had sold out.
“No more G.P.S., sorry,” said one manager. “Those laptops are gone,” yelled another.
Exasperated consumers left the store in anger. “They are toying with the public,” said Syed Sha, 52, who drove to the store two hours before it opened to buy a Sony laptop — regularly $800, on sale for $549 — for his college-age son.
http://www.nytimes.com/2007/11/24/business/24shop.html?pagewanted=2&_r=1
gary,
That thing is hideous.
grim,
lol! I want to meet the sellers. I bet a conversation with them would be like talking to Archie Bunker or Homer Simpson.
Gary 775 for that.No way it would be pricy at 5.
They’ll find out and their not going to like it.
Mike[112] We have seen nuthin’ yet!
Gary,
Owner is a licensed real estate agent, need I say more? At 200 days on market you think he would realize that it might be a tad overpriced. It’s down $20k from the OLP, they’ll probably need to add another zero to that.
mikeinwaiting,
Isn’t it beautiful? I think the sellers might have a dependancy problem. :)
from NJrebears #116 link
At a Wal-Mart outside Nashville, the doors opened at 5 a.m. yesterday, with customers surrounding a wooden pallet piled high with $50 digital picture frames at the front of the store.
Worried that the frames would sell out, Cindy Chavez, 36, braced herself, yelped and tossed her body on top of the pile, much to her fellow shoppers’ horror. She emerged from the scrum with six frames.
“I just didn’t think I could reach down and bend over and get it,” Ms. Chavez explained
Wow, this is consumerism at its purest! bread and circus my friends, bread and circus
grim,
OMG!! Talk about taking one’s own medicine. I think I might have to send an email to the listing agent and tell them they have a typo in the price.
Walmart yesterday:Planned to get up at 5 & run over (10 min away).Well strolled in at 830, wine can do that to you.Plenty of sale items in big stacks.The one item I went for was down to 2( microwave).Every thing else seemed to be in abundence.Check out was a breeze just waik on up no line at all.They opened at 5 so plenty of stuff should have been more depleted.Wait to the #’s come out not going to be pretty.
Ben “rate cut anyone there on special”.
Hurry! Bring your checkbook! This charmer won’t last!
http://homes.realtor.com/realestate/oradell-nj-07649-1089410253/
Gary,
Check out the short-sale in Montclair I just posted up on the main page.
Gary Ditto 119
Did you see see short after movie Thurs. morn.
Good stuff!
This one is for you Gar..
http://homes.realtor.com/realestate/montclair+twp.-nj-07043-1091876919/
Prime!
grim,
If they wanted to lose that kind of money, they should’ve just mailed me a check.
Not sure if someone posted this here last week, but in case it wasn’t…
http://tinyurl.com/ytwscv
From Market Watch ”
PAUL B. FARRELL
17 reasons America needs a recession
Think positive, this ‘slow motion train wreck’ is good for the U.S.”
Reinvestor…please open your mind and read this article.
grim [129],
I’m getting a bad link.
At #98 dreamtheater said:
I don’t understand – is it worth sacrificing an entire night’s sleep to save a couple hundred bucks on Black Friday and jostle with the crowd? Just go work an extra day instead and buy what you need online after spending 5 minutes doing some comparison shopping.
I see the word dream in your name, but I have to ask, does reality mean anything to you at all?
Maybe they can’t get an extra day, and if they do, you can bet they don’t net the necessary $500+.
Your statement reeks of arrogance and ignorance.
In typical mark-to-make believe fashion, appraisers don’t consider ‘forced’ sales to be representative of the market.
Of course they don’t, how can the industry continue to fleece the plebians if they used real benchmarks?
United Kingdom is following suit:
From the Times:
“Sub-prime ‘time bomb’ is set to explode in Britain
Lenders are cracking down on sub-prime borrowers across Britain and could force tens of thousands of homeowners into forced sales of their homes, property experts warned yesterday.
… the British Bankers’ Association (BBA) suggested that the slowdown in house prices was on course to be the most severe in at least a decade, as would-be buyers take fright at a declining market.”
Funny quote at the end talking about biblical Egypt – 7 years of plenty followed by 7 years of famine. I liked it.
http://business.timesonline.co.uk/tol/business/money/property_and_mortgages/article2933895.ece?Submitted=true;
Black Friday & Casinos:
Now, if the casinos had similar deals, i.e., win $1000 and casino matches with 40%, that would have been a deal!
Yes stuw 6 it was but worth a second read .
ED 133 Some well healed boys on blog.Different mind set.I got up early to save 25 bucks on an item.I guess that makes me humble & informed.Well not really, you think.Don’t be angry, some may learn some may not.Life will teach not you & I.Rest assured there is a big dose of life coming down the road for all.
Speaking of casinos.. Revel in AC got approvals this week. AC might just give Vegas a run for it’s money in the next few years.
Mega-casinos to transform Atlantic City by 2012
Five years from now, you might not even recognize this place.
A burst of new, luxurious mega-casino projects to be built by 2012 will transform the face of Atlantic City into a more futuristic — and crowded — gambling resort.
At least four companies are betting a combined $9 billion that the makeover will help Atlantic City catch up with Las Vegas as a place to come — and stay — for more than just gambling.
“I don’t understand – is it worth sacrificing an entire night’s sleep to save a couple hundred bucks on Black Friday and jostle with the crowd?”
dream,
Pavlov’s dog.
“Fresh emergency action to pump funds into the money markets was announced on Friday night by the European Central Bank amid renewed fears that liquidity in the credit markets is again starting to dry up.”
