From Bloomberg:
U.S. Home Prices to Fall 14% More, Deutsche Says
U.S. home prices may fall another 14 percent, led by the New York and Orange County, California, metropolitan areas, before reaching a bottom as an increase in unemployment offsets lower prices, Deutsche Bank AG said.
“Affordability is no longer the driving issue in the housing market, and we believe prices still have a ways to fall in many areas before home prices reach their trough,” Deutsche Bank analysts led by Karen Weaver, wrote in a report yesterday. “The bottom is getting closer, but we are not there yet.”
Home prices are forecast to fall 41.7 percent from their peak, Weaver said. That’s higher than a forecast she released in March and reflects “the actual declines to date and the expected future impact on home prices from rising foreclosure inventory and unemployment.”
In March, Deutsche Bank had forecast a 16.5 percent decline in “current-to-trough” prices. While today’s projection is less than that, many metropolitan areas will still see steep declines, the report said.
In the New York metropolitan area they may drop 40.6 percent from the first quarter to the bottom, the report said, less than Deutsche Bank’s March estimate of 47.4 percent.
Financial firms have cut more than 183,000 jobs in the Americas in the global credit crisis, driving down prices and rents in the New York area. In New York City, Manhattan co-op prices slid the most since 1995 in the first quarter, according to data from Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate.
first :))
I’m still waiting for buying a house next year! NO RUSH!
Death….taxes….and falling home prices.
Life in the Garden State.
so when will we see the buy-1-get-1-free sales?
happy days:
why would i want to double my tax liability in the tax wonderland that is NJ
Comrade nom deplume says:
June 16, 2009 at 5:26 pm
[370] lisoosh
“I drive a Corolla. For me it says cheap bastard who doesn’t care what you think of my car.”
Not nearly as much as my old Pontiac Grand Am. Loved that car. It was solid and beat up and shiny BMW’s used to run from me at toll booths. They knew I didn’t give a d@mn about my paint job.
Now I drive a Santa Fe. To me it says too cheap to buy a CRV.
Great car though. Never had an issue the last 6 years and they actually acted like they wanted to sell it to me, rather than the stand-offish attitude I got from the Honda dealer.
Sastry/veto – yes my education/hubris comment is a contrarian generalization. So was the preceding statement.
Other car driver generalizations, just to appease the Indians I annoyed (although forgive me, I spend a lot of time on Rte 27. Behind slow Indian drivers)
Acura – tailgating Asians
Toyota Sequoia – small bottle-blond women with 1.7 kids and those little footprints on the back window listing how many people are in the family.
Ford Focus – has a redundant “Baby on Board” sign in the window.
BMW – middle-aged guy who thinks he is “all that”. Pure status symbol. Although I like how they handle.
Audi – I am rarely annoyed by Audi drivers. They actually act like they know where they are going and want to get there.
Subaru – Caucasian. Think they are smarter than everybody else.
Left lane hog – Pennsylvania plates.
Tailgater – NY plates.
Am I the only person who thinks that having stickers with your kids names on the back of your car (next to a picture of their favorite sport) is a really good way to encourage predators?
“Hi there Madison, how was dance? Your mom asked me to pick you up”
lisoosh
“Am I the only person who thinks that having stickers with your kids names on the back of your car …”
If you can read the names, you are tailgating…
S
lisoosh #8,
I speak on behalf of me and all 4 trillion Indian Gods and Goddesses, including the 7 armed snake goddess who is often ignored (but I digress), when I say I have been sufficiently appeased.
Sastry #10,
Oh snap.
S,
Please move your camel over to the right lane.
#8 lisoosh
You forgot middle aged bald guys driving convertible sports cars.
zieba,
I’m gonna have my camel take a monster dump in your lawn, homey.
I think I see more menopausal women behind the wheel of BMWs than any other car. Besides….”all that” is really irrelevant at 40 now isn’t it?
Nevada Republican Senator admits cheating on his wife, with a married woman who worked for him.
http://www.cnn.com/2009/POLITICS/06/16/ensign.affair/index.html
Is being an adulterer some kind of requirement for politicians? Like a demerit badge?
(6). Lisoosh
I drove a santa fe in france a couple of years ago. I thoght it a very good ride. My wife however got stuck in the latin qtr when she tried a 3 point turn and could not figure out the gear shifter.
#3The market will turnaround but it doesn’t happen over night.
Yep last time took 10 years. This time at least 10, probably longer.
So the market will turn around when I’m in my mid-40s. That will likely be the last or second to last real estate bull market of my working years. Oh, the pressure.
syncmaster….you named yourself after a computer monitor from the 90’s — neat.
safe (17)-
Yawn.
Now, if he’s having a gay affair & his boyfriend is a pimp, using his apartment as an office to run the whole illicit business…that’d really be something, wouldn’t it?
[sarcasm stuck in “on” position again]
Essex #21,
I had to think of a username and that was the word staring right at me :-) I got it on clearance in 2003, though. And I still have it. How’s that for cheap, you Civic drivers ain’t got nothin’ on me.
#13 Zeiba… You meant, elephant? :)
Sastry – quiet, insolent ayrab!
I sold thousands of those (literally) monitors to corporate accounts in the nineties. Good times.
I was in my twenties…I had zero debt….two degrees…and a vintage Porsche…now that, is “all that”.
*sigh*
My 20s were significantly less glamorous LMAO. I think I’ll leave it at that.
Essex/Sync:
In my 20’s, the only Porshe I wanted was the one that lived in the undergrad portion of the dorm and came to the common area often drunk! Or, may be her name was Mercedes. Of course, much to my surprise, my “fresh off the boat, Indian charm” didn’t really work.
S
Another mystery solved.
Isn’t disclosure wonderful.
You might think I’m being sarcastic. But I’m not. I’ve been wondering about the syncmaster for years now. And I thought you were some messed up Chinese dude. I pictured you like the guy in this:
http://www.youtube.com/watch?v=goix7jFXD9Q
Of course, I was very desperate, and no luck from even vintage Porshe’s too…
However, I’ve spent endless nights with “Tosca”, “Elektra”, etc., each one a beautiful Sparc workstation.
S
My Porsche’s name was Maribel. And even though I wasn’t a FOB my charms didn’t work on her either. Maybe they would have had I met her in a chat room instead, did I just say that out loud?
