From the Wall Street Journal:
‘Subprime’ Aftermath: Losing the Family Home
Mortgages Bolstered Detroit’s Middle Class — Until Money Ran Out
By MARK WHITEHOUSE
May 30, 2007; Page A1
For decades, the 5100 block of West Outer Drive in Detroit has been a model of middle-class home ownership, part of an urban enclave of well-kept Colonial residences and manicured lawns. But on a recent spring day, locals saw something disturbing: dandelions growing wild on several properties.
“When I see dandelions, I worry,” says Sylvia Hollifield, an instructor at Michigan State University who has lived on the block for more than 20 years.
Ms. Hollifield’s concern is well-founded. Her neighbors are losing interest in their lawns because they’re losing their homes — a result of the recent boom in “subprime” mortgage lending. Over the past several years, seven of the 26 households on the 5100 block have taken out subprime loans, typically aimed at folks with poor or patchy credit.
…
In 2006 alone, subprime investors from all over the world injected more than a billion dollars into 22 ZIP Codes in Detroit, where home values were falling, unemployment was rising and the foreclosure rate was already the nation’s highest, according to an analysis of data from First American LoanPerformance. Fourteen ZIP Codes in Memphis, Tenn., attracted an estimated $460 million. Seventeen ZIP Codes in Newark, N.J., pulled in about $1.5 billion. In all of those ZIP Codes, subprime mortgages comprised more than half of all home loans made.The figures show the extent to which the new world of mortgage finance has made the American dream of homeownership accessible to folks in previously underserved communities. By some estimates, subprime lending has accounted for as much as half of the past decade’s rise in the U.S. homeownership rate to 69% from 65%. But as the experience of West Outer Drive illustrates, the flood of cash has also encouraged people to get into financially precarious positions, often precisely at the time when they were least able to afford it. In doing so, it may have temporarily alleviated — but ultimately worsened — some of the nation’s most acute economic problems.
“The market was feeding an addict at its neediest point,” says Diane Swonk, who spent 19 years analyzing consumer credit in the Midwest and now serves as chief economist at Chicago-based financial-services firm Mesirow Financial. “Individuals will resist reductions in their standard of living with everything in their power, including mortgaging their futures.”
From Bloomberg:
China Stocks Drop as Stamp Duty Triples: World’s Biggest Mover
China’s stocks tumbled the most in three months after the government tripled the tax on securities transactions to cool a rally that’s drawing more than 300,000 new investors a day.
The CSI 300 Index dropped 281.83, or 6.8 percent, to close at 3886.46 in Shanghai, the biggest fluctuation among markets included in global benchmarks. The value of local stocks has more than doubled this year to $2.47 trillion and brokerage accounts topped 100 million for the first time this week.
“The Chinese government is concerned that there’s too many people in the market, and they’re gambling,” Mark Mobius, who oversees some $30 billion as managing director of Templeton Asset Management Ltd., said in an interview in Hong Kong. “It’s good for people to not expect that markets go up continuously.”
More than half of the shares included in the CSI 300 fell by the 10 percent daily limit today, including Citic Securities Co., the nation’s largest publicly traded brokerage, and China Shipping Development Co., the biggest oil tanker operator.
The value of shares traded in China today was a record 407.1 billion yuan ($53 billion), according to data compiled by Bloomberg. That’s more than changed hands in either of the New York Stock Exchange’s past two trading sessions.
From MarketWatch:
U.S. private payrolls up 97,000 in May: ADP
U.S. private-sector jobs grew by 97,000 in May, according to the ADP employment report released Wednesday. The report suggests U.S. nonfarm payrolls rose about 123,000 in May after adding in government jobs, a bit less than the 150,000 estimated by economists surveyed by MarketWatch. The nonfarm payrolls figure will be released on Friday. In May, services-producing jobs increased by 120,000, while goods-producing jobs fell by 23,000, ADP said. Manufacturing firms cut 10,000 jobs, the least since November. Large businesses added 8,000 jobs in May, the first increase since November. Small businesses added 58,000 workers, and medium-sized companies added 31,000.
From the Washington Post:
An ATM That’s Out of Money
For a long time, Paul and Amy Woodhull’s house on Capitol Hill was a honey pot. Through multiple refinancings over nearly a decade, they pulled out money to fix it up, buy a car, pay down credit cards, buy three other properties and improve them, too.
Now the pot is dry. The Woodhulls are feeling squeezed by bills, but with interest rates up and home prices down, they’re reluctant to touch their home equity again. They called their six children into a family meeting recently, and Amy laid down new rules: No more impulse purchases or frivolous shopping trips.
That seems to be the new motto in many an American household.
For years, as the bull market in housing gathered steam, people used their homes as glorified ATMs, pulling out money for all sorts of reasons. The trend helped support continued economic growth and recovery from the 2001 recession.
But now people are reining in their spending, raising concern that their collective decisions could nudge a sluggish U.S. economy into recession.
“We’re going to have to save our pennies,” she declared.
