Jayne and I were both home from work earlier than usual yesterday. We decided to take advantage of the little light left in the day and take the dog to the park. We packed up as usual and off we went, a normal day. We walked up the block, and rounded the corner towards the park, and were about half way through the 2 minute walk to get there. We walked passed a two family house with a large pile of cardboard boxes out front. I noticed these the other day too, odd since we were nowhere near “recycling day”. The neighbors were obviously upset about this, since there was a nastygram from someone on the pile of boxes, and a sticker from the trash pickup about when recycling came around.
I muttered something to my wife about the “neighborhood going to hell”, and got a dirty look in return. About this time I noticed a yellow form taped up on the door, at first I thought it might have been a notice from the police about the trash. I couldn’t help myself, I had to go see. So I walked over, and couldn’t believe what I saw.
I’m not sure why it came as such a shock to me, I look at these things all day long. I’ve sat through Sheriff Sales on a number of occasions, and while they aren’t particularly uplifting, they usually aren’t ever shocking
Jayne, wanting nothing to do with my nosiness, was down the block already. I called for her to come back and take a look, she did. She managed to get out an “Oh my god”, and looked pretty shocked herself.
Was it just that I didn’t expect it? I did. Maybe I just didn’t expect it to hit someone so close to home?
From Bloomberg:
Moody’s, S&P Reviewing Bond Insurers as Losses Mount
Moody’s Investors Service and Standard & Poor’s increased their scrutiny of bond insurers after losses on subprime-mortgage securities prompted Ambac Financial Group Inc. to report writedowns of $3.5 billion.
Ambac may lose its AAA credit rating after reporting larger losses than the company previously indicated, Moody’s said in a statement yesterday. S&P is examining all bond insurers after increasing its predictions for losses on subprime mortgages.
Moody’s and S&P are starting new reviews one month after affirming ratings on New York-based Ambac and MBIA Inc., the two largest bond insurers. Both companies slashed dividends and announced plans to raise $1 billion to shore up capital and retain their top rankings.
“No one knows when the end may be in sight, including the raters,” said Richard Larkin, a municipal bond analyst at JB Hanauer & Co. in Parsippany, New Jersey. “The rating agencies have lost as much credibility as the bond insurers. Every time you turn around they’re changing their minds about what’s going to happen in the subprime-mortgage market.”
From the WSJ:
Countrywide Adjusts
Terms on Some Loans
By JAMES R. HAGERTY
January 17, 2008; Page A3
Countrywide Financial Corp. said it modified terms on loans and took other steps to allow 81,266 struggling mortgage borrowers to remain in their homes last year.
The Calabasas, Calif., lender is under pressure from politicians and regulators to prevent foreclosures where possible. Lenders also often find that they are better off accepting lower monthly payments from a borrower than going through a foreclosure, which typically results in a large loss. Those potential losses are even greater now that home prices are falling in much of the country.
Countrywide, facing big default-related losses, last week agreed to be acquired by Bank of America Corp. for about $4 billion in stock.
In a further 7,880 cases last year, Countrywide said, it agreed to “short sales,” in which the borrower sells the home for less than the loan balance and the lender agrees not to demand the remaining amount due.
Countrywide said it expects to modify loans or otherwise help even more borrowers this year. The company acts as the loan servicer, collecting payments, for about nine million home loans.
Foreclosure: coming to a neighborhood near you.
As much as I’ve been immersed in this world for the past six months or so, there’s something surreal about constantly dealing with people on the edge of ruin. Inevitably, much of the denial, despair and uncertainty of my clients has bled into me. Every approved short sale/mitigation becomes a cause for celebration; a short sale denied equals a stinging defeat (not to mention a lot of time and effort down the tubes). For some reason, when I can’t effect a solution for a client, I track the house all the way through to the sheriff sale. Why? I don’t know. Why does the coach of a football team, losing 40-0, stay on the sidelines and watch the game to the end?
The first thing I do each day is come here. Second, I pore over the list of new lis pendens filings. Third, I process and mail letters containing an offer of help to those newcomers to the dark world of the almost-foreclosed. In short, I’ve become the real estate equivalent of a funeral director. For these people, the best outcome I can effect is a workout that will short lenders, force the client from his home and- even though the black mark of foreclosure is avoided- wreak short-term havoc on his finances. Often, an undertaking of a post-short-sale promissory note to the lenders is required of the borrower…just to effect a most unsatisfying solution. At least it’s heartening to see that a surprising amount of people will go to extraordinary lengths to save their credit…even when walking away could be construed as the more prudent (and money-saving) choice. It is a sad state of affairs when foreclosure- or deed in lieu- is increasingly the best choice for thousands of strapped borrowers.
Make no mistake: more pain is on the way. I’m now noticing more high-end (home over 750K) lis pendens filings, more condo association liens for unpaid HOA dues (a sure-fire precursor of lis pendency) and more tax sale certificates.
http://www.cbsnews.com/stories/2008/01/16/earlyshow/contributors/raymartin/main3719955.shtml
Make Your Money Recession-Resistant
So did the dog enjoy his time at the park or what???
Heard through the grapevine a coworker is buying a place in Ewing. She’s a nice enough person but the tern “young and dumb” is probably not too far off. She’s also what many would call lazy. She dropped some word about attorney review the other day and somebody asked, “What kind of loan are you looking at?” Her response: “um, I don’t know I don’t really have to figure out until after attorney review, right?”
There are a lot of smart people at our office who are more than willing to give out advice if asked but she apparently sought none. There is also no doubt mommy and daddy are involved heavily, so maybe that’s why she thinks “interest rate” is the amount of time a bank spends looking at you and your hair over the year.
Clot [3],
You’re turning me into a bear.
I must be mistaken. I thought the first thing in the morning, you tapped into Larry Crudelow?
#3…Clotpoll is simply enjoying his daily cup of schadenfreude…with a morsel of moral superiority thrown in for flavor.
“Merrill Lynch & Co. reported a second straight quarterly loss after writing down $11.5 billion of subprime mortgages and bonds, ousting its chief executive officer and losing almost half of its market value in 2007.”
“The fourth-quarter net loss of $9.83 billion, or $12.01 a share, compared with earnings of $2.35 billion, or $2.41, a year earlier, New York-based Merrill said today in a statement. Analysts were estimating the largest U.S. brokerage would post a loss of $4.82 a share, according to a survey by Bloomberg. The decline resulted in Merrill’s first full-year loss since 1989.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aaUBMjNO.U0c&refer=home
When I did the interview for the Herald, the reporter asked me if I was happy about my predictions having come to fruition.
Yea..
About as happy as a doctor finding out his terminally ill patient died right on schedule.
Essex, do you really think the feeling toward your work and clients can be schadenfreude when it’s your livelihood and it’s feeding your kids?
Oh, 9 there you go, grim.
Everyone loves a disaster. We are fascinated by mortality. Admit it. You feel relieved it did not happen to you…yet.
SX (7)-
Schadenfreude? How so? What glee is there in dealing every day with people immersed in a world of shit? I’m a lot of things, but a sociopath isn’t one of them.
Whatever judgements I may make of my clients, they stay with me…and, they are certainly not helpful or relevant to the mitigation process.
You might be surprised to know that I don’t spend much time at all thinking about how my clients got to the point they did. At the core, their stories are all the same: you already know the plot and denouement if you’re a regular here.
As far as moral superiority, well, I have my own personal history to keep that tamped down. When I got into RE as a serious pursuit, I was 90K in the hole and pretty much foreclosure bait myself (and that was in an UP market). A little help from the family and some fortunate breaks pulled me away from the brink. However, the scare from that is one that lasts a lifetime.
There is no surer way to screw up RE deals than by passing judgement on people, then acting on the (usually) erroneous assumptions that flow from that judgement.
Grim in fact next to ogling disaster, we love the feeling of vindication. Not having fallen for the bait and swimming away free. Something like your experiences in the market.
Ah clotpoll, the reformed addict. I forgot that one….strong sense of moral superiority coupled with a faux empathy accompanies that one.
From Bloomberg:
U.S. Housing Starts Probably Fell in December to a 14-Year Low
Builders in the U.S. broke ground on fewer houses in December, making the year’s decline in homebuilding the worst in almost three decades, economists said before a report today.
Housing starts fell to an annual rate of 1.145 million, the lowest in 14 years, after a 1.187 million pace in November, according to the median forecast of 74 economists in a Bloomberg News survey. Residential construction probably declined 25 percent last year, the most since 1980.
Building permits may also have fallen, suggesting the housing slump will deepen as it enters a third year and threatens to push the economy into recession. Rising foreclosures will throw even more houses onto the market, hurting property values and further discouraging construction.
“Housing activity weakened noticeably as the year concluded,” said Peter Kretzmer, a senior economist at Bank of America Corp. in New York. “With inventories high and credit restrained, housing activity will remain at depressed levels at least through the middle of the new year.”
The Commerce Department will issue the report at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from 1.05 million to 1.2 million.
This past summer I saw a house across town that was in foreclosure. It belonged to a boy in my daughter’s class and his family. Very sad – divorce situation and struggling for years to keep the house. Every now and then for years I would see the first notice in the paper but they would be able to pull back. The mom really tried to keep the house but I don’t know that it was worth it. I remember one day the boy coming to school wearing his mom’s sneakers because he left his at his dad’s. The kid had only one pair of shoes. He is actually the nicest kid you’d ever want to meet. They moved to a garden apartment in town and are probably doing much better. I think the mortgage amount was around $360,000 so their rent must be lower than their mortgage payment.
Anyway, the bank finally foreclosed this summer and it was bought almost immediately. It’s a four bedroom cape that was in rough shape. I just saw that it’s back on the market for $450,000. they’ve done a lot to it but I can’t believe someone is trying to flip in this market.
SX (12)-
“You feel relieved it did not happen to you…yet.”
SX, you must not have walked into a RE office lately. Believe me, I do it every day…and the thought usually comes at some point every day that it COULD happen, and soon. A bad deal here, some fall-throughs there, some agents have a bad month or two…and all of a sudden, you’ve got some bad momentum going.
I have a small gang of very tough, experienced agents, but their experience and toughness only gives them a chance- not a guarantee- that they’ll make it through this sea of crap. I’ve lost count of the times that I’ve carried a desk fee balance forward or given away a personal lead to one of my gang…just to keep someone going. Any broker/owner that tells you right now that things are hunky-dory is either lying, delusional, or both. Until prices come down and deal volume rises- at least a little- survival is the name of the game. Take a look at the stats here, and you can see that no good RE agent is missing deals…there just aren’t many deals happening.
SX (15)-
“I forgot that one….strong sense of moral superiority coupled with a faux empathy accompanies that one.”
The only whiff of moral superioity I sense is blowing from your direction.
5 Cirrus
Tell your friend to avoid buying in Ewing if she can, especially in this downturn, that will be the first town in Mercer to really go way down. Well, other than Trenton, but that’s already been decimated.
Essex,
I would have been happy as a homeowner, a house appreciating at/near the rate of inflation. Unfortunately, buying a home became trading commodities. It was the soybean pit, in the middle of a drought. Some recognized it and decided to move on, others decided not to participate. I don’t seek vindication, markets are too humbling. As soon as you pat yourself on the back, you get slammed over the head with a 2×4. You have to constantly keep your eyes open for the next freight train.
Should those that exhibited prudence be interrogated?
Hope My landlord pays his mortgage … Bad idea to rent a house
BC (21)-
Our friend, Essex, obviously doesn’t participate in any markets.
Re Schadenfreude
There is some housing Schadenfreude going on for sure, in general. Example, look at Britney Spears, we can’t stop watching her downfall, the girl is literally dying on the TV and the ratings are going up, up, up. Or watching Supernanny. Why is that show so popular? Isn’t it to give ourselves a pat on the back and say, I’m a good parent, these people are terrible.
As far as housing, it’s the same. No one wants to see real people we know go through pain, but we can’t stop watching.
Some people think that people in the hole brought it all on themselves, were greedy or stupid; some think (like myself) that the government is to blame for letting this mess happen. If you were shut out of the housing market during the past few years, you might be rooting for the news stories that show the decline and booing when the gov’t says they are going to do something to bail people out.
I saw an interesting article the other day on National Debt, which indicated every man, woman and child is on the hook for $30K to pay it off. I immediately computed $30k x’s 10 = $300K to figure what I needed to pony up for the immediate family of kids and grand kids and decided it was doable. Then I looked beyond that for other items Society needs me to pay for, e.g. Entitlement Programs, ever expanding taxes, etc., and went Tilt. The biggest problem I see is so many promissory notes (e.g. Pension Funds)have been written based upon a Stock Market that must always rise (Irrational Exhuberance), that the number I am due when it Fails to defy Gravity, is larger then my life’s earnings. So, maybe it’s time to turn off the TV, disgard the newspapers, shut down the PC, and pretend “Ignorance Is Bliss”?
Ann (24)-
True dat. One thing for sure: you can tell the losers from the winners- on either side of the housing debate- by identifying those who are obsessed with assigning blame. That’s the big difference between a blog like this (mostly forward-looking) and a sewer like housingpanic (the ultimate finger-pointing LOD).
The door’s blown open, and the horses have left the barn. Pretty much everyone and every institution can accept a little of the blame. The much more interesting question is: what comes next?
Clot (13)Fpr me, best way to learn a lesson is to live it. I’ve screwed up so much – I wouldn’t dare pass judgement. I wish people would live within their means but having learned the hard way myself how can I expect others to be any different.
BTW -“Bring back debtor’s prisons.” from the other day was priceless. Talk about learning the hard way.
Quite the private vs. public sector conversation yesterday. The benefits here in Calif. vary district to district. Gone are the days of the life-time benefits. All new hires operate under a new, more austere set of rules. My district has always had a 10% cap on insurance. Retirees pay for coverage…copays for visits/meds. as do current employees. Current employees have 8% (then matched by district) taken from their checks for retirement plus medicare. No SS. In a neighboring district, if you didn’t retire with your 30 years in last year – no grandfather clause – you lost life-time benefits.
confused #228 – I have no idea if a person can marry again and have that 16 year-old covered by their insurance…don’t intend to marry again.
The governor unveiled his plan to cut 10% from this year’s budget across the board. That translates to $4B this year for schools and $14B next year. He has declared a “finacial crisis” so he is able to suspend prop. 98 that quarantees 40% of the budget go to schools. They say 600 of the 1000 districts in the state will be in the hole. (They have to carry a 2% reserve.) My district will be fine. No raises – we never get raises unless the money is there.
In Calif. -due to prop.13- we work with an unstable set of numbers each year..income tax and sales taxes plus a restricted property tax number. So we have good years and bad. Many assumed we had some in reserve due to our great influx of funds last year – we do not. But that doesn’t seem to be stopping the governor from going forward with his plans to start up a $14B health care program. And there is the QUIA (at a cost of $4B) program – Not even implimented yet. All they would need to do it wait on that then the cuts for this year would not even be necessary. QUIA gives money to “under-performing schools” so they can attempt to meet the “no child left behind” standards. My district won’t see a penny because we run test scores above the 800 mark.
