Tue 24 Jun 2008
(Click to Enlarge)
S&P Case Shiller Home Price Index - NY Metro Commutable
Low Tier (Under $332,377)
October 2006 - 259.75 (peak)
April 2007 - 255.94
April 2008 - 233.29
8.85% year over year decline
10.19% decline from peak
Mid Tier ($332,377 - $479,467)
September 2006 - 224.18 (peak)
April 2007 - 221.43
April 2008 - 200.83
9.30% year over year decline
10.42% decline from peak
High Tier (Over $479,467)
June 2006 - 193.24 (peak)
April 2007 - 188.57
April 2008 - 177.72
5.75% year over year decline
8.03% decline from peak
Aggregate Index
June 2006 - 215.83 (peak)
April 2007 - 211.61
April 2008 - 193.93
8.35% year over year decline
10.15% decline from peak
New Jersey Association of Realtors
New Jersey State Median Price
2006.Q3 - $385,200 (peak)
2007.Q1 - $361,300
2008.Q1 - $350,700
2.93% year over year decline
8.96% decline from peak
(seasonal effects come in to play here, this isn’t a valid comparison)
Source data: http://njrereport.com/files/NJ_home_prices.xls
June 24th, 2008 at 7:26 pm
First!
June 24th, 2008 at 7:32 pm
Looks like Wiley E has begun his plunge.
June 24th, 2008 at 7:39 pm
Somebody please place that wake up call to Richard. The market has met his 7%, decline, threshold.
June 24th, 2008 at 7:40 pm
How do the wizards dance on that slope?
June 24th, 2008 at 7:45 pm
Who is this guy, Mr.Speculator, that is wreaking havoc on all commodity markets?
“SAN FRANCISCO (MarketWatch) — Cocoa futures rose to their highest level in at least 24 years Tuesday, as dry weather in major cocoa-producing countries cut global supplies. The price of the main ingredient of chocolate has doubled since the beginning of 2007.”
http://www.marketwatch.com/news/story/cocoa-rises-historic-high-dry/story.aspx?guid=%7B4D00D0A7%2D8106%2D4DE1%2D8828%2D4CCF9283151A%7D
June 24th, 2008 at 7:49 pm
Damn it BC Bob, I thought bernanke and paulson told you to stop speculating and driving all these prices up needlessly!
Do i need to call greenspan again? dont make him whip out the “irrational exuberance”.
June 24th, 2008 at 7:55 pm
mutter mutter… (internal debate: do i run to costco and stock up on chocolate, or just move to a chocolate-producing country?… ;)
clot, the list of countries that don’t extradite… how many grow cocoa and coffee?
June 24th, 2008 at 7:56 pm
#5 Messing with a man’s hot cocoa is just wrong. I’m going to track down mr Speculator and Ms Global Warming and straighten this out.
June 24th, 2008 at 8:18 pm
The xls file doesn’t load well in openoffice :(
June 24th, 2008 at 8:19 pm
Alia,
Non extardition countires:
Bangladesh
Bosnia and Herzegovina
Brunei
Burkina Faso
Burundi
Cambodia
Cameroon
Cape Verde
Central African Republic
Chad
China (People’s Republic of China)
Union of the Comoros
Democratic Republic of the Congo
Cote d’ Ivoire
Djibouti
Equatorial Guinea
Ethiopia
Gabon
Guinea
Guinea-Bissau
Indonesia
Jordan
Kuwait
Laos
Lebanon
Libya
Madagascar
Maldives
Mali
Marshall Islands
Mauritania
Micronesia
Moldova
Mongolia
Mozambique
Myanmar
Namibia
Nepal
Niger
Oman
Qatar
Russian Federation
Rwanda
São Tomé and Príncipe
Saudi Arabia
Senegal
Serbia and Montenegro
Somalia
Sudan
Syria
Togo
Tunisia
Uganda
Vanuatu
Vietnam
Western Samoa
Yemen
and Zimbabwe.
June 24th, 2008 at 8:19 pm
ALia,
Major cocoa producers:
Benin
Cameroon
Congo, Republic of the
Cote d’Ivoire
Dominican Republic
Ecuador
Equatorial Guinea
Ghana
Grenada
Haiti
Liberia
Nigeria
Papua New Guinea
Saint Lucia
Sao Tome and Principe
Sierra Leone
Solomon Islands
Togo
Trinidad and Tobago
Vanuatu
June 24th, 2008 at 8:20 pm
Alia,
Major cocoa producers that are non-extradition countries:
Cameroon
Democratic Republic of the Congo
Cote d’ Ivoire
Equatorial Guinea
São Tomé and Príncipe
Togo
Vanuatu
June 24th, 2008 at 8:22 pm
ALia,
the major coffee producers:
Brazil
Vietnam
Indonesia
Colombia
Mexico
India
Ethiopia
Guatemala
Honduras
Uganda
June 24th, 2008 at 8:23 pm
ALia,
unfortunately the major coffee producers and major cocoa producers do not intersect. I would recommend going to a non-extradition coffee producer such as Brazil, it is probably one of the safer options on the list
June 24th, 2008 at 8:25 pm
oh almost forgot….
major coffee growers who are non-extradition
Brazil
Vietnam
Uganda
June 24th, 2008 at 8:26 pm
does anyone realize that all sorts of government warning bells went off at the CIA/NSA/FBI….. between all the mentions of “non-extradition” and the various countries listed?
Hey grim, you might see a small uptick in traffic for a day or so, its just the NSA
June 24th, 2008 at 8:31 pm
grim,
What’s included in NYC metro?
Thanks!
June 24th, 2008 at 8:33 pm
njrebear,
From S&P:
http://www2.standardandpoors.com/spf/pdf/index/SP_CS_Home_Price_Indices_Methodology_Web.pdf
Note: the S&P/CS® New York City Home Price Index is not an MSA. It represents a
customized metro area that measures single-family home values in select New York,
New Jersey and Connecticut counties with significant populations that commonly
commute to New York City for employment purposes.
June 24th, 2008 at 8:38 pm
I wish all of the realtors who preach about it being impossible to market time real estate would take a look at this chart.
June 24th, 2008 at 8:39 pm
A hint: real estate prices were basically flat for five years following the last downturn.
June 24th, 2008 at 8:40 pm
Forgot to thank Grim for the great information. Great job as always
June 24th, 2008 at 8:49 pm
boomers crashing!
http://www.cepr.net/documents/publications/housing_crash_baby_boomers_2008_06.pdf
…household’s [45-54] wealth may decline to $81K in 2009, from $150,113 in 2004.
June 24th, 2008 at 8:52 pm
kettle [6],
It baffles me when I look at the prices of cobalt, chronium, rhenium, molybdenum, etc.. Now, these do not trade on an exchange. If speculators are not involved in the trade, why are these at record price levels? Could the wizards be misleading us, blaming the run up in prices, exchange listed, on the specs? No, stupid thought. Even they wouldn’t attempt something so asinine like that?
June 24th, 2008 at 9:04 pm
BC Bob,23
that is why i thin we are about to see the Katrina of economics.
http://farm1.static.flickr.com/143/357282774_1fcace204b_o.jpg
who’s got the hienies???
June 24th, 2008 at 9:18 pm
Our newbies came by during their orientation at work today. One guy is married with a kid under the age of 3 and with another one on the way. He will only be in the area for 3 years (the max contract our department), and told us they bought a house 35 minutes away because his wife demanded 4 BR and a pool and our puny salaries led them to the town so far away. The poor guy will be cursing that commute when he has to be here early and stay late his first year and buying gas for the commute.
What exactly do you do with 4 BR and a pool when your 2 kids are under the age of 3?
June 24th, 2008 at 9:20 pm
#23 BC Bob
I posted a link on this a few weeks back. The main issue is that demand from China, outstripped demand. There are rumors that they have sufficient stockpiles and demand is dropping as the global recession starts. A major correction is coming.
June 24th, 2008 at 9:21 pm
My commute is ~1:15 door to door. (Walking->Train->Walking). You get used to it in time.
June 24th, 2008 at 9:22 pm
The culprit;
http://www.flickr.com/photos/fintag/2422997450/in/set-72157604060807926/
June 24th, 2008 at 9:33 pm
kettle: stockpiling chocolate it is, then. we’ll ship it slow freight to brazil…
;>
June 24th, 2008 at 9:50 pm
Princeton’s Burst Bubble
The headline is misleading. The interviewee sez that Princeton’s not doing so bad.
http://cosmos.bcst.yahoo.com/up/player/popup/?rn=289004&cl=8500931&src=finance&ch=1316259
June 24th, 2008 at 9:53 pm
“when he has to be here early and stay late his first year ”
gryff - you only make him show early and stay late his first year?
