From the Jersey Journal:
Traditionally, when developers have problems selling the last of their units and run out of rabbits to pull out of their hats, they turn to an auction to unload the properties quickly.
But now one Hoboken-based developer, Erik Kaiser, of REMI Companies, is flipping the script by holding an auction on the front end of sales, on June 24, at the Hyatt Regency in Jersey City, where he hopes to unload 40 units within several hours.
The property is the 128-unit Velocity, nestled in the underdeveloped southwest section of Hoboken, on Jackson Street between Sixth and Seventh streets.
…
The building is also, however, in Hoboken’s highest crime area, a fact that is not overlooked by the developer, who is promising 64 cameras in and around the building, along with magnetic key entrance into the building and garage.The unconventional auction has caught a lot of media attention, with mentions in the New York Times and the New York Post, as observers and pundits try to explain the auction in the context of the region’s real estate market.
Is it a sign of a slump?
Are the units a tough sell in the one area of Hoboken that has yet to be touched by the real estate boom?
The answer appears to be no to both questions.
…
Secondly, developments tend to grab some attention at their outset, propelling sales and interest. The Velocity does not have that luxury anymore, so the developer came up with the marketing gimmick to draw attention.“We wanted to have one year worth of marketing efforts wrapped up in one day,” said Kaiser, adding that he expects to sell all 40 units at the auction.
Real estate experts tell me that under perfect circumstances, such as perfect pricing in a hot market, a developer would move as many as 10 units a month.
…
“We are confident in our product, and we trust the consumer to set the price,” Kaiser said.That is, if other bidders don’t drive up the prices.
“There may be some steals, but that’s only if there is a low turnout at the auction,” said one local developer. “But with all the attention, that will not likely be the case.”
From Reuters:
.S. mortgage applications decline in week: MBA
U.S. mortgage applications declined last week, dragged down by sinking demand for home refinancing with long-term interest rates at their highest level since October, an industry group said on Wednesday.
The Mortgage Bankers Association’s mortgage application index slipped 1.7 percent to a seasonally adjusted 625.3 in the week ended June 1.
A rise in applications to buy homes was overshadowed by the drop in refinancing applications.
The MBA’s seasonally adjusted purchase index rose 1.5 percent to 433.6, but the refinancing gauge fell 6.1 percent to 1,757.1 in the June 1 week. The refinancing measure has not been lower since 1,640.4 at the end of last year.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, rose 0.03 percentage point to average 6.35 percent, its peak since 6.36 percent was reached in the October 20 week.
From MarketWatch:
European Central Bank hikes key rate to 4%
The European Central Bank on Wednesday made its eighth rate rise in 19 months, tightening rates by a quarter-point to 4% as European economies including Germany continue to expand at a healthy pace. The ECB, which sets rates in the 13 countries that use the euro as their currency, moved the base rate to 4%, its highest level since before the Sept. 11 attacks in New York that impacted the global economy. The rate hike was expected after recent speeches from European Central Bank officials.
From the AP:
Productivity Down in First Quarter
The productivity of American workers slowed sharply in the first three months of this year but wage pressures eased as well, providing evidence that inflation is being restrained.
The Labor Department reported that the amount of output per hour of work for nonfarm businesses rose at annual rate of 1 percent in the January-March quarter. That was the slowest advance since the third quarter of last year and was below the government’s initial estimate that productivity rose at a 1.7 percent rate in the first quarter.
…
Labor costs rose at an annual rate of 1.8 percent. That was up from an initial estimate of 0.6 percent growth in unit labor costs but was still lower than the 8.9 percent surge reported in the final three months of last year.
While higher wages are good for workers, increases that outstrip the growth of productivity can trigger unwanted inflation as employers are forced to boost the cost of their products to meet their higher payroll costs.
Ben, stop the rhetoric. It’s time to raise.
From the Washington Post:
Fed’s Pianalto says longer-term inflation trend too high
Inflation hovering around 3 percent in the United States since 2005 is too high for comfort in the longer term, Cleveland Federal Reserve President Sandra Pianalto said on Wednesday.
In a speech before a Bundesbank conference on monetary policy strategy, Pianalto said that high commodity and oil prices, which have been pushing up inflation, risk undermining the public’s trust in the central bank’s inflation-fighting mettle.
“Since 2005, the three- to five-year moving average of U.S. inflation has hovered around 3 percent. This is above where I would like to see the trend settle in the longer run,” she said.
http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/prod.htm
Dear NJ.com,
Thank you so much for giving us free adverstzing in the form of this article. You even said that at our opening prices it was a “good value” adding legitamacy.
OverPricedCondoDeveloper
Yes, I know I broke my own rule by posting an article that is largely an advertisement. I posted this mainly because I respect Jarrett Renshaw’s writing and insight.
jb
10 Year @ 4.99%
A section of the article not posted above mentions:
“The project was met with “unexpected” delays that brought construction to a screeching halt for months, forcing the developer to rip up a number of pre-construction contracts”
What were these condos going for “pre-construction”? It will be interesting to see where the auction clears versus what these places sold for pre-construction. Is there any way to find out what there places were going for?
I think we will see price declines. A pre-construction contract is basically a call option. If it were in the money, why would you seek to have it nullified when you could flip it for a profit? In the “old” days (i.e. 2005), a construction delay meant more time for appreciation and even bigger profits. Today it’s an excuse for a buyer to claim breech of contract and get their deposit back.
Interesting, although all disclaimers apply. From MarketWatch:
Morgan Stanley issues “full house sell signal”
Morgan Stanley has issued a “full house sell signal” as of Monday, saying three of its leading indicators – bond yields, Institute for Supply Management new orders, as well as valuation and risk – showed it was time to sell. “Such a full house sell signal across these three indicators is rare, and has occurred only five times since 1980,” said analyst Teun Draaisma in a European strategy research report. “Equities have always been down in the next 6 months, on average by 15%. Previous occasions include September 1987 and April 2002. We prefer to be on the right side of those odds.” Draaisma also said that cautious sentiment can negate a valuation sell signal.
(11)
I wonder when the other 3 times were?
Previous occasions include September 1987 and April 2002
The Morgan Stanley warning is issued from Europe for Europe. I wonder what it means for the US market?????
CC
Hot off the presses. From MarketWatch:
Realtors lower U.S. housing forecasts for 2007, 2008
Existing home sales expected to fall 4.6% vs. 2.9% earlier
Worst home price drop intensifies
Realtors say they are now looking for 1.3% drop in prices of existing homes in ’07, new home prices expected to be down 2.3%. Sales are also seen falling.
http://money.cnn.com/2007/06/06/news/economy/homes_outlook/index.htm?source=yahoo_quote
The outlook for home prices this year grew worse, according to the latest reading from NAR now forecasting a steeper decline in prices and slower sales than its previous estimate.
The National Association of Realtors now sees a 1.3 percent decline in the median price of existing homes sold this year. That’s more than twice the decline forecast by the group a month ago, when it was looking for only a 1.0 percent drop in prices.
New home prices are now expected to be down 2.3 percent, according to the group’s report, much worse than its previous forecast of prices of those homes being essentially unchanged for the year.
Going into this year, the group has never recorded a drop median prices over the course of a full year in nearly 40 years of tracking home sales.
The Realtors also now expect there to be 6.18 million existing homes sold this year, down 1.7 percent from its most recent estimate, and down 4.6 percent from the pace of sales in 2006.
“Overall housing levels are historically strong, but sales remain sluggish compared to the recent boom,” said Lawrence Yun, the Realtors’ senior economist, in a statement included in the group’s latest forecast. “Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year.”
—————————–
I wonder why the big revision. Is this a post Lereah effort to regain credibility?
“Realtors lower U.S. housing forecasts for 2007, 2008”
Don’t prolong the agony. Just add 2009, 2010 amd maybe 2011 to that forecast.
Morgan Stanley has issued a “full house sell signal” as of Monday
Just so I understand, Morgan Stanley is advising to liquidate all stocks (europe) as they’re anticipating a huge drop in valuations?
From the NAR:
http://www.realtor.org/press_room/news_releases/2007/home_sales_projected_to_fluctuate.html
From Bloomberg:
U.S. Home Sales Will Drop 4.6 Percent This Year, Realtors Say
U.S. home sales and price declines in 2007 are going to be steeper than earlier forecast, the National Association of Realtors said.
Sales of previously owned homes probably will tumble 4.6 percent to 6.18 million and the U.S. median home price likely will fall 1.3 percent to $219,100, the Chicago-based trade group said in a report today. A month ago, the association said it expected 2007 home sales to decline 2.9 percent and home prices to drop by 1 percent in the first price drop on record.
Thank God I got this in the mail last night from Remax – who said brokers are not trying to help up – Heck they even laid out the benefits of buying vs. owning so I don’t have to spend time ding it myself. to help the rest of you I’ll present it to you with some follow up questions I know they will help me out with:
Rent vs Buy
When you own a home:
– you will build equity
q- I’ll have them walk me through this one
– you will increase your tax refund
q – won’t AMT wipe out most of my interest deduction or is this because when I blow all of my deposit money I won’t have as much interest income
– you will have the freedom to buy and sell and not be bound to long term leases
q – does this mean you won’t charge me commission on my sale. how is a one year lease long term
– you will benfit from any appreciation your home gains
q – is remax offering a program that will hedge me from any current market declines such as the housing futures market.
They were even so kind as to walk me through the numbers.
