From the Washington Post:
Help for Homeowners, Not a Bailout for Mortgage Pushers
By Steven Pearlstein
It was predictable that once the outlines of the coming mortgage crisis came into view, housing activists would propose some sort of federal bailout. In the new Democratic Congress, they’re likely to get a serious hearing.
This is surely the wrong way to go. The message Washington should be sending is that there will be no government bailout of the mortgage bankers, brokers, syndicators and Wall Street investment houses — the folks who got us into this mess in the first place.
For years, they’ve been preaching the glories of market discipline over heavy-handed regulation, and now they’re about to enjoy a full measure of that discipline. Moreover, to the degree that they participated in, or turned a blind eye to, mortgage fraud, the government will be aggressive in seeking civil penalties and, in the most flagrant cases, criminal prosecution.
That said, there are several things Washington can do to minimize the damage to the rest of the housing market and the economy, reduce the chance of another housing credit bubble, and assist the victims of predatory lending.
The most obvious is to acknowledge that mortgage finance is a national business requiring a single federal regulator with broad supervisory and rulemaking powers. One reason regulators were unable to get ahead of the rapid deterioration of credit standards was the difficulty in coordinating policy among four federal agencies, and 50 state banking commissioners, that have jurisdiction over parts of the industry — all of them with slightly different roles, philosophies and constituencies.
…
In the short term, Congress should direct the regulator with the broadest jurisdiction, the Federal Reserve, to draw up rules for all mortgage originators on their responsibility to ensure the suitability of loans they offer to customers with different incomes and financial sophistication. These rules don’t necessarily have to include a right to sue if a borrower is put in an inappropriate product — that’s a big bone of contention. But they should provide a basis for regulatory review and sanctions for flagrant and repeated violations.
…
The Securities and Exchange Commission also needs to look into the performance of the agencies that came up with credit ratings for pools of subprime and exotic loans. I always wondered how Fitch, Moody’s and Standard & Poor’s could calculate, with any precision, the likely default rate of mortgage products that had never really been tested by a serious recession or a downturn in the housing cycle. Now we know: They can’t. Now that the crisis is upon us, it is likely to be of little consolation to investors that ratings downgrades are under consideration.The most difficult issue is what to do about the prospect that lenders could foreclose on a million or more homes over the next two years, many of them in low-income neighborhoods, involving unsophisticated borrowers and inappropriate mortgage products. Getting them cash to pay those loans will only reward the lenders. Rather, what’s needed is some mechanism to encourage the faceless investors who now hold those mortgages to accept less money than they were expecting, while at the same time helping homeowners to refinance their homes with more appropriate mortgages.
This, it seems to me, is a perfect assignment for Fannie Mae and Freddie Mac, which were chartered by the federal government with the express purpose of stepping in when private markets fail. They have the ability to raise and commit billions of dollars to the refinancing effort. They have active networks of lenders with necessary skills in financial counseling and loan workouts. And what better way for them to atone for their recent accounting sins and burnish their affordable-housing bona fides than to provide a market-based solution to this mess?
Even then, it won’t be easy. Getting investors to forgo further interest payments and take 60 or 80 cents on the dollar they are owed may require some financial sweeteners. And to pay for those sweeteners, homeowners — who, by the way, have some responsibility here — would have to agree to share any profits they earn from selling or refinancing their homes in the future. Through the magic of securitization, Fannie and Freddie could turn that future stream of income into needed cash today.
jb, just another thank you for all your hard work on this blog. learning tons.
From Bloomberg:
Accredited Home Lenders to Sell $2.7 Billion of Loans
Accredited Home Lenders Holding Co., a U.S. mortgage lender to people with poor credit, agreed to sell $2.7 billion of loans to pay bankers who demanded cash to cover the risk of defaults.
The loans will be sold at a “substantial discount” to alleviate pressure from margin calls, the San Diego, California- based company said in a statement distributed by Business Wire today. Accredited didn’t identify the buyer.
At least 20 so-called subprime lenders have closed in the U.S. and more are fighting for survival after a surge in defaults by customers. Former Federal Reserve Chairman Alan Greenspan said he expects fallout from the crisis to spread to other parts of the economy, especially if home prices decline.
“With the jitters we’ve seen in the subprime market, the ability to refinance debt has become increasingly difficult to the point where we may be seeing some forced liquidations of underlying assets,” said Brian Johnson, a banking analyst at JPMorgan Chase & Co. in Sydney.
…
Accredited, the 15th-biggest U.S. subprime lender, will take a pretax charge of $150 million on the sale of the loans. It is also exploring strategic options, including raising additional capital. The company won’t file its annual report by today, and the loans will be sold “over the next couple of days,” it said.
curiousd,
Appreciate the support, but I’ve got to extend those thanks to everyone that participates. This blog wouldn’t be anywhere near as useful of a tool without the comments and contributors.
jb
If a Bailout is coming soon
Free conversion to 4% fixed for any option arm owner :)
Reward the flippers so they can do it again!
Should change my name to RRRRRRRRR Patrick
From Reuters:
Mortgage Meltdown Pulls in More Than Those on Edge
Unlike many borrowers who took out subprime loans, Andy Sobel had good credit, a decent job and modest savings, but he needed to stretch to buy a home in the white-hot San Diego housing market in 2004.
Three years later, Sobel has lost his home and his savings, and he faces a big tax bill as a consequence of a failed subprime mortgage held by Countrywide Financial Corp. he says he should never have been written.
“You never think that this could happen to you. You feel like an idiot,” said Sobel, 48, who has a doctorate in education. “You fall down and they stab you.”
The subprime mortgage meltdown is hitting more than people living on the financial edge.
Thanks to the frenzy of a market seeking to invest in the high-interest loans, incentives for brokers to encourage the sale of those loans and a housing market booming beyond the reach of many, many people with good credit were sucked in, consumer advocates say.
“Once Wall Street entered the marketplace of housing … the typical mainstream lending community was not prepared for those types of loans, the volume and the greed it would create,” said Lori Gay, president and chief executive of Los Angeles Neighborhood Housing Services.
Gay said she has begun meeting with lenders, at their request, to try to stave off what could be “the biggest foreclosure bloodbath that we’ve ever had.”
“We are seeing every age group, every single income level now, people with similar problems, and I haven’t seen that in my career,” she added.
Go buy yourself a macmansion using stated income before any bailout cut off date expires!!!!
NO INTEREST PAYMENTS!!! (more free money)
+
20-40% discount on the house!!! (even more free money)
Is this the new affordability housing eveyone has been talking about? But this is only for
1] borrowers who committed fraud by stating. [stated income + assets]
2] lenders who screwed bag holders.
A request to lenders, please commit fraud on me!!! pleassse……
From MarketWatch:
CPI rises 0.4% as food, energy prices climb
U.S. consumer prices increased 0.4% in February, led by higher prices for food, energy, shelter and tobacco, the Labor Department reported Friday. Core prices, excluding food and energy, increased 0.2% in February. The 0.4% gain in the consumer price index was a tenth higher than the 0.3% gain that was expected. The core CPI came in as expected. Food prices jumped for the second straight month, rising 0.8%, the largest gain in nearly two years. Energy prices rose 0.9% in the month. Natural gas prices advanced 5%, the biggest increase since October 2005. In the past year, consumer prices are up 2.4%, while core prices are up 2.7%, unchanged from last month’s 12-month increase.
Huge misconception if they think this is a low-income, unsophisticated borrower issue. This lunacy has spread throughout the income,sophistication curve. I feel the problems are just as big in the Alt A and prime market. How many so called “sophisticated” individuals that could reasonably afford a 600k house with a fixed rate decided to play the game and stretched it into a $1 million house, with a teaser rate. Just a guess, it’s mammoth.
So we are at a point where the market decides that’s enough and begins to implode on its own weak foundation of cards, built with debt,debt and more debt. Now all the greedy b*stards have been wronged?? What a crock of s*it. It all comes back to greed/fear. Greed was rampant during the boom cycle. I guees it is safe to say that we have swung into the fear cycle. Now the public is trapped and it becomes a federal issue. Guess what, you rolled the dice now it’s time to pay up. Heads will roll, bodies will be twisted, dreams will be shattered……and at 12:30 today, its tip off time.
The federal govt can save themselves time and taxpayers $. Stop the hearings, stop the madness. It’s time to s*ck it up and work off the hangover. It’s really very simple. They can subpoena every bagholder, every bucket shop lending criminal, every flipper, and every US consumer who has tapped the keg. Hell, even bring in China, why not we built the country. Washington will lambast, hammer and stroke until the dead cat falls again. How can Washington come up with the answer, they don’t even know the question. It’s really simple; too much liquidity chasing too few opportunities.
InvestorDavid,
There is an old house on Knickerbocker and Durie. It was on sale on and off for a while. I think it’s a landmark — around 200 years old? Do you know whether this house was ever sold?
06/18/04 $824,900 ACT (Foxtons)
10/20/04 EXP
03/31/05 $824,500 ACT w/new broker
09/30/05 EXP
02/02/06 $759,900 ACT w/new broker
03/22/06 $749,000 PCH
04/19/06 $719,000 PCH
05/17/06 Withdrawn
05/17/06 $699,000 ACT w/same broker
10/12/06 UnderContract
10/30/06 $655,000 Sold
So the house probably cost the builder about $2.4M-$2.5M?
I couldn’t make a guess but I wouldn’t think it cost that much to build. But than again, I’m not up on construction costs.
The number of listings on NJMLS has not incrased for the past few months. Care to guess why?
Why? No guesses from me.
NJMLS inventory stats only go back to 2004.
SFH right now are at the same level they were on March 1, 2006, about 3,500. If they were to keep pace with last year it would need to be about 3,650 right now. It’s still the third highest out of the 4 years. (3/1: ’04 2,296; ’05 2,331; ’06 3,498; ’07 3,398)
Condo, Co-op & Twnhs inventory is around 1,609. This is the highest out of the 4 years. (3/1: ’04 910; ’05 903; ’06 1,447; ’07 1,582)
So total SFH, Condo, Co-op & Twnhs inventory at the beginning of the month was the highest due to Condo, etc.
The biggest jumps seem to come in April, May & June.
Rich
“his lunacy has spread throughout the income,sophistication curve. I feel the problems are just as big in the Alt A and prime market. How many so called “sophisticated” individuals that could reasonably afford a 600k house with a fixed rate decided to play the game and stretched it into a $1 million house, with a teaser rate. Just a guess, it’s mammoth.”
Bob, do you think that’s the big issue in this area, or are the housing ATM people the bigger issue? I’m sure there are a lot of people who did what you thought, but I have always thought the second was more our problem – all the people who said, “Gee I bought my house for 300K and now it’s worth $1 million! Maybe I’ll take some of that equity out – after all, these prices keep rising!” Those are the people who concern me, because I suspect they are in their 40s and 40s – and should have been starting to save for retirement, not removing equity to buy Hummers. But I guess we’ll see, as I am sure there are a bunch of people who bought that million dollar house as well!
For what it is worth, probably not much;
Based on technicals, the dollar has clearly come unglued this morning.
NJGal [10],
I agree. You may be right. It is possibly more worrisome.
>>So the house probably cost the builder about $2.4M-$2.5M?
I couldn’t make a guess but I wouldn’t think it cost that much to build. But than again, I’m not up on construction costs.
>>
typical profit for a small time builder starts at 20%+. this is what i’ve heard from a couple of them i’ve talked to in my area.
what’s needed is some mechanism to encourage the faceless investors who now hold those mortgages to accept less money than they were expecting, while at the same time helping homeowners to refinance their homes with more appropriate mortgages.
Oh no, I hear the violins and Barbara Walter’s specials already.
Look, sorry if I am callous about this, but my family has been priced out of the market because we refuse to take out a suicide loan or exceed a reasonable monthly payment. This means we can’t compete against people who are willing to roll the dice; paying 50% of their income toward some teaser rate, praying that appreciation will let them refinance.
Now my tax dollars are going to support the very people who have made housing unaffordable for my family?
Sure there were some victims who got duped, but there are also a lot of borrows who lied on their applications because they saw $ signs.
It may be painful, but the market needs to correct itself. That will mean some people will lose their homes, which they couldn’t afford anyway. Bailouts only encourage risky behavior.
Let lenders and borrowers work this out among themselves with minimal government intervention. No free put options!
I’ve been at a 6%, 30 yr. fixed rate for almost 7 years in my current home. We wouldn’t even think about an alternative type of financing. If the Fed lifts one finger to help one f***ing idiotic bagholder with an option to get into a cheap fixed rate, I’m going to flip. If that’s the case, we all better get the option to refinance, for nothing, into a lesser rate. I’ll sue for discrimination if I don’t have this option. Geez, this makes me steamed even thinking about it.
So, does this mean that the people who contributed to this horrible bubble by taking out exotic mortgages to buy over priced, poorly constructed McMansions and $600,000 cape cods will be bailed out by the gov’t? Sweet! I think I should just run up my credit cards and lease that IS250…
thatbigwindow,
Yup, I have the same feeling. Big Poppa will bail us out.
R Patrick Says:
March 16th, 2007 at 7:12 am
If a Bailout is coming soon
Free conversion to 4% fixed for any option arm owner :)
Reward the flippers so they can do it again!
Should change my name to RRRRRRRRR Patrick
RRRRRRRRR: be careful….you are being converted……heaven forbid you become one of those ribald “fiscal conservatives and libertarians”!
You get to see a prime example of “feel good” legislation that either:
#1 is logistically impossible to implement in an ethical and equitable way
#2 destroys market discipline and rewards irresponsible behavior
Pathetic; the govt is hoping to save the stupid morons who have no financial responsibilty?
The govt did a HORRIBLE job saving people after Katrina. It led to BILLIONS of dollars wasted by everyone.
I can only imagine what this leads to. People will leave their homes, still collect the checks from the govt, and spend it on escorts and booze.
Morons.
-R
Take the time to email Senator Dodd..
http://dodd.senate.gov/index.php?q=node/3128&cat=Opinion
jb
#19 Richie says: The govt did a HORRIBLE job saving people after Katrina. It led to BILLIONS of dollars wasted by everyone.
The government tried to save people after Katrina? I must have missed that….
-PB
JB,
Does he (Dodd) even read these emails? And does he care?
I’m guessing we’ll see a lot of noise and posturing to appease the masses on their clamor for a bail-out.
How much of the money promised to victims of Katrina, a legitimate use of gov’t assistance, has reached its intended victims? A fairly small percentage, if news reports are credible.
I’m also of the opinion that the subprime trouble is indicative of a larger problem in mortgage pools, from starter homes to million-dollar McMansions.
These probelms are symptomatic of a burst bubble. I’m not sure how vulnerable higher priced communities are here in NNJ, but we’ll see. So far I don’t think there’s enough exposure up here to cause too big a ripple.
“Does he (Dodd) even read these emails? And does he care?”
Gary,
Gold and the dollar index cares.
NOTE: Just an observation not a recommendation.
NJGAl #10 The housing ATM is definitely a problem, and for people in their 40’s; i know lots of them. And many are not making the big bucks, we are talking about school teachers, back office people, and mid level white collar professionals. They have been out of control, I just wonder how they service the debt.
100k kitchen remodels, BMW’s 325I, ML 350’s, Lexus Hummers Jaguars, 3 vacations a year, and one has to be to the DR, and it is just on and on.
Yet these very same people always say, I am so glad I bought when I did, becasue if I had to buy it today I could not afford it, when I then point out well if you cannot afford it then how can you possibly expect that the younger home buyers coming up will be able to afford it.
Then of course the blank looks.
That being said, all the rah rah cheerleading for real estate from family, friends, and acquatenainces has stopped. Gee, nobody wnats to talk about it any more. I wonder why?
BC Bob,
Your post #8 got me all fired up.
JB,
I think we should contact senators on the Housing, banking and Urban affairs who will be sympathetic to our concerns.
http://banking.senate.gov/index.cfm?FuseAction=Information.Membership
I don’t know much about Senator Dodd but i see his proximity to Wall Street as a conflict of interest.
Gary,
I’m livid also.
JB,
Just a thought. You may want to keep this thread up, replacing the weekend discussion, or merge it with that. It seems like this topic has really hit a nerve.
#23 twiceshy: There is lots of exposure up here. A friend of mine does real estae closings, and covers all the towns in prestigious Bergen County, from lowly Garfield, tot lofty Sadlle River, and the storeis he has told me are amazing.
Also they are getting calls now from people who bought 2 or 3 years ago, no money down, toxic financing, payments have skyrocketed, can’t sell the house because prices are declining, and they have no equity.
He tells them there is nothing he can do, they call him in depseration. Many of these people will be forclosed on. I would say it is probably worse here than in many other areas.
Quote of the Day- “From the House’s Mouth”
“When will the market rebound? Who knows? The Shadow knows. I have no idea. I would’ve thought that it would’ve rebounded by now and I would’ve been dead wrong, and I was”- Homebuilder Toll Brothers CEO Robert Toll.
Trouble in paradise!!!
BC (8)-
Too much VCU chasing Dook all over the court.
the government is the court of last resort for bailouts be it corporate, personal, foreign nations, you name it. we the taxpayers end up footing the bill. politicians don’t know how to ‘conduct’ proper business. if you want to get really fired up, take a look at how much money owed us by foreign nations we’ve dismissed.
bergenbubbleburst,
Smells like blood in the water for 2008.
