From Inman News:
Recession, foreign debt seen as wild cards for ’07 recovery
Housing and finance experts say lower interest rates and a healthy economy could help housing markets rebound in 2007.
But there’s no guarantee that a surge in oil prices or another unexpected jolt to the economy won’t send the country into a recession, with long-term interest rates soaring even as the Federal Reserve cuts short-term rates to encourage borrowing.
The slowdown in housing helped keep inflation in check in 2006, allowing the Fed to take a break from a string of 17 straight increases in the short-term federal funds interest rate since 2004. Many analysts now expect the Fed to cut the benchmark short-term interest rate in 2007 to avoid curtailing economic growth.
Financial analysts at UBS and Oxford Analytica are forecasting a 125-basis-point reduction in the federal funds rate by the end of 2007, to 4 percent. Although lower interest rates could serve as an incentive to potential home buyers, long-term rates don’t always follow the Fed’s lead.
…
If the Fed does leave the federal funds rate unchanged, long-term rates could be headed back up in 2007. That’s the view of economists at the Mortgage Bankers Association, who in their Dec. 11 economic and mortgage finance forecasts predicted the federal funds rate will remain unchanged through 2008, but that Treasury yields and mortgage rates will climb.MBA economists predict the average interest rate on a 30-year fixed mortgage will rise from 6.2 percent in the first quarter of 2007 to 6.5 percent by the third quarter, and hit 6.6 percent in early 2008 — an increase of 40 basis points in a little more than a year. That would add $23,000 in interest payments over the life of a $250,000 mortgage loan, and raise the monthly payment from $1,530 to $1,597.
The MBA expects mortgage originations to decline 11 percent from 2006 levels to $2.21 trillion this year, and fall by another 7.4 percent to $2.05 billion in 2008. The MBA also expects the unemployment rate to climb slightly, from 4.8 percent at the end of 2006 to 5 percent by the third quarter of 2007.
The worst-case scenario for the housing industry in 2007 would be a recession and layoffs, coupled with a rise in long-term interest rates. While a recession would likely prompt the Fed to jump-start the economy by cutting short-term rates, long-term interest rates might go the other way if foreign investors in U.S. debt — including China, Russia and oil-producing countries in the Middle East — decided to cut back on their purchases of Treasury bonds.
…
“If the United States does not begin to take steps to reduce its unsustainable dependence on foreign borrowing in an orderly way, there could be a run on the dollar and that could precipitate an international financial crisis and a sharp increase in interest rates,” Democrats warned in a report, “Relying on the Kindness of Strangers: Foreign Purchases of U.S. Treasury Debt.”
…
“Money is as loose as it’s ever been in modern American history — way too loose,” Rosen said. “I can’t imagine them cutting interest rates unless we have an actual recession.”Rosen predicts a 35 percent to 40 percent chance of a recession in 2007, and thinks mortgage rates will go up 50 to 100 basis points.
Some economists say worries that the United States no longer controls its economic destiny — or at least long-term interest rates — are overblown. With the dollar weakening, growth in the trade imbalance may slow or reverse, as imported goods cost American consumers more and more, and U.S. exports become better bargains for overseas consumers.
If you haven’t yet voted for your favorite real estate blog, which is undoubtedly the New Jersey Real Estate Report, please do so!
You will find the “Vote Now” link at the below website:
http://www.housingwire.com/
We’re running for the “Best Regional Blog”, however, we were not nominated, so you’ll need to write in your vote.
All it takes is the URL and name, you can cut/paste the following below:
New Jersey Real Estate Report – njrereport.com
Much appreciated, please take the few minutes to vote!
Thanks!
jb
Saw someone reading an article this morning “Speculators Fueled Boom” but didn’t get a chance to read it.
I believe it was in the Wall Street Journal.
If anyone has that WSJ, please post or email it to me, I’d like to read it as well. From what I’ve read on the summary, the focus is on Florida, but interesting none the less..
jb
Miami, Florida is forecast to be ground zero in the nation’s falling real estate values in 2007, according to Housing Predictor’s forecasts. The Miami market has seen sky-rocking appreciation the last three years with many investors flocking to the area to buy preconstruction condos. The condominium market exploded with new investors, many of whom are now cancelling transactions before the units are even completed.
The over abundance of units has brought the Miami market to a shadow of its once booming cycle and now has an over supply of units to sell. As a result Miami is forecast to drop 13.6% in 2007.
Texas, however, may be the new boom market in the US. After seeing prices fall on the heels of business scandals and the resulting loss of many jobs, and foreclosures, the Houston real estate market is on the road to recovery and will appreciate strongly in 2007, according to a report on the site.
Texas is under going the largest growth in its history and is forecast by the U. S. Census Bureau to be one of only three states to have nearly 50% of the nation’s population by 2030.
Source: http://www.clickpress.com/releases/Detailed/24545005cp.shtml
From US News:
Housing Is Still Off Balance
You might think the recent uptick in home sales-the second in as many months-would be a sign that the ailing housing market is on its way to recovery in 2007.
But according to economists like Edward Leamer, “you’d be dead wrong.”
Despite a prediction of moderate economic growth, a 10 percent increase in the stock market, and as many as three interest-rate cuts by the Federal Reserve Board in the coming year, the director of the UCLA Anderson Forecast says residential real estate will nonetheless be a “moderate to poor” investment in 2007-with median prices for new homes declining from 5 to 10 percent nationally and existing-home prices treading water at best.
“Over the last five years, a home was seen as an investment,” says Leamer. “Now it’s a just place to live.”
