From the Boston Globe:
Fears of increased mortgage defaults put spotlight on subprime lenders
If it looks like a bubble, smells like a bubble, and tastes like a bubble, it must be a bubble.
Or is it?
The smart money now says the US housing market, overall, is not in a bubble. But at least one part of the market certainly looks pretty frothy — the mushrooming “subprime” mortgage market for borrowers who can’t get standard loans. That bubble seems to be bursting.
…
Subprime lending rose from $150 billion in 2000 to $650 billion at the end of 2005, and now accounts for more than 20 percent of the mortgage market, the government says.In theory, subprime loans can be good. In exchange for higher-than-usual interest rates, loans are offered to people who otherwise could not buy homes because of low incomes or tarnished credit.
But studies have shown that mortgage brokers and other lenders often press subprime loans on borrowers who actually could qualify for conventional mortgages with lower interest rates. Why? Because the lenders pay the brokers bigger commissions on subprime loans.
To make matters worse, about 80 percent of subprime loans carry interest rates that adjust every 12 months, starting after the loan has been held for two years. Many people who got these loans in 2005 are now seeing their monthly payments jump 30 to 50 percent.
Finally, about 70 percent of subprime loans, unlike conventional ones, carry prepayment penalties that can trap borrowers by charging thousands of dollars if they refinance within the first three to five years.
…
Some consumer groups have proposed a “suitability standard” to require brokers to put the borrower’s interests first when recommending a loan. Stockbrokers work under such a rule and can be banned from the business for violations. Another remedy would be to require better disclosure of mortgage brokers’ commissions, so borrowers can tell if they’re being pushed toward a loan that’s more profitable for the broker than others.Of course, borrowers need to do their part. If you are offered a subprime loan ask lots of questions. Is there a prepayment penalty? What’s the highest rate the loan could go to in the future? Are there other loans you can qualify for?
From the Denver Post:
Risky loans come home to roost
To understand what’s happening to the mortgage industry, take a look at Douglas County. One of the country’s most prosperous communities now has a foreclosure rate approaching what its former public trustee calls a “tipping point.”
In 2006, foreclosures as a percentage of population were higher than any other year since 1991, said Jack Arrowsmith, Douglas’ former public trustee and its current clerk and recorder.
At a recent foreclosure sale, Douglas officials offered 32 residential properties for auction. According to Arrowsmith, nobody bid on 31 of them.
That’s why mortgage companies making risky loans are now closing by the hundreds.
Offering no-money-down home loans to unqualified buyers using artificially low teaser interest rates was just that – a tease. Especially here in Colorado.
We led the nation in foreclosures most of last year. We’re still No. 4 in the latest RealtyTrac poll.
So on Tuesday, when a Federal Reserve governor expressed shock at the quick national collapse of the risky lending market, she sounded vaguely like Capt. Reneau in “Casablanca.”
Subprime lenders, as risky-loan makers are called, are closing up so fast that financial experts now debate if it will affect the entire economy. Analysts can’t agree. But with stock-market-traded mortgage companies reporting huge losses from subprime lending, it can’t help.
The explanation for crazy lending has always been crazy.
“It is no longer community banks making mortgage loans,” Englewood lawyer Robert Hopp told a recent foreclosure seminar at the Colorado Bar Association. Out-of-town lenders provide mortgage money for a fee. Risky loans are quickly packaged with other mortgages and sold as securities for a fee. Investors buy the mortgage-backed securities expecting a fat return.
Everybody gets paid. Risks get diluted in big loan portfolios. Those who can’t afford houses suddenly can.
And lo and behold, the American Dream comes true. Is this a great country or what?
It all sounds too good to be true because it is.
From MarketWatch:
NovaStar’s high-wire act
If investors learn nothing else from the debacle now known as NovaStar Financial, it should be that no matter how the financial markets have changed, no matter how smart people may think they are, no matter how much it may feel that this time is really different, one basic rule of investing stands: The higher the reward, the higher the risk.
That hit home in the hardest way Tuesday after NovaStar, with its 30% dividend yield, reported fourth-quarter results that left investors stunned as the REIT’s shares plunged 33% in aftermarket trading to $11.81.
Just an FYI, there has been a little “history” behind Greenberg (the author of the piece directly above) and NFI.
jb
Bank of Japan raises rates
Central bank doubles key lending rate to 0.5%, highest in more than a decade.
http://money.cnn.com/2007/02/21/news/international/bc.japan.boj.wrapup.reut/index.htm?postversion=2007022103
From MarketWatch:
Home-purchase loans at four-month low
Despite a drop in mortgage rates, applications for mortgages to buy homes fell 4.8% last week to the lowest seasonally adjusted level since last October, the Mortgage Bankers Association reported Wednesday.
It marked the fifth week-to-week decline seen in purchase loans in the past six weeks, the MBA’s data showed.
Purchase loans are down about 7% on a year-over-year basis, similar to the 8% decline in home sales over the past year.
The total number of mortgage applications as tracked by the MBA — including home-purchase loans and refinancing loans — fell 5.2% compared with the previous week but were up 4.1% compared with same week a year ago.
The number of applications to refinance an existing mortgage dropped 5.4% week to week but were up about 22% from a year ago. Refinancings accounted for about 45% of all applications, the lowest share since September.
Mortgage rates were mostly lower last week.
CPI due out at 8:30am this morning..
You know what will cause drop in prices – going back to 20% downpayment…..
IT requires Real earned money , not paper money…
Well..
We got tired of waiting and made our first offer today.. 30% off 2005 sale price. House has been on the market since August.. Sellers seem desperate, So, I guess we will see how desperate they are. Wish us luck and maybe you will see us on Grim’s “Lowball” list…
Later
Tan
a Coworker of mine made an offer on a house in Woodbridge Area, listed 469 , did not sell all summer, relisted at 429,000, she made a lowball offer after a little bit of negotiation, they settled on 405,000. Not Bad. Really nice ranch with lots of room. That was 65,000 off of last years price.
Another house in Massachusetts, was listed at 425,000 last year, i looked up the sales records on it and it sold for 330,000.(4500 5 bed, 3 bath on 1 acre land) My family looked at this house and wanted to buy it. And being a lowballer myself. I told my wife we might be able to get it for 375,000. People saying there is no Bubble are liars, because the proof is in the Pudding. I know this wasnt about NJ, but I am from NJ…thought i would share.
Suitability and ask questions??? Is this writer trying to be comical??
Regarding post # 1. Is it just me or does Denver seem to be imploding at a faster rate that any other city?? Is it more bubble related or economic forces at play in Denver??
http://news.bbc.co.uk/2/hi/business/6381335.stm
Japan ups interest rates to 0.5%
Japan’s central bank has raised interest rates to 0.5% following signs of steady growth in the economy. …
Well I lived in Denver for 6 years.
My impression:
Denver-has no real industry/jobs – At All. So all job growth was in Constrution – it was ridiculous in the last 7 years how many houses/condo’s/TH were build.
TO put it in perspective: one bedroom condo in 1999 was listed for sale for 40K.
The same condo was listed for sale in 2005 for 180K!!! Do not know what are the prices now.
One of my friends there bought a TH last year. HIs parents gave him 30% downpayment – they sold their house and moved back to TX.
Right now he is in negative equity on his TH judjing buy comparable TH in the same complex.
Granted his parents sold tehir house in 2005 as well – at the top.
Telecommunications/IT left the area about 6 years ago. I have a friend who is senior engeener for HP Denver office- he said they had a choice last year to hire ONE new employee in US or 5 In India with same overhead costs… What do you think their have chosen??
SO the only jobs there left, with housing dead, are few nice Universities, CU boulder medical center and some farming…
So once flow of people from escaping California with huge money who buy’s house in Denver at double average price and thinks it is a bargain stopped, there is not way to stop collapsing housing machine.
Most people – just wanted to get in at any cost, buying 200K houses with arms with 30K family!!! income.
A lot (up to 35%) of hispanic population who does not speak a word of english, did not help either.
For example in Pueblo Community colledge on of the requirements to be hired is to be bilingual – spanish and english!!!
I know it is not very PC but thats the situation in west – NM, CO, AZ, TX. Lender wouldshow them low monthly payments, make them sign at the dotted line, and thats all they know. They are truly belived that US is a great country in which everyone would have a house easilly and with no problems… Reality settles in 3 years when neg ARM resets and they are thrown out of theoir house.
Denver is nice though – people are nice, weather is great, it is dry – house never rots, no termites, moscitos, water in teh basement, mold.
And one can get a big house there right now with may be 170K. And I mean 2000sqft “real” 4 bedroom houses, not NJ cape cods where attik is counted as two extra bedrooms!!!
Inflation under control? From MarketWatch:
U.S. Jan. CPI rises 0.3% vs. 0.1% expected
U.S. Jan core CPI rises 0.3% vs. 0.2% expected
U.S. core CPI up 2.7% year-on-year vs. 2.6% previously
U.S. CPI up 2.1% year-on-year
U.S. Jan. medical care prices up 0.8%, most in 16 years
U.S. Jan. food prices up 0.7%, most in 2 yea
Al [13,Denver],
Thanks!
“Inflation under control?”
Core is outside Fed’s parameters, 35% higher [yoy] than their acceptable high end of the range.
I too have spent some time in Denver.
Here is my take.
That area was hit pretty hard due to tech and IT jobs going away.
Yes, Denver does not really have a dominant sector, but they do have all sectors.
The wages there are pretty stagnate.
I was out there just this past summer. Alot, and I mean ALOT, of houses are on the market.
But, those houses are still overprices (but still, nothing like the overvalued prices in NJ).
I forsee Denver having a quick and minor correction. Not major correction. Why? Because it still a very nice place to live, great place to have kids, clean, safe, better tax environment. Even with the flat wages, and housing being slightly over priced. Its still an affordable and people “new” to the RE market can get in the traditional ways. If they are not be seduced by the real estate cartel.