When was the last time the gov’t did anything for average citizens?
No bailout…but lots of pandering and hot air.
Maybe they’ll hand out $2,000 prepaid debit cards to all the subprime mortgage holders that are past due on their payments.
Unfortunately, I’m sure there will be a number of speculators would just use the bailout money to buy another property…
jb
“Does he (Dodd) even read these emails? And does he care?”
Definitely he does not, but his Staff does. I have done lot of Grass Root Lobbying, and I will tell you, this is very effective tool. Of course you need large participation and very compelling story.
BTW: In my earlier efforts, we had sent almost 30K emails, which I think made big difference.
I’m surprised no one commented on this portion of the article:
And to pay for those sweeteners, homeowners — who, by the way, have some responsibility here — would have to agree to share any profits they earn from selling or refinancing their homes in the future.
This is an interesting idea. In exchange for assistance, a homeowner would need to give up claims to some portion of the future appreciation of the property.
jb
#35 As I have said before, if this bali out happens, then we who would like to buy are going to be hurt. Dirty renter losers take to the streets!!!
Of course, there are some shrewd owners out there who understand these lenders want no part of taking back homes.
They are- very quietly- convincing these lenders to tack unpaid balances onto the principal amount and “recasting” these loans into something more reasonable.
The lender also wins, as the loan is not recorded on the books as non-performing.
BBB #29:
Thanks. good info from the trenches, as usual.
Keep it coming.
Richard: Shout out to a fellow hoodie.
From another thread:
“Richard Says:
March 16th, 2007 at 12:16 am
i was just perusing the burgdorff website looking up properties in my hood (westfield). all i can say is the local builders are going to get slaughtered. there are seriously way too many newly constructed homes in the $1 million+ range. i just don’t see where the buyers are going to materialize. if you are looking to buy you have so many choices it’s ridiculous. peruse the site you’ll see for yourself.”
I sincerely hope this is the end of the tear-down/McMansion game and the builders, town zoning officers, and realtors that have enabled it. Sorry if that offends anyone, I know they’re just trying to make a living, but enough is enough already.
There is one monster going up on lower Hyslip by M Mahoney that has bucked the trend. Sold late last winter to MM for around $775k. It’s framed and already UC. Imagine that barn was loaded with incentives and concessions. And it’s only 50 minutes from NY Penn.
I would say it is probably worse here than in many other areas.
The commonly accepted standard for budgeting housing costs suggest that a family should spend no more than 30% of their income on housing.
In New Jersey, 40.7% of homeowners exceed the 30% target, the 3rd highest rate in the nation.
This suggests that many NJ homeowners are already living at the edge. How many of these people have ARMS, I/O’s, Option-ARMs or any other loans subject to reset? Add this to skyrocketing property tax bills that annually exceed income growth & Houston; we have a problem.
Clot {31},
No ACC allegiance?
#37 JB: And who will keep track of all of that, sounds liek we will need to create another new government agency
BC (42)-
Not when it comes to Dook.
BTW, they didn’t look like an ACC team last night, anyway.
Appraisal Fraud? Noooooo.. It can’t happen here.
From the Star Ledger:
NJ Affordable appraiser pleads guilty
A property appraisal Michael Meehan conducted on 107 Oakdale Road in Chester Township more than two years ago noted improvements such as a new kitchen, two new bathrooms, new plumbing and 17 new exterior windows.
NJ Affordable Homes then used that appraisal to help one of its investors obtain a $375,000 mortgage. But there were at least two problems with Meehan’s work, federal prosecutors said: He never went to Chester to visit the property, and the land was vacant.
Meehan, a Belmar resident, pleaded guilty to conspiracy to commit wire fraud yesterday dur ing a hearing before U.S. District Judge Jose Linares in federal court in Newark. The 47-year-old appraiser became the fourth person to admit his role in what authorities describe as a massive real es tate investment fraud that cost victims tens of millions of dollars.
http://www.reuters.com/article/newsOne/idUSN1516483920070316?src=031607_0919_TOPSTORY_fighting_back
“There are lots of people who may be trying to fight back in terms of yelling at the company over the phone or writing letters, but people don’t necessarily know what to do legally when they are being foreclosed,” said Ash.”
It is a short hop from bailing out no/low credit homeowners who made false claims about stated income to allowing a class-action lawsuit against McDonalds because eating there makes you fat.
A federal judge threw out the McDonalds lawsuit because he felt any reasonable consumer would know they couldn’t eat there every day and not expect to get fat.
Key quote:
“it is not the place of the law to protect them from their own excesses”
but people don’t necessarily know what to do legally when they are being foreclosed
Fulfilling their obligations is probably a good place to start.
jb
Maybe another good place to start is NOT GETTING THE INITIAL PAST DUE LETTER! Sell that puppy!
http://www.youtube.com/watch?v=I97pdC73A_M
I was wrong about my 30,000 prediction for GSMLS today I am 28 short. I hope my kids do better with their grids. I told them on sunday they could take off 1 day for the games,they picked today,the fact that it is crappy out makes the day off even better.
KL
JB [45],
I’m pretty sure that I met this character/fraud, in Belmar. He told me I was absolutely nuts for selling in 2005.
I don’t understand how bailing out screwed debtors does’nt screw non-debtors? Or will everyone get free money? Maybe all the vacant homes can be given away at the same rate that there giving away money.. too confusing to me. Maybe goverment can own all homes and we can all rent them from them? Now there’s and idear!
KL
#50 28 short is nothing, and hey the day is not over.
KL [52],
Let the govt buy all the vacant homes and give them to the Japanese and Chinese. Hell, we should offer them something more than a 4.5% good faith and promise.
28 short is nothing, and hey the day is not over.
I agree, typically morning readings of inventory are low. Automatic expirations take place when the clock strikes midnight. New additions trickle in throughout the day.
jb
Let the govt buy all the vacant homes and give them to the Japanese and Chinese.
Don’t they already own them? They are holding a considerable amount of RMBS after all.
jb
I submitted a note to Senator Dodd…
“Don’t they already own them? They are holding a considerable amount of RMBS after all.”
That is actually very true.
One thing that I have not heard commented upon — here or anywhere else — is the fact that Senator Dodd is running for President. I have a very strong hunch that this proposed “bail-out” has as much (perhaps everything) to do with Dodd’s Presidential ambitions as it does with giving “relief” to anything. I am sure that the thought has crossed his mind that as the housing market melts down and homeowners are getting royally reamed, Mr. Dodd can trot this little issue out and get some traction against Hillary and Obama.
JB(37)
I’m ready to to do away with part of my profits if according to the plan i get a no interest loan plus 20-40% discount on mortgage.
Senator Dodd is running for the president for 08. It might be a political move for presidency. I don’t think he really means it.
CC
We chatted about this when he had a beef-N-bluster session there a few weeks (months) ago. Think he had BB in there for some grilling.
RE #45 JB – fraud appraiser
Off topic, didn’t the Sopranos had something with this couple season ago. Ralph and Tony went on to get bogus loans with help from some local councilmen. And fat Vito had to beat up some skinny old appraiser.
Anyway, I can’t wait for the final season.
CC
“The commonly accepted standard for budgeting housing costs suggest that a family should spend no more than 30% of their income on housing.”
For my own knowledge – is that 30% of gross or take home? Or does it pretty much mean either?
more on (60)
It’s like taking on a risk free investment with only 10% of capital needed. Positive cash flow is almost guranteed.
http://investing.reuters.co.uk/news/articleinvesting.aspx?type=managerMoves&storyID=2007-03-15T074443Z_01_ZWE468140_RTRUKOC_0_MARKETS-ROGERS.xml
Any reason why the subprime stocks have rebounded so strongly over the past few days?
NEWC.PK & LEND both up over 30% today.
Were they just oversold? Are speculators betting on a bailout?
Gotta Love snowy day’s in NJ – it seems like the whole state shuts down – at least the airport did. My wife’s flight to DC was canceled, she took the train.
Also really slow at work
JB [56],
Very true. However, we are very accommodating. Throw in the physical also, a total pure play.
“Any reason why the subprime stocks have rebounded so strongly over the past few days?
NEWC.PK & LEND both up over 30% today.”
This may be the case. A friend in-the-know tells me the detioration is likely being overplayed pulling down stocks past their ‘correct’ valuations due to ‘hype’.
who knows…
http://www.marketwatch.com/news/story/story.aspx?guid=%7BA9FE7B2C%2DCE54%2D4B6D%2DBFBB%2D1EA2DAC7C1D7%7D&dist=rss
JB
GSMLS total on sign – in- page does not change thru-out the day even though listings are being added all day. It changes in the we hrs of the am. New total will definitly be over the 30,000 mark tommorow. Our high came last year at the end of oct with high 32’s I did’nt start tracking in march of last year I started when Booya started putiing the total in on a daily basis which was around may. My May06 start was high 27’s. This May07 should be interesting.
KL
Ah, I see. I don’t really follow that front-page number anymore. I did for a while early on, but it ended up staying the same for a few days, so I gave up on it.
jb
rhymingrealtor,
Care to give an estimate on the May ’07 figure?
With some of these stories on screwed borrowers, I’ve noticed that obvious questions aren’t being asked.
This is an excerpt from that WSJ article of 3/12, and I think this is the 89-year-old woman who was also on Nightline a couple of nights ago:
In 2004, a mortgage broker at the Seattle firm Washington Loan Network Inc. offered to refinance Gertrude Robertson’s mortgage into a New Century loan with lower monthly payments. The 89-year-old health aide agreed to take out a new $414,000 loan that carried a fixed rate for two years and then was set to adjust every six months.
Last year, Ms. Robertson found she couldn’t meet the payments, which had climbed to about $3,300 a month, leaving her without enough money to pay her other expenses. In October, she filed a lawsuit in King County Superior Court against New Century and the mortgage broker. The complaint alleges that Ms. Robertson’s income was never sufficient to meet the expected payments and that information in her application was falsified.
Early this year, another mortgage broker, California Loan Co., arranged for Ms. Robertson to refinance into a new mortgage with New Century that boosted her loan balance to $450,000 and cut her monthly payments slightly, to $3,129.
The obvious question: What is an 89-year-old woman doing with a mortgage, period?
How long has she been in this house? What was going on before 2004?
Is this a long-term homeowner, or someone who bought more recently during the boom?
“Last year,” she refinanced – from $414,000 to $450,000. Without expenses – which are unknown – that’s a $36,000 differential. Suppose her net was $30,000 – what happened to that extra money?
Is this someone who was using her house to leverage up, and each time she got a new mortgage, she got more money – and used it – for what?
Where’s that extra money from the 2006 mortgage? Home health care aides don’t make much – an extra $30,000 is a lot.
“The information in her application was falsified” – by who?
JB
It’s not the best indicator as it includes everything,including rentals, but as you know I am trying to learn the ropes of spreadsheets, so, I chart that, wildwood sales, the scholarship fund I am in charge of and my weight all of which fluctuate wildly!
KL
NJGal/NYMom Says:
March 16th, 2007 at 10:47 am
30% of gross or take home????
Gross. 30% of gross seems a lot of your take home (probably around 40-45%)
But most of the mortgage in the first 10 yr of 30yr fixed is tax deducible. You will get some of it back. But with alt-min tax, it might not be much after all.
CC
The obvious question: What is an 89-year-old woman doing with a mortgage, period?
I believe that denying an 89 year old a mortgage, based solely on age, would be considered discriminatory.
jb
I refied into a an ARM in ’04. 4.625% 7yr. So first possible reset is 2011. Max it can go to is 9.5, but it would take until 2014 to get there. Not bad deal.
Problem? CC debt, Heloc!, student loans, marriage, unexpected medical issues, job insecurity, inflation of all items especially entertainment.
The library and public museums are looking like a great time these days.
#64 NJ/NY Gal Thats 30% gross.
Today’s rates are still at historical lows.
I seriously doubt there will be any type of bailout because there are too many hands in the pot….like my hand is there right now. There are so many people who would have to agree with rate changes. Take the investor (probably many of you) who has any type of fixed income mutual fund that has purchased MBS bonds. My assumption is that you would have to agree with any change because you purchased the fund with an expectation of getting a decent return. The fund manger purchased the bonds in the first place with the expectation of getting a decent return.
Mortgage companies are up a little because Freemont was extended a $1 billion warehouse facility from CSFB.
NEW YORK, March 16 (Reuters) – Fremont General Corp. , which made mortgages to people with bad credit, said on Friday Credit Suisse increased its credit line to $1 billion, lifting its shares 19 percent before regular trading began.
Fremont also said it has received various proposals for additional credit if needed to supplement the company’s current liquidity position of $1.3 billion in cash and short-term investments.
Fremont said it believes this balance sheet strength and funding capacity will enable it to execute its previously announced plan to exit the subprime residential loan origination business in an orderly and disciplined way.
Fremont shares were at $8.79 in premarket dealings, up from Thursday’s close of $7.40 on the New York Stock Exchange
Can you imagine being the person who hired an 89-year old home health aide?
How bad is that?
“Run downstairs and make me some tea, will you, Gertie.. I’m really exhausted today. While your down there, will you bring up those three loads of laundry from the basement and change these sheets? Thanks, honey.”
Making a pretty good run at 100 comments before noon.
jb
NJ Gal[60]
When they refer to 30 percent of income for housing, they mean gross income. (I know, even that is pretty scary, because that is more than 50 percent net). When reports refer to people putting 50 percent to housing, that can be effectively 75 percent of take-home. Nobody really discusses that, but this is really scary. In this boom, the “loan stretchers” were leaving only one-half of one paycheck per month to pay for everything other than mortgage (and maybe property insurance).
Actually in the old guideline for mortgage it was 30% of gross income.
So it is very colse to probably 40-45% of take home.
the idea was that as you go alone you income raises and house payments stay the same…
Regarding JB post# 78:
James Bednar Says:
March 16th, 2007 at 11:12 am
The obvious question: What is an 89-year-old woman doing with a mortgage, period?
I believe that denying an 89 year old a mortgage, based solely on age, would be considered discriminatory.
jb
I Assume, this 89 years old simply run out of retrement savings and needed some spending money. For example to pay taxes on her 400K home, to heat it and fix a leaking roof. In addition, spending money to buy food/clothes are nice.
SO there is nothing wrong with having a mortgage on the first place. What is wrong is to have an ARM. While not illegal it is immoral to push this kind of loans on a elderly person!!!!
Also it might be illegal as well – if he was not in clear mind and could not understand the terms of the loan due to disability – 89 years old!!!
I really hope she wins the lawsuit, sorry but even if she understood all the terms, and agreed to them at the time – it is simply wrong to even offer her this type of loans.
Now as usual, there is probably more to this story – something like young realtive who promised her to take care of her money, invest it and pay her some amount every month for her living expenses. Or something we do not know about.
correction (re 85) – (property insurance and property taxes)
Pat [83],
Hilarious!! The only thing that comes to mind; Baby we were born to run.
KL,
The other day you stated that a client was bidding 347k, I think. I’ll buy the house on Clinton Ave for that price.
Pat [83],
…….then do you mind getting the ladder out of the garage that is falling down, then go clean the leaves in the gutters.
Clot: are you still calling for a large increase in inventory in the next few weeks?
“But most of the mortgage in the first 10 yr of 30yr fixed is tax deducible. You will get some of it back. But with alt-min tax, it might not be much after all.”
Ok, so 30% of groos – I am well within that, and my monthlies will be about a third of my take home. It doesn’t make me happy, and I am still all nervous and not sure I want to sign the contract, but who knows. I suppose no matter WHEN you buy a first time buyer always has jitters.
About the AMT though – what is the effect of that? We get hit with it, and end up paying a boatload come April. My accountant has led me to believe that when I buy a house, taxes, even with AMT, will basically break even – no refund, but I won’t owe either. Actually, my dad said that even with AMT for the first few years I will still get a refund, even if I try not to. Does that sound about right?
Grim,
If you’re 89, you know you’re not going to live long enough to repay a mortgage, and the mortgage company knows it, too.
The underlying assumption – I think – is a never-ending stream of refinancings for larger and larger amounts – and then the music stops, and it’s all the lender’s fault.
My guess is that this person is still working at the age of 89 because her home health care jobs were off-the-books – no Social Security.
But I don’t see how it could be discriminatory to refuse to underwrite a long-term loan to someone who’s 89 – and well past the average life expectancy for a woman. If someone wanted to use common sense in terms of lending $450,000 to someone who’s 89, they could cite the income as being insufficient, including the lack of Social Security.
My sense is that no one in the media wants to ask tough questions of someone who’s 89.
But I would consider the possibility that this is someone who figured out a way to game the system – the house as ATM.
So, basically, f**k me for not buying more house than I could realistically afford. Do I have that right?
How about a bail-out for yours truly, so I can retire my mortgage and go heli-skiing in Alberta? Way I see it, it would be a just inversion; the correction for those knowingly without means who nevertheless bought LBI properties to flip.
BC
Will I see your name on that sign in list?
Offer of 347 won’t be going in till after that agency has their open house on sunday, I ‘ve put in really good offers on homes couple days b4 an open house and learned to regret. Lessons learned in seller’s market will hopefully help me in this one.
