Words from the past: “Seller’s Market”

From the WSJ:

Housing: It’s Becoming a Seller’s Market

The National Association of Realtors said on Thursday what home buyers in many parts of the United States have known for months: it’s becoming a seller’s market.

The number of homes listed for sale in January fell by 4.9%, leaving 1.74 million properties on the market. That’s the lowest since December of 1999, when there were 1.71 million homes on the market. By contrast, there were 2.91 million homes on the market two years ago at this time.

After adjusting for seasonal factors, home sales rose by just 0.4% in January, to an annual rate of 4.92 million units. Still, that’s up from 9.1% one year ago.

The upshot is that there’s a growing pool of buyers chasing a shrinking supply of homes. If the trend holds, prices will keep going up. At the current pace of sales, it would take just 4.2 months to sell the current supply of homes available for sale, down from a 6.2 months’ supply one year ago.

While inventories typically increase in the spring, the Realtors’ group has expressed growing concerns that sales volumes are being held back by the lack of choice. This is good news for homeowners who have watched home prices drop over the last six years, but it’s bad news for buyers—and for anyone that makes their living selling real estate.

From Bloomberg:

Previously Owned U.S. Home Sales Climb to 4.92 Million

Sales of previously owned homes increased in January and an index of leading indicators climbed for a second month as the rebound in housing helped to broaden the U.S. expansion.

Purchases of existing houses rose 0.4 percent to a 4.92 million annual rate, figures from the National Association of Realtors showed today in Washington.

Improving home sales combined with dwindling inventory spurred the biggest advance in property values since 2005, helping mend household finances. The gain in housing, the industry that was at the center of the financial crisis, may help consumers overcome an increase in the payroll tax and rising gasoline prices that pose a risk to spending.

“The economy has legs,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a unit of the largest U.S. mortgage lender. “A lot of people are much more confident. Housing has picked up, and I think it’s sustainable.”

The number of previously owned homes on the market fell 4.9 percent to 1.74 million, the fewest since December 1999, today’s report from the Realtors’ group showed. At the current sales pace, it would take 4.2 months to sell those houses, the fewest since April 2005.

“Inventory has increasingly become the story of the housing market,” Lawrence Yun, NAR chief economist, said in a news conference as the figures were released. “We do expect some relief in inventories as the spring season comes around.” He also said that “only the homebuilders can truly relieve the inventory” shortage.

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128 Responses to Words from the past: “Seller’s Market”

  1. grim says:

    From the Record:

    New Jersey tax revenues climb; budget shortfall at $350M

    New Jersey tax collections improved for the second straight month in January, shrinking the state’s revenue shortfall down to $350 million, the state Department of Treasury announced Thursday.

    This revenue update comes just days before Governor Christie unveils the next state budget, a spending plan that would have to account for any revenue gaps in the current budget because the state constitution does not allow deficits.

    In all, tax collections beat the governor’s budget targets by 2.5 percent in January.

    Treasury officials said the income tax collections remained strong and that strong sales tax collections in January that were likely influenced by the ongoing recovery from superstorm Sandy.

    “What is most striking is the resurgence of sales tax revenue, which appears to be a combination of catch-up spending deferred by Sandy, additional spending coming in line to make up for losses to Sandy, and the strengthening of the underlying trend in spending late last year,” said Charles Steindel, the state’s chief economist.

    Tax collections are now 3.9 percent ahead of where they were this time last year. But Christie had projected much wider growth in the $31.7 billion spending plan he signed in late June. The budget still faces a $350 million revenue shortfall.

  2. Mike says:

    Good Morning New Jersey

  3. grim says:

    From Calculated Risk:

    Existing Home Sales: Conventional Sales up Sharply

    The NAR reported total sales were up 9.1% from January 2012, but conventional sales are probably up closer to 20% (or more) from January 2012, and distressed sales down. The NAR reported (from a survey):

    Distressed homes – foreclosures and short sales – accounted for 23 percent of January sales, down from 24 percent in December and 35 percent in January 2012.

    Although this survey isn’t perfect, if total sales were up 9.1% from January 2012, and distressed sales declined from 35% of total sales to 23%, this suggests conventional sales were up sharply year-over-year – a good sign.

  4. grim says:

    Eat our lunch, from the Star Ledger:

    Nevada rushes to legalize online gambling ahead of N.J.

    Nevada Gov. Brian Sandoval signed legislation legalizing online gambling in his state today, capping a dizzying day at the Legislature as lawmakers passed the bill through the Assembly and Senate as an emergency measure.

    Nevada wanted to beat New Jersey, its East Coast casino rival, to the online gambling punch. New Jersey Gov. Chris Christie previously vetoed an online wagering bill but has indicated he may sign an amended version next week.

    Sandoval and Nevada legislative leaders said it was important for Nevada to remain at the forefront of gambling regulation.

    “This is an historic day for the great state of Nevada,” Sandoval said, flanked by dozens of state lawmakers. “Today I sign into law the framework that will usher in the next frontier of gaming in Nevada.”

    “As to our competitor, New Jersey, they should be accustomed to following Nevada,” he said.

  5. grim says:

    4 – The Nevada law is substantially different from NJ’s proposed legislation. The Nevada law is designed to allow interstate partnerships, so online gaming can be exported from Nevada to other states that partner with them. The NJ law applies to NJ only. Rumors are that Nevada already has a number of state partnerships in the works, which means that off-shore companies looking for place to set up shop will undoubtedly pick Nevada instead of NJ, as the potential user base is significantly larger and has potential to increase as well.

    Honestly? At this point, don’t even bother NJ, your lunch has been eaten. I’m sure Pokerstars/Full Tilt is currently working to dissolve the discussions to purchase Atlantic Club.

  6. grim says:

    Understand why they missed out, they were working diligently to ban .50 BMG ammunition as well, one of the most nonsensical pieces of legislation ever.

    What criminal can afford the $$7,500-10,000 rifle needed to fire this round? What criminal can afford the six dollars PER BULLET? It costs more to load a .50 caliber magazine than it does to fill a gas tank. And that is for the few guns that use magazines, a large number of these are single shot bolt action guns.