#3 Ah poor Amy, what a sad story (BARF!!!)
From the Philadelphia Inquirer:
Consumer confidence lags in area
Consumer confidence rose unexpectedly in May across the nation as a glowing job market and stock gains overshadowed high gasoline prices, the Conference Board reported yesterday in its closely watched monthly survey of consumer attitudes.
But in Pennsylvania, New Jersey and New York, consumers appeared to take a more dour outlook, as confidence fell to the lowest level in 2007, the group said.
The region, one of nine, ranked third from the bottom with a May reading of 90.2, down from 98.4 in April.
3b (from yesterday):
“Some towns will always be more expensive, but this idea that there is permannet new class in these towns is mistaken.”
I tend to believe so as well, but I was just looking to verify this by seeing if anyone knew where to obtain real facts about buyers’ median income levels, rather than relying on hearsay and supposition about historical norms.
#6 fan: Understood. I am just not sure that income levels really matterd over the last few years, as far as really being able to qualify for a house purchase.
schoolmatters.org is a good site for general demographic info and data on public schools (it’s run by S&P).
Incomes are higher than the census stats people generally cite, since the census came out in 2000 and S&P projects income growth through some kind of modeling.
Still, even in the wealthiest towns (Scarsdale, NY comes to mind), there are a sizeable number of households that make below $150,000 annually (35% of Scarsdale households)
Re post 8
Skeptic,
The Census Bureau does an update called the American Community Survey, not as thorough as the census, but lots of data and a good source. They did one for our area in 2005.
why not ask these people what grade they
got thru. 8th., can they balance a checkbook
can they read.
are we really suppose to feel sorry for them
anybody here , getting payments made by
someone else , or is everybody working
theirs tails off to make the nut.
READ MY LIPS:
PANIC IS SPREADING “IF” U HAVE STRONG FINANCES U ARE IN DRIVER SEAT.
U DETERMINE PRICE AND HOUSE PRICES ARE STILL ARE DUMB LEVELS.
LOTS OF DOPES IN TROUBLE. I SMELL PAPAPAPAPAPANIC.
IT IS DEFINATELY WORSE THAN EARLY 1990’S.
MASSIVE MISERY 2008.
BOOOOOOOOOOOOOOYAAAAAAAAAAAAAAA (Half agonizing yell)
Bob
SIMPLE RULE TAKE “AT LEAST” 25% OFF OF 2005 PHONEY HOUSE PRICES.
TAKE THE PACIFIERS OUT AND START SLUGGING IT OUT WITH STARVING TOUR GUIDES AND GRUBBERS.
TELL LIKE IT IS…..MISERY!
HEHEHEHEHEHEHE!
BLEED’EM DRY!
Wake up grubbers or ride it down to the bottom.
NO SPRING REBOUND IN 2008! tHAT’S RIGHT no REBOUND IN 2008. 2007 IS OVER NOW THE REAL PAIN HEADING U WAY.
SO IF U INSIST BETTER HUNKER DOWN FOR A ROUGH RIDE DOWN THE STEEP SLOPE UNTIL IT BOTTOMS IN THE ABYSS OF MISERY.
SLASH AND BURN THOSE ASKING PRICES DOWNWARD. DEMAND DEMAND DEMAND CONCESSIONS.
BOOOOOOOOOOOOOYAAAAAAAAAAA
Bob
24 only $6.99
http://www.shop2world.com/store/gourmet_food/g1-3580501-B00032G3PG-Nissin_Top_Ramen_Spicy_Chili_Chicken_Soup_3_oz.html
Boo-yah Bob is a riot. What do people think of Leonia? Saw online there’s a pretty nice 5/2 in Leonia, but it’s under contract. Seems like the town isn’t bad, and it’s close to the city, plus the schools are pretty good.
We just can’t seem to take care of our chidren or ourselves…
From AP via Yahoo:
NJ starting agency to battle obesity
TRENTON, N.J. – New Jersey’s health department is escalating the battle against the bulge by starting a new Office of Nutrition and Fitness to better coordinate programs to prevent obesity.
The agency is particularly needed in New Jersey — possibly the first state to create such a government body.
The Garden State has the highest percentage of overweight and obese children under age 5, at 17.7 percent, according to a 2004 survey by the U.S. Centers for Disease Control and Prevention.
…
Morton Downey, spokesman for The Obesity Society, which represents doctors, researchers and others in the field, said he knows of no other state with a dedicated agency fighting obesity, although federal grants in recent years have helped numerous states develop plans to fight obesity. He called New Jersey’s initiative a very encouraging step that could become a national model.
…
Jacobs said the new agency will begin operations within weeks, and may be able to win more federal and private grant money. He said it will coordinate spending of more than $2 million in nutrition and fitness programs, including promoting physical activity at all ages, providing fresh fruit and vegetables to eligible women, children and senior citizens, and encouraging breast-feeding, which can reduce the baby’s chances of a weight problem later.
