Thu 24 Jan 2008
For the first time since the Great Depression, house prices fall nationally
Categories: Economics , Housing Bubble , National Real EstateFrom MarketWatch:
Existing-home sales fall 2.2% to 4.89 million pace
Median sales price of single-family homes falls in 2007 for 1st time in 40 years
Resales of U.S. homes fell 2.2% in December to a seasonally adjusted annual rate of 4.89 million, the lowest in nine years, the National Association of Realtors reported Thursday.
Resales are down 22% compared with the previous December and are down 32% from the peak two years ago.Sales of single-family homes dropped 2% in December to a 4.31 million annual rate, the lowest in 10 years. Condo sales fell 3.3% to a 580,000 rate.
For all of 2007, the median sales price of an existing single-family home fell for the first time in the 40-year history of the data, dropping 1.8%. Resales of single family homes fell 13%, the largest decline since 1982.
…
Inventories of unsold homes fell 7.4% in December to 3.90 million, representing a 9.6 month supply at the December sales pace. Inventories typically fall in December, but the data are not seasonally adjusted.The median sales price fell to $206,500 in December, down 6.5% in the past year.
Sales fell in all four regions, dropping 4.6% in the Northeast, 2.1% in the West, 1.7% in the Midwest and 1% in the South
From Reuters:
U.S. existing home sales fell 2.2 pct in Dec.
The pace of existing home sales in the United States fell by 2.2 percent in December to a slower-than-expected 4.89 million-unit annual rate, the National Association of Realtors said in a report on Thursday.
The inventory of homes for sale fell 7.4 percent percent to 3.91 million units at the end of last month. That represents a 9.6-month supply at the current sales pace, down from the 10.1-month supply in November.
Economists polled by Reuters were expecting home resales to slip to a 4.95 million unit pace after hitting a 5.00 million pace in November.
For all of 2007, existing home sales fell 12.8 percent and the national median home price fell by 1.4 percent to $218,900. It was the first annual decline in the median home price since 1999, when the realtor group began tracking both condos and single-family home data together.
Existing Home Sales data from the NAR:
http://www.realtor.org/Research.nsf/Pages/EHSdata
December existing home sales in the Northeast are down 4.6% from November, the worst showing of any region. On a year over year basis, Northeast EHS are down 22.4%.
Median EHS sale price in the Northeast down a whopping 8.9%, average EHS sale price down 4.7%.
Must admit impresive numbers ,,,,where will pricess go in spring???
From the AP:
Existing Single-Family Home Sales Drop
Sales of existing homes fell in December, closing out a horrible year for housing in which sales of single-family homes plunged by the largest amount in 25 years. The median home price dropped for the entire year, the first time that has occurred in four decades.
The National Association of Realtors reported that sales of single-family homes and condominiums dropped by 2.2 percent in December to a seasonally adjusted annual rate of 4.89 million units.
For the year, sales of single-family homes were down by 13 percent, the biggest drop since a 17.7 percent plunge in 1982. The median price for a single-family home dropped 1.8 percent to $217,000.
That was the first annual price decline on records going back to 1968. Lawrence Yun, the Realtors’ chief economist, said it was likely that the country has not experienced a decline in housing prices for an entire year since the Great Depression of the 1930s.
I hope you guys didn’t spend your $800 bailout just yet, I’m hearing reports that it has been cut to $300.
# 87. “Median Price Plunges 6% to $208,400″
Does anyone else find this to be particularly important? We have all seen how by throwing out low prices at the bottom of a list of home sales the median price can rise even as each price on the list declines. I did this with my son the other day, showing him how he needs to be wary of statistics thrown around by other people.
To see the median drop, that seems to indicate some pretty hefty price drops across the board, no
“Lawrence Yun, the Realtors’ chief economist, said it was likely that the country has not experienced a decline in housing prices for an entire year since the Great Depression of the 1930s”
It sounds like NAR will soon have yet another Chief Economist. Larry doesn’t sound like he is up for putting on the skirt and sweater and waving the pom pons any more.
From Bloomberg:
U.S. Existing Home Sales Fell More Than Forecast
Sales of existing homes in the U.S. fell more than forecast in December, capping the biggest yearly slump in more than a generation.
Purchases fell 2.2 percent to an annual rate of 4.89 million, the National Association of Realtors said today in Washington. For all of last year, sales of single-family homes declined 13 percent, the most since 1982, and prices dropped for the first time in at least four decades.
Falling property values and tougher borrowing rules may lead to more foreclosures and depress housing for most of this year. The worsening real-estate recession is at the core of the economic slowdown and will probably prompt the Federal Reserve to lower interest rates next week and in future meetings, economists said.
“We are not at the bottom in the housing market,” said Nigel Gault, director of U.S. research at Global Insight Inc., a Lexington, Massachusetts, forecasting firm. “The Fed is trying to battle against the fundamentals which say housing is not going to recover until we have a substantial decline in prices.”
…
The median sales price fell 6 percent to $208,400 from December 2006 and was down 1.4 percent for all of 2007 from the previous year.
The median price of a single-family home dropped 1.8 percent in 2007, the first decline since records began four decades ago and probably the first since the Great Depression in the 1930’s, the Realtors group said.
CNN says $300 for earners under 75K
http://money.cnn.com/2008/01/24/news/economy/stimulus_package/index.htm?cnn=yes
Grim i will spend my refund on DRINKS :) care to join me???
Last night, the BI black box was working perfectly.
He felt it necessary to mention that one should never short real estate and provided a link to a yahoo chart. What the young grasshopper forgets is that I said to sell SRS at 150 back in August and repeated this call many times between then and now. Well it topped out at 151 and change on Tuesday prior to dropping to 106 yesterday. Admittedly, this is a huge drop, but still is a higher low than the prior 30 day low. I’ll be selling some more at 155. Young BI has much to learn. How is everyone’s 401k doing? My 80% bond position has been sweet there as well.
Of course SRS is up 4% as we speak, so the BI black box continues to perform as expected.
Now back to the collapse of real estate.
#9: So wait a minute — the people most likely to pump it right into the economy get LESS? And this accomplishes what, exactly? Does anyone think that this money is going to make one difference to Mitt Romney’s life?
So a married couple with no kids making less than $150K gets $600?
I don’t need it, but I’ll take it.
What is it with that damn $150,000 earning limit. AMT kicks in around here usually, the Roth IRA begins to phase out, my NJ crock of a homestead rebate check shrinks to nothing and now I don’t qualify for my economic stimulus check.
I’ve been robbed I tell ya!
Though I suppose, I really shouldn’t be complaining.
And anyone who thinks a one time $300 payment is gonna spur the economy is taking more drugs than a gay cowboy.
I’m ashamed of our government, but not terribly surprised.
Jill #12,
Individuals making less than 75k and married couples making less than 150k get nothing. Nada.
Income redistribution at its finest. Marx would be proud.
Stu #14,
It’s not our fault you work hard.
Show me the money, baby!
#8
What will be interesting to see is how much further we have to go to hit the bottom…
JM
Republicans are gonna flip. They hate when they don’t get a piece of the action.
Personally, this economic stimulus package is truly more crumbs in the ongoing bread and circus performance.
Jill,
In economic circles, this topic tends to generate a heated debate.
The current thinking goes something like this:
Those in the lower income tiers are more apt to spend the rebate than those in upper income tiers.
There isn’t any sense in giving stimulus rebates to wealthy individuals, they won’t spend it, or rather, they aren’t going to dramatically change their spending habits based on it.
The government doesn’t want people saving this money, or using it to pay down debts, they want it spent.
Sync,
Will ya buy me a drink in Morristown? I think I’m gonna spring for a babysitter so I can attend.
# 12
Franlky, I would prefer the government keep its hands out of my pockets. When I was poor as dirt I never thought I would ever resent making a tax payment. But — with a government that can’t seem to make tough choices on spending, has a huge and growing defecit, has an insane level of debt — I have little faith that dipping their hands into my pocket to spread cash like fairy dust — in an effort that will not fix the underlying problem — will have any meaningful effect on the health of the economy.