    Not to mention the rifle is 5 feet long and weighs 30 pounds, not exactly something that’s going to be hidden in a jacket pocket. Hell, very few of these can even be fired standing up.

    You’ve essentially banned wealthy gun enthusiasts from purchasing a “halo gun” that is only ever used in long range target shooting and competitions. Idiots with cheap Walmart shotguns are orders of magnitude more dangerous than anyone that can afford one of these things. Your average .50 shooter is armed with a slide rule, scientific calculator, laser rangefinder, anemometer, a laptop with a half dozen spreadsheets open, and is more concerned with mastery of the physics involved than actually caring about shooting a gun.

    Super folks, just super. Now I can sleep at night.

    By the way, there is no record of a .50 BMG as ever having been used in committing a crime in the United States.

  7. More like sucker’s market.

  8. Note to self: look into .50 BMG.

  9. Nomad says:

    Thinking of putting an SSD in a 4.5 yr old MacBook. 256 GB around $200. Anyone ever do this and if so, is it a hassle for a non-techie to install, format and transfer files? I am sure Apple store would gladly charge me arm, leg and a few other body parts.

    And for those of you in the market for a used car, here is a nice salvage list from Sandy brought to you buy your friends at Adessa auto auctions. When are these going to start to show up on lots w/out defects disclosed in the title?

  10. grim says:

    9 – You are probably better off not buying a used car for the next 5 years.

  11. Nomad says:

    Looks like 250k cars damaged in NY from Sandy and another 60k cars in NJ

    http://www.autonews.com/apps/pbcs.dll/article?AID=/20130221/RETAIL01/302219773/damage-toll-from-sandy-rises-to-250000-cars-insurance-group-says#axzz2Ld5LJhPh

    I wonder how often duplicate titles are ordered and have their flood damage histories erased? Maybe for fun I will call CarFax and see how they ensure their clean title info is accurate.

  12. grim says:

    From the Record:

    Region remains one of least affordable in nation, builders’ group says

    With mortgage rates at once-unthinkable lows, and prices way down from their housing-boom peaks, homes are a lot more affordable than they were a few years back, the National Association of Home Builders said Thursday. Three out of four homes sold in the fourth quarter of 2012 were affordable to households earning the median U.S. income of $65,000.

    But buyers in this region shouldn’t get too excited. The New York metropolitan area, including North Jersey, remains one of the least-affordable areas in the nation, with only 29.6 percent of homes considered affordable to families with the area’s median income of $68,300. Of course, incomes vary widely in this region. Bergen County’s median household income from 2007 to 2011 was $83,443, while Passaic’s was $56,299, according to the U.S. Census.

    The median home price in the area was $450,000 in the fourth quarter, compared with $188,000 nationwide, according to the builders’ group., which puts out its affordability index in conjunction with Wells Fargo.

    All these numbers add up to the fact that the area is second-to-last in terms of affordability, just above the San Francisco area.

  13. grim says:

    So how to afford a home in Bergen? Creativity is the key! Think OUTSIDE the box, to afford the box!

    TV report looks at ‘heroin houses’ cropping up in Bergen County suburbs

  14. grim says:

    From Zillow:

    January Annual Home Value Increase Is Largest Since Summer 2006

    Zillow’s January Real Estate Market Reports, released today, show that national home values rose 0.7% from December to January to $158,100 (Figure 1). January 2013 marks the 15th consecutive month of home value appreciation. On a year-over-year basis, home values were up 6.2% (Figure 2) from January 2012 – a rate of annual appreciation we haven’t seen since July 2006 (when the rate was 7.5%), before the peak of the housing bubble. Rents are up 4.3% on a year-over-year basis (Figure 3). The Zillow Home Value Forecast calls for 3.3% appreciation nationally from January 2013 to January 2014. Most markets have already hit a bottom – with only 9 out of 260 not projected to hit a bottom within the next year – and 78 out of the 260 markets covered are forecasted to experience home value appreciation of 3% or higher.

  15. Fast Eddie says:

    The New York metropolitan area, including North Jersey, remains one of the least-affordable areas in the nation.

    Two things: The inventory is low because people cannot sell. They owe more than the house is worth so they can either mail in the keys or suffer through monthly payments indefinitely. They have no net worth; it’s the reason they got exotic, piggyback, NINJA sucka loans in the first place.

    Number two, property taxes doubled in a 6 to 7 year span and will only increase, never decrease. If you all are going to start tossing out these ridiculous price to income ratios, you need to include property taxes because it’s getting to the point where it’s on par with the mortgage payment. Please, stop the silly bullsh1t and just recognize that house prices have another serious price leg down before inventory and transactions can happen.

    My buyers can’t find another house even though I know they’re looking at other houses for months now because I had the audicity (sarcasm) to sell them a really nice house at market price thinking I can find a somewhat reasonable house at market price. So, they’re realizing the majoritity of sellers are living a fantasy just as I am in thinking the housing market is somewhat normal again. Result? Two transactions are dead because people generally are f.ucking m0rons.

    Once again, if you’re going to talk about price to income ratios, include the property taxes or don’t even say anything at all.

  16. Mike says:

    Nevada Gov. states “As to our competitor, New Jersey, they should be accustomed to following Nevada” Maybe legalized prostitution will get AC out of the hole. Or maybe deeper into the hole.

  17. grim says:

    Gary – Inventory is low because people can’t sell? Some 70% of homeowners with a mortgage in (edit: areas that we care about in) NJ have sufficient equity to sell, this doesn’t at all talk to the approximate 1/3rd of homeowners who don’t have a mortgage at all. If taxes were so burdensome, wouldn’t you expect inventory to be high as the homeowners with equity and the free-and-clear owners are clamoring to sell?

    Explain to me why the current inventory levels are in-line with levels that were seen pre-bubble, aka a “normal market”? Heck, comparing inventory levels to the 1998 and 1999 periods, we’re still higher, despite the fact that during that time period unemployment was low, incomes were rising, underwater and default were basically nonexistent (your argument based on the premise that more people are willing to sell in periods of economic strength). Yet inventory was still *lower* than today?

