From the AP:
Lennar Sees Weaker 4Q Earnings Results
Homebuilder Lennar Corp. said Tuesday its fourth-quarter results will be hurt by inventory valuation adjustments and writeoffs.
The company said it sees a quarterly loss of 88 cents to $1.28 per share after valuation adjustments and writeoffs. Excluding items, fourth-quarter earnings are forecast between 70 and 75 cents per share.
…
“Market conditions continued to weaken throughout the fourth quarter and we have not yet seen tangible evidence of a market recovery,” President and Chief Executive Stuart Miller said in a statement. “Given the steep decline in many of our markets, we are completing our asset-by-asset review and will adjust asset balances to reflect fair value in the current market environment.”
From Bloomberg:
Lennar to Post 4th-Quarter Loss on Charge of Up to $500 Million
Lennar Corp., the fourth-biggest U.S. homebuilder by revenue, said it will post a loss in the fiscal fourth quarter due to a one-time charge of as much as $500 million.
The loss in the three months ended Nov. 30 will be as much as $1.28 a share, the Miami-based company said today in a PRNewswire statement. The charges include inventory writedowns and costs related to land it no longer plans to buy.
“Given the steep decline in many of our markets, we are completing our asset-by-asset review and will adjust asset balances to reflect fair value in the current market environment”
Does this mean their book value will be readjusted?
For those interested, relisting activity still seems to be running rather high (anecdotally). I’ll see if I can pull the last month worth of data and snip out the relistings for everyone to see.
jb
JB,
Here comes the flood.
wsj.com is free for today
HI ALl. Hope you had a great holidays!!
Just one note from other blog:
I think you are going to find that comments on your blog become more and more hostile as people maxed out on debt and down in equity get more and more desperate. It seems obvious to anyone who has watched the absurd escalation in prices that it makes no economic sense – but those who are now hurting are hoping against hope that the “fundamentals” are there.
http://www.blogger.com/comment.g?blogID=13164186&postID=116724593924192847&isPopup=true
I think It is a very good point/prediction. So expect a flood of buy now you looser
as spring will come and very few will be buying. I could see a small uptick in buying activity(seasonal) in May and afteer that it is back to dead zone… Than, the pain and realization that most people do not work on wqll street, and can not afford those houses will really start settling in. And do people who make 200+K really want to buy those starter homes???
Without big price declines in starter homes/lower end housing higher end housing will continue to suffocate.
In many places in NJ it does not make sence to buy 2-3 bedroom/1 bathroom home anymore – right now you can get 3-4 bedroom/2-3 bathroom home for 5% more in the same city block.
I don’t ascribe to the “buy now you loser” mentality, but I do wonder about how wise it is to continue to rent if prices are only going to decline by less than 5% per year, as the mainstream prediction seems to go.
If you’re going to live in the place, the question is really whether you lose more money by renting than by owning, rather than how strong an investment RE is in the abstract.
If RE prices are to ground down by inflation over the coming years, rather than by sudden price drops, buying would not be dumb in all cases right now
well, 5% per year = 15K per year tax free on the starter home, or around 25K/year on “average” sizd home in NJ… In addition renting is so much cheaper, so you not only making 25K/year buyt saving extra money for investement/retirement.
If priced stay flat for 5 years and stock market keep going up 19%/year like it did in 2006 – home buying is also not economically sound.
JUst for the record – Home owning was: Cheaper that renting at the bottom of the housing cycle, about even at normal conditions, and More expensive at any given bubble time.
NEVER home owning was so much more expensive that rent than in current cycle.
So explain to me how is it:
I don’t ascribe to the “buy now you loser” mentality, but I do wonder about how wise it is to continue to rent if prices are only going to decline by less than 5% per year, as the mainstream prediction seems to go.
Loosing 15-25K/year is not so bad???
In addition, you may talk about part of your payment going towards principal: in the first year this number is about 2000$ total!!!!! (on a 300K loan)
Wopping 2000$ for loosing 15000$ year to year value, and in addition paying significantly higher monthly payment…
Yea buying in today’s parket is such a grand idea…
chicagifinance #4,
Thanks for the pointer. I just went there and the first thing I saw was this:
The U.S. economy is poised to shake off the housing slump and regain momentum by the end of this year, and the credit goes to techies, bankers, chefs and shoppers, according to a Wall Street Journal survey of economists.
http://online.wsj.com/article/SB116741731488562667.html?mod=home_whats_news_us
“we are completing our asset-by-asset review and will adjust asset balances to reflect fair value in the current market environment.”
I almost feel sorry for the poor bastard trying to hit that moving target. Almost.
“If RE prices are to ground down by inflation over the coming years, rather than by sudden price drops, buying would not be dumb in all cases right now.”
From your own statement, it might make sense to buy in “the coming years”, but it certainly doesn’t make any sense to buy right now, near a 100-year-peak in prices.
Price drops won’t be sudden in most cases, as greedy sellers ride the market down with gradual price drops, always a step behind the curve.
