Just who deserves to live in New Jersey?

From the Asbury Park Press:

High-density housing a sensible alternative to suburban sprawl

In her Feb. 14 commentary, Judith Stanley Coleman of the Monmouth County Conservation Foundation unfairly dismisses the ideas of developer Ralph Zucker, who proposed some limited residential and commercial high-density projects as an alternative to suburban sprawl.

Coleman’s comments express disdain for ideas that deserve a fair hearing, and she ignores the interests of most New Jerseyans.

Zucker’s proposal could provide needed housing and, by using land more efficiently, could preserve more open space. Granted, it needs to be studied more closely, but his idea rightly recognizes there are various interests that need to be considered. It appears Coleman’s idea is simply: Don’t build any more houses.

She dismisses Zucker’s goal of creating settings where neighbors could greet each other and walk to shops, instead of always using cars, as “idyllic, but nonsensical.” She says this is “not any New Jersey community (she’s) ever seen.” That’s true; it’s not like anything we’ve seen. That’s the whole point. If we stick with what we’ve seen, we never will solve the problem of disappearing open land.

Why not let ideas like Zucker’s be tested in the free market? If New Jerseyans don’t like the concept, they will not buy those houses. On the other hand, if people find such houses affordable and of good quality, they will support the idea in the sincerest way — they’ll buy the houses. Working folks always are looking for good location and good value in housing.

Coleman is critical of the fact that high-density housing is cheaper to build, per unit, than other housing, thereby resulting in what she calls “newfound profits” for the developers. What’s wrong with making a profit from a good idea? Does she expect developers to abandon their business interests and convert all of their energies to philanthropy? She seems to be condemning developers simply for engaging in their profession.

Coleman says developers will use their profits to “live in those sprawling McMansions” themselves. She apparently doesn’t like that kind of house and doesn’t like the alternative that was proposed either. Perhaps Coleman finally would be satisfied if we eliminated middle-class housing altogether and moved our families out of the county, leaving it for those who she feels deserve the land.

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273 Responses to Just who deserves to live in New Jersey?

  1. James Bednar says:

    Coleman’s comments can be found here:

    “Beware the siren song”

    Zucker’s original piece can be found here:

    Does dense housing benefit developers only?

  2. SG says:

    Outsourcing’s Uneven Impact
    A new study says sending jobs overseas hits some areas of the U.S. much harder than others

    by Peter Elstrom


    Newark, N.J.
    Total jobs: 967,340

    Est. percentage loss: 2.6% – 3%
    Low estimate: 25,100
    High estimate: 29,000

  3. SG says:

    A Painful Hiss from the Subprime Balloon Subprime lender NovaStar’s warning of little, if any, taxable income through 2011 sends another unwelcome jolt through mortgage company stocks

    by Justin Bachman and Sonja Ryst


  4. SG says:

    Reposting from late yesterday thread.

    I plotted data for NY region on a chart. Here is the link where chart is kept,


    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.

  5. James Bednar says:

    From Bloomberg:

    Toll’s Net Drops on Land Writedowns, Falling Orders

    Toll Brothers Inc., the largest U.S. luxury home builder, said fiscal first-quarter profit tumbled 67 percent as buyers shied away from making purchases and the company wrote down the value of some real estate.

    Net income in the three months ended Jan. 31 fell to $54.3 million, or 33 cents a share, from $163.9 million, or 98 cents, a year earlier, the Horsham, Pennsylvania-based company said today in a statement. Revenue dropped 19 percent to $1.09 billion.

    Chief Executive Officer Robert Toll reduced the company’s land holdings as demand wanes for its houses, which sell for three times the national median price. Potential buyers are waiting amid concern that house values will fall or prices will soon be cut.

    “There are too many soft markets at this stage of the selling season to call a general upturn in the new home market,” Robert Toll said in the statement. “Demand varies greatly from week to week in individual markets.”

    Toll Brothers cut its forecast of how many homes it will sell in the current fiscal year by as much as 4.8 percent. The company now expects to deliver 6,000 to 7,000 houses. The previous forecast was for between 6,300 and 7,300 properties.

  6. njrebear says:

    Fed’s Yellen on Housing

    “If there is one development to worry about the potential of recession it will be housing.”
    San Francisco Fed President Janet Yellen, 2/21/2007

    More at

  7. Clotpoll says:

    Have to give BC the props for the “Chinese water torture” analogy. IMO, prices have dropped fairly rapidly (vs. historical standards) from mid-’05 to this point. No graphs to back that up, just gut feeling from experience. It’s inevitable that some buyers would now sense opportunity and trickle back into the market. No doubt, they are (or should be) buying at a much lower level than Spring ’05.

    How big will the wave of inventory be that hits in 6-8 weeks? What will break the logjam of inactivity in entry-level housing (not 450K capes, but 100-200K condos)? If we cannot create first-time buyer demand- and soon- the “dominoes” of the market are going to cease tumbling.

    The mechanics of the housing market are set in motion by entry-level buyer demand. The person who sells to that first-timer moves up, and a chain reaction is triggered. I’ve never seen a worse environment for a 100-200K buyer in NJ than now. Still-unaffordable prices and poor credit alternatives have led to a lot of languishing inventory. If this slice of housing isn’t sold soon, it’s going to become rental stock…wittingly or unwittingly. And, that’s not a great sign.

  8. Pat says:

    In my neck of the woods, first-timers are scared sh*tless by the obvious foreclosure/REO properties sitting at the bottom of the MLS like a hanged man at the bottom of a rope.

    Even innocent young couples have mentioned that they think it’s odd so many houses mention “as is” or buyer responsible for all use/occupancy…etc.

    Not many folks I’ve talked to lately – and that’s school, church, work, grocery, neighborhood – want to be the next one swinging.

  9. njrebear says:

    “If this slice of housing isn’t sold soon, it’s going to become rental stock…wittingly or unwittingly. And, that’s not a great sign. ”

    I have already seen this happen. What drives me mad is that renters who i presume are bubble sitters pay full rental price!!!

  10. Clotpoll says:

    Pat (8)-

    Exactly. And, it’s very hard to convince a first-timer not to rent a place like this (usually from an “accidental landlord”)- possibly on a lease/option basis- and end up buying it for a song.

    What other type of housing allows the buyer to take a home on a “shakedown cruise”?

    Our memories are so short…this kind of thing happened all the time between ’89-’96. Even in my area, top condo complexes were as much as 50%-60% absentee ownership. We’ve got a lng way to go to get back to those ratios.

  11. James Bednar says:

    From the Record:

    JPMorgan to drop ax on 160

    JPMorgan Chase will lay off 160 people from its Maywood office, victims of the company’s acquisition of a Bank of New York division last April.

    The layoffs will start March 25 and be completed in about two weeks, said JP Morgan spokesman Mike Fusco.

    Work at the 113 Essex St. office, which is mainly a consumer banking call center, will be shifted to other U.S. locations, Fusco said

    Maywood Mayor Thomas Richards, speaking from Florida, said the company had informed the borough that it would close the facility.

    “One hundred and sixty people is a big employer in Maywood,” he said.

    “It’s a major tax revenue for us,” he added, but expressed confidence that another company would move in.

  12. njrebear says:

    advice to renters who pay full price –

    Look at the inventory and decide on the rental price. Great opportunity here to learn the ‘art of lowballing’.

  13. metroplexual says:

    Coleman is a twit.

  14. James Bednar says:

    What happens when NJ isn’t even a desirable location for back-office?

    Citicorp bringing 650 jobs to Buffalo area

    In an early win in his campaign to redevelop the Upstate economy, Gov. Eliot Spitzer planned to announce Wednesday that Citicorp. will locate as many as 1,000 back-office jobs in the Buffalo suburb of Amherst.

    “The idea of a New York City-based major financial firm choosing to locate back-office operations is certainly a winning proposition,” said Assembly Economic Development Committee chairman Robin Schimminger, D-Kenmore, Erie County. “Better that a back-office operation be located in upstate New York rather than in New Jersey or South Dakota.”
    (emphasis added)

  15. Al says:

    Clotpoll Says:
    February 22nd, 2007 at 7:05 am
    Have to give BC the props for the “Chinese water torture” analogy. IMO, prices have dropped fairly rapidly (vs. historical standards) from mid-’05 to this point. No graphs to back that up, just gut feeling from experience. It’s inevitable that some buyers would now sense opportunity and trickle back into the market. No doubt, they are (or should be) buying at a much lower level than Spring ‘05.

    The problem is that buyer’s sentiment is based on asking prices not on actual sales prices. Last year a lot of buyers looked at the prices (which were 10% on top of 2005 sold houses prices) and said: it is insane. Right now, when asking prices a back to 2005 sales level, it seems like a bargain by comparison.

    And if enough fools rush in they will save (at least level it off) housing in NJ.

    For Condos – I think there is no exit there – condos became almost as expensive as houses and sometimes more. There are only so many people who are interested in upscale condo’s…. Historically condo’s where a cheap way for new buyer to get into market at well below rents mortgages… Current situation does not make sense.

  16. Al says:

    On the side note – I checked a mortgage on the house I was looking at – why would anybody take an ARM with:
    6.65%, first increase capped at 2.25%
    in one year and follow up increases are capped at 0.25%/year to a 12.5% max rate

    – vs. Conventional Fixed rate. Were fixed rates so much higher last year???

    Ohh yes, it was a Home equity loan – could you get low fixed rate on those?? The owner had mortgage completelly paid off before last year…

  17. James Bednar says:

    NYT has a piece on the subprime shakeout and Novastar tumble this morning..

    Home Lenders Hit by Higher Default Rates

  18. James Bednar says:

    From Sign on San Diego:

    Lenders told foreclosure picture grim

    Mortgage professionals who are struggling with a national spike in residential foreclosure rates were warned yesterday to expect more of the same in 2007.

    Unemployment, mortgage fraud and speculative buying are among the factors behind the recent surge in filings, experts said at a conference of the Mortgage Bankers Association.

    And this year $1 trillion in adjustable-rate mortgages are due to reset before Dec. 31.
    “This is really a wild card,” said Rick Sharga of the Irvine firm RealtyTrac. “We don’t have a precedent.”

    Sharga said he was worried by the fact that 13.6 percent of residential mortgages are in the riskier subprime market.

    Mortgage attorney Daniel D. Phelan echoed Sharga’s concerns.

    “I personally think we are at the beginning of this cycle,” he said. “It is going to get worse before it gets better.”

  19. James Bednar says:

    From the Star Ledger:

    Subprime effect could stretch far

    The implosion of the subprime mortgage market should be a stark reminder to investors about the risks of lax lending standards fueling the corporate buyout boom.

    A surge in global liquidity matched with low interest rates have fed a lending bonanza in re cent years, driving banks and oth ers to ease loan requirements on everything from starter houses to multibillion-dollar corporations.

    That’s already come back to haunt mortgage lenders. Borrowers with weak credit have become increasingly delinquent on their loans, a big switch in a market that recently had lenders clamoring for business instead of running from it.

    Those risky practices haven’t caught up with commercial lenders — yet. But if they do, the trickle- down effect could be far reaching, even potentially rocking pension funds that have been financing such debt.

  20. Clotpoll says:

    Al (15)-

    “Fools rushing in” isn’t a formula for saving a market. That’s what got us into this bind.

    Not every buyer in the trickle of buyers purchasing now is a fool. Someone who has different needs and motives than you is not a fool. A buyer who is going to occupy a home thru one or, possibly, multiple business cycles is not foolish if he sees an opportunity now. Mortgage rates are low and selection is good (and that’s not Lereah-speak, that’s a fact).

    Those who point fingers and call today’s buyer dumb are not missing the boat…they’re missing the point.

    Different needs and different opinions make the market. One man’s condoshack is another’s palace.

  21. James Bednar says:

    Don’t miss the next bubble, mausoleums and grave sites are PRIME!

    You better buy now, or they’ll be dumping your body on the side of the turnpike when you’re dead.

    A home is only an investment while your alive, a grave site is an investment for ETERNITY!

    MONUMENTAL EGO: Trump plans his own mausoleum in, yes, New Jersey

    He may be a New York native. But it’s the Garden State that may own “The Donald” for eternity.

    Real-estate mogul Donald Trump has filed paperwork to build a wedding chapel on his golf course in Bedminster. He told The Star-Ledger of Newark that he wants to later convert the building into a mausoleum for himself and his family.

    Trump called the 525-acre Trump National Golf Club property in picturesque Somerset County hill country, about 50 miles west of Manhattan, a “beautiful place.” Trump built the course, which opened in 2004, on the former estate of the late automaker John DeLorean.

  22. skep-tic says:


    the peak in this region was really in summer 2005, not 2006. you can see this in sales volume and prices. inventory began building up in 2004

    if we are actually 1.5 yrs off the peak, then either the market has held up remarkably well or the current numbers do not reflect the actual decline.

    Last fall, I tended to think the latter. Now I’m not so sure. Housing in the NYC area lost about 3-5% according to NAR. This is after posting big gains for the full year of 2005. This is a decent drop, esp on a real basis, but it doesn’t even wipe out the 2005 gains.

    Most sellers would rather let their properties sit that cut prices. There needs to be some outside event to break the logjam, I think

  23. R Patrick says:

    Sorry NJ is not a “starter state” and people should look to move elsewhere. :)

  24. James Bednar says:

    Be careful with statewide generalizations, we really are a tale of two states. Southern Jersey communities like Millville, Vineland, and Bridgeton have been named some of the most affordable places to live in the Northeast, if not nationwide.


  25. Clotpoll says:

    Grim (21)-

    We’re worried about RE? I see an article like this and worry about a country in which a deadbeat like Trump can rise to the top.

    Now, he’s got enough stroke and money to indulge his weirdness. My office isn’t too far away from Trump National…his bright idea gives me the creeps. And, I’d also like proof that he is not currently dead and preserved in “Weekend at Bernie’s” mode.

    Skep (22), R (23)-

    Right on the mark.

  26. Clotpoll says:

    Grim (24)-

    Ever been to those towns? Whoa.

  27. James Bednar says:

    Clot (26),

    Your statement is testament to that fact.


