Affordability? Where?

From the Record:

With incomes down and rents up, housing is less affordable

Despite the recent drop in home prices, one-third of New Jersey’s working households struggle with severe housing costs, the Center for Housing Policy said Thursday.

According to the Washington, D.C.-based center, 32 percent of working households faced severe housing cost burdens, defined as spending more than half of their incomes on housing. That’s up from 28 percent as recently as 2008, as the recession began.

Nationally, 23.6 percent of working households paid more than half of their incomes for housing in 2010, up from 21.8 percent in 2008.

To keep up with housing costs, “a lot of people are forgoing needs as well as wants,” said Laura Williams, author of the report “Housing Landscape 2012.”

“Maybe you buy fewer groceries, or don’t get new clothes,” Williams said.

While a big drop in home values has made buying a house more affordable, that was offset by a decline in household incomes from 2008 to 2010. It’s even worse for renters, who are being squeezed on both sides, as their incomes dropped 4 percent from 2008 to 2010, and rents rose 4 percent in the same period.

Demand for rentals has increased during the housing bust, as tougher credit standards made it more difficult for households to buy, and as many families lost their homes to foreclosure. But construction of new rentals has not kept up with demand, in part because lenders have been cautious about financing residential building.

“There are two sides to housing affordability,” said Arnold Cohen of the Housing and Community Development Network of New Jersey. “One is what people are earning, and we know what’s happening with that picture, and the second is what’s available. … For a certain population of people, we need to look at how government can help, because the private market is not doing it.”

The Center for Housing Policy report defines working households as those with a household income of no more than 120 percent of the area’s median income. About half of the state experienced a “significant” decrease in affordability for working households between 2008 and 2010, the report said.

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

129 Responses to Affordability? Where?

  1. Mike says:

    Good Morning New Jersey

  2. grim says:

    From HousingWire:

    Proposed bill would allow principal write-downs in bankruptcy courts

    An Oregon congressman is backing a bill that, if passed, would allow bankruptcy judges to force principal modifications on primary home mortgages during bankruptcy.

    Rep. Earl Blumenauer, D-Ore., proposed The Bankruptcy Equity Act to amend bankruptcy laws to allow judges to modify mortgages on principal residences of debtors to prevent foreclosure and cure distressed situations.

    “People with vacation homes or investment properties can have their mortgage terms reduced by a bankruptcy judge, but regular folks who live in their own homes are forced to play by different rules — bankruptcy judges aren’t allowed to change mortgage terms of primary residences,” Blumenauer said in a statement on his website.

    Blumenauer also spoke on Capitol Hill about the proposed bill, H.R. 4058, suggesting that while companies and enterprises with multiple homes on their balance sheets can simply file for bankruptcy to get mortgage relief, homeowners are left with no option but a foreclosure.

    In the past, servicers, banks and investors have shunned the idea that forced mods or bankruptcy judge involvement will save troubled loans, especially since most troubled borrowers simply can no longer afford their mortgage.

  3. Mike says:

    Once again another who suggests the government needs to intervene : “For a certain population of people, we need to look at how government can help, because the private market is not doing it.”

  4. grim says:

    From the Record:

    Good time to refinance, if they’ll let you

    As interest rates have slid over the past couple of years, Gabriel Bousbib of Englewood refinanced his 15-year mortgage not once, but twice — cutting his interest rate in two steps from about 4.6 percent to 3.375 percent.

    He’s one of a number of homeowners who refinanced just a year or two ago, but decided it was worth considering again as mortgage rates hit record lows — now averaging around 4 percent for a 30-year loan.

    “When you’re quoting rates in the high 3s, people are saying, ‘It’s worth it to me,’ ” said Steve Hoogerhyde, executive vice president at Clifton Savings Bank.

    “My monthly savings are going down a few hundred dollars; it adds up over 15 years,” said Bousbib, a financial services executive. “And if rates keep going down, I would refinance again.”

    Although the old guideline used to be that you should consider refinancing only when rates drop at least 2 percentage points, the new wisdom is that it can be worthwhile even with smaller drops.

    “For most people, if you can shave three-quarters of a percentage point off your interest rate, it’s worth looking at,” said Greg McBride, an analyst with Bankrate.com, a personal finance website.

    Though low-interest rates are eye-popping low, the refinancing climate has changed from the easy-money days of five years ago. Generally, to get the best rates, homeowners need a 740 FICO credit score, well above the median score of 711. They also usually need at least 10 to 20 percent equity in the property. (However, a recent expansion in the federal Home Affordable Refinance Program should allow refinancing this year by more so-called underwater borrowers — those who owe more than their homes are worth.)

    Lenders are also demanding much more documentation — including pay stubs, tax returns and bank statements — than they did five years ago, at the insistence of government regulators, as well as Fannie Mae and Freddie Mac, which buy mortgages from lenders.

    “You have to have a taste for doing paperwork,” said Keith Gumbinger of HSH Associates, a Pompton Plains company that tracks mortgage data. “You’re going to be asked for lots of documents. No one loves the process to begin with, and in today’s environment, it’s even less palatable.”

    These stricter requirements are simply a return to the kind of underwriting standards that prevailed before lending standards slackened a few years back, leading to the housing bust and foreclosure crisis, McBride said.

    “We’re in this mess because money was too easy to get,” he said.

    Lowering the monthly payment is not the only reason people are refinancing. Many are shifting from a 30-year loan to shorter terms, said Matthew Gratalo of Real Estate Mortgage Network in River Edge. He has worked with clients in their 40s who hate the thought of carrying a mortgage into retirement.

    “They’re looking ahead and saying, ‘I don’t want to pay a mortgage forever; can I get this done in 15 years? Can I be done with this and have it paid off?’ ” Gratalo said.