When you are sending 40,000+ per quarter to the IRS, it is hard to get excited about $300 or even $800 rebates. It is even harder to feel positive about the USG borrowing money — which will only increase the debt and with it my taxes — in order to appear to be doing something to help the economy.
This plan is smoke and mirrors. It is like giving a patient makeup to cover the signs of jaundice instead of curing the underlying condition.
Jill,
If you have some free time:
http://www.cbo.gov/ftpdocs/89xx/doc8916/01-15-Econ_Stimulus.pdf
Grim,
We should write to our law makers asking reabte limits to be upped for New Jersey. With an average income of 60K+ most in New Jersey will not get a rebate! If they can increase FHA limits based on geographical area they can do the same with rebates as well.
http://www.usatoday.com/news/washington/2008-01-23-economy-update_N.htm?loc=interstitialskip
Still grouchy from 1-15 1040ES filing.
# 23
Try getting 60 votes in the Senate for that. It will never happen.
I hope you guys didn’t spend your $800 bailout just yet, I’m hearing reports that it has been cut to $300.
Expecting eight hundred
Dreams of Plasma now gone
Settle for Jeans
BklynHawk,
I was looking at the housing futures report from TFS Derivatives yesterday.
I know nobody here wants to hear it, but futures traders are betting NY metro area home prices down 13.3% in 2012.
You read that right, 2012. A slow, painful decline for the next (almost) 5 years.
Now, I’m not saying that you should believe the futures traders. Not saying that their bet is optimistic or pessimistic, just saying what it is, another data point.
But these guys sure don’t seem to be betting on a quick rebound, that is for sure.
Based on this info, I wouldn’t consider purchasing a home unless I intended to stay there for at least the next 10 years.
Lots of folks quote the “5 year” number, I can’t, in good faith, do the same. Especially for those buying right now.
Shore Guy et. al…from your previous posts regarding how do people get into this…and “what are they thinking”? Here are some real life examples from people that have made comments to me or my husband. recently, no lie: 1) My daughter wants to take an SAT course for $1,200 and we have $4,000 on the credit cards, plus we need a little for vacation this summer, looks like I will need to take a home equity for about 20,000 2) I took a equity loan to dump about $20-40,000 grand into hudson city, I will make a fortune. 3) We make about $50,000 to 60,000 but we have to buy this home for 320,000 it’s the only thing out there in our price range. 4) I’m not going to five my house away….
My husband and I feel like the peter schiff’s fo the neighborhood, and are still renting!
So essentially its a subsidy to Wal-mart and Target and consequently China?
#27 grim: I know nobody here wants to hear it, but futures traders are betting NY metro area home prices down 13.3% in 2012.
Why do you say no one here wants to hear it?
Wow we are gonna be rich with the huge rebates. This huge rebate will save the economy and help the housing market bounce back. I am going to take my rebate and but lotto tickets. Yeah baby I will make millions :P
“I know nobody here wants to hear it, but futures traders are betting NY metro area home prices down 13.3% in 2012.”
Those futures are thinly traded and there are hardly any bids. From where we are now in early ‘08, no one would bid a whole lot beyond 2009. Who knows what can happen. Agreed that no matter how you slice it, it doesn’t look good.
#30
Check your sarcasm detector.
A good friend of mine, who was well ahead of me in earnings etc years ago, and was able to buy his first house a decade before I was, was telling me about a year ago how stupid I was for not “using” the equity in my house, and how idiotic it is for people to pay off their mortgages (This came during a discussion in which I revealed that we had no mortgage). He regailed me with stories about how prices had gone up and would continue to as NJ is so darned desirable and would always be so, and he told me how he kept taking equity out to put into vacations, cars, stocks, etc.
Not long ago he was made redundant and has not been able to fing work. He is in an interest only loan that has a huge balloon payment on the horizon. He is now living in his basement and renting out all of his bedrooms and still cannot make ends meet.
I feel like such a putz — since I have no debt and lots of savings. How stupid of me not to have put debt to work for me.
Sound familiar to anyone?
from marketwatch:
MORTGAGES
U.S. mortgage rates tumble
Fixed-rate mortgages at lowest in almost four years
By Amy Hoak, MarketWatch
Last update: 11:09 a.m. EST Jan. 24, 2008
CHICAGO (MarketWatch) — Mortgage rates for fixed-rate loans sank to their lowest levels in nearly four years, pushed downward by further evidence of weakness in the housing market and by an emergency rate cut from the Federal Reserve, Freddie Mac’s chief economist said on Thursday.
The 30-year fixed-rate mortgage averaged 5.48% for the week ending Jan. 24, down from 5.69% last week, according to Freddie Mac’s weekly survey. The mortgage averaged 6.25% a year ago; the 30-year hasn’t been lower since the week ending March 25, 2004, when it averaged 5.40%.
The 15-year fixed-rate mortgage fell to an average 4.95% this week, compared with 5.21% last week. The mortgage averaged 5.98% a year ago; it hasn’t been lower since the week ending April 1, 2004, when it averaged 4.84%.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.13% this week, down from last week’s 5.40% average. The ARM averaged 6.00% a year ago; it hasn’t been lower since June 30, 2005, when it averaged 5.06%.
And 1-year Treasury-indexed ARMs averaged 4.99% this week, down from last week’s 5.26%. The ARM averaged 5.49% a year ago; it hasn’t been lower since Oct. 27, 2005, when it averaged 4.91%.
To obtain the rates, the 30- and 15-year fixed-rate mortgages, as well as the 5-year ARM required payment of an average 0.4 point, while the 1-year ARM required payment of an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.
http://www.marketwatch.com/news/story/mortgages-fixed-rate-mortgages-lowest-almost/story.aspx?guid=%7B1457DA76%2DB6E5%2D402F%2DBA9F%2D72B85EEE6519%7D&dist=hplatest
# 31
There you go. Just send everyone in America a powerball ticket, and a plane ticket to Vegas. Hey, ya never know.
I think we may be finally at the bottom here folks!
And Grim, I posted on the forum - love it. I think your site has become a victim of its own success- it’s outgrown the blog format and desparately needs a forum layout to keep things organized, easier to find and keep track of, easier for people to get their MLS questions answered, finance stuff, etc.
#34 I have heard it time and time again, although I am not hearing it any more.
Make that $600?
http://www.cnn.com/2008/POLITICS/01/24/economic.stimulus/index.html
^Heh - d’oh - I tried to be funny and encase “Obligatory NAR Statement” in HTML tags but looks like it just got parsed into the statement.
#30
I think no one wants to hear about the “long, slow” decline. Most waiting for quick capitulation.
#39
Will the $75k salary limit still hold?
Societe Generale Hit
By Fraud, Write-Downs
Bank Sees $7 Billion
In Fraud-Related Loss,
$3 Billion in Write-Downs
By NICOLAS PARASIE
January 24, 2008 10:09 a.m.
PARIS — Massive fraud by a rogue trader at Societe Generale SA has led to a €4.9 billion ($7.16 billion) write-down and is roiling markets as far away as Asia and further shaking investor confidence in Europe’s biggest banks.
The bank, France’s second largest after BNP Paribas SA, revealed early Thursday that it had detected a case of “exceptional fraud” due to a single trader who had concealed enormous losses through a scheme of “elaborate fictitious transactions.”
The bank identified the trader as Jerome Kerviel. Mr. Kerviel, 31, joined Societe Generale in August 2000 and was working as a trader on the futures desk at the bank’s headquarter near Paris. He was in charge of futures hedging on European equity market indices, known as “plain vanilla” futures. The bank said he was able to dupe the bank’s own security system because he had inside knowledge of the control procedures gained from previous jobs with the bank.
Though Societe Generale says it first learned of what it termed “massive fraudulent directional positions” on Jan. 19, it waited until it could close out those trades before going public with the problem. Winding down the trades, the bank said, resulted in a €4.9 billion write-down, making it potentially the largest loss ever from an alleged rogue trader.
But that wasn’t the only bad news Societe Generale announced Thursday. It also said it was taking additional €2.05 billion write down in assets related to subprime exposure, and it would launch a capital increase of €5.5 billion in the “following weeks.” The write-down and losses related to the trading incident will lead the company to post a net profit of €600 million to €800 million for all of 2007.
grim (19)-
Panderfest for the sheeple.