“The renter starts out paying $3000/ month (app Hoboken average) with annual increases of 5%.” wow I should thank my landlord for only charging me $2,700 for 1300 sqft of concret and satinless steel construciton. want to increase rent 5%, but I was nice and only talked it down to 3%
“the Home owner purchases a home for $500,000, puts 20% down and makes monthly payment of $3,180.44 (30 fixed at 6.125% taxes and main $750/month)” for $3k a month I can get a 3 bedroom. So the housing crash is over if I can get a 3br for $500k. the mtg rate seems on target if I’m prime, but the taxes and maint seems more like a 2br
“The chart below assumes the borrower is in a 25% bracket and that taxes and main do not change” wait a minute I have to make less than $75k to be in this rate with the $3k payment above won’t I be paying 51% of my income for housing? Thank God I’m getting a tax refund. Maintenance and taxes don’t change over a four year period in Hoboken? wow the condo board president of my bldg must be a cry baby when he posted this:
I know you all would like your windows cleaned, but it’s about $50 a
window (because they have to hang off the side of the building with
ropes), and the association simply doesn’t have the money to do this,
given all of the claims we have had. We just paid $3,000 for flood
damage to our elevators and alarm system, we’re paying thousands more
for insurance given the fact that we’re involved in a lawsuit, and
we’re way over budget on our electricity and water bills. We are also
owed about $10,000 in maintenance fees, and will do whatever we have
to do to collect those (including legal action).
If any one is interest I wil post their number crunching but think I’ve type too much already. funny in their detailed analysis my $100k 20% downpayment disappeared in the cost benefit. I look for a footnote saying we assumed it was invested in Jap Yen with no return but couldn’t find it. Acutally for nayone interest I use GE Interest plus yielding 5.3% if you have over $50k invested. Also in Euros from everbank (because I don’t believe in the dollar and obligations I need to pay in euros) You can also buy gold through them which some on this board seem interested in.
Would like to know if anyone is going to the velocity auction. It seems like a pain to get a cashiers check, etc, etc for the price of the show or lack of it. the resuls of the auction would be very telling about the market without these helpful brokers muddying the waters.
I think you could probably rent these out if the broker came in the opposite direction of the projects. I lived in Hoboken for two years and before I took the light rail never realized how many projects there were. don’t think the crime is that bad, but why would you want to live next to them. Also with these being the 1st 40 out of 128 being sold, I wonder who is going to pay the main on the other units
For those of you looking for the bottom I use this as a sign:
1 – Retail banking not on every corner, and they start closing branches
2 – You get a real risk adjusted return for renting out an apartment.
Even if I could get a 2br 2 bath at velocity at say $400k and rent it for $2,600 a month with taxes of $7k and maint of $300 a month. I would have a net of $20,600 or a 5.15% return. In the normal days you would want a 7% to 10% cap rate to compensate for the risk of ownership.
Don’t know if it will go back to these spreads one day But why would you buy a 5.15% return when your cost of borrowing is 6.125%? Even if you rent to yourself. If I bought my apartment my out of pocket of $2,700 would double and with AMT goodbuy most of the tax deduction
Holysh*t hobokenrenter and I are in the SAME building:)
Ps. I got the same Remax mailing yesterday.
Wasn’t going to call the broker and go over the facts with him, but I realized he forgot to mention the “Pride of Ownership” in his Rent vs. Buy analysis. I’m sure he will thank me for that one
HEHEHE
Are you serious. If so what insect infested our bldg recently?
Ants, but I am on the 4th floor so no problems here.
This will be a U.S. story somewhere in 2008….
http://www.bloomberg.com/apps/news?pid=20601109&sid=ar3L878k5YM4&refer=home
From MarketWatch:
Inflation drop isn’t enough for Fed’s Lacker
Benign inflation readings in April are not enough to get the Federal Reserve to relax its vigilance against upward pressures on prices, Richmond Fed President Jeffrey Lacker said Wednesday.
…
But Lacker made it clear that he’s not satisfied with 2% inflation. Lacker isn’t a Federal Open Market Committee voting member this year, but he does participate in closed-door discussions of the Fed’s policy-setting panel.
Lacker said that volatility in the data has made it difficult to pick out any trend. “In fact, no statistically significant moderating trend has emerged,” Lacker said in a speech at Frederick Community College.
Lacker suggested that the Fed should try to shift expectations lower. Right now, inflation expectations are hovering around 2%.
“Without a prompt fall in inflation expectations, a reduction in inflation below 2% is likely to be temporary and hard to sustain,” Lacker said.
If nothing is done to shift inflation expectations lower, the only way to bring down inflation would be “the old Phillips curve mechanism,” he added.
Chi [28],
Spain, akin to Indonesia 1998?
From the AP via USA Today:
Realtors predict even lower home sales, prices
A real estate industry trade group said Wednesday it expects sales of existing homes to drop 4.6% this year to 6.2 million
Two months ago, the group had predicted a 2.2% decline for the year.
…
The NAR also predicts the median price of existing homes, which make up about 85% of the market, will fall in 2007 for the first time since the 1960s, when the group began keeping records.
The median price for existing homes is expected to drop 1.3% to $219,000 this year, lower than the group’s April forecast of a 0.7% decline.
from WSJ
Rise in Home Inventory
Continues to Hurt Prices
By JAMES R. HAGERTY
June 6, 2007; Page D3
“The number of homes listed for sale in 18 major U.S. metropolitan areas at the end of May was up 5.1% from April, according to figures compiled by ZipRealty Inc., a national real-estate brokerage firm based in Emeryville, Calif. The data cover all listings of single-family homes, condos and town houses on local multiple-listing services in those areas.
The sizable increase is notable because, on a national basis, inventories of listed homes have typically been little changed in May during the past two decades, according to Credit Suisse Group. May is one of the peak home-selling months because families with children often aim to move during the summer vacation.”
From Reuters:
Home sales, prices to slip further in 2007: NAR
Home sales and prices will fall at a faster pace in 2007 than originally expected, a leading U.S. real estate trade association said on Wednesday.
The National Association of Realtors trimmed its sales forecast for the fourth straight month and said it now expected sale prices would drop more sharply than it previously forecast.
…
The national median sales price for existing homes should ease by 1.3 percent to $219,000 this year. Last month, the trade group said prices were expected to slip 1 percent.
…
The median price for new homes will probably fall 2.3 percent to $240,800 this year while new home sales should register 860,000 units. Last month, the NAR said new home prices should remain flat while sales would hit 864,000 units.
The trade group representing more than 1.3 million real estate professionals has downwardly revised its major market indicators several times since January.
In its first annual forecast, NAR said it saw existing-home sales holding a 6.42 million unit pace for the year. Wednesday’s revised outlook is off 3.7 percent from that mark.
One of the sharpest reversals has been in the forecast price change for new homes. In January, the group said the median home should appreciate 3 percent in 2007.
Did anyone post this yet?
From today’s WSJ:
Bernanke’s Sense for Now: Hands Off
By GREG IP
June 6, 2007; Page A2
Federal Reserve Chairman Ben Bernanke said he remains worried about a pickup in inflation, but he suggested the American public’s stable inflation expectations make it less likely the Fed will have to raise interest rates.
In remarks delivered via satellite to a bankers’ conference in Cape Town, South Africa, Mr. Bernanke also said the U.S. housing slump will last longer than he had previously expected, but it hasn’t spilled over into other parts of the economy.
His remarks were in line with the Fed’s assessment of the economy at its May 9 policy meeting. While low unemployment means the economy is at risk of overheating, that risk is offset by the continued housing slump. That suggests the Fed sees little need either to lower or raise short-term interest rates in coming months. The Fed meets again June 27-28.
http://online.wsj.com/article_print/SB118104580628924969.html
#21 hobokenrenter:
Do you have any links that explain why AMT would affect a mortgage interest deduction? Everything I read seems to indicate that you can still deduct mortgage interest if you are subject to AMT. Not sure about property taxes though.
Is it a coincidence Lereah leaves NAR and all of a sudden their comments have become almost realistic of what is going on in the world?
“Do you have any links that explain why AMT would affect a mortgage interest deduction? Everything I read seems to indicate that you can still deduct mortgage interest if you are subject to AMT. Not sure about property taxes though.”
I believe you are correct on both points. You’ll lose the property tax deduction but retain the mortgage interest deduction (this from my accountant).
From Reuters:
Subprime loan market may retrench in ’08-WaMu exec
The $1.2 trillion subprime loan market may retrench in 2008 as it wades its way through major changes in infrastructure such as increased regulation, Washington Mutual Inc. Vice Chair William Longbrake said on Wednesday.
“I wouldn’t be surprised to see another downleg” in 2008, Longbrake said, addressing the American Securitization Forum’s annual meeting in New York.
From Reuters:
Subprime guidance seen ‘largely intact’-FDIC’s Bair
Subprime mortgage guidance opposed by some of the nation’s biggest lenders will be ‘largely intact’ when completed by a group of regulators later this month, Federal Deposit Insurance Corp. Chairman Sheila Bair said on Wednesday.
The FDIC is one of five regulators that have proposed subprime mortgage underwriting guidance in an effort to stave off risks to consumers and the U.S. banking system. The guidance is opposed by Countrywide Financial Corp. (CFC.N: Quote, Profile , Research), which has said it will prevent creditworthy borrowers from obtaining a loan.
Among controversial rules, the regulators are urging lenders to qualify borrowers using adjustable-rate loans at the highest rate the consumer would have to pay during the life of the loan, instead of the initial “teaser” rate.