It’s a sober reality that he and many other economists expect to persist as houses that have become all but unaffordable slowly revert to the 3 to 5 percent annual gain they historically posted before a rush of speculation pushed up prices by 20 percent a year and more in some markets.
…
Although inventories of unsold homes have leveled off recently, that could change when the spring selling season lures frustrated sellers to list their homes again. “A lot of people are still hoping their investments turn out,” Mark Zandi, chief economist at Moody’s Economy.com, says of sellers who opted to pull their homes off the market over the winter rather than lower their price. “It’s delayed the correction.”
…
As Leamer predicts, there’s a chance that a slumping economy will compel the Fed to lower short-term rates. That could prove to be an opportunity-or, rather, a reprieve-for those with adjustable-rate mortgages.
But few economists expect the housing market to be helped like it was the last time the Fed lowered rates (and helped spark the buying frenzy). While Fed loosening could lower rates on adjustable mortgages somewhat, new, tougher guidelines for banks making such loans should restrain demand.
More scrutiny is also expected in the subprime lending market, where delinquency rates have nearly doubled over the past year to about 8 percent of all loans, according to analysis by UBS. Fewer loan originations from this increasingly important pool of buyers “could make a tough year even tougher,” says Zandi, who predicts the market will continue to weaken at least through midyear.
Meanwhile, long-term mortgage rates aren’t expected to get much lower than the 6.2 percent lenders now charge for a 30-year fixed loan-not enough to make homes in still pricey markets any more affordable.
That will leave sellers little choice but to make up the difference. “Either they’ll have to lower their prices, or they’ll have to wait it out,” Leamer says.
Perhaps for a very long time.
Here’s a great site that aggregates bubble blog posts and also news articles:
http://usmarket.seekingalpha.com/article/23561
Looks like another daily read.
Thanks, good link.
http://money.cnn.com/2007/01/07/technology/secondlife.fortune/index.htm?postversion=2007010807
JB..maybe an open MLS2? Would be interesting to see the results after a year.
Who’s this we?
Actually, no matter who you think “we” is, we’ve never had control of the economy in this country, it’s just that outsiders today have a far greater influence than most people understand or any sane person would find healthy.
If you operate your country like a banana republic, sooner or later the world will treat you like a banana republic.
This is neat, just plug in a zip code to see listings on a map:
http://www.trulia.com
BTW, inventory in Monmouth/Ocean bottomed on Jan 4 and leaped 463 listings on Jan. 5. Even with Toms River missing from my OC MLS, Jan. 5 saw the biggest rise in inventory sense I started monitoring in September of 2005 . The only day that was even close, was in May last year.
JB,
Check your email. I sent the WSJ article.
Don’t know if anyone saw this interview with Robert Nardelli (Home Depot CEO) before he received his golden parachute:
http://www.forbes.com/global/2007/0108/022.html
The U.S. housing bust is worse than people expected. But Bob Nardelli has a plan for survival.
A housing collapse is under way, and that means terrible things for the economy in 2007. Or does it?
Chief Executive Robert Nardelli says that a year ago Home Depot envisioned a housing decline of 5% to 7%. Would that it were so. Construction of new homes in October was 28% below the year-earlier figure. Mortgage financing giant Freddie Mac (nyse: FRE – news – people ) says proceeds from cash-out refinancings are set to drop 40% this spring compared with the volume last spring. That’s bad news for people selling houses and also bad news for people selling hi-def televisions.
“We haven’t seen the worst of it yet,” says Nardelli from his Atlanta headquarters. “Seventy-five thousand construction jobs are gone. We see these guys in our stores, competing with [established] contractors.”
Snagged a portion of that WSJ article from a poster @ TheHousingBubbleBlog. (May not be the full article.)
Today’s Wall Street Journal – Page A1:
Buyer’s Remorse
Speculators Helped Fuel Florida’s Housing Boom
Slump in Chic Naples Shows Market Perils; Ms. Dresner’s Auction
By Michael Corkery and James R. Hagerty
Naples, Fla. — In 2005, this once-sleepy retirement haven on Florida’s west coast was arguably the hottest housing market in the country.
Builders held lotteries to determine who could purchase homes in new gated communities. In the older neighborhoods, buyers were snapping up modest ranch houses and cottages soon after they were listed for sale. The median home price more than doubled between 2000 and 2005, to about $482,400.
The frenzied run-up prompted economists at banking concern National City Corp. and the economic consulting firm Global Insight Inc. to label Naples “the most overvalued” housing market in the U.S. in the second quarter of 2005, a dubious honor it retains. Today, prices are dropping, the number of unsold homes on the market has swelled to more than twice the national average and investors are scrambling to unload their properties.
Such a crescendo of activity might have prompted some to pull back. But plenty of investors, who purchased homes to rent or flip, continued to buy and sell through the height of the boom. One of them was Marjorie Dresner. The Canadian native believed that Naples, with its laid-back, balmy atmosphere, would long be an attractive market. A prolific invester, she purchased dozens of houses in recent years, many of them with a partner. One of them cost her $1.7 million.
The early run-up in real-estate prices in Naples was based on strong economic fundamentals. Low interest rates, the creation of new mortgage products and a strong economy triggered a wave of home buying by making ownership affordable for the masses. And Naples was especially desirable, with its chic restaurants, impeccably landscaped streets, stretches of pristine beaches and influx of baby boomers.
But it’s increasingly evident that investors and speculators here and elsewhere played a greater role than previously thought in pumping up the real-estate bubble — especially near the end of the run.
