Where’s the bottom?

If the last real estate bubble that hit NJ is any indication of where the market might go, we’re still a long way off from the bottom.


(click to enlarge)

A few points.

If you aren’t familiar with the last real estate bubble, please read up on it here: Home Prices Do Fall.

If you are wondering why your agent hasn’t mentioned anything about a prior bubble, or has said something completely stupid like “Home prices don’t ever fall, the NAR said so”, don’t be too hard on them. According to the NJ Association of Realtors 2008 Member Profile, the median sales agent has 6 years experience. You read that right, at least 50% of all agents have never known any market other than a bubble. And since there is no history section of the licensing exam, they would have no reason to study it. The median of all roles (includes brokers, etc), only goes back 10 years, not much better. We’ve got an entire industry that has never known anything but “up up up!”.

Keep in mind we’re talking about “real” prices here, not nominal. This means the prices have been adjusted for inflation to show the true appreciation (or depreciation) of an asset. If nominal prices are flat over a long period of time, real prices will be declining by the amount of inflation over that period. While some say this might overstate the depth of the declines, this adjustment is necessary to ensure that we’re working with an apples to apples kind of comparison, especially over long periods of time.

What does my gut say? We’re in for at least another year of sharp price declines in NJ. Following that, we will likely see 2-3 years of completely flat nominal prices with declining real prices. Peak affordability (based on price and incomes, not financing) will likely be hit towards the tail end of the flat period.

Thanks to Veto and Kettle for putting the time and effort into creating this graph. Hopefully they’ll keep it updated, and I’ll keep posting it.

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

227 Responses to Where’s the bottom?

  1. scribe says:

    first? first!

  2. Clotpoll says:

    Good on Veto & Kettle. Grim’s own little Case and Shiller.

  3. Clotpoll says:

    NIce graph. Downward facing dog.

  4. grim says:

    Veto,

    What is the correlation?

    Am I the only one surprised at how close these two are tracking?

  5. grim says:

    Nobody posted BFF?

    From the FDIC:

    Kitsap Bank, Port Orchard, Washington, Assumes All of the Deposits of Westsound Bank, Bremerton, Washington

    Westsound Bank, Bremerton, Washington, was closed today by the Washington Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Kitsap Bank, Port Orchard, Washington, to assume all of the deposits, except those from brokers, of Westsound Bank.

    The transaction is the least costly resolution option, and the FDIC estimates the cost to its Deposit Insurance Fund will be $108 million. Westsound Bank is the 33rd FDIC-insured institution to be closed this year and the second in Washington. The last bank to be closed in the state was the Bank of Clark County on January 16, 2009.

  6. 3b says:

    Thanks Kettle and Veto, and grim for posting it.

  7. lurkerd says:

    Super chart fellas. Interesting to see the data in real terms.

    Numerous “30% off peak” forecasts have been posted on the site over the years. Although New Jersey home prices have fallen approximately 10% since the 2006 peak while many other markets have fallen by more than 30%, I haven’t noticed any change to the forecasts. Instead, it seems people are keeping the faith that their forecasts and hoping the home price declines they said are going to happen will eventually come to pass.

    I prefer to observe home price charts in nominal terms. That is how price indices are quoted. Moreover, mortgage debt is borrowed and paid back in nominal terms, meaning homeowner distress is caused by large declines in nominal terms.

  8. 3b says:

    #7 llurkered:Instead, it seems people are keeping the faith that their forecasts and hoping the home price declines they said are going to happen will eventually come to pass.

    They will and are coming to pass there is no other alternative.

  9. grim says:

    Although New Jersey home prices have fallen approximately 10% since the 2006 peak

    I don’t agree with your observation.

    http://njrereport.com/index.php/2009/04/28/new-jersey-home-price-tracker-april/

  10. safeashouses says:

    Great chart veto and kettle

    Now if my wife and I are still employed next year, we might be able to buy a house we can afford. What a novel concept. So last millennium.

  11. Al says:

    Anekdata we all love so much.

    first of all – I am in recession/depression camp. But yesterday I needed to buy a new laptop…

    Went to the stores – EVERY SORE COMPLETELY OUT of laptops under 800$!!!

    I went to 6 different stores and gave up – it seems like everybody went out and bought a laptop for mother’s day….

    it is either stores kept very low inventory of laptops or people were buying them like crazy.

    Just my 2 cents. stores were full yesterday – but for that i blame Friday and first day of warn weather.

  12. safeashouses says:

    #7 lurked,

    I’m seeing 2003-2004 prices in Somerset Hills. There are even houses in Warren and Basking Ridge that were bought in 06, renovated, and are now being listed at 20% off the last sales price.

    I posted a short sale listing in Green Brook the other day that’s listed for around 03 prices.

    Here’s a short sale in Warren
    http://www.trulia.com/property/1050108962-156-Old-Stirling-Rd-Warren-NJ-07059

    bought at 562,500 in Feb 06, now listed as a short sale for 460k.

  13. lurkerd says:

    If one observes the decline from peak for each of the 4 most relevant home price indices and takes an average of the 4 results, then the decline equals 11%.

    The indices are:
    FHFA
    NJAR
    S&P/Case-Shiller New York area house
    S&P/Case-Shiller New York area condo

    I acknowledge each index has some imperfections.

  14. Frank says:

    grim,
    If you’re counting on such high inflation going forward, owning a hard asset like home, is the only way to protect your assets, besides buying gold. So buy a home now, before Omama runs up inflation Zimbabwe style.

  15. sas says:

    hi Al,

    “it is either stores kept very low inventory of laptops or people were buying them like crazy”

    I’ve heard from many distributors and suppliers that its a drop in inventory.
    places dont too many items in stock cause most won’t sell.

    but, weather & more so called “recession is nearing an end” news helps to give economic bounce for a little bit.

    I posted sometime back that the stimulus package will give municipalities a bounce and change psychology for a few months, possbily through the summer.

    but, next fall we could see a repeat of what we saw in 08, but worse.

    we will see.
    SAS

  16. 1987 Condo Buyer says:

    I’ll roll out my story again:

    1987: 2bdr Condo in Belleville Purchase $132,000
    1999: Sold for $92,000

    Held for 12 years, rented it out last 6 after moving to Cedar Grove.

    Oh, let’s talk about Property Taxes for a second, CG, which I think is really well run, cut their actual budget by 10%, yet we will still see a 3.9% tax increase. I can not imagine what lies in wait for other towns this summer and fall as the tax bills come out.

  17. sas says:

    “high inflation going forward, owning a hard asset like home, is the only way to protect your assets, besides buying gold”

    food & Heirloom Seeds is a good way.

    SAS

  18. sas says:

    Al,

    but, tell you the truth.
    i thought tax time many would hit their knees looking for jesus. so far, i think i may have been wrong cause things seem to have ticked up a tad.

    unless of course the buying on time credit cards are running on overdrive?

    SAS

  19. kettle1 says:

    More, fun charts, what recession?

    FYI, i credit VETO for some style pointers.

    http://www.scribd.com/full/15105340?access_key=key-1f3571op9ly151vi9lnj

  20. sas says:

    “Is Anyone Minding the Store at the Federal Reserve?”
    http://tinyurl.com/pxfklf

  21. sas says:

    kettle,

    “More, fun charts, what recession?”

    it would be interesting to see what was going on geopolitically at the bottom time points and the movement back to positive.

    wonder how events influenced graphs?

    I’m giving a direct order, its fun to wonder:)
    SAS

  22. sas says:

    oops:

    “I’m NOT giving a direct order, its fun to wonder:)”

    ye
    SAS

  23. sas says:

    “Admin wants Fed to oversee “systemic risk”: sources”
    http://uk.reuters.com/article/companyNewsMolt/idUKTRE5476T220090508

  24. kettle1 says:

    Note that i think my recession project is VERY optometrist at this point.

    The project is based on the current recession being approximately symmetric as have the last 4. I assume that as bernanke commented recently, job losses will bottom this summer

    more implications. Notice qhat happens to unemployment (U3/U6). If this projection is even close to accurate then we are way past the point of no return. The only scenario thats really more optimistic is if march was the bottom for job losses. will chart that later.

    http://www.scribd.com/full/15111610?access_key=key-2kh8cqz49c1sjfxewluv

  25. Potato Pancake says:

    This listing in Morganville was originally purchased in ’06 for $545,000 now on the market for $499,900 plus tons of renovations done to it. Hardwood floors, siding, updated bathrooms, landscaping, new built-in shelving, new carpeting, french sliders, new tiles, new front porch, new windows. These people put a lot of money into it. They must be up to there eyeballs in debt. Just wanted to share cuz this listing is the epitome of the wasteful mania that this housing bubble cultivated. Nosey neighbors at the open house felt the need to tell us how the couple squeezed out a bunch of kids since moving in and are now in the middle of an ugly divorce.
    trulia.com/property/1078419173-35-Prince-William-Rd-Morganville-NJ-07751

  26. wanttobuy says:

    I agree with #7 Lurkerd. I am a buyer on the sideline holding a large amount of cash. There is no way for my cash to increase its nominal value at the inflation rate. So the nominal home price is what is meaningful for me. Home price in real terms may be very useful tool for the macroeconomic studies.

  27. grim says:

    Frank,

    I think you might be misunderstanding the chart. What this shows is that, in the wake of the last bubble burst and recession, real estate didn’t serve as an effective inflation hedge. If it did, real prices would have been flat, and nominal prices increasing, which we did not see.

  28. grim says:

    Oh, and please don’t pigeon hole me in with the hyperinflation or hyperdeflation camps. I don’t believe we’ll see either of these conditions.

  29. Dissident HEHEHE says:

    “it is either stores kept very low inventory of laptops or people were buying them like crazy”

    Reatailers have dumped a great deal of inventory in Q4 2008 and Q1 2009 at steep decrease is margins; some even at losses.

    The “green shoot” crowds view this as a positive as they think that they will now build up their inventory as there’s “pent up” demand on the part of consumers.

    Ask yourself this question, in an environment where people are continuously worried about losing their jobs, and they see employers cutting back on everything from raises to free coffee, do you really think anybody’s going to go on a spending spree on laptops, widescreen tv’s and cars? I’d say no.

    Secondly, do you think that any retailer who is planning on staying in business is going to load up on a bunch of inventory they aren’t going to be able to pass off unless they end up doing another fire sale?

    Essentially “green shoots” is the new “ninth inning” and whether in the form of a gardening analogy or a baseball analogy it’s unadulaterated bs.

