No, it’s not the weekend yet.
I’m going to be flying up to Buffalo, NY early Wednesday morning, so updates will be likely be scarce. In the interim, feel free to use this thread as an open discussion. If anyone can pick up the slack and post any interesting articles they find, it would be much appreciated.
-jb
This discussion on how lower grade BBB mortage debt is turned into higher grade debt appeared in Gary Shiller’s Jan 2007 “Insight”
Rating Agencies Lag
The credit rating agencies also, and once again, appear to be behind the curve. Back in 2002, we noted that they rated the debt of Enron and K Mart as investment-grade only days before they filed for bankruptcy.
Now they rate securities backed by subprime mortgages as largely AA and better…subprime mortgages are unrated but no doubt would be rated as below investment grade if they were. Nevertheless, a pool of them is assembled and securitized as Residential Mortgage-Backed Securities with various tranches rated AAA, AA and so on down to the BB, B and even C levels that are well below the BBB minimum investment grade. The top tranche, around 80% of the RMBSs, is rated AAA because it get the first mortgage payment dollars, then the AA, about 9% of the total, gets paid and so on down the line.
Next the BBB tranche, only 4% of the RMBS, is pulled out and combined with BBB tranches from other pools to serve as collateral for a derivative called a Collateralized Debt Obligation. Since this combining of BBB tranches supposedly creates diversification that the rating firms’ models indicate will drastically limit delinquencies and defaults, the AAA tranche of the CDO is 75% of the total capital structure and 12% is rated AA. Only 4% is considered BBB. So pools of mortgages that probably would be considered below BBB are miraculously turned into a CDO with 87% of its capital structure rated AAA and AA and only 4% is rated BBB.
Wow! Talk about a sow’s ear being turned into a silk purse! Think of the leverage involved in converting low into high quality debt, even more so when the CDOs are leveraged by their buyers 10 or 20 times! And think of the losses when the 25% fall in house prices we foresee wipes out the whole BBB tranches of the RMBSs by which the entire CDOs are collateralized! Conversely, consider the potential huge profits of investors that are essentially buying insurance policies, Credit Default Swaps, that pay out any losseson BBB tranches of the CDOs. But will the sellers of these CDSs be able to make good on their contracts if the house price collapse we foresee materializes?
#1…Meant to credit Gary Shilling…not Shiller
For Bob:
http://www.happyshmoo.com/storme/booya.wav
“I heard from wmc AEs
No more W2 Stated
No loans under 600 Fico (need clarification on this) not sure if for full doc and stated
Other serious cuts coming soon as well. Also heard no one is happy and many ready to bail.
They are moving toward Alt A with Subprime Rates I feel bad for these guys
”
http://www.brokeruniverse.com/grapevine/thread/?thread=371906
Here’s a formula for bank failures:
“Bank Failures in Mature Economies”
http://www.bis.org/publ/bcbs_wp13.pdf
Happy Reading…
I just checked out NJMLS which I’ve been following for the better part of a year for Hudson and Bergen counties, mostly.
I just did a search for Hudson county condominiums/coops up to 500K and it seems to me that the spring inventory is starting to hit the market. Has anyone else noticed this for any of the towns/counties/regions you’re following?
I also noticed that asking prices in Hudson county, Jersey City in particular, seemed to have declined.
Is this consistent with what others are observing?
I’m in moderation hell?
Any body else sensing that a sucker rally is taking place in real estate? I’m seeing a lot of inventory moving and fairly aggressively yet inventory seems to be growing slightly quicker.
Dr. Doom’s Million Dollars
Peter Schiff (aka Dr. Doom), President Euro Pacific Capital, attempts to dispel the myth suggesting that the fate of the world economies hinge on whether the American economy goes north or south. When asked by CNBC’s Mark Haines where all the products China produces would go, Schiff states that emerging markets, such as China, are capable of buying their own products.
Originally aired on: 3/5/2007 on CNBC
http://www.paperdinero.com/BNN.aspx?id=93
Credit Crunch Hurts Buyers!
CNBC’s Diana Olick chronicles the effects that sub-prim implosion will have on reducing the number of buyers as credit standards continue to tighten.
Originally aired on: 3/5/2007 on CNBC
http://www.paperdinero.com/BNN.aspx?id=91
From Bloomberg:
Housing Rebound Elusive as Market Fails to Reduce Lost Deposits
Scott and Kerry Bingham put down a deposit three weeks ago on a new $321,000 house at Heritage Bay, a development set on a golf course about seven miles from the ocean in Naples, Florida.
Two days later, they abandoned the deal. Like other prospective new-home purchasers, they were nervous about falling home prices across the country and the prospect their new property could tumble in value.
“We don’t want to buy if prices are going down,” said Scott Bingham, 41, an electrician who owns Power Systems Electric LLC in North Andover, Massachusetts. “At this point, we’re in a holding mode. If we wait, we might be able to get closer to the ocean and get a better deal.”
A year after the housing slump began, the spring selling season is off to a rocky start with a glut of unsold properties and buyers like the Binghams putting off purchases, thwarting any chance of a recovery. The National Association of Home Builders in Washington now expects sales to fall for the sixth consecutive quarter after last month predicting a gain. The biggest stock market rout in four years last week, a jump in subprime mortgage failures and concerns about a possible recession are keeping consumers on edge.
About 10 percent of subprime loans were more than 60 days delinquent or in foreclosure as of Dec. 31, up from 5.4 percent in May 2005, according to data compiled by Friedman Billings Ramsey Group Inc. of Arlington, Virginia. The rate was the highest in seven years, according to the report.
http://money.cnn.com/2007/03/07/pf/bc.creditcards.congress.reut/index.htm?postversion=2007030706
Senators to review credit card practices
Lawmakers talk of legislation to curb predatory lending, fees hitting consumers.
Legislation may be needed to stop overzealous credit card companies from piling on interest rates and fees that have plunged millions of American families deeply into debt, a senior Democratic senator said.
By JOE BEL BRUNO
The Associated Press
NEW YORK (AP) — In a March 5 story about the problems faced by subprime lenders, The Associated Press erroneously reported the decline this year in shares of lender Novastar Financial Inc. Its stock, including Monday’s plunge, was down about 80 percent, not 40 percent.
NEW YORK (AP) — Mounting concerns on Wall Street that mortgage lenders might be hurt by increasing defaults and delinquencies sent investors fleeing Monday from some of the biggest names in the industry.
The meltdown among lenders that specialize in home loans to people with weak credit, known in the industry as subprime lenders, again ravaged stock prices. Financial institutions from Britain’s HSBC Holdings PLC to subprime leader Countrywide Financial Corp. sank amid reports of strained portfolios as loans went bad.
Concern about subprime exposure also has spilled into major U.S. investment houses. Standard & Poor’s on Monday downgraded Lehman Brothers Holdings Inc. and Merrill Lynch & Co., partly on subprime mortgage woes. S&P noted that subprime loans are a small piece of the company’s overall assets, but was still concerned about recent market trends.
http://www.nj.com/ap/stories/index.ssf?/base/business-72/117321116260850.xml&storylist=topstories
Proposed megastore raises concerns about environment
Wednesday, March 07, 2007
BY STEPHANIE MOSTACCIO
Special to the Times
LAWRENCE — Environmental issues dominated a meeting concerning a proposed Wal-Mart on Spruce Street here.
Although Wal-Mart representatives discussed tree replantings and preservation, water management and enclosures, residents reiterated demands for environmental safeguards.
Many residents are concerned about the possible environmental hazards.
