Preliminary November sales and inventory data for Northern New Jersey is in. Please note that this data is subject to revision.
The first graph plots the unadjusted sales data (closed sales) for the counties listed. Please note the lower bound of the graph, it is set to 1000, not to zero. I do this to emphasize the seasonal nature of the Northern NJ market.
(click to enlarge)
The second graph is another view at the sales data for the full year. Please note that this graph does cross at zero.
(click to enlarge)
The third graph displays only November sales, 2000 to 2007 YOY.
(click to enlarge)
The fourth graph displays an overlay of Sales and Inventory from 2003 to 2007.
(click to enlarge)
The last graph displays the year over year change in inventory on a monthly basis.
(click to enlarge)
Wonder how this data compares to the early 90’s?
#1….Grim’s earlier work…..might shed some light…
https://njrereport.com/80sbubble.htm
Just change the dates and the pricing data, and this might have well been in this Sunday’s NYT.
Buyers Hang Back in Muddled Market
By THOMAS J. LUECK
Published: January 28, 1990
A TWO-YEAR slump in property values has pushed down home prices in the New York region and mortgage interest rates also have fallen, but the reductions show little sign of attracting the huge numbers of buyers who were locked out of the region’s giddy real estate market in the mid-80’s.
Economists point to one main reason, demonstrated in several recent studies: Prices remain sky high compared to the incomes of most New York area residents. That price-income gap puts homeownership, or a move up to a better home, out of reach.
The price and interest-rate drops are being offset by higher taxes and insurance costs. And in a region that is already one of the nation’s most expensive, other bills paid by both owners and renters, including those for fuel and utilities, are forcing people to reach deeper into their pockets.
Nor have income and employment gains kept pace with the rising household expenses.
”It is not that the economy is falling apart, but the important missing element is the kind of economic expansion we had,” said Samuel M. Ehrenhalt, the New York Regional Commissioner of the Federal Bureau of Labor Statistics. In contrast to the mid-80’s, when New York City and its suburbs were gaining 150,000 new jobs a year, the growth has slowed to 50,000, he said, adding: ”That kind of slowdown is bound to have an impact on housing demand.”
The result is a confused, contradictory and frustrating housing market that confounds expectations. Ordinarily, when house prices and loan rates fall, sales rebound. But most households are facing rising costs, families hoping to move up are struggling to find buyers for their current residences and the feverish boom atmosphere of the mid-80’s has segued into a cold new environment.
It is a market with signposts pointing in several directions, giving pause to both sellers and buyers, and many are choosing to postpone decisions until the picture clears. If there is a watchword in the market, it seems to be ”hesitate.”
…
”IF you bought a house at the end of 1987 you might feel like this market is the end of the world,” said Rosemary Scanlon, chief economist for the Port Authority of New York and New Jersey, which reported the median house price in the region hit a peak of $196,000 in 1988 and has since fallen 7 percent, to $182,400, but still too high for those who might consider buying their first home. ”Affordability just hasn’t gotten much better,” she said. Indeed, the median family income of people living in New York City and its suburbs – $30,867 – is less than half the $63,020 required by most lenders to qualify for the mortgage on the region’s median-price house – even after making a 20 percent down payment, according to the National Association of Realtors, a trade group.
The real estate slump is being aggravated by the changing psychology among those who might buy a house, even those who can afford the high prices of the New York region. Many of them, young professionals in their 20’s and 30’s who had watched home values soar for a decade, have adopted a skeptical view of future gains.
”Buying into this market is a real gamble,” said Scott Fortini, a marketing manager at Guiness Brands who was transferred from southern Florida to the company’s headquarters in Stamford, Conn., in November.
…
For those considering buying, the shifts in housing prices present a predicament. Some have concluded that the real estate downturn has created a long-awaited opportunity to buy while others are put off committing themselves in a market that shows no immediate sign of turning up.
…
BUT Mr. Helsand is not a first-time homeowner, and like thousands of others in the New York region, he has found that putting a home up for sale can be a frustrating experience. His studio, first advertised for sale last July, still hasn’t sold, so he is now planning to rent it out to cover his costs.
”In this market you may be winning when you buy but getting killed when you sell,” he said, adding that even though several people came to the open houses he had advertised to sell his studio, ”nobody seemed serious – it was like they were just out for a walk on a Sunday afternoon.”
Just like today the political talking heads were trying to talk up the market:
”We have probably hit bottom or come close to it,” in housing demand and prices, said Rae Rosen, an economist for the Federal Home Loan Bank of New York. She added that the one-percentage-point decline in interest rates means that the buyer of a $185,000 home, close to the median price in the New York region, would now pay $100 a month less in mortgage payments than a year ago.
And Barbara Corcoran was flapping her lips.
”The only people buying now are the ones who have convinced themselves they are getting a steal,” said Barbara Corcoran, the principal in the Corcoran Group, which deals in expensive Manhattan co-op apartments and condominiums. In an analysis of sales of 297 apartments in December, she said prices had been negotiated down from what the sellers asked by an average of 17 percent, compared to reductions of 4 percent a year earlier.
Grim, from your “inventory pace” chart, i see the pattern this winter is different from both 2005 and 2006. The current inventory YTY change stays low while the inventories started to increase in september 2005 aftar katrina and the inventory in winter 2006 stayed at high level.
From your own data, coupled with lower mortgage rate and possible freezing of arm reset, i don’t see any reason that the housing market in 2008 spring will be worse.
Remmeber that the market is always unpredictable. Before Thanksgiving, some folks here were so excited to trade tips on how to short retails. hope they did not do it or covered last week. This holiday shopping season is amazing – hard to find parking in every malls i visit this weekend.
grim great stuff many thanks.
BI worse than what last yr or now.
The current inventory YTY change stays low while the inventories started to increase in september 2005 aftar katrina and the inventory in winter 2006 stayed at high level.
Inventory continues to grow on a year over year basis. Current inventory is approximately 4% greater than this time last year. All we have seen is the rate of increase slow, there have been no signs of a decrease in inventory.
Oddly enough, YOY change in inventory actually increased in October and November. The rate of change in September was actually the slowest of the year, with a 3.69% increase. Inventory rate actually began to increase in October, to 3.95%, and faster yet, 4.19% in November. If anything, inventory growth is showing some signs of acceleration, not slowdown. Take a close look at the tail end of the curve, you’ll notice it beginning to turn upwards again.
Or are you just seeing a “pattern” (“You keep using that word. I do not think it means what you think it means.”) because you want to see one?
grim: your charts need V!agra
7#, i don’t think it will be worse than now. friend of mine who bouhgt in summer and paid 6.5% for 30 year fix rate did refi last week at 5.75%.
I knew the local RE market was in the mode of recovering in spring 2007. but august event tried to spoil the party. but i think the effect was opposite. it will accelerate the recovering in the high quality market such as NJ since it caused Fed to ease credit so the lenders have less risk to lend.
grim, you got to look at rate “by level” – there is no statistical difference between 4.19% and 3.65% in the range from -20% to +50%. Hope we can agree that the YOY inventory increaing rate stays stationary from Spet. to Nov. 2007.
Now we have to ask why this is happening in the midst of worse housing recession since Great Depression.
BI you mentioned rate freeze this wiil give a whole new meaning to lenders risk come spring.
Contracts spreadsheet has been updated:
https://njrereport.com/files/contracts.xls
Contract activity for North Jersey (GSMLS) was terrible in November. Clearly the worst month of the year. As contracts are a leading indicator of future sales, it’s obvious that a near-term upturn in the market is unlikely.
12#, if rate freeze really happens in next few months, the expected return by lenders and mortgage bond holders would be realized. they must write down assets further. but this has litle impact to real estate market since they still have to lend. their risk will be reduced by tightened lending stardard and lower treasury rate.
would NOT be realized
For those who don’t have Excel..
November Contracts
(Source: GSMLS)
Bergen
2006 – 121
2007 – 106 (-12.4%)
Essex
2006 – 379
2007 – 263 (-30.6%)
Hunterdon
2006 – 115
2007 – 85 (-26.1%)
Middlesex
2006 – 103
2007 – 83 (-19.4%)
Morris
2006 – 395
2007 – 299 (-24.3%)
Passaic
2006 – 211
2007 – 186 (-11.8%)
Somerset
2006 – 290
2007 – 207 (-28.6%)
Sussex
2006 – 132
2007 – 120 (-9.1%)
Union
2006 – 308
2007 – 205 (-33.4%)
Warren
2006 – 106
2007 – 75 (-29.2%)
Aggregate
2006 – 2160
2007 – 1629 (-24.6%)
IT would seem my back woods county(Sussex)is holding up better than the rest.No desireable train towns, NYC is a far commute.I’m at a loss to explain it.Any ideas out there?
mike,
Here is a Sussex-only graph from 2005-2007. Since we’re into a multiyear decline, looking at the YOY numbers doesn’t tell the whole story.
https://njrereport.com/images/sussexmike.gif
OK going to excel sheet we have been in red longer than others ,in addition from what we have of 05 to 06 saw some of the biggest losses.We are just ahead of curve for downtrend.So lets watch humble Sussex to see trends for the rest.
Grim thanks I was writing before your graph but lookig at #s I think my post 19 draws the right
conclusion.
Look out below!
Contracts spreadsheet updated to include NJMLS
https://njrereport.com/files/contracts.xls
November Contracts
(Source: NJMLS)
Bergen
2006 – 519
2007 – 383 (-26.2%)
Essex
2006 – 100
2007 – 71(-29.0%)
Passaic
2006 – 142
2007 – 127(-10.6%)
Aggregate
2006 – 761
2007 – 581 (-23.7%)
“If anything, inventory growth is showing some signs of acceleration, not slowdown.”
INCONCEIVABLE!!!!!
Nice comp killer in West Orange
16 Schindler Terrace
(REO – Countrywide)
Purchased: 8/12/2004
Purchase Price: $505,000
MLS# 2450601
OLP: $489,900 (Was $549,900 prior to forecosure)
Current Asking: $484,900
DOM: 58
The following sellers now need to compete with a Countrywide foreclosure. Both are similar units.
12 Schindler Terrace – $519,000
17 Schindler Terrace – $518,900
WSJ
Troubled Builders, Bargain Seekers United Lennar’s Land Sale Could Be a Catalyst For Similar Deals
By MICHAEL CORKERY
December 3, 2007
Lennar Corp. has sold about 11,000 home sites to a venture mostly owned by the real-estate arm of Morgan Stanley for $525 million, a large land sale that signals that investors have begun to pounce on bargain deals.
The sites — in 32 communities in areas hit hard by the housing downturn — were valued on Lennar’s books at $1.3 billion as of Sept. 30. The low price the venture paid is a vivid sign of how land values have plummeted with the downturn, precipitated by defaults on subprime mortgages and tightening credit that have led to a broader slowdown in sales.
The deal, which closed with little fanfare Friday night, could be a catalyst for other “vulture” investors to swoop in and grab discounted land from other troubled builders. A wide range of investors have been raising money from pension funds and private-equity firms to acquire land.
[edit]
Ouch….most similar CDO have been trading at 0.45 of par, so these guys took a 40% haircut even off that level….
WSJ
A CDO Floor of 27 Cents on the Dollar?
Citadel’s Deal for E*Trade Debt May Set Template For Other Firms Selling Bruised Assets at a Discount
By DAVID REILLY, GREGORY ZUCKERMAN and SERENA NG
December 3, 2007
Ever since debt markets seized up this summer, investors have struggled with the question of how much securities backed by risky mortgages are worth.
