From Reuters:
Fed seen on hold as credit worries rise
The U.S. Federal Reserve is expected to hold overnight interest rates steady and reaffirm concerns about inflation at its meeting on Tuesday, but may also acknowledge emerging signs of economic weakness.
Meeting against a backdrop of unsettled financial markets, the central bank faces the difficult task of acknowledging heightened uncertainty over the economy’s path, while reassuring jittery markets the expansion is sound.
The interest-rate decision does not appear to be in doubt. The Fed looks certain to hold the benchmark federal funds rate at 5.25 percent, the level it was raised to in June last year.
Markets, however, will scour a Fed announcement due at around 2:15 p.m. EDT for any hint officials are growing anxious that rising defaults rate in the U.S. subprime mortgage market and tightening corporate credit conditions could damage the economy.
“We think the Fed will walk a verbal tightrope, acknowledging the turbulence in financial markets and some additional risks to its growth forecast while maintaining a hawkish tone on inflation,” said Michael Darda of MKM Partners.
In recent statements, Fed officials have said housing market weakness and financial market volatility has not spilled over into the broader economy, and they have held to their forecast of steady if somewhat sluggish growth through 2007.
The economy grew at annual rates of 0.6 percent in the first three months of the year, and 3.4 percent in the second quarter of 2007. The Fed’s central forecast is for growth of between 2.25 and 2.5 percent for 2007.
…
Fed Chairman Ben Bernanke and his colleagues may take note of growing concerns about credit risk and shrinking liquidity in the housing and corporate credit markets, some analysts believe.
…
Fed officials have warned in the past that investors may have underestimated the risks they were taking and policy-makers are unlikely to view financial market swings as reason alone to lower interest rates.“Fed officials are very aware that much of the difficulty coming to the surface today is the result of bad decisions made over the last few years and thus will not want to be seen as bailing out bad actors and creating moral hazard for the next financial crisis,” economists at RBS Greenwich Capital wrote.
From Reuters:
ECB’s Kranjec warns on U.S. subprime dangers
Shockwaves from the U.S. subprime mortgage crisis could threaten consumer demand in the euro zone, European Central Bank Governing Council member Marko Kranjec said in an interview.
“If there is stronger turbulence, the demand of households could well be effected negatively,” Kranjec told the Financial Times’ sister paper, the Financial Times Deutschland, in an interview published on Tuesday.
Without the market turbulence, however, the euro-zone economy is healthy and the ECB interest rate policy stimulative, Kranjec said, in comments that add to expectations for a September rate hike.
“If you look at the fundamentals of the economy and fade out the recent turbulence in financial markets, monetary policy seems to be still accommodative,” the central bank governor from Slovenia said.
From Bloomberg:
Bernanke May Alter Rhetoric, Not Rates After Market Turmoil
Federal Reserve Chairman Ben S. Bernanke may respond to the latest squall in financial markets the same way he did when turbulence hit four months ago: with a change in words rather than policy.
Bernanke and his colleagues may suggest after their meeting tomorrow that the risks to economic growth have increased following the rout in stock and credit markets — just as they did after their March meeting.
When it comes to their focus on inflation and the outlook for interest rates, their message will likely be steady as she goes.
“This episode of turmoil is not enough to alter Fed policy,” says Laurence Meyer, a former Fed governor who’s now vice chairman of St. Louis-based Macroeconomic Advisers LLC. He sees the Fed holding its target for the federal funds rate at 5- 1/4 percent through the end of 2008.
By changing what it says, and not what it does, the Fed can show it isn’t oblivious to the 7 percent plunge in stock indexes since July 19 and the possible impact that could have on the economy. At the same time, the Fed can avoid being seen as losing its anti-inflationary zeal or as standing ready to bail out investors.
The risk is that such an approach may undercut financial markets still struggling to recover. It might also hinder the economy’s recovery to growth of 3 percent or so, from a sub-par 2 percent pace in the first half.
…
Housing continues to slump, while consumer spending, until now the bulwark of the economy, is slowing. Auto sales in July were at their lowest level for the month in nine years. Payroll growth slowed in July, and the unemployment rate increased.
“The chances of a recession have now risen to 45 percent,” says Lyle Gramley, a former Fed governor who’s currently a senior economic adviser at the Stanford Group Co. in Washington.
Damn, delayed. Sitting at the airport. At least we’ve got WiFi (that works) here.
jb
From MarketWatch:
Luminent Mortgage cut at UBS, end could be near
UBS downgraded Luminent Mortgage Capital, Inc. to sell from neutral and cut its price target to $0 from $9, saying that while the company is considering its strategic alternatives, it sees limited chance of success given the current environment. The broker told clients that management may be unable to restore investor and lender confidence after recently claiming to have “ample liquidity to manage its business” but then turning around and suspending its dividend, saying it’s experiencing a significant increase in margin calls on its highest quality assets and a decrease on the financing advance rates provided by its lenders.
From MarketWatch:
CIT Sees $45M-$50M 3rd Quarter, 4th Quarter Home Lending Charge-Offs
CIT Group Inc. said it expects to record $45 million to $50 million in home lending charge-offs in the third and fourth quarters, as it exits the home lending business “in an orderly fashion.” The New York financial services company said the charge-offs represent a 6.2% fair value adjustment on the home lending portfolio. CIT said it has taken steps to reduce new home loans. The company said it completed a $3 billion student loan securitization in July, and has nearly $15 billion in alternate liquidity sources: $7.3 billion in unsecured lines of credit and $7.4 billion in committed liquidity under ABS facilities.
“By changing what it says, and not what it does, the Fed can show it isn’t oblivious to the 7 percent plunge in stock indexes since July 19 and the possible impact that could have on the economy”
From post # 2,
A 7% plunge? Is this individual actually kidding. A miniscule 7% pullback and it warrants a fed comment? What until these markets get really juiced.
The fed should have been raising. Productivity increases are on the slide and unit labor costs are rising. The fed is also aware that food and energy increases are about as temporary as a hard 4% property tax cap in NJ.
The usual walk on the tightrope. Oh, and a reason to run stops on both sides of the market.
JB,
You’re coming back to a scorcher [weather, not markets]
BC,
Certainly looks that way. It was nice to be out of the heat for a while.
jb
Robert Says:
August 6th, 2007 at 7:01 pm
You are a Communist. Your the person that my mommy told me to stay away from.
Guan: I can’t imagine anything more capitalist. You are Ignorant, Idiotic and a Troll.
Tag you’re “IIT”
From MarketWatch:
U.S. Q2 productivity up 1.8%, unit labor costs up 2.1%
Productivity of the U.S. non-farm business sector rose at a 1.8% annual rate in the second quarter, the Labor Department estimated Tuesday. Economists were expecting productivity to rise 2.1% in the second quarter. Unit labor costs – a key inflationary signal – rose at an annual rate of 2.1% in the second quarter. Economists had expected a 1.6% gain. Real hourly compensation fell 2.0%. In the first quarter, productivity was revised to a 0.7% increase from 1.0% previously. First quarter unit labor costs rose 3.0% rather than the 1.8% increase originally reported.Compared with the same quarter a year ago, productivity was up 0.6% while unit labor costs rose 4.5, the fastest pace since the third quarter of 2000. Revisions to GDP data pushed the trajectory of productivity lower over the past two years.
From Bloomberg:
U.S. Productivity Rose 1.8% Last Quarter; Labor Costs Up 2.1%
U.S. worker productivity improved less than forecast last quarter as the economy rebounded, and labor costs over the last year jumped, a government report showed.
Productivity rose at an annual rate of 1.8 percent after a revised 0.7 percent gain in the prior quarter that was less than previously forecast, the Labor Department said today in Washington. A measure of labor costs increased at a 2.1 percent pace and was up 4.5 percent in the 12 months ended in June, the most in almost seven years.
Last quarter’s figures were overshadowed by revisions spanning the past three years that trimmed efficiency gains and boosted costs. Coming ahead of today’s Federal Reserve meeting, the report may reinforce concern among some policy makers that the decade-long productivity surge that helped curb inflation is fading.
“The long-term trends don’t look particularly encouraging,” Julia Coronado, senior economist at Barclays Capital Inc. in New York, said before the report. “Productivity is moving lower, and labor costs are rising. It does reinforce the Fed’s view that right now, they need to stay vigilant on inflation.”
Where is inventory built_up? I see it goes down everyday.
Here is the number of listings on realtor.com for a list of towns i tracked.
Date Total
7/17/2007 3,281
7/21/2007 3,256
7/24/2007 3,248
7/31/2007 3,183
8/3/2007 3,124
8/7/2007 3,081
The towns are:
Summit
Short Hills
Westfield
Princeton
Montgomery
Plainsboro
West Windsor
Cranbury
East Brunswick
South Brunswick
Marlboro
Bear Stearns files BK in the Caymans:
http://www.bloomberg.com/apps/news?pid=20601087&sid=awRQv0XawGk0&refer=home
IMO, pricing Yuan to market will kill productivity.
[11],
How is inventory/sales on a yoy basis? You’re simply showing seasonals.
The Gospel according to Matt Lauer this morning:
“There’s a housing bubble”
It’s finally hit MSM.
Female guest (forgot her name) suggested one of ways to sell house: Drop price 20% and conduct a 4 hour sale accepting closed bids.
“The Gospel according to Matt Lauer this morning:”
It may be time to buy.
CNN Money: A last chance to get rich in real estate?
http://money.cnn.com/2007/08/06/magazines/fsb/real_estate.fsb/index.htm?postversion=2007080706
From the WSJ:
How Street Rode
The Risk Ledge
And Fell Over
August 7, 2007; Page C1
Like Wile E. Coyote finding out that he hasn’t been running on solid ground, but over a cliff edge, Wall Street is now realizing its footing hasn’t been so firm.
A recurring characteristic of the recent trouble in financial markets is that many lenders, funds and brokerages were following statistical models that grossly underestimated how risky the market environment had become. The term for this is “model error.”
The genesis of the problem begins in subprime mortgages, or loans to risky borrowers. Wall Street had limited experience with subprime, which until the late 1990s was a much smaller fraction of the mortgage market. With the development late in the housing boom of subprime mortgages where borrowers needed to provide little or no documentation, and no money down, the market entered uncharted territory.
[snip]
In other words, splat.
http://online.wsj.com/article/SB118644819336989982.html?mod=loomia&loomia_si=1
Also from the WSJ:
Democrats Raise Heat
On Mortgage Overhaul
By CHRISTOPHER COOPER
August 7, 2007; Page A2
WASHINGTON — As a wave of mortgage foreclosures buffets financial markets and feeds voter economic anxiety, Democratic presidential candidates are jockeying to get ahead of the emerging issue. The latest, Democratic front-runner Hillary Rodham Clinton, is scheduled to unveil today a plan to combat “mortgage lending abuse” — another example of the Democratic Party’s increasing willingness to explore new regulations on business and markets.
The U.S. senator from New York is proposing a package of measures that would impose new disclosure requirements on mortgage brokers and curb their ability to dictate lending terms. Specifically, Mrs. Clinton is planning to say today that she would force brokers to state their fees in plain language, require a full disclosure of monthly tax and insurance costs for subprime loans, and ban prepayment penalties on all home mortgages. This latter proposal could shake up the industry, one analyst said.
Thomas Lawler, a consultant who used to work for government-sponsored mortgage lender Fannie Mae, said the mortgage industry will resist the package, arguing that it will further dry up credit for many Americans. He said Mrs. Clinton’s proposal could also make mortgages more expensive for conventional borrowers with good credit scores.
• The News: Sen. Clinton is the latest Democratic presidential candidate to propose tougher rules for mortgage lenders.
• The Big Picture: Democrats are showing more willingness to regulate business and markets, moving away from the party’s 1990s shift to the center.
• The Downside: A proposed ban on prepayment penalties could particularly hit the industry.
Mrs. Clinton is part of an increasing number of Democratic politicians who advocate new rules for the mortgage industry, as the subprime meltdown of recent months has weighed on financial markets world-wide.
One rival, former Sen. John Edwards of North Carolina, has proposed setting up bailout pools to assist homeowners facing foreclosure and easing bankruptcy rules for people in danger of losing their houses. Another Democratic contender, Sen. Chris Dodd of Connecticut, chairman of the Senate Banking Committee, has held hearings about predatory lending. His May “housing summit” involving industry officials and consumer advocates suggested changes to current lending practices that lenders would eventually agree to voluntarily, in lieu of future legislation.
Housing isn’t the only issue where candidates are moving away from the party’s 1990s shift to the economic center. In Iowa yesterday, Mr. Edwards blasted free-trade agreements and proposed a ban on future pacts unless they include strong labor and environmental components. He also proposed giving the Treasury Department more tools to counter countries such as China that “manipulate” their currencies in order to give themselves a trade advantage.
