This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing market, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.
For readers that have never commented, there is a link at the top of each message that is typically labelled “[#] Comments“. Go ahead and give that a click, you might be missing out on a world of information you didn’t know about. While you are there, introduce yourselves to everyone.
For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past year. The archives can be accessed by using the links found in the menus on the right hand side of the page.
From the AP:
Newark could lay off 500 to 1,000 workers to reduce deficit
As Newark faces a looming budget deficit, Mayor Cory Booker is expected to announce Friday that one remedy could be a 10 to 20 percent reduction in the city’s work force.
Booker will speak Friday about the challenges and accomplishments of his first year in office, and will paint a dim picture of the structural problems of New Jersey’s largest city, according a city official familiar with the city’s budget. The official spoke on the condition of anonymity so as not to upstage Booker’s speech.
Newark has offered voluntary buyouts to help close a $180 million deficit for the budget to be adopted in 2008.
The city employs more than 5,000 workers, which includes police and fire, and may need to lay off 500 to 1,000.
When the city approved its $785 million budget for this year, residents saw their municipal taxes increase by about 8 percent.
The city’s budget has been balanced in previous years by using money from a settlement with the Port Authority of New York and New Jersey.
From the Wall Street Journal:
Subprime: Point to Where It Hurts
Steps to Modify Loans
And Avert Foreclosures
Has Investors Clashing
By LINGLING WEI, RUTH SIMON and JAMES R. HAGERTY
June 29, 2007; Page C1
As defaults on home loans mount, mortgage companies are scrambling to work out deals to help as many borrowers as possible stay in their houses.
On the surface, it seems an obvious tactic. Lenders usually end up losing money on foreclosed homes because of legal and other costs and the need to sell those properties fast, often at a knockdown price. Also, politicians are pressing mortgage companies to minimize the damages foreclosures cause to families and neighborhoods.
Still, the effort to hold down foreclosures threatens to create clashes between mortgage companies and investors in securities backed by bundles of home loans, a $6 trillion market that has been shaken recently by losses on some of the riskier types of mortgage bonds. And because of the way these securities are sold, these efforts can pit groups of holders against each other.
“It’s going to create a class warfare” among different types of investors, predicts Kyle Bass, managing partner of Hayman Capital Partners LP, a Dallas hedge fund.
…
Investors holding mortgage-backed bonds are watching nervously because mods may not always be in their best interest. Some investors fear that loan servicers — the firms, often owned by lenders, that collect payments and deal with defaults — will make too many mods. Generally, investors favor mods that ease a normally reliable borrower through a rough patch, but not those that merely buy time for deadbeats.
Investors doubt some homeowners merit a rescue plan. In some cases, says Kishore Yalamanchili, a fund manager with BlackRock Inc., New York, “by making these people current, you are pushing losses to another year or so.”
Credit Suisse analysts recently examined loans that had been modified over the past few years by one nationwide lender and found that borrowers missed at least one monthly payment after a mod in nearly 40% of the cases. (That failure rate may have been skewed upward by victims of Hurricane Katrina who never returned to their homes.)
If the borrower is unlikely to keep up with payments even after a mod, many investors would prefer that servicers pursue a foreclosure quickly, especially in regions where house prices are falling, reducing the value of the collateral.
Servicers are required by their contracts to act in the interests of the investors and modify loans only when that can be expected to reduce losses. That puts servicers in the tricky position of trying to figure out which borrowers are basically sound and when it makes more sense to foreclose quickly.
From the Philly Inquirer:
Foreclosure crisis is just beginning
There has been a flood of news headlines recently about skyrocketing foreclosures in the subprime mortgage market, which serves people with lower incomes or blemished credit histories. In response, the mortgage industry trade association and the Federal Reserve Bank have rushed to reassure us that these foreclosures are just a “speed bump” on the highway to homeownership that subprime lending supposedly provides.
But they’re wrong. We’re just seeing the beginning of the foreclosure crisis. My organization, the Center for Responsible Lending, estimates that 2.2 million borrowers who got subprime loans since 1998 either have lost or will lose their homes through foreclosure over the next few years. This includes one of every five borrowers who got subprime loans in 2005-06, a default rate unmatched in the history of the modern mortgage market.
What does this mean locally? In the past, both the Philadelphia and South Jersey areas have seen strong housing appreciation – house prices climbed 70 to 80 percent over the last five years. This has been a boon to subprime homeowners who fell behind on their loans because they were able to tap into this increased home equity to refinance their loans or sell their homes at a profit. But double-digit house price growth is a thing of the past, and foreclosures in these markets are climbing.
In the Philadelphia area, annual housing appreciation is now running at about 5 percent versus 14 percent in 2004 and 2005. As a result, we expect almost 17 percent of Philadelphia area borrowers with recent subprime loans to lose their homes through foreclosure. We expect similar results in the Camden area (which includes Burlington, Camden and Gloucester Counties), where yearly housing appreciation has dropped from 16 percent to 6 percent.
While the rapid run-up in home prices in Philadelphia and South Jersey may have protected existing homeowners from foreclosures in the past, they also made housing unaffordable for many people trying to buy a home. Unfortunately, as these consumers tried to “stretch” to get into expensive houses, they were met by subprime mortgage lenders and brokers all too happy to help them do it.
From the AP:
A subprime time to borrow
With a second child on the way, Chris Shields and his wife wanted to move from their two-bedroom Southern California apartment to a single-family house.
But because the subprime-mortgage market’s recent meltdown has prompted banks to tighten approval standards, the couple can’t qualify for a no-money-down loan.
“Now we’re stuck in the apartment,” said Shields, a 31-year-old firefighter.
…
More than 50 subprime originators have gone out of business or been sold in recent months, and those that remain no longer OK riskier mortgages.
For instance, General Electric’s WMC Mortgage Finance Co. recently stopped offering zero-down-payment loans.
Mortgage giant Washington Mutual Inc. estimates lenders will write $315 billion fewer subprime mortgages this year – a 47 percent drop from 2006.
Federal Reserve Chairman Ben Bernanke recently said tighter standards will “restrain housing demand, although the magnitude of these effects is difficult to quantify.”
But Newark, N.J., broker LaVerne Jackson said the slowdown is already hurting her business.
One of Jackson’s clients recently backed out of a $320,000 home purchase when the person’s lender shut its doors just hours before the sale’s closing.
Jackson expects the housing market to suffer for some time as subprime buyers work to establish better credit.
“They will have to do a lot of credit repairs before they can qualify (for loans),” she said. “It also means the houses will sit a little longer.”
can the fed save the day?
From the Record:
Local merchants unfazed by N.Y.C.’s sales tax cut
New Jersey is about to lose some of its sales tax advantage over New York City.
New York Gov. Eliot Spitzer is expected to sign into law a bill, passed last week, that would reduce the sales tax charged by New York City on clothes and shoes priced at more than $110 by 4 percentage points. Shoppers would still have to pay 4.375 percent in state and transit taxes. New Yorkers don’t pay sales tax on clothing items costing less than $110.
…
“Were they to completely remove it, then I think it definitely would be a concern,” said John Holub, president of the New Jersey Retail Merchants Association. While the group can’t quantify how many New Yorkers shop in New Jersey because there is no sales tax on clothes, Holub said retailers, particularly in Bergen County, often tell him it gives them an important advantage.
“They feel a significant number of their customers are from New York,” he said.
The article above reminded me of all the New York license plates I see in Bergen/Passaic counties.
Can anyone tell me why I always see Virginia plates around here? I really doubt these people live in VA and are just visiting. Sounds like some kind of scam…
Looks like Kara Homes buyers will get their homes after all, but Karagzoji is out which I think will make many buyers a lot happier. The company will also be renamed.
http://www.app.com/apps/pbcs.dll/article?AID=/20070629/NEWS/706290500
Mrs P,
Are you sure about that?
Buyers with contracts in homes that are going to be completed can move forward by negotiating new deals or opting for their existing deals with the builder, said Warren A. Usatine, a Hackensack lawyer representing unsecured creditors.
Unsecured creditors, including subcontractors and home buyers with canceled contracts, will split $2.25 million, depending on the size of their claims. They also will receive a share of the proceeds from the sale of any development that won’t be built by the new company, Usatine said.
An earlier version of the reorganization plan called for unsecured creditors to receive $500,000, plus $5,000 for every home sold. As of April, unsecured creditors were owed about $30 million.
Some of those buyers are trying to recoup their down payments by filing claims with bonding companies.
What about those buyers in projects that are not moving forward? Are they part of the unsecured group, fighting over the scraps?
jb
Midnight Says:
June 28th, 2007 at 10:41 pm
“THe rates are rising so what the hell is the point to wait out and watch home prices fall?”
“You are right. The renters here are waiting for home prices to hit rock bottom, but, while they are doing that, interest rates have shot up. Whatever they save on home rices will go right toward he mortgaae. Buyers were certain that interest rates would remian low while home prices continued to come down. OOPS! Someone has egg on their face and it ain’t me!”
Wrong. I never thought that rates would stay low. I am not in the camp of a new paradigm of cheap/easy creit. Egg on the face? Probably something a little dirtier, if you are a recent buyer. Your assumption is based on the fact that low rates were the trigger for the last 2-3 years of this insanity. Unfortunately, that was not the case. Why the phletora of teaser rates/myth financing when you could lock up 30 year $ at 5.25%-5.50%?? Higher interest rates will bury this market and will result in precipitous price declines. Ask any realtor on this board what the effect of higher rates will be. What asset class thrives in a rising rate environment? Also, you tend to forget that sellers are trapped. When psychology changes the burden is now shifted to the sellers. They are under extreme pressure to find an escape route. That said, potential buyers do not want to step in and catch a falling knife. The last scenario sellers want at their front door is rising rates. GUUULLLPP. The sucking sound of liquidity drying up.
You also don’t account for those with cash ready to take a plunge. I could care less if rates go up 1,2 or 3 %. Cash is king in this time period. A while back someone, I think Renting or Unrealtor, posted; “You can always refinance your mortgage rate, however you can’t refinance your purchase price”. By the way, a classic line.
I’d rather have egg in my face than a sheriff at the doorstep and a size 10 up my *ss.
From Kiplinger:
More Woes For Housing
Forget about a housing recovery later this year. In fact, odds are that the residential property slump will extend into 2008, as beleaguered homebuilders slowly unload a mountain of unsold houses and prospective buyers continue to face affordability challenges.
Those dismal home sales figures for May weren’t an aberration — the housing market’s fundamentals clearly stink. On the supply side, the amount of unsold residences in May was equal to a hefty nine months’ worth of sales at the current pace, and seven months for new homes, forcing builders to slash prices or offer lucrative freebies if they want to move any property.
Surveys of homebuilders show them as pessimistic as they were in 1991, during the last big housing slump. They will break ground on approximately 1.35 million new homes this year, 100,000 fewer than what was previously expected before the mortgage rates jumped. The pullback is bad news for a variety of housing-dependent industries, such as plumbers, drywall hangers, landscapers and insulators. Next year, housing starts should creep up to 1.5 million or so. Nicholas Retsinas, the director of the Joint Center for Housing Studies at Harvard University, says, “It’s going to take into 2008 to work out the oversupply. It will be a while before there’s a rebound.”
Average home prices are likely to fall about 4% to 5% this year, and will probably give up another 1% next year before they stabilize. In principle, this should spur demand. But the recent spike in mortgage interest rates has instead pushed many potential customers to the sidelines. The average rate on the popular 30-year fixed mortgage will probably stay close to its current 6.7% for the remainder of the year, which is up about a half percentage point from May.
You also don’t account for those with cash ready to take a plunge. I could care less if rates go up 1,2 or 3 %. Cash is king in this time period.
I’ve said, time and time again on this site.
