From the Record:
Flooding leaves 2 dead, 1,700 evacuated
Flooding from a fierce spring nor’easter that pummeled North Jersey for a second straight day Monday could get worse before it gets better, forecasters and local officials said.
More than 1,700 people have been evacuated, dams have overflowed and homes have been inundated by feet of rushing water throughout Bergen and Passaic counties. Officials said the flooding is the worst they have seen in two decades, since fierce rains caused hundreds of millions of dollars of damage during a 1984 storm.
Officials blamed the flooding for at least two deaths statewide. And in Mahwah, authorities called off the search Monday night for a woman they fear may have driven off Route 202 and into the Ramapo River.
Meteorologists said the flooding is likely to trump the havoc wreaked by Tropical Storm Floyd, which killed six people as it tore across New Jersey in September 1999. Upstream reservoirs were not as full when Floyd hit, and this storm spread rainfall over a larger area than its infamous predecessor.
“This is the greatest April storm on record,” said David A. Robinson, the official state climatologist.
But to the dismay of a waterlogged state, the worst of the flooding, forecasters said, may be still to come.
Though the heaviest rains should be long gone by late Tuesday afternoon, the Passaic River isn’t expected to crest until tonight into Wednesday morning, meaning flooding could get worse in already inundated areas that line it.
Busy day today CPI, housing starts & building permits all due at 8:30.
School Board elections are also help today. Vote early & often.
U.K. Inflation Unexpectedly Accelerates to 3.1%
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQ5OLkVGKp6U&refer=home
The inflation rate is more than a percentage point above the Bank of England’s 2 percent target, requiring Governor Mervyn King to write a letter of explanation for the first time since the bank was granted independence in 1997. In that letter, King said policy makers “must ensure” that U.K. inflation expectations are “anchored.”
The inflation rate “raises the possibility that we see more increases”
From the Daily Record:
J&J site in Morris put on market
More changes could be coming for local employees of Johnson & Johnson, which announced Monday that it had hired a real estate services company to market the Route 53 facility acquired from Pfizer in December.
The future of the former Pfizer site off Route 53 has been of significant local interest since Johnson & Johnson closed on the purchase last December.
…
Druetzler said that Johnson & Johnson told him that “they expect to maintain 850 to 900” employees at the site.
Johnson & Johnson said in January, one month after the company had closed on the $16.6 billion agreement of Pfizer’s consumer health business, that it would lay off as many as to 400 of the 1,200 former Pfizer employees by Dec. 31.
Druetzler said he expected that only a portion of the site would be leased or sold.
But, he added, “You never know what can happen.”
pound is $2!
Will Gold hit $700 today?
Wondering how bad the hackensack flooding is, my boss could nto get into work yesterday…
“pound is $2!”
bear,
Happy Hour in Hyde Park.
Patrcik (6)-
Send Grim out in his kayak to give you a report.
Has anybody heard of Iggy’s House?
http://www.iggyshouse.com – apparently you can sell your house for free.. on the MLS. Not in NJ yet.
Went over to the Rockaway yesterday in Boonton. It was an impressive sight watching such a huge volume of water drop 20 feet.
Clot,
thanks for the advice yesterday.
There’s about 50K worth of work that needs to happen. We will definitely need to take your advice on the insurance and title fronts. It’s a pre-war farmhouse with some really beautiful wood detailing throughout. Used to be in my wife’s family until about ten years ago, and one of her uncles sold it off. Needless to say he disappointed the rest of the family. Anyways, it has a billiard room that at one time had a custom billiard table made out of slate with ivory inlays, the kind that they don’t make anymore. The guy who bought the place didn’t want the pool table, got tired of waiting for it to be moved, so he took a sledge hammer to it!
Situation now is that our agent hasn’t been getting her phone calls returned by the bank’s agent. The info we have indicates that their agent stands to get a higher than average commission. They had another open house yesterday, two days after the first open house. Not sure why our agent didn’t go yesterday to personally present our offer. I think our chances are slim at this point.