Now, thanks to Citadel Investment Group’s purchase of $3 billion in debt held by E*Trade Financial Corp., there is at least one answer. Citadel paid an average of about 27 cents on the dollar for these assets.
E*Trade sold the portfolio of troubled debt, which includes structured asset-backed collateralized debt obligations, or CDOs, and other mortgage securities, after seeing its stock plummet in value, and after at least one analyst suggested that the bank and online broker might have to file for bankruptcy-court protection. Few others would have been able or willing to buy such a large portfolio of this troubled debt.
[edit]
we can agree that the YOY inventory increaing rate stays stationary from Spet. to Nov. 2007.
Now we have to ask why this is happening in the midst of worse housing recession since Great Depression.
Pent-up supply?
People want to sell, but are sitting on the sidelines waiting for a recovery instead of getting into a price war with their neighbors who can’t sell their homes either?
but this has litle impact to real estate market since they still have to lend.
bi,
Where do you get that from? Nobody “has to lend” a dime. Investors will either get a return they believe provides adequate compensation for their risks or they will chase another investment.
grim: not sure the point of this article other than indirectly accusing a good many people of being lazy and stupid….
Subprime Debacle Traps Even Very Credit-Worthy As Housing Boomed, Industry Pushed Loans To a Broader Market
By RICK BROOKS and RUTH SIMON
December 3, 2007
One common assumption about the subprime mortgage crisis is that it revolves around borrowers with sketchy credit who couldn’t have bought a home without taking on a mortgage with punitively high interest rates. But it turns out that plenty of people with seemingly good credit are also caught in the subprime trap.
[edit]
From Krugman in the NYT:
What it takes
Maybe I don’t have what it takes to be a serious columnist. I mean, it would never have occurred to me to suggest that the only way to explain an economic forecast I don’t agree with is to say that it must be part of an evil plot to drive down the market, so that Goldman Sachs can make money off its short position — and to suggest that Goldman should be the subject of a federal investigation.
For what it’s worth, Goldman’s forecast of a 15 percent decline in home prices seems implausible to me, too — but on the low side. A 15 percent decline would bring prices back to their level in early 2005 — when the bubble was already well inflated. If prices fall back to their level in early 2003, that’s a 30 percent decline.
Well Here it goes – This post is for BI.
Dear Bi – I have being deliberately ignoring you posts for about a month now. I will be doing so for another month after this post. DO not get me wrong – I understand where are you coming from. Your agenda is extremely difficult right now. You need to cheer up sinking Titanic. It does not matter for what reason. ( I personally believe, you are heavily invested in RE and trying to off-load you current properties.)
It does not really matter for what reason – what matter is quality of you posts and general value for you posts. In your today’s posts #5, 10, 11, and 14 you had exactly 0 valid arguments and saying that Remember that the market is always unpredictable.
and using it as an argument – it is like suggesting that I should go play roulette – it is unpredictable, all right.
also: I knew the local RE market was in the mode of recovering in spring 2007. but august event tried to spoil the party. but i think the effect was opposite. it will accelerate the recovering in the high quality market such as NJ since it caused Fed to ease credit so the lenders have less risk to lend.
Please re-read it yourself – if market was recovering in Spring – why did AUGUST!!! credit crunch hurt it – isn’t AUGUST the END of selling season??? and they rest of the post just does not even includes complete sentences…
Effect of what was opposite?? Of credit crunch?? Opposite to what?? Slowing sales down and less available credit???
PLEASE THINK before you post next nonsense.
From post# 14 if rate freeze really happens in next few months, the expected return by lenders and mortgage bond holders would be realized. they must write down assets further. but this has litle impact to real estate market since they still have to lend. their risk will be reduced by tightened lending stardard and lower treasury rate.
if Expected Returns would NOT be realized – One would expect lenders to go out of business, Mortgage bond holders to loose a lot of money. How does this lead to more lending??
How are lenders going out of business ha little impact on housing??
Tightening of lending standards – it the last 2 years if you can walk into broker’s office you got mortgage. Hell, even if you can not walk somebody would give you mortgage. They were giving mortgages to DEAD people (literally).
SO even with that loose lending market stalled. Now we have tightening of lending standard (your own words) – and it will help housing??
to Finish – Bi, this is not a post against you – it is post against YOUR POSTS. Your posts are nonsense, they do not make any sense and bring zero value.
With that I am off to ignoring you for another month (or until you actually start posting better posts.
From Bloomberg:
Moody’s May Cut Ratings on $105 Billion of SIVs
Moody’s Investors Service is preparing the biggest credit rating cuts since subprime mortgages contaminated the bond market, foreshadowing losses for investments that pay Florida teachers and money market funds.
Moody’s may lower ratings on $105 billion of debt sold by structured investment vehicles after the net asset values of 20 SIVs sponsored by firms including New York-based Citigroup Inc. declined to 55 percent from 71 percent a month ago, Moody’s said in a statement Nov. 30. The assets were valued at 102 percent in June.
“The assets that SIVs hold are continuing to decline in value,” said Ira Jersey, an interest-rate strategist in New York at Credit Suisse Group, Switzerland’s second-biggest bank by assets. “As they do that it’s creating more problems for the holders.”
Real estate slump has developers stymied
Sunday, December 02, 2007
BY SUE EPSTEIN
Star-Ledger Staff
More than $2 billion in redevelopment projects were planned in Perth Amboy, East Brunswick and Carteret, where officials hoped declining business districts and abandoned industrial spots would be replaced by luxury condominiums, townhouses and homes.
But with the real estate boom a fading memory and some housing developers declaring bankruptcy, the grand plans for redevelopment linked to housing have been shelved, scaled down and put in jeopardy. Some underestimated how quickly the housing slump would set in.
“I thought we’d just be going downhill, but we went off a cliff,” said Jason Kaplan, president of Kaplan Cos., a developer with multimillion-dollar projects planned in Carteret and Perth Amboy.
In East Brunswick, where Toll Brothers has a contract to redevelop the “Golden Triangle,” the formal application for the $35 million project was expected to have been submitted to the planning board already, but the plans have been delayed.
The project would replace a shopping center off Tices Lane, Old Bridge Turnpike and Route 18 with a mix of retail, office and residential units. The site currently includes the Route 18 Flea Market, Jason’s Furniture, Sam’s Club and the East Brunswick Transportation Center, all of which have leases running through 2008. Toll Brothers now wants to extend the leases until late 2009.
Mayor William Neary said he believes the housing market could have been the reason Toll Brothers has taken longer to file its formal project application.
In Perth Amboy, officials said Kushner Cos., developers of the $600 million Landings at HarborSide project, have delayed the start of the next phase of the project until spring because of the market.
“The question looking back historically is — were the success stories based on regular market pressures or the housing bubble?” said James Hughes, the dean of the Edward J. Bloustein School of Planning and Policy at Rutgers University in New Brunswick. “We won’t know that for several years because this downturn will last several years.”
Hughes said he expects the uncertain housing market to continue to decline through 2008 and maybe longer.
“The market is almost paralyzed right now,” he said.
Carteret Mayor Dan Reiman and Perth Amboy Mayor Joseph Vas said they are willing to work with developers to tweak projects and make them more marketable in today’s climate.
“We have to work to accommodate the needs of the market,” Reiman said. “We’re fortunate that we have so much going on, not only residential but commercial. We have 13 independent projects. While some have slowed, others have not.”
Reiman said the borough worked with Kaplan Cos. to redesign the Gateway at Carteret, the largest redevelopment project in the borough, to reduce the number of the townhouses offered, and their price. The borough also has seen the amount collected from building permits drop $300,000 this year, Reiman said.
Vas acknowledged that effects of the national housing slump have been felt in his city, but he said the impact has been minimal.
“It’s difficult to be isolated from a national trend,” Vas said. “But I’m confident about what Perth Amboy has to offer.”
“I thought we’d just be going downhill, but we went off a cliff,” said Jason Kaplan,
From # 33,
Yes, confirmed by JB’s 3rd graph.
“It’s difficult to be isolated from a national trend,” Vas said. “But I’m confident about what Perth Amboy has to offer.”
Perth Amboy is crowded beyong believe… I’ve got an idea – Let’s build MORE housing units here!!!
They do not understand that this housing slump Is a blessing!!! Now is the time to stop and look criticlly at some of the projects and what they are bringing to the area.
Italics Off
” but this has litle impact to real estate market since they still have to lend.”
bi,
Comedy for Monday morn?
The J. Geils freeze frame being discussed is not for the benefit of John Q. It is strictly a plan to boost the banks. Give them time to build up their capital. We have witnessed the end result of their reckless lending. Now, it’s strictly about capital ratios. If they are so concerned about John Q, why not just foreclose and work out a rental agreement.
For someone in my late 20’s who is new to the “market psychology” factor, this has been a great learning experience I hope to pass down to my children (if I have any) for the next housing bubble
…really if you think about it, people collectively are pretty dumb (for lack of a better word)
Heard an interesting radio ad this morning on 1010 wins regarding oil prices. The NY home heating oil association is paying for ads claiming there is a loophole in the federal oversight of energy trading that may account for nearly 40% of the price of oil.
“In 2000, Enron lobbyists seeking to exempt energy commodity trading from federal oversight were successful in passing the “Enron Loophole.” Virtually overnight, the loophole freed certain energy trading platforms (upon which a majority of such trades now occur) from federal oversight requirements, opening the door to excessive speculation and energy price manipulation. While Enron is long gone, its legacy remains. These new unregulated “dark markets” are now the dominate energy trading environment; resembling the Wild West more than Wall Street. Congress should pass the “Close the Enron Loophole Act” and bring the rule of law back to the energy markets.
(S.2058/H.R.4066) were introduced in the Senate by Senator Carl Levin of Michigan and in the House by Representatives Peter Welch of Vermont and Rob Andrews of New Jersey.
Web site is closetheenronloophole dot com to send an email to your congressman and senator.
I caught the end of the radio ad this morning, didn’t get the full reason for it but it did pique my interest. Thanks for the link.
Read an article in Newdday today about a realtor, boy are they bottom feading scum. She proudly stated that since business is slow and she “now realizes” that many of her clients from 2004 to early 2007 bought houses they can’t afford she is personally calling everybody she sold a home to in that period to see how they are doing. She said she had no idea about how her buyers financed the transactions as that type of stuff the banks and lawyers took care of.
If her buyers are doing well that is great, if they are in over their heads she is more than happy to talk to the bank and be their short sale agent!! If they are out of luck short sale wise and have no equity she will gladly give them the phone number of the local foreclosure govt. sponsored service that assist homeowners in foreclosure!!
Scummy yes but you have to admire her CHUTZPAH!!!
Two scoops of ice cream are always better than one.
Great Job on those charts Grim.
Marketwatch.com article,
Subprime mess to get worse before better: Fed’s Rosengren
WASHINGTON (MarketWatch) — Research at the Boston Fed suggests that the foreclosure crisis in subprime mortgages will get worse before it gets better, said Bank president Eric Rosengren on Monday. Just how much worse depends on the outlook for the economy and housing, he said. “Our forecast is quite dependent on how far home prices fall,” Rosengren said. He urged community banks and states to focus on the 87% of subprime loans that are not seriously delinquent and where action may avoid future problems. Rosengren said he was not advocating any bailout, instead wanted to use “existing programs for what they were designed to do.” Some of the programs administered by the Federal Housing Administration could be modernized, he suggested. Lenders should also consider extending the terms of current loans or refinancing.
“U.S. corporate profits are in a recession, and the entire economy may not be far behind”
“The earnings recession has already arrived,” says David Rosenberg, North America economist for Merrill Lynch & Co. in New York. “We are going to see an economic recession in ’08.”