Prospective buyers need to try to save every penny they can. Work hard to pay down debt, build strong credit, and save as large a down payment as possible.
Those buyers that have done nothing to better position themselves to take advantage of this event will find themselves in just as difficult a position. No free lunch folks, nobody ever said it would be.
jb
From MarketWatch:
Core inflation remains with Fed comfort zone at 1.9%
Core consumer prices increased just 0.1% as expected in May, the Commerce Department reported Friday, leaving core inflation within the Federal Reserve’s comfort zone for a second straight month. Core prices – which exclude food and energy costs – are up just 1.9% in the past 12 months. However, higher energy prices pushed up overall inflation to a 0.5% gain in May, eating into consumers’ disposable incomes and spending. Real consumer spending increased 0.1% in May, the third straight month of tepid spending. Real disposable incomes fell 0.1%, the second straight decline. In nominal terms, incomes rose 0.4%, while spending increased 0.5%, weaker than expected.
From MarketWatch:
U.S. May core consumer prices up 0.1% as expected
U.S. core consumer inflation up 1.9% vs. year ago
U.S. May incomes up 0.4% vs. 0.6% expected
U.S. May consumer spending up 0.5% vs. 0.7% expected
U.S. May personal savings rate falls to -1.4%
U.S. May real disposable incomes fall 0.1%
U.S. May real consumer spending up 0.1%
OK, here’s one for all you POS cape fans.
You think NJ has some beauties?
Check this out:
http://tinyurl.com/2dfr6b
The price may be the only attractive thing about this place. All it needs is a little pride of ownership.
Can anyone tell me why I always see Virginia plates around here
TBW,
Certain states, I know Michigan is one of them, perhaps Virginia is also, have easier licensing rules making it easier for illegals to get a license. Once obtained they register and insure cars in that state also. However most of these states are changing their rules as did NJ, ie requiring more proof for digital licenses, it was hell trying to get mine.
KL
Re Kara:
Here’s something I don’t understand, how exactly do contract purchasers of an asset (a home) end up at the end of the line here?
I realize that’s the way the law is written, but why in Jeebus’s name is that?
Shouldn’t someone who has made a deposit on a home, but not received that home, be first in line to get their money back?
Isn’t there a lawmaker somewhere who can see the logic of that?
the compton house can be found in many
lovely new jersey towns as well.
let’s start with trenton,camden,paterson,
plainfield,elizabeth,lodi,garfield,
pesche22,
In a couple of years, that list of towns will be larger. But… they’re not making anymore land and you are close to NYC, you know.
yes, the list grows with the welfare and other give a ways NJ is famous for.
Just wait till corzine does his thing
with the assets. More tax relief coming
for the garden state taxpayers.
Lindsey,
Not all deposits were secured….seems a lot of people trusted Kara.
#17-I agree, but the law doesn’t always (usually never) make logical sense.
I don’t know what their contract read, but it seems like you’d own something, like the parcel of land the house was to be built on regardless of whether the house was built or not.
My parents live in South Florida, and my Mom sent me this article a few days ago. I was floored by the inventory numbers and the sales pace to clear out current inventory–7 YEARS!!! I can’t imagine it is going to end any other way than very ugly.
http://tinyurl.com/yoyuzw
“At the end of May, Broward had more than 47,500 homes and condominiums on the market, according to the Miami-based Keyes Co. That’s up 27 percent from a year ago. At the current sales pace, it would take about seven years to sell all those properties.”
Seven years is very biblical.
Lindsey, all it needs is a bulldozer. :)
newark has a budget problem? why don’t they just raise taxes on essex county residents from outrageous to unbelievable?
From IDD:
Downgrade by Moody’s Another Warning for Mortgage Bond Investors
Aleksandrs Rozens
June 25, 2007
Moody’s Investors Service’s June 15 downgrade of 131 bonds, and a warning on another 136 issues, may not have come as a great surprise for many investors, but it does serve as yet another red flag about how a slowing housing market is playing havoc with real estate-related debt.
Investors will get more clues as to how bad things have gotten this week when they parse through data issued by trusts overseeing mortgage debt bundled into securities. Some market participants believe that this data – monthly remittances – will show even more late payments and defaults that could prompt rating agencies to issue further warnings and downgrades.
The downgrade from Moody’s involved securities backed by home equity loans and lines of credit issued in 2006. Twenty bonds saw their first downgrade, 111 were downgraded further and 136 issues were put on watch for a possible downgrade, according to Nicolas Weill, chief credit officer at Moody’s.
http://www.iddmagazine.com/idd/fierce_finance.cfm?id=14029&issueDate=current
From BusinessWeek:
JULY 9, 2007
NEWS & INSIGHTS
Mutually Assured Mayhem
Wall Street is on edge, scrambling to buck up Bear Stearns and avert a domino-effect debacle
On June 26 managers of Credit Suisse’s (CS ) alternative investment group sent an e-mail to investors reassuring them that its portfolios “have minimal direct exposure” to subprime mortgages and “do not have any direct exposure” to the two Bear Stearns & Co. (BSC ) hedge funds that had nearly collapsed the week before. As that note was wending its way through the ether, other investors were quietly trying to sell their stakes in hedge funds full of subprime securities. Some were noting that Toronto bank CIBC holds many subprime bonds. Paris bank BNP Paribas (BNPQY ) was fending off questions about its investment in the Bear fund with heaviest losses.
It’s white-knuckle time on Wall Street as firms try to prevent the subprime mess from spreading. The hedge fund blowup has suddenly thrown the world’s biggest financial institutions into a game of brinkmanship that will end in one of three ways: a quick, brutal crash of the subprime mortgage market and possibly the broader corporate bond market; a slow, painful meltdown of one or both lasting many months; or a short-term blip that, over time, will be forgotten as conditions return to normal.
Disaster has been averted so far. But pressure continues to come from all sides. The decisions made by Wall Street’s bankers, hedge fund managers, and bond raters over the next several weeks will determine which way the game plays out. One twitchy move by any of them could lead to mutually assured destruction.
ELBOW DEEP
At first the subprime mess looked more or less like a Bear Stearns problem. When its funds stumbled, it was Bear that put up a staggering $1.6 billion in loans to stanch the bleeding. It was Bear’s stock that took the biggest hit of any brokerage house, falling some 3.2% in a day. And it was Bear that, as reported by BusinessWeek.com on June 25, drew the scrutiny of the Securities & Exchange Commission, which has opened up a preliminary investigation into what went wrong inside the 84-year-old firm led by CEO James E. Cayne.
Ordinarily, rivals wouldn’t shed tears if Bear Stearns were suffering—they’d pounce on the weakness. But much of Wall Street is elbow-deep in the same troubled securities, all created during the height of the mortgage boom, that are now coming back to bite Bear. Last year, Wall Street churned out some $550 billion in so-called collateralized debt obligations (CDOs): complex bonds often backed by subprime loans that pay high yields in good times but are dangerous when the market gets rocky, as it is now. “This is not [only] a Bear Stearns problem,” says Joseph R. Mason, associate professor of finance at Drexel University’s LeBow College of Business.
http://www.businessweek.com/magazine/content/07_28/b4042037.htm?campaign_id=rss_daily
Richard,
The taxes ARE unbelievable.
#15 that’s a funny one.
From MarketWatch:
U.S. May construction spending jumps 0.9%
Spending on U.S. construction projects jumped 0.9% in May, the most since February 2006, the Commerce Department reported Friday. The gain was driven by a 4.1% increase in spending on federal projects and a 2.7% increase in outlays for private nonresidential construction. Outlays on private residential projects fell by 0.8% in May, following a decline of 0.4% in April. Analysts surveyed by MarketWatch were expecting construction spending to rise by just 0.1% in May.
From Reuters:
Regulators set new subprime loan standards
U.S. bank regulators issued new standards for subprime mortgage lending Friday that includes several new consumer protections.
Subprime borrowers should not be penalized for refinancing out of a mortgage before the interest rate resets to a higher level, according to a statement of principles issued by the regulators.
Lenders should only offer loans to borrowers with little proof of assets and income if there is other evidence that they can repay, the statement says.
From the Office of the Comptroller of the Currency (OCC):
Federal Financial Regulatory Agencies Issue Final
Statement on Subprime Mortgage Lending
The federal financial regulatory agencies today issued a final Statement on Subprime Mortgage Lending to address issues relating to certain adjustable-rate mortgage (ARM) products that can cause payment shock.
The statement describes the prudent safety and soundness and consumer protection standards that institutions should follow to ensure borrowers obtain loans they can afford to repay. These standards include a fully indexed, fully amortized qualification for borrowers and cautions on risk-layering features, including an expectation that stated income and reduced documentation should be accepted only if there are documented mitigating factors that clearly minimize the need for verification of a borrower’s repayment capacity. Consumer protection standards include clear and balanced product disclosures to customers and limits on prepayment penalties that allow for a reasonable period of time, typically at least 60 days, for customers to refinance prior to the expiration of the initial fixed interest rate period without penalty.
The statement reinforces the April 17, 2007 interagency Statement on Working with Borrowers , in which the agencies encouraged institutions to work constructively with residential borrowers who are financially unable or reasonably expected to be unable to meet their contractual payment obligations on their home loans. Workout arrangements that are consistent with safe and sound lending practices are generally in the long-term best interest of both the financial institution and the borrower.
The agencies published the proposed Statement on Subprime Mortgage Lending for comment on March 8, 2007. Comments were received from financial institutions, trade associations, consumer and community organizations, members of Congress, state and local officials, and members of the public. The agencies made a number of changes to the proposal to respond to commenters’ concerns and to provide additional clarity.
Wells Fargo suprime unit belly up?
I hope these people are joking?
http://www.autodogmatic.com/forum/viewtopic.php?t=764
From the OCC:
Statement on Subprime Mortgage Lending (PDF)
Observation for Englewood Cliffs:
Based on recently sold houses in Englewood Cliffs, prices are about 5% down from the 2005 summer.
In other words, people who bought houses in Englewood Cliffs in 2005 summer are unloading them with about 5% loss these days.
People who bought in 2004 are still walking away with nice profit as there was a huge run-up from 2004-2005.
—–
Observation for Franklin Lakes:
In the fall of 2004, I was looking for houses in FL for under $600,000. There were exactly TWO. Now there are 8. And 16 houses under $700,000.
Inventory is piling up in this town. I love how FL listings boast about being “only 25minutes away from GWB”. Sure, but only after midnight!
Word to the wise…..if you are driving on the Turnpike or Parkway today….don’t screw around. The smokies are out in force and in all the usual places. Lots of unmarked as well hanging around traffic packs looking for prey.
#17
“Shouldn’t someone who has made a deposit on a home, but not received that home, be first in line to get their money back?”
Agreed, as a general matter, but part of the question should be “as opposed to which other creditor?”
Compare the person who made a deposit on the home with, for instance:
– The contractors who built it and are waiting to receive their hard earned pay
– The building supply companies who sold Kara the concrete and lumber etc., and now have an AR that’s never going to be received.
Perhaps we need another Bankruptcy Bill, but this one to protect the little guy, as opposed to the previous one.
Somebody call Sen. Joe Biden (D-MBNA).
#37 – noticed that too, chifi. End of month?
Kara homes Zuhdi Karagjozi is a good friend of mine, he’s also Albanian, we did some work together in ’01. He started with good intentions and got a little enthusiastic and greedy. I told him to slow down, it’s not always going to be this easy. We sold 75% of a project before the construction really got under way. no cancellations.
It’s sad and a shame, he trully was a good builder when he started. I’m not sure where he went wrong but the since 2004 he hasn’t built a thing worth a damn.
he didn’t realize the need of cash flow, started falling behind and housing went south at the same time and byebye everything. He put away millions but might have to do some time.
It really is a shame. What you gonna do.
