From the Trentonian:
Smoke, mirrors and a ton of tax dollars
Just for the record, this 20 percent property tax rebate idea that’s been all the rage lately is another joke, no matter what happens to it.
Dig the numbers: The average New Jersey homeowner pays some $6,000 in property taxes. There are some 1.9 million households that would benefit from the property tax cut. Do the math, and you’re looking at $2.2 billion — or nearly 10 percent of the entire state budget — going back into our pockets.
Last I checked, we’re one of only two states operating at a deficit.
Which means this property tax rebate plan is similar in scope to paying off your Visa bill with a MasterCard.
And if that’s not brilliant enough for you, don’t worry — it gets worse.
The new hot idea in the legislature is to start selling or leasing our toll roads and lotteries.
Basically, the state would get a lump sum up front for the rights to these moneymakers.
Now if our lawmakers were going to be smart with the money — and pardon me while I spend the next 20 minutes in a full state of guffaw — I’d say it’s a good idea.
It would be like if your dear Uncle Bob left you a million bucks. You could be conservative with it (like the state should be) and put it in a safe investment, pulling out maybe $50,000 a year without touching the principal.
But you just know the legislature will not be smart with the money, and they’ll blow through it in a couple of years, which would be the equivalent of taking Uncle Bob’s inheritance and deciding to hang out with girls named “Bunni” who encourage you to not only snort cocaine, but to do so off their stomachs.
…
Anywho, all this talk about property tax relief, no matter what happens, is just a bunch of smoke and mirrors. Bottom line, we’re paying a fortune in taxes, and will continue to do so.A quick look, then: The average New Jerseyan, homeowner or not, pays $5,234 a year in state and local taxes, according to taxfoundation.org.
On top of that, we pay seven percent sales tax, the second highest in the nation. The average New Jerseyan ponies up some $841 yearly right there.
(What’s even more annoying is that seven percent of the sales tax goes right back to us in property tax rebates. In other words, the state is robbing Peter to pay, well, Peter.)
And if you’re a pack-a-day smoker, well, you should quit, if only because you’re paying $942 a year in taxes to the state.
We get a break at the pump, where the 14.5 cent per gallon tax rate is the fourth lowest in the nation. So if you burn through 40 gallons a week, figure on $300 in taxes there.
And then there’s are the little annoying taxes, like on booze, on your phone and cable, and on countless other things.
Can a tax professional chime in here?
I take it that individuals will lose the ability to deduct the full tax amount, and only be allowed to deduct the adjusted tax?
jb
From the Star Ledger:
School agency cited for waste is back seeking $3.25 billion
Representatives of the Schools Construction Corp. began efforts yesterday to persuade state lawmakers to allow the agency to build another $3.25 billion in new schools despite a long record of mismanagement.
“There’s a critical need now for legislative action which commits future funding for the schools program,” SCC Chairman Barry Zubrow told the Legislature’s Joint Committee on the Public Schools. Scott Weiner, the agency’s chief executive officer, said he is “very comfortable we can handle the next $3 billion” now that the agency has drastically revamped its operations.
Six years ago, the Legislature allowed the SCC to borrow $8.6 billion to build new schools. Since then, 28 new schools have been erected, while 50 more have undergone major renovations. The remaining funds are needed to complete work on 34 school projects now underway.
Gov. Jon Corzine overhauled the agency last year after investigations found rampant cost overruns and weak management that left the program vulnerable to “waste, fraud and abuse.”
While many lawmakers wanted to abolish the agency, Zubrow and Weiner said sweeping operational changes, including more openness, tough ethical standards and stronger project oversight, have bolstered the agency enough so it warrants a second chance.
They are seeking approval of legislation to let the agency borrow $3.25 billion — including $2.25 billion for construction in Newark, Camden and 29 more of the state’s neediest districts, and at least $750 million for wealthier districts.
Catch the 78 Billion dollar Healthcare liability, just 4 times last year’s estimate.
Oh, and headline of Star Ledger that there is waste in the Newark budget..I’m shocked!
From a thread last night..
Ouch..
MLS# 2066175 – Clifton, NJ
Original List Price:$519,900
List Price: $499,900
Sold: $488,500
DOM: 42
Closed: 7/08/2005
Now for sale…
MLS# 2309428
Original List Price:$469,900
List Price: $449,900
DOM: 176
From the Star Ledger:
State health benefits tab swells to $78B
The long-term price tag for post-retirement health insurance the state has promised thousands of working and retired teachers and public employees is $78 billion — nearly four times what experts estimated as recently as last year, a new report projects.
The new calculation, which works out to an average of almost $8,500 for every state resident, opens a new crack in New Jersey’s financial foundation just as Gov. Jon Corzine is preparing to present a state budget and negotiate benefits and contracts with state employees.
“It’s a significant amount,” said Richard Marino, director of Standard & Poor’s, a credit rating service that monitors New Jersey’s fis cal health. “Certainly we’ll have to have conversations with the state about that, as to how they plan on funding something that large.”
The $78 billion represents the total expected cost of retirement health benefits not yet funded by the state for the package of health benefits promised to 325,000 teachers and 150,000 state employees and their families. A task force created by former Gov. Richard Codey pegged this “unfunded liability” at about $20 billion last year.
The state recently tallied the long-term cost to prepare for a new Government Accounting Standard Boards rule that will require governments to list the health benefits tab as part of their routine disclo sures of long-term debt.
State officials who have reviewed the first actuarial tally told The Star-Ledger the size of the projected bill this week.
This year’s state budget included $1.2 billion to cover retiree health insurance payments as they come due. That amount is scheduled to be about $1.5 billion in the upcoming state budget.
The full size of the debt far exceeds even the gloomiest estimates presented to lawmakers during re cent budget discussions.
From the AP:
Senate Banking Committee to Hold Hearing
The Senate Banking Committee will conduct a hearing Wednesday on lender practices within the subprime mortgage space.
Representatives have been invited to testify from Mortgage Bankers Association, National Association of Mortgage Brokers, The National Association for the Advancement of Colored People, American Association of Retired Persons, and the Center for Responsible Lending.
Lehman Brothers analyst Charles Marr said predatory lending legislation is expected to be a top priority for House Financial Services Chairman Barney Frank, D-Mass, and Christopher Dodd, D-Conn.
Marr said Democrats may advance the issue more actively now; bills were introduced in the House during the last Congress but failed to gain traction.
“Legislation never gained traction because lawmakers could not reach consensus in an effort to balance the interests of the consumers (increased protections) with those of the industry (push for a national and preemptive standard),” Marr wrote in a client note.
Hat tip to Pat for the link above, as well as this one:
Misleading mortgage draws claims
With college costs looming for their four children, Bryan and Susan Andrews were looking to cut monthly expenses, and the sales pitch that came in the mail seemed perfect: a mortgage at 1.95 percent, fixed for five years.
“It sounded like a really good program,” Susan Andrews recalled.
But after the deal closed, in 2004, the couple realized to their horror that the $191,000 loan they got from Bethesda, Md.-based Chevy Chase Bank was an adjustable-rate mortgage. The rate has climbed to 8.3 percent and, because of the way the mortgage is structured, the couple now owe more than they did when they signed for the loan.