I’d appreciate if everyone could take a minute of their time and vote for this blog in the 2007 Real Estate Blogging Awards.
2007 Real Estate Blogging Awards
My site isn’t among the choices, so please take the time to make a write in vote!
You can cut/paste the following for the regional write in:
“The New Jersey Real Estate Report https://njrereport.com”
Thanks!
jb
You got my vote :)
voted yesterday – I guess since I am from Hudson County, I may as well vote early and often.
Al,
A few things to consider. First, although you pay little in principal in the early years of your mortgage, what you do pay is nearly 100% tax deductible since almost all of it goes to interest. This effectively subsidizes your housing costs up to the extent of your tax burden. For some people, this could be a 30% subsidy or more.
Second, inflation will not only eat away at the value of any home you purchase, it will also drive up equivalent rent. On a net basis, it is hard to see which is preferable going forward.
Third, after the first few years, principal payments start to become significant. In order to lose money, house prices must decline more than your principal accumulation and more than the rise in equivalent rent each year on an after tax basis.
JB,
Done.
Thanks!
I really appreciate everyone taking the time to vote.
jb
Voted yesterday. Also discovered some new & interesting blogs. None match the quality of njrereport, of course.
I voted yesterday but i did it again today because the text string I used doesn’t match the one prescribed by JB. I’m used the text JB posted along with the quotes. Don’t know if it matters.
Done, and like Chifi, more than once. Also in the best regional category, there’s nothing wrong with being selected Miss Congeniality you know.
I don’t recommend that you vote more than once. No sense going through all the trouble just to get disqualified.
jb
fyi This is a long article !!!
Falling prices trap new homebuyers
Neighbors in a new Garden Grove tract say a developer’s plan to slash prices by about $140,000 has left them owing more for their homes than they’re now worth.
By JEFF COLLINS
The Orange County Register
http://www.ocregister.com/ocregister/money/abox/article_1381194.php
GARDEN GROVE – David Dunn felt as if Christmas were stolen from him when prices for neighboring homes in his new subdivision fell by about $140,000.
Now, he says, his home is worth less than he owes, making it next to impossible to refinance before his $3,000-a-month payment doubles. Eleven neighbors who bought before the price cuts are in the same boat.
“They put us in a bad financial situation by lowering the price,” said Dunn, 33. “Some of (the buyers) did 100 percent financing, so they’re completely over their head right now.”
Brandywine Homes, developer of the 42-home Heritage subdivision in Garden Grove, is one of many homebuilders that’s had to cut prices lately.
Dave Barisic, Brandywine’s vice president of sales and marketing, said in an e-mail that his firm recently held what he thought was a successful meeting with homeowners.
“As such, I don’t think you’ll be contacted again and there probably isn’t much of a story there,” he wrote.
But homeowners say the matter remains unresolved, and an attorney says he’s still waiting for a response to a letter he sent the developer on behalf of buyers who hired him.
Meanwhile, ads offering big discounts and concessions on new homes have been rolling off the press for weeks as builders race to clear inventory before the end of the year:
•”It’s a homebuyer’s market, and now is the time to take advantage of it,” said a Richmond American Homes ad several weeks ago that offered buyers free stainless-steel appliances, free washers and dryers, plus 3 percent toward paying closing costs.
•”Ask about our Serious Incentives for Serious Buyers,” Taylor Woodrow Homes said in another ad.
•The only thing that’s not negotiable, added a Standard Pacific Homes ad, is the quality of the houses – implying that the price is negotiable. Year-end incentives include below-market loan rates, no-loan payments for six months and free upgrades.
At Tustin’s Columbus Grove, sales reps for William Lyon Homes, Lennar and KB Home touted plans that included help paying off closing costs and loans, flooring upgrades worth up to $20,000 or – in the case of one KB Home development – up to $70,000 off the purchase price.
Wally Welter, an Irvine home shopper, said salesmen for several builders at Ladera Ranch offered concessions worth $100,000 or more.
“I’ve had salespeople say, ‘Make an offer,’ which you never hear the builder say,” said Welter, 60. “Now, they’re willing to listen.”
The reason builders now are listening is a housing slump that’s caused new home orders to tumble and homebuilder profits to fall.
Standard Pacific Corp., for example, reported that its net income fell by $66 million in the third quarter, a 68 percent drop; Toll Brothers reported a 44 percent decline in quarterly profits; William Lyon Homes reported that its net income fell 72 percent from the third quarter of 2005.
Most homebuilders are reporting that 40 percent or more of their buyers are canceling this year. Often, cancellations result in the builder getting stuck with an empty home that’s already under construction.
The closer the home gets to being finished, said KB Home’s Irvine-based regional manager, Jay Moss, “the more anxious the homebuilder gets to make the deal.”
Concessions, said housing consultant John Burns, are “the talk of the industry.”
“On a completed home, it can be substantial.”
But residents of Garden Grove’s Heritage subdivision maintain that there’s more to their story than mere concessions. They maintain that their builder, Brandywine Homes of Irvine, has cut prices well below market values, regardless of how that affects the earlier buyers.