“On Friday night, the bank said it would inject an unspecified amount of extra liquidity next week, noting “re-emerging tensions” – and would do so until at least the end of the year.”
http://www.ft.com/cms/s/0/6a8adc9a-99b7-11dc-ad70-0000779fd2ac.html
“Glenn Branney didn’t come to New York this week for the Macy’s Thanksgiving Day parade, the Empire State Building or Central Park.”
“The 31-year-old tourist from Belfast, Northern Ireland, came to shop.”
Over on Fifth Avenue at Circuit City, Ashlee Clifford, 26, of Northern Ireland clutched a Nintendo game system and a fraying list of items — requests from friends after Clifford told them she’d be in America for Black Friday.
“Everything is half price for us,” Clifford said, referring to the buying power of her own currency. “It’s absolutely madness.”
http://www.sun-sentinel.com/business/sfl-flzshopdollar1124sbnov24,0,986835.story
I looked up that monstrosity in Cedar Grove in the tax records just to see the sales history.
Looks like the last purchase was a private sale (SR1A) on 9/18/03 for $325K. How our intrepid realtor arrived at a price of $795K is beyond me. And after sitting on the market all summer long…..a 2.5% price cut!!!
Is the volume enough to save retail?
Will forgien buyers cross the atlantic in such force to make a difference.I do not have #’s to crunch so lets look at it another way.
East coast cities will get bulk of money mainly
NYC & maybe some in west coast.Along north border loonie will help US retail.But what about the rest of country.No one consumes like us.This trend may offset some of losses on balence sheets of big retail,but I don’t think it will save the day.If American consumer pulls back Europeans & Canadians are to small a # to
make much of a difference.
#100 grim it was empty, and I was in Home Dpeot at around 5:00 in Hackensack, and it too was empty.
Fiddy Cents Maybe a second out the @@s or just greedy & stupid. Being an agent should know better.Or maybe how would it look if he/she dropped price big time.Not so good if you work in town, NAR koolaid is strong stuff.
When do retailers report on Friday sales?
#142….Being familiar with Cedar Grove, what are the taxes? looks to me like they may have added a second floor with 2+ bedrooms. Most CG homes taht went in the $300k’s were 3 bedrooms at that time.
Wife & I looked at a house not a bad deal, oh well someone bought it will we debated.Back on market in 1 month (I’ll find out why)here’s the kicker 4% more!
Taxes in 2006 were $7878. It looks like the improvements portion of the assessment was raised in 2004 or so….probably after that poorly planned 2nd floor addition was put on.
At least he pulled permits and got a CO for the work. HA!
97#, njpatient, nobody buy off season cloths on the first day of holiday season. everybody wants to have hot toys, lcds, iphones and garmins. my relative was at bestbuy in east brunswick yesterday and the check-out line was more than 1 hour. this year gps is very popular – maybe a lot of folks want to find home theirselves.
BC #141 –
My sister lives in London with 3 small kids. She has started sending me money to buy their wardrobes – even with the shipping it works out well (although surface has been cancelled which sucks).
Concerning the Euro and Sterling and their efforts to increase liquidity -looks like we are all in the same boat.
Perhaps that Rodgers guy is right – we should all be buying renmimbi.
Bi Just when I thought I was the worse on the board you save me.I’m not a good writer & I’m lost with out spell check.But you take the cake.
#146 Retailers report Friday sales – I think I heard that the numbers will come out at 4pm on Sunday. Seems like an odd time though, so I might be mistaken.
njbear 146 Wish I knew.
lisoosh I gather you have to ship air and then what if it doesn’t fit.Electronics yes, but buying clothes across the pond.I don’t know.
Mike –
She has 3 girls, the oldest of which is 1 size smaller than my daughter so we do pretty good with fit. Plus, if it doesn’t fit the oldest, there are 2 more chances.
Surprisingly, it actually is cost effective. What is $20 in Gap here is 20GPB there (or $40). Plus I am a great sale shopper – Old Navy stuff goes 50% off pretty quick (they don’t have Old Navy there). I sent her a box of winter clothes that cost me $250 for all three + $80 shipping (winter stuff, jeans etc being heavier) which would have been the equivalent of 160 GBP. She said to buy the same there would have cost her around 400-500 GPB. So in answer to your question, yes it works out. And summer dresses will be cheaper to ship.
Sad huh?
Mike,
Looks like WMT provides forecast for Nov sales on Saturday following black Friday.
IMO, if WMT reports, so will others.
25th Nov 2006 report –
http://www.walmartfacts.com/articles/4626.aspx
What’s this Boyko / Deutsche Bank thing all about, anyway?
http://foreclosingcleveland.wordpress.com/2007/11/21/whats-this-boyko-deutsche-bank-thing-all-about-anyway/
15 Lee St, Elmwood Park
Purchased: 7/2006
Purchase Price: $390,000
MLS# 2713892
Listed: 4/9/2007
OLP: $447,000
LP: $365,000
DOM: 230
Active
From MarketWatch:
Jumbo loans still scarce in high-cost areas
California prices could plunge 35%, costing $2.6 trillion in lost wealth
A Time for Bold Thinking on Housing
By ROBERT J. SHILLER
“WE have to consider the possibility that the housing price downturn will eventually be as big as that of the last truly big decline, from 1925 to 1933, when prices fell by a total of 30 percent.”
http://www.nytimes.com/2007/11/25/business/25view.html?_r=1&ref=business&oref=slogin
“We have to consider the possibility that the housing price downturn will eventually be as big as that of the last truly big decline, from 1925 to 1933, when prices fell by a total of 30 percent.”
