From Fortune:
Will foreclosures spark an arson boom?
Faced with foreclosure on her Russellville, Indiana home, Christina Snyder allegedly concocted the kind of plan that now has insurance executives on edge.
According to the county prosecutor, the 31-year-old Snyder allegedly offered to pay a neighbor $5,000 to help her burn down her house and make it look like a botched rape attempt – all in order to claim $80,000 in insurance money. Snyder wanted the neighbor to bind her hands in duct tape, write “whore” on her shirt, and then help her escape once the blaze was set, the prosecutor says. The neighbor demurred, instead reporting Snyder to police.
With the national foreclosure rate zooming and the real estate market in a two-year funk, the insurance industry fears more homeowners will see arson as a way out of their financial woes. A recent report by the industry-funded Coalition Against Insurance Fraud notes that with “untold thousands of homeowners struggling with ballooning subprime mortgage payments, fraud fighters are watching closely for a spike in arsons by desperate homeowners who can no longer afford their home payments.”
History indicates such a spike is coming. “When the economy is down, we see an increase in fraud,” says Dennis Schulkins, a claim consultant in State Farm’s Special Investigative Unit.
It may already be happening. Allstate (ALL, Fortune 500) spokesman Mike Siemienas says his company has seen an increase nationally in arsons among homes in foreclosure. In California, the state¹s insurance division reports that the number of questionable residential fires in 2007 increased 76 percent over 2006.
From Bloomberg:
Subprime Folly’s Lasting Effects on Wall Street: David Pauly
When the definitive history of the subprime mortgage debacle is written, the losses now being reported by banks and securities firms, though enormous, may appear to be the least of the damage.
One prominent loser, Citigroup Inc., will promptly write off its red ink — $16 billion so far — to get a fresh start for future reporting periods. Analysts will even tout this as a sign to buy Citigroup shares.
…
Heavy mortgage losses have forced these companies to seek capital from new investors, notably governments in Asia and the Middle East that have stockpiled dollars because of high oil prices and exports to the U.S.
From Reuters:
Capital One warns on lower-than-expected earnings
Capital One Financial Corp. said on Thursday it expects to report fourth-quarter earnings of around 60 cents per share, and warned that its full-year results would fall below its previous outlook.
…
In November, the company raised its forecast for charge-offs in 2008 to between $4.9 billion and the mid-$5 billion range from a previous outlook of $4.9 billion, and said more customers had difficulty paying their bills in October than in the third quarter.
Jim,
I remember you talking about this topic when you first started the blog. No one will make out if there is a rash of Mcmansion burnings, and I am sure the fire police will be all over these people’s financial records.
BoE holds rates steady at 5.5%
From Gloomberg:
Freddie Mac’s Strength Rating May Be Cut by Moody’s
Freddie Mac, the U.S. mortgage company that reported its biggest loss last quarter, may be downgraded by Moody’s Investors Service because the damage from loan defaults could be worse than the ratings company expected.
Moody’s said it may lower Freddie’s financial strength rating from A-, the second-highest grade. The McLean, Virginia- based company’s top Aaa senior long-term debt rating and the Prime-1 rating for its commercial paper or short-term IOUs won’t be cut, Moody’s said.
Will Benny use the R-word at 1pm?
Renting vs buying:gsmls #2471425
List 349,000
rent 1,350
With 20% down mtg,taxes,ins,apox.2,000.
Why would anyone buy their home?
They cut their own throat.
So I keep my DP 70k & save 650 per month.
Now if I put DP in CD at 5% + put 650 in every month in 10 years I should have about 180k or more.This house would have to sell
for about 500k to give equal return,let say rent increases same as maintenance exp. over period.Been in house not a pos,nice area too.
Grim No way ben will utter the R word.The market would tank even more.More FED double talk.Could be worse he could talk about fear of inflation.WAWAWAWA the market doesn’t get their rate cut.Cramer will leave his body & be arrested with Clot on there way to storm DC,unfortunitly I will be the one driving and also get arrested.
mikeinwaiting….thats the ONLY way to look at this market.
9 mr potter I guess thats why I have not bought yet the #s just don’t work.By the way
that house is a comp killer on rentals in my area.Lower than some pos condos & bigger.
Hi, all — can anyone tell me how to write an offer letter? The lowball we made two months ago came back to us and wants an offer in writing. I should include contingencies about inspection, assessment, loan approval, as well as pre-approval from bank — any other suggestions? I went online and there’s all sorts of advice, but no samples. Lots of realtors telling you to say something nice about their seller’s garden (!?). We don’t have a real estate lawyer at this point and we are dealing with the listing agent (we never got a buyer agent). Thanks.
Very interesting discussion about chemistry yesterday. Doesn’t sound like things change — my dad is a PhD physical chemist and must have had to switch jobs about four times when I was growing up. He started out designing rocket fuel(it was to say your dad was a rocket scientist!) and ended in research on toothpaste. Sadly, he always told us kids not to go into R&D — and none of us did.
From Bloomberg:
Lennar’s New Homes F-tch 60% Less as U.S. Market Slump Deepens
Lennar Corp.’s November sale of 11,000 properties in eight states set a price that may mark the bottom for the U.S. housing market: 40 cents on the dollar.
…
“If you’re an opportunistic buyer with enough cash and credit, it will be one of the best opportunities for acquiring property in our lifetime,” said Jack McCabe, whose McCabe Research & Consulting LLC in Deerfield Beach, Florida, advises hedge funds and other investors on real estate sales.
As the U.S. housing slump drags into its third year, sellers will start cutting prices as much as it takes to find buyers, said Marcel Arsenault, a self-described “vulture investor.” Properties will be available to buyers with the financial strength to ride out the slide. Now that a price has been set, all that’s left is the waiting.
…
“There’s a risk to buying too early in the downturn, but buying too expensive is our biggest pitfall,” he said.
Interesting retail numbers out this morning. Costco, Walmart, BJs, TJX do well, higher end retailers Limited (VS, Bath & Body), Chicos, Abercrombie, Ann Taylor, Ethan Allen, Gap, Macys, Nordstrom flop.
Consumer tapped out and looking for ways to save?
However, poor results at JC Penney, Target, and Kohls seem to run contrary to this.
“Consumer tapped out and looking for ways to save?”
Sure seems that way.
On a more positive note, jobless claims were positive this morning. Unless, of course, you’re positioned to benefit from a rate cut, in which case you might not be so happy.
Jobless Claims Fall Last Week
The number of newly laid off workers filing claims for unemployment benefits unexpectedly fell last week although the decline was not viewed as evidence of an improving job market.
The Labor Department reported that 322,000 persons filed applications for jobless benefits, down by 15,000 from the previous week when claims had declined by 20,000.
While the second straight drop in weekly claims caught analysts by surprise, it was not seen as a sign of a fundamental improvement in the labor market, which has been coming under strains that have raised concerns about a possible recession.
“On a more positive note, jobless claims were positive this morning.”
But that was for a 3-day week, no? Not a lot of folks filing jobless claims on Christmas Day (other than Bobcat Goldthwait).
nj,
My wife told me I was too negative yesterday. I’m trying to be a bit less grim. Of course, not a full 5 minutes later, I showed her a handful of listings that I thought were a good deal. She told me to go away and not come back with listings until there was “blood in the streets”, her words, not mine.
Don’t pooh-pooh the only scrap of (not-quite) good news I’ve found this morning..
No doubt the vultures here are reading the Lennar piece above with glee. I guess “good news” depends on one’s perspective (or position).
An environmentalists nightmare:
India’s Tata Motors Unveils $2,500 Car
ap.google.com/article/ALeqM5iOu-ShBJBU1cfEKl2hs7X9yxarIQD8U2UIVO1
In Cape Coral, Fla., where only 30 percent of agents sold even a single home last year, real estate agents are “dropping out” daily, says local realtor Ginette Young. The Oregon Association of Realtors reports an 11.5 percent decline statewide of licensed agents in the past year.
E’gads! 70% not selling anything?
grim Says:
January 10th, 2008 at 9:03 am
nj, My wife told me I was too negative yesterday. I’m trying to be a bit less grim. Of course, not a full 5 minutes later, I showed her a handful of listings that I thought were a good deal. She told me to go away and not come back with listings until there was “blood in the streets”, her words, not mine.
grim: don’t come back until (to quote George Jetson) you can say “…Jayne, stop this crazy thing….”
First, there was a house on the news in Ocean County that “mysteriously” exploded in the middle of the night and the owner happened to be out. The explosion sent debris two to three houses away.
Second, Grim my wife is starting to sound like yours. Except, she just tells me to go away when I send her listing via email.
BTW, how was the first class?I checked the web site looked interesting. I’m just too swamped to sign up.
JM
11 leavingqueens
Toothpaste! I worked in formulations for a year, I made shampoo for an entire year.
For the offer, the listing agent should have a standard contract that you can use for now. Then, if it’s accepted, you get your lawyer to check it during attorney review. You should have a home inspection contingency (with an out if the radon is over 4) and a mortgage contingency, but most of the standard ones do.
I wouldn’t stress too much now though if it’s a standard contract from an agent, you can iron it all out in attorney review and a good lawyer will help you do that.
From CNBC:
Huntington Bancshares Sees Large Quarterly Loss
Huntington Bancshares, a large U.S. Midwest regional bank, Thursday projected a fourth-quarter loss of $239 million, or 65 cents per share, hurt by exposure to a troubled client’s mortgage losses, credit-related write-downs, and several other charges.
The charges and write-downs are expected to reduce earnings by $1.00 per share. They include $275 million, or 75 cents per share, for losses at Franklin Credit Management, a client and New Jersey mortgage purchaser and servicer that specializes in riskier “scratch and dent” home loans.
JB,
I wouldn’t spend too much time looking at a single month of retailer comps, even when that month is December.
The #s aren’t as comparable as they seem. For example, Nordstrom comps were negative but they beat expectations.
Many retailers, including Nordstrom, built lots of new stores during the last several years. These new stores hurt the comps of existing stores, even though many of these retailers were gaining market share.
Still, I agree that retail sales are flattening, and higher-end retailers aren’t escaping this trend.
For example, the owner of the Short Hills mall said on their last earnings conference call that 3Q07 sales were flat compared to 3Q06.
Um, I thought if your house was destroyed ( by Natural force, ect )
you had to rebuild the place “make the property whole” so how does burning down the place help the person?
I guess the poor sales numbers of all those agents proves the maxim “Listers are lasters.”
Perusing listings last night and the volume of junk still amazes me.
On another note, a friend of my husbands has his house up for sale at $399). I reckoned he would get around $369. He got a solid offer at $375 and refused it.
He’s owned the house for years, moving to Florida (and knows prices are tanking there) but won’t budge. Stupid, stupid stupid. My husband asked him which he would prefer – $375 now or $300 in six months time, but he didn’t want to listen.
I think I may need to just ignore the market for a few months.
28 lisoosh
He turned down a solid 375 offer on 399? He’s truly stubborn, that is going to come back to bite him! Owned the house for years? Ay.
It probably is best to ignore the market for a few months, but it’s too irresistible. I’m still following houses we looked at to see what they eventually sold for (or not).
Ann 23,
I made knockoff perfumes for 2 as well as worked on formulations in a lab. After that I went back to school.
lis,
Junk is nothing new, it’s always been in the inventory. The issue is the incredible range of price tags attached to the “junk”.
There is no rhyme or reason to the pricing seen in the current market. I’ve seen townhomes, literally next door to each other, with gaps in pricing that were over 15%. We’re talking differences of more than $40k, for the SAME unit.