  28. Al says:

    Nebraska is quite affordable as well. If you can find a job there.

  29. Rich In NNJ says:

    Skep #22

    I show sales peaked in Bergen County in the summer of 2004 but prices didn’t peak until summer of 2005. This is the same time I show inventory growth starting as well.

    Mind you, this is for Bergen County only.


  30. James Bednar says:

    Buffett seems to do well there.


  31. BC Bob says:

    bear [6],

    I learned awhine back, if Janet is Yellen you better be selling.


    I am also amazed how this has started to unravel much quicker than I had anticipated. I laugh when the LOD’s [it’s catchy] complain that prices are not coming down quick. It seems like prices are falling at a much rapid pace than I had envisioned. That being said, I still feel it will be a slow gradual decline. Five-Seven years of falling prices, of course with some short term rallies [bull traps].

  32. skep-tic says:

    interesting analysis of the current scale of default risk in mortgages:


    There are 50 million mortgages.

    According to the FDIC, about 4 million recent buyers are at risk of defaulting.

    Recent news items suggest 1 million subprime mortgages are already in that category.

    There are at least 6.7 million subprime loans outstanding, and if 13% are in foreclosure, that’s nearly 900,000.

    Also recall that 13% of FHA loans–“conventional fixed-rate mortgages”–are already in delinquency. So while the foreclosure rate on those mortgages is still low–2% or so–the pool of potential foreclosures is large, and increasing.

    The total value of US residential property is now around $19 trillion, according to the Joint Center for Housing Studies at Harvard University.

    Total household debt is $11 trillion: $9 trillion in mortgages and $2 trillion in revolving credit (credit cards, etc.)

    That means net equity for all 75 million American homeowners is $8 trillion–including the 25 million households who own their homes free and clear.

    [If you subtract this group, you find that] all 50 million mortgage holders are left with a grand total of $1.5 trillion in net equity.

    If housing values decline 15% . . .then the decline collectively suffered by all mortgage holders is $1.9 trillion–enough to put them in a negative equity hole.


    Note that a 15% decline in residential real estate is enough to put the entire nation of mortgage holders collectively underwater!

  33. Richard says:

    i’d like to see higher density communities say in hoboken style farther into the state. right now people get in their cars and drive everywhere which i think loses some sense of community. when i first moved into my house i didn’t meet a neighbor within 10 houses for a month!

  34. SG says:

    skeptic #22

    Good point. I took the peak using the Shiller/Case index data for Newyork. They don’t have NJ specific data. Also there are folks saying that bust is starting at outskirts and moving inward.

    Anecdotally, the highest price I have seen is in summer 2005 in central NJ as well. By that knowledge, you can say we are already 1.5 years into the bear market.

  35. BC Bob says:

    “There are too many soft markets at this stage of the selling season to call a general upturn in the new home market,’’ Robert Toll said in the statement. “Demand varies greatly from week to week in individual markets.’’


    I’m not sure if it was Toll or Hov that came out in Dec/Jan, with statements, saying the tide was turning. They stated that foot traffic was up tremendously and we were “dancing at the bottom”.

    They did not mention that the foot traffic was 5X faster leaving their office as compared to entering. That dance??? Get ready for a marathon.
    The participants have just been notified that the floor, which they are dancing on, has been determined to be structurally defective. Don’t worry, the dance marathon will continue. It will just be moved one floor lower in the building. Going forward, this is also subject to change. However, rest assured, the dance will continue. There is no cause for trepidation. Kick it up.

  36. SG says:

    Homebuilder shares drop on interest rate worries
    Thursday, February 22, 2007
    Associated Press

    Homebuilder shares fell across the board yesterday after investors got data that pointed to a possible increase in interest rates and an investment house said housing demand in February remained tepid.

    The sector got a jolt before the opening bell when the Labor Department reported the consumer price index rose by a higher-than-expected 0.2 percent in January. The CPI is one of the primary indicators the Federal Reserve uses to gauge the pace of inflation.


  37. SG says:

    Fed fears inflation more than housing
    Thursday, February 22, 2007
    Associated Press

    WASHINGTON — Federal Reserve policy-makers saw a lessening of economic threats from the housing slump but continued to worry about inflation as they decided last month to leave existing interest rates intact.

    According to minutes of their deliberations released yesterday, Fed Chairman Ben Bernanke and his colleagues thought that while the slowdown in housing continued to pose a threat to the overall economy, those risks had “diminished somewhat,” with statistics indicating the steep slide in housing might be coming to an end.


  38. BC Bob says:

    “when i first moved into my house i didn’t meet a neighbor within 10 houses for a month!”


    There’s goes your argument that renters are losing out on being part of a community.

  39. Al says:

    when i first moved into my house i didn’t meet a neighbor within 10 houses for a month!

    Lol you need to work on your social skills.

    On more serious note – people in the north-east are not very friendly/ready to make friends.

    Neighbours do not smile at you and talk to you at all. Even in the apartment building everybody is very secluded. When I lived in Denver I rented a small house. Within a week I knew all my neighbours within 2 blocks.

    Granted, I was walking my dog in the neighhbourhood every night, and he is very personable – probably a lot more personable than me. In NJ all I get from people in their yards is an angry look – “Get out of here”.
    It is like they are annoyed by just my presence on the sidewalk.
    Could it be just like lemmings – when the population density is too high people starting to hate each other on deeper hormonal/feromones level?? Something from caveman times… Deeper instincts.

    P.S. I always pick-up after my dog.

  40. Richard says:

    bc bob, i find this part of the country to be none to friendly when it comes to community. you go west or south people will actually knock on your door and introduce themselves and bring cookies. around here, you’re lucky to get a head nod if you catch the eye of your neighbor. it’s sad really.

  41. BC Bob says:

    “and a chain reaction is triggered.”

    Clot [7],

    I know I sound like a broken record, but there are too many weak links in this chain. The subprime was targeted at the first time buyer and now we see the results. You are right, this market either churns or burns based on their activity. A broken chain?? How about a rubberband?? Stretch it as far as you can [2005]. It either pulls back violently or snaps. Unfortunately, this rubberband has snapped[2006-2010??]

  42. Rich In NNJ says:


  43. James Bednar says:

    Sister lives in a great little community in Wayne. Everyone on the block knows each other, heck, even I know all of her neighbors. The block is almost entirely young families with kids. For Halloween, they threw a block party/fundraiser and closed off the entire block. Someone had a 4-wheeler with a trailer (loaded with hay), and was taking the kids on rides. Someone else had a bbq going, and yet another was in charge of the “beverages”. Neighbors routinely babysit for each other and birthday parties average at least 75-100 people.

    Community isn’t dead in New Jersey, but it is certainly becoming very difficult to find.


  44. James Bednar says:

    And yes, even I get a wave from the neighbors when I come to visit.


  45. BC Bob says:

    Richard [40],

    The last house I owned, neighbors brought over champagne and choc chips. By the way, a great combo. The community aspect seems to be a thing of the past.

  46. AntiTrump says:

    “Toll Brothers cut its forecast of how many homes it will sell in the current fiscal year by as much as 4.8 percent.”

    I will bet my money that this will keep getting revised downward every quarter this year.

  47. Rich In NNJ says:

    When I moved in to the home I’m renting I had 6 neighbors introduce themselves.
    Them while walking I’ve met dozens more.

    It’s a two-way street.


    In NJ all I get from people in their yards is an angry look – “Get out of here”.

    What are you doing in their yards? Introduce yourself first! :p


  48. James Bednar says:

    i’d like to see higher density communities say in hoboken style farther into the state.


    I agree wholeheartedly (and I don’t often agree with Richard).

    One of my favorite redevelopments is the Mill on Main St. in Totowa. I believe the redevelopment took place during the last boom (bubble?). Basically, an run-down warehouses and industrial were converted to loft-style condos. Great conversion of an industrial/commercial site to residential.

    I’d really like to see a similar redevelopment take place in the old Colt/Patent Arms site near the Great Falls in Paterson.


  49. Marito says:

    Please, guys with access to MLS. Just a quick check on this number: 2352992 (Fair Lawn). I’m almost certain that it was listed at 449K last year and would like to confirm that. It has just dropped to 380K. Also central AC seems to be new feature.

  50. RentinginNJ says:


    Good analysis. I agree that the decline will take longer than many sidelined buyers would like to see.

    However, in some respects, it “really is different this time”.

    Assuming the average buyer really only cares about the monthly payment, one could argue that prices (i.e. the “price” of a mortgage payment) actually fell much further.

    The 1988 peak occurred at a time when interest rates on a 30 yr fixed were over 10%. Rates fell by 200 basis points by the time the market hit its bottom in 1992. The price of a monthly mortgage payment dropped by 28%.

    The current boom happened in a low interest rate environment. This time around, falling rates won’t be able to absorb a significant chunk of the price drops that need to happen to reestablish affordability. Affordability will need to be reestablished through price declines.

    Falling rates after 1990 also gave buyers who overpaid in 1998 a break. Once could refinance into a lower rate. Those with ARMs actually saw payments adjust down. This put buyers in a much better position to wait out price drops.

  51. PeaceNow says:

    I moved to central Jersey from Manhattan in 2005. Lived without a car for a year and a half, using bicycle for trips to food store and trains and buses for trips to other places. Friends from NY thought this was perfectly reasonable; NJ neighbors and assorted contractors working on my house thought I was insane. I’d still be doing this if I was, say, 10 years younger. (I think I’m old enough to be the parent of most of the people on this blog.)

    The principal benefit that I see in high-density housing (aside from saving what precious little open space is left in this state) would be that some couples might be able to get rid of those second cars.

  52. Rich In NNJ says:


    I take it your getting that number GSMLS? It not showing up on NJMLS.

  53. DE says:

    #39 and #40

    I agree with you guys, I think it comes down to space people are always on top of each other in New Jersey and I don’t think it’s healthy.

    Even animals at the zoo have more space then most people living in New Jersey. Everybody needs a little bit of privacy every once in a while. I know I can’t go anywhere without someone always being in my face.

  54. DE says:

    #53 PeaceNow

    Riding a bicycle anywhere in New Jersey is suicide. Just my two cents……

  55. BC Bob says:

    “The 1988 peak occurred at a time when interest rates on a 30 yr fixed were over 10%. Rates fell by 200 basis points by the time the market hit its bottom in 1992.”


    Bingo. Hit out of the park.

    Back then the fed had the luxury of stepping up and loosening. With present economic #’s, that option does not exist at this time.

  56. James Bednar says:

    GSMLS# 2352992 – Fair Lawn, NJ
    13-15 20th Street
    OLP: 400,000
    LP: 380,000
    DOM: 72
    (Purchased in 1956)

    Rich, can you check comps on this street in NJMLS?


  57. bergenbubbleburst says:

    Rich in NNJ: Thanks again for all fo your help with numbers for River Edge/Oradell, in 05 and 06.

    Can you give me an idea as to what is going on in those towns now?

    I see a lot of volatility in the listings right now, they seem to come and go. I imagine some are relistings etc., but I canno tell if any thing has sold in the last couple of months.

  58. James Bednar says:

    Riding a bicycle anywhere in New Jersey is suicide.

    I’ll ride 75+ miles on a Saturday morning. Starting off in Clifton, perhaps through Millburn, out to the Great Swamp, or if I’m up for a longer ride (100+), I’ll head up through Bergen County and out to Bear Mtn. I’ve been known to venture out to Western Morris or even into Sussex on occasion.

    Riding is great in this area, but you’ve got to be aware of your surroundings and pick appropriate routes. It also helps if you can keep a 25+ mi/hr pace on busy roads.

    New Jersey has a great road cycling / competitive racing community. Perhaps one of the greatest in the entire Northeast. Racing season starts next month! If you want something to do on a cold March Saturday morning, head out to Branchbrook Park in Newark. As usual, we’ll be running the first set of races this season.. Rain, shine, or snow.


  59. Lindsey says:

    I’ve skipped some posts so if my point has been made earlier, I apologize.

    Skeptic, SG, et.al.

    It is true that sales peaked in summer of 05, but not prices. That didn’t occur in most places until sometime in 06. When you’re talking about off peak, it is generally considered to be off peak price, not sales volume.

  60. bergenbubbleburst says:

    #51 rentinnj: how long do you think it will take.
    I am resigend to waiting until Sept of 08, however, with all the recklessness that has been in this market, I must admit I cannot understand why it has not happened so much sooner.

    Things were slowing own int he fall of 03, but with the rise of interest only, and neg am, that I belive reinflated the bubble, and prolonged it for another 18 months or so.

  61. Richard says:

    my wife is from queens and lived there and in manhattan most of her life. she’s a walker, plain and simple. to this day she still walks around westfield and there’s like nobody ever on the street except those that don’t seem to own cars. it’s bizarre to her but in the ‘burbs people drive everywhere. most of them are also on the cell phone even though they aren’t supposed to be.

  62. RentinginNJ says:

    Be careful with statewide generalizations, we really are a tale of two states.


    I agree. Outside of high property taxes, which plague the entire state, things are much different in South Jersey. Even property taxes are less terrible in the South. My sister just relocated to Camden County and bought a decent starter home for just under $300k; A house that would probably cost $450 up here.

    According to the FDIC statistics, South Jersey’s economy actually experienced decent growth while North Jersey’s economy contracted. As far as economic growth, the state is actually riding the coat tails of South Jersey at this point.

  63. BC Bob says:



    Will Montclair be holding another event this year??

  64. NJGal says:

    I have also noticed that people are just not that friendly, even in my apartment building, and I admit to sometimes not wanting to be bothered by neighbors, even though in my LI town our neighbors are friends, and the best neighbors you could ask for (but that could be because my parents still live on a block of mostly boomers, who come from a different time).

    But friendliness is a function of lots of things – I know when new people move in, my mother, while not bringing cookies over, always makes it a point to introduce herself and chat (she’s also totally nosy, but hey, better than nothing I guess). I have noticed myself that now that I have a dog, I have A LOT of neighborhood acquaintances, owing mainly to the fact that my dog is perhaps the most gorgeous thing walking (yes, I am biased) and he gets a lot of attention.