“Once this becomes a Wal-Mart site with thousands of cars coming in and out … pollution will increase dramatically” as vehicles drip fluids that wash into the Shabakunk Creek, said Robin Williams, a Lawrence resident and leader of LET’s Stop Wal-Mart, a group of activists from Lawrence, Ewing and Trenton.
http://www.nj.com/timesoftrenton/stories/index.ssf?/base/news-8/117324402466220.xml&coll=5
Last hearing planned on Highlands draft plan
Wednesday, March 07, 2007
THE HIGHLANDS: The last in a series of public hearings on the Highlands region draft master plan has been scheduled for March 21, in Somerset County, the Highlands Council announced yesterday.
It will be held at Ridge High School in Basking Ridge, scheduled for a 5 p.m. start, said officials. Speakers may sign up to comment on the day of the event. They also are encouraged to leave copies of their comments with council staff.
The proposed draft regional master plan can be found on the council’s Web site at http://www.highlands.state.nj.us
In 2004, the Legislature passed the Highlands Water Protection and Planning Act to protect more than 850,000 environmentally acres that are the source of drinking water for more than half the state’s residents. The subsequently created Highlands Council is now creating a master plan to govern future development in the region.
http://www.nj.com/starledger/stories/index.ssf?/base/news-1/1173246313126790.xml&coll=1
Borough targets illegal housing
Wednesday, March 7, 2007
By PAUL BRUBAKER
HERALD NEWS
HAWTHORNE – Viviana Navarrete found out the hard way that the basement apartment she rented for more than a year was illegal.
Firefighters discovered her living there on Wednesday morning, Jan. 17, while responding to a report of smoke conditions at 46 Passaic Ave., according to Fire Chief Joseph Speranza.
On the following Sunday, Navarrete was notified by the landlord of the two-family house that she and her three daughters had 72 hours to vacate the premises.
But tenant advocacy groups say punishing landlords will only shift poor families from one town to the next, and that municipal efforts should focus on developing more affordable housing for low-income people. And with only 11 citations written in the borough for illegal housing violations in 2006, the question remains whether there is a need for the new code.
“That basement was like a heaven for me,” said Navarrete, 41, a Peruvian immigrant who earns $15 an hour as a polisher at Tiffany & Co. in Parsippany. She has three children, Diana, 21, Samantha, 10, and Janelle, 8.
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXkzNTcmZmdiZWw3Zjd2cWVlRUV5eTcwODkzNTYmeXJpcnk3ZjcxN2Y3dnFlZUVFeXkz
Corzine’s ex-beau paid $1M for condo
Katz won’t comment on source of the cash
Wednesday, March 07, 2007
BY DEBORAH HOWLETT
Star-Ledger Staff
Union leader Carla Katz paid $1.1 million three months ago to buy a luxury condominium in the same Hoboken building where Gov. Jon Corzine lives.
Corzine, who dated Katz for two years before running for governor and previously financed her purchase of a home in Hunterdon County, said last night that all financial ties between them were severed shortly after their relationship ended in late 2004.
http://www.nj.com/starledger/stories/index.ssf?/base/news-11/1173246385126790.xml&coll=1
A bonus for developers
Tuesday, March 06, 2007
BY WILLIAM G. DRESSEL JR.
O
n January 25, the Appel late Division of New Jersey handed down its decision regarding the New Jersey Council on Affordable Housing’s (COAH) regulation authorizing municipalities to require developers to provide affordable housing. While the court upheld substantive portions of the regulations (such as the concept of growth share, regional contribution agreements and various aspects of the credits), it also invalidated the rule that permitted municipalities to require developers to fold — that is to say, to include — affordable housing in their market- rate projects without receiving a “density bonus” in return.
Last week, Gov. Jon Corzine and COAH’s Chairwoman Susan Bass Levin elected to begin a rule- making process to obtain better data while also requesting a stay for clarification of the appellate di vision’s decision to ensure that construction of affordable housing in municipalities continues. But the most important thing they did was to appeal the decision that would have forced municipalities to provide additional compensation to developers when they fulfill their obligation to fold affordable hous ing in their projects. In fact, this appeal was their only responsible option for the citizens of New Jersey.
http://www.nj.com/timesoftrenton/stories/index.ssf?/base/news-0/1173164754204980.xml&coll=5
Final push for land preservation effort in Hopewell Twp.
Advocates hope fundraisers save St. Michael’s orphanage tract from development
Monday, March 05, 2007
BY LISA CORYELL
HOPEWELL TOWNSHIP — With less than two weeks left on a campaign to save the St. Michael’s orphanage tract from development, advocates are scrambling to drum up $202,000 more to meet their goal.
The D&R Greenway Land Trust has until March 13 to come up with the $11 million asking price for the 337-acre parcel nestled at the foot of the Sourland Mountains just outside Hopewell Borough.
http://www.nj.com/timesoftrenton/stories/index.ssf?/base/news-8/1173071158109140.xml&coll=5
http://www.bloomberg.com/apps/news?pid=20601109&sid=anfMB9SdI9u4&refer=home
Bank of America Corp., the third-biggest manager of bond sales in the U.S., is telling clients to unload corporate bonds because of concern that “housing-led weakness” may spread. A month ago, the firm, citing what it called a “Goldilocks” economy, recommended buying company debt.
“The spillover from the subprime market is only going to continue,” said Kiesel[Pimco], who predicts the housing market’s deterioration will prompt consumers to curb spending, the economy to slow and the Federal Reserve to cut interest rates.
“It didn’t take much for the market to reprice,” said Scott Kirby, a bond fund manager at Minneapolis-based RiverSource Investments LLC, which manages about $20 billion in commercial and home mortgages. “People are getting quite worked up.”
Procter & Gamble Co., the largest U.S. consumer-products maker, postponed the euro portion of a $4 billion bond sale because of the disruption. Companies sold $14.8 billion of debt in the U.S. last week, down from $25.2 billion the prior week.
New Subprime Guidelines Open For Comment
by Broderick Perkins
Federal money policy agencies have opened for public comment new guidelines for subprime mortgage underwriting to ward off the growing number of subprime defaults and foreclosures.
The “Proposed Statement on Subprime Mortgage Lending” comes with 60-days of public comment and was jointly crafted by the same gang of federal monetary agencies that late last year rewrote the rules on nontraditional home loans and equity loans.
The effort is considered a “victory of sustainable homeownership” according to the Center For Responsible Lending..
http://realtytimes.com/rtcpages/20070307_subprimecomment.htm
Cape couple wins a round against subprime lender
Judge tells firm it cannot foreclose until suit resolved
By Kimberly Blanton, Globe Staff | March 7, 2007
A Massachusetts judge has ordered Ameriquest Mortgage Co. to halt a $715 monthly increase in a Cape Cod couple’s March payment and to refrain from foreclosing on their property until a lawsuit over the mortgage is resolved.
http://www.boston.com/business/globe/articles/2007/03/07/cape_couple_wins_a_round_against_subprime_lender/
I posted this late yesterday on the previous thread, but I thought it was interesting…
A group called “protecting bad teachers” is targeting Newark in its newest campaign. I saw their billboard while driving through Newark. They contend that the teacher’s union in Newark is so powerful that it is impossible to get rid of bad teachers. While its especially bad in Newark, this is a problem everywhere in NJ.
http://www.protectingBadteachers.com
A few gems from the site:
Newark schools are expensive: In exchange for a low-quality Newark education, the government spent $20,564 per student in the 2004-05 school year, nearly 50% more than the $13,816 spent on the average New Jersey student statewide.
30 parents signed a letter saying that their kids were being harmed by [their teacher’s] failure to ever show up to class; continues to draw a $91,275 salary
Resolution: Unresolved
Pretended to be sick from one district job, but showed up to work at another to collect its paycheck; “willfully and intentionally misrepresented her medical condition and medical status to the District”
Resolution: Retired with no consequences seven months after charges were filed
I wouldn’t give much credence to this report. They’ve been way off the mark, in recent past.