Well, I am back. Sorry Pat, but “Midnight” was not me. I had a lot better things to do the last 2 days than have arguments here…
http://www.nj.com/starledger/stories/index.ssf?/base/news-11/1183006188249500.xml&coll=1
This is your only warning: Ticket blitz in North Jersey
The state that brought you the “Click It or Ticket” campaign is preparing to launch “Obey the Signs or Pay the Fines,” a new ticketing blitz aimed at snaring summertime speeders.
Starting July 4, police in seven counties in the northern half of the state will begin a monthlong ticketing campaign targeting drivers who ignore the speed limit, officials at the state Division of Highway Traffic Safety said.
State troopers, who patrol the New Jersey Turnpike and Garden State Parkway, are not participating, said Sgt. Stephen Jones, a State Police spokesman.
#17
Re Kara:
Here’s something I don’t understand, how exactly do contract purchasers of an asset (a home) end up at the end of the line here?
I realize that’s the way the law is written, but why in Jeebus’s name is that?
Shouldn’t someone who has made a deposit on a home, but not received that home, be first in line to get their money back?
Isn’t there a lawmaker somewhere who can see the logic of that?
*****
Bankruptcy gives priority to secured claims over unsecured claims. Kara, like most companies, took on debt to fund its operations. This debt was likely secured (as is typically the case) by all of the assets and rights to cash flows (e.g., accounts receivable) of the company. Banks typically will not enter into master credit facilities of this sort unless they are guaranteed a first priority security interest in these assets/cash flows.
The houses that are under construction are likely considered “inventory” of the company under any secured credit facility the company has. As such, the bank will have a first priority security interest in them and will recover first in bankruptcy. In most bankruptcies, there is such a shortage of cash/assets that no one other than the secured lender recovers.
The people who contracted to buy the house pre construction have a contract right to close on their purchase. They are in that limbo between “under contract” and “closing” that all homebuyers experience. Until you “close,” you the buyer do not have title to the property. You only have a contract right, which is considered an unsecured claim in bankruptcy.
Although it sounds unfair, think about it in a different context. Say the company manufactured folding chairs. Buyer contracts with Company to buy a folding chair. Like’s Kara’s houses, in this case the chairs are the Company’s inventory. Before Company can finish production of the chair, it has a liquidity crisis and files for bankruptcy. Now the secured creditor who provided the cash for the Company to build the factory, buy the equipment and supplies and pay its employees for year upon year and made this arrangement 10 yrs ago wants to recover by seizing the chair under production. Who should have a superior right to this chair– the secured creditor or the guy who contracted to buy the chair a week ago?
Make Money:
Zuhdi Karagjozi was just being an optimist. Optimist don’t worry about stuff like falling valuations, cash flows etc.
Remember, this country was build by optimistic people like Zuhdi Karagjozi .
Here is a tough question for all of you genisues:
What do NYC buyers, renters, and hookers have in common?
Answer: Every month, they get screwed!
Tight Rental Market Heats Up; Vacancy Rate to 0.8%
By SARAH PORTLOCK
Special to the Sun
June 14, 2007
The summer is astonishingly tough to find an apartment — the market is swarmed with college graduates and new hires looking for their first New York domicile, and landlords respond by setting higher rents to meet increased demand.
In May, the average price of a studio apartment crossed the $2,000 mark for the first time with Manhattan’s vacancy rate hovering at 0.8%, according data from one of the city’s leading real estate firms, CitiHabitats.
The chief operating officer of CitiHabitats, Gary Malin, said the market works in favor of property owners, and prospective tenants need to think and act fast.
“It’s still a landlord’s market. It’s not like people can take their time,” Mr. Malin said. “Landlords are going to push the levels of their rent as high as they can.”
“We’re anticipating that the market will be stronger in the summer,” Mr. Shemesh said. “It will be faster and more money for the landlord.”
As of yesterday evening, there were only 301 studios available in all of Manhattan to rent for under $2,000.
http://www.nysun.com/article/56597?page_no=1
My petty comment of the day: if rates go up and prices decline to the point that my monthly payment is the same, I would rather my money go to the bank than sellers who think that home prices should double in value in 4 years. Yeah, the bubble has left me bitter.
” if rates go up and prices decline to the point that my monthly payment is the same, I would rather my money go to the bank than sellers who think that home prices should double in value in 4 years.”
Newsflash: You don’t get to decide who gets your money. Sellers will get your money, like it or not. Most of those distressed owners the media keeps talking about who are looking to sell cheap and fast don’t exist. Do you know where they are? I will tell you. They are lined up in front of the Apple store waiting to buy a $700 glorified cell phone.
Troll are you feeling okay? You sound rather….well, distressed.
#28
“We are not exposed”
Right, CSFB..
“Patriotism is the last refuge of a scoundrel.”
-Samuel Johnson
These words apply as the sh*t hits the fan. Remember that scumbag Ken Lay talking up Enron right before the complete collapse. In ’01, I remember the CEO for my former telecom co. touting our stock to employees (even though it dropped from $32 to $.08 in a year). Apparently it was a great time for employess to purchase stock..yet a month later we were out of business.
Target those horrible speeders so the people who go 40 mph in the left lane with their left blinker still on will have an easier time preventing people from getting where they need to go.
I actually had a guy in front of me, as he was approaching a green light slow down while the light was still green. Now he is at the intersection and he pratically stops while the light is still green!! He slowly made it through the intersection but it was quite obvious that he had no regard for other traffic. People like that create road rage and accidents. Not to mention all the great drivers who decide to make left turns on route 17, back up on the highway, fail to use their directionals, ride their brakes, etc. One final thought: The left lane is for passing, not coasting. If you are not going faster than the car to the immediate right, get out of the lane!
I asked this on another thread … anyone still think a recession is coming? Why or why not?
My other question … who is waiting for apple stock to dip next week when sales of the phone are weak or there are problems?
im waiting for it to drop to 105/110 and then dropping some cash into apple. for anyone NOT using apple cpus … once you go mac, you never go back
“I asked this on another thread … anyone still think a recession is coming? Why or why not?”
I do not know the answer to this question. Let me ask all the people lined up waiting to buy $700 iphones. Then let me ask the people who buy “flipped” iphones next week on ebay for $1,200.
JB,
from my post last week, I called the NJ bill room to see if anything was inacted to tax NJ residents moving out of NJ. The person I talked to stated if you really read the bill, it can be interpreted to be so, but not explicit. It depends on the definition of non-resident. Passed in 2004, the only portion that defines “non’resident” and appears it could be implied this way reads …”an individual who in not domiciled in NJ but who may be considered a resident of NJ for tax purposed under subsection N.J.S.54A1-2 at the end of a taxable year, by virtue of maintaining a permanent place of abode in NJ for substantially all of the taxable year and by spending an aggregate more that 183 days of the taxable year in NJ unless the individual has already qualified as a resident on the date of the sale or transfer of the real property”.
How many Ken Lay clones are in hedge funds pacifying their clients that they are not exposed to this subprime mess, even though the toxic waste is nowhere close to ebbing. Quite a few…..
I love how people are rationalizing that if sellers drop prices a bit, and rates go up a bit, buyers aren’t saving anything.
Ha! Nice try, folks. This is a ploy for you to BUY NOW!
I don’t worry about rates at all. But I worry about buying a house and watching my neighbors sell a similar house for 50k 6 months later. I’d go listen to the NPR story someone linked to a few days ago. That’s a great listen.
Thoughts on Rahway anyone?
I like the town – does anyone here have any opinions on whether the renaissance in progress will stall or is it moving along nicely? The new condo project across from the train station might be nice – does anyone know how their sales are going?
Kids, it’s all about the price. Nothing else matters.
#46 Robert Troll:
You don’t ask questions if you want to live in New York City. You first write a big check to the seller or landlord, then you turn around and grab your ankles and grit your teeth.
Remember the whole world wants to live in NYC.
RE: Rahway
I think you can get good deals on license plates there.
“I do not know the answer to this question. Let me ask all the people lined up waiting to buy $700 iphones. Then let me ask the people who buy “flipped” iphones next week on ebay for $1,200.”
Yeah, people’s debt fueled overspending will never lead to a recession.
ML,
true but its seems likely that the vast vast majority of houses on sale today were bought before 2005.
And to your point if they did buy in 2005 and are selling now they are probably taking more than a %5 loss if you factor in all the transaction costs.
Based on recently sold houses in Englewood Cliffs, prices are about 5% down from the 2005 summer.
In other words, people who bought houses in Englewood Cliffs in 2005 summer are unloading them with about 5% loss these days.
>>Remember the whole world wants to live in NYC.
sure seems that way. they’ve had a rental supply crisis for how many years now? clearly a demand and supply problem.
#10 BC That was me, it has been my mantra since 2004.
“These words apply as the sh*t hits the fan. Remember that scumbag Ken Lay talking up Enron right before the complete collapse.”
[50]
http://www.gold-eagle.com/editorials_01/seymour062001.html
ADA – Perhaps you’re new here, but on more than one occasion, posters have shown MLS data that proves some sellers have chopped 40% off their original asking price.
Sure, some of these prices may have been inflated, but I’m not sure if those ‘inflated’ prices were actually comparable to what neighbors had sold for in 03 or 04.
And there was a NYT business story one or two weeks ago (it was on a Sunday) about how prices are already down anywhere from 8-16% in the country.
The rents are increasing because NYC’s population growth.
With 205,750 new citizens, Gotham added more residents than any city in the United States since 2000. That’s enough new New Yorkers to fill a city the size of Boise, Idaho, bringing its total number to 8,214,826 – an all-time high.
New York is one of the few major old industrial towns that have not experienced a substantial shrinking in the number of its core residents.
http://money.cnn.com/2007/06/27/real_estate/fastest_growing_cities/index.htm?postversion=2007062805
BC Bob, I totally agree. Mortgage interest rates fluctuate through the years. If you buy a house and mortgage it at a time when rates are high u can always adjust (re-fi) your mortgage rate when they go down. The price you pay for a house however never changes. Thus if you’re buying a house for the long haul, I think it truly is better to buy when interest rates are higher and prices are lower.
Ps. Mister Kannekt Troll, I am renting in Hoboken, my landlord raised my rent a whopping 2%. I can actually can pay cash for several I-phone’s. You?
#63 “Based on recently sold houses in Englewood Cliffs, prices are about 5% down from the 2005 summer.
In other words, people who bought houses in Englewood Cliffs in 2005 summer are unloading them with about 5% loss these days.”
It’s actually worse than that. On those facts, it’s 11% down (don’t forget the commission!). Then factor in inflation – it adds up quickly.
Let’s say your name is Donald Duck, and you bought a house in Englewood Cliffs for $800K in June 2005. You sell it now at 5% less ($760K). Then you pay 6% to the RE agents. Now you’ve got $714,400. Factor in inflation at, say, 2.5% per year, and your total loss on your original “investment” is $126,100. Let’s not even get into the opportunity cost.
If you’re Donald Duck, this makes you a very sad duck indeed.
I guess the Dow will have to go negative before CNN get’s rid of the “Bulls back in the game” headline…
jb-
This was posted at the end of last night’s board.
Any idea what he’s referring to?
164.
ithink_ithink Says:
June 28th, 2007 at 11:20 pm
uhno, you’re so mean linking this guy, you don’t need to populate the website field:
http://www.webmaster-talk.com/general-discussions/4232-careful-with-those-fake-email-addys.html
#50 Bc I love your post.
“I guess the Dow will have to go negative before CNN get’s rid of the “Bulls back in the game” headline…”
patient,
If you mean today, you’re on.
Make [74],
Human nature. Different times/markets, seats occupied by the same *sses with the same objective. Elephants can smell/avoid a tsunami, humans cry bailout.
NJ actually issued over 37,000 tickets last year to drivers who failed to stay right…..