    “Certainly shortening the term makes a lot of sense because you can cut years of mortgage payments,” said Carl Nielsen of Mortgage Master Inc.’s Wayne office.

    Nielsen, for example, recently talked to a customer with a $375,000, 30-year mortgage at 4.5 percent. The customer is considering a 20-year mortgage at 3.75 percent. His monthly payments would go from $1,900 to about $2,223, but by shortening the life of the loan, he’ll save more than $150,000 in interest payments.

    “That’s kind of a no-brainer,” said Nielsen.

    “Everyone’s perception was they were house-rich,” said Gratalo. “Money was very easy to get. The pattern I saw was that people would think, ‘My house is worth $200,000 more; why not take out $20,000 to pay off credit card debt?’ They’d come back a year later, they’ve used up all that money, and they’d refinance again. They thought, ‘We have this huge asset, we should be able to spend some of it.’

    “Now, everyone knows houses are not appreciating,” he continued. “If anything, they’re depreciating. They know they’re not sitting on a piggy bank any more. They think, ‘We have to start paying down our debts instead of living like we have this asset.’ ”

    Michael Moskowitz of Equity Now agrees.

    “People are very cautious about taking out equity,” he said. “In the old days it was, ‘Redo the kitchen and go on vacation.’ You don’t hear that kind of thinking any more.”

    And even if they wanted to take money out of their homes, many homeowners can’t.

    “If you bought your house in the last seven years, unless you put a ton of money down, you don’t have the equity in your house” to borrow against, said Steve Grossman of New Jersey Lenders Corp. in Little Falls.

  5. grim says:

    From Bloomberg:

    Buffett Says Banks Victimized by Evicted Homeowners Who Emerged as Winners

    Warren Buffett, who controls the biggest shareholding of the No. 1 U.S. mortgage lender, said banks were victimized by some homeowners who refinanced their loans before getting evicted.

    “Large numbers of people who have ‘lost’ their house through foreclosure have actually realized a profit because they carried out refinancings earlier that gave them cash in excess of their cost,” Buffett, chairman and chief executive officer of Berkshire Hathaway Inc. (BRK/A), said Feb. 25 in his annual letter. “In these cases, the evicted homeowner was the winner, and the victim was the lender.”

    Buffett, an ally of Obama’s, has won praise from Democratic lawmakers as the billionaire campaigned for higher taxes on the wealthy. Omaha, Nebraska-based Berkshire owns warrants to purchase $5 billion of stock in New York-based Goldman Sachs.

    “Maybe this was kind of a message to his Democratic buddies,” said David Rolfe, chief investment officer of Berkshire shareholder Wedgewood Partners Inc. “Buffett is saying, ‘We know where the egregious acts were, so enough with the lambasting of the banking system and all these bankers.’”

    Blame for the housing bubble and subsequent slump should be shared among lenders and borrowers, as well as the government, bond-rating firms and the media, Buffett has said. In his letter, read by investors around the world, Buffett praised Jamie Dimon, CEO of JPMorgan Chase & Co., and Bank of America’s Brian T. Moynihan. JPMorgan, Goldman Sachs, Wells Fargo and Bank of America have all repaid U.S. bailout funds.

    Buffett and Berkshire Vice Chairman Charles Munger, 88, have criticized bankers for contributing to the housing bubble. Munger, in July, blamed the real-estate boom on “megalomania, insanity and evil in, I would say, investment banking, mortgage banking.” Buffett said in October 2010 that Wall Street helps society through finance, while its bets may do harm, “like a church that’s running raffles on the weekend.”

  6. Anon E. Moose says:

    Grim [2];

    Mortgage cramdowns. How 2009.

  7. Neanderthal Economist says:

    Wheres first wave of inflation? I keep imagining price adjustments when rates spike to 7.5%. Eek.

  8. grim says:

    Inflation in the prices of what? Labor? Houses? Food? Energy? Goods from China?

  9. grim says:

    So, Canada’s housing bubble is going to pop in a really big way… What does it mean for us?

  10. njescapee says:

    Lots of canadians have been purchasing vacation homes in Arizona and Florida. Have you watched HGTV over the past couple of years? Many of those shows have been produced in Canada. A half million canadian dollars for a POS cape eqivalent in the Toronto area.

  11. grim says:

    Buffet on CNBC saying houses are a bargain.

  12. grim says:

    Average home price in Vancouver is $752k Canadian.

  13. Mike says:

    When you are a billionare everything is a bargain

  14. Painhrtz - I ain't dead yet says:

    Grim #5 it is like a drug dealer being upset about being robbed by petty theives.

  15. Brian says:

    Amazon.com in talks to open 2 N.J. warehouses

    Could mean some jobs and sales tax revenue for the state. Sucks for NJ customers though. I do like buying “stuff” there and I don’t like paying the sales tax…er I mean paying it later when I do my taxes at the end of the year ahem ;)

    http://www.nj.com/news/index.ssf/2012/02/amazoncom_in_talks_to_open_2_n.html

  16. Bocephus says:

    3. Just another attempt to even the playing field. Must be terribly unsettling for the myopic.

  17. grim says:

    15 – they are also looking for an almost 2 year sales tax holiday in exchange. Nexus schmexus… Will all the chatter about an Internet sales tax result in any action?

  18. grim says:

    13 – “great way to short the dollar” says the Oracle

  19. 3B says:

    Discussion in the below link about poor quality of the new jobs being created etc. I have been talking about this too for a while; I am always talking to myself. Just saying.

    http://www.marketwatch.com/story/us-job-quality-is-in-trouble-2012-02-27?dist=beforebell

  20. Fiddy Cents on the Dollar says:

    “For most people, if you can shave three-quarters of a percentage point off your interest rate, it’s worth looking at”

    Oh Wow — what a deal !! I can pay all the Application Fees again, and the Loan Broker’s Vig, plus…….I can repay the front-loaded Interest all over again. Just to save 3/4 of a point.