    Bergen Inventory (NJMLS scrubbed old active data, I only have back to 2004 now)
    January 2004 – 3131
    January 2005 – 3121 (Inventory jumps from this point on)

    January 2013 – 3840 (Up 22% from avg “normal” inventory)

    Morris Inventory
    January 2001 – 2010
    January 2002 – 2284
    January 2003 – 2316
    January 2004 – 2326
    January 2005 – 2451 (Inventory jumps from this point on)

    January 2013 – 2913 (Up 28% from avg “normal” level)

    I think the basis for comparison is flawed, you can not compare against bubble inventory levels, especially at the tail end when inventory skyrocketed to unsustainable levels. Remember back guys, we were tracking inventory on a WEEKLY basis here (for example: http://njrereport.com/index.php/2006/06/28/northern-new-jersey-weekly-inventory-update-7/ ). I was the #1 indicator we relied on once sales were clearly in decline.

    Look at the numbers above for context, now let me add the peak inventory.

    Bergen Inventory
    January 2007 – 5507

    January 2013 – 2913 (Down 47% from peak)

    Morris Inventory
    January 2007 – 4028

    January 2013 – 2913 (Down 28% from peak)

    Paints a much different picture.

    So, tell me why we should be comparing inventory to peak levels instead of the pre-bubble market levels?

  18. freedy says:

    Remember that lifelong ban the National Futures Association was thinking of imposing on former MF Global CEO Jon Corzine? Turns out, the board couldn’t follow through on it, seeing as Corzine is not actually an NFA member. Also, any action against Corzine “could have complicated a continuing federal investigation into MF Global’s misuse of the customer cash.”

  19. Brian says:

    bring on the sequester cuts.

  20. grim says:

    Call me a cheerleader all you like, but the fact of the matter is that during the run up to and peak of the bubble, North Jersey saw two very sizable jumps in active inventory. We saw a big jump in 2003, and then a huge jump in late 2005, 2006, and still into 2007. This was an unprecedented level of inventory coming to market.

    Remember this one? (yeah I know, lazy me, I should update those, they were great charts)

    http://njrereport.com/images/jun07_invpace.gif (Remember, everything above the zero axis means inventory is rising. Even if the year over year rate of change falls off the peak, that just means it’s rising at a slower rate.)

    Tell me why I’m wrong, and why we shouldn’t be comparing inventory levels to the pre-bubble market if we are trying to establish a definition for market normalcy?

  21. BearsFan says:

    “Tell me why I’m wrong, and that we shouldn’t be comparing inventory levels to the pre-bubble market if we are trying to establish a definition for market normalcy?”

    Hi, not trying to answer this question… just a comment. What would inventories have been in the bubble if the 30 year was at 3.6% for multiple years. That inventory level, higher or lower, is what I would be trying to gauge for a comp. Just my 2 cents.

  22. Painhrtz - The Holy Hand Grenade of Antioch says:

    Let them ban the .50, I can still get a .416 Barret or .408 cherry tac. Grim your right they are big and scary so lets ban. Private sales of these halo guns go to sniper wanna bes, target shooters and physics geeks. My 7mm Rem mag is effective out to 1000 yds, I would be more scared of someone with mal intent trainign with one of those or a .308. If they want to ban on the scary factor you should start with large caliber hunting rifles and semi auto 12 guages. F*ck twits just want to disarm everyone to continue deeper into the police state

  23. All Hype - Mr. Oil, Mr. Gas, Mr. Coal says:

    Buy Now or Be Priced Out Forever! (South River Edition):

    http://www.realtor.com/realestateandhomes-detail/25-1st-St_South-River_NJ_08882_M55014-61931?ex=NJ555493626

    Anybody and I mean anybody who bids for this house any where near asking price is certifiably insane.

  24. Painhrtz - The Holy Hand Grenade of Antioch says:

    This is some world class fear mongering right here

    http://money.cnn.com/2013/02/21/news/economy/federal-budget-cuts/index.html?iid=obinsite

    My prediction sequester goes through no one notices except for federal employees

  25. JJ says:

    My friends buddy has bought a lot at the IIAi auction out in Suffolk. He focuses on high end cars worth rebuilding. Only ones that turn over.

    I noticed at that auction, late model low to ground complicated foreign cars dont go for much. A BMW Z4, M3, Ferrari is worth a lot less than a Yukno Denali or Caddie Escalade. The higher up cars rarely got water above dash

    Also older cars pre 1975 are easier to get started. Two cars both valued at 30K preflood, a 1963 Corvette or 2011 Corvette or a 1967 280sl or a 1989 560sl I notice older cars retain more value. A shade tree mechanic can get a 1971 Cuda that was flooded to start, he cant get a 2012 flood Cuda to start.

    Ebay has a little business where people sell titles for “decoration only” You see titles for cars that were junked sometimes selling for $500 bucks. With VIN tags 1k.

    In boxes in my attic somewhere are registration to a nice 1971 Dodge Demon and a nice 1963 Dodge Convertible. Both cars I never sold, One I left on street where it died, other went straight to crusher, did not even give junk yard any info.

    Technically, I could buy a flooded 1971 or 1963 Dodge show car that was flooded, then just register it using my old registration. No bill of sale, no nothing.

    Nomad says:
    February 22, 2013 at 7:10 am

    Adessa auto salvage:

    https://www.iaai.com/Vehicles/Search.aspx

  26. nwnj says:

    Meanwhile, pay no attention to the man behind the curtain and the massive ongoing wealth transfers to wall st.

    “Brian says:
    February 22, 2013 at 9:02 am
    bring on the sequester cuts.

  27. grim says:

    What would inventories have been in the bubble if the 30 year was at 3.6% for multiple years. That inventory level, higher or lower, is what I would be trying to gauge for a comp.

    I’d run a regression/correlation, but looking at the charts of national active inventory and 30yr fixed rates, it doesn’t look like it’s even worth the time. They appear to be mostly unrelated.

    Although I suspect that there might be a relationship between price change and inventory with a shifted time scale (said another way, inventory might tend to increase 6-12 months after some level of price increase is seen).

  28. Fast Eddie says:

    If taxes were so burdensome, wouldn’t you expect inventory to be high as the homeowners with equity and the free-and-clear owners are clamoring to sell?

