This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing bubble, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.
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Sorry this was opened a bit later than usual.
jb
Where do I get a list of all the counties and their respective MLS?
I was looking at a house in Bridgewater with an agent and when I asked her to show me a particular south brunswick house, she started dancing around and finally said she doesn’t have access to ‘that’ mls.
I dumped her of course
From the Baltimore Sun:
Real estate sales uptick isn’t return of glory days
So JB According to this articel, the wrost is over,a nd low balling is oput of the question etc.
Does not offer much hope for us Bears.
Sorry for the typos.
Some of my favorite crapboxes, feel free to share yours:
$1M box (cape with an addition?) on 1/8 of an acre:
MLS 2346956
http://www.realtor.com/Prop/1072355005
This one is not a bad house, but it’s been at $750K for over a year (must need a koi new pond):
MLS 2299104
http://www.realtor.com/Prop/1064548506
$839K 2 bedroom, 2 bath on a very busy road
(but it comes with: “UP TO $10,000 BONUS TOWARDS CLOSING COSTS OR 2007 TAXES.” Bwaahahahah.)
MLS 2629598
http://www.realtor.com/Prop/1065463335
$459 complete POS
MLS 2339891
http://www.realtor.com/Prop/1071253265
Everyone wants to be optimistic, unfortunately reality has not set in yet…
I hate having to keep referring back to the dot-com days, but it took more then 1 year for them to come back to reality.
James Bednar Says:
January 5th, 2007 at 4:03 pm
Sorry this was opened a bit later than usual.
jb
Sorry is not going to get you off around here …buddy >:(
BBB,
Sorry, but none of this has anything to do with hope. I am a bear, but I’m not sitting here hoping for anything.
I’m just calling it how I see it.
I don’t necessarily agree or disagree with the articles that I post. I simply post them because I found them interesting in one way or another, and I hope they can serve as a starting point for discussions here.
jb
What is the percentage of transaction volume and total sales during the boom that can be attributed to buys/sells by RE agents (“insider trading”).
Will this percentage impact overall price drop, timing, duration of downturn?
From the AP:
Fiscal watchdog would cost taxpayers up to $9 million per year
A new fiscal watchdog post that Gov. Jon S. Corzine wants to create would cost the state up to $9 million per year, according to a new analysis, but his administration insists the office will find enough savings to pay for itself.
“We expect the dollar amount to be substantial and significant,” Corzine spokesman Anthony Coley said Friday.
…
The Assembly is slated to vote Monday on a bill to give New Jersey an appointed comptroller, though the Senate isn’t slated to take action and has twice delayed votes to create the post. Democrats control both houses.
…
A Thursday analysis by nonpartisan legislative staff estimates the office would cost taxpayers about $7 million to $9 million per year. The analysis was unable to determine how much money the new office might save.
If approved, the New Jersey comptroller would perform audits and performance reviews of state government, independent state authorities and local governments, develop plans for offices deemed inefficient and be responsible for overseeing improvements. It also would have authority to review government contracts that exceed $10 million.
But municipal officials say they aren’t swayed by the Corzine administration’s claim a comptroller would uncover enough wasteful spending and misconduct to prove worthy.
“The bill will create a powerful new bureaucracy, accountable only to the governor, that will duplicate current state regulation of local fiscal affairs, that will slow down and add uncertainty to local contracts, that will cost people of New Jersey at least $7 million from day one,” said Bill Dressel, executive director of the state League of Municipalities.
From the Courier Post Online:
Small towns balk at merging
Leaders of 14 small towns and school districts rallied Thursday against a proposal that could require them to merge services, arguing the measure would ruin their communities’ ambience without saving taxpayers a dime.
The proposal is being considered by state lawmakers as a move to cut costs and lower property taxes, which average $6,000 per homeowner statewide.
“No one knows more than mayors that property taxes are a problem in our state,” said Highland Park Mayor Meryl Frank. “If there were savings here, who do you think would be pushing for consolidation? It would be us.”
The group, which also included the mayors of Metuchen, Chatham Borough and Cape May Point, along with representatives of school boards in Point Pleasant and Glen Ridge, said it does not oppose voluntary consolidation.
It vowed, however, to continue to fight a proposal that would create a panel to recommend to voters towns that should merge. Under one version of the plan, a no vote could result in a loss of state aid for the municipality.
What is the percentage of transaction volume and total sales during the boom that can be attributed to buys/sells by RE agents (”insider trading”).
I don’t think there is any (easy) way to get the historical data necessary to know how that percentage has changed over time.
jb
Pat (#14)-
Assume that this is a trace amount…and dwindling. Most RE agents are so stupid, scared and tapped-out (even in good markets) that they couldn’t identify or act on a hot deal if their lives depended on it.
You’d be surprised how many agents don’t even own their primary residences.
All the predictions, prognostications, forecasts, crystal ball gazings, guesses, myths and urban legends regarding the 2007 RE market listed by contributors to this blog puts Nostradomus to shame. Jeanne Dixon is turning over in her grave…
So what is the record of the Nostradamuses here who made fearless predictions in the beginning of 2006? 2005?
As time has passed we now know that more than 90% of Nostradamus´ all too numerous prophesies (maybe 5000 events) will never happen. On the other hand Nostradamus has missed an endless row of events that did happen.
Our predictions are as good, if not better than
NAR = Nostradamus Association of Realtors
I’m just happy I didn’t cave in during the buying frenzy of Spring 2005.
Clot, I’ve always assumed the number of transactions ’02-’05 was higher among agents, because a fair number of listings are tagged as “realtor-owned” or “this property is a licensed-agent owned property.”
The last time I was house-hunting in ’99, there didn’t seem to be as many, but could be a function of lower inventory then and less data given to me.
“So what is the record of the Nostradamuses here who made fearless predictions in the beginning of 2006? 2005?”
Before the predictions were made, chips were pulled off the table in late 2005. I look back on what I have stated about this market and realize that I have been too conservative in my assessment. It’s amazing how fast this market[sales,inventory and blow up of subprimes/subprime lenders] has unraveled.
listentothecrybabywannabehomeowners
Yes, do listen. Especially if you’re a seller thinking about lowering your price. Listen to the market.
I like your name.
This is scary-
http://www.nationalmortgagenews.com/columns/hearing/
When Ownit Mortgage went bust in early December, all eyes looked to its warehouse lender: Merrill Lynch. Last week, Mortgage Lenders Network signaled a near-collapse by closing its wholesale division, which accounts for 90% of its production. And just who was warehousing to MLN? We’re told that Merrill was there, too (among others). Of course, the collapse of two midsize nonprime players will only help First Franklin Financial Corp., Merrill’s newly acquired subprime unit. By eliminating two competitors, there will be, well, less competition. Now, I’m not a conspiracy theorist by any means, but folks in the industry are talking. And it’s a good thing for Merrill that new Financial Services Committee chairman Barney Frank is too busy with GSE legislation to notice that Wall Street (Merrill, Bear Stearns, Lehman Brothers, among others) now controls a significant portion of the nation’s subprime industry. Now, there’s nothing wrong with that, but Wall Street will be dictating the terms of foreclosures for thousands upon thousands of subprime borrowers who are predicted to go delinquent in the coming 24 months. And some subprime borrowers vote, but they don’t donate the kind of money to Congress that the Street does…
from boston –
http://www.boston.com/business/globe/articles/2006/12/24/year_in_review_boston_globe/
…the median price last year for existing homes plunged 19.3 percent between the first and second quarters,
Listentothecrybabywannabehomeowners,
You should have been here earlier, I would introduced you to NegativeEquity, ForeclosureSucks, and SixHundredThousandDollarCapeCod.
anybody going out this weekend to look? I will be taking a dip in the pool again after long break. You know the problem now is that with the amount that i have learned between say around last year and today is that now it can take literally hours researching any given property.
The flip side is I feel so much more confident and out of the dark when evaluating prices.
Pat (#18):
Don’t take the “owner is a licensed RE agent” in a listing as meaning that house is owned by a practicing agent. Many of these sellers merely hold a license that is parked at a referral company. NJ law requires ANY licensee to disclose that fact.
For those who don’t believe in the speculative craze that’s driving the RE market …
http://forum.brokeroutpost.com/loans/forum/2/83291.htm
Ah. Thanks.
To Post #2
Rentlord,
If your agent was a smarter than the average bear, she’d do the research to find you an exemplary accredited buyers agent that covers the area in question, and then collect a referral fee from that agent should a transaction come to close!
Excuse me while I indulge in a “DUH!!!!”
A
Pat Says:
January 5th, 2007 at 5:22 pm
What is the percentage of transaction volume and total sales during the boom that can be attributed to buys/sells by RE agents (”insider trading”).
Will this percentage impact overall price drop, timing, duration of downturn?
************
My opinion is a sale is a sale is a sale. “A sale by any other name is still a sale.” Doesnt’ matter who’s selling or buying. The final sale numbers all contribute to the future comps.
However, I do find it interesting the number of realtors who are selling their own residence NOW. In my immediate market area, off the top of my head there are 5 that I know of.
A
““If this is a soft landing, it’s not a plane I want to be riding on.”
Yeah, especially since I have $220 million in dollar bills that I got to stuff in my golden parachute before I jump…
“In December, 43,000 new jobs were added in the education and health care sectors and 50,000 were added in business and professional services. What are all of these people going to export in order to pay for all the imported goods their paychecks will permit them to consume?”
Today’s commentary;
http://www.europac.net/#
BC Bob, Unrealtor, whoever:
Please, do tell all… Show the postings here prognosticating and predicting the 2006 RE market. Come on wannabees, show how bright those crystal balls glowed.
Until then, Nostrodamus remains embarrassed. And the wannabees remain wannabees.
You do know that saying that the market won’t collapse is prognostication all the same.. Right?
jb
ladies and gentelemen do not feed the trolls.
HI Al ,
For this weekend I suggest the following topic foor discussion:
It is abvious not that housing market at least slowed down a,d last year was the FIRST year in history when RE priced dropped since great depression.
All of these happened on teh background of:
1. Supposedly good employment (ask my wife who is trying to find job in Biotech in NJ for 8 month now…. But of course she is educated and it doesn’t make sense to get wallmart job for her – being unemployed has it’s own benefits)
2. Stock amrket is doing great
3. Economy is not in recesion
4. there is no energy crisis
5. Weather is very warm and nice all over the country
6. Population is steadilly increasing
7. There is no credit crunch.
SO once again what caused housing sales volumes to drop so dramatically and even drop of prices if for the prevoius years it was all the same and it id not stop anybody???
My take on it: Prices finally reached a point that even with the Creative financing most people can not afford home without being severelly affected in leftover money for FOOD, INSURANCE, GASOLINE and otheer expences. So people just gave up. Plus foreclosures started to creep up.
So post what do you think triggered current: “Slowdown” “bubble popping” “temporary correction” or defined the level of “permanently high Plateau”????? (does not matter at this point how do you call it.
What happened at the edn of year 2005 which stopped people from just going on forever?
And Also every noew troll coming to the blog makes me happier – it means they are really getting hurt
jb,
Look again at my posting. Just looking to see what the RE market predictions for 2006 were. Didn’t refer to an up, down, sideways or collapsed market.
Seems like a number wannabecrybabyhomeowners – the Nostrodamuses – have an opinion for 2007. Their prior predicitive success might offer credence to the predictions they offer on this blog.
Cry away! Waaaaaaaaah!!!
#26
Echos from the tech bust are all throughout that forum.
Who is giving these people money to lend and when will it end like when the Wall street money dried up?
“Until then, Nostrodamus remains embarrassed. And the wannabees remain wannabees.”
Wannabees??? That’s almost as assinine as; “there is no bubble” or “we are at or near the bottom”. You can’t be a wannabe when you are a hasbeen.
I do know that Bob Toll never saw this coming nor did Hov,DR Horton, Lennar, etc… I’m quite positive the owners of their new 1.25 mil McMansion from Kara didn’t see it either. Don’t know what Nostrodamus would have said. However, I do know what Jesse Livermore would have done/said.
By the way, the crystal balls were pretty accurate on this site. Go ask the subprime brokers that are walking away or the HB’s that have been regurgitating their land options. Like I’ve said before, I was too conservative with my take on this bust.
By the way, how’s your inventory #’s looking???
Last post. Not troll material. Assumed input was expected and appreciated.
listentothecrybabywannabehomeowners Says:
January 5th, 2007 at 9:30 pm
BC Bob, Unrealtor, whoever:
Please, do tell all… Show the postings here prognosticating and predicting the 2006 RE market. Come on wannabees, show how bright those crystal balls glowed.
Until then, Nostrodamus remains embarrassed. And the wannabees remain wannabees.
You know what worse than the predictions? It’s the demands that some make on Mr. Market. I had a poster attempt to tug on my heart because Mr. Market wouldn’t accomodate him with an “affordable” home.
Some these guys want Mr. Market to play as a wet nurse for them by wiping their behinds, providing a diaper change and giving them a belly full of simulac. They need to wake up and accept the fact that Mr. Market ain’t gonna do that. They need to stop hoping for a massive price decline and adapt to market conditions.
Right. 450K for a p*ss-smelling POS on a busy street in a questionable part of town is healthy for a community. What we’ll get is three families from Azakhiakistan renting the house selling sheep and old cars out of the driveway. I could clearly see who the pretenders are.
#32, here’s where we are today:
http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
My prediction: lots of pain for greedy sellers who thought this speculative bubble would last forever.
Kudos to those who were able to cash out in time. See you those who bought into the madness with exotic financing (40% of mortgages in 2005, up from about 3% a few years earlier) on the courthouse stairs.
“because Mr. Market wouldn’t accomodate him with an “affordable” home.”
Re 101;
Quite the contrary, Mr. Market provided me with a lifetime of savings in one fell swoop. It is obvious, at least to me, that Mr. Market was almost philanthropic. Kind of mindless not to take, no?? The market giveth, some took. The market taketh some go into submision. Choices??
The global gusher
Thailand’s bungled attempt to stem capital inflows is just one symptom of the worldwide liquidity glut
http://www.economist.com/finance/displaystory.cfm?story_id=8496988
1]The problem that Thailand and other Asian countries face today, however, is the exact opposite[1998]: how to stop capital flowing in.
2] Global liquidity has risen by an annual average of 18% during the last 4 years.
3]Lower interest rates would simply add to the problem, generating higher credit growth, inflation and asset prices.
4] intervention to hold the baht down by buying dollars would also boost the money supply.
5] an economy cannot simultaneously control domestic liquidity, manage its exchange rate and have an open capital account.
AMS, you’re the troll? I thought you had/have some good stuff.
“They need to … adapt to market conditions.”
Indeed, ReInvestor, we’re in agreement! Sellers need to adapt to market conditions:
1) The market peaked Summer 2005, and has been declining since.
2) Inventory is at historic highs and climbing, with a tsunami coming this Spring.
3) Prices are dropping.
4) Lending standards are tightening.