    Sign me up for some of that !!

  21. gary says:

    Despite the recent drop in home prices, one-third of New Jersey’s working households struggle with severe housing costs, the Center for Housing Policy said Thursday.

    Now, let’s factor in that decline in household incomes from 2008 to 2010 and the steady drip of rising property taxes in Northern Unicorn Valley (a.k.a Northern Jersey). Let me know when you start passing out from the pain.

  22. Anon E. Moose says:

    NJE [10];

    Remember that mortgage interest is not tax deductible in Canada. Dispells two myths: 1) that people would not own houses without it; and 2) housing bubble wouldn’t have happened without it. Double-edged sword for bubble-sitters.

  23. Comrade Nom Deplume says:

    [22] moose,

    Historically, there was never a meaningful correlation btwn the tax deduction and price appreciation.

    Mortgage interest deduction is a sacred cow and won’t go away except for “the rich.” And I am planning a strategy to help the rich recover the tax benefits of home ownership by not technically owning. It would be a lot easier if you weren’t prohibited from renting from yourself.

  24. Bystander says:

    Fabius,

    Re: yesterday’s post about the economy recovering. Not sure where you are seeing it. I have been holding on for almost 4 years waiting for the situation to stabilize. I work in finance systems change for a major Wall St. firm and it is shrinking more everyday. I got a 5k bonus this is year after a good review..some people got nothing. Problem is there are so many H1b consultants willing to take nothing. At same time we are moving back office to India as well. What are these new jobs you claim are being created? I don’t see it. I see a lot of hubris and hope based on stock market rally.

  25. gary says:

    3b [19],

    I was at the mall with the family yesterday and sat most of the time as they went in and out of stores. As I sat there and looked around, it occurred to me that the U.S. workforce has been reduced to a bunch of kiosks selling absolute sh1t to other fat b@stards who also run kiosks loaded with sh1t stocked by imports from Asia. There it is in a nutshell and it’s nothing this blog hasn’t observed previously.

  26. Nicholas says:

    Sister-in-law, husband and child moved back in with mother-in-law recently. I’m pretty sure that is just one in a long list of households collapsing under lower wages and no work. They had been struggling for two years or more and finally capitulated to the fact that they couldn’t keep up with the rent payments and take care of the child. Who knew that children get more expensive as they get older?

    I recommended that they move in with MIL two years ago adding “it will be better if you do it before you run out of resources, you won’t like it if you HAVE to”. Apparently they didn’t take my advice and now they are out of resources and living with parents again.

    I know this is just one ancedotal story so take it at face value.

    On the other hand brother says that he has finally gotten some work. He is a Master Electrician and he is excited to go back to work full time for the next few weeks. Previous to this he was working 10-20 hours per week on odd jobs.

    Mixed signals.

  27. njescapee says:

    Moose, our neighbors to the north haven’t been paying attention to what’s been happening to US or perhaps they have. Ah, I think hear that familiar tune. jingle mail.

  28. gary says:

    Bystander [25],

    BINGO!

  29. JJ says:

    He is a “Master Electrician” and he is excited to go back to work full time for the next few weeks.

    WTF, isn’t a plan old electrician title good enought. Jesus do I need a Master Electrician to put in a circuit breaker box. Also what are his assistants called slaves if he is the master?

    Funny unemployed guy living in his mother in laws basement is maybe a master moocher.

  30. Juice says:

    re # 19 – History rhymes and the lack of decent employment is right out of the Japan playbook. About one third of the Japanese workforce is now casual or part-time, and that is where we could be headed.

    The lack of decent employment makes people delay household and family formation.The status quo cannot function if people don’t couple, buy bigger houses, bigger cars, drop 2-3 children, put them through school and college etc.

    Our standard of living where one could at least obtain middle class is slipping away quickly.

    For the men out there there is not motivation to play the game by the old rules. It is just cheaper buy a gaming console, the latest electronic gadget, a sweet car, hook up with a willing woman, buy some action or just do the online thing, all the while living in mom’s basement.

  31. JJ says:

    Economy is coming back and so is inflation too. Used Car Prices are up, vacation packages are up, gas is up. Salaries are rising. For instance I went to Beaches last year, same week this year price went up $3,500. Airfare also is way up. With American BK and less competition and fuel prices way up so has prices. Restaurants and supermarkets as a result of rise in core food commodity prices combined with higher shipping costs have prices up.

    Cars, vacations, gas, oil, food are way up. They alone are a big part of a familiy of fives budget. That combined with rising health care and college tuition. Means employers will be forced to do raises for cost of living adjustments.

    The days of super low investment grade bonds, mortgages, t-bills, cds and muni bonds have at best 1-3 years left. After everyone one has locked in long term financing from the local fire department till uncle sam we will see rates rise quickly. Investors in quest for yield who normally bought 2-10 year bonds who bought 10-30 year bonds instead with high coupons will take huge losses.

    On a good not corporate bankruptcys will fall like a brick and next recession will have limited bankruptcies. Everyone from junkest company to your local school district kicked the can down the road in terms of credit until ten years down the road. Homeowners in debt to eyeballs who refinanced home, got new car loan cheap also kicked can down the road.

    The 70 year old guy rolling five year cds, ten year treasuries, buying govt insured MBS and investment grade corporate bonds when rates rise he will be crushed. Sure he can re-invest upon maturity at higher rates but that wont help him. By then he will be in a nursing home.

    Speculators in equity and junk bonds from 2009 to 2012 and anyone who refinanced in last four years will reap windfall of these low rates.