  30. BC Bob says:

    “Is Anyone Minding the Store at the Federal Reserve?”

    SAS [21],

    The public and holders of our debt are getting hosed. The banking cartel has gone wild. Only one solution, I have to buy more gold.

  31. BC Bob says:

    “Although New Jersey home prices have fallen approximately 10% since the 2006 peak while many other markets have fallen by more than 30%, I haven’t noticed any change to the forecasts”

    [7],

    No need to question your 10% decline #, from peak. Grim has already squashed that. I have changed my forecast. Back in 2005, I stated 30-40% off, nominal. That’s baked into the cake. Obviously, I was too conservative.

    Don’t know if you were on this site, at that time. Maybe you just changed your user name? However, you should have read the comments I received regarding my original forecast. Funny thing, all those bulls are gone.

  32. serenity now says:

    “Is anyone minding the store?”
    One of the most alarming pieces of
    evidence I have seen as to how screwed
    we really are.

  33. BC Bob says:

    kettle/veto,

    Great work. That’s quality stuff. There’s a place for you guys, research/forecasting firms. Get exposure.

    Disclaimer: Didn’t mention JB, not necessary.

  34. BC Bob says:

    SAS [21],

    Better headline; Who’s minding the vault? Dilinger or the James brothers?

  35. sastry says:

    Kettle/Veto…

    Did you include effects of “deflationary” trends in your estimates (given how people are reporting lower rents, and may be costs of electronics, common medicines, etc., will go down)? That will temper the results a bit.

    I think the asset deflation is a bigger deal for some people (e.g. in 2005/2006, we were worried about the scenario where 2 BR TH’s cost half a mil in the near future).

    S

  36. sas says:

    “Who’s minding the vault? Dilinger or the James brothers?”

    lol. yes, no kidding.

    SAS

  37. kettle1 says:

    Sastry, 36

    could you elaborate. The data was adjusted using a basic inflation adjustment based on CPI-U which includes all major consumer expenses, from housing to energy, to food, etc.

  38. sastry says:

    Kettle:

    I meant, whether you have assumed any deflation going into the next couple of years. More of a layman’s question…

    S

  39. yikes says:

    Clotpoll says:
    May 8, 2009 at 9:32 am

    Just me, but I think it’s sorta important that teachers not present an image to the world of being the equivalent of clothed blimps.

    And yes, I do have a problem with fat people.

    “you’re not the only one”
    – Bonnie Raitt

  40. yikes says:

    we says:
    May 8, 2009 at 10:04 am

    107

    Yes, stock market will be higher by 2012. Is this another opportunity you will miss and blog about it?

    what are you basing this upon? logically, it seems like the market should go higher … is there hard evidence, or is this bi-like speculation?

  41. veto that says:

    “Am I the only one surprised at how close these two are tracking?”

    Grim, given the severity of this crisis compared to the seemingly innocuous s&l fiasco of the late 80’s (plus the fact that it was mostly a commercial re crisis as Clot and BC have previously mentioned), yes i am absoltely surprised that this recent housing price crash hasnt been twice as hard, twice as fast.

    Sastry, 36, this chart is not foward looking so neither future deflation or inflation is considered. The inflation adjustments and cs pricing data are actuals released a month after the fact.
    One of the other charts we update does include a forecast but it assumes on 2% annual inflation over the next 6 years.

  42. still_looking says:

    Thanks SAS, 21

    Just saw it.

    I think I need to go throw up now.

    and then there’s this:

    http://www.youtube.com/watch?v=A-DOwLnQ4nk&NR=1

    sl

  43. sas says:

    “yes i am absoltely surprised that this recent housing price crash hasnt been twice as hard, twice as fast”

    easy answer if so choose to believe.
    “off the book” black budget money gets shifted around. shifted from one area to another, to give things an illusion of legitimization or a look of things not being worse than they should be.

    Its estimated about 1 trillion dollars floats. thats alot of jack when one having a cardiac arrest and wondering where the crash cart is located.

    If you throw DOD black money, easily 3 trillion.

    i know timfoil hat stuff, but ask yourself:

    whom is it wearing the tinfoil hat?
    the person with the message or the person whom refuses the message.

    SAS

  44. sas says:

    going to the house in Bergen later today.

    I’m in a mood for a roast beef on a reuben. any suggestions?

    SAS

  45. sas says:

    Bergen count, near Oradell

    SAS

  46. veto that says:

    Grim, thanks for posting the chart.

    This chart was just an aside. Our main intended collaboration is still in the works but its more complex and we are still thinking through some final details. It’s basically a “home buying power index” and it takes into consideration the buying power that exists in the economy, including available bank credit, mortg rates, employment rates, population growth, etc. It should be a good one if we ever motivate eachother to finish it, so stay tuned. In the end, as a final step, if we want to get really tricky, we can theoretically apply regression with the different variables to predict how hard prices will get hit or when they might start to recover.

    Truth be told about this chart, cant claim originality, I stole format idea from those bear market charts that are posted all over the internet, the one comparing the S&P crashes from the worst three markets in our history. Anyway, inflation adjustment that me and Ket collaborated on is key to the whole chart. I agree with Grim, on a nominal basis, it’s useless to compare historical prices.

    Like this one realtor who once told me that prices always go up in the long run because during the 1920s a house only cost $1,000. He had no clue that most of that was inflation. Over the long run, the house price depreciated through wear and tear until it had to be knocked down.

  47. kettle1 says:

    Veto,

    Maybe we should have a weekend powow GTG. Meet up and polish the forward looking projections.

    We seem to be a good balance in points of view.

  48. grim says:

    Veto/Ket,

    Can you send me the dataset? Also, you need to adjust with cpi less shelter, as per the spcs methodology doc. The results won’t differ dramatically from cpi-u, but it might garner some criticism due to double counting shelter.

  49. sastry says:

    Veto/Ket:

    Thanks for the explanation and educating me…

    S

  50. kettle1 says:

    Veto,

    If you like, you can kick me the file and i will update it with CI less housing and then send it back to you and grim

  51. kettle1 says:

    CI = CPI

  52. veto that says:

    sure thing grim, actually kettle brought that up and we did speak about it.
    In then end it was more trouble than it was worth to rip the cs data apart like that to fret over decimal points. it was a tradeoff and we decided that cs by itself would probably be more credible to critics than if we tinkered with it for good reason. In other words, we didnt want to make ragu, you know, “whats in there?”
    Plus, not to minimize it but it prob wouldnt change the impact of the graph anyway. In the end its not perfect, and neither is the cs data or cpi for that matter. But yeah, if you can take a look and make some suggestions, we would welcome any improvements. thanks

  53. veto that says:

    ok ket,will send.
    and yeah im in for a gtg brainstorm anytime.

  54. Sean says:

    kettle1 & Grim some input for your chart.

    The US measurement of CPI omits house prices, using instead a calculation of homeowner’s equivalent rent.

    The same low interest rates that created the housing bubble are now making the homeowner’s equivalent rent calculation nearly equal, thus not reflecting inflation or deflation based upon housing appreciation or deprecation.

    CPI itself was not intended to be an overall measure of inflation. Just as the name suggests, it is no more than an index of consumer prices.

  55. veto that says:

    actually disregard 53, i think i was referring a different cs adjustment. i see your point now with taking the housing inflation out of cpi and its a good one.

  56. kettle1 says:

    Sean,

    point taken, but CPI-U is probably one of the best overall options for accounting for inflation/deflation.

    from BLS

    Brief Explanation of the CPI

    The Consumer Price Index (CPI) is a measure of the average change in
    prices over time of goods and services purchased by households. The
    Bureau of Labor Statistics publishes CPIs for two population groups: (1)
    the CPI for Urban Wage Earners and Clerical Workers (CPI-W), which covers
    households of wage earners and clerical workers that comprise
    approximately 32 percent of the total population and (2) the CPI for All
    Urban Consumers (CPI-U) and the Chained CPI for All Urban Consumers (C-CPI-
    U), which cover approximately 87 percent of the total population and
    include in addition to wage earners and clerical worker households, groups
    such as professional, managerial, and technical workers, the self-
    employed, short-term workers, the unemployed, and retirees and others not
    in the labor force.

    The CPIs are based on prices of food, clothing, shelter, and fuels,
    transportation fares, charges for doctors’ and dentists’ services, drugs,
    and other goods and services that people buy for day-to-day living.
    Prices are collected in 87 urban areas across the country from about
    50,000 housing units and approximately 23,000 retail establishments-
    department stores, supermarkets, hospitals, filling stations, and other
    types of stores and service establishments. All taxes directly associated
    with the purchase and use of items are included in the index. Prices of
    fuels and a few other items are obtained every month in all 87 locations.
    Prices of most other commodities and services are collected every month in
    the three largest geographic areas and every other month in other areas.
    Prices of most goods and services are obtained by personal visits or
    telephone calls of the Bureau’s trained representatives.

    In calculating the index, price changes for the various items in each
    location are averaged together with weights, which represent their
    importance in the spending of the appropriate population group. Local
    data are then combined to obtain a U.S. city average. For the CPI-U and
    CPI-W separate indexes are also published by size of city, by region of
    the country, for cross-classifications of regions and population-size
    classes, and for 27 local areas. Area indexes do not measure differences
    in the level of prices among cities; they only measure the average change
    in prices for each area since the base period. For the C-CPI-U data are
    issued only at the national level. It is important to note that the CPI-U
    and CPI-W are considered final when released, but the C-CPI-U is issued in
    preliminary form and subject to two annual revisions.

    The index measures price change from a designed reference date. For
    the CPI-U and the CPI-W the reference base is 1982-84 equals 100.0. The
    reference base for the C-CPI-U is December 1999 equals 100.
    An increase of 16.5 percent from the reference base, for example, is shown
    as 116.5. This change can also be expressed in dollars as follows: the
    price of a base period market basket of goods and services in the CPI has
    risen from $10 in 1982-84 to $11.65.

  57. veto that says:

    Ket & grim, just emailed the backup calcs.

    ok, enough of this egghead stuff for today, i need fresh air, see you all later.

  58. Sean says:

    kettle1 –

    A housing affordability index would serve better in your chart than CPI.The dollar is the worlds reserve currency, using CPI to measure inflation/deflation of the dollar in any fashion will never be accurate. The cost of local widgets in New Jersey does not reflect the cost of same widgets in Japan.

    As we all know during the bubble people blew way past normal debt income ratios for housing. I feel once we get back to normalized debt/income ratio for housing (with full employment) things will stabilize.

