Will the Fed step in?

From the Associated Press:

Fed to Unveil Home Mortgage Plan

Federal Reserve plan being unveiled Tuesday would give people taking out home mortgages new protections against shady lending practices.

The rules to be proposed are especially geared to providing some future safeguards to the riskiest “subprime” borrowers, already painfully stung by the housing and credit debacles. The proposal is expected to apply to new, or future, loans made by all types of lenders, including banks and brokers. The plan could be finalized next year.

The Fed, which has regulatory powers over the nation’s banking system, is considering:

_barring or restricting lenders from penalizing subprime borrowers — those with tarnished credit or low incomes — who pay their loans off early.

_forcing lenders to make sure that borrowers, especially subprime ones, set aside money to pay for taxes and insurance.

_barring or limiting loans that do not require proof of a borrower’s income.

_setting new standards for how lenders determine a borrower’s ability to repay a home loan.

Fed policymakers also will look into improving financial disclosures so people better understand the terms and conditions of their mortgages. It will consider ways to crack down on misleading mortgage advertising.

The plan, if ultimately adopted, offers Federal Reserve Chairman Ben Bernanke, who took over the helm in February 2006, an important opportunity to put his imprint on the Fed’s regulatory powers. Some critics have complained that Bernanke’s predecessor — Alan Greenspan, who ran the Fed for 18 1/2 years — failed to act as a forceful regulator especially during the 2001-2005 housing boom, where easy credit spurred lots of subprime home loans and many exotic types of mortgages.

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287 Responses to Will the Fed step in?

  1. ithink_ithink says:

    Central Banks Are Getting Desperate in Dealing with the Liquidity Crunch and Resorting Again to Stealth Reductions in Policy Rates

    http://www.rgemonitor.com/blog/roubini

    ECB Lends 348.6 Billion Euros, Easing Year-End Cash Drought

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

  2. grim says:

    From Bloomberg:

    Fed Will Limit Penalties on Prepayment of Subprime Mortgages

    The Federal Reserve will make it tougher for lenders to impose fees for early repayment of subprime home loans, according to consumer advocates and a regulator.

    The change will probably be one of several proposals from the central bank’s Board of Governors when officials convene in Washington today to respond to the collapse in the market for subprime mortgages.

    Fed staff, with input from policy makers, will propose as many as four new requirements for lenders today before a Board of Governors meeting scheduled for 10 a.m. They may also set two new standards for disclosure.

    The proposal will suggest limiting prepayment penalties for most high-cost loans, while giving lenders some flexibility through several exceptions.

    “The consensus seems to be that they are going to do something on no-documentation loans, and they are going to ban prepayment penalties,” said Brenda Muniz, legislative director in Washington at Acorn, a community advocacy group. “The devil is in the details,” she said. There may be several loopholes for lenders, Muniz added.

    The staff memorandum will also probably recommend lenders be forced to include property taxes and insurance in monthly payments. They are already included in payments on most prime home loans, which banks make to their best customers. The proposal will also address standards for measuring whether borrowers can afford a loan for the duration of the mortgage, instead of just for an initial period of lower interest rates.

  3. grim says:

    From Bloomberg:

    Housing Starts in U.S. Probably Fell to 14-Year Low in November

    Builders in the U.S. broke ground in November on the fewest homes since 1993, reflecting concern loan restrictions would deepen the slump in sales, economists said before a report today.

    Work began on 1.176 million houses at an annual pace, down 4.3 percent from October, according to the median estimate of 70 economists surveyed by Bloomberg News. Permits, an indicator of future construction, fell to a 1.15 million rate from 1.17 million, the survey said.

    Some buyers may be having trouble finding financing after a surge in delinquencies and foreclosures reduced access to subprime mortgages. A near-record number of properties on the market and the prospect that prices will keep falling have set the stage for additional weakening in demand and construction.

    “Recent credit woes have sent housing on another downswing,” said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. “Inventories are still too high across the country. There are more declines to come.”

    Economists’ forecasts ranged from annual rates of 1.09 million to 1.25 million. The Commerce Department figures are due at 8:30 a.m. in Washington.

  4. grim says:

    From BusinessWeek:

    Probe of Insider Trading at Bear Stearns

    The investigation by securities regulators and federal prosecutors into this summer’s collapse of two Bear Stearns (BSC) hedge funds that invested in risky securities backed by subprime mortgages is heating up. BusinessWeek has learned the Securities & Exchange Commission and the U.S. Attorney’s office in Brooklyn are looking into an allegation that some Bear Stearns insiders associated with the funds may have been pulling their personal money out of the investment vehicles this spring when the market was in turmoil. The alleged redemptions occurred, sources say, during a time the funds’ managers were urging other investors to stay put.

    It’s not clear which insiders at the Bear Stearns funds are drawing scrutiny. People familiar with the probe say investigators have been reaching out to investors in the highly leveraged funds, seeking information about the comments the funds’ managers made during the spring with regard to the issue of redemptions, as well as the funds’ exposure to the subprime mortgage market. The funds once controlled nearly $35 billion in collateralized debt obligations and other mortgage-backed securities, and investors lost a combined $1.6 billion when the funds filed for bankruptcy in July.

  5. Frank says:

    #2,
    Grim, the Fed has no legal control over the subprime lenders, so why do you even entertain this news? This is bunch of non-sense.

  6. BC Bob says:

    What a revolutionary idea. Ensure that a borrower has the abiltiy to pay back a loan. YAWN.

  7. Clotpoll says:

    Frank (5)-

    I’m with you on this one. Moreover, it’s also now a case of horses gone, barn door shut.

    Mr. Market will take care of itself on this one. Common sense dictates that it’s not a good idea to target lending to a group of borrowers who are unlikely to make payments. Tranche it any way you want, it’s about as simple as that.

  8. BC Bob says:

    “Central Banks Are Getting Desperate in Dealing with the Liquidity Crunch and Resorting Again to Stealth Reductions in Policy Rates”

    ithink [1],

    Said the shepard boy to the mighty king
    Do you know what I know
    In your palace wall mighty king
    Do you know what I know
    A child, a child
    Shivers in the cold
    Let us bring him dollars and euros
    Let us bring him dollars and euros

  9. bewm says:

    Morning everybody! Would somebody be so kind to give me an address and history on #2735311 in Midland Park? It looks like an REO.

    Thanks

  10. thatBIGwindow says:

    bewm: it is on Madison Ave. Taxes are 7100/yr, it is REO…From the deed records, it looks as if the owner passed away and the house wasn’t being paid

  11. BC Bob says:

    Risk goes out the front door and returns thru the back door.

    “Something that has been greatly overlooked in the reporting on Wall Street’s balance sheet problems is the issue of credit exposure on derivatives contracts.”

    “It so happens that the quarterly 10-q filing of each investment bank provides a breakdown of the amount of derivatives credit exposure based on the credit rating of the counter-parties.”

    “Why is the issue of derivatives counter-party credit ratings very relevant now?”

    “There is a major Canadian bank named CIBC, which has just disclosed it may have to take losses of $3.5 billion as a result of hedges it entered into on its subprime debt. The problem as you may realize is the counter-party on the other side of the hedge—that they won’t be able to pay up.”

    “It is widely suspected (with high probability) that this hedging counter-party is none other than ACA Capital. ACA Capital had a credit rating of “A” when the hedge was entered into.”

    “CIBC entered into a total of about $10 billion of these contracts. They thought they were “hedged”. So much for that “hedge”.”

    “This same ACA Capital is known to have been a dumping ground for the investment banks to “offload” risk on their CDOs.”

    http://wallstreetexaminer.com/blogs/ducalion/?p=132

  12. grim says:

    Grim, the Fed has no legal control over the subprime lenders, so why do you even entertain this news? This is bunch of non-sense.

    Regulation Z?

  13. bewm says:

    thatBIGwindow, thanks!

  14. t c m says:

    does anyone have any thoughts about/knowledge about buying a house with oil heat – where the tank is not underground, but in the basement?

    pitfalls? how much does it cost to convert?

    thanks

  15. RentininNJ says:

    Nov housing starts down 3.7%

  16. John says:

    Goldman Sachs Reports Record Earnings Per Common Share of $24.73 for 2007; Fourth Quarter Earnings Per Common Share were $7.01 Tuesday, December 18, 2007

    Please view a printable version of the Annual and Fourth Quarter 2007 Earnings [PDF, 1.20 MB]

    A conference call to discuss the firm’s results, outlook and related matters, will be held at 11:00 am (ET). The call will be open to the public.

    Members of the public who would like to listen to the conference call should dial 1-888-281-7154 (U.S. domestic) or 1-706-679-5627 (international). The number should be dialed at least 10 minutes prior to the start of the conference call. The conference call will also be accessible as an audio webcast through the Investor Relations section of our web site, http://www.gs.com/our_firm/investor_relations/. There is no charge to access the call. For those unable to listen to the live broadcast, a replay will be available on our web site or by dialing 1-800-642-1687 (U.S. domestic) or 1-706-645-9291 (international) passcode number 25388886 beginning approximately two hours after the event.

    Please direct any questions regarding obtaining access to the conference call to Goldman Sachs Investor Relations, via e-mail, at gs-investor-relations@gs.com.

  17. John says:

    You never and I mean never want an oil tank in the ground, it belongs in the basement. In fact it is hard to sell a house with a tank in the ground.

    To convert to gas is no big deal if you already have a gas line, the gas company often has deals with free instalation and zero percent interest. If you don’t have a gas line to house that is an additional 3K our of pocket.

    t c m Says:
    December 18th, 2007 at 8:30 am
    does anyone have any thoughts about/knowledge about buying a house with oil heat – where the tank is not underground, but in the basement?

    pitfalls? how much does it cost to convert?

    thanks

  18. thatBIGwindow says:

    #14: TCM – Personally, I would avoid oil heat for the following reasons:

    -Expense to convert and excavate tank (even in your basement it would have to be brought out of the house which can be messy)
    -Home Owners Insurance more expensive and harder to find
    -Possible soil remediation if tank leaked
    -Inconvienence of scheduling oil deliveries

  19. Clotpoll says:

    BC (11)-

    “This same ACA Capital is known to have been a dumping ground for the investment banks to “offload” risk on their CDOs.”

    I guess now I know why ACA’s nickname is “The Big Shitpile”.

  20. thatBIGwindow says:

    Not to mention if you want to convert from oil to gas you most likely will need a new furnace which is $$$$$

  21. BC Bob says:

    WASHINGTON (MarketWatch) – New construction of single-family homes slowed to the weakest pace in 16 years in November as U.S. home builders scrambled to reduce their inventories of unsold homes, the Commerce Department reported Tuesday. Starts of single-family homes fell 5.4% to a seasonally adjusted annual rate of 829,000, the lowest since April 1991. Total starts, including the 0.6% rise for multifamily units, fell 3.7% to an annual rate of 1.19 million, the government said. Authorized building permits fell 1.5% in November to a seasonally adjusted annual rate of 1.15 million, the lowest in 14 years. Single-family permits fell 5.6% to 764,000, the lowest in 16 years

  22. thatBIGwindow says:

    I remember looking at this one house…we walked away when we saw that the oil tank was under the driveway. No thanks.

  23. Clotpoll says:

    tcm (14)-

    “does anyone have any thoughts about/knowledge about buying a house with oil heat – where the tank is not underground, but in the basement?”

    Don’t. The seller should both test the soil, remove the tank and install a new, above-ground tank at his expense. UG oil tank insurance doesn’t pass to the buyer automatically, either (amazing how many sellers and agents will tell you it does). To my understanding, there’s only one insurer left in NJ that will initiate new policies on UG tanks, so they really need to be pulled before title is passed.

    A UG tank that leaks exposes the homeowner to potentially unlimited risk. Remediation on even mild contaminations could cost 30-40K.

  24. twice shy says:

    #14 TCM:

    You don’t want to remove an oil tank from a finished basement unless it’s done carefully. I had a tank removed from my rental house. They drained the tank, then cut it in thirds and muscled each third up the basement stairs and out the back door. Oil residue all over the basement floor and stairs.

    I didn’t pay for the job but I’ve discussed it with my realtor and I’m guessing ballpark is around $8 – $10K, depending.

    Having lived with oil heat for many years, I can assure you gas is superior. Oil heat in a forced air system will spread a trace of burning oil throughout the house. With radiators, you get a trace of oil smell in the basement and maybe up the back stairs depending on the location of the furnace.

    Hope this helps.

  25. twice shy says:

    #24,

    make that “trace of burning oil odor” throughout the house.

  26. mikeinwaiting says:

    tcm If tank is in basement you are ok.Check to see if at one time there was on in ground.How was it abandoned?Some towns let you test & fill others dig out.
    I have found oil to be cheaper than gas in past maybe a wash now.In a sfh oil is very efficient but thats with hot water baseboard,hot air heat is not as good cost wise.I also do not like hot air,hot water does not dry out air,heats more evenly,& holds temp. better.

  27. John says:

    I had a tank removed from my basement was like a a few hundred bucks. No big deal. First I called someone in phone book who buys fuel oil and he sucked the oil out of my tank and paid me for my oil at a discount, then my plumber just put down some covers on my floor and I threw a whole bunch of crappy blankets and towels, then he put a big fireproof floor to ceiling cover aroud the furnance and he got a blowtorch and cut that baby up.

    Two potential issues is remove the oil delivery spout or plug it up, you don’t want an oil guy accidentatlly making a delivery and flooding your basement. Where there is an old oil tank there is absestos somewhere, take a razor blade cut the absestos around the pipe in a straight line and throw an old wet towel or blanket over and pull it off. Otherwise if your tank and furnance removal guy ain’t cool he will rape you like the taliban.

    There is no downside to oil unless it is a time period when Oil is a lot more than gas. My oil tank in my current house’s basement is 55 years old and does not leak. BTW my oil furnance is also 55 years old. That I am going to replace as it is inefficent. Oil deliveries are automatic and they put the bill in your mailbox. The two big pluses for oil is when you have an oil delivery contract you can get them to fix and service your furnance for free and unlike gas your house can’t BLOW UP>
    -Possible soil remediation if tank leaked
    -Inconvienence of scheduling oil deliveries

  28. PGC says:

    Please take your seats as the recession is about to start. Please turn off all cell phones and pagers. The inflight movie will be a rerun loop of “Its a wonderful life”

    Growth Slows For Online Holiday Spending
    Spending growth for the first part of the holiday season was 18.4%, down from 26% a year ago, ComScore said.

    By Antone Gonsalves
    InformationWeek
    December 17, 2007 12:53 PM

    Online holiday spending is failing to meet expectations, as the economy takes its toll on consumers’ gift budgets, a research firm said Monday.
    From Nov. 1 to Dec. 14, spending was 18.4% more than the same period a year ago, which was substantially less than the 26% growth during the six-week period in 2006 over 2005, ComScore said. The researcher defines the holiday shopping season as the months of November and December.

    Spending this holiday season could fail to reach ComScore’s forecast of a 20% increase over last year. “It’s going to be dependent on the beginning of this week,” ComScore analyst Andrew Lipsman told InformationWeek.

    If spending is very strong, then online revenue could reach ComScore’s prediction. Working in retailers’ favor is the fact that consumers held back spending in the beginning of the season, which means there could be some pent-up demand, Lipsman said. Also, there’s still time in the beginning of the week for consumers to make purchases and get free standard shipping from retailers.

    Nevertheless, shoppers are not expected to match the 26% increase in spending reported for the 2006 holiday season over 2005.

    The Grinch of the holiday season this year is the economy. “There clearly are some economic issues weighing on some consumers this year in both online and offline sales,” Lipsman said. Those issues include the subprime housing meltdown, the decline in home values, higher gas prices, and an uncertain stock market.

    An indicator that those conditions are at fault is the wide discrepancy of spending between income groups. As of Dec. 11, low- and middle-income households, which are the first to feel the pinch in a slowing economy, are spending 10% and 17% more than a year ago, respectively, according to ComScore. Households with annual incomes of more than $100,000, on the other hand, are spending 28% more.

    While higher-income households normally spend more than lower-income groups, the difference isn’t usually so great, unless there’s a problem with the economy, Lipsman said.

    In terms of dollars, consumers spent $22.67 billion between Nov. 1 and Dec. 14, compared with $19.15 billion in the same period last year, ComScore said. From January through October, consumers spent $93.6 billion online, which is 21% more than the $77.5 billion in 2006.

    Overall U.S. spending, online and offline, is expected to increase just 4% this year to $474.5 billion, which is the slowest growth rate since 2002, when sales rose 1.3%, according to the National Retail Federation. This year’s spending is also expected to fall below the 10-year average of 4.8%.

  29. Insulted Renter says:

    I used to be puzzled by sellers complaining that they were “insulted” by the prices offered by low-balling buyers–you’re offering your house for sell, not your daughter.