“U.S. private-sector employment grew by 57,000 in February, the weakest job growth since July 2003, according to the ADP national employment index released Wednesday.
Job growth in February was about a third of the 167,000 averaged over the previous three months. The ADP index rose by 126,000 in January.”
http://www.marketwatch.com/news/story/adp-says-private-sector-employment-up/story.aspx?guid=%7B2875CC8D%2DF38B%2D4591%2D9AC2%2D7582BD329646%7D&dist=bnb
PMI, MGIC Investment: Subprime Trouble for Mortgage Insurance Companies
However, mortgage insurance companies that may have significant exposure to subprime loans have declined slightly, but these companies have been relatively stable compared to the subprime loan originators. We expect the mortgage insurers to see increased mortgage insurance related losses due to an increased number of claims created by an increasing number of mortgages in default.
http://financial.seekingalpha.com/article/28871
The Bubble Guru’s Take On Housing
Yale’s Robert Shiller thinks the market hasn’t hit bottom, but he leaves room for the human factor
http://www.businessweek.com/magazine/content/07_11/b4025100.htm?chan=top+news_top+news+index_investing
Where are home prices headed?
Looking at our national home-price index [the Standard & Poor’s/Case-Shiller Home Price Indices], it appears that the boom is over. [Prices] had been rising at an accelerating rate from the late 1990s through 2004. Since then the rate of increase has been decelerating.
We’re going through a peak. There hasn’t yet been a big price decline, like 20%. For instance, out of the 20 major cities in the country the biggest drops are in Detroit and Boston, which are down 5.9% and 5.1%, respectively. I think there’s a good chance home prices will be down 10% to 30% over the next five years.
Developers are throwing in an SUV or granite countertops to lure buyers. Does this mean prices have fallen more than the data show?
Developers don’t want to cut prices. They try to disguise [them]. The government’s new-home price index doesn’t take this into account. Prices for new homes are falling faster than the index says they are, but I don’t know by how much.
Are low long-term mortgage rates supporting the market?
Mortgage rates have been falling for 25 years and when I look at the whole history of mortgages and home prices, I don’t see a strong relationship. The psychology is more important. In the late ’70s, interest rates rose to double-digit levels, and there was still a housing boom.
Are there any signs of strength?
Yes. One part of the National Association of Builders/Wells Fargo Housing Market Index measures the traffic of prospective buyers, and it has started to go up. It’s possible that the boom could resume.
We’re talking about human psychology. If people think home prices will go up for some time, it becomes a self-fulfilling prophesy.
What will bring the boom to an end?
Bubbles don’t pop suddenly. The air comes out gradually. More and more people decide that the market is turning. The other large factor is a big supply of homes.
I’ve been reading old newspapers and advertisements to see how past booms ended. It’s usually when stories start to circulate that embarrass people who believed in the boom. For example, there was a Florida land boom [in the 1920s]. There were stories of people buying land that was swamp. Booms end when prices start to fall, and then there are stories of buyer stupidity that are told and retold. I sense that’s happening now.
There’s a lot of news about defaults in subprime mortgages. Will that have an effect on prices?
It could. Problems like this can change market psychology. The subprime loan problem will get much bigger if prices really start falling.
Was the recent rise in home prices the biggest housing boom in U.S. history?
In the sense that it was the most pervasive. We’ve had booms before, but they didn’t capture the whole country. This one started out in the glamour cities, and then it spread from place to place.
How has that affected homeowner psychology?
People think they can buy a house anywhere and get a high return. We have found that homeowners have very high expectations.
What kind of return should homeowners expect over the long term?
From 1890 to 1990 home prices went up an average of 3% annually. Most of the big gains were made after World War II and since 1998.
NY Times Article,
Mortgage Crisis Spirals, and Casualties Mount
By JULIE CRESWELL and VIKAS BAJAJ
Published: March 5, 2007
Even in affluent Orange County, Calif., the growing wealth of executives and brokers in the booming mortgage industry was hard to miss.
For Kal Elsayed, a former executive at New Century Financial, a large lender based in Irvine, driving a red convertible Ferrari to work at a company that provided home loans to people with low incomes and weak credit might have appeared ostentatious, he now acknowledges. But, he says, that was nothing compared with the private jets that executives at other companies had.
“You just lost touch with reality after a while because that’s just how people were living,” said Mr. Elsayed, 42, who spent nine years at New Century before leaving to start his own mortgage firm in 2005. “We made so much money you couldn’t believe it. And you didn’t have to do anything. You just had to show up.”
http://www.nytimes.com/2007/03/05/business/05lender.html?_r=1&em&ex=1173157200&en=4971ad61a881ad29&ei=5087&oref=slogin
That’s what I have seen even in NJ mortgage brokers.
From the redoubtable and irrepressible Andrew Tobias, this linq:
http://www.palmbeachpost.com/search/content/local_news/epaper/2007/03/04/m1a_SLCLERK_0304.html
“In all the years I’ve done this, I’ve never seen this many foreclosures,” said Nancy Bennett, supervisor of St. Lucie’s circuit civil clerks
division who has worked in the office for more than 20 years. “It has never been like this.” . . .
Tobias’ commentary:
http://www.andrewtobias.com/newcolumns/070307.html
“Stories like this lead buyers to drive harder bargains and sellers to accept less . . . which drives home values partway back down to where they were a few years ago and puts more mortgages under water . . . just as introductory come-on rates are phasing out and monthly payments are rising . . . triggering more foreclosures . . . which adds more supply to the market for homes, driving prices down further . . . undermining consumer confidence, creating fears of a recession that would cost jobs and lead to more foreclosures, which . . . well, you get the idea.
The optimists, like long-time observer (and newsletter publisher) Adrian Van Eck, believe the bottom has been reached or is very near. Homebuilding has been ratcheted way back, to keep unsold inventories from piling up as they might have, he argues; and Fed chair Ben Bernanke, he believes, has a strong bias against allowing a vicious cycle to start (or, if it’s started already, against letting it get very far).
I obviously don’t know who’s right, but I would not rush to buy stock in homebuilders or sub-prime lenders, even though they’ve fallen sharply. And if I were in the market for a house, I’d be making aggressively low offers.
Paulson Says Bad Debts in the U.S. to Be Contained (Update5)
By Kevin Carmichael
March 6 (Bloomberg) — U.S. Treasury Secretary Henry Paulson moved to cool concern about rising defaults at subprime mortgage companies, saying the woes won’t spill over to banks that make less risky loans.
“Credit issues are there, but they are contained,” Paulson said to reporters in Tokyo during a four-day tour of Asia. The U.S. financial sector is healthy and most institutions won’t feel “a big impact.”
Shares of New Century Financial Corp., the second-biggest U.S. lender of home loans to risky borrowers, had a record drop yesterday after the company disclosed it faces a criminal probe and JPMorgan Chase & Co. said the company may declare bankruptcy. Lehman Brothers Holdings Inc. reduced its investment rating on mortgage companies because a surge in loan defaults may spread beyond the riskiest credits.
“Paulson is trying to reassure the market because that’s been a focus and one of the factors driving down the stocks in terms of how it might fray out for the wider economy,” said Amy Auster, head of international economics at Australia & New Zealand Banking Group Ltd. in Melbourne. “We think there will be limited impact both on the housing market and the economy.”
http://www.bloomberg.com/apps/news?pid=20601103&sid=aWwA8tkyvcxw&refer=us
From the redoubtable and irrepressible Andrew Tobias, this linq:
http://www-dot-palmbeachpost.com/search/content/local_news/epaper/2007/03/04/m1a_SLCLERK_0304-dot-html
(sorry for the “-dot-,” but I’m trying to get around the review-hold process
“In all the years I’ve done this, I’ve never seen this many foreclosures,” said Nancy Bennett, supervisor of St. Lucie’s circuit civil clerks
division who has worked in the office for more than 20 years. “It has never been like this.” . . .