I may be incorrect, but I think you do lose a portion of your mortgage interest deduction due to the ATM. ATM hit me decently last couple of years.
Just spent the last 3 days looking at houses in Mountain lakes, morristown, Madison, essex fells and now caldwell. Seems to me that owners are not in touch with the market, none are willing to drop at all, and some are just testing the waters. All are still pricing at peak. So I am looking in communities that there is no bubble (unlikely) or owners are not in touch with what is going on in RE (maybe) or they are still in the denial phase.
On another note, what are Caldwell and Montclair like as far as ‘communities’ ie schools etc?
how about our senate selling out the american people by voting no against making english the official language of the united states and paying illegal alien social security benefits? how far we’ve fallen…
All right, nice try guys. I knew this was coming:
Please do not let the Velocity auction dictate the market. First, the complex is located in the heart of the ghetto. Second most of the apartments were sold, but buyers backed out due to a 2 year delay in construction. Hoboken buildings in better areas, like Maxwell, have had much better success and have made flippers 6 digit gains.
>>Seems to me that owners are not in touch with the market, none are willing to drop at all, and some are just testing the waters.
that seems to be the approach by and large meaning if you want to buy your options are more limited.
All right, nice try guys. I knew this was coming
Donald,
What, exactly, did you know was coming?
jb
I knew that you were going to use the Velocity auction as a way to show the entire market is down.
JB,
Do you know if the guidance addresses stated income loans? In other words, could a buyer circumvent the qualification provision by “going stated income” and simply saying they make enough to qualify for the real payment?
“Maybe some people like if for condo shacks, but not single family homes. Its that simple.
Nobody says OHHHHHH Cliffside Park.”
Yeah, I guess you are right. Except for a U.S. Senator, a famous doctor, a former professional football player, a disco singer famous for singing the “I Will Survive” song, and the mayor’s family, which owns a multi-million real estate empire.
I knew that you were going to use the Velocity auction as a way to show the entire market is down.
Me? How? You realize that I didn’t write the piece, don’t you?
Did you even take the time to read it?
jb
Let me re-quote…
Is it a sign of a slump?
Are the units a tough sell in the one area of Hoboken that has yet to be touched by the real estate boom?
The answer appears to be no to both questions.
“a disco singer famous for singing the “I Will Survive””
A rock and roll singer famous for “Born to Run” lives in Rumson.
>>Me? How? You realize that I didn’t write the piece, don’t you?
that’s right jim you’re just reporting the news albeit a particular slant of it ;)
Second most of the apartments were sold, but buyers backed out due to a 2 year delay in construction
Buying a pre-construction condo is like buying a call option; a right to purchase something in the future for a predetermined price. Had these places appreciated (an “in the money” option), there would be no reason to back out. You would flip it for a quick profit.
People backed out because they knew they couldn’t flip them for a profit. “Construction delay” is the excuse used to claim breach of contract so you can get your deposit returned.
Yes, I read the entire piece. I already knew about the auction since it got some press in the NY Post last week.
I think the developer would have been better off turning the place into a rental so that he could charge over-priced rents to people like you guys waiting out the housing market.
that’s right jim you’re just reporting the news albeit a particular slant of it ;)
What slant? This piece is clearly market positive (despite the location-related criticisms). Renshaw has pooh-poohed any possibility that this auction has anything to do with a slowing condo market and chalks it entirely up to marketing.
jb
NJ Bound Says:
Just spent the last 3 days looking at houses in Mountain lakes, morristown, Madison, essex fells and now caldwell.
Friends of my parents were selling in Mountain Lakes and swore two months ago they wouldn’t lower their price from $950. Guess what, it just sold for $725.
It’s a matter of finding the right sellers as they finally capitulate to market realities
Most buildings do not have construction delays. There was a good article in the NY Times the other week about flippers trying to back out of condo devleopments in Florida. They hire lawyers to help them do this, but they cannot back out without losing their $100,000+ deposit.
Donald/Groundhog?
“Using the Fed’s Flow of Funds data, our analysis indicates $12 trillion in fictitious value has accumulated in the US housing market since 1997 when the pre-bubble stage of the housing bubble started; the hyper-growth bubble stage lasted from 2001 until mid 2005.”
“All asset bubbles are mean reverting, including the housing bubble. All $12 trillion will disappear, eventually. The only issue is how quickly, and how much in nominal versus real price declines.”
http://itulip.com/forums/showthread.php?t=1404
I sense a little bias in JB’s reporting. Why did he not mention the 2 year construction delay as the reason buyers backed out? If you are going to post an article, the least you can do is post the entire text…
Renting,
The following is from the Proposed Statement on Subprime Mortgage Lending.
When underwriting higher risk loans, stated income and reduced documentation should be accepted only if there are mitigating factors that clearly minimize the need for direct verification of repayment capacity.
“I sense a little bias in JB’s reporting”
I sense a delusional dolt.
the least you can do is post the entire text…
Believe me, it would be much easier to just cut/paste entire articles. However, in order to stay within the bounds of fair use, I can’t. I cut/paste only the paragraphs that I feel are relevant and necessary to foster an in-depth discussion of that topic.
jb
x-underwriter, how long was the house on the market?
Pleeeeeeeeeeeezzzzzzzz put in a bid…..Pretty pleeeeeeezzzzzzzzz
http://bp0.blogger.com/_VMSUn2TMfXo/Rl2iwIhVIaI/AAAAAAAAAVQ/JBQ3V6Vr_J4/s1600-h/crybaby.jpg
To correct myself your people are right its RE Taxes that get wiped out by AMT, my apoligies, but did a little more research and int deduction is reduced by itemized deduction phase outs: so eventually you will lose both deductions:
The adjusted gross income (AGI) levels at which the phaseout of itemized deductions begins are adjusted annually for inflation. For 2001, they are:
$132,950 for singles, heads of households, and married people filing jointly
$66,475 for marrieds filing separately
If your AGI as shown on Line 33 of your tax return is higher than the applicable threshold, you have to subtract the threshold amount from your income. The remaining amount of AGI is multiplied by 3 percent. The answer you get is subtracted from the total amount of affected deductions, and you can only deduct the remainder. However, in no event will your deductions be reduced by more than 80 percent of their value.
Deductions Subject to the Phaseout
Not all deductions are affected by the phaseout of itemized deductions, but most of the larger ones are:
home mortgage interest
taxes
charitable contributions
miscellaneous itemized deductions that are subject to the 2 percent limit, including employee business expenses
federal estate tax in respect of a decedent
impairment-related work expenses
amortizable bond premiums on bonds acquired before 10/23/86
unrecovered investment in a pension
repayments of income previously taxed
The following deductions are not subject to the phaseout:
medical and dental expenses
gambling losses
investment interest expenses
nonbusiness casualty and theft losses
Note that whatever limits are applicable to the particular type of deduction (for example, the $100,000 limit on home equity loans, or the two percent limit for miscellaneous deductions) are applied first, before computing the amount of the phaseout.
I sense a little bias in JB’s reporting. Why did he not mention the 2 year construction delay as the reason buyers backed out?
This post has nothing to do with construction delays or why buyers backed out. The topic was whether or not the auction was due to deteriorating market conditions in the Hoboken Condo Market or simply a fancy marketing tactic that capitalized on the widely reported housing slump.
jb
nj bound:
montclair is a much nicer community than caldwell, generally speaking, but there a parts of montclair that aren’t necessarily “desireable”….i assume you work in the city as most of the towns you mention have train stations.
i live in another essex county town and will glad to provide you as much info as you need (in fact we are likely selling our house soon as I need to relocate for work).
how much are you looking to spend?
if you want or need more info you can email me at aandclaw@yahoo.com
“Friends of my parents were selling in Mountain Lakes and swore two months ago they wouldn’t lower their price from $950. Guess what, it just sold for $725.”
what is $725,000 relative to prices in 2005?
They actually may look pretty smart to unload it to some bimboe buyer depending on historical pricing.
“The topic was whether or not the auction was due to deteriorating market conditions in the Hoboken Condo Market or simply a fancy marketing tactic that capitalized on the widely reported housing slump.”
The answer is neither. There are 2 reasons for the auction:
1. The building is in the middle of the ghetto and is surrounded by train tracks and housing projects
2. They lost their buyers because the complex was supposed to be finsihed in 2005.
Had they stayed on schedule, the developer would have made a fortune.
http://bp0.blogger.com/_VMSUn2TMfXo/Rl2iwIhVIaI/AAAAAAAAAVQ/JBQ3V6Vr_J4/s1600-h/crybaby.jpg
gett’en a little desperate you starving dog chow tour guides
JB,
Why waste your time explaining this to a featherbrain.
regarding veloicty auction, I am discounting that it is in the worst part of Hoboken but as far as the untis themselves I been reading they are nice (or One of a Kind as most broker ads say). First looking to see if they all sell and then at what price. A free market auction is a great place to see market price Kinda like Ebay. and to quote the developers:
“We are confident in our product, and we trust the consumer to set the price,” Kaiser said.
That is, if other bidders don’t drive up the prices.
“There may be some steals, but that’s only if there is a low turnout at the auction,” said one local developer. “But with all the attention, that will not likely be the case.”
#67,
You must be pretty desperate if you are looking for a buyer on thsis site, of all places!!! Why do so many people here live in Essex County? Anyone from Bergen?
donald:
i’m not desperate, b/c in fact the house isn’t for sale. I simply said we are looking. in fact, i responded to nj bound’s post w/ info about the towns he was looking in.
it’s a shame you don’t have a job or something to do during the day or someone you are friends w/ so you don’t have to spend your entire day trying to start a fight on a blog w/ people you konw nothing about.
thanks for your concern though.
