From the National Association of Realtors:
Tighter lending criteria and fallout from the subprime loan debacle will lead to a healthier housing market with greater assurance that owners can handle mortgage adjustments, but higher loan standards will slow the housing recovery, according to the latest forecast by the National Association of Realtors®.
…
“Tighter lending standards will dampen home sales a bit, but by less than a couple of percentage points from initial projections. We still forecast 2007 to be the fourth highest year on record for existing-home sales, and housing remains a great long-term investment,” Lereah said.Existing-home sales are likely to total 6.34 million in 2007 and 6.52 million next year, in contrast with 6.48 million in 2006. New-home sales are seen at 904,000 this year and 935,000 in 2008, below the 1.05 million last year. Housing starts are estimated at 1.47 million in 2007 and 1.55 million next year, down from 1.80 million units in 2006.
“As home sales moderate, overall home prices will be essentially flat this year,” Lereah said. “The good news is that inventories remain well below the levels experienced during the last housing downturn in the early 1990s, and supplies are close to balance in many areas.”
The national median existing-home price will probably slip 0.7 percent to $220,300 in 2007, following a 1.0 percent rise last year. The median new-home price is projected to increase 0.4 percent to $246,200 this year, after gaining 1.8 percent in 2006. Modest growth is expected next year, with existing-home prices increasing 1.6 percent and new-home prices rising 2.0 percent.
“When you look at housing activity in 2007, especially during the first half of this year, the percentage change in median home price is being distorted as the composition of sales shifts geographically from high-cost markets to moderately priced areas, in contrast with the sales distribution a year earlier,” Lereah said. “Within given markets, most areas can expect minor price gains.”
From MarketWatch:
Realtors see home prices falling in 2007
U.S. home prices will probably fall this year for the first time in at least 38 years, the National Association of Realtors said Wednesday.
In its monthly housing outlook, the real estate industry group said tighter lending standards will cut into home sales even further than it had been projecting, driving prices lower.
Median sales prices of existing homes are now projected to fall 0.7% in 2007 before a modest 1.6% gain in 2008, the realtors said.
…
After adjusting for inflation, real home prices will probably decline for three straight years from 2006 through 2008.Meanwhile, the median sales price of new homes is expected to rise 0.4% in 2007 and 2% in 2008, the realtors said.
Q and A with Robert Shiller from Money magazine (via CNN):
Shiller: Mr. Worst-case scenario
Robert Shiller is worried about your home’s value, and that’s not good. A finance and economics professor at Yale, Shiller proved he could see a crash coming with his book “Irrational Exuberance,” which forecast the end of the 1990s stock bubble and hit bookstores in March 2000 – almost to the day the Nasdaq started to collapse.
Today, Shiller believes homes are roughly as overvalued as stocks were then and, once again, he’s worth listening to.
A research company he co-founded, Case Shiller Weiss, created the definitive index of housing prices. A newer venture, MacroMarkets, designs ways to hedge against risks like falling home values.
In short, no one else knows the history – and perhaps the future – of U.S. real estate prices better.
…
Question: So how rich can you get on real estate?
Answer: From 1890 through 1990, the return on residential real estate was just about zero after inflation.
Question: Excuse me? That’s all? Hasn’t it been higher lately?
Answer: Since 1987 it’s been 6 percent [or about 3 percent a year after inflation].
Question: So real estate doesn’t go up roughly 10 percent a year?
Answer: It can’t be true that homes rise 10 percent a year. If they did, in the long run no one would be able to afford a house.
Question: Let me grab a calculator. If real estate really rose 10 percent a year, a $25,000 home in 1957 should be worth roughly $3 million now.
Answer: And that flies in the face of common sense. In fact, I’m inclined to think there’s a good chance that the return on real estate will be negative, substantially negative, over the next 10 years because all booms reverse in the end.
Question: All right. We won’t call that a forecast either. So how should people think about their home as an asset?
Answer: Avoid concentration of risks. You need a house, but I would avoid a second one – or at least avoid an outsize house. Over-investing in real estate now would be a recipe for disaster.
My prediction came true, and no doubt will again next year (if Liareah isn’t in jail by then).
Next year: “We still forecast 2008 to be the 5th highest year on record…
Year after: “We still forecast 2009 to be the 6th highest year on record…
“As home sales moderate, overall home prices will be essentially flat this year,” Lereah said. “The good news is that inventories remain well below the levels experienced during the last housing downturn in the early 1990s, and supplies are close to balance in many areas.”
My lord….and this guy is the bull
I wonder what inventories will look like come August and September? How many more who can get out will get out, and list their houses for sale now.
Regardless of ones feelings for the NYT, front page is still front page.
BBB, didn’t realize that article made it to the NY Times front page.
http://graphics.nytimes.com/images/2007/04/11/nytfrontpage/scan.jpg
It’s above the fold, but below the tabloid Imus story with a 3-column-wide color photo…
Any updates on inventory? MBA adjusted weekly purchase index is slightly up. The mortgate rates are slightly up too.
#5 Unrealtor: Major change in attitude for the NYT’s
“It can’t be true that homes rise 10 percent a year. If they did, in the long run no one would be able to afford a house.”
I think this is a basic truth that many people forget. Some people see real increases in property values in some up-and-coming areas and then start to expect increases in all property values.
“How many more who can get out will get out, and list their houses for sale now.”
Are the buyers still there?
I live next door to two brand new McMansions shoe-horned into a dead-end street in Butler. No front or back yards, almost touching each other.
Is there anyone out there that would buy them now?