  32. sem calcinha says:

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  33. gryffindor says:

    I get to spend today watching the justice system at work (jury duty) in NJ. It occurred to me when I read the requirements for jurors, this is a real farce. You must be a US citizen, but you can be excused if you don’t speak English. If you don’t speak English, you can commit a crime but when you are tried by a “jury of your peers” they will be English speaking and everything will be conducted in English.

    There was an older Greek man speaking fairly decent ESL arguing hard to get out. They made him stay.

    I imagine this English-only must be a real problem in heavy non-English speaking areas.

  34. R Patrick says:

    I’m surprised they are not building in Delaware.

  35. 3B says:

    #32 JJ Avearge corporate raises this year for the rank and file were 2 to 3%.

  36. Anon E. Moose says:

    I saw a house this weekend that was owned by a “Master Electrician”. Every room ceiling had recessed lighting that looked like it was applied with a shotgun; and everywhere I looked were 6-gang switch plates; one of them was a 6-gang next to a 2-gang — I guess they don’t make an 8-gang.

    When all you have is a hammer, everything looks like a nail.

  37. Nicholas says:

    JJ,

    You seem to have a lack of understanding about how Electrician trades work in the U.S. They are based upon very old, long standing traditions in European guilds.

    Master Electrician
    Journeyman Electrician
    Electrician
    Apprentice Electrician

    An apprentice will work under a journeyman electrician or master electrician learning his trade until he can apply for his own license (3-5 years?). It is the Master Electrician that can pull the permits required with the state.

    Think of it what you want but thats the system in place to keep people from getting killed by electricity. It is the ME’s job to make sure that the work is done safe and that loads are sized properly.

  38. njescapee says:

    JJ, we decided not to go to New Orleans Jazz Fest this year due to high airfare and lodging costs. Used a very small amount of that cash to buy 1 yr yacht club membership. place is less than 1/2 mile away from us.

  39. Nicholas says:

    Anon,

    I’m an electrical engineering and I work mostly on computers. My house is full of computers and computer parts. I suppose if I was a master electrician then my house would be full of switches and lights.

    I have never seen anything larger than 5 gang switch boxes. I don’t think that anything larger would fit between the standard stud widths. If you only have 16 inches center to center between studs, and 2.5 inches is taken up by the stud then you only have 14 inches left to put your box. With each plug/switch taking up 2.5 inches then you reach about 5 maybe 6 gang before you run out of room.

    It would be a hillarious electrician joke if you could photoshop someone with a 10 gang switch box/plate on their wall as the impracticallity of it all would just be funny.

  40. 3B says:

    #26/#31 gary/Juice: Things may be improving somewhat, but I don’t see now any one can say there is a real turn around in this economy.

  41. Juice says:

    JJ – is a Master Baiter. He is a well-skilled angler who is an expert at petting his one-eyed snake.

  42. R Patrick says:

    Box out around the switch box like a window

  43. Bystander says:

    JJ,

    I know in your world everything looks rosy. You have King kong cahones with your plays the last several years. Unfortunately when I read your posts, I picture you like this:

    http://t3.gstatic.com/images?q=tbn:ANd9GcR_T21nyy-Iw0D_FHe7RAIJ0D5UMvmFUffj9J-Cy05Lbac4jfxA

  44. JJ says:

    I think is is odd, outdated and racists that electricians are usually white middle aged men who call themselves Masters. What spanish or black guy in his 20’s wants a white 50 year old boss who he has to call Master?

    I do electrical work, except I won’t touch anything that can kill me. I did hire electrician to put in new main outside wire from back of circuit breaker box to pole and new 220 breaker box. Other stuff I do.

    On Saturday I hired my first plumber in my entire life. I am of course good at plumbing. I am after all white middle aged man which apparently is only qualification. Anyhow. it was stem that connect to pipe behind shower to handles and it also had stem extenders as that bathroom has that wonderful vinyl cover on top of the chocolate brown tiles. I need special tools I don’t own and since I have to cut off water to whole house to do it it had to be done quick and with stem extenders good chance for leak.

    Funny guy goes who usually fixes plumbing, I go myself. I then add I was a plumbers assistant once. Told him which plumber, guy did a good job and gave me a discount for cash and rounded down the time. As a fellow member of the plumbing trade he did the right thing. Then again I was also a painter, mover, boat captain, bike repairman, drug dealer, ticket scalper, fence, lab technician, janitor, dog walker, newspaper boy all before my 16 birthday. Knowing a little bit about business always gets you a discount. Although when the master plumber was there I felt like the master, I was paying him and he did what I told him.

  45. JJ says:

    I have you know I have a MS Degree which I think stands for Monkey Spanking.

    Juice says:
    February 27, 2012 at 10:23 am

    JJ – is a Master Baiter. He is a well-skilled angler who is an expert at petting his one-eyed snake.

  46. Anon E. Moose says:

    Nicholas [42];

    And they also make 8-gang switch plates. But you have to image that they’re all paddle rocker switches, because they were.

  47. Juice says:

    re: # 46 – “all before my 16 birthday” you forgot Master Baiter JJ…

  48. Nicholas says:

    Master Electrician who mentored my brother was black. I’m not sure that your theory of white-only guilds holds up JJ.

  49. njescapee says:

    GS forecasts S&P to be off 8% in 1 yr

  50. JJ says:

    Actually never had to do it myself. Always had a gf of some sort. And days I did not see GF and was going to a singles club or bar with the boys I certainly did not want to empty the chambers. Best GF ever was in college. I would tell her when I am out with boys I may swing by later. She had a place where her bedroom was right by front door. She usually went to bed last as parents were usually passed out by ten pm. It was win win. I either hook up, get to drunk just want to go home, want to go to breakfast with boys, or if I struck out and was in the mood would just swing by GFs place at 4:15 am get a quickie and be home by five am. Amazing part was this girl thought this was a win win for her. Anyhow arrangements like this limited monkey spanking. Pretty much I always had a GF of some sort, be it serious, casual, fwb, etc. Best was two summers in a row causing a major fight with GF first week of May and making up second week of Sept two years running so I could go in on Hampton houses. My buddy said no way two summers in a row. Almost worked for third summer in row but apparantly not.