June 24th, 2008 at 9:54 pm
In the link above, the “Princeton’s Burst Bubble” video should be below the one that actually comes up.
You can also go to Fox Business News and find it in their video section.
June 24th, 2008 at 10:10 pm
BC Bob Says:
June 24th, 2008 at 7:45 pm
Who is this guy, Mr.Speculator, that is wreaking havoc on all commodity markets?
“SAN FRANCISCO (MarketWatch) — Cocoa futures rose to their highest level in at least 24 years Tuesday
Bost: I know Covelli Crisp is the CF for the Red Sox. Is Cocoa Futures the guy the Giants called up from AAA Fresno to take the place of Bonds?
June 24th, 2008 at 10:11 pm
gryffindor Says:
June 24th, 2008 at 9:18 pm
What exactly do you do with 4 BR and a pool when your 2 kids are under the age of 3?
gf: pay higher homeowners insurance…..
June 24th, 2008 at 10:19 pm
#25
“35 minutes away”
That commute sounds pretty good to me
June 24th, 2008 at 10:20 pm
#25
“What exactly do you do with 4 BR and a pool when your 2 kids are under the age of 3?”
Ask Jerry Lee
June 24th, 2008 at 10:24 pm
njrebear,
I was reading that article you posted and stopped and had to paste this excerpt for all to see.
Finally, the projections show that the renters within the same wealth quintiles in 2004 will have more wealth in 2009 than homeowners in all three scenarios. In the second and third scenarios, the renters
will have dramatically more wealth in 2009 than the homeowners who started in the same wealth quintile. Homeownership is not everywhere and always an effective way to accumulate wealth. For those who owned a home in the last few years, the collapse of the housing bubble led to the destruction
of much or all of their wealth.
CHEW ON THAT RE BULLS
June 24th, 2008 at 10:26 pm
I am an infrequent poster, but knew you all would get a kick out of this “sign of the times…”
$175 Per Entry *****TAKE A CHANCE AND WIN***** 3br House
http://philadelphia.craigslist.org/rfs/730911215.html
June 24th, 2008 at 10:29 pm
Ask Jerry Lee
Or OJ, or Tommy Lee
June 24th, 2008 at 10:33 pm
No wonder people with pools pay such high insurance rates.
June 24th, 2008 at 10:33 pm
J 38 is that legal?
June 24th, 2008 at 10:36 pm
#22
this is why I think we are seeing so many older sellers unwilling to cut prices despite having owned their homes for many years. their entire retirement plan is contingent on a windfall from selling their house
June 24th, 2008 at 10:37 pm
#22Boomer Crash. Scary stuff. It mirrors a conversation I had with an early boomer. House in nice suburb of Detroit (yes, there are some) has dropped 38% in value. Her 800plus credit score wasn’t enough to get a HEL so she re-fi’ed last month. Didn’t have the heart to ask why she re-fi’ed because I know the answer - to pay her everyday bills AND a 60K kitchen makeover. And this is someone I always thought was good with money - do people just go insane when it’s real estate?
June 24th, 2008 at 10:44 pm
from the link at #22
“The plunge in wealth that most families are projected to see as a result of the collapse of the housing bubble should emphasize once again the potential danger of such bubbles. There are two reasons that
these families see sharp declines in their wealth over this period. The most obvious reason is the loss in the real value of their home, their major financial asset.
“However, there is a second important factor that also leads to a decline in wealth for this age cohort between 2004 and 2009. As a result of the bubble-inflated values of their homes, tens of millions of families opted not to save during what would typically be their peak saving years.”
June 24th, 2008 at 10:44 pm
Guess who will be paying for all these boomers in their old age guys. You. As the biggest voting block they wiil be taken care of on the backs of you youngsters. Sorry, from a boomer.
June 24th, 2008 at 10:48 pm
A nice conclusion to that CEPR article.
Finally, these projections should make clear that homeownership is not always an effective way to accumulate wealth. Homeownership in a housing bubble was a route toward losing wealth, not accumulating wealth. While typical homeowners cannot be blamed for not recognizing the bubble, the
economists and policy professionals who designed policies that pushed homeownership certainly can and should be blamed.
In other words… It’s all George Bush’s fault.
June 24th, 2008 at 10:54 pm
46 And everyone went along for the ride. We can’t give Bush all the credit on this one.
June 24th, 2008 at 11:03 pm
We are residents in a medical center, hence the puny pay. Our first year is the most work. The third and final year is the least work which I get to start next week, yay. Thirty five minute commutes are normal in NJ, but it is not necessary to have such a long commute in Nashville. Good school districts are found less than 15 minutes away. This guy will likely move back to his home state after his 3 years here. He bought a home in marginal school district far away just so his wife could have the 4th bedroom and pool. He could have bought or rented a smaller home with no pool (or large apartment with pool in the complex) less than 10 minutes away in the city with an equally poor school district. Although with kids so small, school district isn’t going to matter for him by the time he leaves. I don’t even know what deals the other two married newbies bought, I’m sure I’ll find out soon. The lone single guy is renting an apartment in walking distance.
Buying homes as poorly paid residents is fashionable in Nashville, probably because the homes/townhomes/condos can still be affordable and desirable compared to the housing stock I’ve seen in NJ. Flipping them for profit was equally as cool, although 2007’s graduates didn’t see as much of a flip profit as they anticipated. My colleagues are starting to sweat a bit as they start thinking about selling in a year. I will hand my keys to the leasing office and drive my Civic back to NJ.
June 24th, 2008 at 11:07 pm
The Star-Ledger is running a story on tactics used to delay foreclosure proceedings - basically, the “who owns the mortgage note” trick. I think it’s a matter of time before banks get their act together and set up a foreclosure collection clearinghouse. In the end the banks always win.
http://www.nj.com/news/index.ssf/2008/06/new_tactic_slows_rate_of_forfe.html
June 24th, 2008 at 11:27 pm
alia (7)-
Indonesia.
June 24th, 2008 at 11:29 pm
BC (23)-
Seen the price of salt lately?
June 24th, 2008 at 11:38 pm
#48
Do you notice that doctors and lawyers (I am a lawyer) seem to feel as though they should be rich and often try to affect a lifestyle as if they are rich, even though in our current society, these professions generally are not so well off (esp considering the mountainous education debt).
I notice this all the time and I find it very odd. It is as if these people, who are otherwise smart, can’t accept this obvious fact staring them in the face. A good example, maybe, is your colleague and his wife who pretend to live the life of a rich doctor
June 24th, 2008 at 11:54 pm
A surprising number of doctors and lawyers go broke because of the lifestyle expectations. It takes years to recoup the education expense, get established, and start living the life. I’m glad that I can show up at work in khakis and a polo shirt designed by someone not named Armani.
Interestingly interest-only loans were generally used for people like medical residents or recent law grads who are both sure bets to make more money in the future. These loans were never meant to help Frankie the Tow Truck Driver and Alice the Part Time Medical Biller (you know, part time ’cause of the kids) pay 550k for a POS Cape Cod in Old Bridge.
June 25th, 2008 at 2:42 am
leaving work now. zombie time
June 25th, 2008 at 6:02 am
From the Philly Inquirer:
Faith in economy lowest in 16 years
Americans’ confidence in the economy fell this month to its lowest since the early 1990s under the weight of the long housing slump, a sluggish job market, and rising prices, especially for gasoline.
The Conference Board said yesterday that its consumer confidence index dropped nationally to 50.4, the lowest since February 1992. The level was 58.1 in May.
“From a consumer perspective, this is the most troubling economy since the 1980s,” said Mark Vitner, an economist at Wachovia Corp.
In the Middle Atlantic states - Pennsylvania, New Jersey and New York - the June confidence index fell to 39.3 from 45.4. The June level was the worst since August 1993.
“In the Middle Atlantic region, the financial sector makes up a large portion of the economy - and as we well know, there has been a lot of turmoil in that area for several months,” said Lynn Franco, director of the Conference Board’s Consumer Research Center.
She said the region’s continuing loss of manufacturing jobs also was contributing to the generally bleak atmosphere in the region.
June 25th, 2008 at 6:03 am
From the WSJ:
Illinois Plans to Sue
Countrywide, CEO
By RUTH SIMON
June 25, 2008; Page A12
The Illinois attorney general’s office, which began an investigation into the business practices of Countrywide Financial Corp. last fall, says it has found enough evidence of wrongdoing that it plans to file a civil suit against the mortgage lender and its chief executive, Angelo Mozilo.
The suit is expected to be filed Wednesday.
