Home Sales and Prices Drop in October

From Bloomberg:

U.S. Economy: Home Sales Fall, Record Drop in Prices

Home resales in the U.S. dropped in October and prices fell by the most on record, signaling a deepening housing recession going into 2009.

Purchases of existing homes slid to an annual rate of 4.98 million, lower than forecast, a National Association of Realtors report showed in Washington. The median price fell 11.3 percent from a year earlier, the most since the group began collecting data in 1968.

Today’s figures indicate a renewed downturn in an industry that showed signs of stabilizing this year, hurt by the credit squeeze and record mortgage foreclosures. That may raise pressure on President-elect Barack Obama to aid homeowners and potential buyers as he assembles a record stimulus package.

“Home sales will continue to fall over the next few months because of tightening credit conditions,” said Sal Guatieri, senior economist in Toronto at BMO Capital Markets, which had the closest estimate for the sales level among 67 forecasts in a Bloomberg News survey. “Underlying demand appears very weak” because “many sales are coming from cheap prices on foreclosed properties,” he added.

Existing home sales were forecast to fall to an annual rate of 5 million, according to the median estimate in the Bloomberg survey.

Sales dropped 3.1 percent from the previous month and 1.6 percent from a year earlier. Resales totaled 5.65 million in 2007. The median-sales price declined to $183,300.

Today’s figures compare with the 4.86 million level reached in June, the lowest in a decade and 33 percent below the record reached in September 2005. Resales have fluctuated around a 4.96 million rate this year.

The number of previously owned unsold homes on the market at the end of October represented 10.2 months’ at the current sales pace, up from 10 months’ at the end of the prior month.

This entry was posted in Economics, Housing Bubble, National Real Estate. Bookmark the permalink.

246 Responses to Home Sales and Prices Drop in October

  1. John says:

    SAN FRANCISCO (MarketWatch) — Pulte Homes late Monday declared a quarterly dividend of 4 cents a share but said it’s canceling dividend on the company’s common stock starting in the first quarter of 2009. The decision is in line with its effort to conserve cash amidst a “very” difficult business environment, said the home builder.

  2. grim says:

    From CNN/Money:

    Existing home sales tumble

    Sales of existing homes fell in October and prices continued to decline as potential buyers remain sidelined by the weak economy, according to a real estate group’s report issued Monday.

    The National Association of Realtors reported that sales by homeowners slid in October to an annual pace of 4.98 million. That was down 3.1% from September’s revised reading of 5.14 million.

    Economists surveyed by Briefing.com were expecting sales to have declined to an annual rate of 5.05 million in October.

    On a year-over-year basis, sales were down 1.6%.

    “Many potential homebuyers appear to have withdrawn from the market due to the stock-market collapse and deteriorating economic conditions,” said Lawrence Yun, NAR chief economist, in a statement.

    The national median existing-home price in October was $183,300, down 11.3% from a year ago when the median was $206,700. In September, the median existing-home price was $191,400.

    October’s median existing-home price was the lowest since March 2004, when it stood at $183,200. That means that homeowners who has lived in their homes for 4-1/2 years are seeing their homes worth the same or less as when they bought them.

  3. grim says:

    From Reuters:

    Existing home sales fall, buyers sidelined

    Sales of previously owned U.S. homes fell in October, with the median home price notching its biggest drop on record as tough economic conditions kept buyers on the sidelines, data showed on Monday.

    Adding to the gloom for the U.S. economy, a separate report from the Federal Reserve Bank of Chicago showed its National Activity Index contracted again in October, staying mired in negative terrain for 15 straight months.

    News on the dire state of the economy was not lacking. The National Association of Realtors said the pace of sales of existing homes in the United States fell 3.1 percent in October to a 4.98 million-unit annual rate. This was slightly below economists’ expectations for a 5.00 million-unit pace.

    On an annual basis, sales were down 1.6 percent on the 5.06 million-units sold in October last year.

    “Many potential home buyers appear to have withdrawn from the market due to the stock market collapse and deteriorating economic conditions,” NAR chief economist said Lawrence Yun told reporters.

    The inventory of existing homes for sale slipped 0.9 percent to 4.23 million from 4.27 million in September. The median national home price declined 11.3 percent from a year ago to $183,300, the lowest since March 2004 when the median price was $183,200, the NAR said.

    The percentage drop in prices was the biggest since the NAR started keeping records in 1968.

  4. grim says:

    From the AP:

    Northeast posts 9 percent October sales decline

    Existing home sales in the Northeast dropped more than 9 percent in October from last year, while the median sales price in the region sank 5 percent to $277,000, the National Association of Realtors said Monday.

    Sales in the Northeast were softer than the national numbers, but price declines were more moderate. Sales nationwide — without adjusting for seasonal factors — slipped less than 1 percent in October from a year ago, while the median price fell 11 percent to $183,300.

    Sales in three major Northeast cities posted positive gains in October, according to the Associated Press-Re/Max Monthly Housing Report, also released Monday. Only two of the nine Northeast metro areas surveyed recorded a drop in sales of more than 20 percent from a year ago. The report analyzed sales transactions recorded by all real estate agents in those metro areas, regardless of company affiliation.

    While the Northeast hasn’t suffered as much from the onslaught of foreclosures like areas in the West, the region’s housing market hasn’t been spared by the deteriorating economy, said Michael Lynch, regional economist at Global Insight.

    He said the largest economy in New England, Massachusetts, is starting to show cracks after seeming “resilient” for the past several months. Job losses are mounting, which could be a harbinger for the rest of the region.

    “It’s the place to watch right now,” Lynch said.

    In the lower parts of the Northeast, the turmoil on Wall Street threatens local economies and housing markets, especially in New Jersey and suburban New York. The area could lose up to 50,000 financial jobs, some economists estimate.

    Already, the New York City suburban housing market is teetering, said real estate agent Sandra Lippman of Prudential Centennial Realty in Westchester County, north of the Big Apple.

    Lippman said sales are “creeping” while inventory has increased over last year. Sales in Suffolk, Nassau and Westchester counties, which surround New York City, dropped more than 11 percent, while prices fell almost 10 percent to $400,000, according to the AP-Re/Max report.

    “I had a few buyers who work for the investment banks or brokerage houses. Some of them have just disappeared,” Lippman said.

    The New Jersey market, home to many Manhattan commuters, also is feeling the pinch. Sales in Passaic, N.J., tumbled 16 percent, and prices dipped more than 3 percent from a year ago to $339,000.

  5. spam spam bacon spam says:

    “On a year-over-year basis, sales were down 1.6%.”

    Why such a small number?

  6. zieba says:

    bear on bear on bear action, triple casino:

    http://finance.yahoo.com/q/bc?s=FAZ&t=5d&l=on&z=m&q=l&c=

  7. SAS says:

    bend over & grab your ankles!

    “U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit (Update2)”
    http://tinyurl.com/6f5vdl

  8. alia says:

    (from weekend discussion)
    lisoosh: we perhaps love pratchett a little too much. our cats were/are named Binky and Quoth. best not to ask about the boys’ names. :*)

    re farmettes: so *that’s* what they’re called… ;) i don’t think i could adequately take care of more than 5 acres, myself… unless the extra acres were “wild”… forest or water. mm, forest… horses hadn’t occurred to me (i’ve been thinking small, on the acre or less side). but if one happened to adopt me i could find room for it. somewhere…

    nom: PA… near the northern coal towns? They’re kind of depressing. I would really recommend central PA. Penn State was founded as an agricultural college because the soil was so good in Nittany Valley.(Though it’s a bit far from the closest railroad. Do you want ease of access to your land or do you want it hard to get to unless you know where it is?)

  9. alia says:

    134 from last thread…
    gator: i am picturing you singing “won’t you be Stu’s neighbor” in full Mister Rogers style.

    i need to get out more.

  10. spam spam bacon spam says:

    Alia:

    We’ve got a few rules re: farming.

    No horses (generally) on less than 3 acres.
    You need to be able to handle the manure.

    Also, you need 5 acres minimum to be farmland assessed. That is the minimum “to be farmed”; you’ll need more acreage to have your house, and any house-related structures.

    In other words, you need to farm a minumum of 5 contiguous acres outside the “human bits”.

  11. spam spam bacon spam says:

    Out here in Hunterdon, if you think 1 acre is a lot of land, you’re a “newcomer” :)

    If you want privacy, animals, or just room to stretch, you’d do well with 5-10 acres, at least…

    Also, “farm envy” is catchy. One day you find yourself looking at the farms much bigger than yours…and dreaming of it being yours…

    And then you start pestering your hubby :)

  12. alia says:

    my farming info is currently a little skew, since i’m learning a lot of “best practice” from the uk gardeners. (none of whom keep horses on their allotments.)

    uk gardeners are really into using “well-rotted (horse and cattle) manure” on their gardens. (right after the carrots, in the crop rotation cycle) is that standard practice in the states as well?

    i’ve just been thinking of a farm as a place to grow things, so hadn’t thought much about the tax implications.

    maybe i can handle more than 5 acres after all…

  13. lisoosh says:

    Binky, Quoth, like the dark stuff huh?
    I have a huge list of Pratchett quotes – kind of thing you can live a life by.

    Enjoy Neil Gaiman? Good Omens?

  14. lisoosh says:

    My husband would view the bigger the acreage the better.
    I just really want my barn and plantation.

  15. lisoosh says:

    spam, alia, s-l. As you are all here, I passed on my e-mail to grim to forward to you.

  16. waiting says:

    CC being closed: it is real.

    I have been rotating the never used CC since I learned here that banks are closing them. There are still three Chase CC left. Today I got a notice that one of them was closed due to inactivity for more that 24 months. Called and learned that the other two were closed as well.

    If you want to keep your seldom used CC, use them once as soon as possible.

  17. alia says:

    lisoosh:
    dark… but humorous. that twinkle in the sepuchral eye of death is crucial.

    good omens is my favorite book. bar none.

    soon after i met my now-husband, we were flirting over email and i said he reminded me of Carrot and he said that was the nicest thing anyone had ever said about him.

    i think _small gods_ is his best stand-alone-how to live book.

    sorry about the fangrrling… but yeah. pratchett wins.

  18. spam spam bacon spam says:

    Alia,

    We love manure here, too!

    I can’t get rid of hot (fresh) manure, but we compost it fully and have some landscapers & professional gardeners who run us completely out of “stock”…

    We can’t legally store it near drinking water wells or water sources (I do have a creek, I must keep manure storage away from it) and realistically, you want it out of sight but still close enough that when winter comes, you’re not trudging 50 million miles in the cold dark night to dump manure…

  19. alia says:

    i once lived downwind from an above-ground mushroom farm. the smell was… unforgettable. :} …burned popcorn and poopy diapers… but they grew lots of very happy mushrooms…

    do you compost it separately or mix it with kitchen/garden waste? does it just compost with time, or do you add worms and keep it covered to cook faster?

    (i am full of the random questions, yessirree! ;)

  20. spam spam bacon spam says:

    Re: tax implications…

    It’s actually not a huge savings in taxes for a small farm like mine, HOWEVER, there are legal benefits to being farmland assessed….

    You can have a truck with “farmer” plates, and not have it inspected :)

    You can build farm barns and structures closer to things that you wouldn’t otherwise be allowed to build so close to…
    (eg: your minimum space between your side property line and barn is smaller when you are legally a farm)

    You can have a farm stand on your property.

    You can build barns (a little easier) in places you aren’t normally allowed to build due to the “right-to-farm” act.

    There’s a lot more, but once you are farmland assessed, zoning laws are relaxed a wee bit.