KL
How quickly we forget…..
FBR Upgrades Countrywide Stock Rating
Saying that the recent sell-off of Countrywide’s stock is “overdone,” analysts at Friedman, Billings, Ramsey and Co. recently changed their recommendation on the company to “outperform.” The FBR analysts said in a report that they are confident Countrywide “will remain among the premier mortgage originators in the country.” They also noted that subprime loans make up only about 10% of Countrywide’s servicing portfolio. The company recently disclosed a 19% delinquency rate on subprime loans. FBR gives Countrywide’s stock a price target of $45 per share.
NPR piece this morning
Subprime Loans: One Woman’s Story
http://www.npr.org/templates/story/story.php?storyId=8951679
Morning Edition, March 16, 2007 –
Jennie Halliburton, a 77-year-old widow from Philadelphia, answered an ad offering to “consolidate her debt.” She soon found herself with a “subprime loan” that she can’t afford and may cost her the home she refinanced. Her lawyer, Allan White, says Halliburton should never have been granted the loan.
++++++++++++++++++++++++++++++++++++
I heard it this morning as I was getting ready for work. Nothing earth shattering, just run of the mill “deception by confusion.” It sounds like the lender didn’t necessarily do anything flat-out illegal, but I would argue they did NOT have the best interest of this 77 year old in mind when they suckered her into signing on the dotted line.
“James Bednar Says:
March 16th, 2007 at 11:12 am
The obvious question: What is an 89-year-old woman doing with a mortgage, period?
I believe that denying an 89 year old a mortgage, based solely on age, would be considered discriminatory.”
I’d have to agree with #92 scribe, it is perfectly within reason (in a normal market) to refuse a mortgage to someone who won’t be in a position to pay it back, and considering the odds of her living for another 30 years, or even 15 are minimal, she wouldn’t be able to pay it.
The real question is why no-one pointed her in the direction of a reverse mortgage, she would seem to be a perfect candidate.
NJGal (re: 91- AMT)
As someone who has paid AMT for a few years now (being relatively high-income and paying high local income taxes of NYC and NYS), I have still gotten a refund (although I also donate low five-figures each year to charity). At least as of now, home-mortgage interest (the largest portion of your house payment) has no impact on AMT (although if you read the AMT schedule, home-mortgage interest is listed, just not used, and thus it would be pretty easy for them to change this).
Age discrimination is discrimination all the same.
From the Federal Trade Commission:
http://www.ftc.gov/bcp/conline/pubs/homes/mortgdis.htm
Mortgage Discrimination
The Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA) protect you against discrimination when you apply for a mortgage to purchase, refinance, or make home improvements.
Your Rights Under ECOA
The ECOA prohibits discrimination in any aspect of a credit transaction based on:
race or color;
religion;
national origin;
sex;
marital status;
age (provided the applicant has the capacity to contract);
the applicant’s receipt of income derived from any public assistance program; and
the applicant’s exercise, in good faith, of any right under the Consumer Credit Protection Act, the umbrella statute that includes ECOA.
Even the mere thought of a bail-out for the greedy drives me crazy. Every single one of our friends live in huge mega houses which most (not all) can’t really afford. Those who stretched all seem to be step away from financial disaster, juggling house payments / car leases / private school bills etc. We, on the-other-hand, live in a town-house which we have long since outgrown. All our friends think we are crazy nuts to keep living here and actually saving for our new house (gasp) instead of just taking on a huge mortgage since “money is so cheap now”. If there is a bail-out, perhaps we were crazy to stay put for so long.
Appreciate all the responses on questions that i ask. I have another. What is considered a dangerous level of inventory. GSML is now coming close to 30k homes listed, i have noticed in one week it has moved up at least 1,000 homes being listed. Any responses on this…..sorry if i am off the topic.
I’ve skipped down a lot so I apologize if this is redundant, but Clot at post #34 got to the heart of the matter.
Bailouts aren’t for people, they are for business, in this case lenders (and in some ways, builders).
Maybe I’m not cynical enough, but I don’t believe there was massive (more than 3%) fraud and criminality in the mortgage market by borrowers. Lenders and brokers are another story…
The borrowers aren’t blameless, but they aren’t the reason we’re in this mess. Let the people who are screwed lose their house and move on, but don’t, under any circumstances give my money (or even worse, my children’s) to the — at best incompetent and more likely criminal– lending industry participants.
Damn. 102. I lose.
“Will I see your name on that sign in list?”
KL,
Is there an open house?? Will you be there?? Tough competition, with march madness, this weekend.
Michelle [100],
You are not crazy. Patience will be rewarded.
Doing whatever it takes to stay afloat.
SAN DIEGO, Mar 16, 2007 (BUSINESS WIRE) — Accredited Home Lenders Holding Co. (NASDAQ:LEND) (“Accredited” or “Company”) announced today that the Company has reached an agreement to sell substantially all of its loans held for sale that are currently funded out of its warehouse and repurchase credit facilities, asset-backed commercial paper facility, and its equity. The $2.7 billion of loans held for sale will be sold at a substantial discount in order to alleviate recent pressures from margin calls.
Terms of the sale include a holdback reserve of approximately $40 million to satisfy all future claims against the loans, including early payment defaults. Claims in excess of the holdback reserve will have no recourse against the Company. The sale is expected to be completed over the next couple of days.
The sale of its loans held for sale will provide additional liquidity to Accredited, thereby facilitating the Company’s efforts to continue its previously announced intention to explore various strategic options, including potentially raising additional capital. The Company estimates that this discounted loan sale will result in a pre-tax charge of approximately $150 million. Accredited will retain approximately $120 million of loans held for sale in its warehouse facilities, comprised mostly of loans originated since March 7, 2007.
From the Record:
Kodak site could develop into housing, offices
Bye-bye, factories. Hello, tree-lined office space, cafes and town houses.
Behold the future of the Route 208 industrial park, currently home to the Nabisco cookie factory and about 134 other manufacturing companies.
Though still in draft form, a new study by the Fair Lawn Economic Development Corp. outlines a concept plan that would transform the 210-acre park in Fair Lawn and Glen Rock from a strictly industrial site to a mixed-use development, featuring commercial office space, restaurants and residential housing.
The corporation, in conjunction with both boroughs, is moving quickly to create a coherent vision for the park as manufacturing plants continue to reduce their operations or shut down entirely, as the Kodak film-processing plant did in 2005.
The plan is still a work in progress, and the EDC will ask municipal and state officials, as well as residents, for input in coming months, said Don Smartt, EDC administrator.
If adopted, the plan could change the zoning at the park from industrial to areas of commercial, mixed-use and multi-family affordable housing units.
[105],
Knock,Knock, it’s your margin clerk. Please provide a check, bcob. If not, you’re blown out of the water.
When markets are complacent,moving higher, everything is fine. Turn up the volatility a notch and all hell breaks loose. It seems like all forgot that risks are inherent in all markets.
BC
Thought you were already there- not sure yet about this sunday. I was’nt planning on OH this sunday.
KL
market self-repair vs. regulation
Everytime I hear one of these cheerleaders on CNBC espouse market solutions to issues like subprime lending, I’d like to puke my guts out. I’m not in favor a bailout or more regulation, but when the market apparrently rewards the bad actors in the subprime world by extending them more credit, there doesn’t appear to be any discipline. Where does it end?
#106 JB Seems a littl elate for this type of project don’t you think? And Ic annot believe Fairlawn wants this on top of the large multi- family projetcts that were opened on 208 over the last few years.
Also I thibk this would alos negatively impact Glen Rock as far as scgool over crowding, and if they had to build additions to the schools, there taxes will go up even more,and GR is a town that already has ugly,ugly, taxes.
KL,
No. I was at the house soused in oil. Beech??
Not at Clinton. 350k??
>>In this boom, the “loan stretchers” were leaving only one-half of one paycheck per month to pay for everything other than mortgage (and maybe property insurance).
that isn’t all that scary if your paycheck is $15k.
KL,
Now you have me thinking. Is my wife cheating on me, going to open houses??
#112 And fo course most of these buyers had pay checks of 15K, so where is the fire? A
nd we are close to NYC, and lamost all NYC jobs come with 15k a month pay checks, so again where is the fire?
newspapers getting hurt by decline in RE advertising… does a lot to explain the overwhelmingly bullish articles on RE that persisted until very recently
from WSJ
“Underlining the increasingly grim state of the industry, the Newspaper Association of America said yesterday that print advertising revenue fell 3.7% in the fourth quarter, following declines of 2.6% in the third quarter and 0.2% in the second quarter.”
Thanks eagle!
Next worry for stocks: Earnings slowdown
Subprime mortgage woes have stolen the spotlight of late but very soon slow earnings growth will be back in focus.
http://money.cnn.com/2007/03/16/markets/markets_earnings/index.htm?postversion=2007031612
bear,
Earnings have peaked, valuations are high, growth is anemic, China is in the midst of a stock market,[not economy] bubble. I guess your name is appropriate, growl.
Agree with RentinginNJ.
There’s no such thing as a free lunch, or a free house. I oppose any rescue of those who could not understand risk and deal with it. And all of these same people wanting a bailout – I’m sure do not vote and pay no attention to the massive ripoffs that the government already sponsors. And were any of those working to make sure that Katrina victims were not forgotten?
I’m not paying to rescue those who kept me (and others) out of the housing market with their greed and endless materialism.
The McMansion syndrome is symbolic of the slide toward excess acquisition in America. It will all come back to haunt this country.
BC
You had said you would put in 347 on clinton , I didn’t know it was site unseen. They have had 2 open houses there, in the last 2 weeks, I assumed you stopped by. I will probaly be doing it the weekedn of the 25th if that’s the case I will definitly let you know.
KL
Richard [112] and BBB[114]–
Your scenario is generally non-existent (and even more extreme than BBB suggests) – we were discussing net pay, not gross. If one take-home paycheck (assuming two per month) is 15k, that means your TAKE-HOME is 30k per month. A monthly mortgage payment that is 75 percent of that is 22.5K, which is around 3 or 4 million dollars.
Burst (91)-
Yes.
skep (117)-
Those losses have been going on for years, as RE marketing has migrated to the net.
eagle, my point was it’s about dollars not percentages. having to live on $500 versus $5000 is a big difference.
Bob,
Let’s say that the slowdown started on March 1st. How long do you think it will take for NYC jobs/bonuses to take a hit?
There is also a huge asset bubble waiting to burst in India. Buyers with ~$15k/year salary are bidding on $100K apartments.
lisooh,
Good point about a reverse mortgage.
Grim,
Something else.
I’m in the media, though in something completely different.
When someone shows up with the “I’m a victim” line – lawyer in tow – it should raise a big red flag.
Lots of people try to use the media to generate sympathy – and force the other side into a settlement. Unfair advantage.
Pretty good bet this is a contingency deal, and the lawyer gets paid only if there’s a settlement, and a quick one – given that she’s 89.
I had a court case that was in the system for eight years, and I was also part of several investigations – Federal, state, and Congressional. There were only a few of us who were willing to come forward as witnesses because it was something personal and embarrassing. And lawyers usually tell their clients not to talk to the media, least the client say something dumb that could be used against them. So there were lots of court cases, but one of our frustrations was that other people wouldn’t co-operate with the government investigators – give statements.
Finally, there was a big blow-out. Guy got busted. Lots of major media.
And, lo and behold, all of a sudden, other “victims” had a sudden desire to talk to the press. In particular, there was one case that was going to trial, and the newspaper story said that the plaintiff’s lawyer had been rebuffed repeatedly in terms of a settlement. So, next stop – the media. Since I knew this particular issue inside-out, it looked to me like a trial in this case would be decidedly iffy, based on the details in the article. I don’t know how it turned out.
I don’t doubt that some people were harmed.
But any “victim” needs to be vetted thoroughly.
Professionally, I’ve punted a lot of “victims” who didn’t want to go the distance in court or in arbitration – wanted some dopey reporter to write a sob story so they could get a quick settlement. But they went into melt-down when asked some meaningful questions.
A good read by Roach at MS:
The Great Unraveling
From bubble to bubble – it’s a painfully familiar saga. First equities, now housing. First denial, then grudging acceptance. It’s the pattern and its repetitive character that is so striking. For the second time in seven years, asset-dependent America has gone to excess. And once again, twin bubbles in a particular asset class and the real economy are in the process of bursting – most likely with greater-than-expected consequences for the US economy, a US-centric global economy, and world financial markets.
Sub-prime is today’s dot-com – the pin that pricks a much larger bubble. Seven years ago, the optimists argued that equities as a broad asset class were in reasonably good shape – that any excesses were concentrated in about 350 of the so-called Internet pure-plays that collectively accounted for only about 6% of the total capitalization of the US equity market at year-end 1999. That view turned out to be dead wrong. The dot-com bubble burst, and over the next two and a half years, the much broader S&P 500 index fell by 49% while the asset-dependent US economy slipped into a mild recession, pulling the rest of the world down with it. Fast-forward seven years, and the actors have changed but the plot is strikingly similar. This time, it’s the US housing bubble that has burst, and the immediate repercussions have been concentrated in a relatively small segment of that market – sub-prime mortgage debt, which makes up around 10% of total securitized home debt outstanding. As was the case seven years ago, I suspect that a powerful dynamic has now been set in motion by a small mispriced portion of a major asset class that will have surprisingly broad macro consequences for the US economy as a whole.
Valerie Plame’s kinda cute when she’s mad.
Maybe this is extreme – but we should bring back slavery. That’s the best way to get rid of greed and overconsumption from the system. If you bite more than you can chew, and you cannot pay your bills, you are sold off as a slave in the market. This should teach these overconsuming brats.
Zack,
Have you read Hudson’s “The New Road To Serfdom”?
The New Road To Serfdom (PDF)
jb
bear,
Tough one. I think our future [near term] growth comes down to emerging markets. Our recent GPD has been a function of business investment [exports] and service jobs.
IB’s earnings have been above expectations. Trading and m&a profits have been thru the roof. That said, their stock prices are stuck in the mud/lower. It’s worrisome, at least to me, when there is an earnings bonanza and the stock does not respond in the same manner.
There is/will be a large retrenchment in mbs sales, trading, risk and operations. I am not in that area, don’t have a good feel for the number of jobs at risk. Someone in that arena may have a better feel for the total #. Bonuses?? Hard to say, it’s only March. However, I hear many are deciding to play it safe with last year’s bonus. I guess we can forget about WS saving RE.
thanks bob
#122 BC Bob: Are you putting a bid in in a house?
I have to take the alternate point of view,
namely: There should absolutely be a wholesale federal bailout of this unfolding disaster! In fact it should be be added as an addendum to the “War on Terror Funding Bill”. After all, what could be a bigger “terror” than being kicked out of your own house? And at least this “terror” is a real one as opposed to some of the made up
ones we’ve been paying for. Why should the Halibuton’s and the other war mongers be the only ones with a place at the trough?
troll
Re: Gov’t Bailout
If the Gov’t pay $125 billion to bail out Savings & Loans in the 80s. Why wouldn’t they do it again???
CC
bbb [135],
I just got a weak spell reading your post. I’m putting on my green tomorrow and watching basketball this weekend.
#139 BC Bob Beannachtaina Feile Padraig (Happy St.Patrick’s Day) And I will defintely be havinga few pints tomorrow. Slainte!
The case for a consumer spillover is compelling, in my view. A chronic shortfall of labor income generation sets the stage – real private compensation remains over $400 billion below the trajectory of the typical business cycle expansion. At the same time, reflecting the asset-dependent mindset of the American consumer, debt and debt service obligations have surged to all-time highs whereas the income-based saving rate has dipped into negative territory for two years in a row – the first such occurrence since the early 1930s. Equity extraction from rapidly rising residential property values has squared this circle – more than tripling as a share of disposable personal income from 2.5% in 2002 to 8.5% at its peak in 2005. The bursting of the housing bubble has all but eliminated that important prop to US consumer demand. The equity-extraction effect is now going the other way – having already unwound one-third of the run-up of the past four years. In my view, that puts the income-short, saving-short, overly-indebted American consumer now very much at risk – bringing into play the biggest spillover of them all for an asset-dependent US economy. February’s surprisingly weak retail sales report – notwithstanding ever-present weather-related distortions – may well be a hint of what lies ahead.
http://www.morganstanley.com/views/gef/index.html#anchor4577
Skeptic, (117)
I don’t remember where I heard it, but there’s an old saw that goes something like:
“Don’t always look for a conspiracy when incompetence is a reasonable explanation.”
My list of problems with newspapers is large enough to fill a 20×10 storage unit, but a grand conspiracy to promote Real Estate (or any other industry) in the face of negative information isn’t on it.
It is possible (indeed it happens with far too great a frequency) that there are individual cases at individual newspapers where promotion gets the driver’s seat and news reporting is along for the ride, but the industry as a whole does not tow some mythical line to keep the RE ads flowing.
As Clot notes, they’ve lost a ton of advertising to the internet in recent years.
Even the mass of crappy reporters and their incompetent editors at papers throughout the country aren’t much for jumping on bandwagons or towing a company line on “happy talk” about a broad industry.
