From AM New York:
When will the real estate bubble burst?
News of a bursting bubble and increasing foreclosure rates is daily fare in reports of the American real estate market – unless it’s New York City’s market that’s being discussed. Then the picture seems oddly stable; some would even say sunny for the foreseeable future.
The average sale price for a home in the city climbed to $782,000 in the third quarter of 2007, an increase of 20 percent from the same period in 2006, according to figures released yesterday by the Real Estate Board of New York.
“New York City is still considered a cool place to be, and everybody wants a part of it,” said Richard Grossman, executive director of downtown sales for Halstead Property. “I have friends from all over country trying to move here.”
“Unless banks stops lending we [the local real estate market] is not going to fall,” he said.
…
Yesterday’s report found prices were highest in Manhattan, where the average home sold for $1.33 million, or around $1,176 per square foot. The average cost of a home went up in every borough except Staten Island, which saw a 2.8 percent drop.The board’s findings is based on data collected by the city and includes all condominimums, co-ops and one- to three-family homes sold in July, August and September. Despite the glowing data, some cautioned against being too optimistic about the market’s apparent strength.
Gregory Heym, chief economist with Halstead, pointed out that there is the forecast of a downturn on Wall Street.
“Obviously, we don’t know what is going to happen with the Wall Street bonuses,” he said. “That is very important not just to real estate but to the whole economy of the city. If Wall Street starts to lay off large groups of workers, the market could turn.”
From the IHT:
New York City real estate market immune to malaise; home values rise again
None of the bad news about the U.S. housing market has seemed to matter to the big spenders lining up to buy homes and apartments in New York City.
The average sales price for a Big Apple dwelling climbed to $782,000 (€531,178) in the third quarter of 2007, an increase of 20 percent over the same period a year earlier, according to a report released Wednesday by the Real Estate Board of New York.
Prices were highest in Manhattan, where the average home sold for $1.33 million (€900,000), or around $1,176 (€799) per square foot. The cost of a home went up in every borough except Staten Island, which saw a 2.8 percent drop.
The price hikes stood in sharp contrast to what has been happening in the rest of the country, and even the New York City metropolitan region as a whole.
Home prices have been falling in the U.S. because of turmoil in the credit markets, worries about rising defaults of subprime mortgages and an oversupply of housing in some markets. The number of sales of existing homes has been dropping too.
But New York City has remained largely unhurt.
From the Wall Street Journal:
SIV Rescue Plan Faces New Pressure
Moody’s Downgrades
Funds Amid Worries
Of Forced Asset Sales
By CARRICK MOLLENKAMP and DAVID REILLY
November 8, 2007; Page C1
A rescue plan for investment funds that are one source of credit-market concern is under new pressure after Moody’s Investors Service said the funds were liquidating assets to meet financial commitments.
The rescue plan, led by Citigroup Inc., Bank of America Corp. and J.P. Morgan Chase & Co., is aimed at providing cash to the funds, known as structured investment vehicles, or SIVs. The plan is aimed at avoiding a forced fire sale of the SIVs assets.
In its report, Moody’s said it had cut, or might cut, ratings of the debt issued by the funds. Moody’s said certain SIVs owned assets with deteriorating values. Some SIVs now could hit financial triggers that would speed up asset sales. Such sales could drag down the prices further, including those of securities to U.S. mortgages, when prices already are low.
Moody’s, in its report, said it now assumes SIVs would be liquidating assets at distressed prices to pay off financial commitments given the problems SIVs face in issuing new debt or refinancing maturing debt.
The breakdown of SIVs is one of a number of concerns paralyzing global credit markets since this summer. In a separate report yesterday, Citigroup said the world’s biggest banks could face write-downs totaling $64 billion because of exposure of securities tied to subprime loans.
The Moody’s moves yesterday will put more pressure on the banks behind the plan, first announced last month, to form a supersize fund to buy some assets from the SIVs. Without the fund in place to purchase assets from the SIVs, they will be more likely to begin selling off assets at whatever prices they can get to raise money for payments they need to meet to investors who have purchased their commercial paper.
“They are going to have to sell at some point,” said Douglas Long, an executive vice president at London-based Principia Partners, which provides technology support for structured-product managers. “It’s not looking pretty.”
From Marketwatch:
Toll Brothers Q4 net contract value $365.2M vs $706.3M
Toll Q4 net signed contracts 656 homes vs 1,010
Toll Brothers backlog at Oct. 31 off 36% to $2.85B
Toll Brothers Q4 homebuilding revenue off 36% to $1.17B
From Bloomberg:
Next on Wall Street: `Honey, I Shrunk the Bonus’: Mark Gilbert
Coming soon to Wall Street cinemas: “Honey, I Shrunk the Bonus,” plus special matinee screenings of the Tom Wolfe classic “Bonfire of the Vanities.”
For anyone who hasn’t changed jobs recently enough to have secured a guarantee from his or her employer, the prospects of a decent payday in the next bonus round are about as secure as the AAA rating on a collateralized debt obligation.
It won’t matter that your particular part of the business shot out the lights last year. There’s just no way to generate enough profit to backfill the holes in the balance sheet at a time when the board is inclined to adopt a “kitchen sink” approach to its quarterly results.
As the year drags on, more and more regions of the global financial map are sinking into the quagmire of distrust, downgrade and destabilization. Even the stock market is finally noticing that we’re not in Kansas any more and Dorothy might have to do more than click her heels three times to get home.
…
“How bad is this financial crisis gonna get?” Michelle Margherita, who plays bass guitar in one of my local bands, asked me in a London pub this week. The collapse of the U.S. subprime mortgage market is turning out to be the exact opposite of self- contained.
It’s time to cancel your Audi R8 order and hang on to the Aston Martin for another year. You might also want to consider spending more time hanging out on Facebook and MySpace; why risk making things worse for yourself by trading and doing deals if you’re not likely to get paid for that additional risk?
From the Express Times:
Home sales still on decline in Valley
Home sales in the Lehigh Valley fell 18 percent in October compared with last year’s pace, the latest in a yearlong pattern of declining sales even as prices nudged upward.
According to the Lehigh Valley Association of Realtors, 551 residential sales were recorded last month, down from 674 sales in October 2006.
Prices remain about stable. The average and median sales prices posted small increases last month compared with year-ago levels.
But other indicators, such as pending sales and length of time homes are staying on the market, suggest a continued slowdown.
One real estate agent said the latest figures demonstrate the need for sellers to make their properties stand out by offering homes that are “in great condition, staged well and priced well.”
“What is selling is the cream of the crop,” said Nick Kavounas, a managing partner at Coldwell Banker Heritage Real Estate in Bethlehem. “If a listing is not cream of the crop, it’s going to be a frustrating experience for the seller and the listing agent.”
11 Rae Ave, Mahwah NJ
Purchased: 9/2005
Purchase Price: $825,000
Sold: 11/7/2007
Sale Price: $795,000
MLS# 2724096
Does anyone know the average commute time from the Thruway to Morristown at about 6:30 am?
From Bloomberg:
Bankruptcy Law Backfires on Banks as Foreclosures Offset Gains
Washington Mutual Inc. got what it wanted in 2005: A revised bankruptcy code that no longer lets people walk away from credit card bills.
The largest U.S. savings and loan didn’t count on a housing recession. The new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages and struggle to pay credit card debts that might have been wiped out under the old code, said Jay Westbrook, a professor of business law at the University of Texas Law School in Austin and a former adviser to the International Monetary Fund and the World Bank.
“Be careful what you wish for,” Westbrook said. “They wanted to make sure that people kept paying their credit cards, and what they’re getting is more foreclosures.”
…
People are putting their credit card payments ahead of their mortgages, said Richard Fairbank, chief executive officer of Capital One Financial Corp., the largest independent U.S. credit card issuer. Of customers who are at least three months late on their mortgage payments, 70 percent are current on their credit cards, he said.
“What we conclude is that people are saying, `Honey, let the house go,”’ but keep the cards, Fairbank said Nov. 5 at a conference in New York sponsored by Lehman Brothers Holdings Inc.
pre,
What is your take?
http://www.nytimes.com/2007/11/07/realestate/commercial/07kushner.html?ref=business
NYC and the surrounding metro area will always be more expensive. I think the real losses will be in areas that were labeled “up and coming” in 2005.
From MarketWatch:
Bad Subprime Bet Costs Morgan Stanley $3.7B
Morgan Stanley said Wednesday it will take a $3.7 billion write-down to reflect a drop in the value of mortgage-related positions taken by its traders. The hit, which resulted from a speculative trading bet with the bank’s own money, could reduce fourth-quarter net income by about $2.5 billion, Morgan Stanley said. The bank said the loss could grow if markets worsen before its fiscal year wraps up at the end of November, and put its remaining exposure at $6 billion. The write-down is in line with estimates made by analysts this week and well below the $7.9 billion in similar write-offs taken by Merrill Lynch & Co. two weeks ago and the $8 billion to $11 billion in additional write-downs announced Sunday by Citigroup Inc.
From Bloomberg:
Toll Brothers Revenue Falls as Demand for Homes Drops
Toll Brothers Inc., the largest U.S. builder of luxury houses, said revenue fell 36 percent in the fiscal fourth quarter as the prospect of lower prices deterred buyers.
…
“It’s just a very weak environment,” said Dave Crossman, a senior research analyst at Kirr Marbach & Co. in Columbus, Indiana, which manages about $550 million in assets and owned about 386,000 Toll shares as of Sept. 30. “They’re basically facing the same headwinds that everyone else in the industry is facing,” Crossman said before the results were published.
…
The cancellation rate rose to 39 percent in the fiscal fourth quarter from 24 percent in the previous three months, the company said. That’s Toll’s highest cancellation rate in the past five quarters.
…
“We can’t predict how long this down period will last,” Chairman Robert Toll said in the statement. “Many of our prospective clients are sitting on the sidelines watching and waiting.”
I wouldn’t pay a penny for a building with an address of 666, call me crazy…….
KL
BOE and ECB both hold rates steady..
#12, I knew someone who’s address was 666 Church Street
Wall St is obviously critical to the city, but almost equally so nowadays is foreign interest due to the slaughter of the USD. NYC prices are cheap if you’re paying in currency from just about any other industrialized nation. I beleive that is one of the main components bolstering the residential real estate market there, and it will only get stronger. If Wall St was to tank, it would probably only help to make the USD even weaker and thus actually futher increase foreign interest & activity in NYC. It really has become America’s “international city”.
Kushner comments moderated!
dukeb [15],
I agree. Friends from England, come here to shop over a weekend. It’s cheaper than spending the weekend shopping in London. $2 mil for an apt in NYC? How about $1 mil, BP. Also, it’s happy hour, 24 hours a day, for them. They think it’s comical that I pay $10 for a drink, while they pay $5 BP. They come over with empty suitcases.
big (14)-
What’s the big deal? I’ve had “666” embedded in my scalp since the day I was born.
It started to fade when my horns fell off.
i have a friend who lives in CT who’s address is 69 woody lane. no joke.
clot: my first boss went to Princeton undergrad and her roommate was from Tenn….on Thanksgiving break she went to Tenn to stay. While there, she was sitting on the couch with her roommate and she noticed that five or six kids were staring into the living room at her from outside. My boss asked “why are they looking at me”? Her roommate said “…they heard a Jewish person was coming and they wanted to see your horns.” :-P
Richard Says:
November 8th, 2007 at 8:30 am
i have a friend who lives in CT who’s address is 69 woody lane. no joke.
Reech: 15 years ago I used to administer DC savings plans (same job as above) and one of the big novelties was finding notable names of participants….such as “Arnold Van Halen” etc.
My shrewd colleague noted this one…..”Samuel Martin Hardick, Jr.” Since he was Jr., it is quite possible that he used his middle name…..hence S.Martin Hardick….
JB [1],
Here comes a S&L type bailout. The masters appreciate the risk management that the US taxpayer provides.