I’ll show you tiny capes priced $100k more than larger colonials in the same neighborhood. Teardowns & guts priced in the same range as move-in ready homes. Prices are all over the map, if a price looks to be an outlier, ignore it. It might as well have been picked out of a hat, no basis in reality.
Ann,
How about turning down an offer of $510k on a $539k listing, going into the winter?
Even better, this is in a town that had a grand total of *1* comparable sale in the past 5 months, 2 in the last 6.
Interesting retail numbers out this morning. Costco, Walmart, BJs, TJX do well, higher end retailers Limited (VS, Bath & Body), Chicos, Abercrombie, Ann Taylor, Ethan Allen, Gap, Macys, Nordstrom flop.
Consumer tapped out and looking for ways to save?
However, poor results at JC Penney, Target, and Kohls seem to run contrary to this.
————————————-
I would not say it runs contrary at all. JCP TGT and Kohls are not upper tier fashion outlets. They run above a Walmart but below Macy’s etal in terms of target income and age classification of shoppers. Also the three mentioned are heavily dependent on clothing sales for a department store.
http://www.marketwatch.com/news/story/citigroup-merrill-reportedly-seek-fresh/story.aspx?guid=%7B7952B60C%2D23D5%2D40CA%2D89D8%2D8EF352DB7527%7D
hear hear America is for sale and being bought up by middle eastern countries. If Merrill and Citi were sold to the USSR in the 70’s hell would have broken loose. Nowdays they call it capital infusion.
Why are these foreign gov’t buying up American business? If there trully is value in these companies they why aren’t they being picked up by the private sector?
Call me paranoid but I’m really worried here!
she should have called twanna brawley.
make,
Are you really sure that these moves are in any way driven by value?
Didn’t you decrease your dollar exposure by moving away from the greenback into alternative currencies and assets?
If you were a foreign government, fund, or business sitting on a pile of U.S.D., what would you do with it? Keep the dollars or trade them for hard assets?
Leavingqueens,
Last year, I wrote a low ball offer that seemed to work. Before I made the offer, I reached out to a smart guy I know for some pointers. He has bought and sold several apartments in Manhattan and has a soft touch with people. Generally I followed his advice.
I didn’t have a realtor. Even if I did, a realtor is the last person I would ask for writing advice.
I had zeroed in on the place I wanted, visited twice, and was able to get a lot of info from the seller’s agent.
Two previous offers had fallen through – one buyer couldn’t get attractive financing and the other couldn’t sell her existing place.
In addition, I learned that this was a divorce situation and the husband was doing a tech startup in San Francisco – obviously he was motivated to sell. Based on his purchase price I knew he would walk away with some cash even if he didn’t get close to his asking price. Moreover, the listing agreement expired in about a month so I knew the seller’s agent wanted a deal to happen quickly, too.
In my offer letter, I began by writing, “This offer is not contingent on the sale of my existing home.”
I wrote the price (20%+ lowball) and added that I wanted to close asap. I also wrote that I would make a 20% down payment.
The letter came to a few sentences only. I didn’t mention anything about mortgage or inspection contingencies – but I made sure these were included in the contract.
I attached to the offer letter a mortgage approval letter and personal financial documents that proved I had the loan and down payment funds ready to go.
When I handed the letter and attachments to the seller’s agent, I told her politely, “I know it is lower than he is expecting but I want him to know that if he accepts this offer then I will buy this place.” The next morning I scanned and e-mailed the document to the agent. That way she could easily pass it on to the seller, who I believed would become more flexible after he read it.
After a day or two of haggling, we settled on 10k more than my initial low ball offer. I was willing to go 35k higher that the # we agreed, so I felt good about the outcome.
Interesting stat, Long Island MLS listings in 2007 reveal that only around 24% ended up with a contract. That means 75% of houses listed did not sell.
Actually I did the stuff I decribed in 2006, not “last year”.
According to the county prosecutor, the 31-year-old Snyder allegedly offered to pay a neighbor $5,000 to help her burn down her house and make it look like a botched rape attempt – all in order to claim $80,000 in insurance money. Snyder wanted the neighbor to bind her hands in duct tape, write “whore” on her shirt, and then help her escape once the blaze was set, the prosecutor says. The neighbor demurred, instead reporting Snyder to police.
This is classic, this really needs to be made into a movie. The “whore” written on the shirt is just plain genius. You can’t make this stuff up.
-Richie
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32 grim
Turning down 510 on 539 is crazy, crazy, crazy. That’s not even 5% below asking. I guess they really don’t need to move.
Then why are you bragging?
pretorius Says:
January 10th, 2008 at 9:56 am
Actually I did the stuff I decribed in 2006, not “last year”.
Top story on Reuters this morning runs a close second..
http://www.reuters.com/article/newsOne/idUSL0910395120080109
WARSAW (Reuters) – A Polish man got the shock of his life when he visited a brothel and spotted his wife among the establishment’s employees.
Polish tabloid Super Express said the woman had been making some extra money on the side while telling her husband she worked at a store in a nearby town.
“I was dumfounded. I thought I was dreaming,” the husband told the newspaper on Wednesday.
The couple, married for 14 years, are now divorcing, the newspaper reported.
Not bragging, just clarifying. The NJ real estate market had already begun to stagnate in 2006.
grim,
If you were a foreign government, fund, or business sitting on a pile of U.S.D., what would you do with it? Keep the dollars or trade them for hard assets?
10% of Citi is hard assets to you grim?
Private investors don’t have any US dollars?
COUNTRYWIDE HOME LOANS MTN BE 3.25000% 05/21/2008 FR
Basic Analytics
Price (Ask) 80.500
Yield to Worst (Ask) 72.807%
Yield to Maturity 72.806650%
Third Party Price 80.122
Countyrwide BOND with have a 72% YIELD TO MATURITY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Re: House Fires
That was my prediction, posted under the Predictions thread.
It just appears like an “out” for someone whose *ss is against the wall while a rottweiler drools fevereshly.
(no offense to rottweilers)
make,
I’m only offering up an alternative, make up your own mind.
# 31 “Teardowns & guts priced in the same range as move-in ready homes. Prices are all over the map, if a price looks to be an outlier, ignore it. It might as well have been picked out of a hat, no basis in reality.”
As long as somepeople fail to use their head and buy the overpriced units, sellers (and their agents) will have an incentive to deny the clear trendlines.
#40 “This is classic, this really needs to be made into a movie. The “whore” written on the shirt is just plain genius. ”
As far as economics or ethics go, it may be close to the mark, at least in this reader’s opinion.
# 44 re. the brothel. In the words of Billy Crystal, “Oh, I hate it when THAT happens.”
From MarketWatch:
Freddie Mac: 30-year mortgage rate drops to 5.87%
Freddie Mac said Thursday that the 30-year fixed-rate mortgage rate averaged 5.87% with an average 0.4 point for the week ending January 10. The company said the rate is the lowest since September 2005. A week ago the average was 6.07%, and in the year-ago period it was 6.21%. Freddie Mac cited the recent weak jobs report, slow non-manufacturing business activity, and a drop in home sales as contributing factors. “These weak economic reports renewed concerns about economic conditions in the near future,” said Freddie Mac Chief Economist Frank Nothaft in a statement. “As a result, mortgage rates came down across the board, with 30-year fixed mortgage rates at their lowest level in more than two years.”
#31
Shouldnt’ the listing agent’s be guiding the sellers ro appropriate asking prices? Are sellers really that stubborn? Or do you think this could be a result of people being over-leveraged due to high LTV or HELOC and refusing to take a loss?
One seller’s agent I talk to a lot routinely turns down prospective clients because they’re too optimistic about pricing.
Some of the sellers she turned down have recently increased their asking prices. That is how out of it some people are.
make,
I’m only offering up an alternative, make up your own mind.
I hear you and I don’t buy it. But even if I did doesn’t that mean that due to our debt(trade deficit) we are forced to beg Foreign gov’t to buy American Financial Businesses instead of them dumping the dollars on the market?
Come on grim you and I know that this can’t be good.
Ann and Pretorius: Thank you for your responses. We are going into the listing agent’s office next week to sign their standard offer letter (not sure that’s the right description — hubby talked to her). I think we will take your suggestion, Pretorius, and give her a letter along the lines of your advice. We do not have a house to sell and have more than a 20% DP (though we don’t want to put down more). I’ve done the research — the house is empty, person lived there for years, etc. Thanks again!
Ann – yes, toothpaste — you know the flip-top and pump toothpaste tubes — that’s my dad! Of course, he also worked at the atomic labs in Oakridge, TN (home of Manhattan Project) — but guess where he made more money … I, on the other hand, failed my high school chem final.
grim:
re: teardowns same price as move-ins…
I hate it when agents/sellers try to sell houses with a dilapidated barn as “has horse facilities” or a lean-to with space for one mower as “has outbuildings”
I saw this:
http://new.gsmls.com/media/getImage.do?mlnum=2449698&res=highres&num=9
and would SOOOOO love to explain to the seller/agent that this is NOT a “riding ring”…this is a patch of dirt with a poorly-installed/mismatched materials fence around it.
A riding ring can start at 20K just for grading/drainage and quarry-base, forgetting top layer materials which can run several thousand to several tens of thousands…
Just my own pet peeve…
India’s Tata Motors Unveils $2,500 Car
…Nice Tata’s.
India’s Tata Motors Unveils $2,500 Car
Can’t wait to run over one of thouse in My Blazer :)
P.S. I do not own a Blazer….
Washington Mutual 2014 bonds trade
135bp behind the 2013 bonds of the Development Bank of Kazakhstan (A2/BBB-/
BBB neg.). We have changed our fundamental credit opinion to Deteriorating, High
Risk from Deteriorating, Medium Risk because of the company’s poor earnings
prospects and weakening asset quality.
Countrywide’s earnings are projected to fall 70% over the two-year period, because
of lower origination volumes, higher charge-offs and funding costs, and the impact
of preferred dividends, which amount to $440 million a quarter.
re: (57) it is a glorified rickshaw. In India they ride 5 to a motorcycle with groceries.
http://www.flickr.com/photos/mattlogelin/168159263/
A great entry for Austraila’s Word of the year.
“Kippers” Adult children who fail to leave home – a contraction of Kids In Parents’ Pockets Eroding Retirement Savings.
“Shouldnt’ the listing agent’s be guiding the sellers ro appropriate asking prices? Are sellers really that stubborn? ”
This is an example of a service provider who has little faith in their ability to generate business and, instead of helping a prospective client by offering clearheaded advice, is afraid to say anything that might cause the prospective client walk away. Good lawyers tell clients when they thing their claim lacks merti and good RE profs owe it to themselves (at least if they want to earn a living) to let unrealistic sellers list elsewhere.
# 58, forget the Blazer, a Kia might do it.
What am I seeing? Someone please explain…
When a home is dressed to the “nines” like a professional decorator put everything in, is this family’s financial house in order?
http://new.gsmls.com/media/getImage.do?mlnum=2445322&res=highres&num=8
When I see sparsely decorated homes, what is this a sign of?
http://new.gsmls.com/media/getImage.do?mlnum=2444723&res=highres&num=6
What does “walmart furniture” tell me?
http://new.gsmls.com/media/getImage.do?mlnum=2468956&res=highres&num=8
And what about lots of “stuff” with little value?
http://new.gsmls.com/media/getImage.do?mlnum=2449986&res=highres&num=4
(last one, note the two teevees…one for “sound”, one for “picture”…)
I’d like to hear from both professionals and non-professionals on what they think is going on based upon what they see…
spam,
How about this one, described as a “horse lovers delight”:
MLS# 2462463
You can’t help but feel sorry for any horses that might be on that property. Barely an acre of rocky steep slope, it is not fit for any animal.
