Interesting graphic from the NY Times comparing the late 80’s/early 90’s real estate bust with the current cycle:
This gives us some perspective on how long the current downturn will take to play out. An oldie but goodie:
Home Prices Do Fall
A Look At The Collapse Of The 1980’s Real Estate Bubble Through The Eyes Of The New York Times
Grim: there is still a massive differece…..look at our economy today….bearing that in mind, this RE softness is troubling at best
clot:
If Bost is Nostradamus, then this information suggests that you are Nostradumbass….
http://www.bloomberg.com/apps/news?pid=20601109&sid=av7wmmWxswTc&refer=home
The Modesto Bee reports from California. “A bleak picture was painted of the region’s housing market at a recent conference for real estate appraisers. ‘This year, we’re going to see prices drop in every market across the country for the first time since the Great Depression,’ said Steven Smith, a property appraiser and consultant from San Bernardino.”
“Smith predicted that home values throughout the country will fall 25 percent to 50 percent below what they were at their peak, which was in 2005 or 2006, depending on the region.”
from Housing Bubble
25-50%. Agreed.
BC Bob was bringing up the inevitability of higher rates yesterday. The beauty of the petro-dollar is nobody has a frigging clue how many are actually being held. China we know, Persian Gulf not so much. This country will have to keep our creditors happy at some point.
I’ll be back in North Jersey tomorrow evening, look for “normal” blogging to resume then.
Sorry about the lack of posts this morning, my wife made me hike up some mountain. It’ll be 106 a bit later in the day, I’m sure she’ll want to go for a run. Don’t buy into that “dry heat” joke, hot is hot.
jb
Anyone has a link to the original NYT article??
CC
movement continues in the mortgage rates..
Wake me up when we have a firm bottom – sort of like Beyonce – so I can buy!! I will love to see how the assessors offices can finally nail the tax people who for seven years have kept the tax rate the same but since house prices kept rising they got more taxes and were able to blame the assessor’s office. Now the assessor can lower values and the tax people will have to raise rates and get their heads cut off. The scary part is I see lots of million dollar homes that were 1.2 million dollars still stuck with 23K taxes, what happens when they hit 800K, who will buy a house at that price with 23K taxes? Should be interesting.
Also who cares about rates. Up til our magic bubble when rates rise the prices fall and vice versa. Higher rates should not affect affordability. But who knows in 1999/2000 they raised rates alot and houses kept going up, kinda nuts.
Plus high rates choke the subprime crowd and small deposit down crowd. The buyers who fueled our last bubble. The guys buying their second home with good credit and jobs usually have at least 400K to put down so the rates don’t hurt them nearly as much as the 5% crowd. Financing 300K at 8% on a 700K house is not so bad, Financing 650K at 8% on a 700K house is death!!
John #8,
Those taxes will never go down… ever.
chaoticchild,
http://www.nytimes.com/2007/06/02/business/02charts.html
Chi – I’m an economic neophyte – the economy to my eyes looks pretty horrendous, built on credit and get rich quick mentality.
What am I missing?
Jim where are you? From your description it sounds like the southwest.
thx…hobo
CC
#9 the small down-payment crowd is the market. the median downpayment of first time buyers during the past couple of years was 3%. That’s right– 50% put down less than 3%. Without 100% financing, the first time buyer is dead. Without the first time buyer, the whole chain is of sellers and buyers is hosed.
lisoosh Says:
June 4th, 2007 at 11:34 am
Chi – I’m an economic neophyte – the economy to my eyes looks pretty horrendous, built on credit and get rich quick mentality.
What am I missing?
l: strong global growth has allowed U.S. based multinationals to profit handsomely…..despite the rhetoric to the contrary, there really is a trickle down in this economy…..the major corporations are doing well and so are their employees. Those employees go out and spend, thereby enhancing the results of the consumer sector businesses……when people talk of the two Americas, it is really those areas that are touched by the corporate engines that fuel this growth and those that are isolated from it.
In the last 5 years, the housing sector has allowed those outside of the corporate realm to benefit, but that element has been eliminated. As we have seen, although housing put a big dent into the economy in 2006 and early 2007, the corporate sector is strong. The NNJ version of this sector is “The Street”. The issue here is that the riches being generated there are the most extreme, so the comparison feels more stark here than elsewhere.
Remember, do not succumb to anecdotal evidence. It is helpful for us to put things into the context of our lives, and to listen to the stories we hear and see. It helps to ground us and allows us to process this information until it resonates. HOWEVER, anecdotal evidence is BIASED in many way and can never replace the importance of robust data. No many how lousy things seem around us, if the data says otherwise, do not be mislead.
That said, always be skeptical of your data if it really seems to be disconnected from reality.
What am I saying? Keep an open mind and use your noodle [unless you don’t have one]….
Seems to me that what I have been saying may be true, the down turn will be quicker and more severe this time, because the increase in prices was quicker and larger than last time.
“The guys buying their second home with good credit and jobs usually have at least 400K to put down so the rates don’t hurt them nearly as much as the 5% crowd.”
Do you know any of these people? I don’t but I sure know many from your latter category. Rates going up is going to kill those people.
If you go to dataplace.org you can see that a lot of “tony” towns have zero exposure to the sub-prime market. Even read an interesting Hamptons 2007 article about the “M” word. Turns out that no one gets a mortagage anymore as that is soooo 2005. Last time the market got crushed it was the homes that did not fully appreciate as much as the better areas in the first place that was hardest hit. The low income areas rely on first time buyers and subprime. The upper saddle river and alpine crowd are not putting down 3%. 400K is a modest down payment on a seven figure house. I don’t see how anyone can put down 3% on a house and expect not to be in foreclosure very soon.
June 4th, 2007 at 12:10 pm
“The guys buying their second home with good credit and jobs usually have at least 400K to put down so the rates don’t hurt them nearly as much as the 5% crowd.”
Do you know any of these people? I don’t but I sure know many from your latter category. Rates going up is going to kill those people.
I disagree with you to the extent of the interest rate effects. Having lived in Hoboken, a supposedly upscale neighborhood, the past nine years I can tell you the creative financing hasn’t stopped at the Hoboken border. I have plenty of friends who own who are “ARMed” to the teeth so to speak and are barely living more than paycheck to paycheck.
Speaking from the perspective of a mid-20’s guy who makes an average income who will (in the next year or two) be a first-time home buyer… putting down 5% is a reasonable thought. Putting down 25% is not. That is just reality. When you’ve got some years of built equity through upgrades/fixes and appreciation, then you can see the bigger chunk downpayments on upgrades… as a FHB, no way.
>>Having lived in Hoboken, a supposedly upscale neighborhood,
there is zero comparison to the hamptons or other tony towns.
Hey when I bought my first house for $280,000 on my $61,000 a year salary I put down $120,000 because otherwise I could not afford the mortgage. I did not eat out, go on vacation, buy a car, buy lunch at work got out etc. for four years. The subprime option was not there and I could not put down 20% as my income could not cover it. There are a lot of struggling young couples but there are a lot of starbucks, au bon pan, leased cars, gym membership, vacation loving 20 somethings out there. The easy money is not too easy later on in life when you are stuck with big bills. When I bought the house it was another four years of that till my income caught up. If you are saving you are actually lucky, cause if houses continue to dip while you can earn 5% risk free you can make it pretty quick.
By the way – don’t buy a house if you are counting on appeciations or fix up potential. This market may be flat for years to come and when you get married you may end up stuck with a money losing bachelor pad for years to come. The easy money is long gone and we are back to the 1992 to 1999 era where inflation and carry costs making housing at best a break even situtation.
DoughBoy Says:
June 4th, 2007 at 1:01 pm
Speaking from the perspective of a mid-20’s guy who makes an average income who will (in the next year or two) be a first-time home buyer… putting down 5% is a reasonable thought. Putting down 25% is not. That is just reality. When you’ve got some years of built equity through upgrades/fixes and appreciation, then you can see the bigger chunk downpayments on upgrades… as a FHB, no way.
prime/subprime is a false dichotomy.
just because someone has a high FICO score does not mean that he can borrow to infinity.
there may not be a lot of subprime buyers in wealthy areas, but there are plenty of “prime” people who are borrowing insane amount of money
as for the Hamptons– I was East Hampton this past weekend and there’s about 4 yrs worth of inventory. I was at a friend’s place about a block away from P. Diddy’s house (can you believe that’s a landmark?). Anyway, basically every third house in that neighborhood is for sale, and it’s a pretty nice area.
Skeptic,
“the small down-payment crowd is the market. the median downpayment of first time buyers during the past couple of years was 3%. That’s right– 50% put down less than 3%.”
Where did you get that info?
The medium price down nationwide is that small. However, in the wall street bedroom communities where DINKS in their last 20’s are making 200K base and parents still throw 50K weddings and let the kids keep the cash gifts no one puts down that little in a nice neigborhood. The last wedding I went to the couple 26yo had 300 people at the wedding and Mommy and Daddy paid for it. They cleared 40K that night alone and had two years of savings from their engagement and had a combined salary of $150K, they bought a fancy condo for $550K right away. Remember, most of NJ/LI etc. has lots of towns and most are junky, I am only taking about the tony towns and those people are not putting down 3%, I have never seen it. If I was a seller why would I sell to them unless they paid me more. Why should I risk the deal falling though in a falling market?