In a draft of the complaint, Illinois alleges that the company engaged in “unfair and deceptive practices” in the sale of mortgage loans. The 78-page document says the company loosened its underwriting standards, structured loans with “risky features” and engaged in “marketing and sales techniques” that incentivized employees and mortgage brokers to push loans whether or not homeowners had the ability to repay them.
The complaint says the company’s actions were driven by its desire to boost market share and to satisfy Wall Street’s appetite for mortgage securities. “Investor demand and secondary market valuation…became the primary concern when determining what kinds of loans to market and sell and at what price, rather than the consumers’ ability to repay the loans,” said the complaint.
June 25th, 2008 at 6:04 am
From the APP:
Towns buckling with aid cuts
The adjustments to the newly approved state budget included in the appropriations bills demonstrate the initial state proposal to slash municipal property tax relief funding by $189 million was unwise, unfair and unreasonable.
Therefore, we salute Gov. Corzine and legislative leadership for agreeing to lighten the impact of these cuts on local property taxpayers all around the state.
Still, based on our analysis of the proposed changes, local policymakers all around the state will need to account for the loss of about $154 million in municipal property tax relief funding. And, inevitably, so will our property taxpayers.
Against the backdrop of the slumping national economy, many of them already are buckling under the burden of rising costs and flattening incomes. And all of them are paying property taxes well above the national average.
June 25th, 2008 at 6:05 am
From the Star Ledger:
Lawyers’ tactic slows rate of forfeited houses in New Jersey
Most home foreclosures being processed in New Jersey are illegal, a growing group of attorneys contends, because lending institutions cannot prove they own the debt they are trying to collect.
Judges in at least four New Jersey counties already have halted foreclosures, using a federal court ruling in Ohio as precedent. And with 48,000 foreclosures expected to be filed this year — twice the number filed in 2006 — some attorneys believe challenging foreclosures can become a large and potentially lucrative area of practice.
“This is starting to creep up all over the state and all over the country as people start to realize these banks don’t really know who owns the (promissory) note,” said Peggy Jurow, a senior attorney at Legal Services of New Jersey, which is teaching lawyers how to represent pro bono clients in these cases. “It’s scary to think how many people are losing their homes who shouldn’t be.”
Attorneys for the lending institutions say this wave of challenges is built on nothing more than legal technicalities and banks quickly will regain their footing.
“These lawyers are trying to grasp on the smallest legal issue, and they’re losing sight of the justice involved,” said Ralph Casale, a Denville-based attorney who has represented lenders in foreclosure for more than 30 years. “It comes down to this: Were you given the loan? Have you paid it? If you haven’t paid it, doesn’t the person who loaned you the money have the right to collect?”
June 25th, 2008 at 6:08 am
From the Washington Post:
Vital Part of Housing Bill Is Brainchild of Banks
A key provision of the housing bill now awaiting action in the Senate — and widely touted as offering a lifeline to distressed homeowners — was initially suggested to Congress by lobbyists for major banks facing their own huge losses from the subprime mortgage crisis, according to congressional staff members and bank officials.
Credit Suisse, a large investment bank heavily invested in mortgage-backed securities, proposed allowing hundreds of thousands of homeowners to refinance their mortgages with lower-cost government-insured loans, relieving financial institutions of the troubled debt.
After the bank proposed this to Congress in January, it became known as the “Credit Suisse plan” among congressional staffers and lobbyists. It later formed the basis of housing provisions in both the House and Senate.
Bank of America, which is acquiring Countrywide Financial, the country’s largest mortgage lender, followed with a similar and more detailed proposal, principal negotiators on the legislation said.
June 25th, 2008 at 6:09 am
This is going to be a long day
June 25th, 2008 at 6:13 am
From Bloomberg:
New-Home Sales in U.S. Probably Fell in May, Extending Slump
Sales of new houses in the U.S. probably fell in May to the second-lowest level in almost 17 years, signaling the housing slump will keep weighing on the economy, economists said before a report today.
New-home purchases declined to a 512,000 annual rate, according to the median estimate of 73 forecasts in a Bloomberg News survey, from a 526,000 pace in April. A separate report may show demand for durable goods stalled last month.
Falling property values, rising mortgage rates and stricter borrowing rules may keep potential buyers out of the market for much of 2008. Even as declines in housing hurt growth, Federal Reserve policy makers are forecast to keep the benchmark interest rate unchanged today on concern Americans are losing confidence that inflation will stabilize.
“It’s still a pretty dismal picture in terms of housing demand,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. “Inventory levels remain very, very high and that suggests you have to have more adjustment.”
The Commerce Department is scheduled to release its new- home sales report at 10 a.m. in Washington. Estimates ranged from 480,000 to 570,000.
June 25th, 2008 at 6:29 am
From the NY Times:
Approval Is Near for Bill to Help U.S. Homeowners
With sinking home values continuing to drag down the economy, Congress is poised to approve a huge package of housing legislation, including a refinancing program aimed at rescuing hundreds of thousands of homeowners in danger of foreclosure and the most sweeping government overhaul of mortgage financing since the New Deal.
Lawmakers moved with increasing urgency on Tuesday after a closely watched housing index showed prices nationally had declined in April by more than 15 percent from a year earlier. Senator Harry Reid of Nevada, the majority leader, threatened to keep the Senate in session through the Fourth of July holiday to finish the housing measure, if needed. The House has already approved similar legislation.
The centerpiece of the Senate package is a rescue-refinancing plan aimed at stemming the tide of more than 8,000 new foreclosures a day that lenders are filing across the country. The plan would allow distressed borrowers and their lenders to stem losses by allowing qualified owners to refinance into more affordable, 30-year fixed-rate loans with a federal guarantee.
The legislation would also provide benefits for first-time buyers, who would receive a refundable tax credit of up to $8,000, or 10 percent of the value of a home, on purchases of unoccupied housing.
As part of a regulatory overhaul of Fannie Mae and Freddie Mac, the mortgage finance giants, the bill would permanently increase to $625,000, from $417,000, the limit on loans they can purchase from lenders in expensive housing markets, making it easier for borrowers to obtain mortgages at discounted rates. Despite a presidential veto threat, the package received overwhelming bipartisan support, clearing by 83 to 9 a crucial procedural vote in the Senate on Tuesday morning.
June 25th, 2008 at 6:38 am
From MarketWatch:
Trichet doubts speculation is major culprit in oil rise
Speculation doesn’t appear to be playing a primary role in rising oil and commodity prices, although a reallocation of global portfolios toward commodities may be one of several factors, European Central Bank President Jean-Claude Trichet said in a European Parliament hearing Wednesday. “I’m not sure speculation is the major culprit,” Trichet said, adding that supply and demand concerns remain the “major issues.” Trichet said it “very important” that oil producers follow through on pledges to boost supplies, as well as for users to conserve oil “where possible.”
June 25th, 2008 at 7:05 am
There are 10 million millionaires in the world, 3 million in the US.
http://www.cnn.com/2008/US/06/24/world.wealth.ap/index.html
I guess not everyone North of the Driscoll bridge is a milionaire. Although many posers do live the lifestyle.
So much for Pret’s sea of wealth from Virginia to Boston. If all the millionaires in the US lived in that corridor, less then 5% of the corridor’s population would be a millionaire.
June 25th, 2008 at 7:07 am
#64 I got the state’s population figures from
http://en.wikipedia.org/wiki/List_of_U.S._states_by_population
June 25th, 2008 at 7:11 am
From MarketWatch:
Mortgage applications down 9.3% last week: MBA
Applications for mortgages fell again last week, with volume down a seasonally adjusted 9.3% compared with the week before, the Mortgage Bankers Association said Wednesday.
Both refinancings and applications for mortgages to purchase homes were down for the week ended June 20, even as mortgage interest rates decreased from the prior week, according to the MBA’s weekly survey.
Overall, applications were down 25.3% compared with the same week in 2007.
Applications to refinance existing mortgages decreased 12.1% on a week-to-week basis, while filings for mortgages to buy homes fell a seasonally adjusted 7.4%, according to the survey.
June 25th, 2008 at 7:12 am
45.Mikeinwaiting Says:
June 24th, 2008 at 10:44 pm
Guess who will be paying for all these boomers in their old age guys. You. As the biggest voting block they wiil be taken care of on the backs of you youngsters. Sorry, from a boomer.
The Boomers won’t be paid for, rather they will be converted into Soylent Green to feed the masses of illegals. Sorry, Greatest Generation.
