From the AP:
Report: Subprime woes to drag ’07 market
The subprime mortgage implosion will take even more steam out of the already slowing real estate market this year and beyond, according to a new economic report.
More than two dozen subprime lenders have shut down in recent months and others are scrambling to stay in business as a spike in defaults caused by borrowers unable to make payments has rocked the mortgage industry.
Now, as lenders tighten credit standards, the housing market will likely see further declines in price and output, senior economist David Shulman wrote in the quarterly Anderson Report to be released Monday by the University of California, Los Angeles.
“We suspect the problem in the subprime area is just the tip of the iceberg for the mortgage market as a whole,” Shulman wrote. “For all practical purposes, the subprime market is in the process of shutting down.”
From Inman News:
Forecast: Housing market loses its legs
Aftershocks from the subprime market disaster will deal another body blow to the already reeling U.S. housing market, though the economy should weather this latest storm without a recession, according to an economic forecast released today.
The quarterly Anderson Forecast, produced by the Anderson School of Management at University of California, Los Angeles, reports, “Put bluntly, the credit crunch in the subprime mortgage market will likely trigger a second leg down in the housing market in terms of output and prices.”
Edward Leamer, forecast director and a professor of economics and statistics at UCLA, said the severity of the subprime meltdown was a surprise since the last forecast was produced.
“This thing started in the Midwest, where jobs were weak and prices were weak,” he said, and has since mushroomed to national scale. Foreclosures are on the rise, but the more critical issue for the economy is the ability for consumers to purchase homes.
“There are sad individual stories about people who got into homes they couldn’t afford. I think the real story is not what’s happening to the people who own homes — it’s what happens to prospective buyers who might be buying a home soon. The energy of the market, a lot of it is in the subprime, low-income homes. You need new money in the market in order to fuel the price appreciation. A lot of the new home buyers have been at the lower end — start-up, entry homes. If you pull that out of the market, where’s the fuel that’s going to keep the fire going?”
He added, “The economy overall is going to be impacted by the inability to provide fuel to drive housing forward.”
…
Leamer said there is some difference of opinion among forecasters on the topic. Leamer said he believes that the Federal Reserve “can’t have much impact on the housing sector at this point,” and a lowering of the federal funds rate “is not going to alter the problems in housing — it is not going to reignite the subprime market.”These problems will need time to heal, he said. “It’s going to take some period of appreciation again in homes. I think that the Fed policy has create a real bind — they seem not to realize that by overbuilding homes and having appreciation that was unsustainable it eliminates the ability to stimulate the economy by the rate cuts,” Leamer said, adding, “It has created kind of an unfortunate environment in which rate cuts are not going to matter much.”
Schulman’s report states that the housing market may take many years to recover, and “will look like the protracted decline that took place in Southern California from 1989-96.”
From HousingWire:
Moody’s: Deterioration Continues for Prime-Quality Mortgage Pools
Serious delinquencies — borrowers more than 60 days in arrears — for U.S. jumbo mortgages increased 16 percent during the fourth quarter of 2006 compared to year-ago levels, according to a report issued recently by Moody’s Investors Service.
The report also found deterioration in early-stage (30-59 days) delinquencies among jumbo borrowers, with early-stage delinquencies rising on a year-over-year basis for the first time in the last two years.
The uptick in jumbo delinquencies could indicate that the recent troubles in the subprime market may be spilling into certain prime markets, although numerous sources have told HW it is too early to tell for certain. Jumbo borrowers typically have very good credit, but have large mortgage balances that exceed the conforming loan limits set by Fannie Mae and Freddie Mac.
Delinquencies among jumbo mortgages reached their lowest point in history during the third quarter of 2005, the report noted, and authors Peter McNally and Bruce Fabrikant from Moody’s were quick to point out in their analysis of the U.S. jumbo mortgage market that the observed increases in delinquent borrowers across the back half of 2006 represented a “relatively benign” amount of the jumbo mortgage pool in absolute terms.
“Since the fourth quarter of 2005, serious delinquencies have increased about 4½ basis points to reach 0.330% [sic],” McNally and Fabrikant said in the report.
“As a point of comparison, serious delinquencies in the home equity sector, according to Moody’s Home Equity Index Composite, were 7.62% [sic] during the third quarter of 2006 (the most recent report).”
I’m new to this thread, and usually only have time to read, learn but not post.
I currently rent in NYC, and am looking to buy our first house, not sure exactly where yet, but affordability of course, is the main factor.
Thanks to all of you for continuing to put the info out there, especially jb!
I was surprised to see prices predicted to drop this far, although it makes sense-
Housing drop may deepen
Forecasters say prices could plunge 30% to 50% more
Economists at a forecasting center in Westchester County say the nation’s housing market is far from being done with its downturn.
http://www.poughkeepsiejournal.com/apps/pbcs.dll/article?AID=/20070327/BUSINESS/703270312
Third Leg down: ARM and IO resetting.
Helicopter Ben: he should raise the interest to control the inflation.
“it’s what happens to prospective buyers who might be buying a home soon.”
I know this word is foreign to the natives. It’s time to save. Yes, save for a dp. Ouch. Everything that dies someday comes back. By the way, how many potential home buyers were just recently swept under the the putrid carpet in the POS cape.
Maybe through constant repetition [save,save,save] a reflex will be triggered. Hopefully in time, they will learn to salivate when they realize their bank account is growing as opposed to only salivating when a new gadget/new line of apparel/new car model is introduced.
“I was surprised to see prices predicted to drop this far, although it makes sense-Forecasters say prices could plunge 30% to 50% more.”
As JB has pointed out several times with these types of forecasts… perhaps it means that NOMINAL prices only decline by, say, 10% over 6 or 7 years,with 3% inflation… that would be about 30% in REAL terms…which seems quite realistic…and still, many think 30% is a crazy number…and it is NOT. 50% however sounds a bit crazy in all but the worst of the speculative areas IMHO.
And then there’s this:
For AIM Investments’ Fritz Meyer, concerns about the housing market are overblown. He sided with Bernanke’s assertion that the economy will continue to “expand at a moderate pace” and defaults and delinquencies among subprime borrowers won’t stanch demand for mortgages to more qualified home buyers.
Concern about subprime “got a little hysterical,” said Meyer, the Denver-based senior investment officer at AIM, which oversees $149 billion. “Stocks can and should do pretty well, absent the economy slipping closer to recession, which I don’t expect.”
Link: http://www.bloomberg.com/apps/news?pid=20601100&sid=aTQvi3GCHXD0&refer=germany
Also, can anyone find the address for MLS#: 2282800 in the Bloomingdale borough? I would appreciate it. Thanks
From Bloomberg:
Subprime Mortgage Bond Sales Plunge as Loan Delinquencies Soar
Sales of bonds backed by subprime mortgages are tumbling as investors and bankers, concerned about rising delinquency rates, pull back from what had been one of Wall Street’s fastest growing businesses.
About $64.8 billion of securities backed mainly by loans to people with poor credit or high amounts of debt were issued this year through March 22, down 36 percent from $100.9 billion in the same period last year, according to Citigroup Inc.
Packaging mortgages into bonds was the fastest-growing part of the debt market since 1995. Lehman Brothers Holdings Inc., Countrywide Financial Corp. and Morgan Stanley were last year’s three biggest issuers of securities backed by subprime mortgages and home-equity loans, according to Citigroup.
Subprime debt sales “will go down a lot as lending standards get tighter,” said Scott Simon, managing director and head of mortgage- and asset-backed securities at Newport Beach, California-based Pacific Investment Management Co., manager of the world’s largest bond fund.
This happy little exchange comes courtesy of Friday night’s “Fast Money” on CNBC:
Can this country handle another war? We’re not talking Iran. The real money is looking at the trade war we may have on our hands with China.
Today, after two decades, the U.S. Commerce Department slapped a tariff on paper from China and other “non market” countries. What’s the play as the US turns protectionist?
Dylan asks if it’s possible China might retaliate and unload dollars.
Eric Bolling says its probable. China is holding $350 billion in treasuries but after this, they’re not going to buy any more. Eric adds that will send the dollar lower and the trade is buying gold, because gold benefits when the dollar goes lower.
Tim Strazzini echoes that he too would buy gold and silver. If the US moves down this path the Chinese will move into non-dollar denominated assets, says Tim.
Dylan Ratigan shows a piece of his interview with Commerce Secretary Carlos M. Gutierrez who said “We don’t like protectionism… what we are saying here is we want to play by the rules and we’re asking other countries to play by the same rules.”
That video clip sets the guys off – Jeff Macke says he’s a politician and he’s rattling his saber.
Glen,
Feel free to email me requests if you don’t want those details made public.
MLS# 2282800 – 24 Van Dam Avenue
OLP: $310,000
LP: $245,500
DOM: 311
Purchased 2/2002: $131,000
Big bankers lowballing. From MarketWatch:
Barclays gets two-thirds discount on Regions’ unit
In another sign of the woeful state of the U.S. subprime mortgage market, Barclays PLC on Monday said it’s paying $76 million for a unit of Regions Financial — a two-thirds discount to what it agreed to pay just months ago.
Barclays said it has closed on the deal to buy from Regions Financial its EquiFirst non-prime mortgage originator.
Barclays said it will pay $76 million, subject to another adjustment to book value — though Barclays says that adjustment won’t be significant.
In January, Barclays agreed to pay $225 million for the unit.
From USA Today:
Home builders’ loans feel heat
The crisis in risky mortgage loans is shedding light on aggressive lending practices by some of the largest U.S. home builders, which stand accused of using lax standards and illegal sales tactics to arrange financing for buyers.
Last week, Beazer Homes acknowledged that its mortgage subsidiary is being investigated by federal regulators for loans made to hundreds of people who bought Beazer homes. But the complaints about loan practices go beyond Beazer.
The Department of Housing and Urban Development is taking more actions against home builders and their affiliated lenders, says Brian Sullivan, a spokesman for HUD.
“We are seeing increased consumer complaints about builders,” Sullivan says. “Including kickbacks and illegal referral fees, phantom incentives and other violations of our real estate laws.”
James,
Thanks very much!
Great post over at Lou Minatti’s blog, he spots a “St. Joseph Home Sales Kit” at Walmart:
http://louminatti.blogspot.com/2007/03/st-joseph-home-sales-kit.html
“That video clip sets the guys off – Jeff Macke says he’s a politician and he’s rattling his saber.”
Clot,
The best segment that I have seen on that show. They all slam dunked Gutierrez.
When I was growing up, a million dollar house meant something.
When I thought of a million dollar house, I pictured a mansion in Malibu Beach, over 10 bedrooms, a swimming pool filled with Play boy beach bunnies, overlooking the Pacific Ocean (OK. I was thinking, a Playboy bunnie in each bedroom. hahaha – I still remember my college roommate’s most prized possession – a mint condition, first edition Playboy, with MM as a Centerfold).
Now, imagine a Million dollar house in Northern NJ.
I wake up with cold sweat.
David [15],
Ditto. I always pictured the Playboy mansion, not a hot dog stand on route 17.
Has anyone heard about this rumor floating around of David Lereah resigning as Chief Ripoffomist of NAR?
No offense to my Catholic readers is intended, but I wonder how toasted condo owners will use St. Joseph. Would they bury him in a planter?
https://njrereport.com/index.php/2007/04/02/second-leg-down-for-housing/#comment-87615
Yeah a Planter purchased by me, somthing wrong with that?? (-:
KL
Has anyone heard about this rumor floating around of David Lereah resigning as Chief Ripoffomist of NAR?
