It’s the weekend, and time for another weekend open discussion.
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A little humor to start your weekend:
Grim-
Thanks for the laugh. I think we need some more humor on here. All these sellers need a laugh, otherwise they will probably start crying.
JM
James,
Did you catch the post over at Calculated Risk? Nontraditional Mortgage Loans guidance issued by the Fed today. Links to PDFs on the page.
Reading it right now..
jb
From Marketwatch:
Decline seen for Aug. pending home sales
Banc of America Securities said Friday it expects pending home sales to decline between 3% and 4% in August from the previous month after its monthly survey of real estate agents revealed disappointing traffic trends.
“Lower pending contracts in August should lead to weaker existing closings in September and October, as contracts precede closings by 30 to 60 days,” wrote analyst Daniel Oppenheim in a research note.
“The continued decline in sales activity will result in an increase in the months supply of homes for sale and put further pressure on home prices,” he predicted.
The National Association of Realtors is expected to report its index of pending home sales, seen as a leading indicator for housing activity, on Monday. The index measures monthly signed real estate contracts for existing single-family homes, condominiums and apartments.
In July, pending home sales fell 7% to hit their lowest level in over three years.
“Residential construction is officially in recession, as the home-building stocks predicted long ago,” wrote Merrill Lynch North American Economist David Rosenberg in a report Friday.
Where is everyone this Friday? It isn’t a holiday weekend.
jb
ROFL the other videos are pretty darn funny too!
(http://www.youtube.com/watch?v=TxylHPnoloI check the ‘Related’ list)
Robogrim,
CR has this one now.
IRS introduces New Tool for Mortgage Income Verification.
What is that sound I hear off in the distance?
Sounds like the credit spigot being ratcheted shut to me.
What I really want to know is to what extent this guidance will be enforced.
Institutions that do not adequately manage these risks will be asked to take remedial action.
jb
I was in and out of boring meetings all morning.
I just started a new job in Morristown. People here were talking about RE at lunch today. one guy bought last year and just said how an identical townhouse next to him sold for 35k less than he paid, meaning he has lost over 10% of his purchase price already
“Institutions that do not adequately manage these risks will be asked to take remedial action.”
Is that like going to summer school?
According to Lereah, the market correction will correct itself to get rid of the excess inventory.
Wouldn’t sales have to increase greatly to work off the excess inventory? That’s assuming that no more inventory is added. Or is he assuming that all of these homes for sale will just expire until the inventory returns to normal levels?
What a tool. There is no scenario in 2007 where sales will greatly increase. Inventory will only increase more as more homeowners with ARMs realize they can’t afford it. I guess if the rates keep going lower, sales might increase… but then we’ll already be in a recession.
lending guidance appears to have more teeth than some expected. debtors are supposed to be able to pay off the loan w/o selling the collateral or refinancing (novel idea). creditors are supposed to avoid issuing IO/Neg Am loans to people with no downpayment. Question is: how much of the pool of buyers does this eliminate? Certainly seems to be another knife in the back of the housing market
James Bednar Says:
September 29th, 2006 at 2:26 pm
Where is everyone this Friday? It isn’t a holiday weekend.
jb
Aw, Grim, I didn’t know you cared.
You like me! You really like me!
That video is too funny. Thanks for the link, Grim.
http://www.bankrate.com/brm/news/real-estate/Sep06_Home_selling_tips_a1.asp
fyi, “guidance” is not as optional as its name would suggest. guidance is an agency’s way of saying, “this is what we think you need to do to be in compliance with existing regulations.” choosing to ignore guidance is like asking to get busted. reputable businesses take it seriously.
As I mentioned in one of my first posts, I’m not so sure that the downturn is a blessing for buyers. There is the potential damage to the overall economy and all that entails, which is scary enough. But there’s also the problem of trying to catch a falling knife. Whereas before the problem was not being able to buy because everything was too expensive, now it’s because the bottom is about the drop out of the market.
So, now that we’re fairly confident we’ve correctly identified the bubble and the beginnings of the downturn, the question I pose to you folks is… what do you think are the signs that we’ve hit the bottom?
“now that we’re fairly confident we’ve correctly identified the bubble and the beginnings of the downturn, the question I pose to you folks is… what do you think are the signs that we’ve hit the bottom?”
1. Real YoY appreciation
2. Shrinking inventory
3. builder confidence rising
basically the opposite of what we have now
“Whereas before the problem was not being able to buy because everything was too expensive, now it’s because the bottom is about the drop out of the market.”
