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Flying back from Buffalo this morning, so I’ll open this thread up early.
jb
Consumers Spooked by Stock Market Drop
http://biz.yahoo.com/ap/070309/ipsos_consumer_confidence.html?.v=5
…Consumer confidence was knocked off a 2 1/2 year high in March …
Consumer confidence sank to a three-month low of 92.3, according to the RBC Cash Index. That represented a steep slide from the fairly buoyant reading of 103 in early February,
Does consumer confidence apply to housing or is housing ‘different’??
Spring housing crash … here we come!
New Century stops accepting loan applications
http://www.marketwatch.com/news/story/new-century-stops-accepting-loan/story.aspx?guid=%7BA1787B0D%2D8729%2D44EB%2DA679%2DE4FD70CEAB50%7D
>>
New century was the 3rd largest subprime lender.
Muhlenkamp [$2.4 billion Muhlenkamp Fund]Loses Ground in Mortgage-Market Shakeout (Update1)
http://www.bloomberg.com/apps/news?pid=20601109&sid=agBlUfdwU9l8&refer=home
““If I didn’t already own Countrywide shares, I would be buying the stock,” Muhlenkamp said.
”
This is really funny!
From the Economist:
Rising damp
LAST November the American publisher of those bright-yellow books that claim to help “dummies” master everything from trigonometry to anger management released “Flipping Houses for Dummies”. It promised to teach would-be property moguls how to “lay the foundation for successful flipping and bring home the bucks”. Four months later, it is the seemingly indomitable housing market that has flipped. One of its main engines of growth, the subprime-mortgage industry, is in free-fall. Where it lands is anyone’s guess.
From Bloomberg:
Rising Subprime Mortgage Defaults Add to Unsold Homes Inventory
Rising mortgage defaults by subprime borrowers may add more than 500,000 homes to a residential real estate market already beset by slumping prices, according to CreditSights Inc.
In January, 4.09 million new and existing homes were offered for sale, down from 4.43 million in July 2006, the National Association of Realtors and the U.S. Commerce Department said. New homes accounted for 536,000 of the January total, down from a record 573,000 in July.
A five-year housing boom that ended a year ago was fueled in part by the growth of mortgage products marketed to borrowers with poor credit histories. Now, as defaults on subprime loans surge to a seven-year high, more than 20 lenders have closed or sought buyers since the start of 2006. The survivors are raising their lending standards.
“We estimate that the effect of looser lending standards could translate into another 533,000 homes coming onto the market as borrowers default — an unwelcome phenomenon given the existing supply surplus,” Sarah Rowin and Frank Lee of bond research firm CreditSights wrote in a March 1 report.
Just in case you missed the latest Carla Katz news:
http://www.nj.com/news/ledger/jersey/index.ssf?/base/news-6/117341955584840.xml&coll=1
Does anybody have a WSJ. I just read that the front page is dredging up the whole sub-prime issue again, with negative stories. Not want you want to read, front page, before a jobs report.
“We estimate that the effect of looser lending standards could translate into another 533,000 homes coming onto the market as borrowers default — an unwelcome phenomenon given the existing supply surplus,’’
If this ends up being even remotely accurate… buy canned goods.
BC (9)-
Doesn’t matter. Employment number threads the needle (97K), Dook loses on Day 1 of the tourney (I still wanted them again!), sun shining, weather warming.
Methinks it’s time to trade some equities.
All disclaimers apply. The last time I felt this good was October 19, 1987.
“We estimate that the effect of looser lending standards could translate into another 533,000 homes coming onto the market as borrowers default ”
Those 500K would have defaulted even if lending standards continued to be weak. What will be the effect of tighter standards? A million + homes more?
“Employers in the U.S. added 97,000 jobs last month, less than in the prior month, as a slowing housing market and the return of winter weather prompted job cuts in construction. The unemployment rate fell.”
“Builders cut 62,000 jobs, the biggest decline since January 1991, after adding 28,000 the prior month.”
“Service-producing industries, which include banking, insurance, restaurants and retailers, added 168,000 workers last month after hiring 120,000 in January, the report showed.”
I don’t see it in this article but I heard that the govt sector added close to 40k new jobs.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a_Yx_V3tG.Fc&refer=home
U.S. payrolls up 97,000 in February, unemployment rate eases to 4.5%, Reuters reports. More soon.
curiousd (10)-
Not to make light of it…but imagine that same number of whole condo complexes and Class A office buildings coming to market foreclosed and vacant.
Also, imagine that Wachovia, B of A and Wells Fargo are teetering on the edge of ruin.
That’s the way it was in 1989. As bad as the subprime bust is, the numbers are dwarfed (so far) by the S & L collapse.
And, the government isn’t diving into your wallet (yet) to pay for a bailout. Fremont, New Century, et al can pound salt before they get a penny.
http://www.housingwire.com/2007/03/08/fdic-shuts-down-subprime-lending-at-fremont-rumors-of-potential-sale-spread/
The Federal Deposit Insurance Corporation said late Wednesday that it had issued a widely-expected cease and desist order against Fremont Investment & Loan and its parent corporations, Fremont General Corporation (NYSE:FMT) and Fremont General Credit Corporation. The bank and its parents, without admitting or denying the allegations, consented to the order.
Fremont first disclosed the pending C&D order in a regulatory filing last Friday, and said it would seek to exit residential subprime lending as a result. Rumors have been swirling throughout the week about a potential sale of the troubled subprime unit, with Bloomberg reporting yesterday that the company has been in discussion with as many as six potential suitors.
Fremont is the another Top 5 sub-prime lender
bear [12],
Hear, hear. Also, what about the % of I/O loans in 2006/2007. I’m sure there may be some percentage that is already figured into this amount. That said, this onslaught is just beginning.
Clot [15],
Yet.
Finally starting to see small increase in inventory in central NJ – somerset, middlesex counties… (I am looking at SFR only – condo’s inventories are scary to look at – tons available with very high prices – would you rahter buy a SFR or condo for the same price???)
Increase in inventory is really small as almost none of the houses which did not sell last summer were withdrawn. There are almost no new listings coming up – all thats being around for ages……
We will see if increase will continue – may be some better ones will eventually pop-up.
P.S. I really do not understand some of the sellers – estate sales, houses standing empty for over a year!!! and seller lowers the price by 5K!!!… Some of them just withdraw and relist with different agency for same price or more.
Don’t they have to pay heat and taxes on the house????? – it was about 6k/year for small starter homes i was looking at …
Inventory overview
A brief overview of inventoryon GSMLS :
5/06 27,684
10/06 32,749
3/07 29,460
Those numbers represent a total inventory which includes everything. It is the number you see when you bring up their first page.
So, we are higher than last spring now, but not as high as last fall. There was a significant drop after oct. bringing us back in to the 27,000 range.
KL
I just heard that Soros attributed the slight upheaval in the markets to the yen carry trade. I have not seen any article pertaining to this. Anybody??
Congrats NJGal on buying your first house. I hope everything goes smoothly for you.
If you dont mind, can you please tell what the taxes are for a kind of house you bought. I see that Westchester is in NY not NJ. I’m curious what the property taxes are in that area.
Regarding the jobs report:
The job report next month and the revision is more important than this report, at least to me. It’s hard to calculate how the weather may have distorted this #.
Which report should we follow, BLS or ADP??
Speaking of Wachovia… I received a letter informing me that Wachovia is going to charge $5.95 a month if you continue to access your account via Quicken, QuickBooks or MS Money (you can download the info from their site free, for now).
Maybe they’re trying to make up for possible losses from their acquisition of Golden West Financial.
I’m thinking of shopping for another bank.
Rich
BC,
You know you should follow ADP. Richard said so.
Grim,
Several months ago, you had a link in the Tools section to an area in NJ.com that gave a lot of specific searchable information regarding taxes of each town in NJ. I can no longer find it. Did NJ.com take that page down?
Thanks
Economist story about the global housing boom. They have a nice chart of house price changes for different countries.
http://www.economist.com/finance/displaystory.cfm?story_id=8822670
Inventory is creeping up by small increments. Lots of properties languishing for a year or more without much price change or small discounts. I don’t understand what sellers are thinking. Why don’t they want to unload? Do they want to just keep ploughing money into the ground rather than give up on their dream of making a killing in RE?
I’m sure there is lots of “invisible” inventory. Lots of listings have been withdrawn and/or expired. A few are coming back, but most haven’t yet.
Psychology must be a big component. Sellers know the market is soft and those who can wait are doing exactly that. We need to take out that Oct. high of 32,749 before the market starts to seriously correct. Right now it is static, stale, not much movement.
The tighter lending standards should take 6 to 8 months to factor in, but even yesterday I saw an ad on TV for a subprime loan: “No money down, bad credit, BK, no problem!”
Soros
http://www.ft.com/cms/s/269b437c-ccca-11db-a938-000b5df10621.html
Rich, Wachovia may not be the only one having some lip-smacking going on in the Fee Department.
I’ve been with the same bank, through mergers, since I was a kid with a passbook savings account in 1970. Would hate to switch, only to find the next bank follows suit.
I’m hearing rumblings of doom for all common online transactions. Now that banks have milked the full savings benefits of customers doing their own transactions (payrolls have been cut, turnover costs are down, training and transactions costs lower), they need some other way to keep the up momentum.
Bergen County SFH Inventory
Month 2004 2005 2006 2007
Jan 2,218 2,271 3,084 3,253
Feb 2,258 2,293 3,344 3,357
Mar 2,296 2,331 3,498 3,398
Apr 2,414 2,391 3,810
May 2,625 2,609 4,168
Jun 2,931 2,940 4,589
Jul 3,102 3,050 4,706
Aug 3,139 3,200 4,749
Sep 3,113 3,225 4,615
Oct 3,141 3,457 4,583
Nov 3,003 3,612 4,387
Dec 2,702 3,537 3,901
“If you dont mind, can you please tell what the taxes are for a kind of house you bought. I see that Westchester is in NY not NJ. I’m curious what the property taxes are in that area.”
A little over 10K, which isn’t bad for Westchester. Local businesses offset that somewhat. Considering the first town we looked in, in southern Westchester, the taxes for a house this size/cost would have been almost 18K; in Chappaqua, we’d be paying 14-15 – these aren’t bad. The agent told me that taxes are based on the size of the house, additions, etc. Our place is over 3100 sq. ft., which is a nice size. My parents on LI pay about 18K for a house just a little bigger (and they’ve done two additions over the years).
It seems to me that taxes are really very town dependent. My parents, for example, are in one of the best school districts in the state. And Chappaqua is has one of the best schools in the country, so that explains that. But in that other southern Westchester town, while the school is good (but not tops in state or county), taxes are high because there are no businesses at all to offset them. And you’ve hit gold if you can live in Armonk, where IBM subsidizes their taxes – 800K houses with 8 or 9K in taxes are frequent. You really want to look into all the reasons for the taxes.
Grim,
Several months ago, you had a link in the Tools section to an area in NJ.com that gave a lot of specific searchable information regarding taxes of each town in NJ. I can no longer find it. Did NJ.com take that page down?
They are still there under “Tools”.
My new found favorite friend is the County Clerk records search on Morris County Tax site. I can see how much of a mortgage people are carrying on their homes. My jaw dropped when I saw some of the mortgages people are carrying.. FYI: This is only for properties in Morris County…
-Richie
rhymingrealtor (20)
what was the inventory on Jan 5 2007? Lower than 29K?
“Speaking of Wachovia…”
Walk-all-over-ya.
Pernicous effects of too much indexing…….I’ve been talking about the drawbacks of what should be a sound theoretical approach. I’m waiting for a volley of “implied” insults from the fan of the rock ‘n roll version of Yanni.
WSJ
Why ETFs Can Have An Outsize Impact On Small Stocks
By SHEFALI ANAND
March 9, 2007; Page C1
The rising popularity of certain exchange-traded funds is starting to have a disproportionate effect on the trading of some companies’ shares.
According to research from Prudential Equity Group LLC, three ETFs that track small-company stock indexes now account for 20% to 40% of the trading of certain smaller stocks in the popular Russell 2000 small-cap index. The three ETFs are Barclays Global Investors’ iShares Russell 2000 Index Fund, iShares Russell 2000 Value Index Fund and iShares Russell 2000 Growth Index Fund.
This has implications for investors in individual stocks. One way to gauge the market’s opinion of a stock is to watch the volume of shares changing hands: If a stock is being traded more heavily than usual, it is an indicator of investor sentiment.
Now in some cases, ETFs — which are similar to mutual funds but trade on a stock market — are turning that indicator on its head. Any money that is invested in an ETF is used to buy stocks represented in the index it tracks, regardless of whether they are stars or dogs.
Money managers call this “insensitive” buying — meaning the buyer (in this case, the ETF) isn’t concerned with a company’s business prospects. “It’s not an indication of knowledge or information,” says Edward von der Linde, a mutual-fund manager at Lord Abbett & Co.
It also has ramifications for prices, according to Steven DeSanctis of Prudential, who conducted the research. Partly because of the heavy inflows into ETFs, last year some smaller stocks “had their best year,” he says.
Some mutual-fund managers agree that ETFs may increase volatility in the prices of smaller stocks, which can be more susceptible to market pressures than the stocks of bigger companies. “To the extent that the ETF is a larger presence in small-cap stocks…there’s at least a chance that they’re going to be able to move stock prices one way or the other,” says Curtis Jensen, manager of the Third Avenue Small-Cap Value mutual fund.
Barclays didn’t provide comment.
[edit]
Actually ADP numbers were good this time. Of the 97K, ~40K was due to the government which means 57K increase in private pay roll. If not for the big government being funded by borrowed money, employment growth would have taken a big hit.