So far, such economic topics remain largely the focus of Democrats in the presidential race. Few if any of the nine Republican candidates have mentioned housing. Perhaps the closest to acknowledging problems in the industry is Republican Mitt Romney, who signed an antipredatory lending law in 2004 as governor of Massachusetts.
What may be the most significant of Mrs. Clinton’s mortgage proposals is her call for an end to prepayment penalty riders on all mortgage products. Advocates of such riders, which prevent borrowers from paying off mortgages early, say they make mortgages easier to resell on secondary markets by guaranteeing a fixed rate of return to an investor. The tradeoff, advocates say, is that consumers often get a lower rate of interest when they agree to a prepayment penalty. But overhaul advocates say the riders are often used by subprime lenders to prevent holders of subprime adjustable mortgages from refinancing their loans at a lower rate with a rival lender.
Mrs. Clinton’s other proposals deal with transparency. One would require mortgage brokers to disclose to borrowers that they make bigger commissions if the loans they sell carry higher interest rates or are larded with upfront fees. This disclosure of the so-called yield-spread premium that brokers receive is technically disclosed already in loan documents — but is so loaded with jargon that few understand what it says.
The third main plank in Mrs. Clinton’s policy would require lenders to include in the monthly payment estimate taxes and insurance on all higher-risk mortgages.
“bi Says:
August 7th, 2007 at 8:39 am
Where is inventory built_up? I see it goes down everyday.
Here is the number of listings on realtor.com for a list of towns i tracked.
Date Total
7/17/2007 3,281
7/21/2007 3,256
7/24/2007 3,248
7/31/2007 3,183
8/3/2007 3,124
8/7/2007 3,081”
Seeing how you included “RENTAL” numbers in there, your awesome statistical analysis is crap.
Maybe the swing is in the rental market. Could the 200 listing change be that everyone is renting? Possibly, but who knows and your numbers are probably fudged as I found out “3105 vs 3081” for 8/7/2007. I guess another 24 house came onto the market in the past half hour. Try tracking for another few weeks and get back to us all, then I can QA your numbers again.
Realtor.com
CITY (8/7/2007) W/O Rentals – W/ rentals
Summit 132 133
Short Hills 69 71
Westfield 201 202
Princeton 560 664
Montgomery 234 258
Plainsboro 221 268
West Windsor 130 143
Cranbury 123 145
East Brunswick 507 569
South Brunswick 359 417
Marlboro 211 235
Total: 2747 3105
From the WSJ:
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How Credit Got So Easy
And Why It’s Tightening
By GREG IP and JON E. HILSENRATH
August 7, 2007; Page A1
An extraordinary credit boom that created many first-time homeowners and financed a wave of corporate takeovers seems to be waning. Home buyers with poor credit are having trouble borrowing. Institutional investors from Milwaukee to Düsseldorf to Sydney are reporting losses. Banks are stuck with corporate debt that investors won’t buy. Stocks are on a roller coaster, with financial powerhouses like Bear Stearns Cos. and Blackstone Group coming under intense pressure.
The origins of the boom and this unfolding reversal predate last year’s mistakes. They trace to changes in the banking system provoked by the collapse of the savings-and-loan industry in the 1980s, the reaction of governments to the Asian financial crisis of the late 1990s, and the Federal Reserve’s response to the 2000-01 bursting of the tech-stock bubble.
When the Fed cut interest rates to the lowest level in a generation to avoid a severe downturn, then-Chairman Alan Greenspan anticipated that making short-term credit so cheap would have unintended consequences. “I don’t know what it is, but we’re doing some damage because this is not the way credit markets should operate,” he and a colleague recall him saying at the time.
Now the consequences of moves the Fed and others made are becoming clearer.
http://online.wsj.com/article/SB118643226865289581.html?mod=hps_us_whats_news
BC I still believe the Fed may not mention the credit markets at all, we will see. And yes the FEd should have been raising and not in baby steps of 25, made the street very complacent.
whoops ..sorry that the last cut & paste picked up so much background stuff from the page ..
Did some analyst on NBC this morning (Matt Lauer)really suggest to drop price by 20% to sellers? i hope the sellers were watching…….probably not though..who watches Matt Lauer and Katie Couric anymore right?
bi Says:
August 7th, 2007 at 8:59 am
CNN Money: A last chance to get rich in real estate?
http://money.cnn.com/2007/08/06/magazines/fsb/real_estate.fsb/index.htm?postversion=2007080706
I hope you read the juiciest part of the article. These guys sound pretty honest (Co-Founders of this real estate MLM). I am sure they are using the same statistical methods you are using to show sales numbers.
“Piccolo retorts, “There is no better time to buy, because real estate is on sale. You can never go wrong with real estate in the U.S. of A.” He admits, though, that he has not bought any property lately.
Raised in Nebraska, Piccolo says he was a poor student, interested more in sports and cars than his classes. After graduating from the University of Nebraska in 1984, he moved to Phoenix and worked in the car detailing and design business. In 1990, Piccolo says, medical bills forced him to file for Chapter 7 bankruptcy and list debts of $650,539. Piccolo ran into more trouble a year later when he pleaded guilty to the theft of his girlfriend’s new Mercedes-Benz. Although he denies responsibility now, Piccolo admitted to the court that he had dumped the car in the desert so that his girlfriend could collect an insurance claim of about $24,000; Piccolo said she’d complained that the car was a lemon. “I couldn’t bear to see her hurt,” he told the court. After three years probation, his felony conviction was reduced to a misdemeanor.
Not long afterward Piccolo discovered real estate. By the mid-1990s he had stumbled on the idea of consolidating investment seminars, offering students the opportunity to hear several gurus speak on various techniques. Out of that grew Nouveau Riche, which he and a co-founder, Bob Snyder, launched in 2005.
At 45, Snyder is a veteran of the multilevel-marketing business. “I’m good at building teams,” he says, and indeed, he has been teaching salespeople for more than two decades, after being trained by Amway (amway.com), the global leader in multilevel marketing, in which sales reps are paid not only for selling products but also for recruiting more reps. To date, he has signed up 1,300 sales reps for Nouveau Riche. Working out of their homes, they sell two products: a 15-volume encyclopedia on real estate investing for $3,500 and tuition to the “college” for $16,000. The first five tuition sales don’t yield a commission, but on subsequent ones the sellers get a 50% cut, or $8,000. “
CAIBC,
Last night, CBS was running promos for a segment on tonight’s evening news with Katie Couric: What if you want to buy or sell a house, and financing has dried up?
20#,
take your number 3105.
how the total number goes down from 3281 to 3105 if it is purely from renting?
maybe they cannot afford renting in pricenton and start to rent in trenton?
seasonals may be the case but it is not my collection.
> Maybe the swing is in the rental market. Could the 200 listing change be that everyone is renting?
comrade scribe, that’s geared towards the buyers right? simple answer – save more money…katie doesnt need to waste our time on the evening news for that! unless there is some other new lending scheme out there!
i want the sellers to hear this stuff so they dont keep asking these crazy prices…
Trump Mortgage Goes Bye Bye
http://www.nypost.com/seven/08062007/business/trump_mortgage_flop_tied_to_credentials_flap_business_paul_tharp.htm
CAIBC,
Going by the promo, it looks like the segment
will be oriented towards both sides.
The latest, Democratic front-runner Hillary Rodham Clinton, is scheduled to unveil today a plan to combat “mortgage lending abuse” — another example of the Democratic Party’s increasing willingness to explore new regulations on business and markets.
Gotta love all those bandwagon candidates trying to cash in on all the “abused” homeowners.
No one was abused, they people are just too !@#$% dumb to realize what the hell they did, and that they’ll never be able to repay the loan.
Want to explore new regulations? How about get rid of pensions and make the government make employees contribute to a regular 401k plan like the rest of the working class people, that way you don’t have to raise taxes every year to pay for all the retirees holding multiple posts and corrupting our society.
Stupid people deserve to be taken advantage of, therefore I don’t think there has been any lender abuse. Just stupid people (including the banks who let those loans fly).
Bi,
I believe both clot and I mentioned the words
“Expireds” and “Superbowl” Total Garden State Inventory is up sales are down. It is a very simple equation.
KL
Hi, could I please get a recommendation for a good RE agent in BC. JB, would you mind if people email to you?
JM
#31 -“Want to explore new regulations? How about get rid of pensions and make the government make employees contribute to a regular 401k plan like the rest of the working class people…”
I believe, from the people I know working for the federal govt currently, that they did get rid of pensions a while back. They contribute to something called a Thrift Savings Plan, which is like a 401K.
I have a question for anyone who may know:
What happens if a buyer is ready to close, and at the last minute the lender pulls out and the buyer can’t get financing? Is the buyer on the hook? What is their liability?
#15
the commentator on the Today Show this morning was Barbara Corcoran. Her advice to distressed homeowners was:
1. do a workout with the lender (but didn’t address the fact that many lenders don’t hold the paper any longer and can’t do workouts)
2. refinance (but what if you’re underwater or you can’t afford the fixed rate?)
3. rent the house for an amount that covers your mortgage/taxes (guess she’s not aware that market rents are way below ownership costs in most places)
4. “4 hr sale”– drop your price by 20% an invite bids over 4 hrs– basically, hold an auction. May work if you are actually able to sell for a steep discount– but then many of these people are underwater and can’t afford to do so.
Associated Press
Fannie Mae Wants Higher Mortgage Cap
http://www.forbes.com/feeds/ap/2007/08/06/ap3992675.html
it does not look like a crash to me:
http://finance.yahoo.com/charts#chart1:symbol=fnm;range=5d;charttype=line;crosshair=on;logscale=on;source=undefined
bi,
Are you looking to sell or buy?
tcm,
You said:
I have a question for anyone who may know:
What happens if a buyer is ready to close, and at the last minute the lender pulls out and the buyer can’t get financing? Is the buyer on the hook? What is their liability?
Usually, the deal is contingent on the buyer’s ability to get financing. It always was pretty common that deals would fall through at the last minute because someone couldn’t get a mortgage – back when it was much harder to qualify. So far as I know, no liability so long as the contract covers that contingency. It’s not unusual that houses are “sold” more than once.
netual for now. i got burned shorting other lenders.
Cerberus, National City units halt applications
Aegis, National City Home Equity are latest to stop offering home loans
SAN FRANCISCO (MarketWatch) — Units of Cerberus Capital Management LP and National City Corp. stopped taking home loan applications on Monday, becoming the latest to be hit by turmoil in the mortgage market.
Aegis was the 13th largest subprime mortgage originator in 2006, according to industry publication Inside Mortgage Finance.
The market for jumbo mortgages — home loans that are too large to conform to the standards of government sponsored enterprises like Fannie Mae – is particularly problematic right now, Lachtman added.
The difference between interest rates on conforming mortgages and jumbo loans is usually about 25 basis points. But now it’s 100 basis points higher, “if you can get it done at all,” Lachtman said.
“There’s a big reluctance to even do these,” he added. “There’s only a small market for it. You can sometimes get the loans done, but at very high rates.”
With most decent housing in NJ costing much more then standard conforming loan, I guess Jumbo loans are more prevelant here.
comrade scribe –
thanks
The federal reserve needs to IMMEDIATELY counter all this nonsense that’s roiling the stock and real estate markets. I’m not talking about merely making some damn comments either. They need to cut rates IMMEDIATELY to stamp out this contagion. We can’t have markets seizing up dammit.
People are now being hurt and credit is being curtailed. How in the hell can the real estate market thrive without credit? This is a bunch of BULLSPIT.
All of this negative talk and attitudes has been a conspiracy to disrupt the markets. For the life of me, I have real difficulty understanding why anyone would participate in this sort of thing. I don’t know what the hell this country is coming to when citizens undermine markets.
“it does not look like a crash to me:”
Go down to Red Bank and carry a sign, stating that, outside Hov’s headquarters. HOV, approx 85% off its 7/05 highs.
Maybe you’re right, not a crash more like extinction.
44#, don’t you think HOV and other builders are value play now? my prediction is Homebuilders will be up 20% at least by year end. it will be a good indicator that housing is recovering
WSJ Online article,
Mortgage Fears
Drive Up Rates On Jumbo Loans
By JAMES R. HAGERTY
Turmoil in the U.S. home-mortgage market is starting to pinch even buyers of high-end homes with good credit records, in the latest sign of rising anxiety among lenders and investors.
This surge in rates on so-called jumbo loans is particularly notable because rates on 10-year Treasury bonds have been falling. Normally, mortgage rates move in tandem with Treasurys, but market jitters have caused investors to ditch mortgage securities.
Lenders were charging an average 7.34% for prime 30-year fixed-rate jumbo loans yesterday, according to a survey by financial publisher HSH Associates. That is up from an average of about 7.1% last week and 6.5% in mid-May.
