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Hat tip to Mr. Jones for the link. From Bloomberg via the Detroit Free Press..
Default rates on sub-prime loans soar
Defaults on adjustable-rate mortgages made this year to the riskiest borrowers and packaged into bonds surged 25% in October to the highest level for new loans in five years, Friedman Billings Ramsey Group Inc. said.
The percentage of so-called sub-prime loans delinquent by 90 days or more, in foreclosure or turned into repossessed properties, rose to 2.52% from 2.01% in September, the Arlington, Va.-based investment bank said last month. The rate for loans from last year gained 9.7% to 5.79%, the worst performance of any year’s loans of the same age since 2002.
Defaults on this year’s sub-prime loans in the $2-trillion asset-backed securities market were 30% higher in October than the 2000-to-2006 average for loans of the same age, the firm said. The increase reflects a slowing housing market, higher mortgage rates, looser underwriting and economic weakness in the Midwest, Friedman Billings Ramsey analysts have said.
“Defaults on adjustable-rate mortgages made this year to the riskiest borrowers and packaged into bonds surged 25% in October”
wow.
I wonder where most of the defaults are happening?
cross off 07 baby.
SAS
interesting little written gimmick by this RE agent glog out of Denver. Its seems RE agents all over are putting spin on things…
“The Investors are coming, The Investors are coming… ”
http://activerain.com/blogsview/20417/The-Investors-are-coming
SAS
Active adult communities – any bargains out there?
Just turned 55. What are everyone’s thoughts on purchasing in an active adult community. Do you think home prices there will follow the rest of the real estate decline? Wondering whether to wait or not…..
Thanks
Although this is from a Denver, CO blog…
its very….very interesting to see how RE agents blog eachother.
http://activerain.com/blogsview/20128/Apartment-Vacancy-Rates-Decline
“While Americans were busy digesting their Thanksgiving feasts, the rest of the world was barfing up dollars. As a result of our massive trade deficits, foreigners certainly have their bellies full of them. This week’s action in the Forex markets indicates that they may have finally eaten their fill. Unfortunately, the bad taste will likely linger as the dollar’s rout has only just begun.”
http://www.europac.net/externalframeset.asp?id=6852
sas,
you really burst their bubble on that blog (pardon the pun).
Herd mentality is to tell others what they want to hear and belive. And it’s entertaining to watch them do this.
Bost: Sorry to say that I think you may be right. Although, is it possible that with all the U.S. market closed, a lot of players were on the sidelines as this rou happened.
I’m still overweight non-U.S. large cap.
Chi.,
You are right, on days with less liquidity the moves can be pronounced. I expect a dollar bounce on Monday. However, the die is cast.
How does the fed react??? Do they raise to support the $ and try to wring out the inflation consequences of a falling $, or do they loosen because of fears of a slowdown and try to cushion the onslaught of the housing bust??? It seems to me that the fed has little wiggle room, thank you Alan!!!! Stagflation????
on the dollar debate: it seems everybody is worried other countries might sell their holdings but what if they just stopped lending us what is it? 2 billion a day??
Chi,
One thing I forgot, the yen carry trade????
“what if they just stopped lending us what is it? 2 billion a day??”
It means, you lose youe job, and your kids will be drafted for WWIII.
SAS
BC & Shytown,
I am loving Argentina right now.
SAS
#4 Bass Singer Says:
Used to be that 55+ homes used to be fairly priced due to the limited apprecation value. Remember you can only sell to 55+ in the community when you plan to move. But I look at the avg price of these homes and it looks like greedy grubbing builders are out to get fatt on pension and social security checks as well.
If I were you and owned my house, I would sell and rent for 2 years or so until the dust settles. Too risky to get in now, given that we are in a deadlocked market.
Bassinger,
When the smoke clears Kara homes will be having a fire sale in Mt. arlington. Prices were up to 500,000.00 but now are down to 350,000.00 for some units. we have looked at them and are very impressed for the low price. They must sell their standing inventory, probably at a heavy loss,it will also help pull down the market even further. Gotta feel sorry for the retirees that bought at the top.
Kara is now in chapter 11, and cannot sell anything without courts approval.
So if the condo owners don’t want to loose their shirts & the home owners don’t want to loose theirs… then what exactly is going to be the catalyst to make double jumps in housing prices drop to ‘norms’?
Did anybody see the “Ask The NJ Builder” series in the Real Estate section of the Clifton Journal? Readers asked why houses in NJ are so expensive and the NJBA said two things: 1) There aren’t enough homes to go around and 2) Population is increasing so… get this… New Jersey needs to have 50,000 houses built per year to keep up with demand. BWAAHAAAHAAA!!!!
You POS liars. These people really kill me. Is anybody really falling for this sh*t? Oh…My…God!
looks like the housing bubble is really derailing consumer spending. not. never underestimate the resiliency and creativity of the consumer. this is one reason i believe we won’t see a bloodbath in real estate markets that aren’t in supreme bubbleish areas like AZ and FL.
http://news.yahoo.com/s/nm/20061124/bs_nm/retail_holiday_blackfriday_dc_8
First of all, Happy Thanksgiving to everyone!
Now, this is a totally off-topic question but since there are so many knowledgeable folks here, I could do with some guidance.
I have a 1 year consulting position in Northern NJ. The good thing is no more long commutes into the city; the flipside is that since I now use the car (05 Honda CRV paid off) for a 1 hr commute to work, wife is without a car at home and needs one for around town and local rides with our baby,etc.
Since we are saving for our down payment with the aim to buy around end 07-08, buying another car puts a dent in our savings.
Should I lease a new, entry-level car for 2 years (like in the Chevy Cobalt range) or buy a used 3-4 year car? I know Japanese cars are cheaper to own in the long run, but could a Ford/GM car be cheaper to lease?
My head is going in circles and I need to arrive at a decision one soon since wife will be graduating in 2 weeks, and have time to be ‘bored’ at home :)
“looks like the housing bubble is really derailing consumer spending. not”
You’re right!!! They are the last to tumble. It’s hard to teach Pavlov’s dog new tricks;
http://nobelprize.org/educational_games/medicine/pavlov/
Yeah they are creative, put out an ad and suck them in, charge the CC.
I’m sure your assessment is comforting to Kara’s customers/suppliers. Bob Toll will breath a sigh of relief, after hearing your thoughts, even after they have let their land options (millions) expire.
You’re wrong, the bubble has burst, look at the Otteau reports for NJ.
The only question is the severity/duration!!
Well???? Do I listen to Richard or the Economist???
Richard,
Please read!!
“The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops ”
A 6/05 article in the Economist, worth reading again.
http://www.economist.com/opinion/displaystory.cfm?story_id=4079027
Richard,
I can’t get over your idiotic post!! Who gives a s*it about the consumer??? Look at the yen/yuan/pound/euro/cd. They are laughing at you/us!!!!!
If anyone is around this weekend, how much does homeowners insurance run? We’re looking at a 1600 sq ft home, built in 1908, but completely remodeled in 2005 (even the plumbing and electric). It’s within spitting distance from both a firestation and a hydrant. 3bed/2bath, partially finished basements, deadbolts, smoke and carbon monoxide detectors. Any ideas?
I’ve been betting against the dollar all year, along w/ Warren Buffett. This week it gets hammered. I wonder what the tipping point was? I’ll be reading up this weekend to see if I can discern any clues, but I’m assuming weakness in the US economy and real estate keeps the fed on hold with bias toward lowering; hence dollar continues to weaken.
Loved gary’s post about the builders needing 50,000 houses a year in NJ to keep up with demand. We certainly don’t need 55,000 McMansions a year–and that’s all they’re building in the SFH market!
BC Bob, everyone is laughing and you at the bubble believers thinking everything is going to pop and the world will plunge into a 1920’s style depression. Sorry bub it seem highly unlikely that will happen. I hear too much here the end is coming, the big bubble pop is coming and i can buy a house for 40% off today’s prices. Just wait another year. No make that another year. No make that another year these things take a long time to unwind. You’re starting to sound like the Jehovah Witnesses who predicted the return of Jesus 9 times already and have an excuse every time it doesn’t happen.
I believe the market is way overpriced historically, however I have no idea what that means in terms of lower prices over what time and what it means to the overall economy. History can rhyme it doesn’t repeat. Many opinions on this blog citing some facts to support a yet to be determined conclusion can only serve to put the fear in people to ever buy and maybe miss out on the right time to step in. Everyone’s situation is different and no one path is right for all.
HOWEVER PAYING TOO MUCH HOUSE IS A WRONG PATH FOR ALL (except the seller)
BTW Don’t bother being a devils advocate by asking what is considered overpriced!
price history, Cost of living, and more importantly COMMON SENSE should dictate that.
“never underestimate the resiliency and creativity of the consumer”
Yes, a credit card can make alot of purchases possible. These so called “consumers” are idiotic pigeons who will paying for the xmas gifts for 5 years at interest rates between 10-15%. wow…
What does the consumer care if they just made themselves slaves? They don’t as long as their is Oprah, football, reality TV, and silly Hollywood movies to keep us occupied and wanting more products.
SAS
“Just wait another year. No make that another year. No make that another year these things take a long time to unwind”
yes, although I suspect you are speaking with sarcasm, if you look at the last RE bust, I think it took something like 8-9 years to play out. Meaning, their was price drops year after year. If this was to happen again, and the odds are more than likely it will, we could see a drop like say… 5% for 5 years. Now thats 25% over 5 years, even with that “mild” drop of 5% year after year…. you know how many people will be hurting because of this….ALOT.
Now, you take that same concept, and collectively apply it to NJ and/or across the whole country, thats a major pinch on the american consumer. The american consumer will then have to pullback on spending. This can not happen, or EVERYTHING will fall apart.
In order to prevent this from happening, I suspect the Fed will pump money like crazy and keep interest rates below 6%.
The consequence of this is a weak dollar, which is already happening. Along with other influential factors yes.
But, each factor, adds to the piece of the puzzle, which makes a picture of a bleak economical future for the USA.
Since we are past the point of no return, only thing that will pull us out of this bleak future is war.
So, get ready for an expanding war in the middle east (i.e Iran) and the draft. Hope your kids are not around 18 in about 5 years.
I was around for the last draft, it was an awful thing. Tore families, friends, and kids apart. If this was to happen again…. Yikes…I don’t even want to think about it..
Its going to be a sad… sad….day when they bring back the draft. I really do feel they eventually will bring it back.
As for me, I actually volunteered for the Marines and then got sent to nam. Alot of water under that bridge.
This is just my personal opinion. Alot of people call me a crazy old man for thinking the way I do. I could be totally wrong, I hope I am, but I have seem enough and know enough in life to say, “yup..I know where this leads”.
In any case, top of the morning to you.
SAS
Thankyou SAS.
SAS, a sad thought for a Saturday. Unfortunately, I agree with you.
When all a nation has to spend is bodies, it spends bodies.
Richard Says:
Although I disagree with Richard’s view on the RE outlook, I do agree with him on consumer spending. There has been decent job growth in the past year or more. You have to realize that increase in jobs, even minimum wage jobs will increase consumer spending.
Now to the part where I disagree with him is that most of the jobs that were created in the last year are not the kind of high paying jobs that were creaed in the stock market bubble, when any moron could quit his job on friday and have multiple offers with huge sign-on bonusus on monday. I had to pay IT consultants about 200 bucks an hour in peak of the bubble, not most of the same resumes are available for under $100 bucks an hour.
I don’t think the quality of jobs created in the past year will not provide the income to buy the avg 500K cape in NJ. They will however be plenty of money to spend in wall-mart, target, macys, sears etc etc. The only way i see consumer spending decline drastically is if we have a job recession or a drastic increase in short term interest rates. As long as the chinese keep lending us money, we will continue spending.
A funny quote, not sure from whom:
“Recession is when your neighbor looses his job. Depression is when you loose you job”
SAS,
When you were at war, did you ever have to shoot and kill someone (i mean self defense ofcourse)?
SS,
Rule #1, never ask anyone whom has served in war times that question.
SAS
I used to be alarmed about our ways and about foreigners stopping buying our assets but over time I realized that it is hard for us or the chinese to break out of this crazy borrow and spend cycle. They lend us the money and we buy the goods they produce.
How can they possibly stop lending us billions each day? Who is going to buy the output from their highly subsidized factories? The europeans?? I don’t think so!. America is the worlds buyer !!
The only way to correct this imbalance is to increase short-term rates, discourage consumption and encourage savings. This is a painful thing to do and neither our *friends* we sent to washington nor the corporations that sponser them want that and between them they set the rules.
Our real-threat will be when India and China build up a sifficient consumer class and can rely on their own consumers to consumer their ouptut and keep the jobs in their country. I think this will take time, maybe about 10 years or so for India and china to bring it’s 2 billion plus combined population to living standards that match developed nations. They they don’t need to lend us money for us to buy more from them.
AntiTrump,
Bingo. You should drive through Ohio, Michigan, Penn, and other states that were once economic manufacturing powerhouses. Then goto Shenzhen China.
I would suspect their are very few Americans whom have done this. I, fortunately, have done such a thing. Let me tell you, I threw in the towel, and said its over. Forget what any economists says, forget what the media says, forget what the so called “experts” say, or buisness leaders say… its over. There is only one thing that will turn it around. See my posts above for that one thing.
I know others are going to have a field day with what I just said, so be it. But I have seen with my own eyes. and as we know, seeing is believing.
Credit cards and loans can only replace a decent middle class salary for so long, than its time to pay the piper. In this case, the piper is China.
On that note, I better start my day and go for my morning jog and calisthenics.
SAS
Forbes on Fox is doing a story about an American military draft this half hour.
“Just wait another year. No make that another year. No make that another year these things take a long time to unwind”
Richard,
I’m with you 100%, there we agree on something. I’ve always said this will be a long drawn (regarding prices) out bust, not an immediate crash. Kind of like Chinese water tortue. It’s not like John Q public can pick up a paper and see the price of their house like a stock. However, make no mistake about it, this bubble (fundamentals of the market) has burst. Not an opinion, just look at the data and the technical charts.
By the way, I don’t think too many I/O’s/flippers are laughing at me, that is an opinion.
SAS:
I have three kids, aged 7, 4, and 1. I don’t think anyone from my generation would accept that their children be used as cannon fodder for what is clearly an incompetent and corrupt generation of leaders. I personally don’t appreciate Rep. Rangel from NY using them as bait to force the administration’s hand. What a foolhardy (and dangerous) maneuver.
“never underestimate the resiliency and creativity of the consumer”
Well, Wal-Mart is questioning it!!!
“Wal-Mart Stores Inc., the world’s largest retailer, said November sales at U.S. stores open at least a year fell 0.1 percent, the worst performance in more than a decade in the first month of the holiday season.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aPrXPCiF5OAk&refer=home
Richard:
I know you mentioned that you thought prices were high in 2003 and it went going up until 2005/2006. You made the right call in 2003 but it was too soon.
Warren Buffet lost shit load of money shorting the US dollar in 2004/2005. He was correct but made the call to early.
Timing risk is one of the risks facing short sellers. Many people took short positions on dot com stocks in 1998/1999 and got hammered, but they were eventually correct.
It is the same with real-estate, it will take time to play out due to the fact that it is a very ill-liquid asset with high turnover costs. But it is happenning and people who bought in the last few years and have to sell in the next few years will take a signifcant financial hit.
“I’ve been betting against the dollar all year, along w/ Warren Buffett”
Twice Shy,
I think yesterday was a combination of things; the scaling back of our growth estimate, which Bush acknowledged the other day, the perceived future interest rate differentials, the slow unwinding of the yen carry trade and less liquidity on Friday. It’s easier to push a weak currency thru some important support levls with less participation. You may have a bounce on Monday but the trend is clearly down, the fundamentals and technicals are working together against the dollar.
BC Bob,
Yup. Alan Abelson’s column in Barron’s today made similar points. The buck is finally starting to buckle, and the trend is down.
The Fed is in a box: they can’t lower rates, or the dollar weakens further. If they raise they slam the breaks on the soft housing market and the consumer.
To me, looks like the chickens are coming home to roost. I’ll continue to adjust my investment strategy accordingly. Thanks for your insight.
Twice,
I agree, the fed is trapped, not Ben’s fault, he just inherited the mess. Inflation or economic slowdown. When the world starts moving out of specific currencies and into others, its not just for a trade. These cycles go on for a long time. If we take out the 4th quarter, 2004 lows watch out.
http://futures.tradingcharts.com/chart/US/M
You don’t hear anybody stating that the $ has ended lower each year since 2001 while gold has ended higher each year during the same time frame. John Q doesn’t have time to acknowledge this because they are too busy in shopping malls burning up their cc’s. They may notice that they are paying more for these goods,your dollar is the culprit. That’s fine, but one day when there is upheaval in the markets, all the experts will be saying that the $ has been telling this all along. Their silence, about this topic now, is deafening. Let the good times roll!!!!
SAS,
My apologies (I didn’t know), I will never ask that again to anyone.
SS,
yes, smart move.
But I will say this:
You know what my favorite memory of the Vietnam war was?
The day I found out I was going back home and made it out alive. If you ask any veteran, I think they would give you the same answer.
Your friend,
SAS
“They’re not looking at the catastrophic event, at what happens when the imbalances unwind. For the most part the people buying this debt haven’t been through a real bear market. When you have to eat what you kill it’s different. This time around we’ve allowed the banks to become killing machines and sell the meat everywhere.”
Interesting chart showing US household debt vs disposable income. You must be standing in deep piles if you continue to cheer the US consumer!!
http://www.financialsense.com/editorials/rubino/2006/1121.html
Testing:
Just checking something to satisfy my curiousity.
BC Bob-
Thanks for the holiday shoutout. Back at ya w/best season’s greetings.
I’m on the dollar gets annihilated side…just too easy and tempting for all concerned to play it this way (while chirping about what strong dollar advocates they are!). Paulson shoulda stayed at Goldman- which, BTW- is doing even better without him. He must’ve been plenty embarrassed when it came out that Goldman gave more $$$ to the Dems than Repubs in the last election.
Have skimmed a few posts with some here long foreign large caps. I think the best play right now is US small-to-mid caps (usual disclaimers apply). All that strong overseas money is getting into our stocks on the cheap. Add that to thin spreads and order imbalances, and I like what I see. Lots of foreign money following Kerkorian outa the train wreck of GM needs a home, too!
“Wal-Mart reports sales decline”
http://tinyurl.com/yhj65o
Its going to be an interesting holiday season.
Currently, I think all the talk on the news is media hype. Hype to get Joe 6 pack motivated to follow the herd and go furhter into debt.
SAS
I have an idea of Clotpoll identity:
He is Alan Greenspan. Thats the way he tries to stop resession!!!
Do I get a prize???
but obn the serious side:
For any clear thinking person it iis obvious that US dollar will be devalues over 50% on the next 5-10 years. That will bring significant increase in prices for imported goods and at the same time will make american workers competitive again.
(of course we still need to do something about the lawsuits first)
At the same tinme it will solve the problem with people getting high pensions (effectivelly ruin people’s retirement.)
Thats the only way US can get out of debt. The ony thing…. I wonder what China and Japan will have to say about it???
“I don’t think anyone from my generation would accept that their children be used as cannon fodder for what is clearly an incompetent and corrupt generation of leaders”
I heard the same thing in the 60s and look what happened.
SAS
So, let me ask you guys and gals: What should your investment portfolio look like going forward based on a declining dollar and weakening economy? Should more money move into Bonds? Large Caps? Gold? What should the percentage breakdown look like?
lol go to your friendly financial advisor – basically anything but forms of cash – no CD’s, BONDS, and so on…
This is way off topic, but we put an offer down on a house this morning. The asking was $400k, it has been on the market almost 60 days, and there are no other offers, despite two open houses. Our offer was originally 10% off asking (and over 20% off peak in the area) — $360k. We felt pretty good about it. Our agent just called with the counter — $395k. We countered for $370k as our final offer, which we think is generous in this market. Our agent agreed and is going to let us know, but I doubt the seller will come down that much.
The house is beautiful, but we think the seller’s expectations are foolish. If she holds on to her house another six months, and doesn’t want to drop asking more than $5k, she’s not going to sell. In fact, the market is only going to get worse for her in the next 6-12 months. This could be by far the best offer she gets. I’m depressed a bit, but glad we’re not willing to bite off more of a mortage than we can chew.
I don’t think I’d have the courage to stick within our budget and our expectations if it weren’t for this blog. Thank you. I’ll keep you posted. :)
I am not a financial advisor, you should not use this advice for you investments. If you want to get into the Euro with a little less risk I’ve invested some in a mutual fund called the Merk Hard Currency Fund as a hedge against my cash. There’s some other funds that focus on Asian currencies too.
SAS
you may be right, we may already be doomed to repeat past mistakes.
If we do start the draft up, I’d like to recommend that we first assign Mr. Cheney (and anyone else who helped promote this war) to Baghdad, with a mandate to get their precious “victory”. And when they determine that they have acheived “victory”, they can then come home.
Did you also hear that kind of solution in the 60s?
Profus…wish it were that simple, but bank decides “when” in our current state. Not the people or the politicians they elect.
http://etext.virginia.edu/jefferson/quotations/jeff1325.htm
Pat,
Sic semper tyrannis
Different market, same psychology;
“One of the most wondrous inventions of the age was consumer credit. Before 1920, the average worker couldn’t borrow money. By 1929, “buy now, pay later” had become a way of life.”
“Mr. GALBRAITH: It was this nature of mass illusion. Prices were going up, people bought. That forced prices up further, that brought in more people. And eventually, the process becomes self-perpetuating. Every increase brings in more people convinced of their God-given right to get rich.”
“Mr. SOBEL: There’s an old saying on Wall Street that the two most important emotions are fear and greed and you go from fear to greed in about a fraction of a second. So you’re very, very greedy and you say to yourself, “I want to make more.” And then, the market goes down ten points and you get frightened. “I want to keep what I have,” so you sell everything. And that’s how you have a panic. So you can panic on the upside — people rushing in to get in before the train takes off — and a panic on the downside, trying to get off the train before disaster hits.”
http://www.pbs.org/wgbh/amex/crash/filmmore/pt.html
Can someone help me understand this black Friday phenomena (I don’t care for it). They artificially lower prices for few hours to measure what I think is artificial demand for the product. How do you use that for predicting consumer spending? I don’t get it!
http://blogs.wsj.com/holidaysales/2006/11/25/strong-start/
Holiday sales yesterday seem to be up 6% from last year. Rest of the sales season will depend on how bad oct home sales numbers turn out to be. Numbers will be reported next week.
FirstTimeBuyer, hope you don’t get the house, for your sake. 10% off asking?
New story: A long time I had posted that my wife and i were looking to rent a 2-3br in Yardley PA on craigslist. We finally found a home we liked in the Tanglewood section that the owner wanted $1750/month for. Basically told them to go F themselves and that we would not pay more than 1450$ since that was a fair amount and we didn’t want to be responsible for their mortgage.
Thought it wasn’t going to work out, until last night the owner called me back agreeing to ALL our terms. We’re in at $1450 :D for this place with cathedral ceilings, a loft + garage, ceramic tiles etc.
I love it, the investors AND speculators are starting to get desperate now. I know it sounds mean of me to say that but, these are the same folks that priced my wife and me out of the housing market.
Sorry for the lack of updates and comments over the past few days, I’ve been taking a little bit of a blog-vacation over the holiday. Judging from the reduced comments this weekend, it seems many of you are as well.
jb
Unrealtor, we didn’t get the house, but 10% off asking was a good deal in this case.
HOWEVER… we just found out through an acquaintance that a fire damaged the house and killed the owner’s two children. That’s why the house was remodeled. Nothing about this was on the disclosure! It certainly affects the desirability of the house. We’re fairly freaked out and put a call into our agent.
FTB, emotions are an incredible factor in homebuying. Something like that should be disclosed, I think, because many buyers will think about that event as long as they live in the house.
We also looked at a rebuild that was made to mirror the houses in the development, and on the same foundation. It had no special touches, and was obviously built using exactly what the insurance would pay. I later went and asked a neighbor, who told me about the fire and how many children died…three.
Realtors will say that history should play no role in the decision, and that it “honors” the people who died to have others live happily where they lived.
But people are sympathetic creatures. My sister bought a home knowing that many years before, a neighbor’s child had climbed the fence and gone into the in-ground swimming pool. The owners cemented over the pool immediately, but it was always talked about on the block. After 15 years, my sister still thinks about it when she looks out of her kitchen window and sees the spot in the yard where the grass is odd.
FTB, PAT
The fire and subsequent repairs should have been disclosed. The children dying should also be disclosed, but does not have to be. In a disclosure, you disclose everything that could effect a “house” the children’s death, have to do with it being a home, it is a stigma.Not a potential problem.
Would I want to know?
Absolutely!
Would it affect my purchase, yes!
Would I tell my clients, if it was confirmed, Yes!
I am sure First time buyer will be relieved soon enough that they did not get that house for more than that reason.
KL
# gary Says:
November 24th, 2006 at 10:43 pm
Did anybody see the “Ask The NJ Builder” series in the Real Estate section of the Clifton Journal? Readers asked why houses in NJ are so expensive and the NJBA said two things: 1) There aren’t enough homes to go around and 2) Population is increasing so… get this… New Jersey needs to have 50,000 houses built per year to keep up with demand. BWAAHAAAHAAA!!!!
You POS liars. These people really kill me. Is anybody really falling for this sh*t? Oh…My…God!
Seems like you don’t want more supply coming to that market !!! Are you a seller trying to get most money for your house?
I don’t see anything wrong in building more houses if population is increasing.
Not that I agree with this, but there is no legal mandate to disclose “stigmas” (murder, accidental death, suicide, etc) in NJ.
Many states do require this disclosure, and NJ agents should do the same.
There’s no legal reason to disclose the fire, because the repairs were made. But there is an ethical reason. My husband is supersitious, and may not have wanted to place an offer knowing this. Also, there is a place on the disclosure form asking if there is anything that would affect the desirability of the house. The fact that the repairs were in response to a major fire does.
In related news, our agent was very supportive yesterday when we were going back and forth with the seller’s agent. But this morning, she sent this “information to consider” in an email:
1) Interest rates are low now but are projected to rise to around 8% in 2007
2) Considering the properties that have recently closed on the street, the price is not really out of line
3) We have them down 10,000
5) A $1000 will cost you only 5 or 6 a month.
6) You love the house and the location
7) It is in great condition
8) While the market is slower, it has not dropped a lot in price and value
9) We can find other houses but if you really love this one (and I think you do), don’t let it be the one that got away!
I’m livid. This is typical industry crap and I’m really surprised that she sent it to us. She’s been terrific so far.
I wrote her back and said that we’re following the market and would rather lose the house than spend too much on it. I also pointed out that inventory will increase in the spring and housing is expectd to go down further. I shouldn’t have to tell her that.
Ugh!
And yes, we are relieved. :)
“1) Interest rates are low now but are projected to rise to around 8% in 2007”
First Time,
You should pin the agent’s a** on this one. Ask her where is the data that supports this conclusion. Who has made this projection??? By the way, Goldman says a fed funds rate of 4% in 2007. However, JP says 6%.
http://www.c-n.com/apps/pbcs.dll/article?AID=/20061126/NEWS/611260325
Is a transit village coming to your town?
A town-by-town look at communities that considered or are planning transit villages
Bob-
I know! That’s the one the pissed me off the most too. Where does she get this info? Also, it’s too much of an increase too soon. I won’t care about a few points increase if I save $50k on the principle. I can always refinance later.
first time:
you can’t be too surprised by your agent’s move. Nice as they sometimes can be, they’re predisposed to closing the deal, your interests be damned. It probably seemed to her that you were close to making a decision, so she’s now trying to push you along.
Be thankful, at least she hasn’t taken you and your spouse out for drinks and given you the Ricky Roma.
#65 Rent in PA.
I suggest that you get into two year lease if you want to rent for that long and lock in the rents for two years. You don’t want the investor to try sell it just as you are getting settled in.
Looking for updates on the listings below, primarily want to know if these listings:
(1) expired
(2) are under contract or
(3) sold.
If sold, sale price please. Thanks!
2269357
2272762
2315826
2287091
2289888
2290152
2310978
2269357
2314042
p.s. asking so I can debate intelligently with realtor advising me inventory is shrinking “buy now”. I say its because listings are expiring, he says because of sales. I don’t think so… flood of inventory coming to a town near you.
#17 ithink_ithink
“So if the condo owners don’t want to loose their shirts & the home owners don’t want to loose theirs… then what exactly is going to be the catalyst to make double jumps in housing prices drop to ‘norms’?”
If the home/condo owner has a choice not to sell, they can hold on paying a higher mortgage than a house is worth and wait until the recovery many years down the line. I beleive the primary catalyst for the prolonged decline in housing prices will be the 25 % speculators/investors trying to exit through the narrow door all at once, and the many folks who bought more home than they can afford with the 1% teaser Optional ARM mortgage hoping for rising home values to bail them out. I dont’ expect a 30% correction in the next couple of months. I think it will take about 2 years to play out.
Add to it that most first time home buyers are priced out of the market.
#20 Buy or Lease:
If you are buying american go for new. The big three is giving away cars. If you are buying japanese, a 3 year car with 36K miles and about 40% off the new price is a good deal. I use http://www.edmunds.com for my auto research. Great website. If you plan on buying German, DONT !. Too many quality problems in the last couple of years. They are even below many american/korean brands in the JD Power quality/dependability surveys.
Antitrump: Good point, only catch is that we’re hoping to move out of the apartment by next december and find a place to buy. With any luck the market would have started to turn by then.
In any case, the lease agreement does not prevent the landlord from selling. you can only protect urself by simply making sure that they give you 60 days notice.
#29 SAS
“This is just my personal opinion. Alot of people call me a crazy old man for thinking the way I do. I could be totally wrong, I hope I am, but I have seem enough and know enough in life to say, “yup..I know where this leads”.”
I think your generation and the previous generation learned many hard lessons. Folks in the 20s/early30s was born in the two car suburban homes with the cell phone and microwave oven. They lived through some of the most prosperous years that our country has seen. They aren’t prepared for the economic and social correction that is coming our way.
OT – Debt and Dollar Talk.
The US is obviously in larger debt and their workers are uncompetitive. With this situation in mind, the one way to lessen the impact of such a situation is to let the dollar depreciate. Depreciation lessens the cost of debt service and at the same time makes the US more competitive. What an elegant solution to our problems.
NJEA is having a massive rally on Dec. 11.
They are there to scare politiciansinto not touchingtheir benefits.
There slogan—- BACK OFF
read all about it here:
http://www.njea.org/page.aspx?a=2889&z=1&pz=
I guess our taxes will be going up not down, ready for NJ crash???
This is news from India – 3rd world country for many folks here.
NEW DELHI: Realty portal MagicBricks.com by Times Business Solutions has launched a new service — Magic SMS –that allows users to send SMS to individual property sellers, agents, builders, developers and buyers for inquiries on properties they like, listed on the website.
Mr R Sundar, President, Times Business Solutions says, ” Magic SMS provides users with another channel of contact, extending their reach, range and approachability”.
With this service, the users can send free SMS through the website to sellers for properties and buyers for requirements that interest them.
The simple and user-friendly interface creates a succinct yet comprehensive message that is sent to the person who has listed the property or requirement.
The sender’s name, mobile number and the relevant identity code is sent in short message to the recipient. This allows the buyer and seller to communicate with each other directly.
MagicBricks.com is one of the leading property portal featuring the largest database of over 1.25 lakh properties across 25 cities in the country.
The point is even in India, they are using technology for buying and selling properties. I am not sure why US is falling behind. Why do one have to pay 4% to 6% commission for RE?
I have friends who work in Tech area, but they don’t want to use discount MLS service, but go with Realtor. I think in long run, Technology will make RE buying and selling run on Fixed fee model.
SG,
I guess you missed the point of my post. 1) No, I’m not selling and when I do, I’ll price it to move quickly, not for what I think I should get. 2) 50,000 houses per year? That’s Fifty Thousand. Um….since home builders can’t sell what they have now, where does the 50,000 come from….. PER YEAR NO LESS!! And the population is growing in NJ? I thought more people were leaving then coming?
Uh… why am I even explaining all this?
Seneca–here you go. UC=Under Contract T=Temporarily off Market X=Expired W=Withdrawn
2289888 – UC Clark Twp. 148 DORSET DRIVE $619,000
2310978 – UC Clark Twp. 17 LARGO LN $709,000
2269357 – UC Clark Twp. 17 GINESI DR $769,000
2314042 – T Clark Twp. 5 Bienko Court $875,000
2290152 – W Clark Twp. 160 MEADOW RD $749,900
2315826 – X Clark Twp. 8 ACKEN $549,000
2272762 – X Clark Twp. 7 Anthony Circle $639,900
2287091 – X Clark Twp. 33 LARGO LN $899,900
just got back from VA. I was close to the DC area where the bubble is ripe. i picked up a local paper and the ads are plentiful for housing. there were several articles telling folks that there is no bubble and that the time is NOW for buying. same propaganda we see here in north jersey.
a family member in the VA DC area is the president of a building company and he also shares the philosophy of NOW is the time. He told me that he just sold a house for 150k off of list price. The house had been on the books for just over a year. he doesnt believe it will go down much more from there.
I maintain that the same folks that were saying there was no bubble are the same folks that are calling bottom.
“the one way to lessen the impact of such a situation is to let the dollar depreciate.”
Hard Place,
It seems like that is our treasury dept’s policy. After the dot com bust, we know what the fed focused on. With the housing bust upon us, this may be the present day focus. Keep us going with our exports, great for our multi-national’s (Dow). However, they are playing with a keg of dynamite. There has to be the right balance. What that is, who knows. I don’t even know what the fair value of a dollar is in relation to foreign currencies. Who does??? There are an infinite amount of dollar’s floating around the world, we don’t even know how much we are printing, what happenned to M3??
In conjunction with this, there is a finite amount of gold in the ground, without further exploration.
Remember, this is a world economy, not a US economy. What about European, Asian, etc.,firms that export here. Do they raise prices, inflate, or do they suck it up and absorb the higher prices associated with the falling dollar??? If they absorb, their profits fall. Does this precipatate a sell of their stock markets??? If the dollar depreciation continues, I feel, we are one day away from waking up to an international shock with this fiasco. It could be a fall/major revision in profits for these firms, it may be the yen carry trade. For those not familiar;
let’s say a trader borrows 1,000 yen from a Japanese bank, converts the funds into U.S. dollars and buys a bond for the equivalent amount. Let’s assume that the bond pays 4.5% and the Japanese interest rate is set at 0%. The trader stands to make a profit of 4.5% (4.5% – 0%), as long as the exchange rate between the countries does not change. Many professional traders use this trade because the gains can become very large when leverage is taken into consideration. If the trader in our example uses a common leverage factor of 10:1, then she can stand to make a profit of 45%.
The big risk in a carry trade is the uncertainty of exchange rates. Using the example above, if the U.S. dollar were to fall in value relative to the Japanese yen, then the trader would run the risk of losing money. Also, these transactions are generally done with a lot of leverage, so a small movement in exchange rates can result in huge losses unless hedged appropriately.
It happenned in 1998, LTCM, with the Russian bond defaut the yen surged 20% in 2 months. Who’s to say it can’t happen again??
Our markets, in my estimation, are very complacent about the falling dollar. They cheer the Dow and fail to mention what % of their profits have been as a result of the exchange rates. It’s all fine and dandy until it’s not. What happens then????
“I maintain that the same folks that were saying there was no bubble are the same folks that are calling bottom.”
Spelunker,
Excellent point!!!!
“The average weekly pay for finance jobs in Manhattan was about $8,300 in the first quarter of 2006, up more than $3,000 per week in just three years, new federal data show.”
This article helps explain why NYC and Hudson County home prices have increased significantly during the last few years. It also supports my position that current home prices in NYC and Hudson County waterfront areas (downtown Jersey City, Hoboken, Weehawken) are consistent with economic fundamentals, the most important of which is income level.
Incomes rose fast, supply of homes didn’t, so prices spiked. Today supply is rising, reducing pressure on prices.
http://www.nytimes.com/2006/11/23/nyregion/23income.html
pretorius,
good post, and I agree with that. I believe its a huge piece of the pie.
But “when”, “NOT “if”, there is a slowdown in the financial sector in this town… look out…
There will be god damn tumble weeds blowing in the wind, and this area will be a ghost town.
SAS
“T=Temporarily off Market X=Expired W=Withdrawn”
Only semantics and realtor games separate the three.
All should be considered “Withdrawn.”
AntiTrump:
Amen on the German car thing. I drive a 2003 Honda with 140k miles. Very few problems.
We have spent twice as much in maintenance on my wife’s 2002 BMW with just 24k miles. When it needed brakes at 19k miles I nearly fell out of my chair. $90 for an oil change. Expensive to buy, expensive to maintain. I doubt that we will ever take it to the dealer again.
Last month my wife wanted to trade it in for a new X3. I can’t see purchasing another. Been there, done that. Probably go with an Acura MDX if she puts a gun to my head.
Rather not buy anything right now. The cars are paid for. No payments.
“The 280,000 workers in the finance industry collect more than half of all the wages paid in Manhattan, although they hold fewer than one of every six jobs in the borough. The pay gap between them and the 1.5 million other workers in Manhattan continues to widen, causing some economists to worry about the city’s growing dependence on their extraordinary incomes.”
“More of the job growth in the city is occurring in lower-paying service jobs in restaurants, stores and home health care, but the pay for those jobs has been lagging”
What happens when Wall Street catches a cold???
Black Friday Sales Up 6 Percent Over ’05
http://www.breitbart.com/news/2006/11/25/D8LKBVU81.html
It’s crashing and don’t look back
1) Interest rates are low now but are projected to rise to around 8% in 2007
if interest rates go up affordability goes down meaning prices go down.
FirstTimeBuyer Says:
November 25th, 2006 at 5:59 pm
This is way off topic, but we put an offer down on a house this morning. The asking was $400k, it has been on the market almost 60 days, and there are no other offers, despite two open houses. Our offer was originally 10% off asking (and over 20% off peak in the area) — $360k. We felt pretty good about it. Our agent just called with the counter — $395k. We countered for $370k as our final offer, which we think is generous in this market. Our agent agreed and is going to let us know, but I doubt the seller will come down that much.
How does anyone coment with any comparables?
You may be overpaying a big amount if it is near the high prices.
http://www.ft.com/cms/s/7a0e36ea-7d74-11db-9fa2-0000779e2340.html
Wall Street’s gains may be a case of irrational equanimity
In foreign exchange, the concern is that investors are indulging in the “carry trade” – borrowing money in a low-yielding currency, such as the yen, and parking it in a high-yielding currency like the Australian or New Zealand dollar or the Swiss franc. This generates easy money that can then be poured into other markets. The great risk is a sudden appreciation in the yen – as happened last week
…
From the credit market, the fear is that spreads have been driven to such low levels that speculators have no choice but to dive for the equity market
…
Further, there are worries about the role of credit derivatives. In making it easier to diversify default risks, these make it far less likely that one big default could bring down a few institutions that were the casualty’s biggest creditors.
…
However, they cannot diminish the risk of default across the economy. Yet they are currently priced as though credit default risks are falling, which runs contrary to the signals emanating from the Treasury bond market.
“what happens when wall st catches a cold?”
Despite the net affect on the tax base, this would be a very good thing for the metro area.
Just out of curiosity – how do you get a job at wall street which pays at 8k/week?
what education/training is needed?
Hi, Can anyone comment on this house in south bruns:
MLS# 618123
Basically, I’m looking for Original list date, price and current status.
It appears to be off the market for a short while and back again.
Thank you!
Nov 28
08:30 AM Durable Orders
10:00 AM Consumer Confidence
10:00 AM Existing Home Sales
“The average weekly pay for finance jobs in Manhattan was about $8,300 in the first quarter of 2006, up more than $3,000 per week in just three years, new federal data show.”
this stat is pretty misleading.
first, it takes its point of comparison from the low point on Wall St from the past 10 yrs. Of course pay is looking pretty good compared to 2003.
second, as an average number, it could be (and probably is) greatly skewed by the crazy pay of those at the very top. You’ve got an elite on Wall St making tens of millions a year right now. not sure how lumping them in with everyone else is supposed to clarify anything
third, to the extent that this average reveals anything about how well wall streeters are doing, it doesn’t tell us hardly anything about how this translates into a plus for the housing market. How many of these “average” people making $400-500k are in to market for a condo right now?
It’s not hard to accept that the street is doing really well right now, or that this is spilling over into the larger economy. What is problematic is taking a number like the one above as evidence of some fundamental value in the housing market
#78 Seneca Says:
I noticed that the number of homes available on http://www.gsmls.com dropped from about 31900 to about 31100 in the last couple of days. It looks like many of the folks are pulling back to make another try in 2007 Spring. It may seem to the uninformed buyer that inventory has decreased due to sales, but most of the drop can be attributed to greedy sellers hoping for a spring 2007 rebound.
Looking forward to the winter 2007 carnage.
http://biz.yahoo.com/ap/061126/holiday_shopping.html?.v=6
Will Holiday Sales Momentum Continue?
Retailers were optimistic but also a little uneasy going into the season, concerned that economic factors like the slowing housing market might make shoppers more conservative. And many shoppers interviewed during the weekend said they were trying to be budget-conscious.
….
Still, the discounts accomplished what they were supposed to do for many retailers — get consumers spending early.
…
A clearer picture of how retailers’ sales fared over the Thanksgiving weekend will emerge Thursday, when merchants report monthly sales results for November.
skep
however you want to put it, I’m feeling some Marxist stirrings about those elite……..
Chi,
There may be something more concrete in the works, in the currency market, than less liquidity (participation)on Friday. In electronic trading (tonight) the euro gapped open higher and is now up .0069 vs the dollar. It is early though, just the start of Monday trading.
“Hong Kong’s economic cycle is getting more and more synchronized with China, so questions will be asked if it still makes sense to be linked to the U.S. dollar,” said Enoch Fung, an economist in the city at Goldman Sachs Group Inc., which predicts a peg to the yuan in the “distant future.”
“People are discounting now a small possibility of a large event happening sometime in the future,” said Simon Flint, a strategist at Merrill Lynch & Co. in Singapore.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aEBFLghIFYOg&refer=home
http://www.bloomberg.com/apps/news?pid=20601103&sid=azozwpvbIYas&refer=news
Europe Surpasses U.S., Japan in Reaping Gains From World Trade
Europe, where worker anger over globalization sparks street protests, is surpassing the U.S. and Japan in the race to reap benefits from the explosion in world trade and investment.
great read.
Coming to a town in NJ… very…very soon.
“Shuttered homes, blighted blocks”
http://www.denverpost.com/ci_4719353
SAS
also, about the link above.
read the full series.
not bad.
SAS
Got this in my email from a RE agent:
“SAS ~ you need to familiarize yourself with the definition of “real estate bubble”. Once you better understand the term, perhaps we can have a real conversation.”
oh man… thats a good one.
wow.
SAS
‘Our neighborhood’s going down the drain. What’s going on? Why can’t the city do something?’ Unfortunately, the city can’t do a lot.”
………..nor can your state, nor can your fed govt!!!
SAS,
By the way, great call on your “window opening” statement in early Oct on gold, $75 higher now. Not eating crow on that one!!!!!
wow thats a scary apper – makes me not wanting to buy a house – not that I can afford any…….
Ohh I guess I will buy a house from foreclosure in a few years, probably not in NJ
“By the way, great call on your “window opening” statement in early Oct on gold, $75 higher now. Not eating crow on that one”
yes, even a broken clock it right twice a day.
SAS
I mean,
yes, even a broken clock is right twice a day
;)
SAS
BC Bob Says:
November 26th, 2006 at 6:55 pm
Chi,
There may be something more concrete in the works, in the currency market, than less liquidity (participation)on Friday. In electronic trading (tonight) the euro gapped open higher and is now up .0069 vs the dollar. It is early though, just the start of Monday trading.
*this comment is not investment recommendation – you should not use this opinion to make investment decisions.
For once, I feel as if I am out ahead of this one. I’ve already knocked the cover off the ball in 2006. If I get a rally on my non-USD holdings in the next 2-3 weeks, I think this will be a year for the ages.
Rachel,
Thanks very much! I will be shocked if the second two listed as UC actually sell at the list price. There are still some real suckers out there if they go for those prices. Unreal. Looks like for the most part, people are just waiting for Spring. Thanks again.
Seneca, Post 78:
Take a look at the Otteau Reports to see where inventories are now and where they were a year ago (I suspect you will see +40% at least). Also note the ratio of monthly sales to inventory, it is represented by the Month’s inventory number and is almost certainly twice what it was last year for just about any community and price range you can name.
My favorite: Monmouth County homes over $2.5M — 30 month supply.
Just a heads up, the MLS site I use to track inventory hasn’t shown any homes for sale in Toms River(Dover), Eagleswood, or Little Egg Harbor in over a week.
In the 3rd quarter Otteau report Toms River had more than 1,000 MLS listings. Right now, no seller there seems to have their home up for view to any public user of the MLS system, and for all I know they are off the realtor’s proprietary system as well.
My favorite: Monmouth County homes over $2.5M — 30 month supply.
This is the essence of current situation – nobody building chepaer housing – there is no Starter homes on the market…
I am sorry, but 2bdr/1bath (800sqft, fixer-upper) for 350K in central NJ (not NNJ) is not started home – first time home buyers do not have previuose home to sell and gain 100K from appreciations. And salaries stayed flat at best.