Wed 14 May 2008
From Bloomberg:
U.S. Foreclosures Rise 65 Percent as Vacated Homes Add to Glut
U.S. foreclosure filings climbed 65 percent and bank seizures more than doubled in April from a year earlier as rates on adjustable mortgages increased and vacated homes added to a glut of unsold homes, RealtyTrac Inc. said.
More than 243,300 properties, or one in every 519 households, were in some stage of foreclosure, the highest monthly total since RealtyTrac, a seller of default data, began statistics in January 2005. Nevada, California and Florida had the highest rates. Filings rose 4 percent from March.
Properties in foreclosure “contribute to already bloated inventories of homes for sale, and put downward pressure on home values,” RealtyTrac Chief Executive Officer James Saccacio said today in a statement.
The collapse of the U.S. housing market, the worst since the Great Depression, is contributing to the economic slowdown and may push the economy into a recession. Median prices for a single- family home fell 7.7 percent in the first quarter, the biggest drop in 29 years, the National Association of Realtors reported yesterday. There were 4.06 million U.S. homes for sale at the end of March, 40,000 more than the prior month, the Realtors association said in an April 22 report.
“Inventory levels have soared to unprecedented levels” Brian Fabbri, chief North American economist for BNP Paribas, said in an interview. “Builders and homeowners have to lower their prices significantly to sell that inventory out.”
…
Foreclosure filings in New York were up 39 percent from a year ago and up 12 percent from March. The state ranked 29th with 5,696 filings.In New Jersey, foreclosure filings ranked 15th at 5,143, up 65 percent from a year ago and up 15 percent from March.
May 14th, 2008 at 5:53 am
From CNN/Money:
Foreclosure filings hit record in April
U.S. foreclosure filings reached a record high in April, rising almost 65% over the previous year and putting municipalities at risk by putting into the value of taxed property, according to a study released Wednesday.
Some 243,353 households, nearly one in 519, received a foreclosure filing during April, according to the U.S. Foreclosure Market Report from RealtyTrac, an online marketplace that tracks foreclosed properties. That was up 4% from March, and surpassed the record of 239,851 set in August 2007.
It’s “the highest monthly total we’ve seen since we began issuing the report in January 2005,” said chief executive James J. Saccacio in a statement.
May 14th, 2008 at 5:55 am
From the Star Ledger:
Corzine: NJ windfall should cut debt
Gov. Jon Corzine acknowledged Tuesday that New Jersey is getting an unexpected budget windfall, but he said the extra cash should be socked away to help reduce the state’s debt rather than spent to restore proposed cuts.
“Am I pleased we have the windfall that allows us to pay down debt? Absolutely,” the governor said after Treasurer David Rousseau updated lawmakers on the state’s budget outlook. New Jersey has $32 billion in debt, the fourth-heaviest burden in the nation.
May 14th, 2008 at 5:57 am
From MarketWatch:
Greenspan sees U.S. house price bottom in ‘09: reports
U.S. home prices will likely bottom out in early 2009 after the market absorbs excess inventories, former U.S. Federal Reserve Chairman Alan Greenspan told audiences in Asia Wednesday, according to news reports. Greenspan, who spoke by video link to audiences in Hong Kong and Singapore, said the current pace of liquidation will accelerate, but excess supply won’t be eliminated until early 2009, according to Dow Jones Newswires, which cited prepared remarks provided to investors by Deutsche Bank, which sponsored the conference. Greenspan told the audience U.S. economy is showing resilience and flexibility. He also said high oil prices are structural and will likely continue due to a lack of investment in capacity and infrastructure, the report said.
May 14th, 2008 at 5:59 am
From the NY Daily News:
City foreclosure woes surge
The number of city homeowners in danger of losing their place to foreclosure soared 28% last month from April 2007.
While 2,201 are at some stage in the foreclosure process, for 211 of them, the battle was over - lenders repossessed their homes, according to real estate Web site RealtyTrac. Another 1,666 got default notices last month, and the rest got word their homes will be auctioned.
The upswing was ominous: In April 2007, just 10 homes were repossessed citywide. There are about 3.3 million households in the five boroughs.
…
In the city, Queens had the highest number of foreclosure filings, 926, and the highest number of repossessed homes, 117. In Brooklyn, 649 foreclosure notices were filed, and in Staten Island, 293. Bronx homeowners received 249 foreclosure notices, and 84 were sent out in Manhattan.
Citywide, one of every 1,631 households got a foreclosure notice last month.
May 14th, 2008 at 6:08 am
From the WSJ:
Fed Officials Say Economy May Remain Sluggish for Some Time
By SUDEEP REDDY
May 14, 2008; Page A16
With financial markets continuing to face strains, the economy could remain sluggish for some time, Federal Reserve officials said. But with markets and economic data showing some improvement, a few policy makers started broaching the prospect of eventually raising rates.
In remarks to an Atlanta Fed conference Tuesday, Fed Chairman Ben Bernanke said conditions in financial markets are “far from normal” and the central bank was prepared to expand its lending programs if necessary.
The Fed in recent months has created numerous new direct-lending tools to relieve pressures in credit markets. Markets for certain types of mortgages, corporate debt and other areas have improved, Mr. Bernanke said, but “pressures in short-term-funding markets persist.”
“At this stage conditions in financial markets are still far from normal,” he said. “Ultimately, market participants themselves must address the fundamental sources of financial strains…and this process is likely to take some time.”
Gary Stern, president of the Federal Reserve Bank of Minneapolis, said Tuesday that he expects a shallow recession this year with “subdued” economic performance — growth that is barely positive or barely negative — for at least the next two quarters.
Mr. Stern said the economic environment is similar to the early 1990s when “headwinds,” a phrase then-Fed Chairman Alan Greenspan used to refer to banks’ reluctance to lend, weighed on the economy. “It took some time for that to all dissipate,” Mr. Stern said in an interview with The Wall Street Journal. “There was a lot of concern about the initial sluggishness of the recovery….I personally expect that’s going to turn out to be the case here as well.”
…
Richard Fisher, president of the Federal Reserve Bank of Dallas, rejected the idea that the economy already is in recession. The slowdown “will last a little bit longer than people expect, but it may not be as deep as many anticipate,” Mr. Fisher told a community forum in Midland, Texas, on Tuesday. When the economy does eventually emerge from its troubles, he said, one of the biggest concerns is there will be a “much higher base rate of inflation than we would want.”
May 14th, 2008 at 6:09 am
From the WSJ:
Home-Price Decline Spreads
Number of Metro Areas Hit Reaches Three-Decade High; Toll Brothers Feels the Pinch
By MICHAEL CORKERY
May 14, 2008
In the latest sign that the housing market is deflating at a record pace, the National Association of Realtors said prices declined in more metropolitan areas in the first quarter than at any time in the past three decades.
The trade group said median prices fell in about 100 metro areas — the most since the trade group began keeping such records in 1979. It also said Tuesday that median home prices rose in 48 metro areas — the lowest number on record. Nationally, the median home price fell to $196,300, down 7.7% from a year ago.
Lawrence Yun, the group’s economist, said the sales-price data are being distorted by foreclosed homes and other distressed sales, which are fueling price drops in certain neighborhoods, while the lack of available so-called jumbo mortgages for high-priced homes has resulted in fewer sales in upscale neighborhoods. The upshot is that the median price for a metro area may be falling, but the prices may very sharply “neighborhood by neighborhood,” Mr. Yun said.
Still, high-end homes are clearly under some price pressure. Luxury builder Toll Brothers Inc., which reported preliminary second-quarter results on Tuesday, said its average home price dropped 17% to $590,000 from a year earlier and was down 7% from the previous quarter, partly because of increased incentives. Toll says it is offering most incentives on homes that were built for buyers who ultimately backed out of their contracts. The builder also said its average price was lower because it sold fewer homes in high-price markets such as California and Manhattan.
Toll says one of the biggest problems is that many buyers are putting down deposits but end up canceling because they fear they won’t be able to sell their existing home. “They go to their friends and neighbors and say, ‘We just bought a new home,’ and everybody says ‘What? Are you crazy? Prices are dropping,’” Chief Executive Robert Toll told analysts during a conference call.
May 14th, 2008 at 6:15 am
From the Record:
A break for Bergen sellers
Bergen County home prices continue to hold up better than in many parts of the nation as the real estate slump shows no signs of bottoming out.
Median home prices dropped 2.4 percent in Bergen County and 8.1 percent in Passaic in the first quarter of 2008, compared with the same period a year ago. That compares with a nationwide drop of 7.7 percent, according to price data released Tuesday.
…
In Bergen County, according to the New Jersey Multiple Listing Service, the median price of an existing home sold during the quarter was $450,000, down from $461,000 a year earlier.
In Passaic, the price was $357,500, down from $389,000 a year earlier.
…
Sales activity is down in most places. The volume of sales dropped 22 percent nationwide and more than 30 percent in Bergen and Passaic in the first quarter, compared with the same period a year ago. Statewide, the volume of sales actually climbed 4 percent, though the reason was unclear.