Funny thing is, the sheeple will spend the money on stupid sh*t and still won’t show up to vote in November.
Bread and circuses.
With my rebate check, I will use that as a down payment on a house and help the economy clear up the excess housing inventory. Thats probably the patriotic thing to do.
#42 It looks like it does. The first link I posted updated the rebate amount from $300 to $600 while retaining the 75K single filer cut-off.
individuals earning $75,000 get the money, so do all three of my kids get a check they made zippo last year, the deadbeats.
# 41 I dunno. A 12% decline in nominal prices by 2012 and another 12-15% decline in relative prices due to the effects of inflation. It works for me. I know prices went nuts but a home that went up 100% from $300,000 to $600,000 between 2002 and 2005 will, by 2012 be at around 450, which is just about a 4% yearly return, not including carrying costs and RE commissions.
Cirrus,
Working on the forum.
I’m going to make it available, but I’m not going to force users to use the forum over blog comments. We tried that before, and the results were horrible.
Hopefully we can find some balance between the two.
http://jamesbednar.net/forums/
That site is beta, don’t post anything there of any importance at this point.
#41 Mojo:Most waiting for quick capitulation.
I think there will be a fairly quick capitualtion, whcih will be folowed by a slow grin downward for another few years.
That is why it is important for people who would like to purchase sooner rather than later (over the next year), to negogiate and bargain hard; lowballs will become much more doable as we get into the Spring and Summer selling market of this year.
Just as an aside, I bought my first house at the peak of the last real estate bubble, and sold it 10 years later for $2500 less than I paid for it;not including the improvements.
So again negogiate hard, forget about insulting the sellers, and if they say no, move one eventually some one will say yes, sooner rather than later.
Buy a house that you can live in for 10 years.
#37 cirrus: I think we may be finally at the bottom here folks!
The bottom of what?
“To address the mortgage crisis, the package also allows Fannie Mae and Freddie Mac — government-sponsored companies that are the two biggest U.S. financers and guarantors of home loans — to buy home mortgages much larger than the current $417,000 limit. Rep. Barney Frank, D-Mass., and chairman of the House Financial Services Committee, said that lending cap might reach as high as $700,000 in areas with the highest home prices.”
Re: Buy a house that you can live in for 10 years.
Why they are predicting with the baby boomer exudus in the NE a 20 year downturn, unless you are staying over 25 years good luck.
[b]“The median sales price fell 6 percent to $208,400 from December 2006 and was down 1.4 percent for all of 2007 from the previous year.
The median price of a single-family home dropped 1.8 percent in 2007.”[/b]
I don’t quite understand this. So prices in Dec ‘07 are 6% less than Dec ‘06. What does the “and 1.4% for all 2007 from the previous year” mean?
Morgan Stanley to cut 1,000 jobs: report
>>
Are these NYC jobs?
The cuts will focus on the brokerage firm’s wealth-management unit, and not affect the company’s institutional securities business, the newspaper reported
http://www.marketwatch.com/news/story/morgan-stanley-cut-1000-jobs/story.aspx?guid=%7BDFEC7D3E%2D692F%2D4E5D%2DB0E4%2DF2E0C62627A8%7D&dist=TQP_Mod_mktwN
We could save a lot of Administrative Costs if the Government cut out the middleman, and simply sent one check directly to China.
#53 John: If so then even more reason to negogiate hard. Those with a down paymt and good credit should be able to do it.
grim #19: You misunderstand. Is it that the lower income people are getting LESS? Or more? It makes sense to pump it in at the lower levels of income than the upper. I’d probably just donate mine to some organization that would give Republicans fits. :)
Hey kids!
Feeling bored? Nothing to do?
Log on to the president of NAR’s blog. Let him feel the love:
http://narblog1.realtors.org/mvtype/president/
Just decided to look at the tax records for 2 new listings (Ridgewood & Wyckoff). I was curious after looking at the listing history adn seeing that they purchased within 2-3 years ago.
Ridgewood
Purchased 3/2005 $770,000
Mortage: 3/2005 $654,500
Mortage: 3/2006 $780,000
Expired Listing: 5-12/2007 $999,000
Active Listing: 1/2008 $899,000
(No improvments listed)
Wyckoff
Purchased 10/2006 $685,000
Mortgage: 10/2006 $684,000
Active Listing: $699,900
(No improvements listed)
Jill #59
No, lower income aren’t getting less, those making over $75,000 (couples $150,000) are getting nothing, squat, nada, butkus…
Some tentative details
Checks of at least $300 including low-income earners who make too little to pay income taxes, so long as they earned at least $3,000 in 2007. Families with children would receive an additional $300 per child, while those paying income taxes could receive higher rebates. Rebates will be capped at $1,200 for couples with children.
And this!
Housing rescue: Allowing Fannie Mae and Freddie Mac to buy loans larger than $417,000
#61 Rich:Wyckoff
Purchased 10/2006 $685,000
Mortgage: 10/2006 $684,000
WOW!!! They put down a thousand bucks on a 685K house
#62 Rich:And this!
Housing rescue: Allowing Fannie Mae and Freddie Mac to buy loans larger than $417,000
And so what will this do?
http://www.behindthemortgage.com/behind_the_mortgage/2008/01/news-on-conform.html
is this true? If it is then it will have huge impact. long mortgage and builders?
Unless it’s a typo in the tax records, but that’s what it looks like.
#60 Clotpoll
Now lets look in the magic mirror. I see Rich and Clotpoll and Grim and all my good little Realtors(R).
Rich,
Even worse, I wonder if the sellers paid for closing costs. They may have been *paid* to take that house (can you even call it “buying” if the money flows in the opposite direction?).
So, on the rebates, if a couple makes more than 150, they don’t get it. But what if you have kids, is there a higher cap for people with kids
re 61
2006 pulled out 125.5K in equity
assuming kept same ltv 2006 appraisal was 840K in 06.
in 2007 to cash in, list at 999K to make 229K in two years (excluding costs)
in 2008 ok lest relist at 899K and settle on 129K in profits.
assuming 10% of 2005 is market, home worth $693K.
Loss of 77K + 125K pulled out to live the high life.
Net Net it would appear net worth reduced by 202K in less than 3 yrs.
#68 grim: What are your thought on the increase in loan limits for Fannie/Freddie?
Federal Tax Rebate;
Uncle Bob just lost his house and is job so I’m going to take him out and buy him dinner tonight in the hopes that he will spend the money he saved from tonight’s dinner on goods and services tomorrow of an equal or higher value.
I’d rather not see the $150 billion get tacked on to the defecit. The tax rebates won’t do anything anyhow
I didn’t realize that realtor with a capital (R) was something NAR really uses.
I thought people were just making fun of NAR and realtors by attaching the registration mark.
“3b Says:
January 24th, 2008 at 12:50 pm
#61 Rich:Wyckoff
Purchased 10/2006 $685,000
Mortgage: 10/2006 $684,000
WOW!!! They put down a thousand bucks on a 685K house”
What do you want to bet that the buyers also got cash back at closing? I am not tapped into the RE market like some of the folks on this board are but I know of a situation in Ocean County, from a year ago, where this couple went essentially zero down (I think it was actually $300 down) on a 500k property and they got, I can’t remember now whether it as $15,000 or $20,000 back at closing. In essence, they got a nice little windfall to move into a house. Crazy.
I’d rather not see the $150 billion get tacked on to the defecit. The tax rebates won’t do anything anyhow
We don’t have the money. We will either print it or borrow it.
Giving away free money and lowering the price(rates)is like giving a free eightball and lowering the price of cocaine to help addicts.
# 75,
For those who pay taxes, is this just an advance on any refund they would be receiving or is it a true gift of my taxes for them?
raising the conforming loan limit to $700,000 is a really big deal. that would mean most first time buyers in the tri state area could get a mortgage for under 5.5% rather than 7%+
$700,000 30 yr mortgage at 5.25% would be $3865 per month vs $4,775 at 7.25%, or in other words, close to 20% cheaper on a monthly basis.
76
I think the last time Bush bought the country a free ice cream cone, I mean sent 400 bucks out to everyone, it was not taken out of your tax refund, it was separate. I imagine this would be also.