Alot of people are leaving the coasts and heading for the Denver area. You would be very lucky to find someone in Denver who is born and bred from the area.
People considering leaving NJ should check out the Denver metro area.
SAS
I still think once housing bubble will really collapse in California we will be amazed how huge it was!!
It all started there.
You should see how many californias cashed out and fleed to lower cost of living stated inthe last 5 years. They do nto flee to Northeast for obvious reasons, so people from NJ just do not realize the magnitude of the migration hich was happening. Small towns all over north west are overrun by Californians. And I mean 5-10K population towns – I guess if you make 500K on selling of your house, move into small town, buy a house for 100K, bank the rest – you can retire and enjoy life…. or take a low paying part time job which you love to do. Plus a lot of professions now can work from home…
But for small town population – that causes huge (by their standards)increases i house prices, aadn small town incomes just can not support these home prices.
Al,
Things like you say are happening in the town of Rapid City, SD.
A small town, about 60-70,000. If you included Ellsworth AFB. But ALOT of CA people are sold high out in CA, bought up RE for pennies on the dollar by CA standards. And are now investing the leftovers and doing either small jobs and working from home.
Very interesting to see this happen.
SAS
A few things,
The collapse of sub-prime is unquestionably on and it will have people screaming by July. As bad as the foreclosures will be (really, really bad), the fact that loans aren’t getting written is what’s going to rip the sector apart and bleed into the larger economy.
As symbolism I guess Japan’s rate increase is worth something, but an interest rate of .5% is not materially different from the .25% rate. If you’re visiting prudentbear (and you should be) you probably know Japan’s biggest publicly traded property company, Mitsui Fudosan recently closed at an all-time high of Y3,440. The previous high was in…1989.
Finally, the stockpile of greater fools is still not depleted. A friend who has moved out of the area recently signed a contract on his studio apartment in Jersey City for above his asking price (which was ludicrously high). He purchased the studio about 8 years ago for less than 25% of what he is selling for.
I forsee Denver having a quick and minor correction. Not major correction. Why? Because it still a very nice place to live, great place to have kids, clean, safe, better tax environment. Even with the flat wages, and housing being slightly over priced. Its still an affordable and people “new” to the RE market can get in the traditional ways. If they are not be seduced by the real estate cartel.
I think Denver is amost done with it’s correction. In Denver in the last year prices dipped the most of the country. – Real selling prices – sometimes more than 30% below asking. Why it was so fast there?? I do not know really.
Alot of people are leaving the coasts and heading for the Denver area. You would be very lucky to find someone in Denver who is born and bred from the area.
Very good point – that ‘s why I think Denver prices will stay at about current level (hopefully a lot of retiree’s with money will coe to the area) which is very affordable right now.
The only reason I am wondering is rolling down Avalanch – and I do not mean the hockey team(they suck so bad – I saw them win 2 cups) – The looming HUGE INVENTORY OF EMPTY HOUSES avalance!!! Check Denver Metro area in Realtor.com…It is kind of scary…
I guess what’s good is the low house price if you can not get a job???
P.S. A lot of people in Denver still remember Oil Bust of 80th…… One of my professors there bough a house in something like 1980 and in 2003 was the first year he was in positive price figure – and I mean not inflation adjasted but nominal!!!!! So it took him 23 years to just get back to the same number!!!
And with weak job market, rents are low right now as well.
From 1999 to 2004 – my rent there was actually dropping every year!!!
That is why I think the deciding factor in long term NJ home prices will be employment picture – if it continue it’s steady decline, like it was for the past 10 years well NJ will turn into a statewide wellfare area with small Ilands of sky-high priced commiter (to NYC) towns.
Has anyone seen any kind of research into Sub-prime mortgages. For e.g. What is percentage of sub-prime to regular prime over last decade? I have seen numbers of ARM resets, but haven’t seen percentages compared to prime. I would imagine percentage grew every year in last decade.
Also I was hearing on CNBC that many Wallstreet banks are eyeing to buy these sub-prime companies, as they may be cheap and can provide them access to many retail customers. If that is the case, then may be the loss will be overcome by big-bank if they can create better business model.
Post #22: I meant the percentage of sub-prime usage in NJ. Just so that we can see how much this will impact NJ housing.
Wall Street is where the buck will stop.
Lenders continually make these idiotic mortgages as long as there’s a secondary market to sell them too. Right now, the mortgage backed securities market is in the process of re-evaluating their stance on the sub prime mortgages. Once Wall St. no longer buys these crappy mortgages, the lenders will top selling them. It’s not up to underwriting departments to tighten their credit standards, they are just the front door to the secondary market.
I forget where I read it, but it goes something like this.
“There is no such thing as a bad loan, just a bad price for a loan.”
Subprime lending *WILL NOT* disappear, loans will continue to be made, the question is… at what price (rate)? And, if that price gets to be much higher, how will that impact subprime demand?
jb
For those interested, the CFO of washington DEC publishes a report of Total tax Burden throughout the US, Income, Property, Auto, etc every 2 years.
There are a lot of “issues” with it but it has gotten better over the years. The CFO does breakouts via income levels and ranks each state. They actually take the largest city of each state for comparison.
http://cfo.dc.gov/cfo/frames.asp?doc=/cfo/lib/cfo/services/studies/Tax_Burden_05NATION.pdf
Al/#18,
Agreed… the reasons are obvious why these people have moved (cost/CA home appreciation) but what is not clear is if it is sustainable /permanent trend. A while back this blog talked of the ‘half-backers’… That is northeast natives that moved to Florida for retirement, went crazy down there and moved halfway back to Carolinas…and some back to NE.
We’ll see…I think the general trend will be the dense regions of US get denser…the sparse will get more sparse. Like it or not… standard of living is many things to many people.
“A cynic is one who knows the price of everything and the value of nothing.” – Oscar Wilde
So true.
The subprime fiasco is the result of an “alignment of the planets” between banks, brokers, buyers and investors:
Buyers, either out of ignorance of the terms, a gamble that houses would go up forever or simply wanting it now and not caring about the consequences, were hungry for whatever money someone would lend them to buy into the American dream.
Investors, hungry for yield, threw money at anyone who promised to pay it back at some point, even if the borrower wasn’t creditworthy and had no means to pay back the debt. You don’t even need to prove your income. Just tell us what you make and we will give you the cash. Can’t afford the payments? Don’t worry, we can just add unpaid interest to the loan balance.
Banks and brokers were more than happy facilitate the transaction between investors and buyers. After all, they are not holding the debt. They get their fees and walk away.
Hey, and for the last few years, the big gamble worked. Home price appreciation bailed out buyers and insured investors’ would get paid. Will the days of appreciation over, we get to see who is swimming naked.
Al,
“rents are low right now as well.
From 1999 to 2004 – my rent there was actually dropping every year!!!”
Correct me if I am wrong, but I think rents nowadays in the Denver area are actually increasing at a pretty good clip???
SAS
“In the housing market, we had a swift downward shift, which caused the guidelines we had in place to no longer be appropriate,” Hartman said in a conference call. Novastar is implementing a new, more selective standard to evaluate prospective borrowers.”
“But so drastic are the credit woes in Novastar’s existing portfolio that the company is considering changing its corporate structure. Novastar Financial is technically a real estate investment trust, which means instead of paying taxes it distributes 90 percent of its taxable income to shareholders as a dividend.”
“Novastar Financial doesn’t think that strategy will work anymore because the company’s not sure how much taxable income it’s going to generate for the next five years. Without profit to funnel into dividends, the REIT structure may become too confining, the company said.”
http://www.businessweek.com/ap/financialnews/D8NE3Q780.htm
From David Lereah Watch:
David Lereah’s Condo Investment Goes Bust
Found some information till 2005 on subprime.
Percent of number of loans with adjustable rates
1998 => 12
1999 => 18
2000 => 21
2001 => 11
2002 => 16
2003 => 17
2004 => 33
2005 => 30
Effective interest rate, \4 all loans
Adjustable-rate loans \2
1998 => 6.5
1999 => 6.6
2000 => 7.2
2001 => 6.4
2002 => 5.7
2003 => 5.0
2004 => 5.2
2005 => 5.6
http://www.census.gov/compendia/statab/banking_finance_insurance/payment_systems_consumer_credit_mortgage_debt/
Its clear to see that sub-prime percentage nationally grew from 20’s range to 30’s in 2004 & 2005. But during this period, the interest rate paid by ARM loans does not seem to be very low as well. It was about 5%. Looking at this data, I don’t think there will be significant shake out. I think majority of sub-prime guys should be able to refinance without huge increase in bill. Effective rate change will be about 1% increase in rate today.
Though I agree house prices are too high, but would like to quantify how sub-prime would impact house prices.
From Bloomberg:
Housing `Hangover’ Kills Jobs as Spending Wanes; More Cuts Loom
Denise Hamilton was earning the biggest salary of her life painting and packing refrigerator parts until Collis Inc. decided to shut its Evansville, Indiana, factory and she was fired.
Hamilton, 36, lost her $11.20-per-hour job last month because Collis’s main customer, Whirlpool Corp., the world’s largest appliance maker, cut production after a drop in home sales reduced demand for new refrigerators, washing machines and dishwashers. Whirlpool fired 500 workers at its Evansville plant and Collis fired 160, including Hamilton.
“Working for Collis was the best job of my life,” said Hamilton, a mother of two who lives on the outskirts of Evansville. “Money is going to be tight.”
New and existing home sales dropped almost 10 percent last year, depressing demand for products from copper pipes to kitchen sinks and resulting in the loss of about 100,000 jobs in the U.S. Housing-related unemployment probably will increase in 2007, according to the Joint Center for Housing Studies at Harvard University in Cambridge, Massachusetts.
Even if the housing market improves in the second half of 2007, as the National Association of Realtors predicts, sales of furniture and construction supplies will stagnate, said Amal Bendimerad, a research analyst at the Harvard center. Housing and related industries account for about 23 percent of the economy, according to the center.