Pat #29 LOLOLOLOL
Sync… Had you met her in a chat room, you’d have found a Miguel :)
Sastry #33 post-op? j/k.
My post had nothing to do with religion, race, creed or gender, bla bla bla…. you guys really are a sensetive bunch.
To all the RE agents that do not believe in mods.
“Bill Campbell, a self-employed electrician in Covington, Ky., recently got a new 20-year mortgage from Chase with an interest rate of 2.75% that will rise no higher than 4.75%, compared with his previous rate of 5.375%.”
http://online.wsj.com/article/SB124508720715715781.html
Where’s the recession??
“In Finance, Recent Signs of Hiring”
http://online.wsj.com/article/SB124511318124517281.html
I’m going to ask a dumb question I think, but here goes. For about 5 yrs, I scoured looking for a house without knowing any of these rules so readily dispensed on the board. Specifically, 3 times income from one worker not two.
That being said, if NJ median income is 67K, and I guess this is a statistics question, shouldn’t housing prices come down to 210K for median? I don’t mean 1 bedroom coops, I mean legitimate SFHs that working families can live in. Is it reasonable to assume that in regular blue collar towns, average people will be able to buy average homes? Also, if the median should be 210K, wouldn’t that imply that if I didn’t want to get a 210K house, houses for less than that amount would also be available that required work or sacrifice to upgrade?
I’m just asking because for average people, a home purchase and 401k is really the only feasible way of building equity. I just feel more and more that, no matter what I do, I’ll die renting or only be able to buy in the event that our parents are able to leave an inheritance. the first scenario is less than desireable and the second is really mean.
Syncmaster: This 95 Civic owner also happens to own a Syncmaseter. Really! No flat screen for me. Just some honkin’ 20″ monitor that almost doesn’t fit on my desk to it’s depth. Although, the picture is great.
Having been to India, I’m not sure those Indian drivers are as bad as you think at it. I personally have some serious respect for drivers from India. In America, you worry about everyone else when you drive. In India you only worry about yourself. I swear, the Indian way is 100% better when the roads are jam packed.
Of course, it is entirely possible that the Indians on Oaktree Road never drove in India and really are just terrible drivers.
Stu, now that we are all confessing how el cheapo we are…
Can I take advantage of an appraisal for the house — it came in at about 70% of the current assessment?
S
Lots of Indians in this country have never really driven in India. Many of them will take a ‘class’ and get their international license before leaving for America, but that’s about it.
Stu, btw, statistically speaking, many Indian drivers here have never driven in India, and even the ones that drove at one point dread driving there now.
In fact, many cannot drive a manual transmission — and some of those that can, like me, typically burn the clutch way too frequently…
S
Silera #38…
The future is not going to be the same as the present… However, if you prepare yourself for the worst case scenario (e.g. trying to save a big down payment), you may be very much ready when an opportunity comes.
S
One of my pals….(ex-IBMer–retired) white dude…moved to India about 7 years ago…wrote me and said…”I am never coming back”….must be the gorgeous gals.
Essex #44,
It is nice being the boss in India. That and the food. Everything else is.. meh.
silera #38,
… if NJ median income is 67K, and I guess this is a statistics question, shouldn’t housing prices come down to 210K for median?
A subset of households from within the universe of all NJ households is eligible for home ownership. What is the median income of that subset? It will, almost by definition, be higher than the median income of the universe.
Sastry says:
June 16, 2009 at 7:59 pm
“If you can read the names, you are tailgating…”
Traffic lights. Heavy traffic. Plenty of time to read.
safeashouses says:
June 16, 2009 at 8:20 pm
#8 lisoosh
“You forgot middle aged bald guys driving convertible sports cars.”
They’re not middle aged. They’re old and unable to accept the fact.
Sync- so basically I should move to the moon.
Baby story alert- My three year old comes downstairs and says “Momma I want to crap.” We say, no that’s a bad word- say poop. He says, I dont want to say a bad word I want to crap- and claps his hands.
Then we try to help him say clap and he say c-WR-ap. So we, said, ok crap is not a bad word as long as you clap your hands whenever you say it.
Traitor nom deplume says:
June 16, 2009 at 8:42 pm
(6). Lisoosh
“My wife however got stuck in the latin qtr when she tried a 3 point turn and could not figure out the gear shifter.”
There’s a double entendre in there somewhere I’m sure.
zieba says:
June 16, 2009 at 9:33 pm
My post had nothing to do with religion, race, creed or gender, bla bla bla…. you guys really are a sensetive bunch.
Sure it did. You want to offend everyone.
Guess what?? The tables have been turned and every damn word you post here is being very closely monitored and logged. Your writing patterns have been analyzed and compared with that of other known real estate terrorists. We have you under surveillence so damn tight, that we know that you farted at 10:06 am and 31 seconds this morning and yes, that was logged as well and noted for future reference.
We’re going to find out who you are and when we do, we going to out your ass at the earliest opportunity. Damn grasshopper.
Numb
U2
Don’t move
Don’t talk out of time
Don’t think
Don’t worry
Everything’s just fine
Just fine
Don’t grab
Don’t clutch
Don’t hope for too much
Don’t breathe
Don’t achieve
Or grieve without leave
Don’t check
Just balance on the fence
Don’t answer
Don’t ask
Don’t try and make sense
Don’t whisper
Don’t talk
Don’t run if you can walk
Don’t cheat, compete
Don’t miss the one beat
Don’t travel by train
Don’t eat
Don’t spill
Don’t piss in the drain
Don’t make a will
Don’t fill out any forms
Don’t compensate
Don’t cower
Don’t crawl
Don’t come around late
Don’t hover at the gate
Don’t take it on board
Don’t fall on your sword
Just play another chord
If you feel you’re getting bored
I feel numb
I feel numb
Too much is not enough
I feel numb
Don’t change your brand Gimme what you got
Don’t listen to the band
Don’t gape Gimme what I don’t get
Don’t ape
Don’t change your shape Gimme some more
Have another grape
Too much is not enough
I feel numb
I feel numb
Gimme some more
A piece of me, baby
I feel numb
Don’t plead
Don’t bridle
Don’t shackle
Don’t grind Gimme some more
Don’t curve
Don’t swerve I feel numb
Lie, die, serve Gimme some more
Don’t theorize, realise, polarise I feel numb
Chance, dance,dismiss, apologise Gimme what you got
Gimme what I don’t get
Gimme what you got
Too much is not enough
Don’t spy I feel numb
Don’t lie
Don’t try
Imply
Detain
Explain
Start again I feel numb
I feel numb
Don’t triumph
Don’t coax
Don’t cling
Don’t hoax
Don’t freak
Peak
Don’t leak
Don’t speak I feel numb
I feel numb
Don’t project
Don’t connect
Protect
Don’t expect
Suggest
I feel numb
Don’t project
Don’t connect
Protect
Don’t expect
Suggest
I feel numb
Don’t struggle
Don’t jerk
Don’t collar
Don’t work
Don’t wish
Don’t fish
Don’t teach
Don’t reach
I feel numb
Don’t borrow Too much is not enough
Don’t break I feel numb
Don’t fence
Don’t steal
Don’t pass
Don’t press
Don’t pry
Don’t feel
Gimme some more
Don’t touch I feel numb
Don’t dive
Don’t suffer
Don’t rhyme
Don’t fantasize
Don’t rise
Don’t lie
I feel numb
Don’t project
Don’t connect
Protect I feel numb
Don’t expect
Suggest
Don’t project
Don’t connect
Protect I feel numb
Don’t expect
Suggest
I feel numb
what the heck happened to the boards?
