“Where? Where?”

Don’t miss the meet-up tomorrow!

When: Friday June 26th, 7:30ish
Where: Fitzgerald’s 1928 http://www.fitzgeralds1928.com
13 Herman Street (off Bloomfield Ave)
Glen Ridge, NJ 07028
Google Maps Link

For drivers, this is right off exit 148 on the Parkway.
For those looking for mass transit, Fitzgeralds is 2 blocks away from the Glen Ridge Station on the Montclair Boonton Line.

—————————-

From the Huffington Post:

Roiling On The Rivers Of Real Estate

To every analyst, forecaster, and economist predicting they see the bottom of the real estate market, I respond as Vinnie Barbarino might: “Where? Where?” I know the bottom is there–we all do– but much like in a polluted riverbed, it is hard to spot and treacherous to reach.

More than three years ago, I saw the banks of the NY metro housing market erode from my vantage point as an attorney wading in its waters. I saw serial refinancers, living on their equity, and watched repayment-challenged buyers receive mortgages as easily as frogs catch flies. Appraisers inflated values in far from desirable areas, encouraging investors to leave multiple homes vacant while they slapped on a coat of paint and re-faced the kitchen cabinets before cashing out from the next no money down speculators.

Then the more-more-more river turned stagnant; occasionally, like a skipping stone, a transaction did skitter along, only to sink with an inglorious “thud.” In early spring, multiple pebbles started being flung furiously at the water, causing expert analysts to calibrate and celebrate the quantity of rocks, while ignoring the clunks that frequently still follow. The bottom must be close, they espouse: look at the volume of activity in the real estate market!

I’m still deep in the real estate waters, loudly hearing the sounds of sinking stones while those in the lifeguard towers think they hear surging surf. As the summer of 2009 begins, the latest wave of “can you help me?” calls I answer are no longer primarily from “sub-prime” borrowers. I’ve either helped them, or been unable to, and they’ve moved on. Nowadays the borrowers in a boatload of trouble and months behind in their mortgages formerly had better-than-decent credit, good jobs, and 20% or more money to put down (or a great deal of equity in their homes).

Some buyers, sensing blood in the waters, want houses upgraded and improved before they close. Sellers without the funds to accommodate these demands are deemed “unrealistic” as the buyers move on. Yesterday’s market was significantly overpriced, but today’s has very little negotiation, with a significant number of buyers regressing to their toddler years to get what they want. There’s something about a population of homeowners who came into title via temper tantrums that cannot bode well for smooth sailing back to a stable real estate market.

I also come across sellers who remind me of cartoon character grandfathers, preferring to live in “the good old days” when their homes were worth 15-20-25% more. Those days are gone, grandpa–it’s time to sell the ranch for whatever you can realistically get if you want to move on.

There’s definitely a bottom to the real estate market. But to finish with my water metaphors, the bottom is not clearly visible through yesterday’s floating wreckage and today’s murky transactions. We need to save the drowners, repel the sharks, and raise the level of the bottom feeders. Only then will we be able to plot a safe course home.

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

225 Responses to “Where? Where?”

  1. grim says:

    From the Philly Inquirer:

    N.J. lawmakers to vote on stimulus bill

    While many New Jerseyans are bracing for the pinch of a tight state budget, lawmakers are expected to approve an economic-stimulus bill that would give developers significant tax breaks.

    The measure, along with a budget bill, is scheduled for a floor vote in both houses of the Legislature today.

    Sen. Raymond Lesniak (D., Union), the Senate sponsor of the stimulus bill, said it “will spur billions of dollars of private development and create tens of thousands of construction jobs.”

    “With it, New Jersey can lead the country in job growth and construction,” he said during a budget committee hearing Monday.

    Supporters include labor unions, the business community, and officials from Jersey City, Newark, and other municipalities.

    But critics take issue with several of the bill’s diverse provisions.

    Many also argue the legislation has been rushed through without an adequate analysis of its potential effects. Parts have been debated in the Legislature as separate bills for months, but the combination bill was not available to the public until this month.

    “We know this legislation will cost billions, but exactly how much is unclear because there has been no analysis,” said Jeff Tittel, director of the New Jersey Sierra Club.

    Naomi Bressler, a policy analyst with the left-leaning New Jersey Policy Perspective, said the bill would divert money from public programs and services when falling tax revenue has already forced deep cuts in services.

    “Is subsidizing the construction of a new mall more important than providing after-school programs to poor children?” Bressler asked during the committee hearing. “Is it more important than providing more access to affordable higher education to all high school graduates or Medicaid payments to nursing home residents?”

  2. grim says:

    From the Economic Times:

    UBS mulls outsourcing 5,000 jobs in two years

    Switzerland-based banking and wealth management firm UBS is considering outsourcing about 5,000 jobs over the next two years, a majority of which may come to India, according to people familiar with bank’s plans. This signifies an opportunity to win new business for Indian IT vendors such as Wipro and Infosys Technologies
    that already work with the Swiss bank.

    UBS recently appointed consulting firm McKinsey to advise it on the outsourcing process. The decision to outsource thousands of jobs is in line with the ailing bank’s cost-cutting strategy. UBS chief exec Oswald Grübel has already announced 7,500 job cuts across the firm till 2010. Switzerland’s largest bank by assets has accumulated more than $53 billion in writedowns in the global financial crisis and had to receive financial aid from the Swiss government.

  3. grim says:

    From the WSJ:

    The Secret ‘Friends of Angelo’

    Angelo Mozilo, the former Countrywide Financial CEO charged with fraud and insider trading by the Securities and Exchange Commission, had a lot of “friends.” The Democratic leadership in Congress just doesn’t want you to know their names — or the details of their loans from Countrywide.

    What we know is that Senators Chris Dodd and Kent Conrad were among the VIPs who received sweetheart mortgages under the “Friends of Angelo” program. What we don’t know is how many other government officials also received such favors, or what exactly Countrywide expected in return. A March report by Congressman Darrell Issa (R., Calif.) highlighted internal Countrywide emails in which executives debated whether the mayor of Billings, Montana, was influential enough to warrant a waiving of his mortgage insurance premium. The company ultimately decided that he was. We can only imagine what Countrywide’s internal emails might say about the benefits of “friendship” with Mr. Dodd, who chairs the Banking Committee of the U.S. Senate, or about others who benefited from the program.

    Mr. Issa doesn’t want to imagine; he wants to discover the facts. He’s asked Rep. Edolphus Towns (D., N.Y.), Chairman of the House Committee on Oversight and Government Reform, to subpoena records of the “Friends of Angelo” loan program from Bank of America, which bought the failed subprime lender last year. So far, Mr. Towns is noncommittal, and perhaps he is hoping that the issue will fade into the background during the long August recess.

  4. DL says:

    Hopefully they weill get their money back.

    “Failure to place a deposit in escrow violates state law, but no builder has been prosecuted for a violation since it took effect in 1997.”

    http://www.philly.com/inquirer/business/homepage/20090625_Buyers_hold_key_in_home_builder_s_bankruptcy.html

  5. Clotpoll says:

    Darrell Issa on Squawk, calling Becky a shill for WS.

  6. Clotpoll says:

    Issa is going to get to the bottom of Bergabe & Klink’s extortion of Lewis.

  7. Clotpoll says:

    DL (4)-

    Everybody knows escrow money is for the builder’s gumade/vacation home/cars/vacations.

    Dopes.

  8. Yves at NakedCapitalism has a post up about credit card trusts and the various problems with them.

  9. homeboken says:

    From the article:
    “Some buyers, sensing blood in the waters, want houses upgraded and improved before they close. Sellers without the funds to accommodate these demands are deemed “unrealistic” as the buyers move on. Yesterday’s market was significantly overpriced, but today’s has very little negotiation, with a significant number of buyers regressing to their toddler years to get what they want.”

    What does this paragraph mean? As a buyer, I should play nice and conceede some negotiating power to sellers because it is childish if I don’t?

    I think I need to go further away from toddler and end up in the terrible twos. MINE MINE MINE.

  10. DL says:

    Read the piece on GS at Rolling Stone. You have to squint but the full text is available on Zero Hedge.

  11. #10 – The Barnes & Noble here in Stanford didn’t have the new issue (yet another reason why I hate CT). I’ll have to pick it up over the weekend.

  12. Dissident HEHEHE says:
  13. Shelley says:

    Even celebrities are discounting their homes. Click the website link above

  14. cooper says:

    “A Miami-Dade Circuit Court judge discovered more than 15,000 foreclosure cases filed this year haven’t been served.”
    “Civil Division Administrative Judge Jennifer D. Bailey made the discovery last month as she was taking stock of the circuit’s foreclosure load. She noticed 15,219 cases with no letters of correspondence, no answers and no motions to dismiss. ”

    http://www.dailybusinessreview.com/Web_Blog_Stories/2009/June/Unservd_foreclosre.html?ref=patrick.net

  15. grim says:

    From Reuters:

    Lennar Q2 loss wider than estimates

    U.S. homebuilder Lennar Corp (LEN.N) posted a wider-than-expected quarterly loss, weighed by falling home deliveries and average home prices, even as the housing market experienced an uptick in new home sales.

    “While we are sensing pent-up demand in the market, rising unemployment, increased foreclosures and tighter credit standards continue to present challenges for the industry…,” Chief Executive Stuart Miller said in a statement.