“Appliance manufacturers and other suppliers are already feeling the heat, but they may not feel the full impact until the end of 2007,” Bendimerad said. “There’s typically a lag of as much as a year.”
…
U.S. furniture makers fired 28,000 workers in the past year, according to the Bureau of Labor Statistics. Homebuilders have cut 24,000 jobs in the past three months alone. The U.K.’s Wolseley Plc, the world’s biggest distributor of plumbing and heating equipment, has eliminated about 4,500 positions in the U.S., about the same number that Whirlpool plans to shed.
…
Masco, maker of Behr paint and Delta faucets, is firing 8,000 people, or about 16 percent of its U.S. workforce, after reporting its first loss in five years. Emerson Electric, based in St. Louis, cut 230 jobs at a plant that makes furnace components and Stanley Furniture in Stanleytown, Virginia, fired half the workers at one of its factories.
sas Says:
February 21st, 2007 at 9:24 am
Al,
“rents are low right now as well.
From 1999 to 2004 – my rent there was actually dropping every year!!!”
Correct me if I am wrong, but I think rents nowadays in the Denver area are actually increasing at a pretty good clip???
SAS
Right before I left Denver in the beginning of 2005 I got a note from my landlord saying that rent will go up by 10%….
I was all happy to give him my moving out notice.
But than I came to NJ and sighed a lease here…. I was not smiling anymore.
** Off topic** Subject: Paint
The subject of painting has come up here a couple times. I am always amazed at folks willing to buy a condo (which is an apt) so they can paint whatever color they want. I also watch House hunters, and have heard the prospective buyers utter the words, oh I don’t like the color of this room, as if somehow that influences their decision on the purchase?? Huh?
It’s just paint folks, it can be painted over, and over, and over again. Why do I bring this up now? Because I am painting again. 4th time for my kids room in 8.5 years, so every 4 years I guess. $40.00 for paint and supplies. Two great colors yankees blue, and cardinals red.
I have said it before, If painting your walls in your apt is not allowed , paint it anyway. Who cares. Paint it back when you move.Better than making major financial choices based on the ability to paint.
So those of you, waiting patiently to buy, while your waiting. Paint. It does a body good.
KL
Ooops, this is my 3rd time painting my kids room, my bathroom was 4 ( smaller room )
KL
“yankees blue”
KL,
Somebody has good taste.
James Bednar Says:
Subprime lending *WILL NOT* disappear, loans will continue to be made, the question is… at what price (rate)? And, if that price gets to be much higher, how will that impact subprime demand?
I Agree. Hopefully some common sense will hit the buyers when they’re getting a ARM that starts at 10% and goes up from there. But then again, nothing suprises me anymore
I’ve seen rate sheets with subprime seconds priced in the 11’s. However, the negative impact of the rate increases on second-liens is going to be diminished somewhat by the new tax treatment for PMI.
jb
KL, Hah, I paint my rental, makes for a great improvement and seeing as how they originally used low quality paint and I always to it myself, painting it back will cost me about $20.
nervous cpi numbers and still the 10 year is at 4.7%. sorry fed but the long rate isn’t going to budge based upon your jawboning. as long as long rates stay low there’s little momentum to jar the RE market in a meaningful way.
i’m still waiting to see what the spring brings. i’m still seeing houses listing at near peak prices. no they aren’t selling but there isn’t much competition. if spring brings more inventory you might see some movement but so far the overall stalemate appears to continue.
kl, atleast it wasn’t RedSox red ;-) – I *love* yankee blue!! Even met blue is nice color….
jb, inflation is here. they can rearrange the numbers all they want…. or more poetically, “a rose by any other name….”
sl
Richard and I tend to watch the same markets/towns and I have to agree with his (biased) observations. The stalemate continues. I see asking prices that range between the peak prices and peak prices plus 20%. I am not sure what motivates a seller to list at values not supported by 2005 or 2006 comp sales in this market. Greed, bad advice from Realtors, the hope that a buyer with lots of money, little patience and no concern for value will step up, who knows.
My (biased) conclusion is that sellers (1) don’t understand the time value of money [how else does one explain sitting on a vacant home for over one year and not lowering the asking price even once] and (2)are confident that a greater fool is waiting in the wings to purchase their home by the end of spring. Furthermore, my (biased) conclusion on buyers who are buying is that (1) the compulsion to ‘own’ a home, especially with a growing family is irresistible to many no matter how irrational it might seem [based on my own friends buying overpriced POS Cape Cod’s etc.] and (2) a very small minority of buyers is educated on the state of the market and the potential for prices to fall. By and large, the feeling is that prices will stagnate, and therefore, who cares if I don’t make 5%-10% gains for a year or two, I will make up for it in the next real estate bubble.
Of course, none of this long term optimism stops them from complaining that they can barely keep up with their mortgage expenses, maintenance for their homes, cost of new appliances, taxes, insurance, etc.
Tim Says:
February 21st, 2007 at 8:11 am
Another house in Massachusetts, was listed at 425,000 last year, i looked up the sales records on it and it sold for 330,000.(4500 5 bed, 3 bath on 1 acre land) My family looked at this house and wanted to buy it. And being a lowballer myself. I told my wife we might be able to get it for 375,000. People saying there is no Bubble are liars, because the proof is in the Pudding. I know this wasnt about NJ, but I am from NJ…thought i would share.
===========
People saying NO bubble have a vested interest in this ponzi scam.
It’s a Friggen Bubble…common sense.
BOOOOOOOOOOOOOYAAAAAAAAAA
Bob
A happy home(s)owner.
Read My Lips:
NO SPRING MAGIC….
Spring Bust.
Wakeup! Better react before the real panic.
Just like all federal ‘budget’ miscalculations, PMI tax deduction can become quite a burden if 80/20 loans are eliminated.
If you do not get it yet you will
babababababa
The credit ponzi buyer is out of the market. No more drugs to take. Debt addict can’t get any more supply.
hehehehhehe
Buyers ranks dwindling with credit tightening.
Hello anyone listening?
#43 seneca: And I guess they dont care/realize, that teh next bubble might be 15 years or more from now, or perhaps never.
I shudder to think just how much further NJ will deteiorate over the next 15 years, not to mention the country as a whole.
Found some information till 2005 on subprime.
SG,
I found a short presentation from WaMu, where they indicate that 48% of all mortgages in 2005 were ARMs.
More amazingly, they describe their strategy for growing profits in the midst of falling origination volume. Their strategy is to more intensely focus on higher margin products, such as Option ARMs and Subprime loans. I would have thought lenders would finally start scaling back these high risk loans. I guess not.
This presentation was just given a month ago, so it’s very recent.
It’s only a 9 page pdf file of PowerPoint slides and worth a quick look:
http://media.corporate-ir.net/media_files/irol/10/101159/WEBQ42006HomeLoans.pdf
I get listings from 2 different realtors everyday and everyday I shake my head and wonder why these new listings still have “2005” written all over them. I laugh out loud at the prices.
I become more and more confused over this thing and wonder who the heck is buying these homes. I can’t figure this out at all. And to top it off, these houses look like real pieces of sh*t. Very dated, weird looking additions thrown on the backside of dumpy capes and splits. Anything that looks decent has a 750K plus price tag to on it. Pathetic.
The 30 year mortgage has been encapsulated in concrete for years now. We need a real shake out to happen. I’m seriously getting sick and tired of this b*llsh*t.
“as long as long rates stay low there’s little momentum to jar the RE market in a meaningful way.”
Richard,
How does the 10 year affect the subprime?? While the 10 year is happy in its “present” trading range, the subprime spreads are gettting wider than a sumo wrestler’s *ss. These prices have not just been jarred, they have cratered. You would be right if the herd was financing with fixed rate loans. Ask any realtor, how much is their client putting down and what type of financing. The 10 year in this bubble?? A non-event.
Regarding subprime [center for responsible lending];
1) 1 out of 5 mortgages originated in the last 2 years will fail over the next few years. This will be worse than the oil patch disaster of 1980.
2) 2.2 million subprime loans, made in recent years have already failed or will end up in foreclosure.
http://www.responsiblelending.org/issues/mortgage/reports/page.jsp?itemID=31217189
Furthermore, my (biased) conclusion on buyers who are buying is that (1) the compulsion to ‘own’ a home, especially with a growing family is irresistible to many no matter how irrational it might seem [based on my own friends buying overpriced POS Cape Cod’s etc.] and …..
Owning a home is not “irresistable”. Not at current prices. Not in NJ. Even with growing family.
And I am wondring how many of empty houses owners are paying taxes/heating bills/electric and so on and how much it cost them in real money not even opportunity costs??
Greed is definitelly a factor in both sides – me as buyer – I do not see why should I fund somebody’s retirement buy buying a home from them. At the same time the only ay seller will retire if he sells his house for 100K over what I am ready to pay… Also every house standing empty quickly deteriorates..
If in previous years buyer’s did not care for condition of the propety it is not the case now.
Now people finally starting realize that it cost a lot of money to fix a house… And they will not recover all costs +20% in a year due to prices appreciation.
Real Estate and Investors were warned few months ago !!!
Watch this videos !!!
http://www.paperdinero.com/BNN.aspx?id=78
Re: NFI
Novastar Financial Inc. fell $6.38, or 36.3 percent, to $11.18 after the mortgage lender swung to a fourth-quarter loss from a profit as it booked charges for loans it expects borrowers with bad credit won’t be able to repay. The company also said it might have to revoke its status as a real-estate investment trust, a vehicle that pays most of its taxable income to shareholders via a dividend.
BC Bob,
Sounds good to me, let the FED raise the lending rate another 50 basis points while they’re at it.