Pat #6 Depends where on the Thruway took my old boss 45 minutes to 60 minutes from Woodbury commons (Exit 16 Harriman)
Thanks, pain..yep that’s the one.
There are a few dynamics in play in NYC.
1) Wall Street up to now have been strong
2) The weak dollar makes it attractive to foreigners– NYC prices have been flat over the last year when priced in Euros
I expect the weak dollar to continue, but Wall Street looks set to slow. The big problem with Wall Street jobs is that those incomes are not easily replaced.
Also, itulip provides a theory about the geography of housing bubbles moving from the exubs to the suburbs and finally into the cities:
http://www.itulip.com/housingpriceregionscascade.htm
CF..I think we did the same durn allocations at the same company at the same time. I wonder if our workpaper binders came in the same boxes.
#9 tbw The NY area has always been expensive vs other areas in teh country, but it has also declined in the past. Bigger peaks, bigger valleys.
This is in direct contradiction with what I see daily around even the best nabes in the NYC boroughs, with huge amounts of inventory, and listing prices continuing to drop.
This article is misleading, because it’s implying a healthy market, and there’s clearly a crisis for sellers going on right now.
‘The average sales price for a Big Apple dwelling climbed to $782,000 (€531,178) in the third quarter of 2007, an increase of 20 percent over the same period a year earlier, according to a report released Wednesday by the Real Estate Board of New York.’
Re: Pat #6
Sometimes I drive from Westchester to Whippany in the morning. On bad days, the traffic starts to back up on I287 between exit 45 and exit 50. On good days, it is backs up around exit 42
So the first 20-25 miles are at full speed and the last 7-15 miles are ssluggish – maybe averaging 25 miles per hour. I would allow at least 45 minutes. It depends which Morristown exit you take.
Also, I should add that my commuting was around 8 AM. It should be a lot better at 6:30 AM.
richard –
from you post last night #297
re: people in your community “deriding you behind your back” because you rent – that’s crazy. what kind of people do you hang out with?
buying a house was always a huge decision, and by this time, anyone who isn’t living in a cave and is semi-literate can see that this housing fiasco has caused a major financial boondogle for so many players at all levels, and you’re advising that people should buy a house now because some shallow neighbor may talk about them behind their backs? who cares! they can go to h*ll.
don’t you advise your kids not to do stupid things because of peer pressure?
yes – foreigners are investing (or rather speculating) in Manhattan real estate because the dollar is weak. But since these are dollar denominated assets, it will only be profitable if real estate keeps rising faster than the dollar is falling.
I once had one of my peers tell me that I shouldn’t consider renting because then I’ll develop “renter’s mindset”. I asked her what that means and she just shrugged and implied everyone knows what it means.
The context of the conversation was whether either of us should consider applying for a position in SC. My thought was I’d rent out my TH in Pway and rent down there while I feel the are (and the new role) out.
Regarding these mythical foreigners that will support the NYC market…
What about the foreigners that already own, and have taken a pretty big hit due to the dollar valuation.
Sure, perhaps some new foreigners might see value, but what about all the others that already own?
Time to double down?
Homeowners Feel the Pinch of Lost Equity,
The link is at http://www.nytimes.com/2007/11/08/business/08borrow.html?_r=1&hp&oref=slogin
If the trend continues, which will cause the decrease of consumption and thus will cause the recession.
From MarketWatch:
Bernanke paints perilous picture on growth, inflation
The U.S. economy not only faces the risks of a sharp slowdown from the housing market contraction, but also of a surge of inflation from sharply higher crude oil prices and the weaker dollar, Federal Reserve chairman Ben Bernanke said Thursday. Overall in prepared testimony to the Joint Economic Committee of Congress, Bernanke painted a picture of an economy in a perilous position, even though it has shown remarkable resilience so far this year, with third quarter gross domestic product rising at a solid 3.9% annual pace. Bernanke said that he and his colleagues at the FOMC expect the economy to slow “noticeably” from the Q3 growth rate and remain sluggish in the first half of 2008. And there were “downside” risks to this subdued forecast, Bernanke said But Bernanke also suggested that the hawkish members of the Fed might have a point. While the FOMC believes that overall and core inflation to be “in a range consistent with price stability” in 2008, there are “important upside risks” to the forecast.
Full text of the testimony can be found at the Fed site:
Chairman Ben S. Bernanke – The economic outlook
the foreigners love the miami market as well and are just about the only ones foolish enough to continue to buy at inflated prices. i was just down in south beach and i felt like i was on a european vacation. all of the real estate agency’s were advertising in german, italian and of course spanish.
Anyone notice how the article tell us all how great Manhattan and NYC are quotes the average prices? Why not median? Typically, if you see average prices in reporting, its as an afterthought, a follow-up to the median. According to the “expert” real estate salesmen (statisticians who actually know what they are talking about say this too…) average is a faulty measure to characterize a range of values because it is easilly skewed by outliers. Do you think it is possible that there are some extreme outliers in the New York real estate market that skew the average upward?
Nothing to see here… move along.
Pat Says:
November 8th, 2007 at 9:20 am
CF..I think we did the same durn allocations at the same company at the same time. I wonder if our workpaper binders came in the same boxes.
Pat: Vinnie in the computer room was the best.
We didn’t have a Vinnie-type in PHL, but we daydreamed about that. Bunch of tight wads upstairs.
We had to run our own jobs, fight over the queue, hokey up the old printers and 1983 tape drives with whatever paperclips and duct tape we had, and try to get the registers to print.
What about the foreigners that already own, and have taken a pretty big hit due to the dollar valuation.
Sure, perhaps some new foreigners might see value, but what about all the others that already own?
It depends on why they are buying.
If it’s an investment, then a foreign buyer is probably about neutral. Appreciation and currency devaluation have cancelled each other out. Not a great investment, but not a big hit either.
If it’s not an investment (just a place to stay when you’re in town), then the falling dollar is great. Your mortgage payment has been falling (priced in Euro’s) and shopping and dining in the NYC just got cheaper.
Hah, CF..I just figured out why the monthly allocation fees at PW were more than ours at C&L.
The foreigners buying in nyc care less about a 20 percent correction than someone in North Jersey buying a home they will live in for 30 years. With the exchange rates they way they are….this is tip money for these guys
grim Says:
#10 From MarketWatch:
Bad Subprime Bet Costs Morgan Stanley $3.7B
I don’t know .. Maybe its just me but the way these places throw these kind of #’s around is well just disturbing to me… does anyone else agree? I mean were talkin BILLIONS here..
I’m a business owner and its tough enough to make a profit in this climate.. Never the less Billions of Dollars lost in what seems like the blink of an eye..
I just feel like people are getting immune to the #’s we are talkin about.
Just my .02
Tan
I don’t know how foreigners are affecting the NYC market, I’ll leave that to you smart guys. However, I work in midtown and entertain at high end restaurants 3-4 times a week. Believe me when I tell you that the Euros are everywhere, particularly in these restaurants… it’s crazy. The prices at some of the places have recently gone through the roof, I’m on a corporate card, the Euros on the other hand…
Just my 2 cents, back to your statistical analysis.
#43 –
how can anyone say that foreigners don’t care about losing money – or that the rising price of apts. in nyc will cancel out the falling dollar? maybe……maybe not.
i would also think that some foreigners who just want a place to stay in nyc when they’re on vacation will also consider a hotel. afterall, with the weak dollar, they’re cheap too, and there’s no risk.
Prime Manhattan for foreigners seeking pied-a-tiers will now be priced to move due to the fall in the dollar. This presumably should continue the “ripple effect” on the outer boroughs and North Jersey, as residents who are priced out of Manhattan turn to these areas to buy, thus buoying demand.
But the problem is that the wages of these secondary buyers have not kept up with inflation and are not paid in Euros, and they will no longer have “exotic” financing available to buy a $600k house on a $100k household income. Thus, even a continued sellers market in Tribeca can’t sustain the build up in inventory in Mahwah. The fundamenals aren’t there.
Doyle:
So when are you taking us out?
-R
Quick question…historicaly speaking how much percent per year should a home appriciate? Am I correct to think about 3% and if so, would it be appropriate to take a purchase price in 1984 and add 3% each year to get an apprx. value today? I know todays prices will be much higher than what I would calculate but I would like to dream what it would be if things did not go crazy in the past few years.
Interesting lowball/comp killer in Ridgewood.
MLS# 2420437 – 152 John St.
OLP/LP: $594,900
SP: $500,000 (16% off OLP)
DOM: 104
Richard,
I think you are preaching to the wrong crowd here. I understand where you are coming from re renting but I would put it in a different perspective than talking about what other people think. This board is not made up of a bunch of people that care what the Jones think. Most of the people on my block are financial professionals like myself and they all knew this was coming. The difference is they bought low to limit their downside risk and negotiated hard on the sale. In the end each of us wanted our kids to remember the house they grew up in and do so at an early age. That was important to me and so I bit the bullet and will deal with any losses if/when we ever sell. Yes it could cost me $100K for this but sometimes you have to pay up to get your chips. To me it would be well worth it. To others it might not be. It all depends on your risk tolerance and financial position in life.
Richie,
After my tab last night I may have to go into hiding. I’m crafting the “heads up” e-mail to my boss as we speak…
Drinks at the bar:$60
Dinner: $900
Drinks afterwards:$230
Car Home:$80
That’s only a night, by Friday I’ll have been out 5 times this week.
I feel I’m doing my part to keep the NYC economy humming ;)
Doyle,
I don’t know if you hit submit by accident, but I think you forgot the “priceless” punch-line.
Can anyone get me the address for GSMLS.COM #2434203 ?
Thanks.
MLS 2434203 – 322 Rock
JB,
I didn’t even think of it, that does read like a Mastercard commercial… too funny.
I don’t see how foreigners have any real impact outside of a few small pieces of the Manhattan and Brooklyn markets. Certainly not in the suburbs.
Let’s think about those who might buy:
(1) Businessmen or -women who travel to NYC frequently and don’t want to stay in hotels
(2) the very wealthy who have homes all over the world
(3) speculators
(4) people with meager Euro trust funds who see an opportunity to let daddy’s money stretch further in the U.S.
The bottom line is that this is a very small number of people. It cannot carry the entire NYC market, and I certainly do not see how foreign buying alone would have any meaningful spillover into the suburbs
sync,
3% + $5k bonus to the selling agent if sold by 11/10. Sweet deal… for the selling agent.
“re: people in your community “deriding you behind your back” because you rent -”
Richard[297] last night,
Wimp. Reach down and count 2,1 or none.
Usually, bullish sentiment results in a long, bearish, a short. If you’re wrong, so be it, you get stopped out. I can’t even imagine being bearish yet stuck in a losing long position. Pass that one on to those in the community.
Would those be the same people that deride anyone who doesn’t dress their kid in overpriced clothing and push them around in $1000 strollers?
grim, thanks for the lookup. Pway has only one “bad” part and Rock Ave is it. Darn. The part of Pway I like is still unaffordable.
The house next door is for sale too, 289k
I lived in a coop and 20% were old rent controled/stablized people who did not buy at the inside price in 1998 nor at the sponsor bankrupcy auction in 1992. In 1992 they had a chance to buy their own apartments for 3K that at the time were worth 60K. They could have sold them the next day for a 57K profit. I asked my neighbor the renter why she did not buy. She told me the following reasons
maint was 200 a month higher that her rent so what is the point
She would have to follow coop rules, as a rent controlled tennant they can’t alter her lease, she could smoke in hallway, play loud music etc.
She never planned on moving and since she was 45 and had three semi grown kids who were on the lease she planned to live there until she died and since the oldest daughter who was 18 was on the lease and rent stablization allows one free pass to an heir she figured she had the apartment until her unborn granddaughter or grandsons death which is around 100+ years away.
She does not have to fix or maint anything in her apartment.
Her second husband converted their two parking spots to a workshop and does all kind of stuff there can be stopped as he does not have to follow coop rules and since the spots are on her rent stablized lease and it does not mention any restricitons she is free to do what she wants.