    If they have all this equity and are free and clear, they can bear the brunt of the tax increase. And if they’re going to sell, they’re expecting peak price with no disregard for the property tax. That’s the buyers problem, not theirs. Remember, they’re free and clear and have lots of equity. They could care less that taxes doubled. I mean, prices came down from peak, what more do buyers expect (sarcasm)? After all, they can’t give it away.

    And salaries have been stagnant for a decade. The 3 new guys on my team confirmed that they now have year 2000 salaries again. Multiply that by a zillion. What about gas prices? What was a gallon of gas in 1998? How about food prices? Maybe those that can sell don’t want to because their p1ssed they can’t total sucka prices like in 2006. Maybe they’re waiting for houses to increase 20% per year again starting next year. And where’s all these transactions that apparently the numbers are showing? I’m seeing houses sold after the fact that I had no idea existed. Again, they were “exclusive” transactions because I’m seeing the same 25 houses listed on the housing sites that nobody wants, week after week. And where’s the metric that shows all the wannabees that are one paycheck away from disaster? Every time I go on the multiple listing sites, all I see is pre-foreclosure and foreclosures.

  29. Fast Eddie says:

    disregard = regard

  30. JJ says:

    New LIRR fares take effect on Friday, March 1, 2013. On average, most commuter rail tickets will increase between 8.19% and 9.31%, depending on ticket type and distance traveled.

    No inflation to worry about at all!!

  31. Brian says:

    Bearsfan I watched that video you posted yesterday about silver. Too many red flags for me to take it seriously. The guy doesn’t cite any of his sources and the video doesn’t make it’s point in a factual manner. The video seems designed to play on people’s emotions. Pictures of chimpanzees and people bumrushing a retail establishment really? Also, whenever I hear someone state what will happen in the future as if it is fact, I am immedieately skeptical.

  32. Ragnar says:

    I think the govt should focus on banning nukes in N. Korea, Iran, and Pakistan, than guns in the US.

  33. POS cape says:

    27 JJ:

    No such thing as a 2012 ‘Cuda but get your point. Substitute Challenger.

  34. Phoenix says:

    Eddie, why put the house up for sale when you can stop payment and stay there for 3 years or more? I have a friend has not made a payment in 5 years. Yes, that’s 5 years, Morris county, beautiful lakefront home. House still not on sheriff website. Market can change in 5 years.

  35. Painhrtz - The Holy Hand Grenade of Antioch says:
  36. Phoenix says:

    Ragnar, shows you just who they think the real enemy is.

  37. Fast Eddie says:

    Phoenix [36],

    Everyone is bleeding wealth. Didn’t you get the memo? The NAR numbers are g0spel, until you go out there yourself and see a different picture.

  38. Fast Eddie says:

    And if the housing market is so rosy and so normal, why are 30 yr. rates in the 3.x range? Let them go back to a normal 7.x range.

  39. BearsFan says:

    33- Brian, yeah, he’s definitely in the Clot camp for sure. He made a lot of short videos like that (around 50), and some of them have more detail. I posted to give you the extreme end of the spectrum.

  40. yome says:

    Interest rates today are kept at the 3′s to keep and prevent home prices from losing more value and kept more buyers afford to buy homes at low monthly payments.If this happened during the bubble will it not make prices jump higher and maybe would be sellers hold to their homes and wait for some more rise in prices? You would definitely create more buyers than it was during the bubble.No?

    “What would inventories have been in the bubble if the 30 year was at 3.6% for multiple years. That inventory level, higher or lower, is what I would be trying to gauge for a comp. Just my 2 cents.”

  41. Phoenix says:

    Yome, I agree with Eddie. Low rates artificially keeping prices inflated. If those rates go up the home market gets turned on its head.

  42. Fabius Maximus says:

    #27 JJ

    My cousin just picked up a beautiful VW T2 camper. for $1500. It had seaweed in the engine, but he is good enough with a wrench to strip it and rebuild. He’ll end up with a van worth about $15-20K at the end for about $1000 in parts and some hard work. The german models go for so low as replacing the electronics is a major PITA. Lots of digital dash boards need to be replaced. I looked around for an early 70s Porsche or Merc, but didn’t find anything that looked to be worth the effort.

    Between Sandy and Cash for clunkers, the second hand market has some inventory gaps.

  43. yome says:

    Phoenix:
    I agree. But low rates are keeping the monthly payments low with home prices high.If prices of homes goes down and interest rates goes up,monthly payments will just be equal today.Actual beneficiary of a low priced homes will be the high down payment and cash buyers.
    With the economy today 2% GDP with 25% coming from Government,a rise in interest rates will bring home prices down.
    With the economy in full capacity 4 to 6% GDP with wages growing,will the prices of homes go down with interest rates going up? I dont think so.

  44. Fast Eddie says:

    If prices of homes goes down and interest rates goes up,monthly payments will just be equal today.

    You can always manipulate the rates. It’s all about the price. Don’t forget that little thorn in the side called property taxes. 8 years ago, my taxes were in the low 5000s, now they’re in the mid 9000s. It’s only an increase of $375 more per month. It’s just a mere technicality because we all know salaries rise year after year, right? Umm… well, they’re supposed to rise.

  45. Comrade Nom Deplume, The Scungilli Cannon says:

    [21] brian,

    Surprised it isn’t all guns and ammo. Go to any retailer and try to buy a black rifle or .223 ammo. They’ll laugh at you. Not because they won’t sell them but because demand is off the charts.

    I reported before that Cabela’s used to maintain a wait list. They aren’t now because demand is so high, they’d have something like 9 years worth of names.

  46. Phoenix says:

    45 yome

    “With the economy in full capacity 4 to 6% GDP with wages growing” What wages growing? I see people who are having hours cut, paying more for healthcare (some employers not hiring smokers now UPENN for example), delayed Social Security, Medicaid and Medicare for younger workers, bull temp jobs that are never going to be full employment, etc , the list goes on and on. And that 31% in NJ without mortgages, how old are they? Like Eddie says, they will get dragged out of their homes in their boots as they had real pension plans, etc that will allow them to pay the increased taxes on an already paid off home. I would rather buy a house for a lower price with a higher interest rate, although the “payment” is the same, the tax writeoff is greater, and I can prepay/refinance a cheaper home. Ex. a Million dollar home at a .01% interest rate, or the same home priced at 1$ at a 1000% interest rate. Hey bank, here’s your one dollar. Game over.