“Bank of America, JPMorgan Chase & Co., Bear Stearns, Citigroup Inc., Lehman Brothers Holdings Inc. and Morgan Stanley have announced some 25,000 job cuts so far this year. Gustavo Dolfino, president of New York executive-search firm Whiterock Group LLC, said in a Nov. 20 interview he expects them to fire thousands more.”
“Scarce credit could make things even tougher for companies such as Brunswick Corp. of Lake Forest, Illinois, maker of Bayliner boats. The firm is cutting 170 jobs as it struggles with what Chief Executive Officer Dustan McCoy suggested might be the weakest U.S. boat market since 1965.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=a_TgRes4VjjU&refer=home
From the FT (free registration required)
http://www.ft.com/cms/s/0/7d92a308-a12e-11dc-9f34-0000779fd2ac.html
JB,
#46 is in moderation
Rosen’s no hack; she is an accomplished economist. Her views may or may not be correct (and her quote is, in fact, accurate) –her honest flaw may be too much efficient market theory, not enough behavioral econ.
Was this posted? From the NYT:
Innovating Our Way to Financial Crisis
By PAUL KRUGMAN
Published: December 3, 2007
The financial crisis that began late last summer, then took a brief vacation in September and October, is back with a vengeance.
How bad is it? Well, I’ve never seen financial insiders this spooked — not even during the Asian crisis of 1997-98, when economic dominoes seemed to be falling all around the world.
This time, market players seem truly horrified — because they’ve suddenly realized that they don’t understand the complex financial system they created.
http://www.nytimes.com/2007/12/03/opinion/03krugman.html?_r=1&oref=slogin
From MarketWatch:
SUBPRIME TODAY
E-Trade cut at BofA; $1 billion addition to reserves seen
Dollar loses ground vs. yen as BoJ warns on U.S. housing
Subprime debacle traps even very credit-worthy
U.S. expands scrutiny of home lenders
A CDO floor of 27 cents on the dollar?
And more at the link above
Sean #40: I heard this ad too. I’m going to check out the site; thanks for posting it. This warrants a blogswarm at my end of the spectrum, I think.
CNN: “Paulson: U.S. “aggressively purusing” relief for struggling subprime mortgage holders. More soon.”
uh – is that CNN’s typo, or are the highlighting Paulson’s dimwittery?
Paulson causes market to surge?
this paulson truly sickening
ugly chart still in my neck of the woods by and large prices haven’t gone anywhere but a couple of % points down and please don’t quote some builder or schmuck who listed their property at fairyland prices. one positive is the builders will stop ripping down every 3rd house and building stuff to big for the lot size.
krugman is a showman hack don’t bother quoting that dolt.
None of the financial leaders in the government (paulson, bernanke, etc) are in the least bit interested in fixing the real problem (fiscal responsibility). Can you imagine the havoc if bernanke and paulson suddenly stated that they are raising rates to prevent the decline of the dollar and are strongly pushing for a stop of deficit spending and an equalization of the trade deficit? We will see pigs flying first
bi (5)-
How many houses will YOU be buying this Spring?
bi (10)-
What will happen when Fannie runs out of money and stops buying all but the most prime mortgages?
This crisis has now reached the breaking point at BOTH liquidity AND solvency.
RE:
grim Says:
December 2nd, 2007 at 7:04 pm
Just change the dates and the pricing data, and this might have well been in this Sunday’s NYT.
Buyers Hang Back in Muddled Market
By THOMAS J. LUECK
Published: January 28, 1990
If you adjust these numbers for inflation from the comparable time period (http://inflationdata.com/Inflation/Inflation_Rate/InflationCalculator.asp#results)which spits out 80.2% (Jan 88 to Sept 07) you get aprox:
“New York Region” of avg house $353,192 and avg salary/family of $55,622. Now compare that to actual median price of $482,300 (http://money.cnn.com/2007/08/15/real_estate/NAR_home_prices_lower/index.htm?postversion=2007081515)and an actual median faimily income of $59,000 the income to house has increased from 6.3x to 8.2x. It would then seem to me that to get in line with where we were at the peak of 88′ prices would have to drop about 30.2%. Any thoughts?
Grim et. al,
Could you help me with a calculation that I am working on for a letter to Schumer. I am looking to identify what the payments would be on a 30 year mortgage that starts out with a 3 year teaser rate of 3% and then resets to 9%. I did a rough estimate assuming the 3% on a 30 year and calculated the remaining principle balance ($314,308.38) at the end of the 3 year period. I then calculated a 27 year mortgage at 9% for that remaining balance. This calculation showed the payment going from $1,418.69) to $2,587.15.
The thing that has me wondering, though, is that the conventional mortgage at 6% shows $10,228.41 principle being paid over those 3 years and the ARM calculation I did shows $21,691.62 in principle payments. This struck me as likely incorrect. If anyone has the ability to do a more sophisticated analysis of the payments or can direct me to an online calculator that can handle ARMs, I would appreciate the assistance.
ChiFi (26)-
What if it turns out .27 is too much?
I just heard the “Enron loophole” commercial on the “cool jazz” radio station.
So please tell me if my assumptions are correct. According to Mr. Paulson, if you are a financially reckless dolt with ADHD and you have the intelligence that rivals that of Sponge Bob’s friend, Patrick, then you will be rewarded with a hyper-low fixed right mortgage until you feel better about yourself and you’ve turned that frown upside down. Will they be throwing in a plasma TV and some pet food to feed the squirrels, too?
A CDO Floor of 27 Cents on the Dollar?
By David Reilly, Gregory Zuckerman and Serena Ng
Word Count:Ever since debt markets seized up this summer, investors have struggled with the question of how much securities backed by risky mortgages are worth.
Now, thanks to Citadel Investment Group’s purchase of $3 billion in debt held by E*Trade Financial Corp., there is at least one answer. Citadel paid an average of about 27 cents on the dollar for these assets. And it received a boatload of E*Trade shares as part of the deal.
Even if he wanted to not even a Wall Street heavyweight like Paulson can make politicians down in DC deal with problems they would rather put off until after the next election.
Paulson’s latest plan is for tax exempt bonds issued by the states, since Bush and what remains of the Republicans in DC do not want a federal bailout.
http://www.nytimes.com/reuters/business/business-usa-subprime-paulson.html
We should see the rest of this bailout plan unfold by the end of the week.
From bankrate.com
Subprime relief: Winners and losers
By Holden Lewis • Bankrate.com
A consortium of lenders is considering a plan to reduce foreclosures by freezing low introductory interest rates on subprime mortgages. There would be winners and losers under such a policy.
[snip]
Most subprime mortgages are called 2/28 ARMs because they have an introductory rate that lasts two years and then the rate can be adjusted up or down in each of the 28 years after that.
A typical 2/28 mortgage underwritten in early 2006 had a starting rate of around 8.25 percent. When the loans are reset at their two-year anniversary, many of these borrowers can expect the rates to climb to 10 percent or higher.
On a $200,000 loan, the monthly principal and interest payment would rise $289 (to $1,792) if the rate jumped from 8.25 percent to 10.25 percent after two years. People get subprime loans because they have credit problems, and a sudden monthly increase of that magnitude can tip their family finances over the edge and send borrowers into foreclosure.
http://www.bankrate.com/brm/news/mortgages/20071203_foreclosures_rate_freeze_a1.asp
So ..
According to bankrate, “low” means 8.25%?
And “reset” means to 10% or greater?
With all of this talk about “low teaser rates,” I thought they were talking about artificially low 1% or 2% rates for an introductory period (?)
Is the problem more that with the option ARMs, a lot of people were going I/O and have hit the point where they have to pay principal plus interest …plus the rate reset …making for payment shock?
From Reuters:
Fannie Mae modified $10 bln in subprime loans -Mudd
Fannie Mae, the largest provider of financing for U.S. home mortgages, has eased terms on some $10 billion in subprime loans to help homeowners faced with foreclosure, Chief Executive Daniel Mudd said on Monday.
Mudd also said he supported a proposal spearheaded by the U.S. Treasury that would prevent scheduled payment increases from causing mortgage defaults.
“We’re supportive” of the Treasury plan, Mudd said on a panel hosted by the Office of Thrift Supervision in Washington. “But everybody needs to play a role in this.”
#64 –
yes, gary, that’s how i see it.
one of the things i have a really hard time with is that they help the people who’s rate is going up and can’t afford it, but the people who’s rate’s going up and can afford it don’t get help. my question for these pols is, why should anyone struggle to work extra hours or jobs or have a duel income, to afford it, when they can just do nothing and have someone else pay?
the incentive is perverse.
I’ve been following about five towns in North Bergen County for about five months now and here’s what I see (very unscientific)!
Sellers are still listing at peak-plus prices.
The houses that sell are in move-in condition.
The houses that sell are selling at 2004 comps, some a little bit lower.
The ones that do sell, sell at 2004 prices after the sellers lower the price practically there. “Lowballs” are not getting accepted, the sellers have to come to reality first.
Quite a few houses are now for rent and for sale and they have been for rent for 3-5 months looking for a renter.
Houses that are classic architecture (not a split, bilevel or ranch) are still selling, no matter what the size, but again, for no more than 2004 prices, or a little bit less.
This bailout of banks and thats what it is,will have the side effect of keeping sheeple in their homes.What it will do to RE market will be a blood bath.No loans no sales, what investor
in their right mind would loan money after this.
New tide of resets 2010-11 do they freeze those to.If Paulson & Ben are going this route it is much much worse than anyone can imagine for the banks.They are surely aware of the can of worms
that is being open.I can only conclude that it is the lesser evil,the bad paper is to wide spread and in stagering amounts.They may screw up RE market for forseeable future but the banks,city & state gov,pension funds will all stay afloat.
From CN Editorial,
Abbott revamping carries hints of progress
Seems that new formula for school funding will be released soon.
TCM # 70
Perhaps this is a bit to cynical, but i would call the continued bailouts to be the “heroin” for the masses. The more the general population gets used to being bailed out by the government and not having to be responsible for their own decision, the more power the government has.
In a society where indiviuals take responsibility for their own actions and do not sit their with their hands held out and the only real function of the federal government is to manage international and interstate relations the politicians hold very little power. The more services and benefits the government controls the more powerful it becomes and every governments primary goal is the accumulation of power
re: (73)
SG, The “dropout factories” in New jersey should all be closed and those kids put on a busses and shipped off to districts that can make a difference in their lives. The Abbott money should go to any district that will accept and Educate these kids.
Clotpoll Says:
December 3rd, 2007 at 11:03 am
ChiFi (26)- What if it turns out .27 is too
much?
clot…see my post 29…I would wager that it is a good deal…
If we are not witnessing the onslaught of moral hazard, then I don’t know the meaning of the term.
#50 “they don’t understand the complex financial system they’ve created.” Never thought I’d agree with Krugman but he’s right. It’s fear of the unknown that has the credit markets paralyzed. That’s human nature – if we don’t know what we’re dealing with or how bad it is, we always imagine the very worst. I also think that all of these derivatives were bound to collapse at some point – they just weren’t stable to begin with but no one wanted to hear the ghost of Skilling tellng them, “You just don’t get it!”
National debt grows $1 million a minute By TOM RAUM, Associated Press Writer
1 hour, 8 minutes ago
WASHINGTON – Like a ticking time bomb, the national debt is an explosion waiting to happen. It’s expanding by about $1.4 billion a day — or nearly $1 million a minute.
ADVERTISEMENT
What’s that mean to you?
It means almost $30,000 in debt for each man, woman, child and infant in the United States.