Kids boyfriends and girlfriends can come all hours of the night making all types of noice and the coop can’t do much.
Her kids dump crap in the halls and don’t have to worry about our stupid recycling rules.
Basically as a renter she can do whatever the hell she wants, break stuff, make a mess and not give a crap about neighbors or the board. But even better, if one of her coop owning members break the rules she has no problem ratting htem out to the board, cause they have to follow the rules.
In NYC coops with a large amount of remaining rent controled/stablized tenants go for a lot less money cause of the renter mentality.
I actually got my coop for a better price as I was her neighbor.
I later lived in an all rent controlled/stablized building and we all paid way way below market and the owner kept us in slum conditions, the owner did not care about the place and neithter did the tenants who were trapped there. The old lady down the hall paid $400 for a studio in a walk-up in Gramercy Park in 1998 when I left, that is around at least $1,000 below market at that time.
I once had one of my peers tell me that I shouldn’t consider renting because then I’ll develop “renter’s mindset”. I asked her what that means and she just shrugged and implied everyone knows what it means.
grim, I’m not surprised.
Re. Foreigners and NY Real Estate.
I can see why foreigners feeling flush might want to pick up a pied a terre or investment property in Manhattan, but it is the worst way possible for RE values to remain high.
I lived in Jerusalem for several years, which has always had a very heavy volume of foreign purchasers. They purchase with much stronger currency and better incomes than the locals and only use the properties for limited periods during the year.
The end results should be obvious; locals are pushed out further and further and the quality of life suffers. In addition there are many neighbourhoods with no more than 20-50% occupancy throughout the year, local businesses have folded due to insufficient yearly income and year round residents are faced with living in creepy empty buildings.
Of course the home “values” have never been higher, but the city has lost its charm, life and atmosphere. It’s not something to look forward to.
lisoosh #67,
Some of the big cities in India have housing developments built with wealthy Indian expats in mind. They feel creepy too, for the same reasons.
#53 mike –
agree with a lot of what you say except the memories stuff. granted, it does depend on your value system, but still can’t see why kids lose their memories if their parents rent a house.
what about the memories of kids who’s parents own a house, sell and move up? are the memories of the first house wiped out?
i guess the way i see it is that as a parent we do the best we can. if your kids are going to piss and moan because their parents made a financial decision to rent a house for a while until this bubble thing gets sorted out, then you’ve gotta think about how you’re teaching them to view life. people have lived through much worse and have come out fine, in fact, maybe sometimes better.
i’m really not trying to make a judgement on how anyone raises their kids, but this “i bought a house so that my kids can have good memories” reasoning doesn’t add up for me.
p.s.- #69-
the memory of your parents stressed out over money is not so great anyway.
“Daddy, why is the police man making us leave our house?”
Hey guys,
Just a quick question: some very close friends have floated the idea of buying a 2 family home in tandem. Not as investment but rather to live side by side. Is there any good way of doing such a thing? Is there any way of having the 2 units appraised individually and for a lender to structure 2 separate loans with separate liability, etc.?
The inventory in the market I have been looking at, South Orange and Maplewood, has stagnated some with the coming winter, but today there was a significant amount of new listings. The Maplewood houses are still priced in dreamland range, but the prices on these new listings for SO are starting to look a little more reasonable. Is there any possibility that sellers are starting to recognize that there will be a big drop in high season next spring/summer as inventory goes up and demand lags and sellers are looking to meet buyers halfway before the bottom falls out? or is it just my wishful thinking?
From MarketWatch:
Toll’s home orders drained by cancellations
Toll Brothers Inc., the builder of luxury houses, said Thursday its net orders for new homes in the latest quarter fell 35% from a year earlier as cancellations increased, pointing to further losses in the residential housing market.
“We continue to believe that excess supply created by cancellations, speculative buyers, and overly ambitious builders; customer concerns about selling their existing homes; and a general lack of confidence are the primary impediments to our market’s recovery,” said Chief Executive Robert Toll in a statement.
He said tighter lending standards and inability to obtain mortgages as a result of the subprime mess do not appear to be a “major factor” affecting its mostly affluent buyers. However, he said a tougher mortgage market may make it more difficult for buyers to sell their existing houses and move into a Toll house.
From Bluejersey.net:
Voters: It’s Time For the Dems to Lead or Lose
by: nathanrudy
Thu Nov 08, 2007 at 10:11:11 AM EST
Great analysis. Promoted from the diaries — Juan
Election Day was full of disappointments, but the main disappointment was expressed by the voters in the leadership of our state in general and in the leadership of the Democratic party in particular. The voters told our leaders that their chances are up, and they want property tax results now or they will exact revenge.
The country has not been more pro-Democrat than it is right now. Only 19 percent of New Jersey residents gave the Republican President a positive rating two weeks before the election, and the national ratings have more than 50 percent strongly disapproving. General approval of Democrats to run Congress is more than 20 percent higher than that for Republicans.
This should be a time that a blue state like New Jersey begins to crush the Republicans and put them into the minority for decades. But that requires real leadership and management, something we are obviously not getting from our current leaders. And the voters feel this failure deep in their bones.
nathanrudy :: Voters: It’s Time For the Dems to Lead or Lose
But they still want to believe in the Democrats, and want the Dems to run the show. They sent a clear message that they still prefer Democrats, extending the majority in the state Senate and only shifting two seats to the GOP in the Assembly. Locally things went pretty even and Dems came closer than ever in highly Republican areas like Somerset and Hunterdon.
Clearly, however, there are issues. For years New Jersey has been laboring under increasing fiscal problems at all levels of government, problems which have resulted in dramatically rising property taxes and slightly higher state sales and income taxes. Voters can believe in the Democratic platform and still see their wallets squeezed to the point where they wonder if they can feed their kids.
A three bedroom cape in the suburbs – and we’re not talking Far Hills or Princeton but Sayreville or Manville – that used to be called a starter home is costing $6,000 to $8,000 a year in taxes. For a family bringing home $50,000 after payroll and income taxes that’s 12 to 16 percent of their entire bank. Add on home repairs, mortgage interest, mortgage principal and utilities and just having a home can walk off with 30 percent of your income before you even consider feeding the kids.
It’s too much, and the people of New Jersey have known this for years. They’ve been telling the politicians and elected officials this for years. At the same time the voters have been loyal and returned Democrats to control in the state, passed all the spending measures put on the ballot, and asked for relief.
In return they got gimmicks, one-time deals and band-aids. Now the voters have decided that enough is enough, and this election is the last one the Democrats can expect to slide on the fiscal issues.
New Jersey voters support embryonic stem cell research by a whopping 71 to 19 percent, and even Republicans back it with a 52 percent majority. That’s an amazing number that should translate into electoral success for a ballot issue asking for money to fund the research.
But the $450 million bond initiative – small in terms of our $33 billion budget – failed 54/46. That means at least 25 percent of the voters support embryonic stem cell research but voted against bonding to pay for it.
They didn’t vote against stem cell research: they voted against adding more debt to an already crushing load.
New Jersey voters overwhelmingly support lower taxes, with no one I have ever spoken to suggesting that our property taxes are reasonable or necessary to provide the services we want and receive. Sure, many Democrats are willing to compromise on this issue to ensure good services, but even we out here on the left end of the spectrum need a break and recognize that there is waste and redundancy that could easily be shifted to reduce the burden.
And yet the voters turned down a chance to spend another half-penny of the sales tax on property tax relief! They voted against property tax relief because they want property tax reform. No more band-aid solutions that put a few more dollars in their pockets, but a straight up solution to the structural issues that are destroying our state.
They’re sick of add-ons like Atlantic City gambling and the income tax, and those failed to address the issue. They’re tired of band-aids like the Republican NJ Saver or the similarly idiotic Democratic plan that shifted a half-penny of our sales tax increase to checks for homeowners.
Thirty years of evidence proves they don’t work. We’ve begged for real solutions to this problem, screaming from the rooftops that our backs are breaking and we get sophism, smiles and slaps on the back in return.
Well the voters just told us that they have had enough. The Democrats were kept in power this year, but both increased spending and band-aid solutions to skyrocketing property taxes were shot down.
Democrats have less than two years to make a change, a substantial change, to the way things work. In 2009 Corzine’s term is up, and if the Dems keep doing nothing we will lose that seat and we may lose the Assembly.
There’s a lame duck session coming up, and it’s an opportunity for the Democrats to step up and tell the state that they heard the message. They need to either admit that they are simply unable to fix the problem and begin the process to have a Constitutional Convention on property taxes, or they need to begin putting together a fix right now.
There are enough plans out there, enough studies, enough recommendations. We have already dragged this one out long enough, and the time has come to pick a plan and go with it. By the end of lame duck they should have an outline, by the end of February they should have a set of bills, and by the end of June they should have it on the Governor’s desk along with a budget.
It’s possible if we do what is right – a complete restructuring and realignment of governmental responsibilities and rights from fire districts to school boards to City Hall to the Governor’s office – that Democrats will still lose in 2009. The necessary solutions are hard to swallow and will cause a lot of pain, particularly to the governmentally embedded private citizens and corporations who profit so handsomely off the redundancy and waste of our current system.
These leeches will fund Astroturf groups to convince the public that Satan walks the land. Local elected officials will scream that only they know how to deliver services locally and that the county or state can’t do it. Unions will go nuts and rally their members to oppose any radical change. They will all choke off campaign funds and make the election season miserable and difficult.
Yes, it’s possible that the Democrats will lose control of the state government in 2009 if they do the right thing. But I can guarantee you we will lose if we don’t.
So we have a choice between doing nothing and losing for sure, or instituting a fair but tough solution and having a shot at maintaining control.
The voters told us what they want. Now we get to see if our party’s leaders are listening.
Marito , I would say form a llc and have both families pay ‘rent’.
The whole thing sounds a little too weird for me.
Aar,
That wouldn’t address the liability requirement. Both families would likely be partners in the LLC, and need to pledge assets to get the loan.
Mar,
You can certainly buy the property together, but you’ll both be liable for the mortgage.
The only way to establish the liability scenario you propose would be to turn the 2 family property into a condo and refinance the loan(s) afterwards.
would the bank go for the llc without guarantees by the owners?
i would be concerned with the consequences of my friend defaulting on the mortgage. i would also want to make sure the tax exclusion on sale passed through.
how can anyone say that foreigners don’t care about losing money
I didn’t say they don’t care.
Look at people here who are looking to move to NC. If I moved today, I could buy my dream home for $275k. Would I be upset if the value fell? Sure, but on the other hand I’m still living in a beautiful house and have a very reasonable mortgage. I’d care much more if I were struggling to pay the mortgage and taxes on a POS starter cape in NJ and the value drops and now I’m stuck.
Think of it this way; you are retired. You buy a little beach house for $80k in Central America. It’s not an investment place and you do plan to spend your winters there. Their currency falls, so the value of the vacation home drops to $60k priced in U.S. dollars. On the other hand, your mortgage payment also fell by 25%, your taxes fell and every time you visit there on vacation your dollar goes much farther.
#69
That’s why he stressed that it was his decision, was important to him and may not be for everyone. His reasoning doesn’t have to “add up” for you. It sounds like he can afford it and isn’t “stressed out” over $ either.
From Mr. Bernanke:
Meanwhile, Mr. Bernanke predicted that foreclosure rates would continue to rise and painted a grim picture of what such a development could have on the broader economy.
Particularly, Mr. Bernanke said subprime adjustable-rate mortgages posed the biggest threat, as it will be “much more difficult” than before for homeowners with these loans to afford the increased monthly payments.
“Delinquencies on these mortgages are likely to rise further in coming quarters as a sizable number of recent-vintage subprime loans experience their first interest rate resets,” he said.
Mr. Bernanke said 450,000 subprime adjustable-rate mortgages per quarter are expected to reset into higher monthly payments each quarter until the end of 2008.
Mr. Bernanke said the number of foreclosures could be reduced if “financial institutions work with borrowers.” The Fed and other regulators have stepped up pressure on loan servicers in recent weeks as studies have shown that early attempts to rework loans had minimal success.