  59. Happy Camper says:

    August 29, 2005:

    Hurricane Katrina, one of the most powerful hurricanes ever recorded, strikes the Gulf Coast. The storm surge breaches the levees in New Orleans; the city is flooded and eventually evacuated amid a complete breakdown of civil order. Bush flies over the city on his way back from a fund-raiser out West. Days later, visiting the destruction as relief efforts falter, the president praises the fema director, Michael Brown: “Brownie, you’re doing a heckuva job.”
    Bush vows to rebuild New Orleans, and Brown, whose performance is widely criticized, is effectively fired; the president’s approval rating sinks to 39 percent. Three years after Katrina the population of New Orleans will have dropped by one-third. The city’s defenses against storms and floods will remain a vulnerable patchwork.
    Dan Bartlett, White House communications director and later counselor to the president: Politically, it was the final nail in the coffin.

    Matthew Dowd, Bush’s pollster and chief strategist for the 2004 presidential campaign:

    Katrina to me was the tipping point. The president broke his bond with the public. Once that bond was broken, he no longer had the capacity to talk to the American public. State of the Union addresses? It didn’t matter. Legislative initiatives? It didn’t matter. P.R.? It didn’t matter. Travel? It didn’t matter. I knew when Katrina—I was like, man, you know, this is it, man. We’re done.

    Michael Brown, director of fema, which becomes part of the Department of Homeland Security:
    There were two things that went wrong with Katrina. One is personal on my part. I failed after having briefed the president about how bad things were in New Orleans and telling him that I needed the Cabinet to stand up and pay attention. When that didn’t happen, I should’ve leveled with the American public instead of sticking to those typical political talking points about—how we’re working as a team and we’re doing everything we can. I should’ve said this thing is just not working. Probably would’ve been fired anyway, but at least it would’ve caused the federal government to stand up and get off their butts.
    The second thing that happened was this. [Homeland Security Secretary Michael] Chertoff inserted himself into the response, and suddenly I had this massive bureaucracy on top of me. I should have basically told Chertoff to kiss off, that I would continue to deal directly with the president. But he’s the new kid on the block and the White House deferred to him, and it gave me no choice but to work through him, which then scoped things down and caused it to just completely implode on itself.

    Lee Hamilton, former Indiana congressman and vice-chair of the 9/11 commission:
    When you have a disaster strike, you have to have someone in charge. They didn’t have anybody in charge in New York during 9/11. They didn’t have anybody in charge in Katrina. And you get a mess.
    Politically it’s a very difficult thing. You’ve got the counties, the cities, and the federal government and all the rest to work it out. Nobody wants to give up authority prior to the fact. The governor of Louisiana wants to be in charge. The governor of Mississippi wants to be in charge. The mayor of New Orleans wants to be in charge. You’ve got 50 other cities that want to be in charge. I have come to the view in these massive disasters—like Katrina or New York on 9/11—that the federal government has to be in charge because they’re the only one that has the resources to deal with the problem.
    But presidents don’t like to stomp on governors and override them. When these kinds of problems are not resolved, people die.

  60. Hubba says:

    I think laptops were sold out due to 2 reasons:

    1 . The freeze in credit markets, no LOC’s for importing or inventory

    2. Everyone cutting inventories to the bone regardless.

    Positive in the short term, but only in the long term if demand holds up. That will only happen if people stop losing their jobs.

  61. Hubba says:

    BTW, great analysis ket and veto.

  62. 3b says:

    #17 1987 condo buyer: I will roll out my story again too.

    Bought my house in 1987 in my blue ribbon Bergen Co train town, and sold it for $2500 less than I paid for it 10 years later in 1997.

  63. poor guy says:

    Ket&Veto

    thanks for your great chart. The similarity of the two bubbles at the beginning stages is uncanny.

    However, I agree with Sean. I would prefer an adjustment relative income/affordability. It would be a better indication of where we are standing.

  64. 3b says:

    #30 Disident he he: I wa out all over today trying to be patriotice ans stimulate my economy.

    Riverside Sq Mall in Hackensack. The lot packed, nobody in the stores, but crowded at the restaurant. And when I say noboody I mean nobody.

    Car delaer 2 people in the show room.

    Best Buy/Fairways nobody at the registers.

  65. 3b says:

    #42 veto:yes i am absoltely surprised that this recent housing price crash hasnt been twice as hard, twice as fast.

    But that is where it is going all the same.

  66. Mikeinwaiting says:

    3b At Shop-rite today 3 people at registers with nobody to ring out. Usually have to wait in line as packed on Sat, usual time. Guess not anymore. Ran into guy I know who owns body shop “never been slower” 4 kids looked worried. But not to worry the market is up.

  67. Important information, very glad you posted this. I enjoy learning new things everyday so I like subscribing to blogs like yours. Charles

  68. Looking for suburban home says:

    MLS # 2680532 is my dream home. Any thoughts on an appropriate offer in this market? Taxes are high in this area – think they will hold value? I like the good commute to nyc. Thanks for the advice.

  69. Everything's Hobroken says:

    This is WAY off topic. I’m going to be traveling a lot in the next year and will probably only be in the area 1/4 of the time.

    What seems to make the most sense would be a studio or room on a subway with easy access to Grand Central Terminal and relatively easy access to LGA.

    How would you recommend I begin a search for such a place? I’ve lived in Edgewater, Hoboken, and Montclair, but the other side of the river is tempting me with the short commute.

    TIA

  70. kettle1 says:

    Sean
    A housing affordability index would serve better in your chart than CPI.The dollar is the worlds reserve currency, using CPI to measure inflation/deflation of the dollar in any fashion will never be accurate.

    I actually looked into that and found that any HAI that i looked at in detail was primarily defendant on interest rate.

    HAI’s are in my opinion misleading unless you really look at them in detail. for example, the NAR recently touted how their HAI is currently at abltu the same level as it was in 2000. SHiller also commented on this point. However if you actually look at the housing market, a household with a median income would have to spend 5-6X annual income to buy a median priced home in NJ. And consider that the median household carries about 23,000 in consumer debt.

    In 2000 the median household in nj could purchase a median priced home for 2.5-3X annual income. Property taxes were significantly lower and consumer debt was at about 17,000 per household.

    SO in the case of NJ, comparing 2000 and 2009 almost any HAI you look at for the state will suggest that homes are currently affordable to the median household at about the same level as they were in 2000.

    That is patently incorrect. HAI’s fail due to the heavey interst rate dependence

  71. Safeashouses says:

    I’m doing my part to fight global warming and illegal immigration.

    I cut my lawn with a reel mower.

  72. Cindy says:

    http://www.doctorhousingbubble.com/

    (71) Kettle – Another point re affordability….

    “I ran the numbers above to find the average 30 year fixed rate since 1971. Want to know what it was? 9.08%. Big deal right? Well let us run the numbers with the current 4.81% rate and the 9.08% rate for a $500,000 mortgage.

    PI @ 4.8% $500K = $2,623/month
    PI @ 9.08% $500K = $4,051/month

    Now here is the thing, sure YOU can buy the home at the low rate but let us say rates in 5 to 7 years when you are looking to sell are now closer to the historical average? Who are you going to sell to?

    Also – middle of the page or so #7
    “Percentage of mortgage properties with negative equity”

    It looks like CA @ 30% and NJ @ 10%.

  73. Cindy says:

    I have 74 wrong. Mark Thoma wrote this piece ABOUT Tyler Cowan’s article “There’s Work to be Done, but Congress Opts Out” – apparently appearing in tomorrow’s NYT.

  74. Cindy says:

    http://www.bloombergnews.com/apps/news?pid=20601068&sid=apuGP0Cp.XrI&refer=economy

    Sean – “Congress considers O’Connor, Volcker, Levitt for Crisis Probe”

    The gist of the article is that you need someone with a big name and a good reputation so it doesn’t look like a whitewash.

    Anyone you think should be in charge?

  75. cobbler says:

    [67] mikeinwaiting
    My today’s observation at ShopRite had been quite opposite to yours – it was packed. Logically, however, the worse is the economy the bigger share of groceries buying will be at ShopRite (as it is the lowest priced chain in NJ, and volume wise grocery buying is pretty inflexible – I don’t mean $$ volume, but lbs that have to be carried out). I think though if someone could get daily sales dynamics at Kings it will be the best gauge the economists might have – willingness of people to overpay ~30-40% of their grocery bill as a token of appreciation of the better service.

  76. syncmaster says:

    cobbler #77: re shopping. The Wegman’s at Woodbridge was packed with people this afternoon. Long lines at the cash registers, that was with many registers open. Woodbridge Center drive was a parking lot, as was the adjacent section of Route 1 southbound (northbound was curiously empty).

    Very different experience, however, at the Target in South Plainfield. That place was a ghost town. But traffic on Stelton Rd. was heavy, they must have been going somewhere, just not Target.

  77. Sean says:

    re#76 Cindy – Any Judge who has worked night court in Manhattan.

  78. veto that says:

    Mike, Cobbler, more anecdata
    Super Market in our neighborhood is having financial trouble, whole neighborhood is talking about it. Was in there today and wife was pointing out all the empty shelf space. But it could be that packages are getting smaller and people aren’t buying the fancy stuff. Now that i think of it, they could probably condense whole store into three or four isles of necessities and the rest are extras anyway.

  79. syncmaster says:

    Mike, cobbler, veto – which towns are we talking about?

  80. Sean says:

    Kettle1 – Mish blogged about it.

    Case-Shiller-CPI might be better than the BLS CPI.

    http://www.marketoracle.co.uk/Article8676.html

  81. Cindy says:

    (79) Sean – LOL!

    Good idea – No one knew who Pecora was.
    I was thinking more along the lines of Stiglitz or Warren….someone with some passion about the matter.

  82. cobbler says:

    [81] sync
    I was in Stirling Shoprite – again, the place was packed with all the registers running. Everyone having large jugs of Tropicana OJ for $2.99 in their carts.

    In the states other than NJ many grocery chains went out of business when Walmart supercenters came in and undersold them. In NJ, Walmarts for whatever reasons have very limited grocery assortment, so if the supermarkets go bust it is mostly because of their own mismanagement (like Grand Union a few years ago). Supermarket inventories cost v. little relatively to the volume (high turnover), so reducing the # of SKUs doesn’t make sense if you can’t get rid of the extra space in the store that you create this way. Aldi stores are built from the beginning to be smaller, so they have fewer items. If you reduce the items at your Super Stop and Shop by 50% you will lose some sales and not gain anything.