Even if you’ve escaped the recent housing and credit crunches and are coping with rising fuel prices, you may still be headed for economic misery, along with the rest of the country. That’s because the government is fast straining resources needed to meet interest payments on the national debt, which stands at a mind-numbing $9.13 trillion.
And like homeowners who took out adjustable-rate mortgages, the government faces the prospect of seeing this debt — now at relatively low interest rates — rolling over to higher rates, multiplying the financial pain.
So long as somebody is willing to keep loaning the U.S. government money, the debt is largely out of sight, out of mind.
But the interest payments keep compounding, and could in time squeeze out most other government spending — leading to sharply higher taxes or a cut in basic services like Social Security and other government benefit programs. Or all of the above.
A major economic slowdown, as some economists suggest may be looming, could hasten the day of reckoning.
The national debt — the total accumulation of annual budget deficits — is up from $5.7 trillion when President Bush took office in January 2001 and it will top $10 trillion sometime right before or right after he leaves in January 2009.
That’s $10,000,000,000,000.00, or one digit more than an odometer-style “national debt clock” near New York’s Times Square can handle. When the privately owned automated clock was activated in 1989, the national debt was $2.7 trillion.
It only gets worse.
Over the next 25 years, the number of Americans aged 65 and up is expected to almost double. The work population will shrink and more and more baby boomers will be drawing Social Security and Medicare benefits, putting new demands on the government’s resources.
These guaranteed retirement and health benefit programs now make up the largest component of federal spending. Defense is next. And moving up fast in third place is interest on the national debt, which totaled $430 billion last year.
Aggravating the debt picture: the wars in Iraq and Afghanistan, which the nonpartisan Congressional Budget Office estimates could cost $2.4 trillion over the next decade
Despite vows in both parties to restrain federal spending, the national debt as a percentage of the U.S. Gross Domestic Product has grown from about 35 percent in 1975 to around 65 percent today. By historical standards, it’s not proportionately as high as during World War II — when it briefly rose to 120 percent of GDP, but it’s a big chunk of liability.
“The problem is going forward,” said David Wyss, chief economist at Standard and Poors, a major credit-rating agency.
“Our estimate is that the national debt will hit 350 percent of the GDP by 2050 under unchanged policy. Something has to change, because if you look at what’s going to happen to expenditures for entitlement programs after us baby boomers start to retire, at the current tax rates, it doesn’t work,” Wyss said.
With national elections approaching, candidates of both parties are talking about fiscal discipline and reducing the deficit and accusing the other of irresponsible spending. But the national debt itself — a legacy of overspending dating back to the American Revolution — receives only occasional mention.
Who is loaning Washington all this money?
Ordinary investors who buy Treasury bills, notes and U.S. savings bonds, for one. Also it is banks, pension funds, mutual fund companies and state, local and increasingly foreign governments. This accounts for about $5.1 trillion of the total and is called the “publicly held” debt. The remaining $4 trillion is owed to Social Security and other government accounts, according to the Treasury Department, which keeps figures on the national debt down to the penny on its Web site.
Some economists liken the government’s plight to consumers who spent like there was no tomorrow — only to find themselves maxed out on credit cards and having a hard time keeping up with rising interest payments.
“The government is in the same predicament as the average homeowner who took out an adjustable mortgage,” said Stanley Collender, a former congressional budget analyst and now managing director at Qorvis Communications, a business consulting firm.
Much of the recent borrowing has been accomplished through the selling of shorter-term Treasury bills. If these loans roll over to higher rates, interest payments on the national debt could soar. Furthermore, the decline of the dollar against other major currencies is making Treasury securities less attractive to foreigners — even if they remain one of the world’s safest investments.
For now, large U.S. trade deficits with much of the rest of the world work in favor of continued foreign investment in Treasuries and dollar-denominated securities. After all, the vast sums Americans pay — in dollars — for imported goods has to go somewhere. But that dynamic could change.
“The first day the Chinese or the Japanese or the Saudis say, `we’ve bought enough of your paper,’ then the debt — whatever level it is at that point — becomes unmanageable,” said Collender.
A recent comment by a Chinese lawmaker suggesting the country should buy more euros instead of dollars helped send the Dow Jones plunging more than 300 points.
The dollar is down about 35 percent since the end of 2001 against a basket of major currencies.
Foreign governments and investors now hold some $2.23 trillion — or about 44 percent — of all publicly held U.S. debt. That’s up 9.5 percent from a year earlier.
Japan is first with $586 billion, followed by China ($400 billion) and Britain ($244 billion). Saudi Arabia and other oil-exporting countries account for $123 billion, according to the Treasury.
“Borrowing hundreds of billions of dollars from China and OPEC puts not only our future economy, but also our national security, at risk. It is critical that we ensure that countries that control our debt do not control our future,” said Sen. George Voinovich of Ohio, a Republican budget hawk.
Of all federal budget categories, interest on the national debt is the one the president and Congress have the least control over. Cutting payments would amount to default, something Washington has never done.
Congress must from time to time raise the debt limit — sort of like a credit card maximum — or the government would be unable to borrow any further to keep it operating and to pay additional debt obligations.
The Democratic-led Congress recently did just that, raising the ceiling to $9.82 trillion as the former $8.97 trillion maximum was about to be exceeded. It was the fifth debt-ceiling increase since Bush became president in 2001.
Democrats are blaming the runup in deficit spending on Bush and his Republican allies who controlled Congress for the first six years of his presidency. They criticize him for resisting improvements in health care, education and other vital areas while seeking nearly $200 billion in new Iraq and Afghanistan war spending.
“We pay in interest four times more than we spend on education and four times what it will cost to cover 10 million children with health insurance for five years,” said House Speaker Nancy Pelosi, D-Calif. “That’s fiscal irresponsibility.”
Republicans insist congressional Democrats are the irresponsible ones. Bush has reinforced his call for deficit reduction with vetoes and veto threats and cites a looming “train wreck” if entitlement programs are not reined in.
Yet his efforts two years ago to overhaul Social Security had little support, even among fellow Republicans.
The deficit only reflects the gap between government spending and tax revenues for one year. Not exactly how a family or a business keeps its books.
Even during the four most recent years when there was a budget surplus, 1998-2001, the national debt ranged between $5.5 trillion and $5.8 trillion.
As in trying to pay off a large credit-card balance by only making minimum payments, the overall debt might be next to impossible to chisel down appreciably, regardless of who is in the White House or which party controls Congress, without major spending cuts, tax increases or both.
“The basic facts are a matter of arithmetic, not ideology,” said Robert L. Bixby, executive director of the Concord Coalition, a bipartisan group that advocates eliminating federal deficits.
There’s little dispute that current fiscal policies are unsustainable, he said. “Yet too few of our elected leaders in Washington are willing to acknowledge the seriousness of the long-term fiscal problem and even fewer are willing to put it on the political agenda.”
Polls show people don’t like the idea of saddling future generations with debt, but proposing to pay down the national debt itself doesn’t move the needle much.
“People have a tendency to put some of these longer term problems out of their minds because they’re so pressed with more imminent worries, such as wages and jobs and income inequality,” said pollster Andrew Kohut of the nonpartisan Pew Research Center.
Texas billionaire Ross Perot made paying down the national debt a central element of his quixotic third-party presidential bid in 1992. The national debt then stood at $4 trillion and Perot displayed charts showing it would soar to $8 trillion by 2007 if left unchecked. He was about a trillion low.
Not long ago, it actually looked like the national debt could be paid off — in full. In the late 1990s, the bipartisan Congressional Budget Office projected a surplus of a $5.6 trillion over ten years — and calculated the debt would be paid off as early as 2006.
Former Fed chairman Alan Greenspan recently wrote that he was “stunned” and even troubled by such a prospect. Among other things, he worried about where the government would park its surplus if Treasury bonds went out of existence because they were no longer needed.
Not to worry. That surplus quickly evaporated.
Mark Zandi, chief economist at Moody’s Economy.com, said he’s more concerned that interest on the national debt will become unsustainable than he is that foreign countries will dump their dollar holdings — something that would undermine the value of their own vast holdings. “We’re going to have to shell out a lot of resources to make those interest payments. There’s a very strong argument as to why it’s vital that we address our budget issues before they get measurably worse,” Zandi said.
“Of course, that’s not going to happen until after the next president is in the White House,” he added.
re: [71]
I’m seeing the exact same thing.
74-kettle1
“The more services and benefits the government controls the more powerful it becomes and every governments primary goal is the accumulation of power”
I agree with you. In addition, when the gov’t instills “fear” in the minds of people, then offers a “solution”, it adds to gov’t power. Therefore, one is surrendering power by allowing themselves to be “helped”.
Controlled manipulation.
“It means almost $30,000 in debt for each man, woman, child and infant in the United States.”
Frankly, I’d like to cut the feds a check for $150K and send it in with a note that says: OK, from now on, the rest of you are on your d@mn own.
#30
is Krugman talking about Ben Stein’s moronic article in the Sunday Times biz section?
every other week, Stein writes another article about how the mortgage market really isn’t that bad, while the calamity grows deeper and deeper. Stein should do himself a favor and read Gretchen Morgenson once in a while
Re: 79
The problem will get addressed when checks to government employees start to bounce…
#74 – kettle1- I’m assuming you’ve already read Hayek’s The Road to Serfdom?
If not, it is highly recommended.
Toshiro, # 85
I have not, but i will add it to my “to read” list
On a different note, it looks like people are trying to save money. No more $300 jeans:
http://shopping.yahoo.com/articles/yshoppingarticles/65/10-best-jeans-under-100
Pandit Emerges as Citi’s Top Internal CEO Candidate (Update1)
Interesting article from the Office of Thrift Supervision. They must be kicking themselves now: What about subprime mortgages
#87
How about $15 jeans at Marshalls or TJ Maxx? I guess I’m just too frugal to spend $78 or $88 on jeans.
You guys must be PISSED, all this evidence of a housing decline and prices in NJ are STILL astronomical while in other places they have dropped. I feel bad for you guys who are waiting for so long.
#74 Kettle –
I don’t think you’re being too cynical, and I definately agree with you in theory about the power grab.
However, in this case, while some may see this as a way to make us all dependent on govt., I think it is more of a case of politicians and regulators being caught off guard.
There was all this talk about the “ownership society” and politicians were all over themselves cheering about the high rate of homeownership while ignoring the reality of how the so called ownership came about. Personally, I think it’s a combination of stupidity and willful blindness. Some politicians are just too dumb to see this coming, and others probably saw that it couldn’t last, but, nevertheless used homeownership in their talking points. Now, they’re looking at a disaster, and have to come up with a “solution” that will help them get re-elected regardless of the long term consequences. What do they care about the long term? They just need to worry about their own political careers. Kinda like the Wall St. guys, all they care about is their next bonus, and the h3ll with all the rest of us.
Now, who’s more cynical?
reality hurts #91,
… and prices in NJ are STILL astronomical while in other places they have dropped.
Prices in Jersey have dropped more. More so in some towns/neighborhoods than others, but they have dropped.
From paulsons Remarks
While the reality is a bit more complex, in the interest of simplicity, there are four categories of subprime borrowers. There are those who can afford their adjusted interest rate; these homeowners need no assistance. There are also a substantial number of homeowners who haven’t been making payments at the starter rate on their subprime loan and may not have the financial wherewithal to sustain home ownership; some of these homeowners will become renters again. A third category of homeowners might choose to refinance their mortgage – putting them in a sustainable mortgage while keeping investors whole. This is the first, best option. Servicers should move quickly to assist those who can refinance.