The far more common scenario is the way the auto industry is treated in newspapers. You might see positive write-ups on individual products (and the occasional negative one too), but the actual experience of buying a car is pretty much ignored.
Ignoring is how these things are generally handled. When it comes to a category of advertisers the policy most generally is to avoid rocking the boat, there’s always something else to write about, rather than an ass-kissing or ass-kicking piece on the advertisers.
The govt owns the printing press. They can print all the (more) dollars they want and pump it back to us as bailout or what not.
It makes no f* difference IMHO.
The dollar is looking more and more like the Russian ruble.
bbb [140],
Corned Beef and Cabbage Dinner
1. Trim fat from meat. Place in a 4- to 6-quart pot; add juices and spices from package of beef. Add enough water to cover meat. Add pepper and bay leaves. Bring to boiling; reduce heat. Simmer, covered, about 2 hours or until meat is almost tender.
2. Add carrots, parsnips or rutabaga, and onions to meat. Return to boiling; reduce heat. Simmer, covered, for 10 minutes. Scrub potatoes; halve or quarter. Add potatoes and cabbage to pot. Cover and cook about 20 minutes more or until vegetables and meat are tender. Discard bay leaves. Remove meat from pot. Thinly slice meat across the grain. Transfer meat and vegetables to a serving platter. Makes 6 servings.
If your brisket comes with an additional packet of spices, add it instead of the pepper and bay leaves called for in the ingredient list.
……and of course; Pionta Guinness, le do thoil
Job Cuts at Ameriquest May Total 3,000
ACC Capital Holdings, Orange, Calif., laid off hundreds of retail and wholesale workers Thursday at affiliates Ameriquest and Argent Mortgage, consolidating its consumer call-center operation into just one location. A source inside the once high-flying subprime giant told MortgageWire that the job losses total close to 3,000. A company spokesman declined to comment. The spokesman said the only retail call center remaining will be the Orange, Calif., location. Previously, there were four sites.
http://forum.brokeroutpost.com/loans/forum/2/103988.htm
adding…
FWIW, I’ve spent more than 15 years in news rooms.
I want to make something else a bit more clear.
When you pick up a newspaper and see something labeled as a “special section” that focuses on some particular topic (i.e. real estate, autos, or education) you can be 99% sure that is an advertising vehicle and not something put together by the news department.
Special sections are kind of a middle ground where advertisers are often used as sources for puff pieces on their industry. In reality, they are adds designed to look close enough to the news pages to take in someone who isn’t really paying much attention.
The real estate section in every newspaper in the country is a special section. Any actual news about the real estate industry will appear on the business pages or the main news section.
Listen to all the crybaby borrowers.
STOP YOUR WHINING. YOU WANT TO BLAME SOMEONE. BLAME YOURSELF AND TAKE THE MEDICINE!
I KNOW A FEW YOUNG FOLKS THAT SUCKED IT UP AND REFUSED TO PAY THE STUPID HOUSE PRICES WHILE THEY HAD TO LISTEN TO THEIR DUNCE FRIENDS BOAST ABOUT HOW THEY GOT IN AND ALL THEIR HOUSE APPRECIATION. NOW NO MORE BOASTING.
HANG IN THERE FRIENDS. YOU EANRED IT IF YOU FOUGHT THE PEER PRESSURE. FRIGGEN BUST!
FREE MARKETS WORK IN BOTH DIRECTIONS …EVEN WITH REAL ESTATE
BLEED’EM DRY
BOOOOOOOOOOOOYAAAAAAAAAAA
Bob
Ponzi money running dry….
You fought off the peer pressure to follow the dopes to financial ruin.
hehehehehehehehe
Savers with strong blance sheets own this market…..
You make’em pay.
BOOOOOOOOOOOOYAAAAAAAAAAAAA
Bob
wow!! cool recipe!
regarding quote: “Don’t always look for a conspiracy when incompetence is a reasonable explanation.”
Sounds like Clot talking… he has finally gotten me to believe that most of the REs we’ve dealt with the past nearly 2 yrs were just plain incompetent.
I said it before, I’ll say it again: He has atleast restored my faith that there are some good ones..
sl
I live for these days. Fully loaded ready to pounce on some undervalued assets.
Someone is going to pay dearly by selling their assets to me at a lower price than they ever imagined.
I have patienctly waited for a few toys and some dummy in over their heads is going to hand over to me a few newish toys i always wanted at .30 on the dollar.
hehehehehe
Bleed’em dry
BOOOOOOOOOOOOYAAAAAAAAAAAA
Bob
Pimco Says Subprime Collapse May Spread to Alt-A, Jumbo Loans
1] `subprime loans performance will carry over to Alt-A and possibly Jumbo prime markets.
2]U.S. median home prices will fall by 4 to 5 percent this year.
http://www.bloomberg.com/apps/news?pid=20601087&sid=auhE5bdvvZR4&refer=home
3]Housing and related industries account for about 23 percent of the U.S. economy.
Kiesel said, “housing is the next Nasdaq bubble.”
It’s amazing how psychology adjusts once the tide has turned. It becomes more apparent when many realize that they are down stream without a paddle. I guess we can put to bed the nonsense regarding those that are currently renting, the asinine wannabe posts. Good night!!
Pumped and ready to pounce…….
BOOOOOOOOOOOOOOYAAAAAAAAAA
Bob
#144 BC Bob Ah parsnips and carrots, I coudl eat that stuff all day, must be an Irish thing, and do nto forget the soda bread and strong teas after dinner. Simple, but very good food.
Enjoy the day tomorrow, I know I plan to.
#131, Zack,
Aren’t 30 year mortgages with an average of 30 to 50% of disposable income going towards mortgage payments and the rest of the income going to property taxes, vehicle loans/leases, utilities, healthcare, etc. already a modern day form of slavery? I mean a person is a slave to their job or corporate america in order to make those payments, or the alternative is to declare bankruptcy. Our modern day way of living is nothing more then indentured servitude or serfdom to the banks.
“already a modern day form of slavery?”
Bingo
Lots of drone zombies walking around thinking they are well off. They are broke and now starting to realize it.
It’s called “Show & tellers” The working drones are slaves to their monthly slave payments. Have everything but own nothing. Sometimes you have to wait for it. Unfortunately we have to many big babies running around with pacifiers in their mouth.
Bleed’em dry
BOOOOOOOOOOOOOOYAAAAAAAAAAA
Bob
Bob,
This one is for you –
from (151)
Gross isn’t the only bear on housing. Executive vice president Mark Kiesel said in June that he had sold his Southern California home and moved to an apartment.
Good luck.
Happy St Pat’s day.
BOOOOOOOOOOOOOYAAAAAAAAAAAAA
Bob
booyaa bob is primed and ready to pounce. We’ve hit bottom. I repeat, hit bottom. buy, buy, buy
bottom? Hmmmmm. ya sure?
who’s bottom are we talking about? ;-)
The bottom’s going to look very messy.. we aint there yet. buckle up
still (149)-
Thanks, though it’s faint solace to me that bumbling incompetence is the normative feature of my business. I will say, however, that it warms my heart to see yet another acceleration to the pace of agents leaving the biz.
Soda bread, carrots, parsnips and warm, dark beer to all the Irish here. Notre Dame coulda used an extra helping today.
Very entertaining today!!
Poser [155],
My first purchase was in 1985;
Criteria for approval;
1)Total housing [piti] expenses, 28% of income.
2)Total expenses, housing and all other monthly obligations, 36%
3)If they stretched, you may have been approved at 30% housing, 40% total.
3)20% down, pmi with 10% down.
Many will say it was different back then, house condo prices were much lower. No argument there. However, if you were just out of school and starting your first job at 15K per year, it was a stretch. Its all relative.
Who said bottom……there is no broken bones at all……just a few bloody noses. Anyone with ants in their pants is ADHD or under 30….sort of the same thing…..
grim is some sort of genetic freak…..he has the fiscal conservatism of a 60 year old, the tech skills of a savant, and perserverence of the T-3000 Terminator. Oh, I forgot, and the hubris of the Donald.
On the newspaper thing – I work in advertising (media planning specifically), and the decline in newspapers is a popular topic. I’d say that decreased RE listings are one of, but not THE, reason for decline in revenue. IMHO, increased online readership is the driver of the decline.
Pandering to RE is just an effort to slow the tide, and trust me, there is much less of a separation between publishing/editorial than you would hope. Assuming realtors continue to increase their focus on online listings, this will exacerbate the decline. Newspapers are going the way of VHS and tube TVs: they’ll always be around, but won’t be as prominent as they used to be.
BC Bob [144] –
Trying your recipe tomorrow!
house down the street from me which i was convinced was overpriced by $60-$70k was lowered $15k twice over 3 1/2 months and just went under contract for $35k below asking. people are still buying houses folks, at least in the sub $1 million range. which brings me to an interesting question. how much does the mainstream media have an effect on people’s purchasing decisions? hard to say.
#159 proficius Hit bottom? Only starting, and it is about time, in fact it is past time.
Richard,
How do you know the contract amount?
jb
What everyone in the UK is talking about:
US Housing Crash.
James Bednar Says:
March 16th, 2007 at 5:47 pm
Richard, How do you know the contract amount? jb
How dare you question our Reechard!
not bottom? dang it.
off camera: dang that booyaa bob! Ok, not bottom, I repeat, not bottom. don’t buy! don’t buy!
I was wondering why my wife brought home soda bread. I sent her out for a six pack of guiness and she comes home with bread. And her maiden name’s gallagher. Someone needs to check her dang dna.
anybody heard that clanking noise in the guiness bottle lately. Thought it might be a plumbing fixture they accidently put in the bottle, so I called the store, and they said nope. It’s so you won’t get a head on your beer when you pour it. The Irish are indeed brillant!
Unlike the last housing crisis in the early 1990s, the economy is very sound; people are getting jobs, not losing jobs! I wish people would stop running around with their heads cut off !
http://www.cwsmarketing.com/cwsauctions/LotDetail.cfm?Lot_ID=2965
preforeclosure deal…gee…a $700,000 (to start) deal and a steal??? egads.
gonna be still_waiting for a looooong time it seems.
sl
I’m going to pretend that she really didn’t just say that.
#167 Richard:
Westfield market is completely nonsensical. Sellers’ asking prices are all over the place. Buyers are obviously not looking at comps. Anything under 1 mil east of Central ave is selling quickly for some godforsaken reason. Anything above 1 mil is generally sitting. It’s total chaos. I’m assuming all buyers are from Manhattan, drooling over the fact that they can get a SFH for the price of a 2 bedroom apt.
Pro[173],
A woman after me ole heart. Sounds a lot better than that smelly cheese in Tiger Paw land.
I have BC and St Paddy’s going on at the same time. I can’t imagine what will happen if BC pulls off the upset.
By the way, there seems to be a large contingent from/looking at South Orange and Maplewood on this site. If you are at Cryan’s and you have had too many Jameson’s, the pub will tow you and your car home for free. Now that’s a bailout!!!
Sally [175],
Great comedy. Govt workers/service jobs in NJ will not stop this flood.
Lie down and have a few stouts. You’ll feel better in the morn.
bc
BC ball and St. Paddy, you should definitely be favored! Really getting to enjoy this new conference. Hope they do well. But like Clot, despite all of the pro-conference sentiments in the big dance, you too will someday grow to enjoy seeing Dook lose. I know I sure as hell did. Hehehehehe.
Like the soda bread, there is a time and a place for a smelly tiger paw rocquefort. Usually it goes well with a nice cab, a hangover, or both.
Sally, here BC is like the John Wayne of the Quiet Man. Listen, learn, and for god sakes, don’t be suprised when he grabs you by your proverbial lockes!
Okay, you all have probaly figured out Sally is my alter ego. Notice her and I never are on at the same time. Were like um Patty Duke, and Patty Duke yea thats it.
KL
thought I’d share some wisdom from across the pond, the punchline is topical to this forum, perhaps we could coin the term: “irish bailout”.
The Gentlemen’s Club
One day, three friends went to this “A Dublin Strip Club.” One of the friends wanted to impress the other two, so he pulls out a €10 bill. The “dancer” came over to them, and the one friend licked the €10 and put it on her butt.
Not to be outdone, the other friend pulls out a €50 bill. He calls the girl back over, licks the €50, and puts it on her other cheek.
Now the attention is focused on the third guy.
He got out his wallet, thought for a minute… then got out his ATM card, swiped it down her crack, grabbed the 60 bucks, and headed for the door.
Pro [182],
Now, I would not go that far.
By the way, me wife is not an auburn-haired Irish lassie. She is a ravishingly beautiful Irish blonde.
Pro,
Hilarious!! I have to get back to the madness.
Sally (183)-
Were you stuck at the Super Bowl with Booyah and WAAAAH?
I think WAAAAH is working as a fry cook at Hooters in Ft. Lauderdale now.
at least WAAAAAH would have a decent view.
Hey Clot, soda bread v. smelly cheese, what say you?
prof (188)-
Slug me, I ain’t Irish. That cheese needs a good ciabatta or sourdough boule.
Not to risk the ire of the Irish here, but soda bread tastes like a dessicated plank to me.
sally are u a realtor? seller? or just a david laire’s secret admirer?
I think the sh1t that the media regurgitated got into your head. The sooner you clean up the better you’ll feel.
clot,
that stanky cheese will put some hair on your chest, and I suppose that’s one reason why your the real man you are today. One properly vetted American. Should of made V. Plame have a taste before we gave her that clearance.
Prof #191, didn’t take you for a toady.
#192
taste the cheese, mate
it will do wonders for your libido.
Sally: Unlike the last housing crisis in the early 1990s, the economy is very sound; people are getting jobs, not losing jobs! I wish people would stop running around with their heads cut off !
Sally, Running around with their heads cut off, thats funny I was thinking the same thing. Take a note at all the new commercial construction in Northern NJ. Quite a bit of big box retailers and restaurants were built over the past couple of years.huh?..not office buildings. If the 24 year old waiter that served me dinner at the Outback last night makes over $125,000, you may have a good point.
Hello, McFly, The economy is full of many bullsh*t jobs. Northern NJ has always been known as a the telecom and pharma. industry location. We have been losing high paying employment from these sectors at an alarming rate, to other states. Real Estate related employment/incomes may have hidden this over the last few years, however, now that this sector is becoming soft, household incomes will probably not appear quite as high.
I sense a naysayer amidst us! Could it be the voice of reason in the wilderness of doubt? Commercial real estate to the rescue! All hands, sound the all clear! Buy! Buy! Buy!
KL:
Could you expand on your interest in Wildwood real estate?
From Reuters:
Moody’s cuts subprime ABS issued by UBS, Goldman
Moody’s Investors Service on Friday said it cut ratings on nine classes of subprime bonds sold by securities units of UBS AG (UBSN.VX: Quote, Profile , Research) and Goldman Sachs Group Inc. (GS.N: Quote, Profile , Research), and cited potential cuts on dozens more from other issuers.
The issues, sold by UBS’s MASTR Second Lien Trust and Goldman’s GSAMP Trust and backed by second-lien mortgages, suffered from weaker-than-anticipated performance and erosions of underlying credit support, Moody’s said in statements. They were mostly originated in 2006.
The UBS deals were backed by loans made by subprime lenders Accredited Home Lenders Holdings Co. (LEND.O: Quote, Profile , Research), New Century Financial Corp. (NEWC.PK: Quote, Profile , Research) and American Home, Moody’s said.
Goldman’s bonds are supported by second-lien loans from New Century, Fremont General Corp. (FMT.N: Quote, Profile , Research) and Washington Mutual Inc.’s (WM.N: Quote, Profile , Research) Long Beach Mortgage Co., it said.
Also from that piece:
Moody’s said it may lower ratings on another six classes of bonds from the UBS and Goldman issues, and eight more from 2006 second-lien bonds issued by Fremont’s own securities unit and Deutsche Bank AG’s (DBKGn.DE: Quote, Profile , Research) ACE Securities Corp. Home Equity Loan Trust. Deutsche’s bonds were backed by loans from Long Beach and Fremont, Moody’s said.
The rating company in separate statements later said it may downgrade three classes of bonds issued by Lehman Brothers Holdings Inc.’s (LEH.N: Quote, Profile , Research) Structured Asset Securities Corp. Trust, backed by 2006 second-lien loans. Three classes of 2006 second-lien bonds sold by Lehman’s Structured Asset Securities Corp. Trust were also placed on review for downgrade, it said.
Moody’s also said it may cut five classes from a New Century 2006 second-lien issue and three classes from a Long Beach Mortgage Loan Trust 2006 deal.
jb (198)
Moody’s is like the police in movies. They come after all the action is complete :)
BUY FRUCTOSE!!!
Prof (193)-
That cheese will set you free.
BTW, I’ve heard they sell it at Fairway and Zabar’s. Any truth to that rumor?
I wonder if this weather will be used as excuse as to why RE sales might be slow for March???
SAS
“Welcome to the new home of Garden State MLS’ public search engine. Currently, there are 30,064 properties advertised for sale in NJ on our site.”
Back up we go… Spring is coming..
Tan
KL:
Could you expand on your interest in Wildwood real estate
D2b,
Flipping was rampant there, prices skyrocket, condos way overbuilt, seems a community is being destroyed by greed. Building code violations possibly in the thousands, title companies, appraisars, inspectors and attorneys all in cohoots. I am watching how this plays out.
