From Bloomberg:
Slowing Economy Proves Fitzgerald Wrong: Rich Aren’t Different
F. Scott Fitzgerald had it wrong: In a slowing economy, the rich aren’t that different from everyone else.
Affluent consumers, pinched by shrinking stock portfolios, falling property values and smaller bonuses, are behaving like their less-well-off peers: They’re reining in spending.
That portends a steeper slowdown than originally forecast for the U.S. economy, or even a recession, because the richest fifth of American households accounts for almost 40 percent of consumer spending, the main engine of economic growth.
“Upper-income consumers are the bellwether,” says Joseph Brusuelas, chief U.S. economist at IDEAglobal Inc., a Singapore- based research firm that advises central banks. “When they begin to capitulate, that’s when we all head down.”
Lower-income shoppers cut spending earlier this year as gasoline prices soared above $3 a gallon and higher payments on adjustable-rate mortgages forced some homeowners into default.
Now, the slumping stock and real-estate prices that followed have attracted the attention of the more-affluent — which might have surprised Fitzgerald, who wrote in his 1926 short story “The Rich Boy” that the very rich “are different from you and me.”
Confidence among these consumers dropped in the third quarter to its lowest level since 2004, according to Unity Marketing, a research firm in Stevens, Pennsylvania.
…
“Some of this may simply be the fact that the stock market has pulled back and may be giving some of the well-heeled reason for pause,” says Tobias Levkovich, chief U.S. equity strategist at Citigroup Inc.Part of the pain originated on Wall Street with the proliferation of securities backed by subprime mortgages. Before his ouster this month, former Citigroup Chairman Charles Prince vowed to eliminate or reassign more than 26,500 jobs. Lehman Brothers Holdings Inc. in August closed its subprime-lending unit and announced 1,200 layoffs.
Financial-industry bonuses will decline as profits at securities firms shrink, according to a report by the New York State Comptroller.
Sales of luxury goods “suffer, in a way that regular retail doesn’t, from what happens in the financial markets,” says Kamalesh Rao, director of economic research at MasterCard Advisors.
The longer oil prices remain elevated, while home and equity prices tumble, the more the rich will act like everyone else. “Historically we’ve counted on the high-end consumer to drive the economy forward,” says Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania. “If they pull back, the economy will unravel into recession.”
From Bloomberg:
Swiss Re Has $1.07 Billion Credit-Default Swaps Loss
Swiss Reinsurance Co., the world’s biggest reinsurer, had a 1.2 billion-Swiss franc ($1.07 billion) loss on derivatives in October after the U.S. subprime mortgage crash roiled debt markets.
Swiss Re fell the most in almost 4-1/2 years in Zurich trading after the loss, which amounts to 981 million francs after tax. Losses occurred on two credit-default swaps Swiss Re sold to protect clients against declines in mostly mortgage-related investments, the Zurich-based company said today.
“We clearly made some poor choices,” Roger Ferguson, the former U.S. Federal Reserve governor who runs Swiss Re’s financial services division, told analysts on a conference call. Swiss Re’s loss came less than two weeks after the company reported third-quarter profit that surpassed analysts’ estimates.
From the WSJ:
Commercial Property Now Under Pressure
By PETER GRANT
November 19, 2007; Page A2
The value of commercial real estate, which nearly doubled in the past seven years, is now starting to decline due to the credit crunch, according to a report set to be released today by Moody’s Investors Service.
The report found that the value of commercial property declined 1.2% in September from the previous month. Particularly hard hit were apartments in the West and office property in most states other than California.
The report is an early sign that the commercial-property sector is being dragged down by the growing reluctance of lenders to extend credit for anything related to real estate, which in turn could create a new drag on the economy and additional problems for investors. Declining commercial-property values could lead to an increase in default rates on commercial real-estate loans and on commercial mortgage-backed securities.
No one is predicting that defaults in the commercial sector will come close to rivaling those in the housing sector. The default rate for commercial mortgage-backed securities is about 0.4%, compared with a 20% default rate for subprime, or high-risk, home loans, the hardest hit segment of the residential mortgage market. And commercial rents in many markets continue to rise.
Tad Philipp, a Moody’s managing director, says he wouldn’t be surprised to see the commercial-mortgage default rate double or triple, but he notes that still won’t be “alarming” because historically the default rate is about 1%.
Still, the latest trends “might represent the inflection point in commercial real estate values given the ongoing liquidity crunch,” the report states. Commercial-property values are primarily being hurt by the increasing cost and declining availability of financing. Given the higher cost of debt, buyers need to pay less to get the return on equity they want.
Even a slight decline in values could make it difficult for property owners to refinance their mortgages, especially if they have been paying only interest on their existing debt and not paying down principal. Such interest-only mortgages have become increasingly popular.
From Forbes:
Radioactive Paper
The calamitous deterioration in the subprime mortgage markets continues to expose vulnerabilities and disturbing financial damage to the cream of commercial and investment banking in the U.S.
It is an enormous black eye for sacrosanct institutions–employing true excesses in the form of financially structured products that involve unknowable levels of leverage. Like the excessive loans to Latin America in the early 1980s and the real-estate-cum-savings-and-loan disaster of the early 1990s, Wall Street has gotten itself into another serious jam that may have deleterious consequences on the markets and the economy.
From 1010Wins:
Comptroller: Many NYC Families Could Lose Homes
New York City’s comptroller says about 15,000 New York City families are at risk of losing their homes by the end of the year.
The subprime mortgage crunch this year has driven the number of possible foreclosures higher. There were about 6,700 formal notices to start the foreclosure process in 2004. But this year, that number is on track to more than double to nearly 14,000.
Comptroller William Thompson Jr. says his foreclosure prevention hotline, launched in April, has received 2,100 calls. He says about four out of 10 of the callers are from Queens. About 33 percent of them are from Brooklyn.
From the WSJ:
Fannie, Freddie Feel Default Heat
Falling Home-Value Growth
Affects Even Mortgage Titans’
Stable Borrowers
By JAMES R. HAGERTY
November 19, 2007; Page A14
Fannie Mae and Freddie Mac are proving more vulnerable than expected to anxiety over rising mortgage defaults.
Nervous investors will be watching Freddie’s third-quarter results tomorrow for signs of how much costs related to mortgage defaults are mounting. Freddie’s results follow unease last week by Fannie investors over a change in how that mortgage titan reports credit losses.
The results also come amid growing unease over the impact of the fallout in the U.S. housing market on the two mortgage companies, until recently seen as fairly well-insulated against the full blast of the foreclosure crisis.
…
“We are seeing unprecedented foreclosures and declines in home prices not seen since the Great Depression,” said Joshua Rosner, an analyst at Graham Fisher & Co., a research firm in New York. He expects at least three years of depressed earnings for Fannie and Freddie and thinks they eventually will need to raise capital or shrink their mortgage holdings to maintain the minimum capital backing required by their regulator.
From MarketWatch:
Impac Mortgage estimates wider quarterly loss
Impac Mortgage Holdings Inc., the Irvine, Calif., mortgage real estate investment trust, said it expected to post a wider loss for the quarter ended Sept. 30. The company also said it would be late to file its Securities and Exchange Commission Form 10-Q for the quarter because it needs more time “to properly record and disclose its recently discontinued warehouse lending operations, commercial operations and the cessation of the origination and purchase of non-prime mortgage loans.” Impac expects to file its Form 10-Q in mid-December.
From Bloomberg:
Bond Market to Fed: Recession Threat Means More Cuts
The headline in the financial futures market these days says Federal Reserve Chairman Ben S. Bernanke is withholding some vital information: The economy is so bad the central bank will have to lower interest rates at least three-quarters of a percentage point to avoid a recession.
Bernanke’s two rate cuts since September failed to reassure the bond market, where volatility has risen four of the past five weeks, according to Merrill Lynch & Co.’s MOVE Index. Yields on Treasury bills, the haven for bond investors in times of turmoil, are near their lows of August, when losses on securities backed by subprime mortgages froze credit markets.
While the record low dollar and the fastest inflation in 14 months give policy makers reasons to keep the target rate for overnight loans between banks at 4.5 percent, traders expect 3.75 percent early in 2008. Interest-rate futures on the Chicago Board of Trade show the Fed will cut borrowing costs in December and again in the first quarter, as the worst housing slump since 1991 deepens and retailers including J.C. Penney Co. and Macy’s Inc. forecast slumping sales.
Investors are sending the message to Bernanke that “you’re wrong and we’re going to lead you to the next ease,” said Thomas Tucci, head of U.S. government bond trading in New York at RBC Capital Markets. The firm is the investment-banking arm of Canada’s biggest bank.
Fed fund futures show traders see a 90 percent chance the central bank will reduce its target a quarter-percentage point to 4.25 percent at its Dec. 11 meeting, 67 percent odds of another 25-basis-point cut in January, and a 43 percent likelihood the rate falls to 3.75 percent in March. Policy makers already lowered the target from 5.25 percent in August.
This article is using pure sensationalism by using a “soundbit” to create controversey. Why is the great depression, an event that occurred in the distant past and having absolutely nothing to do with today, even mentioned? This is the second time in a week where some prominent has said something similar, the other person was Wells Fargo’s CEO. This is a perfect example of negative talk designed to shake confidence.
“We are seeing unprecedented foreclosures and declines in home prices not seen since the Great Depression,” said Joshua Rosner, an analyst at Graham Fisher & Co., a research firm in New York. He expects at least three years of depressed earnings for Fannie and Freddie and thinks they eventually will need to raise capital or shrink their mortgage holdings to maintain the minimum capital backing required by their regulator.”
Bernake is totally clueless. Greenspan would have been way ahead of the curve. Bernake is too timid for me. We need at least an 100bp cut right now. Also, new mortgage products are needed right now.He needs to stop playing around, and get serious.
“Investors are sending the message to Bernanke that “you’re wrong and we’re going to lead you to the next ease,” said Thomas Tucci, head of U.S. government bond trading in New York at RBC Capital Markets. The firm is the investment-banking arm of Canada’s biggest bank.”
Why not 200bps? Or 300bps? Hell, lets go ZIRP. Worked for Japan, didn’t it?
25.25 (9)-
Shut up, troll.
(9) Investor
We are in this mess BECAUSE Greenspan lowered rates. If he lowers the rate too much recession will be spelt like this ” DEPRESSION”
Jim, from overtaxed NJ
Lawrence Yun, Chief Economist at the National Association of Realtors, has used the GD reference on a number of occasions as well.
From CNBC:
Fed Official Says Housing Market to Weaken Further
Minneapolis Federal Reserve Bank President Gary Stern said on Monday he expected the U.S. housing market to weaken further because of a large pool of unsold homes.
But employment and incomes were still rising, Stern said, and that would underpin consumption.
“The adjustment in the housing market has still some way to go. The reason I say that is because of the huge inventory of unsold homes,” Stern told reporters in Singapore.
“I would expect new home building to remain quite constrained. It is also true foreclosures will go up rather than down over the next several quarters,” he said on the sidelines of a risk conference in Singapore.
reinvestor101 Says:
what new mortgage products would you like see?
As Grim continues to to inform the perfect storm
just keeps moving along.Its like watching a slow motion train wreck.I would think that mass media would be sounding the alarm more loudly(as they love to hype).Someone doesn’t want to
scare the sh*t out of general public.Soon they will not have a choice then it hits the fan.
This is an election year,Bush crew may be smarter than I think.They would like to hold this off until election or rather public awareness.They will fail,but have done well so far.
reinvestor101 Says:
We need at least an 100bp cut right now. Also, new mortgage products are needed.