The higher costs for such loans will put further downward pressure on home prices in areas where homes typically bought by middle-class people can easily cost $500,000 to $700,000.
Even borrowers with good credit records who can afford a large down payment are finding rates surprisingly steep if they can’t qualify for a loan that can be sold to Fannie or Freddie. Rates on prime jumbo loans have risen so fast that “nobody in their right mind would pull the trigger” and accept one now, unless they couldn’t delay a home purchase, said Darren Weisberg, president of PFG Mortgage Services Inc., a mortgage broker in Lake Forest, Ill.
bost,
What happens next with all of the private equity deals that are stuck in the pipeline?
Another go at it in the fall?
Or is it that the deals that already have bank commitments will still be funded by the banks, but new deals just won’t get done?
50.5 [43],
Wrong. They need to raise. Inflation has reared its ugly head. Productivity is on the decline, unit labor costs are rising. Potentially, inflation is a much bigger problem as compared to RE 30-40% off 2005 highs.
What more do you want? Money supply has been increasing at approx 10-12%. It’s time to stop the free $. Start saving. Markets go in both directions, get used to it. Markets giveth, markets taketh. You just want them to give forever. Sorry, this is America. God Bless America.
#43
how is massive asset inflation good for the country in the long run? the market is simply mean reverting and pricing in risk after ignoring it for years. It is not the Fed’s job to prop up the MBS market
Anyone see the Today Show this morning? Anne interviewed Barbara Corcoran on the topic of what homeowners who are having trouble making their mortgage payments should do.
Corcoran’s answers:
#1: “Negotiate with the bank”
#2: “Refinance”
#3: “Rent the property”
And I thought to myself:
– you can’t do #1 if your mortgage has been sold to a bunch of investors (see yesterday’s article in the NY Times on this topic;
– you can’t do #2 if you’re upside down, as more and more folks are (ask Duck, for instance);
– #3 doesn’t help much if you live in the property or the cash flow is negative (or, sob, both).
If they wanted to be honest, they should have added that “unfortunately, many of you, if not most of you, are totally f@$|
#43
Most people would be hurt a great deal more by rampant inflation than by a fall in equity values or property values (in fact, many people would be helped by the latter).
When you say “People are now being hurt and credit is being curtailed”, let’s be clear about who you mean by “people.”
S&P may cut ratings on $914 mln Alt-A mortgage debt
Tue Aug 7, 2007 10:01am ET
NEW YORK, Aug 7 (Reuters) – Standard & Poor’s on Tuesday said it may cut ratings on $914 million of mortgage bonds backed by loans whose credit quality is near prime.
S&P placed 207 classes of the so-called Alt-A mortgage bonds on CreditWatch with negative implications amid rising delinquencies and expecations that losses will exceed initial forecasts, the rating company said in a statement. Alt-A loans generally conform to “prime” guidelines but have risky attributes such as high loan-to-value ratios.
S&P is also reviewing structured transactions known as collateralized debt obligations that include the Alt-A debt in question, it said.
#47 comrade scribe
I think many of those deals are no longer in the pipeline at all.
“comrade scribe Says:
August 7th, 2007 at 10:44 am
bost,
What happens next with all of the private equity deals that are stuck in the pipeline?
Another go at it in the fall?
Or is it that the deals that already have bank commitments will still be funded by the banks, but new deals just won’t get done?”
I believe there’s a misperception out there that these deals are a “good thing”. While they do generate advisory fees for banks and law firms and inflate stock prices of many companies the reality is that many of the companies do not see any bottom line improvements on profits. My brother works for a portion of TRW that was taken over by Blackstone a few years ago and he says after the initial chop in headcount they are struggling as much as they were when TRW was running things. Just more work for less employees.
Also there’s a lot of companies out there with heavy cash reserves so I think you’ll just have a shift to more traditional M&A.
#45 bi Says:
44#, don’t you think HOV and other builders are value play now? my prediction is Homebuilders will be up 20% at least by year end. it will be a good indicator that housing is recovering.
———————————————-
Hov is down to 11 from a high of 73. It is falling more rapidly now than at any point since late 2005. You are trying to catch a falling knife that might very well end up sticking into the ground (bankrupt). It is very possible that most of the homebuilders go belly up. Just wait until those arms reset. When banks (who is also in trouble) become the homesellers that is when you will see the homebuilders plunge further. How is a homebuilder going to get rid of their excess inventory when the bank is selling the house next door for 20% to 30%less than their asking price. All of their estimates are based on current pricing models.
I direct your attention to the following links (all mirrors) of the real estate market if plotted as hills and dips on a roller coaster. I have a funny feeling that the last car has not even yet disconnected from the chain on the last hill.
http://one.revver.com/watch/223100/flv/affiliate/79294
http://www.youtube.com/watch?v=kUldGc06S3U
http://video.google.com/videoplay?docid=-2757699799528285056
http://blip.tv/file/187197/
#35 skep-tic
You’re right, I forgot about option #4, 4-hour sale. Didn’t see you stole my thunder already (including identifying problems).
Thanks and, obviously, agreed.
“- you can’t do #2 if you’re upside down, as more and more folks are (ask Duck, for instance);”
You also can’t do #2 when banks are tightening standards and you no longer would qualify for the crazy mortgage you were granted in the first place
The “Chutzpah” of Bear Stearns
http://financial.seekingalpha.com/article/43737
Real Estate Sales DOWN… Drinking UP
http://biz.yahoo.com/ap/070807/earns_molson_coors.html?.v=5
#58
LOL
re: Jumbo loan spreads over conforming blowing out to 1% (from .25%):
Good – finally something that may shake that “Don’t worry, this part of NJ real estate is impervious to sub-prime problems bla bla” attitude loose. Well, now it is affected.
It is better not to turn on any media source, just check the stock market and watch the Feds numbers. There is too much bad advice, doom/gloom and wolves in sheep clothing.
I’ll continue to watch my favorite program – Hidden Potential on HGTV. The show where truly hideous creations are created from $700,000 knock downs. I love watching buyer faces as the designer starts going through the costs. Of course no one informed him that the bank will loan up to the appraised value not the “hidden potential” value. I guess that all of the buyers are sitting on $200K waiting to make his design dreams come true. Hilarious stuff. I love the end when the people are waving from their new home. Its like Sayonara, we can’t afford a damn thing he suggested so please don’t do a follow up segment like House Hunters.
Fascinating
http://www.thestalwart.com/the_stalwart/2006/05/the_house_price.html
Some key quotes:
“Perhaps we’ll be buyers when the Price to Rent Ratio is around 100-120, judging from the Economist chart above.”
“Robert Shiller, a Yale economist, who has just updated his book “Irrational Exuberance” (first published on the eve of the stockmarket collapse in 2000), disagrees. He estimates that house prices in America rose by an annual average of only 0.4% in real terms between 1890 and 2004.”
The MSM is so far behind the curve. At least now they are admitting that there is a problem (see the Today Show this morning and CBS News tonight), but they still rely entirely on people in the RE industry as sources, and they remain blissfully unaware that there are millions of homeowners who are truly hosed with no way out.
As psychotic as Cramer appears to be, at least he brushed up against reality when he said that if you are underwater on your house you should consider walking away now
#63
Agree Cramer’s advice was more meaningful than Corcoran’s.
And we’ll have meaningful input from the MSM the first time they don’t use the NAR or Otteau or the like as their source for any RE story.
skep-tic Says:
August 7th, 2007 at 11:20 am
As psychotic as Cramer appears to be, at least he brushed up against reality when he said that if you are underwater on your house you should consider walking away now”
What exactly does “walking away” from your house mean? Default?
yes
Hillary on CNBC now. She talked about having $1 billion fund, to assist state funding programs. Kind of hinted that Govt was not vigilant.
SG Says:
August 7th, 2007 at 11:32 am
Hillary on CNBC now. She talked about having $1 billion fund, to assist state funding programs. Kind of hinted that Govt was not vigilant.
1 billion/40 states – 25 millions/state…pocket change. 50 houses in NJ…. 20 houses in California..
All that talk is publicity stunt before the elections.
Just colorado have 20,000 homes in FK right now.
You guys misunderstood Hilary. Her $1 billion plan will cover the gas costs for all the moving trucks.
I don’t get it.
#52- I was speaking to a friend who read in the Economist that another potential issue to the decreasing in rating of MBS’s is that certain countries (i.e. Asian) have requirements that they can only invest in AAA rated or whatever rating is required. If S&P cuts the rating, they HAVE to sell, even if they’re still confident in hte product. Another straw on the camel’s back.
I don’t have access to the Economist, so maybe someone else can send a link if they’re familiar with the article.
I think Hillary should take the $1 billion and trade pork bellies. With over $500 billion of resets due the first 6 months of 2008, she’ll have to leverage that $1 billion. If past history is any indicator, she has proven that she can get in the pits with the best of them.
something is happening… HOV up over 5%
Headline: Hillary’s Horsesh*t Humps Hovanian Higher
Bi, you pay way too much attention to short term market fluctuations, whether its looking at month-to-month inventory numbers, or simply daily fluctuations in the price of certain stocks. I can’t imagine this is healthy from a personal finance point of view. In any case, if HOV survives this whole ordeal, it aint headed back to $75 anytime soon.
bi Says:
August 7th, 2007 at 10:41 am
44#, don’t you think HOV and other builders are value play now? my prediction is Homebuilders will be up 20% at least by year end. it will be a good indicator that housing is recovering
bipolar troll: why don’t you listen to what Bobby Boy has to say about everything instead of making baseless and arbitrary idiotic comments…..
http://biz.yahoo.com/bw/070806/20070806006099.html?.v=1
Bi says:
Where is inventory built_up? I see it goes down everyday.
Yes – it is gradually dropping now that summer is half over – too late for people to relocate before school starts.
But watch how the inventory explodes in October, when people relist all of the houses that didn’t sell during the summer, and new listings continue to be added.
This is what happened in 2006.
Toll Bros conference call is this afternoon, are they “still killing em in Hoboken?”
Stu Says:
August 7th, 2007 at 11:08 am
The “Chutzpah” of Bear Stearns
http://financial.seekingalpha.com/article/43737
Stu: right on brother
Nothing like Barbara Corcoran telling me I not doing the right thing… what an ugly fat face I have :(
Pat – shut up!
http://www.abcnews.go.com/Video/playerIndex?id=1710092
HEHEHE Says:
August 7th, 2007 at 12:07 pm
Toll Bros conference call is this afternoon, are they “still killing em in Hoboken?”
tommorrow
I do feel bad for people who are turning on the TV now or opening a newspaper and seeing the bubble pop.
They’re too late. By like a year.
Any homeowner with half a brain would have bailed on their house last year. I cannot thank this board enough for putting the writing on the wall in the summer of 2006. Otherwise, i could be a bagholder right now, stressing out about all this. Granted, I had a 30-year fixed loan … but i didnt want to be holding onto a property that was losing value.
Hmmmm…. so Barbara Corcoran was on all the networks this morning…
She gets around…
Watched the ABC video.
“It’s not the bank’s, it’s mine!”
No. It’s the banks.
Chifi,
Sorry u r right it’s tomorrow. Babs Corcoran was on some CNBC show last night “The Millionaire Inside”. It was like a Tony Robbins infommercial. She of course said the time to buy is often when people say you shouldn’t
geez – I didn’t even see her on CNBC last night. Babs is desperate.
I think it’s particularly strange that Corcoran is the chosen RE expert given that the NYC RE market is very different from the rest of the country.
#88
good point. and on ABC they showed us only one homeowner, and in NYC of course.
Watched the ABC video.
“It’s not the bank’s, it’s mine!”
No. It’s the banks.
———————————————-
And trust me, the banks will have wished it was yours.
“Treasury Secretary Paulson says the subprime mess will not affect the rest of the economy. He must have had a lot of practice lying at Goldman Sachs (NYSE:GS)…or else it just comes naturally to him. Affecting the rest of the economy is precisely what the subprime credit debacle is doing – just as you’d expect.”
“At the bottom end, consumers still seem to be coping. Consumer spending is said to be going up – though, at a slower and slower rate. The little guys, like the big guys, have learned to take chances. They believe that nothing ever goes too far wrong. Whenever a correction threatens, along come the feds with more money. Worst case, they figure, the economy will turn a little soft – as it did in 2001-2002. They didn’t cut back spending then; they don’t expect to do so this time either.”