    Juice says:
    February 27, 2012 at 10:42 am
    re: # 46 – “all before my 16 birthday” you forgot Master Baiter JJ…

  51. JJ says:

    Wouldn’t that be a “negative connection” See I know my electrician stuff.

    Nicholas says:
    February 27, 2012 at 10:47 am
    Master Electrician who mentored my brother was black. I’m not sure that your theory of white-only guilds holds up JJ.

  52. Brian says:

    “Young Americans are shunning factory jobs because they think they are uncool.”

    http://money.cnn.com/2012/02/27/smallbusiness/youth_manufacturing_jobs/index.htm?iid=HP_LN

  53. Mike says:

    JJ 32 Have to disagree on a few things, if you have a 10-30year high yeilding bond with call protection that you paid a premium for there is some rise in interest rate protection on them and you only take a loss if you sell. On the other hand I have some 20 years yielding 5.50 -6.00 that were purchased at or below par and are callable between 2015-2019. You know what happens when a bond get close to it’s call date the price gets closer to par.

  54. The Original NJ Expat says:

    grim [8] asks: Inflation in the prices of what? Labor? Houses? Food? Energy? Goods from China?

    Answers: No, No, Yes, Yes, and Yes but attenuated by Yuan/dollar peg.

  55. All Hype says:

    Looks like SkyNet is programmed to buy stocks this morning.

  56. 3B says:

    #51 What do they know, we have JJ.

  57. JJ says:

    I agree, junk bonds, callable bonds with high coupons or kicker bonds all have interest rate protection. Trouble is Ma/Pa risk adverse fixed income investor buys ten year treasuries, ten year investment grade, Five Year Cds and Fannie/Freddie Mortgage backed. Nearly all of their higher yielding, pre 2008 stuff is either matured or about to mature. They are left with 2009.2010, 2011 and 2012 ten year fixed rate bonds that will tank if rates rise.

    My high coupon, callable non-investment grade bonds or my high coupon muni bonds not callable till 2013 and forward have a lot of interest rate protection built in.

    Ma and Pa did not buy that stuff. Normally rolling tens is a great idea. You lock in low rates sometimes like in 1993, 2003-2005 but normally the majority of time over ten years rates are high. A ten year treasury roller right now is stuck with 2003, 2004, 2005, 2009, 2010, 2011 and 2012 bonds. Which means. 7 out of ten bonds he owns has low coupons. The worst ten year run in 40 years for coupon clipping.

    Mike says:
    February 27, 2012 at 11:17 am

    JJ 32 Have to disagree on a few things, if you have a 10-30year high yeilding bond with call protection that you paid a premium for there is some rise in interest rate protection on them and you only take a loss if you sell. On the other hand I have some 20 years yielding 5.50 -6.00 that were purchased at or below par and are callable between 2015-2019. You know what happens when a bond get close to it’s call date the price gets closer to par.

  58. The Original NJ Expat says:

    Here in Boston the Spring selling season is featuring newly listed (not re-listed) properties coming on the market sensibly priced at 2002 levels. Makes me wonder if those prices may end up being too high.

    Here’s a nice example:

    http://www.zillow.com/homedetails/1992-Commonwealth-Ave-APT-8-Boston-MA-02135/59095164_zpid/

  59. Brian says:

    Stock up on supplies. Google will become self aware soon. Shortly thereafter, it will see human beings as a threat and attempt to exterminate us.

    57.All Hype says:
    February 27, 2012 at 11:23 am
    Looks like SkyNet is programmed to buy stocks this morning.

  60. Painhrtz - I ain't dead yet says:

    I for one welcome our new internet based overlords

  61. JJ says:

    Buffet owns JP Morgan in his personal accounts but not in his fund. Odd. He is big on Wells, BAC and JPM.

    Chifi, a few weeks ago you were busting on my Banco Popular purchase, but the stock is up a ton since Jan 1 on almost no news. And I mean up every day, today alone 6%. I only bought the trups not the stock. But I wish I bought the stock. Up like 30% year to date and still only Feb. What up?

  62. chicagofinance says:

    Brian says:
    February 27, 2012 at 11:38 am
    Stock up on supplies. Google will become self aware soon. Shortly thereafter, it will see human beings as a threat and attempt to exterminate us.
    57.All Hype says:
    February 27, 2012 at 11:23 am
    Looks like SkyNet is programmed to buy stocks this morning.

    http://www.youtube.com/watch?v=WjM26GWWoGk

  63. chicagofinance says:

    JJ says:
    February 27, 2012 at 11:44 am
    Chifi, a few weeks ago you were busting on my Banco Popular purchase, but the stock is up a ton since Jan 1 on almost no news. And I mean up every day, today alone 6%. I only bought the trups not the stock. But I wish I bought the stock. Up like 30% year to date and still only Feb. What up?
    http://www.youtube.com/watch?v=WjM26GWWoGk

  64. JJ says:

    CHifi cant watch youtube at work.

  65. JJ says:

    New Morgan Stanley research on bonds. Rally is long in the tooth

    At nearly three months old, the current rally in credit is starting to look a little long in the tooth. While there are some good reasons behind it—including a better-than- expected run of economic data in the US and the fading negative effect of news out of Europe—valuations in the credit markets are starting to look stretched as investment grade yields touch all-time lows and the high yield market is trading above par for the first time in six months…. [W]e believe that the credit rally is due for a pause or possibly even a partial reversal in the coming months—and that investors should consider harvesting some profits where appropriate.