It’s easy to see the fear and terror in your eyes. You’re about to lose some money and it will hurt. Panicky postings on this blog won’t help. Lashing out at the people who are bearish on real estate here won’t change that either
what new mortgage products would you like see?
100 year negative amortization loans with zero down payment, no income, asset, credit, or FICO verification. Just to be sure those greedy lenders won’t hold back the cash, lets eliminate the property appraisal and inspection requirements as well.
reinvestor Low rates will not make this go away
it has to correct.Learn to accept what can not be changed.
#18 Can I get one off those!3 mllion dollar home in Alpine makes alot of sense with my income!We can all have one.
While we’re at it, let’s ask Fairyland Mortgage to eliminate any TIN/SSN requirements, any limitations surrounding second, vacation, or investment properties.
This is fun!
How about asking the lender to waive their right to foreclosure? Even better, let’s change the terms of the mortgage so that it’s unsecured!
Now for the cherry on top, free downpayment assistance from Uncle Sam! That’s right! The new government cheese is your 20% down.
From the WSJ:
Goldman Says Citigroup Faces
$15 Billion CDO Write-downs
By KIMBERLY A. VLACH
November 19, 2007 8:17 a.m.
LONDON — Citigroup Inc. stock was downgraded to “sell” from a “neutral” rating by Goldman Sachs Group Inc. Monday, with the brokerage estimating the group will incur $15 billion in write-downs on collateralized debt obligations over the next two quarters.
Citigroup will feel “the pain” of a worsening consumer-credit environment in its retail banking and cards divisions, Goldman Sachs said in a research note.
“Given the firm’s exposure to CDOs, subprime mortgages, SIVs [structured investment vehicles] and leverage loans, it will be challenging for the firm to achieve its desired targets,” said Goldman Sachs.
The group is facing mounting pressure across many businesses due to deteriorating consumer and housing metrics.
“We do not expect there will be a ‘quick fix’ to some of Citigroup’s issues and it will likely take the new CEO some time before he/she decides on the appropriate course of action to take,” Goldman Sachs added.
From the Star Ledger:
N.J. cities, towns near top, bottom of crime survey
controversial survey of national crime statistics has ranked Camden and Newark among the nation’s 20 most dangerous cities, while two Shore towns made the Top 10 list of the country’s safest communities.
Detroit, Mich., was named the country’s most dangerous city. Camden ranked fifth on the list, holding the same place it did last year. Newark ranked 20th, up from 22nd place in 2006.
…
Brick Township, ranked first among the nation’s safest in 2006, was bumped to third place by Mission Viejo, Calif., this year.
“You can make statistics say anything. When we got the number-one ranking, that was great, but I’m not a big guy on statistics,” said Stephen Acropolis, a long-time councilman recently sworn in as Brick’s mayor. “You don’t ever want to be lulled into a false sense of security.”
Toms River ranked ninth among the nation’s safest, up from 14th place last year.
mike (16)-
PPT in full ready mode, just waiting for the signal. Carribbean trading desks locked and loaded. BC’s call is that this Friday, they all swoop in and try to short everything counter to the USD into the crapper. What evidence exists that he’s wrong?
I also think the slop window at the US Pawn Shop (er…US Treasury) will continue to churn the swill.
Wish I could get terms at the window…
We need at least an 100bp rate hikes right now to combat rampant inflation!!
“Bernake is totally clueless.”
50.5 [9],
And you are a dolt.
BB can slice and dice the ffr back to 1%. It does not matter. It’s only a bailout for the banks. Current interest rates are not an impediment. The conundrum is massive debt and leverage. How does a lower ffr solve this predicament?
Some may view a 10% decline in prices as a buying opportunity. However, those that are forward looking, view it as the beginning of a major bear market, accompanied with the onset of credit deflation.
Cut all you want, it will not gravitate into the hands of an elephantine, indebted, John Q.
Clot[24],
Beginning with the London close on Wednesday?
BC (27)-
Why not? While some of us are having turkey dinner, the PPT will be having roast buzzard.
Reinvestor –
Why would they want to ‘shake confidence?’ What would that accomplish? Please don’t go with the ‘controversy sells newspapers’ angle because nobody’s been buying newspapers for years.
Everyone reads them free online.
You simply refuse to look at facts.
Would someone with MLS access mind finding historical listing information on MLS #2396547 for me? Thanks in advance.
Bloomberg reports record bonuses on Wall Street this year – up $2,000,000,000 from last year with an average bonus of $202,000/person, four times the average salary. This, despite the fact that investors will have lost $75,000,000,000 this year.
reinvestor: he is the classic perma-real etsate bull. Privatize the gains (when everything is great, the money is mine!!), and Socialize the losses( the market is crashing, people must be helped!!).
Is this the new improved American, self centered cry bsby?
And the message from the street to those who got laid off? Oh well, whatta ya gonna do?
I agree with reinvestor on the matter of sensationalism and the “depression” references mentioned in every housing broadcast. That is kind of jumping the gun a bit, no?
AO,
Purchased: 11/2000
Purchase Price: $447,000
MLS# 2361554
Listed: 1/9/2007
OLP/LP: $829,000
DOM: 94
Withdrawn
Relisted
MLS# 2396547
List Date: 4/15/2007
OLP: $799,500
LP: $649,500
DOM: 218
Active
Thanks.
Are there any good calculators out there for taking a historical home sale and adjusting it to present day based on CPI+(1-3)%?
Gary,
Thanks for pointing out the bonuses article.
It is important to remind people that 2007 has been another year of super profits for the banks. This fact has been clouded by all the hype about residential mortgage problems.
For example, 2007 profits will set a record for my company.
#34 tbw: sensationalism on the way up, and now on the way down.
pretorius 37,
Which is why I believe decent homes in desirable neighborhoods in the NYC metro area will remain flat for a few years at worst. In fact, the next run up might be more unbelieveable than this previous one.
I think this bonus thing is almost downright cruel but it is what it is and it’s driven by the most competitive people in the world. Do I like it? Not really. But then again, my opinion is miniscule.
thatBIGwindow Says:
I agree with reinvestor on the matter of sensationalism and the “depression” references mentioned in every housing broadcast. That is kind of jumping the gun a bit, no?
I have to admit that the media is turning on the doom and gloom spigot a bit much. Right now, the data is mixed as far as the overall economy is concerned. There is a growing number of ominous signs, however, that shouldn’t be ignored. The president of Merrill Lynch didn’t get fired because he did a good job of assessing risk.
Auto sales could hit 15-year low
http://www.reuters.com/article/Autos07/idUSHO86949920071119
Wall Street heads for lower open after Citigroup downgrade
http://www.reuters.com/article/hotStocksNews/idUSL3057195020071119
Grim
(40) is in moderation, whatever that mean
Grim
(40) is in moderation, whatever that means
BW Article, by Steve Rosenbush
The Economy’s $2 Trillion Worry
The subprime spread continues: A Goldman Sachs report says the overall impact of mortgage losses on economic activity could be huge
a new report from Goldman Sachs (GS) says losses from subprime exposure could be much larger than recently assumed, hitting as much as $400 billion. But that’s not the extent of the financial carnage: Goldman said the full impact on the economy could be even more substantial, because the losses could compel banks and other lenders to curtail lending by as much as $2 trillion.
Wait a second – you mean that real estate and the banks are still in trouble? But, but, the Fed injected billions of pretend money just a few days ago and the Financial Accounting Standards Board said never mind about the FAS 157 rule that would have made those nice banks actually try to put a price on their Level 3 stuff. Now the banks have a whole year to get the dead bodies out of the basement. And that didn’t fix everything?
(Gotta quit – I’m about to barf.)
I thought FAS 157 passed for everything but non-financial assets…
Question for BC Bob or Clotpoll how many trillions does it take to short the shorts?
and how can you tell the PPT is on a buying spree since the Fed intentionally stopped collecting and publishing the M3 last year.
Ron Paul has called them out on it but his bill is languishing in committee.
http://thomas.loc.gov/cgi-bin/bdquery/z?d110:h.r.02754:
#39 gary: Well that is this year, and how about next year? As someone who has been on the street a long time, and spent most of his career at one of the big firms, the mythical firm on Wall St,
I can tell you the bonus thing is way over hyped, but you seem not to heed that.
I would simply add, how many of these people who will be getting this mega bonus money already have houses?
There are simply too many desireable towns in the the NYC area, to absorb all the inventory that is for sale now,and that will be going forward.
Also a change from the last few years,are the layoffs on the street, there are soem bing busks jobs being eliminated now.
I know you and I have discussed this before, but I wll say again, you put far too much emphasis on Wall St and its effect or potentail effect on housing prices.
For instance the town I have lived in for many years, good schools close to NYC, a wannabe town if you will, but still considered desireable, the over whelming majortiy of the people I know, both friends family and acquatienances, do not work on the “Street”.
Oh and as an aside, the top residiential areas for Wall St big honchos (outside of Manhattan) is Westchester and Conn, NJ is third.
Gary,
For the past 25 years across this country, the rich have become richer while the poor have become poorer.
This trend has accelrated in New Jersey during the past several years. Incomes and net worths have surged for New Jerseyans exposed to Wall Street jobs. At the same time, impoverished Mexicans have been flooding into the state like never before. This place is beginning to feel like LA, without the nice weather and with better public transport.
“Down here it’s just winners and losers and don’t get caught on the wrong side of that line” – could be my favorite Springsteen line and captures how I feel about living in this state
From Bloomberg:
UBS Writedowns on CDOs May Be `Substantial,’ CreditSights Says
UBS AG, Europe’s largest bank by assets, may make “substantial” losses on $20 billion of collateralized debt obligations with the highest ratings, according to independent research firm CreditSights Inc.
UBS reported its first quarterly loss in almost five years on Oct. 30 after the U.S. housing slump led to about $4.4 billion in writedowns on fixed-income securities. CreditSights calculations show that more than $9 billion of so-called super senior portions of CDOs owned by Zurich-based UBS is at risk of being marked down in future.
“While we do not expect it to make the additional $9 billion of writedowns estimated by our model, we do not see how it can avoid further substantial losses,” CreditSights analysts led by Simon Adamson said in the report. “UBS is by far the most vulnerable bank in absolute terms” out of the nine European banks surveyed by CreditSights, the report said.
Super senior portions of CDOs were considered “virtually risk free” and the idea of writedowns was “unimaginable,” the report said. Ratings firms cut 28 super senior portions of CDOs including eight downgraded to high-risk, high-yield, or junk, JPMorgan Chase & Co. analysts said in a report this month.
Let me ask a question about the following:
grim Says:
November 19th, 2007 at 9:23 am
AO,
Purchased: 11/2000
Purchase Price: $447,000
MLS# 2361554
Listed: 1/9/2007
OLP/LP: $829,000
DOM: 94
Withdrawn
Relisted
MLS# 2396547
List Date: 4/15/2007
OLP: $799,500
LP: $649,500
DOM: 218
Assuming that this house closes at around $610k, this is about a 4% annual increase over this period. No? Is it the collective assessment of those here who have their fingers on the pulse of the NJ RE market that this is about where the house should be? Or is this still overpriced and, if so, why?
3b,
It’s not so much the Wall Street thing that I’m focusing on. For whatever reason, and wherever the incomes are coming from, this area we live in is just very competitive and we’re not going to experience the same dynamics as most of the country.