>>
http://www.marketwatch.com/news/story/us-feb-payrolls-up-97000/story.aspx?guid=%7B6E0A7CCE%2DE59E%2D4CC1%2D9384%2D35887AB68FB8%7D
According to the payroll survey of 400,000 business establishments, private-sector payrolls rose by 58,000, matching the 57,000 estimated by the ADP national employment report Wednesday. It’s the weakest private-sector growth since late 2004.
adp report should start being more accurate with the revisions to the methodology + an understanding that it’s more current than the bls and as such shouldn’t be correlated too much.
http://online.wsj.com/article/SB117336951053530971.html?mod=home_whats_news_us
Many economists say that the subprime crunch won’t cause big problems for the U.S. economy. But economists at Goldman Sachs in New York said in a report this week that the tightening of subprime credit could cut annual demand for new homes by 200,000 units, or about a fifth of new-home sales last year.
What does “mz” mean in zoning?
#5 Muhlenkamp Fund:
I used to own this fund for a number of years and the performance was great. Last year he piled into Energy and housing. In my annual report he said that home builders are a great value at 5 times earnings. I disagreed and pulled my money out of the fund. I am glad I did.
I actively monitor the Fund managers strategy as top holdings for the mutual funds I own.
MJ [29],
Thanks.
Anti [41],
Great call.
Can anyone give me details of MLS#: 2319738.
Address?
DOM?
Was it re-listed?
Thanks in advance.
AT.
Richie Says:
“My jaw dropped when I saw some of the mortgages people are carrying.. FYI: This is only for properties in Morris County…”
What are the steps to find this information? I couldn’t find it on the site.
Rachel
[44] Go here: http://mcclerkweb.co.morris.nj.us/or_wb1/or_sch_1.asp
Select “Document Type”
Type in ‘mtg’ as the document search type
Select date range.
Intrude into others personal mortgage information.
ChiFi (36)-
Indexing: like placing show bets on a wheelchair race.
I know this is like posting an article in 2003 on the tech bubble popping in 2000 but here it is…
http://tinyurl.com/2kydpr
From Bloomberg:
General Electric’s WMC Mortgage Cuts Subprime Jobs
General Electric Co.’s U.S. mortgage unit will curtail lending and fire 460 workers, or 20 percent of staff, amid a rise in defaults by people with poor credit.
WMC Mortgage, the fifth-biggest subprime lender in the U.S., this week stopped making mortgages without down payments or to borrowers with credit scores below 600. WMC last year had $33 billion in new loan volume, according to industry newsletter Inside B&C Lending.
“We’ve realigned our resources to fit the size of the market,” said Brandie Young, a spokeswoman for Burbank, California-based WMC. The lender is adjusting underwriting policies amid a “fluid market,” she said.
About 10.12 percent of subprime home loans in securities were delinquent by at least 90 days, in foreclosure or already turned into seized property on Dec. 31, up from 5.37 percent in May 2005 and the most in at least seven years, according to a March 2 report from Friedman Billings Ramsey Group Inc.
In our home search experience thus far, it appears that sellers of houses both new and old to the market seem to have hopes set high on a rush of Spring buyers who will pay asking price.
My question is this: if a seller asks us to resubmit an offer months after our original offer has expired, how much can our new offer reflect falling market conditions? Is it possible to offer less than before and actually hope to make a deal? Anyone have experience with this scenario?
NJBear
I have 10 days thruout the month of Jan but its listed as only jan 07 the average in the month of jan is 27862.
KL
PS: I am trying to teach myself excell- hence the inventory info.
I’m charting it, graphing it, adding it – averaging it..etc (-:
From MarketWatch:
Nervous home buyers want more concessions
New-home buyers facing an uncertain market and nervous about purchasing a house that might end up falling in value are demanding more incentives and price cuts from home builders.
…
The lowered outlook despite better first-quarter results above forecasts “suggests to us that buyers’ response to higher incentives early in the quarter did not meet management’s expectations,” wrote Banc of America Securities analyst Daniel Oppenheim in a research note Friday.
“We think higher incentives may be necessary to boost sales during the spring season,” he added.
Investors and analysts are keeping close tabs on how the important spring selling season progresses to get a feel for whether a rebound is in the cards for 2007. They’re also trying to get a handle on whether home builders will be impacted by pain in the subprime mortgage market.
As of September 2006, about 77% of home builders were offering some sort of sales incentive in response to rising home inventories, compared with 58% a year earlier, according to the National Association of Home Builders.
The NAHB found 55% of companies were offering home-option items such as granite countertops and landscaping at no charge, up from 37% the prior year. About 43% were offering to pay the closing costs on the buyer’s previous home, and 44% of builders were reducing home prices.
Clotpoll Says:
March 9th, 2007 at 12:00 pm
ChiFi (36)-
Indexing: like placing show bets on a wheelchair race.
Lee Harvey: You had me laughing the first time. What? Am I supposed to suck-up to you on your jokes as well?
Thanks njgal for sharing the info on taxes.
The number of Realtors (membership in the National Association of Realtors) in the United States fell again in February. At the end of February the membership stood at 1,316,060. During February, their membership fell 20,795 or 1.58%. It was the largest percentage decrease for the month of February since 1982.
======================
Now we know why the crabby meter is off the charts.
Preparing to pick some bones.
BOOOOOOOOOOOYAAAAAAAAAA
Bob
All (esp. realtors).
Is it possible for buyer to withdraw his offer, if he/she learns that the seller is using his/her offer to solicit better offer.
I mean I dont want to go into contract process as buyer, just to know 2 months later that seller bagged another buyer who is willing to up my offer. At that time I’d like to withdraw my offer. If this is possible, what clause needs to be written in the offer document?
JB.
My post is stuck in moderation.
>>“My jaw dropped when I saw some of the mortgages people are carrying.. FYI: This is only for properties in Morris County…”
what do you consider a jaw dropping mortgage? what would the salary to mortgage ratio be?
Depths of Misery in 2008 …it’s going to get much worse….better accept it…..deflate those dreams of yours before it’s to late.
rational buyeers take at least 25% at a min off peak 2005 prices.don’t be a bagholder .ike those dope investors in sub-prime mtgs.
BOOOOOOOOOOYAAAAAAAAAAA
Bob
Question to the group: My NYC friends keep insisting that NYC is different (I know, we’ve heard that line before) in that those buying in the city are frequently buying into coops whose boards typically require a hefty down payment of 20% or more. Because of this they argue that while subprime lending with little to no money down may be occuring in the rest of the country, it’s not happening in NYC. They therefore believe that current NYC prices reflect market/fundamental realties and are not bubble-inflated. Anyone know of any data sources to either confirm or refute this thinking? I wonder how many coop boards are relaxing their rules about downpayments and financial condition of potential buyers.
For those who want a sneak peak at February sales:
https://njrereport.com/images/feb07_yoybar.gif
https://njrereport.com/images/feb07_yoy.gif
https://njrereport.com/images/feb07_yoyfeb.gif
https://njrereport.com/images/feb07_salesinventory.gif
What’s the deal with Wells Fargo? Are they on the ropes, and if so, what will that mean for their clients? Any wisdom would be appreciated. Just curious if my mortgage will wind up in someone elses lap sometime soon.
#62:
That second chart is so beautiful. I may have to frame it and put in on the wall of my bedroom.
VOTE EUNUCH 2008!
Mandatory castration for any politician who points fingers.
http://www.abcnews.go.com/Politics/story?id=2937633&page=1
RoadTripBoy Says:
March 9th, 2007 at 1:17 pm
Question to the group: My NYC friends keep insisting that NYC is different (I know, we’ve heard that line before) in that those buying in the city are frequently buying into coops whose boards typically require a hefty down payment of 20% or more.
Trip: while true, there are two mitigating factors…..#1 virtually all new construction has been condos….#2 sub-prime hits New York not from the mortgage angle, but through the W-2 angle (think hedge funds and ibankers)
RoadTripBoy Says:
March 9th, 2007 at 1:17 pm
Question to the group: My NYC friends keep insisting that NYC is different (I know, we’ve heard that line before) in that those buying in the city are frequently buying into coops whose boards typically require a hefty down payment of 20% or more.
===
Back in late 1980’s many of the co-op buyers lost their @$$#@. Know one feller that did not breakeven until about 2000 on a 1988 buy.
Those phoney ws bonuses off this sub-prime looting is coming to an end. Party is over.
BOOOOOOOOOOOOOYAAAAAAAAAAA
Bob
It’s all about the money spigot. In casually chatting with people that are buying/selling right now nobody seems really concerned about their investment dropping (real estate always goes up)
The only thing that is going to stop these absurd prices is when the close off the money supply.
That is when we are going to see the shoe drop.
“It will be the first major project to open in the business park, off Route 611 near Pocono Mountains Municipal Airport, north of Mount Pocono…
…create 268 new jobs within four years and retain 434 existing jobs,” the DCED said, in a news release.
The “existing jobs” will be transferred from another Johnson & Johnson facility that is slated to be shut down, officials said.”
Another 434 NJ (?) jobs bite the dust. I guess if you’re cutting costs on distribution, you go where the low paid people are.
http://www.poconorecord.com/apps/pbcs.dll/article?AID=/20070307/NEWS/703070323
From Bloomberg:
Fed’s Bies Says Regulators Worry About Subprime `Payment Shock’
U.S. Federal Reserve Governor Susan Bies said regulators are concerned about “payment shock” in mortgage loans made to borrowers with weak credit histories whose payments surge after a low introductory period.
U.S. bank regulators have been watching rising delinquencies in the so-called subprime market since last spring, Bies said at a risk-management forum today in Charlotte, North Carolina.
Bies’s comments reflect growing attention among bank regulators to the turmoil in the subprime mortgage market and its impact on consumers and U.S. lenders.
As the housing market continues to decline the number of Realtors will continue to fall. In some of the bubblicious states the percentage lost in February (which is usually a weak month for Realtor membership) was really high:
California: -9.21%
New Jersey: -1.32%
Colorado: -1.97%
Massachusetts: -3.85%
Florida: -.76%
FROM BUBBLEMETER
Sucking wind…
BOOOOOOOOOOOYAAAAAAAAAAA
Bob
“The only thing that is going to stop these absurd prices is when the close off the money supply.”
I was thinking about that myself – when we talk about closing off the money supply, who is left that will be able to borrow? I am a prime buyer with good credit – will it get tougher for me as a result of the mistakes of others (I suspect yes). I ask because a friend in the industry commented today that we should be happy to be buying now before the standards get much tougher. I have no doubt we’d pass them even then, but who knows.
#69 check out the comments after the article. Lots love happening up there between the settlers and the natives.
Prudent buyers with strong balance sheets will be a scarce commodity all lenders will be fighting for now.
Pick a few bones in the next 12 months.
BOOOOOOOOOOOOYAAAAAAAAAAAA
Bob
NJGal,
Don’t worry, if you actually have a job, a down payment, and a decent credit report, there will always be a line of bankers that want to give you a loan. The only thing that could cloudy the picture is if the lender has an issue with the appraisal on the property. As long as there are good comparable sales closeby that are less than six months old, you have nothing to worry about
#60, as far as nyc and coops go, you can’t necessarily generalize that they would protect the nyc market overall. look at 88-92, or ask anyone who lived in the city during the 70s. that said, in certain neighborhoods coops will help to curtail some of the craziness. in some parts of manhattan a board won’t just require 20% or more down, they also have liquid asset requirements that can be equal to, or even in some cases double, the total purchase price. while that, along with the supply constraints in many of the most desirable parts of nyc, could help cushion severity of a downturn, certainly doesn’t insulate the city. one big positive for nyc, tho, when it comes to sfh is incredibly low prop taxes when compared to nnj, westchester, rockland, nassau or suffolk. over 10 years the prop tax differential between sfh in nyc and these other areas can amount to 100k+.
READ MYLIPS: DEPTHS OF MISERY COMING SPRING 2008. It’s going to be miserable for many folks. Sleepless nights.
Do not ever put yourself in such a position
ChiFi (52)-
Sorry. I thought my original answer a few days back had gotten eaten by a 500 Server Error.
I got a zillion more where that one came from…no need to recycle material.
#68 Aron: Well i belive we are starting tos ee the money supply being turned off now, with the blow up in sub-prime, and the belief that some have that it will be contained in just that sector is mistaken.
bergenbubbleburst Says:
I belive we are starting to see the money supply being turned off now,
Agree. Last week it was sub prime. Alt-A is next week. I don’t think the prime will get touched all that much but that’s only half of all mortgages originated lately anyhow
A quote today
“I expect prices and sales to be modestly growing by June in most of the country,” said David Lereah, the chief economist for the National Association of Realtors and perhaps the most bullish housing economist. “But we’ll have to go into 2008, maybe even 2009 before we get even close to the peaks we saw in late 2005 or early 2006.”
Note ‘perhaps the most bullish housing economist’ bit. So the most bullish guy is now saying anyone who bought in 05-06 will see no equity being built up for 4 years.
The money tap is being turned off at 2 sources; for the marginal buyers with the implosion of the subprime, and the house-ATM for the I-wanna-flatscreen equity withdrawers.
NJGal (72)-
Keep your credit good, and you’ll be ok…even when subprime craters.
Remember that mortgage rates are also a reflection of how much money is trying to find a high-quality borrower. As a person with good credit, lenders will always sacrifice rate to lend to you. Don’t expect a world chock full of excess liquidity to run dry tomorrow. All that $$$ still needs a home (so to speak).
Burst (79)-
The vast (95%+) majority of borrowers pay their mortgages on time. Subprime and Alt-A lending account for- at most- around 6% of the entire US mortgage pool.