    But this weekend, after visiting listing ML#: 2744463 as a potential rental, my husband and I now feel insulted. A 4/1/1, central air, approx. 1700 sq. feet for $1950–seemed reasonable.

    After taking a look, we could see it is a beautiful old colonial in criminal disrepair. Broken windows, piles of debris, a piece of cheap plywood nailed up in place of a door. I thought if structurally sound and cheap it might be a good by, though clearly not habitable as a rental.

    However, when we called the realtor and asked if the owner would be interested in selling, we were told yes, for the sum of: $600K. $600k for a house on an 1/8 acre lot and no DOOR! Where is this “buyer’s market” we keep hearing about?

  30. mikeinwaiting says:

    When I sold in 06 my tank was in the ground
    Checked abandon filled (town oked)1400.Put top of the line roth tank in garage 5000.
    Spilt with buyer as he could not get home owners with tank in ground.I had seperate tank ins. didn’t mean sh%t.
    We do not have nat gas up here so its oil or propane. So oil is the way to go.Unless your crazy & heat with electric.A good oil system useing hot water should not smell up your home.Just alittle in the boiler room.Clean furnice & chimney once a year & I had no problem.

  31. grim says:

    Was in a large contemporary (6k sq. ft.) for sale in Kinnelon about a month back.

    Electric (common areas) and propane (bedrooms) heat. Listing agent told a cute story about the owner preferring to use his fireplace to heat the common areas.

    Good luck with that.

  32. NJ Buyer says:

    Do not even entertain a home with an underground oil tank. We were in contract on a home with an ‘abandoned’ oil tank, not registered with the town. The Sellers agreed to have it removed. One week before closing, after having spent 3k in inspections, bank app fees, attorney fees and moving deposits the 3rd round of testing came back that there was ground water contamination.
    Our Attorney said, no big deal…its the new Radon…don’t worry about it, have them put a few bucks in escrow. HA. That was July. The clean-up is STILL going on and the Sellers cannot put the home back on the market. Title gets passed as contaminated until the State inspects and updates the records to reflect a clean site. I don’t care how amazing the home is, its not worth the headache.

  33. gary says:

    Insulted Renter [29],

    Exactly. The drunken, idiot sellers are absolutely delusional… still. Everyone seems to be waiting for the other show to drop until you go out there and see for yourself.

  34. Stan says:

    The problem with these proposals is that they will only be enforced after the problem is so big that the banks are forced to self-regulate anyway.

    These new regulations will be thown out as obsolete the next time housing has a run up and everyone is making money.

  35. Mike NJ says:

    #26

    Hot water heat is definitely more even in my opinion but what good will that do you in the summertime when you need the air cooled? Having the duct work in place is key unless you want to do high velocity forced air.

  36. SG says:

    From Economist,

    A dirty job, but someone has to do it
    Dec 13th 2007 | WASHINGTON, DC
    From The Economist print edition

    In concert, central bankers try showering cash on the credit crisis

    CENTRAL bankers are supposed to be boring and predictable. But on December 12th the rich world’s monetary authorities stunned financial markets with a dramatic, joint plan to ease the liquidity squeeze in global money markets. America’s Federal Reserve, the Bank of England, the European Central Bank (ECB), the Bank of Canada and the Swiss National Bank all pitched in.

    Financial markets have been seizing up for weeks. The spreads between the federal funds rate and the prices charged by banks to borrow from each other have widened dramatically since early November (see chart). By some measures, the financial system is more blocked than it was in September. And it has long been clear that central banks’ attempts to sort out the mess were failing. The Fed’s discount window, for instance, through which it lends direct to banks, has barely been approached, despite the soaring spreads in the interbank market.

  37. John says:

    Actually, it is even worse than you think. The EPA website lists all toxic clean up sites. A house with a reported oil spill gets reported on that site and if you clean it up it gets reported as a former hazmat site, so the old dumps, dry cleaners and fuel refill sites will all be identified as will your house forever.

    NJ Buyer Says:
    December 18th, 2007 at 9:23 am
    Do not even entertain a home with an underground oil tank. We were in contract on a home with an ‘abandoned’ oil tank, not registered with the town. The Sellers agreed to have it removed. One week before closing, after having spent 3k in inspections, bank app fees, attorney fees and moving deposits the 3rd round of testing came back that there was ground water contamination.
    Our Attorney said, no big deal…its the new Radon…don’t worry about it, have them put a few bucks in escrow. HA. That was July. The clean-up is STILL going on and the Sellers cannot put the home back on the market. Title gets passed as contaminated until the State inspects and updates the records to reflect a clean site. I don’t care how amazing the home is, its not worth the headache

  38. John says:

    I think the government should pay for breast implants for any woman who wants it. That’s a tax I could live with,,,,, at least I can see the results everyday.

  39. gary says:

    The FED throwing all this “liquidity” out there is like filling up the gas tank of a car that has no engine.

  40. SG says:

    From The Economist print edition
    Property bubbles

    Been there, done some of that

    Lessons from Japan’s financial crisis should worry, and embarrass, America

    America saw a huge growth in the securitisation of mortgage assets and “structured investment vehicles” when the Federal Reserve was providing cheap money. Similarly, Japan in the mid-1980s faced pressure from the United States to liberalise its markets. That sparked a wave of “financial engineering”, and the proliferation of new products such as derivatives. The cocktail was given added fizz by American pressure to revalue the yen: in response to a rising currency, the Bank of Japan (BoJ) cut interest rates, flooding the economy with cheap cash. All of which reinforced an impression that the economy had broken free from the usual boom-and-bust cycles.

    United States, they said, banks lent against cash flow, the best gauge of a borrower’s ability to repay a debt. Japan got into the mess by assuming land prices only rose (in cities they have since fallen by about 70%). But American financiers have made the same silly assumptions, gaily advancing money to “ninjas”: people with no income, no job and no assets. Even if some local property markets tanked, they figured, a nationwide bust was almost unthinkable. They were very wrong.

    One reason the approach of both crises was widely missed was that most of the warning signs were not at parent banks but in affiliates, subsidiaries and other murky offshoots.

    Unable to raise money from banks or in the capital markets, Japanese companies stopped lending to each other: trade credit, which had accounted for about a third of all lending, dried up.

    Meanwhile, depositors took their money out of banks and stuffed it in the post office or under their mattresses. This aggravated the crisis in the banking system.

    More worrying, they say, is its backing for the “superfund” proposed by Citigroup, Bank of America and JPMorgan Chase into which all sorts of toxic assets might be poured, out of sight and out of mind.

  41. SG says:

    Grim – #40 in moderation.

  42. thatBIGwindow says:

    My in-laws refuse to get rid of their underground oil tank…which means it will end up being the problem of my wife and I when they go into a home or pass on.

  43. PGC says:

    #9 bewm

    I looked at that house last week. It’s a nice house at a good price but needs some work. It looks like it was an illegal 2 family that needs converting back. It’s a quiet street but it backs onto a small industrial complex. That was the deal breaker for us.

    Next door is a FSBO for $100K more.

  44. Nj bound says:

    If you take price out of the individual fuel at any given time out of the equation, oil vs gas is totally user preference ((if 1) the tank is in the basement as the orig poster mentioned 2) it is a relatively new system)). I’ve had both and the best and most efficient to me was the oil hydro-air system in the new home that we just moved in and then out of 18 months later. Zero oil smell, quiet, and really helped to raise humidity. Unless the system is a dog and there is oil smell etc, not sure if there is any reason to rip it out of the basement. We painted one tank to look like a cow, added a head and all….. Milk wasn’t so good though.

  45. grim says:

    From MarketWatch:

    Fed proposals rules to clean up mortgage market

    The Federal Reserve proposed sweeping new rules on Tuesday to clean up the market for subprime and all forms of home mortgages.
    The rule proposals, if adopted, aim to strike a balance between protecting borrowers without causing lending to shrink.

    “We strive to protect borrowers from practices that are unfair or deceptive, but to do so without unintentionally causing responsible lending to shrink or unduly limiting consumer choice,” said Fed Gov.
    Randall Kroszner, who is quarterbacking the central bank’s effort.

    Widespread fraud in the market for mortgages has hurt the entire economy, said Fed Chairman Ben Bernanke in opening remarks ahead of the meeting of the Fed’s board of governors.

    “Unfair and deceptive acts and practices hurt not just borrowers and their families, but entire communities, and, indeed, the economy as a whole,” Bernanke said.

    The proposals would prohibit lenders from granting mortgages to borrowers whose only means of repayment would be an increase in the value of the property.

    It also prohibits lenders from paying mortgage brokers fees for higher-rate loans

  46. John says:

    Hey NJ Buyer, how did you find out about the abandoned oil tank in the first place? Was it recorded somewhere or did the prior owner open his big mouth and tell you. If the guy filled if full of bricks, rocks or tar and then threw a driveway on top why would he tell you.

    My sister year’s ago bought a house with an abandoned cess pool and she had no way of knowing so I was just wondering.

    The other curious thing is that in NYS up to 1-1-00 you could fill a tank in with rock or cement and abate it and that was fine. Since then you have to take it out. So there are lots of old pre 2000 houses on LI where I don’t know how you would even know it had one in the ground. My bother filled his in December 1999 and switched to gas. I doubt he would tell the next buyer. Why should he.

  47. Ann says:

    33 Gary

    I think things are going to change after the holidays and definitely the winter. The sellers who have to sell will have to come to reality and start doing price reductions until it sells.

    The ones who don’t want to sell for a reasonable price (many buyer-uppers) should pull their houses and stay put.

    What I saw were a lot of sellers clogging up the market that didn’t have to sell right now. They had pipe dreams of getting 700K for their split and moving into a big house on your dime. Those people are lost causes.

    Also some people hitting retirement age that could sell now or could wait. They’ll be waiting too.

    The people who relocate are the most receptive to reasonable offers in my experience (myself and the people we are in the process of buying from).

  48. Ann says:

    I thought underground oil tanks weren’t a big deal for a buyer as long as the seller took them out and did the proper testing and got the EPA certification (that you can get from the town to see for yourself).

  49. mikeinwaiting says:

    Mike 35 I put in central air $6000 in 03.Kept my hot water baseboard.I really hate hot air,just me.

  50. John says:

    We sold our Mom’s house in an estate sale and had a separate legal document saying the house was as is and I am not responsible for absestos/lead/oil spils etc. or any other issues found after closing and we made the buyer sign it at closing and paid him $500 dollars for his signature.

    thatBIGwindow Says:
    December 18th, 2007 at 9:44 am
    My in-laws refuse to get rid of their underground oil tank…which means it will end up being the problem of my wife and I when they go into a home or pass on.

  51. grim says:

    From Bloomberg:

    Florida Got Lehman Help Before Run on School’s Funds

    It was the first day of November and Coleman Stipanovich’s world was coming undone. Florida school districts and towns had begun pulling their cash out of the $26 billion money market fund he supervised, after they learned it held subprime-tainted debt.

    Stipanovich, who earned $180,214 in 2006 as executive director of the State Board of Administration, was in New York in confidential meetings with Lehman Brothers Holdings Inc., the largest U.S. underwriter of mortgage-backed bonds. Lehman was proposing ways to help the state manage the risk of its debt investments, according to a letter the bank sent to Stipanovich after the meeting.

    What Stipanovich, 58, hadn’t told his boss, Florida Chief Financial Officer Alex Sink, was that Lehman Brothers was the same firm that had sold the state fund $842 million of mortgage- backed debt in July and August. Those securities defaulted within four months, and totaled more failing debt than any other bank sold the state, Florida records show. “At the time, I never knew it was Lehman Brothers that actually sold us these investments,” Sink says.

    Florida CFO Sink is riled up about more than Stipanovich. She says JPMorgan Chase & Co. and Lehman Brothers were offloading tainted debt on Florida and other states at a time when those assets were plummeting in value.

    The subprime meltdown made front-page news in June, when Bear Stearns Cos. disclosed that two of its hedge funds were collapsing because they were stuffed with subprime collateral. During the next two months, Wall Street firms were quietly peddling mortgage-backed securities to the states.

    And the states, eager for higher returns, were buying them.

  52. Mike NJ says:

    John,

    Why should he tell them? If the buyers don’t ask then as they say, “buyer beware”. But if they ask and he lies that could open him up to some serious litigation if there are issues in the future. It is exactly for this reason that I had my property scanned with ground radar even though I am gas heat and most likely was since the house was built. The sellers claimed ignorance on the subject and I didn’t want to be left holding the bag later on. Well worth the $100 for the ground scan.

  53. grim says:

    From the Journal News, hat tip to Ben Jones.

    Lots of blame to go around in subprime mortgage crisis

    For months Marie Chantale Joseph and her husband, Daniel, have been unsuccessfully trying to refinance their home before their interest rate spikes in April.

    Already, Daniel, a taxi driver, is working 18 hours a day and on weekends to pay the approximately $4,800 a month they owe, and Marie, a babysitter, works as many hours as she can. Banks they have approached say they cannot better the terms of their two adjustable mortgages: one at 11 percent and another at 8 percent that total $520,000.

    Marie Chantale says she and her husband didn’t know the financial implications of their mortgage when they bought their home in Elmsford. Their mortgage broker gave them very few details, she said, and they didn’t ask many questions. Their only home-buying experience was in their native Haiti.

    “In my country it is different. No one can come and take your home away from you,” said Marie Chantale, who must pay about $8,000 a month beginning in April, or lose her home to foreclosure. “Here, if they know you don’t know what you are doing, they take advantage of you.”

    Keith Gumbinger of HSH Associates, a New Jersey-based publisher of consumer loan information, said borrowers should have informed themselves about the biggest financial investment they are likely to make in their lives.

    “It’s not that the mortgage broker held a gun to someone’s head to lend the money,” Gumbinger said.

    “Brokers don’t have a fiduciary responsibility. It’s the borrower’s responsibility. You can say no and challenge. You can hire a lawyer.”

  54. Nj bound says:

    Most contracts ask owner to disclose underground oil tank or not and you can have an inspection done as well. Also town records generally have it Call me silly but perhaps if you know a tank is there you should disclose it because its (shock) honest?

  55. SG says:

    Stipanovich: WTF!!! Dont you read news? I am not financial guy, but knew very well in summer 2007 there was trouble brewing.

  56. reinvestor101 says:

    Hi,

    I’m sorry that you feel that way. The buyers market really only exists on this blog. Most sellers aren’t prepared to give their houses away because they know there’s a lot of pent up demand. They’ll just wait it out if they have to.

    Good luck with your rental.

    Insulted Renter Says:
    December 18th, 2007 at 9:12 am
    I used to be puzzled by sellers complaining that they were “insulted” by the prices offered by low-balling buyers–you’re offering your house for sell, not your daughter.

    But this weekend, after visiting listing ML#: 2744463 as a potential rental, my husband and I now feel insulted. A 4/1/1, central air, approx. 1700 sq. feet for $1950–seemed reasonable.

    After taking a look, we could see it is a beautiful old colonial in criminal disrepair. Broken windows, piles of debris, a piece of cheap plywood nailed up in place of a door. I thought if structurally sound and cheap it might be a good by, though clearly not habitable as a rental.

    However, when we called the realtor and asked if the owner would be interested in selling, we were told yes, for the sum of: $600K. $600k for a house on an 1/8 acre lot and no DOOR! Where is this “buyer’s market” we keep hearing about?

  57. gary says:

    Ann [47]

    It’s hard to figure anymore. I think some of these sellers are insane. If you listened to the media, the net, the blogs, etc., you would think the bottom is falling out and then I view the listings sent to me on a daily basis and I’m wondering if I’m opening emails from 2005. The numbers are what they are. You either need 25% or better and/or a hefty income for anything called livable. I’m astounded that people are still able to do it in this area.

  58. thatBIGwindow says:

    REInvestor: Not really a buyers market. For the most part, it is a stand-off market. Houses will still sell quickly if priced right. For instance, if a 3br/2ba house in Ridgewood NJ came on the market at $375,000 that didnt need much work it would probably sell immediately while the same houses priced at $575,000 will linger.

  59. Nj bound says:

    reinvestor101 said

    ….The buyers market really only exists on this blog.

    Not true. The buyers market is alive and well in NJ. We had offers on 3 homes in the late summer and early Fall in Mendham and Mountain Lakes. They budged, but not much so we decided to call their bluff and we are renting for 18 months. All three have called back asking us to put in another offer and 2/3 are now listed less than what we offered….. However, I do agree, those that don’t have to move, just pull the listing. 2/3 of these homes were people that had to relo for jobs. There was also another one in Mountain Lakes that was on for $1 MM, person sold to the relo company as it could not sell, went finally for over 20% less. It is a buyers market, if you look.

  60. BC Bob says:

    “Most sellers aren’t prepared to give their houses away because they know there’s a lot of pent up demand.”

    The only items that are pent up are supply, cc bills and footprints on your head.