I’m typing this very post from my desk…. for an internationl financial firm….. staring out my window at lower Manhatten. We’re busy, very busy. I’ve worked for these Wall Street firms for many years now myself. :)
#47: You make really good points, but real estate market naysayers have been making those same points for years and years, and the market continued to skyrocket in the desireable towns. I think we just have to wait and see whether the increase in supply will dramatically affect those desireable towns, or whether they will be flat in growth (or even increase slightly).
#45 Grim – You are right. It still makes me uneasy though. Whoever talked about watching a train wreck in slow motion was right. You can see it coming, you know it’s inevitable and there isn’t a thing you can do about it except try to be prepared for impact.
Pret,
Same here. We are a broker/dealer so we take no positions. All this volatility has sent our transaction volume and thus profits through the roof. Keep those trades coming!
#51 gary: Well all I can say is that it happened before, (the decline),and it will happen again, nor area is immune.
And Wall St going forward look a lot different, than it did over the last few years.
Two final points, and you and I disagree on one of these as well, but there is tons of inventory in all of the desireable NJ train towns now rotting away on the market (dumps or not)
And I would not assume that people who get the big bucks bonus money, are simply going to over pay, just because it appears that they can.
3b # 38
That is true too…
pretorius 48,
I agree wholeheartedly. I grew up my whole life in Jersey City and downtown by the water was nothing but weeds, old rail yards and abandoned factories. We used to run around down here as teenagers drinking quarts of Budweiser and flinging 2 pound rocks at the rats. We had a boat at the foot of Greene Street for 30 years and the place looked like a third world country with shacks constructed from scraps. We paid 5 dollars per year for squatters rights. We used to eat the crabs out of the Black Tom and scooped up mating crabs hanging on the walls of the Statue of Liberty in October and November.
LOL!!
Who would’ve believed that I’d be sitting 30 floors up from this very same spot with access to enormus amounts of data with people around me speaking German and French drinking espresso on their breaks?
“Down here it’s just winners and losers and don’t get caught on the wrong side of that line” – could be my favorite Springsteen line and captures how I feel about living in this state
And meet me tonight in Atlantic City.
3b,
Regardless of whatever the future holds, I’ll still buy the keg. :)
From the Washington post.
Federal reserve goes to great lengths to prevent their note from collapsing. AMAZING!!!!!!!
http://blog.washingtonpost.com/the-trail/2007/11/16/post_203.html?hpid=topnews
#52 Imus: I think people were making those predictions about real esate in general, and not just the desireabale towns.
In fact in Bergen county at least, every town became desireable, the whole county became desireabale.
Some towns of course will fall more than others, but all will fall.
I think what will seperate towns going forward, are desireable towns with high property taxes vs. desireable towns with low, or lower property taxes.
But at the end of the day although much of north Jersey is impacted by its proximity to NYC, the majority of people who live in north Jersey, work in north Jersey.
Protections for Renters in Foreclosures
The House on Thursday passed a broad mortgage act that includes protections for renters. The House act, which the lending industry has opposed, would require new owners to continue the leases of tenants for up to six months after foreclosure
http://calculatedrisk.blogspot.com/2007/11/protections-for-renters-in-foreclosures.html
#59 I think you will be plesantly surprised. And I of course will bring the red cups.
Asbury Park Condos
Yesterday I posted a question regarding condo inventory in AP. I had found a realtors’ post on Trulia in which she said inventory was at 46 months. This figure was really perplexing to me, so I asked for clarification.
Here was an explanation I recv’d by a Trulia
realtor:
There were 3 sales in Oct. Inventory at 139.
Divide 139 by 3, and you get 46 (months).
So this 46 mo. figure is based on the assumption there will only be 3 sales per month.
Key word, assumption.
So, it’s really a guestimate on her part.
Gary 57,
Great stories. Shows how much JC has benefited from proximity to New York.
Other smaller cities across the river from major cities like Camden and East St. Louis haven’t been as lucky.
Philly and St. Louis have universities that attract the best and brightest students. Problem is these kids move to New York after they graduate.
Orion,
Supply is simply defined as the number of months it would take to eliminate all inventory given the current pace of sales.
Supply (Absorption) = Current Inventory / Current Sales
These are all very rough metrics and shouldn’t be looked at in a vacuum. Also keep in mind that volatility will be incredibly high given the small sample sizes. In order to be useful, you need larger sample sizes. The only way to increase sample size is to aggregate up to a county level, or aggregate into quarters (as Otteau does).
Otteau had Asbury absorption at 13 months at the end of Q3.
“Citigroup Inc. stock was downgraded to “sell” from a “neutral” rating by Goldman Sachs Group Inc. Monday, with the brokerage estimating the group will incur $15 billion in write-downs on collateralized debt obligations over the next two quarters.”
That can’t be true. Bi said there would be no more writedowns.
had an interesting weekend. We went to 4 open houses….2 empty as they have gone back to the bank. The other two are moving due to the property being unaffordable.
One of the realtors greeted us by saying…”of course these days, you need some cash down at the table to buy this property”. I have never seen/heard this in my one year hunt for a house. Also, realtor e-mailed on home we low balled. Of course our bid was rejected…they have dropped the asking price by 70,000 in two months and still no buyer. That equates to about a 20% drop and still going….What changed in the last two weeks from my perspective is astounding. Are lenders pushing back? Do realtors need sales?
The price tags on those Asbury condo’s are pretty crazy too. That is another developer who caught on to the tail end of the tiger.
I get a chuckle out of those who postulate that high earners (in the tri-state area)are going to limit RE purchases to the NY metro area, the Shore, etc. I have seen the following with people I work with and socialize with (all at the upper tail of income and net worth scales):
1) as the income and worth rise, there is this tendancy to buy the trophy house, car, boat, vacation property in the immediate area.
2) as wealth continues to rise, the hassle factor, if you will, becomes important. The time away from the kids, the being exhausted at the end of a day, etc., start to take a toll.
3) once the feeling of lifetime security is achieved, there is a strong push to “declutter,” as it were, ones life; a desire to simplify and to achieve real satisfaction from the “toys” one has accumulated.
With #3, I have seen our friends and associates look for different types of properties and experiences. Once one is no longer worried about the potential loss due to tropical storm, or political instability, buying property in Montana, New Mexico, Colorado, Honduras, St. Kitts, France, the U.K., etc., becomes more desirable (and economically smarter)than buying more in this metro area.
Ability does not correlate directly to action.
We recently spent time with two sets of friends who between them have 6-7 homes (Upper East Side, Nevis, San Francisco, Toronto, on the finger lakes near Ithaca, and some others closer to the city). The “outlier homes are the mental escape properties. The city properties are the functional ones (where one might start the day walking a loop through Central Park) then get a car to the office.
These folks might be different than most other high earner, high-net-worth individuals in the metro area, I ‘dont know, but neither they (nor we) are interested in buying overpriced assets of any kind. The bonuses may give a large number of people the ability to buy in this town or that town or some other town, but, it also gives them the opportunity to buy a townhouse in London too.
I suspect that any of you with friends or associates in the 7-9 figure net worth range know people who have fractional jet ownership ( or even access to family or corporate jets). For a pretty reasonable fee one gets access to a broad swath of the hemisphere with no hassle at airports, or turnpikes, or parkways, or trains, etc. Think about Midtown to Tortola in about the time it takes to get to the Hamptons, or parts of NJ, all with better weather.
This is not within the reach of most people, but, if one is in line for the larger bonuses (and don’t kid yourself that they are all “average” sized) there is a whole big world in which one may spend one’s bonus money.
One may need to live close to Manhattan in order to have access to The City. But, the thing of it is that one need not buy the biggest or most expensive place available near The City; not when there are so many other options that add more quality to one’s life.
From Reuters:
Freddie Mac may see $1 bln-$5 bln subprime loss-CS
Credit Suisse said in a research note on Monday that Freddie Mac may recognize a loss of between $1 billion to $5 billion on its subprime AAA portfolio. Its shares fell 6.7 percent.
“While Freddie’s AAA subprime securities likely have substantial subordination, if the recent credit spread widening does not reverse over the coming quarters, we believe that Freddie could recognize an other than temporary impairment of between $1-5 billion,” the note said.
AP condos:
We looked at some. The ones that are up are quite lovely and, if one looks the right direction, the scenery is “to die for.” That said, right across the street and for blocks around, it is like the South Bronx back in the Fort Apache days. One building we looked at, on Wesley lake, a beautiful penthouse with a huge terrace overlooking both the lake and the ocean, had loads of damage from vandals, and there were spraypainted hate messages about the influx of outsiders all over the area.
During the daylight, right along the crescent at the east end of Wesley Lake, up to the Casino, and along the Boardwalk to just north of COnvention Hall is more or less fine. But to walk west from the Wesley Lake condo complex, just a few blocks along the lake, to the only destination restaurant, Moonstruck, is a dicy proposition, even during the day.
I wiss AP well, but until the development is several blocks deep, I am not persuaded that one is likely to get one’s money back over a 10 year period. Of course one gets to live overlooking the water, so that may offset the loss to some people.
New mortgage products are definitely not needed.
In fact, I’d like to see legislation that puts a cap on what people can do. This is something that we as a country should all agree. The trouble with “new” mortgage ideas is that they invariably increase the purchasing power of the buyer. When one buyer does this it’s great for them, but it is terrible for everyone else who now can’t compete. Then everyone else does it to compete and you end up with housing prices jumping by the level of afforability that the “new” mortgage product allows. No one wins here, we all get more when we sell, but we all pay more when we buy. We also all pay more in interest since we’re paying more for our houses than we otherwise would.
Saying that we shouldn’t legislate minimum mortgage quality is kind of like the argument that restaurants make about smoking bans. They say “don’t legislate it, let the market decide”. The trouble with the market in these cases is that no restaurant owner will jump first because they will lose business if everyone else still allows smoking. But if you ban it everywhere (a common lowest standard), then business stays the same. I think we need the same thing for mortgages.
I don’t care if some moron thinks they can afford a house with 0% down on a 1 year ARM, they shouldn’t be allowed to do that simply for the fact that it pushes up prices for everyone else.
If we don’t legislate this we’ll all be here in 10 years talking about how there is a bubble due to innovative mortgage products and waiting for the next pop.
BH
When the Bond Market is spanking the banks, almost 9% yield on Wamu, over 16% on Countrywide, you know things are gonna get worse.
BAA3/BBB+ 25 22237LMY5 COUNTRYWIDE HM GLOBAL NT 5.625 07/15/09 16.181(M) 85.250
A3/A- 45 93933WAC0 WASHINGTON MUTUAL GLOBAL 5.125 01/15/15 8.786(M) 80.865
“Ability does not correlate directly to action.”
[71],
How true. In addition to this, sometimes the action taken is on the short side.
Here are some of my favorite quotes from the NAR’s new 2007 campaign that started this month
‘ If you have been waiting for the right time to buy a home, you should know the facts about home ownership. Right now, interest rates are still at historic lows, conventional financing is available, and FHA mortgage applications are on the rise. The more you know the more you’ll realize it’s a decision you shouldn’t postpone any longer.’
‘On average, the value of a home nearly doubles every 10 years. That’s a return most investments can’t match.’
‘Homeownership is key to climbing up the economic ladder. When you own a home, you’re essentially paying yourself and building up equity.’
‘Very few people look back and regret their decision to purchase a home.’
‘You might wonder if buying a home is a smart financial decision these days, given some of the misinformation presented in the national media. Your local realtor associations want you to know that in the second quarter of 2007, over 22,000 homes were sold in the Los Angeles area.’
Sean (46)-
“Question for BC Bob or Clotpoll how many trillions does it take to short the shorts?”