Tobias’ commentary:
http://www-dot-andrewtobias.com/newcolumns/070307-dot-html
“Stories like this lead buyers to drive harder bargains and sellers to accept less . . . which drives home values partway back down to where they were a few years ago and puts more mortgages under water . . . just as introductory come-on rates are phasing out and monthly payments are rising . . . triggering more foreclosures . . . which adds more supply to the market for homes, driving prices down further . . . undermining consumer confidence, creating fears of a recession that would cost jobs and lead to more foreclosures, which . . . well, you get the idea.
The optimists, like long-time observer (and newsletter publisher) Adrian Van Eck, believe the bottom has been reached or is very near. Homebuilding has been ratcheted way back, to keep unsold inventories from piling up as they might have, he argues; and Fed chair Ben Bernanke, he believes, has a strong bias against allowing a vicious cycle to start (or, if it’s started already, against letting it get very far).
I obviously don’t know who’s right, but I would not rush to buy stock in homebuilders or sub-prime lenders, even though they’ve fallen sharply. And if I were in the market for a house, I’d be making aggressively low offers.
#8 mkfinancial:
I am certainly noticing it in our town. It’s shocking what people are paying right now given the real estate market news. And our realtor keeps telling us the town is underpriced, the RE market is going up, we are letting opportunities slip through our fingers, etc. To tell you the truth, it is difficult to stand firm against her unrelenting diatribes against our strategies. So maybe it isn’t all that shocking that so many people believe it still.
Possibility [29],
If the market is so damn underpriced and the market is going to the moon, then why is she wasting her time trying to change your views. I would imagine that she would be too busy selling all this underpriced property rather than squabble with you.
#6 I have notivced in the 2 towns that i follow in BC., that inventory is rising, in one town, 6 came on the market yesterday. Some are still asking way over peak prices, others appear more reasonable.
Somebody stated they they see inventory moving, and osme of it aggressively, I would caution to wait and see if these deals actually close, big difference between under contract and SOLD.
Mortgage Defaults Start to Spread
by Ruth Simon and James R. Haggerty
The mortgage market has been roiled by a sharp increase in bad loans made to borrowers with weak credit. Now there are signs that the pain is spreading upward.
At issue are mortgages made to people who fall in the gray area between “prime” (borrowers considered the best credit risks) and “subprime” (borrowers considered the greatest credit risks). A record $400 billion of these midlevel loans — which are known in the industry as “Alt-A” mortgages — were originated last year, up from $85 billion in 2003, according to Inside Mortgage Finance, a trade publication. Alt-A loans accounted for roughly 16% of mortgage originations last year and subprime loans an additional 24%.
To be sure, defaults have remained very low in the prime market — and despite the uptick in bad loans, the problems in the Alt-A sector aren’t as severe as those that have roiled the subprime market. Some 2.4% of Alt-A loans are at least 60 days past due, according to UBS, which looked at mortgages that were packaged into securities and sold to investors. That is well below the 10.5% delinquency rate for subprime mortgages. (During the housing boom, delinquencies were low for all types of loans because borrowers who wound up in trouble could refinance or sell.)
http://finance.yahoo.com/loans/article/102536/mortgage_defaults_start_to_spread
Well all, I have to tell you, our sellers capitulated, quicker than I thought, and have come back to us. We really like the house – it has a lot of potential, great location (a town we like, good schools and a good location in the town – cul de sac, near the end) and size – it’s what most people would consider a forever home. So we’re meeting them in the middle.
We don’t have a signed contract yet, but we hope to do engineering this weekend. If for some reason they get shady or another offer comes in and they try to spark a bidding war, my offer will be off the table and I’ll walk away, and lower my offer if they come running back.
Now, I still think there may be some correction in the market. 30%? No – perhaps in FL or AZ. 20%? DC, especially condos, condos here as well perhaps. 10%? Could be. Do I like it? No. But I am buying a house I plan to be in for 10-15 years (or maybe even longer). My parents have watched the value of their home go up and down through downturns. I’m buying a place to live, and am glad to finally feel comfortable doing that.
#29And why do you want to follow these people? Becasue your realtor is teeling you to?
I would again caution to not assume these have all sold. There are still cluless people out there, who belive it or not have no idea what is going on. But they will once they try and secure financing, the days of the no money down 100% financing is over, and now these people will find out.
Big difference between under ccontract and SOLD.
NJGal,
If you don’t mind, how does your offer compare with comps?
Jobs grow by 57,000 in February, ADP says Weakest private-sector hiring since July 2003
http://www.marketwatch.com/news/story/jobs-grow-57000-february-adp/story.aspx?guid=%7B2875CC8D%2DF38B%2D4591%2D9AC2%2D7582BD329646%7D
U.S. private-sector employment grew by 57,000 in February, the weakest job growth since July 2003, according to the ADP national employment index released Wednesday.
Sure NjBear, it’s about 25K below the most recent comp on that street, but it generally fits in with the town itself, if not a little lower. And 60K below their asking.
NJ GAl: congrats on your purchase, hope it all works out for you. What makes yout hink there may be only a 10% decline now?.
Have you seen psychology change etc., or with all due respect are you changing your position to reflect teh fact that you have now purchased?
NJGal,
Are you comparing againt peak comp or most recent sale? When was comp sale recorded?
Thanks again!
>>Any body else sensing that a sucker rally is taking place in real estate?
no, what i’m seeing are too many properties that are utter crap asking premium prices and they’re just sitting. the quality stuff continues to move at prices not far off peak bubble (-5 to 10%).
Comp sale was actually in February, NJBear.
Bergenbubble, I’m not changing my position now that I’ve purchased – I’m nervous as hell, but I don’t really have a crystal ball. I’ve already seen prices in Westchester drop over 5% (that was last year) and despite that we’d all like it to be different (me as well), there are indeed a lot of wealthy people with good jobs in the area, who are NOT Wall St. people (as I realize they are a small percentage). Combine that with good jobs, NY is going to remain an expensive place to live – that doesn’t make it immune from drops at all, but I don’t see prices in NY dropping to say, Alabama levels (what a dream that would be though).
My real concerns remain the stock market and the baby boomers (but I think that’s going to be an issue no matter what, and I don’t plan to wait until they all retire in 30 years to buy a house). The only reason I bought now is because we need space, want to change our lifestyle and plan on having kids soon. And I saw plenty of places I WOULDN’T buy because they weren’t right – this is a place we may never grow out of. I would not buy a starter house right now.
Congratulations NJGal!
Can I ask how much off list price your original offer was? We are putting in an initial offer today at almost 100K (10%) off and would love some hope, esp. since our agent thinks we belong in an asylum.
If you are planning on being in your house for decades I don’t think you will regret this decision, no matter what happens in the next few years.
>>I wouldn’t give much credence to this report. They’ve been way off the mark, in recent past.
BC bob, your ignorance is showing. you know squat about the ADP report. trying to compare it to BLS is incorrect. the most accurate BLS figures don’t come out until a year later. the adp report is the best indicator of today’s employment picture. if you want to discuss the specifics of how the methodology and such works i’m game.
>>We don’t have a signed contract yet, but we hope to do engineering this weekend.
good luck njgal. sounds like a situation that will provide you good protection in an uncertain market.
word of advice. find a great engineer it’s worth the money. they can uncover the things that can cost you and arm and a leg.
Speaking of engineer. Question to the board.
I went to an open house this weekend. There was an house inspector there looking as well.
He was passing me his card in case I was going to bid on the house.
His card has BS in Engineering on it. Does a engineering degree matter????? I did couple of semesters of Engineering in college. I don’t see how it relates to home inspection.