Can someone please get this message out to the drunken b*stards still dreaming of having their retirement funded in one fell swoop?
161#,
they are all out for holiday shopping. even this board got lighter traffic after thanksgiving.
http://money.cnn.com/2007/11/24/news/economy/bc.holidayshopping.ap/index.htm
Bi,
unfortunatly all of hose people shopping are not going to help or solve the current problem. The USA is BANKRUPT. All of the new plasma TV’s, Ipods,shoes and clothing are being paid for with credit cards that already have huge balances! The core problem is currently DEBT, and all the shoppers are only digging a deeper hole
162#, 163#, i just got back from local quaker bridge mall. the traffic was not as busy as i expected. i guess a lot of people are doing online shopping now.
i don’t know anyone with unpaid balance after due day. it would incur huge interest payment and will affect your credit a lot when buying home.
>All of the new plasma TV’s, Ipods,shoes and clothing are being paid for with credit cards that already have huge balances!
Bi,
unfortunatly all of hose people shopping are not going to help or solve the current problem. The USA is BANKRUPT. All of the new plasma TV’s, Ipods,shoes and clothing are being paid for with credit cards that already have huge balances! The core problem is currently DEBT, and all the shoppers are only digging a deeper hole.
1st sorry for the double post… oops
Bi, i am not referring to a missed payment, i am referring to carrying a balance on your card. very few people actually pay off their card every month
“i don’t know anyone with unpaid balance after due day”
LOL LOL LOL
from creditcards.com:
Total US consumer revolving debt reached $904 Billion in June 2007, up from $879 billion at the end of 2006 (Source: Federal Reserve)
Almost a trillion dollars, but Bi knows no one.
Yes but we still have the Hoff….
http://youtube.com/watch?v=NxAd2sHtMf0&feature=related
#166…I’m looking for a link, but I believe less than 50% cc users carry a balance.
#166, ok, see link 42% No balance..
http://www.bankrate.com/brm/news/cc/20060707a1.asp
171#, i took the poll and found out the following. if everyone is telling the true,
70% of cc users are paying off the balance in just a few months.
168#, i guess those numbers are obtained by accumulating by 20% interest rate for many years. these debts will never be paid off.
———-
I pay off my credit card in full every month. 45.2% (7631)
I sometimes have to carry a balance for a month, but I pay it in full the following month. 10.0% (1681)
I have to carry a balance for a few months after the holidays. 14.1% (2382)
I pay only the minimum due. 11.8% (1991)
I’m still paying for things I no longer have. 18.9% (3184)
U.S. Sales Rose 8.3% Day After Thanksgiving, ShopperTrak Says
http://www.bloomberg.com/apps/news?pid=20601087&sid=aPrwprvdNoQw&refer=home
bi,
Don’t get too excited about #173. ShopperTrack only tracks “foot traffic”.
For example those mentioned in #116 were probably counted as having made a purchase.
I went to woodbury commons yesterday. Absolutely out of control, wall to wall people. There was a 30 minute wait just to get into some stores. The consumer just will not stop buying crap they cannot afford.
From Newsday:
Why the housing dream died hard
Greed was good . . . at least until home prices started falling.
The collapse of the mortgage market this summer largely stems from the actions of Wall Street bankers, mortgage brokers and homeowners who chased the red-hot housing market for much of this decade, observers say.
What began as an enticing investment opportunity now has become a credit crisis, which has unnerved Wall Street and jeopardized the dreams of many homeowners.
So how did we get here?
From the NY Times:
Blame the Borrowers? Not So Fast
IT has become fashionable of late to say that America’s subprime borrowers themselves deserve a good part of the blame for the current mortgage mess. They were either greedy (looking for easy money in a bubbly real estate market) or irresponsible (assuming a debt whose terms they did not understand).
They should be punished for their behavior, the argument goes — not rewarded with loan workouts.
http://calculatedrisk.blogspot.com/2007/11/merrills-rosenberg-recession.html
In a piece [Merrill Lynch’s David Rosenberg] put out Friday, he says unequivocally that if you’re looking for the earnings recession, you need look no more — it’s here. …
Hence, he’s ineluctably forced to the conclusion that a recession in the economy “is either here or no more than two quarters away.”
Ed Sanders Says:
November 24th, 2007 at 10:18 am
At #98 dreamtheater said:
I see the word dream in your name, but I have to ask, does reality mean anything to you at all?
Mr. Sanders, would you give me the benefit of doubt if my name was JackandDiane instead of dreamtheaterr?
Maybe they can’t get an extra day, and if they do, you can bet they don’t net the necessary $500+. Your statement reeks of arrogance and ignorance.
I think you missed my point. A consumer is spending 10 hours overnight in line at a Best Buy or Circuit City to save an extra $200-250. So that’s $20-25/hr. Now, if you do some comparison shopping online, you can get the same piece cheaper by at least $100, and save on tax. So their net savings is perhaps $150-200.
Now, is it worth it freezing one’s butt off for $15/hr overnight? I don’t think so. My point was that people could be more discerning consumers. If you are a high income earner, it’s not worth standing in line overnight to save $15/hr. and show up to work the next day groggy and be totally unproductive. If you are a low income earner, realize how many more hours you’re having to work just to afford that new toy even though you ‘saved’ $200. You’re having to earn $1.4-$1.5 just to buy that $1 toy, adjusted for taxes you pay in total (income, FICA, sales tax, etc).