5) Houses are sitting on the market.
6) Many sellers are already taking substantial losses since buying 2-3 years ago.
7) Foreclosures on the rise.
I’m about a mouse click away from deleting the majority of the comments on this thread.
Keep it clean and keep it on topic.
Confrontational or argumentative comments will be deleted past this point.
jb
JB,
Very calm compared to BIA.
BC, let me know if you get my email.
jb
AMS, that comment wasn’t directed towards you.
Appraisers, Lenders and Regulators Tackle Valuation Fraud
http://communicatormagazine.com/page279.aspx
I thought that people looked for blogs/forums to discuss subjects with people who hold similar views, and to pick up information in once place gathered from many sources. Why is re-investor here? To put a diferent light on the subject? That’s why clot is here.
AS Seneca Says:
January 5th, 2007 at 3:23 pm
A coherent, measured response from a realtor
Reinvestor, you are no clotpoll!
hehehehehe
KL
Forget fighting over RE. I just heard something truly disturbing:
The Mets are considering going after Jeff Weaver.
I bet this Sunday’s Real Estate section of the Star Ledger is as thick as Gibbons’ volume of works on the fall of the Roman Empire.
The weekend discussions were always very laid back. A little scotch and a little Depeche Mode.
There may be a real estate war being waged, but you are mistaken if you think this is the front line..
jb
From Smartmoney:
Jitters Rock Subprime Mortgage Market
Investors worried about the slowing housing market and the shuttering of several subprime lenders Friday sent the home equity credit derivative index to its widest levels ever.
The index, the ABX.HE 06-2, has widened considerably in the past few days as investors buy credit protection on the bonds listed in the index.
Friday, the BBB- subindex, the riskiest of the ABX’s subindexes, hit 450 basis points over swaps, according Derrick Wulf, portfolio manager at Dwight Asset Management. That compares with its level late Tuesday of 400 basis points and 431 basis points on Thursday.
“It’s about time,” said Mark Adelson, managing director and head of structured finance research at Nomura Securities. Risk premiums “were way, way too tight and now we have moved into stressful times.”
…
The current index is based on loans originating in the first half of 2006, widely perceived to be risky. Analysts note that the widening is likely to continue throughout 2007 as the 2006 securities age.
This Greedy Grubber discovered today why this McUgly Shack hasn’t sold — it needed an $11K price drop:
MLS 2333339
$1,110,000 -> $1,099,000
http://newmls.gsmls.com/media/getImage.do?mlnum=2333339&num=0&res=highres&imgcnt=5
What an architectural monstrosity.
That $11K price drop should get buyers beating down the door…
You can track the ABX Indicies here:
http://www.markit.com/information/affiliations/abx
Declines can be seen in many other of the subindexes, not just the BBB-.
jb
Jb,
Got it.
Al
Can she do production planning? How far down 1 can she go?
Clot,
It could be worse, they could have signed Gil Menche.
Today’s wage/employment gain report will probably push mortgage rates up. High mortgage rates will take a bite off the refinancing share (~50%) of MBA applications.
Or even worse: re-signing Armando Benitez.
I still haven’t gotten over the Ryan for Fregosi trade.
If we really take down Weaver (he wants 4 years at 10M), I’ll be back to shaving with the cheese grater.
From JB’s post # 59
“The fundamentals of the market are weighing on the index,” said Alex Pritchartt, a trader at UBS. “People are trying to balance risk with reward.”
Fundamentals and risk/reward??? Why should these dictate the moves in any market?? According to the bulls this must be an outlandish statement by this trader.
Fundamentals and risk/reward, abc’s and economics 101.
By the way, as you are now well aware, the hedge funds are bombing the derivatives that back the subprime bonds. How’s that Mr. Market??[re 101] aka economics 101.
Some free advice for everyone;
Buy a house to live in and enjoy as an expense but forget RE as an investment.
BUY SILVER!!!!!!
Seriously; do some research on this and you will agree.
Clot,
You can always bring back Mo Vaughn.
BC Bob,
Oh my God, Mo Vaughn. lol!
Off the Mets and back to Jesse Livermore;
“A speculator will gradually layer in positions, immediately stopping if the markets prove him wrong over the short-term. Yes, he may be right in the near future, but why absorb a big loss if he happens to be early? Why not preserve capital for a better opportunity in the weeks ahead?
Gamblers, on the other hand, will bet it all on one roll of the dice. They will get excited, grow convinced of a sure thing, and they will drop their entire war chest of speculative capital on the table at one time. The problem with this approach is that no one wins all the time, and by betting everything every time sooner or later a speculator will get crushed by some massive loss.”
http://www.zealllc.com/2004/jesse08.htm
Livermore?
REMINISCENCES OF A STOCK OPERATOR (PDF)
Interesting that you brought it up, I read this earlier in the week.
jb
Mo Vaughn is now a RE developer. No kidding.
In Rapid City, South Dakota checking out the local RE market.
wow. This place has a huge RE bubble. Checking out the trends.
NJ is RE is in bad shape.
SAS
Looks like an alternative and challenging view has been banned from this blog. Too bad.
jb – why don’t you email me and tell me why?
As long as you keep up with the childish name calling, I’ll continue to delete your posts. It’s that simple. You offer no alternative or challenging viewpoint at all, you are simply trolling.
Secondly, if you had registered with a valid email, you would have received a message from me last night. See below.
This is an automatically generated Delivery Status Notification
Delivery to the following recipient failed permanently:
nj*******er@yahoo.com
Technical details of permanent failure:
PERM_FAILURE: SMTP Error (state 12): 554 delivery error: dd Sorry your message to nj*******er@yahoo.com cannot be delivered. This account has been disabled or discontinued [#102]. – mta251.mail.re2.yahoo.com
—– Original message —–
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Message-ID:
Date: Fri, 5 Jan 2007 21:35:42 -0500
From: “James Bednar”
To: nj*******er@yahoo.com
Subject: Confrontation isn’t necessary
MIME-Version: 1.0
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Confrontation isn’t necessary. It won’t win anyone over, nor will it change
anyone’s opinion. I try very hard to keep a balanced viewpoint here, but
confrontation doesn’t help to keep anything in balance, only upset it. I
usually send a similar email out to any new reader/writer that doesn’t
share the consensus view, only because most will “burn out” relatively
quickly. While I appreciate your contributions, I would appreciate
if you could tone it down a bit and stop with the insult.
Nice to have you.
-James
Interesting piece out of Ohio this morning.
Cabinet factory cuts 500 workers
An estimated 500 workers at KraftMaid Cabinetry Inc., Geauga County’s largest manufacturer, received layoff notices Thursday.
Company officials blame a nationwide building industry slowdown causing a ripple effect that has impacted the cabinet company.
Kathleen Vokes, spokeswoman for Detroit-based Masco Corp., KraftMaid’s parent company, said employees at three KraftMaid locations, including Middlefield, Orwell, and Sayre, Pa., were told Thursday they would be laid off indefinitely.
“Housing starts were down 12 percent across the board in 2006, especially in the last half of the year,” Vokes said. “That caused a building and remodeling industry slowdown.”
Unrealtor,
No price drops yet on this one
http://new.gsmls.com/media/getImage.do?mlnum=2328135&res=highres&num=0
but the similarities are there.
I love the use of hardcoat, siding and stoneface all on one facade. Do you suppose the builder was indecisive? Seems this guy ran out of money when it came time to build the back deck.
81]
Was that directed at me? By the way, i recieved your email from from ‘Rich in NNJ’
Jan 5
Federal Agenices Revise Guidance for Structured Finance Deals
http://www.housingwire.com/2007/01/05/federal-agenices-revise-guidance-for-structured-finance-deals/
…
Like the proposal issued in May, the regulators’ final statement takes a risk-and principles-based approach to addressing the risks CSFTs may pose to institutions and focuses on those CSFTs that may present elevated levels of legal or reputational risk to institutions.
…
>>
It sounds like a good step but don’t understand what it really means :(
Sorry you think I’m trolling; I merely seek to challenge some of the prognosticators here, perhaps with humor you find unwelcome. I don’t find the approach here balanced, but that is my interpretation and this certainly is not my blog.
Email address is fixed, it hadn’t been used for some time. Feel free to try it again.
WAAAAAAH!!!
Just read something on another forum, it may have been posted here already, regarding Mc Mansions
http://www.calendarlive.com/galleriesandmuseums/cl-re-gellner31dec31,0,4193452.story?coll=cl-art
I don’t understand the need for all that space, the waste of energy is what really gets me. We have very good friends with one of those homes, it is absolutely georgeous!….but too big. They have 2 girls 2 years apart w/seperate rooms. When we almost purchased in nov of 05 my boys 6years apart did not want seperate rooms. Is all this space needed for the all stuff we have that we also don’t need? How do others here feel about big homes?
KL
Listen:
Here something for you:
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXk1NSZmZ2JlbDdmN3ZxZWVFRXl5NzA1MTU5OSZ5cmlyeTdmNzE3Zjd2cWVlRUV5eTM=
And:
http://www.eveningtimes.com/articles/2007/01/06/ara/money/735.txt
Listen,
That’s fine. Challenge us with some facts. Let’s hear your take on inventory/sales data, the affordability index,the huge extraction of he loans,the negative savings rate, the migration factor, the subprime being bombed into submission, etc…. Just for a start, as you are well aware there’s many more holes in this dike. Didn’t want to overwhelm you.
Let’s revisit the timing question.
There seems to be a lot of focus/hope on a ’07 spring bottom/massacre. For argument’s sake, lets say the bubble peaked at the end of ’05. Historically, the downside has taken much longer than one year. However, as we’ve discussed in several threads over the last year, the speed of market changes may have increased along with greater information availability.
Do folks still think ’07 is some kind of turning point?
I personally think that information availability has permanently changed the housing market, but given the relative illiquidity and emotions involved in home ownership, I still don’t think that the RE market will stabilize in ’07. Consequently, I still think it’ll be a slow, painful, grinding multi-year slide, with various pauses and dead-cat bounces along the way.
Also, keep in mind that the foreclosure process is a lengthy one, which can take longer a year. So if the bottom is predicated on many subprime borrowers defaulting in ’07 because of the upcoming resets, the conversion of those foreclosures may not come into play until ’08 or even ’09.
listentothecrybabywannabehomeowners
Believe it or not there are many home owners still concerned about home affordability and high property taxes in this state. Unless you have the resources to help your children/grandchildren, sisters, brothers, friends, etc. to buy homes they may flee for a better life in another state. I dont about you, but I like the people in my life. From your simplistic, sarcastic name I am certain your a not a savy real estate person, nor do you understand basic real estate / economic fundamentals. There is much more at stake for residents living in New Jersey, than just owning a home!
#87
“How do others here feel about big homes?”
I know what you mean. I do not like these new bigger homes because that’s all they build new anymore. I do not need a home that size but the only alternative is a condo, townhome, or outdated, 60 year old cape code style house with linoleum. Except for the age 55+ communities that are going up, a buyer cannot find a small brand new home.
The weekend discussions were always very laid back. A little scotch and a little Depeche Mode.
Oh James I knew I liked you for a reason. Although I’ll swap the scotch for a little soco and lime.
Politely:
Take a look at the report card on the left.
http://www.meyersgroup.com/homebuilding/homebuilding.asp
Still doesn’t look good for either an investor or a conservative homebuyer. Demand is down, supply rising.
There are two items that got an “A” and one is homeownership rate. Too high. They’ve already bought.
How does this bear on your timing question? Many factors, not just foreclosure rate, can impact supply over the next year.
“Do folks still think ‘07 is some kind of turning point?”
I know that’s a rhetorical question but we won’t know if ’07 will be a turning point one way or another into ’08 and beyond. Any prediction is pure speculation. History is on the bears’ side but history can be fickle.
Not to state the obvious or anything.
re post # 14.
what nonsense!
case in point. 10 acres in basking ridge that was essentially an inside deal. A Coldwell RE allegedly representing her church who bought the place for 975K and then sold it to….(oh, gee guess….A ReMax RE and her “luxury home builder” husband) for oh guess??? 960K.
Even when we were offering list – 1,050K– YES list. Because we wanted to convert it to a functional farm for our family. It was an inside deal that the church took a loss on…. probably in return for some other kickback.
I HATE real estate agents. When the dollar value of something is that high you can EXPECT crooks, thieves and lying sons of b**ches.
YOU are soooooo wrong. Most REs if they smelled a steal or a deal are ready willing and able to find buyer, investor etc.
Sickening…. and that’s only *one* of the many crooked deals we have run across in our search for a home. One RE even was attempting to cross her own niece.
Long story short? Protecting the sell of a property for a lawyer/investor who hoped to subdivide and didn’t tell the seller we were interested. Until she found out we actually *went there* and talked to him.
He knew NOTHING about any other offers. It was fascinating to watch the lightbulb go on above his head.
I could go on but I have to *vomit* right about now.
sl
#87, #93 – Big Homes
I’m not a fan (unless someone has 4/5 kids and actually needs the space). Friends with those houses have utility bills that approach $1000 a month, plus they find themselves living in their kitchens. A lot of them aren’t even fully furnished, an acquaintance has a company that rents furniture to the owners of large mansions in the Princeton area when they have parties so that the houses looked “lived in”. Agree that the most reasonable looking new homes are invariably in over 55 communities.
Interestingly Frank Lloyd Wright always designed homes with comfortable, small living spaces.
NJrebear – the broker link you posted upthread was hilarious. Especially liked this post:
“Just last week…
Me: Borrower has no job and the only income is the daughter’s welfare check of $600 a month. You gotta be kidding. She can’t buy a house.
Realtor: Dammit. Why can’t you just take her stated?
Me: Did you ask that of the 20 other brokers who turned you down before you called me?
Realtor: F*** You! ”
Have any of the realtors who visit this board seen that kind of desparation from their associates?
regarding the church property…. Um… isn’t the listing agent supposed to work in favor of the financial interest of the SELLER??
seems like she was working in the financial interest of the BUYER.
BTW… we had a 50% downpayment prepared with our offer.
sl
politely Says:
January 6th, 2007 at 9:34 am
Let’s revisit the timing question.
“Do folks still think ‘07 is some kind of turning point?”
I think that it is impossible to know. I do think that there will be more realism on the side of sellers and we will get a lot less hyperinflated and unrealistic asking prices.
Just a thought:
With all the fun stuff going round (I love it all guys), my focus is on actual indicators that the market is changing one way or the other.
Although we can make predictions like “spring will bring increased inventory which will lower prices”, I am more intrigued by a posting yesterday that a majority of RE agents are beginning to reject bad or overpriced listings. This, IMO, is a real market driver as it should actually increase the number of realistic askings on the market – step 2 (I think) in the 5 steps to the bottom. It will not immediately reduce the selling prices, but will whittle away as more and more realistic listings come on board.
still looking:
Wow. Did the original seller sue the real estate agent? Were there any other repercussions?