They went to court, saying they were deceived. A federal judge sided with them and is allowing a class-action suit involving up to 7,000 borrowers against Chevy Chase. The bank has appealed and on Friday was granted a motion for an expedited appeal. The bank says the terms were clearly stated in the contract and that the family should take any grievance to the mortgage broker who sent the original sales flier and acted as an intermediary between them and the bank.
The case worries the lending industry because of the potential for hefty losses if other borrowers are allowed to rescind mortgages they claim were misleading.
It also underscores the rising uncertainty surrounding the kinds of loans that have emerged in the past five years, said Glenn Costello, managing director of Fitch Ratings Residential Mortgage Backed Securities Group. These loans include such variations as interest-only loans and what are known as option ARMs, which allow people the choice of paying less each month than the interest would be. In many of these loans, the amount owed is deferred to keep monthly payments down. The downside is that at some point payments can rise sharply. The amount owed can rise, too.
OK. i’ll say it… i think corzine is doing the right thing here. i dont mean to sound bush-ish or to oversimplify, but NJ (along with most states) can never have a budget surplus… not for long… if they have more money they invest in more, well, whatever BUT you can stop the spending by reducing the revenues. when do companies have budget cuts? when revenues aren’t coming in. corzine is limiting revenue from Real estate to slow spending and filling some of the gap with sales tax (consumption). how can that not be largely agreeable?
it doesnt solve all the problems… but it is more progress than we have had in years IMHO.
From the Center for American Progress:
The End of the Great American Housing Boom
“OK. i’ll say it… i think corzine is doing the right thing here”
….if you are a union member.
Total sham, with a foundation of exemptions, exclusions, loopholes and special circumstances. Oh wait, that’s just a start. If the unions are not marching, guess what??? Taxpayer’s get hosed again.
Oh what a difference a year makes.
“In 2005, I was a brain surgeon, and in 2006, I was a moron,” said Tuttle, who walked away from his deposit on the land rather than lose even more money buying it and building homes on it. “The only good news is that I’m not alone.”
“The land market has dried up,” said Alex Barron, an analyst at San Francisco-based JMP Securities LLC. “Most builders are on the sidelines because they expect prices to go down another 30 percent”
“Our earnings visibility going forward remains limited due to rapidly changing market conditions and uncertainty regarding possible future land-related charges,” CEO Richard Dugas Jr. said in a Jan. 31 statement. “Given this fluid environment, we aren’t in a position at this time to provide full-year guidance for 2007.”
“The music on that has stopped incredibly quickly. Now you walk into the bank and they say, `We don’t do that.”’
http://www.bloomberg.com/apps/news?pid=20601109&sid=aA90FVv3DDrY&refer=home
From MarketWatch:
Fed’s Plosser: Too soon to declare victory over inflation
The Federal Reserve may have to hike short-term interest rates in coming months to ensure that inflation continues to decline, said Charles Plosser, the president of the Philadelphia Fed bank. Late last year, Plosser said he thought the current 5.25% Fed funds rate might be sufficient to bring inflation down. But as the economy has strengthened in recent weeks, “that scenario becomes less likely,” Plosser said in a speech prepared for delivery to the Greater Philadelphia Chamber of Commerce. “Additional monetary policy action may be needed to keep us moving along the path to price stability,” Plosser said. He forecast economic growth at a 3.0% annual rate in 2007, which should hold the unemployment rate below 5.0%. Plosser said he expected gradual improvement in the housing sector over 2007.
Only a moron would think that the Gov.
did the right thing.
NJ is a sad state of affairs.
From Bloomberg: (Great Title)
Toll, Centex, Lennar Join `Moron’ Speculators in Land Grab Bust
Brian Tuttle owns so much land that he paid $3.6 million to get rid of 125 acres ready for development in the middle of Florida’s Palm Beach County.
“In 2005, I was a brain surgeon, and in 2006, I was a moron,” said Tuttle, who walked away from his deposit on the land rather than lose even more money buying it and building homes on it. “The only good news is that I’m not alone.”
The worst housing slump in 16 years made a lot of smart money vanish. D.R. Horton Inc., Pulte Homes Inc., Lennar Corp., Centex Corp. and Toll Brothers Inc., the five biggest U.S. homebuilders, said plummeting land prices cost them a combined $1.47 billion in the fourth quarter.
Builders paid more for land during the boom because home prices were rising, too. They didn’t realize speculators were pumping up demand by buying houses to sell quickly. When prices reached a point where speculators quit buying, homebuilders were forced to abandon so much property they helped create a glut that drove down land prices more than 9 percent last year, according to data compiled by New York-based research firm Real Capital Analytics Inc.
“Homebuilders allowed their own enthusiasm for price increases on houses to affect their decisions on what they would pay for land,” said Mike Inselmann, president of Metrostudy, a real estate research firm in Houston.
The decline in land values reveals the role short-term buyers played in the housing boom, when the median U.S. home price rose to $276,000 last June from $177,000 in February 2001. Industry executives, including Toll Brothers Chief Executive Officer Robert Toll, estimated that about a quarter of their houses were bought by people interested only in flipping them — buying and selling quickly rather than moving in.
…
Japan’s land prices skyrocketed in the late 1980s, fueled by low interest rates and easy credit. The peak came in 1991, when some Japanese boasted that the land under the Imperial Palace in Tokyo, home of the Japanese emperor, was worth more than the gross domestic product of Canada.
After the bubble burst, Japan was stuck in the mire of a stagnant economy for at least a decade, said Mark Thornton, an economist in Auburn, Alabama, with the Ludwig von Mises Institute.
“Japan in the 1990s tried to prevent the collapse of the bubble, so the correction took much longer,” Thornton said.
pesche22,
excellent, articulate point.
all you renters out there, don’t forget that you can deduct 18% of your annual rent total off your NJ state income tax. the state calls it your paid share of property taxes.
if say you’re paying $1500 a month that’s a $3240 deduction and at say 5% state income tax you’re saving $162.
when do companies have budget cuts? when revenues aren’t coming in. corzine is limiting revenue from Real estate to slow spending and filling some of the gap with sales tax (consumption). how can that not be largely agreeable?
With all due respect, I think you are way off base. When companies get into trouble, they create comprehensive plans and strategies for improving their condition. They don’t just hope they’ll spend less because they are taking in less money.
New Jersey is already spending more than it takes in. What makes you think that things are going to be any different? Why didn’t they make any tough decisions about where these cuts would need to be made?
This is a political move meant to placate voters, but it will ultimately be unsustainable and only add to NJ’s mounting credit card bill.
Interesting thread at Broker Outpost. Lenders getting more strict on loans to FSBO buyers.
Lenders backing away from fsbo’s!.
it isn’t just the NJ politicans that don’t have the chutzpah to change things. no one wants to take a hit for the team instead opting to blame someone else for the mess. so they’ll keep covering up the problem by grossly underestimating costs, shifting tax burdens with no net change, borrowing to fill gaps and other chichanery to make it look like progress is being made. we’re all a bunch of egoists so why expect anything but business as usual?
Off Topic, but big news:
From AP, via Ben Jones:
“Due mostly to the slowdown in new home construction, lumber prices have sunk from a peak of about $1,000 per thousand foot board 18 months ago to around $200 per thousand foot board. In addition, prices for oriented strand boards, or OSB, are at a four-year low.”
If you don’t think this is bad news for the existing residential market, you’re nuts.