43% of first-time home buyers put no money down
By Noelle Knox, USA TODAY 1/17/2006
WASHINGTON — As housing prices soared last year, an eye-popping 43% of first-time home buyers purchased their homes with no-money-down loans, according to a study released Tuesday by the National Association of Realtors.
…….
The median first-time home buyer scraped together a down payment of only 2% on a $150,000 home in 2005, the NAR found.
http://tinyurl.com/dvef2
*****************
So actually, the median downpayment was 2%– worse than I thought
WOW that is scary!!! Why would anyone buy a house they can’t afford. Even scarier when houses prices fall what’s to stop people with no money in the bank and 100K negative equity from walking away. Well I am at least one to two years away from buying a larger house and the train looks like it is head the wrong way and I ain’t jumping on the tracks!
I know there’s a lot more rich people near NYC than in most places, but given that median house prices in the fancy NYC suburbs are at least 4x the national median, I would think that first time buyers are less likely overall to have a meaningful downpayment than in other places.
#26 John : A family memebr does closings in many of the so called Bergen County tony towns the The Saddle Rivers, Franklin Lakes, Wyckoff, Old Tappan etc.),and over the last 5+ years the average down payment was less than 5% unless it was a move up buyer.
Never saw a 10 or 20% down payment, period, in that time frame. I would think this was probably the same for many other closing attorneys in Bergen county as well.
Jim where are you?
Scottsdale, Az.
jb
From Bloomberg:
Fed Faces Pressure to Raise Rates, Options Show
In the options market where the savviest investors take apart conventional wisdom, the Federal Reserve is facing growing pressure to consider raising interest rates as soon as December.
Options on Federal Fund futures at the Chicago Board of Trade indicate a 41 percent chance the central bank will lift its target rate for overnight loans between banks to 5.5 percent from the current 5.25 percent, according to data compiled by Bloomberg. A month ago, they showed no expectations for an increase.
While the economy expanded at the slowest pace in more than four years in the first quarter, inflation remains at the top of the Fed’s comfort zone, business activity has rebounded, the jobless rate is near the lowest in six years and stock indexes are setting record highs. Just three months ago, options traders speculated the weakest housing market in 16 years would force the central bank to cut interest rates to 4.5 percent by January.
“The economy is in better shape than people give it credit for,” said Jamie Jackson, who oversees government debt trading at RiverSource Investments in Minneapolis, which manages $100 billion of bonds. “People exaggerated the pass-through effects of the housing weakness. If the Fed were to do something by year- end it would be a tightening.”
The chance of at least one cut in the overnight lending rate between banks has fallen to 29 percent from 83 percent since the start of May, options prices show.
Richard Says:
June 4th, 2007 at 1:13 pm
>>Having lived in Hoboken, a supposedly upscale neighborhood,
there is zero comparison to the hamptons or other tony towns.
Reech: I think you can draw a comparison if you consider the “north of the highway” areas. For those not familiar, when you drive out there are you turning left [land] or right [beach] off of 27. Obviously there are exceptions [e.g., Sag Harbor, Wainscott etc.]….
From MarketWatch:
Capital spending revised higher in April
Businesses boosted their capital spending in April at a faster pace than previously reported, the Commerce Department said Monday.
Orders for core capital equipment goods rose 2.1% in April, revised up from 1.2% reported two weeks ago, the government said. Shipments of core capital goods — which exclude both defense goods and civilian aircraft — increased 1%, ahead of the 0.7% previously reported. Read the full report.
Combined with strong March data, the report shows a faster recovery in business spending and factory output, confirming other indicators of strength, such as the Institute for Supply Management index and industrial output data from the Federal Reserve.
The report lends credence to those who say the economy is growing robustly again after a six-month slump that brought first-quarter growth in at just 0.6% annualized. See earlier Capitol Report.
“The gains in the April factory data extend the March bounce, and the sequence both diminishes concern about the January and February drop in equipment spending, and reinforces the assumption that the inventory cycle turned in the corner,” wrote Mike Englund, chief economist for Action Economics, in an email.
what a mess…..”….you are turning left NOT right…” :P
New to this site, love what I read here.
Regarding the 3% down payment, I now of a young couple my wife and I are friends with that bought a small cape in 2005. They paid $450,000 (needs alot of work), put down less than 5% , there mor. is just under $4,000 a month. There Combined income just under $150,000.
The thought of starting a family or remolding is not a option.
#16 – Gotta respectfully disagree.
“strong global growth has allowed U.S. based multinationals to profit handsomely…..despite the rhetoric to the contrary, there really is a trickle down in this economy…..the major corporations are doing well and so are their employees.”
The first part of this is correct, but the second part is not. The median wage in this country has been falling steadily for a decade and continues to do so.
I would point out as well that we can’t really compare to previous real estate contractions, because this is the first time that John Q. Public rushed out to include real estate, in essence, as part of their investment portfolio. Whereas in previous contractions, folks who didn’t like the price they would get for their house simply continued to live in it rather than sell it, today’s “investors” are leveraged up to the gills, and are going to be put in a position where they HAVE to put property on the market because they will need the liquidity (and that’s only if they are lucky enough not to be upside down).
From Inman:
Consumers don’t know much about real estate, says CFA
A consumer survey released today revealed that most respondents believe a 5 percent to 6 percent commission paid to real estate professionals for the sale of a $300,000 home is too high; 41 percent believe the real estate industry or its agents set the commission rate; and 13 percent believe commissions are set by state law.
…
According to the group’s latest report, 36 percent of survey participants said they know “a lot” or “a fair amount” about real estate agents and brokers and the services they offer, while 34 percent responded that multiple listing services are the most complete source of information about homes for sale and 26 percent said real estate commissions can be negotiated.
Among the respondents who worked with an agent or brokers in the past five years, 58 percent said they were knowledgeable about industry professionals and their services; 38 percent knew that state commissions regulate the industry; 73 percent said they view agent and brokers’ consumer practices favorably; and 84 percent said they viewed their own agent or broker favorably.
That compares with 68 percent of all respondents who said they have a favorable view real estate agents’ and brokers’ consumer practices.
…
Meanwhile, a separate survey by Harris Interactive found that real estate agents and brokers ranked among the least prestigious jobs. That poll, released in July 2006, found that 32 percent of respondents found that the occupation of real estate agent and broker had “hardly any prestige at all,” while 6 percent of respondents said that the occupation had “very great” prestige. The occupations of firefighter, doctor and nurse earned top rankings for prestige.
…
Also, 55 percent of consumers do not approve of the potential conflicts created when active real estate brokers serve on state real estate regulatory commissions, while 57 percent said they would approve of consumers serving on real estate commissions, and about 42 percent disapprove of state laws that prohibit real estate agents from offering rebates to home buyers.
About 63 percent of survey participants said that buyer access to the local MLS should be fee-based and should not require an exclusive agreement with a broker. Most participants said the most useful services that agents and brokers offer include helping buyers visit homes, closing the sale, and listing homes and helping buyers search listings.
Fifty-two percent of respondents said that a dual agent, who is an agent that represents both the buyer and seller in the same real estate transaction, “cannot effectively represent (the) financial interests of buyers and sellers.”
Interesting info from Fitch..
Fitch release on new U.S. RMBS criteria
Increased usage of loan modifications as a loss mitigation tool may cause larger numbers of poorly performing loans to be reported as not delinquent, which could allow for early overcollateralization (OC) release, according to Fitch Ratings, which has amended its rating criteria for U.S. subprime RMBS/HEL ABS to better reflect this trend in rating opinions.
The changes will be effective for transactions closing in August 2007. As U.S. home price growth has slowed and begun to fall, mortgage delinquency rates, particularly subprime mortgage delinquencies, have risen.
The concomitant rise in mortgage foreclosures has resulted in a focus by policy makers, regulators, community groups and mortgage/securitization industry participants on ways to assist homeowners in avoiding foreclosure. One approach that is gaining increasing favor is loan modification, which means changing the terms of the mortgage in order to make the payments more affordable to the borrower.
Though loan modifications are an important servicing tool for avoiding foreclosure, Fitch’s new rating criteria will reflect the risk of early OC release followed by high levels of borrower re-default, where such risk is deemed to be substantial. Analysis of various loss timing and cash flow scenarios will be incorporated into Fitch’s rating opinions.
http://www.nytimes.com/2007/06/03/realestate/03njzo.html?ref=realestate
LIVINGSTON
IN suburbs like this one, the term “town center” can signify anything from a crucial intersection to a public gathering place, from a housing development to a shopping center.
But the plan for the Livingston Town Center is for it to be all those things. What town officials and developers set out to do was create a new small town at the center of an existing township.
“The old Livingston basically had a hole at its center,” said Jon Stein of Roseland Properties, one of three companies redeveloping a 14-acre site at Livingston and Mount Pleasant Avenues. “At the crossroads of the two most important streets in town, there was nothing but a beat-up strip mall, a few empty buildings and a lot of parking.”
