From the AP:
Home Sales Hit Slowest Pace in 4 Years
Reflecting further housing troubles, sales of existing homes fell in May to the lowest level in four years while the median home price dropped for a record 10th consecutive month.
The National Association of Realtors reported Monday that sales of existing single-family homes and condominiums dropped by 0.3 percent to 5.99 million units in May, the slowest sales pace since June of 2003.
The median price of a home sold last month dropped to $223,700, down 2.1 percent from a year ago. It marked the 10th straight price decline compared with a year ago, the longest stretch of weakness on record.
…
In a troubling sign for the future, the inventory of unsold homes rose by 5 percent to 4.43 million units in May, a level that would take 8.9 months to clear out at the May sales pace. That is the highest inventory level since the last deep slump in housing in 1992.
From MarketWatch:
Existing-home inventories rise to 15-year high
The inventory of previously owned homes for sale in May rose to the highest level in relation to sales in 15 years, a real estate trade group said Monday. Sales of existing homes fell 0.3% in May to a seasonally adjusted annual rate of 5.99 million from 6.01 million in April, the National Association of Realtors reported. Sales were stronger than the 5.90 million pace expected by economists surveyed by MarketWatch. nventories of homes on the market rose by 5% to a record 4.43 million, representing an 8.9-month supply at the May sales pace. That’s the biggest overhang of inventory since June 1992, at the tail end of the last housing bust. The median price of a home sold in May was $223,700, down 2.1% compared with May 2006.
From Bloomberg:
U.S. Existing Home Sales Fell 0.3% in May to 5.99 Mln Rate
Sales of previously owned homes in the U.S. fell in May to the lowest in almost four years, reinforcing concerns about a protracted housing slump.
Purchases last month declined 0.3 percent to an annual rate of 5.99 million, the lowest since June 2003, from a revised 6.01 million in April, the National Association of Realtors said today in Washington. The supply of unsold homes jumped to the highest in almost 15 years.
Weakening demand for existing homes, along with a decline in construction starts on new homes reported last week, make the housing market the biggest threat to economic growth, economists said. An increase in mortgage rates this month will further discourage buyers, leaving a glut of properties on the market.
“I don’t think we’ve seen the bottom yet for existing home sales,” Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “Mortgage rates jumped and are heading higher. Lending standards have tightened not only for the subprime borrowers but also a little bit overall.”
Resales were forecast to fall 0.3 percent to a 5.97 million annual rate from a previously reported 5.99 million in April according to the median forecast of 61 economists in a Bloomberg News survey. Estimates ranged from 5.75 million to 6.15 million.
Existing home sales averaged 6.51 million last year, lower than the 7.07 million average for 2005. Sales last month were down 10.3 percent compared with a year earlier.
…
The supply of homes for sale increased 5 percent to 4.43 million. At the current sales pace, that represented 8.9 months’ worth, the highest since June 1992 and up from 8.4 months’ worth at the end of the prior month.The median price of an existing home fell 2.1 percent last month from a year ago to $223,700, the 10th consecutive month of year-over-year declines, the Realtors group said.
Resales of single-family homes fell 0.8 percent to an annual rate of 5.2 million. Sales of condos and co-ops rose 2.6 percent to a 790,000 rate.
Purchases fell 3.4 percent in the South and 0.8 percent in the West. They rose 5.8 percent in the Northeast and 0.7 percent in the Midwest.
(This post will be updated as information becomes available)
From Bloomberg:
Bear Stearns’s `Friends’ Reject Hedge Fund Rescue in LTCM Redux
Bear Stearns Cos. is getting a taste of its own medicine.
It was Bear Stearns, the biggest broker to hedge funds, that nine years ago declined to join 14 other investment banks in the bailout of Long-Term Capital Management LP. Then last week, as New York-based Bear Stearns pleaded for help to rescue two of its hedge funds teetering on the brink of collapse, many of the same firms refused to come to its aid.
Merrill Lynch & Co., which pumped $300 million into LTCM, said no and seized $850 million of bonds held as collateral for loans it had made to the funds. Lehman Brothers Holdings Inc., JPMorgan Chase & Co. and Cantor Fitzgerald LP also pulled out, leaving Bear Stearns to sort through the wreckage of bad bets on subprime mortgage bonds and collateralized debt obligations.
“There is a good analogy to Long-Term Capital,” said Anthony Sanders, a former director of mortgage-bond research at Deutsche Bank AG who starts next month as a professor of finance and real estate at Arizona State University’s W.P. Carey School of Business in Tempe, Arizona. “They were all friends with Bear Stearns when they thought the spreads were huge. Now that the market has turned, Bear’s standing there like the lone grizzly.”
From the Wall Street Journal:
Wall Street Fears Bear Stearns Is Tip of an Iceberg
Near-Collapse of Funds Stokes Broader Concerns Over Murky Investments
By JUSTIN LAHART and AARON LUCCHETTI
June 25, 2007; Page A1
The near-meltdown of two hedge funds at investment bank Bear Stearns Cos. last week underscored — and in some ways aggravated — a growing fear on Wall Street: that hard-to-trade investments may suddenly turn south and set off a broader market downturn.
The Bear Stearns funds, whose investors include wealthy individuals, other hedge funds and some of the firm’s own executives, are part of a recent boom in investment vehicles specializing in illiquid assets, such as exotic securities, highways and timber lands.
Unlike stocks or bonds listed on an exchange, such assets can’t be readily bought or sold. That makes it hard to establish an accurate price for them. Fund managers have broad discretion in attaching a value to these assets, and often don’t reveal many details of their trades.
Bear Stearns’s High-Grade Structured Credit Strategies Fund and High-Grade Structured Credit Strategies Enhanced Leverage Fund ran into trouble when a downturn in parts of the housing market hurt the funds’ bets on complex securities backed by subprime mortgages, or home loans to borrowers with troubled credit histories.
Such securities trade infrequently, which makes it hard to sell them quickly without incurring steep losses. The funds, especially the Enhanced Leverage Fund, used borrowed money, or leverage, to amplify returns. But leverage also amplifies losses when a fund’s bets go sour.
Investors with plenty of cash on hand, thanks to years of low interest rates, have flocked to illiquid investments in search of outsize returns, often with the help of borrowed money. Some market experts worry that investing in illiquid assets, despite their inherent risks, has become almost mainstream.
…
The combination of illiquidity and leverage has long been a mainstay of financial crises. In 1994, hedge funds run by Askin Capital Management sustained huge losses on leveraged bets on infrequently traded mortgage-backed securities. The collapse of Long-Term Capital Management, which roiled markets around the world in 1998, was sparked by its inability to unwind leveraged bets.
Last fall, commodity hedge fund Amaranth Advisors LLC lost about $6 billion when it couldn’t easily exit esoteric trades that went against it. (See article on page C1.) Earlier this year, Bank of Montreal lost more than 600 million Canadian dollars (US$560 million) with a bad bet on natural-gas volatility.
Many investors have grown more comfortable with illiquid investments, based in part on the view that even highly illiquid assets have become more liquid these days, thanks to low interest rates and an influx of cash from the developing and oil-exporting countries that run trade surpluses with the U.S. What’s more, through sophisticated financial products, the risk inherent in illiquid assets can be offloaded to hundreds of other players, making it more manageable.
Still, the increase in illiquid investments raises concerns. For one thing, even in liquid securities like stocks, what can seem like a ready supply of cash can dry up quickly if investors get spooked. Those problems are heightened when leverage is used.
Even if a fund plans to invest in an illiquid asset for the long haul, creditors can force its hand. If a leveraged investment racks up losses, the fund’s lenders may demand more collateral, or even repayment of their loans. To meet those demands, the fund, whose losses are already magnified by leverage, could be forced to sell the investment well before the market recovers, adding to its burden.
“If the banks all pull the plug, that has a big impact on a fund’s ability to ride out a short-term loss in value,” says Chris McNickle of Greenwich Associates.
Letter to the Courier News:
Shell game
Re: “Use sales-tax increase for property-tax relief (editorial, June 13).
Only in New Jersey can you raise one tax to lower another and call it tax relief. The Courier-Post Editorial Board has now become part of the tax problem in our state by feeding into the Trenton shell game.
According to the Courier-Post, the money that came from raising the sales tax a penny is “earnings.” This is part of the tax misunderstanding that is rampant in New Jersey.
The state doesn’t earn anything. What it does is raise taxes. When it raises one tax to lower another, it’s giving us back our own money, not the state’s.
Gov. Jon Corzine’s plan was to use the sales tax revenue to support the cost of state and local services. If supported, his plan would allow there to be less reliance on increasing property taxes.
It is a shame the Editorial Board can’t see the wisdom in what the governor is trying to accomplish. It is doing a disservice to the public when it feeds into this political game by referring to this sham as tax relief.
DR. ALBERT K. BROWN
From Bloomberg:
Cheyne Capital Fund Posts Full-Year Loss on Mortgages
Queen’s Walk Investment Ltd., a fund investing in the riskiest portions of bonds backed by mortgages, said it made a full-year loss after turmoil in the U.S. subprime market and increased repayments by U.K. borrowers.
The fund, run by London-based Cheyne Capital Management Ltd., lost 67.7 million euros ($91 million) in the year ending March 31, Queen’s Walk said today in a statement. Its net asset value fell to 7.24 euros per share from 9.9 euros a year earlier. The loss was caused by “significant developments” in the U.S. and U.K. mortgage markets. The fund sold three of its four holdings in the U.S. subprime mortgage market, it said.
“We are disappointed with the performance,” Stuart Fiertz, a founder of hedge-fund manager Cheyne Capital, said in a phone interview. “We don’t wish to excuse it by pointing to the broader market changes that have occurred, but we are pleased with how we have restructured the portfolio so far and look forward to the future.”
Look, if corzine can get away with the katz
affair, how can he not pull the wool
over the citizens of NJ on this.
the pols of NJ , the lowest of the low.
they would rob their own mothers to keep
the job
#5
Shame on you! They would never rob their own mothers when there are so many other people’s mothers available.
From the Record:
Condo auction draws crowd
The public auction ended as abruptly as the final episode of “The Sopranos.”
But it seemed to solidify opinions that the North Jersey condominium market remains alive — if the price is right.
The developer’s principal admitted the auction was a marketing gimmick, created to kick off a sales campaign for the luxury condo complex on Hoboken’s quickly changing west side.
As of a week ago, Remi Cos. planned to put 40 of the 128 units on the auction block Sunday to see what the market would bear. Thirty units of what is being called Velocity/Hoboken had previously been sold, the company said.
However, by the time proceedings began in a Jersey City hotel ballroom, the list had been cut to 16, and without notice, it was cut to nine after about a half-hour of spirited bidding.
…
“The people were willing to bid on one-bedrooms, but not two,” Erik Kaiser, principal of Hoboken-based Remi Cos., said in explaining why he halted the auction.