At the very least, their story shows that the pain caused by falling prices isn’t borne by the developers alone.
The homeowners said that the price cuts began in November, just months after the first dozen buyers closed escrow, paying from $770,000 to $888,500 for their homes. The average price was $825,000, property records show.
After the builder dropped prices by more than $100,000, all but five of the homes sold in a matter of weeks.
“Usually builders keep their prices up. They try to keep their buyers happy,” said Christie Vu, 27, who paid almost $870,000 for the home she and her husband, Philip Luu, share with their two young sons. “In this case, it’s just the opposite.”
The builder’s representatives said during a recent meeting that they are being forced to price the homes to sell and maintain they are getting “zero profit” from the project, homeowners said.
Keyvan Samini, an attorney for some of the buyers, said the purchasers relied on the lender and its appraiser to confirm the homes’ $800,000-plus price tags.
But appraisers ended up using homes about three miles away as a guide for the first appraisal, and subsequent loan appraisals were based on the first one, Samini said.
The appraisals “were way too high,” Samini said. “I believe that the builder knew they were too high, or should have known. And it’s not the fault of the buyers. They rely on the expertise of those appraisers.”
Barisic, Brandywine’s sales VP, said he doesn’t know anything about the comparable homes used in the appraisals.
“The appraisers are not hired by Brandywine Homes,” Barisic said. “They’re hired by the lenders, which the homebuyers chose themselves.”
One of Samini’s clients said he’s facing the possibility of foreclosure because of the price cuts.
Dunn said he’s in a financial bind because he’s using an exotic mortgage called an Option ARM, an adjustable-rate loan in which the homeowner can pick his monthly payment from a variety of options.
Eventually, he’ll be responsible for making full payments of $6,000 a month, he said, adding, “I don’t know how we’ll be able to pay that.”
“It’s not just the financial aspect. It’s the emotional,” Dunn said. “We can’t eat, can’t sleep. I can’t concentrate on work. This is all I think about.”
JB,
You got my vote.
JB,
You got mine. However, as you are well aware, you don’t win unless you get the union vote. Any union concessions??
JB,
You should probably look into –
http://www.housingwire.com/2007-rebas/reba-selection-criteria/
“David Dunn felt as if Christmas were stolen from him when prices for neighboring homes in his new subdivision fell by about $140,000.
Now, he says, his home is worth less than he owes, making it next to impossible to refinance before his $3,000-a-month payment doubles.”
It this columnist read blogs, he would have simply written:
“David Dunn, a bagholder…”
Can one of you genius explain when does listing disappear from realtor dot com
1)Listing agents discretion
2)When status changes to sold or something
3)When listing is delisted.
I was looking(Just looking) at one listing which was reduced from 699k to 675k to 650k to 625k. Next day price was changed to 625k the listing disappeared. I called listing agent just out of curiosity to hear from him that it got sold.
Is it possible that house was under contact and they still reduced the price?
I still see the agent’s banner in front of house. Is the cheap bastard playing games?
If a property listing disappears from century21.com but still shows up on gsmls.com, does that mean anything?
Broadband,
Must you post the entire article?
You just need to post the pertinent points since you supply the link.
Thanks, Rich
MLS#?
jb
JB,
Should have saved the MLS#. Is it possible to find with the address? Still don’t understand why “For Sale” banner by Century 21 realty is still up there.
Voted for your blog, J.B., good luck.
This will certainly impact the market:
Fannie Mae has announced that, effective Jan. 30, borrowers must be qualified at “a fully-indexed rate that assumes a fully-amortizing repayment schedule” in order to qualify a loan for purchase by the government-sponsored enterprise.
(via http://thehousingbubbleblog.com)
We’re still waiting on the NJ Department of Banking and Insurance (NJ DOBI) to issue the CSBS Nontraditional Mortgage Guidance.
Hopefully, we should see something on this shortly.
jb
You got my vote, JB. Great Work
Sorry, this is off-topic:
Do you know if state of NJ credits State Tax Deduction for out-of-state 529 Colledge Savings Plan contributions???
No – the only one is PA; NYS only gives a deduction for the NYS plan
If you have interest in the NYS plan and have NYS income from which you can deduct your contribution, I have a method of buying A shares [full load] in the Advisor Plan for NAV [meaning no load].
JB,
It’s a home and office thing. Hudson County isn’t the only place where they know how to work the elections.
BTW, you’re in an uphill battle and I didn’t think this was as much about winning as as about increasing exposure and therefore (hopefully and, sadly doubtfully,) improving the quality of the discussion. Although winning is always good.
Also, I hate to say it, but I don’t hit Ben Jones as much anymore because he’s a victim of a problem defined by Yogi Berra — “That place is too crowded, nobody goes there anymore.”
JB
You got my vote on almost all of the categories, the most extreme to me goes to Patrick.net
KL
KL, Patrick? I picked HousingPanic as most extreme!
But I did vote for you Grim. Good luck!