Hi JB,
I agree with your approach; but why doesnt this apply to boyaa boob?
As long as you keep up with the childish name calling, I’ll continue to delete your posts. It’s that simple. You offer no alternative or challenging viewpoint at all, you are simply trolling.
no of course not. I tried talking to the pastor of the church (would not even meet with me on my 3 (!) visits there) nor speak to me by phone. Had his secretary do all the talking….”Our elders met and agreed on the price….we are happy with the price etc, etc etc….”
I’m sure they are getting a kickback in some way shape or form from the buyer.
it was on the market for 2 days.. I search the GSMLS 4 times or more a day. Found it late one Friday night – printed the listing — called the next day– and the prop was “under contract” before we even went to go see it the following day.
I wish it was investigated. It ought to be.
sl
still looking:
You are not alone. Been there, done THAT lovely experience. What’s worse, you think – a stupid party binge then worshipping the porcelain god for 8 hours, or this?
Isn’t it pleasant, especially when you know you would never pull that deception on somebody?
What I don’t understand, is why these RE agents made us waste our time bidding, going and seeing the property, dragging babies out of bed sometimes, etc., when they KNEW all well and good they were just gonna stomp us.
Maybe in the past, they thought buyers would never find out what they did.
I wish there was a Website to list an agent’s name, the nasty transaction against the buyer they were “representing,” the MLS listing #, the list price, the bid we made, sale price and buyer.
In fact, wouldn’t it be great if the law were changed so that upon a sale, every seller and bidder had to receive a list of all bids made, so that if yours was never presented, you knew and could change agents?
even by the time I called the next day it’s GSMLS listing was *gone*. Vanished.
I’m waiting to see what happens with the 10 acres (of prime basking ridge real estate.)
sl
What kind of kickback are you thinking is going on? Parking variance/cemetary mainentance commitment?
Sometimes a church will give members dibs at a minimum floor price, even if at a detrimental price to the coffer. Was the agent/developer related to a member? Just a thought – you might go to the church (rear entrance) and read any posted financial information, maybe way near the back entrance to the church.
For example, you might see this in a small, reformed Methodist, where the members must tithe/give a pretty high cut of income. They’ll post the name and amounts in the back of the church, and then scratch each other’s backs on business transactions. Very cultish.
yet more.
The whole month of “under contract” etc. …. I called her every three days hoping we’d have even a remote chance at buying it. She kept stringing us along with, “if this falls through, you are the next buyer.” “they haven’t made their second downpayment yet” “they don’t have a mortgage commitment yet” etc etc
when she knew EXACTLY that it was a done deal.
I have their names. I agree with that kind of open website. It would probably save many buyers (and sellers) the angst our family has been through.
sl
oops..notice the Steven King spelling of cemetary. This stuff is like SK.
a church willing to *lose* almost 100K on a property sale? — please don’t tell me they aren’t getting something more in return.
Time will tell.
The truth comes out one way or another.
sl
I sent a letter to James about this, I am 27 and I cannot see a reason to stay in the GS or NY or anywhere around here.
I made a bad/poor argument in that letter and got labelled a troll I think, but unless you have parental help either was cash money or heloc, make a very good living or are willing to work a lot or multiple jobs and put off childbearing there are limited options to build a stable base here.
I do hope there will be price drops I think that NYtimes article/graph shows that sustinctly. I see the monetization/inflation offsetting that drop in price by inflating away a loss.
Meaning those in the game ( which I am ) track with inflation and those that are not get left behind unless they have investments as well that track with or better than housing.
I am happy where I am but I am worried about the next step and how the big upgrade to a house means a signifigant portion on my and someone elses income from all the initial and continuing expenses.
I wonder if NJ is in many of your childrens future.
jb,
do you know of a legal way for people to share their stories of crooked real estate agents so folks can avoid them?
sl
Still looking,
How about something like a rate my teacher site. It is used by college students often to pick there courses/professors. I think it could be helpful for good realtors, but most people would go just to complain. So I guess the absence of complaints could be considered a good rating (-:
KL
Ewww… I just realized something. I DO SOUND like a crybabywannabehomeowner.
New Year’s resolution: stop whining and crying about dirty agent stuff.
Clot:
from the other thread, is this true???
“if you worked for GM, the world’s largest purchaser of the popular ED medication Via**a”
KL..instead of the model using rate my teacher, maybe it would be best to use the dontdatehimgirl model.
donteventhinkaboutusingthatrealtor(tm).com
ChiFi –
The little blue pill thing is absolutely true! GM is the largest purchaser in the world! Proof that they are an HMO that builds cars to defray healthcare costs.
Hey Still Looking-
Funny that you’re so livid over this insider deal, but you haven’t gone to the Hunterdon-Somerset Assn of Realtors, the RE Commission in Trenton or initiated a lawsuit. The agent behavior you’ve described is illegal and unethical.
And, why look for somewhere else to name names and call out the offenders? This blog is the perfect spot for that sort of thing. Since I work the same market area, I may well recognize the agent, and I’d be happy to help you in any way possible.
I am sorry you’ve met some bad actors in your pursuit of a property. But does that mean every Realtor in the US is a crook? When you indict the whole profession in that “broad brush” manner, you come across as a whiner. I’ve encountered a couple of bad dentists over the course of my life, but that doesn’t mean I decided to avoid all dentists and let my teeth rot out of my head.
If you want, send me an e-mail thru Grim and let me know about the particulars of this deal. I might be able to help you.
clot & Bost:
40 days to pitchers and catchers
http://www.mlb.com/NASApp/mlb/scripts/mediaplayer/mp_tpl.jsp?w_id=522781&w=2006/open/tp/archive10/101906_slnnyn_chavez_catch_dbp_tp_350.wmv&pid=mlb_tp&gid=2006/10/19/slnmlb-nynmlb-1&mid=200610191718380&cid=mlb&fid=mlb_tp350&v=2&mType=w&urlstr=&murl=
Re: people starting to look at “quality” instead of quantity when buying houses
Freddie Mac reported over half a BILLION $$$ loss for Q3. (Guess what: their stock has only gone down 1%???)
Nice to see our fed. gov. working again.
grim:
http://www.laphroaig.com/
listentothecrybabywannabehomeowners:
I recall saying “cross off 2006 & beware the false bottom” for at least 6 months, possibly 8…..I think I started with cross off 2007 about 3 months ago.
Oh, and “beware the false bottom” ;-)
agree with your approach; but why doesnt this apply to boyaa boob?
Booyah Bob (BYB) is an exception to the rule, mostly because he has been a regular fixture here. I will treat a “regular” a bit more lightly than a new poster who rushes in, guns blazing. However, be aware that I frequently delete BYB’s comments, he isn’t immune. I will also note that I’ve never deleted a comment from RE101, he falls into the category of regular, thus I’ll let his comments through even though I find many of them to be very abrasive and confrontational as well. Many of the regulars here have had comments deleted when arguments broke out, just ask, many here will tell you. Just realize that you have little or no visibility into what gets deleted.
jb
“Consequently, I still think it’ll be a slow, painful, grinding multi-year slide, with various pauses and dead-cat bounces along the way.”
Politely,
I agree, something like a slow leaky faucet that you just can’t fix or a gnat that just won’t go away. It is a slow unwinding process. Remember the flippers/subprime can’t lower their asking, there is no room for them to maneuver. It’s either find a buffoon to pay their price or send it back, just like Wall Street is doing to the subprime.
Pricing is a slow tedious process. That being said, there will be many opportunities to buy at reasonable value. Take your time and be patient. Enjoy the hunt, the sellers are certainly not enjoying their fate. You are dealing from a position of strength, make it work to your advantage.
For what’s its worth, I’m seeing 10-15% off 2005 highs in my area, these are closed sales. Why can’t this market decline at least 5% annually from now to 2010?? That would get you to 30-35% off 2005 highs.
Past RE declines were a result of a recession. We have never seen a market pull back like this in the face of a vibrant economy. That’s why we are in unchartered waters.Is this market a prelude to a recession??? I know, outlandish of me, never underestimate the printing press. However, how about a 20% pullback on its own implosion and another 20% as the result of a recession or some other shock to the system?? That’s the wild card. After this past moon shot, this scenario is more than plausible. Maybe not to a flipper but certainly with an astute “investor”. The only piece of the puzzle that is missing is the duration/severity of the decline.
Just a reminder to vote for your favorite bubble blogger. It only takes a minute. Below is an update on the survey and apparently a write in candidate is a close second in one of the categories. Wanna bet it is JB’s blog?
http://pro8.sgizmo.com/survey.php?SURVEY=YJUHQE1U2IX8O0HWK488VZ5OV178TN-3495-525205&pswsgt=1167701953&c-9id4r=
1/3/07, 10:12pm – 1,000 votes. Well, we’ve crossed the 1,000 vote mark, folks. And the feedback keeps pouring in – most of it extremely positive. People are discovering new blogs, writing about blogs they thought should have been nominated, pulling together write-in campaigns — and voting for their favorites, of course. It’s grassroots at its best, and that’s exactly what we’d hoped for.
For the record, we’d like to remind everyone of our selection criteria. We didn’t select our list of nominees because they’ve been around the longest, get great press coverage from other media outlets (because they’ve been around the longest), or because they’ve been nominated for recognition elsewhere.
Those wondering about write-in campaigns should know that one write-in blog is currently running a close second in one particular category. Which blog and which category we, of course, won’t disclose. But it illustrates the power of open voting….
I sent a letter to James about this, I am 27 and I cannot see a reason to stay in the GS or NY or anywhere around here.
I made a bad/poor argument in that letter and got labelled a troll I think, but unless you have parental help either was cash money or heloc, make a very good living or are willing to work a lot or multiple jobs and put off childbearing there are limited options to build a stable base here.
R Patrick,
No! I just haven’t had the time to send you a proper response. Believe me I read your email and I agree with much of what you’ve said. I apologise for not sending you an acknowledgement.
jb
Re: people fed up with ugly McMansions
There is definitely a movement of people starting to look at quality (usually with lots of wood work) instead of just quantity (McMansions) when buying houses. Great books such as “The Not So Big House” by the architect S. Susanka. She also has a web-site devoted to this issue. Gorgeous houses – and most not that big.
clot & Bost:
“40 days to pitchers and catchers’
Chi,
Funny you should mention that. I was looking at the spring training schedule this morning.
Clot,
It could be worse. I’m a Yankee fan. When I look at our starting five I see, 1 qualified buyer, 2 subprime lenders, 1 no doc loan with a teaser rate and 1 pundit. How the hell do you think I feel???
Please, if you haven’t voted yet, please take the minute or two to do so. Unfortunately, I didn’t make the nomination, so you’ll need to write in that vote, like Metro mentions above. The category I’m most interested in is the Regional.
Thanks!
jb
When you mess up one of your classic songs in front of 10,000 people, time for scotch and salty language….
http://archives.depechemode.com/video/live_concert_footage/popup/110305_ec320.htm
Link JB, they’ll need the link.
Rich
BC Bob-
Typical Yankee fan! You just unloaded a 56 year-old, one-legged pitcher with the salary of a small nation…and still you whine.
Your team’s biggest problem is still the $20M fencepost stationed at third base.
new twist to foreclosures [sue the creditors ]
http://www.businessweek.com/magazine/content/07_03/b4017082.htm
“My goal is to train an army of attorneys to take the fight right to the creditors and their Wall Street aiders and abettors,” says Gardner. “They wanted reform, and we’re going to give it to them.”
experts say the pain will be broader and deeper this time around. In the past few years, millions of Americans bought homes they couldn’t afford, lured by exotic mortgages that advertised no money down and low monthly payments–for a limited time only.
Vote Here:
HousingWire Survey
I voted. Next time NJRER should be on the ballot. (Shoulda been on this time.)
clot,
I would report these dealings if I knew it wouldn’t fly back in my face — knowing that unless I can get a FSBO, auction or foreclosure prop — I will likely have to deal with an RE from that area.
Only 2 of them seemed at all on the level – the rest are vomit-inducing.
I don’t agree with painting broadly across realtors. Like I said, nearly every dealing *I* have had so far with REs has been rife with deceit laced with greed.
I’m sure there are others who’d disagree — like the people who *got* those other properties (for a steal.)
I’m sure they are sweet on REs.
sl
more of the Wright stuff……
http://www.mlb.com/NASApp/mlb/scripts/mediaplayer/mp_tpl.jsp?w_id=442248&w=2005/open/topplays/archive08/080905_nynsdn_wright_bare_350.wmv&pid=mlb_tp&gid=2005/08/09/nynmlb-sdnmlb-1&cid=mlb&fid=mlb_tp350&v=2&mType=w&urlstr=&murl=
Clot,
Some arguments you can’t win. You are right.
David versus Goliath
http://www.youtube.com/watch?v=kt5pOPn_0Ik
Still Looking –
Thing is, in this case you are not actually the injured party. That would be the original property owner who was not able to realize the best price. The real estate agent had a fiduciary and legal obligation to him that she did not carry out and did indeed perpetrate a very serious fraud.
Outside of your own frustration, this should absolutely be reported to the authorities and also to local media. That real estate agent needs to lose her licence and some light needs to be shone on these kinds of transactions.
Still Looking-
What’s gonna “fly back in your face”? Do you think all the other local agents will close rank and collude against you? Please. Organizing Realtors is like herding cats; you’re not going to be blackballed. You AND the seller have been damaged in this fiasco. You have nothing to fear. Believe me, if you brought this incident to light, some good would come of it. I’ll contact you away from this board to speak further.
chicagofinance Says:
January 6th, 2007 at 1:00 pm
When you mess up one of your classic songs in front of 10,000 people, time for scotch and salty language….
http://archives.depechemode.com/video/live_concert_footage/popup/110305_ec320.htm
OMG I’ve seen Dave mess up the words quite a few times actually but I’ve never seen any of them stop a show over it.
Clotpoll Says:
January 6th, 2007 at 1:03 pm
That dude from Depeche Mode is such a loser, he even failed at trying to commit suicide.
That’s a disgusting thing to say. What’s wrong with you?
Guys.
Yesterday someone posted a link to get data on middlesex county from a realtor.
Well I did get data of listed price vs sales price history of last one year for edison area. I dont see even a single transaction in it where the sales price is off more than 10% than the listed price (except for >1million range). Most of the transactions are at the listed price or 5-20K less than listed price. Funnily there seems to be still some ‘bidding wars’ as some of the houses sold for more than listed price (even during the last 6 months).
The pdf document that the realtor sent me seem authentic.
Guys – if there is really such a buble, why are we not starting to see huge % discounts (>15% discounts)? Or the huge discounts are not there in middlesex county?
JB
My post is stuck in moderation.
listentothecrybabywannabehomeowners:
You’ve asked for the history of 2006 prognostications from the posters here.
Doing your own research is customary on this blog.
All the archives are available on the home page, so do your own homework!
att]
I wouldn’t go by list price.