Of course, it’s possible that a lot of Alt-A has been mis-packaged as higher-quality paper, but even then, you’re not looking at an entire, systemic, top-to-bottom breakdown. The tipping point on that is just way too far off to venture a call. Even with paranoia rife, no one has impugned the status- or quality- of “A” paper.
Chifi, Clotpoll:
Re: Indexing
Are there any website that can point out all the pros and cons of investing in an index or ETF? I’ve seen you guys talk against them on recent days, but I guess I missed any previous discussion.
For those of us who don’t have the time, inclination and/or talent to pick proper investment vehicles, are ETFs that much worse than, let’s say, non-index mutual funds?
The vast (95%+) majority of borrowers pay their mortgages on time. Subprime and Alt-A lending account for- at most- around 6% of the entire US mortgage pool.
Sorry Clot, the MBA puts the *subprime* share of the total mortgage market at 12-15%, and this doesn’t include Alt-A. Add Alt-A to the mix and I wouldn’t be surprised if the share was greater than 20%.
https://njrereport.com/images/subprime.gif
#82 True Clot, but we are cerrtainly in a much different place then we were over the last few years.
Removing sub-prime borrowers from the pool of potential home buyers will afffect sellers efforts to sell their houses, at nose bleed prices.
I think the process will unwind over the next 12 to 18 months.
#80 X-underwriter: I wonder how much of the so called prime might only be a few FICO points away if you will from Alt-A, or even sub-prime.
I am sure good credit, 20% down people will be able to get a loan– but they are going to qualify for less, and things like crazy Option Arms will be off the table.
Another MBA estimate from 2006H1 putting the subprime share of total mortgages at 12-13%.
jb
This is a good presentation, from Amy Crews Cutts from Freddie:
http://www.mortgagebankers.org/files/Conferences/2007/Servicing07/Tab14-FocusontheEconomy1.pdf
The scary part of that presentation is slide/page 14:
In 2005, 35% of all mortgage originations were Interest Only or Neg-Am.
jb
bergenbubbleburst Says:
#80 X-underwriter: I wonder how much of the so called prime might only be a few FICO points away if you will from Alt-A, or even sub-prime.
Alt-A and Prime pretty much have the same FICO’s. The difference is that Alt-A has reduced documentation.(liar loans) The gray area here is what’s the difference from prime and sub-prime. If FNMA approves a loan at 620, but declines one at 618, what’s really the difference here? That’s like one extra 30 day late payment on a Sears charge card two years ago
utlm (84)-
No websites to refer, but I’d recommend Googling the name “Louis Navellier”. Navellier is currently a hedge fund manager and advisor to several mutual fund families, including his own. He is well-known as having done work at UC Berkeley in the 70s on indexing; he has written from time to time on that experience, during which he concluded that indexing is largely a sham concept. Needless to say, the UC system didn’t take kindly to that, as much of their study of indexing was meant to convince CALPERS to rely upon it.
ETFs are an intriguing attempt at more precise, targeted indexing; however, I believe two major- and unexpected- pitfalls have arisen concerning these securities:
1. As proved by the recent selloff, they are being used by hedge funds as highly speculative short-selling vehicles. A risk-averse investor might not like discovering that his Yugo has a Maserati motor under the hood…and his car is pointed straight at a cliff.
2. Many ETFs are extremely illiquid and trade in a fashion that do not offer the conservative investor a safe, consistently-available “out”. Gapping order imbalances create price swings that are the hallmark of far more speculative investments than ETFs are often represented as being.
Because of this, I think ETFs are a lot more than just mutual funds or index funds on the cheap. In many cases, they’re like grabbing a tiger by the tail.
JB(89),
12-13% doesn’t include prime borrowers who will be reclassified as subprime because of tighter lending standards.
Inside Mortgage Finance puts nontraditional originations at 31.9% of all mortgages originated in 2006.
http://www.imfpubs.com/issues/imfpubs_imf/24_10/news/1000005619-1.html
Grim (85)-
I stand corrected…it is 6% when you factor in homes that are completely paid-off, which are not a factor in our discussion.
[70],
Two weeks ago, Susan Bies was much less concerned. I’ll dig for her statement later.
Burst (86)-
No disagreement with you there. The market effects are undebateable.
James Bednar Says:
The scary part of that presentation is slide/page 14:
In 2005, 35% of all mortgage originations were Interest Only or Neg-Am.
Don’t forget to look at the slide on page 15, which states that share of nontraditional mortgages increases with average homeprices. Where do you think this area fits in? According to that, don’t look at the national average for these loans and then project that estimate on to NY and NJ loans. No, we’re much higher than the national average
#88 Aron: and that will bring prices down, if people want to sell.
>>Don’t expect a world chock full of excess liquidity to run dry tomorrow. All that $$$ still needs a home (so to speak).
Liquidity will dry up a bit, but as long as the oil export countries keep recycling their dollars into our markets, there will be ample enough to go around.
Over the long haul (10 years or greater), Index funds will outperform 85% to 90% of managed mutual funds. You can invest directly through excellent companies like Fidelity, Vanguard or T. Rowe Price for dirt cheap prices and gain maximum investment potential with reduced risk especially when you dollar cost average.
Middlemen and Financial Advisors will never steer you to these investment products because they lose their fees and commissions. You do not need a financial advisor; again, do your homework and invest yourself.
every body started siging the same song. here is one more ….
http://money.cnn.com/2007/03/09/news/economy/home_price_slump/index.htm?cnn=yes
$20 says, Here’s where Tony Soprano is gonna get whacked
http://tinyurl.com/ys6dfp
`Sopranos’ can film in North Jersey town
NEWARK, N.J. – Tony Soprano is welcome in the North Jersey town of Bloomfield.
Earlier this week, the town’s mayor and council had denied a permit to film the series’ final scene, saying they found the HBO mob drama a disparaging portrait of Italian-Americans.
Township attorney Brian Aloia has decided, however, that the town clerk is required to issue a filming permit and the council doesn’t have a say unless the permit requires a waiver. A waiver wasn’t needed for “The Sopranos” shoot because producers would be filming in a commercial area instead of a residential one after 8 p.m., he said.
HBO was to shoot the scene at an ice cream shop in Bloomfield. The town borders Newark, where fictional mob boss Tony Soprano grew up.
Aloia said the clerk must issue a permit after determining that a shoot fulfills certain legal requirements, such as having adequate insurance.
“She must look at the application in an objective manner,” he said. “She cannot consider, for instance, what’s being filmed or in this case if she likes the show or doesn’t like the show.”
Permits were approved last week. But after complaints, the council voted again on Monday and rejected them.
Bloomfield Mayor Raymond McCarthy, whose wife is Italian, voted against the shoot twice.
“I don’t think 1The Sopranos’ depicts the life of a typical Italian American in a positive way,” he said, “and I still don’t like the way people see New Jersey based upon ‘The Sopranos’ series.”
The owners of the old-fashioned ice cream parlor selected for the series’ final scene, Holsten’s Brookdale Confectionary, said personal feelings shouldn’t stand in the way.
After receiving word on Friday of the town’s reversal, co-owner Ron Stark said he was excited about becoming a pop culture landmark.
“Hopefully this will all work out,” he said.
The show is scheduled to resume on April 8.
a sharecropper society living on borrowed time
=======================
AP
China Forming Fund to Invest Reserves
Friday March 9, 2:24 pm ET
By Joe Mcdonald, AP Business Writer
China Creating Company to Invest a Portion of Its $1 Trillion in Reserves
BEIJING (AP) — China will soon create one of the world’s largest investment funds, with ramifications for global stock, bond and commodities markets and for how the U.S. finances its trade deficits.
Finance Minister Jin Renqing said on Friday the aim is to make more profitable use of its $1 trillion in foreign currency reserves that have piled up as it posted huge trade surpluses year after year. Most of those funds are now parked in safe, but relatively low-yielding U.S. Treasury securities and other dollar-denominated assets.
BTW, I am taking a community college class on “How to buy a foreclosed homes” next week – it is 2×2 hours class with 15$ fee – I am not expecting too much out if it – it is only 15$, taught by local economics professor.
I think it will be as good as Trump’s seminar though…
Any thoughts on this one?
Gary (101)-
That’s like saying a turtle can beat a snail in the 440.
Any reasonable, intelligent person with basic research skills can assemble a diversified portfolio of stocks, with each stock representing a top stock in its sector.
What’s the need for buying an index fund? The common characteristic of all of them is that every single one is weighed down by the dogs of the sector represented.
You wouldn’t buy 11 broken eggs to get the 12th one intact, would you?
All disclaimers apply.
BEIJING (AP) — China will soon create one of the world’s largest investment funds, with ramifications for global stock, bond and commodities markets and for how the U.S. finances its trade deficits.
Finance Minister Jin Renqing said on Friday the aim is to make more profitable use of its $1 trillion in foreign currency reserves that have piled up as it posted huge trade surpluses year after year. Most of those funds are now parked in safe, but relatively low-yielding U.S. Treasury securities and other dollar-denominated assets.
In order to do htis they would have to find a buyer for all those low-yielding U.S. Treasury securities first……
Chineese bank is in the “interesting” position – dollar decline is financially hurtfull for them, at the same time if they want to get rid of some – they will automatically devalue dollar……
Al (105)-
Sounds like a “can’t lose”. Get up and walk if the prof says it’s easy, though.
Clotpoll Says:
March 9th, 2007 at 2:13 pm
ChiFi (52)-
I got a zillion more where that one came from…no need to recycle material.
clotso: even your recycle is better than everyone else’s originals
chicagosuckup
Chineese bank is in the “interesting” position – dollar decline is financially hurtfull for them, at the same time if they want to get rid of some – they will automatically devalue dollar……
Of course, China dumps the dollar, interest rates shoot up, the Yuan appriciates versus the dollar, U.S. products become more competitive at the same time liquidity is curtailed choking the U.S. consumer, Demand for Chinese products drops, China enters recession.
Basically, the US and China are locked in the economic version of mutually assured destruction (MAD). Neither one can seriously harm the other without sustain pain themselves.
There’s nothing wrong with having some solid, blue chip stocks in your portfolio. It should go along with your equity and bond index fund holdings. As I said, Index funds will beat the majority of managed mutual funds, are low cost, they take the guesswork out of investing, give you instant diversification and offer excellent tax advantages.
More from Bies (Bloomberg):
Bies Says Subprime Defaults Are `Beginning of Wave’
U.S. Federal Reserve Governor Susan Bies said banks’ losses from risky home loans made at low introductory rates are just beginning.
Bies, who has been Fed’s top banking policy official in her tenure at the U.S. central bank, said today banks are likely to see more missed payments and foreclosures as consumers with weak credit histories begin to face higher monthly mortgage payments.
“What’s happening is the front end of this wave of teaser- rate loans that are coming into full pricing,” Bies said at a risk-management forum in Charlotte, North Carolina. “So what we’re seeing in this narrow segment is the beginning of the wave — this is not the end, this is the beginning.”
gary Says:
March 9th, 2007 at 3:18 pm
gary: I don’t know how to refute most of what you say without sounding completely self-serving. However, to be brief, I will mention that you should draw a distinction between investment philosophy and fees/expenses.
Also, you post your opinion as if it is widespread agreed fact. The biggest problem here is that my well researched opinion happens to support the side of the egregious ripoff artists out there. There is no excuse for stealing from people either overtly or otherwise. However, it is clear that anyone arguing to index in anything other than an S&P 500 fund has been drinking to much kool-aid.
To index in any other fashion is in-itself active management. Further most of the publsihed data suggesting otherwise is to support the marketing campaigns of BGI, Vanguard, sundry ETF snake oil salesmen or anyone else with an inflated ego (e.g., John Bogle/rock ‘n roll Yanni). Indexing worked when there were inefficiencies and a lack of transparency. Since the turn of the century, not so much.
Fees? Different discussion.
Outside of the whole subprime/alt-a mortgage market, what is the situation with the prime mortgage holders (good FICO) who stretched to buy a house and currently have either an option arm or I/O mortgage or a regular 30 year with a ridiculously high percentage of income going on the house?
What percentage of them do you think will be in trouble soon?
“Outside of the whole subprime/alt-a mortgage market, what is the situation with the prime mortgage holders (good FICO) who stretched to buy a house and currently have either an option arm or I/O mortgage or a regular 30 year with a ridiculously high percentage of income going on the house?”
To me, that’s a scary situation, if there are indeed a lot of those out there. Those SHOULD be the people who are more responsible with their money – if a lot of them took out I/Os or are spending a majority of their income on a house (which something in my gut tells me will be more common with the lower high end buyers), I think we could see more trouble than even in the subprime category. Granted, those folk may have good jobs are more likely to hunker down and hold the property at all costs, but they also tend to be spenders who like to keep up with the Joneses. If they stop spending, that will affect the economy as a whole.
But – this is all dependent on how many are out there. Somehow I don’t foresee a wave of foreclosures in Short Hills, but maybe that’s just me.
The S&P 500 index should be the core of an individuals holdings. It gets too complicated for most people to try to understand the “dogs of the dow” theory, value vs. growth, etc. In the long run, a basket of Index funds along with some individual holdings is the best way to go for a long term portfolio. It’s the tortoise and the hare method and one that has worked effectively. You don’t get rich quickly (unless you want to flip houses :0), you do it with time, income and consistency.
gary Says:
March 9th, 2007 at 4:29 pm
I just want to mention that what seems relatively easy for you is not for many other people. In fact, a good number of people have the cognitive ability to decipher this stuff, but have neither the time, inclination, or discipline to build a strategy, execute it, and maintain it through the passge of time.
anyone else with an inflated ego (e.g., John Bogle/rock ‘n roll Yanni)
If the latter you are referring to is me (just because I asked if anyone is going to see The Police this summer), what a compliment! A pathetic small time investor with a net worth less than your car gets lumped with Jack Bogle….. I need to go have a beer to that!! I do have an inflated ego…thanks for inflating it more.