MM 65:
“Expanding the conforming loan limits”
Although this will make it a bit easier for people who can afford homes in the $500-$750K range to obtain a mortgage with a lower interest rate, I doubt it will have much of an impact as the problem, IMO has more to do with the fact that no one has any savings to put down the 10-20% required down payment. If I recall correctly, FNM is now charging some serious fees on loans that they used to not charge at all. Plus, non-conforming loans used to cost (prior to August 2007) no more than .25% in interest than a conforming loan.
Add it all up, and I don’t see this as a compelling reason to go long the home-builders and the mortgage companies (if there are any left).
I would wait to see how the spring and summer play out. We haven’t gone through a Spring yet in the current scenario of tight credit and lowering housing prices.
Even the 3/4 point fed rate drop has had a very small impact on the overall markets. There are only so many more 3/4 point drops left before the Fed becomes powerless to stop the damage. One oil-price hike inducing incident or another round of financial mark downs and we are back to where we started. Only now, the disount rate and lending rates have been lowered by 1/3rd of their total. Two more rounds of this and the Fed would have to pay banks to get them to borrow and lend money. This would trigger an all out depression.
But go ahead, go long real estate. I dare ya!
Speaking of Wyckoff, does anyone have the listing history for MLS# 2738528??
Thanks.
Hold on folks, Fannie and Freddie are in the progress of changing their policies to accomodate risk based pricing.
Why would we assume that the higher value loan would be priced at the same rate as a lower value loan?
There are many, many variables that go into loan pricing (rate).
I can’t remember now whether it as $15,000 or $20,000 back at closing. In essence, they got a nice little windfall to move into a house. Crazy.
That’s no windfall. They simply got a bigger loan, which will need to be repaid.
# 82
You are assuming they ever paid any of it back.
“Why would we assume that the higher value loan would be priced at the same rate as a lower value loan?”
You are so much more articulate than I Grim.
I only wished I paid closer attention in 4th grade English class.
RC,
SLD $900,000 1/18/2006
New home built
ACT $2,549,000 5/25/2007
EXT $2,549,000 9/27/2007
PCH $2,429,000 11/14/2007
PCH $2,299,000 1/15/2008
[80] If it’s Wyckoff it’s worth every penny - in fact you should pay extra for the priviledge of buying there.
Sarcasm detectors to full power.
[85] How much income does a family have to have to buy that kind of house at 20% down?????
Well, Nancy’s on now & I was getting a pretty good refund this year ( due to my lack of sales last year ) and it looks like now,
I’m in the money. I’m in the money. This is better than working…. yeah.
KL
You know we’ve done the Disney thing, I thinking Universal Studios.
KL
oops I’m thinking
Wow Rich!! Thanks.
If only the government bailout stays at $800, I may be able to swing it!!
Sarcasm off, disbelief on!!
In the end, the government will reduce the bailout to a level that will make it unavailable to most of us in NNJ.
What’s 800/600/300 doing for me anyway? 300’s not even enough for a playstation 3.
Yeehah! Partial rebate. Rather than buy some useless crap, I’m just gonna forward my check to Hu Jintao.
According to Yahoo Finance:
The rebates would phase out gradually for individuals whose income exceeds $75,000 and couples with incomes above $150,000, aides said. Individuals with incomes up to $87,000 and couples up to $174,000 would get partial rebates. The caps rise higher for individuals and couples with children.
re:Raising GSE limits
In my opinion, this is how Congress plans to bail out the banks. By raising the limits, the banks can get all of the problem loans off of their books and into the GSE portfolios. When the GSE’s are overwhelmed with losses, Congress will bail them out, thereby saving the banks. By the time they are bailed out, everyone will have forgotten who was really saved by this.
PS: Don’t forget, the stimulus package is going to be fast tracked, so there will be very little discussion on the bank bailout.
I agree with you Hobokenite.
A lot of people would be up in arms about bailing out a Bank Of America or a Wells Fargo. No one will say boo if Fannie Mae becomes insolvent and gets the ol’ US government bail out.
Of course, the increase in the size of the mortgages that FNM can now underwrite reveals how it slowly morphing from a sub-prime to a prime mess. And if I must remind everyone, prime is a much larger piece of the mortgage pie than subprime is. It won’t take a 20% delinquency rate to cause waves. Probably a number much smaller, like 5 to 10% would do it.
Praise the savers, for a change.
I’ll have to keep my eye on this one, just out of curiosity.
Cresskill
ACT $5,888,000 3/7/2007
PCH $5,598,000 4/30/2007
PCH $5,298,000 7/5/2007
SLD $4,900,000 9/10/2007
Mortgage (ARM): $3,430,000
Taxes: $54,469
ACT $5,248,000 1/24/2008
Taxes: $33,090 (Nice tax break..)
I feel like Charlie Brown at Halloween: I got $300. I got $600. I got a rock.
It isn’t even a cool one like coal, which burns.
One last thing.
Why is everyone calling it a tax rebate?
“Tax Rebates Closer
to Reality”
Does that make everyone feel a little better about it?
Our country is sick. We are consumerist junkies fawning over Uncle Sam’s crumbs.
Glass-Steagall Act Repeal signed by Bill Clinton
With the stroke of a pen, Bill Clinton ended an era that stretched back to William Jennings Bryan and Woodrow Wilson and reached fruition with FDR and Harry Truman. As he signed his name, in the whorls and dots of his pen strokes William Jefferson Clinton was also symbolically signing the death warrant of Liberal America and its core belief in the level playing field that had guided the Democratic Party.
The Millionaire Globalists controll both major parties in this Country, for their own benefit.
Hobo (95)-
“…the stimulus package is going to be fast tracked, so there will be very little discussion on the bank bailout.”
Even if it wasn’t fast-tracked, there’s be no discussion. The banking industry has paid big money over the years to buy those Congressmen and Senators.
# 100
As true as that may be, is there anyone who does not believe that had Clinton not done so that W would not have? W had a friendly House and Senate, so it would have happened anyway. It is like losing ones virginity, in nearly every instance, it is a matter of when and under what circumstances not if.
The Street.Com:
Builder Bounce Belies Weakening Results
http://tinyurl.com/ywfu5x
Can anyone give me address and history on NJMLS 2743138 ?
Thanks
grim: where is the Depeche Mode thread in the forum?
If the governemnt wants the money spent asap they should give everyone, regardles of income, a debit card or something similar that expires in 3 months. You use it or lose it.
34
Sorry, Shore Guy. Not buying it. Guy in the basement of his own house? Yet another story where you’re the virtuous, wise hero?
Nuh-uh. Not for all the Allen Edmonds in the world.
# 106
That will not work. The savers amongst us will simply save an amout equal to the debit card and then spend the debit card $ on something we were going to buy anyway.
102.Shore Guy Says:
January 24th, 2008 at 2:49 pm
# 100
The last two presidents who probably could have vetoed it were HST & DDE. After them, Globalists All.
It is not really $600, on your 2008 tax return you have to add the check back in as income.
You not what is great about the rebate? When it comes out I can casually say at a cocktail party, so did you get a rebate? Then I can tell if they make under or over 150K.
# 107. Buy it or not. It is a sad and true story. As to my own virtue or lack thereof, I only used my own situation as a foil for those who used to, essentially, mock the financially conservative amongst us.
Anxious,
7 Winfield Drive
It’s like $600 and we are all acting like it’s a million bucks.
This same disease is not that dissimilar to our inability to save (for a down payment).
When will it be the financially conservative’s turn? You save and save and now what you saved won’t buy you anything close to what you’d like to have - so we keep saving and waiting.
Fanny and freddy just OK to raise loan limit to 110% of local market !
“A higher cap, to apply for one year, would breathe life into housing markets in New York, California and other expensive markets because lenders would feel more comfortable knowing Fannie and Freddie (FMC) can buy and package the loans into securities that investors consider to be relatively safe.”
http://money.cnn.com/2008/01/24/news/economy/stimulus_housing.ap/index.htm?postversion=2008012414
What does that 110% translate into for Northern New Jersey?