1] Did you try comparing with previous sales (comps)?
if you didn’t, try using
http://tax1.co.monmouth.nj.us/cgi-bin/prc6.cgi?menu=index&ms_user=monm&passwd=data&district=1301&mode=11
2] Sellers could have payed sign on bonus (closing cost?).
I will be interested in your comp analysis.
att,
Do you know if the listing price is the ORIGINAL listing price? The property may have also been re-listed.
My point, the stats probably don’t show what the seller’s original list price was prior to any reductions made by the seller.
The only way you can truly track price changes is either going by the released median price releases or having access to the MLS.
But I feel the BEST way to know is to view homes (sorry Booyaa Bob).
To me buying a home is like buying an antique (or collectibles if that helps the analogy). You have to educate yourself as much as possible about the market and figure out what “value” you would put on the product using comparison (or for that matter your experience).
I also have seen a few go above original list lately but they were all $1M or greater. (They were under contract in November and sold in January and in Ridgewood).
Rich
http://www.bea.gov/bea/dn/nipaweb/nipa_underlying/TableView.asp?SelectedTable=35&FirstYear=2005&LastYear=2006&Freq=Qtr
Total Realtor commission has dropped by 18% since 2005 3rd quarter.
As you can see, commercial construction is not compensating for residential declines.
follow up 152]
It looks like brokers’ don’t get 6% on a non-residential deal. Don’t brokers add value in a non-residential deal?
http://www.reiclub.com/articles/Bbubble-schmubble-flipping-works-any-market
ReBear (153):
Realtors generally make more on commercial transactions (in the range of 6-10%). Those deals generally move slower, there’s more risk taken on by the broker and escrow takes longer to close.
RE consultant (#92)
I know plenty about real estate, owning and selling property, the ridiculous property taxes in NJ and the idiots who burn the money we work so hard to earn.
Can you tell us more about your RE consultancy?
I’m not sure this blog welcomes a contrary point of view. Moreover, I’m not even sure questioning the anecdotes and loaded data masquerading at market information is welcome. However, I’ll bring a contrarian view, based on data, challenging urban myths, and laced with some humor, until I’m welcome here or my postings are permanantly banned. Or perhaps I can start my own blog.
jb – this is a great blog, btw.
Seems like a number of individuals here believe they have a lot to gain if the housing market tanks. They are sorely mistaken.
WAAAAAAAAAH!!!
Pat #115
LOL!!
WAAAAAAAAAAH!!!
http://www.reiclub.com/articles/Bbubble-schmubble-flipping-works-any-market
Tom # 154,
Interesting read.
This was particularly interesting:
The biggest difference between flipping and speculating is that flipping works in any market, whereas speculating only works in certain places at certain times.
[…]
… speculating often works on the “greater fool” thesis …
[…]
Flipping, by contrast, relies on fundamentals. The idea is .. to find undervalued properties, rehab them, present them in an attractive manner, and sell them for a reasonable profit. … Assuming that you add value through rehabbing, you almost can’t lose!
listentothecrybabywannabehomeowners Says:
January 5th, 2007 at 9:30 pm
Did you buy at the price highs?
If you did you are losing nicely at this point.
good luck you are going to need it.
RentLord
http://www.business.com/directory/real%5Festate%5Fand%5Fconstruction/property%5Flistings/residential/united%5Fstates/new%5Fjersey/
It’s Crashing:
“If you did you are losing nicely at this point.”
Do you imply that someone who bought recently deserves to be losing shirt?
“good luck and you are going to need it.”
Thanks for the charity, but I’ll take the good luck I generate for myself. That includes my fine standing with my RE.
Listen to the crybabies. WAAAAAAAAH!!!
thanks clotpoll!
Thanks Pat.
I saw the mls’s breakdown in one of your links:
http://www.njar.com/mlspub2.shtml
A follow up question: Does a RE agent need to be certified(and current) in each of the above mls to practise?
Just trying to figure out how this RE cartel works!
Actually there is just one home in the list of 100s which sold for more than 10% discount.
I feel that this is definitely the difference in the “relisted” price and sold price rather than original price and sold price. I am pretty sure since clotpoll on this board mentioned that in his area (somerset county) the homes on average had sold for 89% of the list price. It is impossible that the adjoining county would not have any transaction in that discount range.
I think this is another way in which realtors try to misguide as well as scr*w unaware buyers.
BTW if you look at that realtors website, he tries to sound convincing, but is full of contradictions. He still seems to be giving examples of how realtors can help seller get max. price by getting their house into multiple bid situation and how to help the buyers in multiple bid situation.
Here is that realtor’s website, read his articles.
He seems one guy who would definitely pressurise his buyer clients into bidding up and up. Read couple of his articles, which seem nothing but realtor rant.
http://www.edchaparro.com/Getting_20_Started.html
RE post #40:
BCBob, I don’t think I would put Robert Toll on the list of those who missed the collapse. His words were saying “boom, boom, boom,” but his actions (massive sale of his company’s stock) said, “bust, bust, bust.”
(I apologize if anyone posted something like this before me.)
RE ADA post 104
I know JB gave you his answer, but I’ll chime in with the prespective of a regular reader/poster.
Booyaa Bob is comic relief. Comparing what he does to actually demeaning or insulting someone doesn’t seem be a rational response. Along similar,(but by no means the same) lines, consider the difference between lying as a prank and lying to deceive someone out of money.
syncmaster # 158,
just like I learned about the stock market. There is ALWAYS a good deal to be had in both up and down. Waiting around for “the bottom” to make a killing will only cause one to keep waiting.
Has anyone else been watching the south jersey shore market on Realtor.com. The inventory has dropped approx. 20% in the last week or so. I know that sales are still down, have the realtors been refusing listings?
just like I learned about the stock market. There is ALWAYS a good deal to be had in both up and down.
Tom #169,
That is correct but also an oversimplification, IMHO. Stock prices aren’t as sticky and they are much more liquid than RE.
Hi clot. I sent an email address to jb — not sure if he passed it on to you as yet.
Lisoosh — thanks. Unfortunately when I attempted to contact the church pastor he (via his secretary –he refused to talk to me) was very defensive — seemed very odd to me that the property wasn’t allowed to stay listed so other potential buyers could have access to it.
I’m at work now so, I will send another another email when I get home.
sl
ran a query on gsmls a few weeks ago for the towns maplewood, milburn, chatham, madison and westfield in the $550k-$900k range. here’s the stats to date
Chatham
25 a
4 a*
3 uc
some decent properties but you have to be careful with chatham as it’s big and there are vastly different sections
Madison
15
2 uc
inventory is tight and what’s out there is leftovers
Maplewood
17 a
1 a*
2 uc
a number of nice properties but the east side of town so could be contributing to their sitting
Millburn
12 a
1 a*
6 uc
inventory is tight. the good stuff is gone.
Westfield
36
4 a*
7 uc
a number of nice properties out there, many in the $750k range and new construction.
overall what’s different this year is there are more quality properties on the market than last year.
>>Did you buy at the price highs?
If you did you are losing nicely at this point.
good luck you are going to need it.
>>>Did you buy at the price highs?
If you did you are losing nicely at this point.
good luck you are going to need it.
what i meant to say was there seems to be a contingent on this board that thinks anyone with an alternative viewpoint to a housing crash must’ve bought at the top and is having their hat handed to them. sounds like self-reinforcement of one’s beliefs.
Lindsey, #168
I should have been clearer. When I said Bob Toll never saw this coming, I was referring to the fact that he has never seen a RE market decline like this, in the face of thriving economy. The past two downturns were recession related.
Moody’s May Cut Mortgage Lenders Network’s Servicer Rating
http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20070103\ACQDJON200701031839DOWJONESDJONLINE000821.htm&
Moody’s Investors Service said Wednesday it may cut the servicer rating of Mortgage Lenders Network USA, raising concerns among mortgage-bond investors about the company’s ability to recover losses on defaulted loans.
Anyone feel the bitterness growing?
That is the bitter underwater homeowners , the bitter johnny come latelies grubbing sellers it’s not 2005 anymore and bitter realtors.
It’s funny how this group above did not give a damn about wrecking some young person’s financials just too keep the party going.
Keep up the pressure on this crew. NOone is entitled to anything. People make decisions and sometimes it is the wrong decision.
BOOOOOOOOOOOOOOOYAAAAAAAAAAA
Bob
a happy home(s)owner eventhough prices are tanking at a rapid rate.
Misery growing.
Misery index hits all time high Spring 2008. So bad news bitter group cuz the misery is going to get worse from here.
Markets go up and go down. Accept it that RE is going down now to correct the absurd prices.
BITTER!
BOOOOOOOOOOYAAAAAAAAAAA (SICK half moaning yell)
Bob
I congratulate the smart young people who thought for themselves and did no buy into this irrational ponzi scheme the last few years (2003-2005).
Now just be patient to be rewarded by paying at least 25% off of peak house prices: condoshacks be careful. By no means is this a BARGAIN! There are no bargains unless you want to live in MI OH IN where houses in some areas are at 50% of replacement cost.
Watch the bitterness grow among the bagholders, the specualtors, the step up homeowners who bought before selling present house and Realtors!
BITTER!
BOOOOOOOOOOOOOOOYAAAAAAAAAA
Bob
a happy home(s)owner eventhough prices are tanking.
from the housingbubbleblog –
Suit alleges massive mortgage scam
http://www.nctimes.com/articles/2007/01/06/news/californian/20_44_381_5_07.txt
“Temecula attorney Richard Ackerman filed the suit on behalf of an anonymous client, who he said was duped into buying five houses in and around Murrieta in early 2005.”
“According to the suit, the anonymous plaintiff is stuck with 10 loans and payment obligations of more than $20,000 a month, far beyond her ability to pay. All told, the alleged scheme involved as many as 400 investors and an estimated $1.2 billion of property, Ackerman alleged in the complaint.”
Aside from Jovane, the suit names Sunburst Financial Systems Inc., Oetting Enterprises and several lenders as defendants. The suit also cites payments among the defendants and other parties, including Stonewood Consulting and Hendrix Montecastro, Stonewood’s chief executive; and his mother, Helen Montecastro, whom Ackerman said is a nurse at Rancho Springs. Ackerman said he expects to add additional defendants to the suit.
>>
They are suing subprime lenders and their mothers :)
The trial lawyers are smacking their lips gett’en ready to pounce.
BITTER!
BOOOOOOOOOYAAAAAAAAA
Bob
For the all the real-estate gurus out there:
Why the inventory keeps dropping in NJ and it’s off 18% from the peak??
anyone who thinks there is uniformity of opionion on this site doesn’t actually read the posts.
true, most people are bearish on housing, but if you look at the data it is obvious that there is very little reason to be bullish.
the most bullish scenario that anyone is putting forward these days is that housing has bottomed. No one is saying that we will return to the crazy appreciation of the last few years.
If anyone has a realistic argument for a bullish scenario in residential RE, I would love to hear it. I have presented arguments repeatedly on this board that RE may not be as doomed as some here think, and these arguments have been met with respect.
RentLord (164)
An agent must be a paid member of the various MLS systems to access info and lockboxes in their market areas. Some MLS systems, such as Mercer and Monmouth, impose super-high fees and restrictions to keep out agents from other areas.
“what i meant to say was there seems to be a contingent on this board that thinks anyone with an alternative viewpoint to a housing crash must’ve bought at the top and is having their hat handed to them. sounds like self-reinforcement of one’s beliefs.”
Richard,
Not true. I only refer to the madness from 2001-2005, flippers, bidding wars, subprime, I/O’s, massive lending fraud, etc.. You can also put anybody who bought in 2006 at 2005 prices and those that sucked all their paper profits out of their abode,[atm] in this same category.
For the all the real-estate gurus out there:
Why the inventory keeps dropping in NJ and it’s off 18% from the peak??
Inventory is seasonal. Here’s Bergen County SFH data for January 1, 2004 – 2007.
Date 2004 2005 2006 2007
01/01 2,218 2,271 3,082 3,140
As of 01/07/07: 3,195
Rich
“The trial lawyers are smacking their lips gett’en ready to pounce.”
BOOOOOYAAAA,
How true. Six months ago there was posts here regarding the 6 figure starting salary, how this was destined to save this area. Hah,hah. A number of posts stated how the big law firms were on a hiring binge. No s*it. They were ramping up for one of their biggest onslaughts ever. They recognized this, along with some others, and are ready for a blistering assault.
Rich NNJ,
Wow!! Almost 50% higher, at this time, as compared to 1/05.
It seems to me that the federal government wants to keep the housing party going as long as possible – so be it!
I’ll buy another 1 yr cd tomorrow.
Somebody needs to blink first.. and it ain’t gonna be me.
To NJOptimist
The inventory is way up compared to one year ago.
I’ve been tracking houses in the 350K-550K range over 19
selected towns in Essex, Passaic, and Union counties.
My totals:
1/2/06: 249 active listings
1/1/07: 386 active listings
That’s a 55% increase in one year.
It is true that this is down from the peak 2 months ago (I counted 535 active listings on 10/23/06).
However, I’ve been doing this for 18 months and have found that inventory to drops off about 25% between Fall peak and New Year’s Day.
I predict that there will be well over 800 listings in my price range by Fall 2007.
I have a feeling that most of the bagholders who ‘had to buy’ have already bought into the bubble. Most of those reamaining are ready to rent it out for at least another year.
Some MLS systems, such as Mercer and Monmouth, impose super-high fees and restrictions to keep out agents from other areas.
Clotpoll #185,
Why do they need to keep out agents from other areas?
Good morning all-
Found this interesting link on the costs of homeownership…this was in 1998 before all of this craziness began! I guess now that we pay at least 10x as much for a house than in 1968 (at least in NJ), upkeep costs are not such a big deal (upkeep is a fraction of the cost of the house rather than a multiple). But I wonder whether homes in the future will be left in much worse shape when one goes to buy an existing home.
http://www.realestatejournal.com/buildimprove/20001003-fletcher.html
afe
Interesting response to a comment of mine over at the Matrix blog:
“I would also draw serious comparisons between the London and Manhattan markets. Both had leveling off (London in 2005 NY in 2006), both have strong financial employment bases (just look at M&A activity), and both have very limited room to expand, and whereas London appears to me a year ahead of the Manhattan in it’s cycle, it had 12% housing appreciation in 2006 after a year of nothing and many calling for a bubble bursting. So look to London 2006 for would could possibly portend Manhattan 2007.”
thoughts?
Syncmaster-
I think they just want to keep the local business in their hands and not let out-of-market agents get a foothold.
Their MLSs, not surprisingly, spin it the other way.
Since RE info has become pretty much ubiquitous and RE companies and MLS systems cannot hoard info away from the public, I find no real reason for MLS to exist. I, for one, have no problem with a national, online database of homes offered for sale with a Broker’s letter of cooperation and compensation attached.
MLSs are essentially lonely hearts clubs for RE agents who don’t have a life.