Talking about greedy sellers… I looked at a cape cod yesterday that is listed for sale $429K and to rent at $1850. It was on a main street with no street parking (you could fit 5-6 cars in the driveway), had the original bathroom and kitchen, three bedrooms, a den and a decent deck and backyard. It’s been a rental for years so it was in quite crappy condition. It also has periodic flooding in the basement. The owner didn’t get any offers due to this so he put in a sump pump, but the basement is a mess from the flooding. The realtor said that the owner lives in PA, owns it outright and would prefer to sell it, but he’s not going to “give it away” so he’s quite content to sit and wait for someone to pay for this POS. I mentioned to the realtor that quite a few capes in town have sold for under $400K recently but he said that the owner doesn’t care, he’s in no rush. The realtor also told me that housing prices are up. I said, “No, ASKING prices are up, but selling prices are down.” Of course he could not argue with that.
I was a firm believer that things would change this spring. From my perspective, they have. Houses are selling. I’m looking around 500k in Maplewood / South Orange. I went to visit prospective properties this weekend, and the top four houses on my list were under contract. All went UC within two weeks of listing, one within five days. Properties in this narrow niche are definitely moving.
So many impatient LOD’s here today. Must be the warm (?) weather. Losing your nerve? Losing your patience?
Chinese water torture only works with a slow, agonizing drip pace. And, while the market is in a temporary updrift- like now- you may be best advised to find something else to distract you. Seed catalogs? NASCAR? Renegotiating your lease to a long-term arrangement?
To add a little historical perspective: a 30-year mortgage right now carries a 6.25%-6.5% rate. In 1987, that same 30-year probably ran well into the 11% range. In the late 90’s, pre-Asian flu, it approached 9%.
Something even more crushing has got to come down on sellers to trigger the kind of total capitulation many here want to see. And, that something “more crushing” has got to be a real jump in mortgage rates…across the board, A to D paper.
When a 30-year, 80/20 LTV to an A-borrower gets close to 10%, start licking your chops. Until then, it’s just drip, drip, drip. There are just enough buyers out there right now who will still pull the trigger when they see a home positioned just under the immediate competition.
BC-
Any of your buddies in the carry trade get a little jumpy on the “sell” button this morning when the BOJ governor made his announcement?
I see clothole is busy giving everyone his pimp speeches again.
Prices are going down and they are going down nicely. it takes time. Not much different than early 1990’s. just remmeber this bubble is worse imo.
rhymingrealtor Says:
“I have said it before, If painting your walls in your apt is not allowed , paint it anyway. Who cares. Paint it back when you move.Better than making major financial choices based on the ability to paint.”
KL–too funny and true. I painted every room in my apartment. My only advice is to use Benjamin Moore paint. It has nice coverage and goes on easy.
A little paint goes a long way in making temporary housing a home! (and it only costs me $65 a room in fines when I move out)
Rachel
Clot [59],
Bigger non event than the 10 year, at this time. It was in the market since the BOJ’s last meeting, layup. It is the unforeseen that will set off the blackboxes.
(60) Depths of Stupidity-
Just exactly who’s the pimp here? I’m not denying prices are coming down…nor am I denying the very nasty subprime credit implosion that is bound to have a very real aftereffect on sales going forward.
As I’ve said here a zillion times, I’ve got no skin in the game of trying to artificially prop up prices. Frankly, business would be much better if we did have sellers rushing for the exits all at once amidst fast-dropping prices.
The only thing I’ve noted is that the “free fall” so many wish for needs a catalyst…and that catalyst isn’t forthcoming. Yet.
So, whose self-interest is threatened by the current reality? Who’s really the pimp?
>>Houses are selling. I’m looking around 500k in Maplewood / South Orange. I went to visit prospective properties this weekend, and the top four houses on my list were under contract.
it’s an affordability thing. $500k on 2-incomes with both working in NYC and putting their kids in daycare high taxes and all is definitely doable. $600k seems to be the separator for those i just described and those looking at post first owned homes bringing equity to the table.
Interesting paper:
http://money.cnn.com/2007/02/20/magazines/moneymag/homes_buy_orwait.moneymag/index.htm?postversion=2007022111
few quotes:
For example, the monthly payment on a $300,000, 30-year fixed-rate mortgage at today’s rates is $1,847. Rates would have to rise to 8.1 percent – nearly two full percentage points – before a $250,000 loan would cost that much.
So instead, focus on what we do know: Over the long haul, home prices in the U.S. have appreciated at about 6 percent a year, and even in the most volatile markets, one-year declines of more than 10 percent are very rare.
If prices are stagnating or dropping in your area, you can offer about 10 percent below the asking price to start off the bidding, says Miller, and ask the seller to pay for closing costs, which can run to 2 percent or 3 percent of the value of the mortgage.
And if you think you’ll want to sell within a few years, you could end up with a loss (after paying broker’s fees) if home prices in Columbia stagnate or increase just 2 percent a year during that time.
“To add a little historical perspective: a 30-year mortgage right now carries a 6.25%-6.5% rate. In 1987, that same 30-year probably ran well into the 11% range. In the late 90’s, pre-Asian flu, it approached 9%.”
Clot,
Historically you’re right regarding rates. However, what effect did low, long term fixed rates have on this market in 2003-2005??
Back in 2004, the 30 year rate was 5.25%-5.50%, with zero points. What amazes me, the choice financing, at that time, was some form of an ARM.
They required a teaser since they could not afford 5.50%. Are you saying the 30 year is more prevalent at this time?? If yes, has the non-qualified buyer left the building??
Richard Says:
February 21st, 2007 at 12:36 pm
>>Houses are selling. I’m looking around 500k in Maplewood / South Orange. I went to visit prospective properties this weekend, and the top four houses on my list were under contract.
it’s an affordability thing. $500k on 2-incomes with both working in NYC and putting their kids in daycare high taxes and all is definitely doable. $600k seems to be the separator for those i just described and those looking at post first owned homes bringing equity to the table.
_______________
Richard —
Agreed. Wasn’t expecting it to be such a hot niche, but it is. Basically any two NYC professionals paying market Manhattan rent can afford the house.
Michael
#14 JB:
I am betting my money that Bernanke is more concerned about inflation that he says in public.
I don’t see how inflation is going to come down without additional interest rate hikes.
Bernanke is hoping that the housing slow down will help moderate inflation as the free money (home equity) is disappearing.
It’s funny when oil was at 70 plus a barrel, it didn’t increase inflation as producers/manufacturers had to eat the addition cost as they couldn’t pass the costs on to the consumer.
Now the claim is that lower oil prices will help calm inflation (when higher oil didn’t cause it??)
Weather and price of oil are to things that most analysts use to justify their forecasts.
I think Clotpoll has a good point. There may be just enough buyers to keep prices declines at a “slow leak” rather than an outright 2007 crash.
Most prospective first time buyers I talk to still think prices are too high. They were patient for this long and they are prepared to sit on the sidelines. A few others, however, think a 3% -5% price reduction off 2005 peak is a steal and its time to jump in before interest rates go up.
Are there enough of these buyers to keep marginal prices up (in the small decline range)? Will enough transactions take place to give other sellers hope that that a financially brain dead knight in shining armor will buy their place too, prompting them to hold out just a little longer? It is certainly a good possibility.
While I strongly believe that real prices will revert to the mean, I just don’t know if it will come in a few years of dropping nominal prices or many years of flat or slightly declining prices eroded by inflation.
To post 67..
I always though that moving further away fro your work/city implies cheaper rents/housing costs. Glad to see it is not an issue anymore – you adding at least 4 hours of commute/day for couple working in Manhatten… thats equial to 20 hours!!! or extra working time/or time with the family….
Or 25% higher income for people who lives in Manhatted compare to commuters….
And thats for the ones who have decent commute. Not counting parking passes, gasoline/car insurance costs if train – train passes and so on….
But Hey – it is all worth it right?? pride of Ownership!!!
Christ, I wonder how many suckers bought into this “strategy”…
http://www.webspawner.com/users/womfm/index.html
jb
#24 x-underwriter Says:
Used to be that simple. Except now wall street is gagging on these sub-prime delicacies and is asking the originators to buy them back.
>>Something even more crushing has got to come down on sellers to trigger the kind of total capitulation many here want to see. And, that something “more crushing” has got to be a real jump in mortgage rates…across the board, A to D paper.
my earlier point. rates are what could move this market down significantly. sub-prime tightening up? what % of that affects the overall market? geopolitical tensions? what effect does that have? tighter lending restrictions for non sub-prime? where except a little tweak here or there? loan product versatility is here to stay.
Al Says:
February 21st, 2007 at 12:56 pm
To post 67..
I always though that moving further away fro your work/city implies cheaper rents/housing costs. Glad to see it is not an issue anymore – you adding at least 4 hours of commute/day for couple working in Manhatten…
But Hey – it is all worth it right?? pride of Ownership!!!
__________________________________
Al —
I think it’s more of a space issue. 1800 square feet, four bedrooms, vs 800 square feet 1 bedroom/den for the same price. Also, my original post was about town right on a Midtown Direct line, so the commute would be about an hour door to door each way, not two hours. I know people in Manhattan with a 35 minute commute IN the city.
So, yeah, for lots of people it is worth it.
Michael
“loan product versatility is here to stay.”
Richard,
Yes, but at what cost/terms??
Loasn Versatility may be here to stay, but the pool of those bing able to use these loans is shrinking.
Why all the inventory sitting out there? Did some buyers just finally say enough, and decide not to play the game, or are many of the sub-prime borrowers out of the market, becasue they can no longer get financing.
While houses are selling there and there, it appears on the whole the market has stopped.
What stopped it I guess is a matter for debate.
Clot,
Are you watching the de facto??
BC Bob (66)-
I think the ’03-’05 run of low rates aided and abetted the gargantuan price run-ups during that phase of the market. As the cost of money went down, the price of housing itself ratcheted higher in almost exact inverse proportion. HBs were certainly a big driver of overall pricing, as every time rates dropped, they immediately ratcheted prices up…and in turn, resale prices followed apace.
I think the massive use of toxic/exotic mortgages was more a reaction to unaffordable house prices…not that a conventional rate of 5.5% on a 30-year was unaffordable. Buyers weren’t straining to afford money, they were straining to afford housing.