“Foreclosure cannot always be avoided, but in many cases loss-mitigation techniques that preserve homeownership are less costly than foreclosure,” he said.
Mr. Bernanke said that regulators should be watchful of how these loans are reworked.
“Although workouts are to be encouraged, regulators must be alert to ensure that they are done in ways to protect consumers’ interests and do not disguise lenders’ losses or impair safety and soundness,” he said.
Mr. Bernanke reiterated his plan to issue a proposal by the end of the year that would create new standards and rules for all lenders that issue subprime loans. The Fed has had this authority for years but never used it.
As part of this proposal, Mr. Bernanke said the central bank was looking at certain prepayment penalties, stated-income loans, and “failure to give adequate consideration to a borrower’s ability to repay,” among other things.
“Because many investors had not developed the capacity to perform independent evaluations of these often-complex instruments, the loss of confidence in the credit ratings, together with uncertainty about developments in the housing market, led to a sharp decline in demand for these products,” he said.
http://online.wsj.com/article/SB119452853756986479.html?mod=googlenews_wsj
Anybody can give comments to this one?
MLS ID# 2448281
http://cnj.craigslist.org/rfs/471903418.html
They sold it as oringal price? Unbelievable at today’s market!
BTW…I have no idea how strong demand is in NYC from foreigners. I do not, however, believe that this demand, even if it is strong, will prop up RE markets in the suburbs.
There is just too much inventory to fully absorb any overflow from people priced out of NYC and moving to the burbs due to the alleged foreign invasion.
T C M
I am definitely not saying that there is anything wrong with renting or that it hurts your kids. I did it for quite some time and chose not to buy when I could have in favor of the freedom of renting. What I am saying is that when you rent you are usually on a month to month, yearly, or every two year cycle. The LL could decide to sell the place, move back in, or just be an idiot and raise the rent sky high. Then you would be forced to move and try to find something comparable. For me that represents risk, especially in the suburban NJ town that we just had to move to (all wife). There is a severely limited supply of homes that met our criteria for rent in our town. If you are in a town where there is ample supply then I say have at it. No, a kid would absolutely not be scarred for life for moving, what I was trying to say is that for me it was about ensuring that we had the house we wanted in the town we wanted with the neighbors we wanted. Sometimes in order to basically guarantee that my payments would stay the same and we would be able to enjoy what we want in the town and school system we wanted, buying was really the only option. Yes I took a financial risk (limited by pricing aggressively and hunting for that “diamond in the rough”) and yes I am fully aware of the downside that I could face if I decide to move in the next 5 years. The plan is not to move and the financial aspect of it pales in comparison to the “relative” safety for me of owning my home. As long as I make my payments I am fine. If I lost my job then we would get kicked out of our rental just as fast for not paying as our leveraged house.
From yesterdays thread:
Richard Says:
November 7th, 2007 at 11:18 pm
“you’ll still be a renter with no control over your own living situation. landlord can raise prices on you or kick you out whenever he feels like it. you have zero protection against inflation. sure you can suck it up and move somewhere else but you’re at the mercy of someone else’s decisions not your own. there are two sides to every coin.”
So I thought, you’re right, there are two sides to every coin. And I pulled out some sellers comments from other forums regarding that very topic:
“Our house has been on the market since May. I truly feel almost imprisoned. It just struck me that I’ve never been in a situation like this where our choices are so limited by the whims and circumstances of others.”
“Trapped, angry, tired of cleaning, sick of my life being on hold. Does that just about cover the bases? Oh, and scared too because I’m losing money faster than I can make it.”
“In the past year we have tried to sell two houses ; sold nothing, and now we will be trying to sell another one. … But its hard. One puts their whole lives on hold while we try to sell.”
We’ve been on since May as well and I’m finally at the point where while I pray it sells …. stressing won’t help in fact it could kill me before we are able to sell.”
“Hubby and I always talk about how our house is holding us prisoner. It’s a rollercoaster ride. I have been very stressed”
“were not having to sell now, but it really is messing with our plans to grow our family.”
“I’ve been poised to jump into another house as soon as this one sells, but lately I’m wondering if I really want another house until I’m comfortable that I can get out of it at some point.”
BTW – almost all of the sellers from post #85 were planning on renting for a couple of years after they eventually sell in order to build up a financial cushion and see which way the wind is blowing before making a huge commitment again.
NJ Gator #75
Holy Tolstoy Batman!
Big mortgage #51,
The rate of appreciation depends mostly on what is happening to the value of the underlying land. Since land value is based largely on the proximity it provides to economic activity, land values and home prices rise faster in dynamic, wealthy places New York and San Francisco and slower in areas having weak economies, like Detroit and West Virginia.
An additional factor is supply. In places with few geographic or political barriers to new home construction, such as Texas, brand new houses flood into the market during economic expansions. The new competition pressures the prices of existing homes.
In New Jersey, home prices rose at a real (inflation-adjusted) pace of 2% per year across the past few cycles. That doesn’t sound like very much. But after a decade or two, the separation between 2% real growth and inflationary growth is quite wide. The 2% happened during a period of strong economic growth in New Jersey that probably won’t be repeated. So I believe that real growth will be closer to 1% during the next cycle.
2% real growth equates to 5% annual appreciation on a nominal basis, assuming an inflation rate of 3%, which is about right today. (I created a chart that shows this. Maybe grim could post it again.)
renting –
i didn’t say you said that, it was implied in #45 – “The foreigners buying in nyc care less about a 20 percent correction…”
you have a really good point in #79, and i personally have no idea what will happen to real estate in nyc – it does seem to have it’s own parameters –
i’m just sort of playing devils advocate. don’t you think that some of those potential buyers will consider the possibility of both the dollar falling AND real estate prices falling –
your example assumes that the value of the property in central america stays the same, but what happens if it goes down along with their currency? maybe staying in a luxury hotel would have been a better choice.
I wonder if some apartments in NYC are owned by real estate investment trusts fueled by foreign investments; if so, it would be up to the trust managers when to sell (not the individual investors in the trust).
The majority of recent Manhattan homebuyers are people who already live there.
These are mostly two income households earning a combined income of $250k or more. There are hundreds of thousands of households like this in the New York metro.
If the novelty of foreigners buying in Manhattan for cocktail party conversation wears off, then only will Manhattan top end not be supported by foreigners.
But we’re talking of .01% of the US RE market, so take it with a pinch of salt. The rest of the US is in for a frickin hard landing.
I wonder if some apartments in NYC are owned by real estate investment trusts fueled by foreign investments; if so, it would be up to the trust managers when to sell (not the individual investors in the trust).
does anyone know if this could be happening?
maybe only with condos since coop rules are stricter?
These buildings make a lot of headlines. But they are a tiny minority of sales.
http://tinyurl.com/3d54p7
Bubbledisciple,
It isn’t happening. Real estate investment trusts focus on income-generating properties.
REITs own a couple of apartment buildings in New York City. They don’t own individual condos.
Should add to #91 that Manhattan homebuyers also tend to wield high net worths and a lot of family wealth.
Just finished watching Bernanke being grilled before Congress/Joint Economic Committee on CNBC. He received quite a grilling from a few members. Although he smiled a lot, and appeared to make light of the severity of economic problems, his voice belied his nervousness; it was pretty shaky thoughout.
Ron Paul was interesting to listen to. I know some here think he’s wacky, I honestly don’t know enough about him yet to have an opinion. But he seems to have a straightforward way of talking that’s refreshing. He basically outlined the points that are discussed here frequently on this board about what the fundamental problems/consequences are.
Bernanke, among other choice statements, felt that the housing market should rebound by Spring 08, and hinted about another rate cut.
Aaron and Grim, thanks a lot for the comments! So, the idea would be, i.e., to form a LLC and then have that LLC rent to ourselves for an amount that would cover mortgage, property tax and etc. I get that. One last question: does the LLC needs to do anything to “justify its existence” so to speak, or simply owning the property is enough for the LLC to exist. Does the fact that the property is owned by an LLC change the tax issue at all?
pretorius Says:
November 8th, 2007 at 11:52 am
The majority of recent Manhattan homebuyers are people who already live there.
These are mostly two income households earning a combined income of $250k or more. There are hundreds of thousands of households like this in the New York metro.
________________________________________________
True, but the supply of such households isn’t unlimited, and even they have finite resources as prices continue to skyrocket, particularly as the economy continues to contract, including at the high end. The question is whether appreciation will continue or stabilize, or whether Manhattan will also see some declines? Because the some pool of high income households can’t sustain the level of appreciation that Manhattan R.E. has experienced over the past 10 years–growth will have to be fueled from some other source if it is to continue apace.
with all this bad news from wall street ..where do you think housing prices’s will go???
From the NY SUN…
A precipitous rise in the number of condominium owners who are defaulting on their common payments, an important indicator of future foreclosures, is being reported.
http://www.nysun.com/article/66066?page_no=1
From Reuters:
HSBC to close US mortgage-backed securities desk
Europe’s biggest bank HSBC Holdings said it had stopped selling and trading mortgage-backed securities in the United States, as part of 120 job cuts in its investment bank unit on Thursday.
A spokesman said 100 of the job cuts would be in the United States, mostly due to closing its MBS desk. It will also cease investment bank coverage of the healthcare sector in the United States. The other job cuts will be in Britain.
The decision to cease MBS trading comes after HSBC closed its U.S. subprime mortgage unit Decision One in September, and before that stopped buying subprime loans originated by other lenders, as the U.S. subprime housing crisis deepened.
Grim #8,
My take is that the Kushner and Macklowe deals represented the high water mark in the cycle. Those buildings are worth less today. But both of them’ll make $ if they can hold on and sell at the peak of the next cycle.
I believe that the Kushners trace their roots back to Syria, and for some reason Syrians are in love with Manhattan retail real estate. So something interesting is going to happen with the retail space at 666 5th, which is worth 10x what the office space is worth on a per square foot basis.
It is interesting that many New Jersey real estate sharpshooters seem to have given up on the state recently.
Kushners, Mack-Cali, and SJP have stopped allocating capital into New Jersey, and started investing in Manhattan. Nobody pays attention to this one-way capital flow, but I think it says a lot about the future of New Jersey (bleak) and Manhattan (bright).
JB, my comment in the #90s is awaiting mederation.
#101:grim I feel bad for these people, that got the ax.
But here you have 100 hundred high paying jobs, eliminated just like that.
All of these people were most probably located at HSBC’s downtown NYC office, as that is where there fixed income department is located.
And the chances of these people landing at another firm, in this environment, not happening.
Dow down 180 points. Everything is getting crushed. And we have Joe Six pack hoping somebody will buy his flip.
hehehehahaha
RE always goes up, what a joke?
Maybe Joe Six pack needs to read a chapter from the Book of Wisdom.
“Wisdom clings to a man who seeks it”
River Edge Comp Breaker/Heart Breaker, or whatever we should call it.
***njmls listing number 2733974
this house closed in Oct of 2004 @458,000.
The owners put in a new kitchen,new bath (Home Depot special) re finished the hard wood floors, painting landscaping etc.
I would guess on the low end 15k to 20K in renovations, perhaps more.
House listed in late August at 492K, price dropped one month later to 469K, and still sitting.
HAHAHAHA I was surfin the net and found this article from 2005 and it just make me laugh
http://www.dailyrecord.com/business/business2-Boros17.htm
I think being a renter is great!!!!!
Being able to hang your underware out to dry on the front lawn and have cars up on blocks just cause you can is cool. Plus wearing the stained guinna tee with a can of meisterbrau in one hand and a cheap stogie in the other bending over to pick up the post with your plumbers crack showing is a treat.
Lawn service, pool service, maid service who cares they can take my damm one months deposit since I ain’t paying my last months rent anyhow.
Plus newspapers, magazines, etc. are all free cause I aint leaving a fowarding address.
maybe I will leave a few buns in the oven on the way out too.