  61. Ann says:

    gary 57

    I agree with you that it does seem sellers are insane. I’ve been watching listings for 6 months. Listing prices have been 2005 PLUS the entire time.

    But, if you follow the ones that eventually sell, the final selling prices are hovering around 2004 right now.

    The sellers that I’ve found are ‘insane’ really don’t have to move. I’ve mentioned before, that IMO, the “buyer-uppers” are the worst offenders. They are already in towns they like, in pleasant-enough houses and their kids in schools, they’ve hit 40 and they know it’s now or never to move up to a bigger house. And of course, they don’t have anything to lose by listing, doesn’t cost them anything. Back in the boom, they would have got their prices. Too bad they are two years late. Their realtors should dump them.

    We just bought and sold at 2005 minus 10% or a little bit above 2004.

    As someone said on here once (my apologies, I can’t remember who), the sellers see silence as affirmation that the right buyer just hasn’t come along yet. it’s only when you give the “lowball” that the anger comes out. We did one “lowball” and the people just thought their house was move-in condition and shiny and were “insulted”, and the reality was it was a fixer-upper. Back in 05, they would have gotten their price. But now they are sitting there and the house is rotting going on a year. I think we did them a favor with the offer in the end. Probably brought them a little closer to reality. They did us a favor too by rejecting our offer!

    Not sure where you are looking, but BuyinginBergen.com gives the closed sales each week for Bergen. I’ve been following that too, and the houses that sell aren’t selling for anywhere near their list usually.

  62. Ann says:

    Something else I’ve been mulling, there really are plenty of affordable towns even in North Jersey, even Bergen County. No, they are not Ridgewood or Brigadoon, but not everyone can afford to live in a platinum town. That’s life, you know.

    Not sure about everyone else’s parents, but my family seemed to have just picked a town and a house that they could comfortably afford and it wasn’t necessarily the best town. Maybe if more of us did that (including myself) we wouldn’t be tormenting ourselves over the fact that some towns are simply out-of-reach, unless you want to live in a shack.

    I have a friend who is a teacher, his wife stays home with their three kids, and they have a perfectly lovely ranch house with a nice big yard in South Jersey in a mid-tier town and they may be one of the happiest families I know. It can be done.

  63. cynicalgirl says:

    #48, technically that’s true. But the reality is that most ug tanks are over 20 years old and leaking. So your odds are probably better that the tank will fail the inspection.

  64. reinvestor101 says:

    Dear BC Bob,

    Are you making a joke at my expense? That’s not very nice and I’ve done nothing to deserve that.

    Please refrain from doing that.

    Thanking you in advance,

    R.E. Investor 101

    BC Bob Says:
    December 18th, 2007 at 10:13 am
    “Most sellers aren’t prepared to give their houses away because they know there’s a lot of pent up demand.”

    The only items that are pent up are supply, cc bills and footprints on your head.

  65. Pat says:

    If there’s so much pant-up demand, how come so many people are pissed off?

    I’ve read many advertisements for real estate (a.k.a. news articles) and note that in most every blog response, there are generally a bunch of pissed off residents.

    It can’t possible be the same couple of real estate terrorists who post on this blog, could it?

    http://www.recordonline.com/apps/pbcs.dll/article?AID=/20071216/BIZ/712160321/-1/BIZ05

  66. John says:

    GS has it’s christmas party tonight, my friend invited me but I am too busy with the kids and wife this time of year, I will go next year just for the fun of it.

    NEW YORK (CNNMoney.com) — So marks another banner year for Goldman Sachs employees.

    The venerated Wall Street bank spent $20.2 billion this year on employee salaries and bonuses, up 23 percent from $16.4 billion last year, the company said when it reported strong fourth-quarter results Tuesday.

    If that were to be handed out evenly among the 30,522 employees of Goldman (GS, Fortune 500), that would come to about $661,400 a person. Last year, that figures came to just $621,906.

  67. John says:

    Your friend the teacher should be happy, he only works nine months a year, gets off work at 3pm and through the high NJ taxes most of the people on the blog is paying his salary and mortgage.

    I have a friend who is a teacher, his wife stays home with their three kids, and they have a perfectly lovely ranch house with a nice big yard in South Jersey in a mid-tier town and they may be one of the happiest families I know. It can be done.

  68. reinvestor101 says:

    Most sellers aren’t inclined to give their houses away. Buyers are the one’s who need houses and they will give in and buy at the sellers price. Most sellers, as you’re finding out, are not desperate.

    This is way real estate is a great investment!

    “We did one “lowball” and the people just thought their house was move-in condition and shiny and were “insulted”, and the reality was it was a fixer-upper. Back in 05, they would have gotten their price. But now they are sitting there and the house is rotting going on a year. I think we did them a favor with the offer in the end. Probably brought them a little closer to reality. They did us a favor too by rejecting our offer!”

  69. Insulted Renter says:

    reinvestor101 [56],
    I hope there is a lot of pent up demand somewhere, because my husband and I are not prepared to give away our money anymore than sellers are prepared to give away their houses. Luckily, the market in our area seems to be flooding with relatively cheap rentals offered by people who refuse to just “give away” their houses by pricing them reasonably. :-)

  70. reinvestor101 says:

    Renter,

    You and your husband’s attitudes will cause you to miss the train leaving the station. They aren’t making anymore real estate and the time to buy is now, while rates are low. You really don’t want to be penny wise and pound foolish!

    Insulted Renter Says:
    December 18th, 2007 at 10:34 am
    reinvestor101 [56],
    I hope there is a lot of pent up demand somewhere, because my husband and I are not prepared to give away our money anymore than sellers are prepared to give away their houses. Luckily, the market in our area seems to be flooding with relatively cheap rentals offered by people who refuse to just “give away” their houses by pricing them reasonably. :-)

  71. Shore Guy says:

    The Fed unveiled a proposal that would give people taking out mortgages new protections against shady lending practices. CNBC.com will air a tape-delayed version of the hearing at about 11:15 am New York time.

  72. BC Bob says:

    “Are you making a joke at my expense?”

    I failed my comedy class in school.

  73. reinvestor101 says:

    Patricia,

    I thought we had arrived at an agreement regarding our use of this blog. As I recollect, you were to absent yourself when I was posting. It now appears that you’re not in compliance with that agreement.

    Please comply.

    Thanking you in advance,
    R.E. Investor 101

    Pat Says:
    December 18th, 2007 at 10:30 am
    If there’s so much pant-up demand, how come so many people are pissed off?

    I’ve read many advertisements for real estate (a.k.a. news articles) and note that in most every blog response, there are generally a bunch of pissed off residents.

    It can’t possible be the same couple of real estate terrorists who post on this blog, could it?

    http://www.recordonline.com/apps/pbcs.dll/article?AID=/20071216/BIZ/712160321/-1/BIZ05

  74. Shore Guy says:

    #70 “They aren’t making anymore real estate and the time to buy is now, while rates are low”

    I hear this often and I do not buy it. If one runs the numbers, one is better off paying an initially-higher interest rate than a higher purchase price. Over time, interest rates go up and down and sometime in the first 10-15 or so years of a mortgage one is likely to find an interest rate decline, if one is inclined to refinance. On the other hand, if one buys now and prices continue to decline, one cannot do anything to take advantage of the lower prices.

    As for the “they are not making any more of it” comment. This is the same thing RE people were saying in Florida — in the 1920s. First, the population in most NJ communities is not rising, so there is little pressure from strong population growth. Second, if we do get such pressure, some of the existing sfh units will be torn down and replaced with townhouses, condos, or apartments; building will go up rather than out.

  75. thatBIGwindow says:

    A better question would be why buy a house in New Jersey? Seems many people still want to live here dispite the high taxes..must be the blue ribbon schools in every township

  76. pretorius says:

    Look at this survey result. Source is Wall Street Journal and Harris Interactive.

    How do you think value of your home will change over next year?
    Flat to up 75%
    Down 15%

    Helps explain why home prices are “sticky down.” Many optimistic sellers will take homes off market instead of sell at big discount to peak prices.

  77. BC Bob says:

    “I hear this often and I do not buy it. If one runs the numbers, one is better off paying an initially-higher interest rate than a higher purchase price.”

    Jersey Shore,

    I agree. I hope rates rise to 8,9,or 10%. Let’s see the pent up demand come out of the woodwork then.

  78. Ann says:

    67 John

    I suppose he is happy because his hours are reasonable and he gets to see his family more than most men. His children might actually remember him being around for their childhoods, unlike many other men who choose other professions. His wife is a happy person too. She doesn’t need a big fancy house in a fancy town or a big SUV.

    I also suspect that most people don’t want to hang out with their own children all day, nevertheless, teach them math.

    If you want to be a teacher and you think its so great, why don’t you go be one?

    I suspected someone was going to make a jab at teachers when I wrote that. Remember, you can dislike the system, yet still have respect for teachers who do their jobs well, which my friend does. I bet if you look back, you might even have a few teachers that tried to make a difference in your life too.

  79. reinvestor101 says:

    “Helps explain why home prices are “sticky down.” Many optimistic sellers will take homes off market instead of sell at big discount to peak prices.”

    Precisely. People aren’t going to give their houses away. The buyer’s market only exists here and in the press. The only thing that’s changed is the fact that the lending enviroment is more challenging….all the more reason for the fed and the government to do more than they’ve done to date.

  80. Ann says:

    68 reinvestor

    Actually, I believe the offer was very fair for the condition of the house, which was basically a fixer-upper. Perhaps our offer was low, what do I know? But clearly, their price is wrong if their house hasn’t sold in a year, don’t you think? BTW, they are still calling us and “the lowest number” they will take keeps dropping. Lucky for us we have moved on.

    ________________
    Most sellers aren’t inclined to give their houses away. Buyers are the one’s who need houses and they will give in and buy at the sellers price. Most sellers, as you’re finding out, are not desperate.

    This is way real estate is a great investment!

    “We did one “lowball” and the people just thought their house was move-in condition and shiny and were “insulted”, and the reality was it was a fixer-upper. Back in 05, they would have gotten their price. But now they are sitting there and the house is rotting going on a year. I think we did them a favor with the offer in the end. Probably brought them a little closer to reality. They did us a favor too by rejecting our offer!”

  81. pretorius says:

    “A better question would be why buy a house in New Jersey?”

    Answer – the proximity it provides to intense economic and cultural activity. This access explains why home prices and apartment rents are so high in New York, San Francisco, and London.

  82. chicagofinance says:

    Morningstar
    The Nine Biggest Surprises in Funds in 2007
    Greg Carlson | 12-18-07

    It has been a turbulent year in the stock and bond markets, as both asset classes have bounced around due to bad news regarding the economy and credit cycle. And in the fund industry, we’ve seen some very significant personnel changes. Here’s a rundown of the events that surprised us the most in 2007.

    David Corkins Leaves Janus
    Corkins, one of Janus’ most experienced, accomplished managers, departed on Nov. 1. This was a big blow to a shop that appeared to be on the rebound; Corkins steered Janus Growth & Income JAGIX to a fine record before changing jobs twice to help turn around other funds. What’s more, his departure came on the heels of veteran skipper Scott Schoelzel’s exodus from Janus Twenty JAVLX, and was quickly followed by the departure of rising star Minyoung Sohn (who had taken over Growth & Income).

    Jean-Marie Eveillard Back in Action
    Another big surprise on the personnel front: Charles de Vaulx, who had taken over several First Eagle funds (including First Eagle Global SGOVX) in 2004 from longtime boss Jean-Marie Eveillard (who had retired), abruptly departed in March 2007. Eveillard was quickly brought back on board; he’s to serve as manager for one year, then gradually scale back his duties over the following several years.

    El-Erian Returns to PIMCO
    In October 2005, Mohamed El-Erian, PIMCO’s highly regarded managing director and senior portfolio manager who specialized in emerging-markets bonds, left to manage Harvard’s endowment, a prestigious position. In September 2007, PIMCO announced it had lured El-Erian back to the firm; he’ll become co-CEO and co-chief investment officer (along with legendary bond skipper Bill Gross) when he returns in January 2008. That’s a coup for the firm, and it provides PIMCO with a clear successor to Gross when he retires.

    Fidelity Contrafund Defies Expectations
    Veteran manager Will Danoff carries a heavy burden. Between Fidelity Contrafund FCNTX, which closed to new investors in 2006, and other vehicles, he’s run $90 billion to $100 billion for much of 2007. That’s a staggering amount that can make buying and selling stocks an arduous process, and can cause a fund’s returns to more closely correlate with those of its benchmark. And yet, spot-on calls on the energy sector, as well a bets on Apple AAPL, and BlackBerry maker Research In Motion RIMM have powered the fund to a 22% gain for the year to date through Dec. 10–more than double the return of the S&P 500 Index, this fund’s bogy.

    Fidelity’s Abby Johnson Once Again a Contender
    In 2005, Abby Johnson, the daughter of longtime Fidelity chairman Ned Johnson, switched roles at the firm, from heading up of its money management arm (the firm’s flagship business, which was struggling at the time) to running a division that oversees administration for retirement plans. Although the latter division handles a lot of business for Fidelity, the move was seen as a demotion of sorts, and called into serious question whether she would take over for her father when he retired. However, she recently took on a higher profile again–in September, she was tapped to run a new unit that will market Fidelity’s funds, in addition to her other responsibilities. Between that move and the departures of other potential successors Bob Reynolds and Ellyn McColgan, Abby Johnson may again be the favorite to take over the firm.

    Conservative Fixed-Income Funds Rocked by Subprime Troubles
    The subprime mortgage crisis had a direct, immediate impact on lower-quality debt, but eventually led to trouble among even higher-rated bonds. Fidelity Ultra-Short Bond FUSFX, for example, which keeps its interest-rate sensitivity low and generally hasn’t been volatile, has suffered a 5% loss through Dec. 10–that’s a big decline for such a conservative fund. Also, a number of money market funds, which aim to keep a stable net asset value of $1, held paper affected by the subprime debacle, and had to be bailed out by their management companies to avoid “breaking the buck.”

    Growth Stocks Rebound–but Not Mega-Caps
    After lagging value stocks for seven consecutive years, growth stocks finally took the lead again in 2007. However, while many–including us–expected steady-growing, recession-resistant businesses to lead the way when value faltered, investors instead turned to faster-growing companies with lofty price multiples, particularly within the tech sector. Thus, many funds that focus on steady-Eddie fare have continued to fare poorly, while aggressive growth offerings such as Fidelity Growth Company FDGRX have thrived.

    Same as It Ever Was?
    Some of the same types of equities that had performed remarkably well in recent years have continued to crank out big gains in 2007, despite warnings about stretched valuations and a potential reversion to the mean. Foreign stocks have extended their run of dominance over their U.S. counterparts as the dollar has continued to decline; the typical foreign large-blend fund has gained 14% through Dec. 10, doubling the gain of domestic large-blend funds. More specifically, emerging-markets stocks have had another remarkable year–the typical diversified emerging-markets fund is ahead 37% (and gained at least 23% in each of the four previous calendar years). Finally, as oil prices flirted with the $100 mark, energy funds are working on their fifth consecutive year of outsized gains and energy-heavy diversified funds have also flourished.

    The Markets Soldier On
    Despite all the turmoil in 2007–a housing slowdown, subprime mortgage issues, skyrocketing oil prices, and a sputtering economy–stocks and bonds have still churned out reasonable gains with just three weeks left in 2007. The S&P 500 Index has risen almost 9% for the year to date through Dec. 10, and the Lehman Aggregate Bond Index has notched a 6% gain.

  83. BC Bob says:

    50.5 [79],

    Pretty good call for 1/2005. No?

    Housing bubbles don’t collapse suddenly. They go through a long series of self-reinforcing deflationary stages that typically last five to seven years. Given the extreme and unprecedented nature of the current housing bubble, I expect a ten- to fifteen-year downturn to follow this boom. The government will step in with all manner of supports and bailouts along the way, similar to those that created the bubble in the first place, so the exact trajectory of the decline is impossible to predict. Here I estimate how and over what time period the decline may occur.”

    http://www.itulip.com/housingbubblecorrection.htm

  84. bewm says:

    #68 (reinvestor101) I’m looking to buy, hence am a “Buyer” — but please tell me why I _need_ a house? I’ve been renting for a few years now and will happily rent until prices fall into my range, or I come across an opportunity.

    IOW, there is no urgency on my part. Can’t say that about a lot of sellers…

  85. Shore Guy says:

    #76

    Of course, for one who needs not buy, vacation homes, weekend places, etc., and who has the prospect of rising income during the same period, even flat numbers represent a discount.

    #77

    Unless we end up with a real case of stagflation, we are unlikely to see rates up above 8%. There are so many fewer “qualified” borrowers now — people with low debt, high credit scores, and high income relative to the amount necessary to finance a home — that there is going to be less pressure on available funds (assuming that liquidity does not completely dry up) so I would not be surprised to see rates stay at or below 8. Still, if they rose to 8, it would be a pretty good percentage jump, and that, in and of itself, might cause even fewer sales.