“A higher cap, to apply for one year, would breathe life into housing markets”
Sure it will. What about the fact that you can’t sell your current home cause no one is buying and no one is buying because noone is saving.
Don’t believe the hype and lies. IMO, Hobokenite nailed it earlier. It’s a facade to hide the largest bailout in US history. Nothing more, nothing less.
We are just sheeple.
Jan. 24 (Bloomberg) — Banks are unable to find buyers for a $230 billion backlog of high-yield, high-risk debt, freezing leveraged buyouts and raising the risk of more writedowns on Wall Street.
Wonder what that translates into FED Funds Rate Cut?
Great I can now “afford” more debt since fm can purchase a higher loan. Don’t tell my wife.
I guess it is for one year so all the bozo 2005-2008 3/27 jumbo loans can refinance.
This is bad news for homebuyers who can afford to put down enough on a high price home to get under the 417K limit as it puts the fiscally irresponsible folks back in the bidding wars betting with the banks money to drive up prices.
ithink-ithink Says:
January 24th, 2008 at 3:13 pm
“A higher cap, to apply for one year, would breathe life into housing markets in New York, California and other expensive markets because lenders would feel more comfortable knowing Fannie and Freddie (FMC) can buy and package the loans into securities that investors consider to be relatively safe.”
They are only deemed to be relatively safe because Fannie and Freddie securities have an implied government guarantee.
#98 ShoreGuy
yup… I got a rock too! Ugggh. That’s your reward for working smart/hard.
125% of local median up to $730,000.
KL
14#, stu, of curiosity, did you get change to sell any SRS shares at the open Tuesday morning?
jam (114)-
“When will it be the financially conservative’s turn?”
Never. Saving = losing, due to inflation.
The only way out is to invest. Saving isn’t enough.
John (121)-
“This is bad news for homebuyers who can afford to put down enough on a high price home to get under the 417K limit as it puts the fiscally irresponsible folks back in the bidding wars betting with the banks money to drive up prices.”
Did you really think it would be any other way?
79#, this is an interesting metality from many bloggers here while they keep boasting their own savings
> IMO has more to do with the fact that no one has any savings to put down the 10-20% required down payment.
Are those rebates based on gross income?
I understand that Clot, buy investing in C and MSFT and GE haven’t done wonders for anyone either.
Clotpoll,
Exactly. Saving alone won’t do it.
Need to play aggressive offense too. This means earning a lot of $ (Wall St or small biz owner) and investing it at high returns.
Making $75k and putting 15% of it into a savings account won’t create net worth fast enough to live comfortable around here. It took me a few years to figure that out.
There is another issue I have been reading about that will also impact prime.
While the rates were low a lot of older mortgages were refi’ed to lower rates. That reduced the amount of debt from the overall pool. When rates eventually go up to stop inflation these refi’s are not going to go up. As rates move higher it will make it harder to give up a nice 30yr 5.5% fixed to loan at 9-10% or back to the old days od 14-17%. It makes better sense to stay in the current house and pay down the mortgage.
The banking system is built on debt, this will have a big long term impact. Paying off too much debt is the other side of the bell curve of too much default.
I still don’t think rasing the loan limits does anything. Once unemployment picks up who is going to want to be buying a house.
just save ur bonus each year and u will do fine, actually depressing enough to buy a nice house 5k a month for 4-6 years should do it for a good dwm pmt.
with this increased loan limit and 1% lower interest rate, i go to re-test my 10% price appreciation hypothesis.
Bi asked, “14#, stu, of curiosity, did you get change to sell any SRS shares at the open Tuesday morning?”
Sold some, but not all. I guess I got a little greedy, but I still think 155 is just a few more weeks or months away as the new low is higher than the previously low. From a technical point of view, the ETF is still very much in an uptrend. I don’t really worry about the day to day. If you do, you end up ignoring the fundamental reasons you purchased the investment in the first place. With SRS, the only thing that worries me is the psychological impact of the 2008 presidential election. Hopefully, I’ll be out of SRS in August with lots of 15% taxable long term gains. I’m almost halfway there.
By the way, most of my sells and buys occur with GTC limit orders as I’m too busy working to follow it closely. Sure sometimes I sell early, but I like to have a line in the sand. It keeps me from being too greedy or too cheap. I am definitely NOT a day trader. Most of my gains and losses (unfortunately) are long term. In investing, patience is truly your best friend.
So are you going to the get together? I’d love to buy you a drink to make up for all of my taunting ;)
PGC 132:
“As rates move higher it will make it harder to give up a nice 30yr 5.5% fixed to loan at 9-10% or back to the old days od 14-17%. It makes better sense to stay in the current house and pay down the mortgage.”
I’ve been thinking about this issue as well and agree it has a lot to do with why no one is selling. If nobody sells, where will the buyers come from? I feel bad about the Boomers. They have some seriously problems to face. Especially those who have been banking on their homes to pay for their retirement.
RE When rates eventually go up to stop inflation these refi’s are not going to go up. As rates move higher it will make it harder to give up a nice 30yr 5.5% fixed to loan at 9-10% or back to the old days od 14-17%. It makes better sense to stay in the current house and pay down the mortgage.
I disagree. The value of a low interest rate mortgage becomes less valuable each year as the loan become more principal than interest. My older brother in law said it was fantastic when he was saving for his first home in the 1980-1984 period. Every month he put money into his 17% savings account while the high interest rates made home prices fall each month. He ended up putting a huge downpayment on his house at rock bottom price and in a year or two when rates fell refinanced out of the high rate. When he bought a trade up home in 2003 he said he had his first house paid off but saving up more was a nightmare. Money market was 2% and houses were rising 20% and since his mortgage rate was low to begin on his new 2003 home there would be no chance to refinance in the future to get a much lower payment and he would be stuck with the high mortgage payment for 30 years.
1 year of lower rates isn’t enought to clear all of the excess inventory.
#139 skeptic: 1 year of lower rates isn’t enought to clear all of the excess inventory.
And of course there would have to be enough qualified buyers as well.
#135 bi: i go to re-test my 10% price appreciation hypothesis.
And please, Oh sage reveal to us how this magical mythical hypothesis would work.
Should we be expecting this 10% appreciation right after Super Bowl? Please do tell?
#128 bi:IMO has more to do with the fact that no one has any savings to put down the 10-20% required down payment.
I think most of us here have at least 20% to put down, and many have much more.
But do ask yourself this oh wizened one, if as you claim most people here do not have a down payment of 10/20%, then why did they not buy when they could have bought with no money down up until very recently?
You are like a dog chasing his tail with your line of reasoning, round and round you go.
137
You feel bad for the Boomers?
I feel bad for people my age, sorry. We got screwed royally. They didn’t.
Ya know I’ve been reading all this stimulus Garbage and if you ask me, ( and no one has, but I’ll put in my .02) The gubm’t should target stimulating bussiness first. like offering bussinesses the right to expense capital purchases in the same year ( like they do for Big Oil!!). Get manufacturing and corporate spending going and the salaries will rise and people will start spending again… We ( the USA) used to be pretty good with being innovative and economicly sound when it came to leading the rest of the world in the industrial revolution… now that it is all being done in other countries we have nothing to base the GDP on except Consumer spending … and look where that has gotten us.. We Need to start leading the world again. Not just trying to make money off of other money.
My .02!
Tan
BTW: thanx Rich in NNJ # 112.
#127 clot:Did you really think it would be any other way?
Do you really believe that this will restart bidding wars and reinflate the housing bubble, and the madness starts all over again.
Or is it a convenient way for the banks to get this toxic junk off their books?
Even with these new caps in place, will nto buyers still have to qualify under Freddie/Fannies guidelines for down payments, credit worthiness?
Trickle down economics - will it work this time?
Trickle down or piddle down?
146- Trickle down economics
Isn’t that when the goverments pees on my head and calls it a spring rain?
“i go to re-test my 10% price appreciation hypothesis.”
Before this, please call back your margin clerk.
jam (130)-
What’s your time frame on those investments? Take them back 10-12 years and tell me how badly they’ve done.
Any individual investor who started investing within the past 5 years would’ve been brain-dead to make those picks.