    While we hold a long-term constructive view of the municipal market, we believe it is time to consider some selective selling. Accordingly, we advocate lightening up on 25- to 30-year debt with sub-5% coupons, as well as low-BBB-rated and sub-investment grade paper where demand from yield-hungry investors has been robust. For buyers, we prefer state-level general obligation bonds, state-level appropriated paper, local general-obligation bonds and essential-service revenue bonds with mid-tier A ratings and higher, as well as AA-rated hospital debt within a maturity band of six to 14 years. We also suggest holding bonds that have above-market coupons throughout for their defensive attributes, as well as to bolster tax-exempt income.

  66. Shore Guy says:

    Grim,

    The prospect of internet sales taxes is a nightmare for small businesses. When the clamor comes to “equalize the playing field” for brick and mortar stores by imposing sales taxes, it will give the Dems all the excuses they need to impose a national sales tax on internet sales.

  67. Shore Guy says:

    “An Oregon congressman is backing a bill that, if passed, would allow bankruptcy judges to force principal modifications on primary home mortgages during bankruptcy.”

    Wht good is making a loan and using a house as collateral if there is a good likelihood that government, in one guise or another, will prevent a lender from protecting itself from loss by taking back the collateral?

  68. Shore Guy says:

    “If you only have 16 inches center to center between studs,”

    That presupposes 2×4 construction. With larger studs, placed 24″ on center, one has all the necessary room.

  69. cobbler says:

    shore [71]
    Why, specifically, you don’t object against the existing right of the bankrupcy judge to modify the mortgages for the 2nd/vacation homes, but have an issue with extending it towards the principal residence?

  70. JJ says:

    Shore Guy says:
    February 27, 2012 at 12:31 pm
    “If you only have 16 inches center to center between studs,”

    Sounds like something you would hear at Platos retreat in the 1970s

  71. Shore Guy says:

    Cobbler,

    You seem to mistake someone else’s views for mine.

  72. Shore Guy says:

    http://www.latimes.com/business/money/la-fi-mo-summers-tax-reform-20120227,0,3848341.story

    Larry Summers on the issue of and need for tax reform, for what it is worth.

  73. Shadow of John says:

    “16 inches center to center between studs”

    16″ center to center is hardly a stud. It sounds like two little 8″ nancy boys standing tip to tip. No woman worth doing the backseat boogie on crush velour would settle gor 16″ 0n center nancy boys. They prefer to wait for us 24″on center men.

  74. John Connor says:

    Not Funny.

    66.chicagofinance says:
    February 27, 2012 at 11:48 am
    http://www.youtube.com/watch?v=MUq7C5bwIHM&feature=related

  75. Happy Renter says:

    [27] “Who knew that children get more expensive as they get older?”

    Wait — what? They do? ruh-roh …

    ;-)

  76. Anon E. Moose says:

    Nom [24];

    It was a sop to the landowners at inception, and has long since been priced into the buy v. rent calculus. Contrary-wise, taking it away now will leave the blue state coastal enclaves with $500k cr@pshacks squealling like stuck pigs. Schumer is already on record how ‘$100k a year makes you rich in Ole Miss., but not in my district.’

  77. gary says:

    A wealthy banker left a $1.33 tip on a $133 lunch at the True Food Kitchen restaurant in Newport Beach, California.

    http://news.yahoo.com/blogs/trending-now/banker-insulting-tip-incites-class-warfare-between-1-164624882.html

  78. Shore (76)-

    Any utterance by the criminal, Larry Summers, is made worthless by the mere fact that it came from him.

    Either he, Rubin or Geethner should be the first executed after the revolution.

  79. My brother recommended I would possibly like this blog. He was once entirely right. This post actually made my day. You can not imagine simply how a lot time I had spent for this info! Thanks!

  80. JJ says:

    Sounds like you used to be a “puffer”

    Shadow of John says:
    February 27, 2012 at 12:59 pm
    “16 inches center to center between studs”

    16″ center to center is hardly a stud. It sounds like two little 8″ nancy boys standing tip to tip. No woman worth doing the backseat boogie on crush velour would settle gor 16″ 0n center nancy boys. They prefer to wait for us 24″on center men.

  81. Comrade Nom Deplume says:

    I’ve met Carville and he is so full of himself, he has to let his suits out.

  82. tbw says:

    Since I know lots of you are frugal, I wanted to ask if anyone has had a positive experience cancelling their cable? My cable was like $170 a month including internet, we recently switched to basic channels with cable internet, but now that we have been enjoying the local public tv programming I bought a digital TV antenna which I will be putting up in the attic soon. Anyone else do this? I would like to hear your results and experiences with this. Paying to watch TV is just insane and the cable bills are out of control.

  83. Nicholas says:

    Townhouse in my community was just listed on the MLS for 125k. At the top of the market these were being sold for 325k. The funny thing is that the unit for sale is an exact copy of the place I’m renting right now. I pay 1200$ a month in rent and the cost/rent calculators that I look at say If I plan to say longer than 3 years that it makes sense to rent if the property appreciates at the rate of headline inflation (2.5%) otherwise 5 years if property has appreciation rate of zero. I think it puked when I put in a negative appreciation rate.

    Either way it is a 62% drop from the top of the market so far and based upon the rate of people moving in vs. those moving out that the correction isn’t quite over. I’m set to sit tight for another year to see how things play out.

  84. 3B says:

    #88 Nicholas: And I bet there was a time when people laughed at you for not buying.

  85. gary says:

    Nicholas [88],

    What community are we talking about here? Location?