April fools joke?
jb
KL (18)-
What are the Hindu, Daoist, Muslim and Confucian equivalents of the St. Joseph kit?
Third Leg down: ARM and IO resetting.
Helicopter Ben: he should raise the interest to control the inflation.
He should, but he won’t. If housing woes spill over into the broader economy, which I think will happen, Bernanke will jump on the gas peddle hard and fast.
In the Fed’s thinking, while its too late to save housing, a rate cut could cushion the fall. It could also get the next bubble started somewhere else and stave off a deflationary recession. Of course, it thins happens, it will mean a more precarious economy.
The ‘spring’ inventory flood has begun. Price points are getting crowded, and greedy tone deaf sellers now see a crowded market with better “values” (a relative term, given the still-bloated prices) all around them
In addition, this past week has seen two houses drop out out of contract in the zip I watch. That’s after a 1+ months UC. Victims of the new lending standards put in place April 1st?
Lots of lost deposits in the future for starry-eyed buyers relying on exotic financing.
Has anyone heard about this rumor floating around of David Lereah resigning as Chief Ripoffomist of NAR?
It’s an April fools joke
http://housingpanic.blogspot.com/2007/04/flash-david-lereah-resigns-from-nar.html
#18 and #20,
They say the Lord helps those who help themselves. I think divine or religious intervention is most useful when you ask for something completely out of your control, not when you fail to exercise common sense and put yourself in the dumb situation to begin with (i.e. overextending on a mortgage when you know you can barely make the payments, etc.)
It doesn’t take divine intervention to sell a home, just a lower price.
jb
#4 BC Bob: Yep I remember when getting a mortgage was like root canal;it hurt.
Everything old is new again, a down payment imagine that!
Lots of putrid capes ranches and colonials sold over a year ago, and nothing ahs been done, no painting, no landscaping, not even snow shoveling when it snowed 2 weeks ago.
****** When the 500k POS Colonial,becomes 400k, and the 450k POS Cape becomes 360K, than I will buy (and it is happening quickly) until then I rent
#22 Unrealtor: Oh you mena the good faith deposists of $500.00 to $1000.00, that so many home buyers put down?
ISM comes in a bit under consensus estimate, the prices paid index jumps.
jb
JB,
LOL, maybe you could sell those Home Sales Kits, at Walmart, “Sell your house – Lower your price”.
Will M&T Bank (MTB) the first casualty of the Alt-A shakeout? Stock is down some 8% this morning after M&T announced that it was seeing issues in it’s Alt-A portfolio late Friday. The issues run the gamut from writedowns to buybacks to difficulies selling in the secondary market.
jb
Maybe we could partner with TrimSpa and sell some kind of home sales pill or dietary supplement?
A twice-a-day herbal supplement guaranteed to help you sell your home. Maybe a powder or a shake? Sell your home while you sleep!
jb
(These statements not verified by the FDA)
Aah, April Fool’s joke. I was so happy to hear this idiot go that I forgot it was 4/1. What a pity.
BC Bob Says:
April 2nd, 2007 at 9:16 am
David [15],
Ditto. I always pictured the Playboy mansion, not a hot dog stand on route 17.
Bob, a hot dog stand on Route 17 is multi-million dollar real estate.
I want twin playboy bunnies in each bedroom.
Just a little Monmouth County inventory note.
The county’s three publicly available MLS’s had a total of 7,562 listings on March 28, about 16.5% higher than on the same day in 06 (6493)
In both absolute and percentage terms inventory increased during the month significantly less than the same month in 06
From March 1 to March 28 inventory rose by 520 listings, 8.7% in 06.
From March 1 to March 28 inventory rose by 363 listings, 5% in 06.
It is quite clear that inventory is not increasing as fast as last year, but there is still a great deal of inventory available.
I don’t think it would show much, but I would love to have some way to count FSBOs and see whether they have increased.
Last year there was no end of month drop in inventory from March to April (People must really have sensed the market was slipping away.)
This year the drop was there, but not all that big, by April 2 there were 53 fewer listings than on March 28.
This is the website used to pull the numbers:
http://tinyurl.com/2r2gsd
Important Note: My Ocean County numbers are not YOY comparable because several towns, including the biggest, Toms River (Dover), have no listings in the database, though if you specifically request listings for that town you get more than 1,000. I’m quite sure that pulls in nearby listings that are counted on the other site so there is no way to get an accurate tally with the sites I use.
Inventory pace (rate at which inventory is added to the market) is absolutely slower than what we saw last year, and trending down.
However, that shouldn’t be confused with inventory drawdown. We’re not yet drawing down inventory. Inventory levels have still been increasing, YOY, by double digit percentages.
That rate, however, has been falling.
jb
I’d post up the GSMLS data/graphs, but I left my laptop at home today.
jb
I concur.
The following from breakoutwatch –
Link to Bill Gross’s estimates:
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2007/IO+April+2007.htm
If you are lazy to read the whole thing, look at the 2nd chart.
JB, What do you think of this?
Was in Home Depot over the weekend looking for cheap blinds for my rental.
As I perused their collection of “window treatments”, priced exorbitantly (who spends that many thousands on curtains?), I wondered how many had been purchased over the past few years with funny money and HE loans as an “investment”.
This is going to be very painful.
Nothing compared to those who spent $100,000+ on kitchen remodels…
jb
New Century files for Chapter 11 bankruptcy
(Reuters) – New Century Financial Corp. (NEWC.PK) on Monday filed for Chapter 11 bankruptcy protection in the biggest collapse of a mortgage lender in the U.S. housing downturn.
The largest independent U.S. subprime mortgage lender filed for protection from creditors after several lenders forced the company to repurchase billions of dollars in bad loans.
New Century’s largest creditors included Goldman Sachs Group Inc.’s Goldman Sachs Mortgage Co.
Irvine, California-based New Century is the biggest casualty so far of the souring subprime mortgage market, which has forced many lenders to put themselves up for sale, to post losses, or to file for bankruptcy.
More on the same, from Bloomberg:
New Century Files for Bankruptcy Following Subprime Defaults
New Century Financial Corp. filed for bankruptcy in Delaware today, becoming the biggest mortgage lender for people with bad credit to seek court protection over the past year after delinquencies hit a four-year high.
Re post 34
If everyone in NJ puts their home up for sale today and only 1 home sells this month, next month inventory would DECREASE! (by 1 home)
A sure sign we have finally reached bottom, and that things are finally looking up.
Or at least that would be the NYT headline.
Press release from Prudential Fox & Roach..
Prudential Fox & Roach, REALTORS® HomExpert Pending Home Sales Index© Shows Signs of a Stable Spring in the Southern New Jersey Real Estate Market
DEVON, PA – April 2, 2007 – Reflecting February’s colder weather, pending home sales in the five-county Southern New Jersey region dropped during the month as compared to January, according to Prudential Fox & Roach, REALTORS®.
The first HomExpert Pending Home Sales Index© from Prudential Fox & Roach’s Research Division showed that contracts signed in February fell 13.1 percent to an index of 99.9 compared to 115.0 in January.
The following is the February 2007 HomExpert Pending Home Sales Index for the five-county Southern New Jersey region:
County
February Index
January Index
Percent Change
Burlington
88.7
102.6
-13.6
Camden
103.1
124.5
-17.2
Gloucester
102.7
110.9
-7.5
Mercer
107.5
118.9
-9.6
Salem
111.8
137.2
-18.6
(Note: Since when do double digit percentage declines point to ‘stabilization’? -jb)
#45 The real estate industry speaks a different language.
#40 JB Blinded but eh granite and the stainless steel. Although I understand that granite and stainless steel habe now becoem passe.
I wonder if I can persuade Altavista to include a Real Estate Agent to English translation option in Babelfish.
Hmm, maybe I’ll code one up this afternoon, might be kind of fun.
jb
I’ll laugh if in 10 years, we look back at granite and stainless in the same way we look at avocado paint, wood-grained formica, and pale yellow appliances.
jb
Damn, now I remember what the yellow was called, Harvest Gold!
jb
JB,
a slow day at work? :)
Hey, I grew up with formica.
I was initially thinking that the housing price will bottom out in 2-3 years from now.
Once ARM and IO resetting starts massivly and these homeowners can’t refinance due to tougher financing, housing decline might continue another few years.
I saw inventory rising last week in Closter from 82 to 91 but it is not increasing as fast as I expected.
Data at a town level is wildly volatile, mainly due to small sample sizes. I’ve found it useful to combine towns with their neighbors (where appropriate) in order to increase sample sizes to the point where the data calms down a bit. It’s only when you aggregate up to a county level that the data smooths out enough to be able to read any kind of clear trend or movement in the market. County level isn’t always appropriate, so try to find some middle ground with a multi-town analysis.
jb
investorDavid re Inventory,
IMO, sellers have also beginning to realize the housing burst. (For example, on MarketWatch.com’s front page today, “Now that housing has blown up…..”)
Sellers are holding a wait and see strategy. They are hoping for a spring rebound or David Lereah’s housing plateau.
Those who need to sell will eventually sell. Retiring, mortgage reset, moving up, divorce…….
CC
After reviewing prices the past 2 months, it appears that New Jersey near Philly isn’t taking that much of a hit…Maybe it’s because we’ve been better priced down here?
I did read #44 with those numbers, but price-wise – Is it possible that most of the negative numbers we hear is due to the extreme bubble areas? (ariz/ca/nv/fla)
Could it be those numbers are skewing the overall market? and maybe in NJ we will not take a major hit like the rest?
I’m not saying either way…just looking for other opinions.
thanks
billz
I’ll laugh if in 10 years, we look back at granite and stainless in the same way we look at avocado paint, wood-grained formica, and pale yellow appliances.
My thoughts exactly! Don’t forget tumble tile.
Can anybody provide status for this 2 NJMLS #s: 2636110, 2645928
thanks a lot!
From my vantage point, this post is the most significant information we have had in weeks. The rest of the stuff, while interesting, is really just noise.
James Bednar Says:
April 2nd, 2007 at 10:17 am
Will M&T Bank (MTB) the first casualty of the Alt-A shakeout? Stock is down some 8% this morning after M&T announced that it was seeing issues in it’s Alt-A portfolio late Friday. The issues run the gamut from writedowns to buybacks to difficulies selling in the secondary market. jb
It is obviously lonelier being a Realtor…..
http://news.yahoo.com/s/ap/20070402/ap_en_tv/maytag_repairman
One more question: Is there any way to find out the MLS# of houses that were listed in a particular town, at a particular price range and date? I was uninformed enough to follow them through a site that was not MLS and now I find myself with all this houses that I tracked for months without way of knowing if they sold, or were withdrawn or what. Thanks.
chicagofinance Says:
From my vantage point, this post is the most significant information we have had in weeks. The rest of the stuff, while interesting, is really just noise.
Chi,
I agree. The most important news headline we’ve had in the last two months is the sub-prime meltdown. If this turns out to be as big as sub-prime, that will be three legs taken out of the housing market.
billz (#53),
You know what it is Bill, people in Arizona, Fla., etc. know when the gig is up and the party has ended. Cycles behave normally in those places. In NJ, however, especially in Northern New Gluttony, the congregation of bovines need to have “it” and need to have “it” yesterday.
The Jones’ got a 64 HP snow blower? I need to get one, too. The Jones’ went to Disney? I need to go on a cruise. The Jones’ put an addition on their POS? We gotta get an inground pool and 340,000 BTU outdoor grill with six side-burners and a broiler.