I’m gone for a few hrs and the the joints gone teen wolf on one end and the cast from Grease is on the other end.
eek
SAS
“In the New York metropolitan area they may drop 40.6 percent from the first quarter to the bottom, the report said, less than Deutsche Bank’s March estimate of 47.4 percent”
that funny to see such writings in the popular press.
if you were to say such things back in 05, they would of tar & feathered you and called you a nut. aka. bitter renter.
life is sure interesting.
like the days we snuck behind the iron curtain, they called us nuts then too.
and guess what? we were.
SAS
“BMW – middle-aged guy who thinks he is all that. Pure status symbol. Although I like how they handle”
The car or middle-aged guys who think they are “all that”?
The way they handle, that is.
grim: I am so numb to all this shite numbers out there that I didn’t even flinch at the lead article. But taking a step back……..bloody hell….
I like this, but it is U2 shuddering off the rails…right before they freakin’ wiped out….
http://www.youtube.com/watch?v=tOd4CDaUmLc
i saw earlier today someone said they were paying $22k IN TAXES.
can that possibly be correct? That’s like $1500 a month. Who can afford that?
it means you’re likely pushing your monthly mortgages and taxes to like $4500 per month.
to me, that’s a danger zone. a lost job and it’s tough to hang onto that place for longer than 6 months.
we were adamant about keeping our mortgage and taxes in the 2500 range (a shade under 2600).
Maybe they bought their house with cash. I know a guy who paid cash for his 2 million dollar house somewhere in the Somerset Hills region. Owns a bunch of hotels.
An anecdote:
Bid on a house (no contingencies, 50% down) after extensive price analysis in early spring. Owners said no and wanted more. They soon went under contract with a couple with a sell contingency (for $2K more than my offer). Ended in disaster as the buyers lost their contingency sale. I’m asked by the sellers to make the offer again as they will take it. I do, but they can’t take it as the couple won’t release them from the contract even though their sale fell through. They ask me to make the offer again later. I decline. House price has now been lowered 3 times since and now lists more than $20K less than I offered a few months go. This is a nice house too, but based on the macros, I don’t see a big future for RE in the near term. So we continue to sit…
The moral of the story? NO RUSH! The money I’m saving by watching prices fall is like tax-free income!!
#6 lisoosh,
Looks like I’m getting a Hyundai as well after my Civic got an SUV enema. Had 2 Hondas and loved them, but like you said, it’s like Honda isn’t interested in ‘winning’ drivers anymore. Features are weak on the lower trims, they’re expensive, and there was a c0ckiness to the dealership atmosphere. Hyundai seems like they are actually trying to sell cars by offering deals and features — and to ease the brand fear, they throw in a stellar factory warranty. The car is made in the US to boot!
Never understood the fascination with Porsches. Lots of boomers drive them down to the shore with their twenty something trophy wives/girlfriends. It’s pretty funny when they try to race me. I drive slowly while they pull up behind me and they pull into the right lane and floor it. Needless to say, they get left in the dust by an old banged up Mustang with a turbo. I just want to know what goes through the female’s head when their sugar daddy gets humiliated.
LSAT!
I hate when this happened to me.
Teenager to sue over 56-star facial tattoos.
http://www.smh.com.au/world/strangebuttrue/teenager-to-sue-over-56star-facial-tattoo-20090617-cgts.html
Do you think Big pharma will ever let this be used in the US? A certain type of honey (not the John type) can kill antibiotic resistant bacteria.
http://www.smh.com.au/world/science/honey-may-hold-key-to-beating-hospital-superbug-20090617-chi9.html
Can someone pull the COMPLETE history on MLS 2598090? I believe you will find a classic case of riding the price down. This one has been for sale for well over a year, maybe even two!
“LSAT!”
Last?
Now that is something I never knew. Blogs like this really add to our understanding.
In the New York metropolitan area they may drop 40.6 percent from the first quarter to the bottom, the report said, less than Deutsche Bank’s March estimate of 47.4 percent.
So, you’re telling me that the 639K price tag at the peak is going to become 384K? Yeah, ok.
Rev [61]
Greatstory. Thanks for sharing.
regarding indian drivers: guy I work with moved here from India about 10 years ago. Loves driving when he has to travel for business. Lives in manhattan but spent about four years in Orange County, CA. Too cautious of a driver but not too bad overall. He drove in India before he moved here. Now when he goes back, his father hires a driver to take him around. Says driving there now is insane.
…And from yesterdays discussion on california RE, inland empire is a whole different ballgame than any decent part of LA county. The prices in Beverly Hills and surrounding communities are still sky high and have given up very little of tot just ritzy towns like BH or MDR, even places like Culver City and Playa are still very expensive. I know people who have been waiting to buy since 2003. They are still waiting. Prices have barely started to come down.
I think on some level there are towns here in NJ that are also very insulated. Not saying prices won’t eventually drop but its going to be a painfully long wait.
WSJ: FedEx reports a loss of $2.82 a share for the fourth quarter as revenue slides to $7.85 billion from $9.87 billion.
I think Blackberry tried to correct my spelling.
»The prices in Beverly Hills and surrounding communities are still sky high and have given up very little of tot just
…Should have said they have given up very little of total froth as it relates to pricing.