Emphasis added
All rehash and a very long article, but the anecdotes really capture the flavor of everything…..
http://www.bloomberg.com/apps/news?pid=20601109&sid=a8VFwgtdQ9FM&refer=home
what is next? Soon it will be illegal to hurt someones feelings. Watch, it will happen. The wheels are already turning on this one….
from article…..
Among other allegations, the Kansas City lawsuit claims NovaStar fraudulently puffed up borrowers’ assets to qualify customers for loans. One unnamed former employee, identified as a “loan officer” who worked in California from 2002 to ’03, told plaintiffs’ lawyers that employees would apply an “X-Acto knife and some tape” to borrowers’ W-2 forms and paychecks to qualify them for loans.
The same employee said that on other occasions, the company would temporarily deposit $5,000 in the bank account of a potential borrower to inflate his or her assets. NovaStar would either take the money back or increase the loan fees, according to the lawsuit filed by co-counsel Milberg Weiss & Bershad LLP of New York.
!
Foreign U.S. Notes Rise to 80 Percent; Treasuries Irresistible
By Elizabeth Stanton
May 30 (Bloomberg) — For the moment, at least, financing the U.S. budget deficit may be getting less arduous as foreign investors now own a record 80 percent of the Treasury notes due in three to 10 years.
Not since the 19th century have foreigners held so much American debt, said Alan Taylor, a professor of economic history at the University of California, Davis. International investors own $672 billion of the $835.4 billion Treasuries due in three to 10 years, according to research by Lawrence Dyer, a New York- based strategist at HSBC Securities USA Inc., the investment banking arm of HBSC Holdings Plc in London.
While the Central Bank of China in Taipei and the Bank of Korea say they have had their fill of Treasuries, the 22 percent rise in U.S. dollar reserves led by Brazil and China during the past year makes Treasuries irresistible. Yields on U.S. government bills, notes and bonds are higher than similar- maturity debt sold by Japan and the countries sharing the euro. That’s partly why foreign holdings of U.S. securities have doubled since 2002.
“Those dollars need to go somewhere and the natural place to go to is Treasuries,” said Charles Comiskey, the New York- based head of U.S. government bond trading at HSBC, Europe’s largest bank by market value. “They’re not bought for fundamental reasons but for necessity.”
Yields on 10-year notes, the benchmark for corporate bonds and 30-year fixed-rate mortgages, have climbed for three straight weeks. They increased 2 basis points yesterday to 4.89 percent.
3b Says:
May 30th, 2007 at 9:03 am
#3 Ah poor Amy, what a sad story (BARF!!!)
Six kids??? They may have wanted to use some of that equity line on birth control?
window (18)-
Was at a NJ High School girls’ lacrosse semifinal game last week. A couple of parents yelled at a ref (nothing obscene, nothing really that bad) on a close out-of-bounds play.
The game was stopped, the refs had the school’s AD pull the parents aside to ostensibly read them the riot act, and the team was assessed a penalty.
Is this how it started in Germany in the ’20s?
ChiFi (20)-
Wake me when the 10 yr tops 5.25%.
I wonder how the offspring of the entitlement generation will ever survive without the help of the govt?
From marketwatch:
* Fed staff trims its estimate of structural productivity rate
* FOMC sees considerable uncertainty in inflation outlook
* FOMC sees housing drag on growth lasting longer than thought
* FOMC sees growth pickup, gradual inflation decline this year
* FOMC says downside risks to growth have diminished a bit
* FOMC members not convinced inflation on downward trend
* FOMC less worried about slowdown at May 9 meeting
* FOMC says weakn Q1 GDP growth exaggerated weakness
I have a silly idea, Can someone tell me if it would legally work.
Leasetrader creates a market for people to get out of an unwanted lease and byers looking to cash on sellers cost.
Can the same idea work for mortgages?
Istead of loosing a home through foreclosure, or sellers with little or no equity needing to sell the home but after realtor fees and closing costs they’ll be flat or under. Why not create a market that allows someone with no equity and no money for downpaymnet to come in and assume the mortgage payments.
http://www.mortgagetrader.com lol
any legal issues you can think of. or reasons why it wouldn’t work.
Make,
In the case of lease trader, there is equity built up on the car, but if there is no equity in a house, who would want to make the payments on a depreciating commodity?
You decide:
http://biz.yahoo.com/ap/070530/fed_minutes.html?.v=6
Anyone get their Bloomberg magazine yet this month?
The cover story is “TOXIC DEBT” in big, red, stenciled letters. “The subprime mess is spreading to banks and pension funds”.
Dow will close at another new all time HIGH S&P ditto..REITS biggest gainers of the day! another way to let somebody profit on your home ….http://www.rex-inc.com/index.php
jersey # 27
Let’s say I’m a seller and I can’t afford the $3500 mortgage due to disability, I have around $30,000 in equity. If I was to put my house on the market, after waiting 6 months to close, and realtor and closing fees, I’d be flat.
I’d rather have someone take over the paymnets, transfer ownership and have them move right in. No foreclosure. I don’t have to make mortgage payments until I actually sell and close.
If I’m a buyer, instead of downpayment, closing cost, etc I can just buy the house and move right in.
I wish my attorney would return my call. Any thoughts?
make (26)-
Stop sniffing glue. You’re a RE investor? Virtually 100% of all first mortgages in the US (except VA loans) have provisions against assumption.
How’s that apartment building coming, Mr. Troll?
Nowdays all people are focused is how much is the monthly payment? I can just see it…
Beautiful center hall colonial, great condition, great schools, only $3500 per month.
Lender loose money everytime someone forecloses, Why not have someone else continue to make payments?
make (31)-
Your proposal in this post contains multiple potential RESPA violations.
Transfers of ownership trigger the due-on-sale clause of every mortgage out there (again, except VA loans). Any attempt to circumvent this is a crime.
Clot,
I’m sitting in an interior design class bored out of my mind.
What type of assumtion provisions are common?
The only class of residential mortgage in the US that’s assumable is the VA loan.
Unless it’s some sort of private, unrecorded, person-to-person note, assumption is strictly prohibited. A lender will usually invoke the due-on-sale clause if he discovers a mortgage has been assumed “on the sly”.
Therefore, there’s no such thing as “common assumption provisions”.
Therefore, there’s no such thing as “common assumption provisions”.
Clot,
I went to school with a friend who went onto become a psychologist. One of the techniques taught is called “mirroring”. So you say “I feel angry”, psychologist says “you are upset”. I think after interior design, MM is headed to “Psych 101” where he/she learns when cornered and don’t know what to say…repeat using similar words. Post # 35 is a great example of that.
Thanks for the info on RESPA, quite informative.
afe
Clot,
I had an assumable mortgage in 1989 issued by citibank. Even with that, the fact that I had only put 10% down the market erased that and more, I was unable to get rid of it 5 years in. Just get me outta this take over the payments, no down payment needed, that did’nt help us.
KL
kl (38)-
By the early ’90s, all those conventional, conforming assumable loans had gone the way of the dodo. What happened to you happened to lots of people…the loans were assumable, but the underlying terms made them impossible to dump on anyone.
Clot,#36
I see. Thanks.
Do you think that lenders will be willing to give up the due on sale clause if there is documented risk of potential foreclosure?
Or am I pushing it?
window (18)
You mean like a flag-burning amendment, right?
“Do you think that lenders will be willing to give up the due on sale clause if there is documented risk of potential foreclosure?”
They would do this why?
make (40)-
There’s a way around everything…and plenty of lenders out there who’ll look the other way when a big check comes in, suddenly getting a mortgage that’s thousands in arrears back on track. Three caveats, however:
1. The above scenario can never be played out on a repeated basis, or turned into any kind of organized, ongoing business.
2. If one is going to do a de facto, “under the table” mortgage assumption, it’d better be done without a transfer of title underlying the deal.
3. The investor who does this kind of assumption had better do it behind the veil of some type of trust arrangement or shell corporation.
Needless to say, I don’t endorse this or encourage it. I have seen it done, though.
#28 Gary Like I have been saying no rate cut this year, period.
Either way,nothing is going to stop the housing market’s decline.
Still amazed the markets took these minutes as good news, at best its neutral IMHO.
Wish I bought some (CROX) beginning of May.
CNNMoney:
Wow, I could’ve had a prime mortgage
Why many borrowers who qualified for prime-rate loans wound up with subprimes instead.
Imagine you’re a homeowner, and you discover that instead of the expensive subprime mortgage loan you signed on for, you actually qualified for a prime mortgage with much lower interest rates.
Subprime loans are usually designed for borrowers with damaged or sketchy credit histories. Lenders charge higher rates to these customers to offset the extra risks they take on. Prime loans are usually granted to borrowers with credit scores of 650 or higher.
More at: http://money.cnn.com/2007/05/29/real_estate/could_have_had_a_prime/index.htm?cnn=yes
All right, I have been reading this blog for some time and am getting really sick of things. The fact is that it is NOT a seller’s market. It is also NOT a buyer’s market. If homes are not selling because there are no buyers out there, it is NOT a buyer’s market. My home is on the market and nobody has came to seen it in over a month.
And the truth is that home prices are not going to crash and burn like you people say they are. I have lowered my asking price for the last time. I got a lowball offer and I cursed the guy out. A few days later, the buyer’s agent called and raised the offer. It was still a pathetic offer so I cursed him out again.
Donny, you are not the only one, you know.
Hope that helps.
Lady at the end of our street with the “nicest cape in town” said two months ago “I’m NOT lowering the price again. I’ll just stay here, I will.” This, after two agents and a year.
Guess what. New agent, new improved price this week.
He’s a pain, he’s a drain, he’s “Mr. Market.”
Donny, you are not the only one, you know.
Hope that helps.
Lady at the end of our street with the “nicest cape in town” said two months ago “I’m NOT lowering the price again. I’ll just stay here, I will.” This, after two agents and a year.