  21. spam spam bacon spam says:

    Said in a hillbilly voice, my husband leans on his shovel and says…

    “This hearin’ ma schitt farm…”

    We run three piles.

    Hot = fresh manure, eggs of unknown origin, (we find eggs laid in stored bales of hay or hidden in weird places!) and chicken coop bedding (chicken poo and pine bedding)

    Cooking = the mix being turned completely, about every 2 weeks… this is heated and will steam in winter when you expose the interior…

    Compost = Full cooked. This is about 8 weeks old. It has worms living in it (they just move in) and will grow grass on it.

    Due to us selling it ($2 for a tractor bucket load-pays for diesel to run tractor to turn it), we hardly ever have any.

    I don’t think it smells, but I could be wrong :)

    No one complains. Our neighbors love our farming our small parcel and our next door neighbor has a grandson who eagerly sleeps over his house once in a while and asks “Will I get to hear the roosters, poppop?”

    Our other neighbor (elderly) has family that that visits every Thankgiving and brings their own carrots for the carrot
    w-h-o-r-e-s, and they come to the fence all dressed up nice in dresses to pet the carrot w-h-o-r-e-s.

  22. still_looking says:

    lis, cool!

    alia…. grow mushrooms? How ’bout finding them? My hubby proposed to me under a giant chicken mushroom at Bear Mtn :) We went mushroom hunting that day… I got the biggest mushroom of all…him! :)

    bacon, right now we get horse manure from the chicken/egg farmer by us….hubby mixes it with the compost…the garden seems to like it but our tomatoes failed miserably this year.

    also…as a farm, you are allowed to hunt for venison on your property.

    I was hoping to have enough land (with a stream) to raise bees.

    ….one day….one day…

    sl

  23. spam spam bacon spam says:

    Rather than manure smells, flies are the nuisance we work hard to avoid.

    Flies=Horses=Flies

    If anyone invents something that makes flies NOT ATTRACTED TO HORSES, consider yourself an instant gazillionaire.

    There are plenty of ultra-rich horse owners (think Georgina Bloomberg) willing to pay WHATEVER PRICE YOU NAME to get rid of the flies.

    Flies suck.

  24. still_looking says:

    http://www.cheesemaking.com/store/pg/194-Farm-for-Sale.html

    this one’s for Nom…

    or anyone interested in NW Pennsylvania

    sl

  25. still_looking says:

    bacon,

    you mean like the horse bot flies?

    ugh.

    they are really nasty!

    sl

  26. spam spam bacon spam says:

    My friends have an apiary.

    Now theirs is a house you’d like.
    Old colonial, every weed is named, apiary, about 2 acres…

    They are from England.

    They drink lots of beer, too!

    BTW-goats are not affected by the flies. No fleas, no flies, not gnats, I don’t know how our goat does it, but she is a walking “clean chamber”…heck she doesn’t even like to get any hairs wet. :)

  27. spam spam bacon spam says:

    I’ve actually never had to deal with bots, they stick like little eggs on their legs, but the regular “schitt” flies (horse flies) are gowd-awful annoying all summer long…

    Then you get the B-52’s in late summer for about 2-3 weeks that I believe actually radio in for landing and I swear you can hear them throttling down to land on the horse’s rump.

  28. spam spam bacon spam says:

    S-L,

    Very cool on the mushroom!

  29. still_looking says:

    bacon,

    I remember twice in my life getting chased (!) yes, chased by greenhead flies…

    once in Maine and once in NC. Maine also had these wicked blackflies… the bites swelled up to the size of half dollars and took forever to heal.

    Bees…mmmm….and honey…and pollenation….mmm gotta have bees….

    sl

  30. kettle1 says:

    sl, alia

    sounds like nom needs to get the compound moving…

  31. lurkerd says:

    Am I the only person here who notices the elephant in the room?

    Los Angeles prices down 35%
    Las Vegas prices down 28%
    Phoenix prices down 28%
    San Francisco prices down 25%
    San Diego prices down 36%
    Sacramento prices down 37%
    Washington prices down 24%

    Newark-Union prices down 2%

  32. lurkerd says:

    The real story, grim, is the tremendous outperformance of this area’s housing market. How do you explain it?

    Here’s the source for my earlier post.
    http://www.realtor.org/wps/wcm/connect/c5200d804bf84ae9beb7befda086cc0a/REL08Q3T.pdf?MOD=AJPERES&CACHEID=c5200d804bf84ae9beb7befda086cc0a

  33. Pat says:

    lurkerd, are you looking for the links to research describing price declines relative to mortgage and borrower characteristics? You can visit ofheo dot gov, read a typical research paper, and then check out the maps at various Websites, including:

    http://maker.geocommons.com/maps/900

    check out LTV stats, GSE stats, etc.

  34. DL says:

    Jersey Jim: From previous thread, # 69; yes. That’s why I end up posting either very early or very late. NJRERE; the global blog.

    BTW, I still go to Camden regularly. In a State known for being corrupt, the Camden municipal government was taken over by the State because it was too corrupt by even NJ standards.

  35. DL says:

    http://www.courierpostonline.com/apps/pbcs.dll/section?Category=camdenmap08&template=nocolumn

    Camden murder map. Click on the ballons and you get the details with a photo of the murder scene.

  36. grim says:

    The real story, grim, is the tremendous outperformance of this area’s housing market. How do you explain it?

    Newark Union?

    We’re talking about Essex, Morris, Hunterdon, Union, and Sussex Counties. As well as Pike County out in PA.

    Given the dramatic range in towns in this grouping, from Newark to Far Hills, I’d be most concerned about how the underlying mix of properties influenced the median price reported.

    Realize that a further slowdown in sales in areas like Newark and Irvington would likely have the effect of pushing the median upwards. Likewise, a drop of sales out in Sussex and Pike might have the same effect.

  37. grim says:

    From FISERV:

    Fiserv Case-Shiller® Home Price Insights: Weakness Broadens Across U.S. Housing Market as Credit Crunch, Tighter Lending Standards and Sagging Economy Take a Toll

    In a year when home prices across the U.S. have fallen 15 percent, the
    housing market in several metropolitan markets that have to date shown resilience are now falling in line with the national downward trend, according to an analysis of home price trends in more than 375 U.S. markets based on the Fiserv Case-Shiller® Home Price Index, owned and generated by Fiserv, Inc. (NASDAQ: FISV), a leading provider of information technology services to the financial industry and data from OFHEO, Office of Federal Housing Enterprise Oversight. The weakening housing picture is broad and deep: home price forecasts have been revised downward for nearly all the 375 metro markets evaluated by Fiserv. Among the markets where the outlook for housing prices has dimmed:

    – The outlook for the suburban New York City markets of Southern Connecticut and Central New Jersey have been revised down, reflecting job losses on Wall Street and at hedge funds, as well as anticipated cuts in year-end bonus payments. Average house prices are forecast to decline 12 percent over the next year ” a faster rate than the 7 percent decline experienced over the 12-month period that ended June 30, 2008. In the Edison and New Brunswick, N.J. metro area, which is home to many pharmaceutical companies, home prices are forecast to fall 19 percent over the next year.

  38. grim says:

    From the WSJ:

    New Facility Targets Consumer Lending

    Treasury Secretary Henry Paulson, seeking to ease strains in the consumer credit market, plans to announce Tuesday the formation of a program to increase the availability of auto loans, student loans and credit cards, according to people familiar with the matter.

    The lending facility, which will be operated by the Federal Reserve, is expected to provide loans to investors who want to buy securities backed by credit cards, auto loans and student loans, these people said. Treasury will contribute between $25 billion to $100 billion to the facility from its $700 billion Troubled Asset Relief Program.

    The program is aimed at making it easier for consumers to borrow money. Government officials, including Mr. Paulson, have grown concerned about “distress” in the consumer finance market, as the availability of household loans has ground to halt amid a broader credit crunch.

    While the initial focus will be on consumer loans, the facility could eventually be expanded to cover all manner of assets, including mortgages.

  39. grim says:

    From the WSJ:

    N.J. Is Drawing Heat for Hedge-Fund Foray

    New Jersey’s pension fund, already in the spotlight thanks to losing investments this year in large banks, is under fire again, this time over a series of controversial hedge-fund investments that initially swept below the public radar.

    New Jersey made the investments last month, to funds run by BlackRock Inc., Canyon Capital Advisors LLC and GoldenTree Asset Management LP, as they were “facing the equivalent of margin calls,” William Clark, director of the New Jersey Division of Investment, said in an interview Monday.

    In effect, the funds, which had borrowed money for investments, either faced or anticipated facing demands from lenders for cash as the value of those investments fell.

    State legislators, upon learning of the investments, are questioning both the wisdom of the decisions as well as the process: At $49.5 million each, the investments came in a hair below the $50 million threshold that requires the fund to explain an investment to an oversight board before moving forward.

    The dustup comes at a time when hedge funds have been facing a rise in margin calls from their prime brokers.

  40. Jersey Jim says:

    DL,
    I’m in northern Italy and Germany. We have a place just outside of Nuernberg.
    Jim

  41. grim says:

    From the Philly Inquirer:

    N.J. lawmakers fret over pension-fund losses

    New Jersey lawmakers brooded over the latest bad news for the state’s pension system yesterday: more than $20 billion in recent investment losses, including $9 billion in October alone.

    In a hearing held days after a report detailed the damage, lawmakers homed in on a few eyebrow-raising decisions – including an an ill-timed investment in Lehman Brothers shortly before the firm toppled – but they had few solutions for a deepening problem.

    William Clark, director of the state’s Division of Investment, defended the pension system’s performance, saying that despite the losses, New Jersey is actually doing better than most states struggling through the nation’s economic meltdown.

    He said lawmakers should consider the good – the state saw a better than 17 percent investment return last fiscal year – with the bad, including a Lehman move that turned so sour his office refers to the firm only as “the L word.”

    “On a percentage basis, [the losses] are what you would expect,” Clark said. “Admittedly, it’s a lot of money.”

    The losses represent just the latest blow to a retirement system that covers more than 700,000 state and local government workers, teachers, police and firefighters, and whose funding has been slipping for years.

  42. grim says:

    From Bloomberg:

    Paulson May Ask for Remaining $350 Billion of TARP

    Treasury Secretary Henry Paulson, less than a week after indicating he would let the Obama administration decide how to use the second half of the $700 billion financial fund, is considering asking for the money.

    Paulson may ask Congress for the remaining $350 billion from the Troubled Asset Relief Program as he puts together plans to boost consumer credit. Treasury and Federal Reserve officials are working on an effort to buttress the market for securities backed by auto, student and credit-card loans, Paulson said last week. He’s also assembling an office to address mortgage foreclosures.

  43. grim says:

    From Bloomberg:

    Citigroup Bailout Charts New Course for U.S. Government Rescues

    The U.S. government’s emergency rescue of Citigroup Inc. offers a new model for bank bailouts: explicitly insuring against losses on toxic assets, with taxpayers footing the bill.

    The Citigroup plan extends the federal commitment beyond the previous framework of capital injections from the Treasury and credit from the Federal Reserve. Now, the U.S. is a partner in the performance of $306 billion in real-estate loans and securities, sharing losses beyond $29 billion on what are likely to be some of Citigroup’s worst holdings.

    “Everybody and his brother has got to have their hand out now,” said Eric Hovde, chief investment officer at Hovde Capital Advisors, which manages $1 billion in financial-services stocks. “The whole problem is so much bigger and deeper than the Fed and Treasury ever understood.”

    Taxpayers are likely to be at greater risk from the new template, which may be used to help more companies as debt writedowns continue to climb, analysts said.

