From the Record:
Complex fed up with delinquent fees
“Love thy neighbor” is under fire at The Glens in Pompton Plains.
Even before the economy nose-dived, Cathy Winterfield said neighbors were burdening neighbors with the cost of maintaining property they all enjoy. About 37 are behind on their homeowners’ association fees — some by years — at the 583-unit, mixed-housing development, running up at least $40,000 in delinquent bills that other residents have had to absorb through increased fees.
The complex also has had to put certain maintenance needs on the back burner, said Winterfield, president of the board of trustees at The Glens, a mix of town houses, duplexes and condo units that went up in the 1990s in Pequannock.
Delinquency has grown to the point where management intends to do something about it.
…
The Glens has already placed liens on debtors’ properties, she said, but that won’t bring in any cash unless the owners decide to sell and have equity. Delinquent households also were offered a payment plan to get back on track, but only one responded, Winterfield said.So The Glens has reached out to the township to join in action against the worst offenders, since the bulk of the problem lies with those living in the fair housing units, which fall to an extent under the township’s Fair Housing Committee guidelines, Winterfield said.
But the township is not eager to join in any foreclosure proceedings — the strongest legal remedy left to The Glens.
“The concern of the township and the Fair Housing Committee is, in the event a unit is foreclosed upon, we could perhaps lose it as a fair housing unit,” said Township Manager David Hollberg.
…
“The only thing we’re permitted to do is make a friendly call and remind them they signed a paper that they would pay their maintenance fees,” he said.
…
“It must be a sign of the times,” that people are getting so behind, he said. “I don’t know. There’s some that just can’t pay their bills like others.”
From Bloomberg:
Summers Says U.S. Economy to Decline ‘For Some Time’
The U.S. economy will continue to contract “for some time to come,” said Lawrence Summers, director of the White House National Economic Council.
“I expect the economy will continue to decline,” with “sharp declines in employment for quite some time this year,” Summers said today on “Fox News Sunday.”
http://www.bloomberg.com/apps/news?pid=20601039&sid=aXHVu97lAGjs&refer=columnist_weil
Just more mess analysis…an op/ed piece before breakfast, what a way to diet.
sl
frist – well almost…
http://economistsview.typepad.com/economistsview/2009/04/paul-krugman-money-for-nothing.html
Paul Krugman: Money for Nothing Economist’s View – a few lines…
“No, the reason financial firms are paying big again is simply because they can. They’re making money again (although not as much as they claim), and why not? After all, they can borrow cheaply, thanks to all those federal guarantees, and lend at much higher rates. So let’s eat, drink and be merry, for tomorrow you may be regulated.
Or maybe not. There’s a palpable sense in the financial press that the storm has passed: stocks are up, the economy’s nose-dive may be leveling off, and the Obama administration will probably let the bankers off with nothing more than a few stern speeches. Rightly or wrongly, the bankers seem to believe that a return to business as usual is just around the corner.
We can only hope that our leaders prove them wrong, and carry through with real reform. In 2008, overpaid bankers taking big risks with other people’s money brought the world economy to its knees. The last thing we need is to give them a chance to do it all over again.”
(2) Still – “We can have our freedom. Or we can have our systemically failure-prone financial institutions. We probably can’t have both.”
Whoa…Looks like the commentaries today are zeroing in on the banker dudes.
2 and 4
this was my fav from the article
“Is the U.S. a nation of laws, or a nation of banks?”
the answer is like throwing a ball in the ocean every thing the gvt seems to do is for banks and investors
I ate a pork chop last night, and I feel a little under the weather today.
Swine flu?
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_reilly&sid=aColIYAe.RaU
Did anyone catch this from a few days ago?
Your tax dollars at work
“Fannie Mae Creates Housing Mirage With Bum Loans: David Reilly – Bloomberg
“In the meantime, Fannie is simply burning taxpayer dollars to create a housing smoke-screen.”
cindy, crossrds, 4,5:
the everyday, working, tax-paying folks are doomed.
we’ve been served up on a platter.
sl
things heating up? Swine flu reported in Mexico, US, Canada, and Spain so far.
(8) Still – Thrown under the bus –
The more of this crap that sees the light of day the better. The PBS piece with Simon Johnson over the weekend was compelling. He does not mince words. His fear is that it will have to get much worse before anything will be done about it.
vodka (9)-
Warm weather.
People mixing together.
People rioting in huge numbers.
Swine flu.
Barca Champions League.
Barca-Real Madrid this week. 90,000 in attendance.
What a way to kick off the Summer.
Cindy (7)-
Amazingly, they were a complete garbage can/bankruptcy/bailout vehicle not too long ago. We all know how that ended, with equity blown out and de facto nationalization.
Now, just months later, the garbage can is being re-primed for another complete bust. The stupidity is monumental, and the consequences will be Biblical.
BTW, let’s not discuss what a cesspool FHA has become. It’s like they took the coke also known as Phony/Fraudy and distilled it into a flesh-eating super crack. FHA is also unique in that virtually all the loans behave more like subprime and the agency insures all of it.
This is not going to end well.
Cindy (7)-
So that’s how you refinance negative equity: hand out unsecured loans, then value them at 1.7 cents on the dollar.
Brilliant!
My favorite part of that Bloomberg article:
“Fannie’s program shows how potentially big losses are still festering within the system, unbeknownst to investors.
Known as the “HomeSaver Advance” plan, Fannie used the program to provide “foreclosure prevention assistance to distressed borrowers,” according to its 2008 securities filing.
The plan entailed Fannie funding loans to help distressed borrowers get current on their mortgage payments. Fannie said there were about 71,000 advances made in 2008 with an average value of $6,500.
Really Thinking
Fannie funded $462 million in such loans during 2008. The company tells investors in notes to its financial statements, though, what it thinks the loans are actually worth.
Based on market prices, Fannie said the loans had a value of just $8 million. That’s right, the loans, which are in many cases just months old, were worth 1.7 cents on the dollar.
In a footnote, Fannie said there were several reasons for the huge markdown. Among them: the loans aren’t secured by any collateral; and they are second loans, or liens, that serve as catch-up payments for borrowers who can’t pay their primary debt.”