  86. scribe says:

    From the FT:

    Second wave of SIV liquidity problems looms

    By Paul J Davies

    Published: December 18 2007 02:56 | Last updated: December 18 2007 02:56

    The funding problems for the structured investment vehicles (SIVs) that have been at the centre of this year’s liquidity troubles are far from over in spite of a number of banks stepping in to support their vehicles.

    January will bring the start of a second wave of liquidity problems for SIVs as the vast majority of medium-term funding starts to come due for repayment, according to a report from Dresdner Kleinwort analysts to be published on Wednesday.

    http://www.ft.com/cms/s/0/1464f522-ac08-11dc-82f0-0000779fd2ac.html?nclick_check=1

  87. BC Bob says:

    Shore [85],

    Except the market controls the long end, not the fed. Going forward, if inlation rears its ugly head the bond vigilantes will be in full force. My first mortgage was double digits. Who’s to say we will not experience this again?

  88. mneer1 says:

    I don’t think people realize the extent of the impact that stricter financing guidelines will have as it fully snowballs its way through the market. Last year my wife and I easily qualified for a 375-400K mortgage from multiple sources. Now if were lucky, we could do $300K. (Our GI is $105K + or -) Of course, at that price, that doesn’t buy much more than a roof with four walls. The liquidity drought will keep new buyers like me out of the market for another 3-4 years so that we can conform to way tighter standards. We’re not just sitting on the sidelines with a wait and see attitude like many speculate, we have all but been banished from the market. Unfortunately for sellers looking to unload their POS’s to us new buyers so they can move up, will either have to make significant adjustments or plan on packing it in for quite some time.

    A second point to add is new buyers are going to avoid mistakes of our predecessors who made serious lifestyle concessions for income/debt ratios 35-40+. At those levels one is no more than a slave to the mortgage. We have read and seen the horror stories of sacrifice that that can cause on family and lifestyle. Forget it; I’ll stick to rent with the flexibility to take an annual vacation, the occasional dinner out and the wife’s trip to the spa. Life is to short for that stress. To all trade-up buyers you’re going to have to find a new cash spigot to suck on.

  89. Insulted Renter says:

    reinvestor101 [70],

    It is exactly because we don’t want to be penny wise and pound foolish that we refuse to overpay for a money pit just because we can get a low rate on the mortgage.

    Many people are learning to their detriment now that a low interest rate is not magic: it cannot miraculously make the unaffordable, affordable.

    In a market economy, the value of a house is not simply whatever a seller decides it should be; so claiming that by offering a lower price than the one the seller has offered = “wanting them to give it away” I think shows a profound misunderstanding of the natural back and forth that should exist between buyers and sellers in setting a price for a good or service.

  90. kettle1 says:

    RE 101

    They aren’t making anymore real estate

    really??? i beg to differ

    http://tinyurl.com/24h859

  91. Shore Guy says:

    # 87

    I agree. There is no way of knowing whether or not it will happen again. Even so, I stand by my statement that the analysis shows one is better off paying a higher interest rate on a significantly-lower-cost home than a low initial rate on a high cost home that is going to decline in value. I suspect that you eventually refinanced into a single-digit loan at some point, assuming you were in the place 15 years.

  92. CB in SJ says:

    Re: Pent-up demand, insulted buyers, low-balling sellers, etc.: It’s all a bunch of hooey. All the wailing and gnashing of teeth is just the sound of the market self-correcting, as markets always do. If you throw a ball into the air, it will always fall to earth. It might take longer if there are air currents, or you throw it harder, etc. but it will always, always, always return to earth. For years and years, the median home price has been 2.5 to 3 times the median income. That’s because banks would not give you a mortgage unless you were buying a house in this range, plus 20% down. Then the rules changed, and just about anyone could get a mortgage for almost any amount, housing prices inflated, and a vicious cycle ensued. But, the rules have now resorted to normal. No more easy money, no more nothing down (unless you have PMI–remember that?). So, now that you can’t get a mortgage for more than 2.5 to 3 x your income, what will you do? Buy a house in that range, or rent. These are the new old rules and apply to just about everyone. So, house prices will go back to where they belong. The median price of a house is going to go back to 2.5 to 3.0 times the median income. The only question is when. I know that this is stating the obvious to most here, but it seems to have escaped some, and I just felt the need to rant.

  93. pretorius says:

    Lowballers should be polite. Maybe reason why sellers feel insulted is because buyers are mishandling negotiations by being jerks.

    Put the offer in writing (and attach proof of downpayment funds) and tell the agent, “I know it is less than the seller was hoping for but I want him to know that if he accepts my offer I will buy the house.”

    Agent wants the house to sell too. She might even cut her commission to help convince her client to accept your lowball offer.

  94. RaggedJohn says:

    Are we really debating a $1950/month rental being worth $600k for sale? With New Jersey property taxes?

    In any case, the giggle made my morning a bit brighter…

  95. BC Bob says:

    Who the hell wants to pay for an ovepriced, oversubscribed pos when the rent/purchase calcualtor is screaming rent. Put your money to work outside of RE, pay down debt and start saving. There will be bargains coming down the pike. You need to be liquid and debt free to be able to take advantage of what is coming. Get the gun loaded, the targets will be numerous.

  96. BC Bob says:

    “I stand by my statement that the analysis shows one is better off paying a higher interest rate on a significantly-lower-cost home than a low initial rate on a high cost home that is going to decline in value.”

    Jersey Shore,

    Exactly. Your purchase price is final.

  97. grim says:

    From the Federal Reserve:

    Proposed Amendments to Regulation Z)

    http://www.federalreserve.gov/boarddocs/meetings/2007/20071218/memo.pdf

  98. SG says:

    I wonder any way we can find out what happened to Duck’s house. It was listed at I believe 865 in Cliffside park. Since he is no longer participating on board, it may be worth finding out. Will just give us perspective that did he finally gave in or is still holding out.

  99. Ann says:

    93

    Who ever said that “lowballers” aren’t polite? I take issue with the term lowballer anyway. A sincere offer shouldn’t be considered an insult or a lowball, it’s just what the buyer is willing to pay.

    Taking the time to go see the seller’s house, sitting down and writing an offer, attaching a check are all extremely polite activities. Standing outside their open houses with signs that say, where is everyone? Now that would be impolite behavior.

    On the topic of courtesy, sellers should work on being courteous too. Price properly, leave when potential buyers come to see your house, etc.

  100. R Patrick says:

    About the post about the Japanese market:

    Under the mattress or post office? Money saved at the post office? I don’t get it.

  101. grim says:

    grim Says:
    December 18th, 2007 at 8:18 am
    Grim, the Fed has no legal control over the subprime lenders, so why do you even entertain this news? This is bunch of non-sense.

    Regulation Z?

    My comment about Regulation Z was a best guess due to the fact that Z and HOEPA give the Fed authority to regulate nondepository institutions through TILA (truth in lending).

    IMHO, given that these changes would be modifications to Regulation Z, it seems the Fed will have the authority to control non-bank lenders.

  102. 3b says:

    #81 pret:This access explains why home prices and apartment rents are so high in New York, San Francisco, and London.

    No it does not.

  103. pretorius says:

    CB,

    “The median price of a house is going to go back to 2.5 to 3.0 times the median income.”

    Home prices never rose above this level across much of the country, including Texas, the Midwest, and the Southeast.

    And home prices will never decline to this level in high wealth metros like New York and San Francisco.

    The median household income in New Jersey was $66,752 in 2006. Are you really making the case the home prices should be less than $200,000 here?

    http://www.census.gov/hhes/www/income/income06/statemhi2.html

    Notice that this report shows that household income is growing faster in NJ than anywhere else in the country.

  104. pretorius says:

    3b, why do you think home prices are high in New York, San Francisco, and London?

  105. ex-NJ says:

    Hello anyone,

    Is there a checklist available that I can use before signing a contract.

    e.g

    a) Does oil tank exist?
    b) Lead paint?
    c) Property on flood plain?

    thanks

    R

  106. 3b says:

    #79 reinvestor:People aren’t going to give their houses away.

    What exactly does that mean?

  107. scribe says:

    From the NY Times:

    December 18, 2007

    Fed Shrugged as Subprime Crisis Spread

    By EDMUND L. ANDREWS

    WASHINGTON — Until the boom in subprime mortgages turned into a national nightmare this summer, the few people who tried to warn federal banking officials might as well have been talking to themselves.

    Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.

    But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.

    http://www.nytimes.com/2007/12/18/business/18subprime.html?ei=5087&em=&en=139f4231c2d3e303&ex=1198040400&pagewanted=print

  108. 3b says:

    #103 pret:Never said they were not high, they have always been high relative to other areas.

    The reason they are so high now, is because of the real estate bubble, nothing more.

    Again your glossy eyed view that there are literally hundreds of thousands dare I say millions with staggering amounts of money, that are ready willing and able to pay these prices is delusional.

    As far as being close to NYC and all that it has to offer, that is yet another myth.

    For most surburban families with children, they are far too busy raising children, and all that it entails to go running into the city every weekend for a Braodwy show and dinner.

  109. scribe says:

    This one was posted on the Mortgage Implode-O-Meter this morning:

    Press Release

    Are You in Foreclosure? Hope Now Not Helping Now?
    Real Estate Radio USA to reinstate mortgages for listeners in foreclosure

    FORT LAUDERDALE, Fla., Dec. 18, 2007 – Real Estate Radio USA (http://www.realestateradiousa.com), a leading Internet talk radio show, is taking the initiative to help stop the foreclosure crisis by offering to reinstate the mortgages of those in homeowners in foreclosure.

    Each month beginning January 28, 2008, Real Estate Radio will be giving one lucky listener the opportunity to stay in their home and stop their foreclosure proceedings. The promotion is open to homeowners anywhere in the USA.

    Homeowners in foreclosure can register to win by logging onto Reinstate My Mortgage! (http://www.reinstatemymortgage.com), the promotional website set up by Real Estate Radio USA. In order to participate, the homeowner must be in foreclosure, and have an auction date or sale date looming. At random each month, a listener who has registered will have their mortgage reinstated and be able to stay in their home.

    A mortgage reinstatement, with the cooperation and approval of the foreclosing lender, is the quickest method for resolving mortgage foreclosure. The mortgage reinstatement amount is usually the total amount that is past due including late fees and legal costs, although some banks will waive some of the fees to reinstate.

    http://www.ereleases.com/pr/20071218005.html

  110. scribe says:

    grim, #108 is in moderation

  111. t c m says:

    thanks everyone on your feedback on oil tanks.

    i just called my insurance company and found out that they do not insure underground oil tanks! so thank you clot, i wouldn’t have thought of that.

  112. 3b says:

    #76 pret:Many optimistic sellers will take homes off market instead of sell at big discount to peak prices.

    And just as many will not, no different than last time.

    I purchased during the last bubble, wanted to sell a few years later, did not want to take the loss, so stayed,and rapidly paid off the mortgage.

    And yet all around me people sold, left and right at that time.

  113. John says:

    I personally don’t like public school teachers in the highly paid surburbs.

    My first cousin was NYC principal of the year, my two sisters are teachers. One graduated number one in her masters program and my other sister graduated number two in her class. Plus my sister-in-law is a teacher and so is my second cousin. At parties at my house I usually have 5-6 teachers in the room.

    Why do I hate teachers, well my favorite is they take credit for everything good their students do and blame the students for everything bad they do. My favorite example is Great Neck North, somehow they started a hall of fame and nominated the Hughes sisters as members, meanwhile the school does not even have an ice skating team. But I know a guy from the school who ended up on America’s Most wanted, well that was the parents fault.

    Before you say what do I know, I was an adjunct professor at St. John’s and give presentations all the time. In fact I am presenting at a 500+ conference in England in March and I am published. Meanwhile I hold down a full time job. I like teaching and I enjoy it.

    But public school teachers near me are mainly girls in their 20’s too lazy to work in the city, want summers off for the beach and want to make good money. Heck half the teachers in my daughters school show up in flip flops and have the lowly paid aids do most of the work. My daughters teacher who mumbles complained my daughter was talking in HER class, turns out my daugher was just trying to ask her to speak up. I told the teacher that she needs to speak up and she agreed then she went right back to complaining that it was HER classroom. I told her it is the students classroom not your classroom and that she is the equivalent of the desk clerk at the Marriot and my daughter is the guest and she should be doing her job in school and I should be doing my job at home to make sure she does all the homework. WOW what a suprise my daughter got all A’s the next report card. A few weeks later I heard she was a good teacher for five years and then got engaged two years ago to a firemen and now parties a lot and dials it in and the latest update is she is now married and pregant and doesn’t give a rats ass as she is going to milk it and then try to wiggle an admin position so she doesn not have to deal with students. Makes me long for my catholic school days when the teacher was in charge and if the students failed it was 100% her fault.

    I can’t blame them in a way if I had to teach the same old stupid subject from the same old stupid book for 20 years I would shoot myself.

    Funny thing are that teachers with young children are an oxymoron. They are supposed to like kids yet they go to work to avoid being with their own kids.

    The money being a teacher is very good. My principal cousin is a multi millionaire many many times over due to teaching. She learned the ins and outs of NYC govt and in the 1970s though 1990s she bought NYC owned properties every summer. My favorite was she got a five story carrol garden brownstone for 40K once, the amount of back taxes owed!

    Ann Says:
    December 18th, 2007 at 11:00 am
    67 John

    I suppose he is happy because his hours are reasonable and he gets to see his family more than most men. His children might actually remember him being around for their childhoods, unlike many other men who choose other professions. His wife is a happy person too. She doesn’t need a big fancy house in a fancy town or a big SUV.

    I also suspect that most people don’t want to hang out with their own children all day, nevertheless, teach them math.

    If you want to be a teacher and you think its so great, why don’t you go be one?

    I suspected someone was going to make a jab at teachers when I wrote that. Remember, you can dislike the system, yet still have respect for teachers who do their jobs well, which my friend does. I bet if you look back, you might even have a few teachers that tried to make a difference in your life too.

  114. CB in SJ says:

    Pre [102]:

    The median income varies widely throughout the state. In my former hometown, Edison, the median income is $77k. So the median home price should be under $240k. Perhaps a few multi-million dollar homes (Stephenville Parkway e.g.) can distort the mean? The bottom line is you are not getting a mortgage for a house that costs more than 3x your income, and this simple fact will drive the market. If I am making $200k/year, and I live in Manhattan, I am going to have to settle for something that costs $600k or less. Maybe a year or two ago I could have gotten a mortgage for $1 million or more, but not now. If banks won’t lend, how are these real estate values going to be maintained? I contend that they will not be.

  115. 3b says:

    370 reinvestor: You and your husband’s attitudes will cause you to miss the train leaving the station. They aren’t making anymore real estate and the time to buy is now, while rates are low. You really don’t want to be penny wise and pound foolish.

    Penny wise, pound foolish, and you call yourself an investor?

    It is always the underlying value ot the aset that matters, not the financing mechanism. when you grasp that concept, then come back,until then, the market will do what it is supposed to do,and that is correct itsef.

  116. kettle1 says:

    From the BBC

    The US sub-prime crisis in graphics

    http://tinyurl.com/2a2gjs

  117. 3b says:

    # 66 John:If that were to be handed out evenly among the 30,522 employees of Goldman (GS, Fortune 500), that would come to about $661,400 a person. Last year, that figures came to just $621,906.

    But they are not handed out evenly, it is ocncentrated in the upper echelons.

    As opposed to the days I worked there, where everybody from the guy in the mail room, all the way up got 25% of their base salary as a bonus.

    Plus for people like me in municipal sales and trading, we then got our second bonus based on our units profitability, which was far more than the firm bonus.

    That across the board bonus was eliminated when the firm went public.

  118. VMC says:

    RE investor – I think the saying goes “They are not making any more LAND” not “They are not making any more real estate”. Obviously land is static, but more real estate is being made all the time. Lots of it.

  119. pretorius says:

    “Again your glossy eyed view that there are literally hundreds of thousands dare I say millions with staggering amounts of money, that are ready willing and able to pay these prices is delusional.”

    There ARE hundreds of thousands of people around here earning piles of $. For instance, 474,597 households in the New York metro earned more than $200,000 in 2006.

    http://tinyurl.com/27cymy

  120. grim says:

    Frank,

    After skimming the proposed changes, I will now agree with you. Fluff.

  121. CB in SJ says:

    Re: “They aren’t making anymore real estate”

    I remember this argument regarding Japan in the early 1980s, when their economy was on fire. (When Chrysler was failing, before the gov’t bailout, a cover on National Lampoon showed Japanese workers removing the “R” from the Chrysler sign and replacing it with an “L”). Japan was an island country with a rich population and real estate prices went to the stratosphere. But the comment made earlier in this blog says it all:

    “Japan got into the mess by assuming land prices only rose (in cities they have since fallen by about 70%).”