Msft comes through:
http://www.cnbc.com/id/22826950/site/14081545?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo
3b (145)-
Bailout, not re-ignition.
2-3 years hence, all the glop gets quietly eaten by the gubmint. Problem solved.
Urrrp…
What I want from the Easter Bunny:
Both political parties to call for, not only a true freeze in the size of the federal budget (including all of the off-budget BS) for the rest of this year, but an actual .5% decrease in the overall budget for each of the next 4 years (thus leading to a real decrease in federal spending of about 15%).
Each year that the spending is held to the above restrictions, a 10% surcharge on each tax bill, up to the first $100,000 taxable income, a 20% surcharge on between $100,001 and $1,000,000, a 30% surcharge between 1,000,001 and $10,000,000 (including deferred income), a 40% surcharge between 10,000,001 and $100,000,000 (including deferred income), and a a 50% surcharge on income above $100,000,001 — all of which will go towards paying off the most expensive debt currently being serviced.
An end to all pensions for any elected office except for President and, in its place, a $10,000 contribution to a retirement plan of choice for each elected official.
Some coffee, so I can wake up from this dream.
Time frame has been 10 years plus. I’m just pi**ed I thought of selling my home before the market took a hit but I didn’t follow through with my bank stocks.
“A higher cap, to apply for one year, would breathe life into housing markets”
The market is dead because the food chain has been broken. First time buyers can’t afford the lower end of the market, so trade up buyers can’t get out of their homes to buy the bigger homes. Many first time buyers were already looking for homes under the conforming loan limit anyway. So, does this really do much?
#152 clot: Understood. These new caps are they just for new mtgs or will existing mtgs qualify as well?
WOW. I just did a check on my old house in NJ and it can be had for $56k less than what we sold for. Just over 10% of its value lost from what we sold at in May 2005. $88K less than its peak value.
BTW Charlotte area here is seeing a small decline now. About 1%-2% off peak are the homes being priced now. We were up about 4.5% for 2007 so its not a real loss yet. I stress the YET. Housing is still priced well for the income to housing ratio so while we will get a drop I don’t expect as much as surrounding areas but I do expect a decrease to happen. I still hear of a lot of people trying to get here but cant sell where they are at. I’m sure they can but they just cant get what they want where they are at.
Homes that are marked 5% off peak sell within a month or two max still. Buyers could be seeing this as value priced.
I’m curious to know what kind of trends the moving companies are showing.
I love the emotional response attached to these things.
Fear, than panic, than absolute terror.
My god, housing prices are going to go up 300% tomorrow morning and I’m going to be forced to live in a Honda Civic and eat cat food for the rest of my life!!!
Now you know why real estate agents love to use techniques that instill a sense of urgency in the buyer.
As soon as you get to a point where you trigger that sense of urgency, it’s simple to play on that to manipulate the buyer into purchasing.
Seller’s must be salavating. The housing atm machine is being restocked. Problem solved?
#152 clot: Understood. These new caps are they just for new mtgs or will existing mtgs qualify as well?
Sorry, but that rotten pork has already been ground up, stuffed into casing, and sold.
You’ll need to refinance to play this game.
“Just over 10% of its value lost from what we sold at in May 2005. $88K less than its peak value.”
Mitchell,
Where did you sell in NJ?
#94, #96 Sometimes ya gotta hand it to the pols. So Congress raising the conforming loan limits is really a bank bailout in the guise of helping the little people afford nice houses. Slick. I stand in awe of these guys, I really do.
“is this true? If it is then it will have huge impact. ”
65 make
agree - it will put fanny and freddy into insolvency.
Hold on here, this thing is still in proposal and the Treasury isn’t backing it.
Conforming loan limit changes were supposed to be part of the GSE reform bill, not this new stimulus bill.
Paulson was pretty clear that he didn’t want to saddle the stimulus bill with any other changes than the ones initially presented, for fear of it getting bogged down.
http://www.ofheo.gov/newsroom.aspx?ID=410&q1=1&q2=None
STATEMENT OF OFHEO DIRECTOR JAMES B. LOCKHART ON CONFORMING LOAN LIMIT INCREASE
We are very disappointed in the proposal to increase the conforming loan limit as we believe it is a mistake to do so in the absence of comprehensive GSE regulatory reform. To restore confidence in the markets we must ensure that the GSEs’ regulator has all the necessary safety and soundness tools.
Yesterday Chairman Dodd talked about moving a GSE reform bill early this year. We are ready to work with him and the Senate Banking Committee. We will also be working with Fannie Mae and Freddie Mac to ensure that any increase in the conforming loan limit moves through their rigorous new product approval process quickly and has appropriate risk management policies and capital in place.
Is this the last guy with any common sense left among the feds?
Yea I was just about to post that along with this piece..
White House, congressional leaders announce deal on economic package
http://www.thomsonfxhub.com/fxhub/forex-news-detail.jsf?newsId=10459
The House plan also calls for a temporary increase in the size of mortgages that Fannie Mae and Freddie Mac can buy, to 730,000 usd from the current 417,000.
Paulson had opposed this component, because he wanted to use it as a carrot to push Congress into passing legislation that would toughen the regulatory structure of the two mortgage giants.
‘But I got run down by a bipartisan steamroller,’ Paulson told reporters at the White House.
Frank told reporters he assured Paulson that he would not pursue legislation to further expand the conforming loan limits. And Senate Banking Committee Chairman Christopher Dodd of Connecticut is expected to push legislation to strengthen federal regulation of the two companies.
Nonetheless, the federal regulator of the two companies, the Office of Federal Housing Enterprise Oversight (OFHEO), said it was ‘disappointed’ that the stimulus package includes an expansion of the conforming loan limit that is not part of increased regulatory authority.
‘We are very disappointed in the proposal to increase the conforming loan limit as we believe it is a mistake to do so in the absence of comprehensive GSE regulatory reform,’ said OFHEO Director James Lockhart.
100 confused, why’d you have to remind me of that horribleness?
A few weeks ago I read an article that stated conforming loan limits were going to be reduced to reflect the declines in home values. Now, we are going to raise them?! To what end? To reward speculators and keep prices artificially high. Might as well raise asking prices since the sheeple can borrow more at conforming rates. Squeeze every last penny out of them so they can’t afford those other outlandish expenses that come along in life like education, family and leisure.
How will people be able to afford their Yankee tickets that have doubled in price? Or the licensing fee for the priviledge of buying season tickets for the Jets or Giants?
Good God we love debt.
so now we can all get zero down $730,000 loans backed by uncle sam?
#162 Toms River 08755 just north of the super cell area Ciba-Geigy.
#171 I think you need to start asking the Gov when they are going to re-asses everyones taxes now that home values have dropped dramatically.
The pathetic part of NJ will be Property taxes paid out per year being higher than the mortgage on the home. Makes me sick.
169.njpatient Says:
January 24th, 2008 at 5:26 pm
100 confused, why’d you have to remind me of that horribleness?
Because Hilly in her campaign keeps saying she will fix the economy, but she doesn’t mention she’ll have to fix Billy first, because he broke it.
[173] Reassessments will come right after the municipality raises the tax rate. Remember what they do to one side of the equation they have to do to the other side - just to balance things out and make it “fair.”
Besides, a small split one car garage in a town like Glen Rock should cost you 15/16K a year in taxes - shouldn’t it?
The President has about as much a chance of “fixing” the economy as he/she does of changing the course of a mighty river or leap tall buildings in a single bound.
It must self correct.
“It must self correct.”
Just not during a campaign year.
[177] That’s absolutely true. They won’t keep their #$%^ hands out of it during a campaign year.
They will outsmart themselves when all the 730K loans start to default and then lets see how our banks fare. It’s time to start asking advisors and pension funds how much is invested in mortgage backed securities.
# 174 “she’ll have to fix Billy first, because he broke it”
I disagree with that. I am a former Reagan appointee, and lifelong Republican. I even worked on GHW Bush’s campaign, and that of some other R pres candidates. Clinton left the economic house in better shape than any of us had any right to expect when he took office. It is my party that has sold us to the highest bidder and it makes me sick. The economic mismanagement of the past 8 years has been of epic proportions and my children are likely to be old before we sort out the monumental mess we are in because of out current President and members of my party who headed up the House during most of his term.