…
He said he was pleased with the results and the amount of interest in the complex, and predicted that at least 20 people who attended the auction, but did not bid, would purchase two-bedroom units within a week.
About 200 people showed up, and some viewed the sudden end to proceedings as a sign that the condo market is hurting.
“It’s bad P.R.,” said Sean Munroe of Ridgewood, who predicted that Sunday’s results would push prices down. “There’s a glut of condos here.”
…
He said the auction would give potential buyers the opportunity to create a market.
“There is a question mark on every building as to its value,” he said. He said having an auction was a risk, but it was worth it because it created a buzz about the complex as his company begins to actively market the property that was completed on June 1.
“We had more traffic in one month than we could have gotten in two years,” he said.
Another “D-word” reference…
From MarketWatch:
BIS warns credit spree could produce 1930s-style depression
The Bank for International Settlements is warning that years of loose monetary policy have fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump is than generally understood, the U.K.’s Telegraph newspaper reported on its website. Virtually nobody foresaw the Great Depression of the 1930s, or the crises which affected Japan and Southeast Asia in the early and late 1990s. In fact, each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a ‘new era’ had arrived”, the bank was quoted as saying. The BIS, the ultimate bank of central bankers, pointed to multiple worrying signs, including mass issuance of new types of credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system, the report said.
Condo auction draws crowd
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXkyNzgmZmdiZWw3Zjd2cWVlRUV5eTcxNTYxMzQmeXJpcnk3ZjcxN2Y3dnFlZUVFeXkyMg==
The public auction ended as abruptly as the final episode of “The Sopranos.”
But it seemed to solidify opinions that the North Jersey condominium market remains alive — if the price is right.
…
As of a week ago, Remi Cos. planned to put 40 of the 128 units on the auction block Sunday to see what the market would bear. Thirty units of what is being called Velocity/Hoboken had previously been sold, the company said.
However, by the time proceedings began in a Jersey City hotel ballroom, the list had been cut to 16, and without notice, it was cut to nine after about a half-hour of spirited bidding.
The apartments that were sold brought in $3.6 million, about two-thirds of what developers said was their last asking price, but a third higher than minimum prices they had set.
Prices ranged from $369,000 for a one-bedroom unit to $502,000 for a two-bedroom apartment.
“The people were willing to bid on one-bedrooms, but not two,” Erik Kaiser, principal of Hoboken-based Remi Cos., said in explaining why he halted the auction.
…
About 200 people showed up, and some viewed the sudden end to proceedings as a sign that the condo market is hurting.
“It’s bad P.R.,” said Sean Munroe of Ridgewood, who predicted that Sunday’s results would push prices down. “There’s a glut of condos here.”
Also, despite the fact that the complex is within a block of the NJ Transit Hudson-Bergen Light Rail stop, its location across town from Hoboken’s main commercial district and next to a public housing project works against it.
…
“There is a question mark on every building as to its value,” he said. He said having an auction was a risk, but it was worth it because it created a buzz about the complex as his company begins to actively market the property that was completed on June 1.
“We had more traffic in one month than we could have gotten in two years,” he said.
Even before the auction was halted, Deedre Miranda, who rents an apartment in Hoboken, had left.
Like many of the attendees, she was looking for a bargain, but the bidding was “a little past” her price range.
But to Bruce Snyder, who is renting an apartment in New York City, the price was fair.
He won the bidding at $502,000 for one of two two-bedroom units sold, and was willing to pay about 10 percent more after his due diligence convinced him that concern about the location was not warranted.
“I feel we got a decent deal, but it was not a steal,” he said.
from weekend thread…
Clotpoll Says:
June 24th, 2007 at 11:32 pm
Troll (311)-
I wouldn’t bail out either one of you chumps. The best outcome would be that you and Un would be locked in a holding cell together, then commence re-enacting your own version of Thunderdome.
Then, the winner would start busting rocks on a chain gang the next day, a la Cool Hand Luke.
clot: Thunderdome was released right as I was graduating high school. Our high school courtyard was perfect for stickball. We used to call a one-on-one stickball game Hunterdome – two men enter, one man leave. To hit a homerun, you had to clear a 50 foot high brick tower. When you cleared the tower the ball would be bouncing on Madison Avenue. It was bad luck if a traveling bus hit the ball, because it would knock it uptown to practically Mt. Sinai hospital – game over.
The author in #9 seems to fully accept the spin that the auction was “just a marketing gimmick”.
He quickly shoots past the point:
“The people were willing to bid on one-bedrooms, but not two,” Erik Kaiser, principal of Hoboken-based Remi Cos., said in explaining why he halted the auction.
He chalks this up to “people being uncomfortable with the auction process”, who would rather negotiate the old fashion way.
I mean that is the story here. They stopped an auction due to lack of interest. There was no market for these units.
“The dollar is “vulnerable” to a drop in the investment inflows that the U.S. relies on to fund its trade and current-account deficits, according the Bank for International Settlements.”
“Central banks may reduce purchases of dollars and allow their currencies to strengthen in a bid to curb inflation, the BIS said. They may also invest a greater proportion of new foreign-exchange reserves outside of the U.S. to earn higher returns, adding to the “threat” to the dollar, it said.”
“Governments “have already publicly expressed strong concern about excessive capital investments, and possible resource misallocations,” the BIS said. “In a number of countries, inflationary pressures are rising.”
http://www.bloomberg.com/apps/news?pid=20601103&sid=aHlb_k7gVajg&refer=us
Len and KBH report this week.
and we got the existing homes this AM.
Lets see how were doing.
p22,
If HOV has been “dancing”, it’s doin the limbo.
jb
From Newsday:
Hugh Johnson of Johnson Illington Talks About Sub-Prime Fund Fallout
The market for loans to borrowers whose credit is not the best has been collapsing for months now as a number of those borrowers have been unable to maker higher and higher monthly payments that are part and parcel of what are known as sub-prime loans.
…
Q. What specifically prompted them do that?
A. What happened is a number of things. The way the loans were made, they were called teaser loans. They are sub-prime and they are given to people who might not otherwise be able to get loans. The debt service on them is minimal in the early stages, but it rises very quickly. Monthly payments became more difficult for the borrowers.
Q. So what happened then?
A. Well, interest rates rose and the debt service on the mortgages rose too. Many of the sub-prime borrowers defaulted. They couldn’t sell their property because housing market conditions deteriorated and prices declined. If they were going to sell, it would be at a loss.
So at some point, people who bought into the fund became restive and started to grab collateral.
Q. What does all this say about the sub-prime mortgage market?
A. It says a lot about lending standards from lending institutions that make these sub-prime loans. It says they shouldn’t be making so many loans to sub-prime borrowers. These are very risky loans. Any time a bank makes a loan like this there’s a big risk attached to it.
I think they (the banks) got caught up in the profitability of all of this. When things were going good, they were slapping each other on the back. But now they have learned something about risk.
For those interested in reading the BIS report, it can be found here:
http://www.bis.org/publ/arpdf/ar2007e.htm
No Job…..No Problem!!!!
No Money…No Problem!!!!
No Credit..No Problem!!!!
Well, now there’s a problem. My brother’s mother in law was a closer for a large mortgage company here in NJ. They did all Alt A and A paper, no sub-prime stuff. Four months ago she swore up and down that they were swamped and business couldn’t be better. She just got the pink slip on friday along with 15 others.
“Just to be clear, my short version of reasons for prices falling are: affordability; declining wages; excess supply; and affordability (it’s worth repeating, and yes, I realize that declining wages actually means I said affordability three times).”
What? Wages are not falling. That is ridicilous.
Real wages.
#19 BC He will not undestand that. He is a simpleton!!
From MarketWatch:
U.S. May existing-home inventories 8.9-month supply
U.S. May existing-home median price down 2.1% y-o-y
U.S. May existing-home inventories up 5% to 4.43M
U.S. May existing-home sales fall 0.3% to 5.99M pace
U.S. May existing-home inventory highest in 15 years
Bust.
Wait until we see the #’s going forward. The increase in rates did not start to take effect until the middle of May.
Velocity condo auction in Hoboken NJ turns out to be a “marketing gimmick”:
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjcxN2Y3dnFlZUVFeXk5JmZnYmVsN2Y3dnFlZUVFeXk3MTU2MTM0
As of a week ago, Remi Cos. planned to put 40 of the 128 units on the auction block Sunday to see what the market would bear. Thirty units of what is being called Velocity/Hoboken had previously been sold, the company said.
However, by the time proceedings began in a Jersey City hotel ballroom, the list had been cut to 16, and without notice, it was cut to nine after about a half-hour of spirited bidding.
JB, thanks for the BIS report link.
-Sapiens
forget that last post, I ment to post earlier
Wasn’t born in NJ, didn’t grow up there, but soon will find myself living there. Tried to have this discussion over the weekend with some Jerseyans …
why are the taxes so high in NJ? I know it’s a very general question, but can anyone boil it down to, maybe, 3 one-sentence points?
I don’t know if I buy the schools argument – this list
http://www.msnbc.msn.com/id/12532678/site/newsweek/
says NJ only has 4 schools in the top 200, and states like VA, NY, Fla, etc have many, many more.
So, let me get this straight: A buyer lands a two bedroom apartment in Hoboken for a half a million dollars and he thinks he got a bargain? Folks, I’d say the cleansing and brainwashing phase is now complete. I think it’s time to pack up and move out of this state previously known as New Jersey.
JB – Love how you don’t even need to mention anything in post 21. The headlines speak for themselves.
It’s going to get ugly, people … and this is a guy who isn’t hoping for a bloodbath … but if people who need to sell don’t start lowering prices, it will be ugly
Existing Home Sales, Prices Decline
Existing-home sales dipped during May to their lowest level in nearly four years, while inventories climbed and prices fell a 10th straight time. NAR economist Lawrence Yun said would-be buyers appear to be waiting for more signs of stability. “The market is underperforming when you consider positive fundamentals such as the strength of job creation, economic growth, favorable mortgage interest rates and flat home prices,” Mr. Yun said.
http://online.wsj.com/article/SB118277925445347058.html?mod=googlenews_wsj
Yun said today “The market is underperforming when you consider positive fundamentals such as the strength of job creation, economic growth, favorable mortgage interest rates and flat home prices.”
And what’s going to happen to current underperformance when any one of the current positive fundamentals turns south? It’ll be time for our imagination to run wild…..and we’ll definitely not be thinking of potential upsides.
Get the diapers out…..
Weakest home sales in 4 years
Jump in glut of homes on market continues to hit prices as the pace of home sales slowest to lowest level since June 2003.
June 25 2007: 10:18 AM EDT
NEW YORK (CNNMoney.com) — Home sales slumped to a four-year low in May and prices fell from a year earlier for the 10th straight month, a real estate group said Monday in a report showing no sign of a housing market rebound.
Existing homes sold at an annual pace of 5.99 million last month, down from a revised 6.01 million rate in April, according to the report from the National Association of Realtors. It was the slowest pace of home sales since June 2003, although it was essentially unchanged from the original April reading.