Bill Gilsenan of Gilsenan and Co. Realtors in Ridgewood said home shoppers are “waiting to buy at the very bottom of the market. Where that may be, no one knows.”
At some point, he said, these prospective buyers will be drawn into the market because they’ll need different housing.
“People get married, they have children, they want to downsize, they’re transferred,” he said. “Life goes on.” He argued that buyers should look at the long-term trends, rather than worry about short-term market cycles, because most people live in their homes for a number of years.
Some of the data released Tuesday suggest that home prices in the region have given up the gains of 2006 and 2007. According to the NAR, the median sales price of existing single-family homes in the New York metropolitan area, which includes Bergen and Passaic counties, was $491,900 in the first quarter — close to the $495,200 level of 2005.
Some properties are selling for less than 2005 values. For example, Colin Somerville, an agent with Re/Max in Saddle River, recently sold a Montvale condo for $420,000, down from the $460,000 the homeowner paid in 2005.
…
Somerville also said the prices of new homes have come down about 10 percent to 15 percent off their peaks, much faster than the prices of existing homes. Homeowners tend to be reluctant to lower their prices, because they have emotional ties to their properties. They often believe they deserve to get at least as much as their neighbors got in 2005.
May 14th, 2008 at 6:22 am
From the Star Ledger:
N.J.’s housing market is doing better than most other states
In New Jersey, the housing market continued to fare better than the nation as a whole.
Home prices in the Garden State rose in a number of areas, including the Atlantic City region, where the median sales price increased 4.8 percent in the first quarter, to $277,400, and the Trenton-Ewing market, where the median price rose 1.6 percent, to $288,200. The median is the price where half the homes sold for more and half for less.
And in stark contrast to the rest of the country, New Jersey was one of only three states where the volume of existing home sales actually rose in the first quarter compared with a year earlier.
Nationally, existing-home sales — which generally account for 85 percent of all home sales — dropped 22 percent from the first quarter of 2007, the NAR reported.
However, in New Jersey, the sales volume rose 4 percent. The other two states that posted increases in home sales for the quarter were Alaska and Illinois.
Kenneth Fears, an economist with the NAR, attributed the jump in existing home sales in New Jersey to a dramatic drop in 30-year fixed mortgage rates over the past six months. Fears said interest rates on conforming, 30-year, fixed-rate loans slipped to as low as 5.8 percent, from 6.8 percent, making home buying more affordable.
The low rates, coupled with sluggish sales the previous two quarters and New Jersey’s proximity to Manhattan, apparently led to a spike in demand during the most recent quarter.
“Part of what we’re seeing now is pent-up demand is getting released again,” Fears said. “Sales in New Jersey were very slow for awhile and it was hard to get financing and rates were higher. It has since loosened up.”
…
In New Jersey, existing home prices in the Newark-Union area, which includes Essex, Hunterdon, Morris, Sussex and Union counties, fell 3.4 percent, to $409,300. In the New York-northern New Jersey area, the median price fell 3.9 percent, to $445,400. And in the Edison area, which includes Middlesex, Monmouth, Ocean and Somerset counties, the median home price fell 0.6 percent, to $361,200.
But even in those parts of the state where prices fell, the declines were modest compared with most of the rest of the country.
The NAR blamed much of the record decline in home prices on liquidity problems that are making it difficult for homebuyers to secure financing for expensive homes in high-priced markets.
May 14th, 2008 at 6:59 am
#3 Why do people pay to listen to Greenspan? The only reason I can think of is to listen to him, then do the opposite, like watching Cramer and the rest of the bobble heads on CNBC.
May 14th, 2008 at 7:03 am
#5 Why do politicians and the Fed act concerned when housing starts dropping in price? Where was this concern during multiple years of 10%+ increases? higher housing prices = money unavailable for productive purposes in the economy. Lower prices = more money for investment and discretionary spending.
May 14th, 2008 at 7:14 am
From MarketWatch:
Mortgage applications rose 2.9% last week: MBA
Mortgage application filings rose a seasonally adjusted 2.9% last week compared to the prior week, driven by increased interest among homeowners seeking out refinancings, the Mortgage Bankers Association said on Wednesday.
Applications for the week ended May 9 were down 1.1% compared with the same week in 2007 on an unadjusted basis, according to MBA’s weekly survey.
Applications filed for mortgages to purchase homes dipped a seasonally adjusted 0.7% on a week-to-week basis, while refinancing applications rose 6.5% .
May 14th, 2008 at 7:21 am
Grim when I refresh I lose name & email in reply field. Are there still problems or is this on my end?
May 14th, 2008 at 7:24 am
Ahh, I understand it now. The current ratings measures weren’t flawed, they measured what they intended to measure. However, they didn’t measure what we thought they measured, for that we need a new measure.
In other news, MBIA and Ambac were upgraded by Moody’s on Wednesday to Triple-A Smiley Face, and Triple-A Gold Star, respectively.
Moody’s to unveil new ratings measures -FT
Credit ratings agency Moody’s Investors Service will on Wednesday unveil two new measures to help investors understand the risks in structured finance products, the Financial Times said.
Michel Madelain, the new chief operating officer of Moody’s, told the newspaper that the new indexes would show how rapidly a security could lose a top-notch rating if the economic climate changed.
May 14th, 2008 at 7:25 am
Grim when I refresh I lose name & email in reply field. Are there still problems or is this on my end?
Try clearing your browser cache and cookies. There is still a problem I’m trying to fix, when the name/email fields are blank, you should be pushed to a login screen, instead you get an error.
May 14th, 2008 at 7:28 am
From Reuters:
Tax rebate won’t stem U.S. recession: Merrill
The U.S. economy is in a recession and stimulus from a government tax rebate later this quarter will only temporarily stem a fall in consumer spending, a Merrill Lynch (MER.N: Quote, Profile, Research) economist said on Wednesday.
U.S. households will get tax rebates next month as part of a $152 billion stimulus package passed earlier this year, aimed at propping up an economy hit by the subprime mortgage crisis, losses at top banks and a credit crunch.
“I still maintain the business cycle is bigger than the government,” Merrill’s North American economist David Rosenberg said at a client conference in Singapore.
He said the world’s largest economy was already in recession as consumer spending and confidence had fallen and jobs losses were rising, with the number of hours worked having fallen sharply.
Describing housing as “the quintessential leading indicator,” Rosenberg, a long-time bear on the U.S. economy, said he expected home prices to fall another 15-20 percent before stabilizing.
May 14th, 2008 at 7:39 am
From MarketWatch:
Freddie Mac expects credit-related expenses to remain high
Freddie Mac expects to raise $5.5 bln in new core capital
Freddie Mac Q1 provision for credit losses $1.2 bln
Freddie Mac 1Q loss $151 mln, or 66 cents a share
May 14th, 2008 at 7:45 am
Hi ho
Hi ho
May 14th, 2008 at 7:59 am
NJP,
Do you ever sleep?
May 14th, 2008 at 8:08 am
Grim thanks ok now.
NJP Ditto 18!
CPI due out about 25 min, welcome to fantasy island.
May 14th, 2008 at 8:16 am
Someone to feel sorry for on this bright and sunny Weds morning. I posted the link so that you can see the pic for the full effect.
He has some work to do now to save up for UC Santa Cruz for young ‘Chase’. (I guess at least he didn’t name the kid “Countrywide or HSBC”.)
http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10509977
May 14th, 2008 at 8:23 am
Hi ho
Hi ho
Your motivation makes perfect sense to me now.
May 14th, 2008 at 8:31 am
Core up 0.1%
No inflation!
May 14th, 2008 at 8:31 am
Greenspan said it’s too hard to see a bubble yet now he knows when a bubble will end. Can’t they send that guy off to a home someplace?
May 14th, 2008 at 8:32 am
From MarketWatch:
U.S. April CPI up 0.2% as expected
U.S. April core CPI up 0.1% vs. 0.2% expected
U.S. CPI up 3.9% in past 12 months
U.S. CPI core up 2.3% in past 12 months
U.S. April CPI energy prices flat vs 1.9% gain in March
U.S. April CPI food prices up 0.9%. largest since 1990
May 14th, 2008 at 8:48 am
# 23 It sounds very Zen-like.
May 14th, 2008 at 9:01 am
# 8 “And in stark contrast to the rest of the country, New Jersey was one of only three states where the volume of existing home sales actually rose in the first quarter compared with a year earlier. ”
The cynic (realist?) in me does not see this as a sign of strength. When one takes these numbers and considers the number of underwater borrowers in NJ, I would not be surprised to find the volume reflecting people who refused to sell last year (because they faled to recognize the change in market conditions) and have now decided to bail to cut their losses. When volume is up and prices are flat, I do not see this as a sign of a “healthy” market; were it so, the volume would be pushing prices up at a considerable clip.
Any thoughts from anyone else?
May 14th, 2008 at 9:03 am
# 22 Indeed. It seems the price increases in food and energy are the economic equivalents of neutrinos: they exist but have little effect on day-to-day living.
May 14th, 2008 at 9:04 am
# 2 Against my expectations of what might fall aout of Trenton, this actually makes sense. Conswquently, I suspect this proposal will never fly.