Do I think the non-qualified borrower is exiting the market now? Yes. To what extent are they leaving? Too early to tell.
What I DO knowis that subprime money is being priced more like in the “old days”…that is, with a healthy risk premium built in. That’s gotta be chasing off buyers. When those same relative spreads move into A and B paper, we’ll see some real movement on housing prices.
There will most certainly be some negative effect on the market by restricting financing options, or making those options more expensive (higher rates).
Unfortunately, trying to quantify that effect is short of impossible, especially when you have a number of competing factors (for example, subprime seconds going up in rate is offset by the new tax rules for PMI).
If low rates and easy money created the bubble, what happens when those get taken away?
jb
BC (77)-
Like a hungry croc eyeing a pack of wildebeests.
Jeez, I’ve managed to use the word “wildebeest” twice here.
BC-
And every bean, grain, metal and fuel this side of cow patties. Including Mexican cellulose. Check this little number:
http://money.excite.com/jsp/ct/bigchart.jsp
All disclaimers. Investing in Mexican companies may make your hair fall out.
Except now wall street is gagging on these sub-prime delicacies and is asking the originators to buy them back.
I wonder how this meshes with WaMu’s strategy to increase high-margin subprime originations in 2007 to offset lower earnings from reduced overall origination volume.
Interesting strategy (Warning PDF file)
http://tinyurl.com/2x5rw6
500K in Maplewood? An incredible waste of money.
iTulip has an excellent illustrated guide to the credit cycle and how it plays into the current housing bubble. It’s well worth the visit.
This previously appears in Harper’s Magazine.
http://www.itulip.com/forums/showthread.php?t=966
bergenbubbleburst Says:
February 21st, 2007 at 1:15 pm
500K in Maplewood? An incredible waste of money.
Bergenbubbleburst —
Where else would you suggest looking for a price in that range, and why?
Michael
“I think the massive use of toxic/exotic mortgages was more a reaction to unaffordable house prices…not that a conventional rate of 5.5% on a 30-year was unaffordable. Buyers weren’t straining to afford money, they were straining to afford housing.”
Clot[78]
That was my point. Who in their right mind[I know that’s saying a lot] would finance with a teaser/ARM with fixed rates at this level?? Total shell game.
Nice move on gold this afternoon.
jb
gotta agree with Clot here…
rent is very high in this region and esp if you have a high tax rate, a mortgage is close to the equivalent cost of rent.
Clot [81],
Maybe I’ll move west and start digging for some. Your link was unavailable, server too busy. Are all the flippers going there??
“rent is very high in this region and esp if you have a high tax rate, a mortgage is close to the equivalent cost of rent”
[88]
Run this analysis for me. 600k to buy/12k in taxes or 2,500 mo. to rent. Tell me where it’s close??
“Nice move on gold this afternoon.”
Not too shabby for Hi-Ho either.
I would look in Cedar Grove, Nutley, Springfield, Clark. I would also look in E Brunswick.
Further up I would look in Wyckoff, Allendale, River Vale, Montvale, and even Paramus.
Alot of people knock Paramus, becasue of the malls and traffic, but if you buy in a quiet area, the taxes are vey reasonable,a nd the schools are good.
bbb,
I have heard bad stories about Springfield and Clark.
What is so attractive about these towns.
CC
Bergenbubbleburst —
Still not sure why you don’t like Maplewood. Is it the high taxes, bad schools, close to Newark/Irvington/Union angle?
chaoticchild, what bad stories have you heard?
>>Run this analysis for me. 600k to buy/12k in taxes or 2,500 mo. to rent. Tell me where it’s close??
you’d have to quote some examples. i’ve seen something more like $400k/$8k taxes/$200 month condo fee for 2bd/2.5ba renting at $2300 a month.
Seneca,
I have heard mediocre school, too much commerce/traffic, lower income/working class folks in Springfield/Clark.
However ppl told me the above are from Millburn and Westfield. (They also think their own town is the best in the entire NNJ)
CC
GLD and OIL going up up up today. What’s the scoop?
can anyone get me the address and listing price history for MLS # 2309948? Thanks.
Renting #84 –
Excellent illustration in your link.
Every buyer needs to see this!
As usual, clot spouts facts……damn how can I make him look bad now??
“Run this analysis for me. 600k to buy/12k in taxes or 2,500 mo. to rent. Tell me where it’s close??”
Richard,
Saw it this weekend.
“GLD and OIL going up up up today. What’s the scoop?”
[98],
Flippers??
Some peopel may not like Clark and Springfield, but in my opinion better then MW/SO.
MW/SO lovely older homes int hose towns, but the reality is the schools are mediocre at best, and that is the elmentary, the HS is not good.
Paying those kind of taxes with less then desireable schools, makes no sense,a t least in places like Ridgewood, the schools are excellent, always were, and probably always will be.
And yes its close proximity to Newark, sadly is a problem, the over flow of problems fromt hat city spills into MW/SO, any one that tells you differently is lyinging or totally clueless.
Mid-town driect service is all it has.
BBB,
How long is commute from Clark and Springfield to NYC. Bus, train????
CC
bbb,
You are right. MW/SO doesn’t belong in the same sentence with Ridgewood.
bergenbubbleburst —
All I’m really looking for is a charming older home in a quiet neighborhood with an easy commute to the city. I don’t have kids, and don’t plan on having kids, so the schools are not that much of a concern to me. Taxes are high anywhere within an hour of the city. Higher in Maplewood, for sure, but not a deal breaker. And I’ve lived my whole adult life in the city — often in less than “desirable” neighborhoods. I’ve been very comfortable with the neighborhoods I’ve seen in Maplewood / SO. Are there areas of those towns I’d avoid buying in — Yep. But I think I can judge a neighborhood at this point in my life.
Maplewood/SO: [think how this contrasts with most of NJ]
All you need to know – M/SO on the LOCAL train to Penn Station/NYC is 39-42 minutes and leaves every hour.
Hi! I’m Johnny Repackage. I grew up in Middle-useless, NJ. I work for Morgan Stanley off Times Square in their securitizaton of random crap department. I’m 30 years old and graduated college and worked for a dot-com in CA which blew-up during 2000. When I got laid off, I went to Latin America for two years. Afterward, I went to get an MBA and jerk-off snot-nosed school. I got a job with MS out of b-school. I’ve been there for 2 years and my wife and I just pulled down $325,000 with our bonuses. I’m worried about the market and a little about my job, but things are so good, and I’m tired of waiting. Our parents have gifted us $96,000 for our wedding (tax free gifts in 2006 & 07) combined to pool with our own $50,000.
I know we have run out of things to repackage at MS, so now we have shifted over to celebrity hair and bodily fluids. We are currently underwriting the syndication of Britney Spears hair on eBay and also we are going to repackage her future vomit streams. Our spreads blew out when she went into rehab, but she just left again today, so our 2Q07 projects to be better.
Hi. I’m Tiffany Repackage. I’m married to Johnny. I hate our 2BR apartment that we spend $3,800 a month in Chelsea. We both grew up in New Jersey and I just don’t like living in the city anymore. Everyone here is either gay, a foreigner, or someone I knew in High School. I hate going out now on the West Side because of all the kids from the SUBURBS. I am so Sarah Jessica Parker. Anyway, I work as an equity Analyst for Lehman off Times Square. When I met Johnny, I thought to myself —– oh he must be the kind of guy that leases a BMW 3 series. Anyway, when I realized he lived in Manhattan, I knew that even though he didn’t own a car, he was actually the kind of guy that would lease a 7 series. That’s when I knew he was Mr. Right. I HATE living in the City. It’s cool, but it not what I dreamed. I want a house now. Who cares about all this stuff that Johnny says about housing. We have the down payment, and we make good money. Oh yeah, don’t tell Johnny, but I’m pregnant – AND I’M NOT GOING BACK TO WORK. NJ prices are so much cheaper that NYC and Brooklyn!
Chicagofinance:
Hmmmm. Not sure what the point was. I took the train to/from the city to maplewood this weekend. 35 minutes. Six stops.
CF,
Oh yeah, don’t tell Johnny, but I’m pregnant – AND I’M NOT GOING BACK TO WORK.
Funny…..it actually happened to my friend who moved to Morristown from Brooklyn. He hates his life now (except the child but not the wife).
CC
ChiFi, are you TRYING to get me to wet my pants with laughter with that post? Seriously, that made me laugh so hard.
By the way, there must be a scary disconnect in NJ, because hubby and I are about to start the Westchester search, and things look a lot more realistic there for some reason – more inventory and scary enough, lower taxes where we’re looking than in NJ, with much better schools than M/SO, for example.
Oh, and MBaldwin, I know you don’t want kids but you can’t discount the school system. Unless you plan to stay there for a very long time, if you go to sell, you can bet your butt that other people WILL be worrying about the school system. That thinking only works if you’re retiring and it will be a downgrade/last home for you, for example, and want to pay lower taxes and don’t mind a less prestigious school system. Otherwise, why pay M/SO taxes? Don’t care about neighborhoods or schools and want a decent commute? move to Brooklyn.
Chi,
My soda landed on my monitor!!
can anyone get me the address and listing price history for MLS # 2309948? Thanks.
NJGal,
Have you look at N shore of LI???
We are in NNJ now but we can move to any NYC suburb. I have good things about N LI but the prices are actually more crazy than NNJ.
(a family friend is selling a 3bed 2.5bath starter home for 850k. down from 1m last summer)
How would you compare Westchester to N LI???
Thx,
CC
NJGal Says:
February 21st, 2007 at 2:50 pm
Oh, and MBaldwin, I know you don’t want kids but you can’t discount the school system. Unless you plan to stay there for a very long time, if you go to sell, you can bet your butt that other people WILL be worrying about the school system. That thinking only works if you’re retiring and it will be a downgrade/last home for you, for example, and want to pay lower taxes and don’t mind a less prestigious school system. Otherwise, why pay M/SO taxes? Don’t care about neighborhoods or schools and want a decent commute? move to Brooklyn.