Yes, I love the stick figure families in the backs of SUVs – totally says you are a young hip mother
Support our troops ribbons – you are probably in your 50’s
USA flag on the back of your car – you are probably a senior citizen
I totally rock the USA flag on the back of my SUV. My wife said I increased my age by 40 years! BTW, you see lots of seniors driving Pacifica’s.
BMWs are all that, although they are very high maint. I don’t think I will get another, kinda like the models I used to date, expensive and hard to handle but oh what a ride, but eventually you shoot your load and your wallet is empty and it is time to move on. That said, no reason to sink as low as a korean tin can car.
A car should be like a wife, a ten in the bedroom who is a zero in the kitchen is great for thrills in your twenties and early thirties, but a better mix is an 8 in the bedroom and an 8 in the kitchen.
U.S. mortgage applications plunge to near seven-month low
John #75,
… no reason to sink as low as a korean tin can car.
What are you, some kind of automotive terrorist?
oh and regarding india playas, I have worked with tons of single Indian guys, the muslim guys who have gone native in america get down and dirty and hook up with more types of girls than you see in a benneton commerical, the christian indians ain’t got no game and the hindu indians don’t or can’t play the game. Then again they get married so young and don’t move out of home it is hard to play the game.
http://www.nj.com/news/index.ssf/2009/06/nj_gets_ready_for_the_growing.html
at least someone is moving into NJ.
What are you, some kind of automotive terrorist?
LMAO
Peace Sign on the back of the car….you live in Livingston and have that Kate Gosselin haircut.
For all the Elizabeth Warren groupies, this is a pretty good read:
The Over-Consumption Myth and Other Tales of Economics, Law and Morality
by Elizabeth Warren
http://www.yale.edu/law/leo/052005/papers/Warren.pdf
“But the new family budget is notable for another reason: It is far more deeply
leveraged. A generation ago, the one-income family committed about 54 percent of its pay to the basics—housing, health insurance, transportation and taxes. In effect, the one income family spent about half its income to make the nut—the basic expenses that do not vary if someone gets sick or loses a job. Today, the basic expenses consume 75 percent of the family’s combined income. Their nut—the amount that they must pay in good times and in bad—is fixed at 75 percent of their income. With 75 percent of income earmarked for fixed expenses, today’s family has no margin for error. There is no leeway to cut back if one parent’s hours are cut or if the other gets laid off.”
#81 Essex,
She has awful hair. Looks like she was doing it all night the way it sticks up in the back.
Clot,
Best news I had in a few days.
Manchester United’s new policy on age rules out signing Franck Ribéry
http://www.guardian.co.uk/football/2009/jun/17/manchester-united-transfer-policy
Shocking that word the recession is over comes from a huckster for a brokerage firm. Invest now before its too late!
http://tinyurl.com/m5qhnd
“The Recession Is Over, Schwab’s Sonders Says”
What I enjoyed most was that she declared an end to the recession but hedges with there is a “reasonable risk” we could see a double dip.
The trend will continue until it ends.
“In the New York metropolitan area they may drop 40.6 percent from the first quarter to the bottom, the report said, less than Deutsche Bank’s March estimate of 47.4 percent.”
Ok, i need an interpretation as my skull is thick. If this is saying what i think its saying, i simply cant compute. What is the first quarter they are referring to? 1 qtr 2009?
Are they saying that ny prices will fall another 40% from q1 2009? Wow. Or are they saying 40% from the peak in q1 2006?
Someone please slap me.
If they are referring to q1 2009, that would be a total cumulative drop of about 55% from 2006 peak to trough in 2010. That is roughly 1999 prices, right?
Back in October 2008 I told you recession would be over by Memorial day 2009, why is this shocking, jobs are a lagging indicator.
Seneca says:
June 17, 2009 at 9:18 am
Shocking that word the recession is over comes from a huckster for a brokerage firm. Invest now before its too late!
http://tinyurl.com/m5qhnd
“The Recession Is Over, Schwab’s Sonders Says”
What I enjoyed most was that she declared an end to the recession but hedges with there is a “reasonable risk” we could see a double dip.
The trend will continue until it ends.
FT:
The recession tracks the Great Depression
http://www.ft.com/cms/s/0/b31c06a2-5a7a-11de-8c14-00144feabdc0.html?ftcamp=rss
“Green shoots are bursting out. Or so we are told. But before concluding that the recession will soon be over, we must ask what history tells us. It is one of the guides we have to our present predicament. Fortunately, we do have the data. Unfortunately, the story they tell is an unhappy one”
Slate:
The New Boom-Bust Cycle: The housing and finance sectors caused the economic mess. Here’s why they can’t fix it.
http://www.slate.com/id/2220601/?from=rss
“The financial media are desperate to find good news in the troubled finance and housing sectors, the very industries that got us into this mess. This quest for green shoots is frequently comical. Today, the Wall Street Journal featured a piece about new jobs in the financial services industry. Why, JPMorgan hired 950 new loan counselors, and a former Morgan Stanley guy found a job with an asset-management company! But given that financial services firms have shed 600,000 jobs since December 2006, that hardly seems like a triumph.”
#70 gary:So, you’re telling me that the 639K price tag at the peak is going to become 384K? Yeah, ok.
Yeah, thats what I am telling you grasshopper.
John,
IMO, the recession is far far from being over. Read the two articles I linked above.
When the next leg down occurs, we’ll be sure to remind you of Memorial Day 2009.
There is no way you can simply replace consumer spending with government spending and expect it to work.
If unemployment is a lagging indicator, then astronomical government debt is a leading indicator.
Standard & Poor’s lowered its ratings and revised its outlooks on 22 U.S. banks, citing the firm’s belief that operating conditions for the industry will become less favorable than they were in the past.
Why is that hard to believe, I paid 280 for my house in December 1999, in the spring of 2005 my house was worth around 580 right now my house just got reassessd by town for 385K. I have three knucklehead neighbors who bought the identical house to mine for between 560K to 610K during 2005-2006. Even scarier of the three identical houses in a row, my neighbor to left paid 40k back in 1982, neighbor to right paid 610K in spring 2006 and I paid 280K in 1999. Guess what the amount we paid is irrelavent, the houses today most likely are worth between 380k and 480K. People are not going to give the guy an extra plug nickle because he overpaid. If my house fell to 200K I would sell it no problem, forget about the 80K loss and buy a mansion for 500K. My neighbor who paid 610K will be in bankruptcy court and my neighbor who paid 40K can sell at 200K for a 160K profit.