# 32
Thanks Unrealtor :)
on #32
What about undocumented loans?
“UPSIDE-DOWN ON MORTGAGE”
Off topic, but in fairness to the NAR, I have added David Lereah’s predictions for 2007 to JB’s prediction thread.
If you didn’t see his call or want to see it again, here is the link:
http://www.realtor.org/press_room/news_releases/2006/hef_dec06_existing_home_sales_in_2007.html
Great work JB.. just voted.
I use an ad-block plugin with Firefox which initially blocked the “vote here” picture. Used IE to vote.
At least NJ leads the nation in something:
States With the Highest Property Taxes
Posted 12/28/06
State Median Property Tax
1. New Jersey $5,352
2. New Hampshire 3,920
3. Connecticut 3,865
4. New York 3,076
5. Rhode Island 3,071
6. Massachusetts 2,974
7. Illinois 2,904
8. Vermont 2,835
9. Wisconsin 2,777
10. California 2,278
http://www.usnews.com/usnews/biztech/articles/061228/28highest10states.htm
Top 20 Counties [Nationwide] in Real Estate Taxes Paid
Posted 12/28/06
County Median Annual Taxes
1. Westchester (N.Y.) $7,337
2. Nassau (N.Y.) 7,025
3. Hunterdon (N.J.) 6,988
4. Bergen (N.J.) 6,846
5. Essex (N.J.) 6,642
6. Rockland ( N.Y.) 6,527
7. Morris (N.J.) 6,478
8. Somerset (N.J.) 6,465
9. Putnam (N.Y.) 6,335
10. Union (N.J.) 6,312
11. Passaic (N.J.) 6,210
12. Suffolk (N.Y.) 6,131
13. Monmouth (N.J.) 6,015
14. Hudson (N.J.) 5,472
15. Lake (Ill.) 5,393
16. Sussex (N.J.) 5,363
17. Fairfield (Conn.) 5,213
18. Middlesex (N.J.) 4,954
19. Mercer (N.J.) 4,926
20. Warren (N.J.) 4,781
http://www.usnews.com/usnews/biztech/articles/061228/28top20taxpaid.htm
JB-
Got my vote, good luck!
JM
Unrealtor-
That’s almost funny, but really sad. Would love to see bottom 20.
JM
From BusinessWeek:
Ownit Mortgage files for bankruptcy
Ownit Mortgage Solutions Inc., a subprime mortgage lender, filed for bankruptcy last Thursday, just a few weeks after it stopped making new loans.
Ownit Mortgage, which specializes in making loans to borrowers with poor credit or limited incomes, filed for Chapter 11 in the U.S. Bankruptcy Court of San Fernando Valley, Calif. The company listed assets between $1 million to $100 million and more than $100 million in debt, court papers show.
The company named Merrill Lynch LP Holdings Inc., owed an estimated $93 million, as its largest unsecured creditor. Merrill Lynch also owns a 20 percent stake in Ownit Mortgage.
Other unsecured creditors include Terwin Advisors LLC, which is owed $19 million, and Credit Suisse First Boston, which is owed $12.7 million.
Ownit Mortgage’s Chapter 11 petition didn’t include an explanation for why it decided to file for bankruptcy protection and company representatives weren’t available for comment Tuesday morning.
From the Boston Globe:
Mortgage Lenders Network USA stops funding new loans
Mortgage Lenders Network USA, a major issuer of loans to people with blemished credit histories, says it has stopped funding loans and accepting applications for new loans.
MLN, which bills itself as one of the country’s top subprime mortgage lenders, also is “currently exploring strategic alternatives” for its wholesale business lines, according to telephone recordings at at least two of its wholesale lending offices.
MLN, based in Middletown, Conn., says its goal last year was to produce more than $12.1 billion in loans, 80 percent of which would be in the subprime space. The company has four regional wholesale lending offices.
…
Some subprime issuers are facing liquidity problems as their so-called warehouse lenders withdraw credit lines. Among MLN’s warehouse lenders is GMAC’s residential-mortgage arm, ResCap. In mid-December, a ResCap spokesman said that “We have a relationship with MLN which includes purchases of loans and warehousing. We continue to support MLN through these programs.”
jb,
my post is flagged for moderation.
Investors are still dabbling in real estate. But they are changing the rules of engagement….Despite the end of the speculative craze, a number of markets in the fragmented real-estate world continue to lure investors willing to adjust their expectations. One key move: As rents take off, buyers increasingly focus on multiunit rental properties instead of the single-family condos and homes that were popular during the housing boom….Another major shift: Most investors are focusing on the fundamentals that guided the market before the housing boom, especially cash flow — the ability to actually make money from, say, rentals, rather than from quickly selling the property. They are sticking with properties that turn a profit (or at least break even) after factoring in interest payments, taxes and other expenses.
That is a change from the past few years, when speculators were willing to lose money each month in hopes of selling for a big gain.
http://homes.wsj.com/buysell/tactics/20070101-simon.html
Where is Hunterdon County and why are their property taxes higher than Bergen?