Chifi, when you start selling Dimensional Fund Advisors funds, I promise I’ll become your client.
I’m a index fund cool aid drinker…
My two favorite books:
A Random Walk Down Wall Street
http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393325350
The eternal truth of this updated investment classic, originally published in 1973, is simple: you can’t beat the market. Well, technically, you can beat the market, but not profitably, because the transaction costs of your brilliant trading will eat up the extra returns. You can also beat the market by pure luck-but you can’t deliberately beat the market, because you can’t predict future stock prices. You can’t predict them by divining Wall Street’s crowd psychology; or by charting trends in stock prices; or by doing lots of research on companies’ business prospects. You can’t predict them from hemlines (though there’s been “some evidence” for correlation between skirt length and market prices in the past, Malkiel poo-poos future possibilities) or Super Bowl winners (this, he says, makes “no sense”). In fact, according to the efficient market theory, which states that all knowable information about a stock’s value is already reflected in its share price, you can’t predict them at all. Malkiel, a Princeton economist and professional investor, backs it all up with statistics, charts and studies, and gives an entertaining review of the sorry history of market bubbles, panics and delusions of omniscience, from the Dutch tulip craze to the Beardstown Ladies. This edition looks at new wrinkles (it seems you can’t beat the market by buying companies with “.com” in the name), and provides a lucid overview of novel investment vehicles. Standing by his notorious claim that “a blindfolded chimpanzee throwing darts” at the NYSE listings could pick stocks as well as the Wall Street pros, Malkiel advises investors to “buy and hold” a diversified portfolio heavy on index funds that passively mirror the market, which usually out-perform actively managed funds. His witty, acerbic style and persuasive arguments will delight readers but, alas, leave Wall Street unmoved.
Unconventional Success: A Fundamental Approach to Personal Investment
http://www.amazon.com/Unconventional-Success-Fundamental-Approach-Investment/dp/0743228383
Swensen, CIO of Yale University and the author of Pioneering Portfolio Management, reveals why the mutual fund industry as a whole does a disservice to the individual investor. Soft money, 12b-1 fees, overtrading, market timing, and other management practices lower performance and virtually guarantee that most mutual fund returns will fall short of their benchmark, such as the S&P 500. Furthermore, for-profit mutual fund companies have a fiduciary obligation to their stockholders, not to their investors, and this relationship “inevitably resolves in favor of the bottom line.” Swensen is also highly critical of the Morningstar rating system, which only causes investors to chase hot performing funds and managers. He advises considering alternatives to the for-profit mutual fund industry, including Exchange Traded Funds and not-for-profit financial institutions such as Vanguard and TIAA-CREF. He highly recommends that as an individual, you should play a more active role in your financial future. This includes periodic portfolio evaluation and rebalancing, to ensure that your asset allocation remains diversified and suits your investment time line. David Siegfried
clot: is there an investing LOD?
What is the date of the book?
SDS is more fun.
jb
I said that fees versus investment philosophy are two different discussions.
Clot,
Whew!! Bring on da Heels!!
Clot,
Isn’t this your old stompin’ ground?
Business Pulse results: Creative financing leads to foreclosures
The old adage that if you give someone enough rope, he’ll hang himself seems to be behind the high rate of foreclosures in the Memphis area, according to the results of an online survey.
A recent story published in Memphis Business Journal found that there was one foreclosure for every 1.06 homes sold in 2006 in the Memphis MSA. Specifically, there were 19,738 homes sold in 2006, and there were 18,155 residential foreclosures last year.
Sales = Foreclosures?
My apologies, but it needs to be told!
A new sign in the Bank Lobby reads:
“Please note that this Bank is installing new
Drive-through ATM Machines enabling customers to withdraw cash without leaving their vehicles.
Customers using this new facility are requested to use the procedures outlined below when accessing their accounts.
After months of careful research, MALE & FEMALE
procedures have been developed.
Please follow the appropriate steps for your gender.”
MALE PROCEDURE:
1. Drive up to the cash machine.
2. Put down your car window.
3. Insert card into machine and enter PIN.
4. Enter amount of cash required and withdraw.
5. Retrieve card, cash and receipt.
6. Put window up.
7. Drive off.
************************************************
FEMALE PROCEDURE:
1. Drive up to cash machine.
2. Reverse and back up the required amount to align car window with the machine.
3. Set parking brake, put the window down.
4. Find handbag, remove all contents on to passenger seat to locate card.
5. Tell person on cell phone you will call them back and hang up.
6. Attempt to insert card into machine.
7. Open car door to allow easier access to machine due to its excessive distance from the car.
8. Insert card.
9. Re-insert card the right way.
10. Dig through handbag to find diary with your PIN written on the inside back page.
11. Enter PIN.
12. Press cancel and re-enter correct PIN.
13. Enter amount of cash required.
14. Check makeup in rear view mirror.
15. Retrieve cash and receipt.
16. Empty handbag again to locate wallet and place cash inside
17. Write debit amount in check register and place receipt in back of check book.
18. Re-check makeup.
19. Drive forward 2 feet.
20. Reverse back to cash machine.
21. Retrieve card.
22. Re-empty hand bag, locate card holder and place card into the slot provided.
23. Give dirty look to irate male driver waiting behind you.
24. Restart stalled engine and pull off.
25. Redial person on cell phone.
26. Drive for 2 to 3 miles.
27. Release Parking Brake.
SEND THIS TO A GUY WHO NEEDS A LAUGH
AND TO THE GALS YOU THINK CAN HANDLE IT!
From Reuters:
GE’s WMC Mortgage loans hit subprime ABX index
General Electric Co.’s (GE.N: Quote, Profile, Research) subprime mortgage unit is responsible for some of the worst-performing loans in the benchmark index for the $575 billion market for home equity asset-backed securities, showing few lenders are immune to recent U.S. housing sector problems.
Losses on more than $2.6 billion in loans issued by WMC Mortgage, a Burbank, California-based unit of GE Money Bank, are expected to top 15 percent, the highest projected rate of any bond in the widely watched ABX derivative index of bonds issued in early 2006, a UBS Securities model showed.
James,
I am sure you get enough compliments from tag-a-long readers like me for your blogging excellence but I have to say, the constant onslaught of data you present and your command over the data makes me quiver! :) Even if I wanted to believe “things are going to be okay so just buy”, I hold myself back waiting for the punch line.
Damn it is getting hot out there!
afe
In reference to post #120:
According to Buffet, If the markets were efficient, He would have to go back to delivering news papers
Warren Buffet stated in a February 1996 investment letter to his Berkshire Hathaway shareholders: “…the best way to own common stocks is through index funds….” In his 1997 letter he writes: “Let me add a few thoughts about your own investments. Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals.” In February 2003 he gave this advice to investors in his shareholder letter: “…those index funds that are very low cost (such as Vanguard’s) are investor friendly by definition and are the best selection for most of those who wish to own equities. And, his February 2004 letter states: “Over the [past] 35 years, American business has delivered terrific results. It should therefore have been easy for investors to earn juicy returns: All they had to do was piggyback corporate America in a diversified, low-expense way. An index fund that they never touched would have done the job. Instead many investors have had experiences ranging from mediocre to disastrous.”
Man, I’ve been clenching my teeth since #84 waiting for the testosterone-based mutual fund playground fight.
You guys, can we agree to disagree on the current value to investors of a product called
The Index Fund? It’s a product. Hello, anybody home? A product. You either buy it because of some benefit potential, based on your own research, risk cycle position, or on a “professional” recommendation, or you don’t buy it. It ain’t God’s gift to humanity and it ain’t gonna save your immortal soul. It’s a product.
Now houses, on the other hand, you can live in. And tinker around with. And climb on. Just like a jungle gym at the playground.
UTLM, the troublemaker:
Go to a metasearch engine. Like dogpile.com. Type in various search terms such as:
Index fund and SEC fund advice
Start with the SEC’s description and links, which will be number 2 on your results.
Then go to some of the private, for profit sites like number 3. He’ll give you some long term portfolio opinions as well.
Listen to the following: http://www.npr.org/templates/story/story.php?storyId=6203264
You’re not going to find a lot of contrarian index stuff there, but it’s a start. At least you’ll get the basics, then you can start questioning the value of an index fund.
RE:132
I should source that: http://www.ifa.com/
I think Index funds gets you average results. But to be truly successful in stock investing, you will have to find extraordinary stocks and overload on them for the long run. One had to just invest in Walmart for a long time to be a multi millionaire. But then, hindsight in not wisdom.
Friday after market close is starting to be the most interesting time of the week. This one gets a big “Holy Cow!”.
From CNN/Money:
Countrywide stops no-money-down lending
Countrywide Financial Corp., the largest U.S. mortgage lender, Friday told its brokers to stop offering borrowers the option of a no-money-down home loan, according to a document obtained by Reuters.
Loans financing 100 percent of a home’s value are among those leading to a sharp rise in delinquencies at U.S. mortgage lenders. Such mortgages below “prime” quality have resulted in the closure, sale or losses at more than two dozen mortgage lenders, analysts said.
“Please get in any deals over 95 LTV [loan-to-value] today!” Countrywide said late Friday in an urgent e-mail. “Countrywide BC will no longer be offering any 100 LTV products as of Monday, March 12.”
Isn’t it funny how the good stuff gets sneaked in on Friday night?
Anyone have any data on high LTV origination at Countrywide? I’ve heard some rumors that 95%+ LTV lending makes up somewhere between 10-15% of the loans originated at CFC. Note: I can not find any data to back this rumor up, so just assume it is false.
jb
Anyone who thinks that the US can compete with China on more favorable exchange rates is gravely mistaken. Their cost of labor is so cheap even a significant devaluation of the USD / appreciation of CNY is not going impact the trade deficit much.
Countrywide stops no-money-down lending
http://money.cnn.com/2007/03/09/real_estate/countrywide.reut/index.htm?postversion=2007030917
ChiFi (118)-
Kinda like buying and selling real estate?
Investing is simple…but, not easy.
ChiFi (122)-
I think we’ve found them.
What a bunch of balderdash…
Grim (127)-
Hell, yeah. Memphis runs a high foreclosure rate in up markets.
Sorta the home office of foreclosure.
Grim (138)-
Only anecdotal, but high-LTV/stated loans have been Countrywide’s calling card in my area since 2003.
They called it the “Quick and Easy” program.
That’s ok, though…their regional VPs have made a lifetime worth of gravy in the past 4-5 years off of mortgage/title “tie-in” skulduggery.
And, if any Countrywide rep or VP is reading, I stand by what I say. Call me on it…please. I’ll feed more details here.
Zack (135)-
Hear, hear! Even Cramer will tell you that to beat the street, you can’t be the street. Sometimes the best defense is a good offense of fundamentally-superior stocks.
And, I second ChiFi on even S&P 500 indexing. The inefficiencies are long gone. Small caps, though…well, that’s a different story. Lots of juicy stuff still there, especially during the “shoulder” months.
BC (126)-
You knew it had to come to this. A wager, perchance?
I apologize, but this stuff really gets me steamed. I feel as if I have to scream above the din of specious arguments, hypocrisy, and the brainwashed, all the while I am dealing with those skipping in the meadow of some theoretical neverland defending something that fails to exist anywhere except in some tweed jacket wearing professor’s ivory tower publishings.
================
Stock Strategist
How Stock-Pickers Can Outperform Index Funds
At Morningstar, we’ve long extolled the virtues of index funds, and with good reason. Low costs and an ability to avoid underperforming the market are no small feats. However, we think that investors who are willing to invest a little time to assemble a portfolio of attractively valued, high-quality companies can outperform an index fund–with lower expenses.
[edit]
The Virtues of Index Funds
And indeed, index funds present brutal, ever-present competition for stock-pickers. Recent Morningstar research concluded that index funds based on the S&P 500 delivered higher returns than about 75% of all actively managed large-blend funds over the past decade. By buying the stocks in a representative index like the S&P 500 and simply holding them, an index fund can easily provide market-matching returns. What’s more, the best index funds do this at very low cost, thanks to low turnover, the absence of research expenses and fewer capital gains taxes. As costs are a critical drag on investment returns, investors with below average costs are more likely to reap above-average returns. So investors who don’t want to make frequent investment decisions can simply buy an index fund, and sleep soundly knowing their returns will match the market.
What could possibly be wrong with this rosy scenario? Quite a lot, actually. Index funds aren’t the lowest-cost option, and blindly tracking the market can be hazardous to your wallet because markets get horrendously risky at times, and index funds can’t help but reflect these risks. To elaborate, we need to take a detour through countryside that index fund proponents rarely visit.
[edit]
Holes in the Index Fund Facade
What’s true of individual stocks is also true of collections of stocks–like markets and the index funds that track them. If we examine our price/fair value ratio a little further, we can uncover one of the nasty secrets of index funds–at times they can be horrendously risky.
Just as we value individual stocks, we can value the entire market (or a representative index) by summing the fair values of the component stocks, then applying the same weightings. Since Morningstar began rating stocks in August 2001, we’ve tracked the market’s aggregate price/fair value ratio, and a glance at the data helps illustrate the potential risk index funds present. Since 2001, we think the market’s aggregate price/fair value has fluctuated between 0.78 in October 2002 and 1.14 at the end of 2004. So anyone who bought an index at the end of 2004 effectively paid $1.14 for $1 worth of stocks. Ouch! If we peer into the more distant past (albeit without our price/fair value reference point) we can surmise that investors who bought an S&P 500 index fund during 1999–when that index varied between 1,200 and 1,470–probably paid a lot more than $1.14 for their $1 worth of stocks. It’s not surprising that 6 years later, these investors are still underwater. Such are the perils of investing without a margin of safety.