Here’s the original link for the graph from the AP.
http://www.chron.com/disp/story.mpl/ap/fn/4527474.html
Amazingly, it is in a story about the rising stock price for forest industry companies.
Only a moron would think the gov. and the
pols did us a favor with their vote.
I stand by those statements.
“lumber prices have sunk from a peak of about $1,000 per thousand foot board 18 months ago to around $200 per thousand foot board.”
Reminds me, where is that lumber bull????
“From the Center for American Progress:
The End of the Great American Housing Boom”
Looks like a good article. I especially liked figure 2 on page 9 – “House Costs Relative to Income”, the sudden jump is a must see for anyone who is sick of hearing about how it was difficult for previous generations too.
Not sure why everyone is so shocked by the fiscal problems of New Jersey, they pretty much mirror the fiscal problems of the entire United States. The federal government doesn’t have the ba$$s to reform social security or to cut pork any more than New Jersey does.
Richard Says:
February 7th, 2007 at 9:03 am
it isn’t just the NJ politicans that don’t have the chutzpah to change things. no one wants to take a hit for the team instead opting to blame someone else for the mess. so they’ll keep covering up the problem by grossly underestimating costs, shifting tax burdens with no net change, borrowing to fill gaps and other chichanery to make it look like progress is being made. we’re all a bunch of egoists so why expect anything but business as usual?
Richard,
How does it work. Do I have to itemize my deductions???
CC
http://www.bloomberg.com/apps/news?pid=20601087&sid=affoBrZTbziQ&refer=home
Whirlpool Profit Declines on Slump in U.S. Housing
NJ is going to be detroit. Smart people run from this state asap. It is like nj caught in the fire and just need to pack. i am so sick of it.
“Not sure why everyone is so shocked by the fiscal problems of New Jersey, they pretty much mirror the fiscal problems of the entire United States”
lisoosh,
Shocked??? No. Outraged??? Yes.
You are exactly right, from our fed gov, [deficit,ss,medicare,etc…], to the state to the county to the municipalities to the consumer.
It’s just a massive debt bubble. Reform??? There’s probably only one scenario that would
alter this?? Nobody wants to go there.
Jim, re #7
The bank has appealed and on Friday was granted a motion for an expedited appeal. The bank says the terms were clearly stated in the contract and that the family should take any grievance to the mortgage broker who sent the original sales flier and acted as an intermediary between them and the bank.
It will be interesting to see how this works out. This is a classic tactic – introduce a middle man and take the blame away.
“Any design problem can be solved by adding an additional level of indirection..”
I was reading some of the threads on Brokers Outpost. Almost everyone is looking for a 90-100% LTV stated income. Unreal.
#22 Peche22 Says:
As rude as it may seem, I second Peche22’s comments. Corzine is a hack and any of you think we can attain fiscal prudence by not cutting expense are living in a dream world.
What they are proposing is Hog Wash !!
nj refund for rent paid
http://www.state.nj.us/treasury/taxation/index.html?njit35.htm~mainFrame
What I don’t understand is how anyone could think that selling the turnpike or the lottery will help in the long run. This is such a stupid proposal! Let’s just worry about today and let our children worry about tomorrow. Don’t allow special interest groups to run the government.
Renting…”With all due respect, I think you are way off base. When companies get into trouble, they create comprehensive plans and strategies for improving their condition. They don’t just hope they’ll spend less because they are taking in less money.”
I agree on this point… maybe a bad analogy, but sticking with what your saying, i think their is (gasp) a strategy to this. decrease RE taxes, limit increases… it does at the very least PUT PRESSURE to find cuts. i aplaud bloomberg for his surplus (again based on RE taxes) for ’06 and his giving back in terms of retail-sales tax… NJ just doesnt have those options. have to stop the bleeding somehow, and self-restraing, pollitically, doesnt get us there…but CAPS… maybe, just maybe… it IS a strategy. this is politics afterall… forest through the trees or what have you…
JB or others,
What did #611938 sell for?
And the house prices are still beyond insane and people are starting to come out in droves because they think a 10K cut off a 550K POS is a bargain. I don’t know if it’s a f***ing comedy or a tragedy.
gary – here’s one way to look at it.
Supply is many times over demand. Let all the suckers buy the over price sh1tholes. There’s no way this supply is going to be dried out any time soon. Wait on the side lines till the demand dries/thins out, and you will be rewarded.
With the current levels of inventory, prices have to come down – significantly!
I thought/hoped Corzine would have had a bigger set and fought the unions more diligently since he was independently wealthy and not a lifelong liar…I mean politician being controlled by groups that helped get him into office. The jury is still out, but he seems to have peanuts instead of coconuts.
I have been following the posts on this site for quite some time now, and I am impressed with the amount and quality of information presented here.
There seem to be quite a few people from Jersey City or Hoboken on this site, but the real estate markets in these cities are rarely discussed.
I was wondering if anybody had an opinion on these markets, particularly downtown Jersey City (where I am considering to buy)? I don’t really want to touch any of the new high-rise developments with cookie-cutter condos and high taxes and maintenance fees – but it seems like brownstones will always be in limited supply, and as the areas around them are getting nicer and the empty lots are filled, I wonder whether one can go wrong buying a more unique brownstone or a condo in a brownstone, something with a deck or a yard?
Any opinions?
#10 article link
Talk about greed
“The 77-year-old widow from Flagler County, Florida, owns a half-acre parcel on Highway A1A in the coastal town of Hammock. The carrying costs are killing her, she said. She’s paying property taxes of $4,500, triple what she paid when she made the purchase three years ago.
“It’s an extremely lot of money,” Bushnell said. “I’m retired and it’s hard for me to come up with that.”
Bushnell is offering the land on Craigslist.com, a free on- line advertising site. A year ago, her price was $699,000. Now she’s asking $650,000. She said in a half-whisper that the land, zoned mixed commercial and residential, could be had for $595,000. She’s ready to wait another year for a buyer at that price.
How much did Bushnell pay for the half-acre in 2004?
$80,000.”
I have no idea what land goes for down there, but she’ll die before she gets her 7.5x return.
I didn’t see this posted yesterday but if it was and I missed it, my apologies.
Economists: Housing Layoffs on the Way
By Rex Nutting
WASHINGTON (Dow Jones) – The home-building industry collapsed in 2006, but surprisingly few workers lost their jobs, revised government data show. That could change this year, economists said.
….
The drop of 47,000 home-building jobs in 2006 is a big change from the 638,000 added in the previous three years, but it’s much less than the 100,000 that were reported as lost before the Labor Department released revisions to last year’s employment data.
Two economists think construction employment will plunge this year as many of the homes started last year are finished. It typically takes six months for a new home to go from the groundbreaking to the final steps of construction. The latest data show 1.26 million homes were still under construction in December.
….
Rosenberg estimates that employment in residential construction will fall about 20% in 2007, or about 600,000 jobs. In essence, the number of jobs in home-building will return to 2002 levels as the pace of home building does.
In addition, of some 3 million manufacturing jobs tied directly to housing, about 10% will disappear, Rosenberg estimated.
All told, that’s about 900,000 jobs likely to be lost this year, and it doesn’t include a large number of threatened jobs in real estate, mortgage banking and other housing-related fields.
Many of those workers would find employment in other sectors, including nonresidential construction, but the net impact could be enough to take the unemployment rate to 5% by the end of the year, Rosenberg said.