    This combined with a recent spike in mortgage rates has made it difficult to predict when the market will ultimately turn the corner, he added.

    Second-quarter loss was $125.2 million, or 76 cents a share, compared with a loss of $120.9 million, or 76 cents a share a year ago. Revenue fell 21 percent to $891.9 million.

  16. grim says:

    #14 – Oops.

  17. grim says:

    #15 – I hear the pent-up demand for Ferarris is through the roof. Everyone wants one.

    It’s just that everyone is having a bit of a hard time coming up with the money to buy one.

    But don’t despair! The demand is there!

    As soon as this market turns, we’ll all be driving 599s.

  18. Shelley says:

    The collector car market is in the tank as well.

    Old Cars that sold for $50-60K in 2007 are now selling for $25-30K.

  19. Dissident HEHEHE says:

    I love “pent-up demand”. Sounds so sexually frustrating.

  20. As soon as this market turns, we’ll all be driving 599s.

    I’d settle 246 Dino.
    Am I alone in thinking that it has been a long time since Ferrari has made truly pretty cars? They’re certainly capable but nowhere near as sexy as they used to be.

  21. GerryAdams says:

    How’s that house in PA looking this morning?

    UPDATE: Crash, threat of explosion closes I-78 in Clinton

    “State Police say a box truck slammed into the back of a tanker carrying about 4,000 pounds of compressed liquid oxygen in Hunterdon County Wednesday night.”

    http://www.mycentraljersey.com/article/20090625/NEWS/90625005/UPDATE++Crash++threat+of+explosion+closes+I-78+in+Clinton

  22. cooper says:

    Here’s another one re. mortgages

    “A growing number of American homeowners are falling into financial limbo: They’re badly behind on payments, but their banks have not yet foreclosed.

    The backlog of seriously delinquent mortgages, which so far affects about 1 million borrowers, is a shadow over hopes for a rebound in the nation’s housing markets. It masks the full extent of the foreclosure crisis and threatens to depress prices even further just as some parts of the country are hinting at recovery. For lenders, it could portend even more financial losses tied to the mortgage meltdown. ”

    http://www.washingtonpost.com/wp-dyn/content/article/2009/06/23/AR2009062303500_pf.html?ref=patrick.net

  23. grim says:

    I asked the question years ago, how exactly does one measure pent-up demand accurately?

    The first hurdle is going to be how you separate your respondents into two groups; those who have the means to purchase and those who don’t. Responses from the latter category should be promptly discarded. This does not happen today.

    The second hurdle is how to ensure that the respondent is likely to follow through on their response. Same problem applies to any kind of consumer confidence survey. What people say and what they do are two very different things.

    The third hurdle is how to determine whether or not the home that the respondent would consider purchasing is available. What I mean is, if what you would consider buying is a 4br Colonial for $200k, you represent demand, but at a price point that simply isn’t available.

    This whole “pent-up demand” thing is a myth. Those who have the means to buy, the intent to buy, and wanting to buy a product readily available are already under contract. They aren’t sidelined, *they are* the activity in the current marketplace, they are the current contracts.

    There isn’t any magic here, just plain ol’ supply and demand. Demand for most goods is higher at lower price points. Lower the price and more people buy, simple. But using this concept to justify existing prices just doesn’t make sense. The increased demand at a lower price point does not create a floor under the current price point, it creates a floor under the *lower* price point.

  24. frank says:

    #1,
    “create tens of thousands of construction jobs.”
    Great news for the Mexican population of NJ. What about the college educated??

  25. frank says:

    When a major bank increases their salaries by 50+%, you call this a recession?? I call it a boom for NYC. Buy a house now before those new salaries start buying homes.

  26. grim says:

    From MarketWatch:

    Bankrate says 30-yr. mortgage rate rises

    The average 30-year fixed mortgage rate was slightly higher this week, rising to 5.80%, according to Bankrate.com’s weekly national survey Thursday. The average 30-year fixed mortgage has an average of 0.45 discount and origination points. The average 15-year fixed rate mortgage inched lower to 5.16%, while the average jumbo 30-year fixed rate pushed above the 7% mark to 7.03%. Adjustable rate mortgages were generally lower, with the average 3-year ARM falling to 5.32% and the 5-year ARM dropping to 5.26%.

  27. x-underwriter says:

    frank says:
    When a major bank increases their salaries by 50+%, you call this a recession??

    Banks can no longer pay out large bonuses due to their involvement in TARP. Until now, wall street pay has been 25% salary and 75% bonus. If they don’t bump up the salaries, the people they want to retain are going to get a 75% pay reduction.
    Dim Wit

  28. grim says:

    Frank,

    So?

    How does that effect net compensation?

    Are you familiar with the compensation structures of bankers and traders? These folks are getting 3/4 to 2/3 of their total compensation as bonus, only 1/4 to 1/3rd is salary.

    So really,what does a 50% increase in the base salary really mean after bonuses were slashed?

    Not to mention the fact that I seriously doubt the back office is going to see this kind of modification. They’ll be lucky their jobs aren’t going to Wipro or Infosys.

    C’mon now Frank.

  29. grim says:

    #28 – Beat me to it

  30. Stu says:

    “When a major bank increases their salaries by 50+%, you call this a recession?”

    http://tinyurl.com/RareFrankPhoto

  31. Clotpoll says:

    Fugly unemployment number just now.

  32. grim says:

    From MarketWatch:

    U.S. weekly jobless claims up 15,000 to 627,000

    Jobless claims highest since mid-May

    First-time claims for state unemployment benefits rose unexpectedly in the latest week, the Labor Department reported Thursday. The number of initial claims in the week ending June 20 rose 15,000 to 627,000. It’s the highest level since mid-May. The consensus forecast of Wall Street economists was for claims to fall slightly. Claims in the previous week were revised to an increase of 7,000 to 612,000 compared with the initial estimate of a increase of 3,000 to 608,000. A Labor Department official said that some states reported more end-of-school-year claims. Many states allow bus drivers and cafeteria workers to file for unemployment during school breaks. Meanwhile, the number of Americans receiving state jobless benefits held steady rose 29,000 to 6.74 million in the week ending June 13. The four-week moving average of continuing claims fell 3,250 to 6.76 million.

  33. Clotpoll says:

    Squawk thinks Allen Stanford frog march is news.

  34. Stu says:

    Real GDP was -5.5%. Green shoots!

    New Unemployment Claims up from 608K to 627K. Green shoots!

    “I call it a boom for NYC.”

  35. Clotpoll says:

    grim (33)-

    Oh, of course…those bus drivers and cafeteria workers skewed the number. Silly me…

  36. grim says:

    #35 – Just as bad, the prior week was revised up to 612k from 608k.

    Given the rate of job loss, we’re looking at another 300-500k jobs lost this month.

  37. Dissident HEHEHE says:

    Clot,

    They’ll soon become lifeguards and ice cream truck drivers under the birth/death model

  38. Shore Guy says:

    Grim,

    Your post in 24 is ideal for an OpEd in the Times. You have been used by them as a source and should have no problem getting a 300-600 word piece into print.

    A broader readership needs to hear what you said.

  39. The Q1 import/export numbers are out as well.
    Q1 Exports -30%
    Q1 Imports -36%
    Q1 Home Investment -38%
    Q1 Business investment in structures -42%
    Q1 Bus. investment in software/equipment -33%

  40. Shore Guy says:

    Stu,

    Those green shoots are just shredded dollar bills.

  41. 3b says:

    #15 grim: “While we are sensing pent-up demand in the market, rising unemployment, increased foreclosures and tighter credit standards continue to present challenges for the industry…,”

    Can someone explain how the above makes any sense. How can they be sensing pent up demand, ah never mind.

  42. grim says:

    Oh, and before anyone points to the drop in (or stabilization of) the 4wk continuing claims number as green shoots, I’ll ask the question.

    How many of those who dropped off the total did so because their unemployment insurance ran out? If someone is no longer eligible to receive unemployment benefits, they are no longer counted in the continuing claims.

    Continuing claims have been elevated long enough for this to be a significant concern.

  43. Shore Guy says:

    HEHE,.
    Don’t dis the lifeguards, dude. Bernie Madoff started out that way. :)

  44. 3b says:

    #26 frank How aboutthis

    Old base salary 100k, plus 200k bonuss, total 300K.

    New salary 150K, 100k bonus, total 250k.

    Is that a recession?

  45. Dissident HEHEHE says:

    Shore,

    Did Bernie bring that up at sentencing? That may be good for a couple months reduction.

  46. Shore Guy says:

    “How many of those who dropped off the total did so because their unemployment insurance ran out?”

    Grim,

    You have obviously not yet fallen under the spell of Hopeium; c’mon B.O. will lead the jobless to comfort and greater productivity. Also, when B.O. makes all the illegals legal and they come out of the woodwork and join the labor poolthings will get even better for everyone.

  47. x-underwriter says:

    grim says:
    #28 – Beat me to it

    It’s easy to whack the slow pitches out of the park

  48. gary says:

    I also come across sellers who remind me of cartoon character grandfathers, preferring to live in “the good old days” when their homes were worth 15-20-25% more. Those days are gone, grandpa–it’s time to sell the ranch for whatever you can realistically get if you want to move on.