It took the better part of a decade to produce a detailed plan for transforming the site into a residential and retail hub and then another two or three years to build it.
. . .
One recent day, several model condos were being outfitted with furniture and several newly occupied single-family homes were having flower beds installed, while an Italian restaurant, a family-style cafe and an ice cream shop at the center were already packed with customers.
There were people standing in line for sundries at Silverman’s Card and Gift, and heading into the fitting rooms at the Nicole Miller dress shop. There were people sitting on every one of six sidewalk benches outside the stores, and the retail center’s outdoor parking lot was full, so a stream of cars was heading into the adjacent garage.
Roughly half of the 114 housing units at the center are occupied, and a total of 76 have been sold.
All but 3 of the 17 single-family homes that line the periphery of Livingston Town Center have been sold at prices starting above $1 million. The houses are grand three-story structures with front porches and Victorian accents, a look that town officials felt so strongly about that they wrote the design requirements into the zoning ordinance.
Forty-four of the 66 town houses, which are classic brick three-story designs, have been sold at prices exceeding $900,000. The three-bedroom homes have 2,600 to 3,400 square feet of space, elevators and two-car garages.
Fourteen of 24 condominium apartments and seven town homes set in a midrise building directly opposite the retail center have been bought. Asking prices for the units, ranging in size from 1,500 to more than 3,000 square feet, run from the high $600,000s to $1 million. Each unit comes with two parking spaces in an attached garage.
“Part of the charm of Livingston Town Center — and Livingston in general — is its access to major roadways and commuter routes,” Mr. Stein noted, “but the special thing about the town center is its walkability.”
“There is no need for an automobile because everything is close at hand,” he said. “We think this community is unlike any other in New Jersey, because it offers the convenience and liveliness of urban living, but in an established suburban setting.”
Sales agents at the center cited two factors as appealing to Orthodox Jews who live in Livingston or would like to move there: The synagogue is within walking distance, and a mikvah — a ritual bath house — has been built.
Other amenities at the center, which was developed by Roseland in partnership with the Eastman Management Company and Jacobs Enterprises, include a “neighborhood concierge” in the midrise building’s lobby, who is available to all Livingston Town Center residents. The Roof Garden Club atop the condo building is also available, offering a glass-enclosed pool, a fitness center, and meeting and party rooms.
The whole project will be part of an owners’ association. The monthly maintenance is about $525 for a town house, about $575 for an apartment-style condo and about $475 for a single-family home.
The retail section was also designed for “neighborly” gatherings, Mr. Stein said, noting that there is considerable outdoor seating for the restaurants.
An evening outdoor concert series is to begin in July on the plaza near the clock tower; seating will be set up for these events to accommodate visitors as well as residents.
Deborah Cleary, director of marketing for Livingston Town Center, said that a residents’ discount program at the center’s shops began this month, starting with a champagne reception. Last month, a fashion show at Nicole Miller drew “a big crowd spilling out the door,” she said.
. . .
The eating establishments include Cold Stone Creamery, Baumgart’s Cafe, Fresh City and Mama Tucci’s Italian Bistro.
ChiFi (2)-
All I have behind my opinion is a bunch of air. I have no skin in that prediction.
Thank God.
Insulting clot and carrying on civil disclose with Reech. Forget vacation…..I need shock treatments :( :(
http://homefinance.nytimes.com/nyt/article/mortgage-column-by-bob-tedeschi/2007.06.01.03mort/?ref=realestate
A New Way to Tap Home Equity
Now yet another alternative has emerged that allows owners to extract cash from their homes without having to take out a traditional loan.
The latest alternative is called a Rex Agreement, marketed by Rex & Company in San Francisco, and it gives the homeowner an up-front cash payment of 12 to 17 percent of the house’s existing value. In exchange, Rex gets half of the increase in value of the house when it is eventually sold.
Only owners of single-family detached houses can qualify and only those with average, or higher, credit scores are accepted. People with houses valued in the top or bottom 10 percent of their local markets are not eligible.
This is how it works: say the house is worth $600,000 and the owner signs a Rex Agreement for a $100,000 payout. If the house is sold 10 years later for $720,000, Rex gets $160,000: $100,000 in repayment and half of the $120,000, the house’s increase in value. If the value is flat after 10 years, Rex gets only $100,000.
If the house’s value decreases by $120,000, Rex and the homeowner share the loss equally, $60,000 each. That is, Rex subtracts $60,000 from its $100,000 payment and gets back $40,000.
Rex’s chief executive, Thomas Sponholtz, said homeowners who received money from Rex and invested that cash in an aggressive financial instrument would come out ahead in a stagnant housing market.
“If the housing market is flat, and you earn 10 percent a year with the money you get from Rex, you’ve done well,” Mr. Sponholtz said. “If the market goes up, you’ll have gained something, and in the meantime, used the money to meet whatever life needs you’ve had.”
. . .
Kevin Depew, the executive editor at Minyanville Publishing and Multimedia, a New York-based investment education Web site, said that a Rex Agreement may make sense for some homeowners, but not all of them.
“It’s a unique and interesting idea, and there’s nothing inherently wrong with these,” Mr. Depew said. “But people need to understand the worst-case scenario before flocking to them.”
For instance, Mr. Depew said, owners who put their Rex money into high-risk investments, and whose homes lose value, could be hit particularly hard. Mr. Depew recommends that owners who are thinking about Rex Agreements talk to their financial advisers before signing.
. . .
“And there’s a lot of equity people have in their homes that they really can’t access today,” he said. “This could be used as a very effective financial planning tool. But it has to be done within the context of a comprehensive financial plan.”
Homeowners who arrange for their Rex Agreements directly from the company pay no fees, but financial advisers, mortgage brokers and real estate agents licensed by Rex to sell the product can charge fees of up to $2,000.
Rex Agreements are available to residents of nine states, including New York and New Jersey, and Mr. Sponholtz said that Connecticut would soon join the list.
Hey JB,
I e-mailed you. Just cuious: Why did you want me to e-mail you?
#36 Drew: but are they happy?
Can someone please tell me how the sellers on last night’s “Bought and Sold” were able to sell their house in 1 week with 3 offers and for $51,000 ABOVE asking price?
Why is it on tv, practically all the houses sell? I think I need to get my house on tv.
Donald (46)-
I’d pay to see YOU on TV.
The Donald already is on tv:
http://www.thirdwayblog.com/wp-content/uploads/2007/01/caveman_1.jpg
Clotpoll,
How are you “representing sellers everyday” if you are always on this blog everyday? I work from home, what’s your excuse?
I work from my office every day. I also type as fast as I think (which may or may not be a blessing).
Anyone here has been welcome from Day 1 to vet my numbers. I’m sure others here can testify to the fact that I run a RE business that closes 120-140 units per year.
I consider being around here part of my job. I learn more here in a week than I could in five years of hanging out with other agents.
A follow-up to borrowing ‘tradelines’ topic a while ago
—————————————
Instead of spending several years repairing his credit rating… paid $1,800 to an Internet-based company to bump up his score almost overnight….The result was a happy ending, but the growing practice is sending shivers through the mortgage industry. Federal regulators are also reviewing the practice….the developer of the widely used FICO score, said it will change its credit scoring system beginning later this year in a way it contends will end this little-known but potentially high-impact mortgage loan loophole.
http://www.chron.com/disp/story.mpl/ap/fn/4858301.html
#45 3b
happy but stressed out.
I can’t you how many young couples I am friends with bought in the last 3 years thinking or just assuming that the house would just keep going up and up. I am very glad I’m still renting, with the imfo I’m receiving here I am more motivated than ever to wait. Looking at fall of 07, but if at all possible I like to wait till spring summer of 08. Every month that goes by means a bigger down payment.
PS, Donald-
I also am an active RE investor. If you’re feeling a little “upside down”, gimme a call.
I’m sure we could work out something.
In talking with friends over the weekend, I was wondering if others have heard from others in a similar scenario. People stretching to get into a starter home 5 to 10 yrs ago. Fast forward to today, they have kids and space is getting tight and they have out grown the their home..of course it has appreciated. So they want to move and use the proceeds from the sale, but with the run-up in home prices they can’t afford to purchase a new home. In fact, if they were looking for a starter home, they couldn’t afford to purchase their own house. I think its probably due to the fact that their salary did not keep pace with the home appreciation.
#52,
Good, keep renting while my house appreciates in vaue during the market slump. That is right, I deliberatley left out one fact about myself just so I could use it in the future to go after you guys: I also own an investment property (2 family house) in Brooklyn. It makes me money everyday in income and appreciation. Keep rentiong. I enjoy making money off of you epople. You probabaly are not going to beleive me, but I DO NOT CARE!
#53,
You are a RE investor in NJ during this market? And I am the one who is stupid?
#52 Drew Good for you wait, I hope things are oK for your friends, butwith prices dropping, things will only be more stressful. There is no no warm and fuzzy pride in your home, if you over paid, and realize that if you had to sell it now, you Would lose money.
Part of the psychological if you will benefit of owning, is the idea of equity building up. But if you keep paying every month, while prices are dropping, well, just not a good feeling period.