So a 920K house with about 20% down gets you a conventional loan. That seems like a good place for starter homes to begin pricing.
Let’s tell all the Rutgers student to ask for $300K as a starting salary. And then we should raise the professors salaries (that’s fair) so then just increase the tuition a bit more, keep the interest on the student loans hovering near prime, and then we should raise parents salaries because its not fair that your kid makes more than you - well then $8 a gallon gas is ok and a $25 salad for lunch just tastes better.
Oh, shouldn’t they raise the threshold for the mansion tax since 1million dollars doesn’t get you a mansion anymore.
168 raising “conforming loan limits”
Can someone paraphrase what this means (in simple language)? Thanks.
posts 159 and 160, read in succession, are pretty funny.
Here’s the thing, jam. When the bubble bursts, you can’t re-inflate it. It’s broken. It’s in pieces. You can’t glue it back together and then pump air into it.
The real estate bubble required one ingredient above all others - that the generaly house-buying public be unable to remember as far back as 1989 when the last RE bubble burst. If they could remember that panic, the new bubble couldn’t inflate. Just ask pretorius.
The problem now is that we’ve had panic, and plenty of it.
Now, when someone says “real estate is the best investment you can make; it NEVER goes down”, or “it’s ALWAYS better to own than rent” or “they’re not making any more land”, folks will be able to remember all the way back to the winter of ‘07/’08 and the panic they felt when they first realized that they, too, could be f*cked.
And the folks who never had that feeling, because they had enough sense to see the train coming and get out of the way? They’ll still have enough sense.
No, friend, you’re going to have to wait another 10 years or so to get the entire country irrationally bidding up home prices.
It’ll happen. But it won’t happen this year or next year or the year after, no matter what kind of a$$inine policy the geniuses who are running this country impose.
They may be able to rob Peter to pay Paul, they may be able to bail water from the left side of the boat to the right side of the boat, but the fact is that the real estate bubble is a lead balloon.
“Paulson was pretty clear that he didn’t want to saddle the stimulus bill with any other changes than the ones initially presented, for fear of it getting bogged down.”
Banky Bernanke said the same.
I agree with Renting - don’t see how raising the limits will “jump start” anything, or bring back bidding wars.
My end of the market falls withing current limits and there are no bidding wars here.
It’s all about affordability and ability to make payments - and raising the limit won’t give people bigger incomes.
counter argument is that this high conforming loan limit is the equivalent of “don’t fight the Fed.”
179 shore
sing it.
it’s all about the monthly payment. higher limit = lower monthly payment = new affordability threshold
184 ’soosh
Right. All those POS $200K condos in Palm Beach that are now worth somewhere between $100K and $0 weren’t helped much by being fully within the old limit.
187 skep
That assumes people were buying because they were calculating their monthly payment based on their mortgage amount and their rate and factoring in their taxes and insurance etc. and making an overall determination that what they were doing was “affordable.”
I don’t think it could possibly be any clearer that this is NOT what happened. Affordability became an antiquated concept; what mattered is that there would always be someone down the road who would pay 15% more, compounded annually, than you did, so if it turned out that what you had purchased wasn’t “affordable”, the worst thing that would happen to you was that you would make a massive profit.
That people now take affordability into account at all is a prime ingredient in the burst of the bubble.
You can’t contain a massive hemorrhage with a band aid. Whether it’s central bank intervention, rebates, stimulus, ppt, etc…, it just doesn’t work. The market calls the shots, not the rubes that are acting on their own interests.
It will take years for banks, if they make it, to repair their balance sheets. They will hoard cash. Borrow cheap and hope the yield curve steepens, that’s their game plan. John Q is not on their radar. Unless, of course, John Q has cash to put down and can survive a scope up his/her #ss. The sins of the past will not be repeated, in the short term.
They can raise the conforming loans to any # that they so desire. It doesn’t solve the problem. We have lived thru the greatest debt/credit bubble in our history. You can’t jam more s*it into a clogged up septic tank. Insolvency is not cured by cheaper $. Foreclosures, price declines, tapped out consumers, falling consumer confidence, job losses, flight from the dollar, etc., will continue. The unwinding will take years. The fed can inflate all they want. They are doubling and tripling down on a bad bet. Just ask LTCM, Leeson, dot com, bi and socgen how that works. You can try to maneuver, push or pull markets. It’s a losing battle. Mr. Market always comes out on top.
“don’t fight the Fed.”
Why not?
190
Sing it, BC!
(that’s twice in one day!)
[182] Thanks. I’m old enough to remember the late 80’s housing problems but too young for it to have had a lasting impression on me (I was still living at home).
I guess, having sold my starter home in June, I was looking at the weakness in housing as an opportunity to buy something bigger (not a macmansion) on a nicer location (I have kids now). All of a sudden when prices start coming back to me, the Fed rushes in and rewards all the buyers who outbid me for houses and pushed prices beyond my means.
It is to say the least depressing. Don’t get me wrong - I don’t want to see blood in the streets, but a little self correcting would not be the worst thing either.
[189] And i always check the loan calculator and the taxes and insurance prices to calculate my monthly payments to make sure my bid will make for an affordable monthly payment. Either most people don’t or my wife and I make very little money.
159 grim
“My god, housing prices are going to go up 300% tomorrow morning and I’m going to be forced to live in a Honda Civic and eat cat food for the rest of my life!!!
Now you know why real estate agents love to use techniques that instill a sense of urgency in the buyer.”
Right you are.
“SPECIAL LIMITED TIME OFFER”!!!!!!
http://philadelphia.craigslist.org/rfs/550452641.html
(I ask myself: “Self, why are they only offering that house for a limited time?” But I have no answer. Unless perhaps it’s because they can no longer offer it for sale once they’ve been foreclosed.)
179.Shore Guy Says:
January 24th, 2008 at 5:47 pm
# 174 “she’ll have to fix Billy first, because he broke it”
I disagree with that. I am a former Reagan appointee, and lifelong Republican. I even worked on GHW Bush’s campaign, and that of some other R pres candidates. Clinton left the economic house in better shape than any of us had any right to expect when he took office. It is my party that has sold us to the highest bidder and it makes me sick. The economic mismanagement of the past 8 years has been of epic proportions and my children are likely to be old before we sort out the monumental mess we are in because of out current President and members of my party who headed up the House during most of his term.
Two sides of the same coin WJC & GWB. WJC started the ball rolling, repealing things like Glass-Steagall, further setting the stage for Economic Treason. GHW, who I unfortunately also voted for twice, tried to emulate every bad decision before him. JFK/LBJ did Vietnam (pay as you go), GHW say’s “I’m smarter than a 5th Grader, I’ll do IRAQ” on (credit). I think you’ll also find a lot of WJC’s surplus was the growing bubble debt economy created under his reign. Housing Bubble replaced .Com Bubble. Bubble is only a recognized problem if your in the chair when it pops, exit Greenspan, enter Bernanke. Don’t forget GHW’s father & AG in the S&L Fiasco. Teddy Kennedy & John Kerry nodded through the whole period. They are all Globalists. Only honest Senator was Mr. Stirling on the TV show who was an Independent gaming the Reps & Dems. Being a Conservative Independent I’ve had the opportunity to vote for many Globalists over the years wearing Donkey & Elephant suits. It’s only a costume. Last guy I voted for who wasn’t a Globalist was DDE.
Please, please, please look this property, MLS# 2465402, up for me. Thank you!!
“Two sides of the same coin WJC & GWB.”
This is silly. All you need do is compare (a) rate of growth of discretionary spending (it’s not close) and (b) tax policy.
We don’t even need to get into the bigger questions that are more important but more factually murky; those two are dispositive.
Just received in my email:
IMAGINE…a houseFULL of FREE furniture when you purchase a KAPLAN home. furniture is from Ashley Furniture store(mostly made in china)
#139 John,
Good for your BIL.
Two points. Because the inflation numbers are stated low (no M3), you will not get the high savings rate to match the true inflation. You take a hit on the puchasing power of you money.