From Bloomberg:
U.S. Bank Regulators Tell Subprime Lenders to Tighten Standards
.S. banking regulators told mortgage lenders to tighten standards for subprime home loans in a belated effort to end abuses that led to a surge in defaults and the highest foreclosure rate in five years.
Lenders, in most cases, should verify income levels instead of relying on borrowers’ statements, the Federal Reserve and other banking regulators said in guidelines issued today. They also said banks should account for potential interest-rate increases in scrutinizing whether homebuyers can pay off loans.
“This guidance on adjustable-rate mortgages underscores that the Federal Reserve and other banking regulators expect lenders to make sure subprime borrowers not only can afford their monthly payments while the introductory rate is in effect, but also after the interest rate resets,” Fed Governor Randall Kroszner said in an e-mailed statement. “It is the right thing to do for the borrowers’ sake.”
“NJ actually issued over 37,000 tickets last year to drivers who failed to stay right…..”
A hundred tickets a day for failing to stay right?!
37,000 tickets * $100 a ticket fine = $3.7 million added to the ‘lazy cops retire early fund’. Ain’t enough….
#78
taking out another rung on the property ladder.
“how am I supposed to buy a house if I have to verify my income?”
Add on to the high price/ low rates or low price/high rates discussion.
Definitely prefer a lower price and higher rates.
Apart from the obvious ability to refinance at a lower rate another time, there are several advantages.
1. Downpayment for property goes farther so lesser percentage is mortgaged.
2. It is easier to pay down the mortgage ahead of schedule.
3. If/when interest rates drop again the “value” of the house rises providing a sales opportunity, if wanted.
Really a no-brainer. The only people who would think otherwise are the “monthly nut” sheep.
Rate woes:
The latest hit to home values
Jump in Treasury yields will push mortgage rates higher still, hurting buying power, pressuring sales and prices.
That will only add to the downward pressure that has sparked the biggest drop in existing home prices on record.
http://money.cnn.com/2007/06/13/news/economy/mortgage_rates_housing/index.htm
I was just looking at the two year chart for TOL and the insider transactions.
Bob’s one shrewed MF. He offloaded significant amount of shares in the 40 – 60 dollar range to the likes of our friend peche22 who has been trying to pick the bottom of housing for many months now only to be disappointed as the chart continues to point at his shoes.
I wouldn’t trust a CEO who says the worst is behind while his banker is offloading his stake in the company.
http://finance.yahoo.com/q/bc?s=TOL&t=2y&l=on&z=m&q=l&c=
http://finance.yahoo.com/q/it?s=TOL
Don’t know if this was already posted.
Further loan deterioration seen for Alt-A market-S&P
Tue Jun 26, 2007 2:00PM EDT
By Nancy Leinfuss
NEW YORK, June 26 (Reuters) – Delinquency rates are rising for so-called “Alt-A” home mortgages held by U.S. borrowers who are rated above the subprime category but below the more pristine prime borrower, said Standard & Poor’s in a report on Tuesday.
“Although the vast majority of Alt-A borrowers are making regular payments on their mortgage loans, there are strong–and growing–indications of deteriorating performance in the 2006 vintage,” S&P said.
The rating agency said the percentage of Alt-A loans that are 90 or more days delinquent in 2006 is 2.5 times higher than the previous year’s figure and more than 4 times that of 2004.
After 14 months, 90-plus-day delinquencies stand at 4.21 percent for 2006 Alt-A loans versus 1.59 percent for 2005 vintage and 0.91 percent for 2004 loans, it said.
Many Alt-A borrowers used the mortgages to refinance second homes or investment properties, but with U.S. home prices stagnating, and lending criteria being tightened, it will be harder for Alt-A borrowers to sell or refinance their mortgages.
S&P said the most disconcerting trend is how quickly the performance of these delinquent borrowers has deteriorated.
“We continue to see migration from 60-plus-day to 90-plus-day delinquencies within the 2006 vintage, suggesting that homeowners who experience early delinquencies are finding it increasingly difficult to refinance or work out problems, as opposed to being able to cure falling behind on payments,” the rating agency said.
The expansion of credit parameters in underwriters’ lending decisions was contributing to a riskier Alt-A homeowner profile, said S&P.
“We ascribe the higher levels of delinquencies in the 2006 vintage to the increasingly riskier credit profile of borrowers, characterized by an increasing proportion of highly leveraged homeowners who obtained their loans through limited verification of income sources and with little equity in their homes,” the rating agency said.
http://www.reuters.com/article/bondsNews/idUSN2636866620070626
#71 njpatient, #63 ADA
Yes I was not factoring in inflation and other real and opp costs. Like yourself and others on this board, I figured people would factor them on their own.
I’m only going by the data from sold houses. I didn’t factor in the listings that haven’t been sold, because most of them overshoot the market price. But based on my observation, there is about 5%-10% discounting going on from Last List Price -> Sold Price in Englewood Cliffs. But as market sours, this gap tends to get larger.
And this brings us to another point. I think this is how the market will play out for the next few years. Perhaps small but gradual drops in nominal prices for a long period, that in the end, will add up to a substantial drop in the real term.
Speaking of tickets (or avoidance thereof)…does anyone happen to own a Valentine1? Richie? :)
#81 – perhaps for the ARM crowd this matters but smart people who locked in at 5% – 5.5% fixed between ’03 – ’05 might be ok.
#87 Steve:
IMO don’t waste money on a radar. Cause most of them don’t work well against the new Laser systems. By the time your valentine picks up the laser, you have already been tagged. Remember lasers don’t diffuse like the older technologies allowing your detector to pick up the signal as it bounces off another car that has been tagged.
The best way to speed without getting caught is to keep alert. Watch your mirrors and watch the road ahead. let off the pedal if you can’t see around the turn or over the hill.
#76 BC Bob
Headline changed to “Bulls check out”
#81 – perhaps for the ARM crowd this matters but smart people who locked in at 5% – 5.5% fixed between ‘03 – ‘05 might be ok.
Bystander[86],
Those that locked in are not the problem.
Anti,
Not that I go zooming around on regular basis, but it doesn’t take much to rack up those points. Apparently there are now laser absorbing materials to put on your license/headlights, laser jammers, etc etc…(as they apparently have to aim at your license plate region to get a clean read).
I guess the ol’ cat-and-mouse game will never end :)
#58 jmacdaddio
Thoughts on Rahway anyone?
Rahway has improved 100x over what it used to be even 5 years ago, but, it has a long long long way to go.
Drive around the downtown and there seems to be reason to be optimistic but drive one block in certain directions and you can also see redevelopment that has been stagnant for at least 6 months if not more.
I haven’t been able to find any info on how the condo sales are going. The convenience of being near a train is nice but being literally right on top of the train, not so sure.
There are people who bought nice little cape cods two years ago in Rahway for $200k-250k trying to sell them now for $350k and up. Massive amount of inventory.
The school system in Rahway will keep it from becoming the next Hoboken (Rahway pundit and MSM tag, not mine)for a long time to come. You can get of the NJTransit train at Rahway and still be (gently) accosted for spare change. There are some magnificent homes in Rahway in the ‘posh’ Milton Lakes area but anyone with $550k or more to spend is going to move to neighboring Clark or Colonia instead.
Bottom line, as overpriced on a percentage basis as any other town with direct train access to NYC. Too much inventory to buy in now without some serious negotiating.
From MarketWatch:
Regulators crack down on subprime-lending abuses
After years of abuse in the subprime mortgage marketplace, federal regulators are cracking down on banks by issuing new rules Friday to make sure borrowers get loans they can actually afford.
The new rules, effective immediately, are for adjustable-rate mortgage products that can cause payment shock. These loans start off with low “teaser” rates that balloon, and end up being more expensive than borrowers initially anticipate.
The new rules call for banks to beef up their disclosures, limit prepayment penalties, limit the use of “stated income” loans, and include a fully indexed, fully amortized qualification for borrowers.
…
The new rules do not include a “suitability standard.” So borrowers will continue to be responsible for making sure that they choose appropriate loans for their needs and circumstances.
Mortgage bankers said the new rules would hurt consumers’ ability to choose credit products.
“This is a strong statement that will help curb abuses, but will likely also constrain consumer credit choices,” said Mortgage Bankers Association Chairman John Robbins.
…
However, the guidance only covers a minority of subprime lenders. Mortgage brokers — not banks — originated 71% of subprime loans in the second half of 2005, according to a September estimate from the Mortgage Bankers Association.
“This guidance is simply not enforceable against the majority of people who do these kinds of activities,” said John Taylor, president and chief executive of the National Community Reinvestment Coalition.
No Valentine1 here; I gave up on radar detectors YEARS ago.
Nowadays, if I need to speed, I just wait for someone faster then me to be about 10 car lengths in front of me, then just trail them. Chances are they will panic brake when they see any cops…
Sometimes it’s better to be a follower then a leader…
-Richie
Steve:
Laser Jammers are illegal.
Yes, they have to aim at a reflective surface like headlights license plates etc. so if if your state doesn’t mandate front license plates don’t put them on. I haven’t tried any of the stickers. I just keep alert for unmarked cruisers and stay behind big rigs that are speeding.
Richie has a valid point. Follow the leader.
I have been caught only once. I was taking a test drive on my cousin’s BMW M5 and got carried away. I didn’t realize that I drove past an unmarked police cruiser in the next lane. Anyway he caught up with me in a few mins and said that he had to do over a 100 to catch up with me. Luckily for me, he happened to be an M5 fan himself and let me off with a warning. whew !!
51: TBW, drivers not exceeding the speed limit aren’t preventing anybody from getting where they need to go, dummy.
If you’re in suck a big f**ing hurry, just leave home five minutes earlier. Or take another route. Free markets and all that …
Steve
I’ve got a Valentine one and love it. It’s got a counter on it so if you are used to getting a false positive and you don’t usually pay attention you will when it says 2.
What I’ve learned about speeding – I don’t slam on my brakes if I see a cop, he may shoot me twice but the gradual reduction in speed gives me more credibility when I tell him I have a fast car and I try to keep my speed under X and as soon as I realized I was going faster then I wanted I took my foot off the gas.
In an “unlucky” 18 month stretch between 2002-03, I got 5 speeding tickets in upstate NY. But always said not guilty, and reduced to each of them to a $50 parking ticket and no points. Since then, I have become more careful and haven’t been pulled over.
When visiting family on the west coast over the years, 2-3 times was pulled over in rental cars but strangely never ticketed – despite having a NJ license.
Knowing that I just don’t have that kind of luck, mentioned to my parents in passing, and they mentioned a similar experience. Turns out there’s a neighbor in the area with the same last name, who has family in the local police force…
MER,GS,BSC.
Why are they tanking?
HeHe,
The market was up big this morning on the RIMM news. However, the financials were a drag all day.
I would not say tanking, down 3-5%. Friday afternoon, skiddish before the weekend, end of month/quarter. The 20% of profits are usually quarterly based. Lock it in and get out of Dodge? Revisit with a Monday morn hangover.
financials tanking because they know
something we dont.
i think its called subprime
watch xlf go into the tank
money flow going out of the financials big
time. actually started in early june
>>Rate woes: The latest hit to home values
that articles is 2 weeks old. the 10 year is almost below 5% again.
When did 5.03 become less than 5.0?
“American Home Mortgage Investment Corp. shares fell as much as 17 percent after the lender said it’s being forced to repurchase larger than expected numbers of loans that soured.”
“The repurchases will lead to “substantial” charges against earnings and likely a loss in the current quarter, the company said after the close of regular trading yesterday. The mortgage sales to investors were backed by a “timely payment” warranty, meaning the company agreed to buy them back if the borrowers missed payments within a three-month period.”