Houses are still too expensive for us. I personally do want to buy a (relatively) low-maintenance home in a good school system.
Bottom will be when my potential mortgage payment including taxes is a little lower than my rent payment for the same house. We don’t really care past that point… If we have to move, or lose our jobs, we can then at least rent the thing out without taking too big of a financial hit.
We’re really not trying to time the market, just do a little damage management.
Suggestion Box: If technology permits, can you add a timestamp next to the number of comments in each post? That way, if I know the last time I checked the blog was at 4pm, I can just click into the comments that were added after that point. Otherwise, I have to remember how many comments were in each post or click all of them and scroll down to see the time of the recent posts. Its a minor thing but if you can do it, it would be great.
I’m sure I can do something like that, how about a list of the 5 most recent comments on the main page, regardless of the thread they are on?
jb
“I’m sure I can do something like that, how about a list of the 5 most recent comments on the main page, regardless of the thread they are on?”
That would be great!
Last night, bored behind the computer, I decided to see if an acquaintance of mine had managed to sell his house in DC. Had to register to see the listings, including giving them my phone number. Did check the box that said “Just browsing,” however, rather than “planning to buy in 3 months” (or “planning to buy immediately”).
Well, got a call this morning at 10 a.m….
Luv the video! LMAO
“Where is everyone this Friday? It isn’t a holiday weekend”
Searching to buy tax liens????
Do you know when the next foreclosure report is due? thanks
THAT VIDEO IS GREAT
i love this debt is for you
another week and more bad news for sellers
just keep on saving and waiting
have a great debt free weekend everyone
That was one spot-on video. Such a skewering of American living too large society – right down to the overweight couple.
Can anyone tell me anything about Long Valley, New Jersey? How are the schools? What are the downsides? Anybody think homes will hold their value there? OK, the last question was a joke. But, seriously about Long Valley.
Hilarious!
There are two others, also:
http://www.youtube.com/watch?v=ECIuteQB8hw
http://www.youtube.com/watch?v=33OE65bNclc
Well guys, i took your advice and made an offer 40 percent under asking price of $699k for a house in the Sleepy Hollow area of Plainfield (MLS # – 2298329 ). For fear of insulting the ownner,the realtor insisted that she present it as a verbal so that i stay anonymous; and in case i decide to go up in price at a later date. Two days later she got back to me with his decline and no counter offer. Tomorrow they are having their third open house in the past five weeks. There are no comps are recent activity at that price range to go on. Should i try again at 30% off ? Thanks.
Zac,
I’m no expert, but I just don’t think you’re
going to get anything in Sleepy Hollow
for $420K, at least not for a few years.
At $500k you might have a shot. Wait
another month and see if it’s still available,
and then maybe hit them with another lowball
in the 25% range just before Thanksgiving.
good luck
ts
Housing slowdown may hit bank profits
Regulators warn that the few ‘positives are starting to fade’ in banking.
http://money.cnn.com/2006/09/29/news/companies/banks_housing.reut/index.htm?postversion=2006092917
“It certainly started to cool this summer in August,” she said. “And now we are seeing a little more emphatic reduction in some of the housing and housing-relating activity that had been a big boon to bank earnings.”
why are realtors so afraid of offending sellers? it’s not like sellers are helping them close deals
New worry: A hard ‘soft landing’
Everyone agrees the economy is slowing but recent reports have some analysts concerned about recession.
http://money.cnn.com/2006/09/28/news/economy/bumpy_landing/index.htm?postversion=2006093009
September 30 2006: 9:01 AM EDT
”
Consumer Spending Fridays’ economic news showed that spending by consumers in August rose just 0.1 percent, less than forecasts and down from a 0.8 percent rise in July. When adjusted for inflation, consumer spending actually slipped in August, an important month for retailers due to the back-to-school shopping season.
GDP Thursday’s government report on gross domestic product, the broadest measure of the economy, showed growth slowed to a 2.6 percent rate in the second quarter, down from the 2.9 percent rate estimated a month ago and 5.6 percent in the first quarter.
More weakness in housing, coupled with reduced corporate profits, especially for smaller businesses, were the key reasons for the downward revision. But the lower GDP reading isn’t the only sign the economy is facing tougher times ahead.
Durables Earlier in the week another report showed orders for big ticket items fell unexpectedly, with a key measure of business spending in that report showing a sharp drop. Falling business spending could spell trouble since many economists have been looking for a pickup in business outlays to counter an expected slowdown in consumer spending.