In late October, Ms. Dresner tried auctioning off 28 of her properties, but some bids were as much as 40% lower than what she paid. One three-bedroom ranch house she purchased in July 2005 in the middle-class Lake Park neighborhood fetched a high bid of $400,000; Ms. Dresner and a partner paid $690,000 for the house, according to county records. Ms. Dresner won’t talk much about her investment experience, but prefers to focus on the positive. “I did very well in the beginning,” she says. “I look at the overall picture. You don’t just look at one year.”
Housing bust on Page A1. Booooyyya!
Gas-like odor permeates Manhattan
SM,
Any more news on that??? I hear that the path is shut down between JC/33rd and Hoboken/33rd.
Gas-like odor permeates Manhattan
The Giants must be back from Philadelphia
http://seattletimes.nwsource.com/html/localnews/2003514469_gates08.html?syndication=rss
Bob,
Yes, you are right about path train shutdown. Autorities are still investigating the cause.
http://www.cnn.com/2007/US/01/08/ny.gas.odor.ap/index.html
There’s a new show on the Discovery channel:
“Million Dollar Agents”
http://tlc.discovery.com/fansites/milliondollaragents/about/about.html
They follow realtors who operate in the Miami area. One realtor sold a 12 million dollar house to a couple from NY.
Commission “earned” for less than 8 hours “work”:
$360,000 (3%)
$720,000 (6%)
A week later, the buyers decided not to move into the house, but instead to sell it. The same realtor would be the listing agent.
Commission she will earn on the second sale:
$360,000 (3%)
$720,000 (6%)
Total commission earned for less than a week’s work:
$720,000 (3%)
$1,440,000 (6%)
Why go to medical school. And even if you did, why perform brain surgery, when you can just fill out some forms and earn a cool million?
New show on HGTV called “Buy Me”.
I just saw an episode where a couple buys a house in the country on impulse. After all, their POS townhouse in the city will fetch big dollars and sell quickly. They use their friend for a agent, who drags his feet putting up a “for sale” sign and often doesn’t make it to open houses. They list the townhouse for $459k, but get absolutely no interest. They drop the price and eventually a few people here and there start to trickle in looking, but most are turned off by the place’s poor condition.
After many months, they eventually get a conditional offer for $330k. They are disappointed by the lowball offer, but it’s the only one they got and the bank is within days of foreclosing on them (they can’t afford 2 mortgages). The sale goes through. They are thoroughly disappointed, but relived that the nightmare is over.
Just anecdotal evidence soo loved by RE cheerleaders: Houses that removed ” For sale” sings in my neighbourhood last fall in november are all coming back for sale now. I saw 6 sighns come back already and (out of 8 in 4 block radius) and one new one appeared – which says FSBO..
SO i guess get ready for february listings surge – seems like sellers are afraid to wait for too long to list their houses.
You guys are tempting me to break my New Year’s resolution, here.
Think kind thoughts about RE agents. Think kind thoughts. Think kind thoughts.
I bet that FL real estate agent secretly funds a home for abused mothers & children. After selling a million dollar home, she drives her 1995 Ford Escort home to her 400 sqft sh!tbox apt., puts on her $4.99 Hanes T-shirt and stretch pants, and then hurries over to the HOME to help the Moms change diapers.
New show on HGTV called “Buy Me”
Love it. It’s now on every night at 8:30PM.
Pay, you’re very, very close.
The realtor rolled onto the listing to meet the buyers with a $90,000 convertible Porsche 9-11 (white, of course).
Al #21,
Will be interesting to see how asking prices compare to when they were removed from market.
With the mild winter so far, sellers have every reason to get a jump on spring by listing now. I expect we’ll see more of the same. Inventory is creeping up on the GSMLS site. No deluge yet. Come February, we may have a better indication.
Buyer’s Remorse
Speculators Helped Fuel
Florida’s Housing Boom
Slump in Chic Naples
Shows Market Perils;
Ms. Dresner’s Auction
By MICHAEL CORKERY and JAMES R. HAGERTY
January 8, 2007; Page A1
NAPLES, Fla. — In 2005, this once-sleepy retirement haven on Florida’s west coast was arguably the hottest housing market in the country.
Builders held lotteries to determine who could purchase homes in new gated communities. In the older neighborhoods, buyers were snapping up modest ranch houses and cottages soon after they were listed for sale. The median home price more than doubled between 2000 and 2005, to about $482,400.
The frenzied run-up prompted economists at banking concern National City Corp. and the economic consulting firm Global Insight Inc. to label Naples “the most overvalued” housing market in the U.S. in the second quarter of 2005, a dubious honor it retains. Today, prices are dropping, the number of unsold homes on the market has swelled to more than twice the national average and investors are scrambling to unload their properties.
Such a crescendo of activity might have prompted some to pull back. But plenty of investors, who purchased homes to rent or flip, continued to buy and sell through the height of the boom. One of them was Marjorie Dresner. The Canadian native believed that Naples, with its laid-back, balmy atmosphere, would long be an attractive market. A prolific investor, she purchased dozens of houses in recent years, many of them with a partner. One of them cost her $1.7 million.
The early run-up in real-estate prices in Naples was based on strong economic fundamentals. Low interest rates, the creation of new mortgage products and a strong economy triggered a wave of home buying by making ownership affordable for the masses. And Naples was especially desirable, with its chic restaurants, impeccably landscaped streets, stretches of pristine beaches and influx of baby boomers.