“American Home was the 13th-biggest U.S. mortgage lender last year, according to Inside Mortgage Finance, an industry publication.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=afQnuvlCs2V8&refer=home
Starting July 4, police in seven counties in the northern half of the state will begin a monthlong ticketing campaign targeting drivers who ignore the speed limit
By the way, towns get 4,000 of your tax dollars from the state for agreeing to participate in the blitz, so many towns are more than happy to join in.
the zombies in trenton will do anything to
pick the pocket of the nj taxpayer.
do you know how to read? i said almost.
“do you know how to read? i said almost.”
True, he did say that. However, he also touted the new paradigm of easy/cheap credit and excess liquidity when the 10 year was at approx 4.50%-4.60%. I also, seem to remember him saying to give him a wake up call when the 10 year rose to over 5%.
CR has an interesting snippet about a decline in a traffic index noted in a BoA RE survey report:
BofA RE Agent Survey: Another Leg Down in Traffic
From Reuters:
Fannie, Freddie could have big subprime exposure-analyst
Mortgage finance companies Fannie Mae and Freddie Mac could face a multibillion dollar loss if subprime assets continue to mount, according to an analyst report issued on Friday.
The continued writedown of subprime assets could hurt the two government-sponsored enterprises even though they hold highly rated mortgages, according to a report from Federal Financial Analytics in Washington.
“Looking only at their non-AAA positions, a writedown of 15 percent to 30 percent would mean a $1.8 billion to $3.6 billion hit for Fannie and a $1.5 billion to $3 billion hit for Freddie,” the report said.
Neither government-sponsored enterprise has much of a cash reserve against losses of that size, and covering those costs could push the companies’ capital below the levels agreed to with their regulator.
From Reuters:
Benchmark subprime ABX indexes close at record lows
Darcy Morrison, analyst at Evergreen Investments in Charlotte, North Carolina said events in the subprime sector are likely to get worse as underlying loan deterioration in pools of securities continue to filter through the pipeline.
“I think that there is much more pain ahead. I don’t think we know the full extent of the downside yet. A lot of investors put too much stock and trade in rating agencies rather than doing their own due diligence,” said Morrison. “The thing of it is, is that they do no forensic work whatsoever. Whatever information they are given is what they base their opinions on and so that’s where people get derailed.”
Steve Says:
June 29th, 2007 at 2:15 pm
Apparently there are now laser absorbing materials to put on your license/headlights, laser jammers, etc etc…(as they apparently have to aim at your license plate region to get a clean read).
S: A lot of the unmarked cars clock you by matching speed for I think 30 or 60 seconds.
TIME TO MAKE THE DOUGHNUTS :)
Trailing 12 Months
Dow Jones Industrials
20.25%
S & P 500
18.36%
Nasdaq Composite
19.85%
From Reuters:
SEC investigating Brookstreet collapse
The U.S. Securities and Exchange Commission is investigating the collapse of Brookstreet Securities, a California broker-dealer that was hit by heavy losses in mortgage-backed securities this month, its president said on Friday.
“The SEC is on site and they’re reviewing it,” Stanley Brooks said in a telephone interview on Friday.
He said the SEC team is investigating the firm’s “books and records,” but declined to elaborate.
From the piece above..
One New York lawyer, who asked not be named, said he may be retained by one Brookstreet client who lost $1.5 million and is considering litigation.
jb
“I also, seem to remember him saying to give him a wake up call when the 10 year rose to over 5%.”
Is he awake or is he still dreaming??
“I asked this on another thread … anyone still think a recession is coming? Why or why not?”
Yes, I do! You bet.
Here are my reasons:
-oil prices (only going to get worse, thanks to the BRIC boys, and I don’t give a crap what they say in Sudan. But, I do like Sudans courage w/ OPEC, just too bad they also kill their own people for shits and giggles..i.e Darfur!!)
-lack of personal savings (How many months has it been negative?)
-The popping of the RE bubble. (I am still not convinced that we are in the bear market yet, I still think we are in the lamb phase… good ol fashion mexican standoff, but one it starts to really unravel, look out!!)
-Personal debt (basically, credit cards have replaced decent middle class jobs, middle class is supported by debt, thanks to the loose money supply by Greenspan and his 1 Trillion dollar China buddies. btw-if you don’t think China owns you, think again…. remember that 250 pt drop on the Dow in like 30 seconds awhile back, reason being, China said…”don’t try to intimidate us or we will drop your Dow in a flash, they damn near did, good thing the current Secretary of the Treasury is a very good diplomate, otherwise we would of had a 500-600pt drop in one day. In addition, if we ever tango with China over Taiwan, expect 1000pt drop in one day.)
ok, enough of this, you get the idea.
and remember one more thing, the world is flat…very flat, even in NJ.
Ciao,
SAS
Has anyone ever heard of trading currency using the Forex Method? It a pile of crap or is there actually something to it? Any info would appreciated.
“who is waiting for apple stock to dip next week when sales of the phone are weak or there are problems?”
I picked up some AAPL back when they had the clam shells. I’ve always like them, I think they have some room to grow. I like the iphone, although exspensive and first generation, they are still ahead of the curve. IMHO
Love my macbook pro ;)
but, its damn heavy, and my wrist hurts alot these days. Too many bar fights in the ball rooms during my hey day :)
SAS
“Has anyone ever heard of trading currency using the Forex Method? It a pile of crap or is there actually something to it? Any info would appreciated”
You are you referring to a Forex swap?
If so, I hope your networth is over 1e6.
Thats just my opinion too. And if it is over 1e6, maybe shytown can recommend someone to you.
SAS
“NJ actually issued over 37,000 tickets last year to drivers who failed to stay right…..”
A hundred tickets a day for failing to stay right?”
-Thats why NJ has a gang & meth problem. These cops are too busy chasing drivers, because that is the cash cow. You think their is any money is arresting the homeboys? nope, lets just let them be. We need to pull over drivers so we can get paid…
yup,
SAS
and these Mayors of these towns are a bunch of do nothings…
especially that no good Lamatina!!
That SOB still around?
SAS
“Thoughts on Rahway anyone?”
Aren’t you guys missing the highlight of Rahway? Like the PRISON!!!!!!!!!!
“Mortgage finance companies Fannie Mae and Freddie Mac could face a multibillion dollar loss if subprime assets continue to mount, according to an analyst report issued on Friday”
This, if it turns out similar to the S&L crisis of the 80s. More reasons for a recession, coming to your town, USA. Remember Mae & Mac are government-sponsored enterprise, and with a stroke of a pen, who knows what can happen.
Its going to get interesting!!
post #115 has a good article.
SAS
““Based on recently sold houses in Englewood Cliffs, prices are about 5% down from the 2005 summer.
In other words, people who bought houses in Englewood Cliffs in 2005 summer are unloading them with about 5% loss these days.”
No they are not. Show me at least one example of a house selling for 5% less than what it was bought for in 2005 in Englewood Cliffs in the tax records:
http://tax1.co.monmouth.nj.us/cgi-bin/prc6.cgi?&ms_user=monm&passwd=data&srch_type=0&adv=0&out_type=0&district=0216
Thanks sas, but I should have done a simple google to answer my own question. However, knowing absolutely nothing about trading foreign curency my curiosity has been piqued. Is trading currency too complicated a persuit for the novice? And/or,is it an investment strategy that’s worth persuing after due dilligence compared to domestic equities?
Some are catching on
Ho-Ho-Kus
ACT HOLLYWOOD AVE $695,000 5/16/2007
PCH HOLLYWOOD AVE $649,900 6/1/2007
PCH HOLLYWOOD AVE $549,900 6/29/2007
Ridgewood
ACT CLIFF ST $799,500 6/14/2007
PCH CLIFF ST $699,000 6/29/2007
Re post 28:
(with apologies if someone addressed this earlier, I skipped down because I did not want to lose my train of thought.)
Scribe,
Interesting in its entirety, but this:
The decisions made by Wall Street’s bankers, hedge fund managers, and bond raters over the next several weeks will determine which way the game plays out.
Contains some false hope. It seems the people at BW want to leave this whole thing in Wall Street’s hands, but they left out one crucial component. If the investors start asking for their money, then these hedge funds, and the investment houses behind them, could experience a situation similar to a pre-FDIC run on the banks.
When a handful of people want to pull out, no big deal, but if big numbers want out, then these guys have to make good. As long as there is a market for the securities at or above purchase price, no problem, but if the securities aren’t worth what they think…
“Has anyone ever heard of trading currency using the Forex Method? It a pile of crap or is there actually something to it? Any info would appreciated.”
If you’re referring to the spot currency market, it could be a pile of crap for unsuspecting individuals. The big financial institutions have been dealing in it for years, so you’re pretty much taking the other side of the trade.
The proliferation of web-based forex trading is attracting plenty of Joe six-packs who don’t realize it’s a zero sum game. There is no direct commission paid, but it’s buried in the bid-ask spread. For the Euro-USD, it’s about 3 pips. A pip is .0001. So when a quote is 1.3549-1.3552, that’s a 3 pip spread that you pay for in every trade. Depending on the ‘lot’ that you trade, 1 pip could be $30, $3, or 30 cents.
Leverage offered is up to 1:100, some even up to 1:400. So at 1:100, putting up $1,000 lets you take a $100,000 position. At that level, you might as well get a gun and blow your head off. Anything over 1:10 is really pushing your luck, given the volatility in currencies. A 100 pip swing can happen within a couple of seconds on major macro-economic numbers that the market was not expecting.
A good website to get more unbiased info on forex is http://www.moneytec.com . A bunch of novice and some experienced traders hang around anonymously and offer info on companies offering their trading platforms, etc.
The biggest downer is that the most active hours for forex trading are around 1 AM EST to 8 AM EST when the European markets are open.
Looks like increasing mortgage rates are not stopping people from buying in Manhattan:
The $3.6 Million Mortgage
But Mr. Weinstein, who for nearly the last 30 years has developed office buildings and condominiums in the New York area, and who seems to be allergic to the idea of accumulating debt, was approved for a $3.6 million mortgage last month for the $4 million condominium he is buying at the Century at 25 Central Park West.
The loan is a two-year floating-rate mortgage that will carry payments of roughly $24,000 a month at what he estimates will be an interest rate of 8 percent through the term of the loan. He plans to refinance in two years after making some renovations on the apartment.
http://www.nytimes.com/2007/07/01/realestate/01cov.html?_r=1&ref=realestate&oref=slogin
8% interest people! Better buy NOW before that 8% makes it’s way to NJ!!!!! But what do I know, I am a bagholder….
“Ha! Nice try, folks. This is a ploy for you to BUY NOW!
I don’t worry about rates at all. But I worry about buying a house and watching my neighbors sell a similar house for 50k 6 months later.”
Are you still going to say that if rates reach 8%?
http://www.nytimes.com/2007/07/01/realestate/01cov.html?_r=1&ref=realestate&oref=slogin
Re post 38:
NJPatient,
While I understand that the contractor’s and workers don’t deserve to be left out in the cold, don’t they have a claim on the asset their labor and materials created?
I realize that their claim may not be entirely compensated, and certainly the timeliness of compensation matters, but the second issue would not be resolved either way, and to some degree the first issue comes under the heading of a business loss.
I’m not saying business losses don’t hurt, but in some respects businesses (at least large ones) make a certain allowance for not getting paid by some customers. Please be assured that I don’t want these guys to get screwed, but notice that the loss they take is part of their operation.
I can’t imagine anyone who goes into contract on a new house thinking for a moment that they can be left out in the cold in terms of the deposit if the house doesn’t get built.
Also, please note that I am referring only to people who received nothing for their deposit.
If someone ended up in a house in an unfinished development, while they certainly have legitimate complaints, I don’t think they should necessarily be at the front of the line for compensation. They’ll rightly get squared away when the project gets finished at the end. (They shouldn’t have to worry about things like unpaved roads, etc. because Kara would have been required to post performance to guarantee the work gets done.)