  65. RentL0rd says:

    I am relatively new to NJ and driving south feels like being in a different state all together. I haven’t been much in NNJ, but Central NJ doesn’t look all that great compared to South NJ.

    Around here – north brunswick/south bruns, it looks like at least one member of the household is commuting to NYC (ok, my sample size is small).

    So, looks like its a tale of 3 states.

    Is Central NJ an average between the two other extremes? Or is it just my limited vision?

  66. Lindsey says:

    This is a little long, but I think it might help people understand the origins of the post that launched this thread. Despite it’s general terms, this discussion actually has a very specific focus.

    Judith Stanley Coleman, along with being a very staunch open space advocate, is a big-time player in Monmouth County politics and head of the Middletown Planning Board. I don’t travel in her circle (I lack the requisite net worth), but I know enough about her and the matters at hand to shed some light.

    This debate is playing out against the backdrop of a very long and public battle over something known as the “Middletown Town Center.” The short version is this: Now former State Senator Joe Azzolina proposed a massive development on land he owns in Middletown that had been long been included in state planning documents as a designated “town center.”
    When he actually put up his plan, a long battle ensued, with Coleman leading the opposition. Short version, she won, he lost. She doesn’t want to see anyone trying to open that door again.

    If you want the full story, google Azzolina and “Town Center.”

    Judith Stanley Coleman is many things, Metroplexual, but she is not a twit.

  67. James Bednar says:

    Montclair residents hate us, but the town is asking us to run the race again.

    We had no input on the date/time last year. It should have been on a lazy Sunday afternoon, not on Friday during rush hour.


  68. R Patrick says:

    AActually been down that far south, I have also been iin the middle of nowhere upstate. And that is the problem it is the middle of nowhere.

    I was quoteing some snob who went to the zoning board in RIver Edge going “stop building small houses, we don’t want people to think this is a starter town”

    I live in Fort Lee, probably one of the most over priced parts of the state. Maybe JC on the water or Edgewater is more over priced but I am in the cheap complex, I bet the neghbors would like us bought out and bulldozed because we drive down the property values for the whole town.

    As a 27 year old man who wants to when he gets out of RN school in a couple weeks ( the reason why I ditched the party/meetup ) work in NYC my options are limited ( I could move into NYC next as well )

    I am where I am, and I live in a good place.

    Someone mentioned Pal Park and people with suitcases of money. I could say the same about Fort Lee. I can’t decide if it is Jealousy or Racisim that colors my comments sometimes. Sorry it’s the truth and I am not proud of it, and I am working on it.

    But since so many of those deals are family cash they won’t forclose and they are there for the long haul so I don’t see prices droping at all.
    So if I cannot beat them join them I guess.

    My concern is to get the average 700K half a house and stay within communting range of the three hospitals I want to work for ( and C-P is my first choice ) I need a 300-400K down payment to afford it the heat and the taxes.

    So at 27, how do I save up 300-400K if I am making 60-70k a year in the next seven to ten years?

    I figure working 20 hours of overtime a week if I can get it or working a 3-12’s 1-4 schedule and a second per diem job the other three days a week I can step it up to 100K a year for the next 5 years.

    The don’t spend any money that I do not need to and save save save and put it in safer mutual funds like the Vanguard S&P or the SPY ETF?
    ( I can’t tell which would be better )

    What do you think?

    P.S. Since I’ll still need a really big mortgage, when the mortage companies say 3 tradelines is ideal does it mean 3 credit cards or like anything that has to be paid off? I went to this BS seminar at school and they said a tradline included my cell bill, my school loans, and my mortgage on my current place.

  69. AntiTrump says:

    To revisit our SO/Maple wood discussion from yesterday. This is what I get when I plug in numbers into Yahoo’s mortgage calculator for a 500K house with 10% down:

    Loan amount 450000
    Annual interest rate 6%
    Number of months: 360
    Monthly principal and interest payment $2,697.98
    Monthly property taxes $1,000.00
    Monthly hazard insurance $166.67
    Monthly PMI (if applicable) $150.00
    Total monthly payment (including taxes, insurance, and PMI)

    Assuming you are in the 33% tax bracket, your after tax cost is about $2800, not including any maintenance/upgrades that you have to spend on. To say that you are living rent free your home must appreciate by 2800 * 12 = ($33K). That means the house you buy for 500K th is year must be worth atleast 533K next year to say that you live rent free. i.e the money you pay in rent comes back as capital appreciation. If the property market is flat or even worse declining you are better of if you can rent for less than $2800 a month.

    If the home prices decline 10% in the next two years, your true cost for the next two years is (2800 * 12 months * 2 years) + loss on value of the house.

    I agree that over a longer period owning makes much more sense than renting. But in the current market, there is an arbitrage opportunity to rent. i.e. if you can rent for 2500 a year and buy a similar house for $450 next year, you have effectively saved approx 25K by renting for a year and buying next year.

    Guess it all depends on what your view on housing is. If you are bullish and expect a 10% increase in home prices going forward then you will be living rent free if you buy as your cash outflow in interest and property taxes will come back as capital appreciation of the house. If you think the market is going to flat or down for the next 2/3 years then it is better to rent for 2/3 years.

  70. Rich In NNJ says:

    13-15 20th St
    4 Bd; 1.5 Bath; 51×153; $7,024.74 Tx
    Central Air, Oil heat

    13-34 20th St SOLD 11/2005 $385,000
    3 Bd; 1 Bath; 50×110; $7,152.54 Tx (Current)
    Gas Hot air, wall A/C

    12-21 20th St SOLD 2/2004 $282,500
    3 Bd; 1 Bath; 50×150; $7,131,24 Tx (Current)
    Gas hot air; Family Rm Fireplace

    12-21 20th St
    3 bd; 2 Bath
    ACT 3/2006 $459,000
    PCH 7/2006 $449,000
    EXP 10/2006
    ACT 1/2007 $439,000

    One block over (further from train)
    26 Lowe SOLD 7/2006 $385,000
    4 Bd; 1 Bath; 53×110

    29 Lowe SOLD 12/2005 $350,000
    4 Bd; 2 Bath; 53×109
    Cent Air

    6 Lowe SOLD 9/2005 $390,000
    3 Bd; 1 Bath; 50×110
    Cent Air

  71. AntiTrump says:

    I haven’t even factored in the 5% return on your savings account for the $50K a year and the fact that you can put away more for a bigger down payment next year.

  72. RentinginNJ says:

    how long do you think it will take.

    I expect to see a pattern similar to the post 1980’s bubble.
    I think 2-3 years of falling prices as speculators are chased from the market and foreclosures force out those who can’t afford the mortgage payment. I think after 2-3 years though, housing will still be overpriced. I then expect to see a longer period (5-7 years or so) of an illiquid market with stagnant sales and flat prices as the fundamentals catch-up to prices.

    After the jokers are chased out over the next couple years, most buyers who can afford the payment and remain employed will likely “suck it up” and stay put.

  73. bergenbubbleburst says:

    #69 River Edge as a startr town, that comment probably came from a certian relator in the town.

    As far as RE being a starter town it was in that soem people had to desire to move up to Oradell, and there has alwyas been tension between the two towns, I myself never undestood it.

    Now if you wer comparing RE to franklin lakes or the Sadlle Rivers or Allendale or Wyckoff, then I could see it.

    The beauty that was RE, was that it was a hokey kind of town, with a non descript even run doen commerical area, but ocne in the heart of town, the homes were all well maintained, with many having deon nice expansions with out Mc Mansions over the years. teh schools were very good, and the taxes were reaosnable.

    That has all changed over the last few years, and while the quality of life has declined a certian snob factor by newer residents has increased.

    The twon is living on faded glory, some newe residents some newer residents do not realize that yet

  74. BklynHawk says:

    Hey, weren’t some of you talking about this house and the re investor (flipper) involved with it…looks like he’s switched to “rent-to-own” now



  75. Rich In NNJ says:

    Oradell SFH Past 2 Months
    37 Active

    17 UC

    15 Sold
    2 at $390k
    3 btwn $400 & $450
    4 btwn $450 & $500
    3 btwn $500 & $550
    2 btwn $600 & $700
    1 at $1.7 Million

    River Edge SFH Past 2 Months
    40 Active

    17 UC

    13 Sold
    2 btwn $350 & $400
    3 btwn $400 & $450
    3 btwn $450 & $500
    2 btwn $500 & $550
    2 btwn $550 & $600
    1 at $725k

  76. Lindsey says:

    Re Trump’s mausoleum:

    Don’t bet on it. New Jersey doesn’t approve new cemeteries. At all. Ever. Well, mostly. There’s been only one cemetery to be approved by a town in the last 50 years and most of the people involved in its application and approval are currently in jail or indicted, though not on that particular approval. The names of those involved are Anthony Spallero and and Matthew Scannapieco and the town is Marlboro.

  77. Willow says:


    Yep, that house was discussed here. I can’t imagine that he will get the $3,500/month rent either. It is walking distance to the NYC bus but it definitely does not take 35 minutes. The DeCamp bus runs along Bloomfield Avenue and doesn’t get on the highway until you get through Bloomfield so it takes a solid hour without traffic on the highway. Most here will drive to Willowbrook Mall to take the express bus or drive to the train in Montclair or Little Falls/Great Notch.

    This guy did not know enough about the town before buying this house. The house right next door, while not as updated, is bigger and has been on the market for $510,000 for almost a year. It’s not on a great street and doesn’t have enough parking.

    I also want to point out in the picture of the bathroom: do you see the pipe going up along the left side of the shower door – that’s where the radiator should be. As far as I could tell when going through the house, there is no heat in the master bath. That’s a negative to me.

  78. Lindsey says:

    Correction to post #67. (when it comes out of moderation)

    Azzolina was an Assemblyman, not a state senator. Also there is an extra been in the text.

  79. James Bednar says:

    The fact that they aren’t making any more cemetaries is more proof that grave sites are HOT real estate!

    Maybe you can’t afford to live here, but you better buy now if you want to die here.



  80. Richard says:

    >>I agree that over a longer period owning makes much more sense than renting.

    very true on a 30-year loan. the worst time of the loan is the first 5-7 years since it’s primarily interest but you have to ‘go through that’ to get ever higher payoff of principal. on antitrump’s example you pay off around $450 a month principal whereas in year 15 it’s $1000. if you can do 13 payments a year it’s closer to $1400.

    then again if you’re looking at monthly payment the more interest the more you can deduct.

  81. njrebear says:

    What happened to Greenspan’s call on a housing bottom in Nov 2006?

  82. chicagofinance says:

    James Bednar Says:
    February 22nd, 2007 at 9:03 am
    And yes, even I get a wave from the neighbors when I come to visit.jb

    grim: is that a wave or a flip?

  83. Clotpoll says:

    BC (38)-

    My argument isn’t that renters lose out on being part of a community…it’s that people often opt to buy, because they fear that renting will make them “outsiders”.

    That perception vs reality thingy.

  84. AntiTrump says:

    What happened to Greenspan’s call on a housing bottom in Nov 2006?

    The fed looks on a national level and they are correct in their assumption, given than a large swath of this country never saw the madness on the coasts and selective bubble towns.

    The fed is looking at a bunch of numbers in a spreadsheet to help them with monitory policy.

    I am looking at homes on sale in the towns that I am interested in buying, and I got to say, I have more detailed information that greenspan or bernanke has on prices and sales in few town in union county, NJ.

  85. chicagofinance says:

    DE Says:
    February 22nd, 2007 at 9:45 am
    #53 PeaceNow
    Riding a bicycle anywhere in New Jersey is suicide. Just my two cents……

    DE: FYI – the moderator is a bike geek

    He’s shaves his legs and walks around in spandex.

  86. AntiTrump says:


    Don’t forget our good friend AMT. I know many people who live in high prop tax areas who got hit with AMT and couldn’t deduct property taxes on their federal return.

  87. BC Bob says:

    “because they fear that renting will make them “outsiders”.”


    Nobody will ever go broke underestimating the intelligence/common sense of the American public.
    I guess that makes me a LOD Outsider.

  88. RentinginNJ says:

    What do you think?

    R Patrick,

    Are you really committed enough to staying here that you are willing to work 60 hour/week to buy a house?

    Not knowing your situation, you seem like a prime candidate for relocation. You’re young and not settled into a career, you don’t have to worry about selling a house and you work in an “in demand” field where you can get a job anywhere in the country. Why struggle to make ends meet here when you can live comfortable somewhere else? Don’t just look at the small pay cut you might take, look at the cost of living side of the equation too.

  89. bergenbubbleburst says:

    #76 Rich: Thanks a lot. prices appear to be trending downwards, with more activity in the lower priced ones, than teh higher priced ones.

    So if I am reading your post right, 17 are currently UC in both towns (final sales price still to be determined)Any idea on how many listings have expired in the last 2 months?

    In your opinion how does this activity compare to other towns, slow brisk, stagnant.

    the realtor that I have had preliminary contact with, tells me that things are at a stalemate between buyers and sellers in both towns.

  90. skep-tic says:


    the real problem with the numbers here is the property tax ($12k on a $500k home!)

    if the property tax is half that (which is the case in CT, where I am looking), then owning is pretty close to renting on an after tax basis

    the NJ tax situation is definitely out of control and should present much more of a drag on prices than is currently reflected

  91. bergenbubbleburst says:

    #84 Clotpol: i agree, having both owned and now renting int he same town, there is definitely a feel of being an outsider, which is both liberating, and a little disconcerting.

    There is also the feeling that since you do not own, you re not entitled to comment on what is going in the town, you lack a certian credibility, even if you are much more informed, than most of the homeowners.

    By the way i am heading out to your neck of the woods to visit family who recently located to Annandale, after living out of state for many years;pretty country out there, but horrible commute to NYC.

  92. chicagofinance says:

    RentL0rd Says:
    February 22nd, 2007 at 10:09 am
    I haven’t been much in NNJ, but Central NJ doesn’t look all that great compared to South NJ.
    Is Central NJ an average between the two other extremes? Or is it just my limited vision?