But it’s increasingly evident that investors and speculators here and elsewhere played a greater role than previously thought in pumping up the real-estate bubble — especially near the end of the run.
In late October, Ms. Dresner tried auctioning off 28 of her properties, but some bids were as much as 40% lower than what she paid. One three-bedroom ranch house she purchased in July 2005 in the middle-class Lake Park neighborhood fetched a high bid of $400,000; Ms. Dresner and a partner paid $690,000 for the house, according to county records. Ms. Dresner won’t talk much about her investment experience, but prefers to focus on the positive. “I did very well in the beginning,” she says. “I look at the overall picture. You don’t just look at one year.”
Economists cite individual investors for pushing prices up excessively and lenders for lowering their credit standards. Borrowers were able to purchase homes with little or no money down and often without having to verify their income and financial assets. In many areas, builders made things worse by putting up too many houses for the market to absorb.
“If you look at the last two contractions you can see what caused it: high mortgage rates and a slumping economy,” says David Lereah, chief economist at the National Association of Realtors. “Today we don’t have that. The economy is still good. The thing that sent us into a contraction was that house prices were getting high and affordability was aggravated by investor speculation.”
Many economists and housing industry executives had previously estimated that as few as 10% of the buyers in hot markets were investors. A survey by the National Association of Realtors found that 28% of buyers in 2005 were investors. At the peak of the Naples market in 2004 and 2005, as many as 50% of buyers may have been investors, local real-estate agents say. The Naples boom and bust also illustrates how some savvy investors can help rebalance markets, by coming back in and picking up the pieces left by previous investors. Indeed, some of the buyers who placed bids on Ms. Dresner’s houses at the auction in October were other investors. One of them was Jerry Krecicki Jr. “It’s all about timing,” says Mr. Krecicki, a local real-estate investor and real-estate agent who believes the market will rebound.
Mr. Krecicki, a former car salesman with salt-and-pepper hair, decided to enter the fray and got his license to sell real estate in September 2001. His brokerage, Remax Elite Realty, encouraged him to focus on selling homes in the areas he knew best. So Mr. Krecicki chose the Lake Park neighborhood, where he lives, near the heart of quaint downtown Naples and just across a highway from the ritzier neighborhoods closer to the beach.
Mr. Krecicki, 43, also decided to buy investment homes to build a retirement nest egg. His strategy was to rent out some homes and sell others to use the profits to buy more properties.
In October 2002, Mr. Krecicki and a partner bought their first investment property — a three-bedroom, one-story house on 10th Avenue in Lake Park. They paid $200,000, using a mortgage loan secured by the equity in their primary residences, and spent $30,000 on renovations in hopes of selling it for a profit.
Mr. Krecicki says his first full year as a real-estate agent was relatively slow as he built his reputation around the neighborhood. But by early 2003, business had picked up. That year, home prices across Naples rose 13%, and the city was gaining a reputation across the country — mostly through word of mouth — as a hot market.
Its waterfront was crowding with massive mansions. Baby boomers were buying second homes. Young people were moving to Naples to work as money managers, lawyers and real-estate agents. The international airport in nearby Fort Myers made it easy to reach. Investors smelled opportunity.
“People wanted a piece of Naples so badly, they were willing to buy whatever came on the market,” says Michael Tomany, a real-estate agent, who owns 13 properties in Naples.
By 2004, investors were scouring every corner of Naples, including Lake Park. Although many of the homes were small and drab, they were built on spacious lots facing quiet streets adorned with palm trees and shrubbery. That caught the attention of home buyers willing to tear down the old homes and rebuild new, bigger homes or undertake substantial renovations.
Ms. Dresner also saw the potential in Lake Park. The Toronto native had been buying investment properties in and around Naples since 1999, Collier County records show.
Part of her strategy was to renovate the older houses or team up with builders to tear down and construct new homes. “Our objective was to renovate and transform neighborhoods,” she says.
Mr. Krecicki says he met Ms. Dresner a few months after he sold her his home on 10th Avenue in Lake Park in September 2004 for $435,000, more than double what he paid for it.
After that deal, Mr. Krecicki served as her real-estate agent on multiple sales in Lake Park. Soon after homes went on the market, “Marjorie was on the top of my list” to call, he says.
Ms. Dresner bought several homes in and around Lake Park in 2004 and 2005, records show. She also bought houses in the pricier section of Naples, known as the Moorings.
Mr. Krecicki’s business as a sales agent was booming. He says he closed $15 million in sales in 2005 up from $5 million in 2003. He also got more interested in properties for investment. He says he bought two more homes in Lake Park, including a duplex for $349,000, in April 2005.
Seven months after he bought the duplex, in October 2005, Mr. Krecicki sold it to Ms. Dresner and a partner for $621,000, county records show.
Meanwhile, longtime Lake Park residents were emboldened by the escalating prices, which had skyrocketed 28% in 2004 and 30% in 2005 across Naples. They tried to cash in. “A lot of people had false hopes for what they could get for their properties so everybody put their houses on the market with unrealistic expectations,” says John Turner, a real-estate agent who also lives and sells homes in Lake Park. “They see a sale for $700,000, and they say, ‘Wow, I can get that too.’ ”
Dona Steele, an artist, lives next to a three-bedroom ranch house that Ms. Dresner bought for $690,000 in July 2005. The house, which sits on a lake, sold for $275,000 in February 2001. “We were just laughing at these prices,” Ms. Steele says. “I grew up here and it’s out of control. This used to be a working-class neighborhood.”