Ok, talk me out of this before I do something I shouldn’t.
Went to go look at a property today. Nice place, about 3 months on market. It’s in a smaller upscale development, roughly 30-40 or so homes, all built by the same builder during the last bubble (1988). Plenty of past sale history in the development.
Current asking is *below all comps* in both 2005 and 2006. Is roughly equal to January 2004 sales prices, even though the current propery has a higher assessed value (likely due to the inground pool since all the homes are similar).
I would seriously consider this property at 10% off asking. When I say seriously, I mean seriously.
At 10% off, this property would be equal to comps at 2000-2001.
It’s currently sitting at a 2% trendline from when the community was built in 1988. Understand that these homes were significantly overpriced during the last bubble.
jb
Adjusted for inflation, the property has seen a net loss since it was built in 1988.
jb
re: London, from the Financial Times:
http://tinyurl.com/yye3gh
“this week’s announcement from the Land Registry that London house prices fell by 0.6 per cent in November. This could be taken as a bearish signal, since prices in the capital are widely perceived as a leading indicator of subsequent price movements in the rest of the country.”
“Six weeks ago David Miles, chief UK economist at Morgan Stanley and a former adviser to Gordon Brown, chancellor, warned that house prices were likely to fall steeply because recentincreases had been fuelled by speculation of further price rises – a classic sign of abubble.
In November, John Hawksworth of PwC estimated that the housing market was overvalued by 15 per cent, and said there was a one in three chance prices would be lower in 2010 than today.”
JB,
That’s my target, 2000-2001 prices. I’m not looking for a crash, just 30-40% off 2005. This property seems to meet that criteria. If this same scenario was in my area, I may bite. You’ll even pass the BOOOOYAAAAA test. If you go through with it are we then bombarded with the NAR hype??? Does this blog become extinct, since your parameters have been met???
NJOptimist Says:
January 7th, 2007 at 9:48 am
For the all the real-estate gurus out there:
Why the inventory keeps dropping in NJ and it’s off 18% from the peak??
=================
DUUUUHHHHHHHH! Lets see the Grubbing sellers are pulling their house off the market cuz they will relist in the Spring magic.
NO SPRING MAGIC THIS YEAR. SPRING MASSACRE!
BITTER SELLERS & REALTORS!
BETTER LOWER YOUR PRICE FAST BEFORE YOUR EQUITY IF YOU HAVE ANY NOW GOES POOOOOOOFFFFFF!
BOOOOOOOOOOOOOYAAAAAAAAAA (sick moaning half yell)
Bob – a happy home(s)owner eventhough prices are dropping
JB
What do you mean by 2% treadline?
afe
James Bednar Says:
January 7th, 2007 at 12:08 pm
Ok, talk me out of this before I do something I shouldn’t.
Went to go look at a property today. Nice place, about 3 months on market. It’s in a smaller upscale development, roughly 30-40 or so homes, all built by the same builder during the last bubble (1988). Plenty of past sale history in the development.
Current asking is *below all comps* in both 2005 and 2006. Is roughly equal to January 2004 sales prices, even though the current propery has a higher assessed value (likely due to the inground pool since all the homes are similar).
I would seriously consider this property at 10% off asking. When I say seriously, I mean seriously.
At 10% off, this property would be equal to comps at 2000-2001.
It’s currently sitting at a 2% trendline from when the community was built in 1988. Understand that these homes were significantly overpriced during the last bubble.
jb
====================
why wait? Drop it 12% and BLEED’EM DRY!
Hope you get it!
BOOOOOOOOOYAAAAAAAAAA!
Bob
BOOOOOOOOOOOYAAAAAAAAAAAAAA(SICK MOANING HALF YELL)
Bob
JB,
Out of curiosity, how much did the current sellers buy for? IMHO 1988 was a very high year to be drawing a 2% trend line off of.
If you take the comps from 1988 and multiply those sale prices by 1.02 (2%) per year, and graphed that line out, the current asking price will be sitting on or near that line.
Say for example, a property last sold for $400,000 in 1998.
1988 $400,000
…
1990 $416,150
…
1995 $459,474
…
2000 $507,296
…
2005 $560,096
…
2007 $582,724
So, if property x which last sold for $400,000 in 1988 is currently selling for $583,000 in 2007, it’s sitting on the 2% line.
jb
JB,
Sounds good to me but then again, I’m a n00b. I see you have Booyah Bob’s blessings, that should be good enough. Go for it! Good luck :)
JB
My post is stuck in moderation. What triggers this? Is it the size of the post?
Metro,
I don’t have the current owner purchase price, it wasn’t MLS listed and tax records have it at $1.
Like I said above, prices in this development were extremely high in 1988.
jb
Thanks for the treadline illustration. Got it! Well, some questions right off the top of my head I have:
1) Did it go through a recent assessment? If not how much would prop. taxes increase once this is completed?
2) How is the quality of construction given this is an “80’s” house (gross overgeneralization, but not knowing much more about the builder, etc and given the shoddy constructions some post-70s homes have, it is a consideration) ?
3) What are the chances owners will drop below this asking price? How motivated are they? Of course it doesn’t hurt to bid anyways?
4) When did the buyers buy? Post 2000 or before?
AFE
Most NJ prices were very high. My house almost doubled in value from 1986 to 1988.
JB,
But it doesn’t have chestnut trim!
I thought you were a old house kinda guy…
Your gonna make me say it… I hate this word but it comes out when I’m taken aback.
Dude?! Dude!
Rich
Rich in NNJ,
This ones for you!
http://www.youtube.com/watch?v=sEr8SYqTc3s
I’ve got a party to go to this afternoon, a couple Johnnie Blacks and I’ll forget about this whole thing.
jb
Seneca #83, that house actually isn’t too bad. If you ripped off the fake stucco and replaced with cedar shakes, that house would actually be quite nice.
#91 writes:
“Do folks still think ‘07 is some kind of turning point?”
Definitely not the “bottom” by any means, but a steepening of the hill down.
We’re looking at years of price declines.
“The Treasury should not advocate a decline in the dollar, but it should not mislead the markets to think there is some hidden support there for the currency,” he said.
Feldstein said the sense that foreign investment will keep flowing to the United States because it is still the healthiest economy is another “error of understanding.”
Most of the money now coming into the country is for debt purchases by foreign governments, not from equity investors attracted by fundamental strength in the U.S. economy, as was more the case in the 1990s, he said.
http://sg.biz.yahoo.com/070106/3/45t9a.html
Chicago #133, that was great, thanks for the link.
Didn’t see this tour but the nightcam video screens were a fantastic idea.
Realtor™ Clotpoll Says:
January 6th, 2007 at 1:03 pm
That dude from Depeche Mode is such a loser, he even failed at trying to commit suicide.
Realtor™ ethics in action…
JB,
What kind of ‘bag holder’ would you be if you bought this ;-)
just kidding!
Ok, it’s 1:50, haven’t drank any scotch yet, and have decided against moving on that house.
We’re going to wait to see how ’07 plays out.
jb
Hello All – I am new on this site. I have a question I am hoping you can help. I am in the process of selling an investment property. I will owe about 75k in taxes if I decide not to do a 1031 exchange. Given the current market, would you buy another home of 750k to defer taxes? Atleast if the market depreciates, my tax deferral will cover up to 10%. Thanks.
how much a sq foot for the house if you take off 12%?
taxes?
My prediction for 2014: Grim will still be waiting for the right conditions to buy.
J.B.
Intervention
This happens. All the time. Problem is you need to look at the stuff. It’s part of a routine.
But then you want what you see every day. A lot of cooks and chefs are a *tad* bit overweight.
If you truly believe in a higher probability of further decline, how do you keep your emotional hand out of the cookie jar?
-Remind yourself that you are not seeing all the inventory. Yet. Maybe the good stuff is behind the counter (maybe).
-Remind yourself that your downpayment on the $580k is earning $$$.
-Do your rent v. own exercises..remember to breathe out when hitting [RECALC].
If you do all of this, then go look at what you can get right now for $675…do you still want that house? Does the house pale in comparison to something that might be $580 next year?
If you still think it fits the bill, go buy the house. But buy with your calculator in your hand and your brain turned on.
What is a good book to read about the process of buying?
http://www.wikihow.com/Buy-a-House
http://homebuying.about.com/od/howtobuyahome/tp/home_buying.htm
http://homebuying.about.com/od/howtobuyahome/tp/home_buying.htm
JB,
What are chances of a bid up on that property using the first [your] offer?
Do you have a feeling this could be a setup?
JCS –
Certainly NOT this blog.
WAAAAAAH!!!!
#227,
well jcs, if you are looking for ways to lose money in real estate talk to #230.
jcs,
Don’t worry about what I’ve done – just fine, thank you. Suggest you look for a source of RE information elsewhere; this place is chock full of individuals who’ve never had the guts or financial wherewithall to buy a home, but are more than willing to offer you advice. Especially the njrebear.
listentothecrybabywannabehomeowners said
this place is chock full of individuals who’ve never had the guts or financial wherewithall to buy a home, but are more than willing to offer you advice.
—————————–
You must be in RE. RE Agent maybe?
I owned a house for 13 years. And could buy now, but see renting as more judicious. Just because you are so invested in being pro real estate does not mean that the info here and the dialog is not valuable.
I would say you are the one crying waaaah! because you are not able to quiet this group. I suspect by the end of the year you will be really crying after the ARMs reset this year and nothing is selling.
listen,
Are you one of the 20% subprime borrowers who will foreclose this year in NJ?
#233 and 234,
Interesting conjectures. Not based on fact, but mere hypotheses. Similar to much of the information here that masquerades as market data.
The postings I’ve placed here address nothing about the state of the RE market. I’ve merely inquired as to track record of all the RE prognosticators here. It’s simply a way to challenge all the urban legends and mythology here presented as data, either bull or bear.
But that’s okay. When someone challenges some of these postings and gets responses like those in #233 and #234, he knows he’s made the RE wannabees cry. Nothing like crying over something you can’t have.
I’ve seen a few other postings that indicate anything even remotely interpreted as contrarian is not welcome. Perhaps THOSE postings are fact.
I almost forgot…
WAAAAAAAAAH!!!
“this place is chock full of individuals who’ve never had the guts or financial wherewithall to buy a home”
Just an assinine statement, fits the anal sign in name.
listen,
please don’t cry here.
Why don’t you post some ‘true facts’ instead of your mindless bickering? I want to see what’s left in your cranium cleaned before the collection agency cleans your wallet :)
What do you find as conjecture, the fact that $1.3 trillion in ARM resets are coming bigtime in 2007? That it represents around 13% of all the mortgage debt in the US. This is fact and can be backed up. I like contrarian if you have the facts to back it up. But if you are just going to say “no it isn’t” you are wasting our time and will be declared Troll.
http://www.youtube.com/watch?v=T_e8ETqWjdI
BTW, sounds like you are an Artie Lange fan.
Hey anal, I mean listen,
I’m ready to buy again. Should I?? If yes, why??
listen,
“The banks making these shady loans should be kicked in the ass, and they will probably find a way to pass off their losses on on other parties.”
Once having lost money, do you think the ‘other parties’ will be interested in buying bank mortgage products? I bet not. If mortgage credit squeezes, home owner wallets are also going to squeeze.
For your information, under certain circumatances the “other parties” require mortgage originators to buy back bad loans.
Heard of MLN, ownit, Preferred Advantage , SecuredFunding, Harbourton Mortgage, Sebring Capital & Meritage Mortgage.
ALL OF THE ABOVE SUBPRIME LENDERS WENT BELLY UP IN THE LAST MONTH.
By the way, what’s in your wallet? LOL
Listen,
“The banks making these shady loans should be kicked in the a**, and they will probably find a way to pass off their losses on on other parties.”
Once having lost money, do you think the ‘other parties’ will be interested in buying bank mortgage products? I bet not. If mortgage credit contracts, home owner wallets will follow suite. For your information, under certain circumatances the “other parties” require mortgage originators to buy back bad loans.
Heard of MLN, ownit, Preferred Advantage , SecuredFunding, Harbourton Mortgage, Sebring Capital & Meritage Mortgage.
All of the above subprime lenders went belly in the last one month. One of the reasons, the “other parties” wanted them to buy back their loans.
By the way, what’s in your wallet? LOL
jb,
My post is marked for moderation.
Listen,
I am out of the market completely, totally flat, as compared to naked long. However, if you are not a troll, naked long may be hard to comprehend. Getting ready, between 2008-2009 to buy my 7th property since 1985, lucky # 7. Again curdled brain, should I buy now??? If yes, why???
Can you please offer something of substance?? If you have nothing to do but rank the bloggers 2006 predictions, just go into the archives. My archive says sell, sell, sell, that was 9/2005. I really would like to buy, right now, just don’t have confirming data from the market. What can you offer of any value??
BC … you are too much of a helper.
Customer-Service oriented.
Listen needs to sh*t or get off the pot..ante up, if you’d rather.
Gee, the innuendo around here is thick and fierce.
WAAAAAAAAAH!!!
listen,
the 1.3 trillion is just standard ARMS. The IO’s and the PO ARMS are accounted for differently and I have not seen the numbers for them. As for the prognosticating, i went through the last one in the 80’s and I know how slowly prices go down. The main difference this time is that as you mentioned we have some pretty shady mortgage companies out there. As for them getting away with it Sebring and Ownit have had it catch up with them.
Unrealtor #215 in ref. to my #83:
Seriously? I actually thought the house you linked that was a “monstrosity” was rather similar to the one I linked. I actually don’t think either one qualifies as a monstrosity but that might just be that my opinion is jaded by the true McManse style homes I have seen that have entryways fit for kings. Hmmmm.
JB – You don’t want to be a greedy buyer do ya? 10% = 2001 comps? If thats the case then you need to seriously consider this house. And not just because you would be doing a service to future sellers by resetting all comps in the area.
Here’s the thing though, until you get through inspection, the price may indeed be too good to be true. I’ve watched a number of friends get their heart set on a home only to find out through a good inspector that the homeowner used patchwork to try and hide plumbing issues, termites, etc.
If you love this house, you have to start going down the path, can’t hurt to toss in an offer. If you are only in love with the price, don’t waste your time.
Pat,
You know me like a book. Yes, I concur, customer service oriented. I like that, much more than what the Gints are doing right now.
Is liquidity tightening?? Not good news for the RE industry.
“Kohn, who speaks in Atlanta today on the economic outlook, on Dec. 2 said inflation risks remain “tilted to the upside.”
Is the the beginning of the end of the
carry trade??
“Volatility in the yen will rise in coming months on speculation the Bank of Japan will raise rates as soon as this month, according to Lehman Brothers Holdings Inc.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSpdWzm2dEDQ&refer=home
Listen,
Do you know the difference between carry and piggyback??
Listentothe….
I keep hearing attacks on people but no real contribution to this board from you. I do not mind an opposing view. I have one from most of the people here, but I think that your are nothing more than transferance from some other problem in your life. Probably something related to RE perhaps.
For example:
I am a property owner, and I could of at the time bought much larger than I live in now even at 24 when I bought my apartment. It’s 3 years later and I do not regret buying.
But I predict inflationary pressures due to foreign debt like keeping the carry trade going and keeping the oil nations using dollars along with M3 leads to interest rates staying where they are or going higher in the next couple years.
So if housing drops 20 percent but inflation causes the value of that home to increase ( just like gold ) 15 percent the buyer may have lost value but on paper is only down 5%
I’m the lawyer who recently bought in westchester.
“Listen..” is the bull version of boyaa. He makes no substantive points while he rants about his point of view.
That being said, I do find it interesting that as soon as some espouses a contrarian view they are labeled as being a homeowner in a dire financial situation or a RE agent.
Conjecture and speculation runs rampant on this blog as soon as one does not agree with the dominant paradigm.
BC Bob Says:
January 7th, 2007 at 6:18 pm
However, if you are not a troll, naked long may be hard to comprehend.
Bost: About eight years ago I had to prepare a lengthy discussion about hedging various financial risk exposures of one of my prior employers. Anyway, one of the memos I wrote, I repeatedly needed to describe buying call and writing a put in tandem [i.e. synthetic long position]. So in the memo I kept repeating “synthetic long position…synthetic long position…” Anyway, I turn to my co-worker and ask ”….can you think of another way to state a synthetic long position because my memo was sounding redundant?” He says “uh….how about VIAGR-“
“So if housing drops 20 percent but inflation causes the value of that home to increase ( just like gold )”
R Patrick,
India and China raised reserve requirements, the Bank of Japan is hinting about a .25 rate increase in their short term rates. What is the outcome if the carry trade unwinds?? Believe me, I am a huge gold bull, have been long for 3 years. However, I am hedged. Is last weeks actions by foreign banks just sugar coating or is the beginning of the end of excess liquidity?? I know, stupid me. If gold, oil, copper, etc.., continue to get railed, it’s dark skies ahead, especially for the RE industry. Can you imagine, if you are long RE or looking to sell, it is imperative that the crb is supportive. If not??…. and this has zero to do with the subprime.
listen,
#244 is for you.
Bost: don’t use “China” and “reserve requirements” in the same sentence. It makes it sound as if there is a banking system there…..
Chi,
I wish I was there with you. Although, it doesn’t pertain, I would have added, “is that like a butterfly spread”?? Oh s*it, here come the Gints.
njrebear,
Does “listen” know why the Good Lord gave us 2 ears and 1 mouth???
ch914]
“Conjecture and speculation runs rampant on this blog as soon as one does not agree with the dominant paradigm. ”
Speculation of what sort may i ask? Is it,
1] the fact that federal reserve has issued guidelines to subprime lenders to tighten lending standards? Which is unprecedented.
2] fact that any borrower can walk away with a loan greater than 100% LTV?
3] the fact that 1 in 5 subprimers will foreclose in NJ in the next few months?
1 in 4 if you are in Atlantic city.
4] Be one among the 30% of home owners who are ARMed and ready to reset?
5] or is it the fact that 80% of homeowners cannot afford the house they live in?
6] or is it the fact that $700Bln dollars in home equity was withdrawn by home owners in 2005 thus boosting GDP to artificial levels? Of course the level of withdrawals in the last quarter fell by a significant margin and so did GDP.
7] or is because foreign central banks reserves are moving away from US dollars?
8] Or is it because 7 subprime lenders have gone belly up in the last 1 month?
9] or is it the ever growing inventory followed by record foreclosures?
well that’s a start …
What speculation and conjuncture are you talking about? All i can see is that your own speculation has caused you to turn a blind eye towards the real speculation and conjuncture.
nice to see a more balanced discussion here. i thought i was the only one without a bubble for a head.
BC bob,
The ‘thing’ in Listen’s cranium is incapable of translating letters to units of sound :(
ch #257,
That is the point I have been making. If you challenge what is posted here, then someone such as njrebear or BC Bob shouts you down with crybaby references to your wallet, mortgage status, or your length naked.
Question for the njrebears and BC Bob’s here: what is the objective of your postings? Tell us what you stand to gain.
Richard #265,
Right on, buddy!
WAAAAAAAH!!!
njrebear,
I admire your passion on the topic.
WAAAAAAAAAH!!!
Maybe listentothecrybaby is Booyah Bob?
“If you challenge what is posted here,”
Listen,
??? I’ve heard better rationalization for buying pet.com.
“Bost: don’t use “China” and “reserve requirements” in the same sentence”
Chi.,
Like I said sugar coating.
Richard #265,
“Right on, buddy!”
Nothing left to be said.
Something of more substance than pet.com;
“Disasters may be rare, but I see the kind of conditions that could make one happen,” said Sedacca. “It’s like a big keg of dynamite with a fuse. I don’t know when, but I think the conditions exist for the explosion to eventually occur.”
At the same time, the $643.4 billion U.S. trade deficit through October, on pace to set a record, threatens to further depress the dollar, fueling inflation and pushing interest rates higher, they said.
“Given the ease of borrowing now, acquirers may be taking on too much debt, said Chicago-based Mouser. That in turn could lead to another possible cause of a market collapse, a bond-market blowup”
“The risk is that the slowdown “actually becomes a hard landing, or recession,” said Orlando of Federated Investors in New York. Investors can hedge those risks by buying health-care, consumer-staples, utility and telecommunication-service stocks, he said.”
I guess this guy is not a pundit, outrageous of him not to specify soft landing.
http://www.bloomberg.com/apps/news?pid=20601087&sid=as.fCPN.CCkM&refer=home
Richard/Listen,
Which reprecussions of the two scenarios is more ominous; carry or piggyback??? This should represent a meeting of the minds.
listen,
“what is the objective of your postings? Tell us what you stand to gain. ”
I don’t want to mortgage my families’ future!
What do you stand to gain by posting on this website?
Chi/others,
I know we have addresed this numerous times. I had dinner last night with a MD of a major Wall Street firm. He told me six months ago and is steadfast at this time regarding their analysis; the inverted yield curve is not a sign of an imminent recession, rather the excess liquidity caused by the carry trade along with the plethora of dollars in circulation, petro dollars, china, trade deficit,etc… The amout of Eurodollars [back to the m3 question] is enormous. They have never seen anything else like it. They are on record for a ffr of 6% by year end. The dichotomy on the street regarding this [inverted yield curve] may be unprecendented.
Inverted yield curve?? Recession or parking spot for the colossal amount of dollars in circulation??
Listen/Richard,
Any input is appreciated, do you say WAAAAAAAH, if their analysis is correct regarding the ffr??
YAAAWN! I’m going to bed.
WAAAAAAH!!!
“The yen gained for a third day against the dollar on speculation Japanese investors will trim investment in overseas assets as the Bank of Japan raises interest rates.”
Liquidity????
http://www.bloomberg.com/apps/news?pid=20601087&sid=ai0_ToH_1Kok&refer=home
BC Bob,
I have to Goolge ten times to understand your post completely :)
Thank you.
“That is the point I have been making. If you challenge what is posted here, then someone such as njrebear or BC Bob shouts you down with crybaby references to your wallet, mortgage status, or your length naked.”
Listen,
Don’t retreat. Are you getting taxed?? You have me LOL regarding length naked?? What the hell is that?? Is that a straddle???
Chi,
Did you present length naked in your seminar 8 years ago?? Comic relief after the tough loss by the Gints.
njrebear,
I know, I’m getting off topic. Why the hell do you think Listen went to bed?? However, these topics will have a major effect on RE. If this is the beginning of draining of liquidity, again if, it will have a major impact on RE. As opposed to the soft landing/at or near the bottom camp, it will be; Houston we have a problem.
To the naysayers of this board:
It is EXACTLY this type of mindless pablum in the mainstream media that makes this blog an essential read. This information is sourced from Bloomberg no less. I am actually shocked —— realize the focus is on VOLUMES and economic activity – not prices – still a freakin’ crock of lazy reporting….
http://www.bloomberg.com/apps/news?pid=20601103&sid=aj_uUcvveZy8&refer=us
Bost: do you remember the article I posted on China’s banks a few weeks ago? I really think things will blow up, but 2007 and 2008 are not the time. We are going to have a mess around here in 2007. However, I think the real recession induced carnage will be saved for 2008-2010. We never really paid back THE MAN for the 2000-2002 clubbing we deserved. So many people are completely unprepared, and that reality is only going to make the financial cesspool worse. Oh don’t worry, Congress will bail us out with some “feel good” legislative nonsense when the votes are on the line :-P
bc bob, i’ve been hearing the imminent collapse of the world financial markets for what seems like forever now, just like when the savings rate went negative or the yield curve inverted it was doomsday for the US economy. you’re starting to sound strangely like Roach, shouting in the wilderness with very few ears listening.
carry or piggyback? if by carry you mean carry trade and piggyback you mean mortgage loans i’d say the more ominous threat would be the carry trade without contest. the hypothetical situation the doomers always quote is the unwinding of one major firm causing a domino effect bringing down the world markets. i know a bit about the subject but i’m by no means an expert but i have a hard time believing such a thing.
oops hit submit by accident. i don’t believe the unwinding of the carry trade will have an armageddon-like effect because i believe it will unwind slowly and i see nothing going on today to alter that outlook.
BC Bob Says:
January 7th, 2007 at 9:09 pm
Chi,
Comic relief after the tough loss by the Gints.
Bost: maybe this will cheer you up
http://www.mlb.com/NASApp/mlb/scripts/mediaplayer/mp_tpl.jsp?w_id=343516&w=2004/open/topplays/archive07/070104_bosnya_jeter_catch_350.wmv&pid=mlb_tp&cid=mlb&fid=mlb_tp350&v=2&mType=w&urlstr=&murl=
Chi,
Yes, regarding the article.
I don’t know if things will blow up, if they do, I agree with your time frame. There is a serious payback upcoming. We’ll gravitate from I/O’s to IOU’s. The table is now being set, appetizers are now being served. The only way to avoid it, is a serious retrenchment caused liquidity constraints. Either way, not a pretty picture. The wild card, don’t underestimate the fed/cartel. By the way, who is that Caribbean Trading Co.??
bc bob, in regards to #267, i believe the core reason for the global excess liquidity is the FCB’s purchases of US assets partly because of savings/lack of investment in their own countries and to keep their currencies in step with the US dollar. pray tell where are the chinese workers going to invest their savings? tightening won’t do much in this scenario and that’s why i believe we’re not seeing a budge on the long end after so many consecutive rate hikes at home. the account imbalances we’re seeing today is a natural extension of this symbiotic relationship.
for every “Reechard The Blue Sky Hearted” we have others who walk around with placards that read The End of the World is nigh…
http://www.bloomberg.com/apps/news?pid=20601087&sid=as.fCPN.CCkM&refer=home
“i know a bit about the subject but i’m by no means an expert but i have a hard time believing such a thing.”
Richard,
I am not promoting a world collapse. However, to avoid it major pain will be inflicted, not today nor tomorrow but…..??
I am same as you, not an expert. However LTCM was.
Great now we have the “Curse of the Seven”
1987: Stock Market Collapse
1997: Asian Flu
2007: CryBabyWannaBeReechard’s Revenge
i’ll admit minor changes in excess liquidity (e.g. increased savings) could have profound effects on illiquid assets like real estate and i do believe people will eventually start savings more and spending less, however i believe the situation will be gradual and the housing market will experience what is termed a soft landing. by soft landing i mean flat to slightly rising prices. do i believe the historical relationship of house prices to incomes will once again rule the roost? no, because i believe the fundamentals of the game have changed. yes it is different this time in some respects which is too much to get into at this time.
“do i believe the historical relationship of house prices to incomes will once again rule the roost? no, because i believe the fundamentals of the game have changed.”
Richard,
Don’t want to get into it either. Quickly,for 110 years incomes drove RE. That changed from 2001-2005. In all markets, fundamentals never change, just the characters.
“fundamentals of the game have changed. yes it is different this time in some respects which is too much to get into at this time”
I understand and appreciate your point here. However, also recognize that the liquidity glut has allowed some of these financial “innovations” to be developed and mass marketed. You may find our friendly neighborhood security regulator and bank regulator interfering with the “new paradigm”. Needed? That is for us to discuss. Ultimately though, it will be rammed down our throats by those interest in “protecting the innocent”. Yeah right.
ChiFi,
From your bloomberg article link:
“They may not be taking off the top price, but by throwing in …mortgage buy-downs, they are making it more affordable to buy a house,”
Isn’t a mortgage buy-down essentially taking down the price (at least from the standpoint of how much the buyer ends up paying monthly)?
Any advice on where to read about the benefits of making a larger down payment vs. buying points on a mortgage? Assuming you have a large enough down payment for a conforming loan, is there any reason to make a larger down payment if you can afford the monthly payment at that point? Are you better off buying points instead so you can at least write it off?
njbear,
Reread my post: I was talking about the speculation and conjecture you engage in about the person who disagrees with anything you say. If someone posts a contrarian view you immediately assume they are a broke homeownner or a RE agent. I am neither.
What speculation and conjuncture are you talking about? All i can see is that your own speculation has caused you to turn a blind eye towards the real speculation and conjuncture.
chicago, it’s a symbiotic relationship. the availability of money via our emerging trading partners recycled back into our economies has definitely helped spur the innovations for people at home to borrow more cheaply and with more versatile terms than ever before. that’s the new paradigm and while i don’t deny there will be some pain felt as americans realize they can’t live on this level of debt forever this new way of the world won’t allow some historical relationships to manifest themselves again as the rules of the game have changed.
Any advice on where to read about the benefits of making a larger down payment vs. buying points on a mortgage? Assuming you have a large enough down payment for a conforming loan, is there any reason to make a larger down payment if you can afford the monthly payment at that point? Are you better off buying points instead so you can at least write it off?
Seneca [by the way, I am more of a Lake Cayuga fan] – hate to sound like a lawyer, but it depends – don’t look at this decision in a vacuum
Throwing on my financial planner hat – many people target being able to retire without a mortgage – maybe that might help you focus on an answer
Points – you BETTER be rock solid about staying in your home until you can recoup the outlay – AND DON’T FORGET TIME VALUE OF MONEY
Chi-
Didn’t see your post about China banks…can you repost. Would like to read it.
JM
Subject: NYT Article: In the New China, Banks Still Cling to Old Ways
ECONOMIC SCENE; In the New China, Banks Still Cling to Old Ways
By AUSTAN GOOLSBEE
Austan Goolsbee is a professor of economics at the University of Chicago Graduate School of Business and a research fellow at the American Bar Foundation. E-mail: goolsbee@nytimes.com.
Perhaps nothing seems to represent new China more than the gleaming, ultramodern headquarters of the Industrial and Commercial Bank of China. Its laminated glass exterior was intended to showcase the modern, transparent face of China’s largest bank. Inside the building, though, many elements hark back to more traditional forms. Wave patterns in the lobby floor and the circular interior space recall a traditional courtyard garden.