12
We’re throwing away the future because lenders and borrowers couldn’t control themselves. my question is why do our leaders think solving the current issues is best done by going back to what caused them?
GM announces poop-for-vomit swap plans.
225 shares per $1,000 in notes. Says it will BK if not enough debtholders tender.
Epic fail.
http://www.creditslips.org/creditslips/2009/04/why-card-issuers-engage-in-ratejacking.html
I’ve been wondering about this –
“Why Card Issuers Engage in Rate-jacking”
“Credit card securitizations give issuers imbalanced upside benefits and downside risks.”
“If issuers jack up rates, it will mean greater volatility for the receivables. There will be more cardholders who default, but the ones who don’t will pay more.”
Sounds like it’s the big banks doing it so I guess the answer is to carry a small-bank card.
x-roads (14)-
I think this is best viewed from the frame of reference that says nobody is trying to solve anything. TPTB know the train is off the tracks- permanently- and they are doing nothing more than either:
1. Kicking the problem down the road.
2. Buying more time in order to loot their own respective institutions.
3. Both of the above.
“…why do our leaders think solving the current issues is best done by going back to what caused them?”
That settles it – Forget my Alaska Air miles (B of A). I’m checking with my credit union. I feel used again. What else is new.
The fact that Ken Lewis swears on a Bible that Bergabe and Klink strong-armed him into committing the biggest single act of securities fraud in US history pretty much tells you everything we need to know about how committed these people are to finding “solutions”.
I also fully expect Elizabeth Warren (somebody who IS trying to find a solution) to meet an untimely death before the end of 2009.
Another sign of the apocalypse (or, at least today’s episode of Beavis, Meet Butthead):
Wilbur Ross & Richard Lefrak are joining forces to play in the PPIP pool.
I’ve seen a lot of MSM trying to discredit Lewis and throw him under the bus. At the end of the day if there was no truth to what Lewis is alleging then why would Paulson come out and say it was Bergabe who was doing the strong arming?
GM equity holders will be left with only 1% of the company, post proposed cramdown.
Retirees will also get fuct.
Hey, this is great!
Clot, where are you reading this stuff re GM?
OT… but had me laughing, so what the f.uck,
http://www.mightysweet.com/mesohungry/?p=5903#
sl
Ultimate bagholders for GM will be US taxpayer and unions.
It just keeps getting better.
herring (23)-
Squat Box. Just announcing it now.
gary: Since Allendale, ramsey etc. are nto wroking for you, might I offer you this wonderful opportunity to live in a Bergen Co blue ribbon train town. Start you Summer right!!!
http://www.njmls.com/cf/details.cfm?mls_number=2917440&id=999999
BOA shareholder meeting is on the 29th.
Thain just tossed Ken Lewis under the bus as well, I gather revenge is a dish best served cold.
http://online.wsj.com/article/SB124080394182958429.html
“But Mr. Thain says that he and Bank of America Chief Executive Kenneth Lewis agreed in writing that the bonuses could be paid before Bank of America’s acquisition of Merrill closed, which led to the early payments. “The suggestion Bank of America was not heavily involved in this process, and that I alone made these decisions, is simply not true,” he says.”
#21 – MSM trying to discredit Lewis
I’ve seen the same dismissive reports as well.
Lewis may very well be a lying SOB (probably is). However, his accusations have to be taken seriously. If there is no action on this matter it will just confirm every dark suspicion and muttered accusation about a kleptocracy that has been made in the recent past.
clot/grim: How accurtate do you guys believe Trulia to be? The stats for my town indicate that prices have dropped over 16% from the first quarter of 2008 to the first quarter of 2009.
21000 additional layoffs at GM
You all seem to be very knowledgeable in the real estate market and I just wanted to ask a question. One that is completely opinion based and will be extremely hard to actually know, but I am trying anyway.
I am currently looking at houses in the Morris Cty area, Parsippany, Denville, Rockaway, etc… Nothing spectacular, but bi levels, ranch, that need just a bit of updating. Public utilities, no CAC, avg 60×120 property, 1 car garage, 3-4 beds/2 bath. The pricing on the houses I am looking at is around 325K with less then 7K prop taxes.
That seems amazingly cheap to me and I want to jump on checking them out with negotiating somewhere to the lower 3’s. The low mortgage rates and new homebuyer credit is very attractive to me.
Am i being completely ignorant and nieve thinking that a decent house in the Northern NJ area that isn’t completely out in the sticks or in a flood zone can’t drop below 300K??
Another 5-star Mish post. I think this could’ve also been titled “How Money Dies and Goes to Money Heaven”:
http://globaleconomicanalysis.blogspot.com/2009/04/money-multipliers-velocity-and-excess.html
Vodka, this is right up your alley.
3b (30)-
Trulia is a piece of shit.
#31 – 21000 additional layoffs at GM
Are these from UAW/plant lines for white collar?
Isn’t it true that Lewis was under oath and Thain wasn’t. Does that even matter?
I want my Pecora hearing!
#35 – UAW/plant lines or white collar
Can’t type…
BD1188 (32)-
In a word, yes.
“Am i being completely ignorant and nieve thinking that a decent house in the Northern NJ area that isn’t completely out in the sticks or in a flood zone can’t drop below 300K??”
Cindy (36)-
I don’t think it matters at all. These guys start lying from the minute their feet hit the floor in the AM.
#34 clot: Thanks for the descriptive comment.
The reason I asked, is the stats also indicated a 69% drop in sales for the same period. That much I would tend to agree with, as most inventory is sitting, even in the Spring height of the market selling season.
3b (40)-
I think the general drift implied there is correct. You just can’t trust the specifics from either Trulia or Zillow.
We have discussed this before here, the subject of States Rights when it comes to regulating the national banks is going to be heard by the Supreme Court this week.
If they rule in favor of the states watch out below.
Next Case: State vs. Federal Power
Justices to Rule if U.S. Treasury Can Shield National Banks From New York Laws
http://online.wsj.com/article/SB124078827601457447.html
BOA story- I have a small biz account… last month my fee’s went from $25 a month to $243!!! A MONTH! needless to say i am no longer with them, thieves.