“My lord….and this guy is the bull”,
Chi,
When bull markets turn, the bulls attempt to decipher and translate negative news into positive news. They spew so much idiotic rhetoric, they actually believe their spin.
On the other hand, the H-Builder’s have their glasses adjusted; never, ever, usually, etc… My fav, Don Tomnitz…… it s*cks and will for the remainder of 2007. Just classic.
“Are the buyers still there?”
schabadoo [9],
I stated this over a year ago. Since, I do not recognize your logon, I’ll repeat.
There will come a time when the phone lines are jammed, in realtors offices, with sellers. The realtor will hang up the phone and scream; “Sell?”, “Sell?”, “Sell to whom?” “There are no buyers, they already have been sucked into this frenzy”
#9 They will try to get out, whether they are successful or not is another story.
What will kill recent hoembuyers or people that havs used theri homes as ATM’s are long term homeowners who have been prudent, and who wish to sell. The can accept dramatically less prices, and many will
“Sell to whom?”
A perfect description of the downside of a high homeownership rate.
jb
schabadoo – “Is there anyone out there that would buy them now?”
Only two things are infinite, the universe and human stupidity, and I’m not sure about the former. – Albert Einstein
Have no doubt, the uninformed are dwindling in numbers but they are still out there. People are still listening to Realtors who stand by the ‘its a great time to buy’ line. Buyers are still taking out ARMs, no interest loans, etc.
I am watching some homes on lovely lots sit on the market for hundreds of thousands dollars less than newer homes or remodeled homes on microlots that are selling at a decent clip. Granite countertops and stainless steel fridge’s with a plasma over the fireplace are still selling at top dollar. The “I Want It Now” generation is alive and well.
The grass keeps growing, slowly……
Don’t know how many of you took note of JB’s item on increasing foreclosures this morning (Or CR’s last week) but consider this:
Houses taken in foreclosure are considered sales.
Most, if not all, of those houses being foreclosed on at the moment were bought with something that very much approximates 100% financing.
I don’t know how these sales are recorded, but if the sale of a foreclosed house to the lender is recorded as the amount necessary to satisfy the debt, foreclosure sales could actually help support home prices in the stats.
If those sales are recorded at the typical lender auction bid price of $100, depending on the market, that could show up as a real negative in the stats.
The CR story noted that 15% of existing sales in California were foreclosures.
If the same were true for NJ, and sales were recorded at $100, I would guess the median price paid for an SFH could drop about 5% in a hurry.
Anyone know how this works?
Yeah I am new here. Nice site.
I got curious after watching Open House after Open House every weekend with absolutely no buyers coming by. It took them 18 months to finish construction of the 1st house…can’t help thinking they missed the market.
Missed the market?
My POS rental Cape sits next door to a multi-family on a busy corner that sold last June and has been vacant ever since. Notices went out to the neighbors that the new owners plan to demolish and build two houses less than 15 ft. apart (that will require a variance, even in our lax-zoned builder tear-down heaven town).
These owners do not appear to be affliated with the local builder/developers, who I assume know better. I bet the clock is ticking on their option ARM that financed their speculative foray into residential real estate. How’s that for timing?
Fed
Considering using forecasts to help explain rate policy
still deadlocked on adopting specific inflation target
staff cuts Q1 GDP forecast, raises inflation outlook
FOMC says fundamentals in place for capital spending pickup
FOMC sees modest growth in coming quarters
FOMC agreed further hikes may be needed to quell inflation
FOMC says will not be satisfied if inflation stays steady
FOMC worried downward trend to inflation had stalled
FOMC saw downside risks to growth, upside risks to inflation
FOMC wanted new statement to show they are dependent on data
From the Fed:
Minutes of the Federal Open Market Committee March 20-21, 2007
Housing starts declined in January, extending the downward trend that had been in place since early 2006, but bounced back in February. However, adjusted permit issuance in the single-family sector continued to step down, suggesting that builders were still slowing the pace of new construction to work off elevated inventories. The inventory of new homes for sale remained high, although cuts in residential construction in the last few months had reduced the number of unsold homes. As at the time of the January meeting, available data suggested that housing demand was stabilizing. Sales of both new and existing single-family homes in recent months were, on balance, in line with the pace seen since mid-2006. However, a tightening of standards for subprime borrowers in recent weeks seemed likely to restrain home sales. House price appreciation had slowed further, with some measures showing outright declines in home values.
…
At its January meeting, the Federal Open Market Committee maintained its target for the federal funds rate at 5-1/4 percent. The Committee’s accompanying statement noted that recent indicators had suggested somewhat firmer economic growth and that some tentative signs of stabilization had appeared in the housing market. Overall, the economy seemed likely to expand at a moderate pace over coming quarters. Readings on core inflation had improved in recent months, and inflation pressures seemed likely to moderate over time, but the high level of resource utilization had the potential to sustain inflation pressures. The Committee judged that some inflation risks remained. The extent and timing of any additional firming that might be needed to address these risks would depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
OK, I’m going to rant just a bit now.
Can we please stop referring to “POS capes”?
I would take my 1958 cape over any of the newer houses being built in my neighborhood. Yes, it needs a lot of updating, which we’re doing….over time….in cash….as we have it, rather than taking equity loans. The house is solid, timeless, has plaster walls and “good bones.”
It’s dormered, has two full bathrooms, I can have guests over and they can be on a different floor, and it’s a very livable house.
So why the heck is everyone referring to capes as “POS”? If you’re going to bash McMansions for being crappy, why pick on perfectly good, solid, well-built houses?
#20 We call them POS’s exactly because not only have they not been updated, but more importantly they have been neglected over the years.