Grim, how was the Rutgers class last night?
http://www.cnbc.com/id/22590773
There is an interesting video clip in the article.
Builder’s Collapse Devastates Florida Community
25 pret
I wouldn’t put too much stock in individual earnings conference calls, either. At this point, maybe I’ll sit up and take note when it shows up in financials that the CEO can go to jail for certifying.
“How about this one, described as a “horse lovers delight”:
MLS# 2462463
You can’t help but feel sorry for any horses that might be on that property.”
Keep digging through that horse$hit, there’s bound to be a pony somewhere!!!!
gotta love Cramer.
He is going after two of the Fed Presidents who are against a rate cut.
http://www.thestreet.com/video/index.html?clipId=10397830&channel=Cramer+On+Demand&cm_ven=YAHOO&cm_cat=&cm_ite=#1370858965
grim,
I can’t tell, realtor.com only has 1 photo, but isn’t an acre not even zoned for horses? Geeze…you need an acre just for the “stuff” related to having a horse, forgetting the horse!
the manure pile, wheelbarrow, rakes, forks, hay (lots of hay), enclosed area to store feeds/vitamins/medicines, etc (void of mice/rats), animal & equip cleaners, truck/trailer, muck buckets, tack, etc.
This doesn’t even include PASTURE and ANIMAL SHELTER, which can be as simple as a run-in shed…
Before I checked on this blog, I copied the house fire article to post, of course it was on the front page, oh well always a day late and a dollar short!.
The reason I was going to post it was because I had personally lived thru a downturn as did somehere 1987condobuyer stuck it out, I did not due to other financial constraints,we were unable to pay mortgage and unable to sell, the thought of burning does come to even the most lawful minded. It is not acted upon by those folk but thought of. To answer as to why, well you will reduce your monthly tax bill during rebuild and your rental is paid for,while you still pay your mortgage it’s lessened by the tax amount and while in the rental your outlay again is less (PSE&G is a killer in an old house) and in the end you will have a brand new house that would be easier to sell.
KL
MEETUP
By the way, my personal opinion on the meetup issue is that Grim, you should just go ahead and pick a date, time and location and notify us a couple weeks in advance.
It seems like quite a number of folks would like to get together, and you’ve provided ample opportunity for folks to express their opinion (which many have).
I’m happy with wherever and whenever, frankly.
spam,
The place you posted is club med in comparison..
https://njrereport.com/images/2462463.jpg
I beleive the area to the right is the “riding ring”, and the hill behind is the.. well.. pasture.
Grim,
Right up your alley:
http://www.cnbc.com/id/22591738
I’m reporting from “Real Estate Connect NYC” a conference of real estate agents, online real estate services and some finance-type folks thrown in for good measure. So you’ve got Zillow, RealtyTrac, Bankrate, Coldwell Banker, Century 21, and it’s all about data.
ING DIRECT DID A BIG CUT IN CD RATES TODAY. Bet they are betting on 50bps and don’t want to get stuck with money losing cds.
6 Month 4.55% 01/10/08 Open Now
9 Month 4.55% 01/10/08 Open Now
12 Month 4.55% 01/10/08 Open Now
18 Month 4.50% 01/10/08 Open Now
24 Month 4.50% 01/10/08 Open Now
30 Month 4.50% 01/10/08 Open Now
36 Month 4.50% 01/10/08 Open Now
48 Month 4.50% 01/10/08 Open Now
60 Month 4.70% 01/10/08 Open Now
Shore,
I didn’t go because they wouldn’t comp me admission.
uh oh, you know it’s bad when flippers are dumping their Lamborghinis
http://cgi.ebay.com/ebaymotors/1989-Lamborghini-Countach-25th-Anniversary-Edition-Mint_W0QQitemZ120208181950QQihZ002QQcategoryZ6290QQssPageNameZWDVWQQrdZ1QQcmdZViewItem
“I got myself in over my head with 2 homes & a slow real estate market & My business occupies most of my time so i dont have much time to drive it, Its time to sell it.”
#72
MEETUP
How about morristown? Hennesey’s has recently been renovated and is adjacent to the train station for those train-types.
John Says:
January 10th, 2008 at 10:10 am
COUNTRYWIDE HOME LOANS MTN BE 3.25000% 05/21/2008 FR
Basic Analytics
Price (Ask) 80.500
Yield to Worst (Ask) 72.807%
Yield to Maturity 72.806650%
Third Party Price 80.122
JJ: somehow, even though it is NCL, the YTW should = 0% in my mind ;)
albani: with your CFC jollies……you must be tracking the short interest, so you know that there will be ready buyers when you want to bail…
#24
in re: huntington / fcmc.
i just spoke to some of my buddies remaining over there and the sentiment is of obvious uncertainty. management is preaching their strong service platform and the ability to offer due diligence and third party services to reinvent themselves.
they manage about 2.5 billion of assets with about 30% of them not performing. i’m not sure if i were a hedge fund that was new to secondary game that i’d take advice from a company that had to shut down it’s acquisitions due to over aggressive pricing and poor modeling.
come april, they potentially will be off the nasdaq if they can not get their common stock market share to 5mm.
Re 77, I think thehe guy who owns Petruzelli realty in Hoboken has a red Lambourghini, maybe that’s the one
alrighty then….
http://www.cnbc.com/id/22578009
Isn’t that Gordon Gekko’s car?
I just heard from an agent friend of mine who says that real estate is “hopping” where she is (central NJ). I wonder if anyone has heard about the NJ shore real estate climate since the new year.
# 85, Hopping as in flippers going to the roof and hopping off to their deaths?
Oil Falls Below $94 as Economic Woes Mount
http://www.cnbc.com/id/22577633
Maybe if we enter a deep recession or mild depression we will see $60 oil again.
leavingqueens
You’re buying in NJ right? Just fill out the standard contract if that’s what the agent has. It is a contract, but you have three days to get an attorney to review it for you before it become binding, so don’t be too, too worried about what it says. Also, not to be a drag, but don’t make any predictions that because the house is empty etc that you are dealing with a reasonable person. Empty can just mean a seller who is stubborn and unrealistic. I’ve come to learn that days on market, empty houses, dead owners means nothing.
Your dad invented flip-top toothpaste caps!!! Wow. That’s awesome. Remember dropping that tiny cap on the floor and having to look for it? Your dad took care of that dilemma! I bet he made money for that.
Question for the group:
Does anyone have any thoughts on prepaying your mortgage?
I have a 30 fixed at 6.25%, does it make sense to put extra money toward my mortgage instead of in the market?
PattiMak Says:
Shore Guy
“Hopping” as in things are picking up as far as increased new listings. Shore Guy, do you see many new for sale signs down there at the shore?
I’m only asking because I’ve been holding off my quest for a summer house/future retirement place for some time now. Just wondering where the shore (Ocean/Monmouth) real estate is heading.
PattiMak:
How do the sales look in Central NJ? I am looking for a townhome, but debating if this is the right time to buy or not – what with the recession coming and everything…:)
There is a new rumor that Citigroup is about to raise more money perhaps as much as t $10 billion. If it does not happen Vikram Pandit may be forced to beak up the company.
There are 97 million shares short in the company’s stock, those suckers are going to get hit hard.
Should be interesting to see how much Citi is willing to give away of the company.
Perhaps Prince Alwaleed bin Talal Citigroup’s largest shareholder and a bunch of other rich Saudis make a play for the company.
shore guy 87
I wouldnt hold your breath on oil going back to $60. Supply growth cannot keep up with current demand growth. We will see up and down volatility in oil, but the fundamentals are not there for a return to 60. One of the biggest US suppliers (mexico) is seeing large drop offs in one of its primary oil fields, signs that most of the large fields are already maxed out.
Re: the Tata car,
Not being sold here, of course, and the BW story on it last week had a family of 6 on a scooter.
Whatever became of the compressed air car out of France? Tata was supposed to be in on that.
anyone have any thoughts on what a decent pre mba salary range is for NJ age 26-29?
Merrill Says we Are In Recession:
http://www.seekingalpha.com/article/59394-merrill-recession-is-already-here
Shore guy 87
another thought…. I still suspect that we will see oil hit or pass $150 at some point this year. I am not saying it will stay at that level but it will stay in an overall upward trend
OT
Regarding yesterdays Biodiesel chat. Most people seem to miss the point; from an energy density vs availability point of view, no one energy source can replace oil. Oil is phenomenally energy dense. Oil will need to be replaced with a variety of other fuels. So while just biodiesel or just ethanol or just hydrogen are not the answer, a varied combination of alternative fuels is the only answer that is likely to be successful and feasible.
Victorian: #91
My agent friend says that prices are “stablizing”–whatever that means. She also implies that things are picking up; but picking up from what point, I don’t know.
# 89
“ADA Says:
January 10th, 2008 at 11:56 am
Question for the group:
Does anyone have any thoughts on prepaying your mortgage?
I have a 30 fixed at 6.25%, does it make sense to put extra money toward my mortgage instead of in the market?”
Here is my take on the subject, others may differ (for the record, I have a stellar credit score, no debt (including no RE, car, credit card or other debt), an above-average net worth. I just disclose so that you have some idea that I am not living in my dead father’s basement eating bomb-shelter food from the 1950s):
Take a look at the market, it is falling, take a look at bank and CD interest rates, they are at historic low numbers. Now, look at your am schedule. In particular, look at the principal column (which in the early years is likely to be the smaller number) then look at the interest column (in the early years of the mortgage this is likely going to be the larger number. Now, if you make an additional principal payment each month you save the interest associated with that payment.
Lets look at a 30 year loan for 300,000 at 6%. This gives a monthly payment of $1789.70. In the first year you are paying about $300 per month in principal and $1489 per month in interest. So, each month that you pay an extra $300 you earn $1489. That is one heck of a return on your investment.
#90 I am not ther every week but there are lots of sale signe. Of course, many of these have been up a year or more.
#98 spelling correction: “stabilizing”
kettle1 Says:
January 10th, 2008 at 12:16 pm
shore guy 87
I wouldnt hold your breath on oil going back to $60.
Ket,
I was kidding. I knew I should have put a ” :-) ” in there .
#98
Isnt that what the cruise director of the Titanic said?
Freddie Mac has a list of soft counties for each state:
https://image.minyanville.com/assets/FCK_Aug2007/File/Andrew/2008/Jan%2008/011008/Freddie%20Mac%20Declining%20Areas.pdf
http://www.minyanville.com/articles/mortgage-florida-refinance-california/index/a/15485
Helicopters Speech:
http://www.federalreserve.gov/newsevents/speech/bernanke20080110a.htm
98 PatiMak
Not to be insulting, but have you been on this board very long. Housing will not be “recovering” for a very long time. While this bubble will not be the same as the late 80’s early 90’s bubble, that market behavior would probably be a good first run guess on what to expect this time. We have barely started the downward slide, realestate bubbles take YEARS to workout not 1 or 2.
Your friend may be seeing more homes being listed, but the money just doesnt exist for any significant # of people to buy at the current levels given the depth of individual debt and the tightening or credit.
Grim unmoderate 103
Shore,
sorry if i jumped on you…..