  122. -119. More than offset by the 4mil making under $75K.

  123. 3b says:

    #119 pretThere ARE hundreds of thousands of people around here earning piles of $. For instance, 474,597 households in the New York metro earned more than $200,000 in 2006.

    Yeah in a metropolitan polultaion of over 30 million,and how many of those hosueholds that you sepak of already have a house, or 2.

    Again a glossy eyed view, not based on reality.

  124. BC Bob says:

    “474,597 households in the New York metro earned more than $200,000 in 2006.”

    Pre,

    Is that all? The entire NY metro area? If that’s true this bust will be worse than I imagined.

  125. Nj bound says:

    We did not lowball the houses we looked at in Mendham and Mountain Lakes, but they were shocked that we were not offering asking price. One owner was so upset that she accepted our price (2% less than asking) but was going to take all the curtains and this and that and on and on and on. So we said forget it. She is one of the 3 that still has the house on the market for less than our offering price and has come back asking us to make an offer.
    We also looked in Harding and Chatham, and the homes that people were and are selling for a million bucks are dumps. The house we are renting (which the owners could not sell at $999,999 needs total renovation on first and second floors as little has been done since 1972. The ovens for example are original- as are most windows. Gutter are falling off, siding is rotted. So call me old fashioned, but I’d rather look elsewhere than drop a million bucks on this. I get the impression from some in there that I should be happy paying this.

  126. Anyone have any thoughts on the Goldman conference call? They’re refusing to give any details on their mortgage write-downs or hedge gains…

    Also their lvl3 assets increased to 7 pct of total.

  127. 3b says:

    #57 gary:I’m astounded that people are still able to do it in this area.

    And the number taht is able to do it gets smaller every day.

  128. stuw6 says:

    119 pretorius says:
    There ARE hundreds of thousands of people around here earning piles of $. For instance, 474,597 households in the New York metro earned more than $200,000 in 2006.
    ———————————————-
    The problem you are ignoring which was created by the Republican tax cuts is that the gap between the have’s and the have not’s have widened considerably. As the average working wage has fallen behind inflation, the rich got richer, but the middle class got poorer. All of these $200,000+ salary earners would love to move up into more expensive homes, but who is going to buy their old (nouveau riche) McMansions? Certainly not anyone from the middle class. Especially when you consider the lack of available financing.

    Our area has not yet suffered like areas in Michigan, Florida or California. No one ever said that the drop in RE has to happen in an orderly and balanced pace.

    Patience is by far an investors best friend. It is far easier to time the buy, than to time the sell. Even if I’m wrong (although my SRS continues to hit new highs every month), certainly RE is not going to rebound quickly or at a dramatic rate in which you will suffer great financial damage if you wait a year or two. For reinvestor to say now is the perfect time to buy RE and not back it up with anything more analytical than calling us residential terrorists is both immature and economically foolish. The argument for renting becomes stronger every day as house prices stubbornly remain unfordable. This is especially the case as ill-informed sellers try to rent their properties out rather than sell them increasing the rental stock causing a drop in rental rates due to the expanded competition.

    But what do I know. I’m just playing the don’t pass at the crap table. As usual, no one likes me.

  129. 3b says:

    #56 reinvestor: They’ll just wait it out if they have to.

    Its obvious you did not live through the last real estate down turn.

  130. chicagofinance says:

    BC Bob Says:
    December 18th, 2007 at 12:09 pm
    “474,597 households in the New York metro earned more than $200,000 in 2006.”
    Pre, Is that all? The entire NY metro area? If that’s true this bust will be worse than I imagined.

    Bost: my thought exactly…that CAN’T be right….based on W-2 wages?

  131. Insulted Renter says:

    94. RaggedJohn Says:

    Are we really debating a $1950/month rental being worth $600k for sale? With New Jersey property taxes?

    Not just NJ property taxes–TEANECK, NJ property taxes! I’m glad I could give you a laugh, because it sure gave us one!

  132. John says:

    All this means is you need a bigger downpayment. This was the case when I bought my first home and I put down 40%. Why the heck would anyone in their right mind making only 200K take out a mortgage over 600K? That does not mean you can’t buy a million dollar home that just means you need to put down more. Jumbos above 417K are expensive and unlike school teachers people who make 200K and up can and will eventually get canned. I plan on buying a trade up and at most I will take a 300K mortgage, even on a million dollar house.

    RE The bottom line is you are not getting a mortgage for a house that costs more than 3x your income, and this simple fact will drive the market. If I am making $200k/year, and I live in Manhattan, I am going to have to settle for something that costs $600k or less.

  133. John says:

    chicagofinance Says:
    Dick Grasso was only making like 200K at the NYSE some years while defering millions of dollars in salary. W2 is bull.

    BC Bob Says:
    December 18th, 2007 at 12:09 pm
    “474,597 households in the New York metro earned more than $200,000 in 2006.”
    Pre, Is that all? The entire NY metro area? If that’s true this bust will be worse than I imagined.

    Bost: my thought exactly…that CAN’T be right….based on W-2 wages?

  134. CB in SJ says:

    Pret et al.: Take a look at #53 again. A taxi driver and his wife, a babysitter, struggling to pay their $530k mortgage. When taxi drivers are buying half million dollar homes, how can you say the market was not seriously distorted?

  135. 3b says:

    #29 insulted renter:Where is this “buyer’s market” we keep hearing about?

    Its not here yet, but it is rapidly approaching.

  136. 3b says:

    #131 Insulted: Teaneck has the highest property taxes in Bergen county, followed closely by Bergenfield, and River Edge in 3rd place.

  137. Mike NJ says:

    Nj bound

    Some people are just born stupid and that woman sure sounds like one of them. 2% off asking and she pulls that BS???? You were smart to walk and refuse to respond to her requests for another offer. People who sell their homes are the ones that are ready and willing to listen to any and all offers. Last year when I bought a house I offered real low on another home and the idiot sellers and their realtor refused to counter my offer. Let it be known to all sellers: What a buyer offers and what they would eventually pay for a property have nothing to do with one another! I would have gladly paid what they eventually sold the house for but I wanted to frame the negotiation from a lower starting point (negotiating tactic). The sellers could have saved themselves months and months of carrying costs by just negotiating in good faith, but they passed. You would think that the agent would have held their hand and pushed them to negotiate as she was a so called expert in RE negotiations for over 30 years. It is not my or your job to teach people reality, my advice is just to keep moving along till you find a seller that has a clue. Unfortunately I can tell you from experience Chatham has very few of them!

  138. Confused In NJ says:

    CB, you are right for 99% of the cases. Their are alway’s minor exceptions. And house price is a lot more important then interest rate. I can remember having 16 1/2% mortgage in 1981, which was no problem, as mortgage was only 2x’s income.

    CB in SJ Says:
    December 18th, 2007 at 11:23 am
    Re: Pent-up demand, insulted buyers, low-balling sellers, etc.: It’s all a bunch of hooey. All the wailing and gnashing of teeth is just the sound of the market self-correcting, as markets always do. If you throw a ball into the air, it will always fall to earth. It might take longer if there are air currents, or you throw it harder, etc. but it will always, always, always return to earth. For years and years, the median home price has been 2.5 to 3 times the median income. That’s because banks would not give you a mortgage unless you were buying a house in this range, plus 20% down. Then the rules changed, and just about anyone could get a mortgage for almost any amount, housing prices inflated, and a vicious cycle ensued. But, the rules have now resorted to normal. No more easy money, no more nothing down (unless you have PMI–remember that?). So, now that you can’t get a mortgage for more than 2.5 to 3 x your income, what will you do? Buy a house in that range, or rent. These are the new old rules and apply to just about everyone. So, house prices will go back to where they belong. The median price of a house is going to go back to 2.5 to 3.0 times the median income. The only question is when. I know that this is stating the obvious to most here, but it seems to have escaped some, and I just felt the need to rant.

  139. Shore Guy says:

    #137 “she was a so called expert in RE negotiations for over 30 years.”

    Some people have 30-year’s experience and others have one year’s experience 30 times. There is a difference.

  140. Shore Guy says:

    # 138 In a high-interest-rate environment, potential buyers should do everything possible to keep debt to a minimum so that they can more easily swing a 10-15-20-year mortgage, thus putting more into principal in the early years. Or, in the alternative, to taking out that 30 year note and then paying lots of extra principal in the early years. This is a lot harder when there are other bills screaming to be paid, especially at 18%.

  141. Clotpoll says:

    3b (106)-

    “reinvestor: People aren’t going to give their houses away.

    What exactly does that mean?”

    It means: “help me; I’m screwed.”

  142. BC Bob says:

    “I can remember having 16 1/2% mortgage in 1981,”

    Confused,

    Yeah, I laugh when I’m told we will never see 7-8% fixed mortgages. Most think that steroid financing will be with us forever. My first mortgage was a 12.5% adjustable.

  143. Clotpoll says:

    Ann (78)-

    “I bet if you look back, you might even have a few teachers that tried to make a difference in your life too.”

    The only thing that can make a difference in John’s life is the business end of a Taser.

  144. Clotpoll says:

    Mike (144)-

    You jacked that one out of the park. :)

  145. John says:

    I had one good teacher in 10th grade. That was it.

    Clotpoll Says:
    December 18th, 2007 at 12:50 pm
    Ann (78)-

    “I bet if you look back, you might even have a few teachers that tried to make a difference in your life too.”

    The only thing that can make a difference in John’s life is the business end of a Taser.

  146. Frank says:

    #120,
    Grim, without reading the gobbledygook I realized that it is just government propaganda. Just like the Soviet times.

  147. John says:

    “The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”
    – Rudiger Dornbusch, MIT Economist

  148. grim says:

    Frank,

    It’s not completely fluff, but it the regulations being proposed only apply to a segment of the mortage market, high-cost loans. High cost being defined as 3% over treasuries for first liens, 5% over on seconds.

  149. stuw6 says:

    Pent up demand with the ability to put 20-40% down with little outstanding credit? The stalemate is going to end soon.

    One in Five Expect to Borrow to Heat Homes This Winter

    http://tinyurl.com/yuq2zx

  150. Richie says:

    The more reinvestor101 posts, the more I believe he/she is a realtor trying to pump the market.

    In any case, I’m sure all of you have heard atleast one or more “Bob’s Discount Furniture” commercials over the past year. There was one I actually listened to this morning about how he talked about 0% financing and people getting involved in payments they can’t afford. Needless to say it’s a plug for his business, but it was definitely a change from their normal ‘the competition is busted’ commercials.

  151. grim says:

    From the AP:

    Fed Endorses New Home Mortgage Plan

    The Federal Reserve endorsed new rules Tuesday that would give people taking out home mortgages new protections against shady lending practices.

    The proposed rules, approved in a 5-0 vote by the board, are geared to providing safeguards to the riskiest “subprime” borrowers, already painfully stung by the housing and credit debacles. The proposal is expected to apply to new loans made by all types of lenders, including banks and brokers. The plan could be finalized next year.

  152. HEHEHE says:

    Pretard and RE101, The talking Bears points 1 and 2 are here for you:

    http://www.minyanville.com/articles/index.php?a=15256

  153. BC Bob says:

    “One in Five Expect to Borrow to Heat Homes This Winter”

    Stu [151],

    There was a report in Barron’s, I think 2 issues back, that CFO’s claim approx 20% of workers are digging into their 401K’s to either ward off bankruptcy or to pay their mortgages.

  154. NJ Buyer says:

    John # 46
    We found out at inspection. The current owner had purchased the home in 2000, and was told that the tank was filled with sand and abandoned properly. (There is a whole area in this town that this was done.) Problem is, back then they didnt have to register with the town. So any clown could fill it and call it abandoned.
    THANK GOD we had a great inspector who has seen some of these issues and told us to RUN if there was ground water contamination. He had seen homes where the buyer moved forward and then inherited the problem which can take months to clean up and then the property is listed as Toxic by the EPA. Not to mention how much it cost.
    Last we heard, the Seller (an older lady in a nursing home) was suing their home insurance company.
    There is one company in NJ that will test the area, and if it comes back clean will guarantee the safe removal of the tank. If it tests positive, THEY pay for the clean up.

  155. skep-tic says:

    #113

    “I told her it is the students classroom not your classroom and that she is the equivalent of the desk clerk at the Marriot and my daughter is the guest and she should be doing her job in school and I should be doing my job at home to make sure she does all the homework”

    Wow.

    Ever consider that you may not be as important as you think?

  156. reinvestor101 says:

    Dear HeHeHe,

    I believe that I pointed out before that talking steers, cows, bears and camels do strain the credulity of this particular website. I believe that I politely suggested that you cease and desist from posting links to that particular site.

    Would you be able to tell me when you expect to comply with that request?

    Thanking you in advance,

    R.E. Investor 101

    HEHEHE Says:
    December 18th, 2007 at 1:39 pm
    Pretard and RE101, The talking Bears points 1 and 2 are here for you:

    http://www.minyanville.com/articles/index.php?a=15256

  157. reinvestor101 says:

    Dear 3b,

    If I’m not mistaken, it appears that you are attacking nearly every statement I post. I believe we need to up the level of discourse here by not attacking other posters. Moreover, some might intrepret your actions as being mean and spiteful.

    I believe I’m owed an apology.

    Sincerely,
    R.E. Investor 101

  158. skep-tic says:

    #119

    in other words, you’re saying roughly 3% of the metro-NYC population makes $200,000 or more. this is not particularly impressive

  159. reinvestor101 says:

    “The more reinvestor101 posts, the more I believe he/she is a realtor trying to pump the market. ”

    Richie, I only invest in real estate and sell on my own account. I’m not a real estate agent. Please note for future reference.

  160. HEHEHE says:

    When you can read one of the articles and explain to me:

    a) what it means and

    b) how it shows you that you are full of sh*t

  161. John says:

    A teacher, garbageman and a doctor are all in the client service business. The customers are the parents and students.

    My garbage man does not say they are his cans neither is the classroom the property of the teacher.

    I also told her that it is disturbing that the majority of teachers are women yet the principal and school district head is male and as such it is setting a bad example for our daughters.

    She

    skep-tic Says:
    December 18th, 2007 at 1:48 pm
    #113

    “I told her it is the students classroom not your classroom and that she is the equivalent of the desk clerk at the Marriot and my daughter is the guest and she should be doing her job in school and I should be doing my job at home to make sure she does all the homework”

    Wow.

    Ever consider that you may not be as important as you think?

  162. HEHEHE says:

    BC,

    It’s 401-K dipping and maxing out the CC’s for the new year. Once that’s gone it’s onto faking ones death for the insurance money

  163. TJ says:

    Reinvestor,

    Please stop giving out biased advice to home buyers, when obviously you have some large stake in real estate.
    The people on this board are buyers, not “investors”. RE is not an investment for a home buyer.

    First, pent up demand only exists when there is no or limited supply, or a grossly overprice supply. Pent up demand is not created by the media and blogs. The current market will see supply and demand equalize when either the price of supply decreases or the amount of supply decreases (the only way that will happen is if houses evaporate) ECO101.

    Second, people don’t need to buy homes, they need places to live. If you can’t buy a home, rent; it is that simple.

    Third, what do you define as giving your house away? Making less than 15% YoY? Getting less than you paid? Or just plain giving away your house away for free?

    If you really need to buy a house and for some reason can not rent, listen to me or don’t, it’s your choice. I just purchased a house after 3 years of renting and looking.

    First – stick your what you can afford, do not go any higher.
    Second – if a house is not worth it lowball, lowball, lowball. Even lowball houses that are worth it. Lowball everyone. That is how I got my price.
    Third – Let the offer sit. Of the 10 lowballs I put in, 1 got back to me right away, 7 got back to me after 1 month, 2 still have not gotten back to me and still have not sold.

    Go ahead, try to prove me wrong.

  164. reinvestor101 says:

    Dear HeHeHe,

    Again, I find it difficult to listen to a cartoon character talk. The site reminds me of looney tunes. These matters are serious and cartoon characters have no place.

    As to your last statement, I don’t believe talking about someone’s bathroom habits is appropriate in polite company.

    Again, I ask, when do you expect to comply with a most reasonable request?

    Sincerely,
    R.E. Investor 101

    HEHEHE Says:
    December 18th, 2007 at 1:54 pm
    When you can read one of the articles and explain to me:

    a) what it means and

    b) how it shows you that you are full of sh*t

  165. Pat says:

    credulity : readiness or willingness to believe especially on slight or uncertain evidence. –
    m-w

    Is that the same as “gullibleness,” or would that be “gullibility.”

    “…talking steers, cows, bears and camels do strain the [gullibility] of this particular website.”