UnRealtor Says:
January 2nd, 2007 at 1:57 pm
Top 20 Counties [Nationwide] in Real Estate Taxes Paid
UnReal: sick! :(
Am I wrong?
Cost of renting 2 bed/2bath apartment in essex county runs about 1300-1700 depending on location and such. We’ll use the median # of 1500 to be fair.
If this blog is correct and housing prices fall by 5% for the next few years:
Renter will have lost 1500 * 12 = $18,000 per year
Homeowner will have lost (on 330K house) mtg payment of 2500 * 12 = $30,000 and assuming 28% tax bracket will recoup $8,400 = $21,600 per year
Someone explain to me how having twice as much space in my house versus apartment and having a garage and a home to enjoy with family and friends BBQ etc etc is not worth $3,600 a year? Please.
Thanks.
“That’s almost funny, but really sad. Would love to see bottom 20”
What’s even sadder is that when I started to look at homes in Morris, after focusing on Westchester (and earlier, Bergen and Essex), I thought the taxes were low. Now THAT is sad. Talk about perspective!
Not Convinced says:
:assuming 28% tax bracket will recoup $8,400 = $21,600 per year”
I’m thinking here with a $2500 pmt. assumption, it’s not an IO loan.
You’re looking at the entire payment as deductible instead of interest.
Not convinced,
how about $5000-7000 on top of that for property tax and $3000 ($250 per month) for maintenance or condo fee.
NotCon
http://www.dinkytown.com/java/MortgageFixedvsIO.html
A $330k single family house in Essex?
Newark, East Orange, Irvington are the prime candidates for that price range, although you might find something in that range in the lower-cost areas of Bloomfield, Belleville, or Maplewood.
jb
Not-convinced from 55
Most of us here feel are looking for a 25% decline. Even if we ‘assume’ just a 5% decline.
1] what about cost of maintenance? which equates to 50% of your monthly mortgage payments. Which is 1250 * 12 = 15000K/year
2] 5% decline is equates to 8% decline (after tax deduction) if you add mortgage interest payments. Which turns out to be 26400 loss.
3] From when is principal payments tax deductible? (All of $30K is not tax deductible)
4] The pleasure of seeing you whine … priceless :)
…none of which would rent for $1,500.
I’ve got a 3br/2ba I’m looking to rent in Clifton. Large bedrooms with large closets, Master with a master bath and two closets (one slider, one walk-in), Formal dining room. Nice section of town, dead end street. Close to the park, schools, mass transit, etc.
I’m looking to get $1,400. Interested?
jb
#55,
You’ve left out a few things. In favor of your argument, you forgot to mention that rents can be expected to go up roughly at the rate of inflation (let’s say 3% annually). So in Year1, you’ll pay $18,000. In Y2, $18,540. Y3 $19,096 and so on.
After 5 yrs, you will have paid $135,492 in rent or $108,000 in mortgage in your example.
If we expect that this $350,000 will lose 3% in value per year, it will be worth $300,556 at the end of 5 yrs.
So add roughly $50,000 to the cost of owning and you get $158,000, or a extra cost for owning of about $22,500 over 5 yrs.
Still a decent amount of money, but by no means a slam dunk argument against buying.
none of this of course takes into account property taxes and maintenance, which tilt the scales toward renting
Voted this site for ALL categories EXCEPT those that don’t apply, ie.
4. Category: Best Corporate
and
6. Category: Most Extreme
Thanks and Happy New Year!
Anyone familiar with the Mill development in Little Falls (on Main St)? I’ve always liked that place, mostly because they’ve preserved the architecture and the site. It’s a neat little gem if you’ve never seen it. The units with tall ceilings/windows and exposed brick are very “trendy”, if you are into that sort of thing.
Anyway, I always keep tabs on this place, always watch the MLS to see what units are available, what sold, etc.
A unit came up about a week ago (MLS# 2356976), a 2br,2.5ba listed at $419,990. I thought the price was high, but inline with others. The seller purchased this unit for $400,000 in 2004. That should give you a little bit of an idea about the weakness we’re seeing locally.
So I work up the numbers to see who can afford this unit, and when I get to the maintenance, I nearly fall off my chair. $680 a month maintenance? In addition to the current taxes of $4,390? We’re talking over $12,000 in taxes and maintenance a year here. Given 10% down, buying this place would cost about $3,400 a month. Ouch..
jb
James or anyone. Is the NJ adoption of the CSBS Nontraditional Mortgage Guidance just a matter of time or is there still debate? Any ideas on time frame?
Thanks in advance.
I have always felt that guidlines like these along with the Fannie Mae guidlines that Unrealtor posted would be one of the biggest factors in substantially trimming back “able” buyers.
BTW i put my vote in too. This is by far my favorite blog of them all. I did vote Housing Panic as most extreme.
“Someone explain to me how having twice as much space in my house versus apartment and having a garage and a home to enjoy with family and friends BBQ etc etc is not worth $3,600 a year? Please.”