And the fourth category is those with steady incomes and relatively clean payment histories who could afford the lower introductory mortgage rate but cannot afford the higher adjusted rate. We are focusing on this group, determining who they are and what steps may appropriately assist them.
So as everyone else has pointed out, this should be a relatively easy system to game, why pay full price on your mortgage when the GOV will force the bank to give you a discount? Secondly if they are really focused on the small group that has a clean payment history and can afford the initial payment but not the reset; this is going to be a fairly small group, i suspect that it would end up similar to the State of NJ’s attempt where they found only a few hundred families would qualify
From Bloomberg:
Montana, Connecticut Hold SIVs Downgraded, Reviewed by Moody’s
Montana and Connecticut state-run investment funds hold debt tainted by the subprime mortgage collapse that was cut or put under review by Moody’s Investors Service, leaving local governments vulnerable to losses.
Moody’s lowered its rating on commercial paper issued by the Orion Finance structured investment vehicle, or SIV, to “Not Prime” on Nov. 30, saying its net asset value is inconsistent with Orion’s former Prime-1 rating. Montana owns $50 million of the paper. Moody’s put another $105 billion of SIVs on review for a possible downgrade, of which Montana holds $80 million and Connecticut holds $300 million, records show.
“This just reinforces the fact that we have a serious issue,” said State Senator Dave Lewis, of Helena, Montana, a member of the Legislative Audit Committee.
Schools, fire departments and towns across the U.S. that use state- and county-run funds like a bank account are seeing the far-ranging effects of the housing slump, as complex investments once sold as high-yielding, safe havens are now backed by collateral investors don’t want. Modeled after private money-market funds, the investment pools are supposed to hold safe, liquid, short-term debt.
Reality (91)-
Hey, Einstein…if things keep going in this direction, prices will have to fall, since most potential buyers won’t continue to have interest in owning a home, and banks won’t have any more money to lend (due to the seizure of the credit markets and gubmint willingness to encourage wholesale bailouts of deadbeat borrowers).
WHO CARES what the asking price is when there’s a year of inventory on the market, there are no buyers out there and nobody has money to lend? Asking price is a complete joke and a fiction as it is.
And, why should anyone here be pissed? Until the rent/own arbitrage turns in favor of buying, everybody here’s making out great. Even Gary, the toughest-core bear here, admits he’s pissed primarily because it’s his nature to be pissed.
I do not hear the gnashing of teeth from other denizens here. Pardon me if I’ve missed something.
TCM #92
We are on the same page, but while i agree a large number of politicians may just be spouting talking points, i do believe that there are at least a small number of politicians who fully comprehend the effectiveness of using situations such as the housing mess to continually amass more power and control. The US is still one of (perhaps not THE)most powerful countries in the world. You do not play in the top ranks of ruling politicians in the most powerful countries in the world unless you are very intelligent and very well connected, unless you happen to be a convenient puppet. but even then there is always someone behind the puppet.
November Could Be Worse Than August, HFR Says
It scarcely seems possible, but last month may have been worse for hedge funds than subprime-scarred August, according to early figures from Hedge Fund Research.
Investable hedge funds on average lost 2.78% in the first 28 days of November. While overall hedge fund indices tend to outperform the investable universe, the returns indicate that hedge funds could suffer their second decline of more than 2% this year. If they do, August and November 2007 would be the only two such months recorded by HFR since April 2000.
The worst-performing strategy last month was long/short equity, which declined 4.34%, followed by event-driven funds, which were down 3.67%. Convertible arbitrage funds fell 2.84%.
All investable hedge fund strategies tracked by HFR were in negative territory, with the strongest result coming from distressed debt funds, which lost a mere 0.56%.
http://www.finalternatives.com/node/3019/print/
“It means almost $30,000 in debt for each man, woman, child and infant in the United States.”
Can I pretend to be a non-american in an overseas country who needs 30K so Oprah can send me a check?
tcm (92)-
Except, this bailout is the economic equivalent of holding a grenade, pulling the pin…and continuing to hold the grenade.
The offshoot of this “freeze” is gonna be the biggest Pandora’s Box of unintended consequences ever seen.
On the one hand, mortgage money will dry up completely. On the other, once the mortgage money dries up, there go the buyers…and there goes the market.
I can tell you that from where I sit, if I have neither: a) qualified buyers, ready to act, or b) short sales and REOs to transact, that means NO meaningful activity at all.
And, that would be my working definition of a destroyed market.
Jim Simons fund on Long Island is rocking the house and though SB you can get in for 100K.
John Says:
December 3rd, 2007 at 1:51 pm
Jim Simons fund on Long Island is rocking the house and though SB you can get in for 100K.
John: think the old Groucho Marx line….
Reality,
For myself and for many on this board, the rent/own decision is a primarily financial decision, as opposed to most people where it is a primarily emotional decision. Most of us on this board run the rent vs. own numbers as they maybe for our individual situations and then move with the housings situation that makes the most sense. What many people here are upset about is that a large % of the people who bought homes in the last 5 years acted like spendthrifts (with corporate assistance from the banks)and have now caused a financial crisis within the US economy.
As I said here all along, NJ real estate market has been quite healthy, espcially in premier towns. Did you hear any story that people fliped houses in westfield in 2005? I did not. If I had to name a few bubble spots, it would be jersey shore, trenton, irvington and newark. Now with this subprime help, you will not see massive foreclosure in middle to upper scale towns.
Paulson: Subprime help on the way
http://money.cnn.com/2007/12/03/real_estate/Paulson_on_housing/index.htm?postversion=2007120313
“Jim Simons fund on Long Island is rocking the house and though SB you can get in for 100K”
I was under the impression that his funds have been closed to new investors for quite a while now.
92
TCM – I couldn’t agree more. Re the below quote, however, there was ONE politician who coined the term “ownership society” and added it to his platform, and that was Bush. Back when every Tom, D+ck and Harriet was buying a house, he wanted to take credit for having brought this about.
I wonder if he still does….
“There was all this talk about the “ownership society” and politicians were all over themselves cheering about the high rate of homeownership while ignoring the reality of how the so called ownership came about. Personally, I think it’s a combination of stupidity and willful blindness. Some politicians are just too dumb to see this coming, and others probably saw that it couldn’t last, but, nevertheless used homeownership in their talking points.”
OT but can anyone tack the series 7 test or do you have to be sponsored in some form???
OT but can anyone take the series 7 test or do you have to be sponsored in some form???
“OT but can anyone take the series 7 test or do you have to be sponsored in some form???”
I remember when I did it you had to be sponsored by your employer. Check out this site: http://www.cfainstitute.org
#107 kettle: You have to be sponsored and employed by a firm, otherwise it is considered registration parking.
Some interesting ideas,
American house prices, Fantasy or phobia?
The latest online game is “fantasy real estate”, run by Realius.com, which emerged in November in San Francisco and enables players to guess the price of properties on the market in the Bay area.
This is nice observation,
Professor Shiller provided possible solace. During the last slump in 1991, the home-price index did a quick about-turn and soared higher (see chart). The latest data contained signs (albeit inconclusive ones) of a slight slowdown in the rate of decline.
kettle,
You need to be sponsored for the 7.
#104 bi: Your desperation knows no bounds. Your posts are nto even entertaining any more, but sadly pathetic.
Clotpoll [96],
I’m touched and honored that you acknowledged my affliction…. (sniff).
“Did you hear any story that people fliped houses in westfield in 2005? I did not.”
I did. We looked in Brigadoon in 2006, and she told us that she was amazed at the number of people who were making a killing flipping properties in Westfield.
Geeesh, I was talking about the CFA designation while kettle was asking about the series 7. Sorry. And yes, you have to be sponsored for the 7, just like everyone else said.
“she” being our RE agent, that is.
I have a suggestion – how about a goverment giving EVERYBODY a Neg ARM mortgage at 0% interest – this way house basically pay’s for itself ???
Just remember I am the one who came up with this idea!!!! So I am first in line.
this way I will take out 10,000,000 mortgage at -5% interest and I will not have to work anymore!!!
Since goverment is getting rid of free market anyways.
Soviet Union Rule!!!
They are, but citigroup got exclusive rights to have people with a smith barney account invest in it in 100K increments. A way for the little guy to get in.
DebtVulture Says:
December 3rd, 2007 at 1:58 pm
“Jim Simons fund on Long Island is rocking the house and though SB you can get in for 100K”
I was under the impression that his funds have been closed to new investors for quite a while now.
apologies if this was already posted:
“Lennar Corp. has sold about 11,000 home sites to a venture mostly owned by the real-estate arm of Morgan Stanley for $525 million, a large land sale that signals that investors have begun to pounce on bargain deals.
The sites — in 32 communities in areas hit hard by the housing downturn — were valued on Lennar’s books at $1.3 billion as of Sept. 30.”
http://online.wsj.com/article/SB119664527659511255.html?mod=hpp_us_whats_news
Let’s see: $525M divided by 11,000 is ~$47,000.
That seems affordable…
# 100Clotpoll
Clot,
Have people stopped listing? “Buyers” stopped looking? Or is it more a matter of the buyers being lookers with no prospects of getting the financing to close?
so when was the last time ppl got together from this board??? another one anytime soon? it would be an interesting time
I say we meet at a vacant house.
All go to an open house and make a series of ever lower offers.
here’s an anecdote from Chris Fountain, an agent in Greenwich, CT who has an interesting blog at
http://www.greenwichrealestate.blogspot.com/
Makes you wonder how much of this sort of thing is going on, causing sellers and their agents to be unrealistic in pricing:
“Stop the presses!
I’ve always wanted to send that message and finally had a chance to do so last week when, after reading on our MLS daily hot sheet of an astonishing sale for $7,400,000 on Thunder Mountain Road (off Riversville), I wrote all about it in a first draft of this column; I learned the next day that it was all a crock. In a message on the MLS Bulletin (something I and most agents rarely read) the selling agency, Greenwich Fine Properties, slipped in a note that the “property sold in unfinished condition. Builder estimates that budget for finished project would have created a finished value of $7,400,000”. Not reported was the actual sales price: $4,600,000. Well: I just sold two properties in Riverside for $3,800,000 apiece. If my builder had installed gold-plated fixtures and swimming pools, he might have sold them for $6,000,000. Should I adjust my sales reports accordingly? The point here is that Realtors rely on the honesty of their peers when reporting sold prices. We use that data to advise our clients on what to pay for a house and where to price it, if they’re selling. When a broker pollutes the well by inserting phony numbers, everyone loses. I fault my own real estate board for accepting and reporting this ridiculous subterfuge as much as I do the offending agency but neither comes out looking especially good. I understand the problem here: the builder has three new houses he’d like to sell and doesn’t want to depreciate the value of the remaining two by showing a sale millions less than his asking price for the houses next door, especially when the sale is for an unfinished house. But we live on real data in this business, not fantasized dreams.”
Re #110 and parking a Series 7
From Broker Dealer Journal:
But the penalties can also be severe for the individuals who are caught playing the parking game, says Barbara A. Stettner, a partner in the Securities Enforcement and Regulatory Counseling Group at the Washington, D.C., law firm of O�Melveny & Myers.
A person who�s caught parking a license �could be barred from the industry for a short or longer period of time,� she says, and that means a disciplinary mark on that person�s record. Depending on the severity of the circumstances surrounding the violation, someone could even be barred indefinitely, she says. The regulators can also fine the individual as well as the firm, she notes.
http://www.brokerdealermagazine.com/article.php?uid=178
Fed May Cut Interest Rates A Full Point: Citi Economist
The Federal Reserve will cut interest rates by a full percentage point before June to help the housing market, Citigroup’s chief economist, Lewis Alexander, said on Monday.