  83. syncmaster says:

    cobbler #84,

    Cool. I was at a grocery store in that neck of the woods a few days ago, at the King’s in Warren (at the plaza with the huge flags) on a weekday after work. Seemed really empty. I didn’t find what I wanted, drove down the hill to the Shoprite on Rt 28 in Bound Brook and it was packed there. Seemed to be a lot of people stopping by after work, lots of suits and professional wear.

  84. safeashouses says:

    #84 cobbler and syncmaster

    I stop at Stop & Shop on the way home instead of Kings. I only go to Kings for picking up milk and bread if we run out.

    I think I could shop at Whole Foods for the same amount that I would spend at Kings.

  85. chicagofinance says:

    If you are looking for healthy alternatives, Whole Foods always crushes everyone in price except Target. Also, in Eastern Monmouth County, the prices at Dean’s produce section crush Whole Foods. However, everything else in the store is 50-75% higher.

    If you avoid doing frivolous stuff at Whole Foods, such as buying an apple for $3 or a sandwich for $10, it really isn’t ridiculous for the quality and taste. I will say that the Middletown outlet is consistently a nicer run store than most I have seen. Very low turnover in employees and consistent service.

  86. Seneca says:

    Hobo [70]

    Where do you work? If you are going to be in and out of LGA a lot, you should look at Forest Hills in Queens. 30 min. into midtown via the E or F, 40 min on the V and you are guaranteed a seat. Avg. 15 min to LGA. Once I clocked it to LGA in 8 minutes on a Monday morning at 8am with traffic. But its usually closer to 15 min.

  87. Seneca says:

    I rarely get to watch CNBC but had the ‘privilege’ of doing so on Friday.

    Watched this Fast Money program they have. All of the fast talkers were recommending being in the market and being long banks.

    What I found interesting was that they also all agreed that when the sh*t hits the fan, you don’t want to be anywhere near this market but they feel like the monkey business will drive things higher in the near term so might as well milk it.

    One of the commentators commented something like “I wouldn’t be long this stock but i wouldn’t short it either”. I don’t recall what company she referred to but the comment captures the general gist of what they were saying, only most agreed you want to be long here because things will go higher before we crash and burn.

    Is there anyone here who can offer the case for this market only going higher from here, and not seeing lows like we did a few months ago?

    Sitting on the sidelines has become tiresome. I hear a lot of you anxious to short more as things go higher and higher. I haven’t heard anyone talking about going long? Any takers?

  88. Sean says:

    Seneca – define your timeframe for long.

    1 year
    5 years
    10 years
    retirement

  89. Sean says:

    yes bi and I would love to hear your explanation.

  90. bi says:

    bob, first time see you post actions before going up. double brave!

    >267# previous, BC Bob says:
    May 8, 2009 at 3:34 pm
    “Who’s brave enough to buy SRS today?”

    First time, moc.

  91. Seneca says:

    Timeframe is anything you suggest. Are there like-minded individuals here who are holding long positions but pan to cut the cord at Dow 9000 or S&P 950?

    Anyone here long with no plans to sell until retirement?

  92. bi says:

    92#, why do you want to hear a janitor’s explantion on financials? save time and space for something else.

  93. Firestormik says:

    bi: I really hope you bought some oil and gas futures or shares yesterday. :) good luck. I hope you won’t have to beg for food in very near future

  94. Sean says:

    bi – we do enjoy your comedy. :)

  95. bi says:

    96#, to me, yesterday was a little too late.

  96. Firestormik says:

    bi, Why? The price will go up, right? :)

  97. safeashouses says:

    How could John have missed this one?

    “100 Angry Models Not Getting Paid”

    http://www.nbcnewyork.com/news/local/100-Angry-Models-Not-Getting-Paid.html

    I can only imagine his comments.

  98. bi says:

    100#, 2 years ago i said here oil would go down to $40. everyone here mocked at me. why should i wait until it went up 50% from recent low to jump in (if i want to jump in)?

    i have been warning ultrashorts 1 and half years ago. now look at what happened to these “stocks”?

    you said begging food? i do like PBJ though.

    disclaimer: by nature, a peasant likes food.

  99. Sean says:

    Seneca – re:”Timeframe is anything you suggest” I am not a stock picker (analyst) only a speculator, and the folks on the TV are infotainment, when you watch their shows make sure you watch the disclaimer at the end of the show.

    The one thing to remember about investing is there are always two sides to every bet.

    Also the best advise I have ever received over the years is “once you place your bet you take your chances.”

    All Disclaimers since I am bi’s apprentice and have yet to graduate from cleaning the porcelain.

  100. Sean says:

    re: #102 – bi – stopped clocks are right twice a day also, I will always call you out on your oil call because you are omitting the time frame from your call.

  101. Firestormik says:

    bi: Yeap, my call now!- oil will be 300. It’s the same stupid call you made 2 years ago. Your black box is really phenomenal

  102. bi says:

    104#, you can omit any of my calls. as a matter of fact, i always omit my calls. what important is to avoid traps. yes. oil went up to 150 and srs went up to 250 since my call. but so what, i didn’t lose any money there.

  103. Sean says:

    bi – glad to see you are opening up, are you hitting the bottle tonight?

  104. safeashouses says:

    Anyone know of good school districts in Somerset, Union, Middlesex, or Northern Monmouth county with all day kindergarten?

  105. Stu says:

    Sean,

    I think the bottle hit him.

  106. BC Bob says:

    “Whoever investigates this is going to have to dig way below the surface and get to the bottom of what caused all these problems,”

    Cindy [76],

    Dig way below? It’s served on a silver platter. My nomination? Minnie Miñoso.

  107. BC Bob says:

    “I haven’t heard anyone talking about going long? Any takers?”

    Seneca [89],

    Yes, long new economies, short old economies. It’s the great Texas Hedge. Right up the middle with Earl Cambell.

    Also, long the CD, AD and NZ.

  108. Interesting thoughts on this one.

  109. BC Bob says:

    “bob, first time see you post actions before going up. double brave!”

    bi,

    Obviously you weren’t breathing when I bought shiny, at 342, back in 2003. In addition to this, you weren’t paying attention to the short Bear, AIG and BC,[no pun] Carry on.

    Recently,I guess you missed my long BAC, X and DRYS. Oh, I forgot, you are not on the email list.

    Friday, out of all longs, will be getting shorty, at/+5 200 dma.

    Thank you O.

  110. BC Bob says:

    “100#, 2 years ago i said here oil would go down to $40. everyone here mocked at me.”

    Well, at that time crude was trading at $68. Subsequently, it traded to $147. Obviously, if you traded your sentiment, you were carried out.

    The bigger question; was the blackbox adjusted?

    JB,

    How do you attract this?

  111. Sean says:

    BC – let’s see if he can admit who he is first.
    And by who I don’t give a rat’s ass about residence or portfolio.

  112. mkfinancial says:

    Anybody have any info on Randolph…good, bad, or indifferent

  113. BC Bob says:

    [112],

    Surge Protector,

    Well, since I last discussed, the hard wired, criss crossed, taped, electric panel has shorted. Unfortunately, nobody knows why the blue, orange and red wires are intertwined. What happened to simple circuit breakers?

  114. BC Bob says:

    “BC – let’s see if he can admit who he is first.”

    Sean,

    No bias here. I could care less who he/she /it really is. Hopefully, they will continue to post their market sentiment. It’s uncanny, if you’re going the other way.

  115. still_looking says:

    BC 114

    JB,

    How do you attract this?

    it’s the chest hair :)

    sl

  116. BC Bob says:

    “yes. oil went up to 150 and srs went up to 250 since my call. but so what, i didn’t lose any money there.”

    Chi,

    Bi’s post.

    Imagine the lurkers?

    Funny thing, eventually everybody is right. Vincent Van Gogh?

  117. safeashouses says:

    The place we were renting last year is still available 7 months after we moved out.

    I hope my ex landlord was counting on the cash flow to cover the mtg on their mcmansion.

    They were cheap, miserable people.

  118. Sean says:

    BC – yes, bi is uncanny for sure, hence my defense of his banishment.

  119. safeashouses says:

    #120 BC Bob

    I find bi almost as entertaining as re101

  120. BC Bob says:

    SL [119],

    I’m not sure what it is? However, it’s comical. Mustard seeds and green shoots? How about the underlying roots? I love those that trade on perception and hope. Just 5-10% higher, please.

  121. BC Bob says:

    Sean,

    I remember that, the best call on this blog, over the last 12 months.

    Bairen,

    I don’t know. My vote goes to 50.5. After all, he voted for Bobby Knight to be buried upside down. The real question to both rabbits, courtesy of the great Admiral Stockdale; “Who am I, why am I here”?

  122. safeashouses says:

    BC Bob

    I think Frank, bi, and 101 are here to entertain us.

    101 is back. He got stale for a while, but recently he’s been on fire.

    Now if we can only get listen and booya to come back.

  123. Firestormik says:

    Received this via certified mail today. Dish is on a pole 2ft from the townhouse. The pole was there before I rent it.
    I’m sooooooo p@ssed off
    http://69.74.229.4/crap.tif
    crazy

  124. safeashouses says:

    I also miss Richard.

    He was so appropriately named.

  125. Sean says:

    I miss Ducky……..

    Anyway cheers and off to bed for me.

  126. jcs says:

    firestormik:

    You may have to comply. But send them a picture of your scrotum first. See what happens.

  127. SG says:

    Yale’s Robert Shiller on the Outlook for Home Prices

    People are talking about the housing market bottoming out. Do you believe it?

    The conspicuous fact with our [Case-Shiller] data is that prices are still falling, although at a somewhat lower rate. There is also some sign of pick-up in pending-home sales. But to me the dominant fact is that prices are still falling. We’ve never seen a real estate market turn on a dime. For the longer horizon, though, it’s possible that we are picking up. The other thing that is striking is that home prices have come down a lot, so they’re no longer very overpriced.

  128. SG says:

    Great Chart: Kettle and Veto.

    The only contention I have comparing 80’s bust to current one is that the reasons of the housing bust are different. In 80’s the lending standards were still tight, which was not the case this time around. IMO it is very easy to calculate how much the current bust will go down.

    Peak of Housing: 2006
    Most ARM and Option ARM reset in 5 years, hence max resets happening till: 2011

    Now Average percent decline per year: 10%
    So by 2011: you get easy 50% declines.