  47. Comrade Nom Deplume, The Scungilli Cannon says:

    [6] grim,

    Just spitballing here but I think that the number of crimes committed by armored vehicles is greater than with 50 cal. weapons (think Killdozer and the freak who let rip with a tank in San Diego some years back).

    I also saw a stat that said the number of people killed with long rifles in 2011 was in the range of 350 while the number of people killed with fists was over twice that number. Naturally, both were dwarfed by handgun killings.

  48. Anon E. Moose says:

    Eddie [40];

    Early in our search we had a wide area – Wayne (Passaic), Kinellon, Rockaway (Morris), West Caldwell (Essex),

    We saw two types of things in our initial price range – warmed over crap, like you’re seeing – and decent houses on terrible land. Coming out of one of the latter, I naively asked ‘why can’t someone put a house like that on a decent plot of land?’ — the question answered itself. If they did, it would sell for more money.

    I’m not suggesting you buy the crap, just that you’ve been swimming in the market long enough to have your own feel for what buyers are paying for what kind of houses and where. There are plenty of idiot listing agents and idiot sellers (like the three kids who owned the house in W. Caldwell I bid on – now fourth year chasing the market down….). But you just cannot argue with a closed arms-length sale.

    Something else – in my process I saw a contemporary house that I actually liked, at an attractive price. It was highly overtaxed (listing agent remarks even promised an appeal was in the offing – riiiight), and backed up to power lines and beyond that it faced a bit of an eyesore (water tank, at least they had the decency to paint it beige). It was a 1.5 acre plot, so not like the lines directly crossed the property, or I had to see this thing out my bedroom window every morning. But the price was right, especially compared to the colonials on the block.

    I didn’t pull the trigger because all those factors, esp the contemporary layout, made it an odd duck. The discount I would have enjoyed getting into it I would have had to give to my seller to get out of it again. However, if it had been the very top of my price range, given it was in a target town of mine, it would have been more compelling. In the end, I stretched a bit more to get something with fewer (but not completely free of) “buts”.

  49. yome says:

    Phoenix:
    We are at 2% GDP supported by 25% Government spending. With sequester cuts coming will that not bring GDP lower? Will see when we get to 4 to 6% GDP. “Full US economic capacity” is the Q

    “With the economy in full capacity 4 to 6% GDP with wages growing” What wages growing?”

  50. zieba says:

    JJ,
    Dash height is irrelevant. Today’s cars have tens of yards of wire harness in the floorboard. Many have ECU’s and other critical units located in compartments under the front seats, or in front foot wells. The car is cost prohibitive to overhaul well before the water gets to dash level.

    Fab, I always wanted a late ’80s Porsche 944!

  51. Anon E. Moose says:

    Con’t [50];

    [wide area], Gillette, Berkley Hgts., NP (Union)… I think I single-handedly cost G an oil change.

  52. yome says:

    Eddie:
    Would you rather pay individual things your town offers or the ala carte we have today?

    I like the way it is set up today.Kids done with school,I have the option to move rather than paying $6000 each kid to send them to public school.Is that what somebody said about a PA town?

  53. yome says:

    Asia is prone to flooding. Flooded cars are very common no biggie.All they tell you is not to start the vehicle disconnect the battery until a tech works on it. My sister has her car flooded twice to the roof. 12 years old now.Only problem is some rust normal for a car equivalent to rust we get with salt on the road.Carpet and upholstery replaced twice. Of course labor is much cheaper there while cars price is is 2 to 3x what we pay.It is cheaper to buy a new car than do same work here.

  54. Fast Eddie says:

    Yome,

    I’d rather pay individual items. The majority of the taxes are theft and extortion.

  55. joyce says:

    If (IF) interest rates rise and home prices fall making that portion of the monthly payment about equal, than why not let it happen? Clearly, it has nothing to do with increasing affordability for new buyers. It is, and always has been, one of several bailouts for the lenders/bankers who would lose tons of money with more defaults.

    Gee, I wonder who those people are… are they at all connected to powerful people?

  56. yome says:

    eddie;
    maybe if you can bring enough signatures you can send a petition for a town vote.

  57. yome says:

    57
    The cause of the downturn was housing.It was stabilized when they did this.With economy starting to stabilize,prices starting to go up, sentiments are up and economy healing.
    I dont know what would have happen if we pick up ourselves from the bottom.Some will say will be out by now.That question will remain un answered.I can only say what I see now.

  58. Brian says:

    Yome, it’s been said many times on this blog (along with supporting evidence) that interest rates and home values do not necessarily correlate. In other words, just because you lower the interest rate, it doesn’t mean the home value will increase. Conversely, just because the interest rate is rising, it doesn’t mean housing prices will decrease.

    45.yome says:
    February 22, 2013 at 10:30 am
    Phoenix:
    I agree. But low rates are keeping the monthly payments low with home prices high.If prices of homes goes down and interest rates goes up,monthly payments will just be equal today.Actual beneficiary of a low priced homes will be the high down payment and cash buyers.
    With the economy today 2% GDP with 25% coming from Government,a rise in interest rates will bring home prices down.
    With the economy in full capacity 4 to 6% GDP with wages growing,will the prices of homes go down with interest rates going up? I dont think so.

  59. joyce says:

    Admitting this a little bit of nitpicking: the cause was not housing per se; it was the fact that a mere 5% default rate wiped out 20 times that much of paper wealth in various ‘exoctic’ derivatives that would have bankrupted several large institutions.

    Even if I say what is going on now is healing (which it is not), what happens when ZIPR stops? It all goes to sh*t again. I know some like to think rates won’t rise until GDP is humming along… what catalysts are going to cause GDP to grow faster than it is now?

    yome says:
    February 22, 2013 at 11:37 am
    57
    The cause of the downturn was housing.It was stabilized when they did this.With economy starting to stabilize,prices starting to go up, sentiments are up and economy healing.
    I dont know what would have happen if we pick up ourselves from the bottom.Some will say will be out by now.That question will remain un answered.I can only say what I see now.