“On the rare occasions when we actually worry about the future…we wonder what will happen when these poor lumpenhouseholders realize what has happened to them, for they are the big losers of this economic era. Jobs and wages are moving to Asia – leaving them behind. And they actually helped finance…they helped to speed up…the process – by buying more from Asia than they could rightly afford. Now, they are the most indebted people in the world…with the most expensive lifestyles to support…and with the slowest income growth outside of Africa. While the foreigners have gotten richer and more competitive…America’s middle and lower-middle classes have merely gone deeper into debt…and added to their monthly expenses. They have bigger houses to heat and cool. They have more cars. They have more gadgets and second homes. And in the years ahead, they’ll find themselves competing with these dynamic foreigners for jobs…for earnings…for fuel…even for food – while trying to avoid bankruptcy.”
http://www.dailyreckoning.com/Issues/2007/DR080307.html
2 hours until Bernanke speaks.
This is totally my opinion and why I sold off almost everything I owned in domestic equities yesterday (except for my CMG).
Do you feel that the recent optimism that the FED will throw the financial companies a bone will come to fruition?
I think that their statement won’t change an iota from the last six or so meetings. Even if it does and he mentions the credit crunch or housing, I think it will have a negative effect on the market as investors will see it as a sign that the problem is more serious than they originally thought. So equities be damned either way!
I just watched the ABC video on “bubble sitters” – people selling to cash out and sit on the sidelines as renters.
The host seemed to have no idea that the time to make a move like that was in 2005 or the first quarter of 2006 – last summer at the latest.
The host seemed to have no idea that the time to make a move like that was in 2005 or the first quarter of 2006 – last summer at the latest.
———————————————
How can you be so sure?
The drop from 2005 to now might just be the start of the downturn.
The arms have not reset yet and nearly half of all mortgages sold in 2005 and 2006 were of this exotic variety. What we’ve seen so far MIGHT just be the beginning.
I hope it isn’t, but having witnessed the bursting of the tech bubble and the ensuing 70% drop in share prices, the massive enormity of the housing bubble which affects more than just equity market investors (a much smaller portion of the population than homeowners)is scary. If stocks dropped 70% after a run up of 300%, then why would housing only drop 10% after a very similar prosperous period? We are all optimists, but some are just more realistic.
“And in the years ahead, they’ll find themselves competing with these dynamic foreigners for jobs…for earnings…for fuel…even for food – while trying to avoid bankruptcy.”
BCBob, thanks for the snippet.
It is hard enough for kids getting out of college with $20-30K in debt to compete with kids from overseas with a similar education, no debt, and a marginal propensity to save for the future.
It is even harder when kids graduate with $20-30K in debt with a liberal arts degree, and find themselves in low paying jobs. Not too many skills a prospective employer is looking for. There is a reason IT and engineering folks make $60-65K out of school. But it seems the US education system is churning out less of them and I wonder why.
The major flaw to the ABC/GMA segment (besides only consulting a realtor to gauge buyers’ motivations–and making that realtor the nails-on-a-blackboard presence of Ms Corcoran): Corcoran cites the costs associated with borrowing…a mere minute after singing the praises of having money in the bank from selling “at or near the peak.”
Beyond that, GMA basically gave a wealthy realtor five minutes to advertise to potential “marks.” Sick-making, really.
All,
You do realize that the video with that guy with the big head isn’t recent, right?
Dreamtheater #95
Due to the taboo, fear and anxiety created by performing well in both math & science. Greed doesn’t help either; buisness/liberal arts majors fit in better with the herd mentality. Scientists and engineers are taught to think not only within the box but outside it to find solutions. The cable TV, video game get it now culture also only likes the easy path. Math science engineering do not offer it. they require hard work. My grad program 5 years ago was predominately populated by those from Pacific rim countries. Myself and a friend were the only native English speakers in the entire program!
Pretty sloppy generalizations about business/liberal arts majors there, Painhrtz. I’m sorry you were picked on in school. But maybe it wasn’t because you were “good at math”…
Can I offer you a piece of unsolicited advice? The “box” was invented for people who use terms like, “thinking inside/outside the box.”
Rich In NNJ Says:
August 7th, 2007 at 1:37 pm
All,You do realize that the video with that guy with the big head isn’t recent, right?
Rich: I’m going to kick your a%%
skeptic #88,
How do you think the NYC market is different?(dont tell 3b this;) I agree with you as I’m looking for a coop/condo south of 96th for my parents and to date I havent seen any price declines there at all.
I know you are looking in Westchester; do you think Manhattan price increases will affect the severity of the downturn in the inner suburbs. I live in Bronxville and things seem to be holding pretty steady here in terms of sales and prices.
comrade scribe Says:
August 7th, 2007 at 1:12 pm
I just watched the ABC video on “bubble sitters” – people selling to cash out and sit on the sidelines as renters.
The host seemed to have no idea that the time to make a move like that was in 2005 or the first quarter of 2006 – last summer at the latest.
comrade: filmed and aired March 2006…do you see the snow on the ground?
njpatient,
The people renting in that GMA/Barbaa Corcoran segment were in Hoboken, not NYC. Hudson Tea to be exact… where our good firends chicagofinance and Gov. Corzine live!
Little do those Hoboken renters realize they made a BIG mistake. Of all the markets to sit on the sidelines of, they chose the second worst! Sorry renters, but the Hoboken market is not going down! They would have made a good decision if they sold in Miami or Vegas, but NOT the NJ Gold Coast!
CF: If you know those renters in the GMA segment, can you please ask them if they regret their decision to sell and then rent? I would love to get an update on those renters! That is, of course, they did not give up and buy yet!
ADA Says:
August 7th, 2007 at 1:55 pm
skeptic #88,How do you think the NYC market is different?(dont tell 3b this;) I agree with you as I’m looking for a coop/condo south of 96th for my parents and to date I havent seen any price declines there at all.
I know you are looking in Westchester; do you think Manhattan price increases will affect the severity of the downturn in the inner suburbs. I live in Bronxville and things seem to be holding pretty steady here in terms of sales and prices.
ADA: if people start getting whacked on the Street next month, see whether you can make the same comment in October
Robert Says:
August 7th, 2007 at 1:56 pm
CF: If you know those renters in the GMA segment, can you please ask them if they regret their decision to sell and then rent? I would love to get an update on those renters! That is, of course, they did not give up and buy yet!
guan: oh, I can guarantee that they do not regret their decision and also that they did not buy yet
Clinton proposes crackdown in mortgage market
http://news.yahoo.com/s/nm/20070807/pl_nm/usa_politics_clinton_dc_1;_ylt=Asn0cA6ucv_a7g_8JaHKP_YE1vAI
typical everyone is a victim bs trying to bail out people who made their own bed and now have to lie in it.
“Beyond that, GMA basically gave a wealthy realtor five minutes to advertise to potential “marks.” Sick-making, really.”
Would you have rather GMA have consulted a poor realtor? That is no problem, I can arrange for them to get one. They can go to the following website to locate a poor realtor:
http://www.chiphughes.com/remaxnj/index.asp?acc=18819
Robert Says:
August 7th, 2007 at 2:01 pm
They can go to the following website to locate a poor realtor: http://www.chiphughes.com/remaxnj/index.asp?acc=18819
That guy? He dyes his chest hair……whacko….a good hurricane forecaster though
“guan: oh, I can guarantee that they do not regret their decision and also that they did not buy yet”
How can you “guarantee” this? Were you the renter in the video? Admit it! I think it was you! That’s pretty cool. I always wanted to be on a television show (just not one where you get thrown into the back of a police car at the end of the segment :)
Can #107’s post by Quack be removed? This is getting riduculous…..
“Were you the renter in the video? ”
Yes, I said as much in the original post. Maybe I wasn’t clear. Isn’t my wife insane? Yes, she has 20/20 vision with contacts.
Certain people could be allergic to specific brands of detergent or fabric softener, and might therefore tend to have swollen cheeks with a persistent chipmunk-like appearance.
Just sayin’.
“Can #107’s post by Quack be removed? This is getting riduculous…..”
What is wrong with #107? That link has been posted on this site dozens of times. You do know who that agent is? Right? Certainly you know who he is…
comrade chicago:
ahhh, so it was filmed early in 2006 … so the renters did indeed have good timing … boy, they must be happy now!
CF: I couldnt agree more; but is the Street single handedly propping up the Manhattan market?
ADA: if people start getting whacked on the Street next month, see whether you can make the same comment in October
Gold Coast – Friend in metro homes building just rented out the condo she’s been trying to sell for the last six months. The market is dead Roberto.
dream [110],
Can you add him and his house.
If it was any other market, the renters would have been right. But NOT Hoboken. Prices have went up a lot since they sold in Hoboken. For proof, all they have to do is go across the street to Maxwell Place, where flippers literally cleaned up the place!
TJ (25)-
That Nouveau Riche crap is one of the things that blew up Casey Serin, the renowned, multiply-foreclosed RE loser.
just scrolled back up and realized Chi and his wife were the renters!
bravo, Chi!
errrr, comrade Chi!
Robert Says:
August 7th, 2007 at 2:09 pm
For proof, all they have to do is go across the street to Maxwell Place, where flippers literally cleaned up the place!
guan: flippers? try a handful of connected realtors, friends of the mayor, and connected Toll employees that accessed a phone lottery.
Pure garbage really.
I am wondering how all of the bubble sitters in Manhattan are doing these days. They could not have chosen a worse market to sit on the sidelines of. They must be really depressed. If you ask me, they should just jump in front of the next B train and get it over with!
fed unchanged
acknowledged upheaval BUT inflation #1
#101
ADA–
I meant that NYC is mostly very expensive apartments, whereas most of the country is very cheap SFHs. Also, NYC is an international city more than an American one. More in common with London or Hong Kong than Topeka. Basically, I think it’s odd that you’d have someone like Corcoran from the manhattan RE scene comment on U.S. RE trends.
I think the above factors also support your meaning, which is that Manhattan RE has so far bucked the downward trend.
I also think the city’s RE market has greatly benefitted from dollar devaluation (lots of foreign buyers). I don’t think these buyers are present in the suburbs in nearly the same numbers.
The best priced, renovated houses are selling quickly in the areas in Westchester and Fairfield that I watch– but there is a large amount of inventory that sits and sits, even after pretty substantial price cuts.
Duck ] you better sell now!!!
FOMC: Inflation still predominant policy concern
Moderation in inflation not yet demonstrated
FOMC sees moderate growth ahead despite volatile markets
FOMC says downside risks to growth have increased
FOMC holds rates steady, keeps focus on inflation
Quack, were you born on 29th Feb? I think your brain is aging in leap years.
market’s FIRST response – no likely likely, but we wait….banks getting whacked a little a long with homebuilders……….
check again at 3:30PM for the actual response
Fed Announcement – Fed leaves rate unchanged @ 5.25 %
Glen Rock
ACT GODFREY TER $1,149,000 6/5/2006
PCH GODFREY TER $1,099,000 7/17/2006
EXP GODFREY TER $1,099,000 11/16/2006
ACT GODFREY TER $1,049,000 4/12/2007
PCH GODFREY TER $989,000 5/8/2007
ACT* GODFREY TER $989,000 5/29/2007
U/C GODFREY TER $989,000 6/15/2007
SLD GODFREY TER $891,000 8/7/2007
Cool, CF is a “celebrity.” If anyone else wants to be on tv, I heard that Chris Hansen from Dateline NBC is holding an “open house” in Ridgewood… :)
No change in rates. Fed did mention credit crunch. Here comes the volatility.
“in a brief statement, the Fed acknowledged the turbulence and said the downside risks to the economy had “increased somewhat.”
Regurgitator (43)-
“I don’t know what the hell this country is coming to when citizens undermine markets.”
Like when tens of thousands of them take out liar loans that they have no ability/intention of repaying?
Off topic for a minute, but Jay Leno mentioned the water treatment plant that got shut down during the storm last weekend in Bergen County in his monologue last night:
“Over the weekend, nearly 800,000 people in New Jersey were unable to shower after lightninig struck a water treatment plant, causing it to shut down. And you thought that the people in New Jersey smelled bad before! Oh my God!”
Release Date: August 7, 2007
For immediate release
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.
Economic growth was moderate during the first half of the year. Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy.
Readings on core inflation have improved modestly in recent months. However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated. Moreover, the high level of resource utilization has the potential to sustain those pressures.
Although the downside risks to growth have increased somewhat, the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the outlook for both inflation and economic growth, as implied by incoming information.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Michael H. Moskow; William Poole; Eric Rosengren; and Kevin M. Warsh.
#133
Like when tens of thousands of them take out liar loans that they have no ability/intention of repaying?
———————————————-
Keep on reserving the spoils of this great economy for the top 1% while destroying the working wage for the other 99% and you would be surprised by what else this country is capable of doing.
skep,
I agree that there are diff buyers in the suburbs; I think many buyers who are priced out of NYC b/c of foreign money but still want to stay close to work and space to breed are still buying in the inner burbs.
#115 “CF: I couldnt agree more; but is the Street single handedly propping up the Manhattan market?”
YES.