  129. SG says:

    Numbers game – Affordable housing group wants Xchange to comply with new rules

    “The [NJMC] adopted the rule that if you don’t have a certificate of occupancy, and haven’t already started construction, you must now be subjected to Round III COAH rules,” Drumeler said.

    The new rules would increase Xchange’s affordable housing quota by an additional 185 units. Arguing that this isn’t economically feasible, Secaucus and Fraternity Meadows want Xchange to be exempted from Round III.

  130. SG says:

    Newark Mayor Cory Booker, Archconservative

    Cory Booker, 40, said rising expenses for health care, pensions and salaries are impinging on government finances. Operations need to be streamlined in a state with 566 towns and cities, 617 school districts and 21 counties, Booker said during a meeting with Bloomberg editors and on Bloomberg Radio today.

    “New Jersey will go bankrupt in 10 to 20 years because we cannot afford our employees as a state,” Booker said. “I’m talking about every worker from the cities and counties to the state government. Eventually, we’re going to price ourselves out as a government or tax ourselves to death.”

    Personnel accounts for 70 percent of the budget of Newark, Booker said. The first-term Democrat said the employment reduction was among “very difficult decisions” he faces.

    “There should be a tax revolt in the state of New Jersey,” Booker said. “We’re the most inefficient state in the country. We have more government per person than we need. You would never manage a business the way we manage our government – – we have overlapping provision of services and in my opinion, it’s insane.”

  131. SG says:

    Data show many shore foreclosures on second homes

    The Irvine, Calif.-based company offers a picture of how many foreclosures in an area might be rental properties by sorting out the ones whose owners have a mailing address elsewhere. In most markets, most of those homes would be rentals.

    However, along the shore, most of those properties are probably second homes. Year-round rentals are rare at the shore because seasonal rents are so lucrative.

    Sure enough, RealtyTrac’s figures show an unusually large percentage of owner-absent properties among shore homes with a foreclosure filing.

    In Atlantic and Cape May counties, 36 percent of properties in foreclosure last month were owned by people living elsewhere.

    Cumberland County, with

    31 percent, and Ocean County, with 20 percent, fit the national pattern of about 30 percent of owners of foreclosed homes living elsewhere, RealtyTrac said.

    Given the dominance of second homes, and the paucity of year-round rentals, my guess is that one-fifth to one-third of the foreclosures in Atlantic and Cape May counties are second homes.

  132. confused in nj says:

    I have found tht many items are cheaper at StopNShop then ShopRite, so check your prices. Especially true for Meat & Produce. We basically bounce back and forth between them, but actually buy more at StopNShop. ShopRite has more customers, because perception is they are cheaper, but Perception can be different then Reality.

  133. veto that says:

    “Now Average percent decline per year: 10% So by 2011: you get easy 50% declines.”

    Thanks SG, just my personal opinion, and this is where Kettle and i have agreed to disagree, i dont think NJ will see anything near 50% declines per year, ever.
    In looking at the credit crisis, im also considering the govt and the thousands of other little factors that differentiate this environment from the 80’s. If option arms blow up worse than expected, that just means guv’t will print more money and hand out as a christmas gift to plug the whole. If we ever see 20% yoy declines in NJ RE, i would be totally beside myself. In fact, i do think that 10%-15% yoy declines is as fast a pace as we will see, and thats if it doesnt start recovering slowly from here. Again, just a personal opionion.
    Im still a re bear though, agreeing with predictions of 30-50% total decline from peak through 2015.

  134. Rev. Al says:

    BC [113]
    >>Friday, out of all longs, will be
    >> getting shorty, at/+5 200 dma.

    Which sectors? Banks?

    Some talking head said he is looking at P/Es to determine a true bottom. When they come closer to single digits, he goes long.

    SBUX is trading at 114 P/E. If I were to judge by the NYC outlets, I wouldn’t consider it, lines are still long in the mornings. But are folks between San Fran and Boston still buying four-dollar coffee and three dollar bagels?

  135. veto that says:

    Reverend Al, its your holy day, i thought you might be at church today.
    Its hard to tell anything from NYC, everything always seems to have lines, even the hot dog stands. The sbux out here in suburbs, central NJ, have been dying for a year, barely any lines in morning. The fancy coffee shop in my neighborhood shut down 6 months ago. This must be tough environment to sell Lattes.

  136. Clotpoll says:

    No lattes for you! SBUX in Hunterdon, Somerset are ghost towns. DD is sooo right now (too bad it’s not publicly-traded).

    After last week’s McCafe rollout, none of this matters anymore. MCD will end up dominating this space (they already do everywhere it’s been test-marketed), and everyone else will be blown out.

    Disclaimer: I have been short SBUX for a while. Just trying to figure out now if it will see 0.

  137. Clotpoll says:

    MCD’s coffees are really good, too.

    I am long MCD in a child of mine’s custodial account.

  138. Clotpoll says:

    Hey, kids! Here’s a green shoot.

    A dung-covered, sharpened bamboo shoot, a la sas. From Mish:

    “In Credit Card Lending Goes Full Cycle I posted an Email from Scott who was denied a credit card by Capital One on the basis of where he lived. Capital One did not even bother with a credit check that would have sown that Scott had a FICO score of 800.

    Businesses are also feeling the squeeze. BusinessWeek is reporting JPMorgan Chase is Reducing or Eliminating Small Business Credit Lines.

    JPMorgan Chase and others are shoring up balance sheets by reducing or eliminating these financial lifelines to entrepreneurs.

    For small business owners, a line of credit can be a lifesaver, giving them a buffer against cash-flow problems and enabling them to handle regular expenses such as payroll. But beginning in March, according to documents obtained by BusinessWeek, JPMorgan Chase suspended credit lines for a large number of business owners. According to someone familiar with the matter, the move affected thousands of businesses. They had been clients of Washington Mutual before Chase bought the ailing bank in September 2008. The documents show that Chase tasked a special group inside the bank with responding to inquiries from borrowers.

    If business owners can’t convince Chase of their creditworthiness, they have three options: 1) pay off the balance in full; 2) agree to a conversion of the line of credit into a term loan; or 3) go into default.

    Thomas Kelly, a spokesman for Chase, says the bank continually reviews the lines of credit in its portfolio. “We contact customers if we determine there has been an adverse change in their financial condition or credit history. We may eliminate the unused portion of their credit line and set up a standard repayment plan.” Kelly says the bank encourages customers to contact Chase if they want the decision reevaluated or if they want to provide information such as their federal tax return. And he says the bank has assigned staff to work with customers who want such decisions reexamined.

    Broader Phenomenon

    The phenomenon may extend well beyond Chase and its borrowers. “I’m hearing it more and more,” says Stacey Sanchez, senior community loan officer with San Diego-based CDC Small Business Finance, a community development corporation, who says entrepreneurs often turn to her institution when their credit lines are pulled. Sanchez says the increased aggressiveness on the part of lenders may be due in part to banks now being in possession of 2008 tax returns for most of their clients, which show the full ugliness of the last quarter of 2008.

    And suspending lines of credit is certainly an efficient way to reduce the risk on a bank’s balance sheet. According to officials at the Office of the Comptroller of the Currency, bank reserves for bad loans are based on the total exposure to a customer. So if a bank has a $100,000 line of credit with a small firm and only $20,000 is drawn down, the total exposure is still $100,000, and the bank usually will reserve for loan losses based on that amount. But if they convert the $20,000 outstanding to a term loan and cancel the line of credit, or if they simply cut the line to $20,000, the reserves would be based on that $20,000 figure.

    Regulatory pressure likely plays a part as well. Bert Ely, an Alexandria (Va.)-based financial-services consultant, says he hears repeatedly from banks around the country that while the White House and Treasury talk about the need for lending to small business, local bank examiners continue to pressure them to upgrade the quality of their loan portfolios.

    “You have a disconnect between what policymakers are saying and what the rank-and-file bank examiners and supervisors are saying,” Ely says. That has painful repercussions for business owners around the country.”

    http://globaleconomicanalysis.blogspot.com/2009/05/vanishing-credit-lines-for-consumers.html

  139. Rich says:

    Turning out to be a great month. We will find 9/08 – 4/09 was the RE market bottom.

  140. veto that says:

    “We will find 9/08 – 4/09 was the RE market bottom.”

    Rich, not even possible at this point. cs prices declining 10% yoy, even if the magic mustard seeds make the price declines slow, it will take months before we see yoy appreciation again.

    Clot, am long mcd too, they could sell burgers and coffee in nuclear holocost, although the returns will never blow your hair back, shes a little boring but steadily growing cash cow. Although they are huge holder of re, so i always wonder how this re price collapse might effect their bottom line but always forget to look into it.

  141. still_looking says:

    Happy Mother’s Day to all our blog-mommies!

    sl

  142. sas says:

    ye happy mother’s out there.

    SAS

  143. grim says:

    Turning out to be a great month. We will find 9/08 – 4/09 was the RE market bottom.

    Not even close Rich, 9/08 – 4/09 all set new market lows for price and volume, and I have no reason to believe the trend will break.

    Prices declined in NJ for years after the last recession ended, why should it be different today?

  144. grim says:

    Smart buyers are on the sidelines, sheep and pigs to slaugher.

  145. yikes says:

    John says:
    May 8, 2009 at 4:07 pm

    I hung out one night in the early 90s with Quniten Tarintino, Pat Reilly, John Travolta, Lee Majors, Evandor Hollyfield and that boxer with the crazy eye, whats his name.

    biggest jerks from this set: Woody Harrelson, Danny Masterson, Adrien Brody.

    Tom Brady and Val Kilmer – surprisingly cool.

  146. sas says:

    “MCD’s coffees are really good, too”

    going into a MCD?
    you must wear a brown paper bag over your head when you enter the place.
    (Charlie Brown).

    SAS

  147. crossroads says:

    Rich

    “Turning out to be a great month. We will find 9/08 – 4/09 was the RE market bottom.”

    Are you a baby boomer giving advice to children, nephews and nieces??

  148. 3b says:

    #137 veto: We are finally seeing significant declines now, and they will accelerate into 2010.

  149. 3b says:

    #143 Rich: yeah All thpse unemployed people in NJ will be running out to buy real estate and drive prices up.

  150. safeashouses says:

    There was a line at Dunkin Donuts for the first time in 6 months. Is the recession over is this a false uptick from Mother’s Day?

  151. d2b says:

    Still-
    On the few occasions that I’ve been to the ER I’ve noticed that many did not appear to need critical care. Is this a problem and do doctors have a opinion about this?