May 14th, 2008 at 9:07 am
Grim (24): Love those fantasy numbers. Look for the Fed to lower the rates in June/July. They have the cooked numbers to slash the FFR to 1.0% by the end of the year.
Oil to $150 is certain by the end of the summer. $200 oil is around the corner for Christmas.
We are F***ed!
May 14th, 2008 at 9:07 am
Take a look at this from the FBI relating to mortgage fraud. The photos are amazing.
http://www.fbi.gov/publications/fraud/mortgage_fraud07.htm#http://www.fbi.gov/publications/fraud/mortgage_fraud07.htm
May 14th, 2008 at 9:08 am
http://www.fbi.gov/publications/fraud/images/interior1.jpg
The above photos are from condos that were involved in a mortgage fraud. The appraisal described “recently renovated condominiums” to include Brazilian hardwood, granite countertops, and a value of $275,000.
May 14th, 2008 at 9:09 am
Grim,
# 30 in mod. It has a link to an FBI report.
May 14th, 2008 at 9:10 am
# 29 Does that make the stimulus check that some of you are getting foreplay?
May 14th, 2008 at 9:10 am
#26 - I don’t believe the number of sales increased in NJ.
NJMLS, GSMLS and Monmouth/Ocean MLS show steep declines over last year. In addition, the NJ areas that are covered by Prudential Fox and Roach (Philly region) were showing large YOY declines as well.
Where did home sales increase so dramatically in NJ, as to overcome the steep declines seen across the regions I actively monitor?
Sorry, but I don’t buy these numbers, call me a conspiracy theorist if you want. They don’t correlate at all with other published sources.
May 14th, 2008 at 9:11 am
WYOMISSING, Pa., May 13, 2008 /PRNewswire-FirstCall via COMTEX/ — Sovereign Bank (”Bank”), a federal savings bank and a subsidiary of Sovereign Bancorp, Inc. (SOV) announced today that it has priced $500 million of fixed rate subordinated notes. The notes will have a coupon of 8.75% and will mature as of May 30, 2018.
So all the banks and AIG etc. are selling bonds in the mid 8’s yet inflation is tame.
Even more interesting the WSJ was saying that bond sales and pref sales for 8% coupons have continuing demand as the customers who bought them each year have 8% of their principal thrown off as interest payments and they have to keep reinvesting it. Crazy stuff, I bought a short term Soveign secondary market bond last week with a 9% YTM. These are early 90’s post junk bond meltdown yields. Yet they are supposedly investment grade banks and insurance companies that are regulated. Freeging AIG and Citi are paying junk bond rates. Crazy stuff. Even crazier citi managed to create equity like structure in its prepetual pref so that 8.3 coupon is taxed at the 15%. The few people I know with money are locking in and with commodities on a tear along with bonds I don’t see why people would want to rush right back into real estate as an investment.
May 14th, 2008 at 9:13 am
“Sale prices of homes stabilizing at Shore”
So much for the NY commuting town theory. Prices are are going down around NYC and going up down the shore.
May 14th, 2008 at 9:14 am
Shore Guy (32): Forplay is considered fun, we are in for some serious pain…
I am now convinced that these checks were sent out just to pay for energy.
May 14th, 2008 at 9:15 am
JP Morgan to cut 4000 of their own employees, away from the Bear take over.
http://www.reuters.com/article/ousiv/idUSN1341503420080514
May 14th, 2008 at 9:18 am
So much for the NY commuting town theory. Prices are are going down around NYC and going up down the shore.
It’s all in the spin, John.
SFH Median Home Price - Edison MSA (Monmouth, Ocean, Somerset, Middlesex)
2005 - $375,000
2006 - $387,700
2007 - $380,300
2008(q1) - $361,200
Current median home price is currently 3.7% under the 2005 median home price.
Of course, nobody was talking about this yesterday.
May 14th, 2008 at 9:19 am
# 37 What was the advice Queen Victoria (I believe it was) received about her wedding night? Something to the effect of “Lie back and think of England.”
I assume she got kissed during the process, I trust we will not.
May 14th, 2008 at 9:20 am
3b Says:
May 14th, 2008 at 9:15 am
JP Morgan to cut 4000 of their own employees, away from the Bear take over.
3b: all in South Dakota in their credit card operations and hot dog vendors at Chase Field in AZ.
May 14th, 2008 at 9:20 am
Nor do I expect the media to discuss it either.
The fact of the matter is, according to the NAR, the median single family home price in Monmouth, Ocean, Middlesex, and Somerset is now sitting almost 4% *UNDER* 2005 prices, and almost 7% *UNDER* the peak price set in 2006.
May 14th, 2008 at 9:25 am
# 42 AND, because folks at the far upper reaches of the economic scale (far above my pay grade) still have and will continue to have vast quantities of cash available for second-, third-, and fourth-home purchases in places like Bay Head, Mantaloking, Spring Lake, Sea Girt, Loveladies, Ship Bottom, etc., the numbers for the Shore will remain skewed, and any decline in prices will appear smaller than it actually is.
May 14th, 2008 at 9:26 am
http://news.bbc.co.uk/1/hi/sci/tech/7399226.stm
The new frontier for RE development? Get in on the ground floor, just bring long underwear.
May 14th, 2008 at 9:29 am
#41 Chgo: And from their Fixed Income desk in Manhattan, Manhattan Beach that is.
May 14th, 2008 at 9:30 am
#42 grim: What about Bergen
May 14th, 2008 at 9:30 am
#43 - Ship Bottom? How did that make the list?
May 14th, 2008 at 9:34 am
Oceanfront is oceanfront, bayfront too.
May 14th, 2008 at 9:35 am
According to the NAR, the median sales price of existing single-family homes in the New York metropolitan area, which includes Bergen and Passaic counties, was $491,900 in the first quarter — close to the $495,200 level of 2005.
In New Jersey, the housing market continued to fare better than the nation as a whole.
And in stark contrast to the rest of the country, New Jersey was one of only three states where the volume of existing home sales actually rose in the first quarter compared with a year earlier.
So, I’m to believe this is skewed, twisted and biased, yes?
May 14th, 2008 at 9:35 am
Are foreclosures and reposessions are counted as sales???
I believe so…
Which kind of gives you an Idea of whats coming to NJ. will we end up like CA - 36% of ALL home sales are REO’s???
May 14th, 2008 at 9:36 am
#42
Bergen is in an MSA with a very broad definition.
New York-Wayne-White Plains
Kings County, NY
Queens County, NY
New York County, NY
Bronx County, NY
Westchester County, NY
Bergen County, NJ
Hudson County, NJ
Passaic County, NJ
Richmond County, NY
Rockland County, NY
Putnam County, NY
2005 - $495,200
2006 - $539,400
2007 - $540,300
2008(q1) - $491,900
Current median home price is 9% under 2007 as well as approximately 0.6% under 2005 median price.
May 14th, 2008 at 9:37 am
Are foreclosures and reposessions are counted as sales???
Foreclosures are not.
However, if REO properties are marketed and sold through the MLS, they are.
May 14th, 2008 at 9:38 am
grim Says:
May 14th, 2008 at 9:10 am
#26 - I don’t believe the number of sales increased in NJ.
NJMLS, GSMLS and Monmouth/Ocean MLS show steep declines over last year. In addition, the NJ areas that are covered by Prudential Fox and Roach (Philly region) were showing large YOY declines as well.
Where did home sales increase so dramatically in NJ, as to overcome the steep declines seen across the regions I actively monitor?
Sorry, but I don’t buy these numbers, call me a conspiracy theorist if you want. They don’t correlate at all with other published sources.
See Post #50.
May 14th, 2008 at 9:38 am
So when banks buy a home through auction it is not counted as a sale?
May 14th, 2008 at 9:39 am
Through the looking glass we go nothing to see here.
http://news.yahoo.com/s/ap/20080514/ap_on_bi_go_ec_fi/economy
WASHINGTON - Inflation pressures eased a bit in April despite the biggest jump in food prices in 18 years.
The Labor Department reported Wednesday that consumer prices edged up 0.2 percent last month, compared to a 0.3 percent rise in March.
The lower inflation reflected a flat reading for energy, which helped offset a 0.9 percent jump in food costs as prices climbed for many basic items, from bread and milk to coffee and fresh fruits.
The unchanged reading for energy reflected a big 4.8 percent jump in natural gas prices, offset by a 2 percent decline in gasoline costs.
The reported drop in gasoline prices reflected the government’s accounting process, which discounts expected seasonal price changes.
Since gasoline prices normally rise significantly in April, the 5.6 percent rise in prices for the month turned into a 2 percent drop after the government adjusted for normal seasonal changes. That was little comfort for motorists now paying record prices at the pump, which are nearing $4 per gallon.
May 14th, 2008 at 9:39 am
Speaking of oceanfront. Has anyone seen any erosion/accretion data for the NJ coast? Mrs. Shore and I had been considering picking up an oceanfront lot or house in NC, and got poking around the state’s erosion/accretion database and decided there was no way in Hades we would sink a single dollar there. The minimum beach loss seems to be 2′/yr and some sections it is 15′. The state of NC now requires that structures be built no closer to the water than 60x the annual erosion rate.