This f***s it up for the old-school thinkers and makes the prudent ones look like losers. That’s why prices will stay flat at the very worst and the next “genius” will come by and buy somebody’s p*ss-smelling dump for an absurd amount of money.
And these are the same people who will no doubt re-elect the same charlatans who preach one thing and hack you to death of every morsel you earn while you’re powerless to stop it.
#53 bilz: It is only starting here, the Spring selling seasnon will really get under way right after Easter, althiugh I think we had a pre-Spring market in late Jan into mid March.
I believe we have seen just as much insanity as many of the other bubble areas. To think we are somehow insulated is I believe a msitake.
Also at some point I do believe that the residents of the People’s Republic of NJ will wake up and realize just what sorry shape our beloved state is in.
That too does not bode well for the future of PRNJ real estate.
We have got to have soemthing more than we are close to NYC.
Didn’t MS pull the plug on one of the big sub-prime lenders …was it New Century?
AP
Morgan Stanley Promotes Mortgages
Wednesday March 28, 5:08 pm ET
Morgan Stanley Urges Brokers to Promote Home Mortgages, Adds Bonuses
NEW YORK (AP) — The residential mortgage market may be floundering, but Morgan Stanley wants a bigger piece of it.
The firm has launched a campaign to push mortgages and home equity lines of up to $3 million through its 8,000 financial advisers. Like banks offering toasters to new depositors, Morgan Stanley is offering $100 gift cards to The Home Depot, Pottery Barn, or Sharper Image to new borrowers, according to announcements of the “spring campaign” sent to brokers.
It also is promising loan decisions within 24 hours of receiving an application during the course of the campaign — which was launched March 19 and ends June 15.
Brokers are also being offered added bonuses for selling home loans.
The “Spring Purchase and Refinance Campaign” comes as the mortgage industry is undergoing a credit shakeout, led by a deluge of payment delinquencies and defaults from subprime mortgage borrowers with poor credit histories. But Morgan Stanley, like Merrill Lynch and other competitors, has been eager to lock in its customer base with bank products as well as investment assets and aims at generally wealthy customers.
“With $1 trillion in adjustable rate mortgage loans re-setting in 2007, and with the uncertainty in the interest rate markets, many borrowers are looking to lock in a fixed-rate or to explore other mortgage alternatives,” Morgan Stanley wrote brokers in an e-mailed introduction to the campaign. “If you are not helping your clients meet these liability needs, a competitor is!”
Morgan Stanley and Merrill have recently bought subprime mortgage companies in order to obtain a supply of home loans for its investment banks to package into mortgage-backed securities for sales to yield-hungry investors.
Christy Pollak, a Morgan Stanley spokeswoman, confirmed the campaign’s details but would not comment on its goals or current mortgage assets in its retail brokerage unit. Morgan Stanley Chief Financial Officer David Sidwell last week said mortgages originated through its brokerage network are insubstantial.
Jed Horowitz contributed to this report.
So this is smoke….the question is whether there is indeed a fire, and how big the fire is…IN ITSELF, this M&T story means nothing, and if there is no follow-through then it gets branded as noise….watch in this area for the cutting edge..
http://www.bloomberg.com/apps/news?pid=20601170&sid=axd7JY1E9q4o&refer=home
#60 Prices are not going to stay flat Gary, I know you and I disagree on that, but they fell before, with out all the recklessness we have had in this market.
What is different this time some will say is we are nto in a recession,well that is coming, and I woudl argue we are well on our way into one now.
I agree with you that there are many shallow people in the PRNJ who must have the larest gadget and gizmo, but if you cannot borrow any more, than you cannot continue to consume with abandon.
Now truth be told I must say that when I do buy again, one of the first things I will do is buy in cash a hot tub, absolutely wonderful for lower back pain, especially after a work out.
Be patient Gary I know it is frustrating, but it is all unfolding now.
Speaking on the Southern NJ area. I know of at least 6 people (myself included) in my office of around 1000 people who bought or are in the process of buying. That seems very high.
I’ve been monitoring the Mt Laurel market and there hasn’t been any real price drops in at least 6 months.
I’m guessing that the SNJ market isn’t as bad as the NNJ market. Based on my limited knowledge.
“makes the prudent ones look like losers.”
Gary [60],
2004-2006 or 2007-2011??
Does anyone have any recent sales #’s for nutley? My wife and I are finally looking for our first home and are indecisive whether this is the right time to buy. We found a cheap fixer upper in a great location but still don’t know whether we want to pull the trigger. Some more info: The house we are looking at is ~425k and the surrounding houses were all assessed late last year in the range of 600k-1mil.
scribe: what is your reaction to this story? It goes one of two ways…..MS sees value and is buying on the cheap and priming the pump, OR the cynical (realisitic?) version, the spigot is about to turn off, there is money to be made in the short-run (before credit crunch and new regulation), churn out as much sausage as possible. Yeah we have anthrax and e-coli in there, but we will pay the fines and legal costs later. Just build in an expense item on the income statement (ex-post clean-up fees for remuneration, legal, compensatory, punitive damages etc.)
scribe Says:
April 2nd, 2007 at 12:08 pm
Didn’t MS pull the plug on one of the big sub-prime lenders …was it New Century?
AP
Morgan Stanley Promotes Mortgages
Wednesday March 28, 5:08 pm ET
Morgan Stanley Urges Brokers to Promote Home Mortgages, Adds Bonuses
NEW YORK (AP) — The residential mortgage market may be floundering, but Morgan Stanley wants a bigger piece of it.
bergenbubbleburst,
I’m hangin’ in there. Part of me says the laws of physics have been thrown out the window here (LOL!) and part of me says lending crackdows = no credit = no purchase = lower price. I’m begging to say I was wrong. Until then, I gotta keep kicking the dog. (NOT LITERALLY FOLKS!!)
ChiFi, don’t necessarily discount the “smoke,” as that same smoke (market perception) is what fueled the bubble on its way up, and has been fueling it on the way down.
I love the smell of RE meltdown in the morning.
#54
Don’t forget Viking fridges, 6 burner gourmet ranges, GE convection ovens, and on and on…
Historically, you only get about 65-80% of your investment back on a kitchen remodel (don’t quote me on the exacts, i can look them up if needed).
And, don’t forget that is only if the fixtures and other comparable homes. People won’t pay for a kitchen that’s way over-remodeled compared to other homes in your area and price range.
JM
Gary,
Do you have a strong opinion on $300 jeans?
BC Bob,
We shall see about 2007 and beyond. I’ll gladly buy you guys a drink in a few years from now and admit I was wrong.
Sorry, little too fast on the enter button – “…that is only if the fixtures and other work are similar to comparable homes.” Meaning, you have to use similar fixtures and finishes to other homes in your area that have been remodeled.
These flippers on TV are not indicative of real RE investors. They don’t waste money on outrageous appliances and the most expensive materials.
JM
Rich #72,
NOW, THERE IS SOMETHING I’D SPEND GOOD MONEY ON!! lol! No, I haven’t given it thought on the $300 jeans.
One thing I found out.
The nicer the kitchen with all that marble top, etc. the horrible the food.
In most McMansion home with top of the line appliances and marble everything, the kitchens are hardly used. Vanity.
David,
Don’t forget the copper pots hanging from the ceiling above the center island.
Marito,
SLD 17-02 MORLOT AVE $160,000 12/18/1
ACT 17-02 MORLOT AVE $549,999 8/1/2005
PCH 17-02 MORLOT AVE $529,000 9/8/2005
PCH 17-02 MORLOT AVE $515,000 12/6/2005
EXP 17-02 MORLOT AVE $515,000 2/1/2006
ACT 17-02 MORLOT AVE $489,000 5/2/2006
PCH 17-02 MORLOT AVE $479,000 6/15/2006
PCH 17-02 MORLOT AVE $459,000 7/25/2006
EXT 17-02 MORLOT AVE $459,000 7/25/2006
PCH 17-02 MORLOT AVE $439,000 8/21/2006
EXT 17-02 MORLOT AVE $439,000 11/2/2006
PCH 17-02 MORLOT AVE $429,000 11/2/2006
EXP 17-02 MORLOT AVE $429,000 12/1/2006
ACT 17-02 MORLOT AVE $389,000 12/4/2006
ACT* 17-02 MORLOT AVE $389,000 1/31/2007
U/C 17-02 MORLOT AVE $389,000 2/1/2007
SLD 17-02 MORLOT AVE $365,000 3/28/2007
——————
SLD 8-46 OAK ST $150,000 9/13/1999
ACT 8-46 OAK ST $369,000 2/5/2006
PCH 8-46 OAK ST $359,000 6/5/2006
W-T 8-46 OAK ST $359,000 6/15/2006
BOM 8-46 OAK ST $359,000 8/10/2006
W-U 8-46 OAK ST $359,000 9/13/2006
ACT 8-46 OAK ST $369,000 9/13/2006
PCH 8-46 OAK ST $358,999 9/22/2006
PCH 8-46 OAK ST $338,900 10/24/2006
PCH 8-46 OAK ST $329,900 12/11/2006
PCH 8-46 OAK ST $337,900 12/11/2006
W-T 8-46 OAK ST $337,900 2/20/2007
BOM 8-46 OAK ST $337,900 3/13/2007
PCH 8-46 OAK ST $339,900 3/13/2007
EXP 8-46 OAK ST $339,900 3/31/2007
SLD 17-02 MORLOT AVE $160,000 12/18/1998
Marito,
Tax record info:
SLD 8-46 OAK ST $266,822 1/20/2006
Rich,
Can you check the property taxes on 500,510,520,530, 540 of Homans Ave, Closter?
Thanks.
Was in Home Depot over the weekend looking for cheap blinds for my rental.
As I perused their collection of “window treatments”, priced exorbitantly (who spends that many thousands on curtains?), I wondered how many had been purchased over the past few years with funny money and HE loans as an “investment”.
This is going to be very painful.
Buy your blinds online. THey custom cut/size them accordign to your measurements. Installing is a breeze. We got brand name blinds (bali) for a fraction of what any local place would charge. All you have to do is take the time to measure them, and most likely you did if you went to home depot.
Can anyone provide status for these mls numbers? 2376415, 2368106 Thanks!
David,
Bergen County Tax Records
Chicago,
What about a third option: The pool of qualified borrowers under the latest, more stringent, standards just got a whole lot smaller. It’s no longer enough just to blindly cast your net into the sea of subprime borrowers and pull in a net full of low-quality fish that the MBS market will happily gobble up.
You are now going to be rejecting more mortgages and fighting over fewer qualified buyers. Lenders will actually have to work to get business.
BG,
Sorry, not in NJMLS
rich,
thanks. :)
510 HOMANS AVE CLOSTER 5/9/2006 $1,200,000
520 HOMANS AVE CLOSTER 1/27/2006 $1,650,000
530 HOMANS AVE CLOSTER 3/22/2006 $1,500,000
540 HOMANS AVE CLOSTER 4/3/2006 $1,419,000
If they’re pretty much the same house that’s quite a drop from $1.65 to $1.2 in 5 months!
Rich,
I wrote in another thread to you.
500 Homans is also the same house.
A builder bought a big lot, demolished the old house. Built 5 houses – very similar to each other – same lot size, same house size, etc.
First one was bought by someone I know – 520. He thought he got a bargain since the builder told him that.. he wll sell the rest of the houses at $1.8M.