    I’m not understanding that sentence. Does it mean that posters on this website are gullible, but posting links to the other site makes folks here less gullible because the other site is so unacceptable that nobody would believe any of if?

  166. Willow says:

    #14 Oil heat

    We have oil heat with a tank in the basement. We have automatic deliveries and insurance on the tank. It’s not hard to get homeowner’s insurance with oil heat at all since it doesn’t cover spills (that’s what the tank insurance is for). We did have an oil tank in the ground which did leak. The insurance took care of everything except our deductible.

    The only way I would buy a house with a tank in the ground is to make the homeowners get the tank certified (they pressurize the tank to make sure there are no leaks) and have the tank insurance carry over to you.

  167. Clotpoll says:

    John (146)-

    John Says:
    December 18th, 2007 at 1:01 pm

    “I had one good teacher in 10th grade. That was it.”

    John, where did you bury her?

  168. TJ says:

    Also,

    If anyone is interested, Mensa testing will be:

    Tuesday, December 18, 2007
    7:00 PM – 9:00 PM
    Hillsborough Municipal Bldg
    379 South Branch Road
    Hillsborough, NJ 08844

    Wednesday, December 26, 2007
    2:00 PM
    Culture Fair
    Edison, NJ 08817

    $40.00 at the door. ~135 IQ or higher. That doesn’t mean you are successful, overpaid and/or driven, it just means you are intelligent.

  169. Clotpoll says:

    ReTard seems to be medicated now.

    Funny, but it’s even more annoying that his old routine.

  170. BC Bob says:

    HEHE [164],

    Any truth to the rumors that in 2008, they will be termed 201K plans?

  171. skep-tic says:

    #163

    John, actually, I’d be curious to see the bills that your garbageman and you child’s teacher send you. These people are public servants (not your personal servants) and are no more in the “customer service business” than an auditor for the IRS.

  172. reinvestor101 says:

    “Go ahead, try to prove me wrong.”

    Dear TJ,

    This reminds me of the commercial with the actor named Chuck (I can’t remember his last name) with a battery on his shoulder daring someone to knock it off.

    Look, I don’t want to fight you. I do understand your frustration. You really want a house, but no one wants to sell one to you because you refuse to pay the going market price.

    I don’t have sufficient time right now to answer your queries in detail, but I will say this. Dig deep, take the plunge and enjoy the American dream of home ownership.

    You’ll never regret it!

    Very truly yours,

    R.E. Investor 101

  173. Pat says:

    TJ…is there an open bar and/or food? I can fake smart for appetizers.

    Oh, wait. Forty bucks? Fuggetaboutit. ;)

  174. skep-tic says:

    #163

    also, a court of law isn’t the property of the judge, but I would love to hear you tell a judge that. your child should exercise similar discretion in the classroom

  175. Pat says:

    “ReTard seems to be medicated now.”

    No, I think he’s just trying get in somebody’s pants. That’s usually the motive from what I’ve seen.

    He WAS O.K. when he was blasting people, but after his smarmy and drooling skit with lisoosh, I’m convinced.

  176. pretorius says:

    “in other words, you’re saying roughly 3% of the metro-NYC population makes $200,000 or more. this is not particularly impressive”

    No, more like 7%. Can you defend your 3% figure?

    And if you still aren’t impressed with the # of high earners around here, what impresses you? What other city on the planet produces nearly half a million $200k households?

  177. skep-tic says:

    #178

    I’m looking at the top line of your chart which shows 15m population for the NYC metro area. You cited roughly 500k at $200,000+.

    Not sure where your 7% comes from, but let’s go with that figure anyway. What exactly are you trying to prove? The NYC-metro housing is fairly priced? Even the 7% figure does not support this

  178. TJ says:

    Reinvestor,

    You may have read my comment, but have seemed to completely skip the comprehension part.

    If you really need to buy a house and for some reason can not rent, listen to me or don’t, it’s your choice. I just purchased a house after 3 years of renting and looking.

  179. Rich In NNJ says:

    Dear R.E. Investor 101,

    I find it amusing how you make requests and demands as to what should and should not be posted (along with who should or should not post) in such a “professional” and business like manner. And then, after making said request you close with a question as to when the poster will conform.
    Unfortunately, I must point out that it is not up to you to make these decisions and ask that you cease and desist immediately.

    “Would you be able to tell me when you expect to comply with that request?”

    Sincerely,

    Rich in Northern New Jersey

  180. skep-tic says:

    #178

    again, the relevant question is not whether NYers are relatively rich. They obviously are. The question is whether there is sufficient income/wealth in the area to support the broad based appreciation in real estate prices. I would agree that at the very high end, there are no problems of affordability. But most of the metro-area population has not enjoyed the massive wealth gains of the richest few percent of NYers, and yet their housing costs have risen by a similar amount.

  181. TJ says:

    Pat (175),

    What kind of spread would you like to see for 40 bucks?

  182. 3b says:

    #178 pret:What other city on the planet produces nearly half a million $200k households?

    And as I said, ho mwnay of those already own houses.

    And I can also tell you for a fact, yes a fact, that Wall St is going to be looking and feeling very sick next year.

  183. pretorius says:

    Skeptic,

    The math is simple – divide 200k households (474,597) by total households (6,709,151).

    3b called me “glassy eyed” and “delusional” if I believed there are lots of people who can afford peak prices.

    So I responded with data that proved there are hundreds of thousands of people who can afford the median priced home in the New York metro area ($476k in 3Q07).

    People on this site claim to like data, and I provided the data to support my point. Probably more people should do that.

  184. 3b says:

    #174 reinvestor:You really want a house, but no one wants to sell one to you because you refuse to pay the going market price.

    If it were the going market price as you say, then how come they are not selling for the most part? Do I have to explain everything to you?

  185. TJ says:

    Reinvestor,

    Please to not use the excuse of “fight”ing with you or mentioning some color commentary on a dated commercial to side step answering my comment.

    1. Can you effectively and sufficiently tell me why “pent up demand” exists?
    2. Can you put a number on what “giving a house away” exactly is?
    3. Why should other not consider your comments biased if you have an investment stake in RE?

  186. pretorius says:

    3b,

    You believe Street worse than 2002 next year?

  187. leavingqueens says:

    Mike NJ Says:
    December 18th, 2007 at 12:33 pm
    Nj bound

    Some people are just born stupid and that woman sure sounds like one of them. 2% off asking and she pulls that BS???? You were smart to walk and refuse to respond to her requests for another offer. People who sell their homes are the ones that are ready and willing to listen to any and all offers. Last year when I bought a house I offered real low on another home and the idiot sellers and their realtor refused to counter my offer. Let it be known to all sellers: What a buyer offers and what they would eventually pay for a property have nothing to do with one another! I would have gladly paid what they eventually sold the house for but I wanted to frame the negotiation from a lower starting point (negotiating tactic). The sellers could have saved themselves months and months of carrying costs by just negotiating in good faith, but they passed. You would think that the agent would have held their hand and pushed them to negotiate as she was a so called expert in RE negotiations for over 30 years. It is not my or your job to teach people reality, my advice is just to keep moving along till you find a seller that has a clue. Unfortunately I can tell you from experience Chatham has very few of them!

    Mike: I was just going to write something like this! We had the same thing happen — we lowballed expecting to neogtiate up. The seller wouldn’t even counter. In fact, realtor told us that she didn’t even counter a higher bid received later on. I don’t understand — house is empty.

    Regarding renting — I’m fine with that and waiting for market to come down, even though I do get impatient at times. In a nice train town, what is a reasonable rent for a 2 or 3-bedroom house/apartment?

  188. scribe says:

    Yo, gang

    Enough already.

    **Do not feed the trolls**

  189. skep-tic says:

    Pretorious, I read the chart wrong. Thought the number you cited (since you said “people” before “households” in your original post) was the total pop figure rather than household figure. So you are correct on the 7% figure.

    Still not sure what the significance of this is in your mind.

  190. 3b says:

    #185 Pret:And again I ask you, how many of those people already have houses? Are there enough people with those kinds of incomes to absorb all the inventory that is out there now, and the massive new inventory that will be coming on next year.

    Do you also assume that all of these people will pay those prices just because they can? That they will pay no attention to what is going in the real estate market right now, as well as all the markets in general?

    Did you ever consider they are successful because they have worked hard and been prudent? What makes you think that many of these same

    People who are disciplined and savvy in so many other aspects of their lives, will just pay the so called going price? And if so, where are they now? Lots of inventory out there, very few buyers it appears.

  191. 3b says:

    #188 pret: Absolutely. If I am wrong( and I will not be), you will be the first I apologize to.

  192. skep-tic says:

    “So I responded with data that proved there are hundreds of thousands of people who can afford the median priced home in the New York metro area ($476k in 3Q07).

    People on this site claim to like data, and I provided the data to support my point. Probably more people should do that.”

    So the median priced home is roughly 8 times the median household income. Is the 7% making above $200,000 more significant?

  193. 3b says:

    #159 reinvestor: Yeah I am attacking evry post of yours, ebcasue you are demanding a bailout/handout and a manipulation of the market to suit your own personal wants and needs.

    Free markets do not work like that, it is that simple.

  194. Hobokenite says:

    Link on CR to a story that says GS had the worst 2 weeks in the company’s history in November.

    http://www.marketwatch.com/news/story/goldmans-horrible-nov-points-more/story.aspx?guid=%7B9F86EF19%2D2E6F%2D40A9%2D8B1B%2D8DC661F6E6AD%7D

  195. Hehehe says:

    Quick Marketing Survey

    You are selling a house in the current market what sounds better:

    a) Just Reduced

    b) Price Improvement

    c) Priced To Sell

  196. Zack says:

    Everybody, please IGNORE reinvestor. He lost his job being a RE broker and now has nothing to do except spew BS on this forum. Please don’t feed him.

  197. Hehehe says:

    It’s not our fault he lost his job!

  198. TJ says:

    Hehehe,

    Well technically it is, at least according to him. The NJREReport blog and the media has caused this housing downturn.

  199. BC Bob says:

    3b [194],

    It’s amazing, at least to me, how those that don’t work on WS and have no clue how the street operates, pretend to come across as experts.

    “Next month starts bonus season, when bankers find out how large their year-end checks will be. Expect them to try to hold on through the bumpy fourth quarter in the hopes of locking in these bonuses before launching their job searches in earnest.”

    “Nobody is leaving before their bonuses if they are not forced to,” a partner at the executive search firm Sextant Search Partners, Jonathan Goldstein, said. “After that, there will be so many bankers on the street that anyone looking to hire will have their pick of the litter.”

    “Already, there has been a record-breaking 141,442 finance jobs cut so far this year, according to executive search firm Challenger, Gray & Christmas. That far surpasses the previous record of 116,647 jobs cut in 2001. In just the last three months, financial job cuts totaled 73,000 — 46% more than in all of 2006. Even that number could be dwarfed by what is to come.”

    http://www.nysun.com/article/65894?page_no=1

  200. New in NJ says:

    leavingqueens (190)

    I can’t speak for all train towns in NJ by any stretch, but here’s our story…
    My wife and I chose Madison because I work in Morristown, and my wife occasionally works in NYC. We are close to two train stations; the train is a straight, approx. 40-minute shot to Penn-NYC. I don’t think that there are many rentals around Madison/Chatham, so prices are a bit higher here than in other similar towns. But on the other hand we do fine with one car because either the bus or the train can get us pretty much anywhere we need to go when our schedules don’t allow us to carpool. The rent for our 2BR/2.5BA townhouse, maybe 1100 or 1200 sq. ft., with a 1-car garage is $2,300 per month. We like our particular place a lot because it has cinderblock walls between the units. We have never heard a sound from either of our neighbors, and they have never complained about our noise despite the fact that we often listen to music or watch movies until quite late. The thing that we don’t like is that the place has never been renovated since it was built in 1987. The appliances are old and the colors aren’t to our taste. But our rent is only about 60% of the monthly cost to own the same place (PITI + association fee), so we’re happy to wait it out.

  201. pretorius says:

    The median-income-to-home price metric is convenient to calculate. That means the mainstream media and some njrereport posters quote it a lot. But that doesn’t make this stat very meaningful.

    The reason is the median income figure includes many households who aren’t buying homes. Retirees and welfare families make up nearly a quarter of the population, but they aren’t prospective homebuyers.

    That is why it is important to focus on the realistic pool of prospective homebuyers – particularly married households in their 20s thru 40s and high-earning single folks. There are hundreds of thousands of these households in the New York metro area who can comfortably afford the median priced home.

    Of course, many of them already own homes. But many of them don’t, and most existing homeowners are considering their next move.

    I agree that home affordability is worse today than it was in 2000. That is natural because we’re at the top of the cycle. I acknowledge that home prices are falling and foreclosures are rising in some parts of New Jersey (inner cities, rural South Jersey, exurbs), but overall I expect several years of home price stagnation and not a broad crash.

  202. Hehehe says:

    Hey Pretard, looks like I was right about the Biglaw “special bonuses”:

    http://www.abovethelaw.com/2007/12/associate_bonus_watch_open_thr.php#more

  203. John says:

    Actually, auditors are in the customer service business, they should work around their client schedules and come up with value added actionable findings. My school district and garbage district itemize my tax bills so I do see the charge for their service. My problem is and I will use both my kids current teachers as example. Both grew up in my town, married civil service workers from nearby and have their kids in the school district. Both have aids to help them in the classroom and they get a “volunteer” student teacher to do part of the class, they don’t do lunch duty and they ask the parents to help on many many projects that require taking off from work in addition to using the PTA to ask for gifts. In addition when they are unable to teach their students it if up to the parents to do their job and spend extra time at night with them. My favorite comment is when the teacher says call her anytime. When I went to call her I found out she has an unlisted phone number, does not give out her e-mail address or her cell phone. Anytime ment during 9-3pm and I could leave a message on the schools switchboard. Pretty much crack dealers and teachers maintain the same level of secrecy. If I had a consultant and I he was taking off and I asked him for emergency contact info and he gave me a dead end voice mail that would be the last time I would have him on a project. My sisters are also brainwashed into doing as little as possible and using the union to wiggle their way out of any type of work. I was so tempted to give a report I was working on for work to the teacher and ask her if she could finish. When she said why would I want to do your job I could say back why the hell do I have to do your job five days a week. At least the garabage men do their job without hasseling the paying customers.

    skep-tic Says: December 18th, 2007 at 2:06 pm
    #163 John, actually, I’d be curious to see the bills that your garbageman and you child’s teacher send you. These people are public servants (not your personal servants) and are no more in the “customer service business” than an auditor for the IRS.

  204. grim says:

    That is why it is important to focus on the realistic pool of prospective homebuyers – particularly married households in their 20s thru 40s and high-earning single folks.

    pre,

    I’ve been looking for granular data that provides groupings based on age, income, homeownership rates.

    Please let me know what you have.

  205. PGC says:

    #109 leavingqueens/Mike NJ

    There are two sides in every transaction. I think the terms “buyers market” and “sellers market” are misleading. There are market condidtions based on supply and demand of property. There is no buyers market if there is no inventory and no sellers market if the buyers are priced out of the properties.

    At the end of the day, you have the price the seller will sell for and the price the buyer wants to buy for. If they can meet you will have a sale. If they don’t then one side has to move. If there is no movement there is no deal. It can be a hot market and the seller will still have to drop the price if they need to move quickly or there are issues with the property. In a slow market, the buyers may still have to come up in price if they want the seller to move.

    On the negotiation front I have experienced both sides. I have had the lowballs rejected and rejected them myself. People forget that this is a business transaction and if you can put away emotion, the offers, rejections, acceptances, negotiation and contracts will go a lot smoother. When I sold I put out a price that I would not accept offers below. The lowballs below that price were thanked for their interest and wished luck on their search. When a buyer told me “But you have to counter?”, I politely told them that I was not required to do anything.

    The big point here is that not all sellers are against the wall and have to sell. Balance that against buyers seeing the run up and pull back of prices and deciding to hold back to see a market stabilisation. Stuck in the middle is the real pent up demand. People suck in both camps. They want to move, but have to sell to do so. A friend summed up that position well. They lost 50K on the house after they moved in to dropping prices. But they had sold their last place for a big gain so overall they were ahead in the game and very happy with the situation.

  206. skep-tic says:

    #204

    Pretorious– I agree that the median income number is imperfect as a measure of affordability, but I fail to see how the income of the top 7% of households is a better measure of overall affordability.

    Maybe the ratio of the median house price to mean household income is a better approximation. The mean household income (roughly $85k) is skewed higher due to the presence of the very high earning portion of the population. Yet even this comparison yields a multiple of 5.6, which most people would consider beyond the realm of affordability.

    I agree with much of what you say regarding the economic health of the region, and I think that consequently, area real estate should enjoy a higher multiple than the rest of the United States (say 4.0 vs. 2.8).