As to the need for a new bankruptcy bill, I couldn’t agree more even if it included a provision to pay me $1M. The injustice of the current law, and the mess it is making of both individual’s lives and society in general can’t be overstated.
“This, if it turns out similar to the S&L crisis of the 80s.”
SAS,
IMO, this may make the Charles Keating’s of the world look like single A ball. When a firm {Bear} ponies up approx 8% of their total market cap to avoid dropping their drawers, you have to wonder what the alternative may have been. That’s one hell of a hickey to pay to avoid a benchmark. There analysis/forecast is spun to disquise their giant lies. Too late, they are naked. The benchmark is coming.
If the #’s are correct, approx $500 B of this worthless crap, in total, maybe levered 10,20 or 30 times, the possible consequences are ominous. Is it isolated contagion or systemic contagion? A run followed by, of course, a bailout will further crush the dollar. The fed knows this. Do we eventually see an abandonment of worthless dollars and the creation of a new currency, akin to the euro. Maybe a north/south american currency? The possibilities are endless. Bottom line, protect and add to what you have, build up cash. Be in a position of strength to stike when the iron is hot.
r.e post #135 NTY article:
Is it me or does this article make any sense?
“Mr. Weinstein, who for nearly the last 30 years has developed office buildings and condominiums in the New York area”
ok, so if he is any good, he should have made alot of Jack over the 30 yrs. Then why the heck the loan? Where is your jack Mr. Weinstein?
“seems to be allergic to the idea of accumulating debt”
Again WEinstain, why the loan? Is it an anti-histamine or something???
“Century at 25 Central Park West”
Hell of a nice building, he must be the only one with a loan in that place.
“$24,000 a month at what he estimates will be an interest rate of 8 percent through the term of the loan”
ok, not the smartest move for someone in the biz for 30+ yrs.
“He plans to refinance in two years after making some renovations on the apartment”
So, basically, he is a high end flipper?
This article is the same shit Time mag ran awhile back, but with middle class people from the burbs.
SAS
“Better buy NOW before that 8% makes it’s way to NJ!!!!! But what do I know, I am a bagholder”
Thats right, if 8% makes it way, people who didn’t buy during the boom, will sweep up with CASH for pennies on the dollar because that 8% will mean nothing to them.
You do know something however…
you do know you are a bagholder ;)
SAS
BC Bob,
I can forsee something like that happening..
but I have to wait and see how things pan out.
I hate to even think of those options that you mention. Then again, I would love to see Bear take it in the shins.
SAS
” Is trading currency too complicated a persuit for the novice? And/or,is it an investment strategy that’s worth persuing after due dilligence compared to domestic equities?”
I think that if you are a novice, and don’t have a net worth over a million. Best to stay out. IMHO.
SAS
Re post 43:
skep-tic;
While not as thoroughly versed in the intricacies of bankruptcy laws as you, I do have a general understanding of them.
My post wasn’t really seeking such an explanation (though, since I have to acknowledge that I qualify as an ubernerd as defined by Tanta at CR I can’t say I didn’t appreciate it).
Mostly I was wondering why there was never specific legislation designed to address the very specific situation of an individual putting down a deposit on what they believe will be their future home, but never seeing that home built.
Time and again we hear that, for most people, the purchase of a home is the biggest financial transaction of their life.
I’m just surprised that it never became the subject of legislation to prevent individuals from suffering a financial loss so large as to be potentially catastrophic.
Contractor Bill [123],
I’m in FX. 90% of investors get chopped up in short term swings/noise. You make money [no pun] in this market by catching a trend and sitting. Once currencies turn, they are the best trending animals in the world, dollar, euro, kiwi, cd, etc.. If you day trade with stops around the release of reports, you’d be better off going to Vegas.
Dream [134] touched on many pertinent points.
Any other questions, get my email from JB. I’d be happy to answer what I can.
136 – few things …
a) this guy is dropping millions of dollars on high-end NYC apartments … not quite sure how that applies to a person seeking a house in NNJ …
b) all i see about rates in that article is that the owner ‘estimates’ the rates will be 8% next year. what’s the basis? when was the last time they were 8%? it just seems like an opinion backed up by zero fact
c) please take at look at the many, many graphs that chart the last real estate slump that followed a massive run-up. I think you’ll find that we’ve just begin a slow fall into the chasm
grim: you didn’t post this article from the WSJ?
EATING OUT
The Best Barbeque
Juicy brisket pulled straight from the pit in Texas. Pulled pork shoulder with crispy browned bits in Tennessee. And versions rivaling both in Boston and New York. Our food critic goes cross-country for the pick of the pits.
By RAYMOND SOKOLOV
June 30, 2007; Page P1
True barbecue is a complex, slow method of cooking meat in an enclosed space with low, indirect heat and smoke. True barbecue emerges from the “pit” still moist and very tender after as many as 18 hours of cooking. Its flavor is a mix of the smoke, the sublimation of fat, the caramelization of meat juices, spices rubbed on it, soaked or injected into it and sauce basted (“mopped”) over it while it cooks.
Within all this, there are endless variations: Tennessee takes its pulled pork from the shoulder; eastern North Carolina uses the whole hog, and flavors the smoky, succulent meat with vinegar sauce; and of course Texas serves up beef from ribs to brisket to sausage. But as I learned on an odyssey in search of America’s best barbecue, the cuisine is outgrowing its regional origins. Barbecue joints up north can hold their own against the best below the Mason-Dixon.
[edit]
At Carl’s Perfect Pig Bar B Que in White Bluff, Tenn., I dined on an artful jumble of shoulder shreds punctuated with browned bits of the outside of the meat. At Kreuz in Lockhart, Texas, I devoured juicy beef brisket, pulled from the smoker and sliced before my eyes.
[edit]
The odd thing about Memphis in May is that you can’t eat the barbecue. The overwhelmingly male teams hang about in their colorful booths, minding their techno-pits. The general public just mills around or pays to go into a special tent where they can ingest limited samples of the contestants’ output.
This elitist setup mirrors the larger barbecue world, which is starkly divided between the mob and the cognoscenti — a paradoxically snobbish rift in a subculture built on a myth of rural simplicity and y’all-come populism. Barbecuemania is split between the uninstructed millions (who will eat a sparerib no matter where it’s been) and the adepts who love to split bristles over where to find the best “dry” ribs or the tangiest vinegar-based sauce.
At Memphis in May, I cadged enough meat to conclude that there was plenty of bad ‘cue and some very fine stuff to be had. But for those of us outside the contest circuit, the real contest is in restaurants, where pitmasters test their skills every day for the benefit of Everydiner.
The most famous barbecue venues tend to be big, souvenir-sauce-selling places coasting on their owners’ fame as contest winners or on raves from the small coterie of barbecue critics. I trekked to Decatur. Ala., to Big Bob Gibson Bar-B-Q, a multiple first-place winner at Memphis in May, and found the pulled pork mushy and the much-touted sauce underwhelming. I had a passable lunch at Mike Mills’s 17th Street Bar & Grill in the cheerless southern Illinois burg of Murphysboro. Mr. Mills uses applewood in his smokers, which is too mild for my Lockhartian taste for post oak.
The most famous of all barbecue restaurants is Arthur Bryant’s in Kansas City, Mo. Put on the map by Calvin Trillin who in the 1970s called it “the single best restaurant in the world” in Playboy, Bryant’s is now a minichain in Kansas City. I found the barbecue serviceable but unexciting.
Tennessee may qualify as the capital of the most basic kind of barbecue, pork shoulder “pulled” or shredded by hand. Shoulder, like other barbecue cuts, is not a luxury meat — it’s tough — but benefits from the slow braising of the pit.
At Bozo’s BBQ in Mason, east of Memphis, you don’t need to sauce up the perfect squills of pork shoulder. Outside this unassuming family operation, a lonely whistling freight train rumbles by. The bright lights of the high-security federal pen next door cast an ominous shadow on the humble former farmhouse. Within, all is good cheer restrained by the confident reserve that comes from knowing you can pull pork so that each strand comes away long and perfect, like hanks of moist beige yarn.
This is the Memphis style at its apogee, 40 miles out from Graceland, and all the other sights and sounds of downtown. Bozo’s does not serve ribs. Don’t ask for brisket either. In this shrine of the shoulder of the sow, aficionados know that “barbecue” signifies only one cut of meat, from high on the hog.
For a serious challenge to this fare, you’d have to head to the Raleigh-Durham airport and scoot down to Wilber’s in Goldsboro, N.C. You are now in whole-hog territory. Vinegar is the basic condiment underlying the pulled pork, which Wilber’s variegates with meat fragments from all up and down the succulent swine. You could have this as a sandwich topped with chopped, vinegary cole slaw, but I prefer the unadorned piggy perfection. The southern-fried gizzards are also A-one and offer a crunchy counterpoint to the silken, mildly peppery main event. At Dillard’s Bar-B-Que in the city of Durham, they offer a similar, if smokier pork in a dandy coleslaw sandwich.
[edit]
Will there be any “Bone us” on wall street this year?
From Dean Baker:
Home Values Slashed in Half? The Housing Bubble Is About to Burst
The latest data on housing sales showed that the inventory of unsold homes climbed to 4.4 million in May, yet another record. The current inventory would be more than a full year of housing sales in the mid-nineties, before the housing bubble began to take off. There is also a record inventory of new homes for sale. Economists usually expect that excess supply leads to a drop in prices, and in this case, there is a considerable excess supply of houses.
In fact, house prices by many measures are already falling. The National Association of Realtors reports that the median price of an existing home is down by 2.1 percent from its year-ago level. Prices have fallen by much more in some local markets. For example, an index constructed by Yale economist Robert Shiller shows that house prices are down by 4.9 percent in the Boston area and by 6 percent in San Diego. Adjusting for inflation, Shiller’s measure implies that the real price of an average house in San Diego is down by almost 10 percent from its year-ago level. That’s real money in a city where middle-income families might have purchased a $700,000 house in 2006.
Even these numbers understate the true decline in house prices. At the peak of the boom, houses were sold without conditions. No successful buyer got a home inspection, and then forced sellers to make repairs before closing. It has also become a standard practice in at least some markets for sellers to make kickbacks to buyers at closing – effectively allowing the buyer to pull out cash by inflating the sale price. These kickbacks, which can be 2 to 3 percent of the sale price, are not picked up in any of housing price indices which rely on the contracted price.
Unfortunately for homeowners, several factors indicate that the situation is likely to get worse in the near future. The vacancy rate for ownership units is 50 percent higher than it had ever been prior to the last two years. A seller holding a vacant unit – one which collects no rent – is likely to be a very motivated seller.
…
House prices will not collapse to nothing like the most ridiculous of the Internet stocks, but homes in the most-inflated markets could lose 30 to 50 percent (in real terms) from their bubble peaks. Some people bought homes in these markets expecting to make great returns on their investments. Perhaps these people deserve their fate.
However, many homeowners followed the advice given to them by Realtors, politicians and financial advisors, and were simply pursuing the American Dream of homeownership. When the wreckage from the real estate bubble becomes clearer, these “experts” will have much to answer for.
From the Record:
Region’s office market stays weak
The office market in North Jersey continued to stagnate in the second quarter, according to a report issued Friday, as Central Jersey continued to emerge as the state’s office real-estate growth area, indicating that more businesses are looking to the south and west.
Vacancy rates in the state increased by 0.1 percent, and the average asking rent per square foot decreased by 1 cent to $24.29, said the Parsippany-based GVA Williams real estate services and brokerage firm.
In North Jersey, the vacancy rate mirrored the state average, and asking rents have fallen by 5 cents, to $24.47.
In contrast, asking rents in Central Jersey jumped 5 cents in the second quarter, to an average of $24.03 per square foot, according to the report.
Central Jersey is generally defined by market analysts as Hunterdon, Monmouth, Middlesex, Ocean, Mercer and Somerset counties.
The amount of vacant office space in New Jersey has increased for seven of the past eight quarters.
…
Within its market research, GVA highlights the same red flag discussed at a seminar last week by Rutgers University economist Joseph Seneca: Job growth in New Jersey has slowed to a crawl in 2007, and as job creation stagnates, so, too, does the office market.
Though New Jersey’s 4.3 percent unemployment rate is still lower than the national average of 4.5 percent, “office job growth has still lagged,” GVA’s report states.
“Much of the job growth is for low-paying jobs which don’t positively impact absorption rates for the office market.”
Franklin Lakes
ACT PULIS AVE $924,900 4/22/2006
PCH PULIS AVE $849,900 5/4/2006
PCH PULIS AVE $699,900 6/17/2006
PCH PULIS AVE $724,900 7/10/2006
PCH PULIS AVE $649,900 7/22/2006
W-C PULIS AVE $649,900 10/2/2006
EXP PULIS AVE $649,900 1/1/2007
ACT PULIS AVE $599,900 2/1/2007
PCH PULIS AVE $579,900 4/5/2007
ACT* PULIS AVE $579,900 4/25/2007
U/C PULIS AVE $579,900 4/30/2007
SLD PULIS AVE $575,000 6/28/2007
ChiFi (147)-
Thanks for catching that. Fer a Yankee, that writer’s got pretty good taste in ‘cue. If you’re ever traveling to Memphis, the best joints can sometimes be of the dingy, “sleeper” variety; cleanliness is no indicator of quality when it comes to BBQ.
My faves:
1. The Rendezvous. Simply Mecca. Dry rubbed perfection, served with beer that’s at least 5 degrees colder than anywhere else in town. My vote for the best BBQ on Earth.
2. Interstate BBQ. So good, they sell it at the airport. Heavily hickory-smoked & sauces that rival anyone’s.
3. Germantown Commissary. Suburban, but not tame. Go during off-hours to beat the line.
4. Loeb’s. Grubby, dirty and features locations in which you should fear for your life. However, each store has its own pit…and somebody at the home office teaches the managers how to use them. If you’re a coleslaw fan, theirs is the best in the world. I’ve heard rumor Loeb’s is out of business, but cannot confirm.
Rich,
Wow.
JB [149],
In 2005 & 2006 I was called delusional since I called for decline of 30-40%. It seems like many are in the 40-50% camp, Kriesel, Gross, Heebner, Schilling, etc.. Am I the only optimist?
#154 moderated.
Hillsdale
SLD CRAIG RD $834,000 2/3/2004
ACT CRAIG RD $1,279,000 5/24/2006
PCH CRAIG RD $1,188,000 8/4/2006
EXP CRAIG RD $1,188,000 11/25/2006
ACT CRAIG RD $999,000 1/13/2007
PCH CRAIG RD $899,000 2/23/2007
ACT* CRAIG RD $899,000 3/20/2007
U/C CRAIG RD $899,000 3/29/2007
BOM CRAIG RD $899,000 4/25/2007
ACT* CRAIG RD $899,000 5/4/2007
ARR CRAIG RD $899,000 5/11/2007
PCH CRAIG RD $849,900 5/29/2007
ACT* CRAIG RD $849,900 6/1/2007
U/C CRAIG RD $849,900 6/4/2007
SLD CRAIG RD $830,000 6/28/2007
Wyckoff
SLD CRESCENT AVE $365,000 3/15/2004
ACT CRESCENT AVE $423,900 3/23/2004 (New siding & roof)
PCH CRESCENT AVE $409,900 4/5/2004
PCH CRESCENT AVE $399,900 4/21/2004
PCH CRESCENT AVE $398,000 4/28/2004
PCH CRESCENT AVE $397,000 5/6/2004
PCH CRESCENT AVE $391,000 7/19/2004
U/C CRESCENT AVE $391,000 7/26/2004
SLD CRESCENT AVE $391,000 7/27/2004
ACT CRESCENT AVE $430,000 1/12/2007
ACT* CRESCENT AVE $430,000 5/22/2007
U/C CRESCENT AVE $430,000 6/4/2007
SLD CRESCENT AVE $390,000 6/28/2007
Just saw several auctions of iphones on ebay. All going around the price of $1,900. Holy crow, as much as I want one, these blokes are crazy for saying that amount of money..
Reminds me of RE. When the frenzy starts and the media hypes, peoples common sense goes out the door, and the “I have to have it” thinking sets in.
Will we have an iphone bubble?
SAS
Yan: They stole our conclusion….mostly that Wharton is garbage ;-)
For Hot Idea, a Cool Start
WisdomTree ETFs Lag With Fundamental Indexing
By IAN SALISBURY
June 30, 2007; Page B2
Fundamental indexing recently has been one of the hottest investment ideas in the fund world, but early returns from one of the most prominent fundamental indexing shops, WisdomTree Investments Inc., are less than groundbreaking.
Conventional index funds aim to match market results, betting that, with the help of razor-thin costs, they will be able to beat most actively managed mutual funds over time. But conventional index funds, which weight companies by their market capitalization, or the total value of their outstanding shares, also have been criticized, because they reflect a big dose of market sentiment, rather than more “fundamental” criteria such as a company’s earnings or dividends.
WisdomTree, a start-up based in New York, launched a family of exchange-traded funds designed around indexes that weight companies based on dividends, a factor WisdomTree argues is a better indicator of a company’s real value.
Since then, WisdomTree, which manages about $3.9 billion in ETF assets, has touted the success of its funds based on hypothetical back-tests, data that show how the funds might have performed against traditional indexes such as the Standard & Poor’s 500-stock index and the Russell 3000, had their investing methodology been used in the past.
WisdomTree’s original set of 20 ETFs celebrated their first birthday in June. The early results suggest that the company might have to wait a little longer before putting conventional indexing giants such as Barclays PLC, State Street Corp. or Vanguard Group out of business.
[edit]
I live in a small townhouse complex (rental). Vacancies are up and it is getting harder for them to find tenants. From what I see in central Jersey, the rental market is very soft.
Holy crow, as much as I want one
Don’t worry, given Apple’s history of extremely short produce lifecycles, I fully expect the Gen 2 iPhone to be announced shortly after Christmas.
jb
A few ancedotes… not sure what to make of it at this stage:
– A number of months back, ML insituted a hiring freeze, seemed a bit odd(this despite record bonus payouts). Now certain divisions are being asked to size things up for coming layoffs…
– Rolling layoffs continue at Citi, though likely more of an isolated case of cost-cutting vs. broader trend. Uncertainty from the layoffs a few months back having a huge ripple effect- literally every week people are leaving in droves on a global basis, huge talent drain. Many going to HSBC and UBS, which conversely seem to be on a (overhiring?) binge.
– MS seems to be holding their own, Mack making some good progress over there from the god-forsaken Purcell days.
– Horrible morale continues over at JPMC, though Dimon is driven and ruthless and will probably make out in the end, as they continue to move all non-essentials from NYC to Ohio. Unfortunately for him his rep preceeds him, so not too many viable acquisitions looking to play ball – yet
Curious if anyone else is hearing similar rumblings…firms just being prudent ahead of an expected market top? CDO/HF/LBO worries?
Also wonder if there’s a broader rotation/power shift underway between US banks/wirehouses and their overseas counterparts. Deutsche, UBS, HSBC all seem to have a pile of cash from their banking operations that they want to put to work (though not always wisely).
“Wharton is garbage ;-)”
hear..hear…
(rules of parliment)
sas
“I fully expect the Gen 2 iPhone to be announced shortly after Christmas”
you don’t think before xmas? They would make great little stocking stuffers. Hope Santa brings me one.
What will be interesting is to see how other companies react to AAPL. I expect the iphones to be a hit really. So, VZ is going to have to counter somehow.
SAS
btw-
bought me a fuji Roubaix the other day.
Like my son says “fu_king sweet dad”
So, for my purposes, I really like it.
thanks for the tip fellas.
sas
Steve,
I think alot of jobs are going to be shipped to Sioux Falls, SD.
A good town btw..
cheap, close to Minnespolis, low taxes, good place to raise kids.
SAS
“people who didn’t buy during the boom, will sweep up with CASH for pennies on the dollar because that 8% will mean nothing to them.”
Oh really? People are buying houses for cash left and right? Seriously, most buyers only put down between 10% and 20%. They WILL get hurt by the 8% interest rate. Will the people buying estates in Alpine and Saddle River be affected by higher interest rates? Most likely not. But that is not the case for cheaper homes, especially those being bought by first time buyers.
How are a newly married couple in their 20s or 30s who have entry level jobs supposed to come up with the monthly payment on 8% interest, never mind how they will save up the downpayment while renting in the landlord’s market of northen NJ.
Lindsey Says:
June 29th, 2007 at 8:45 am
Re Kara:
Here’s something I don’t understand, how exactly do contract purchasers of an asset (a home) end up at the end of the line here?
A while back, I saw something posted on one of the real estate blogs by an ex-Kara employee – that home buyers had the ability to purchase a bond to insure their deposits. I think the cost of the bond was 10% of their deposits.
Has nothing to do with the way in which the bankruptcy laws work, but the ones who were bonded will get their money back – or at least that’s what the poster said.
Some of the articles about Kara have mentioned home buyers pursuing bonding agents for their money.
“How are a newly married couple in their 20s or 30s who have entry level jobs supposed to come up with the monthly payment on 8% interest”
Exactly – lower the prices or get squashed.
“Exactly – lower the prices or get squashed.”
No, it does not work that way. If a young couple can’t afford to buy, oh well. They will need to get help from mommy and daddy or go back to school to get that MBA so they can make more. We are in the middle of a LENDER’S MARKET right now so monthly mortgagae payments will not be coming down anytime soon.
Correct me if I’m mistaken, but I believe those (purchasers) in trouble with Kara were the folks who specifically released their money from escrow, at the builder’s urging “to finish their home.”
Otherwise, it would be held in an escrow acct and not released unless the home was completed… either these folks had the worst attorneys ever, or they let common sense go out the window and signed away their deposits hoping to get their homes.
Tragic, but at the same time, you gotta cover your own a–, no one else is going to do it for you.
Clotpoll –
Do you still think t-bills are a foolish place to hold a significant amount of cash while waiting for the housing correction to play out?
You may or may not recall asking me if I was 80 years old by suggesting this as a decent strategy on 04/01. You suggested the following REITs instead; BXP, CT, CGP, HOT, HST and VNO. They are down 12.3% collectively since you suggested this 3 months ago.
I hope nobody was foolish enough to take your advice with their hard earned savings.
How are a newly married couple in their 20s or 30s who have entry level jobs supposed to come up with the monthly payment on 8% interest, never mind how they will save up the downpayment while renting in the landlord’s market of northen NJ.
You paint a very grim picture of the future of the New Jersey real estate market.
jb
“go back to school to get that MBA”
OK. Wait for them to complete their MBA [3 years?] and then get squahed.
Steve,
I don’t know all of the ins and outs of the Kara debacle.
I just remembered that bit about the bonds.
“But based on my observation, there is about 5%-10% discounting going on from Last List Price -> Sold Price in Englewood Cliffs.”
You have not provided any evidence to back this claim up with links to tax records. Can’t find anyone selling for a loss in EC? That’s ok. It’s my job to separate fact from BS. Thanks for palying, though! Join us later for Round 2 of “Spot the BS”
I bought my first home in 1992, on the downslide of the 80’s RE bust. I was a newly married man in my mid 20’s. My wife didn’t work. She stayed home with our son. I made a decent wage as a technician.
Somehow, we managed to buy a home, putting only 5% down and paying 8.625% on a 30 year fixed. The first few years were tight, but we managed to pay all our bills.