Current Mortgage Rates
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Video More video
Money magazine has some useful tips on how to help you sell your home.
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Economists surveyed by Briefing.com had been forecasting a 6.0 million sales pace.
The Realtors also reported that the median price of an existing home sold in the month was $223,700, down 2.1 percent from a year earlier. It marked the tenth straight month that the price has shown a year-over-year decline. Until the current slump in home prices began a year ago, it had been 11 years since home prices showed a year-over-year decline in the closely watched report.
The glut of homes for sale on the market rose 5 percent from April to 4.4 million homes, leaving an 8.9-month supply of homes for sale on the market. The number of homes for sale is now 23 percent above year-ago levels, while the months’ supply, based on the sales pace and the inventory, is nearly 40 percent above a year year earlier.
The reading comes the day before a government report on new home sales, which is seen as a more forward-looking take on the real estate market. The weakness in home prices, and the large supply of homes for sales, has hurt the earnings and outlook for the nation’s leading home builders, including Lennar (Charts, Fortune 500), D.R. Horton (Charts, Fortune 500), Centex (Charts, Fortune 500), Pulte Homes (Charts, Fortune 500), KB Home (Charts, Fortune 500) and Toll Brothers (Charts, Fortune 500).
“why are the taxes so high in NJ?”
Someone has to support the overpaid corrupt politicians and their cronies. Taxes are also not that high in NJ. Suburban NY has the same taxes we do while Westchester has even higher taxes.
“but if people who need to sell don’t start lowering prices, it will be ugly”
yes, ugly for the buyers. The number of people who “need” to sell is grossly exaggerated. The majority of people can sit on their homes for years to come.
#26 The schools arguement is bogus, but it works. It took me a long time to realize the emperor (Schools) have no clothes.
#33 And you know this because? So all that inventory sitting ou there is just people testing the market, and the overwhelming majortiy of them have no need to sell?
Why is the school ranking bogus? You think you know better than Newsweek? Who are you to qualify you to make this argument?
“and the overwhelming majortiy of them have no need to sell?”
Yes, that is correct. The market is full of people who WANT to sell, like myself. The people who NEED to sell are mainly confined to the poor neighborhoods.
New Today! Homebuilding Business Ain’t What it Used to Be
http://www.paperdinero.com/BNN.aspx?id=246
CBS segment details the trials and tribulations of a New York homebuilder whose spec McMansions have stopped selling even with slashed prices and extras thrown in. Includes some brief statements from David Seiders, Chief Economist of the National Association of Home Builders.
Originally aired on: 6/21/2007 on CBS
Running Time: 1 minutes 39 seconds
“The people who NEED to sell are mainly confined to the poor neighborhoods.”
Supporting data?
Yes, I know better than Newsweek, as far as schools.
But if you think a little harder, you will realize that at I am actually complementing Newsweek, as far as schools.
You see grasshopper Bergen County and other North Jersey areas will to an extent justify the high taxes because of the schools, yet NJ’s schools rank no where the top as far as the Newsweek survey.
“Yes, that is correct. The market is full of people who WANT to sell, like myself. The people who NEED to sell are mainly confined to the poor neighborhoods.”
With a negative savings rate for the country, you will find out that slowly people would NEED to sell rather than WANT to sell for a profit.
“Supporting data?”
Go find it yourself. You should not need a link to tell you that there are more distressed homeowners in Newark than in Alpine. Use some common sense…
Did you see the article in the NY Post last week about the areas of NYC with the highest foreclosure rates? The #1 area in Brooklyn was Bedford-Stuvyestant. CASE CLOSED!
“Use some common sense…”
LMAO.
CR has got the EHS data graphed:
http://calculatedrisk.blogspot.com/2007/06/may-existing-home-sales.html
jb
#26-Bloodbath in Winter 2007 Says:
why are the taxes so high in NJ? I know it’s a very general question, but can anyone boil it down to, maybe, 3 one-sentence points?
Schools- even though you said there are only 4 in the top 200, doesn’t mean they don’t spend a ton of money on them. Also, I wouldn’t say that report should be consdired the bible either.
Fiefdoms- just about every town in NJ has it’s own Chief of Police, Superintendent, Director of Public Works, Chief Sit and Do Nothing Officer. Take a walk into your local borough hall one day and watch all of the people that “work” for the town and are playing solitaire on their computer. Also, I don’t know the facts, but I know it’s been mentioned here before, NJ is at the top for the # of public sector jobs in the country.
Pension Plans- Our pension plans for public sector workers is absurd and it’s out of control. I think pension plans are fine, but working for 30 years to get another 30 years at 85% salary and full benefits does not make sense.
(11) “There was no market for these units.”
They could have titled the story “Reserve Not Met” and been done with it…
Robert Troll Says:
“The people who NEED to sell are mainly confined to the poor neighborhoods.”
Donald in diapers, do only poor people divorce, get laid off and relocate because of new jobs?
i was talking to a police officer in
a very upscale Bergen town.
Said he was very worried about the
gang activity.
he was on a stake out the other night
of a major supermarket that was to be
robbed. gang members from teaneck,passaic
Troll (33)-
Your disconnect from reality is stunning.
pesche: what town, or what general area in BC if you don’t want to be specific?
PMI Mortgage Insurance Co., the U.S. subsidiary of The PMI Group, Inc. (NYSE: PMI), today released its Summer 2007 U.S. Market Risk Index(SM), which ranks the nation’s 50 largest metropolitan statistical areas (MSAs) according to the likelihood that home prices will be lower in two years. For the 50 largest MSAs, the average score, weighted by population, was 346, translating into a 34.6 percent chance that prices will be lower in two years.
News release
http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-newsArticle&ID=1017129&highlight=
Report
http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-Publications
Wow, the Troll really is clueless.
Dude, why don’t you go to an open house? When you tell a realtor that you wouldn’t pay nearly this much for the house, and they say, ‘make an offer, any offer,’ you let me know who needs to sell. Realtors have told me this over the phone.
Hell, what about that ad in the Bergen REcord that said VULTURES WELCOME?
I know you want to sell your house and you want to pray the market isn’t going in the tank … but you got no idea, man
The has been about 6 months behind the housing bubble. When we were at the peak in 2005 and things began to go south in 2006, the media was still pumping up front page articles about how things were rosy. Now, they’re probably 6 months behind how bad things really are.
I’m surprised reporters from the Ledger/Record aren’t reading this blog and staying ahead of the curve …
Northern Bergen County
Anybody here following Englewood Cliffs area? The prices there don’t seem to be moving all that much, and many people are still snatching up 80×100 houses for 900k range. I would say an equivalent house in Cresskill would only go for $650k, so there is a huge premium in Englewood Cliffs for their low taxes. Whether that kind of premium is justified, I don’t know. I just don’t see people lowering their prices in Englewood Cliffs in the past 5 months. It seems like they’re not anxious to sell their houses.
Re Velocity: The reality in Hoboken is that 1BR/1BA are selling because 2BR/2BA are overpriced. 1BR/1BA are now going for what 2BR/2BA were going for back in 2002-2003, around 400K. Buyer’s who would have gone 2BD back then are going 1BR now because they can’t afford the 2 BD’s at these ridiculous $650K asking prices when they no longer getting 5 yr arms at 4.50%. That market is going to collapse as that 2BD/2BA inventory keeps building.
What other BC towns have low taxes besides Paramus and south Bergen towns?
55 – Montvale is the first one that comes to mind.
FLASH: Used home sales fall yet again – supposedly down 10% vs last year, dead wood inventory at 9 months, prices fall yet again
Sales down, inventory up, prices down.
Any questions?
http://housingpanic.blogspot.com/
Oh, you’ll see the lazy MSM report the NAR’s “down 0.3%” as their headline number. Why? Because sales in May at an annual rate vs. April’s annual rate fell by that amount. When we all know the only real number to look at is May 2007 vs. May 2006. But that would be to tough for the MSM to do. It’s much easier to take the NAR’s spin and report it as the news.
And remember, this NAR number (to be trusted like Enron) doesn’t include rampant incentives and cash-back, and is a 40% sampling of MLS sales.
Sales of previously owned homes in the U.S. fell in May to the lowest in almost four years, reinforcing concerns about a protracted housing slump.
The supply of homes for sale increased 5 percent to 4.43 million. At the current sales pace, that represented 8.9 months’ worth, the highest since June 1992 and up from 8.4 months’ worth at the end of the prior month.
The median price of an existing home fell 2.1 percent last month from a year ago to $223,700, the 10th consecutive month of year-over-year declines, the Realtors group said.
Housing accounts for about 23 percent of the U.S. economy, when taking into account purchases of furniture, appliances and items for new homes.
HEHEHE Says:
June 25th, 2007 at 11:22 am
HEHEHE: I know a guy who teaches real estate courses at NYU. I bumped into him a few days ago. He mentioned in passing that the Toll didn’t drive the piles in the Maxwell Place building deep enough. As a result, certain sections of the building are sinking. This comment is unsubstantiated, but still, what a random thing to mention to me. If true, what a massive clusterf–
#55 tbw Mahwah, Park Ridge
#53 ML Some places its happening faster than other, just be patient.
This issue has been getting quite a bit of press time..
From CNN/Money:
Putting the card before the house
In another symptom of the subprime mortgage meltdown, stressed-out borrowers may be taking care of their credit card bills before making their mortgage payments.
According to a report from consumer credit reporting agency Experian, borrowers with credit scores of 620 or below are 30 days late more often with mortgage payments than with payments on bank-card debt.
Josh Rosner, managing director at financial research firm Graham Fisher & Co., said the data “highlights the level of distress among subprime borrowers and how close they are to the precipice. They need credit cards to make daily purchases, which takes priority over monthly payments like the mortgage.”
Linda Haran, director of product management and strategy for Experian’s Decision Sciences division, said the data marks a departure from how subprime borrowers acted in the past, when their first priority was to keep mortgage payments current.
The survey noted that historically, consumers have prioritized mortgage debt over credit card debt as they “traditionally view their home as their most valuable asset which should be protected at all costs.”
But the current housing slump, in a very fundamental way, has changed the math that governs the way subprime borrowers deal with debt.
Part of it, according to Doug Duncan, chief economist of the Mortgage Bankers Association, is that people have different attitudes about spending. “The real issue is lifestyle,” he said.
To maintain spending levels, homeowners, including many subprime borrowers, relied on the equity they built up in their homes. The last housing boom made many homeowners wealthier by building up home equity.
But you can’t spend home equity – not until you convert it to cash – which can be done through cash-back refinancings and home equity loans. Many subprime borrowers joined other homeowners in tapping the value of their property through these products, which increased their debt.
When home prices stopped growing, this fragile balancing act collapsed for many subprime borrowers. With their equity tapped out, they found themselves owing more on their mortgage than the home was worth. Their ability to borrow any more cash was gone.