(ok, a little with the furriners too, but mostly the former)
New (65)-
“As psychotic as Cramer appears to be, at least he brushed up against reality when he said that if you are underwater on your house you should consider walking away now.”
Walking away from your house is complete insanity. Whether you give your lender deed in lieu of foreclosure or just allow the lender to foreclose, two awful things happen:
1. Your credit is killed for at least the next seven years.
2. The lender sends you a 1099 for the “forgiven” balance of your mortgage. That’s right…the IRS considers that forgiven unpaid balance to be taxable income!
Haggling with a lender over a workout, recast or short sale is unpleasant. However, it is a great deal more pleasant than facing down the IRS.
Walking away from your house is complete insanity. Whether you give your lender deed in lieu of foreclosure or just allow the lender to foreclose, two awful things happen:
1. Your credit is killed for at least the next seven years.
Chances are that if you signed up for an exotic loan, you had subprime credit anyway. What’s another 7 years when you have always had bad credit.
When APRs on loans are less than what banks are paying interest on savings, then one must be a complete moron to accept the risk of a variable rate loan. Of course these people probably had no savings so they aren’t aware of current savings loans rates.
“you would be surprised by what else this country is capable of doing”
Stu, you are certifiable. For all your class warfare rhetorical nonsense, you don’t know much about the common man. He is too busy deciding whether to have butter or gravy (or, more likely both!) on his mashed potatoes to care about the “inequitable” distribution of wealth in the US.
Until Joe Sixpack can use his remote control to vote in an election, the elites have nothing to fear.
#137 Clot
In many cases, you can’t haggle with your lender.
I think individuals need to do the math in #1 and #2 and see if it makes sense if they’re way underwater
Remove ‘loans’ from that last sentence please!
Stock market seems to be dropping again too by the way.
“Chances are that if you signed up for an exotic loan, you had subprime credit anyway. What’s another 7 years when you have always had bad credit.”
And just as importantly, if you’re even considering walking away, you’ve probably already lost any good credit you may previously have had.
99# Jamey no offense but I may have hit a little to close to home on that one. Secondly for someone with a science degree I have subpar math skills which is why I followed a biology tract. Excelled at contact sports you dink not all science geeks are Anthony Edwards from Revenge of the Nerds. If anyone picked on me it was usually the math geeks since I was so poor at math. Lastly, I do not recommend that any one should get a science degree since we generally get paid significantly less initially that most of lib arts/ business majors.
Hey there are lots of bright lib arts/ business folks out there. I’m sure there are many much smarter than I, but since most sheople follow the path of least resistance even in a college education it tends to drag down the mean. Granted my course work was limited in business to only graduate school but when I saw mid level mangers, stock brokers, and well to do professionals from those backgrounds breaking down and crying about some of the tasks which any undgrad science major would laugh at, it pretty much proved my suspicions.
dream (110)-
Coming from A$$hat, it’s a compliment. I don’t mind if it stays there.
Foreclosure should always be a last resort. You do not want to have to pay taxes on that unpaid balance (chances are a distressed homeowner won’t have this money so our friends at the IRS will garnish their wages for the next 20 years, in addition to 15% interest).
If worse come to worse, you can always strip the house and sell the parts and materials to contractors at disocunt prices. Squeeze every dollar out of it. ALso, northern NJ is alandlord’s market so you should be able to rent the place out for a decent amount.
Now back to Corcoran. You have to give her credit. Back in 2006, she said that rates will go up and have a negative affect on bubble sitters. Well, fast forward one year later and many loans are now charging over 7%.
Also, if we look at the negative savings history of the country, I am pretty sure that some of the bubble sitters spent most, if not ALL, of the money they were supposed to be saving for the next house when we hit the “bottom.” Oops!
I wonder if Cramer is standing on a bridge right now after his impassioned plea to helicopter Ben fell on deaf ears? October is going to be ugly when third quarter earnings come out.
Clot–
As others have said, if it’s a question of foreclosure now or later, better to take the pain now before you’re even deeper in the hole.
oh, and Barbara Corcoran does not need to advertise to anyone on GMA. She sold the company a few years ago for a nice few BILLION.
Here is a little FYI: Corcoran grew up in Bergen County. She lived in a small 2 bedroom apartment on Undercliff Avenue in Edgewater.
#143 pain
It wouldn’t have hurt you to take a language course.
50.5 [43],
The nerve of the fed, “fighting” inflation rather than supporting the markets. How Un-American. How preposterous, Bennie and the feds are not stuffing everyone’s pockets with dollars. I guess too many dollars overseas at this point. Seems like Ben wants to maintain this. After all, they do lay a claim to “wealth”. If they come back, what’s our recourse? Sky high interest rates or run the presses 24 hours a day to create more?
By the way, The RE market is not seizing up, it’s simply comatose.
ADA–
I’ve been looking mostly in the further out suburbs, so I don’t have a good sense of the market closer to the city.
I do know that transaction volume is well down across Westchester as a whole, and I would be surprised if this was solely due to a handfull of towns up north.
Then again, I can see how Bronxville might be somewhat unique as it does seem a more easy transition for Manhattanites in some ways (short commute, semi-urban town, etc)
Yeah my typing and editing skills are awfull. Microsoft basically killed any decent grammatical and spelling skills I had. I am also at work so I’m trying to get a point across as quickly as possible. Apologies if the point was a bit scattered.
“I am pretty sure that some of the bubble sitters spent most, if not ALL, of the money they were supposed to be saving for the next house when we hit the “bottom.” Oops!”
$1.99 [146],
You have it #ss backwards, as usual. The chamber is loaded. Those that got sucked into this charade are the ones with zero savings. That’s OK, they are paying their cc bills, behind on their mortgages. Keep that lifeline going.
Rich – Great post.
This house sold for 22% off asking price. And it was in one of the prime towns of Bergen County, if not the state – Glen Rock.
Patience, people!
Any owners asking 600k will soon be selling for 450k!
August 7th, 2007 at 2:20 pm
Glen Rock
ACT GODFREY TER $1,149,000 6/5/2006
PCH GODFREY TER $1,099,000 7/17/2006
EXP GODFREY TER $1,099,000 11/16/2006
ACT GODFREY TER $1,049,000 4/12/2007
PCH GODFREY TER $989,000 5/8/2007
ACT* GODFREY TER $989,000 5/29/2007
U/C GODFREY TER $989,000 6/15/2007
SLD GODFREY TER $891,000 8/7/2007
22% of $1,149,000 is $252,780
Here you go… A cabdriver and a babysitter in NY facing a $4,800 per month mortgage payment, readjusting to $8,000 per month.
These are the type of people Cramer was talking about
“Marie Joseph said she and her husband, Daniel, have filed complaints with the state Banking Department and other agencies over the handling of the sale and the financing of the house they bought in Elmsford last year.
Foreclosure proceedings have begun on the property, she said. The couple’s two monthly payments total nearly $4,800 and will rise to $8,000 next year, she said. Marie Joseph, 48, who works as a baby sitter, said the couple was unaware the mortgage payments would be that high.
Her husband, a cabdriver, sold his medallion, valued at $50,000, to raise money to buy the house, she said.”
http://tinyurl.com/ywekbo
First off, my tag is Reinvestor101 not 50.5. Stop trying to be cute with your jokes.
Second, the fed’s job has revolved around saving the financial markets here of late. It would be very wrong of them to ignore the turmoil that they helped to create. People have gotten used to them helping resolve problem like this. Now is not the time to be changing their stance.
Lastly, where the hell else are the Chinese and everybody else gonna go? The USD is the world’s reserve currency and there’s no other currency that’s going to rise and check the USD, particularly since oil is traded in USD. They along with the rest of the damn world needs to hold dollar reserves to buy oil. The fed has the room to lower the damn rates to stamp out this fire without having to worry about inflation.
They need to lower rates IMMEDIATELY and stop this damn pussyfooting around. Bernanke needs to stop acting like a chickenspit and do his duty.
BC Bob Says:
August 7th, 2007 at 2:49 pm
50.5 [43],
The nerve of the fed, “fighting” inflation rather than supporting the markets. How Un-American. How preposterous, Bennie and the feds are not stuffing everyone’s pockets with dollars. I guess too many dollars overseas at this point. Seems like Ben wants to maintain this. After all, they do lay a claim to “wealth”. If they come back, what’s our recourse? Sky high interest rates or run the presses 24 hours a day to create more?
By the way, The RE market is not seizing up, it’s simply comatose.
>>Until Joe Sixpack can use his remote control to vote in an election, the elites have nothing to fear.
how true. a recent poll on CNN asked would you vote for a candidate that accepted money from a lobbying firm? 85% said no. umm….
Re: I think that is for short sales only, not bankruptcy. “The lender sends you a 1099 for the “forgiven” balance of your mortgage. That’s right…the IRS considers that forgiven unpaid balance to be taxable income”!
Also I thought cab medallions are a lot more than 50K.
Lying on a mortgage statement to obtain a mortgage is a felony, they should evict these criminals and give them a new home in the big house.
I wonder how much the bubble sitters are REALLY saving considering the increased mortgagae rates and “delusional” sellers.
http://bp2.blogger.com/_wFWqWIH-WFU/RrggChEKkrI/AAAAAAAAB4Q/qPQWlYR0fH8/s1600-h/shrewd_re_investors.JPG
Here is a great flashback to 2005!!!!!!
from the same article:
“They get you into the home. … There’s no equity at all in the home when you buy it,” said Quanda Moore, 36, who paused several times to compose herself.”
doesnt sound like fraud to me; she knew what she was getting into when she bought it w/o a DP and a I/O loan.
Bloodbath,
The house in Glen Rock was probabaly overpriced from day one, as are most houses since realtors “buy” the listings. If you saw what kind of nonsene goes into pricing houses, you would understand the prie drops. SURPRISE SURPRISE, but realtos don’t just take the comps and price based on it. They take the comps, and add 10% to 20% to it so that their price will be higher than all of the other realtors, allowing them to get the listing. Do you know anyhting abot how homes are priced? It does not sound like it!
Come on Robert. When homes in Montclair were selling for 10-30% over listing price, were you saying that those selling prices did not reflect reality since they were over the asking price?
**Advice needed**
Late in the day here, so I’ll re-post if I don’t get responses.
Has anyone here had their resume professionally written? It looks like it would cost a couple of hundred. Is it worth it?
Second, I want to buy a commercial building. My credit is solid. With the tightening lending standards, what will be the down payment required? 15%? What do commercial rates run on about $1,000,000 borrowed? I need ballpark figures to see if it’s worth it to move forward.
I would be the tenant, so I want to figure out if it would be cheaper to rent or buy.
“NAR or Otteau or the like as their source for any RE story.”
NAR and Otteau are definitely difficult to both use as sources because they drasitcally differ from one another. NAR says home prices are up, and Otteau is saying home prices are down 10%. Persoanally, I think the NAr nubers are more accurate. Otteau is just a little appriaser in NJ who owns a calculator.
I think DP on commercial is usually more like at least 20-25%. And rates are about a point to a point and a half higher. I’m sure others have more experience with these types of buildings, however.
“Come on Robert. When homes in Montclair were selling for 10-30% over listing price, were you saying that those selling prices did not reflect reality since they were over the asking price?”
It was already mentioned here countless times that the ERA office in Montlclair deliberately UNDER PRICES homes in order to spark a bidding war. Homes are sold differently in Montclair than other parts of NJ.
Robert,
If I may ask, how much did you pay for your house and when did you purchase it?
RE: DJIA………….boooooooooyaaaaaaaaaa
Donald,
That’s your pat response to all price reductions yet you say that sellers WILL NOT lower their price.
Glen Rock Median Price
1-7/2006: $646,000
1-7/2007: $600,000
And your wrong about your statement that homes are priced by adding to the current comps as if this were a standard.
Unless of course you don’t want to ral;ly sell your home.
“How do you think the NYC market is different?(dont tell 3b this;) I agree with you as I’m looking for a coop/condo south of 96th for my parents and to date I havent seen any price declines there at all.”
That is because the Manhattan market is immune form the slump. There are no price drops. Bidding wars are common.
Sorry 3b, but it is a seller’s market in Manhattan. Get your head out of the sand!
$840,000; April 2005
Robert,
Thanks.
CF: I am surprised at the market!
Troll: Keep bending the truth to please yourself. That’s what the subprime mortgage holders did to. “The market will never go down…foreclosure.”
Robert: I understand you want to sell your place for 899 and buy $ 1.6 million house in Alpine, right?
In that case you should be thankful if the prices go down. If prices go down 10%, you will have to pay 160K less on your Alpine house, while your place only goes down by 90K. You still save 70K, right?
No need to thank me for saving you 70K. Enjoy your riches.
“Until Joe Sixpack can use his remote control to vote in an election, the elites have nothing to fear.”