See where Greed got you. :)
BG,
Both under contract..
2376415
Ant. CD: 5/16/2007
2368106
Ant. CD: 4/13/2007
Chi,
My interpretation: Another instance of a big wirehouse chasing the trend too late.
A big firm going “rah rah, let’s do mortgages, boys and girls!” in the middle of a meltdown is likely to be met with skepticism by the salesforce.
He thought he got a bargain…
Ouch.
Does anyone have any recent sales #’s for nutley?
I can send you over a spreadsheet if you drop me an email. jamesbednar at gmail dot com
jb
Nominal versus real price declines? Tell me how many here are keeping up with even reported inflation in their paychecks? An argument can be made to buy a property and lock in a 30-year fixed loan if you plan on staying put a while. As inflation erodes everything else your largest out of pocket expense will be fixed and that has to account for something.
#76/77 Gary?David And of course you need the second sink in the kitchen, or the bar sink I believe it is called, plus a satellite home office in the kitchen is a must have;good spot to keep all the take out menus.
http://www.app.com/apps/pbcs.dll/article?AID=/20070327/NEWS/703270317
Bank hit by mortgage defaults
OceanFirst subsidiary made subprime loans
Posted by the Asbury Park Press on 03/27/07
BY MICHAEL L. DIAMOND
BUSINESS WRITER
OceanFirst Financial Corp. said Monday it could be forced to buy back as much as $47 million in delinquent subprime real estate loans made last year by a mortgage subsidiary.
Problems at the subsidiary, Columbia Home Loans LLC of Valhalla, N.Y., have already caused OceanFirst, which operates the largest bank based in Ocean County, to restate its fourth-quarter earnings. Instead of a $4.6 million profit, the bank said late Friday it lost $1.6 million.
The problems at Columbia will cause the bank to report lower earnings through the second quarter of this year and force executives to consider closing the mortgage company, analysts said.
OceanFirst’s stock closed Monday at $19.07, down 86 cents, or 4.3 percent. Since the beginning of the year, the stock has fallen 16.8 percent.
Toms River-based OceanFirst, which operates 20 branches in Ocean, Monmouth and Middlesex counties, is one of a number of banks nationwide to run into trouble by making so-called subprime loans. Those loans are made to consumers with spotty credit histories and carry above-average interest rates.
When home values are soaring, lenders face little risk. But when the real estate market slumps, lenders face a different scenario: Home values stop appreciating, mortgage rates rise, and consumers’ income may not be enough to cover their monthly payments.
OceanFirst and Columbia “got burned on the real estate shift; values went south on them,” said Drew Anlas, sales manager of Select Mortgage Corp. in Brick and a 24-year veteran in the industry. “If (homeowners) get even a little bit behind, where is the incentive to make payments?”
Executives said Columbia, which OceanFirst bought in 2000, originated $728 million in loans last year, about 40 percent of them in the subprime market.
At issue is a subprime loan product launched by Columbia in April 2006 that offered 100 percent financing to help consumers with credit problems buy homes. Those loans were sold to investors with the caveat that Columbia would buy them back if the homeowners defaulted on the first payment following the sale of the loan.
Bank CEO’s explanation
In an interview with the Asbury Park Press, John R. Garbarino, OceanFirst’s chairman, president and chief executive officer, said the defaults came in faster than expected, but OceanFirst executives didn’t learn about the looming problem until late February. Had they known sooner, they would have discontinued those loans, he said.
Garbarino said the company investigated what went wrong and found no evidence of fraud. But he said the underwriters didn’t tell their managers as soon as they learned the loans were in default.
Garbarino said some of those underwriters were fired and others were placed on administrative leave.
“The problem wasn’t in making the loan,” Garbarino said. “No one ever consciously makes a bad loan. But when repurchase requests were being made, that wasn’t passed along to proper levels of management. It was withheld, and that’s where there was issue in terms of controls.”
OceanFirst set aside $9.6 million to cover the bad loans, but the financial hit to OceanFirst is likely to linger. As of March 21, the company had repurchased 37 loans worth $11.2 million, and company executives told investors that figure could grow to as much as $47 million for loans made in 2006.
Once the bank repurchases the mortgages, it has several options to recoup its money. It can work with homeowners to help them catch up with their payments, or it can foreclose on the homes and sell them.
Analysts’ viewpoints
Still, Albert Savastano, an analyst with Janney Montgomery Scott, said he expects OceanFirst will need to set aside another $1.8 million in the first quarter to cover more defaults. He lowered his rating on the company’s stock to “neutral” from “buy.”
Another analyst, Matthew Kelley of Sterne, Agee & Leach in New York, said OceanFirst should be able to weather the storm.
“It is a concern from the standpoint of how quickly things went sour,” Kelley said. “But relative to the overall size of the holding company ($2.1 billion in assets) this situation is manageable.”
Analysts said OceanFirst executives will need to decide whether to keep Columbia operating. In the wake of the defaults, Columbia has stopped making subprime loans, and analysts said the mortgage company always has been more expensive to operate than the community bank. Kelley said he thought OceanFirst should simply close it.
“It will be difficult in the short run for Columbia to be profitable,” said Frank Schiraldi, an analyst with Sandler O’Neill & Partners in New York.
Garbarino said the bank will consider its options in deciding Columbia’s future.
James, email dropped. Thanks!
>>If housing woes spill over into the broader economy, which I think will happen, Bernanke will jump on the gas peddle hard and fast.
still isn’t happening according to the experts. with decent job and income growth continuing not likely to.
#71 Bklyn I read in the WSJ a while back, that a kitchen remodel would yield back 82% of its cost, if sold within 2 years of the remodel.
It drops substanially after that.
aside from stock prices and some spotty job losses, where is the definitive impact from the ‘sub prime’ meltdown. people here talk as if the problem in this area automatically means a broader whack to the economy. some direct correlations would be more useful than assumptions.
#5-
It’s true, a 50% decline does seem crazy, although I’m already seeing houses down from the 600K’s to the 500K’s in and around my neighborhood. Just waiting for them to continue falling!
Don’t know what you guys tbink about Roubini’s blog, but here’s an analysis of how subprime woes will spill over into other areas of debt –
The Subprime Economy: Subprime Meltdown Spreading from Mortgages to Subprime Credit Cards, Subprime Auto Loans and Harley Davidson’s Hog Loans
http://www.rgemonitor.com/blog/roubini
A realtor gives a ‘skeptical’ look at the RE market:
And that’s the optimistic opening.
Pain in the…
Really. You don’t have to paste the entire article. And link and summary should suffice.
#65 Justin: Wait and see how many close, that is the ticket.
It was so easy for so long to just say hey we are buying, and have people puff theri chests out with pride at how samrt they are.
Now that qualifying for a mortage will becoem painful again, many so called buyers will be shut out.
Given the problems with sub-prime and some lenders going to a 95% LTV there are still plenty of others offering 100% LTV and other risky products to the masses. a friend of my brother’s just got a 30-year fixed rate with a 10 year interest only option at 100% LTV at 6.25%. not too shabby.
#100 Richard This process is just starting, that is the point that people are making, and there are tentative sigsn that it is spreading.
How you can think at this point that it is all over, or contained is truly amazing to me.
You guys are going to learn though.
#106 Richard Your brother’s friend is disturbed, and I will leave it at that.
“aside from stock prices and some spotty job losses, where is the definitive impact from the ’sub prime’ meltdown.”
Richard, most lenders (who are still solvent) implemented stricter lending guidelines April 1st. You have to give things more time than a day.
But negative public perception is broadening more each day with all the recent headlines.
Could someone let me know if MLS #2344128 (short hills) is under contract?
Thanks muchly,
>>If housing woes spill over into the broader economy, which I think will happen, Bernanke will jump on the gas peddle hard and fast.
still isn’t happening according to the experts. with decent job and income growth continuing not likely to.
The self-described experts (in the consensus view) have consistently underestimated the severity and depth of the housing downturn. A year ago, we weren’t even supposed to be in a downturn according to the experts, but rather a period of “normalization”.
It will take a while for the downturn to really impact consumer spending. Unlike stocks which are marked to market, you can see how much you lost that day on the 6 o’clock news, housing psychology takes longer to shift.
Also, despite some pull back in lending, the liquidity spigot remains wide open. The trend, however, is biased toward tightening. As the spigot begins to close, it will impact spending.
any info how to access listings in Middlesex MLS? GSMLS does not show all listings in Middlesex county
abamitphd,
UC, nice digs though.
jb
JB
Thanks for the fast response. It is a nice place, but the builder didn’t actually finish it (because the buyer ran out of money) and it has no warranty.
We were hoping to pick it up at half price sometime next spring, but we’ll have to make new plans.
One thing to look out for with those deals is that you might not be able to get a traditional mortgage if there isn’t a C/O. I was looking a a remodel of a historic home out Rt. 80 that was partially done. Builder was doing an absolutely beautiful job. Slate roof, copper flashing, copper gutters, cedar clabbord, etc. The place was a real gem. Plans changed, he needed to sell. Had a real tough time because most of the interior was still gutted. He definately took a big bath on the place, simply because most buyers were going to be turned off by the fact that they would need to either pay cash or attempt to secure construction financing.
jb
Everyone is talking about Prestigious Haughtyville, etc. These folks kept talking about Great School system and that’s why RE is so high.
Well, last year, a Blue Ribbon School, Northern Valley Demarest sent
one kid to Brown, one to Cornell, one to Darthmouth, one to Johns Hopkins and another to U of Michigan, Ann Arbor.
I know kids from “bad” towns who went to Cornell, Columbia and U Penn.
Where’s the value in paying all that property tax????
Where’s my money going to? Time to sell my house and move to a town with less tax.
Southstar Funding, a minor warehouse player (Subprime/Alt-a) at 6.3B in 2006, shuttered up today.
—————
Dear Employees:
It is with great regret and sadness that I must announce that SouthStar is ceasing its mortgage lending operations today, April 2, 2007. We are canceling any pending closings and will not close or fund any new loans going forward. All pending loan files will be returned immediately to our customers.
This decision was brought upon by events that developed toward the end of last week. Two of the primary purchasers of our loans refused to fund pools that were already locked and committed until we reimbursed them up front for all of our existing repurchase obligations – something that we were financially unable to do. Another purchaser only bought a portion of loans that they had previously committed to, kicking out a significant portion of loans for various reasons unrelated to underwriting guidelines. We rely on the cash from the sale of these pools to fund our operations. Without the funds from the sale of these loans, we are approaching an insolvency situation. We identified two potential buyers of our company that would have allowed us to continue operating but were notified on Friday and Sunday respectively that this would not be a viable option. This leaves us no choice but to cease operations.
Our first priority is to protect employee compensation: salaries, bonuses, commissions and severance pay. At this point, we cannot guarantee that we will be able to do this but we will make every effort humanly possible.
Senior Managers will be meeting with everyone within the next hour to formulate a plan for the remainder of today.
It is an extremely difficult thing to see a company that you have put in so much effort, time, blood, sweat and tears fail. Personally, it feels to me like the loss of a loved one. The most difficult thing to handle is having to say goodbye to so many wonderful friends and extended family. Mike, Brian and I appreciate everything that you all have done for this company and want to sincerely thank you for your efforts. We should all be very proud of what we accomplished over the years and today’s events cannot diminish that.
It has been an honor to work with each of you. I wouldn’t have changed anything for the world.