#56 Young Donald, I thought the mark in Cliffside was great, gold coast and all that?
#54 And that 2000 is why prices are falling and will continue to fall.
2008 buyer
I can’t believe how many late 20’s early 30’s couples my wife and I are friends with, thought nothing of spending 40 to 50% of there gross income on monthly mor. I can’t imgine spending more than 30% ,35% max and even that makes me nervous.
There are very few young couples today that truly understand money.
Qustion for anyone out there – I read that idealy you shouldn’t buy a home for more than 2.5x your groos income. that 2.5 is total purchase price or just total price less down payment (mortgage amount)???
Why would you want to buy in 2008? That will not be the end of the slump and asking prices will still be high. In 2009, you will be in the same boat as I am.
Do you really think prices are going up in 2008?
And what boat are you in exatly?
Donald,
I own an 8 FAM in Staten Island that makes around 8K a month in rentroll, taxes are $4500, it’s by the Ferry so it’s always full of tennants.
You can have it for only a million. If you put down 200K you’ll still have a negative monthly cash flow.(not including maintance)
Real Estate only goes up, people gotta live somewhere, don’t listen to these guys they don’t know anything. You just keep buying at all time high and show them who the smart one in your family is.
Donald,
How come you never answered me when I asked for your agents phone #? I want to make you an offer.
Tell me the amount of the offer and I will consider giving out the number.
# 60 Drew,
I always thought the 2.5 times meant the total amount being mortgaged, which as you asked is not necessarily the actual purchase price.
I could be wrong though.
“Do you really think prices are going up in 2008?”
I never siad prices are going up in 2008, excpt for my house in Brooklyn.
“And what boat are you in exatly?”
The Titanic.
#66 poser
Thanks – I hope you are right.
The real estate market is going up. Don’t listen to everyone. It is not the Titanic. Sellers are merely re-arranging the deck chairs on the Hindenberg. :)
For a moment there I thought we had gotten lucky and Donald was gone……..
re-arranging the deck chairs on the Hindenberg.
So the market is going to fall from the sky in a ball of flames?
Nice analogy.
I have also heard that the mortgage amount, not the purchase price, should be no more than 2.5 your gross income. If you use that metric you should have enough money leftover every month pay your bills and save for retirment and other goals. My husband and I are aiming for more like 2 times our gross income, but even for 20-somethings with relatively high incomes that is tough to do in this market.
AK
LOL…I’ve been a lucker since the begining of 2006. I knew I wasn’t buying in 2007, hence the name 2008. I actually should change it to 2009+. look for it.
Donald,
How about we start w/100X the supposed rent? I believe you said $4000-$4500/month? Let’s say $425,000.
Why would you want to buy in 2008? That will not be the end of the slump and asking prices will still be high.
I agree that 2008 probably won’t be the end of the slump. However, A house for me is not an investment; it’s a place to live. It’s not about buying at the absolute bottom. The inflation-adjusted bottom is probably 10 years out and I’m not waiting that long.
By fall 2008, I think we will see a good chunk (if not all) of the nominal price declines behind us. By that time, I think enough sellers will be hit with a dose of reality and willing to capitulate that I can find a reasonably good deal. For enough sellers, it will be time to throw in the towel and just get the place sold; forgetting about prospects for a quick recovery that’s been “just around the corner” for the last 2 years, accepting that your not getting what your neighbor got in 2005, and forgetting about what price you are “entitled” to.
After 2008, prices will still be too high. At that point, however, I expect to see the “cold war” phase, where we see a prolonged period (years) of relatively flat prices being slowly eroded by inflation.
If I am wrong by Fall 2008…I leave NJ with a big savings account and buy something in NC.
#69 Donald
Went to a open house in Park Ridge with my wife 3 or 4 weeks ago , the asking price was $539,000.
I remeber driving away telling my wife, a year and a half ago that house would have sold for $575,000 and the agent wouldn’t even had said hello to us when we walked in. Not the case any more the agent followed us around like a puppy opening every door, cabinet, and asking us at least 10 times if there any thing else I can show you please call. And she did call the next day (I have to admit I admire her zeal) She also sent us a card in the mail telling how us how much she enjoyed meeting us. Times have truly changed. A year and half ago the only thing the agent would have said to me at an open house is are you pre-approved. Now thay want my whole life story, and of course tell me over and over again it a buyers market, Make an offer see what happens. Well we walked away from that house, Just happened to check njmls.com today that same house is now listed at $499K.
Every 6 months that goes buy i save an extra $25,000 for down payment and watch the house drop at the same time. This is living!!!!!!!!
I’m starting to think Donald is for real. I believe he does own an income-generating property in Brooklyn. And he’s also the King of Patagonia.
Is anyone else detecting a scent of “unhinged” in his posts? An investor on the edge? Some of Booyah Bob’s pa-pa-pa-panic perhaps?
I couldn’t believe that transaction on “Bought & Sold” last night. $801k Cash. I’m impressed.
Donald, with your enthusiasm you should be on that show, or at least working in a PR position for the NAR.
I know you’re busy counting your dough but you many have missed your calling.
#76,
Do not let the price drops fool you. Agents give sellers inflated values in order to get them to list with them. Many sellers will choose the agent tat gives them the highest price so agents play along at that game. Sorry, but you are not REALLY saving $25,000.
Wife and I hit a couple of open houses yesterday after looking at a potential rental. All realtors called us later that evening to gauge our interest. We respectifully declined the solicitation and informed them we will purchase when we find right house, right price. Was followed by the usual spiel never better time to buy blah, blah blah. Definately a different experience than attending open houses a year and half ago.
I don’t watch the show but do they tell you when it was taped? I’m guessing its an old episode
Designed to Sell also has some impressive sales. One family got 16 offers.
#81,
No, it is not an old episode. It is a brand new series. It looked like it was taped during the late fall/early winter of 2006-2007 based on the clothes everyone was wearing and the leaves changing colors.
JB. So you climbed the Camelback? I hope you took water. It gets very hot on the way up.
#76 Sorry, but you are not REALLY saving $25,000.
How do you figure?
I will tell you guys one thing: On HGTV is is a seller’s market. Every time I watch one of their house shows (which were filmed during the market slump) the home sells for impressive prices. Practically every house on Secrets That Sell is sold. Most houses on Buy Me sell. Designed to Sell houses sell.
#86 Young Donald, the slump is just really getting underway my child.
What the heck you think they are going to put on HGTV a bunch of open houses where one person shows up and a couple at each others throats because they are in over their heads on their mortgage and two steps away from calling divorce attorneys???
How do I figure? Simple:
The home was over priced to begin with. If it was priced correctly, there would be no $25k price drops. Most homes that are new to the market are over priced since agents inflate values.
Let me use an example: A house in Fort Lee that was bought for about $870,000 2 years ago is on the market now for $1,159,000. Now, if they drop the price $50,000, are you saving money? No. The house is over priced unless they drop the price at least $250,000.
#75 Rent; I agrew with you, and that is exaclt my plan (2008) Of course I will not be leaving thts state, job/family. But if by this time 2008 I cannot buy, then I will rent for another couple of years (till school issues are done), and then see where we go from there.
Do not like like the uncertainity factor, but thats the way it is.
I enjoy Buy Me, because most of the houses do NOT sell, unless the seller reduces the price to be more in line with (or lower than) comps. I have seen a few episodes where the sellers still have not sold their home by the end of the show and the realtor walks away in disgust. Sellers then try FSBO. It is most amusing.
Donald,
Your threats ring hollow.
OT, but looking for some input in AZ area. JB, any thoughts?
Wife and I are off to Las Vegas tomorrow. We will be staying Friday night in Williams, AZ en route to visit Grand Canyon on Saturday. Is there any interesting stuff to do (like relax in natural hot springs, etc) while driving to Williams, AZ since we have the afternoon/evening to kill time.
I went to open houses yesterday and saw two being sold by flippers. The interesting thing about these two is that the flippers moved in until they were done – probably to save on taxes once they do sell.
One was originally a two bedroom cottage with 1 bathroom, kitchen, living room and dining room that was bought in 2006. They put on a whole other floor with 4 additional bedrooms and 2 more bathrooms. The thing about this house is that it now has 6 bedrooms but the living areas are still the same size – small. It does have some charm but if you have enough people in your family to fill the bedrooms, you need more common spaces like a family room. The flipper could have converted the two bedrooms into one family room. Or instead of adding on another floor, added another bedroom/bathroom and a family room onto the back. We’ll see if it sells.
The second one was a victorian that was really in dire shape when it was sold 3 years ago. The owner has been doing all the work himself and just finished the rehab. He did keep/bring back a lot of the original character of the house and the kitchen is beautiful with an eating area (my pet peeve is when people redo kitchens, put in an island but then there is no room for a table). The problem is the asking price is astonomical considering the neighborhood, the size of the yard, the shared driveway, the vinyl replacement windows (another peeve of mine when you’re dealing with a historical house and asking lots of money – put in wood replacement windows).
There were a lot of people out looking yesterday so we’ll see if they are sold anytime soon.
# 89
I have to admit I know nothing about Fort Lee.