Housing Meanwhile, recent reports of home sales have shown prices for new and existing homes fell in August from a year earlier. That marked the first drop in existing home prices in more than 11 years and was the second biggest drop on record.
No. 3 builder Lennar (Charts) warned this week that the homebuilding downturn has not hit bottom, becoming the latest builder to cut its outlook. Executives at home improvement retailer Lowe’s (Charts) warned during its annual analysts’ meeting Tuesday that it could take as long as 12 to 18 months for the housing market to stabilize.
Automakers such as Ford Motor (Charts) and DaimlerChrysler (Charts) are cutting output due to sluggish sales of many vehicles, including pickups. Ford has decided to follow rival General Motors (Charts) and offer all of its hourly workers large payouts to retire or leave the company as it speeds up plant closing plans.
“
Just saw Dean Baker from Center for Economic Policy on CNN. When he predicted 30% drops in home prices, the host’s jaw dropped. He explained the economic fundamentals and how a 30% drop was necessary to bring prices back to normal.
I saw that too. Mainstream media finally piping it into everyones living room.
Renting in NJ…
I would like to offer that Dr Baker is keeping his estimate a bit conservative. I think he can safely release a number like that now because more people can see it. Had he said it even as recent as 4 months ago he would have been considered a heretic. The downturn will have housing come down no LESS than 30% to return to affordability. The drop will be even larger in a number of areas.
Zac, the media piping it into the boob-tubers will have a fantastic affect as well. Now the “secret” is out and everybody knows it was all just a phase.
Lastly, mortgage reform will be one of the single largest contributors to the falling price trend. Reform will significantly reduce the number of potential buyers and of the potential buyers the amount they are approved for will be considerably less.
Skeptic said:
“why are realtors so afraid of offending sellers? it’s not like sellers are helping them close deals”
I saw this first hand back in Janurary when we were considering buying. Realtors were having us draft plead letters to the sellers explaining our lowball offers in hopes of not offending them. I thank my luck stars today that none of my offers were accepted. in fact they often retorted with laughter.
This information is preliminary and will change as sales that closed today and during the past week may not have been entered into the system. Also, the month is not completely over but this should give you a pretty good idea as to where the market is going.
For Bergen County ONLY, here is the average & median price along with the number of homes sold and number under contract in September for the past 11 years. This is for residential SFH listings; this does NOT include Condos/Co-ops & Twnhs.
Year Avg$ Med$ Sold UnderContract
1995 $265,464 $215,000 579 569*
1996 $252,048 $205,000 578 529
1997 $265,964 $218,000 656 611
1998 $297,774 $230,000 684 591
1999 $340,098 $259,000 608 439
2000 $392,537 $295,000 571 551
2001 $418,217 $325,000 545 423
2002 $494,848 $375,000 583 543
2003 $514,952 $407,000 762 645
2004 $544,765 $460,000 655 621
2005 $663,049 $520,000 684 590
2006 $649,815 $492,000 429 479 as of 9/30/06 10:30 AM EST
And here is the same data including Condos/Co-ops, Townhouses as well as SFH.
Year Avg$ Med$ Sold UnderContract
1995 $241,345 $200,000 721 689*
1996 $235,855 $190,000 705 690
1997 $250,638 $210,000 841 770
1998 $272,553 $218,000 886 755
1999 $299,183 $237,000 842 598
2000 $339,488 $260,000 803 770
2001 $368,705 $297,500 732 587
2002 $428,868 $342,000 828 774
2003 $458,021 $372,000 1039 908
2004 $478,034 $410,000 952 885
2005 $604,673 $490,000 946 832
2006 $580,604 $450,000 630 674 as of 9/30/06 10:30 AM EST
*1995 data may be incomplete as I believe this is the first year this data becomes available.
Rich
Well guys, i took your advice and made an offer 40 percent under asking
Perhaps that house you are looking at may be worth 40% less next year, or the year after. Or maybe it will never drop that low. Or maybe it will drop lower.
But the fact is that prices have not dropped 40% as of today. Wishing doesn’t make it so.
Forgive me…but in expecting to buy a house today at 60% of listing price, aren’t you being every bit as “greedy” as a seller who expects to get 20% more this year than last?
Wait and watch, certainly. But if you’re expecting 40% off, better extend that lease for a while.
No lease here Diva. And I am cash-in-hand.
@40
i wouldn’t extend the current lease. There are lots of investor types who are offering their properties for rent. You most probably will get a better deal than your current lease.
for starters try rental on realtor.com
No lease here Diva. And I am cash-in-hand.
I was being a bit facetious about the lease. What I meant was simply that if you thought a seller would jump at your offer, you’ve been reading Grim’s blog too long! The real world out there today is not willing to sell at 40% off.
Cash-in-hand doesn’t make too much difference to a seller unless most contracts in your area are written with financing contingencies, which might give you the edge over someone who needs such a contingency.
Infodiva
All standard NJ real estate contracts written by realtors have a financing contingency. That being said, cash does not have that much of an advantage to sellers as they feel it is all cash at the closing table anyway.
KL
mike Says:
September 30th, 2006 at 12:07 am
Hilarious!
Oh those are incredibly funny. The shopping madness that have taken over so many otherwise sane people is incredible. I see it all around me. Sunday traffic near malls illustrates sadly the american way of life. It used to be church and family dinner on sundays. I don’t feel going to church every sunday will cure all our ills, but a little more family time without spending money could’nt hurt!
KL
“skep-tic Says:
September 30th, 2006 at 9:39 am
why are realtors so afraid of offending sellers? it’s not like sellers are helping them close deals”
I get the feeling that this is realtorspeak for “I don’t want to look like a crappy real estate agent to my clients by not being able to bring in good bids or price a house correctly”.
Guys:
Does anybody have access to fsbo.com – is it worth to register for free 1 trial with Credit card info ?
FSBO.com – They have foreclosure properties theer – we can get something for cheap I guess.
You really think you’ll find a “something for nothing” deal in foreclosures?
With that said, if you want to browse the foreclosure records, I recommend RealtyTrac. I believe they have a 1 month trial as well, but it does require a credit card.
I’ve spoken to the folks over at RealtyTrac on a number of occasions and they’ve gone out of their way to compile foreclosure data on the NJ market for me. They’ve always been a big help, so I suppose a plug on their behalf would be OK.
jb
What I meant was simply that if you thought a seller would jump at your offer, you’ve been reading Grim’s blog too long! The real world out there today is not willing to sell at 40% off.
It is unlikely, I’ll agree with that. Also let me clarify that I’ve never suggested that someone go out and randomly offer 40% under asking. I know you aren’t saying I have, but that statement seems to insinuate that I’m the source.
With that, it’s unlikely, but it does happen. Unless, you are arguing that the sellers that do accept these lowball offers are not “in the real world”.
Here are some links to an older feature, “The Best of Lowball”. It’s a bit dated, but it is a convenient example.
Best of Lowball 1
Best of Lowball 2
Best of Lowball 3
Best of Lowball 4
jb
Although I might agree that some of those asking prices (OLP) were most certainly out of this world.
jb
Zac,
I agree with ppl here that you might not get that 40% discount right now. You can wait for next month or next year, but depends on your sentiments – have you fallen in love with this house ? does it fit your various priorities to the tee ? do you absolutely feel the need to become a home-owner ASAP ? etc.etc.
In my area the number of listings have fallen suddenly from realtor.com, I am sure at least some of them are withdrawals. There are price decreases also. Not to 2005 levels but about 10-15% above that vs. the 30%+2005 prices that were originally being asked. I suppose they all hope to get 2005 prices after ‘negotiations’. I think most ppl will accept a 2005 offer today. Just my guess, that is all.
So if you offer 40% below asking and get laugh at, can you live with being laugh at?
On the other hand, can you close on the deal if they accept?
The point, you can offer anything you want, that’s the beauty of Capitalism, they can take it or leave it, we are free to contract within the framework of our paternalistic government.
My two bits,
-Sapiens
I just got back from house-shopping in Sleepy Hollow / Plainfield today. My Realtor told me that if I really want to live there, to find a house I like and offer full price. My take: As a buyers agent, sometimes I think she’s batting for the other team.
Plainfield? Batting for the other team? I think she must OWN the other team and is way behind on her payroll.
Do you have five houses on hand you could live in? Put in 5 similar lowballs and don’t be shy about letting folks know you’re bidding on five houses. You might hit on the one who has to sell, inherited and doesn’t care, or is making big bucks anyway, because they’ve owned the house since 92.
Now, look at the information you’ll have after this action, versus what you have now.
You have some people telling you that 40% won’t cut it. You have people telling you a lot of things. Is it going to cost you anything at all to go get the real information? Only problem you’ll have is ponying up if somebody takes you up on your lowball.
There’s saddle and spurs on that pony, thanks Pat.
@44- info diva –
If banks implement the guidelines for mortgages, sellers will start differentiating between buyers with cash-on-hand and ARMers.
I feel banks will enforce the guidelines rather be made ‘examples’ after the bubble bursts.
https://njrereport.com/index.php/2006/09/30/putting-an-end-to-orwellian-affordability/
Zac..tell me that house is NOT the one on Hillside in preforeclosure on realtytrac. My brother used to live right around there..near the hospital? My sister-in-law worked at the hospital.
Out of curiousity for your situation, I looked around there, and couldn’t believe the homes in that section in preforeclosure.
Set your target price and lowball after a price reduction. I think that sellers that sit on a high price are not motivated. Sellers that reduce prices are probably motivated to sell. You may get closer to the 40% that way.
And get a new realtor.
Grim, I never meant to insinuate that you were the one proposing that buyers make 40% lowball offers today.
You have been a voice of calm rationality. While I disagree with you on some things, I generally can’t fault your approach.
No Pat, this house is on Belvidere Ave listed for $699k, mls#2298329.
Geez..there’s one on Belvidere in preforecl. too. Check it out. But it’s a year or so off on year built. Big one.
I’m not a memeber, is it a Tudor-style house with a red shinge roof?
In another thread someone asked “how much does someone need to make to afford a 700k house?”
I suggested about $120K gross income; others suggested about $200K gross income.
So I ran some numbers for a $700K house with $8K property taxes, and came up with this:
Principal + Interest: $3,540 (30-year fixed @ 6.5%)
Property Taxes: $667
Insurance: $100
————————
TOTAL: 4,307
Whish means someone would need about $145K gross for PITI to fall around 35% (what many would see as a “max”), so it’s more than $120K, but much less than $200K.
Am I off, or are the $200K folks off?
Belvidere; SqFt 4156; Yr. built 1910: entered 9/12; outstanding due $538,000
Go to realtytrac.com if you want a free trial for address. Otherwise, just put in the zip to see the general info.
Not same house
Unrealtor..at $120 gross, it’s mac ‘N cheese for a $700K house. No kids, no daycare, no furniture, nuthin. {Assuming 20% down).
At $120 gross, with 20% down out of savings, to live life in today’s world, with a car payment, 1.5 kids and incidentals, a family cannot have a mortgage over 2800k making diddly like $120.
You have daycare..800 to 1,000 a month. You have car payments, tuition, retirement savings, educational savings, insurance, etc. Realistically, it just doesn’t work.
Now, without kids, it’s different. You can up the payment by a grand.
unrealtor,
I’m not familiar with the conversation on the other thread. I would consider front-end ratio of 28% as max.
i was actually the person who posed the question in the other thread, and I had calculated around 175k to be comfortable with the payments. I think a lot of it depends on how stretched you can be and still be comfortable
There are no comps are recent activity at that price range to go on. Should i try again at 30% off ?
Why not drop the bid even lower, say to -45%? Then go back to -40% at the next open house, it may look better to the seller then.
Take your time, the house probably isn’t going anywhere.
With respect to the $700k house and $200k income, I’m generally conservative about finances, so I think that even $200k is cutting it too close – although it depends on the buyer’s situation.
I would look at the cashflow by not how much the buyer can pay, but how much is left at the end of the month to spend. Assume a fairly typical family of 4 – two wage earners, two young children. Back of the envelope calculations look kind of like this:
$200,000 gross income
-$30,000 (2 x $15,000) 401K contributions
-$59,500 (35% Fed, State & Local taxes on $170k)
-$ 7,000 (approx. SS/FICA)
-$51,684 (house payments)
-$ 6,000 (500 per month for utilities,cable,phone,etc)
$200k -$154,184 = $45,816 / 12 = $3,818 per month left in discretionary income (assuming all the math is right).
$3,800 a month may sound like a lot, but subtract from this car (gas & loans), insurance payments (health, dental, disability, car, death, property (non-RE), etc), food, clothing, child care, maintenance (car, house, etc), entertainment, vacations and savings. One thing that’s true is that as your income rises, so do your expenses. With two kids, you don’t have a lot of cushion. Based on my experiences and some asking about, I’d say childcare expenses are about $1,000 per child per month (excluding food, clothing, college savings, etc).
Now, if you’re single with no kids, this should be fairly doable, unless you’re a big spender. And while it’s doable even with 2 kids, I personally wouldn’t feel comfortable without a bigger cushion – particularly given what I know of our monthly expenses.
The taxes, at $8k, seem awfully low for a $700k home.
jb
I made an offer the other day that was a little bit less than 25% off the OLP on an estate sale. The sellers countered by reducing the price $15K. The reasoning on their part, supposedly, was that they had only just listed the property. My response to my realtor was that my offer was fair in light of the condition of the house, comparable houses in the area were priced similarly but were in better conditon. No counter-offer on my part. It’ll be interesting to see if I get a call back in December asking if I am still interested.
Amaranth losses up to $6.5 billion, down 70%. It’s suspended redemptions to liquidate.
Amaranth Says It Plans Liquidation After More Hedge Fund Losses
Amaranth Advisors LLC suspended redemptions in order to sell off its remaining assets after losses at its two main hedge funds continued in the past week.
The funds are down as much as 70 percent for the month, the firm said in a letter to investors. Redemption requests scheduled for today and Oct. 31 won’t be honored, preventing investors from withdrawing any money for at least another month.
“Our current intention is to dispose of the remaining positions in the funds’ portfolios in an orderly fashion over time, seeking to maximize sale proceeds and to make periodic cash distributions to investors on a pro rata basis,” founder Nicholas Maounis, 43, said in the letter late yesterday.
Amaranth is the Greenwich, Connecticut-based hedge fund manager that imploded almost two weeks ago after making wrong-way bets on the direction of natural-gas prices. The firm, which managed $9.5 billion of assets as recently as August, now has lost about $6.5 billion in the biggest hedge fund meltdown.
jb & others –
Do you think the recent ARM loan guidelines by bank regulators will force the percentage of ARM loans to reach year 2000 levels? As far as i remember, the percentage of ARM loans in 2000 was 3% compared to today’s 27%.
If so, would there be ~20% less buyers in the market?
i agree with Politey’s numbers. i have a family of four with all of the typical expenses. i would say to live comfortably and attain financial goals you would need to make in the area of 300K minimum annually to afford a 700k house.
an income of 200k annually maybe more around a 350 to 400k home if you have a family. otherwise, expenses and those surprise expenses will blow the budget within a matter of months.
I’ve always been a firm believer that you shouldn’t take a mortgage of more than 2 to 2.5 times your annual income. That is, if you want to be extremely comfortable with your debt level, this is the max.
Thus, for a family with an income of $150k, the maximum mortgage amount should be $300k to $375k. The remainder should be paid via downpayment. A cushion of 6 months expenses should be available as well.
So, with a 20-25% downpayment, a family with an income of $150k would be looking in the $450k to $500k range.
jb
On 700K house you need gross income of $176,271 , excluding all other variable. Here is the breakdown.
$245,000 – Down payment coming from proceeds selling current house or cash, 1st time home byers should not look for 700K house, unless you are exteremely high earner (family or single).
$2,951 P/I at 6.75% -30 yr fixed
$1062 RE Tax -say $10,800/year
$100 Insurance
$4,113 Monthly House related payments
at 28% rule
You need income of $176,271 to afford this house and have enough disretionary money for everthing else
I really wonder just how common those 35% down payments are..
jb
How much do you need to make to afford these:
Super-luxury homes hit market for $100M
Donald Trump’s property for sale here has all the big-time extras one might expect. Pricey marble and 24-karat gold fixtures decorate bathrooms. There’s a gargantuan fountain in the driveway and 475 feet of oceanfront out back.
Perhaps the biggest thing about the home, however, is its price tag: $125 million. And (sorry Donald) that price has already been trumped. A home in Aspen, Colo., is now listed at $135 million. Another home in Lake Tahoe, Nev., was recently listed at a flat $100 million.
The listings represent a monetary milestone in American real estate: the first time U.S. homes have broken into a whopping nine figures, according to real estate experts, and they’ve done so in quick succession. A May survey of the nation’s most expensive homes by Forbes.com put Trump’s home at the most expensive and the first to break the $100 million mark. At the time, the next highest listing was a $75 million estate in Bridgehampton, N.Y.
Here is a link about financing and the new regulations and stuff. Found it on citibank.com. I don’t know how to shrink it though.
https://web.da-us.citibank.com/cgi-bin/citifi/scripts/qandr/qr_newsarticle.jsp?BV_UseBVCookie=yes&storyID={D65CBE06-491D-437F-B9F8-851F37D54B39}&cat=CAT%3AEconomy
Bring a copy of this to a local open house;
http://www.kitco.com/ind/Willie/sep292006.html
The home builders have benefited from a rally in their stock shares, one without merit. A pure short covering rally in my view, as their fundamentals worsen. The HGX approaches the 20-week moving average, the next resistance boundary. Their August new home inventory level grew from 6.5 months supply to 6.6 months supply. Their reported land lease abandonments have grown, with large claimed losses. Sadly and tragically, the housing market bear market has only begun. With each passing month, the denial will continue in the investment community and among the economist charlatans. They will never mention downward momentum, but rather newfound stability at a lower level. Just as upward momentum was critically important, so is downward momentum. Lower property values will encourage people to sell out, to avoid being a victim of negative home equity. Rising carry costs to the homeowner will motivate round after round of selling, until the 1999-2000 level is reached in prices.
Hundreds of thousands will be forced to leave their homes and sell out, some of whom with negative equity. In fact, a new subclass will reveal itself, the homeowner who is bankrupt, in full ownership, but with negative equity. Wow, the homeowner in poverty! In time at a later date, they might actually gain bargaining power with their lenders, overwhelmed by foreclosures. Imagine occupying a home, enjoying its shelter, its opportunity for comfort and privacy, a place to raise a family, but being unable to make payments which have risen monthly by 30% to 50%. Imagine for these unfortunados that they must produce tens of thousand$ in order to sell and depart
RE: $700K house
At $145K gross income, that’s $3,700 savings in the bank each month (that’s after food, utilities, etc). No kids in my calculations, though.
$300K income to buy a $700K house?!?!? Does a kid soak up $100K to $150K every year?
did anyone see the article from sunday’s ny daily news??
titled honey i shrunk the real estate market!
maybe grim can post it
good read
Here is the link to NY Daily News article.
Honey, they shrunk
the housing market
Hillsboro discusses transit village
BW Article
U.S.: Consumers Aren’t Sweating The Housing Slump Yet
Just back from a buisness trip in DC.
Damn, that town has built up alot of Condos in the past year. I think the DC area is setting up for a nasty fall, far worse than NJ. ANyone care to comment?
SAS
SAS
http://dchousingbubbleblues.blogspot.com/
KL
I was visitng some open houses today (Sunday) in Bergen county – emerson and North.
Quite a lot of people turned up – atleast 8 to 9 in each house – I mean that’s a lot with today’s standards.
Realtors also seemed busy showing.
Grim:
Can you please keep this weekend open dicussion on the top thru Monday – people can contrinut their weekend exprience for all to read. OW it gets lost cause Monday sure brings in more NNJ RE news.
thanks,
done
Unrealtor, I’m not sure how you came out to those numbers, and I’m not saying it can’t be done under certain circumstances, but it’s very risky. There are numbers on a page, but then there are real-life numbers. Somehow, real-life numbers always turn out worse. :)
Also, at that level, the buyer is probably putting almost all of their financial eggs into the housing basket – and like other assets, it can go down in value (as we’re seeing now). And, it’ll be a huge entry in the liability column for a long time.
And kids are unbelievably expensive :)
Pardon PMD,
How do you visit several open houses at a time?
Then, how do you determine, how many visitors at any given open house, unless you sit there until it’s over, and detail how many visitors have indeed come through?
I detect a case of realtus ignoramus, aggravated by the syndrome iamus assholious. just my observations. carry on.
Does anyone have access to Mercer county tax records. I want to make several lowball offers on condos in hamilton and lawrenceville area. Any and all suggestions are welcome!
Arr Elle
it ought to be interesting watching what happens with home prices now that the mania is over and people have to build equity the old fashioned way, by paying off their mortgage slowly over time. those that bought recently and can sit tight over the long haul (10+ years) will see things come around ‘in the end’. those that have to move and bought recently are not going to be in a position of weakness and will either have to try and stay put, sell at a loss and bring cash to the closing or dare i say risk foreclosure. i expect a surge of rentals as this plays out. even now the rental market provides plenty of opportunites for bargains if you don’t want to buy until the further drops that are coming.
my advise on when to wade into the murky waters of first time homeownership? wait until nov ’07 you’re going to see a # of deals.
Get the block and lot numbers and go to the Mercer County Clerks website. It’s easy.
…and Antionette. I’ve gone to many open-houses in one day. And always tally the visitors register that the agents are so eager to remind each guest to sign.
GSMLS says there are currently 32,194 listings. Yesterday the number was 32,610 or something close to that. What happened to the 400+ other listings? Are people pulling their homes off the market and trying again next year? Was there a massive cleanup of double posts? Anyone know what gives?
Could have been end-of-month contract ends for listings…
Seneca – last month they went down by 800 listings. Most of them are relisted in a week or two.
I don’t know if there is a connection. FSBO numbers from around where i stay have gone up by 50% since March.
End of month closings and expirations.
jb
Antoinette = realtorus desperatus.
hey SAS if you think dc is bad i was in San Diego after labor day and it is even worse there
so many new condo’s a really unbelievable amount actually
Re: $700,000 homes
$140,000 downpayment (20%)
6.5% 30 yr mortgage
$12,000 annual property taxes
$6,000 annual insurance/maintanence
= $5040 per month
$185,000 – $215,000 is the income range you should have
Even though we are above that income range, I feel VERY uncomfortable about paying 700K for a (for us, starter) house. We do not quite have 20% down (at least in that price range) but even if we did, 5K a month? I guess it wouldn’t bother me as much if the houses that I have seen in that range were houses I felt were nice and that I could stay in for 10 years. But they really haven’t been, at least not in the decent towns.
The other thing is that 12K taxes are dreamy – I feel like many of these houses that sell in the 700 range are actually assessed much lower, so following the sale, your tax bill could increase a lot. Where we are looking in Westchester they are closer to 15-16K PRIOR to the sale.
Maybe I am just crazy but if I were in that 185-215 bracket, I would never even consider a house that expensive, unless it was great and I had a huge downpayment. Lord, what is this world coming to?!?
NJGal, I’m with ya. But for me, it’s a perspective problem. I’m old enough to remember when a $700k house was someone’s estate in a romance novel, or something you passed with your nose pressed against the window on a Sunday drive in the country.
When I drive around $700k houses now, I get a little sad. My little girl doesn’t even look out the window.
njgal,
I hear what you are saying, and of course I believe prices will come down, but I think the days of getting a gorgeous house in westchester (or similar areas) for $700,000 are long gone.
$700,000 starter houses are a joke, but $500,000 starter houses seem realistic to me. Keep in mind that this would be about 30% off current prices, which many people think is a fantasy.
I believe that income figures in the region are misleading in terms of their relationship to house prices. First, more people in the NYC region rent than anywhere else in the country. The median household income is not the same as the median homeowner household income.
Second, while incomes across the board are stagnant, incomes at the top are going up rapidly. And a huge share of the top 5% live in this area.
While I grant that people often overstate the wealth in this region, it is important not to understate it. There are at least 25 towns in Northern NJ, Westchester, Fairfield County and Long Island that have median incomes above $150,000. And there are tens of thousands more households in NYC that are above this as well.
It’s so crazy. Pat, I remember when I thought a million dollars was an insane amount of money. If I won that in the lottery now, after taxes, it would pay off my student loans, allow for some savings and be a nice DOWNPAYMENT – not even a house.
skep-tic, I am in no way under the illusion that 700K is going to buy me a mansion in ot interested in the houses I am looking at. Westchester. But it is just not a do-able starter house price. I am not underestimating the wealth there, but I think more people overestimate the true wealth than underestimate it.
I think 500 or thereabouts is probably where it will end up, and I know that I would be fine with that amount because this is always a more expensive area. That would also be in line with rents to me and other who rent in urban areas. I have actually seen several new listings below 600K in the town I am looking in, and prices dropping out of the high 700s to the low 700s (with further to go, as they’re not selling) and sometimes 600s. Frankly, nothing seems to be selling, so I imagine that those people will either drop the prices or play the relist game in the spring (making inventory even higher). I don’t think Westchester is anywhere near it’s bottom yet.
Eew, I did a bad backspace thingie up there. Sorry. Meant to say that I do not believe that 700K is going to buy me a great house.
Wondered why it was so quiet today, everyone is stuck in this old thread.. :)
I need to get links to the most recent comments up on the main page so everyone can find where the action is.
jb
# Antoinette Says:
October 1st, 2006 at 10:21 pm
Pardon PMD,
How do you visit several open houses at a time?
Then, how do you determine, how many visitors at any given open house, unless you sit there until it’s over, and detail how many visitors have indeed come through?
I detect a case of realtus ignoramus, aggravated by the syndrome iamus assholious. just my observations. carry on.
Antoinette:
You seem to be very new to this RE world. Have you ever been to a open house. There is always a register to sign in. That is where you see how many people have visited. If an open house is from 1-5pm go there at 4:30 and you get a pretty nide idea.
Do you get what I mean? Like to know what’s the next disease you are talking about.
PMD
Guess my sign has a copy-paste type.
Zac,
Thanks! 8-)
Arr Elle
I’m waiting for baby news. CF?
due 10/28
tomorrow is the birthing center tour
since the Mets game is at 4PM on Wednesday, she can go with me
Awww, 10/28. A Mets WS baby. Did you plan that down to the day?
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