34 sync
“I once had one of my peers tell me that I shouldn’t consider renting because then I’ll develop “renter’s mindset”. I asked her what that means and she just shrugged and implied everyone knows what it means.”
She means you might conclude that renting was a better choice and continue to do so, which would be bad because … because …
You can never trust a man with two first names
and no last name!
Re Ron Paul was interesting to listen to. I know some here think he’s wacky, I
if your down payment is linked with equity index fund, you need additional 5% off from the 2005 peak price. if are still long stink oil, watch out. you will see oil all over the street.
Dow down 180 points
Did you catch the NASDAQ? Down 3.6%.
Haha, I would rather have a renter’s mindset than a buyer’s mindset ….
SRS is up again :P
bi #112, did you just predict an oil spill?
HAHAHAHA I was surfin the net and found this article from 2005 and it just make me laugh
http://www.dailyrecord.com/business/business2-Boros17.htm
Good find. Among this list of reasons why we don’t have a housing bubble:
“New mortgage instruments enable more people to afford houses. Adjustable rate mortgages, for example, which start out with low rates. Interest-only payments. Coming are 35-year and 40-year mortgages.”
What a tool
I was trying to figure out BI’s latest as well ;)
if your down payment is linked with equity index fund, you need additional 5% off from the 2005 peak price. if are still long stink oil, watch out. you will see oil all over the street.
Bi,
How’s your position on sort oil doing? Margin calls? If I remember correctly you called a peak at $82.
I knew I should have listen to Stew and went agaist what you said. I missed on some pretty coins here. Lessoned learned.
Let me know what your best investment idea is so that I can bet against it. I need to make some money too.
Renting a house for years on end, purchasing a car (maybe a Camry or Accord) because it is a “good value”, doing all of your shopping at Costco, always buying year old technology (phones, computers, etc.) because you refuse to pay the extra couple hundred $$ for first generation, etc…..you are destined for a boring life and soon enough you will be 80 years old in a crappy condo in Florida checking your watch to hit those early bird specials. Don’t get me wrong — those characteristics reflect a practical and somewhat intelligent mentality, but so damn boring, no? For real, you cannot be happy with that, can you? Isn’t life too short???? I know this will get flamed, but come on, when you were younger and thinking about how life would be for you, is that what you imagined? Surely not. Be a do-er, and not a watcher and a hater. Just my worthless 2 cents.
the market seems agree what bernanke said: we are entering into slow growth period. it means less consumption of oil, less return of equity, lower bond yield and good for real estate investment. the funds are allocating to defensive stocks such as pharmas and utilities.
#121 Imus: there is a happy medium between the two. I think that is what people here are striving for.
Google in the tank … down to 680. At what point do you buy 3 shares?
Apple has fallen off a cliff, too .. was just at 190 and now down to 170 …
my beloved Garmin is now buyable! was at 116 just a week ago … now down to 80
wonder if this is the beginning of the economic hardship?
(sorry been absent lately, fellas … busy as hell)
121# Imus, thats 2 cent gold coins.
Say it….Saaaayyyyy ittttttttttt. So the homebuilders have now hit bottom for the 4th time BI?
#122 bi: Slow grwoth has never been good for real estate. Where do you get this stuff?
NJ Vulture fund trading black box algorithm:
Input = Bi inversed.
Output = kaching.
3b…control yourself! I can mediate if you feel it would be worthwhile.
#111 because … because … If everybody gets that renter mindset, then the value of her house will not go up, up, up.
#129 stu: No, just a momentary laspe on my part, I will return to just ignore mode. After all, I promised Doyle.
IMHO, this was the best “call” ever made on this site..
CastleKing
K. Hovnanian up 28% today. Bernanke is the best. All you have to do to make $$$ is read the posts made by the negative “geniuses” on this site and do the opposite.
Sep 18, 5:07 PM
Hov is currently trading down somewhere around 40% from that “call”
know this will get flamed, but come on, when you were younger and thinking about how life would be for you, is that what you imagined? Surely not.
I have to flame on this…
I doubt most of us thought about IPOD or Iphones when we were younger or lcd tv’s or plasmas. In this comment you are saying everyone needs material things to be happy.
I have nice things a wife, twin boys and too dogs. The only thing I would enentually like is a house. I cannot afford one though.
I do have nice things, but I don’t care if I have the latest and greatest technologies.
To me when I was younger since my dad worked most of the time, something I wanted was to be there for my kids and spend time with them and I do. So dont assume everyone thinks about being rich or famous. Or having the best technology.
It appears that the negative “geniuses” are going to be the only ones left with the positive “cashflows.”
#113 Don’t worry Bi, keep saying oil will go down everyday on this blog and one day you will be right. Then everyone will know how right you were. Even if it takes 365 guesses before your right.
DE? What if oil never goes down? ;)
#131
3b, go for it… hit ’em with a Grasshopper.
#121
Actually, I think the people who don’t watch their budgets are the ones who end up sitting in the crappy condo and going to all of the early bird specials during retirement.
Correct Skep-tic.
Once you embark on the anti-consumerism quest, you begin to enjoy being the envy of all your friends. Sure my home is crappy, but I’m about to buy a second one! Maybe a beach house too?
Imus, when I was a child, I played.
I put away my childish things and had a child. There’s a difference.
I might be boring, but I’m rarely bored.
From Newsday:
Woodbury’s (NY) Delta Financial laying off half its workforce
Subprime lender Delta Financial Corp. is laying off almost half its workforce, hundreds of employees, its chief announced Thursday in an office e-mail that said he had “no viable alternatives.”
Managers at the Woodbury-based firm called in employees Thursday morning and told them the news and by afternoon, many of them were gone, with promises of severance pay from chief executive Hugh Miller.
“While it was our expectation that the reduction in force we experienced this past August would be sufficient to sustain our business through what is a global credit crisis,” Miller wrote in the e-mail, “the recent and unexpected turmoil in the subprime and securitization sectors is having a further and significant adverse impact on our business.
…
The layoffs come after a series of troubles, from 300 jobs cut just in August to suspended dividends and desperate negotiations to get a $60 million loan to weather the mortgage industry crisis. The company has about 1,000 workers nationwide.
“After the last layoff, you could set a bomb off on certain floors and no one would get hurt,” the outgoing employee said. In his e-mail, Miller wished outgoing employees “a positive new beginning” and promised remaining workers to get through the “volatile business cycle and to preserve as many jobs as possible.”
The latest cuts raise questions of how Delta can operate with just half its staff, but it was just the latest subprime lender to fall further.
138….that’s OK I can always eat at 4 or 5….it works fine for me….I also can live very comfortably in a pair of dacron sansabelt pants and white shoes.
IMUS
ALso when I was a kid I didnt’ think about if I was gonna have the lastest and greatest thingss, I thought I was gonna grow up to be a member of the A-Team. But thats just how kids think.
Imus – Someone told me once that there were two types of people – those who put more value on “stuff” and those who put more value on “experiences”.
I’m pretty thrifty when it comes to stuff (cheap in fact)j. I won’t buy the latest gadget when it comes out (no matter how much I might like it) I won’t buy the most expensive car (unless I suddenly become a multi millionaire and then all bets are off) and I won’t put myself in debt up to my eyeballs just for a house.
Then again, I’ll happily spring for foreign travel at a moments notice and have spent many years abroad experiencing other cultures and lifestyles. No stuff to show for it, but a lot more memories than someone who spends every weekend working on a perfect lawn or showing off the newest cell phone to friends or playing the newest video game.
In what way is that boring? In fact getting on a treadmill and running furiously to keep up with all of those purchases and debt sounds a lot more boring to me
#137 Are you sure? Your earlier post on your entertaining expenses, bought back a lot of memories.
I remember when the brokers/brokers used to take us out for dinner, everything top shelf. Post House, Bobby Van’s Peter Lugers, Smith/Wollensky, Il Mulino’s,and all the rest.
$200 bottles of Opus Wine, expensive cigars, nice car home.
Then of course the best tickets to any event in the NYC area, and oh those golf outings.
Anyhow, you sure you OK with a grasshopper, I am thinking I might save it, until he goes completely over the top, but then again…..
#145
I frequent all those joints, I was the client years ago, now I’m the Sales guy. Looking back, it sure was more fun when I was taken out. Plus, no matter how late I stay out now, my little guy still wants to watch Barney at 6a. This morning was a bit rough…
If you dropped a Grasshopper every time he was over the top then you would never stop typing.
How can the unemployment claims keep dropping if so many jobs are being terminated? Something is really not right about those numbers. Is Bush behind this lie too?
#144 lisoosh: nothing beats travel,and I have been fortunate to have done many wonderful trips over the years.
When friends getting married went to Bermuda, Bahamas, Aruba(nothing wrong with them), we went to Europe.
One of the most memorable and (cheapest) times I had was on the Ferry from Dublin to Liverpool, it was a truly magical night.
In my mind trips like that will beat granite countertops any time.
Lisoosh,
Our priorities match. Relative to my friends, the only category I spend more on is foreign travel.
My college roommate (who is a risk manager on Wall Street!) bought a new construction Toll mcmansion with an option arm. House is probably worth $150,000 less than he paid.
Already gave back the car keys to the leased Lexus SUV. Probably the bank will get the house keys soon.
Doyle,
Barney is my nemesis!!! There is something about that show that drives me up the wall. I would trade 8 hours of Mr. Rogers for a half an hour of that fat purple blob and his yellow and green relatives. The fact I wake up to him on Saturday morning is no way to usher in my weekends. Of course Barney is only half as annoying as those kids on the show. Who does the choreography…Stevie Wonder?
#146 Doyle: Definitely fun being taken out. But I used to feel bad for some of the guys, they had young kids and some weeks they were out every night.
Since I had an infant at the time, I could relate, and I would tell some of the guys I worked with at the time (single no kids) to give these guys a break. Some really took advantage of the whole thing.
As far as Grasshopper, a test of endurance I know, but I will try to wait.
I have faith in you 3b….not!
#150 Wait till he move on to SpongeBob/Square Pants.
#152 I will not let you down!!!!
I took the Irish Sea ferry when I was 20 and broke. London to Dublin via bus and ferry was 10 pounds less than the plane at the time, enough to persuade lots of Irish people and me.
Turns out it was a stormy night. The boat swayed so much that the plates in the cafeteria flew out of their trays and shattered. People were vomiting everywhere.
But best memory was the duty free shop. Amazing amounts of alcohol being purchased. I sold my duty free tickets to an Irish woman who used to buy more whiskey than one set of tickets would allow.
Stuw6,
I am well versed in all things Barney, and that was a magical post you just wrote on the subject. My wife actually makes fun of how corny the little boys on the show are. She often says, “I hate that kid”… and she is really nice!
You literally had me laughing out loud in the office.
#138 Or day old bread and cat food.
RE: Manhattan RE
Cities are always in flux and always changing and I don’t think it is possible to completely discount massive foreign ownership. It is possible, especially if the dollar continues to be devalued and the knock-on effect on other national economies is minimal.
A three bedroom Victorian rowhouse in an OK part of London, a very lower middle class residence currently sells for around 500GBP – over a million dollars. It’s not inconceivable for people in that situation, feeling flush, to get together with a couple of friends and buy a studio or one bedroom in Manhattan at what must appear to be bargain prices. Multiply that out over the populations of many countries and cities and those individual sales could have a pretty serious effect.
Those kinds of sales would seriously effect entry level apartment sales in the city and push the local population out. It would also decrease occupancy rates of hotels and the empty apartments would effect neighbourhood businesses, having a knock on effect. Middle class New Yorkers would be pushed out to the other boroughs and CT/NJ/LI/Westchester, effecting those areas. Newark might rise up and the slums move out (tough on Westfield as it would become surrounded).
Manhattan would become inhabited year round only by the poorest and immigrants, the very rich and a few holdout middle class. Businesses might start moving out to be closer to its workforce. If Manhattan loses its cache, the financial centers might move to somewhere like Chicago, the All-American city.