But I do the Park Ridge area an HAD that house been on the market in the summer of 2005 it would have sold for at least 575,000 and it would have sold in a week. Not any more not only has it been on the market for 3 mon. the price has been reduced.
#61 Donald 2009? You will be fine, by that time, and you will be glad you waited.
We have yet to see the bottom of the current housing downturn, and the recovery will be slow and steady and heavily dependant on local economic conditions, affordability factors and level of exposure to poorly performing subprime loans…The recovery will take longer than first anticipated, said Bernard Markstein, vice president of forecasting and analysis for the National Association of Home Builders….”We’re not going back to a party, but rather a nice simple diet of bread and some chicken broth,”..Markstein and others expect the market to reach bottom some time this fall…Unlike past downturns, mortgage rates are not the problem, he said. Average rates on 30-year fixed-rate mortgages are around 6.4 percent, which is only about 1 percent above last year’s rates. That compares to double-digit interest rates during the downturn of 1991….Overbuilding and affordability problems have caused much of the downward fall, according to Markstein, who noted that housing starts were rising as the NAHB’s index gauging builder confidence was falling…”We were concerned about that and thinking, ‘Is this index correct?’ Well, it was correct with a vengeance,” he said.
http://www.inman.com/hstory.aspx?ID=63408
Donald is totally Booyah Bob.
No-one can encapsulate that many bad cliches.
Was followed by the usual spiel never better time to buy blah, blah blah. Definately a different experience than attending open houses a year and half ago.
Was followed by the usual spiel never better time to buy blah, blah blah. Definately a different experience than attending open houses a year and half ago..
My wife and I visited a few open houses this year and last year in Fair Lawn, nothing serious, just looking.
Last year we visited an open house listed at $525. We told the agent we were just browsing around the area, but were first time buyers looking to spend closer to $425. She turned her nose up at us like we were filth and said “well, you won’t find anything around here for that” and showed us the door.
A few weeks ago, we visited another open house in Fair Lawn…low and behold…the same agent. She didn’t recognize us, but we recognized her. We again told her that we were first time buyers looking to spend around $425k. This time she was all over us like a puppy dog. She called my wife the next day with a bunch of listings. We told her that on second through, we are going to wait another year.
This guy was facing foreclosure so he decided to trash his house so no one can get it, he lost 50GEES.
http://www.kgw.com/news-local/stories/kgw_052607_news_pig_house.12e66bfa.html
Drew,
“Every 6 months that goes buy i save an extra $25,000 for down payment and watch the house drop at the same time. This is living!!!!!!!!”
If I was a first time buyer, this is exactly what I would do. Kudos to you Drew.
Why even bother to go see an open house? Why bother to predict when you will buy? 2008?2009? who cares? Stay put as long as prices are declining or flat and you’re putting away 50K per year. Just think in 8 yrs you’ll pay cah as a first time buyer. I love it.
>>I think you can draw a comparison if you consider the “north of the highway” areas.
true
re: 97
2008 Buyer: I read that article, too. When oversupply and affordability, and not interest rates, are pointed at as a cause for price declines, you know which way things are headed.
Donald: Go home. You’re not even an entertaining liar at this point, just a liar.
“On HGTV is is a seller’s market. Most houses on Buy Me sell.”
LOL! Also, on tv, Rocky beat Appolo Creed for the heavyweight championship. Then again, Ozzie’s dog s*it again on the rug.
RentinginNJ #100,
I’ve been there. Aren’t realtors nice when they don’t need you?
From Bloomberg:
Housing Bust Got You Down? Here’s Another Dud: Gene Sperling
If the housing bust has you down, don’t try taking comfort in the state of spending on goods and equipment by businesses.
This important indicator of the health of the U.S. economy fell into negative territory in the fourth quarter of 2006. Economists now predict real investment growth by companies of only 2 percent to 4 percent for 2007 — a yawner at best. Richard Berner, chief U.S. economist for Morgan Stanley, last month labeled business investment as the “biggest wildcard for the economic and inflation outlook.”
There are more signs of trouble.
The ratio of inventories to goods shipped stood near its highest in four years in April, suggesting there’s a fat backlog that needs to be worked off. According to the minutes of the Federal Open Market Committee meeting in March, there was muttering that “investments in goods and services had softened more than fundamentals suggested.”
So what’s going on?
in regards to livingston center, i know the area as i frequent it often. i remember when the building started. i cannot believe the statistics of how many units sold and for what price. those people are going to get creamed. also that part about the ‘walkability’? what are they kidding me? route 10 and livingston ave are pretty busy streets with no crosswalks to speak of. if you walk south on livingston ave you can’t get to the other side for a 1/4 mile where the next traffic light is.
they do have some decent shops but nothing to get excited about. sorry but i don’t see what all the hoopla is about.
they do have some decent shops but nothing to get excited about. sorry but i don’t see what all the hoopla is about.
It’s very pretty, if you like that sort of thing. I’ve toured that development on a number of occasions. While mixed-use new developments are old news most everywhere else, the concept still carries a bit of novelty in our parts. I’m also a bit surprised at the prices that some of those stand-alone homes sold for. For similar prices one could have purchased an equal or nicer home in the surrounding community. Paying a premium to live in that development seems a bit odd to me.
jb
Donald,
Not even a weak diatribe at my “lowball” offer?
More on that Fitch release above, from Reuters:
Modifiable mortgages may get lower ratings – Fitch
Bonds backed by residential mortgages that can be “modified” to stave off foreclosure may get lower ratings since the changes may result in reduced protection for debtholders, Fitch Ratings said on Monday.
…
Fitch said it will begin to consider the increased use of loan modifications in its ratings for bond transactions that close in August.
Bonds whose contracts include language to restrict the release of the reserve pool — known in the securitization process as overcollateralization — or have some other form of increased protection, may avoid lower ratings, Costello said.
…
Loan modifications also have drawn protests from investors who bet on the demise of subprime loans. A group of 25 hedge funds has complained to the International Swaps and Derivatives Association that modifications give breaks to borrowers, reducing the value of their derivative investments, the Financial Times reported on Friday.
>>For similar prices one could have purchased an equal or nicer home in the surrounding community. Paying a premium to live in that development seems a bit odd to me.
i actually met someone who was surveying one of those $1.1 million houses in the building stages as i was looking at the same unit wondering how they were doing. i basically asked him a similar question. he said part of it was he gets the benefits of a single family home but none of the hassles of maintaining the property as the complex also does maintenance like a co-op arrangement. there are a couple of restaurants and such to keep you close and not have to drive much. he’s got kids close by. i also got the sense there was a little bit of one upsmanship. in livingston, surprise surprise.
Enjoy the heat Jim, I have vacationed in AZ many times and will again this summer. I am going to Lake Powell to houseboat for a week.
You should take in Frank Lloyd Wright’s Taliesen West while you are there.
“Not even a weak diatribe at my “lowball” offer?”
Hobokenite,
Donald’s response;
http://video.msn.com/v/us/v.htm?g=6EBC9A95-E928-4B0B-8E89-E249204E0C9E&t=c3464&f=06/64&p=hotvideo_foxsports_bloopers&fg=>1=10056
#108 Richard: And location, location, location, will be supreme again.
In my opinion anybody that buys on a main drag in NNJ is in a word insane.
No matter how nice the house, the development etc, a busy street is always a busy street, and it does negatively impact the quality of life, to say the least.
#96 Sorry should have said Drew, not young Donald.
make money #102:
If I was a first time buyer, this is exactly what I would do… Why even bother to go see an open house? Why bother to predict when you will buy? 2008?2009? who cares? Stay put as long as prices are declining or flat and you’re putting away 50K per year. Just think in 8 yrs you’ll pay cah as a first time buyer. I love it.
Are you being facetious? If not, what has made you change your tune? I thought you believed that people who decided to wait and buy were sucker renters who paid your mortgage and put food on your table. Or perhaps you are just looking to increase the amount of renters out there so you can raise rents? Just curious what the angle is here.
The best example of mixed use that I have seen around here is City Place in Edgewater. It has rentals, condos, extended stay-living, a hotel, diner-type restaurant, upscale steakhouse, retail [Gap/BR, other big-box, newsstand, Sharper Image, Jos. A Bank, Panera]. If you are willing to walk across a parking lot, there is a 14-plex movie theater.
It’s rather a piece of prepackaged crap, but – in theory – you could have a complete day and never use your car.
Chi Fi,
the state of NJ has completely embraced smart growth (bad types I might add). It can be done well I am sorry to hear when it goes so-so.
Metro: actually, I give credit to downtown Westfield for being a good example of an outdoor retail district done well – big box not withstanding
Summit, Madison and Millburn all do a good job of having a proper downtown and business district adjacent to trains stations, but no real residential uses. It is also not as densely packed [i.e. walkable] and balanced as Westfield.
