I think it is time for some more of my own commentary on the blog. Over the past few months I’ve tried to hold back my own opinion, preferring instead to simply post stories as I found them. Yesterday I received a number of comments and emails about my bias, but more importantly, my agenda.
While going through my usual routine this morning, I come across this piece in Realty Times:
NAR Campaign Negates Bubble Hype, Encourages Buyers And Sellers
by Blanche Evans
If you don’t know who Blanche is, you should spend some time reading her stories. I am about ready to take the crown from Leslie Appleton-Young and proclaim Blanche Evans the new Bubble Queen.
“If you don’t tell your story, someone else will,” Joe Williams, co-founder of Keller Williams said recently about the media’s disinclination to quote real estate brokers as sources for the myriad stories written recently about the so-called housing bubble.
Instead they turn to anyone but people who buy and sell homes for a living — stock analysts, economists, media pundits, authors, and so on. The effect on buyers has been paralyzing. Many brokers say buyers are concerned with more than rising home prices and interest rates — they’re scared of being the next greater fool.
Right on Blanche! Forget about those PhD economists and writers. What do they know about real estate anyway? Those dopes spent years tucked away in ivy league schools, learning about the intricacies of economic theory, for what? Didn’t they realize they could learn all they needed to know from a 75-hour licensure course and a Carlton Sheets book?
Or maybe, just maybe Blanche, they realize that people who sell homes are biased. If homes don’t sell, real estate agents don’t have food on their tables. How can you ask someone who has such a vested interest in real estate? Do you really think you’ll receive an unbiased answer?
With enormously improved conditions — interest rates comparable to 40-year-lows and rising inventories that provide greater selection, pending sales are already beginning to rise. Even the former Federal Reserve chairman, Alan Greenspan said he thought the “worst of this may well be over.” This could cause many buyers to miss a golden opportunity — home prices and sales expected to rise again in the spring.
Way to spin Blanche, you go girl! And throwing Greenspan in there for credibility, absolute genious. I also like the play on urgency as well. That worked so well for you guys over the past few years, didn’t it. You’ll miss the boat, you’ll be priced out. You’ll never afford if you don’t buy now. If you don’t make an offer today someone else will! Don’t you understand? You are going to miss a golden opportunity.
Now the NAR is doing something about the negative hype — running full-page newspaper advertisements in six of the nation’s leading newspapers beginning yesterday. The ads are designed to urge home buyers who have been waiting to buy the home of their dreams to act now before the market changes. Not coincidentally, the newspapers chosen — Wall Street Journal, USA Today, New York Times, Washington Post, Los Angeles Times and Chicago Tribune, are among those most guilty of hyping the housing bubble to the point of scaring buyers to death.
So what you are basically saying Blanche, is that scaring buyers away from buying is bad, but the NAR trying to scare buyers into buying with their mass propoganda is good? Of course it is, because it suits your agenda.
NAR’s first-ever newspaper blitz features the headline, “It’s a great time to buy or sell a home.” The advertisement points out that interest rates have fallen seven months in a row and are near 40 year lows, inventories of existing homes are higher than they have been in decades and prices have stabilized. But the perfect conditions for buyers are likely to change as sales pick up, prices gain traction and conditions improve for sellers next year.
Of course it’s a great time to buy or sell a home, it’s always a great time for a commission. Oops! I meant to buy or sell a home. When has the NAR or the Real Estate industry ever said it was a bad time to buy or sell? Never, and they never will. Sales are down thus commissions are down. The increased pool of agents only serves to further dilute the commission pool. I see the NAR has also mastered the ability to create a sense of urgency among buyers.
“The market is much better than you might hear or read,” says Tom Stevens, NAR’s president. “Consumers should take advantage of this perfect alignment of low rates and extraordinary inventory before market conditions change,”
Tom, turn that chart over, you are looking at it upside down. But I’ll agree with you on that last point, we’re in for one heck of a change.
And people say I have an agenda?
From the New York Times:
Realtors Say the Stars Are Aligned for Housing
IT may go down as the “Got milk?” moment for the housing sector.
Just as dairy associations, with their widespread ads, have tried to convince Americans of the many benefits of milk, the National Association of Realtors will begin promoting the notion that buying a home is an unalloyed good in a $40 million campaign that boldly declares: “It’s a great time to buy or sell a home.”
The ads will try to counter the drumbeat of dour housing data and news by making the case that historically low interest rates, a large supply of homes on the market and the group’s forecast of rising prices next year make now an ideal time to buy a home.
The campaign, which was developed by the Most Agency, based in Newport Beach, Calif., starts today with full-page ads in The Wall Street Journal and USA Today. It will make its way into other newspapers, including The New York Times, over the weekend and onto television and radio networks early next year.
“It’s a great time to buy or sell a home.”
Wow! A buyer’s and a seller’s market! At the same time! This is the best market ever!
Geez, that 3 month correction after the 6 year run-up in prices wasn’t so bad now, was it? Thank God that’s over!
Due to the fact that I am not an ecomnomist,or a stock analyst,or a phd in anything. I need to know what will cause the “perfect conditions for buyers”, to change??
KL
I’m thinking we should pay some college kids to make you-tube movies to counter this propoganda.
The first time we bought a house, 1980, was a scary time in real estate with a slow market and interest rates over 10%. That worked out very well BUT the house only cost $46,000. Looking back, there was no great risk at all. It wouldn’t have destroyed our lives to lose HALF the value of that house. A first time buyer today is looking at $300 – $400,000 for that same house (only its 25 years older) and maybe half of that run-up has been in the last 5 – 7 years.
You’re taking on a tremendous risk and not getting much for it. What would push someone to buy now?
propaganda
I need to know what will cause the “perfect conditions for buyers”, to change??
Its simple prices need to drop a lot more. Most people looking to buy live and work in NJ.
Combined salary my wife and I make around 93k per year, and the most we feel comfortable spending is 150,000.00 which there were plenty of homes at the price before the bubble. Its called we are priced out. The bigest problem is everywhere in NJ is overpriced, even Irvington is overpriced lol.
And as far as Jim having an agenda thats the funniest damn thing I have heard…
If anyone has and agenda its the real estate agents. You greedy scum bags no most people who live and work in NJ cannot afford these prices so thats why everywhere is an easy commute to NYC. Yes I have said it many times but its tru, they have the salaries to afford these prices. Every open house I have been too even if its 2 hours away from NYC I still hear the same line “Easy access to NYC” So who really is the one with the agenda?
Realtors seem to think that we are being cheap and waiting for prices to come down becuase they think that people like can afford to buy at these prices. Keep smoking your crack.
How come someone people who were in the same salary bracket as I was only a few years ago could not afford 200K but now magically some how I am? Again who is the one with the agenda.
Huses are not selling becuase people cannot afford them, plain and simple. There are 3 markets in real estate
Welthy area’s like, Short Hills, Bernardsville, Montville
Average income area’s: Mount olive, Rockaway, Hillsborough
And poor area’s, Irvington, plainfield, newark etc
But as of right now every area has been turned into Rich, richer, or richest area.
So by trying to fabricate stories and say prices will not drop much or that the market has to adjust itslef out but only 10-15% who is the one with the agenda.
People say when will buyers be happy? When we can afford to buy a house, we do not expect to purchase Mega Mansions or even a Mini MegaMansion. But the only way this market will correct itslef out is if prices adjust themselves out to how they were before the bubble. It not like companies are lining up around the block and say Hey let give everyone a 60% raise so they can afford housing…We do not expect them to. But again houses will not sell becuase the people left who are looking cannot afford these prices. And people want someone to blame?? Its the buyers but the realtors were the instigators making everywhere a easy commute so they have pulled it so far away that you casued 2 hour commutes. So now all of a sudden I have no choice but to commute to get to work. If I want to buy in this state I will probably have to wait until I am in my 40’s to be able to afford a house. So use your brains and stop blaming other people the Jim for helping people and giving a place for people to vent and talk about the market. Hey to say hey there are others in my situation.
Of course media has been hyping the fact that the bubble is bursting. That’s because it is. The media’s job is to portray conditions objectively.
I’m on my way to the Otteau workshop this morning. Please feel free to use this thread as an open discussion.
Can someone please post the employment numbers at 8:30?
Thanks!
jb
James, unfair. It was simply a misprint. Like the GOP on Kerry, you are taking unfair advantage of NAR’s small and forgiveable error.
“It’s a good time to buy or sell a TOME.” Tome, you see, that is an issue in a volume of books. Yes, it’s a little known, under reported fact that the NAR, sensing the end of their peak revenues and an onslaught of lawsuits, similar to that of the tabacco industry in the 70s, has decided to diversify revenues into other cash-rich low-inventory businesses… such as books!
Coming soon: “It’s a good time to buy or sell a PHONE.” and a LOAN or a CLONE (yes…NAR is going Biotech soon too… watch this space).
Please James… lets be balanced here.
“Didn’t they realize they could learn all they needed to know from a 75-hour licensure course and a Carlton Sheets book?”
Funny you should bring up the 75 hour course. A beautician in the state of NJ is required to go through a much more rigorous training period. Believe me, I am not ctitical of a beautician, we have some good friends in that business. However, they were the ones that brought this up to me. Think about it, the person who cuts your hair is required to put in more hours, to get licensed, than an individual that is convincing you to make the biggest investment in your life. It actually gets worse, the mortgage broker who is probably trying to convince you to go with an I/O, more $ to them, does not have any licensing requirements.
Great work JB, love the Sheets line!!!!
From the NAR: Please, please don’t let house prices come down!!
Newspapers and other media sources present opinions all of the time. JB, you are entitled to do the same.
For all of those who question his agenda, consider that he maintains this site free of charge, with no ads.
Take a look at your local paper and the number of RE related ads. They dominate the publication. Even the NYTimes is dominated by RE ads. With circulation of newspapers dropping like a rock, do you think these people aren’t afraid of offending one of their biggest revenue sources?
Of course, NOW they report on the bubble. Where were they last August, when it became clear things were starting to trend down? Even today, most real estate articles continue to quote realtors, reps of the NAR, mortgage brokers, etc, far more than any other “experts.” Despite the continuing overwhelming bad news, every single article I read posits that a turnaround is just around the corner. Have you ever read in the NYTimes that houses could drop 50% in value in the next 5 yrs? Why not?
The bottom line is that everyone has an agenda. RE industry types are just upset because they no longer control the flow of info.
Employ Report.
Estimate, +130K
Probable range, +120-160K
Jobs,
+92k, will follow up with details
Game is up NAR!
Your credibility with buyers is kaput….
LET THE MASSACRE BEGIN SPRING 2007…
Watch for the desperate-starving-harassing fast talking realtors…
games up…spend more time talking some sense into those brainwashed grubbing sellers who think they are entitled to something…
If you pay anywhere near asking rice I mean anywhere near post a big F on your forehead cuz you will be underwater as soon as you sign the slave contract…
BOOOOOOOOOOOOYAAAAAAAAAAAA
Bob
I’ll never forget my first interaction with a “professional” realtor who’d been in the business at least 15-20 years. When I started going into such complex details such as the current interest rates for a 30yr fixed(!), in addition to a few neighborhood details, his response “That’s why I like you, you’re always so informed!” (e.g. he had absolutely no clue what the mortgage rates were at the time). They tried to push me- hard – into buying something way over my head. I passed, thank goodness.