I stand by my original post.
BC Bob Says:
November 24th, 2007 at 10:50 am
dream,
Pavlov’s dog.
BC Bob, sad but true.
My Black Friday shopping started off with buying a few gold nuggets on Wednesday instead :)
Here you go, ripe for a lowball:
http://homes.realtor.com/realestate/glen+rock-nj-07452-1090857489/
online foot traffic
http://www.akamai.com/html/technology/nui/retail/index.html
# 181
Ripe for a lowball and spelling lessons “NEW PRISE 549000!!!! DESPERATE SELLER!!!! ”
Prise????
gary (181)
The house looks very old. Why the hell dont the realtors put the age of the house on the website? Is it yet another marketing gimmick, so as to not turn off the user in the first instance.
Besides being old, the house also seems to be weird and dirty (see floor and tile color in photo #8). I would not bid more than 300 for this piece of junk (provided if I bid at all).
From the Big Picture Blog:
http://www.portfolio.com/executives/features/2007/11/19/Blaine-Lourd-Profile#page9
whoops meant to post page one:
http://www.portfolio.com/executives/features/2007/11/19/Blaine-Lourd-Profile#page1
gary,
pic #8 – are the 7 rolls included? :)
Here you go, ripe for a lowball:
http://homes.realtor.com/realestate/glen+rock-nj-07452-1090857489/
Gary,
That house was purchased on 2/24/2005 for $545,000. OLP on that listing was $629,000.
The seller is also facing foreclosure.
http://bcsd.us/sheriff_sale.aspx#sales
The auction has been scheduled for January 11th. Outstanding balance on the mortgage is $553,402. Factor in the larger mortgage balance (they likely financed closing costs), and the loss is greater than $30k.
Good eye, Gary.
15 Lee Street, Elmwood Park NJ
Purchased: 7/31/2006
Purchase Price: $390,000
Currently for sale, listed as:
MLS# 2713892
Original List Price: $447,000
Current Asking: $365,000
DOM: 230
Big Midland Park Comp Killer!
144 Franklin Ave, Midland Park NJ
Purchased: 8/2/2005
Purchase Price: $630,000
Foreclosed, REO
Currently for sale, listed as:
MLS# 2734110
Original List Price: $539,900
Current Asking: $519,900
520 Floyd Road, Englewood Cliffs, NJ
Purchased: 9/26/2006
Purchase Price: $790,000
Currently active, listed as:
MLS# 2733003
Original List Price: $899,000
Current Asking: $789,000
55 Elm Street, Englewood Cliffs, NJ
Purchased: 10/28/2005
Purchase Price: $865,000
Currently active, listed as:
MLS# 2614876
Original List Price: $1,025,000
Current Asking: $849,000
DOM: 576
512 Highridge Ave, Cliffside Park NJ
Purchased: 1/30/2006
Purchase Price: $900,000
Currently active, listed as:
MLS# 2740898 (multiple relistings)
Original List Price: $1,120,000
Current Asking: $850,000
DOM: Approx. 500
#82-Sean,
Amazing link, thanks.
From Asbury Park Press:
http://hosted.ap.org/dynamic/stories/D/DOOMSDAY_SCENARIO?SITE=NJASB&SECTION=BUSINESS&TEMPLATE=DEFAULT
From The Economist print edition
The mortgage market’s supposed saviours are its latest victims
Does anyone have experience with fractional ownership? I’m looking at a 1/13th share in a beachfront home vs. buying a smaller unit on my own further away from the beach. I’ve been in a 2-partner arrangement before with a lot of headaches. I was wondering if a well-defined Operating Agreement in a fractional deal is any better?
#197 I have seen fractional ownership of jets work, but that is usually in the context of a company that operates multiple aircraft so there is little chance for overlap when people desire to fly. Beachfront in the Mid-Atlantic region, and north has a limited number of “prime weeks” (I say that even though my favorite time to be at any beach is in Oct-April. With 13 investors, that gives you at most 4 weeks a year to use the property.
For myself, I would be inclined to just rent a place each year. It also gives one the option of changing vacation location more easily.
http://money.cnn.com/2007/11/15/magazines/fortune/fannie_losses.fortune/index.htm?postversion=2007111509
(Fortune) — Investors might want to take a closer look at Fannie Mae’s latest earnings report. Lost in the unsurprising news of the mortgage lender’s heavy losses was a critical change in the way the company discloses its bad loans — a move that could mask that credit losses that are rising above levels that the company predicted just three months ago.
Without the change in disclosure, an important yardstick for credit losses that Fannie Mae (Charts) provides to investors would have looked much worse than it did in financials filed last week.
Fannie Mae’s potentially misleading disclosure comes at a crucial time for the company. Fannie Mae was severely penalized last year for overstating earnings and for a lack of oversight. As part of its punishment, the amount of home loans that Fannie Mae can make was limited.
But now influential members of Congress, including Senator Charles Schumer, want Fannie Mae’s watchdog, the Office of Federal Housing Enterprise Oversight (OFHEO), to temporarily lift the portfolio limits on the company and its rival Freddie Mac. Legislators want both lenders to buy more subprime mortgages to help stave off foreclosures.
Fannie Mae already holds a substantial amount of risky mortgages in its $2.4 trillion mortgage book — and the recent shift in how it discloses a much-watched credit yardstick disguises just how quickly bad loans may be rising.
If that’s the case, Fannie Mae will face a new barrage of questions about its bookkeeping.