Donald–
I was going to challenge you yesterday after your post about spending $6,000 in reno for your Manhattan place and getting a $30,000 return. Because, I mean, COME ON: you’d already said the place sat on the market for two years, so how you figure you got a $30K return eludes me. But then I figured I shouldn’t encourage you to keep posting…
But now you’ve said you own ‘investment property’ in Brooklyn (which, personally, I find totally impossible to believe), so I’d like to refer you to brownstoner.com. Lots of trolls and liars there. You’ll fit right in.
chicago finance,
Do you know what else I love about City Place? The superfund next door! If your looking to slowly kill yourslef over the next 10 years, City Place is the place to live!!!
Possible Buyer,
You do know that “Buy Me” is filmed in Canada? Sellers on Amercian home shows have much better luck. Perfect example: Last night’s Bought and Sold. They sold for $50,000 over listing in one week!!!
What is wrong with the apartment sititng on the market for 2 years? For one of those years, I was renting it out and earning a monthly profit of $1,000. After I raised the rent, the tenants moved out and it sat vacant.
Donald,
Where’s my verbal tongue lashing? Surely you haven’t forgotten?
The only one full of it here is “Starting Over.” Nobody who can afford to keep their house for the next few years is going to sell for a $100,000 + loss. The poster is obvivously a renter trying to bring down prices.
Hey Hobokenite,
Better start packing your stuff. The condo you live in is being flipped for a $200,000 profit. :-)
Donald,
Is that the best you can do?
You do know that Hoboken homeowners are making significant gains? I wish I bought in Maxwell. Those people are sitting on gold mines, unlike me. I am sitting on a ticking time bomb. The fact remains that flippers who bought in the right buildings at pre-construction pricing made out good.
FYI: Someone on Kannekt posted some transaction history for Maxwell. A flipper that bought a 3 bedroom for $900,000 sold for $1.4 million. Look up the info yourself.
I am sitting on a ticking time bomb.
Set to explode, like your Hindenberg analogy?
I was under the impression you felt your investment was safe?
Donald,
I recommend you read this story:
http://www.nytimes.com/2007/05/27/realestate/27njzo.html
Hobokenite,
I recommend that you read this story:
http://www.nytimes.com/2007/02/25/realestate/25njzo.html?ei=5088&en=d1661f5d12831c05&ex=1330059600&partner=rssnyt&emc=rss&pagewanted=all
“At Maxwell Place in Hoboken, which Toll Brothers is building in partnership with the Pinnacle Companies, Mr. Jogodnik said 300 of 376 units in the second tower have been sold preconstruction.”
Donald,
Thanks for posting a link to a story that’s 3 months old.
I believe that’s been superseded by the story I posted a link to as far as what’s happening with the spring selling season.
2008 (54)-
Yep…except over the past two years, I’ve cashed out about 15 families like this that took their profit and moved to NC. Now they’re all doing just fine.
I figure I’m going to spend the next 5 years moving away everyone around me. I wonder who’ll be left…
Now my old clients e-mail me restaurant menus and wine lists from places down there. Cover the name at the top, and they look to me like they could be from Daniel in NYC. They say there’s lots for their kids to do, plenty of social/cultural activities and a cost of living that’s a fraction of ours.
Re #133
Based on the article, I went to see how the auction of the Madison in Ewing, N.J., went. with 42 condo at auction only 30 of them sold or 71%. Previous asking of $275k, avg auction price $208,433. Nice 24% discount.
Anyone going to the Velocity Auction on June 20th. Nice looking buildings but horrible location
“Those people are sitting on gold mines”
AUY.
Donald (56)-
Yes, you are still the idiot. Because, unlike you, I haven’t bought to hold here in NJ in a long, long time. I don’t touch anything that won’t cash flow positive.
I thought you were a good troll; now I’m beginning to wonder about that. Too many holes in your story & your game.
The people on Kannekt bash Velocity every single day. I have heard so many bad things about the palce, I would stay away from it.
I do not see any holes in my story. Where are they?
Donald (89)-
So when will you be dropping your price to current market value?
“So when will you be dropping your price to current market value?”
Sorry to disappoint you, but I am at market value. In the same price range as mine in Cliffside Park, you can get:
a) A bigger house in the bad section of town
b) A house half the size of mine
c) A ranch style home in need of complete updating ( http://www.njmls.com/cf/details.cfm?mls_number=2714822&id=999999 )
d) A smaller house for $100,000 more in the bad part of town
e) My house
Then let us not foget this house: Over $100,000 more than what I am asking and only has 3 berooms. Good lord, you have to check out the red kitchen appliances. Looks like something from the 50s.
http://www.njmls.com/cf/details.cfm?mls_number=2712102&id=999999
Then there is this house:
It is only 1,000 square feet bigger than mine, but it is almost another $250,000.
http://www.njmls.com/cf/details.cfm?mls_number=2710517&id=999999
Be careful what you wish for
Saw this Article in FinancialWeek “The Bubble Boys” Even bankers who’ve helped leverage us up the wazoo are now talking credit crash
“asset prices not CPI inflation are the threat” – Bill Gross PIMCO
“Global credit is more extended than ever before” – Jeremy Grantham GMO
“It’s going to be a disaster” – Richard Kovacevich Wells Fargo
Can’t find a link to it on the web, but the above sound bits make the point. If there is a major correction it won’t just stop at housing. Jobs, companies, maybe gov’ts hit and they won’t ask if your a renter or not.
Based on info I’ve found in these blogs for tax records, etc. I know my landlord is getting a 4.2% return on the place and its the nicest rental I’ve ever had in Hoboken, stainless steel kitchen, 1342 sqft, etc. Would rather ride that out for a couple of more years then see any melt down. But have cash to ride it out either way
BC (89)-
AUY…now that’s my idea of the Gold Coast.
Donald (141)-
If the Kannekt dolts are lined up against Velocity, I’m suddenly very interested.
Donald (142)-
In your brain.
Donald,
Posting advertisements that masquerade as journalism is not allowed here. You had a piece that was stuck in moderation that was a “Special to the …” piece. Sorry, but those pieces are pure advertisement and violate the rules against advertising.
jb
#144 Young Donald: If you were at market value then you would have sold.
If anybody pays any where even remotley close to those asking prices of those houses you have posted in Cliffside, they are in one word INSANE!!!!!!!!!!!!
I’ve been tracking inventory numbers on GSMLS.COM for certain price points in Middlesex County and the Township of P i s c a a t a w a y (spelling it out triggers moderation). Now, I know GSMLS.COM isn’t the best source for M’sex Cty or P’way but it’s something. The results so far are interesting.
% increase in inventory from 2/28/07 to 6/4/07:
P’way all prices – 39%
P’way 9%
P’way >=300k, 46%
P’way >500k – 43%
Middlesex County >=300k, 62%
Middlesex County >=400k, 50%
The previous post’s formatting got messed up due to html tags… Here it is again:
I’ve been tracking inventory numbers on GSMLS.COM for certain price points in Middlesex County and the Township of P i s c a a t a w a y (spelling it out triggers moderation). Now, I know GSMLS.COM isn’t the best source for M’sex Cty or P’way but it’s something. The results so far are interesting.
% increase in inventory from 2/28/07 to 6/4/07:
P’way all prices – 39%
P’way less than 300k – 9%
P’way 300k to 500k – 46%
P’way more than 500k – 43%
Middlesex County 300k to 350k – 62%
Middlesex County 400k to 550k – 50%
Donald-
You could always turn your place into a grow house:
http://realtytimes.com/rtcpages/20020806_caneighborhoods.htm
You could make a nice buck while you wait out the market…plus, you could clip a few buds here and there and not have to go to an outside “connection” to get whatever it is you’re smoking.
Funny how a few weeks back wall street had decided that a fed interest rate cut was a certainty. Now they are betting on a 41% chance of a rate increase.
#156
saw that on CNBC this morning. not good for RE, but what is worse is the changes that occur in spreads. Some more of my article in #147. Mr Wyss of S&P -“You look at soverign markets and you’ve got places like Indonesia issuing at 150bps over Treasuries. I mean what are people thinking?”
I’m in comm real estate and spreads are spreading. Our mgmt thinks that they will tighten up again after the sub prime scare blows over. Hope they are right
Clotpoll Says:
June 4th, 2007 at 7:51 pm
Now my old clients e-mail me restaurant menus and wine lists from places down there. Cover the name at the top, and they look to me like they could be from Daniel in NYC.
clot: yeah….I can see it now…..Billy Bob’s Michelin 5-Star Diner y’all
BC Bob Says:
June 4th, 2007 at 7:57 pm
“Those people are sitting on gold mines”
AUY.
Bost: Is this an Irish guy trying to speak Yiddish?
Donald Says:
June 4th, 2007 at 7:59 pm
I do not see any holes in my story. Where are they?
The Donald: have you checked your temples?
James Bednar Says:
June 4th, 2007 at 8:44 pm
Donald, Posting advertisements that masquerade as journalism is not allowed here. You had a piece that was stuck in moderation that was a “Special to the …” piece. Sorry, but those pieces are pure advertisement and violate the rules against advertising. jb
grim: what rules? You tech geeks also have rules about showering and we ignore those? What’s the big…..
AntiTrump Says:
June 4th, 2007 at 8:59 pm
Funny how a few weeks back wall street had decided that a fed interest rate cut was a certainty. Now they are betting on a 41% chance of a rate increase.