I get the sense we are in better shape than that, but it makes one wonder.
May 14th, 2008 at 9:40 am
Al,
The NAR data is a survey of MLS sold homes. New homes not sold through the MLS are not included, foreclosures at auction are not included, mom selling her house to her son is not included, FSBO are not included, etc etc.
The survey is of MLS listed sales.
May 14th, 2008 at 9:41 am
The “BRICs” (and Mortar) of the New Global Economy
In the past quarter century, the center of wealth creation has steadily moved away from the United States and towards new foreign competitors, especially the so-called “BRIC” countries of Brazil, Russia, India and China, where economic growth rates have greatly eclipsed the U.S. In recent years, this economic might has translated into much higher returns on their respective stock markets. These movements are creating a wave of real wealth that wise American investors cannot afford to miss.
In the mid 1970’s, a transformation began in which the driving force of the American economy shifted from ‘producers’ to ‘consumers’. Today, as measured by the GDP, consumption accounts for some 72 percent of the American economy. It is no wonder then, that as economics is so synonymous with spending, that the recently passed “stimulus package” is skewed heavily (90%) in favor of the consumer (where the votes are) at the expense of producers.
But after a generation of consuming more than it has produced, America has dissipated vast amounts of its wealth.
Unwilling to allow the citizenry to confront the reduced living standards that such dissipation requires, successive American governments have instead produced consumer booms in technology and real estate. Inflated through a combination of deficit spending, borrowing and massive depreciation of the U.S. dollar, the bubbles created by these policies have left future generations of Americans saddled with vast debts and an anemic currency.
But while America has lost much of its wealth, the rest of the world has gained. Since the late 1980’s, a wave of economic enterprise has swept across the world. Under the leadership of the Reagan-Thatcher-Gorbachev triumvirate, communism melted, opening the world to free trade, and brought some 2 billion new consumers to the market. It also brought some 2 billion hard-working, low cost producers into direct competition with the developed West.
Today, Western consumers not only buy their clothes, toys and sneakers from BRIC factory workers, but they are also likely to use service workers in those countries to manage help-desk call centers, prepare tax returns and read X-rays. As a result, growth rates in BRIC countries skyrocketed and corporate profits and stock prices followed suit, far outstripping the average performance of U.S. stock markets.
The benefits of the great, new world consumer super boom have flowed mainly, as should be expected, to ‘producer’ nations. As an example, the S&P 500 Average Index rose by some 14 percent gross in 2006 (Incredibly, some 80 percent of mutual fund managers failed to equal even this return). Further, when deductions were made for management fees, transaction costs, 3 percent inflation and the depreciation of the U.S. dollar, many American investors actually experienced a ‘real’ net loss in that year. By contrast, the stock markets of BRIC offered far superior yields in appreciating currencies with Brazil up 33%, India 47%, Russia 71% and China 131%!
One major impact of the increased manufacturing power of the BRIC nations, and even smaller countries like Vietnam, is a greatly increased thirst for raw materials. As formerly impoverished populations gain wealth, demand for higher quality food impinges upon the established demand of the ‘mature’ markets. These two factors have greatly benefitted nations such as Canada, Australia and New Zealand that provide raw materials, energy and food.
As a result, perhaps a more appropriate and meaningful pneumonic device for international investors would be BRIC JACS (Brazil, Russia, India, China, Japan, Australia, Canada and the Smaller nations, such as Singapore, Vietnam and New Zealand).
American investors face a difficult situation. While the American economy has slowed almost to recession and a property debacle and massive de-leveraging still threaten, the economies around the world are still booming. The solution is clear; Americans must “Go abroad”, if not with themselves than at least with their wallets. Investment portfolios should be constructed not just of BRICS, but also of the JACS which largely hold them together.. macro-economic mortar so to speak.
The true dimensions of the changes heralded by the end of the Cold War are only now becoming clear. The world looks headed for a gigantic economic boom. Massive economic prizes will go to the ‘producing’ economies. Economies that produce less than they consume can expect some economic and political shocks. Investors should beware and construct their portfolios accordingly.
May 14th, 2008 at 9:41 am
Actually when banks buy a home at auction it should not be counted as a sale as it is an artifical price, sometimes one dollar. NAR wants when a bank even if they use a realtor and MLSI and hold open houses and sells their REO property to the a member of the general public not to count. That is just crazy. Yea they go for cheaper the bank is making a business decision to sell quicker to avoid carrying costs and get the cash back even if it is 70 cents on the dollar so they can get it to work on a performing loan or an investment. People hold on to a price point that has nothing to do with the market.
May 14th, 2008 at 9:42 am
# 55 “The Labor Department reported Wednesday that consumer prices edged up 0.2 percent last month, compared to a 0.3 percent rise in March.”
Playing Karl Rove: Inflation declines 33%. Proof that Administration economic policies have the economy on the right track.
May 14th, 2008 at 9:43 am
So let me get this straight - gasoline rose 3.6% but it actually dropped 2%???
I am really getting mad -and what pissing me off the most - most people are so ignorant and when you are trying to explain it to them the moment you say “Percent” - you lost them.
Well I guess people get what they deserve. I see in 5-6 years average person will be spending 30-40% of their income on food.
May 14th, 2008 at 9:44 am
http://www.bloomberg.com/apps/news?pid=20601012&sid=alrs2tzxEhT0&refer=commodities
$1000 cubic ton of Rice????
May 14th, 2008 at 9:46 am
grim Says:
May 14th, 2008 at 9:40 am
Al,
The NAR data is a survey of MLS sold homes. New homes not sold through the MLS are not included, foreclosures at auction are not included, mom selling her house to her son is not included, FSBO are not included, etc etc.
The survey is of MLS listed sales.
han I really do not know how did the sales rose. But I guess NJ is different and everything is possible here due to proximity to Manhattan.
May 14th, 2008 at 9:47 am
#51 grim; Thanks.
May 14th, 2008 at 9:47 am
# 62
It is a great deal, but just try to fit it in the pantry.
May 14th, 2008 at 9:48 am
Ready to buy in outerspace? ha ha ha
——————-
MEDIA ADVISORY : M08-089 NASA to Announce Success of Long Galactic Hunt WASHINGTON — NASA has scheduled a media teleconference Wednesday, May 14, at 1 p.m. EDT, to announce the discovery of an object in our Galaxy astronomers have been hunting for more than 50 years. This finding was made by combining data from NASA’s Chandra X-ray Observatory with ground-based observations.
To participate in the teleconference, reporters must contact the Chandra Press Office at 617-496-7998 or e-mail mwatzke@cfa.harvard.edu. Live audio of the teleconference will be streamed online at:
-http://www.nasa.gov/newsaudio
A video file about the discovery will air on NASA Television on May 14. NASA TV is carried on an MPEG-2 digital signal accessed via satellite AMC-6, at 72 degrees west longitude, transponder 17C, 4040 MHz, vertical polarization. NASA TV is available in Alaska and Hawaii on AMC-7 at 137 degrees west longitude, transponder 18C, at 4060 MHz, horizontal polarization.
For information about NASA’s Chandra X-Ray Observatory on the Web, visit:
-http://www.nasa.gov/chandra
May 14th, 2008 at 9:50 am
#49 gary: It is telling the story they want to tell, not the whole story.
I am surprised that after all that has gone on you would not consider that numbers/information can be skewed, twisted and biased.
May 14th, 2008 at 9:51 am
I really do not know how did the sales rose. But I guess NJ is different and everything is possible here due to proximity to Manhattan.
The NAR reported numbers are incorrect.
There is no way NJ sales are up 4% from Q1 2007, the data has got to be wrong.
I’m going on record with this statement.
May 14th, 2008 at 9:54 am
Rice at Costco right now is 19.99 for 50lb bag - actually less than 1$/kilo!!! (it is about 881.58$/1000 kilos’ or 12 cents profit from each kilo’s!!!
I am going to buy 10000000000 kilo’s from Costco, sell them for 1003$/metric ton, and make 120000000$!!!.
After that I can afford a house in NJ.
May 14th, 2008 at 9:56 am
Here is a comp killer (I believe)in River Edge. This house was purchased in 2005 for I believe 500k.
They added a new kitchen. It has been in and out of forclosure (they keep getting it postponed apparently).
Although the realtor web site is still listing it at 489K, my daily review of the njmls site shows that it was dropped to 449K this morning.
http://www.realtor.com/search/listingdetail.aspx?zp=07661&typ=1&sid=de3c06d447f944039258859287f02be1&pg=3&lid=1093871470&lsn=25&srcnt=57#Detail
May 14th, 2008 at 10:00 am
3b [66],
When I see the acronym “NAR”, I immediately start chuckling, so I don’t trust anything they say. However, after all that has gone on you would think there would be greater price drops and a lot more pain. It’s happening in many parts of the country but it hasn’t really happened here.
May 14th, 2008 at 10:01 am
I have aquestion - what can people tell me about Springfield ??
Anything?
What it is like, how are the schools, taxes, and general stuff - chrime and such.
May 14th, 2008 at 10:02 am
Speaking of crime, did anyone hear about the member of Latin Kings who was arrested for selling a gun? Apparently he lived in Prestigious River Edge! I found that funny
May 14th, 2008 at 10:03 am
Whitney Whips Wall Street
There are two things Wall Street potentates don’t want to hear: (1) “Sir/Madam, there are some people from the SEC here to see you” and (2) “Did you see Meredith Whitney’s latest note?” Yes, it seems that the Oppenheimer (OPY) equity analyst, who has bedeviled big financial firms such as Citigroup (C) (BusinessWeek.com, 11/26/07) with her bearish calls in recent months, has struck again. In a May 13 note titled “What Goes Up Must Come Down,” Whitney lowered her earnings-per-share estimates on Lehman Brothers (LEH), Merrill Lynch (MER), Goldman Sachs (GS), and Morgan Stanley (MS). The cuts were deep: Whitney reduced estimates by an average of 41% for the 2008 second quarter, 48% for fiscal 2008, and 20% for fiscal 2009.
May 14th, 2008 at 10:04 am
Is there a way to get the NAR data on the MSA medians earlier than on their website?
May 14th, 2008 at 10:04 am
# 72 Crime pays?
May 14th, 2008 at 10:05 am
Well the good news is that old Al Greenspan has called the bottom in early 2009. So all we have to do is keep our powder dry and buy a mcmansion in Feb 09 and hold off selling our starter cape till peak April 2009 selling season so we can buy low and sell high all within the same two months. That old Al is a crafty guy. Actually Feb 2009 might not be a bad time to buy a dollar time share or a one or two bedroom coop/condo in hamptons or shore at a distress sale. Those you can buy right from the bank cash. Betting the farm on a real property contingent on financing and sale of your first home will need at least six to 12 months past when the bottom occurs. At bottom it ain’t like banks will be running to give you money or their will buyers for your current home That will be when fear is the highest.
May 14th, 2008 at 10:05 am
#75: yes it does, I guess gang members arent only confined to less desirable towns. I wonder what the “blue ribbon school” folks think?
May 14th, 2008 at 10:06 am
#70 gary: after all that has gone on you would think there would be greater price drops and a lot more pain.
True, you have got me there. And I myself wrestle with that from time to time.
However, since it has not happened on a larger scale here YET, it makes me all the more convinced that it will be even uglier and more painful here than it would have been.
May 14th, 2008 at 10:06 am
Re 73 never trust a women with two first names.
May 14th, 2008 at 10:07 am
Shore guy 26, grim 34,
I was surprised by the strength of the 1Q08 existing home sales number, but not that surprised. This metric includes single-family houses, condos and co-ops, so it captures the strong activity in Hudson County (lots of condos and co-ops there compared to the rest of the state) that single-family-only metrics ignore.
Although the 3Q07 and 4Q07 figures reflected a sharp drop from the peak sales volume activity in 2003 and 2004, the sales volume in this housing slowdown is still above the low points in 1999 and 2000.
I wouldn’t dismiss this better-than-expected number.
May 14th, 2008 at 10:08 am
Grim,
I sent you a chart of New Jersey home sales going back to 1999. Please post when you get a chance.
May 14th, 2008 at 10:08 am
The more the spin meisters twist the data, the more I feel like i am living in the world of Winston Smith, where nothing the governemnt says can be trusted.
May 14th, 2008 at 10:09 am
With the average home price dropping from $212,600 to $196,300, or $16,300 it should also be noted that on a mortgage of 196K w/ 10% down and a rate of 6.2%, interest, savings over a 30 year term is $17,675. A present value of that number is $9,636.
(Why is 9,636 so large? Don’t forget that as a loan amortizes the bulk of interest is paid earlier and declines over time.)
So all in, assuming the down payment was put into a 3% CD, a buyer would have saved a net value of $26,625 or 12.5% of the total investment (excluding closing costs).
Be weary of anyone who talks to only the long term value of real-estate.
May 14th, 2008 at 10:11 am
#72 tbw: Yes it was in Saturday’s Record. Apparently he ws 28, and ived on Taft Rd. However, not to sound racist, I thought the Latin Kings were a Hispanic gang, the name printed in the paper, did not appear to be Hispanic.
In addition to the guy arrested, there was also a River Edge youth arrested with him, but released into the custody of his parents.
May 14th, 2008 at 10:11 am
Gotta leave for work but in the interest of how a house progressed along the inflated price continuum…here is what happened with my own home in California..(anecdotal from neighborhood sales and reports from my realtor.)
Notice - about 1% a month (12% for the year) - then about 11/2% for 2005 - 2% for 2006 (that’s 24% for the year!)….then down she goes….)All stated as estimated values…
purchased 1999 $115,000
2000 $128,000
2001 $160,000
2002 $180,000
2003 $204,000
2004 $226,000
2005 $268,000 - here we go!
2006 $332,000 (house next door literally sold for that!)
Well, it all goes down from there. My house is currently valued (according to comps in the neighborhood) at about $225,000. - back to the 2004 price…
If that helps - that is exactly what happened to me…Maybe the percentage of run-ups wasn’t as severe for you - If you saw 5% per year instead of 12% through 2004 or if your 2005/2006 run-ups weren’t the 18% and 24% we saw…you could adjust the stats accordingly…
May 14th, 2008 at 10:12 am
I was surprised by the strength of the 1Q08 existing home sales number, but not that surprised. This metric includes single-family houses, condos and co-ops, so it captures the strong activity in Hudson County (lots of condos and co-ops there compared to the rest of the state) that single-family-only metrics ignore.
Otteau Report 2008.Q1 - Includes Condos/Coops
Hudson County - Sales Per Month
2007.Q1 - 344.3
2008.Q1 - 258.3
% Change -25.0%
May 14th, 2008 at 10:13 am
# 80 You may be right that the numbers cannot be dismissed out of hand. Nevertheless, I remain wary, given the pressure on developers to discount and move units, homeowners pushed into short sales, etc.
I guess I am back to the position taken by Reagan some years ago: Доверяй, но проверяй (doveryai, no proveryai). It will be interesting to see some granular analysis of the data.
May 14th, 2008 at 10:14 am
Oh by the way..never even considered selling - I love my home - exactly the right size and commute for me (1 1/2 miles to work - right next to shopping etc. as I will retire in the next few years - 1100 sq. ft - perfect for me…
May 14th, 2008 at 10:15 am
I’ve asked the NAR for the underlying raw survey data for NJ.
If they agree to provide it, it will cost me $75.
May 14th, 2008 at 10:16 am
“grim Says:
May 14th, 2008 at 9:18 am
SFH Median Home Price - Edison MSA (Monmouth, Ocean, Somerset, Middlesex)
2005 - $375,000
2006 - $387,700
2007 - $380,300
2008(q1) - $361,200
Current median home price is currently 3.7% under the 2005 median home price.
Of course, nobody was talking about this yesterday.”
Grim,
The reason why nobody was talking about it is because these numbers aren’t seasonably adjusted. Prices are always a lot lower in the 1Q and 4Q.
Comparing the 1Q08 figure to full-year figures from previous years is the wrong way to look at it. The right way to look at it is to compare 1Q08 to 1Qs in earlier years.
By the way, the sales volume #s are seasonally adjusted.
May 14th, 2008 at 10:18 am
Shore guy, grim,
I agree that the #s should be verified. However, past figures seem reasonable. Although the 1999-2007 figures are choppy, the general trend makes sense.
May 14th, 2008 at 10:18 am
Here is the data from the most recent Otteau Report:
County Q1.2007 Q1.2008 % change
Atlantic 318.7 237.3 -25.5%
Bergen 807.3 542.7 -32.8%
Camden 534.3 352 -34.1%
Cape May 196.3 170.3 -13.2%
Cumberland 42.3 31 -26.7%
Essex 426.7 330.3 -22.6%
Gloucester 276 204.7 -25.8%
Hudson 344.3 258.3 -25.0%
Hunterdon 120.3 111.3 -7.5%
Mercer 290.3 217.3 -25.1%
Middlesex 706.7 523 -26.0%
Monmouth 741.3 573 -22.7%
Morris 480.7 364.7 -24.1%
Ocean 751.3 562 -25.2%
Passaic 263.3 213.7 -18.8%
Salem 51 31 -39.2%
Somerset 362.3 248.3 -31.5%
Sussex 167.7 125 -25.5%
Union 365.7 270.7 -26.0%
Warren 108.3 76.7 -29.2%
May 14th, 2008 at 10:20 am
# 89 $75 and your head on a pike, I believe is what the small print said.
May 14th, 2008 at 10:20 am
Shore Guy Says:
May 14th, 2008 at 10:13 am
# 80 You may be right that the numbers cannot be dismissed out of hand. Nevertheless, I remain wary, given the pressure on developers to discount and move units, homeowners pushed into short sales, etc.
I guess I am back to the position taken by Reagan some years ago: Доверяй, но проверяй (doveryai, no proveryai). It will be interesting to see some granular analysis of the data.
Правильной дорогой идете, Товарищ!!!