The tiny little wave is building into a Tsunami. Who opened the can of worms?
http://ml-implode.com/viewnews/2007-06-05_COUNTRYWIDESREOSUP251FROMFEB30LASTMONTH.html
1. The building is in the middle of the ghetto and is surrounded by train tracks and housing projects
Do you at all remember what Hoboken was 10-15 years ago? If you believe that the Gold Coast gentrification will continue, this is clearly a market opportunity. You need to buy into a neighborhood prior to gentrification (and invest in) in order to maximize your profit/investment.
jb
“it’s a shame you don’t have a job”
I work from home, thank you very much.
But the area near Velocity is not going to improve because the Hosuing Authority is not going to move the projects and NJ transit is not going to move the light rail tracks. You can tear down old factories and warehouses, but not projects. Where will all the low income people move to?
Donald #77
“I work from home, thank you very much.”
What do you do?
Donald – Would like to ask you why you are selling? Are you stating in NNJ?
donald:
then go work…do us all a favor.
“Donald – Would like to ask you why you are selling?
I want a home with a bigger lot. That is only a small reason why Ia am moving. I don’t intend to disclose the main reason.
Are you stating in NNJ?
Yes, I am STAYING in NNJ. I plan to move further up north near the Rockland/Bergen border.
Donald / Richard,
You both seem to suffer from a lack of reading comprehension.
Question for the both of you.
If you bought your home in 2005 and sold it for the same price today (excluding taxes, closing costs, etc), would you consider it a loss since you didn’t keep pace with inflation?
Rich
“would you consider it a loss since you didn’t keep pace with inflation?”
No, because home prices did not go up. I simply plan to transfer the money I get from my current home into the new one.
I’ve heard all the brokers say NYC and Hoboken are immune from this down turn. Would say that Hoboken would hold value better than JC. I grew up on LI, so can someone tell me what makes Paulus Hook historic? Haven’t seen a broker ad that didn’t call it Historic Paulus Hook. Know my history and I know that Burr shot Hamilton in Weehawkin and George slept/camped in Morristown, but never heard about Paulus Hook
I’m lovin Hoboken less and less, commute options are great and it has a nice town feel. But its losing the charming Italian neighborhood feel it had. when a new shop is opening the joke is will it be a dry cleaners, nail salon or RE Broker
“I want a home with a bigger lot. That is only a small reason why Ia am moving. ”
Donald,
If in fact you are upgrading, wouldn’t you save money if prices fell substantially?
rich in nnj:
donald can read, he chooses to mis-read b/c in his mind there’s nothing better than being that commenter on a blog noone likes and trying to get people to respond…it’s a game w/ these people
Anyone near Paramus Rd. in Ridgewood? What is the story with 240? From the old listing photos it looks like a little cape on an 11 acre lot.
In 2000 it was listed at $695k (a serious reach), in 02′ it was sitting at $595k. It was purchased on 07/2004 for $640k (ouch). It was foreclosed on and went REO. Currently available at $595k. Assuming that the $640k was “market”, it’s currently sitting at $45k under 2004 pricing.
jb
jb:
you have a link for that house?
11 acres?
“wouldn’t you save money if prices fell substantially?”
No, because then the value of my home would fall substantially. Now if prices fall a lot once I sell, then yes, I would save money. If you own a hosue and are moving to a new one, I really do not see how your bottom line is affected by the market. If you sell for more, you pay more. If you sell for less, you pay less. It all equals out.
Well if you are waxing for old time Hoboken you can take heart that the politicians are still corrupt as they’ve always been.
“If you sell for more, you pay more. If you sell for less, you pay less. It all equals out.”
Ace,
How about you owned various properties for 20 years,cashed out in 2005 and are currently on the sidelines? How do you construct that equation?
“If you sell for less, you pay less. It all equals out.”
It equals out only if you are moving to a similar priced property.
20% off a million dollar house is not equal to 20% off on a 600K house.
“How about you owned various properties for 20 years,cashed out in 2005 and are currently on the sidelines? How do you construct that equation?”
Well, that does not match my situation. Right now, you really won’t save that much money because prices have only come down by a few pennies. When you factor in the over-priced rent you are paying, you might just break even.
I really don’t think you will be in a substantially better situation as someone who owned a house during the slump.
So what you are saying Donald is that once you sell, knowing that housing prices are at peak, you would not try lowballing the house you want to buy? That is insane.
“It equals out only if you are moving to a similar priced property.”
And that is what I am doing. The property I intend to buy is not that much more than mine. Less than a $50,000 price difference.
you have a link for that house?
Haven’t checked NJMLS, but it isn’t GSMLS listed. It is listed on the Countrywide REO list though.
The location is terrible (Pull it up on Google maps or pull up the tax maps), it’s on Paramus between 17 and Linwood, backs to the Saddle River. My guess is since it’s got two additional lots attached the buyer wanted to try to teardown, sub, and put up some new homes. Wetlands were likely the issue here. Not to mention the location..
jb
“So what you are saying Donald is that once you sell, knowing that housing prices are at peak, you would not try lowballing the house you want to buy?”
WHAT? I never siad that. But I don’t want to lowball to a low point where the sellers will get pissed off and not take my offer. I was thinking of paying a little bit more, but taking moeny off after the inspection so that the sellers will be more likely to do this since they are almost done with the sales process and do not want to start all over again.
Here is the tax map, since I’ve got it.
https://www.njrereport.com/images/paramusrd.png
JB,
I listed info on the property a couple of weeks ago.
It’s right on Paramus Rd and Route 17 South. A lot of the land is wetlands.
“When you factor in the over-priced rent you are paying, you might just break even.”
Ace,
Wrong. I pay zero, my interest from the proceeds of my last sale pay for it. I thank my lucky stars every day that there are simpletons like you on the other side of the trade.
Donald, I’m not saying you said it, but if you know housing prices are inflated, why wouldn’t you?
JB,
I am not from Paramus, but what is worng with the location of the house?
“Less than a $50,000 price difference.”
A bigger lot closer to the city will cost more than 50K difference. So I guess you are moving away from NYC.
Even if you are moving to a similar priced property, a 20% drop in prices will attract more buyers which will in turn help accomplish your goal much quicker without you losing, right?
Sorry BC Bob,
But prices have not come down that much. The double digit depreciation that so many people predicted in 2005 has yeat to come. I just read one of the archives from this site in which JB said back in 2005 that prices would fall 30%-40% in the near future. Well, almost 3 years later, that prediction was worng.
“Even if you are moving to a similar priced property, a 20% drop in prices will attract more buyers which will in turn help accomplish your goal much quicker without you losing, right?”
Are you smoking something? Prices did not come down 20% and if I got crazy and lowered the rpice 20% I would not be able to afford the next house.
#41
Generally you pay a premium for Montclair because of the train to NYC. It is more diverse ethnically and economically than Caldwell. Caldwell HS is ranked 43rd in the state and Montclair HS is ranked 90th. Montclair has magnet schools such as Hillside which is for gifted and talented grades 3-5 or Northeast which is a k-5 magnet school specializing in Global Studies. Caldwell/West Caldwell school district has 4 elementary schools k-5, 1 middle school 6-8 and 1 high school 9-12 with no magnet schools.
http://www.montclair.k12.nj.us
http://www.cwcboe.org
Both have a college in town, both have town centers. Montclair is bigger and taxes are higher than Caldwell. Montclair has more of an urban/artsy feel with lots of restaurants, an art museum, art shows, a YMCA. Many people from NYC move to Montclair. Caldwell has a community center, volunteer fire dept, shares services with West Caldwell such as recreation, schools, joint police dispatch, pools.
It really depends what you’re looking for because they are very different.
James Bednar Says:
June 6th, 2007 at 1:30 pm
the least you can do is post the entire text…
Believe me, it would be much easier to just cut/paste entire articles. However, in order to stay within the bounds of fair use, I can’t. I cut/paste only the paragraphs that I feel are relevant and necessary to foster an in-depth discussion of that topic. jb
grim: welcome back to NNJ geek-bag….
Ridgewood, not Paramus.
The issue is that it borders both the Saddle River and the Rt. 17 ramps. Both major defects, however, given 11.25 acres, it’s entirely possible to tear down the existing home and rebuild deeper within the lot to situate the home away from the roads.
My guess is that subdivision isn’t possible, and that wetlands consume such a large portion of the property that rebuilding deeper isn’t possible.
Actually, I think the property might actually straddle the river itself.
jb
From September 26, 2005:
“Absolutely unreasonable percentage gains here, I think this helps illustrate why I think prices are going to fall approximately 30-40 percent (beginning in the very near future).
Caveat Emptor!
-grim”
It must stink to be THAT wrong….
jb:
i looked at the bergen county GIS..there really is no possible way to subdivide there, as you need an entrance off the exit ramp to the house off of 17 which is a state rd…
that being said, it looks like you could possibly make 2 parcels w/ a driveway easement or something
jb:
here’s the GIS..
http://gis.co.bergen.nj.us/ridgewood/viewer.asp
Ace [106],
I never remember JB saying that.