38
i think in certain towns and neighborhoods this is possible. i don;t think much below 300k. but if we overshoot the trend line on the way down we should get there
#38 – clot – In a word, yes.
Just for my clarification; Are you saying it is reasonable to believe such a house to sell for under $300k, or that that is unrealistic?
OT: For parents with little kids,
Free Leapfrog The Learning Rhythms CD
tosh (45)-
I’m not saying it is a probability. I’m not saying it will happen.
What I am saying is that it is possible. Hell, the one thing I’ve learned through this whole debacle is that the unthinkable CAN happen. To ignore that is to put oneself in a very perilous place.
I have a friend at KPMW. She survived last week’s cuts but told me over the weekend that the job losses all across the accounting sector will be brutal and decisive. The work simply isn’t there.
I think we all know that the job loss isn’t just assembly line/McRetail. Big $$$ jobs are going away…never to return.
In addition to those 21k laid off at GM they’re cutting
%42 of their dealers.
A local Caddy/Saab/Acura dealer had a lot they used for new inventory on my way home. The entire thing was cleared out over the weekend of all cars, about 100 – 120 I’d say. Poof, gone.
#47 – Thanks clot.
#44cross: We shall see. According to Trulia, the median price for a SFM now in my Bergen Co blue ribbon train town is around $358,000.
If that is so, than it puts us right around late 2003 prices.
#41 clot: Thanks.
Any price in central NJ that approaches a 2003 selling price sounds reasonable to me.
However, the next stop is 2001 prices (that will be an express trip…possibly this year, into Q1-’10). End of the line? An overshoot to ’99-’00.
I planned to check a few houses last weekend. But I didn’t because 2 houses that I have most interest in are already under contract after my agent contacted the seller’s agent.
Both houses are about 100k below comps. I wasn’t able to check those 2 houses. So, ‘100k’ is just my estimation based on the information available from MLS. One house is asking for $580k, while I believe similar houses are asking for 670k. The other one is a twins asking for 630k while a similar one in the same block asking for 780k.
I went to 1 open house though. There were a few couples with children there checking the houses. I saw about 10 people signing already at 2:30pm.
#53 I am sure there are lookers, what with it being the Spring buying/selling market.
Buyers are another story, and that is reflected in the large inventory of houses for sale.
We are 2+ months into the Spring selling season, and we have about another 2 months to go. I do not see any quick inventory absorption over the next few weeks.
Clot, 38
BD1188 (32)-
In a word, yes.
I am no RE expert, but i disagree. The only variable is time. under 300K will happen, the unknown is will is take 1 yr, 3 yrs, or 10 yrs.
The economics are heavily stacked in favor of such a decline. A caveat i must add is prices will drop below 300K in 2009 $. what the dollar is worth is 2020 in relation to 2009 $ is anyone’s guess at this point
Re Mish,
Yep, good article. i have been trying to harp on that point although, perhaps not as succinctly as Mish does.
Clot,
99-00 is the sweet spot for NJ. In 99 the average income to home mortgage ratio was between 2.5 and 3.0. That is a historically sustainable price range for a home. The catch is that that was still when people were putting down 20%. Without the 20% down payment and with lower average incomes the prices will have to drop below 1999.
@47
“I think we all know that the job loss isn’t just assembly line/McRetail. Big $$$ jobs are going away…never to return.”
That is what should be said whenever anyone talks about signs of hope or as the CNBC charlatans love to say, “mustard seeds”.
We know a handful of folks in high paying tech, managerial and accounting positions who have lost their jobs in Nov/Dec and have yet to find a job. Things are worse then they say they are.
Oh and open houses this gorgeous weekend were dead. Sellers are still delusional.
vodka (56)-
Yeah, but going forward you’ll have to factor in that homebuyers may eventually be able to pay for homes with handwritten IOU notes and various forms of unsecured debt.
[sarcasm off]
Any news regarding JC? The pier is jammed packed. All bldg’s are evacuating.
beav (57)-
The Spring ’09 market was DOA. A non-event. Some storm and bluster, signifying nothing.
I knew it the minute Larry Fitzgerald broke that TD catch down the middle.
BC (59)-
A foaming-at-the-mouth pig is running loose there.
Low-flying commercial plane flying down Hudson River, accompanied by military jets.
Anybody else hearing random rumors about a wayward jet near/over the city being “escorted” by an F-18? Apparently NYMEX was evacuated?
Anybody else hearing anything or is this just your typical Monday morning swine-flu induced randomness?
http://www.nytimes.com/2009/04/27/business/27geithner.html
Can’t finish it – 7 pages – late already…
“Geithner as Member and Overseer, Forges Ties to Finance Club”
Jo Becker and Gretchen Morgenson – NYT
Victorian – remember you said “Geithner and Summers are Obama’s Iraq.”
…hearing the plane might’ve been part of a military exercise. I guess they’re practicing shooting down civilian planes.
Meh, beats a normal Monday morning.
Planned exercise.
Thanks for the advance notice, guys.
Note to self: never set foot in an airplane again.
#62/63 NYPD reports it was previously scheduled. It is a movie being made.
any links on this?
movie?
You fuel and fly a jumbo and two fighters by a large metropolitan area…for a movie?
NYC OEM:
Please be advised that the US Air force conducted an authorized photo flyover the downtown Manhattan area this morning.
SRS down to $18 today??
Did the low-flying plane have “PPT” printed on its side?
Hell, Fedco’s probably financing the damn movie they’re making.
Frank (72)-
Please drink poison.
#74,
Please buy more SRS.
Frank.(72),
Fcuk you. Since you have hairy ones why don’t you tresspass on Clot’s property?
#76,
Make that down to $16 today.
[42] sean,
I predict that SCOTUS upholds the lower courts and denies the appeal. This area is reasonably well-settled, and IMHO, the only reason SCOTUS took the case was to foreclose yet another avenue by which states attempt to regulate national banks.
The issue of whether banks discriminate in lending goes directly to its business, and therefore is an attempt to impose a visitorial power on the banks. This is something the NBA disallows, and with laws like ECOA, HOEPA, CRA and numerous pieces of fair lending legislation, it can likely be said that Congress has pre-empted the field.