Ms. Dresner says she never bought a home for more than its appraised value. “The sellers can ask whatever, but it’s up to the banks in how they appraise it,” she says. “I never overpaid for anything.”
Several factors converged in late 2005 and early 2006 that turned Naples investors into mass home sellers. The active hurricane season caused a spike in insurance rates throughout Florida. Coupled with a rise in short-term interest rates and property taxes, investors now were facing higher carrying costs.
Ms. Dresner says she was growing tired of the burdens of being a landlord. Many of her properties were listed for sale in early 2006, but some were slow to move. In late October, she tried a new tactic and auctioned off the houses.
Mr. Krecicki says he went to the auction out of curiosity and jumped into the bidding when he saw the low prices. “After about two hours, a house came up for bid that I knew very well,” Mr. Krecicki recounted in a monthly newsletter he distributes, called the Lake Park Journal.
“I looked at my friend next to me with a bidding card and check in his hand and asked him, ‘Aren’t you going to bid on this one? C’mon, man, 50/50 split. Bid on this one.’ ”
They put up the highest bid, which was $275,000. It was the same house Mr. Krecicki and a partner sold to Ms. Dresner for $435,000. Given the huge price drop, “it would have been stupidity” not to bid, Mr. Krecicki says.
Many of the sales from the auction haven’t closed yet. In many cases the top bids on Ms. Dresner’s homes weren’t high enough to pay off her lenders in full, says auctioneer Paul Drake. Ms. Dresner’s lawyer says she has received additional offers on several houses since the auction, but that no sales have closed.
In the past month, both Countrywide Home Loans Inc. and the Bank of New York filed court papers in Collier County Circuit Court in Florida saying they are seeking to force a foreclosure sale on two properties owned by Ms. Dresner. Ms. Dresner says she isn’t in financial difficulty.
Mr. Krecicki and a partner still own about a dozen homes that they are renting out. He says they have cash reserves to cover homes where expenses exceed the rental income. He says he feels badly that Ms. Dresner has had trouble selling her properties.
“This market downturn came out of nowhere, like a snowstorm,” he says. “It surprised everybody, especially the people making mortgage payments.”
Pay = Pat!
twice shy Says:
January 8th, 2007 at 11:33 am
Al #21,
Will be interesting to see how asking prices compare to when they were removed from market.
With the mild winter so far, sellers have every reason to get a jump on spring by listing now. I expect we’ll see more of the same. Inventory is creeping up on the GSMLS site. No deluge yet. Come February, we may have a better indication.
All houses are listed between 350-400K, all are either 3bedroom or 4 bedroon One bath, all build before 1950, (some in 1920s, some in 1940s). On two properties price was about 5K lower.
On 3 properties price was the same. One – price was actually 10K higher. And FSBO was about 30K higher than all other properties.
So no price dropping yet (1% off asking is not a price drop, it is insult to buyers, the same way as under asking offers are insult to sellers).
Un, did you look at the sq foot data on any of those Trulia houses for your ZIP?
Something’s wrong in their data load.
I could lease this one out in my hood to maybe ten families, and make a killing:
http://www.trulia.com/property/1030856523-1479-Makefield-Rd-Yardley-PA-19067
kyk2001, thanks for posting the rest of the WSJ article.
Highlights:
* “The thing that sent us into a contraction was that house prices were getting high and affordability was aggravated by investor speculation” says David Lereah, chief economist at the National Association of Realtors.
[What happened to the “fundamentals” that supported bloated prices David? You said they were there a few months ago, and now it’s “speculators” and “affordability” problems?]
* Many economists and housing industry executives had previously estimated that as few as 10% of the buyers in hot markets were investors.
[Ouch, that means much more pain on the way than anticipated.]
* A survey by the National Association of Realtors found that 28% of buyers in 2005 were investors.
Ouch, lots of vacant houses to sell.
* At the peak of the Naples market in 2004 and 2005, as many as 50% of buyers may have been investors, local real-estate agents say.
[More pain on the way…]
* Mr. Krecicki, a former car salesman with salt-and-pepper hair, decided to enter the fray and got his license to sell real estate in September 2001.
[A used car salesman as a realtor?]
* Mr. Krecicki says he met Ms. Dresner a few months after he sold her his home on 10th Avenue in Lake Park in September 2004 for $435,000, more than double what he paid for it.
[100% gross profit in months for everyone!]
* After that deal, Mr. Krecicki served as her real-estate agent on multiple sales in Lake Park. Soon after homes went on the market, “Marjorie was on the top of my list” to call, he says. … Ms. Dresner says she was growing tired of the burdens of being a landlord. Many of her properties were listed for sale in early 2006, but some were slow to move. In late October, she tried a new tactic and auctioned off the houses. … Mr. Krecicki says he went to the auction out of curiosity and jumped into the bidding when he saw the low prices. … Mr. Krecicki…put up the highest bid, which was $275,000. It was the same house Mr. Krecicki and a partner sold to Ms. Dresner for $435,000. Given the huge price drop, “it would have been stupidity” not to bid, Mr. Krecicki says.
[Sweet, pennies on the dollar! It’s just business Marjorie!]
Pat, I’ll bet that’s the lot square footage.
It’s not an accurate tool, more of a novelty, as they apparently just comb the Internet for realtor website listings and aggregate the info.
Fun to see what turns up, though.
Did you see the graph at the bottom of the page?
This realtor Krecicki’s relationship with Ms Dresner is interesting.
First, he sells her a house months after buying it for twice what he paid. (That’s the deal where he met her.)
Then, he buys her house at auction for half what she paid.
Looks like the used car sales man found a Greater Fool he can really get along with.
“Marjorie was on the top of my list to call” — I’ll bet she was.
Hah, yep, I’m familiar with that little ski slope at the end.
But, as Greenspan claims…it’s level right? A two-year old could ski down that cause it’s level!!
Krecicki bought a house for about $250K, made about $200K profit selling it to Marjorie, then bought the house back for the same thing he initially paid.
The only thing that changed throughout these transactions, was the $200,000 deduction from the bank account of Marjorie the “investor.”
off topic, but what I found on Craigslist (posted by a Realtor)
—————-
10 Tips to Prepare your home to Increase the Sales Price.
Everyone knows that curb appeal and first impressions make all the difference in the world. If you were paying top dollar for a home, you would want it “Move In Ready.” Here are 10 ways you can make yourself more money by increasing the sales price of your home.
1. Fresh paint – inside and out.
2. Flowering plants on the porch.
3. Have your windows professionally cleaned.
4. Have your carpets professionally cleaned (wood floors – polish them).
5. Have the house professionally cleaned – it’s easier to upkeep after a good “spring cleaning!”
6. Have a room freshener by the front door as potential buyers walk into a fresh smelling home.
7. Keep all window coverings as open as possible – lots of light is good.
8. Fresh flowers inside your home.
9. Set your dining table with your best china so it looks extra special (most people can’t visualize what things will look like) – so put out your best and make them fall in love with your property!
10. Finally, have your home as clean and picked up as possible….
When you speak with your Real Estate Agent, remember they will also give you great suggestions! Don’t take their suggestions personally! They are working for you and have the experience! Follow these tips and you will be ahead of the game!
If you don’t have china, can you put out paper plates, as long as they are the chinet version?
Also, should you pick up the cat’s water-bowl (an old land-o-lakes margarine tub he’s partial to) and put down the fancy stainless steel set he won’t drink out of?
“Marjorie was on the top of my list to call” — I’ll bet she was.
Unrealtor,
That’s exactly what I thought. This realtor had some gig going with her. Sell to her at 100% gain, buy back at 50% off. He needs more Marjorie’s in his rolodex. By the way, how many Marjorie’s are out there???
My best china? You mean the Old Abbey Limoges with the gold trim? That should be worth an extra $5k on the offer–especially when it walks out the door with the “buyer” (or RE agent). Sweet.
>>Will be interesting to see how asking prices compare to when they were removed from market.
i would guess the mainstream will finally catch on to what the smarter realtors were doing when the slowdown was apparent, set listing prices at closer to market selling levels. listing at a price substantially above recent sales for whatever reason isn’t going to work anymore. the price must be set to be competitive, more so with the higher inventory levels. so far from a macro perspective i’m not seeing any big jump in listings. i thought i might considering the abnormal weather but not yet. after super bowl is typically when they start coming on.
I know it’s early in 2007, but we may have an out of the box classic destined for Top Ten 2007 status.
From the Weekend Thread:
“…Buying a home in New Jersey at this point is like burning your money….”
grim: any chance we can have a best quote of the year from 2006?
two categories: [1] from media [2] from NJREReport
Richard,
Are you the Richard who is neutral on the market?
If so, back in December you cited a listing in Westfield (MLS ID#: 2337680) that went under contract with a Wall Street bonus, I believe. (Seneca and I had an exchange about this one, as I thought it had some potential.) Anyway, it appears to still be for sale. If you are The Richard, and you have any follow-up info on this, let us know. Thanks.
for [2] obviously I request “read my lips you schmuck”
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
Jim
Good luck with 2,3 & 4 but hey number 1 should be okay, the only time my broker ever said anything about that one was when someone gave her gruff about me and my lowballs ( wow that sounds funny) at The convention in New Orleans! (-;
KL
From Reuters:
Eaton Vance manager: Markets poised for upset
Financial markets are vulnerable to a significant correction in the next 12 months that might be triggered by an event in the derivatives markets, a well-known municipal bond manager said on Tuesday.
“I will be very surprised if we don’t get an accident in the next months,” Thomas Metzold, who invests roughly $4.5 billion in the Eaton Vance National Municipals Fund, told the Reuters Investment Outlook Summit in New York.
…
One of the biggest problems may be that investors no longer worry about risk, Metzold said. “I can’t believe I haven’t seen an editorial cartoon that shows a tombstone with the name ‘risk,’ rest in peace, because risk is dead,” Metzold said.
“People don’t believe they can lose money anymore,” he added.
‘From the Weekend Thread:
“…Buying a home in New Jersey at this point is like burning your money….”’
Burning a home in New Jersey at this point is like burying your money…
If I get enough quotes emailed to me, I’ll put up a poll.
jb
My entry for best quote:
Appeared on this blog in April 06:
“The keys to a strong, growing economy is innovation, entrepreneurship, productivity, expanding markets, job creation and wage growth. Not flipping McMansions and installing granite countertops with short-term EZ credit and selling them back and forth to each other. That’s pure smoke and mirrors and no substitute for real economic growth.”
You guys are tempting me to break my New Year’s resolution, here.
Think kind thoughts about RE agents. Think kind thoughts. Think kind thoughts
Pat, Pat they got you too
I have always, counted on you
When others here, were putting us down
You made me smile, just like a clown
You saw our worth, sometimes took our side
You could make me feel, swollen with pride
One little story about
making a a quick buck
Sometimes in this business
It is just luck.