Kirk Smith
President
SouthStar Funding
“A Long Runway for the Soft Landing,” that the Federal Reserve will lower the federal funds rate from 5.25 percent to 4.5 percent by yearend to help reinvigorate the real estate market.
This scares me a bit? What do you guys think, any truth to this?
This article tells me 1 thing. The person who wrote doesn’t know squat.
Think about it. Th sup prime issue is a very localized issue – meaning that most people who had to take out a sub prime mortgage to buy a house most likely are those from inner cities and low income areas who should really still be renting where they stretched financially just to buy there own home. This might affect the bottom of the market – homes under 200,000. But I highly doubt these sub prime borrowers are well to do owners of half million dollar homes. Someone buying a million dollar home most likely has good credit and is not there first home and won’t need a sub prime mortgage. If the sub prime troubles have any effect on prices if at all it will be only in certain areas in the bottoms of those markets.
#114
Thanks for the heads-up on the financing. It is hard to keep track of underwriting standards with credit markets changing so quickly.
I hope to take advantage of another distressed builder in the near future.
This article tells me 1 thing. The person who wrote doesn’t know squat.
Please cite the sources for your statements on subprime statistics and demographics. Thanks!
jb
This article tells me 1 thing. The person who wrote doesn’t know squat.
Michael,
Sub-prime loans are written up to and over $1,000,000. You’d be suprised at how many doctors have crappy credit. It’s not just localized to poor people. Believe me, I’ve done hundreds of millions in loans to these rich people.
#118 Hey Mikey: Perhaps you actually talk to people int he business before making your broad assumptions.
I have attorney friends/family who do real estate closings in prestigious Bergen County, from Garfield to Saddle River, and all towns in between. With the exception of move up buyers, they have not seen a down payment in years.
You need to familarize your self with what is going on.
Only people with good credit are buying 500K homes, its the inner city, blah, blah, either that or you are a misguided uninformed realtor.
#117 Anth Even if they do, in my opinion it will not make a difference, I do not hink we are going to see any rate cut until Spring 08 at the earliest.
https://njrereport.com/files/nj2005subprime.pdf
jb #114
I know that house. Never did get to see the inside, though. They were doing a fantastic and very expensive job of restoring it. Fantasized about it briefly, but it was too much work for us, though (financing and C/O issues aside).
I know they had to be taking a huge loss, and as an Old House Lover myself, I felt really bad for them that they had to sell it.
“Th sup prime issue is a very localized issue – meaning that most people who had to take out a sub prime mortgage to buy a house most likely are those from inner cities and low income areas who should really still be renting where they stretched financially just to buy there own home.”
Michael [118],
Great misconceptiom. The subprime is not a function of income but rather credit. Don’t assume that someone with high income has a high fico score. This mess did not discriminate. This is not just an inner city problem.
#115 David There you go David, the emperor has no clothes, but sill people cannot see.
People get all tied up in that Blue Ribbon which by the way does not exist any more.
Its all about the appearance, lap tops for all, and now of course smart boards, 350k football fields, and an atrium as an entrance.
Its all about the glitter, no substance. That is why students in India and China and other places will bury us.
scribe (91)-
Gut feeling tells me this is the new face of subprime…which is gonna be the old-school way of subprime: loads of risk premium, crushing terms for borrowers and plenty of fat for Merrill and its affiliated lackeys. And, add in a little dash of gouging, as this gristly “sausage” (thanks to ChiFi for the apt terminology) will be thinly-traded once it’s securitized.
Proof once again that yes, an Ibanker CAN polish a turd.
jb re: 49 — My wall oven and cooktop are STILL harvest gold — and I had a harvest gold fridge till 2 years ago.
But your points about granite-stainless are well-taken. I’m currently refacing my original 1950’s pine cabinets. Yes, I’m doing it myself. Cost about $2k for supplies and it looks awesome. Have to reface again because they were refaced with cheap plastic laminate in the late 1970’s, presumably when the previous owners put in the Harvest Gold appliances, yellow geometric floor and yellow striped Sanitas wallpaper. Yeesh.
But seriously….I am replacing the cooktop with a range and taking out the wall-oven…but I am going back and forth on a countertop. Solid surface is hideous, granite on top of refaced cabinets seems like putting a Blackglama mink on a street hooker, and I’m leaning towards — laminate!! Any thoughts on this from the peanut gallery? I am assuming that anyone who bought my house, if I were to sell it, would gut the kitchen anyway.
Gut feeling tells me this is the new face of subprime…
We’re going to see this originate to securitize model become commonplace worldwide. While it has become the norm here, it’s not the norm worldwide. But it will be. The question is, what happens to worldwide supply of MBS if this is the case? If mortgage securitization goes worldwide at a fast pace, is there enough investor demand to scoop it all up? Will American MBS remain the preferred flavour or will yield-seeking investors get a taste for foreign cuisine?
jb
Richi #82:
“Buy your blinds online. THey custom cut/size them accordign to your measurements. ”
I mean REALLY cheap – standard ready made boxed. It’s not my place and the kids and the dog are so destructive that any money spent is down the toilet.
When it is my own house, and the kids are past the age of cutting things up, that is the time to really find something I like. I did look at a factory direct blinds place in Milltown and they had custom for considerably less that HD or Lowes, probably half the price for the same quality.
Michael (118)-
Don’t look now, but some of the worst of the subprime swill is in jumbos. The delinquency rate is ticking up daily on those puppies.
I’ve got a client who makes 340K a year, has multiple judgments, a FICO in the crapper and needs a co-signer for cash.
The only obligation she meets on time is her mortgage. So, when she went to refi 5 months ago, some lender took a flyer on her because she at least paid that mortgage on time.
She subsequently stripped all the equity out of her house in a cashout re-fi. I’m sure I’ll be hearing from her any day to plant a “for sale” sign, once she realizes she can’t go back the the refi well again.
Jim,
I saw you provided somebody with a spreadsheet of recent sales for Nutley. Could you do the same for me for Fair Lawn? Would it help if I give you a price range? What info does a spreadsheet have? I’m trying to find some way (DOM, addresses, etc) to cross reference some houses listed in Fair Lawn Nov.06, that I know all about except MLS#.
Thanks.
Just shoot me an email and I’ll pull up a list of the most recent sales. I know I said spreadsheet but it might just be a list (or report).
jb
Re: 105
6.25% sounds about right for the 80% part of the loan…but what’s the “blended” rate when the 20% piggy back is factored in?
disclaimer – this is my first post ever!
Subprime demographics? OK, here is my source for subprime demographics in Union County.
http://www.huduser.org/maps/newyork_quads.pdf
What this tells me is that if I was looking for a deal due to subprime collapse in:
Plainfield
Rahway
Roselle Park
Roselle
Elizabeth
Union
or
Hillside
I would be rubbing my hands together.
I am not looking in ANY of those towns. I don’t expect to see a lot of people forced from their homes in Summit, Westfield, Cranford, Springfield, Mountainside, etc.
People may have overpaid for their homes in these towns over the past few years but I don’t think there is any tidal wave of foreclosures coming.
Alt-A – Bologna
Subprime – Head Cheese
Like head cheese, subprime makes no attempt to at trying to look palatable, some might even describe it as hideous. However, we know what we’re dealing with, we can almost make out what makes up the head cheese by looking at the scraps of meat suspended in the transparent gelatin. Alt-A, like bologna, is anyone’s guess. Even worse is that it’s been packaged and sold as the fancy stuff. Unfortunately, too many people were paying attention to the Olde English font and fancy gold wrapper to bother asking what was inside.
jb
“…this is my first post ever.”
Lay back and enjoy it.
Grim (137)-
Computer screen drenched again! This “sausage” analogy’s got legs now (ugh…sausage with legs???).
I want foie gras!
Seneca,
The subprime shakeout isn’t about foreclosures, at least not in my book. It’s about reducing an already small buyer pool relative to supply.
jb
“scraps of meat suspended in the transparent gelatin”
LOL!! effing brilliant.
bergenbubbleburst Says:
April 2nd, 2007 at 2:38 pm
#115 David There you go David, the emperor has no clothes, but sill people cannot see.
People get all tied up in that Blue Ribbon which by the way does not exist any more.
Its all about the appearance, lap tops for all, and now of course smart boards, 350k football fields, and an atrium as an entrance.
Its all about the glitter, no substance. That is why students in India and China and other places will bury us.
Here’s an observation in my discussions with Indian and Chinese friends. Take it for what it’s worth….
What is their first criterion for buying in a certain towns? Not the multi-colored ribbons colors or neighborhoods. But “What is the demography of students”? If there is a decent chunk of Indian and Chinese students, you can be almost assured that the school district will improve over time, and kids are going to excel. And so will your kid by hanging around these competing kids.
Don’t underestimate the competitive fire drilled into these kids by their immigrant parents. These parents know a thing or two about studying really really hard to get admission to a college due to the almost non-existent poor educational infrastructure in India and China back in the years of Sgt. Peppers.
My 2 cents.
#129
JB,
How about butcher block for your countertops? Can’t beat the price if you’re doing it yourself – it’s less than laminate from Home Depot. Lumber Liquidators and Ikea have them for great prices. We got ours at Lumber Liquidators and finished them with tung oil (food safe once it cures).
#115:
investorDavid Says:
…
Well, last year, a Blue Ribbon School, Northern Valley Demarest sent
one kid to Brown, one to Cornell, one to Darthmouth, one to Johns Hopkins and another to U of Michigan, Ann Arbor.”
Don’t forget that a lot of the “top” district kids are legacy kids – they get in even with a C average.
JB: “The subprime shakeout isn’t about foreclosures, at least not in my book. It’s about reducing an already small buyer pool relative to supply.”
I stand corrected, poor choice of reaction as subprime relates to Newton’s Third Law.
So let me rephrase if I may.
I will now have a smaller pool of buyers with which to compete for a house in Plainield, Rahway, Roselle Park, Roselle, Elizabeth, Union or Hillside.
Wait, I still don’t plan to look there. So again, the subprime shakeout helps me how?
Seneca
“scraps of meat suspended in the transparent gelatin”
I’m registering this as a blog name right now.
Seneca (145),
Per Bill Gross, it will lead to curbs on credit for all. Ergo, smaller buyer pool everywhere. Less competition for you now…even in the top towns.
“…this is my first post ever.”
That’s what I said when I [9 or 10] visited my older brother in South Bend and sat on his girlfriends lap [a Notre Dame cheerleader] before the Irish clashed with the Trojans.
Dream:
“If there is a decent chunk of Indian and Chinese students, you can be almost assured that the school district will improve over time, and kids are going to excel. And so will your kid by hanging around these competing kids.’
Not very PC, but a point well taken. My school district is one of those “second tier” ones, but the demographics have shifted dramatically in a couple of years. My daughters class is 50% Indian, and those kids parents push them hard. You can also get an inkling when you look at the school inspection demographic breakdown. The Asian section, when viewed as how many read at or above grade level comes in at 100%, putting everyone else to shame.
Clotpoll,
That might be the best line I’ve ever read here. It sounds like a Monty Python script.
I’ve got nothing against laminates. Some of the new stuff Formica is coming out with is beautiful, especially the metal laminates (yes, real coated & backed metals). My brother has a 4×8 sheet of a style that looks like oil streaked copper, it’s drop dead gorgeous (yeah I know I’m using those adjectives to describe building material).
jb
BC (14)-
And then you started boring her with talk about gold futures.
Seneca I think one of the most insidious things about this now ending credit/houisng bubble, has been the total disregard/disrespect for money in general.