Guess what. New agent, new improved price this week.
He’s a pain, he’s a drain, he’s “Mr. Market.”
Ooo….a two-fer. What do I win?
I have lowered my asking price for the last time…And the truth is that home prices are not going to crash and burn like you people say they are
Donald,
Like a lot of people around here, I don’t think prices are going to “crash and burn” either. Housing bubble corrections typically play out over the course of years. Many sellers, such as yourself (assuming you are in a position to stay put), simply refuse to sell. This is why housing corrections are characterized by illiquidity; transactions grind to a snails pace.
In life, however, people get divorced, die, get relocated, lose jobs, run into financial trouble or simply decide to capitulate. My wife’s parents, for example, are getting divorced. They have lots of equity and are going to take what they can get. If you happen to live in their neighborhood, guess what, your home value just went down, as these sales set the new “comps”.
Donald #47, the 5 stages of grief:
1) Denial
2) Anger
3) Bargaining
4) Depression
5) Acceptance
I’ll see you and other delusional sellers after you get past the “I have lowered my asking price for the last time” mindset.
We can wait. The value of your home continues to decline each month you refuse to meet the market.
Keep your house, sell it, it doesn’t matter — people who are retiring, dying, and squeezed under their increasing ARM payments are forced to sell around you. And these are the transactions that set the comps.
That 80-year-old lady down the street, with $400K in equity, will undercut you all day, and she’ll sell the house at what the market will bear.
RentinginNJ, was typing at the same time as you, and eating dinner. :)
We can wait. The value of your home continues to decline each month you refuse to meet the market.
I agree. There are probably 25 homes on the market for every buyer. 24 self-righteous sellers can turn their nose up at my offer as they smugly reassure themselves that they are “entitled” to get their price. I only need 1 seller who decides to cry “uncle”.
If you have been a victim of predatory lending or know someone who has, we want to hear from you. Please send all submissions to predatorylending@oprah.com for consideration.
mba numbers ugly today..
Donnie,
Nobody said crash and burn. More like a slow drip that eventually turns into a flood. Maybe 5-7 years of slowly declining prices. No reason to curse anyone out. I know a slew of investors that are still cursing out JDSU, JNPR, etc. That curse, along with a subway token doesn’t even get you on the train. Don’t waste your time on negative vibes. Shift gears into a positive mode and close your deal. It’s not going to get any better. Possibly 1/2-1% lower, every month you sit.
I find it odd that you come to this site to bitch and moan. Why not go to your realtor/nar and vent?
Complacency
Concern
Fear
Panic
RE: #47….It is also NOT a buyer’s market. If homes are not selling because there are no buyers out there, it is NOT a buyer’s market.
Actually Donald, there is at least 1 buyer out there and he made an offer on YOUR house. You turned him away. He is probably buying another house right now.
RE #47
The idea that there are no buyers ‘out there’ is an illusion. Just like the troll a few weeks ago who raged against ‘lowballers’ insisting that they ‘have to buy sometime’ you seem to not accept the current reality.
I am one of those ‘not there’ buyers. I am waiting. I can afford to wait. There are plenty of rentals available now and more on the way as those forced to sell by life circumstances look to minimize their losses.
I am happy to help. Just offer a nice two or three bedroom home with garage, recently upgraded kitchen, close to the train at a competitive price, and I will certainly consider it as an option. I might even be willing to give up some of the maintenance, landscaping, pool care, and free shuttle to the ferry I get with my current rental if the yard is nice.
I think I’ll go out for a walk by the river. It’s a nice evening.
Donald (47)-
You’re cursing at air. If the offer you have is the only one you’ve gotten, that offer’s your market value. If you haven’t gotten any showings in a month, it’s because you’re overpriced.
Do yourself a favor. If you don’t have to move, just pull up the sign and stay. Your house is not going to sell. Get out of the way and let sellers who need to sell and buyers who need to buy set the market.
Wow… it’s amazing, isn’t it? Seems like all the folks who “missed the boat” are really bitter.
By not cashing out in 05 and make heaps of dough by selling their homes in an inflated market they are stuck. I guess they are hoping for the next “gold rush” and are angry that no one right now is willing to over-pay for the house they are selling.
I’m with you, Clot. These folks should give up being bitter and re enter the market when prices are to their liking…at the next boom. Whenever that is.
That “lowball” price probably is the right *current* price. Too bad.
sl
>>If you happen to live in their neighborhood, guess what, your home value just went down, as these sales set the new “comps”.
i question this ‘common’ wisdom. who says the last sales price is all your home is worth? if you live on a desirable block and no one else is selling does that mean you can only ask for what the last person sold for? there are other factors to consider like supply and demand.
Donald Says:
May 30th, 2007 at 7:23 pm
All right, I have been reading this blog for some time and am getting really sick of things.
Yo’ D: where is the “The”?
>>I am one of those ‘not there’ buyers. I am waiting. I can afford to wait.
so can many sellers. a desirable property will sell at a premium. problem is most don’t fit that category.
#62, good point about supply and demand — so this bitter seller not only has lower comps coming in, but more inventory, and fewer buyers.
A triple smackdown.
Keep up the spirit #47 — “I have lowered my asking price for the last time”! Show those prospective buyers who’s boss!
ChiFi #63:
http://www.allmusic.com/cg/amg.dll?p=amg&sql=11:aifwxqr5ldse
nice!
i question this ‘common’ wisdom. who says the last sales price is all your home is worth? if you live on a desirable block and no one else is selling does that mean you can only ask for what the last person sold for? there are other factors to consider like supply and demand.
Sure, supply and demand are big factors. When homes were selling in hours and inventory was tight, the last sale in the neighborhood became the opening bid for the next house for sale. Comps were not a limiting factor, in fact they set the new floor price.
Times have changed though and there is an oversupply on the market. Even if you have a desirable house on a desirable block where no one else is selling, you still get impacted. In fact the weakest segment of the market now is in high-end homes.
Current reality is that a lot of people are selling. Today, you are not the only game in town. At some point, even more desirable houses on other blocks fall to within your asking price range, making your place overpriced. At the same time, prices on slightly less desirable houses on other blocks fall, growing the “premium” to buy your house versus a slightly less desirable house. At some point, buyers will not see enough value in paying the premium to buy your house.
Comps are also a bigger factor in getting financing today. Appraisers are not as freewheeling as they were 18 months ago. A buyer may think he found a true gem and is willing to pay a premium, but the appraiser is going to look at the comps and getting financing could be tough.
364 So all 200 houses in Westfiled for sale are not desireabale, and will not sell for a premium?
#57 BC Bob : I don’t think they will be slowly decling prices 5 to 7 years.
I believe you will see the big cuts over the next year or so, and then continued price declines and or flat over the next 5 years or more.
There was too much recklessness for this to play out in a slow orderly manner.
For everyone’s information, the offer I received was $140,000 less than what I bought the house for in 2005. I live in an affluent neighborhood so nobody is undercutting me because they are desperate to sell. Just down the block from me, there is a new condo devleopment that is under construction where the prices range from $1 million to $2.5 million. Sales there have been very strong and people put deposits on condos before the sales office even opened up!
Like the rest of the competition, I can afford to wait. I do not want to wait, but I will gladly do so, so that I can show the door to anyone that comes in with a lowball.
I just picked up the NY Daily News yesterday. In the first quarter of 2007, prices have only came down by 1.4%. That is less than $10,000 for most homeowners. I hardly consider that a reason to take a lowball.
And you people can wait all you want because I doubt you can afford my house… it is listed at $900,000.
“I am happy to help. Just offer a nice two or three bedroom home with garage, recently upgraded kitchen, close to the train at a competitive price, and I will certainly consider it as an option. I might even be willing to give up some of the maintenance, landscaping, pool care, and free shuttle to the ferry I get with my current rental if the yard is nice.”
I will offer a 5 bedroom/4 bathroom 4,000 square foot house for $869,000. It is listed a t $900,000, but I will accept a lower price if I do not have to pay a realtor. The home is 12 years old and has a 2 car garage. However, it does not sound like you are looking in Bergen County, as you mentioned “close to the train.” We do not have any trains in this neck of the woods.
“And you people can wait all you want because I doubt you can afford my house… it is listed at $900,000.”
That’s on the lower end of our price range, what town?
And as for “the offer I received was $140,000 less than what I bought the house for in 2005” — welcome to the club. I’ve posted transaction after transaction here where sellers bought in 2004/2005 and sold 12 to 18 months later for a $100K to $300K loss.
What you’re failing to realize, is that the mania is gone from the market. You’re looking to sell your Cisco stocks in 2001 at the same premium from 12 months prior. Not gonna happen — no mania, no “pay day” for greedy sellers.
Face facts, you bought at a 100-year-market peak, get out while you can:
http://graphics.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
Donald (#71)
Here’s a graph illustrating that -1.4%
http://www.marketwatch.com/News/Story/Image.aspx?Guid=1403381f45b8499796060a98635b4280&Track=201
Even if you ignore the fact that this is just a multi-city average (and not NNJ), look at where that graph is heading. -1.4% is not a small figure in this context.
Weak GDP, high energy price, weak wage, and etc are all signs that things are not favorable for the housing prices.
I have access to njmls database, and I see a lot of “green” fonts for prices. And ironically in njmls, green font means price DROP. Some towns have been holding up better than others. Towns with high property tax burden relative to their desirability are taking bigger hits.
Exercise caution.
It’s actually quite simple, 30-40% off 2005 by the time the smoke clears.
Sorry renters, but you are wrong. Unemployment and interest rates are at historical lows. Jimmy Carter is not president and interest rates are not 20%. I live in southern Bergen County, along the “Gold Coast” and there are few people selling for big losses. The ones who are taking hits are the flippers who bought at pre-construction prices with the idea of selling for a profit. Those who bought homes to live in with traditional mortgages, like myself, are not panicing. My interest rate is locked in for the next 28 years.
I have no desire to sell for less than what I paid. Not even $1 less. Unfortunately for the home buyers of today, you will run into a lot of sellers like me. The ones dropping their prices left and right are few in number, unless you are looking at hosues in a low income neighborhood.
Sorry renters, but you are wrong. Unemployment and interest rates are at historical lows. Jimmy Carter is not president and interest rates are not 20%. I live in southern Bergen County, along the “Gold Coast” and there are few people selling for big losses. The ones who are taking hits are the flippers who bought at pre-construction prices with the idea of selling for a profit. Those who bought homes to live in with traditional mortgages, like myself, are not panicing. My interest rate is locked in for the next 28 years.
I have no desire to sell for less than what I paid. Not even $1 less. Unfortunately for the home buyers of today, you will run into a lot of sellers like me. The ones dropping their prices left and right are few in number, unless you are looking at hosues in a low income neighborhood.
Donald,
from what you said, it totally boggles my mind why people would want to spend 1-2.5 million on a condo rather that a $869K house which they can move in right a way. it does not make too much sense to me, maybe you can ask yourself that question. the answer might be obvious…
And I only decided to visit this site after I saw all the forum posters on Kannekt (www.hobokenx.com) laughing at you guys. I now know why you are their laughing stock.
“the answer might be obvious…”
Nope, it is not obvivous to me. Maybe because the condos are being designed by Philippe Starck? They will have NYC views and ever ammentiy imaginable? For the prices being charged, I would rather buy in Manhattan and watch my condo appreciate double didgits during a national market slump.
RE # 72
I wish you good fortune. You are certainly correct that I am not looking for a Bergen Behemouth.
No trains in Bergen county? Are you sure?
Wow, a new troll. This is exciting! Donald, guess you’ll be living in your house for quite a while. Too bad you bought at the peak, but while you might not sell, other sellers will happily chop some off their price and sell their homes – for every person like you, there are people who’ve lived in their places for 30 years who bought for 100K and couldn’t care less about losing an extra 100K. I’m not really sure why you bought at the peak and need to sell now, or what you did to assume you deserve to make a profit doing so.
By the way, don’t assume 900K is out of people’s league here – had I bought in NJ, I would have probably looked at homes in that range, although being a smart buyer, I would have ignored your place, since you bought in ’05 and many buyers like you have more an entitlement mentality than others. Although not all – I bought in Westchester, for the same price my ’05 buyer bought for. Yep, he lost money. Divorce. Sometimes sellers HAVE to sell. Keep patting yourself on the back a little more.
379 Donald May I ask why? Why are we a laughingstock, because we and people like us will nto buy your house? Some additional questions you ask yourself.
1. Why are you selling now?
2. Would you pay for your house what your asking for it?
3. Why should we buy now, inventory is rising dramatically, and no turn around in sight.
4.Were you around during the last real estate down turn where prices dropped 25 to 40%, even more on coops and condos?
5. Do you know what a precarious financial situation the state of NJ is in?
6. Is it your belief that it is your God given right to get the price you want?, and if so I again ask why?
7. Shoul we attemopt to use exotice financing to buy your palace Donald just becasue you want to sell it?
8. Do you know that markets including the housing market changes?
9. Do you know NJ has the second highest forclosure rate in the country?
I could go on Donald, but you get the message, as far as those bozo’s over at kannett, they do not have a clue, but they will.
If you want to sell your house Donald, then sell it, if your buyer is gone, than lower the price more, it is as simple as that.
We control this market now son, you just have to accept that reality and move on. Suck it up.
Don,
Here’s the thing. Most people who sell will not have bought their house in the last 2 years. They will have enough equity to bring their selling price down when and if they need to move. Now if you don’t need to move then do yourself a favor (quoting clot here) and take your house off the market. If you still want to stay out there, I say thank-you since you add to the “months of inventory” count for your prestigious town and therefore the statistic used to determine buyer vs. seller market. So even if it is not a buyers market yet, people like you will help make it one.
afe
Donald,
I’m not a renter. I own a house overlooking nyc in nnj. I look at njmls transaction prices for nnj frequently. Even NNJ is highly fragmented.
Take Allendale for example. It has top 2-3 high school in the entire state of NJ, but is burdened by high tax. Many houses on sale over there are now back down to 2004 price level if you take out 6% sales commission.
Englewood Cliffs on the other hand is holding up somewhat better, because of low property tax and proximity to NYC. Although inventory is pretty high, things are still moving. Still, it’s littered with houses that are being sold 30% off OLP (original list price).
#77 Hey Donny: I live in one of the so called sought after desireable Bergen county towns, schools commute and all the rest, and people are dropping prices left and right.
In fact we are in most cases back to 05 asking prices, and yet the inventory sits and grows every day.
Watch and learn grasshopper, and the adults will show you how it is done.
Oh by the way you have already lost money. Suck it up cream puff.
I monitor the NJMLS daily and hardly anone is lowering their prices. The ones that do lower it are those who were ridicioulsy overpriced to begin with. And why should I take my home off the market? It does not cost me anything to have it for sale. I plan on taking it off in November for the holdiday season, but I will re-list shortly after.
I just met a seller that is in the same situationa as me. He bought for $810,000 in 05 and is now listed for $859,000. I am using the same asking price that the previous owners used when they listed 2 years ago so the home is not overpriced. I am happy to break even. Even if I take a $30,000 loss AFTER I pay the realtor, I am still happy. However, 30,000 loss does not mean selling for $30,000 less than what I paid in my vocabularly.
Donald,
I have access to historical prices through njmls for the members(not the freebie version).
The thing with free njmls is, it’s not possible to tell when and why a house disappears. It could be expired, withdrawn, or went into a contract.
So it may appear that hardly anyone is lower prices, because those are the houses that are not moving due to their high price. This creates an illusion that people are not lower the prices.
Meanwhile, even when the prices are steadily declining, those houses that are priced accordingly with the market condition go sold unnoticed, because they don’t stay on the market as long.
A lot of people are unwilling to sell for what they’ve paid for, because not only does it mean they’re losing money, but it also means they’re admitting that they made a bad decision.
Donald: Your house is worth whatever someone will pay for it, and not a penny more. If your house is priced at $900K and it is not selling, then it is not worth $900K.
As for it not costing you anything to keep it on the market, I think you’re wrong. Like anything else that goes on sale and sits for a long time, home listings get “old”, and a house that has been on the market for a long time is always overshadowed by something “younger and prettier.” Houses too get “shopworn”, even if they are impeccably maintained. A house with a sign in front of it for a long time inevitably becomes a dog.
There is a house in my town that started at $1.2 million, then dropped to $1.1 million, and it’s been listed at $999K for the better part of a year, with no takers. And they are on their second realtor.
From what I can see, a home priced right for the current market will sell. One that isn’t will not. Very simple. A realtor has two listings in my town. One is priced (IMHO) about $20-$30K more than it should be in this market. It’s a POS cape, no updates, small lot, no garage, loaded with clutter from what we see in the photos. I think this house would be snapped up at a just-under-$400K price point. Another house, a cape-turned-contemporary, beautifully updated, with a lovely yard and deck, was listed at $599K — and sold within two weeks. This would have been a $675K house in 2005, but it is not 2005.
If your asking price is the same that the owners listed in 2005, your house is overpriced, because 2005 was the top of the market.
Sorry, but that philosphy is worng. I am clever. My realtor has repeatedly took the house off the market and re-listed it the next day to makie it look like a new listing. An excellent way to fool buyers. My home has been on the market since August, but you would never know that by looking at the listing. According to the listing, my home has only been on the market for 2 weeks. And it works. Nobody is smart enough to figure it out.
^that has nothing to do with being smart or not. And any savvy buyer knows that kind of practice is rampant. And certainly all realtors have access to that kind of information (re-listing), and so will the prospective buyer who hired that realtor.
Donald #90. Not as clever as you think. Your house has been on the market since August 2006 and has not sold? Do the words “Do the math” mean anything to you?
Why do YOU think the house hasn’t sold? Is it because the world is full of Philistines who don’t appreciate the intrinsic worth of your particular home?
Handy tool btw:
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
So you can calculate what 8 years worth of X percent appreciation from 1999 prices should have done..
And it works. Nobody is smart enough to figure it out.
Congratulations! I didn’t realize you sold your home!
Nope, you are all wrong. As soon as I relist, the phone starts ringing. Also, how would a buyer know what I am doing? They do not have access to the NJMLS. Only realtors do and there is no incentive for them to pass this information on to the buyers. Remeber, realtors work for the sellers. The more money you pay, the better for them.
If homes are not selling because there are no buyers out there, it is NOT a buyer’s market. My home is on the market and nobody has came to seen it in over a month.
I thought there were no buyers out there?
Okay…so you trick some new buyers into looking at your place, they conclude it’s overpriced just like the last batch of buyers and they move on.
If this is such a great trick, then why has your home been on the market for 10 months?
#95 So the phone starts ringing, but no ones a check bringing. Good strategy Young Donald.
Hey, I really don’t get my jollies from watching poor schnooks twist in the wind, but it looks to me like Donald is stuck somewhere between stages 2 and 3 on the Kübler-Ross scale..
Next comes bargaining, Don. By that time, you’ll be happy to eat a $140k loss. Amazing that the commonsense stuff about market prices, or that the presence of a single buyer sets that price is not self-evident to more sellers.
Really.
I usually don’t either, but with Donald I’m willing to make an exception. ;)
I’m interested in this house in westchester county. Anyone know how I can look up past sale histories? The westchester mls # is 2710566
Does anyone know of a database where you can look up past histories yourself? I know the re agents can look them up for you.
Thanks