From MarketWatch:
Housing starts, permits rise 0.8% in March
Boosted by warmer weather, construction of new homes increased 0.8% in March to a seasonally adjusted annual rate of 1.518 million, the highest level this year, the Commerce Department estimated Tuesday. Building permits also increased 0.8% in March to a seasonally adjusted annual rate of 1.544 million. The figures were slightly higher than expected by economists surveyed by MarketWatch. The median estimate for housing starts was 1.50 million, while permits were expected to be at 1.52 million. Housing starts are down 23% from March 2006, while permits are off 26%. Economists said that favorable weather in March compared with February probably had a major impact on construction.
From MarketWatch:
U.S. March CPI up 0.6% but core rate tame
The rate of U.S. inflation accelerated in March, the Labor Department said Tuesday. The consumer price index increased 0.6% in March, driven by a 5.9% gain in energy prices, the fastest increase in energy prices in more than two years. Transportation costs rose 2.8%, but housing and food prices were moderate. The core CPI, which excludes food and energy costs, was up 0.1% in March, the lowest level since December. Economists were expecting the CPI to rise 0.7% in March after a 0.4% gain in February. The core rate was expected to rise 0.2% in March after rising 0.2% in the previous month.
Also from MarketWatch:
U.S. March CPI largest gain since April 2006
U.S. CPI up 2.8% in past 12 months
U.S. CPI core up 2.5% in past 12 months
U.S. March CPI energy prices up 5.9%, biggest since 9/05
GSEs to the rescue…….
http://money.cnn.com/2007/04/17/news/companies/fannie_freddie.reut/
Mortgage finance companies Fannie Mae and Freddie Mac have new programs to help troubled subprime borrowers avoid foreclosure….”working on a major effort to develop more consumer-friendly subprime products that will provide stable financing alternatives going forward,”…..”These offerings will include 30-year and possibly 40-year fixed-rate mortgages and ARMs with reduced margins and longer fixed-rate periods.”
Housing starts fell 7.7 percent in the West, 6.1 percent in the Northeast and 2.7 percent in the South. However, up 45% in the midwest.
Why the huge # in the midwest? Is everybody migrating to Ames, Iowa to take up farming?
Very interesting stats
Washington Mutual topped the list of mortgage lenders in the percentage of loans it gave to investors or second-home buyers…such loans are generally considered more risky than those to borrowers who take the money for their primary residence…WaMu originated last year, 15 percent were backed by homes that were not the borrower’s main residence,13 percent at Countrywide Financial, 11 percent at Wells Fargo, 9 percent at JPMorgan Chase and 5 percent at Citigroup (Charts)…
You can find the permits/starts data here:
http://www.census.gov/indicator/www/newresconst.pdf
That Midwest starts jump is very odd.
jb
Profucus
They know you want it back, they know you want it back HARDCORE. It would be like someone else in my building trying to buy the apartment next to theirs to expand. You want it I got it, 2005-2006 prices baby!
Maybe a JB or Clot question: Can they arrange for a third party to either underbid them making their bid look better or to make the bid look like it was coming from a disinterested party?
More calculators, income/affordability
http://cgi.money.cnn.com/tools/houseafford/houseafford.html
BCBob,
Have a friend that told me dr horton is great buy, yesterday he purchased at 20 and change. Bloomberg as of this morning is confirming his optimism that HB’s have hit bottom. Your thoughts?
KL
From MarketWatch (audio):
Mark Vittner: Looking for the housing bottom? Wait ’til Labor Day
Despite modest increases in housing starts and building permits in March, it’s too soon to say the housing market has hit bottom. So says Mark Vittner, senior economist at Wachovia. He tells John Wordock March’s numbers may have been a ‘weather-related fluke.’ He also says we may have to wait until Labor Day before seeing bottom.