3b says:
June 17, 2009 at 9:24 am
#70 gary:So, you’re telling me that the 639K price tag at the peak is going to become 384K? Yeah, ok.
Yeah, thats what I am telling you grasshopper.
Yahoo Finance:
Beijing orders ‘Buy China’ for stimulus projects
Beijing says stimulus projects to use Chinese goods; move could strain trade ties
http://finance.yahoo.com/news/Beijing-orders-Buy-China-for-apf-15546146.html?sec=topStories&pos=8&asset=&ccode=
Protectionism?
Consumer spending is overated.
Stu says:
June 17, 2009 at 9:26 am
John,
IMO, the recession is far far from being over. Read the two articles I linked above.
When the next leg down occurs, we’ll be sure to remind you of Memorial Day 2009.
There is no way you can simply replace consumer spending with government spending and expect it to work.
If unemployment is a lagging indicator, then astronomical government debt is a leading indicator.
actually a house priced at 639K becoming 384K makes sense…given what i saw 639K bought you a couple of years ago…
i think very possible….
i know thats not what many want to hear especially those that paid 639K thinking it was going to be 850K in 5 years!!! now, this would all make sense if the generally the salaries moved liked that but its a select few that got those increases and it was mainly on the back of this housing scam….
#87 John: That jobs ar a alagging indicator is a bunch of crap. You cannot talk about a recession being over, when unemployment is still rising, and it will hit double digits at or before year end.
And is Best Buy and Fed Ex’s results a lagging indicator too?
“Consumer spending is overated.”
If this is truly how you feel John, then this country will soon make the slums in India look like a picnic.
The only sector recovering in our economy is the banking/trading sector. This sector does not benefit the other 90% or so of our population one bit. Financial alchemy simply robs from the lower and middle classes and transfers wealth to the upper classes. Keep on believing that we don’t need a consumer anymore. Then hire your private security detail for you and your family to keep from getting robbed and raped anytime you want to leave your compound.
#96 caibc:those that paid 639K thinking it was going to be 850K in 5 years!!!
No, some of themn thought it would be worth 850K in 1 or 2 years, and if they threw another 40 or 50k into it, they figured it would be worth a million.
Here ya go John.
“Commentary: The supply of stock is mushrooming — a bearish sign”
http://finance.yahoo.com/retirement/article/107201/supply-and-demand;_ylt=AsQJzb8p6iLNwfgWSxFZqem7YWsA?sec=topStories&pos=8&asset=&ccode=
“The recent surge in the supply of shares has also caught the attention of Ned Davis, the eponymous head of Ned Davis Research. He has found through his research that it is optimal not to focus on monthly totals but instead on a rolling 13-week window. On this basis, according to Davis, recent corporate issuance has been exceeded historically only by two other occasions — early 2000 and early 2008.
Those were “not great times to buy stocks,” Davis notes dryly.”
PGC (84)-
It sounds so much smarter and circumspect than just telling the world the Glazers are broke.
Guess the American LBO model is not the way to purchase a football club.
#95 John:Consumer spending is overated.
Than how can you say the recession is over? You are speaking in tongues again.
I think five years from now, when we are standing on lines with food ration stamps, I will cite Memorial Day 2009 as the end of the recession.
You don’t deleverage an economy by issuing more debt.
Stu (100)-
And most of the growth in stock supply are probably REITs.
Dilute shareholders to nothing, then pay their dividends in worthless stock. It should be illegal, but hey: what do I know?
Looking through NJMLS, I saw a 2-family listed in a nice town in Northern NJ. My husbands cousin is a realtor and he refuses to use anyone else as a realtor. So we called his cousin Siken to arrange a house seeing.
Siken doesn’t know that area well enough. We arrived 20 minutes before the appointment and decided that we’ll walk around a little bit.
The house is next to the railroad (commuter train). 100 feet! But it is very close to the train station as well 300-400 feet. The house is sandwiched between county road and railroad.
The realtor who listed the house, Tudd, was across the street chatting with another realtor who was holding an open house for a 2 bedroom single family. I asked him how much that house was. Tudd told us that the single family got an offer for 472K. I checked the house in NJMLS, it was listed for 424K.
Anyhow. Then we were standing in front of the house and even before seeing the house, Tudd told us that the owner of the house lost his job that’s why he was selling. Supposedly, the owner built the house as a 2-FAM so that his mother could live in one of them and he could live in the other. But his mother who owns a house in the next town for almost 50 years didn’t want to move in. And additionally the owner lost his job and he decided to put it on the market. The house has been on the market since early 2007. This is the 3rd or 4th time it is being listed. For the 4th time (after a price reduction of 11% since the very first time it was listed), the house has been listed for about 2 months, but Tudd told us that no one has yet seen the house because he couldn’t reach the tenants blah blah blah.
Then we go into the house. It is a new construction. Everything is new, many details have been thought of. We liked both apartments. They bring a good rental income.
My husband gets very excited and begins to discuss if he could increase the rents once we buy it. Both the listing agent Tudd and my husband’s cousin Siken notices my husband’s excitement. Without our approval cousin Siken asks the listing agent Tudd if the owner would sell the house if we offer 6% less. Tudd suggests that we start with 10% less of an offer so that we’ll have room for negotiation.
After we leave the house, Cousin Siken insists that we immediately go into his office and make an offer. By the way, he had the same attitude for every house we saw. I have never seen him saying anything negative about an house we saw so far. Because he is a relative, he knows our financial power, he knows we can afford even more than the houses we have seen so far.
We saw the house at 2 pm Sunday and we were at cousin Siken’s office at 4 pm Sunday, same day. Cousin Siken asked us if we had approval letter. I had the approval letter emailed to me by a Wells Fargo representative 4 months ago. I downloaded it from my email account. Siken changed the date to a recent date, now the approval letter was dated as if two weeks ago.
In the offer letter, we offered 10% less than the asking price. He wrote his commission as 3%-300. He told us that he will fax it immediately, because he was very sure that this house would get many offers on Monday. We left his office. Next day, Monday morning, 9 pm, he calls both me and my husband, to tell us that the owner refused the offer and he won’t accept anything less “6% less”.