This environment encouraged people to think “BIG”, and belive they were rich, not to mention the perverse sense of entitlement.
So that being said, I think there are quite a few who over the lst few yeats purchased in Westfield, Summit, Chatham, Ridgewood, Saddle River etc., who never should have purchased in those towns in the first place.
You will see foreclosures there too, just a matter of time.
Wait, I still don’t plan to look there. So again, the subprime shakeout helps me how?
Can someone paste in the Plankton theory?
jb
BC Bob (149),
Oh…. My…. God.
BC (149)
#152 JB Formica is great, and what is nice about it, is that every few years you can replace it, if you like because it is so inexpensive. Its like getting a whole new kitchen for a fraction of the cost.
Plankton Theory, by Bill Gross, circa ~1980.
http://www.pimco.com/LeftNav/Featured+Market+Commentary/FF/2007/GCBF-+March+2007.htm
The Plankton Theory, like life itself, begins and ends in the ocean. Plankton, of course, are almost microscopic organisms that serve as food for higher life forms. Without plankton almost every fish and mammal in the sea could not survive, since most species depend upon other fish for their existence and plankton are the initial building blocks of the entire process. Logic would suggest, therefore, that in attempting to forecast the well being of the Great White Whale, Jaws, or even Jaws II, that one of the factors to consider would be the status and future outlook of the plankton. That, in one hundred words or less, is the Plankton Theory.
Now, what possible significance could this have for the investment world? Plenty. Take for example, the area of real estate, especially that of single family housing. We’re all familiar with the rapid escalation of home prices over the last 10 years. For most Americans, their homes have been the best and in many cases the only investment that they have made in their entire lives. Some have gone so far as to invest in several homes and have endured ‘negative carry’ on the cash flow in anticipation of leveraged capital gains a few years down the road. But where does it stop? Can housing continue to increase at twice the Consumer Price Index for the next 10 years?
One way to measure might be via the Plankton Theory. In the case of real estate, the plankton would be the first-time buyer (perhaps a young married couple) with a desire to own their own home but with very little capital to carry it off. When the time comes that they can’t pull it off – either through an inability to come up with a down payment, or to service the monthly mortgage – then the ‘plankton’ would disappear and the rapid escalation in housing prices would ease as well. For, unless the current homeowner has someone to sell his house to, he’ll be unable to afford the house with the view or that extra bedroom, and the process would continue into the echelons of Beverly Hills and Shaker Heights. In the end, the entire market would wither on the investment vine and home prices would stop increasing at the same rapid rate. So to gauge the health of the housing market, look first at the plankton. Without their presence and financial vitality, the market’s not going to repeat the experience of the past 10 years.”
A rule-of-thumb that I got from Jeff Otteau (for this area) is that for every first time homebuyer that purchases, he/she enables 5 more transactions to take place.
jb
Thanks Cltpoll. I’ll admit I have been reading this blog for some time now; however, I’m one of the “bagholders” I guess. Thought that 15% below 2005/2006 peak would be a good deal and I bit. No buyers remorse though, especially when I look at comps from the last 3-4 years!
“And then you started boring her with talk about gold futures”
Clot,
She was a midwest farmers daughter. It was the first time I heard of John Deere. I thought he was a running back for USC.
#142 True, but it also depends on the soco-economic background of the groups as well.
The Asian community is certainly not one solid bloc,some peopel wrongly make that assumption.
And I will stop there as i do nto wnat to cross over into territory that is not PC.
As far as the ribbons, thats for the ladies in minks.
Re my post #142, I didn’t mean it in any disrespectful way towards any people.
I don’t know if what I wrote was PC or not PC. I stated an observation when asking friends about their reasoning behind the areas where they bought their houses in different towns around Middlesex, Somerset and Mercer counties.
I just think when someone like Bill Gates mentions that the US educational system is obsolete (given the great infrastructure the US has), it should make people sit up and take notice.
Clotpoll Says:
April 2nd, 2007 at 3:09 pm
Lay back and enjoy it.
Thank you Mr. Knight
>>I know kids from “bad” towns who went to Cornell, Columbia and U Penn. Where’s the value in paying all that property tax????
a truly ignorant statement. i guess we should all move to east harlem then.
#164 people just think the answer is to spend more, and more. Laptops for all Freshman, why? Totally unnecessary in my opinion.
But people like the bragging rights, all of our students are provided laptops upon entering their Feshamn year, but our summer reading program is optional.
Our district spends more money than ever, blue ribbon and all the rest, yet our test scores are dropping, but WOW the place looks great!!
dreamtheaterr Says:
April 2nd, 2007 at 3:52 pm
I don’t know if what I wrote was PC or not PC. I stated an observation when asking friends about their reasoning behind the areas where they bought their houses in different towns around Middlesex, Somerset and Mercer counties.
Yan: The horrible thing is that there is now reverse affirmative action. If you are Asian/South Asian and excel at math & science, that just gets you on the dance floor. You better differentiate yourself or be left behind. Meanwhile, Polly Purebred from the same zip code can waltz in due to diversity.
You want a qualitative advantage to get your kid into a good school? Move your family to a garbage zip code and have the kid excel.
Screw PC. The truth is the truth. In NJ, the Indian and Chinese communities place huge emphasis on education and collectively push their children to a high degree of achievement that is largely unmatched by other ethnic groups.
Nothing about mentioning this fairly obvious fact is pejorative or demeaning. If anything, it is a compliment.
#166 Richard Why is that an ignorant statement? I think its true in mnay cases.
There was a single Mom who worked with me some years back (sales assistant on the desk) from Elmwood Park, not knocking the town, but certainly not known for its school system. Her son is finishing his Freshman year in Cornell, full ride.
BC Bob Says:
April 2nd, 2007 at 3:51 pm
It was the first time I heard of John Deere. I thought he was a running back for USC.
Bost: after 9-11 when the Senate was being debriefed, the quote was “….who is al-Qaida? I thought it was a first baseman for the Tigers….”
par4156 (161)-
You’re not a bagholder until you go to sell your house and find out you have to bring a check to the closing.
Sit tight for a few years. It’s gonna be a bumpy ride, but the worm always turns. In a few years, there will be a new gang of buyers out there with memories wiped clean of the present unpleasantness.
lisooshi and dreamtheaterr,
When I was talking about this Blue Ribbon haughty school, I was thinking.. if the school is so great, they should put 30-40 kids out of 300 to Ivy schools but they are NOT.
Northern Valley Demarest has 20%-25% Asian students.
But they barely managed to put only 3 kids to lower tier Ivy schools (and probably legacy kids)
So what does that say about “OUR School is so great and our RE will never go down???”
I am not talking PC but take a look at NJASK statistics of average scores between White, Hispanic, Asian, African American – it’s “interesting”.
Out of 300 (over 250 is considered Advanced Proficiency, 200 and up, Proficiency, below 200, Partially Proficient).
White: Math: 235, English: 225
Black: Math: 206, Eng: 208
Asian: Math: 248, Eng: 230
Hispanic: Math: 214, Eng: 211
Seneca Says:
“So let me rephrase if I may.
I will now have a smaller pool of buyers with which to compete for a house in Plainield, Rahway, Roselle Park, Roselle, Elizabeth, Union or Hillside.
Wait, I still don’t plan to look there. So again, the subprime shakeout helps me how?’
Towns aren’t self-contained fish tanks, there is movement between them.
So the guy in Union who bought in Westfield now can’t sell his house to a young couple for the amount he “needed”, he has to back out of the Westfield deal. Another guy in Westfield who was Alt-A didn’t get the bonus he was counting on and he will have to start paying principal on a depreciating asset, so he decides to sell before he ends up upside down. Now someone else in a townhouse in Hillside wanted to move to Westfield but there are 30 houses in his development for sale, non are moving and there is strong downward price pressure.
That is how inventory creeps up in “top towns” as sales eventually slow and price pressure is downward.
>>Her son is finishing his Freshman year in Cornell, full ride.
you’ll always get people from all walks of life getting into ivy league schools, but to make a statement that the educational system you attend has little bearing on how well you do is ignorant. quality of teachers, resources, peers, etc. all play into the overall environment you’re learning in. i’ll wager a guess if you take the same kid and bring him through a newark school system and a summit school system he’s more likely to do better in summit.
#173 David: Bu their facilities are lovely, betcha they have smart boards too.
>>That is how inventory creeps up in “top towns” as sales eventually slow and price pressure is downward.
westfield is a bad choice example. i’ve seen little if any backing out of contracts. i see no one selling because they’re out of cash or credit. all i know is there are lines of people waiting to get into this town as long as the price isn’t 15% above recent comps. heck i had a realtor and a potential buyer walking around my block on sunday going door to door asking people if they were ready or getting ready to sell. they came up to my door i said they don’t look like jehovah witnesses!
#168. CF. I concur wholeheartedly.
When I was teaching, I had two students who applied to med schools.
One kid: 3.97 GPA from Electrical Engineering Comuter Science, 14.5 (99 percentile) in MCAT. no interviews from California Med school. ended up going to a med school in Texas
2nd kid: 3.7 from Mechanical Engineering, 12.5 in MCAT (about 90 percentile). got accepted Harvard, Yale, Stanford MD/Ph.D. programs.
Can anyone care to guess their sex and ethnic background?
Reech: genetics and environment…..its the parents…..the school system crap sells houses….I guess you would know that…..the resources, quality etc. make a difference, but it is neither a REASON NOR AN EXCUSE
“take the same kid and bring him through a newark school system and a summit school system he’s more likely to do better in summit.”
Don’t try to tell that to the 75 school administrators, in Newark, who make north of 100k.
BBB,
don’t get me started on BoE. :) I would say .. board members are “well-kept” and preserved. :)
IDavid – all good points, and one I have noticed about the “blue ribbon” schools not sending an appreciably larger amount of kids to Ivy League.
See your scoring showed the same thing I was seeing in my town. I do wonder how those scores and recent demographic changes will affect the standing of those schools after a few years.
#175 Richard: The point daviss is trying to make,and I agree with him, is simply that for all the money that is spent on so many of these blue ribbon award winning districts, the return on investment does not appear to be that great.
One of the reasons that Ionce a huge fan of public schools in the past have had an ephinany of sorts, I am now ambivalent at best.
My child did well, because we demanded it, and he would have done well, even if horrors of horrors he was ina school that had “oh my God 26 kids in a class.
When you look at the amount psent to educate a child in mnay of the so called best public schools in Bergen County, and then look at the test scores, and wht is demanded from the kids, one is underwhelemed at best by the results.
In the UK they call the effect of each buyer on the next one up – The Property Ladder. They even have a whole TV program dedicated to it. It is quite sobering to see how many deals can fall apart if just one person has some issue, and yes it all starts with the entry level buyer.
#181 David And clueless on so many topics,a nd God help you if you question them on anything.
They say they want the public’s participation and all the rest, but when challenged on any thing or asked for an explanation and not rhetoric, they then become hostile.
And so I do not go to meetings any more. i will make sure my children are well educated; I don’t trust you; I know more then you do.
Richard Says:
April 2nd, 2007 at 4:20 pm
>>That is how inventory creeps up in “top towns” as sales eventually slow and price pressure is downward.
“westfield is a bad choice example. i’ve seen little if any backing out of contracts. i see no one selling because they’re out of cash or credit. ”
Westfield isn’t a bad choice of example. It is merely higher up the food chain and the poison hasn’t seeped up to it yet. It will. Sorry.