    Rent: Central New Jersey is the worst part of the state with the exception of the burned out interiors of the cities in NJ, Newark, Trenton, Paterson, Camden, Jersey City, and the industrial deathtrap that is the most dangerous 2 miles in the United States. It has all the drawbacks of density and none of the charm of any open space. Most of the development is derided nationally as an example of what not to do. Think Route 1 corridor, I-287 corridor, US-22 corridor, US 202 corridor.

  93. Clotpoll says:

    Being a Southerner, I appreciate total strangers not walking up and getting in your sh#t here. I got a lifetime’s worth of that growing up, and I can get all I want when I go home to visit. 90% of that famous “Southern hospitality” is phony, transparent bulldukey.

    I moved to NYC right before the transit strike in the ’70s. When the strike hit, I saw more acts of real kindness in two weeks than I saw at home during my entire childhood. That was when I knew I’d never live down there again.

  94. bergenbubbleburst says:

    #73 rentinnj: How over priced would you still consider it to be?

  95. skep-tic says:

    here’s how you solve a property tax problem (from BusinessWeek):


    Fla.: Trade property tax for sales tax

    Florida voters would be able to abolish property taxes on primary homes and put caps on government revenues in exchange for adopting the nation’s highest statewide sales tax under a plan proposed Wednesday by House Republican leaders.

  96. AntiTrump says:

    #91 skep-tic Says:

    600 dollars property taxes a month roughly equates to 100K in the purchase price of the house.

    If I worked in midtown NYC, I would completely rule out NJ at this point. But if you work down town or in Jersey city, then NJ is the best option from a commute perspective.

  97. skep-tic says:

    the FL solution continued…

    would you trade a ban on all property taxes for an 8.5% sales tax? I’m guessing yes.


    “House Speaker Marco Rubio, R-Miami, said a proposed constitutional amendment that would raise the statewide sales tax by 2.5 percentage points — from 6 percent to 8.5 percent — could go on the ballot later this year or at the 2008 general election.”

  98. chicagofinance says:

    I’ve lived in one of those urban highrises for 3 years. I don’t know any of my neighbors. We knew a few people, but they moved out. The guy across the way is nice, but my wife hates him because he lets the door slam all the time. I used to be a big fan of my neighbors next door, because the wife made a lot of noise when they “hit it” (thin walls – shhhhhh don’t tell Hunter or Mrs. Chicago), but they moved. The idiots upstairs installed hardwood floors throughout and let their dog’s leash drag on the floor, throw loud parties, and drag their furniture on it – luckliy, the floors are REALLY thick (old warehouse).

  99. SG says:

    BC Bob:

    “The 1988 peak occurred at a time when interest rates on a 30 yr fixed were over 10%. Rates fell by 200 basis points by the time the market hit its bottom in 1992.”

    Bingo. Hit out of the park.
    Back then the fed had the luxury of stepping up and loosening. With present economic #’s, that option does not exist at this time.

    BC Bob: Very good point.

    Even in falling Interest Rate regime, the prices fell down 15% from 89 to 92.

    Basically the point is Fed can not do anything to save Market. You can take them out. The only other major factor that can have impact is Employment growth. Which, I think everyone points is not going to happen significantly in next 2 years.

    I think the Roller coaster ride has just begun.

  100. chicagofinance says:

    Clotpoll Says:
    February 22nd, 2007 at 7:05 am
    Have to give BC the props for the “Chinese water torture” analogy.


  101. R Patrick says:


    Actually I was looking at 70-80 hours a week like the people who own houses where I live do. Bascially make double checks for the next 5-10 years before I get married/have kids so I can afford a SFH in a nice neighborhood with good schools. I can then back it down to 50 at one job to keep up the bills and other expenses.

    Palisades is like 50 an hour per diem and most places start RN’s at 30. ( not sure about NYC hosptials probably a little bit more to offset the NYC tax hit ) So thats 60K base for the 40 and then rither OT at 45 like 65 hours a week if I can get it or work a second job per diem for the house money.

    Somewhere in there I would like to go for the NP ( masters ) since that is a pay raide that would bring my income to 100-120 meaning I could dial back not do OT as much and have money for prestige items like all my friends have already ( Benz, Ducatis, nice vacations ) But I am cool to do without since well my Parents can’t give me a 100-200K down payment. I just need to do this the hard way.

    Best case 60-70 job 1 and then another 50K from the part time gig. My costs right now are about 18K a year, I could cut out more if I wanted to. That’s about 80-100K a year and wiht interest that should be 400-500K in 5 years. And then I can afford my house! Does this sound right?

    As far as moving, I love the city but am perma priced out and I want nobody walking above me and a garage to put my bike in.

  102. James Bednar says:


    Are you a single wage earner?


  103. RentinginNJ says:

    #73 rentinnj: How over priced would you still consider it to be?

    Long term (7-10 years), I see prices reverting to their historic trend. I honestly don’t know how much will come from short-term nominal price declines and how much will come from longer-term inflation erosion. It depends on a number of interrelated variables.

    If I had to guess, I would say that short term price declines will be greater than the consensus analyst position, but less than catastrophic. I would guess that by late 2008, the bulk of the nominal price declines will probably have happened. While housing will still be overprices, you can probably buy and most of the risk of being seriously underwater will have passed.

  104. James Bednar says:

    Only asking because it’s going to be incredibly difficult for a single wage earner to compete against DINKS.


  105. RentL0rd says:

    chifi – thanks. It certainly feels that way about central NJ.

  106. James Bednar says:

    longer-term inflation erosion

    Given the recent Fed comments (and lack of action), I’m beginning to believe this may be the most probable scenario.


  107. Otis Wildflower says:

    Speaking of biking, Delaware has _tons_ of marked bike lanes, at least in New Castle Co.. Basically every 4-lane road I’ve seen between Newark and Claymont has a bike lane on each side, and even the smaller roads have at least 1 marked lane or a wide shoulder. Very few sidewalks though :p

  108. James Bednar says:

    Bobby gets the boot. From Bloomberg:

    HSBC U.S. Head Mehta Resigns After Loan Losses Jump

    HSBC Holdings Plc, Europe’s biggest bank by market value, said Bobby Mehta stepped down as head of the North American unit after it posted higher-than-estimated losses on U.S. home loans.

    Mehta also resigned as chief executive officer of HSBC Finance Corp., formerly Household International, the company said today in a statement. Mehta’s successor at HSBC Finance Corp. is chief operating officer Brendan McDonagh. The role of North America CEO is still vacant.

    HSBC earlier this month increased the amount set aside for U.S. bad loans to about $10.6 billion, 20 percent more than analysts had estimated, as the American mortgage business deteriorated. The company said Feb. 7 it was shaking up management and tightening lending policies.

    “Mehta was the guy charged with driving the growth of Household into mortgages, and that has been the source of disappointment,” said Simon Maughan, a London-based analyst at Blue Oak Capital Ltd., who doesn’t have a rating on the stock. “So he’s the guy who has to fall on his sword.”

  109. Otis Wildflower says:

    “I could dial back not do OT as much and have money for prestige items like all my friends have already ( Benz, Ducatis, nice vacations )”

    Dude, rent.. I rent, and I have the Benz and BMW bike, paid for in cash. Granted, the Benz is 20 years old, but it costs $700/yr to insure (costs more to keep the old panzer running :p)…

  110. Rich In NNJ says:

    BBB #90

    Oradell SFH Past 2 Months
    4 Withdrawn (1 re-listed within the same time frame)
    15 Expired

    River Edge SFH Past 2 Months
    10 Withdrawn (1 re-listed, 1 rented)
    13 Expired

    I don’t look at individual towns as the numbers are to low to make any comparisons. I track the county stats. What I’m seeing is a drop in sales (UC 1-3 months prior), a flat to slight increase of homes going under contract and decrease in median price compared to this time last year.
    January saw an 8% decrease in price compared to last January and right now February is showing a 6% decrease compared to last February.


  111. R Patrick says:

    JB yes, just me for now.

    But remember this if Fort Lee so it’s DINK’s with 4 sets of grandparents and 2 sets of parents all with big savings accounts lending at least 50+ percent down if not all of it. So while you or I would pbe giving the bank 4K in interest they are paying 1% back to their family great if you can manage it I guess. ( see Jealousy vs Racism in original post )

    But when I am looking to upgrade it will only be when I get married. I am not leaving my studio co-op until that happens. And there is nobody I am seeing that seriously so I have at least 3-5 years to bank loads of cash.

    And even if it is not fort lee to stay in NNJ where the hosptials pay well most houses are like 400+ in good school districts.

    So I need alot of money to buy and not put my future family in a risky situation.

  112. R Patrick says:

    Oh PS my parents almost lost the house in 92 and the stress destroyed my Parents Marriage and pushed my dad over the edge into alcoholism.

    Thats not happening here….

    Time to go to work will check on this when I get back at 10-11 PM

  113. bergenbubbleburst says:

    #111 Rich Thanks again. Stupid question but what is the difference between expired and withdrawn?

    These numbers appear high for small towns,and I would think that many of these will be coming back on the amrket in the next few weeks (Spring market), plus new additional inventory. Thanks again.

  114. bergenbubbleburst says:

    #104 rentinnj: I was kind of thibking along the same lines, but I thinkt he situation is more precarious in general, and it would not take much of an out side shock to change things.

  115. SG says:

    This is older article, but still good reading.

    Housing Bubble Correction Update
    Geographic Regions Cascade


    The graphic is nice. It shows how bubble growth starts from City and moves to Suburbs & Rural areas. It also shows reverse motion.

    For Suburbs:
    Bubble Growth: 2002
    Bubble static: 2006
    Bubble Decline: 2007
    Post bubble static: 2010
    Post bubble mean growth: 2011

    The bad part – Wait till 2010. :-)

  116. BC Bob says:

    Disclaimer: This is old news. However, I still can’t get over their statement questioning if they will have taxable income within the next 4-5 years.

    “When we initially shorted the stock, it was obvious that there was going to be some distress here,” said Whitney Tilson, who heads the hedge fund firm T2 Partners and who took a small short position in the stock in the last couple of weeks. “But when a company announces that they’re not going to have taxable income for four years, that’s amazing.”


  117. Rich In NNJ says:

    BBB #114,

    When you sign a contract with an agent it’s for a stated time period. If house doesn’t sell by the end of the contract, it expires.

    A home that is withdrawn is exactly that. The seller has withdrawn the home from the MLS it is no longer for sale. This could be temporary or unconditional.

    But back to the expired listing, I’ve noticed that some will re-list their homes with the same realtor (possibly signing a new contract) before the old listing has expired. So a listing can expire but the house may still be for sale under another listing.
    Get it?

  118. Rich In NNJ says:

    Do it!
    Fences DO make good neighbors.
    Just be sure to follow the towns “rules” regarding permits and placement. You don’t want to leave your neighbor with any “ammo”.

  119. UnRealtor says:

    RPatrick, your career (nursing) is very portable, and there’s no need to live near NY City, or even the Northeast.

    You can live in a city such as Atlanta and find tons of work, a lower cost of living, and a better quality of life.

    Not everyone has such flexibility, it’s an asset you should exploit.

  120. skep-tic says:

    maybe an electric fence with some barbed wire on the top is in order. I wonder how that would affect her resale value

  121. RMB says:

    My husband wants to paint the middle finger on the back of our garage

  122. James Bednar says:


    Read up on “adverse possession”.


  123. BC Bob says:

    “The bad part – Wait till 2010”

    SG [116],

    Seems reasonable to me.

    This was a bubble of extreme proportions, accompanied by fraud, chicanery, abuse, deception, etc… It will take an extreme amount of time to unwind [drip,drip,drip]. Going forward, there will be colossal structural and fundamental changes instituted [drip,drip,drip].
    First time buyer for a 500k pos cape?? Gone, down the same path as pet.com.

  124. UnRealtor says:

    “Withdrawn” / “Expired” / “Temporarily off Market” all mean the same thing: the seller has pulled the house off the market.

    A listing doesn’t “Expire” unless the seller lets it.

    In summary, they’re all “Withdrawn.”

  125. RMB says:

    We did.. Thanks JB.. We called the police and filed a report but did not press charges and did not have the police go over there. As long as there is a record of letting them know the trespassed they cannot claim adverse possession.

  126. bergenbubbleburst says:

    #114 Rich Thanks

  127. RentL0rd says:

    #126 – “This-house-is-NOT-SELLING-if-you-buy-it-you-are-the-next-victtim”

  128. bergenbubbleburst says:

    #114 Rich Thanks again for all the information. i will be watch those 2 towns carfully as the Spring market approaches.

  129. bergenbubbleburst says:

    #116 I cannot wit until 2010, I will have to take my chances in Fall of 2008.

  130. NJGal says:

    “But remember this if Fort Lee so it’s DINK’s with 4 sets of grandparents and 2 sets of parents all with big savings accounts lending at least 50+ percent down if not all of it.”

    Well think about this R – those boomer parents are retiring soon, and perhaps selling their homes for way less than they expected. With the downturn of the market and less housing ATM money, they may be less inclined to give their retirement fund to their brats. That extreme level of parental participation could slow down somewhat.

    That said, continue to rent. I know that even as a lawyer I could not afford something on my own – when you get married, that changes entirely, and you don’t want to be stuck with a one bedroom condo that you may not be able to sell if you do get married.

  131. Richard says:

    >>Nobody will ever go broke underestimating the intelligence/common sense of the American public.

    i say something similar. never overestimate people.

  132. Lincoln78 says:

    As a Rutgers alum, I just received this invite via email. You probably don’t have to be an alum to attend, but I haven’t really looked into it. Sorry if a repost.

    On Tuesday, March 6, from 5 to 7 p.m., U.S. Secretary of Housing and Urban Development (HUD) Alphonso Jackson will be delivering the Richard Goodwin Lecture in Honor of Ethel Lawrence in the Gordon Theater on the Rutgers–Camden Campus. The topic is “Future Trends in Affordable Housing.” The event is free and registrants should RSVP to Jonathan Boiskin at fasevent@camden.rutgers.edu or 856-225-6324. More information can be found at goodwinlecture.rutgers.edu.

  133. bergenbubbleburst says:

    The cluelsee people who “own” thso hosue next to the one I rent, do nto take car of their property.

    They have a massive pine tree which hangs over onto my drive way, i get all of the pine coens and needles from theri tree. It used to be once a year, so I

    swallowed hard and cleaned it up myself,as i did not wnat to be the malcontent renter.

    After the first year renting the tree started to die, and the pine coens and needles started falling all the time.

    This stuff is dnagerous especially when it is wet, not to mention it clogged the air conditioning system in my car,w hcih ahd to eb repaired at a cost of $700.

    finally I approached them and asked if they could please clean the mess up. They just stared at me dumbfounded, absolutely no answer. So i started to blow the debris back ont to theri property where it sat for months.

    Finally i cam home one evening and the woman ahd blown several motnhs of debris back onto my drive way. I went ballistic, she accused me of being a bad and evil man. The husband said nothing

    After my spouses intervention it was agreed that ehy would clean it up once a week, it has been sporadic at best, and to show how pett they are, they clen it but then leave it right on the edge of the property line, so I can see it every day.

    The owner of my hosue does nto wnat to get involved as he could cut all teh branches that hang over onto my drive way down.

    As some here know, I am in the process of buying a new car, as soon as it is done i am chopping those branches down myself.

    Meanwhile their hosue continues to deteoirate squirrel infestation no gutters, athe list is endless.

    I guess that is what happens when you buy with no money down I/O, I know this ebcasue the former owqners were amazed when they got the price they did back in 04, and she told me they had no money and had some “crazy” kind of mortgage where you only pay the interest, but thay they were holding onto to these buyers becasue they were willing to pay so much for the house.

  134. Richard says:

    >>Fences DO make good neighbors. Just be sure to follow the towns “rules” regarding permits and placement. You don’t want to leave your neighbor with any “ammo”.

    what’s more complicated are trees. in many parts of NNJ you get a small plot but some large trees that can spread over multiple properties not your own. while usually not an issue unless it’s on the property line where roots are growing up under your neighbors driveway or other structure, neighbors do have a right to saw off roots and branches on their property which could make the trees look ugly or outright kill them.

  135. RMB says:

    I WAS JUST GOING TO ASK THAT.. We have no front lawn and the roots ar to our door because of the tree on our neigbors property. Its a maple. We talked to our other neighbor about it asking 1 to remove it and replant another tree and we will pay half the cost or 2. lay down more soil at the base.. They told us they have not intention of doing either. We have no idea what our rights are in this case.. The landscaper told us the only way to be rid of this problem is to dig up the roots and it will definetly kill the tree. Or every other year dump new soil and lay new sod. (which can be expensive).

  136. Dink says:


    I heard the “Good Time to Buy 60 sec/Radio” commercial on 92.3 during the morning rush. Have these spots been out for some time, or is the NAR gearing up for an offensive?

  137. thatbigwindow says:

    I am looking at tax records. Can anyone tell me what the owners last name followed by “(ETALS)” means?? I see this on many properties…what does it mean?

  138. thatbigwindow says:

    Bergenbubblebust: Check out Van Saun Court. a builder is in the process of cheaply constructing a McMansion where a gutted ranch is.
    They are taking the walls down, keeping the original basement and expanding the back with a crawl space. Those houses get water too…Coming to an MLS near you…probably will ask over a million since the builder paid in the mid 400’s for the land.

  139. Willow says:

    Trees: Legally, you can cut down or dig up any roots that are on your property. The downside is that if a neighbor’s tree falls on your property, it is your problem not the neighbors. We don’t have any trees on our property but there are many behind and next door. Last summer one tree fell on our house and came through the roof. The neighbor wouldn’t do anything about it so we had to go through our insurance. It would have been nice if she had offered to at least pay our deductible. We did need a new roof in that area, so we did get that out of the accident but it could have killed someone when it fell.

    The thing to do is to notify the neighbors in writing/certified that their trees are in danger of falling. This then legally puts it on them and if a tree falls onto your property, then they are liable. What I plan to do is to get the tree guy out to give me a report on any tree that could fall and then send it to my neighbors.

  140. Al says:

    I want to contradict myself for a while here:

    Few questions:

    Is buying a first house ever easy financially??? – (I mean with fixed 30 years mortgage)

    Next question – how much of the current Stocks and Housing Run up are hidden inflation expectations – that would mean home prices stay flat for 5 year with 6% inflation, for example??

    How would we emerge from 6% inflation as an economy??

    Would dollar be devalued with respect to Yen/Yuan and how much?

    Would our salaries keep raising with inflation or stay stagnant as well untill our workforce costs become competitive with China’s??

    If you believe in inflanatory erosion of Housing prices it might make sense to buy sooner than 2009-2010.

    I have this feeling that Fed is just following tries to keep a good face while following prescription from teh Goverment to devalue dollar.

    The objective is to get as much as we can in debt right now, with low existing interest rate, and couple of years later jack it up to let’s say 12% and devalue the living S#$T out of dollar.
    That would cause economical Collapse of Asian Financial Markets as their reserves will devalue huge, and I do not see how their fragile banking system will survive at all.
    After collapse of their economy, they would be working dirt cheap again!!!

    How about this weird scenario??

  141. Willow says:



    This means “and others” so other people also own the property with the person named.

  142. thatbigwindow says:

    Thanks Willow!

  143. UnRealtor says:

    While large trees come with some issues, it’s worth considering that it takes 60-70+ years for a tree to grow very tall.

    Just chopping down a 100 foot tall tree and replacing it with a 6 foot tree is practically criminal.

    Unless there’s disease, it’s worth dealing with the hassles of wonderful big, old trees.

    A friend lives in a development that was clear-cut, and it looks awful.

  144. thatbigwindow says:

    My neighbor has an old huge tree right at the end of her property. It hangs over my driveway and I subsequently get squirrel and bird droppings on my car. I guess I am legally allowed to cut the branches which extend onto my property (which would be half of the tree)

    I would really like to see this tree go because it is so close to my house, and it leans towards my house as well, so you know if it fell, it would fall right into my bathroom.

  145. bergenbubbleburst says:

    #140 TBW: I wil take a drive by, but I just don ot get it, there are at elast 7 or 8 of these babies ont eh amrket right now, and on my last count there was t least another 8 in various forms of construction, that have not yet hit the market, and there ar 2 more coming on 5th Ave wher one hosue stood, they just cleared the land.

    Don’t these one truck builders take a look around and see that the market is changing before they committ to these projects.

    That being said, a potential tear down came on the market on the Fenway about a month ago at 409k, they just lowered the price to 399k yesterday.

    It is a 3 bed 1 bath and listed as an “as is” sale. property size I believe is 75 by 100 or 150, and teh taxes are just under 8k!

  146. Willow says:


    Send your neighbor a certified letter stating that the tree is in danger of falling on your property and that they should do something about it. Also state that if it does fall, they are liable for removing it and paying for any damage done by the tree falling. This should prompt them to care for the tree.

    If they refuse to do anything about it, I wonder if going to the town would do anything. Our neighbor’s garage (right next to our driveway in the front) had a huge hole in the roof and it was an eyesore (besides the fact that animals were probably living in it). When the candidates for mayor and town council came around campaigning, my husband pointed it out to them. Within weeks the town had made the owner fix the roof.

  147. bergenbubbleburst says:

    #147 tbw: As soon as my new car coems, off come thosie branchse, I can take any more bird droppings, sap eatinga way the pint on my other car, hundreds of pine cones, andpine needles that look like piled of tumbleweed as the neighbors refuse to pick the debris up, they just move it throe it back on to theri property.

  148. abamitphd says:


    Note this comment in the blog post to which you linked:

    “Here’s a question that deserves to be asked: if everyone who can afford a house–even those who stretched their credit to the breaking point–has already bought a house, then who’s left to buy the 4 million empty dwellings?”

    This is an interesting thing to think about.
    Before 2000, I imagine that most first-time buyers were looking at financing 90 percent with a 30-year conventional mortgage. The nubmer of first-time buyers is just a simple function of demographics, income, and saving.

    Then you get innovations in financing which permitted lower down payments, higher debt service, etc. This had two important effects: (1) first-time buyers could buy more and (2) people could become first-time buyers earlier than they could previously. Both are a big increase in housing demand for first-time buyers which puts pressure on houses at the low end of the market, which works its way up as current owners trade up.

    (2) is important because these innovations basically took people that would have been buying in this spring market and put them in houses a few years earlier. Instead of buying at age 27, let’s say they purchased at 24.

    This isn’t a problem as long as you have new people turning 24. However, things get interesting when loan standards tighten as they are now, so that now you really can’t buy until you’re 26.

    Because of the loosening of underwritings standards and then sharp tightening, you have basically destroyed the first-time buyer market for two years.

    It would be interesting to put some real numbers in this story. Anyone have good sources of data on first-time buyers?

  149. thatbigwindow says:

    BBB: That house on 5th that you speak of wasnt even in bad shape. It was a nice ranch with an inground pool. I think the builder paid in the mid 500s for it.

  150. bergenbubbleburst says:

    $147 tbw: You are legally allowed to cut them down (I checked with the town) if you do, I was advised to let the Police dept know, in case there are any problems.

    In my case since I am renting, and my neighbors are obnoxious, I dont care if they get mad, in your case since you own, you might want to take a different route.

  151. thatbigwindow says:

    Willow #149:

    The elderly lady who lives there is very nice. I am going to talk to her in person first. I will absorb the entire cost if I have to..I just want the tree gone.

  152. njrebear says:

    abamitphd (151),
    Add to that booming inventory caused by Baby Boomers cashing out/downsizing their real estate (retirement fund) investments.

  153. RentinginNJ says:


    A few years ago, one could argue that innovative mortgages brought in more market participants (i.e. younger buyers) because they increased the perception of affordability. The problem is that housing prices have increased beyond the ability of low interest rates and creative financing to make the payments more affordable.

    For example, a $250K house in 2000 with $25k down and a 30 yr. fixed at 8% would result in a monthly mortgage payment of about $1,650/month.

    That same house today would cost $500k. Putting down $25k and financing the rest with an interest only loan at 6.5% would result in a monthly payment of $2,575; almost $1,000 more for the same home.

    Even if standards don’t tighten, we are still in trouble (at least in NJ). Many of those 24 year olds who left NJ to go to college simply aren’t going to return.

  154. Richard says:

    >>My neighbor has an old huge tree right at the end of her property. It hangs over my driveway and I subsequently get squirrel and bird droppings on my car.

    i agree with unrealtor. cutting down old trees is criminal unless it’s rotting and there is a real danger of falling. i have a couple of trees twice the height of the surrounding houses on my property and they all overhang my neighbors property somewhat. they’re healthy and the danger of them falling is next to nil. i think the neighbors would be more upset if i took them down! branch intrusion is much easier to deal with than roots. when you cut roots you have no idea whether the tree will survive the excision or not.

  155. NJGal says:

    Can anyone explain this to me? I was talking to my mortgage broker (who naturally said to take a 30 yr b/c it made no sense not to – smart man). He was discussing a 30 year with an interest only option and I kind of freaked, telling him I wanted no such thing. He promised to explain it fully later, if we got a mortgage through him, as an option. He sort of made it sound like what an I/O was meant to be – something for financially well off people that allows them, if they want, to pre-pay part of a mortgage with bonus money (as I told him we do get this) to reduce their monthly payments if they choose. This was versus a normal 30 yr, which if you pre-pay, just reduces the term (although it sounds like the funky one does NOT reduce the term but who knows). It didn’t sound horrible, because you would still be paying normally like a regular 30 yr., with interest AND principle.

    Any thoughts.

  156. RMB says:

    #145.. The tree is called a Swamp Maple or Red Maple they grow very fast and are very invasive. They kill everything around it. (The pine tree next to it which is about 50ft tall is dying because of it).. I am not an advocate of cutting down trees for convenience.

  157. abamitphd says:


    I agree completely with you that prices are a huge problem for the first-time buyers. In principle, this should be the check that keeps prices from increasing too rapidly. However, a sequence of innovations in finance has kept this from happening. The game is ending now because innovation has gone too far and those funding this risk have changed their appetite.

    My point is that we have basically “borrowed” first-time buyers from this market and several future markets and have to pay for that now with significantly lower net demand for housing.

    However, I think there is a big difference between prices pushing these buyers out of the market and tougher lending standards doing the work.

    In particular, this price mechanism seems like it is much more orderly, associated with the so-called “soft landing.” As prices increase, demand falls in a very continuous fashion.

    The tightening of standards seems less orderly, as it is associated with sharp changes in demand. We could be in for a world of hurt.

    Anyone have any idea what fraction of first-time buyers (and second-home buyers/investors for that matter) fall into the sub-prime category? This is where the net demand for housing originates.

  158. thatbigwindow says:

    Oh, this tree I speak of is actually lifting my neighbors roof..that could be a problem too..

  159. abamitphd says:


    Ask your broker to disclose the fees he (or his company) gets on the conventional vs. more exotic products. That might help explain his preference.

    That being said, the real question is what are you paying for the option to make an interest-only payment instead of being compelled to pay interest and principal every month.

    It is a riskier loan from an investors’ point of view, and they will want to be compensated for this risk. Look closely to see exactly where this is happening.

    From his point of view, he can qualify you for a larger loan based on the option loan, because he counts the interest-only payment when measuring your debt service.

    If its not completely transparent to you how you are paying for the option, I would walk away.

  160. James Bednar says:

    From the AP:

    Governor Corzine: Grim Outlook For New Jersey

    New Jersey can’t balance its checkbook without drastic moves like leasing the New Jersey Turnpike and the lottery to private companies, Gov. Jon S. Corzine warned lawmakers during his annual budget address on Thursday.
    Corzine’s $33 billion budget proposal doesn’t rely on such moves, but the Democratic governor said they cannot be dismissed as the state grapples with debt nearly as large Corzine’s entire proposal for the budget year beginning July 1.

    “It’s frustrating to have so few financial resources to invest in our future,” Corzine said.

    Though his budget includes property tax relief and more school aid without tax hikes, Corzine said a large cash infusion is needed to erase the state’s $33 billion in debt and for unmet needs. Among those needs are school construction, preschool and full-day kindergarten, helping those without health insurance and preserving open space.

    Corzine highlighted a 3 percent aid increase for K-12 schools and a 2 percent increase for municipalities, along with money to cut America’s highest property taxes by 20 percent for most homeowners. But ultimately, he offered a grim outlook.

    “The real news of this budget isn’t what’s in it, but rather what’s not and what will never be in future budgets unless together we do something to further restructure the state’s finances,” Corzine said.

  161. NJGal says:

    Thanks abamitphd. I am pretty sure that in the end, I will go with a straight 30 yr. because at the very least I understand it and it’s safe.

    The other thing he started to talk about was the piggyback and I stopped him. I said that I understood that PMI goes nowhere if I need to pay it, but I’d rather pay PMI than EVER have a piggyback mortgage. No creative financing for me thanks.

  162. BC Bob says:


    Yes, this market has sucked in those who either were not ready to buy or paid much more than they are capable of handling. It’s no different than the car manufacturers offering interest free financing. You entice many fence sitters. The combination of easy/basically free, teaser financing along with the premise of forever rising prices has been the catalyst for many impulsive buyers. Therefore, robbing subsequent years of activity.

    The end result of this charade?? New lending standards and requirements. You can put your *ss near the fire. However, when you get burnt you adjust quickly.

  163. RentinginNJ says:

    Any thoughts.


    First thing to know id that I/O loans typically result in high fees for the broker.

    Technically what he said was true. If you pay extra in a traditional loan, you still own the full payment next month. The term just gets shorter. What happens after an extra payment is that the amount applied toward principal grows and the amount going toward interest gets smaller.

    With an I/O loan, you only owe interest. When you make a payment toward principal, the loan balance drops and your interest payment (the amount you owe each month) gets smaller. Same things happens in a traditional loan, you just don’t see it because they apply the extra amount toward principle.

    If you plan on making all your payments, an I/O loan probably isn’t worth the higher interest rate.

  164. Clotpoll says:

    Skep (122)-

    I like fencing that makes a statement. In Colombia, rich peoples’ houses are ringed with concrete walls that have broken glass embedded in the top.

    What a way to say “hi, neighbor”!

  165. James Bednar says:

    Also, the rate on the I/O loan will be higher than a conventional.


  166. bergenbubbleburst says:

    #152 tbw I think it was even closet to 600K, was absolutely shocked, and it has sat foe almost a year since he pruchased it.

    He let the fire department use it for training purposes, and just finishded clearing the property. I think him a l long with a lot of these other Mc Builders in RE missed the baot.

  167. Clotpoll says:

    Al (142)-

    Is nitrous oxide readily available to you in your workplace?

  168. Richard says:

    one must be careful with the type of loan taken out. if you ‘extract’ $25k from your house and pay it back on a 30-year fixed rate, your monthly payments are fixed but you’re paying a whole lot more than $25k. if you need to borrow from your equity for whatever reason go with the standard HELOC. works like a credit card balance. whatever principal is left every month the interest is calculated on that so you can pay off as quickly or slowly as you want. keeps one away from getting caught in low monthly payment mentality.

  169. rhymingrealtor says:


    I/O is a perfect option for anyone who is disciplined with their money. If you can afford a 30 yr and pay the 30yr paymnet on your i/o you will reduce your monthly payment immediately and allow more of the payment amount to be paid toward balance every month. They were always a good choice for certain situations. The fact that they are getting such a bad name now is a shame.
    I know how it works heres hoping I am explaining it right.
    If you have to pay 100.00 per month 30 yr fixed. And you have to pay 90.00 per month I/o you pay the 100.00.Next month your i/o will be 89.00 so you could if you needed pay 99.00 so you haven away 89.00 of your interest and 10.00 of your principal but your payment was 1.00 less because your billable hours that month( your a lawyer right?) was 1.00 short. Now next month you are expecting your billables to be 15.00 more, are you a disciplined payer. Do you pay the extra?? Major advantages for people with different amounts coming in monthly. As long as they pay good when the times are good!


  170. RentinginNJ says:

    In particular, this price mechanism seems like it is much more orderly, associated with the so-called “soft landing.” As prices increase, demand falls in a very continuous fashion.

    In a normal rational market, I agree, demand should fall as prices increase. This, however, isn’t what happened over the last several years. A bubble market is characterized by a positive feedback loop. Prices increases cause demand to increase and prices to increase even further, resulting in parabolic growth in prices.

    While this appears irrational, and on a macro scale it is, the psychology is such that people either feel forced to “buy now or be priced out forever” or they simply see too much profit potential with little risk to pass up. Even if they know it’s irrational, they think they can get in and out and make a quick profit. Others simply buy into the notion of a paradigm shift (i.e. after 9/11 people care more about their homes).

    History does not support soft landings for economic bubbles.

  171. spyder says:

    First, I must say this is an awesome site, i’m learning and understanding a great deal from everyone’s thought’s and opinion’s.
    I have a quick question…..is anyone seeing any price declines in these McMansions, just driving around eastern bergen county, there are alot that are just sitting there, uninhabited?

  172. rhymingrealtor says:

    there was a lot of chiming in here while I was typing. I/O’s are not always higher than Fixed. I would go with PMI as opposed to Piggyback as soon as they are deductible. PMI most often has a max life of 7 years only. I would have especially gone with PMI when appreciation was so fast you were at 80/20 in a blink of an eye.

  173. rhymingrealtor says:

    Or put another way, I/O’s used to be taken only by people who knew about finance. Not those that it had to be explained to.


  174. rhymingrealtor says:

    Or put another way, I/O’s used to be taken only by people who knew about finance. Not those that it had to be explained to.


  175. Marito says:

    Hey, I was out running some errands, couldn’t check earlier.

    Thanks Rich for your post #71 and jb for the earlier one!

  176. Clotpoll says:

    NJGal (158)-

    There are many I/O and pay-option mortgage products that are completely legit and appropriate for qualified, informed borrowers. Most of these products are really designed for people who receive significant bonuses and/or lump-sum disbursements. Being self-employed myself, I have used them, and they have worked to my advantage.

    There’s no such thing as “bad” loans; only bad mortgage guys and dumb borrowers.

  177. James Bednar says:


    I don’t agree, and in fact, it’s a common misconception. Paying the equivalent of a fully amortizing payment on an I/O loan will make it function in exactly the same manner as a fully amortizing loan. No free lunch.

    Now, add in the premium that a lender will charge you (higher interest rate) for the I/O option, and it costs you more. You are paying a premium for the ability to short-pay your mortgage every month.


  178. James Bednar says:

    Or maybe I just misread your description.


  179. rhymingrealtor says:


    That did’nt come out right, Post 178 wasn’t sarcasm directed at you, I meant they have been around for a long time and used to be taken by people with certain financial needs, that differed than a weekly paid person, ie business owners, with different amounts coming in. None of these loans (i/o no doc, stated assets, stated income) were designed for the W-2 worker.

  180. BC Bob says:

    Clot [171],

    The post you were alluding to is just a major head fake. IMO, Al is screaming out; “Buy that de facto currency”. That’s my conclusion after decoding it.

  181. abamitphd says:


    I don’t disagree with anything you write, but I think this bubble was about more than just psychology.

    You need net demand for housing to sustain the bubble. Everyone can’t trade up unless there is someone there to buy the cheapest housing stock. That leaves you with first-time buyers and investors in second homes. Even if they expected priced to appreciate, they wouldn’t have been able to do much about it based on 2000 underwriting standards.

    The important question is this. Could we have handled these financial innovations in fashion that didn’t end up in a huge bubble and crash.

    Let’s say that the rating agencies and investors were actually paying attention to underwriting standards on the loans underlying MBS pools, and forced lenders to be cautious with these new products. Widespread mortgage fraud was prevented. Loans weren’t underwritten with the expectation that they would be refinanced in one or two years. You would still get an increase in demand by first-time home buyers and possibly second-home buyrs, but it would have been sustainable. Prices would have increased faster than inflation, but not nearly as much as they did.

  182. Clotpoll says:

    BC (184)-

    Everything screams for us to buy the de facto currency! Hidden messages are everywhere…

    One of us should register “The De Facto Currency” as a URL. Great blog title (not that I’d be posting anywhere else…)

    Doctor Bam (185)-

    Very erudite way of saying we p!mped and punked the goose that laid the golden egg.

  183. Al says:

    Clotpoll Says:
    February 22nd, 2007 at 2:36 pm
    Al (142)-

    Is nitrous oxide readily available to you in your workplace?

    Lol Actually yes, and in addition, we have better stuff.

    Still, in 5 years, you will call me visionary!!!!

    At least I do nto predict bottom of housing decline every month like NAR does…

  184. Lincoln78 says:

    Two questions for you all:

    – Noob question: What does DINK stand for?

    – One of the first posts on this page discussed negotiating rates. Living in Hoboken, that seems like a totally foreign concept.

    With the bubble leaking air, what areas are more rent price flexible than others?


  185. Clotpoll says:

    If you play The Beatles’ White Album backwards, John is saying “de facto currency…”.

  186. Clotpoll says:

    Al (187)-

    I don’t need to wait five years. I think you’re having visions now. LOL…

  187. Clotpoll says:

    Link78 (188)-

    DINK= double income, no kids.

  188. BC Bob says:


    I agree with RentinginNJ [174]. That being said, I also agree with you regarding a bubble requiring demand. The first phase of this RE move was precipitated by economic demand. The question being, when did this demand shift gears, no longer dictated by the fundamentals of the market. IMO, the last leg of the run was strictly psychological. It’s the character of any blow off top. Simple economics do not enter the equation. It’s get in at any/all costs. It’s the greed/fear syndrome. A house that is listed for 500k and subsequently goes into a bidding war and sells for 625k, defies any normal supply/demand curve. It’s all greed/fear.

    The decline down will be similar in nature. High prices/supply with little demand will force prices down in a slow manner. Again, supply demand. There will come a time when we switch gears. Instead of bidding wars, we will have 10-15 sellers chasing 1 buyer. Lower prices will beget lower prices. It becomes self perpetuating. At some point the same greed/fear, that lifted this market to the moon, will slam this market back to earth, maybe beyond. This last leg down will not coincide with supply/demand. Strictly psychological. Greed/fear.

  189. rhymingrealtor says:


    You have explained i/o’s it better than me, and I take too long to type it.
    A disciplined owner can save a ton of money when their introductory rate is 1%, Why do people charge everything and pay in full at the end of the month?? they are taking advantage of and oppurtunity, I/O’s are not for the feint of heart,(sp) and not for everyone, but they have been advertised in much the same way as prescription drugs, to the general public.

  190. Richard says:

    >>Paying the equivalent of a fully amortizing payment on an I/O loan will make it function in exactly the same manner as a fully amortizing loan. No free lunch.

    On a 30-year fixed you have the same payment every month. You can pay off extra principal in whatever amount you desire however you still have to come up with the monthly amount. In an I/O loan situation you have flexibility month to month. To Jim’s point the interest charged on each loan is no different if you pay on the same terms. I like the 30-year fixed to prevent myself from even thinking I have flexibility on payments ;)

  191. RentinginNJ says:


    The important question is this. Could we have handled these financial innovations in fashion that didn’t end up in a huge bubble and crash.

    I think so. I really think the run up in prices really occurred in 2 phases:

    Phase 1 was a rational market response to lower interest rates and mortgages that “aided” affordability. This allowed more buyers to enter the market, either younger than in the past or that would have been on the margins of “not qualified” in the past. It’s rational to think this new pool of buyers would result in a higher equilibrium price for housing.

    Had it stopped here, things could have been fine.

    Phase 2, however, is when psychology took over. Affordability declined even with low interest rate, buyers were in a panic about getting priced out forever, others got greedy over the prospect of easy riches, mortgages went from creative to suicidal and subprime lending went beyond the “marginally unqualified” to “patently unqualified”.

  192. BC Bob says:

    “Still, in 5 years, you will call me visionary!!!!”

    Visionary or late to the game??

  193. James Bednar says:

    From CNN/Money:

    Late mortgage payments surge

    Late payments for residential mortgages shot up by 15.6 percent in the fourth quarter, U.S. regulators said on Thursday in a report showing record earnings by commercial banks and thrifts in 2006.

    The Federal Deposit Insurance Corporation, which insures deposits at more than 8,600 banks and savings institutions, said the increase in late mortgage payments followed a 5.2 percent increase in the third quarter.

    Noncurrent mortgage loans – payments that are more than 90 days late – grew by $3.1 billion in the last three months of 2006 after rising by $974 million in the third quarter, the FDIC said.

    Richard Brown, FDIC’s chief economist, said regulators are seeing emerging signs of distress among subprime loans, especially with hybrid mortgages that subject borrowers to higher monthly payments after introductory interest rates.

    “While the degree of credit distress in these portfolios is still well below the peaks that we saw during and after the 2001 recession, it seems likely that their performance will get worse before it gets better,” Brown said.

  194. Al says:

    Clotpoll Says:
    February 22nd, 2007 at 3:13 pm
    Al (187)-

    I don’t need to wait five years. I think you’re having visions now. LOL…

    IT would be funny if I am correct – sad but funny.

    If I was confident in my prediction I would be buying a house now…

    But seriosly what is so wrong with it?? did not goverment stopped reporting M3?? Did not we had huge run up on stock market with 3%year GDP growth??

    Did not India and China being he main creditors of the US will suffer the worst economical consequences in case of raging inflation in US??

    Did no US had inflation figures in Low Teen’s before?? If my knoweledge of history any good it happened more than once…

    Right now economy is perfectly set up for inflation spike…. In som respect it is already happaning – 100% increase of costs of healthcare in 6 years?? gasoline – up 100%, housing up almost 100% (I think nationwide it is 83%)… rents lagged behind, but only because they are linked to salaries not inflation expectations… Food – at least 100% up since 1999 in average – I still have my grocery recipts from 1999!!! from the same wholesale chain – so comparison is applesto apples!!!

    So basically everything except Electronics, Cars, Clothes which are made in Asia, and rents which are linked to salaries went up at least 15%/year!!!

    SO right now Asia sponsoring US economy, by accepting devalued dollar as it has the same buying power as 5 years ago…

    The moment they would stop – beware!!!

  195. chicagofinance says:

    Clotpoll Says:
    February 22nd, 2007 at 3:14 pm
    DINK= double income, no kids

    Dual Income, No Kids

    Clotpoll = Lear’s Idiot

  196. chicagofinance says:

    RE: fixed rate I/O’s
    grim is probably correct about the higher rate – I always assumed I/O’s were generally for the first ten years, and then they became standard amortizing, except for the remaining 20 years, so the monthly payment jumped up dramatically.

  197. abamitphd says:


    The hard part is in the details.

    How do you stop phase #2?

    When do you know phase #1 has run its course?

    And who do you trust with the power to make these decisions?

  198. Al says:

    I am sorry it is off-topic but what is it with unionized workers and Health Care premiums??

    Do they like to go to a Doctor every day???


    HARRISBURG, Pa. – Unionized workers at Harley-Davidson Inc.’s largest manufacturing plant overwhelmingly approved a new labor agreement Thursday, ending a strike that halted motorcycle production for three weeks.

    Eighty-three percent of those who voted endorsed the contract, which calls for a 12 percent wage increase over three years; institutes lower starting wages for new employees, but allows them to advance to the same maximum rate earned by current employees; and will not require workers to pay health-care premiums, the union said in a statement.

  199. Clotpoll says:

    ChiFi (199)-

    Lear’s fool= Oswald

    Not Lee Harvey…

  200. BC Bob says:

    “How do you stop phase #2?”

    The market simply starts to implode on its own. Nobody rings a bell, the switch is turned off by the market. Changes are not made until the consequences are apparent. Too late for the short term, great for the long term.

  201. chicagofinance says:


    you [p]ile it [h]igh and [d]eep I see

    don’t get stuck in the ivory tower

    academic discussions can be thought provoking, but at times they end up causing a potential bias that may prevent an objective review of the facts

    the rally in housing was caused by the age-old effective “call option” embedded in compensation design where excessive risk taking is rewarded with cash payment in the short-term, and when everything blows-up, those responsible can just walk away

    it’s the only explanation, and most of our concern should be directed at identifying where these same types of incentives exist today (and in the future) – that way, we can recognize them and benefit from the next rally and step away before it falls apart

  202. chicagofinance says:

    Clotpoll Says:
    February 22nd, 2007 at 3:58 pm
    ChiFi (199)-
    Lear’s fool= Oswald
    Not Lee Harvey…

    who is more foolish…the fool, or the fool who follows the fool

  203. chicagofinance says:

    Al Says:
    February 22nd, 2007 at 3:57 pm
    I am sorry it is off-topic but what is it with unionized workers and Health Care premiums??

    Al: regarding Harley……how many companies do you know where the employees are so loyal they have the company logo tatooed on their bodies?

  204. BC Bob says:

    “how many companies do you know where the employees are so loyal they have the company logo tatooed on their bodies?”

    Along with a baseball, I hear Rickey has a portrait of himself tatooed on his body.

  205. Clotpoll says:

    ChiFi (206)-

    There’s always a greater fool…

    Isn’t there?

  206. Clotpoll says:

    What would Rickey make of this whole RE mess?

    What would Jesus do?

    What would Rickey do?

  207. bergenbubbleburst says:

    Off Topic: regarding the new property tax plan or scheme for NJ, i understand the increase is capped at 4% a year. Two questions.

    1. Does that include the school portion, or is it just the municipal portion?

    2. Is it effective this year or next?

  208. Richard says:

    capped at 4%. what a laugh. wait for all the local exclusions which will bring you right back to the old tax rate. this is nothing but lipstick on a pig.

  209. BC Bob says:

    “capped at 4%. what a laugh”

    Richard is right. There is no cap when you consider the exemptions, special provisions and loopholes.

  210. 2008 Buyer says:

    My train of thought would be to get a mortgage that matches the length of time you plan on staying in the house. If you plan on moving in a few years (may be starter home, no kids, etc.) get a 5 year ARM. If you think you are going to stay longer, get a 30 year. That was the process when there was a significant difference in rates on the short end (2,3,5,) that the 30 yr rate on mortgages. IMHO…the difference in rates between an ARM and a 30yr fixed is not that significant enough to get an ARM

    An I/O in its simplest sense gives the option of paying just the interest during a fixed period, usually 3 to 5 years. Afterwards the loan will amortize the remainder of the 30 (27 yrs or 25yrs) yrs with an associated increase in payments (interest & prin).

    These so-called “affordability” products I/O Arms and Pay-Option ARMS (can pay IO, Int & Prin, or something less than IO) have been around for quite some time and is really in my mind geared more towards people who get a significant portion of their salary in commission or bonus. You can make up that principal payment when you receive your bonus. Having said that…..I also think its a good product in an appreciating environment. You can easily gain equity in the house simply off of the appreciation. Alas…that’s not the case now and think we will be a little stagnant for some time.

  211. RentinginNJ says:

    but not those of investors or the rating agencies

    The current situation in housing is really unprecedented. Subprime lending has never been extended so far and the new cadre of creative mortgages hasn’t been around long enough to determine a long term track record. We also don’t have any experience with a housing market collapsing under its own weight in the absence of a triggering economic downturn outside of the sector. The economic models used by the rating agencies for estimating risk are of limited value in this situation.

    One problem with the models is that they assume rational market behavior. We don’t have a rational housing market right now. The models, I think, are all assuming a soft landing for housing.

  212. James Bednar says:

    Blah blah, more of the same..

    H&R Block Posts Loss on Subprime Mortgage Unit’s Woes

    H&R Block Inc., the largest U.S. tax preparer, posted a fiscal third-quarter loss after setting aside an additional $111 million to cover losses on loans underwritten by its Option One subprime mortgage business.

    Net loss for the quarter ended Jan. 31 was $44.7 million, or 14 cents a share, compared with a profit of $12.1 million, or 4 cents a share, a year earlier, Kansas City-based H&R Block said today in a statement. Excluding results from the mortgage unit, which the company is selling, profit was $25 million, or 8 cents a share, compared with a loss from continuing operations of $30.2 million, or 9 cents a share, a year earlier.

    Chief Executive Officer Mark Ernst put the money-losing mortgage unit on sale in November while also trying to reverse an erosion of H&R Block’s share of tax returns prepared. Ernst has offered new loan products tied to tax refunds and opened new branch offices to win more customers.

    “Until it’s sold, the mortgage unit will weigh down on earnings,” said UBS AG analyst Kelly Flynn said before the announcement. Rising defaults are plaguing U.S. mortgage lenders, and Flynn has said the unit may not get sold at all.

  213. bergenbubbleburst says:

    #214 BC Bob So with an average tax bill of around 8k in River Edge, and an avergae increase of 7% over the last four years, and a huge new school expansion project coming on line in Sept of 07, it looks like the average tax bill will be 10k in no time.

    Its getting to the point, that even with price declines, it may not be worth buting, as the tax increases are going to kill us.

  214. lookingaround says:

    R Patrick:

    I think you are ahead of yourself, you are worrying about things that you don’t have to be at this point in your life. Unless you are planning to marry someone doesn’t want to work, I think your future wife will be bring something to the table too. With 2 salaries, it is a lot easier for you to save up your down payment. Instead of a house, you probably should be saving up for that engagement ring first.

  215. NJGal says:

    Thank you guys, you have all been very helpful. I am completely new to this and the mere mention of I/O scares me. But I will look into the products. Perhaps I will have a friend of mine who is a mortgage broker explain the options presented to me, whatever they may be, when we finally go for it. That way she’ll be biased towards ME.

    I am very disciplined, but in a way, I DON’T want the flexibility to pay less because it’s very easy to turn one month of paying less into another, and another. I would love to have my monthly payments decrease over time, but even disciplined as I am, I am not sure that I trust myself. It’s really tough to decide because we do get bonuses, and while they’re not financial bonuses, lawyers bonuses are pretty ok. Doing the plaintiff’s end myself, there always potential for something ridiculous that could even pay off a mortgage (poor defense side hubby, nothing like that for him!). but that’s years away, you know?

    God, this is the hardest thing ever. Time to go get some margaritas.

  216. bergenbubbleburst says:

    Sorry should have said may not be worth buying.

  217. 2008 Buyer says:

    “I am very disciplined, but in a way, I DON’T want the flexibility to pay less because it’s very easy to turn one month of paying less into another, and another.”

    NJGAL….that’s unfortuantely the mentality of most of the borrowers who get these loans. Let’s just say that the majority of the people who get them make only the minimum payment. Its the same philosophy when looking at a property….in you mind you mentally come up with a price based on the asking price which stays “STUCK” in your head as a basis of whether or not you are getting a bargain.

  218. James Bednar says:



    Get into a house you can afford on a 30y fixed, sans bonus. When those bonuses come in, the hardest decision you’ll need to make is whether you want to pay down principal, save it, invest it, or go to Tahiti.


  219. Clotpoll says:


    At least you’re not practicing law like this:


    I hear this judge is using the proceedings as an “audition” for his own reality show.

    That’s grosser than the rapidly-decomposing Ms. Smith.

  220. James Bednar says:

    And yes, I know I’m completely boring.


  221. New in Town says:

    planning to use bonus to pay principal seems risky to me. live on salary and use the bonus as an extra.
    what do you do if the expected bonus doesn’t come?

  222. Orion says:

    Does anyone have info on current status of WMC Mortgage (wholesale lender/General Electric sub company)?
    Goggle didn’t help much.


  223. WickedQuiver says:

    Could Tremors in the Subprime Mortgage Market Be the First Signs of an Earthquake?


  224. Clotpoll says:

    ChiFi (230)-

    Eat my bread, do my will.

  225. PeaceNow says:

    We’re way past discussions of bicycling by now, but let me just say to all the people who feel cycling in NJ is insane…well, try 7th Ave. in Manhattan at rush hour. After 2 accidents (and 3 stolen bikes) I gave up riding in the city.

    Re: friendly/unfriendly/downright bad neighbors…well, can anyone propose a solution for my neighbor? She sits outside her house, which is roughly 10-15 ft. from my house, listening to talk radio from noon to late at night. Obviously in the winter this isn’t such a problem, but it tends to make me dread my favorite season: summer. Believe me, I’ve talked to her, both politely and not so, but it has had no effect. Any ideas?

  226. Zac says:

    Peace #223
    If she likes talk-radio so much; you should talk to her. All the time, everytime, until you become the nuisance she wants to avoid by staying indoors or out back.

  227. lenrom says:

    Hello guys..Been reading this board religiously every day..I know it’s not a good time to buy, but with a baby underway..I am somewhat pressured to move out of my 1 bedroom apt..Anyone with MLS access can provide listing history for #2374841 in Scotch Plains? thanks in advance..

  228. AntiTrump says:

    lenrom Says:

    Have you thought about renting a bigger place? Having a baby doesn’t have two be a reason to buy now if you don’t have to. I live in a rental townhome and both my kids were born here.

  229. Pat says:

    Neighbors planting trees on other people’s private property.

    Neighbors blasting talk radio all summer, all day.

    Neighbors with loud wives. :)=~~~ (geesh, this used to mean smoking after s*x, now it refers to “pulling an Obama”, I think.)

    I love this area.

    Peace…you have any noise ordinances there?
    I never have had this kind of neighbor trouble..or maybe I’m oblivious. A few years ago, one of our neighbors had a barking dog. The guy one house down barbequed hamburgers and put them in a garbage can on the other side of the fence and left it there. Ninety degrees. The dog broke down the fence a couple of times that day, but eventually the smell was the killer. Hehehhhe…I can still remember that smell drifting in the living room window. Dog guy goes pounding over. Burger guy says he’ll toss the burgers if the dog is kept inside. End.

  230. James Bednar says:

    From Bloomberg:

    FDIC Says Troubled Mortgages Grew by 15.6% in Fourth Quarter

    The Federal Deposit Insurance Corp. said bad mortgage loans increased 15.6 percent to $22.8 billion in the fourth quarter, slowing growth at the end of a record year for the banks and thrifts it insures.

    Loans at least 90 days past due grew by $3.1 billion, triple the $974 million rise in the third quarter, the Washington-based bank regulator said in its Quarterly Banking Profile released today. Residential loans written off as bad debt more than doubled to a three-year high of $888 million.

    “We’re seeing credit distress” among higher-risk borrowers who didn’t count on the slowdown in home-price appreciation, FDIC Chief Economist Richard Brown said in a telephone interview. “That distress is going to continue through 2007.”

  231. still_looking says:

    Ah….neighbors. Nothing like ’em.

    I lived in an apt in Millburn for almost 10 yrs. ($750/mo 1 BR, utilities included) — the guy next door used to burn stuff of all kinds in a stove in his garage. Soot used to land on my car. The yard looked like Sanford and Son. He rented out the house – a 2 family — but arrived daily to burn stuff there. Special place in H*ll waiting for him — with his own stove and pitchfork.

    For RPatrick. Do you realize you could sign up to be a travelling nurse, make a heap of dough for a few years (housed at someone else’s expense?) When you are ready to settle down, then go house hunting – by then hopefully prices will be realistic? Plus you get to see the rest of the world rather than just NNJ.

  232. lenrom says:

    AntiTrump:..yes we did, and most likely that’s we’re going to do..however while checking various gsmls listings, it’s hard to keep emotions from taking over when we find something where monthly payment is somewhat closer to rental price.Social pressure is factor as well especially for my wife whose friends got new houses recently.

  233. metroplexual says:

    Oh I am sorry Lindsey. She is an elitist exclusionary jerk. My bad. She should travel and see how smart growth works elsewhere. She is emblematic of what is wrong in New Jersey, she is afraid of experimentation (even though it is very successful elsewhere.) I stand by my statement: “she is a twit”.

  234. abamitphd says:



    I think that you are grossly overstating the importance of these options.

    The average borrower didn’t use exotic mortgages to buy a house that he couldn’t afford because he thought that they could walk away from it if things didn’t work out. When you incur debt based on fraud, it is non-dischargable in bankruptcy. And even if the bank forgives the debt, then you owe the IRS. And that liability is also non-dischargable. My sense of the real root of the problem is financial incompetence on the part of borrowers.

    Mortgage brokers that engaged in fraud will not be able to walk away from their failed busineses free and clear. Spend a few minutes here and you will see how they will end up.


    The corporate veil does not protect you from criminal acts. Just ask Ken DeLay.

    And if you think that the ratings agencies were willing to risk the reputation that they built up over decades for a few years of fee income, you are the one in the ivory tower. The bottom line is that these agencies employ people who couldn’t get jobs at good investment banks. Their failing has nothing to do with greed. They are just incompetent.

    Of course investors are not blameless. Ratings are just an opinion, and at the end of the day investors are responsible for their own due diligence, which many obviously failed to do.

    Instead of describing it as a big moral hazard problem gone wild, I would say it is more like a bunch of kids who steal the keys to their father’s car and end up in more trouble than they can handle.

  235. njrebear says:

    “they shoudl have paid a huge price in reputation for Enron and WorldCom”

    The total loss for Enron creditors was around $30B.
    What do you think will be the loss this time around?

  236. Duckweed says:

    “Mortgage brokers that engaged in fraud will not be able to walk away from their failed busineses free and clear. Spend a few minutes here and you will see how they will end up.


    The corporate veil does not protect you from criminal acts. Just ask Ken DeLay.”

    While fraud/willfulness liability is non-dischargable, the judge will discharge the debt unless the creditor brings a suit demanding the debt be paid. (Don’t count on the Trustee. There is nothing in it for the Trustee to get all the money back). For the average Joe, the process to bring a non-dischargeability action is simply too slow and costly. The end recovery is cents on the dollar, and that’s not including legal fee. (The poor cost-benefit analysis also discourages company trustee). NJ bankruptcy system seems pro-debtor as well. But that’s neither here nor there.

    Nor is criminal liability helpful. Sure, we feel vindicated when the execs go to jail (assume the gov’t lawyer does well). But the disgorgement is, again, cents on the dollar. Besides, civil penalty is paid to US treasury, not our bank account.

    All these various level of oversight and control is probably more useful to scare folks pre-emptively, so they don’t take up the fraudulent acts. However, once money changes hand it is good as gone.

  237. Duckweed says:

    On the brighter side, someone in default/foreclosure situation might be able to blame it on fraudulent mortgage practice and get some kind of a break.

  238. PeaceNow says:

    Ah, just learned there’s a code enforcement town info session this weekend. Will check on noise ordinances, but fear there’s probably nothing to shield me, especially during daylight hours. I’m looking into foul smelling plants for the property line…but perhaps rotting meat (thanks, Pat, for the anecdote) might be an alternative.

  239. BC Bob says:

    Raymond James analyst reports that sales for Toll’s first spring weekend was down 20%, yoy. Are we waiting for the Grey Cup??


  240. PeaceNow says:

    BTW, on the topic of this story, there was an article in the New Yorker several years ago about high-density development, which is kind of the practice (adopted over several centuries) in Europe.

    IMO, people in US feel they “need” too much space. They might “want” a lot of space, but they sure don’t need it. I grew up in 1200 sq. ft. house; 3 bedrooms, two baths; two parents, two kids. Maybe my parents felt cramped (though I doubt it, based on the houses they grew up in) but I don’t think we kids ever did. But today, tell people to raise kids in a 1200 sq. ft. house, and they’ll think you’re crazier than somebody who rides a bike.

  241. Clotpoll says:

    PeaceNow (246)-

    What kind of talk radio is this lady into? If she’s got Michael Savage going into the night, I think most NJ local ordinances would allow you to shoot her.

    That dude is wack. He’s so conservative, he even hates Bush. And his website has Iraq execution videos. Yuk.

  242. njrebear says:

    BBB- ABX Contracts are “going to zero”


    The BBB- rated portions of ABX contracts are “going to zero,” said Peter Schiff, president of Euro Pacific Capital, a securities brokerage in Darien, Connecticut. “It’s a self- perpetuating spiral, where as subprime companies tighten lending standards they create even more defaults” by removing demand from the housing market and hurting home prices, he said.

    Source CR

  243. chicagofinance says:

    abamitphd Says:
    February 22nd, 2007 at 8:22 pm
    I think that you are grossly overstating the importance of these options.

    doc: I think you misunderstand me. My point is that there is a essentially a limitless demand for borrowing. You will generally not find the bottleneck or self-regulation on the borrower side (think Homer Simpson and doughnuts). As long as lenders have an overriding financial incentive to originate loans and do not have to bear the economic (not legal) consequences of failure, the payoff mimics a call. No fraud needed. These sub-prime lenders didn’t engage in fraud or ostensive illegal activity (I didn’t say they were moral or ethical).

    As for your comments regarding the rating agencies. My wife is director of employment for one of THOSE agencies. I’m sure she’ll appreciate your informed comments about the employees of her organization. FYI – not everyone with that skill set is obsessed with work and money – additionally she is responsible for terminations and knows exactly what standards are there. The biggest problem is finding economists and statisticians with even a modicum of interpersonal skills.

  244. njrebear says:

    more on 250

    They [subprime] made up about a fifth of all new mortgages last year and about 13.5 percent of outstanding home loans, according to the Washington-based Mortgage Bankers Association.

  245. chicagofinance says:

    njrebear Says:
    February 22nd, 2007 at 8:26 pm
    Enron creditors was around $30B.
    What do you think will be the loss this time around?

    to quote Luke Skywalker “more wealth than you could imagine”

    to quote Han Solo “I don’t know. I can imagine quite a bit.”

  246. James Bednar says:

    I think 250+ comments on a single weekday is a record.


  247. abamitphd says:


    It will be interesting to watch how all of this plays out. I don’t think you can say much about how mortgage lenders will act based on recent experience for many reasons:

    1. most bankruptcies involve credit card or medical debt, where the amount at stake is an order of magnitude smaller than the losses to a mortgage lender. this is a new beast.

    2. there could be economies of scale. it doesn’t make sense to go after the average joe, but when you you have hundreds in foreclosure, your average cost is smaller, and the calculation makes sense. it’s like having an in-house lawyer versus paying one by the hour.

    3. all those brains on wall street that spent the last five years thinking about how to repackage mortgages for a profit will have their minds focused on how to turn defaulted mortgages into profit. that is where the money to be made is.

    That being said, my point was that people weren’t over-borrowing because of the bankruptcy option. Even if you are right and the legal costs are too high, an innovation that reduced these costs to zero (so borrowers would know that they would have to pay back if they lied) would not have prevented much borrowing in the first place.

  248. njrebear says:

    Do you know of any mortgage fraud speciality law firms that are traded publicly? :)

  249. chicagofinance says:

    James Bednar Says:
    February 22nd, 2007 at 9:57 pm
    I think 250+ comments on a single weekday is a record.

    can you un-moderate me chumpy?

  250. Clotpoll says:

    Retrofit vacant, foreclosed REO properties with state-of-the-art remote camera/security/monitoring systems. Use them as house-arrest facilities for first-time & white-collar-type offenders.

    House arrest is a very popular concept in S. America. Perhaps it would work well here and relieve prison crowding by “warehousing” the non-violent offender elsewhere.

  251. abamitphd says:


    Time for the IPO.

  252. Clotpoll says:


    You recently mentioned the concept of a “NJ Vulture Fund”. Well, here’s our prototype…and I don’t think any financial institution can play hardball any harder:


  253. Orion says:


    Your point #3 has already materialized two weeks ago in a wabc radio ad.

    Male voice starts with a disclaimer that he is not a bank, not a mortgage company, nor any lendinding institution. He then identifies himself and his company as a “group of investors” who will “help” those who are mortgage-strapped. But to qualify for help, you must, must, must have at least 25% equity in your house.

    There’s money to be made going up….and down.

  254. Rich In NNJ says:

    Thought I’d take a quick look at the site before hitting the sack and DAMN! 258 comments!


    But a her some headphones.

  255. Richie says:

    I can’t wait for the foreclosure fun to begin. All the sob stories, all the heartaches. I know all these people will find a way to blame someone (the agent, the mortgage broker, their friends/family), but it all comes down to their bad decisions.

    I had the chance to go with a adjustable rate loan, it was attractive at the time. It would take approximately 6 years before the payment reached that of a regular 30yr fixed, but in the end I opted for the fixed because who knows what the rates will be in the future.

    I’m making comfortably payments and throwing an extra $300 a month in principle, that’ll cut my 30yr loan down to 22 years.

    I hope to expand into some investment property soon when I see some good deals pop up, but right now it’s just fun to watch everything unravel..


  256. UnRealtor says:

    Great story — a bunch of retirees opened up a can of whoopass on some would-be muggers:

    Associated Press
    Feb 22, 2007

    SAN JOSE, Costa Rica – A tour group of U.S. senior citizens fought off a group of muggers in Costa Rica, killing one of the assailants, police said Thursday.

    The tourists’ bus was held up by three men armed with a gun and knife in the Caribbean coastal town of Limon after the group arrived on a cruise ship Wednesday, said Limon police chief Luis Hernandez.

    Hernandez said a retired U.S. serviceman whom officials estimated was in his 70s put one of the attackers — aged 20 — in a headlock and broke his clavicle.

    After the other two assailants fled, the tourists drove the injured man to the local Red Cross branch where he was declared dead.

    Authorities said they did not plan to file charges against the tourists, who left on their cruise ship after the incident. Hernandez declined to give their names or hometowns.

    “They were in their right to defend themselves after being held up,” he said.


  257. PeaceNow says:

    Clotpoll, Rich…thanks for the suggestions(?). With a name like PeaceNow, it’s unlikely that I’d shoot her. (She listens to good ol’ WBAI, nothing more left-wing than that…and even too left-wing for me.) I’ve offered to buy her headphones. Twice. Knew she’d turn me down, but thought the offer would humiliate her into buying them for herself.

    Note too all bloggers: wherever you may or may not buy a house, make sure I’m not on your block. I have great luck with real estate, but terrible luck with neighbors…

  258. Clotpoll says:

    Semper fi, byatch!

  259. Clotpoll says:

    Speedy Peas (265)-

    You can be my neighbor anytime.

    -Mister Rogers

  260. R Patrick says:

    Thanks for all the feedback

    1. I really like the area and there are reasons where the south would not be the right choice for me. I grew up here, my family is here, and there are certain communties I participate in that are very well represented here in NYC area.

    What started this question was who gets to live in NJ, and to do so and to remain here and have a good standard of living later I need to start planning now.

    Other people have parents cashing out money for them, ect. I do not so therefore I need to plan long term.

    2. I already own the co-op, costs much less than renting then anywhere in Bergen or in NYC area. I don;t get any tax benfits since the mortgage is too small but thats ok. I would rather pay 1 less than get .25 back

    3. The people I am talking about are not Boomers and do not in general retire, until they are incapacitated or dead. I see their work ethic and know that to get ahead in this new economy I need to step it up like they do.

    I also intend to not retire, because I will need to fund the undertable loans of my offspring eventually as well as make sure they can get into good grad school and have the same standard of living I will get.

    I did not get the handout like so many of my generation so I need to make my own. I asked so how do I make the money to get to a downpayment so I can afford a house and be not sweating every pay check?

    If I was smart I would have taken out risky loan 6 years ago and bought big and then sold and have the money. But I did not I read SoCal and Bubble Blog and bought super minimal 50% below rent.

    Friend got 200K family loan not have condo worth 400. Grad school, nice car, is on easy street. I have to save now catch up.

    4. Dont really need nigh end prestige items just tired of seeing guys my age in Benz Lexus and nice clothes.

    Need Prestige Items to get the womens attention. Was hoping this was not needed, that good career, good guy not beat his wife, good man be enough. Maybe I find her, maybe they all like CL personals and want to sleep with older married man for presents and money. ( go look I am not kidding )

    I hope not, that would be sad.

    Need to get the respect in Bergen County. Which also is sad that I need to define myself by the stuff.

    5. Cart before horse? Not really, 27 now get woman same age get married by time we afford house she Elderprimapara, more likey to have birth defects, ect.

    Have many friends get married, get pregnant, run out and get house. Causes major stress. I want to be prepared.

    Many friends in RN program have babies, want to spend more time with them. Not want to work first 3-4 years. Psych class say that is best as well. Want to have that be option for her.

    6. Travleing RN get paid well because almost 24/7 job when on road. I want to be ER RN. Need 2 years exp and ACLS training ( one year ) need big city hosptial to get skills.

    Maybe then when meet someone in 5-10 years we go somewhere else, maybe I have big career and not want to move and start that over. If I planned we on easy street. If not we have to work double hard and may have stress and unhappyness.


    Plan now, if crash happens I ok only lose 20K if 50% crash. If no crash I still get place.

  261. still_looking says:

    #6 is not entirely true. I’m an ER doc. My hospitals have hired newly graduated and while it’s stressful, they do learn a lot early on. ER nursing is good (hard at times, but good.) but you may want a back up. Burnout rate can be significant.

    just my 2 (er, inflation – 4) cents.


  262. R Patrick says:


    Two of my professors ( one who works in ER ) said I need the ACLS first and CCU exp before ER. I can understand spending a year in medsurge getting the basics down solid.

    Now here is the other question your an MD, so I am sure you understand the factor of “I have some student debt” and I can pay it back faster in NNJ and NYC rates than Middle PA or Georgia? Esp if I go take the masters and become an NP.

    Its while middle american MD come to big city and abandon family practice, 120K for 8 years of school and 200-300K of debt is not enougth. Not all are doing it but I have heard of many who went in for the patients and are not making ends meet.

    I hear also from people my generation and below, MD is for prestige not for the patient care.

    Some people take their big paycheck and buy Lexus and Rolex, I want dig out from pile of debt that 500 a credit grad school will cause even while working and having my employer helping.

    After that maybe I move, but like dot com Rn shortage go away sometime as well.

    People who were smart banked Dot com paycheck and stocks, now on super easy street, live on 5% interest like retired mother at my age.

    People who not smart talked about here and housingbubbleblog about all the lexus, corvettes, and lambos in Silicon valley used car lots.

    I bank money now and work hard while good money easy. Then I 35 have 500K in bank and NP lic. I then can go elsewhere if I want to or stay put.

    I be on easy street, and then I can do good care and raide kids to be MD or JD where the money will be.

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