  60. joyce says:

    This has always been a HUGE balance sheet recession. The bad debt for individuals and institutions must be written down (if it bankrupts them, so be it).

  61. JJ says:

    low rates should spur, housing, car sales, appliance sales etc.

    BTW the market is red hot in places like manhattan right now.

  62. yome says:

    Brian,
    That is what I said in last 2 paragraphs. It depends how the economy and wages is doing. Just my observation

  63. joyce says:

    A clear and obvious example of why the statistic GDP (for overall health of the economy) is extremely flawed. By your logic, govt. spending can never decrease because that would decrease GDP. Ok then we’ll raise taxes to shore up the deficit… but but but that would decrease other things in the GDP equation, we can’t have that either.

    trillion dollar deficits and ZIRP to infinity… don’t let one or two random commetns from the FED minutes fool you… they’ve been claiming there a year or so away from withdrawing liquidity since they started this crap

    yome says:
    February 22, 2013 at 11:09 am
    Phoenix:
    We are at 2% GDP supported by 25% Government spending. With sequester cuts coming will that not bring GDP lower? Will see when we get to 4 to 6% GDP. “Full US economic capacity” is the Q

  64. joyce says:

    Phoenix,
    Exactly. Inherent in your comment but unsaid was that this encourages savings. One must (again) save a large downpayment in order to buy a house. Savings=investment=production… old school stuff, i know. We can’t have any of that in the new normal.

    Phoenix says:
    February 22, 2013 at 10:58 am

    “With the economy in full capacity 4 to 6% GDP with wages growing” What wages growing? I see people who are having hours cut, paying more for healthcare (some employers not hiring smokers now UPENN for example), delayed Social Security, Medicaid and Medicare for younger workers, bull temp jobs that are never going to be full employment, etc , the list goes on and on. And that 31% in NJ without mortgages, how old are they? Like Eddie says, they will get dragged out of their homes in their boots as they had real pension plans, etc that will allow them to pay the increased taxes on an already paid off home. I would rather buy a house for a lower price with a higher interest rate, although the “payment” is the same, the tax writeoff is greater, and I can prepay/refinance a cheaper home. Ex. a Million dollar home at a .01% interest rate, or the same home priced at 1$ at a 1000% interest rate. Hey bank, here’s your one dollar. Game over.

  65. JJ says:

    http://www.easyexport.us/cars-for-sale/FLOOD_-_SALVAGE_1983_PORSCHE_944_29608892

    zieba says:
    February 22, 2013 at 11:09 am
    is irrelevant. Today’s cars have tens of yards of wire harness in the floorboard. Many have ECU’s and other critical units located in compartments under the front seats, or in front foot wells. The car is cost prohibitive to overhaul well before the water gets to dash level.

    Fab, I always wanted a late ’80s Porsche 944!

  66. yome says:

    Joyce
    Im sure you are right. I can only pray that our leaders do what is right for our country. We can debate this to death in the end their actions will produce the result, hope it is right.

  67. joyce says:

    68

    Following what you advocate (or think is working) does nothing but encourage more and more individuals to take on more and more debt. That doesn’t help them long term; it only helps the banks as if they need any more.
    Less people borrow to buy homes and their prices will fall. That will help them long term and only hurt the financiers.

  68. maybe buyer says:

    Fast Eddie 56

    I know it makes no sense but it seems prices are heading up. This obviously because of Bernanke credit bubble. But it seems like a new bubble forming. This time things are worse as as you notice property taxes are way up and will only be doubling every few years or so to support retirement and health benefits of boomers.

    In effect, new generations are scre wed to bailout the boomers and the real estate economy (realtors, banks, etc)

  69. maybe buyer says:

    Also, I was reading that

    http://www.counterpunch.org/2013/02/19/theres-still-a-foreclosure-crisis/

    and it says that banks are holding as much 90% of their foreclosure inventory to prop home prices up-another reason for low inventory. Who knows?

  70. JJ says:

    Prices are headed up. Just talking to a girl who just traded up coops in Manhattan, jumped at a 3 bedroom as it is a freenzy, did not see her current two bedroom, as no rush, by the time she puts that on market in two months it will already be up in value,

    sounds like 2003 familar

    maybe buyer says:
    February 22, 2013 at 12:36 pm

    Fast Eddie 56

    I know it makes no sense but it seems prices are heading up. This obviously because of Bernanke credit bubble. But it seems like a new bubble forming. This time things are worse as as you notice property taxes are way up and will only be doubling every few years or so to support retirement and health benefits of boomers.

    In effect, new generations are scre wed to bailout the boomers and the real estate economy (realtors, banks, etc)

  71. Brian says:

    My hairdresser told me I should get into real estate.

  72. Brian says:

    Like, everybody is buying a house n’ stuff.

  73. maybe buyer says:

    jj 73

    actually properties in New York city are another story because there are no property taxes. It is a sure bet New York city will see the biggest gains because of the credit bubble.

  74. maybe buyer says:

    westchester or new jersey? what is your best bet to buy now for an equally good school district and commute? What is the best poison?

  75. maybe buyer says:

    yome 78

    sure–if you know re you know what i mean
    1mil in NYC may have 4-5K a year, in westchester with decent school district 25K a year

  76. 250k says:

    Cake Boss coming to Westfield.
    http://www.nj.com/entertainment/dining/index.ssf/2013/02/cake_boss_westfield_buddy_vala.html

    … Carlo’s will be maybe two storefronts down from Bovella’s. Not surprising since you can’t walk past more than 10 storefronts before hitting a fro-yo place.

    OK, now everyone go ahead and post how Carlo’s sucks or how the Brigadoonians are just dumb enough to pay $10 for a crappy tart lest Graydon should have to eat Entenmans, etc. etc.

  77. yome says:

    Historical gdp growth running 7 to 10 percent. Why cant we get to 4 to 6?

    http://www.tradingeconomics.com/united-states/gdp-growth

  78. yome says:

    81
    Run a 50 year history

  79. joyce says:

    81
    Until the bad debt is restructured (i.e. written down, losses taken, bondholders kaput), we cannot: link for the chart only
    http://steadfastfinances.com/blog/wp-content/uploads/2011/08/USA-National-Debt-growth-vs.-GDP-growth.-via-Market-Ticker.org_.png

  80. BearsFan says:

    81 – we just ran a trillion dollar deficit for 0% GDP growth.