We increased our offer 5K. Cousin Siken called us back in 15 minutes saying that the owner doesn’t accept it. We increased our offer gradually upto 6% less. All these things happened before noon on Monday. Finally, cousin Siken told us that the owner accepted our offer. He congragulated us and told us that we should immeadiately arrane the lawyer and inspector. And of course, he already had some people in his mind!
I suspect that cousin Siken was lying to us when he was going back and forth between us and the owner. I don’t think he negotiated for us at all. I think he was negotiating for his commission.
I can’t convince my idiot husband though. He thinks that I am overreacting.
Any suggestions?
Julia
Clot:
I read that E-Trade is about to issue a 400 million share offering.
Who in their right mind would buy E-Trade shares?
John and his like?
I suppose, but only if he thinks that the government would backstop a brokerage and bank. Maybe it’s time to pile in?
#96 CAIBC: The house listed below sold in my town for 740k in March of 06. In Oct of 06 (6 months later), it sold for 968K, or 228K more in 6 months.
Bank forclosed now offered for sale at 623K.
http://www.njmls.com/cf/details.cfm?mls_number=2925359&id=999999
3b (102)-
This is the kind of prattle you hear from those who only have hope left.
No analysis based upon fundamentals can lead one to a different conclusion. To me, the only distortion is in the gubmint/WS manipulations that keep kicking the day of reckoning down the road.
The question is not if we are screwed; it is when the final screwing will occur.
Stu (106)-
Maybe it’s good for shareholders to be diluted…and we’ve got it all backwards.
Not.
#105 Julia: Bag the house, and maybe bag the husband. Seriouslsy sounds like you have been suckered on this one.
And the physical location of the house is awful. Anything else can be fixed, but a bad location, is forever.And wedged between a county road and the railiroad tracks is as bad as it gets.
I would get out of this deal in a hurry.
Julia (105)-
Shoot your husband between the eyes.
The jury won’t convict you.
Julia:
You need to get some control over your husband. This is the kind of decision that you will be forced to live with and your regret could have dire consequences to your relationship with him. Let him know this. If he still doesn’t budge, spend $300 and get an appraisal behind his back for your piece of mind.
Either way, work out your money issues because if you don’t, it WILL ruin your marriage.
Good luck with the home.
#108 clot: Agreed And you know what I don’t care anymore. Just take care of me and my own.
Ask your husband at what point the traffic noise and/or train noise/vibration could reasonably be expected to drive one of you out of your minds.
Julia, spend a morning at the house with your husband. Bring a pillow. Tell him to picture its 5:30am and he is sleeping. Here is what you will hear every 20 minutes, including weekends.
Rescind offer.
Clot – great minds?
#63
“Never understood the fascination with Porsches. Lots of boomers drive them down to the shore with their twenty something trophy wives/girlfriends. It’s pretty funny when they try to race me. I drive slowly while they pull up behind me and they pull into the right lane and floor it. Needless to say, they get left in the dust by an old banged up Mustang with a turbo. I just want to know what goes through the female’s head when their sugar daddy gets humiliated.”
my guess is she doesn’t care how fast the car is
#101 Clot,
The best part will be when Giggs Neville and Scholes hang up their boots, they won’t be able to replace them with experienced players.
(105) continued.
Can someone tell me what is the deal with houses very close to the railroad, train station, on county road?
And also what kind of negotiation might have possibly been going on with our realtor cousin Siken and listing agent Tudd?
A man’s willingness to ignore the fact he is being used for his wallet never ceases to amaze me.
By the way, what, in the board’s opinion, is a “hot” car for a woman to drive?
When I lived in LA, I thought guys driving Boxsters said “doesn’t make enough money to buy a 911” but women in Boxsters was pretty cool.
This is all very pertinent to RE, of course.
Julia [120]
What do you mean by “what is the deal”? Is it convenient to live near a train if you commute? Sure. Is it going to provide a peaceful home? Doubt it. It’s one thing to live near a train but from what you describe, you are going to be on top of it!
Tell Siken you want him to be your co-investor in purchasing the home. Would his attitude change if it was his own money at play?
#121 – `67 Citroen DS
#120Can someone tell me what is the deal with houses very close to the railroad, train station, on county road?
In a word, undesireable. They will never maintain their value, they rise during booms, but fall further and faster during busts. The areas are marginal, and most of the surrounding homes also fall into disrepair and neglect over the years. You will never have any enjoyment, and I could go on and on.
Dont do it!!!!
#121 – By the way, what, in the board’s opinion, is a “hot” car for a woman to drive?
Also;
`76 Citroen SM
`72 Alfa GTV or a GT Junior
Julia says:
June 17, 2009 at 9:54 am
Julia: I apologize for being blunt. Your husband is not very shrewd at all. If he cannot be detail oriented, then he should not be in a position to be making major financial decisions for your family.
Julia,
It is my personal opinion that the RE agents involved in both sides of the transaction should never know how much money you have. There is a huge conflict of interest if they do since they get paid on commission, typically a percentage of the sale.
I would try and scrap the deal based on what I have heard from you because you let important information leak.
I would go with a RE agent that you trust but never let them know how much money you have or how much you can spend. I would also suggest looking like every purchase is a struggle, “We can afford this right honey?!?”, “I don’t know, it is going to be a stretch…” That type of behavior will get the RE agent on your side because if he doesn’t negotiate well then the sale might not happen at all.
If you don’t like playing those types of charades then you should go with a fixed fee + incentive type structure for your RE agent.
3b is correct Julie. You might be uniquely tolerant of the noise, but when you try to resell the home, it will be difficult to find someone who else who does.
Same argument as living under powerlines. I have no issue with it, but lord knows, good luck finding a buyer when I choose to sell it.
Plus rail right-of-ways are tricky. Who knows, maybe ten years that commuter line gets sold to a liquid natural gas distributor and you have no say about the constant stream of potential daisy cutters running through your backyard.
Try to locate yourself withing a 5 minute walk from a commuter rail station but far enough away where you don’t hear the rumble of the train. Just the whistles.
#121
“A man’s willingness to ignore the fact he is being used for his wallet never ceases to amaze me.
By the way, what, in the board’s opinion, is a “hot” car for a woman to drive?”
you’re looking at it the wrong way. a lot of men ASPIRE to be used for their money. it is an easily quantifiable/ understandable way to be judged. it also allows one to avoid being introspective.
hot cars for women: despite the board’s apparent animosity for them, I actually dig the hot mom in the huge SUV bit. Cougars in cadillacs also good. Subarus are a negative in general.