Sean, I wish I knew. But, I think we’re going to find out pretty soon…by seeing all the shorts vs. gold, oil, Euros, etc. get blasted to smithereeens.
I’m gonna say we should start looking real close right around Dec. 11.
John Says:
November 19th, 2007 at 11:23 am
Here are some of my favorite quotes from the NAR’s new 2007 campaign that started this month
How funny. Well, sad, actually. But it brings up the question, “Why do the various media outlets quote NAR as if it were an unbiased institution?” I have no ax to grind with NAR, they need to do what they need to do in the interest of their membership. That said, their economic forecasts do not appear to have a very good track record.
anotherone Says:
November 19th, 2007 at 9:27 am
Thanks. Are there any good calculators out there for taking a historical home sale and adjusting it to present day based on CPI+(1-3)%?
MICROSOFT EXCEL
anotherone Says:
November 19th, 2007 at 9:27 am
Thanks. Are there any good calculators out there for taking a historical home sale and adjusting it to present day based on CPI+(1-3)%?
Or just use a scientific calculator: multiply the home cost by 1.0″X” times 10 the the “Y”th power, where X equals the CPI+ whatever you choose, and Y equals the number of years.
71 shore
good post
I would add to a lot of what has been said today that there seems always to be a need to explain the real estate bubble, and its burst, in terms of fundamentals. That is, folks want to explain that NY area RE rose because, well, it’s NY area RE (as if it wasn’t back in the day when it was a weed infested gangland). Or they want to explain that the bubble was the result of high bonuses, or increased net worth, or reduced cost of borrowing, or Suzanne’s research, or predatory lending. All (or at least some) of these may be contributing factors, but in my mind, the most important factor in ANY bubble is psychology. People will pay obscene, unaffordable amounts for things that they think will thereafter be worth twice that obscene amount. They do this with tulips, baseball cards, beanie babies, dotcom stocks, real estate, etc., but it is always based on the perception that “if I buy this for X now, I’ll be able to sell it for 2X next year, so it doesn’t matter if I don’t need it or can’t afford it.”
Well, right now, we’re on the flip side of that psychological mountain.
It doesn’t much matter what the fundamentals are. It doesn’t matter whether BC is more desireable than New Canaan or Scarsdale. It doesn’t matter that Jersey City is or isn’t just as close to NYC as it has been since its first cornerstone was laid. It doesn’t matter whether the IBankers spend their bonuses in Brigadoon or British Columbia. It doesn’t matter if Helicopter Ben drops $1B in cash every hour on the hour for the next six months, or drops the FFR until it’s negative and the bank has to pay you to borrow. The fact is that the worm has turned. The flip side of the bubble is that prices will fall, and continue to fall, and likely continue long enough and fall far enough to be distinctly irrational.
It was a bubble, and unless we disagree on that fundamental factor, then the real issue is psychology, not fundamentals.
We’re at the “Fear” stage.
“Panic” looms.
#82 njpatient: Agreed.
82: We’re at the “Fear” stage.
“Panic” looms.
Cue the spooky music and Vincent Price.
Now this is something that makes my blood boil. Who the hell do Ahmadinejad and Chavez think they are? We have to stamp out this fire right now damnit. Why the hell is Bush waiting for? Iran should have been bombed to smitherens months ago. That twerp Chavez needs to go also. Pat Robinson had an excellent suggestion to handle Chavez.
This is what we face from our enemies, but rather than take the measures we need to take our Federal Reserve wants to move tepidly while housing insurgents in our own country undermine the markets. People, WAKE UP! This is America damnit and we can’t have tin horn dictators scheming to hurt us.
OPEC meets about the U.S. dollar
The Organization of Petroleum Exporting Countries is holding a special meeting to discuss the weak U.S. dollar.
Iranian President Mahmoud Ahmadinejad said over the weekend that some OPEC members want to price oil against currencies other than the U.S. dollar. The dollar has been trading at record lows against the euro in recent weeks.
“They get our oil and give us a worthless piece of paper,” Ahmadinejad said at the end of the summit, according to CNNMoney.com.
Venezuelan president Hugo Chavez also had some negative words about the U.S. currency. “The dollar is in a free fall, and everyone should be worried about it,” Chavez said to reporters after the meeting, Bloomberg News reported. “The fall of the dollar is not the fall of the dollar. It’s the fall of the American empire
http://articles.moneycentral.msn.com/Investing/Dispatch/071119markets.aspx
Clotpoll Says:
November 19th, 2007 at 7:41 am
25.25 (9)- Shut up, troll.
clot: this reminds me of a story my brother told me about a high school teacher of his…..my brother graduated Stuyvesant class of 1984, and as a Math/Science school there was (is?) a requirement to take mechanical drafting.
Anyway, the teacher loved playing G-d with the students, and the kids freaked out because this guy would think twice about destroying their GPAs. My brother was in there questioning a grade, when he overheard the kid in front of him with his mid-term report card.
Kid: Mr. Gordon, I think there is some mistake. You gave me a “2” [note: out of 100].
Mr. Gordon: That is not possible. Let me see that…
Kid hands Mr. Gordon the report card.
Mr. Gordon: You are right, I made a mistake. This isn’t the correct grade.
Mr. Gordon takes out a pencil and writes a square root sign over the 2.
Sometimes I forget what the Panic looks like. Then reinvestor50.5 posts and I am reminded…
would think twice……should be “would NOT think twice”
But CPI changes year to year. Where can I get the year on year CPI % increases. Don’t I need the CPI for each year? With that data I could put together my own excel spreadsheet if there is not one readily available.
I have calculated the future bottom of the RE market statistically and determined what year and month you should jump back into real estate.
Current average home in NJ around 500K
Houses are falling 10K a month
In 50 months houses will have fallen 500K
So by Feb 2012 houses will be free!!!!!!
Feb 2012 will be bottom of market.
Hey if the NAR can spin stats anyway they want why can’t I!!!!!!!!!!!!!!!!!!!!
Grim, I don’t suppose you could have a policy where any post that suggests that we take advice on the economy, foreign policy or national security from Pat Robertson be automatically deleted?
anotherone
http://www.westegg.com/inflation/
http://www.bls.gov/cpi/
Well we have the known knowns, the unknown knowns and now in the MBS/CDO world we are entering the unknown/unknown phase.
NAHB HMI due out at 1pm et.
Coming soon to an affluent BC town near you…
i think ‘panic’ will be an understatement after all this unravels!
http://money.cnn.com/2007/11/16/real_estate/suprime_and_crime/index.htm?cnn=yes
CAIBC
reinvestor101 (85) I agree. You are clearly in a position to better understand the geopolitical environment than Ahmadinejad and Chavez. Who do they think they are? The nerve.
#82: Ineresting stuff. I think that in this day and age, the psychology can switch faster than ever before, thanks to the internet — crappy sources like cnn.com, etc. seem to flip-flop positions from day to day. So where a “bubble” took years to turnaround in the past, the lifetime of a bubble or market swing in our day and age may be much shorter. Just a thought.
90:
I will take two, ROFL.
#82
Not enough pain yet for panic. maybe if this christmas shopping season is a bust and mass layoffs become more commonplace, the blinders will come off. but right now it is just too easy for people to sit in denial, waiting for their mythical buyer to come along with his wall st bonus, desperate to pay full asking price. It has been so long since we had a truly nasty housing market that I’m not even sure most sellers are in the “fear” stage yet. They do not recogize what is happening
NJ Pols looking out for us. Who cares about taxes and reckless spending anyway?
New Jersey seeks tougher law on online dating sites
New Jersey legislators are targeting online dating sites.
A legislative committee expects on Monday to consider requiring the sites to notify New Jersey residents whether they do criminal background checks.
Internet companies such as Yahoo!, AOL, eHarmony and Match.com are opposing the plan, claiming background checks are unreliable.
Senate President Dick Codey says the bill would help protect online dating users and force the sites to take more responsibility for safety.
#89 CPI?
What is the deal with these questions? How about trying “Google” first…let alone BLS, etc
grim (99)-
A single pal of mine claims that meeting women thru these sites (even e-harmony) is a sure-fire way to get “lucky”. Fast.
Leave it to NJ to spoil all the fun.
anotherone Says:
November 19th, 2007 at 11:59 am
But CPI changes year to year. Where can I get the year on year CPI % increases. Don’t I need the CPI for each year? With that data I could put together my own excel spreadsheet if there is not one readily available.
You also need to consider that there are a number of different CPIs. It is not a single measure, even for a given geographic region. The analysis can get fairly tricky as you begin to tease out the numbers. You may be better off just taking average numbers over a given time span. The CPI-U for the region may be a good-enough measure. FOr grins, say the average rate over a given 5 year period was 3.5 %. What difference does it make to you whether any given year was above or below this rate? Inasmuch as it is only a ballpark number anyway, and not something that will generate substantially-different decisions based on the data changing incrementally, why put yourself through the trouble of measuring with a micrometer?
re. 101
Do they allow one to search on terms like chlamydia?
Dow 12083 at 1:10 p.m.
If I remember correctly, several users here work on the Street and in related industries. Is there any meaningful data out there concerning any corelation between consumer spending and the wealth effect of a rising market and the reverse wealth effect of a falling market. Do the RE pros here have any observations regarding this effect?
Can anyone provide information on a Forclosure that I saw? It was listed by Century 21 and says on the sign bank forclosure, however its not on there website.
Address:
94 Denow Rd
Lawrenceville NJ 08648
Is there anyway to find how much is owed on it, including liens and which bank has possesion of it? Thank you
RE 101- Please go away. I thought you said you were leaving last week, but here you are. PLEASE LEAVE. Just go, you’re not wanted, you’re not changing anyone’s mind, just leave.
re: 101 I would prefer a law forcing a DNA check for the crazy gene over a criminal background check. Criminals come and go but crazy is forever.
Shore guy #104,
Lots of studies on housing wealth effect. Congressional Budget Office studied the studies and concluded, “$1,000 increase in price of a home this year will generate $20 to $70 of extra spending this year and in each subsequent year.”
But these studies look at what happens to consumer spending when home prices rise. I don’t know if anybody has looked into the effect on consumer spending when home prices decline.
Assuming a 5% wealth effect, a 10% home price decline would translate into a ~1.5% consumer spending reduction.
Reinvestor(85)
You seem like someone who would benefit from medication of some sort….nay, you seem like someone who would benefit us by you being on medication of some sort…
This is getting good, commodities, real estate, bonds, stock all getting hammered.
108 pretorius
I wonder if there is any correspondence between overall consumer spending reductions and housing prices. Is there an economist in the house?
163 County Rd, Demarest
Purchased: 6/2005
Purchase Price: $685,000
MLS# 2711475
Listed: 3/25/2007
OLP/LP: $750,000
DOM: 125
Expired
Relisted
MLS# 2731929
List Date: 8/5/2007
OLP: $789,000
LP: $639,000
DOM: 107
FYI – 10 year treasury yield to 4.08%, 8 basic points to my target.
FYI – from all the indications i got in last few weeks, the housing markets in northeast region including nj will rebound next spring. the inventory schrinked to 2 year low in desirable nj towns. the buyers market, if exits, will end jan 31, 2008
Fannie Mae (FNM:US) slid $2.53, or 6.2 percent, to $38.16, the lowest since April 1997. The largest source of money for U.S. home loans was cut to “market perform” from “outperform” at Friedman Billings Ramsey & Co. on concern about credit market losses and the housing slump.
What brand of pot are you smoking as I want a toke!