May 14th, 2008 at 10:21 am
3b [78],
Which leads me to believe that the worst has already happened and what we’ll have is flat prices for the next couple of years. If we don’t see acceleration in price declines by the latter part of this year, then we’ll know the bottom is near. To say we’re going to get 30% off of peak in this area is a dream.
May 14th, 2008 at 10:22 am
GSMLS - First Quarter Sales
Bergen,Essex,Hudson,Morris,Passaic,Somerset,Sussex,Union,Warren Counties
SFH, Condo, Coop
2003 - 5619
2004 - 5862
2005 - 5787
2006 - 5573
2007 - 5316
2008 - 3718
Down 30% YOY
May 14th, 2008 at 10:25 am
18 rich
“Do you ever sleep?”
Rarely.
May 14th, 2008 at 10:26 am
“CPI due out about 25 min, welcome to fantasy island.”
Da plane!
May 14th, 2008 at 10:27 am
#95 gary: well I disagree that the worst has already happened. I think we are waiting for the next shoe to drop.
But I do belive that the next 6 to 12 months will be key as far as declines. I lived through the last houisng bust, and as I have been saying, I see no reason/s that would indicate that thie one will be lesss severe.
In fact all indicators point to the fact that this one should be more severe than the last one.
And yes I am in the BC Bob camo 30% off peak. But of course I will still bring the red beer cups.
May 14th, 2008 at 10:27 am
grim,
I hope you get that raw data because I want to know how the f*ck sales are apparently falling off a cliff while prices appear to stay elevated.
May 14th, 2008 at 10:28 am
3b,
I lived through the last one, also. And I’m sorry, but 30% ain’t going to happen here. Regardless, let the beer flow. :)
May 14th, 2008 at 10:29 am
I generally prefer “горожанин” to “Товарищ.” But given the current state of things, “Товарищ” may be more appropriate.
May 14th, 2008 at 10:29 am
NJMLS - SFH, Condo, Coop
Closed Sales - Q1
2007 - 2718
2008 - 2002
Down 26%
Contract Sales - Q1
2007 - 3771
2008 - 2784
Down 26%
May 14th, 2008 at 10:30 am
Nearly seven in 10 Americans are worried about maintaining their standard of living, as concern has spiked higher in just the past five months, according to a new Washington Post-ABC News poll. Soaring consumer prices are a major challenge, with many people struggling under the weight of the rising costs of fuel, food and health care.
http://www.washingtonpost.com/wp-dyn/content/article/2008/05/13/AR2008051303120.html
no worries here. CPI is contained much like the subprime the feds say.
May 14th, 2008 at 10:30 am
28 shore
“Against my expectations of what might fall aout of Trenton, this actually makes sense. Conswquently, I suspect this proposal will never fly.”
Righto. I guess I have to revise my odds of it happening slightly upward from 0%, however.
May 14th, 2008 at 10:32 am
101… gary I think there will be occassional spikes in sales and prices when pent-up demand explodes.
May 14th, 2008 at 10:33 am
34 grim
“I don’t believe the number of sales increased in NJ.”
I had assumed it was an unblinking lie.
I read that post twice to see if I’d missed where the number came from; then I realized: Yun’s a$$.
May 14th, 2008 at 10:34 am
# 104 If core inflation stays flat, but food and energy go up 500%,, is there anyone who could, with a straight face, say inflatio is flat?
May 14th, 2008 at 10:34 am
I had assumed it was an unblinking lie.
We need to know which NJ-based MLS systems reported to the NAR, and what they reported.
NAR methodology surveys roughly 30-40% of existing home sales, which means approximately 1/3 of NJMLS systems should be reporting.
May 14th, 2008 at 10:36 am
#101 gary; The last real estate down turn?
May 14th, 2008 at 10:36 am
“inflatio” was a typo but I think it may be an appropriate new name for the phenomenon
as it sucks dry our wallets.
May 14th, 2008 at 10:37 am
can someone let me know when and how much the property below was last purchased? again, thank you much!
==============================================
18 Fairview
MLS# 2725002
Listed: 6/19/2007
OLP: $699,999
Reduced to $644,900 on 7/20/2007
Reduced to $574,999 on 9/25/2007
Expired
DOM: 197
MLS# 2819063 - Short Sale (Subj. to bank approval)
Listed: 5/8/2008
OLP: $480,000
Active
Was also listed for rent under MLS# 2743455, listed on 10/26/2007 for $2k/mo. Was on for 189 days.
May 14th, 2008 at 10:37 am
42 grim
“Nor do I expect the media to discuss it either.”
heh!
heheheheh!
HAHAHAHAHAHAHAHAHAHAHA!
May 14th, 2008 at 10:38 am
Shore Guy Says:
May 14th, 2008 at 10:29 am
I generally prefer “горожанин” to “Товарищ.” But given the current state of things, “Товарищ” may be more appropriate.
Just a little correction, I believe you wanted to say - “citizen” over “comrade”.
“горожанин” - means a person who live in town as opposed to a village.
“гражданин” - means citizen.
At this point Russian lesson is closed, please send a payment for a lesson to Grim’s donation page.
May 14th, 2008 at 10:39 am
# 105 “Righto. I guess I have to revise my odds of it happening slightly upward from 0%, however.”
Heck yea. I would tripple that estimate ;-)
May 14th, 2008 at 10:42 am
# 114 Indeed. It has not been since the tanks were rushing into Latvia that I had to use any Russian. Clearly, I am rusty.
May 14th, 2008 at 10:43 am
Al,
One last Russian shot:
Should it now be “All power to the bloggers!”?
May 14th, 2008 at 10:43 am
59 john
“Yea they go for cheaper the bank is making a business decision to sell quicker to avoid carrying costs and get the cash back even if it is 70 cents on the dollar so they can get it to work on a performing loan or an investment. ”
The fact is that if buyers have that purchase as an option, then Joe Seller down the block nevertheless has competition at a lower price.
They can say it “doesn’t count” for comps ’til they’re blue in the face, but Joe Seller is still f*cked.
May 14th, 2008 at 10:44 am
3b,
Yes, the last RE down turn. I didn’t own then but my brother did. He bought a house in ‘82 for 35K, sold in the late 80’s for 165K. Complete madness. Then, the bottom sort of dropped out. It isn’t happening here like it did then.
May 14th, 2008 at 10:46 am
119# Gary
In your opinion, why would it be any different this time? What’s the factor that changes things this time around?
May 14th, 2008 at 10:48 am
I have posted similar examples for last few days. I think in exurbs the cookie is crumbling very quickly. Here is one more example,
MLS 2444779 in Washington Boro
Currently asking $329,900
Once again, Property Taxes: $11,933
It’s brand new house (built 2003) with 0.4 acre lot, now selling for just $329K? I think in 2005 these houses were going for $450K or so.
http://new.gsmls.com/public/getMediaReport.do?mlsNum=2444779&imageCount=10
Grim Address please. Also it would be good to see comps as well.
May 14th, 2008 at 10:48 am
Of course home prices look good in BC, ballpark I saw at least 40% of listing expire unsold. Only people who are getting somewhere near their price sell. The rest keep re-listing or letting it expire.
On wall street your can’t always look at the prices of securities sold. Their is something called depth of market. For instance if there are tons of unexecuted buy orders sitting at below market price and hardly any unexecuted sells sitting above market prices it tells you that current stock price is going down. A simlar stock where people are buying at market price and unexecuted sells are sitting above market price tells you stock is headed up.
In re unexcuted purchase orders are coming in below asking and people are willing to sell if anyone is even close to asking. That is a market where seller are just trying to get out and the majority of buyers are waiting for lower prices. It is irrelevant that April prices look good. The market is screaming it is going down.
May 14th, 2008 at 10:50 am
Gary,
It did drop back in early 90s, but not over night like you imagine it did.
May 14th, 2008 at 10:50 am
70 gary
“When I see the acronym “NAR”, I immediately start chuckling”
I think we need to turn it into a bad word, sort of on the order of what was done to santorum (look it up, ’cause this is a family site and I ain’t repeatin’ it here).
I’m thinking maybe a synonym for fool. As in “and he forgot he’d opened the V-8 can before he shook it. What a NAR!”
May 14th, 2008 at 10:51 am
71 al
“what can people tell me about Springfield ??”
It’s best feature? Easy access to Brigadoon, of course.
May 14th, 2008 at 10:53 am
SG
2444779 - 86 Alvin Sloan
May 14th, 2008 at 10:53 am
The Unemployment numbers in the 90s were horrendous. Right now I see nothing like that. We can’t hire decent IT people for less than $100K, and even BSC Employees are getting double pay till august.
May 14th, 2008 at 10:56 am
# 121
Lets see, $329M with 20% dp leaves a mortgage of 263,200. At 6% over 30 years gives us a payment of $1,569. At just 4% increase in taxes each year, this homeowner will be paying as much in taxes each month as he/she is paying for the mortgage.
Such a deal.
May 14th, 2008 at 10:56 am
It did drop back in early 90s, but not over night like you imagine it did.
Long, slow grind, just like today. From the top, ‘87-88 to the bottom, ‘93-95.
I was duped into thinking that the speed of news today would somehow cause the cycle to play out faster. It is simply not the case.