    But even accouting for the growth potential inherent in the area and even skewing the household income figures toward the top half of the income pool, it still seems clear that much of the area real estate is drastically overvalued (20-30%).

  207. CB in SJ says:

    #204 Pret:You don’t think there will be a crash, others speculate there will be a spectacular flame-out. Truth be told, no one knows the future, and anyone under about 40 years old is not going to remember the prior real estate crashes. And no two housing bubbles are the same. Bottom line, no one really knows what the future holds. But, look at some of the drivers of NJ RE: Pharma companies are cutting jobs, NJ population growth has stalled and may actually decline in the future, housing prices are way too high, the aging population in this state, the highest property taxes in the nation (and our Pension liability for one is going to keep them this way). I think it is going to get ugly. real ugly.

  208. Clotpoll says:

    PGC (208)-

    I think the terms “buyers market” and “sellers market” are misleading.

    Agreed. They are gross oversimplifications, put out by bad RE agents and swallowed by buyers and sellers with no financial acumen.

    In fact, whenever I hear anyone use these terms, I make a mental note to be on the lookout for future cluelessness or bad behavior. Unfortunately, one- or both- of these traits are displayed soon after.

  209. pretorius says:

    CB,

    I share your view that New Jersey’s brightest days are in the past.

    Home prices rose 2% per year in real terms between the last two peaks. I expect home prices to rise at a slower pace during the next cycle.

  210. John says:

    BTW who cares if listing prices are not falling. What difference does it make that you can get an agent to list your house at 2005 prices if no one is willing to buy it. I got the itch to buy a new home back in September before I came to my senses. Of the four houses I saw with the agent all four on them are still on the market without an offer. All four were priced between 600k and 900K more than the previous owner paid way back when. Also when I was looking back in 1991/1992 NO ONE was buying people would cut prices week after week and still no one bought.

  211. skep-tic says:

    #206

    I would agree that some teachers who have never done anything else can have a very union mentality and are disinclined to do anything not required by their contract. Unfortunately, not only does the unionization of the profession protect lazy teachers, but it also disincentivizes those who would otherwise go above and beyond (there is no reward).

    This is the important thing to keep in mind: although good teachers do spend at least as much time working out of school as in school, much of this work is technically not required and these teachers only do it to the extent they feel like it.

    When people treat them like they are servants, or act as though children are the boss and not the other way around, teachers are disinclined to stay late for extra help, allow make-ups for missed tests and homework and take calls/emails from parents beyond anything strictly required in their contracts.

    Last I checked, there was no plan to chuck unionization for performance bonuses in most public schools, so I think it is important to keep this incentive structure in mind.

  212. Kurt says:

    John – funny I don’t see any teachers posting here. As you describe them (as in, each and every teacher except for your 10th grade gym teacher) as lazy, blame laying, uninitiated losers one would think they’d have time to post here 50 times per day, like you.
    Go write another report and leave the tough, low paying, and largely thankless job of teaching your kids to the pros
    Love,
    Kurt (son of 2 teachers)

  213. gary says:

    pretorius [204],

    I tend to agree, that’s a pretty fair analysis. So far, house prices and jobs in this area have been holding steady and until further review, nobody can argue that.

  214. 3b says:

    #212 pret:Home prices rose 2% per year in real terms between the last two peaks. I expect home prices to rise at a slower pace during the next cycle.

    Are you including the years where the prices declined dramatically during the last houisng crash?

  215. 3b says:

    #204 pret:There are hundreds of thousands of these households in the New York metro area who can comfortably afford the median priced home.

    And again I ask, where are they?

  216. Hehehe says:

    3b, you forgot my favorite:

    “most existing homeowners are considering their next move.”

    I think he got that one off an NAR talking points list.

  217. BC Bob says:

    “most existing homeowners are considering their next move.”

    I did in 9/05, kicked it out. Today’s homeowner? If they don’t cut, they are stuck in the mud.

  218. 3b says:

    #202 BC Bob : So true!! And I worked at Goldman, I do not bring that up to brag, but simply as it seems to be the firm that every one is so mesmerized with, and it appears to be the yardstick that everything else is measurted against.

    And yet there are still those, including people I know, who are teh experts on everything Wall St, and have little or nothing to do with it.

    I do not argue that am I am cynical, or perhaps doom and gloom, but I am sorry over the years I have seen and heard it all, and much of it is the same old wine put in new bottles.

    I would much rather base my decesions on things that I know and lived through in the past, coupled with what I see going on today,and make prudent decesions from there.

    I admit I have no patience for the relentless cheerleading that I see here at times, be it real estate or NYC. And I am sure there are those who do not care for my cynicism, so be it.

  219. 3b says:

    #219 He is impossible, like a yapping dog.

  220. ithink_ithink says:

    Failed Australian Hedge Fund Solvent, Will Repay Creditors

    December 18, 2007
    For creditors of collapsed Australian hedge fund Basis Yield Alpha, there is some holiday cheer. The banks that lent the hedge fund money—and then seized its assets when it missed margin calls—are likely to recoup all of their money, as the fund—now in provisional liquidation—has become solvent once again, thanks to continued coupon payments from some collateralized debt obligations it holds.

    In a letter to investors, Basis Capital said the fund has amassed US$60 million in cash, enough to pay off its creditors. The fund also held out the prospect that there could be something left for investors, as it has still been unable to value the disastrous structured credits that caused the hedge fund to fail in the first place.

    But the fund’s liquidator, Grant Thornton’s Steve Akers, threw some cold water on the holiday cheer, warning that things are going to get worse for hedge fund investors before they get better. He says banks are reluctant to force any hedge funds out of business—as they did with Basis and with two Bear Stearns credit hedge funds, which collapsed earlier this year—because it would hit their bottom line at a sensitive time. In other words, expect more hedge fund collapses early next year.

    In an interview, Akers said, “The banks know if they push them into insolvency that they would have to reflect that on their own balance sheets and they’ve been holding off on doing that for fear of damaging their share prices.”

    http://www.finalternatives.com/node/3133

  221. BC Bob says:

    3b [221],

    As you are well aware, it’s quite simple on WS. If earnings are down jobs are slashed. There have been decent size cuts at Merrill and MS, the last couple of weeks, not advertised. Some of these cuts were “voluntary”.

  222. 3b says:

    #224 BC: Of course, and there are much more to come after the holidays. It is truly amazing to me that there are some here on this forum, who even with all that has transpired believe that the damage is going to be extremely limited, and all will be well. nad it will be up, up, and away.

    I just do not understand that type of obstinance.

  223. John says:

    Kurt, I did not say I was good at teaching I just said I like to do it. I plan on doing that cushy teaching gig one day when I semi-retire so I can be on the public dole like your parents. It is a sweet deal. Free medical and pension for life. I can get vested in just ten years at the university level so why waste 25 years in an elementary school. I will just do my last ten years at a college. When I go to England in a few weeks to speak at a conference the airfare, hotel, meals are all picked up for a few hours work. It is a good deal. I am going to milk it like your Mom and Dad did one day, KACHING.

  224. Wendy says:

    Millburn Twp, NJ 07078
    MLS ID# 2424370
    is listing for 999500. I am offering 940k and got accepted, Am I paying too much?

    Another
    MLS#: 2447213 Millburn Twp.
    AD: 20 FENTON DR*
    asking 895K. offer 870k accepted.

    Which on is better?
    Your imput is appreciated.

  225. chicagofinance says:

    pretorius Says:
    December 18th, 2007 at 2:12 pm
    “in other words, you’re saying roughly 3% of the metro-NYC population makes $200,000 or more. this is not particularly impressive”
    And if you still aren’t impressed with the # of high earners around here, what impresses you? What other city on the planet produces nearly half a million $200k households?

    pret-a-poseur: should I use one of your patented pretarded “literal” standards to refute your latest pronouncements of lunacy?……well, since the USD has cratered, I think the answer is London, Paris, Tokyo, Hong Kong, etc. etc.

  226. Confused In NJ says:

    Light Bulbs, Gas Changing as U.S. Energy Bill Passes (Update1)

    By Daniel Whitten

    Dec. 18 (Bloomberg) — The light bulbs in almost every U.S. home and the gasoline in many cars will be altered by energy legislation that the U.S. House of Representatives passed today. President George W. Bush plans to sign the bill tomorrow.

  227. RentininNJ says:

    I’ve been looking for granular data that provides groupings based on age, income, homeownership rates.

    Here is the best I have (from 2006 American Community Survey)

    Total number of households with making more than $200k by age of head of householder in the NY Metro Area* :

    Householder under 25 years: 1,411
    Householder 25 to 44 years: 184,821
    Householder 45 to 64 years: 244,359
    Householder 65 years and over: 44,066

    Total number of households: 7,338,731

    * New York-Northern New Jersey-Long Island, NY-NJ-PA Metro Area

  228. ithink_ithink says:

    231 holy crap, wouldn’t have guessed that much. i have truly no clue.

  229. Punch My Ticket says:

    pret #204,

    That is why it is important to focus on the realistic pool of prospective homebuyers – particularly married households in their 20s thru 40s and high-earning single folks. There are hundreds of thousands of these households in the New York metro area who can comfortably afford the median priced home.

    Per http://www.census.gov, there appear to be 185000 +/- 6500 such households in 2006 (Table B19037). Per http://www.census.gov, there appear to be 1505000 +/- 20000 houses valued at more than $500k (2006 ACS Housing Survey) in the same statistical area.

    A wee mismatch, no?

  230. chicagofinance says:

    RentininNJ Says:
    December 18th, 2007 at 4:46 pm
    I’ve been looking for granular data that provides groupings based on age, income, homeownership rates.

    RentininNJ Says: That’s just shockingly low…..

  231. Zack says:

    Wendy #228

    A million $ for that kind of crap. Are you freakin crazy? Whats the matter with you?

  232. Kurt says:

    Nice try john, but my folks haven’t managed to work the system like you plan to. Mother taught at a private business school for years that went under, nothing for retirement there.
    Father is a phd in the middle of his 35th year at TSC (oops TCNJ), president of the teachers union so no reach arounds from the admin there. If he didn’t work his ass off and co-author a text book that is probably bringing in more than his base salary from sales to colleges around the world he’d probably have to work until he’s 80 to pay off the house he designed and built in 1981 (you might know what ineterest rates were like then)
    Guess I just respect teachers in general more than you do – shame if you haven’t met more who do it more for the satisfaction of giving something back to society more than the lifetime of leisure and riches the profession clearly brings.

  233. grim says:

    A wee mismatch, no?

    Not if they each own 10 homes..

  234. grim says:

    Renting,

    Thanks for the table numbers.

    B19037. AGE OF HOUSEHOLDER BY HOUSEHOLD INCOME IN THE PAST 12 MONTHS (IN 2006 INFLATION-ADJUSTED DOLLARS) – Universe: HOUSEHOLDS
    Data Set: 2006 American Community Survey
    Survey: 2006 American Community Survey

    New Jersey

    Householder 25 to 44 years: 1,150,033 +/-8,488

    Less than $10,000 50,605 +/-4,219
    $10,000 to $14,999 30,187 +/-2,756
    $15,000 to $19,999 34,977 +/-2,508
    $20,000 to $24,999 35,046 +/-3,219
    $25,000 to $29,999 40,564 +/-3,131
    $30,000 to $34,999 45,016 +/-3,368
    $35,000 to $39,999 45,161 +/-4,056
    $40,000 to $44,999 51,784 +/-4,434
    $45,000 to $49,999 47,579 +/-3,664
    $50,000 to $59,999 95,578 +/-5,342
    $60,000 to $74,999 130,215 +/-6,063
    $75,000 to $99,999 185,772 +/-6,767
    $100,000 to $124,999 129,074 +/-5,827
    $125,000 to $149,999 76,504 +/-3,618
    $150,000 to $199,999 79,418 +/-3,554
    $200,000 or more 72,553 +/-3,855

  235. pretorius says:

    Punch my ticket,

    I agree that demand from high earners isn’t strong enough to absorb the current supply of high-priced homes on the market. That explains why prices are stagnant.

    Following several years of rising incomes and stalled prices, the next up-leg of the cycle should begin. I see a crash (let’s say 20% peak-to-trough nominal price decline) taking place only if local economic conditions deteriorate to the extent where major population outflows happen – like Detroit today or Alaska in early 1980s.

    To make life easier for people who want to check out the data in its original form:

    http://tinyurl.com/2y6m68
    http://tinyurl.com/27cymy

  236. grim says:

    Fun with tables..

    B25096. MORTGAGE STATUS BY VALUE – Universe: OWNER-OCCUPIED HOUSING UNITS
    Data Set: 2006 American Community Survey
    Survey: 2006 American Community Survey

    New Jersey

    Total: 2,110,308 +/-15,499

    With a mortgage: 1,504,931 +/-13,704

    Less than $50,000 8,620 +/-1,357
    $50,000 to $99,999 31,539 +/-2,075
    $100,000 to $149,999 58,904 +/-3,716
    $150,000 to $199,999 112,378 +/-4,676
    $200,000 to $299,999 274,666 +/-6,525
    $300,000 to $499,999 591,968 +/-9,175
    $500,000 or more 426,856 +/-7,908

    Not mortgaged: 605,377 +/-8,574

    Less than $50,000 20,803 +/-2,028
    $50,000 to $99,999 32,266 +/-2,233
    $100,000 to $149,999 44,748 +/-2,455
    $150,000 to $199,999 55,974 +/-2,939
    $200,000 to $299,999 116,527 +/-4,439
    $300,000 to $499,999 201,401 +/-6,107
    $500,000 or more 133,658 +/-5,165

  237. pretorius says:

    grim I’m in moderation

  238. Punch My Ticket says:

    each own 10 homes..

    LOL

    All sorts of great news today. I liked the NYT piece about the South Korean market stalling out with Seoul 3 bdrm apts priced now at 100x per capita annual income, but Seoul must just be a more advanced version of the pretorian NYC.

    But the best bit is the unanimous Fed approval to advance new mortgage rules. It’s gonna be watered down but anything along these lines means trouble.

    On subprime (defined as anything higher than 3% over a comparable maturity T-note), stated loans banned. Prepayment penalties banned. Mandatory escrow for taxes and insurance.

    Undisclosed yield spread premiums on all loans illegal, i.e. mortgage brokers weeping uncontrollably.

    Plus what I think of as the anti-Ditech provision: A mandate to disclose all rates, not just the teaser, in the same size print.

  239. Everything's 'boken says:

    re: 236
    MS reported 6B max exposure long ago. ‘Street sources’????

  240. Confused In NJ says:

    Nationally, 30 state pension systems are 80 percent or more funded, including Oregon and North Carolina, with almost half of those more than 90 percent funded, the report said. There are 20 states with funding levels below 80 percent, including West Virginia, New Jersey, Kentucky and Louisiana. For them, the “proportion of assets to liabilities may create fiscal stress if unaddressed,” the report said.

    In another report released yesterday, Chicago-based Loop Capital Markets said of 72 state-managed pension plans it studied, the number less than 80 percent funded doubled to 32 from 16 in 2002.

    Health-Care Costs

    Rising health-care costs are contributing to the funding problem, Urahn said. New Jersey’s retiree health costs rose 355 percent during a recent five-year period, the report said. In 2005, the state spent $911 million, up from $200 million in 2000.

  241. pretorius says:

    Punch,

    Where do you see NYC metro home prices going during next few years?

  242. Confused In NJ says:

    For perhaps as many as 27 million American adults, keeping warm this winter will mean borrowing money and 20 million will use credit cards to be able to afford their heating bills, according to a CreditCards.com poll.

    Nearly 12 percent of Americans say they will need to borrow money to pay winter heating bills; 9 percent will need to use credit cards to be able to afford their heating bills. The poll, commissioned by CreditCards.com and conducted by GfK Roper Public Affairs & Media, surveyed 1,004 randomly selected American adults by telephone Dec. 7-9, 2007 to gauge their attitudes about energy costs in 2008. A majority say they expect oil and gasoline prices to get worse in 2008.

    More from CreditCards.com:

    • 7 tips for paying higher heating bills

    • More utilities allow credit card payments

    • List: Utilities that accept credit cards

    Heating bills are rising at a time when utility companies across the country are broadening electronic payment options for customers, including allowing credit card payments for utility bills. Personal finance experts say paying for basic living expenses with credit cards makes sense only if you pay off the entire balance each month. They also warn that carrying a revolving balance encourages people to live beyond their means while racking up interest charges that can plunge families deeper into debt.

    Conserving and cutting back

    More than two-thirds of the poll respondents (71 percent) say they will attempt to reduce heating costs by lowering their thermostats this winter. Every American family will need to consider ways to make similar kinds of changes in their long-term energy consumption habits, says Perry Sioshansi, president of Menlo Energy Economics, a San Francisco energy consulting company.