I always thought home inspector and engineer are different animals…….
CC
NJGal,
Congratulations. I hope the engineer gives both thumbs up this weekend.
Soon we will call you NYGal.
CC
Njgal,
I bought in Southern westchester this past year, with similar numbers as you. (also 60K off asking about 9%.) From the information you have given it looks like you got a great deal and given how long you plan to spend in the house any impending downturn probably wont affect you too much. I agree with you about the make up of Westchester. Congrats and good luck.
NJ GAl: Good Luck, sounds like you did get a discount to hwt you would have paid last year, and that is good. As you say going forward is a crap shot,a nd there is a lot of down side that is stillout there, but sometime other matters take over.
Since your plan is to sty there long term, then you can ride it out, but welcome tot he wondeful world of NJ property taxes, just completely out of control.
There have been a couple of house I might have considered gritting my tetth and making a bid on, but conce the property taxes wer factored in, just did not make sense.
I currently rent a 3 bed 2 bath house, and it is cheaper for me to rnet even witht he tax deduction then to buy at this point, although asking prices. and closed prices are coming down.
I owned for al ong time before selling, and renting. And so that was hard, but you do what you have to do.
I would like my own place again, and yes a big part of it is psychological,and renting for the next 20 years does not makes sense.
I am giving it one more year,and at that point I will throw in the towel and purchase. I would just like to get it behind me, but I am willing to gove it some more time.
Once again good luck!
Richard [43],
Hello. What I meant to say is the ADP has not been accurate when comparing with the BLS, not saying which one is correct. Just comparison purposes. However, thank you for picking that up. There have been revisions recently made in how ADP calculates this. We’ll see if their #’s are more in line with BLS going forward.
The market doesn’t trade the ADP report. The market also doesn’t wait a year for accurate BLS #’s. The report which the market follows closely is the BLS, revisions. If you feel the ADP report is the best indicator, it seems pretty ominous to me.
NJGal,
Congratulations on your decision. You have analyzed this thoroughly and are a long term buyer. I hope you have many years of happiness in Westchester. There’s only one negative, NJ loses another taxpayer.
From MarketWatch
“Automatic Data Processing reported that private-sector employment grew by 57,000 in February, the weakest job growth since July 2003. Adding in some 20,000 government jobs created in a typical month, the ADP report would signal payroll growth of about 80,000 in February. Economists are currently projecting job growth of about 100,000 for Friday’s report.
However, the ADP report in recent months has not been a reliable predictor of overall employment levels.”
Emphasis added
NJGal,
Good luck! Keep us informed of the process.
Rich
House O’Cards (9)-
Too bad China’s consumers don’t want their own products. Wal-Mart has failed in China primarily because they are stocked with too many Chinese items. The customers want things made in the US and Europe!
Clot[53],
To hell with the customers. The real question is what do the commie leaders want.
NJGAL
Congratulations! People always buy homes, the ones who buy at the bottom of the market – were lucky, that’s it. No plan just lucky, you know what state the market is in. You are not going to move in and 2 weeks later say oh honey look at the news seems we may have purchased in a sliding market. I myself hate “starter homes” that how we got burned. Starter home 2beds/1bath no basement/no attic, no room to grow at all. We outgrew before market caught up, Way before, if it was a home we could have stayed in we may not even have noticed that we could’nt sell for what we paid becuase we wouldn’t have wanted to. Sometimes what is newsworthy to people only depends on what they need at the time. Enjoy!
KL
NJGal-
Congrats! Welcome to the dark side. Now brace yourself against the “hard right” of the LOD.
chaoticchild (#45) — In my opinion, don’t put too much weight on degrees unless it is a professional degree (e.g. MD, PharmD, etc…) when relating to the real world. As for house inspectors, a civil engineer may know a bit more about the structure of the house, but who knows??? Given equal experience, I’d take the engineering guy over a guy, lets say, with a marketing degree.
>>However, the ADP report in recent months has not been a reliable predictor of overall employment levels.”
this is only correct if you compare to BLS and assume BLS is correct. it isn’t. BC Bob is right in that it seems people trade more on the BLS report than ADP report if you had to take one or the other. in general both are used as data points in a larger quant model to trade on.
NEW YORK, March 7 (Reuters) – Fremont General Corp. (FMT.N: Quote, Profile , Research), which stopped making new home loans after agreeing with a U.S. bank regulator to stop risky lending, said it will also not fund loans in process.
Tuesday’s decision by the subprime lender will make it more difficult for people who have contracted to buy homes to close, because they will need to quickly find alternative financing, perhaps at less favorable terms.
on ADP Employment Report, from the horses mouth.
>>The ADP Report is derived from the largest private employment sample, incorporating anonymous payroll data from approximately 400,000 of ADP’s more than 500,000 U.S. business clients, covering roughly 23 million U.S. employees (note that this sample is modified to make it indicative of national employment levels; therefore the resulting employment changes are not representative of changes in ADP’s total U.S. client base). In addition to allowing us to provide a richer set of information, the larger sample improves the consistency of month-to-month estimates.
The newly revised ADP Report will now include select industry and company-size data. With our exceptionally large payroll database, our report will be the first, and only, credible resource to offer monthly information about short-term movements in the U.S. labor market across companies of various employee sizes.
There have been voiced certain concerns about the ADP National Employment Report regarding its accuracy and ability to predict the U.S. Government’s employment figures. While employment estimates from the ADP Report have differed significantly from the BLS in certain months, economists and financial professionals look to the ADP National Employment Report each month for further insight on trends in the U.S. labor market. And while the media may offer their own perspectives and opinions, the vast majority of media coverage surrounding the ADP Report has been positive or simply a factual account of the news.
It is important to understand that the ADP Report is not designed to predict the U.S. Government’s initial estimate of employment, as this initial estimate is often significantly different than its annual, comprehensive count of employment which is released more than one year later. Consequently, the ADP National Employment Report has been designed to better understand the nation’s true employment situation, as it eventually will be reported by the U.S. Government, well in advance of their ability to compute and release this “final” report.
“Congrats! Welcome to the dark side. Now brace yourself against the “hard right” of the LOD.”
Ha. I’m willing to take some crap, but I will still consider myself a member of the LOD – I don’t consider you a member of the dark side Clot – you’re no Reechard, and you’ve been helpful!
Clot #56
Now brace yourself against the “hard right” of the LOD.
correction:
the LOD is hardly “the right”. We are the “hard left”.
NJGal – congrats and good luck with the whole process.
the single most important metric for determining how well (or not) you did on a house purchase is sold price comps within the not too distant past. looking at % off list means nothing except to the seller who expected a certain amt. to you as the buyer it’s only what you spent and how it fit into your overall plan. i’d say today ideally you want sold comps within the last 3-4 months.
the adp report is the best indicator of today’s employment picture.
So what BC Bob says:
“If you feel the ADP report is the best indicator, it seems pretty ominous to me.”
and MarketWatch reports:
“…the weakest job growth since July 2003.”
is actually true and does not bode well for the economy and more importantly, housing.
Richard, I looked at comps going as (uselessly) far back as March ’06. Most WERE within the past 3-4 mos.
Market Meltdown And Irrational Complacency
Paul Krugman- is a columnist for The New York Times
Wednesday, Mar 7, 2007
The great market meltdown of 2007 began a year ago, with a 9 percent fall in the Shanghai market, followed by a 416-point slide in the Dow. But as in the previous global financial crisis, which began with the devaluation of Thailand’s currency in the summer of 1997, it took many months before people realized how far the damage would spread.