Duncan said that these subprime borrowers with “little skin in the game,” have little or nothing to lose if their lenders foreclose on their homes.
Re 58: You have to ask yourself what experience TB, the McMansion builder, has to begin with in building high rise waterfront properties.
Historically those who sell one year after the peak still come out better than seller who hold on to see if they can do better. And buyers who jump in a year after the peak end up trying to catch a falling knife and get burned. We are only ten months into the real fall. I am writing off spring 2008 already and may test the waters in January 2009 either on a buy and hold personal property or a rental with a positive cash flow. Why that lady would want to move and buy in NJ is beyond me. The houses that are 30 miles plus from NYC where the extreme commuters with high NYC salaries live in cause they were priced out of Bergen will have no new high income buyers very soon and the one million dollar homes in a town where residents make 50K will soon collaspe!!!
#63 I certainly would not write off Spring 08. I think the housing landscape will be radically altered by then.
3b #64,
Sure, the $780,000 POS Center Hall will be bought by some genius for a bargain price of $740,000. :)
#65 gary. No. It will bw a lot less than that. With all due respect, you need to ease up and be patient.
Much as you may think you do not see it, the market form this time last year to now, has changed radically. (psychology etc.)
Oh, you’ll see the lazy MSM report the NAR’s “down 0.3%” as their headline number. Why? Because sales in May at an annual rate vs. April’s annual rate fell by that amount. When we all know the only real number to look at is May 2007 vs. May 2006.
… Don’t forget, May 2006 wasn’t such a hot month for sales either. By May 06, we were already into the slump. Compared with the peak (i.e. May 2005), sales are off by 16%, Inventory is up by 74% and “months supply” of inventory is up by 107%.
3b,
Got Valium? I’m still holding but geez, I’ll be freakin’ 70 before I make a move. lol.
yea but in May 2006 sales were way down and houses were taking longer to sell but sellers were eventually able to find idiots to buy their slightly reduced overpriced home. Now McMansions knock 100K off asking priced and the realtor has to eat all the chocalate chip cookies herself.
For example, yesterday I got invited to a nice BBQ up in Harission NY, very tony neighborhood, Joe Torre, Mariano Rivaro and many CEOs live there. On a nice sunny day I saw several open houses on typical nice 4/5 bedroom two car houses and there was zero buyers at the open houses. A neighbor down the street had the open house so I could see the lack of traffic. The owner of the house I visited bought in 2003 and couldn’t even have his wife see the house as he had to sign the binder on the house on the spot or lose it as that is how quick houses went. 2007 is sooooooo different than 2003.
26,34,36…The Newsweek article does not mean that NJ lacks good schools! It is just listing what THEY think are good schools…based on AP scores, etc.
Statistically, Texas and Florida have way more people than we do. they should have more schools listed.
Also, those 2 states employ magnet schools that only admit high academic students, where we tend to not to do the magnet schools (yes I know there are some…)
But this can skew the figures a bit!
jmo
Dude, why don’t you go to an open house? When you tell a realtor that you wouldn’t pay nearly this much for the house, and they say, ‘make an offer, any offer,’ you let me know who needs to sell. Realtors have told me this over the phone.
Dude, why don’t you go to an open house? When you tell a realtor that you wouldn’t pay nearly this much for the house, and they say, ‘make an offer, any offer,’ you let me know who needs to sell. Realtors have told me this over the phone.
I can remember going to a few open houses a year ago and telling the realtor® that the “house was a little out of our range”. The would generally turn up their nose at me and either:
1) Advise me that “I had better get in now before interest rates go up, because prices in West Faux Haughtyville aren’t going down”.
2) Simply tell me that West Faux Haughtyville may not be for us.
Now I tend to get “please make an offer…any offer…you never know…just make an …don’t like this house?…please le me tell you about my other listings”
From Reuters:
ABX subprime mortgage index falls to new low
The benchmark subprime mortgage ABX index fell to new lows on Monday, after June remittance reports showed delinquencies on outstanding pools of subprime mortgage loans were rising, market sources said.
“So far the latest reports show that delinquencies are looking worse so the ABX index is selling off,” said one home equity ABS analyst. “Reports are still being sorted through,” he said.
The ABX 07-1 “BBB-” series, which is tied to loans made in last year’s second half, sank two points to 55.94 from 57.95 at Friday’s close, market sources said.
“The reports look terrible. The tone is very poor in the latest performance data,” said one investor.
Remittance reports provide a snapshot of the performance of outstanding subprime mortgage loans over the last 30 days.
May’s data showed generally weak performance in outstanding subprime mortgage loans underlying the ABX index series. Delinquencies of 60-days or more, in loans underlying the ABX 07-1 index, averaged 8.40 percent, an increase of 164 basis points, according to JP Morgan Securities.
BTW speaking of schools…
http://www.youtube.com/watch?v=pfRUMmTs0ZA
Just think of that when you ponder life in a $15-16k per student area that’s under the high heel of the UFT and all the rest of the eduklatura..
From CNBC:
Home Sales Data: The Number The Pundits Will Miss
Existing home sales in May were essentially flat, down just 0.3% from April and down 10.3% from a year ago. Prices also continue to drop for the tenth straight month, down 2.1% and inventories continue to rise, now to an 8.9-month supply. A pretty bland housing report all in all, except for a strange new number slipped into the middle of the report by that crafty NAR Senior Economist, Lawrence Yun. This mention, to me at least, is the real nugget that the 94 talking heads we’ll see on TV today will inevitably miss.
Household Formation. What’s that? It’s first time homebuyers. Whether it’s young professionals, new families, or new investors, none of these people, well, a lot less than usual, are jumping into the market. Household formation is down 70% (!) in the first quarter of this year from last year. On an annualized basis, it’s less than 500,000, which Yun calls, “rare.” You only see that in a real economic recession.
So the BUYERS are in trouble, eh troll??
Let’s put it this way……..
1. wages down, housing stagnant, prices lousy.
2. all of a sudden, people who couldn’t borrow salt off a wet pretzel can get a loan for 300K on 12K/yr income.
3. BOOM! prices go through the roof everywhere.
4. dust settles, and all the ARMs are resetting everywhere, not just newark and bed stuy. if you bought on the “up” you’re screwed.
5. now that the shit has hit the fan, nobody with a brain is buying anything, ’cause it’s all at least 50% overpriced.
6. see you at the bottom.
“Household formation is down 70% (!) in the first quarter of this year from last year”
[75],
Clot has been telling us this for months. Without the 1st time buyers, the chain is busted. Who’s left to buy? Only the vultures?
Interesting about NJ, it is an entire state and they don’t have one single top 100 public school in the entire state yet Long Island (just Nassau Coounty)has five public schools in the top 51 schools. Considering the sky high taxes for schools in NJ you would think they would have scored better. I know this list does not mean the school is better, but if this is how schools are graded you would think NJ would play the game and make the list.
34 Jericho Jericho N.Y.
41 Great Neck South Great Neck N.Y.
43 South Side * Rockville Centre N.Y. 4.433 49 John Miller-Great Neck North Great Neck
51 Cold Spring Harbor Cold Spring Harbor N.Y.
6,34,36…The Newsweek article does not mean that NJ lacks good schools! It is just listing what THEY think are good schools…based on AP scores, etc.
Statistically, Texas and Florida have way more people than we do. they should have more schools listed.
#77 BC Bob: Related to what i was saying last week, you can argue that inventory may not even “matter”,as there are no buyers.
HEHEHE
Did you see the one bed room open house in our bldg this weekend for $479k? Don’t know if its the same one that canceled the open house at $489k. This one is on the second floor. Different broker any way
We are nowhere near a situation where we have “no buyers”.
jb
#68 You will be fine, in the menatime, enjoy your summer.
Big table out on Lower Broadway today, with banner and balloons, and young ladies passing out flyers for luxury ocean fornt condos in Far Rockaway.
Prices slashed (459k to 439K), low taxes, low maintenance, and 15k cash back at closing.
Re the Velocity Auction, 9 units. I looked at my list and the were 8 one bedrooms (soem with “dens”. Detail are scarce except for the fluff piece posted here. I’m guessing based on this they only sold one 2br. Based on what the paper said I’m estimating that the 1 br went for about $435psf and the 2 br for $465psf base on rough averages of the units. That still better than the opening bid price.
So some hand holding is needed for the 2 brs. Quick some one call Suzanne to do the “research” and get to work.
http://www.slate.com/id/2139572/
http://housingpanic.blogspot.com/ (go down about four or five items)
Even if things went according to plan they stil would of had 60 units to unload, now they have 91. Wonder who is going to pay all that maintenance that they probably low balled?
381 JB: I did not mean literally no buyers as in zero none, but not enough buyers to purchase all the inventory that is available at the asking prices that sellers would like to recieve.
#55- Saddle River, Franklin Lakes
#81 JB
I agree. We will never be at the point where there are “no buyers”. For every house on the market today there is a buyer at the right price.
Lower your prices untill the byers emerge or take your houses off the market and let the market correct itself. I believe that’s it’s the sellers who do not need to sell that raise the expectations for all the rest of sellers and confuse buyers. It’s a nightmare for the impatient buyer who lacks discpline.
MM
#55 – I think they’ve all been covered, towns with a lot of high-end homes and no apartment buildings and maybe some industrial parks. Since Englewood Cliffs sends to the Englewood public high school, most the residents pay for private school. Effectively, the taxpayers don’t pay for high school.
For fun, can we name all the high property tax towns in Bergen County? I’ll start with Hackensack, Teaneck, Bergenfield, Englewood..
#87 MM: True: If the sellers who does not need to sell puts his house on at a ridiculous price, it gives ammunition to other sellers, whose asking prices are over inflated, but still less than this new listing.
It slows the correction process down. I would think that the better realtors out there would do their best to discourage this.
Re: rankings
It doesn’t use AP scores to devise the rankings – just the number of AP, Int. Baccalaureate and/or Cambridge tests divided by the number of graduating seniors.
So you don’t even know what these kids scored (or how many even passed for that matter). They discuss their reasons, but I think that this system has a very limited value. Unless you are trying to sell magazines with catchy headlines to anxious parents.
Joel Naroff: May take another year for housing recovery
The number of unsold homes sitting on the market has hit its highest level in 15 years. And because of that inventory the housing market may not fully recover until next spring or summer. So says Joel Naroff, chief economist at Commerce Bank. He tells John Wordock the market is still in what he calls the “sellers’ denial phase.”
“We had more traffic in one month than we could have gotten in two years,” he said.
Is it me or is the Velocity guy acknowledging the market is dead?
I have no idea if these numbers are connected to reality, but suppose
every fifth person who looked at Velocity leading up to the auction registered and showed up for it, and fewer than 1 in 20 of those actually bought one, what does that tell you?
Also, what does it say when they announce they will auction 40, cut it to 16, then cut to 9?
If you’re Robert (Duck) Troll, it probably says they sold all the other units before the auction.