Fundamental things like roof, updated electric, windows plubing issues etc.
Nevertheless people were asking and getting big bucks for these things, hence the term POS Cape, also refers to colonials and ranches.
I agree I too like the style and functionality of a cape, and the the ones with 3 beds down and 1 up, are very attractive, and as you say many have 2 baths.
JC, when people refer to a “POS cape” they’re referring to stuff such as this:
http://www.realtor.com/Prop/1074267469
Price is also a factor — if a cape was priced at $400K, it could be a decent value, even if dated. But price it as if it’s a 5 bedroom mansion (see above) and it becomes a “POS cape.”
Here we go again.. From Bloomberg (no link)..
New Jersey Lawmaker Seeks Halt to Subprime Loan Foreclosures
By Adam L. Cataldo
April 11 (Bloomberg) — New Jersey should stop all evictions
and foreclosures against homeowners with subprime mortgages from
certain lenders for as long as six months, a state lawmaker said
today.
Legislators and state law and banking department officials
need time to understand how problems with subprime loans could
affect New Jersey, Assemblyman Neil Cohen said in a statement.
Cohen, a Democrat from Union, sent a letter to state Attorney
General Stuart Rabner asking him to issue the moratorium.
“Without government intervention, we will, without a doubt,
see a dramatic increase in the amount of New Jersey homeowners
defaulting on their mortgages,” Cohen wrote. “We need to act
before the effects of this meltdown triggers absolutely chaos in
the entire lending industry and undermines our entire economy.”
Subprime mortgages are sought by and given to people with
poor credit histories or a large amount of debt. Those borrowers
are typically charged a low interest rate on their initial
mortgage payments, and then see that rate increase over time.
U.S. subprime borrowers are falling behind on their
payments at the highest rate in four years, according to the
Mortgage Bankers Association, and more than 40 mortgage lenders
have closed operations or sought buyers since the start of 2006.
“This crisis transcends all social, economic, ethnic and
geographic borders in New Jersey,” Cohen wrote. “No one wins
when a home goes into foreclosure, and the current rate at which
subprime loans are defaulting is only hastening the market’s
collapse.”
Foreclosures
Foreclosures involving firms that are going out of business
or are in jeopardy of closing would be covered by the moratorium.
Cohen said that includes mortgages issued by New Century
Financial Corp., Accredited Home Lenders Holding Co., Fremont
General Corp., Countrywide Financial Corp. and Wells Fargo & Co..
If the attorney general’s office can’t put a halt to the
foreclosures, they should advise Governor Jon Corzine about
issuing an executive order barring them, Cohen said.
David Wald, a spokesman for Rabner’s office, said they had
just received Cohen’s letter and had no immediate comment.
Cohen, who chairs the Assembly’s committee on financial
institutions and insurance, said in an interview he still plans
to hold a special hearing on April 19 on the subprime home-
lending market and how its problems could affect the state.
Industry and state officials along with representatives from
consumer groups are expected to testify.
“The subprime market in New Jersey has always been a
rather heavily trafficked area,” said Cohen. “Part of the
reason for the hearing is how many of these do we have out
there?”
Lawmakers in California, the most populous U.S. state, held
a special hearing last month on subprime home lending. Ohio,
which had the highest foreclosure rate among the 50 U.S. states
at the end of 2006, plans to issue $100 million in taxable
municipal bonds this month to help homeowners refinance mortgages
they can’t afford.
Same boat; two houses so close to each other they seem more fitting in Queens.
http://new.gsmls.com/media/getImage.do?mlnum=2373071&res=highres&num=0
If you would like, you can email the Office of the Attorney General through this link:
http://www.nj.gov/lps/formmail.htm
#25 Nah just as fitting for Ft. lee, Pal Park and the Ridgefields.
Regarding #24, delaying for 6 months will simply do just that – delay a whole wave of foreclosures by another 6 months. So it doesn’t solve the long term problem. I suppose it gives a chance for some lenders to dump their portfolios onto someone else.
#23 JC Dated is one thing, and over the years I have seen a small amount of homes that were lovingly taken care of, but never updated, right down to the furniture, plastic slip covers and doilies.
I don’t have a problem with that, but a POS, one knows one when they see it.
Re #22, 23, and 29: My house was a #29 when we bought it, and 10 years in we still haven’t gotten everything done. When we moved in, it had 100 amp electric in a fusebox, 2-prong outlets throughout, 9-year-old water heater, and nothing at all updated since 1975. I am told that there was also black-and-gold flocked wallpaper in the living room before the house went on the market by the previous owners, but I cannot confirm this. We’ve since upgraded the electric to 200 amp service in a huge expandable panel, painted multiple times, replaced the water heater, oil burner, and replaced the siding and windows, all the exterior doors, and the garage door and opener. It seems like it never ends, and all these “guts of the house” updates have precluded cosmetic updates like new flooring and updating the kitchen and baths. OTOH, if God forbid I had to sell it, I would probably list it at around $429-$449K in the current market — down from around $480K that houses like mine were listing for at peak price. We bought in 1996 at just about the bottom of the market and refinanced 3x to get to a 4.75% 15-year fixed, so we are sitting relatively pretty.
Reuters: Lawmakers propose aid for subprime borrowers
WASHINGTON (Reuters) – The federal government should offer troubled borrowers hundreds of millions of dollars to bail them out of subprime mortgage loans, several leading Democratic lawmakers said on Wednesday.
More at: http://www.reuters.com/article/ousiv/idUSN0625933120070411?src=041107_1423_FEATURES_subprime_crisis
We have one next door to our ‘POS cape’ at the shore. It’s new construction @ $799. It’s much nicer than ours. Buy it will never sell, especially next to a crapbox like ours.