At the start, all sorts of implausible explanations were offered for the drop in U.S. stock prices. It was, some said, the fault of Alan Greenspan, the former chairman of the Federal Reserve, as if his statement of the obvious — that the housing slump could possibly cause a recession — had been news to anyone. One Republican congressman blamed Rep. John Murtha, claiming that his efforts to stop the “surge” in Iraq had somehow unnerved the markets.
Even blaming events in Shanghai for what happened in New York was foolish on its face, except to the extent that the slump in China — whose stock markets had a combined valuation of only about 5 percent of the U.S. markets’ valuation — served as a wake-up call for investors.
The truth is that efforts to pin the stock decline on any particular piece of news are a waste of time.
Wise analysts remember the classic study that Robert Shiller of Yale carried out during the market crash of Oct. 19, 1987. His conclusion? “No news story or rumor appearing on the 19th or over the preceding weekend was responsible.” In 2007, as in 1987, investors rushed for the exits not because of external events, but because they saw other investors doing the same.
What made the market so vulnerable to panic? It wasn’t so much a matter of irrational exuberance — although there was plenty of that, too — as it was a matter of irrational complacency.
After the bursting of the technology bubble of the 1990s failed to produce a global disaster, investors began to act as if nothing bad would ever happen again. Risk premiums — the extra return people demand when lending money to less than totally reliable borrowers — dwindled away.
For example, in the early years of the decade, high-yield corporate bonds (formerly known as junk bonds) were able to attract buyers only by offering interest rates 8 to 10 percentage points higher than U.S. government bonds. By early 2007, that margin was down to little more than 2 percentage points.
For a while, growing complacency became a self-fulfilling prophecy. As the what-me-worry attitude spread, it became easier for questionable borrowers to roll over their debts, so default rates went down. Also, falling interest rates on risky bonds meant higher prices for those bonds, so those who owned such bonds experienced big capital gains, leading even more investors to conclude that risk was a thing of the past.
Reality rears its ugly head
Sooner or later, however, reality was bound to intrude. By early 2007, the collapse of the U.S. housing boom had brought with it widespread defaults on subprime mortgages — loans to home buyers who fail to meet the strictest lending standards. Lenders insisted that this was an isolated problem, which wouldn’t spread to the rest of the market or to the real economy. But it did.
For a couple of months after the shock of Feb. 27, markets oscillated wildly, soaring on bits of apparent good news, then plunging again. But by late spring, it was clear that the self-reinforcing cycle of complacency had given way to a self-reinforcing cycle of anxiety.
There was still one big unknown: Had large market players, hedge funds in particular, taken on so much leverage — borrowing to buy risky assets — that the falling prices of those assets would set off a chain reaction of defaults and bankruptcies? Now, as we survey the financial wreckage of a global recession, we know the answer.
In retrospect, the complacency of investors on the eve of the crisis seems puzzling. Why didn’t they see the risks?
Well, things always seem clearer with the benefit of hindsight. At the time, even pessimists were unsure of their ground. For example, Paul Krugman concluded a column published on March 2, 2007, which described how a financial meltdown might happen, by hedging his bets, declaring that: “I’m not saying that things will actually play out this way. But if we’re going to have a crisis, here’s how.”
Congrats NJGirl. I hope it works out. Best of luck.
njgal, you seem to know the market pretty well and you made a choice based upon this knowledge. i’d rather make a fully informed decision than an ignorant one.
Yeah, I think we were pretty well informed, mostly because we have a lot of people in the area, and friends of ours bought nearby. We’ve been considering the area for years, even though we went astray a few times.
What is LOD?
BTW, while in Buffalo:
http://local.google.com/maps?f=l&hl=en&q=duffs+&near=amherst,+NY&layer=&ie=UTF8&z=11&ll=43.069891,-78.768539&spn=0.127409,0.33783&om=1&iwloc=A&iwd=1&cid=42979382,-78799455,1441673463403486131&dtab=2
Duff’s on Sheridan & 263 in Amherst. Best wings on the planet, accept no substitutes.
njgal,
thanks for the information and congrats.
NJGal..
Congrats.. Best o luck! I hope all goes well with the Inspection.
Tan
From Reuters (via USA Today):
Lowest rates of year push up mortgage demand
NEW YORK (Reuters) — Mortgage applications jumped last week as borrowers emerged in droves to refinance their existing home loans as interest rates fell to their lowest since early December, an industry trade group said Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, increased 7.3% to 671.6 for the week ended March 2.
The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 1.7%.
…
The group’s seasonally adjusted index of refinancing applications surged 15% to 2,234.2. A year earlier the index stood at 1,614.4.
Demand for new home loans, however, was muted.
The MBA’s seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, rose 1% to 405.3. The index was also above its year-ago level of 399.0.
More at link above and at Calculated Risk
Rich
#70 Gary LOD= League of Dorks.
Damn, I’m in moderation due to links.
From Reuters (without links)
NEW YORK (Reuters) — Mortgage applications jumped last week as borrowers emerged in droves to refinance their existing home loans as interest rates fell to their lowest since early December, an industry trade group said Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, increased 7.3% to 671.6 for the week ended March 2.
The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 1.7%.
…
The group’s seasonally adjusted index of refinancing applications surged 15% to 2,234.2. A year earlier the index stood at 1,614.4.
Demand for new home loans, however, was muted.
The MBA’s seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, rose 1% to 405.3. The index was also above its year-ago level of 399.0.
More at Calculated Risk site also
Rich
Just got in, 2 hours of delays and deicing at Newark.
jb
http://www.nytimes.com/2007/03/07/business/07econ.web.html?_r=1&ref=business&oref=slogin
“pay close attention to economic indicators to judge the state of the U.S. economy.”
I suppose nobody is really banking in BB’s opinions anymore, so the numbers are king now?
bergenbubbleburst,
Thanks!
NJGal–
nice work and hope it all works out for you.
as others have said, the good houses that are reasonably priced are selling at a small discount (5-10% off list).
I think at the end of the day, you just have to ask yourself whether you are committed to living in the NYC metro area, and if you are, then to at least some degree you have to accept the fact that your housing costs and taxes are going to be more than many would consider reasonable.
This doesn’t mean that you should overpay, but you can only measure value in a relative sense.
For example, if you are getting a 9% discount on a $700,000 house, this probably exceeds 2 yrs of rent at the rate you’re currently paying.
Again, value around here has to be measured against the alternatives, and all of them are very expensive.
Good luck and keep us posted
skep
NJGal:
Congrats..Enjoy the house.
I am also looking for my first home. can you please let me know where did you get information on latest comps ?
Thanks.
njrebear Says:
March 6th, 2007 at 9:04 pm
cf,
If you don’t mind … What are you guys doing? buying, selling or holding?
bear: RE or stocks?
NJ/NYGal: congrats……good luck with the due diligence
re: Newark teachers–
I’m sure there are some really bad ones, but I’m also sure it’s really tough to find people willing to work in those schools. you could triple the salary and most people still wouldn’t do it
it’s unfortunate, but the best teachers in the world probably wouldn’t get a high success rate in those schools. kids are only there 6 hrs a day. for most kids, those 6 hrs can’t make up for the 18 hrs on the outside
BofA: Real Estate Traffic “Short of Expectations” in February
From the BofA Monthly Real Estate Agent Survey for February:
Market Downshifts in February, the Start of the Key Selling Season
Agents noted that traffic fell short of expectations in February, after coming in essentially in-line with expectations in January. Responses worsened over the month, suggesting that traffic lost steam.
http://calculatedrisk.blogspot.com/2007/03/bofa-real-estate-traffic-short-of.html
cf,
stocks
Tom, I got the information from my realtor – unfortunately, they still have a monopoly on access to the MLS. When we told her we were considering an offer, I asked for comps in the neighborhood (based on size, land, etc.) She said local appraisers will go back about 6 mos. with the comps. I was able to see sale price, original listing price, and the listing price the sale was made from, as well as all of the usual details – sq. ft., etc. It was helpful, because what it basically showed me was that smaller homes had sold for higher amounts early last year, hence my belief that for this time in the market, at least, I got a good deal.