If you’ve got a brain in your head and are remotely aware of what is going on in housing, it says they realized they couldn’t possibly sell 40, were clinging to the notion that they could sell 16, and were confronted with the reality that they could sell 9.
If I remember correctly weren’t the 1BRs originally priced at $450k? Based on the auction that price has been trimmed by $80K.
Also, it’s worth wondering about the nine purchasers, if a couple of those deals fall through, a very bad market suddenly looks even worse.
For fun, can we name all the high property tax towns in Bergen County? I’ll start with Hackensack, Teaneck, Bergenfield, Englewood..
Glen Rock seems to have some incredibly high tax rate.
FYI – It does not matter what the kids scored on the test. The indicator of success they are measuring is how heavy their workload is in high school. High Schools with a challenging and difficult course load send students off to college better prepared to deal with the additional demands of college. So it is not about the test results it is about the journey.
t c m Says:
June 25th, 2007 at 1:28 pm
Re: rankings
It doesn’t use AP scores to devise the rankings – just the number of AP, Int. Baccalaureate and/or Cambridge tests divided by the number of graduating seniors.
So you don’t even know what these kids scored (or how many even passed for that matter). They discuss their reasons, but I think that this system has a very limited value. Unless you are trying to sell magazines with catchy headlines to anxious parents.
OK, I found the article from the previous Sunday about this auction.
http://tinyurl.com/24k5oj
Here’s a quote:
The auction, he says, is a way to move a lot of units quickly at the two-building, 128-unit Velocity project, after construction delays slowed earlier marketing efforts.
In what version of reality is 9 considered a lot when the original plan was to sell 40?
I can see how Glen Rock can have high taxes – the schools there are great (at least according to the NJ Monthly school rankings).
I will offer my faux sellers service at a fee to anyone who wishes. I will stage pretend open houses for 100K more than your house on your block while you have your open house to drive interest!!!! In realty the only way you are getting near asking is if you have a hot wife and you throw her in for free to the new owner to do what ryhmes with two cities in China.
#95 And yet they ran nowhere in the Newsweek list, its all relative.
“hobokenrenter Says:
June 25th, 2007 at 1:09 pm
HEHEHE
Did you see the one bed room open house in our bldg this weekend for $479k? Don’t know if its the same one that canceled the open house at $489k. This one is on the second floor. Different broker any way”
Yeah I saw it, found it pretty funny. Even more so when my neighbor on the 4th floor is selling his own one bedroom on his own and listing it for $20K less and having his Open House the same day as that realtor:) I wanted to go over to his place and share a good chuckle with him on that one:)
My cousin bought a house on staten island(in contract)this past weekend. OLP was 659K
lowered to $629K sold for $585K.
He is convinced he got a bargain. It’s a 2 Family high ranch and he get’s $950 from the rental.
Including the rental income he will devote 60% of his income to mortage+taxes and insurance.
He’s soooooo happy. I thought about cautioning him and then I said “Good Luck”
Should anyone try to talk sense to their family right before the go into contract?
“Including the rental income he will devote 60% of his income to mortage+taxes and insurance.”
Make,
Not only should you try to talk sense to him, you might want to hit him over the head with a tire iron.
HEHEHE #99
Do either of them know that the 1 BR on the third floor sold for $429k per the tax records?
99 – Just a question .. what does this couple make a year? If you’re buying a $585k house, i hope your combined income is at least $300k. Otherwise, that’s just crazy.
$850,000 cape cod across the street from me (no garage).
two weeks; two open houses; zero lookers.
Back in the 1990s I used to pay ten times annual rent roll. So lets say combined 2k monthly rental income the place is worth at most 250K.
make money Says:
June 25th, 2007 at 1:49 pm
My cousin bought a house on staten island(in contract)this past weekend. OLP was 659K
lowered to $629K sold for $585K.
He is convinced he got a bargain. It’s a 2 Family high ranch and he get’s $950 from the rental.
#93 John –
john Says:
June 25th, 2007 at 1:40 pm
“FYI – It does not matter what the kids scored on the test. The indicator of success they are measuring is how heavy their workload is in high school.”
They say they are measuring HOW MANY kids took the tests – then jump to the conclusion that the workload is higher for these kids than for kids in other schools or other classes. May be true – but maybe not. The other classes in good schools may also be rigorous. Also, if you have 30 kids take the test and half fail and half get 3, that school ranks higher than a school that has 15 kids take the test and get 5. You may believe that the first school does offer a higher quality education, but you can also make a very good argument that it does not.
I definitely see the merit in encouraging kids to take AP classes, but I think the headline is misleading.
MM: Lets see if he gets approved for the mortgage big change from the last year, when even the most marginal of buyers were approved.(Althogh at 60% of income, I would say that is not marginal, but rather insane!)
As far as family, that can be treacherous. My advice is to give your advice,and then be quiet.
You can say quietly to yourself (when it all unravels) I told you so.
Household formation? I thought formations were strictly related to stalagmites. Low interest rates were the drip that led to housing affordability for the first-timers aka stalagmites.
Having been on this blog more than a year, I can see a bunch of us as the contrarian view. We were ahead of the curve when this bubble start leaking. The MSM media caught on 6 months too late and they are going to beat this RE market to a death over the next couple of years. RE psychology is turning for the worse, but it’s only just begun.
Wait till they start flogging the dead horse. When you see TIME magazine cover saying that RE is a money pit and the worst investment ever, it will be time to dip your toes in. Anything in between will be akin to catching a falling knife. I am not advocating timing real estate purchases with the bottom. But purchasing amidst seriously deteriorating fundamentals is asking for a spanking to your bottomline.
From MarketWatch:
Accounting for bad lenders
A battle is brewing over a plan to create a national registry that would license mortgage brokers and suspend those found guilty of predatory tactics and other wrongdoing.
On one side is the Conference of State Bank Supervisors, which is working with state mortgage regulators to develop a uniform licensing application for use by all states starting in January. Eventually, the nationwide system would prevent miscreants from moving from place to place.
On the other side is the National Association of Mortgage Brokers, which says the CSBS model is defective because it singles out loan brokers who originate loans but don’t actually fund them.
Since there are rotten apples in every origination channel, the NAMB is backing the creation of a federal registry, one run by the Federal Trade Commission, the Federal Reserve or some other agency that would flag the con artists wherever they are so they can never work in the mortgage business again.
“There is no reason to regulate just mortgage brokers” new NAMB President George Hanzimanolis said at the group’s annual convention here this weekend. “If a bad broker is found out, he can just go to work for a mortgage banker.”
CSBS’s plan is well underway. It has been working with the American Association of Residential Mortgage Regulators for the past two years to develop a uniform licensing application.
With the CSBS registry, participating states will accept a standardized and centralized licensing exam, making it less expensive for lenders who operate in multiple jurisdictions.In that originators would be given a permanent license number, the registry also will be used to track unscrupulous brokers who tend to move to other places when they are carded for bad deeds in one place, apply for a new license and set out their shingles somewhere else.
Under NAMB’s alternative proposal, every originator no matter who he or she works for would pay a fee to be in the registry.
The money would be used to cover operational costs, create funds earmarked for state enforcement of mortgage laws and assist in on-going consumer financial-literacy programs.
Wait is he getting paid or paying to live in SI. If he is paying to live in a SI two family where a clean guinni tee is considered dressing up he is nuts.
From Bloomberg:
Bear May Have to Save Second Hedge Fund, Merrill Says
Bear Stearns Cos. may have to salvage the second of its two teetering hedge funds after offering $3.2 billion last week to bail out the first one, Merrill Lynch & Co. analyst Guy Moszkowski said.
Investors “can’t rule out” the chance that Bear Stearns will “stump up even more for a similar, more-leveraged, fund,” Moszkowski, who rates the firm a “buy,” wrote in a note to clients today. He estimated that the second fund, the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund, owes about $7 billion to its financiers.
Bear Stearns, the biggest broker to hedge funds, is struggling to keep the funds from collapsing after losses on securities backed by home loans led lenders including Merrill Lynch to demand more collateral. By assuming the loans, New York- based Bear Stearns is protecting the funds’ investors while increasing the risk to the firm itself, according to Moszkowski.
“In its two decades as a public company, we do not believe Bear Stearns has faced a situation of this magnitude,” Moszkowski wrote.
From Reuters:
Goldman-issued subprime bonds lead downgrades
Goldman Sachs Group Inc. subprime mortgage bonds issued last year are being downgraded by rating companies at the fastest rate of any issuer, according to Citigroup Inc. research dated June 22.
Nearly 70 of Goldman’s GSAMP-issued bonds, which include subprime loans from a variety of lenders, have been downgraded by Standard & Poor’s and Moody’s Investors Service in the year through June 15, with 60 of those issued in 2006, analysts at Citigroup Global Markets said in a weekly note.
Grim (75)-
No more plankton.
Regarding giving advice about real estate…to me this is so hard. I am sooooooooo sick of hearing from everyone I know that the market is going up. TONS of people seriously think this. My stepfather, a friend, and an aunt to name three that have made this claim in the last two weeks.
I try to just blow the comment off and change the subject when talking with people who are just trying to force me into homeownership. But when my friend who is causally looking herself tells me that NYC is not NJ and prices are going up, that’s different. I can’t just sit back and watch this young girl make a huge mistake. She’ll regret it for years to come. And she is simply wrong about prices in NYC but she is convinced otherwise. It’s hard to have a conversation with people who have their heads in the sand.
What do you all do when something like this comes up?
On a funny side note, at a work event a few weeks ago, I was talking about how I’ll be waiting until the fall of ’08 to buy. A stranger overheard and said what I always do. “I think prices will fall too. 20-30% if history repeats itself.” We gave eachother a knowing smile. In my mind I thought “BC Bob, is that you?”
Up 5.8% in the Northeast though.
That’s all that should matter as far as this blog is concerned.
113 – a few weeks ago i posted something about a friend of mine who was looking to buy in NYC. I cant remember what my question/point was. anyway, I have given up on trying to give her advice (though she called last week to ask my opinion on I/Os). When she first mentioned buying i told her she should do her research because RE isn’t doing so well these days – her response was “this isn’t new jersey, NYC is very different and this apt is in an up and coming area” im guessing this is based on what the agent told her, but i have no idea. you can’t expect everyone to make the same decisions you would. not everyone spends their lunch reading financial news and blogs such as this one.
Up 5.8% in the Northeast though.
That’s all that should matter as far as this blog is concerned.
Per NJMLS down 1% in Bergen County.
And just WAIT until you see the numbers for June.
Right now, with 6 days left it is down about 33% compared to 2006 (which was down 23% compared to 2005)!
Up 5.8% in the Northeast though.
That’s all that should matter as far as this blog is concerned.
Karen,
Northeast is down 3.5% versus last May (SAAR), unadjusted May sales are down 2.9% over the same period.
