Tue 27 Oct 2009
From the APP:
Time winding down for home buyers
With its expiration just over a month away, a push is on to extend the first-time home buyers’ tax credit, which boosted the beleaguered housing market in the midst of a recession.
…
There are competing ideas out there to extend — and even expand — the tax credit, which gives up to $8,000 to first-time buyers who close on a home by Nov. 30.In a press conference on Monday at the New Jersey Association of Realtors in Edison, U.S. Rep. Leonard Lance, R-N.J., said his bill would open the tax credit to all people buying a primary residence, regardless of past home ownership or income. He would increase the credit to $15,000 and extend the program through Dec. 1, 2010.
“We do not want the American dream to expire,” Lance said. “We want to make sure as many Americans as possible have home ownership.”
Lawmakers are under pressure from real estate agents and others in the housing industry to extend the credit.
The timing is critical, Lance said.
…
In the Senate, Senate leaders are negotiating to extend the credit and gradually reduce it through 2010, Democratic Sen. Bill Nelson of Florida said Monday.Senate Majority Leader Harry Reid of Nevada and Senate Finance Committee Chairman Max Baucus of Montana, both Democrats, may seek to add the home buyers’ extension to legislation extending unemployment benefits that may be debated as early as this week, according to Regan Lachapelle, an aide to Reid.
Another proposal by Sen. Christopher Dodd, D-Conn., Senate banking committee chairman, and Georgia Republican Sen. Johnny Isakson would extend the credit through next June and expand it to couples earning $300,000 or less, up from the current program’s $150,000 maximum income eligibility for married couples.
The current program comes with costs. Congress allocated $13.6 billion for the home buyers’ credit. As of July 17, 2009, more than 1.1 million tax returns claiming more than $8 billion in credits have been processed.
And to make things confusing..
From Bloomberg:
Housing Credit Will Likely Be Phased Out, ISI Says
The U.S. Congress will probably phase out the tax credit for first-time home buyers, according to a note sent by ISI Group Inc.’s Washington research analysts.
“There could be an agreement reached as early today on the Reid/Baucus amendment that would PHASE OUT (not extend, as we originally understood when the idea was first proposed last week) the home buyer tax credit,” ISI analysts said in the note. “The phase out is worse than a straight extension and probably worse for housing than the consensus.”
Just returned from our two week neighborhood/house hunt in PA/Montco. Don’t know who coined the phrase “crapbox” but that pretty much described everything we looked at. One place smelled so bad we left upon entering. Absolutely amazing.
From Realty Check at CNBC:
Home Buyer Tax Credit’s Course
More confusion today about what’s up with the first time home buyer tax credit extension.
Sen. Bill Nelson (D-FL) made a comment as he boarded AF1 today that “We should be able to extend that later this week.”
He’s a member of the Senate Finance Committee, which is working on the phase-out plan I reported Friday.
Then supposedly the market gets spooked because Bloomberg reports a story that ISI Group says the tax credit would not be extended even though it then goes on to explain it would be phased out.
From Bloomberg:
Goldman Sees U.S. Housing ‘False Bottom,’ Merrill Sees ‘Treat’
The stabilization in U.S. home prices won’t last, according to economists at Goldman Sachs Group Inc. in New York. Their counterparts at BofA Merrill Lynch Global Research see a “treat” rather than a retreat.
“The risk of renewed home price declines remains significant,” Alec Phillips, head of Goldman’s Washington office, said in an Oct. 23 note to clients. “Our working assumption is a further 5 percent to 10 percent decline by mid- 2010.”
“We should expect subdued home price appreciation over the next few years,” wrote Merrill Lynch’s Ethan Harris and Drew Matus on the same day.
“…the American dream…” Yeah that’s it…the banks want to help us.
#5 And our politicians, they want to help us too.
I for one prefer reality to dreams but dreams seem to be enough for our lawmakers.
I wish I was smoking whatever our politicians are smoking.
Whats the estimate for the tax credit extension, 16 billion? Of which our government will create out of thin air. People just don’t understand how broke we are as a nation. If we don’t like the out come of anything we either ignore it our extend a credit. Feel like we are in the late stages of Rome here
http://online.wsj.com/article/SB10001424052748704224004574489740879074028.html
Rolling Up the TARP - WSJ Opinion
“The Troubled Asset Relief Program will expire on December 31 unless Treasury Secretary Timothy Geithner exercises his authority to extend it to next October. We hope he doesn’t. Historians will debate TARP’s role in ending the financial panic of 2008, but today there is little evidence that the government needs or can prudently manage what has evolved into a $700 billion all-purpose political bailout fund.”
I do remember months ago posting an article where Elizabeth warned that instead of returning funds to the taxpayers, Geithner may try to say paid back funds could be reused as needed.
In my opinion, this is tax payer money - to be paid back as collected..but…
evidently there was language inserted from the onset that left that in question…
Keep the American Dream alive!!! Give me $8,000 in tax credits so I can go $400,000 in debt in order to “own” a depreciating asset. Only in America, Idiots.
Wtf are they thinking with extending this tax credit? Let’s go deeper into debt so that our constituents can benefit and our grandchildren can be royally screwed? Wonderful.
anyone catch Real Estate Intervention last night? Best episode yet.
http://money.cnn.com/2009/05/22/news/economy/TARP_money/index.htm
Article from May 09 - The language..
“Geithner points to parts of the federal law that allow Treasury to have as much as $700 billion “outstanding” and invested at any one time.”
Oh swell….
Just finished listening to presentation by Richard Koo. I think he has got it absolutely right at Macro economic level. I would recommend it to anyone who is interested in Macro level,
Presentation is available at,
The Age of Balance Sheet Recessions
Audio: Great Recessions - Lessons Learned from Japan
Audio to go along with presentation posted earlier.
“Wtf are they thinking with extending this tax credit?”
The Republicans who are for it are thinking, “If I don’t support this, the Democrats will run ads saying that I hate the middle class, motherhood, and apple pie.”
The Democrats who support it are thinking, “The costs don’t matter, we can just raise taxes on Nom and the other rich folks to pay for it.”
Barb (13)-
I practice real estate intervention every day. I don’t need to watch more of it on TV.
Busy week in Hoboken RE. 13 UC. Where’s the recession??
http://hudson.fnismls.com/publink/default.aspx?GUID=daa7d77f-c22a-466e-860b-6c567af7269f&Report=Yes
shore (17)-
That is the extent of the thinking. It’s just about that simple.
OTOH, I got a taste of the typical John Q thinking on it. My mailman started talking to me about it yesterday, and I was fascinated to find that he thinks the whole program revolves around houses that are about to be foreclosed, believing that not only does the buyer get an 8K tax credit, but the seller is magically rescued by the sale, and everyone lives happily ever after.
I don’t know if being in Chile will be far enough away when this country devolves into utter chaos.
frank (19)-
As always, the recession is in your frontal lobe.
Chart - Mountain of Resets
18. Schumpeter
fair enough. This one was a stand out because it contained pretty much every subject and pitfall that this blog covers, all in one convenient 22 minute episode.
13 Barbara
We record every new episode. I’ll have to check it out later today.
Honestly, I can’t even get my own agents fully on board with hating on the 8K tax credit…and these are guys who have 10-25 years’ experience.
We are all bailout junkies. I’ll go to rehab tomorrow; just gimme that hit of smack now to take the edge off.
barb (23)-
Sort of a Cliff’s Notes version of War & Peace?
Is it me or do all of the option arm resets keep moving further down the road?
Lord help us if interest rates ever start increasing again.
27 Stu
I think you’re right. Wasn’t there talk a few months back about the majority of them starting to reset this month?
Stu (27)-
One of the nice things about ZIRP is that (if the Japanese model holds) rates won’t start rising for another 20 years or so.
3 More Black Swans for the U.S. Economy 10 comments
Today, we are in an unprecedented housing environment. Two years after the majority of Wall Street and analysts proclaimed (and built their business models on the idea) that housing prices could never decline, they are now calling the bottom 30% later. The recent seasonal jump in prices has many analysts calling the all clear. Our problems have not passed.
While the majority of the subprime problems have passed there is another mountain of resets ahead that will wreak havoc on the housing market. Tilson argues that two waves have passed, but three lie directly ahead. These three waves include prime loans, jumbo prime loans and commercial real estate.
Tilson believes this is the “mother of all head fakes” for 7 reasons:
Ultra-low interest rates
The $8,000 tax credit for first-time homebuyers
More middle- and upper-end homes are being sold (either voluntarily or via foreclosure), which has the effect of raising the price at which the average home is sold – but more defaults of higher priced homes is very bad news for mortgage holders
A decline in resets
A reduction in the inventory of foreclosed home
The FHA is providing massive support to the housing market, in part by doing extremely risky lending
Home sales and prices are seasonally strong in April-July due to tax refunds and the spring selling season
As recent data has shown, the seasonal downturn in housing is beginning to take hold.