This is going to be a horrific 12-18 months. Taxes up, heating oil up, bonuses down RE down where exactly is the money coming from and why would anyone want to jump back into real estate so quick. The stock market rebounds much faster than real estate and the March 2000 bubble pop started its slow recovery in March 2003 and even then it wasnt for another 2-3 years that money invested in March 2000 was back to break even. This bubble popped big in August when Bear unleashed its subprime exposure, you have it coming back to life six months later. I don’t care if there is one single home for sale, if no one wants it big deal. There are hardly any 1975 canary yellow AMC Pacers left so inventory is low so I bet they all should be going for 100K.
bi Says:
November 19th, 2007 at 1:40 pm
FYI – from all the indications i got in last few weeks, the housing markets in northeast region including nj will rebound next spring. the inventory schrinked to 2 year low in desirable nj towns. the buyers market, if exits, will end jan 31, 2008
Price of country wide
$10.650 1-Yr Return -73.241
Bi,
from all the indications i got in last few weeks, the housing markets in northeast region including nj will rebound next spring. the inventory schrinked to 2 year low in desirable nj towns.
What indications? I just showed you the inventory for Bergen County yesterday, the…
You must either be a troll or a fool. I’m not wasting my time.
#108
lots of studies also show that most investors feel losses more acutely than gains. so it may be that where you have a loss vs. a gain of similar magnitude in RE, the wealth effect on the downside may be of a greater magnitude.
116#, john, i am not smoking anything. talking to your old neighbors in little neck you will find the same thing.
I saw this comment on a NY TIMES story about a possible bailout on foreclosures :
As a retired Realtor who was active during the 80’s (when Texas suffered through a rash of foreclosures) I have seen what they do to a community.
First, the damage to the familys who lose their home is incalculable. They go through tremendous stress, many marriages do not survive. Some show their frustration by trashing the houses, which add to the total monetary costs of foreclosure. Some end up on the streets, all have to go somewhere, which stresses other segments of the rental market.
Vacant homes not trashed by the vacating owners are subject to vandalism by others, especially teen aged gang members.
A story on C.N.N. this morning identifies a section of Cleveland, Ohio with very high foreclosure rates also having extremely high crime with these homes being not just damaged but stripped of appliances, etc.
Even if not vanadalized, a vacant home is a wasting asset: without heat and water, physical deteriation occurs. And, obvously, the higher the foreclosure rate, the greater deteriation of values in the area. In the 80’s the V.A. (in El Paso) offered an extra 25% discount to any buyer who would by 12 foreclosed V.A. homes at a time.
This kind of value erosion can lead to another big problem: many of our states have instituted caps on property tax increases. Since the tax rate is determined by dividing the total budget desired by the total property to be taxed, a percipitous decline in value can result in government needing a higher rate than can be assessed.
Property owners who are not in danger of foreclosure are potential victims of this scenario also: consider the young couple who needs more space for their growing family, or the family who needs to sell their existing home in order to move for reasons of employment: if they cannot sell their home, especially if the market value is less than their existing loan balance, what are they to do?
Foreclosures are bad for all of us, not just the lenders or investors owning these real estate notes. We do not need a million or more families displaced and searching for alternative housing, we do not need a million or more vacant homes, depreciating in value, suffering vandalism, killing our local Real Estate Markets.
This situation, if not addressed, will become a disaster. Our national goverment should act, and act immediately.
I suggest, that in as many instances as possible, existing loans whose payments are beyond the means of their owners be converted into lower interest, lower balance F.H.A. fixed rate loans that their owners can pay. The difference between the amount of the new loan and the old loan can be subsidized by the government, absorbed as a loss by the lender or replaced by a zero interest, zero payment 2nd loan that will be due upon resale of the home, or by some combination of these suggestions.
The present course leads only to disaster.
— Lsterne, El Paso, TX
Haha, Bi increases the hits and comments on this blog 5 fold. Without him, everyone would be agreeing with each other. Boring, right?
From MarketWatch:
U.S. Nov homebuilders’ index steady at record low 19
The National Association of Home Builders said Monday its housing market index held steady at a record-low 19 in November. Readings below 50 in the diffusion index indicate that more builders rate business conditions as poor rather than good. The index has fallen from a record high two-and-a half-years ago to a record low. The October index was revised up slightly to 19 from the initial estimate last month of 18. The NAHB said continuing mortgage market problems, a substantial inventory overhang and ongoing concerns about the effects of negative media coverage weighed on builders.
John 110 the train wreck will proceed as correction needed, necessary yes, good well I don’t think I’d go that far.To many things/people caught in the storm.Not only sheeple who bought like fools & greedy banks.
Maybe its getting bad.
An oasis on a desert of gloom and doom!
I agree. This will definitely turnaround in the spring. There’s too much pent up demand for it not to. We can’t get too caught up with the folks that post here. Many of these guys are housing militants. They’re deadenders who will never ever buy under any circumstances.
bi Says:
November 19th, 2007 at 1:40 pm
FYI – from all the indications i got in last few weeks, the housing markets in northeast region including nj will rebound next spring. the inventory schrinked to 2 year low in desirable nj towns. the buyers market, if exits, will end jan 31, 2008
with this declining stock market and interest rate, smart money is relocating to real estate related investment. keep in mind that buying real estate is not equal to buying sub-prime bonds.
“FYI – from all the indications i got in last few weeks, the housing markets in northeast region including nj will rebound next spring.”
bi,
Can you please share these indicators with us?
Whether or not there is a recession, I get the feeling that the current credit crunch — whether longlived or not — has acted like a slap on the face of many consumers. If you have ever watched a person in front of a slot machine, they sometimes get a glassy look in their eyes and become oblivious to the world around them.
The “economic boom” of the past several years and the resulting “wealth effect” from the rising home values allowed many to get swept-up in the moment. Life was grand, and I can spend more than my income because the 401k is doing well, the house is “worth a fortune now,” and the strong dollar even lets ME own a BMW.
Now, the $ is tanking, the market unsteadiness has folks rethinking whether it is a “sure thing” to make a killing in the market over the short or medium term (when they may need to borrow against it) and housing, well, it is what it is. All of this forces people to look at the outstanding credit card balances and some bit of uneasiness sets in.
Even in months when we spend $10-20k on the cards, we pay off right away. They are great tools and provide good legal protection. Still, I know some people (lower income and tax brackets) who are maxed out on their cards and express opinions that it is the normal state of affairs.
For an awful lot of people, debt is up, the value of assets is declining, and incomes are about keeping up with inflation. For the upper 5% of earners, none of this much matters. Still, the upper 5% OF earners are not buying in most towns in the NY metro area. And, even in the towns where they are — Rumson for example — there are foreclosures there as well.
When on vacation, it is common for one to get a bit ahead of one’s self with respect to spending: too many expensive dinners out, etc. But, hell, as long as things are fun, what the hell. But when one gets home, one is forced to come to terms with the profilgate vacation spending by paying off the debt right away or curtailing spending for some months in order to “catch up.” I supsect that we are in the “catch up” phase of the economy. We have a negative savings rate, as a nation, and were using appreciating assets as a piggy bank. Well, the bank is empty, and the bills remain (ad the cards may be maxed out). From where does the spending come, for the other 95%?
There was a study, I believe it was University of Chicago, but I may be wrong, that said that — no matter what the income or wealth level– in order to feel “comfortable” with ones economic status people estimate they would need to have twice the wealth they currently have.
In a time of uncertain markets, and declining RE values, I would not be surprised to see much of the Wall Street bonus money going to Europe as a hedge against problems here. Better to park it there for awhile.
Dow 12,983 at 2:09
127#, i have been talking to real people in real field, not media headlines. my conclusion is: if you want to buy apartment type of stuff, you may have 1 or 2 years to wait and see. but if you want to move to desirable house on the desirable side of desirable towns, this winter is the best and last change for the folks who have been waiting for 4 years.
Kid Twist Big Gov. bail out.Very few can afford a home in NJ this has to change.Agreed alot of pain(My posttion post 124)but it has to & will play out.We should not put good money after bad,
that we do not have anyway.
Maybe we should print some more,oh we already are.Very slipery slope there.
You are right though we are in deep sh##.
re 121 “The difference between the amount of the new loan and the old loan can be subsidized by the government”
UGGGGGHHHHHHH!!!!!! I hate this approach. I am in NO position to feel put upon. Still, when one is paying 6-figures in tax each year, enough is enough; especially with respect to bailing out people who gambled and lost or were just not very bright. Unless bad gambles and economic stupidity are punished by the market, there is no check on bad decision making.
125 “There’s too much pent up demand for it not to.”
Demand means NOTHING if the resources are not there to buy.
O.K., bi, I’ll bite.
Step up to the microphone and list your recent real estate purchases (last six months only).
Please speak clearly.
Please don’t think everyone will immediately jump all over you for purchasing. But if you’re pounding a horn behind me in the passing lane, you better be driving a car.
mikeinwaiting,
I agree there will be pain.
Did anyone see that an Ohio backruptcy judge REFUSED to foreclose on 13 houses because Dutchebank could not prove they own the mortage! It was sold and bundled so many times.
From MarketWatch:
Audio: Homebuilder pessimism remains strong
“For the most part, builders understand that there’s a huge amount of excess inventory to work off,” says MarketWatch real estate editor Steve Kerch, “and they don’t think that’s going to happen until the latter half of 2008.” One problem, Kerch says, is that sales incentives aren’t working because the buyers themselves lack confidence. “Buyers of new homes have purchased a house, only to find six months later the homebuilder discounting prices next door to them.”
shore (103)-
Details…
kidrock (134)-
Can’t turn sausage back into a pig.
Citigroup over the years grew into one fat ugly pig. Watch the slaughter. Ultimately capital rests in the hands of the wise.
reinvestor101 Says:
“This will definitely turnaround in the spring. There’s too much pent up demand for it not to.”
bi Says:
“from all the indications i got in last few weeks, the housing markets in northeast region including nj will rebound next spring.”
bi Says:
“with this declining stock market and interest rate, smart money is relocating to real estate related investment.”
Comments completely devoid of substance – and skeptic, when I say that panic looms, it may just be that I am fooled by the leading edge of flop sweat dripping from the brows of bi and reinvestor.
It is not different this time. I know plenty of 200K people keeping up with the jones who have three kids, leased cars, trips to Disney and trade up home bought between 2003 and early 2007 who are sinking quick. A lot of them are at the senior manger level in consulting and in consulting in a downturn everyone over 150K is in the chopping block. I have no clue how they sleep at night.
Case in point, my idiot brother-in-law bought a house in the spring of 2006 now wants to do a chris cringle this year even though we only give to the the 5 little kids and even though he already one gives 20 dollar toys. He want to get it down to spending 20 for one kid and giving his other four nieces and nephews nothing. WOW he is saving eighty bucks a year and the 1-7 year old kids won’t know anyhow. This is only small peanuts and is no big deal, but the subprime crowd cracks me up, when they were on the 2001 to 2005 gravy train they were spending like wild on themselves but when the train stops they want you to pay for it, or in this case little kids. These spenders are maxed out and this won’t be a quick recovery, the fiscal responsible people who still have the cash are not all at once going to jump at million dollar homes for 800K and the subprime crowd can’t even buy a $20 dollar christmas present let alone a discounted mcmansion.
But who knows, GM is giving interest free financing again and maybe the subprime dopes will buy zero down zero percent interest Denalis for their christmas tree this year. They are good at spending other peoples money.
http://www.condoflip.com/
Things are going oh so well in Fla.
133
couldn’t agree more
Anybody can provide more information about 2442682?