[edit]
Of course, the flip side is that there are periods in which index funds can make wonderful, lower-risk investments with attractive margins of safety, such as in October 2002 and, arguably, early 1995 or any time in 1982. The trick is to know when the indexes are attractively priced, and for that you need quality research.
Another problem with index funds is that even though they are actively managed (committees choose which stocks belong to an index) the stocks are not selected on the basis of investment merit. This is not a criticism of indexing per se, but rather serves to highlight that the stocks are chosen to reflect the composition of industries and the general economy. But since there can be a world of difference between the best business in an industry and the worst–as well as the most and least attractively valued–we think the active stock-picker can benefit simply by avoiding trouble. Both Enron and WorldCom were once in an index.
A more subtle problem is that capitalization-weighted indexes will, by definition, force index funds to make relatively larger investments in overvalued stocks–and smaller investments in undervalued stocks. This is exactly the opposite of what we want.
[edit]
Subprime enthusiasts must be dreading Friday evenings. LOL.
“Basically, the US and China are locked in the economic version of mutually assured destruction (MAD). Neither one can seriously harm the other without sustain pain themselves.”
IMO, there is a slight difference. Neither China nor US can quit like USSR. Both of the countries have to keep winning for the tango to continue.
Clotpoll,
After reading hundreds of MLS listings, I’ve come across this intrigueing observation:
At the end of many home descriptions the last line reads:
Must See!!
Can I interpret that as:
Must Sell
all you other people don’t measure up to Hoboken
http://www.youtube.com/watch?v=3_lPIM6JgpU&mode=related&search=
An announcement:
These are certainly turbulent times for the nonconforming lending industry. In addition to the changes we have seen many mortgage companies go through, we have seen a change in our investors’ appetite for loans. That change means we at NovaStar must adjust our guidelines as well. The link to the right will take you to our revised matrices, which are effective immediately.
The most significant changes are the elimination of our piggyback program (meaning secondary financing) and the fact that we can no longer accept submissions above 95% at any doc level other than full. Going forward, only Full Doc loans with a score greater than 680 and no mortgage lates will be eligible for 100% financing with NovaStar. CLTV limits of up to 100% may still be eligible from third party originators. See the updated matrices for specific details. In the coming weeks, we will continue to monitor the market and adjust our guidelines to mirror those required by the investing community.
I apologize for the short notice on this decision and for the impact it may have on your customers. We remain committed to making loans that make sense for both the business and the borrower. I hope you will allow us to be your lender of choice today and into the future.
We appreciate your business.
Dave Pazgan
President
NovaStar Mortgage, Inc.
http://www.brokeruniverse.com/grapevine/thread/?thread=373891
sorry Bost
http://www.youtube.com/watch?v=udqznzuz20Y&mode=related&search=
That’s why it’s important to dollar cost average and do it on a consistent basis over a longer period of time. Why abandon an investment strategy that has worked effectively over a span of many years? It’s worked for me quite well.
A combination of small and large equity and bond index funds with some individual holdings is a solid, longterm, simple, dirt cheap investment strategy. The sales charges in the thousands of mutual funds that exist are 5 to 10 times higher than index funds with a turnover of 85% on average.
It’s fine to have an exploratory investment track, I wouldn’t dispute that. What I don’t understand is the outright animosity over someone’s preference.
WorldCom and Enron were considered attractively valued, high-quality companies that would outperform an index fund by both pikers and whales at one time.
Swensen is not a tweed jacket wearing, ivory tower professor.
With regards to subprime and lending in general – is anybody here surprised with the speed it is unfolding???
I know I am – I was expecting slow disappearance over the course of 2007/2008…
Bear Stearns: Stricter lending seen barring 1 mln US home buyers.
http://calculatedrisk.blogspot.com/2007/03/bear-stearns-stricter-lending-seen.html
“Banks and mortgage companies would sharply scale back lending to two groups: subprime and “Alt-A” borrowers”
Westhoff estimated a 30 percent, or $180 billion, contraction in the subprime sector in 2007 from 2006, and forecast a 25 percent, or $100 billion, decline in Alt-A loan production from last year.
>>
Bear Sterns seem to agree with the number i picked out of thin air ;) post (#6)
i mean post #12.
ChiFi:
Swensen is the guy who manages Yale’s endowment. Make of that what you will, but he isn’t quite a tweed jacket-wearing academic. That said, good points re: index funds. I like ’em a lot theoretically, but just about all of money are in some good actively-managed funds and I’ve done just fine (so far anyway).
Still, Swensen also readily concedes in “Uncommon Success” that his position as manager of the Yale Endowment gives him tools and opportunities that ordinary, small investors won’t ever have. He also recommends putting 20% of one’s investments in commercial real estate funds (like the Vanguard Total Real Estate Market fund) — which, given the insane p/e’s of the stocks in such funds, seems like a recipe for short-run disaster.
WickedQuiver Says:
March 9th, 2007 at 9:35 pm
WorldCom and Enron were considered attractively valued, high-quality companies that would outperform an index fund by both pikers and whales at one time (?)
Quiv: I was at AT&T when WorldCom was beating the pants off us. The general opinion was that Ebbers was a clown, and the bankers walked around wiping his posterior because he would constantly be lining their pockets with fees on his aquisitions. We still couln’t figure out how he would wipe us out with his margins. Mike Armstrong ground up and spit out a lot of talented people that had no chance.
Enron was keen to get involved with broadband so they were talking to AT&T. The head of Real Estate division once said to us “….these are the kind of guys that you know leave a ring around the bathtub….”
People knew these guys were trouble at least 12 months before they started sucking the tailpipe. What wasn’t clear was the deathspiral and outright hubris to commit massive fraud. These guys were being underweighted…….the people that really got killed were the bondholders.
from the NY Times
In the Region | New Jersey
Why Sellers May Be Disappointed
HOME sellers beware. Despite what real estate industry data might suggest, sales prices were down by 10 to 20 percent around the state last year — and prices are still flat in most locales, according to an East Brunswick analyst who keeps day-to-day tabs on New Jersey residential transactions.
The analyst, Jeffrey G. Otteau, who heads the Otteau Appraisal Group and issues the monthly Otteau Report to subscribing brokers, offered this current reading on the overall market: “It is just beginning to recover.”
Many of the state’s largest real estate agencies subscribe to the Otteau Report, and hundreds of brokers and agents attend his periodic seminars.
Although agency executives frequently quote him, Mr. Otteau does not show the same sort of reverence for the National Association of Realtors and its recent rosy numbers about sale prices in New Jersey.
http://www.nytimes.com/2007/03/11/realestate/11NJZO.html?ex=1331269200&en=6e40dfd3da779f81&ei=5088&partner=rssnyt&emc=rss
Swensen is the guy who manages Yale’s endowment.
I understand who Swensen is and also the context in which Buffet’s statements should be taken. More than anything else, these guys are being incredibly patronizing. Think about it.
“The Otteau Group’s latest figures, for January, to be officially released this week, by the way, indicate the market “correction” has ended. Statewide, there were 10 percent more contracts signed in January 2007 than in January 2006 — and in booming Hudson County, sales volume was up a whopping 40 percent.”
it’s time for a Otteau-watch
http://davidlereahwatch.blogspot.com/
I think the debate of index vs. active is overblown. The more important issue(s) is low vs. high cost; having the proper AA taylored to your risk tolerance; & tax efficiency.
Most of my portfolio is with Vanguard and I slice and dice w/a mix of active and indexed funds. I have a 70/30 mix of equities/bonds, & have a 25 yr time horizon.
I know there will be a handful of money managers who will outperform me over the long term, but that percentage is slim to none and 2. Unfortunately if someone could identify the next Bill Gross for me, please dust off your crystal balls and let me know. If you do know the answer, you will make 7 figures easy on Wall street.
Give me my boring, unsexy, low cost mutual funds. This is not a “race”. I am content knowing I will outperform the vast majority of market timers out there.
my 2 sense….
ChiFi – by the way I couldn’t agree with post 118 more.
RE: 160 WCOM and ENE
This guy (ie the average retail investor):
“Any reasonable, intelligent person with basic research skills can assemble a diversified portfolio of stocks, with each stock representing a top stock in its sector.” — Clotpoll
Probably would have picked them up around peak prices as top stocks in their respective sectors and got smoked.
The example doesn’t even need to be that extreme.
Technology Sector:
APPLE INC AAPL
CISCO SYS INC CSCO
GOOGLE GOOG
HEWLETT PACKARD HPQ
INTL BUSINESS MACH IBM
INTEL CP INTC
MICROSOFT CP MSFT
ORACLE CORP ORCL
QUALCOMM INC QCOM
TEXAS INSTRUMENTS TXN
Hmm… which one is going to have the best return over a 5 – 10 year period?
Clotpoll and Zach make it sound so easy…
http://money.cnn.com/2007/03/09/magazines/moneymag/funds_subprime.moneymag/index.htm?section=money_latest
Today, there are 8,000 odd mutual funds out there. What are the odds of the average investor picking a handful of them that are going to outperform the market (for argument’s sake the S&P 500 index) a decade from now after taxes on distributions, annual fees, and the hidden market impact costs on bid-ask spreads.
How many investors bought Legg Mason fund before Miller started making the news? And why did he make the news? Coz he was one among the few who outperformed the market! He held a concentrated portfolio, and that extra risk compensated fundholders with extra returns.
When fund managers are diversifying risk by holding more securities, they are in effect becoming a closet-index fund.
If holding an index fund costs .2% a year, should investors pay 7-8x above that to be in a fund where most managers are incapable of achieving decent alpha in excess of the index?
Most investors should be willing to pay more for alpha. The statistical odds of finding the next mutual fund manager to generate decent alpha over the long term is a huge task.
If anyone knows the managers that are capable of doing that from now through 2016, please let me know. I wish to retire early.
Respectfully,
The yodeler originally known as Gordon Summer
at a minimum your can parse….and only three of these have the right combination of management, product, market, and valuation, and one of those three I just pared my positions by 1/3
you also have to consider the bear market that is going to appear some time in the next 12-48 months methinks
CISCO SYS INC CSCO
GOOGLE GOOG
MICROSOFT CP MSFT
APPLE INC AAPL
HEWLETT PACKARD HPQ
INTL BUSINESS MACH IBM
ORACLE CORP ORCL
QUALCOMM INC QCOM
INTEL CP INTC
TEXAS INSTRUMENTS TXN
A bunch of 40+ Vanguard investors (from the Morningstar Diehards forum) are meeting in White Plains, NY on Saturday, March 10.
For anyone who might be interested, it’s at Camille’s Cafe 15 Bank St White Plains, NY 10606 from 11:30 AM till 3 PM.
Quiv (166)-
Are you clairvoyant now? Did I say it’s easy? No…and I said it earlier in this thread.
There are easily weeks in which I spend more time studying and trading than doing RE (frankly, RE is satisfying but boring work; investing is never boring).
I’m not some hack individual investor. This is my 20th year of doing it. No indexes, no mutual funds. Do I get whipped sometimes? Yes. Do I shoot the moon sometimes? Yes.
I have nothing against passive investments in quality mutual funds and other conservative investments for those who are so inclined. However, indexing is a counterintuitive and flawed concept that dooms the investor to being chained to the worst performers in any given index (see #147) and renders the investor subject to unexpected volatility.
http://www.brokeruniverse.com/
THIS JUST IN: HSBC Holdings soon will begin unloading some of its on-balance-sheet subprime holdings. Scratch-and-dent investors tell us billions may come to auction.
Tanta on “Scratch and Dent” Loans
http://calculatedrisk.blogspot.com/2007/01/tanta-on-scratch-and-dent-loans.html
From the Courier Post Online:
Pa. competition hurts Atlantic City slots
One month doesn’t make a trend. But what about two? For the second month, gaming revenues fell in a year-over-year comparison, and the culprit was a decline in slot revenues, according to figures released Friday by the state Casino Control Commission. Much of the decline could be attributed to race track casinos in neighboring Pennsylvania. Philadelphia Park, in Bensalem Township, opened Dec. 19 and Harrah’s Chester Casino and Racetrack, on Jan. 22.
Casinos won $378.3 million in February, a 4.8 percent decrease over the same month a year ago. More telling, the 11 casinos took in $264.4 million at the slot machines, off 7.8 percent. However, table game revenues rose 2.8 percent to $113.9 million.
Inventory are up 1.1% from last week. Who’s trying to off load all this inventory without dropping prices??
I am hearing that once New Century goes into bankruptcy, the stories that will come out in the court depositions will be wild. Strippers, naked pool parties, divorces. It’s going to be great reading material.
Frank (176)-
I’ve been to mtg broker parties in AC that were like outtakes from Caligula.
New “status” drink in China: Johnnie Walker Black shots, with a splash of green tea.
Aaaargh!
Looking for any information on the following NJ mortgage industry layoffs:
http://www.state.nj.us/labor/warn/2007/01-07warn.htm
EQUITY ONE – 3/11/07 – 44
POPULAR FINANCIAL – 3/11/07 – 207
GMAC MORTGAGE – 3/16/07 – 85
http://philadelphia.craigslist.org/rfs/291544304.html
Think we’ll ever see this up here?
Chi,
I loved your post 128- I think you’ll like this one better
http://www.toilette-humor.com/the-man-song.html
KL
Hey
I just noticed were not allowed to ping anymore. Dang.
KL
Can anyone give me details of MLS#: 2319738.
Address?
DOM?
Was it re-listed?
Thanks in advance.
AT.
GMAC was looking for mtg loan officers for their pine brook office last month. That would suck to leave a job and get laid off the next month at your new job.