The announcement this week of details of the planned initial public offering of the bank — potentially the largest offering in financial history, topping $21 billion — has foreign investors in a frenzied clamor to get a toehold in the booming Chinese financial market. Apparently, Chinese banking, like Chinese manufacturing before it, has arrived.
But according to the work of the economists Anil Kashyap at the University of Chicago Graduate School of Business and Wendy Dobson at the University of Toronto, banks in the new China may look modern on the outside, but they are not so far from their traditional roots. Their behavior seems closer to the 1990’s crony capitalism of neighbors like Indonesia and Thailand, which engendered financial panics, than to that of international financial centers like London and New York.
The study of Chinese banks by Professors Kashyap and Dobson, titled ”The Contradiction in China’s Gradualist Banking Reforms” (which is available at http://faculty.chicagogsb.edu/anil.kashyap/research/chinabanksoctfullpaper.pdf), raises some troubling issues about the four big government-owned Chinese banks and, by implication, their initial public offerings.
The basic problem, they say, is that the Chinese government owns the banks and will continue to control them after the public offerings. The government has always exercised ultimate authority over the banks’ lending decisions and, historically, has forced them to lend to corrupt and inefficient state-owned enterprises. That leaves the banks with a large share of loans that, effectively, default. Despite the recent reforms, that basic interference continues.
Because the government now badly wants to modernize its financial sector and bring it up to Western standards, it has made a clear attempt to clean up the balance sheets of the big banks in preparation for their public offerings. The Industrial and Commercial Bank received a direct infusion of something like $30 billion from the Ministry of Finance and the Chinese central bank. The government also reduced Industrial and Commercial’s ratio of ”nonperforming loans” to less than 5 percent from 34 percent in 2000 by taking $35 billion in failed loans off its books and giving them to specially created ”asset management companies” (which, suffice it to say, will probably not be having public offerings anytime soon).
At the same time, however, the government desperately wants to prevent a breakdown of regional stability and an overwhelming mass migration of workers out of rural areas (especially before it stages the Olympics in 2008). One major way it does that is by using bank loans to keep afloat the major employers in those remote areas: state-owned enterprises. Those are the same employers that failed to pay back the previous loans. Lending them money another time will, of course, mean that a large fraction of the bank’s loans will again go sour. By that point, though, the bank’s initial public offering will be long completed.
As Professor Kashyap put it in an interview: ”They can move the toxic stuff off the bank’s balance sheet but the key issue going forward is whether the same people are in charge of credit evaluation. The government owns them. If someone from the party calls up and says, ‘Give money to State Store No. 6,’ are they going to say no? If not, then the bad loans will pile up again.”
He cites the case of a detailed examination by the consulting firm McKinsey & Company of the loans by one Chinese bank to companies in a particular region. For some 60 percent of the loans, the bank had no record of what collateral the borrower had given, what industry the borrower was in or even which bank official had made the decision to lend the money.
The Dobson-Kashyap study suggests that despite a laminate of reform pasted onto the banks in preparation for their public offerings, loan behavior looks quite familiar. The government-run banks continue to lend intensively in regions that have high shares of state-owned enterprises. Some of the highest lending rates are to remote regions like those bordering on Tibet, where the government wants people to stay.
The authors do admit that so long as China maintains the torrid growth rates of the last 10 years, the problems of the banking system will largely go unnoticed. Only with a slowdown may these flaws ignite a crisis.
But they are wary about China’s ability to sustain its growth rates. They point out that astounding rates of industrial investment — on the order of 43 percent of gross domestic product — have largely driven the current boom and that these investments have been artificially stimulated by cheap government loans. They point out that in the steel industry, for example, China has 120 million tons of unused capacity and yet is investing in another 70 million tons.
According to Professor Kashyap: ”If there is a slowdown, there will be a day of reckoning. It might be in a long, long time or it might be the day after the Olympics.”
Back in Beijing, optimists turn to the Industrial and Commercial Bank building as a symbol of the bank’s future. It looks transparent and feels decidedly of new China. Yet one cannot help noticing that it is situated only a few blocks from the seat of government in Beijing and the huge painting of Mao in Tiananmen Square. The real estate agent’s refrain hangs over the bustling air of the bank’s interior courtyard. No matter where you are these days, it’s still about three things: di dian, di dian, di dian (location, location, location).
Copyright 2006 The New York Times Company
Anyone go to any open houses this weekend? I saw several signs, but was to busy having fun with my kids to bother.
JM
BC Bob, ChiFi,
So how come Bill Gross, one of the most astute bond guys out there, sees ffr @ 3%-4.5% by year end?
Because it serves his interests to have people piling money into PIMCO Total Return on a call of a bond rally than listening to the fed
Clot:
I do agree that he was one of the few to call the Ten pushing back down through 5% in the 2H2006. My call way back was a pair of 6’s. FF 6% & the Ten 6%
Chi-
Thanks for posting. I was having a conversation with someone who just came back from living in China for several years. My take was pretty much in line the article regarding the government and how they are building on top of an old/very inefficient system.
Will be interesting to see what happens if there is a slow down…
JM
Clotpoll Says:
January 7th, 2007 at 10:51 pm
BC Bob, ChiFi,
So how come Bill Gross, one of the most astute bond guys out there, sees ffr @ 3%-4.5% by year end?
Clot: to be clear – this is a recession call
BklynHawk Says:
January 7th, 2007 at 10:56 pm
Chi-
My take was pretty much in line the article regarding the government and how they are building on top of an old/very inefficient system.
Brooklyn: not so much inefficient as motivated by reasons other than why one runs a bank – which is a scary for stockholders and businesspersons depending on this economy of this country.
Seneca (#295)-
The value of a buy-down is best determined after pegging how long you intend to occupy the home. Generally, the longer you intend to stay, the more value the buy-down offers.
Buy-downs offered via seller concession are usually a big win for the seller, as conforming Fannie Mae loans allow for a maximum concession of 3% of the purchase price. Let’s say a buyer and seller strike at 300K on a property, and the buyer is going for a 270K mortgage. If the seller pays 3 points, or $8,100, he’s bought the buyer’s mortgage down one full percent (probably from around 6.5% to 5.5%. That’s a huge monthly savings for the buyer, and the seller has accomplished a sale with a concession of $8,100 vs. an outright price reduction of possibly 10-15K.
BC Bob,
I actually like your posts. Keep them coming.
ChiFi-
Bonds bore me, but I never got the idea Mr. Gross was that crass. And, yeah, it was a flat-out recession call.
Something sick deep inside me is really curious to see what a recession with white-hot tsunamis of liquidity, massive M&A deals and corrupt, power-mad Chinese bankers will look like. Wouldn’t it be funny to see some LBO outfit take down Home Depot…just at the point when all they’ll be able to sell is plywood for boarding up all the abandoned homes that will be out there?
All this talk of “balance” and an “alternative view” on the housing market is utter nonsense from the realtor/flipper/recent buyer contingent.
Tell me how the outcome from this can in any way be balanced:
http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
This is a forum based on facts. The facts support one scenario: dire straits for sellers who have mentally cashed checks for what their neighbor sold for in 2005.
Not gonna happen — the boom is over, the bust is well underway.
UnRealtor-
The only talk of “balance” that is unwarranted is that which is in reference to your outlook.
If every seller and buyer out there were in the same position, you’d have a point. However, not every seller is out to match- or top- ’05 prices. The number who are is dwindling, thru permanent expiration/withdrawal from the market or more forcible actions, such as foreclosure.
On the flipside, not every prospective buyer out there is dug into his rental-bunker like so many members of the League of Dorks here. It is interesting to note so many posts expressing frustration at how slowly prices are dropping…even though the seller capitulation and price unwinding in the latest downturn have been lightning-fast by historical comparison.
Long story short, the current environment doesn’t have the look or feel of a bust (and yes, I’ve been through one). There’s still enough people out there wanting a home now to sustain things at a middling, workable level.
I do dislike anecdote, but just to really pi** you off: the phone has been ringing off the wall in my office since 1/1.
http://www.levy.org/default.asp?view=publications_view&pubID=108580b2346
Are Housing Prices, Household Debt, and Growth Sustainable?
1] Price to rent ratio – 21 (Historical 10)
2] Renters rent obligation percent – 31% (Historical 24%). Rents cannot grow as there is no room
3] 5% drop in prices will wipe 1 Trillion dollars in equity.
4] Real meadian price of homes will drop to 2003 level per offical scenario. 1998 level if in “slow-growth” scenario.
5] Household borrowing will increase to 18% of GDP in 2010 based on official scenario. Slow growth scenario, the borrowing will drop to 2000 level [10% ].
6] Rental vacancy rates – 10%. [Historical 6%]
clotpol,
“not every prospective buyer out there is dug into his rental-bunker like so many members of the League of Dorks here ”
I thought you were only interested in bringing sellers and buyers together. Why is it then your name calling is restricted to buyers?
LOL clot;
I agree with you, people are looking to buy and I think they are some deals to be had already if you do your homework.
On the flipside, not every prospective buyer out there is dug into his rental-bunker like so many members of the League of Dorks here.
haven’t heard this one in a while
http://www.merriam-webster.com/cgi-bin/audio.pl?dork0001.wav=dork
There’s still enough people out there wanting a home now to sustain things at a middling, workable level.
Clearly. I drove through South Bound Brook yesterday. POS town, if I may say so. There are these brand new townhomes/condos on Main St. Stylistically they look a lot like the high-density developments in Edison. IOW, ugly. But driving by them in the evening, I got the sense they were all or almost all full.
headmaster dork
http://www.merriam-webster.com/cgi-bin/audio.pl?dork0001.wav=dork
“League of Dorks” is classic, btw.
njbear,
where is the rental vacancy rate 10%?
bumble#$%^ egypt?
I moved from NYC where they were
syncmaster Says:
January 7th, 2007 at 11:48 pm
Clearly. I drove through South Bound Brook yesterday. POS town, if I may say so.
sync: hate to be a jack—, but did you check out where the highwater marks are on the buildings? :(
corrected
chicagofinance Says:
January 7th, 2007 at 11:48 pm
headmaster dork
http://www.merriam-webster.com/cgi-bin/audio.pl?dork0001.wav=grim
ugh
http://www.merriam-webster.com/cgi-bin/audio.pl?grim0001.wav=grim
914]
click on the link and read the report.
NJREbear (314)-
Because all you permabears have cornered the market on calling sellers names (“grubbers” is my fave…I’ve even got my agents using it now!). I’m just trying to blaze new territory.
BTW…flooding is the least of concerns in that South Bound Bk development. It’s built on a chunk of toxic waste that could kill the Swamp Thing.
tomorrow’s WSJ – I apologize, because I know people hate it when you post an entire article, but it is a paid service, so you wouldn’t have access with a link
CREDIT MARKETS
Grading Bonds on Inverted Curve If Investors Are Betting On Lower Rates, Does a Recession Loom? By MICHAEL HUDSON January 8, 2007
The bond market is having relationship issues that are getting harder to ignore.
Normally, yields on long-term government bonds are higher than yields on short-term ones. Investors demand a bigger return for the risk that comes with holding an investment that takes longer to repay.
The relationship has been upside-down since July, however, with yields on short-term U.S. Treasury bills exceeding those on long-term Treasury notes. Late Friday, the yield on the three-month Treasury bill stood at 5.05%, well above the 4.648% yield on the 10-year note.
This unusual state of affairs — known as an inverted yield curve — has gone on longer than many economists expected and has some wondering whether the bond market is signaling that the economy itself could turn upside down.
Even non-Wall Street types are starting to notice. Charlotte Observer sports columnist Rick Bonnell likens an inverted yield curve to a basketball player whose shooting percentage is lower at the free-throw line than from the field. It’s uncommon and nerve-wracking.
Just as hoops star Shaquille O’Neal’s ineptitude at the free-throw line gives his opponents strategic information — foul the big man to prey on his weakness — a yield-curve inversion may offer insights about the economy’s own Achilles’ heel.
Yield inversions, many analysts say, are harbingers of hard times. When bond investors see a recession coming, they tend to buy long-term Treasury securities for two reasons. First, they are safer than stocks. Second, they are appealing when inflation is low, and recessions tend to beat down inflation. The buying that comes with recession fears drives down a long-term bond’s yield, sometimes below the prevailing yield on short-term Treasury securities.
The market, in effect, is betting that the Federal Reserve, which dictates short-term rates, will have to cut its overnight fund rate to boost the economy, and investors are pushing long-term rates down in anticipation.
Inverted curves often come toward the end of Fed rate-increase cycles. Fed Chairman Ben Bernanke halted the central bank’s latest rate-increase campaign in August.
The Fed’s overnight funds rate now stands at 5.25%. “The market is pricing in that the Fed funds rate is not going to stay at 5.25% over the next 10 years; it’s pricing in that it’s going to be considerably lower,” said Bill Irving, who runs a long-term Treasury-bond-index fund for Fidelity Investments.
Some economists doubt the yield curve’s effectiveness as a recession-forecasting tool. They think long-term rates are exceptionally low right now for other reasons, including lower long-term expectations about inflation and growing demand for U.S. government bonds from foreign investors needing somewhere to park their money.
But those who think highly of the yield curve’s predictive power have history on their side. Seven times between 1965 and 2005, yields on the 10-year note have dropped below those on the three-month Treasury bill for an extended span. In six of those instances, the U.S. economy went into recession soon after.
For example, the 2001 recession was predated by a yield-curve inversion that lasted from July 2000 to January 2001. In the one time when a recession didn’t follow, in the mid-1960s, there was still a sharp slowdown in growth.
“The yield curve gives you information that you should pay attention to,” said David Roberts, chief economist at Dominion Bond Rating Service.
When the yield curve inverted for two weeks last February and March, the inversion between long-term and short-term rates was so narrow and lasted so briefly that many economists dismissed it.
The current inversion is harder to ignore. The disparity has grown deeper and has endured for months; the three-month/10-year inversion is entering its 26th week.
“The longer it persists, the more of a puzzle it becomes,” Mr. Roberts said.
One economic-forecasting tool using Treasury yield-curve data pegs the chances of a recession at nearly one in two. The model, which was developed by Fed economist Jonathan Wright, takes into account yields on 10-year and three-month Treasury securities as well as the Fed’s overnight funds rate.
Another forecasting model — developed by Federal Reserve Bank of New York economists using only the 10-year/three-month spread — puts the chances of a recession in 12 months at just under 40%.
Those predictions are at odds with the consensus among economic forecasters.
A recent survey of economists by The Wall Street Journal pegged the chances of a recession within the next 12 months at 27%.
Two researchers who focus on recession forecasting, Lakshman Achuthan and Anirvan Banerji of the Economic Cycle Research Institute, argue that the yield curve is overrated as a recession harbinger. They note that the yield curve failed to invert before recessions in the 1950s and early 1960s. They also point to the misleading signal sent in 1966-67, when a lengthy inversion didn’t precede a recession.
Messrs. Achuthan and Banerji argue that the economy and financial markets have changed greatly in recent years.
They note that pension funds, oil-producing nations and other cash-laden institutional investors around the world have been pouring money into long-term Treasurys, which they say creates “artificial” pressure that pushes long-term bond prices higher and their yields lower.
“Once the dust settles and we look back a year or two from now, we’re going to see [the inverted yield curve] as a false alarm with respect to a recession,” Mr. Achuthan said.
Dominion Bond Rating’s Mr. Roberts also isn’t predicting a recession. But he said the yield curve’s long inversion does sound a cautionary note for him — and should do the same for anyone who is trying to figure out where the economy is going.
“I think that a prudent businessperson would say: ‘Maybe I should look more carefully at some other sources of information. Maybe I should be more skeptical,’ ” he said.
due to the paradigm shift i talked about above, one of the consequences is low long term rates are here to stay. actually they aren’t low historically, only when compared to 3 decades in our not so recent past. this will give the RE market some support. to think the banks will shut off the money spigots is to be in denial about today’s dependent relationship of the global players. i say recognize it for what it is and profit from it. frankly i don’t think we’ll see 8% long rates again if ever.
chicagofinance & clot,
I always thought it was Bound Brook and not South Bound Brook that had flooding problems. I could be wrong.
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/05/AR2007010500839.html
Sync (328)-
They both spend significant amounts of time underwater.
” to think the banks will shut off the money spigots is to be in denial about today’s dependent relationship of the global players”
Do the names SecuredFunding , Preferred Advantage, MLN, Harbourton Mortgage Investment Corporation, Ownit Mortgage, Sebring Capital Partners or Meritage Mortgage ring a bell?
That’s interesting because that new development is right on the water. Pricey for the area, too. A 3br th with basement+garage goes at near 400.
Broker Violations Next Up for State AGs
http://www.originationnews.com/plus/feature/
WASHINGTON–The origination practices of loan brokers may soon fall under the microscope of the states if one state attorney general gets his way.
Economy Ready to Rebound With Worst of U.S. Housing Slump Over
“The worst of the drag on the economy from construction is behind us,” says Chris Varvares, president of St. Louis-based Macroeconomic Advisers Llc. As a result, he says, growth should pick up to an annual rate of more than 3 percent in the second quarter, from 2-1/4 percent in the current quarter.
That would lessen pressure on the Federal Reserve to reduce interest rates…
[…]
“There are early indications of better times ahead,” Ara Hovnanian, chief executive officer of Red Bank, New Jersey-based Hovnanian Enterprises…
[…]
Behind the improving outlook: More people are able to afford homes. The rate on a 30-year fixed-rate mortgage has remained under 6.2 percent since mid-November, down from 6.8 percent in July. … The median price of existing homes, which account for 85 percent of the housing market, was down 3.1 percent in November from a year ago, the fourth consecutive monthly decline.
[…]
In addition, incomes are rising after years of stagnation. Weekly earnings adjusted for inflation were up 2.6 percent in November over the same month a year earlier…
[Behind the improving outlook: More people are able to afford homes.]
.6% reduction in rate will just save you 150 dollars a month! 2600 Vs 2450 on a $400K house.
[In addition, incomes are rising after years of stagnation]
NJ state reported that the average YOY wage gain till last decemebr was $4 a week! Yeah that will help affordability. Wage increase after compensatin for inflation is Negative.
Wow..I missed out this weekend on the comments.
I agree with listentothecrybabywannabehomeowners. Real Estate only appreciates. Buy now or be priced out forever.
LOL
Just want to thank everyone for what I think was a very successful weekend discussion. While 335 comments isn’t a record (we have hit 400 on one or two prior occasions) it certainly illustrates the passion and emotion that this topic can generate. While I don’t particularly care for the insult and personal attacks, I do think they serve as an important indicator of the psychology of the market, and shouldn’t be ignored. While I’ve always hoped that we might be able to tone down the attacks in exchange for a more cooperative discussion, I’m not sure that we would have the vehement participation that we currently have.
jb
“So how come Bill Gross, one of the most astute bond guys out there, sees ffr @ 3%-4.5% by year end?”
Clot,
I discussed the huge dicotomy on the Street. Goldman sees 4%, JP 6%. I wish I knew. I would then be sitting somewhere else.
Burrow deeper into those rental-bunkers! There will be plenty of cheap homes to choose from after the rapture.
LOL
Prices double in 5 years while income remains the same. Many people who bought before the bubble are now patting themselves on the back for having the financial foresight to “invest” in a home while the real reason they bought in the first place was to have a place to live and start a family.
Sorry, $600k for a crap cod which sold for $250k 5 years ago doesn’t compute.
Grim-
This is an uncivil state. The US is an uncivil nation. We march into parts of the world of which we have no knowledge, blow up everything in sight and proclaim we’re there to help people. The participants here are not exactly Chamber of Commerce types. There’s a super-valuable asset class on the line, and deeply-entrenched interests on both sides.
To edit too much of the venom would be to miss the story.
frankly i don’t think we’ll see 8% long rates again if ever.
Just wait for inflation to really settle and bank realizing they are loosing “real”money value every day – load will be right up there next month.
OR dollar to euro not to hold up = again interest rates wil compensate with raise…
Or US keeping negative trade balance …..
Just tell me what is the “positive” factor in the economy???
PS to Grim-
Don’t give up on that house so quick. I can’t wait until the day someone here calls you a bagholder.
Richard,
Your scenario, regarding the liquidity, is certainly plausible. I am not promoting disaster. I just think it adds value to bring to the table. You may be right, there may be a slow unwinding of the trade. Does this then mean a slow melt up in rates??? My question; [I don’t know the answer, nor pretend to] How much of this borrowing is currently financing a losing position?? Also, if there is a hiccup, things don’t move gradually on wall street. Market reversals that took years in the past, seem to happen much quicker today. What happens if the bell goes off, at blackboxes simutaneously.
It is also possible that the carry trade can be a non event, the discussions regarding this may be over subscribed. That being said, there are many mine fields out there. There was a ton of $ made last year in the stock market, much more in overseas markets as compared to ours. It may be prudent if individuals are still long, to go out a certain period of time and buy protection.
Discussuions like this are balanced and constructive. Your post regarding this leads one to think. That’s what makes this useful. Thanks for responding. That other guy ,listen, took a high fastball close to the head and ran out of the batter’s box. Until he offers something of substance, like you have done on this topic, I would not align myself with him. He has been exposed, rather quickly.
One question, we will never see 8% again?? Isn’t that somewhat radical???
By the way, sorry for talking so much about the excess liquidity/carry trade. I know some question why the topic, since this is a real estate blog. However, I feel that the future consequences, regarding this, may have as much to do/or more with RE than the talk of the subprime.
BC Bob-
With you on that. History teaches that a financial world awash in liquidity eventually finds the dumbest possible thing to do with it. In that respect, I think this liquidity bubble will come to the same demise as those that have preceded it.
That’s my biggest fear, and possibly that of others who post here.
Clot,
Yeah, I know where you are coming from. The subprime talk doesn’t hold a candle to the possible consequences of this one. The theme last year was liquidity, liquidity. Does that change this year to liquidity chasing far too few opportunities??? I really think it is prudent, if there were large gains and still holding, to buy some protection. Suppose I am long multi nationals and the Dow goes up 20% this year, but I lost 5% on my hedges. Do you think I’ll complain??
Clot,
Had a chat with the listing agent last night. Nice fellow, but I didn’t know what to make of the conversation.
He mentioned to me that the house was on the market for over a year, yet I see no MLS history of that. He also mentioned that the asking price has been cut over $100,000 in the past year. Again, no history of the listing or those price changes.
Asked him if he would cut his commission on a dual disclosed, he said he couldn’t had too much tied up in advertising over the past year. Really didn’t make much sense to me, as I was offering him an additional slice of the pie. Informed him that if he didn’t want to go down the dual-disclosed route, I’d simply be representing myself as buyers agent.
Clot, did you buy recently?
jb
Grim,
I bought in July of ’05, out of the necessity of getting my kids into a school that didn’t look or operate like a penitentiary.
However, I had a very real sense that the market was decelerating, so I bought well under my means and picked an “orphan”, vintage-1880 (fortunately, my wife and I love old houses) home that had been overpriced and had languished on the market for 100+ days. I represented myself, “buried” my side of the commission in the deal and spoon-fed the seller an extreme lowball (his agent worked harder for me than for him).
Since the purchase, our house’s market value is about flat with the sale price, so I figure we did OK. We basically avoided a nasty year’s worth of falling value. Even if values drop further- which I think they will- we’re not going anywhere.
Grim, where are you hanging your license? Most companies demand a significant cut of the commish from agents trading their own accounts. Make sure you don’t save on the purchase, only to turn around and hand a big chunk of those savings to some schmuck of a broker.
My inbox and voicemail is constantly filled with starving realtors hoping to pull in a commission check.
Even the ‘top performer’ realtors have been getting touch:
“Are you ready yet?”
“There are so many properties to choose from.”
“Here’s another great house, do you want to see it?”
“Hello, I met you last year at an open house, are you still looking?”
That last one may have been Clot.
Realtor™ Clotpoll writes:
“I bought in July of ‘05…”
Right at the 100-year-peak. No wonder you’re on here trolling — negative equity sucks.
UnRealtor (351)-
Hey Genius, explain the negative equity in a 475K home purchased with a 360K mortgage.
Frankly, I’m surprised you would not leave a fictitious e-mail address on an open house sign-in sheet.
Continue to enjoy reveling in your self-delusional state of hatred.
“We march into parts of the world of which we have no knowledge, blow up everything in sight and proclaim we’re there to help people.”
Japan and Germany worked out fine — more US “help” to come for all fascist regimes hoping to acquire nukes and other lovely technologies that can kill Americans en masse.
Clot,
Currently have two candidates brokers.. My requirements are as follows:
1) Allow me to present any offer as I see fit, insult or not.
2) Allow me to cut my own commission as I see fit.
3) Pay no fees other than those directly associated to my own activities.
4) Allow me to cut the full buy or sell side commission on my own deals.
jb
Unrealtor (352)-
Please do not flatter yourself by believing I post here in some attempt to change the minds of you and your League of Dorks.
However, it would make for an interesting study to determine what political party or media outlet brainwashed you and your crew into believing that the misfortune of others translates into success for you.
“Hatred”? I don’t hate you, but you certainly seem an angry, pompous, tool.
As to your question:
“explain the negative equity in a 475K home purchased with a 360K mortgage.”
Simple: Bought July 2005 for $475K — able to sell for $450K today.
Neat, huh?
UnRealtor-
That’s what I expected you would say. And, you would possibly be right…IF I were looking to sell today.
Even if this were my situation (BTW, it is not; my home appraised at 520K in July of ’05 and I paid 475K, so if I were to sell today, I’d probably draw about 475K), I would not be concerned over the day-in, day-out fluctuations of the current market. I’m not looking to sell anytime soon. If I’m in negative equity in 12 years (the soonest I’d sell), then I’ll have to take my lumps.
I’m not an angry person at all. My life is extremely ordinary; that’s why I derive so much pleasure from conversing here with people I’ve never even seen. However, I find the whole “zero-sum game” mentality of you and the LOD here fascinating.
Gas-like odor permeates Manhattan
listentothecrybabywannabehomeowners
My concetration is on Class A and B product in the commercial sector. Feasibility Studies, valuation analysis, etc. I also worked in placing commercial debt, raising equity and some structured finance.
I consult some of the major players in the NJ real estate market I have to admit, my experience in single family home market is quite limited. However, many of the same fundamentals / market analysis come into play when dealing with the residential sector. There are and were many idiots thinking single-family “investor” homes / condos were a good long term investment. The numbers in most areas of NJ have not worked for a long time (probably before 2003). Now that the appreciation days are over and people begin to realize their income is not meeting their debt service. The time to sell is increasing. For me it’s like watching the movie when you already read the book!!!!
Why is residential real estate surging in NJ Cities? Answer: Because you have so many poor uneducated still buying for investments. Can someone repeat this in a few languages please….(Someone needs to look out for these people!!) (It sure the hell isnt their own!!) You know who you are!
I think “cheap money” and the “know-nothing realtors” have rooted the NJ housing market into a very bad situation for years to come. Remember “Pigs get slaughted!!”
Buying a home in New Jersey at this point is like burning your money. Unless private sector incomes increase substantially over the next few years and someone in Trenton figures out that they need to stop spending, NJ is going to be in some serious trouble. You donot need to be an analyst to figure this out!!!
Commercial Re Consultant: But the realtors all say we are close to NYC, and so it does not matter,and our schools are 4th best in the nation,and so it deos not matter, and we are creating new low paying jobs, so the market will remain healthy, and we have now soft landed on a permanently high plateau.
Not only that, but we renters are now in our league of our own, we are dorks.
I recently observed a property appraised at over $1M in 2005. Just went into contract in the mid sevens.
And transaction costs on $475K are how much?
You have negative equity today — whether that translates into an actual net loss depends upon when you sell, and for how much.
There’s no “zero sum gain” argument coming from me (or anyone else that I’ve seen here) just numerous observations of buy high, sell lower.
Markets go up and down, which seems to only surprise realtors, and greedy homeowners hoping for what their neighbor sold for in Summer 2005. Those were the days.
In NJ you don’t own a house, the house owns you. Holds true even for people who have paid off their mortgages but now have to deal with 10 – 20k a year property taxes.
Seems like everyone is “renting” land in the form of property taxes from the slum lord Trenton.
thatbigwindow: it does not matter, we are close to NYC, and our public schools are the 4th best in the nation, although our state cannot create any good jobs. But who cares.
I am giving this thing another year,and at that point, who knows, either throw in the towel and buy (low ball of course) or buy something in Delaware or NC, as a potential retirement home.
When we start to see office buildings being constructed like we have big box retail buildings and chain restaurants then we can say New Jersey is back on track, until then: rent, save your money and considering moving to North Carolina or Georgia.
I have a question and this is sorta off topic
My mortgage int plus all the other deductions are too small to get me above the standard deduction. Now I would much rather pay 1 dollar less to get 15 or 25 cents back.
But can I carry foward interest/deductions?
UnRealtor-
Keep your day job. You don’t have the math skills to do RE. Negative equity= total obligations on home totaling more than potential proceeds from a sale. Even IF I had some equity shaved from my original position (let’s say my house is only worth 450K), my mortgage payoff is only 360K. Throw in, say 18K , for commissions, taxes and fees…that leaves 72K.
Moron.
Bergenbubbleburst (36)-
Being a renter doesn’t put you in the Dork camp. Waiting- and hoping- to profit from the misfortune of others does.
Being a renter when the cost of owning is higher is a good idea. Then your landlord has to fix your fridge when the defrost timer does not work :)