Update your calcs to include opportunity costs. Renter pays $0 in rent due to interest earned from cash NOT spent on an over-priced crapbox.
Also see post #25, with regards to risk.
Spelunker,
I hope to see something from the NJ DOBI within the next few weeks.
jb
Not Convinced,
Don’t forget that renters who don’t itemize are eligible for the standard deduction. I think it’s about $10,500 for couples filing jointly in 07.
So whatever mortgage interest homeowner pays for the year, reduce it by $10,500, which is the amount you can take off your gross income if you are a couple filing jointly and rent your home.
more news on guidance –
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/01/AR2007010100669.html
States Swift to Warn Mortgage Lenders
Guidance Follows a Federal Advisory On the Risks of Nontraditional Loans
“Am I wrong?”
Not Convinced,
I would agree with you, if I could buy a nice SFH, in a nice area, for 330k, your example. Where does one find this???
More on MLN and the subprime credit crunch..
Mortgage Lenders Network USA stops funding loans
“I could buy a nice SFH, in a nice area, for 330k, your example. Where does one find this???”
1999.
Unrealtor,
You’re right. I wasn’t thinking. Staying up too late watching college football.
The Washington Post piece is a good summary of the issue.
jb
Not Convinced Says:
January 2nd, 2007 at 2:51 pm
Am I wrong?
Cost of renting 2 bed/2bath apartment in essex county runs about 1300-1700 depending on location and such. We’ll use the median # of 1500 to be fair.
If this blog is correct and housing prices fall by 5% for the next few years:
Renter will have lost 1500 * 12 = $18,000 per year
Homeowner will have lost (on 330K house) mtg payment of 2500 * 12 = $30,000 and assuming 28% tax bracket will recoup $8,400 = $21,600 per year
Someone explain to me how having twice as much space in my house versus apartment and having a garage and a home to enjoy with family and friends BBQ etc etc is not worth $3,600 a year? Please.
Thanks.
Taxes+ maintenance+?????? I guess you know the way of not paying those…. ohh ya and do not forget mortage costs/downpayment (lost interest since you could have invested them at 19% in 2006…..)
UnRealtor Says:
January 2nd, 2007 at 4:10 pm
“I could buy a nice SFH, in a nice area, for 330k, your example. Where does one find this???”
1999.
LOL
JB Said:
“A $330k single family house in Essex?
…
although you might find something in that range in the lower-cost areas of Bloomfield, Belleville, or Maplewood.
I’ve looked for some places in Maplewood and gotten an out cry of DON’T DO IT from many of the denizens of the this blog. I’m seeing alot of inventory in Bloomfield and Belleville. Are these better places to consider? How are the schools?
While waiting for the market to come to us, we’re trying to learn as much about these areas as possible. I really want to keep a resonable commute to NYC.
Thanks!
Re owning a 330K house in Essex vs rent example:
Don’t forget Renters don’t pay extra Property tax (included in rent), owners do, and PT is sky high in Essex! Not to mention the maintainence costs!
Owning a house in this market just don’t make any sense anyway you spin it.
i understand bloomfield has a nice grade school level program going on. The middle and high schools i dont know too much about. There are some nice spots around bloomfield too. Especially around the park.
You can always use this site to reserch the schools a bit:
http://education.state.nj.us/rc/
Also, http://www.greatschools.org can be a bit useful as it contains user feedback and ratings. In the end nothing beats parking yourself in front of the school during dropoffs and pickups to see what is coming in and out of the school.
“Owning a house in this market just don’t make any sense anyway you spin it.”
Huhu,
You are right. I have more data, on this comparison, than flippers have houses. An apples to apples comparison will favor renting, at this time.
“I wasn’t thinking. Staying up too late watching college football.”
:-D
I’ve looked for some places in Maplewood and gotten an out cry of DON’T DO IT from many of the denizens of the this blog.
Wasn’t really suggestion, just a statement.
jb
you could find a decent house for $330K or so in nutley, which is a very nice town…
Staying up too late watching college football
My sons 9 and 15 screaming woke me up – they were’nt so gregarious this morning for back to school !
KL
JB, will you begin posting weekly inventory numbers again? Did you continue recoding inventory through out the fall and now winter? I wonder how inventory trended during this period and where it is now compared to last year.
What do you guys think of Oradell and Emerson? What are these towns like? What are there schools systems like? What is the commute like to NYC?
For those of you looking for a decent house in Nutley for around 330 here they are.
2327847 2317422 2327722 2356693
Total of four under 350,000 sorry not a decent one in the lot.