They paid $250k for the land. Realtor told me contsrtuction would cost about $185-200k. The granite is so nice…
What kind of construction loan is needed for a project like that?
I often think people use the terms Cape Cod, colonial, etc. because they have to with sites like Foxton’s.
Like this “colonial” for instance…how is this a colonial?
http://www.foxtons.com/search?price_from=300000&price_to=450000&search_type=SS&bedrooms=3&order_by=price%20desc&bedrooms_max=6&location_ids=26,6,4,2,205,196,107,66&search_form=map&per_page=10&search_type=SS&property_id=369849&submit_type=search
“Schumer spoke as chairman of the Joint Economic Committee, a joint committee of Congress, and appeared with Democratic senators Robert Menendez of New Jersey and Sherrod Brown of Ohio.”
From post# 31,
This lineup is more dangerous than the 1927 Yankee lineup.
And, some people have “interesting” decorating tastes and “upgrade” their capes/colonials with various siding treatments and faux flourishs that are breathtaking, to say the least, for someone from the midwest like myself.
JM
BklynHawk [33],
Fell of my chair. Now that’s a true “POS”. How about the rent/buy calculator for this gem. They truly have to be kidding.
#33 BklynHawk
LOL. If that’s a colonial, then Abe Lincoln’s log cabin is a Victorian :)
Regards,
Jersey4Life
latest suburban pick-up line:
“My POS or yours?”
From Bloomberg:
Subprime `Debacle’ Will Delay U.S. Housing Recovery
Home purchases are being derailed as subprime lenders stop funding mortgages or go out of business, increasing inventory and weakening demand, Yun said. In the last 12 months, at least 40 subprime lenders have halted operations, gone out of business or sought buyers amid rising borrower defaults. On April 2, Irvine, California-based New Century Financial Corp., the largest independent subprime lender, filed for bankruptcy.
“We’ve been getting reports from realtors out in the field about home closings not going through at the last minute because of loan problems,” Yun said in an interview. “That impacts all homeowners because it affects prices.”
#40 JB Family member who is a a para-legal at a Bergen Co law firm, tells me that they have had a number of instances where the funding was pulled the day before, and 2 the dat of closing.
#33 Is that for real? That doesn’t even qualify as a POS cape…maybe a garage or a doghouse.
Any one has a clue on why the Construction is hiring 50k when all builders are in a bad shape?
#33 That is definitely the POS of the week.
schabadoo #25, sheesh, that “house” is an eyesore.
BklynHawk [33],
“Like this “colonial” for instance…how is this a colonial?”
Obviously, this was originally a privy in Colonial times and has been updated to include modern plumbing.
But next to #33, #25 is a beauty. Wow, you can sell a shed on Foxtons?
From Reuters:
NYC foreclosure rates hit Brooklyn, Bronx hardest
Homeowners in New York’s predominantly minority neighborhoods of Brooklyn and the Bronx are more likely than other borrowers to have subprime mortgages and many now face foreclosure, according to a university study.
The rate of subprime home purchase lending in New York City rose to about 23 percent in 2005, and in some poorer neighborhoods the share of new home purchase loans was 50 percent or higher. The national average is 17 percent, according to a New York University draft report on mortgage foreclosures in New York City presented on Wednesday.
“The risk of foreclosure is likely to increase as the housing market cools,” said Jenny Schuetz, a research fellow at NYU’s Furman Center for Real Estate and Urban Policy. “Subprime borrowers are more likely to be in lower-income households, non-white and in houses in rapidly depreciating markets.”
“Any one has a clue on why the Construction is hiring 50k when all builders are in a bad shape?”
MJ,
Commercial?
Dear Senator Schumer,
I think it is wonderful that you would like to help troubled borrowers! Can you please use your own money?
Lereah, the chameleon is at it again. Home prices are expected to decline marginally in 2007. In real terms, they will decline 3 years blah blah blah. If we add in the incentives being offered in the form of upgrades and closing costs, etc. it’s a bloodbath.
Maybe I can should buy that no-respect-for-intellectual-property-rights brand flat-screen TV from Walmart, since I need to save less for a down payment. The depreciating US dollar will makes imports expensive eventually, right?
Just imagine how bad things must be if Lereah is forecasting price declines. Just imagine how high the ACTUAL price declines will be for the next two years.
I think that construction is hiring back workers that were laid off because of the weather. Plus some people are stuck with overpaid lots and they need to build on them or risk foreclosure. Finally, there’s always additional springtime remodeling/construction.
People should not call capes “POS” just because they’re capes. If they’re updated and maintained well, capes are fine.
That’s the problem w/alot of young potential homeowners who shun capes. They feel they are “entitled” to a 4BR/3BA colonial as a starter home. If that’s their mindset, they have no business whining about home prices in this area…they should be in a less expensive part of the country.
IF ITS PRICED CORRECTLY, a cape should and can be a wonderful starter home like a lot of my friends have.
JC, don’t sweat the noise sometimes you find here.
UnRealtor
What’s amazing is there are two of them that are exactly the same and within 10-15 feet of each other. On the smallest lots I’ve ever seen.
#53 Speaking for myself, I only call Cpaes POS’s if they are one, it has nothing to dow ith the fact that it is a cape. In fact as I have mentione earlier I like Capes.
You might also recall that I call Colonial’s POS’s and again that only applies if they are, it has nothing to do with the style of house.
If you like we can call them cra**y Capes, cruddy Colonials, and of course rancid ranches.