I say, 30-40% off 2005, 5-7 years from the peak. Slow, gradual tortue. The worm has turned, this bust is only in its initial stages. If I’m wrong, this will be the first bubble in history that has not reverted to the mean. I doubt it.
i didnt realize the river was there…
Donald Says:
June 6th, 2007 at 1:48 pm
But the area near Velocity is not going to improve because the Hosuing Authority is not going to move the projects and NJ transit is not going to move the light rail tracks. You can tear down old factories and warehouses, but not projects. Where will all the low income people move to?
Mr. Duck: the NJT is a huge perk, because you have rail service to your door, and the station leads you away from the projects. Plain and simple, this project would have easily sold out in 2004 & 2005, but not in 2007. The Sky Club did, as well as a half dozen other properties with similar profiles that (1) not as well contructed or (2) priced as aggressively
jb:
if you look on local.live.com…there seems be two houses on the property already.
See JB’s comments for yourself:
https://njrereport.com/index.php/2005/09/
jb:
on the flip side…three houses down on the corner is a multi-million dollar property..so you never know.
i get this weekly listing email from a real estate agent in montclair. here’s the opening of today’s email LOL.
“It was another active week in Montclair, with many new listings of homes going under contract with multiple offers the first weekend on the market. Don’t you think this area is one of the safest in which to invest your house dollars? Call for an appointment to see the new selections for this week. “
Scroll down to “A Look at 3 Houses”
https://njrereport.com/index.php/2005/09/
chicagofinance,
The train is NOT a perk if you have to listed to it at all hours of the night when you are trying to sleep.
Way off topic – lived in Bergen County my whole life and I’ve noticed more wildlife around than ever before…
1. Maybe I’m just getting older and growing to appreciate/observe things like that more?
2. Maybe it’s conservation efforts are panning out?
3. Maybe our state’s entire manufacturing base has moved to China.
4. Maybe human encroachment into forested areas?
5. Maybe a combo of all the above.
Anyone else notice the same thing?
#41
http://www.montclairnjusa.org/
http://www.caldwell-nj.com/
There is a property next door (further away from 17). I’m not sure what the structure in the back yard is, a barn or shed perhaps?
jb
jersey4life…i go w/ answer # 4.
jb:
i think 240 paramus is the property directly off the exit ramp..it shows that way on the bergen county gis map link i posted
A 30% decline in real prices relative to rents and incomes has always been my position. I’ve often called this 30% figure a “magic number”, since it describes the both the income/price and rent/price gaps.
jb
willow, tried emailing you a couple of times but I may have had the address wrong. What was the address of that house in caldwell that you said to avoid- was it on forest ave and something else- steep road beside it? 2 car detached victorian?
Regarding the “magic number” and the 30% figure:
https://njrereport.com/index.php/2005/12/31/just-how-far-can-new-jersey-home-prices-fall/
#129
willow16 at gmail.com
Yes, that’s it. Did you look at it?
i think 240 paramus is the property directly off the exit ramp..it shows that way on the bergen county gis map link i posted
First house off the ramp (closest to 17).
jb
Donald Says:
June 6th, 2007 at 2:36 pm
chicagofinance, The train is NOT a perk if you have to listed to it at all hours of the night when you are trying to sleep.
Mr.Duck: It’s a glorified bus not a locomotive!
I do not think the 30% magic number will ever come true. Many people who are priced out of Manhattan come to NJ for the cheaper housing and short commutes. The median price for a Manhattan apartment is about $1.2 million and this is out of a lot of people’s price ranges. This is why Hoboken and Jersey City have seen lots of growth. I was in Hoboken last summer and I was mazed at all the construction projects.
And eventually the people living in JC and Hoboken wil need to move to the suburbs because the public schools there are down the toilet.
“Mr.Duck: It’s a glorified bus not a locomotive!”
Just fell off my chair.
“Glorified Bus.” That is an interesting (and funny) way to refer to the light rail. What surprises me is that it is called the “Hudson-Bergen Light Rail” but the line does not travel into Bergen County.
Actually Velocity did sell a decent amount of units at 2005 prices but buyers got to walk away with their deposits refunded due to the building delays. The prices were definately way higher than other building in that area are getting now, I saw listings for $600K-750K 2bd/2ba units a couple years ago. How many of those people who were able to walk away aren’t thanking God daily.
#129
It’s a really nice house but it was bought for $350,000 in 2004. The owner has done most of the work himself – it was an absolute wreck when he bought it. It just isn’t worth the asking price for the location and especially in this market.
There is a small house next to 240 Paramus Road and then another that faces Linwood Ave. It’s a large, older Tudor style home (I’d say 1920 at the earliest). The ranch house is right on the bend of the off ramp from Rt 17 South. The only access would be from Paramus Road (frontage is too small) or a side street off Linwood (Sollas Ct) but that runs into the “wetlands”.
If the buyers were not lucky enought to get the chance to walk away, I think you would be seeing massive foreclosures at the complex since many owners would be “upside down.”
Live near the light rail and it is very quite and a nice perk for living back that hfar in Hoboken. You can get to shop rite, weehawking chart house, like the view and newport mall. But would prefer to live closer to washington street. Was the only elevator bldg and needed it for the baby.
Also near the sky club. restaurant never opened and the 25,000sqft health club everyone mentions is near bankruptcy. These optimists started a rumor that Equinox was going to take over. The deli in our bldg closed two months after it opened and people are hoping a Starbucks moves in. Yet they don’t want anymore development
Living near the projects is probably a perk for some of these people because they are on drugs and supply is close at hand
Donald #140 the point is noone owns yet. dont even know if they have a COO yet. There might be some people that didn;t bail, but they haven’t closed yet. Look at hoboken411.com and see the pictures. Its been under development for at least 2 years now
rich in nnj or jb:
either of you have the link for the listing for 240 paramus?
jb:
btw…if you search google for 240 paramus rd, a planning board meeting comes up talking about the “240 paramus road issue”, but nothing else is there…
You can find it here:
http://www.countrywide.com/purchase/f_reo.asp
yeah i saw that reo listing..just thought it would be w/ a broker so i could see a picture.
No, because home prices did not go up. I simply plan to transfer the money I get from my current home into the new one.
The value of $1 in 2005 is not equal to $1 in 2007.
For arguments sake, say that inflation was 3% a year. Wouldn’t you be able to purchase more if you had your money in an 5% interest bearing account (earning 2%/year after inflation) instead of receiving what you paid for your home in 2005 (earning -3%/yr after inflation)?
I don’t think you’ll see a return to 2005 prices for sometime. And the longer that prices stay flat or slowly decrease the more you’ll NEED prices to appreciate above inflation for a longer period of time (depending upon the appreciation level) in order to “break even”.
Back in NOV 2006, I believed that Sring 2007 will turn the market around. I thought that the buyers would jump all over this inventory and speculators will be back.
I was WRONG. I’m man enough to admit it.
Anybody want to come clean about their 2007 double digit depreciation predictions?
Make money #148
NAR is ready to admit it too. Ironic that this came out on D-Day
Home prices: More pain to come
Expected drop in home prices nearly double estimate of two months ago; recovery more than year away.
By Chris Isidore, CNNMoney.com senior writer
June 6 2007: 1:01 PM EDT
NEW YORK (CNNMoney.com) — The outlook for home prices this year – already expected to post the first drop on record – got worse Wednesday as an industry group cut its forecasts for sales and prices for 2007.
The National Association of Realtors said it now sees the median price of existing homes sold falling 1.3 percent this year. That’s almost twice the 0.7 percent drop forecast just two months ago, and is worse than the 1.0 percent drop in prices it estimated in May.
As recently as March, the group was forecasting a 1.2 percent rise in the median existing home price for this year.
Home prices: Where the growth is – and isn’t
New home prices are now expected to sink 2.3 percent, according to the group’s report, much worse than its previous forecast of essentially flat prices for the year.
If home prices fall as is now expected, it will be the first time that’s occurred in the nearly 40 years the group has tracked home sales.
The Realtors also now expect there to be 6.18 million existing homes sold this year, down 1.7 percent from its estimate a month ago, and down 4.6 percent from 2006.
The pace of new home sales is expected to fall to 860,000 this year, essentially flat from the estimate of a month ago, but down 18 percent from 2006 sales.
I do not think the 30% magic number will ever come true. Many people who are priced out of Manhattan come to NJ for the cheaper housing and short commutes.
That’s been the case for years. People live in Manhattan, make a lot of money & move to the suburbs when they have kids or just want to slow things down. This trend was priced into NJ RE long before the bubble.
Quite frankly, I find this whole Hoboken/Jersey City downtown discussion pretty amusing as I was born and raised in Jersey City and lived the first 90% of my life there. In fact, we used to have a boat at the foot of Greene Street from the mid 60’s to the mid 80’s. Everybody built shacks along the banks of the Morris Canal and paid $5 a year for “membership” dues. You had to know somebody to get in there. It was state-owned land and everyone had a share of squatters rights.
I remember Hoboken before all the doucheb*g wannebes ever even heard of the place when Biggies and the Clam Broth House still existed and Fiores was the place to go for the “mutz”. Second street downtown JC also had the good stuff as well as the bread. You could’ve bought a townhouse in the 70’s in downtown Jersey City for around $20,000.
In the last 20 years, all the wannabes took over and that was the beginning of the end. Now, everybody’s clamoring for a piece of belonging and it’s hysterical. If youhave a family, where are you going to send your kids? Do you guys realize how bad Hudson County schools are? LOL!! 700K for a condo in Hoboken and downtown… Christ, these builders and realtor tour guides made a fortune off this scam.
what bubble,
Send JB an email. He can forward a picture from a previous listing I sent.