  86. Bocephus says:

    Condos pffffft. Revoution pffffft.

  87. Nicholas says:

    tbw,

    I switched to over the air (OTA) about a year ago. It is really nice for the local programming. I just put a tuner in my computer and attach my computer to the television. The PC-tuner card had a remote control and integrated to Windows Media Player on install. I think the manufacturer was Happanauge.

    The only problems that I have seen, which are endemic to OTA broadcasts is that when planes go overhead or when it is cloudy, you can lose signal. You can improve this by getting a better antenna and placing it on top of your house (I have mine about 6 feet off the ground). These problems can sometimes be fixed by re-orienting the antenna. If you had TV before cable, fiber, or satellite these problems should sound very familiar.

    I’m in between Baltimore and DC thus I get access to about 20-30 different stations via my reciever and crappy antenna. If you are in NJ then you should have access to NY broadcast towers so your selection should also be good.

    I think the first thing to try would be to renegotiate with your cable provider. 170$ seems really high and anything over 99$ for triple play is probably outright robbery. Thats regular cable channels, not basic btw. Comcast is getting really agressive against Verizon as of recently. Apparently Comcast believed that Conneticut was off limits to Verizon (Comcast is headquartered in Conn.?) and Verizon started advertizing and making sales there. Comcast got mad and is now aggressively seeking Verizon converts.

    It might do you good to play one vs the other to see if you can get better rates. I had some guy quote me 38$ a month, one year contract, for 25/15 Internet service when I currently pay 45$ with Verizion. Unfortunately, I don’t think less than 100$ is enough to get me off my rear to switch providers.

  88. Nicholas says:

    Gary,

    I live in Laurel, MD. An area supposedly supported by Government dollars so we are immune to the housing downturn.

  89. Anon E. Moose says:

    tbw [87];

    $170? You were getting hosed. Now paying $70/mo to the Dolans for cable/phone/IP. Cable includes the typical mix, but no a la carte premium channels like HBO, Show, or the ‘premium’ level sports — ESPN classic, NFL network. Haven’t made the leap to go all IP like Nexflix/Hulu, etc.

    On the sports front, when there’s something worth seeing that they want eyeballs on, they’ll find a regular channel and air it, like they do for the sold out NFL home market games on NFL channel, or World Series on Fox in 2010.

  90. Nicholas says:

    3B,

    I actually looked to buy a home in 2007 and I was just dumbstruck at the inventory and how expensive it was. I literally walked into a home that a cat had used as a litter box and the seller had the nerve to ask for 300k for the place.

    I wispered to my wife, “This place smells like cat p!ss…”

    The only one that belittled me for not buying was my wife. She was very aggressive and layed on the guilt trip very heavy. “You are not even trying to buy a house!” is what she said one day in frustration. I told her that there were things that I wouldn’t let her do because they were unsafe. One was to swim just after eating, the other was to run in the house with scissors and the last was to borrow a quarter of a million dollars to buy a used litter box.

    I think that is when I found this blog and it has helped me keep my sanity. My trigger finger is itchy though after 5 years of waiting.

  91. 3B says:

    #96 Understand.

  92. Juice Box says:

    “borrow a quarter of a million dollars to buy a used litter box.”

    Post of the Day!

  93. JJ says:

    I feel for you. I personally have not bought a bond in over six weeks. My longest break in four years. Additionally, I am 100% out of margin and I have cash piling up plus bonds being called. Yet I refuse to buy more into this bond bubble which I know will burst eventually. Sidelines are tough.

    Now that I can afford a trade-up house the taxes went up so much on larger homes during bubble years due to reassessments and tax rate hikes I can’t stomach the thought of taxes of 20K or more. So now I sit on sideline on homes too. I think upper end homes in spite of low rates are sitting as even a zero percent mortgage with zero percent down sucks if re taxes are 24K a year.

    Nicholas says:
    February 27, 2012 at 3:22 pm
    3B,

    I actually looked to buy a home in 2007 and I was just dumbstruck at the inventory and how expensive it was. I literally walked into a home that a cat had used as a litter box and the seller had the nerve to ask for 300k for the place.

  94. gary says:

    Nicholas,

    I wispered to my wife, “This place smells like cat p!ss…”

    300K sounds like a bargain. In prestigious Northern Jersey, homes that smell like cat p!ss start at around 475K and 9.5K in taxes.

  95. xolepa says:

    (87) TBW
    I don’t know what town you’re in, but here in Hunterdon county I use an off-air rotatable antenna in my attic that supplements my satellite system via hookups to the satellite signal source and other hardware pieces. I have connected a Channel Master rotator and amplifier to a highly directional antenna. The model numbers I do not remember as I did this over 10 years ago. Several reasons for doing this: uncompressed signal, including HD, and the signals do go thru when heavy clouds are present. Best signal for sports, by far. The DIRECTV boxes I have integrate satellite and off-air via a single cable feed and Channel Master does also provide a remote for spinning its antenna.
    I am very satisfied as I can reach stations from Connecticut to Delaware. There is a way you can program the CM remote to rotate the antenna to the particular position based upon what station you’re watching.
    As to antennae, there is no such thing as an HD antenna. Get a UHF oriented one, though. Search the internet for the latest tests, get what fits your attic size. Searching the internet, the CM 3671 is the style you want. WineGard is another good name.

  96. 3B says:

    #96 Nicholas: We are looking this year, (took a long time to decide where we wanted to go), and we are holding to a tight price; we waited this long, we can wait a little longer. Discipline is tough, but it pays off.

  97. 3B says:

    #00 gary: I think you mean unicorn p—.

  98. JJ says:

    So the bank got back to me on the REO I lowballed on and now we are 15K apart. So realtor said I have 24 hours to put a new bid or confirm my current bid. She then says if you put in a new bid it will get you and the bank closer.