Home Seller – do you make a distinction between young twenty-something first time home buyers with, say, 4-5 years of earnings under their belt vs. thirty-something first time home buyers with, say, 14-15 years of earnings under their belt?
Is it wrong for a couple who has $150k to put down and $150k+ in annual HH income to expect to be able to buy ‘more house’ than a couple with $50k to put down and $70k+ in annual HH income?
People should not call capes “POS” just because they’re capes. If they’re updated and maintained well, capes are fine.
I don’t think there is anything inherently wrong with a cape. IMHO, starter capes get a lot of negative attention here because they epitomize the pure ridiculousness and sheer excess of the housing bubble. Starter capes experienced some of the greatest appreciation of all forms of SFH’s, because they are the only form of SFH that even approaches affordability for first time buyers.
Quite frankly, “Starter” and “450 thousand dollars” simply don’t belong in the same sentence. After all, a $450 starter cape purchased with a traditional mortgage would require $90k down and require an income of $120k under traditional affordability guidelines to support. * Many of these aren’t’ updated or well maintained.
POS is a relative term. For $280k, a smallish cape is a perfectly fine starter home where once can build equity as they begin to climb the property ladder. For $450k, a starter cape becomes a POS.
* Assumes 28% of income allowed toward housing. $7k in taxes and a 6.25% mortgage rate.
#33 BklynHawk,
don’t you know how real estate listings work?
Small house w/ dormers : cape
Small house w/ porch: bungalow
Pointy roof or any beaming on the outside of the house: tudor
absolutely everything else: colonial
#35, BklynHawk:
“Interesting” is an understatement of majestic proportions. I’m always amazed at the lengths people go through to truly uglify their houses. It’s almost like they’re saying to themselves, “What can I do to make my house more ugly today?”
“I don’t think there is anything inherently wrong with a cape”
Renting [57],
I agree. The perception gets distorted, rightfully so, when a price tag of $450-$500k is applied. At this price, it will always remain a “POS” to me. A decent cape in NNJ is basically a starter home, $280-$320K. However, I would pay more if the basement was filled, from floor to ceiling, with 100 oz. gold bars.
#53: I’d echo what a lot of people who’ve responded to your valid points. “POS capes” is meant as a sort of code-word on this site, more a reflection of posters’ views of how absurd and untethered to economic fundamentals real estate prices have become in northern New Jersey than necessarily a view that a Cape Cod house is automatically a POS. You’re absolutely correct in noting that there’s nothing wrong in a nice Cape Cod serving as a starter home, or that a well-maintained Cape Cod is a fine place to call home. As others have stated before me, however, it’s when these Cape Cods — or ranches, or condos, or whatever — are being marketed at ridiculous prices that are unaffordable to the market to whom they should appeal to the most (i.e., first-time homebuyers) that gets the dander up for folks here. Basically, the sellers of the “POS Capes” are charging BMW prices for what is, essentially, a Honda Civic or Toyota Corolla. Civics and Corollas are fine cars for what they are and if properly priced, but they aren’t BMWs and if they are priced the same as a BMW then they are rip-offs.
Also, that some folks focus on Cape Cods has to do with what’s on the market in the towns where they live (or are looking to buy). I live in Hoboken, where the equivalent to a “POS Cape Cod” would be a “POS walk-up conversion.” To use my car analogy again, the Cape Cod and the walk-up offerors are trying to sell the real estate equivalent of a Honda Civic at BMW prices. It’s senseless and due for a major correction.
BBB #43
Nah, here’s an even better POS:
http://homes.realtor.com/search/listingdetail.aspx?ctid=27103&typ=1&sid=1b4ba0e1c5a44f4e8cf8b956bed1d474&pg=7&lid=1059936768&lsn=70&srcnt=110#Detail
Though I wonder if the price is more for the land – a prospective knock-down and rebuild.
#56 Seneca
I agree with your point, but I was just wondering how you could thirty-something and be saving for 14-15 years. I mean, I’m 30 and after paying off some loans and debt, I’ve only been saving for about 4 years.
I thought that was pretty good, so I’m just curious
#62 scribe
That price is absolutely ridiculous for that price. You would have to be out of your mind to buy that thing at that price.
Pigpen #58, that’s too funny, and it’s true.
Glen,
That’s why I nominated it for “POS of the week.”
Even if it’s being sold for the land, the asking price is on the high side.
From MarketWatch:
NY Times sees $152-$169 mln in plant closure charges, 250 job cuts
The newspaper publisher also will cut 250 jobs in the Edison closure and the consolidation of its print operations to its plant in the New York City borough of Queens, according to a filing with the Securities and Exchange Commission.
Audio from MarketWatch:
Subprime Surprise!
Wachovia economist says ‘many did not expect subprime market to be as bad.’
Re: #53, #57, and #61: First of all, Eisbär, I love your screen name. Yes, I am a Knut-o-maniac.
I absolutely agree that $450 is insane for a cape, even a fairly large one like mine. When we first refinanced in 1998 and our appraisal came in at $240K, thus letting us eliminate PMI, I was floored. I’ve watched prices climb, I’ve watched houses like mine in about the same condition go for upwards of $450K and been appalled. There is just no way that a house like this is almost a half-million dollar house; even one with granite countertops and subzero appliances, let alone mine with the harvest gold cooktop, the geometric yellow sheet vinyl floor, the olive green fixtures in the upstairs bath and the black-and-seafoam-green tile in the downstairs.
The other side of this, of course, is that we have been CLOBBERED on revaluation, because of the higher appreciation of smaller and older houses.
As for whether these are “starter homes”, I wonder what that means. I have neighbors in their 60’s who raised their two kids in their tiny 3-bedroom 1-bath ranch. The previous owners of my house raised their kids in this POS cape. My house has four bedrooms and two bathrooms, for God’s sake, and a finished basement family room. How much freaking room do people need? At a time when just heating a big house is getting more expensive, and quality jobs are diminishing rapidly, is it even FAIR to raise your kids in a 3500-square-foot house where each kid has his/her own bathroom when they can never, ever expect to duplicate that lifestyle?
No link but thought this was interesting coming off the wires:
“Real estate riches flow into newspapers
April 11, 2007 5:27 PM EDT
CHICAGO (AP) – Subscribers, shareholders and advertisers may be leaving newspapers in droves but real estate moguls, of all people, are sinking part of their fortunes into the business.
For better or worse, that gives outside magnates a growing role in newspapers at a time of dramatic change for an industry long dominated by traditional media ownership.”
Am off to write a nasty letter to Senator Schumer.
Errr… ooops!! It’s a Java script so I don’t think I can paste here.
Go to the front page of MarketWatch and scroll down a little to Real Estate for the link.
Sorry, Rich
Hate Capes, sorry. Not a size issue, I just don’t like the layout. I prefer all beds upstairs, even a higglety pigglety old 1800’s house with add ons is preferable.
Since James has a pad in Kraków (for which I am jealous since my paternal grandfather’s family is from the Kraków area and my paternal grandmother’s is from Lwów), this [a href=”http://www.marketwatch.com/news/story/citigroup-seen-transferring-back-office-jobs/story.aspx?guid=%7B609F8686%2D6BAE%2D408E%2D91FA%2D8684EBC11F39%7D”>story about Citibank back-office jobs being moved to Poland[/a] may be of interest.
JC: Actually, I took my Internet name from a 1980s Swiss New Wave song [a href=”http://en.wikipedia.org/wiki/Stephan_Eicher”>called Eisbär[/a] by Grauzone. It’s a very nice song, with a sort of a proto-Pixies feel to it. Anyway, your mention of “Knut-o-Mania” is the first I’d heard of THAT particular Eisbär :-)
ok, my HTML skills suck — so here goes again:
http://www.marketwatch.com/news/story/citigroup-seen-transferring-back-office-jobs/story.aspx?guid=%7B609F8686%2D6BAE%2D408E%2D91FA%2D8684EBC11F39%7D
Also, the story about real estate riches flowing into newspapers is an AP story on the Editors & Publishers website –> http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003570627
I knew that one of the Toll Bros. was one of the folks who purchased the Philadelphia Inquirer and Philadelphia Daily News a year or so ago (not coincidentally, Toll Bros. headquarters is in the Philadelphia suburb of Horsham, PA). Accordingly, I take whatever those papers have to say about RE (esp. in/around the Philadelphia metro area) with a massive grain of salt.
Fed Minutes Say Rate Increases May `Prove Necessary’ (Update3)
By Scott Lanman
April 11 (Bloomberg) — Federal Reserve officials concluded last month that higher interest rates could still be needed even as they removed a reference in their policy statement to tighter credit.
“Further policy firming might prove necessary to foster lower inflation,” the Fed said in minutes of the Open Market Committee’s March 20-21 meeting, released today in Washington. “But in light of the increased uncertainty about the outlook for both growth and inflation, the committee also agreed that the statement should no longer cite only the possibility of further firming.”
http://www.bloomberg.com/apps/news?pid=20601103&sid=aj1pn8.gVwVQ&refer=news
…………and on March 21, every bobblehead on CNBC was convinced that the fed, altering their statement, would be cutting. If they cut now, they lose all credibility and the long term will act accordingly. No friendly fed,no WS bonuses, no subprime, no alt a, etc… When is spring coming?
Eisbar (74)-
Here’s the skinny on the “other” Toll. I especially dig the “non-compete” arrangement for someone who was completely out of the daily operations of the company at the time it was offered:
Bruce E. Toll was President until April 1998 and Chief Operating Officer until November 1998. He is the founder and president of BET Investments, a commercial real estate company, and the owner of several car dealerships. Mr. Toll is also the Chairman of Philadelphia Media Holdings, L.L.C., which is the parent company of the Philadelphia Inquirer and the Philadelphia Daily News.
Even though Mr. Toll is involved in the aforementioned activities, the Board still felt it worthy to effect an “Advisory and Non-Competition Agreement” with Bruce Toll back in November 2004. The Advisory Agreement provides, among other things, that (a) the Company will retain Mr. Bruce E. Toll as “Special Advisor to the Chairman” for a period of three years at compensation of $675,000 per year, (b) he will be paid $675,000 for each of the three years following the term (or termination) of the Advisory Agreement, too (so long as he does not violate certain non-competition and other provisions—Ha! Ha!), and (c) he will be entitled to group health insurance of the type and amount currently being provided to Company executives.
In addition, Mr. Bruce E. Toll was designated a participant in the Company’s Supplemental Executive Retirement Plan, which provides an annual benefit of $230,000 for 20 years.
During fiscal 2006, the Company provided Bruce E. Toll with additional perquisites with an estimated value of approximately $22,665. Such perquisites include group health insurance and contributions to the Company’s 401(k) plan. It is expected that the provision of perquisites like these will continue in fiscal 2007. [Ed. note. If he is no longer involved in the day-to-day affairs of Toll Brothers, why is the Company still making 401(k) contributions on his behalf? (Rhetorical) Might it be his last name is Toll?]