KL
Clot,
Just a question for you… here’ a bit of the background… my wife and i put a bid in for a house this past week… the listing price is $430K… our frst bid was $380K… they came back with a counter of $423K… so, we put another one in at $399K… the house has been on the market for 13 months… and this is the first bid/activity that they’ve had… should we just let this bid stay out there for a while or should we put an expiration date attached to it?
Many thanks for your help!
Clot,
Also… we just bid the last bid of $399K in just yesterday… their agent said no but he’ll ask the owners…
Sorry about those typos!
MJM,
I am surprized you are making bids in this market.
Make sure you are not letting this decision become an emotional decision one.
SAS
More background… and this is in no way to justify buying a home… just info… OLP $479K… on the market for 13 months… down to $430K… our bid, and possibly the final one for this house, $399K…
Sen. Dodd sets subprime hearing for Thursday
“As chairman, I will use all the powers and tools at my disposal to keep families victimized by predatory loans in their homes and ensure that America’s dream of home ownership remains alive,” said Dodd.
Will this enable housing to continue to grow?
Ah, the joys of renting. I am watching a group of men shovel/chisel my walkway while I sit inside and play on the computer.
Rachel
Hi.
What would be a “fair” price for the following house:
http://www.realtor.com/Prop/1072248504
It has been on market for at least 4-5 months and has undergone a 10K price reduction.
Realtors/ experts – please weigh in.
Top of the Morn.
Rachel [210],
Ditto.
“Now, for readers who may be as unfamiliar with mortgage backed securities (MBSs) and collateralized debt obligations (CDOs) as we are, we supply the following elucidation of these two life-enhancing inventions: Imagine the entire mortgage market as a giant pig and the financial industry as a rendering plant. After the best lenders have taken the AAA++ hams and ribs, there remain many body parts you might show to your daughter only if you wanted to see her make a face and hear her say ‘eeewwww.’ In the mortgage industry, as in the slaughterhouses, those cuts do not get the ‘prime’ label. In lending, they are known as ‘subprime.’”
“The low-priced stuff is too disgusting for most people to put directly on the table, so the unidentified scraps are typically run through the grinder. Then, they are packaged into old-fashioned, pure pork mortgage-backed sausages. Even at this level, the investors never met the borrowers (and often not even the lenders) and were never privy to the particular lies that coaxed the animal into the abattoir in the first place. Nevertheless, the markets are familiar with these things; they know more or less what is in them…and have some slim idea of what they are worth.”
http://www.financialsense.com/editorials/daily/2007/0316c.html
att (211)
I bid 385.
But I’m no expert.
att(211)
My bid would be 305K ( my best and final offer)
BLEED’EM DRY!!!!!!!!
IT’S PAYBACK TIME.
U MUST BE REWARDED FOR YOUR PATIENCE AND TIME.
BOOOOOOOOOOOOOYAAAAAAAAAAAA
Bob
What would be a “fair” price for the following house:
http://www.realtor.com/Prop/1072248504
Find out what peak 2005 prices were and take at least 25% off preferably 30%. This is fair.
NO BARGAIN but fair.
It’s not your problem if they overpaid.
You had the senses to wait and the discipline to realize this re ponzi was to good to be true. Now u will be rewarded.
BLEED”EM DRY!
Free markets work in both direction and remember u may have to sell it in the future too.
BOOOOOOOOOOOOOOYAAAAAAAAAAAA
Bob
But 305/385 for that house could possibly not be a winning bid.
It is listed at 540K. So in extreme case, even if you take off 20% (I really doubt the owner of a sfh would be ready to take that hair cut), the price would be 430K. Practically – I think 430K does not have a chance to get accepted. (But that is just me).
DEPTHS OF MISERY 2008……HEHEHEHEHE
YEAH THAT’S RIGHT IT’S GOING TO GET WORSE.
BOOOOOOOOOOOOOOOYAAAAAAAAAA
Bob
att
With all due respect.
The place does not look like the dream-house that I’d hate to miss out on.
If you lose the bid, move on.
MJM Says:
March 17th, 2007 at 9:23 am
Just a question for you… here’ a bit of the background… my wife and i put a bid in for a house this past week… the listing price is $430K… our frst bid was $380K… they came back with a counter of $423K… so, we put another one in at $399K… the house has been on the market for 13 months… and this is the first bid/activity that they’ve had… should we just let this bid stay out there for a while or should we put an expiration date attached to it?
MJM: I know you wants clot’s opinion, but I don’t know why you came up in the first place. You should have just let it sit at $380K. It is obvious that they are trying to get you in the $410-415K range, and you will likely close between $405-410K. If you want it, ask for one more counter and then split the difference. However, I see absolutely no reason that you moved off your original $380K, which in itself might be too high depending on comps [extrapolating from the history your introduced on the bidder activity]. You are being rope-a-dope’d.
Happy St. Paddy’s all!
Corned beef, cabbage and potatoes getting under way in just a little while. With soda bread later. I’m married to a fine Irish/Scottish/Englishman. Oh he’s Italian too but you’d never guess it.
Anyway, going back to the 30% of gross pay spent on housing, is that 30% just the mortgage, mortgage with taxes and insurance or mortgage, taxes, insurance and all utilities?
Thanks all!
Enjoy your day.
“You are being rope-a-dope’d.”
Th un-official qoute-of-the-day.
MJM,
If your first bid at 380k was not accepted, I would go back at 370k. If you don’t want to do that, stay firm at 380k. You hold the cards. They need you more than you need them. Deal from a position of strength. Who else has been knocking on their door for the last year?? Patience will be rewarded.
I can’t believe there are folks on this blog who are putting bids on houses. If anything any homeowner trying to sell should be paying the buyer to take away their burden.
The 10 myths about a so-called bottom are at Nouriel Roubini’s Blog :
http://www.rgemonitor.com/blog/roubini/183694
For your own sake forget about buying a house till the blood is all washed away from the streets. Guys, this is serious!
lostinny[223],
I can smell it from here. Yum!!
http://www.theholidayspot.com/wallpapers.php?img=patrick/images1/wall_big.jpg
Anyone have any ideas/guesses about the percentage of homes going under contract right now where the sale will fall through before close?
We have been looking casually and have noticed that several of the places we liked have gone under contract. With lending standards tightening and contingencies for buyers who first have to sell their own places, I wonder how many of these will be back on the market. Is this just wishful thinking on my part, or can you see a fair number of “sales” falling through this Spring?
AK
MJM,
I have to agree with some of the others. I wouldn’t have budged from 380. So long on the market with no activity is not your problem, it is theirs. The time for stretching yourself thin is over. If 380 was your first bid then I’m sure that’s something you know you can easily afford. What give them another 19? They need to come back to reality.
For me personally, I’d have to literally fall over from being “wow’d” by the kitchen and bathroom for someone to get asking price out of me- and that’s after this market actually corrects itself, not on the downhill ride.
Bob 227
Thank you! I may just use that! There will be plenty of leftovers if you find yourself in Staten Island. :)
Chi,
I take total responsibility for that… it wasn’t my idea to move up in price so quickly… i should’ve controlled the process more… and as you point out, i should’ve let the sellers sit… however, we’re at the $399K level… do you think i should just let the offer linger and possibly attach an expiration date some time late next week?… i just don’t like the idea of offer floating out in space for months… i’d rather start anew if they get back to us in the summer… what do you think?
Thought I would finally contribute some humor. I heard this is a great place to get a loan.
http://www.247negamloans.com/modules/loans/
Zac (221), Rentlord(226).
I havent bid on the house. I’m just taking opinions from fellow bloggers.
I’ll keep in mind booya bob’s value test (25-30% off 2005 price), before putting in any offers. But I think I know I would have to wait more to get those prices.
“rope-a-dope’d”
SAS
Rich,
Thanks for the info on that old house. I was just curious.
I was wondering why the NJMLS listing went down so much in Closter. It was hovering 150 last Summer and now it’s just 80.
MJM (231).
If I were you and could wait more, I would just plainly withdraw the offer citing deterioating market conditions. Let the sellers rot in uncertainty and repent.
The subprime market just started to implode in last month. Once the lending standards go up and subprime borrowers are squeezed out, that guy would be begging buyers to buy his house at 350K :).
In the meantime you can save for downpayment in 5% online savings account (which is what I’ve been doing for past couple months).
If there is a bailout people in North Jersy
Land of the 899K house or duplex will make out happily
Take out the helocs get some shiny cars,
if you 22 in hoboken goto 8 dollar a drink bars
Housing bailout coming to save you from I/O
because all of them vote and have the money Yo!
Option arm go away we’ll fix that right away
And subsidize intoa fixed and make it better yay!
All the people who lived small and well with in their means
Should have gone and refied their lavish lifeste dreams
HA HA HA
RRRRRRRRRR Patirck
2003
Im 24 Where my Condo, MOM AND DAD Helock your house for my down payment and cosign my loan!
Let me use my credit cards for buying the furniture on my place yo. Gotta look fly for the GIRRIES!
2005
Yo Mr Benz dealer lease me that CLK350 I want to look fly when I bring the bitches back from the club.
Yeah I got the 4K for the costs of the lease, my joint is worth 2x from what I paid in 03 so i refied. Got rid of my CC debts and now i can afford this new fly ride.
Im gonna get mad bitches yo!
2008
Bergen County Records office
Lis Pendins
then
Yo I lost my house and my fly ride now the bitches dont want to talk to me no more
lostinny,
Thank you for the offer. Oh my, wrong word, I mean invite. Who knows where I will end up today. As long as I don’t find my way into a Toll sales center, I have a feeling it will be a good day.
Cheers.
MJM Says:
March 17th, 2007 at 11:16 am
Chi, however, we’re at the $399K level… do you think i should just let the offer linger and possibly attach an expiration date some time late next week?…
MJM: You are right. Tell them to meet you at $399K. Period. Let the offer explode first thing Monday 3/26. Also, tell them that every extra day it drops $1,000 after Monday of this week. Tuesday it’s 398, Wednesday it’s 397, Thursday it’s 396 etc. It gets you to back away from the $399K.
I’m sorry…..I don’t drink alcohol before noon, and it is 11:45AM and I want a scotch.
sorry………..I meant a Jameson’s
Chi and others,
Thank you for your advice… hope everyone has a fun weekend!
MJM #205,
I agree with the other folks that you should have stayed firm @380. Keep reading the news out there and you’ll find out the sub-prime market is not in good shape. I would say that based on the price range, this is a starter home. With the lenders tightening their belts, there will be fewer folks qualifying to buy these type of homes. If I am in your shoes, I would decline their counter (unless I am in love with the house). Believe me, with it sitting on the market for so long and the market conditions deterioating quickly, they will come back to you (and it’ll be more favorable for you).
Ah, the joys of renting. I am watching a group of men shovel/chisel my walkway while I sit inside and play on the computer.
No joys when you rent a house.
jb
sorry………..I meant a Jameson’s
Chi,
Now we’re talking laddy. I’m not sure if “rope a dope” pertained to this weekends home buyers or me around 5:45 PM this afternoon.
Two Irishmen, Patrick Murphy and Shawn O’Brian grew up together and were lifelong friends. But alas, Patrick developed cancer, and was dying. While on his deathbed, Patrick called to his buddy, Shawn, “O’Brian, come ‘ere. I ‘ave a request for ye.” Shawn walked to his friend’s bedside and kneels.
“Shawny ole boy, we’ve been friends all our lives, and now I’m leaving ‘ere. I ‘ave one last request fir ye to do.”
O’Brian burst into tears, “Anything Patrick, anything ye wish. It’s done.”
“Well, under me bed is a box containing a bottle of the finest whiskey in all of Ireland. Bottled the year I was born it was. After I die, and they plant me in the ground, I want you to pour that fine whiskey over me grave so it might soak into me bones and I’ll be able to enjoy it for all eternity.”
O’Brian was overcome by the beauty and in the true Irish spirit of his friend’s request, he asked, “Aye, tis a fine thing you ask of me, and I will pour the whiskey. But, might I strain it through me kidneys first?”
recall that 200pt drop in about 3 sec….
I got wind that some overseas balked.
What scary is that they can bring the Dow down so much so fast. Yikes.
SAS
Back to the main topic, bailouts:
“Mortgage gimmicks designed to allow fast-food workers to buy half million dollar homes began resetting at much higher rates and the defaults and foreclosures began. We are now seeing only the tip of the iceberg. While the media chooses to pretend this is a non-issue, the snowball gathers speed.”
“The fact that there will be a bailout is a foregone conclusion. We should be more interested in the timing and ultimately the cost of any such bailout and who is going to bear the cost. It is my guess that most of the people reading this column will not like the answer to the last question.”
http://www.financialsense.com/fsu/editorials/sutton/2007/0316.html
JB,
I may be in your territory later this afternoon;
The Shannon Rose- Clifton Commons.
Inventory on GSML now over 30k and growning
BC Bob- …It is my guess that most of the people reading this column will not like the answer to the last question.”
That is what I thought. My fear is that it will allow home prices to remain where they are or continue to rise. It seems that waiting and saving to put 20% down is not enough.
The Shannon Rose- Clifton Commons.
They did a nice job building that place. Let me know how it is.
jb
JB,
I don’t know how crowded it will be. We are planning to go around 4:00. I hope we get in. If you happen to be in the area, stop by. I owe you a few, well more than a few, scotches.
BC Bob Says:
March 17th, 2007 at 1:33 pm
JB, owe you a few, well more than a few, scotches.
JAMESONS!
Could this be the name of a new James Bond movie?
Maybe we can make the pilot:
JAMES BEDNAR IS SECRET REAL ESTATE AGENT 007 in “20% DOWN IS NOT ENOUGH”
Chi [252],
Hear,hear.
Yesterday someone posted a story,on this site, regarding the $1,000 NY pizza. From Daily Reckoning, no link.
Yesterday, we spoke of an enterprising restauranteur in New York who put a
$1,000 pizza on his menu. Upon further reflection, we think it is a shame
that eateries aren’t required to run small-print disclaimers, like stock
offerings. We’d like to see what it might say:
“This pizza might not taste a bit better than any other pizza…in fact,
with its caviar, crème fraiche, and lobster, most people will probably
think it sucks. Diners are also advised that several animals were harmed
in the creation of this culinary offering…that fossil fuels were used in
its preparation…and that buying it may do damage to the acquirer’s
balance sheet as well as to his intestines and his planet. Still, if you
and your buddies have just laid off a few billion dollars worth of
subprime distillate upon a pension fund for widows and orphans, what
better way to celebrate?”
MJM – You’ve left off the most pertinant information, which is how much is this house worth TO YOU?
1. Is it a great house that you can see yourself in for many years to come, ideal location, 10 minutes from work, 3 doors down from the worlds greatest babysitter, and easily affordable with room to spare?
OR
2. Is it just any old house that you think you can afford (maybe at a stretch), reasonable condition and you think you could live there for a few years?
If 1 – then you need to offer whatever will get you the house.
If 2 – then choose the limit that you are comfortable paying and won’t regret and if not accepted, walk away, another house will come along.
Does anyone know anything about the Glenbrooke townhouses in Bridgewater? How’s the traffic taking 28 to 287? Is there a train to Manhattan near by?
Thanks.
watch them all: http://www.paperdinero.com/BNN.aspx?id=100
Let others know these videos on SUBPRIME MELTDOWN !!!
lostinny,
Why ruin a great day. Enjoy the corned beef, have some Irish coffee and forget the townhouse.
Seriously, don’t know anything about that area. Maybe, Clot.
Florida’s Housing Bust Continues!
http://www.paperdinero.com/BNN.aspx?id=99
Chronicles the state of the Florida housing market, particularly in Fort Myers where record inventory has driven the market into deep declines. Inventory has quadrupled and Hovnanian speculated creating truly miserable market circumstances for sellers.
Originally aired on: 3/15/2007 on CNBC
Bob,
I’m bored out of my mind. :)
MJM (205)-
13 months on market? I’m not usually an advocate of leaving offers on the table, but in your case, I’d be tempted to leave the offer open & even go so far as to mention to the listing agent that you don’t believe anyone will match or beat it.
A seller in that position has pretty much no leverage at all, and in the current environment, you may be their only shot at a sale. If you feel you’re in this strong a spot, press your bet.
lostinny (256)-
Glenbrooke is typical Hovnanian POS. Nicely-landscaped, clean…and physical defects galore in the units.
Check Beacon Hill and Bridle Club…just around the corner, and much better-built.
Lost (256)-
BTW, NY commutes are a beast from that area. No viable alternatives. They all s@ck.
Some of the advice to our pal MJM is funny stuff! Can we all agree that one bear cannot bring the housing market to a complete standstill…and one bull cannot reignite it?
Not everyone out there is in the same position. This person and his family may not have the same opportunity to ride out the storm as others here. And, I don’t think anyone would disagree that a sharp buyer can negotiate himself a pretty decent deal right about now.
Boy they sure put up those “cheap” looking condos next to Whole Foods just north of Red bank in a hurry! I can’t believe anyone would pay 400 something for cardboard. I guess they figure on getting all those young pseudo intellects who pay outrageous food prices next store!
Thanks Clot. I’ll check out the others.