    Dear Sellers, do you get the f*cking picture yet? Take the slice of dominos out of your fat, f*cking face, pick up a paint brush, rip the rugs up that have piss* stains on them from 1975 and get rid of the bags and boxes of shit* that nobody wants.

  49. grim says:

    Worth reposting a link from Barry:

    Continuing Claims “Exhaustion Rate”

    ast week, we saw Continuing Claims decrease — proof, said the green shooters, of the imminent economic recovery.

    Only, not so much:

    Those of you (who can still afford the luxury of) a trusty Bloomberg will note the ‘exhaustion rate’ for jobless benefits – EXHTRATE – reveals that people are not leaving the pool of continuing unemployment claims because they are getting new jobs; Rather, they are leaving because they have exhausted their benefits.

    They are now unemployed AND broke. That is hardly a green shoot . . .

  50. stan says:

    In other news, the hoboken real estate news site, which in my opinion was unbelievably valuable(it posted weekly sales figures, under contracts, price reductions etc) has been force by mls to stop postin the info.

    The realtor on that sight, IMO was pretty good, she at the very least provided a lot of data for hoboken, which is a rarity.

    Apparantly other agents were complaining because buyers were backing out after seeing how much prices had fallen.

    Bye bye transparancy

  51. Shore Guy says:

    Stu,

    Do you and Gator have any Hopeium? I know Gary doesn’t, and I sure don’t.

  52. A.West says:

    I’m an example of someone with pent-up demand (not “pant up demand” btw). But I suspect there’s even more “pent up supply”. This website has helped me keep my demand “pent up” until prices become more reasonable for the sort of property I want.

    I have roughly 250k equity in my existing 4/3 home in a reasonably appealing mid-level suburb (Scotch Plains, named by Businessweek as NJ’s “Best affordable Suburb”)

    Have over $200k cash & liquid assets in the bank.

    Have decent income, as does wife, and no personal debt besides existing mortgage.

    Wife constantly nags about moving to Warren or Basking Ridge, where a house upgrade 5/3.5 or 4/3.5 with decent yard is still going for over $900k.

    We could do it, in theory, but I argue:

    Why pay at least $100k more today than we could pay in a year or two, as prices continue to inevitably grind down?

    On a $600k mortgage, with $18,000/yr in prop taxes, if one of us loses our job, the other person’s salary is entirely consumed by housing and necessities. I want to live in a house, not live for my house.

    It’s quite likely that national, state, and property tax rates will increase for us in coming years, most likely targeted at the higher income levels and at larger properties. Even the mortgage interest exclusion is coming under scrutiny.

    In summary, I have some pent up demand for a house upgrade. That’s because, against the trend, my family saved rather than overconsumed over the past 9 years. But I think there are more people who did the opposite, and need to get out of their houses over then next 10 years, who are creating even more pent-up supply out there.

  53. Shore Guy says:

    Stan,

    Like that will help. It is one thing to see the data and to decide to buy nothwithstanding the price drops. To look into darkness and to not have any sense as to what is happening, in an environment where all the talk is about declines, is likely to cause more people to hold off: I suspect.

  54. grim says:

    Shore,

    Montclair is a veritable hopium den.

  55. Sean says:

    re: #50 – Grim

    BLS maintains lots of stats on Unemployment, however the U-6 data paints the whole picture.

    % Unemployed

    2008

    Jan 9.0
    Feb 9.0
    Mar 9.1
    April 9.2
    May 9.8
    June 10.1
    July 10.4
    Aug 10.9
    Sept 11.2
    Oct 12.0
    Nov 12.6
    Dec 13.5

    2009

    Jab 13.9
    Feb 14.8
    Mar 15.6
    April 15.8
    May 16.4

    June??

    Here is the official Green Shoot Chart!

    http://data.bls.gov/PDQ/graphics/LNS13327709_121095_1245934935288.gif

  56. Alap says:

    The economy tumbled at a 5.5 percent pace in the first quarter, but appears to be doing better now. The Commerce Department said Thursday the revised reading on gross domestic product shows the economy from January through March didn’t fall as deeply as the 5.7 percent annualized decline reported a month ago.

    WOO! It “appears” to be doing better. ONLY 5.5% rate. Not bad at all. GREEN SHOOTS FOR EVERYONE!

  57. John says:

    That is around a $1,000 a week pay cut. I tell you most people would not be happy with that.

    3b says:
    June 25, 2009 at 8:46 am
    #26 frank How aboutthis

    Old base salary 100k, plus 200k bonuss, total 300K.

    New salary 150K, 100k bonus, total 250k.

    Is that a recession?

  58. grim says:

    According to the US Department of Labor, 23,347 NJ residents that were previously receiving unemployment, received their final payment in May

    The exhaustion rate in NJ is running roughly double what it was the same time last year.

  59. Alap says:

    I think there is plenty more “pent up” demand to sell then to buy. Why else would the banks have such a huge shadow inventory of homes.

  60. John says:

    Realistically, you don’t know if you have any equity in your current home until you sell it. When you are trading up you should consider the value of your current home equity zero. Also after you trade up you need around 100K in bank as a cushion for problems. Hence you have 100K for your trade up home. Now no-one should take a mortgage over 300K as it is a recipie for a disaster in the event of a lay-off or illness. Decent trade up homes in good parts of NJ still go for at least 950K, with a 300k mortgage and your 100K you are now a mere 550K away from safely buying that house. Now go tell you wife to go get that 550K.

    A.West says:
    June 25, 2009 at 9:04 am
    I’m an example of someone with pent-up demand (not “pant up demand” btw). But I suspect there’s even more “pent up supply”. This website has helped me keep my demand “pent up” until prices become more reasonable for the sort of property I want.

    I have roughly 250k equity in my existing 4/3 home in a reasonably appealing mid-level suburb (Scotch Plains, named by Businessweek as NJ’s “Best affordable Suburb”)

    Have over $200k cash & liquid assets in the bank.

  61. Shore Guy says:

    A.West,

    Welcome to the outlands, where the prudent gather.

  62. John says:

    That is a very very cycial market. I know a mechnic with a big warehouse who is buying classic benz converts with blown engines, trannys etc. from ex-rich people for a song, he just throws them in the back of his garage and when market turns around he restores them one by one. This is a 60 year old guy, did it in 1982, 1993 and 2002. But then again he has money, space and mechanics on payroll. The laid off banker with a 1960 SL with a blown engine has none of the above and a desperate need for cash. That is capitalism.

    Shelley says:
    June 25, 2009 at 8:04 am
    The collector car market is in the tank as well.

    Old Cars that sold for $50-60K in 2007 are now selling for $25-30K.

  63. gary says:

    John [58],

    The alternative is there out of a job. Let’s see how happy they are with that. Ya see, when you get down-sized, one doesn’t have a choice so, you circle the wagons, buy cup-a-soups instead of steak, use the yard as your summer get-away and put the credit cards in the top draw.

  64. gary says:

    there = they’re

  65. John says:

    I am a cockaroach. Not worried. Only say that as I know whole chain. Plus I have banking, brokerage, insurance, commerical experience. I can do nearly every job. My brother-in-law who is out of work as a commodities guy did not even know what an OFAC check was or what GL his firm used, heck he did not know who his accounting firm was or even who his main regulator was, did not even know what risk management system they used. He just spent 20 years punching in trades. He can do one job, keypunching and he needs at least 200K as a keypuncher not to go bankrupt. It is scary that I see that a lot.

    gary says:
    June 25, 2009 at 9:21 am
    John [58],

    The alternative is there out of a job. Let’s see how happy they are with that. Ya see, when you get down-sized, one doesn’t have a choice so, you circle the wagons, buy cup-a-soups instead of steak, use the yard as your summer get-away and put the credit cards in the top draw.

  66. safeashouses says:

    #17 grim

    #

    #
    grim says:
    June 25, 2009 at 7:58 am

    #15 – I hear the pent-up demand for Ferarris is through the roof. Everyone wants one.

    It’s just that everyone is having a bit of a hard time coming up with the money to buy one.

    But don’t despair! The demand is there!

    As soon as this market turns, we’ll all be driving 599s.

    I want an Enzo. 599s are so passe.

  67. Sean says:

    John need an extra 10k in cash for your 7 Series?

    From craigslist via DealBreaker. Safe for work.

    http://newyork.craigslist.org/mnh/acc/1236833132.html

  68. Stu says:

    Montclair is indeed the den of Hopium. I actually have Poppy plants in flower beds.

    Shore (52):

    “Do you and Gator have any Hopeium? I know Gary doesn’t, and I sure don’t.”

    Would someone strung out on Hopium be as short the market as I am?

  69. safeashouses says:

    A. West,

    I used to live in Basking Ridge and found it quite dull. Pretty to look at but not much going on. The library is great though. Also lots of pretentious people and keeping up with the joneses attitude. There were also teen boys who thought they were a cross between the sopranos and 50 cent. I found them pretty funny to watch strutting around acting tough at the stores in The Hills until mommy showed up in the minivan to pick them up.

    Also went to China Chalet over the weekend. Still has great, authentic food.

  70. Stu says:

    Kimberly Clark cutting 1600 jobs globally.

    Green tissues?

  71. John says:

    I always thought that would be a great adult movie star name.