IF your BIL had paid off the house, then the 2003 purchase is to I assume a bigger house with new P&I payment and amortization schedule. A $ of interest paid is still lost money if the tax relief and savings rate does not match or exceed it.
If he pays off the house, the money tied to the house will still lose to inflation, but not as much as the cost of the interest and the lack of a decent savings rate to offset.
hey guys dont worry how bad can inflation really be????
Zimbabwe’s central bank recently decided to issue $10 million notes– believed to be the highest denomination of currency in the world today. The bill, worth less than US$4, is barely enough to purchase a hamburger
http://www.gadling.com/2008/01/22/zimbabwe-releases-10-million-bill/
oh and doesnt this sound familiar
from the same article
Despite the dismal economic situation, the central bank’s much-maligned governor, Gideon Gono, offers this risible bit of encouragement: “As monetary authorities, we once again assure the nation that we are in full control of the currency situation.”
#190 Amen, Brother.
Another day of listings and yet another day of prices at 2005 levels. I’m now convinced that in the event of nuclear aftermath, two things will survive; cockroaches and the peak prices for houses in North Jersey.
I refuse to rip the remaining seven hairs out of my head trying to figure out who’s producing the morons who somehow continue to find someone to back their financial suicide. As a result, I’ve just increased the asking price of my house by 10% when I decide to sell and will continue to raise it as additional Forest Gumps’ fall off the assembly line.
I believe I said this yesterday:
http://calculatedrisk.blogspot.com/2008/01/egan-jones-monolines-need-200-billion.html
#193 jam but a little self correcting would not be the worst thing either.
We are getting self-correction, with much more to come.
#187 skeptic: How does a higher limit = lower monthly pymt?
Noir Esaj,
Sorry, can’t help. Must be GSMLS number.
Rich
3b 206 Lower rate conforming loan.You get killed on a jumbo now.
#170 Jam:To reward speculators and keep prices artificially high.
How will raising loan limits keep prices high? I do nto see a connection.
Thank you, Rich. Anyone else can look it, MLS# 2465402, for me?
#160 Jay Problem solved? NO, problem just got alot bigger.
#208 mike ?
Why do people who know nothing think they are bestowing their wisdom on me when they tell me, “Now is great for you. The interest rates are coming down again!” I tell them I don’t care if they cut the rates to zero. It won’t be a good time for me until prices come back to earth. What fukkin planet are they on anyway?
3b 212 Just checked out rates from Hudson City
30 yr fixed under 417,000 $576 per 100k $600 over 417,000.If gov raises 417 max on GSEs then you would get lower rate to new limit.But I don’t think it will make a dif.On 500k we are talking 120 bucks a month not a big deal at that level.Better be snow white with 20% DP if you want a loan from hudson though.This will sound good & put the GSEs on the hook but will not stop the declines.
Noyer knew this 4 days ago. The European markets were hammered on Monday, NY holiday. Socgen was unwinding their long trades. Obviously the fed was alerted and they subsequently moved on Tuesday morning. What a freaking disgrace. The fed interjects the largest cut, between scheduled meetings, ever as the result of a rogue trader? To support markets that are called 4% lower? No wonder we are the laughing stock of the world. Our monetary policy is shaped by some d*ck trader and his cohorts in a French nationalized bank. Please stop the antics. Abolish the charlatan/puppets now. Don’t fight the fed? My a##. Monitoring the threat of inflation? The thing they are monitoring is the red light direct to Goldman/PPT.
“Bank of France Governor Christian Noyer said he learned at least four days ago that Societe Generale SA had identified a rogue trader whose positions led to 4.9 billion euros ($7.2 billion) of losses, the largest in banking history.”
“The bank disclosed the losses today after the trades were liquidated. The Bank of France, the banking regulator, also said today it was opening an investigation.”
“All necessary contacts were made in due course,” he said. In Davos, Switzerland, ECB President Jean-Claude Trichet declined to comment on the matter. Fed policy makers didn’t know about the losses at Societe General prior to their Jan. 21 decision to reduce interest rates, said a Fed official today. [Edit: Animal House, listening to Dean Wermer, BULL##IT, BULL##IT]
http://www.bloomberg.com/apps/news?pid=20601109&sid=aWplLsSN.cGk&refer=home
Jase,
MLS 2465402 - 4 James Pl
Listed: 12/01/07
OLP/LP: 494,900
DOM: 54
Lost 213 My agent almost started that line on me.But then she new better.Its about the price its all about the price.Like the last time I bought a car guy asking how much I can afford.I told him its not about the monthly, what I can pay means nothing.How much is the price of the
car!
Grim
Donde esta mi password?
Sorry, no way I can look it up. Unfortunately, I think you’ve got to re-register.
Thank you.
Grim,
I meant on the new forum. I am trying to register and I haven’t gotten the email yet.
What new forum?
BC Bob Says:
January 24th, 2008 at 6:32 pm
…
It will take years for banks, if they make it, to repair their balance sheets. They will hoard cash. Borrow cheap and hope the yield curve steepens, that’s their game plan. John Q is not on their radar. Unless, of course, John Q has cash to put down and can survive a scope up his/her #ss. The sins of the past will not be repeated, in the short term.
…
I agree that we won’t see the same insane underwriting standards that we’ve seen in the past, but what raising the conforming limit does is it allows the banks to transfer large amounts of the loans on their books to the GSE’s. Granted alot of the really toxic stuff can’t be refinanced, but alot of the marginal stuff probably can. It’s a bailout of the banks plain and simple, and the taxpayers are going to end up paying for it when the GSE’s have to be bailed out.
The politicians are either too stupid to realize this (doubtful), or they selling the taxpayer down the river to bail out the banks.
BTW got a letter in the mail yesterday re a homebuying seminar being held in Hoboken at Rogo’s bar by the local Countrywide rep. My how the mighty have fallen!
The following is a table of jobs eliminated by the biggest banks and securities firms due to the collapse of the subprime mortgage market.
Firm Number of Jobs Cut
Citigroup 4,200
Lehman Brothers 3,890
Bank of America 3,650
Washington Mutual 2,600
Morgan Stanley 1,900
HSBC 1,650
Bear Stearns 1,550
UBS 1,500
Merrill Lynch 1,000
National City 900
RBC 500
Wells Fargo 500
Wachovia 443
Deutsche Bank 370
Credit Suisse 820
JPMorgan Chase 100
_____
Total 25,573
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAM0j9ONhoB0&refer=home
BC Bob Says:
January 24th, 2008 at 9:03 pm
Noyer knew this 4 days ago. The European markets were hammered on Monday, NY holiday. Socgen was unwinding their long trades. Obviously the fed was alerted and they subsequently moved on Tuesday morning. What a freaking disgrace. The fed interjects the largest cut, between scheduled meetings, ever as the result of a rogue trader? To support markets that are called 4% lower? No wonder we are the laughing stock of the world. Our monetary policy is shaped by some d*ck trader and his cohorts in a French nationalized bank.
Bost: funny stuff…go the the video at 10:20 of 14:08
http://www.cnbc.com/id/22823862
Evil Kerviel……Nick Leeson of the new millenium….my man…
I thought they all had three names:
John Wilkes Booth
Lee Harvey Oswald
John Wayne Bobbitt
OT: I’m sorry….this is like a game of free association…..
this Wiki is hilarious!!!
In 1994, John appeared in the adult film John Wayne Bobbitt Uncut.
In 1996, he appeared in another adult film, Frankenpeni$
http://en.wikipedia.org/wiki/Lorena_Bobbit
OT: more…..who says U.S. schools are failing our children?
Two Georgia schools to pay students $8 an hour to study
http://news.yahoo.com/s/ap/20080125/ap_on_re_us/paid_to_study
#225 HEHEHE
Ask if they will have it on Tuesday night. That is 10c wing night and their wings arn’t bad from what I remember.
#196 - AMEN! The last 7.5 yrs of this dolt have screwed US royally.
sl
PGC,
I already tossed the flyer but it’s good info to know!
a homebuying seminar being held in Hoboken at Rogo’s bar by the local Countrywide rep.
Rogos????
In a town of disposable income, they’re going to a discount college-type bar blocks off Washington.
Why not just have a walking tour of Velocity while they’re out there?