Thanks
25.25 (125)-
“They’re deadenders who will never ever buy under any circumstances.”
“Deadenders”? Isn’t that the word Cheney used for the Iraqi insurgency?
BC (127)-
The dogs barking in his head told him so.
I agree. This will definitely turnaround in the spring. There’s too much pent up demand for it not to.
Where? Everyone who wanted to buy and was remotely qualified to buy already has.
So, who is left? Renters for life, those structurally priced out or unqualified and the “arbitrage renters” like many of us here.
If anything, I think there is pent up SUPPLY. People want to sell, but think the market is bad and are waiting for a turnaround before they put their house on the market.
“127#, i have been talking to real people in real field”
bi,
Left field without a glove?
I think I am a beneficiary of the ‘wealth effect’…as in I feel rich by not capitulating at the top….aka Richard style.
Back to the new home builders confidence…. they allude to a crisis in confidence in buyers. A house as a depreciating asset is not similar to buying a car as a depreciating asset. The key difference is that if you buy a new car today, the similar model is going to be selling at a similar price, perhaps 2-3% less in the near term….not too much buyer remorse involved. The same cannot be said of RE….a 10-15% haircut after a purchase that is 15-20 times larger than a car purchase is HUGE in $ numbers.
x (143)-
3 Brentwood Ct, Warren. Started @ 1.3M in July of ’06. Relisted three times after expirations; the latest listing is 70 DOM at 1.18 M.
Total DOM= 400.
Homeowner is the owner of the Re/Max in Warren.
Disclaimer: not all Re/Max owners are this stupid.
John Says:
the subprime crowd cracks me up, when they were on the 2001 to 2005 gravy train they were spending like wild on themselves but when the train stops they want you to pay for it,
The subprime crowd = welfare crowd. They’re used to living on the dole from Uncle Sam.
Nov. 19 (Bloomberg) — Shareholders in the securities industry are having their worst year since 2002, losing $74 billion of their equity. That won’t prevent Wall Street from paying record bonuses, totaling almost $38 billion.
That money, split among about 186,000 workers at Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos., equates to an average of $201,500 per person, according to data compiled by Bloomberg. The five biggest U.S. securities firms paid $36 billion to employees last year.
The bigger bonus pool derives from a record $9 billion of fees for arranging acquisitions and $5 billion for underwriting initial public offerings and sales of junk bonds, the most lucrative securities, Bloomberg data show. Bankers’ record fees help explain why 2007 will prove to be the industry’s second- most profitable after the subprime mortgage market collapse led to losses at Merrill and Bear Stearns. The last time bonuses declined was 2002 when the Standard & Poor’s 500 Index fell 23 percent, and Enron Corp. and WorldCom Inc. went bankrupt.
Goldman’s record earnings and gains at Morgan Stanley and Lehman mean all the New York-based firms will be forced to pay more in a year when all but Goldman lost more than 20 percent of their market value, said Charles Geisst, finance professor at Manhattan College in Riverdale, New York.
“They’re all going to have to fall into line,” said Geisst, author of “100 Years of Wall Street.” “If Bear and Merrill plead poverty, they’re going to lose all of their good people.”
renting #146
“arbitrage renters” LOL
Goldman Sachs forecasting greater than 30% price declines in New Jersey..
Eight states … for which there is greater than 30% house price depreciation forecast would be California, Florida, Arizona, Nevada, Virginia, New Jersey, Maryland, and Washington D.C. … 13% to 14% nationally masks some states that we have accute concerns.
Goldman Sachs, Nov 19, 2007
http://calculatedrisk.blogspot.com/2007/11/gs-conference-call-mortgage-fall-out.html
Clotpoll,
Thanks for you info.
Renting 146 I think you got the ticket it is pent up supply that is not being seen. Any one with any kind of job & a pack of chicklets already bought.Many want to sell
are waiting on sidelines,hope they have alot of patience, years worth.
MLS# 2442682 CO: Somerset* TOWN: Warren Twp.*
AD: 3 BRENTWOOD CT
1,180,000
70-DOM
KL
oops, my next comment was going to be I’ll look up the history. Clot beat me to it altogether.
KL
153
A big wow!
grim Says:
Goldman Sachs forecasting greater than 30% price declines in New Jersey..
Goldman was sharp enough to short the CDO’s enough to actually come out on top of this mess (so they say)
I’d listen to these guys over most everyone else.
If Chavez was President, he’d take the $38B in Wall Street Bonuses, and use it to wipe out the sub prime losses.
Get out the sake….. Dollar Yen cracking 110.
Confused In NJ [151],
I stated this in an earlier post just as a matter of fact. People seem to think I’m saying that these bonuses are keeping house prices steady in our area. I don’t know if that’s the case but I do know that we live in area of the country with the highest median incomes. Well, go figure. NYC is still on fire as far as the amount of well-paying jobs are concerned. It’s not my opinion, it’s fact. And I’m not talking about just Wall Street.
$38b would be like one Cheeto tossed out to a single seagull on the beach.
“Goldman Sachs forecasting greater than 30% price declines in New Jersey..”
JB,
I guess they misssed the report regarding the pent up demand.
89 Hillman Ave, Glen Rock
Purchased: 2/2006
Purchase Price: $530,000
MLS# 2626398
Listed: 7/3/2006
OLP/LP: $599,900
DOM: 298
Withdrawn
Relisted
MLS# 2733312
List Date: 8/14/2007
OLP: $454,900
LP: $407,500
Under Contract
DOM: 98
“Get out the sake….. Dollar Yen cracking 110.”
dream,
Thank you Japanese housewives. Please don’t jump.
bear (158)-
Bill Gross made this call months ago.
Is that 30% from today or 30% from peak?
144 Franklin Ave, Midland Park
Purchased: 8/2005
Purchase Price: $630,000
MLS# 2734110
List Date: 8/14/2007
OLP: $539,900
LP: $519,900
Active
DOM: 95
Goldman doesn’t know what they’re talking about. They should stick to stack market and RE alone.
I’m going with BI and reinvestor, They seem to be smart ones on this site???
Eddie Curry has a better chance of rebounding this spring then housing.
First American released their home price index today:
First American LoanPerformance September 2007 House Price Index
–First American LoanPerformance, a member of The First American Corporation (NYSE:FAF) family of companies and a leader in residential mortgage data and analytics for the mortgage industry and Wall Street, today announced the release of its September 2007 LoanPerformance Home Price Index (HPI).
The LoanPerformance HPI provides a comprehensive set of monthly home price indices and median sales prices covering 7,416 ZIP codes, 956 Core Based Statistical Areas (CBSA) and 659 counties in all 50 states and the District of Columbia. The index, which is the most comprehensive available in the industry, is reported as early as five weeks after each month ends.
“LoanPerformance’s HPI continues to track the nation’s housing market’s progress. This latest release reveals that 17 states show a negative home price appreciation over the past 12 months,” said Damien Weldon, vice president, collateral and prepayment analytics for First American LoanPerformance. “However, most states continue to have stable home values while states like Wyoming, Utah and North Carolina show a moderate growth in prices,” added Weldon.
…
12 Month Change By Top 30 CBSAs (Core Based Statistical Areas) September 2007
Riverside-San Bernardino-Ontario, CA -13.59%
Cape Coral-Fort Myers, FL -11.49%
Las Vegas-Paradise, NV -9.80%
Phoenix-Mesa-Scottsdale, AZ -8.49%
Miami-Fort Lauderdale-Miami Beach, FL -8.37%
Los Angeles-Long Beach-Santa Ana, CA -8.14%
Orlando-Kissimmee, FL -7.66%
Tampa-St. Petersburg-Clearwater, FL -7.65%
Cleveland-Elyria-Mentor, OH -7.39%
Washington-Arlington-Alexandria, DC-VA-MD-WV -6.65%
Boston-Quincy, MA -4.97%
New York-Northern New Jersey-Long Island, NY-NJ-PA -3.78%
Detroit-Warren-Livonia, MI -3.46%
St. Louis, MO-IL -2.10%
Miami-Miami Beach-Kendall, FL -1.59%
Minneapolis-St. Paul-Bloomington, MN-WI -1.55%
New York-White Plains-Wayne, NY-NJ -0.87%
Atlanta-Sandy Springs-Marietta, GA -0.40%
Philadelphia, PA -0.05%
RE, MM, BI: I guess you all had lot of positive thinking tapes, while waiting for someone to show up at yesterday’s open houses. Which ones do you guys listen to, Tony Robbins etc…
Japan and China, the world’s largest holders of our debt, have now been sellers for the past 3 months.
http://www.treas.gov/tic/mfh.txt
Clot (167),
Yes but for a major IB to make that call is a ‘surprise’ :)
Builders Remain Pessimistic
The NAHB Housing Market Index remained at an upwardly revised 19 in November, its worst reading ever.
Components were mixed. Traffic rose two points, sales were unchanged, and expected sales fell one point to
a new record low. Regionally, results were mixed, with builders more pessimistic in the South and Midwest,
while those in the West and Northeast improved marginally. According to the NAHB, builders “realize it will be
some time before market conditions support an upswing in building activity — most likely by the second half of
2008.” Many builders are also reporting that special sales incentives are having limited success in terms of
getting buyers in the door. Once again, builders are partially blaming the media for their negative coverage,
not themselves.
The market will likely turn sometime next year, but we still see a long road to recovery.
Little Boxes.
http://www.youtube.com/watch?v=ONEYGU_7EqU&eurl=http://calculatedrisk.blogspot.com/2007/11/gs-conference-call-mortgage-fall-out.html
BC173 If they are selling who is buying?
HeHe168 Way I read it todays.
mike,
You and me and the rest of the US taxpayers.
Rich [169],
Approx 20% off of 2005 purchase price and stuck in the mud. Watch out below.
Talking heads cnbc market in capitulation.Stocks
that is.Can RE be far behind.
To be clear:
Anyone who says that we hit bottom in RE anywhere from the Summer of 2008 or earlier is implying that there is not, nor will there be, a recession. In addition, job creation will need to continue in order to mop up all of the people who have been kicked out of the workforce over the last six months and the ensuing six months. I would suggest calibrating your opinions relative to these overarching views.
Thats just great BC, I thought so.This just keeps geting worse & worse.Did I say slow motion
train wreck.
From CNBC:
Housing Sentiment Report: Don’t Blame The Media For Bad Times
Today the home builders released their monthly sentiment report, which is the product of a survey by the National Association of Home Builders and Wells Fargo. The sentiment number gauges current sales conditions, future sales expectations and buyer traffic. They boil it down to one number at the top, with 50 being the dividing line between “positive” sentiment and “negative” sentiment. The number for November stands at 19, unchanged from last month, which is still the lowest on record.
The biggest focus of this month’s report is negative media attention to the housing market: “Builders are worried that the national media has tended to report negative housing stories as if there is one real estate market, when in fact, there is no such thing,” says Brian Catalde, president of the NAHB in the press release. “As a result, some healthy markets are being unfairly impacted by this negative media coverage.”
…
Here’s where I respectfully disagree: The media may focus on the negative numbers, but we don’t make them up, and I’m specifically talking about the mortgage crisis that is the real driver in today’s housing recession. Defaults and foreclosures are at record levels. The lending industry has fundamentally changed the way it does business in just the last six months, and many of the loans that fueled housing prosperity in the last decade simply aren’t being offered anymore.
…
I remember, during the height of the housing boom, doing dozens of stories on sky-high appreciation, on flippers making millions, and on front-porch bidding wars. I don’t recall anyone blaming the media for the good times.