    Stu says:
    June 25, 2009 at 9:39 am
    Kimberly Clark cutting 1600 jobs globally.

    Green tissues?

  72. kettle1 says:

    Clot, 3B Shore

    From the data i have looked at it seems that U3/U6 leads the total Non Farm employment numbers. watch those and you will see the turn around in unemployment before you see it in the TNF numbers

  73. x-underwriter says:

    safeashouses says:
    I used to live in Basking Ridge

    I think you described most of NJ here. Aside from NY and good restaurants, there’s not really much going on here. I wouldn’t reccomend this place to single people.

  74. Clotpoll says:

    safe (71)-

    All these right-wing, family values pols are a bunch of sick, twisted freaks. Their public proclamations- as contrasted with their private actions- really reek of sociopathy.

    This guy has the emotional stability of a 17 year old. I think he’d have run off even if he were the VP.

  75. Clotpoll says:

    x (74)-

    Hard to recommend for dead people, much less single ones.

  76. Hubba says:

    #6 Clot

    Expect Issa to wind up in Argentina or the bottom of a river.

  77. Clotpoll says:

    hubba (77)-

    Chained to Elizabeth Warren.

  78. A.West says:

    John: I agree with your conservatism on assumed selling price of house, but unlike many, my mortgage really has been shrinking over the years, and I have to assume I’ll be able to sell my house for something! I think I can handle more than a 300k mortgage, but I don’t want a 600k mortgage (35-40k/yr payment + 20k for taxes). Paying $50 -60K/yr in total mortgage& taxes seems just insane. Maybe that’s why recent buyers temporarily turned it into $40k/yr via teaser rates.

    Safeashouses:
    Yes, China Chalet in Florham Park continues to be really good. They have better Sichuan food there than the most popular Chinese Sichuan food chain restaurant “South Beauty” in Shanghai.
    I spent a few days in Chengdu and Chongqing recently, and some of the food was really good – mellow heat combined with lots of numbing from the sichuan peppercorn.

    I have gotten some exposure to the Warren/Ridge crowd via daughter’s dance classes. The moms spend big on BMW SUVs, big mortgages, and then bitch about minor expenses the dance studio charges.
    Half of them won’t talk to my wife, for some reason.

  79. Joey says:

    “All these right-wing, family values pols are a bunch of sick, twisted freaks. Their public proclamations- as contrasted with their private actions- really reek of sociopathy.”

    Clotpoll,
    What of our former governor, Jim McGreevey? You don’t mind if our politicians engage in licentious behavior, just that they don’t speak out against said behavior?

    Just wondering, I’m not trying to start a left-right argument.

  80. Nurburgringer says:

    Tosh – sure Dinos are drop dead gorgeous but you’ll pay about 3 times the price of a 308 for those curves.
    V6 istead of V8, few hundred pounds lighter, and some other unimportant mechanical changes aside they are identical under the skin (same exact chassis right down to the wheelbase).
    If you want to get into a Ferrari and don’t have a problem being slower to 60mph than any new V6 minivan, 308s can’t be beat (and don’t look all that bad, unless you park next to a Dino :)

  81. Alap says:

    The market is up why?

  82. Silera says:

    A. West-
    Your wife is probably more attractive or younger than them.

  83. John says:

    Sure you can sell for something, but that something may be not what you can stomach. Last crash I bought my place at end of 1992 at 75% off the 1988 price. People did firesales or rented it out and waited for market to recover, those who could do neither waited it out. It was pretty ugly for the 1988-1990 buyers trying to sell in 1991 and 1992.

    A.West says:
    June 25, 2009 at 10:34 am
    John: I agree with your conservatism on assumed selling price of house, but unlike many, my mortgage really has been shrinking over the years, and I have to assume I’ll be able to sell my house for something! I think I can handle more than a 300k mortgage, but I don’t want a 600k mortgage (35-40k/yr payment + 20k for taxes). Paying $50 -60K/yr in total mortgage& taxes seems just insane. Maybe that’s why recent buyers temporarily turned it into $40k/yr via teaser rates.

  84. jcer says:

    ALAP, one word PPT

  85. jcer says:

    Ever notice the market is going down on good news, up on bad. I see fingerprints and hand marks all over it.

  86. x-underwriter says:

    Nurburgringer says:
    308s can’t be beat

    Yes but you have to wear a phony magnum P.I. burly mustache when you drive it

  87. stan says:

    Shore -agreed as far as hoboken, futile attempt at slowing the bleeing. Won’t help

  88. gary says:

    Bernanke getting grilled…

  89. A.West says:

    John,
    Do you think 4 years from peak will be the magic time again this time?

    Sileria,
    Definitely true. Besides being prettier, and at least looking younger than them, my wife is Chinese and assertive, which further disorients them.

  90. RayC says:

    Grim,

    Back on April 30 you listed a Brigadoon Mega Comp Killer, 20 Woodbrook Circle.

    Purchased: January 1st, 2007
    Purchase Price: $1,450,000

    You listed all reductions down to its last list price of $1,075,000 on April 2nd, and you correctly predicted it would sell for even less.

    It just closed at $1,040,000.

  91. stan says:

    And lastly- its. Pant up, get with the proram……

  92. gary says:

    And how does Allan Stanford look in an orange jump suit and shackles!?

  93. Nurburgringer says:

    x- prefer a Tigers cap :)

  94. #81 – If you want to get into a Ferrari and don’t have a problem being slower to 60mph than any new V6 minivan, 308s can’t be beat

    I won’t argue with that. Even with the hint of chest hair and Tom Seleck 308s are pretty cool. You could also go for a Jalpa if you want Italian & brash.
    Regarding the V6 minivan – I wonder how many people know that that is in no way an exaggeration.

  95. Silera says:

    A. West – I’m amazed half of them talk to her.

    My Snotty North Jersey Housewife Estimator calculates that at most 15% of other moms would speak to her, 5% of whom would be looking for her to vote them onto the PTA.

    She must be amazingly sweet =).

  96. John says:

    That chinese wife stuff is hot, you could easily get a threesome going.

    A.West says:
    June 25, 2009 at 11:00 am
    John,
    Do you think 4 years from peak will be the magic time again this time?

    Sileria,
    Definitely true. Besides being prettier, and at least looking younger than them, my wife is Chinese and assertive, which further disorients them.

  97. skep-tic says:

    Interesting Real Time Economics blog post today in the WSJ:

    “from 2002 to 2006, homeowners borrowed $0.25 to $0.30 for every $1 increase in their home equity. Our microeconomic estimates suggest a large macroeconomic impact: withdrawals of home equity by households accounted for 2.3% of GDP each year from 2002 to 2006.”

  98. Nicholas says:

    John need an extra 10k in cash for your 7 Series?

    From craigslist via DealBreaker. Safe for work.

    http://newyork.craigslist.org/mnh/acc/1236833132.html

    UM, THIS CRAIGS LIST POST IS IN ALL CAPITALS. THIS GUY IS NEVER GOING TO GET A JOB. LEARN SOME SKILLS MAN.

  99. x-underwriter says:

    Nurburgringer says:
    x- prefer a Tigers cap :)

    I actually do like the 308’s….one of the more prolific cars in the company’s history. They are quite rare on the road nowadays though. Back in the 80’s, my absolute dream car was the 288 GTO.

  100. RayC says:

    …so count me in as part of pant up demand if prices come down 30% from January 2007 as this Westfield new construction just did.

    Although many still haven’t gotten the memo in Westfield – here are two 2009 sales and one recent listing with their assessed values.

    40 Carol Rd ($186,200) sold for $500k
    18 Carol Rd ($206,500) sold for $530k
    6 Carol Rd ($193,700) is for sale – $769K

    There is nothing about the condition of the for sale that says – worth $240k more than these other houses. It scares me that someone may buy it at an incredible discount off the asking price of, oh, say $689.

  101. HEHEHE says:

    Man had CNBC on for a moment. That Krudlow is a piece of work. Apparently Ben Bernanke can do whatever he wants, after all they are the FED, the FED controls everything, they are our rulers. Mr friggin’ free markets. Gimme a break.

  102. chicagofinance says:

    safeashouses says:
    June 25, 2009 at 9:39 am
    There were also teen boys who thought they were a cross between the sopranos and 50 cent. I found them pretty funny to watch strutting around acting tough at the stores in The Hills until mommy showed up in the minivan to pick them up.

    safe: You would have loved seeing my cousin’s son strut down the aisle during his Bar Mitzvah……I was wondering why he didn’t have his kippah stylishly tipped to the side….

  103. chicagofinance says:

    Regarding NJ suburban people…..I was over at the Grove in Shrewsbury running an errand for my wife at around 2PM……ugh!

    How many 22 year old girls dressed to the nines driving new BMW/Benzes…..WTF is this crap? You know you are in douche bag city when the multi-tatoo/piercing Starbucks losers are tossing an attitude…..