More at link above
Rich
curiousd Says:
February 7th, 2007 at 7:21 am
OK. i’ll say it… i think corzine is doing the right thing here. i dont mean to sound bush-ish or to oversimplify, but NJ (along with most states)
I am just wondering:
Last I checked, we’re one of only two states operating at a deficit.
From the beginning of the trend…
How is it “along with most states”???
Don’t you see a problem here – allstates, but NJ and one!!! other state, are profitable.
Just so you know how screwed up NJ is.
I will have to agree with SAS – there is no hope for NJ.
I always thought that high RE taxes will cause lower home prices – but in NJ it seems reverse: Higher taxes means better schools, better schools – higher RE taxes, and so on………….
And I am sorry but this 4% cap means nothing!!!!
The bill’s sponsor, Senate President Richard Codey (D-Essex), said homeowners also will benefit from new limits on future property tax increases. The bill would impose a 4 percent cap on annual increases in tax collections by local governmental bodies — although with a list of exemptions that account for about a fourth of a typical community’s expenses
Right now we can be confident that RE Taxes Will go up full 4% every single year, in addition, towns and townships will be applying for as much expempt increases as possible – expect even higher tax increases that in the last 4 years…
Hey ND, I am in Hoboken. I don’t know much about Jersey City but where you buy is ultimately a function of your needs and what you’re comfortable with. I almost bought a condo in Hoboken and have been happier than a pig in mud that I didn’t. If I wanted to stay in Hoboken, I would love to own a brownstone, and I think in the long run, if you plan to stay in a place for 10 years or more, start a family, etc., you might want the bigger place. However, not an option for me as I can’t stand Hoboken anymore and my hubby hates the urban area.
In Hoboken, some of the brownstones are beautiful. They are pricey though – 1.5-2.3 million, depending on size and location. And unlike brownstones in Brooklyn, they come with NJ taxes – and for that you get crappy schools – which is why I think their prices are a tad high in comparison. As I said, needs – can you do private schools? If so, who cares that Hoboken schools aren’t good, right? Plus, no parking. Ever tried to park in Hoboken? Unpleasant.
JC, esp. in Paulus Hook, has beautiful brownstones, but the situation there is tougher than Hoboken re: schools, services, amenities.
My conclusion is if you love old houses, want a short commute, more space in an urban environement and don’t mind crappy schools and a horrible parking situation, buy one. I would not expect that they will rise tremendously in price over the next few years, based on the observation that the most expensive ones on the market have yet to sell after ages on the market and in perfect condition, and because, as I said earlier, brownstones are for families, and many tend to leave Hoboken for better schools.
that 10-year just keeps rallying. whenever it approaches 4.9% it backs down again. i’ve shared my beliefs here and i’ll say again you won’t see it break 5% for at least 12 months if not longer.
Al #42 Lots of towns in Nj with high property taxes and crappy schools, and eventually IMHO higher taxes will lead to lower prices in many towns.
With the exception of a handful of towns, it does not matter how good your schools are, if young families cannot afford the taxes they will not move there.
And ironically in Bergen county, some of the most desireable towns with the best school systems have lower taxes than many of the other towns that have good school systems.
i’ve been hearing about more and more families moving to neighborhoods that have spotty schools/amenities but not utilizing them and sending their kids to private schools and also limiting their association with like individuals. they don’t utilize the town of services at all. this has been happening in south orange, maplewood, jersey city, hoboken, and of course montclair has been doing it for years. just seems to be getting more popular with the more well-off yuppie crowd that’s transplanting from NYC.
Just a quick note in defense of Hoboken. Commute to NYC, especially Wall Street, cannot be beat. Great restaurants and social life. Also, a ton of young kids so excellent for play dates etc. Street parking is a gigantic issue, but most new construction has parking. We own a 2 bdrm condo bought in 2000 before the bubble and have a parking spot.
With current pricing I would not recommend buying a brownstone or anything else in Hoboken. Why not rent and enjoy this nice town without the hassles and risks of buying?
Finally, I cannot defend the school situation here. It is terrible and most parents I know move out once their kids are of school age. If you have school age kids you’ll probably need to look into private school.
Pictures are deceiveing, and we have been
deceived.
Only morons will believe that this is a
good deal.
When your expenses rise over income,its
called a loss and losses can only go
on for so long.
NJ is a welfare state that has been given
away.
mexicans, entitlements,high taxes on everything,have doomed the state and
the pols have done nothing on this except
line their nests.
Its a disgrace.
Paid for by Pesche22
Al/42,
To your point NJ has not enjoyed the economic expansion of the last 4 years like most other states and that’s a problem…a big one. I was speaking more generally, but you’re right from 2001 on… before many states were running red. I am suggesting that Corzine is trying to do something about it… not that the picture is so rosy. If you look at what his action items are, there’s some great ideas about how to do this (including independent/private/non-political audits of the books to uncover corruption and budget busts).
Second, on 4% incease ‘they mean nothing’. That’s untrue. It is a cap. A beginning…and the only form of property tax relief fully executed in this state in over 20 years.
again, not saying it looks good in NJ…just saying i like what corzine has tried so far.
Pesche22, again. excellent points as always.
while i’m on my positive corzine kick, i found some points from his state of the state speach which are true (somehow being the optimist in a pool of pessimist is encouraging me…)..
– For instance, Coach Schiano and his classy, wood-chopping Rutgers football team.
-Or Kerry Close, a bright young lady from Spring Lake, who won last year’s National Spelling Bee.
-From an economic perspective, our household income is the highest of any state.
-We’re an engine of the nation’s economic life – located within four hours of 60 million consumers, the distribution hub of international commerce, host to the present and future promise of the gaming industry, the medicine chest to the world, and a powerhouse of medical research.
-We have the highest high school graduation rates in the nation, and 10 percent of all high school students with perfect SAT scores in 2006 came from New Jersey.
-We are the nation’s most ethnically diverse state and a welcoming home to immigrants in both our thriving suburbs and vital urban centers.
come on… feel the love!
Wait , their’s more. Lets sell the lottery
Its not a good sign when a business
is selling off assets to raise cash to
meet current obligations.
I opine that Trenton should be sold.Yes,
the entire city. Now, lets see, we could
get a one time shot of cash from who:
1.Mexico
2.Korean
3.China
4.India
5.Russia
Trenton Makes the World Takes.
I stand by those words
HobokenDefender, you and ChicagoFinance are probably the only two people from Hoboken I have heard telling people not to buy in Hoboken. From listening to many, it’s the greatest investment since sliced bread and in 5 years, one bedroom condos will be worth millions…even if they are on Jackson St.!!
You make good points.
HobokenDefender & NJGal,
What you have pointed out for Hoboken can probably apply for the rest of Jersey Gold coast. Except the nice nite skyline view, there is nothing nice to say it. Bad school, crowding, bad commute (may be with the exception of Weehawken)
Not thx for 750k 2 br condo in West NY, N Bergen or Edgewater.
CC
We are suffering from obesity in Trenton.
Where is Chainsaw Al when we need him.
Thanks for your comments regarding Hoboken / JC. Any Jersey City defenders or opponents out there?
I agree about the Hoboken comments, but I think downtown Jersey City may be a little different: It is under heavy development, even in the centers, not just at the periphery. It has better connection to NYC, i.e. the walk to the PATH is much shorter for most people, and brownstone are 800k – 1.2 mil.
I certainly do not expect property values to rise as they did in recent years… but how much of a risk in price deflation do you really see here compared to other cities in Northern New Jersey?
Sign of things to come. Trial lawyers are smacking their lips.
===============
Misleading mortgage draws claims
Suit against bank over transparency of terms worries lending industry
By Kirstin Downey
The Washington Post
WASHINGTON — With college costs looming for their four children, Bryan and Susan Andrews were looking to cut monthly expenses, and the sales pitch that came in the mail seemed perfect: a mortgage at 1.95 percent, fixed for five years.
“It sounded like a really good program,” Susan Andrews recalled.
But after the deal closed, in 2004, the couple realized to their horror that the $191,000 loan they got from Bethesda, Md.-based Chevy Chase Bank was an adjustable-rate mortgage. The rate has climbed to 8.3 percent and, because of the way the mortgage is structured, the couple now owe more than they did when they signed for the loan.
They went to court, saying they were deceived. A federal judge sided with them and is allowing a class-action suit involving up to 7,000 borrowers against Chevy Chase. The bank has appealed and on Friday was granted a motion for an expedited appeal. The bank says the terms were clearly stated in the contract and that the family should take any grievance to the mortgage broker who sent the original sales flier and acted as an intermediary between them and the bank.
The case worries the lending industry because of the potential for hefty losses if other borrowers are allowed to rescind mortgages they claim were misleading.
It also underscores the rising uncertainty surrounding the kinds of loans that have emerged in the past five years, said Glenn Costello, managing director of Fitch Ratings Residential Mortgage Backed Securities Group. These loans include such variations as interest-only loans and what are known as option ARMs, which allow people the choice of paying less each month than the interest would be. In many of these loans, the amount owed is deferred to keep monthly payments down. The downside is that at some point payments can rise sharply. The amount owed can rise, too.
Banking regulators have only recently begun offering new information to borrowers about these loans and warning lenders to explain them more carefully. Meanwhile, the loans have proliferated.
“Some percentage of borrowers don’t understand the terms of these loans, and it is to be expected that there would be some issues emerging,” Costello said.
The Andrewses — Bryan, 49, a carpenter, and Susan, 51, a nurse — live in Cedarburg, Wis., and previously had a 5.75 percent fixed-rate mortgage. They say they didn’t realize what they had done until they got their first payment coupon for the new loan in the mail. They couldn’t refinance into a different loan without a $5,700 prepayment penalty. They sued two years ago.
Last month, U.S. District Court Judge Lynn Adelman, a federal judge in Milwaukee, ruled that Chevy Chase had violated the 1968 Truth in Lending Act, which requires lenders to clearly explain loan terms to borrowers. Chevy Chase’s disclosures to consumers showed a “lack of forthrightness” and “would both confuse and mislead an ordinary consumer about the cost of the loan,” the judge wrote.
Adelman ruled that while the borrowers were ineligible for damages, they could to turn back or “rescind” their mortgages. Recision would permit borrowers to be released from the loans and be reimbursed for any interest paid to Chevy Chase as well as their closing costs.
In other words, the ruling may give some borrowers a refund of everything they have paid to live in their houses for years.
At the core of the dispute are some words that appeared on the top right corner of a document the lender must provide under the Truth in Lending Act. One line read: “WS Cashflow 5-year fixed,” and the line under it said “Note Interest Rate: 1.950%.”
Misleading mortgage draws claims
Suit against bank over transparency of terms worries lending industry
By Kirstin Downey
The Washington Post
WASHINGTON — With college costs looming for their four children, Bryan and Susan Andrews were looking to cut monthly expenses, and the sales pitch that came in the mail seemed perfect: a mortgage at 1.95 percent, fixed for five years.
“It sounded like a really good program,” Susan Andrews recalled.
But after the deal closed, in 2004, the couple realized to their horror that the $191,000 loan they got from Bethesda, Md.-based Chevy Chase Bank was an adjustable-rate mortgage. The rate has climbed to 8.3 percent and, because of the way the mortgage is structured, the couple now owe more than they did when they signed for the loan.
They went to court, saying they were deceived. A federal judge sided with them and is allowing a class-action suit involving up to 7,000 borrowers against Chevy Chase. The bank has appealed and on Friday was granted a motion for an expedited appeal. The bank says the terms were clearly stated in the contract and that the family should take any grievance to the mortgage broker who sent the original sales flier and acted as an intermediary between them and the bank.
The case worries the lending industry because of the potential for hefty losses if other borrowers are allowed to rescind mortgages they claim were misleading.
It also underscores the rising uncertainty surrounding the kinds of loans that have emerged in the past five years, said Glenn Costello, managing director of Fitch Ratings Residential Mortgage Backed Securities Group. These loans include such variations as interest-only loans and what are known as option ARMs, which allow people the choice of paying less each month than the interest would be. In many of these loans, the amount owed is deferred to keep monthly payments down. The downside is that at some point payments can rise sharply. The amount owed can rise, too.
Banking regulators have only recently begun offering new information to borrowers about these loans and warning lenders to explain them more carefully. Meanwhile, the loans have proliferated.
“Some percentage of borrowers don’t understand the terms of these loans, and it is to be expected that there would be some issues emerging,” Costello said.
The Andrewses — Bryan, 49, a carpenter, and Susan, 51, a nurse — live in Cedarburg, Wis., and previously had a 5.75 percent fixed-rate mortgage. They say they didn’t realize what they had done until they got their first payment coupon for the new loan in the mail. They couldn’t refinance into a different loan without a $5,700 prepayment penalty. They sued two years ago.
Last month, U.S. District Court Judge Lynn Adelman, a federal judge in Milwaukee, ruled that Chevy Chase had violated the 1968 Truth in Lending Act, which requires lenders to clearly explain loan terms to borrowers. Chevy Chase’s disclosures to consumers showed a “lack of forthrightness” and “would both confuse and mislead an ordinary consumer about the cost of the loan,” the judge wrote.
Adelman ruled that while the borrowers were ineligible for damages, they could to turn back or “rescind” their mortgages. Recision would permit borrowers to be released from the loans and be reimbursed for any interest paid to Chevy Chase as well as their closing costs.
In other words, the ruling may give some borrowers a refund of everything they have paid to live in their houses for years.
At the core of the dispute are some words that appeared on the top right corner of a document the lender must provide under the Truth in Lending Act. One line read: “WS Cashflow 5-year fixed,” and the line under it said “Note Interest Rate: 1.950%.”
Hoboken was great before all the wannabes started moving in. You went to “Biggies” for a dozen shells and Fiore’s for a brazute and muzzadell sandwich.
The question you have to ask yourself about JC is whether you can wait around for the place to gentrify. Building buildings is one thing but making it a really nice place to live in terms of services, stores, etc. takes time. I would never buy something at today’s prices with an expectation that those prices are going to hold up, particularly in an up and coming area. What happens when prices come down in the nicer areas of Jersey, or even Hoboken? Will as many people want to take the risk in JC or will they simply buy the now lower priced place in Bergen or Essex? That is the one issue I have with the upcoming areas – you are paying prices based on what people expect JC to be, not what it is.
Yes, the commute is good, but the crime is bad (certainly worse than Hoboken) If you are willing to take the risk that’s up to you, but if anything, I can see JC losing value faster than other areas because the current prices aren’t based on much at all. Maybe I’m wrong, but I wouldn’t buy there personally.
I am suggesting that Corzine is trying to do something about it
He has done nothing except pass a smoke and mirrors tax cut bill meant to keep the General Assembly Democratic in the November election and keep his popularity from plunging. It is unsustainable and won’t last. If it does, it will just mean shifting the tax burden to other areas. You will pay in the end.
If you look at what his action items are, there’s some great ideas about how to do this (including independent/private/non-political audits of the books to uncover corruption and budget busts).
These are the easy things to do politically. Form committees to explore problems, talk about fighting corruption, talk about fighting waste; all cop-outs that involve no political risk. Any politician can do this stuff; it’s political “mom and apple pie”. It’s easy. It’s punting the problem to the next governor. It won’t save us any money.
Where are the “third rails, sacred cows and 800 pound gorillas” Corzine talked about last July?
Jersey City is in a great location, however, you can not simply push out long term residents just because it is close to NYC. They will stay. Their children will stay. No one likes to admit it, but Northern NJ can not be made up of all upper class.
When NYC is no longer the financial capital (which will happen eventually with technology making Wall St obsolete)Jersey City will remain what it is now. Jersey City.
thatbigwindow: And Jamie Dimon the head of JP Morgan Chase said it s nasically no big deal, not being the financial capital of the world.
#52 NJ Gal: And probably most of those people were too young to rember the last real esate crash, and have nver lived through a recession.
Economi cycles can be delayed, as Greenspan proved with his massive and reckless rate reductions, but they cannot be stopped.
A recession sooner or later will arrive and all the 30 somethings of today will have their horror stories to tell, just like last time.
What is sad, is that so many like myself, the 40 somethings who lived through the last housing crash,and a couple of recessions are going to need a refresher course.
#54 pesche22 Says:
“We are suffering from obesity in Trenton.”
=============================================
Cut the bus service to/from the Welfare Office ! (“The World Makes Trenton Takes”)
” ForeclosuresMass.com reported yesterday that lenders initiated 19,487 Bay State foreclosures in 2006.
That beats a previous record of 17,000 foreclosures set in 1991 during the depths of the 1990s’ housing bust. Filings also rose 69.6 percent from 2005 levels.
“(Last year) was a terrible year for thousands of Massachusetts homeowners,” ForeclosuresMass.com President Jeremy Shapiro said. “More families faced foreclosure than at any other time in our history.””
=====================================
17,000 foreclosures back in 1991 = housing bust
19,487 foreclosures in 2006 = Spring Rebound?
I don’t dig it..
The Banking Gorilla-driven fire sale should start in 6-9 months
Hey, wait a minute, but the housing only goes up, and up .. !
“Economi cycles can be delayed, as Greenspan proved with his massive and reckless rate reductions, but they cannot be stopped.”
bergenbubble,
How true.
Cycles can be masked, disquised, temporarily halted, delayed and even employ vicious counter cycle moves. However, when the fundamentals and technicals coincide and the corresponding cycle turns, watch out. If anybody is on the wrong side of this???? Not a big deal, you’ll just be trounced upon.
hey guys, sorry to say, but there are only 2 ways out of gov’t entitlement mess, both on fed and state level: (1) massive tax increases; or (2) massive benefit cuts.
given the political reality that baby boomer retirees will dominate politics for the next 20 yrs, my money is on the former.
incidentally, this makes a fairly strong argument for converting wealth to tangible assets like RE
JB: is there any way I can get an idea where average prices for River Edge were for 04, 05, 06, or just an idea if they have dropped fom 05 to 06?
I do have a realtor now, who is willing to provide me with tax information etc., but I would like to put together my own information, so that I can tell her what is going on, rather than the other way around.
skeptic: So if we need massive tax increases to pay for them, I guess I should have no problem paying 25 to 30K a year for a crappy cape, 45% tax bracket,and a 10 to 12% sales tax.
Especially so since NJ is creating all these restaurant and home health care attendant jobs.
bc bob such cycles could last decades. you can be right but your timing could be way off and you could miss out on some nice gains. keep your ear to the ground so you can hear the stampede and get out of the way in time. sound advice for the nasdaq pop. it’s debatable where the housing market will go but it’s clear many here are hearing the footfalls…
at least we can all take heart in the fact that a massive black market economy will emerge to avoid oppressive taxation. maybe everyone will start wearing hats again like in prohibition
epic meltdown approaching for NYC condos (courtesy of the Housing Bubble Blog)
****************
From New York Business. “Despite a significant slowdown elsewhere, residential construction in New York City continued at a torrid pace in 2006, according to newly released figures from the U.S. Census Bureau.”
“The year saw the second highest number of building permits for privately owned residential units since 1972. Jason Bram, an economist at the Federal Reserve Bank of New York, points out that the 30,927 units that received permits in 2006 in New York City exceeds the total issued in the six-year period from 1990 through 1995.”
“In addition, last year’s figure includes only new construction and does not include units in office buildings or hotels being converted to residential use, or the units re-built in dilapidated buildings, Mr. Bram says.”
BBB: Averages for River Edge
2004: 459,213.33
2005: 521,053.13
2006: 545,494.72
“bc bob such cycles could last decades.”
Richard,
I agree. I’ve always said when the worm turns it goes a lot longer than anyone can imagine. Presently, I’m in some markets that I expect will last between 1-2 decades [total]. I don’t need to debate where housing goes from here. I have zero risk in that trade.
looks like everyone’s checking out each other’s ‘zillow’…
interesting article on cnn:
http://money.cnn.com/magazines/fortune/fortune_archive/2007/02/19/8400262/index.htm?section=money_topstories
I realize ThatBigWindow already posted information but since I took the time to collect I’m posting too!
River Edge Average and Median Price
SFH
2004 $443,859 $429,000
2005 $505,623 $476,000
2006 $507,518 $475,000
Condo, Co-op, Twnhse
2004 $353,271 $430,000
2005 $368,714 $444,000
2006 $378,883 $492,500
All
2004 $435,367 $429,900
2005 $496,830 $474,900
2006 $498,106 $477,000
The people of New Jersey are getting what they deserve. It is a wealthy state, and as a share of its residents’ income, its taxes have been average, its services good. It benefits from having a low poverty rate and less of a social service burden than New York.
But for 20 years New Jersey voters have voted for something for nothing, and New Jersey politicans have delivered. Low gas taxes. Clothing exempt from sales taxes. Lower income taxes on clothes. Big spending increase for education. Richer pensions.
You got it from Kean. Florio tried to put a stop to it, and you threw him and the Democrats out. Christy borrowed against the pension funds, expecting a perpetual boom to bail the state out or perhaps not caring. McGreevey saw what happened to Florio and did a Christy.
Now you will get taxes without services, but don’t think you can be better off by moving across the river, because New York State did many of the same things!
The problem isn’t New Jersey. It’s the g-g-generation in charge.
Jim,
perhaps you could play the background
music from “shaft” .
Thats how the NJ taxpayer should feel
after reading about the tax decrease we
will be receiving.
another new bottom prediction!
http://rds.yahoo.com/_ylt=A9htfMQPM8pFxAcAHAXQtDMD;_ylu=X3oDMTBjdmNoOTVjBHBvcwMyBHNlYwNzcg–/SIG=14h818qei/EXP=1170965647/**http%3a//www.marketwatch.com/enf/rss.asp%3fguid=%257BD3228219-2D28-4B44-8796-E63E9AD525ED%257D%26dist=rss%26siteid=mktw%26rss=1
Jersey City:
I lived in downtown Jersey City for a number of years. Was going to school in Manhattan at that time and JC was an affordable place to live on a student budget. During the time I lived there in the mid 90s. I my car stolen. I had the Battery stolen from another car (Mind you, This time, it was just the battery, not the car). Down town JC has come a long way since then.
It is no Hoboken. It is a very mixed neighborhood which has many rent controlled buildings. Each block can be different from the other. If I were to buy a place there, I would stick to buildings between Grove Street and the exchange place water front.
If you go to Ibby’s falafel in near the Grove Street Path, he has an article on the wall from NY Times published sometime in the mid eighties talking about the revival of Jersey City. I must say it is finally happening after 15 years.
From Marketwatch.
Housing still on down slope
Economists say no recovery until midyear; prices face record fall
link
It is kind of surprising to read this from major media outlet
CC
Less of a social service burden, Camden, Newark, Trenton, Paterson, and all the other dead and dying entities in the state.
High income jobs dying (phara,telecom etc)
As far as lbig incomes in general well lets see. In Bergen countythe richest county in the state (or it used to be) over 70% of homeowners have incomes of 100k or less, no big deal today.
I agree we get what we deserve, and many deserve it. You see part of the roblem is NJ thinks we are rich, and many spend like we are rich, but the reality is much different.
No recovery until mid-year? What happens in mid-year (which is about 4 months from now) to spur a recovery? There will be no recovery in mid-year, in fact things will kicking into full gear (downards)
oh yeah, that’ll happen.
“Strength in consumer spending stemming from more jobs and higher wages and improvements in the U.S. trade balance will help buoy the economy, he said.”
http://www.nytimes.com/reuters/business/business-usa-fed-plosser.html
#71 tbw and # 74 Rich in NNJ: So if i ak readingt his right, then prices in River Edge are up slightly fron end of 05 to end of 06?
Am I missing something?
BBB,
Realize, in Bergen County for 2006 prices peaked in August and didn’t start declining until September.
The Average price is up 0.3% and the Median is up 0.4% over 2005.
Factor in inflation…
I echo people’s Hoboken sentiments as I’ve lived here for eight years. I’ve both owned and rented and I’ve never been happier in this town than when I’ve rented as I am currently.
While there has been more development and the addition of a few nicer restaurants the town itself is still corrupt as it has always been. Same politically connected born and raised types getting a bunch of no-show/no-work government jobs provided by politicians who are bought and sold by the developers and real estate agencies. They’ve already spent the tax revenues from whatever new construction comes online before it is even built. The school system is an absolute joke.
Essentially, if you are going to buy a place with the intention of starting a family and being there for ten years move out to Short Hills or Montclair or someplace where you are at least seeing your tax $$$ not being totally wasted. If you are looking to live in Hoboken renting is your wisest option.
#84 Rich: Thanks for that information, I was under the impression that prices peaked in August 05 in Bergen county, not in August of 06.
Guess we will not start seeing significant declines until the late Spring early summer. Thanks again for your efforts, they are much appreciated.
does anyone know how to get tax & property info on a house in mercer county? it’s not available on the nj property search site thru monmouth county that JB links to.
My observation –
I have recently noticed quite a few realtor owned properties coming up for sale. Can we call this trading based on ‘insider information’?
does anyone know how to get tax & property info on a house in mercer county? it’s not available on the nj property search site thru monmouth county that JB links to.
njrebear Says:
February 7th, 2007 at 4:03 pm
My observation –
I have recently noticed quite a few realtor owned properties coming up for sale. Can we call this trading based on ‘insider information’?
bear,
What area? Condo or SFH?
CC
Ithink_ithink posted this but I feel it needs more attention.
Housing still on down slope
ORLANDO, Fla. (MarketWatch) — The U.S. housing market has not reached bottom and will likely not begin to recover until the middle of this year, three housing economists said Wednesday.
“I don’t think we’ve seen the bottom,” said David Berson, chief economist for Fannie Mae. “We’re going to see a much bigger drop in investor demand this year. But by the second half of the year the market will stabilize, if investors pull out quickly.” (What?)
Berson said he expects the home-price index calculated by the Office of Federal Housing Enterprise Oversight will show a nationwide decline in values for 2007, the first time that will have happened since the data began being collected in 1975. Unlike other measures, the OFHEO data measure the price changes on the same homes over time, meaning the index is less likely to be skewed by the types and locations of sales.
….
“It won’t be a big decline, maybe 1%. And the declines will be far more centered in areas that have had the most investor activity,” he said. “Real home-price gains, adjusted for inflation, will be negative this year, next year and possibly the year after that.”
….
“There is still a little room for sales and starts to weaken,” said Frank Nothaft, chief economist for Freddie Mac. “We should hit the trough in the first half of the year. But we’re a few years away from the robust levels of activity we saw in 2005.”
Emphasis is mine
More at link above
Rich
I live in JC, and I will say this. In this market it is best to buy either a brownstone or really large loft, because it clears out many younger people and speculators, so you will get a better deal. But know this 1 million will not buy a Brownstone in the best neighborhood, your taxes will be astronomical, and it is really a mixed bag with respect to your neighbors.
I do not see such high upside potential, these are quirky old homes with problems and factoring in taxes they have a very high cost. When you buy new you are getting the abatement, a location in a better neighborhood, and smaller maintenence issues.
Also JC in general has a nasty crime problem, homeless problem, it is sketchy at best so you need to be aware of this. Right now I do not see a whole lot of upside potential in JC. It has a good location but the prices are high as high as Hoboken and it is not Hoboken, someday maybe it will be as desirable but not now. If you buy the 800k brownstone as opposed to anytype of condo you can assume the psf is in the low to mid $300s. I think at that pricing you will not get burned too bad but the problem is almost everything I have seen short of a few brownstones is priced at $400-$450 psf which I don’t think there is a market for. The other thing is the market here is very speculative and how does 10,000 units of inventory comming in affect it. Long term there is promise but do you have 30 years? If you can handle the problems that exist there right now than go for it but don’t expect change to be rapid. The old guard is still around and they still run the city, crime is high, and for all the talk of gentrification, I’d bet there are 3 old JC residents for every 1 new downtown. Also the situation surounding historic downtown and local establishments is getting worse, commercial rents are skyrocketing and no one is willing to pay, utill we see some national retailers, who knows what will come?
CC,
Middlesex along Route 1. Condos and SFH.
I was talking to a friend of mine from Orlando. After the recent tornado attack, a home builder has offered his vacant houses to displaced home owners for ‘free rental’. Catch – The ‘victims’ have to sign a contract stating that the home builder will build their new homes.
thatbigwindow: Just curious when you were looking in RE, did you bid on any houses?
The Fed Probably Thinks It Is On Hold for All of 2007
http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0702/document/us0207.pdf
On housing:
We believe that the bottom of the current housing recession lies quarters ahead. An average post-WWII era housing recession entails about a 25% peak-to-trough decline in real residential investment expenditures. As of the fourth quarter of 2006, these expenditures were down about 13% from their Q3:2005 peak. So, unless this is a milder-than-average housing recession, the trough lies ahead.
And on tighter lending standards:
… effective housing affordability is likely to fall as federal and state financial regulators clamp down on “exotic” mortgage products as well as the mortgage market itself. In the past couple of months a number of exotic mortgage lenders and brokers have closed their doors as intermediate buyers/securitizers of this product have pulled back. The Fed’s latest survey of bank lending standards shows a sharp rise in the number of banks tightening their lending standards for residential mortgages (see Chart 2). In other words, credit conditions in the mortgage market are tightening.
>>
Source calculated Risk
jb,
i’m up for moderation.
they just had the spot on discussing
land prices on Bloomberg.
Very sad. However, could be some
opportunity.
Are their any ex Realtors on the Blog?
Let me also add my raspberry to other, fellow Hoboken bashers. I moved there immediately after college in the late 90s — which seems to be the town’s target demographic, as it were — stayed on through law school & I’ll remain there for as long as I work in Manhattan. As far as I am concerned, the only thing that it really has going for it is the ease of commuting in/out of Manhattan — the bars and restaurants are fun, esp. when I was younger, but much less so the older one gets. I can’t imagine raising a family here — not only because of the grossly-overpriced property, the crappy schools and the Sopranos-esque political culture, but also because I don’t want my kids to be surrounded by the perpetual frat-boy meatheads that this town attracts (like flies are attracted to a steaming pile of dung) who shout at their ‘bros at all hours and relieve themselves of various bodily fluids on my stoop.
does anyone know how to get tax & property info on a house in mercer county? it’s not available on the nj property search site thru monmouth county that JB links to.
Email me, I have access to subscription-based systems that cover the entire state.
jb
“HSBC Says Bad-Loan Charges to Exceed Analysts’ Estimates by 20%”
http://www.bloomberg.com/apps/news?pid=20601087&sid=ar.WRLz45vtA&refer=home
New Century Warns
http://www.thestreet.com/_yahoo/newsanalysis/banking/10337574.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
The company also “expects to record a fair value adjustment to its residual interests to reflect revised prepayment, loss and discount rate assumptions with respect to the loans underlying these residual interests, based on indicative market data.”
New Century will also restate earnings for previous 2006 periods to fix its accounting for allowance for loan repurchase losses. The restatements will cut earnings in previous periods, the company said.
“As winter temperatures return to normal or colder-than normal levels, both housing construction and sales activity are likely to weaken again, dousing talk that the housing recession is over. Moreover, effective housing affordability is likely to fall as federal and state financial regulators clamp down on “exotic” mortgage products as well as the mortgage market itself. In the past couple of months a number of exotic mortgage lenders and brokers have closed their doors as intermediate buyers/securitizers of this product have pulled back. The Fed’s latest survey of bank lending standards shows a sharp rise in the number of banks tightening their lending standards for residential mortgages (see Chart 2). In other words, credit conditions in the mortgage market are tightening.”
“But job growth is picking up, which will offset the negative effect on consumer spending from slower MEW, right? Wrong! Job growth is slowing as housing-related jobs contract, as shown in Chart 4. As builders complete houses already under construction, they will begin to lay off even more workers. Why don’t we think builders will start a lot of new construction? Because they are walking away from options on land. Mortgage lenders and brokers will begin to lay off more employees as the housing market continues to languish. Once a real estate broker, always a real estate broker. But that doesn’t mean real estate brokers will generate much in commissions as sales and prices remain soft.”
http://www.financialsense.com/editorials/kasriel/2007/0207.html
FirstFed’s portfolio of risky mortgages has the short-sellers pouncing
http://www.businessweek.com/magazine/content/07_07/b4021072.htm?campaign_id=yhoo
Some 40% of the company’s 15.3 million shares have been sold short. That dynamic may have helped boost the stock. As it climbs, hedge funds and others rush to buy more shares to cover their money-losing short position, pushing the stock higher.
FirstFed’s portfolio of risky mortgages has the short-sellers pouncing
NJbear:
Hmmm. With that much of the float being shorted, perhaps it is worth a look at First Fed. Could an investor benefit from the short squeeze? Maybe I should take money I am saving for my condo “investment” and go long (for the short term) with FirstFed. Then again I am comfy with my high yield money market funds and CDs!
kk,
Thought of buying occured but it’s too risky for me….
NetBank sees 4th-qtr loss steeper than expected
http://www.netbankinc.com/pdf/netbank_operating_stats.pdf
The company shut down its non-conforming mortgage operation during the fourth
quarter as planned. Repurchase requests in this channel rose sharply following the announcement of management’s decision to close the business and accelerated further in late December. Non-conforming epurchases far surpassed the level management had anticipated and resulted in additional provision expense on top of the upwardly revised estimate management provided in its last guidance. Provisions in excess of typical expectations totaled approximately $26 million for the fourth quarter of 2006. As context, management
points out that the company’s non-conforming repurchases in the fourth quarter were equivalent to all of the repurchases in the prior three quarters combined.
SG Says:
February 5th, 2007 at 7:03 am
What a nice way to discuss RE and celebrate JB’s Blog that got all of us coming here pretty much daily, by coming to NJ RE Report Network Event.
Please sign up for the Networking event (aka Cult Gathering) for some nice lively fun & discussions (along with Rituals).
http://www.evite.com/app/publicUrl/skgala@yahoo.com/njrereport
If many people sign up, we can try to get some exciting folks come as well. I dont think David Lereah will be in town though :-)
Guys, don’t forget to RSVP to SG’s get together. It is sure to be a great time.
Also, is there a final decision on the location?
curiousd (51)-
The future of the gambling (I can’t stand the new euphemism, “gaming”) industry is most certainly NOT NJ.
It’s Macao.
AC is a town full of junkies and hookers that sports exactly ONE top-notch hotel/casino (Borgata), one pig that’s been given a fresh coat of lipstick, thanks to government largesse (Tropicana) and a bevy of past-their-prime crapboxes that remind one of the final days of the Catskills.
Need Carolina to step up and put a pounding on Dook in the 2nd half, or I’m gonna get even surlier.
Billions lost in Kyoto carbon trade loophole
http://www.ft.com/cms/s/c07a48b4-b6d9-11db-8bc2-0000779e2340.html
Billions of dollars are being wasted in the international carbon trading system owing to a loophole in the Kyoto protocol, according to a study to be published on Thursday in the journal Nature.
The Financial Times revealed last month that a few Chinese factories and carbon traders were making large profits by exploiting the regulations in the protocol surrounding a potent greenhouse gas, HFC-23.
By installing cheap equipment, the companies could gain “carbon credits” which they could sell for hundreds of millions of dollars.
NJ is basically insolvent. The tax base is fleeing while fixed costs continue rising exponentially. When the excrement hits the fan it is going to be very interesting.
http://inquirer.philly.com/rss/News/njrebateplan.pdf
I am looking in the area of clifton and nutley to buy a townhome but the prices are way up into $415k-450k. I feel they are way overpriced and with the taxes make it so unattractive that moving to hicksville long island where the commute is 45 minute to midtown and taxes are upper $3000 on single and two family houses. Shall I move out of NJ?