Further, I predict that the reported effort to nullify what appears to be a foregone conclusion goes absolutely nowhere. A contrary decision or congressional reversal would effectively nullify the NBA, and cause national banks to become, post hoc, subject to state laws that did not exist when they did business in that state.
If that happens, look out below.
make-
I could cap him and thell the cops I thought it was a groundhog.
My landlord is putting her condo on the market (exigent circumstances). I think she will have problems trying to sell it (bought in 2006), if she expects the same price at which she bought it.
Bah! Looks like I will have to move again. Worst part of being a renter.
#70 Yep as per NYPD anyhow.
Conde Nast shuttering Portfolio mag?
Clot,
take a look
http://www.scribd.com/full/14681990?access_key=key-l0th3tt4bem1966fkmz
the income/mortgage ratio and % of income spent on housing for the state of NJ was last at a sustainable point around 1999. And even better, the 99 price level is only stable is interest rates do not jump above 7-8% and median income does not decrease. If one or both happen and the decreas in income or high rates last for more then 2 or 3 years then the stable point will be even lower.
FYI, NJ inflation adjusted median sales price for the last 10 years:
1999 – 2008
$215,755
$232,307
$254,327
$295,907
$322,837
$355,837
$392,517
$391,892
$400,091
$361,200
Anyone know the “catch” with this bond, just got a million for sale at close to 30% interest and it is still A rated.?
SUNAMERICA INC DEB 9.95000% 02/01/2012
CUSIP 866930AD2
Coupon 9.949
Maturity Date 02/01/2012
Moody’s Rating A3
S&P Rating A-
Price (Ask) 65.000
Yield to Worst (Ask) 29.290%
Photo op?
http://blogs.wsj.com/middleseat/2009/04/27/readers-did-you-see-the-low-flying-jet-over-lower-manhattan/?mod=mktw
82 Grim – Confirmed.
My rent vs buy decision is starting to cross over to the buy side. Anyone else starting to experience this phenomenon? 5% rates and 3 extra years of savings (down payment) make for an interesting equation.
Maybe it is because I need to negotiate my rent down with my landlord. And yes, the buy alternative means an equity stake in a declining value asset. But I am looking in brigadoonish towns where I don’t see 1999 prices coming anytime.
Just wondering if its just me.
Also, plenty of well-attended open houses again this weekend. One home I looked at last week and was going to bring a builder to in order to assess expansion opportunities is already under contract.
http://www.silive.com/news/index.ssf/2009/04/faa_says_lowflying_plane_over.html
My dad so the plane a few hundered feey above ground in South Beach. What do you need a jumbo plane escorted by two F-150’s to take” PICTURES”
All of JC was evacuated.
http://www.silive.com/news/index.ssf/2009/04/faa_says_lowflying_plane_over.html
Why do have have media again?
#87
If you are looking for consensus on this board to make the decision for you with regard to your dilemma on buying, then only God can help you.
Fing idiots at the FAA/DHS and Bloomberg’s office, just heard from my wife they evacuated allot of buildings in lower Manhattan, my pregnant wife had to walk down over 40 flights of stairs, they thought it was real.
I have a pic of the fly by from up top of the building, it looks scary enough.
Seneca,
The consensus for this board (if there was an official consensus) is that RE will continue to decline in real prices OR inflation will wear away at the remaining value for the next few years.
When I see things move back toward center in terms of housing I definitely will give a definite “buy” signal but for now I’m expecting more declines. I’m hearing the same for your area too.
Two sayings I keep close to my heart when thinking about RE.
“Housing is sticky downward”
“You cannot get tomorrow’s price today”
Here is a pic of the fly by this morning.
If you saw this out the window and were told to evacuate the building what would you think?
http://www.imagechicken.com/uploads/1240849914062048300.jpg
Zack [88]
Not really a dilemma at all. Just wondering. I am pretty good at making my own decisions and don’t generally rely on signs from God for help.
Nic [90]
Understood that the general consensus is a few more years of declines. However, if you are not trying to time a bottom, its possible to find yourself in that gray area now. Anyone who won’t buy because prices might drop another 5% is probably someone who won’t ever buy. Depending on where you are looking, year over year declines of 10% or more are not a guarantee.
I don’t understand how some people can be in agreement with the issues discussed on this blog and yet at the same time draw an imaginary line in the sand and say, “it won’t get any worse than 2002 or 1999”
If you acknowledge the economic predicament and understand its mechanics then there is no backstop at year X just because it “looks cheap”.
Declining wages, higher barriers of entry to the game, excess inventory and a permanent and marked shift in consumption, the likes of which, we haven’t seen in 100 years.
It may not manifest itself immediately, but saying “I live in town X so I don’t see prices going to B” is realtor speak.
Gross income is a misleading number to home affordability. Gross income can be everyones income. Including, servants, grown kids at home, fast food workers, should be gross income of home owners only.
http://www.silive.com/news/index.ssf/2009/04/faa_says_lowflying_plane_over.html
My dad was scared and he witnessed NATO drop bombs in Montenegro a mile away from him.
Sean,
See #85.
I wasn’t scared. Only the good die young, SOB’s like me are like cockroaches couldn’t kills us if you dropped 10,0000 atomic bombs.
John says:
April 27, 2009 at 11:32 am
Gross income is a misleading number to home affordability. Gross income can be everyones income. Including, servants, grown kids at home, fast food workers, should be gross income of home owners only.
Homeowners already own a home by definition… They do not need to buy……..
zieba (93),
Don’t you read Frank’s posts? It’s all good.
I’d fill you in on more reality but I have to get back to feeding my unicorn.
Rich
93
you forgot the never ending property tax increases. i believe grim calls it the wild card
97 al
shouldn’t it be median family income : median house price??
Did Hov hope it would hit 77 Hudson?
“In Jersey City, construction workers were evacuated from a condominium tower under construction at 77 Hudson Street.”