From Reuters:
Fed’s Plosser says inflation uncomfortably high
Inflation is uncomfortably high and the U.S. Federal Reserve needs to remain vigilant about it, Philadelphia Federal Reserve Bank President Charles Plosser said on Tuesday.
Plosser, regarded as one of the more hawkish among Fed policy-makers, said that inflation was not coming down fast enough.
“Inflation is uncomfortably high from my perspective and not declining as rapidly as I’d like to see it,” he told a meeting of business executives hosted by Rutgers School of Business.
KL [21],
Major disclaimers here. I don’t follow H-B’s as close as other markets. However, I actually like them for a short term play, maybe a date, not a marriage. I bought some calls. I certainly can see them retrace a decent % [Feb highs to April lows]. However, my long term view is still intact.
Remember housing and housing stocks are two very different animals.
May save a few marriages…..
Ask any couple and you’ll find that bedroom battles….solution…separate bd and dressing rooms. And while you’re at it, why not separate wings entirely? Today’s homes are increasingly being tricked out with his-and-her toilets, second kitchens and dual dressing rooms. And over 60% of future upscale homes (defined as those with more than 4,000 square feet) will feature two master bedrooms by 2015.
http://www.forbes.com/2007/04/13/home-his-her-forbeslife-cx_mw_0416hisherhome.html?partner=forbeslife_newsletter
test
KL [21],
I thad tried to respond but got knocked off. Maybe an omen.
Major,major disclaimers apply.
I don’t follow the H-B’s as close as other markets. However, I actually like them for a short term play, maybe a date, not a marriage. Just looking for a much needed technical bounce. I actually bought some calls. I certainly can see them retrace a decent % [Feb highs to April lows]. However, my long term, bearish view is still intact. Remember, this is just a technical trade on my part, nothing to do with fundamentals. If I really felt strongly about it, I would have purchased the stock, not the option.
Remember housing and housing stocks are two very different animals.
Patrick (19)-
Realtors are prohibited from orchestrating “straw man” transactions.
I’d suggest consulting an attorney first. If doing this is not outright fraud, it’s certainly skating on the edge of it.
It seems wholly unnecessary to resort to such a maneuver. Prof has time- and the bank’s anxiety to unload a problem property- on his side. As in many other pursuits, honesty is the best policy.
Patrick (19)-
Bad move. Realtors are prohibited from generating “straw man” deals, and a private bidder setting up shills and sham offers sounds a lot like fraud. I’d certainly advise consulting an attorney before proceeding with anything like this.
Sorry if this is a duplicate post…previous one appears to have been eaten in a 404 error.
Didn’t you just say that?
:P
KL (21)-
With BC on H-B stox. Most are way too volatile and way too sold short to consider as investments. Some of these issues are good for quick hits & piling onto short squeezes…no more.
Personally, I’m out until these guys hit their lows of last summer (which seems like a genuine possibility). One to two trading sessions will see today’s enthusiasm wane; there’s real and fundamental weakness in the sector, and many of these stocks are still trading above book value. When the big names hit- or drop below- book value, then they are a buy (IMO…all disclaimers).
Don’t forget to VOTE YES today, whoc ares its only money. Its for the children and their future. Who cares that for a great many of them it will mean a future not in their own state.
Perhap we can revvive the old custom of an Irish wake (immigration),and call it a Jersey wake. compelt with traditional Jersey music, Springsteen and Bon-Jovi, and traditional Jersey Pizza and Hoagies.
I’m repeating my posts because I’m getting knocked off. I didn’t think my post was received. I hit the mat more times today than Chuck Wepner.
“Personally, I’m out until these guys hit their lows of last summer”
Clot [31],
Only pertaining to the ones that I follow, HOV & CTX have taken out their lows of last summer.
Sorry for the poor site performance this morning. My host assures me that the problems were taken care of and shouldn’t happen again.
With that said, we’ll be moving again sometime next week.
jb
BC Bob: According to that calculator, I can afford a $470,000 house. Doesn’t seem right to me…
I got a call Sunday morning from a realtor who’s called me now for the 3rd time in two months and I calmly and patiently told her each time that the prices were still insanely too high and the sellers are delusional (not in those exact words). It was a POS bi-level in Fairfield with an asking price of $599,000 (that’s FIVE HUNDRED AND NINTY NINE THOUSAND DOLLARS). It was an open house in that rain storm and she sent me the link even though I told here I was NOT interested in a bi-level and will not purchase anything until asking prices fall back in line with the long term mean. She told me that if I went to the open house, tell the realtor (her friend) that we were working together. I just laughed to myself. If anything, she’s persistent.
She sent me the link and the house is the typical piece of sh*t with no landscaping, stained roof and sh*tty exterior. I can only imagine the cabbage and beer smelling interior. This is total bullsh*t. Anyone who buys anything at these prices is f*cking stoned.
And yes, please vote affirmative on the schol budgets in order to justify the administrators 12% salary increases across the board. It’s for the children. The state of NJ f*cking s*cks.
BC Bob: According to that calculator, I can afford a $470,000 house. Doesn’t seem right to me….
I’ll usually run those without including my wife’s salary or bonuses. When I run the calculation based on my salary alone, the numbers seem much more realistic.
jb
tbw [36],
To arrive at an “affordable” home price, we followed the guidelines of most lenders. We’ve allowed a total debt-to-income ratio of no more than 36 percent. And we have assumed a housing payment-to-income ratio of 28% for our conservative estimate, and 33 percent for the aggressive one. Before buying, however, you should also factor in other savings needs, including retirement and college.
rhymingrealtor Says:
April 17th, 2007 at 9:55 am
BCBob, Have a friend that told me dr horton is great buy, yesterday he purchased at 20 and change. Bloomberg as of this morning is confirming his optimism that HB’s have hit bottom. Your thoughts? KL
KL: I know I should mind my own business. However, as a matter of risk mitigation, you should not invest in stocks that are related to your individual ability to generate income. The correlation in the performance of publicly traded homebuilder stocks and your personal commission revenue would make such an investment inappropriate for your situation. The fact that you are looking to invest in what would be a specualtive position only exascerbates the risk. Sorry for the wet blanket treatment in such a water-logged week.
chicago
If I run those numbers based on my salary alone, I’m buying a house in Newark or Irvington only.
Clot, I just mean that at this point I am sure the seller knows the buyer has some emotional investment in the site. And I am sure he/she is trying to leverage that.
I used the apartment example because one of my neighbors wanted to expand, and the unit next to them was on the market. And the seller was like “you can only go one way, and I own it, for you it costs more” but that was at the end of 05. The seller was greedy and the buyer decided he really did not need a dining room and a spare bedroom. Now he cant sell it :)
( if I break even with what I payed 3 years ago i’m doing great )
It just seems that having a 3rd party put in another offer that is legit with a contract to buy the place and then quickly resell it seems legal and decouples the seller possibly thinking he has a definate sale all he has to do is wait and let them sweat.
If I run those numbers based on my salary alone, I’m buying a house in Newark or Irvington only.
Do you or your wife need to commute into NYC?
jb
Building up, but housing woes far from over
Housing starts, permits post surprise gain but weather in the Midwest resulted in false sign of strength.
More at:
http://money.cnn.com/2007/04/17/news/economy/housingstarts/index.htm?cnn=yes
My kids (if I have any) are paying for their own college.
JB,
No, we both work in Jersey. Our combined salaries would hardly allow us to buy my current rinky dink cape based on the old standards.
In what town?
jb
Good old Clifton, USA.
gary,
You like Athenia? They just relisted the house on the corner of Huron and LaSalle. 4br/2ba 50×100 lot, estate sale @ $339,900
Was listed 9/1/06 for $424,000.
jb
JB,
I’ll take a look on the way home today.
Thx.
Taxes are $6600 on that property. Also, isn’t Clifton being re-assessed soon?
It’s going to need work, for sure. One thing to look into is whether or not it’s zoned 2-fm.
jb
oooh, it is a 2-Family!! Not bad…
Yes, Interior is probably 1970’s. I checked the old expired listing. There were 3 pictures of the house, all exterior pics. Very telling about what the interior might look like…
thatbigwindow,
My taxes went from $5500 to $7100 in the last 5 years. I didn’t do anything major to the house. If that’s not called “re-assessed” I don’t know what is. I seriously think I want to leave this state formerly known as New Jersey.
gary: my small lot of 33 x 88 is $4,100 a year for prop taxes. Last year they were $3,200. A few more years and they will be at the 7k mark.
Patrick (42)-
All Prof has to do to convince the bank he’s not emotionally-involved with this property is to kill-date the offer (which I bet he’s done).
Concocting a fraud isn’t something you’d approve of a Realtor doing; how come you think it’s OK for an individual acting without a Realtor?
BTW, describing the set-up of a fraud with softball terminology doesn’t make it less of a fraud.
Chi Fi
Actually – I told him not to buy, I did not feel they are at their low, they have further to go, and longer to get up- he is also in the field as mortgage broker, and has a very optimistic view. He has given me quite a bit of good stock tips ( I have what I call a play account
I lost half of my comment????
Patrick (42)-
Or…since buyers have gotten the short end of the stick so often in the past few years, does that mean any ruse today’s buyer can pull is OK?
From MarketWatch:
FDIC says subprime lenders must adjust to aid struggling borrowers
Federal Deposit Insurance Corp. Chairman Sheila Bair said Tuesday that subprime lenders must be more flexible and allow borrowers to rework terms of their mortgages to prevent escalating delinquencies and foreclosures.
“Restructuring their loans into more affordable products, especially 30-year fixed-rate mortgages, would bring them back to good standing, allow them to repair their credit histories, and dampen the impact that foreclosures may have on the broader housing market,” Bair told the House Financial Services Hearing, according to the prepared text.
The real question is whether or not “struggling borrowers” can afford those “affordable products”.
Hell, an “affordable 30 year fixed” in this market seems a bit oxymoronic.
Unless those 30 year fixed loans are being originated in the very low single digit rates, they are going to be unaffordable to anyone coming from an ARM, NegAm, Option, or I/O, especially if a teaser was involved.
jb
JB
62
Spot on. Fed officials appear to be completely ignorant of the fact that marginal borrowers were unable to afford fixed rate loans in the first place. Even below market interest rates will not help affordability with fullly amortizing loans.
Ron Says: April 17th, 2007 at 1:48 pm
JB 62 Spot on. Fed officials appear to be completely ignorant of the fact that marginal borrowers were unable to afford fixed rate loans in the first place. Even below market interest rates will not help affordability with fullly amortizing loans.
R: Please draw a distinction between what Fed officials say and what they think…..
4br 2.5ba colonial for only $54000 (no, I did not miss any zeros!)
Check this out:
http://homes.realtor.com/Prop/1075976345
Nice but the commute is going to be a killer!
the midwest (atleast places like kansas city) never had a RE boom, and they ain’t having a bust eitha
NJ is a different story
but i digress.. sorree
#65 RentL0rd
Again, the term ‘colonial’ is very subjective!
#56tbw Too bad you are not in River Edge, you could be at 10K already and counting.
Because with this years $629 increase in the school taxes, and still waiting for municipal and county, it will be over 10k. In fact it will be pushing 11k and counting.
Was wondering in general if Fed officials have a grasp of reality, as in the plight of the common Joe Sixpack’s finances. Or are they up there in their offices and look at life where most folks pull in $200-500,000 incomes like them? Do the Feds see everything in aggregates, or is there drilling down of the statistics? I understand drilling down would be information overload for them, but do they see the trees in the forest?
If the teaser rates are at 2% and a ‘refi’ is into 5% fixed, it’s still unaffordable.
All this talk of bailouts, handouts, etc is just prolonging the agony of the upside-downers. A bandaid just isn’t enough to shut off a water fountain this late in the game.
JB, KL, or Clot or others with MLS access,
I posted this last nite, but reposting today in case it got lost..
Do you know current status of 2311922 in berkeley heights?
It was initially listed at 739k, then dropped to 700k most recently..now off realtor.com..
any help appreciated.
thanks afe
#71 dream: I think you have to assume that the teaser rate has reset from its initial 2%.
Under Contract
thanks jb
From Marketwatch:
Credit Suisse acquires subprime lender Lime Financial
Credit Suisse Group on Tuesday said it agreed to buy subprime lender Lime Financial Services. Terms of the deal were not disclosed. Lime, based in Lake Oswego, Ore., funded $2.1 billion in mortgages in 2006 and $250 million in the first quarter 2007. The deal, subject to regulatory approval, is expected to close later this summer.
#76 JB I guess my question would be Why?
Credit Suisse acquiring Lime Financial.
I would say they are doing it for the platform just as all of the others are doing. The market is getting rid of excess capacity which is good for the market and you want to have a solid origination platform and more importantly the financial backing to weather this storm which an investment bank gives you. The pure originators (non-depositors or other strong sources of funding) are struggling. I personally think its cheaper to buy the AEs are run the production through your existing platform.
From my vantage point….it really interesting times
#78 I guess that makes sense, buy the platform, gut the rest and start over.
Execs jumping ship, from Bloomberg:
GMAC’s Home-Loan Chief Executive Paradis to Retire
GMAC LLC’s money-losing Residential Capital home-lending unit, which does business as Ditech.com among other brands, said Bruce Paradis will retire as chief executive officer. It was the third executive departure to be announced in four weeks.
He will be succeeded by Chief Operating Officer Jim Jones, 58, a former chief executive officer of closely held Aegis Mortgage Corp., who joined ResCap last month, GMAC said in a statement. Jones also served as president of ResCap’s U.S. Residential Finance Group, and will be succeeded in that capacity by Craig Chapman, 50, another former CEO of Houston- based Aegis, the company said. Paradis, 58, will leave June 1.
The change follows a $651 million operating loss in the fourth quarter at Minneapolis-based ResCap, the 12th-largest subprime mortgage lender in the U.S. Late payments on subprime loans, to borrowers with poor credit histories or high debt, reached a four-year high of 13.3 percent in the fourth quarter, according to the Mortgage Bankers Association.
Losses at ResCap, which also operates under the GMAC Mortgage brand and is the seventh-biggest originator and servicer of U.S. residential mortgage loans, contributed to a lower-than-expected fourth-quarter profit at General Motors Corp. Detroit-based GM sold a 51 percent stake in GMAC, then known as General Motors Acceptance Corp., last year to a group led by Cerberus Capital Management LP.
Two other ResCap executives left earlier this month. Chief Financial Officer James Giertz, whose resignation was announced March 23, was replaced by GMAC CFO Sanjiv Khattri, 42. Treasurer Louise Herrle’s resignation, to pursue personal interests, was announced March 20.
ChiFi
64
Good point. Fed and State offficials are most likely paying lip service to consumer advocacy groups calling for a bailout. As to what they think/believe is anyone’s guess.
Personally, I’m happy to see the overwhelming majority here is against a bailout. As a fiscally prudent individual, I am 100% against bailing out anyone that fails to read what they sign.
Clot-
What you are I think refering to is the mysterious “other offer” and other types of fraud. Where another offer does not exist.
This is giving another legit full legal offer from OPM to buy the house for a lower price as “attached to the property buyer” where the seller is in my example has the price he wants to get it at and then the list price which if he wants it hes going to pay.
Its a real offer from a real person, who will really buy the place. He will then flip it to “psychologically attached buyer” and pocket some money for his troubles.
It does not seem like fraud, but then I really dont ever need to google “so your going to prison”