Some say the governor is only posturing to try to get the dems/reps to work out a tax cut/spending cut budget for next year. I’m not sure how it will all play out.
One thing for sure..the numbers (re sales and foreclosures) are only getting worse…for now. California is a funny state. You never know what to expect.
From MarketWatch:
Housing starts plunge 14% to 16-year low in Dec
Construction on new homes fell 14% in December to a seasonally adjusted annual rate of 1.01 million, the slowest monthly building pace in more than 16 years, the Commerce Department reported Thursday. Housing starts for single-family homes in the West fell 16% to the lowest level since the data were first collected in 1959. National housing starts were lower than the 1.12 million pace expected by economists surveyed by MarketWatch. Building permits fell 8% in December to a seasonally adjusted annual rate of 1.07 million, the lowest since May 1993. For all of 2007, housing starts fell 25% to 1.35 million, the lowest annual total since 1993.
From MarketWatch:
U.S. Dec. housing starts fall 14% to 1.01M v. 1.12M expected
U.S. Dec. building permits fall 8% to 1.07 million pace
U.S. 2007 housing starts off 25% to 15-year low
U.S. Dec. West housing single-family starts at record low
U.S. 2007 building permits fall 25% to 12-year low
U.S. Dec. housing completions fall 8% to 1.30 million
From the U.S. Census Bureau:
NEW RESIDENTIAL CONSTRUCTION IN DECEMBER 2007
WASHINGTON MUT INC SUB NT 8.25000% 04/01/2010
Basic Analytics
Price (Ask) 95.501
Yield to Worst (Ask) 10.595%
Yield to Maturity 10.593479%
OK, I told you guys to bout the countrywide bonds, that should shoot back to par if they got taken over. I am “guessing” the wamu bonds will pop to par if chase makes a move. If not YTM is almost 11% and the only risk is they have a complete bankruptcy. Seems the vultures screw the commmon stockholders on the deal but they can’t screw the bondholders.
Grim,
I usually just wander thru and rarely comment…I gotta say though,I hope New Jersy doesn’t end up as bad or even in the ballpark as SW Florida is right now. Our county had as many FC’s as sales in Dec. 5 outta 9 homes over the last three years on my street. None resold yet. And its getting even uglier.
Like i said…Friends and Family are in the area so i hope it doesn’t get to ugly…
Chris
John (31)-
“…the vultures screw the commmon stockholders on the deal but they can’t screw the bondholders.”
Same as it ever was.
Cramer in full rant on CNBC right now.
Everyone,
Get-together will be on Saturday February 9th in Morristown.
For those who can’t make Morristown (although I beg that you try), we’ll be getting together on the Gold Coast somewhere in the March/April timeframe for a “Spring Market Kickoff”.
Still working on selecting the venue in Morristown.
From CNBC:
PNC Financial Profit Falls on Higher Credit Losses
PNC Financial Services Group, Pennsylvania’s largest bank, on Thursday said fourth-quarter profit fell 53 percent, hurt by higher credit losses and the lower value of commercial mortgages in its portfolio.
…
“Fourth-quarter performance did not meet our expectations due to challenges that included unprecedented market volatility and credit deterioration in our residential real estate development,” Chief Executive James Rohr said in a statement.
Merrill Lynch’s (MER) fourth quarter was uglier than even the biggest bears on Wall Street expected. The brokerage firm lost $10.3 billion, or $12.57 a share, from continuing operations for the quarter ended Dec. 31, reversing the year-ago profit of $2.2 billion, or $2.29 a share. Analysts on average were looking for a loss of $2.41 a share, with the most negative view an $11-a-share loss expected by analysts at Citi. The latest quarter included an $11.5 billion writedown of Merrill’s exposure to mortgage-related securities, and a $3.1 billion loss tied to credit valuation adjustments on hedges with financial guarantors on collateralized debt obligations. Because of the writedowns, revenue for the fourth quarter swung to negative $8.2 billion from positive $8.4 billion a year ago –
Anyone here familiar with Monmouth county real estate? I’m looking for a townhouse near the shore (Little Silver to Long Branch area) for a weekend place and have been casually browsing realtor.com, but haven’t really noticed any pricing trends.
I’ve got a pretty broad price range in mind at the moment; $400k-$750k.
Here’s one I was looking at today: MLS ID# 20802167. Looks like a new listing, asking $759k.
At the lower end of my price range, there is this: MLS ID# 20800374, asking $419k.
Any helpful insights on the area would be much appreciated. Also, any suggestions on a good broker in that area?
From the AP:
Home Construction Drops 25 Percent
The prolonged slump in housing pushed construction of new homes in 2007 down by the largest amount in 27 years with the expectation that the downturn has further to go.
The Commerce Department reported Thursday that construction was started on 1.353 million new homes and apartments last year, down 24.8 percent from 2006. It was the second biggest annual decline on record, exceeded only by a 26 percent plunge in 1980, a period when the Federal Reserve was pushing interest rates to post-World War II records in an effort to combat an entrenched inflation problem.
Many economists believe that the current slump in housing will rival the dive in the late 1970s and early 1980s when housing construction fell for four straight years before beginning to recover after the severe 1981-82 recession. For December, construction fell by a bigger-than-expected 14.2 percent.
“Seems the vultures screw the commmon stockholders on the deal but they can’t screw the bondholders.”
John: Very often in complicated bankruptcies the administrative expense claims (lawyers, investment banks involved in asset sales) are so massive that they’re the only people who get paid. While bond holders have priority over stock holders, they’re still unsecured lenders who lose to holders of administrative expense claims and there’s a good chance of bond holders getting nil from the restructuring process.
27. Cindy Says:
confused #228 – I have no idea if a person can marry again and have that 16 year-old covered by their insurance…don’t intend to marry again.
I was just curious. Years ago, spouse had to be covered > 3 years prior to retirement for Public Sector retirement, so was surprised when a Private Sector Widow, without Retirement Medical Insurance, was getting Public Medical Insurance by marrying a Teacher post retirement. Of course all the rules have changed nowadays, anyway.
California is really hitting the big issues, sooner. I’m doing my part for Medical, I dumped my Vytorin months ago and started walking six miles a day instead. Cheaper & no negative side effects.
“When I did the interview for the Herald, the reporter asked me if I was happy about my predictions having come to fruition.”
Being right about something unsavory makes you a bad person, dontcha know…
Confused (41) I think the key has got to be “stop the bloodletting.” New hires can not have the lucrative packages of the past. Everyone here is adjusting. Also, some county employees who received that “OT plus salary” formula are being challenged in court. I of course never know details but the practice has stopped and those receiving the skewed formula are being challenged.
Confused (41)-
Vytorin = Pez, with better marketing and worse side effects.
Confused also.. Our PERS system is solvent for now but I read the NJ 4/07 report from yesterday with great interest because in tough times, “who knows what who will do.”
I printed up the 5 pages and gave it to my faculty senate leader last night and asked “Do we have someone all over this?”
Evidently – we do!
Grim #9, I look at it more like a patient with an infected and impacted tooth. The situation couldn’t go on forever and in the short term will hurt more, but getting it done is the most important thing.
Here is a gem from 2005 to remind us all of how much better it is to be a buyer today:
http://www.realestatejournal.com/buysell/tactics/20050620-efrati.html
22
Lol!!!
If your landlord can’t pay his mortgage, who’s worse off; you or him?
OK, as I am now here and not moving here I can’t be NJ bound (or maybe I am as I would have to pay back relo expenses if I moved again) so I will change the name.
Would someone with MLS access be kind enough to dig up the address, LP, OLP if there is one and DOM for 2455749?
thanks very much
kiwi,
31 Garibaldi
Listed: 10/22/07
OLP/LP: $849k (no price changes)
DOM: 87
No prior history on GSMLS
Purchased 9/5/2003 for $270k (prior to remodel, obviously).
#46 – a contract to feed squirrels forever? I would be interested to find out the implications of violating such a contract. Does the new homeowner have to give up his house? And what if some terrible intruder wearing a ski mask and black suit poisoned the squirrels when the poor homeowner was out of town for the weekend? I mean, surely the buyer would not be responsible for such an unfortunate happenstance?
35
“Still working on selecting the venue in Morristown.”
Someplace with boooze.
I am assuming I am only purchasing investment grade non mortgage related banks like Wamu, Captial One, Suntrust, Soveign type bonds. Firms that are distressed, but still maintain investment grade rating, pay at least 7% interest and are below par. I am guessing if things get worse, chase, wells etc. might buy them if commmon falls to crap and they will shoot back to par, or the Fed may help pay them out, also “brick” banks have lots of physical assets which help in a default. Banks often have huge real estate holdings and securtitized loan portfolios. I would not buy more than 5K bond in each of the banks. You can get wiped big time in a enron type bond of a firm with little physical assets. The bondholders get zero yet they did not particpate in the rapid stock rise. They took on all the risk of the common stock holders with much less possible reward.
Bonds of beaten down banks are now in an unusual state. The bondholders take on less risk yet have more reward. If you bought country wide bonds you were much better off than the country wide stock holders with less risk.
This is just chump change but for someone with 10-20K rolling out of a cd into a new low rate cd it might be worth a shot.
“Vytorin = Pez, with better marketing and worse side effects.”
ha! although if they sold Vytorin in little Snoopy dispensers……
Ah, the “feed the squirrels” article! That piece is a housing bubble classic.
#3 Clot: There were time I would think I would take great satisfaction from being right, particulary with some incredibly obnoxious housing bulls along the way.
But my wife would pull me back with her one line “if you do this, you will become just like them, is that what you want? And the answer was always no.
A family friend asked for advice a couple of years ago, newly married, wanted to buy a town house, we told them that they are young, and might want to consider renting, enjoying themselves, and wating for this thing to work out.
They thought it was a great idea, until 3 months later when they actually bought a town house (Orange Co), we remained silent.
Long story short 2 years later, baby comes they want a house, and they were dismayed when the realtor told them units exactly the same as the one they own,are on the market with asking prices of 50k or more less, than what these guys paid for theirs in 05.
Now they are stuck (down payment is gone), no satifaction on my part, just very, very sad.
3b (55)-
Nothing funny about that at all.
From Bloomberg:
Convicted Appraiser Exposes Toxic Debt Tie to Inflated Values
Home appraiser Julian “Tony” Perez conjured $7.5 million out of thin air in the first six months of 2001 by overvaluing 33 condominiums in the Atlanta area.
Perez valued eight unfinished properties at the Deere Lofts development on April 2. Some were missing ceilings, cabinets or sinks. Each had been bought the previous week for $90,000 to $167,000. Perez said they were worth $177,000 to $330,000, according to the U.S. Attorney’s Office in Atlanta.
“These are the worst condos ever,” Perez said last January during testimony at the federal trial in Atlanta of developer Phillip Hill, who used the appraisals to resell the properties. “Those values are super over-inflated, probably double what the amount of that property is probably worth.”
Perez and appraisers like him helped exaggerate U.S. mortgage values by as much as 10 percent, or $135 billion, in 2006, according to Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School in Philadelphia. Such appraisals artificially inflated the value of collateral supporting mortgage-backed securities and are contributing to record foreclosures because borrowers end up owing more than their houses are worth.
Lenders and investors in mortgage-backed securities depend on independent appraisals to value their collateral. Buyers use them to make sure they aren’t overpaying.
3b, were those the new ones by Monroe-Woodbury?
46
I look at as being somewhat akin to grim being in the leading wave of docs who recognize that smoking cigarettes causes death (let’s say it’s the ’20s). He tells folks that smoking is probaby not a good idea. BC Bob and Chifi quit smoking, but grim mostly just gets ridiculed or ignored, while HGTV does half hour shows about which starlet looks the most glamorous holding a cigarette.
Then, all the smokers start dying. The medical studies are done, and the consensus begins to build: smoking, not so smart.
A herald reporter shows up at grim’s door and asks “are you happy all those people are dying?”
I’ll bet grim’s happiest that any number of folks who read this blog acted prudently due entirely to or in large part because of the information presented here.
The reporter’s question implies that grim would have been happier had fewer people listened to him. That’s self-evidently absurd.
From GlobeSt:
Good News (at Last) for Asbury Park
This oceanfront city’s two-steps-forward, one-step-back redevelopment process got some bad news last month when the Hoboken, NJ-based Metro Homes announced it was halting construction on its high-rise Esperanza condo project, citing the state of the national mortgage market Metro Homes. City officials informed the developer that it was in default of its development agreement.
That issue has yet to be resolved, and it remains another bit of bad news for a city that has seen more than its share of bad news over the past four decades. But this week, city officials got some very good news when the Washington, DC-based Madison Marquette and locally based Asbury Partners, the master developer of the 56-acre Oceanfront Asbury redevelopment, unveiled the Asbury Park Initiative, a five-part plan designed to advance that revitalization and generate increased support from private companies in the community.
Grim – I know I got dissed for not realizing that the saying “The secret of success is to find a need and fill it” was an old marketing mantra…but you did…you filled an obviously gaping hole re information for your industry in NJ. Think of all you helped.
#58 I am not sure, but will check. I thought the development they purchased in was built in the late 90’s,but they are close to Woodbury Commons.
I heard a guy on CNBC this morning say that the decrease in housing starts is great news because that means they’ll clear out all that excess inventory. Am I crazy, or is that the most whackadoodle spin ever? Does that mean Mr. Toll is saying “Yippee! I have lots of time now to spend my money!”
hi…
can anyone comment on the website realtytrac.com? is it worth $50/month?
i was thinking of subscribing and trying to buy a foreclosure/preforeclosure property with their “wealth” of resources… i don’t have any experience with the buying of these types of properties, but i thought i should at least investigate…
thanks.
Chuck Schumer’s Banker’s bailout bill
S. 2346 is on the Senate’s calendar tommorow. I believe it will be up for a vote.
This bill will raise the Fannie Mae and Freddie Mac conforming loan limits for 6 months and is designed to allow sup-prime borrowers to refiance into “safe” affordable mortgages. This bill will definetly pump more liquidity into the mortgage market.
85% of the refiancing is supposed to go to only subprime borrowers.
I cannot help but conclude Chuck Schumer wants to throw good money after bad in the housing market.
Congress should only pass a law which instead of expanding Fannie & Freddie limits to accommodate more mortgage refiancing with government guarantees, it would be better to have Fannie & Freddie buy existing mortgages at 50 cents on the dollar.
This way American taxpayers won’t get stuck with the bail-out. Wall Street wizards, hedge funds, and their securitized holders should take the first 50% hit.
Write your Senator and tell them NO!
Ridgewood
SLD 635 ALBERT PL $609,000 8/17/2005
($10k over original asking price of $599,000)
ACT 635 ALBERT PL $599,000 1/16/2008
this is so off topic but i had to share this insanity:
Sports Illustrated – PORTAGE, Wis. (AP) — Upset that his 7-year-old son wouldn’t wear a Green Bay Packers jersey during the team’s playoff victory Saturday, a man restrained the boy for an hour with tape and taped the jersey onto him.