The Audit Committee, concerned with “the safety and security of Company executives while traveling on Company business” and the extensive amount of time lost due to such travel, approved the chartering, from time to time, for business purposes, of an aircraft that is owned and operated by Grey Falcon, LLC and Grey Falcon Management, L.P., companies solely owned by Robert I. Toll and an affiliate of Robert I. Toll (surprise!). In fiscal 2006, Mr. Toll’s companies have received or are entitled to receive fees for chartering the aircraft of approximately $323,505 from the Company.
As if the senior executives do not make enough money–in fiscal 2004, the Company adopted an unfunded SERP. The SERP provides for annual benefits of $500,000 for Robert I. Toll, $260,000 for COO Zvi Barzilay, and $250,000 for CFO Joel H. Rassman.
The Toll rundown above is compliments of Seeking Alpha.
Wow, my jaw dropped when I saw the headline on the front page of the NYT!
Awesome, because it will continue to add to the impact already being felt by all the truth put out there on blogs like this.
Clotpoll (#78): Most interesting, indeed. I had a gut feeling that Toll Bros. finances would provide a FIELD day for trial and defense attorneys should they ever get sued for anything, ahem, “untoward.”
Advice to other attorneys (and attorney wannabes) out there: brush up on your knowledge of ERISA and employee benefits. S**t’s boring as hell, but you’ll always get paid. ;-)
From where I sit, I think the RE industry’s influence on editorial content in any print venue is highly overstated. The single biggest source of lost revenue for newspapers is the decline in classified RE advertising; it’s all gone to the internet. The trend is long-term and irreversible. Both my industry and print media know it, and there is no love lost between the two. There is no incentive that print media can offer RE- including becoming our stooges and mouthpieces- that will ever bring our marketing dollars back.
I also believe that print has fallen into the TV-news trap of seizing upon any theme that can be used to frighten and manipulate the public. Telling an audience that is 70%+ invested in homeownership that their investment is rapidly going a’crapper definitely qualifies as frightening…and manipulative.
If anything, the recent 180-degree turns of opinion on RE by pubs like the NY Times smacks of sour grapes and tit-for-tat. If they can’t bring us back into their camp, they’ll at least get the pleasure of pillorying us in the arena of public opinion. I’d imagine that right about now, nobody in the editorial department of the Times would even take Barbara Corcoran’s call (although- come to think of it- I wouldn’t either).
Print media is dead. It will never come back. The quality of writing and editing displayed in American newspapers (with the possible exception of the WSJ) is execrable. The grammar, style and usage of the average American print journalist’s work product is unreadable…and getting worse by the day.
Bloomber Radio had lot of talk today evening about subprime. They had Bob Menendez & Neil Kohen on radio. Both were proponent of helping homeowners who are facing foreclosure.
SG (82)-
Give ’em a refrigerator carton and 40 square feet under an overpass.
Clot [83],
In 2005 there would have been a bidding war.
Clot # 81
“Telling an audience that is 70%+ invested in homeownership that their investment is rapidly going a’crapper definitely qualifies as frightening…and manipulative.”
Clot, slight exaggeration, no?
The NYTimes article I read said that anyone who decide to rent rather than buy in the last two years made a good decision. As for those who did buy in the last two years, I am not sure what percent of the 70% of home owners that is, but I bet its relatively small. Nothing in the article should make any longer term home owners crap in their pants. Maybe get angry that they aren’t going to get peak prices on their homes should they choose to sell in the next few years, but no reason to whip out the Depends.
That being said, I agree 100% with you assessment of the quality of writing and editing displayed in American newspapers today, including and especially the NY Times and yes, WSJ is the exception.
http://www.marketwatch.com/news/story/story.aspx?guid=%7B2569DC3A%2D31C7%2D48DA%2DB15A%2DD83D4B31AFB1%7D&dist=rss
I’d rather bet it all on black in A.C.
Glen #63
Some people have conservative fiscal values (max out your 401k, save for a rainy day/emergency fund/future home purchase before buying another pair of $300 jeans) instilled into their minds from early childhood.
Its certainly not popular for Generation X to follow the conservative approach, and seems even less popular among Generation Y, but there are some who find a way to save from the first pay check on.
It means living with roomates rather than on your own immediately after college, it means getting your drinks from the bar rather than paying for table service at clubs/bars, it means getting a new Civic rather than leasing a 3 Series BMW when you get your first promotion, etc. etc. It’s not easy and in a world where you need $700k to buy the house your parents paid $55k for 30 years ago, it hardly seems like it was worth saving all that time.
For the record, I have nothing against Cape Cods. I’ve seen some that have been very nicely updated on well kept lots. I have also seen some that are large scale doll houses with original shag carpeting from 1972 and “remodeled” kitchens, so labeled because they replaced the cabinet door knobs in 1992. These places don’t warrant half a mil asking prices but many in Essex and Union County feel free to ask for that and more.
Uh, how come we have NO private equity groups rising to the challenge, here?
Waiting to snap up those Alt A’s, aren’t ya, ya buggers. Let the hysteria do the work. 50/50 chance at half price buy, with 70% collections.
Seneca (86)-
Yep, I probably overstepped a little. Hard to stop when I get the momentum going. Let’s see, however, if the Times ratchets up the rhetoric over the next few months.
On the other hand- to be fair- I think the real story this summer will be so scary, no hyperbole will be needed. Much as we all suspect, there is no Spring Market “rebound”. There will not be a Spring Market. I’ve been able to flush thru all but one of my current listings by convincing my clients to capitulate. Whatever prices we’re getting now (which really aren’t that bad) are vastly superior to what we’ll be seeing after Memorial Day, when the sellers who are left high-and-dry rush for the exits. I think we’re cruising for another 10% across-the-board drop…and fast.