June 25th, 2008 at 7:14 am
From CNBC:
Mortgage Applications Drop to 6-1/2-Year Low
U.S. mortgage applications fell for a second consecutive week, hitting their lowest level in nearly 6-1/2 years despite a sharp drop in interest rates, an industry group said Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended June 20, which includes both purchase and refinance loans, dropped 9.3 percent to 461.3 — the lowest level since the week ended Dec. 28, 2001.
The report offers additional evidence of a U.S. housing market that is suffering one of the worst downturns in its history.
Significantly tighter lending standards and an unwieldy supply of homes for sale are some of the factors preventing the U.S. housing market from rebounding out of its two-year-long slump.
The frenzy of foreclosures hitting the market is aggravating matters adding to the supply of unsold homes and depressing home prices nationwide, analysts say.
June 25th, 2008 at 7:17 am
#64 & #65 Now if I could find those articles and figure out the data in about 2 minutes, how come the “sophisticated investors” buying MBS pools didn’t realize housing was way overpriced in comparison to income and wealth? Why are the talking heads and politicians so shocked by this bust?
Why were “sophisticated investors” buying subprime pools rated AAA (subprime AAA is a favorite oxymoron of mine)? How is putting a thousand mortgages from dead beats into a pool AAA worthy?
Probably because the whole system is a big con. Smoke and mirrors. A farce. Get your commissions, bonuses, stock options, and votes. Who cares what happens 3 years from now, we will just socialize all losses and blame speculators and sovereign funds for our demise.
June 25th, 2008 at 7:18 am
From CR;
C/S futures indicate NY metro down 25%, May 2010.
http://bp3.blogger.com/_nSTO-vZpSgc/SGHhhyixfHI/AAAAAAAAC1o/06s1eACgDHM/s1600-h/case-shiller-apr2008TC.png
June 25th, 2008 at 7:19 am
#45 mikeinwaiting,
Sorry, ain’t going to happen. Wal-mart will simply expand to 2 million stores so your fellow boomers will find jobs as greeters and carriage boys.
June 25th, 2008 at 7:20 am
I think people use “good school systems” to compensate for being lousy parents
June 25th, 2008 at 7:25 am
BigWindow…that ‘is’ interesting. I like that.
June 25th, 2008 at 7:26 am
My thought is that you want your child to be safe…you want the school to provide a consistent environment. To know if your system is a good one, you really need to have a very good communication with your child and know if they can read and add…and know history. Etc.
June 25th, 2008 at 7:27 am
Oh, and are they happy and well adjusted….I mean hey….most parents are not…but childhood should be different. Right?
June 25th, 2008 at 7:31 am
The towns with “good/excellent schools” is a sham on the taxpayer. Case in point: I know people who went to high schools in towns like:
Clifton
Bergenfield
Dumont
Hackensack (Maywood)
And guess what? They are all doing well for themselves. In addition, I went to a very good “blue ribbon” high school and my wife went to a “marginal” high school. Guess who has their masters from Rutgers and who doesn’t?
Parenting > Schools.
“My thought is that you want your child to be safe…you want the school to provide a consistent environment. To know if your system is a good one”
my thoughts exactly Essex!
June 25th, 2008 at 7:38 am
How can the boomers live out their golden years on golf courses and in fine restaurants, even though they failed to save and led a life of conspicuous consumption?
They will become caddies and busboys. The boomers will compete with illegal aliens for the various menial jobs, thus helping to keep wage inflation in check.
June 25th, 2008 at 7:40 am
bairen [69],
Exactly.
You will always have your Blodgett’s, Quattrone’s, Grunman’s and Cioffi’s. That said, these “sophisticated” investors have to get a grip. Time for them to acknowledge that they f*cked up. Stop blaming others. Take a long hard look in the mirror.
Anyone with a pulse, not many, knew this market was set up for a bust. In addition to that, subprime never had a chance. Yet these dolts are invested in a high grade structued credit fund and an enhanced structured credit leverage fund? What about their due diligence? Suck it up and move on. Next time open the damn prospectus and at least read the first paragraph.
June 25th, 2008 at 7:43 am
#70 BC Bob,
Love the graph. San Fran may actually be reasonable at the 2010 price. The SF trough price in Nov 2010 would have bought a pos cape in North Jersey at the peak.
June 25th, 2008 at 7:43 am
“The boomers will compete with illegal aliens”
bairen,
I was planning to be a shoe shine man, outside the NYSE. Trade on the info. Well, Broad And Wall is barren,[not bairen]. I guess I’m going east, Dubai Bob.
June 25th, 2008 at 7:44 am
Next time open the damn prospectus and at least read the first paragraph.
Yeah, maybe, but those fund names were just so clever. (Credit to Fortune and Bird)
June 25th, 2008 at 7:48 am
52 skep/53 jmac
“It takes years to recoup the education expense”
That’s why the personal finance book I write will be titled “Getting to Zero”.
The prologue will be about how I was walking down 6th Avenue a couple of years out of law school when I was accosted by a bum with a coffee cup asking me for money. I looked at the bum and thought to myself: “I can’t wait until my net worth is as high as his!”
June 25th, 2008 at 7:49 am
#80 BC Bob,
Shoeshine boy and caddy are 2 jobs I don’t think can be off shored. They are our new growth industry.
Go to Singapore instead BC. Much better food and health care.
June 25th, 2008 at 7:51 am
My mother is an early boomer. She only invested in CD’s and conservative mutual funds. Basically, she lives like her parents lived. Spend a little, save a little. Now she is retired and bored.
June 25th, 2008 at 8:01 am
69 bairen
“Get your commissions, bonuses, stock options, and votes. Who cares what happens 3 years from now”
Now you’re paying attention…
June 25th, 2008 at 8:06 am
“TOKYO: Heavy selling hit shares in Japanese property firms on Wednesday after real estate developer Suruga Corp fell into bankruptcy, fanning fears about the health of a sector hurting after the global credit crunch.”
“Suruga’s bankruptcy comes as the global credit crisis muddies the outlook for Japan’s once-soaring property market. The Tokyo Stock Exchange’s REIT index has fallen about a quarter this year and nearly halved in value since a peak last May.”
http://economictimes.indiatimes.com/International_Business/Japan_property_stocks_slide_after_firm_goes_bankrupt/articleshow/3162663.cms
June 25th, 2008 at 8:09 am
BC,
I’ve caught they caught the cocoa speculator:
http://i26.photobucket.com/albums/c109/El_Ian/cocopuffs.jpg
June 25th, 2008 at 8:16 am
He looks awfully similar to that shifty roadrunner fellow.
June 25th, 2008 at 8:18 am
From MarketWatch:
Small banks could take construction loan hit
Small banks could be greatly exposed to billions of dollars of outstanding construction loans to home builders and developers, a published report said Wednesday.
Small banks have some $280 billion of outstanding construction loans and analysts have predicted that as many as 150 smaller banks could fail in coming years after betting heavily on construction loans, The Wall Street Journal reported.
The practice of allowing real estate developers to delay paying construction-loan interest has raised alarms with regulators concerned that smaller banks are masking potential problem loans, the paper said.
June 25th, 2008 at 8:21 am
he [87],
Top notch.
June 25th, 2008 at 8:22 am
No love for Count Chocula?
June 25th, 2008 at 8:26 am
he [87],
Go to pic on page 57. The CFTC wants to questiom then regarding speculative position limits.
http://books.google.com/books?id=Aj5grzlSjFAC&pg=PA64&lpg=PA64&dq=ivory+coast,+pictures,+cocoa&source=web&ots=d_gGgVLp06&sig=YywhCYmU6n5JgCGtKh3OCr0CQ04&hl=en&sa=X&oi=book_result&resnum=9&ct=result#PPA57,M1
June 25th, 2008 at 8:28 am
Because of the economic slowdown, the wealthy tended to shift their money to safer investments such as bonds and money-market savings accounts, and away from less stable investments such as real estate, the report found.
So the wealthy view real estate as an unstable investment. Well I guess the realtors still have the poor as customers, I guess they buy a lot of houses.
June 25th, 2008 at 8:33 am
“Approval Is Near for Bill to Help U.S. Homeowners ”
It’s about time the Democrats do something about housing. Republicans just put their head into the sand and hope things will go away.
June 25th, 2008 at 8:36 am
They got the headline wrong, it was supposed to read:
“Approval Is Near for Bill to Help Bank of America and Credit Suisse”
June 25th, 2008 at 8:37 am
Wrong, it was really supposed to read:
“Approval Is Near for Bill to Help Bank of America and Credit Suisse and screw the middle class”
June 25th, 2008 at 8:40 am
Count Chocula was given immunity, turns out he used to work at Goldman and was a member of Skulls & Bones.
June 25th, 2008 at 8:40 am
At least this bill will help American taxpayers and American companies as opposed to Iraq or Afghanistan and the price tag will only be 10% of the cost of the war. How can anyone oppose it?
June 25th, 2008 at 8:42 am
I love Wamu. You can’t have 13% plus yields for too long without fixing the problem or going broke. If I believe in Wamu, why I am I going to subscribe to their new cash offering when I can get 13% on an existing bond. So is Wamu going to go for 14% at their next trip to the well?
WASHINGTON MUT INC SUB NT 8.25000% 4/01/2010
Price (Ask) 92.670
Yield to Maturity 13.041042%
June 25th, 2008 at 8:43 am
Yeah, I am all for feel good legislation.
June 25th, 2008 at 8:43 am
95, Yes
96, Yes
98, I guess it sucks buying at the peak.
June 25th, 2008 at 8:45 am
BC,
Nice pic
June 25th, 2008 at 8:46 am
#46 Hardplace: Anyone could have recognized it was a bubble, including the homeowners.
June 25th, 2008 at 8:47 am
Herring for breakfast?
June 25th, 2008 at 8:51 am
Grim
Count Chocula is mah hommie.
Alia, I might meet you if you pick a major chocolate producing country. :)
June 25th, 2008 at 8:52 am
I can’t quite pinpoint why, but the Count reminds me of Ara Hovnanian.
June 25th, 2008 at 8:53 am
Grim
Is it the hair?
June 25th, 2008 at 8:54 am
Angelo Mozilo reminds me of beef jerky. I shouldnt say that, he is my brother in laws cousin…
June 25th, 2008 at 8:56 am
Anyone notice the similarity between Guiliani and Nosferatu?
June 25th, 2008 at 8:57 am
#108tbw; Nice, cutting on your brother in laws cousin, and knocking River Dell.
June 25th, 2008 at 8:59 am
…I know, I have no respect :(
June 25th, 2008 at 9:10 am
#98 frank
Very easily. I will only support it if it also gives huge amounts of money for us renters who refused to take part in this housing pyramid scheme or home owners who refused to trade up during the frenzy. We should be rewarded for our fiscal prudence, instead we will be punished and stuck footing the bill for the financially illeterate AKA the General Public.
June 25th, 2008 at 9:17 am
#112,
Risk takers get rewarded; fiscal prudence will get you nowhere.
June 25th, 2008 at 9:19 am
What about me? What if I lose my job and can’t pay my conventional 20% down 30Y Fixed mortgage? Who is going to help me? Is the IO/ARM/100% financing crowd more worthy?
June 25th, 2008 at 9:21 am
114
Buy your own Senator.
June 25th, 2008 at 9:24 am
Re 114, just have an affair with a gov and sell your downloadable songs for a few hundred thou. Or have an affair with Christie Brinkly’s husband and get paid a few hundred thou not to talk to the media.
All the hookers are back at their day jobs not that RE is dead and even renters can join in. America is a great country.
June 25th, 2008 at 9:27 am
http://www.bloomberg.com/apps/news?pid=munievents&sid=aKB0GQ6R_LVs&refer=
School borrowing via bonds in NJ going up and up.
June 25th, 2008 at 9:29 am
#114,
Joke on you, you should have taken a subprime IO with no money down. I always said that the smartest people take mortgages with no money down, they have nothing to loose. It’s like going to AC with banks money. I love it.
June 25th, 2008 at 9:29 am
#177 John: and they keep cutting aid to the the state universities.
June 25th, 2008 at 9:31 am
#113 frank,
I’ll stick to Buffet and Munger. They’ve done pretty well being fiscally prudent.
June 25th, 2008 at 9:32 am
#114 tbw
According to frank you were fiscally prudent and will go nowhere. The NINJA ZERO down crew were risk takers and should be rewarded.
June 25th, 2008 at 9:34 am
“and they keep cutting aid to the the state universities.”
Who needs state universities, we get them educated from India and China, why pay for the education when you can get it for free?
June 25th, 2008 at 9:35 am
Hard knock night for Assembly Democrats still adds up to GOP heartache
As he stood with futility against a bill he believes would ravage his 39th Legislative District, Assemblyman John Rooney took little joy in noting a personal milestone.
For while 2008 marks the Bergen County Republican’s 25th anniversary as an assemblyman, it is also the low point of his legislative career.
“My towns got destroyed last night,” said Rooney, a day after the majority Democrats passed a $32.9 billion budget, which includes 25% cuts in aid to all of the 28 municipalities in Rooney’s district, and eliminations of property tax rebates for residents in the $150,000 to $250,000 income range.
Monday also brought the Democrats’ successful if ignominious - by Rooney’s reckoning - passage of a bill requiring the construction of affordable housing in affluent towns.
“It’s just a plan to get more Democratic voters in our towns,” complained the veteran Republican assemblyman, whose home of Northvale for years took advantage of state regional contribution agreements that enabled small municipalities like his to sell their Council on Affordable Housing (COAH) obligations to places like Newark and Jersey City.
June 25th, 2008 at 9:38 am
Circling the drain!!! WOOF! WOOF!
June 25th, 2008 at 9:41 am
“Risk takers get rewarded; fiscal prudence will get you nowhere.”
Frank,
Somewhere, PT Barnum is spinning.
Only prudent risk takers get rewarded, the reckless become a statistic.
June 25th, 2008 at 9:41 am
End of RCAs Could Devastate Middletown with New Construction
Two recently introduced bills working their way through the state legislature will have dire consequences for Middletown and other towns like it if they are ultimately signed into law. Bills A500 and S1783 would effectively end the option of Regional Contribution Agreements (RCAs), which allows towns to satisfy a portion of their state-mandated low income housing quota by rehabilitating existing housing in surrounding towns. If this did come to pass, it would mean that Middletown would have to build its hundreds of additional low income units within its borders. Since the COAH formula states that for every four units of market rate housing, one low income housing unit must be built, that could mean thousands of new housing units must be built in Middletown in order to satisfy the state’s demands. Simply put, this would change the character of our town forever and result in severely overcrowded schools, congested roads and overwhelmed municipal services.
June 25th, 2008 at 9:44 am
Bills A500 and S1783 would effectively end the option of Regional Contribution Agreements (RCAs), which allows towns to satisfy a portion of their state-mandated low income housing quota by rehabilitating existing housing in surrounding towns.
SG,
Hard not to take issue with this, RCAs have nothing to do with “surrounding” towns at all. Note the article above that said that Northvale sold its obligations to Newark and Jersey City. How, exactly, are those “surrounding towns”?
June 25th, 2008 at 9:45 am
Count Chocula was based on bela lugosi (I think the lugosi estate sued the cereal maker for infringing upon his right of celebrity/right of publicity) and the resemblance between lugosi and ara hovnanian is pretty strong.
June 25th, 2008 at 9:46 am
#126 COAH will only succeed at making all of NJ a dump.
June 25th, 2008 at 9:46 am
Mid’town opposes RCAs
June 25th, 2008 at 9:50 am
Hovnanian and Dracula have so much in common regardless of similarities in appearance; they’re both blood-sucking parasites who need an endless supply of victims or they’ll wither up and die.
June 25th, 2008 at 9:51 am
That article is written by Gerry Scharfenberger, Mayor Middletown Township. Its natural for him to argue against abolition of RCA.
# bairen Says:
#126 COAH will only succeed at making all of NJ a dump.
You got it confused. COAH is just following NJ Supreme court decision which was followed up by legislation. You can’t blame agency for following its charter. The issue is not COAH, the issue is Rich towns using Zoning ordinances to prevent any housing.
June 25th, 2008 at 9:56 am
“I think the mortgage industry has done more to hurt this country than al-Qaeda ever did,” Subers said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a8C74i7bBnh0&refer=home
My vote for quote of the year thus far.
June 25th, 2008 at 10:00 am
#132
Gary,
Look at the stock grants your boy Ara was given last year.
http://biz.yahoo.com/t/24/3854.html
Capitlalist or pillager?
June 25th, 2008 at 10:05 am
From Bloomberg:
New-Home Sales in the U.S. Fell 2.5% to 512,000 Pace in May
Sales of new U.S. houses fell 2.5 percent in May, signaling the real estate slump will keep weighing on the economy.
Purchases dropped to a 512,000 annual pace, as forecast and the second-fewest in almost 17 years, from a revised 525,000 rate in April, the Commerce Department said today in Washington. A separate report showed demand for long-lasting goods stalled last month.
Falling property values, rising mortgage rates and stricter borrowing rules may keep potential buyers out of the market for much of 2008. Even as declines in housing hurt growth, Federal Reserve policy makers are forecast to keep the benchmark interest rate unchanged today on concern Americans are losing confidence that inflation will stabilize.
“There’s just not anything out there yet to lift home sales right now,” Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina, said before the report. “The economy is still sluggish, and while prices have come down, it’s harder to get a mortgage.”
Economists forecast sales would decline to a 512,000 pace, from a previously reported 526,000 for April, according to the median of 73 projections in a Bloomberg News survey. Estimates ranged from 480,000 to 570,000.
June 25th, 2008 at 10:06 am
From MarketWatch:
U.S. May new-home sales fall 2.5% to 512,000 as expected
U.S. May new-home median sales prices down 5.7% in past year
U.S. new-home sales down 40.3% in past year
U.S. new-home inventories rise to 10.9-month supply
U.S. May new-home sales in West fall to 26-year low
June 25th, 2008 at 10:08 am
re: COAH. i think this former U.S. senator from democratic party said best:
http://politickernj.com/torricelli/19381/torricelli-coah
June 25th, 2008 at 10:12 am
#132 SG
I stand corrected. Let me rephrase. The court mandated mission of COAH is to make all of NJ a dump.
June 25th, 2008 at 10:14 am
I am going into the certified pre-owned home business with a zero percent loan model.
June 25th, 2008 at 10:17 am
I don’t think new homes sales falling is meaningful, when you have a mania or a huge sale you pull in buyers early. An example would be 2005 employee pricing of cars. Everyone who was already was going to buy in 2005 bought, but a large amount of people who were going to buy in 2006 also bought in 2005 as they figured the price of the new car would be up 5K in 2006 and their current used care would be worth less on trade in. Sales sank like a brick in 2006/2007 as everyone had a new car already.
June 25th, 2008 at 10:20 am
Affordable Housing Rule Changes Discourages Economic Growth
By Joan Verplanck, President, New Jersey Chamber of Commerce
“New Jersey is the only state in the nation with a mandate that ties the affordable housing issue to economic growth. There is also a component of the new rules that forces companies to pay additional amounts to COAH if they decide to expand their facilities. To make expansion and job creation punishable by additional fees is at odds with the Governor’s goal of growing us out of our debt through economic vitality.
”
http://www.njchamber.com/News/jun%2008%20coah.asp
June 25th, 2008 at 10:27 am
132#, SG,
The issue is not rich towns. real rich towns will not be hurt by this new coah since they don’t have land left for commercial or residential developments so that they have limited coah abligation. the pain is given to the tax payers of middle class towns where they want to attract businesses to reduce taxpayer’stax burdens.
middletown is hardly considered as a rich town while there are a few 10K+ mansions along the river.
>The issue is not COAH, the issue is Rich towns using Zoning ordinances to prevent any housing.
June 25th, 2008 at 10:31 am
SG,
And is the answer to that, forcing, unrealistic / unsustainable development on communities the answer? I do not have a suggestion as i have not looked into the details myself, but assuming that there is a core of truth to the building requirements that bridgewater and similar communities would be forced into by COAH, then all COAH will turn out to be a a developers best friend that will end up doing way more damage then good to the indiviual communities.
One big thorn in my side with COA is that towns can be forced to build on open preserved open land. Do we really want all of NJ to turn into one giant landmass of suburban sprawl? How about traffic issues? a lot of these towns are already gridlocked with the amounts of traffic that they have due to development over the last 10 years. how do you expect to get anywhere when you jump start development like COAH would.
June 25th, 2008 at 10:35 am
ket,
There is an easier answer, cease development. No new development, no new COAH requirements.
Perhaps this was the goal all along?
June 25th, 2008 at 10:41 am
COAH aims to what build another 575,000 housing units in the burbs? Totally nuts to add another 2 million people in NJ?
June 25th, 2008 at 10:56 am
Wikipedia has some background:
http://en.wikipedia.org/wiki/Mount_Laurel_Doctrine
June 25th, 2008 at 10:57 am
June 25 (Bloomberg) — Bank of America Corp.’s $3 billion takeover of Countrywide Financial Corp. will be financed by 138 million tax-paying Americans.
Bank of America, led by Chief Executive Officer Kenneth Lewis, can use tax write-offs to pay for Countrywide, the country’s biggest mortgage lender, said Robert Willens, a former managing director at Lehman Brothers Holdings Inc. who now runs his own accounting firm. Taxpayers may pick up about $5 billion of Countrywide’s losses over 20 years, he said. Countrywide shareholders vote on the sale today.
“Ken Lewis got a break,” Willens said. “What these losses do is reduce the effective cost of the deal so the headline price isn’t really what they’re paying. It’s entirely possible that the entire equity purchase price could be financed by tax savings.”
June 25th, 2008 at 11:00 am
It’s entirely possible that the entire equity purchase price could be financed by tax savings.”
Who got a better deal Dimon or Lewis?
Welcome to the United Socialist America(USA)
June 25th, 2008 at 11:00 am
#145 New Jersey and Rhode isalnd perfect together.
Two small states, that used to be economic power houses, with influence far gretaher than theri size spiraling down into economic wasteland.
The Peoples Republic of NJ, a socialist paradise.
June 25th, 2008 at 11:05 am
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a8C74i7bBnh0
Here’s th elink from #147 above. UNBELIVABLE.
June 25th, 2008 at 11:06 am
And is the answer to that, forcing, unrealistic / unsustainable development on communities the answer?
Well, I am not suggesting the approach that NJ towns, state and supreme court has chosen is right or wrong. The point is there is land of law, which was made based on litigation in NJ Supreme court. Now, one can argue better possible approaches, but since Towns lost their argument, Court mandated some solution. Either you abide by court’s mandate or file a suit against it and fight it. Once the law was created, RCA definitely does not preserve the spirit of the law.
Do we really want all of NJ to turn into one giant landmass of suburban sprawl? How about traffic issues?
Agreed. But Towns have no problem approving housing with 5 acre zoning law. Isn’t that significant waste of environment and Open space. I can not presume with COAH housing price limit they can afford to build even Townhouse. Most of these are going to be condos. These can be placed near public transport areas reducing traffic issues. As for schools, they can be merged to optimize the usage of facility, teaching and admin resources.
Once again, I am not for or against development. It’s just that when there is law of land that should be followed and court’s decision should be respected. If not there are legal ways to fight it, which towns should pursue.
June 25th, 2008 at 11:10 am
“Ken Lewis got a break,” Willens said. “What these losses do is reduce the effective cost of the deal so the headline price isn’t really what they’re paying. It’s entirely possible that the entire equity purchase price could be financed by tax savings.”
Ken Lewis did not get a break. This whole deal was structured, from the start, by our treasury. Ken knew exactly what he was getting, a taxpayer bailout. If not, he had the right to walk away. Why do you think BOA wrote the housing bailout plan?
June 25th, 2008 at 11:12 am
make money Says:
June 25th, 2008 at 11:05 am
Here’s the link from #147 above. UNBELIVABLE.
bost & mm: what’s the big deal?
June 25th, 2008 at 11:16 am
Vital Part of Housing Bill Is Brainchild of Banks
http://marketpipeline.blogspot.com/2008/06/vital-part-of-housing-bill-is.html
June 25th, 2008 at 11:18 am
#151 BC Bob: A thundering disgrace!!!
June 25th, 2008 at 11:21 am
grim….you missed this…article has a chart that list auctioned property
WSJ
Investor’s Banks Hold the Bag New Jersey Property Tycoon Hits Bankruptcy, and Creditors Face Underwater Auction Bids
By SUI-LEE WEE
June 25, 2008; Page C17
Two years ago, New Jersey real-estate investor Solomon Dwek was arrested on bank-fraud charges and in early 2007 was forced to seek Chapter 11 bankruptcy protection for both himself and his companies, which owned about 300 residential and commercial properties.
His creditors began the process of trying to take over his holdings, initially valued at $300 million to $400 million, in seven states. Now, they wish they would have moved faster.
A court-appointed trustee began auctioning the properties last fall but ran into the teeth of the real-estate downturn. In some cases, lenders have accepted far less than the mortgages outstanding. Others are opting to reject the top bids and keep the buildings, hoping the market will turn.
“This was not a fantastic auction,” said Charles Stanziale, the trustee, after an auction of 10 commercial and residential properties last week. “There’s very little money for the benefit of the bankruptcy estate because I couldn’t get over the mortgage amounts.”
The auctions also draw the curtain on the business of Mr. Dwek, 35 years old, a religious-school head and philanthropist in Ocean Township, N.J. He was charged by the Federal Bureau of Investigation with defrauding PNC Bank out of $25 million, of which $22.2 million was allegedly transferred to a different bank to pay off loans. He also has been sued by dozens of former investors and partners, including his uncle, Joseph Dwek.
Solomon Dwek, who hasn’t been indicted, remains free on a $10 million bond and is being paid $12,800 monthly by his estate, with permission of the bankruptcy court, for assisting in the sale of the properties. If convicted, he faces up to 30 years in prison, said Michael Himmel, his criminal attorney. Mr. Himmel declined to comment on the FBI’s specific allegations.
Mr. Stanziale said he tried to move faster to sell Mr. Dwek’s properties but ran into resistance among creditors. They rejected his initial plan to sell a mix of 140 houses and commercial buildings for $110 million in one bulk deal.
Since October, Mr. Stanziale has held one auction a month. He has sold about 140 properties and has 150 left. Banks have decided to hold 49 of them.
Of the 55 single-family homes, condominiums and parcels auctioned in April, only 25 went to third-party individuals. Amboy Bank, of Old Bridge, N.J., kept nine of the 17 Lakewood, N.J., properties it had on the block. “There was insufficient bidding to satisfy the bank’s debt,” said Cyndi Bleier, Amboy’s general counsel.
Mr. Stanziale said there were few buyers at some of the auctions because investors typically are drawn by the possibility of fire-sale prices that often accompany real-estate slumps. But with the large amount of debt attached to these properties, Mr. Stanziale said bargains were difficult to find as the lenders were unwilling to accept offers far below mortgage amounts.
In the auction last week, banks were more willing to accept bids less than the mortgage amounts. A four-bedroom home in Deal Borough, N.J., was sold for $918,000, below the $1.2 million mortgage held by Wachovia Corp.-owned World Savings. A Wachovia spokesman couldn’t be reached for comment.
Banks were able to recoup $8.7 million of the $9.2 million in mortgage debt on the 10 properties. Two of the 10 went for more than the mortgage amounts. All sales are subject to court approval.
Mr. Stanziale said in court papers that Mr. Dwek was “orchestrating a massive Ponzi scheme,” where he would use the money from bank loans to pay fictitious returns to his investors. Mr. Dwek’s bankruptcy attorney, Timothy Neumann, said Mr. Dwek himself was “a victim of a fraud perpetrated by his uncle,” Joseph Dwek.
Mr. Stanziale also has sued Joseph Dwek, contending he had “received extraordinary false profits on numerous transactions and continued to invest with [Solomon] Dwek after realizing the false gains.” Joseph Dwek’s attorney, Steven Klein, said his client denied any wrongdoing. Joseph Dwek has said in court papers that he has given his nephew $60.2 million since 2003 to buy him properties, but didn’t realize until April 2006 that none of the properties was in his own name.
The FBI complaint against Solomon Dwek alleges that in 2006 he deposited a $25.2 million check from a closed PNC Bank account into another PNC account. He then transferred $22 million out of the second account to HSBC Bank USA and used the proceeds to pay off two loans, according to the complaint.
The complaint states that Mr. Dwek repeatedly assured PNC Bank that he was working with HSBC to return the money. But HSBC Bank said in court papers that Mr. Dwek never asked for the money to be returned. Both PNC and HSBC said they don’t comment on pending litigation.
June 25th, 2008 at 11:24 am
I just closed on a 4500 sqft brand new house in a 27 hole golf course comunity in Dutchess County. The community started in 1999, with avg starting baseprices for 3500 sqft homes at 475-500k. Over the years, the size of the homes went up to 4000+sqft, while the base price went up to a peak of 739k in 2007.
The house I am buying was priced at 950k after adding 200k of options. I got it for 725k. I hope it is worth it, but I had to enter the market sometime finally.
June 25th, 2008 at 11:31 am
12 year old Chicago girl wins a car for good attendance
http://gmy.news.yahoo.com/v/8509228
June 25th, 2008 at 11:32 am
“bost & mm: what’s the big deal?”
Chi,
Ask the working stiff what the big deal is?
You rarely get what you expect from financial markets, you get what you deserve.
June 25th, 2008 at 11:37 am
Wachovia, National City Foretell More Losses: Jonathan Weil
The stock screen that I did turned up 218 U.S. financial companies trading for less than 70 percent of book value, which also indicates distress. The difference between their book and market values was about $177 billion.
While markets can overshoot, their judgment this quarter will be hard for companies’ executives and auditors to ignore. The so-called credit crisis is entering its second summer, which is a long time to be in crisis mode. The argument that this is merely a temporary state of affairs won’t wash much longer.
June 25th, 2008 at 11:38 am
#148 Are those like nols?
June 25th, 2008 at 11:57 am
#98
“At least this bill will help American taxpayers and American companies as opposed to Iraq or Afghanistan and the price tag will only be 10% of the cost of the war. How can anyone oppose it?”
please explain how this will help American taxpayers
June 25th, 2008 at 11:58 am
This should rustle some feathers; why should we defend Realtors again?
Faux-Market Value from Philly.com
http://www.philly.com/philly/classifieds/real_estate/CTW_realestate_20080624_Faux-Market_Value.html
Peter G. Miller
Q: As a broker, I wrote an offer for a client on an FHA foreclosure house, and after a counter offer my clients were able to get the property for $374,500. Then I get a call from my client’s lender today saying that the appraisal came in at $347,000 - $27,500 below the accepted price. I was floored!
I’ve been in the business for more than 35 years, and I had never had an appraisal come in so ridiculously low. I have buyers who are willing to settle at the price negotiated, which is fair, and now FHA wants the house values to drop even more? It doesn’t make sense! Who established fair-market value in this case? Apparently not the buyer!
A: At first it would seem that the agreement of an informed buyer and an informed seller would represent fair-market value. But that agreement is between the buyer and the seller; the lender is a different party with different interests. The lender - the party who actually employs the appraiser - wants the most conservative valuation possible because if the loan goes into default the lender does not want to be in the position of having a property that is worth less than the loan balance. As to the FHA, it’s an insurance provider, and it, too, is not looking for extra risk.
The reality is that the buyer and seller in your situation are welcome to close their deal if the buyer can come up with cash, financing or both to make the transaction work. However, what the buyer and the seller cannot do is force a lender or insurer to accept their terms. The bottom line: If you need the lender’s money you also need to accept that it’s the lender’s definition of fair-market value that counts.
June 25th, 2008 at 12:02 pm
#113
“Risk takers get rewarded; fiscal prudence will get you nowhere.”
hey Frank, take a look at the doc in this link:
http://www.cepr.net/documents/publications/housing_crash_baby_boomers_2008
I think you have a very simplistic notion of risk/reward.
June 25th, 2008 at 12:03 pm
well regarding COAH, we will have to see where the current exodus from the state and housing demand meet. But what do people think will happen to housing values if the level of development forced by COAH actually happens?
If Coah is upheld, then NJ is set to be the next bombay/Mumbai,
June 25th, 2008 at 12:11 pm
Re #147
The level of blatant corporate greed/political malfeasance, is so high that i do not understand why people are lighting the torches and sharpening the pitchforks. We have a 100 Trillion dollar liability in medicare/SS a failing health care system etc and the government is allowing taxpayer money to be used for corporate profit?!?!?!?!?!? These are the people who should be put in GITMO and waterboarded!. The US of A is dead. at this point we are just a bloated corpse of what was once a great nation. A greatness made by the peoples and governments action, not by military or economic might.
June 25th, 2008 at 12:21 pm
#162 Would not the buyer be very happy in this situation? I would think?
June 25th, 2008 at 12:28 pm
“The US of A is dead”
kettle,
It’s the I.O.U.S.A.
http://www.washingtontimes.com/news/2008/jun/17/deadbeat-nation/
June 25th, 2008 at 12:30 pm
#165 I would be ecstatic if that were me. I especially like how the broker is claiming the FHA is valuing the home unfairly. 35 years in the business, you would think they learned some thing.
June 25th, 2008 at 12:42 pm
#168 AMEN!!
June 25th, 2008 at 12:45 pm
I just spoke to a builder working in the neighborhood. Current cost per square foot for new construction is $125.00 Average lot in NJ costs $400k. Build
2000 sq. ft. for basic 3/2 and you’re already at $650k combined. So, to concur what we all know, it is not economical to build smaller homes in NJ. You’re better off buying an existing home and renovating if necessary.
June 25th, 2008 at 12:50 pm
149#,
tell me which highly ranked schools are in a big school district?
>As for schools, they can be merged to optimize the usage of facility, teaching and admin resources.