The next experience, I blatantly caught Weichert agents lying multiple times, realized they had never presented my offer for a brownstone (I was friends with the neighbor). This was after I had initially offered to let them list my place as well- when they came out of the gate with a “proposed” price at least 30-40% higher than what any reasonable person would consider/comps at the time, I said no thanks. Now, I won’t even consider buying a Weichert property given how they try to over-inflate prices.
This blog has been an unbelievable source of information on the market, and I can say much of the data presented here confirmed my gut feeling at the time- which is why I’m happily renting right now.
Thanks to Grim and all here for providing the info to help me avoid buying a ridiculously overpriced place and being underwater for years!!
Yeah, I BET those real estate industry folks/agents are sending plenty of hate mail. They’d rather bury people in neg-am, IO, no doc, no down-payment ARMs.
Grim, your “agenda” has been to provide information- tons of it – to let reasonable people make their own decisions. You’ve had a huge impact on people like myself, who were starved for data to look at things objectively.
We always knew this day would come- when the scales would tip the other direction decisively, and the industry shills would come out of the woodwork.
The “media” certainly hasn’t “caused” anything- they merely have reported on what’s already happened, with about a 1 yr. lag. If you waited for the NY Times to save your behind, ahhh, well, good luck to you.
Thanks as always Grim, for an incredible effort to inform and create this community-
Steve
From Marketwatch;
The increase in nonfarm payroll was concentrated in the service producing category.
Manufacturing jobs declined by 39,000. Construction jobs fell by 26,000.
Jobs in the services increased 152,000.
Within services, government added 34,000 workers and jobs in education rose 28,000.
Temp jobs increased by 15,000 in October
You have an Agenda!? Since when is telling the truth an agenda? That woman should be wearing a turban and sitting in front of a crystal ball.
How about the RE ads, house pictured, priced $859,000 then boasts “SOLD!” They don’t actually say it sold for $650k. Over 200k less than they are leading the public to believe. How is this ok? Isn’t this some sort of twisted agenda by the RE market?
Grim – you are doing a great service to all of us in the market to buy. It is just sick that you have to fight a group that has made their living off of lying and cheating.
By the way, great article about you in the paper.
Aug & Sept revised higher by a cumulative 139K
http://www.marketwatch.com/default.aspx?siteid=mktw&avatar=seen&dist=ctmw
Something else I thought to add, why do realtors relist properties?? Of coruse thats not an agenda to fool a scam people, and not telling them it has been relisted.
And to Steve I have to agree realtors no nothing about a mortage. I have told realtors that I cannot afford the house and they say well we have a great mortage speailist who has hundreds of programs that can get you in. So who has the agenda. I guess realtors don’t know my credit sucks bad and is starting to get better but I realy do not qualify for there loans. And I mean are realtors that studpid that they think everyone make 200K/year??
I did get a loan but I went with a Bank not some backdoor mortage broker through some half wit real estate company. And I plan on lowballing if I like the prop I am going to see this weekend, Listed 385,000.00 originally purchased for 40,000.00 My offer if I like te place 120,000.00 and if they dont like it the proprty can continue to rot on the market :)
Regarding the job numbers, looks like the Fed will still be in a bit of a quandary given the productivity numbers were negative. Anyone else got any guesses?
JM
Her whole article is baloney – I have yet to see a newspaper article that DOESN’T quote a realtor or Liereah. Seriously, the pissiness is getting ridiculous.
In this case, it’s a Sept. 7 interview with Clinton-era Treasury Secretary Bob Rubin that was just released by Citigroup’s (C, news, msgs) Global Economic & Market Analysis group. While he doesn’t specifically talk about a dislocation, Rubin’s comments do echo what I have been saying:
“Most people seem to think that the problem is somewhere down the road. I think the markets are remarkably complacent. It’s curious to me that economists, with an exception here or there, are as sanguine as they seem to be. They talk about a cooling off or a soft landing or whatever it may be, but generally seem to attach very low probabilities to really serious, adverse developments. Most of the people I know in the national security world, and there are many, seem deeply troubled about a variety of matters: nuclear proliferation, Islamic radicalism, the endgame in Iraq, instability in countries that mean a great deal to us in the Middle East, what’s going to happen in Pakistan and many other issues as well. And the markets do not reflect this.”
NAR is getting desperate.
About time this cartel gets shaken.
SAS
Picked up a wireless connection here in the conference room. I’m blogging from a room full of real estate agents. Talk about being in the belly of the beast.
jb
I can’t see them cutting rates anytime soon- there are just too many inflationary risks out there, in IMO. Oil prices coming down a bit, housing softening certainly helps, but plenty of inflation to go around. I’d bet the Fed stays on hold until it sees some very clear, consistent evidence it needs to act in either direction (bias to to the upside).
I checked into moving back into the city, I was stunned at where rents have gone- literally $3500-$3800 for a 1 bdrm apt. I read a typical 1bdrm that had been priced at $2400/mo went up over $1000/mo in something like 7-8 months. Yikes.
Just ancedotal, to be sure, but at least in the realm I’m aware of the job market is still very tight, anyone I know that moves jobs manages to land a good bump up in comp, and firms are having a tough time geting good people- pushing up wages. I can’t recall the exact # (I’m sure someone here can opine), but the unemployment % for college grads is extremely low right now- something like 1-2% vs. the broader numbers.
Steve
Rubin’s right, but it would have to be some amazingly sophisticated modelling to factor in all or even some of those things. You would have to bring in experts in international security, terrorism, military strategy, Islamic culture, the Middle East to be able to build something like that.
JM
Construction jobs fell by 26,000. Legal or illegal?
I really burns me up that Grim gets bashed for being biased, while the NAR is treated as a legitimate and unbiased sources of news. NAR press releases are often picked up by AP or Reuters and republished almost verbatim.
If the Hamburglar said it was a good time to eat Big Macs, the media would treat this as an advertisement. But, when David Lereah says it’s a good time to buy houses, it’s treated as news. Why the difference?
U.S. Adds 92,000 Jobs
To Nonfarm Payrolls
Unemployment Rate Drops to 4.4%,
Lowest Level in More Than Five Years
By BRIAN BLACKSTONE
November 3, 2006 9:12 a.m.
U.S. payrolls posted moderate growth last month but prior months were revised sharply higher, pulling the unemployment rate down to a five-and-a-half year low. The report, which comes just ahead of the midterm election, suggests that labor-market conditions remain very favorable for U.S. workers.
Nonfarm payrolls increased 92,000 in October after growing a revised 148,000 in September and 230,000 in August, the Labor Department said Friday. Previous reports had shown job growth of just 51,000 in September and 188,000 in August.
The October unemployment rate fell 0.2 percentage point to 4.4%, its lowest level since May 2001, when it was 4.3%. Average hourly earnings increased six cents, or 0.4%, to $16.91. That was up 3.9% from a year earlier.
FED THINK
• Fed Official Says Bad Data Fueled Rate Cuts
11/03/06
Though the October job gain was below Wall Street expectations of a 125,000 increase, the prior-month revisions signal that the report was better than expected. And the unemployment was well below expectations for an unchanged 4.6% rate. Wages came in slightly above expectations for a 0.3% rise.
The figures are likely to offset fears of a sharp U.S. slowdown and may raise concern among Federal Reserve officials who have warned that tight labor markets pose an inflation risk.
This is a “strong report that suggests that the labor market is very tight, that wages should begin to re-accelerate soon and that the consumer is likely to keep spending,” wrote Drew Matus, senior financial-markets economist at Lehman Economics. “This combination adds up to a continued heightened level of inflation risks. We continue to expect that the Fed will raise rates once more to keep inflation expectations contained,” he wrote.
The report clamped investors’ expectations of a rate cut at the Federal Reserve’s next meeting. On the Chicago Board of Trade, the February federal-funds futures contract traded with an implied yield of 5.24% after the report was released, reflecting 4% odds on a rate cut by January, compared with 16% odds before the report. The Fed meets next on Dec. 12.
Immediately after the report was released, the 10-year Treasury bond fell 23/32 to boost the yield to 4.695%, compared with a rise of 2/32, or 4.596% prior to the release. The market action is a turnaround from the last several days, when bonds rallied, as several pieces of weaker-than-expected economic data caused investors to worry about a harder landing than had been previously thought. (Read more in MarketBeat.)
The Fed has held the federal-funds rate at 5.25% in the past three policy meetings, and has been expected to keep rates steady into 2007. It also maintained a bias toward higher rates should inflation persist and warned that price pressures could be sustained in part by high “resource utilization,” a reference to the tight job market. Thus, Friday’s report should not only cool expectations for a rate cut in the near future, but could spur fears of higher rates if underlying inflation remains elevated.
The Labor Department report suggests that fundamentals for consumers remain positive for spending and that a tight jobs market should give workers greater bargaining power to boost wages. Other economic reports including a weaker-than-expected Institute for Supply Management October index and tepid retailer sales reports for October had suggested the fourth quarter started on a soft tone.
Job losses in manufacturing, construction and retail offset gains in professional and business services, education and health, government and elsewhere. Factories shed 39,000 jobs in October, marking the fourth straight month of employment cuts. Construction companies got rid of 26,000 jobs, while retailers trimmed 3,500 positions. Professional and businesses services, meanwhile, added 43,000 jobs. Education and health expanded employment by 28,000, and the government payroll swelled by 34,000.
All told the 92,000 total net jobs added in October were the fewest in a year, when the economy was suffering the blow of the Gulf Coast hurricanes. Though, that was offset by the sharp upward revisions to prior months.
The average work week was up 0.1 hour at 33.9 hours.
You’ve had a huge impact on people like myself, who were starved for data to look at things objectively
I found this blog, because I too was starving for data, even though I was surrounded by it, it was the quality of data I was getting, that was so nutritionly empty, It left me starving.
KL
If the Hamburglar said it was a good time to eat Big Macs, the media would treat this as an advertisement. But, when David Lereah says it’s a good time to buy houses, it’s treated as news. Why the difference?
I am not sure but I know as a fact the Hamburglar is a lot freakin cooler than David Lereah and I would listen to the Hamburlar any day of the week, he is the MAN
Apologies- credit to WSJ for earlier jobs article… thx
One other thing to ponder is why is the only thing a realtor knows how to quote is Otteua report? I guess places like CNN are not reputable sources
I’m very, very disappointed that the Philadelphia Inquirer was left off the list of target papers for the brainwashing.
I fear that means the SE PA/DE/SNJ area is not a candidate for big losses.
—
Homer: I forgot to tell you that you were the inspiration for Hubby’s Halloween costume. He wore his full-body white Tyvek chemies from work and wrote HOMER across the front. Scared the bageebees out of the kids.
Pat
LOL thats great, I can’t wait till I live somwhere where I can scare the bageebees out of kids on Halloween(right now only get to scare the wife and dogs :)
Ugh, JB. Hope you brought some Purell.
IMO i’d stay away from commentary Jim. you’ve done your best (and it’s damn difficult) to maintain impartiality, particularly on such an emotional subject. if you take the route of calculated risk and stick to the #’s, it will be hard for people to poke holes at you. if you ‘take a side’ you’ve become that side and i believe your credibility will suffer. just my 2.
JB if while at conference they point and screech at you like invasion of the body snatchers, run!
It may be a great time to buy but i still cant afford it and i doubt many others can either. This is for the REALTOR’s benefit so that they may understand what they are going through.
~ 5 Stages of Grief ~
1. Denial and Isolation.
At first, we tend to deny the loss has taken place, and may withdraw from our usual social contacts. This stage may last a few moments, or longer.
2. Anger.
The grieving person may then be furious at the person who inflicted the hurt (buyers and media), or at the world, for letting it happen. He may be angry with himself for letting the event take place, even if, realistically, nothing could have stopped it.
3. Bargaining.
Now the grieving person may make bargains with God, asking, “If I do this, will you take away the loss?” If i take out a full color add in the ledger will you please bring back the frenzy?
4. Depression.
The person feels numb, although anger and sadness may remain underneath.
5. Acceptance.
This is when the anger, sadness and mourning have tapered off. The person simply accepts the reality of the loss. Finally the realtor either finds another job or starts working for the buyer. Gasp! Work for the buyer and get those prices down… what a concept.
oct job report with revisions of Aug and Sept and overall unemployment rate was strong. bonds are suffering. we’re continuing to get conflicting messages from the economy which has been the case for a number of months now. today’s data makes the case for a soft landing from a housing slowdown. still this is only one data point and if we’re in a bubble housing historically take a while to unwind so this story is far from over. i say look to 2nd-4th quarter 2007 to get the real story on direction.
Realtors are somewhere between stages 2 & 3 at the moment. The winter will bring lots and lots of stage 4.
JB,
As someone who has asked for you opinion, I am very happy to get it.
As for your agenda, of course you have one, you stated yesterday in the Star Ledger — you’ve been trying to figure out why the RE market is so screwed up and how not to get screwed over in the process of buying a house.
In pursuit of your agenda, you’ve learned a lot and helped and others learn it too. You’re shameless,man, but I think it’s because you have nothing to be ashamed of.
If the Pentagon can institute a new rapid response team to counter what they perceive as negative Iraq coverage, why not the NAR? I’ve been waiting for just such an announcement. Maybe the two groups can mix their messages and convince us it’s a good time to buy…in Baghdad.
In 2005, National Association of Realtors Chief Economist David Lereah released the book,
“Are You Missing the Real Estate Boom? Why Home Values and Other Real Estate Investments Will Climb Through the End of the Decade – and How to Profit From Them.”
Interestingly, the title for the 2006 edition of the book was changed to,
“Why the Real Estate Boom Will Not Bust – and How You Can Profit From It.”
Below are Minyanville’s suggestions for subsequent title revisions in later editions of Lereah’s book through 2015:
2007: “Why the Real Estate Boom Will Not Bust and How Foreclosures are Technically Part of the Continuing Real Estate Boom, In a Way.”
2008: “Why the Real Estate Boom in Distressed Properties Will Not Bust (except in certain local markets) and How You Can Use Leverage to Profit From It.”
2009: “Why the Phrase “Real Estate Boom” is Often Misunderstood to Mean Higher Prices and How You Can Pray for Them.”
2010: “Why the Real Estate Boom Will Soon Bounce Back and How to Eventually Profit From It.”
2011: “Why Did I Have to Write “The Real Estate Boom Will Not Bust Through the End of the Decade” and How Did I Not Realize How Long A Decade Really Is?”
2012: “Oh, Dear God, Please, Please Let the Real Estate Boom Bounce Back… and How You Can Profit From It.”
2013: “Please, Please, Just Let the Real Estate Boom Come Back This One Time for This One House and How You Can Break Even From It.”
2014: “Why I Am Willing to Accept a Small Loss of 35% On the Real Estate Boom and No Longer Care About How to Profit From It.”
2015: “Why Can I Maybe Borrow a Couple Dollars Off You Until the Real Estate Bust is Over?”
Hey realtors are the first ones to change – if they will see that they either have to convinve their clients to cut price a lot or go work as Janotors in bu building – I think they will do their best do lower the price.
But if you saw your neighbour selling his house 6 month ago for 600K would you be willing to sell yours for 350K??? better yet would you be willing to sell you house for 350K if mortage balance on it is at 550k???
I’d rather go through bankruptcy and live in the house rent free for a year… Thats why a believe that we wil see a lot of either quick foreclosures/bankruptcie’s in the future instead of short sales…
Bankruptcy in this country is a Joke…
And how does realtor suppose to convince me to sell my house for 350K when I have 550K outstanting principal balance??? Better yet how is he going to cinvince my bank/lender??? Do you own stocks??? any securities papers?? are you ready to give up 10% of your portfolio so some poor shmuck can do short sale?? is everybody who have Investments in mutual funds ready to take a hit for those oversealos home buyers???
Remember with current law’s people are buying home 2 years after they are filed for bankruptcy…. And in hte end your mutual fund buy’s their mortages as “secure” debt papers….
BTW,
“It’s a great time to buy or sell a home.”
In all fairness to Blanche Evans, she’s half right. It is a great time to sell a home, at least for people who bought their home more than four years ago.
Of course while it might be a great time to actually sell a home, it is not a great time to be trying to sell a home, as an insane run up in prices has left many people out of the market.
BTW Bob (post 22) be careful about these kind of postings, you don’t want to ruin your reputation. ;^)
Grim:
As I have learned at my own building in Hoboken, the people spewing the greatest amount of vitriol at me are the ones with the biggest agendas.
The most disgusting recent example was a married couple who bought in my building where the husband was a self-absorbed, moneyed, British meathead, who became incensed at my anti-Toll/anti-Real Estate opinions that I authored on my local website.
The response?
His wife set up her own website and sent a postcard to everyone in the building. However, instead of creating a nice neighborly online community, she instead used it as an excuse for a full-on marketing piece for her own Real Estate practice.
Projection all the way. There is a lot of venom and people are just looking for a whipping boy.
“‘Obviously, a lot of agents are hurting,’ said Larson. ‘When agents don’t sell homes, they don’t make any money. That’s what it boils down to. But past real estate downturns have lasted years, and this downturn has a long way to go. I don’t see a reason to rush in.’”
BITTER SELLERS AND STARVING REALTORS A VOLATILE COMBO…
Shake & Bake….hehehe
BOOOOOOOOOOYAAAAAAAAA
Bob
Damn Grim, you’re good when you get angry.
Waters, #2:
“A buyer’s and a seller’s market! At the same time! This is the best market ever!”
Excellent catch.
Heard from the front lines….”It’s bad” “REALLY BAD” “and it is going to get WORSE”
Hehehhehehe
BLEED’EM DRY….MAKE’EM PAY FOR YEARS OF THIS LOPSIDED PONZI..
IF you didn’t buy in the last 1 or 3 years do not be a fool and make the mistake of buying now as this CRASH progresses into a MASSACRE slaughter…
babababa
BOOOOOOOOOYAAAAAAAAAA
Bob
This is from the scotch plains area…
but all areas are down down down…it’s bad it’s miserable it’s depressing for…..
Grubbers and starving realtors….It’s PAYBACK TIME FOR YEARS OF TRASHING BUYERS….
MAKE’EM PAY…BLEED’EM DRY!
Bababababa
Boooooooooooyaaaaaaaaaaa
Bob
IT’S PAYBACK TIME…
MAKE’EM PAY….
MAKE SURE YOU ARE COMPENSATED FOR THE ALL THE SPIN MANIPULATION BS YOU MAY HAVE ENDURED OVER THE LAST FEW YEARS….
30% 40% DROPS ……
BLEED’EM DRY
BABABABA
BOOOOOOOOOYAAAAAAAAAAAAA
Bob
From the Times article (post #1):
“Showing how perilous the art of forecasting can be, the ad by the National Association of Realtors cites a 4.3 percent increase in the number of existing home sales contracts signed in August, from July, as evidence that “prices over all have stabilized.”
•But Wednesday, new data released by the association showed that contract signings fell 1.1 percent in September, from August, and 13.6 percent from September 2005. A spokesman said that the first ads were prepared before the latest figures were available and would be updated next week.”
saw this on housing bubble blog
According to the article, “I don’t think the macro statistics reflect accurately what’s going on in many local markets,” says Bruce Karatz, CEO of national home-builder KB Home. In many once-hot regions, order cancellation rates are running above 40 percent, new-home sales volume has dropped 50 percent, and new-home prices are down 10 percent to 25 percent. Karatz says the current downturn is worse than any he has seen – even the early 1990s market that left so many big builders reeling.”
“Karatz says the current downturn is worse than any he has seen…”
Very telling statement by a RE lalalaland insider
Hi all-
Since this has become the open topic…
We’re still having trouble getting real estate agents to show us houses and answer questions about houses that we’re interested in (which is rare, since the market is full of crappy houses in our range).
Of what we’ve been able to see, we found two houses we like, priced $60k apart.
The less expensive house is in great shape, but the neighborhood is just so-so. The agency that’s showing it is taking offers next Friday at 5pm, and the best offer “wins.” My agent thinks it’s a shady remnant of the past few years, but that said, the three-bedroom house is beautiful and listed at only $319k. If we’re one of the suckers that puts down a bid next Friday, we won’t go over $345k. My agent says it will go for at least $375k and she’s probably right, but I don’t want to be the sucker stuck with that mortgage. But you never know, we might get lucky.
The other house is in a better neighborhood and needs a little work. It’s listed for $379k, which of course, my agent thinks is reasonable. the nicer house next door sold for $350k two years ago, and I’ve told her we won’t go over that. If we offer, we’re starting at $329k.
Both houses have doubled in value in 5 years. That’s unbelievable and unsustainable, no matter what our realtor says. That’s why neither of these homes are worth $375k.
Anyone know any DATELINE NBC producers? Dateline needs to do an undercover report with one of their producers posing as a buyer going through the process. It would be interesting to see how realtors handle someone with a 60k yearly income looking to buy a 700k home. The realtor, mortgage broker, appraiser, etc. would undoubtedly dig themselves into a hole as they convince an unsuspecting buyer that they CAN have the American dream.
If these news programs think its important enough to catch repairmen scamming people on a $50 auto repair or a $120 A/C repair, why not on the largest purchase an individual will EVER make?
Realtors say the media is bursting their bubble, I say, WHERE IS the media and why are they not covering the story in-depth?
“The other house is in a better neighborhood and needs a little work. It’s listed for $379k, which of course, my agent thinks is reasonable. the nicer house next door sold for $350k two years ago, and I’ve told her we won’t go over that. If we offer, we’re starting at $329k.
Both houses have doubled in value in 5 years. That’s unbelievable and unsustainable, no matter what our realtor says. That’s why neither of these homes are worth $375k.”
#1 DO NOT TELL ANY REALTOR HOW MUCH YOU ARE WILLING TO PAY! DO NOT PUT ONE IODA OF TRUST IN THESE SCAVANGERS…YOU ARE ON YOUR OWN…PROTECT YOUR OWN INTEREST…SAVING $50,000+ BUCKS ON A HOUSE LIKE THIS ONE MEANS ALOT FOR YOUR FUTURE…PUT THE SAVINGS IN YOUR POCKET NOT THE GREEDY GRUBBERS AND REALTORS..
#2OKAY IT’S NOT WORTH $375k…BID LESS MAKE’EM PAY!
Richard,
I never really saw JB as impartial observer on real estate. I think it’s a mistake to automatically equate impartiality with credibility. I don’t think pretending to be impartial is the way to go. I see JB as someone who clearly has an opinion on real estate and who does a very credible and ethical job of presenting data that can either support or undermine his beliefs and allowing a free and open discourse on the topic. I think being open and honest about his opinions are precisely what makes him credible.
I wish others were only so straightforward. I would challenge NAR to issues statement along with its press releases to the effect “NAR represents realtors® who earn a commission based on the sale of properties”, rather than trying to present themselves as impartial economists.
“Hey realtors are the first ones to change – if they will see that they either have to convinve their clients to cut price a lot or go work as Janotors in bu building – I think they will do their best do lower the price.”
the reality is that Realtors are an unnecessary bunch. The NAR and their minions were a huge part of the frenzy in price increase. The days of people viewing them as a “partner” in the transaction are coming to an end. The days of seeing them as a unnecessary middleman are coming.
ONLY -13% OFF OF LISTING PRICE….
U CAN DO BETTER..
BLEEDD’EM DRY….
WORD FROM THE STREET…”IT’S BAD” “REALLY BAD” “AND IT IS GOING TO GET WORSE”
THEN WHY BID AT SUCH A LITTLE DISCOUNT B/C SOME GRUBBER THINKS THEY ARE ENTITLED TO SOMETHING…
Seneca, a show in Britain did just that, but I think it was more to expose fraud. I cannot remember but I think it was on one of the blogs. I think it would be great if Dateline did that – but Chris Hansen is too busy hiding behind bushes scaring internet predators (seriously, I am addicted to “To Catch a Predator” – I live for the reactions of these dirtbags when they get caught).
FirstTimeBuyer,
In Grim’s most recent October sales data for NNJ, there were 1,342 sales. 8.4% sold for over list price, 5.4% sold for list price, and 86.1% sold for under list price.
75% of these houses were on the market for more than 30 days. And these are the realistic sellers we’re talking about, because they actually got sales.
Are you sure the house is *that* special? Be careful.
So unemployment is down, why do the stocks going down??? I know nobedy believes any of the govermental reports since they are lying at first, and in a couple of months “Revising” their data.
So unemployment is down, why do the stocks going down???
Unemployment falls = Pressure on wages = Inflation = Fed raises rates = stock market falls
I agree w/Lindsey and RentInNJ.
Just by all the reading Grim does (and thankfully passing it on to us) makes his opinion an educated opinion (it IS a blog after all).
But he also does research, comparative analysis and is now attending a seminar (using his own coin I assume).
If all that isn’t enough to show he’s open to ALL data and capable of forming an opinion, well I don’t know what else someone can expect.
I’ve read other “bubble” blogs that are JUST opinion or rhetoric and after awhile find them to be like rice cakes. Bulky but with no sustenance (actually like many comments on here from time to time!).
Rich
Re: Seneca (post 57)
What a FABULOUS observation, Seneca!!!
It’s so appropriate, I’ve taken the liberty of reposting it verbatim below.
You’re sooooo right.
Does ANYONE have a contact at one of the big investigative shows (Dateline, 60 Minutes, etc.) that could get this idea on the table? Just think of the ratings they’d get on THAT show!!!
—————–
“Anyone know any DATELINE NBC producers? Dateline needs to do an undercover report with one of their producers posing as a buyer going through the process. It would be interesting to see how realtors handle someone with a 60k yearly income looking to buy a 700k home. The realtor, mortgage broker, appraiser, etc. would undoubtedly dig themselves into a hole as they convince an unsuspecting buyer that they CAN have the American dream.
If these news programs think its important enough to catch repairmen scamming people on a $50 auto repair or a $120 A/C repair, why not on the largest purchase an individual will EVER make?
Realtors say the media is bursting their bubble, I say, WHERE IS the media and why are they not covering the story in-depth?”
—————-
IMO – Blanche Evans and the rest of the RE cheerleaders would be wise to pace themselves and save some of that energy for next year as it will be much, much worse.
Dow is below 12K again. Easy come, Easy go.
Spelunke,
“Dow is below 12K again. Easy come, Easy go”
Yup….
SAS
I think anyone hoping for more than a temporary period of softness in the real estate market will be disappointed. It’s a finite resource folks, and while we all complain about it, many of us like living here. It’s pretty cool to be close to the beach, close to NYC, close to the mountains, etc. Decent employment. My gripe is more with our tax base than with housing costs. Do we really need hundreds of townships with hundreds of school districts with thousands of paper-pushers making six-figure salaries? I’ve got no issue with the vitriol directed toward realtors, but to be honest, I’ve got more for the NJEA. Until we fix our arcane structure, the tax system will never be changed. But I guess that would be a different blog…
I think the DOW being down is relevant indicator that there is plenty of uncertainty with the economy. I believe the FED has maintained the rate in the past couple of sessions not so much because things were OK but because the economy is teetering on a very fine edge between inflation and recession.
http://www.washingtonpost.com/wp-dyn/content/article/2006/11/02/AR2006110201694.html
“Instead they turn to anyone but people who buy and sell homes for a living — stock analysts, economists, media pundits, authors, and so on.”
Why all the finger pointing Blanche? Many have turned to their own gut feeling, common sense or the realization that markets always return to levels driven by funadamentals.
“close to the mountains”
mountains what mountains?
If you call anything around here a mountain, would love to see your reaction to Colorao, Wyoming, Mountains.
3 great states by the way…..
; )
SAS
he he…
I mean Colorado, Wyoming, and Montana mountains.
3 great states ;)
SAS
I’ve got to chime in!
Yea, they aren’t the Rockies but driving north in a ’61 Corvette through the Hudson River Valley with the top down… perfection!
My off topic comment for the day.
Rich
FirstTimeBuyer writes:
“My agent thinks it’s a shady remnant of the past few years, but that said, the three-bedroom house is beautiful and listed at only $319k. If we’re one of the suckers that puts down a bid next Friday, we won’t go over $345k. My agent says it will go for at least $375k and she’s probably right, but I don’t want to be the sucker stuck with that mortgage. But you never know, we might get lucky.”
1. It doesn’t matter what your agent thinks.
2. You’ve written the work “sucker” twice in a single paragraph, yet are still looking to submit an offer on houses that, in your words, “have doubled in value in 5 years. That’s unbelievable and unsustainable.”
It appears you’re a bit in denial. You know it’s a bad decision, you’ve said as much, yet you still want to move forward. Stop looking at houses for a month. Seriously. Take the wife out, play with the kids, whatever.
See how things look next year. There is always another ‘perfect house’ – especially with the way inventory is continually climbing.
OK, fairly lame mountains… but mountains nonetheless… ;-)
Correct me if I am wrong but doesnt everyone have there own agenda?
I guess realtors forget that without us they hae no jobs. I think realtors only want rich people to bu at these price and forget about middle america. They are targeting people with money.
I guarantee anyone that if prices dropped too 1999 prices houses would sell like hopt cakes. Realtors and new homeuilders have the same view the higer tthe price the more they make. The peoblem now is the rate of welthy people moving into NJ is declining quickly
so now middle america is dominating the buyes market and we cannot afford these price. So its inevitable that price will have to drop down more toward 1999-2000 prices for people to be able to afford a home not to mention how high txes are.
I think once realtors figure out most people buying (not all) make under 100 k between 2 salaries the matrket has to adjust for that.
And most people includoing myself are only lookin at 30 fixed we r not interested in the stupid loans.
Realtors are in for a rude awakening if they still think prices will only drop 10 percent
“Unemployment state by state”
http://money.cnn.com/pf/features/lists/state_unemployment/index.html
#39 NEW JERSEY
#24 NEW YORK
Is your job next?
SAS
Tom D said – “It’s a finite resource folks”
Tom, the RE market is a bit more complicated than that. You’re bordering on the “they’re not making any more land” argument.
Tom,
“It’s a finite resource folks”
Yeah and they aren’t making any more land right? And this housing bubble is different from the past housing bubbles that plummeted the housing market for years to follow.
“Decent employment”
We are third highest in the country for the rate of unemployment claims.
“Correct me if I am wrong but doesnt everyone have there own agenda?”
I have my agenda, I’m tired of seeing people mislead, misinformed, and taken advantage of by the RE cartel. I know people share the blame, but come on these turkeys (real estate agents) are a large piece of the blame. The NAR will say anything to anyone. Peckerwoods.
SAS
I think anyone hoping for more than a temporary period of softness in the real estate market will be disappointed. It’s a finite resource folks, …It’s pretty cool to be close to the beach, close to NYC, close to the mountains, etc.
Well, I would point to our last RE downturn as evidence that corrections can be slow and painful in the NY metro area. Housing prices in NNJ peaked in 1988 and didn’t recover on an inflation-adjusted basis until 2002.
https://njrereport.com/80sbubble.htm
After all, it was a finite resource close to the beach, NYC & the mountains before prices doubled over the last 5-6 years.
Regarding investigative reporting shows, you’re either looking at a morality expose (typically Cheaters) or a crime expose.
Taking a show through the typical process of real estate purchasing couldn’t fit into these, since most play will occur either in the white or gray zone.
There would need to be a fraudulent mortgage app., overstated appraisal, collusion between agents, etc. Filming an agent convincing a 60k buyer to purchase a $600k house might make us clench our stomachs, but it’s not breaking any law, if the financing is there. Ever go to a car dealership, ask for a low-end model and the salesperson says, “With your FICO, you should be looking at [insert high-end model name]. Salesmanship isn’t a crime.
How about turning the camera on the commercials accompanying the show (footing the bill) that encourage the desire for such purchases? Ha, right. We want what we see, every day, right?
I know you all don’t want to hear this, but our real estate agent is a good one and we trust her. We’ve told her what we’re willing to pay and/or where we’re willing to start on some of these houses, and we think we have a good feel for the market. If we feel pressured, we will simply not make an offer or make the offer we like. We’re not budging and perfectly willing to lose a house to a sucker willing ot pay more. We’re comfortable with that and our realtor has learned to be comfortable with that. Her problem, and she admits it, is that while she understands that our lower-than-asking offers are smart, she’s having a hard time convincing other agents of that. So when she makes an offer on our behalf, she hears a lot of crap about the market that she doesn’t believe anymore. (My words, no hers.)
Unrealtor:
It does matter what my agent thinks. I’ve known her for a long time. I trust her opinion about what will sell down the road and what won’t. I trust her opinion on neighborhoods. I trust how candid she’s been with us.
I am looking to submit offers on houses because I’m willing to go and stay low. I don’t think that’s being a sucker or being in denial. I don’t think I’m making a bad decision by going 10-15% below asking, especially if I’m willing to walk away.
I’m not going to stop looking at houses, because there are a ton on the market and we’re bursting at the seams in our apartment. The rents have gotten so high that it’s silly to move to another rental. And honey, I am the wife. ;) My husband could care less about real estate.
Your advice is sound — I’ll look next year if I’m still in the market. If I find something now and can get it for less than list, I’ll take that too.
I believe in this burst, I just don’t believe any of the houses I’m looking at will drop by 50%, as some are predicting. Some of the dumps we’ve taken a look at may, but not a decent house at an OK price. We’re not going to see 2000 prices again.
We need to make a video like this to counter NAR’s campaign:
http://www.youtube.com/watch?v=oZFt46aQyQ8
Will someone please replace the heads here with Blance and other NAR guys?!
JB, witty and funny commentary in this post. You could be the Jon Stewart of RE news!
As for taking sides, there is only one side – the truth. Thanks for continuing to help find it, and expose the marketing spin of the RE industry for what it is.
FirstTimeBuyer –
If you’re making an educated decision and it makes sense for you and your family to buy now instead of waiting, I say “go for it”. You’re better off buying this year than you would have been last year. Good luck.
Hey BOOOOOYAAAAA,
Great find on the Rubin quote.
Fair points made. I’d like to see additional sources for some of the statistics I’m seeing flying around. When I look at HUD data since 1963, the regional figures show a relative flatness from ’89 to ’99, but no significant downturn during that time. I wouldn’t be shocked if we saw prices remain flat here for a period of years. I will be shocked to see a downturn to the extent that some folks on this board predict.
Tom D:, take a look at the chart in this report:
https://njrereport.com/80sbubble.htm
Tom D
I will be shocked to see a downturn to the extent that some folks on this board predict.
Well than explain how someone like me can afford to spend 200K on a house, if it was just a dream for someone in the same salary range just 6 years ago? Where do all the people who make under 100K move to? Like I said between my wife and I we make 93k per year and the max we can afford is 150,000.00. And there are hundreds of thousands of people in our same salary range. So we will never be able to buy a home since we do not make 200k per year. Prices have to fall significantly for most people to be able to purchase a home. I am not saying that everywhere has to be where anyone can afford it. There just has to be more areas where a middle class family can afford to buy a home. There were places for people to buy homes in 89-99 in my salary range, even less than my salary range. So yes you can beleive that these prices will stay level, but with a smaller and smaller market of wealthy people moving into the state, sellers do not have many options left but to drop the prices significantly.
The chart referenced in post 93 is based on median home price from an NAR quarterly report adjusted annually using the Office of Federal Housing Enterprise Oversight “Home Price Index” for the Newark-Union MSA and normalized for chages in the consumer price index.
“I wouldn’t be shocked if we saw prices remain flat here for a period of years. I will be shocked to see a downturn to the extent that some folks on this board predict.”
Tom D,
Were you involved in this market in the early 90’s??? SFH’s down approx 20%, Condos, down approx 30-40% in NJ. Remember, the mania that exists today, 2001-2005, was not like that then, no bidding wars, 20% down, if less PMI. No I/O’s to the subprime. The 1990’s downturn was economy related. What happens if/when this downturn filters throughout the economy; the multiplier effect?? Stay away from any faulty outlets.
I looked at that report, I’d just like to see some other corroboration. Homer, I do hear ya on your points. Although it seems like you should be able to afford a bit more house on that income. Strangely, some of the affordability indexes I’ve seen don’t seem to point that we’re completely out of whack right now. I’ll try and find some data and post specifics.
Best take on this comes courtesy of NY Daily News’s Lore Croghan:
“You know it’s time to worry about real estate when a powerful industry group takes out ads saying what a great investment it is.”
http://www.nydailynews.com/business/story/467722p-393600c.html
Homer: I earn roughly what you earn and I can afford a $500k house. It’s simple: Just borrow against the value of your home! Don’t think of it as a place to live; think of it as a giant piggy bank, snuggled inside an investment.
D’oh!
“…Not coincidentally, the newspapers chosen — Wall Street Journal, USA Today, New York Times, Washington Post, Los Angeles Times and Chicago Tribune, are among those most guilty of hyping the housing bubble to the point of scaring buyers to death.”
Do all realtors honestly believe that buyers are just scared? I’m not a scared buyer. I’m not a buyer at all because I can’t AFFORD to buy…
Strangely, some of the affordability indexes I’ve seen don’t seem to point that we’re completely out of whack right now. I’ll try and find some data and post specifics.
Well major lending organization have revised their guidelines for mohe affordabiity last year – it is right now not x2.8 of family salary like it was 10 years ago, but x4.6 of Family yearly salary. So you earn the same, but you can buy (1.6/2.8 = 0.57) 1.6 times more expensive home… And what got cheaper – car insurance?? health insurance?? food??? utilities??? NOTHNING.
But they did revised their guidelines and all of the sudden affordability doesn’t look so bad….. let’s revise it x10 – than for a famiy making 30K/years it will be affordable to buy 300K house, right?? Affordability my @$$.
Although it seems like you should be able to afford a bit more house on that income.
I might be able to, but taxes have made it so thats the limit. Plus being young and just getting out of credit card debt I have learned to live within my means. And I am glad I learned that. And I am thankful too that this blog is here to give us not only insight but to help us all know that we are not the only ones in this situation.
The one thing is the market will drop to where more buyers can afford. If the market drops 30% and sales go up 70% than thats where it will probalble stay.
If the market drops 50% or 60% and sales start going back up a significant amount than thats where prices will flatten out. Its up to the buyers to determine the bottom point of the market.
People can guess all they want, but you cannot go buy mortage applications or less inventory.
Sales is what you have to go by.
I think its a good time to buy, BUT what I do is find places I like and go see them. I do not concern myslef with prices(but I am not looking at mega mansions). I havent found any I am truley in love with yet. But when I do, I make an offer what I feel comfortable paying even if I am asking a lot less than the list price. (I do check what the currnet owners paid for it to, before I deterine what and if I should make an offer) I am hopefully going to see a place tommarrow. I know the current owners paid 40,000.00 for the house.
Its been on the market for a while. So relly anything over 40,000.00 they are gonna most likley make a profit. Just not as much as they hoped.
I have seen a lot of people say well I will offer 300K on a place for 350K beucase they are comfortable at that 300K price margin and they like the house. Which hey thats fine and dandy, but I would reccommend starting a lot lower than that. Even if you pay 300K with a 30 year fixed, if for some reason in 10 years you have to sell it and the most you can get is 150,000.00 well than you have to eat the other 150K. My only advise to give is think about what things could happen in the future. Play the what if game, like what if the market takes 15 years to recoever. Don’t listen to what the realtors are saying, dont listen to me, read articles make your own decision. Real estate is a gamble and as people can see right now the market is comming down and will most likely continue. So think about what could happen to the market and if you want to risk a good chance of losing money if you ever have to sell in the future. I mean if its listed at 350 I would be as bold to say start bidding around 150-160K. Maybe thats low but the more and more people who put out bids a lot lower the faster the market can adjust itself out. Buyers do have the power to controll where the market bottoms out, so bid carefully :)
Italics again
Fix That do it?
How did you do it – remind me again I tried /i with the and it did not work ?
RE: NAR end-consumer blitz
They use the term consumer in the ad.
Where’s the ad for real estate investors and speculators…”It’s a great time for real estate investors to buy a house!”
It should have an accompanying reprint of recent purchase contracts signed by NAR members (within the last 6 months) that documents how real estate “professionals” are investing in houses right now.
What? Nobody can find any documents like that?
Homer: I earn roughly what you earn and I can afford a $500k house. It’s simple: Just borrow against the value of your home! Don’t think of it as a place to live; think of it as a giant piggy bank, snuggled inside an investment.
I really hope your joking casue if your not thats the dumbest thing i have ever heard.
I mean So you buy a house take out a loan and use that loan too payback the 2 loans?
And I am the idiot for not paying 500K on my salary?
“And honey, I am the wife. ;) My husband could care less about real estate.”
LOL, sorry. :) You need to pick a less ‘gender-neutral’ nic.
“I believe in this burst, I just don’t believe any of the houses I’m looking at will drop by 50%, as some are predicting.”
Just bear in mind ask prices are meaningless. Look at comps that sold in 2001, or so.
Have your realtor send you all sales that closed in your price range, in the zip codes you’re looking, for 2001.
I recently posted a house that was originally listed @ $1.2M. Unattainable for most, right? Why eveb make an offer. It just closed at $772K. That’s a huge difference.
Best of luck, and bid 2001 sale prices, if you must bid now.
Cultural Infidel Says:
“Do all realtors honestly believe that buyers are just scared? I’m not a scared buyer. I’m not a buyer at all because I can’t AFFORD to buy…”
You know i have been wondering the same thing. This in itself is yet another campaign of untruth. It is an attempt to mislead people into thinking that it is fear that is driving the market down. I am not afraid. And even if i could afford it why would i buy now? Everybody who hasn’t been living under a rock for the past year knows the prices are coming down.
Tom D writes:
“I wouldn’t be shocked if we saw prices remain flat here for a period of years. I will be shocked to see a downturn to the extent that some folks on this board predict.”
Compare your comments against the last 60 years of real estate history:
http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
http://articles.news.aol.com/news/
_a/soldiers-make-stuck-hear-n-irak
-sign-for/20061102191409990008?ncid=NWS00010000000001
I put a comment in that is awaiting moderation..no links, but maybe had some word in it that got flagged.
The comment was about the ad blitz targeting consumers.
If this group pushes house purchases by consumers, could they be required, for example, in a Senate hearing, to produce documents proving that they, themselves, purchased homes during the down period?
I’m very curious about this. I’d like to see proof that Realtors (TM), as well as investment divisions of their companies have been purchasing homes at the same rate they purchased them in 2004 and 2004. If not, perhaps consumers are owed an explanation of the deviation.
Anybody know what words to omit from posts to avoid your comments being flagged for moderation?
Don’t know what I’m doing wrong. No links.
READ MY LIPS YOU FRIGGEN GRUBBERS…
PRICES ARE GOING DOWN AS WE SPEAK!
NOOOOTTTTING IS MOVING REALTORS ARE STARVING AND SELLERS ARE WORRIED…
IT’S THE TRUTH!
NO FRIGGEN SPIN…
Bob
Anybody know what words to omit from posts to avoid your comments being flagged for moderation?
Just be calmer than Bob and you will be fine :)
I think using the three letter word for the National Association of Realtors does it.
Duplication..sorry:
The comment was about the ad blitz targeting consumers.
If this group pushes house purchases by consumers, could they be required, for example, in a Senate hearing, to produce documents proving that they, themselves, purchased homes during the down period?
I’m very curious about this. I’d like to see proof that Realtors ™, as well as investment divisions of their companies have been purchasing homes at the same rate they purchased them in 2004 and 2004. If not, perhaps consumers are owed an explanation of the deviation.
Pat, too many “Booyas” perhaps?
http://c-n.com/apps/pbcs.dll/article?AID=/20061101/BIZ01/611010362/1019
By VINNEE TONG
The Associated Press
NEW YORK — Price gains on single-family homes are slowing and in some cases reversing, a national real estate indicator showed on Tuesday.
August 2006 prices across the nation are 5.2 percent higher than a year ago, according to the S&P/Case-Shiller composite index, a rate of growth sharply lower than the 15.8 percent rise recorded in the same month in 2005 and the 20.4 percent uptick in 2004.
Compared to July this year, the composite index showed a 0.4 percent decline in August. In that period, prices fell in six of ten major cities tracked by the index: Miami, New York, San Francisco, Washington, San Diego and Boston.
The markets measured that still showed a rise in prices are Chicago, Denver, Las Vegas and Los Angeles.
“Home price gains definitely appear to be wearing away,” MacroMarkets LLC Chief Economist Robert Shiller said. “Not only do we continue to see shrinking gains but actual declines in most cities.”
Growth in housing prices so far in 2006 appears closer to the rate last seen in 1997, Standard & Poor’s notes.
The index reading adds to evidence of a severe slowdown in the real-estate market. Last week, the Commerce Department reported that the median price for a new home sold in September dropped by the most in 35 years and the median price for existing homes also fell.
JB can delete those, I repeated comments with different language to try to figure out what I was putting in that was flagged.
Hey anyone heard from Jim? I hope they didnt start on Bon Fire and put him on a stake and started chanting around with ther pitchforks in Hand…..
Al,
This page of basic Text Tags might be helpful for you and others.
I can’t wait to hear from Grim as to what he’s heard (and overheard) at the seminar!
Chicago’s right, HE’S A SLACKER!!
Come on Grim, give us an update!
;-)
Rich
Yes, Jim please send dispatch from front line of beast’s belly.
Worse..one of them convinced him to go look at a Friday afternoon Open House after the sessions.
I’m trying this post one more time:
If this group (N**) pushes house purchases by consumers, could they be required, for example, in a Senate hearing, to produce documents proving that they, themselves, purchased homes during the decline?
I’m very curious about this. I’d like to see proof that Real***s, as well as the investment divisions of their companies, have been purchasing homes at the same rate they purchased them in 2004 and 2005. If not, perhaps consumers are owed an explanation of the deviation, in light of the ads being run in the papers.
Unrealtor:
You wrote: “Just bear in mind ask prices are meaningless. Look at comps that sold in 2001, or so.”
I had to her pull the 2002 comps and similar houses in this area went for about $175k. These houses will never go for that little again and I wouldn’t consider ever bidding that low. Wages have gone up too much in recent years, and the average household income in the neighborhood is above $100k, which can sustain housing prices in the $300ks. IMHO, if we lose value after closing, which we probably will, it’ll drop another $25-50k. It’s not pretty, but I can sit on that for awhile. You have to remember that this area already dropped about 10% and during the last “correction” even the most overpriced areas in Essex (Montclair, Glen Ridge) fell 11%.
You keep referencing houses that you posted over $1mil, and how they closed 25-30% off list. Of course they did. The higher end of the market is going to feel it much more than those at the lower end of the market. That’s always the case.
Wages have gone up too much in recent years
Umm no, the wages in NJ are still the same, the only thing pulling it up in commuters salaries.
Take away the NYC salary and you are going to have an average income of 65K give or take.
average household income in the neighborhood is above $100k, which can sustain housing prices in the $300ks
Ok but please make sure you specify its the upper 100K. Like I said in previous post 235K mortage at 6.5 % is 1409.00/month plus average taxes 500.00/mo(6000.0 per year) thats 1900.00 per month plus homeowners insuraance and if no down payment than thats another chunk of change. If you live in a townhouse or condo add on another 180/month + So thats already over 2000.00 /month
At 300,000 for a mortage a 6.5 % its 1896.00 month plus 500.00 for taxes, thats 2300 + whatever other expenses are included in that.
If you make 100K thats almost half monthly salary going toward a house payment.
So no people who make 100K a year cannot afford in the 300K range, may the ones making closer to 200K can
Firsttimebuyer,
I have no idea where you’re looking for a house, but I guarantee it is not in Monmouth County. This week was the first time in a long time I saw any (and there weren’t many) decent SFHs priced below $400K in a town most people making enough money to pay $300K would want to live.
I’m not as familiar with housing, towns and neighborhoods north of here, but I know enough to surmise that they ain’t a whole lot different price wise.
I’m sure you’re real estate agent is very nice, but she wants to sell you a house, and, as things stand, the more you pay the bigger her commission. As long as that’s the way agents get paid, she really doesn’t fully represent you, no matter how nice she is.
The problem with the market right now is there is no rational price because people don’t really know where prices are going. Everyone knows the price should be lower than 2005, but how much lower? Booyaa Bob has put lower by 25% in his name, but would probably say 40% (real). Even here, where there is a basic agreement on conditions there is a lot of variety on the number.
One thing I’m sure of, anything over an ask should not even be considered.
Can the Economy Survive the Housing Bust?
Fortune on CNNMoney.com
By Jon Birger
SEE http://biz.yahoo.com/weekend/ecslump_1.html
“You keep referencing houses that you posted over $1mil, and how they closed 25-30% off list. Of course they did. The higher end of the market is going to feel it much more than those at the lower end of the market. That’s always the case.”
Actually, people always say “quality towns are more immune to a downturn.” They’re wrong.
And I post prices of all ranges, one house was listed for $650K and sold for $490K last month.
“Wages have gone up too much in recent years…”
Wages have been fairly flat for 5 years, are you listening to that realtor again?
“There is no such thing as objectivity, there is just lesser degrees of subjectivity.”
– David Brinkley
“IMHO, if we lose value after closing, which we probably will, it’ll drop another $25-50k.”
So prices can go up $150K, and only drop $25-50K?
Very interesting. I don’t think you’re being honest with yourself, just based upon your own comments here in this thread.
I stand by my original advice (post #77), and hope you take it. Good luck.
I agree 2001 prices plus NORMAL interest.
And DEFINITELY RESEARCH WHAT THE OWNER PAID and compare the profit margin, especially during
2001-2005!!!
I simply refuse to reward bad behavior.
Worst Offenders:
-Typical House Flipper Profiteers: (Pheudo RE geniuses who are out to ripp off a poor slob working stiff who was too busy working for a living for his familily earing a savings so he can buy a house TO LIVE IN)
-Financially Irresponsible Buyers: (Couldn’t afford the house but instead of forcloser, gets a hefty profit)
-Retirees dumping there old house: (which had done no improvement other than Father Time allowing them to retire elsewhere in compfort at buyers expense)
Excerpt, from above link:
Tucked away in the briefcase of Liz Ann Sonders, chief investment strategist at Charles Schwab & Co., is a chart so scary she’s hesitant to show it to investors. It plots the National Association of Home Builders’ Housing Market index – a monthly measure of builder confidence – against the Standard & Poor’s 500 stock market index, with a one-year lag.
It turns out that the mood of builders is a terrific stock market bellwether: The correlation between current builder confidence and future stock market returns over the past ten years is downright unnerving.
Also First time homebuyer check out the lowballing section,
2258207 Montague Twp
OLP: $324,000
Sale Price $113,000
Percent lowballed 65.1%
So even lower prices homes fall a good percentage. And you can argue Montague is out in the middle of no where, but during the peak of the bubble a realtor would have said great commute to NYC.
One thing I still do not get and maybe someone who is a commuter can enlighten me. Your used to the hustle and bustle of the city and maybe even lived in NYC, or Bergen county which is quite busy. What would make you move out to the middle of no where? I mean I live in an area thats got things going on around the general area(not as much as NYC) and I could never move to the middle of no where :)
Wages have gone up too much in recent years, and the average household income in the neighborhood is above $100k, Actually salaries for 90% of income brakets went up in average of 2.8%/year since 2000 (or crazy 14.0%over 5 years….) How much housing prices went i]up – 84% in average. now 84% number comes from 200 based price, so drop of 70% in 2000 prices – would mean drop of over 40% in 2006 prices…..
SO people predicting 30% drop are very concervative…
THIS Is TRUE, however
I would ALWAYS use the 2000 year for the formula base, because you can not trust an inflated price for accurate results. There is no true reference point. The sellers will just put a ridicules price just to come down to make the 30% or whatever to match. (looks like bargin)
Homer:
Your affordability arguments are ridiculous.
You fail to take into account the deductibility of property taxes and mortgage interest at your income level. If you really believe that all you can afford is 150k, then you will be renting forever.
Also, you think that you need to make 200K to afford a 300k mortgage? That’s crap.
Stop with the nonsensical self pity
I looked at HUD data re: housing prices since 1968. It was northeast regional data, so perhaps New Jersey differed from this. Median home price in 1988 was $143K. Median home price in 1997 was $143,500. During that period, housing was flat to slightly down. But there was no decrease that even approached 5%. Then of course from 2002 on it was through the roof. So, I could see a correction exceeding the historical norm since the recent increase exceeds the historical norm. I’m just saying that that type of decrease simply hasn’t happened before. According to these numbers anyway.
Homer:
To clarify:
You said:
“At 300,000 for a mortage a 6.5 % its 1896.00 month plus 500.00 for taxes, thats 2300 + whatever other expenses are included in that.
If you make 100K thats almost half monthly salary going toward a house payment.
So no people who make 100K a year cannot afford in the 300K range, may the ones making closer to 200K can”
At 100k a year, it is a little more than 8k a month. After taxes, I’ll give you $5,700 (pre itemized deductions)
Half that is $2,850. But most of the $2,300 hundred in your example is deductible — so you are really out of pocket let’s say, conservatively, $1,700. So really, the 300,000 mortgage is less than a third of take home.
200k a year means $17,000 a month gross or $11,000 net. I think that someone in that range can afford a little more than you think.
Hello!!
“Dallas Fed President Richard Fisher said the Fed held its target rate at 1 percent ‘longer than it should have been’ and unintentionally prompted speculation in the housing market. The Fed was influenced by inflation figures, which have been revised upward, he said.”
“In this case, poor data led to a policy action that amplified speculative activity in the housing and other markets,’ Fisher said. ‘Today, as anybody not from the former planet of Pluto knows, the housing market is undergoing a substantial correction and inflicting real costs to millions of homeowners across the country
No Kidding!
Greebscammer says the bottom is in? HAHHAHAHHAHAHAHA! This clown has been wrong many times before.
‘Today, as anybody not from the former planet of Pluto knows, the housing market is undergoing a substantial correction a…””
NAR CAN YOU HEAR…LEREAH CAN YOU HEAR…STARVING REALTORS CAN YOU HEAR IT…
IT’S GETTING MISERABLE OUT THERE FOR THE BUNCH OF THEM….WELL FINANCED BUYERS LALALALA NO RUSH PLUNGING PRICES…….
BOOOOOOOOOOOOYAAAAAAAAAA
Bob
A reasonable post yesterday was not to judge a person’s personal affordability level. A lawyer didn’t buy enough house, according to an opinion, and now Homer isn’t buying enough house.
Seems once prices start going down, housing becomes an expense again.
Maybe people should (and indeed are free to) purchase only what they need (housing as expense, not asset), instead of what someone else thinks they should be comfortable buying, right?
Maybe Homer didn’t explain fully his reasoning, or maybe somehow he stated an opinion that seemed he felt everyone should have the same affordability comfort.
He might have a working spouse who intends to stop working at some point after the purchase, or they might have two children entering daycare soon.
read it again again and again…
the fed governors says this
‘Today, as anybody not from the former planet of Pluto knows, the housing market is undergoing a substantial correction a…””
COMPRENDE NOW….WE ALL KNOW IT’S BAD AND YOU STARVING BEGGARDS ARE HURTING…
DON’T TRY YOU BS PLOYS….LIKE SETTING UP VIEWINGS WITH OTHER BUYERS JUST TO SPARK PHONEY INTEREST….OOOOPPPPSSSS ANOTHER SECRET …
Is anybody else experiencing problems using the back-door GSMLS links? (please ignore if you do not know what this means)
HOW DOES IT FEEL GRUBBERS?
NOT FUN IS IT?
HOW ABOUT YOU STARVING REALTORS?
NOT FUN IS IT?
YOU TRASHED BUYERS OVER THE LAST FEW YEARS…
IT’S PAY BACK TIME. GOING TO BE FUN WATCHING THE BOTH OF YOU SQUIRM AND WHINE AND WORRY.
JUST THINK IF YOU DON’T TAKE THAT FIRST 30% OFF BID YOU MAY HAVE TO ACCEPT LESS.
HOW’S IT FEEL?
FEELS GOOD…
BOOOOOOOOOOOOYAAAAAAAAAA
Bob
Easy Pat.
Homer was making a blanket statement about affordability — not about his own specific situation.
I agree that each person’s own situation dictates what they fell confortable with or what they should do and that ‘s their individual choice.
The issue I had yesterday and still have today is the blanket statements made here regarding the affordability issue — including Homer’s statements.
Those statements, while they may be true with respect to individual situations, do nto apply accross the board.
Pat:
Homer said that in order to afford a 300k mortgage, a family needs to make 200k.
Do you agree with that statement? If so, explain.
Prices are going down every week month and year…
you turn down a bid 30% below your dream price and just maybe you may find that you have to sell it lower..
do you that sinking feeling?
BOOOOOOOOOOOOOYAAAAAAAAAA
Bob
I’m going to be annoyingly repetitious here. Please ignore all the same comments I posted above on this topic.
Would all the supporters of RE please step forward. I mean those who believe in the ad that is being run in national papers.
O.K.: Show of hands. How many of you purchased a house since May 2006, or intend to purchase a house in the next few months. Please present documentation.
RE companies (and investment subsidiaries): please show documentation of RE purchases (NOT HUD, AUCTION/FORECLOSURE).
If you can show me that the same purchase rates are occurring among interested parties RIGHT now as in 2004=2005, then I forgive the ad and just think you’re all lobotomized.
Interesting news today:
contagion from housing slowdown showing up in retail (growth of same store sales slowing; guidance going forward is poor).
Fed is starting to make banks pay for FDIC insurance again, and rate is much higher than many expected. fears of a banking crisis brought on by bad RE loans?
productivity slowing sharply, while unit labor costs rising above expectations. unemployment at lowest level in years. strong inflationary pressure going into slowing economy?
in the midst of all this, NAR advertising that this is a golden opportunity to buy. pure desperation
WHO’S GOT THAT SINKING FEELING?
WHOOOOAAAA SINKING FEELLING
WHO’S GOT THAT SINKING FEELING?
BA BABABA BABA BABABABA
The key to economical situation – 39000 production jobs lost….. Can economy live without production???? who is going to make those new homes/cars/goods??? more importantly lets say Japaneese, chineese people making all good we are comsuming – how are we going to pay for it – Send al our MD’s and Lawyers, and water’s over to China and Japan??? (since only service inductry and Medical industry is growing) because is it as clear as hell to me that worker at the factory in China geting 150$/month is not coming to US for healthcare or services…..
Even though sending most of our lawyers out of the country might not be such a bad idea….
Tom D.
Northeast is a little too large to get the level of granularity you need to look at New Jersey, and North Jersey, specifically.
Actually, in NJ 1988 prices were about equal to 1998 in nominal terms. Prices fell after 1988 for a few years and then rose slightly (but did not keep pace with inflation) until 1998. In inflation adjusted terms, home values dropped.
Check out the housing price index, published by the Office of Federal Housing Enterprise Oversight http://www.ofheo.gov/HPI.asp
Check out their calculation methodology. While not perfect, its pretty good because it looks at resales of the same home.
BuyNextYear @140:
Yes, since yesterday.
for the Westchester crew:
Sept 2006 median sales price 9.3% below Sept 2005 and 4.9% below Sept 2004
POOF! goes the equity
BuyNextYear,
The link is a bust as of late for me too. For about a week for me.
Great 20/20 hindsight from Fed Governor Fischer. Anyone in any business remotely tied to financials should well remember the 3-4 weeks after 9/11, when it seemed as though the whole world was sitting at home, watching CNN and waiting for the next attack. Remember the Prez urging people to go out and spend money? Not a lot of housing selling right around then.
The Fed’s flushing the market with liquidity seemed to be the appropriate response to what appeared to be the beginning of a nasty recession. And, it didn’t seem to be enough…until the first serious wave of buying kicked in around February of ’02. Couple that liquidity with the “nesting” phenomenon that hit the buying public, and you’ve got the ingredients for a perfect storm of massive housing appreciation. And, lest we forget, the rest of the economy still went in the dumper.
Again, it’s very easy to lay blame at any number of favorite targets: Realtors, mortgage guys, Greenspan, etc, but how about blaming plain old human herd mentality?
You can’t have it both ways. You guys say RE and mtg guys are useless, uneducated idiots who can’t sell…and the public knows it. So how did we manage to pull off this Ponzi scheme of epic proportions? We’re too dumb.
Huh? Says:
Is your real question @143, “Aren’t I right and Homer wrong?”
You have not looked at the full color picture of Homer’s words and meanings, but are seeking redress in an oversimplification. When you go back and read all of Homer’s opinions and experiences…from getting himself out of debt, etc., can you ask me that question?
BuyNextYear @140:
They may be closing the loop :-(
POOOOOOOOOOOFFFFFFFFFFFFF!
PAPER WEALTH GOING UP IN SMOKE…
Clotpoll,
I think you are trying to say that in order to be a “scammer” you need to be intelligent and that is just not the case. While RE agents are useless, obviously they have been able to sell people on the idea of overextending themselves financially. Used care salesmen have achieved similar success.
“Maybe people should (and indeed are free to) purchase only what they need (housing as expense, not asset), instead of what someone else thinks they should be comfortable buying, right?”
Pat,
I’m in your camp.
Don’t forget credit card companies, Spelunker.
Pat:
That is obviously my real question. You obviously won’t answer it.
I don’t need to go back and read Homer’s prior postings. He said that in order to afford a 300k mortgage, a family would need an income of 200k. Since he makes 93k, his statement self evidently does not apply to his situation. What is your reluctance to answer the question?
“You can’t have it both ways. You guys say RE and mtg guys are useless, uneducated idiots who can’t sell…and the public knows it. So how did we manage to pull off this Ponzi scheme of epic proportions? We’re too dumb.”
Hurting? Things really are slow? No bids? No interest? NO COMMISH!
lalalala Prices continue to tank as the rational buyers demand demand demand much lower prices…
Get to work you thugs are talk some sense into those fairy tale sellers…
BOOOOOOOOOOOOYAAAAAAAAAAA
Bob
BOYCOTT REALTORS AND HOUSES….NO BIDS NO NOOOOTTT”ING
MAKE’EM SQUIRM
MAKE’EM WORRY
MAKE’EM BEG….
BOOOOOOOOOOYAAAAAAAAAA
Bob
The seminar was great, will post my notes later this weekend.
jb
Buy Next Year,
Same problem for me for past three days. If anyone finds a new opening, please alert us so we can email you for the info. Thanks.
Pat & BC Bob:
Again, I agree with the fundamental premise that people should only pruchase that which they feel comfortable affording and spending for a house. That is most definitely a personal choice which is no one else’s business.
With that being said, it is continually taken as gospel on this blog that RE is extrmemely overpriced.
One of the arguemnts used continually on this blog is that this is true because of the affordability factor, i.e., people are unable to afford RE at current levels.
Without getting into whether or not RE is indeed extremly overpriced (it’s not relevant for this discussion), isn’t it hypocritical to continually bash the “other side” for not presenting accurate factual data while you choose to ignore it when people in your camp present absurd arguments.
Once again, I am not trying to argue with you concerning the actual pricing of real estate. Hoever, you cannot with a straight face argue that RE is in bubble territory and base tha
“Hoever, you cannot with a straight face argue that RE is in bubble territory and base tha”
Huh???
Straight face in the light and dark!!
Homer shall explain
I said upwards toward 200K..
I responded to a post that said the average income is over 100K. Perception is everthing my frineds. I stay within that range because you have also got to account into play other expenses.
Someone may be makining 100K per year and spending 2300.00 on a mortage.
Lets just go by 5700.00 is take home a month
Let pretend I am MR commuter and I work in NYC and my wife works in NJ. Combined we make 100K
This is monthly expensis
5700 take home pay
2300 mortage payment
400 commuting fair into NYC
300 car ins 2 cars (hey I am 27)
575 car payments (2 cars)
800 food, and small expensis car repair etc that come up.
200 on gas
100 cell phone (2 phones
30 house phone
150 Electric Bill
100 cable bill
———————
5000.00
Now thats no including credit card debt.
Plus if you have children thers another expense. Everything adds up. Plus I am using rough figures. Most places have a lot higher taxes so you will have to adjust for that as well. So maybe you will be safe if you make 100K having a 300K mortage, but I wouldnt go much above that for the fact of what if taxes go up? Yeah you probable could buy more I have looking at living within your means and having money to save.
Also we have twins on the way, so we may very well be living on 1 salary for a while.
So when I say I am looking to stay under 150K, its becuase thats where I feel comfortable and its living within my means.
If something happens in the future we would be able in the mean time to set money aside.
And ther was also a post yesterday, someone who he and his wife make around the same as I my wife amd I do and when first looking for a home in 1999, he thought 150K was a lot of money. So why should my perception be any different?
Just so everyone knows I do not want sympathy for my story its the over all point
In 2002 My family lost there home that we had lived in since 1989. My father owned a buisness in Edison NJ for 20 years. The bank had sent and auditor out there to do a yearly audit. Well I will not mention names but the VP overheard the guy on his cell phone making a bet with someone that he will put my fathers company out of busniness like he did to 5 other companies. After months and months of trying to get a loan from a new bank it was too late even though they had the new loan it was impossible to make money. So after 20 years he had to close the busniess. He lost the house and all his money. He and my mom moved to NC to live with my grandmother. My father had nothing and he was going back to be a CPA and it took him 6 months to get recertified. He than died in 2005 leaving my mother with some money from life insurance. So my point of this story is to get people to understand why I live within my means. Why I dont want to spend some outrageous amount on a house. You do not know what will happen. Maybe someone making 100k can afford that 300K house, but are you really leaving yourself enough money if something were to happen?
By the way, I don’t have to argue about the present bubble, the industry is telling us; Toll’s comments,KB’s comments, Kara’s situation, the H-Builders index. Would you be comfortable buying a product where the producers of that product are expressing a sentiment that is at its lowest point in 16 years???
PS
Dont forget about Medical Ins and how much it will cost for family plan to so you prolly wont have 5700.00 take home you will probably have less
Homer,
You are right. However, you forgot to include the price of Grey Goose. Also, don’t we all remember the posts of the 150k salaries that could not save a dime, they did not even have a mortgage.
Twins? That’ll be a case of Grey Goose, please.
Regarding affordability;
You can’t make general statements about this. Each individual has their own unique set of circumstances.
When this market was sane, the criteria was simple. The guidelines that lenders utilized were; max of 28% of gross monthly income for PIIT, 36% for total obligations, CC,student loans,car loans,utilities etc. Down payment of 20% or PMI, which was included in the formulas.
Obviously the above has been thrown out the window. Now it seems common for unethical mortgage brokers to put forward fradulent app’s, where the broker ups the income. What a system!!
Hey Spelunker–
Yes, used car salesmen have enjoyed success scamming the public: those who are sub-mental and/or easily-led! It takes two to tango. There’s also just a tad less on the line financially in a used-car transaction.
So, how do you go from there to the assertion that your gang of usual suspects engineered the biggest event of mass hysteria in American economic history? Are there millions of howeowners who’ve bought since ’01 out there under the thrall of bad come-ons and pushy sales tactics?
This is a country of individuals, and individuals are responsible for themselves. See a scam out there? Resist it. The culture of victimization (and many who post here come off as victims) is much more suited to the Eurocommunity.
Clotpoll,
Or just recognize an extremely overbought,irrational mania/bubble that can in no way,shape or form sustain itself based on the underlying fundamentals and sell.
Kill these unecessary expenses:
* $575 car payments (2 cars)
* $100 cell phone (2 phones) (I pay $60 for 2 phones)
* $100 cable bill
And also:
* credit card debt.
I need vehcicles to get around. We have 1 mid size SUV, and a car. Thats what we pay. Hey you want your 300.00 jeans I want my cellphone toys (PDA) and I am a neard so I gotta have my cable modem, and I like TV. You have your 300.00 jeans I have my cell phone PDA and cable bille(which most people have)
And most people have credit card debt. There are many people without it, but I know tons of people with it, so you cannot exlude it.
First time buyer,
My experience is that I wouldn’t want to feel I had a personal relationship with my realtor. The listing agent on the last house we sold told us at one point, “Buyers are liars and sellers are yellers.” That is really how they think of us.
Hard to say whether these 2 houses you’re interested in are good value but if one of them is going to have a bidding war that the realtor thinks will end up $60K over the asking price, that sounds like a Turkish bazaar.
There were some articles here the other day about renting houses and I think thats an interesting possibility in this market, with so much less risk.
Re: BuyNextYear post 146 and Seneca post 171:
Yeah, me too – link is dead. :-[
Hope someone can help us out here…
(First post)
Homer, as someone else pointed out you’re not taking into account all of the tax deductions you’ll get from the interest on your mortgage and property tax. Speak to someone who knows taxes and can run the numbers based on your income, an estimated mortgage, and estimated property tax.
grahamb
Take it from me, no one here wants to hear that.
Huh? Says: Are you reinvestor101? The new nick is harder to retype.
Huh!
We have heard enough. I’m sorry to say your efforts to recruit bag holders is bound to fail.
“Take it from me, no one here wants to hear that”
Huh,
Come on. Hear it?? I have done all the calculations as has my accountant, believe me, over and over. The tax benefit does not compensate me for the difference of buying versus renting, at this time. I would have agreed with you from 1985-2002/03. Not now!!
When you have done your #’s,have you calculated the benefit of taking your down payment and placing it in an interest bearing account???
Also, have you calculated the risk that your down payment is exposed to at this time. Are you naked long?? If I am wrong about this market, my downside is the int from my RE gains pay my rent. If you are long and wrong, what’s your downside??? Risk/Reward!! What the hell is a tax deduction worth if you lose 20-30% of your principal??? You want tax write offs??? That may certainly satisfy you.
“I need vehcicles to get around.”
Me too. I just don’t make any payments.
Buy a used car cash.
“Hey you want your 300.00 jeans I want my cellphone toys (PDA) and I am a neard so I gotta have my cable modem, and I like TV.”
Levis — $36.
Toys cost money, I don’t buy gadgets. My cell phone (“RAZR” piece of junk) was free.
When cutting corners a few years ago, I dropped all cable. That’s $1,200 a year.
BC Bob #191 — right on the money.
Clotpoll,
“This is a country of individuals, and individuals are responsible for themselves. See a scam out there? Resist it. The culture of victimization (and many who post here come off as victims) is much more suited to the Eurocommunity.”
Great! so you do admit there is a scam out there.
BC Bob:
Why do you constantly twist my words and posts?
I have never once advocated that anyone buy anything. I have never once advocated the benefits of buying vs. renting.
The only thing I have ever stated is concerning the affordability issue — not whether owning or renting is better.
God man, can you read????
re post 193 about cutting corners. people throw money in the garbage in our culture. on phone bills i now use skype and save a boatload there. cut the cable down to the basic (and I even resent that but i want the news and the occasional law and order); use the local library in Hoboken for free use of dvds for home entertainment, they have a big selection and can draw on other counties selections too. You know, I don’t feel too deprived. And hey – I bought a second hand Volvo that seems to run forever. Never got into that auto-status rut.
Spelunker-
No, I don’t admit to a scam going on out there. Amazing how some of you guys insist on putting words in my mouth. I’m just going with your premise, in what appears to be a vain attempt to illustrate that if there HAS been a scam perpetrated, it’s been done to several million homeowners. Are they ALL that gullible…and the handful of junior Nostradamuses (Nostradamae?) here that right?
“Take it from me, no one here wants to hear that.”
HUH,
Your quote regarding the tax benefits of owning pertaining to #187. Maybe I assumed wrong about your views of owning. However, half my post was centered on the tax benefits. Focus on that. I have more spreadsheets on this than flippers have houses. Do you feel that the tax benefits justify buying in this market??
Clotpoll,
I don’t buy into the scam argument. This market was no different than tulip bulbs,1929 stock market, nikkei, dot com. It was a mania, built like a deck of cards, with the foundation being debt,debt,debt. But I do agree with you, no scam here, just a greed/fear market, one for the record books.
BC Bob:
Do you have a synapse problem????
My point was that you cannot look at net income (without taking into account tax benefits of owning) and gross carrying costs when determining affordibility. It’s apples and oranges.
What is so hard for you to understand about that?
MY POINT HAS NOTHING WHATSOEVER TO DO WITH WHETHER ONE SHOULD BUY OR RENT!!!!!!!
Huh,
I know it’s early Sat afternoon but please wake up. I already stated that I made assumptions(#199). Get the cobwebs out. My last post strictly centered on the fact that you stated that nobody, on this site, wants to hear about the tax benefits, your words (#188). You’re wrong about that, see #199.
Again, Again, forgot about renting/buying. Do you feel that the tax benefits gained are worth the risk of buying in this market???
Again, for simplicity purposes only one question;
Do you feel that the tax benefits gained are worth the risk of buying in this market???
I dont look at tax breaks refunds as extra money too spend. Thats like saying since I am paying an interest only mortage I can afford to spend 225 instead of 150k. Thats nonsence thinking.
Another reason i believe market will drop ubstantially
if people in 1999 who made about 90k thought 150 was to much and more than they could afford, and taxes have gone through the roof why should i be able to afford that much now
and people can claim that pay went up in the past 5 years where
ohh cause it says the averafer houshold income in your town Wow
a brilliant argument. Look at agleast 50 towns throughout nj
find out if ther are minimal or lots of commutes. The only fair way is to look at every industry and only look at nj residents with nj salaries. take into account how many new commuters moved to nj in the past 5 years. Thats probably why it seems its gone up because there have been a lot more than normal amont of commuters moving here so that does not justify anything especially now there is a lot less of an influx of commuters moving here. Do some reseach before u blurt out that I do not know what I am talking about. show me facts
Homer,
I was kidding about borrowing from home equity to pay loans. But tell me, please, that you are NOT serious about considering as absolute necessities nearly $400/month in extraneous expenses.
[sic]Neard or not, we all have to make choices. Do you want flashy cellphones and top-tier cable packages, or do you want a house?
And bringing $300 jeans into the discussion is just stuffing more straw into a straw-man argument.
This thread is played out. I’m calling a bottom!
Clotpoll you just cant call bottom baby and walk away. i put no more words in your mouth than you put in mine. I dont believe there is a GRAND scam. However i do believe Realtors and the like run a scam. just like car salesman.
It seems somewhat obvious that you have taken offense to this opinion and for that i apologize however the fact remains that Realtors are scoundrels. If you wanna call bottom now please do.
Spelunker–
Not a GRAND scam? Just a minor one? Nice attempt to backpedal through qualifying your past statements.
I take no offense. You barely have enough game to get my attention.
Kudos on working the Republocrat trick of saying the same false thing (“Realtors are scoundrels”) over and over again until you convince yourself it’s true. Done like Limbaugh! However, could you please switch to another tired bromide? My eyes are glazing over.
Huh? said: My point was that you cannot look at net income (without taking into account tax benefits of owning) and gross carrying costs when determining affordibility.
I’m going to take a very different perspective here and say, “you most certainly can!” What if a person is of the belief that if you can’t pay cash and buy something outright, you shouldn’t buy it at all?
I can’t for the life of me understand why you are arguing this point. This all started because Homer stated his comfort level regarding his housing affordability and you’ve spent the last umpteen posts telling him how wrong he is.
What’s wrong with erring on the side of caution, especially in this market which is clearly going down?
RoadTrip,
Kudos to you!! Not only going down but one for the history books!!