Mathew Kowald was cited for disorderly conduct in connection with the incident with his son at their home in Pardeeville, Lt. Wayne Smith of the Columbia County Sheriff’s Department said. Pardeeville is about 30 miles north of Madison.
The 36-year-old Kowald was arrested Monday after his wife told authorities about the incident. Kowald was taken to the county jail and held until Wednesday, when he pleaded no contest, paid a fine of $186 and was released.
Kowald’s wife filed a restraining order Wednesday, so Kowald will not be able to have contact with his family, Smith said. Smith said other domestic issues have surfaced, though he wouldn’t elaborate.
The boy refused to wear the jersey Saturday, when the Packers beat the Seattle Seahawks in a playoff game, Smith said. Smith said the incident sounded strange when reported at first, but the mother took pictures with her cell phone and that type of evidence is difficult to dispute.
Kowald, contacted later Wednesday by the Portage Daily Register, said the incident started as a joke. His son challenged him by saying he wouldn’t root for the Packers. When he tied the boy up, the youngster was laughing while his wife took pictures, he said.
“Then he couldn’t get out and he got upset and that’s it. It lasted a minute,” he said. “I didn’t mean no harm, and he knows that, but I haven’t been able to tell him that.”
District Attorney Jane Kohlwey said there wasn’t enough evidence to support felony charges.
“I wouldn’t agree with what he did, but legally a parent can restrain a child,” she said. “I have no proof of emotional damage. … I have to follow the law.
Thanks grim,
those are the ones I have to stay away from, I have no clue how to value ie is there really $579,000 worth of upgrades in the house…..
can anyone comment on the website realtytrac.com? is it worth $50/month?
jlx,
If you are interested in a smaller area, it is much less expensive to go over to the records office and ask for the most recent Lis Pendens or Notice of Foreclosure Sale records.
Even easier is to log on to your county Sheriff website and get access to the Sheriff Sale list, if available. For example, Bergen County:
http://bcsd.us/sheriff_sale.aspx
However, realize that the pickings are slim in the preforeclosure market right now. Those with even a shred of equity will attempt to sell. Those who don’t will make their way through the foreclosure process to auction. Few, if any, will bid on these properties as the bank upset prices are typically higher than what the property is currently worth (the owners are underwater, so to speak).
The best place to find opportunities right now are in short sales and REO (bank owned properties).
Leave the pre-foreclosure deals to the sharks.
Most don’t have the stomach for it anyway.
Unless you are OK with knocking on someone’s door, telling them you know they are going to lose the house, and trying to convince them to sell to you, even though you are probably the 4th person to contact them that day.
I think there is race to the bottom of negativity in the media – only few days left and we will hear Great Depression on the news!!!
From MarketWatch:
Bernanke repeats substantive rate cuts coming
2%!!!! 200bp:)
#71 Al: And yet nobody accused the media of cheerleading, when everything was supposedly great right? No articles urging people exercise caution, no articles outlining what might happen if things blow up (which they have).
So its only the media’s fault when the news is bad, when the news is good, they are only doing their job.
Its like some in politics who believe if you disagree, you are unpatriotic.
thanks grim…
so if i want to look in ridgewood, for example, would i just go to the ridgewood records office and ask for this list of lis pendens/notice of foreclosures? and just like that, they’ll give it to me for free?
i’m wondering if there are any opportunities to save money with foreclosures… is there a book you can recommend? or would you even recommend this route for a new home buyer? i’m not a handyman, but i don’t mind doing a bit of renovation myself…
thanks again for the advice (and your website)
Hey – I am not accusing media of negativity – I am just noticing that medial like to focus on negative a bit too much – I almost do not want to watch news as all you see are murders, robberies, deaths, and corruption.
I part what news are doing right now is convincing people that murders, corruption and crime are normal part of life.
Note that the Philly Fed survey includes portions of New Jersey…
From Bloomberg:
Philadelphia Fed Bank’s January Factory Index Falls to -20.9
Manufacturing in the Philadelphia region contracted more than forecast in January to a six-year low, adding to evidence factories are throttling back as the economy slows.
The Philadelphia Federal Reserve Bank’s general economic index declined to -20.9, the lowest reading since October 2001, from -1.6 in December, the bank said today. Negative readings signal contraction. The index averaged 5.1 in 2007.
The figures indicate that the housing recession, entering its third year, is dragging down other industries. At the same time, a weaker dollar and stronger growth abroad are boosting demand for U.S. exports, keeping factory output from collapsing.
“We’re pretty doggone close to saying `recession,”’ Daniel North, chief U.S. economist at Euler Hermes ACI, a trade credit insurer, in Owings Mills, Maryland, said before the report. “Producers of consumer and capital goods are clearly seeing an incoming recession.”
Economists surveyed by Bloomberg News had forecast the index would rise to -1.0 from an originally reported -1.6, according to the median estimate. The index averaged 5.1 in 2007.
N.J. shows December job gains
New Jersey added 3,700 jobs in December, wrapping up 2007 with a total gain of 29,400, state labor officials said Wednesday.
…
In December, jobs were added in education, health, leisure and hospitality, and professional and business services … Jobs were lost in construction and finance, especially in the mortgage industry.
#63 leavingqueens; Yeah, and now all they haev to do is find qualified buyers to purchase all of these houses.
From the Philly Fed:
Business Outlook Survey – January 2008
Activity in the region’s manufacturing sector weakened this month, according to firms surveyed for the January Business Outlook Survey. The general activity and new orders indexes fell sharply this month, and indexes for shipments and employment also turned negative. A significant share of firms reported a rise in prices for inputs and for their own manufactured goods. Also this month, the region’s manufacturing executives were less optimistic about future activity, and most future indicators have fallen considerably over the past three months.
…
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, fell sharply from a revised reading of -1.6 in December to -20.9, its lowest reading since October 2001 (see Chart). [footnote] Forty percent of the firms reported no change in activity from December, but the percentage of firms reporting decreases (41 percent) was substantially greater than the percentage reporting increases (20 percent). Other broad indicators also suggested declines this month. Demand for manufactured goods, as represented by the survey’s new orders index, fell dramatically, from a revised reading of 12.0 in December to -15.2, its first negative reading in 15 months. The current shipments index fell 17 points, from 15.0 to -2.3. Indexes for both unfilled orders and delivery times remained negative.
…
The outlook for manufacturing growth over the next six months was less optimistic than in December. The future general activity index declined from a revised reading of 11.1 in December to 5.2 this month. The index has declined 34 points over the past three months (see Chart). The percentage of firms expecting growth in activity over the next six months (32 percent) is only slightly higher than the percentage expecting decreases (27 percent). The indexes for future new orders edged down two points, while the future shipments index increased three points. Firms’ expectations for future employment, however, were virtually unchanged: The future employment index increased one point, and nearly 39 percent of the firms still expect to increase employment over the next six months.
#85 Its with the county, not the individual municipality.
Great, now the Fed chief who once stood tall and said housing isn’t affecting the economy is now panicking like Greenspan and going buck nutty.
sync,
NJ unemployment jumped to 4.5% in December from 4.2% the month prior.
from another blog
I figured out Bernanke’s 2008 economic roadmap
January 15, 2008
In early July of 2007, before the August panic, I sold everything and went 100% cash in several currencies. I held on to my cash for many months while studiously trying to figure out how the sub-prime fiasco would pan out and how the Federal Reserve would respond. I finally figured it out.
The first thing everyone needs to understand is that Ben Bernanke, the current Federal Reserve chairman, is an absolute nut. After reviewing some of his published papers (via Marc Faber’s reports) I am now convinced he’s a pompous arrogant asshole who doesn’t even understand basic economic theory. If you don’t believe me, just watch his answers to Ron Paul’s perfectly reasonable challenges on youtube then ask people in Zimbabwe if the only consequence to a weakened currency is higher prices on imported goods.
Ben Bernanke has spent his entire career proselytizing the omnipotent power of central banks to cure every economic flu with inflation — that’s right, inflation — and now he has control over the printing press. Have no doubt, he intends to use the American economy like a lab rat in a vain attempt to prove his asinine theories. He’s betting the stupidity and ignorance of average investors will compel them to believe fraudulent economic figures published by the government despite contradictory evidence produced by their own eyes and wallets.
Don’t get caught in their trap and don’t believe their lies. Wishful thinking is not a long term investment strategy. If you want to make money you have to put your emotions aside and wake up to the reality of this catastrophe. Inflation is not contained, it’s rising dramatically. GDP is not growing slowly, it’s contracting. The US dollar is not a valued currency, it’s worthless paper.
The second thing you need to understand is that all central banks around the world are working in collusion to export American inflation abroad. They are trying to spread price increases around the world to cushion the impact on America’s failing consumer driven economy. Despite what you’re hearing on typical business news propaganda networks, every major currency is being vastly outperformed by gold — even the Euro. And that’s not unique, in fact many commodities are rising faster than any of the major fiat currencies.
Ben Bernanke’s plan is simple. The primary cause of this economic calamity is that foreigners are no longer willing to lend Americans money to buy the goods they produce, therefore, the solution is to debase the US dollar by whatever means necessary to entice foreigners to re-enter American markets. He believes that frozen mortgage resets and government bailouts of corporations through money auctions will tide everyone over until foreigners are willing to come snap everyone up for pennies on the yuan. In that scenario, the market will hit a bottom even without a large decrease in nominal asset prices and useful idiots everywhere will continue their consumption binge. He ignores inflation because he believes an economic slowdown in the meantime with create enough disinflationary pressures to counteract higher commodity prices.
Of course, his plan is ridiculous. International trade is now a game in which Americans produce dollars and foreigners produce things dollars can buy; if people are no longer willing to accept those dollars because they’ve been so terribly debased, we’re right back to where we started. Obviously foreigners will buy some cheap American assets, but that won’t solve the problem. The average American will not be able to consume more products because Citibank manages to barely escape bankruptcy. Banks are not loyal to any nation, they will invest anywhere profits can be made. No matter what happens with the stock market, easy credit is gone and the American consumer is toast.
Also, the inevitable consumer driven slowdown will not spread as dramatically as many people predict. Conventional wisdom tells a fanciful story of coupled economies that rise together and fall together in tandem, which couldn’t be further from the truth. It’s normal for some regions to experience growth while others suffer. Are people really arguing that China is more coupled with America than Texas is with Michigan? Economies are not coupled by geography, they are coupled by industry and capital — all of which is abroad. If Americans had money they wouldn’t be begging Arab oil sheikdoms and Chinese communists to rescue their faltering businesses.
What everyone needs to understand is that China doesn’t benefit when their people work around the clock at slave wages (by American standards) to send cheap goods abroad in return for currency that will soon be worth less then their own. If the Chinese allow their currency to float they would benefit much more by consuming those products themselves. And the Arabs can sell their oil anywhere — last time I checked oil burns just as easily in Asia.
Historians used to call WWI the great war, then WWII happened. Let’s get real, the end result of helicopter Ben’s disastrous monetary policy will be a new depression much worse than the first, because this time it will be inflationary. Protect yourself by buying anything that can’t be replicated at rates equal to Bernanke’s ability to print money. Taking into consideration changing weather patterns, it appears to me that food may be the new black gold. All commodities and precious metals that have stable demand will increase in price.
jlx,
REO represents the best opportunity for the lay-person. Next best is a short-sale deal. Pre-foreclosure? Way down the list. The risk is very high, and the potential for acceptable returns just isn’t there.
I’ve seen agent-sold properties going for lower prices than similar properties at the foreclosure auctions. Realize that a bank is going to bid up to it’s upset price (lien + legal). If there is a second lien on the property, you can bet they’ll be bidding even higher in an attempt to resell the property themselves, to minimize loss.
The downside to REO and short-sale is that you are looking at a smaller subset of the market.
DJIA 12408 right now. Who thinks we will see 12,250 by week’s end?
Was anyone also on ML conf.call this morning???
Lots of very unhappy campers ( stockholders) and employees…they could not BLEEP them fast enough. Also they are bringing ” hatchet man” .:( will be tough in there to!!!…
Al,
The media is nothing but sensationalist propaganda with a little bit of real info sparingly sprinkled in.
The question of a depression may not be an unreasonable question. Between the massive debt levels that the US is carrying, our lack of base manufacturing, devaluation of the dollar, increasing energy prices and general price inflation, we have entered a period where a depression is an actual possibility. A global recession is more likely, or possibly stagflation, but a depression would not be out of the question espescially given how poorly the government and the FED appears to be handling the current fiscal “crisis”.
Clot,
My wife and I intend to buy late summer or fall. I like the idea of a short sale just to avoid wading through a sea of fantasy sellers & get something at a realistic price for today’s market.
Can any realtor handle a short sale on the buy side or do I need to find someone who specializes in short sales?
86 shore,
It would not shock me to see 12,000 wihtin a week
Watching Bloomberg now….Bernanke testifying…says moral hazard isn’t a major concern
Why do I like REO so much?
1) Properties are often distressed. Owners trashed the place when they left. Damage from a lack of maintenance. Landscaping dead, lawn overgrown. Properties as-is. Lots of buyers will get turned off, even at the lower price. The uglier the better, but only if those defects can be easily repaired. Correctable defects are opportunity. When buyers are looking for granite and stainless, look for formica and harvest gold. Learn to love dirt and grunge.
2) You have a bank on the other end of the deal. No emotion. They didn’t raise their kids there, they don’t have fond memories of swimming in the pool on the first hot summer day, etc etc. Nothing worse then trying to negotiate with a homeowner that is in love with their home. Don’t fool yourself into thinking they’ll just hand the property over in a sweetheart deal. No free lunch, but I’ll take any negotiating advantage I can get.
3) As REO portfolios bulge, banks are going to be willing to push negotiation further. Who would you rather lowball, a speculator with 1 extra property on hand, or Countrywide with a few thousand?
4) Less bad-karma than pre-foreclosure. Your going to need to be a ruthless b*stard to get a good deal in pre-foreclosure. With REO the damage was done, and you weren’t anywhere near it. The owners are gone, the properties are vacant. Neighbors think you are a “good guy” for buying the deteriorating property and cleaning it up. With pre-foreclosure, you’ll be the jerk who kicked out the Wilsons.
Bernanke also saying no recession, just slowdown in growth.
from CNN
Bernanke: Juice the economy ‘quickly’
I heard a great description on NPR the other night by some economist. His main point was that you cannot cause a 13 trillion dollar market to move quickly, is hasnt been done in the past with smaller markets and it will not work with one of the largest economies to ever exist.
Shore,
do you think the DJIA will hit 12250 by today??? once again it wouldnt shock me
# 88 “given how poorly the government and the FED appears to be handling the current fiscal “crisis”.”
If anyone here has ever had an employee, a coworker, a friend, or relative who had an addiction you will likely note the similarities to our current economic situation. Right now, so many of us are addicted to debt. Like a crack addict uses the “tool” of crack to achieve a certain temporary feeling of wellbeing, many American consumers use the “tool” of debt to buy things thaty give them the temporary feeling of wellbeing.