  152. still_looking says:

    d2b, 155

    Nothing new. We are the ongoing primary care office. No appt needed, open 24/7, and above all, FREE.

    My ongoing hatred? Folks who are screaming about their splinter because I’m busy taking care of a heart attack/stroke/seizure/hemorrhage.

    sl

  153. goonsquad says:

    Been lurking for some time. I’m one of the many looking to buy in the future. I have cash saved but am waiting for sales price declines to subside before diving in.

    With that being said, I had planned on attending some open houses today. Is there some sort of unpublished Mothers’ Day moratorium on open houses? Very few are open today.

  154. grim says:

    Hold an open house on Mother’s Day?

    Desperate.

  155. rita says:

    Bank decides knocking down partially finished houses is the better option

    http://realestate.msn.com/article.aspx?cp-documentid=19580208

  156. goonsquad says:

    grim: I’ll take that as a yes. I couldn’t make it home for Mom’s day this year. Guess I’ll need to find something else to do.

  157. nwnj says:

    mkfinancial says:
    May 10, 2009 at 12:47 am

    Anybody have any info on Randolph…good, bad, or indifferent

    I’m technically in Randolph, but I actually live in the apartment sprawl on the North side of route 10(center grove road).

    I’ve only been here a year, but Randolph seems like a nice area.

    The biggest issues are typical of NJ suburbia. It’s largely Republican and pays disproportionate taxes to support the state.
    I believe they passed the school budget recently. AFAIK, the schools are good. The predominate sport appears to be baseball in the HS.

    The local prestige ranking appears to be Mendham > Randolph > Roxbury. Roxbury is apparently the school rival.

    The other bordering munipalities(Morris Plains, Dover, Parsippany, Denville) are tough to compare as they’re more mixed bus/residential. Randolph is largely suburban(other than Route 10).

    Route 10/Route 24 are horrible during the commute.

  158. nwnj says:

    BTW, Randolph does not appear to be immune to foreclosures. This week’s DR closings had a REO in Randolph.

    232k for this house. Couldn’t find prior sales information in the tax records. Not sure if it was a botched renovation or in some state of disrepair either.

  159. gary says:

    Just an observation: Went to Garden State Plaza Mall around 5:00 PM last night and the place was a f*cking mad house. I had to park somewhere out in Rochelle Park (seemed like it). The mall was packed… I couldn’t figure it out. Are people looking for bargains? Is confidence coming back? Go figure.

  160. Rich says:

    Some of you are in the business, be honest, there are quite a few homes under contract.

  161. Sean says:

    re: #163 – Gary were you attacked by Trekkies?

  162. grim says:

    As compared to what, Rich?

    The winter season? Of course there are, it’s seasonality. Every Spring for the past 3 years, those who don’t understand seasonality confuse it with a market rebound. Contract activity isn’t consistent through the year, in fact, it is heavily skewed towards the spring market. What we are seeing now constitute the bulk of the summer closings. Seasonality will not go away. Don’t confuse it with a go-go market.

    Or do you mean compared to the last few years? Hardly, contracts have slowed dramatically in comparison. Of course, you need to realize that sales don’t go to zero. Zero is not the absolute lower bound of the market. What we are approaching is effectively the zero bound, however. There are many life events that spur sales, it is these events that create the churn at the lower bound.

  163. grim says:

    Rich,

    Remember, we’ve already seen two “rallies” in home sales this downcycle, both failed:

    http://njrereport.com/images/mar09_salespace.gif

    Both of these temporary slowdowns in the second derivative were accompanied by victory cries that the bottom was reached.

  164. Seneca says:

    Why do I see so many Real Estate Agencies with signs outside saying they are looking for new agents?

    “Only 75 hours to get your license!” – the signs read.

    Is this how agencies are making money now? Or have the ranks become too thinned out? I thought we still had a glut of agents? I am missing the obvious but someone please enlighten me.

  165. crossroads says:

    grim

    can you show a correlation of price with the 2 busts?

  166. Seneca says:

    South Orange report: I spent the late afternoon/early evening in South Orange. Hopping little downtown, very diverse community, great access to NJT at two different stops.

    Classically beautiful mansions abound just a few blocks from downtown. But, it seemed that every other one of them was for sale. Looked some of them up and was surprised at how “cheap” they are. We are talking old money woodwork, grand staircases, beautifully landscaped yards and midtown direct access. Then I looked at the taxes. Holy cr*p!!! Asking prices of $649 with $18k taxes!!!

    No thanks. Next.

    Also, once you cross over So Orange ave by Seton Hall U, different ‘feel’.

  167. Seneca says:

    Grim’s comment about Mother’s Day Open House = desperation sent me searching for the desperate.

    Found this in Westfield. Can someone tell me what the owner asked of their interior designer to get this result?
    http://imagehost.gsmls.com/imagedb/highres/56/2671356_4.jpg

  168. still_looking says:

    gary 163

    Hi!!

    A packed singles’ club on Saturday doesn’t transform into weddings on Sunday.

    Browsing equal buying.

    Economy may not seem to be getting any worse, but can’t say it seems to be better, either.

    Then again, I’m not a data-head. At least not an economy/financial one.

    sl

  169. Silera says:

    ” Can someone tell me what the owner asked of their interior designer to get this result?
    http://imagehost.gsmls.com/imagedb/highres/56/2671356_4.jpg

    I want to make sure we capture the warmth of an emergency room and my love of garden trellises?

    Happy Mother’s Day to all!

  170. Silera says:

    My three year old has no idea it’s Mother’s Day. We’re getting ready to head to a Diner to have brunch with my sister and cousins to catch up. We’re all a no fuss bunch.

    He just came up to me and hugged me and said- Mommy you’re not going anywhere without me.

    Best gift ever.

  171. bi says:

    riskasultrashorts, if you had been holding srs, skf or fxp since 3 months ago, you would not think i am entertaining

    >safeashouses says:
    May 10, 2009 at 1:10 am
    #120 BC Bob

    I find bi almost as entertaining as re101

  172. bi says:

    113#, bob, i feel betrayed by your disclosure. we are here day-in day-out listening your end-of-world preach. now found out you not only had one night stand with saudi prince (quickly bought and sold Citi shares) but also went to bed with our enemy number one, ken lewis.
    To your credit, however, you are the only pastor here who can deliver coherent rants.

    > Recently,I guess you missed my long BAC, X and DRYS. Oh, I forgot, you are not on the email list.

  173. bi says:

    175#, bairen, this is not entertaining. look! all down from up 100% to down arond 60%. i would prefer staying at guantanamo bay.

    http://finance.yahoo.com/echarts?s=srs#chart3:symbol=srs;range=3m;compare=skf+fxp;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

  174. NJGator says:

    Seneca – When I want to feel better about my Montclair tax bill, I look at South Orange for sale listings.

    Also, completely anecdotal, but it seems like there are more high end short sales in SO than any of the close in “prestigious” MidTown Direct towns.

  175. NJGator says:

    Baby G Update – Baby G went off the ventilator yesterday and is breathing only on CPAP. She’s had a few apnea spells and may need to go back on the vent if they continue. The doctors said this is not a very serious setback considering how soon she came off the vent.

    Also, an echocardiogram confirms that her PDA artery closed and she will not need surgery to correct it.

    If she continues to do as well as she has been, they may start giving her breast milk today.

    Happy Mothers Day everyone!

  176. Mikeinwaiting says:

    Gator , Good to hear, Happy Mothers Day to all the Moms.

    Syncmaster # 81 from yesterday. My store was in Franklin Sussex Cty. As there are no high end stores to trade down to from unless you count A&P the fact that they were slow on the usually busy day & time may be telling. Could it just be Mothers Day, no cooking today,
    who knows.

  177. Happy Camper says:

    where SAS at?

    http://www.guardian.co.uk/politics/2009/may/10/g20-policing-agent-provacateurs

    G20 police ‘used undercover men to incite crowds’
    MP demands inquiry into Met tactics at demo

    An MP who was involved in last month’s G20 protests in London is to call for an investigation into whether the police used agents provocateurs to incite the crowds.

    Liberal Democrat Tom Brake says he saw what he believed to be two plain-clothes police officers go through a police cordon after presenting their ID cards.

    Brake, who along with hundreds of others was corralled behind police lines near Bank tube station in the City of London on the day of the protests, says he was informed by people in the crowd that the men had been seen to throw bottles at the police and had encouraged others to do the same shortly before they passed through the cordon.

    Brake, a member of the influential home affairs select committee, will raise the allegations when he gives evidence before parliament’s joint committee on human rights on Tuesday.

    “When I was in the middle of the crowd, two people came over to me and said, ‘There are people over there who we believe are policemen and who have been encouraging the crowd to throw things at the police,'” Brake said. But when the crowd became suspicious of the men and accused them of being police officers, the pair approached the police line and passed through after showing some form of identification.

  178. Safeashouses says:

    #171 Seneca

    They wanted to live in a diner?

  179. Cindy says:

    (179) Gator – Awesome news. Happy Mom’s Day to all.

  180. Cindy says:

    (94) Seneca –

    “Anyone here long with no plans to sell until retirement?”

    Does my dollar cost averaging into a 403b each month count? If so – yes.

  181. sastry says:

    Gator… Great news. Happy Mother’s day.

    S

  182. sastry says:

    Fire #127…

    We had similar situation — had to beg the rental agency for permission, which they granted. Going over two years now. Our trick was to show that the dish would be inconspicuous, etc.

    It’s probably worth pleading on a personal level. It may work.

    S

  183. Firestormik says:

    Sastry,
    I think I’ll tell them to go ahead and try to evict me. I went over the addendum they mentioned and could not find anything that requires me to purchase the insurance. They currently have at least 4 units sitting empty, so I don’t think they are going to pursue it.

  184. t c m says:

    #170-

    “Looked some of them up and was surprised at how “cheap” they are. ”

    “Then I looked at the taxes. Holy cr*p!!! Asking prices of $649 with $18k taxes!!!”

    exactly! someone on this board said it a while back, we are getting to the point of “here take my house, just pay the taxes”.

    don’t remember who, but spot on.

  185. 3b says:

    #158 grim:Hold an open house on Mother’s Day?

    Desperate.

    I saw 4 today in my town!!

  186. 3b says:

    #164 Rich:Some of you are in the business, be honest, there are quite a few homes under contract.

    Man you are dense.

    Two things to consider
    1. At what price are they UC
    2. Will they close.