James Bednar Says:
Looking for any information on the following NJ mortgage industry layoffs:
GMAC MORTGAGE – 3/16/07 – 85
GMAC Mortgage in Mountainside is Ditech.com, which is primarily Sub-Prime
Since it appears as though I’ve been so ill-advised, injudicious and obtuse regarding my venture stratagem, my consort has asked me to poll those who object to index fund investing so obdurately and ascertain your investment strategy which, no doubt, reaps superior results.
I do realize this is merely your opinion and is not investment guidance.
So, with great anticipation, we await your retort.
Report: Trump may sell Atlantic City casinos
Donald Trump’s casino business hires Merrill Lynch to look at strategic options, including a possible sale.
http://money.cnn.com/2007/03/09/news/companies/trump_merrill.reut/index.htm?postversion=2007030917
Anti
History for MLS 2319738 is colorful, seems it has been listed on and off since 2002
listed for 650,000> 639,000> 634,000 withdrawn, expired, Then Sold 2004 630,000 unrecorded- got sale from tax record.Currently 699,000 was 779,000 dom 177 .
So bottom line current owners bought 2/2004 after being on market for 2 years, and are now trying to sell for 699,000.
KL
You guys got a funny idea of what a ‘prime lender is’. I think many of them are 20 somethings out of college that are high on their aspirations, and then bought into an ARM that they cannot afford. What is going to happen when all those banking jobs in NY dry up with the money supply, and with it all the IT and support jobs?
Aaron (189) “You guys got a funny idea of what a ‘prime lender is’. I think many of them are 20 somethings out of college that are high on their aspirations, and then bought into an ARM that they cannot afford.”
Good point my feeling is everybody was given enough rope to hang themselves subprime to prime and hang they will.
I am one of those 20-somethings who bought a home during the boom. I bought it with a 5/1 ARM which I have recently refinanced. My monthly payments have gone up less than 200 bucks, which doesn’t affect me at all since my income has increased since I bought this place.
As for jobs drying up… we will see. I was employed and didn’t get laid off during the last recession (00-01). Let’s see if I can make it through another one. Time will tell. The good news is, even if I can’t, I have enough equity in this home and enough cash in the bank to rough it out for a while. I’ll be allright.
Many of my peers, who bought homes when they were 20-somethings during the boom, will also be allright. We’re not about to fall en masse into foreclosure. That’s simply not gonna happen.
Heck I got out of an ARM myself, but I tend to think this is the exception as opposed to the rule. Also I did so at the peak of 2006. Not sure I could have gotten out if I waited until now.
My point is that younger and younger people have access to credit. I don’t think that credit scores truly reflect the risk there is in loaning a person money.
Also syncmaster your overconfidence about your peers backs up my point in spades!
Aaron,
I know my peers. You’re too busy looking down on us to know us.
i know a 20something that cant get his ass off my mother’s couch and up until this week he could have qualified for a loan.
your peers at work are one thing an entire generation is another.
glad to hear your in good position
Thanks KL. Do you have the address?
I don’t know much about Florham Park. Just want to drive by and check out the general area. Seem like the Town Assessed value is 740K.
syncmaster,
did you do either “stated income” or “stated assets”?
njrebear,
They had me document both my assets and income.. at the initial ARM and more recently at the refi.
My comment with date/time March 10th, 2007 at 11:21 am is awaiting moderation.
Sorry AT
So much info given – so little needed
Address is 44 Ridgedale Ave
KL
re: indexing
an overwhelming body of research shows that indexing beats almost all active management over the long term once fees and taxes are taken into account.
I do not understand the logic of considering fees and taxes separately– these are a real component to investing that cannot be separated out.
I don’t doubt that there are a few superstars who can beat the market consistently.
The problem, as others have mentioned, is that you have no way of knowing who these people are ahead of time. Past streaks more often suggest future underperformance that future outpeformance
I can see the appeal of trying to pick winners, but I think it’s hard to argue that this is sensible for most people.
You can pretty accurately measure the risk of the S&P, the Lehman Bond index, etc over a 20 yr period. Given this knowledge, the average person can put together a portfolio that fairly certainly matches his risk preference.
But as soon as you introduce stock picking into the equation, you introduce a variable that most people cannot accurately assess.
And given that asset allocation accounts for the overwhelming portion of returns (see Fama and French), this additional variable will mostly result in uncompensated additional risk.
Perhaps this is all too tweedy and boring, but from what I can tell, the contrary view is mostly anecdotal
Troubles Hit Real Estate at High End
Until now, deep-pocketed Wall Street tycoons and foreign investors benefiting from a weak dollar seemed to be holding up the luxury real estate market even as the low-end fractured. But there are signs that some high-end real estate developers are also being hit by the slowdown.
Last night, a condo-hotel developer who was a partner with celebrities in selling luxury perches from Miami to Chicago let the mortgage on the Royal Palm Hotel in South Beach, a trendy section of Miami Beach, expire. The missed deadline places another luxury condo project into the hands of bankers specializing in troubled mortgages.
Jack McCabe, a real estate consultant in Deerfield Beach, Fla., said there would be more troubles for developers, lenders and title insurance companies.
“This is the first of what will probably be several high-end developers who had a number of luxury projects,” he said. “We’re going to see some where the banks take them back. We’re going to see some sold to other developers. We’re also going to see a lot of litigation.”
The developer, Robert Falor, planned to turn 160 of the Royal Palm’s more than 400 rooms into condo-hotel units with a Maxim-themed bar operated by Cindy Crawford’s husband, Randy Gerber, in the same complex.
According to a report this week by the rating agency Standard & Poor’s, Mr. Falor, whose company is Robert Falor Investments, did not sell any condos and has put the hotel up for sale.
As a result, the agency lowered its rating on the commercial mortgage-backed security — a type of bond — that includes Royal Palm’s mortgage; the mortgage had been packaged into the security by Credit Suisse. Last night, Mr. Falor let his $109 million mortgage mature without any payment or refinancing.
Mr. Falor also failed to meet requirements for an extension set by Wachovia Securities, which services the loan. Both banks declined to comment about the status of the loan made to Mr. Falor.
“The financing was based on a successful condo-hotel conversion,” said Larry Kay, director of structured finance ratings for Standard & Poor’s. “My understanding is that the conversion or renovation is moving forward. But there have not been units sold to date.”
Mr. Falor did not return calls made to his office in Florida and to one of his lawyers in Chicago. A spokeswoman for Mr. Gerber did not return calls.
While Wall Street bonus money and foreign investors have kept the luxury market far stronger than most segments of Florida real estate, Seth Semilof, a former broker and publisher of the Miami lifestyle magazine Haute Living, says that buyers are becoming more cautious about the types of Miami luxury condo projects they will buy.
Consumers are rejecting any projects that involve developers turning existing hotel units into condominiums because the consumers fear that they could lose their deposits if these projects are never converted.
Instead, Wall Street bankers, baby boomers and Europeans are more often snapping up condominiums from developers with projects that are being built from the ground up.
“The market is separating the contenders from the pretenders,” Mr. Semilof said. “The consumer is not buying projects where they sell units and then do the conversions. People are willing to put money where they know where the building is going to be built.”
In February, Mr. Falor sued Paris Hilton’s sister, Nicky, and her agent, Paul Fisher, over their former proposed partnership to open in South Beach the “Nicky O” condo hotel. The hotels, he told The Miami Herald, were supposed to feature cupcakes with turn-down service. Mr. Falor started a partnership with Ms. Hilton less than a year ago to redesign the Blake Hotel in Chicago and the Breakwater-Edison condominium in Miami under her name.
Court documents state that she failed to meet her plans to design the Blake Hotel’s interiors, misrepresented herself as having experience in hotel design and gave parties for herself and friends that never promoted the projects. He says that Ms. Hilton owes him more than $1 million on hotel rooms, public relations fees and travel.
“Nicky and Fisher intended to use the Falor group to promote Nicky and underwrite a lavish lifestyle for both Nicky and Fisher,” according to court documents. Ms. Hilton and Mr. Fisher did not respond to e-mail messages and phone calls.
On March 2, Mr. Falor filed for bankruptcy against a mezzanine lender on a 454-unit conversion project in Chicago called Hotel 71. Now his mezzanine lender, Oaktree Capital Management of Los Angeles, may face more roadblocks in foreclosing on the property from Mr. Falor after he defaulted on a $27 million loan. Oaktree declined to comment on the negotiations.
I have another post with date/time March 10th, 2007 at 11:55 am awaiting moderation.
that Countrywide development is pretty huge.
If all the major lenders start requiring 5% down, this will eliminate the majority of entry level buyers
from Reuters:
“Countrywide joins other large lenders that will require homeowners to have at least a 5 percent stake in their homes, including Washington Mutual Inc. and General Electric Co.’s WMC Mortgage. Fremont General Corp. last month stopped making “piggyback” loans that are often used to make up 100 percent LTV loans”
Pop!
“If you look at what’s happening in mortgage markets this year, what you see is, in the aggregate, the mortgage markets are doing very well in terms of credit quality,” Bies said.
Bies in a speech at Clot’s favotite hangout, DOOK, 2/20. Amazing what occurs in 3 weeks.
Clot,
I can find the post but I believe you stated that the total subprime and Alt-A represented 6% of the total. Remember, this RE discussion is focused on 2001-present. Have you been hanging out with Missing Bob?? Did BIA give you lessons on how to read a chart?? You are beginning to sound like a realtor when you state 6%…….maybe some subliminal message. No need for me to respond. I saw Grim threw you a high fastball under the chin. The word in NY was you went down like Chuck Wepner.
By the way, the spread today, I’m on.
CHI,
That You Tube was very disturbing. Make sure Hunter doesn’t take that low road. Teach him to respect the Pinstripes/Dynasty.
skeptic [202],
No problem. On a 500k house, they’ll borrow the 5%, go to contract at 550k, get a 50k rebate at closing, pay back the borrowed 25k down payment, pay the closing costs and of course; new granite countertops. The industry will then proceed to tell us median prices are rising. Larry Crude-Low will continue to scream;
“Goldilocks reigns”
Am I missing something? Should I start making my offers with terms like this:
I agree to your purchase price of $550k but I want $75k cash back 10 days after closing.
skep-tic Says:
March 10th, 2007 at 11:47 am
I apologize for the caps….I just want to distinguish my text.
I AM NOT GOING TO LECTURE YOU ABOUT WHAT YOU SHOULD DO – HOWEVER, THIS DISCUSSION STARTED WHEN I PRESENTED EMPIRICAL EVIDENCE THAT INDEXING HAS CAUSED PRICE INFLATION IN SMALL CAP STOCKS OVER THE COURSE OF THE LAST FEW YEARS. ANOTHER POSTER ASKED FOR AN EXPLANATION OF PROS AND CONS. THIS REQUEST WAS GIVEN AN AUTHORITATIVE RESPONSE THAT INDEXING WAS THE CLEAR SOLUTION – IT IS NOT FOR A VARIETY OF REASONS. I AM NOT TRASHING THE CONCEPT OF INDEXING. HOWEVER, I DO TAKE ISSUE WITH PEOPLE WHO MAKE SPECIOUS CLAIMS ABOUT ITS BENEFITS AND USE.
an overwhelming body of research shows that indexing beats almost all active management over the long term once fees and taxes are taken into account – MISLEADING – PLEASE SPECIFY – MANY OF THESE STUDIES COMPARE THE RETURNS OF THE S&P 500 INDEX TO ALL ASSET CLASSES NOT JUST FUNDS THAT WOULD LOGICALLY BE BENCHMARKED
I do not understand the logic of considering fees and taxes separately– these are a real component to investing that cannot be separated out – WHAT IF YOU ARE INVESTING IN A TAX-DEFERRED (e.g., 401(k)/IRA) or TAX-EXEMPT (ROTH) ACCOUNT. A GOOD 75% OF MUTUAL FUNDS ARE PURE RIPOFFS AND EASILY CAN BE AVOIDED WITH MINIMAL RESEARCH. SHRINKS THE DOMAIN QUITE SUBSTANTIALLY.
I don’t doubt that there are a few superstars who can beat the market consistently. MORE THAN A FEW, PLEASE BE REASONABLE
The problem, as others have mentioned, is that you have no way of knowing who these people are ahead of time. NOT A REASONABLE STATEMENT Past streaks more often suggest future underperformance that future outpeformance
I can see the appeal of trying to pick winners, but I think it’s hard to argue that this is sensible for most people. IF SO, YOU WOULD FIGURE MOST PEOPLE WOULD EXECUTE IT – THEY DON’T
You can pretty accurately measure the risk of the S&P, the Lehman Bond index, etc over a 20 yr period. Given this knowledge, the average person can put together a portfolio that fairly certainly matches his risk preference. AVERAGE PERSON? ARE YOU KIDDING? YOU WOULD EVEN BE SURPRISED AT THE LACK OF SOPHISTICATION IN THE FINANCIAL SERVICES FIELD. PEOPLE KNWO THEIR JOBS, BUT THAT KNOWLEDGE DOES A POOR JOB TRANSLATING INTO PERSONAL SITUATIONS
And given that asset allocation accounts for the overwhelming portion of returns (see Fama and French), this additional variable will mostly result in uncompensated additional risk. FAMA BASICALLY ALSO PROVED THAT BETA WAS NOT A FIRM STATISTICAL RELATIONSHIP. THE CAPM [BETTER APT] IS THE MOST EXPEDIENT MODEL, BUT IT ULTIMATELY IT FAILS TO BE ROBUST. IT IS FINE, BUT YOU CAN’T USE IT AS IF IT IS BULLETPROOF.