182: lisoosh.
That’s the report from 5th graders from the entire state of NJ.
Reechard needs both an enema and a lobotomy. However, I am at a loss as to which treatment should be administered at each end of the subject.
#177 Richard: Realtors knocking on your door? Hmmmm that is so 2004/05.
The gsmls lists over 170 houses for sale in Wersfield right now. This number is not counting co-ops- and condos, with prices rannging from the low 300k’s all the way up.
Seems like there is soemthing for everyone who might want to buy in the town.
I do nto understand why realtors have to knock on doors begging people to sell. Oh well, must be me.
#177 Richard – Did you actually mean to say that realtors were begging knocking on your doors to BUY houses.
I went through this whole college admissions process last year with my son. I think the reason that there isn’t a larger amount of kids from so called “blue ribbon” schools accepted into Ivy’s is that the Ivy’s/top schools don’t want to accept too many kids from one school. It’s another way of diversifying the student body. So for example, if your kid goes to a school with a lot of very smart kids, he’s sort of competing with the kids in HIS school – (in fact I was told this by one admissions officer). – So in that sense, it would be better not to send your kids to one of the blue ribbon schools – On the other hand, I moved from an area with lousy schools to a so called “great” school system, and I’m glad I did. When you go to a school where most people are very serious about learning, your kid is more likely to rise to the occasion.
As far as full ride to the Ivy’s – they don’t give money for merit – only financial need. Not sure about athletic scholarships.
#65 Justin,
I am a renter in Mt Laurel. I’ve been monitoring listings as well and condo prices here are down 5% (nominal) since summer 2005. House prices are tougher to pin down but they appear to be flat. I can’t see them going up anytime soon, which is why I haven’t jumped in to buy yet.
Did you see the chart showing the subprime infiltration into Burlington County? I remember some 2005 newspaper article stating that less than 6% of loans here were subprime. Now that the numbers are in, we can see that it was many times that.
Mark
191, tcm:
They have that scenario in some part of Texas – some parents moved their kids from the “top” school to ones which were good, but not so notorious, so that their children would stand out. Better to be the stand out student in school than one among many great students.
TCM,
Ivy doesn’t give athletic scholarship either.
Top boarding schools put whole bunch of kids to Ivy schools.
Clotpoll (172) –
funny…my seller did “bring his checkbook to the closing”. The insight I gained here helped me to view a house as a LONG term investment. Some where to live and not just make a quick buck. I’ll be here for a long time; hopefully expand if more than 2 kids come along.
on another topic – for high academic acheivement levels, look at children of 1st or 2nd generation immigrants. Regardless of social or economic class this group seems to match or surpass the academic level of children of wealthy parents. Seen as one of the easiest ways to rise economically.
Disclaimer – I’m a first generation immigrant.
#191 tcm: I think that is one of the points that David and I are trying to make.
The kids in the blue ribbon schools are not that smart to begin with, not because they may not be intelligent, but simply because the schools do not demand it.
Its more about appearances then substance, and I still believe that if the so called blue ribbon schools were as good as they are touted to be, we would see a lot more of these graduates going to the Ivy Leagues, and other top tier schools.
Yes, I heard that about the top boarding schools – do you think it’s due to legacy kids – in part?
#191 No money for merit, but this woman’s kid got in because of the effort she made, and from a school district with a lousy reputation.
The question should be for all the taxes people in the blue ribbon districts pay, are people getting theri money’s worth? i for one do not hink so.
tcm,
Absolutely. Many of those top boarding school kids are legacy kids to begin with.
And if they can’t get in, they buy their way in. It “only” costs them several millions. :) American way at its best. :)
tcm Says:
April 2nd, 2007 at 4:50 pm
I agree with your entire post with one exception…..
When [live in a home] where [the parents] are very serious about learning [and make the effort to be invested], your kid is more likely to rise to the occasion.
“I think the reason that there isn’t a larger amount of kids from so called “blue ribbon” schools accepted into Ivy’s is that the Ivy’s/top schools don’t want to accept too many kids from one school. It’s another way of diversifying the student body. So for example, if your kid goes to a school with a lot of very smart kids, he’s sort of competing with the kids in HIS school – (in fact I was told this by one admissions officer).”
Very true – it’s a fact that it’s tougher for a smart kid from the Northeast to get into a “good” school than it is for a smart kid from Montana, for example. I had a friend in admissions at my college who explained the whole thing to me. It’s also better not to ask for financial aid if you know you’re not going to get it – sorry, but it’s the truth – you go into a different pile – life isn’t fair, huh? After all, colleges need some paying students.
No college wants too heavy a representation from one geographic area, much less one high school in one town, and the Northeast is known for its very competitive environment. If you have a smart kid and they work hard (and I agree with ChiFi – it’s parents and genetics that drive the kid), you’d be better off in this area having them be tops at a school that’s been underrepresented in the Ivies and not “blue ribbon”, than have them come from a place like a Scarsdale as the #50 smart kid out of hundreds of kids just like him (or her). I have family from “worse” schools who have kids at Cornell that had they come from a blue ribbon place wouldn’t have cut it among the competitive folk in those places. Plus, I personally think some of those overly competitive places are a tad demented. It’s a bit much, no?
BBB,
This is what I think. I am paying all that tax so that the school system does not have “Too Many” problems.
But I heard that Haughtyville schools have another problem. DRUG — too much spending money for these high school kids.
NJGal,
“a tad demented”? how about.. overly demented? hahhaa.. But it does open so many doors (but you have to prove yourself once you are in).
Gotta sell my house and move to Montana. I am moving to Joe, Montana.
Or buy a log cabin in Timbucktwo.
Boarding school advantage is crap. It’s all about legacy and buying off favor.
The utterly atrocious social skills [i.e. high society sensibilities] and warped sense of reality that is inculcated into their graduates is as fierce as it is embarassing. You show me one ivy admittance, and I will show you three 18 year olds with a designer drug habit and a trust fund baby’s view of the world [with trust sans trust].
If you want your kid to social climb, then good for you.
My favorite quote from a dad regarding his social climbing son….”…..my son shops at Brooks Brothers and I visit the sales at Macy’s…” This son sued him by the way when he was financial cut off at 25 years of age and the dad said ENOUGH!
I wonder.. will the housing price rise in “bad” areas since many parents want their kids to be outstanding in “bad” schools?
Will the housing price goes down in Haughtyville since the parents sell their house and move to a “bad” area as they want a fighting chance for their #10 kid from a Top school system?
#204:
CF,
Don’t knock Brooks Brothers. I think it’s a great value. My first suit my dad bought me at 14 still looks good and still in style. I just have a hard time fitting into it. I think the pants waist shrank. hahaha
Now, if I can only get my son to wear the brooks brothers suits I bought for him, rather than.. “Dad.. all my friends dress like “homeys”.. it irks me.
#44 That is bizarre that Fox & Roach is citing a double-digit sales drop as evidence of a stable spring market. I guess they trying to say that the sales decline is smaller than other recent declines, which just makes them look silly.
I keep hearing the mantra that prices won’t fall in South Jersey because there was “less of a runup here”. Looking at OFHEO data, I can surmise that North Jersey prices are roughly 2.5 times higher than a decade ago, and South Jersey prices are 2 times higher than a decade ago. Sure, it’s less than the North, but prices are still too high to support fundamentals. And we have the subprime infection down here too. Why is that, if it’s so affordable here?
Mark
ChiFi (188)
How about a lobotomy with an enema bag?
I just heard that the new Maytag Repairman is a former real estate agent. No kidding.
#200
Agree.
But it’s easier for your kid to achieve if his peers come from families with those values. Unfortunately peer pressure is alive and well. If kids are with other kids who want to get A’s, they will be more likely to try harder. If he is made to feel like a dork for raising his hand, participating in class, studying hard and getting good grades, then he is less likely to do those things.
So, unfortunately, when choosing schools, the only thing we have to go by is ranking – and test scores- all based on past performance of students – all influenced by the parents – so then, certain schools become blue ribbon and people pay more for the houses. I guess you could say that the students/families make the schools “blue ribbon” rather than the other way around.
Am I making sense?
As far as drug problems go – I think a bigger problem is alcohol -seems like every kid drinks. It’s scary because so many of these rich kids have their own cars.
David (202)-
Don’t knock it…I smoked a couple of fatties before I took the SAT the first time.
And I scored lower the second time around.
ChiFi (204)-
As a prep school alumnus, I can assure you that you’re absolutely right.
Their stock-in-trade is turning out sociopaths. It took me several years of very expensive therapy to get all their noblesse oblige and other mental garbage out of my system.
I wouldn’t send my kids to my old school…even if you held me at gunpoint.
#211. Clotpoll.
who’s knocking it?
I got my doctorate from U C Berkeley and I used to teach there. My students used to bring me “home growns” around exam time to “discuss” various topics. :)
Clot,
Your old school is not Groton, Lawrenceville, Andover or Exeter, right?
or St. Paul?
tcm,
If you are smart/getting good grades, you will be labelled as “dork” often, regardless of Blue Ribbon school or bad schools.
To be “popular”, kids fail exams on purpose.
My kid once asked me, Dad, can I fail a test on purpose? I said, What? He said, Dad, that’s what you have to do to be “cool”.
And I even heard that to be “cool”, you have to get detention. And it’s in the Blue Ribbon School system.
210 tcm.
I think it’s a matter of what kind of cars they drive rather than.. whether they have a car or not.
I once took my son to a wine tasting. I “forced” him to taste (not drink) Carbent Sauvignon. He spat it out and told me. Dad, I will never drink this stuff. hahahaha
Whatever happened to the infamous Sally.
As everyone is now jumping on the bandwagon of sinking real estate prices… she vanished.
I guess no one likes to be shown up as being totally wrong.
Jim
David (214)-
Worried? Anywhere there’s money, there’s high-quality drugs.
And, no…my prep school was in the South (and shall remian nameless).
Ivy doesn’t give athletic scholarship either.
Good friend, full ride, Princeton, Soccer.
jb
Educated in a shitty town too, Clifton.
jb
James Bednar Says:
April 2nd, 2007 at 6:47 pm
Educated in a shitty town too, Clifton.jb
Obviously.
Also, you smell. Even over the internet.
Deleted that, too nice a guy to be made an example of.
jb
JB,
Princeton doesn’t give out athletic scholarship, nor any Ivy league schools.
One of my friends’ kid is in Princeton Varsity hockey.
If he got a full ride, his parents were not making or reporting enough income.
I’ll tell ya’ what…..my life didn’t start to get unbelievably and massively better until I was about 25 years old, and suddenly everything that made me a dork was turned on it’s head.
I’m going to tell my son one piece of advice. You never want to look back at high school and say “…those were the best years of my life….”. I hear people say it, and I apologize, if I cannot censor my mind of the thought that they are losers.
“As a prep school alumnus, I can assure you that you’re absolutely right. Their stock-in-trade is turning out sociopaths. It took me several years of very expensive therapy to get all their noblesse oblige and other mental garbage out of my system.”
A refund is in order.
From MarketWatch:
Fremont says auditing firm Grant Thornton LLP resigns
Fremont General said late Monday that its auditor, Grant Thornton LLP, resigned roughly eight months after the company hired the firm. The two companies gave different reasons for the split. Fremont explained in a statement that, given turmoil in the subprime mortgage business, Grant Thornton wanted to significantly expand its audit. Fremont said it always provided the accountancy firm with extra information in a timely fashion and wants the firm to finish the audit. However, Grant Thornton said that during the audit there were instances where Fremont didn’t provide certain requested information on dates previously agreed upon with management, according to a letter it filed with the Securities and Exchange Commission. Fremont’s subprime mortgage lending unit, which accounted for roughly half its business, stopped offering loans earlier this year. The business is now for sale.