‘Subarus’ say, “I shop in Whole Foods.”
#129
Skep, agreed. Isn’t the hot young woman ignoring what she is being used for as well? I’m guessing it’s not her superior intellect.
Anybody familiar with Proscan TV’s, looking to purchase as a gift. Prices are very, very reasonable.
#130 – ‘Subarus’ say, “I shop in Whole Foods.”
As well as ‘I have a lot of flannel and ‘The Butchies’ cds’.
Hi Julia,
I’d say that there is nothing wrong with house next to the rail-road or county road.
AS LONG AS YOU GET IT FOR THE RIGHT PRICE.
If you are buying rental – look at comparable rents, get the rent-roll for the last couple of years, and do not forget 50% rule – maintenance, insurance and “landlording expenses” will be about 50% of you total rents.
So you mortgage and taxes should be no more than 50% of total collected rents.
I haven’t seen a single place in “safe neighborhood” in NJ in the last 4 years which would satisfy this rule.
Normally in NJ rents would just cover PITI + taxes… not even insurance and 2% maintenance. That’s why 99% of “newbie” landlords go bankrupt, FK or sell their rental in a few years and end up losing a lot of money.
As far as living with the tenants in the same structure – I think it takes a very special person to pull it off successfully – we have one person like this on this board…
Think what happened if your renters will trash the apartment/house… Steal your appliances, doors window frames and such. Bring in pest-infestation, don’t pay rent for 3 month +3 month to evict… if you are ready for something like this – go ahead. You might mitigate some of it by choosing tenants selectively, but in the long run you will get a tenant like this.
Try to locate yourself within a 5 minute walk from a commuter rail station but far enough away where you don’t hear the rumble of the train. Just the whistles.
Stu – I live about a mile away from the train – I still hear the rumble…
It is not very loud though.
It is very quiet in my neighborhood at night/morning…
[50] lisoosh
Nope, straight up. She could not figure out how to get the car in reverse, and had to call me to bail her out. Remarkably, the parisian drivers did not seem too p.o.’d
we have one person like this on this board…
Who that be?
I did not want to drop names…
[105] julia
Kill it in attorney review. Kill it now.
There is so much wrong with this deal, it would keep one of my litigators busy for weeks. I am thinking I ought to call the A.G. on Siken (real name???)
This blog is hilarious! Keep ’em coming.
Al…Diesels?
The new NJTransit electric engines are so silent that you can hear the crackling of the power being transferred from the catenary wire to the train. When it’s dark and misty, it’s really a gorgeous sight.
President O said yesterday that as the recession ends unemployment will continue to rise to around 10% as unemployemnt is a lagging indicator. Factories need to hum and shifts working OT before you add headcount.
Etrade is issuing stock cause citadel can’t go beyond a certain percentage of ownership and they are already largest shareholder. Citadel is also their largest bondholder and are ready to take a haircut on bondside but etrade needs cash to pay them off which is the reason for the stock sale.
makes sense to me why they are doing it. however I would not touch that stock with a ten foot pole.
3b says:
June 17, 2009 at 9:38 am
#87 John: That jobs ar a alagging indicator is a bunch of crap. You cannot talk about a recession being over, when unemployment is still rising, and it will hit double digits at or before year end.
And is Best Buy and Fed Ex’s results a lagging indicator too?
Al, you are so right about being selective about your tenants. I’d rather lose 3 months of rent finding the right tenant than risk the cost of repairing a destroyed apartment. Run their credit, check their references and interview them like they were marrying your daughter and you were paying for the wedding.
But not wild by nature, all spots outfront are reserved for hybrid cars. I generally park my BMW in those spots as being a German car it is a hybrid as it is a car that can be used as an oven if necessary.
toshiro_mifune says:
June 17, 2009 at 10:33 am
#130 – ‘Subarus’ say, “I shop in Whole Foods.”
As well as ‘I have a lot of flannel and ‘The Butchies’ cds’.
http://money.cnn.com/2009/06/15/retirement/jobs_for_retirees.fortune/index.htm?postversion=2009061709
stu here are some jobs for you
John,
Now you trust Mr. O? Thanks for the citadel explanation on Etrade. Still don’t know who would buy those shares though. Maybe bi and Frank who are mysteriously missing? Maybe has something to do with their short positions in SRS.
PGC (119)-
Giggs, Neville and Scholes are all shot. Every time they’re on the pitch, it’s like ManU are playing that many men down.
Giggs barely moved vs Barca. They ran him into the ground in less than a half.
#142 John: So the O-Man said it, therefore its true? What does he know? He says only what his advisors/handlers tell him to say. Nice guy, but an empty suit.
“In the New York metropolitan area they may drop 40.6 percent from the first quarter to the bottom, the report said, less than Deutsche Bank’s March estimate of 47.4 percent.”
So whats the deal? Is DB predicting that ny prices will fall another 40% from current prices?
The way it is written is confusing because they start out by saying “many metro areas will see another 16.5% decline from today” but then they say that NY will decline another 40%. There is obviously a huge difference between another 16% drop and another 40% drop in NY, depending on how you read it. Can someone please weigh in here.
Thanks John (145):
Fortunately for now, I’m not part of that lagging indicator you like to ignore.
Maybe so you can cover your future shorts!
Stu says:
June 17, 2009 at 10:51 am
John,
Now you trust Mr. O? Thanks for the citadel explanation on Etrade. Still don’t know who would buy those shares though. Maybe bi and Frank who are mysteriously missing? Maybe has something to do with their short positions in SRS.
#134 Al:AS LONG AS YOU GET IT FOR THE RIGHT PRICE.
In my opinion there is never a right price for those locations. The downside is huge, and if the overall area declines in the future, that area will decline more.
Case Study – the house I rent…
Was purchaced by a builder in 2007 for 300K – cash. Market turned builder have 5-5 700K houses to unload (by the way he sold one recently for 550K, new construction in 2007, original price – 750K).
So he rented house i live in. Rent – 1800$.
Assuming invertor have to get loan…
Just interest would be 18000/year. Taxes – 7500$. Insurance – 1000$ I think he has an umbrella policy as the house is owned by his construction company.
In a year he had to repair heater (2 days of work and 500$ part – I checked just for fun!), clean upsewer line under the yard, and fix stairs railing.