May 14th, 2008 at 10:57 am
# 125, AND you can be a neighbor of Cramer.
May 14th, 2008 at 10:57 am
nnj,
Use a real email address, please.
May 14th, 2008 at 10:58 am
86 grim
sure, but otteau failed to take into account the absolutely massive increase in sales in Cherry Hill.
May 14th, 2008 at 10:58 am
# 104 If core inflation stays flat, but food and energy go up 500%,, is there anyone who could, with a straight face, say inflatio is flat?
Yes. It’s a long list.
Because the central banks around the world are printing their currecy to buy and prop the dollar they are reporting double and triple inflation numbers that we are reporting.
In addition, the nations who have their currency pegged to the Dollar are really struggling with inflation.
But inflation here at home is contained. It’s a miracle. It’s gods will.
May 14th, 2008 at 10:58 am
Cramer lives on Hillcrest in Summit.
May 14th, 2008 at 10:59 am
I though Cramer lived in SH.
May 14th, 2008 at 11:02 am
In the final analysis, inflatio is your friend. Inflatio will reduce the size of our debts. Inflatio will make you smile. It may suck dry your savings, but, ask Mugabe, inflatio is good.
I think I will go down and get some inflatio on main street.
May 14th, 2008 at 11:02 am
Ok, he does live in Summit. I just checked.
May 14th, 2008 at 11:03 am
# 133 “It’s gods will.”
So much for Israel, clearly we are the chosen people.
May 14th, 2008 at 11:03 am
What, you think I was fibbing?
May 14th, 2008 at 11:06 am
89 grim
“If they agree to provide it, it will cost me $75.”
most of the way there. This I want to see.
May 14th, 2008 at 11:06 am
Knowing which celebs live where is important when peddling homes, especially if the buyer is vain. “Jim Cramer lives a few blocks over” is heard as “If you buy this house, you are as rich and smart as Jim Cramer”.
Bam, sale.
I tried to get Gary to buy a house in Upper Montclair because Steven Colbert lived about 6 houses away.
He threw a lamp at me.
May 14th, 2008 at 11:08 am
#119 gary: Well I lived through the one in the late 80′ early 90’s newly married, bought at the peak because we were “going to be priced out forever”, (same realtor nonsnes than).
We sold it 10 years later for $2500 less than we paid for it, and that price did nto include all the substanial improvements we made on it.
In the meanatime we tried to sell it, and the offers we were getting on it, were 25 to 30% and more less than we paid for it.
Also at them same time we were out looking to see what we could buy, as the kids started to arrive, wanted bigger place, and the difference was shocking.
4 bed 2 bath move in colonials 50k to 75k less than what we had paid
paid for our small house just 2 years prior.
These numbers in % terms represented at elast 30% off what we had paid for our house.(Talk about a depressing time.)
As we did not and could not take that kind of loss without bankrupting ourselves, we stayed and paid the mtg off in 10 years.
It was a bad down turn, and people with coops/condos fared even worse.
1 bed room coops that were 125k at the peak, were availbale from the banks at 25k cash. I know people that took 50, 60% losses and more on real estate at the time.
Perhaps I am colored by the past, but I just have not seen any convincing arguement as to why it will not be the same and worse this time.
As I have said time and again, it is my belief that our economy and country as a whole was on a far better financial footing back then, even in a recession.
May 14th, 2008 at 11:10 am
Why prices are stubborn? At first, I thought population growth but it doesn’t appear to be a factor. Take a look for yourself: http://www.cornwall.rutgers.edu/Data-Popluation.htm
It’s definitely employment. I’m in IT and receive a few emails per week from recruiters asking if I’m looking. If employment holds up, so do the prices. Just go to Dice and tell me if it looks like things are dire.
May 14th, 2008 at 11:12 am
grim,
I’m Italian, we get someone else to throw lamps. :o
May 14th, 2008 at 11:12 am
Al #71: I get my hair done at a salon in Springfield, so I’m there every 6 weeks. I asked about it here recently because the son of a co-worker just bought a house there. It has easy access to the highways, Brigadoon, and the equally chic downtown of Millburn — but it’s an older town, population is elderly so no way to tell which way it’s going. The New York Times wrote it up a few weeks ago here:
http://www.nytimes.com/2008/04/20/realestate/20livi.html
May 14th, 2008 at 11:14 am
#130 grim: You duped? Do you belive that the spread of information faster today is not playing a role in the decline of prices faster than you would have thought?
May 14th, 2008 at 11:14 am
gary,
I’ll make you more upset.
He lives in a house near Brookdale that he paid $515k for in 2000.
Imagine that, a well known celebrity in a modest home.
If it takes that kind of job to afford a $500k home in NJ, I don’t think I can afford a tent on the parkway median.
May 14th, 2008 at 11:14 am
# 144 The wildcard is DEBT. If folks are employed, but are still overspending day to day, employment figures alone will not support prices.
May 14th, 2008 at 11:15 am
#144 gary Even if Wall St employemnt goes down? and it is going down?
May 14th, 2008 at 11:20 am
Do you belive that the spread of information faster today is not playing a role in the decline of prices faster than you would have thought?
It is not, I firmly believe that. If anything, the increase in information is making this cycle play out longer, especially as noise is read as data. People are too fixated on the short-term movement, and their timeframe expectations have been compressed into something on the order of days.
May 14th, 2008 at 11:22 am
“Bottom Calling” in the real estate market is a perfect example.
The “bottom” in pricing, during the last cycle, lasted for *YEARS*. Depending on the measure, you could probably say the bottom of the last cycle was found sometime between 1991 and 1995, a full five years. (edit)
People here are expecting the “bottom” to last for approximately 2 days, after which the market will skyrocket upwards.
May 14th, 2008 at 11:27 am
http://quickfacts.census.gov/qfd/states/34000.html
Between April 1, 2000 to July 1, 2006, population in NJ grew 3.7%. I don’t have more current data.
May 14th, 2008 at 11:27 am
Interesting article over at BP..
http://bigpicture.typepad.com/comments/2008/05/positive-thinki.html#more
“The skeptics ask, mostly to themselves these days, why, if the crisis is over, are companies like AIG still losing big money? Why, if the CEOs of financial companies are so bullish on their companies’ futures are they selling dilutive stock at depressed valuations? Only one spring ago, these far-sighted chieftains were buying back shares at levels 2 to 3 times higher than current levels.
It’s interesting; ,b> Wall Street CEOs are talking like bulls and selling like bears, while Wall Street money managers are talking like bears and buying like bulls. When financial companies feeling the need to dilute their shareholders just to make ends meet can link up with the trusting managers of other people’s money, it’s more than just the perfect match. It’s the perfect example of positive thinking at work in today’s markets.”
May 14th, 2008 at 11:29 am
If they posted a median list price to go with the median sale price, it would be a good indicator of how the two are trending in relation to each other.
I received a flyer from a realtor giving current listings with prices, under contract and Sales since the start of the year for my town. My non mathematical/ statistical take is :
There are 1/3 more under contract listings than sales since the start of the year. This suggests Superbowl bounce was non-existent, but things are picking up.
U/C and sold prices seem much lower that the listing prices.
My own REO was listed and as I suspected, I seem to have set the price point for my area. Of the three properties listed on my street, one has just sold and two are under contract at prices within $10-$15K of my sale price. I wonder if the local market needed one property to set to set a comp price for the others to follow.
May 14th, 2008 at 11:29 am
# 152 “People here are expecting the “bottom” to last for approximately 2 days, after which the market will skyrocket upwards.”
Grim,
This point is KEY. We have become so focused on the short-term view in nearly every aspect of economic life that I do not believe that people have factored into their thinking that things will be flat for a long time. If folks finally reaslze this, perhaps price declines will accelerate.
May 14th, 2008 at 11:36 am
“If you buy this house, you are as rich and smart as Jim Cramer”.
If you ever say something so rude to me I’ll drop you like a cheap habit.
May 14th, 2008 at 11:37 am
“I tried to get Gary to buy a house in Upper Montclair because Steven Colbert lived about 6 houses away.”
that might work, however.
May 14th, 2008 at 11:41 am
Ok so I am looking at short sales on long island, run across this house at 2798 Stevens Street in Oceanside NY, 11572 check out this sales history
Listed today at 450K in short sale
sold $603,720 11/05
sold $444,000 5/05
sold $250,000 2/02
sold $136,000 08/94
Prices are all over the place. That house went up in value from 94 to 05 (11 years)over $3,500 hundred a month! If you bought in 1994 and held you almost doubled your money every three years during that 11 year period. Funny thing is the guy in short sale who bought in 11/05 was he expecting the house to keep tripling every three years? Guess so.
May 14th, 2008 at 11:42 am
Updated 2/24/2004 2:13 AM
USATODAY.com
Greenspan says ARMs might be better deal
By Sue Kirchhoff and Barbara Hagenbaugh, USA TODAY
WASHINGTON — Federal Reserve Chairman Alan Greenspan said Monday that Americans’ preference for long-term, fixed-rate mortgages means many are paying more than necessary for their homes and suggested consumers would benefit if lenders offered more alternatives.