People who drink the coolaid and parrot how the current oil prices are just a temporary spike drive me batty. without any background in science or finance, just look at the rate of increase in oil use of india and china, compared to the rate of oil production increase….. which one is bigger? which rate shows signs of decreasing???
Oh and another fun tidbit. They have shifted from reporting light sweet crude reserves to “total condensible liquids”. This way they can add all the secondary extracts like LPG to the production numbers.
HEHEHE,
#103
Atlantic County – Soft
Hunterdon County – Soft
Sussex County – Soft
Cape May County – Soft
Morris County – Soft
Union County – Soft
Essex County – Soft
Salem County – Soft
SHore 87
does by know you are stealing his lines??? have you started using the Bi Investment StrategyTM
just a test
Bi Investment StrategyTM
Grim does this website restrict certain HTML tags????
I think oil will be flat or go down a bit… a huge amount of the stuff goes into making plastic junk in China that is shipped to the USA.
Americans have 10 years worth of the stuff in their closets and garages.
I believe the counties above listed as “soft” will be subject to the max LTV restrictions proposed by Fannie and Freddie last month.
Grim,
I suppose the softness is riding the NJT trains towards Manhattan. ;)
Aaron,
I am curios about your logic, could you please explain further? I do not understand how americans having lots of plastic bags in closets impacts oil demand. The majority of oil is burned as fuel. as of 2001 only 18% of oil products in the US were NOT used as fuel. So 88% of the oil in the US is burned as one or another type of fuel.
Law firm layoffs:
http://www.law.com/jsp/nylj/PubArticleNY.jsp?id=1199959526088
Is that Freddie Mac list of soft markets an internal document that was leaked?
My agent friend says that prices are “stablizing”–whatever that means. She also implies that things are picking up; but picking up from what point
That has been the official Realtor party line for 2 years now. “Market stabilizing and things looking up” If you go to realtor.org and look up their monthly press releases for home sales, most of them sound just like this.
Aaron, while i am not able to find any hard #’s, i would suggest that the majority of oil in china also goes into fuel with only a small percentage going into petrochemicals. Just look at the physics of oil distillation.
a graphic
http://tinyurl.com/ymo9zq
most of the distillation products are suitable primarily for fuel, not a petrochemical base stock. The petrochemical base stocks tend to be the lighter fractions of the distillate which comprise a smaller percentage of the total distillate. The largest percentage of the distillates are heavier components that are best suited as fuel or other uses such as lubricants or asphalt
# 108 “Shore,
sorry if i jumped on you…..
”
I take no offense. I am a very big believer in fundamentals and what is clear is that competition for oil has not even begun to heat up yet. Once it does, watch out. Why we even burn the stuff is beyond me. It is a long-chained hydrocarbon from which we can make darned near anything and instead we actually burn it up.
talking of oil…
if anyone is interest take a look at depolymerization. Its a process that can render almost any organic compound to oil. there is a prototype facility int he midwest that uses turkey guts as feed stock and produces light sweet crude. Basically steam + high pressure + high temp will turn almost any organic compound into oil wwhether its turkey guts or old tires.
There is only one question: Basically steam + high pressure + high temp will turn almost any organic compound into oil wwhether its turkey guts or old tires.
It the process energy negative, positive or neutral???
If it is positive how positive is it?
Shore
outside of uranium or other nuclear fuel, oil is one of the most energy dense substances we have available. Thats why we burn it….
Here is a link to a table of energy densities for various substances
http://tinyurl.com/fbmmn
With respect to the “soft counties,” does the name Kuzmickas mean anything to anyone here?
This $1.3M home in central jersey just went under contract in lesss than a week. where is slow-down?
MLS ID# 810244
http://www.realtor.com/realestate/cranbury-nj-08512-1093733837/
Hehehe,
Wow. I know some people in Cadwalader and they thought they could pull thru the downturn in securitization deals.
However, Cadwalader was the dominant law firm in this area so don’t expect other firms to fire as many lawyers.
Many law firms remain bullish though. Gibson Dunn and Proskauer Rose are set to sign leases for a big blocks of space (hundreds of thousands of SF each) at a new building that will go up at 55th & 8th.
Kettle remember your thermodynamics, the net energy expenditure to make that oil is probably higher than the energy created. So not that economically feasible. This also includes pertoleum products used to grow said turkey guts gobble gobble.
AL,
the company running the plant (Thermal Depolymerization, LLC) in carthage MO claims the following numbers
energy efficiency is 560% (85 units of energy made available for 15 units of energy consumed)
and yield efficiency is 85% ( 85% of the total energy contained in the feed stock in extracted, including parasitic energy draws such as pumps and reactors)
This is not a perfect tech, but very interesting and has potential promise as well as potential problems.
Does anyone remember when we discussed mls#2471673? It is the 450k home in Baskin Ridge/Bernards Twp and someone at work brought it up.
I was hoping to point them to the discussion of the house but I havent been able to find it :(
bi,
So what? “Appletrees” in Bernardsville sold for $6.35m last month.
# 126,
Life is good at the top of the economic food chain. For the sub $200,000 a year crowd, life is not as grand as it was.
MEETUP
How about morristown? Hennesey’s has recently been renovated and is adjacent to the train station for those train-types.
I used to live a few houses down from Hennessys. Playing bass on their astro-turf teetering stage was always a challenge.
The renovations really did seem to suck the life out of the place tho. Formica? Ugh. The place when from McSorelys to Bennigans.
I just sold my condo in Central Jersey by the hair of my chinny chin chin. I tried to FSBO for 2 months in the late spring. Had limited traffic through Open Houses but no real offers. I purchased a Flat Fee listing which seemed to work. Traffic picked up because agents were willing to bring their clients because they knew I would pay back a 2.5% commission. However, I had no serious interest for the next 5 months. I got lucky and I mean lucky a month ago with a buyer. I got a bit uneasy the day before the closing when I was told he was $8,000.00 short and the mortage company was not coming to his rescue. Four hours later I was told he “found” the extra money. We closed and now I am sitting in rental awaiting the fall of Western Civilization. I would have to disagree with the comment that Central Jersey is “Hopping.” Having experienced the real market for condos first hand over the past year. Maybe “Hoping” but not “Hopping.” In my former development there were at one time 25 units for sale. Most listing were pulled or expired by mid-fall. I assume they will all be back by Spring. One last interesting point was that in the development the prices ranged from $320,000.00 – $264,000.00. Expect for views and upgrades in stoves and diswashers, the units are identical. All it takes is two or three sales in the $260,000 range to truly shake that place up.
I had lunch with one of Cape May County’s better Realtors. He is an old timer who has been in the game for almost his whole life. His firm is less than half of it’s 2005 size. He told me that he is doing 25% of his business two years ago. He considers himself lucky. He also mentioned the media as part of the problem.
For any Westfield (aka Brigadoon) fans still out there, I just noticed this come on the market.
MLS ID# 2472150
OLP $1,150,000.
Bought 11/06 for $912,500.
Could be a marital split. That’s only +20.65% in 13 months. Man, the high end must be zooming in Westfield. OH this weekend for all you qualified buyers. Don’t everybody bid at once.
P.S.: I am not the listing agent for this property.
Roubini joined a group of three other real estate experts at the Real Estate Connect NYC 2008 conference in New York Wednesday for a discussion titled, “The Housing Debate: Bull vs. Bear.”
“There will be 10 million houses with negative equity,” he said, where the owners will owe more on their mortgages than the properties are worth, giving them less incentive to keep making payments. Many will walk away, he said, depressing markets further.
The housing turndown, according to Roubini, was the initial trigger for a broad economic decline. “We’re in an economy-wide recession already, one that will be much more severe than those of 1991 or 2001,” he said.
# 124
Ket,
Although my days in nuclear engineering and chemistry labs are long behind me, I understand your point. Still, 1,000 years from now when people look back on our recent use of oil, I have to believe they are going to say “What the heck were those people thinking?” And, like recent research into the development of the teenage mind shows, the answer will likely be “they weren’t.”
I saw a report about 8 years ago that concluded it would cost about $500 billion to construct enough alternative energy facilities (of varried types) to rid the U.S.’s need to import any oil (except maybe from Canada). The author concluded that it would not happen because the government would never spend that much on any single activity.
Now we find ourselves spending $1 trillion, or more, to safeguard Middle Eastern oil, which mainly goes to Europe and Asia.
126 re house that sold
Cranbury is a very nice town. That house is pretty much new and HUGE, probably much bigger than you can tell from the outside picture. It’s in Liedke Farms, a new development of huge houses.
Do you know how much they bought it for in 05 and how much it went for now? That would be interesting.
Hey you all, Listen To Bi – We All Must go out and buy a hosue!!!! Everything is fine, don’t forget to offer 40% over asking!!!
Save flippers, and in 5 years someone will save you!!! Right!!! Right!????
If oil prices continue to stay at current levels, what will that do to the economy? Have the higher prices been priced into oil stocks?
136 twice shy
I hope they renovated that or something. 20% in a year.
Pre,
I agree with your point on Cadwalader. Not necessarily the others. Law firm moves are usually years in the works so I don’t necessarily agree that it reflects any bullishness/bearishness re current market conditions.
135 d2b
The media is part of the issue for sure. I do think there are more people out there who want to buy, but are scared by the stuff they read on the MSM. Yes, there is real stuff going on out there, but the media hypes everything up without real facts. Hey, if they played a part in the bubble, they can play a role in the bust.
Look at them tripping over themselves after Obama wins one primary as the new “phenomenon” “a movement” then NH comes, and oh, maybe not.
142 Ann,
Sorry, I should have mentioned that this gem is brand-new quality construction as of 2006. Tear-down of a vintage ranch replaced by this magnificent new palace. Brigadoon lives!
I saw a report about 8 years ago that concluded it would cost about $500 billion to construct enough alternative energy facilities (of varied types) to rid the U.S.’s need to import any oil (except maybe from Canada). The author concluded that it would not happen because the government would never spend that much on any single activity.
Any report must me read with serious amount of skepticism. You do not believe everything NAR reports……
Spending money on WAR is always destructive, unproductive and lowers average quality of life for most people . It is selected few who positioned themselves to benefit from WAR – they are smiling.
It reality right now even if we build all the nuclear plants we need, what are we going to do about, what was it 700,000,000 cars and trucks in this country???
they ALL run on gasoline, and it would take ALL world manufacturers about 150 years to replace them at current rates of hybrids production.
uh oh, you know it’s bad when flippers are dumping their Lamborghinis
He’s not dumping he’s downsizing:
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&viewitem=&item=280186424510
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&viewitem=&item=180200194722
Look at the winner of the auctions.
/I wish I was making that up
142 Ann,
It looks like they bought it new. And it is really close to South Ave (the commercial street along the train tracks). “Why the hell not” pricing.
Nearly anything organic or even platic can be deploymerized, the problem is the smell it creates.
http://www.redorbit.com/news/science/344413/wastetooil_plant_with_conagra_ties_fails_airquality_rules_governor_says/index.html?source=r_science
Kettle1 #106 & Rentininnj #119
I’m just curious to see if anyone had any actual observations re: the current NJ Shore real estate situation in Ocean/Monmouth counties. I’d love to know bad it really is. (I’m not insulted)
Thanks to both of you for your comments
RE I have a 30 fixed at 6.25%, does it make sense to put extra money toward my mortgage instead of in the market?
It makes sense if you are an ING CD type of guy looking at relocking in at 4.5% or you are looking to trade up in a few yearss and are worried that housing will be so weak you can’t trade up and carry two mortgages if you cant sell.