No matter how you want to slice and dice, May sales in the Northeast are worse than last year.
jb
As far as the 5.8% jump on a month over month basis, also realize that the Northeast saw an 8.8% decline last month. Volatility is typically very high on a month over month basis.
jb
Why try to draw some kind of inference based on the EHS numbers? We’ve got MLS data (as Rich posted above).
GSMLS sales data for May:
https://njrereport.com/index.php/2007/06/10/north-jersey-may-residential-sales
every ghetto is “up and coming” if you listen to realtors and the NY Times
“hobokenrenter Says:
June 25th, 2007 at 1:56 pm
HEHEHE #99
Do either of them know that the 1 BR on the third floor sold for $429k per the tax records?”
They probably both know but hoping a buyer won’t:) Which one sold on the third floor? Do you know what they were asking? I know most of the intial one bedroom sales in 2005 were around 365k.
I’m going to be buying a condo in westchester for my empty nest parents soon and I’m finding that “up and coming” means “still” crappy.
Way to go BX..
jb
This could get ugly….
Bear’s Big Loss Arouses SEC Interest
Bear Stearns may have a lot of explaining to do about a big restatement of losses at one of its troubled hedge funds—and not just to its investors. BusinessWeek has learned that the Securities & Exchange Commission recently opened a preliminary inquiry into the near-collapse of Bear Stearns’ High-Grade Structured Credit Strategies Enhanced Leveraged Fund.
http://www.businessweek.com/investor/content/jun2007/pi20070625_673995.htm
skep-tic #105:
$850,000 cape cod across the street from me (no garage).
two weeks; two open houses; zero lookers.
wow. what town????
10y down at 5.078%.
jb
Karen Says:
Up 5.8% in the Northeast though.
That’s all that should matter as far as this blog is concerned.
Karen,
April versus May; In the Northeast there is a big difference in weather between those months. May is always a “peak” month.
Sales versus last May were lower versus both 2006 and 2005.
Saying sales rose is May versus April is like saying July had more beach days compared with March.
Did anybody happen to see a program on NBC y’day after WSJR with Bartiromo? It was called Open House NYC. Is it me or is every channel having some kind of program like this.
10y down at 5.078%.
Looks like a flight to quality
Treasuries Rise as Investors Move Away From High-Risk Assets
http://www.bloomberg.com/apps/news?pid=20601087&sid=akPdlY5YZ0K4&refer=home
JB –
could you please post what site you get real time data on the 10y from?
thanks!
U.S. Treasury Yield Curve
http://www.marketwatch.com/tools/pftools/default.asp?siteid=mktw
HEHEHE 124
When I moved in around June 1 of 2006, he just had a for sale sing in the window (its the unit right by the elevator, 850 to 900sf). After a while when it didn’t sell itself, He got a broker and listed for $489k, then $469k and then sold, saw the tax records for $429k (don’t quote me) did see that the previous owner got in for the high 3’s minus commissions and cost of carry, he made a little bit
please see my post #85, it was held for moderation for a while, but the Suzanne NAR ad is the funniest/scariest thing I’ve seen in a while
“It’s a nightmare for the impatient buyer who lacks discpline.”
That’s the idea of the RE game. It is the seller’s goal to make the buyer’s experience as difficult as possible so that they stop waiting and buy already.
…or stop bothering to try to buy…
Sorry, off topic.
Wanted to rent for less than a year (actually until we find the house we want). Our agent show us one townhouse with 1.5 month security deposit and 1 month advance. We told our agent that we might have to move out in several months, and ask if we could just pay 3 months penalty instead of the whole year. He told us that the owner would just take the security deposit and the 1 month advance and we are free to go. I really don’t think this is true. Please advice. What can I can if I have to move out after 3 months? Can I just rent it to other person? Or I have to pay to the rest of the contact.
Thank you.
007
“It is the seller’s goal to make the buyer’s experience as difficult as possible so that they stop waiting and buy already”
You really weren’t kidding when you said you never owned a stock.
Yikes, stay away from any area that is advertised as “up and coming.” That is the biggest con game in real estate. It seems that every ghetto these days is “up and coming.”
The low tax towns are Englewood Cliffs, Franklin Lakes, and Saddle River. The BEST low tax town is Alpine.
Re 85 Hobokenrenter,
I did not find it on the link but was able to see it via YouTube. Excellent. That wife is like a little kid acting like “but mommy said I could” when she busts out with that “but Susan researched it” line. Unbelievable.
007 (137):
This page should help you out.
http://www.lsnjlaw.org/english/placeilive/irentmyhome/tenantsrights/chapterfive/index.cfm
007 (138)-
Before he could come after you legally, the landlord must first attempt to mitigate his loss on any broken lease. If it’s a nice place, that landlord can usually find another tenant. Practically speaking, even if the landlord incurs loss due to vacancy while he re-rents the place, it probably wouldn’t be worth it for him to come after you legally.
It would be nice if you were to sublet the unit for any unused length of your own tenancy…however, you’d have to disclose your intention to possibly sublet in advance of signing your lease, in order to establish your right to pursue subletting. Your interest in obtaining this right would, of course, tip off the landlord as to your eventual intent.
In the court of karma, however, breaking a lease is a sleazy thing to do. People who do it have usually made a conscious decision to falsely misrepresent their intentions and skip out on an obligation that they know will cause someone else a financial loss.
There are plenty of suite hotels and short-term rentals out there. Why not go that route?
“Robert “Donald” Troll, f*ck you. No, seriously. With a splintered ax handle. I don’t know what your game is, but just stop it before you or someone else gets hurt.
I live in Leonia and can say without qualification that the taxes are, considering lot size and comparable improvements, a good deal lower than those in FOUR of the adjacent communities–Pal Park, Ft Lee, Englewood (duh!), and Teaneck.”
My goodness, you need to calm down. I lived in Leonia, in case you don’t know. The taxes on the run down cape (FYI: the home was beyond repair, it needed to be torn down) we were renting were $7,500 back in 2002. Go to Alpine and the taxes on a semi-new McMansion are $6,500 today! I know what I am talking about. I did my comparison shopping.
RentinginNJ Says: (-132)
June 25th, 2007 at 3:18 pm
Well, here it is!
It has commenced, let see where it will take us… It was only fair for Merrill Lynch to begin it by kicking Bear Stearns teeth in.
I hope you are sitting on a pile of Gold, Silver and Printed Cash.
It will be good pickings for those whom are liquid after all is said and done.
-Sapiens
Why not eliminate the federal reserve. You gotta love this republican from Texas.
http://www.govtrack.us/congress/billtext.xpd?bill=h110-2755
Well, just checked the taxes on the home I was renting in Leonia and Zillow has them at $8,458. What a rip off! In Fort Lee, those are the taxes you pay on a completely renovated older home. No wonder there are so few new homes in Leonia. Few builders venture there because nobody is going to buy a McMansion with $25k taxes when they can go to Fort Lee and pay half.
Troll … where’d you check these tax numbers?
(147) Ron Paul has been a proponent of hard money for a long time. I’m sure this is not the first time he has submitted that bill (or one very similar).
Make [147],
Since the fed reserve was created the dollar has lost 95% of its value.
#151
Source.
Credit Triggers
“Experian selling your credit history to collection agencies.”
“Applying for a mortgage? Refinancing? Well, your info is also being sold on a real time basis without your approval. Those are sold as “mortgage triggers”.”
http://www.dailykos.com/storyonly/2007/6/24/7591/57004
007
Another suggestion for how you could get a short-term rental where it wouldn’t be a hassle to break the lease if you wanted to leave early –
When builders buy houses as tear-downs, typically, it takes a year to get the approvals. So they rent the houses short-term to keep them occupied in the interim.
I know of a builder who bought a house out of foreclosure about two months ago, and wants to rent it out. An older house, but doesn’t look bad from the outside – nice woodsy area. I don’t know what kind of rent he’s looking for, but if you want to pursue it, send an email to grim and I’ll send you the name of the company.
A builder wouldn’t care if you left early since they’re not in the landlord business –
whatever they get from a rental is just a little gravy.
JB,
Did you get Otteau’s newsletter? That will probaly tommorows topic.
SALES REBOUND IN MAY BUT STILL LAG LAST YEAR
—The New Jersey housing market has been stalled for several months now following increasing sales earlier in the year. That this is occurring in the face of low mortgage interest rates, a reduction in home prices, increasing worker salary and fewer new home construction starts is evidence that the current slowdown is deeply embedded and not likely to reverse soon—
Troll: There are (practically) no new homes in Leonia because there is nowhere to build, and town ordinances have incredibly harsh strictures against tear-downs (to prevent Leonia from becoming another Ft. Lee or Pal Park). One putz thought he’d get cute and demolish his home “accidentally on purpose.” He wasn’t able to get a building permit for the site for nearly two years–the boro tied up all permit applications with a lengthy investigation; the owner sued and got tied up in court. Only after he scaled back his plans by approx 700 sq ft of developed lot space did he get his permit.
A walk around the boro and a few quick calls to Boro Hall and the planning commission will corroborate my story.
So much of what you write hereabouts is utter bollocks. Why do you do it? And if you’re interested, I have an ax handle with your name on it. It says, “chump.”
Just had an interesting conversation with an nice agent.
This house looks nice: MLS 2348148
http://homes.realtor.com/search/listingdetail.aspx?ctid=67908&ml=3&mxp=29&bth=4&typ=1&sid=135c186ed0574b64a82d2e6680a4413d&lid=1072489637&lsn=7&srcnt=22#
The agent was up front – the house is vacant, they NEED to sell, and i said, ‘well i haven’t had a friend peek into the MLS to see what the house started at’ and she countered with, ‘they started it ridiculously high.’
She said they have an offer, but they are still showing the house (leads me to believe it’s a lowball). Wouldn’t say the offer (if link doesnt work, house is at 499k).
She said it was on sort of a main road (25 mph, but double solid yellow line on Westville Ave). I said that’s not ideal for us.
I then told her, ‘yeah, we’re probably going to wait until the winter, when things may begin to bottom out.’ She said, ‘well things are stabilizing now.’ And i said, ‘that flies in the face of all the slumping numbers.’
her: ‘mortgage rates look like they’ll remain steady.’
me: ‘but remember the slump in the 1990s? That lasted several years.’ She said, ‘well we’re close to NYC, and it didn’t hurt us as much as the rest of the country.’
Me: ‘Well we’ve looked at the graphs, and north jersey was hit almost just as hard. For a few years, it was hurting.’
She kind of laughed because she could tell she was dealing with an educated shopper, and not some schlub off the streets.
I finished with – ‘i’ll continue to keep tabs on it, but we most likely wouldn’t jump on this place until it gets around 400k.’ Her, ‘i dont think that’ll happen.’ Me: ‘Maybe not. We’ll see.’
Bloodbath,
Notice the last line in the ad?