    That concludes today’s lesson, since it is Mother’s Day.

  187. sas says:

    “where SAS at?”

    see blokes. SAS does know he is talking about…

    SAS

  188. sas says:

    oops, ended a sentence with a perposition.

    SAS

  189. syncmaster says:

    Gary #163,

    Interesting. My shopping trips today consisted of going to an Indian takeout joint in south Edison. This place used to be packed, it’s now empty. Maybe lots of H1B’s went back home or are ‘on bench’ and unwilling to spend $6 for biryani?

  190. Firestormik says:

    syncmaster,
    Check the parking lot by Metropark station. A year ago you wouldn’t be able to park there after 8am. Now, you can find a coulpe of levels empty at 10.

  191. Cindy says:

    http://baselinescenario.com/2009/05/10/james-surowiecki/

    At Baseline Scenario – The discussion for a few days has centered around are we “turning Japanese” or not.

    Today’s post titled “James Surowiecki and Me” refers to The New Yorker’s article questioning some of the ideas of Simon Johnson and James Kwak. When you go into the comments section, James Surowiecki posts and defends his position. Very interesting – in depth probing into the nationalization issue with cross links to original posts and differing positions.

    If you are a masochist, may I recommend it.

  192. Potato Pancake says:

    safeashouses says:
    May 10, 2009 at 9:54 am

    There was a line at Dunkin Donuts for the first time in 6 months. Is the recession over is this a false uptick from Mother’s Day?
    ….

    Instead of jewelry, Mom’s got Munchkins and a Box O’Coffee instead.

  193. Potato Pancake says:

    #
    gary says:
    May 10, 2009 at 11:26 am

    Just an observation: Went to Garden State Plaza Mall around 5:00 PM last night and the place was a f*cking mad house. I had to park somewhere out in Rochelle Park (seemed like it). The mall was packed… I couldn’t figure it out. Are people looking for bargains? Is confidence coming back? Go figure.

    That mall is always packed. I live 5 minutes from there and not only do tons of NYers come in to avoid tax on clothes/shoes but people in this area go to the mall to hangout since there isn’t much else to do around here. Doesn’t mean the stores are seeing any increases in sales other then from the clearance racks. It used to be the mall was packed as well as the restaurants, nowadays the mall is packed but restaurants have plenty of seating.

  194. chicagofinance says:

    veto that says:
    May 10, 2009 at 9:05 am
    Clot, am long mcd too, they could sell burgers and coffee in nuclear holocost, although the returns will never blow your hair back, shes a little boring but steadily growing cash cow. Although they are huge holder of re, so i always wonder how this re price collapse might effect their bottom line but always forget to look into it.

    veto: review non-USD revenue streams…and commodity hedging program…

  195. chicagofinance says:

    Bost: you are held accountable because you have cred; village idiots can pontificate all they want….

  196. chicagofinance says:

    Rev. Al says:
    May 10, 2009 at 8:02 am
    Some talking head said he is looking at P/Es to determine a true bottom. When they come closer to single digits, he goes long.

    Sharp: well…he French Connection UK’ed that one up bad….

  197. chicagofinance says:

    Clotpoll says:
    May 10, 2009 at 8:34 am

    clot: why would you short SBUX? Easy money earned. Just stay away from this one; if they were going to zero, it would have happened already; now they may be in chronic malaise; just ignore

  198. chicagofinance says:

    All: keep an eye on oil price inflation and its pass through to gasoline prices; on my watch, I’ve seen 20% inflation at the pump in just a couple/several weeks

  199. chicagofinance says:

    gary says:
    May 10, 2009 at 11:26 am
    Just an observation: Went to Garden State Plaza Mall around 5:00 PM last night and the place was a f*cking mad house. I had to park somewhere out in Rochelle Park (seemed like it). The mall was packed… I couldn’t figure it out. Are people looking for bargains? Is confidence coming back? Go figure.

    g: college kids home; HS seniors done with finals; before Memorial Day

  200. chicagofinance says:

    syncmaster says:
    May 10, 2009 at 6:26 pm
    Maybe lots of H1B’s went back home or are ‘on bench’ and unwilling to spend $6 for biryani?

    sync: H1B’s are the swine flu strain, yes?

  201. chicagofinance says:

    #1 I believe that this article is a fair assessment of current conditions
    #2 Idiot cliche du jour “….Wall Street climbs a wall of worry…”

    Wall Street Journal
    ABREAST OF THE MARKET
    MAY 11, 2009
    By Most Measures, Stocks No Longer Look Cheap

    By TOM LAURICELLA

    The outlook for stocks has brightened but, thanks to the big rally of the past two months, the market is no longer a bargain.

    By many measures, stocks are still on the cheaper side of the ledger. But they are approaching levels that bring them closer to long-term averages, making them neither a deal nor expensive.

    As a result, valuation has shifted from being a talking point of the bulls to one used by those bearish on the near-term outlook. And even many of those who think the market has hit bottom — a rapidly growing group — say valuations now suggest investors should tread more carefully.

    “The market is a little bit extended,” says stock-market strategist Subodh Kumar, of Subodh Kumar & Associates. “Where it goes from here is going to depend on how quickly things really improve as opposed to getting less bad.”

    For now, the “less bad” news has been enough for stock investors. Last week, the U.S. government’s stress tests showed a number of the country’s biggest banks needed capital, but in largely manageable amounts. April chain stores sales were better than expected, reinforcing the idea that the bulk of the pullback in consumer spending is over.

    And Friday’s employment report suggested that, while companies continue to slash jobs, the pace of the cuts is slowing.

    On balance, first-quarter earnings had enough positive surprises to cheer investors.

    All this has enabled stocks to extend gains that began from 12-year lows hit on March 9. With a solid rally Friday that capped the eighth up week out of the last nine, the Dow Jones Industrial Average has climbed 31% in the past two months and the Standard & Poor’s 500-stock index is up 37%.

    While the rebound was a relief for battered stock investors, it complicated matters for those still trying to decide whether to get in or add new holdings.

    Higher prices have made stocks less of a screaming buy by several valuation measures.

    For example, based on the last 12 months of operating earnings, the S&P 500 was changing hands late last week at a price-to-earnings ratio of 14.7, according to Morgan Stanley.

    That is still below the average trailing P/E of 17 for the last 25 years but up sharply from 10.5 in February.

    Looking ahead to expected earnings for the next year, the story is less compelling for buying stocks. The S&P 500 was at a forward P/E of 14.5 late last week compared with a 25-year average of 15, according to the Morgan Stanley data.

    But many investors are reluctant to put too much weight on the forward P/E ratio during a period of significant uncertainty about the earnings outlook.

    Last October and November, for example, the S&P 500 appeared to be extremely cheap on that basis, trading below a P/E of 11. But it turned out that analysts had wildly overestimated the earnings for the year ahead.

    Analysts had forecast 2009 S&P 500 operating earnings of $89 a share; that is now down to $57. But for 2010, the consensus calls for an almost 30% rebound.

    Many investors also take issue with basing valuations against even historical earnings posted through the middle part of this decade. Profits from the period of record earnings growth that lasted into 2007 are now widely seen as having been significantly inflated by the credit and housing bubble.

    At the same time, the subsequent collapse of the economy sent earnings tumbling to low levels that also are seen as extreme. Already that is in evidence by the jump in S&P 500 operating earnings from their worst performance ever — a nine-cent-a-share loss in the fourth quarter of 2008 — to a first-quarter earnings increase that appears on track to hit nearly $10 a share, according to data from Standard & Poor’s.

    And current as-reported earnings, which don’t exclude one-time charge-offs, are creating readings seen as distorted. At the start of this month, the S&P 500 was at a P/E of 131 on that metric, according to Ned Davis Research. That is a record high that dwarfs the long-term average just south of 20.

    In this environment, valuation measures that compare stocks to longer-run earnings trends gain favor because they smooth out the cyclical peaks and valleys.

    Probably the most widely followed of these barometers, often known as “normalized” earnings, is the one created by Yale University professor Robert Shiller.

    He compares stock prices to a 10-year trend in earnings adjusted for inflation. In March, his normalized P/E ratio dropped toward 13, its lowest since 1986.

    Now the measure is close to the historical average, with a reading of 15.9 at last Wednesday’s close of 920 for the S&P 500. That’s a reading that suggests “average returns for the next 10 years,” Mr. Shiller says.

    “However,” he adds, “I still think the market is risky right now.”

  202. Cindy says:

    http://seekingalpha.com/article/136760-mid-year-macroeconomic-review-history-repeating-itself?source=from_friend

    Chicago (202) – Got this from a friend via email – Seeking Alpha – I am not familiar with the author but he says:

    “Unfortunately, our crude consumption has dropped only modestly and is already increasing as GDP stabilizes, even at current levels of employment. As a consequence, crude prices are headed north again, and will support headline and eventually core CPI through the cost structure, as cost push ‘inflation’ resumes after pausing for last year’s massive inventory liquidation.”

    Just part of a longer post titled:
    Midyear Macroeconomic Review

  203. Everything's Hobroken says:

    re Forest Hills in Queens

    seneca: Thanks for the suggestion.
    I work in the vicinity of 42nd and 5th at the moment but, as always, could easily be moved to one of the other buildings.

    I see any subway ride as do-able but have gotten tired of the seemingly increasing frequency of flight delays out of EWR.

    — Ray

  204. veto that says:

    “review non-USD revenue streams…and commodity hedging program…”

    ChicagoFin
    i already have a pretty diverse portfolio including ung, gxc, fxc, gld, an energy mlp and a couple blue chips but im always open to ways to improve the portfolio. What do you recomend?

  205. Cindy says:

    http://www.nakedcapitalism.com/2009/05/saturday-night-live-grades-stress-tests.html

    Saturday Night Live Reviews the Stress Tests via NC

    The banks take a test – you know, a written test. LOL

  206. kettle1 says:

    A housing market projection based on the Case Shiller NY Metro Index and a joint effort between Veto and myself. This is one of several scenario’s we have discussed.

    http://www.scribd.com/full/15111610?access_key=key-2kh8cqz49c1sjfxewluv

  207. chicagofinance says:

    veto that says:
    May 10, 2009 at 9:08 pm

    ChicagoFin
    i already have a pretty diverse portfolio including ung, gxc, fxc, gld, an energy mlp and a couple blue chips but im always open to ways to improve the portfolio. What do you recomend?