If it goes through, that is…we need to get an engineer in there ASAP (no atty. review in NY – you just inspect immediately and get a contract)
“What is LOD?”
It’s a name given to posters here by a realtor, whereby people get giddy about being called a “Dork” and suck up to said realtor.
Moskow says recent economic data has been on the soft side
http://www.marketwatch.com/news/story/moskow-says-recent-economic-data/story.aspx?guid=%7BE8626354%2DE4DB%2D4B65%2D9A6B%2D708BA11586EA%7D
WASHINGTON (MarketWatch) – Chicago Fed president Michael Moskow said recent economic indicators have, on balance, been “on the soft side” and that he’s not as sure as he had been about his forecast for a steady pickup in growth over the next two years. Since last August, Moskow has consistently warned that the Fed might have to resume hiking rate hikes to combat the threat of inflation. While he repeated this possibility, there was a new tone of concern about growth and less worry about inflation in his remarks. Recent readings on core inflation have “been a bit better” and the fall in energy prices may help move inflation down going forward
NJ Gal,
Congratulations and Good Luck.
If you happen to suffer some marginal loss, I hope (suspect) it will get more than eaten up by comfort and piece of mind it’s hard to put a number on that, but it’s worth a lot. No matter what else goes on, listen to your engineer, and get it all in writing.
njrebear Says:
March 7th, 2007 at 12:45 pm
cf,
stocks
Nothing has fundamentally changed. However, two items – #1 I have a plan of attack that is readied. #2 The money that moved out of the markets didn’t dissipate, it just got parked elsewhere. It will flow back (for now). The caveat is that it may flow back into different destinations. I don’t have any color on the latter point though, so I will assume back to its sources for purposes of this generic discussion.
YOU CANNOT RELY ON THIS INFORMATION TO MAKE INVESTMENT DECISIONS
Unrealtor #90,
Relax man. A little humor never killed anybody.
ok thanks
Lending standards Vs Personal Consumption
http://bp1.blogger.com/_pMscxxELHEg/Re7_Dt3Xt2I/AAAAAAAAAKQ/Rc3cjhwIzu0/s1600-h/StandardsvsPCE.jpg
“This graph is related to the third strike, and suggests that tighter lending standards might lead to lower YoY changes in consumption in the coming quarters.
”
>>
Source CR.
NJGal –
Good luck with the home. We’ll miss your well-informed opinions and posts. Don’t be a stranger.
“For example, if you are getting a 9% discount on a $700,000 house, this probably exceeds 2 yrs of rent at the rate you’re currently paying.”
I wish – more like off of an 800K house. But still, a HUGE house, with a lot of potential. I’m hoping it’s big enough to stay in to weather any downturn. Unless I have triplets, I think I’ll be fine.
And I’ll still be around – I’m sure some people may be interested in how the process goes for a first timer. Right now, we’re working on getting the inspector, and I have been told to go get tax records and building department records early on by my atty. so we can catch any issues ASAP.
Beige Book is out:
http://www.federalreserve.gov/FOMC/BeigeBook/2007/20070307/default.htm
Comments on NY Area housing:
Housing markets continue to be mixed. New Jersey homebuilders report that the market for new homes, though still soft, appears to have stabilized in early 2007. However, one contact notes that harsh weather in February has made it difficult to assess market conditions. Builders are reported to have scaled back construction plans and have moved inventories by reducing prices and offering concessions. However, in other areas, adjacent to New York City, the market is reported to be fairly resilient.
The market for existing housing has also been mixed, with continued sluggish demand for single-family homes, but persistent strength in demand for multi-family units–particularly in New York City. Buffalo area Realtors report that both sales and prices for single-family homes were running below year-earlier levels in January, though a pickup in sales and a slight rise in prices is noted in the Rochester area. More generally, single-family home prices across the District are reported to be steady to slightly lower than a year ago. In contrast, Manhattan’s co-op and condo market has remained buoyant: thus far in 2007, both prices and the number of transactions are reported to be up from comparable 2006 levels. Manhattan’s apartment rental market has grown increasingly tight; a large real estate firm reports that rents have accelerated in recent months and have eclipsed previous highs set in 1999 and 2000.
Economy growing, but some slowing seen, Beige Book says
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B91A18EA5%2DD3C7%2D4DB7%2D9255%2DC9208DAB7456%7D&dateid=39148%2E5835905671%2D891221738&siteid=mktw
WASHINGTON (MarketWatch) – The U.S. economy is growing at a modest pace, but some slowing has been seen in about a third of the country, the Federal Reserve reported Wednesday in its Beige Book. Most of 12 Federal Reserve banks “reported modest expansion in economic activity,” the Beige Book said. “But several districts noted some slowing,” including New York, St. Louis, Boston and Dallas. The economy improved slightly in the Philadelphia region. Housing markets remained weak, although there were “signs of stabilization” in some areas. Manufacturing activity was “steady or expanding. Retail sales were said to be growing steadily. Auto sales were sluggish. Inflation was “little changed.” Pay increases were “moderate.”
#6 RoadTripBoy:
gsmls is increasing by about 100 homes a day.
NJ/NYGal:
Good things to know…..
Jaipore Royal Indian
280 Rte. 22 N.(3 mi. off I-684, exit 8)
Brewster, NY
Blue Hill at Stone Barns (bring suitcase of money)
630 Bedford Rd.
Pocantico Hills, NY
Stoneleigh Creek
166 Stoneleigh Ave.
Croton Falls, NY 10519
Xaviar’s at Piermont (bring BIG suitcase of money)
506 Piermont Ave.
Piermont, NY
See, ChiFi, now THAT’S the stuff I need to know…I was thinking to myself, gee, how do I get takeout menus from the necessary places. We’re not chefs, so we’ll also be eating out a lot. And I love me some Indian…
I just want to note, about homebuilding, despite the weather, they are building new condos near my office and have continued to work daily through rain and snow and freezing temps. Desperate to finish or just didn’t want to stop in the middle?
Chiming in to #102
Tempation Tea House
(Great for after shopping at Target)
11A South Moger Avenue
Mt. Kisco NY 914-666-8808
Le Chateau (bult by JP Morgan)
Route 35 (between Cross River and Ridgefield)
Cross River NY 914-533-6631
Enjoy!
NJGAL
Triplets should share a room, if same sexed forever, if not till there around 5-6 or until they are uncomfortable, even so you’ll have to have 2 of the same (-:
Children do- not- not- not- need seperate rooms. There is nothing as joyfull to my husband and I as being able to once in a while here them taking before falling asleep. Those are memories for us and them.
KL
here = hear
rhymingrealtor #105
I couldn’t agree more… I shared with my younger brother and my sisters shared a room as well. We are now ages 23 – 32 and we could not be closer. Things got a little dicey in the teenage years, but that only makes for funny stories over beers nowadays.
I’ve been following this website for about a year now and am most pleased with the downturn in real estate in North Jersey (have been following the market closely in Bergen County and Essex County). It’s amazing how the market has changed… and how much prices have gone down in the $1million – $2million price range I’ve been following. There are lots of houses that don’t yet reflect a price correction, but those that sell inevitably take a 10-20% bite easily off the asking price. I myself am waiting until next Winter since I’m convinced the true price corrections will take another selling season to see in asking price. I encourage all the renters out there to just hold off for another 12-18 months to buy…..you won’t be sorry. Sellers out there are getting desperate. Don’t be a sucker and give into those greedy agents.
[108],
I’m tuned in to that.