Not inconcievable. Of course this scenario actually begs for a global recession as that would limit foreign money.
3b, I only do one night a week, unless I absolutely have to be somewhere. I try to get the rest done at lunch.
It does wear on you after a while, and people absolutely take advantage.
#159 I know it does.
Ah but the Post House, my hands down all time favorite. Simply the best IMHO.
So do you all see the DOW plunging another 100+ points into the close as people begin to see the writing on the wall…”recession”. I expect China to get hammered tonight!
#158 lisoosh And all and all, it would nto be a welcome development for NYC. A city inhabited by the super rich,and the super poor, not something to aspire to in my opinion.
Lisoosh,
“If Manhattan loses its cache, the financial centers might move to somewhere like Chicago, the All-American city.”
Manhattan always has been the US financial capital and it always will be. Same thing with London and Tokyo.
161#, chinese is different animal. shanghai index has little correlation with the rest of the world. but hong kong follows u.s. market closely.
sign of the times………
SING IT!
WSJ
As China Soars, an ETF Anti-Bubble
By IAN SALISBURY
November 8, 2007; Page C2
If you think the Chinese stock market is overvalued, ProFunds Group is with you.
Today, the Bethesda, Md., fund manager will introduce an “ultrashort” China exchange-traded fund, an investment designed to rise in value when Chinese stocks fall, making it easier for investors to place bearish bets.
The appearance of the fund, called ProShares UltraShort FTSE/Xinhua China 25 ETF, means fund marketers think U.S. investors might be ready to turn against what has been a red-hot investment this year.
As if to underline the point, ProFunds, which specializes in funds that offer magnified and inverse returns relative to well-known stock benchmarks, doesn’t plan a bullish China ETF — just one that goes “short,” betting against Chinese stocks.
[edit]
The iShares FTSE/Xinhua China 25 Index Fund — which follows the same 25 Hong Kong-traded stocks that the ProFunds ETF will bet against — is up 76% so far this year, according to Morningstar Inc. The fund’s annual returns have averaged 57% over the past three years.
[edit]
The aim of the fund will be to rise 2% on a day when the index of Chinese stocks it follows falls 1%, meaning the returns will reflect both the reverse of the index’s returns and the effect of financial leverage, as if the investor had borrowed money to double down.
[edit]
Thanks BI…I see what you mean.
http://finance.yahoo.com/q/bc?s=%5EHSI&t=6m&l=on&z=m&q=l&c=%5EDJI
Oh and here is Shanghia too on the same chart.
http://finance.yahoo.com/q/bc?t=6m&s=%5EHSI&l=on&z=m&q=l&c=000001.SS&c=%5EDJI
3b -I think my best memories are all of cheap, budget travel in my late teens and early twenties:
The $2 a night Cairo hotel room with the giant cockroaches, but the balcony which let you hear the sound of muezzins all over the city.
“Nubian Disco” in the middle of nowhere.
Sudanese camel market.
Waking at 3am to catch chickens for market.
Picking bananas in the pouring rain and foot deep sticky clay mud that had to be cleaned from my shoes every 3 steps.
Hours spent sipping Trappist ale in a market square in Eindhoven.
Even more hours traipsing Amsterdam markets.
Getting stoned while staring at the stars in the middle of the desert in a bedouin encampment.
Sleeping in a car in the rain on Skye and slipping into a hotel for a free breakfast.
Sleeping on the beach.
Sleeping on a roof in Greece and hanging out at bars all day where the waitstaff gave free drinks because they hated their boss.
Being in a bus that got stoned in Jericho (full of soldiers, very tense).
Hitchhiking through Jericho (not recommended) and rescued by a watermelon truck driver from being harassed by two carloads of bored men. (Why are we so stupid when young?).
Two days in an airport with a bunch of other people waiting for a standby spot (what a party).
The list goes on and on.
Now I have a taste for nice hotels and nicer rental cars and comfortable flights and hot showers. And they are enjoyable too.
But they just don’t seem to produce such good stories.
167#, if you look at 1 year frame, shanghai is up 200% while hongkong is up 50% and u.s. is basically doing nothing. for correlation, you have to look at day-by-day. i thought you were going to switch your SRS to FXI or EWH
Manhattan always has been the US financial capital and it always will be.
lisoosh, what made you pick Chicago?
I know…Just playing with ya. I’m well aware how the Asian markets work.
#163 pret: And Rome used to rule the world,and the sun never set on the union jack.
And who would have have predicted the fall of the Berlin wall, and the demise of the Soviet Union,and the rapid ascent of China.
One should be humble enough in life as they get older, to at least appreciate the fact, that things can and do change, no matter how long they have been the way they were.
Not saying you are wrong, but to say always, and it will never change, can lead one to a very narrow view of things.
3b #162 -I don’t think it is something to aspire to either and it would be terrible for the city. I’ve seen it happen to someplace I lived in and loved and it isn’t good.
What scares me though, is the hubris shown by people who insist it could never happen, or any other like scenario. Manhattan has changed before and can change again. That kind of “it could never happen here” blindness and rigid mindset is what allows things to happen in the first place.
syncmaster Says:
“lisoosh, what made you pick Chicago?”
Has an exchange and infrastructure in place and is less attractive to foreigners so less likely to have a large influx of foreign buyers, therefore more stable if the dollar is ever weaker.
Asia focusses on the West Coast, Europe on the East.
http://www.researchrecap.com/wp-content/uploads/2007/11/cdo-writedowns.gif
#171 lisoosh: I agree, (see post 171). Of course Manhattan can change again, and not necessarily for the better.
London was once the center of the financial world, while still important, the new center became NYC, and at some point perhaps somwhere else.
Nothing stays static, perhaps this realization just comes with age( and I am not old). Perhaps it comes form the fact I grew up in NYC, and I have seen it at its worst and its best.
As with many things in life, if you have only seen one facet of something, it leads to a very blinkered view of things.
lisoosh #173,
Could it be that they like the coasts because that’s where the action is at this point in time? If the financial center of gravity were to truly shift to Chicago… wouldn’t all the attention NYC gets today shift to Chi with it?
I blew through my money like crazy from 21-34, but I never went into debt. Had five or six used convertables, rented in around 14 Hampton share houses went sking somtimes 20 -30 times a year and had an apartment in NYC. You can spend it, without spending it and that is something the cheapskates don’t understand. A new Camry or an Accord is just plain stupid. A good 10 year old 911 porsche can be bought and driven for two years and if you are a good wheeler dealer maybe you are out $500 hundred bucks, a grand slipped to the super gets you a $1,000 a month apartment, hampton house shares gets you in the door of a million dollar house for 2K. Live it up BABY, you can be 30 when you are 60!
I save crazy amounts of money for the last ten years cause once you are married with kids there is nothing to spend money on. Mortgage stays the same year after year, no point getting a new car, no point fancy vacations, no point nice dinners etc.
BTW technology is for losers, go have fun.
Renting a house for years on end, purchasing a car (maybe a Camry or Accord) because it is a “good value”, doing all of your shopping at Costco, always buying year old technology (phones, computers, etc.) because you refuse to pay the extra couple hundred $$ for first generation, etc…..you are destined for a boring life and soon enough you will be 80 years old in a crappy condo in Florida checking your watch to hit those early bird specials. Don’t get me wrong — those characteristics reflect a practical and somewhat intelligent mentality, but so damn boring, no? For real, you cannot be happy with that, can you? Isn’t life too short???? I know this will get flamed, but come on, when you were younger and thinking about how life would be for you, is that what you imagined? Surely not. Be a do-er, and not a watcher and a hater. Just my worthless 2 cents.
#6, If you reach the NJ border by 6:45-7ish I think you will probably be able to go 65 mph all the way to Morristown. If you reach it at 7:15, you will probably need to hit the brakes around Boonton. I head north on 287 every day. Most days I pass Boonton around 8ish and it’s backed up. On bad days, it can be backed up all the way to Riverdale.
From Reuters:
Wall St’s subprime CDO write-downs seen $64 bln -Citi
Total write-downs of collateralized debt obligations at Wall Street investment banks will probably climb to $64 billion, according to research by Citigroup Inc.’s global markets unit.
The biggest banks wrote down more than $25 billion of assets in the third quarter.
Falling values of the CDO securities backed by risky subprime mortgage bonds are at the heart of losses disclosed by the world’s largest financial institutions in recent weeks. Morgan Stanley (MS.N: Quote, Profile , Research) was the latest to surprise the market, announcing late on Wednesday that it will write down $3.7 billion in securities supported by home loans.
“Of the many skeletons hiding in the subprime closet, write-downs on banks’ positions on CDOs of (asset-backed securities) are probably the scariest,” said the Citigroup analysts, led by Matt King in London.
bath (124)-
Tank? Naw, just buying opportunities.
All the weak longs/shorts are gonna get blown out; then, it’s back to the usual.
Hey I have a bazzar question – completelly off-RE topic:
Next year I want to take few surfing lessons – what is the best place in NJ????
bi (122)-
“…the funds are allocating to defensive stocks such as pharmas and utilities…”
Uh, bi…utilities started becoming a favorite sector for growth investors about a year ago. The easy money’s been made there.
bath (124)-
Notice how every 4-6 weeks, we get a market purge?
These events seem to coincide with new predictions from bi.
I really wish big pharma would provide free anti-nausea drugs to shareholders. Looking at the pharma portion of my portfolio makes me want to vomit.
syncmaster Says:
“Could it be that they like the coasts because that’s where the action is at this point in time? If the financial center of gravity were to truly shift to Chicago… wouldn’t all the attention NYC gets today shift to Chi with it?’
Well, firstly it was just a hypothetical scenario and I am neither a financial markets whiz nor a psychic so the whole thing should be viewed for what it is.
BUT. The stock market can turn on a dime, the housing market more slowly, cities morph even MORE slowly – these are things which take a long time to play out. Based on a hypothetical of a tanked dollar, lots of foreigners buying up real estate in the center, the city changing, the suburbs ever expanding, eventually something has to burst.
Either a new city is built up from scratch to please the urbane people or an older one is rejeuvenated or becomes the center of focus again – Philly or Chicago would fit that bill.
If the center of financial gravity were to shift to Chicago, the foreign banking money would follow, but not the touristy pied a terre crowd, at least not for a long time. Manhattan isn’t just built on finance anyway, tourism and is a huge income generator and moving the financial center wouldn’t appreciably change that, at least immediately. The effects of less money on infrastructure would take longer to play out. The city’s atmosphere would change considerably though. It would just be the locals who would notice it first, it would take decades before tourists would realize that the city had become an urban Disneyland, and frankly they may not care.
And of course in a billion other alternate universes, the reality could be completely different….so all disclaimers apply.
#102 grim: So that means there are now some less 250K jobs plus bonus in NYC.
But not to worry, there are hundreds of thousand of these jobs/incomes left, hundreds of thousands.
Can anybody seriously defend the case that New York will not be this country’s financial capital, say, 50 years from now?
Sure, but where will the world financial capital be?
My bets on Dubai!
Sure, but where will the world financial capital be?
London
Baghdad.
Imus (121)-
So, surrounding yourself with a bunch of depreciating consumer goods is your definition of a rich life? You seem to confuse a healthy embrace of risk with buying stuff.
I fail to see how delaying gratification in lieu of the pursuit of stuff has any correlation at all to one’s tolerance of real financial risk (which seems to be your point).
Furthermore, the world is full of people who exhibit little-to-no regard for stuff, while taking enormous financial risks (e.g., Warren Buffett).
You seem to be from the ever-growing segment of our population that cannot determine the difference between consumer goods and investments. Perhaps we could rejoin this conversation once you have learned how they differ.
Just something for you to think about. :
TO post 187 – 50 years from now Manhatten might be under water….. Literally – raise of 20 feet of water level ocean will do it easilly – read on antarctic and Iceland Ice cap melting..
One nuke from terrorists.
One Huge hurricane hitting NYC.