Despite seasonality and government stimulus, the laws of supply and demand always rule the long-term price trend in any market. While demand has stabilized somewhat, the supply side of the equation remains very lopsided. The current housing overhang is 7 million homes and the new housing inventory glut is at 12.9 months. With over 8 months of total supply on the market and a massive shadow inventory, it is highly unlikely that these problems will fix themselves in short order.
#22,
“Chart - Mountain of Resets”
Stop with this re-set crap, the rates are so low, the resets are actually helping people. Add HAMP and other Obamanomics and home sales are up 9%.
I think we should model for a depression/recession of 20-40 years.
frank (31)-
Thank you for writing today’s episode of Pushing on a String.
#22 SG
Are we now in the valley of debt? Resets to the left of them, resets to the right of them,resets straight ahead.
I oughtta change my handle to bankfodder.
We must keep this tax credit. The cynics don’t understand that by pulling housing demand forward we are keeping the economy growing.
Ps. Buy CIT with both fists, IT’S A NO BRAINER!!!!
PPS. Sarcasm off.
Stu (27) - I don’t think Govt will let that happen easily. They will Borrow as much as possible and keep rates low.
I think the biggest issue for housing is shadow inventory esp in Northeast (mainly NJ). Due to high taxes many want to leave NJ as soon as they retire or at earliest opportunity. Many are waiting for housing market to show some green shoots and will put house on market. The inventory will swell next year like crazy. I don’t see anything that can save housing in NJ. It is on next leg down.
So even though we don’t have large foreclosure or reset issue, the property taxes are the ones that will kill any recovery.
Frank: Stop with this re-set crap, the rates are so low, the resets are actually helping people. Add HAMP and other Obamanomics and home sales are up 9%.
For a change, I actually agree with Frank. As I posted earlier, resets are not issue. The govt understand the issue very clearly and has tools like Interest rates and Tax credit to take care of the problem.
The Govt. solution takes care of I component of PITI. But there is large Tax component for NJ homes. I don’t see anything at NJ state level, which can take care of Property Tax issue. Even if they do not increase, the taxes are at a level where a couple in 50s or older, is pretty much ready to throw in towel on the state. Hence you will have large shadow inventory. I know at least 10 homes on my block, ready to relist as soon as some decent comps are established. This is what will kill RE….
Tax News of the day:
http://www.nypost.com/p/news/local/tax_refugees_staging_escape_from_qb4pItQ71UXIc0i6cd3UpK
“Tax refugees staging escape from New York
New Yorkers are fleeing the state and city in alarming numbers — and costing a fortune in lost tax dollars, a new study shows.
More than 1.5 million state residents left for other parts of the United States from 2000 to 2008, according to the report from the Empire Center for New York State Policy. It was the biggest out-of-state migration in the country.
The vast majority of the migrants, 1.1 million, were former residents of New York City — meaning one out of seven city taxpayers moved out.
“The Empire State is being drained of an invaluable resource — people,” the report said.
What’s worse is that the families fleeing New York are being replaced by lower-income newcomers, who consequently pay less in taxes.
Overall, the ex-New Yorkers earn about 13 percent more than those who moved into the state, the study found.
And it should be no surprise that the city — and Manhattan in particular — suffered the biggest loss in terms of taxable income.
The average Manhattan taxpayer who left the state earned $93,264 a year. The average newcomer to Manhattan earned only $72,726.
That’s a difference of $20,538, the highest for any county in the state. Staten Island was second, with a $20,066 difference.
It all adds up to staggering loss in taxable income. During 2006-2007, the “migration flow” out of New York to other states amounted to a loss of $4.3 billion.
The study used annual US Census reports, which showed which states had increased population, combined with Internal Revenue Service data, which show which states, cities and counties had lost people.
While New York City and the state were the losers, the Sunshine and Garden States were winners. more than 250,000 New Yorkers who lived in and around the city fled to Florida. Another 172,000 city taxpayers ended up in New Jersey. . . .”
New Jersey??? Green Shoots!!!
plume (38)-
Nope. Latest stats show that NJ has a small net increase in population, but the folks moving out are high earners, and the ones coming in make very little and eat up public resources.
Kettle: You will love this one,
Outlook for Global Energy Markets after the Great Recession: With Perspectives on China and Iran
CNBC Breaking News
Home prices in 10 largest cities rise for the third straight month in August, a sign a housing recovery taking hold: Case-Schiller (story developing)
[39] schump
Sorry, should have hit the Sarcasm Off button.
http://www.ritholtz.com/blog/2009/10/breakdown-of-single-family-homes-by-price/
41 Seneca - Barry is waiting for the Case-Shiller numbers as well.
TBP posted “Beakdown of Single Family Homes by Price.”
“In September, 70% of transacted homes were priced under $250,000.
Lawrence Yun responds in the comments section…
In MD, I unfortunately need to attend a school consolidation meeting tomorrow night. It’s the latest and greatest local result of the bursting real estate bubble. Stupidly, or maybe naively, I thought we would be safe from such carpetbombing and raiding of innocents if we moved closer to the Federal government.
Of course, the kids are being punished as a result of our adult misbehavior during the last two decades.
There is no Federal law requiring local or county school systems to reduce high-level administrative and appointed headcounts proportionately to reductions in childrens’ services.
I can’t stop mulling over this inequity long enough to create my salient points. I’m frozen in anger and recrimination. Forgive me, but I’m a 46 year old woman with normal anger issues resulting from age and I refuse to take the happy pill or give up my coffee.
Does anybody have a list of points I can have? Anything work to delay such an action? I’m going for delay, because I know what is inevitable. But I believe housing will turn around here within three years, and there’s a hundred site housing development close to one of the schools that could save the issue if it can just be put off for a few years.
repost from last night…this is good…no comments?
212.chicagofinance says:
October 26, 2009 at 11:01 pm
For all you fans of the Doors…Ray Manzarek on keyboards…
http://www.youtube.com/watch?v=R32aFmxL9HY&feature=channel
Let’s think….3.5% of $250,000 is $8,750. Gee, I wonder what is driving those $250,000 and under sales? 70% in September - go figure.
Yun threatens @ TBP that without an extension of the $8,000 credit we face a double-dip recession.
I read an article that said now is the best time to buy a house because house prices never go down.
This is a masterpiece….
Got a trash can of Styrofoam peanuts, you can have em for free
You can drop by on the weekend and pick em up from me
But the trash can ain’t part of the deal
Only givin’ you the peanuts, get real
Don’t have no Hefty bags, so bring your own
Don’t bug me with questions on the phone
Don’t ask for help, don’t waste my time
And don’t complain, cause they won’t cost you a dime
Just ask yourself
Do you want my Styrofoam peanuts?
You can have my Styrofoam peanuts
Do you want my Styrofoam peanuts?
You can have ‘em all
45- Chicago
I did listen but couldn’t get into it. The only Doors tune I ever really liked is here..
http://www.youtube.com/watch?v=M_yWyBjDEaU
chifi,
you are like this boards Ashton Kutcher (http://twitter.com/aplusk)
This marks five straight months of NY Metro price increases.
Grantham:
http://www.gmo.com/America/
Thanks, CF…your weird Al link got me off the rage, at least.
““We do not want the American dream to expire,” Lance said. “We want to make sure as many Americans as possible have home ownership.””
what these knuckleheads should be saying is the following:
“We want to make sure as many Americans as possible have AFFORDABLE home ownership.”
oh yeah, affordability, that little word everyone seems to throw out the window.
SAS
anyone got a good housing affordability index for the boards?
might be a good tool.
SAS
#38 Only problem now after living in NJ for a few years, and paying those proeprty taxes, they are looking to leave here too. 40 to 50% increase in property taxes in 4 or 5 years,kills the green shoots.
so, I am watching the granddaughter today & tomorrow.
toddler. i think we will go out for later and have some fun.
any suggestions for a kid fun place in the Bergen county area?
I canceled a trip this week, cause daughter was going to put her in a day care for the few days cause she has a busy work schedule for the next couple days.
SAS
Veto That (51):
“This marks five straight months of NY Metro price increases.”
Yes it is, but keep in mind that these numbers are from August. It is very likely that this trend continues into September with the current ‘credit for cr@pshacks’ program which was supposed to wind down. Me thinks this winter will be the end of happy happy price recovery followed by more decimation if the government is really considering phasing out the credit. If the markets implode in the Spring due to another round of post-Xmas store closings and layoffs, then this 5-month winning streak will be nothing more than a blip on the ride down the first big drop.
3b,
not to worry, in a few years…. we all will be working for the govt.
:P
SAS
SAS, the problem with the affordability index is that it has so many moving parts and becomes subjective.
I think NAR creates one and it shows all time high affordability right now.
Judging from the little bit of data that i pulled into excel, price to income and price to rents are actually not as far from historical averages as many would think.
http://www.funnewjersey.com/rainy_days_NJ.HTM
SAS, I don’t know how bad the flu stats are up there, so I’d go someplace where there are no elementary kids during the day…no class trips. And no Chuck Cheesemeister.
Better would be something outdoors, like that train ride.
#58 Yeah NY metro increased a whopping 0.5% during the busiest time of the year for real estate sales.