AT: in December….it is a change, but not a huge jump
Since Cliffhanger has provided his own ‘comps’, I am curious about what the actual story is on them, actual DOM and such.
Was in Ireland last two weeks visiting my girlfriend. She said people were up in arms because Brokers (or Estate Agents as they are called over there) raised their comm to 1.5% from 1%. Although this is a 50% increase it laughable compared to what is charged here. They must not do much stagging over there and are probably leaving money on the table all over the place.
Guess the broker on 60minutes didn’t read Freakonomics where they proved that the only time Brokers didn’t leave money on the table was when they were selling their own houses
“You could always turn your place into a grow house:”
Clot [155],
Better yet, I hear Michael Vick is setting up shop in the north.
http://cgi.ebay.com/Dog-Fighting-Michael-Vick-T-shirt-jersey-falcons-07-XXX_W0QQitemZ110130341305QQcmdZViewItem
“Bost: Is this an Irish guy trying to speak Yiddish?”
Chi[159],
Good one.
“Indonesia issuing at 150bps over Treasuries. I mean what are people thinking?””
Hobo-Renter,
He thinks the spread is too wide? Before the onslaught, only kidding. I think.
BC – 167
Some guys are using zero coupon debt to fund deals. Haven’t seen this since I audited an investment fund that was made of 3rd mtg zero coupon debt in the early 90’s. Saw the original marketing broucher from the 80’s that promoted the safety of the investment becasue it avoided reinvestment risk. Well the investors did avoid reinvestment risk. Their original investment was worthless
hobokenrenter Says:
June 4th, 2007 at 9:49 pm
Well the investors did avoid reinvestment risk. Their original investment was worthless
hoboR: excellent!
“Booyah Bob’s pa-pa-pa-panic ”
SAS
ChiFi (158)-
Wash down that burgoo with a nice Cru Beaujolais. Moon Pies and Vintage Port afterwards?
ChiFI (161)-
Leave it to Donaldo to take less than 72 hours to break one of what must be no more than three rules at a board that is more mosh pit than blog.
And this from a guy who frequents a blog (Kannekt) that’s run like Romania under Ceaucescu.
BC (167)-
I’d rather buy Freeport-Mac corporate bonds. That’s some mighty tasty junk. Heck, they pretty much own Indonesia…and they don’t even have to deal with fighting the terrorists and rebels.
From Bloomberg, June 1:
“The CVS sale was exceeded this year only by Phoenix-based Freeport-McMoRan Copper & Gold Inc.’s sale of $6 billion of junk-rated notes in March, according to data compiled by Bloomberg.”
One of Donald’s neighbors is having a tough time… all with the same broker and agent for th epast 333 days.
SLD $840,000 4/4/2005
ACT $998,000 8/22/2006 (relist)
PCH $975,000 10/4/2006
PCH $939,000 10/15/2006
PCH $919,000 10/29/2006
W-C $919,000 1/10/2007
ACT $905,000 1/10/2007 (relist)
PCH $899,900 1/16/2007
PCH $899,800 3/20/2007
PCH $889,000 4/2/2007
PCH $884,000 4/11/2007
PCH $879,000 4/16/2007
PCH $874,000 4/23/2007
PCH $869,000 5/3/2007
W-T $869,000 5/17/2007
ACT $86,900 5/16/2007 (relist w/typo by agent)
PCH $869,000 5/17/2007
The newest listing price isn’t even keeping pace with inflation.
But they should be okay, their broker has TWO offices…
“Posting advertisements that masquerade as journalism is not allowed here. You had a piece that was stuck in moderation that was a “Special to the …” piece. Sorry, but those pieces are pure advertisement and violate the rules against advertising.
jb”
I am sorry, but I was NOT posting advertisements. If there is a policy against this, how about removing the links to my MLS listing that the other posters put all over this forum? Please do not enforce a double standard against me.
And what exactly are the “advertiseents” I posted? The lisings for the houses in my town? If they are considered advertisements, then fell free to remove them along with the links to my house that the other posters plastered all over the place. If you found the articles I posted to be “advertisements” then I think that is something you would need to take up with the newspapers. Perhaps write a letter to the editor? I find these types of articles to be informative and interesting.
“Just peeked in from my usual stomping grounds at Housing Bubble Blog.
I find the chatter with Donald to be most entertaining. His “advice” regarding RE market of course is ludicrous, but that is not at all bothersome. Indeed, that is OK. The other part of all this of course is that many of the things he says are true. No! Really! They ARE true.
But, you see, truth is not the end all of a reasoned discourse. You see, a statement must be RELEVANT to the issue at hand, not just true, to matter. Seems to me it is the disconnect that is stirring the pot. Donald’s thoughts “might” be true. The just also are utterly irrelevant.
To elaborate…
a) Donald might not ever ever ever entertain an offer below his wishing price, his originally paid price or some other randomly assigned “price”. If he has the ability either to stay in his house forever or to continue to pay Mortgage/Tax/Insurance/Upkeep while moving into a new place and carrying those expenses too, then he need never lower his price. His thus tells truth.
However, the overwhelming majority of humanity attempting to sell a house at any given time lacks this wonderful situation. They must sell. They cannot choose to stay in one location forever. They cannot carry the costs of two homes. Etc
b) Not accepting lowball offers, unable to negotiate, etc.
Donald conflates his claimed unwillingness to accept negotiation with his perception that any would-be-buyer must not negotiate. Anyone can negotiate. If one party opts not to play, then deal does not go through, but negotiation has happened.
Lowball? Sad word. There is no lowball in business dealings. There can be no “insulting offers”. Anyone who views his house as an investment will have to grow up and realize that business is business. If CISCO stock drops from $80 to $40, one cannot whine that the $40 is an insulting lowball offer. It is… simply… the market. In a wobbling housing market, lower priced offers will be the rule. They were for a long time. One can opt to “feel” insulted by an offer- hey we are a confused touchy feely people these days anyway- but the “feelings” of insult preceived by a trapped homeseller is not same as insult having actually been given.
c) Dropping housing prices of “only” 1.4%.
Well, of course i disagree with this, given the gaming of numbers. Foreclosures, REO’s and the like seem not to be included and really they are the new Comps as they define the leading- downward in this case- edge of the market.
But, to a degree Donald is correct, though again his correctness lacks relevance. Housing drops have not… yet… compensated for bubble gains. Houses certainly still cost more than they did six years ago, maybe 2 years ago. But big picture analysis requires more big picture viewpoint. As has been noted elsewhere, the nature of the housing market is one of much lesser liquidity than stocks. Many people- like Donald it seems- CAN hold onto a house much longer in face of a market shift, if they can AFFORD to keep making payments. A slow halting lingering painful death of a 1000 cuts will be the housing market. Drifting down over 5 years, maybe just 5-10 percent a year (don’t forget, even an imagined 1% drop really is 7% counting realtor fees, which negates 10% of profit) will characterize this fall. Figure 60% down over five years than a floor ten more years.
Folks could not imagine that $80 CISCO would hit $9, especially after its first drop to $78. Folks cannot imagine their houses that tripled in value giving up the 66% that will return price to same point (66% drop negates a 200% increase that raised price to 300% of original price). But, it is happening. It will happen slowly. But, Donald can keep his price where it is through all that… so long as he is in no rush to sell :-)
Housing deflation tends to be a staggered drawn out and painful affair.
In summary…
As we know, the housing bubble is similar to other bubbles in history. Prices detach from need or from affordability as the house or tulip or whatever is bought not from need but from expectation it will “only go up”.
If housing continues as it had the last few years, every person in what 40 years would be rich as Buffet, one of the few in history to sustain 20% per year at length. Y’all expect ALL homeowners to be Buffet , selling crapboxes for $20 milliion to folks whose incomes barely are above today’s levels? No. Crashes correct Bubbles… every time.
So, Donald tells the truth. If he is wealthy and is disinterested in selling his abode… or even if he just gets lucky… he need not sell his place for anything less than he chooses. That truth though, has no impact on the housing market as a whole.”
This analogy, for the most part, is correct. I can hold onto my house until the end of time so I have no desire to sell for less than what I paid. And the number of people that must sell in a hurry is very limited. They are mainly confined to the urban slums of Newark, Paterson, etc. I do not foresee a price drop anytime in the future. I will either yank the home off the market or keep it listed at the present price. The only reason I dropped the price substantially is because I priced the house at $160,000 more than what I pai for it 2 years ago. I just wanted to have some fun and see if I could get lucky and make a killing. Unfortuantely, that did not work out, but I will not be tking a loss.
I do not mind staying put. I will simply put some drywall up in the unfished portion of the basement and build my mega home theater, complete with 100 inch projector screen, reclining seats, surround sound, and the other bells and whistles.
#164,
Most of the comps I provided were put on the market this year so they are not that old.
…but I will not be tking a loss.
If you get this “target” price two years from now, you won’t consider it a lost?
Look at the example above of one of your neighbors, they have not kept pace with inflation even if they were get their asking price NOW.