Whether an addiction is to gambling, alcohol, narcotics, etc., people seldome overcome the addiction until they hit bottom. In the vast majority of cases, attempting to coddle an addict and gently ease them into a new set of behaviors does not work; “tough love,” which in an employment situation may involve terminating employment, is what does the trick.
I suspect that the same is needed with our current economy. Proposed attempts to stimulate the economy by putting more money into consumers’ hands just continue to feed the consumption addiction. The underlying issue is not failure to spend, it is spending when people should not. We do not want to “oversave,” and strangle the avaibility of capital for economic expansion; but, our current negative savings rate cannot be sustained. People need to spend less, save more, and invest for the future.
Short term economic “stimuli” are not likely to fix the underlying issue. We need to correct the underlying addiction before any real improvement can occur.
Grim, What would you say is the best way to find REO properties?
Currently discussing Regulation Z in Bernake hearing.
#93 grim:Bernanke also saying no recession, just slowdown in growth.
Just semantics?
85 grim,
so i guess the pre-foreclosure route is probably a waste of time… if i want to get a list of reo/short-sale opportunities, do i need to go to each individual lender’s website? or is there a better way to get a comprehensive list?
as for the sheriff’s auctions, is it a good idea to go to those and try to bid for a house there?
sorry for all the questions…
and again thanks.
Hello,
My wife and I have decided to look at buying a home in northern New Jersey after renting for the past several years. I really just stumbled upon this site and have a few questions… perhaps someone would be kind enough to answer?
Is this site primarily offered as a public service for buyers and sellers? Or is this directed more towards real estate professionals?
I browsed around for a bit this evening… from what I gather, home prices in NJ have not come down quite as much as they have in other parts of the country, but may be starting to move lower as sellers become more realistic. Is this the general consensus… and would you expect a bottom in 2008?
I see that qualifying for jumbo loans is becoming an issue. Are there any special things I’d need to be concerned with as a first time home buyers? We have no debt, excellent credit, a combined annual income of about $250,000, and would be looking to put 20% down on say a $1,000,000 home. That would put us at a monthly payment of about $5500 according to my estimates.
This is literally my first day of learning about how to buy a house… so please forgive the questions if they are a bit naive.
-=Jake=-
Jake,
I’ll write up something a bit longer later, but let me just sum up.
1) This site is for buyers/sellers, not professionals.
2) Spend a week here and you’ll be more informed than more than half of the licensed agents in this state.
#91 Bernanke testifying…says moral hazard isn’t a major concern.
Did he perhaps say why it is not a moral hazard?
shore 96
The same economist on NPR also discussed how any stimulus package is a farce. The money that is in any such package has to come from somewhere and that somewhere is basically someone elses pockets. You are essentially robbing peter to pay paul. There is no net gain in that scenario. even if you argue hat the money comes strait from the fed, it is still coming out of everyone else’s pockets in the form of inflation
3b,
Semantics? Good question.
99 A recession is defined as two consecutive quarters of negative growth, so a slowdown would not count — even though it would feel like one anyway. It may be analogous to Clinton’s assertion that his activities with Lewinski did not constitute “sex,” inasmuch as there was no intercourse. I am sure Hillary did not see it that way, even if it did not meet the “definition.”
jlx,
Lenders often list REO properties on their site:
http://apps.indymacbank.com/Individuals/Realestate/Search.asp
http://www.banking.us.hsbc.com/HICServlet?cmd_PropertySearchDefault=cmd_PropertySearchDefault
http://www.premierereo.com/reo/consumerSvlt//nav/ConsumerNavL1.jsp/requestPage/consumer/PropertySearch.jsp
http://www.ocwen.com/reo/residential/res_reofindbystate.cfm?proptype=VA
http://mortgage.chase.com/pages/other/co_properties_landing.jsp
http://www.reoexperts.net/
http://www.countrywide.com/purchase/f_reo.asp
http://www.citimortgage.com/Mortgage/Oreo/SearchListing.do
http://bankofamerica.reo.com/search/
# 103 “The money… has to come from somewhere… basically someone elses pockets. ”
Ket,
Those who have been here for awhile know that I grew up poor, struggled to afford an education, and am no longer poor. I have no objection to paying taxes that provide for defense, build and maintain economic infrastructure and the like. I resent paying more in taxes than most people earn in a year and having that go to bailout people who made economic decisions that could not be justified by any clear-thinking person with a scintilla of common sense. I also resent having 1/3 of my taxes going to pay interest on debt that, in most cases,was accrued for current operating costs and not for infrastructure improvements.
Here are some sheriff sale links..
http://www.mcsheriff.org/sales/
http://www.co.middlesex.nj.us/sherifffc/foreclosures.asp
http://www.bcsd.us/sheriff_sale.aspx
http://www.camdencounty.com/sheriff/Sales/indexsales.htm
#91 Agreed
My first home back in ’91 (yes, I’m old) was an REO.
general question for the group,
taken as a whole, is building a home approximately the same cost as purchasing a pre-existing home; assuming that the new building is comparable in most aspect to the pre-existing home. If not what are the primary differences.
# 110 It is more expensive to build new, in my experience. In buying an existing home, one is buying a property where the labor was purchased at a lower wage rate. Many building products have also increased substantially in recent years.
On the other hand, if the existing home needs significant updates, especiallly to major systems, it is less expensive to put systems into a new home than it is to retrofit.
The bottom line, I suppose, is that it is situational.
#106 Great list ! Thanks!
” am just noticing that medial like to focus on negative a bit too much”
They’re finally reporting reality and acting responsibly. For years, they were cheerleading, which was NOT reality, and was irresponsible. You’re complaining about them now, when they’re finally reporting the obvious?
How odd.
shoreguy…do you have a link for that definition of recession?
102
… and welcome to the ‘Isle of Relative Sanity’
shore,
Mrs kettle and i are staring to lean towards trying to build something in the next 2 years or so. What si the best way to start roughing out costs? Would it make any sense to talk the various trades people about rough estimates this far out? I would guess that this far out would not be representative on the labor market at the tome of construction.
The other factor is that this would NOT be a Mcmansion. We are looking at ground loop geothermal heating and cooling ICF construction, solar thermal etc.
Is it just me or is anyone else scared about the future? Especially since Bernanke is in front of congress this morning telling them we need a “fiscal stimulus package” right now.
It might be the fact that I am a little young, 28, and haven’t been entrenched in a recession in the past, 2000-2002 was the closet but I was fresh out of college. So are we in for it?
I have a stable job, a mortage and debt I can pay on one salary, but I am fearing something bad or am I being irrational and this will just be like the past?
“With pre-foreclosure, you’ll be the jerk who kicked out the Wilsons.”
And there you have it.
shore, i should be alittle more clear,
I am perfectly capable of pricing out a solar thermal system or geo-ground loop, but i am not sure of the best way to get initial install costs in a residential market. Getting quotes and what not in industrial markets seems to be a little different (which is where my experience is)
Kettle1,
Are you looking for estimates on “ground loop geothermal heating and cooling ICF construction, solar thermal” or on construction of an entire home.
Will you be GC’ing it?
3b 99,
I beleive we’re in a mid-cycle slowdown, not a recession. I doubt the NBER will find a recession in 2008.
However, difference between economic growth of 1% and -0.25% isn’t very big – either way a sharp slowdown has occurred. So whether or not we’re in a mid-cycle slowdown or recession is more a semantic difference than a economic difference.
Unlike 2001-2, this slowdown is mostly a consumer slowdown, not a corporate one. For instance Wall Street job cuts have been modest even though we’re in a financial crisis.
Ket,
I am not an expert on this but here is the key: when you take bids, you need to make sure that the bids are based on the exact same structure, same materials, same workmanship. The only feasible way of doing that is to draw up a rough estimate of what you want, have an architect draw up the plans and construction documents (Watch out for rooms that require extra work. A room that allows a full sheet of drywall to go up, or an exterior wall that uses full sheets of plywood, rather than needing to be cut, can be less expensive than a smaller one).
After you know what will go into the home, you can then price out the cost of the “parts” — how many yards of concrete, yards of wite, sheets of plywood, bundles of shingles, etc. Then, taking bids from builders — after you specify the exact quality of materials you will require — will get you meaningful quotes.
That is my approach, anyway.
117 TJ
The more I hear BB and company speak, the more nervous I get. I don’t think the circs are bad enough yet that those folks can’t make them worse.
great list grim thanks!
# 117 “am I being irrational and this will just be like the past?”
Who knows. We can tell you after the downturn is over.
120
I would like to GC the whole thing, but after seeing my brother inlaw try to do that with his house while working fulltime, i am considering alternatives. I would like to GC as much as possible but realize that there will be time constraints due to the fact it wont be my full time job and will need something a long the lines of a part time GC.
I plan to spec out most of the construction myself and have a licensed civil engineer review and approve it.
I guess my question boils down to how early is to early to get quotes from various contractors for purposes of cost estimation/modeling and where do i fond info on regulatory costs (permits inspections and what not)
TJ #117, I’m not a whole lot older than you are, so my thoughts are, let’s sit tight and see what happens. The old timers all have their recession and hard time stories, this is probably when we get ours.
Are you ready to walk barefoot in the snow to get to work?
TJ, don’t be scared. The country is in better shape today than is has been in years.
The bad stuff isn’t as bad as it once was:
Crime down
Teenage pregnancy down
Smoking (huge killer) down
Road deaths (huge killer) down
Immigration & births up – means more economic growth and taxpayers will offset spike in social costs during next few decades
Meanwhile, educational and economic opportunities which set this country apart continue to grow.
126
It can’t hurt to get the data sooner rather than later. If you find that particular aspects of the construction will cost more than you expected, it will give you time to modify the project or find less expensive suppliers.
# 127
Walking barefoot in the snow only counts if it is uphill both ways, like when I was a whippersnapper.
Funny thing is my grandfather had pictures of when he used to have to ski to school all winter long( he was born and grew up in sweden)
Talk about a double whammy, just witnessed a major bloodletting.
I’m ready to call recession.
Grim,
What happened?
Can’t discuss, sorry. That was about all I can say.
For those who were paying attention, what was the recent high and to what level does the DJIA need to drop to meet the 10% reduction used to define a correction. It feels like we are close.
i’m watching the hearing, and in a way, i feel sort of sorry for bernanke – it seems that these representatives use soliloquies, posing as questions, to kind of get him to agree with their own financial agenda.
they also are in the habit of interrupting him when he starts to say something that may not agree with what they want to put forth.
(i.e. – policies about food stamps, healthcare, energy)
#7 I enjoy my daily fix of Clotpoll.
One of the biggest critcisms of Ben Bernake when he first “applied” for the job is that Bernanke has never actually worked in corporate America. His lack of real life economic experience makes him more likely to institute theoretically attractive policies, that have never been tested except perhaps in the Third World.
When he was first was coming into the spotlight back in 2005 he tried to postion himself as an inflation fighter and that he would run things independent from the Bush administration.
I guess he has changed his tune already and his lack of experience is sticking out like a sore thumb. The markets are reacting accordingly.
# 138
You mean experience on a school board and living in the ivory tower of Princeton is NOT the same as corporate experience? Who the heck nominated a guy like that? Those meanies on Wall Street should be nicer to him, no?
Can someone please ring up Paul Volcker?
I trust the guy from Teaneck more than I trust the guy from Princeton.
shore
not sure what time horizon you wanted, havent we dropped more then 10% several times already?
140
Amen.
Since the most recent high, not the all-time high. I just haven’t had a chance to go check. I figured someone here has the data. Then, I suppose the next benchmark is the 20% reduction to qualify as a bear market.
TJ #117
This is what we should be worried about.
http://flood.firetree.net/?ll=43.3251,-101.6015&z=13&m=7
What Gold Coast?
“Meanwhile, educational and economic opportunities which set this country apart continue to grow.”
Based on what? The increasing affordability of undergrad and graduate education? The increasing quality of our public schools?
129
I agree with shore guy. There is absolutely no reason you should not start now. However, no one will stand by any of their estimates for something two years in the future. Use the estimates as a general guideline on your costs and then work from there. One thing to caution you, I know a guy who just finished a house in upstate NY. He spent a lot of $$ building his dream vacation home (couple mil). This place is extremely eco-friendly and it cost him dearly in all aspects. His projected budget ballooned to twice his original estimate and it took twice as long to build the place as he originally projected. What he found was that anytime he deviated from the norm (very common in an eco-friendly home) we was punished in terms of cost and time. He is happy with his place ultimately but he was at a loss for words when it came to how far past cost and time his new house strayed. And just to let you know, this guy is an absolute stickler on cost and time, so he followed the project as closely as anyone could ever do since he is retired. This still meant nothing as he was in a powerless position when costs increased and time expanded. He heard “take it or leave it” many, many times and he had limited to no alternatives. The contractors knew it and so he “took it”. Be careful.
#142 – And not just because I think Bernanke is playing the role of G. William Miller in this farce.
Can someone please ring up Paul Volcker?
Best Fed chairman ever
Did you see him criticize Bernanke yesterday?
Talk about a double whammy, just witnessed a major bloodletting.
BTW. It’s hardly fair to drop a bomb like that and not give any details…
“Can’t discuss, sorry. That was about all I can say.”
grim, you’re beginning to sound like I’ve been feeling for the past month or so.
139 Shore
I don’t trust the guys on the Street either; quite the reverse.
Mike 146,
would you be willing to elaborate a little, it sounds like i have similar plans, minus the price tag
grim
“Can’t discuss, sorry. That was about all I can say.”
so should i start stocking up on freeze dried meals?
I guess you guys are nicer than me because I am pretty pleased to see the real estate bubble pop.
Let me be clear that I do have sympathy for those who were genuine victims of fraud at the hands of unscrupulous members of the housing/finance industry and for those who are now becoming collateral damage from the resulting recession.
However, I have zero sympathy for the many, many people who drove prices insanely high by taking out crazy/stupid loans and spending more than they could reasonably afford.
I also have limited sympathy for those people who work in housing related industries who are now falling on hard times. Guess what– you made a killing for the last 10-15 years and if you had thought about this for 5 minutes, you must have realized the good times were bound to end at some point. Hopefully you put some money in the bank and built up a client base derived from providing good service and actual value rather than just order taking. If so, you will be fine in the long run.
At the end of the day, the bursting of this bubble is necessary for the long term health of our economy. The fact that it is happening so swiftly and severely is good news because it means our economy will get back on track sooner rather than stagnating for a generation like Japan.
And, yes, it is also good because now responsible people who save their money and use debt reasonably will be able to afford houses again.
Why would anyone in their right mind want to build a house? Can’t you just buy a used one and take some pills to raise your collasteral, pull out some of your hair and then flush 100K down to the toliet.
#121 pret: For instance Wall Street job cuts have been modest even though we’re in a financial crisis.
\
The Wall St layoffs are just getting started, take it from me, and I have been in this business for many years, including GS, which has now become cult like in the eyes of many.
I am amazed that with all that is transpiring you are still in your goldilocks world, saying all will be well.
Again, part of this delusion on your part stems from the fact that you have never lived through a significant down turn.
You job hunting woes in 2001 do not count.
I do not begrudge you your optimism, but at times it appears as just reckless cheerleading, as reflected in your earlier comments about growth and opportunity.
Oh and by the way teen age preganncy is on teh rise again.
How is Bernanke’s speach going ?!
Good Grief !!!!!!
Dow at 12,274 – down 191
Oh and by the way teen age preganncy is on teh rise again.
yay abstinence only health classes. Why teach someone to drive when you can just tell them that it is not safe to drive and leave it at that?
Ouch, Dow down 190 points
This downturn will be worse than Gonorrhea
153 skep
Don’t mistake my earlier defense of grim for sorry at the current state of RE. I’m quite happy as well, and you state quite nicely why this does not translate to schadenfreude.
Circumstances will be better for people who behave responsibly, and that’s a good thing.
I don’t bother to make budgets or schedules for DIY projects.
Reason is I witnessed one of the best construction managers I know go dramatically over-budget and over-schedule when he added an addition to his home. This guy routinely delivered complex commercial real estate projects on time and on budget.
Managing construction projects, big and small, is one of the trickiest jobs out there. When there aren’t professionals working full time on a project, build in a lot of cost and schedule contingency or be prepared to cut back the project’s scope.
If you tie a dog up and whip him daily for 4 years, don’t be surprised if he bites you when you set him free.
come on kettle – abstinence only classes?
maybe in the media there’s a debate, but from my kids experience, it doesn’t exist. when my kid was in 8th grade, the teacher brought in flavored lubricant and had the kids taste it. another assignment was to go to cvs and look at the different types of condoms- there was all sorts of stuff – and it started in 5th grade.
hey, you can think its a good thing, or a bad thing, i don’t care, but i don’t think you need to have any fear about kids not knowing about sex and the associated risks and rewards.
Interesting, traders (CME housing futures) are betting on the bottom being hit in 2010, with prices 21% below peak.
http://bespokeinvest.typepad.com/bespoke/2008/01/us-housing-mark.html
TCM,
I do worry about accurate info being provided. such what sorts of health issues may be involved and how to prevent/aviod such issues. I have family in NC and have seen some of the sex-ed 2nd hand and at least in NC that do not seem to give any practical information about safe X. I dont expect this to as much of an issue in NJ, but it is an issue. There is a strong correlation between abstinence only education and increases in teen pregnancy and disease transmission.
Sorry about the thread-jack, back RE and what not
“maybe in the media there’s a debate, but from my kids experience, it doesn’t exist.”
I assure you it exists, and it’s not pretty. You just don’t run into it in this neck of the woods.
rent (89)-
A Realtor with experience can do this on a buyer’s behalf. However:
1. The seller’s first lienholder will order an appraisal to determine current market value. If your offer is not at that level, the lender will reject the sale and demand you pay more or that the house be marketed further.
2. A giant majority of potential short sales involve a second lienholder. Increasingly, these second lienholders stand to get nothing from the proceeds of the short sale. In those instances, the second position may- out of spite- disallow the short sale, thereby forcing the first holder to foreclose. Many seconds will accept partial payments and/or promissory notes, but that acceptance is never guaranteed.
In short, many potential short sales involve some risk to the buyer, as there’s no guarantee of bank acceptance and only the hope of a slight discount to market, should the subject property be cleared to close.
#164, 165 –
ok, i will concede, my experience is only in the northeast.
#163 grim: That 21% is national, is it not? I would imagine in the former real estate bubble areas (east coast,west coast, etc.),it will be worse.
Kettle and all other energy conscious people…
While this might an overly large house (located in VA), check out all of the engery efficient goodies being installed:
http://members.cox.net/benito.loyola/house/Loyola_Lot_95_notes.htm
It is hands down the best website that has documented green home construction.
here’s another interesting site in addition to JoeR’s
http://www.solarhouse.com/
jlx-
That list at #106 is more comprehensive than the list I review daily.
Well, maybe I shouldn’t say ‘green’, but it has many state of the art energy saving technologies being installed.
Bernanke says no recession in 2008, only slower growth with the economy picking back up at end of year… then why a need for a stimulus package?
Also, has the Fed ever predicted a recession?
Zimbabwe bank issues $10million bill – but it won’t even buy you a hamburger in Harare
Last updated at 15:08pm on 17th January 2008
http://tinyurl.com/259b8g
This is approximately all the new Zimbabwe $10million bill will buy you – two thirds of a hamburger
Forget the glitzy restaurants of New York and London: only in Zimbabwe would a hamburger actually cost millions of dollars.
The central bank of the southern African country has announced that tomorrow it will issue a 10million Zimbabwe dollars note. The move increases the denomination of the nation’s highest bank note more than tenfold.
Even so, a hamburger in an ordinary cafe in Zimbabwe costs 15 million Zimbabwe dollars.
This is approximately all the new Zimbabwe $10million bill will buy you – two thirds of a hamburger
Forget the glitzy restaurants of New York and London: only in Zimbabwe would a hamburger actually cost millions of dollars.
The central bank of the southern African country has announced that tomorrow it will issue a 10million Zimbabwe dollars note. The move increases the denomination of the nation’s highest bank note more than tenfold.
Even so, a hamburger in an ordinary cafe in Zimbabwe costs 15 million Zimbabwe dollars.
SO when do banks start issuing 1 million dollar bills at ATMs
In short short sales are stupid. Lets say I can get a house that was 600K in spring of 2006 right now for 450K. Is that a good deal? In spring of 2010 I can get a 600K spring 2007 house for 350K in a short sale and saved three years of mortgage payments.
You guys think this is stocks and we will have a quick turnaround, when it hits bottom it will lay there for awhile. It is foolish to look.
Rich 173
They have not predicated nay recessions to me knowledge and the will not ever do so. Part of a recession is faltering consumer/business sentiment. If the FED says that the predict a recession they will pretty much guarantee one unless the fundamental are very strong.
As baby boomers retire, home markets will hurt
USA TODAY
The next housing downturn is already on the horizon — and it looks like it’s going to be a long one.
In the next two decades, as millions of aging baby boomers put their homes on the market, they’ll put downward pressure on prices, and their exodus will reshape neighborhoods and cities coast to coast, according to research released Wednesday.
In some states, the trend has already begun, making it harder for areas to recover from the real estate recession, which isn’t expected to bottom out until the second half of this year at the earliest.
There are already more sellers than buyers in six states: Connecticut, New York (excluding Manhattan), North Dakota, Pennsylvania, West Virginia and Hawaii. The trend first hits areas with cold weather and traffic congestion, which tend to drive retirees away.
Nationwide, the ratio of seniors to working-age residents will increase by 67% in the next 20 years. As boomers age, more will move into assisted-living centers, apartments or relatives’ houses. Those with two homes may sell one and retire to their vacation house. And when they pass on, many of their heirs will sell the properties.
Last hit should be warm-weather states, such as Florida, Arizona and Nevada, where retirees usually sell late in life. That’s good news for homeowners in those states, where prices and sales are reeling from the collapse of the real estate bubble.
Myers’ research, which included population and immigration projections from the U.S. Census, shows that the baby boom housing bubble will hit the Northeast and Midwest hard.
“It’s most pertinent to declining parts of the country,” said William Frey, a demographer at the Brookings Institution who agrees with Myers’ conclusions. “The glut of homes on the market from baby boomers will depress the housing market and have an impact on some suburban neighborhoods that will come to look like older city neighborhoods that have undergone blight and disrepair.”
The math is simple: 79 million boomers have driven up housing demand. That trend will reverse itself when boomers are age 65 to 75; there will be three sellers for each buyer, Myers says.
“unless the fundamental are very strong.”
And as everyone with a TV or radio knows, every idiot with a microphone has been telling us for the past year that “the fundamentals are very strong.”
3b,
Here is the most recent snapshot I have..
https://njrereport.com/files/1-8-2008_TFS_Housing_Metrics.pdf
#173 Rich then why a need for a stimulus package?
Becasue it is a recession, we just will not call it that now, becasue people might get upset.
It’s how things are now in the home of the clueless, land of the crybabies.
Thi is the same countyr where large once proud financial companies are traveling around the world with hat in hand, looking for handouts.
You would think these clowns would be humiliated.
And the same country that lectured Latin America and other areas during their financial meltdowns, on how importnat it is to take the medicine, no matter how painful. Except of course this should not apply to us, because we are “special”.
Just some more reasons why the USA is now a laughingstock around the world.
#159 grim: thanks
John #177,
Last hit should be warm-weather states, such as Florida, Arizona and Nevada…
Last hit? Are we talking about the downturn we’re in right now or some hypothetical future one? In the one we’re in right now, those three states have been hit way harder than NJ has.
Re 176 & 180,
I concur & agree, I was being sarcastic.
See the news from Lehman?
Reducing their residential-mortgage lending and suspending its warehousing operations.
“the same country that lectured Latin America and other areas during their financial meltdowns, on how importnat it is to take the medicine, no matter how painful.”
Ouch – was forgetting about that. There may be quite a bit of schadenfreude in Argentina….
I wonder if you are willing to Pony up the $30K per person, the Government needs for the National Debt, will the Government take a check, or more likely will they insist that you pay them in Gold? Let’s see, at $920 an ounce, that would be 32.608695 ounces. Good, light enough to carry to Washington.
syncmaster Says:
January 17th, 2008 at 1:06 pm
John #177,
Last hit should be warm-weather states, such as Florida, Arizona and Nevada…
Last hit? Are we talking about the downturn we’re in right now or some hypothetical future one? In the one we’re in right now, those three states have been hit way harder than NJ has.
They are talking next Phase of Boomer Retirements.
Jan. 17 (Bloomberg) — Wall Street’s five biggest firms are paying a record $39 billion in bonuses for 2007, a year when three of the companies suffered the worst quarterly losses in their history and shareholders lost more than $80 billion.
Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. together doled out $65.6 billion in compensation and benefits last year to their 186,000 employees. Year-end bonuses usually account for 60 percent of the total, meaning bonuses exceeded the $36 billion distributed in 2006 when the industry reported all-time high profits.
The New York-based firms, which shed 25 percent of their equity value during 2007, have said they’re eliminating at least 4,900 jobs amid mounting losses from the collapse of the subprime mortgage market. Merrill posted a record fourth-quarter loss of $9.83 billion today, bringing the net loss for the five firms to $10.2 billion and reducing the combined net income for the full year to $11.5 billion, the lowest since 2002.
“To many people, it will be shocking and questionable,” said Jeanne Branthover, managing director of Boyden Global Executive Search in New York. “People in New York in the world of investment banking will understand it. It’s critical that pay is still there or you’re going to lose really good people.”
That article says NJ is at the begining of a 20 year downturn in real estate. COOL
#188 That article says NJ is at the begining of a 20 year downturn in real estate. COOL
Somebody tell the realtors and or sellers.
187. John Says:
January 17th, 2008 at 1:21 pm
Jan. 17 (Bloomberg) — Wall Street’s five biggest firms are paying a record $39 billion in bonuses for 2007, a year when three of the companies suffered the worst quarterly losses in their history and shareholders lost more than $80 billion.
As I said in an earlier post, the Government needs to put in a 2007 100% surcharge on Financial Community Bonuses and use that money as Stimulus.
#187 John: It’s critical that pay is still there or you’re going to lose really good people.”
Are not some of these really good people largely responsible for much of the mess that we are currently in.
And where are exactly are they going to be lost to”
Think about it Jeanne, its nto that hard, its a process, but you can do it.
“Somebody tell the realtors and or sellers.”
I nominate Gary.
We’re talking about the next downturn?
Damn, events sure do move fast.
192 posts at 1:30PM….grim you’ve created a monster :(
OT: Please indulge me….I am reviewing my board (@$&&$_@!#&!()#@*&!_#*!@$(_&@%_(*&_!(*#&_!#*(!&$#_@*@(_$&_*@#&()_*#@(*@!$#+_(@*$
Just a quick off the cuff on the DOW.
DJIA high around 14,100. Right now it’s down about 12.5%, which is correction territory. Certain sectors (financial) and indexes (small cap) are in bear market territory (down 20% or more). Once all three indexes (Dow, S&P, Naz) confirm 20% down we can welcome in a new official bear market. Are we having fun yet?
Kettle-
Be careful with any geothermal HVAC system in NJ. It is a heat pump. It will work great for cooling purposes. For heating purposes I’ve always found them to be suspect. The air actually feels cool to me. Maybe consider twinning it with a gas furnace to add the extra heating boost on very cold days. Any type of heat pumps should only be used in the south IMO.
Anytime the word “green” enters into a construction project the cost doubles. I would wager that 90% of the jobs I’ve bid that were going to be “green” get rebid as regular jobs once the owner gets the estimate.
hughes,
Why is it so expensive to build “green”?
Is it that there are fewer manufacturers of “green” insulation, flooring, etc., and therefore, higher prices?
Or is it that the systems for heating and cooling are more complex and therefore more expensive?
# 158 “Zack Says:
January 17th, 2008 at 12:11 pm
Ouch, Dow down 190 points
This downturn will be worse than Gonorrhea”
And not nearly as much fun as catching it either.
chifi 195 board report?? board game? board (fill in the blank)
????
sl
198 scribe
It is a combiination of both. The systems are more complex and there is not enough demand so that the products have not reached an economy of scale.
I just bid 2 small dorms for Rider College to a plumber today. Each one has 24 toilets, showers, lavs, etc. My quote to the plumber for the material was $70K per dorm. I could have done it “nongreen” for around $30Kish.
For example the toilets involved were $200 each (to the plumber) instead of $110 or so. The water heater was $32K instead of $10K.
Why is it so expensive to build “green”?
A lot of it is first mover cost. You’re paying the premium for the newest technology.
For technologies like solar, there is a worldwide shortage, so you will pay top dollar.
hugh 197
I plan on going with geothermal hydronic radiant heat. I have 2 years worth of data from a friend in sussex who has one and has recorded all the historical data from it (he’s a controls guy) and if you set it up right there is no reason that it shouldnt be effective.
Scribe 198
there are afew reasons for the cost premium. Some of the green techs suffer from a lack of economy of scale, while others such as geothermal ground source have a higher upfront cost due to complexity, but have a lower lifetime cost. Most green tech has a higher upfront cost but a lower total lifecycle cost compared to conventional tech like gas fired heaters and such. For example a geothermal ground source heat pump will supply you with 2 watts of heat energy for every 1 watt of electrical energy you put into it.
Some of the other tech such a solar thermal may have a cost premium because builders are not familiar with it and so either charge a premium upfront or it ends up costing more because they are not proficient with the install of the tech and so it takes longer and costs more.
a cost example. a new conventional furnace can be had for about 10K with duct, but a geothermal heat pump will run about 20K. if you consider a 20yr life span though the geothermal is cheaper as it takes much less energy to run the heatpump then the furnace.
From MarketWatch:
Lehman Brothers cuts back mortgage lending further
Lehman Brothers Holdings Inc. announced it will “substantially” reduce its U.S. residential-mortgage lending, suspending its warehousing operations.
The move will result in some 1,300 job cuts at Lehman’s Aurora Loan Services business, which will continue to originate loans directly with consumers and service loans. An approximately $40 million charge is expected from the consolidation.
Lehman cut some 2,500 jobs in its mortgage operations last year as it streamlined its presence in the ailing space.
Loan warehouses provide capital to third parties such as mortgage brokers to make mortgages. Numerous firms have exited that business in recent months.
Ted Janulis, who oversees Lehman’s mortgage-servicing and origination business, said, “It was necessary for us to structure our mortgage-origination business in the U.S. to reflect the change in industry dynamics.”
The scale-back comes as Lehman – along with numerous other mortgage lenders, underwriters and investors – adjusts to continuing turmoil in the credit markets, caused by sharp climbs in mortgage delinquencies and foreclosures.
njpatient [192],
I’m in, when do I start! :)
189 “Someone tell the Realtors and the Sellers.”
If they knew, the downturn would seem more severe, but probably last 5-7 years instead of 20.
-$200
Buying Gold as a Hedge, can get quite expensive, if your better half insists upon Hedging the Gold, with Diamonds.
“Lehman Brothers Holdings Inc. announced it will “substantially” reduce its U.S. residential-mortgage lending”
Gosh – a few more announcements like this and I’ll begin to get the impression that the pant up demand won’t be materializing…
204 – hits NJ
“The move will result in the closure of operations centers in Lake Forest, California; Sunrise, Florida; and Florham Park, New Jersey. Lehman also said it will record a charge for severance, technolkgy and facilities exit costs.”
http://www.nytimes.com/reuters/business/business-lehman-mortgages-layoffs.html
“Merrill’s losses were driven primarily by a $11.5 billion writedown the company took on its subprime residential mortgages and collateralized debt obligations – an investment vehicle that buys and sell bonds.”
That can’t be true! bi said there’d be no more writedowns!
In an effort to provide cheaper, more secure benefits payments, the Treasury will roll out prepaid debit cards for many Social Security recipients.
Interesting to see who those, without bank accounts, getting SS or SSI, really are?
(by the way, does anyone recollect how old that joke has gotten (i.e., when did bi tell us there’d be no more writedowns)?)
bi?
the dow is starting to look like a guy stuck in quick sand. he’s steadily sinking but every so often tries to struggle upwards, only to sink back down…
pant up demand Is that a new phrase? I have seen it a couple times here. I would think it would be “pent up demand” or the more appropriate “pants down demand”
KL
Down 200
http://www.youtube.com/watch?v=n6cZUCa6Kyk
so according to the NAR there is one segment of the population that is the pant up demand , so i guess that means the other is the pant down demand? would that be the people underwater?
Jan. 17 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said fiscal stimulus of as much as $150 billion would help revive economic growth, while warning against any widening of the budget deficit in coming years.
Ben’s starting to talk real money. Wonder if Hillary will direct it all to Green Collar.
Absolute Dow moves seem correlated with comments totals.
Fearless Benny B says we’re far from bottom..
Subprime losses won’t top $500 billion: Bernanke
Federal Reserve Chairman Ben Bernanke said on Thursday that losses in the U.S. subprime mortgage market may have reached $100 billion so far and could climb, but would not top $500 billion.
It’s a good thing he didn’t bring up Alt-A, Prime, HELOC, Auto, and Credit Card debt, otherwise we’d be talking real money.
rhyming
“pant up” comes from an argument that “pent up” demand would save the housing market in NJ. “pent up” was misspelled as “pant up” and here we are today….
#220
Lets multiply that by 2. We are talking a trillion $$ of total losses.
So the Fed says no recession. So glad we dodged that one.
They also say they believe in a strong dollar policy.
KL,
It’s pant up. If my pant were any shorter, I’d be bare a##.
Patient,
Bi’s comments, no more writedowns, 11/14/07. However, I think it was only pertaining to writedowns in Whipperney.
KL
“pant up demand” was one of bi’s many typos, going back to July or August.
I think clot whacked him with the pants down rejoinder right out of the gate.
When do I get my stimulus policy debit card? I’ve got some shopping that needs my attention.
“Federal Reserve Chairman Ben Bernanke said on Thursday that losses in the U.S. subprime mortgage market may have reached $100 billion so far and could climb, but would not top $500 billion.”
Glad Ben thinks things aren’t likely to get more than five times as bad as they already are.
Shwoo.
njp,
The $500b was calculated using S&L bailout accounting.
DJIA 12,230 and sinking. I hear the RE environment getting better for vultures.
228
$100 billion here a $100 billion there, pretty soon your’e talking real money.
#225 nj patient:pant up demand” was one of bi’s many typos
I am not sure it was a typo.
“grim Says:
January 17th, 2008 at 2:45 pm
njp,
The $500b was calculated using S&L bailout accounting.”
Ah. Of course.
We should count ourselves fortunate that, unlike in ’89, the presidential offspring are not dabbling in the bubble bailout industry du jour. I can only imagine the types of mortgages that Jenna and Barbara would be handing out.
#226 – i was just making a Blingmas List!
I wonder if Jim Cramer and the likes are shorting this sucker down while having folks go long on TV
“pant up demand” was one of bi’s many typos, going back to July or August.
I think clot whacked him with the pants down rejoinder right out of the gate.
I believe it was BC Bob who took the reins and ran with it.
#116 Kettle1,
I’m looking to build too and I agree with Shore Guy (#122) on the approach. You’ll need to get a full set of achitectual plans drawn up. Without them, you won’t be able to get a proper bid to compare apples to apples.
If you plan to GC yourself you’ll have to go out to all the different contractors to get bids for what you need. Or, you can contact a GC who will give you one price to build what you want.
Not knowing anything about home building I bought a few books to get educated. One book I bought was The Owner-Builder Book. It is geared for the do-it-yourself GC.
http://www.ownerbuilderbook.com/
Kettle
Check out 266 Woodport in Sparta MLS 2420721
This is a builder flip that shows what you can do with a pre-existing structure. The photos don’t do it justice.
The builder is overpriced and has dropped $50k so far, but I think he has a long way to go before it moves. I ran the numbers and came out with $480K. He built it to comercial spec, so he might be better selling it on the commercial market.
The big unknown is what the city will tax it at.
From the AP:
Rutgers forecast: Higher unemployment, slow growth for NJ economy
New Jersey is caught in “the economic doldrums” and its economy likely will perform worse than the rest of the nation’s through at least 2012, according to a Rutgers University semiannual economic forecast.
The Rutgers Economic Advisory Service forecast, released Thursday, predicts slow job growth and rising unemployment, with a quick turnaround unlikely.
Nancy Mantell, the service’s director, said although New Jersey’s 2007 unemployment rate of 4.3 percent was below the 4.6 percent national average, the workforce is shrinking.
“People appear to be dropping out of the labor force rather than looking for work,” Mantell said in a statement.
She expects an average jobless rate of 5 percent this year, followed by 5.2 percent over the following decade.
“The average unemployment rate is expected to exceed the national rate in 2008, as well as through the 2017 forecast period,” Mantell said.
…
Also Thursday, Fairleigh Dickinson University’s annual New Jersey consumer survey found residents’ confidence in their near-term financial situation is eroding.
The survey found 41 percent say they are worse off than a year ago, up from 35 percent last year. Meanwhile, 27 percent say they are better off than the year before, down slightly from 30 percent.
Only 37 percent expect to be better off financially a year from now, down from 42 percent a year ago.
“I believe it was BC Bob who took the reins and ran with it.”
Right you are
So when will the MSM start talking about the cracks in the foundation of the commercial RE biz?
“So when will the MSM start talking about the cracks in the foundation of the commercial RE biz?”
Today. See Wall Street Journal, page A1.
Thanks, all, for the responses on the costs of building green.
What always amazes me is that, with the huge amount of construction in NJ in recent years, it’s the same old stuff, but for very high asking prices. No effort to build houses with futuristic, energy-efficient tech.
I think the houses built during the bubble will become obsolete very quickly, once the tide turns and the thing everyone wants is energy efficiency, equal to smaller but better houses.
Does anyone know how large Lehman’s Florham Park operation is?
Holy JC Ambac was 96 a share in May and is now 5 a share!!!
MBAC Inc. ABK (NYSE)
$5.28Change:-7.69 -59.29%
52-Wk High:
05/18$96.10
My one comment on “green building”.
Building green can also mean re-using and retrofitting existing structures.
Tearing down an older house and filling a landfill with (de)construction debris isn’t green.
Too often people say, “I want green”, and then proceed to generate tons of trash as they buldoze a perfectly good structure.
Green isn’t just about reducing energy usage.
nj patient
I was reading an article the other day about how the Commercial RE market was bullet proof. It was obviously hot air, but most people wont realize that
Here we go, RTC 2. And yes, in typical Hollywood fashion, the sequel will be overbudget and worse than the first.
Government “will step in” on subprime if needed: FDIC
The chief of the Federal Deposit Insurance Corp warned on Thursday that if industry solutions fail to help subprime mortgage borrowers, the odds of government involvement will increase.
With about 2 million subprime mortgages due to reset at sharply higher interest rates, FDIC Chairman Sheila Bair urged Wall Street to act quickly to help modify mortgages under a Treasury-backed industry plan because time is of the essence.
“I very much believe in the market,” Bair said in remarks prepared for a Bear Stearns investor conference in New York. “But if market solutions fail to solve the problem, government will step in.”
240
Thanks, pret! Been stuck in the office too much this week.
“Holy JC Ambac was 96 a share in May and is now 5 a share!!!”
If past is precedent, somebody is going to be due for a $230,000,000 severance package.
So… buying green is more expensive up front, gotcha.
How expensive is building a house that isn’t wood frame construction, in comparison?
John,
Regarding ABK..
In 2007, Joe Sixpack learned about SIVs, CDOs, and MBS. 2008 will be defined by terms like monoline, counterparty, and bailout.
Hey Clot,
Is it time to go fishing in the Bristol pond yet???
sl
My HOA just raised monthly fee 12.5%. Last year, it increased 33 1/3%.
My new HOA monthly fee is now 50% higher than it was 2 years ago.
Inflation?
You open up craigslist and you will still see a lot overpriced condos on the Goldcoast.
750K for a 1bed/bath
Gimme a break
What we need is a great depression and a 15% unemployment rate to bring these prices down. Lets stick it to them
245 ket
I think I read the same article, which prompted the question.
#242 grim.
I think its just a datacenter. Most of the staff are in Exchange place
hey grim,
any relation to you???
http://www.realtor.com/search/listingdetail.aspx?zp=07853&mnp=32&mxp=31&typ=7&sid=919ca96bf06e440fab8ffc2ff075584b&lid=1092369371&lsn=1&srcnt=15
Dow down 300points
Holy smoke!
grim Says:
January 17th, 2008 at 2:31 pm
Absolute Dow moves seem correlated with comments totals.
grim: correlation does not imply causation….
njpatient Says:
January 17th, 2008 at 3:20 pm
“Holy JC Ambac was 96 a share in May and is now 5 a share!!!”
Where is albani?
#250 – grim – In 2007, Joe Sixpack learned about SIVs, CDOs, and MBS. 2008 will be defined by terms like monoline, counterparty, and bailout.
Let’s not forget “mark to market” and “lvl 3 asset”.
Dow down 300points
Holy smoke!
Bi said it’s gonna be a soft landing.
249 IVV
if you are not familiar with ICF (insulated concrete forms) take a look at it. It can run anywhere from comparativly priced to stick framing to 15% premium from the numbers i have seen. It seems to depend on the local market, the coost of concrete vs lumbar and the level of experience of the builder.
if you are interest in the method look here for some good info
http://www.greenbuildingtalk.com/Forums/tabid/53/view/topics/forumid/4/Default.aspx
IVV,
I was wondering about that, too, considering that the standard wood frame structure can be damaged and even destroyed by termites, and doesn’t wood degrade with time?
I’ve seen ads in craigs’ by someone who’s building fireproof houses somewhere else, maybe PA. Expensive per-foot quote, but he says he’s copying a type of house that he’s seen elsewhere in the country, maybe out West.
Building a non-wood frame, fireproof house would seem to me to be desirable, too.
But then again I’m paranoid about fires :)
make 261
This is going to be a downright cushy landing for the IB CEO’s, so whats the problem???
“Does anyone know how large Lehman’s Florham Park operation is?”
~23,500 total employees in 51 locations worldwide, and Florham is somewhat of a satelite operation, so I’d guess around 300 and surely no more than 500.
scribe here is a link for you then, they use this to build nuclear blast resistant structures
http://en.wikipedia.org/wiki/Monolithic_dome
from the link
This domed government building in Baghdad, formerly a part of Saddam Hussein’s regime, was hit by a 5,000 lb. bomb.Apart from the hole made by the entry of the bomb, it remained structurally sound.
chicagofinance Says:
January 17th, 2008 at 3:33 pm
njpatient Says:
January 17th, 2008 at 3:20 pm
“Holy JC Ambac was 96 a share in May and is now 5 a share!!!”
Where is albani?
ChiFi,
What’s with the epersonal assault?
I predicted that BoA will sweep CFC at those prices and not allow it to go bankrupt after I put my money where my mouth is and 24 hrs later I made 60% on my investment.
Will Buffett rescue Ambac? NO. Short it to death. Cramer opened the flood gates this morning with his fiction novel story telling and this is first blood only.
Plenty of more Ambac’s out there my friend.
if you like the icf idea but want a concrete exterior then look at this
http://www.thermomass.com
I don’t think people spending more $$ is going to help our economic situation. Most people spend more then they have right now, so why are we provoking them to spend more? That’s how we got in this damn mess.
Sometimes I think the government doesn’t believe in common sense.
Joe six pack learned the hard way about neg am IO teaser loans!!! I am ready to pounce when NJ real estate hits bottom in the year 2028!!!!!
WAMU REPORTS IN AN HOUR!!!!!!!!!!!!!!!!!!!!!
kettle1 Says:
January 17th, 2008 at 3:39 pm
make 261
This is going to be a downright cushy landing for the IB CEO’s, so whats the problem???
That’s capitalism!!!
“I DON’T HATE i JUST TRY TO GET MINE”.
Any bets on a surprise cut in the AM tomorrow?
Mozilo kicked to the curb….
http://www.cnbc.com/id/22706130
Shlt. SOMEONE HAS GOT TO DO SOMETHING AND DO SOMETHING RIGHT DAMN NOW!! The damn market is down again today with Bernake opening his damn mouth. I don’t know why the hell he doesn’t shut up and just turn on the monetary spigots so we can get out of this damn mess. Take the damn rates down to zero if you have to, but do something and do it quick. We can’t have investment markets going under. People need a place to invest and make money. We need the real estate markets and securities markets functioning and allowing people to build wealth.
I’m really pissed now. We’ve got our stellar American companies going out and begging other countries for capital. This is total bullshlt. What the hell is going on when Citi has to go to the same damn Saudi Arabian prince that Rudy G sent money back to? This is bullshlt. THIS IS AMERICA DAMMIT, WE DON’T HAVE TO BEG ANYONE.
Toshiro,
Good question. It wouldn’t suprise me one bit.
MM
toshiro_mifune Says:
January 17th, 2008 at 3:47 pm
Any bets on a surprise cut in the AM tomorrow?
t: only if they are looking to singe some shorters…..it would be a dick move, but I think they would mind bitch-slapping those guys a bit….
would NOT
Re101 has got to be a professional troll!
Re, i give it a 9.8, ease off the anger just a tad for a solid 10/10
#242 grim
The datacenter I’m thinking of is in Livingston. The Aurora mortgage unit was in Floram Park. Thats a lot of people on the street.
http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-22335385.htm
I don’t see how cutting the FFR will help the situation, if the problem is fear of lending, not liquidity.
If anything, if the Fed comes across as panicing, doesn’t that increase the level of fear?
What am I missing?
280,
i would suggest that you politely ignore re101.
if you want to know what 0% interest does then just google the 80’s real estate bubble in japan, when they went to 0% interest rates.
the only effective fix for the US is to stop using credit and balance deficits (spending/trade) and to start saving. It will be painful, but there is a large amount of excess in the US markets that needs to be cleared out
The reason I ask about Lehman is that I don’t see a WARN issued.
grim – I assume moderation
“I don’t see how cutting the FFR will help the situation, if the problem is fear of lending, not liquidity”
The Fed needs to cut to zero just like Japan. We need longer amortization periods on mortgages. We need to go with 50-100 year amortization if necessary. We need to continue to loan money to support real estate. We need to pull out all stops to save our investment markets.
We have seen the spectacle of premier American companies going overseas to beg for capital. That ought to tell you something right there. The government needs to do more.
“Mozilo kicked to the curb….”
Noting the photo at the link, I have a friend who had to work with him recently who was surprised to discover that he was caucasian.
280
I would politely suggest you ignore Kettle.
He has a dirty mind.
kettle, #281
But, kettle, I already skip over those … :)
I don’t see how cutting the FFR will help at this point, but I do see how it will hurt savers (like me), the dollar, etc., while fueling inflation.
Japan?
Japan cut rates to zero and property values declined for more than a decade.
“The reason I ask about Lehman is that I don’t see a WARN issued.”
perhaps the deadline hasn’t passed, although it sure sounds like the layoffs are effective now or imminently.
Lawrence Summers, the ex-Harvard dean who now comments for Financial Times, discusses his view of the stimulation plan.
http://www.ft.com/cms/s/2/80400fbc-ae73-11dc-97aa-0000779fd2ac.html
What’s interesting is some of the Q&A’s he got–as if people on this board were doing the asking. For example:
Why do we fear a recession? Our leaders tell us the core of the economy is in good shape. I have the utmost confidence that we would bounce back just like we always have. Why take extreme measures?
Mark Bicanic
Lawrence Summers: We fear a recession because of the havoc it would wreak for the lives of millions of families, the reduction in the economy’s long-run production potential that would come from reduced investment, and the damage to the global economy it would result. No doubt eventually, the economy would bounce back, but the self-limiting character of most sickness is not usually taken as an argument against medicine.
Japan did multigenerational loans too, that didn’t work either.
Google down to $600. Still overvalued? At what point do you jump in?
Prediction – the down is under 10,000 by the end of the summer.
I suppose it’s also possible florham park had less than 50 employees.
“Any bets on a surprise cut in the AM tomorrow?”
[272],
I would not be surprised at all. You would think that they would wait until the end of the month. However, it may not be their call, Goldman is pulling the strings. How about an announcement around 8:00 AM. Tomorrow is options expiration. They may want to get the biggest bang out of their announcement. The PPT can start buying S&P’s tonight and can murder the shorts tomorrow.
Then again probably not, after all the fed is independent. Right?
Kettle,
That link that I posted earlier to the house under construction used ICF.
The page takes a long time to load since it has a lot of photos, but there are really some great shots and technologies being used.
The bottom of the page starts at day one. Two years later (top of page), it is still under construction.
“We need the real estate markets and securities markets functioning and allowing people to build wealth.”
50.5,
Simple question. Why can’t you build wealth on the short side? After all the financials and consumer discretionary have crashed.
grim,
I think what’s coming next, in the next wave, after this all plays out, is shorter, 20-year mortgages with 1/3 down.
Maybe some of the 30-year loans in trouble will be lengthened to 40 as a bailout measure.
But my guess is that bankers are going to become super-conservative in the future – equal and opposite the trend of recent years.
How’s about this for green architecture:
http://www.simondale.net/house/
Be a good unassuming entrance, just build a bunker underneath and all ready to go.
“Simple question. Why can’t you build wealth on the short side? After all the financials and consumer discretionary have crashed.”
Even simpler question – why not build wealth by building and creating things or providing services people actually need?
Too much like work I suppose.
“Even simpler question – why not build wealth by building and creating things or providing services people actually need?”
lisoosh,
I agree. There are a ton of empty containers, at Port Newark, that are ready to go.
WaMu Q4 net loss $2.19 a share vs 20c a share profit
Big problem with Japan real estate is zero growth in wages and population. The US doesn’t have those problems.
And just because Japanese real estate overall has done badly doesn’t mean that savvy investors can’t earn enormous returns there.
For example, a company based in Roseland, NJ, has built several outlet centers across Japan and is making absurdly high returns on these real estate investments, in part because they can borrow at 1-2%.
http://www.cpgi.com/information/99jun17.shtml
“the reduction in the economy’s long-run production potential that would come from reduced investment”
What a bunch of bunk!
“The Fed needs to cut to zero just like Japan. We need longer amortization periods on mortgages. We need to go with 50-100 year amortization if necessary.”
Yeah, doesn’t that work for furniture companies? I see ads on TV all the time about no interest for 3 years. I think all the banks should do this too. Give people a chance to buy more stuff and keep their homes. This is America after all, right?
304
zero interest, pay it back when you can
“njpatient Says:
January 17th, 2008 at 3:58 pm
“Mozilo kicked to the curb….”
Noting the photo at the link, I have a friend who had to work with him recently who was surprised to discover that he was caucasian.”
Yeah, he’s caucasian, he’s just been that color since he used his finger to plug a leak at the local nuclear reactor when he was a kid.
#91, 102
Lawrence Summers discussing why moral hazard may not be an issue in an editorial last September
http://www.ft.com/cms/s/0/5ffd2606-69e8-11dc-a571-0000779fd2ac.html
I think his 3 conditions of moral hazard is reasonable, but reasonable people can disagree on whether we currently meet the 3 conditions For example, condition two being whether we face a liquidity problem (moral hazard a lesser concern) or a solvency problem (moral hazard a bigger concern). He seems to think liquidity, but many here would no doubt think it’s solvency.
“Simple question. Why can’t you build wealth on the short side? After all the financials and consumer discretionary have crashed.”
In addition to being unpatriotic, the short side is too dangerous as losses are unlimited. The short side is equivalent to the dark side of investment philosophy. Moreover, it does not triumph in the long haul mainly because people are betting against America. I can’t countenance that. A bet against America is a bad bet!
“Even simpler question – why not build wealth by building and creating things or providing services people actually need?
Too much like work I suppose.”
This is what investors like me support. We’re always looking for the next good idea that will make money. I prefer to let my money work rather than do it myself.
I know I’m hated for that.
“zero interest, pay it back when you can”
Actually, this is not a bad idea. The reason we’re in a bit of a pickle now is that negativity has created a situation where people can’t pay. Of course, the bankruptcy laws will mitigate the extent to which they can’t pay. Why go through all of that when it’s just much easier to let people pay in back with they can. Of course, there’d need to be some structure put around that whole scenario, but it’s a good idea in light of the circumstances.
Cramer today took his histronics to a new level. This guy deserves an Emmy for his TVperfomances this year, and then perhaps a stint in a Mexican jail for his bad advice.
Quote: those executives behind the current credit crunch are unlikely to get any punishment for their mistakes and disingenuousness about their numbers, Cramer opined.
“I’m fed up with it. The American people should be fed up with it. And the SEC should be fed up with it,” Cramer said.
“This is what the SEC is supposed to protect us from,” he added.
http://www.cnbc.com/id/22706231
BC Bob Says:
“lisoosh,
I agree. There are a ton of empty containers, at Port Newark, that are ready to go.”
?????
Alright, you lost me, unless you are talking about a business opportunity that noone has jumped on?
In addition to being unpatriotic, the short side is too dangerous as losses are unlimited. The short side is equivalent to the dark side of investment philosophy.
Funny. Communist China has the same philosophy. You are not permitted to short shares on the Chinese market.
Moreover, it does not triumph in the long haul mainly because people are betting against America. I can’t countenance that. A bet against America is a bad bet!
A bet against America WAS a bad bet.
About shorting – with short ETFs your losses are limited to what you put in – you can’t lose more than 100%. Just yesterday Stu on this board mentioned a Proshares ETF – short RE. Didn’t buy that one, but put significant $ (for me, that is) in a 2X short Russell Mid Value ETF. Boy was it fun making money today when the market tanked! Yes, I realize I could lose it all tomorrow, and my investment could go to zero. At any rate, thanks Stu.
310
Duh, lets just give money away. You can go to any local bank and just ask for however much money you need or want. Just think we can all drive a Lamborghini. Gas prices who cares money is free.
My say is, keep interest rates where they are let the system purge itself of the reckless lets get through this down cycle in the market and back to normal, if there is even such a thing anymore.
“zero interest, pay it back when you can”
And happens when 0% isn’t good enough to get the job done? At some point, 0% gets priced into the market and is no longer capable of providing stimulous. What then? Hand out paper money for free? Pay people to take loans?
“My say is, keep interest rates where they are let the system purge itself of the reckless lets get through this down cycle in the market and back to normal, if there is even such a thing anymore.”
We can’t afford a recession. That would purge this nation. We must avoid that at all costs. We are not prepared for that sort of pain. Besides, Greenspan promised that the Fed could avoid this. That promise must be kept.
“the short side is too dangerous as losses are unlimited.”
50.5,
Huh? How is it more dagerous than being long, as the market is unwinding?
If I’m short, I’m not betting against America, I’m betting against the value of the stock. By the way, if you were patriotic and were long US dollars over the past 5 years, how did you fare?
I bet you’re bottom would be as sore as Tony Romo’s.
but isn’t Goldman shorting the market as well?? :)
#313
“Funny. Communist China has the same philosophy. You are not permitted to short shares on the Chinese market.”
I JUST know that you’re not trying to imply that I’m a communist.
reinvestor, tell us some more about bad bets.
321
he may not have implied it, but I inferred it.
# 319
“If I’m short, I’m not betting against America, I’m betting against the value of the stock. By the way, if you were patriotic and were long US dollars over the past 5 years, how did you fare?
I bet you’re bottom would be as sore as Tony Romo’s.”
I will never ever bet against America. Where does it stop for the short sellers? Isn’t it they that start rumors to cause share to fall? Short sellers are the worst.
#280 “What am I missing?”
Not a thing. When the only tool you have is a hammer, every problem starts to look like a nail.
“Where does it stop for the short sellers?”
When the bell tolls.
#319, as an example of “unlimited” losses from shorting, let’s say that I shorted 100 shares of First Solar on Jan 1 07, and I got $2850. At the end of the year, I cover the short and must pay $23,864 because it rose 800% last year. My loss would be over 700%.
Actually, the $23,864 is my net “profit” from the short. I would have to pay $26,714 to cover.
I would say reinvestor101 is currently in the panic stage; soon to be followed by capitulation.
http://www.thedividendguyblog.com/wp-content/themes/tiga-06/images/2006/08/sentiment_cycles_1.jpg
Personally I would like to see dispondency.
I also believe the original reinvestor101 no longer exists, but is rather being masqueraded by frequent poster who is allowing his insanity to continue on this board as a reminder of the past lunacy and for our own personal entertainment.
I wonder if the recent market losses and talk about recession will have the effect of getting some sellers or soon to be sellers to conclude that the world is a very different place than it was two years ago. When investment statements were showing ever-increasing wealth, and every home sold seemed to go for a new record price, people began to believe they were wealthy and were sitting on a pile of gold, in the form of a house.
The “wealth effect” may have been illusory but when people see an “economic ship” starting to sink they are motivated to get off and save what they can of the paper gains.
Who is it that says they are going to pull up a chair and a bag of popcorn? It sounds like a good idea right now.
First lesson in counterparty this evening.
ChannelRe and MBIA…
Question for the finance people.Kids 529s in mutual funds can’t cash out due to taxes.Put in money market for awhile to be safe?Is it safe there?
HEADLINE: MARKET TO BERNAKE…..YOU SUCK!
Demarest
SLD 163 COUNTY RD $685,000 6/17/2005
SLD 163 COUNTY RD $633,000 1/16/2008
With updated kitchen and baths
Oops….BERNANKE.
Oh well. Blew that one.
Where the hell is Demarest?
337 BC
If it’s not in Essex County it doesn’t exist?
Bergen County
Question for sellers/realtors on this board – if there are any.
With all this market unrest, reduction is net worth (real estate and stocks), write downs,lay offs and prediction of a worsening housing market.
Is your house worth more today than it will be a year from now ? If so, price it to sell. Lots of buyers are waiting for a 2002/2003 price. We will hit the bid.
“HEADLINE: MARKET TO BERNAKE…..YOU SUCK!”
When you loan billions of dollars to those that don’t have a chance in hell of repaying, even those that are unemployed, why is that Bernanke’s fault? When a credit bubble develops over the last 5 yeras that eclipses the credit bubble of the GD, why is that Bernanke’s fault? Insolvency is the problem, not interest rates. A much cheaper long term alternative, it to blow out the dead wood. If our currency was backed by something other than Ben Franklin’s picture we would be entering the GD #2.
So does this bad economic news today help the Dems or the Repubs?
Which ones?
I say it helps Hillary and McCain.
We talked about this toxic dumping site in the past. Troubling, to say the least, when you wake up in the morning, next to someone that really doesn’t belong there.
“Merrill Lynch & Co., the biggest underwriter of collateralized debt obligations, said it will write off $2.6 billion in default protection from bond insurers including ACA Capital Holdings Inc. because it’s worthless.”
“Merrill Lynch cut $1.9 billion of debt insured by ACA, whose debt ratings were lowered 12 levels to CCC in December, and $679 million from other insurers. Guarantors including MBIA Inc. and Ambac Financial Group Inc. are under threat of losing their AAA ratings from Moody’s Investors Service and Standard & Poor’s.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=abJ54xMm7k4Y&refer=home
There is one person that can fix this mess. However, he would inflict much needed pain. Come back, Paul. Just give me a little notice.
“Former Federal Reserve Chairman Paul Volcker thinks the U.S. central bank is to blame for allowing bubbles to inflate asset markets, and says that current Fed chief Ben Bernanke is in a tough spot.”
“Too many bubbles have been going on for too long … The Fed is not really in control of the situation,” the Times quoted Volcker as saying, seemingly clear criticism of both Bernanke and his predecessor Alan Greenspan.”
http://www.usatoday.com/money/economy/2008-01-16-volcker-nytm_N.htm
BC Bob Says:
January 17th, 2008 at 6:45 pm
We talked about this toxic dumping site in the past. Troubling, to say the least, when you wake up in the morning, next to someone that really doesn’t belong there.
Bost: imagine that the same happens for exposures covered by MBIA and Ambac…..by all affected parties..
Thank the lord that something out there is working….
http://www.bloomberg.com/apps/news?pid=20601103&sid=az6xnIveer24&refer=us
Chi [345],
Ouch and Ouch.
311. Sean Says:
January 17th, 2008 at 4:42 pm
Cramer today took his histronics to a new level. This guy deserves an Emmy for his TVperfomances this year, and then perhaps a stint in a Mexican jail for his bad advice.
Quote: those executives behind the current credit crunch are unlikely to get any punishment for their mistakes and disingenuousness about their numbers, Cramer opined.
“I’m fed up with it. The American people should be fed up with it. And the SEC should be fed up with it,” Cramer said.
“This is what the SEC is supposed to protect us from,” he added.
Actually Cramer makes a good point. After we reopen Alcaraz, it’s first prisoners can be the recently layed off CEO’s like Price. We appropriate their ill gotten gains, and imprison them for life. We use reality TV to beam them working in the Rock Yard everyday, to all Financial Institutions. All Wall Street PC’s will have an immovable window with the executives breaking rocks, for the Streeters to see, as they work each day. Be a lot more effective then jailing Martha Stewart again.
I remember looking at a brick CHC in Allendale somewhere around year 2000 on a really pretty piece of property. It was that type of brick you see on some of those houses in that area… like Upper Saddle River and the Ramapo area.
The house was listed at 425K and I remember thinking, wow, that’s big bucks… something only a real professional could afford. How naive and old fashioned I am sometimes.
It’s amazing how out-of-control people can become in such a short span of time, isn’t it? To go from having to work for something substantial and enjoying the rewards of success to being a bunch of losers, wannabes and weaklings.
To go from that charming, beautiful home to a Joe six pack wife beater tee shirt in a double wide…. for the same price. Isn’t it amazing? If you have any doubts that the populace was fleeced over the last 7 years, then click on the link and you tell me.
http://www.realtor.com/search/listingdetail.aspx?ctid=95100&mnp=29&typ=7&sid=a5ce939b71e14330b10f9bc0b6295fc3&sdir=1&sby=2&pg=3&lid=1083241138&lsn=27&srcnt=400#Detail
Here you go, $150,000 annual income gets you this: http://www.realtor.com/search/listingdetail.aspx?ctid=95100&mnp=29&typ=7&sid=a5ce939b71e14330b10f9bc0b6295fc3&sdir=1&sby=2&pg=7&lid=1093273550&lsn=65&srcnt=400#Detail
349 Gary
I liked the your intro on that one…it really led into the picture nicely.
Bush Stimulus Plan Includes $1,600 Rebate, People Say (Update2)
That’s 1.7391304 ounces of Gold at $920/ou!
Maybe when we file our 2007 Tax Returns, if we are getting a refund, we need to ask for it in Gold.
#350 Charm galore awaits you!!!
#349 gary: You don’t like an English cottage? Dreams come true in this charmer!!!
#346 chgo Except its not working here.
341. It’s not Bernanke’s fault there’s an RE bubble. It’s Greenspan’s fault for bring the FF’s rate down to 1% and leaving it there too long. Bringing rates down now won’t prevent the RE crash, but it could alleviate other problems with the economy and the stock market. Why compound the RE problem? My IRA is down 15% from it’s peak and I don’t own any speculative real estate. Why should I be losing wealth because some pinheads with large salaries made bad loans to ill-informed customers? The bond market has already done the heavy lifting for the Fed. Bernanke just needs to follow their lead.
re: 349 Gary,
I looked at a primo property in Franklin Lakes back in the winter of 1997 that was going for $349. At that time I thought to myself the same thing, only a exec could afford it. Anyone who is old enough to remember the prices only 8-10 yrs ago knows that the run up was something that was unbelievable and more importantly unsustainable.
thunderbolt
the problems go way beyond housing and a low interest rate does not fix insolvency, read the boards a little more for a better picture
#324 recrybaby: And look at what patriotic Americans have done to America, with Merrill and Citi and all the rest begging for hand outs from foreigners; and this makes you proud?
Save you patriotic drivel, its getting old.
#318 recrybaby: Recessions are part of a free market system, are you advocating Communism now? And you call yourself patriotic? Yeah, only if it suits you.
#310 And you call yourself an investor? You sound like a wuss.
#284 reinvestor: We need to go with 50-100 year amortization if necessary. We need to continue to loan money to support real estate. We need to pull out all stops to save our investment markets.
Why would you possibly advocate 50-100 years mtgs, please tell me how that is investing?
You want the real estate market to heal? Tell sellers to drop their moronic prices.
Its the only patriotic thing that will save them.
#280 If anything, if the Fed comes across as panicing, doesn’t that increase the level of fear?
Even more so if they cut before their scheduled meeting end of Jan; that has not happened since the early 90’s
#274 THIS IS AMERICA DAMMIT, WE DON’T HAVE TO BEG ANYONE.
Yes we so, we are a nation of beggars and borrowers, and beggars/borrowers cannot be choosy.
kettle, who said lowering interest rates would fix insolvency problems? Is that the only problem out there for you?
sl (251)-
Still efforting getting that guy to return a call.
I think he’s still eating stupid pills.
Will continue to reach out. Watch that thing come BOM after the Super Bowl…
Ann/Sean/3b,
Some day we’ll all get our piece of reward for our patience and hard work. :)
Actually, if Bernanke reduces the interest rate to zero, it may have one real effect, tax filing will be simpler, no interest earned. In a Fiet System, it wasn’t worth much anyway.
Gary 350 – That is in my neighborhood – I can tell by the schools – but I have no idea where it is. Can any one look 2467635 up. Thanks in advance.
John #187,
Thanks for posting the update on the current Wall Street jobs and bonuses situation.
Back in September, I noticed that the massive Wall Street layoffs predicted by some weren’t materializing. I pointed out that “Wall Street firms have been very disciplined about hiring during the past few years” and that these companies remained “comfortable with current staff levels.”
The doom and gloomers responded by pushing out their predictions with this assortment of comments:
“I’m hearing 10-20% layoffs”
“30-50% layoffs” at Bear
“old ‘October surprise’ is still the way the Street does it”
“Typically they start in October, go on until right before Thanksgiving, stop until after Christmas, resume again in January through Feb”
“Wait until the end of October, cuts before bonus calculations”
“bonuses will be down even in areas that were doing fine”
Now we have the facts. Five biggest firms (GS, MS, ML, Lehman, Bear) reported that they ended the year with 12% more staff than they started with and the combined bonus pool had grown by 8% to $39 billion.
I have to ask, were you guys talking about 2007 with those predictions? Or do you want to push them out to 2008?
From Bloomberg:
Washington Mutual Posts Quarterly Loss on Provisions
Washington Mutual Inc., the largest U.S. savings and loan, reported its first quarterly loss since 1997 after writing down the value of its home mortgage unit and setting aside $1.5 billion to cover bad loans.
…
Washington Mutual signaled that the unprofitable mortgage unit will continue to struggle this year, with Chief Executive Officer Kerry Killinger predicting a “dramatic” rise in loans that will need to be modified to avert defaults. Credit-card losses are likely to rise as well, from 6.9 percent to as much as 9.5 percent.
“Certainly credit costs are elevated and we anticipate them to be elevated throughout 2008,” Killinger said in an interview. He added during a conference call that he won’t take a cash bonus for 2007.
Two biggest real estate leases signed in US last week – 517,000 sf in New York and 395,000 sf in Jersey City.
Both financial firms.
I’ve had an interesting few weeks in the world of REO. I have found a lot of people in the industry don’t (or refuse to) realise how bad things are. I was shooting the breeze with a mortgage broker while we waited for a screen to refresh. We started talking about Home Equity loans and how at some point they have to be paid back. With the delinquency rate rising, the tipping point is coming soon. His comment was “That can’t be right, if it was we would be in the middle of a recession an the whole thing would collapse.”
I stopped into a mortgage shop to sign some forms. While the car park was full and the place was busy, I got the feeling that its all Refi and very little new business. It was a nice office and I was thinking not a bad place to work. I thought about Lehman’s today and my though was “Will this company be around long enough to close?” Not a nice thought. I hope the car park stays full and that my loan helps someone to the “Employee of the month” car park space beside the door.
On the house I’m trying to buy there is a story. I don’t know what it is and I’m not sure I want to know. I know from the numbers that a lot of cash was left at the table. But I think to myself, I didn’t cause it and in a lot of ways, I’m not benefiting. I can’t see the house getting back to that 2006 sale price. I think the REO means I am about 2yrs ahead of the price declines and the house will hold the current value while the rest of the neighborhood prices come down to meet it.
I’m not sure what the neighbors will think. My only thought is that the sale will not be in the neighborhood comps and at the end of the day I didn’t cause the REO. But hopefully soon they won’t have to park cars in the driveway and mow the lawn to make the place look occupied. Also I’m bringing a nice family to the area and I hope to be able to make it a home for a long time.
People sometimes say that you need to take the emotion out of a home purchase. While that is true to a point, Grims opening comment on the Sheriffs notice and Clots #3 show that you can’t divorce all emotion. While greed and stupidity may have got us here. Working together will move us forward. While I don’t think it will turn into a rerun of “Its a wonderful life”, there will be a tuning point somewhere.
You can’t talk price yet, can you? (To hell with etiquette, we want details)
#311,
hilarious!!!! do we want money from the communist or the terrorist sovern funds? we only got 2 choices.
I’m not sure who it was that was asking about 114 Boulevard in Pequannock, but it closed today.
114 Blvd, Pequonnock NJ.
Purchased: 10/25/2005
Purchase Price: $615,000
MLS# 2426227
Sold: 1/16/2008
Sale Price: $550,000
11% below 2005 price, a loss of almost $100,000 post commission and fees
One more indirect reference for Grim in NY Times.
Dow Plunges More Than 300 Points on Grim(‘s) Outlook
LEAVE ME ALONE. I’M TIRED OF YOU CHASING ME FROM POST TO POST. LEAVE ME ALONE.
“3b Says:
January 17th, 2008 at 8:12 pm
#318 recrybaby: Recessions are part of a free market system, are you advocating Communism now? And you call yourself patriotic? Yeah, only if it suits you.”
You and I are no longer on speaking terms, so don’t try to engage me now Inpatient. BTW, take your inference and shove it. Unlike you and your ilk, I detest communism.
njpatient Says:
January 17th, 2008 at 5:07 pm
321
he may not have implied it, but I inferred it.
Troll
And your point is? Look, there’s nothing wrong with that house and a seller and a buyer will arrive at the appropriate price for it to change hands. I don’t like your inference that there’s something wrong with the house and that someone won’t buy it. Try putting that house in Manhattan and see what it will bring. NNJ is an extension of New York City and the demographic change that accompanies that means that pricing is going go align with New York income levels not the working class people who grew up in that area.
gary Says:
January 17th, 2008 at 7:49 pm
Here you go, $150,000 annual income gets you this: http://www.realtor.com/search/listingdetail.aspx?ctid=95100&mnp=29&typ=7&sid=a5ce939b71e14330b10f9bc0b6295fc3&sdir=1&sby=2&pg=7&lid=1093273550&lsn=65&srcnt=400#Detail
Troll 2
#375 grim.
You have the address from the MLS. We are under contract for 25% off the Aug 2005 sale price.
One more indirect reference for Grim in NY Times.
Dow Plunges More Than 300 Points on Grim(‘s) Outlook
Super
Why I dislike flying and despise Heathrow
http://news.bbc.co.uk/2/hi/uk_news/england/london/7194086.stm
My own personal Top 5:
#5 Flying back from Tenerife on one engine.
#4 Doing a Top Gun style fly by of the main runway as the pilot cut the turn over Ally Pally and ended up on a wrong glide path.
#3 Landing at LHRwith a full complement of Fire engines trailing us don the runway.
#2 From LHR coming out the clouds at SAn Francisco an seeing another plane cut in front of us and ending up side by side going into the to runways.
#1 Hitting an air pocket in bad turbulance, the plane dropped so sharply my coffee ended up on the celing
[i]I’ll write up something a bit longer later, but let me just sum up.
1) This site is for buyers/sellers, not professionals.
2) Spend a week here and you’ll be more informed than more than half of the licensed agents in this state.[/i]
________________________________________
Thanks very much grim. I just spent the past hour reading through these 374 posts today… sheesh this is an active board!
…and gary, the link in Post 350 just convinced me I need to take Stu’s advice and rent for another couple years.
-=Jake=-
PGC –
I was on a plane to Scotland via Iceland that got hit by lightening. Nobody knew until we landed (we knew there was a bad storm, but not about being hit).
Did have one close call in Heathrow, but my worst moment was coming in to land in Phoenix, when suddenly the engines powered up again and we rose back up – turned out there was a plane on the runway, right where we were due to land in approx. 10 seconds. Apart from the engine noise, you could have heard a pin drop.
#382 Try putting that house in Manhattan and see what it will bring. NNJ is an extension of New York City and the demographic change that accompanies that means that pricing is going go align with New York income levels not the working class people who grew up in that area.
The overhwelming majority of people who love in North Jersey,work in Jersey, so enough with the NY income levels. Do you not undesrtand anything?
#380 I detest communism.
Then why are you advocating communsism?
#373 pret:Two biggest real estate leases signed in US last week – 517,000 sf in New York and 395,000 sf in Jersey City.
Both financial firms.
And that means what no layoffs? You have no idea the incredibly stupid things the “strret” has done over the years.
Like hiring a whole trading deskf ro a fixed incoem business, from anotehr firm, and thena month later exiting the business.
#371 pret: Point taken, howver you do realize that the street has starrted to lay off people, and they started in 2007, and some of the layoffs have been significant, but of course not as large as we would have expected at this point.
Push the predictions out to 2008? Sure why not, just the collapse of the real estate bubble was pushed out, but ultimately it collapsed.
As far as the steet being disciplines with hiring, well, child the street has never been disciplined as I submit to you the mess we are in now, courtesy in large part to the street.
The bonus money paid in 2007 is the lat hurrah for quite soem time. There will be no repaeat of that in 08 and for quite soem time to come.
And yes pret the layoffs will follo too; they always do. The fact they may have been delayed means nothing.