  44. grim says:

    From the Asbury Park Press:

    Yacht builder cuts 17% of jobs

    New Jersey’s largest boat-building company, Viking Yachts, laid off as much as 17 percent of its work force this year in what could be the biggest downsizing since the 1990-91 recession, coupled with a federal luxury tax that decimated the Bass River boat works.

    From a recent peak of 1,400 workers, the company has shed 210 to 250 positions in several rounds since March, said Peter Frederiksen, Viking director of communications. Escalating fuel costs earlier this year were one factor, and the deepening global economic malaise has reduced domestic and international demand for the company’s distinctive sport fishing and motor yachts.

    The company’s 600,000-square-foot production plant on the banks of the Bass River was expanded this year with completion of a 130,000-square-foot addition. Production had expanded in recent years to as many as 108 vessels annually, priced from around $1 million to $4.5 million each, according to the company.

  45. DL says:

    Opps. Our bad.

    “Stewards of the state-employees’ pension fund on Monday promised greater communication with workers at a time when Wall Street’s troubles are sapping retirement plans for legions of workers. The fund managers said they would, for example, disclose emergency investments even if they are less than the $50 million threshold.”

    http://www.courierpostonline.com/article/20081125/NEWS01/811250356/-1/newsfront2

  46. SAS says:

    keep your eyes on the pension fund stories!

    if that fails, all bets are off.

    SAS

  47. SAS says:

    don’t get your hopes up with this Citi bailout, there books are a mess.

    They don’t even know how much they lost.

    SAS

  48. grim says:

    Cramer making sense? What has this world come to.

    Not Another Dime for the Home Builders

    How about the outrageous request from homebuilders asking Congress for a 250 billion dollar stimulus package. These are the very companies that got us into this mess are now begging at the federal trough for a quarter of a trillion dollars so they can build more homes.

    “This package had better be deep-sixed immediately,” demanded Cramer as giving these companies money is the worst possible thing he believes they could do given the house price depreciation that has threatened the global economy.

    “They want $250 billion? You know what? They owe us $250 billion for the damage they’ve caused to our economy. We need the homebuilders do go under. We don’t want them pumping out any more homes. This is the absolute height of outrage,” said Cramer.

    Cramer can’t believe these guys had the guts to even ask and it must be stopped.

    “I’m happy to give these companies money to stop building homes or to dismantle their existing inventory (or dismantle themselves), but letting them live another day and keep building houses is like dropping napalm on the US economy. No thank you.” added Jim.

  49. grim says:

    From WaPo:

    Google Layoffs: 10,000 Jobs Being Cut, Report Claims

    Google is getting ready to layoff 10,000 of its staff, according to the organization WebGuild that cites anonymous inside sources.

  50. Clotpoll says:

    lurky (32)-

    Please come spend a week with me and view for yourself NJ’s “outperformance”.

    Please also explain to all how NJ’s housing market will hold us vs. cascading job loss.

  51. Clotpoll says:

    grim (39)-

    How much of the TARP will go to the payday loan industry?

  52. grim says:

    Crime in Upper Haughtyville? Impossible.

    From the Record:

    Englewood Cliffs sees uptick in home burglaries

    Authorities are encouraging residents to be vigilant this morning after burglars swept through three homes in Englewood Cliffs over the weekend, police said.

  53. grim says:

    I’ve got a question.

    Are housing markets necessarily synchronous?

  54. Clotpoll says:

    grim (40)-

    “New Jersey’s pension fund, already in the spotlight thanks to losing investments this year in large banks, is under fire again, this time over a series of controversial hedge-fund investments that initially swept below the public radar.”

    These dolts just needed a follow-on to their brilliantly-timed final investment in LEH…just as everybody else was fleeing the burning wreckage.

    NJ’s pension fund directors should be arrested and all investment activities suspended. The only thing that will reverse the slide is taking the fund into a full stop-loss mode.

  55. Clotpoll says:

    grim (42)-

    In a sane world, a statement like this should earn somebody serious jail time:

    “William Clark, director of the state’s Division of Investment, defended the pension system’s performance, saying that despite the losses, New Jersey is actually doing better than most states struggling through the nation’s economic meltdown.”

  56. grim says:

    Isn’t that the Banker’s Creed? When you fail, be sure to fail in such a way that won’t leave you singled out from your peers

  57. grim says:

    From MarketWatch:

    D.R. Horton loss widens to $2.63 a share

    D.R. Horton Inc. said Tuesday that it lost $800 million in the fourth quarter, or $2.53 a share. In the same period a year ago it lost $50 million, or 16 cents a share. Sales fell to $1.75 billion compared to $3.12 billion. Analysts polled by FactSet Research estimated, on average, a loss of $1.87 a share and sales of $1.50 billion. Pre-tax charges included $365 million in impairment charges for owned inventory, $624 million in impairment charges for land and lots that were sold during the quarter and $86 million for write-offs of deposits and pre-acquisition costs related to land option contracts and goodwill impairment charges of $79.4 million. Chief Executive Donald Horton said, “We continue to adjust our business to the current homebuilding environment by reducing our homes under construction and our owned lot position, controlling costs and repaying debt.”

  58. grim says:

    Nice to hear someone is doing well in this economy. Spam-maker Hormel Foods raises dividend.

  59. Clotpoll says:

    SAS (47)-

    The pensioners will be storming the ramparts before I can even get my grenade launcher together.

    The real potential for civil unrest lies in a pension fund failure scenario.

  60. grim says:

    From Bloomberg:

    London, Tokyo, New York Office Rents Fall First Time Since 2002

    Office rents in London’s West End, midtown Manhattan and Tokyo fell in the third quarter for the first time in almost seven years as the global financial crisis cut demand, CB Richard Ellis Group Inc. said.

    The total office occupancy cost in the West End was 139.50 pounds ($248.66) per square foot a year in the 12 months ended Sept. 30, down 5.1 percent from a year earlier, Los Angeles-based CB Richard Ellis said today in its semiannual global-office survey. Rents in London, midtown Manhattan and central Tokyo last fell from a year earlier in January 2002, during the last recession.

    Rents fell in the three cities as the economic crisis dampened demand for space among banks and investment companies. Rents worldwide are likely to fall for the rest of this year and the first quarter of 2009 as the financial crisis spreads throughout the world’s economies, Raymond Torto, CB Richard Ellis’s global chief economist, said in an interview.

    In midtown Manhattan, they dropped 2.7 percent to $98.08. Total office occupancy costs are rents plus other service charges by landlords.

  61. grim says:

    Hope the CRE black-boxes (assumption boxes?) took into account the possibility of falling rents.

  62. Clotpoll says:

    SAS (48)-

    My nephew is in short-term commercial paper at C. He’s one of the last left in the dept. Boss was fired on Friday.

    Monday AM, he listed his Manhattan apt and Hamptons place for sale. I’ve heard thru the grapevine his wife is already on meds.

    And this is a guy who was sharp enough to see this coming 12-14 months ago. He sold all his C stock in the high 30’s. Makes him seem almost Buffett-like in retrospect.

  63. lurkerd says:

    37,54

    The mix shift and timing excuses have grown tired. As analysis of the facts dismisses them both.

    Let’s begin with the genuine housing crash markets – San Diego, Los Angeles, San Francisco, Phoenix, Las Vegas, Miami, and Tampa. We’ll use S&P/Case-Shiller data as it is a matched pair index that isn’t influenced by a shift in the mix of sales.

    These housing crash markets peaked at the same time – between May 2006 and August 2006. The price declines are similar too, ranging from 26.4% to 32.6%. This data is in line with the NAR stats.

    Some local observers predict that home prices in the New York area will fall by a similar amount, but with a lag. These self-proclaimed housing experts justify their predictions with the claim that the New York area’s version of the housing crash has until now failed to appear because home prices peaked later here. They retain faith in their belief of a massive New York area crash, arguing that it is simply a matter of time before it comes to pass.

    There is a big problem this explanation though – it isn’t supported by the facts. According to the S&P/Case-Shiller home price index for the New York area, this area peaked at the same time, June 2006, as the 7 markets listed above. But home prices have fallen only 10.0% in the New York area. This is consistent with the NAR data.

    In other words, the difference between the New York area and these 7 markets has to do with the scale of the crash. The facts reveal that timing does not explain the difference.

    Here is the data.

    http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_History_082653.xls

  64. grim says:

    Perhaps we should consider divesting ourselves of those troublesome “middle states”. Maybe we can persuade Canada to buy a few of them, perhaps a package deal that would include an automaker or two?

    ArcelorMittal Warns of US Layoffs: Report

    The world’s largest steelmaker ArcelorMittal told its steelworkers union that it could eliminate 16 percent of its U.S. work force, beginning in January, due to lower demand for automobiles, appliances and machinery, the Wall Street Journal said.

    It would be the largest single layoff of steelworkers in the U.S. in the current downturn, the paper said.

    ArcelorMittal said that layoffs are not yet imminent but alerted the United Steelworkers that it has targeted 2,444 indefinite layoffs at its Burns Harbor steel plant just outside Gary, Indiana.

  65. Clotpoll says:

    lurky (64)-

    I’m in RE, and I’ve never heard ANYONE claim that home prices peaked later here than in other parts of the US.

    Most of the NYC bull argument revolved around the former relative strength of WS and the NYC economy and the irrational belief that it’s somehow “different here”.

  66. grim says:

    Speaking of S&P Case Shiller, September numbers due out this morning.

  67. Clotpoll says:

    grim (65)-

    It’ll be heartwarming to see the industrial Midwest return to being a gritty, hardscrabble symbol of poor white trash poverty.

    It should also be a boon for the sport of football. The best players seem to come from down & out Midwestern towns in particularly lean economic times.

  68. Clotpoll says:

    Bet against Case-Shiller at your own risk.

  69. NJGator says:

    I expect my company to freeze our pension plan. I am surprised that they haven’t done it yet. I am just hoping they can hold out for another 2 years, so I don’t have to include the year of Lil Gator’s birth in my salary calculation, as disability and leave payments don’t count towards earnings. Fingers crossed.

  70. BC Bob says:

    Clot [55],

    Just a total mess.

    Over the last several years, they decided to allocate close to 20% in alternative investments; hedge funds, pe, commodities, re, etc.. How’s their association with Blackstone/Carlyle working out? How about close to $1B in Citi and Merrill last Jan..

    You would think they would offer a true service to NJ taxpayers, view our open positions, allowing us the opportunity to take the other side of the trade.

  71. BC Bob says:

    “But home prices have fallen only 10.0% in the New York area.”

    [64],

    Only 10%? Say you put down 50K on a 500K property. You are only down 100%. Comforting? Actually more, when you calculate cost to carry.

  72. RentinginNj says:

    BC 72 considering the median DP on a house was something like 2%, a 10% drop means you lost all of your money and now owe the bank. Ain’t leverage great

  73. John says:

    Here is an interesting thought do home prices even matter any more? Homes are no longer a path to wealth and don’t even offer much tax breaks. Yea you can write off mortgage interest but a lot of people can’t write off RE taxes and since there are no gains who cares about the tax breaks on that. Now people have small house envy. I never traded up and the folks who did tell me they are jealous of my POS Split. In the past week we have been promised the bush cuts to 2011, FDIC bank bonds with good yields and munis still hovering close to 6% and 4.25% CDs still around. For those with cash why invest in a home in NY/NJ when a lot of the stock is 50 years old, requires a lot of main and RE taxes and home insurance is headed straight up? Thanks to Mr. Paulson I can just do a mix of three year FDIC insured bonds at 6%, long term Munis at 6% tax free and FDIC one year cds at 4.25% and sit back and relax. Buying a 600K house with 120K down is what I call gambling.