Two Things:
1. Not keeping pace with inflation = loss.
2. Comps are recent sales, not active listings. (You use what homes sold for, not what people “hope to get”.)
Donald (178)-
Last time I checked, “comps” are supposed to be closed sales. All you’ve proved is that your town features a selection of overpriced and smashingly-ugly homes.
Clotpoll, I, in my infinitely delicate habit of phrasing all my polite opinions so as never to offend, didn’t want to be the mosher who clobbered Don with the ugly stick.
Glad you pointed it out.
Fookin frugly, they was.
[181] – Exactly. He stands at the edge of the cliff and refuses to look down.
But I’m spoiled. When I search at $800-900, I see stuff like this:
http://tinyurl.com/3cyyr6
I have to remember not to compare apples..
From The Record:
EnCap meets 1 deadline, faces 2nd
EnCap Golf Holdings on Monday wired a payment of more than $146,000 into an escrow account, meeting the first of two deadlines set by the state Attorney General’s Office.
…
Gale said, however, that EnCap has not yet submitted a revised budget that estimates total remediation costs for the $500 million project in Rutherford and Lyndhurst. Deputy Attorney General Valerie Haynes informed EnCap last month that a new budget would have to be submitted by Wednesday, the end of a 15-day “cure” period that follows a formal notice of default.
From the HeraldNews:
RiverFront project awaits DOT action
ELMWOOD PARK — A proposed development that would combine an office park with town houses on River Drive could raise borough tax revenues, widen the road and improve access ramps at Interstate 80, but elements of the project must clear several hurdles before construction can begin.
The $200 million RiverFront project would include three office buildings, a 150-room hotel, an Applebee’s and other restaurants, retail space, a bank, 280 town houses, a boathouse and launch, and parking garages, according to developer Bernard F. Langan. The 22-acre site is located on River Drive alongside the Passaic River between I-80 and Route 46.
…
He added a residential element to the project last year that would require the Borough Council to amend the town’s master plan to allow for residential development in an area now zoned for commercial use. The council has yet to vote on the proposed change.
Under his proposal, 33 of the units would be earmarked for affordable housing, but borough officials could require a higher number from the 280.
More at the link above, Rich
I can’t feed an ignoramus. On to more important/interesting issues;
“The damage of the dollar glut. Money printing to prop up the U.S. economy has spawned more of the same around the world, fueling a global boom and an inflation spiral.”
A major reason why our Treasurys market has traded as well as it has stems from the accumulation of dollars by the aforementioned regions and their desire to keep their currencies weak against the dollar. (China, Japan, South Korea, Taiwan and India have accumulated more than $2.5 trillion in less than 10 years, according to the May 23 Financial Times.)
“The trillions of dollars printed “forced” those countries to print trillions of dollars’ worth of their own currencies to keep them from appreciating too quickly. After they printed their currencies to buy ours, they wound up buying mostly Treasurys with those electronic greenbacks (that is, until recently).”
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/TheDamageOfTheDollarGlut.aspx
“Federal Reserve Chairman Ben Bernanke Predicts Economy Will Rebound From Poor 2007 Performance”
“Bernanke, as he said in a speech last month, predicted there will be further increases in delinquencies and foreclosures this year and next as interest rates on many subprime adjustable-rate loans will go up as they reset.”
“Some analysts estimate that nearly 2 million adjustable-rate mortgages will reset to higher rates this year and next.”
“Even with the expectation of more problems in this area, Bernanke repeated his belief that troubles in the subprime mortgage market are “unlikely to seriously spill over to the broader economy or the financial system.”
http://biz.yahoo.com/ap/070605/bernanke.html?.v=14
“Lowball? Sad word. There is no lowball in business dealings. There can be no “insulting offers”.”
Amen. In the last 6 months I made a $165k offer on a $179k condo, and a $325k offer on a $355k house, and both times the reply from the seller’s agent was “The seller is insulted by your offer”.
Well SORRRRRRRREEEEEE!!!! Guess they had lots of other no contingency, 20% down, pre-approved, flexible move-in date buyers lined up at the door offering full LP. But then why are both are still on the market BTW, going on 9 months each??? HMMMMM????
Kurt
patiently renting…
#189 kurt: I always love that line, the seller is insulted by your offer, well guess what cream puff,we are insulted by your asking price.
WOW at 6% commission realtors are at DOUBLE the down payment amount for fist time buyers. Now that is crazy. Realtors are for the most part a sleazy lot. Lots of my friends got laid off from Wall Street in late 01 and early 02 went to sell houses. They told people that their junk homes were worth 50K more then they were worth and locked a long exclusive listing and TA-DAA the market caught up before the listing expired and everyone looked great. Except the young subprime first time buyer who got a lovely 500K starter estate sale cape in need of work in an ARM transaction!!! One friend who is a CPA even did the couples taxes and used his CFA to invest their cash outs while the RE office “home inspector” and mortgage broker took care of the rest. Well now that housing is dead he is happy to be back at work at wall street where he can make money without bascially having to see the people where the money is coming from.
A consumer survey released today revealed that most respondents believe a 5 percent to 6 percent commission paid to real estate professionals for the sale of a $300,000 home is too high; 41 percent believe the real estate industry or its agents set the commission rate; and 13 percent believe commissions are set by state law.
Kurt (189)-
Hang in there…the worm is about to turn.
thanks 3B and Clotpoll, it gets damned frustrating at times. As a 35 FTHB it’s easy to think that I’ve ‘missed the boat’ when 1100sq ft places with little to no upgrades are listed at prices averaging 10-15% yearly appreciation from what the sellers paid 5 years ago. I happened to be overseas during the big housing run-up, managing to sock away a decent nest egg, but $300k for a dinky little place is just plain hard to swallow… appreciate the kind words.
cheers
Kurt
“easy to think that I’ve ‘missed the boat’”
Kurt,
That boat has reversed course and by the time it gets back to shore it will be a ship-wreck. You need to be patient, it will take time.
BC – heh, that I am. Just renewed my apt lease for another year (no rent increase over last BTW), with an escape clause to only pay one month penalty if I buy a home.
cheers
Kurt
Donald: Those other houses in CP haven’t sold; neither has yours.
I love guys like you, always eager to spend a slow dime to make a fast nickel.
Clot (155):
Do you really think there’s room in Donald’s house for ANOTHER kind of dope?
Kurt you are one lucky SOB with money on the side lines and a year lease you can get out of on a months notice. By December the people who got in over their heads will pray just to get out and lose their deposit and all their renovation money and be able to work away without a foreclosure on their record!!! Congrats!
I see all those Toll Brothers houses people bought in places like Hampton NJ for 800K on paper lots and think how the heck can people pay the mortgage in a town where there are no high paying jobs for 20 miles with 5% down!!! Those types of places will be cherry picking for you, brand new in 2005 and broke in 2008 – three year old houses for a song!!
Donald: Listing price is meaningless. What are they SELLING for? That’s right — they’re not selling. What does that tell you?
Clot: It depends on where in NC you’re talking about. If you’re in the Triangle area, most of the restaurants there are as good or better than what’s in Bergen County, where everything is sushi or Italian. The best Indian restaurant I’ve ever been to is in Durham. Ditto the best Chinese. The Acme in Carrboro is awesome, there’s good Thai in Southern Village, the Pittsboro General Store is great for weekend brunch, Foster’s Market has wonderful takeout. Frankly, I’d move there just for the restaurants if my hubby weren’t bound and determined to stay in NJ.
I’ve been following this blog for the past few months and I was curious what you all think will happen to rental rates?
With so many impending foreclosures and others homeowners struggling to make ends meet, the demand for rental residential space will increase in demand and supply should drop. A lot of you bubble bloggers are renters and I commend you for continuing to rent until prices bottom. Unfortunately, I expect your rents might increase a bit quicker than you would like in the interim.
The reason I ask this question is due to my unusual situation. In late 2004, my wife and I purchased my first home (a 2-family) in Montclair where we had formerly been renting. We bought it from the brother of the deceased owner at about 20% below true value when you factor in the realtor commission, if there had been one. We put down the requisite 20% and have no problem meeting our current mortgage obligations (it sure helps that we have tenants footing over a 3rd of the bill). The taxes have gone up about 30% in the last 3 years due to a reval where all the multi’s got hammered, but my wife and I are frugal savers.
I used to commute to lower Manhattan via rail and my wife still rails to Midtown, but I was recently promoted and now work out of an office in Union. With this in mind, we would like more space and are considering a departure from the tax hell we know as Essex County. Don’t even get me started on the stupidity of building an ice arena, sans basketball team in downtown Newark. Well, we are left with the choice of selling our 2-family in Montclair or renting both units. Currently, the property should be close to break even with 2 rent roles, but this ties up our downpayment. We do get to keep the tax breaks though. The downside is that as home values decrease, we lose that great 20% discount we earned by getting in with such a good deal.
We do have enough saved to make another downpayment to purchase our Madison/Chatham/Summit home, but plan to wait at least 2 more years for prices to drop.
So the question of rental rates and which direction they are heading is key for us to make the wisest decision.
What do you all think?
Jill,
C’mon, the best Italian food you had was Durham?
What do you usually eat, wheat grass?
“Do you really think there’s room in Donald’s house for ANOTHER kind of dope?”
LOL