    OK, based on what. Bank says my bid expires in 24 hours and I can re-bid. If I can re-bid why not bid lower. I am thinking I will re-bid 1k lower then when bank rejects re-bid another 1K lower. Then bank is faced with an outcome where my bid price is continuing to fall and realtor faces decreasing commission. If I bid every 24 hour 1K lower I think it is better than if I keep bidding higher every 24 hours. Why would bank ever accept?

    Although for some strange reason non business buyers don’t like bid down approach. I like it.

  99. Nicholas says:

    There are good videos on youtube for creating your own antenna’s for getting HDTV stations. Your store bought antenna’s probably are not going to be very good. I have returned one or two for being absolute crap.

  100. Nicholas says:

    Woah!

    The CM 3671 is 120$. I think you could probably get by with a board and some coat hangers for less than 6$.

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

    Try out a small antenna first then if it looks like OTA serves you well then upgrade to a better antenna.

  101. Bystander says:

    tbw,

    I shut down cable a year ago when I moved to CT. Don’t miss it one bit. I went with Optimum/ Cablevision for internet. It was only 29.95 month for 15 mbs speed. Best part is that they send unscrambled QAM standard channels to my home. I get about 50 channels with 12 HD. I also hooked up a HDhomeun box between my PC and TV. Basically it turns my computer into a DVR. Works very well. I fill in ESPN by watching Justin tv. PBS has three great HD channels alone (reg, create and world). Always something on so get rid of cable.

  102. chicagofinance says:

    Have kids, so cable is required. We are not HDTV types. I have bargained with Cablevision three years in a row (note: we have no FiOS in my area), so we get the triple play for $89 + DVR $10 + remote $6 + tax = all-in $109/month or so. Cheap enough…..

  103. JJ says:

    The dolans throw a huge fireworks show for neighbors each year at their oyster bay cove mansion. I shudder at thought cheapskates like you could impact that wonderful event.

    chicagofinance says:
    February 27, 2012 at 4:28 pm
    Have kids, so cable is required. We are not HDTV types. I have bargained with Cablevision three years in a row (note: we have no FiOS in my area), so we get the triple play for $89 + DVR $10 + remote $6 + tax = all-in $109/month or so. Cheap enough…..

  104. chicagofinance says:

    To be clear, literally every utility will chop $10 off just for calling them since the fear of switching is so high…..every 12 months or so, you should call around to your service providers just for the hell of it……

  105. Juice Box says:

    I have Direct TV screw Cable for TV. I use them for Internet Only and if I could get rid of them I would. I had FIOS over the summer in my Shore Rental Home. It was good but the user interface was too cluttered.

  106. chicagofinance says:

    WSJ
    Letter to Editor

    I respectfully suggest this extra-credit course be added to Mr. Reynolds’s piece, “A Case Study in Socialism: How the microcosm society of OWS developed spontaneously into socialism with free housing and food.” This could dovetail with the “Bourgeois vs. Non-Bourgeois Revolution” to illustrate how nonownership of property leads to squalor and crime. Also highlighted would be the contrasting response to the unwelcome infiltration of outsiders as nonoccupiers tried to make the most of the “free” gourmet food offered at Zuccotti Park.

    Joseph Hodonsky

    Atlantic Highlands, N.J.

  107. Anon E. Moose says:

    Chifi [110];

    I tried that with Cablevision; no joy with their phone monkeys. Then I put an order in for Verizon FIOS and cable got the request to port my home phone number. That prompted a call from an actual salesman who matched their best advertised price ($69.99 triple play) for 1 year.

  108. Anon E. Moose says:

    JJ [109];

    Two bit hacks. They’ve got a virtual monpoly and still manage to barely make money. If they were real BSDs they’d step up and foot the bill for the Jones Beach fireworks show, especially considering that it would directly benefit their customer base. Nah, they’d rather buy another helicopter or upgrade their G4.

  109. Juice Box says:

    Lib or Gator – I am hearing of a bidding war reminiscent of the old days in Glen Ridge, my friend is interested but the noise coming from the Realtor involved is they need to bid up supposed bid is already 75k over ask in the last few days.

    Any info?

    http://www.realtor.com/realestateandhomes-detail/15-Hillside-Ave_Glen-Ridge_NJ_07028_M50912-16058

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  111. Comrade Nom Deplume says:

    Elmendorf’s cheery thought for the day, delivered first to the elites in 02138:

    http://www.cbo.gov/publication/43017

  112. njescapee says:

    Nom, that analysis isn’t surprising given the federal government’s recklessness over the past 10 years. Did we really need to embark on 2 wars, homeland insecurity, medicare part d combined with tax cuts? Guns and butter didn’t work for Johnson and has been an unmitigated disaster this time around as well.

  113. njescapee says:

    great show on PBS now. Blues concert with Buddy Guy, Jeff Beck, BB King and Mick Jagger oh and President O..

  114. gryffindor says:

    I have Cablevision at the office, but am not up for renewal until summer. We have Time Warner at home and they are relentless. They raise the bill every few months by a few dollars here and there. People like my husband have electronic statements and pay on autopay so they don’t notice the creep until I logged in and see the bills and get mad. I called to complain and spent 35+ min on the phone with retention and walked away with $15 off and Showtime for $5 so really $10 off the monthly bill. He didn’t even want to stack the two promotions but after about 27 minutes, finally did. Doesn’t matter that my husband has been with them for over 7 years, if you want to leave, they are ready to cancel and drop you. Business must be good.

    I’ve done life without cable many times, but my husband refuses to give up HD ESPN and various other sports channels so we had to compromise elsewhere. Since we have the cable, we enjoy watching Showtime and subscribe from time to time.

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