From the Washington Post:
An Economic Pillar on the Verge of Collapse
It’s been more than a year since we’ve heard from those who denied there was a housing bubble.
Since then, the industry boosters, along with the “soft-landing” crowd over at the Federal Reserve, have coalesced around the idea that maybe the market got a bit frothy after all, but now the correction is almost complete, the unsold inventory’s been worked off and the worst is behind us.
But just when you’re feeling hopeful again, you get reports like yesterday’s Wall Street Journal piece reporting that delinquency rates are suddenly soaring on all those loosey-goosey subprime mortgages. They are starting to cause real heartburn for pension funds and other investors who bought securities backed by those mortgages on the theory that they were no more risky than a Treasury bond.
…
But enough hand-wringing over the residential real-estate market. Not much anyone can do about that now. The new story is the bubble in the commercial real estate market — offices, hotels and retail establishments — which has generated spectacular returns for investors over the past few years.Prices have risen to ridiculous levels, relative to the risk involved and the amount of income generated by these properties. But even those prices don’t seem to scare away pension funds, university endowments and Arab investors, who continue to pour hundreds of billions of dollars into real estate investment trusts, private-equity real estate funds and hedge funds that specialize in real estate finance.
…
What, exactly, does that mean?First of all, it means that the lessons of the past five real estate crashes have, once again, been forgotten, and real estate has once again become a highly leveraged investment class. So, when the inevitable downturn finally happens and the price falls by more than 20 percent, there’s a pretty good chance the value of the collateral will fall below the value of the loans, which in financial circles is considered a no-no. To make things even worse, it’s a good probability that these are interest-only loans, which means that even in good times, the borrower is not paying down principal.
These numbers also mean that once you take into account things like the need to invest each year in maintaining the properties, investors will earn a premium of less than 1 percentage point for the risks associated with real-estate investing — little things like tenants who don’t pay rent or vacant property that can’t be rented — as compared with risk-free Treasury bonds. As risk premiums go, that’s as low as anyone can remember.
But not to worry, says just about everyone in the real-estate business. The prices for real estate aren’t too high because there’s a new paradigm in which the old rules no longer apply!
…
I can’t tell you exactly how it will unfold, or when. But when it does, probably sometime in the next two years, everyone will look back and wonder why anyone could have doubted there was a bubble, why credit-rating agencies didn’t warn of the risks, and why bank and securities regulators didn’t step in.By then, the fund managers who made and financed the deals will have gotten rich from all the fees they collected. It wasn’t their fault, they’ll explain: They merely took money from people who had already decided to invest in real estate and put that money to work.
And the Journal will run a front page story quoting some Wall Street executive on his surprise at how fast it all came unraveled.
From NJBiz:
Business Owners See Cloudy Skies
Despite ongoing efforts by the Corzine administration to make the state a more attractive place to run a business, a new survey finds that many businesses don’t find New Jersey friendly at all and expect its economy to worsen.
Complaining chiefly about high health-insurance premiums, increasing government spending and steep property taxes, just 17 percent of the 1,700 employers responding to questions from the New Jersey Business & Industry Association (NJBIA) said the Garden State is a good place to renovate and expand a business.
The 17 percent of respondents that called the state a good place to expand was down from 28 percent last year, and the lowest since 1985, according to the NJBIA. In this year’s survey, 19 percent said New Jersey is an average place to renovate or expand, 25 percent called it a fair place and 39 percent said it was a poor place to expand.
According to the survey, 28 percent of respondents said their industries are in a recession while another 27 percent said their industries were nearing one. Fifty-one percent expect the state’s economy to worsen in the first half next year. That marked the highest number in 16 years. Just 39 percent of respondents expected conditions to worsen a year ago.
Among those responding to this year’s survey, 34 percent expect the national economy to worsen in the first half of 2007. Rose said he was surprised by “the spread in perception” regarding the state and national economies.
Kirchner attributed the differing outlooks to the state’s “abysmal” creation of only 11,000 new private-sector jobs over the past year, compared with the national average of 40,000 new jobs per state.
Private-sector job creation in New Jersey is the second lowest in a nonrecession year in 30 years, according to the NJBIA. “For three straight years, we have lagged the national average of creating top jobs,” Kirschner said. “If [companies] are not leaving the state, they are certainly not expanding and hiring.”
While the state is not in a recession, he said, growth has been “weak and sluggish,” instilling a lack of confidence in business owners.
NJ has been given away. It’s a welfare state.
take a look at the proposals for tax relief
for the taxpayer. Pension, no rollback, no new school aid distribution formula, no elimination
of any school districts or municipal gov.
its all a cover for increases.
,
Anyone else catch Ivy Zellman zing Bob Toll during the conference call?
http://calculatedrisk.blogspot.com/2006/12/bob-toll-i-didnt-mean-to-project.html
The conference I attended on friday was about NJ construction. Joe Seneca said that since the eighties non residential construction has picked up the slack for residential.
From CalculatedRisk – http://calculatedrisk.blogspot.com/
From Yahoo: Toll Brothers Earnings Conference Call (Q4 2006)
http://us.rd.yahoo.com/finance/confcall/streetevents/SIG=13cemuktt/*http%3a//web.servicebureau.net/conf/meta?i=1112824591&c=2343&m=was&u=/w_ccbn.xsl&date_ticker=12_5_2006_TOL
Credit Suisse’s Ivy Zellman asked the best questions (starts at 50 minutes 30 seconds), including a few funny remarks:
“Which Kool-aid are you drinking?”
She challenged Toll Chairman Bob Toll about his optimism this morning, and Mr. Toll responded:
“I didn’t mean to project optimism.”
And she made this comment directly to Bob Toll (who sold a significant amount of stock in the Summer of 2005):
“I think a lot of people, if they ever follow you Bob, and your buying and selling personally, they made a lot of money.”
I’ve been on both sides of conference calls, and the Toll team seemed unprofessional to me at times. Update: As I noted in the comments, at times they seemed disorganized and they seemed to stray from their talking points. As an example, at one point Mr. Toll mentioned that demand would increase in D.C. because of the recently elected Congressman and Senators. Of course just as many ex-Congressman and Senators will probably be leaving D.C., so it was difficult to understand how this would impact their business in a material way. It seemed like Mr. Toll was winging it – I doubt this was a key talking point for the company.
For those who just love to hear stories of ethical Realtors..
How To Screw Homebuyers And Doctor Statistics – A Re/Max Educational Series
jb
my post is awaiting moderation :(
I spent some time yesterday with a long-term homeowner here in NJ. Wife is a top-producing real estate agent, they are hardworking and have done well. According to this fellow, “Renting is throwing money away. If you knew what I paid for my house, you’d laugh. Prices never go down in NJ. They just stagnate, or plateau for a little while, and then zoom again. Now’s a great time to buy and you should get in now or risk being priced out forever.”
Gee, thanks for the advice. I guess the myths are still alive and well.
If you had Bob’s Tolls money, why even
bother to be on the call. That’s what
you pay your COO and CFO for.
And who cares what Ivy Zelman thinks.
She has never run a company.
“The new story is the bubble in the commercial real estate market”
If Sam Zell is yelling you better be selling!!
“And the Journal will run a front page story quoting some Wall Street executive on his surprise at how fast it all came unraveled.”
Sounds like the posts on this blog!!
“If you had Bob’s Tolls money, why even
bother to be on the call. ”
Whoever claimed Ivy Zelman had money like Bob toll?
“And who cares what Ivy Zelman thinks.”
I’m sure investors who lost money since sep 2005 care what Ivy Zelman has to say.
“She has never run a company. ”
since when is it a rule that only a CEO can question other CEOs?