So lets say about 2K maintanace.
Total costs: 18000+7500+2000(skip insurance) – 27500$.
Total rent roll: 1800*12 = 21600$.
negative/year – 5900$
Before we rented this house he listed in at 2500$/month and kept dropping the rental price down for 6 month!
at the cost of 13250$. Total money “Loss” in two years – 19150$.
For him it is not a big deal as he hopes market ill turn around quickly, and he will tear the small house we rent down,
and build 2x700K houses on its place (double size lot, ok neighbourhood).
The only reason I am very familiar with the builder financial status and his buisness as he did not use a realtor and rental was a private party listing on craigslist.
So I checked on title, sales deed, tax records and his construction company sales record and ownership records. –
This site educated me on how to get most of this information for free or a very small fee.
SO in fact I did my own “Credit Score” Check on landlord and title search on landlord’s property – I did not want to move due to FK or make a lease with a person who does nto own a house…
Re end of recession:
The trick is in the numbers. if the government drops a few trillion into the market the recession will magically end, yet the economy will not have returned to normal as you do not have productive economic growth. Pumping GDP into positive territory through government spending is parasitic and Keynesian wet dream.
While the government and tout its GDP numbers from the highest mountain, the average joe, and the average business own will still see the real GDP without the parasitic Government spending.
The perverse thing is that the government is spending your future earrings now in order to paint a pretty picture, therefore reducing the amount of money you will have available at a future date (through taxes) and therefore pushing the negative GDP trend to a future date in the hopes that the delayed negative effects will be out weighed by net positive growth.
smoke and mirrors
3b says:
June 17, 2009 at 10:55 am
#134 Al:AS LONG AS YOU GET IT FOR THE RIGHT PRICE.
In my opinion there is never a right price for those locations. The downside is huge, and if the overall area declines in the future, that area will decline more.
If you are investing in rental location does not matter. What matter are historic rents, and rental market right now. If rents are supporting the price – after PITI – see my post above and you are making money every month – why do you care about location?
If you can rent it out cheap enough people will rent. In NJ it is somewhat limited due to high taxes. You can not set your rent at less than 800$.
(Assuming house has 5K taxes and you bought it for a dollar – cheap enough) I am just not adventurous enough to be a landlord in the areas for NJ where you can buy a house for 1 dollar right now.
But 800$ is cheap for a house rental and a lot of people will overlook the fact that home’s back yard have a train.
If you start losing money on rental – hey you bought it for a dollar, let town take it from you. Just don’t forget to have incorporate.
So I would agree that it might not make sense in Detroit to buy even for a dollar, as you will not be able to rent it out, but in NJ so far it is not as bad – really crappy one bedroom apartments are still listed for 1200$ when I look!!!
Here the short paper from the Council on Foreign Relations, some interesting graphs dated June 5, 2009.
The Recession in a Historical Context.
http://www.scribd.com/doc/16417774/Current-Recession-in-Historical-Context
Thanks for the case study Al… pretty informative to me as a newbie on this board. Would you mind sharing the info about the sources of your research that you mentioned you learnt on this board? Thanks.
With regards to #154 – Grim are you still in “No hyper-inflation will happen in USA” camp?? With goverment spending accelerating/debt mounting/manufacturing disappearing?
What is backing up thouse dollars? houses?
P.S. I do not call 20% /year hyperinflation. I am talking Zimbabwe style. At least 100% month.
Shore Guy says:
June 16, 2009 at 11:19 pm
“The car or middle-aged guys who think they are “all that”?”
The car. I’ve never test driven a middle-aged guy who thinks he’s all that.
Hopefully I never will.
#155 Al: Understood. I would not have a problem as a rental/investment property at the right price, but I woule never live in it.
[105] continued.
We are able to get the house for 700K. The tax is 15K. Monthly rental income 5K.
Al, Stu, 3b
I would like to know your opinion.
On the right side of Site’s main page there are tax tools. – you can check tax records, notices of sales and lot records. Check who is the deed owner on he house for rent. Lease should be signed between you and the deed owner of his official representative.
County clerk offices would have up-to date info. For small builders info and registration you need to go to http://www.njba.org/. and so on.
I also asked realtor who placed couple of offers for me to check sales history on the house, and also check GSMLS for the owner’s name/company name – to see if he has other significant assets besides the house.
Julia says:
June 17, 2009 at 11:18 am
[105] continued.
We are able to get the house for 700K. The tax is 15K. Monthly rental income 5K.
Al, Stu, 3b
I would like to know your opinion.
Is it for both units?
Or for one and you will live in the other?
Do the math.. at 6% loan 42,000 Interest + 15,000 taxes = 57K/12 – 4750/month.
so you will have 250$/month to pay for … insurance, repair, rental fee’s if you going to use realtor, I am sure I am missing quite a bit here as well.
how much is insurance for a rental? how much is umbrella liability insurance?
But what do I know – I do not own any rental because every time ai look at the prices they just do not make sense to me.
and most importantly how long can you carry on paying this 4750$ if you get no rent – ???
anyways,
Disclaimer:
I have no idea what I am talking about.
I only operate with high school math.
If RE investment needs more complicated models than compound interest and percentages to calculate why it is going to make money – I think it is not going to make money.
I have never invested in RE in my life. (except in stocks).
Enough real estate advice from somebody who has never invested in RE due to being too chicken…
I am off for the day.
To [163]
Al
The rental income of 5K is from two apartments. We are not planning to live there in the near future.
Julia
I saw a fat middle aged dude on the beach last weekend wearing those tight euro bathing shorts. he had a smoking hot mid-20s trophy girlfriend with him.. made me wonder whether she had played a joke on him by convincing him to get dressed like that. might just have been french though.
Julia,
Seems not to be a good deal to me at all. Especially with that location. I too am no expert though.
To those with experience, what’s a good rule of thumb for maintenance expenses on new construction? Would 1.5% of purchase price per year be about right?
So Deutsche Bank says, “Financial firms have cut more than 183,000 jobs in the Americas in the global credit crisis, driving down prices and rents in the New York area.”
And Wall Street Journal says, “The Labor Department says financial-services firms shed 30,000 jobs in May and have lost nearly 600,000 jobs since December 2006.”
That’s the problem with statistics in the news and why I never really believe them. WSJ at least cites the DOL. Where does DB get their 183,000? There’s a huge gap there.
New thread, up!