Alexander, who worked at the Fed before joining Citi, also said Asian economies would probably suffer only a modest slowdown as a result of the U.S. housing turmoil as the spillover effect from housing was much smaller than from sectors such as information technology.
More at: http://www.cnbc.com/id/22077235
# 125 Shore guy
I like your idea, maybe we could go to one that is serving refreshments? Food and entertainment all at the same time!
Kettle,
The issue with a Series 7 – you have to be employed in a capacity that requires a 7, and you have to be subject to supervision.
Basically, they don’t want people “out there” with a 7 who are not subject to supervision.
When I listed a 1999 Townhouse in 2005 the Real Estate Agent asked what I thought it was worth. I replied, between $590K and $609K based upon it’s location, condition (it was the upgraded model), and related area comps that I had been following for 2 years. The Agent insisted I was low, and it should be listed at $649K. So, my personal experience is the Realtors drive up the price, more then the sellers.
Scribe, just idle curiosity, i dont have any evil plans.
#131
I agree. Friends have their house for sale. Before meeting with realtors, they thought their house should be priced at around $450,000. They chose the realtor who priced their house between $499,000 and $519,000 and that was about 2 1/2 months ago. They have had no offers and have not reduced. I truly believe that if they had priced where they first thought, they would have sold already. They have people “interested” and some have even asked their realtor if they’re going to reduce the price.
Kettle,
I wasn’t suggesting that you have any sort of evil plan.
Getting a 7 through one of the organizations that will sponsor you for a fee looks to be innocuous. But if you get caught by the NASDR – now FINRA – they consider it a serious violation.
#134 scribe: only a registered broker/dealer can sponsor some one for a Series 7.
122 Shore
I am a buyer who has stopped looking, despite having no problem with financing. I’ll be looking again in 2009.
131 Confused
I just went through this when I sold in late October. My listing agent really wanted to price it about 10% higher than I knew it would sell for. She wanted to price at the peak 2005 price and I wanted to price slightly higher than 2004.
Well, I was stupid enough to go with her stupid price and I wasted about two weeks with ZERO showings. I dropped the price to a bit above 2004 comps, and had to go over her house and stand there until she put the change in (she was stalling).
I had 13 showings the next week and three good offers after the open house.
Then after we sold it, I said to her, “See, that price drop really got it done. Everyone else is still on the market after us and they all had to do a price drop anyway and will probably end up selling lower than us anyway.”
And she replied, “Yeah, you’re killing my territory here.” Joking, but not.
Realtors need to start being honest with their listings. I just got rejected on another house, we offered a 2004 comp but it was 20% below OLP. So the people flat out rejected it and said they were insulted.
BUT, the OLP was 10% higher than peak 2005 prices! No house on the street had ever sold for that price! What was their realtor thinking pricing that high? No wonder they are in shock.
Super Lowball! in Millburn..
MLS# 2430971 – 11 Bruce Circle
OLP: $1,050,000
LP: $1,050,000
DOM” 82
Sold: 12/3/2007
Sale Price: $740,000 (30% off OLP)
“kettle1 Says:
December 3rd, 2007 at 2:49 pm
# 125 Shore guy
I like your idea, maybe we could go to one that is serving refreshments? Food and entertainment all at the same time!”
And complain about the quality of the food vs some other open house.
133 Willow, you are right. That first OLP kills sellers. Because then they think that money is theirs in the bank, and every little price reduction or lower offer comes in, they think they are “losing” X amount of dollars.
140
Ann,
That’s exactly it. They want that amount because they are counting on using it to buy their next house and have a lower mortgage amount. In the meantime, they are paying their mortgage here and will be paying rent on an apartment out of state soon.
http://www.beazer.com/holidaydesign/?sourceid=extbannernewsb
Beazer wants you to buy a home as a christmas gift
I wonder if we all brought the biggest pos cars we could find and maybe a hobo or two to place in front of the open houses we do like it would help. Why not help create the comp killers?
#136 njpatient. Why not 08?
Can anyone provide for me the sales history for MLS# 2459318?
Thanks!
Here’s a good one from patrick.net:
SUV Bailout To Keep America Humming
http://patrick.net/wp/
“Ownership Party” = Frank Luntz coinage, c. 2003. Further discussion of its validity — or the integrity of any politician who seriously invoked the term — therefore is absolutely unnecessary.
Make that “ownership society.” Ownership party is the snarky name Rent To Own repos have for their monthly rounds…
http://www.maltzauctions.com/auction_detail.php?ID=375218
Best Looking Foreclosure I have ever seen.
“Beazer wants you to buy a home as a christmas gift”
too funny
Ann/Willow – I’ll second/triple what you are saying. The higher price starting point raises the psychological barrier, especially when it crosses a $100k line ($300k, $400k, ++).
144 3b
couple reasons: (1) I don’t think we’ll be anywhere near bottom in ’08, and (2) more importantly, it doesn’t fit into my plans, because I may move by 2010.
#149 –
Outside is lovely, interior is missing something though.
#152 nj patient: I think we will be pretty close to bottom by Summer of 08, but could be wrong, if not, we will certainly be close to making our way there.
If you decide to move, then that of course changes things for you.
#153 lisoosh That stone fire place (uncentered ), stone floor (I think) is odd.
I predict a 2019 bottom!!! It seems everyone keeps stretching out the bottom so I might as well get out there now!!!
#156 I think (could be wrong), that most people here believe the bottom to be 2008/09.
Scribe 146 Love it!lol
Damnit. Someone has to do something or this thing is going to get out of control. Negative talk has to stop. We can’t have credit and real estate markets freezing up. This is the equivalent of a financial nuclear bomb. Paulson has to get radical here and go for a much longer amortization. We need 100 year mortgages and we need them right now damnit. That would save the homeowners and the investment community.
I had a mortgage broker drop by my office today seeking to refinance my mortgage. The guy walked in right off the street as he was going around knocking on doors to get business. This is bullspit. He shouldn’t have to do that. I talked with someone who does home inspections today and he’s crying about the lack of business. The RE market is being destroyed. THAT CAN’T BE ALLOWED TO HAPPEN.
3b157 I think the time to buy well depend on your area/town of choice. I like 08-09 timeline
but all should watch their target area closely.
It is very hard to pick a bottom so I would rather pay 10 20 k more on up swing than buy early & pay 10-20 more.That being said I srongly believe it will be flat for along time after bottom,
so, time….. is on my side, oh yes it is.
I think the bottom is going to take a long time to come, not in 2008 or 2009. Are there reasons I’m missing on that one?
If it took ten years to hit the bottom after the eighties, why would it happen in a mere three years this time?
The other reason I say that this is going to take a long time is because there is such a huge lag between sellers finally getting out of their state of denial and catching up to the market.
John Says:
December 3rd, 2007 at 2:20 pm
They are, but citigroup got exclusive rights to have people with a smith barney account invest in it in 100K increments. A way for the little guy to get in.
DebtVulture Says:
December 3rd, 2007 at 1:58 pm
“Jim Simons fund on Long Island is rocking the house and though SB you can get in for 100K”
I was under the impression that his funds have been closed to new investors for quite a while now.
John & Vulch: I don’t know anything specific about this fund, except what has been in the press, but I wasn’t making a joke with the Groucho-thing……..caveat emptor….
RE159 It already has, no stoping this train wreck.And we all have ring side seats!
“The guy walked in right off the street as he was going around knocking on doors to get business.”
50.5,
Did the door hit him in the a## on the way out?
“The RE market is being destroyed.”
Yes, I agree.
#161 Ann: prices hit bottom fairly quickly ( I remmeber it well, purchased first house in last boom),and then once bottomed stayed flat for years after.
Plus this time around we had the whole no money down etc, exotic financing, Keep in mind people had to qualify for mtgs back then
when is another edition of “lawball” coming up?? Anyone??
#159 Hip-hip Hooray, Hip-hip Hooray!!
3b, that makes sense.
Hi
OMG Bailout!!!
I just read about Paulson’s bailout of subprime borrowers. In my opinion, its the most immoral thing to do for any government. They are bailing out all folks who made wrong financial decision thereby encouranging such borrowings in future. This is probably only way to win elections in 2008.
Just wanted to checkout your opinions on the future housing market as a result of this bailout. Here is what I think.
1. The plan may not be implemented because of disagreement with investors.
2. If there is agreement, the plan will take time to implement maybe 6 months from now or more
3. The housing market will never get back to 2005 levels as all the no-money down subprime buyers will never return to market.
4. Although there will be reduced foreclosures, there will be plenty of homes on market and very few qualified buyers. As a result house prices in NJ will keep going down back to 2002-2003 levels in 2008.
5. The housing market will keep going down and will hit botton in 2010 and thereafter will grow around 3-4% / year.
– Tom.
#160 mike: Well I plan to start making my offers around the end of January, I fully expect it may take the better part of a year, before I get a good buy, but I have no doubt that I will.
But I agree reale state will be in the crapper for years, just like last time.
Yesterday I was waiting for the elevator in the condo building I am renting when along comes a young asian couple walking down the hallway with a realtor. I listen in to their conversation. They live in city, looking in Hoboken because more room for the money. Realtor asks so what’s your time frame. The couple tells her there is too much negative news out there right now and they are waiting for things to bottom out more. Realtor, “Well fortunately Hoboken and NYC are sheltered from all the problems the rest of the country is having”. I bit my tongue.
“John Says:
December 3rd, 2007 at 4:31 pm
I predict a 2019 bottom!!! It seems everyone keeps stretching out the bottom so I might as well get out there now!!!”
That’s just because you like big bottoms, John.
3168 Ann: I think you will be pleasnatly surprised come 2008, and if I remember you have a month to month rental, so you lose nothing by waiting. Good Luck.
“The RE market is being destroyed.”
From your post at 159, reinvestor, isn’t this the very definition of “negative talk”?
Why do you hate America?
Hey I am certainly not saying buy the fund. My boss is good friends with Jim Simon and has money in it and has done well. But I can’t risk 100K on a single risky investment while saving for a house. It is a good deal for someone with a high risk tolerance to get in on a real quality hedge fund with only 100K.
It is funny how the same people who would not put 100K into this were often the same people who bought something safe in 2005 or 2006 like a house.
Hedge funds are often glamorized for the super wealthy, but I know Smith Barney has a lot of mid west doctors and dentists in this type of fund and I doubt they are jet setters.
To quote MC Hammer “I like big butts and I can’t complain”
njpatient Says:
December 3rd, 2007 at 5:00 pm
“John Says:
December 3rd, 2007 at 4:31 pm
I predict a 2019 bottom!!! It seems everyone keeps stretching out the bottom so I might as well get out there now!!!”
That’s just because you like big bottoms, John.
ann 161 Maybe at what point do the agents capitulate.Much talk of agents over pricing
protecting their little market.At some point they will get to where they don’t care & just need the money.No offence to are agent posters
intended.But this is part of the equation, it is seldom mentioned.At that point both sellers & buyers agent will be pushing for that lowball offer they are reluctant to put in now.
Apparently, given this…:
http://seattletimes.nwsource.com/html/localnews/2004048340_webcraigencounters02.html
…the new plan is to narrow the Larry Craig investigation by simply determining who DIDN’T have sex with him. Those of us who didn’t have been asked to line up under the “DIDN’T” right behind Mrs. Craig.
that would be, under the “didn’t” sign
“John Says:
December 3rd, 2007 at 5:04 pm
To quote MC Hammer “I like big butts and I can’t complain””
….you other posters are insane…
I’ve had it with you. You’re the one who is negative. You’re the one who is unamerican with your gleefulness at the misfortune of others.
njpatient Says:
December 3rd, 2007 at 5:02 pm
“The RE market is being destroyed.”