Perhaps this is all too tweedy and boring, but from what I can tell, the contrary view is mostly anecdotal AS IS YOUR SUPPORT
Bob/cf or others,
I would like to trade options. I think i know how it works but I’m not very confident. Do you know of any good reading material that i can read?
gary (186),
Fingers are not being pointed at anyone here. I’m not about to tell someone else what a decent rate of return is, or in any other way play risk manager with OPM. Alas, I’m not a trained financial professional.
However, it is equally naive to assert that indexing is the be-all and end-all that many purport it to be. Yes, indexing garners better returns and is more fee-and-tax efficient than some mutual fund that has a twentysomething gunslinger churning stocks like its his own personal hedge operation (and yes, one of the scarier things about mutual funds is that they are increasingly operating using hedge fund techniques).
But the fact remains that a stock-picking approach can and does generate the best returns over time (with the caveat that the investor is doing more than watching Cramer and mirroring his picks). It’s not for everyone, and I can see a day (when I’m a lot older) when I’ll stop doing it myself. Why? Because the risk will no longer be justified. Nor will the expenditure of my time.
What’s my strategy? I’ll give you the quick overview; I have a “hot market” one and a more “defensive” one. The “hot” commits me to a 50-70% overweight into one or two market-leading sectors; for example, right now, I’m loaded up in precious metals and oil services. Makes for some nervous days, but that load-up is either gonna come in…or I’ll abandon it by July (btw…I don’t think I will be). The rest of my “hot” portfolio is held in longer-term, conservative, dividend-paying stuff that I don’t have to pore over daily.
My “defensive” play involves a 60-30-10/conservative-moderate-speculative outlay that focuses on loading up with larger-cap, dividend-paying issues in order to weather the storm. In down markets, I will also aggressively short with some- or even all- of the 10% speculative allocation in order to capitalize on dying sectors.
That’s about it. I feel weird about really getting into anything more in this forum & certainly do not want to discuss individual stocks. As always, all disclaimers apply. However, I stand by my claim that a person so inclined- and willing to do research- can employ a stock-picking approach and do quite well. If it didn’t work for me, I would’ve abandoned it 15-16 years ago…so I know it’s possible, and I know that luck has nothing to do with it.
Crisis Looms in Mortgages
by Gretchen Morgensen
http://www.nytimes.com/2007/03/11/business/11mortgage.html?hp
Here’s weekly summary from breakoutwatch (i’m only pasting stuff related to RE:
Friday’s trading illustrates the problems the markets face at the moment. There was positive economic news in falling unemployment and rising wages, which benefits consumers who account for 70% of economic activity, but this possible stimulus to consumer spending was offset by news that New Century Financial Corp. would stop writing new mortgages and may seek bankruptcy protection. This was the thirtieth sub-prime lender to close shop since December. Goldman Sachs estimated this week that the reduction in sub-prime lending will cut new home sales by 200,000, or 20%, this year. If they are correct, then housing demand has further to fall and consumers will feel less wealthy as the value of their homes falls. This will inevitably drag consumer spending down as consumers feel less wealthy and the economy will suffer, putting the ‘soft-landing’ theory at risk. It will be difficult for the markets to gain traction while the threat of recession continues.
emphasis added by me
“But the fact remains that a stock-picking approach can and does generate the best returns over time”
Clot- I have some “play money” (probably like most do) that I fool around in investing in individual stocks. But, in a million years I would never commit a large or even small chunck of my portfolio to individual stocks. I’d have a better chance going to vegas unfortunately…
I know of no credible financial person (well known or not) who would advocate that approach. Can you provide us some credible backup to this system? I’m very curious.
If you guys got time, check this out:
Maxed Out – the movie
http://www.youtube.com/watch?v=YiOVNWoWTAU
Maxed Out–The Lawyer
http://www.youtube.com/watch?v=dHEh3UsHP0A
Collection Agency
http://www.youtube.com/watch?v=DAorbJK-e_M
GREG PALAST Exposes Debt Relief Lie / Vulture Funds
http://www.youtube.com/watch?v=xTAlH0Yzn_A
seller (213)-
What do you want? Pdf’s of my brokerage account statements?
The strategy I employ is no more than an investment approach that is uncomfortable for you. That makes the returns no less real, nor does it invalidate a “stock-picking” approach to the market. However, if you want to check the 20-year track records of advisors who advocate variations of this approach, take a look at the Hulbert Financial Digest. Yesterday, I mentioned Louis Navellier; one of his strategies, which is called Emerging Growth (it used to go by the name MPT Review…the MPT was a nod to Navellier’s reworking of the concept of modern portfolio theory), is Hulbert’s top-rated over the past 20 years and has obliterated the S & P 500 during the same timeframe.
In the interest of full disclosure, I have subscribed to- and followed- Navellier’s advice from time to time. I currently do not subscribe to any.
If it makes you- or anyone else- feel better, this is not a conventional approach and is probably best-utilized by someone who has a good deal of time to spend on research, trading and fine-tuning and who has a tolerance for risk that is several notches aboe the norm. Implicit in this approach is a great deal of investor proaction and awareness of some complementary hedging strategies to address downside risk.
Clot, I have no problem w/your stock picking strategy. The only problem I have is if you (or anyone who advocates a market timing newsletter) makes the claim that they will generate greater aftermarket returns after taxes over the long term, when compared to their proper benchmark.
Will Hulbert’s/Navellier’s strategy make it worthwhile over the next 20-30 years to invest in? I can’t answer that. Because I can’t buy past performance. I do know that a diversified, passive approach will outperform a large majority of investors over the long term.
” We’re not about to fall en masse into foreclosure. That’s simply not gonna happen”
Be careful with this thinking…
You never know when the rug may get pulled out from under you.
SAS
this web page has been working like crap lately.
SAS
this web page has been working like crap lately
Don’t remind me, I’ve been working lots of hours to get it moved. All I need now is for Yahoo to give me back my domain name, and we’re off to a new host.
jb
njrebear Says:
March 10th, 2007 at 1:05 pm
Bob/cf or others,
I would like to trade options. I think i know how it works but I’m not very confident. Do you know of any good reading material that i can read?
Off-hand: what are you intending to do?
rhymingrealtor Says:
March 10th, 2007 at 8:41 am
Chi,
I loved your post 128- I think you’ll like this one better
KL
“…and I’ll come home when I’m good and ready……..to sleep on the couch…”
Hey
I just noticed were not allowed to ping anymore. Dang.
KL
Ping and trackback were turned off in an attempt to stop the spam attacks. While they stopped messages from being posted (even on closed topics), the traffic is still sending the site into failure.
jb
dreamtheaterr Says:
March 9th, 2007 at 4:38 pm
A pathetic small time investor with a net worth less than your car gets lumped with Jack Bogle…
Chifi, when you start selling Dimensional Fund Advisors funds, I promise I’ll become your client.
Yann: If you got the $2M minimum AUM, I’m game.
WickedQuiver Says:
March 9th, 2007 at 5:34 pm
I should source that: http://www.ifa.com/
Quiv: Yeah…it is a nice site.
Caveat…..they charge 90 bps to run things through their black box….you would figure that the charge should be about 50+ bps less given that they are using a scalable model.
So I am taking some of your advice. I am looking once I get some serious money saved to get out of the NYC/NNJ area. Your right I can move, and I should.
I own here, and to sell now would not be at a loss but I pay about 600 a month all inclusive. I might as well make NNJ/NYC RN money and shove it into the bank/investments. I can sock away at least 20-30K a year and have some fun. And barely work any OT.
Then take the apartment sell it and take the 200K from both and buy most of a house somewhere else if not all of it free and clear.
I see my previous posts as being totally lacking of any work/life balance. Look I know most of you are older or have family $$ behind you if your my age.
I can do this here but it involves taking on massive amounts of debt and a combined income of at least 120K with a non existant spouse. OR moving into “da hood” which is not so cheap anymore anyway. OR taking on more debt ( if I can even get the loan after the last couple weeks ) and getting a multi family and being a landlord in like UC or NB.
Or I can move elsewhere where 1 mil fort lee house is 500K and starter house is 100-200K and then I can spend my time living and not trying to work mad OT to pay for it.
It makes me sad that even with 2 BS required jobs making good money still won’t cut it sometime in the future.
It also means that I can do this arbitrage once and only once. After I leave I am locked out.
Thanks for all the good advice
Seller (215)-
The Navellier MPT strategy is NOT a market-timing play. It is exactly the opposite. Navellier stresses holding the core positions to gain maximum tax efficiency. He frequently reminds his readers that it is NOT meant as an active trading aid. Emphasis is place on diversification into as many as 25-30 stocks- across a broad range of sectors- to mitigate the volatility inherent in a portfolio weighted heavily toward thinly-traded small-to-mid cap stocks.
Market-timing is a gimmick that is both specious as a concept and unworkable as a practice. It’s actually just a fancy term for chasing gains…the bane of many an investor. Damnation of a proven and workable theory of investment by hanging a disparaging tag on it still does not change the long-term results already booked.
All you state about a diversified, passive approach is true. It will outdo most investors over the long-term…because most investors cannot sustain a disciplined strategy through a series of different trading environments. However, your statement sets as low a bar for your own approach’s performance as your other statement- referencing the inability to buy past performance- sets the bar at 30,000 feet for the stock-picking paradigm.
And, in a weird way, that’s fair. The only difference, at day’s end, is a diverging analysis of risk and its mitigation in order to arrive at a desired rate of return.
Clotpoll, read post #150.
cf(219),
“Off-hand: what are you intending to do? ”
Short stocks with limited risk. I was told that this approach would help limit potential downward risks like a buy out or broker ‘calls’.
I have target price in mind and also an approximate time frame.
I have shorted stocks before but couple of my adventures have gotten out of control because of M&A. I was planning to mitigate any such high risks using options. I’m ready to take a risk but only to a certain extent.
thanks.
#224 R Patrick” I twill cut it in the future, and in the close future. There is no need for you to up and leave if you do not want to.
Will this area stay expensive, probably, but it always has, but prices have dropped dramatically beofre, and they are droppinf now, and will continue to drop. That is a fact, all the silly eationalizing in the world will nto change that.
Just look at how the whole credit environment has deteiorated in just a few short weeks, and that right at the start of the Spring market.
Give it another year or so, and I think you will see prices dramatically lower.
In th emenatime continue to save your money, and have some fun.
NY Times: Crisis Looms in Mortgages
I think there is no doubt that home sales are going to be weaker than most anybody who was forecasting the market just two months ago thought.”
Thomas A. Lawler, founder of Lawler Economic and Housing Consulting, March 10, 2007
http://calculatedrisk.blogspot.com/2007/03/ny-times-crisis-looms-in-mortgages.html
#191 syncmaster: The recession of 00-01, with all due respect, that was no recession, mofr like a hic-cup after 9/11, and the Fed easing, that recession was aborted.
If you wnat to talk about a recession, lets talk about the ealry 90’s.
With all due repsect, you are a little young to be patting yourself on the back, and congratulating yourself on how you made it through etc.
As far as the rest of your post, if true, you are the exception to the rule.
As far as that so called equity in your home, I would not count on it, and you do know its only yours when you sell the condo/house and put the proceeda in your pocket. Othewise borrowing against it (if you can), is just creating more debt for your self;not a good strategy.
#163 Jay: Obviously Mr. Otteau has not factores in the whole sub-prime mess, and perhaps he should also ponder how Countrywides new lending standards are going to impact the market,a s other lenders will follow their lead,
Mr. Otteau amazingly stsates the correction is over, I say it has only started, but picking up steam quickly.
njrebear Says:
March 10th, 2007 at 8:17 pm
cf(219),
“Off-hand: what are you intending to do? ”
I have shorted stocks before but couple of my adventures have gotten out of control because of M&A. I was planning to mitigate any such high risks using options. I’m ready to take a risk but only to a certain extent.
thanks.
Shorting a stock is not option trading. Are you interested in shorting (borrowing shares and selling), buying put options, or writing calls?
For people who are interested in the stock market and stock picking here are a few books and essays I would recommend.
1) The Essays of Warren Buffet: Lessons for Corporate America by Warren Buffet & lawrence Cunningham. Cunningham edited 30 years of Buffet’s letters to the shareholders into this book. Buffet says it is the best book ever written on his approach. Of course it is his own words.
2) Poor Charlie’s Almanac by Charlie Munger Vice-Chairman of Berkshire Hathaway. This is an auobiography plus 10 speeches Charlie Munger as given covering a broad range of topics. This won’t tell you any formula for picking stcks though. just Munger’s philosophy on investing and life. Munger said if you don’t like/understand his book, you should give it to someone more intellegent who will.
3) The Warren Buffet Way by Robert Hagstrom
Hagstrom is a mutual fund manager for Legg Mason who has studied Buffet for years and hs written 2 other books on him.
4) The Little Book of value investing. by Christopher Browne. Browne is an MD of tweedy,browne investments which is a benjamin graham style investing firm. tweedy.com has excellent letters to shareholders explaing their philosophy and other essays and studies on value ivesting
Eddie lampert, CEO of Sears Holdings has written a serious of quarterly and annual letters to he shareholders avvailable on searsholdings.com that explains his aproach toinvesting and his plans for sears.
I am not giving any recommendations on stocks or funds, I’m simply saying these are good reads for folks interested in value investing.
James,
I really like this on-line community, but it gives a false sense of knowing someone, sometimes. For example my warped sense of humor does’nt always come thru in my posts.
I guess instead of saying Oh I can’t ping anymore dang! I should have asked if I could still zing (-:
Or maybe I should have asked if I can still bong?bang?bing or badabing?
You’d think a Rhyming Realtor would have a reputation as a bit of a cut-up
KL
cf(232)
“Are you interested in shorting (borrowing shares and selling), buying put options, or writing calls? ”
I’m familiar with shorting. I wanted to try my hands on buying put options.
Thanks again.
“bergembubbleburst Says:
If you wnat to talk about a recession, lets talk about the ealry 90’s.”