(emphasis added)
FYI – I offer this opinion as a method to rebut any nonsense being posited in cocktail/dinner conversation over the holidays.
grim: I put c0cktail in a post and your crap monitor threw me into moderation….clown!
A friend posted that GS blurb on Kannekt and they removed it?
grim: the homebuilders are complaining, because they feel that reporting that reflects most of the United States is slowing sales in NC, Texas and the Pacific Northwest, which are considered the pockets of strength.
If I’m not mistaken, DHI is now at another 52-week low. This is just another missed (bi) call for a homebuilder bottom.
bear (174)-
Bear in mind that GS’ call could be construed as more than a little self-serving.
“A friend posted that GS blurb on Kannekt and they removed it?”
hehe [184],
I posted 4-5 months ago, telling them they were all loonie, sell RE and buy the loonie. They removed it. Too bad!
Clot [187],
Not that elite group of well connected insider traders and market manipulators.
#189 …you are probably correct about GS…after all they arranged the a-Rod signing back with yankees (per WSL-saturday). Interestingly they are the major shareholder of YES!
this place is like a moose lodge. you all sit around preaching to the converted. what’s the point?
>>I agree. This will definitely turnaround in the spring. There’s too much pent up demand for it not to. We can’t get too caught up with the folks that post here. Many of these guys are housing militants. They’re deadenders who will never ever buy under any circumstances.
investors invest. no one makes real money sitting in cash. if you sat in cash the last 5 years waiting for doomsday you got your a** handed to you. when stocks are out of favor something else will take its place. it wouldn’t surprise me at all if real estate after a brief respite goes back on the warpath. the game is rigged i don’t know how many times i have to say it.
reech (191)-
You’re just the f-ing moose.
reech (192)-
“…it wouldn’t surprise me at all if real estate after a brief respite goes back on the warpath. the game is rigged i don’t know how many times i have to say it.”
Hey, Toto, we’re not in Kansas anymore.
“investors invest. no one makes real money sitting in cash.”
Why do you assume that those, currently renting, are sitting in cash? Who are you talking about, “in cash for the past 5 years”? Your brain is rigged.
Hey reech,
Assuming there are still hordes of sheeple itching to run themselves off the proverbial cliff, who’s gonna lend them the money to do it?
You should see what it takes to get a file for a top-profile buyer (720+ FICO and a DP) through underwriting these days. I got people here ripping their hair out and MF-ing everybody they talk to on the phone at these loan shops, just to get the paperwork complete and moved forward a step. It is not uncommon for a processor to work one client file for an entire work day (or more).
That’s what the world doesn’t see on CNBC, at it scares me more than another 10B of slop that C will have to write down.
“what’s the point?”
I would like to ask Goldman that same question. What’s the point of forecasting a 30% decline in housing prices in NJ?
#192 Richard: I know we ignore each other, but come on you have got to be kidding.
After all that has transpired to call for some kind of quick real estate turn around and upward march in price again because the fall out from real estate is now infecting other sectors of the financial system (stocks) ,and the economy as a whole, is just plain delusional.
Fine you are a bull, but nor a prudent one, a hysterical one.
And the only reason I can see for that, is simply because you bought at the peak, and much as you deny it, its making you crazy.
Now feel free to accuse me of being a rhetorical loser, wannabe home buyer , dirty low life renter loser, and all the rest.
“…it wouldn’t surprise me at all if real estate after a brief respite goes back on the warpath. the game is rigged i don’t know how many times i have to say it.”
Just like tech stocks?
Sure. The game may be rigged. The Fed may very well jump on the gas peddle to avoid a serious recession. This could very well manifest itself as a new bubble somewhere else in the economy. Housing, however, is dead. The psychology has shifted. The damage has been done.
Went to two open houses yesterday with a friend. She asked the realtor at one what she thinks of the market and she actually blamed the media for the “perception” that the bubble had burst. She said that she was still closing on houses so that was a sign that the market was not tanking. Nice enough lady who has been in the business for many years but she couldn’t help herself from trying to spin.
Both houses we saw were way overpriced. I think both were probably being sold because of really high taxes. While one was in great shape (1924 Victorian style) and done very well, it still had a 1980s kitchen and very small common rooms for $680,000 and over $11,000 in taxes. The other one was a small three bedroom cottage for $600,000 with over $10,000 in taxes and the owner was the realtor. These open houses were not advertised at all – just signs. I’m guessing they didn’t want to waste any more money on advertising.
Funny part is that you are assuming that re investors only invest in re. If I really, really thought RE was coming roaring back I would just buy a 30 year countrywide bond at 14% interest and kick my heels up!!! Maybe a little homebuilder bonds at 18% just for fun.
Buddy it ain’t coming back in January.
#182 grim Its what I have been saying for some time now, anobody was knocking the media on the way up.
They were simply reporting what was transpiring, nobody urged them to use caution,and not create an atmosphere of irrational exubernace (if I may). Now its all on the way down, and all the clowns are crying its the media who is making it worse.
#162 gary does not mean they will over pay, simple as that. And even with the large number of high paying jobs in the NYC area, the over whelming majortiy are average.
As I have noted in the past 70% of all households in Bergen Counth have incomes of 100k or less.
Just got a random email from a person I knew back in high school. Not friends, not enemies, just indifferent acquaintances.
Email says, “Hey all – my wife and I are selling our Brooklyn apartment! Showing the apartment this weekend from 12 to 5 PM, with 20 minute showings for each prospective buyer. The apartment will be sold for $399,500, or best offer, following a best and final bid ending at 9PM Sunday. Anyone who knows the NYC market would agree, this is a fantastic value. There is no obligation to bid and any bids following the showing are non-binding.
==================
I have no ill-will towards him, nor do I know the situation- maybe he landed an awesome job and is making 7 figures and is trading up. Maybe his wife is pregnant with twins and they’re moving to the country. But if I had to guess knowing his style, I’d say they might’ve bitten off a bit more than they could chew and are now having to pay the piper. I wish them luck.
#147 BC I have been talking to real people in real field”
Well at least he is talking to real people now.
housing is bad enough that it’s affecting stocks, and the drop in stocks will cause housing to do better.
Richard, your logic has all the beauty of a Rube Goldberg contraption.
Richard’s Goldberg Breakfast Machine:
http://vids.myspace.com/index.cfm?fuseaction=vids.individual&videoid=6422926
Peter Schiff, a financial adviser and sound-money advocate whose Connecticut firm, Euro Pacific Capital, specializes in investing clients’ money in overseas assets to spare them what he argues will be a destructive decline in the value of the dollar followed by major deterioration in the U.S. economy. Schiff, who earlier this year published the investment guide “Crash Proof,” recently sent out a “call to action” e-mail to the 60,000 people in his database urging them to send the $2,300 maximum-allowed contribution to Paul’s campaign, describing this as one of the most productive uses for their rapidly fading U.S. dollars.
“If you are fortunate enough to be one of my clients, writing a $2,300 check should not be a problem. As I have likely made you tons of money over the years, here is an opportunity to donate some of it to a worthy cause. We have made our money by betting against the U.S and betting against the dollar. Giving $2,300 of our winnings to Ron Paul gives us the opportunity to bet ON America for a change. And it’s a bet none of us can afford to lose, and the best part about it is that if we all make this bet together we can’t lose,” Schiff wrote in the e-mail. “My penchant for foreign investments has from time to time caused some of my critics to label me unpatriotic. While such attacks are clearly out of line, using some of our foreign profits to secure the election of Ron Paul goes a long way toward defusing such allegations. If you are not a client and you think $2,300 is a lot of money, it’s not. In fact, if Ron Paul is not our next President, such a sum will be practically worthless by the end of the term of whoever is. So what do you have to lose? Just write the check and hope for the best.”
http://blog.washingtonpost.com/the-trail/2007/11/19/if_its_good_enough_for_mickey.html
Donate money and let’s save this nation. Understand that by the time this president is done (2012) so will be the US Dollar and economy as we know it. With Ron Paul we still have a chance.
Mark Hurd…the man
200#, i know what is the point: cut 100 bps, which is the same as what reinvestor101 said.
otherwise,……
Wow, tried to hop on the http://www.ronpaul2008.com website just now and they seem to be experience a heavy load, can’t even get to the home page.
Could this be a tipping point for him? Could he actually have a chance?
From MSNBC:
Alarm at rising US car loan defaults
US car loan delinquencies have climbed markedly, raising another potential red flag for financial institutions and the automotive industry.
“We are beginning to see deterioration in auto asset-backed securities (ABS) credit conditions,” Lehman Brothers said in a report on Monday, drawing on data from two of the US’s biggest car finance companies – GMAC, 49 per cent owned by General Motors, and Ford Credit.
Jhonny Boy 214 We can only hope.But if he can’t get GOP nod & runs independent he would split REP. vote.Dems win ( Clinton) Oh No……..
“you’re wrong and we’re going to lead you to the next ease,” said Thomas Tucci, head of U.S. government bond trading in New York at RBC Capital Markets.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aMbKLK.0iL8A&refer=home
BI 227 Bonds maybe leading to cut,but it will not save houseing.Sentiment & lack of credit will feed downward spiral.Affordability will return like it or not.
Grim 215 Another big shovel of coal to fuel the train wreck,and the beat goes on.Got to get off this train thing!
#213 bi: Please give it a rest!! You are getting delerious. Breathe deep, repeat after me, real estate is DEAD. Accept it, plan accordingly.
In the netherlands, people went agog over tulips. Tulips bc\ecame the rage and the path to fisal stability and wealth. Prices were bid-up well beyond what could be supported by the demand for the product. Eventually, over-levereged investors got hammered when buyers ceased being willing, or were no longer able to, purchase the product.
In the 1920s in Florida people said “Land is running out,” and “get in now or forever be shut out of the market.” People rushed in and got burnt. While it is true that “God isnt’ making any more land,” river deltas, and certain limited other exceptions to the contrary, is accurate. Nevertheless, when we run out of land on a horizontal basis, we build up, just like they did on the Florida coast. I suspect that for the next 1,000 years there will be available housing stock in the NY Metro area.
By the way, if you want to listen to the Goldman Sachs conference call, here is how:
Monday, November 19, 2007
GS Conference Call: Mortgage Fall Out Has More To Go
We believe … the industry will suffer $148 Billion total losses related to CDOs, to date we’ve accounted for roughly about $40 billion of those, so we’re estimating another $108 billion in writedowns over the next several quarters.
Goldman Sachs, Nov 19, 2007
Most of this call is company specific (like Citi), however the bearish comments on the credit crunch, housing and states currently in or near recession are worth noting.
House prices have 13% to 14% to fall from current level.
Goldman Sachs, Nov 19, 2007
GS Conference Call
US Financial Services: Mortgage Fall Out Has More To Go
Monday, November 19th, 2007
11:00am EDT
Hosted by:
Lori Appelbaum and others
Replay: 800-332-6854 (Domestic)
973-528-0005 (Int’l)
Replay Code: 707854
the point?”
#200 BC Bob: I would like to ask Goldman that same question. What’s the point of forecasting a 30% decline in housing prices in NJ?
Adding more fuel to an already out of control, raging fire?
“200#, i know what is the point: cut 100 bps, which is the same as what reinvestor101 said.
otherwise,……”
bi,
This is alarming. 100 bp cut,otherwise? Will you stop being so damn pessimistic. You are becoming Roach-ish. If your posts continue to be so bleak, I may have to be a contrarian, even buy a house. Please be more optimistic.