The elites will always be in charge. I can’t wait for the Republicans to distribute fliers next year in Newark, Paterson, and Camden reminding everyone to vote on the SECOND Tuesday in November.
Donald,
That’s a cop-out. Not all the homes in Montclair were “shopped” by Era.
So now answer the man’s question.
Hell, replace Montclair with Glen Rock.
Median Jan – July
’06 $646,000
’07 $600,000
“Robert: I understand you want to sell your place for 899 and buy $ 1.6 million house in Alpine, right?”
$1.6 million house in Alpine? Yes, just as soon as I make some powerful connections in Hoboken and flip condos for 7 digit profits!
No, I want to buy a $900,000 house in Alpine.
>>October is going to be ugly when third quarter earnings come out.
not around here. my company who is a fortune 200 is doing very very well.
Q: Market WTF?
A: Fed says “ain’t that bad guys; suck it up”. Market says…ok, I believe you….FOR NOW…leading snap back in home builders/mortgage cos
>>The chamber is loaded. Those that got sucked into this charade are the ones with zero savings.
um, not me or many i know. be careful with generalizations they’re always wrong.
>>I wonder how much the bubble sitters are REALLY saving considering the increased mortgagae rates and “delusional” sellers.
good point. if you thought in 2003 prices were high and said i’m going to sit on the sidelines and save diligently to catch up because this can’t continue well every month thereafter you lost ground. how many people if they knew then what they know now even feeling that prices were high would’ve bought? plenty i’m sure. RE prices can and have gone up far quicker than they’ve come down so if you missed the party you’re going to be waiting a very long time for mean reversion.
“Did some analyst on NBC this morning (Matt Lauer)really suggest to drop price by 20% to sellers? i hope the sellers were watching…….probably not though..who watches Matt Lauer and Katie Couric anymore right?”
Yes, and even if the sellers were watching (I wasn’t… I am never up at that un-Godly hour), you think they are all going to take their advice? I love it how peole tell other people how to spend their money!
My wife and I have been stuffing all of our extra money into the stock markets since 2003….WTF are you talking about? We are freaking blowing everything away.
For all of the bubble sitters in Manhattan reading this blog, the Brooklyn Bridge offers great views and a fast fall!
>>Homes are sold differently in Montclair than other parts of NJ.
very true. been through the pandemonium sealed bidding process more than once. stupid me i actually participated again after getting screwed the first time.
re 139 155
Probably not. When the guilt attached to non-participation is removed through ease of access, participation actually decreases.
not to sound callous, but does anyone but the locals really care about 6 trapped miners in utah? you think they give a rats @#$^ about the 4 newark students shot execution style?
184
Chance to sell hope.
“We are freaking blowing everything away.”
So maybe you would have been better off keepng your assests in real estate. How do you intend to buy again if your losing your money like water?
Richard [179],
Why do you always refer to 2003? We are not talking about a 2003 bubble. Many, owned at that time. We are talking late 2005, present day. You should know this. You were agreeing with BOOOYAAA , until capitulation day, sometime in the last quarter of 2006.
Save diligently to catch up? You are kidding right? It has been a massive blowout in favor of metals, mining, minerals and multi-nationals over RE, since I sold. Where have you been?
“not to sound callous, but does anyone but the locals really care about 6 trapped miners in utah?”
Richard,
This garbage doesn’t even deserve a response.
Hey Chi,
How do you get on a popular tv show like GMA? All I need are some cameras in my house and I can sell the place. Nothing beats free publicity. Of course, cameras will not be allowed anywhere near my infamous retaining wall!
“not to sound callous, but does anyone but the locals really care about 6 trapped miners in utah?”
Richard,
This garbage doesn’t even deserve a response.
Yeah it does; he’s an a**hole.
Consumer Credit Up in June
Tuesday August 7, 3:24 pm ET
By Martin Crutsinger, AP Economics Writer
Consumer Credit Rises Strongly for Second Straight Month
http://biz.yahoo.com/ap/070807/consumer_credit.html?.v=2
“My wife and I have been stuffing all of our extra money into the stock markets since 2003….WTF are you talking about? We are freaking blowing everything away.”
Chifi, what % of your down payment do you keep in non-cash/bond investments? How do you arrive at that %, given the fluid date you might want to purchase a house?
Saddle River
SLD CHESTNUT RIDGE RD $1,895,000 4/27/2005
ACT CHESTNUT RIDGE RD $1,999,900 7/5/2006
EXT CHESTNUT RIDGE RD $1,999,900 1/5/2007
PCH CHESTNUT RIDGE RD $1,899,900 2/15/2007
ACT CHESTNUT RIDGE RD $1,899,900 5/2/2007
ACT* CHESTNUT RIDGE RD $1,899,900 5/15/2007
U/C CHESTNUT RIDGE RD $1,899,900 5/30/2007
SLD CHESTNUT RIDGE RD $1,810,000 8/7/2007
Closing costs?
Commission: 5%
Average Inflation:
’05 3.39%
’06 3.24%
’07 2.54% (Jan-Jun)
“Yeah it does; he’s an a**hole.”
ADA [191],
And that’s on a good day.
SLD CHESTNUT RIDGE RD $1,895,000 4/27/2005
SLD CHESTNUT RIDGE RD $1,810,000 8/7/2007
Oh no, prices are down 20%! We are all doomed. Somebody call up Bloodbath, it is time for me to surrender to him! Bagholders are screwed.
“My wife and I have been stuffing all of our extra money into the stock markets since 2003….WTF are you talking about? We are freaking blowing everything away.”
Maybe someone should have listened to Queen Corcoran, huh? Remeber that part of the segment where she said something about bubble sitters having the urge to spend all of their money they got from the sale of their house? Maybe someone needs to watch the segment again!
Turdburglar (160)-
How much did your agent pad the suggested price in order to “buy” your listing?
Mahwah
SLD 3 YOUNGS RD $675,000 9/15/2005
ACT 3 YOUNGS RD $739,000 5/15/2007
ACT* 3 YOUNGS RD $739,000 6/12/2007
U/C 3 YOUNGS RD $739,000 6/26/2007
SLD 3 YOUNGS RD $700,000 8/7/2007
(1.8% gain/year, inflation data above…)
Hey Clot,
Is it safe to say that you’ve joined the LOD?
My current realtor did not pad the price, but the one I used in Manahttan did by about $100,000. My current agent told me right off the bat that he does not “buy” listings.
SLD 3 YOUNGS RD $675,000 9/15/2005
SLD 3 YOUNGS RD $700,000 8/7/2007
Wow, this is looking really bad. Prices are down 30%. Bloodbath is right. Maybe I should just get it over with and jump in front of the PATH.
“Is it safe to say that you’ve joined the LOD?”
What is LOD?
How much do all the RE bears want to bet that Bloodbath will not respond to #193 and #198?
Turdburglar (200)-
“My current agent told me right off the bat that he does not “buy” listings.”
Nice to see that he is incompetent rather than dishonest.
On 7/26 Richard urged a buy on BGY (closed at $17.98) and RSF (closed at $11.25)
If you followed his advice, you’ll appreciate that BGY has gone up 1.5%, but you’ll be saddened by the fact that RSF has plummeted 17%.
Thanks, Richard.
“What is LOD?”
Lights Out Donald.
ADA (199)-
No, I’m not to the LOD stage. I will never turn anti-RE ownership, as even in an environment as challenging as the current one, there is narrow opportunity available for selected buyers and sellers. This market is not for everyone…but I spend every day dealing with lots of RE agents and lots of people who want to buy and sell, so I get to peek at a flow of business that MSM is incapable of snapshotting.
Deal flow is lousy right now. Lots of agents are getting blown out of the game. All that means for me & mine is increased market share and elimination of competitors.
Good times!
“If you followed his advice, you’ll appreciate that BGY has gone up 1.5%, but you’ll be saddened by the fact that RSF has plummeted 17%.
Thanks, Richard.”
All disclaimers apply.
WSJ
Economists React: ‘Bernanke Tied to the Mast’
Economists weigh in on the Fed’s decision to hold rates steady and the changes to its statement. See how the statement changed.
“Bernanke tied to the mast, the FOMC remains deaf to the song of sirens” — to borrow from Homer’s Odyssey. Markets are like the sirens, and Bernanke and the FOMC are Ulysses and his crew, steadfast with their policies, not giving in to cries from the marketplace; economic data and credit events to date do not warrant rate cuts or neutral bias just yet. –Zoltan Pozsar, Moody’s Economy.com
Bernanke has apparently disappointed Wall Street with the Fed’s announcement that it will remain focused on inflation as today’s primary risk, dashing hopes of a rate cut anytime soon. Stocks have swooned as a result, but the U.S. dollar and the economy will be better for it, as rumors of a systemic credit debacle are almost certainly overblown. About today’s interest rate decision and its accompanying statement I say, “Bravo, Ben!” … Unless one believes the Federal Reserve to be a collection of utter buffoons, one must now suspect Bernanke and company fully realized they created a credit monster with a 1% Federal Funds rate and that they knew they’d have to clean it up at some point. –Chip Hanlon, Delta Global Advisors
While this is a clear move toward neutrality, it by no means actually implies a neutral stance and was hedged by stated expectations of modest growth going forward… Perhaps the last sentence is the most telling: “Although the downside risks to growth have increased somewhat, the Committee’s predominant policy concern remains the risk that inflation will fail to moderate.” This is again the “inflation bias lite,” and slow walk towards policy neutrality we’ve seen for several months now. –Janney Montgomery Scott
Some analysts have called today’s statement “a step towards neutral.” … Well, I can leave my office and take a step towards China, but that still leaves me with quite a journey, and the FOMC still has a way to go to reach neutrality… The judgment here is that the FOMC got it right when it came to addressing current credit market conditions. We are seeing a much overdue, albeit painful, repricing of risk, and just as the pendulum had swung way too far in the “easy” direction in recent years, in terms of credit availability, it will surely swing too far in the “tight” correction as the markets learn to reprice risk. –Richard F. Moody, Mission Residential
The explicit recognition that the market turmoil threatens the economic outlook was stronger than we expected… For the Fed to acknowledge it so baldly suggests they are more worried than it has been possible to discern from recent speeches. It would probably have been enough for the markets for the Fed merely to acknowledge the problems … so to draw a clear line to softer growth expectations is a signal of real concern. –Ian Shepherdson, High Frequency Economics
Also of interest is that they did not change their language around housing… Given that the housing sector outlook has gotten worse over that time frame this suggests a “wait and see” approach to high-frequency data… Nothing in this report suggests that the Fed is entertaining cutting rates anytime soon and supports our view that things would have to get significantly worse for the Fed to respond via a rate cut. Although many market participants are likely to view this as “whistling past the graveyard,” it is entirely consistent with this Fed’s view of the appropriate response to market volatility and the fact that the recent volatility has done little to change the forecast for the real economy. –Drew Matus, Lehman Brothers
Fed policymakers may be signaling that they believe we are still in the midst of a needed repricing of risk, as opposed to an outright credit crunch. Moreover, the Fed believes — as we do — that the direct economic loss associated with the subprime problem is relatively modest (on the order of $50 to $100 billion)… The shake-out could end badly for some market players, but in the Fed’s view, it might be more dangerous to risk reinflating the credit bubble by hinting that the Bernanke put is alive and well. –David Greenlaw, Morgan Stanley Research
The Fed threw the markets a bone, commenting on recent financial market volatility and tighter credit conditions. However, they gave no hint that they would act anytime soon. –Steven A. Wood, Insight Economics
How come no one is calling comrade Rich in NNJ a subversive any more?
Let us all put on our Mao suits and bicycle home in time for Katie Couric’s answer to the question: What if you want to buy or sell but financing has dried up?
How come no one is calling comrade Rich in NNJ a Communist/subversive any more?
Let us all put on our Mao suits and bicycle home in time for Katie Couric’s answer to the question: What if you want to buy or sell but financing has dried up?
whoops, sorry for the double posting
Oh, and in addition to blowing all his money away, ourudson Tea renter friend needs to pay a realtor commission and moving expenses when he moves out. Renters have 3 years to vacate from the time they are informed that their rental is being converted to a condo. So get packing CF! Pay that realtor one month’s rent so that Bob Toll can sell that condo!
#178 Richard: Again becasue you say so , simple as that yep. Take it to the bank.
And yet I watcch all the 500K asking prices in my town go into the high 400K’s.
Again Richard you refuse to acknowledge the amount of recklessness in this market that was absent the last time prices drop. Because back then, people actually ahd to qualify for a mortgage.
It will not be long before we are back to 04 asking prices in quite a few areas, and that looks likely at this point to continue. The real estate party is over, say it after me, retch rinse, and repeat, the real estate party is over.
Yes 3b,
We will be back to 2004 prices very soon. YAWN!