Rich
willow 138. very nice house but dangerous lot on a dangerous corner. So what are the approx estimated costs for renovating a 4 bedroom house. Of course this can vary significantly but I would imagine he spent about 250K + on the house and another 30K on the garage and 30K in landscaping so about 310, so that would make the house 350 + 310 660K, so he is looking to make about 220K on it. comments?
Gary
Biggies still exists and you can still get homemade “mutz” but that live is dying (yeah I know I’m part of the problem).But blame the people that built the PATH. Any idea about why it is called Historic Paulus Hook or is it a brokers dream
https://www.njrereport.com/images/240paramusrd.jpg
Gary,
We can say the same about the whole “Gold Coast”, I grew up in Fort Lee. Edgewater used to be a dump. The only road in and out of it was never maintained. And every time it rained a little, forget about it.
Now there is a whole food and all these 600k 2 bed 2 bath condos. The NYC Metro demographic is changing. The gold coast will continue to be developed………
When the bubble is completely bursted, we would know the true value of Gold Coast.
My family members keep telling me that overcrowding, traffic and bad school would never be an issue. Because it is close to NYC!!??!!!
That part of Jersey looks like Queens. It is sad.
CC
CC
hobokenrenter,
You’re not part of any problem. lol! Enjoy it.. it’s just that things have changed. There are, however, a slew of wannabes who think they invented the place. Go to Wiki, it’ll tell you all you want about Paulus Hook. :)
chaoticchild,
River Road was bare and full of trash from Hoboken to Palisades Interstate Park. There used to be a little ice cream parlor we went to in Edgewater, just off River Road… can’t think of the name of it.. it was a dumpy place.
How about this one… I vaguely remember Palisades Amusement Park!! OMG, I feel old!
#156
“The NYC Metro demographic is changing.”
How so?
165 chaoticchild,
Growing up in Cliffside Park, we use to call Edgewater “Badwater” because we used to kid that the white trash that lived there drink the Hudson River water and turned retarded. How times have changed.
Gary
Found a site that history of Historic Paulus Hook. Based on this the fight in front Elks club last Sept we should call it Historic Hoboken
While this battle garners only a small piece of U.S. Revolutionary History, it is an important part of the history of New Jersey and certainly it has an important place in the history of the neighborhood. A Monument was erected in 1903 to memorialize the battle. It was originally located in the middle of Grand and Washington Street until falling over after being hit by trucks over and over again. The obelisk that presently stands on the southeast corner replaced it.
In 1776, the patriot colonists decided to defend the western banks of the Hudson and built several forts, one of which was located at Paulus Hook. After suffering defeats in New York City, the rebels took leave of Paulus Hook and the British occupied it. The fort was naturally a strong position that guarded the gateway to New Jersey. In mid-summer 1779, the flamboyant 23-year old Princeton graduate, Major Henry “Light Horse Harry” Lee recommended to General George Washington a daring “hit and run” plan to attack the fort. The assault was planned to begin shortly after mid-night on August 19. Lee led a force of about 300 men, some of who got lost during the march, through the swampy, marsh, land. The attack was late in getting started but the main contingent of the force was able to reach the fort’s gate without being challenged. It is believed that the British thought that the force they saw approaching the fort was the return of an ally Hessian patrol. The attacking patriots were unable to use their muskets effectively since their gunpowder had gotten wet. So, they were ordered by Lee to fix bayonets. They succeeded in damaging the fort and took 158 prisoners. But, they were unable to destroy the fort and spike all its cannons. As daytime arrived, Lee decided that prudent action demanded that the patriots withdraw before the British forces from New York could cross the river. The importance of the battle rests on the fact that it forced the British to abandon their plans for taking rebel positions in the New York area. Paulus Hook remained in British hands until after the war. On November 22, 1783, the British evacuated Paulus Hook and sailed home. “Light Horse Harry” Lee settled in Virginia, to become one of the Commonwealth’s early governors. He died in 1818. Perhaps, he is best remembered for being the father of the Robert E. Lee, the Confederate Civil War general.
Gary –
My pops grew up in West New York and loved Palisades Amusement Park. There was a TV special on it recently on channel 9.
To show you how much things have changed, he lived in WNY but thought Hoboken was too dangerous.
From PR Newswire:
Weaker Trends in Home Sales Cause Meritage Homes to Revise Its Outlook for 2007
Meritage Homes Corporation (NYSE:MTH – News), a leading U.S. homebuilder, reported today that April and May home sales have been weaker than expected, as reported by other leading homebuilders, and lower than the Company’s first quarter order rates. Preliminary net sales for the first two months of the second quarter were approximately 21% lower than the same period last year, and cancellations increased to a rate of 36% of gross orders, from 27% reported in the first quarter 2007.
“We were encouraged by sales and cancellation rates that improved each month of the first quarter, leading us to anticipate relatively stronger second quarter sales results,” said Steven J. Hilton, chairman and CEO of Meritage. “But these positive trends ended at the beginning of April, as demand slowed and cancellations rose. The weaker conditions we noted in April when we reported our first quarter results, continued through May. Order cancellations increased after widely-reported concerns over credit tightening and difficulties in the subprime markets, which appeared to dampen consumers’ confidence and demand for homes.”
Mr. Hilton continued, “Weaker demand has predictably led to further price competition and margin deterioration, which we believe will prevent us from achieving the guidance we provided on April 25 for total home closings, revenue and earnings for 2007. It also increases the risk for larger associated write-offs of options and impairment charges, which could significantly impact our near-term profitability.”
Emphasis added..
Lincoln78,
Yes, there was a time when Hoboken was considered dangerous! lol! Bergenline Ave. in WNY had all these beautiful stores and food places all Cuban owned. It was one of the best places to shop and we went there often. I know there are still a lot of Cubans living there but it isn’t the same as it was years ago.
he lived in WNY but thought Hoboken was too dangerous
That is saying a lot. When we were livining in Fort Lee, anywhere South of it is dangerous.
CC
If you guys and gals want to read something fascinating, look up the Black Tom explosion in JC and read about that. It was incredible.
From Motley Fool:
From Bubble Talk to Double Talk
The National Association of Realtors (NAR) is talking out of both sides of its mouth in its continuing effort to calm homebuyers as the housing bubble rapidly deflates.
To wit, the front page of the NAR website features a fancy graphic news crawl with stories about hot young real estate clerks and a Dubya-approved, made-for-a-self-interested-monopoly-trade-group celebration called “National Homeownership Month.”
There’s even a link to a June 1 release titled “Housing Market Seems to be Stabilizing.” Funny, that last one, because it not only tries to paint heavy year-over-year drops as a good thing, it also looks like a direct conflict with today’s NAR press release, which predicts a steeper drop in home sales and home prices than the NAR had previously predicted. The NAR doesn’t exactly come clean on this, however, but luckily for us, the folks at Reuters are keeping track of the past. Bottom line, the NAR expects home prices to “ease” 1.3% now, and new home prices to drop 2.3% this year.
But you’ll want to down those predictions with a fifth of bourbon, especially if you bought into this bubble hoping for a quick flip.
…
There are no such worries for the NAR. Thus, it continues to make rosy statements and, unfathomably, is still quoted by the national press as if it’s 1) an expert on housing and 2) a disinterested party. Never mind that recently departed NAR economist David Lereah proved the opposite time and time again.
It comes down to this: The NAR’s prospective on housing is irrevocably skewed because its very existence depends on the fiction that housing is a good “investment.” All evidence points to the contrary.
A home is a great place to live, but not when it leaves you poor.
there was a point late last year where I thought we’d already seen the biggest leg down in housing, but since Q2 this year, the decline seems to be accelerating once again. Maybe the media spin adds to this sensation, but it is beginning to seem as though we are entering full-scale crash mode right now
From Reuters:
Wall St leans to unchanged Fed policy all year
A series of stronger-than-expected economic reports has shaken Wall Street’s confidence that the Federal Reserve will cut benchmark overnight interest rates in the second half of 2007.
A poll of 18 primary dealers on Wednesday showed a median forecast for no change in Fed policy through 2007, starting with the next Federal Open Market Committee on June 28.
In a June 1 Reuters survey the median forecast was for a cut in the federal funds rate to 5 percent by year-end from the current 5.25 percent.
…
At this point, though, of the 15 dealers with a directional forecast for Fed rates, 10 still called for the Fed’s next move to be a rate cut while only five forecast a hike.
78 “Where will all the low income people move to?”
Cliffside Park, of course.
Seems the NAR is using a trick that the airlines use. when they know a plane is going to be 4 hours late, they give it to you in 15 min increments because they know you will lose you mind if you knew the truth.
Seems so long ago the last RE bust, but remember that one was brought about be tax shelter scheme where you could deduct huge tax loses for a small equity investment. Back in my auditing day we were going to give a going concern opinion on a fund that kept losing money. Management shows us the original marketing that showed the fund was set up to generate loses. Many projects were done that made no economic sense and we saw what came out of that
This time is different and caused by excess global liquidity causing people to forget about risk when they looked at returns.
Don’t know which one is going to be worse
Remember this too, much like the good news mania caused the herd to march off the cliff. Once the bad news mania really starts the same should happen on the way down. I remember back then there were predictions that the Boston RE market would not come back in my life time
Donald #99: Don’t bet on sellers being willing to negotiate at inspection time. Unless a problem comes up that prevents a CO from being issued, a seller doesn’t have to fix a darn thing.