Clot,
I did that… i also made it clear to the listing agent that this deal contains no contingency… my wife and i rent… so, we’re free to buy at any point in time.
Many thanks for your opinion… i value it as well as the others on this blog… JB: Thank you so much for your time and wealth on information.
Cheers!
After a whole day of horrible basketball yesterday, I was about to pack it in & go to bed. Just then, a buddy of mine gave me a ring to tell me Kobe was getting warm vs. Portland. Back to the couch, turn on the dish.
23-of-36, 65 points and a game-winning 3 by Kobe later, I think I can safely re-assert that the NBA- despite being a complete PR nightmare- is a vastly superior, and more entertaining product that doesn’t force you to sit thru 6-7 games full of slow white guys who can’t finish until you get one exciting, well-played game.
March Madness? More like March Stupor.
where is the weekend open discussion?
SAS
sas # 269,
from the sounds of it, this is it!
Joe (264)-
Those shacks by Whole Foods just despoil that whole area. The locals fought for years against a big box store on that site…..and they ended up with this blight! Just imagine what the Middletown “Town Center” would have done to that area!!
“recall that 200pt drop in 3 seconds”
I gotta admit, Treasury Secretary Henry Paulson
has got some guts or that could easily have been a 500pt drop.
Theres some truth to Wanta.
SAS
JOE Says:
March 17th, 2007 at 4:37 pm
I guess they figure on getting all those young pseudo intellects who pay outrageous food prices next store!
Errr…JOE & Fiddy……I shop at that Whole Foods…..care to meet me in the parking lot, I give you an earful of Dairy Queen.
OK – those Centex condos should be condemned NOW!
If you take me out to dinner here, I accept your apology…;)
http://www.restaurantnicholas.com/directions.htm
chifi
I eat mostly organic too.
whole foods a/k/a whole paycheck…. I kinda like Trader Joe’s myself.
can someone help me with the history of 2702226
sl
Sympathies to BC Bob. Iggles played a great game today; just too much Hibbert & Green.
Erin Go Bragh! Erin Go De Facto Currency!
How’s Green Brook for investment? good area to invest?
“whole foods a/k/a whole paycheck”
Actually, whole foods is not much more exspensive than ShopRite or Safeway if you stick to the basic goods. Even, the basic organic goods are about the same price.
However, Whole foods offers more “premium” items at a much higher cost. Which, they DO NOT place these premium items next to the basics. Otherwise, it will blow their cover.
So, before you blame whole foods, first ask yourself: Am I being “rope-a-dope’d” by marketing economics? rather than by pricing economics.
know what I mean…
SAS
“China Announces 0.27 Pct. Rate Hike”
http://biz.yahoo.com/ap/070317/china_interest_rates.html?.v=4
SAS
Hey people, I want your opinion on something I heard today. A friend of my fathers, says he’s made a lot of money in real estate over the last few decades – told me that once we hit bottom (or shortly after), buy in the areas where the bubble was at its largest. Why? Because those are the areas people want to live in, as evidenced by the size of the bubble. That’s why the bubble was bigger in Northern New Jersey than in Dallas.
Does that make sense? How about on a micro level, since Hoboken bubbled (and continues to bubble) a lot more than, say, Dunellen, does that make Hoboken a better investment at the bottom?
SAS:
I think that Target and Wal-Mart are ten times the shark tank that Whole Foods is.
I love going to those stupid fruitcake stores just to keep my mind sharp. Master bait and switch (do not say that out loud).
Wal-Mart is the king of selling the cheap stupid piece of crap toy that was made in Asia for $0.50 and marking it up to you for $10.99.
The biggest mark-up in a Wal-Mart is on the item that is the next price point above the cheapest. Normally, they suck you in with the cheap price, but that thing is such a piece of garbage that you go one rung up the ladder and get soaked in the process.
Whole Foods – if you spend the time to think and know how to shop there, you can save a lot of money. Most of the products they have are less expensive than almost anywhere else, except for the few items that are at both Whole Foods and Target/Wal-Mart.
Also, you could argue that some of the stuff at Whole Foods is more economic when you factor in a holistic view of items such as food borne illness, children entering puberty at 9 years old, various major organs giving out before their time etc.
Take your time shopping for real-estate in NJ, inventories are up 2% since last weekend.
Frank, close to 10% in Piscataway (since last weekend).
My comment with date/time March 18th, 2007 at 1:13 am is awaiting moderation.
BOUND BROOK — At the order of the Somerset County tax board, the borough will be embarking on a complete property revaluation.
A more thorough process than a reassessment, the revaluation will be conducted by an outside firm and includes inspections of all properties in the borough.
The last time Bound Brook performed a revaluation of all property was in 1986.
[…]
Hasting said public information sessions are being planned to assuage residents’ worries that a revaluation will not mean an increase to their tax bills.
“The total tax burden does not change,” Hasting said. “The revaluation does redistribute the tax.”
For example, if the total valuation of the town doubles and the value of a home doubles, the owner will likely see no increase in the gross tax bill, Hasting said.
JB, it appears that posting the word P i s c a t a w a y is making posts go into moderation.
Hmm… am looking forward to the next set of “the housing market is now stabilizing / has now hit bottom” type comments to hit the media. I think we’ll be due for another round fairly soon. Honestly, it’s hard to believe the junk that gets printed.
Also, for those of you that don’t know – the rating agency models are based upon prior real estate busts – so the following statement by this “business columnist” is just stupid (why bother doing any investigation or fact checks? that might actually entail doing work…):
“I always wondered how Fitch, Moody’s and Standard & Poor’s could calculate, with any precision, the likely default rate of mortgage products that had never really been tested by a serious recession or a downturn in the housing cycle. Now we know: They can’t.”
-P
where is the weekend open discussion?
This is it.
jb
There’s a lot to be said for Whole Foods. They generally run a clean, tight ship, and there’s a great case to be made for eating food that is not chock-full of fillers, herbicides, pesticides and hormonal additives.
In addition, Whole Foods’ range of proteins (meat, fish, egg) is vastly superior to that of regular stores. There’s a weight-loss benefit there, as high-quality protein pushes your “I’m full” button at a much lower level of consumption than the waterlogged, mass-produced stuff you find elsewhere.
Much of the current “fat epidemic” can be traced to consumption of low-quality, tasteless food that does not satisfy. I’ve found that shopping organic is actually cheaper than in regular stores, as we buy…and eat…less of everything.
Politely (289)-
Is that light at the end of the tunnel from the oncoming train that’s going to flatten us?
Clot, I noticed that too; when I started eating clean-food I ate less, my energy level was up and on and on and on. The benefits are too much to list.
Just one thing, I had a rough time while my body was adjusting to the lower blood-sugar level. I was ready to break into Foodtown at midnight just for a candy bar. Insulin is like a drug addiction.
Shytown,
good post, #283.
I agree.
SAS
yes, I am a big fan of Whole Foods too.
SAS
syncmaster,
“he’s made a lot of money in real estate over the last few decades”
–I am sure he did. It was a hell of a run up. I too made some nice jack off a townhouse in Manhattan. Just remember though, market timing is everything.
“once we hit bottom (or shortly after), buy in the areas where the bubble was at its largest.
-Not sure if I agree with this logic. First, you can’t predict the bottom, nor the top. Very hard to do. Best attempt I think for calling the bottom is just watching the arbitrage gap narrow. But, that isn’t a perfect tool.
“Why? Because those are the areas people want to live in, as evidenced by the size of the bubble”
Lets put it this way, if people really wanted to live there, there would not be price declines because there would be low inventory. In NJ, for example, people are leaving the state in large numbers because of the taxes and a bleak job market. Thats been proven many times on this blog.
Keep in mind to, about bubble areas, there are alot of speculators in the market. These speculators can REALLY move things. For example, in Ft. Lee. You know how many Koreans bought RE as a speculator, meaning they are just going to flip it in a year or two. I know this one guy, bought 3 condos in Ft. Lee. One in 00, 2 in 04. One he solid one for DOUBLE the currance, the other 2 are not moving at all. Even after a 20% price reduction, they have been sitting for over a year now.
My point, when there are speculators in the market, they tend to muddy the waters. Especially, the Joe 6 pack speculators.
SAS
Anyone a little hungover from their St. Pattys cheer?
Wife and I went to O’ Donnells for some cheer, alot of fun.
My father was Irish & my mother was German.
What a combo. That must be why I like to drink, have a bad temper, and I want to take over the world.
he he.. ; )
SAS
Bob or anybody else –
Regarding : Chinese increasing rates on a weekend.
Is there a Yuan carry trade? If so, how does it compare with Yen carry trade in terms of volume?
Thanks again.
Well, I don’t know why I expected anything different in this Sunday’s real estate section as opposed to last weeks or any other week in the last 4 or 5 years. The listing prices are still sad, the pigs are still in denial and evidently Forrest Gump and family are still reaching for somebody’s over-priced, p*ss-smelling POS.
Why is anyone bidding on anything at this point? Even if your “bid” is accepted (ugh!), you probably still are 20% over the true fair market value of the dump. Any bid that doesn’t start at 20% of list (insert chuckle here), is a bid to high. Actually, it should be 25%. If the seller outright rejects or feels insulted (insert bigger chuckle her), walk away. If the realtor refuses to offer the bid to the seller, walk away. It’s as simple as that.
If we keep pounding this message and 1% of potential buyers read this blog, then maybe we’re making a dent. We have no control over gas, food, taxes, insurance, tuition, and 60 other expenses in our daily lives. Fine. Then we refuse to pay nowhere near the asking prices for these dumps.
When the sellers are out in the streets, attempting to wave down your passing car begging for you to make a bid so they won’t starve to death, then it’s time to house shop.
Bear,
Not aware of a Yuan carry trade. The largest is the yen, then the swiss. That said, I can almost guarantee that a good % of the borrow is in the Chinese stock market [side B of the trade].
ChiFi (274)-
I’m not throwing stones at Whole Foods, so you can keep your Dairy Queen to yourself.
My issue was with the condo-shacks on the property next to WF. If you’re from the area, you must remember the outcry over the idea of a Home Depot or WalMart they were trying to put on that parcel. Instead they get High Density townhouses.
Cafe Nicholas is superior. I can remember when that building held a Mexican Restaurant. I hope they got rid of all the cucarachas in their recent expansion. My own personal preference is the Seafood at Doris & Ed’s.
JB,
Shannon Rose, hell of a place, a true authentic Irish bar, it’s huge. Didn’t get a to see much of the place since is was so crowded. However, a great place/location for the next get together of the NJ Vulture Fund.
Clot,
We just lack a big man. Although,we did play them better than I had anticipated. Hansbrough is an animal. Good luck!! I’m working on the meadowlands.
Please don’t ruin my March by comparing the best tourney in sports to the overpaid, coddled, no defense, gun carting, subprime NBA. The Kenny Anderson’s of the world, 10k a month hanging out money. Not even up for discussion.
“During his term, the former Fed chairman was much like Sergeant Schultz on the 1960s hit comedy series Hogan’s Heroes. Fans will recall that the good-hearted German POW camp guard would invariably look the other way after spotting all sorts of untoward behavior.”
“At this same time, mortgage lenders began making “liar loans” in huge numbers. That is, no-documentation and low-documentation loans that make up more than 80 percent of the next mortgage lending trouble spot – Alt-A loans.”
“Home prices are probably going to go down. Maybe a lot”
http://www.financialsense.com/fsu/editorials/iacono/2007/0316.html
The NFL is getting like the NBA, BTW.
Those condos next to Whole Foods are horrible. I can’t believe what they are asking for price wise. Personally, I think that is such a poorly planned community. The townhomes are poorly designed and from the exterior look like a combination of low-income housing and college dormitories.
I’m a proponent of high density housing as a means to preserve open-space through concentrating efforts but the design needs to me aesthetically pleasing to work. If you drive through the Villages at Chapel Hill there is no green space in the development, the only outdoor spaces are parking lots, driveways, and small balconies off each. There is no sense of community; I just don’t see what the draw would be to these over priced stacked townhomes. Call me a purist I guess. I like a town with economically and socially integrated living with a nice blend of housing options where people walk around and actually know their neighbors………
Back to the original topic, bailout. If I was a betting man, [I don’t gamble but I do speculate], I would say some form of a bailout is looming. This is just an opinion, I can actually debate both sides of the argument.
We are about the witness, the greatest dog and pony show that our elected “leaders” have been a part of. We had a $200 billion bailout of the S&L’s in the late 80’s and the fed orchestrated, thru the IB’s, a $3 billion bailout of LTCM. Not much as compared to the S&L’s but this avoided a potentially massive, future train wreck. However, both of these pale in comaprison as compared to the eventual cost of this bust [multiplier effect].
Now we are at 3/18/07 and the more I think about the more I feel ill. By the way, I can’t blame the ill feeling on the Guinness, only had 3 pints. I’ve said all along that when the smoke clears, we will be at least 30-40% off 2005 highs. Let’s say I’m wrong, we end up being 25% off 2005 highs. I feel this will result in sales being off 40-50%. Housing is the US economy, look at the % housing contributes to GPD. If we have a massive decline,[its in process now] it’s hard for me to imagine that there would not be a significant reaction from our Administration/Congress.
The problem is that so much of this crap has been securitized, that lending is way beyond its normal means. It’s not a problem that that can be alleviated by saving a few institutions. That said, what about the pained and hapless homeowner?? [before you jump thru your monitor,I’m being sarcastic]. Can’t Washington create a new agency, instead of the RTC maybe the STC, Subprime Trust Corp, or BTC, Bust Trust Corp. They can rally the troops, the IB’s, BOJ, China, hell all emerging markets can contribute. Who has a bigger stake in this than the emerging markets. They would be the first to jump into the fray to help resusciate the US homeowner. There is too much at stake for them to be indifferent.
To take this one step futher, could this be part of the reason that we stopped reporting M3?? We are told that there’s no reason to report this since we already report M1 and M2. What a crock of s*it. What about govt repos and eurodollars that are not a part of M1 and M2?? I’m not in the bond market but there are reports that we are very active in the repo market. In conjunction with this, European banks are floating with Eurodollars [US dollars parked in European institutions] Why not repatriate these Eurodollars to the the newly established STC/BTC?? Everybody says our govt is always reactive not proactive. Was the elimation of reporting M3 proactive?? These funds, along with contributions from the above mentioned troops, can then be utilized to work out new terms with the fleeced, wronged [again, sarcastic] homeowner.
In conclusion, I hope I’m wrong. Someone please convince me that I’m wrong. However, my gut tells me otherwise. Also, what better campaign [2008] gibberish than this topic.
My, how complacent we’ve become on this blog regarding the housing con. Being fleeced seems to no longer matter, since we’ve apparently accepted the scam perpetrated upon us. Where’s the outrage? Where’s the anger? Where’s the stories of triumph for the outcast among us you refuse to plunk down every warped penny we can muster to procure somebody else’s ball and chain just to say we live in Upper Arrogant Falls? Remember, everything is a two way street and evidently, we’ve become accepting and tolerant of the housing hoax. I guess it’s sort of the Stockholm syndrome of housing.
Diane: “Oh Jack, this house is beautiful, just as I always dreamed!”
Jack: “Diane, there asking $910,000, don’t you think that’s a little steep?”
Suzanne the Realtor: “Shall we put in an offer?”
Jack: “Diane, why don’t we wait and discuss this and see what options we have.”
Suzanne the Realtor: “This one won’t last, I can tell you that.”
Diane: “But Jack, how long are we gonna wait?”
Jack: “Ah…. Maybe until prices are real again?”
Suzanne the Realtor: “Housing never comes down Jack, and the population is growing quickly… even as we speak!” And you know, New York is only a 12 minute commute.
Jack: “Aren’t we 23 miles from New York?”
Suzanne the Realtor: “Yes, but we have state of the art trains here….. I researched it.”
Diane: “Please Jack, think about the memories we will have?”
Suzanne the Realtor: “I think we can low ball this one… probably start at $870,000 on the bid. No reason to fear Jack, your income will always go up and I know a great mortgage guy who can show you dozens of finance options.”
Diane: “Great Suzanne, let’s put in the offer!!”
Jack: “sigh………..”
easy gary, no one has become complacent.
one step at a time.
you can’t always fight city hall.
SAS
“NBA”
yawn, so boring. I would rather watch the snow melt.
SAS
(CBS) Despite all the bad buzz about subprime mortgages, Sunday Morning correspondent Ben Stein says the economy is strong and that the amount of foreclosures is small in relative terms.
Perspective is a great thing. It’s especially good where money and the stock market are concerned.
Recently, there has been large movement, mostly down, as the stock market reacts to a large number of foreclosures on homes in the so-called “subprime” mortgage area. This is the place where higher risk borrowers got loans during the housing boom of the last three or four years. Now, to people who actually made those loans, it’s a scary phenomenon to see those loans default, and the companies that made those loans are in real trouble.
But here is where perspective comes in, and is such a lovely thing: The U.S. mortgage market is immensely large, spectacularly large. Total foreclosures are a large amount in dollar terms, but a tiny amount in percentage terms. Foreclosures are now about 1 percent of loans. The lenders will sell the houses and recover at least fifty per cent of the value. That means the total loss may be about ½ of one percent of the mortgages made and probably less, and a lot of it is insured. This is an absolutely trivial number in the context of a $14 trillion economy with net wealth in the realm of $60 trillion.
This whole subprime mortgage mess is just an excuse for the gunslingers and river boat gamblers on Wall Street to use their tricks to move markets and make money. The economy is still very strong. The most cagey players on Wall Street like Goldman Sachs are now trying to buy — not sell — as much distressed merchandise in the mortgage area as they can. This is a good clue about where the smart money is going.
You can panic if you enjoy being panicky. But this will all blow over and the people who buy now, in due time, will be glad they did.
Anyway, that’s my perspective.
to 306
Here’s a little diddy, about Jack and Diane
2 professionals in jersey land.
Jacky works in the city
Diane’s an RN at Paskcak Valley
Oh yeah life goes on long after the ability to buy housing is gone
Oh yeah life goes on long after the ability to buy housing is gone
For att 211
http://www.realtor.com/Prop/1072248504
I have seen the house myself and found it dissapointing. The formal dining is too far from kitchen although there is a small window between the two. Basement is too small. Lot is more but if you dont need then no use. Tax is high 8k.
I personally thought it is worth 400-425k. They are asking money for the location. FYI the house I believe was 569 then 559 , 549 and now 539. They previously tried to sell on their own.
Maybe you can give an offer of 420.
Zac (293)-
Insulin bounce isn’t like an addiction; it IS one.
The whole mass-production food machine in the US exists to develop, then feed, that addiction.
R Patrick: yup!
SAS: gotta wake up the masses once and a while.
In Order of Appearance
Kathleen Turner – Diane
William Hurt – Jack
LOL!! I like the casting! Who’s playing Suzanne?
Helicopters/Inflate??
“Options traders are starting to say the Federal Reserve may cut interest rates three times this year as the housing slump threatens the economy’s growth.”
“Options on Federal Fund futures at the Chicago Board of Trade show a 24 percent likelihood the central bank will lower its target rate for overnight loans to 4.5 percent from the current 5.25 percent. Just seven weeks ago, options prices suggested no chance of that large a reduction this year”
“The fear is it spills into the economy, it spills into the banking system and creates a credit crisis,'”
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1H6obe1v6NE&refer=home
Who’s playing Suzanne? Ted Danson maybe?
Don’t know, but the tagline would go like this:
“It’s a hot summer. Ned Racine, aka Jack, is waiting for something special to happen. And when it does… He won’t be ready for the consequences.”
prof (309)-
Copy you on that. I think the whole subprime thing plays out somewhere on the painmeter between the Asian Flu workout and the S&L bailout.
The fact that sharpies like GS are running back toward the scene of the accident to loot the first of the detritus to be foisted off is an excellent indicator that the recovery process is underway. Some of the first glop to be resold is probably as underpriced now as it was overpriced in its original form.
Also of note- even though it flew under the radar- is National City’s announcement that it will portfolio 1.6 BIL of unmarketable mortgages. It will be interesting to see how they deal with that internally (I’m guessing there will be a lot of re-casts and write-downs in order to put a coat of lipstick on these pigs and remarket them at a later, more discreet date).
As for the public face of this “crisis”…the kernel of this story is an ugly and cautionary tale about massive liquidity chasing too few opportunities (which, by the way, continues unabated). However, it has been whipped into a perfect storm by: 1) a media enthralled with scaring people to death (note even CNBC commentators now joke “subprime all the time”); 2) demagoguing politicians like Chris Dodd, who try on the jacket of Mr. Deeds to see if it’ll fit through the whole ’08 campaign; and 3) the bitter permabear bubble blog camp, who are a-twitter with glee at the sight of a Ferrari going 130 mph toward a cliff. They’re just here for the wrecks and the blood.
gary (315)-
Suzanne= Alan Greenspan (in a very special appearance).
If you have 11 minutes on a Sunday afternoon, listen to this file from Bloomberg. An economist from FannieMae. Someone with exposure to a lot of data, but with no agenda to defend [effectively for all intents and purposes]. It won’t knock your socks off, but is it a primer for the coming week, and it cuts across practically every housing topic out there on a national basis. Pithy choice for your precious time…..
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vUsqYTeOQi3s.asf
I wonder how Alan looks with rouge? On second thought, not really. lol!
Clotpoll Says:
March 18th, 2007 at 1:09 pm
Zac (293)-The whole mass-production food machine in the US exists to develop, then feed, that addiction.
Clot: when I was a first year at Chicago, I went on a recruitng trip to Kraft. The most eye opening experience of my life. Think Disneyland levels of child manipulation centered around cheese, refined bleached flour, and high fructose corn syrup.
By the way, I din’t feel like reporting to the “Managing Director of Cheese, Americas” – this is a real job title :P
BC (302)-
The Madness is a great event, but this year’s first week has been a little off years past. Lots of plodding, mediocre teams. I think next week offers some great matchups & the pretenders will then be gone.
As for the NBA:
1. Many players are ghostfaced thugs and sociopaths. No argument.
2. None of them- down to the 12th man on the roster of any team- are less than top-class athletes.
3. The best teams DO play defense…and play it better than any other basketball teams on the planet. If NBA teams didn’t play defense, the Suns would now be working on their 4th or 5th championship. And Gerry McNamara would have a contract.
4. The games seem ordinary at times because the level of talent on the floor is so uniformly high. However, when you look closely, all those guys are doing superhuman things.
5. Be honest. You have a choice of tickets to one of two games: a) Mavericks/Suns or b) USC/Arkansas. Which one do you take (BTW…you couldn’t pay me to watch more than the 10 minutes of USC/Arkansas that I managed to choke down)?
gary (320)-
Ask Andrea Mitchell.
Clotpoll Says:
March 18th, 2007 at 1:51 pm
The fact that sharpies like GS are running back toward the scene of the accident to loot the first of the detritus to be foisted off is an excellent indicator that the recovery process is underway.
clot: GS is in the business of gouging and collecting tolls……I would necessary look at this move as a sign of a bottom as much as a sign of an opportunity to make money in March 2007. You may find that by April 2007 theirs hands are clean and their pockets are full……capisce?
“would NOT”
Chi (324)-
Agreed. I’m not calling a bottom here, just observing that the carrion-birds are already out and picking on bones.
You really think GS can hit-and-run this by the end of April?
Clotpoll Says:
March 18th, 2007 at 2:31 pm
Chi (324)-
You really think GS can hit-and-run this by the end of April?
Lee Harvey:
Making a point.
However, GS can certainly buy something out of the market when they get a whiff that some other vulture is circling. Watch them regurgitate it for profit. Please use this visual…..same item…with extra material placed around it…charge extra.
Continuing with the vulture example…barf up possum and bile in exchange for a nice fresh kill rabbit.
Chi (321)-
“Managing Director of Cheese, Americas”?
Ask Grim if he wants the moniker.
Chi (327)-
Our analogy is accidental, but apt.
Enjoy:
“Debt is Wealth — look at all the great societies the world has produced and you see one thing in common: debt. Debt builds wealth. Imagine if there was no debt and no ability to borrow. Want a $50K BMW? You have to pay cash. Want a plasma TV? You have to pay cash. Want a house? You have to pay cash. How long would most people be able to function in such a world? It would be a nightmarish place filled with poor, unhappy people. However by introducing debt into people’s lives you gain the ability to procure wealth. People can leverage that debt to purchase homes, cars, needed consumer goods, etc. The debt allows people to create wealth for themselves and also for other people too. Everyone wins in a debt fueled society except perhaps the gold hoarding no debt renter who keeps expecting civilization to collapse. For them the debt fueled world is a nightmare in which they fill up their minds with imaginary gloom and rationalize why all this wealth will lead to disaster.
Slavery is Freedom — I remember reading once someone saying that they did not want to become a slave to their home. They felt the seeming high prices of homes today means they are slaves to the house, spending weekends fixing up the house or working second jobs to make the mortgage payment. But what they don’t realize is the freedom the home gives you. You see, every hour spent putting in granite countertops or fixing the yard is money in your pocket. You are using your time to create wealth. And every nickel you put into that mortgage from that second or third job comes back to you dressed up as a twenty dollar bill. This wealth creation gives you freedom. If you need $100K to give your child an Ivy League education you can use the wealth created by your home to fund it. Try doing that with your canceled rent checks and see how far that gets you. If you need Bruno Magli shoes and an Armani suit for a social function you can tap your home equity line of credit and the best part is you get to deduct it all from your taxes. Thank you Uncle Sam! This so called slavery leads to the greatest freedom a human can possess: the freedom to do anything.
Fear is Happiness — one of the main reasons why people stay renters is fear of failure. They are afraid if they buy a house they might lose everything. They see isolated instances of this happening and assume that they will be one of these unlucky few. However, by embracing the fear and buying one or multiple homes you open the door the complete and joyous happiness. Every home owner is afraid the first time they buy a house. They have those lingering doubts that perhaps it is a mistake. But as time passes, and the massive equity builds, they realize that the fear of success has been supplanted by happiness at their wisdom of purchasing a home.”
*************
ThereIsNoHousingBubble
http://thereisnohousingbubble.blogspot.com
It is a parody in case anybody was wondering…
SG/ JB /ChiFi/BS Bob/ Other experts (with access to data for previous housing downturn) – How did the higher price segment do in previous downturn? My gut says that would have been the hardest hit (also confirming from Al’s / Homer’s experiences from entry level housing market).
I mean if this whole housing bust comes out as predicted on this blog, a house which was priced say $900K in 2005 – could it go down to $600K by 2009-2010? If yes, does that scenario have to be accompanied by a recession (as in 1991-92) or can it happen just based on tighter credit controls and media scare of buying house?
Paul (311).
Thanks for your info. I hate when builder tries to make lot bigger and house smaller. I think I’ll just pass on that house and wait (Even if I wanted to bid, I dont think that the owners are ready to face Mr. market @420K :) )
BC (302)-
And…you’ll never see an important NBA game called by that bag of blood, Billy Packer.
Honest to God, can’t somebody put him out to pasture? He is the human equivalent of an irritated hemorrhoid.
Although it’s always a pleasure to hear him try to call his way thru a Carolina game while trying to keep his total Heel-hatred in check.
My post 332.
I meant ‘BC Bob’, not ‘BS Bob’.
att Says:
March 18th, 2007 at 3:02 pm
My post 332.
I meant ‘BC Bob’, not ‘BS Bob’.
I zeroed in on that immediately……Freudian slip? Leave him alone…..his BC boys got waxed when he figured they were favored. He’s probably on “hair of the dog” patrol right now.
att, there’s already a recession in auto. housing recession has been postponed by low rates, ARM, neg IO mortgages, etc. Real inflation (if you include oil and food – which is excluded from CPI) is closer to 8 – 9% and guaranteed to go up – no matter how the govt cherry picks and markets it. manufacturing is in a recession.
What’s left?
home owners can be in denial all they want. The inventory will only explode and cause a bigger wreck..
there’s a perfect storm brewing.
RentL (337)-
Real rate of inflation 8-9%? How do you arrive at that number? Can I assume you’re old enough to remember when that kind of inflation was around? What are the similarities between now and then? I don’t see them.
In the last three months of 2006, lenders began foreclosure proceedings on about one out of every 200 mortgages, the highest rate on records dating back 37 years, according to the Mortgage Bankers Association.
Go ahead folks, write the scenario for the next round.
Clot,
Ok… so, here’s the deal… we put our $399K offer in as a verbal one… and as our agent was emailing it over to the listing agent this morning, he called and left a message… and said… guess what?… there’s another buyer… apparently, this other buyer is offering around the same amount as us… so, the listing agent said, of course, give us your best offer… we didn’t budge… same $399K deal… but we’re asking to see the other offer… in the state that we’re buying in, apparently you can ask to see the $$$amount… they just white-out the name and other info… anyway… what do you think? Is there anything else we can do? We think the other buyer is a non-existent one…
clot, regarding inflation –
by real inflation I am not talking about the advertised CPI or PPI.
If you include how much your gas bills, your energy and food bills are going up.. It’ll come to around that percentage.
Since the govt is trying to hide real inflation (by hiding M3), it is hard to come up with the real number:
http://inflationdata.com/inflation/Articles/M3_Money_supply.asp
MJM (340)
If the other buyer exists, would you increase your offer? Does the other buyer even matter??
I remember JB mentioning quite sometime back that he was talking to a seasoned realtor, who told him that ‘there is always that other buyer’.
Personally, I refuse to get sucked into bidding wars. On top of it, I’d mention to them that you’ve heard this phrase a million times, and it has seldom been true. I’d work on either withdrawing the offer, just for the fun of them calling back with sorry face and begging you to retable the same offer in weeks. Alternatively you can go with ChiFi’s advice on putting a clause that the offer amount decreases everyday after 3/26.
Can anyone tell me if MLS#: 2380834 is offering any extra money to the buyers agent. Our agent has been pushing this house hard and I’m just wondering why….thanks!
MJM (340).
I see that you’ve put in only ‘verbal’ offer at 399K. If true, good for you. I dont think verbal offers are binding.
I’d say simply tell them that your interest has decreased and your offer of 380K is now your valid and best offer. Also tell them congratuations that there is another buyer @399K. Tell them that it probably should be a done deal with that other buyer (I can bet my money that they’d come back to you @380K).
Dont throw your money. Think how much time would it take for you to save that 20K. All of us know that there is no other buyer, why would you give away 20K when you know they would come back to you and sell to you @380K.
Anyway – it’s your money and your decision.
… and i did not include property taxes (home prices and property taxes are exempt from CPI), that will go up to pay for the drunken sailors in the govt.
Clot and everyone… sorry bad writing on my part… just to be clar… i meant to say that our 399K offer was verbal… and that my agent was just about to email over our formal offer in writing of 399K, when the listing agent called and left a message…
Debt is Wealth and other Doublespeak ala 1984
Some debt is good. When used for appreciating assets. Of which there are only a few education and housing being the personal ones that really matter.
Or we would be back to only rich kids getting education and thus getting the jobs keeping them rich as well as being a nation of rentors like prior to the 1910-1920 era when that changed.
But I see consolidation of property already happening again and this downturn will only accelerate it.
MJM,
When we asked to see the “other” offers when we went through the bidding wars 7 years ago, the reaction of the realtors was like bringing Dracula to the beach on a bright, sunny day. If they allow you to see those “offers”, then by all means, consider your options. If they don’t, stay firm to your offer or say buh-bye.
MJM (390)-
You didn’t mention that your offer was just verbal. Not good. Not good at all. Get it in writing, get your pre-approval attached to it, get a grand or two of earnest money into escrow, and get it into the seller’s hands. Your “verbal” and a nickel buys you a cup of coffee. Things that aren’t in writing do not exist.
Where are you that seller’s agents are stupid enough to show competing offers to other interested parties (especially those who haven’t put pen to paper?). I want to open a practice there.
Don’t worry about the “other guy”. If it’s a ruse, you can smoke it out by stating that your offer is on the table until midnight. If midnight comes- and you pull the offer- you can always re-submit in a few days, if the property still shows available. The seller should then be well-chastened if they used the whole “another offer just came”-game as a ruse.
Whatever you do, keep in mind that you can’t win if you’re just avoiding losing. Get your offer strong, then press your bets.
Clot,
Long story short… the offer of 399K is now in writing… and we are now asking for this other buyer’s offer in writing as well… to ensure that we’re not competing against ourselves… i was just saying that as our agent was in the process of offering our 399K offer over to this listin agent… he called and said that there’s another buyer who is putting an offer a little bit more than ours… so, he was asking for our best and final…
also… do you really think that i should try to smoke them out or just hang back and see what happens?
If you have 11 minutes on a Sunday afternoon, listen to this file from Bloomberg. An economist from FannieMae. Someone with exposure to a lot of data, but with no agenda to defend [effectively for all intents and purposes]. It won’t knock your socks off, but is it a primer for the coming week, and it cuts across practically every housing topic out there on a national basis. Pithy choice for your precious time…..
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vUsqYTeOQi3s.asf
I put the link up, but it is moderated
RentL (341)-
OK; I have household bills, plus bills for an office building. I’m not seeing anything like an 8-9% YOY increase…my energy bills are down, and as I run thru my line items, I see most things as flat, and a few things with more like a 2-3% increase.
I’m the first guy to accept the theory of the “real-life rate of inflation” being at around 3% YOY- no matter what- just thru the nickel-and-diming of many who provide goods and services. However, I gotta call BS on a number around 8-9%…if that sort of thing were true, it wouldn’t being flying under the radar…and the first symptom of it would be a re-emergence of the “buy it now, it will just be more expensive tomorrow” philosophy. And right now, consumer numbers show the trend to be the opposite.
Clot,
NBA, or Never Been Adjusted.
No argument regarding their athleticism. They are simply the best athletes in the world. Not a fair comparison, Suns/Mavericks and USC/Arkansas. That’s like comparing gold to the US dollar. Of course you’ll have some clunkers along the way in the madness. Not nearly as bad as 82 exhibition games and everybody pack for the playoffs. Any league that still has the Knicks in contention for a playoff spot, at this point, must have some issues.