  81. Juice Box says:

    Drove by Cake Boss factory in Jersey City a block or so from the Holland Tunnel. 2 stretch Escalade limos out front with a bunch of tourists piling out to go visit perhaps to take a $125 2 hour class on cake decorating . Whomever is running that part of his business is really baking it rich. A Bently is usually parked out front and some other pricey cars.

  82. Fast Eddie says:

    Juice,

    Whomever is running that part of his business is really baking it rich.

    The first thing that came to mind when reading that statement was the realtor who told me the price of a certain house was “warranted” because Woodcliff Lake is the most sought after town. It’s all in the sales pitch. Like I said the other day, nail a rock to a stick, market it correctly and the low level masses will fist fight over the last one. By the way, the house that’s “warranted” is still for sale after many open houses and many months listed.

  83. yome says:

    I will say 4 percent gdp in 5 years 2018 due to energy growth. Will there be market for 3 d copying?

  84. relo says:

    Gary,

    The commute probably won’t work, but it’s one way to go.

    http://online.wsj.com/article/SB10001424127887323478004578302330870331620.html#slide/1

  85. Fast Eddie says:

    relo,

    If that house was in North Jersey, the taxes would be $14,750 and the price tag around 689K.

  86. Nomad says:

    Some big institutional money buying single family homes and renting them.

    Think any of the banks will partner up with the money people and put together some type of JV for a pool of their home mtgs that moves them off balance sheet or turns it into a private REIT? Down the road, can the rentals be liquidated via land contract to tenant – price them higher than market but with rent allocated to principal reduction will that entice the tenant?

  87. yome says:

    From CBO although they have been wrohg lately

    Economic Growth from 2014 to 2017: As the economy adjusts to a lower path for budget deficits, real GDP is projected to begin growing again in late 2013. The pace of economic expansion will average 4.3 percent from 2014 through 2017, CBO projects, although the economy will continue to operate below its potential level (when output reflects a high rate of use of labor and capital) until 2018.Unemployment Rate from 2014 to 2017: As economic growth picks up, the unemployment rate is projected to decline to 8.4 percent in the fourth quarter of 2014 and to 5.7 percent by the fourth quarter of 2017.Inflation and Interest Rates from 2014 to 2017: Inflation (as measured by the PCE price index) is projected to inch up toward 2 percent by 2017. CBO anticipates that, as the economy strengthens, interest rates will return to more-typical levels; the rate on 3-month Treasury bills is projected to be 3.4 percent at the end of 2017, and the rate on 10-year Treasury notes is projected to be 4.6 percent.Economic Growth from 2014 to 2017: As the economy adjusts to a lower path for budget deficits, real GDP is projected to begin growing again in late 2013. The pace of economic expansion will average 4.3 percent from 2014 through 2017, CBO projects, although the economy will continue to operate below its potential level (when output reflects a high rate of use of labor and capital) until 2018.Unemployment Rate from 2014 to 2017: As economic growth picks up, the unemployment rate is projected to decline to 8.4 percent in the fourth quarter of 2014 and to 5.7 percent by the fourth quarter of 2017.Inflation and Interest Rates from 2014 to 2017: Inflation (as measured by the PCE price index) is projected to inch up toward 2 percent by 2017. CBO anticipates that, as the economy strengthens, interest rates will return to more-typical levels; the rate on 3-month Treasury bills is projected to be 3.4 percent at the end of 2017, and the rate on 10-year Treasury notes is projected to be 4.6 percent.

    http://www.cbo.gov/publication/43539

  88. All Hype - Mr. Oil, Mr. Gas, Mr. Coal says:

    yome:

    More normal interest rates in 2017? With an estimated 2017 debt of 22.5 trillion 1% interest is game over for the USA.

  89. joyce says:

    CBO wrong…. LATELY???!?!?!?!?

  90. maybe buyer says:

    they will keep interests at 0% until most boomers are bailed out-selling their homes and drawing ss and medicare benefits. Then game will be over and there won’t be anyone to buy our house or fund our benefits. So no savings, no benefits and no equity is a sure thing. Plan accordingly.

  91. JJ says:

    You mean Generation X, commonly abbreviated to Gen X, is the generation born after the Western post-World War II baby boom.Demographers, historians and commentators use beginning birth dates from the early 1960s to the early 1980s

    Baby Boomers are born between 1946 and 1964, the oldest ones are 67 and youngest 49. Other than our tri-state region where trading up and leveraging exists for middle age folks, most baby boomers might not even have a mortgage.

    Most banks wont refinance a mortgage under 100K. Given home prices in the USA as a whole between 1969 and 1999 when most baby boomers bought their home it is hard to imagine they are the ones screwed.

    The ones I know who are screwed are folks who bought their first home or a big trade up home between Spring 2003 and Spring 2008.

    maybe buyer says:
    February 22, 2013 at 3:11 pm

    they will keep interests at 0% until most boomers are bailed out-selling their homes and drawing ss and medicare benefits. Then game will be over and there won’t be anyone to buy our house or fund our benefits. So no savings, no benefits and no equity is a sure thing. Plan accordingly.

  92. yome says:

    Put your bets!

  93. joyce says:

    98

    You’re right, I can’t imagine any boomers refinanced at all.

  94. joyce says:

    “cash-out” refinanced.

  95. Richard says:

    JJ are you sure Manhattan prices are up? I noticed rents have been falling the last 6 months. Like most banks, we’re about to go into another round of layoffs.

  96. Roy G Biv says:

    Radio Show – Saturday mornings 10 am to Noon, WOR-AM 710

    Eye on Real Estate with Dottie Herman

    Interesting to hear the other side ….

  97. nobody says:

    nomad #9
    >>Thinking of putting an SSD in a 4.5 yr old MacBook. 256 GB around $200. Anyone ever do this and if so, is it a hassle for a non-techie to install, format and transfer files?