“The workers, who were on the 32nd floor of the construction site, said the plane circled three times past the Goldman Sachs tower, the tallest building in New Jersey. On the second pass, they said, the jet appeared to be only a few dozen feet from the building — close enough to clip the side of the skyscraper. A fighter followed right behind, mirroring its moves.”
http://cityroom.blogs.nytimes.com/2009/04/27/air-force-one-backup-rattles-new-york-nerve/
I am not privy to Seneca’s situation, he may very well be in immediate need of housing for whatever reason. Since frugal is the new black, maybe scale down the rental and come out in a stronger position once the effects of this bubble are well known in a year or two.
The tax situation alone should be enough to give pause to at least 50% of the qualified crowd. I’ve been on the receiving end of the “great time to buy because of the 8K credit” speech recently.
Stupid is always around.
If you’re buying now, you might as well defer to the magic eight ball:
http://web.ics.purdue.edu/~ssanty/cgi-bin/eightball.cgi
John says:
April 27, 2009 at 11:05 am
Anyone know the “catch” with this bond, just got a million for sale at close to 30% interest and it is still A rated.?
SUNAMERICA INC DEB 9.95000% 02/01/2012
CUSIP 866930AD2
Coupon 9.949
Maturity Date 02/01/2012
Moody’s Rating A3
S&P Rating A-
Price (Ask) 65.000
Yield to Worst (Ask) 29.290%
JJ: bond of AIG sub
#102 zieba: I would not be at all surprised to see the 8k tax credit extended into 2010, and beyond.
#92 seneca:Depending on where you are looking, year over year declines of 10% or more are not a guarantee.
It is certainly a gurantee in our area, where we are late to the game as far as price drops.
crossroads,
97 al
shouldn’t it be median family income : median house price??
that is exactly what i charted
#87 seneca: Also, plenty of well-attended open houses again this weekend. One home I looked at last week and was going to bring a builder to in order to assess expansion opportunities is already under contract.
Good luck on your decesion, but with all due respect, it appears that you are at the point of buying, and are now rationalizing how prices cannot go down any further, once you buy. That may not be your intention, but that is the way it is coming across.
As many here will tell you including clot and grim, (both realtors)attendance at open houses is not indicative of people buying. In many,many cases it is simply indicative of neighbors nosiness.
Thank the president for another example of “Transparency”.
Obama says that we were just celebrating a succesfull first 100 days by taking some pictures and enjoying the wheather!!!!
I wish it would have circled by gramercy park, I would have got on the roof and emptied out my shot gun. idiots!
chicagofinance re, bond of AIG sub do you think they will be able to succesfully spin it off to a better company and it will pop?
does anyone here pack heat when they go out in public? are you more inclined to go to the grocery store/movie theater and bring your gun?
my issue is that if some shit’s going down, and you get involved … you just open yourself up to something that could impact the rest of your life.
just wondering, what with the weather warming up …
A realtor told wife and i inventory in summit NJ is four (4) months?? Looked back at the terrific charts posted a bit ago but can’t seem to decipher. I assume it’s much higher.
John says:
April 27, 2009 at 12:18 pm
chicagofinance re, bond of AIG sub do you think they will be able to succesfully spin it off to a better company and it will pop?
JJ: could end up as a sub of Ameriprise; or else it may end up being levered up and run by a PE firm. In this environment, there has to be better opportunities. It currently is regulated and has a government backstop, but it won’t out to maturity, hence the pricing.
I don’t expect anyone to memorize my posts so please allow me to remind you all that last weekend I posted that of the well-attended open houses I went to, at least half the people were neighbors.
I am not looking to rationalize anything. I am not here to talk everyone into buying now cause its a great time and the 8k tax credit can’t be beat. In fact, the tax credit plays no role in any decision I might make.
Some background. I rent a desirable apartment in an undesirable town. I have no immediate need to move but have always kept my eye on the market in the towns I plan to ultimately move to in Union or Essex counties. I will be just as happy renting a home as I will be buying one but a 3rd bedroom is becoming more urgent and it is very difficult to find rental complexes that are as new and well maintained as the one I am in now that have 3BRs.
I am seeing some places that are available either “for sale” or “for rent” and when you run the numbers, buying is starting to make more sense than renting in SOME (not all) of the places I am looking at.
Yes, the tax wild card leave me more confused than a cow on AstroTurf and I am not looking for anyone to hold my hand and tell me its all going to be OK no matter what I do.
People, I was simply wondering if anyone was running the numbers and determining that PITI vs rent paid was starting to converge?
The discussion on who should be included in median/gross family income has already been discussed with John.
Points to summarize from that previous discussion:
1. If you used the gross/median income of families to create statistics when prices are going up then you still need to use them prices are going down.
2. Gross/median incomes are important because this gives us an indicator of the “pool” of buyers capable of generating the income necessary to purchase at the price you are asking. An assumption that incomes are Gaussian in distribution helps to provide real numbers.
John, it is possible to throw away low income families in statistics and redraw a curve using the people with enough income to buy homes. The problem that you run into is that the definition of “low income” changes and thus doesn’t provide a good measure of where to make a consistent threshold. The other problem is that the curve is no-longer Gaussian in distribution but rather looks more like it is a Poisson distribution.
Unfortunately the changes that you are suggesting (ignore low income families) result in statistics that provide zero important information due to inaccuracies and skewed distribution curves.
Unless you have an argument as to why homeownership rates adhere to a Poisson distribution rather than a Gaussian distribution….?
No family who makes under 100K should be buying homes in BC unless they have a big downpayment.
#115 John: Well, 70% of all families in BC make 100K or less a year.
110 yikes,
Its almost impossible to get a carry permit in NJ. So its unlikely anyone on this blog carries. In PA i am not very familiar with their carry/concealed carry laws.
If you are going to carry/concealed carry, its important that you are properly trained and have a working understanding of the legal ramifications of carrying and potentially acting at some point. people also carry for many different reasons. Some just to exercise their rights , others for security, etc.
Just like cars, which car be a lethal weapon in the wrong hands, or someone who is poorly rained, it comes down to the person using the tool.
The funny thing is that the average joe who goes to the range once a month or more is probably better trained with their firearms then the majority of police officers who often shoot only when they are required to qualify which is usually once or twice a year.
With firearms, the more controlled and familiar you are with the weapon the lower the probability of collateral damage.
#113 seneca:People, I was simply wondering if anyone was running the numbers and determining that PITI vs rent paid was starting to converge?
I am running the numbers, and it is staring to change, and in fact accelerate. We are just not there yet IMO.
Speaking of firearms, does NJ law require a letter from your employer? My permit is with state of California and my firearm is registered where I live but I don’t have a permit to purchase which means i can’t go to a club and shoot. Went to apply and they gave me the many many forms to fill out including one that has to be signed by my employer! Wasn’t sure what business it was of my employer. You want to pull my psych reports, go ahead but permission from the big corporation I work for? Seems like a bit much.
What do you do if you are self-employed?
3b, thanks.
Lines haven’t crossed yet on a consistent basis but are directionally moving that way is what I am typically seeing. Few random cases where they meet or come pretty damn close to it.
seneca,
no nj does not require informing or interviewing your employer
Seneca,
here is some info on NJ fire arm permits
http://www.njguns.com/permit.htm
3b,
Is it safe to assume then that 70%, or for the sake of argument 50%, of families in BC are single earner families?
It’s difficult to earn *less* than 100K if both people are working, no?
Perhaps we are just a bunch of elitist?
#123 That 70% number I quoted is from US census numbers as of 2005. I was surprised myself, but I think there is the myth of Bergen co (as in other so called affluent places,and the reality), 2 very different things.
Just as an aside, I live in a Bergen co blue ribbon train town,and the median income is 76k a year.
The New Jersey by the Numbers figures show very high median incomes for the best ranked school districts. Montgomery in Somerset has a median HH income of $157,827 and 29% have a median HH income above $200,000. Even a mediocre to poor school district like Franklin Twp. has a $90,420 median HH income.
#125 renter: And yet in Ridgewood NJ, considered another very affluent area,and which has always been desirebale the median income is about 121K
An interesting point was made over the weekend that the fluctuation in median prices is probably not very reliable given that certain segments of the housing market have completely collapsed in terms of sales.
Let’s say in the last 3 months, 5 sales have closed at below $500k in a town, 1 between $500,000 and $750k and none between $750k and $1m. How do you price the latter house— based on the percent of decline of the other sales in other price ranges?
More than likely, most sellers just go further back in time to look for comps which are increasingly irrelevant.
Considering college graduates start at 55K, that means a couple who met in HS who get engaged and married the day they graduate would already be at 110K income. That does not make 100K per household much of a barrier to a blue ribbon town where most of the town has households with at least one college graduate.
Funny part with a 2.5 income rule most of montgomery could not afford the house they live in.
renter says:
April 27, 2009 at 1:03 pm
The New Jersey by the Numbers figures show very high median incomes for the best ranked school districts. Montgomery in Somerset has a median HH income of $157,827 and 29% have a median HH income above $200,000. Even a mediocre to poor school district like Franklin Twp. has a $90,420 median HH income.
re: #101 BC Bob
Check this video of the fly by of the plane taken from Jersey City, you can see the GS tower and 77 Hudson.
post #9 on this blog.
http://hoboken411.com/archives/17839
Seneca says: “My rent vs buy decision is starting to cross over to the buy side.”
Mine too… Monthly cash flow analysis is practically at parity right now but its the longer term depreciation of home value that needs to be considered.
the question for people who are considering buying right now is what is the hurry? even if you think RE is plateauing, do you think it will be going up any time soon?
the NYC area is in a tremendous amount of flux right now. Wall St just melted down about 6 months ago. How many people really know what they will be doing/making for a living in a year or two?
How many people in the NYC area have the cash and the confidence to make a big downpayment on a house right now?
It just seems to me that even if you are relatively optomistic about RE that there is little to be gained by jumping in right now. I would at least wait until the end of the summer.
3b and seneca
are you using a %20 down scenario when running #’s?
and ket
did I miss your charting of median family income:median home price?
3b
if %70 # is true how are people staying in these homes or does this add to the argument that we NJ are behind the curve and the worst is yet to come?
John,
the average college graduate does not start at 55K. The highest paid bachelor graduates are engineers and actuaries and both start around 50K. most other fields start around 30-40K
Kettle, nice analysis.
Thanks for sharing.
crossroads,
see my post at #83
did the O man really do this stupid fly-by to get a photo of Air Force 1 cruising by the Statue of Liberty to commemorate his first 100 days?
http://www.reuters.com/article/newsOne/idUSTRE53Q3S820090427
Veto,
thanks,
e-mail me i am curious about your rent vs buy cross and have some other data we might want to collaborate on
Another Video, this plane was close.
http://www.youtube.com/watch?v=BMoy8JprKI0
#128 John: You are off base there. There are very few industries that pay 55k to start right out of college with a basic BA/BBA for entry level positions from a non-Ivy League school.
I have friends in that line of work, including headhunters, career guidance/job position at a well regarded University in NYC, not to mention I have been involved in the process myself.
Markets down 50 odd points (as of 1:50 PM) because of swine flu!! This is the craziest thing I’ve heard in some time. Did’nt know some BS like this could affect world markets.
#133 crossroads:or does this add to the argument that we NJ are behind the curve and the worst is yet to come?
That is my opinion. I know lots of everyday people who have staggering amounts of debt outstanding including and in addition to the mtg.
All predicated on the mistaken belief that real estate always goes up.
Ket/John,
Obviously company size is a big factor. That said, three years ago during the boom, mid-tier accounting firms in NYC were offering mid-tier students 45-50K to start. During the same period, accounting positions with the government or city of new york started at 35-38K. Four year students going into finance, at the op/keyboard jockey level, could expect 50-55K to start + small signing bonus plus 10K from the trough at years end.
Three years later, at around 27-28 the mid-tier accountant at a mid-tier national firm is earning 65-70K, the government employee is at 42-45K and the finance jockey is praying to keep his 75K having seen his 10K pig trough bonus evaporate.
If any of the above combine forces with a librarian, store clerk, medical assistant, municipal clerk or construction worker the result is an income exceeding that of lower medians.
“does this add to the argument that we NJ are behind the curve and the worst is yet to come?”
just one anecdote, but in the last couple of weeks a sh*tload of houses have come on the market in the starter neighborhoods of the towns I follow, all of them at totally unrealistic prices. My supposition is that these are people who have to sell due to job losses or mortgage resets and are pricing at the level of what they owe on the house. A lot of people stretched themselves pretty far to get into the right town in the last few years.
seneca,
I’ve been a determined renter for a while now. Even though I feel sure prices will continue to drop for at least 2 more years, I found myself beginning to wonder if now could be an okay time to buy an REO. This was based on 1) REO’s are selling at a significant discount 2) the tax credit which expires in December, and 3) worry that interest rates could spike 4) inflation favors debtholders (and the Treasury is printing money like crazy).
However, a few things convinced me that it’s not the time to buy. 1) A RealtyTrac study that claims there is a massive shadow inventory of forclosed homes that banks are not selling 2) my uneducated opinion is that the tax credit will be extended when the market does not recover 3) NJ’s population problem, which is likely to get worse given state and local budget issues, 4) the economic minds I trust (ie Mish) expect deflation rather than inflation, which would punish debtholders.
#143 – I feel I should point out that there is a considerable portion of the population that is not college educated.
My my, we are all splitting hairs this morning. Perhaps its the anticipation of feb’s Case Shiller home price data tomorrow that has us jumping out of our seats.
Doesnt matter if Kettle uses gross, family, personal home owners or renters. They are all probably 95% positively correlated anyway. If you’re getting hung up in the data source you are probably missing the point. The historic relationship between income and house prices are still out of whack. Any source of ratios that he uses will likely show that same result.
Just found this…
“The Case-Shiller 20-city home-price index for February, due on Tuesday, might rise to –18.7 from a record –19 in January.”
http://blogs.wsj.com/marketbeat/2009/04/27/tuning-back-in-to-the-economy/
#147 – veto – The historic relationship between income and house prices are still out of whack
Agreed.
People who went to college and picked the major they could handle that paid the most are still earning good starting salaries. Pharmisists still can start at near 100K. Engineers and good accountants can start at 55K to 65K. Problem is 4 years ago when times were good kids started in history, sociology, communications type degrees cause in a hot market even they got jobs but that door has been slammed
[110] yikes
That depended on where I was going.
When I lived in NH, I had a carry permit, but I never carried. Never felt the need.
When I lived in PA, I did have a permit but would carry only when walking around in the evening or going to areas I knew to be sketchy.
ATEOTD, I knew that even if carrying, I would likely not pull. Someone wants my car, fine (in fact, I may just pay them to steal it). It behooves the responsible owner to know what he/she will do if the situation arises.
Carrying will almost always lead to more hassle than it is worth, which is why I almost never exercised my right, but I still believe in getting the permit. Better to have it and not need it than the inverse.
traveljerk123 – markets are not down due to the swine flu.
The markets are down because for the first time in 23 years Microsoft revenues are down.
so lets say someone wants to buy a house for one million, what 20K taxes, what do you think historically pre bubble their income and downpayment should be.
There is a 3pm SIFMA industry wide BCP Pandemic call. I will have a delegate on the call, tell you what up afterwards.
first plage then earthquakes?
What comes next, locusts or frogs?
Strong earthquake felt in Mexico City
MEXICO CITY – A strong earthquake struck central Mexico on Monday, swaying tall buildings in the capital and sending office workers into the streets.
The 6.0-magnitude quake was centered near Chilpancingo, about 130 miles (210 kilometers) southwest of Mexico City or 50 miles (80 kilometers) from the resort of Acapulco, according to the U.S. Geological Survey.
Televisa television network quoted Mexico City officials saying there were no immediate reports of damage or injuries.
[102] zieba
“If you’re buying now, you might as well defer to the magic eight ball”
All hail the Magic 8 Ball.
(as a child, there were many occasions where I did not make a decision without consulting the magic 8 ball. Maybe I still should).
“Considering college graduates start at 55K, that means a couple who met in HS who get engaged and married the day they graduate would already be at 110K income.”
I think that $55k is pretty far off for an average or median. I graduated in 2002 with a general business degree from a top 25 undergrad school. It took me about 3 years to get a $55k job. My wife graduated from the same school as a teacher. Needless to say she’s not making $55k. If we didn’t make that kind of money, somehow I doubt every Montclair State grad is a shoo-in for a $55k job.
the average college graduate does not start at 55K. The highest paid bachelor graduates are engineers and actuaries and both start around 50K. most other fields start around 30-40K
My start was 62k, recent college grad.
My start was 62k, recent college grad.
What field and major?
SS,
Finance?
[110] yikes
“my issue is that if some shit’s going down, and you get involved … you just open yourself up to something that could impact the rest of your life.”
You are absolutely correct. While you may be entitled to get involved, as you put it, I would never recommend defending others unless they are your loved ones. After all, where you and yours are concerned, it’s better to be judged by 12 than carried by 6. But for anyone else, the most you can do is take their pain for them, in one form or another.
Computer Science Major, Work for big Telecom
Highest Level of Educational Attainment of U.S. Population, 2005
Some high school 8.5%
High school graduate 32.2%
Some college 16.8%
Associate’s degree 8.6%
Bachelor’s degree 18.1%
Master’s degree 6.8%
Doctoral degree 1.2%
Professional degree 1.5%
These percentages usually shock most people.
Skeptic 127,
I have added additional data to the charts linked below,
http://www.scribd.com/full/14681990?access_key=key-l0th3tt4bem1966fkmz
Look at the sales volume vs median price and the median income vs median price.
The sales volume continue to grow from 2001 to 2006 while the median income stayed approximately flat and while the median sales price rose substantially.
This suggests that the median trends are representative during this period on the basis that the sales volume had to come from somewhere. and the sustained growth in transaction volume did not realistically come from an increasingly smaller “high income” segment of the population. What we saw anecdotally” was that down payments decreased to zero and increasingly risker loans were used to complete the transactions even as prices increased, and incomes stayed flat.
#162 – Congrats! Your story used to be pretty standard in NJ not too long ago; go to college, get degree, get good paying telecom job (AT&T had to have employed about 1/4 of the entire state in the 70’s and 80’s).
Renter,
Indeed. Every time I see them.
As the child of first generation immigrants to this country, I was never given a choice of the first four.