3b [222],
This thing is raging out of control. There is no band aid, no resuscitation, no saviour nor any miracle maker. Simply the market giveth and now the market taketh. No need to disect, analyze, nor argue. It is simply a classic bubble and after a peak frenzy, the door is slammed shut and you’re left with a bunch of deer caught in headlights. No different from Tulip Bulbs, Fla 1925, dot.com.. The only question to be answered, length and severity.
Bob length & severity will depend on fed gov not fed.Big bail out by gov could ease pain short term but long term more pain.IMHO
UPDATE:
Eight states … for which there is greater than 30% house price depreciation forecast would be California, Florida, Arizona, Nevada, Virginia, New Jersey, Maryland, and Washington D.C. … 13% to 14% nationally masks some states that we have accute concerns.
Goldman Sachs, Nov 19, 2007
More good news fencesittingjacks housing prices will get down where they belong much lower
3b Says:
November 19th, 2007 at 8:30 pm
#213 bi: Please give it a rest!! You are getting delerious. Breathe deep, repeat after me, real estate is DEAD. Accept it, plan accordingly.
http://www.youtube.com/watch?v=9Kkr5o-EA3g
Who gives a tinkers damn about anything Goldman has to say about any damn thing? Aren’t these the same dirtbags who are short mortgage bonds? Did it ever occur to you that they might have a bit of self interest in publishing this sort of thing?
Why in the hell are they just saying this now? Why didn’t they say this a year ago?
Fencesittingjack Says:
November 19th, 2007 at 9:29 pm
UPDATE:
Eight states … for which there is greater than 30% house price depreciation forecast would be California, Florida, Arizona, Nevada, Virginia, New Jersey, Maryland, and Washington D.C. … 13% to 14% nationally masks some states that we have accute concerns.
Goldman Sachs, Nov 19, 2007
More good news fencesittingjacks housing prices will get down where they belong much lower
It would seem the areas with highest prices & most speculation will see greatest declines.
We needed Goldman to tell us that.
Not all Polish guys are geek central like grim……
http://www.youtube.com/watch?v=JP7NvDN0wuo&feature=related
228
Ok – that was funny
I assume you’re being sacastic. If you’re not, please realize that we don’t need Goldman saying shlt. They need to shut the hell up.
mikeinwaiting Says:
November 19th, 2007 at 9:55 pm
It would seem the areas with highest prices & most speculation will see greatest declines.
We needed Goldman to tell us that.
Hey, I don’t believe I told a joke. There’s nothing funny about any of this
njpatient Says:
November 19th, 2007 at 10:11 pm
228
Ok – that was funny
cf,
That kid has talent.
From MarketWatch:
Mortgage meltdown seen spreading to credit cards
As shares of Citigroup Inc. tumbled on Monday, analysts pointed to signs that the mortgage meltdown could be spreading to the banking giant and other major credit card players.
“We’re starting to see signs within the industry that credit quality is dropping,” said Justin McHenry, research director at market tracker IndexCreditCards.com. “That’s causing major credit card companies to at least consider taking out larger reserves to protect themselves against more people defaulting in the future.”
re 235:
It is beginning to feel like the Wizard of Oz when Dorothy and the Tin Man get chanting: mortgages and credit cards and auto loans go south. mortgages and credit cards and auto loans go south.
http://www.msnbc.msn.com/id/21889393/
US car loan delinquencies have climbed markedly, raising another potential red flag for financial institutions and the automotive industry.
“We are beginning to see deterioration in auto asset-backed securities (ABS) credit conditions,” Lehman Brothers said in a report on Monday, drawing on data from two of the US’s biggest car finance companies – GMAC, 49 per cent owned by General Motors, and Ford Credit.”
Just what Ford needs.
Does anyone have info on comp killers in Livingston, Essex Fells or Millburn?
#235…………..the cc companies being run by the same imbeciles that provided mortgages to morons are to blame here….stiffing clients with interest rate hikes to 30%….universal default…and other predatory practices heaped upon normal bill paying (in debt) Americans means some people will break under the pressure….others will take the abuse, pay the cars off, and avoid any future interaction, be it mortgages, car loans, or other ‘products’ from firms that they cannot trust. All the marketing in the world can’t overcome distrust and greed.
Watch MAXED OUT…Opening scene a successful realtor talking up the virtues of a planned community where you won’t lose……”I could not have paid for the construction of that house if I had not gotten loan to value…….if that interest rate goes up by that time we move in in April, I might not be able to afford the house anymore…..if you look like you make money, I guess you make money….”
http://tinyurl.com/38om75
par,
https://njrereport.com/index.php/2007/10/31/essex-fells-comp-killer/
clot(190)
yes, this could be a ploy by GS to pump their ABX shorts.
http://www.pegasusnews.com/news/2007/feb/27/movie-review-imaxed-outi/
There are films we attend purely for entertainment, and others we might take in for purposes of moral enrichment; there are even people who enjoy being educated by attending the occasional documentary on a subject that is near and dear to them, or one that is totally outside their realm of experience. And then there are films that simply make us mad. Maxed Out is one of that last variety.
It’s funny: when I pulled up Maxed Out on IMDB, the short list of recommended films that appeared at the bottom of the page included Titanic (involving the most famous sinking ship ever) and Deliverance (with its infamous Ned Beatty ass-reaming episode).
I wasn’t aware that the IMDB logic engine was so metaphorically astute, but my hat’s off to it.
Maxed Out, you see, is subtitled “Hard Times, Easy Credit and the Era of Predatory Lenders,” and it provides an insider’s view into the dark side of consumer credit in contemporary America. Which, from a metaphorical standpoint, can be said to involve both sinking ships and ass-reamings. Lots of them.
With the enormous trans-Saganistic U.S. national debt looming over our collective bowed-for-the-chopping-block heads (what, me worry?) as a backdrop to all this, writer/director James D. Scurlock begins his maddening 90-minute narrative positioned in the front seat of a car (a big, expensive car) driven by a real estate agent (an immaculately-suited, impeccably coiffed, professional-yet-subliminally-sexy female real estate agent) around a gated community in suburban Las Vegas, where the McMansion-esque properties are, by her own admission, priced beyond the means of most of the people who buy into them. Including her.
From here, the story moves along to the recording studio of the Dave Ramsey radio show, where we eavesdrop on Dave and several of his interviewees; these folks seem to be of the mind that they are entitled to relief from the outlandish debt they’ve compiled by maxing out their credit cards, financing new automobiles and signing on the bottom line of balloon mortgage agreements. Dave’s challenge is to convince them that there’s some responsibility on their part (huh?) for the gigantic mess they’ve gotten themselves into, and that they should quit whining and go to work to digging themselves out rather than resort to the more palatable solution of bankruptcy. Dave cuts himself no slack, either, stating for the record that “I’ve done stupid with zeros on the end.” But he’s a recovered credit-aholic.
Here the story takes a dark turn, as we’re introduced to the good folks at DebtOutlet.com, a kind of Ebay for credit investors looking to buy bad debts from creditors of all ilks. Turns out that receivables – whether likely to be actually received or not – look good on the financial books (go figure), and there’s plenty of businesses anxious to trade in them.
Not David Spade, but played by him on TV
Not David Spade, but played by him on TV
The camera takes us into the boiler room of a collection agency (apparently an easy business to start up and make lots of money at) where, from a typical set of phone-equipped cubicles, agents call to extract funds from delinquent debtors. Any amount of funds. Any way they can, using threats both actual and imaginary (i.e., legal and extra-legal). The owners of this operation seem to be pretty nice guys, as they converse over their tax-deductible steak dinners about how happy they are to be making lots of money by – in their minds (or mouths, at least) – reminding people of their neglected financial responsibilities.
Cut to the homes of the kinds of folks this outfit has actually been calling, including the parents of heavily-indebted college students (who were seduced into the mingled joys and outrages of credit card spending when they filled out credit aps conveniently provided on the campuses they were attending); the children of a missing woman who combined her taste for credit with a gambling addiction; and a rural black family whose lay clergy (acting in the capacity of part-time broker) kindly showed them how to lower their monthly mortgage payments by lengthening the terms of their note – and, incidentally, ballooning their interest rate.
To those of us who’ve worked to establish credit and manage it successfully, our knee-jerk impulse is to dismiss the arguments of people who whine about their (self-induced) fiscal predicaments – until we take into consideration the absolute drug-pusher mentality of the banks, who are portrayed as not only willing but ANXIOUS to extend credit to those undeserving of it, either through lack of credit history (as in the case of incoming college freshmen) or through documented BAD credit history. They WANT their debtors to default on payments, so they can raise their interest rate from that manageable (though still immensely profitable to the banks) initial rate of 10, 12 or 14%, to a usurious 29.99%; once the rate gets high enough, debtors in their target market (middle income) are left with the choice of making minimum monthly payments (thereby preserving the entire principal of their debt) or, eventually, declaring bankruptcy. (Or dying, of course.)
Speaking of bankruptcy, Scurlock uses President Bush’s advocacy of the bankruptcy “reform” bill (passed in April of 2005) as yet another avenue for demonizing our embattled chief executive, who has been demonized so often and by so many in the past several years (well, since taking office, actually) that we’d be surprised if the Secret Service hasn’t plastered alert posters for this character all over their regional offices. Scurlock’s reasoning is that the bill serves the interests of big bankers and their evil consumer credit minions while sticking it royally to those who will find it most difficult to wipe out their debt following the bill’s passage: namely, middle class Americans with big credit card balances.
Further implications of a big money conspiracy center on Comptroller of Currency (and Bush appointee) Julie Williams, who is portrayed as sort of a demi-demon, stonewalling Congressional oversight of the credit card companies in relation to the accuracy of the information they maintain on individual credit histories – the assumption being that much of this data is inaccurate, and, once it gets that way, it’s nearly impossible to amend.
The bottom line conclusion is that, if you’re short of funds, then Big Brother (in the incarnation of the Big Banks) wants to keep you that way. On the other hand, if you’re rich – well then! – more power to you. Literally. In the form of money. Here, have some more!
One of the few tension-breakers in the film is a sketch in which a stand-up comedian describes how his bank called to tell him he’d gone under the minimum balance required by the terms of his checking agreement. “They charged me $15,” he informs the audience. “That’s how much it costs to only have $20.” Later, he compares his situation of that of the rich guy on the other side of the aisle, who gets this call from the bank: “Hey, we just collected $15 from this guy, and we’d like you to have it.”
Funny, funny stuff. To some folks.
Opens today at the Inwood.
YOU KNOW YOU’RE IN DEEP DOO DOO WHEN: the most sympathetic character in the film is a pawnbroker.
PROGRESSION OF REPRESSION?: slavery to sharecropping to consumer credit (a sequence of social classes suggested by the film’s narrator).
APPEARANCES ARE EVERYTHING, RIGHT?: “If you look like you make money, I guess eventually you will.” – Beth Naef, Las Vegas realtor
YOU KNOW YOU’RE IN DEEPER DOO DOO WHEN: As a Harvard professor and expert on consumer credit, you write Alan Greenspan asking him where the exit strategy is – and he never writes back.
The above link is a story from the (English) China Daily newspaper re: financial impact to China of US subprime credit crisis. I was kind of shocked that China’s dollar reserves total $1.43 trillion. That gives me some comfort that they’re not going to do anything that would totally tank the Dollar. They’ve got too much to lose.
Err, here’s the link: http://tinyurl.com/33jlrs
240 – thanks Grim.
I’d prefer reading in my native language, because my knowledge of your languange is no so well. But it was interesting!
I’d prefer reading in my native language, because my knowledge of your languange is no so well. But it was interesting! Look for some my links: