November Contracts Surprise – But can we believe the numbers?

From the WSJ:

Pending-Home Sales Hit 19-Month High

The housing market showed signs of improvement as the number of Americans signing contracts to buy existing homes increased in November to the highest level in 19 months.

The National Association of Realtors’ seasonally adjusted index for pending sales of existing homes increased 7.3% on a monthly basis to 100.1, the industry group said Thursday. Sales increased in all four regions of the country.

Economists surveyed by Dow Jones Newswires had expected pending-home sales would climb by 0.5% in November. November’s 100.1 level was the highest since April 2010.

The NAR credited the increase partly to pent-up demand from buyers who have been on the sidelines for months and may have previously failed to obtain a mortgage.

“Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,” the trade group’s chief economist, Lawrence Yun, said in a statement.

The NAR’s pending sales gauge is 5.9% above its level in November 2010.

From Bloomberg:

Pending Sales of U.S. Existing Homes Rose 7.3% in November

The number of Americans signing contracts to buy previously owned homes rose more than forecast in November as falling prices and low borrowing costs boosted demand.

The index of pending home sales increased 7.3 percent to the highest level since April 2010 after climbing 10.4 percent the prior month, figures from the National Association of Realtors showed today in Washington. Economists forecast a 1.5 percent gain, according to the median estimate in a Bloomberg News survey.

The industry that triggered the 18-month recession that ended in June 2009 is showing signs of stabilizing as construction picks up, builder confidence improves and the number of houses on the market declines. Nonetheless, another wave of foreclosures may weigh on real-estate values next year.

“It looks like buyers are becoming more confident and are attracted to record-low mortgage rates,” Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. At the same time, he said, “activity still looks depressed by historical standards.”

Estimates for pending home sales ranged from a drop of 3 percent to an increase of 11 percent, according to the median of 30 forecasts in the Bloomberg survey.

Pending home sales were up 6.9 percent from November 2010. (this is 5.9, not 6.9 – jb)

From HousingWire:

Pending home sales up 7.3% in November

Pending home sales — a measure of mortgage contracts signed and an indicator of possible home closings – increased 7.3% in November from October, reaching its highest level in 19 months, the National Association of Realtors said Thursday.

The trade group’s pending home sales index hit 100.1 in November, up from a revised 93.3 for October and 5.9% higher than 94.5 a year earlier.

The last time the index score topped 100 was April 2010 when it hit 111.5, which was buoyed by the effects of the federal homebuyer tax credit.

Lawrence Yun, NAR chief economist, said November’s gain is likely due to delayed transactions that stalled over mortgage contracting issues.

“Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” Yun said. “Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.”

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135 Responses to November Contracts Surprise – But can we believe the numbers?

  1. grim says:

    From HousingWire:

    Buyers, sellers continue to butt heads on home prices

    Most Americans feel now is a good time to buy a home, but those who want to sell are having difficulty finding buyers at desired prices, causing seller sentiment to fall to record lows.

    The low opinion is causing a wide gap between homebuying and home selling that won’t narrow for at least the next five quarters, according to a new report by the Mortgage Bankers Association’s Research Institute for Housing America.

    From 1992 to 2005, positive seller sentiment fluctuated between 40% and 60%, according to the report. Since 2005, sentiment has plummeted to 7.6%, even while homebuyer opinions remain high. Despite high unemployment, slow economic growth and problems plaguing the economy, nearly 80% of American households believe now is a good time to buy a home.

    Today’s pattern of homebuying sentiment looks similar to past recessions, but what is different is today’s historically low positive seller sentiment, according to Gary Engelhardt, Syracuse economics professor. The large overhang of mortgages past due or in foreclosure is a major factor for the difference. As market values have fallen, potential sellers have not adjusted their target selling prices downward fast enough to bring buyer and seller sentiment more in line with one another.

    He says seller prices may be anchored to past market values such as the purchase price of the property or what a comparable property sold for recently, especially around the market peak.

    “If owners update these anchor prices infrequently, then a wide gap in buyer and seller sentiment would emerge in the face of sharp, prolonged declines in market values, such as those seen in the last few years,” Engelhardt says.

    He also cites the underwater homeowners who can’t or won’t adjust their selling prices to below that of their outstanding mortgage amount, as they would need to bring cash to the table to pay off the mortgage plus transactions costs.

    Also, with large declines in market values, sellers now hold a highly leveraged option that pays off with any future increase in prices, meaning there may be increased value in waiting, either to initially list, or to keep, the property on the market. This could hold prices high enough to drive a substantial wedge between the existing buyer and seller. And a poor jobs market with limited mobility, a key driver of housing-market transactions, may exacerbate this.

  2. grim says:

    From the Hartford Courant:

    It really is a buyer’s market, but owners remain pessimistic

    Where do you side in the great real estate buy-sell divide of 2012? If you’re a homeowner considering selling sometime in the new year, are you apprehensive that you won’t get the price you need or want, and therefore it’s possible you won’t even try to sell?

    The study was conducted by Syracuse University economist Gary Engelhardt using extensive data from the University of Michigan’s Survey Research Center, which is generally recognized as an authoritative source on consumer attitudes.

    Engelhardt said that unlike earlier post-recession periods, owners have been more deeply shocked by the extent and severe side effects of foreclosures, short sales and unemployment. In the aftermath of earlier recessions, such as in the early 1990s, 40 percent to 60 percent of homeowners remained relatively positive about their prospects if they chose to sell — far higher than the tiny sliver who see it that way today.

    Many owners “have not adjusted their price expectations downward” to keep pace with local declines in property values following the mortgage bust, Engelhardt said, thereby contributing to the sharp divergence in their real estate visions compared with buyers.

    This is consistent with the results of a study conducted in mid-2011 by Zillow, the online real estate and mortgage information company. Zillow found that sellers nationwide were having trouble coming to grips with what market forces had done to their property values. They knew prices had declined, but they didn’t necessarily think those devaluations applied to their houses. For example, people who had purchased their homes in 2007 or later thought their homes were worth about 14 percent more than their actual sales value. People who bought homes before 2002 were slightly more realistic but still overvalued their houses by about 12 percent.

    How are such seller perceptions affecting local real estate market dynamics today? For one thing, they are keeping owners out of the game. But they also bringing more motivated and committed sellers to the fore. Glenn Kelman, chief executive of Redfin, a national realty brokerage based in Seattle, says the shortages of listings in some markets currently are the byproduct of owners “waiting for better times to sell.”

    But owners who feel they need to sell now — they’re downsizing, moving to a new area, or there’s been a divorce — turn out to be “more reasonable” in general, according to Kelman. “Some are even resigned” to the reality that despite their unfortunate timing, they will definitely sell provided they price the house realistically.

    What about sellers who refuse to believe their properties won’t command the prices they expect or require? Mike Litzner, broker-owner of Century 21 American Homes on New York’s Long Island, says “it’s all about educating them. We try to show them the comparables” — the recent selling prices of similar houses in the area. “If sellers really want to sell,” he says, “they adjust their expectations to the changed realities.” If they adamantly refuse, Litzner says his agents often decline the listing rather than waste weeks or months trying to market an overpriced piece of real estate.

  3. grim says:

    From MarketWatch:

    Charting how home prices are moved by rates, city

    All things equal, lower mortgage rates should spur increased demand for houses, whether that shows up in prices or in transactions. That formula held through the beginning part of the last decade — mortgage rates fell, and house prices boomed. After the housing market bubble burst, however, mortgage rates have dropped and yet prices have as well. This could be for several reasons, including tougher lending standards, which make it more difficult to get financing in the first place.

  4. grim says:

    This could be for several reasons, including tougher lending standards, which make it more difficult to get financing in the first place.

    Why? Because the idea of living in a world without a Greenspan Put is just too hopeless for us? Just too scary to live in a world where Momma Washington can’t protect you? So instead of accepting it, we need to try to find some sort of justification for why it isn’t working. So, it’s got to be lending standards, just too tight. Yep, it’s those bad Wall Street bankers screwing with us again.

  5. Mike says:

    Good Morning New Jersey

  6. grim says:

    From Crains:

    NYC’s foreclosures continue slow avalanche

    The rate of foreclosures may be stabilizing in most big American cities, but that’s not the case here, according to new data.

    In the New York metro area, the foreclosure rate rose to 7.5% in June, up 2.1 percentage points from the previous peak in December 2009, according to Foreclosure-Response.org, a joint project by the Local Initiatives Support Corp., the Urban Institute and the Center for Housing Policy. The rate is up 3.7 percentage points from March 2009, when the group started tracking the data in 100 U.S. metro areas.

    “New York is a judicial state, so it takes a long time for properties that enter foreclosure to exit the process,” said Rob Pitingolo, a research assistant for Urban Institute. “The backlog of foreclosures in the system is driving the foreclosure rates up.”

    Judicial states require a lengthy and formal court proceeding to carry out a foreclosure, and in New York that process can take up to two years for a loan to complete foreclosure, according to experts.

    “At the current pace of foreclosure sales, we are looking at a process that could take decades to complete,” said Leah Hendey, a research associate at Urban Institute, in a statement. “It is critical that the status of these properties be resolved quickly if we want to stabilize communities and housing markets.”

  7. grim says:

    From yesterday:

    funnelcloud says:
    December 29, 2011 at 5:09 pm

    Grim #30
    So with everything that’s happened to the housing markets, Banks, stock market, 401k’s, big business Job loss and all the theft thats occurred in the last 4 year, you absolutely believe that rental markets price increases are completely based on current supply and demand conditions and cannot or are not be manipulated in any way in an attempt to try to create a market demand. Maybe in your area but not in warren or sussex county.

    ——————————————–

    I just can’t bring myself to imagine the level of collusion that would be necessary to manipulate the rental market. With such a large number of independent players in the rental market (from both the “seller” and “buyer” sides), the most rational explanation is that the rise in rent is due to increases on the demand side, as more “households” turn to renting instead of buying, as well as a reduction of available inventory on the supply side (adding additional rental inventory is as expensive as additional sale inventory).

    Care to elaborate on the dynamic behind manipulation? Idiot landlords don’t get tenants, just like idiot sellers don’t ever sell. Again, I’ve got to say that you’ve got to be looking at agreed upon rentals, and not the inventory of properties, to determine the overall trends and activity. The inventory is just too polluted with crap

  8. grim says:

    That said, builders are adding to rental inventory, so the question is, is the longer term supply more than enough needed to satisfy all the demand, and will cause a decline in real rents over the longer term? Or will the new supply not meet the need, in which case real rents will continue to rise? Likewise, rents tend to trend with incomes in local areas, so where do you think incomes will be over the next 5 years?

  9. grim says:

    Let’s just look at population and labor force for a minute.

    November of 1999 – Things were pretty darn good, economy was rocking, unemployment was incredibly low (3.6%), salaries were increasing, housing market was improving, stock market was on a tear. Things were GOOD. Would anyone here like to argue with me that the Fall of ’99 wasn’t just about the best labor market you can (still) remember?

    NJ Population – 8,414,350 (2000 Census Data)
    Employed – 4,119,200 (NJDOL, NSA)

    Fast forward to November 2011:

    NJ Population – 8,791,894 (2010 Census Data) (377,544 additional residents)
    Employed – 4,136,000 (NJDOL, NSA) (16,800 more employed than in 1999)

    Not only do we have almost 400,000 new residents in the state, we’ve technically got more people employed today that we had during one of the greatest economic expansions in recent history.

    Given the NJ average of 2.68 residents per household (2010 census average), in 2011 we need 140,874 additional housing units in state to accommodate the new residents alone. This is a tremendous number.

    Just for reference, the peak employment total was reached in February of 2008 with 4,284,800 (Seasonally adjusted) folks employed, so yes, we are down from peak.

    However, just looking at the overall near-term trend over the last 10 years, population and employment continue to grow. Likewise, personal incomes have risen dramatically over this period as well. Oh, and don’t forget about inflation ($1,000 in 1999 is $1,350 today), so I’d assume a similar double digit growth rate for rents as well.

  10. BearsFan says:

    9 – grim, can you post those personal income numbers? Thanks

  11. grim says:

    NJ Per capital personal income (BEA)

    1999 – $35,215 ($46,091 adjusted)
    2000 – $38,666 ($48,963 adjusted)
    2001 – $39,686
    2002 – $39,980
    2003 – $40,532
    2004 – $42,451
    2005 – $44,060
    2006 – $47,746 ($51,643 adjusted)
    2007 – $50,364 ($52,996 adjusted)
    2008 – $51,473 ($52,131 adjusted)
    2009 – $50,313 ($51,138 adjusted)
    2010 – $50,781

  12. gary says:

    – The NAR credited the increase partly to pent-up demand from buyers
    – It looks like buyers are becoming more confident and are attracted to record-low mortgage rates
    – Housing affordability conditions are at a record high and there is a pent-up demand from buyers, Lawrence Yun said.

    Ask yourself again if you believe the numbers. Any questions?

  13. gary says:

    grim [11],

    So, from 2000 to 2007, salaries increased at a rate of approximately 2.25% per year while house prices went up 87% on top of property taxes increasing 60% to 70% in the same period.

  14. grim says:

    More on rents from FRED:

    http://research.stlouisfed.org/fred2/graph/?chart_type=line&width=800&height=480&preserve_ratio=true&s%5B1%5D%5Bid%5D=CUURA101SEHC

    Looking at the Owners Equivalent Rent component of the CPI-U. Increase in rental prices (through the OER proxy of course), is pretty damn consistent over the long term.

    If the link doesn’t work, just use series id – CUURA101SEHC

  15. gary says:

    Many owners “have not adjusted their price expectations downward” to keep pace with local declines in property values following the mortgage bust, Engelhardt said, thereby contributing to the sharp divergence in their real estate visions compared with buyers.

    This is consistent with the results of a study conducted in mid-2011 by Zillow, the online real estate and mortgage information company. Zillow found that sellers nationwide were having trouble coming to grips with what market forces had done to their property values. They knew prices had declined, but they didn’t necessarily think those devaluations applied to their houses.

    Insult to injury, property taxes in NJ are totally disconnected from reality. We have another 20% decline to go.

  16. Libtard at home says:

    Grim,

    Our first floor unit is going up on the MLS again as tenant was transfered to Amsterdam. We’ll see what the off-peak demand looks like comared with August’s, where we had 30 views over 4 days with three offers over asking.

  17. gary says:

    In the New York metro area, the foreclosure rate rose to 7.5% in June, up 2.1 percentage points from the previous peak in December 2009.

    Tick… tick… tick… tick…

  18. gary says:

    Tears and tortured faces filled county offices Thursday as hundreds of workers were called and told to pack up their belongings and turn in their identification badges in a round of mass layoffs.

    In all, 262 civil service workers were fired. Most were from the county departments of social services, probation and public works, and were, according to union officials, among the lowest paid in the county.

    Another 137 workers were demoted, with their pay cut, according to a Nassau County spokesman.

    “This shouldn’t be taken out on the workers of Nassau county,” said a tearful Lisa Kuriga, who was fired from her job of 14 years as a child support investigator.

    The layoffs are being blamed on Nassau’s looming $310 million budget deficit.

    They could’ve avoided this by just raising taxes. Right? Right? I said, right?

  19. grim says:

    Stu – Have fun, here are the last 3 months of rentals in town:

    Address / Ask / Rented / Rooms / Beds / Baths / Parking
    14-1/2 CHARLES ST / 800 / 800 / 4 / 1 / 1 / 1
    8 Francis / 850 / 850 / / / 0 /
    29 The Crescent / 900 / 900 / 2 / 1 / 1 / 1
    850 Bloomfield / 950 / 950 / 3 / 1 / 1 / 1
    331 BLOOMFIELD AVE / 995 / 1100 / 3 / 1 / 1 /
    198 FOREST ST / 1000 / 1000 / 4 / 1 / 1 /
    207 BELLEVUE AVE / 1000 / 1000 / 2 / 1 / 1 / 1
    41 GLENRIDGE AVE / 1100 / 1100 / 2 / / 0 / 1
    130 Forest Street / 1100 / 1100 / 4 / 1 / 1 /
    132 MIDLAND AVE / 1100 / 1050 / 3 / 1 / 1 / 1
    298 CLAREMONT AVE / 1150 / 1150 / 3 / 1 / 1 /
    201 N FULLERTON AVE / 1200 / 1200 / 4 / 1 / 1 / 2
    70 GREENWOOD AVE / 1200 / 1200 / 3 / 1 / 1 / 1
    87 PINE ST / 1275 / 1275 / 4 / 2 / 1 / 1
    415 CLAREMONT AVE C003H / 1300 / 1300 / 4 / 1 / 1 /
    16 OXFORD ST / 1300 / 1300 / 6 / 2 / 1 / 1
    114 CLAREMONT AVE / 1350 / 1390 / 3 / 1 / 1 / 2
    4 CLAREMONT PL / 1350 / 1350 / 4 / 1 / 1 / 2
    28 GRENADA PL / 1350 / 1350 / 5 / 2 / 1 / 2
    43-45 NEW ST / 1350 / 1250 / 5 / 3 / 1 / 1
    211 LORRAINE AVE / 1395 / 1375 / 3 / 1 / 1 / 1
    209 North Fullerton / 1400 / 1300 / 5 / 2 / 1.1 / 2
    6 JEFFERSON PL / 1400 / 1400 / 5 / 2 / 1 / 2
    8 N MOUNTAIN AVE / 1400 / 1400 / 4 / 2 / 1 / 1
    41 GLENRIDGE AVE 3R / 1475 / 1450 / 4 / 2 / 1 / 1
    50 PINE ST C900I / 1500 / 1450 / 4 / 1 / 1 / 1
    108 FOREST ST / 1500 / 1500 / 5 / 2 / 2 / 2
    850 Bloomfield Avenue / 1500 / 1500 / 4 / 2 / 1 /
    23 SYLVAN PL / 1550 / 1550 / 5 / 2 / 1.1 / 2
    25 MIDLAND AVE / 1600 / 1600 / 6 / 3 / 1 / 2
    81 MIDLAND AVE / 1600 / 1600 / 4 / 2 / 1 / 2
    132 MIDLAND AVE / 1650 / 1650 / 4 / 2 / 1 / 2
    180 VALLEY RD / 1650 / 1600 / 6 / 3 / 2.1 / 2
    49 MONTAGUE PL / 1675 / 1600 / 6 / 3 / 1 / 0
    171 ORANGE RD / 1695 / 1695 / 4 / 2 / 1 / 1
    429 VALLEY RD / 1700 / 1650 / 6 / 2 / 1 / 2
    72 N WILLOW ST / 1800 / 1600 / 7 / 3 / 1 /
    77 CENTRAL AVE / 1800 / 1750 / 7 / 3 / 1 / 2
    15 MONROE PL / 1800 / 1800 / 6 / 3 / 1 / 1
    331 ORANGE RD / 1800 / 1800 / 5 / 2 / 1 / 2
    2 LAUREL PLAZA / 1850 / 1850 / 5 / 2 / 1 / 1
    126 VALLEY RD / 1850 / 1875 / 5 / 2 / 1 / 1
    414 VALLEY RD / 1850 / 1850 / 6 / 2 / 1 /
    415 CLAREMONT AVE 2F / 1900 / 1900 / 5 / 2 / 2 /
    200 S MOUNTAIN AVE / 1950 / 1850 / 4 / 2 / 1.1 / 2
    149 CHESTNUT ST / 1950 / 1950 / 6 / 2 / 1 / 3
    18 BALDWIN ST / 2200 / 2200 / 4 / 2 / 2 / 2
    18 BALDWIN ST / 2300 / 2000 / 4 / 2 / 2 / 2
    4 ROCKLEDGE RD / 2300 / 2200 / 5 / 2 / 1 /
    39 WALNUT ST / 2400 / 2350 / 6 / 3 / 2 / 1
    52-54 FAIRFIELD ST / 2550 / 2550 / 5 / 2 / 1 / 2
    82 N FULLERTON AVE / 2600 / 2600 / 6 / 3 / 1 / 2
    3 VINCENT PL / 2600 / 2600 / 7 / 4 / 2 / 3
    83 BAY ST / 2700 / 2700 / 7 / 3 / 2.1 /
    14 COLUMBUS AVE / 2995 / 2750 / / 3 / 0 /
    142 UNION ST / 3200 / 3300 / 7 / 3 / 2 / 2
    48 S PARK ST 509 / 3400 / 3200 / 4 / 2 / 2 /
    51 GRANDVIEW PL / 3500 / 3400 / 8 / 4 / 2.2 /
    29 MARQUETTE RD / 3800 / 3600 / 8 / 3 / 2.1 /
    29 MARQUETTE RD / 3800 / 3600 / 8 / 3 / 2.1 /
    386 PARK ST / 4500 / 4500 / 10 / 4 / 3.1 / 3
    15 HIGHLAND AVE / 4995 / 5000 / 11 / 6 / 2.1 / 4
    161 HIGHLAND AVE / 5000 / 5000 / 9 / 4 / 2.1 / 2
    338 HIGHLAND AVE / 5800 / 5800 / 10 / 5 / 3.1 /
    177 UNION ST / 5900 / 5900 / 14 / 8 / 3.1 / 2

  20. Mikeinwaiting says:

    When I moved this August the owner had plenty of demand but no one passed the credit check. One guy offered 300 more than but the owner found out he was being evicted from his preset rental for nonpayment. I pay my rent in one shot for the year (make a deal on price) so I was in the drivers seat. Sat down to sign papers told him , put more mulch in beds ,cut down a few small trees & paint porch. They were done, put it in righting before handing over check.

  21. Mikeinwaiting says:

    writing , duh.

  22. Comrade Nom Deplume says:

    (18) Gary,

    Payback’s a bitch.

    And a recent internet exchange with a firefighter who displayed his bigotry suggests to me that the public sector monolith can be attacked one leech at a time. I’m tempted to pen some letters, one to the commander and one to the editor on the town paper, questioning why someone who hates a large percentage of the town has a position of trust with it.

  23. Anon E. Moose says:

    Mike [20];

    I pay my rent in one shot for the year (make a deal on price) so I was in the drivers seat.

    I don’t disagree, but where does that put you when something breaks during the term of the lease? Its not like you can withold rent until it gets fixed. Even before my last landlady went all psychopause, minor complaints that came up during the prior month always seemed to get deferred until the 3d of the next month when the rent check hadn’t yet appeared. Her husband always walked out with the check when he dropped by to fix the broken gozinta – ‘Oh, while you’re here, let me give you the rent check…’

  24. BearsFan says:

    just an anecdotal note here, just needed to share. Did some house recon in Monmouth yesterday, looking at things. Saw a small new SF development, a few occupied…empty lots next to them. Looked up very recent sales price, $720K. Mortgage is $690. Now, there is no guarantee they didn’t hold back on putting down a bigger deposit, but…any reactions to this?

  25. Comrade Nom Deplume says:

    Was surfing and passed cspan. My old friend Bert Ely was testifying about eurobanking.

  26. BearsFan says:

    1999 – $35,215 ($46,091 adjusted)
    2000 – $38,666 ($48,963 adjusted)
    2001 – $39,686
    2002 – $39,980
    2003 – $40,532
    2004 – $42,451
    2005 – $44,060
    2006 – $47,746 ($51,643 adjusted)
    2007 – $50,364 ($52,996 adjusted)
    2008 – $51,473 ($52,131 adjusted)
    2009 – $50,313 ($51,138 adjusted)
    2010 – $50,781

    interesting. that 1999 # of 35K adjusted to today’s $ is roughly 45K. So we’ve seen some real growth in wages. I wonder if it has anything to do with the 12-15% of the population who are employed by the state/municipalities whose treasury has increased it’s intake 100% over that same span?

  27. BearsFan says:

    sorry, I saw you after i posted you put adjusted numbers in there for us. my mistake.

  28. Mikeinwaiting says:

    Moose I vet my landlord as well, known family, mutual acquaintances. I have never had a problem with landlords since I sold in 06. Just lucky I guess.

  29. BearsFan says:

    and, a record number of state employees are retiring/locking in benefits….
    http://www.nj.com/salem/index.ssf/2011/06/new_jersey_to_see_record_numbe.html

    I’m currently renting from 2 of them. They may help inflate the overall numbers of a healthy NJ economy, but the only good thing they are doing for the state is spending like drunken sailors here, for the time being. Funny thing is, both are extremely over-educated, yet cannot grasp the concept that the 120K they put into a pension over the span of their careers, and have drawn that much in their first year and a half of retirement in pension payments and health benefits, is not a system that can continue for much longer. Normalcy bias kicks in, head meet sand…but to me, the numbers can be deceiving as an overall gauge of health of NJ economy.

  30. gary says:

    Private sector wages have not only flat-lined, but have retracted. Factor in the long-term rate of inflation and the pain is even worse. Clot has it right; many years of wandering in the abyss. The public sector is just now beginning to get drilled. We’re in the top of the 5th inning. Believe me if you want but my cars are paid for and I’m a mouse click away from the postman handing me the deed to my house.

  31. gary says:

    “If you attack people who have dedicated their lives to public service, say they’re overpaid when they are not, say their benefits are too generous, when they’re not, then it’s going to have an impact on morale,” Rosenstein said.

    Hey Rosenstein, why not you and your public service sisters and brothers create a fund and contribute annually to stem the tide of layoffs? Or, should we just raise taxes on the guy and gal working two part time jobs?

  32. Anon E. Moose says:

    Gary [30];

    my cars are paid for and I’m a mouse click away from the postman handing me the deed to my house.

    If you believe that inflation is inevitable (and I do), why not lever up on hard assets (like land)?

  33. gary says:

    Moose [32],

    I guess I’m exhausted looking for yield on anything but it’s something to consider. I don’t know if I’m comfortable considering any asset at this point. I just put some dough into a high yield dividend ETF just to get any kind of return whatsoever. This is just another reason why housing in our area, including Upper Haughtyville, still has a way to go. No jobs, no salary increases and no ROI. Equities, ironically, are the only play. What other assets, in your opinion are a reasonably safe move to at least obtain a return equal to the rate of inflation?

  34. gary says:

    Orion [33],

    ~ 2000 jobs announced with the first 60 days of 2012. Thank goodness we’re insulated and prestigious and have a sizeable unicorn population.

  35. grim says:

    Gary,

    I’ve been thinking about buyer dynamics quite a bit over the past few weeks, no doubt spurred by the Occupy Wall Street Rhetoric (99%, etc).

    Buyers in NJ, in the towns we tend to focus on, tend to be in the top quintile for income, period. Current owners of those homes, tend to be in lower quintiles. So should we really be focusing on the median incomes here? I don’t think so. It is the income of the buyer pool that has a closer relationship to prices, not the income of the owner pool.

    ESPECIALLY, realizing the growing income gap between the top tier and median, and the top tier and bottom. The poor are staying poor, and the rich are getting richer.

    In 2010, a household income of $129,811 put your family in the top 20% of all wage earners in the state. Congratulations, you are the 20%, maybe even higher.

    Families in the top quintile have been doing better than folks in the lower quintiles (not significantly better over the short term, but the lower quintiles have certainly been doing worse).

    One of the major factors driving incomes in the top quintiles is the fact the number of wage earners per family is significantly higher than the lower quintiles. Earners per household around the median tend to be close to 1, and households at the top are very close to 2.

    Looking at the quintiles, homeownership rates at the top quintile tends to sit in the 90% range, where at the median it tends to be around 60-70%.

    Cue Kettle here, but even with the decline in pricing, we are still looking at a pretty clear stratification still developing between incomes and homeownership.

    Now, layer on the tiered housing model that Case Shiller publishes. The biggest price gains (still) from 2000 and onward are in the lowest price tier, not the highest. Homes under the $287k mark in NJ are significantly more expensive today than homes over the $463k mark.

    Put the two together, if you are a household with 2 wage earners bringing in $130k+ a year, looking in the mid $400s, you are in a significantly better position than the median family making $63k looking to buy a lower priced home. At the median, not only did you see less income growth, your house is more expensive. Single income families don’t stand a chance in hell, unless the single wage earner is a high earner alone. Even so, realize that it’s very easy for a 2 income family to eclipse that single wage earner, despite having a high income.

  36. Thundaar says:

    Boonton-
    Any posters out there know Boonton at all? Is this thought of as a high end town or at least parts of it? My friend has a 10,000 sq foot home on a couple of acres and a few streets off Rockaway Valley Road and sits on three sides in the woods (Jonathan Woods-I think). It needs massive updating-kitchens, baths, paint, indoor pool needs work ……….taxes are in the mid $20k’s
    He would like $1.25 million….is that crazy for that area even at the height? Never thought of Boonton as “high end”. Not saying I dislike Boonton just never thought of it as a $1,000,000 plus kind of town.
    Thanks again!

  37. gary says:

    grim [36],

    Understood, but didn’t we always say that without healthy activity at the starter level, the rest of the food chain can’t exist? How do we measure the ability for the upper quintile to sustain themselves through rough times comapred to the lower quintile? The upper earners usually have assets and a larger safety net (i.e. savings, investments, family) to assist them. They also have, as you pointed out, two wage earners in the upper quintile as opposed to one in the lower; thus, two heads are better than one. So, are the residents in Upper Haughtyville insulated or do they just have the means to tough it out longer? Are there metrics to back this up or is it just intuition and experience talking? My keen sense of smell tells me that no one will be spared.

  38. Jill says:

    Libtard #16: Where is your rental? A colleague of mine is looking for an apartment.

  39. yo says:

    Grim,nice arguments you have been posting lately.I agree with all the post backed by stats.

  40. gary says:

    Thundaar,

    Is it Boonton or Boonton Twp.? Big difference.

  41. Thundaar says:

    Gary-
    Boonton Township- Thanks!

  42. yo says:

    Not everyone is having difficulty financially,specially the ones that are still holding their jobs.At 20% unemployment,80% are still working.Income on this people are most probably still equal to before the downturn.This people in the middle to upper tier have the buying power.Since home prices are lower and interest rates at rock bottom,Monthly servicing of mortgage is affordable.
    An example is a home that was bought at the height of the market for $360,000 with a 20% down puts the buyer at $1657 a month,with a down of 20% at 5.6% interest rate.Same house that is priced at $230,000 today ,is paying a mortgage of $878.44 with a 20% down at 4% interest rate.

    This person was not affected by the job losses and income still intact from the downturn.All that is affecting him is fear of a job loss.But his buying protection from purchasing this home has gained 50%.$1657 mortgage before the downturn to $878 to today. I think Grim’s arguments are in the bull’s eye.

  43. Jags says:

    The old school way of buying…sort of makes sense.

    Grow Slow, Pay As You Go Method of Home Buying
    Here is what mortgage companies don’t want you to do:

    Rent or buy the smallest, most inexpensive mobile home, house or apartment that you can exist in.
    Estimate the size of the mortgage you could qualify for based on what the mortgage companies are telling you.
    Each month deposit the difference between your monthly rent or house payment and what the mortgage companies say you can afford to be paying each month. Also include any money you will save in home ownership costs (insurance, utilities, maintenance, repairs, property taxes, etc.) from buying or renting a much smaller residence.
    Once your savings has grown to the point that you can afford to pay cash for a larger residence, pay cash for the larger residence but continue to deposit the previous amount into your home buying savings account.
    Repeat step #4 as often as you deem necessary.
    If you follow the Grow Slow, Pay As You Go home buying method, three things will happen.

    First, you will fully appreciate every dwelling upgrade. After all, you can’t fully appreciate a larger living space until you’ve live in a cramped living space. Nor can you fully appreciate a free standing home unless you’ve lived in a thin-walled apartment surrounded by other apartments.

    The second thing that will happen, is that over time you will be able to afford twice the house you could have afforded if you had bought into the instant gratification home buying plan promoted by real estate and mortgage companies. This is due to all of the interest you will earn on the invested mortgage payments you won’t have to make, combined with all of the mortgage interest charges you will save by not having a mortgage.

    And finally, the third thing that will happen is that at some point you can choose to stop buying larger homes and instead simply use your investments to supplement your income — meaning you can take more time off from work to spend time doing things that are most important to you.

    If you opt for the popular instant gratification home buying plan (Grow Fast, Pay Later), all of the interest charges you will pay will only insure that the top executives of your home’s mortgage company will have more time to do what is important to them.

  44. grim says:

    More on the stratification/change of buyer:

    Income Level/2010 buyer breakdown/2004 buyer breakdown

    $0-$44,999k / 8.5% – 14.2%
    $45,000 – $64,999 / 14% – 21.6%
    $65,000 – $84,999 / 15.9% – 15.4%
    $85,000 – $124,999 / 29.5 % – 26.6%
    $125,000+ / 32.1% – 22.2%

    (non adjusted)

    In 2010, 32% of buyers had an income of $125,000 or more, versus 22% in 2003.

    This is huge.

    Heck, $200k and greater made up 14.2% of all 2010 sales vs 9.9% in 2003.

  45. grim says:

    38 – Gary, you are going to hate me man…

    In 2003 the percentage of first time buyers in NJ was 40% , in 2010 it’s 51%.

  46. Anon E. Moose says:

    Grim [36];

    Buyers in NJ, in the towns we tend to focus on, tend to be in the top quintile for income, period. Current owners of those homes, tend to be in lower quintiles.

    I agree. The only people who can afford to buy from them are those in the top quintile, who are stuck paying more (even inflation adjusted) for less.

    In my view the dynamic is The Locust (Boomer) Generation selling out the next generation, giving them a lower quality of life at higher cost. We’re talking about towns that were once accurately described as “middle class” (3 BR capes on 50×100), maybe the right side of the bell curve (measured as they could also afford the occasional vacation), but still firmly in the middle nonetheless. What was affordable on one wage earner’s income is now being sold (even today) at comparatively higher P/I ratio, where today’s household income statistically includes more second income earners. So higher income earners (post-graduate professionals, small business owners) are moving into neighborhoods and buying from retiring/retired plumbers and tradesmen of a generation ago.

  47. grim says:

    Median income of married first time home buyers in NJ in 2010 was $99,500k.

    Think about that, median. Half of all first time married couple buyers are making more than $100k. This is way above the 2010 median household income in NJ. Wouldn’t be surprised to see the top quintile of this group start around $150k (I don’t have the data).

  48. gary says:

    Ok, so if all the stats are indeed true then the X factor is property taxes? Are we looking at this from different angles? Then why are we off 30% in price from the peak if everything appears to be proportional?

  49. John says:

    46 grim

    “In 2003 the percentage of first time buyers in NJ was 40% , in 2010 it’s 51%.”

    That’s an interesting statistic – do you have the actual number of first time buyers in 2003 vs 2010?

  50. gary says:

    I just answered my own question(s). It’s a combination of property taxes, 20% unemployment/under-employment and lending qualifications. And the percentage of first time buyers in 2003 as compared to 2010 in the form of number of buyers will be substantially less in 2010 as John asked above.

  51. Comrade Nom Deplume says:

    [30] gary

    more on inequality, complete with Gini coefficients. Ooooooh, Gini Coefficients.

    http://taxprof.typepad.com/files/crs-1.pdf

  52. grim says:

    So higher income earners (post-graduate professionals, small business owners) are moving into neighborhoods and buying from retiring/retired plumbers and tradesmen of a generation ago.

    Post-grad professionals are nothing more than the tradesman of our day. We all shovel shit these days, just the same. The previous generation’s plumbers possess more useful knowledge than just about every fresh post-grad these days.

    Perhaps the real criminals here are those who peddled the post-graduate degree as some sort of ticket to the good life entitlement.

    Don’t scoff at the tradesmen, most of those who were successful at what they did were sucessful because they were good at running small businesses, not because they could snake a drain. Most plumbers I know these days are successful millionaires. They’ve created jobs and employed crews dozens deep for years. Not only have they made good lives for their familes, they did it for their crew too. These guys risked everything on projects.

    Today’s post grad professional creates no jobs, actually -1 jobs. They simply consume a job and expect to be paid handsomely for it. They’ll take no risk, and they expect more than their share of reward.

    Party’s over America, the Post-WW2 paradise is over. We got fat while everyone else took our jobs.

    Don’t expect the same standard of living as your parents, it’s just not going to happen. Get mad, get pissed off, channel that anger into something constructive. Maybe then we’ll have a chance, but I’m not going to bet on it.

  53. gary (38)-

    No one will be spared. No one.

  54. grim says:

    That’s an interesting statistic – do you have the actual number of first time buyers in 2003 vs 2010?

    Not directly, will need to approximate based on the published stats:

    NJ Sales/FTB Count
    2003 – ~146,200 (40% FTB – ~58,480)
    2010 – ~110,000 (51% FTB = ~56,100)

    Even more interesting when I look at those numbers…

  55. grim (54)-

    The complete lobotomization/enslavement of Amerika is almost complete.

    Witness every major news network talking about every candidate except Ron Paul. A pal of mine said TPTB is passing a stone over this guy, but I say no way. If his candidacy gains any traction at all, they’ll kill him.

    The machine has grown too large. The amount of banksters/militia for politicians (aka, the police)/bureaucrats/political hacks/teat-suckers has reached critical mass. They outnumber the rest of us, and they are locked into an electoral you-scratch-my-back-I’ll-scratch-yours feedback loop that will ensure them victory after victory until the whole bloated system collapses under its own weight.

    In fact, all we have left to hope for is that the collapse comes soon.

  56. grim (55)-

    Big diff is that those 2003 first-time buyers were buying into a market still short of topping out, in an environment of aggressive credit expansion.

    In 2010? Today’s first-timers are buying into the fifth inning of a complete collapse that’s accompanied by a deflationary credit crisis that’s turning the US into a Third World jerkwater.

  57. Oh…and don’t forget the property taxes…

  58. grim says:

    58 – Like Gary said, it’s the X factor.

    Look at these idiots:

    http://njrereport.com/images/resagesbig.jpg

    Ahead of the curve back in 2007, taxes weren’t on any of their radars.

  59. grim says:

    Needless to say, with an outlook like that it’s not a surprise that Foxtons didn’t last much longer, and filed for bankruptcy later that year.

  60. XXX says:

    #57 How many of these dual income buyers have 50K to 100k or more in student loan debt, vs. 10 or 20 years ago? How many will be paying for child care? What happens if one of the earners looses their job? The numbers do not tell the whole story, far from it.

  61. joyce says:

    53
    Great post, grim. Spot on!

    A plumber, electrician, mason, etc are individuals who produce, create, and add value.
    An accountant, et al (myself) pushes paper around all day (well electronically now-a-days). I don’t mean to offend or demean anyone; others may feel similar roles are very productive and meaningful, but that’s just now how I feel.

  62. Anon E. Moose says:

    Grim [53];

    I don’t want to get into the weeds on value judgements of relative professions. People earn what they are worth and I don’t call that tune. I was using professions as a proxy for income potential — the upper half of middle class v. HENRY.

    My point is what was once affordable to many/most of the middle class (that 3BR cape) was used, abused, and is now being sold considerably deteriorated to higher income strata at (still) inflated prices (Case and point – a $250k converted lake house 50 miles from a metropolitan area).

    Don’t expect the same standard of living as your parents, it’s just not going to happen.

    Agree. The Locusts have swarmed the crops and are moving on (to Belize, according to a recent article I posted) where they’ll expect to receive their Social Security checks timely.

    channel that anger into something constructive. Maybe then we’ll have a chance, but I’m not going to bet on it.

    No energy left — takes everything and then some just to pay the mortgage.

  63. joyce says:

    not* how I feel

  64. joyce says:

    That’s right, Moose. The baby boomers are to blame for EVERYTHING wrong with the housing market.

    Is it possible they are listing their houses for what they think is market value +/- 15%. Yes, 15% too high is a lot. And yes, some lists are just crazy. But no one is forcing anyone to buy them. When some one does pay what we would think is an overpriced borderline crapshack, again no one forced them to do so.

    What are you ENTITLED to a very nice house at your FMV price?

  65. Brian says:

    Prediction for 2012:
    A bidding war erupts on my parent’s crapshack 50 miles from a metropolitan area. Closing price: $289,000. Wohoo!

  66. John says:

    We live in a world of politicians just reacting to market concerns and a finance-dominated system in which the primary economic activity is borrowing/lending/and trading. Heaven forbid Goldman should not make $100 million a day – every single day.
    Economists and politicians are enslaved to the stock and bond markets. Media sweeps all into a frenzy about the market opening in Asia Sunday night. This is all based on an ever increasing need for ever larger per share earnings for our corporations to support stock valuations. Its all about corporate per share earnings and their “growth story” – that’s the beast that needs to be satisfied and all is laid to waist in that quest.

  67. Comrade Nom Deplume says:

    Prediction for 2012:

    Nothing major out of Washington. That is because Obama has to run for reelection and the house is still republican. Even if Obama wins and the House flips, the new members don’t come in until 2013.

    I also predict a financial market move of significant proportions based on the outcome of the election. The period before the election will see slow decline and cash building up on sidelines as investors await a potential tax selling downdraft in equities. If momentum shows a clear Obama win and the potential for the house flipping, the effect will be muted as tax selling will be spread out over a longer period.

  68. Barbara says:

    44.Jags

    Here’s a better idea. Buy a multi family that allows you to live in a unit for free while your tenants rent covers all expenses. Then follow all your steps except doing it this way leaves you with an income producing asset on the other side. Thats what I did and it has really ppaid off.

  69. Barbara says:

    I will be looking at some rental properties next week. Capitulation is in, I am seeing wide margins but still have a few doubts about supply ( a local boondoggle may go all rental soon and I do not want the competition). Short sales still looking tricky but moving better that a few years back. I’ve got a good contact with a local lender who will be useful in short sales and I don’t want to deal with a big bank ever again so I hope that all works out. Credit checks are scary, I may pay a brokerage for screening if it comes with some sort of insurance.

  70. Anon E. Moose says:

    Joyce [65];

    That’s right, Moose. The baby boomers are to blame for EVERYTHING wrong with the housing market.

    Well, they are walking away from the closing table with 95% of the sale proceeds. Nt like they are just disinterested bystander at the closing table.

    Is it possible they are listing their houses for what they think is market value +/- 15%. Yes, 15% too high is a lot. And yes, some lists are just crazy. But no one is forcing anyone to buy them. When some one does pay what we would think is an overpriced borderline crapshack, again no one forced them to do so.

    Forcing? No. I’m just lamenting that the Locusts are eating their young (not specifically, as I’ve called the game it is “You screw my kids; I’ll screw your kids; we all retire in Boca together”), and pulling up the ladder they climged from the generation behind them. They are the “ME” generation, after all.

  71. Anon E. Moose says:

    Con’t [71];

    And thanks for self-identifying. I’m far too polite to ask a lady her age.

  72. Brian says:

    Joyce – 65
    Sounds like Moose needs to channel his anger into something constructive.

  73. joyce (65)-

    Never forget that you are speaking to a simpleton who carries water for the banksters.

  74. Anon E. Moose says:

    Brian [73];

    I hate to go all Doom-like here, but vengence can be constructive, pour encourager les autres.

  75. All I want for New Year’s is moose’s head on a platter.

  76. SX says:

    Best Self-Gift this year? A leftover 2010 Bianchi San Jose in Hunter Green. Great trainer and fat tire (700c) all-rounder. Between that and Horse Camp for the kid, we had a great break.

  77. SX says:

    76. Apple in mouth? Bahahahahaaaa

  78. Anon E. Moose says:

    We are Doomed – Coconut Water Edition

    “If people see me carrying around this coconut water with my yoga mat this will show that I like yoga and I’m really conscious and enlightened,” says Simon.

    It’s not about the taste. For people who see soda as a sugary poison and fruit juices as loaded with calories, coconuts evoke glowing healthy people, according to Pirko.

    “The only thing that really counts is image,” he says.

  79. joyce says:

    72
    Moose,
    My parents are babyboomers. How many more times do you have to be wrong before you will remove your veil of arrogance and ignorance?

    74
    Meat,
    you’re right again, this isn’t the first time you’ve reminded me of that, i should know better

  80. grim says:

    My point is what was once affordable to many/most of the middle class (that 3BR cape) was used, abused, and is now being sold considerably deteriorated to higher income strata…

    I guess it depends on perspective, the direction at which you look at the transaction. Does the seller set the price? Or does the buyer? It takes both a seller and a willing buyer. Buyer’s don’t need to buy, there isn’t a gun involved here.

    What I’m getting at is don’t discount the willingness of your peers to outbid you and/or accept a lower value proposition than you might. Value is a subjective beast when it comes to real estate.

  81. BearsFan says:

    53 – grim, great post. Similarly, I’d cast a bigger net and say the financialization of everything as the match that set things off. None of this ever gets to this point without fiat.

  82. Comrade Nom Deplume says:

    Okay, on to some football. The line on the Patriots-Bills is -11.5. Who the heck thought this up? Bills dispatched Tebow last week and match up well against our battered defense. Much as I love my Pats, I gotta bet that they don’t cover the spread. Easy money.

  83. Comrade Nom Deplume says:

    Wanna take on Occupy Wall Street? Challenge their tax exemptions!

    http://taxprof.typepad.com/files/2011-tnt-250-2.pdf

    So here’s another 2012 prediction: Some OWS groups that filed for 501(c)(3) status, and the Alliance for Global Justice, which sponsors OWS in NYC, will have their exemptions challenged (if it hasn’t happened already). The purpose of the challenges will be to see if the IRS actually investigates or gives the groups a pass. The latter could be a decent campaign issue.

    Even if IRS doesn’t issue an opinion in time, that could provide a Fox News-worthy issue since the IRS clearly has held back inconvenient information ahead of an election. They did it in 2010.

  84. grim says:

    Reference any listing that comes on the market screaming of value. It’ll attract 8 bidders that will move the price to market.

    Reference some of these:

    10 Wakefield in Caldwell, asking $329,000, sold $351,000
    6 Welshman in Caldwell, asking $439,500, sold $450,000
    4 Wells in Glen Ridge, asking $459,900, sold $482,000
    239 Ridgewood in Glen Ridge, asking $725,000 sold $818,000
    143 W. Northfield in Livingston, asking $489,500 sold $505,000
    51 Dunnell in Maplewood, asking $429,000 sold $460,000
    26 Felton in Millburn, asking $829,000 sold $865,000
    48 Twin Oak in Millburn, asking $995,000 sold $1,361,000
    176 Midland in Montclair, asking $699,000 sold $740,000

    All multiple bidders, pretty much all of these were inked in a week or two from hitting the market.

    Who is to blame here? Clearly the buyers should be altruistic and not overbid their fellow non-boomer peers?

  85. sx (78)-

    Like a pig. Bwahahahahaha!!!!

  86. I think a better tell on where the market is headed in 2012 is to see how many agents don’t re-up by paying their dues.

    The MLS in NJ usually purge deactivated agents by mid-Feb (in time for the Super Bowl, natch).

    GSMLS should be another bloodbath this year.

  87. BearsFan says:

    grim – very cool data you posted. So FTB’s jump from 40% to 51% of market from 2003 to 2011, on lower total volume (145K to 110K) but similar FTB volume (57K sales). Put that way, the FTB volume is the same 2003 vs 2010, it’s the trade-up folks that dropped off?

    Could one say that the folks who’ve never been burned before are keeping the stampede going while those with “experience” are holding back or just stuck in an existing?

  88. grim says:

    89 – Yeah, isn’t that crazy. It’s got pretty far reaching implications if that’s the case. I’ve been scratching my head all day on that one.

    If this is the case, for our area:

    1) Financing is clearly not an issue at all (assumption is that move up buyers tend to have an easier time with lending qualifications, I find this to generally be true). There’s been no reduction of the buyer pool.

    2) It’s the trade up buyers who have stalled, and not the first timers. Why? Gary – care to chime in here? Is this all sentiment related? This makes no sense at all to me since overall changes in market pricing (up or down) tend to have lower financial impact to transition buyers, since the dynamics that impact their sale generally impact their purchase (yes, you sold your house for less, but you also bought for less)

    3) The FTB transaction multiplier has clearly been significantly reduced. For a long time it’s been thought that the multiplier that results from a FTB purchase was relatively consistent (it’s the FTB that allows a chain of move-up/move-down transactions to be executed).

  89. grim says:

    God damn, no sooner than I hit enter and it comes to me.

    These first time buyers are buying foreclosures, short sales, or distressed sales, and there are simply no move up buyers to trigger additional transactions.

    It’s not a lack of first timers, its that all the move-up buyers are gone.

  90. BearsFan says:

    90 – just some opinions and some more useless anecdotal info….
    1) I think this is the case. I do not believe financing is an issue at all. The two folks I pre-approved with email/call constantly to follow up. I get the impression they are dying for business. My comment at 24 may dovetail this…from a lending perspective, nothing has changed.

    2) I’m 35, and am lucky enough to have a large family and an extremely large circle of friends living where I grew up. Point is, I personally know a lot of people between the ages of 25-35 in Middlesex county. Only ones who have bought homes are the ones who got married. I can also say that some of them have tapped into mom and dads wealth to help come up with a DP. Put another way, I know 3 couples between 25-30, all who have decent jobs, all work, and all needed help or would not have been able to buy. NONE of them would even listen more than 30 seconds to anyone trying to tell them to wait to buy, understand the market, think about this, etc. ZERO. It was married=must buy now.

    The majority of the folks I know my age who bought 04-08…none have traded up. I sold in 09 to prep for the move up, got a lot of funny looks.

    3) Yes, the data suggests the multiplier effect is not really part of the story recently. I’m not sure how I would process this, but instinctively it says “market not healthy”.

  91. grim says:

    I’ll add a 4th – The premise behind the first time homebuyer credit was completely flawed (we can spend 1 dollar as stimulus, because it will generate 3x that in economic activity), and this is exactly why all we saw was a very brief jump in transactions and prices ($1 to $1), without any kind of long-running market transaction developing. Read: Money wasted.

    It also means that any future stimulus directed at first time buyers will largely be ineffectual (Washington, take note here).

  92. chicagofinance says:

    Fab: ? …. your opinion made a lot of sense about 6 months ago, but after the debt ceiling thing, and basically everything else exposing this guy as a hack, you appear rather divorced from reality at this point.

    Fabius Maximus says:
    December 30, 2011 at 12:32 am
    O has always been a lock for 2012,

  93. 30 year realtor says:

    My prediction for 2012? Moose remains a bitter renter!

  94. NjescaPee says:

    chi-fi, I’m not a fan of the current seat warmer in the WH by anymmeans but I don’t think any of the repugs running have a chance. Like I said before Romney will end up as the biggest loser

  95. 30 year realtor says:

    The entire premise of blaming people for accepting market value for their house is insane. Moose, what would you do? Turn the money away? No, I had good fortune and purchased my home for so low a price, I just can’t accept all that money!

    Moose, the boomers f*cked you! They chose a better time to be born.

  96. Methinks moose is begging for a kind of bailout.

    At least he’s consistent in his hypocrisy.

  97. grim says:

    The majority of the folks I know my age who bought 04-08…none have traded up. I sold in 09 to prep for the move up, got a lot of funny looks.

    Interesting, but there has been a lot of research on post-crash mobility being reduced resulting in longer ownership periods, so maybe your anecdote is in-line with the data…

    From the NAHB:

    How Long Buyers Remain in Their Homes

    The result of this decline in mobility after year four is that many of the buyers who remain
    in their homes after that time will still be there years later. The survival table
    shows that about three-fourths of homebuyers are still expected to be in the homes at
    the end of the fifth year. Over half of these (38 percent of the total who originally moved
    in year 0) are still expected to still be living there 25 years after they moved in.
    Based on the data in Table 1, it will take about fifteen years for half of current single
    family home buyers to move out of the homes they purchased.

    The results show that the expected length of time single family buyers will remain in
    their homes is only 13 years in the South or West, compared to 17 years in the Midwest,
    and 22 years in the Northeast. These results conform to the regional pattern of home
    buying activity, with shorter lengths of stay in the regions with the most activity.

    The American Housing Survey, although based on a smaller sample, collects more detailed
    information about homes and home buyers. Based on the most recent data from
    this survey, the expected length of time home buyers remain in the homes they purchase
    (in the sense that half of the buyers will still be in the homes and half will have
    moved out) is 15 years for all single family home buyers, 13 years for first-time buyers,
    and 17 years for trade-up buyers.

    Averaged across all eleven data points shown in Figures 2 and 4, the average length of
    stay in a single family home is a little over 12 years for all home buyers, 11 years for
    first-time buyers, and a little under 14 years if the analysis is confined to trade-up buyers.

  98. Heartwarming.

    “A criminal complaint has been filed against Barclays in Geneva, Switzerland this week for its role in a $1.4 billion structured investment vehicle (SIV) called Golden Key. The Barclays arranged and structured SIV blew up in spectacular fashion in 2007 and a French asset management firm, Oddo, tried to sue the British bank for fraud in a New York court but got the motion tossed, in 2009, on a technicality. So now one independent investor from Geneva has foregone the US court system and filed his own criminal complaint against the bank and the collateral manager they hand picked — Avendis Capital a Swiss asset management company.

    Golden Key was considered a SIV-lite, meaning it would raise an amount of capital, borrow money in the short-term commercial paper debt market, and then invest all of this money in higher interest rate bearing instruments such as, mortgage-backed securities, in its strategy for high returns. Investors in Golden Key originally sued, in 2008, because they believed BarCap was sitting on a bucket of rmbs they needed to off-load and the bank arranged for the SIV-Lites to expand their size by increasing their borrowings and use these borrowing to take the toxic securities off Barclays’ hands. The idea was collateral managers like, Avendis, were buddy-buddy with BarCap executives who were in charge of selling and creating the SIV, and would basically let BarCap pick the collateral for the SIV.

    This is a method we’ve seen before in CDO fraud cases brought against Goldman and Merrill Lynch. But in the Barclays suit they didn’t have any hard evidence like emails from Avendis and Barclays’ executive, Kelsey Burr, detailing their cozy relationship or plan to screw investors in the name of saving Barclays’ balance sheet. Well now they do.

    The Geneva investor, Philippe Rebourg of Coficap, just happen to get a hold of some damaging internal Barclays comunication, which are now evidence in his criminal complaint.”

    http://www.zerohedge.com/contributed/barclays-accused-criminal-fraud-golden-key-geneva

  99. BearsFan says:

    maybe I should have said “none of the folks who bought 04-08 can move up”, and I think most want to.

  100. grim says:

    Sunk cost fallacy is a bitch … or is it leverage that’s a bitch? I can never remember.

  101. BearsFan says:

    in this case, both :)

  102. joyce says:

    grim,
    on this website:
    http://tax1.co.monmouth.nj.us/cgi-bin/prc6.cgi?&ms_user=monm&passwd=data&srch_type=0&adv=0&out_type=0&district=0721

    Do you know of a list or key which explains all of these “building descriptions”? I can’t figure all of them out.

    examples:
    Bldg Desc: 1SF2CBG
    Bldg Desc: 2SF2CDG
    Bldg Desc: 2SF
    Bldg Desc: 1SF1CAG
    Bldg Desc: 1.5SF2CDG

  103. BearsFan says:

    and not to ruffle feathers or side with anyone, but I will say that I am very anxious for the day this country is not run by boomers. Very anxious.

  104. BearsFan says:

    examples:
    Bldg Desc: 1SF2CBG
    Bldg Desc: 2SF2CDG
    Bldg Desc: 2SF
    Bldg Desc: 1SF1CAG
    Bldg Desc: 1.5SF2CDG

    1/2 car attached/detached garages?

  105. bears (106)-

    Same here. The only thing in my life that gives me any hope at all is seeing my daughter and friends of hers who have more common sense at 18 than 99% of the Boomers I know.

    The next generation may very well turn out to be another Greatest Generation. I really like their whole zeitgeist.

  106. Good luck explaining sunk cost to a population in which 75% of the people think a lottery ticket is an investment.

  107. joyce says:

    108
    thanks a lot, Grim!

  108. chicagofinance says:

    “O has always been a lock for 2012,”…note the quote….always been a lock is pretty presumptuous……honestly in 2008, I wrote here that O was likely a one-term president, because the economy was going to overwhelm anything he managed to accomplish.

    With hindsight, I thought that such an assumption would set him free to undertake a really aggressive agenda based on his campaign…….I didn’t anticipate him being a close-minded and parisan hack who has no leadership ability. Not that the 2008 republican campaign didnt level such charges at him, but it is really disappointing to see that their worst fears were rather well considered.

    NjescaPee says:
    December 30, 2011 at 5:07 pm
    chi-fi, I’m not a fan of the current seat warmer in the WH by anymmeans but I don’t think any of the repugs running have a chance. Like I said before Romney will end up as the biggest loser

  109. chicagofinance says:

    parisan = partisan

  110. BearsFan says:

    meat – yes, I am hopeful for the same. There are some in my generation, but still many more who just can’t shake the shackles of their mommy/daddy’s politics, and all the shit that comes with this 2 party system. They are starting to ask the right questions. It’s going to take time. Not sure we have it.

    Maybe I’m a good example? I supported Obama mainly because I was comfortable eliminating McCain as more of the same/ie what I didn’t want. It was also appealing to see someone who was educated seem cool. Yes, I was hopeful. I’m now frustrated and finished with him, and my personal voyage has led me to feeling that nothing can be fixed until we return sound money. So now, I will support Ron Paul. No allegiances to party.

    My parents, 100% heart and soul great people, will still vote blindly for any Republican, anytime, anywhere, against their economic interests at times, without hesitation. It’s this fact alone that utterly depresses me when I try to talk to them. I know they are capable of critical thought, and making difficult decisions, but when it comes to politics, the fact that 80% (maybe more) of the country are voting one way or the other no matter what is what I’m hopeful the next generation can kick. Boomers will never acknowledge the intellectual dishonesty they have slothed in for decades. Some are probably reading this and are angry at my opinion. I could very well be wrong, it is just an opinion, but it is what I have lived, and is the reality I see.

  111. Anon E. Moose says:

    30-yr [95];

    My prediction for 2012? Moose remains a bitter renter!

    Its just realtor talk unless there are some Benjamins backing it up.

  112. Shore Guy says:

    Stu,

    You could have been featured in this article:

    http://online.wsj.com/article/SB10001424052970203479104577124494272500550.html?mod=googlenews_wsj

    Want cheaper cable television? Try asking for it.

    Every three to six months, when his most recent promotional deal expires, Carey Anthony blocks out an hour of his day to negotiate with his cable company. Each time, the president of a software company in Los Angeles says he can knock $20 to $30 off his monthly bill.

    “Negotiating works every time,” says Mr. Anthony, 46, who estimates he has saved more than $350 a year over the past decade. “Sometimes you have to threaten to cancel service, or switch to another provider, or sit on hold for an hour, but I’ve never failed to get a discount,” he says. “You just have to be diligent

    snip

  113. Anon E. Moose says:

    30-yr [97]

    The entire premise of blaming people for accepting market value for their house is insane.

    I thought we were talking about the 80% of houses for sale that really aren’t for sale because Ma and Pa Kettle want the same price that Ethel and Fred got five years ago.

    Market value today is what it is, but they refuse to accept reality because they “need” to retire on the house — like its the next generation’s fault that they haven’t saved dime one for retirement.

  114. Shore Guy says:

    What is insane is people grossly overpaying for houses, not people grossly overpricing them. I have little doubt that many (most?) sellers are taking the attitude that, “I like my house and I am willing to stay here for the long term, but, if someone is willing to pay me $x, I will sell it to them and move.” Inasmuch as the process of listing their home for sale costs nothing, why not? I for one will not overpay for a house, even if it means not buying another one. The property we currently own is fine for us. We are open to another but are okay without buying anything else, at least for the next 15 years; however, if somone else had more money (or credit) than sense and wishes to overpay, so be it. That said, if someone overpays and gets into trouble, the government has no business attempting to bail them out. Overpaying consumers distorted the market and should not be saved from their own foolishness.

  115. NjescaPee says:

    Amen Shore and I wish everyone even Moose a healthy happy and prosperous 2012

  116. SX says:

    I bought what would be considered a nice home, a nice starter place with enough room for a small family. With the work done to it the fact that it is worth about what we paid for it is simply a reason not to move into something bigger and more ostentatious. Most people who reach some level of financial security and have ordinary jobs usually only buy one place and stay for a while. A long while.

  117. SX says:

    Biggest event of the year? Scarjo’s phone gettin’ hacked.
    And Bin Laden’s demise.

  118. Comrade Nom Deplume says:

    [117] shore

    I do that periodically. Been a bit lazy about it lately but ready to do it again. Helps if the competition has a special running, or if the competition says that they will match any special your provider is running. And get them to throw in some premium channels that you don’t already have, even if only for a ‘trial’ period.

  119. Comrade Nom Deplume says:

    [115] bearsfan

    “My parents, . . . will still vote blindly for any Republican, anytime, anywhere, against their economic interests at times”

    That defines what they consider their economic interests quite narrowly. It also suggests that thieir own economic situation is the only thing of interest to them (or should be of interest to them) and that they are also gullible. Was that really what you intended to say?

  120. Shore Guy says:

    http://www.theatlantic.com/health/archive/2011/12/the-psychology-of-home-why-where-you-live-means-so-much/249800/?google_editors_picks=true

    The Psychology of Home: Why Where You Live Means So Much

    snip

    Susan Clayton, an environmental psychologist at the College of Wooster, says that for many people, their home is part of their self-definition, which is why we do things like decorate our houses and take care of our lawns. These large patches of vegetation serve little real purpose, but they are part of a public face people put on, displaying their home as an extension of themselves. It’s hardly rare, though, in our mobile modern society, to accumulate several different homes over the course of a lifetime. So how does that affect our conception of ourselves?

    For better or worse, the place where we grew up usually retains an iconic status, Clayton says. But while it’s human nature to want to have a place to belong, we also want to be special, and defining yourself as someone who once lived somewhere more interesting than the suburbs of Michigan is one way to do that. “You might choose to identify as a person who used to live somewhere else, because it makes you distinctive,” Clayton says. I know full well that living in Paris for three months doesn’t make me a Parisian, but that doesn’t mean there’s not an Eiffel Tower on my shower curtain anyway.

    We may use our homes to help distinguish ourselves, but the dominant Western viewpoint is that regardless of location, the individual remains unchanged. It wasn’t until I stumbled across the following notion, mentioned in passing in a book about a Hindu pilgrimage by William S. Sax, that I began to question that idea: “People and the places where they reside are engaged in a continuing set of exchanges; they have determinate, mutual effects upon each other because they are part of a single, interactive system.”

    snip

  121. Anon E. Moose says:

    Shore [117], Nom [123];

    Cablevision tried to jack my triple play from $90 to $150, and refused to budge when called on it… that is until they got the authorization from Verizon to port my phone to FIOS. Then they came begging and came down to $70.

  122. Anon E. Moose says:

    Nom [124];

    I know a few unapologetic communists who confidently assert that rank-and-file republican voters are voting against their “self-interest”. That assertion is based on the assumption that the communists know the ‘self-interest’ of those voters better than the voters themselves; part and parcel of their nanny-statist worldview.

  123. Anon E. Moose says:

    NJE [120];

    To you as well.

  124. NWNJHighlander says:

    I’m very much in the same position as BearsFan, but I live in NW Passaic county, the 25 to 35 year old crowd here only bought a house if they were married, (excluding arms-length transactions between family members).

    This has been one of the better blog entries and comments I’ve seen on here in a while,

    [#91] grim says:
    December 30, 2011 at 4:11 pm

    God damn, no sooner than I hit enter and it comes to me.

    These first time buyers are buying foreclosures, short sales, or distressed sales, and there are simply no move up buyers to trigger additional transactions.

    It’s not a lack of first timers, its that all the move-up buyers are gone.

  125. cobbler says:

    nom [124]
    Would you parse bearsfan’s statement similarly had he mentioned Democrats instead of Republicans? Both parties’ positions and actions more frequently than not undermine the economic interests of the majority of their voters…

  126. BearsFan says:

    Nom – 124 – nope…actually, sort of the opposite, so I’m glad u asked, cuz I did a bad job at expressing my thought. My comment was more posted to highlight what I have seen in the generation before me as a blind faith to 1 of the 2 political parties. In a way, as if they derived some sense of identity from what they perceived the party to stand for (and those perceptions may have been wrong) …Almost religious in the sense that you could not ask critical questions or reason one way or the other. Think Mike Francesa on the FAN (if your a sports fan). Sorry for the “reach” analogy, but it sticks out in my brain to this day when I listen to him. If anyone questions anything he says, no matter who it is, they either mis-understood him, they missed his point, or they are just flat wrong. There can be no other explanation in “his bubble”.

    Similarly, when I was young and didn’t no squat, but would ask questions about why they voted repub, they would say they are the party for “business”…and since my parents are very conservative socially and my old man was a mechanic, that was it. Done. At the time, and maybe even still, there might be nothing wrong with that. Something that is simple, makes sense to you, so you cling to it. But, taking a step back and looking at the aggregate, if 80% of the voting public is taking a similar stance (find something that resonates, true or false, kind of like falling in love with a brand)…and this is what we’re left with (10% approval ratings of congress, yet everyone says its the other sides fault)…maybe this whole approach is not the best way to go about things. We have no discourse anymore, just everyone with a misguided sense of patriotism blaming the other guy…

    gosh I hope that makes some sense what i wrote….if not, i promise to not try again :)

  127. cobbler says:

    highlander [129]
    Unless the FT purchase was a condo or a really small rancher/cape (which is usually not the case if the buyers are a married couple planning on starting a family), the marginal utility they get from the move to a bigger home in the same or equivalent town is not worth the huge extra debt burden. Move to a “better” town is getting more difficult due to the divergence of the price tiers. Idea of a house as an investment vehicle (and move up as a shift to the next gear) is dead for the next [put in your number] years or decades.

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