    1. buy the SSD with same or high capacity of current drive
    2. need a usb to sata adaptor
    3. download clonezilla and burn it to a CD
    4. hook #1 and #2 up and plug into MacBook USB
    5. boot from clonezilla CD and follow the prompts to clone internal drive to SSD
    6. open MacBook and replace drive
    7. now see you MacBook boot up in less than 10 seconds.
    8 all the content you have on the old drive is on the SSD. no need to xfer files or reinstall applications.

    Did this to 3 Macs. 2 2008 white macbook and 1 2011 alumimunn macbook.
    You will also need to enable trim support in Mac OS X. This can be done via a tool – Trim Enabler or manually editing some system files. Google Mac OS X SSD trim support.

  98. maybe buyer says:

    jj 98

    meant boomers–even if not underwater and keeping up with monthly payments most have planned with a home appreciated. They would take quite a blow if 30-50% less.

    Generation X has already bought high and currently into high maint so they are already screewed when music stops and no bubble will save those.

  99. maybe buyer says:

    yome 97

    and this is the rosy governmental take on debt

  100. Fast Eddie says:

    The ones I know who are screwed are folks who bought their first home or a big trade up home between Spring 2003 and Spring 2008.

    Affirmative on that one. And we’re expected to bail them out by paying in the vicinity of what they paid? With property taxes unchained and rising? F.uck me? No, f.uck you!

  101. maybe buyer says:

    “The ones I know who are screwed are folks who bought their first home or a big trade up home between Spring 2003 and Spring 2008.”

    Then you know nobody in Brooklyn

  102. JJ says:

    Rents in manhattan oddly have little bearing. Condos rent for way less than cost to own and coops you cant rent at all. You buy a place cause you want to buy a place.

    Richard says:
    February 22, 2013 at 3:22 pm

    JJ are you sure Manhattan prices are up? I noticed rents have been falling the last 6 months. Like most banks, we’re about to go into another round of layoffs.

  103. maybe buyer says:

    For those who have some trouble understanding: the first Generation X retirees are at least 20 years from now. By that time the game will be over. The ex housing bubble and current credit bubble is to save a huge percentage of the populace called boomers.

  104. Essex says:

    This just in:

    It’s not a huge surprise that Detroit, Mich. topped Forbes’ list of the most miserable cities in the United States. Another Michigan city, Flint, was the second-most miserable.

    Both Detroit and Flint, the hometown of documentary maker Michael Moore, also topped Business Insider’s list of major cities in America with the highest crime rates based on FBI statistics.

    The BI list looked at cities with at least 100,000 residents and found that Flint had the highest number of violent crimes per 100,000 people while Detroit had the second-highest number of violent crimes.

    (The FBI defines violent crimes as murder, manslaughter, rape, robbery, and aggravated assault.)

    Forbes used violent crime as one of nine factors to determine the most miserable cities, along with unemployment, taxes, and “quality of life” issues like commute time.

    (New York, which famously shook off its reputation as a dangerous place, also made the list of most miserable because its so expensive.)

    Read more: http://www.businessinsider.com/detroit-tops-forbes-miserable-cities-2013-2#ixzz2LfKPRs73

  105. maybe buyer says:

    Saving the boomers is not a problem but for their number and responsibility for the current state they should have taken some or all of the medicine themselves.

  106. maybe buyer says:

    If you are generation X yourselves and you are set (or think you are set) for life you are just exceptional.

  107. Dissident HEHEHE says:

    “low rates should spur, housing, car sales, appliance sales etc.”

    JJ its been a while since I checked in; thanks for the chuckle.

  108. Anon E. Moose says:

    Joyce [101];

    Round-the-World cruise; New boat/trailer and an Escalade to pull it; marble counters and SS appliances; all ‘on the house’.

  109. maybe buyer says:

    Essex 111

    also this just in. read it along with my previous posts

    Millennials Are Starting To Act Like The Great Depression Generation

    http://www.businessinsider.com/millennials-arent-who-you-think-they-are-2013-2

  110. JJ says:

    Yep, me like. I bought two new cars, redid house, now going bungalow shopping this weekend!!

    We have low rates, people sitting on large capital gains in stocks and bonds and cash is earning zero in bank. Big Ben has manufactured a bubble

    Anon E. Moose says:
    February 22, 2013 at 4:43 pm

    Joyce [101];

    Round-the-World cruise; New boat/trailer and an Escalade to pull it; marble counters and SS appliances; all ‘on the house’.

  111. maybe buyer says:

    “We have low rates, people sitting on large capital gains in stocks and bonds and cash is earning zero in bank. Big Ben has manufactured a bubble ”

    you are delusional as s&p is lower than 2007 and 2001, and there is no bubble because unfortunately wages did not follow price increases. Only bubble is credit bubble but you haven’t seen the end yet.

    Perhaps you made some money and live well but you think others are same that’s why you are delusional

  112. Essex says:

    116. Saw that…brother can you spare a dime?

  113. yome says:

    The ones that can not afford are on FK already.The ones that kept paying their mortgage and showed they can afford it and it is their primary home got a gift from the govt through HARP 2.0.They are now paying 3.6 % interest rate and can stay foot for a long time.Getting expanded to non GSE loans,hopefully.

    “The ones I know who are screwed are folks who bought their first home or a big trade up home between Spring 2003 and Spring 2008.”

  114. yome says:

    The Fed made it clear rates will not go up until we have lower unemployment which means economy is thriving.CBO projects a GDP of 4% from 2014 to 2017 with 10 year at 4.0.I said 2018.
    Who is betting to buy the lower priced house when rates go up? Or Buy the house today while rates are down,prices of home will remain up when rates go up?

  115. maybe buyer says:

    121 yome
    I have to buy soon because i have to.
    However this is the highest home prices can go given this economy. They are not going anywhere up anytime soon–people already borrow the most they can afford. Fed will anything they can to stabilize prices and devalue because of inflation but I am not sure this is working. In any case there is no money to be made in real estate primary ownership-probably loss. Try to make money elsewhere.

  116. The Original NJ Expat says:

    I just made myself laugh my misreading this post. I, for a scant second, misreadit as

    I can only pray that our lenders do what is right for our country.

    Joyce
    Im sure you are right. I can only pray that our leaders do what is right for our country.

  117. Fabius Maximus says:

    #80 250k

    He’s already in Ridgewood.