We are about 37 months from peak and we are seeing a good 5% price blip in CS NY metro.
Interesting to note, this same thing happened 37 months from the 1988 Peak but then the index went on to crash another 10% over the next 8 years but at a slower pace obviously.
Judging from my anectdatal experience in central NJ, i am not surprised. The market was very active during June, July and Aug. I was shocked to see all the activity and the level of closing prices. But i also noticed that it seemed to completely stop on Sept 1. Maybe some of the realtors or house hunters here witnessed the same?
http://www.railsusa.com/cgi-bin/links/go.cgi?id=1080
Too far?
“Me thinks this winter will be the end of happy happy price recovery”
Stu, my bet is that we commence the downward price spiral with the release of Sept CS data next month. And then i think Oct data will be worse. ive seen some serious asking price reductions this month in my hood mixed with very little sales activity.
Here are typcial examples of gloomy forecasts delivered by njrer A-listers in 2005 & 2006.
“I am beginning to think that my original estimate of a decline of 30-40% may be conservative”
“housing prices in Northern NJ will fall upwards of 40% in the next 5 years.”
Case-Shiller data indicates that New York area house prices fell 21% from peak to trough. Condo prices have fallen by less.
So, are people here throwing in the towel on their “40% off” calls?
Or are folks accepting that their predictions turned out to be dramatically wide of the mark?
Lurkerd,
I’m still sticking to my guns on my 40% off call. The government intervention is certainly helping, but it won’t last forever. Anyone can dam a river, but eventually the water gets around it.
sas (54)-
The whole US economy is now based on the concept of sticking consumers with as much debt as it takes to trap them in one place and make them virtual slaves.
People who owe are real controllable.
Consumers not as confident as expected:
47.7 vs 53.1 expected by analysts
veto (65)-
Pretty much all local RE sales activity ceased by Oct. 1.
Gonna be a long Winter for delusional sellers.
Based on #58 and #65, seems like njrer consensus is to downplay the data and somehow build a case that a double dip housing crash will take place.
Remember, not all parts of the New York area had the scale of housing crash suffered in the suburbs.
In my town, prices held steady, with sales velocity of high-end homes actually accelerating during the crash years.
$1 million home sales by year
2006 - 5
2007 - 11
2008 - 30
lurk (66)-
40% off is too conservative. At bottom, it will be 50-55% off. The blow-off bottom will be an absolute bloodletting. People won’t be able to give away houses.
Rasmussen today
Christie 46%
Corzine 43%
Daggett 7%
rest undecided
#66 Not at all. take a look (if you can) at where prices were in 89/90, after the last bubble burst,and prices had fallen, and than appeared to stabalize, than take a look at where they bottomed out in 94, 95. This time will be worse with all the manipulation that has taken place in the market.
Schump - I agree 50-55% off for McMansions in exurbs like Somerset & Hunterdon.
Do you think that level of decline will happen in broader New York metro area?
#2 DL - we are also looking in MontCo. Was in NJ before and we are seeing same thing as you are, crap at prices way too high.
What gives - plenty of similar homes in NJ in good condition.
What’s the difference in Philly vs NJ?
#71 Remember, not all parts of the New York area had the scale of housing crash suffered in the suburbs.
Which areas did not?
lurk (75)-
Devastation everywhere. No one, anywhere, will be spared.
Gentrifying neighborhoods near Manhattan
How can we talk about prices not dropping further when unemployment is publicy stated at just under 10%?
Where are all these new buyers to come form to keep prices high?
It is all govt intervention to delay the inevitable further price declines.
Ket,
I just emailed you our updated “veto kettle” CS charts.
geocities acct went down for non paying users so i havent yet found a place to post to the board. Can you find a place to post the link?
let’s have a $500k tax credit.
There won’t be a bloodbath in Brigadoon. Not based on the traffic I saw this weekend at Open Houses. You can’t fight Wall St. Bonus money. You can’t fight people who are OK with spending $700k for a starter home.
“Seems like njrer consensus is to downplay the data and somehow build a case that a double dip housing crash will take place.
So, are people here throwing in the towel on their “40% off” calls?”
Lurkerd, i wouldnt get too excited about this head-fake blip. Even Robert Shiller himself is tepid about the price outlook and expects the declines to commence.
Take a look at the veto-kettle charts that kettle post later and you will see the comparison of the 80s crash to this crash from peak. About 37 months out from the feb 1988 peak, we had the same 6 months in a row price blip but then the index went on to commence a further 10% correction in prices over the next 8 year.
Also, on a real basis, we are already down 31%. So another 9% is not far off.
Dont forget we are under a national emergency folks.
If you see roadblocks dont take the mark of the beast.
hey clot quick boots on the ground question. Found a Double lot builder is selling as a combo for 60000. Assessed value is 52000K for one lot. no contigencies cash only sale, no permits and far as I can tell no surveys done on the land.
Here is the question since builders aren’t exactly building right now was thinking of coming in at 30-35K firm offer. Unrealistic? combined lot size is 1.1 Acre. This is without knowing the town obviously, best answer if possible.
I have been looking in the Bridgewater/Clinton/Flemington triangle for the past 6months. Very few decent 3-4bd/2ba homes listed in the 400-500k range. Most are either under or over, nothing in-between. Anytime a decent home is priced just under the 500k mark, it immediately goes under contract within days. I guess there are many buyers that can’t afford more than 500k and are waiting and waiting and waiting.
It occurs to me that the banking lobby is putting the kabosh to the housing tax credit extension. The banking and RE lobbies are mortal enemies, and they lately fought a vicious war over restructuring the Commerce Clause to allow banks into the RE business. Also, I figure anytime Chris Dodd starts flapping his well-exercised jawbone, his banking puppetmasters are pulling the strings.
The RE lobby is powerful, but financial services companies own Congress and run the gubmint. Banks don’t want to make the type or volume of loans that a generous extension of the tax credit implies. They fully understand that Phony, Fraudy, FHA and the MI industry are all trip-wired to implode, and no amount of mortgage insurance or gubmint guarantees will make them whole on the mother lode of defaults that would result from a year of expanded tax credits to the horde of drooling, fraudulent idiots that it would inevitably suck in.
Most banks probably secretly understand the depths of their insolvency, as demonstrated by their sheer avoidance of lending and obsession with stockpiling loan loss reserves. The game plan for all appears to be working a combination of high-volume trading/building loan loss reserves/avoidance of any type of lending/looting the gubmint/hoping for the best.
Clot, when I referenced accounting rules here two years ago, Bank was still crossing fingers that the issue would never become public.
In just a few months, Joe understood at least the buzz words. Internet is amazing for its speed of knowledge transfer.
lurkerd ignores the timing aspect of financial planning, and sees consensus where virtually none existed here.
I always thought that was the strength of this blog. Its lack of consensus.
SAS - Children’s Museum in Paramus?
http://www.njcm.com/
Oct. 27 (Bloomberg) — Investors worldwide are borrowing dollars to buy assets including equities and commodities, fueling “huge” bubbles that may spark another financial crisis, said New York University professor Nouriel Roubini.
“We have the mother of all carry trades,” Roubini, who predicted the banking crisis that spurred more than $1.6 trillion of asset writedowns and credit losses at financial companies worldwide since 2007, said via satellite to a conference in Cape Town, South Africa. “Everybody’s playing the same game and this game is becoming dangerous.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=atlyygQuBLUI
pain (86)-
Vacant land is the riskiest of all types of RE investment. From as little as you’ve given me to go on, I’d feel more confident telling you to take 35K to the Borgata and putting it all on the pass line.
Pat (90)-
It’s impossible to find consensus in the middle of a clusterfcuk.
“I always thought that was the strength of this blog. Its lack of consensus.”
I just checked out a Jersey City condo tower where theoretically prices should’ve have crashed, but haven’t.
The James Monroe building is a tired high-rise in Jersey City’s Newport section, a gentrifying neighborhood with a convenient commute to Manhattan. 2 sparkling new condo towers were built across the street from the James Monroe in 2007 & 2008, doubling the supply of condo units in Newport practically overnight and obstructing skyline and river views from the James Monroe. Thousands more condos were built in nearby neighborhoods, with developers offering incentives that James Monroe sellers couldn’t match.
Moreover, the James Monroe houses many finance industry professionals who should be suffering disproportionately from rising unemployment and falling incomes in their employment sector.
In other words, the problems of oversupply and shrinking demand appear to be more severe at the James Monroe than in the suburbs.
However, 2009 comps at James Monroe reveal that prices there have outperforming suburban house prices. Here are details on the 3 James Monroe condos that resold several times during the boom-bust years.
#2112
December 2002 $257,500
April 2005 $375,000
August 2009 $498,000
#3210
December 2004 $835,000
July 2005 $976,000
June 2009 $918,000
#3307
February 2006 $420,000
September 2008 $300,000
January 2009 $356,000
If one compares these comps to price trends of suburban houses, then one will gain visibility into the outperformance of urban condos relative to suburban houses. This contrasts with the early 1990s bust when urban condos dramatically underperformed suburban houses.
d2b says:
October 23, 2009 at 9:45 pm
I’m beginning to think that there will not see a major crash. While we have massive debt, much of it is owned by trading partners that have every incentive to keep us as customers. I think that the closest thing that we will have to a crash is the continued erosion of the middle class. We will have a middle class that is enslaved and really poor. The laptops, cell phones, and ipods will serve ass comfort mechanisms that will keep us passive. Then again we could always hire illegals to storm Wall Street.