_____________________________________________
NJ Gal — Certainly understand your comments about the schools even without children. But, frankly, there are tons of what seem to be perfectly well behaved, bright kids in those towns. People don’t seem to be shying away from
the town cause of the schools. It’s just one of a dozen factors I’m considering….and one that frankly isn’t in my top three.
And, Brooklyn? Show me a charming house in a leafy neighborhood in Brooklyn within a 30 minute commute for under 500k and I’ll buy it.
chaotic – let me share what i know as I was looking in those towns.
In my completely biased opinion (put on your gross-generalization shield now):
Realtors quote Clark having schools in the top 100 list (i think just barely, maybe #99) in NJ Monthly. The high schools in Clark and Springfield seem to send a small handful of kids to Ivy League schools each year. So the folks from Westfield/Milburn who are much smarter overall, will of course tell you Clark/Springfield sucks.
If you want a top education you have to choose Westfield over Clark, Springfield over Milburn. There is no doubt about it. If you want your kids to get an average education because they only need to get into Rutgers or a similarly ranked school, Clark/Springfield is fine.
Both towns are certainly more working class than Westfield and Milburn. Your daddy is a trader on Wall St. and your mommy is an attorney when you grow up in Milburn or Westfield (if mommy works at all). In Clark mom is a beautician or teacher and in Springfield, if you don’t live at “The Top” (an area near Baltusrol Golf) then your mom also works for a living. “The Top” of Springfield is the poor mans Short Hills/Summit (and by poor I mean $800k house instead of $1.5). Those at “the Top” use the Summit train station, about a 15 minute drive in the morning, plus walking time because you can’t park in the Summit residents only lot. Not too many folks from Clark commute to NYC regularly, no train and the bus will take you easily over an hour and a half. If you live on one side of Clark, you can hit the Linden train station in about 15 min. and if you live on the other side of Clark you can get to Rahway in about 10-15 min.
When you look in Westfield, they tell you that the train station (which makes you change in NEwark for Midtown trains) has a waiting list but that the Linden or Rahway station is just 10 minutes away. Utter BS. Its not 10 minutes with no traffic let alone the morning rush.
Drive around Clark and every other house has a plumbers/electricians/repairman/contractor van in the driveway all the time. That’s who lives in Clark, tradespeople who own their own business. Some residents are so upset by seeing those vans parked in driveways all the time that their are Hatfield-McCoy wars going on because there are laws in town against it.
Springfield has the benefit and disadvantage of Route 22. It brings some nice commercial taxes in but, hey, its Route 22, not a real pretty part of the state and traffic is awful.
Clark has the Parkway cutting it in half, convenient especially if you commute south to Edison area but awful if you are trying to head NOrth. There is a parkway circle that is supposedly being redesigned so look for traffic nightmares there for a year or so.
Oh yes, there is a jitney that takes you to the Short Hills train station from Springfield Pool I believe. Its great if you want to get in your car, drive to the pool, get on a bus, get out of bus onto a train, get out of train and onto a subway and finally get to work. Now thats convenience. The NJT bus also cuts through Springfield but I am not sure how easy it is and if its standing room only by the time bus is in Springfield.
These towns are in no way premiere towns but their residents think they are. Esp. in Clark, which I believe has the highest months supply of inventory in Union County. The current home sellers are clueless about finance and markets and still think its April 2005.
You could do much worse than Clark and Springfield, you could also do much better, but be prepared to pay.
can anyone get me the address and listing price history for MLS # 2309948? Thanks.
MLS # 2309948
6 Dixon Terrace
OLP/LP: $849,900
DOM: 190
(No prior GSMLS listing, no prior sales info in the tax records)
thanks JB
I said:
“If you want a top education you have to choose Westfield over Clark, Springfield over Milburn. ”
I meant chose Milburn over Springfield.
Lol…Chifi…..gr8 post.
“Have you look at N shore of LI???”
I have relatives on the south shore of Long Island and they would love to move off the island. The problem is that to get anywhere else by car is such a pain. The traffic is unbelievable. What should take under an hour (from NNJ to south shore) sometimes takes over two hours. We have to be very aware of what day it is, how traffic looks, etc. Last July 2nd, we had to go out for a funeral and chose to drive straight through the city – we usually take the Belt Pkwy but no way on that weekend. The other choice is to take the Cross Bronx and go over the Throgs Neck Bridge – again what a horrible drive. If my relatives are heading north, they do take the Port Jefferson or Orient Point ferry. It’s great to get to the city and you have the beaches (that was the draw for my uncle, an avid sailor) but everything else is difficult.
Seneca,
Thank you for the great info.
CC
chifi,
Clot was in high demand during the networking event.
jb
Fed minutes a non-event today?
jb
Could someone pull street addresses on the MLS# 4943576, 2335767, 708173???
thats why I do not like realtors – why hide listing’s address??? I just want to do a drive-buy? “For Sale” sign is infront of the property anyways??
From Knowledge@Wharton Real Estate (great site):
Could Tremors in the Subprime Mortgage Market Be
the First Signs of an Earthquake?
For months, the steady drip of news about troubles in the subprime
mortgage market looked no worse than one would expect: merely a
comeuppance for lenders, borrowers and investors who should have
known that high-interest loans to people with poor credit were risky.
During the same period, many economists started breathing again after
concluding that the superheated home market of recent years had not
become the bursting bubble many had feared. While home prices are
leveling off, there has been no deep, widespread decline.
But now some experts wonder whether those sighs of relief came too soon,
especially in light of the troubles recently experienced by one of the
largest subprime players, HSBC Holdings. Some suggest that the growing
number of borrower defaults in the “aggressive lending” market, which
includes various types of risky mortgages besides subprime loans, could
shock the broader housing market and economy after all. Many subprime
borrowers are paying 10% to 12%, compared to 6% to 8% on standard, or
“prime,” loans, and delinquencies are rising.
Fed’s minutes were blend as usual.
Nobody believe that they will raise rates this year as it would be the end for housing…
Everybody in fanance and banking is praying for rate drop, but most do not expect it to happen anytime soon either with today’s bad inflation data.
How did Fed see the positive on the inflation in today’s CPI data – thats beyond me…
“H&R Block Inc., which is selling its Option One mortgage unit, may get less than half the $1.3 billion price originally sought because bankruptcies at three rivals curbed enthusiasm from buyers, UBS AG analyst Kelly Flynn said.”
“Option One, based in Irvine, California, was the ninth- biggest issuer last year of subprime mortgages, which are granted to borrowers with heavy debts or blemished credit histories. Such loans, which carry interest rates at least 2 percentage points higher than those on conventional mortgages, typically default about six times more often. Bear Stearns Cos. has said the newest subprime loans are going sour at a record pace.”
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=af.T0etQUo.E
We looked in Port Washington, Manhasset and Plandome.. I WILL NOT pay 850K for a 40 X 100 lot fixer upper for taxes as high as 7K. I grew up in the area and My mother still lives around there and if I told you her taxes for 3 acres you would puke. I think its equal to Westchester. (even then I think you get more property in Westchester for the money then in LI) Northern NJ is still cheaper and in my opinion had more to offer. The traffic is worse there .. And I like the people better in NJ then in LI.
“Clot was in high demand during the networking event”
Was he the guest bartender??
“And, Brooklyn? Show me a charming house in a leafy neighborhood in Brooklyn within a 30 minute commute for under 500k and I’ll buy it”
Ha, I can’t. I guess I missed that price range thing. There are certainly some places out there, but we’re talking 800 to over a million. Now, with city taxes, that’s equivalent to buying a 500K house in NJ if you add NJ taxes. But clearly not the range you’re looking in. And people are not shying away now, but when their precious kiddies get to middle school, watch out.
Chaotic, northern LI is expensive. I grew up on the Island. As compared to Westchester, there is more traffic and it’s more crowded. I’m looking in Northern Westchester for space, space and more space, so that’s an issue for me. But for your taxes, the schools are pretty good in Northern LI.
Seneca,
Nice summary of Clark. Grew up there and you are correct while leaving out a couple curious details.
JP – Do share! I felt like I could have gone on and on… is it Clark’s diversity (ahem) I failed to mention?
From Bloomberg:
Subprime Mortgage Bond Derivatives Fall After NovaStar’s Loss
The perceived risk of owning low- rated subprime mortgage bonds rose to a record after NovaStar Financial Inc. reported an unexpected loss for the fourth quarter, according to an index of credit-default swaps.
Prices for credit-default swaps linked to 20 securities rated BBB-, the lowest investment grade, and created in the second half of 2006 fell 3.8 percent to 78.6 today, and are down 19 percent since being introduced Jan. 18, traders said. The drop in the ABX-HE-BBB- 07-1 index means an investor would pay more than $1.1 million a year to protect $10 million of bonds against default, up from $389,000 last month.
“It’s been a one way train,” said Dan Ivascyn, a managing director at Pacific Investment Management Co. in Newport Beach, California, manager of the world’s largest bond fund. “There’s been selling from a lot of different areas, and there’s not a natural buyer.”
James Bednar Says:
February 21st, 2007 at 3:43 pm
From Bloomberg:
Subprime Mortgage Bond Derivatives Fall After NovaStar’s Loss
grim: unless it crosses to higher rated instruments and linked-derivatives, it isn’t news
Sen,
Yes, that is one variable.
Another is the deplorable physical condition of the HS. Not good at the moment, but should be resolved in a year or two.
On the positive side, the rec center has really improved and is great for the kids and active residents.
Some areas of town are actually very quiet and nice.
Don’t forget White Diamond. That alone raises property values!
oh my….look at this article….the stuff I wrote earlier was just a joke, but look at the parallels in this passage!???!
WSJ
Escape From New York
When you’re working wall-to-wall hours just to pay the rent, sometimes it helps to leave town.