Fantastic 9 room, 4 bedroom, 2 1/2 bath colonial offers: updated eak in kitchen, large formal dining room, living room, family room, laundry/mud room, 1/2 bath on first floor. 2nd foor: Master with full bath, 3 large bedrooms and second full bath.Pull down stairs to attic storage.Huge unfinished basement that offers unlimited potential!Convenient location, close to all schools, public transportation and shopping.Brand new 2 zone central air, FHA heat.!Large lot offers privacy.
**Best value in town for only $545,900**
Just got this in my email:
SALES REBOUND IN MAY BUT STILL LAG LAST YEAR
Contract-sales in New Jersey increased by 1,090 homes in May, a 14% increase, above the April level as the housing market continues to struggle with low buyer confidence and an increasing inventory of unsold homes. Despite the increase in May sales however, that was 6% less than May 2006. So far in 2007, year-to-date contract sales are running 4% lower than the same period last year which equates to 1,800 fewer home sales.
Compounding the lagging sales pace is that unsold inventory now exceeds 71,000 homes, the highest on record for New Jersey. The prior record was 68,000 reached in September 2006. Based upon seasonal housing patterns it is likely that unsold inventory will continue to increase for several more before receding later in the year. The present supply of 71,000 represents an 8-month supply as compared to a 7-months one year ago.
The New Jersey housing market has been stalled for several months now following increasing sales earlier in the year. That this is occurring in the face of low mortgage interest rates, a reduction in home prices, increasing worker salary and fewer new home construction starts is evidence that the current slowdown is deeply embedded and not likely to reverse soon. Part of the reason is that concerns about sub-prime mortgage delinquency are sending shock waves through the housing market by causing mortgage lenders to tighten loan approval standards and at the same time creating uncertainty in the mind of potential home buyers. As a result, many buyers are either unable to obtain affordable financing or have put their home-buying plans on hold out of concern about this issue. The facts however suggest that the ?bark is bigger than the bite? on this topic as actual foreclosures in New Jersey are few in number and have been steadily declining over the past several months. 270 in March, 162 in April, 147 in May. Even more compelling is to consider these figures within the context of 71,000 homes for sale and you can see that any real impact on the housing market to date is insignificant. The problem comes from the counting of foreclosure activity which has been dramatically overstated, casting a dark shadow over the housing market. Some relief on this issue will come later this month, largely as a result of criticisms in this newsletter, as counting methods will be revised to reflect more accurate figures (read more about this story at the following link – RealtyTrac to revise formula).
Any benefits of the recounting however will likely come too late to avoid a further decline in home prices as the housing market now faces the additional challenges of rising mortgage interest rates and the likelihood of a further slowing of sales pace during the approaching fall and winter selling seasons. As a result, any significant recovery will likely be pushed off until 2008 at the earliest. Given the current situation, home sellers should understand that Right-Pricing! will take on even greater significance in coming months. From the buyer?s perspective, rising mortgage rates and increasing seller flexibility will present significant opportunities during the 2nd half of the year that will likely disappear in 2008.
Otteau Valuation Group, Inc.
158 … ha, didn’t even see that
i usually just scroll through to make sure there’s central AC, 2 bathrooms or more, and a basement
i dont think we have any interest anymore because of the whole main street thing. when we have kids, i want them to be able to go in a yard where cars aren’t zipping past the house
Is there a site out there that tells you what someone paid for their home?
I Think [152],
Actually my 8 year old nephew. If you don’t believe him go to the inflation calcualtor;
http://stats.bls.gov/
Gonna buy a Toll Bros home? Once you’re under contract, they’ll have their professional stager stage your house for sale:
RISMEDIA, June 25, 2007:
Toll Brothers has spent the last 40 years staying in tune to the industry’s latest trends. To reflect the current buyer’s market, the Central Florida division has partnered with Morris & Kalm, Inc. (M & K) ofOrlando, Fla. to execute a selling technique for their Quick Delivery Homes: home staging. “It only took eight weeks from the time M & K arrived at our vacant Quick Delivery Home to the moment a contract was signed and the home was sold,” says Rick Mastrangelo, project manager of Chatham Place at Arbor Meadows, a townhome community in South Orlando. “Staging this home heavily increased traffic that ultimately ended in a sale.” M & K “stages” brand new Toll Brothers homes with furnishings and accessories that entice the senses of prospective buyers and helps them visualize the space relationship of furniture in a home.
Ultimately, the buyer envisions themselves living at the residence and calling it home. “Toll Brothers evaluates the industry and adjusts accordingly to meet the needs of the current home buyer,” says Greg Goldman, senior project manager of Woodland Terrace at Timber Springs, a townhome community inEast Orlando. “Home staging is a fantastic tool and M & K was the appropriate fit for this unique partnership because of its attention to detail and quality design aspects that align perfectly with Toll Brothers.” Goldman staged a Quick Delivery Home at Woodland Terrace at Timber Springs that resulted in the home being sold after only a few weeks.
Toll Brothers also offers prospective buyers who currently have a home on the market the opportunity to have their home staged. Home buyers who place a deposit on a new Toll Brothers home are given a consultation with M & K. When the home buyer signs a contract agreement, Toll Brothers pays for the staging of their home. “We believe in this partnership with M & K and extend the opportunity for home buyers to see the great results achieved from home staging,” says Goldman. “It’s another way Toll Brothers helps home buyers through the process of purchasing a new home.”
For more information, visit? http://www.QuickDeliveryHomes.com and TollBrothers.com.
104 – “If you’re buying a $585k house, i hope your combined income is at least $300k. Otherwise, that’s just crazy.”
If you put 20% down, you only have to finance $468K. A buyer making $187.2K would only have to borrow a reasonable 2.5 times his income to get a mortgage that size. So I don’t think “at least $300k” is the crazy-threshold for this house. Does anyone disagree?
AlexY,
I agree with you, a 300K income should be able to afford much more than a 585K house.
sorry I typed your name by accident
I agree with you, a 300K income should be able to afford much more than a 585K house.
AlexY-
If i am not mistaken, the traditional 2.5 rule applies to the total cost of the house (incl 20% dp) so an income of 234k is required if u want to follow the rule.
afe
Don’t usually follow the 2.5 rule … got more by the mortgage. Someone can run the numbers, but a $468k mortgage probably means you’re looking at $3,000 a month, right?
Then you add 2 cars, gasoline, and kids, nannies (or one parent staying at home) … and having 6 months living expenses ($25k) in the bank in case of job loss/emergency … maxing out 401k … contributing to mutual funds …
I don’t know. We’re trying to keep our mortgage closer to the $2200 mark. And that means the most we’ll spend on a house is 400 max. And our combined salary was in the neighborhood of 200k last year. Plus, haven’t you heard? A recession is coming!
Maybe we’re being too conservative.
I don’t know what property taxes are like on Staten Island, but I would guess he would pay a minimum of $400.
The calculation of housing expense traditionally (and officially, according to BLS data) also includes utility/maintenance/furnishing costs on your home with utilities being gas, electric, water, sewer, and I believe, telephone, but not internet service or cable tv.
Anyway, figuring conservatively (very conservatively based on what I’m paying for a 3br ranch in NJ), utilities/maintenance adds $500 to your housing costs.
Basically, those expenses are a wash with the tenant. That means the new homeowner has to pay roughly $3K per month, or $36K per year, for the mortgage.
If all those numbers work, he should be able to get away with household income as low as $120K, but that’s still way above median.
If those numbers are nudged up even a little, or the rental is not consistently filled, the salary needed heads north in a hurry.
AdLady,
This is my favorite site. Just adjust the homepage to reflect the county and town you are looking in:
http://tax1.co.monmouth.nj.us/cgi-bin/prc6.cgi?&ms_user=monm&passwd=data&srch_type=0&adv=0&out_type=0&district=0905
“And i said, ‘that flies in the face of all the slumping numbers.’”
The agent has a point. Home contracts are up 14%. Plus, homes in your price range sell relatively quickly if they are priced right. Buyers of upper end homes have the greatest advantage in this market. Those looking for starter homes, like yourself, do not have as much negotiating power as they think.
“Troll … where’d you check these tax numbers?”
Zillow
“Home contracts are up 14%.”
Compared to May 2006?
Leonia’s policy regarding new homes makes no sense. Newer homes attract wealthier residents and that equals more property tax revenue. It seems that the only way to build a new home in Leonia is if the old one burns down. If a town is full of old run down homes, people are going to avoid it, like myself. Realtors I worked with recommended Leonia, but I rejected the idea because I wanted newer construction. I rented a dump in Leonioa so I knew what older homes entailed…
Compared to May 2006?
I think he means New Home Starts in the Northeast, which were up 15.7% in May, but were still falling on a year over year basis (down 2.5% yoy). The jump in starts were due to multi unit starts (which include rental apartments). Single unit construction rose less than 1% on a month over month basis during that time.
jb
JB,
What do you do for a living?
Software architecture and project management.
jb
I guess we’ll just have to see about your theory in regards to ‘starter home seeks not having much negotiating power.’ The guy in Caldwell started his house probably in 545k range (at least per the old ad that was still on the realtor.com page) … and i think he just got a lowball offer.
He’s at 499k now, and I’d be interested to see how low it goes.
“project management”
oh no, your type gives me the red a_s.
he he….
just a joke.
SAS
Here is a good indicator of how low it will go, I live in a development from 1955/1957 so all the houses are the same. The newlyweds from the 1950’s original owners periodically have estate sales and since most are original it is a good benchmark. I can compare the renovated houses as viking stoves, blow-outs and pools make it tough, anyhow summer of 2005 they were getting 579k, last summer one hit the market for 529K and it took them till January 2007 to unload it at 500K, last week one hit the market for 450K. That is 130K less than the peak and these were the low priced original starter homes that never had the huge mcmansion run up. Today should be interesting. The Spec builders are still looking for 950K for teardown mcmansions but those estate sales for 450K with a 100k renovation will get you to 550k which is 450K less than the tear down, so who the heck is going to spend 950K?
FYI – New homes often attract white trash. They are rich white trash but still trashy that is why towns don’t want them. . contraRobert Troll Says:
June 25th, 2007 at 8:51 pm
Leonia’s policy regarding new homes makes no sense. Newer homes attract wealthier residents and that equals more property tax revenue. It seems that the only way to build a new home in Leonia is if the old one burns down. If a town is full of old run down homes, people are going to avoid it, like myself. Realtors I worked with recommended Leonia, but I rejected the idea because I wanted newer construction. I rented a dump in Leonioa so I knew what older homes entailed…
10:00 – New Home Sales
Highlights
Market Consensus: 925K
Key Factors
A sharp decline follows the large 16% April surge.
Almost all of April gain from the South, presumed to be tied to New Orleans. Could surprise in either direction.
Inventories to partly rebound after the reduction to 6.5 months in April. Stood at a high 8.1 months in March.
Prices expected to return to nearly flat from -11% yoy in April and 8% yoy in March.
MBA purchase applications index rose 5% in May, NAHB index fell.
National Assoc of Realtors expects new home sales to bottom in Q4 at 849K.
Big Picture
New home sales reached a low in March and rebounded 16% higher in April. The warmer spring weather and an expected boost from New Orleans have provided the lift after very weak first quarter sales. The National Assoc of Realtors expects new home sales to trough in Q4. Prices have been swinging wildly as an -11% yoy decline in April compares to the 8% yoy rise in March. Inventories have fallen off the 8.1 month high in March. Still waiting for signs of improving demand for residential investment to provide a delayed lift to new construction given the large supply of inventories.
Another Bear Stearns fund may need bailout
(Reuters) Investment bank hopes to restructure hedge fund that made bad bets in repackaged subprime loans; firm’s shares sink more than 5 percent.
Bear Stearns may have to bail out a second troubled hedge fund that it manages, Merrill Lynch analyst Guy Moszkowski wrote Monday.
That fund could have a loan exposure of as much as $7 billion, Moszkowski wrote. But at current valuations, Bear Stearns shares offer an excellent value, he added.
Bear Stearns’ shares fell as much as 5.3 percent Monday, after the note and a BusinessWeek report that the Securities and Exchange Commission was preliminarily probing a Bear Stearns hedge fund’s performance restatement.
Bear’s shares have fallen about 9 percent since the end of the second week of June, when talk of trouble at two Bear Stearns’ managed hedge funds began to arise.
Bear Stearns said Friday that it was providing up to $3.2 billion in secured financing to a fund it manages that was down about 5 percent through the four months ended April 30.
That move took the fund’s anxious lenders out of the equation, which should allow Bear Stearns to wind down the fund in an orderly way, and minimize losses to itself and investors, Moszkowski wrote.
But the investment bank is still hoping to restructure a second hedge fund that took more risk through borrowing more. That fund, the High-Grade Structured Credit Enhanced Leverage Fund, was down about 23 percent through April 30.
It is possible that because the Enhanced Leverage fund was known to be riskier from the start, that lenders would be less likely to expect a bailout, Moszkowski wrote.
Nowhere but down
“But it’s not yet clear that the firm won’t ultimately feel the need to provide support here as well,” he added.
Lenders have exposure of around $7 billion to the Enhanced Leverage fund, given the fact that the two funds had somewhere around $10 billion of combined repo borrowings, Moszkowski wrote.
Analysts at Deutsche Bank on Monday were also peppered on a conference call with questions about Bear Stearns and the state of the subprime market in general.
One questioner asked about the fact that Bear Stearns had $5.6 billion in retained interests from mortgage-backed and other asset backed securitizations as of November 30, 2006, though it is unclear how much of that exposure it still has. Of that total, $4.3 billion was investment grade, according to Bear’s annual report.
“One would imagine that given today and given the deterioration in market sentiment, wider spreads and continuing deteriorating collateral, one would assume that the only direction that number could go is down,” said Karen Weaver, Deutsche’s global head of securitization research.
Bear Stearns’ shares fell as low as $136.13, before closing down $4.65 at $139.10 on the New York Stock Exchange Monday.
The company’s stock is cheap relative to its peers — Bear trades at about 1.6 times its book value, while most major U.S. investment banks trade at more than 2 times their book value.
Given the company’s current market value of about $22 billion, a bank might choose to buy it, either as a way to enter the U.S. capital markets business or enhance a business, Moszkowski wrote.
BusinessWeek wrote on Monday that the SEC was looking into why the Enhanced Leverage fund restated its April performance.
The Enhanced Leverage fund said in May that it was down 6.5 percent in April, but on June 7 said its April loss was actually 18.97 percent, BusinessWeek said. It did not provide a reason for the discrepancy.
A spokesman for the SEC declined to comment, while a spokesman for Bear was not immediately available for comment.
Separately Monday, researchers at Citigroup said subprime mortgage bonds issued last year by Goldman Sachs were being downgraded by rating companies at the fastest rate of any issuer.
S&P/Case-Shiller Home Prices Fell 2.1% in April, Index Shows
By Courtney Schlisserman
June 26 (Bloomberg) — Home values in 20 U.S. metropolitan areas fell the most in at least six years, weakened by a record supply of properties for sale.
Home values declined 2.1 percent in April from the same month a year earlier, according to a report today by S&P/Case- Shiller. It was the fourth straight drop in the group’s index, which started in 2001.
The housing market continues to restrain the economy even as other areas, such as business spending and manufacturing, accelerate. Elevated inventories of unsold homes, reduced demand and stricter loan requirements will probably keep prices low the rest of this year, economists said.
“No region is immune to the weakening price returns,” said Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University in New Haven, Connecticut, said in a statement.
Home prices fell 0.2 percent in April from a month earlier, following a 0.3 percent drop in March, according to the index. The figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes.
Fourteen cities showed a year-over-year decrease in prices for the month, led by a 9.3 percent drop in Detroit and a 6.7 percent decline in San Diego.
The biggest increases in home values were in Seattle, where prices rose 9.6 percent, and Charlotte, with a 7 percent gain.
S&P/Case-Shiller’s 10-city composite index, which has a longer history, declined 2.7 percent in April from a year earlier.
Record Inventory
The National Association of Realtors said yesterday that the median price of an existing home fell 2.1 percent in May from a year earlier to $223,700. The group also said that resales fell to the lowest level in almost four years and the supply of unsold homes on the market reached a record.
The Commerce Department is scheduled to release May new home sales figures later today. The median price of a new home dropped 11 percent in April from the same month a year earlier, the biggest decline since 1970.
The S&P/Case-Shiller index and another gauge by the Office of Federal Housing Enterprise Oversight track the same home over time and more accurately reflect price trends, economists say.
The measures from Commerce and the Realtors group can be influenced by changes in the types of homes sold. Higher sales of cheaper homes relative to more-expensive properties will bias the figures down.
Housing accounts for about 23 percent of the U.S. economy, when taking into account purchases of furniture, appliances and items for new homes, according to the Joint Center for Housing Studies at Harvard University in Cambridge, Massachusetts.
Bernanke on Housing
“The adjustment in the housing sector is still ongoing, and the slowdown in residential construction now appears likely to remain a drag on economic growth for somewhat longer than previously expected,” Federal Reserve Chairman Ben S. Bernanke said on June 5.
Fed policy makers are expected to hold the benchmark overnight lending rate between banks at 5.25 percent for the eighth straight meeting on June 28, according to a Bloomberg survey of economists.
A recovery in housing is partly being held back by a wave of subprime mortgage defaults, which is throwing homes back onto the market and prompting banks to make it tougher for borrowers with poor or limited credit histories to get loans.
The number of Americans who may lose their homes because of late mortgage payments rose to a record in the first quarter, the Mortgage Bankers Association said this month. Subprime loans going into default rose to a five-year high, and prime loans entering foreclosure also surged to a record.
http://bp0.blogger.com/_SfxDExxUukY/Rmv4WTzO-rI/AAAAAAAAAEE/uRifOFMHL2w/s1600-h/housing_bellwether.JPG
Dink, Clotpoll, and scribe,
Thanks for your suggestion/comments.
scribe: I am looking for renting in Bridgewater. Do you know if the builder you mentioned as house for rent? Thanks
007
Case-Shiller details
Atlanta: up 0.8% in April, up 2.1% year-on-year
Boston: up 0.6% in April, down 4.5% year-on-year
Charlotte: up 1.2% in April, up 7% year-on-year
Chicago: down 0.7% in April, up 0.2% year-on-year
Cleveland: down 0.2% in April, down 2.8% year-on-year
Dallas: up 1.3% in April, up 2% year-on-year
Denver: up 0.5% in April, down 1.8% year-on-year
Detroit: down 2.5% in April, down 9.3% year-on-year
Las Vegas: down 0.8% in April, down 3% year-on-year
Los Angeles: down 0.5% in April, down 2.6% year-on-year
Miami: down 1.2% in April, down 1% year-on-year
Minneapolis: down 0.5% in April, down 2.9% year-on-year
New York: down 0.2% in April, down 1.5% year-on-year
Phoenix: down 0.8% in April, down 4.5% year-on-year
Portland: up 1% in April, up 6.4% year-on-year
San Diego: down 0.3% in April, down 6.7% year-on-year
San Francisco: up 0.2% in April, down 2.8% year-on-year
Seattle: up 1.3% in April, up 9.6% year-on-year
Tampa: down 1.1% in April, down 5% year-on-year
Washington: down 0.5% in April, down 5.7% year-on-year
10-city composite: down 0.3% in April, down 2.7% year-on-year
20-city composite: down 0.2% in April, down 2.1% year-on-year
When you see TIME magazine cover saying that RE is a money pit and the worst investment ever, it will be time to dip your toes in. Anything in between will be akin to catching a falling knife.
Even then, only as long as the numbers are realistic (in line with historical norms).. Or better ;)
If you clearly have positive cash flow on an investment property (considering all expenses) you can tip your toe a little earlier, otherwise I am with you. You can get 5.3% risk free in an internet money market while you wait it out so there is not too much of a reason to jump too soon. Plus flipping is dead so unless it is a long term investment property with tenants you are taking a bath.
otis wildflower Says:
June 26th, 2007 at 12:46 pm
When you see TIME magazine cover saying that RE is a money pit and the worst investment ever, it will be time to dip your toes in. Anything in between will be akin to catching a falling knife.
Even then, only as long as the numbers are realistic (in line with historical norms).. Or better
CDOs in `Hooker Heels’ Fool Moody’s, S&P, Gross Says (Update2)
By Caroline Salas
June 26 (Bloomberg) — Moody’s Investors Service and Standard & Poor’s were duped by the make-up and “six-inch hooker heels” of collateralized debt obligations they gave investment-grade ratings, and investors now stand to lose all their money, according to Bill Gross, manager of the world’s biggest bond fund.
Subprime mortgage bonds made up about $100 billion of the $375 billion of CDOs sold in the U.S. in 2006, Moody’s and Morgan Stanley data show. CDO’s are created by bankers and money managers who bundle together securities and divide them into slices with credit ratings as high as AAA.
With defaults on those subprime loans rising, buyers of the BBB pieces of some CDOs stand to lose their entire investment, said Gross, chief investment officer at Pacific Investment Management Co. Gross manages the $103 billion flagship PIMCO Total Return Fund in Newport Beach, California.
“AAA? You were wooed Mr. Moody’s and Mr. Poor’s by the makeup, those six-inch hooker heels and a `tramp stamp,”’ Gross said in his monthly commentary posted on Pimco’s Web site today. “Many of these good looking girls are not high-class assets worth 100 cents on the dollar.”
Subprime mortgages are loans made to borrowers with poor or limited credit histories, or high debt burdens. Mortgages at banks with past due payments are the highest since 1994, according to first-quarter data compiled by the Federal Deposit Insurance Corp., the agency that insures deposits at 8,650 U.S. financial institutions.
`Like a Weed’
Defaults on subprime loans will “grow and grow like a weed in your backyard tomato patch” and if total losses reach 10 percent, CDO slices rated A may also “face the grim reaper,” Gross said.