In a standing-room-only speech to the Credit Union National Association meeting here, Greenspan also said U.S. household finances appeared generally sound, despite rising debt levels and bankruptcy filings. Low interest rates and surging home prices have given consumers flexibility to manage debt, he said.
———————
This is the same Alan Greenspan we are talking about, right? The one who in 2004 recommended taking out an ARM and said US household finances were “generally sound? Is it him, or is there another Alan Greenspan out there?
I just like googling, cutting and pasting way TOO much.
May 14th, 2008 at 11:44 am
I know everyone has seen that Greenspan quote before. I just had to. In a related matter, I lost, well, all of my respect for Jon Stewart the night he had Alan on. He all but gave him a happy ending.
May 14th, 2008 at 11:47 am
I did my check for the three towns I am interested in buying. A total of 127 homes on the GSMLS. Only one house within 15-20% of the price I would actually pay. Conservatively determined based on 1998 comp and 4% annual price inflation. What are some of your housing price guidelines? I waver a bit in terms of the year I like to use, but 1998-2001 is generally where I fall. Also 4% price appreciation I think is adequate given the low inflation figures since 1998.
May 14th, 2008 at 11:53 am
#151: grim: interesting way of looking at it.
May 14th, 2008 at 11:53 am
what is greenspan smoking? someone please explain!!
May 14th, 2008 at 11:59 am
149 shore
“The wildcard is DEBT.”
Agree (what’s new). And contrary to the “never underestimate the power of the American consumer” crowd, there is a limit to consumer debt. The folks who think it’s a good idea to borrow against their home to buy a car or a teevee have no more equity. This is why we’re seeing a drop in big ticket items (car sales, e.g.) and a big increase in credit card debt (and all the more troubling for what is apparently everyday staples (food, clothing)). Credit cards get maxed out just like houses, and when they go bust, folks can’t just mail in their cards and walk away.
This house of debt does have a ceiling, and we’re about to crack our collective skulls.
May 14th, 2008 at 12:02 pm
RE price reactions…
Level and speed of information may have changed, but people’s behavior hasn’t. Can’t get over the fact that the market takes a while to react due to illiquidity. It takes the lower comps to cycle not only within a town, but has to be within several blocks of a home. Seller will think, oh homes in my area are not affected, until “Comp Killer” passes through and wreaks its havoc on the area.
May 14th, 2008 at 12:02 pm
CAIBC
Please explain??? Please share!!!
May 14th, 2008 at 12:08 pm
Stephen Colbert is da bomb. And that location is walking distance to the dog park AND Shop Rite. What were you thinking, Gary?
The Fairway section is lovely, but some of those modest homes do come with almost 20k tax bills.
May 14th, 2008 at 12:11 pm
the real estate crash is playing out rapidly in some places (FL, CA, NV), just not in most of the northeast. new homes aren’t as big of a factor here, and existing homeowners are slower in cutting prices. also, our local economy isn’t as reliant on homebuilding and we did not see the extremes of lending/speculation as these other places did. I’m not saying our area is immune, but there are good reasons why it isn’t dropping as much/as fast as the most bubbly areas. Still, down roughly 8% from the peak before we have even had a full selling season without access to loose credit is pretty good. I think we are seeing the dam break open wider in the last few months and I expect that prices will be down at least as much in calendar 2008 as they were in 2006-07 combined.
May 14th, 2008 at 12:14 pm
For the first time in California’s history, foreclosure sales exceeded 1,000 properties per day in April, according to a report released Tuesday afternoon. Foreclosure sales at auction — the last step in the foreclosure process — jumped 44 percent in April to 22,838 sales, representing $9.45 billion in combined loan value, according to foreclosure data firm ForeclosureRadar.”
over 1,000 properties a day? Yikes.
May 14th, 2008 at 12:15 pm
Back to pretorius’ comments yesterday about Wall Street employment…
Despite lots of apocolyptic headlines about “Wall Street” layoffs, the number of people getting fired is nowhere close to the level experienced in 2001 & 2002. Meanwhile, US companies have more than $1 trillion stashed in the bank.
So do you still think the # of layoffs won’t approach 2001 & 2002? We are only in the first year of those layoffs and its already approaching the total for 2001 & 2002 combined. I’m guessing the 12k in aggregate layoffs (8k at BSC and 4k at JPM) will have very little impact on Wall St? (sarcasm) JPM source stated that 2k of those are coming from declines in IB fees. I would wager that 2/3rds of those jobs are highly paid employees located in the NYC area. Anyone know of some good recipe to prepare some crow for pretorius to eat?
May 14th, 2008 at 12:19 pm
Baby boomers are putting off retiring
mmm…I think this story will play out for oh…perhaps the next 30yrs or so when folks realize they can’t make ends meet with skyrocking inflation and reduced SS benefits.
http://money.cnn.com/2008/05/13/news/economy/delaying_retirement/index.htm
Do I want to retire now? Yes,” lamented 53-year old Charles…Charles Burge was able to consider retirement in his mid-50’s because of the generous pension he’s earned from New York City, nearly 2/3′rds of his salary. But selling his home is part of the plan as well...and you can guess how that story ends up. Poor Chuck was in the dog house for weeks when he broke the news to the missus.
May 14th, 2008 at 12:21 pm
http://www.marketwatch.com/news/story/high-fuel-prices-claim-air/story.aspx?guid=%7B99BC2A66%2D2877%2D4E34%2D9313%2DF7B100F0E8D9%7D
Another airline falls to $125 crude.
May 14th, 2008 at 12:21 pm
Hard place, most of my friends who were laid off in last six months on wall street have jobs already. Maybe a little less, maybe a junkier firm. But in late 2001 and 2002 when you were let go there were no jobs, people went unemployed for quite awhile or left wall street for good.
May 14th, 2008 at 12:23 pm
Hard Place Says:
May 14th, 2008 at 12:15 pm
Back to pretorius’ comments yesterday about Wall Street employment…
Anyone know of some good recipe to prepare some crow for pretorius to eat?
HP: If you want pret to “eat crow”, then you must buy the house that you want at a (reasonable-to-expect) price that you want.
This site has always been about sharing information and scamming for babes. Everything else only serves to stifle objective discussion.
Oh…also the site is also for SAS’ War stories about carpet bombing drinking some warm milk and cognac…..
May 14th, 2008 at 12:33 pm
#174 John: That cannot and will not last. There are simply not that many firms around even junkier ones that can pay anywhere near what the big boys were playing. Let alone hire all teh people that are and will be out there.
And the Fixed Income market is dead, absolutely dead. All my contacts on the street tell me the same thing.
Take a look at the Bond Buyer, and all the people looking for new fixed income positions.
A friend of mine was let go from Morgan late last year. He landed a new job, at a small boutique firm.
He knows there is no way he will get the kind of bonus money he got at Morgan,and he has to pay for his health benefits. At Morgan he was paying under 400 bucks a month for coverage, family of 4.
He is now paying in excess of $1600 a month for less coverage for his family of 4.
May 14th, 2008 at 12:39 pm
“This site has always been about sharing information and scamming for babes.”
That clotpoll chick is smokin’!!
May 14th, 2008 at 12:39 pm
Hey guys what is your opinion about Fair Lawn. I am planning to bid on the house I liked. The price of that house was reduced 2 times (about 12%). Should I wait any longer?
May 14th, 2008 at 12:39 pm
So what happens to the FED’s pawn shop loans when the next big wave of write downs hit, or if citi ends up being the next bear?
(see chart on page 1)
http://www.cumber.com/home/Factors.pdf
the FED has approx 550 million in securities left to hand out after starting with 800 million. but dont worry it is not a bailout!
May 14th, 2008 at 12:41 pm
John,
I disagree. People in 2001-2002 had alternatives as well, the smaller shops were all around too. However what generally happens is the large and bulge bracket firms reduce when business dries up. Some of those get absorbed into smaller places and the rest linger. Anyone cut in the next round are than in trouble. Those are the ones that are left without a seat when the music stops. As 3B points out it looks like the music is stopping. Hiring freezes at most of the core depts of the big boys except for isolated sectors like EMG, commodities and distressed.
May 14th, 2008 at 12:47 pm
hey BC
runs on costco for flour instead of rice?
The United Nations Food and Agriculture Organization (FAO) warned in March that Iran had detected a new highly pathogenic strain of wheat stem rust called Ug99.
The fungal disease could spread to other wheat producing states in the Near East and western Asia that provide one-quarter of the world’s wheat.
The FAO warned stated east of Iran — Afghanistan, India, Pakistan, Turkmenistan, Uzbekistan, and Kazakhstan to be on high alert.
Scientists and international organizations focused on controlling wheat stem rust have said 90 percent of world wheat lines are susceptible to Ug99. The situation is particularly critical in light of the existing worldwide wheat shortage.
May 14th, 2008 at 12:48 pm
want to live in NJ,
Evaluate your situation. Determine how long you can wait. Determine your capacity to purchase (finance) in this environment. Research the comps (current & historical) and the home and determine a price you think is reasonable. Make a bid in an amount based on evaluating your situation as described above.
My situation. I can wait until