However, dollar cost averaging into the stock market when it is weak like now is a much better long term choice then paying off your mortgage each month.
If we get 50bps this month starting Feb 1 I may be tempted to take my maturing CDs and knock off my 6.75 mtg rather than reroll them at 4%. Then when my mortgage is knocked off I will be forced back into equities as 3% taxable money markets is a guaranteed loss. Most Financial advisors will tell you it is all about risk tolerance, stocks are always better but if you are chicken of stocks and keep it in a 3% mny mkt and don’t need quick access to cash you might as well prepay.
Cranbury sounds like a good name for a HO>
131#, grim, this house was evaluated at $1.2M in 2006. I was surprised that it was sold that quick. My point is the natural demand is still there.
Monmouth County is not “hopping”. My parents have had the house on the mkt in Middletown(100K+ cheaper than the neighborhood sold in 05) since May, w/o one offer! Although the house is big, it needs a new kitchen.
They’re are (still)a total of 3 homes for sale on the street, since spring-summer.
Times are tough all over, apparently. I wonder if the White House has paid the cable TV bill?:
http://www.cnbc.com/id/22592208/for/cnbc/
FBI wiretaps dropped due to unpaid billsBy LARA JAKES JORDAN updated 15 minutes agoFont size: WASHINGTON – Telephone companies have cut off FBI wiretaps used to eavesdrop on suspected criminals because of the bureau’s repeated failures to pay phone bills on time.
A Justice Department audit released Thursday blamed the lost connections on the FBI’s lax oversight of money used in undercover investigations. Poor supervision of the program also allowed one agent to steal $25,000, the audit said.
In at least one case, a wiretap used in a Foreign Intelligence Surveillance Act investigation “was halted due to untimely payment,” the audit found. FISA wiretaps are used in the government’s most sensitive and secretive criminal investigations, and allow eavesdropping on suspected terrorists or spies.
“We also found that late payments have resulted in telecommunications carriers actually disconnecting phone lines established to deliver surveillance results to the FBI, resulting in lost evidence,” according to the audit by Inspector General Glenn A. Fine.
More than half of 990 bills to pay for telecommunication surveillance in five unidentified FBI field offices were not paid on time, the report shows. In one office alone, unpaid costs for wiretaps from one phone company totaled $66,000.
[snip]
http://media.cnbc.com/i/CNBC/Sections/Video/CNBC_Live/player/cnbc_live.html?v=101
Big Ben speaking right now. Ready to cut rates aggressively.
Kettle,
Matthew Simmons 11/16/07 demo re peak oil:
http://www.simmonsco-intl.com/files/Another%20Nail%20in%20the%20Coffin.pdf
# 146
“it would take ALL world manufacturers about 150 years to replace them at current rates of hybrids production.”
We have the ability to use solar to split water and to use the hydrogen to power fuel cells. The only thing that we lack is the will, or the motivation. There is no need to centralize hydrogen generation and to transport it, which is problematic. I am confident that the current car I am driving is the last, or at most, the penultimate, internal combustion car I will ever own.
bi,
So in order for you to believe that housing has slowed there has to be NO pending sales? Or did you not see yesterday’s stats?
And can you define “natural demand”?
Rich
whether it will go to $40+ is another issue, oil will be going down from here for a while. The conflict with Iran on Monday did not move oil up; yesterday’s decreasing inventory did not move oil up. what else will move it up short term?
Natural Demand — The tendency of a seller to demand as high a price as possible, in case some sucker is willing to pay more for the asset than it is worth. Related, see screwed flipper, sub-prime, foreclosure, National Association of Realtors.
I suspect bi is right that oil is heading downward. As recession moves around the globe, there will be some reduced demand for energy. Of course, if OPEC decides that it would like to keep prices a bit higher than they would otherwise fall, they have the option of decreasing supply. Or some Wahhabist “warrior” will blow up a refinery or two.
Well, time to go oppress the masses.
MA says gas sales for December were down 1% YOY… what was the price of gas last december? That would mean that gas usage was down 5% + on a per gallon basis.
Ann,
Any news about the sellers and the repairs?
Jan. 10 (Bloomberg) — Lennar Corp.’s November sale of 11,000 properties in eight states set a price that may mark the bottom for the U.S. housing market: 40 cents on the dollar.
What a crazy statement. Why is 40 cents on the dollar a good price. I remember in early 90’s looking at unreonovated one bedroom coops at Blvd Gardens in Queens (big coop conversion near astoria/woodside). Sponsor cut prices to 40K and was trying to unload them to avoid bankrupcy. I went on the tour sounded good never bought and forgot about it. By late 1992 the bankruptcy judge sold the remaining empty units for one dollar each. Damm maint shot up due to sponsor lack of payments to $750 and units rented for $600, you were buying the right to lose $150 a month.
This isn’t huge news, but highlights a trend that shows few signs of reversing. Jersey City continues to grab a large share of demand from office users in New Jersey.
Indicates that creation of white collar jobs hasn’t slowed in Jersey City, even though growth in good jobs has ground to a halt in the suburbs.
http://www.mackcali.com/news/press_releases/view.phtml?id=14306
We have the ability to use solar to split water and to use the hydrogen to power fuel cells. The only thing that we lack is the will, or the motivation
WRONG!!!!
What we lack in Infrastructure (cost in many trillions), we luck efficient solar cells (cost to develop more efficient ones – billions and counting…..), we lack Hydrogen fuels car production facilities(can add this to infrastructure as well), we lack any means of storing sufficient amount of hydrogen safely and cheaply (again cost to develop probably in billions so far and counting).
I am confident that the current car I am driving is the last, or at most, the penultimate, internal combustion car I will ever own.
Do not be so confident – I think in the next 20 years all cars might be hybrids, but thats about it.
Just so you know – So far all hybrids still use internal combustion engine.
160 Shore Guy – I laughed out loud.
Ann, my dad has had about seven patents (not sure about the flip-top -he might of just worked on the chemistry, not the actual packaging) -all owned by the company he was working for at the time. Ever hear of Post-its? Ever hear of who invented Post-its? Ever hear of 3M?
Bernake looks like he’s finally had a come to Jesus moment. He’s finally accepted his duty and is prepared to execute. Finally, he realizes that we can’t have financial and real estate markets becoming unglued. We can’t have investment drying up and a bunch of people losing houses. The financial primacy of our great nation can not be allowed to be upended simply due to to those who want to destroy this nation’s real estate markets. The dream of homeownership must continue to be extended to all.
I heartened by Bernake’s stance!
SOMETHING BIG IS HAPPENING OPRA IS SPIKING!!
BOA in advanced talks to buy CFC
BofA to buy CFC.. next target is homebuidlers.
127 pre
“However, Cadwalader was the dominant law firm in this area so don’t expect other firms to fire as many lawyers.”
right – the other firms mentioned in the PPP para at the end of the article hardly touch the stuff.
link;
http://online.wsj.com/article/SB119999250189581559.html?mod=MKTW
This really shouldn’t surprise anyone.
Oh boy! Christmas again!
Chair: Fed Ready to Cut Interest Rates
Federal Reserve Chairman Ben Bernanke pledged Thursday to slash interest rates yet again to prevent housing and credit problems from plunging the country into a recession.
The Fed chief made clear the central bank was prepared to act aggressively to rescue a weakening economy. “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks,” he said.
” Hey, if they played a part in the bubble, they can play a role in the bust.”
Waah.
# 166 “Just so you know – So far all hybrids still use internal combustion engine”
Of course they do.
I reject your thesis that we lack the ability to split tyhe water. Heck, I have done so before as part of a science demonstration. Local production of hydrogen will obviate the need to store vast quantities of H. In the end, we can use the existing water system to move H to where we split it, condense it, and pump it.
BOA allegedly in talks to buy Countrywide
Sean 148
I believe that after they investigated, it was shown that the smells did not come from the depolymerization plant. people complained of smells even when the plant was not running. The depolymerization plant is surrounded by other agro plant such as the conagra turkey processor. the smells most likely come from there. I am not defending anyone just repeating the info i have
guys it is too late to get into CFC but homebuilders are still low…
“I heartened by Bernake’s stance!”
Is that a wide stance, like Larry Craig?
178 “I believe that after they investigated, it was shown that the smells did not come from the depolymerization plant.”
Actually they DID come from ther plant, it was a maint worker named Gus who had a thing for refried beans and beer.
# 165 ,,,,just hang on …..layoff news from finn. secktor is comming and it will be BIGGGGGGG
I reject your thesis that we lack the ability to split tyhe water.
It’s not ability that’s the issue (as any high school chemistry teacher can demonstrate); it’s cost.
From an energy efficiency perspective, why use electricity to create hydrogen to power a car when you can just run a car on electricity?
INHO, the next big thing will be plug-in hybrids. The only real impediment is battery technology. With hydrogen, you would need to create an entire infrastructure in addition to overcoming huge cost issues.
Kiss the dollar value good bye. It is darn good thing food and oil aren’t included in CPI or else we might have some real inflation on our hands. Sarcasm off
“guys it is too late to get into CFC but homebuilders are still low…”
bi…Your black box is working perfectly.
“Stocks spike on news that Bank of America (BAC 29.90, +0.88) is in advanced talks to buy Countrywide (CFC 7.86, +2.74)”
When the talks break off, CFC will go bankrupt. Mark my words.
pret (37)-
“Last year, I wrote a low ball offer that seemed to work. Before I made the offer, I reached out to a smart guy I know for some pointers. He has bought and sold several apartments in Manhattan and has a soft touch with people. Generally I followed his advice.”
Pret, you’re in RE investment, and you didn’t know how to write a residential offer?
Jesus. That’s like being a cook who can turn out seared foie gras and can’t grill a hamburger.
I also raised my bond exposure by another 10% after market close today.
Good chance that market will sell off tomorrow. Why? Cause it’s Friday!
Clot, commercial real estate is a lot different than residential. Feelings matter a lot more in residential. That’s why I went with a soft approach.
So, I’m interested in your feedback on my approach to making an offer. What do you think I did right and how can I improve next time?
Bofa in Talks to Buy Countrywide
albani: you were right for now…I would have bought the straddle
WOW – OPRA is for you guys is Options Reporting Authority, a little after 2pm the damm thing lit up like a christmas tree – red capacity across the bins – JC have not seen that since after 9/11 and the suprise greenspan cut in 2002. The CFC thing was a shocker, KUDOS to the guy on the board who bought 25K yesterday.
albani: book the f– gain, or at least 50%….
# 183 “From an energy efficiency perspective, why use electricity to create hydrogen to power a car when you can just run a car on electricity? ”
Because the batteries are big and heavy and expensive and don’t last long enough and cost a boatload to dispose of properly at the end of life.
I hear Ken Lewis traded Angelo a case of Hawaiian Tropic for ownership.
grim,
My friends at the MIB agency tell me that Angelo Mozilo is really a 250 lb. cephalopod.
Amazing that a Country which is effectively Bankrupt, can raise hopes, by lowering Interest Rates. As if that does anything to correct the principal in a mountain of bad debt. Chavez may be right, if the Stooges here think he’s wrong. Picture the average consumer going under from a mountain of (Credit Card, Student Loan, and Mortgage Debt), asking the Bank to lower it’s interest rate on their meager savings. They won’t change the Rate on his contracted loans. And even if they did, he can’t afford the pricipal, anyway.
Hmmmm…..if BoA does buy CFC, I will count that as 1 of my predictions having come true. Actually, I wouldn’t really count it as a bank, so maybe not.
Potential Comp Killer
MLS 2472693 – 99 Overlook Rd Montclair
6BD 3.5 Bth
LP – $999,000
Sold 06/06 $1,125,000
homebuilders are moving up steadly 5% now. it is a natural speculation. all disclaimers apply
ChiFi, Clot, BC, Kettle, and everyone else.
I hate to say thuis but I told yoy so.
I only wish I would have bought more then 5000 shares.
When do I ring the register? before or after the sale?
When the talks break off, CFC will go bankrupt. Mark my words.
Stu,
Why would Mozillo break off the talks? or Lewis? they’re practically married to each other on this?
This deal is as good as done. I saw the writing on the yestaerday.
BI,
Why are you so excited for? Let me guess, you have a buyer who is approved by CFC to by your overpriced POS!
Make,
Sell now while the shorts are covering.
pret (188)-
You didn’t do anything wrong. I just get a chuckle when I see people way up the food chain in any business who are unfamiliar with nuts-and-bolts processes.
make (199)-
You’re like a rodeo rider who’s just logged four seconds on the last, meanest bull in the pen (you know, the one that’s named “Smiley”).
Once you’ve won the rodeo, get off the bull…or prepare to be impaled.
re: Bernake
He is just forestalling doom, he cannot stop the inflation that is being caused by OIL. The housing market is still done, he could cut the rate to 0 and it still would not matter. Nobody is going to want to commute far when gas prices shoot over $4 to perhaps $5 a gallon.
CPI numbers are due out next week, and they won’t be pretty.
NovaStar Financial (NYSE:NFI PRC) (NYSE:NFI) ran up 6.4% at $3.18, Indymac Bancorp (NYSE:IMB) surged 18% to $5.55, Fannie Mae (NYSE:FNM) climbed 7.3% to $35.10, Freddie Mac (NYSE:FRE) climbed 4.2% to $28.28, Washington Mutual (NYSE:WM) advanced 12% to $13.84 and Wells Fargo advanced 3.8% to $28.07.
Hey since everyone on this board is so rich, let me ask this questions.
My friend is turning in her 2005 Mercedes E class, it has 38K and she garages it and lives in NJ and always maintains it. I can buy at lease end for 30K in May. Is that a good deal, does anyone like the E class? I know the 2008 is something like 55K new so it already depreciated a good bit. Should I pick it up?
BTW Countrywide Cap V. CFC.PRB (NYSE) is $15.88Change:+8.48 +114.60%
Volume:2,632,964
The common is only up a lousy 50%.
Bernake will solve inflation by moving everything else out of the Core CPI, and replacing it with the US dollar.
If BOA buy’s Countrywide, I’ll have to move my money out of it. FICA or not, it’s a pain when a Bank Fails.
John – what engine does it have?
Personally I’d only spend $30k on a car with a prancing horse on the badge (all my cars have been bought much further down on their depreciation curve than the one you’re considering), but the E class is such a solid vehicle they use them as taxis in Germany (the diesel version, of course)
Clot,
I think Congrats are in order
MM
206 John – Can’t help ya. I am driving a 1994 Toyota 4Runner with 145K miles on it. I paid 3K for it a year ago. Buy 10 of them instead. I can’t kill it. I’m trying. It won’t go.
Good luck.
Confused In NJ Says:
January 10th, 2008 at 3:43 pm
If BOA buy’s Countrywide, I’ll have to move my money out of it. FICA or not, it’s a pain when a Bank Fails.
I was thinking the same thing.
and John, assuming the one you’re looking at is an E350 or even an E500, I’d much rather have one of these (for $7k less, and MUCH closer to the bottom of it’s depr. curve)
http://cnj.craigslist.org/car/508417285.html
John (206)
Edmunds has a good used car pricing tool.
http://www.edmunds.com/
On the main page there is a box called “USED CARS”. In that box you’ll see a link called “Appraise Your Car”. As you go through the tool, at one point you’ll see button to select ‘buy’ or ‘sell’. The tool is pretty detailed. At the end you’ll get estimated trade, direct sale and dealer prices based on your location.
Saying that it’s a 2005 E-Class isn’t enough information for anyone to give you an answer. At the bottom of the MB E-Class stack you have a relatively vanilla E320, at the top an E55 AMG. Two very different animals.
Not a fan of M-B. Quality (and hence resale) has slipped in recent years. Not specifically familiar with 2005, however.
shore,
I mostly agree with you regarding H2. It would be possible to use H2 and this is actually one of the better choices simply on the basis that H2 can be burned in a conventional combustion engine. As was pointed out, any new fuel must deal with the problem of how to replace existing automobiles. H2 doesnt have to. You could start using H2 now and slowly shift to a combination of fuel cell vehicles and hybrid fuel cell/combustion engine hybrids.
One factor to remember though is that H2 is not a fuel like oil, but an energy carrier like a battery. So the infrastructure problem would need to be solved. To economically produce hydrogen without using oil in the process, you need to use a combination of nuclear/wind/solar/geothermal. This infrastructure is generally missing currently and would have to be built.
There is an H2 storage problem. H2 embrittles most materials that it is stored in. H2 is also hard to store in that for a H2 car to have a comparable range to a gas car you must put the H2 under very high pressure. Most of these problem has solutions and it could be done if there was true national will. But once again the solution is not just H2 or just biodiesel or just anything. The answer to energy is the same as the answer to a smart portfolio. DIVERSIFICATION.
Diversification is solution to most of the energy issues. By building the Nukes/wind/solar/geothermal, you can generate H2 without using oil in process. At the same time you are hedge against unforeseen energy crisis, as you do not have all of you eggs in one energy basket. With a diversified energy source a single disaster like katrina or the middle east oil embargo will only have a minor impact as you have system redundancy.
Regarding efficeny of solar cells…
the efficency issue is a non issue. If you are going to use solar on an industrial generation scale then you are talking about cover square miles! in solar cells. some i may generate 2% less by building now as opposed to waiting 5 years but the point is that you have to start somewhere.
Sorry for the long rant. But this is a highly complex issue and there are many other critical parameters that we have not even touched on!
Clotpoll Says:
January 10th, 2008 at 3:24 pm
make (199)- You’re like a rodeo rider who’s just logged four seconds on the last, meanest bull in the pen (you know, the one that’s named “Smiley”). Once you’ve won the rodeo, get off the bull…or prepare to be impaled.
clot: why do I feel like the a55hole at the Blackjack table who is sitting next to the guy who bet a black and is holding a black in the other hand.
He is dealt a K & 2, and the dealer has a 6 up.
“What should I do?” says blackie….
“f—ing hold!” says chifi
“But he has a 6….”……so he doubles down with the other black and pulls out a 7.
Dealer ends up with 18, so blankie did the right thing in this iteration……
I suck a55….
Novastar calls it quits and implodes.
https://www.novastarmortgage.com/
167 leavingqueens
Your dad invented Post Its? Now that is a chemistry career gone right! : )
MB & BMW are experiencing “serious software problems”…meaning all the high-end capabilities they programmed in are causing nightmares electronically.
You’re better off with a pre-2K MY for either badge; or forget it and buy something with less software…
If you have tons of cash to spend, buy the MB and you can personally financially support the dealer service dept for years to come…
163 Sybarite
The sellers basically went crazy ape-sh*t on their realtor when they got our repair letter, hence, leading to crazy phone calls to us from our realtors.
However, their lawyer calmly advised them what should repair, what shouldn’t, and they ended up crediting us for half of the 1,500 (750).
The deal is on now for good.
Also, I also found out the listing agent chipped in a percent of her commission to get them to take our offer initially anyway.
They are also still super-ticked about the other offer they lost and another buyer came back and was interested also.
I’ll tell ya, as much as I’m not sure some realtors deserve the amount of money they get on a deal (SOME realtors Clot, SOME), they really do put up with a lot of emotional crap.
re: CFC BOA
As of this minute, I’ve not seen any confirmation of the rumoured deal by either party. Have I missed it? Is it forthcoming?
At least Ken Lewis’ original $2 billion cash infusion got a nice 50% pop today. Will be interesting to study the actual details once the deal is officially announced, if they do agree on terms.
http://www.mercedes-benz-usa.com/e_class.php
What am I missing here?
NFI is trading over $3 per share up 10% today but they have closed shop?
Acording to mlimplode its game over.
Can someone explain how the company is worth more closed today then open yestarday?
I know I’m missing something but what?
Actually 3M did not invent Postit. A 3M employee who was a choir director used a glue 3m invented that would stick but not stick so well (flop). He put it on the back of the little pieces of paper to mark the songs he was to sing. He thought it was a good idea and told 3m and they thought it was stupid. He persisted and with a sissors made a box of them and sent them to every executives secretary in the company, well the secretaries uses them to mark the spots on the contracts etc. for boss to sign and the light bulb went off in their heads and said this is great lets market it. Of course 3m got the credit and all the profits.
Ann,
Congrats.
Once it’s a done deal, and you’re in your new house, all the hassles will fade.
The fact that there are other potential buyers tells you that if you ever need or want to sell, you should have that opportunity. You said that this was the one that everyone wants because it’s on the best lot in the development – or something like that?
That’s good.
Maybe I will skip E class. I still have my old 1975 450sl in the garage I need to finish restoring the body/interior and my train car. Was going to sell both and get one car.
Problem with Benz is they have gotten less reliable. They come with 48 month warranty and this one has a 39 month lease. So you have nine months to judge if the car is not a lemon before the warranty expires.
My old benz took me for a tranny rebuild cause the engine was great then six months later a faulty theromsat on a hot day caused the head gasket to blow so I am familar with saving money on an older benz without a warranty and taking it hard.
I won’t ever again buy a benz from a stranger without a warranty and benzs new and used at the dealer are a fortune. Maybe I should kiss my benz dreams goodbye.
Ann,
Congrats! I’m surprised they budged.
Hey since everyone on this board is so rich, let me ask this questions.
My friend is turning in her 2005 Mercedes E class, it has 38K and she garages it and lives in NJ and always maintains it. I can buy at lease end for 30K in May. Is that a good deal, does anyone like the E class? I know the 2008 is something like 55K new so it already depreciated a good bit. Should I pick it up?
I purchased an 03 e320 for my wife in 2006 with 32k miles. Paid $31k for it (dealer) with the remaining factory warranty + an extended 1 year warranty. The warranty came in handy because one of the wheel hubs/bearings had to be replaced, but other then that the car has had no problems. Gas mileage is average (averaging about 20mpg), but it is a 6 cylinder with quite a bit of pep. I did a brake job on it over the summer and that was quite easy as well. Now have about 48k miles and the ride is still exceptionally smooth. We’d definitely get another one.
-Richie
#228
Good move. They sure don’t build them like they used to.
From Bloomberg:
American Express Reports $440 Million Charge for Fourth Quarter
American Express Co., the third- largest U.S. credit-card network, will take a $440 million charge before taxes in the fourth quarter as cardholder spending slowed and bad loans rose.
#104,
In that pdf, what is the difference between ‘soft’ and ‘distressed’ and is there any significance to the fact that some counties are in red font?
227 scribe
It’s one of the nicest lots in the neighborhood for sure. I try to reassure myself with that thought. I imagine we will be very happy once we are in there.
229 Sybarite
We were surprised they gave in too. I think some of the stuff was valid, so our lawyer pushed a tiny bit and then their lawyer advised them to give us something.
sync,
I’ve been trying to dig up more info on that all afternoon…
The investor has an “At Risk Markets” list (Form 20) that must be checked, at minimum
for all transactions with maximum financing and ALL stated income transactions. Properties
located in “At Risk Markets” per the list must meet the following requirements:
If the property is located in a designated “soft market” the maximum LTV/CLTV is the
lesser of 90% or the maximum allowed for the program, regardless of occupancy,
transaction type or doc type.
If the property is located in a designated “distressed market” the LTV/CLTV is limited
to the lesser of 80% OR the maximum for the program, regardless of occupancy or
transaction type.
If the property is located in a designated “severely distressed market” the LTV/CLTV
is limited to the lesser of 75% OR the maximum for the program, regardless of
occupancy or transaction type.
http://www.tfsweb.com/doclib/files/ZENTFS/8502/wellsfargo%20newsflash%20december%2014%202007.pdf
As a follow up to the Newsflash dated Dec. 7, 2007, a change to the restriction for nonconforming loans in At Risk
Market areas is outlined below:
• Soft Markets – Regardless of occupancy, transaction type or doc level, for all loans the maximum LTV/CLTV is the
lesser of that shown on the appropriate LTV matrix or 90% (rather than 85% as previously required).
As a result of this change, the Enhanced Standards requirements are not necessary for this category of nonconforming
loans.
For your convenience, the complete revised At Risk Markets requirements are shown below.
• At Risk Markets will be defined by three designations:
− Soft – markets which are generally experiencing a relatively lower decline;
− Distressed – markets which are generally experiencing a higher rate of decline or may be facing significant
future declines; and
− Severely Distressed – markets which are generally experiencing a higher rate of decline that is forecasted to
continue.
Based on what I could dig up, the “soft market” designation means a max LTV/CLTV of 90%.
Based on what I could dig up, the “soft market” designation means a max LTV/CLTV of 90%.
Well at least someone likes the e320 which is what the girl has that is coming off lease. With the market as it is maybe I can just update my station car with a nice shotgun rack and skip the benz.
http://activerain.com/blogsview/302279/Fannie-Mae-Says-They
On December 5, 2007 Fannie Mae announced that it will re-institute it’s Maximum Financing in Declining Markets Policy. This policy had been removed by Fannie Mae in January of 2006. Basically, this policy will reduce the Maximum Loan-to-Value (LTV) Ratios by a pre-determined percentage if markets are considered to be soft, distressed or severely distressed. These determinations will be made by lenders and appraisers using tools to access housing trends like the S&P/Case Shiller Home Prices Indices, the Office of Federal Housing Enterprise Oversight (OFHEO) Index, and The National Association of Realtors (NAR) Statistics, to name a few. In addition to this, when running a loan through Desktop Underwriter (DU) which is Fannie Mae’s Automated Underwriting engine, their findings may come back with a market indicator that will automatically reduce the max LTV for that particular loan.
…
This policy goes into effect for all loan applications dated January 15th, 2008 or later.
Forget about buying up front just lease used cars. It’s worth tying you money up or financiang to own a depreciating asset.
this is a way to go. drive a BMW for Toyota type money. no money down, even the sales taxes are paid, just ENJOY.
http://www.leasetrader.com/auto/lease/search/2007_BMW_530i_Sedan_125274.xhtml
# 233 “the difference between ’soft’ and ‘distressed’ ”
soft — borrowers are drinking heavily and using Rx drugs to calm down.
distressed — borrowers have been found hanged in their basements.
grim,
Thanks. It’s really interesting how all four ‘severely distressed’ counties are out west, in Cali and Nevada. And wow, what is with so many soft/distressed counties in CA, FL, VA, GA, OH, MI, MD etc? Makes NJ look good by comparison.
BTW I’m surprised Middlesex/Somerset aren’t in the ‘at risk’ categories.
BA decides to get out of the bad loan business….but wait….let’s buy CFC and get back in…..*is this what they pay the management team for?
Here are a few others..
Suntrust Mortgage Declining Market Index
http://www.cmbrokers.citymax.com/f/DECLINING_MARKET.pdf
https://www.stmpartners.com/manual/bro/general/STMMarketIndexList.pdf
Most of Northern Jersey is noted at “declining”
Angelo Mozilo looked lil pale this pm on CNBC ?? Any ideas why>????
The Real Story on Countrywide….
We’ll know it soon enough, but with the leak that Bank of America is near acquiring Countrywide, several things would appear apparent (at least while we’re playing the guessing game):
1. The Fed is behind the deal.
2. The Fed is behind the deal because the rumors yesterday of a near bankruptcy were probably true.
3. As part of the deal, the Fed likely agrees to guarantee BofA against Countrywide-related losses.
4. Lost in the in the noise yesterday was that Moody’s downgraded the ratings on 30 (count ‘em — THIRTY!) tranches of Countrywide’s mortgage debt by more than a few notches. They did something similar before American Home Mortgage filed for bankruptcy.
5. Investors bid the stock higher assuming a premium when it’s likely that BofA still needs to fully assess the value of the assets before the deal’s full value will be known.
6. Big question, of course, is what Countrywide investors will get.
7. Rule of thumb with bankruptcies: Stocks often double on their way to zero.
8. BofA gets a free bank and a put to the government.
http://blogs.marketwatch.com/greenberg/2008/01/the-real-story-on-countrywide/
197 RayC ,
Montclair and Upper Motclair have been overpriced for a loong time …..pricess are holding up to now…will be interesting to see what will happend now!!
grim #245, unless I’m misunderstanding the difference between Metropolitan Statistical Area vs Metropolitan Division, I don’t see Middlesex or Somerset or even Monmouth on that list. That just doesn’t make sense.
“Frank Says:
January 10th, 2008 at 5:33 pm
The Real Story on Countrywide….”
If it’s true it is yet another example of the Plunge Protection Team at work. Really makes you wonder how big of a clusterf*ck our economy is really about to face when you have the Feds arranging M&A deals.
Bernanke will top Greenspan. He’ll make the Interest Rate (-5%) Negative, for first time in US History.
AP
Analysis: Bernanke Adopts Greenspan Tone
Thursday January 10, 5:43 pm ET
By Martin Crutsinger, AP Economics Writer
Analysis: Bernanke Is Moving More to Greenspan Playbook in Trying to Explain Fed’s Intentions
WASHINGTON (AP) — Fed Chairman Ben Bernanke borrowed a page from Alan Greenspan’s crisis playbook when he promised emphatically to cut interest rates further if the weak economy needs the help.
The response from Wall Street on Thursday showed that the former Princeton economics professor is improving but still has a few things to learn before he can match Greenspan’s magic in wowing financial markets.
Still, the effort rated at least a “B+” while previous Bernanke attempts to handle the first major crisis in his two-year tenure at the Fed have gotten far lower grades.
The Dow Jones industrial average reacted to the last Fed rate cut on Dec. 11 by plunging 294.26 points — not exactly the response Bernanke was seeking as a way to instill confidence that he is up to the task of combatting the nation’s worst credit crunch since the savings and loan crisis of the 1980s and early 1990s.
The problem has been that Bernanke and his Fed colleagues have appeared to be providing rate relief in a grudging fashion, disappointing investors who wanted a full-throated pledge that the central bank was prepared to do whatever was needed to keep the country from falling into a recession.
On Thursday in a Washington speech, Bernanke was more forceful. “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.”
That’s more like it, investors said, pushing the Dow average up by 117.78 points. It was welcome relief for a market that has been plunging in the New Year as investors have had to digest once bad piece of news after another indicating that the country was moving dangerously close to a recession.
The most ominous signal on that score came last week when the government reported that unemployment in December shot up to 5 percent, from 4.7 percent in November. That was the biggest one-month gain in the jobless rate since October 2001 during a time of massive layoffs in the travel industry following the September terrorist attacks.
The worry is that a two-year slump in housing, which shows no signs of easing, has now started to spread to other sectors of the economy, especially the financial services industry, with various industry leaders declaring multibillion-dollar losses because of bad bets on securities backed by subprime mortgages where defaults are soaring.
The Bush administration, worried about what a recession in an election year would do to Republican chances to hold on to the White House, has announced that President Bush is considering a stimulus package that likely would include targeted tax breaks for individuals and businesses.
The problem is that it will take time for such a stimulus effort to get through Congress and by that time the country could well be in a recession. That is why the response from the Fed is viewed as critical. Timely interest rate cuts will boost economic activity and more importantly instill confidence that the central bank is on the job, doing what it can to prevent a downturn.
No one understood the Fed’s confidence-building role better than Greenspan, who was confronted with his first market crisis, the 1987 stock market crash, only weeks after taking over at the Fed.
Greenspan rode out a number of other threats to the economy from S&L and banking troubles to the Asian currency crisis of 1997-98 with only two mild recessions during his 18 1/2 years at the Fed. That span included the country’s longest period of interrupted growth, a decade of prosperity from 1991 until 2001.
There have been grumbles that Bernanke has been too much the academic, deferring to other members of the Fed, when what was needed was more of the approach of the two previous Fed chairmen, Greenspan and Paul Volcker, who both relished the roles of crisis managers who would make decisions and then by force of their personalities get others to go along.
Bernanke has stressed a more collegial approach, which has included going last to give his opinions at Fed rate-setting meetings where Greenspan, hoping to influence the discussion, had always gone first.
But in the Thursday speech, there were hints of a more forceful approach by Bernanke, whose comments were viewed by many analysts as a solid signal that the Fed is prepared to cut rates by a bolder half-point when Fed officials next meet Jan. 29-30 and to keep cutting rates as long as needed until the economy begins to gain traction.
“Bernanke’s comments were unambiguous,” said Mark Zandi, chief economist at Moody’s Economy.com. “The Fed is going to do what it can do to avoid a recession.”
Still, given that economic growth is believed to have slowed to a barely discernible pace in the closing months of last year, there is a worry over whether Bernanke’s newfound forcefulness will be enough to keep the recession wolves at bay.
“Bernanke’s speech on Thursday was appropriate, but it may have come too late,” said David Jones, chief economist at DMJ Advisors.
For the record — my dad didn’t invent post-its — I was just pointing out that the folks who invent things often do not get any credit or any money. Another nice perk of working in R&D!
From the AP:
Regulators Would OK Countrywide Buyout
A buyout of hobbled mortgage lender Countrywide Financial likely would be approved by regulators, analysts say, because otherwise the company could file for bankruptcy, further disrupting the market for home loans.
Bank of America Corp. is in talks to acquire Countrywide, The Wall Street Journal and The New York Times reported Thursday online, citing unidentified people familiar with the deal. The transaction would put the country’s largest mortgage lender, which has experienced a surge in home-loan defaults and has seen its share price plummet, in the hands of the largest U.S. bank by market capitalization.
A Bank of America-led buyout is “the one and only hope that (Countrywide) has” to avoid bankruptcy, according to Sean Egan, managing director of independent ratings firm Egan-Jones Ratings Co. Egan-Jones warned earlier this week that Countrywide could “falter” unless it receives an infusion of $4 billion in capital within the next two weeks.
“I cannot imagine that the regulators want Countrywide to go under,” said Bert Ely, a banking industry consultant in Alexandria, Va. “I think they’re actually quite nervous about that.”
So, how does a depositor get money back from FDIC?
Interesting Read:
http://www.dealbreaker.com/2008/01/it_didnt_start_with_countrywid.php#more
#86 patti: Well my sister in law is down in central Jersey, and tells me the market is dead, absolutely dead.
Do not listen to clueless realtors.
#91 Hopping” as in things are picking up as far as increased new listings.
Yeah, just not increased new sales.
This from aboutourtown.com’s Pway real estate page dated 1/4/08:
Condominium at 14 Forest Dr to Thomas Powers from Birchview Properties LLC. $98,755
Less than 100k??? Can anyone tell me what kind of model this is, how many bed/bath etc? This doesn’t sound right at all.
Wow there are 6 more transactions listed today at that same price, all in Birch Glen. WTH happened??
Condominium at 14 Forest Dr to Thomas Powers from Birchview Properties LLC. $98,755.
Condominium at 59 Forest Dr to Amerigo Cheechio from Birchview Properties LLC. $98,755.
Condominium at 58 Forest Dr to Amerigo Cheechio from Birchview Properties LLC. $98,755.
Condominium at 33 Forest Dr to Thomas Powers from Birchview Properties LLC. $98,755.
Condominium at 17 Forest Dr to Thomas Powers from Birchview Properties LLC. $98,755.
Condominium at 180 Sunshine Dr to Amerigo Cheechio from Birchview Properties LLC. $98,755.
Condominium at 69 Forest Dr to Amerigo Cheechio from Birchview Properties LLC. $98,755.
Condominium at 23 Forest Dr to Thomas Powers from Birchview Properties LLC. $98,755.
According to app.com’s DataUniverse, this Thomas Powers dude already owns 8 properties in the Birch Glen complex, and now he just bought 4 more. What is he trying to be, some kind of suburban slumlord?
#260
Maybe the owner(s) are transferring deeds to LLC’s? I checked the MLS and all recent solds are 300k+. Not sure why they would pick $98,755 as the sale price though.
Syb, right, don’t transfers usually have $1 or $10 or something similarly token? $100k isn’t a token payment but it’s wayyyy below ‘peak’. I wonder if my comps just got busted. Very interesting situation.
Syb, oh and the sales are from an LLC (the builder) to these individuals, thomas powers and cheechio. Not from the people to the LLC.
#240, Fannie fighting with Ginnie? Or is it just that the 417k piece can’t be 100% LTV?
New VA Loan Limits:
Ginnie Mae who is the government chartered corporation that insures VA Loans has raised their loan limits. The new loan limit for VA Loans is $650,000.
Even though the VA Loan limits have been raised, loans that are above the conforming loan limit, $417,000, do not carry the same guidelines as a traditional VA Loan. The qualifying veteran is required to cover 25% of the difference above $417,000.
Example1: buying a home for $480,000 with a VA Loan, the VA will fully insure the first $417,000 and then they will insure the remaining $63,000 as long as the Veteran comes in with 25% or $15,750 of that $63,000.
Example2: a veteran wishing to purchase a home valued at $600,000 will need to provide a cash down payment of $45,750 – 25 percent of the difference between the $417,000 VA loan limit and the actual purchase price of $600,000.
The bloodbath in Hardyston continues..
Although I’ve got to wonder if this is a straw buyer/mortgage fraud situtation. Did they buyer even make one payment?
6 White Oak Court, Hardyston NJ (Crystal Springs)
Purchased: 10/10/2007
Purchase Price: $825,110
MLS# 2353980
Original List Price: $875,000
Current Asking: $748,900
DOM: 391
264
I’m not seeing anything show up in the MLS.
Syb 267,
I don’t know what to say. Unless the site I’m looking at is just making sh1t up.
FWIW i’m getting this from http://www.aboutourtown.com/towns/pi/realestate/pi_real_index.htm.
BTW this is a brand new development with quite a few unsold units. These sales, best I can tell, were from the builder directly to these two guys (powers and cheechio).
Wayne Comp Killer
10 Gannet Court, Wayne NJ
Purchased: 05/26/06
Purchase Price: $525,000
MLS# 2455715
Foreclosure/REO
Current Asking: $464,900
11% below 2006 price
#269
Sales aren’t necessarily always captured in the MLS. Link doesn’t work on my work computer.
Livingston comp killer
92 Belmont, Livingston NJ
Purchased: 10/6/2006
Purchase Price: $530,000
MLS# 2472770
Current Asking: $469,000
11% below 2006 price
wow, people who chased after a few extra bps by putting money in a Countrywide CD must be feeling pretty dumb right now. I believe I saw several personal finance articles in the last couple of months (including one by Ben Stein) advocating taking advantage of this “extra” yield.
#242
Hey make, how does that lease site work? Seems like an interesting concept.
Vernon comp killer
2 Opeechee Rd, Vernon NJ
Purchased: 6/15/2005
Purchase Price: $369,000
MLS# 2426659
Short-sale
Original List: $374,900
Current Asking: $309,900
16% under 2005 purchase price
grim, none of those are as precipitously low as 98.755K! 50% drop just got blown out of the water, that’s probably closer to 70%.
We must be very generous people ..bailing out all “unscrupulous’ folks, businesses and mac-mansion owners .
“Bernanke will top Greenspan. He’ll make the Interest Rate (-5%) Negative, for first time in US History”
Oh no! Upper Saddle River comp killer
44 Echo Ridge Road, Upper Saddle River, NJ
Purchased: 4/6/2006
Purchase Price: $974,000
NJMLS# 2745377
Current Asking: $959,000
(w/ new kitchen and other updates)
Grim 266 purchase date ?.But anyway keep the hits coming for my area.Thanks
#252 The Fed is going to do what it can do to avoid a recession.”
And my question is why the need to avoid a recession. They are part and parcel of a capitalist system.
#169 reinvestor: Its not going to stop the housing collapse, crybaby. Watch and learn grass hopper.
#92 I am looking for a townhome.
Those things along with co-ops always get hammered with a real estate bust. I would wait and shoot for a SFM, assuming that is what you really want.
#99 My agent friend says that prices are “stablizing.
She is either totally cluless, or a lair, or both, not who I would want for a friend.
#106 kettle:this bubble will not be the same as the late 80’s early 90’s bubble, that market behavior would probably be a good
Its going to be worse, much worse, than the 80’s/90’s downturn.
#103 grim No Bergen?
#126 bi:where is slow-down?
One house allegedly goes into contract and that means no slow down.
#144 ann: Nobody blamed the media for the hype on the ay up, they were just reporting what was happening, well its the same on the way down.
#153 bi: My point is the natural demand is still there.
My point is you need to be medicated, heavily.
3b
i agree, this bubble burst is going to blow the 80’s out of the water. I was trying to give someone who doesnt seem familiar with the situation a rough idea of what we are looking at…
On another note, i have to ask, bernanke and Co are not idiots they know how bad the financial/housing situation is better then we do. SO that leads to the questions, are they incompetent? probably not. Are they political hacks who are just figure heads? probably not entirely but perhaps a little. Or, is the situation so bad that they know that they cant really fix it without serious collateral damage, or they can try to keep this puppy limping along until they have gotten paid and left office.
I vote for the last option. Greenspan, heli Ben and CO know what they are doing. it boggles the mind to consider how messed up and corrupt our financial system must be for the people controlling national finance to take actions that a bunch of blogging junkies can tell you is only going to deepen the hole.
Friend of mine send me this link from CA….do we see any similarities in NJ???
http://www.californiahousingforecast.com/commentary/2008/1/8/most-bank-owned-homes-in-san-diego-not-listed-for-sale.html
If nothing else Paulson & Barnanky should throw Greenspan to the wolves, as the Economy Unravels. I would suggest they appropriate his ill gotten gains, and let him live the remainder of his days over Geppeto’s Shoe Repair Shop in the Bowery. He can carve little Puppet Boys with short rather then long noses.
Ron Paul just aced economic sit. at debate,nobody seems to get it.
make (212)-
I’ll congratulate you when you close out your position.
Ann (223)-
“I’ll tell ya, as much as I’m not sure some realtors deserve the amount of money they get on a deal…they really do put up with a lot of emotional crap.”
Ann, I tended bar in college. Dealing with drunks and breaking up bar fights is easier than RE.
Frank (248)-
You nailed that. make had better read that twice.
sync (261)-
Who is the LLC? Amerigo Checchio is a Somerset-based builder/developer. That could be the LLC selling at a “special” price to its principals.
wow, all of grim’s stories together look like a tusnami. Good news in all is for Ann’s new house.
Best to you and your family!
just a note on some comparisons to the late 80’s. My husband bought his townhouse in 89 at 50% off the others. The neighbors literally would not talk to him. The property was flat for about 7-8 years then took off like a rocket. late to the post from the other day, but 50% is not out of the question…timing will be everything.
Ron Paul just aced economic sit. at debate,nobody seems to get it.
Ron Paul was spot-on. The candidates were asked if we were headed for recession…all pretty much gave the same canned response, “Amierica is strong…the fundamentals are strong…there doesn’t need to be a recession…we need to cut taxes (so people have more to spend)…blah blah blah”.
Ron Paul said low interest rates created misallocation of capital within the economy leading to a credit & housing bubble. He said lowering rates again will only make the inevitable recession worse later. He mentioned the Austrian school of Economics.
Went over 98% of the heads in the room.
Clot #296, Birchview Properties LLC is the builder, I believe they are associated with Lackland Associates in Warren. All the new units that were sold in Birch Glen in the last few years had Birchview Properties LLC as the seller.
FWIW I have heard Lackland Associates is going to start demolishing the existing abandoned office building at 1 Possumtown in the spring (adjacent to Birch Glen) and begin construction of low to moderate income rental units at that site. I don’t know if it’s related to this or not.
Renting They all just looked at him like he was crazy.These guys are not stupid you would think they at least understand his point.
mke (300)-
They ARE stupid. That’s why they’re politicians.
” He mentioned the Austrian school of Economics.
Went over 98% of the heads in the room.”
Eh, I’m sure the Christian Coalition crowd followed it perfectly.
Paul would be taken more seriously on economics if he wasn’t an isolationist.But he is right we don’t have the money for all of are overseas commitments we have to use are money where it will do us the most good & the hell with the rest of them.
WOODBRIDGE — : The Keasbey waterfront may be targeted for redevelopment, and the results of an exploratory investigation were scheduled to be heard by the Woodbridge Planning Board Wednesday night.
…
The area covers 46 acres bordered by Smith Street, the Garden State Parkway, Crows Mill Road and the Raritan River.
…
… [mayoral spokesman] Hagerty said the Keasbey waterfront is not being considered for residential development …
http://www.thnt.com/apps/pbcs.dll/article?AID=/20080110/NEWS010201/801100449/1001
House Hunter Says:
January 10th, 2008 at 10:34 pm
just a note on some comparisons to the late 80’s. My husband bought his townhouse in 89 at 50% off the others. The neighbors literally would not talk to him. The property was flat for about 7-8 years then took off like a rocket. late to the post from the other day, but 50% is not out of the question…timing will be everything.
I have a hard time thinking that timing a 7-8 year flat period will be that difficult. It will only be difficult if you think you can time the market and catch it right before it “takes off like a rocket” again (which I don’t expect anyway).
Another example of how the Indian CNBC differs from our version.
They were discussing the BOA buyout of CFC. They pretty much summed it up with two sentences.
1. BOA made a big mistake with their first loan to CFC at $18/share.
2. At $5/share, they could make up for their earlier purchase and recoup some of their original loss.
They then went on to discuss the Tata Nano, which is going to take this country by storm.
Personally, I don’t think this deal will go through unless the purchase price CFC is offering is $8 is more of a gamble than originally purchasing CFC at $5.
Disclaimer: I am clueless. Taking financial advice from me is like borrowing underwear from a homeless person.