    “We all need to make those decisions when we buy appliances, when we’re replacing appliances. When the light bulb goes out, buy the more efficient kind and put it in, get the more-energy-efficient insulation for the walls,” he says. “These are permanent things that improve the utilization of energy.”

    He and other oil industry analysts and energy experts expect fuel costs to continue to rise in 2008 — a situation that could contribute to an overall economic slowdown.

  243. Just me says:

    224 ..i heard the same from WS insider ..some are beeing quietly walked out ..and not a lil boys!!!

  244. Confused In NJ says:

    Americans’ longstanding addiction to gasoline will continue well into 2008, despite rising fuel costs, and may contribute to a slowdown in the overall economy, a new CreditCards.com poll suggests.

    Two out of three Americans say they’ll cut back on spending for other things as a result of higher energy costs in 2008, with nearly a quarter saying they’ll cut back significantly on other spending. If they follow through, it will not bode well for the economy in 2008, say oil industry analysts and economists. Rising gas prices, the housing slump, the sagging dollar, the employment outlook and the stock market all may converge during the year, boosting the odds of a recession, they say.

  245. Confused In NJ says:

    Wall Street Layoffs. Maybe we can get the US Army to create a “Wall Street Brigade”, they seem to be having trouble meeting their quota’s.

  246. skep-tic says:

    Tort “Reformers” Slam New Jersey, Nevada Courts as “Judicial Hellholes”

    New York Lawyer
    December 18, 2007

    State courts in New Jersey and Nevada have joined the list of those that the American Tort Reform Foundation considers the least favorable for lawsuit defendants looking to fend off plaintiffs’ tort claims.

    Courts in Clark County, Nev., and Atlantic County, N.J., will be newcomers to the foundation’s “judicial hellholes” list when it’s issued today, a source at the organization said.

    …..

    The association alleges that judges in the “hellhole” counties inequitably apply the law in favor of plaintiffs.
    …..

    Atlantic County made it into the list principally because the authors of the report said that the court there has become a plaintiff-friendly venue for mass tort claims against the state’s many pharmaceutical companies.

    New Jersey is one of the only states that doesn’t consider prescription drug manufacturers’ warnings about side effects to doctors to be sufficient if patients themselves are not aware, according to the report. The report also cited the handling of Vioxx-related lawsuits against Merck & Co. Inc.

    ********

    kind of a surprise that such an unfavorable rule persists in a state with such a heavy pharma presence

  247. chicagofinance says:

    IMHO: be careful reading wage data in 2007 & next year…..you have to believe that there is en masse grabbing at the easiest available money source for those tapped out and cut at the quick by financial companies….first the IRA (to hell with the penalty)..then the 401(k) since it is one grade harder in terms of logistic ease to empty….every penny out goes to income….

  248. chicagofinance says:

    pret-a-poseur: with your NYC pretarded pronouncements…..I would care to make a qualified call….20% nominal drop off peak prices by 2010 for condo and SFH properties under $2M and not purchased all cash.

    By the way, you underestimate something……sure there are plenty 30-somethings who are taking the plunge and willing to live in NYC, but there will come a point when a good number of them will look at their kids and all the inherent problems of living in an urban environment and say…..F THIS…..

    I know you have likely sterilized yourself, because children are negative NPV, and dropping a kid off at daycare extends one’s commute, but you need to be a little more objective….MAYBE?

  249. t c m says:

    Re: #228 – 2 accepted offers

    maybe i’m naive, but i thought if your offer was accepted, you had some financial obligation to move forward.

    how do you get out of one of them? what’s the rule on putting in offers?

  250. gary says:

    Admit it; you would love to sit down with these sellers and guess which chemical distorted their brain activity:

    http://homes.realtor.com/realestate/roseland+boro-nj-07068-1085295281/

  251. 3b says:

    #257 gary ludes?

  252. pretorius says:

    Chicago,

    I appreciate that you’re willing to go on record with a home price call.

    Regarding 30 somethings with kids fleeing New York City – didn’t this trend reverse about 10 years ago and lead to a growing number of high-earning families staying in the city? I not calling the end to suburbanization, but it seems like one reason Manhattan home prices remain so high is because more hotshot families are sticking around and buying homes there.

    By the way, I have a family.

  253. gary says:

    3b,

    I was thinking paint thinner. :o

  254. PeaceNow says:

    Kurt—I’m with you. I know quite a few teachers, and all of them have given more to their student than they will ever be paid for.

    John—If we paid teachers as much as you pay your consultants, perhaps you’d have found more teachers to inspire you.

    To all the people on this blog who constantly moan about how much municipal workers (teachers, cops, etc.) collect in benefits: Believe it or not, when those benefit programs were introduced, the only way to attract qualified workers to fill those jobs was by offering great benefits, since private employers also offered things like free health insurance and pensions. Unlike private companies, however, public workers have strong unions that protect their membership, whereas private companies go out of their way to discourage not only unionization, but also hiring “permanent” employees. Just sayin’ (as long-time freelance worker). But please try to bear it in mind.

  255. mikeinwaiting says:

    Peacenow That was then this is now.The benes
    & lifetime employment along with increase in wages have made these golden jobs.In a blue collar town tax payers support these jobs making less, getting minimal if any benes & no retirement.Forget about the time off teachers get.Not to worry I plan on getting my cert. so I can get on the gravy
    train to.Yes I have fam. who are teachers they are the ones telling me to get on the dole.They call it a CAKE WALK.

  256. Punch My Ticket says:

    pret #247: I think what you wrote earlier is not unreasonable but a bit rose-colored.

    I agree that demand from high earners isn’t strong enough to absorb the current supply of high-priced homes on the market. That explains why prices are stagnant.

    IMO prices are stagnant because transactions have stopped. If nothing is being printed on the tape, then price discovery is defective. You admit that there is a mismatch between supply and demand, the resolution of which is lower prices.

    Following several years of rising incomes and stalled prices, the next up-leg of the cycle should begin.

    That’s an alternative, sure. But if the down-leg is 10 years long, which is hardly unheard of? In a normal year, about 5% of existing housing stock turns over. Part of that is voluntary, part is involuntary. Stack the involuntaries up for 10 years. Do you honestly believe that prices will just stall?

    I see a crash (let’s say 20% peak-to-trough nominal price decline) taking place only if local economic conditions deteriorate to the extent where major population outflows happen – like Detroit today or Alaska in early 1980s.
    You don’t need population outflow. As long as houses are paid for by people out of their incomes (and grim’s table extracts above show 3/4 of metro NYC residences priced at $300k and over have mortgages), then the number of people is irrelevant. The only relevant data are incomes and house prices and loan pricing/availability. Those numbers don’t jibe today. Even you admit it.

    Loan pricing is getting worse, not better. That is not under government control. Lenders and investors have been burned – and they should have been, because they have been grade A stupid – and they will insist on a premium in order to lend against houses. The options left are for incomes to rise a bunch or house prices fall.

    I’m having a hard time imagining rapidly rising income, given that so much in metro NYC depends on shuffling paper which, shall we say, has a recent aroma of doubtful quality. So I would bet on falling house prices.

    All that said, you might be right about nothing worse than 20% down on a nominal basis. But if it’s 10 years down and 50% cumulative inflation, then it could still be a 50% haircut in real terms, which is no fun for levered participants.

    Full disclosure: I own my own home, mortgage free. I like the place. I’m not selling, even though I believe I can be clocked for 50% real over the next 10 years. If I’m not involved in a transaction – and with no mortgage to pay there is no pressure for one – I don’t even think about the house as a tradable good on which I can lose high six figures. But partly that’s because I never thought of it as a tradable good on which I made high six figures either.

  257. Richie says:

    Hovnanian reports $469.3 million 4Q loss
    The Associated Press

    RED BANK, N.J. (AP) — Homebuilder Hovnanian Enterprises Inc. said late Tuesday it lost four times as much money in its fiscal fourth quarter compared to last year because of fallout from the housing downturn and an accounting charge.

    It was the fifth consecutive quarterly loss for Red Bank-based Hovnanian, which operates in 19 states.

    The company reported a loss of $469.3 million, or $7.42 per share, for the quarter that ended Oct. 31. This compared with a loss of $117.9 million, or $1.88 per share, for the same period a year ago.

    Hovnanian said an accounting determination resulted in a $54 million tax expense in the quarter instead of an expected $162 million benefit, for a $216 million swing.

    Quarterly revenue fell 20 percent to $1.39 billion from $1.75 billion in the same period last year.

    Analysts surveyed by Thomson Financial, who apparently did not factor the accounting charge, expected Hovnanian to lose $1.49 per share in the quarter on revenues of $1.32 billion.

    Shares rose 5 cents to $8.45 in after-hours trading, having closed earlier up 45 cents, or 5.7 percent, at $8.40. The stock has steadily declined from a high of $37.58 to a low of $6.75 over the past year.

  258. John says:

    Kurt that it I am no longer teaching!!!! I will just do it on the side for fun!!! I will go to plan B to sit on a couple of boards in semiretirement

  259. John says:

    RE $200,000 or more 72,553 +/-3,855

    what is breakdown, 200-300, 300-400, etc. Barely scratching 200K isn’t much. but 500K plus is pretty good.

  260. MrT says:

    hmm..nice to see a story that doesn’t quite fit w/ the overall depression theme people try and push..

    “The average bonus this year at investment bank Goldman Sachs is about $600,000, Reuters reported. The bonuses come from a pool that totals a reported $18 billion to $20 billion”

    I work for an international transporation company..with exposure to various industries..pharma,chemicals,fashion,furniture,oil and gas, automotive, etc etc..

    no one is talking depression….no one is even talking recession…we’re hiring..and paid out 10% higher bonuses than budgeted…

    Again doesn’t really fit with the headlines we read about mortgages (of course always highlighting isolated neighborhoods in MI and OH..and some overblown condos in MIA and Las Vegas..)

    Friends of mine across NJ work in investment banking, pharma, consulting, accounting, logistics, healthcare, education…None seem to be struggling..

    Well..I missed the 1930’s depression..but I always assumed it was a lot more…depressing than these days..ha..

    Anyway once the dems are in the white house..you will see the news suddenly turn quite positive..and not much talk about a housing crisis…all will be right with the world.. like…magic…:)

  261. Confused In NJ says:

    The projected cost of Pension & Benefits for Teacher’s in NJ is so astronomical, that all the children they teach will have to have jobs on Wall Street to pay the taxes necessary for Teachers Retirement. Teacher’s in Berkeley Height’s love to say “Vote Yes on the School Budget, It’s For The Children”. The truth is it’s for the Teachers, and the Children will receive the Bill (Pension & Benefits) when they grow up. At the present growth in Teacher’s Benefits, the aged Children will be indentured.

  262. Confused In NJ says:

    A lot of “Me Generation” people are lacking a good dose of Reality. A positive step to give them back some sembalance of reality would be to reinstitute the Draft. Hard to be EGO Centric or Obtuse in a fox hole with your buddy trying to stay alive.

  263. kettle1 says:

    Courthouse-step auctions offer 1,336 properties in foreclosure — 17 are sold

    http://tinyurl.com/2lcj3k

  264. 3b says:

    #266 Mr. T: Another one with all is well, the mtg mess is isolated, the housing problem is just in a couple of isolated areas.

    The dollar is fine, inflation is fine, $90 a barrell oil, is fine.

    Tge Fed and other central banks wih billions of dollars in bail outs for Wall St investment banks.

    Yep all is fine, cause my friends tell me so, they work in pharam they work on Wall St etc.

    Oh I would much rather be doom and gloom, then in complete denial, lets just poh-ppoh it away.

    You guys are going to get hammered.

  265. Wendy says:

    #255,
    Seller just agreed on our price. Attorney review is not started. I could not make my decision. I gave the offers two month ago and was rejected. Now they came back to me.

  266. 3b says:

    #272 WEndy: That should tell you soemthing, RUN, NOW!!

  267. mikeinwaiting says:

    wendy DON’T pull the trigger.AS you asked
    for advice you must read this blog.So you know you could wait & save alot of money.You said that the offer was two months
    ago no reason to think it will not be there in 3 or 4 more.AT that price range & the mortgage sit.you have big advantage.Why not wait nothing is going up.Rent a nice place if you have to move buy wait.My 2 cents.Good luck.

  268. JCSidelines says:

    peace-now, right on brother! This blog’s government bashing is way over the top!

  269. Fenjcesittingjack says:

    Wendy Says:
    December 18th, 2007 at 9:58 pm
    #255,
    Seller just agreed on our price. Attorney review is not started. I could not make my decision. I gave the offers two month ago and was rejected. Now they came back to me.

    ===============
    it’s time to turn it down and tell them the market has changed for the better. Meaning you have plenty of choices and prices are dropping rapidly. Do not buy to early you will regret it and have large losses.

  270. t c m says:

    #267

    “The truth is it’s for the Teachers, and the Children will receive the Bill (Pension & Benefits) when they grow up. ”

    not if they all move out of the state of nj

  271. Everything's 'boken says:

    RE: 255
    If they like the house and are planning to stay there, why suggest they kill a deal they were was willing to make so recently?

    Sounds like more than a little like spite.

  272. Everything's 'boken says:

    Please ignore double verb and the like.

  273. Rich In NNJ says:

    19 Rivervale Rd, Park Ridge

    Purchased: 5/2005
    Purchase Price: $690,000

    MLS# 2741932
    List Date: 10/15/2007
    OLP: $679,000
    Sold: $660,000
    DOM: 64

    ———-

    300 Ross Ave, Hackensack

    Purchased: 7/2004
    Purchase Price: $445,000

    MLS# 2735872
    List Date: 9/4/2007
    OLP: $499,000
    Sold: $430,000
    DOM: 105

  274. dreamtheaterr says:

    Just saw a new listing. It says ‘new 30 yr. roof’ …..wtf?

    Maybe it should say ‘pre-owned 30 yr roof’…

  275. chicagofinance says:

    wsj
    Bear Stearns Chiefs to Skip Bonuses
    Move Caps Rough Year
    On Street, Goldman Excepted
    By KATE KELLY
    December 19, 2007

    In an acknowledgment of the most difficult period in Bear Stearns Cos.’ 84-year history, Chief Executive Officer James Cayne and other senior executives are expected to forgo bonuses for this year, people familiar with their plans say.

    The expectation comes as Bear prepares to announce tomorrow its first quarterly loss ever, an outcome certain to curb pay for the firm’s 15,500 employees. It’s a turnabout for Bear, which over the years has used its generous, merit-driven compensation system to recruit job candidates it calls PSDs: those who are poor, smart, and have a deep desire to be rich.

  276. MrT says:

    271 –

    the part i don’t get from the crashing dollar, $90 oil crowd is….

    which is it?..inflation or deflation

    If you expect inflation to continue to get worse and compound going forward..why wouldn’t you want a 30 yr fixed loan at 6%? pay back over time in depreciated dollars…seems like a no brainer.

    if deflation..i.e. houses will drop to 1999 levels etc etc……wouldn’t that mean dollars must be scarce..and foreigners would not be able to buy these assets either (strong dollar again)? and if oil was $20 a barrel in 1999..will oil and other commodities also be dropping to 1999 levels? and if this is all going to happen..why would the Fed and all central banks reduce the money supply so drastically?

    Im sure a collapse and deflationary depression such as that is possible..but if there was such a deflation..I would bet the last thing on your mind would be trying to close on a nice 4 bedroom house in Bergen county..would probably be a full scale world war raging or some other disruptive event.

  277. chifi - children are -(NPV) says:

    pretorius Says: You are right about one thing though – I’m bearish about the future of NJ at the same time I’m bullish about the future of New York City. NY remains internationally competitive in finance and continues to attract this industry’s best and brightest.

    High powered people need high powered incentives and yada, yada, yada…blah, blah, blah….DOH!
    http://www.bloomberg.com/apps/news?pid=20601039&sid=avJTBd4Ua32Q&refer=home

  278. RentinginNJ says:

    Believe it or not, when those benefit programs were introduced, the only way to attract qualified workers to fill those jobs was by offering great benefits,

    I partially agree. The “social contract” with teachers was always that they would have great benefits (9 month work year, go home by 3:30, great health care, great pension, early retirement) in exchange for accepting lower pay.

    They have complained about their pay and now their pay has caught up with the private sector, but they still get the ridiculous benefits.

    And, teachers don’t even have the best deal. I have a police officer friend (patrolman) with a few years on the job expecting to clear $120k this year, plus the cushy benefits.

  279. mikeinwaiting says:

    MR T you missed a flation stagflation.
    Renting 285 Thats a fact jack.You want benes
    job,pension for life well the tax payer can’t afford a great pay to.25& out retire at 48 medical pension for life great deal.

  280. njpatient says:

    76 pre
    “Helps explain why home prices are “sticky down.” Many optimistic sellers will take homes off market instead of sell at big discount to peak prices.”

    I agree. I’ll re-post in the morning, but this isprecisely why I think that what is pant up is supply, not demand.

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