February 21, 2007
Welcome to Lifelines, a new column that offers first-person strategies for solving work-life dilemmas.
Many cubicle dwellers in their 20s feel blocked off from the American Dream by killer work hours, job stress and housing prices that far exceed their grasp. After asking herself at age 28, “Is this all there is?” Melissa Mauro and her husband took what family members said was a crazy risk — and found a satisfying answer. Her story shows the potential power of risk-taking at critical stages of a marriage.
Ms. Mauro, now 32, still remembers the moment in 2002 when, sitting in her cube at a New York City communications agency, she tapped out an email to me at The Wall Street Journal lamenting the “pre mid-life crisis that afflicts a tremendous number of people in the 28-35 age range.” Working 12-hour days to pay the rent on their Manhattan apartment, she and her husband of two years, Marc Hineman, a trading-desk manager, had “all kinds of questions” about how they would afford to buy a house and raise a family, she wrote.
“I have over 20 friends who are all unhappy with the rat race,” she wrote. “It has reached the point where we joke about packing our belongings and moving to an island in the tropics to start our own modern-day commune.” Looking back, Ms. Mauro says now, she and her friends did start a commune of sorts. Her story:
The Problem: “I was at a great New York company with progressive family-friendly policies. That was the scary thing. It was just the work itself, the nature of the business, that made life so hard. My husband and I were both making six-figure salaries, but buying a house seemed like an impossible dream. And I was letting work consume me. I felt like a leaf in a current, having no real effect on which way the water swept me.
The Solution: “After our daughter Ava was born in 2004, we made a decision: We want to live away from the craziness. We didn’t want to feel pigeonholed by housing and financial obstacles. Life is so much bigger. I wanted to work, but I didn’t want to have to work to pay a mortgage.
“It wasn’t until Marc and I took a huge leap of faith that things started to fall into place for us. About 10 of my friends had moved to Charlotte, N.C., after college. They said, ‘We’re getting out of New York.’ On a visit there in 2005, we saw a new house in a new subdivision that was under construction. It was priced attractively, and we took the leap and bought it. We made plans to move there with Ava — before my husband even got a job in Charlotte. Talk about having faith! My grandfather said, ‘You guys are nuts. You bought a house and your husband doesn’t even have a job there? What are you doing?’ But we felt we had to step out of our comfort zone a little and say, ‘What if?’
“We knew we might have to have a commuter marriage temporarily, but that was a risk we were both prepared to take. Luckily, my husband got a job in Charlotte the day after we closed on the house. The power of positive thinking has a lot to do with that. Sometimes you just have a vision — you know, ‘This is right and we’re going to find a way to make it work.’
“Living down here has given me the opportunity to be a full-time mom. I live two doors down from my best friend in college. On my block alone there are six kids within a month of my daughter’s age. Half the people in our neighborhood are from the tri-state area. We call it ‘Little New York.’ It was the quality of life that attracted all of us. I went from an 800-square-foot apartment in Brooklyn to a 3,000-square-foot house with four bedrooms.
“I’m freelancing about 10-to-15 hours a week for my former boss. My income pays for extras, like vacations. [Ms. Mauro’s New York-based boss, Ellen LaNicca Albanese, executive vice president, CRT/tanaka, of Richmond, Va., says the firm carved out a free-lance role for Ms. Mauro that has enabled her to help win new accounts and serve clients in the mid-Atlantic states.]
The Downside: “Being away from my extended family in New York has been a little tough. We talk all the time about their moving down here. My sister is 26 and she’s facing some of the same questions I did. I told her to get on the five-year plan: Where do you see yourself in five years?
“Looking back, we have lost a few things. Nothing is ever going to be like New York. I’d like to be closer to family. And I’d love a really good bagel once in a while.
The Outcome: “But we’ve gained so much. Charlotte is a city that’s growing. We can be at the beach in three hours and the mountains in 1-1/2 hours. Everybody is so family-oriented. In my old neighborhood in New York, I felt like people were working so much, always rushing, rushing. The pace of life is a little slower here. I don’t feel like a leaf swept along in the current. I’ve learned to chill out a little more. That’s been really good for my sanity. And my husband and I have the family life we want.”
Chi [135],
By borrowing 5x its assets and investing in the
riskiest part of a structured security [cmo’s] a credit hedge fund could in theory become the marginal lender on $850 million worth of residential securities by committing just $10
million of its own funds.
Besides the fact that the cost to insure has gone up 7% in a month, subprime lenders are dropping like flies and mortgage adjustments may be 5-6% over libor, the overall news may not be so apparent in its present form. However, don’t these hedge funds have trading/clearing/financial relations with the same banks that sold them this crap?? Does the risk go out the front door and come back in the side door?? Has the news been reported or are we still editing the script??
I’m guessing we have a bunch to two bit jokers at the sub-prime mortgage companies that are finito. Otherwise, there are a few hedge fund and pension fund investors that are pissed with their portfolio managers. Probably the brunt is going to be felt by the foreign investors who viewed the opportunity to invest in GILDED American securities sourced directly from the i-banks. In the end……rich people, fuzzy foreigners, and people who had no excuse to buy homes are hurt. The bankers still have their cash bonuses from 2006 and I don’t see how anyone in NNJ (of any financial means) really gives a clot.
Chi[139],
Agree, “any financial means”. They wouldn’t be in this situation if that was the case.
Marty Higgenbotham of Higgenbotham Auctioneers International in Lakeland said sellers are still having a tough time in today’s market.
“Sellers aren’t willing to accept today’s property value,” he said, noting that he has seen six real estate booms and busts in his 48-year career. “They’ll get over it.”
I agree the greedy smirks will be wiped off their faces.
BOOOOOOOOOOOOOOOYAAAAAAAAAAAAAA
Bob
It appears that the greed level is a little greater today than early 1990’s. It seems just about everyone is counting on their house to bail them out of their lack of savings. Sorry get a second job. hehehehehhehe
seneca, an excellent overall analysis of the clark area. i live in westfield so i can also speak accurately to the ‘climate’. yes we do have quite a number of snotty, luxury car driving, think they’re the next ceo of goldman wanna be big shots in town. and that’s the stay at home mom’s! westfield is also a population of 30k and there’s also plenty of more down to earth folks, you just have to get to know them through your travels. it’s like any fish bowl you visit. the fishes come in all shapes and sizes and it’s all contextual. you can’t believe the keeping up with the jones’es that goes on in clark!
Not good news if you just received the ax.
“Wells Fargo & Co. (WFC.N: Quote, Profile, Research) said on Wednesday it is cutting 320 subprime mortgage jobs in two operations centers because it is tightening its lending standards to home buyers with poor credit histories.”
http://www.reuters.com/article/bankingfinancial-SP/idUSN2128605620070221
I like Westfield, a lot. Wonderful downtown. And I do know that there is more variety to the residents there than I may have indicated. My personal belief is that a child may feel less pressure outside of a Milburn/Westfield type of school system and find it easier to stand out. Potential residents just need to understand that in Clark, your kid is going to fill one of maybe 10 slots at a Top 10 College whereas in Westfield, there are 40 kids who will make the cut.
If I can put back on my over generalization cap again, here is another difference between Clark and Westfield. In Westfield, people brag about their kids SAT scores and getting first chair in the local orchestra. In Clark, people brag about their kids scoring the winning touchdown at the Pop Warner game and getting Brodeur’s autograph after the last Devils game.
Of course there are Clarkites who want their kids to excel in school but in general, the values systems of the two towns are different.
Both towns suffer from McMansion blight.
BC (130)-
The only beverage I dispense is Kool-Aid.
BC Bob Says:
February 21st, 2007 at 2:17 pm
“GLD and OIL going up up up today. What’s the scoop?”
[98],
Flippers??
You mean they got out of housing????
A true “flipper” is always looking for a quick 20% annualized return somewhere.
Once piranhas pick a carcass clean, it’s on to the next piece of meat.
#139 Thats assuming all in NNJ have the financial means. The illusion vs the reality.
Anybody got a good term for a spouse who gets preggers on the sly in order to quit slaving at a 6-figure NYC job?
Mom?
Ambush Mom?
“My personal belief is that a child may feel less pressure outside of a Milburn/Westfield type of school system and find it easier to stand out. Potential residents just need to understand that in Clark, your kid is going to fill one of maybe 10 slots at a Top 10 College whereas in Westfield, there are 40 kids who will make the cut.”
I am not looking in certain districts in NY to avoid that level of competition as well.
But don’t kid yourself as to your kids chances at top schools – you’ve already doomed them to a life of ultra-competitiveness just living in the tri-state area. Had a friend who worked in admissions in college – there are completely different, tougher standards for kids from this area. So no matter what school they go to, it’s going to be harder for them. It then becomes an issue of what’s most important – seeing them more relaxed or getting them caught up in a more competitive sweep….
Smart?
NJGal (152)-
Spot on. My kids are both already deep into the “never good enough” grind. And, I understand the only way to stop it now is to move to Iowa. Modern life, I guess. If things had been like this when I was growing up, I’d be a bum now.
As long as the OCD, bulimia, cheating, backstabbing thing doesn’t begin to rear its ugly head, I sleep well. Thank God the kids have a sense of humor and seem to be able to stop themselves short of doing stupid things in response to school pressure.
Clotpoll Says:
February 21st, 2007 at 5:25 pm
Anybody got a good term for a spouse who gets preggers on the sly in order to quit slaving at a 6-figure NYC job?
Mrs. Hughes?
http://www.markit.com/information/affiliations/abx/history
SIIIIZZZZZZZZZZZZZZ
ChiFi (155)-
You’re on fire today.
Keep in mind the scales differ on those ABX graphs.
jb
morons being led to slaughter.
with fewer and fewer dummies roaming the streets should dry up most dummy demand.
BOOOOOOOOOYAAAAAAAA!
Bob
I am not looking in certain districts in NY to avoid that level of competition as well.
I hate to be the devil’s advocate.
But life is competitive. Especially in NYC Metro area, RE is expensive/competitive.