    I veto your use of the word “diverse”….gas, copper, gold, china and a couple of blue chips? It looks as if you are making one big bet on China to me…except for the gas piece…withstanding Mickey D’s which I assume is one of your chips…your others better be something non-cyclical, cash rich, and not already on a huge run in the last 60 days….

  208. chicagofinance says:

    Want some portfolio diversity?…figure out the answer to this issue, and who is going to make a mint off of it….

    WSJ
    HEARD ON THE STREET MAY 11, 2009 Demands on Network Are an iPhone Hang-Up

    The iPhone has made AT&T the cool kid on the cellphone block, bringing in lots of new customers all eager to play with the shiny new device.

    Trouble is, the iPhone is expensive for AT&T, and not just because of the heavy subsidies on the initial purchase price.

    Users of iPhone download games, video and other Web data at two to four times the rate of other smartphone users, according to comScore. Yet AT&T charges iPhone subscribers the same fee of $30 a month for data that it levies on other smartphone customers. And aside from restricting certain activities, like file sharing, AT&T doesn’t limit how much data can be downloaded.

    But Web applications popular with iPhone customers are bandwidth hogs. A recent analysis by Alcatel-Lucent of North American wireless network use during the midday hour on one day found Web browsing was consuming 32% of data-related airtime but 69% of bandwidth, while email used 30% of data airtime but only 4% of bandwidth. Email taxes network resources but in a different way.

    As the proportion of customers with iPhones grows — 5.9 million 3G iPhones were activated in the last three quarters, 7.5% of AT&T’s total subscribers — the resulting growth in downloading and Web browsing will strain AT&T’s network. AT&T will need to add cell towers and spend more on the back-haul lines that connect the towers to the rest of the network.

    The iPhone is the leading edge of a challenge for the wireless industry. Until now, carriers have boosted revenues by taking on new customers — even when average revenues per user haven’t grown much. For example, Verizon Wireless, controlled by Verizon Communications, has lifted ARPU only slightly to almost $52 a month over the past few years.

    The falling cost of voice minutes and additions of lower-end customer has offset growth of text messaging and other data services. Voice and texting use little bandwidth and are lucrative.

    Now, new customers are harder to come by. The question is whether new data revenues the industry is banking on — from Web-browsing and entertainment services — will be as profitable, at least as measured by return on invested capital. That looks doubtful. To ensure networks have the capacity to offer these services, particularly bandwidth-heavy offerings like video streaming, carriers will have to make heavy capital investment. Both AT&T and Verizon are building the next-generation 4G network, each spending more than $9 billion last year on new wireless spectrum, as well as $6 billion annually on overall capacity.

    The new networks are likely to be more efficient at delivering data applications. Even so, Sanford C. Bernstein analyst Craig Moffett argues that returns on invested capital related to these new services will be lower than on older services.

    In the short term, carriers should abandon unlimited data pricing plans. Both AT&T and Verizon Wireless already charge extra for heavy users with wirelessly connected laptops. They will have to contemplate similar strategies for smartphone users.

    Setting the right price won’t be easy. With competition, the temptation to discount will be hard to avoid. And there’s no guarantee that customers will pay as much for entertainment as for voice-calling and email.

    Whatever they do, the carriers may be caught between a rock and a hard place.

  209. chicagofinance says:

    veto: I am not saying you are making the wrong call…just make sure you understand the call you are making…….correlation is your potential for doom….

    WSJ
    MAY 11, 2009 World Regains Taste for Risk
    Stocks, Currencies in Emerging Markets Soar; China’s Stimulus Spending Kicks In
    By JOHN LYONS, ALEX FRANGOS and ALASTAIR STEWART

    Investors are aggressively piling back into markets shunned as too risky just a few weeks ago — driving up stocks in the developing world and raising concerns that the euphoria may be overdone.

    As fears of a deepening global recession are pushed aside by expectations of recovery, investors have rediscovered their appetite for risk in places ranging from Brazil and China to Russia. Brazil’s Bovespa stock index is up 75% since its October lows, and across the emerging-market world, stocks are up 50% since the beginning of March, according to the MSCI Emerging Markets index, which tracks 23 markets.

    During the week ended May 6, investors plowed $4 billion into emerging-market investment funds, marking the biggest week for the funds since late 2007 — and their eighth-largest week ever — according to Bank of America-Merrill Lynch and EPFR Global. Meanwhile, investors withdrew $9.8 billion from U.S. funds in seven weeks.

    Behind the optimism are signs the worst of the global slump may have passed, and that China’s massive stimulus plan is kicking in, heralding a pickup in demand for commodities and agricultural products.

    “These moves back upward are real,” says Robert Weissenstein, chief investment officer at Credit Suisse’s private bank. He cites investors’ renewed belief that economies such as Brazil and China will grow faster than the developed world. Barring unforseen events, he says, “The black hole in front of us is gone,” referring to the broader threat of possible collapse of some markets or economies.

    The sudden run-up has some observers concerned that investors may be too optimistic. Not long ago, Brazilian leaders were upset that Wall Street was underestimating the nation’s resilience amid a global sell-off. After an rebound in its shares and currency, the message has changed: Calm down.

    ” The excess of optimism is dangerous and could lead to disappointment the first time there is a negative number,” Brazilian central banker Henrique Meirelles told a conference in recent days. “Brazil is showing signs of recovery on the margins, but that doesn’t mean [the crisis] is over.”

    Brazil was forced to intervene in its currency market twice in the past week to prevent its currency, the real, from strengthening too quickly against the dollar. Currently, it’s trading around 2.07 per dollar.

    Just six months ago, the real was plunging, blowing huge holes in the balance sheets of blue-chip companies such as pulp maker Aracruz Celulose SA. The company’s market value lost $2 billion when the currency crashed after it (and other companies) invested in various hedging strategies that wrongly assumed the real would stay strong back then.

    Now Brazilian stocks are the world’s second-best performer after Russia, according to MSCI Barra.

    Investors, who during the height of the crisis had been hoarding cash — especially U.S. dollars and Japanese yen — are now more willing to put some of that cash back into foreign stocks.

    An index showing the U.S. dollar against a basket of currencies is down 7.5% since March 5. The dollar traded Friday at a seven-week low against the euro at $1.3628.

    Investors appear to be trying to get in early on a long-term bet: Emerging-market economies will get back into their grooves long before the U.S. or Europe shake off the global crisis.

    “Several emerging economies entered the crisis with better initial conditions and, as such, will likely maintain a better economic performance than most industrial countries going forward,” says Mohamed El-Erian of Pacific Investment Management Co., manager of the world’s biggest bond fund.

    Economists see rebounding global commodity prices as an early sign that economies such as China’s are beginning to hum again. When China’s economy is strong, it ranks among the world’s most voracious consumers of oil, metals and other raw materials. Crude-oil futures prices rose 10% to a six-month high of $58.63 a barrel, while natural gas jumped 21% last week.

    And while most of Eastern Europe struggles to recover from an economic slump, Russian stocks have come back 45% this year, thanks to rising prices for energy and metals, two commodities it produces. Investors have plowed $376 million into investment funds that invest in Russia this year, according to Bank of America-Merrill Lynch.

    Uri Landesman, head of international equities at ING Investment Management, bought stocks in Russia and Brazil last week. Currently, his funds have about 30% of their assets invested in emerging markets — his largest proportion ever.

    “I’m really stepping on the gas pedal,” he said. Countries that depend on selling commodities such as oil or steel, as do many emerging economies, were disproportionately abandoned by investors during the crisis, he said. That means they are more likely to show a bigger rebound than more developed nations as global demand begins to improve.

    “I think it’s an awareness of where the growth stories are coming from,” says Jonathan Auerbach, managing director at international brokerage Auerbach Grayson. “We’re about 12 months away from a genuine return to global growth, and it’s going to be driven by the emerging markets.” His firm last week traded in more than 50 different markets, while a more typical weekly number is 25 to 30.

    Mr. Auerbach said he doesn’t expect a big pullback in emerging markets, because they began to rally from a much lower point than U.S. markets did. “While they’ve had big moves, there’s still a lot to go.”

  210. Revelations says:

    From yesterday:
    #14

    FHFA. That’s the weak number in your 4 index average.

    ” lurkerd says:
    May 9, 2009 at 9:36 am

    If one observes the decline from peak for each of the 4 most relevant home price indices and takes an average of the 4 results, then the decline equals 11%.

    The indices are:
    FHFA
    NJAR
    S&P/Case-Shiller New York area house
    S&P/Case-Shiller New York area condo”

  211. Revelations says:

    Anyone in-the-know:

    What MSA does Monmouth Co fall under? I always look at ‘Edison/New Brunswick’ or sometimes it’s reported as just ‘Edison’.

    Right? Wrong?

  212. syncmaster says:

    216, Monmouth county is part of the Edison-New Brunswick, NJ Metropolitan Division, which in turn is part of the New York-Northern New Jersey-Long Island, NY-NJ-PA Metropolitan Statistical Area.

  213. Revelations says:

    #73 Cindy:

    I think as NE RE numbers continue to plummet, NJ (along with CT, NY, PA, MA, etc.) will catch up with CA.

    That neg equity figure rises with every month of price drops, which I think have been accelerating in the NE.

    My guess is that gov’t bailouts caused a delay in NY metro corrections due to an expectation that gov’t $ would preserve jobs and house prices.

    P.S. Not lecturing you.. Just thinking out loud.

    ” Cindy says:
    May 9, 2009 at 6:47 pm

    Also – middle of the page or so #7
    “Percentage of mortgage properties with negative equity”

    It looks like CA @ 30% and NJ @ 10%.”

  214. Revelations says:

    Thanks sync. I thought that was right, but was never sure (I would’ve really felt stupid if I’ve been looking at the wrong figures all these months.)

  215. Revelations says:

    veto and kettle:

    Awesome charts.

    I prefer to look at nominals too for housing, but understand why the adjustments are necessary for the comparison.
    A million different ways to adjust (HAI vs CPI vs wages, etc.) each with adv/disadv, but I think the similarities would be clear regardless of the method.

    Great work. Thanks for putting the time into it.

  216. Revelations says:

    Posting to myself again. So embarrassing..

    Lsat?

  217. kettle1 says:

    nope

  218. kettle1 says:

    rev,

    big picture, CPI probably the method of adjustment with the least issues. HAI is probably one of the worst in my opinion

  219. Curmudgeon says:

    Lsat.

  220. kettle1 says:

    Nien

  221. Stock Forum says:

    I will be linking back I really like your site keep up the good work.

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