June 25th, 2008 at 1:00 pm
Looks like corruption, well at least highly unethical behvaior for pols is not limited to NJ.
http://www.cnbc.com/id/25370654/for/cnbc/
Baltimore’s mayor allegedly took fancy fur coats and plane rides from a real estate developer she had a personal relationship with when she was a council member and voted to approve his projects.
June 25th, 2008 at 1:03 pm
bi: tell me which highly ranked schools are in a big school district?
I have read Maryland has county wide school districts and performance has improved significantly. I had same story from Minnesota.
June 25th, 2008 at 1:06 pm
It is one thing to live the doctor lifestyle if you actually make the money. Deluded residents like to start the lifestyle early. Many of the wives don’t work. Some of them have multiple small kids to take care of, that I can understand. As a female, the wives without kids who just hang out and lunch waiting for their doctor husbands to get out of residency and hit it big bug me.
Let’s not even mention the mountains of educational debt some of these new grads have. Dental students coming out of NYU or Penn now owe nearly 400K (tuition + living) if they borrow the entire price tag. And the only starter homes to be found is your choice of 400K studio in Manhattan or POS 50 year old home in NJ.
June 25th, 2008 at 1:16 pm
I got into Med School in NJ. I turned it down because of the giant debt I would have accumulated in those 4 years. I don’t understand how any of these kids expect to pay that debt off. Residency usually lasts 3 years, it can be up to 6 years for some depending on their career choice. They get to start making money at around 30, if they are lucky. With those student loan payments from Undergrad, and Med School combined, I just don’t see how it’s possible to ever get out of the hole. Put it this way, my father is a physician, he’s 55, and he still hasn’t even come close to paying off all the debt he accumulated. He lived high and mighty, and i’m pretty sure he’ll be bankrupt by the time he’s 60. Most doctor’s I know do act like they have money, but they really only have debt. The only thing that ever allowed them to live the way they do is their home equity loan, and we all know what’s happening to those.
June 25th, 2008 at 1:17 pm
#173, my obstetrician told me he was 40 by the time he finished paying off his medical school bills.
Funny, if doctors realized how much money they could make in different ways, I wonder how many of them would still be physicians. Many of my friends are doctors, and sadly, most went to med school just for the money. They should have spared their patients and gone into business instead.
June 25th, 2008 at 1:23 pm
Re: an interesting consolidation idea by
Michael Vernotico, Councilman, City of Summit, March 17, 2008
—-
Trenton: Chapter 11 or a New Chapter ?
In the 1970s, Boeing Aircraft was in deep financial straights and the one time world leader in producing commercial aircraft appeared destined for a complete demise and threatened to take its home city of Seattle with it. A billboard appeared which said, “Will the last person to leave Seattle shut off the lights?” Will we see a similar sign near Trenton some time soon?
Debt provides a valuable service. We all utilize it for benefits today as we use those benefits in the future. It is why we take out mortgages to purchase homes and willingly sign on for car loans. It is also a way for governments to appropriately distribute the tax burden over the period of time we benefit from capital improvements. Borrowing to pay operating bills is a sign of trouble. New Jersey is in trouble “big trouble.” New Jersey is already the third largest debtor of all 50 states.
The Governor intends to cut state spending in the budget. As a local elected official, I know that cutting spending means less funding for municipalities, who then fund these cuts through property taxes. All this accomplishes is to replace a progressive tax with a regressive tax.
It is time to put the shell game away rethink completely the way New Jersey does business. When large companies are in danger of failing, they re-organize. They cut and redeploy staff. They develop a new business model.
New Jersey has 566 municipalities and 21 counties. We actually have more school districts than we have towns. We simply cannot continue this way. New Jersey needs to re-organize and we should plan for a Constitutional Convention immediately. New Jersey’s system of independent communities has long been a sense of pride. Towns are already seeking shared services and it produces only limited results. Communities with 10,000 or fewer residents are encouraged to merge in the new state budget. While these actions are worthwhile, they are no where near enough.
The system needs complete and radical change. In my opinion the best hope for change is to eliminate county government (as three states already have) and replace them with more efficient regional arms of state government as Senator Tom Kean proposed a few years back. Municipalities are aligned in counties based on an archaic demographic and geographic distribution. Millburn and Summit are sister cities with a great deal in common and have often worked together in the past to share equipment and services. What does Millburn have in common with Newark? What does Summit have in common with Elizabeth? The answer “ absolutely nothing. Why is Millburn in Essex County and Summit in Union County? Because they are. Why do we need Essex County and Union County? We don’t.
The US Attorney Chris Christie spoke in Summit a few months ago and correctly opined that the more government you have, the more waste and corruption you have. Union County spending is up again this year by $22 million. We recently passed an ordinance to prohibit left turns out of Washington School onto Morris Avenue for two hours a day. Since Morris Avenue is a County Road, it now must be approved by Union County and then the State. This makes sense how? The answer is ” it doesn’t.” Clearly we need less government.
Newark and Elizabeth do not need County Government either. Large urban areas should deal directly with the State, particularly with regard to state aid. Communities of similar demographics and geographically aligned should be united under a regional arm of State government to broaden the realities of sharing and eliminating wasteful county government. Smaller communities could then merge either completely or de facto. Either way, we cannot afford the silo approach going forward. We hear much talk of change in the presidential debates, but the real question is do we have the courage to take on the political obstacles and hysteria to really affect change. Do we have the courage to take on the politicians?
We need to write a new chapter in New Jersey’s history because the chapter we are now writing is Chapter 11. We are in a real crisis of energy due to a lack of synergy. Will someone please turn on the some “energy” efficient lights in Trenton and turn off the lights in the County Seats of Elizabeth, Newark, et al?
Michael Vernotico
Councilman
City of Summit
June 25th, 2008 at 1:33 pm
Interesting article on China and commodities.
http://www.guardian.co.uk/world/2008/jun/25/china.commodities
“In order to maintain the so-called China Price (ie lower than everyone else and thus impossible to compete against), China needs more and more raw stuff. When Mark Leonard, executive director of the European Council on Foreign Relations was writing his book, What Does China Think?, last year, the country was using 40% of the world’s cement, 40% of its coal, 30% of its steel, and 12% of its energy. According to the British Metals Recycling Association, 35% of the recovered aluminium exported by the UK goes to China (and 72% of it to Asia in general); 43% of the recovered copper goes to China (and 66% to Asia in general).”
“last week, the BBC’s John Simpson reported from a mountain in Peru that is copper-rich: the Chinese have bought the whole thing for a bargain price and are in the process of moving a sizeable town in order to strip-mine the ground beneath it. It won’t be that long before the mountain is gone. Need is leading them to invest, says Leonard, “in all these dodgy regimes in the world, from Zimbabwe to Iran to Sudan. And that’s also changing the balance of power in those parts of the world. So China has emerged as an incredibly influential broker in all these places, and they’re places that we don’t necessarily associate with China.”
June 25th, 2008 at 1:49 pm
Communities of similar demographics and geographically aligned should be united under a regional arm of State government to broaden the realities of sharing and eliminating wasteful county government.
Basically, Summit, Millburn etc… should join forces to preserve the status quo.
June 25th, 2008 at 2:00 pm
[176] bi
your story quoted Chris Christie, and I was reminded this weekend that the informed thinking is that Christie will be among the first expected to fall on his sword when Obama takes office.
While dems in Trenton say nice things about him in public, he P’O'ed too many democrats by prosecuting them for corruption, and they are looking forward to getting him out.
June 25th, 2008 at 2:04 pm
Wow, McCain going against the oil lobby.
http://uk.reuters.com/article/motoringNews/idUKNOA42874820080624
June 25th, 2008 at 2:09 pm
Re 179,
Yeah thats a given, Christie is gone if the dems get in, which is a damn shame becuase nothing will change in this crap state unless there’s an outside force driving it
June 25th, 2008 at 2:12 pm
No fed rate cut or increase. Blah Blah Blah!
June 25th, 2008 at 2:15 pm
June 25 (Bloomberg) — The Federal Reserve left its benchmark interest rate at 2 percent, ending the most aggressive series of rate cuts in two decades, as higher energy costs threaten to boost inflation.
“The Committee expects inflation to moderate later this year and next year,” the Federal Open Market Committee said in a statement today in Washington. “However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=abQ3cIKi7qEQ&refer=home
June 25th, 2008 at 2:17 pm
I liked it better when the FED announcements required a decoder ring to translate them. This Bergabe is as predictable as a clock. Boring!
June 25th, 2008 at 2:18 pm
And the Dow of course rallies
June 25th, 2008 at 2:21 pm
re 178
Summit and Millburn must not be allowed to merge. Intelligence-limited Jerseyites will avoid the place when its name changes to Sumburn