I am not referring to consumption and catching up with the Jones.
I am not sure sheltering your children from competitive environment is a good idea. They might find it diffcult to adopt to the real world when they become adults.
CC
Clot, I am afraid to have kids nowadays. I’ll do it, but man, the work it must be just to have them be normal in the face of the nightmare that is life in the tri-state area…
And life is going to get even more competitive. no way around it. The internet and Global markets make the world a smaller place.
BRING ON THE MISERY!
SPRING 2007 HOUSING MASSACRE COMING TO A HOOD NEAR YOU.
MANY MANY DREAMS ARE GOING BUST.
NO MAAS! REMOVE THAT GREEDY SMIRK.
WANT IT ALL GET ANOTHER JOB OR SECOND JOB.
HEHEHEHHEHE
I am not sure sheltering your children from competitive environment is a good idea. They might find it diffcult to adopt to the real world when they become adults.
Some might say the same for the U.S. in relation to the global economy.
jb
NJGal (161)-
Didn’t mean to be a buzzkill. It is a competitive world out there, and there’s no good in keeping your kids sheltered from reality.
However, I think a parent has to protect children from exposure to pressures that are greater than they can handle, whether it’s academic, social or sports.
I’ve also- thankfully- found that in our area, if a parent tells a teacher or school official to back off, they will respect that.
What kills me are some of my kids’ friends whose parents are forcing SAT tutoring every week in 9th grade & restricting normal social acitivities for “academic enrichment”. These poor kids are miserable…
Tomorrow’s hedge fund managers?
Hey Al,
Did you get your doctorate at UCB or UCD?
Just wondering b/c I graduated UCB 2001 with mine.
Agree w/your analysis of denver market!
afe
MBaldwin:
People always paint a rosier picture of their commute.
The only way you have a 30 minute commute is if you:
a. live in south orange trains station
b. work in penn station in NYC.
For most people it takes about 15 minutes from the time you leave your house to the time you are at the platform and another 15 minutes to get to your office from penn station. so a more realistic commute is about 50 minutes to an hour, not 30 mins. 30 mins is the time you spend in the train.
“Flippers??”
“You mean they got out of housing????”
[146],
Please, just being sarcastic. First of all you need cash in an acccount. In conjunction with this, these commodities are marked to the market. Can you imagine if RE was??
absolutely off topic. Can anybody look this up for me? MLS 2352992 in Fair Lawn. I am alomost sure this was listed at 449K back in mid 2006. It was withdrawn from the market and returned recently at 400K. It’s now 380K. Also, I think that the central AC is new.
#90
re: the rent vs buying thing
I agree that if you’re comparing apples to apples, the scale still tips in favor of renting.
However, as Chicago has pointed out, there are lots of people out there who are not comparing apples to apples.
These people are looking at $3500 per month for an apartment in the city vs. the same amount for a much larger SFH in the suburbs.
And while we’re on the subject, rent in the suburbs is not exactly cheap. I pay $2200 a month for my apartment in westchester. This is roughly the equivalent of a $500,000 mortgage on an after-tax, month-to-month basis.
the bottom line is that the deck is stacked so heavily in favor of ownership that it is the very rare occassion when renting beats owning over the long term
we have been in one of these anomalous periods over the past 1-2 yrs, but the market is changing rapidly. renting is not always the straighforward, better option that it was 12 months ago
skep (170)-
So many variables for some folks in that rent vs own thingy. Your situation is a perfect example. Very apples to oranges.
And, you rightly alluded to the “stacked deck” thing. Right or wrong, it is.
“Feds take over credit union”
http://bakersfieldbubble.blogspot.com/2007/02/feds-take-over-credit-union.html
The Ann Arbor News reports from Michigan. “A federal agency announced Monday it has assumed control of operations at Ann Arbor-based Huron River Area Credit Union. Regulators from the National Credit Union Administration, the independent federal agency that charters and supervises federal credit unions has taken over the credit union’s management, placing it in conservatorship.”
“‘We found it’s been operating in an unsafe and unsound manner and is in imminent danger of insolvency,’ said Kathy Fagan, spokesperson for the Michigan Office of Financial and Insurance Services. ‘This was something that came up suddenly.’”
Well… I got an answer on my offer 2nite.. and I was told that the agent sellers were quite annoyed with my offer… oh well.. just cant please everyone…
They did counter however only to the tune of $4,000 … big counter.lol
Later
Tan
Now you should counter 4,000 above your lowball. Make ’em squirm.
AntiTrump Says:
February 21st, 2007 at 6:21 pm
MBaldwin:
People always paint a rosier picture of their commute.
The only way you have a 30 minute commute is if you:
a. live in south orange trains station
b. work in penn station in NYC.
For most people it takes about 15 minutes from the time you leave your house to the time you are at the platform and another 15 minutes to get to your office from penn station. so a more realistic commute is about 50 minutes to an hour, not 30 mins. 30 mins is the time you spend in the train.
____________________________________________________
No Shit, I said I had a one hour commute each way.
One hour conmmute eaach way for 2 people working in the city = 4 hours a day, 20 hours a work week…
http://www2.standardandpoors.com/spf/pdf/index/022107_case-shillernational.pdf
S&P Launches National Home Price Index in the United States
Reflects Home Prices Throughout the Country for All Market Segments
http://www.sheldongood.com/detail.php?id=1225
just the beginning….
btw……inflation….inflation….inflation……inflation…….
sl
for all you cats out there that like to talk China.
Remember what happened today back in 72?
SAS
and yet another Kara auction…..
http://www.sheldongood.com/detail.php?id=1223
This may ring a bell:
http://en.wikipedia.org/wiki/1972_Nixon_visit_to_China
Whats this have to do with RE? Nothing directly.
But, one thing always leads to another.
Cause and effect.
SAS
Gold rallies on above-consensus CPI
Traders see possibility of further upside for precious metal
http://www.marketwatch.com/news/story/gold-safe-haven-rally-cpi-ignites/story.aspx?guid=%7B741B0E6A%2D0774%2D421E%2D9C4B%2DA8E3A50DA334%7D
Today’s rally in gold “might be an indication that the Fed and Bernanke are losing credibility and that the Fed is all talk and no action,” Schiff said. “The Fed is afraid of raising interest rates, but it can’t let the market know that. Gold’s saying we don’t believe you. You’re still on pause.”
“The Fed wants to maintain the illusion that they’re going to raise rates, because the economy can’t stand it,” Schiff said.
>>
Investors call Fed bluff??
SAS (181)
Can you please explain?
thanks.
njrebear: Thanks for posting Shiller Case link.
I plotted data for NY region on a chart. Here is the link where chart is kept,
http://www.geocities.com/skgala/shiller_case.JPG
This are the numbers from last RE bubble.
Highest point => September 1988 => 85.54
Lowest point => March 1992 => 74.27
Total decline => 15.17%
Time for decline => 3.5 Years
For current RE bubble,
Highest point => June 2006 => 215.83
In my earlier analysis, I had proved that affordability in 2006, was reduced to the same point peak in 1987. In many respect, the bursting of current bubble seem to follow the same path as in 87. For example, 6 months after the peak, February 1989, the index was 83.77, i.e. 2.11% decline. This time the index after 6 months from peak, November 2006 is 212.99, i.e. 1.33%.
If this bubble/bust follows the same logic as the one followed in early 90’s, then it will take at least 2.5 to 3 years before the prices come down to reality. I would like this time to be different and fast decline, but, I don’t think it will be different.
Clot mentioned earlier this will be like Chinese water torture, and after this analysis, I have to agree with him.
http://en.wikipedia.org/wiki/Chinese_water_torture
What would happen if the Fed did raise interest rates?
Any takers??
RE 174
No. A 4K jump in this case is worse than no response at all. You would be setting up a diverging negotiation model.
bergenbubbleburst: I agree, Maplewood is often known by many of the residents as “Maplehood” I don’t care about the ease of access into the City …at the end of the day your way to close to Irvington to pay that kind of price and taxes for a house. Deal with the commute from a different town.
Furthermore, I heard from a resident, the highschool is getting worse.
bergenbubbleburst: I agree, Maplewood is often known by many of the residents as “Maplehood” I don’t care about the ease of access into the City …at the end of the day your way to close to Irvington to pay that kind of price and taxes for a house. Deal with the commute from a different town.
Furthermore, I heard from a resident, the highschool is getting worse.
SAS,
You freaked me out with your post asking if we remember what happened this date in ’72…
My dad died that day.
For what it’s worth, he was very interested in the Nixon/China issue the night before.
Jaywalk
Thanks SG
Whoa Nelly. Just wanted to clarufy – I am not afraid of competition, having gone to a top college and law school, and would not try to shelter my kids from it – after all, as I said earlier, it’s impossible to do so in this area . That said, we are basically trying to avoid the extreme d–chebags that populate certain towns, and the high pressure they put their spoiled kids under. As Clot noted, SAT prep in the 9th grade? It can be a bit much, and we’re looking to strike a balance.
#190 Commercial Re: the high school is bad, and they have a huge problem with kids int eh HS that do not live in MW/SO, further starining the towns, and adding to tension.
People need to stop with the charming houses, and the commute. to committ that kind of money and taxes to that town is insane.
You can try and give advice, but I guess you cannot force people to take it.
bergenbubbleburst: All those towns you mentioned in Bergen county will run you $700K MINIMUM for anything that doesn’t back into a highway or a cornerlot on a main road. Center halls in those areas start at $800K.
There is a saying.
Bulls Make Money
Bears Make Money
Pigs lose Money
Jersey4life” That is not the case any more, perhaps you need to take anotther look again, prices have declined anywhere from 5 to 10% in those towns since the peak in 05.
If those drops are not enougt, don’t worry because those drops will continue going forward.
People have to be patient.
I would rather rent longer than buy in MW/SO
RE: 196.
I think the last statement should be” Pigs get slaughtered”
But I got your idea anyway
JIM