From your post at 159, reinvestor, isn’t this the very definition of “negative talk”?
Why do you hate America?
3B Jan 08 or 09 ?
3b
If I had to bet when the lowest nominal prices will be seen, I’ll bet it will occur in Jan/Feb, and the question is which Jan/Feb. I think Jan/Feb 2010 most likely, 2009 second most likely, 2011 third most likely. I think when folks give a really broad bottom projection, they’re talking more about real price drops. If you look at pretorius’s lovely chart, which he updated to adjust for inflation last week, you’ll see that the bottom with respect to nominal prices in the last downturn did not coincide with the bottom in terms of real prices. Nominal prices will start rising before real prices do (this is almost a logical certainty, but I mean to say that the drag will be a matter of a couple of years, not a couple of months).
From Minyanville:
Zero Hour
http://www.minyanville.com/articles/GS-C-UBS-LM/index/a/15080
3b 173, I have a month-to-month rental but I also have a kiddie starting K, so I would like to be somewhere by September 08. Although I guess that still leaves a nice chunk of time to shop. By that point, if we don’t find something decent that we can stomach, we’ll just pick a town and get a year lease there.
177 Mike
I’m waiting for the agents to change their tune too, but I don’t see it. Right now, in the dead of winter, coming onto the holidays, I think they are all playing along and seeing what happens in the spring. Plus, they have all screwed themselves by pricing all of their listings too high.
We are going to keep making offers through the winter, but I am doubtful that anyone will take them right now until we see what pans out in the spring.
“They are, but citigroup got exclusive rights to have people with a smith barney account invest in it in 100K increments. A way for the little guy to get in.
DebtVulture Says:
December 3rd, 2007 at 1:58 pm
“Jim Simons fund on Long Island is rocking the house and though SB you can get in for 100K”
I was under the impression that his funds have been closed to new investors for quite a while now.
John & Vulch: I don’t know anything specific about this fund, except what has been in the press, but I wasn’t making a joke with the Groucho-thing……..caveat emptor….”
chifin – I am going to check this out. The scary part is the fund is a total quant fund, but it has an amazing track record. Charges ridiculous fees, but seem to be well worth it.
“BC Bob Says:
December 3rd, 2007 at 4:53 pm
“The guy walked in right off the street as he was going around knocking on doors to get business.”
50.5,
Did the door hit him in the a## on the way out? ”
No, BC, it didn’t. Reason being that reinvestor really badly needs that re-financing, don’t you know, and here was a fella offering him one even though he’s WAY underwater….
“Charges ridiculous fees”
I’m not a fan.
#159 It’s too late and the real estate collapse is not the worst of the problems – that’s just what’s being talked about. The real problem is the broader financial system teetering on the brink and no one really knows what, if anything can be done about it.
Ann I agree when there is no big selling season in spring it will hit the fan.You have a tough time line with the little one.Its a hard call but if you wait it out & get a better deal more money for jrs school fund.1 change in school will not big big deal at this young age.
CNN: “Home builder Lennar sells properties worth $1.3 billion for $525 million to a venture controlled by Morgan Stanley.”
So…I guess it’s NOT worth $1.3 billion then..?
190 Mike
It’s kind of limiting even having that (imaginary) K deadline, but it’s downright scary contemplating overpaying for the rest of our lives. Worse comes to worse, we’ll pick a town and rent there for a while to try to minimize any drastic switches.
“So…I guess it’s NOT worth $1.3 billion then..?”
patient,
It is, if marked to the model.
John, you must have a real crystal lowball! i guess you should suggest to your boss if he wants to trade you to his friend Jim S.
(prediction deleted -grim)
John Says:
December 3rd, 2007 at 4:31 pm
I predict a 2019 bottom!!! It seems everyone keeps stretching out the bottom so I might as well get out there now!!!
[189],
I agree, the real estae bust is the least of the problems.
“It is, if marked to the model.”
Right. I keep forgetting.
Tom Says:
December 3rd, 2007 at 4:59 pm
Hi
OMG Bailout!!!
I just read about Paulson’s bailout of subprime borrowers. In my opinion, its the most immoral thing to do for any government. They are bailing out all folks who made wrong financial decision thereby encouranging such borrowings in future.
________________________________________________
Uhhh . . . I’m just wondering if I’m the only one who recognizes that this is a bailout of subprime LENDERS, not subprime borrowers?
Who would really lose if all the borrowers in houses that they plain can’t and never could afford just defaulted? At that point, the borrower is free if they have no attachable assets and insufficient income to support repayment of a deficiency judgment.
The lender, on the other hand (who is in the credit business, not the R.E. business), is stuck with a property that they likely won’t be able to sell profitably + they’ve lost the residual income stream from the loan repayments.
With the bailout, the borrower stays in the property they can’t afford and will never own, and simply continues making their rental payments to the lender. As the value of the property decreases, the borrower’s obligation on the debt remains the same without any gain in equity on their part–and the lender, if they can extend the game for long enough, can keep the stream of rent coming until foreclosure actually becomes a relatively profitable option, and then sell the property since they will retain full ownership.
Who really wins in this scenario?
reinvestor:
I can’t speak for others but I am just trying to find a place to raise my kids without mortgaging my future. My wife and I parked our downpayment in a savings account and were ready to pull the trigger on a house this fall. After looking around, we put our house search on hold. The prices are still so high. It isn’t that I am trying to stick it to the guy who bought 2 years ago. I just can’t rationalize signing myself up for years of struggling to get by. Maybe I am seriously underpaid but I can’t imagine who would be a buyer under these circumstances.
““Charges ridiculous fees”
I’m not a fan”
Management fees of 5% and it takes 44% of the profits. Its main fund has been closed to new investors since 1993. Usually I am not a fan of HIGH fees either, but you’d be hard pressed to find anyone with better returns, net of all fees, than this group. From 1990 through 2006, the main fund (Medallion) produced a NET return after all fees of 38.5% per year. If this loophole really does exist, I may have to open up a Smith Barney account.
bubble yum 197 read my post #72
vulch: quant funds are the ones that have been smacked around the last few months; remember all of those days where there was a one-in-one thousand year event, followed by two more days of the same thing…..this fund was affected. Now suddenly they are accepting new money, BUT NOT FROM THE QUALIFIED INVESTORS….rather small retail accounts…..logic????? it means they are toxic……JUST A GUESS
Groucho Marx: I sent the club a wire stating, “PLEASE ACCEPT MY RESIGNATION. I DON’T WANT TO BELONG TO ANY CLUB THAT WILL ACCEPT ME AS A MEMBER”.
I stand corrected….something fishy here though…..
http://www.bloomberg.com/apps/news?pid=20601213&sid=aq33M3X795vQ&refer=home
John Says:
December 3rd, 2007 at 5:04 pm
To quote MC Hammer “I like big butts and I can’t complain”
njpatient Says:
December 3rd, 2007 at 5:00 pm
“John Says:
December 3rd, 2007 at 4:31 pm
I predict a 2019 bottom!!! It seems everyone keeps stretching out the bottom so I might as well get out there now!!!”
That’s just because you like big bottoms, John.
NO! NO! NO!
this is the reference that you need….
http://www.youtube.com/watch?v=YMZilI_ct1A
Thanks for the heads up mikeinwaiting–a bunch of sheeple are about to be seriously fleeced, and I think too many of them are drinking “the government’s coming to save me!” kool-aid. I’m glad to see there’s some awareness out there of what’s REALLY coming.
This is what a million dollar home looks like these days:
http://homes.realtor.com/realestate/hillsdale-nj-07642-1078412737/
How ’bout this f*cking horror show:
http://homes.realtor.com/realestate/fair+lawn-nj-07410-1090857471/
This is what drug and alcohol addiction can do to you:
http://homes.realtor.com/search/listingdetail.aspx?ctid=10524&mnp=33&typ=7&sid=fb27a2c64f754c679d54dc633a6ef535&sdir=1&sby=2&pg=4&lid=1089042013&lsn=33&srcnt=35#Detail
oh , but Gary Its BCounty.
you have to pay for the location, location,
location.
203 chifi
That was the reference that was intended.
One of the great songs of all time.
207
the interior shots are lovely
I’m thinking about doing a 90% lowball on this on. Do you think they’ll bite?
http://homes.realtor.com/realestate/franklin+lakes-nj-07417-1092688757/
Yan & East London Suburbs:
FOR YOU……….
http://www.youtube.com/watch?v=CT_fFwV-xIk&feature=related
Gary, (210)
You believe that home is only worth $249,900…?
Gary is on a roll…..Da-yam son.
Amazing…..
http://new.gsmls.com/public/detailLst.do?mlsNum=2415865 If you guys have a mil to spend
check out this house.Of course you would not be in BC.
E-Trade shares fall after B of A analyst says sell
By Greg Morcroft, MarketWatch
Last update: 4:51 p.m. EST Dec. 3, 2007
PrintPrint EmailE-mail Subscribe to RSSRSS DisableDisable Live Quotes
NEW YORK (MarketWatch) — Shares of E-Trade Financial fell more than 10% in opening trading Monday after analysts at Bank of America suggested clients sell the shares, saying the brokerage business is not strong enough to offset problems at the firm’s bank.
The analysts added that another $1 billion in loan loss reserves are likely at the bank and that would wipe out any earnings for all of 2008.
Bank of America cut its price target on the shares to $2, and the stock fell about 10% to $4.05.
+++++++++++++++++++++++++++++++++++++++++++++++++++++
Editorial note….does anyone else laugh their freakin asses off when one of these loser institutions ranks the other one???? They all suck — some more than others…..WTF???? Pot calling kettle black. So to speak.
Shore (122)-
All I can provide is anecdotal evidence, but I believe the rush of unqualified buyers that came out after Credit Seizure I (my own designation for the pre-Labor Day meltdown) has thinned significantly. My feeling is that any of these wannabes who got close to an actual offer-and-acceptance got knocked out of the game in the mortgage qualification process. I had a couple of chuckleheads who fit this description make offers on listings of mine, and the pre-approvals they originally proffered were so sketchy that I made them re-qualify through more reputable lenders, who immediately blew them out.
In the past couple of weeks, I’ve seen the emergence of a group of much more qualified and serious buyers. I think this is partly seasonal, as “lookie-lous” generally don’t go out tire-kicking during the holidays. However, I think a goodly number of these more serious buyers are of the LOD description: savvy, well-monied prospects with serious intent, who smell blood on the water.
Gary not a chance, at least not yet!Sh*t link expired but you can use it to see 214.
clot, one of them is called bi.
>However, I think a goodly number of these more serious buyers are of the LOD description: savvy, well-monied prospects with serious intent, who smell blood on the water.
Innovating Our Way to Financial Crisis
By PAUL KRUGMAN
Published: December 3, 2007
The financial crisis that began late last summer, then took a brief vacation in September and October, is back with a vengeance.
How bad is it? Well, I’ve never seen financial insiders this spooked — not even during the Asian crisis of 1997-98, when economic dominoes seemed to be falling all around the world.
This time, market players seem truly horrified — because they’ve suddenly realized that they don’t understand the complex financial system they created.
Before I get to that, however, let’s talk about what’s happening right now.
Credit — lending between market players — is to the financial markets what motor oil is to car engines. The ability to raise cash on short notice, which is what people mean when they talk about “liquidity,” is an essential lubricant for the markets, and for the economy as a whole.
But liquidity has been drying up. Some credit markets have effectively closed up shop. Interest rates in other markets — like the London market, in which banks lend to each other — have risen even as interest rates on U.S. government debt, which is still considered safe, have plunged.