When I discuss the difference, I’m talking about the journey, pagentry and excitement that makes this tournament so much better as compared to the NBA. Thirty games, conference tournaments, bubble busters and the march to one shining moment. After Jordan blitzed the Jazz and was assisted off the court, sending the Mormons to the bar, there has been very little drama since. About all I can remember post Jordan, is Shaq rapping to his own music. Off the top of my head, compare this to Tynus Edny going coast to coast in the 2nd round on their eventual run to the title, Pete Carrill leading 5 guys who couldn’t jump nor run to a near stunning upset over Alonzo and gang, Bryce Drew buzzer beater, two freshman leading Cuse to a national championship {Wicked, help me out}, etc…
Just me, NBA is not even in the same league. I would take a ticket to the final 4, any day, over an NBA final. Again, nothing to do with athleticism. Billy Packer, I agree, put him out to pasture.
ATT,
I like that [BS Bob]. I may change my logon. By the way, that’s a compliment compared to other names which have come my way.
MJM: walk away – insulting
these guys are combination of a one word noun for a child of unwed parents
AND
people with mental deficiencies characterized by IQ’s that range between 50 and 69.
Chi,
The listing agent is indeed soft in head… and so is my agent, who was suppose to put our verbal offer of 399K this past Friday and only sent it over this morning… i also had to remind my agent that we rent; so, this deal does not contain a contengency…
BC (354)-
Knew you were coming back with the Knicks. There is no defense of that organization, the Dolans or Thomas (the NBA’s version of “failing forward”). Nor is their decrepit “World’s Most Famous Arena”- reeking of day-old bongwater, and ringed with hustlers and pickpockets- the site for anything resembling “pageantry”…unless your idea of pageantry includes fighting through a phalanx of surly cabbies, transve$tites and p!mps to get to the front door. What other club in pro sports could make a jackal like Larry Brown look like a victim? Just amazing incompetence.
No argument with the great moments that will surely come in this year’s Madness. The only down is that it seems like you have to sit thru 5-6 USC/Arkansas to get one “shining moment” this year. These first-round games have largely been a bust (Dook’s heartwarming loss aside).
And, as far as the NBA’s playoff format goes…it’s a men-only, flat-out war of attrition in which fluky wins are overshadowed by the inexorable math of 4-out-of-7. Advancement is earned, and if the Knucks make the playoffs this year, we’ll be treated to their gory execution at the hands of the Pistons.
Finally, the league did stumble after the exit of MJ. It’s hard to turn a gang of millionaire carjackers and wife-beaters into sympathetic PR figures. However, Dwayne Wade in last year’s championship run put in a MJ/Magic/Bird-level performance. And, the Mavs are using the whole league as a punching bag this year and are well on their way to 70 wins. Impressive! Nobody can go 7 games vs. them this year…might as well hand over the trophy now.
Michele
2380834 -no buyer agent incentives
KL
MJM-
It doesn’t hurt to ask to see this “other offer”, especially since it’s the norm in your part of the country. Maybe they’ll show it to you. The worst they can do is say no.
However, don’t get too nuts over this other party. The real focus should be how much YOU value this home…absent other influences. Do you feel like you could walk on this place right now? Then let your actions make that statement to the seller. Is it worth it to you…only up to a certain price? Then, discipline yourself, and don’t exceed it.
KL,
I was hanging around Clinton. I don’t mean Bill and Hillary.
Clot,
Just quick, I really know where your heart is. How about I go to the Meadowlands next Friday, you go to the Garden.
BC (361)-
Naaah. Still working on a family-for-tix trade. I told the kids if the games are good, I’ll try to rescue them afterwards. The wifey, she’s on her own. LOL.
BC (36)-
Hanging around here? Doing what? Watching ice floes on the river?
Hey Prof-
How did IPTAY handle Rick Barnes when he was at Clemson? Must’ve driven you guys nuts.
If there’s a worse coach in America, I’d like to see him. This guy’s got the best player in the college game…and won’t give him the ball.
Clot,
I hear you… we do have a final offer price… however, i just want to make sure that we’re not bidding against ourselves… and needlessly burning money.
RE: 354
Bryce Drew buzzer beater, two freshman leading Cuse to a national championship {Wicked, help me out}, etc…
The odds makers in Vegas had Syracuse as a preseason 600 to 1 shot to win the NC that year. I was in Aspen bar with six of my Syracuse boys for the final four game. Heckling a bar full of Texans… priceless.
Clot,
That was an ave around the hood., not a picturesque town with comfy inns.
I have somebody working the Carolina sid, we’ll see. By the way, did you notice any disconnect on Friday??
Wicked,
I can ony dream.
Re
Boy they sure put up those “cheap” looking condos next to Whole Foods just north of Red bank in a hurry! I can’t believe anyone would pay 400 something for cardboard. I guess they figure on getting all those young pseudo intellects who pay outrageous food prices next store!
It’s a real shame. My parents live off of Navesink River road (where I grew up) about a mile from there. The condo development used to be a nice wooded area. My parents literally went on vacation for a week and came back to town… the woods were gone. They were horrified.
I remember when nicholas was a crappy Mexican joint that would serve me when I was in High School. Now it’s fine highway 35 dining.
Re: 366 last post “in an Aspen bar”. I’m never going to get the hang of this pda.
off
I know SAS trashed Little Miss Sunshine….and yeah…is was….okay…but it did contain probably the best 3 minutes in US cinema in 2006. Scene 5. Minutes 22 to 26
Frank: I take it you didn’t like it at Sunset Manor?
Sheryl: Frank…
Grandpa: Are you kidding me? It was a ####### paradise. They got pool… They got golf… Now I’m stuck with Mr. Happy here, sleeping on a ####### sofa. Look, I know you are a #### and all, but maybe you can appreciate this. You go to one of those places, there’s four women for every guy. Can you imagine what that’s like?
Frank: You must have been very busy.
Grandpa: Ho oh. I had second degree burns on my johnson, I kid you not.
Frank: Really?
Grandpa: Forget about it.
For this Alan Arkin gets an Oscar!
clot, regarding inflation –
did you check the link I gave.
I’m no economics professor, but it’s clear that the govt is hiding inflation by not disclosing M3. And, dispute me, but the govt benefits from having high inflation at the same time making the official numbers look low.
According to that article the inflation is actually around 9.4%.
Here’s the article again:
http://inflationdata.com/inflation/Articles/M3_Money_supply.asp
“A professor who recently completed his seventh annual study on subprime lending in Massachusetts believes more than 20,000 of such high-cost loans originated in the state in the last two years alone will eventually end up in foreclosure.”
“Statewide, foreclosure petitions jumped nearly 70 percent last year, according to The Warren Group, a Boston-based publisher of real estate data.”
http://business.bostonherald.com/realestateNews/view.bg?articleid=189276
Since when are clot and rent civil? The last thing I recall was “lard” and off-color body parts being bandied about..
(358) KL – Many thanks.
How are your bracket busters, no bs please. I have 10 still alive.
Speaking of bs. The top categories of male bs, not in any particular order;
1) How much we earn
2) Our sex life/how large
3) Our golf scores
4) Our acumen for winning trades/stock market
No wonder females always state that males are insecure.
chifi, this time around, I would love for clot to be correct! I wish the inflation is really the ~3% that we are fed to believe. The reality is too scary.
Guess what the quarter plus interest rate increase in China would do to our inflation?
BC,
I have’nt even seen clinton yet. Just the outside when I took the pic.
Too much craziness on the home front the last week or so.
KL
Whole Foods isn’t that expensive if you mostly buy their store brands (that’s what I do). I frequently feel sick now when I ate that heavily processed mass market groceries and soda. WF’s fresh fruit is so good I actually eat it, and their meat are great.
Rent,
I’m in your camp. It seems like M3 is at approx 9-10%. M3 at more than 3X’s GDP, Yikes. Monetary inflation seems to be ignored in the equation. Also, all should understand how our cpi is calculated. Go ahead and trust our govt #’s, akin to good faith and a promise.
KL [379],
That’s not what I told the Mid agent. Hah, Hah.
A realtor was telling me a certain townhouse development was now a bargain with prices dropping 40k (10-12%) in the last 6 months. I told him at that rate of deprecation I might be interested in the summer….. of 08.
Note only might be interested. Dropping 6 to 7k a month would put a 2 bdr2.5 bth 1 car garage with a full basement and a loft would be around 250k by Aug 08. Not too unreasonable and would place a 20% down PITI + HOA about the same as renting.
Lord (372)-
Missed that link before. Thanks.
Not debating the M3 skullduggery (I think I was one of the first here to call BS on Fed non-disclosure), but these 8%+ guesstimates just don’t feel right.
Still stand by my thought that if inflation is running that high, the psychology of the average Joe would be a lot different. 75% of inflation is the presence of a pernicious inflationary mindset, a la 1980.
And, whatever amount of inflation any of us believe is present now, it’s gonna pale in comparison to the carpet bombing of green that’s about to be unleashed by Helicopter Ben. The Apaches are locked and loaded.
BC
That last post of yours (380) reminded of the Seinfeld show when Elaine runs into Susan’s Parents and they mention george said he has a home in the hamptons. Elaine asks George why they thought he did, he says I told them I did, what did you tell them?? She says I told them Ya didn’t !! And I laughed and I laughed.
I guess you had to see it..
KL
JB,
The Asbury Park Press is running a 3 day series on subprime lending called “Home Roulette: Gambling with your house”
Here is part 1:
http://www.app.com/apps/pbcs.dll/article?AID=/20070318/NEWS/70318001/1001/DWEK01
May be worth posting Monday A.M.
ChiFi (374)-
Mr. Rent is onto something. I’m just quibbling with his number.
I play nicely with others. Just don’t call me names.
BC (367)-
Big disconnect. The trigger finger’s itchy. Really wanting to long SLW to get the “speedball” effect on the first bang. Even the junior golds are behaving.
Clot,
AUY, and;
http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=NAK
“The long and short of it is that we are in uncharted territory. The setup today is unlike the arrangements at the time of the last real estate flop twenty-five years ago.”
“And just think, it was only a few years ago that those smart men and women they released from the think tanks to lecture us were explaining that the days of uncertainty and worry were all in the past.”
http://www.cbsnews.com/stories/2007/03/16/opinion/main2578986.shtml
BC-
Jeez…the future’s so bright, I gotta wear shades.
BTW, end of the 3rd, Kobe’s got 38, and I don’t think Phil’s gonna pull him.
T’wolves start the 4th doubling Kobe off the ball.
bairen #381, which development is this?
sorry long post…………
AHEAD OF THE TAPE
By JUSTIN LAHART
Believing In House of Cards Haunts Investors
March 19, 2007
Investors who trusted in the magical powers of the stock market to forecast a recovery in housing have been finding out what can come of trusting in fairy tales.
Less than two months ago, the idea that the housing market was at a turning point, and that shares of home builders were a screaming buy, was firmly established. In early February, the Dow Jones Wilshire U.S. Home Construction Index of home-builder stocks was 39% above its July 2006 low point. Since then, it has tumbled 21%.
One reason for the drop was that subprime mortgages turned out to be a much bigger problem than many investors thought. There also was a spate of economic reports that made it clear a recovery in the housing market wasn’t yet at hand.
How did investors come to believe housing was getting better in the first place? One possibility is that the rebound in home-builder stocks tempted them into seeing signs of improvement that weren’t really there. While there is a certain allure to the idea that stocks, which move on the real-money decisions of thousands of investors, are better at predicting the future than any forecaster, this sort of thinking can be dangerously circular: Home-builder stocks are going up, therefore housing is getting better and therefore it is time to buy home-builder stocks.
It wasn’t just the stocks that got it wrong. Former Federal Reserve Chairman Alan Greenspan, who last week warned that the trouble with subprime mortgages could spread to other areas of the economy, said in October that he saw signs that the worst was over for the housing industry.
Home builders were talking about how they expected the spring selling season, which actually starts before winter is over, to take care of a glut of excess homes, which would lead to a recovery in prices that would lure buyers back into the market. Now they are saying the season has been lousy.
But not everyone got caught up in the idea that housing was on the road to Wellville. Ivy Zelman, a Credit Suisse analyst who became bearish on home-building stocks as they approached their top in July 2005, has continued to document how far-reaching the sector’s woes extend. Her latest report, published last week, details how the mortgage mess could affect the builders. She estimates that 20% fewer new homes will be sold in 2007 than last year.
Northern Trust economist Paul Kasriel says he saw no reason to revise his negative view on housing this fall. He thought the speculation on the way up had led to a glut of homes on the market that couldn’t be easily worked through, and he suspected there were lurking problems in the lax lending standards that helped to fuel the latter stages of the boom.
Finally, with the help of bearish housing blogs like Calculated Risk, Mr. Kasriel kept tabs on a lot of the local news stories on housing. Even allowing for the fact that there was a negative slant to which items were selected, he says, “there were so many bad stories out there that it suggested further problems.”
moderation hell…………….
WSJ
chicagofinance Says: Your comment is awaiting moderation.
March 18th, 2007 at 10:25 pm
sorry long post…………
AHEAD OF THE TAPE
By JUSTIN LAHART
Believing In House of Cards Haunts Investors
March 19, 2007
Investors who trusted in the magical powers of the stock market to forecast a recovery in housing have been finding out what can come of trusting in fairy tales.
Less than two months ago, the idea that the housing market was at a turning point, and that shares of home builders were a screaming buy, was firmly established. In early February, the Dow Jones Wilshire U.S. Home Construction Index of home-builder stocks was 39% above its July 2006 low point. Since then, it has tumbled 21%.
One reason for the drop was that subprime mortgages turned out to be a much bigger problem than many investors thought. There also was a spate of economic reports that made it clear a recovery in the housing market wasn’t yet at hand.
How did investors come to believe housing was getting better in the first place? One possibility is that the rebound in home-builder stocks tempted them into seeing signs of improvement that weren’t really there. While there is a certain allure to the idea that stocks, which move on the real-money decisions of thousands of investors, are better at predicting the future than any forecaster, this sort of thinking can be dangerously circular: Home-builder stocks are going up, therefore housing is getting better and therefore it is time to buy home-builder stocks.
It wasn’t just the stocks that got it wrong. Former Federal Reserve Chairman Alan Greenspan, who last week warned that the trouble with subprime mortgages could spread to other areas of the economy, said in October that he saw signs that the worst was over for the housing industry.
Home builders were talking about how they expected the spring selling season, which actually starts before winter is over, to take care of a glut of excess homes, which would lead to a recovery in prices that would lure buyers back into the market. Now they are saying the season has been lousy.
But not everyone got caught up in the idea that housing was on the road to Wellville. Ivy Zelman, a Credit Suisse analyst who became bearish on home-building stocks as they approached their top in July 2005, has continued to document how far-reaching the sector’s woes extend. Her latest report, published last week, details how the mortgage mess could affect the builders. She estimates that 20% fewer new homes will be sold in 2007 than last year.
Northern Trust economist Paul Kasriel says he saw no reason to revise his negative view on housing this fall. He thought the speculation on the way up had led to a glut of homes on the market that couldn’t be easily worked through, and he suspected there were lurking problems in the lax lending standards that helped to fuel the latter stages of the boom.
Finally, with the help of bearish housing blogs like Calculated Risk, Mr. Kasriel kept tabs on a lot of the local news stories on housing. Even allowing for the fact that there was a negative slant to which items were selected, he says, “there were so many bad stories out there that it suggested further problems.”
Pretty much everybody here had sussed that the HB stocks were just a nice trade for a quick buck. The fundamental 1-2 punch of stupid-low P/Es and top stocks trading at book value drove the trade for a few fun weeks.
The air started coming out of this sector well in advance of the subprime blowup, as earnings and writedowns disappointments kept driving multiples lower. The subprime news delivered the kill shot…probably for the rest of the year. The only company in the space that bears attention is WCI…if only to see what Icahn’s next play will be.
If WCI rebuffs Icahn’s bid, they’ll be driven into the pink sheets.
Of course, WCI has a poison pill in place. On the other hand, they have (allegedly) valuable land and a backlog of solid, booked sales with a minimum of 20% down…a rarity these days.
More twists and turns than an episode of The Hills. Icahn saying he wants to “unlock value” should be enshrined in the “Famous Quotations” top 10…along with “I’ll be baaack”, “Where’s the beef?” and “Read my lips (you schmuck)”.
Icahn’s also reached into his old playbook for a gambit we haven’t seen in a while: the public denuciation of current management as “incompetent”. Just when you thought the guy had mellowed…
Man, I’m played. Can’t push this thread over 400 by myself.
BTW, Kobe finishes with 50. T’wolves cost themselves a shot at winning the game just to shut him down. 115 points in his last two games. Just a sick performance.
Better than any March Madness.
http://www.pimco.com/LeftNav/PIMCO+Spotlight/2007/In+Focus-+March+2007.htm
Excellent study about the state of housing.
Holy Crap, whoever put in that link to the Asbury Park Press article.
This chart was attached, huge swaths of the state where over 50% refinanced, and a lot of those took money out:
http://www.app.com/multimedia/maps/20070318_refin/
OK, just so there will be a 400.
INTERACTIVE MAP: 2005 Subprime Loans in New Jersey
http://www.app.com/multimedia/maps/20070318_subpr/
INTERACTIVE MAP: Refinancings and Home Equity Loans 2003-05
http://www.app.com/multimedia/maps/20070318_refin/