I’ll up you one and go with the early 80’s recession in the northern UK. Try 20% unemployment in some areas, whole towns dying en masse, the move from heavy industrial to service. Middle aged men with families lost solid jobs and never really worked again.
Now THAT was a recession.
Zac (150)-
Missed that. I don’t think you can make a blanket assumption about the intent of that statement. It could range from being puffery to being a desperate cry for help.
njrebear Says:
March 10th, 2007 at 9:19 pm
cf(232)
I’m familiar with shorting. I wanted to try my hands on buying put options.
http://www.cboe.com
go to “learning center”
Bairen (233)-
Excellent recommendations all! In the department of iron discipline, unswerving and tenacious analysis and bold innovation within an narrow, self-limiting range of possibilities, all the rest of us run a distant second. I’m not ashamed to say that what these guys accomplish from a value perspective dwarfs the best of the growth crowd. They also all share onions of iron. Value or growth play, big bets are big bets.
One of the things I look forward to about old age is seeing how Lampert stacks up to Buffett. Too bad Buffett never got kidnapped…although if he were, I bet he could talk his way out, too.
thanks cf!
IMO, Lampert’s prescient analysis of K-Mart and its unrecognized kernel of value will be viewed as the single most astute financial move of the post-Boomer generation.
I’m not thrilled with Sears’ essentially cruising along as a mask for Lampert’s trading operations (10 bil in Q4/06)…and those hideous stores are like shopping in Bulgaria; yet one has to trust in his overall vision for the company and look forward to his next acquisition. Hopefully, an orderly sell-off of the giant cache of RE will comfortably fuel whatever move comes next. Many old Sears/K-Mart spaces are being quietly offered for sale now, via personal letter from Lampert.
Yann: If you got the $2M minimum AUM, I’m game.
K-Fed, I thought the minimum for DFA access was $100K.
RE: 223
I don’t know anything about the site other than it was the first one that came up when I went goggling for Buffet’s shareholder newsletter quotes. I have spent all of 60 seconds on the site.
I automatically cost average in (on price and NAV) directly with Vanguard on a monthly basis. It’s a mix of US Stock Market, Intl Developed Markets, Emerging Markets, REIT, and Bond Market indices.
I visit the portfolio twice a year:
January first 1st
1) Do I need to reallocation between asset classes to become more conservative? If no, do I need to rebalance?
July 1st.
1) Do I need to rebalance?
I spend maybe 4 hours a year on the portfolio. Over the last ten years I’ve been very happy with my returns. It’s zero stress and let’s not forget time is money.
If you and Clotpoll want to continue flame me for “placing show bets on a wheelchair race”… flame away!
reallocate… to flame… it’s late
Just a test here as well
James,the new site works fine for me.
It’s really the URL that I’m worried about. It’s been incredibly difficult to get Yahoo to release my URL. At this point, they want me to cancel my account and shut down the old site before they transfer it to me. That means the old site/URL will be down for at least a day during the transition.
I’m just going to take things slow so that all the regulars can make a note of the new (temporary) address.
Really just trying to mimimize any blog withdrawl that we might have during the transition.
jb
I just wanted to show in my support to Jim’s new blog address!
Shame on yahoo!
Google= don’t be evil
Yahoo= evil
This address (njrealestatereport) is only temporary until Yahoo releases the address (njrereport) back to me.
Both will bring you to the same site in the future.
jb
Quiv (245)-
Who flamed who? I think you’ve got a great game on…a really decent return for 4 hours of work a year. I don’t doubt you for a second.
My only bone to pick is with those who state that a stock-picking approach that offers 20 years of documented results cannot possibly exist…or even work.
“Cry not for mortgage lenders
They gambled with others’ money”
http://www.denverpost.com/ci_5404197
SAS
Yahoo can’t hold your domain name hostage; if you have control of your DNS (host settings) just update the addresses.
Actually, I’ve got to cancel the transfer, repoint the name servers, reinitiate the transfer and then finally cancel my Yahoo account to get them to release.
I could just cancel my account and move it to the new registrar, but during that time the old site would be down, and nobody would know about the new URL.
I’ll just go ahead with the cancel/transfer midweek, maybe on Monday night. Hopefully the nameserver updates will have all taken place by Tuesday morning.
enough with the geek-speak :(
Wherefore art BC? Looks like the only people doing the Bayonne Bleeder imitation yesterday were the Iggles. Youch.
Perchance are you in a bar, drowning your sorrows in Goldschlager?
Despair not; there’s still the de facto currency.
I also think your team will get a favorable bracket & win some games. That offense is hard to defend if you haven’t seen it.
I just got this in my email. It’s hilarious!! Apparently, you don’t have neighbors if you buy, real estate never depreciates and your property taxes never go up.
Renting or Buying?
Owning a home of your own offers many advantages, including the opportunity to create an environment that is a reflection of your taste and personality, not someone else’s. You can also move when you choose to move, not just when you’re forced to escape rising rents or noisy neighbors.
On the downside for some people are the expense and trouble of maintenance and upkeep. But high-quality remodeling and home improvements are a good investment in the long-term value of your home if you decide to sell it.
One of the most important benefits of home ownership is appreciation, the overall increase in the value of your home as the years go by. Owning a home not only provides you with an appreciable asset, but it also locks in the cost of shelter.
Here’s how this works: According to the Bureau of Labor Statistics, renters have experienced a 3% annual increase in rents. That means that a $750 per month rental in 2003 will cost $978 in 2013. In the meantime, annual appreciation for housing has been approximately 4% per year, making a home worth $110,000 in 2003 possibly worth $163,470 or more in 2013. These figures differ region to region, but they give you an idea of the benefit of long-term appreciation.
Please don’t hesitate to email or call if you, your family, or friends would like assistance with buying instead of renting–or any other real estate needs.
A record $400 billion of these loans [Alt-A] were originated in 2006. They accounted for 13.4% of all mortgages offered last year, up from 2.1% in 2003.
More than 80% of Alt-A mortgages that were securitized in 2006 were low-documentation, stated-income loans.
58% of all mortgages originated in the fourth quarter of 2006 were low-documentation loans.
2.38% of Alt-A loans were at least 60-day delinquent in December
http://www.marketwatch.com/news/story/subprime-mortgage-problems-may-spread/story.aspx?guid=%7B664D15E5%2D33EA%2D41AB%2DBAF7%2D116BBF929245%7D&siteid=yhoo&dist=yhoo
Yup, I drove past this one today by accident. Pulled over and the wife gave it a call not realizing it was listed. Yup, that’s the correct price in the link.
As she was dialing the realtor on the cell, I said, “Watch, I bet they’re asking over 700K for this thing.” It needs paint and the garage doors are peeling and who knows whatever else needs renovation.
And yup, I was wrong about the price.
http://www.realtor.com/Prop/1076665506
Clot,
Congrats!! Bad news, the Iggles played like the Knicks. Good News, woke up this morning to the salt air of LBI. Gorgeous. Went to the beach, then Buckalew’s. Invited the bar to you a party on your deck, they thank you for the hospitality.
Now, off the Bracketology.
[260],
Forgot to add, missed the market talk. Thank the Lord.
GSMLS # 2377477 … can anyone tell me what the status is? It is a very recent listing on GSMLS and is now gone. Did it sell, already? For how much?
Thanks
sync,
Under contract, no further details until it closes.
jb
I saw one SFH today in a supposedly ‘desirable’ neighborhood. The yard (if you can call it that) had a funny triangular shape with 3 neighbors decks right onto the property. Absolutely no privacy. When I commented about that, the listing agent said –
“That’s good security”
Now, when did lack of privacy become “security”. I just laughed at him… It was even more funny, cuz he didn’t laugh back!
BC & Clot
Just left a comment re: Bracketology on other topic. The dynamics in this household is why working sundays is a perfect choice for me.
Happy Selection Sunday.
KL
BC (260)-
Yeah, thanks. I get sucked into a stock conversation & it’s me and ChiFi against the free world. A little of the ultra-violence from you would’ve helped, but you’ve gone soft, enjoying “nature walks” at LBI. Pop a Goldschlager for me, ok?
So much for BC’s easy bracket…Bobby Knight, then Georgetown? Adios.
Terry really saved our bacon today (like he’s done about 10 times this season).
did some post this already of did we whiff?
http://www.nytimes.com/2007/03/11/business/11mortgage.html?_r=1&hp&oref=slogin
Only fitting this bastard works for BS [Bear]…..he gets the Henry Blodgett award.
On March 1, a Wall Street analyst at Bear Stearns wrote an upbeat report on a company that specializes in making mortgages to cash-poor homebuyers. The company, New Century Financial, had already disclosed that a growing number of borrowers were defaulting, and its stock, at around $15, had lost half its value in three weeks.
Traders and investors who watch this world say the major participants — Wall Street firms, credit rating agencies, lenders and investors — are holding their collective breath and hoping that the spring season for home sales will reinstate what had been a go-go market for mortgage securities. Many Wall Street firms saw their own stock prices decline over their exposure to the turmoil.
“I guess we are a bit surprised at how fast this has unraveled,” said Tom Zimmerman, head of asset-backed securities research at UBS, in a recent conference call with investors.
Even now the tone accentuates the positive. In a recent presentation to investors, UBS Securities discussed the potential for losses among some mortgage securities in a variety of housing markets. None of the models showed flat or falling home prices, however.
Terry McGraw is a gutless piece of trash…
========
Meeting with Wall Street analysts last week, Terry McGraw, chief executive of McGraw-Hill, the parent of S.& P., said the firm does not believe that loans made in 2006 will perform “as badly as some have suggested.”
Nevertheless, some investors wonder whether the rating agencies have the stomach to downgrade these securities because of the selling stampede that would follow. Many mortgage buyers cannot hold securities that are rated below investment grade — insurance companies are an example. So if the securities were downgraded, forced selling would ensue, further pressuring an already beleaguered market.
Corzine’s office has already been subpoenaed.
Any bets, which one is indicted first, Corzine or Menendez?
“State union leader Carla Katz’s scholarship from Seton Hall Law School is now part of an inquiry ordered by North Jersey’s Roman Catholic leader, who raised questions about donations made by her former boyfriend — Governor Corzine.”
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjcxN2Y3dnFlZUVFeXkyJmZnYmVsN2Y3dnFlZUVFeXk3MDkwNjE2
“Terry McGraw”
That guy is still alive. I heard through others that he passed away.
Good, I am glad to hear he is alive. That son of a bitch owes me money.
SAS
Jamil [269],
# 1, Wayne Bryant.
http://www.njleg.state.nj.us/members/bryant.asp
Clot,
We’re one and gone.
KL,
Selection Sunday, Priceless.
SAS: I got a McGraw story…..I used to run their retirement benefit plan, and we were running statements, and supposedly one of the McGraws was in the middle of a pretty nasty divorce. So the lawyer calls HQ to stay that his statement shouldn’t be delivered to his home, because his wife would get it, and this thing is going downhill fast. Anyway, the HR guy doesn’t rely the message to me, and the statements go out. The next week, I call HR for one reason or another….and they canned his a55. I thought what a freaking bush-league corporation. It shows how bad things can get when the founding family is still exerting significant influence on a major corporation…..Ford Motor, Cablevision come to mind….
link to follow subprime lenders.
http://www.lenderimplode.com/
CF
You could’ve “innocently” included a QDRO model…just to be helpful.
Best sporting events in the world:
1. World Cup (sorry; a billion people aren’t watching March Madness, and they’re not gonna stop blowing up each other in Iraq to watch a game).
2. March Madness. Real-life “Hoosiers”. Enough tear-jerking, overplayed human interest stuff to get women into it…thereby juicing the ratings and continuing the upward spiral for CBS and the new, real winner…Akamai. Their webcasts, complete with “Boss Bar” (to kill the screen when your boss walks in), are the greatest American invention since the Model T.
3. Kentucky Derby. The greatest two minutes in sport. Nothing else comes close. Great to be in a crowd where you don’t have to apologize for guzzling Knob Creek out of a paper cup at 11 AM while trying to get a Daily Double pick together.
4. Indy 500. After “gentlemen, start your engines”, it degenerates into a continuous left-hand turn. However, the infield always features about 10,000 drop-dead gorgeous, dead-drunk women who seem to always have something they need to get off their chests (sorry for this, my personal “one shining moment”, KL).
5. The Masters. This one’s all in my mind, as I’m too much of a degenerate to rate a member invitation. And, I don’t know any members. However, I hear StubHub may have loose tix available in the future, so there’s still hope. The TV broadcast- complete with canned bird songs- is also conducive to a lazy Sunday afternoon of imbibing Knob Creek.
BC & Clot,
As much as I hate the ACC, good luck in the tourney. The RE bubble isn’t the only one bursting today.
Quiv (278)-
Your team got screwed.
I can’t stand those Dolans.
Those guys are crooked, along with that SOB AJ Clarke.
SAS
ChiFi (27)-
I keep hearing that Moody’s and McGraw are ready and willing to pull the trigger on MBS downgrades, counterintuitive as that may seem.
What thinks you?
They are not going to move until they have firm evidence. Remember it is the “issuers” that pay for the rating. The issuers stop issuing, go bankrupt, or the market comes unglued, and the agencies take a hit to the top line. In a sense, the rating agencies sow the seeds of their own demise by stabbing one of their big revenue generators in the heart. You hate to have the incentives stacked this way, but thems the facts….
Clot or anyone else: I heard the Breeders’ cup is coming to Monmouth in September. They (whoever they are) are dumping $50M to upgrade the facility. Is this going to make it a great place, or will it continue to live off of its name? Saratoga is still too far for a day trip.
Wicked,
Cuse got robbed. I’m sure that’s no consolation.