Mahwah
SLD 3 YOUNGS RD $675,000 9/15/2005
SLD 3 YOUNGS RD $700,000 8/7/2007
Donald,
Oh no, prices are down 20%! We are all doomed. Somebody call up Bloodbath, it is time for me to surrender to him! Bagholders are screwed.
Wow, this is looking really bad. Prices are down 30%. Bloodbath is right.
You’re finally getting it!
dreamtheaterr Says:
August 7th, 2007 at 4:41 pm
Chifi, what % of your down payment do you keep in non-cash/bond investments? How do you arrive at that %, given the fluid date you might want to purchase a house?
yan: we put a cap on the down payment….we have what we have, and I am not adding to it
all fresh capital goes into the market
of the downpayment….I hesitate to say anything because I don’t want to anyone here to use a strategy appropriate to MY situation. That said, I started with a 25% chunk and it has changed value as the market has changed. I have not corrected or reallocated this amount (i.e. let it ride).
You cannot rely on this information, or any similar information in the forum. You should retain advice of a professional or your own thorough research to guide you in these decisions and contingencies.
Robert,
Oh no, prices are down 20%! We are all doomed. Somebody call up Bloodbath, it is time for me to surrender to him! Bagholders are screwed.
Wow, this is looking really bad. Prices are down 30%. Bloodbath is right.
You’re finally getting it!
“Let us all put on our Mao suits and bicycle home in time for Katie Couric’s answer to the question: What if you want to buy or sell but financing has dried up?”
Pitty nobody will find out the answer because nobody watches Couric. Her ratings are dropping faster than home prices. The segment should have been on Brian Williams’ show so that people would actually find out the answer!
Rich,
I was being sarcastic. Everyone here should know me well enough to know when I am being sarcastic…
#215, thanks Chifi.
I was curious because I presumed that a person wouldn’t want to commit too much to an asset class displaying equity-like returns, when the investment horizon would be anywhere from a few months to a couple of years. Your reasoning makes perfect sense.
Unlike Richard’s ridiculous calls that are bereft of any thought…
#214 We will grasshopper, we will.
#177 Richard of course you are acknowledgeable as to their savings, of course!!
Clot:
Can I pick your brain?
Client situation for me.
Couple near retirement.
Own in Tewksbury area.
Place worth more than $1M.
Sitting on market since last September.
Just bought near Greenville SC and can move at any time.
Pocket the difference.
#1 Assuming they haven’t budged in asking since last September, and even that wasn’t a market clearing price – What gets it done now?
#2 Are you of the opinion that the longer they wait the more money they will destroy, or will there be a better window any time between now and next Spring? I asking because you would know best about that local area.
I’m a seller and even I am not watching Couric’s segment on that stupid show of hers. I will be flying A380s in MS Flight Simulator!
If someone wants to post a summary of the segment after it airs, please do!
Duck – where do you get all the handy MLS info? Are you an appraiser or something?
Comrade ChicagoFinance:
Could you please clarify for the realtor-troll that when you say:
My wife and I have been stuffing all of our extra money into the stock markets since 2003….WTF are you talking about? We are freaking blowing everything away.
You mean that you are making lots o’ money on stocks, not that you’re blowing the money away.
njpatient,
The MLS info is coming from Rich. I just copied and pasted from his posts.
#168 There will be grasshopper. Manhattan may be the last to capitulate, but it will. It did before, it will again, simple as that. Stop howling at the moon.
comrade scribe Says:
August 7th, 2007 at 5:30 pm
Comrade ChicagoFinance:
You mean that you are making lots o’ money on stocks, not that you’re blowing the money away.
YES, but baby makes 3 ;)
“There will be grasshopper. Manhattan may be the last to capitulate, but it will. It did before, it will again, simple as that. Stop howling at the moon.”
3b,
When the Manhattan market is still strong 2 years from now, feel free to copy and pste that. Why do you want the Manhattan market to fail so much? Are you planning to buy there? I thoughtr you were buying in some “prestigious minutes from NYC BC town”?
Comrade 3b,
During the last bust in the early 90’s, people very often referred to their co-ops as being “worthless” – no buyers, period. Market was utterly dead in the water.
The devalued dollar and foreign investment may make a difference this time – but only for so long and by so much. Foreign investors aren’t looking to be bagholders, either.
внимание
http://en.wikipedia.org/wiki/Image:Changing_Guard_Alexander_Garden_Moscow.hires.jpg
Saddle River
SLD CHESTNUT RIDGE RD $1,895,000 4/27/2005
ACT CHESTNUT RIDGE RD $1,999,900 7/5/2006
EXT CHESTNUT RIDGE RD $1,999,900 1/5/2007
PCH CHESTNUT RIDGE RD $1,899,900 2/15/2007
ACT CHESTNUT RIDGE RD $1,899,900 5/2/2007
ACT* CHESTNUT RIDGE RD $1,899,900 5/15/2007
U/C CHESTNUT RIDGE RD $1,899,900 5/30/2007
SLD CHESTNUT RIDGE RD $1,810,000 8/7/2007
Here’s an example of someone who lowered their asking price about 9%.
As Rich pointed out they were a bagholder who lost money on this deal.
Sufficient response, clueless Troll?
#229 Duck
“Why do you want the Manhattan market to fail so much?”
Why would falling prices in Manhattan be considered “failure”?
Rising real estate prices aren’t inherently good.
RE During the last bust in the early 90’s, people very often referred to their co-ops as being “worthless” – no buyers, period. Market was utterly dead in the water.
Blvd Gardens in Woodside Queens was selling unrenovated one bedroom coops in 1989 for 40k, by 1992 the RTC sold them for one dollar each!!
My RTC coop went from 106K to my purchase price of 27K in 36 months.
That is the type of blood I want to see in the streets.
FYI I saw my first foreclosure listing in the Hamptons today on the Wells Fargo site, last market crash that was the first sign of a collaspe. Once you can’t hold onto your Hampton house it is all downhill from there.
I, for one, welcome our new Russian overlords.
FYI Crashing real estate is good for economy, too many of our children are moving down south cause they can’t afford it up here. There will be plenty of 200K capes and ranches soon which is good news!!
“That is the type of blood I want to see in the streets.”
John [236],
Chuck Wepner.
Just to be clear, I’m not hoping people suffer from this. That’s just wrong.
I just think the real estate industry is going to get very bad for an awful lot of people because many, many folks got greedy and in over their heads.
No doubt many were taken advantage of, too.
John, you provided a great link to foreclosed houses held by a bank the other day … got any other listings from banks?
$200,000 capes and ranches? Yeah. good luck with that. Actually, they alreay exist. They are the ones with boarded up windows and fire ravaged interiors! I hope all of those who went to the red neck states can never afford to come back up. The northeast is only for the elite! Let’s keep it that way..
And Bloodbath,
I love how you conveniently forgot to comment on this listing:
Mahwah
SLD 3 YOUNGS RD $675,000 9/15/2005
SLD 3 YOUNGS RD $700,000 8/7/2007
What was that about falling prices and blood in the streets?
And njpatient,
Rising prices are good. If you think falling prices are good, tell that to all of the people at the lenders who got laid off! If prices keep falling, sooner or later you will lose your job, as with most people here. ALmost everything is connected one way or another to the housing market.
“Here’s an example of someone who lowered their asking price about 9%.”
The price did not come down 9%. It only came down $85,000. We are only concerned about the 2005 sold price, not some asking price that the seller thought of in their sleep. And $85,000 on nealry $1.9 million is pennies!
Robert,
I know you don’t like to acknowledge closing costs and commissions, so I’ll leave that out.
You do realize you need to sell your home for ~$882,000 in order to keep pace with inflation, right?
And that’s what your missing in the sold data I posted above.
Saddle River needed to sell for $1,990,000 to break (EXCLUDING closing costs and commission)
Mahwah need to sell for $710,000 to break (EXCLUDING closing costs and commission)
And I’m being conservative using 2.5% inflation.
Rich
Is it true Babs Corcoran is spreading some bs that those who have sold at or near the peak and are now renting are out frivolously spending their RE gains??? Yo Babs I am sitting debt free on over 100K in investments since my ex and I divorced and sold our place in Spring ’06. That’s debt free Babs. Kissed $30K left in student loans and $8K in credit card debt bye-bye. I can’t tell you how nice it is not having that monthly credit card balance yoke around my neck Babs hoping the year end bonus will cover me. Keep wishing babe.
Hey all. Just back from Tampa.
I took a ride around a couple of historic higher end areas. Beautiful preserved homes. Many for sale and several Tampa City signs on the lawns announcing liens/foreclosures/etc.
It’s happening everywhere. Even in areas where people “have money”.
So what did the segment on the CBS News say regarding the lack of financing for home buiyers? I was too busy flying my Bombardier to watch.
“It’s happening everywhere. Even in areas where people “have money”.”
NOT Manhattan!
“hoping the year end bonus will cover me.”
Someone is going to be disappointed this winter! VERY disappointed!
And Bloodbath,
I love how you conveniently forgot to comment on this listing:
Mahwah
SLD 3 YOUNGS RD $675,000 9/15/2005
SLD 3 YOUNGS RD $700,000 8/7/2007
What was that about falling prices and blood in the streets?
4.8% inflation between 9/05 and 6/07.
so, that house bought for $707400 6/07 dollars. Looks like a loss to me…
Inflation does not matter to the buyer. If a seller is “selling” for a loss (not an actual one, just an inflation one), then how does the buyer save money? If someone bought in 2005 for $675,000 and sold today for $700,000, in a way, both the buyer AND seller lose. The seller did not keep up with inflation and the buyer did not save any money despite the “slump.”
“Gold Coast – Friend in metro homes building just rented out the condo she’s been trying to sell for the last six months. The market is dead Roberto.”
Yes the market is dead. YAWN!
“we sold more than 10% of the homes before there were even shovels in the ground,”
http://www.globest.com/news/963_963/newjersey/162840-1.html
Then there is the best quote of all: “Were killing ’em in Hoboken.” — Bob Toll
‘don’t like to acknowledge closing costs and commissions’
Those in denial will not be convinced even if you consent to ignore reality. If you do so, they win.
#247
In this example, I think Troll might have a point here. In any event, even with inflation a loss of 7400 is hardly 20-30%.
“If someone bought in 2005 for $675,000 and sold today for $700,000, in a way, both the buyer AND seller lose. The seller did not keep up with inflation and the buyer did not save any money despite the “slump.”
Absolutely the best quote;
“I don’t want to be too sophisticated here, but 2007 is going to suck, all 12 months of the calendar year,” D.R. Horton Chief Executive Officer Donald Tomnitz said at a Citigroup Inc. conference in New York. “Our future is not as bright as what we would like it to be.”
https://njrereport.com/index.php/2007/03/07/2007-to-suck
I am willing to acknowledge closing costs. But do not forget that buyers must also pay closing coast. And as far as commissions, they have came down a lot due to flat fee brokers.
Besides, barely anything keeps up with inflation. Salaries (except for those of Bergen County cops) do not keep up with inlfation. Money in the bank does not. Inverstments in this market do not.
Don’t forget the NJ Realty transfer tax, paid by the seller.
“Inverstments in this market do not.”
Don’t make asinine statements like that.
“I don’t know what the hell this country is coming to when citizens undermine markets.”
I agree. The renters here are hoping for a recession, but they will immediatley regret it when that happens because they will be out of a job. YOu know that house you just bought for “20% off” 2005 prices… Goodbye! The bank owns it now!
BC Bob,
Have you not been watching the DOW lately? The subprime mortgagae collapse is going to have devestating affects on investments across the baord. Just ask Bear Stearns!
“Don’t forget the NJ Realty transfer tax, paid by the seller.”
And do not forget the 1% NJ “Mansion” Tax for all homes purchased for over $1 million… PAID FOR BY THE BUYER.
“Have you not been watching the DOW lately?”
Donald,
Please.
For some reason, you entertain me. Therefore I will answer. Who the hell said anything about the Dow. I’ve been saying here, for the past 6 months, that the Dow has already crashed, in comparative terms. Go price the Dow in gold, silver, copper, uranium, nickel, lead, euro, bp, kiwi, loonie, grains. Do you need more? How have the chaps, across the pond, fared investing in the Dow?
You stated that barely anything keeps up with inflation. Again, an asinine satement
ChiFi (222)-
#1 Assuming they haven’t budged in asking since last September, and even that wasn’t a market clearing price – What gets it done now?
They should immediately re-list at a price that will draw a buyer within 30-60 days. Depending on how overpriced they were last September, that could mean as much as 20% off the current asking (their potentially mildly-overpriced listing of last September is probably the local laughingstock by now). The 1M segment is the weakest part of the market here…and just got even weaker with the jumbo meltdown of late last week. Most Tewksburians on the market now suffer from a big case of uniqueness bias, which they need to cure quickly. The truth is, 40%+ of the listings in that township since mid-’05 either expire or withdraw. That percentage is going to go higher in upcoming months.