Basically any Natural/Unnatural Disaster would wipe Manhattan out – extremelly vulnerable location.
re: financial center of gravity were to truly shift to Chicago
Anyone who was around in and around NYC finance after 9/11 can tell you that there was some real pressure to move the markets and finance companies out of NYC. If a terrorist attack and lots of govermnet pressure at the Federal level did not move the markets and finance companies out of NYC then it would take a calamity of greater proportions to do so.
Al,
Well, then, the next financial capital will be in Tora Bora. Not even the USAF could penetrate there.
The Dow is Green? nice
#194-
Having lived with terror attacks on a regular basis to the point where you become seriously worn down and then become numb, I can tell you that if they were a regualar occurence, the pressure would be far far greater.
It is absolutely impossible to know what will happen in the next 50 years.
More Finance Comedy from England.
“Structured finance basics”
http://www.youtube.com/watch?v=axAjb6fDsPY
grim (184)-
“I really wish big pharma would provide free anti-nausea drugs to shareholders. Looking at the pharma portion of my portfolio makes me want to vomit.”
Do what my friend does. He’s set up a separate database for his big pharma stocks. That way, he doesn’t have to look at them mixed with the rest of his portfolio.
The name of the database?
“Bonds”
When we left the states we rented the wife’s condo in Chicago. Our first renters were messy as heck (and we knew them! mmmm…mistake?). Happily we were luckier the second time around – Point being we value “good” renters (a category I think most of the folks here fit into) and we’ll work to keep them by keeping the rent increases realistic.
After renting a few years abroad if we don’t find a solid bargain on our return we’ll be fine renting while we get the lay of the land and the market shakes out a little more.
Even if Manhattan ceases to be either the U.S. or world financial capital, I seriously doubt if Chicago or Philly would move into that position. The greater liklihood is that it would be another coastal city (maybe San Francisco) domestically, and an Asian city internationally.
Personally – I do nto see why there even should Be “A World Financial Capital”
With telecommunications and Internet getting faster and faster – why not a network of linked Stock exchanges/commodity trading centersin in many locations???
Why centralize??
Clotpoll Says:
November 8th, 2007 at 3:50 pm
grim (184)-
“I really wish big pharma would provide free anti-nausea drugs to shareholders. Looking at the pharma portion of my portfolio makes me want to vomit.”
Do what my friend does. He’s set up a separate database for his big pharma stocks. That way, he doesn’t have to look at them mixed with the rest of his portfolio. The name of the database? “Bonds”
grim: you are looking at the wrong pharma dude…..
I really wish Santa would bring me a Bloomberg for Christmas..
http://bp2.blogger.com/_pMscxxELHEg/RzN1KE3pFgI/AAAAAAAABJY/v-M1Ttqk3Zs/s1600-h/TollComments.gif
Did he mention Hoboken?
All my Xmas gifts will be presented in a black box.
Can anybody seriously defend the case that New York will not be this country’s financial capital, say, 50 years from now?
Will there even be a “financial capital”?
With low-cost high-speed transfer of information across great distances and greater access to information in general, physical location isn’t as important today as it was even in a few years ago. What is going to happen over the next 50 year?
I see a greater democratization of the financial industry over time. Some of the conditions that helped NY rise to the top (like access to an educated population, proximity to industry, access to shipping ports, roads & railways) either don’t exist any more or are less important than they used to be. I think New York will play a smaller and smaller role over time. This doesn’t mean I’m bearish on NYC, just that it isn’t going to have the lock on the financial industry that it enjoys today.
Charlotte an “F”…that suprises me. I thought Charlotte was still okay.
The Dow is Green? nice
Something happen or shorts covering late in the day?
EVERYONE,
The contract is signed, the ink is still wet. I have an home inspection Saturday and then under contract.
I got my super lowball, I think you will all be amazed. I will post you the MLS number once under contract, because it is that great of a deal, but here is something to wet your lips.
Sold in 1997. (6% appreciation a year based on my purchase price)
Sold in 2001. (3% appreciation a year based on my purchase price)
OLP was about 10% appreciation a year from 2001
You.
Dude.
The one who reads this blog and writes the Bing thing.
Yeah, I’m pointing at you.
You really want to be into statistical rubber-stamping? Go take a nap and think about it.
Keep trying, though.
TJ,
Congrats, great to hear!
TJ, that was fast!
TJ
Congrats on becoming one of us dirty home buyers. There is nothing like getting tomorrow’s price today I always say!
JB [132],
I shorted it after that call. It was also my anniversary.
grim Says:
November 8th, 2007 at 4:00 pm
I really wish Santa would bring me a Bloomberg for Christmas..
grim: ranges from $1100-$2500 a month for an open bloomberg with delayed pricing….
oooooooooo TJ…this is exciting….cool.
TJ, was it a 33% off lowball?? If so, nice!!
RentinginNJ Says:
November 8th, 2007 at 4:07 pm
Charlotte an “F”…that suprises me. I thought Charlotte was still okay.
rent: Remember….this is TOLL’S grade for its own projects….
What you say sounds plausible, but it isn’t playing out in reality.
The reason is the network affect. Technology cannot replace the face to face contact that makes things happen.
Though the Implode-O-Meter was unable to track down official confirmation of the above tips, we have been able to confirm verbally from an unofficial source at E-LOAN that a meeting did take place around 3:00 P.M. According to our tipster, at this time approximately 800 employees were divided into two groups, one of 500 and another of 300. The group of 500 was informed that they were being laid off.
Further, our unofficial source indicated that the consolidation is part of E-LOAN’s plan to streamline into prime lending only. Auto lending operations are expected to be eliminated, as well.
Finally, we have received an unconfirmed tip that E-LOAN may be eliminating their wholesale HELOC department.
E-LOAN is owned by Banco Popular. Per a telephone recording that plays while on hold with E-LOAN, E-LOAN has “done over 32 billion dollars since inception.”
Thanks Grim & daily posters (Clot, errr Bi?)
I owe a lot, a whole lot, to the support this blog has provided. There are not to many out there who believed for years the market would go soft. This blog was my solace.
I will tell everyone this, since I am about to become a new home owner. The market has by no means come to its correction. I was “lucky” although hard work and having the “gall” and “audacity” to lowball with fair market bids helps.
I was responding to rentinginnj 207
http://www.halflifesource.com/news/2007/11/07/article9985.htm
Im BAD
TJ,
Can you at least give us an area?
dream,
Technically it is 37% off OLP, but it was listed 3 times. I bought it for 10% off of the New OLP.
Note: For all of the skeptics, I will follow up. Also, the house does not have fire, flood, mold or other damage. I just found desperate homeowners willing to part with a 20% profit over 6 years paying another mortgage.
gary,
Upper Somerset, Lower Morris County. Train Towns. Chatham, New Providence, Basking Ridge, Bernardsville, Berkeley Heights, Far Hills, Peapack/Gladstone. It is one of those:)
OT: those who own mutual funds in taxable accounts……beware everyone, the year-end distributions this cycle are going to be large in some cases, so don’t be caught off guard….especially certain growth-style funds that may not have paid distributions for many years…..payout of between 5-15% of NAV should not shock you……a recent example that raised some eyebrows…
Columbia Real Estate Fund: expects to go ex 12/10/07 with an expected payout percentage between 38.32%-40.68% of NAV – NO TYPO
TJ,
NICE!! Good Move!
Good job, TJ! Can’t wait to hear the details.
Gee Tj…well it’s in Jersey, can’t blame you for being tight lipped cause things here can get bid up during the review…(a bizzare law i think) though less likely these days I would think. Congrats. Hope it is everything you wanted and more.
Can’t wait to hear MORE of the details! *clap*clap* Party at TJs!
Grim & All: Is there any parallel with downturn in 89 on how Manhatten RE prices behaved?
Well, generally we have understood that RE downturn moves from outskirts to inwards. As we know at present we see price cuts in Somerset, Hunterdon, Warren, Sussex counties but not so much in Bergen. How much time it took last time for the NYC to really start getting affected.
TJ for Governor
What you say sounds plausible, but it isn’t playing out in reality.
The reason is the network affect. Technology cannot replace the face to face contact that makes things happen.
50 years is a long time.
I’m not projecting any kind of exodus out of NY, more like growth in other places, as companies are more open to considering other locations for expansion. I also do think technology will play an increasing role, which will make the industry less personal. Even today, computer models and statistical analysis are increasingly relied on for making decisions.
If you asked someone in Detroit 50 years ago if it would remain the car capital of the world, the answer would have been “of course”.
Even if Manhattan ceases to be either the U.S. or world financial capital, I seriously doubt if Chicago or Philly would move into that position. The greater liklihood is that it would be another coastal city (maybe San Francisco) domestically
Who says it would be in the US? With the dollar dead and manufacturing gone why would you lead the worlds financial markets here?
Right now, London is the worlds financial center.
i’m new to the site and don’t know you but that is great news to all looking to find the right opportunity in this market.
I really wish Santa would bring me a Bloomberg for Christmas..
I’m getting mine next week :)
Detroit failed because the people who live there are incompetent and they can’t compete in a global market.
New York and San Francisco are very different. The people in those places are the best in the world at what they do – New York for finance and San Francisco for tech.
Al Says:
November 8th, 2007 at 3:54 pm
Personally – I do nto see why there even should Be “A World Financial Capital”
With telecommunications and Internet getting faster and faster – why not a network of linked Stock exchanges/commodity trading centersin in many locations???
Why centralize??
________________________________________________
I don’t think financial capitals exist because people make some kind of conscious decision that they will–they exist because they great trend in human civilization is towards centralization and urbanization, and when combined with a globalized economy, the result is great concentrations of wealth and economic activity in certain urban centers.
It may well not be NY 50 or 100 or 200 years from now, but if people are still around and trading with each other, such centers will exist, because human experience and interaction cannot all be made virtual. The idea that “technology” will eliminate the need for such interactions isn’t new–it pre-dates Gutenberg, and has acccompanied every tech advance from the cotton gin to the internal combustion engine to the microchip, and it’s always been wrong. **shrug** I guess our great-grandkids will see . . .
Aaron Says:
November 8th, 2007 at 4:48 pm
Even if Manhattan ceases to be either the U.S. or world financial capital, I seriously doubt if Chicago or Philly would move into that position. The greater liklihood is that it would be another coastal city (maybe San Francisco) domestically
Who says it would be in the US? With the dollar dead and manufacturing gone why would you lead the worlds financial markets here?
________________________________________________
You didn’t read the rest of the sentence.
TJ,
Don’t post the MLS #.
Hopefully, that will be your new home, and you don’t know who’s reading this blog. Lots of lurkers.
mr potter said:
TJ for Governor
I think BC Bob should run for president under the slogans:
“Rain makes grain” (Iowa and the rest of the farmbelt)
“Don’t be a d*ck for a tick” (NYC)
Detroit failed because the people who live there are incompetent and they can’t compete in a global market.
They were considered very competent 50 years ago. They just got fat, lazy and overpaid. I’m not saying that will happen to NYC.
New York and San Francisco are very different. The people in those places are the best in the world at what they do
It’s not like there is “something in the water” in those places or a genetic advantage to being born in the New York metro area. “The people” are in those places because they are the right places to be right now. But “Those people” are mobile and will go to Charlotte or Chicago or Miami if the right opportunity presents itself.
NJ always claimed the “right people” argument when it came to pharma. It is still an important place for pharma, but it no longer has a lock on it either. Many places now have an educated population that can support a pharma industry.
I’m not saying NY will end up like Detroit. I think it will remain an important center for commerce in the future. I just don’t know if it will be the “capital of finance” or just one of many important centers for commerce.
Another Short Sale (assuming they can sell it)
MLS 20745971
Sold 07/06/2005 $1,800,000
On Market Today $1,699,000
pretorius Says:
November 8th, 2007 at 4:54 pm
New York and San Francisco are very different. The people in those places are the best in the world at what they do – New York for finance and San Francisco for tech.
pret-a-manger: are you world-class hubris?