Fannie Mae controller David Hisey responds that the change in how its loss numbers were presented makes them “more transparent, not misleading.”
How the Wall Street money machine broke down
But Fannie Mae’s numbers effectively make its credit look better than it is.
It all comes down to what’s known as the credit loss ratio — a measure that Fannie Mae has consistently provided to investors to help them assess the credit quality of its mortgages. The credit loss ratio expresses bad loan losses as a percentage of Fannie Mae’s loans.
In August, Fannie Mae predicted its credit loss ratio would be 0.04-0.06 of a percentage point for all of 2007. (Wall Street generally refers to percentages in basis points, which each equal one hundredth of a percentage point. In Fannie Mae’s terminology, then, its 2007 loss ratio estimate is four to six basis points.)
A range of four to six basis points may not sound like a big deal for an institution involved in mortgages, but for Fannie Mae it is the norm.
What matters is if Fannie Mae goes above that range. And Fannie Mae appears to have already done that this year. But its disclosure change makes that worrying development very hard to see.
Here’s why: Last week, as part of its earnings report, Fannie Mae revealed that the company had changed the way it calculates the credit loss ratio. Under the new method, Fannie Mae’s annualized credit loss ratio was just 4 basis points in the first nine months of the year.
At first glance, four basis points looks to be at the low-end of Fannie Mae’s full-year forecast. Problem is, because the company is using a new methodology, the previous estimate no longer makes sense to use.
So what would have happened if the company had compared apples to apples — and stuck with the old method of calculating its loss ratio?
Under the previous method, Fannie Mae would have been well outside of its range. The company would have reported an annualized loss ratio of 7.5 basis points in the first nine months of this year.
Uh-oh. It’s Enron all over again
What exactly caused the change — and how did it lead to a reduction in the credit loss ratio?
In its third quarter financial statements, Fannie Mae started to break out credit losses taken to fulfill an accounting treatment called SOP 03-3, which the company said it adopted at the start of 2005.
These SOP 03-3 losses were previously included in its credit loss ratio calculation, but Fannie Mae last week removed them from that calculation, causing its loss ratio to look much lower.
The company said it made the change to add transparency to its loss numbers and to show a more cash-based reflection of credit losses.
In a statement, Fannie Mae spokesman Brian Faith said that the forecast of four to six basis points was “predicated on our estimation of what our realized losses would be for the year.”
What does realized losses mean? When asked that, Faith referred to Fannie Mae’s most recent quarterly filing. There, realized losses appear to be defined as losses calculated under the new method. In other words, Faith appears to be suggesting that the 2007 forecast was always based on the new method of calculation.
Why is that hard to believe? When the company issued that range in August, it expressed all its published credit loss ratios under the old method. And on an August conference call, when discussing the full-year range of four to six basis points, Fannie Mae executives did not mention any change in calculation of the ratio.
Management acknowledges that credit losses are mounting. During an analyst call last week, Fannie Mae CEO Daniel Mudd warned that the company’s loss ratio could rise to eight to 10 basis points in 2008, due to a worsening housing market. It’s not clear whether that forecast is based on the old or new methodology.
The company may already be exceeding that 2008 guidance. Based on the old methodology for calculating the loss ratio for the third-quarter alone, the company’s annualized loss ratio is already at 14 basis points.
If so, Fannie Mae’s mounting losses are disturbing.
So what could a soaring loss ratio mean for Fannie Mae? Consider these numbers: At Sept. 30, Fannie Mae had exposure to $74 billion of loans with a FICO credit score below 620. Loans scored below 620 are generally classified as subprime. In addition, Fannie Mae has exposure to $196 billion of Alt-A mortgages, home loans for which the borrower doesn’t have to submit complete documentation for basic criteria like income.
At the same time, Fannie Mae has only $40 billion of capital.
Worst-case, credit losses from high-risk loans like subprime and Alt-A could eat away at that capital and leave the mortgage giant on an extremely weak financial footing.
From Newsday:
Caught in the modern mortgage machine – woman on LI refinances and still, her house was sold to a “group of investors.”
http://www.newsday.com/news/local/suffolk/ny-lihome1124,0,1261349.story#comment-form
grim (191 – 194).
Now you are hurting the feelings (& maybe finances too) of our patriotic friend REInvestor101
Does anyone know how much toxic loans doe fannie mae and freddie mac hold?
Their share prices are going down (although a bit less steeper than countrywide), and the yield is a luscious 6-8%.
They being govt. backed organizations, have minimal risk of going bankrupt (our tax dollar is going to save them in that worse case scenario). Additionally I think they wouldnt have been that reckless (like countrywide) and would have followed stricter standards.
Given above, I’m wondering if it is time to buy their stock.
Comments/ Opinions??
Additinally if anyone has read the 3 books by Peter Lynch, he was bullish on both Fannie mae and Freddie mac during the entire S&L crisis and his Magellan fund made a boatload of money betting on them.
Here’s a link to the share price of Freddie mac and fannie mae:
http://finance.google.com/finance?q=NYSE%3AFNM
http://finance.google.com/finance?q=NYSE:FRE
Grim, post 203 stuck in moderation.
Ok, so tell me again, when does the capitulation start?
http://biz.yahoo.com/ap/071125/holiday_shopping.html
#204
My guess is sometime between when the credit card bills come due in January and when people have to pay taxes (if folks have been claiming extra deductions in order to get a bigger paycheck to make ends meet).