Jersey4Life #123: Yes, there is more wildlife around, and a lot of that is due (depending on where you are) to more building in areas that used to be woods. Some woods near where I work in Rockland County have been clear-cut for baseball fields — and now there are deer and coyote in River Vale.
Donald Says:
June 6th, 2007 at 2:14 pm e
“So what you are saying Donald is that once you sell, knowing that housing prices are at peak, you would not try lowballing the house you want to buy?”
WHAT? I never siad that. But I don’t want to lowball to a low point where the sellers will get pissed off and not take my offer. I was thinking of paying a little bit more, but taking moeny off after the inspection so that the sellers will be more likely to do this since they are almost done with the sales process and do not want to start all over again.
Can’t believe I missed that one..
Donald,
So what you are saying is that it is better to lie (in a roundabout way) to a seller in order to force them into a position where they are in weaker negotiating position?
I’m sorry bud, but at least a lowball is an honest offer. What you are talking about doing is downright dirty. Bad karma written all over this. I hope you try this one day, only to have found a hardball seller that is more than willing to sue for specific performance.
jb
New Zealand Unexpectedly Raises Key Interest Rate to Record 8%
Good afternoon sunny bloggers,
Just opened up my weekly “news transcript” and raced to the real estate section like I do every week. But today, just cuz I am bored I decided to look up some of these advertised “property lines” that Re-max advertises that provide you with address and sales prices. Out of 11 properties that sold in Marlboro, NJ, 3 were for losses after accounting for 7% of sales price (6% realtor, 1% transfer fee).
Here we go: (SP= sales price; AP= actual price; OSP = old sales price)
8 diamond hill
SP 4/07 = 995k
AP = 925k
OSP 6/05 = 940k
loss = 15k
25 rutledge
SP 5/07 = 987.5k
AP = 918k
OSP 12/05 = 973k
loss = 55k
and the grand finale:
42 witherspoon (toll brothers is builder; but was a resale)
SP 3/07 = 935k
AP = 870k
OSP 4/05 = 964k
loss = 95k
respectfully submitted,
afe
skep-tic Says:
June 6th, 2007 at 4:31 pm
there was a point late last year where I thought we’d already seen the biggest leg down in housing
Really? Most people here reckoned it hadn’t even started. Housing is a big ship to turn around.
the first half of 2006 saw a huge increase in inventory and a huge dropoff in sale. So much so that it seemed to me by late 06 that the die was mostly cast for prices to head down– but now inventory continues to increase and sales continue to drop. Prices are dropping as well, but the catalysts for price drops have not appeared to bottom by any means
Weekly inventory numbers for those interested. Note that this is a two-week change, I didn’t pull inventory numbers last Wednesday.
GSMLS
(the usual suspects)
5/23/07 – 19,734
6/6/07 – 20,060
NJMLS
(the usual suspects)
5/24/07 – 9,208
6/6/07 – 9,409
GSMLS monthly data for May should be available shortly.
“A pre-construction contract is basically a call option. If it were in the money, why would you seek to have it nullified when you could flip it for a profit? In the “old” days (i.e. 2005), a construction delay meant more time for appreciation and even bigger profits. Today it’s an excuse for a buyer to claim breech of contract and get their deposit back.”
Couldn’t agree more
GSMLS# 2391402 – Peapack Rd, Far Hills, NJ
Original List Price: $575,000
List Price: $479,999
DOM: 68
Listing Date: 03/30/2007
Purchased: 2/2007
Purchase Price: $528,000
Quick flip didn’t quite materialize?
$72,000 loss after commission? Ouch!
jb
Here was the prior owner’s listing. Sale isn’t recorded on GSMLS, perhaps they went FSBO.
MLS# 2259492
Original List Price: $650,000
List Price: $575,000
DOM: 374
Expired
NJMLS – 2709015 – Ridgewood
ACT $1,395,000 4/30/2005
PCH $1,275,000 7/29/2005
ACT $1,195,000 9/12/2005 (expired, relist)
PCH $1,145,000 1/11/2006
PCH $1,095,000 3/10/2006
ACT $1,095,000 6/15/2006 (expired, relist)
PCH $1,050,000 7/9/2006
PCH $995,000 9/20/2006
ACT $975,000 3/8/2007 (expired, relist w/new broker)
PCH $929,000 4/11/2007
PCH $895,000 5/2/2007
PCH $850,000 6/6/2007
Perfect example of “chasing the market down”.
[183],
Wake up Donald. It comes down to risk/reward. What are your risk management parameters? Oh I forgot, you don’t have a clue regarding this. You never owned a stock.
Bob, c’mon, though…you have to chuckle. JB makes it out of Dodge, avoiding the Donmeister for a few days, but then immediately gets clobbered by Donaldlogic on his first real day back.
What would be worse: being a blogger with a rehearsed and calculating foe, or having to deal with A+B=WhateverDonsaysitequals?
These people smoke crack:
http://newjersey.craigslist.org/rfs/346448800.html
Perfect example of “chasing the market down”.
I thought so.
Thought I would start posting these as I come across them.
Bob / Pat,
Donald is in denial.
I think from now on I’ll ignore him except to post actual data when he makes outrageous claims about the market.
It won’t be easy! He says some off the wall stuff and contradicts himself a lot!
My favorite gem (and I paraphrase): “The market isn’t like the Titanic, it’s like the Hindenberg!”
1. JB I meant the articles in NJ.com seem like free advertising. Your putting it here is a valid point about the market.
2. 11 acres, I have some grapes that need planting. And that’s 650 for alot of space versus no space in fort lee for the same price
lost-
bought in 1/07 for 565k, that is a 45% return in 6 months. I guess that’s the market return these days for granite countertops and stainless steel, and travertine tiles. Whatever.
Sellers…delusional!
afe
Keep in mind that you’ll be paying taxes on those 11 acres of largely unusable land. Property taxes with that home (as-is, likely a teardown or massive remodel) are already pushing past $11,000. Add a new home or extensive remodel and you’ll be looking at a whopper of a tax bill, all courtesy of those acres.
jb
lost-
bought in 1/07 for 565k, that is a 45% return in 6 months. I guess that’s the market return these days for granite countertops and stainless steel, and travertine tiles. Whatever.
Sellers…delusional!
afe
Something must be up. I lived in Summit a few years ago and the house is in a good spot. Can’t believe that it went for $565k in the heated recent past. If so they must have done a good deal of work on it. They should have redone the front It doesn;t have curb appeal
From the Star Ledger:
Republicans ask for cuts, not add-ons, to state budget
Republican lawmakers today called on the Democratic majority to slash about $1.5 billion from state spending to provide more property tax relief to homeowners and steer more aid to suburban and rural school districts. Democrats said they’ll look at the proposals.
“Republicans believe that after five years of unprecedented spending growth, the state budget is still bloated with unnecessary and wasteful spending while providing too little in the way of property tax relief,” said Assembly Minority Leader Alex DeCroce (R-Morris) during a Statehouse press conference.
Democratic Assembly Speaker Joseph Roberts sent a letter to Treasurer Bradley Abelow saying, “While it is late in the budget process and the preference would have been for earlier notice of these particular changes, I believe that all possible consideration should be given to these recommendations.”
The budget-slashing requests by Assembly Republicans were submitted before the midnight deadline today for lawmakers and Corzine administration officials to submit changes to the governor’s proposed budget. Those requests are expected to be made public within a week.
Original question…I think it’s a sign of the slump.
Auction is the kiss of death, not marketing.
Years down the road. HUD money, urban renewal.
Yuppies of 2025 in Velocity.
Somebody turns to them at party and says, “Oh, you live there? I remember when nobody would touch those dogs with a fork in 2007.”
The folks over at the nj.com homebuying forums are having a serious discussion about St. Joseph statues.
I hate going away, I miss all the good stuff.
jb
JB—#174—I was out all day, so read whole thread in one sitting, and found myself waiting for someone to call this ‘Donald’ on his tactics. (Not to mention the fact that he’s said he won’t entertain an offer under full asking price himself, but then plans to expect seller of his new house to accept a lowball that won’t piss them off BEFORE he tries to beat them out of more money.)
Bad karma indeed.
Re: wildlife. Growing up in rural area of Monmouth County—in the sixties—I never saw a single deer. My father’s garden’s biggest enemies were rabbits. Now my mother can’t grow anything because of the deer…and there are coyotes in Middletown. It’s definitely due to human encroachment into animal habitat.
“Original question…I think it’s a sign of the slump.”
Pat,
Slump? HMMNN. Forget about stagflation. It’s slumpflation.
Grim (174)-
Although specific performance is an avenue of litigation that’s technically available to a seller, in practice it’s really only a buyer’s remedy.
NJ attorneys will generally advise a seller whose buyer refuses to close to remarket the property, then sue the original buyer for the difference between the two contract prices (generally the second sale is for less money) and all other damages. I’ve been involved in two of these (on the seller’s side, thank God), and the judge in both cases threw the book at the defendants.
Gosh, we’d hate to see that happen to Donaldo…
Pat (186)-
Hell is other people (and Donald).
-Jean Paul Sartre
From Reuters:
GMAC’s ResCap says subprime mortgages at a dribble
Subprime loan volume at GMAC’s ResCap residential mortgage unit is now a “dribble” because of the tighter underwriting standards at the company, GMAC-ResCap managing director Diane Wold said on Wednesday.
…
ResCap, a survivor of the crisis that sent dozens of lenders out of business or into bankruptcy, is still working to get its mortgage products “in front of customers,” Wold said, speaking at the American Securitization Forum’s annual meeting in New York. Subprime lending will pick up but probably won’t return to the “old” heyday, she said.