KL
Detailed NJ school info is available online, for free:
http://education.state.nj.us/rc/rc05/menu/01.html
I’ve been through Nutley, and noticed many people are knocking down houses and building new mega-boxes to within 5 feet of the property line on all 4 sides. This is on lots about 40 feet wide by 60 feet deep.
kl:
those are the listing prices…you can get one for $330K that might be listed higher. I saw a few on gsmls…mls #s 2330180, 2330180, 2290483, 2337459.
since all of you say the listing prices are not what they should sell for, you should be able to get all of these for around $330K-$350K based on the estimates in this blog.
all you have to do is look KL…they are there…I believe you CAN get a nice house in Nutley for $330K.
unrealtor:
most of what you say is correct about nutley as it has a pretty lenient planning/zoning board. there is a local group that started to protest these things (preservenutley.org), but most of them are not lots of minimum 50 x 100, not 40 x 100…in either case, lots of money is being invested in that town…which a fairly good alternative to montclair or glen ridge.
Putting a 3,500 square foot stuccofoam box on even a 50×100 lot is not really an “investment” in the town, but instead a drag on property values, IMHO.
I’d much rather see a cape, with some trees, and space between the neighbors.
Not trying to be a wet blanket, these are just my observations.
unrealtor:
your opinion notwithstanding, someone is investing whether you like the architecture or not…many of these have sold…so whether it’s the builder or the buyer, someone has invested. i didn’t say they are adding to the quality of life, all i said is they are investing w/ their pockets, and there is no denying that.
what’s with the trolls since the calendar flipped to 2007?
who’s a troll? i have been on this site for more than a year…contributed under a different name…i have a different opinion so i’m a troll?
Okay, SAS I’ve been wondering where you are, different opinion different name (-:
KL
i’m not SAS….
where is SAS these days? Last we heard he was drinking somewhere on a ski vacation no?
I would love to see a nice house in nutly for 330K. If anybody could provide a link i would be most appreciative.
spelunker…i provided several MLS #s above…the asking prices range from $350K to $399K, but since everyone on here says at least 5-10% off asking prices is the rule, then these can be had relatively close to $330K…
thanks bubble. i took a look and they arent too bad. I use to live in nutley and the town is nice. Compared to some of the other prices in nutley these seem to be listing into the realm of realism.
Bubble,
330k?? Now we’re talking. Do you know what the current market rent is, for prpoerties like these?? Thanks for the input/mls #’s.
“My sons 9 and 15 screaming woke me up”
KL,
LOL!!! They saw a gem. I’m sure they were alert today in school.
Theo (#53)-
Hunterdon County is Central NJ, between Somerset Co and Warren Co & bisected by Rt 78. It is the 4th-highest median family income county in the US. We also have a big corporate presence here: Merck, Foster-Wheeler, Exxon, Medarex and Chiron. I’ve lived here since 1992 and most of my friends & neighbors who are lifelong Jerseyites moved here from Bergen. A great deal of my time is spent moving people here from Bergen, too. Hunterdon has always been smack-dab in the path of westward NJ migration. Population is just over 100,000, schools are top-notch (Voorhees, North Hunterdon, Hunterdon Central) and Green Acres/restrictive zoning have contributed to driving up RE prices and keeping them there. Accordingly, we are taxed thru the gazoo, and since the county leans Republican, our last couple of governors and the legislature love giving us the hose every chance they get.
Please do not move here. We have enough people (just kidding).
I have a different kind of question to pose here. I just got married and between husband and I we have about 600K to put down on a house. We are thinking that perhaps we can just buy it outright.
Still knowing that the market is overpriced, is it still silly to buy if you may not have a mortgage at all? Should we wait it out anyway even though we will most likely buy with no interest payments ahead?
I can’t quite decide if Jersey sucks anymore or if this is the most desirable place to live. There was an article in the Star Ledger about 10 years ago that outlined the reasons why NJ was the most sought-after place to live in the country.
I can’t remember the details but I recall thinking how much sense the article made and remember the author explaining why NJ had so much moxie without even trying. My wife said she remembers the article too and wished that we saved it.
If you’re born and raised here like I was it makes it very difficult to even consider moving. I’ve been all over this country and I still think Jersey has the best of everything (no offense to anyone else) despite the problems.
My gut feeling tells me that home prices will dip slightly or stay flat at the worst. We have friends that just lost out on a multiple bid in Fairfield so… I still think the best play is to save like hell and be patient.
I’m just spewing my thoughts….
Grim, just voted for you. Great work…best wishes for ’07.
However, I had to write-in iamfacingforeclosure.com as “Most Extreme”. This punk-a** byatch should be read to be believed. He’s such a loser, you’ll think the site is a set-up, a la lonelygirl15.
bc bob:
i would guesstimate that houses of this size would rent for anywhere between $1500-$2000 per month…look at mls #2351800 ($1600/mo) for a good example…but understand that house is in a very busy area right next to an apt building, so it’s less than ideal.
what bubble,
Thanks!!
http://calculatedrisk.blogspot.com/
CR has posted 2007 Economic Predictions.
AdAgencyWoman, when was a better time to buy Cisco stock, 2001 or 2003?
Stock
Peak: $100, Today: $27
http://finance.yahoo.com/q/bc?s=CSCO&t=my&l=on&z=m&q=l&c=
Real Estate
Peak: The Moon, 1-2 Years: $???
http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
“‘Market conditions continued to weaken throughout the fourth quarter and we have not yet seen tangible evidence of a market recovery,’ said CEO Stuart Miller.”
“The company said although deliveries increased in 2006, it saw ‘materially lower’ gross margins on home sales ‘as a result of deteriorating market conditions in the home-building industry.’”
Intersting post from
http://thehousingbubbleblog.com/?p=2112
“Comment by paladin
2007-01-02 16:55:29
Update on Sacramento Mortgage Fraud: 1/2/07
Background: 5 houses on Hillwood Loop in Lincoln CA (Sacramento, CA) sold for $250,000 over comps.
Update: There are now EIGHT houses that sold for $200,000 over comps. In my opinion, the builder has to be in on this fraud big time. Same people buying 2 houses, using 2 different sub prime lenders? It sure looks like fraud. One lender has four loans on the same block. I wrote to them an e-mail yesterday and copied Fitch, S&P, and Moody’s. Calls came back immediatley from the lender and from Fitch today, both wanting more info. The lender has requested some more evidence I have developed and has already opened an investitgation last month based on my prior e-mails. They are already working with the DA & the FBI. This lender is getting stung all over the place with buy backs and have a whole fraud division now. They have sent people to jail for several years already in multiple cases. Their fraud director is a former chief of police in L.A.
It is interesting how much their ears perk up, when I notify the rating agencies. This will stop their exit strategies right now and they will quit doing it.
Amazing that it takes such persistence to get this done. Some of my friends call me Mr. Tenacity. You can call me Paladin!!
“Wire Paladin, San Francisco”
Have Gun, Will Travel
“
AdAgencyWoman Says:
January 2nd, 2007 at 7:01 pm
I have a different kind of question to pose here. I just got married and between husband and I we have about 600K to put down on a house. We are thinking that perhaps we can just buy it outright.
Still knowing that the market is overpriced, is it still silly to buy if you may not have a mortgage at all? Should we wait it out anyway even though we will most likely buy with no interest payments ahead?
I suggest for amount of money you have at risk you want to buy like Boya bob says at least 25% off of peak or just wait. You can rent a beautiful house for much cheaper than buying.
My gut feeling tells me that home prices will dip slightly or stay flat at the worst
I think your gut is wrong. Prices in many neirghborhoods keeping track of down 12-15% off of peak.
Careful skep-tic,
A balanced view like yours will bring out some angry bears. This has been my point on prior posts; i.e. rents just like home prices in desirable areas are also going through the roof. A 2 bedroom apt in NYC is running around 3500 when I last looked.
Although it is still cheaper to rent comparables in a purely financial sense, this ignores the preference that people have for owning their own homes. I know, I know bears like renting, which begs the question why they are on this blog, but I think most people attach an emotional/happiness value to owning their homes.
skep-tic Says:
January 2nd, 2007 at 10:01 am
I don’t ascribe to the “buy now you loser” mentality, but I do wonder about how wise it is to continue to rent if prices are only going to decline by less than 5% per year, as the mainstream prediction seems to go.
If you’re going to live in the place, the question is really whether you lose more money by renting than by owning, rather than how strong an investment RE is in the abstract.
If RE prices are to ground down by inflation over the coming years, rather than by sudden price drops, buying would not be dumb in all cases right now
It’s Crashing,
Sorry, I don’t see it. The prices are still insultingly laughable. Look at the most desirable towns in Upper Bergen and West Essex. Like I said, friends lost out in a bidding war a month ago in Fairfield. Until I see the blood for myself, I don’t believe it.
I voted for your site.
UnRealtor Says:
January 2nd, 2007 at 8:26 pm
AdAgencyWoman, when was a better time to buy Cisco stock, 2001 or 2003?
Stock
Peak: $100, Today: $27
UnReal: I bought for my own account at $17.66. Good. Very good. How about a Fresca?
Chicago, no unloading at nearly 100% profit?
I’m very risk averse, probably to a fault. Stunts growth potential, I suppose, but also keeps what’s in the bank, in the bank.
I don’t see the crash either. Nearly impossible to find any place worth living under $400k.
We just had the inspection on the house we *were* buying. It needs a new roof (leaking), new chimney (falling down), all new windows (10 of 16 are sealed shut; 3 are broken), major repairs to the garage, electrical box and service upgrades, two new pipe fittings in the basement, new hot water heater, etc. This is before the new kitchen that we want to do. All of this for only $375k!
We’re out. Waiting for spring again.
UnRealtor Says:
January 2nd, 2007 at 11:15 pm
Chicago, no unloading at nearly 100% profit?
I’m very risk averse, probably to a fault. Stunts growth potential, I suppose, but also keeps what’s in the bank, in the bank.
Unreal: two things – sunk cost fallacy and also diversification – if you believe in both…then things are styling….
Firsttimebuyer: You will grasshopper, trust me you will. Do not cave in now and buy or you will regret that decesion for years to come. Sit tight and watch for bargains later in 07. It is coming, I can hear it. Trust me I lived through the last downturn, that one was ugly, this one will be hideous.