ChiFi,
…I love me some Indian…
http://www.culinarymenus.com/restaurants/jaipore.php
#108 bubbletuner:
I endorse this message :-)
Just signed a 16 month lease.
Ok, this one makes me say hmmm???
http://newjersey.craigslist.org/rfs/289618286.html
Am I paying for the renovation? Why not let me buy the property and find my own sub’s and do the rest of the work myself? Could I get a significant discount off the asking price? Would I have input on the renovations? What if I don’t like something the contractor picks out for the house, can that be deducted?
Please, someone offer the contractor $450K and tell him you’ll do it yourself.
JM
NJGAL, in post #89 you said:
“I got the information from my realtor – unfortunately, they still have a monopoly on access to the MLS.”
when you say “my realtor”, were you working through your own realtor, or do you mean the realtor who was handling the listing?
also, any tips for finding a good engineer/local attorney?
congrats and hope all goes well with the inspection.
waitingwatching:
Realtor meant mine – not the listing agent.
I really think word of mouth is best for the other stuff – we happen to have a lot of lawyers in the family, including one who owns property and does a ton of real estate stuff in Westchester. So not only is he totally on our side, he’s free. But if I hadn’t, I had friends who just bought up there, and would have gone with someone they used.
And our atty got us the inspector – he told us not to really trust the agent. I don’t trust anyone, so I agreed with him, but my friends who moved up there used someone recommended by the agent and they were pleased with him, so who knows.
Inspection is this weekend. Please lord, let the hot tub be in good condition;)
BklynHawk Says:
Ok, this one makes me say hmmm???
It’s still a dinky little house for $650,000, even with new sheetrock
NJGal, thanks for the clarification. seems word of mouth is the best way, tho was hoping you had some secret formula for finding those folks in a new market. my condolences on all the attorneys in your family, but i guess this time such a curse turned out to be a blessing. ;-)
NJGal, thanks. think my other post saying thanks got stuck in moderation for some reason.
Read sentence in selling:
“…Reduced Price Today!!!…Our stubborness has cost us…”. Isn’t it an interesting sign?
#117 NJ/NY Gal First thing I do when I buy again is the purchase of a hot tub, ( I am so jealous, just kidding)and I will use it on a regular basis.
I will be in your new nehighborhood this weekend (Mt. Kisco & Chappaqua) Once again good luck.
Yeah, unfortunately, waiting, I think word of mouth is best. It’s tough if you’re moving somewhere and know no one. If my husband did not have family up there, mine couldn’t have helped us – what do LI folk know about wells and septic tanks (which seems to be most of Northern Westchester)?
Bergen, that hot tub sold my husband – grilling by a hot tub on huge property was his dream (he has simple needs I guess). He could care less about my decorating dreams and carpet fantasies, as long as that hot tub is working and he can pound his chest and say “Me have much land!”
Enjoy NJ Gal, enjoy!!
NJGal, sounds then like a good topic for the wiki. Chapter 52: best ways to find a reputable engiineer and/or local attorney.
Grim, any more word/thoughts on the wiki?
septic tanks, yikes. just hope that doesn’t back up into the hot tub.
Wiki is taking a back seat until the site gets moved to the new server (to eliminate the annoying HTTP 500 Internal Server Errors).
jb
Home builders tighten their belts
After housing pullback, CEOs focus on costs, inventory glut
http://www.marketwatch.com/news/story/after-pullback-home-builder-ceos-focus/story.aspx?guid=%7B3DFF7511%2DFA80%2D4480%2D990A%2D3C3E975D5730%7D
In one of the conference’s more memorable quotes, the CEO also said he expects 2007 to “suck” for home builders with the market not recovering until 2008 at the earliest.
“septic tanks, yikes. just hope that doesn’t back up into the hot tub.”
You’re telling me. But the tub is above ground, in the deck, so I think we’re ok. But I do want to know where that tank is…it’s so gross to me, but if we want to live up there, sewers are rare.
NJ Gal-
From your husband’s description, he isn’t one of those Geico guys is he? ;)
JM
Ditto on #108. Bunkered down in a 1BR until at least through the summer w/ a 1 year old and my wife. May consider a 2BR at the end of the summer to last us through next year. No need to settle for a real home until I need to send my kid to school. Even looking at some jobs internationally, so I can weather out the coming USD devaluation. My wife is all for it considering buying power in some of the places we are considering are significantly higher.
ADA (94)-
Humorless observation of the RE market is a prime LOD characteristic.
KL (105)-
“Good night, John Boy…”
Clot: you are the smartest and best
Sincerley,
chicagosuckup/5.75%load;1%12-b1;;2%expenses
Dollar falls after Beige Book survey
Yen steady as investors continue to eye stock prices
http://www.marketwatch.com/news/story/currencies-dollar-falls-after-feds/story.aspx?guid=%7B0E70B674%2D5551%2D4FDE%2D87C2%2DD3EF82BC52D9%7D
Late in New York, the dollar was quoted at 115.99 yen, compared with 116.53 yen late Tuesday.
>>
Will we see an interest rate hike?
NJGal (126)-
Septic systems were invented by the Romans. They are a safe, natural and efficient method of waste disposal (2000 years, and nobody’s come up with much that’s better!). Resist the temptation to have yours cleaned frequently, as aeration reduces its efficiency. Anaerobic organisms in the system break things down, and repeated exposure to air will actually “break” it by killing those organisms.
You will also appreciate no sewer bill after your first 3-6 months in the house (same with no water bill, if you have a well).
Like father….like son…
#28 Prince (Son of Cecil) Fielder
Proper Name: Prince Semien Fielder
Born: May 9, 1984 Ontario, CA
Height: 6-0
Weight: 260 lbs
ChiFi (131)-
5.75% load; 1% 12-b1; 2% expenses STILL beats 2-and-20!
Be honest with me…do you suspect inbreeding in any of your top-tier-wealth clients? If so, you are certainly providing them with a valuable service.
“What a waste it is to lose one’s mind.”- Dan Quayle
Lloyd Bensten wrote his place in history.
** Off topic ***
I need help. Does anyone know how or if it is possible to have excell or another program number something automaticlly?? I am trying to make labels with a series of numbers say 100-500 I don’t want to do it by hand.
Thanks
KL
Rhymingrealtor:
1st cell: Type in “1” in your first cell (let’s say that cell is B2)
2nd cell (which should be B3): Type in = (B2 + 1)
Copy and paste 2nd cell (B3) down your column.
NJ Gal, Congratulations on the home purchase. Hope all goes well and that you can settle in quickly and enjoy it!
Best,
RoadTripBoy
NJgal–you’ll know where your septic tank is when the grass gets green this spring. as per the emma bombeck book title, the grass is always greener over the septic tank.
must admit, i haven’t been following your home search that closely, but I wish you all the best. now that you’re on to renovating and decorating, you might want to check out houseblogs.net.
BklynHawk, he might just be one of those guys – I married a real man’s man – there is nothing metrosexual about him (although sometimes I wish he’d take just a little more interest in fashion – he wears the same jeans EVERY weekend).
Clot, thanks for that septic info – very helpful. We just found out the people haven’t cleaned the tank in 10+ years – now, I think that’s gross. But they have agreed to clean it, thankfully (and naturally, following inspection, they will repair or replace if need be). We also have a well, so no water bill. And an attic fan, so we’re hoping that until it gets very hot, that will cool the house less expensively than the central air.
PeaceNow, thanks for the link. I will check it out – I am starting my decorator’s notebook this weekend. I come from a family of natural artistic talent, several of whom just have a knack for interior design, so I will be taking advantage of their talents!
Well water tends to be harder than reservoir water, and it’s particularly noticeable for NYC escapees, so you may have to factor in a softening/filtration system. A nice plus to that is you’ll have filtered water at every tap!