#2 Are you of the opinion that the longer they wait the more money they will destroy, or will there be a better window any time between now and next Spring? I asking because you would know best about that local area.
They have already waited too long, unless they pare their asking price down to a workable number TOMORROW and try to take advantage of the weak “dead cat” we’re now experiencing. Sept. 1 marks the eve of doom for all sellers here. The faster they can get out, the more equity they will preserve. There will be NO window for an advantageous sale from Sept. 1 out. Just a grinding, inexorable plummet.
ING is paying 4.5% right now … 5.5 if you put your money in a 6-month CD.
Someone posted the five or seven stages of bagholders struggling in a real estate bubble … can you please re-post?
I sense the Troll’s tone getting more angry by the day. He’s bordering on delusional.
The Manhattan market will be storng for years to come because it is a market like none other. One of the BEST advantages it has, besides foreign buyers, is that buyers are in the dark. It is very difficult to find out how much co-ops were sold for and there is no MLS so buyers will never have access to every single listing. Sorry, but Zillow is useless in Manhattan! Some agents keep listings to themsleves so they don’t have to share the commission.
ChiFi-
If you shoot me the ML# of that listing, I can give you a “ballpark” asking price to give to your people.
I think we’re all going to get yelled at like bad puppies when J.B. gets back.
http://news.yahoo.com/s/nm/20070807/bs_nm/usa_mortgage_wrap_dc_2
“But the mortgage mess has created bargains ripe for the picking.”
http://www.news.com.au/business/story/0,23636,22209020-31037,00.html
“MORTGAGEE companies say Australians will have to rethink their borrowing habits after the central bank today lifted interest rates.”
All you have to do to find co-op/condo prices in Manhattan is go to NY Dept of Finance website and check something called ACRIS. Will give you sold prices either by party, address or year.
“The problem is that the subprime crisis has caused a liquidity crisis,” Uwe Fuiten, a senior manager at WestLB Mellon, said.
“So we can’t get a fair price for our investment.”
The scale of the problem…has prompted the head of the German central bank to call repeatedly for calm in the market.”
http://www.reuters.com/article/gc06/idUSL0788685520070807?pageNumber=1
What does Uwe mean, “fair price?”
All right. I created this webapge so that we can all countdown until Clot’s September 1st deadline. WHen Sep 1st comes and goes, I will change the clock to countdown to the winter, which is when there will be a “bloodbath.”
As always, you can click my user name for a link to the dooms day clock!
http://www.happycountdown.com/clotshousingpanic/index.cfm
Tell me what everyone thinks of the clock. I am going to upgrade it with some pictures either today or tomorrow!
http://en.wikipedia.org/wiki/Robert_Troll
Any similarities? How is the RE in the land of make believe?
China threatens ‘nuclear option’ of dollar sales
The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.
Two officials at leading Communist Party bodies have given interviews in recent days warning – for the first time – that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.
Described as China’s “nuclear option” in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.
http://tinyurl.com/267s4n
“I think we’re all going to get yelled at like bad puppies when J.B. gets back.”
Surprisingly, the quality of the posts here remained high despite JB’s absence!
Whatever “ballpark” Clot gives you, add 10% to it!
Duck, you’re crackin me right up.
I like the muzak on the clock. It reminds me of something..can’t remember what.
“Robert”,
If someone bought in 2005 for $675,000 and sold today for $700,000, in a way, both the buyer AND seller lose. The seller did not keep up with inflation and the buyer did not save any money despite the “slump.”
Besides, barely anything keeps up with inflation. Salaries (except for those of Bergen County cops) do not keep up with inlfation. Money in the bank does not. Inverstments in this market do not.
I hope you have placed any savings you have with a financial planner…
I’m not sure who is dumber. Donald/Robert for his inability/refusal to understand simple concepts like the time value of money, or everyone who keeps replying to his nonsense with their own nonsense.
RE 260
wtdirect is paying 5.26% I moved from ING to WT and I’m very happy. Interface is not as slick as ING but much better than HSBCDirect.
Re: #271 wickedO
also from the same article
– Henry Paulson, the US Tresury Secretary, said any such sanctions would undermine American authority and “could trigger a global cycle of protectionist legislation”.
Damn right we would protect. Shut the ports down. Shut ’em down if the bastards try to hold a gun to our heads.
http://www.philly.com/philly/business/homepage/20070807_Radian_buyer_says_it_can_back_out.html
“MGIC Investment Corp. said today that it could back out of its agreement to buy rival mortgage insurer Radian Group Inc., of Philadelphia.
Since it was announced in February, the stock deal has plummeted in value from $4.87 billion to $2.17 billion as the companies faced mounting losses from defaults on mortgages to borrowers with weak credit.”
August 7th, 2007 at 10:32 pm
reinvestor101 Says: Your comment is awaiting moderation.
August 7th, 2007 at 3:20 pm
This is a repost of my original response to BC Bob. It got caught in moderation and I’ve been forced to clean up my language, even though it appropriately describes Bernanke.
First off, my tag is Reinvestor101 not 50.5. Stop trying to be cute with your jokes.
Second, the fed’s job has revolved around saving the financial markets here of late. It would be very wrong of them to ignore the turmoil that they helped to create. People have gotten used to them helping resolve problem like this. Now is not the time to be changing their stance.
Lastly, where the _____ else are the Chinese and everybody else gonna go? The USD is the world’s reserve currency and there’s no other currency that’s going to rise and check the USD, particularly since oil is traded in USD. They along with the rest of the ____ world needs to hold dollar reserves to buy oil. The fed has the room to lower the _____ rates to stamp out this fire without having to worry about inflation.
They need to lower rates IMMEDIATELY and stop this ____ ______footing around. Bernanke needs to stop acting like a chicken____ and do his duty.
BC Bob Says:
August 7th, 2007 at 2:49 pm
50.5 [43],
The nerve of the fed, “fighting” inflation rather than supporting the markets. How Un-American. How preposterous, Bennie and the feds are not stuffing everyone’s pockets with dollars. I guess too many dollars overseas at this point. Seems like Ben wants to maintain this. After all, they do lay a claim to “wealth”. If they come back, what’s our recourse? Sky high interest rates or run the presses 24 hours a day to create more?
By the way, The RE market is not seizing up, it’s simply comatose.
UBS no longer buying “no-doc” mortgages from brokers
http://www.reuters.com/article/bondsNews/idUSN0733559220070807
Good to be home..
jb
testing
thank god Bernanke isn’t a lap dog of Wall St.
Try to imagine for a minute what would happen if he catered to their ever whim.
At that point, why even have bother to have a federal reserve system?
Welocme back JB.
Are you counting down to September 1st?
http://www.happycountdown.com/clotshousingpanic/index.cfm
“- you can’t do #2 if you’re upside down, as more and more folks are (ask Duck, for instance);”
I’m upside down! HA HA! I guess I should walk away from my house then! Why even bother selling it?
If Bernanke fails to do his duty, there will be many, including myself, who will call for the Fed to be abolished and replaced by an institution more attuned to the needs of the financial and real estate markets.
profuscious Says:
August 7th, 2007 at 11:00 pm
thank god Bernanke isn’t a lap dog of Wall St.
Try to imagine for a minute what would happen if he catered to their ever whim.
At that point, why even have bother to have a federal reserve system?
RE 101 #286
I see, so whatever system is in place, it should be to the sole benefit of the financial and real estate markets, is that it?
Why should people buy now instead of renting? A recent post by a renter on Kannekt should answer that question:
“Got my new lease today with a 25% increase versus what I currently pay.
Did anybody got a similar increase?
My understanding was that the conversion was a non-eviction one and that rent increases had to be “reasonable” (and that latest jurisprudence had set that figure around 10%)
In any case, I would think that 25% doesn’t sound “reasonable” at all.
Anybody knows how to start legal actions? or had the same issue recently?
Thanks”
http://www.hobokenx.com/html/modules/newbb/viewtopic.php?topic_id=18376&forum=25&post_id=117414#forumpost117414
duck,
I feel sorry for you. I hope you find a sucker.
That’s an oversimplification of my statement. Obviously, the fed should be concerned about inflated prices as far as staples are concerned, but they’re not supposed to be deflating bubbles. They’ve established a precedent with helping markets over troubled spots and they can’t change course on that. That is now a part of their duties and many are going to hold them accountable for doing their duty.
profuscious Says:
August 7th, 2007 at 11:15 pm
RE 101 #286
I see, so whatever system is in place, it should be to the sole benefit of the financial and real estate markets, is that it?
Charlie Rose on PBS tonight preempted scheduled show with Kofi Anan to talk with a panel about the housing market and Bernanke’s decision. Couldn’t catch all of it, so I hope to catch the repeat tomorrow.
re 101 #290
No offense, but I think you’ve incorrectly presumed what the Fed’s priority should be.
It seems to be a fairly common problem these days. Kind of like when my elderly neighbor presumes that because I’m not there at 7:00 Am to help her cross the street, I must be a lazy s.o.b.; when in fact, I’m in a fire truck headed to a 3 alarm call at the local power plant.
Savvy mate?
Recently I’ve noticed that listing I have been receiving are not showing uyp on Realtor.com Can anyone shed light on why this may be the case. I would think in a slow market realtors would want to reach the broadest audience. Do the realtors have a fiduciary duty to the client or is this just more self serving so they can grab the full commish.
I’d think that China story would rattle the markets more than anything sub-prime should it get the media play.
No offense, but I believe you’ve overlooked what the Fed’s role has actually been over the last decade. The Greenspan Fed altered its role and did in fact save us from market disruption on a few occasions. In doing that, they’ve created expectations and people are going to hold them to it. They can’t go back now. Bernanke must do his duty. A precedent has been well established.
profuscious Says:
August 7th, 2007 at 11:50 pm
re 101 #290
No offense, but I think you’ve incorrectly presumed what the Fed’s priority should be.
It seems to be a fairly common problem these days. Kind of like when my elderly neighbor presumes that because I’m not there at 7:00 Am to help her cross the street, I must be a lazy s.o.b.; when in fact, I’m in a fire truck headed to a 3 alarm call at the local power plant.
Savvy mate?
I am the only one in this house who does’nt give a whit about sports and the only one to see Barry hit number 756, nice video from Hank Aaron, nice moment it was memorable.
KL
RE 101
different time, different fed chairman
When making an investment, I generally avoid presuming a third party will come to bail me out if the deal starts to sour. Unfortunately, the old guy made everyone a little too comfortable.
There’s a new regime, different patrons, and a different agenda. Value your risk accordingly.
When Speculators Get Stupid
In today’s installment, we learn of a builder who bought 2 teardowns next to each other in 2005, knocked them down, and built fugly McMansions, each with the silly big window over the front door. Sold the first 6 months ago, and is about to close on the second.
But when the money is rolling in, and you can’t lose, you Go For It™ and buy a 3rd property next door — for over 4 times what the current owner paid in 2001.
334 White Oak Ridge Road
Short Hills, NJ
Sale History
Jul 18, 2001: $195,000
Nov 02, 2005: $925,000
Satellite photo – house to the right of the new foundation, with a brown roof….
http://local.live.com/default.aspx?v=2&cp=qsqqn68t4v1k&style=o&lvl=2&tilt=-90&dir=0&alt=-1000&scene=7901239&encType=1
The property used to have a sign out front stating “New Construction Coming Soon!” and now has a sign out front stating “Land for Sale.” The lot is as purchased in 2005, with the vacant older house on the lot.
The sellers from July 2001 are no doubt still laughing…
Sorry, in #298 above, the address mentioned was not for the 3rd property (326 White Oak Ridge Road), but for one of the McMansion properties.
But the transaction data is correct for 334 White Oak Ridge Road.
The July 2001 sellers are definitely laughing.
The speculator bought at $925K, dropped about $500K in construction and carry costs, will sell for $2M, so actually made about $500K.
Guess he was saved by the Greater Fool who dropped $2M on the McMansion.
Geez, sorry again, the first post in #298 is actually 100% correct.
Disregard the “correction” in post #299.
I need sleep.
“Why should people buy now instead of renting? A recent post by a renter on Kannekt should answer that question:”
C’mon. EVERYONE knows that kannekt is a “by us for us” Realtor echo chamber. Believe what you read at your own risk.
Besides, even if one person did get a 25% increase, it hardly says anything about the rest of the market. It’s an anecdote at best.
#309 Now we are supposed to feel sorry for him or we are communists, right?
#306 Stop yourself, that is nto the Fed ‘s job to bail people out. Do theri duty? Tahst a little much, more like bail out the crybaby borroweres and lenders.And we are the communists?