“What we are witnessing,” says Bill Gross of the bond manager Pimco, “is essentially the breakdown of our modern-day banking system, a complex of leveraged lending so hard to understand that Federal Reserve Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August.”
The freezing up of the financial markets will, if it goes on much longer, lead to a severe reduction in overall lending, causing business investment to go the way of home construction — and that will mean a recession, possibly a nasty one.
Behind the disappearance of liquidity lies a collapse of trust: market players don’t want to lend to each other, because they’re not sure they’ll be repaid.
In a direct sense, this collapse of trust has been caused by the bursting of the housing bubble. The run-up of home prices made even less sense than the dot-com bubble — I mean, there wasn’t even a glamorous new technology to justify claims that old rules no longer applied — but somehow financial markets accepted crazy home prices as the new normal. And when the bubble burst, a lot of investments that were labeled AAA turned out to be junk.
Thus, “super-senior” claims against subprime mortgages — that is, investments that have first dibs on whatever mortgage payments borrowers make, and were therefore supposed to pay off in full even if a sizable fraction of these borrowers defaulted on their debts — have lost a third of their market value since July.
But what has really undermined trust is the fact that nobody knows where the financial toxic waste is buried. Citigroup wasn’t supposed to have tens of billions of dollars in subprime exposure; it did. Florida’s Local Government Investment Pool, which acts as a bank for the state’s school districts, was supposed to be risk-free; it wasn’t (and now schools don’t have the money to pay teachers).
How did things get so opaque? The answer is “financial innovation” — two words that should, from now on, strike fear into investors’ hearts.
O.K., to be fair, some kinds of financial innovation are good. I don’t want to go back to the days when checking accounts didn’t pay interest and you couldn’t withdraw cash on weekends.
But the innovations of recent years — the alphabet soup of C.D.O.’s and S.I.V.’s, R.M.B.S. and A.B.C.P. — were sold on false pretenses. They were promoted as ways to spread risk, making investment safer. What they did instead — aside from making their creators a lot of money, which they didn’t have to repay when it all went bust — was to spread confusion, luring investors into taking on more risk than they realized.
Why was this allowed to happen? At a deep level, I believe that the problem was ideological: policy makers, committed to the view that the market is always right, simply ignored the warning signs. We know, in particular, that Alan Greenspan brushed aside warnings from Edward Gramlich, who was a member of the Federal Reserve Board, about a potential subprime crisis.
And free-market orthodoxy dies hard. Just a few weeks ago Henry Paulson, the Treasury secretary, admitted to Fortune magazine that financial innovation got ahead of regulation — but added, “I don’t think we’d want it the other way around.” Is that your final answer, Mr. Secretary?
Now, Mr. Paulson’s new proposal to help borrowers renegotiate their mortgage payments and avoid foreclosure sounds in principle like a good idea (although we have yet to hear any details). Realistically, however, it won’t make more than a small dent in the subprime problem.
The bottom line is that policy makers left the financial industry free to innovate — and what it did was to innovate itself, and the rest of us, into a big, nasty mess.
Richie (124)-
I say we create an LLC, have everyone contribute a few bucks to it, and buy some POS like that meth lab in Wayne that got posted over the weekend.
A place like that could be our clubhouse.
Ann (137)-
I submitted an offer today in which- on the first pass- I presented the offer to the listing agent and told him that my buyer was insulted by the asking price.
I WILL NOT accept the indignance of some idiot seller who still thinks it’s 2005…so now, I’m just gonna beat the sellers to the punch with this “insulted” crap.
#206 gary: In a word, ugly, but some how that word just fails to truly describe that house.
CLOT 220 34k price but another 50 to fix up.OK less we can go out back to pee.Don’t think the girls would be in but you never know.
ReTard (159)-
“I had a mortgage broker drop by my office today seeking to refinance my mortgage.”
How many recent rejections for refinance have you had? It now generally takes 3-4 rejections for your name to make a database that the Glengarry-type cold callers will use…
I’m thinking about doing a 90% lowball on this on. Do you think they’ll bite?
http://homes.realtor.com/realestate/franklin+lakes-nj-07417-1092688757/
Only a 3 car garage? Sheesh, for that much it should have at least 5..
mike (223)-
So we accommodate the gals by sticking a porta-potty out back.
Clot 221 Please post response it will be interesting I’m sure!
Tom (169)-
This thing won’t take until 2010 to bottom. We’ll get there quick…like this Summer.
#182 mike: Jan 08.
Rich in NNJ [212],
LOL!! In my dreams. If that house goes for $249,000, forget one keg at the party, I’ll be buying each of you guys a keg and lobster and steak and hey… what the h*ll, lets just get the Allman Brothers to jam at our blast!!!
Good. Ya had me nervous. I thought, you know… you might… you know… not be… too bright.
Allman Brothers? You’re just old.
Watch out for the peach trucks.
I’m not that bright; just this side of Forest Gump actually….. or maybe it was too much partying at those Allman Bros. concerts. :)
essex [219],
Manufacturing has been replaced by financial engineering and construction has been replaced by press releases.
3b 232 08 wnats the hurry let time do the work for you.
Short sale in Clifton..
97 Huron Ave
Purchased: 1/17/2006
Purchase Price: $349,000
MLS# 2423399
DOM: 150
OLP: $365,000
Current Asking: $309,900 (11% under purchase price)
Chifinance,
Yeah, Medallion got hit pretty hard 1H of August. They managed to get through it and have done a heck of a job since. The markets are sooooo whippy lately. Our fund had a great November but we gave back about half of our gains in the last week. While I am happy that were were up in November and up around 9% for the year, it has been no easy feat. We made all our money the last couple months on the short side. So many people still want to believe that equities only go up. 3Q profits for S&P500 companies were negative but 4Q projections were for a 10% increase. We are now at a proj for less than a 2% gain for 4Q profits at S&P500 companies. Proj will probably go negative by the end of this week or next week when some of the brokers start reporting again. I look forward to the day the market finally pukes and gives up. Credit is dead and equities are not far off all-time highs…makes no sense. Will be nice to start making some money on the long side again in the fixed income markets. Do not think that will happen until sometime mid next year though.
#214, ChiFi thanks!
Bubble Yum, 197
With the bailout, the borrower stays in the property they can’t afford and will never own, and simply continues making their rental payments to the lender. As the value of the property decreases, the borrower’s obligation on the debt remains the same without any gain in equity on their part–and the lender, if they can extend the game for long enough, can keep the stream of rent coming until foreclosure actually becomes a relatively profitable option, and then sell the property since they will retain full ownership.
Who really wins in this scenario?
(Spoken as the politician who votes for this legislation): Who cares? By the time that all happens, I’ll be happily retired, drawing a government pension or two. It will not be my problem.
good article in ny times about manhattan real estate..
http://www.nytimes.com/2007/12/02/realestate/02cov.html?pagewanted=2&_r=1
Paul Krugman is an unrepentent liberal that has been moaning about depression economics for the past 10 years. What the hell does he know? The other day, someone posted an article with Ed Yardeni quoted extensively; the same Ed Yardeni that was telling everyone to gather provisions on their bunkers due to Y2K.
Neither of these guys has any credibility whatsoever.
Essex Says:
December 3rd, 2007 at 8:04 pm
Innovating Our Way to Financial Crisis
By PAUL KRUGMAN
Published: December 3, 2007
The financial crisis that began late last summer, then took a brief vacation in September and October, is back with a vengeance.
How bad is it? Well, I’ve never seen financial insiders this spooked — not even during the Asian crisis of 1997-98, when economic dominoes seemed to be falling all around the world.
Mike, your downpayment may not be any good unless you’re planning on buying a house for cash. Actions taken by certain housing insurgents have resulted in the secondary market being seriously curtailed, so getting a mortgage is going to get much tougher regardless of credit. They’re going to make FICO scores mean nothing.
We may see a situation where sellers have to hold or assign mortgages to even get a home sold. Most mortgages don’t even allow for assignments nowadays. That’s yet another modification that Paulson should push for.
Mike08 Says:
December 3rd, 2007 at 5:57 pm
reinvestor:
I can’t speak for others but I am just trying to find a place to raise my kids without mortgaging my future. My wife and I parked our downpayment in a savings account and were ready to pull the trigger on a house this fall. After looking around, we put our house search on hold. The prices are still so high. It isn’t that I am trying to stick it to the guy who bought 2 years ago. I just can’t rationalize signing myself up for years of struggling to get by. Maybe I am seriously underpaid but I can’t imagine who would be a buyer under these circumstances.
150 http://www.zillow.com/aerial/DualMapPage.htm?zpid=61949787
here is the zillow view of that house. It looks nice. If it only had a pond within view of the house and a bit more privacy from the neighbors we might have taken a look at it.
213
FINALLY. A million dollar plus home that looks like one.
243……..reinvestor101 Says:
December 3rd, 2007 at 10:27 pm
Paul Krugman is an unrepentent liberal that has been moaning about depression economics for the past 10 years. What the hell does he know? The other day, someone posted an article with Ed Yardeni quoted extensively; the same Ed Yardeni that was telling everyone to gather provisions on their bunkers due to Y2K.
_______________________________________________
Now, Krugman’s credentials as an economic wunderkind are impressive. (If you have doubts, check out the “More About Me” page on his Website at web.mit.edu/people/krugman/www/ mememe/html.) He’s also a good writer and rhetorician. (Krugman formerly was a regular columnist for FORTUNE, and he wrote a feature story on the future of economics that appears in the 70th-anniversary section of this issue.)
******************************************
Paul R. Krugman
Ford International Professor of Economics at MIT and winner of the 1992 John Bates Clark Medal. He has served as Senior International Economist on the staff of the Council of Economic Advisers and is the author or coauthor of numerous works on international trade and monetary economics, including Has the Adjustment Process Worked? (1991), and Foreign Direct Investment in the United States (3d ed. 1995). He is a member of the Advisory Committee of the Institute.
******************************************
Paul R. Krugman
Professor of Economics and International Affairs
Woodrow Wilson School, Princeton University, Princeton, NJ 08544-1013
Here is one especially for redooshbag….you know the guy who wants to ‘die for Bush’….
http://www.nytimes.com/2005/09/02/opinion/02krugman.html
“I don’t think this is a simple tale of incompetence. The reason the military wasn’t rushed in to help along the Gulf Coast is, I believe, the same reason nothing was done to stop looting after the fall of Baghdad. Flood control was neglected for the same reason our troops in Iraq didn’t get adequate armor.
At a fundamental level, I’d argue, our current leaders just aren’t serious about some of the essential functions of government. They like waging war, but they don’t like providing security, rescuing those in need or spending on preventive measures. And they never, ever ask for shared sacrifice.
Yesterday Mr. Bush made an utterly fantastic claim: that nobody expected the breach of the levees. In fact, there had been repeated warnings about exactly that risk.
So America, once famous for its can-do attitude, now has a can’t-do government that makes excuses instead of doing its job. And while it makes those excuses, Americans are dying. “
#237 mike: Well Jan 08 is whan I will start with my bids, and from there it could take the better part of a year,and at that point we are close to 09.
“I’ve had it with you. You’re the one who is negative. You’re the one who is unamerican with your gleefulness at the misfortune of others.”
I prefer to think that for those people, their uppance has come.
Also, comedy is tragedy that happens to other people.
lol!
I am thinking of selling my 3br/3ba condo in Mahwah and wanted to get some comps on it.
The real estate agents are like hawks.
Is there anyway for me to get info on how much I could get for it?
Thanks
Maria