The market will rise and fall. But the last 9 months have shown us that big money moves the market. Look at this week, triple digit increases when unemployment is high. Triple digit losses when AMZN blows away estimates. Same as it ever was.
this is an interesting theory. bc bob? clot? what say you?
[With apologies to Chifi, who would have posted this had I not first abused his trademark . . . . ]
The End is Nigh . . . .
http://www.cnbc.com/id/33487670
“I’d feel more confident telling you to take 35K to the Borgata and putting it all on the pass line.”
I’d put $5,833 on the pass line and then back it with 5X odds.
If your number comes up, you can win anywhere from $40,833 to $64167. Come on, baby needs a new pair of shoes!
stu (98)-
When were you gonna tell us you worked at LEH?
“I’d put $5,833 on the pass line and then back it with 5X odds.”
lurkerd: I am not a permabear, and I appreciate your perspective. However, you know for damn sure that a lot of that data can be polluted by various factors. A good example would be desi-money that has no contextual frame of reference, but they will soon get the lesson of a lifetime…..
Green shoots for us!
Just got a full price offer on FIL’s house in Roselle. Buyers have an FHA loan with 3 1/2% downpayment.
Jeez another one who’ll need a bailout.
Comrade Nom Deplume says:
October 27, 2009 at 11:22 am
[With apologies to Chifi, who would have posted this had I not first abused his trademark . . . . ]
Rock On nom!
Just ask yourself
Do you want my Styrofoam peanuts?
You can have my Styrofoam peanuts
Do you want my Styrofoam peanuts?
You can have ‘em all
[102] chifi
I thought that the story had an “End is Nigh” vibe you would appreciate.
and in other news, it’s official: Payback’s a b1tch!
http://www.nytimes.com/2009/10/27/business/27aig.html?_r=1&hp
Re 92,
“Everybody’s playing the same game and this game is becoming dangerous.”
Roubini is exactly correct, and the result is going to be even worse this time than the last.
A little morsel posted at ZH. What to think of this? Is this standard procedure on delinquent cc accounts?
http://www.zerohedge.com/sites/default/files/images/citi5.png
HE (105)-
Correlation is good. Really.
[106] schump
Not to my knowledge, and I see it as a troubling portend. Basically, everyone in trouble will start to default and look for their own personal cram-down.
The other possibility is that forecasting and data-mining software idenfitied that person as a probable bankruptcy case, and they figure half a loaf is better than none at all. If they collect now, they get in ahead of the secured creditors and don’t get wiped out.
Chifi -
Asians have been driving the condo market in New Jersey’s Hudson River towns for years. This trend of expanding demand won’t reverse, although it could decelerate.
The wealth creation ability of Asians in this country is uncanny. It is here to stay, and it helps explain why condo prices will continue to hold up relatively well in neighborhoods where Asians buy condos.
“Roubini is exactly correct, and the result is going to be even worse this time than the last.”
Just keep on ignoring the moral hazards of the decisions made by our brilliant leaders.
My favorite of all of them was rewarding GS for their CDO shenanigans. This should encourage them to devise even bigger and better financial nukes. Perhaps their bonuses will be even larger next time.
106 - maybe they posted a youtube rant against citi. worked with boa for that girl with the high interest rate.
The end is nigh:
“The CRE crunch continues claiming victims, with the latest being the Four Seasons Hotel in New York. And while Stuyvesant Town is some dinky little project somewhere on the East side of New York (or so prevailing thought runs), which few care if it goes belly up or not, the fat cats that frequent the opulent hotel on 58th street next to the brothel, pardon, gentlemen’s club, which is Tao in all but name, may be a little more concerned about this one. In addition to the Four Seasons, three other luxury hotels, which back a loan sent to a special servicer 10 days ago include the Four Seasons Biltmore Resort in Montecito, the ritzy Las Ventanas in Cabo, the destination of many a banker closing dinner, and the San Ysidro Ranch in Montecito.”
http://www.zerohedge.com/article/four-seasons-hotel-new-york-latest-victim-cre-crash
[98] stu
That’s some damn nice shoes.
Clot,
They’ve thrown about $10T at the last asset collapse. When this one goes bust how much are they going throw at it?
Stu,
If Greenberg has a pool, he might want to stay out of it for awhile. It might also be a good idea to sleep with the light on and a security force outside the doors and windows.
If anyone sees an ad for Food Taster, it might be a good job NOT to take.
Re CRE,
Walked down 5th Ave from the 40’s down to 14th street the other night after work. The sheer amount of empty retail space was simply staggering. I am not just talking about little shops either. Several of the buildings had their entire first floors empty.
Foreclosed on couple, Daniel Weston and Mary Ann Parmelee, charged with torturing loan modifiers.
http://www.nydailynews.com/money/2009/10/27/2009-10-27_foreclosed_on_couple_charged_with_torturing_loan_modifiers.html
Housing has hit a bottom, just not pricewise.
Actually, I think that should have gone to Nom, about AIG2.
#108 Or Citi really is this desperate for cash.
lurkerd - admit it, you’re Pret. Got a job in condos after the commercial/REIT business fell apart.
Come on, even the same gentrification talk, used to be Weehawkin now JC.
The Amazing Round Trip Of House Prices Back Toward Pre-Bubble Levels
When it comes to post-bubble retraces, the fundamental reasons may not matter as much as the technical case for a full reversion to pre-bubble prices. We all know the fundamental reasons why housing shot up–a credit bubble of epic proportions plus securitization, fraud and low interest rates, to name but a few factors–and why housing has plummeted: foreclosures and inventory are rising, tightening of credit standards by private lenders, etc.
In other words, regardless of the fundamental reasons offered (they’re not making any more land, inventory is drying up, foreclosure rates are dropping, etc.), markets tend to fully revert to pre-bubble prices.
Here is a chart of the national median prices which have already reverted to 2002 levels. The future full retrace has been added as a projection:
#36
” think the biggest issue for housing is shadow inventory esp in Northeast (mainly NJ). Due to high taxes many want to leave NJ as soon as they retire or at earliest opportunity. Many are waiting for housing market to show some green shoots and will put house on market. The inventory will swell next year like crazy.”
*********
That is an interesting theory. Anectdotally, a few real estate agents in the past couple of months have told me that they have a bunch of potential clients for next year when people believe the market will be improved.
Re: 91 NJGator - I was at the children’s museum in Paramus with my kids (4 and 2) last year — it’s a large warehouse space with lots of kind-of-rundown exhibits and playspaces, including an electric train, and replica fire trucks and cars the kids can climb on. Not the worst rainy day activity for the littlun’s if you’re desperate, but it feels like a relic, smells like cafeteria pizza.
#166- He - I know the ones you’re talking about. Many of those store fronts have been empty for a while now.
NJ kicks @ss!
http://www.cdc.gov/h1n1flu/images/maps/fluview/usmap41.jpg
Detroit: A city for sale, and very few takers
Over a four-day period a huge portion of the city of Detroit was put on the auction block, but very few bids were submitted. Of the 9,000 homes and lots put up for sale for prices as low as $500, only 1,800 attracted buyers. Most of these were not prospective homeowner-occupiers, but speculators from New York City and California hoping to cash in on a quick flip of the property.
No estimate was available of the total revenue generated by the auction, but it was certainly minuscule. For 200 properties in 12 city tax districts where information was provided, only $250,000 in revenue was brought in, for an average price of $1,250 per house or lot.
#122 I love how people believe the market will be improved. Improved based on what? I bet if asked they probably could give no real valid answer as to why it would be improved. It will be improved because they said so?
#120 Yes. And what is this belief that Asians will over pay?
Consumers: Current economy at 26-year low
http://money.cnn.com/2009/10/27/news/economy/consumer_confidence/?postversion=2009102711
“”It is surprising how uniformly weak this report was,” said Mark Vitner, an economist at Wells Fargo. “The expectations had gotten ahead of themselves. Everyone thought that economy would follow the rebound in the stock market. But now that the rebound has leveled off, folks doubt whether conditions will get better.”"
Ya think?
Speaking of cc cards, watch the autofilled “expected” pay date on your BOA online payments this month.
The due dates have changed in some cases. Be sure to backspace over the date and insert a non-bank holiday date prior. Otherwise the payment will post as one day late against the statement due date.
This has been a public service announcement. You may now return to your regular broadcast.
Reckless strategies doomed WaMu
• In its headlong pursuit of growth, WaMu systematically dismantled or weakened the internal controls meant to prevent the bank from taking on too much risk — the very standards and practices that had helped it grow in the first place.
• WaMu’s riskiest loans raked in money from high fees, but because the bank skimped on making sure borrowers could repay them, they eventually failed at disastrously high rates. As loans went bad, they sucked massive amounts of cash that WaMu needed to stay in business.
• WaMu’s subprime home loans failed at the highest rates in nation. Foreclosure rates for subprime loans made from 2005 to 2007 — the peak of the boom — were calamitous. In the 10 hardest-hit cities, more than a third of WaMu subprime loans went into foreclosure.
By the summer of 2004, nearly 60 percent of the loans WaMu was making were the riskiest sort — option ARMs, subprime mortgages and home-equity loans.
The most direct way was by paying them more to do so. A compensation grid from 2007 — the same year Killinger told investors that WaMu was reining in its home-loans operation — shows the company paid the highest commissions on option ARMs, subprime loans and home-equity loans: A $300,000 option ARM, for example, would earn a $1,200 commission, versus $960 for a fixed-rate loan of the same amount. The rates increased as a consultant made more loans; some regularly pulled down six-figure incomes.
“The big saying was ‘A skinny file is a good file,’ ” said Nancy Erken, a WaMu loan consultant in Seattle. She recalled helping credit-challenged borrowers collect canceled checks, explanatory letters and other documentation that they could afford their loans.
==
“Someone in Florida had made a second-mortgage loan to O.J. Simpson, and I just about blew my top, because there was this huge judgment against him from his wife’s parents,” she recalled. Simpson had been acquitted of killing his wife Nicole and her friend but was later found liable for their deaths in a civil lawsuit; that judgment took precedence over other debts, such as if Simpson defaulted on his WaMu loan.
“When I asked how we could possibly foreclose on it, they said there was a letter in the file from O.J. Simpson saying ‘the judgment is no good, because I didn’t do it.’ “
When bargain seekers become bagholders….
http://www.miamiherald.com/business/real-estate/v-print/story/1298873.html
Homeowners walking away from underwater mortgages
Andres Duque thought he got a real steal when he paid $125,000 for his Little Haiti condo. But four years later, similar units are selling for $35,000 and even less.
And so, faced with the prospect of being underwater on his mortgage — owing more than the unit is worth — for the next 20 years, Duque, 33, made what seemed to him like a rational choice: to cut and run.
He stopped paying the mortgage, basically forcing the lender to take the condo off his hands through foreclosure.
“I was able to pay off all my credit cards,” said Duque, who is biding his time in the condo, waiting until they come and evict him. “In a way, it was the best thing that happened to me because all my income is not being consumed by this freaking monster of a debt.”
Duque’s game plan is known as a strategic default…
“Improved based on what?”
3b, This is like saying that the banks stock prices have nowhere to go but down in Nov of 2008. But that is completely ignoring all the govt printing of money and pouring straight onto banks balance sheets. take govt out of the equation and i will agree with you that RE prices are definately going down another 50% everywhere. But thats not reality. The govt is in the picture and they do intend to stop the price declines.
Apparently a 90% real estate crash is not good for the people or the economy somehow.
The only middle class in America 20 yrs from now will be gov’t workers. Everyone else will be either rich or poor. Poor will be heavily on the dole. Merely affluent will pay 60-70% in taxes between fed, state and local. Truly wealthy will keep money offshore and continue to pay a very low effective rate. All of the downsides of Europe without the good food or vacation time.
Second try:
For Nom:
The tax breaks that ate America
The greatest threat to the U.S. economy is not creeping s0cial!sm. It’s creeping subsidism
http://www.salon.com/news/taxes/index.html?story=/opinion/feature/2009/10/26/tax_subsidies
“Instead of raising taxes to pay for universal healthcare, as many other nations do, the federal government grants a $250 billion a year tax break to employers to give them an incentive to buy healthcare for their employees.
..And then there’s America’s biggest antipoverty program, the Earned Income Tax Credit (EITC). By means of the EITC, the federal government “tops up” the wages of full-time workers who are trapped in poverty. Needless to say, this is also a massive subsidy to employers who pay poverty wages to their workers, and to consumers who buy goods and services produced by poverty-wage workers.
Did I mention the home mortgage interest deduction? This costs the Treasury around $80 billion a year in lost tax revenue that must be paid for by other taxes if it is not to enlarge the deficit. This program, justified on the grounds that it promotes home ownership, in practice showers government subsidies chiefly on rich and upper-middle-class homeowners. Some countries like Canada that lack such a tax expenditure have higher rates of homeownership than the U.S.”
Skep #135- There’s a good reason I’ve kept hold of my EU citizenship. :-)
Veto: take govt out of the equation and i will agree with you that RE prices are definately going down another 50% everywhere. But thats not reality. The govt is in the picture and they do intend to stop the price declines.
Well the question, what Govt can do more? Bernanke is keeping Interest rate to lowest. Govt giving housing tax credit. Govt giving help to prospective foreclosures. These are keeping market give appearance of stabilization.
Having done all that, I think Govt is pretty much out of options. With unemployment running high, they have to fix economy. Housing will always come second to unemployment.
When you look at NJ homes, Property Tax is the component that will kill any recovery. Just ask anyone above 50+ what is their major concern. NJ will be better today compared to Detroit, but bear in mind, there are only few main industries here.
I fail to see how Govt can rescue housing more, when unemployment is so high. They will continue to help, but they can’t force people to buy homes in declining price environment.
I agree that unemployment is key. If the economy recovers next year and unemployment gets better by a couple of percentage points, I could see there being a bounce in housing. Caveat is that the gov’t cannot take away stimulus (and I don’t think they will– possibly ever).
If holiday season is a bust and another round of layoffs follow, gov’t will not be able to stop further house price declines.
Part 2: WaMu: Hometown bank turned predatory
Skep,
We are in total agreement…for a change :P
http://www.businessinsider.com/henry-blodget-london-real-estate-seeing-a-v-shaped-recovery-2009-8
I thought UK GDP was shrinking.
“I think Govt is pretty much out of options.”
Fair enough SG, but this is where we differ in our thinking. Govt would think nothing of changing the tax code, giving abatements, plowing millions of homes, loosening immigration policy to open the floodgates. We’re right now witnessing the removal of MTM effect on inventory - the banks are hoarding the foreclosures and that is another big reason why prices arent down another 10-20% right now. If we think mortgage rates and tax credits are their only tools, we are probably fooling ourselves.
But i dont want to make assumptions either. So i dont even know IF the govt wants to push up prices or if they are simply trying to slow the slide downward so its more controlled. My guess is the latter but im no self-proclaimed expert on re so im open to be convinced otherwise.
Skep-tic: Well you got me looking into holiday season.
Five Reasons US Retailers May Have Jollier Holiday This Year
The article is rosy and even predicts 2.5 percent increase. But their on poll on website says something else,
Do you plan to cut your holiday spending this year * 1364 responses
Yes - 77%
No - 16%
Not sure - 7.3%
“The only middle class in America 20 yrs from now will be gov’t workers.”
Skep, Lish,
This is funny but i think extreme if meant to be serious. govt is slow to adjust. That is a big reason people work for govt - job security. Most who go into govt from priv sector take pay cut so they dont have to get laid off every time there is a recession.
But if this is a sustained structural shift in our economy, the layoffs will slowly happen. its law that we have to balance the budget. Corzine is already bragging that state payroll is down over the last three years. It will continue but dont expect state and local govts to cut and hire as fast as the dow goes above and below 10k.
If Jersey City is so robust why are rents dropping?
Veto: I am no expert either. I agree with you, there are somethings Govt can do. But to best of my understanding, most would involve some legislation compared to what can be done via executive decision. Legislations are very difficult on things like immigration.
I agree with your opinion, Govt may not try to push up prices, but simply slow the slide. The issue is they will do it at national level (esp where unemployment is high), which is trying to save places like Detriot, Indiana etc… I don’t think stabilizing FL, CA, MD, NY, NJ is that important. So, though overall situation might seem stable, pockets like NJ will go further down. The property Taxes will make things worse.
to anyone here who likes sharks and large sea creatures
http://www.telegraph.co.uk/news/worldnews/australiaandthepacific/australia/6442974/Tourists-in-Australia-warned-of-6m-monster-shark.html
Clot-
Those Four Seasons properties are owned by Ty Warner, the creator of Beanie Babies. He knows a few things about bubbles.
#142 Than why are they no just extending and increasing the 8k tax credit right now?
Veto-
At the shore, govt workers are part of the upperclass.
You mentioned MTM. Hard to believe, but whole neighborhoods will rot because of bank-owned homes. If I’m on a street with 60%+ bank owned, why would I ever pay my mortgage?
#133 I think with the exception of the 8k tax credit, most homeowners have no idea what the govt is doing to stop price declines. Americans are incredibly uninformed on almost all subjetcs (I have found). That is why I believe many will say things will improve next year, but if asked why, they will have no idea.
#144
Veto– gov’t budgets at the federal level are exploding. There was an article in the WSJ yesterday that the average federal agency’s budget is up 57% YoY. This means they are hiring more people, most of whom will be lifetime hires.
I agree that on the state and local level, the picture is more complicated. But take education, for example, which is the biggest part of such employees. If Dems stay in power, a larger portion of education funds will come from the fed gov’t, which essentially at this moment has an unlimited money supply.
U.S. Economy: Consumer Confidence Drops on Unemployment Concern
Share | Email | Print | A A A
By Courtney Schlisserman and Shobhana Chandra
Oct. 27 (Bloomberg) — Confidence among U.S. consumers unexpectedly fell for a second month in October, reinforcing the views of Federal Reserve policy makers who say household spending will be restrained by rising unemployment.
The Conference Board’s confidence index dropped to 47.7, trailing the lowest economist forecast, from a revised 53.4 in September, a report from the New York-based private research group showed today. A measure of employment availability slid to a 26-year low.
The emerging recovery from the deepest recession since the 1930s may fall short of expectations without a sustained rebound in consumer spending, which accounts for 70 percent of the economy. A separate report showed an index of home prices rose in August, indicating the housing market, while stabilizing, may be getting a boost from government aid.
“As long as you have increasing unemployment, consumer confidence will remain mired in the muck,” said Joseph Brusuelas, an economist at Moody’s Economy.com in West Chester, Pennsylvania, who forecast a drop in sentiment. “We think we are going to have another rough patch in the housing market” after a government tax credit expires, he said.
snip
http://www.bloomberg.com/apps/news?pid=20601103&sid=aknKBCX4QXZA
Nothing to see here, move along.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aknKBCX4QXZA
U.S. Economy: Consumer Confidence Drops on Unemployment Concern
Share | Email | Print | A A A
By Courtney Schlisserman and Shobhana Chandra
Oct. 27 (Bloomberg) — Confidence among U.S. consumers unexpectedly fell for a second month in October, reinforcing the views of Federal Reserve policy makers who say household spending will be restrained by rising unemployment.
The Conference Board’s confidence index dropped to 47.7, trailing the lowest economist forecast, from a revised 53.4 in September, a report from the New York-based private research group showed today. A measure of employment availability slid to a 26-year low.
The emerging recovery from the deepest recession since the 1930s may fall short of expectations without a sustained rebound in consumer spending, which accounts for 70 percent of the economy. A separate report showed an index of home prices rose in August, indicating the housing market, while stabilizing, may be getting a boost from government aid.
“As long as you have increasing unemployment, consumer confidence will remain mired in the muck,” said Joseph Brusuelas, an economist at Moody’s Economy.com in West Chester, Pennsylvania, who forecast a drop in sentiment. “We think we are going to have another rough patch in the housing market” after a government tax credit expires, he said.
snip
d2b says:
October 27, 2009 at 1:55 pm
“You mentioned MTM. Hard to believe, but whole neighborhoods will rot because of bank-owned homes. If I’m on a street with 60%+ bank owned, why would I ever pay my mortgage?”
Funnily enough (laughing through the tears), before this went down, the assumption was that the banks would lead the way, dumping properties as they had no emotional attachment.
That was before the whole MTM debacle meant that they needed to pretend their inventory had value.
Banks ended up being the most delusional sellers out there.
I’m going to an on-site land auction in a few weeks.
There’s no parking, no driveway and nowhere to pull over. I could park somewhat further away and walk, but I don’t want to.
Has anyone ever been to anything like this?
http://www.reuters.com/article/newsOne/idUSTRE59Q03Q20091027
LOS ANGELES (Reuters) - As Los Angeles housing advocates launched a campaign warning of mortgage rescue scams, a couple hit by foreclosure are charged with torturing two loan-modification agents they suspected of fraud, authorities said on Monday.
The couple, Daniel Weston and Mary Ann Parmelee, and three other people are accused of luring their two victims to an office where the men were tied up, held for hours and beaten, a spokeswoman for the Los Angeles County district attorney said.
Police were called after one of the victims managed to escape…
“The two allegedly sought loan modification assistance from the victims but believed that nothing was being done and wanted their money back,” a statement from the district attorney’s office said.
[135] lisoosh,
all good points. Much has been written in tax wonk circles about these, and more.
On a related note, I just learned that a former colleague from when I was in DC is now an attorney in the Office of Tax Policy at Treasury. I think I will try to turn her on to this blog.
Barney Frank, Predatory Lender
Almost two-thirds of all bad mortgages in our financial system were bought by government agencies or required by government regulations.
“The benefits of the tax cuts have been obscured by the recent economic crisis, no question about it. But when they finally take a look back at whether or not tax cuts were effective or not, it’s hard to argue against 52 uninterrupted months of job growth as a result of tax policy. And so my hope is, is that after this crisis passes—and it will—that people continue to write about and articulate a public policy of low taxes.”
So lets cut taxes and get that trickle down economic bandwagon rollings again.
“Banks ended up being the most delusional sellers out there”
The banks, unlike many private sellers, are not delusional — they are calculating. The banks well know that the properties do not have their book value but if they admit it they go belly up. The private sellers actually seem to believe the AIW (Alice in Wonderland) values they place on their nests.
#31 Frank.
Here is one small point you are missing about the Hoboken market. A lot of people bought those new construction condos on 5/1 ARMs and can’t refinance. Its not FICO’s or cash in the bank, its that no one will touch them because of the building they are in. When they go to re-finance they are getting denied as the buildings are dropping below the 85% Owner/Occupier threshold. A lot of Condo boards are omitting the owner/renter ratios from the paperwork they send back to the lenders in the hope that it gets overlooked. A lot of sales are falling through because of this. So the owners are stuck, can’t refi, cant sell. The only real option is to bite the bullet on the higher payment.
The U.S. median price of existing homes was $174,900 in September, 24 percent less than its peak in July 2006, according to the National Association of Realtors. The average balance of 401(k) accounts at the end of 2008 was $45,519, compared with $65,454 a year earlier, reflecting market losses, according to data collected by the Employee Benefit Research Institute, based in Washington.
Delusional bank.
http://www.zillow.com/homedetails/1193-Herkimer-Rd-Brick-NJ-08724/59925621_zpid/
Thanks Clot been in meetings all day. I’ll perform my due diligence and I’ll try and give you more info
72.Schumpeter says:
October 27, 2009 at 10:22 am
lurk (66)-
40% off is too conservative. At bottom, it will be 50-55% off. The blow-off bottom will be an absolute bloodletting. People won’t be able to give away houses
This is a bunch of bullspit by the most negative and radical person here. He needs to be absolutely banned from the real estate industry and shunned for this kind of talk. That also applies to that stinking mutt of his as well.
Let me tell you something, they’ll be holding the ice follies in hell, the day I mark my damn house down 55%. I’ll burn it before I let some cheapass vulture rip me off.
so, i took the little tike to a park, and we out for a canoli:)
the paramus children’s museum is a good idea. I will take the kids to the “super Hero Pizza Party” in Nov.
SAS
lurkerd,
You sound like a NAR knucklehead.
Who cares about C&S or an upturn? We know that the demand is not real, it is simply temporary and subsidized. People are still not able to afford 20% DP’s and a starter house should not be a ball and chain for life. So long as 2FAM’s in the working class neighborhood of Clifton (with 10K tax burden) are listed at half a million 500K… I’ll know there is more downside to come. Whether it is through price reductions or concerted efforts to rein in taxes, if you want the masses to play, the cost of admission and upkeep needs to shift.
Do not underestimate the importance of upward mobility in this massive game of musical chairs. The starter home needs the owner of the moveup to be able to get into his new crib in order to vacate…after all, they’re not making any more land ya’kno.
“Tim Geithner’s $14 Billion Gift of Taxpayer Funds to Goldman Sachs: Crisis Profiteering?”
http://jessescrossroadscafe.blogspot.com/2009/10/tim-geithners-14-billion-gift-to.html
Nom #159, which is why, liberal though I may be, I prefer a flat tax on all income (including investment income) with a reasonable standard deductable.
I even wonder how much Section 8 is just a handout to landlords.
when are we going to start putting these people in prison?
“New York Fed’s Secret Choice to Pay for Swaps Hits Taxpayers”
http://www.bloomberg.com/apps/news?pid=20601109&sid=a7T5HaOgYHpE
re#157 - Sounds like something out of pulp fiction, and similar to that story of the German senior citizens who Kidnapped and Tortured their investment Advisor.
is it true? NJ has one of the highest rates of autism of the states?
by gosh! what the hell is going on?
http://www.fightingautism.org/idea/autism-prevalence-report.php
i was at the local park today, walking & playing with kids, talking to parents. its was like I was at a autism convention. This is serious stuff.
SAS
“, which is why, liberal though I may be, I prefer a flat tax on all income (including investment income) with a reasonable standard deductable”
Liberal I am not but, I agree with this approach. I would, modify it slightly, though, and make the first dollar through — pick a number, $5,000, $10,000, whatever — taxable, then if one wanted to exempt some amount, say $20,000 from taxes and then tax every bit of income at the same rate. This would make EVERYONE feel som pain of supporting bloated governments. The other exception I might make is to exempt the first $20,000 in interest, dividand, cap gains from taxation, in order to encourage savings.
The one group that is not addressed in the copious musings in this column are those who simply inhabit their homes. People like myself who may fret over this or that…but in the scheme of things simply like being inside this little box enough to say…f*ck it.
PGC says:
October 27, 2009 at 3:11 pm
#31 Frank.
Here is one small point you are missing about the Hoboken market. A lot of people bought those new construction condos on 5/1 ARMs and can’t refinance.
So the owners are stuck, can’t refi, cant sell. The only real option is to bite the bullet on the higher payment.
PGC: But unless the 5/1 is an option ARM on neg am, the reset causes the payment amount to drop in these conditions, no?
listened to a guy say why he doesnt think hyperinflation will happen (or that it isn’t a given):
- national debt (fed debt up, consumer debt down, corporate debt down) on the whole is down
- a lot of the fed $ has gone to the purchase of toxic assets … the crap that created the meltdown
- those toxic assets are performing (generating interest) for the govt. maybe someone buys this crap later … and the govt makes a profit
What was the average age of the dads and moms?
sas says:
October 27, 2009 at 4:47 pm
is it true? NJ has one of the highest rates of autism of the states?
by gosh! what the hell is going on?
http://www.fightingautism.org/idea/autism-prevalence-report.php
i was at the local park today, walking & playing with kids, talking to parents. its was like I was at a autism convention. This is serious stuff.
SAS
Gator,
This just in from CNN:
“CNN Breaking News
– The FAA says it has revoked the licenses of two Northwest Airlines pilots who overflew a Minnesota airport last week”
SaS - We know for sure that autism runs in families. What triggers it is up for much debate. Prenatal screening for Downs is now a standard here in the US and Prenatal screening for autism is coming.
“But unless the 5/1 is an option ARM on neg am, the reset causes the payment amount to drop in these conditions, no?”
Chi,
I thought these were loans with a balloon payment at the end. All the people I have known with them, this is how it worked. Also, while the balance on the loan goes down, it does not tend to go down THAT much, and is a similar reduction to year 5 of a 30-year conventional mortgage. Which means that many of these folks will have huge debts to refi.
Is this not correct?
“What was the average age of the dads and moms?”
maybe early 30’s?
SAS
“Prenatal screening for autism is coming.”
yikes! that means more abortions. oh man, thats hurts SAS.
i hate to see these things.
SAs
everyone who is underwater but wants to trade up is just going to rent their houses out until bubble prices come back.
[170] lisoosh.
You like the flat tax because it appeals to an elemental notion of fairness. The flat tax is not flat in that wealthier people do pay more, but the hit to the individual is more or less uniform–each person pays in proportion to what they earn. It’s hard to argue that this isn’t fair, though there are some, notably of the liberal persuasion, that argue against the flat tax, claiming that it is regressive (really! they do!), and that only a steeply “progressive” tax is fair.
This latter view is predicated on the marginal utility theory, wherein they postulate that the millionaire doesn’t need that millionth dollar nearly as much as the low wage earner needs his 20 thousandth. Hence, the low wage earner’s last dollar has more “utility” than the millionaire’s. Since the millionaire won’t miss his quite useless millionth dollar nearly as much, we feel it is “fair” to take it from him and spend it for the benefit of those less well off.
Liberals will also note that there were times when our marginal tax rates were much more steeply “progressive” than they are now, but that misses the fact that the entire tax code is vastly different now. Those lower rates were gained at the cost of a lot of so-called “loopholes” and deductions. This meant that some earners, post-TRA 1986, were taking home much less than they were previously because they kept more post-tax dollars but lost all their loopholes and deductions. Being worse off, they simply raised the cost of their services.
Okay, that’s enough tax policy for today.
184: Skep, you jest? If not, ask any landlord how that’s working out these days.
Nom - I like the flat tax because ALL the still existant loopholes and deductions would be abolished (in my perfect world) and ALL income would be evenly taxed, not just the earned income of us lowly peons.
Plus an absolute fortune would be saved by cutting down on IRS people and tax lawyers as the tax code could be no more than a paragraph.
Shore Guy says:
October 27, 2009 at 5:01 pm
Chi, I thought these were loans with a balloon payment at the end.
Is this not correct?
Shore: as far as I know, unless it is specifically a balloon mortgage, all loans are 30 year…regardless of all the bells and whistles….that is why I think this ARM thing is a bit overstated….assuming they are pure ARM….the neg am stuff kills because the month payment locks in at something egregiously higher…still a 30Y loan
[187] lisoosh
“an absolute fortune would be saved by cutting down on IRS people and tax lawyers as the tax code could be no more than a paragraph.”
You commie! ;-)
#188 ChiFi
I would expect a lot of interst only, so now the pricipal is bring the 30yr ARM to a 15Yr type payment level. If there a lot of people who bought pre construction and held, they can’t refi because of the rental ratio, but theroetically they are not underwater as as all cash buyer could leave them with equity or the apraisal can leave them above the workout level.
Interest only. Egads! How anyone ever thought that was a valid approach escapes me.
SEC and Homeland Security need Web backup, GAO says
WASHINGTON (Reuters) - Securities exchanges have a sound network back-up if a severe pandemic keeps people home and clogging the Internet, but the Homeland Security Department has done little planning, Congressional investigators said on Monday.
The department does not even have a plan to start work on the issue, the General Accountability Office said.
But the Homeland Security Department accused the GAO of having unrealistic expectations of how the Internet could be managed if millions began to telework from home at the same time as bored or sick schoolchildren were playing online, sucking up valuable bandwidth.
Experts have for years pointed to the potential problem of Internet access during a severe pandemic, which would be a unique kind of emergency. It would be global, affecting many areas at once, and would last for weeks or months, unlike a disaster such as a hurricane or earthquake.
H1N1 swine flu has been declared a pandemic but is considered a moderate one. Health experts say a worse one — or a worsening of this one — could result in 40 percent absentee rates at work and school at any given time and closed offices, transportation links and other gathering places.
Many companies and government offices hope to keep operations going as much as possible with teleworking using the Internet. Among the many problems posed by this idea, however, is the issue of bandwidth — especially the “last mile” between a user’s home and central cable systems.
“Such network congestion could prevent staff from broker-dealers and other securities market participants from teleworking during a pandemic,” reads the GAO report, available here
“The Department of Homeland Security is responsible for ensuring that critical telecommunications infrastructure is protected.”
http://www.reuters.com/article/newsOne/idUSN2620750120091026
Start seeing this for what it is people. Its about control through fear. If they try to force vaccinate your kid you know what to do. Dont be a sheep.
Just finished looking at some closed listings in my town over the last couple of months. The prices for the most part are definitely back to 2003/02 levels. What is incredible to me however,(and I know I have been blathering on about this for some time), are the property taxes, starting at 10k and than 11, 11.5, 12, and even 13K a year!!
These are all for the most part modest/starter houses (capes, ranches, small colonials),and as such most of the purcahsers would be first time buyers. These people are looking at a minimum of $1000 to 1200 a month and more just in property taxes What a ball and chain around the neck, before they even touch the monthly mtg and insurance pymt.
First time home buyers? How many of these put down 20% or even 10%. How many of these sales were FHA, which is scary.
#184 So for 15 20 years or more? Perhaps never?
3b (127)-
Dude, all these people are idiots. The violence will begin when the public at large realizes this whole mess is not going to end like one of those “very special episodes” of Full House.
It ain’t gonna be a kumbaya moment. More like “talk to my little friend”…
veto (142)-
Every clever gubmint trick today adds another megaton to the plutonium/bad uranium dirty bomb that will eventually implode and take us all back to the Dark Ages.
Shore,
So who exactly is not paying tax? Social Security is taxed so you have seniors and the unemployed covered. Does your issue come down to deductions and credits. This may wipe out the small amount due from the low income, but it’s where the higher incomes (250K up) make out like a bandit.
How many people earn 250K on a W2 outside Wall St.? You want flat tax, get rid of partnerships, ban paying yourself in dividends and paying 15% as opposed to ordinary income. Get rid of Trusts as tax shelters. Give up NQPRT’s, BETIR’s, LLC’s, FLP’s.
Federalize Delaware.
The tax code is fair because it applies to everyone. If those low incomes make it up to the top then they can pay all their taxes as well. Inheritance tax is set in the code, just because you got an inheritance and I didn’t doesn’t give you an exemption. Just because you paid Nanny tax and I didn’t doesn’t give you an exemption.
You can have your 20K exemption on interest, it just has to be on interest from TBills …. :*)
3b, I’m very focused on the taxes as well. It’s a major reason why I’m considering staying a renter or buying/moving to PA.
I was really thinking that as prices retreated to more sane levels that I would purchase in NJ, but taxes have risen and I’m thinking they may continue rising.
Consider I’ve been renting for a long time in my complex and pay less than most ppl here ($1200/mo including heat). If I buy a modest home in NJ my taxes will be about $1000 so if I count the added expenses from ownership I would need to pay cash for a house for my monthly payments to be about what they are now!
Although I’d like to have a house, I find it hard to justify the added expense (and time) that would be required to have one. Maybe PA is the way to go for me. At least I can justify the taxes.
“The tax code is fair because it applies to everyone. I”
How funny. 48% of the income earners in this nation pay no income tax at all.
There is no good reason why anyone should pay a different tax rate than anyone else.
It is pathetic that a plumber who reports W2 income should pay a much higher rate than an investor who reports 1099 income.
Likewise, it isnot right that a successful lawyer or industrialist should pay a higher rate than a teacher or butcher. In the end, thse earning more will still pay far more, but the rates should be the same.
looks like there is more trouble on the Paki border.
not good.
SAS
flat consumption and passive income tax, work/labor should never be taxed-its immoral.
#200 Shore
Can you post a link to the 48%.
My main point is that the the successful lawyer ot industrailist will be paying closer to 15% while the plumber and teacher will be paying 25%.
http://money.cnn.com/2009/09/30/pf/taxes/who_pays_taxes/index.htm
47% will pay no federal income tax
An increasing number of households end up owing nothing in major federal taxes, but the situation may not be sustainable over the long run.
I’ll leave it to Kettle and Veto to explain toanalyse the numbers. But the graphs on the first page sumerize the last 30ys. It is interesting to note tha the numbers don’t reflect 401ks and other employer benefits such as health insurance. That would skew the 90th percentile mens number higher.
http://www.cbo.gov/ftpdocs/105xx/doc10527/10-02-Workers.pdf
Tax info brought to you by Lou Dobbs?
I’ll look at the Tax policy figures, but this pops out of the article.
“Of course, income taxes don’t tell the whole story. Workers are also subject to payroll taxes, which support Social Security and Medicare.
When considering federal income taxes in combination with payroll taxes, the percent of households with a net liability of zero or less is estimated to be 24% this year, according to the Tax Policy Center’s estimates.
”
So take out the stimulus money which I think is factored into these numbers and that 24% should drop further.
Here is the raw data.
http://www.taxpolicycenter.org/UploadedPDF/411943_distribution_federal.pdf
is lou dobbs mentioned in that article or are you doing the whole “i don’t like lou dobbs therefore i’ll choose to discredit anything and everything that comes out of the organization the employs him” thing?
#207 imkeithernandez
No, I think money.com does that on its own.
As for Dobbs, he left CNN as chief economist at the height of the Internet bubble to found space.com. That says a lot about the quality of Dobbs and CNN.
Can always count on PGC to peddle leftist envy.
The very concept of an income “distribution” contains a false premise - namely that wealth is distributed (by the wealth fairy?), rather than earned (by effort).
chicagofinance says:
October 26, 2009 at 10:54 am
I think I’ve posted this in the past…..two step process to separate the wheat from the chaff of Yankee fans:
(1) Did you ever see Mattingly place 1B?
(2) Who is John Wettleland?
Donnie Baseball is my favorite yankee ever, but Jeter will probably end up #1. his 1985 season was the best jerry, the best.
who doesn’t know Wettleand was the man before Mo?
“Houston, we have a problem. We are bankrupt.
That is the finding of Bob Lemer, CPA, Retired Partner at Ernst & Young; Aubrey M. Farb, CPA, Retired Partner at Grant Thornton; and Tom Roberts, CPA, Retired Partner at Fitts Roberts.”
[snip]
City of Houston
Disturbing Financial Facts—October 2009
By: Bob Lemer, Aubrey M. Farb and Tom Roberts
“The City of Houston is financially broke and it appears that the mayor who takes office in January 2010 may have to captain the City through bankruptcy procedures.
The City’s unrestricted assets were $1.2 billion short of the already recorded corresponding liabilities these assets were needed to pay as of fiscal year end June 30, 2008,according to the City’s latest publicly available audited Comprehensive Annual Financial Report (CAFR). The $1.2 billion shortfall was a result of operating losses totaling $1.5 billion for fiscal years 2004-2008, applying the full accrual basis of accounting used in the private sector.
Apparently the City has no idea as to what has transpired financially since June 30, 2008 or will transpire this fiscal year ending June 30, 2010, on the full accrual basis of accounting. But even on the modified accrual basis of accounting (essentially cash basis) followed by the City and all other municipalities, the $236.8 million fund balance in the City’s general fund as of July 1, 2009 (the beginning of this current fiscal year) would not exist except for the City having deposited the proceeds of pension obligation bonds into the City’s general fund instead of depositing them in their legally required immediate destination, the pension plans’ bank accounts.
The City is in this dangerous financial position because its total spending since fiscal year 2003 has greatly outstripped its total revenues in that period. And the rate of growth in the City’s total revenues since 2003 has, in turn, greatly outstripped the City’s rate of growth in population plus inflation.
Thus the City’s problems are a result of greatly overspending and not a result of insufficient revenues. All of this occurred before the current severe recession. Now the City has the added burden of the recession.
The City is in a real financial dilemma, because now its two principal sources of general fund revenues are in trouble—sales taxes and property taxes. Sales tax revenues already are dropping significantly and property tax revenues will commence dropping at an even more rapid rate after the next annual appraisal and assessment process. And the City will have to go to the voters for any contemplated rate increases in either the sales tax rate or the portion of the property tax rate allocable to operations.
It appears to us that there may be no viable alternative to bankruptcy proceedings and thereby positioning the City to regain control over its overspending, through addressing structural spending problems such as overstaffing and overly generous employee benefits.”
http://globaleconomicanalysis.blogspot.com/2009/10/city-of-houston-is-bankrupt-so-are.html
210: Follow up question to # 1 must be, alright then, what was his uniform #?
210.yikes says:
October 27, 2009 at 11:12 pm
who doesn’t know Wettleand was the man before Mo?
Idiot front runners…ever walk around NYC?
Does anyone remember 10 o’clock thunder?
Remember… soup is not dinna Jerry… and it has to be at Mendy’s… you can go somewhere else but it isn’t as good as Mendy’s…
and Thurman Munson.. always fondly remembered, revered, and respected, a tear brought to one’s eye always… he left us way too soon… # 15 da real deal… could have had it out with Reggie… but did what was right for the team… he made the peace.. good times gang… what days…
The 1985 season was one for the ages. Pre-steriods and all balls….probably 110 of those 145 RBIs were Rickey…
212.relo says:
October 27, 2009 at 11:30 pm
210: Follow up question to # 1 must be, alright then, what was his uniform #?
http://www.baseball-reference.com/players/m/mattido01.shtml?redir
I hope the World Series is marred by beanballs, bench-clearing brawls, rain delays and weather bad enough to cause the baseball-hating suits at Yankee Stadium to either not show up or spend the game cowering in their overpriced suites.
A pox on both teams. A pox on baseball, which has been reduced to a tedious, irrelevant sideshow full of medically-enhanced (yes, there is a lingering positive effect from taking ster0ids) freaks.
#209 A West
Feel free to define “leftist envy”, because I’m pretty sure it is not me.
Can I send you back to the basic definitions of wealth and income so you can work out how they are linked.
Wealth = assets - liabilities
Change in Wealth = income - expenses.
I don’t care what your wealth is, but if you have income, then you are liable for taxes.
If you have a big pile of gold and you do nothing with it, it earns no interest and you pay no taxes on it. It’s your gold I don’t want it and I don’t want to give it to anyone else.
But if your expenses are more thank your income and you have to sell, you may be have a capital gain (or loss) if you made a profit. Profit = Income = liable for taxes.
It’s your wealth, do what you want with it, just pay the applicable taxes on your income.
I’ve sentenced boys younger than you to the gas chamber. Didn’t want to do it. I felt I owed it to them.
YOU USELESS FCUK!
http://www.bloomberg.com/apps/news?pid=20601103&sid=ac5lPAgsFVrU
Rickey probably never took steroids, but he got himself run from the Mets for playing cards.
If I had to sit and watch the Mets every night, I’d start playing cards too.
strumpet: what did you think of that European eyeglasses ad I sent you?
217.Schumpeter says:
October 27, 2009 at 11:45 pm
I hope the World Series is marred by beanballs, bench-clearing brawls, rain delays and weather bad enough to cause the baseball-hating suits at Yankee Stadium to either not show up or spend the game cowering in their overpriced suites.
A pox on both teams. A pox on baseball, which has been reduced to a tedious, irrelevant sideshow full of medically-enhanced (yes, there is a lingering positive effect from taking ster0ids) freaks.
Does anyone remember the “swoon over my hammy?”
chi (221)-
The file wouldn’t open. Can you post it here, or is there g^nit@lia and buggery in it?
Let me give it a shot…
Found it on the Tube
http://www.youtube.com/watch?v=JRRPFAhmNno&feature=related
For JJ:
http://www.youtube.com/watch?v=rZJ8-v7LdIo&feature=related
GMAC is getting a third bailout. Unbelieveable…
Read about UN Agenda 21. Connect the dots. Realize you have looked behind the curtain and have seen the wizard. Then prepare. There isnt much time left. Folks this country is under a national emergency. What that means is Obama can execute executive orders at his command. In other words Martial Law.