How’ bout those folks I take round and round
Three months later guess what they found
It wasn’t the homes I showed them they chose
No, it was this way out of there price range, FSBO!
So you see we all don’t have the same kind of luck
Some of us just get, well you know what rhymes with luck
Got to stay out of moderation mode (-:
KL
Got a kick out of thise piece from the Bradenton Herald..
Heritage Harbour forbids signage
When a job opportunity led Heritage Harbour homeowner Richard Brody to move across the country, he knew selling his house would be rough.
“By the time I listed my home, the market had already gone sour,” Brody said.
Now, a new regulation is further challenging how long it will take for Brody to sell his home.
The Heritage Harbour Master Association sent a letter to Brody last month telling him the small For Sale sign he had in his yard is no longer allowed.
While the community has always had restrictions on what For Sale signs in the neighborhood should look like, the homeowner’s association decided to take it a step further.
“We were flooded with complaints from homeowners because the neighborhood looked awful. We’re trying to get some kind of control of the whole process,” said Rob Allegra, Lennar division president for Sarasota/Manatee.
Lennar, the developer and sole builder within Heritage Harbour, still maintains majority control in the homeowner’s association because the neighborhood has not reached 90 percent completion. That control has raised some eyebrows as the developer itself is busy trying to sell its inventory of new homes.
“Developers will take every advantage they possibly can,” said Peter Evans of Coldwell Banker, who along with wife Pat, listed Brody’s home. “In the case of Heritage Harbour, they’re going to continue doing things for their benefit.”
…
His client added, “We didn’t complain when they put up their huge sale signs down every main street in the community.”
The local Naples newspaper writes an article about today’s WSJ article:
http://www.naplesnews.com/news/2007/jan/08/naples_real_estate_bust_featured_wall_street_journ/?latest
The reader comments after the article are amusing.
Come on KL, you know we love you!
KL
;P
“Housing dip brings triumph to renters”
http://www.myrtlebeachonline.com/mld/myrtlebeachonline/business/16403216.htm
Here’s a quote for the contest:
We’ve never seen a housing bubble, which — if we compare to stock bubbles — would be a prolonged double-digit collapse from unsustainable prices,” said Walter Molony, an NAR spokesman.
Behold, Mr Malony:
http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
KL-
The League of Dorks wouldn’t whiz on you if you were on fire.
Another 2006 quote:
“Welcome to another edition of Lowball!”
The Ivy Zelman quote to Bob Toll from December
BITTER Underwater Homeowners, It’s not 2005 Grubbing sellers and Realtors all in for another MISERABLE year!
hehehehehehehehehe
Depths of misery spring 2008.
hehehehehehehhehehehe
O.K., the quote idea is a good one.
But I still want the real “$300 jeans” guy to stand up.
Jayne and I took a look at this listing in ’05, we were basically looking at any historic or semi-historic home available.
MLS# 2064713 – Cedar Grove, NJ
Asking was $439,900, sold for $464,900 on 6/30/2005.
It was listed for sale by the new owners on 09/06/2006, asking was $495,500. An agent I know in Essex brought it to my attention when it was back. We weren’t interested at $439,900, we sure as heck weren’t interested at $495,500 (the place is just tiny, no room to expand out the back due to terracing and a pool).
It was withdrawn on 12/18/2006. It’s now back. Welcome Spring!
MLS# 2361095
Asking is now $479,900, $15,000 higher than their original purchase price in 2005. Commission is 5%, you can do the math yourself.
jb
Let them wallow for 100+ days or so JB, then hit them the smelling salts in the form of a nice lowball.
The place didn’t really interest us.
jb
twice shy, a # of the properties i mentioned (and a few others i’m finding out) are still in review. there are a variety of specific circumstances but none of them are financial in nature.
in regards to the article, there’s nothing substantive in it, just a lot of opinions on events that might come to pass. exogenous events are like that in they’re not predictable. the run on the dollar isn’t going to happen in any substantive way. the structural account deficits are a byproduct of the way global finance/trade operate. last weekend’s open discussion i went into my thoughts on the subject. the likelihood of rates even surpassing 7% in the next couple of years are slim due to these factors. i welcome contrary viewpoints if you can intelligently explain your position.
the likelihood of rates even surpassing 7% in the next couple of years are slim due to these factors. i welcome contrary viewpoints if you can intelligently explain your position.
10% by 2010!
10% by 2010!
10% by 2010!
10% by 2010!
10% by 2010!
Booyahhhhhhhhhhhhhh!!!!!
Pretty interesting if you have 12 minutes to spare…..starts out ho-hum, but so real insights are given….
http://media.bloomberg.com/bb/avfile/v7yrdPFtt7Mc.mp3
From Bloomberg.com:
Marc Faber, who predicted the U.S. stock market crash in 1987, said global assets are poised for a “severe correction” and it’s time to sell.
“In the next few months, we could get a severe correction in all asset markets,” Faber said in an interview with Bloomberg Television in New York. “In a selling panic you should buy, but in the buying mania that we have now the wisest course of action is to liquidate.”
Faber, founder and managing director of Hong Kong-based Marc Faber Ltd., advised investors to buy gold in 2001, which has since more than doubled. His company manages about $300 million in assets.
The bullish outlook of traders in everything from bonds, equities and commodities to real estate and art suggests valuations are peaking, Faber said.
[…]
“I am not a great buyer of assets now,” Faber said. “We may be in a situation where consumer-price inflation comes back and will have a negative impact on the valuation of assets.”
Might be worth noting that Mr. Faber runs the Gloom Boom and Doom fund.
http://www.gloomboomdoom.com
Here’s a greedy seller trying to blame a realtor for his own greed:
The next poster in the thread immediately points out that this seller’s greed cost $50,000, yet they think they did “not bad” and blame the realtor. The lengths people will go, to avoid accountability for their own greed and stupidity. The next poster wrote:
I just couldn’t pass posting this. It’s pretty unbelievable considering the price, location, lack of front yard or space between neighbors. I’ll save the best for last for those who click (try not to laugh out loud if you’re in a cube).
http://tinyurl.com/y4dmcw
JM
What is it with Foxtons? Their stuff seems to be pricier and even crappier than the rest. Check out this beauty – on a main street with no street parking: http://www.foxtons.com/search?md5=65dedb1151c77bb4c7a35c19cedce404&search_form=keyword&per_page=10&order_by=price%20desc&search_type=SS&property_id=10023&submit_type=search
BklynHawk, now that is a proper shack.
Looks like the flipper ran out of money?
IMPORTANT…NEED HELP
Grim: Can you or someone else w/ access to the MLS service please let me know the status of the following listing….MLS # 2334992 in Kinnelon. Please. It was just recently taken off the GSMLS public listing system and I’d like ot know if it sold or is under contract and for what price…thanks.
Thanks so much in advance.
BklynHawk,
Can anyone explain how it’s legal to build a house with inches of clearance between the adjoining property? If your neighbor catches fire, likely you will to.
This thing is just an obscene POS. Thanks. You really made my day. Very sobering for us “crybaby wannabees” out here.
I think I’ll just cry some more. WAAHH
Grim: Can you or someone else w/ access to the MLS service please let me know the status of the following listing….MLS # 2334992 in Kinnelon. Please. It was just recently taken off the GSMLS public listing system and I’d like ot know if it sold or is under contract and for what price…thanks.
Thanks so much in advance.
from fxstreet.com
One way to describe the current paradox is that:
If you raise interest rates to head off inflation,
Then the dollar will strengthen, making our exports more expensive.
However, the Fed is indicating they would like a “lower dollar”
A lower US Dollar would mean higher prices for our imports
Resulting in inflation
Can anyone help and provide the info?
Kim,
It’s not that bad for what it is – its just overpriced. It would make a perfectly good starter home for a middle income family with the time to do it up on weekends
whatbubble,
Went UC, closing date set for 03/30/2007. You’ll have to wait until closing to learn the price.
jb
The bubble is global. Prices in Kiev, Ukraine are up to 100 times the yearly salary.
firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=3603&cat=44-0-0
“Kiev, the capital of Ukraine, is now apparently the “most expensive city in Eastern Europe”.
Ukraine is one of Europe’s poorest countries – apparently the typical salary is around $2,400 a year. So the average Kievite would need to pay just over 40 times their annual salary to buy the cheapest property in the region.
Not that there’s anything wrong with Ukraine particularly, but has it turned into the world’s financial centre over night? No. Have the streets recently been repaved with gold?
It’s these kind of stories that show the unsustainable hysteria that lies beneath the global property boom. When you hear of properties in Kiev going for 100 times average earnings, that’s when you start to think about the triple-digit p/es of the dotcom bubble era.
When people start relying on capital gains rather than income to justify an investment, it means they are expecting a “greater fool” than themselves to come along and buy it for more at a later date. “
thank jb…i think i’ll have to ask you again at that time…how long after the closing do the sale numbers usually post?
#84 What bubble?
When a house closes, the Star-Ledger has a column on houses bought and sold. It shows up there as a public record. Not sure how long after the closing, but the paper version is faster than NJ.com.
Crabby sour pusses all over.
RE is in major correction mode.
BOOOOOOOOOOOOOOYAAAAAAAAAAAA (sick moaning half yell)
Bob
Better lower your prices fast or else your home equity (if u have any now) will just go POOOOOOOFFF
BOOOOOOOOOOOOOYAAAAAAAAAAAA
Bob – a happy home(s)owner eventhough prices are dropping like a rock.
Much Lower home prices are good for the state.
Bring it on! Misery index climbing to new records by next spring.
Where’s the BITTER group!
BOOOOOOOOOYAAAAAAA
Bob
BOOOOOOOOYAAAAAAAAAA
Bob
What bubble? Says:
how long after the closing do the sale numbers usually post?
As soon as the selling agent enters the info into the MLS system.
Rich
I just voted for:
New Jersey Real Estate Report – njrereport.com
do i get a free BOOYA now?
http://www.youtube.com/watch?v=oibk9Zk1_yI
http://flippersintrouble.blogspot.com/
Has any one seen anything similar for NJ??
Interesting site about CountryWide…expect the class actions to begin soon against mortgage companies based on how many lawyers were looking for class action participants…
http://www.countrywidehomeloansucks.com/
JM
Question 21 (10 points): Did Countrywide CEO need $3M to pay off Christmas presents?
Monday January 8, 4:02 pm ET
Countrywide Financial President and COO David Sambol Exercises Options for 14,000 Shares
Countrywide CEO Exercises Options
Monday January 8, 1:22 pm ET
Countrywide Financial Chief Executive Angelo R. Mozilo Exercises Options for 23,000 Shares
AP
Countrywide CEO Exercises Options
Friday January 5, 1:42 pm ET
Countrywide Financial Chief Executive Angelo R. Mozilo Exercises Options for 70,000 Shares
oops…
http://biz.yahoo.com/ap/070105/countrywide_insider_sale.html?.v=1