  74. John says:

    Fed to buy $600B in mortgage-related debt, Treasury to pump $20B in TARP funds to boost consumer credit.

  75. Old Stan says:

    Clot (66) – NYC *is* different. It is both the financial capital of the US and a the target for foreign investors who (until recently) had a 30% off coupon from the weak usd-euro exchange. I think these reasons are enough to explain the relative strength of the markets close to NYC.

    It could also be setting NYC up for an even greater fall as Europeans and Wall St. are forced to divest.

  76. chicagofinance says:

    lurkerd Says:
    November 25th, 2008 at 7:47 am
    37,54 The mix shift and timing excuses have grown tired. As analysis of the facts dismisses them both.

    lurked: Honestly, what is your point?

    “The mix shift and timing excuses have grown tired.” Maybe in your eyes, but unfortunately for your assertion, they really hold a lot of merit.

    The basic issue here is that the housing market on a national level imploded on its own without a causational economy backdrop. That is a pretty nice trick. Now…we have about the most nasty recession you are ever going to see at hand. Any relative robustness in this market that you are discerning from your data sources is pure GIGO, “mix shift” or “timing”. If you see anything you like in the current data on November 25th, then wait awhile….

  77. Al says:

    I think I am with Lurkerd here. NJ is still surprisingly overpriced.

    Most drops comes from places like Newark and other not so good towns. Heck – in plainfield/south plainfield I can almost buy “real cash Flow” Properties – renta are multiple of 1.5 of PITI…

    But good luck collecting rents and my view of NJ employments and rental potential is quite… well… grim

    Better towns are still holding their ground. OF course Grim and other are going to say – well if you think you should get a house in “blah blah” for 50K you are dreaming…
    I am not talking about Prime NYC commuting towns. I am talkin cental NJ – Bridgewater, Middlesex, Boubd brook, Clark, Woodbridge areas. Also “more” Premium towns such as Scotch Plains, SUmmit, Union, Cranford, Fanwood, Warren, Watchung, Green Brook – are still VERY expensive.

    Come on – average house listed at something like 500K-700K in all thouse places… When Will people wake up and realize that nationwide average home is at 183K!!!

    Are salaries really that much higher?? Do everyone iin thouse towns gets 200K+ inheritance?? DO highest taxes in country does not affect RE prices??

    I’ve said it multiple times that Central NJ – north NJ NYC area is the most expensive in the country and it is not even that nice of a place to live.

    IN CA right now it is 70 – no heating bill….

    What I do not understand is why people who’s job’s are not connected to NYC or to NJ state goverment are still here??? If you can get similar salary elsewhere a lot cheaper whay not move?

    But the outflow seems to be really slow.
    7 more month left in my contract… SO I will start looking in 3 for job elsewhere – I hope with this economy there will be jobs for me….

    Two years ago I did not choose California because SF surburbs were crazilly expensive, even though I weas offered a bit higher salary there than here (job was not as nice though)… Now fairly new homes (5-10 years old) around the same area I looked at selling for 50% off (I saw few FK sales at 250K)…

    Had I known back then….. I would not have to pay heating bill right now…

  78. Stu says:

    Yahoo Finance:

    Economic Tumble Worse Than Expected in 3rd Quarter- AP

    The government says the economy took a tumble in the summer that was worse than first thought as American consumers throttled back their spending by the most in 28 years. The Commerce Department’s updated reading on the economy’s performance showed gross domestic product shrank at a 0.5 percent annual rate in the July-September quarter. That was deeper than the 0.3 percent rate of decline first reported.

  79. HEHEHE says:

    Man the economic figures must be beyond manipulation at this point given the amount of money the PPT is throwing around. I was holding out for maybe just a deep recession but it looks more and more like a complete economic collapse.

  80. comrade nom deplume says:

    [24] still,

    Ideal property but a bit too expensive and too far west. Further, unless I could rent it out, I don’t need a cheesemaking facility.

    But you get the general idea.

    [30] Kettle,

    Working on the business plan. Perhaps a Country Compound GTG is in order?

  81. Stu says:

    Consumer sentiment numbers come in at 10am. Prior was 38, forecast is 40. I’m guessing 36.

  82. HEHEHE says:

    That’s over a trillion dollars in two frigging days!!! At what point do people start invading Washington?

  83. Secondary Market says:

    @45:grim Says:
    “Yacht builder cuts 17% of jobs..”

    talk about a rough year; my very good friend works for their family hedge fund and goes to work everyday bracing for his departure. he said they’re down over 50% on the year and halted trading. so the only thing he does all day is manages his fantasy football teams. not bad for 80k + a year (that goes much further in south jersey).
    wife is preggers with twins and was laid off by schering plough in september. not to mention their 400k town home that now has comps in the low 300’s. they both are 29.
    not to feel too sorry for them however; they still hang onto their wealthy parents teet. money always begets money.

  84. Pat says:

    Lurkerd’s post has that fishing expedition and gimme free ideas feel.

    I can’t just do what I have to do and write about the same old crap explanations while I’m writing up the new data coming out on Tuesday. I think I’ll go pretend to be a lurker, stir up the pot, and see if anything new and flavorful rises.

  85. comrade nom deplume says:

    Now where is Schabadoo? He upbraided me for suggesting that this sort of economic behavior would happen:

    Baseball Free Agents Seeking to Avoid Higher Taxes Under Obama Administration

    Some free agent baseball players are seeking large signing bonuses to avoid paying higher taxes if President-elect Obama succeeds in raising the top tax rates in 2009, according to agents, sports economists, and financial advisers.

    Obama supports making the 10 percent, 15 percent, 25 percent, and 28 percent tax rates established in the Economic Growth and Tax Relief Reconciliation Act of 2001 (Pub. L. No. 107-16) permanent but wants to see the 35 percent marginal tax rate rolled back to 39.6 percent for the highest earners (168 DTR GG-1, 8/29/08).

    For certain taxpayers in 2009 the 35 percent tax rate is scheduled to apply to taxable income exceeding $372,951. The minimum major league salary for 2009 will be $400,000, according to the Major League Baseball Players Association. In 2007, the average salary was $2,824,751.
    “There are people who like to make every last dollar and will try to maximize impact by front-loading” their next contract, said Ron Shapiro, a Baltimore-based sports agent and attorney.

  86. chicagofinance says:

    I’ve been getting a lot of questions such as “Are you still renting?” / “Are you still bubble sitting?”….. I say yeah….answer “Lucky Bastard”….

  87. JBJB says:

    John [64]

    You make a good case. Home prices are irrelevant to me. I don’t consider a home an investment vehicle for retirement. Also, the single biggest factor that as kept us on the sidelines is NJ is real estate taxes. I simply refuse to send 10-12K a year down the sinkhole. Any you can bet, as the economic climate gets worse, there is going to be a hard push to accelerate the increases in RE taxes. The old adage – why rob banks, cause that’s where the money is – will become the motto of the ignorant and corrupt NJ politician and the sheeple that elect them. Where are they going to get the money? If you can afford a house, you must be “rich”. Owning a home in NJ will no longer be the American dream but merely a conduit by which a corrupt state can rob you.

  88. comrade nom deplume says:

    crap, 86 in mod. An embedded O in the cut and paste. Sorry, Grim

  89. Sean says:

    re: #40 Considering the NJ Pension Fund had $90 Billion in 2001 and was still short at that time to cover future liabilities. The taxpayers are going to be taking it on the chin as well as bending over, it will be a double whammy as the municipal taxes as well as the states taxes are going to really increase. The law is written that the taxpayers must make up for the shortfall. They are now about 50% short at 57.8 Billion and are paying out to about 240,000 retired workers. With all those boomers getting ready to retire we are in for a castastrophy just like California and other states. If William Clark the director of the state Division of Investment was smart he would begin the process of converting the NJ Pension fund into a commerical bank.

    Sell the damm, ports, the bridges, the tunnels, the highways the beaches will be
    the chants coming from the pensioners as they protest in Trenton.

    I will not be buying anytime soon in NJ.

    Anyone know how PA is doing? Heck I may pack it up and leave town to avoid the taxes. I heard Texas is run well, can anyone provide feedback?

  90. grim says:

    From MarketWatch:

    U.S. Q3 GDP down 0.5% vs. down 0.3% prev. est.

  91. twice shy says:

    RE prices are declining even in desirable towns like Brigadoon. As they come down, you’d think the properties might become more affordable. I’ve seen a couple small ranches, capes or bungalows revised in price down to $399k or $428k, for example. These are modest older 3/1.5 homes in decent locations. So why not jump in? Property taxes. Property taxes become seriously out-of-balance as the prices decline. On the two examples cited above, both carry property taxes at $9,000/year. I find that excessive. Further, given the state’s fiscal mess, these taxes will only increase.
    This equation puts even the solvent homeowner with a large DP in a bind, and they will get squeezed. It is unsustainable.

  92. grim says:

    From MarketWatch:

    Fed creates Term Asset-Backed Securities Loan Facility

    Fed to support issuance of some asset-backed securities

    Fed to support ABS collateralized by auto loans, SBA loans

    Fed to support ABS collateralized by student loans

    Fed to purchase direct obligations of housing-related GSEs

    Fed to purchase mortgage-backed securities backed by GSE

  93. grim says:

    Given the fact that Freddie and Fannie have already been nationalized, are the last two points largely irrelevant?

  94. NJGator says:

    Another Montclair comp killer:

    GSMLS 2587126 43 Macopin

    OLP 499k
    LP 469k
    Assessment (10/06): 631k

  95. grim says:

    From Standard and Poor’s:

    National Trend of Home Price Declines Continues Through the Third Quarter of 2008 According to the S&P/Case-Shiller Home Price Indices

    Data through September 2008, released today by Standard & Poor’s
    for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, shows continued
    broad based declines in the prices of existing single family homes across the United States, a trend that
    prevailed since 2007.

    The chart above depicts the annual returns of the U.S. National, the 10-City Composite and the 20-City
    Composite Home Price Indices. The decline in the S&P/Case-Shiller U.S. National Home Price Index –
    which covers all nine U.S. census divisions – remained in double digits, posting a record 16.6% decline
    in the third quarter of 2008 versus the third quarter of 2007. This has increased from the annual declines
    of 15.1% and 14.0%, reported for the 2nd and 1st quarters of the year, respectively. The 10-City and 20-
    City Composites continue to set new records, with annual declines of 18.6% and 17.4%, respectively.
    “The turmoil in the financial markets is placing further downward pressure on a housing market already
    weakened by its own fundamentals.” says David M. Blitzer, Chairman of the Index Committee at
    Standard & Poor’s. “All three aggregate indices and 13 of the 20 metro areas are reporting new record rates of decline. Looking at the returns of the U.S. National Index, prices are back to where they were in
    early 2004. As of September 2008, the 10-City Composite is down 23.4% from its peak, the 20-City
    Composite is down 21.8% and the National Composite is down 21.0%.”

  96. grim says:

    New York Metro Area Home Prices (S&P) down 7.3% year over year.

  97. Stu says:

    Grim,

    Didn’t everyone say home values were bottoming in California?

  98. grim says:

    New York Metro Area Home Prices (S&P) down 11.4% from peak.

  99. grim says:

    From Bloomberg:

    September Home Prices in 20 U.S. Cities Drop 17.4% From 2007

    House prices in 20 U.S. cities declined in the year ended in September at the fastest pace on record as rising foreclosures pushed down property values.

    The S&P/Case-Shiller home-price index dropped 17.4 percent in September from a year earlier, more than forecast, after a 16.6 percent decline in August. The gauge has fallen every month since January 2007, and year-over-year records began in 2001.

    Mounting foreclosures are contributing to the drop in home prices, while adding to the inventory of unsold homes on the market. Lower property values are weighing on household wealth, causing consumers to cutback on spending and increasing the likelihood that the U.S. economy will contract for a second consecutive quarter.

    “Price declines have already led to considerable improvements in affordability, but more foreclosures and an inventory overhang will keep depressing prices,” Abiel Reinhart, an economist at JPMorgan Chase Bank in New York, said before the report.

    Home prices decreased 1.8 percent in September from the prior month after declining 1 percent in August, the report showed. The figures aren’t adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month-to-month.

  100. BC Bob says:

    Renting [73],

    Exactly. I must be drunk, using 10% as an example.

  101. NJGator says:

    Grim or someone else with GSMLS access – did 676 Longview in SO go UC or was it withdrawn? If UC, when is the estimated CD?

  102. grim says:

    From CNBC:

    Home Prices Take Biggest Drop Ever in Third Quarter

    A widely watched index shows home prices dropping by the sharpest annual rate on record in the third quarter.

    The Standard & Poor’s/Case-Shiller U.S. National Home Price Index released Tuesday tumbled a record 16.6 percent during the quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004.

    The monthly indices also clocked in record declines. The 20-city index fell by 17.4 percent in September compared with a year ago, the largest drop since its inception in 2000. The 10-city index plunged 18.6 percent, the biggest decline in its 21-year history.

    No city in the Case-Shiller 20-city index saw annual price gains in September — for the sixth straight month.

  103. BC Bob says:

    “That’s over a trillion dollars in two frigging days!!! At what point do people start invading Washington?”

    he [83],

    Print or rob Peter to pay Paul, or both?

  104. John says:

    87, I agree, bottom line if your taxes are 10K and the town can either lower taxes and cut their own salaries or raise their salaries and raises taxes what do you think they will do?

  105. grim says:

    Isn’t it amazing, two years ago people were telling me that NJ home prices would never fall.

    Now they are telling me the NJ market is strong, because prices have only fallen 11%.

    Oh bother.

  106. Stu says:

    And for those who don’t think home prices will drop in NJ?

    Take the option Armageddon about to surface, add to it the tax increases to cover the pension mismanagement and Corzine’s absolute refusal to make cuts and there will be a mass exodus from NJ next year due to unaffordability. The numbers might not reflect it, but the price drops in Montclair are astounding. Keep in mind, they will never match those of neighboring Bloomfield (which is what I think many of you here are unrealistically expecting).

    Give it some time people. Your need for instant gratification is intellectually immature and unbecoming.

  107. John says:

    Dig deeper into yesterdays real estate numbers and you will see that the fourth largest decline in home sales took place in Passaic, NJ which from October 2007 to October 2008 fell 16.6%. Interesting Pittsburgh fell 26.7, Willminton fell 22.6 and Philadephia fell 22.6. The top three drop in home sales in the Northeast were not even towns that had huge price increases. Ouch.

  108. 3b says:

    #76 oldstan:It could also be setting NYC up for an even greater fall as Europeans and Wall St. are forced to divest.

    They already are.

    NYC and its metro area is no different than any other area as far as the bursting bubble.

    It is nto differetn here, it is not different this time. the only thing that is different this tiem, is that the numbers ar far larger.

  109. grim says:

    Gator,

    676 Longview went under contract on 11/19, last list price was $500,000. Last sale was at $712,500 on 7/19/2005. Anticipated closing date is 1/25/2009.

  110. SG says:

    Ed Yardeni’s 4% Solution

    Says Fed should target 10 year rates and bring it down to 2%.

    Also says, Fannie and Freddie should offer 4% mortgage rate loans.

  111. BC Bob says:

    “Now they are telling me the NJ market is strong, because prices have only fallen 11%.”

    JB,

    They must all be spread traders, long RE short S&P’s? I can’t imagine any other reason why they would be cheering an 11% drop?

  112. NJGator says:

    Thanks, Grim.

  113. NJGator says:

    $500k and $15k+ in taxes. Which overtaxed NJ town will be the first to implode?

  114. grim says:

    $712,500 -> $500,000

    30% price decline?

    Wasn’t that my magic number?

  115. BC Bob says:

    “Says Fed should target 10 year rates and bring it down to 2%.”

    SG,

    The fed does not control 10 year rates. However, Yardeni may get his wish, joined at the hip with a 4-5K Dow?

  116. John says:

    There will be no mass exdus of people from NH just a reshuffling. Lets say your house in worth 1.5 million and has 20K in taxes which is sky high already but moves to 25K. Well your house is plenty affordable at 25K as long as your selling price falls like a brick. The seller will be expected to drop his price to make up for the higher RE taxes. In the coop world each $100 maint a month is worth roughly 10K in price. So if the coop raises your maint 200 a month you need to cut your price by 20K as the next buyer is comparing monthly cost to own not price only, same with a house. So when they jack your RE taxes there will be buyers but the buyers want their money off. Following the coop method when you taxes get raised 5K, your selling price should fall around 50K.

  117. SG says:

    Grim – When is next GTG? Any recommendations from folks here.

    I recommend this week Sunday evening. Its kind of quiet at most restaurants and bars. I can set it up.

  118. Doyle says:

    #107

    Stu,

    Heard through the grapevine about a house that should hit MLS sometime soon in GR, between Grove and Ridgewood on the North End. If the list number I am hearing is correct it will be about 23% above what they paid in 2001. And they redid the kitchen a few years back. It will be listed by the aggressive local agency, but still…

  119. grim says:

    YOY Declines are holding steady for the NY Metro Area. Last month some were saying that the rate of decline appeared to be slowing, that doesn’t seem to be the case anymore.

    NY Metro S&P CS YOY Change
    Jan 07 -0.3%
    Feb 07 -0.9%
    Mar 07 -0.9%
    Apr 07 -1.6%
    May 07 -2.3%
    Jun 07 -2.9%
    Jul 07 -3.2%
    Aug 07 -3.3%
    Sep 07 -3.6%
    Oct 07 -4.1%
    Nov 07 -4.6%
    Dec 07 -5.5%
    Jan 08 -5.8%
    Feb 08 -6.7%
    Mar 08 -7.5%
    Apr 08 -8.0%
    May 08 -7.7%
    Jun 08 -7.0%
    Jul 08 -7.1%
    Aug 08 -6.7%
    Sep 08 -7.3%

  120. NJGator says:

    115 Grim – It was indeed. And that house isn’t even in a marginal area of town. It’s up in Newstead right by the South Mountain Reservation. We did a drive by to take a gander.

    There seem to be quite a few people who bit off more than they could chew to buy into there. This is just my non-scientific observation based on the number of short sales/bank owned properties that have cropped up in my daily listings. SO seems to have been hit harder than most other train towns in the area.

  121. grim says:

    Grim – When is next GTG? Any recommendations from folks here.

    I recommend this week Sunday evening. Its kind of quiet at most restaurants and bars. I can set it up.

    I’m not sure I can commit to this weekend, still out of the country. Looks like I’ll be heading back to Jersey on Thursday.

  122. SG says:

    Grim – Too bad. I am out of country from Dec 4th till end of year. Will do in 2009.

  123. grim says:

    Flip, flop, flip, flop. What happened to Hank and his “buying MBS isn’t the best use of funds”?

    From CNBC:

    Fed Unveils Plan to Support Mortgages, Consumer Credit

    The U.S. Federal Reserve, in another massive life-support intervention for the U.S. financial system, Tuesday announced a $600 billion program to buy mortgage-related debt and securities and a $200 billion facility to buy consumer debt securities.

    The U.S. central bank said it would buy up to $100 billion in debt issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, the government-sponsored mortgage finance enterprises.

    The Fed also said it would buy up to $500 billion in mortgage-backed securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae.

    The move is intended to strike at the heart of U.S. economic woes, the collapsed housing market.

    “This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved financial conditions more generally,” the Fed said in a statement.

    The central bank also launched a $200 billion facility to back consumer loans, including student, auto, and credit card loans and loans backed by the federal Small Business Administration.

  124. comrade nom deplume says:

    Sean, JBJB and John,

    You are all hitting, in one day, the marks that this board has covered with respect to NJ property.

    I bought in Brigadoon very recently, but don’t think that this decision has not given me the violent shakes. If I did not have a 20 year horizon, I would have told the missus to forget it. And I did put down a sizeable amount because it lowers my interest dramatically. Most folks don’t consider interest when they think of housing costs. So my PITI is probably equal to comparable rent.

    *****************

    FWIW, property tax hikes have the greatest potential for backlash because they are the least easily avoided tax. Mass. and Cali have had property tax revolts. Other states are also curbing property taxes. And I think that voters in one state tried prophylatically to curb real estate transfer fees by prohibiting the state from imposing fees in the future. If NJ voters were smart (well, we know the answer to that), they would pass a law prohibiting the STATE from imposing a property tax or transfer tax of any kind–that would force any tax increases to localities where voter strength isn’t so easily diluted.

    This goes to the primary reasons I want the Compound to be in PA, not NJ. First is to use it as a tax home. Second is to avoid the tax and debt sinkhole that is New Jersey. So, if I am still working here and own a home here, at least NJ isn’t sucking the life out of me through income taxes since I can shift that to PA.

    And this brings me to my NJ tax early warning system: One thing to look for as a sign that NJ is truly in trouble is if the state starts talking about voiding the reciprocal tax agreement with Pennsylvania. To me, that is the canary in the coal mine. Since SoJersey is a suburb of Phila., and PA can easily outmuscle NJ in terms of tax incentives, I don’t see it happening easily but it could happen.

  125. DL says:

    The only way pension funds will avoid bankruptcy is if the workers becomne too poor to retire. Some of my friends told me their plan was to work until they drop and that was before the bust.

  126. grim says:

    Very interesting that this facility is going to buy the debt of the Federal Home Loan Banks (FHLB). Many have speculated that the FHLB system would be the next to fail.

  127. comrade nom deplume says:

    126 in mod and I have absolutely no idea why.

  128. 3b says:

    #120 Doyle:it will be about 23% above what they paid in 2001. And they redid the kitchen a few years back

    And it can sit on the market with all the other houses for sale in Glen Rock.

  129. grim says:

    #130 – Glen Ridge, not Rock.

  130. Stu says:

    The market appears to be setting up for the greatest short opportunity ever. I won’t go back in until O’s massive stimulus plan is outlined for the pop could be a big one, but I am fairly certain that tripling our debt will eventually crush our economy. Less than one hundred years ago, the UK was the wealthiest empire in the world. It can happen here and my gut is telling me it will.

  131. 3b says:

    #125 grim: Will this stop house prices from dropping?

  132. grim says:

    If the first set of bailouts didn’t help, why exactly, should this one?

    Also consider that one of the previous “bailouts” raised the conforming loan limits to ~$700k from $400k~, something that probably should have stemmed the declines, given the directness of the approach.

  133. 3b says:

    #132 Stu: I am of the belief that perhaps O’s stimulues plan may cause the eact opposite of a pop, ocne the market sees what it entails.

  134. still_looking says:

    Re GTG… how bout next fri or sat?

    sl

  135. grim says:

    At this point, I can’t help but see these “bailout” announcements doing much more than undermining the little amount of confidence left in the markets.

    Each announcement of a new bailout is a confession that the prior bailouts have failed, nothing more. Especially since each of these were touted as the bailout to end all bailouts.

    Another bailout simply means that our fearless leaders don’t know what the hell to do to fix the problem.

  136. jamil says:

    it’s getting interesting in Europe.

    “Icelanders demand PM resign during violent protests”
    —-
    (telegraph:)
    Is Britain going bankrupt?
    There is now a palpable fear that global investors may start to shun British debt as the budget deficit rockets to £118bn – 8 per cent of GDP – or charge a much higher price to cover default risk.

    (bbc:)

    “UK to suffer ‘severe’ recession
    The Organisation for Economic Co-operation and Development (OECD) has warned of a “severe” economic downturn in the UK in 2009.

    The Paris-based body has predicted that economic output in the UK will fall by 1.1% next year, more than any other major G7 country.

    Unemployment in the UK is predicted to rise significantly to over 8% by end of 2009 from 5.5% in 2008.”

  137. Stu says:

    From 50,000 feet, it appears that Paulson’s strategy is to force our children to pay for the mistakes of the greedy d*cks who created this crisis. Sadly, the debt is going to be so large that our children will have absolutely no way to pay it back. All the meanwhile, the money being wasted on creating false floors is essentially being burned and those responsible are being rewarded.

    How we can just sit by and watch the systematic destruction of our future will one day make a wonderful psychology lesson. Stanley Milgram’s findings are once again reaffirmed as they were in most of Europe during the reign of the Nazis.

  138. make money says:

    Each announcement of a new bailout is a confession that the prior bailouts have failed, nothing more. Especially since each of these were touted as the bailout to end all bailouts.

    Another bailout simply means that our fearless leaders don’t know what the hell to do to fix the problem.

    FED is running out of ammo. The clip is gonn abe empty once we get FFR at .25%.

  139. BC Bob says:

    “Another bailout simply means that our fearless leaders don’t know what the hell to do to fix the problem.”

    JB,

    Simply throwing sh#t against the wall. Hoping/praying.

  140. grim says:

    I’m surprised that we’ve heard so little about that $7,000 tax credit to buyers of distressed or foreclosed properties.

    I’m wondering if that is the reason we’re seeing a spike in distressed sales in the hard-hit markets out West. Just speculation, I don’t think we’re going to get any real numbers until well past tax season.

    I have a feeling we’re going to see the politicos bring out the big guns with direct housing subsidies to buyers. I think we’ll see a larger tax credit to buyers of any properties, perhaps on the order of $10-15k.

    Unfortunately, this isn’t free money, it does need to be paid back.

  141. make money says:

    Nov. 24 (Bloomberg) — The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago

    http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=arEE1iClqDrk

  142. Hard Place says:

    NJGator

    $500k and $15k+ in taxes. Which overtaxed NJ town will be the first to implode?

    You mentioned S. Orange. Than you have W. Orange and Maplewood. Some of those taxes are insane! The pension revelation has me particularly worried about the long term viability of the state. I think it will force the state to divest of some of its assets. No taxpayer is going to want to foot the bill, so the NJ Tpke goes on the auction block. Sold! To the man with the towel on his head!

  143. make money says:

    Unfortunately, this isn’t free money, it does need to be paid back.

    15K with 0% interest to be paid back in 15 yrs is a GRANT!

  144. watergapnomad says:

    Does anyone have any insight or thoughts on GE? I’ve been doing quite a bit of reading on their situation and it looks somewhat grim. GE Capital makes up 46% of their earnings, in years past at least, and that appears to be a potential massive anchor around their necks.

    What would it take for GE to lose their ‘AAA’ rating? And should they lose it, would that not pretty much throw the entire company’s future into chaos?

  145. 3b says:

    #137 grim: Agree. And yet the market rallies again today. Go figure.

  146. Stu says:

    3b,

    “I am of the belief that perhaps O’s stimulues plan may cause the eact opposite of a pop, ocne the market sees what it entails.”

    Exactly!

  147. DL says:

    Ref 143: That would be one half of our annual GDP. Now if only we could get everybody to work harder and faster.

  148. grim says:

    I believe the NAHB is pushing for a first-time buyer tax credit of $22,000.

  149. 3b says:

    #142 grim: Ihave a feeling we’re going to see the politicos bring out the big guns with direct housing subsidies to buyers. I think we’ll see a larger tax credit to buyers of any properties, perhaps on the order of $10-15k.

    What kind of impact if any do you think that might have on prices in our area?

  150. DL says:

    Ref 146: Now you know why the Money Honey is hyperventilating. The CNBC crowd surely gets bonused in GE stock.

  151. Hard Place says:

    Also consider that one of the previous “bailouts” raised the conforming loan limits to ~$700k from $400k~,

    But how many loans were actually made? That would be an interesting figure. But I guess it doesn’t matter how large of a loan that fits under conforming limits matter when you can’t lie about your income like you did in the past.

  152. randy says:

    78 Al-

    Amen brother. central NJ is wickedly overpriced, especially in those “premium towns” you mention.

  153. grim says:

    #137 grim: Agree. And yet the market rallies again today. Go figure.

    $800,000,000,000 only buys a 80 point move in the DOW?

    What is that, about ten billion a point?

  154. grim says:

    Consumer confidence comes in way above expectations..

  155. watergapnomad says:

    Ref 146: Now you know why the Money Honey is hyperventilating. The CNBC crowd surely gets bonused in GE stock.

    Who is/are the Money Honey?
    Pardon my ignorance.

  156. cooper says:

    paulson is on cnbc – says lack of credit is hurting housing/affordable financing is critical to ending housing correction.

    -no comment

  157. Paul Yarbles says:

    #158 – Why would you want to end a ‘correction’. It’s good to correct things gone wrong.

  158. NJGator says:

    144 Hard Place – You also need to factor in that these are not top tier towns. West Orange, is not even a train town. They are going to get hammered. For 15k/year in taxes, I can live in Short Hills, so why would I bother with the West Orange school district? I have friends that live in the St. Cloud neighborhood in WO. Their backyear is on top of a cliff overlooking Northfield Ave. They pay $16.5k in taxes. I can’t imagine that they won’t be paying for private HS x 2. I think they are insane.

  159. ben says:

    “What would it take for GE to lose their ‘AAA’ rating? And should they lose it, would that not pretty much throw the entire company’s future into chaos?”

    Who knows. The system is corrupt. Didn’t they not remove Fannie’s AAA rating until the stock was near zero? They have all been junk bonds for year.

  160. cooper says:

    Paul 159- I agree- we need a “genuine” correction but this seems to be like curing a hangover with a bloody mary. how does more credit solve a credit crisis?

  161. grim says:

    #162 – You are forgetting about the applicability of the Homer Conjecture to the current situation.

    “Beer, the cause of, and solution to, all of life’s problems.” – H. Simpson

    Where: Beer = Credit

  162. DL says:

    Money Honey = Maria Bartiromo. Watch her interview of Prince Alwaleed yesterday. A combination of Father Guido Sarducci and SNL.

  163. Al says:

    well one reason to buy a house at any price is upcoming hyperinflation and dollar’s collapse – since goverment abandoned last bits of self-discipline and restrains….

    I am thinking about buying a smallish piece of land with crappy house somewhere in he mid-country like Iowa or Kansas – ample water, possible to grow produce, 2-5 acres. Should be able to get it for very cheap right now, lets say 20k??? Right??? In one of the so called “Dying” towns…

  164. grim says:

    Father Guido Sarducci

    Just lost my coffee.

  165. BC Bob says:

    “how does more credit solve a credit crisis?”

    cooper [162],

    Dead man walking. Japan, 1990-Present.

  166. Al says:

    grim Says:
    November 25th, 2008 at 10:16 am
    #162 – You are forgetting about the applicability of the Homer Conjecture to the current situation.

    “Beer, the cause of, and solution to, all of life’s problems.” – H. Simpson

    Where: Beer = Credit

    I beg your pardon, but …
    BEER IS A LOT BETTER THAN CREDIT!!!

  167. Paul Yarbles says:

    cooper #162 – Maybe I misunderstood. I think the ‘correction’ should continue and not be ended with more (and more and more and more…) credit. Housing prices in Central Jersey are still absurd.

    ~~~~~~~~~~~

    Not that I’m in favor of a bailout of the auto industry but does anyone know why the auto execs had to go before Congress when they asked for handouts whereas bankers do not?

  168. randy says:

    118 JOHN-

    Indeed..! It surprises me how few people pay attention to the inverse correlation between property tax increases and property values.

    when viewed in that light, especially in NJ, it’s hard to envision any appreciation in our lifetimes!

  169. comrade nom deplume says:

    [165] Al,

    That thought had crossed my mind some years back. This would mean, of course, that you are moving permanently and living in the subsistence economy.

    One problem with your suggestion is that, for larger scale farming, you are in the Ogalla Aquifer, which is dying. I chose the Northeast because it still had lots of water and it served other purposes. I also considered the Mountain West, but three issues constrained me: (1) inability to regularly use property, (2) demand from people like me, and (3) access to water.

    But, if you are content to farm only a few acres, then buy that property in the middle of nowhere, sink a well, and build yourself a helluva large cistern to corral as much wellwater and rain/snow accum. as you can.

  170. spam spam bacon spam says:

    Weird OT question:

    My dad, a self-employed artist, just met an artist from Romania who got here legally recently but now can’t support herself with this economic downturn. My dad received a heartfelt email saying she’ll do anything…(legal-get your mind out of the gutter, Clot)

    She’s living in Woodbridge.

    Check out her work. My dad doesn’t like it, he’s an old fogey, but it’s very nice work :)

    http://www.coroflot.com/public/individual_details.asp?job_seeker_id=232215&t=&keywords=camelia+moldoveanu&sort_by=1&&page_no=&c=1

    You guys know of any place I can send her to to try looking for work?

    This economy sucks and boy-o-boy, she really really picked an unlucky time to try America…

  171. grim says:

    From IHS Global Insight:

    S&P/Case-Shiller® Home Price Indices
    September 2008
    “House Prices in a Free Fall”
    Patrick Newport
    U.S. Economist
    IHS Global Insight

    Outlook

    The monthly S&P/Case-Shiller Home Price Indices are calculated using a three-month moving average, so this report measures house prices over July, August, and September when the economy was still on its feet. The real economy took a sharp turn for the worse towards the end of the third quarter. Making matters worse, financial markets fell into disarray in mid-September, after Lehman Brothers went bankrupt. So as bad as the latest Case-Shiller numbers appear to be, they are bound to get much worse.

    Year-over-year (y/y) prices retreated in all 20 cities covered; adjusted for inflation, prices fell even more, since the CPI was rising 4.9% y/y in September—prices need to be adjusted for inflation to accurately portray how much house prices are dropping.

    Prices continued to drop the most in cities located in California, Florida, Arizona, and Nevada. The so-called toxic securities that are at the heart of today’s financial crisis are concentrated in these states. According to data from First American CoreLogic published on the New York Federal Reserve’s Web site, as of September, nearly 40% of subprime, and 53% of Alt-A securitized loan balances outstanding come from these states. These four states account for 19% of the nation’s housing stock.

    Last month, the Census Bureau reported that the Homeowner Vacancy rate, which measures the proportion of homes that are vacant and for sale, remained at 2.8% at the end of the third quarter. This translates into an excess supply of about 800,000 homes. Eliminating this excess will require a combination of lower house prices and fewer housing starts.

  172. John says:

    Well two upcoming rate cuts are a done deal, no new tax hikes to 2011 and close to risk free govt backed fixed income investments at 6-8% should make this a fence sitters dream. Your 200K downpayment money will be worth 242K in three years at 7% and by then houses will be down another 30%. So todays million dollar home with 20% down for a 800K mortgage will be a 700K house with 242 down for a 458K mortgage in just 36 months.

  173. kettle1 says:

    AL,

    The deflationary period we are in will last until at least through 2011.

    The question is, can you and is it worth it to spend your resources hanging onto that house when you could wait out the deflationary period preserving your assets as best you can and as the deflationary period wraps up you pick up real assets such as property.

    Just my opinion

  174. Stu says:

    Mr. Yarbles (169):
    “Not that I’m in favor of a bailout of the auto industry but does anyone know why the auto execs had to go before Congress when they asked for handouts whereas bankers do not?”

    Just look at the color of the collar of the worker in each sector. There’s your answer.

  175. grim says:

    From Reuters:

    U.S. problem banks rise to 171 at end of third quarter: FDIC

    The number of problem U.S. banks and thrifts jumped in the third quarter to 171, from 117 at the end of the prior quarter, marking the highest level since the end of 1995 and adding to expectations that more banks will fail, regulators said on Tuesday.

    The Federal Deposit Insurance Corp said the industry-funded reserve to back deposits was $34.6 bln as of September 30, a 23.5 percent decrease from the previous quarter.

    The FDIC also reported that bank industry income fell 94 percent from the previous year to $1.7 billion in the third quarter.

  176. comrade nom deplume says:

    [139 Stu,

    What makes you think we are sitting back and watching?

    Personally, I am doing something about it. Best way to avoid getting hurt when the bus goes off the cliff is to not be on the bus.

  177. ben says:

    “maybe i can handle more than 5 acres after all…”

    the word I and 5 acres in farming should not be synonymous. There’s not enough time in the day for you to pick the harvest by yourself. If you’ve ever been strawberry picking, it takes a hell of a lot of people to clear those fields.

  178. John says:

    Re 172 maybe if they remake the Adams family she can play Morticia.

  179. grim says:

    The Federal Deposit Insurance Corp said the industry-funded reserve to back deposits was $34.6 bln as of September 30, a 23.5 percent decrease from the previous quarter.

    Seems nobody is really worried that the FDIC burned through almost a quarter of it’s trust fund in one quarter.

    Bank failures are running a much slower pace than during the S&L crisis, but the losses have been substantial. It appears that the FDIC is waiting much longer to step in and take a bank into receivership than it did in the past.

  180. comrade nom deplume says:

    [179] ben

    true. Though there is migrant labor to be had.

    But then you have to do something with what got picked. So you need to package/preserve your crop or sell it. Need some more labor for that.

    At this point, you have a nice little cottage industry going here. Too bad I know nothing about cheesemaking.

  181. grim says:

    At what point does the TARP bail out the FDIC? Or are they already doing it, indirectly?

  182. jamil says:

    useful reminder from thomas sowell. I agree..

    “Amid all the political and media hysteria, national output has declined by less than one-half of one percent. In fact, it may not have declined even that much– or at all– when the statistics are revised later, as they very often are.

    We are not talking about the Great Depression, when output dropped by one-third and unemployment soared to 25 percent.

    What we are talking about is a golden political opportunity for politicians to use the current financial crisis to fundamentally change an economy that has been successful for more than two centuries.”

    Didn’t Emmanuel Rahm already stated that this opportunity (to remake America) that should not be wasted?

  183. Al says:

    That thought had crossed my mind some years back. This would mean, of course, that you are moving permanently and living in the subsistence economy.

    I would buy it not really for the moving out and living there – I would buy it as valuable inflation hedge and place of last reserve.

    As many here saying that
    “It is USA and depression/huge crush will not happen” – I see goverment pumping huge sums of money out of where?? into financial system, with no control or restrain.

    I will repeat it – Hyper-inflation is a self-amplifying process. Once tru hyper-inflation starts there is NOTHING anybody can do but to go to a effectivelly “New Currency” backed by material good – wheither it is a commodity or gold.

    Hyper inflation destroys any possibility of a supply chain or non-barter based economy.

    Considering globalization and extremelly long and complicated supply chains with many links if hyperinfaltion will hit dollar that will be Armageddon – complete collapse of the worlds economy.

    In this case enough irrigable land to feed you family, with a shelter is very valuable.

    I know it is very pessimistic, but if you buy this “refugee” place for cheap (let say 20-30K) and just keep it and nothing bad happen – well you just “lost” your 30K.
    Heck, Have a bought that house in Arbor School discrict Piscataway in 2006, the realtor was pushing on me, I would be 100K (well whatever downpayment I’d sunk in) out right now.

  184. watergapnomad says:

    At what point does the TARP bail out the FDIC? Or are they already doing it, indirectly?

    I thought that the FDIC was already given the authority to borrow funds directly from the Treasury if need be?

    http://www.reuters.com/article/ousiv/idUSBNG28670420080827

    (Reuters) – Federal Deposit Insurance Corp (FDIC) might have to borrow money from the Treasury Department to see it through an expected wave of bank failures, the Wall Street Journal reported.

    The borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank, the paper said.

    The borrowed money would be repaid once the assets of that failed bank are sold.

    “I would not rule out the possibility that at some point we may need to tap into (short-term) lines of credit with the Treasury for working capital, not to cover our losses,” Chairman Sheila Bair said in an interview with the paper.

  185. kettle1 says:

    grim,

    why worry about the FIDC. Its crystal clear they will be bailed out by the treasury to the tune of hundreds of billions of dollars.

    Now it just comes down to finding a comfy spot to watch the train wreck from.

  186. grim says:

    New Jersey state unemployment at 6%, a 5-year high. One of the few sectors that was still showing some strength was healthcare-related jobs. Is this sector next to fall?

    From MarketWatch:

    NJHA: Hospital Finances Show Troubling Trends

    Nearly half of the state’s hospitals – 47 percent – posted overall losses at the end of 2007, according to new audited financial data contained in the 2008 edition of the New Jersey Hospital Association’s Financial Status of New Jersey Hospitals report.
    The data shows that New Jersey’s hospital industry was on shaky financial ground long before the recent economic meltdown.
    New Jersey hospitals reported a dramatic decrease in hospital total margins in 2007, which include income from restricted and non-operating funds such as grants, endowments and investments. The statewide average total margin dropped from 3.1 percent in 2006 to 0.9 percent for 2007 – the lowest it has been since 2002. The 2007 data did reflect a modest increase in year-end operating margins, from 0.6 percent in 2006 to 1.3 percent in 2007. However, the 2007 figure constitutes the 11th consecutive year that New Jersey hospital operating margins have been less than 2 percent.

    In the same year, three New Jersey acute care hospitals closed and five filed for bankruptcy. “This data underscores the longstanding challenges New Jersey hospitals face in remaining financially sound in the face of insufficient reimbursement from Medicare, Medicaid and the state charity care program,” said NJHA President and CEO Betsy Ryan. “It’s truly troubling to think that this is the foundation from which our healthcare facilities entered our new economic struggles. A serious situation is rapidly turning critical.”

    According to Sean Hopkins, senior vice president of health economics for NJHA, the steep decrease in 2007 total margins leaves hospitals with little means to increase staff, improve facilities or purchase new equipment, which could impact quality of care and access.
    “Many of New Jersey’s hospitals sustained a loss in their 2007 margins, and with the current healthcare climate, hospitals will have to look for new ways to sustain themselves. Additional hospital closures are a very real prospect in the wake of aging plants, reduced revenues and – in this economy – a growing number of individuals who are losing healthcare insurance coverage,” said Hopkins.

  187. BC Bob says:

    “At what point does the TARP bail out the FDIC?”

    JB,

    Who bails out the fed? They are currently levered approx 60-1, more than 100% increase in less than a year. They have become one of the world’s largest hedge funds.

  188. HEHEHE says:

    This is uplifting if it hasn’t been posted:)

    “Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures – combined:

    • Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
    • Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
    • Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
    • S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
    • Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
    • The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
    • Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
    • Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
    • NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

    TOTAL: $3.92 trillion

    ______________________________________________________________________

    data courtesy of Bianco Research

    >

    That is $686 billion less than the cost of the credit crisis thus far.

    http://www.ritholtz.com/blog/2008/11/big-bailouts-bigger-bucks/

  189. grim says:

    Paulson talks, market tanks.

  190. grim says:

    From MarketWatch:

    10:31 a.m. – Paulson: Markets are not working as we’d like them to

  191. Stu says:

    “Markets are not working as we’d like them to”

    Awwww, poor baby!

  192. comrade nom deplume says:

    rally off. Is Paulson speaking somewhere?

  193. Sean says:

    Jim Rodgers was on CBS morning show talking about Japan’s never ending recession. He was adamant that the banks should be allowed to fail since banks have been failing since the beginning of time and a new bank steps in to talk the place of the old one every time. Continuing on this never ending backstopping is only going to make us all Japanese.

    The damage has already been done and the willingness of investors to bear risk hasn’t been this off kilter since the great depression.

    If this backstopping garbage gamble pays off we enter zombie mode for a few decades as we pay off this debt.

    In the meantime I am going out for a Sushi and Sake lunch, if we are going to act like the Japanese we might as well and walk and talk like them too.

  194. RayC says:

    Just look at the color of the collar of the worker in each sector. There’s your answer.

    Spot on Stu.

  195. HEHEHE says:

    Amen Stu,

    Wall Street wants the auto unions to give up their sweetheart union contracts but God forbid they have to give their bonuses because “they were CONTRACTED FOR and there’s one thing that must be protected in this country is contract rights”.

  196. grim says:

    Great post over at CR:

    Price-to-Rent Ratio

    A look at current price declines based on price-to-rent ratios.

  197. ben says:

    comrade,

    “true. Though there is migrant labor to be had.

    But then you have to do something with what got picked. So you need to package/preserve your crop or sell it. Need some more labor for that.

    At this point, you have a nice little cottage industry going here. Too bad I know nothing about cheesemaking.”

    Well, my friend’s father owns a raspberry farm. An acre I think yields about 5000 pounds of raspberries each year. They pick them and make raspberry jam and sell it for 4 bucks a jar. They sell out each year.

  198. the crazy man in the corner says:

    time to move to canada?

    vancouver is nice place to live?

  199. grim says:

    I do have North Jersey sales data up to October ready to post. Was finally able to pull together the numbers.

    Will post them up later in the day.

    In short, inventory appears to have stabilized but sales continue to fall.

  200. reinvestor101 says:

    People like me are being hit on all sides. My stocks and real estate are down, my beloved political party is on the outs and I can’t get a damn loan.

    Basically, my ass is in a vice and no one cares about me and people like me. People like me drove this economy to new heights and we now need help. Real estate investors did a lot for this country and it’s time to stop jerking us around. Hopefully Paulson’s move this morning will unfreeze credit markets and allow me to pull some damn money out of my real estate.

  201. Veto says:

    Question for the group… Assuming NY Metro RE continues to take a beating through 2009, What do all the bubble sitters do with their downpayments? Seems to be much agreement that all this gov stimulus and new gov debt burden eventually leads to a weaker greenback and/or hyper-inflation, eventually pushing mortgage rates sky high. Whats the plan under that scenario? (and im sorry but gold bars/coins hidden under the bed of the apartment is not my idea of an acceptable investment, even if prices are sure to reach 10,000/oz by next week)
    The reason i ask is that i’m torn between jumping in now or waiting, (like many others here I guess) takes much discipline to avoid buying a house discounted 25% from peak and i see one of those now.
    Thanks!

  202. NJGator says:

    Grim – I have a realtor who keeps sending me monthly stats showing that Montclair, Millburn, Summit etc sales are averaging 97% and up of the LP. Do we think that she is calculating her percentages off of final LP and not OLP? It’s still a great time to buy, you know.

  203. John says:

    Jim Rodgers is a Kook, if a massive amount of banks fail there will be no new banks created. No one will have money to deposit into them and FDIC will be bankrupt.

  204. Victorian says:

    Crazy (199)-

    Vancouver has one of the biggest RE bubbles in North America. Not a lot of jobs there. I lived in Victoria, B.C for 2 years.

  205. Taro Todoroki (Sean) says:

    I am adopting a new name Taro Todoroki for myself to honor our noble financial quest to become Japanese. I will also be adopting additional Japanese habits.

    Tonight I am going to shave my chest hair just like James Bond did.

  206. BC Bob says:

    “Hopefully Paulson’s move this morning will unfreeze credit markets and allow me to pull some damn money out of my real estate.”

    50.5,

    50% off peak, I’ll talk to you.

  207. Al says:

    Question for the group… Assuming NY Metro RE continues to take a beating through 2009, What do all the bubble sitters do with their downpayments? Seems to be much agreement that all this gov stimulus and new gov debt burden eventually leads to a weaker greenback and/or hyper-inflation,

    CD’s… As long as my downpayment is for buying a home (no matter where) and home prices are dropping I do nto care what Inflation is. IN terms of House/dollar My downpayment still growing.

    Unfortunatelly measely 3.75% interest us taxable… But the ability to withdraw my money at anytime with 30 days interest penalty only – priceless.

  208. Al says:

    I think we are going to have another 1000 point swing today – up-down-up :)

  209. Al says:

    The reason i ask is that i’m torn between jumping in now or waiting, (like many others here I guess) takes much discipline to avoid buying a house discounted 25% from peak and i see one of those now.

    Just look at the real etstae taxes – that will make not buying easier.

  210. John says:

    Dec 31st 1999 Prices and I will talk to you.

  211. HEHEHE says:

    Al,

    All depends, if S&P breaks 840 look out below.

  212. ben says:

    reinvestor101

    “People like me are being hit on all sides. My stocks and real estate are down, my beloved political party is on the outs and I can’t get a damn loan.

    Basically, my ass is in a vice and no one cares about me and people like me. People like me drove this economy to new heights and we now need help. Real estate investors did a lot for this country and it’s time to stop jerking us around. Hopefully Paulson’s move this morning will unfreeze credit markets and allow me to pull some damn money out of my real estate.”

    You should see if you can get a spot on comedy central. You crack me up. Maybe you should have saved some money. Then you wouldn’t need a loan.

  213. Tom says:

    “People like me drove this economy to new heights and we now need help.”

    Sorry, no sympathy here.

    You didn’t drive the economy to new heights, you made it seem like a new height. But it was all fluff. Do the same without empty calories and then you might warrant pity.

  214. Victorian says:

    RE101 is the Stephen Colbert of NJRE.

  215. Tom says:

    The amount of money being spent on bailouts got me thinking, what if it went elsewhere. Seriously, the credit markets as we’ve known them recently are dead. Time to put money in something more profitable.

    A couple trillion could replace all the US coal power plants or provide insurance to the uninsured and underinsured.

    Watching the Fed pump so much money into the system is like looking at some idiot pump money to maintain into repairs for his car because of sentimental value when it would be much cheaper to let it go and move on.

    Let them all fail and put the money into areas that have potential for growth. Real estate and finance doesn’t. It was a good run but they got too greedy and ruined it.

  216. Tom says:

    Victorian,

    Except that Colbert is doing it intentionally.

  217. Taro Todoroki (Sean) says:

    no worries RE101 –

    The plan is to let you pay 3 percent for a few years to ease the pain, and then allow your kids to rent to own it after they have finished putting a pillow over your mouth as you sleep.

  218. alia says:

    175 kettle

    i would like to agree with you. why do you think it (deflationary period) will last that long?

    179 ben
    a lot of space would be taken up by the wind farm, the solar collectors, the aquaculture experiments, the orchard. ;) Visited a garden that was 10 feet by 10 feet that (with the help of a generously sized greenhouse for staging plants) could feed a family of four.

    now, they would have to not be picky eaters, and get their grains from somewhere else… but it supplied enough vegetables to keep them going.

    it’s a dream. and dear husband is wedded to his urban lifestyle, so i don’t expect it to happen how i imagine it. but i’m happy practicing it here, on my 9 feet by 11 feet patch of dirt. every season i learn a little more. :)

  219. jamil says:

    “New Jersey state unemployment at 6%, a 5-year high. One of the few sectors that was still showing some strength was healthcare-related jobs. Is this sector next to fall?”

    Not sure if any are in NJ, but anyway:
    “AMSTERDAM, Netherlands – Royal Philips Electronics NV said Tuesday it plans to cut 1,600 jobs at its health care division in response to a global economic slowdown.

    Spokesman Joon Knapen said the cuts fall mostly in the U.S., Germany and Netherlands, where its medical imaging operations are largest. The company will try to avoid forced layoffs but some were likely anyway, Knapen said.

    The jobs represent 5 percent of the 32,000 employees at Philips’ health care division”

  220. BC Bob says:

    Nov. 25 (Bloomberg) — The interest rate banks charge each other for three-month loans in dollars, a benchmark for global borrowing costs, is starting to rise as the world’s biggest economies fall into a recession.

    The London interbank offered rate, or Libor, for such loans climbed for a third day today, to 2.20 percent, according to the British Bankers’ Association’s survey of 16 banks. The increase signals that even as the Federal Reserve and Treasury pumped more than $3 trillion into the financial system, governments are failing to unlock credit markets.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=ansRO4ahzcUw&refer=home

  221. Stu says:

    “RE101 is the Stephen Colbert of NJRE.”

    Please don’t move to Montclair!

  222. kettle1 says:

    alia,

    the quick and dirty version is a combination of the quantity of excess debt that must be purged from the system and the world governments fighting it tooth and nail.

    I think it could go on longer, but the wild card is how stupid do governments get trying to bailout every constituent they see. The trillions upon trillions being thrown at this thing could cause a very rapid flip from deflation to hyper inflation.

    The US dollar is toast, there will be a move to a basket world currency based on an asian, european, and middle eastern denomination.

  223. kettle1 says:

    Alia,

    i think that what many countries may end up with in the end is an inflationary depression rising from the tale end of deflation.

    1930 was a deflationary depression

  224. kettle1 says:

    Alia,

    a better analogy for my reasoning….

    Consider an onion, you must remove the outer layers to get to the inner core.

    The outer layers of debt must first be shed before we see how rotten the core is and what must be purged from the core of the system.
    2009 will be the shedding of the outer layers and 2010 will be the period where we are forced to deal with the core rot in the system.

  225. Tom says:

    from calculated risk… Roubini likes O’s financial team picks.

    The choices are excellent. Tim Geithner is going to be a pragmatic, thoughtful and great leader for the Treasury. He has experience at the Treasury and the IMF [International Monetary Fund], then the New York Fed. I have great respect for both Geithner as well as Larry Summers. I think both of them in top roles in economics in the administration were good moves. I think very highly of them both.

    Nice to hear something positive from Dr. Doom

  226. John says:

    Ben just change your last name to Over.

    ben Says:
    November 25th, 2008 at 11:35 am
    reinvestor101

    “People like me are being hit on all sides. My stocks and real estate are down, my beloved political party is on the outs and I can’t get a damn loan.

    Basically, my ass is in a vice and no one cares about me and people like me. People like me drove this economy to new heights and we now need help. Real estate investors did a lot for this country and it’s time to stop jerking us around. Hopefully Paulson’s move this morning will unfreeze credit markets and allow me to pull some damn money out of my real estate.”

    You should see if you can get a spot on comedy central. You crack me up. Maybe you should have saved some money. Then you wouldn’t need a loan.

  227. cooper says:

    163 Grim- Ha! LOL love the homer analogy. mmm beer is good, mmm beer IS worth more then US dollar, mmm homer thirsty…

    BTW re101 what do you really do?

  228. Essex says:

    201…Priceless.

  229. Tom says:

    kettle1,

    Not to dismiss your other points but when was the last time you scrutinized an onion that closely.

    In reality you may peel a couple outer layers thinking it’s only some sort of bruising but if it goes deeper you through it out. Who knows what’s wrong with it that you can’t see.

    You grab another onion from the bag. If there are enough problem onions you through out the whole bag. If the problem persists, you start buying your onions from another grocer.

    There were plenty of banks that aren’t rotten. These too big to fail banks are in serious trouble and at some point not even the government will be able to prop them up.

    The next shoe to drop in my opinion will be these large companies that have become so large through mergers that they can only be serviced by these overgrown banks.

    To me it seems they are too big to function. GE has already taken a beating. It also made the mistake of getting into the subprime game at the wrong time. I wouldn’t be surprised if it’s history.

  230. Taro Todoroki (Sean) says:

    So klink is down to his last $15 billion of play money and now has to go back to congress for an up or down vote on the next #350 billion.

    They should make for some good theater in the coming weeks.

  231. grim says:

    OFHEO numbers out today as well, new post coming up.

  232. kettle1 says:

    Tom,

    dont take the onion analogy to literally….

    Another little problem is that every single dollar in every single bank in the US is borrowed and does not belong to the bank.

    the FED currently puts net non-borrowed reserves for US banks to be at about 200 billion. The banks owe 200 billion more then they have.

    And hey, the fed is actually paying the banks interest on that borrowed reserve.

    hmm will by bank pay me money to borrow money from them and sit on it?

  233. kettle1 says:

    Tom

    what do you do if that bad onion is the entire US financial system?

  234. kettle1 says:

    Tom,

    Per the TARP Act US banks now have a 0% reserve requirement. Talk about a Fiat system

  235. John says:

    If you drill a hole in an onion and hump it you feel better for awhile but in around ten minutes you are back where you started except your johnson smells like an onion.

  236. HEHEHE says:

    S&P 500 entering important test range again. Bounced last time at 841.

  237. Stu says:

    John…Why would you hump an onion?

  238. HEHEHE says:

    Broke 840

  239. Al says:

    John Says:
    November 25th, 2008 at 12:44 pm
    If you drill a hole in an onion and hump it you feel better for awhile but in around ten minutes you are back where you started except your johnson smells like an onion.

    POST OF THE MONTH!!!!!!!!! I Laughed so hard I had to restrain myself :)

  240. BC Bob says:

    “John…Why would you hump an onion?”

    Stu,

    Because that is the best he has had.

  241. grim says:

    New post up, move on over.

  242. kettle1 says:

    US Gov bailout to date:

    4.4 trillion ( as of Nov 13)
    http://tinyurl.com/5dhltm

    7.7 trillion pledged on monday

    and now another 0.8 trillion

    Total bailout to date: 12.9 trillion

    US GDP: 13 trillion

  243. Tom says:

    “what do you do if that bad onion is the entire US financial system?”

    You throw it out. You don’t try and clean it up and give everyone pills to prevent food poisoning.

    Our financial systems hasn’t always been what it is today. Maybe it’s time for a change.

    I worked at a company once where the entire premise was drastically changed. It involved replacing almost the entire staff from CEO down. Even changed the name. Only thing that remained was the bank accounts.

    I’m not saying it’s going to be easy, but with a components that has failed so catastrophically, it’s best to remove it and put something else better in it’s place so it doesn’t take the whole country down with it.

  244. 3b says:

    #184 jamil:“Amid all the political and media hysteria, national output has declined by less than one-half of one percent. In fact, it may not have declined even that much– or at all– when the statistics are revised later, as they very often are.

    Perhaps that is because this whole thing just started really getting interesting if you will over the last 3 months. it will be the numbers going forard that amtter, not what has alreaddy happend. I believe Mr. Sowell is way too optimistic.

    We have not seen anything like this mess in our life time. I guess some people need to bw reminded of that on a daily basis.

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