“June 7 (Bloomberg) — The yen rose to a three-week high versus the dollar and strengthened for a third day against the euro as declines in global stock markets caused investors to sell higher-yielding assets they bought with money borrowed in Japan.”
`A decrease in global excess liquidity may encourage the unwinding of carry trades,” said Toru Umemoto, chief currency strategist at Barclays Capital in Tokyo. “Global equity markets are under downward pressure with higher interest rates in the world.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=a2pyhOopOZlg&refer=home
If the carry trades were to suddenly unwind, would it be a one time adjustment, or will it fundamentally change Yen valuation? I was surprised the way carry trades returned after March
I love it when everyone talks about me behind my back. Just to clarify on a few issues so that you guys do not think that I am REALLY stupid.
1. As far as my idea of taking money off during the inspection, this wil mainly depend on the condition of the house. If I buy something that has been recently renovated or new construction, then I will not deduct anything. If the house is old and needs a ton of work, I think a price deduction is fair. I will definitely consult my realtor before I do anything. However, I have been monitoring several houses for a while and the sellers have yet to lower the asking price. I really doubt a lowball is going to be accepted.
2. Great idea about sending all of the low income people in the Hoboken projects to Cliffside Park. We can put them into the brand new multi-million dolar Philippe Starck condos with all of the rich lawyers, doctors, and business executives. I am sure they will all be happy neighbors, NOT!
3. The Velocity auctions is NOT a sign of the slump. There are 2 reasosn for it’s poor performance:
a) Most buyers fled after the 2 year construction delay
b) The building is in the heart of the ghetto
If the market was REALLY bad, other buildings, like Maxwell Place and Hudson Tea would also be having auctions. But THEY ARE NOT!
#187,
That seller is huffing too many NJT exhaust fumes.
yikes.
SAS
Thought I would link to two papers challenging the view that house prices are a bubble:
The first computes price-rent ratios for all MSAs and concludes that prices are about right. Low real interest rates do most of the work, but the fact that prices are more sensitive to interest rates in urban areas (where land is valuable) has an assist.
http://www1.gsb.columbia.edu/mygsb/faculty/research/pubfiles/1940/Assessing_High_House_Prices.pdf
The second aruges that the OFHEO index overstates house price inflation, and that increases in quality of housing help explain the run-up in prices.
http://www.newyorkfed.org/research/epr/04v10n3/0412mcca.pdf
Not saying that I agree with either of these, but they are both serious papers and food for thought.
Haven’t logged on here in a while, and don’t have time to read lots of previous emails…but have to say, it’s remarkable how much softer the housing market is than just 1 year ago. Every day there’s another negative article about how prices are going down and the housing market will take more time than expected to recover. I’ve been following the market in Bergen and Essex counties, looking primarily in the 1.5Mil ballpark range. Most of the same inventory is still sitting unsold. Some slight markdowns, but not everywhere. Can’t wait til late summer/fall….no chance I’ll buy until I see a clear bottom of this market. My money is working better for me in the bank/stock market, and that’s a fact.
I usually like to just throw up stats (or argue) but got to reflecting on this ever changing market.
I think Clot and KL can give a better perspective, but it seems that a large portion of the inventory that is out there has been listed for a very long time (to me most of its crap and unappealing, but I’m looking for a “specific” style).
I can understand those who bought recently not wanting to lower their price but other’s who stand to make a tidy profit, even if they lower the price still think they can get ’05 and early ’06 comparable prices.
If only they would take a moment to review real estate AND economic history. Real estate prices ARE sticky (slow) going down but even if prices were just to remain stagnant; inflation will erode their equity. Instead they continue to holdout but in doing so they continue to lose value ($).
Those that bought recently just need to face the reality and either hope they get lucky finding the greater fool, take the loss or pull their home off the market, if they can afford to.
What IS the average yearly inflation rate anyway, 3%?
Look – until you hear of a layoff of high profile people [e.g., Bear Stearns whacks out 2,500 off their CDO’s desk], and then you see 30 extra yellow signs on lawns in Summit – AIN’T NO GRAND PARADE
The stuff going on now is the serious dumbasses who f—ed so bad [see the duckman] and people who need to move on with their lives. In reality, if someone is CHOOSING not to drop their price, then they are not a BAGHOLDER [to use the vernacular]. We can’t have CHOICE, we need people to be STARING DOWN THE BARREL OF A GUN.
grim: post if you want
some good stuff here…..NJ not at the top of this list, but if we got hit with a big Category 3 jobber, NJ coffers would take the hit, because the Allstate’s of the world have been smart enough to charge – MARKET RATES [not PRICE GOUGING].
WSJ
HURRICANE WARNINGS
As Insurers Flee Coast,
States Face New Threat
‘Last Resort’ Carriers
Could Shift Liability
To the Broader Public
By LIAM PLEVEN
June 7, 2007
As hurricane season gets under way, a dramatic shift in the way homeowners insure against disasters could pose a big financial risk in several coastal states.
Private insurers have been fleeing the shoreline, wary of costly storms and often fed up with government regulations that prevent them from pushing rates higher. In more than a dozen states — from Texas along the Gulf of Mexico and up the East Coast to Massachusetts — an odd breed of carriers known as “insurers of last resort” is filling the void.
• The Issue: ‘Insurers of last resort,’ created to cover people who can’t buy policies elsewhere, are taking on more risk in storm-prone states.
• The Background: Other private insurers are wary of suffering big storm losses, so they’re often pulling back from the coast.
• What’s at Stake: If insurers of last resort face major storm losses, those costs could get spread to a broad cross-section of the public.
These last-resort insurers, which cover people the private sector won’t, issued more than two million policies to homeowners and businesses in hurricane-prone states last year, about twice as many as in 2001. Over that same five-year period, their total liability for potential claims has increased roughly threefold, topping $650 billion. Meanwhile, a separate federal flood-insurance program has seen its liability jump by two-thirds since 2001 to just over $1 trillion.
[edit]
Hobokenrenter,
When is the velocity auction, and what are the requirements?
http://www.velocityhoboken.com/
You shall bid on our Velocity !
Homer Simpson once tried to woo his wife into attending a police auction by saying they might stumble upon the “drug boat of their dreams.” He also giddily promises “drug dresses” and “drug vacuum cleaners.”
Homer understood our collective fascination with an auction: The chance to get good swag at a cheap price. (Not to mention the thrill of outbidding a competitor.)
But imagine going to an auction and finding new-construction real estate for sale. Next month, you can do just that, and it’s no sheriff auction: REMI Companies is offering 40 condos in their new Hoboken, N.J., building Velocity. The auction will take place on June 24 at the Hyatt at 2 Exchange Place in Jersey City (registration is at 11:30 a.m., the auction kicks off at 1 p.m.). To register for the auction, stop by Velocity (at the intersection of Jackson and Seventh streets) between June 2 and June 23, look at what will be on the auction block and sign up.
“We’re in a market where we don’t really need an auction,” says Erik Kaiser, CEO of REMI. But, he wants to “cut down on additional costs that would usually be borne by the buyer.”
It also allows the market, rather than the developer, to determine the value of the apartments: “We’d rather let [buyers] establish a price in the market,” Kaiser says.
Bidding will start at $295,000 for a 745-square-foot one-bedroom and $395,000 for a two-bedroom.
Velocity will have 128 units in total and consist of one-, two- and three-bedrooms (the largest unit is 1,550 square feet). It will be green (”The building is LEED-certified by default,” says Kaiser, “but we have not applied for a LEED rating”) and will have a concierge, outdoor space, gym, garage and free wireless Internet. Moreover, the building will be a block away from the light rail, which gets you to the Hoboken PATH station in just six minutes.
“If this first [auction] is successful, we might do all the units” at auction, Kaiser says.
Rich (207)-
Well-stated. But it IS a market…and in markets, emotion trumps logic every single time.
I think the saying goes: the market can remain illogical far longer than one can remain solvent.
And you wake up one morning and say, why, oh why, didn’t I sell when my gut told me too?
PeaceNow Says:
June 6th, 2007 at 8:28 pm
JB—#174—I was out all day, so read whole thread in one sitting, and found myself waiting for someone to call this ‘Donald’ on his tactics. (Not to mention the fact that he’s said he won’t entertain an offer under full asking price himself, but then plans to expect seller of his new house to accept a lowball that won’t piss them off BEFORE he tries to beat them out of more money.)
Bad karma indeed.
Re: wildlife. Growing up in rural area of Monmouth County—in the sixties—I never saw a single deer. My father’s garden’s biggest enemies were rabbits. Now my mother can’t grow anything because of the deer…and there are coyotes in Middletown. It’s definitely due to human encroachment into animal habitat.
In PIscataway, wehre I live, I see 5 dears living in little preserved space at night they are coming to our lawns and eat grass and flowers
Alos – could it be that by now wild life just gotten used to humans??
abamitphd (206):
Looks like the fed economists are toking on the hedonics pipe again.
Say, friend! Hedonics is the tonic for what ails ya! Inflation jitters? Hedonics will take the edge right off. Asset prices bubbling? Hedonics inflates the size of the universe so the bubble looks like nothing but a bit of froth… Yes sir! Hedonics is the economic CURE-ALL for the 21st century!
Looks like auction minimum prices are around $350-370psf…nothing to get excited about imo when you can get stuff for $400+psf away from the warzone. I think the auction will be a major flop.