The one bright spot in all this is that I dropped an entry-level condo from 170K to 164K and quickly got showings and a good offer. I was beginning to think there weren’t ANY entry-level buyers at all out there.
Best real-life RE agent story of the past week: today, an agent presented me with a 375K offer, with a mortgage pre-approval for 100% financing attached. Even better, the approval was dated February 19, 2007 (pre-subprime-media-meltdown, which was March 2). I told the agent I wasn’t even going to present the offer until I verified the continued existence of this buyer’s 100% program. The agent was flabbergasted, so I explained what’s been happening over the past few weeks. Her reply? “Really? Is that so? I didn’t know…”
JC..I love that black and seafoam look in your bathroom. Vessel sinks are for wusses, anyway. Double vessel sinks = seller is a future landlord waiting for enlightenment.
Enjoy the kitchen floor, too. It may never be so easy to brush off damage to it.
Bob Toll’s description of Pennsylvania…”two cities Philadelphia and Pittsburgh, and everything in between is Alabama. The only place where there was a lynching north of the Mason/Dixon line.”
Bob Toll’s description of New Jersey….”those people vote in the people in government so they get what they deserve. New Jersey is in trouble and is sinking fast. McGreevey started the Highlands Act and as a result there is going to be restrictions on the ability to build new suburban housing. As a result, there is not going to be a sufficent amount of population available to work for the companies in NJ. Eventually, the companies will just give up and move down south.”
On housing as a personal expense…”we are moving to the paradigm seen in the UK where 45-50% of income will be spent on housing. Kids, even after they are married, will continue to live with their parents. When the couples start working on their second kid, the parents will finally kick them out”.
Among other things, Bob Toll can go f—- himself.
“Print media is dead. It will never come back. The quality of writing and editing displayed in American newspapers (with the possible exception of the WSJ) is execrable. The grammar, style and usage of the average American print journalist’s work product is unreadable…and getting worse by the day.”
Clotpoll, I couldn’t agree more.
My guess is that 90% of newspaper content is not read these days; perhaps the sports section is glimpsed over. In the era of 24-hr talking heads on TV and the Internet, morning papers arrive stale. And the absence of eloquent writing is an eyesore.
The ‘copy-paste’ mentality is an easy recourse to throw rehashed content to the readers.
Couple points…
Seneca, I am in your boat. I’ve always been frugal (not cheap) w/my money like you seem to be. Good for you to have that much money saved and to be bringing in that much HHI. I do make the distinction between the two.
Most homes in NNJ are OVERPRICED whether they are a cape or colonial or ranch or whatever…it doesn’t make a difference. My point is that it seems like most people who have problems budgeting or saving money, still EXPECT to move into nothing less than a 4BR/3BA first home. This is sheer lunacy!
ChiFi (re #93):
Actually, wasn’t it James Carville that first made that quote? May not matter — it’s made its rounds so much that it’s practically public domain material at this point.
It’s also a fairly common attitude for folks in the Philly metro area re: the rest of the state. The term preferred by my family down there is “Pennsyltucky.” And “Pennsyltuckyans” return the favor wr2 Philadelphians and Pittsburghers.
Still, I agree that Robert Toll is a first-class douchebag.
#93:
Well, Bob Toll may not be popular around these parts, but he did nail the Pennsyltucky thing right on the head. However, I’d go a bit further and put Pittsburgh in the ‘Alabama’ section of PA as well… :)
“Really? Is that so? I didn’t know…”
Clot,
I could paste that quote > 100 times and it would not even come close to the amount of times I have heard it in the last couple of weeks alone. Does anyone read, listen to the news, surf the internet? anything… It’s almost like if no one knows is it not so? If the real estate market/ponzi scheme collapes and nobody knows does it happen?
Too deep for me.
KL
collapes = I dont know how to spell it. Falls down?
Its late
KL
Bob Toll’s description of New Jersey….”those people vote in the people in government so they get what they deserve. New Jersey is in trouble and is sinking fast. McGreevey started the Highlands Act and as a result there is going to be restrictions on the ability to build new suburban housing. As a result, there is not going to be a sufficent amount of population available to work for the companies in NJ. Eventually, the companies will just give up and move down south.”
This is first time, I have heard someone say, that Company locates to places where people leave. Traditional argument is people move to locations where companies are and that’s why we pay premium in NJ as there are many high paying companies in NJ.
It is funny seeing huge houses with no backyards. What do people do? Spend their whole day inside? ugh.
Home Seller, et. al.,
“Seneca, I am in your boat. I’ve always been frugal (not cheap) w/my money like you seem to be. Good for you to have that much money saved and to be bringing in that much HHI.”
All of my points are based on hypothetical people and situations.
I drew the distinction because of the shift in mentality for the “Generations” I mentioned. In 1960, the median age at first marriage was 22.8 for men and 20.3 for women. In 1980, the median age rose to 24.7 for men and 22.0 for women.
As of 2003, the median was 27.1 for men and 25.3 for women so you have many more couples who are getting married in their 30’s with significant savings and earnings under their belt. I have no problem with them demanding more house than their 20-something counterparts.
With all of my crybaby comments yesterday, I was sure I would have lured listentoallthecrybabywannabehomeowners out of the bushes but I guess s/he has better things to do?
Seneca #89
Thanks for your opinion. I really just like to ask questions like that so I know what other people are doing, so that I know what I have to compete against.
For the record, I do all of those things, and I’m not close to having 50k saved, but I’m doing it by myself, I am not married.
I guess in today’s world, that’s a penalty. It’s unfortunate.