UnHuman (225)-
Perhaps a refund is in order. However, to paraphrase Churchill, I shall wake up tomorrow morning and have my intellignece.
You, on the other hand, will still be a moron.
ONE SHINING MOMENT.
Also, off topic. Gil Meche is 1-0.
IP H R ER BB SO HR PC-ST ERA
G Meche (W, 1-0) 7.1 6 1 1 1 6 0 103-62 1.23
“People across all income brackets are having financial hardship.”
“For those on the frontlines of the growing US mortgage crisis, these are the early signs that the explosion of subprime loans made to mostly poorer borrowers is reaching higher ground.”
“The damage is hitting homes financed through jumbo loans for more than $400,000 and so-called Alt-A loans that are a notch above subprime and a step below prime.”
“It’s not the American Dream anymore,” said Fran Napolitano, a county clerk in Hackensack. “It’s ‘who can I stab next.”’
http://www.dailytimes.com.pk/default.asp?page=2007%5C04%5C03%5Cstory_3-4-2007_pg5_38
If Pakistan has nothing else to worry about but US housing market, things must be really bad.
JB,
Sent you some “info”
Rich,
I’ve got to include the NJMLS in the monthly data (see the new post).
jb
Forget about the subprime and alt-a. What about our prime lenders?? Sorry for the post regarding old news.
“U.S. Treasuries fell Wednesday after the government’s auction of 2-year notes drew fewer bids from foreign investors than last month’s sale, raising concern that overseas buyers might be pulling back from government securities.”
“Indirect bidders, the class of investors that includes foreign central banks, were awarded 29.3 percent of the auction, down from 52.2 percent in February. The $18 billion of notes were sold at a 4.51 percent yield, lower than the 4.52 percent forecast in a Bloomberg survey and down from 4.83 percent at the 2-year auction in February.”
“Because foreign central banks would typically bid as indirect bidders, when the indirect bid lags, that’s often taken as less than positive,” said John Canavan, a fixed-income analyst in Princeton, N.J., at Stone & McCarthy Research Associates.”
http://www.chicagotribune.com/business/chi-0703280701mar29,0,4059505.story?coll=chi-business-hed
JB,
Princeton doesn’t give out athletic scholarship, nor any Ivy league schools.
One of my friends’ kid is in Princeton Varsity hockey.
If he got a full ride, his parents were not making or reporting enough income.
It’s true; I know who JB is talking about. He got the full ride for playing on the Soccer team. He then played semi-professionally in Poland afterwards. His parents had assets, so there’s no income issue.
-Richie
Richie,
Here’s an excerpt from wikipedia,
“Unlike most Division I athletic conferences, the Ivy League prohibits the granting of athletic scholarships; all scholarships awarded are need-based (financial aid).”
Here’s a link from Brown.
“The Ivy League prohibits athletic scholarships, and the NCAA strictly regulates the source of any aid for athletes and the circumstances under which it may be provided.”
http://www.brown.edu/Administration/News_Bureau/1999-00/99-111.html
http://www.go4ivy.com/ivy.asp
“Although Ivy League sports teams compete in Division I athletics, the schools do not offer athletic scholarships and maintain the same academic standards for both athletes and non-athletes.”
Richie,
If he received athletic scholarship from Princeton, Princeton is in violation of Ivy League rules.
I have a good friend whose kid is playing for Yale varsity hockey this year. He has been crying the poverty. Too bad that he makes over $60K (I think it used to $42K to qualify for full aids – not sure it’s full or partial aids, etc. I didn’t really look into how much aid since most middle class won’t qualify much).
sheesh. tune in tomorrow, folks, for the next installment of educational class warfare…
WOW. It looks like this year may be worse(for sellers) than last year. I have a search on Realtor.com for towns in Essex $300K to $450K in Bloomfield, Nutley, WO and Livingston. I searched for newly eddited in the past 7 days and got 53 pages. Usually this is a 5-10 page search result. I am sticking to my guns with the suggestion from last summer that said wait 2 years. I think this will pay off more than I thought at first.
Ok Thats just about enough ChiFi
We have gone over this and gone over this, I keep thinking you guys are friends and this is just guys ribbing each other but, you my dear man are a bully ! yeah thats right a bully!
I have heard you call JB a slacker on more than one occasion, a fruitcake yesterday.. and now this, he smells! even over the internet!!
Now just stop it!
KL
Clot,
Here’s my favorite Churchill story – wit at its finest moment.
To Winston: Sir, if I were your wife, I would’ve poisoned your tea.
To the woman parliment member: Madam, if you were my wife, I would’ve drank it. :)
KL,
I think Elenor Roosevelt said this.. No one can make you feel inferior without your consent.
>>#177 Richard – Did you actually mean to say that realtors were begging knocking on your doors to BUY houses.
yup. sorry to blow your pet theories about how the sky is falling everywhere.
RE: 235
They don’t give scholarships but they give grants (unofficial for sports). My brother play football for UPenn and my parents payed half price tuition all four years. Best part scholarships can be yanked but grants can not be as long as you maintain the required gpa.
>>the resources, quality etc. make a difference, but it is neither a REASON NOR AN EXCUSE
tell that to the kid dodging bullets after school. a few make it through, just like a few make it to the major leagues.
chicago thinks he’s some kind of teacher preaching from the bully pulpit. feels he has the right to bash those of differing opinions. you lack maturity and grace sir.
wickedorange,
absolutely. If they really want you, they will come up with some way to help you. But they don’t call it Athletic Scholarship – it would be disguised as grant, financial aids, etc.
What really irks me is when people tell me.. my kid is so smart that he/she got a full scholarship to Harvard (or insert any Ivy school).
Richard,
ever read Uberman by Frederic Nietzsche?
I think Clarance Darrow used Uberman defence for Loeb and Leopold (hey, aren’t those kids from Chicago? :)
RE: 247
Yep, my brother only had to break 1000 on his sats to get into UPENN. He got a half scholarship disguised as a grant for football.
Similar deal with my other younger brother in the Patriot League (Lafayette).
Both were all-shore defensive ends.
Don’t like “good” school districts – but yet want your kids to go Ivy? :)
And ummm… I like SS & granite. Alot! I’ve had the avocado & the Harvest Gold (actually, pink Caloric)… and there’s no comparison. Sure tastes will change (eg, carpet vs. wood, skirts vs. minis), but you can’t always worry that what you buy today will be worth less tomorrow. Not everything is an investment … heresy, I know. :)
And not every purchase of a luxury makes you an idiot, whether it’s $300 jeans… or, in my case, $400 of Nintendo products for the kids – who, I’m sure will be retarded by playing it.
-P
Between the dorks, people who sound like they trade “My kid is an Honor Student” bumper stickers, and the sports fans here, I actually do feel like I’ve been back in high school on this thread.
Yikes. This competition stuff (cleverly disguised as team values-building) just never goes away, does it?
I’m gonna teach my kid how to count cards and twirl a maglite. That oughtta pretty much cover her for life. Risk management and best offense approach.
Oh, she does know all the Mets cheers. Once when I asked her to say the Pledge of Allegiance, she sang “Take Me Out to the Ball Game.”
This thread came with a prize, by the way. First one who admits they played the tuba in the marching band wins.
#244 Ricahrd: Like I said over 170 listings in Westfield,and realtors are knocking on your door asking you to sell?
OK I am going to say it, either you are delusional, or just a plain liar.
Politely,
You missed the point.
Many people say high property tax and high RE price is justified since they have “good” school district. I am saying that high tax and high RE price is NOT justfied.
#253 – Pat, you actually made me laugh out loud. I wish I had played tuba, just to win your contest.
#255 – investorDavid, I think we get too caught up in some of these discussions patting ourselves on the back and we start losing some perspective. And, I don’t want to get caught up in who’s missing the point, but if a “good” public school really isn’t worth the taxes, is an Ivy really worth the $40-50K a year? Is an Ivy really multiples (cost-wise) better than a state school (eg, Berkeley or Michigan)? Is that justified?
But that’s just a theoretical discussion. All I know is that, if I can afford it, I’m sending my kids to the “good” school district – justified taxes or no. And just to be clear, even if I CAN’T afford it, if my kids get in & want to go, I’m paying for the Ivy – justified tuition be damned. However, I have to admit, I’m really hoping they’ll go to my small liberal arts alma mater. :)
Finally, I think it’s humorous that we complain about “PRNJ”, but we think it’s great to get a grant or a scholarship for education… ie, money given to us by others. We’re entitled to financial aid, right? :)
-P
rhymingrealtor Says:
April 2nd, 2007 at 10:55 pm
Ok Thats just about enough ChiFi
I have heard you call JB a slacker on more than one occasion, a fruitcake yesterday.. and now this, he smells! even over the internet!!
Now just stop it! KL
KL: I will stop for you, but who will keep him in line? I mean that he is a celeb and all, I want to keep him grounded, or coralled. Once he begins to glow (literally) after dips in the Passaic, I am afraid he is going to be clubbing around Crapensta. I need those 6:30AM blog entries!
What is Crapensta? Well, we have TriBeCa, SoHo, NoHo, NoLIta, DUMBO, then we have CrAPenSta [the Crap Around Penn Station], which now has all the super NJ B&T club scene.
http://nymag.com/listings/bar/cain/
#257 We do not get it, in many instances, and what is wrong with rewarding good students with a grant or scholarship.
We waste so much on the students and or their parents who do not care, sure give it to them, and expect every one else to pay for it.
As far as the good school bad school debate, you may have missed the point,and that simply is that in many instances there is not a whole lot of difference in test scores if any between the so called blue ribbon districts,and the ones that are considered lesser. Keep in mind, that blue ribbon no longer exists, and many schools that brag about it recieve that designation 10 years ago or more, and things can and do and have changed.
Also keep in mind that even when the program was in existence, schools were not awarded it, they applied for it. Some schools did not apply of course because there wer etandards involved that they might not meet,and other schools felt it was window dressing, and did not wnat to expend the resources to apply for the designation.
So when you are looking at schools keep all of this in mind.
If youa re impressed by Blue Ribbon, find out when the school applied for this designation, if it is 10 years or more you will find that many of these so called blue ribbon districts are living on faded glory.
So if you believe that higher taxes mens better schools, you will find in mnay many cases there is little to no coorelation.
I am not talking about the Newarks and Camdens etc.
#258. bbb
First, let me say I’m cranky from lack of sleep and working on my tax returns. (Did you know that, in America, working hard to earn a good living is a crime punishable by forfeiture of a third of your wages?) So apologies if the following responses offend you.
1. Nothing’s wrong with rewarding good students with free money – just like there’s nothing wrong with rewarding good families with free homes. It’s all fine & good if you’re the recipient.
2. Ok, I’ll say it – you’ve missed my point, which was to point out some hypocrisy, hopefully with some humor.
3. With respect to the rest of your post, I have no idea what you’re talking about. I don’t care about “blue ribbon”. What’s clear is that generally, towns with “good” schools are more desirable, which results in higher demand, and consequently higher housing prices and consequently higher nominal taxes. Are you saying this isn’t true?
-P
#260 I agree it is true, but in many cases it is a myth, a myth that people buy.