HSBC warning ominous for U.S. lenders
http://tinyurl.com/yebn52
Outside housing and autos, economic activity remains solid, he said. “Overall, the economy is likely to expand at a moderate pace going forward,” Bernanke said.
http://tinyurl.com/yn8a4a
Don’t expect a rate cut unless the ecomomy gets a lot worse.
More on lessons of the past. Chart 2 is similar to Grim’s chart yesterday (sold/actives). Amazing how the stars align. I hope there is no problem with your analysis.
“In the prior nine housing cycles, the average peak-to-trough decline is 24.6%; the median is 22.6%. The peak-to-trough decline to date in the current housing recession is 7.9%. Unless this turns out to be a more moderate than usual housing recession, unlikely given the amount of speculation and leverage involved in the boom, then we have “miles to go””
“the October negative gap still is wider than any prior to this housing recession. So, supply continues to outpace demand by a wide margin, which suggests further declines in single-family home prices and continued negative carry in housing.”
http://www.financialsense.com/editorials/kasriel/2006/1205.html
Ha Ha, investors from 2005 care what Ivy
Zelman has to say.
Thats history,
tol was up 20% yesterday thats what investors
care about .
pesche,
You are a pip. Where do you pull your #’s from???
Tol was up .96 or 3.01%.
In conjunction with this, throw your XHB charts out the window. They are meaningless, only provide data back to Feb, 2006. You can’t even decipher one year data!! How can you even mention a trend with no past data. You need to analyze 1, 3 and 5 year charts. Stop the nonsense. If you want to look at trends pull up 5 year charts of the dollar.
WAY off Topic (but I did first read about it here):
New York bans trans fats at restaurants
New York on Tuesday became the first city in the nation to ban artery-clogging trans fats at restaurants, leading the charge to limit consumption of an ingredient linked to heart disease and used in everything from french fries to pizza dough to pancake mix.
….The Board of Health, which passed the ban unanimously, did give restaurants a minor break by relaxing the proposed deadline. Restaurants will now be barred from using most frying oils containing trans fats by July 2007 and will have another year to eliminate trans fats from all foods.
…a national requirement beginning this past January that companies list trans-fat content on food labels.
More at the link above, Rich
CNBC just reported that 30 year mortgage rates are below 6%, for the 1st time in however long. Commentators noted that this should spur those who have ARMs to refinance. If so, shouldn’t this slow down some of the foreclosures that would be due to higher ARM interest payments?
I know most posters here are in agreement that prices must decline. I’m just curious what everyone’s thoughts are if 30 year mortgage rates stay below 6%.
What a great article that smells of vindication. Definitely something to pass around housing bulls.
Poser Says:
My take on the mortgage situation is this. The 30 year fixed has ranged from about 5.5 to 6.5 in the last year or so. More recently it has been in the 6 ~ 6.5 percent range.
During the bubble years, most of the spec buying was done using the teaser short term ARMS as the buyer was only interested in a quick flip and wasn’t so concerned about rate increases.
Two things have changed from last year. The spec buyers/flippers are either licking their wounds or the smarter ones see the market has turned. The teaser short term rates you got last year is harder to come by. Remember the fringe buyer who is overpaying for more house than he can afford normally has to get a teaser rate.
This is why I think a 6% rate won’t improve the home sales outlook. It is a good opportunity for ARM which are goint to float to get a fixed rate.
The bottom could be in. XHB continues the
march onward and upward.
Santa Claus rally, CNBC said so.
From Marketwatch:
Meritage CEO sees tough couple of quarters for housing
Meritage Homes Corp. Chief Executive Steven Hilton said Wednesday he expects the housing market to remain “tough for at least the next couple of quarters.” The home-builder CEO, speaking during a Webcast of the New York Society of Securities Analysts Homebuilding Conference, said the market needs to work its way through the oversupply of speculative and resale homes, and will improve when “expectations become more realistic” on the part of buyers and sellers. He said expansion plans “are on hold now,” but that the company next year could buy land or pursue acquisitions. If Meritage’s stock goes down and it doesn’t see opportunities for M&A or land purchases, it will buy back shares, the CEO added.
Pesche,
What is your position in the HB sector?
jb
“The bottom could be in. XHB continues the
march onward and upward.”
Toll doesn’t seem share CNBC’s optimism.
Toll this week said “I didn’t mean to project optimism.”
jb
strickly the numbers
BC Bob – that’s some fantastic analysis…
From Chart 1 it seems to signal that now is the time to get out as appreciation is below the cost of mortgage carry, therefore speculators should leave the market.
Too bad Chart 2 doesn’t go further back. It shows that the last decline in sales and prices back in ’90-91 was presaged by increases in inventory. Given the much larger increases in inventory this time around, I would venture to say that the price declines will be larger as well.
Than chart 3 provides further justification for investment in residential real estate. I don’t have the actual data, but by eye you can tell there are similar increases in terms of % increase of private residential real estate with the periods during ’70-73 and ’75-79 with this current cycle. You would think the declines would parallel those periods, which saw 39.6% declines and 45.4% declines. If I were a realtor and I saw these charts I would start thinking about harvesting for a long sales hibernation or find some sunnier climate. For buyers that can wait, join us on the sidelines, put your money in savings, watch it grow and watch your buying power increase.
This definitely reinforces my feelings I will sit out this market next year.
Pride of ownership for me will not include the need to feel like a goat owning an overpriced home.
lower mortgage rates present an interesting twist. seems like if they continue, they will mitigate distressed selling somewhat.
the question is who can actually refinance at these rates. the low rate is not available for the subprime market, which is where most of the foreclosures will come from.
Marcal files for Ch. 11, State looks to rescue.
State attempts to rescue Marcal
Judge: Marcal workers’ pay safe
Commentators noted that this should spur those who have ARMs to refinance. If so, shouldn’t this slow down some of the foreclosures that would be due to higher ARM interest payments?
It may slow the foreclosures down a bit but just remember many people who bough spent well about there means and go the 1-2% introductory rate. So Even a jump up to 5.5% can still increase the payments.
A 350k mortage with no money down at the 1% introductory rate is 1126/month (before taxes)
if it jumps to 5.5% your basic mortage payment is 1987/month. 861.00 increase. And with taxes figured in thats going to give you a nice heftty mortage payment. So yes it may slow down a bit, but I think a lot of people who purchased used the 1% introductory rate so they could get into a place that cost 350-400k. Which they would have not been able to afford without a fantsy exotic mortage. I think over the next few years the housing market is going to be one big mess, and we are going to continue to see a rize in forclosures and we are going to continue to see houses just sitting on the market for month and months. I think to get prices down where most people can afford we have a long way to go. Again with the article stating that arond 70% of NJ makes under 100k, I am really starting to believe that prices will fall a little above 1999-2000 prices. The job market is crap. Now that the government is finally starting to regulate exotic mortages and property taxes really high, we are going to see massive price drops over the next 5 years. I mean its been about a year the market has started to decline and people are still in denial, and don’t want to reduce or dont want to come down that much in price. Its no wonder houses are not selling now. Well realisitcally since everything is starting to get straightend out, sellers are relying on 30% of people who can afford astronomical prices. They are also relying on people who have homes that are considering upgrading. But I think they are relying on 40-45% of potental buyers. Once prices come down to being more realistic as they were in 99-2000 I think sales will start to pickup. But I think for prices to get to a normal level it will take alomst as long as it did for prices to go up.
If you put no money down, and took out an ARM, and prices have started to fall, how will somebody be able to refinance now? it does not make sense. Even somebody that may have put 10% down lat year may now not be able to refinance, since prices have fallen.