Gary [204],
I was in a gold mine, over the weekend. There were no lines, no madness, zero interest. Guess what? They did not take cc’s in the mine. You tell me, who will capitualte first?
re: (202) Feddie Mac shows it only changed its requirements for what is known as known as 2/28 and 3/27 hybrid adjustable rate mortgages in Feb 2007 to take effect for new loans made after September 2007, so they were pretty much buying and packaging off to Wall Street 20% of their new business as sub prime. The reckless no doc, no income, no asset loans continued through a good part of this year.
As of September Freddie Mac reported that they held $105 billion of securities backed by subprime mortgages.
They are projecting .11% of those loans will go bad in the next two years.
Some say they are overly optimistic. 11 basis points is quite low considering as those ARMs reset people will continue to pay or they may just walk away.
From MarketWatch:
A week of weakness seen for U.S. economy
….
Housing has been a big drag on the economy and this coming week’s data forecasts don’t offer any hope that the housing outlook will improve. Analysts surveyed by MarketWatch are expecting existing home sales, for example, to drop to a seasonally adjusted annual rate of 4.99 million in October from an eight-year low of 5.04 million in September. The existing home sales report is due out at 10 a.m. on Tuesday.
On Thursday at 10 a.m., analysts are forecasting that new home sales for October will fall to a seasonally adjusted annual rate of 730,000 from 770,000 a month earlier.
“We don’t expect any good news on housing anytime soon, specifically on the demand front,” says Ryan Sweet of Moody’s Economy.com. Demand will remain weak for the remainder of the year and well into 2008, he says.
In other housing-related data, October construction spending is expected to fall by 0.2% following a modest rise of 0.3% in September. That release is scheduled for 10 a.m. Friday.
Two home-price measures are due out this week also: the Case-Shiller Home Price Index on Tuesday and the house price index from the Office of Federal Housing Enterprise Oversight on Thursday. For the third quarter, the Case-Shiller index is expected to fall by 5.01%, while the Ofheo index is expected to be flat in the third quarter.
————
As they say, “all real estate is local” and NJMLS data shows that this is the WORST October in the past 13 years.
Year Sold Under Contract
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 574 586
(208) …NJMLS data shows that this is the WORST October in the past 13 years in Bergen County.
If you are looking to buy electronics, Circuit City is offering an extra 10% off on online orders. No shipping cost if you can pick up the merchandize from your local store.
#202,
If you look at the amount of subprime deals that Fannie and Freddie have guaranteed without even looking at the collateral, you’ll understand why they are done. Fannie and Freddie will get bailed out by the government but the equity holders will get wiped out. So as far as stockholders are concerned they are bankrupt. Short them or buy put options and you’ll make money, just the way I did last week.
202] Yield percentages posted on yahoo may not be correct.
http://www.reuters.com/article/marketsNews/idUKBNG12690920071121?rpc=44
“So, for better or worse, Americans and countries whose prosperity is tied to Americans’ spending are apparently headed into uncharted territory: We are about to find out what happens when the easy money runs out.”
http://www.nytimes.com/2007/11/25/weekinreview/25goodman.html?_r=1&oref=slogin
Frank (212)
So if a bailout by govt. happens, wont the shareholders equity survive?
Worse case, even if they issue new equity to some bank for raising money, it will only dilute the stake of the present shareholders. It wont wipe them out. What am i missing here?
BTW what percentage of their portfolio is subprime? Also both these govt. agencies hold these mortgages for long term, so a big chunk of their portfolio might be 5 or more years old, when this subprime madness started.
** Off Topic**
I a currently very busy moving electronics and furniture for a “Sandless refinsher ” coming on tuesday. Saw it on HGTV sat 11/17 I had already started removing carpet to reveal the hardwoods underneath. They are in fairly good shape,but have wear and tear in high traffic areas. I dreaded having them refinished the Sanding way. Saw this process on HGTV googled it and found the franchise that does it in this area. The price is extremely reasonable and it includes moving furniture and lifting the rest of the carpet I have left. The guy was here this morning to explain the process and see my floors. I’ll let you all know how it comes out.
KL
Looks like I can get a better deal on an Ipod through my husband’s company discount then I can through mine or any of the store sales. Maybe my brother will be lucky this year.
205] capitulation starts here.
Extended hours seem to have helped a bit but then the retailers mortgaged future earnings.
>>
http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=420
Consumers spent an average of $347.44, down 3.5 percent from last year.
This strategy [opening earlier] appeared to pay off as 14.3 percent of consumers were out shopping before 4:00 AM, compared to 12.4 percent last year.
About what percent of your total holiday shopping have you completed thus far?
—- — 2007 —2006
>
About 5% of customers are further along in their shopping compared to last year.
#215,
Have seen what happened to the airline industry after 9/11? The same thing will happen to the GSEs.
“The housing recession will persist into 2008 as banks tighten lending rules, foreclosures rise and prospective buyers wait for further price declines, economists said. Business and consumer spending are likely to cool this quarter, leading to a deceleration in growth.”
“D.R. Horton Inc., the second-largest U.S. homebuilder, on Nov. 20 reported a fiscal fourth-quarter loss and its worst annual results in at least a decade.”
Next year will be “more difficult” than 2007, Donald Tomnitz, chief executive officer of D.R. Horton, said on a conference call. “There’s less volume, and the volume that is there is demanding better pricing.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=akRLw5MJjjlQ&refer=home
KL (216),
Never heard of it but DO keep us informed. I’m very curious, I’ll have to google it myself to learn about this “sandless” process.
Thanks, Rich
JB,
Sorry for the dupe. The post was not going through.
JB,
The big difference between Las Vegas and Atlantic City isn’t the gambling.
It is Las Vegas attracts more international tourists and major business conventions.
Foreign tourists and business people distinguish Vegas from Atlantic City more than the quality of the casinos.
So again, I’m just calling it like I see it. This weekend I went to Barnes & Noble on Rt. 46 in West Paterson and the parking lot for the store and the adjacent store, Kohls, didn’t have a spot to be found. In other words, the place was jammed. Behind Barnes & Nobles there is Best Buy and not only was that parking lot jammed, but the traffic on the side road leading to the store was backed up to the Rt. 46 entrance. I found it hard to believe that everyone is just maxing out credit cards.
I heard on this board in the spring that the housing market was dead. At that time, I was getting listings for POS splits in the 600K range… the same to me as the year before. Ok. Then, in the summer, I heard that the dead market was really going to be a blood bath by September 1st. 9/1/07 came and went and guess what? I’m still getting the POS 3/2 split listings in the 600K range. Now, I suppose in a few months from now, I’m REALLY going to see the panic. I suppose I should just continue to ignore those 600K POS splits, yes?
Do you see my point? I don’t see anger, fear, outrage and panic on the 6 o’clock news. I do see people shopping, lots of them and an employment rate still really low. Unless I’m living in a parallel world, my senses are not deceiving me.
If you want to buy something decent in Summit, New Providence, Berkeley Heights, Chatham or Madison, you are still talking $600K as a starting point. Volume has grown and is sitting, but prices have not been reduced significantly.
KL Rich Owened a wood flring co.Chemical sanding
isn’t as good as traditional sanding.This may be some new stuff but without true sanding it just can’t compare.There are new dustless sys. that will not mess up your house also water born finishes dry in 1-2 hours no smell.You get what you pay for.KL Rich if you have any questions Grim can give my email.KL as you are committed there are some things you should ask.I checked out their site, something doesn’t seem right in Denmark.Drop me an email.
224 Gary I think you’re giving too much credit to the average consumer. They spend. Period. They’re not making smarter buying decisions, just buying one POS as opposed to a different type of POS.
What goes, “clop-clop, clop-clop, clop-clop … bangbangbangbangbangbang … clop-clop-clop, clop, clop, clop, clop, clop, clop”?
An Amish drive-by shooting.
Which adequately describes the sensation one gets watching the painful unraveling of the US economy…
I’m used to tawdry gimicks during the holiday “shopping season,” (disclosure: I wrote groan-inducing POP signage for WHSmith booksellers when I stayed in UK [e.g., “Holiday I-dears,” emblazoned over a cartoon reindeer face. But I digress…]). This year, however, the shenanigans seem more desperate than ever before. Like alcoholic-at-closing-hour desperate.
Wife, extended family and I have a pact, two years running: small, hand-crafted gifts for exchange with the adults (this year I learned how to do glass tile mosaic); limited-“skies-the-limit” for the kids. We observed Adbusters.org’s Buy Nothing Day on 11/23. (Good thing I had an extra necktie lying about, so I didn’t have to go out to buy a tourniquet to stanch the bleeding when I did some leftovers drunk carving after midnight that eve…)
I’d expect that we might see little movement, either way, in actual prices in this area for years. But in 10 years, that $600k for POS cape will have, in effect, fallen about 30% or more on an inflation adjusted basis.
Re: #224
I agree that there haven’t been significant price drops yet. As I’ve written on here before, we are looking in a few towns in NW Bergen County.
The lower sales just aren’t happening yet. There is definitely a large build-up of inventory though. I’ve been watching the market since June and I don’t see large numbers of houses in these towns selling. The ones that do sell sell for much lower than their OLPs and are usually are shiny.
We are getting ready to make offers this week and I fully expect to be rejected. We are planning on making offers around the 2004 comps, which is still a nice chunk of change, but the houses are originally listed at 10% above peak.
I really don’t blame sellers yet though. There just aren’t the comps to support taking lower prices right now. I also believe that they have to lower their prices if they really want to sell; they don’t want a buyer to do it for them.
Anyway, long story short, I totally agree that I don’t see price drops yet, on sales (the few that do sell) or the listings.
gary Says:
November 25th, 2007 at 8:10 pm
I heard on this board in the spring that the housing market was dead. At that time, I was getting listings for POS splits in the 600K range… the same to me as the year before. Ok. Then, in the summer, I heard that the dead market was really going to be a blood bath by September 1st. 9/1/07 came and went and guess what? I’m still getting the POS 3/2 split listings in the 600K range. Now, I suppose in a few months from now, I’m REALLY going to see the panic. I suppose I should just continue to ignore those 600K POS splits, yes? Do you see my point? I don’t see anger, fear, outrage and panic on the 6 o’clock news. I do see people shopping, lots of them and an employment rate still really low. Unless I’m living in a parallel world, my senses are not deceiving me.
gary: do you skim the threads here or do you really read them? if you paid attention, I think you can easily answer your question….as I see it, things are reacting almost exactly as clot and some of the other pundits here predicted…are you going to let this unfold or what? this isn’t the stock market…..
Gary the US consumer will buy to the bitter end they know no other way.Thats why this coming storm will hit so hard.They will spend every last dime till it hits the fan.When the bills come due & resets hit 08, sheeple will just start to figure out they’re F***ed.
By the way in my area 2-3 homes under 300 now same type 29,15 from 250 to 279.I’m out there but it will work its way down to the closer towns.
lost (227)
Case in point: A blogger I read pretty much on a daily basis surprised me recently. She lives in Ohio, husband is the only working adult in the family, 3 kids. The husband was at risk for being laid off this year, house sold earlier as a short sale: hit the stores at 5 in the morning on friday and spent about $200 on xmas gifts already for kids and ate breakfast out. I don’t know about you but I personally would not make that choice this year. But to each his/her own.
afe
chicagofinance,
I’m just going by what I see. I’ll be the first to throw out an “ut oh” when I see it.
lostinny,
That sounds plausible.
grim: I was wracking my brain trying to remember your wife’s name…
Franciszka,
Józefa,
Olga,
Rozalia,
Zofia,
Weronika????
help?
“I’ll be the first to throw out an “ut oh” when I see it.”
Gary,
I did that today after Eli’s first interception.
BC Bob,
Ugh… Oh my God, what a friggin’ disaster that team is. Did you have to remind me?
Grim’s wife is Jane, grim’s name is Tarzanski.
knock knock…who’s there? (mortgage fraud)
h**p://www.arooly.com/view_video.php?viewkey=6fa44e1ed0ff613f563b
gary…..here ya’ go….look what it takes to force imbeciles to pare their spending….
WSJ
Home or the Holidays? Mortgage Woes Are Creating A Subprime Christmas For Consumers and Stores
By ANN ZIMMERMAN
November 26, 2007
Susan and John Harriman normally spend about $500 on holiday gifts — $100 on presents for each other, $50 on their 29-year-old niece, then $25 on all of their other family members. But this season, the couple has a wrenching choice to make: celebrate Christmas or keep their home out of foreclosure.
“We’re just sending out Christmas cards, with us standing in front of the house — the house that cost us,” says Ms. Harriman.
With all their might, the couple is trying to hold on to their modest 1,100-square-foot ranch house in Central Islip, N.Y. In the six and half years since they bought their home on Long Island, Susan, a former postal worker, and John, a school district custodian, have watched their monthly mortgage payments skyrocket 66% to $2,454 due to home-equity loans for repairs, delinquent fees, and an adjustable-rate mortgage that has risen twice in the past six months.
“I think people pay less a month on mansions in the Hamptons than we do,” Ms. Harriman says with a bitter laugh.
Housing-related woes may turn out to be this year’s Grinch, not just for families like the Harrimans who are fighting off foreclosure, but for many other consumers accustomed to funding life’s little extras — from big-screen TVs to a Caribbean vacation — by borrowing against their home’s value.
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With the knowledge that just one missed payment will start the foreclosure process, Ms. Harriman has to be scrupulously thrifty about her holiday spending. The Harrimans’ attorney told them that if they make a year’s worth of mortgage payments on time, they might be able to refinance at a fixed rate of 8%, down from 10.5% now. They have about six months to go.
Ms. Harriman — who revels in decorating for the holidays — has three inflatable lawn ornaments, but will put up only one this year — a Charlie Brown Christmas globe — to save on the electric bill.
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Its work is particularly anguishing around the holidays when clients are tempted to overspend.
“Everyone who comes here has to make tough choices and some of them can keep their houses by budgeting to the bare minimum,” says Eileen Anderson, senior vice president of the CDC.
Ms. Anderson says it seems like the choices are increasingly harder to make as stores work overtime to lure shoppers with earlier promotions and no interest payments.
“Encouraging people to charge now and pay later is the worst thing to do when you’re struggling,” she says.
With home equity in the doghouse, consumers are turning back to credit cards, cushioning some of the blow to consumer spending. Recent data from Equifax Inc. shows that the growth in the number of new credit cards, as well as balances, is as strong as it has been since 2001, after remaining fairly flat in recent years. But defaults also are creeping up.
Retail experts have begun to see consumers curb spending by turning to lower-price stores and goods. That explains the projected softness in “affordable luxury” sales at companies such as Nordstrom Inc. and Coach Inc. “Nordstrom customers are trading down to Macy’s, and the Macy’s customer is trading down to Target,” says Bill Dreher, retail analyst with Deutsche Bank.
Trading down, themselves, the Harrimans are calling it their dollar-store Christmas. The couple are typically Wal-Mart shoppers, with an occasional splurge at Kohl’s. But this year they will give each other small tokens from the local dollar store.
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In September, Ms. Harriman finally got her pension. John, 38, started working a second job three mornings a week as a stock clerk at A.C. Moore crafts store. But just as they felt they were catching up, their mortgage interest rate jumped to 8%. This month it rose by two and a half points — an increase of $800 a month.
“My husband was real down that there will be nothing under the tree this year,” Ms. Harriman says. But, “it makes me want to work harder to get back to live my life normally again. It is a reminder and an incentive.”
Turns out maybe the Patriots suck.
Can’t even cover the spread against a .500 team
I always thought that AC had the possiblity to be like Las Vegas and then some. They have a beach, a decent one at that, that should attract visitors during the summer moreso than they have. It seems like there has never been a concerted effort to realize its potential. Its not just me, but all my friends in my age group would easily forego the flight cost to Vegas if there was a readily available substitute close by.
#211 njrebear: I guess they can afford to offer that discount after laying off all their long-term employees who knew their *sses from a whole in the ground and replaced them with a bunch of ignorant gumchewers. I will never give Circuit City a nickel of my money again.
I’d prefer reading in my native language, because my knowledge of your languange is no so well. But it was interesting!
I’d prefer reading in my native language, because my knowledge of your languange is no so well. But it was interesting! Look for some my links: