How to Beat the Home Buying Bubble of Over-Inflated Prices

There is an answer to the astronomical rising prices of homes. Within our area, housing prices have more than doubled (and in some instances, have tripled) in the past 5-6 years for no reason except greed. People have put themselves into debt, because they did not want to lose a home because they became emotionally attached and in turn, took out a mortgage that a mortgage broker said they could afford -when in actuality they could not. I am a homeowner in Chatham and have lived here for most of my life. The realtors have strongly brainwashed homebuyers to purchase more expensive homes than they could afford and persuaded home buyers to take out huge mortgages in order to purchase a home. Due to the greed of the realtors, the homeowners who sold their homes, which accelerated into a false “supply and demand”, houses have escalated so much that middle class prospective homebuyers cannot afford to purchase a home. My children cannot afford to purchase a home.

Greed has brought down Wall Street, Banks, Mortgage companies, and other large corporations. This is where we had to fall, in order to learn and know the important things in life. When I sell my home, it will be for the Pre-Real Estate Boom price: an average price where the middle class person can afford to purchase a home, easily. This will begin the lowering cost of homes. People are losing their homes and their jobs. Middle America cannot get over-inflated mortgages, any longer, nor do they want to. We have entered into an economic collapse.

A colleague of mine has been looking to purchase his first home. Just to give you an example, in December 2002, the house sold for $210,000. In October 2008 (5 years later), the realtor has listed the home price as $420,000. Bear in mind, there has been a small amount of cosmetic work done to the home (nothing exceptional). The price has listed as more than doubled in the past 5 years, which is completely ludicrous. A doubling of a house price in 5 years is pure greed. This is just one of the many examples in this area of a 20 mile radius. Has your salary doubled or tripled within 5 years? No, in fact, many salaries have decreased in the past 5 years.

When my colleague had questioned the realtor regarding the reasoning behind the over- inflated prices, she mentioned “it was for a reason.” She alluded to the statement to “keep particular people out.” I expressed to her how disgusting that was and at this time in history, someone actually had the audacity to express this sentiment. She was from a big conglomerate Realtor firm. Needless to say, my colleague dropped her as a realtor and strongly advises against recommending her company.

People need to stick together and look at the “big picture” and look at their fellow man, instead of the most exhorbant amount of money they can put into their pockets.

So, as homebuyers, there is a way to bring the prices of homes (Pre-boom real estate prices – 2001) to an affordable price.

1) In the state of New Jersey, the cost of a sale of a home is public information. All records date back to the building of the home.

2) Call the Taxation Dept. at the Borough Town Hall in the designated town. Give them the address of your prospective home and ask them all the sale dates of the home and what they sold for. You may want to know the last 3 or 4 home sales of the particular home in order to determine the inflated real estate boom market price and to determine a bid price.

3) Bid according to the price BEFORE the Real Estate Boom Market. At the point of the Real Estate Boom Market – during and at its highest peak, these are over-inflated homes and they are simply not worth it.

4) For example, the house that my colleague was reviewing, sold for $210,000 in December 2002. In October 2008, the realtor listed the price as $420,000. So, with the collapse of the economy; people losing their jobs and homes, coupled with the doubling over-inflated prices of homes, in order to bid for a home, bid closer to the 2002 price of $210,000 with an increase of a few dollars. Use your discretion.

5) Do not be swayed by realtors. They are conniving, aggressive sales people, who are looking out for how much money they can put in their pockets. They are NOT looking out for your best interest, whatsoever. The most used phrase to attempt to condone listing homes with extremely high prices; even the most modest small/average home in the Chatham, NJ or the Morris County area, the realtor would say in that unconvincing wispy voice, “It’s C-h-a-t-h-a-m” or “It’s M-A-D-I-S-O-N.” You could sell a home in any neighborhood with those sales tactics and using that tone and connotation. “It’s W-H-I-P-P-A-N-Y.” Sounds the same, right? You understand the brainwashing techniques.

There are homeowners in this area and the surrounding towns, who are able to sell their home for a reasonable price. Not everyone is greedy. Another friend of mine sold their home. This was at the beginning of the real estate boom. His house was listed as $750,000 by the realtor. He met a couple whom he liked. He expressed to the couple that he has been blessed with an average income and a wonderful family, and would like to give someone an opportunity. He sold his house for more than ½ the listed price at $350,000. Look at the possibilities. Do not listen to the negative people. Everything is possible.

The more homebuyers use these tactics and stick to this principle, the more homes will decline in price, close to where they were before the Real Estate Inflationary Boom of Double and Triple prices. Soon, homebuyers will be able to purchase homes again at a reasonable price and not an inflationary false price.

Good luck!

The original list price was actually $1,975,000 in 2005, not the $1,850,000 that I mention above. Didn’t realize it when going through the 10 prior MLS listings.

That would put the sale at 44.3% below the original 2005 list price.

Mike Morgan also forgot family D: No credit card debt, have 20% downpayment, but unfortunately missed a credit card payment 14 months ago. Sorry no mortgage for you. No wait, we can work with you, but your mortgage rate is going to be 10%. Sorry most of our money went to modify all the family A’s mortgages, that’s the deal, 10% take or leave it. Maybe come back in a year when the late payment is off your credit record. Maybe we can knock that rate down to 9%.

NEW YORK (Reuters) – Texas billionaire Allen Stanford’s offshore bank, which is under federal investigation, recently curtailed financing commitments to two small firms, The Wall Street Journal reported on its Web site on Saturday, citing regulatory filings.

Stanford International Bank Ltd. of Antigua failed to provide $16 million in funding to a telecommunications firm in Florida and an Alabama health-care company said it could not complete a $62 million merger when funding fell through.

http://uk.reuters.com/article/breakingFundsNews/idUKN1526611620090215

This is going to be Madoff II. I am sure there’s III, IV etc out there waiting to pop up too.

i wonder if its a good time to look for rental properties…there may be a lot more renters out there…then again, these properties probably still have high asking prices!!!

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=273056&version=1&template_id=46&parent_id=26

Like I said, if they want a civil war in this country all they need to do is pass some crazy @ss mortgage modification program.

SATURDAY, FEBRUARY 14, 2009

Obama Deal with Family A, B and C

“Light years away from the circus in Washington there is a land called “reality.” Not “Reality TV,” but real reality. Below is my attempt to demonstrate why Obama’s latest plan will not work. In fact, there are no less than 10 versions of the fart he floated out to the world on Thursday.

In all due respect, nothing will work . . . with the one exception of a huge transfer of wealth. That transfer will happen . . . or we will destroy the planet. The transfer should start with guys like King Henry and Lord Blankenfein. Add to that list Angelo Mozilla, Wilbur Ross and thousands of others that have profited immensely from fraudulent and misleading deals that are now coming to roost.

In any event, we will never go after these men. In fact, we allow them to continue to r@pe the system. Below is a disgusting taste of reality.

Family A – Husband and wife with 13 and 19 year old children. On in high school and one in college. Husband and wife recently lost their jobs. He was employed as a mortgage broker and she was a manager for a builder. They went from a combined income of $350,000 to zero.

When they were both employed, they took several expensive vacations each year, ate out at fine restaurants three times a week and they bought a boat, two jet skis, two snowmobiles, two motorcycles and an RV. The 19 year old has a brand new car that Mommy and Daddy bought her. It’s a $40,000 Lexus. Dad drives a Mercedes 500 and Mom drives a Jag. Junior at 13 has an allowance of $50 a week. Missy, in college, lasted one night as a waitress before she called Daddy to cry about a busted fingernail. Daddy got upset and called the restaurant manager. The Daddy called Missy and told her to just calm down, take a Valium and relax . . . she didn’t have to work, and Daddy would still send her $200 a week for her expenses.

Her expenses . . . $50 a week for her nails, $100 a month for her hair and clothes. No . . . strike that. She has a credit card for her shopping . . . and Mommy pays that bill.

Family A has NO savings. They used their house as a revolving ATM machine. The house was worth $700,000 at the peak, on which they have $650,000 in ARM mortgages and equity lines. Now the house is worth $400,000. Oh by the way, they had $45,000 in credit card debt when they lost their jobs. Now they have $125,000 in credit card debt and the interest rate on all of their cards is 29.99%, so interest alone is now $3,125 a month.

Family A has not paid their mortgage in six months. Mr. A has been looking for a job, but he has turned down five jobs because they only paid half of what he was earning. He wants $250,000 a year, and his best offer was $125,000. Mrs. A got her real estate license and is selling real estate. Did I say selling? Silly me. She spent $4,000 to get her license and $12,000 on new clothes and $2,500 on accessories and office stuff. But she is not selling. In fact, she spends most of her time at Open House get-togethers with other agents and lunches with the girls.

Mr. and Mrs. A are also collecting unemployment benefits.

Family B – Same as Family A – Husband and wife with 13 and 19 year old children. On in high school and one in college.

Mr. B has held the same job as a manager at a local hotel for 18 years. He earns $67,000. Mrs. B is an ER nurse and earns $72,000 a year. Instead of golfing on Saturdays, Mr. B also works Saturdays as a cook in a local restaurant at $18 to earn a few extra bucks so they can pay their mortgage.

Family B has one car. It is a seven year old Chevy. Family B’s last vacation was a week at the Jersey Shore where they stayed at a relative’s house. Family B does NOT own a boat, nor any jet skis, nor any snowmobiles and they don’t own an RV. They eat out once a month at Denny’s. They shop at Sam’s Club. Junior has a $10 a week allowance and he earns another $30 a week doing chores. Missy works two jobs while attending a community college.

Family B saves money and has about $200,000 in bank accounts saved by cutting corners for 20 years. Family B bought a $250,000 house a few years ago and it is now worth $180,000. Family B put down 30% on their home so they are at about break even on equity in the home. Family B has NO credit card debt.

How It Works – Obama proposes to take Family B’s savings and hard earned money to reward Family A for living above their means with no sense of responsibility. Obama is going to yank the rug on Family B’s future so Family A can continue to live above their means . . . and Obama is going to tell Family B to work harder so they can pay more taxes, so Obama can give more money to Family A.

Naturally, I have simplified the examples and there are millions of hard working Family B families that have lost their jobs and are stuck in homes that are underwater. But how does Obama plan on deciding who gets what and why? But that’s not all. Obama is planning on telling the people that loaned Family A money . . . that they are not going to get paid what they are entitled to, but Obama is going to come up with a new interest rate and . . . . AND Obama is going to reduce the principal due or extend the life of the loan or change the terms anyway he so pleases.

Now do you get it? Not yet. One more example.

Family C – Husband and wife with 13 and 19 year old children. One in high school and one working full time because the family can’t afford to send her to college. Missy works at minimum wage in a local fast food restaurant.

Husband and wife recently lost their jobs. He spent 18 years at the same job as a mechanic. She spent 18 year at the same job as line person at a furniture manufacturer that went out of business. Instead of collecting unemployment, Mr. and Mrs. C work for $8 an hour.

Family C does NOT own a car. They use mass transportation. They do not own a house. They have been renting all of their lives because they never earned enough to save. And their kids get no allowance. Family C has no health insurance and Junior has severe autism requiring medication and special food that Family C cannot afford.

Family C is behind on their rent and were just evicted. Mr. C lives in a men’s shelter and Mrs. C lives in another shelter. Mr. & Mrs. C still go to work everyday and are trying to save enough to rent another apartment.

ObamaRamaLama – Family C . . . too bad, because you get zip. Since you don’t own a home and you didn’t go out and get a zero down mortgage with no payments for the first year . . . that reset in year three with a whopper of a payment . . . you get zip. Tough love. Go live on the street. Eat dog poop and die. Sounds harsh?

That is exactly what Obama is proposing. ObamaRamaLama is going to reward the irresponsible, spoiled brats of the world, while the most in need will suffer even more than they have.

And folks . . . if you think that is not a recipe for violence . . . think again. In fact, there are millions of families in far worse shape than Family C. And there are millions of illegal immigrants out of work and not counted. And there are more violent gangs today, than ever in the history of this country. These gangs are growing more than any other demographic group in the world.

5Gs – God, grub, guns, gold and grape juice.

Investment Update – Very briefly. We just recommended more gold and added a group of mining stocks. Things are unraveling faster than I anticipated. We will profit on our short positions and PUTs. With these profits, I want you all to consider where you are at financially and what you need.

This will be a critical weekend. The foreign markets will have two trading days in front of us. I am going to carefully watch China. If we do not see enough movement down, we will exit our FXP position. If things do not begin to adjust to reality, I want to be out for the next 2-3 months. If we do get out of FXP, we will actually look to get back in as the weather improves. It is not easy to demonstrate and rally when it is freezing cold outside. So if the markets do not start to recognize the tidal wave on the horizon, we will move to higher ground for a bit, and the re-enter in 2-3 months.

If we see a hard spike down this week, we will be adding to cash and gold . . . because there will be market rallies. Obama might just promise something we cannot even dream of. Who would have though King Henry could get away with everything he did? Obama is just getting fired up . . . and he is more clueless than a rock covered in bird poop . . . unless he is sly as a fox with rabies. Then again, a fox with rabies is not sly . . . just wild, crazed and capable of anything.”

Naked Capitalism: Another Sign that Volcker is Marginalized (And a Preview of His Program)

“The system is broken, he said. Fixing it will take a lot of money and a lot of losses in the banking system.”

…effectively he is calling for the re-imposition of Glass-Stegall, the Depression-era legislation that separated commercial banking from investment banking.

So Obama chooses to follow Geitner – the market hates indecision and that is all this guy is – and avoids the tough ideas of Volcker – the one bright spot in the whole mess.

I see now why many here have said O is being run over by a fast-moving train. He better stand up tall soon…if only he’d listen to Tall Paul – I might listen to him….

“If there was any doubt left that bonuses reward performance, this Wall Street chart should put it to rest.”