BULLETIN!BULLETIN! My cell phone just rang, an low & behold IT WAS MY REALTOR! She just advised me that I should start looking to buy as 30 houses sold in October, 5 of which she sold herself! “The market is turning!” (LOL)
(THIS IS A TRUE STORY!)
Location: Vernon, NJ!
Chicagofinance,
“New York and San Francisco are very different. The people in those places are the best in the world at what they do – New York for finance and San Francisco for tech.”
Just calling it as I see it. Do you disagree?
#248 Mike: “The market is turning!” (LOL) You mean it was bad in the first place?
3b well it was just a little slow!
I didn’t even try to reason with, her no point.
Clot: I think you had mentioned %off numbers from 05 prices that you are seeing in your area. Would you mind discussing those numbers again? Thanks.
#251 Mike: So very true.
“The market is turning!”
Mike [249],
Those damn cell phone problems, just like the commercial. She said, the market is burning.
Can any one check #’s is there a way.Would love to plot decline from asking or maybe just verify homes sold.
pretorius Says:
November 8th, 2007 at 5:29 pm
Chicagofinance, “New York and San Francisco are very different. The people in those places are the best in the world at what they do – New York for finance and San Francisco for tech.”
Just calling it as I see it. Do you disagree?
pret: there are many people in NYC that are here for their jobs….if the job went away….they would soon follow…..save this post and let’s revisit it in 12 months after those who suddenly found themselves structurally unemployed return from whence they came……
SF? That city is so overrated it is laughable. I am not a skier, so I cannot fully appreciate the world-class skiing offerd. I love Napa/Sonoma….the rest of it? Seriously…yawn….and business-wise, the area is broken, worse that NJ, it just has better weather and a bigger attitude.
So anyway, if these places are built on perception, and the perception changes, you have the world passing you by…..Paris is a shell of its former self as an example……most of Italy’s business sector may as well shut down…..to think permanence is ….hubris….
what do a bunch of missed the boat renters know about the market anyways.
http://www.hgtvpro.com/hpro/nws_econ_fin_bus_nws/article/0,2624,HPRO_26528_5742562,00.html
I know I aint buyin’.
“what do a bunch of missed the boat renters know about the market anyways.”
Richard[258],
Quite the contrary, got out before the boat began to sink. Others knew the market was an overbought, oversubscribed, irrational mess. Despite this, some still decided to board the Tiatnic.
HGTV? Comical. I mean absurd. True markets experts. Is HGTV the new 2007/2008 RE market pundit.
3b (252)-
Easily 25% off the ’05 highs, across the board.
Another 25-30% to go, IMO.
Clotpoll,
Does that 25% off the ’05 highs go for Bergen/Essex/Passaic, also?
BCBOB How did that song go “burning down the house”anybody remember that one!I must have missheard her.
gary (261)-
Me no expert on those areas, but from all the grumbling I hear from you and other residents of the prestigious BC, I’d say you have yet to see the big declines.
They will come, though.
mike (262)-
That should be the official song of the RE bust:
“Heres your ticket pack your bag: time for jumpin overboard
The transportation is here
Close enough but not too far, maybe you know where you are
Fightin fire with fire”
“No visible means of support and you have not seen nuthin yet
Everythings stuck together
I dont know what you expect staring into the tv set
Fighting fire with fire…”
That’s prestigous and “haughty” BC. And yeah, very small declines on anything worth while.
Clot as I am in the far end of sussex cty I hoped for a larger declines than more comutable areas.Is this just whisling in the wind or should are location force steeper declines?
HGTV News? Oh boy.
That piece is actually a press release that the NAHB sent out yesterday.
Homebuilders PR’ing housing propaganda? Impossible.
mike (268)-
Hell yeah. They should pay you to live there.
Seriously, the declines should be steeper…especially in areas further from Rt 80.
I guess if home prices drop to what they were five years ago we’ll just hear, “It’s never a bad idea to invest in real estate, the worst that can happen is you’ll break even”
Clot You got the song!We’re showing our age.
25 min from 80 5 min from NY state border.
I’ll be waiting……….to pounce!
Question:
In NJ, or even nationwide, when the public is given data for unsold SFH, does that number include FSBO’s? Or just MLS numbers?
#262 Clot: Thanks, thats what I thought you said.
#259 Richard: I know you and I have a mutual disdain for each other, and have elected to ignore each others posts, but seriously HGTV?
You are really scrapping bottom now.
I’m depressed. Lost a fund manager today…again. I was just starting to trust him after a few years. Figured I was set for while.
I have few funds left. Less than 6.
Do I bail?
Vote?
#258chgo: Give it up, there is no reasoning with the kid. He is still new to the area,and is NY start struck.
As far as SF,nice weather, but as far as weather being better, not so sure, lots of cool,cloudy, rainy, days.
Clot & Mike on deck,
Live from HGTV;
http://www.youtube.com/watch?v=Ozc70JPGRMQ
mike (272)-
Dude, are you living in a tar paper shack with a case of grenades and enough beef jerky to last until March?
If things get rough, you can slip into Port Jervis for more provisions.
#276
Pat, was he Janus? There seem to be a rash of departures from there off late. I just hope Brent Lynn who runs the Overseas fund sticks around, otherwise I’m bailing too.
Pat (276)-
Bail on all of them. Buy individual stocks.
All disclaimers.
It’s only my non-taxables.
I’m running out of exits.
haven’t anybody posting this yet:
http://www.msnbc.msn.com/id/21694890/
Bernanke proposes new mortgage guarantees.
Fed chairman tells Congress losses could match 1980s S&L debacle
As Congress and the financial services industry struggle to cope with rising mortgage defaults and a deepening housing slump, Federal Reserve Chairman Ben Bernanke Wednesday proposed that the federal government guarantee so-called “jumbo” home loans worth up to $1 million.
276, yeah.
Minyoung Sohn.. aka Imgone, Son.
Mikeinwaiting
Just for the record, 28 homes were sold in vernon ( 406 are active) 3 agents sold 2 each noone closed 5.
Come here for the truth Mike, the agents on board love the truth.
KL
dreamtheaterr Says:
November 8th, 2007 at 9:38 pm
#276
Pat, was he Janus? There seem to be a rash of departures from there off late. I just hope Brent Lynn who runs the Overseas fund sticks around, otherwise I’m bailing too.
yan: Janus is being prepped for sale….when they do sell it, bail on all of it…
Schoelzel and Corkins bailing….speaks volumes…..the new paradigm there is no all-stars/all worker bees…..
BC thanks for link old gold!
CLOT Hey we even have running water!
Take a ride ,fall beautiful up here.
I can give you some good spots to eat & drink.
Rhyming Much thanks for info.
406 still high as there were 450 during peak listing time.AS many expire this time period & alot of FSBO who are going without RE agent to lowert price .Declines have been 10 to 20 %,but not across the board.I will wait them out ,want to buy all cash.
Once again thanks to all!
You can either follow this story or you can’t……if not, ignore….if so, what a bunch of piggly a$$holes…
WSJ
How a Good Subprime Call
Came to Hurt Morgan Stanley
By RANDALL SMITH
November 9, 2007
Sometimes, even good bets can go bad.
Before the market for subprime mortgages cracked in February, some smart Wall Street players, including securities firm Morgan Stanley, were correctly betting it would go south.
Morgan Stanley executives had just gained a window into that market from the acquisition in December of a subprime-mortgage company. And a bearish bet helped Morgan Stanley report a 70% jump in profit to a record $2.67 billion in its first quarter ended in February.
Fast forward eight months. Even though the market for subprime mortgages — which are loans extended to the riskiest borrowers — continues to deteriorate, the same bearish bet has now cost the firm $3.7 billion, or $2.5 billion after tax, wiping out most of any profits Morgan Stanley might have made for the fourth quarter that ends later this month.
What went wrong? It turns out Morgan Stanley’s hit has a lot in common with a much larger write-down of $7.9 billion incurred by rival Merrill Lynch & Co. Both firms wound up with huge positions of super-senior segments of collateralized debt obligations, or CDOs, which are securities backed by pools of mortgages and other assets.
The firms held the super-senior CDOs — considered relatively safe investments — for different reasons. Merrill’s total CDO inventory of $32.1 billion June 29 was a byproduct of its league-leading franchise underwriting CDOs. Morgan Stanley’s $13 billion at the start of this year helped hedge and finance its bearish subprime bet, company officials said.
But one common element, Wall Street analysts and Morgan Stanley officials said, was the CDOs paid a higher interest rate than the firms’ cost of financing. That generated seductive profits for both firms until the bottom fell out in October after more modest declines in August and September.
In some respects, the way Morgan Stanley’s subprime bet went awry is similar to how some quantitative-hedge-fund bets soured over the summer. The hedge funds expected low-quality stocks to perform worse than “value” stocks in a downturn, but instead it was the higher-quality shares that got hit.
On a conference call with analysts late Wednesday afternoon, Morgan Stanley’s chief financial officer, Colm Kelleher, said the firm’s proprietary traders began making the bearish bet against the subprime market in December, the very month that Morgan Stanley acquired subprime lender Saxon Capital Inc. for $706 million.
Both the acquisition and the trading strategy were in line with Morgan Stanley Chief Executive John Mack’s stated determination in the fall of 2005 to take more risk with the firm’s capital, a goal that echoed that of former Merrill Lynch CEO Stan O’Neal, who left his position last month following his firm’s losses.
Armed with Saxon, Morgan Stanley quickly climbed to the No. 1 ranking in subprime-mortgage-securities underwriting this year, according to Inside Mortgage Finance, a trade publication in Bethesda, Md. That is up from No. 5 in 2005 and No. 3 in 2006. Merrill, which also acquired a subprime-mortgage company, rose to No. 2 this year from No. 4 in 2006 and No. 7 in 2005.
The subprime-mortgage-underwriting drive left Morgan Stanley with $2.9 billion in subprime loans and $4 billion in subprime-mortgage securities on its books as of August. But that position was hedged by an offsetting bearish subprime bet totaling $6.6 billion.
A Morgan Stanley official said the bearish subprime wager wasn’t begun in December to hedge the subprime underwriting of Saxon. But he said it might have been constructed partly from Saxon-generated assets. And he said it might have been informed by market data that Morgan Stanley was getting from Saxon’s activities.
The bearish subprime bet, which took the form of derivatives called swaps, required Morgan Stanley to pay interest on those contracts, the same official said. To offset the bearish subprime bet and help generate interest income to pay the cost of the swaps, he said, the firm amassed the CDO position that produced most of the losses announced Tuesday.
The biggest piece of the $3.7 billion in pretax paper losses, the firm’s data indicated, came from a write-down of the CDO position from $11.4 billion Aug. 28 to $8.3 billion Oct. 31 — a difference of $3.1 billion. Such securities fell as much as 4.4% in August and 4.5% in September but tumbled as much as 27% in October.
On the call with analysts, Mr. Kelleher said the mortgage-related bets “did not come out of our client-facing activities” such as underwriting.
Instead, he said, “we began with a short position in the subprime-asset class, which went right through to the first quarter.” But as the downturn spread to the senior CDO holdings that were meant to hedge the subprime bet, the firm’s exposure changed “from short to flat to long,” Mr. Kelleher said.
“You go short, expecting a certain predefined range of losses,” Mr. Kelleher said. He added, “That range of losses was burnt through by the excessive market action. And then you ended up effectively going long.”
Through the first nine months of the fiscal year through August, Goldman Sachs Group Inc. analyst William Tanona noted that the bearish subprime bet actually earned Morgan Stanley a profit of $1 billion. But the firm’s disclosure of the paper losses and the position sizes prompted two ratings firms to issue negative outlooks for the company’s credit.
Moody’s Investors Service said the news “raises questions regarding the effectiveness of Morgan Stanley’s trading risk management.” Merrill analyst Guy Moszkowski said the trade was “too big.” Morgan Stanley ousted a team of CDO traders a few weeks ago.
#286, thanks for the heads up Chifi. Much appreciated.
Chicago That was a mouthful ,I I think I got it.Oh well what ever.