I am willing to bet there are large variances in the numbers above based on geographical area.
Zieba 143,
Take a look at Nj employment data
http://www.scribd.com/full/13991400?access_key=key-1gynzdukk9fkad556dku
The majority of workers in NJ are not in high paying industries. Even the BE/BS crowd. The 2 largest employers in NJ are the state government and educational/health services. yes there are some high paying jobs in those fields, but a relatively small percentage compared to the overall population. Remember that we are referring to people just out of schools.
re 163,
Add to those statistics the sorry state of education in this country and you get an even better idea of how the sheeple are so easily led into doing things that ar not in their best interest.
VETO<
i actually have built all of the different ratios, and you are correct that they are show the same trends no matter which set of ratios you use.
So much to say and so little time at the moment so let me just get this one out:
Photo shoot? Photo shoot!!!
Really? Really. Really!!!
That is the justification for making pregnant women walk down 40-flights of stairs? Is Bam Bam paying for this out of his own pocket? Are we the taxpayers paying for this? Where are those elected officials of ours who reprimanded Big Three auto CEOs for flying to their hearings in corporate jets rather than commercial flights?
Does a single person out there, even the guy who failed high school Algebra three times, does even HE believe this story?
WTF? I want a much higher caliber of lube to ease the pain this oversized ramming of my taxpayer arse is taking. Make up a better story and make it up NOW!
What does income have to do with housing anyhow. Is it sometype of god giving right to have a house? If you want a brand new Mercedes you need to work for it, they don’t lower the price and give you govt cheese to put you in one. I went to a hick party in upstate NY this weekend, don’t ask me why. Anyhow, garbage men, divorcees, college dropouts, lazy people etc, job hoppers, people who left workforce etc. there made up 80% of party. The 20% of men who had a real degree in school, did their graduate degree at night, never had a dead spot in their resume and have been employeed 20+ years all made a lot of money, it is not a secret recipie to have a high income in your 40’s. Other weird thing two people in their 80’s were complainig about losing money in the market, what they heck are they doing holding equities anyhow?
[163] renter
wow, that is very interesting. I had no idea.
Of course, it also means I am “smarter” than at least 97% of you.
I wish I would have had a guidance counselor like John.
“…picked the major they could handle that paid the most…”
#171 – What does income have to do with housing anyhow.
Nothing John, nothing at all.
Ket,
Time after time, I fail to reconcile the amount of income necessary to live a modest yet financially sound family life with the figures reported by census data.
Either your figures are off the wall or we are in for a major quality of life adjustment.
Separate and several from the above, I would be interested in seeing the % of households that are dual earners vs single earners. I wonder if the dual income family is myth being perpetuated by people of power in blue collar BC towns. :)
#144 skeptic:A lot of people stretched themselves pretty far to get into the right town in the last few years.
Alot of people stretched themselves pretty far to get into any town in the last few years.
75% of Americans should just pitch tents on rented land and be thankful for the opportunity to do so.
3b,
Very true!
“Alot of people stretched themselves pretty far to get into any town in the last few years.”
ket
nice work. from # 164
“What we saw anecdotally” was that down payments decreased to zero and increasingly risker loans were used to complete the transactions even as prices increased, and incomes stayed flat.”
I can’t believe people can afford to stay in a home when bought with %0 down. median income:median price people must be in debt up to their eyeballs
Zieba 175
Either your figures are off the wall or we are in for a major quality of life adjustment.
all of the data i use is publicly available from the US census website as well as the other sources i site. feel free to check the #’s.
guess which option that leaves.
John asks: “lets say someone wants to buy a house for one million, 20K taxes, what do you think historically pre bubble their income and downpayment should be.”
I’ll take a crack at this one.
Down payment is easier of the two. No matter what the price or taxes, 20% is the historical standard right? Thats $200K in this case, asssuming credit crisis doesnt get way worse, lets just assume 200K.
Now for the income.
Conservative Gross Income ratio of 2.5x would be $400k per year, doesnt matter household or personal as the ratio gets applied to the house, not the number of people paying the mortgage.
At 3x income, you need minimum of $330K per year to afford that house.
I like using the percent of income analysis since it factors in the high property taxes and is more accurate for states like ours. Factoring PITI carrying costs and keeping it between 25% and 30% of income puts you in the 250k – 300k range.
In summary, you’d need anywhere from $250K – 400K per year income to be comfortable buying a million dollar house with 20k per year taxes. It’s a wide range but i guess it depends on how conservative or aggressive you are.
Zieba
Time after time, I fail to reconcile the amount of income necessary to live a modest yet financially sound family life with the figures reported by census data.
that is an excellent point ad here is the result of that disconnect:
http://1.bp.blogspot.com/_lsF4HSdqo04/SfX-mx6uiEI/AAAAAAAABBg/gPPhF00Jwd0/s1600-h/Consumer+Debt.PNG
171 john
“Is it sometype of god giving right to have a house? ”
John about 1 1/2 years ago I had a birthday party for my son. Two members of my family are realtors and were talking about the %0 down loans going by the wayside. So as the story goes the 1 realtor said to the other realtor ” How are people going to buy houses anymore?” I said they’ll have to save %20 down like they use to. of course they laughed at me. well the one who said it is unfortunately heading into bankruptcy. pretty sad. his god giving right is ending
Ket,
I was just trying to be clever. We’re all f@cked.
zieba,
sorry, missed the sarcasm :(
Got quiet.
Must be the final burn to 5PM. I have to catch up on some work as well.
Nom, 172
I guess that puts me in the 3rd percentile since i’m just a high school janitor.
New thread, up!
Nom, 172
“smarter”… or, some people that I know would say that you were one of the suckers that spent way too much time in training/schooling and not much time in working/earning in the “real world”.
Many of my friends have spent several years with $12k/yr stipend — some even married and had a family during that time!
S
#155
“so lets say someone wants to buy a house for one million, what 20K taxes, what do you think historically pre bubble their income and downpayment should be.”
I would say minimum $350k
but even more interesting is the question of how many people sitting in million dollar homes earn at least $350k. I bet well under 50%.
waters (147)-
FWIW, I concur with you completely (and I’m a Realtor). Excellent summary!