Its just common sense, or am I missing something.
one possibility is that lenders might forgive a portion of the mortgage so that homeowners can refinance. might be preferable for everyone rather than foreclosure. of course, this creates tax liability for the borrower
“The truth is that the official numbers on house prices, the last refuge of soothing information about the real estate market on the coasts, are deeply misleading. The numbers overlook all those homes that have been languishing on the market for months, getting only offers that their owners have not been willing to accept.”
“In reality, homes across much of Florida, California and the Northeast are worth a lot less than they were a year ago. Tom Doyle, a Naples real estate agent, estimated that a typical house there, sold in the normal way, would go for about 20 percent less than it did the previous fall.”
“In the Boston area, prices have fallen about 10 to 15 percent since the middle of 2005, estimated Chobee Hoy, who owns a real estate brokerage firm in Brookline. Jerome J. Manning, who runs the Massachusetts-based auction company that conducted the Naples sale, told me he thought that values had dropped about 20 percent around Boston. The government, meanwhile, says the average price rose 1 percent from last summer to this summer.”
“In September of last year, Ms. Hoy sold a one-bedroom condominium in Brookline for $395,000. She recently sold another apartment of the same size in the same building for $300,000. Since March, her firm has been listing a house in the Fisher Hill neighborhood of Brookline that cost $995,000 when it last sold, in the summer of 2004. Ms. Hoy expects it to sell this time for less than $900,000.”
“The market in northern Virginia is similar: prices are down 10 to 15 percent, according Mr. Lawler, a former Fannie Mae executive who’s based there. In Portland, Me., the typical house has lost about 10 percent of its value in the last year and a half, said Bill Trask, the former head of the local Realtors’ board.”
“Unfortunately, there are also a lot of families that took on huge mortgage debts based on the ephemeral peak values of their properties. In effect, they cashed in on the housing boom without cashing out. The withdrawals have been so big that the average household in Boston now has slightly less equity in its home than it did in 2000, according to an analysis by Moody’s that took inflation into account.”
“Most worrisome, growing numbers of these families are falling behind on their mortgage payments, and they won’t be able to bail themselves out by refinancing or selling their homes. ‘We’re now going to combine a high amount of debt with falling home values,’ said economist Mark Zandi.”
from housing bubble blog
pesche22 – regarding post #16, can you share with me your opening and closing values for TOL yesterday? Either your dollars are worth a lot more than everyone elses or your math is wrong.
Stocks don’t generally change on news that the CEO doesn’t mean to encourage any optimism. Share increases of that proportion don’t generally happen without announcing discovery of a cure for cancer or trading as a penny stock to begin with.
Please explain yourself.
Grim,
You might want to post the following.
http://www.nytimes.com/2006/12/06/business/06leonhardt.html?hp&ex=1165467600&en=13e309a543ffe184&ei=5094&partner=homepage
Interesting article on today’s NYT business section, it writes on “The truth is that the official numbers on house prices — the last refuge of soothing information about the real estate market on the coasts — are deeply misleading.”
It also writes towards the end of the article that NYC suburb has probably gone down 10%.
10% decline is registering in major local media now….it is the beginning of media accepting the bubble is bursting…..
CC
“The bottom could be in. XHB continues the
march onward and upward.”
To someone looking to buying a home I woudn’t recommend looking at an index as the same hedgefunds that buy up this index can exit way way faster than you can if they have misjudged the recovery. As a home seller you can’t exit that easily. This information that peche provides is good for any speculator who wants to play the market without buying a house.
Interesting piece from Bloomberg:
Amaranth’s $6.6 Billion Slide Began With Trader’s Bid to Quit
Nicholas Maounis, founder of the Amaranth Advisors LLC hedge fund, made a decision in April 2005 that eventually cost him his firm.
His promising natural-gas trader, Brian Hunter, had been offered a $1 million bonus to join Steven Cohen’s SAC Capital Advisors LLC. Maounis, who had built his Greenwich, Connecticut- based fund to $6 billion in assets, didn’t want Hunter to go.
Convertible bond and equity prices were falling and oil and natural gas prices were increasing, making Hunter’s expertise more valuable. So Maounis named Hunter co-head of the energy desk and gave him control of his own trades.
Hunter, within 17 months, would be responsible for $6.6 billion in losses, detonating the biggest hedge fund implosion ever. Since Amaranth’s sudden collapse, investors have questioned the unusual trust Maounis put in his star trader, now 32. They say Maounis gave Hunter too much latitude and that Hunter, trading more than half the firm’s assets, was blinded by a bet that had worked like a charm for two straight years.
The missing pay hikes
http://money.cnn.com/2006/12/06/news/economy/november_jobs_walkup/index.htm?postversion=2006120606
Wage gains are expected to be modest as employers use bonuses, contractors to curb costs.
Employers are working hard to keep a lid on wage increases – and to a large extent they’re succeeding
xhb is the leading ETF today
i dont have to explain anything to anybody.
What amazes me is the great disconnect between Wall Street and RE. If everyone knows that RE is softening and this will hurt a lot of homeowners (subprime and flippers), and this will result in a overall decrease in future consumer consumption resulting in declining Earnings per share, why isn’t this hypothesis reflected in the stock market. The Dow, Russel all making double digit returns for this year. I thought the stock market is a better indicator of the future, rather than conference calls of homebuilder CEO’s and Economists.
What am I missing here??
conference calls are for the most part a
waste of time.
read the filings , always better.
pesche22,
I don’t think you can explain your logic to yourself. you a kanector?
XHB isn’t a pure play on the “housing market”. At least not in the way that the CME housing are intended to be..
This information is for discussion purposes only and does not constitute a recommendation to buy or sell securities.
Correction: CME Housing Futures
jb
home depot and lowes big part of xhb
pesche22,
What do the filings say?
from Lindsey’s post # 71
https://njrereport.com/index.php/2006/12/05/northern-nj-sales-and-inventory/#comments
Down at the bottom of Toll’s Q4 info they noted that they expected to sell between 6,300 and 7,300 homes (noted in Bloomberg story) at an average price of between $660K and $670K (not noted by Bloomberg [at least in update 6]).
In the third quarter their prediction was for more homes 7,000-8,000, but at a lower average price: $635K to $645K.
My question is, in a softening market, particularly in the Northeast, what makes them think they can raise prices now that they didn’t know three months ago? Or are they just trying to massage the revenue numbers?
Oh, and while I’m on Toll, lets take this bit of contradiction from the first graphs of the
”
Bloomberg story:
Toll Brothers Inc. said the U.S. housing market may have reached bottom as the largest builder of luxury homes reported the biggest drop in quarterly profit in 16 years.
Net income in the three months ended Oct. 31 fell 44 percent … Fiscal 2007 earnings may drop as much as 62 percent,
My question here, if they expect profits to drop more next year why would they call this the bottom?
“
the largest holding is sherwin williams
Re: post 33- take at least 25 percent—
I think that article (about the “hidden” aspects of the house price slump being even bigger than the “obvious” statistics) is actually an exerpt from an article in today’s NY Times. (Which is even better for us sideline-sitters because this may help the sellers leave la-la land sooner.)
home depot and lowes big part of xhb
Exactly my point.
jb
The foreclosure capital of the U.S.
Job cuts and risky loans get the blame in the Detroit area, where about one in 80 homes started the foreclosure process in the third quarter. The fire-sale prices are hurting other homeowners, too.
Empty houses with long, weed-choked grass, court orders pasted in windows, streets littered with “for sale” signs — these sights are becoming a familiar part of the landscape in Detroit, where people are losing their houses at the fastest rate in the nation. Rising unemployment, a sliding real-estate market and risky lending are the culprits behind the Motor City’s surge in foreclosures, analysts say.
Where does your city rank?
Foreclosures nationwide were up 43% from a year ago in the third quarter of 2006. Here are the rankings for the 100 largest U.S. metropolitan areas
Foreclosures are rising in many parts of the country, fueled by a slowdown in home sales, slumping real-estate prices and rising payments on adjustable-rate mortgages. Homeowners who have lost a job or faced another economic crisis are finding it hard to refinance or take out home-equity lines of credit to bail themselves out, analysts say.
let’s not forget that the HBs fell by 50% last year. nothing of the sort has happened w/r/t to house prices. at the end of the day, these are two diff’t asset classes. they should be expected to move in tandem
what I find more interesting is how purchase mortgage apps appear to have reversed their downward slide in the last month. this corresponds with anecdotes we’ve been hearing from RE pros in the media that the slide has slowed down somewhat.
seems logical to me that combination of lower mortgage rates, sellers more willing to negotiate, and increasing rents would bring some buyers in off the sidelines.
the problem as always is that what is happening today won’t be reflected in stats for several months
that is, they should NOT be expected to move in tandem
from calculated risk
The refinance share of mortgage activity increased to 50.1 percent of total applications from 46.9 percent the previous week. The refinance share is at its highest level since April 2004.
Someone earlier on was mentioning CNBC…
I had a professor at NYU that used to begin most classes with current events and by saying “I watch CNBC so that you don’t have to…”
Ivy Comes Forward With A Killer Cleveland Left-Hook:
“I think a lot of people, if they ever follow you Bob, and your buying and selling personally, they made a lot of money.”
Nice cojones.
Pesche,
First of all get your #’s right. How the hell do you calculate Tol being up 20% yesterday??
Regarding your XHB, read my post (#17) again. By the way, wise people are only concerned with their REAL position. You can only get hurt with what you have on!!
pesche,
One other thing, if you are such an advocate and have conviction, step up to the plate and put you *ss on the line.
excellent
http://www.curbed.com/archives/categories/outside_nyc_new_jersey.php
http://newjersey.craigslist.org/rfs/244956587.html
Hoboken residents or Kannekt Krowd: Is this getting common?
Chi,
What an advertisement!!!
“NEW JERSEY BONUS: Careful where you buy in old, industrial Jersey. Today’s Times notes that the view from $2M town houses in Weehawken may not be the only thing about them that is killer. Turns out they’re sitting on top of chromium, which causes lung cancer, liver and kidney damage and DNA mutations. It also says that Hudson County, which is where Jersey City is, is “the nation’s chromium-waste center, with almost 200 sites where it was dumped decades ago.”
Bob…you mean YOU don’t hold your breath the whole way through there on the train?
Mamma don’t take my Kodachrome awayyyyyy.
“i dont have to explain anything to anybody.”
classic.
What is XHB?
come on boys , cant take it. all gloom and doom
you got to be in the right crap game.
housing and materials up again today.
were at the bottom
xhb = homebuilders etf.
pesche: you have much to learn grasshopper, but learn you will, they always do in the end.
you also need some staying power
pesche,
any reason other than your ETF why you think housing has bottomed?
O.K. How many listings like this is it gonna take for Booyyyaa’s greedy grubbers to start reducing their prices?
“Former deal fell apart at the last minute even though purchaser had a mortgage committment.PRICE IS REDUCED TO BE IN LINE WITH APPRAISAL. Pursunat to terms of previous deal, Owner removed capets and ceiling tile. Certifications are on file…Property comes with a Home Warranty. A prior Home inspection is also on file.Owner says, “”Bring me an offer.”” ….. Our mortgage afffiliate can get your client a mortgage for this property, even though your mortgage company can’t! So, don’t be shy, bring your buyers to our mortgage comapany.”
Hoboken residents or Kannekt Krowd: Is this getting common?
That’s the first auction I’ve seen. I don’t live too far from there, may have to walk by and check out the building.
persche,
you lost all your arguments today. Eventually you will lose all your money playing the “crap game”.
I’ve been getting a bunch of emails and mailing from Toll regarding their new places in Hoboken. Seems like they are trying to get year end sales figure up. Good luck with that!
just remember you got to have staying power.
and the trend is your friend
GDP impacted by housing , slow for the next several quarters and their you have it.
come spring, home free.
get the wallets out, and line up your deal,
that is if you have any money left.
Refi’s up, interest rates low,
all set to go.
Just watch the ccards for xmas so you got
the monnney for the spring.
Trying to dissect what I believe is Bob Toll’s reasoning:
We all pretty much agree that the slowdown began in Aug 2005. Thus, we’re 15 months into the downtrend.
In past RE busts, most of the declines happen in the first 2 yrs of the downturn. So to the extent that this time is similar, we should start to see things flatten out relatively soon.
There are two problems with this view. First, past RE busts have coincided with recessions. We don’t have that yet.
Second, we haven’t seen much evidence of widespread, substantial price drops.
So either this is either (1) a very mild RE recession, or (2) big price cuts are still to come, or (3) they are already here and there is simply a lag in the numbers.
If (1) or (3), then Toll is right. If (2), he’s wrong. If there’s a recession next year, he’s doubly wrong
“Business stinks at the country’s biggest home builder, and the CEO says it may get worse next year. The Fort Worth company is being as aggressive about reining in its business as it once was about growing it.”
“The company reported that 4 of 10 customers walked away from their contracts. If cancellations continue at their current level, ‘then it’s going to be a much more difficult market than I’d want to spin,’ CEO Don Tomnitz told the analyst.”
“With Horton’s high cancellations, half the company’s units are now spec homes. As a result, Horton is spending heavily on incentives and discounting, reducing profit margins by 450 basis points.”
FWIW, I’m starting to think that the price drops have arrived but are not yet reflected in the numbers
lagging numbers, now you got it.
remember the trend is your friend
“you also need some staying power”
pesche,
You first have to put your *ss on the line. If you are referring to a trend in XBH, it is obvious you don’t know how to ascertain one, not enough data.
By the way, if Sherwin Williams is the largest % of this index and Lowe’s and Home Depot make up a good % what the hell are you telling us???
The homeowner is painting and buying snowblowers for the winter??? What the hell is your damn point?? Staying power, my *ss, get in the freaking game first!!
Pat or another should post that Craigslist listing on kannekt. I of course can not as I am Banned to the Bone.
pesche22 Says:
December 6th, 2006 at 1:47 pm
all gloom and doom you got to be in the right crap game.
22 fish: ever play the Do Not Pass line?
http://www.dfw.com/mld/dfw/news/16175849.htm
“I’d say we’re in the early stages of a declining market,” Chief Executive Don Tomnitz [Horton] told analysts in a conference call Nov. 14. “And as I said [before], most of these downturns are longer and deeper than we envisioned at the beginning.”
Tomnitz outlined a spate of recent moves to respond to the current marketplace. In the past three months, the company has cut more than $200 million in overhead, including the jobs of three chief operating officers. It has renegotiated better terms on almost all contracts with vendors and labor.
HeHeHe Says:
December 6th, 2006 at 2:30 pm
Pat or another should post that Craigslist listing on kannekt. I of course can not as I am Banned to the Bone.
HeHeHe – have you cleared all the cookies related to kannekt? How do you access the Internet?
just remember the trend is your friend
xmas is here, and will be great.
retail is good , housing lagging
a little slow in next several quarters
and then off to new records in housing sales
as the reality sets in..
do not miss the train leaving the station.
Become a Kmart shopper
“the misunderstood trend will be your end”
pesche22
I have been reading through your posts and response to your posts. And I have not seen anywhere that you have made a valid point on why we have reached bottom. I mean you can quote other people which anyone here can, but you have not given valid reasons why the market will start to come back. Take all the magically data that you have read through and than write a nice speal on why you think it will come up. Other than the 2-3 line quotes I have not heard any valid reasoning.
So I would really like to know why you feel the market has reached bottom. Cause it seems you cannot think for yourself. If Toll said that Crack had Vitamen C and Iron in it would your run out and go smoke it?
I am guessing yes becuase if someone says so than they must be right.
“It has renegotiated better terms on almost all contracts with vendors and labor”
In other words, new home builders will continue to cut prices. Exisitng home sellers watch out!
Booyyyaa!
just following up on my point above:
we may have already seen prices drop 10% in real terms. if prices are flat for the next 3 yrs, that would be close to a 20% haircut. this would be a very substantial drop in a healthy economy. again, all bets are off if we go into recession
I think the dramatic price drops will come in late summer 2007 after so much stuff has sat through the traditional RE busy season. Especially the new construction. There’s only so many concessions that a builder can throw out there before they start hitting the price.
When all the outrageous appreciation was occuring the rate on a 5 yr ARM was about 4.25 – 4.50%. That’s now up to about 6% or about the same as a the 30 yr. You lose that interest rate flexibility and it kills your sales push. Back then the builders couls push it off onto the banks. The teaser rates these builders are offering are lasting two years max. People aren’t stupid. Buyers are going to ask the question “okay builder is offering a lower thank market rate and he’s going to pay my condo fees for two years, why is he doing this other than he doesn’t want to be the one to have to try to sell this thing in two years because things may even be worse than they are now”. At least somebody sane would think that.
Plus with all the negative press there’s no way they are going to be able to turn the ship anytime soon.
One other point I would like too add, who are all these people that you are claiming will buy houses? If NJ average household income is between 65-90k, companies are laying off people left and right, who are all the people that are going to be buying these homes? The only reason many people were able to purhcase these homes were due to exotic mortages, which are now being regulated more by our government. So I guess 2006 we all decided to take a break huh and 2007-2008 will be some miracle of a recovery?
Hehehe:
If you post that listing on the other “chat” one of those airheads will go over there on Sunday and pay $600k for it just ’cause “It’s an auction!”
Come to think of it…if you’re really interested in doing damage, go ahead and post it.
come on homer, dont you know when your
pudding is being pulled.
buy some gold.
This will sound Booyaaa Bobbish…
Telecom 2000 = Homebuilders 2005
unlit fiber = spec homes
Telecom bankruptcies 2002 = Which homebuilder??? 2007/2008
Chicago,
I’ve cleared all of the cookies. When I go to access any of their real estate message boards I get a blank screen from my home computer. I can view the postings through the Wayback Machine. I just can’t post from there. It’s not that big of a deal. I think it all stopped after I made fun of the stupid Young and the Rentless add that Tarragon had in the Hoboken Reporter for the Upper Grand. You talk about some creative arithmetic, I hope the guy who wrote that add isn’t doing his own taxes.
No homebuilders that are public will go bust,
balance sheets to strong, very different
that the telecom bust.
Bk’s happen when cash flow sucks, not the
case with the tol, hov, nvr,(toa,maybe)
and the large publicos.
there’s still a tremendous amount of easy credit out there. buyers can still get teaser rates, no doc loans, etc. Fixed rates are already below 6% and could be headed lower if the bond market is right.
I know defaults are rising rapidly, but the credit crunch still has not emerged. Purchase mortgage apps have been increasing for several weeks now.
Sales of houses declined very rapidly over the last year, so a lot of buyers did get scared and still are. But if you were thinking of buying a year ago and could now get the same place for 10% less and some upgrades… some people will jump on this.
I’m just saying that the situation is not playing out according to the worst-case-scenario playbook. Either this worst case scenario is yet to come (in which case I think you have to answer why it hasn’t happened yet), or it isn’t.
Telecom 2000 = Homebuilders 2005
That’s a bad equation.
skeptic,
Its been six-to-eight months since the downturn started. Historically it takes about 3-5 years for a downturn to hit bottom.
The downturn in this short period has already caused a 10% price drop.
On a 500K house, a 10% drop comes up to 100K if you include interest payment.
Skep, it’s all in the inventory. Watch the inventory.
v,
I guess one’s view depends on when one pegs the beginning of the downturn. Why do you think the market turned 6-8 months ago rather than in Fall of 2005? Do you think Fall 2005 was just normal seasonal fluctuation?
I agree that these busts seem to play out over a 3-5 yr period, but I thought the conventional wisdom was that most of the declines happen in the first two years.
So if we say that 2007 represents the second year of this decline, what do you see bringing about another year of 10% losses? Seems like sales will have to continue to drop or inventory will have to continue to rise for this to happen (or we will have to go into a recession).
I am really beginning to think that it will take a full on recession to kill this market like many here (including me) have been predicting. If the economy remains strong next year with continued high liquidity, so many of our prior assumptions seem to fall apart
Pat,
the big moves in inventory seem to have already happened. builders are putting on the brakes. there are probably some exisiting homeowners who are waiting for Spring 07 to list, but w/o massive distress it is hard to imagine inventory moving up in the same magnitude that it did this past year
The Denver Post. “A Texas mortgage bank that employed 50 people in the Denver area abruptly closed its doors Friday, signaling more trouble in the subprime lending industry.” “Sebring Capital Partners notified employees of their termination Friday. Carrollton, Texas-based Sebring employed 325 people, including 50 in the Inverness area of Arapahoe County.”
“Subprime lenders are struggling with rising default rates. Eight percent of subprime borrowers are at least 60 days late on their mortgage payments, according to a UBS analysis of loans packaged and sold as securities. That’s up from 4.5 percent a year ago. Banks are responding to rising defaults by closing or trying to sell their subprime operations.”
“A former employee who requested anonymity told The Denver Post that Sebring, like other subprime lenders, was hurt by rising defaults. A major investor stopped funding Sebring’s loans as a result, forcing the company to seek a buyer, the former employee said. Sebring had to close after a potential acquisition fell through.”
“Sebring made loans of $209 million during the second quarter of 2006, down 11 percent from last year, according to Origination News magazine.”
The Australian. “Renowned US economist Stephen Roach believes the US economy will slow to a near ’stall speed’ next year as the housing market in the world’s biggest economy runs out of puff.”
“‘The first thing you hear when you land in the US is the air coming out of the housing market,’ Mr Roach said at a briefing in Sydney.”
housingbubbleblog
Don’t you see what’s happening here? Pesch is the antithesis booya Bob! Albeit somewhat more subdued.
skeptic: I am not so sure. I think that perhpas many who would have sold this year, and waited and watched, now understand that teh amrket really is different.
I think many of those people will list in 2007, figuring the down turn will be extended,and prices will continue to fall.
I think that if you prurchased before 01 or 02, and have not sucked out all of your equity, you can be extremely flexible on pricing.
pesche22 Says:
“Doom and Gloom”
Do you have to be “Doom and Gloom” to be short an asset? I am short housing but housing isn’t the only asset in the world that you can make money off. I am invested elsewhere. I don’t see most readers/contributors on this post as predicting doom and gloom.
You must be pretty desperate to get your message across. Wonder why?
“A major investor stopped funding Sebring’s loans..”
PHONEY LOANS ARE DRYING UP…Big time hangover….
Line up pigeons your foreclosure notice will be arriving soon. Kick their rears out in the street.
BOOOOOOOOOOOYAAAAAAAAAA
Bob
I’ve been reading all these posts and I’d like to point out that the sellers we’ve met aren’t coming down. Not even a little. They are still expecting 2005 or early 2006 sales and are often insulted if you offer even 5 or 10 % below asking. So when are these folks going to come down? It’s winter, no one is buying, prices are supposedly down, but why won’t they sell?
defaults could be the key. could lead to greater inventory and credit crunch. what is the trajectory of defaults? are they still accelerating?
“‘The first thing you hear when you land in the US is the air coming out of the housing market,’ Mr Roach said at a briefing in Sydney.”
hehehehehe
This is the realtors draining checking accounts…NO commish for months.
Go ahead carry the grubbers several more months…I have to warn you though NO SPRING REBOUND…SPRING 2007 HOUSING MASSACRE COMING TO A HOOD NEAR YOU.
BOOOOOOOOOOOOOOYAAAAAAA
Bob
skeptic,
https://njrereport.com/images/overlay-nov06.gif
inventory and sales started moving in opposite directions in March-April 2006. Price cuts happening only this move. Inventory is still out of hand.
Homebuilders are cutting production but the number of new home sales is not even close to new home starts. Homebuilders are renogating contracts forcing new home prices to fall further. This inturn will force existing home sellers to match price diclines.
ARMers are suposed to be the biggest contributors in 2007. Remember no one was predicting a 10% drop this year. Everyone was and is still waiting for 2007 “survior -ARMers” series.
I expect to see some sort of economic downturn .. it may not be a classic recession (2 quarters back to back negative growth) but all those new jobs created because of housing boom will have to move to different sectors. Even if they do find jobs the transformation period will be interesting to watch.
plus what is going to keep consumer spending growing when refinancing goes back to what it is supposed to be?
skeptic:
Where do see that inventory is coming down. I see a very stagnant market from the Otteau reports. Prices will have to decline further before inventory clears.
Maybe you are correct, but I would prefer to hold until I see the number of homes for sale come back to historic norms.
Don’t be fooled by Nov numbers. Many sellers drop the listings in winter waiting for a Spring comeback.
FirstTimeBuyer Says:
December 6th, 2006 at 3:55 pm
I’ve been reading all these posts and I’d like to point out that the sellers we’ve met aren’t coming down. Not even a little. They are still expecting 2005 or early 2006 sales and are often insulted if you offer even 5 or 10 % below asking. So when are these folks going to come down? It’s winter, no one is buying, prices are supposedly down, but why won’t they sell?
STOP YOUR FREAKEN WHINING ALREADY. YOU THINK THAT THE BIGGEST GREEDEST BUBBLE IN HISTORY AND THESE GRUBBERS ARE JUST GOING TO ROLLOVER?
Eventhough the market is tanking there is still going to be stubborn sellers who feel they are entitled to a price the neighbor received 2 years ago. Go ahead Pay it if you want. You will just be another number…a bagholding underwater no future appreciation fool
long term owners can be extremely flexible on pricing, but by and large they aren’t.
they don’t have to be because they have jobs and can still get easy credit if they need it. will the people who list in the spring be any diff’t if the economy is still strong?
BOOOOOOOOOOOOOOYAAAAAAAAAA
Bob
skep-tic
Surge in mortgage delinquencies
https://njrereport.com/index.php/2006/12/05/surge-in-mortgage-delinquencies/
Firsttimehomebuyer:
The market is just starting to correct. You have two options:
1. Buy now and pay the market price.
2. Rent for another year and take a chance.
It’s your money. It’s your call. Seller’s aren’t going to do anyone any favours. You can choose to blink first.
v,
good points all around. It will be interesting to see what happens with the ARM adjustments next year. Another waive of inventory and defaults continuing to rise or people quietly refinancing, putting off the day of reckoning a little while longer.
housing might be more like the rest of our consumer economy than we hope. you always think the consumer is tapped, but they keep spending and spending. it has to end at some point, but who knows when.
My comment December 6th, 2006 at 11:52 am says Your comment is awaiting moderation.??
Reposting part of it again:
The foreclosure capital of the U.S.
Job cuts and risky loans get the blame in the Detroit area, where about one in 80 homes started the foreclosure process in the third quarter. The fire-sale prices are hurting other homeowners, too.
Skeptic,
Even if 2004 ARMers survive which i highly doubt, 2005 ARMers will not. As of yet, majority of 2005 and early 2006 armers will not be able refinance because comps will be at least 10% lower then refinacing price + no more introductory rates. If price drops even more in the next 6 months, later half of 2004 armers will also have to pay higher interest rates + pay the difference in comps.
lending standard did seem to go out the window in 2005 and 06. were no doc loans and the like as prevalent in 2004?
must be busch’s fault and I love
Wynn’s Resort, wait till he comes to
AC,
skeptic: Long term owners can and will be flexible, if they have to sell. Be it divorce, job transfer, loss of job,or just a general case of being up with the state.
Also lots of senior citizens in Bergen County, who may decied they have enough. For instance in my town 20% of the homeowners are 65 and older.
Point is the last time the market crashed, they too, the flexible sellers contributed mightily to the down turn in prices.
If people want to go on with their lives, they will price therohosues accordingly, if they can.
There were lots of no docs in 2004 and 2003 as well.
Anti-
RE: Post #114
If The Kid chooses option #2, and waits a year. Won’t The Kid be paying market price then, too? Isn’t market price a relative term?
The Kid
Neither the bulls nor the bears on this forum have a crystal ball.
Many of the posters on the forum have provided links to good data to help buyers make a decision. Some people have also given strong emotional arguments why you should or shouldn’t buy.
Ignore the hype, study the facts and do what you like with your money.
Anti,
I agree. They should just stop the whining. How many times do you need to discuss why the decline in prices takes time/years. Pavlov’s dog got it quicker!! That’s why I liked the forum. JB, is there any way to get that back??? Let these whiners just go to the price topic and read what has been said a zillion times. Do yourself a favor, either step up and buy or be patient and wait. Just do something and please stop the whining!!!!
If you are questioning why prices are slow to come down, go to the forum section, under economics, I placed a previous post regarding this same topic there.
If it makes sense great. If not, go buy. Very simple!!
The Kid:
I mean inflated market value vs fair market value. and yes fair is a loose term. Each person has a price they will pay for house.
Kind of like the p/e value of a stock.
Bob,
The problem is that there are 89 entires under ‘economics’. Which one should i read?
A section called “Housing bubble facts” will help.
v:
Start here:
http://en.wikipedia.org/wiki/United_States_housing_bubble
FirstTimeBuyer – I am having the same experience and you just have to hang in there. Of the dozens of homes for sale I have been following since February, maybe 2 have actually gone to contract. They went for less than the original listing price (they were relisted several times) but still for far more than they are “worth”. This just tells me that there are some very uneducated unaware people out there, sucker born every minute.
Just hang on because come spring when ARMs continue to put people upside down and when inventory skyrockets and sellers realize buyers still ain’t buying, they will have to come down in price if they really want to sell. The rest of ’em were just testing the market anyway.
Worst case scenario, if we are mostly wrong on this forum and prices hold, you have saved more $ towards a down payment and you are no worse off. Do you really think prices are actually going to continue to go up at 10% or more a year? If prices do at least hold, you will have much more selection to choose from. Why go to the 7-Eleven and pick from one of 4 cereals when you can go to Shoprite and pick from 80?
Do you guys really think that prices will continue to rise at 10% year over year indefinitely for the rest of our lives? Will the 500K house be 550K next year and 600K the year after and so on?
If you do think that this will happen, go ahead and buy so that you don’t get priced out.
If not, it may pay off to delay your purchase until inventory is back to normal levels.
FirstTimeBuyer Says:
December 6th, 2006 at 3:55 pm
I’ve been reading all these posts and I’d like to point out that the sellers we’ve met aren’t coming down. Not even a little…….It’s winter, no one is buying, prices are supposedly down, but why won’t they sell?
First: If you don’t have the patience to deal with how the market will unfold, then you are doing yourself no favors by perusing this board. You are going to find the attitudes here frustrating and possibly counterproductive in general. People won’t sell, because they do not have to sell. The bulk of the intellectual capital here is subscribing to the opinion that the grand “BLEEDING DRY” of the “GRUBBERS” is going to occur because people are overwhelmed in general, have suffered a setback in their personal situations, or else are merely trying to move forward with their lives. This process is more Chinese Water Torture than Enter the Dragon.
If you are frustrated, then I would advise you to dive in and stop trying to be a market timer.
chicago
To add: dive in, because there is a possibility that we have “hit bottom”, and you will do no better than today. Do I beleive we have hit bottom, no. However, I would be a fool to consider my assessment infallible.
Anti,
Many of us visit this blog to get northern New jersey specific information along with all the nice data.
How does someone couter a realtor’s argument that NJ re always goes up? or NNJ is different?First time visitors will have to dig deep through 100’s of articles in order to educate themselves. How many seconds do you spend on a site looking for relevent information before giving up?
V:
Buying a home especially in this market when you will pay a lot more than what you pay in rent is a significant decision which will affect your financial situation for the forseable future.
It all comes down to how much research you want to do before couging up 500K of your future income.
First off I think you should start to study the local market many months before you step in. I am looking in union county and have been watching the market like a hawk since last year. I see 20% price declines in the upper end of the market. I see crappy overprices, cape cods, ranches & split levels languish on the market for about a year. I see good colonials prices competitevly go into contract in about 30 days. It may be a mixed picture but I think the days of picking a price out of your hat and then have buyers go into a bidding war is in the past.
“The bulk of the intellectual capital here is subscribing to the opinion that the grand “BLEEDING DRY” of the “GRUBBERS” is going to occur because people are overwhelmed in general, have suffered a setback in their personal situations, or else are merely trying to move forward with their lives.”
I am saying that I think implicit in this view is the prediction of a recession.
The economy from many angles looks pretty good. Few people are overwhelmed right now, and few sellers seem content to just move on.
Most of the price cuts seem to be coming from builders who are in a recession already.
Can anybody explain to me why the epic crash will play out even if the overall economy remains strong?
A section called “Housing bubble facts” will help.
Let me know what you think might be useful. I’d love to take the time to put together a document that focuses on New Jersey, but I won’t have the time until after the holidays.
jb
Don’t buy under pressure and live with buyers remorse. Do you research and buy when you are convinced that it is a wise decision.
Skeptic:
“Can anybody explain to me why the epic crash will play out even if the overall economy remains strong?”
I re-iterate that I don’t predict an epic crash. I expect a 20 to 30 % correction over the next two years and a stagnant market until the like affordablity and incomes catch up to the historic norms. That is assuming we don’t hit a recession. If we do, then all bets are off.
V,
Just go to the economics discussion on the forum, it’s the top post. You’ll notice that they dated. Good Luck!!
“This process is more Chinese Water Torture than Enter the Dragon.”
Chi,
Thank You!!!
Housing slump hits Andersen Corp.; 440 jobs to go
BY JOHN WELBES
Pioneer Press
A day after telling workers, Andersen Corp. said this morning it’s cutting 400 production jobs at its Bayport facility and 40 from its Menomonie, Wis. plant in response to what it’s calling “a dramatic downturn in all segments of the housing market.”
In a conference call, the company unveiled its plan for dealing with excess manufacturing capacity at the two plants that make windows and doors used in new home construction.
Who thinks the economy is strong?
Very telling statement
“a dramatic downturn in all segments of the housing market.”
Maybe the Fed..as they brush their long golden locks? http://today.reuters.com/news/articlenews.aspx?type=reutersEdge&storyID=2006-12-06T153411Z_01_N05199852_RTRUKOC_0_US-USA-FED.xml&from=business
“I’d say we’re in the early stages of a declining market,” Chief Executive Don Tomnitz [Horton] told analysts in a conference call Nov. 14. “And as I said [before], most of these downturns are longer and deeper than we envisioned at the beginning.”
A statement from the CEO of the largest homebuilder in the country. How much more info do you need to know?
Hey I just wanted to get opinions. I know this site is all about Jerzy, but since we have all become critics I just wanted too get some input. The place in Bethlehem I am going too look at this sunday is a nice 3 bed 2.5 townhouse. Its larger than most townhomes I see in NJ and its got a 35′ x 20′ finsihed basement. Kitchen quite small. And just from pis it doenst look like updates have been done.
It was built in 1989, sold for first time in 1990 for 113,000.00 It was than boguht by a 2nd person for 108,000.00 in 2000. SO 5000.00 was lost. It was than bought in 2004 for 117,000.00
So according to the realtor from 02-04 there was a 10% appreciation and than 3-4% there after. So I think a fair offer going by the realtors calculations is 130,000.00
Although when I calculated what she said the increase was she was like uhhh uhhhh I always show data from the past 6 month to clients beofre they make an offer. Why so I get too see how many people ove paid. I told her that it was overpriced, she said it was fair price at 187k, but than she provided me with that info about the inflation out there. So what I am going to offer seems in line with how she explained how the market was out there. There hoenstly hasnt been to much of an increase in property value since the place was built.
Please give me your opinons my fellow bubble bloggers :)
And more.
“Business stinks at the country’s biggest home builder, and the CEO says it may get worse next year. The Fort Worth company is being as aggressive about reining in its business as it once was about growing it.”
“The company reported that 4 of 10 customers walked away from their contracts. If cancellations continue at their current level, ‘then it’s going to be a much more difficult market than I’d want to spin,’ CEO Don Tomnitz told the analyst.”
Listen and stop listening to all the noise. The answers are all here.
i believe they are considering slot macines or a casino in bethlehem.
how far is your commute? Lots of traffic coming east in the morns & west at night.
Interesting that this Fed and FDIC guidance release came out the same day as that Washington Post article:
http://www.federalreserve.gov/BoardDocs/press/bcreg/2006/20061206/default.htm
They obviously wouldn’t need to issue a guidance if they didn’t foresee a problem in lending for commercial real estate.
There are no words.
http://www.washingtonpost.com/wp-dyn/content/article/2006/12/05/AR2006120501342.html
Culture Shock on Capitol Hill: House to Work 5 Days a Week
By Lyndsey Layton
Washington Post Staff Writer
Wednesday, December 6, 2006; Page A01
Forget the minimum wage. Or outsourcing jobs overseas. The labor issue most on the minds of members of Congress yesterday was their own: They will have to work five days a week starting in January.
The horror.
Rep. Steny H. Hoyer, the Maryland Democrat who will become House majority leader and is writing the schedule for the next Congress, said members should expect longer hours than the brief week they have grown accustomed to.
“I have bad news for you,” Hoyer told reporters. “Those trips you had planned in January, forget ’em. We will be working almost every day in January, starting with the 4th.”
The reporters groaned. “I know, it’s awful, isn’t it?” Hoyer empathized.
For lawmakers, it is awful, compared with what they have come to expect. For much of this election year, the legislative week started late Tuesday and ended by Thursday afternoon — and that was during the relatively few weeks the House wasn’t in recess.
Next year, members of the House will be expected in the Capitol for votes each week by 6:30 p.m. Monday and will finish their business about 2 p.m. Friday, Hoyer said.
With the new calendar, the Democrats are trying to project a businesslike image when they take control of Congress in January. House and Senate Democratic leaders have announced an ambitious agenda for their first 100 hours and say they are adamant about scoring legislative victories they can trumpet in the 2008 campaigns.
Hoyer and other Democratic leaders say they are trying to repair the image of Congress, which was so anemic this year it could not meet a basic duty: to approve spending bills that fund government. By the time the gavel comes down on the 109th Congress on Friday, members will have worked a total of 103 days. That’s seven days fewer than the infamous “Do-Nothing Congress” of 1948.
Hoyer said members can bid farewell to extended holidays, the kind that awarded them six weekdays to relax around Memorial Day, when most Americans get a single day off. He didn’t mention the month-long August recess, the two-week April recess or the weeks off in February, March and July.
He said members need to spend more time in the Capitol to pass laws and oversee federal agencies. “We are going to meet sufficient times, so the committees can do their jobs on behalf of the American people,” he said.
For lawmakers within a reasonable commute of Washington, longer weeks are not a burden — although they are likely to cut into members’ fundraising and campaigning activities. But for members from Alaska and Hawaii, the West Coast, or rural states, the new schedule will mean less time at home and more stress.
“Keeping us up here eats away at families,” said Rep. Jack Kingston (R-Ga.), who typically flies home on Thursdays and returns to Washington on Tuesdays. “Marriages suffer. The Democrats could care less about families — that’s what this says.”
Time away from Washington is just as important to being an effective member of Congress as time spent in the Capitol, Kingston added. “When I’m here, people call me Mr. Congressman. When I’m home, people call me ‘Jack, you stupid SOB, why did you vote that way?’ It keeps me grounded.”
Rep. Elton Gallegly (R-Calif.), who had intended to retire this year, only to be persuaded to run again, wondered whether the new schedule was more than symbolic. “If we’re doing something truly productive, that’s one thing,” he said. “If it’s smoke-and-mirrors hoopla, that’s another.”
Senate leaders have not set their schedule, but the upper chamber generally works a longer week than the House, though important votes or hearings are usually not scheduled on Mondays or Fridays.
House Majority Whip Roy Blunt (R-Mo.), one of the architects of the lighter workweek, put the best Republican face on Hoyer’s new schedule.
“They’ve got a lot more freshmen then we do,” he said of the Democrats. “That schedule will make it incredibly difficult for those freshmen to establish themselves in their districts. So we’re all for it.”
The new schedule poses a headache for Rep. Debbie Wasserman Schultz (D-Fla.), who runs her 7-year-old daughter’s Brownie troop meetings on Monday afternoons in Weston, Fla. “I’ll have to talk to the other mothers and see if we can move it to the weekend,” she said.
Setting a calendar that satisfies 435 members is impossible, said the current majority leader, Rep. John A. Boehner (R-Ohio), who will become minority leader in January. “Between the travel issues, the members’ work schedules, the family and district issues, it was a Rubik’s cube,” he said.
But most Democrats, some still giddy from their election victories, seemed game.
“It’s long overdue,” said Rep. Mike Thompson (D-Calif.), who lives in Napa Valley and will have to leave his home at 3 a.m. on Sundays to catch a flight to Washington in time for work Mondays. “I didn’t come here to turn around and go back home.”
Staff writer Jonathan Weisman contributed to this report.
Hey,
Can anyone link me to some good FL RE information. I just spoke to a relative of my who says RE in orlando area is still pritty good. I would like to verify that for myself
thanks
From Marketwatch:
Subprime lender Ownit Mortgage shuts down
Ownit Mortgage Solutions, a California company that described itself as one of the top 15 lenders to homeowners with weak or no credit histories, has shut down, citing “the current unfavorable conditions of the mortgage industry.”
Merrill Lynch & Co. (MER) and private equity firm CIVC Partners hold stakes in Ownit, which built its book of new loans to $8.3 billion in 2005 from $1.1 billion in 2003, in part by introducing products like 45-year mortgages, according to its Web site. Ownit’s demise comes as subprime mortgage lenders are being squeezed by higher funding costs, weakening loan demand and rising delinquencies.
“Effective Dec. 5, Ownit closed its doors, and we are no longer able to fund or process your loans,” the company said on a recorded telephone message. “We apologize for any inconvenience.”
Ownit ran out of cash needed to meet its obligations to repurchase loans from investment banks and others who bought them in the secondary market, people in the industry said. The banks, which convert the loan payments into mortgage-backed securities for sale to investors, can force the original lenders to repurchase loans if the mortgage borrowers default.
…
The end came quickly for Ownit.
“We were all working yesterday, assuming we were fine,” Dave Hanthorn, a New Jersey-based employee who sells the firm’s loans to mortgage brokers, said Wednesday evening. “At 5:15 last night we got the call that we were ceasing operations.” He said the company gave no explanation for its funding problems.
From Marketwatch:
Weyerhaeuser to cut operations further on low demand
Weyerhaeuser Co. (WY) said low demand has forced it cut back on its softwood lumber, engineered lumber and structural panels operations.
The Federal Way, Wash., forest products company said operations have already cut back at 70% of its residential wood product facilities, and additional closures, curtailments and restricted operating postures are necessary.
On Wednesday, the company said cutbacks have already led to significant fourth-quarter production decreases on all of its products.
“Can anybody explain to me why the epic crash will play out even if the overall economy remains strong?”
Skeptic,
I will begin to explain after you explain to me why this market has imploded on its own in an enviroment of historically low rates and a great economy. This argument is not about the economy, yet. Although a sluggish economy will certainly accelerate this decline.
By the way, it’s a slow moving (prices) epic crash. On the flip side, the monthly data indicates that the market,(sales/actives) is unraveling faster than I or D.R. Horton would have imagined. If you are looking for instant gratification, go to the casinos.
JB,
By the way, where is that lumber analyst??
Homer,
IMO a house that was purchased for 117,000.00 in 2004 is not worth 187,000 2 years later just because. I know the realtor is showing comps from six months ago but how about comps from six weeks ago? I dont know that i would get into the whole rationale with the realtor about prices and where they are headed. I would just ask her to put the offer in. If you feel she is not going to represent you then get another Realtor. There is always the do it yourself approach where you write the offer letter (Staples has a template for sale), attach your approval letter and get it to the seller to make sure they see it.
An offer of 130K i believe to be V E R Y reasonable on a house that was purchased in 04 for 117K. IMO they should be freakin ecstatic that an offer even came in.
#154 BC Bob:
Amen.
Nothing changed drastically this year for the demand to dry up so quickly. If anything at all the job market has picked up a little bit. This is exactly why I don’t think the demand we saw in the last couple of years was genuine. It was a combination spec buyers and uninformed/emotional buyers hoping to buy before they get priced out.
Homer,
I don’t think that 130k gets it done. I sell into that area and it has seen some significant growth in the last few years. The growth is bringing in new people that are conditioned to paying more for homes. Just my opinion.
Stick to your guns because it can’t hurt. Some areas have seen larger appreciation because they have been ‘discovered’. With more people moving into the area from Philly, NJ, and NY, this may be one of those areas. It’s kind of like Toms River.
I would doubt that there will be other offers. So you can put your offer out there and wait for a response.
130k might be a fair offer. But, as an attorney once told me ‘what does fair have to do with anything?’
Best of luck
You might want to look at other properties in that area that do not have the ‘city’ problems of Bethlehem, Allentown, and Easton.
i like stocks
Homer (post #146)
It is cheap realtive to NNJ, but that does not mean they are “entitiled” to gains.
117K in 2004 when the prices were supposedly at their peak. Assuming 5% appreciation for 2004 and then 5% depreciation for 2005, the price actually works out even lower.
I would make the offer at 110K and cite the declining market as reason (to hell with realtors comps from last 6 months). You can always go higher, but I would not go much higher (say 125k be the max). If nothing else, this first offer will at least serve to bring down the expectations of the seller.
GL. I hope you succeed in lowballing here.
att:
Many parts of the country never saw the crazy appreciation that we saw in the costal areas and the spec/bubble areas like Las Vegas, Arizona, etc. Hence working of the 2004 price may not be a bad thing.