  104. goonsquad says:

    Grim, the “pent-up” argument goes both ways. People watching the shadow inventory talk about the number of people waiting for better market conditions to sell. Calculated Risk commented on Zillow’s recent survey of how many people would like to sell if conditions were better. These people would like to sell if they could get 10, 15, 20% more for their homes than they can currently. Of course, the shadow inventory also contains REO properties which haven’t been relisted which Realtrac estimated at about 600k. That number I see as legitimately adding to the existing inventory of around 4 million existing homes. The pent up demand and supply are just noise. Here’s CR’s take on the pent up supply.

    http://tinyurl.com/pent-up-supply

  105. veto that says:

    http://tinyurl.com/nhgll4

    Ok here is my newest research, hot off the press.
    It shows average home prices for NY metro going back historically (in red)
    and i hooked it up with NJ Med income (in blue)
    and then calculated prices as a multiple of med income (shown in green).

    Conclusion: We’re as overpriced as we’ve ever been in recent history, as a percentage of income terms, even with prices coming down 15% over the last year or two.

    Interesting to note that the historical price to income multiple for this region, according to this analysis, is more like 4x or 5x, so if the average person in NJ is waiting to buy an avg house for 3x income, like the experts advise, that may never happen here, unless we get an off-the-charts meltdown but im not making any predictions. I’ll leave that to you all and just assume anything is possible.

    *Calculation Confessions: I could only find ANNUAL med income data for NJ from census bureau and 2007 is the latest year for nj so I made an assumption that NJ med income would be 55K in 2008 and 53K in 2009.,
    IMO thats actually conservative if you consider it was 68K in 2006 and 60K in 2007. The real median incomes for NJ in 08 and 09 will likely be lower, making houses in this region even more unaffordable than this graph shows.

    ———————
    Kettle, dont worry, im not cutting you out of our two piece band, this is just a solo album project to appease my manager. You will still get royalties from any tee shirt sales and we’ll be back on tour again in time for next weeks CS release.

  106. skep-tic says:

    #106

    “Interesting to note that the historical price to income multiple for this region, according to this analysis, is more like 4x or 5x, so if the average person in NJ is waiting to buy an avg house for 3x income, like the experts advise, that may never happen here”

    I share this view. Getting down to 4x is about as good as it will get around here, I think

  107. leftwing says:

    who is the blondie over Bernanke’s right shoulder? Jailbait?

    John?

  108. #104 – I was over at the Grove in Shrewsbury

    My apologies. I once saw Springsteen there in the early 90’s. He was getting into a beaten up old pick-up while I was heading to the Software Etc.

    How many 22 year old girls dressed to the nines driving new BMW/Benzes…

    That’s dad’s money you’re seeing.

  109. goonsquad says:

    [106] Veto,

    This chart is great. Thanks.

  110. skep-tic says:

    #106

    I actually think affordability has gotten even worse when you consider that credit is tighter. People don’t understand why buyers aren’t rushing out to snap up bargains— it’s because few if any exist right now.

  111. 3b says:

    #107 skeptic:share this view. Getting down to 4x is about as good as it will get around here, I think.

    With the state of the economy, and the mess that Nj is in, I would not be too sure of that.

    As well there is nothing on the horizon as far as a new driver for higher income jobs, with the street, pharam, ande telecom dead.

  112. relo says:

    Be prepared for upcoming green shoot fodder. Was listening to someone say that a housing price “head fake” is upcoming due to the fact that “higher” priced homes are coming into foreclosure and, in theory, will be sold for more on a relative basis. This should give MSM and realtor propagandists something to work with.

  113. skep-tic says:

    3b– but if incomes drop and house prices drop along with them, still seems to me that we will fall along the same historical relationship between the two. I guess we will see

  114. 3b says:

    #114 skeptic: True. However in my opinion, much more reckless this time around than in prior real estate booms, a much more severe recession than after the dot com bust, and the early 90’s, and a much weaker consumer all around.

  115. veto that says:

    good point Skept,
    i wish there were a way to encapsulate conditional descriptions like that into a chart in a more specific way but they should mostly be reflected in the price drops, right? likely with a lag of some degree.
    For example, if unemployment shoots to 20% and banks stop lending totally, technically a chart like this should be picking up on those conditions since the home prices would have most likely dropped through the floor under those conditions. *In theory*
    Maybe im wrong about that but thats how i think about it.
    But another one is exhuberance and goodwill about re. That is an asset that is hard to quantify onto a chart, although we all know its depleating at a fast rate. five years ago, if you mentioned re to anyone, you had an instant happy conversation about how someone’s house price doubled. there was an aire of joy in the whole re experience. Today if you mention re to someone, they will immediately get all serious and nervous and the conversation will naturally turn negative and hopefully someone wont end up crying on you.
    these are all factors, which i think ultimately get reflected in price, even though you cant tell which factors are effecting price more or less than others.

  116. John says:

    funny homeprices don’t always fall when unemployment and rates go skyhigh. For homeprices to fall some have to sell. I remember NYC coops back in 1992 some buildings had last sales of 1989 or 1990, you knew they were worth nothing but you could not sell them at any price so who knew actual price.

  117. W8ting says:

    My job is being relocated to Purchase NY and I’m still going back and forth between moving to Westchester or Connecticut (Greenwich area). My wife would rather stay somewhere in the northern NJ area (since all of her friends are in NJ) but living in CT might be the best move from a financial standpoint.

    I know from a state income tax perspective, CT is the lowest among the 3 states but does anybody know if I have to pay some sort of Westchester city tax if i live in Westchester?

  118. kettle1 says:

    Skeptic 107, Shore 112, Veto

    in 1999 the median nj home price to median Nj household income was about 3X

    My charts for NJ only:

    http://www.scribd.com/full/16782641?access_key=key-uur2tpjtyw9kufeq2ec

    Veto, using the CS data will definitely skew the data, as you are including NYC in that and that is a huge outlier. i do not think you can use housing indexes in the manner that you have. I think they are useful for seeing the the multiple trend is in line or out of whack. Its fine for that. But the manipulation that goes into generating the index makes it inappropriate for trying to extract the direct multiple of income trend

    And veto, no worries its all good. I enjoy a challenge :) think of it as dueling guitars!

  119. kettle1 says:

    Veto 116

    already made that model, we an chat about it next week.

    The catch about incomes falling faster then housing is that housing must fall even further for it to settle at historical norms.

    Ask yourself, given globalization and the overall economic trends in the US do you see median/average income going up or down?

    My guess is down, which means that the stable point for the housing market will be at a lower average home price due to the decreased incomes and tighter lending standards. hence my 1980’s argument. there is also an interesting gold argument in there as well. look at the gold vs housing chart i sent you, and notice when the ratio converged last……

  120. Stu says:

    Or dueling nerds :P

  121. #119 – in 1999 the median nj home price to median Nj household income was about 3X

    This was also an era in which employment was more diverse than it is now. The big telecom jobs were still here, big pharma hadn’t taken off for greener pastures, auto manufacturing was still here as well. Northern NJ has become increasingly dependent on Wall St. both directly and indirectly for jobs. The Street has not stopped laying people off either.
    What does this mean for the future pricing of housing? I can hazard a guess, and it’s not good.

  122. John says:

    No city tax but RE taxes are sky high in Westchester

    W8ting says:
    June 25, 2009 at 12:36 pm
    My job is being relocated to Purchase NY and I’m still going back and forth between moving to Westchester or Connecticut (Greenwich area). My wife would rather stay somewhere in the northern NJ area (since all of her friends are in NJ) but living in CT might be the best move from a financial standpoint.

    I know from a state income tax perspective, CT is the lowest among the 3 states but does anybody know if I have to pay some sort of Westchester city tax if i live in Westchester?

  123. kettle1 says:

    Veto,

    want to duel???

    http://tinyurl.com/l3d8be

  124. veto that says:

    “you are including NYC in that and that is a huge outlier”

    ket, i dont think of NYC as an outlier, it just bumps the avg price a little higher than if you didnt include it. but NJ incomes are dependant on NYC anyway, its all one region moving up and down together, so i think its appropriate to include it. Even if you just used NYC data, their would be different neighborhoods moving up and down at different paces so you’ll never get the prefect region anyway.
    but i think cs works out accurately enough to show a relationship, especially back into the eighties. i dont really have anything to tie it out to so extrapolation is really the only way.

    The problem i see with using NAR price data is that it only goes back to 1999 and you cant trust what adjustments they make to make the crash look like a soft landing.

    nice charts though. i like your % of income spent on housing. did you calculate that or is it published? and can you get that going back further?

  125. veto that says:

    “dueling nerds”

    cmon Stu, i know you can appreciate how exciting a 12c can be.

    reminds me of the funniest video of all time when triumph rips on all the star wars nerds.

    http://www.youtube.com/watch?v=ugk37TvIR8E

  126. HEHEHE says:

    Very good read:

    Three Real Risks to the Future of the Banks

    http://www.minyanville.com/articles/C-bank-bac-wfc-jef-finacial/index/a/23279

    End result is if you create an artificial environment to goose earnings you are likely to get a major selling of the news. Just personal opinion of course.

  127. veto that says:

    ket, also just a suggestion but i dont think home prices and income need to be adjusted for inflation when comparing the two.
    They both inflate at different rates anyway so removing cpi-u would assume they are both inlfated at the same cpi-u rate, which most likely wasnt the case.
    but that doesnt spoil the whole analysis for me, even without that suggested adjustment its close enough to make the point on a chart. good work.

  128. kettle1 says:

    Veto,

    true, but the adjustment is negated by calculating the ratio. (A*C) / (A*B) = C/B

  129. kettle1 says:

    thanks, you too

  130. kettle1 says:

    Veto 125

    The problem i see with using NAR price data is that it only goes back to 1999 and you cant trust what adjustments they make to make the crash look like a soft landing.

    i used the raw sales data to get the median sales price. there were no adjustments made to the data set unless they modified the core data set. but if they did that they did a very poor job as the curve of the NAR sales data matches all the major indexices. Im my opinion the NAR data is most likely sound

  131. kettle1 says:

    Veto,

    I calculated the (% income spent on housing) using a 30% income tax rate to get net income and assuming a 20% DP an the average interest rate for the given year ( there are databases of historical average mortgage rates, down to the monthly level)

  132. John says:

    farah fawcet just died, damm she was hot. that 1976 mustang II she drove and that blonde hair, WOW

  133. veto that says:

    “unless they modified the core data set but the curve of the NAR sales data matches all the major indexices”

    ok, good to know. thats what i was implying. you’ve got to wonder when a bunch of realtors volunteer to be in charge of creating the benchmarks.

  134. Ben says:

    “How many 22 year old girls dressed to the nines driving new BMW/Benzes…”

    –That’s dad’s money you’re seeing.

    I beg to differ. It was dad’s line of credit.

  135. kettle1 says:

    Veto,

    i had the same concern regarding the NAR data, so i checked before using it.

  136. veto that says:

    Ben, whats the word in mercer county? when will prices finally come down?
    even hamilton is still overpriced for crying out loud and they have gangs in their schools.

  137. goonsquad says:

    [138] I’m wondering the same for essex, union and morris. Any bets on what case schiller data for NY metro will look like next tuesday? 5th record yoy decline?

  138. goonsquad says:

    …or would it be a 6th consecutive? I forget.

  139. veto that says:

    “i had the same concern regarding the NAR data, so i checked before using it.”

    ket, nice job. just make sure they dont do what my realtor does. pile the comps from best to worst and then throw the worst ones in the trash.
    because there is no such thing as a upper level outlier, only low ball outliers should be discounted.
    ha.

  140. veto that says:

    goon,
    according to my calcs we will be down over 13% yoy on cs metro ny next week, but i really dont have any calcs at all… so thats a pure guess.

    although im sticking to my original stubborn and baseless prediction that we’ll see a few years of 10-15% declines but we wont see anything in the 20% or more yoy drops.

    I know a few people here disagree with this scenario so try to be nice everyone or i will have to take my gat out. okay?
    thank you

  141. John says:

    Re 136 Actually, back in day I dated this totally smoking hot girl who was around that age and was dirt broke. She was a wannabe actress. Other than once playing on americas most wanted Paul Castalana’s mistress I don’t know what she starred in. Before I continue her roomate who was equally kooky like 20,000 others had a one night stand with wilt champblin when I was there one night, me and wilt spit our spunk with the two roomies that alone was worth the relationship. Kinda like being on the same court as michael jordan, anyhow she would borrow my Benz once in a while and I let her crash once in a while at my hamton house. Young beautiful things can get stuff like Beamers and Benzs off anyone. No big thing to let them drive it. Plus no fun to get it off daddy. In the end though it always ends up just like the famous Al Goldstein quote, “show me a beautiful women and I will show you a guy who is sick of screwing her”

    Ben says:
    June 25, 2009 at 1:20 pm
    “How many 22 year old girls dressed to the nines driving new BMW/Benzes…”

    –That’s dad’s money you’re seeing.

    I beg to differ. It was dad’s line of credit.

  142. Ben says:

    Veto, IMO, there’s no way it can’t. We get monthly market snapshots for each zip code through Keller Williams and they all show the same exact trends. The amount of homes for sale is increasing. That increase dwarfs the amount of sales that offset it. We have big decreases in demand (year over year) and the seasonal upticks have been pathetic. With increasing supply and decreasing demand, they have no where to go but down. For obvious reasons, Trenton already mirrors the worst markets in the countries. You have people snatching up properties there for 20k. The areas of Hamilton that are near Trenton look to be tanking big time. The nice areas of Hamilton appear to be showing some resistance. Obviously, really nice homes that are still moderately overpriced (but competitively priced compared to the other jokers listing their houses) move pretty quickly. Overall, sales volume is pathetic. Given the fact that mortgage rates are starting to creep up, it also will put negative pressure on prices. To be honest, I’m still amazed that the local market here is holding on as it has. It really has surpassed my expectations by leaps and bounds. I wonder how many state workers who work in Trenton actually live in the area. It’s probably the only logical explanation I could come up with. State workers aren’t losing their jobs…yet. I would love to buy something this year but I doubt it happens. If the market doesn’t tank big time by this fall, the Alt-A fiasco that is approaching will be sure to blow it up the same way sub prime blew up the West Coast and Florida.

    Btw…I’ve noticed it has become common in the area for flippers to buy a foreclosure at $150-$170k, paint the walls, put in new carpets, install a new kitchen and bathroom, and relist them for $250k 2 months later. Haven’t seen them move yet. IMO, they are con artists. They cover up all the flaws in these beaten down homes with white rugs and white paint. But anyone who gets suckered into buying them probably deserves what they get.

    As far as the Hamilton shcools go…West and Nottingham are both bad news. I know people who have taught in both.

  143. yikes says:

    #

    #
    Shelly says:
    June 24, 2009 at 9:04 am

    Think about this. The median income in many of these train towns is around $100,000. How does one afford a mortgage on a million dollar house when they will be paying $20,000 or 20% of their annual income in property tax and 30% or so in income taxes. Basically it leaves them $50K annually or $4000 per month for everything they need to live including their mortgage.

    a day late, but … credit cards.

  144. Alexnyc88 says:

    #135

    Yes and no.
    I know one 22 y.o spoiled brat from Fort Lee, her dad works as an Anasthesiologist and mom is a regular doctor. She is the most spoiled kid i have ever seen in my entire life. Not only does she drive a brand new 328 coupe, she also gets $2k allowance monthly.
    The most ironic thing is that her brother (my friend) lives with his fiancee very modestly and gets shit from his parents. Go figure.

  145. Ben says:

    John, we all have our own little personal anecdotes. My parents live in a fairly new McMansion neighborhood. When it was in it’s opening stages (1996-1998), well off couples moved their with their young kids who were 5-10 years old. Aside from that, people in their mid 50s also were moving in. Fast forward 10 years, all their kids were driving 2006-2008, the peak of bubble mania. All the old couples had a porsche boxter or a Vette in the driveway while all the now middle aged parents had bought their kids BMWs, Lexuses, or SUVs. I used to do some nice active surveying in my head when I would run around the neighborhood. That stopped since I screwed up my knee. But I’m getting off track. The point is, the cars have been slowly disappearing and they are being replaced by “for sale” signs on the front lawn. I’m sure out in Hampton land, it was just rich guys buying their trophy girlfriends nice stuff (although it appears they were on a credit binge as well). Out here in the suburbs, it was more likely Daddy’s home equity loan.

    There is also a used car dealership down the road that I believe specializes in expensive cars (BMWs, Porsches, Ferrari’s, Vettes, and all kinds of SUVs) It’s now filled to capacity. I’ve never actually stopped there. I should out of sheer curiosity now that I’ve mentioned it. Kind of an odd crap shoot business. It’s a crappy looking building with a big parking lot filled with some of the nicest cars. I guess they make it work though…

  146. Alap says:

    NEW YORK (Fortune) — Known for his early warnings on Bear Stearns and Lehman Brothers, analyst Martin Weiss of Weiss Research is now sounding the alarm about state of California municipal bonds.

    In a new report, Weiss has some rather blunt advice for California muni investors: “Sell all California paper now!” His reasoning? California is facing a $24 billion budget gap with no obvious way to close it.

    The state has appealed to Washington for a federal bailout, but it got a cool response from the Obama Administration. The next step is draconian cuts in state services and payroll, but Weiss says that will only deepen the “depression” in California, where the unemployment rate is 11.5%, by further cutting into tax revenue.

    Asked to put odds on California defaulting on its $59 billion in outstanding general obligation bonds, Weiss doesn’t hedge. “It’s unavoidable,” he tells Fortune.

    If he’s right, the impact on investors would be far broader and deeper than Bernie Madoff, General Motors (GMGMQ) or any of the other investment implosions that have occurred over the past year. Municipal bonds tend to be a retail product, which means that those most affected by a large muni bond default are not endowments, banks, or foreign governments but mom-and-pop investors.

    A California default would be especially devastating for two reasons: Munis have generally been viewed as a safe haven and California is the nation’s largest issuer of tax-exempt bonds. According to Morningstar, assets in California muni bond funds now total $46 billion — with billions more of California bonds held in national muni funds and individual bond portfolios.
    0:00 /02:56State budgets: billions short

    But if the situation is so dire, why do credit rating agencies Moody’s and Standard & Poor’s still give the Golden State an investment-grade, single-A rating? Weiss says that the rating agencies have been consistently behind the curve, and this crisis is no different. “They’re very hesitant to downgrade,” he says.

    That said, both Moody’s and S&P have put the state on a watch list and warned of possible downgrades. A downgrade below triple-B would likely precipitate a mass stampede by money market funds out of short-term California notes and make it much harder for the state to roll over maturing debt.

    While Weiss believes the numbers point to a California default, he doesn’t rule out last-minute intervention by Congress or the Obama Administration. Washington may be suffering from bailout fatigue, but the political consequences of allowing the largest state in the nation to default on its bonds may prove too great.

    The last time a leading municipal bond issuer was on the verge of default was 1975, when New York City was going through its own financial crisis. Then-President Gerald Ford gave a speech vowing to veto any federal assistance for New York — a speech immortalized by the next day’s New York Daily News headline, “Ford to City: Drop Dead.”

    Even though Ford later approved federal loans to New York, the political damage was done. New York had voted Republican in 1972, but four years later, Ford would up narrowly losing the state to Jimmy Carter, which ultimately cost him the election.

    Analysts think Obama is unlikely to make a similar mistake. “The most important factor here is that California has 55 electoral votes,” says Greg Valliere, Washington policy strategist at Soleil Securities. “At the end of the day, that’s why I think Washington blinks.” To top of page

  147. veto that says:

    ‘I’m still amazed that the local market here is holding on as it has. It really has surpassed my expectations by leaps and bounds.’

    ben, sounds about right, im shocked too.
    but i cant believe its just govt workers because i see prices have corrected about the same they have in other parts of the state.
    I mean wall street and pharma made huge lay offs months ago. What in the world is keeping the prices up in NNJ now?

    you are prob around the block somewhere. we should meet up for a coffee one day. i’ve been spending alot of mornings in lawrenceville starbucks on rte 1.
    let me know if you are ever in that area.
    njsoccer@ ymail.com

  148. Alap says:

    Gotta love the last 2 paragraphs of that article. So sad, but so freakin true.

    Even though Ford later approved federal loans to New York, the political damage was done. New York had voted Republican in 1972, but four years later, Ford would up narrowly losing the state to Jimmy Carter, which ultimately cost him the election.

    Analysts think Obama is unlikely to make a similar mistake. “The most important factor here is that California has 55 electoral votes,” says Greg Valliere, Washington policy strategist at Soleil Securities. “At the end of the day, that’s why I think Washington blinks.” To top of page

  149. x-underwriter says:

    John says:
    Re 136 Actually, back in day I dated this totally smoking hot girl

    John you’ve reached a new high/low in telling unbelievable but true stories

  150. safeashouses says:

    #79 A. West

    The people in Warren don’t seem anywhere as annoying as the Ridge crew. The one’s I ccan stand in Warren turned out to be migrants from Ridge. I think that attitude is found pretty much throughout the region from BR up to Madison/Summit/Chatham. Westfield seems more like Warren to me, the people tend to be less pretentious.

    Very jealous of your food exploits. Have you ever been to Joe’s Shanghai in NYC? It’s in the 50’s off of 5th Ave. They have authentic xiao loan bao (thin skinned pork or crab dumpling with broth inside). We go there and just order the dumplings, soup and a desert. don’t know how their main dishes are.

  151. W8ing says:

    #123 Thanks John but I should’ve mentioned that I have no plans to buy for the time being. I’m going to rent for 2 yrs and see how working in Purchase is for me and my family.

  152. stan says:

    John-

    You just hit it out of the park with your ridiculously umproveable story . Well we now have confirmation for 1 of wilt’s conquests, 9999 more to go.

    Thanks,

    Stan

  153. Alap says:

    John is like the east coast version of Ari Gold.

  154. Ben says:

    #145, Alexnyc88

    As a kid I grew up poor because my father was still in school. When I turned 16, he came into a bunch of money and bought me a nice Mustang Cobra. Yeah, it was nice…but these days, I drive it once a month. I normally drive my Chevy Metro that I bought for $150 and pretty soon my Honda motorcycle that I bought for a dollar. If your friend is older than his sister, that might explain it. The sad fact is, I could win the Mega Millions Lottery tomorrow and I would still probably live in a 2 bedroom house and refuse to spend more than 100 bucks a week on myself. My younger brother? I seriously doubt it. He’s too young to remember he once shared a bedroom with 2 siblings.

  155. Ben says:

    btw John, I’ve yet to allow a single girl to drive my Mustang. That includes my mother and my 2 sisters.

  156. veto that says:

    John, how many stds have you caught in your time?

  157. Ben says:

    Heh, well, as far as North NJ goes, I think the finance people held on through their 2007 bonuses, severance packages, and subsequent unemployment checks. Unemployment checks are probably the only life support left for NNJ financiers and mid NJ pharma employees. These people only lost their jobs recently. Veto, I actually live at the Shore in Monmouth County right now and I work in Middlesex. I don’t get up to Mercer much, even though my fiancee lives there. We figure that we should spend weekends at the shore during the summer, despite this god awful weather. I did think it was pretty funny that we were apparently at the same open house that one time though. Maybe one of these days. You’d probably be disappointed in me though. I’m just a punk kid who’s still in school who happens to pay attention to the markets.

  158. safeashouses says:

    #103 chifi

    Drop the little one off at the bowling alley on Joline Ave/rt 36 in Long Branch on a Saturday night. The locals would enjoy his antics, especially if he is in the pool room.

    Disclaimer: I used to hang out there a lot.

  159. Clotpoll says:

    John (142)-

    Shit. I thought you were Al Goldstein.

    “‘In the end though it always ends up just like the famous Al Goldstein quote, “show me a beautiful women and I will show you a guy who is sick of screwing her”’

  160. safeashouses says:

    #104 chifi,

    The starbuck workers in Shrewsbury give you the tude because they live with mommy and daddy so they can buy designer hand bags and drive their own bmw.

    I also think the people in Rumson are pretty arrogant and pretentious.

  161. veto that says:

    “I’m just a punk kid who’s still in school who happens to pay attention to the markets.”

    no worries ben, im older than you but dont know what im talking about either.

  162. stan says:

    Who’s moving up to Purchase? MS headquarters is up there, do you work for smith barney?

  163. Happy Daze says:

    “Appraisers inflated values in far from desirable areas, encouraging investors to leave multiple homes vacant while they slapped on a coat of paint and re-faced the kitchen cabinets before cashing out from the next no money down speculators.”

    Casey Serin anyone?

  164. x-underwriter says:

    Clotpoll says:
    I thought you were Al Goldstein.

    I was thinking Larry Flynt

  165. chicagofinance says:

    W8ting says:
    June 25, 2009 at 12:36 pm
    I know from a state income tax perspective, CT is the lowest among the 3 states but does anybody know if I have to pay some sort of Westchester city tax if i live in Westchester?

    W8: someone correct me; I think the only two cities in NYS that have income taxes are NYC and Yonkers (which is in Westchester).

  166. kettle1 says:

    Alap 155,

    The US government cannot afford to blink. what happens to the 10 yr when they ave to bailout half of the state sin the nation, and the other half demand kick backs as well?

    You dont think the Feds will be able to bailout just 1 state do you? you would have 49 other pissed off states to deal with and that can make your day a very big pain in the but if the decide to work together to do so.

    its bail all or bail none

  167. Against The Grain says:

    For Realtors and anyone else interested, here is info on how the new regulations effective July 30 impact closing dates:

    https://www.wellsfargo.com/mortgage/resources

  168. safeashouses says:

    #168 kettle1

    its bail all or bail none

    I think it could be bail the big electoral states and f the rest.

  169. morpheus says:

    #141:

    Word.

  170. kettle1 says:

    Safe 170

    that seems risky, because you could then see some of the left out states try Nom’s scenario of states threatening to dispute their federal tax burden based on the lack of bailouts that others got.

    It seems like a last resort step to me. there is no easy way out of that mess once you step in it

  171. Alap says:

    168:

    As the end of the article states. California is too many electoral votes for Obama to ignore. A state that voted red in the previous election and has a history of it, doubt they’ll get much. Its all about votes and the election, he is already making his case for a second term, barely a year into his first. California, NY, Mass, need some money? Sure, here you go, “too big to fail”

  172. Happy Daze says:

    kettle1 (168)
    its bail all or bail none

    Bail! Bail!
    The gang’s all here…

  173. safeashouses says:

    What’s up with stainless appliances?

    Do the sheeple really like them? Or do the like them because they been told they like them by re agents and TV?

    Why do people want their home kitchen to look industrial? Plus it is a pain to clean and shows every fingerprint and smudge.

    Am I missing something about the lure for stainless? I much prefer shiny black appliance in the kitchen.

    And don’t get me started on granite. why would you want a porous counter top that may cause your cabinets to get moldy from the moisture passing through the counter, and may be releasing radon.

  174. kettle1 says:

    Alap, Safe

    Wonder how obama is going to feel about a decision to bail when the 10 yr Tbill and the 90 day Tbill goes nuts.

  175. Doyle says:

    I like stainless, hate black appliances. And no, TV and RE Agents didn’t tell me to like them. I just like the clean – sleek look. And the smudge thing is overstated all the time, we don’t have a huge smudge issue. More of a my wife spilling everything all over the place issue.

    Personal preference I guess…

  176. kettle1 says:

    Safe,

    O better have the DHS ready for that blow back, especially when he ignores some of the poor red states

  177. #175 – Or do the like them because they been told they like them by re agents and TV?

    They’ve managed to turn appliances in to fashion accessories. Quite a feat.
    I’m partial to white myself. Traditional, simple, can be cleaned with bleach.

  178. Sastry says:

    Kettle1 #178…

    Or promise a lot of new stimulus money to the red states, and when they say NO, just accept their decision. The likes of Sanford will screw their state anyway — when they get some time in between exotic Latinas…

    S

  179. kettle1 says:

    Safe,

    I do like sealed, cast concrete counters that i have seen.

  180. safeashouses says:

    #177 Doyle and Tosh,

    I was just wondering. Seems like every time I watch a show on hgtv the homeowners or flippers want to add stainless.

  181. safeashouses says:

    #181 kettle1

    That would be my choice as well.

  182. NJGator says:

    Just finished looking through a list of all the current active Montclair multis on the GSMLS. 9 are short sales. No problem with the market here.

  183. Sastry says:

    Safe,

    Wife likes stainless steel… Different tastes I guess.

    Here is an interesting thing that happened at Home Depot a few days ago — do it yourself type furniture for bathroom vanity. I ask a lady who said we are better off ordering from a store that already has models ready for sale. Anyway, she explains the process, and was leaving, so we find this guy that was going to design the thing for us…

    We start off. I said, 2 sink vanity. His response? Why not 1 sink? I explained, “we like that way… when I try to get my daughter to brush, I seat her on the counter, and there is no space to brush…” He reluctantly agrees after a long explanation!

    His whole line of argument is, “I’ve been doing this for 20 years, so I know better than you”. Well, I am sure there are great chefs that think the best dish is some Veal Parmesan, but I want a Pasta Primivera, so *please*?

    I mentioned to him that there is already a hideous sink combo (he was asking me whether there is enough space and I told him there are two 42″ sinks side by side, so it should be enough for a 72″ thing). I explain how bad it was (glass doors — pieces of glass glued together), and his response was, “I think that’s delightful”.

    Finally we found something online for half the price… It was delivered in 4 days — versus 3 weeks for the do it yourself stuff.

    S

  184. kettle1 says:

    Grim,

    maybe you should add an Age Check feature to this blog, you dont want to get sued for adult material ;)

  185. Silera says:

    Appliances have been fashion accessories since the 50’s. Pink appliances, yellow appliances.

    None of this is new.

    “Get your kitchen of tomorrow today”
    http://retrorenovation.com/wp-content/gallery/50s-kitchens-advertising-and-illustrations/pink-and-lavendar.jpg

    They even financed it.

    I like whatever is easier to clean. White stove tops are the worse.

  186. safeashouses says:

    I got an email from one of my former co-workers in Sydney. I am really starting to think Western governments want to keep the masses in debt. Why else would they have their idiotic policies.

    Her last job was offshored to the Philipines. She has to wait 3 months to start a government sponsored job retraining program because she has more than 5k in savings. During this time she is not allowed to earn any money or she will be barred from the program.

    What sense does that make? Her reward for living within her means and saving money is to be told you have to burn through your cash and live on credit cards before the gov will help you?

  187. kettle1 says:

    safe,

    hide your money, look poor on paper and keep your head low. that seems to be the lesson of the day

  188. 3b says:

    #149 veto:I mean wall street and pharma made huge lay offs months ago. What in the world is keeping the prices up in NNJ now?

    Becasue many sellers are not lowering, or not lowering theri prices enough. A few may sell here and there, but it is far more telling that so many more are just sitting and rotting on the market.

  189. safeashouses says:

    #186 Sastry,

    my wife used to like stainless, until she discovered what a pain it is to keep looking clean.

    the guy at the depot is a pro, he knows better than you what is best for you. /off sarcasm

    I’m starting to think the whole world has gone mad.

  190. #188 – Appliances have been fashion accessories since the 50’s.

    True enough. I can’t remember where I saw it (maybe apartmenttherapy.com) but some company was taking 50’s appliances and reconditioning and updating them. Some very cool stuff, wish I could find the link.

    White stove tops are the worse.

    I don’t have problems with mine, you can bleach away almost anything.

  191. landshark says:

    [190] kettle

    Actually, it has been the lesson for centuries, whenever there is a risk of confiscatory regimes. This has long been the norm in Europe—-after all, before socia1ism, there were barbarians.

  192. John says:

    Re 192 and 193, you ladies really like your appliances.

  193. Silera says:

    Maybe I scrub too hard but I scrubbed the enamel right off the last white stove I used. I don’t think we really have stainless now anyway- it’s a black top with a stainless front.

    I bet there could be a market for appliance “skins” like they do for cell phones.

  194. #194 – I bet there could be a market for appliance “skins” like they do for cell phones

    Hmm, that’s a really good idea. Stoves and fridges with changeable and recyclable enameled panels. You could do some very cool stuff. I could have a kitchen by Murakami.

  195. Clotpoll says:

    John, does your “appliance” come with its own microscope?

    “…you ladies really like your appliances”

  196. Silera says:

    Tosh-

    It actually could be as simple as expanding on the “fathead” washable removable sticker thing. Ensure the stuff is heat/fire proof and then sell the kits at home improvement stores and online.

    Renters, college kids etc. could personalize without going nuts. Homeowners could change the look of the kitchen without spending 3K on new appliances.

  197. W8ing says:

    #164 stan: i was not working for SB but the majority of my “clients” were SB advisors. My group somehow got acquired by the JV.

    #167 cf: thanks…

  198. John says:

    Re 198 watch for me on HBO this fall, my show is called Hung

  199. Sean says:

    re: #200 – John isn’t that show the heartwarming adventures of an Asian family?

  200. Firestormik says:

    re: A.West
    “my family saved rather than overconsumed over the past 9 years.”
    Ohh. If you are able to support 600K mortgage+18K in taxes and other expenes on one salary, you should have been able to save a couple of mil over past 9 years, so this statement is simply a lie.

  201. Sean says:

    Recession ain’t over if you can still get a heavily discounted meal in Clifton NJ.

    http://www.nytimes.com/2009/06/24/business/24casual.html?_r=1&ref=business

  202. Shore Guy says:

    Well, duh! These school administrators are a sign of what is wrong with the people in charge of such a large part of our property tax burden:

    http://www.nytimes.com/2009/06/26/us/politics/26scotus.html?hp

    And we wonder why they make bad fiscal decisions?

  203. Shore Guy says:

    Better hung than hanged.

  204. Shore Guy says:

    “I do like sealed, cast concrete counters that i have seen.”

    Inasmuch as so much in the kitchen involves salt and liquids, is spalling a danger?

  205. relo says:

    Re: 146

    http://online.wsj.com/article/SB124595411380855267.html

    That inventory reference is in contrast to other data I’ve seen as well.

  206. Jay says:

    grim[43] It’s even worse than that. From Calculated Risk:
    “Also, as people move off the standard 26 week unemployment benefits, they are no longer included in continued claims (for the most part).”
    http://www.calculatedriskblog.com/2009/06/initial-unemployment-claims-increase.html

    “How many of those who dropped off the total did so because their unemployment insurance ran out? If someone is no longer eligible to receive unemployment benefits, they are no longer counted in the continuing claims.”

  207. John says:

    nine years to save 200K is not really saving much at all.

  208. Jay says:

    so people who are receiving extended benefits are no longer being counted in these numbers…

  209. relo says:

    175 & 206: good reference for all things surface related.

    http://www.ntc-stone.com/

  210. chicagofinance says:

    John says:
    June 25, 2009 at 4:16 pm
    Re 198 watch for me on HBO this fall, my show is called Hung

    IS THIS YOU?
    http://www.youtube.com/watch?v=Zcc8dTqflh8&feature=related

  211. Shore Guy says:

    “so people who are receiving extended benefits are no longer being counted in these numbers…”

    If we are engaged in such an act of self deception, it is pathetic. Look, the numbers are what the numbers are; lets just count them honestly and then we can develop policy to address any issues the numbers show. Hiding the true scope of economic problems only prevents us from being able to address them.

  212. Shore Guy says:

    From CNN e-mail message

    It is no loss, but worth passing on anyway:

    — Pop singer Michael Jackson has suffered cardiac arrest, CNN affiliate KTLA reports.

  213. safeashouses says:

    Let’s mine for coal under Sydney’s reservoirs and water catchment area.

    http://www.smh.com.au/national/in-the-drink-goahead-for-mining-under-citys-water-supply-20090625-cy9n.html

  214. grim says:

    New thread!

    Up!

  215. grim says:

    #214 – God no, not Farah and Michael in the same day.

  216. cobbler says:

    This is the link to the unemployment benefits exhaustion rate chart on Bloomberg:

    http://www.bloomberg.com/apps/cbuilder?ticker1=EXHTRATE%3AIND

  217. grim says:

    Castro for the trifecta?

  218. skep-tic says:

    w8ting–

    The only part of westchester that has city income tax is yonkers. that is on the opposite side of the county from purchase so you probably won’t want to live there anyway.

    on living in CT– since you will be working in NY, you will have to pay income taxes in NY. You also will have to file in CT, but they will credit you for what you pay to NY.

    Basically, if you rent and live in CT and work in NY, there is no tax advantange. There is a huge property tax advantage of CT vs Westchester and there is a big income tax advantage if you work and live in CT.

    If your sole gole is to live as economically as possible, I would say you should look into renting close to work in Westchester. When it comes time to buy, it may make sense to look in CT.

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