If mortgage rates climb into the 8’s again, housing prices will plummet. That’s how people will afford them.
Some people won’t sell at those prices because they don’t want to and some people won’t sell because they’re upside down on their mortgage, but if people want to sell, they’ll have to take less. That’s just basic economics.
I’ll throw in some data..
All of these are in Englewood Cliffs.
285 Arthur, Sold 5/25/2007
Last Asking Price: $1,330,000
Sold Price: $1,160,000
(13% discount list/sold)
21 W. Bayview, Sold 5/15/2007
Last Asking Price: $2,300,000
Sold Price: $1,950,000
(15% discount list/sold)
50 Snyder, Sold 5/21/2007
Last Asking Price: $1,250,000
Sold Price: $1,100,000
(12% discount list/sold)
549 Summit, Sold 5/1/2007
Last Asking Price: $1,200,000
Sold Price: $879,000
(27% discount list/sold)
315 Center, Sold 5/21/2007
Last Asking Price: $1,425,000
Sold Price: $1,300,000
(9% discount list/sold)
jb
JB,
Those people did NOT take losses because we do not know what they bought their homes for. Selling for 10% less than asking is MUCH different than selling for 10% less than what you paid.
“They are down 12.3% collectively since you suggested this 3 months ago.”
[172],
There has been a management change. The NJ Vulture Fund has terminated its agreement with Clot. Bear is not the only institution shuffling the deck.
Donald,
“But based on my observation, there is about 5%-10% discounting going on from Last List Price -> Sold Price in Englewood Cliffs.”
I see nothing in that comment that refers to the sellers taking losses, only the spread between ask/sell.
jb
“Those people did NOT take losses because we do not know what they bought their homes for.”
OK, you don’t know what they paid. However, you are certain that they did not take a loss. Sounds like another Monte Carlo simulation. Heads I win, tails you lose. There were also a ton of fantasy assumptions built into the equity tranches.
JB,
Excellent job of “Spot the BS”.
Wish I had time to play as well… maybe later.
Rich
“.. different than selling for 10% less than what you paid.”
IMO, bankruptcy is the only way out for bag holders.
JB,
I don’t think he actually wanted facts.
And you forgot to mention Alpine…
How are a newly married couple in their 20s or 30s who have entry level jobs supposed to come up with the monthly payment on 8% interest, never mind how they will save up the downpayment while renting in the landlord’s market of northen NJ.
Don’t most people base what they can afford on monthly payment size? If the prin amount varies with the rate then the monthly payment that the market can bear can stay the same.
Of course, it will mean prices will need to fall.
And before you tell me how wrong this analysis is remember that the reverse happened in the beginning of this decade.
JB,
Do you have NJMLS Acess? they have a nifty statistical report function.
If you ask for solds in Englewood cliff from say 6/1/2005 to 6/1/2006 you would find out that 73 homes sold for an average of 1,1195.00 which was an average of 94% of the asking price. Then if you changed the date to 6/1/2006 to 6/1/2007 you would find that 60 homes sold for an average of 1,1000,00 which was an average of 88% of asking price.
Tell Donald for me please.
KL
KL #187, does that “88% below asking price” reflect the original asking price, or only the asking price from the last listing?
Many houses are relisted 3-4 times, with numerous price drops, before they eventually sell.
Un,
If there was an easy way to find that out I would, but you would need to check the history of each individual sale. If I had that much time I would figure how to use this dang hard drive video recorder I got for christmas. My kids want a you tube and I can’t get it off the hard drive in the camera into the computer!
Less time online more time w/instruction manuel.
KL
S&P, Moody’s Mask $200 Billion of Subprime Bond Risk (Update2)
By Mark Pittman
http://www.bloomberg.com/apps/news?pid=20601109&sid=ag8P5Or55avc&refer=home
“For Sale” and “Open House” signs June 29 (Bloomberg) — Standard & Poor’s, Moody’s Investors Service and Fitch Ratings are masking burgeoning losses in the market for subprime mortgage bonds by failing to cut the credit ratings on about $200 billion of securities backed by home loans.
The highest default rates on home loans in a decade have reduced prices of some bonds backed by mortgages to people with poor or limited credit by more than 50 cents on the dollar and forced New York-based Bear Stearns Cos. to offer $3.2 billion to bail out a money-losing hedge fund. Almost 65 percent of the bonds in indexes that track subprime mortgage debt don’t meet the ratings criteria in place when they were sold, according to data compiled by Bloomberg.
That may just be the beginning. Downgrades by S&P, Moody’s and Fitch would force hundreds of investors to sell holdings, roiling the $800 billion market for securities backed by subprime mortgages and $1 trillion of collateralized debt obligations, the fastest growing part of the financial markets.
“You’ll see massive losses from banks, insurance companies and pension managers,” said Joshua Rosner, a managing director at investment research firm Graham Fisher & Co. in New York and co-author of a study last month that said S&P, Moody’s and Fitch understate the risks of subprime mortgage bonds. “The longer they wait, the worse it’s going to be.”
Loss Estimates
Rosner estimates that collateralized debt obligations, which have packaged thousands of bonds and derivatives into new securities, will lose $125 billion. Institutional Risk Analytics, a Hawthorne, California-based company that writes computer programs for accounting firms, says 25 percent of the face value of CDOs is in jeopardy, or $250 billion.
Losses may rival the savings and loan crisis of the 1980s and 1990s. The Resolution Trust Corp., formed by the U.S. government to resolve the thrift crisis, sold $452 billion of assets at a cost to taxpayers of about $140 billion.
Judicious (172)-
Talk about old news, out of context. First of all, if you’re playing t-bills right now, you’re riding with the trade. Not a bad place to be, but nowhere I’d want to be parked for years.
Second- and BC Bob would back me up on this- I’m certainly not recommending stocks- from ANY category- as “buy and hold” or “buy and forget” investments. BC can second for you that the first day of the bond market explosion, I took virtually my entire portfolio to CASH (including VNO, BXP, et al- which I made a killing on in the past year).
That’s why- as I’m doing right here, right now- I say ALL DISCLAIMERS APPLY when I mention stocks at this board.
The fundamentals for any stock or sector can break down overnight. Depending on which way you’re looking and the window of time you choose, even Warren Buffett can be made to look like a fool.
BTW, I don’t think the trade’s done in REITs…not by a long shot.
All disclaimers.
“The fundamentals for any stock or sector can break down overnight…”
Agreed, but why did you suggest that as a good place to park one’s savings for a down payment on a house that they may need in the next 2-3 years? Especially as an alternative to an investment that has a guaranteed return along with a possible tax benefit.
“Oh really? People are buying houses for cash left and right?
Correct, people are not buying houses with cash (not yet anyways) because the squirels w/ the acorns know better because we haven’t begun to see serious declines.
True, these squirels are very few, and they won’t save the falling market, but they will pick up something really nice for pennies on 05 summer 05 prices.
“Seriously, most buyers only put down between 10% and 20%”
somewhat correct, I suspect more people put 10% to nothing down, rather than 10-20%. Either way, smart money wouldn’t put anything down on RE.
Remember, majority of people do the wrong thing at the wrong time ; )
“How are a newly married couple in their 20s or 30s who have entry level jobs supposed to come up with the monthly payment on 8% interest”
Thats just it. They won’t, nobody new can come to the market. Plankton as JB call it. Also, during the bubble, not only was the borrowing in overdrive, we also “borrowed” future buyers. Another reason why there wont be anyone to buy in the future, not anyone new to the game anyways.
“renting in the landlord’s market of northen NJ”
Hark, I won’t call it a landlor’s market. Maybe is a town here or there, but collectively. No way.
Think Big picture Troll and connect dots.
You hear words, but you are not comprehending.
You will get it ;)
sas
“Do you still think t-bills are a foolish place to hold a significant amount of cash while waiting for the housing correction to play out?
I think T-bills is a good place to hold in this climate, but no more than a 1/3 max.
Disclaimers of course.
SAS
“IMO, bankruptcy is the only way out for bag holders”
You are forgetting the new bankruptcy laws that went into effect.
Not that easy to do on RE.
sas
From NBC4:
Prosperous Suburbs Not Immune To Foreclosure
Home foreclosures are on the rise in nearly all the Washington suburbs — areas that have been mostly insulated from hard times in the past.
Arlington County real estate assessor Tommy Rice said he was taken aback when he saw six foreclosures pop up in a three-week period earlier this year.
The foreclosure rate has quadrupled in Fairfax County and increased ten-fold in Loudoun County over the past year. It has tripled in Montgomery County.
The surge in foreclosures during relatively good times is being traced to risky subprime mortgage loans being made to people in an inflated real estate market.
John Rust, accounts commissioner in Fairfax, said the trend in foreclosures seems to be accelerating and hasn’t reached its peak yet.
From the AP:
EPA wants paper company to pay for Passaic cleanup
Struggling northern New Jersey manufacturer Marcal Paper Mills Inc., which is already trying to resurrect itself out of bankruptcy, now faces a nearly $1 billion claim from the U.S. Environmental Protection Agency.
The EPA and other government agencies have filed a claim in Marcal’s bankruptcy case for $946 million to help clean a stretch of the Passaic River that federal environmental officials say was polluted with dioxins and PCBs from Marcal’s plant.
Pollution in the lower Passaic has been blamed on scores of sources, including a former herbicide factory in Newark. But since the area is on the federal Superfund list, the EPA has the right to charge a single contributor for the entire cleanup, according to an agency spokesman.
…
The Elmwood Park manufacturer says the EPA’s demands are holding up a bankruptcy reorganization plan in which a private equity firm has agreed to provide millions.
“The (reorganization) plan does not contemplate the payment of a $946 million claim,” company attorney Michael Sirota recently told The Star-Ledger of Newark.
“I see nothing in that comment that refers to the sellers taking losses, only the spread between ask/sell.”
I DO!!!!
“In other words, people who bought houses in Englewood Cliffs in 2005 summer are unloading them with about 5% loss these days.”
“Then if you changed the date to 6/1/2006 to 6/1/2007 you would find that 60 homes sold for an average of 1,1000,00 which was an average of 88% of asking price.”
This does not mean that prices went down for individual homes. Avergae prices can be brought down by $1 transactions, land sales, and the sales of older homes that are greatly cheaper than the new McMansions. Did prices go down? Yes. But not as much as the statistics you cite.
Perhapos someone can compile home statistics for Alpine. Forbes has the average home in Alpine at $1,888,888.
http://tinyurl.com/24q36y
For about a year now, this is the style? Does the height of platform heels have anything to do with how overpriced homes are? Do heels rise as prices drop?
Anyway, I saw women with shoes like this on at the Mets game yesterday.
It’s the end of the world as we know it.
Duck, lower your price, like now, man.
“I’ll throw in some data..
All of these are in Englewood Cliffs.
285 Arthur, Sold 5/25/2007
Last Asking Price: $1,330,000
Sold Price: $1,160,000
(13% discount list/sold)
21 W. Bayview, Sold 5/15/2007
Last Asking Price: $2,300,000
Sold Price: $1,950,000
(15% discount list/sold)
50 Snyder, Sold 5/21/2007
Last Asking Price: $1,250,000
Sold Price: $1,100,000
(12% discount list/sold)
549 Summit, Sold 5/1/2007
Last Asking Price: $1,200,000
Sold Price: $879,000
(27% discount list/sold)
315 Center, Sold 5/21/2007
Last Asking Price: $1,425,000
Sold Price: $1,300,000
(9% discount list/sold)
Here is what the following sellers paid:
285 Arthur: $400,000, 11/12/96
50 Snyder: $1, 5/15/02
549 Summit: Unavailable
21 W. Bayview: $600,000, 1/24/2005
So, as I said before, nobody is selling for less than what they paid.
Yeah, so? What does that have to do with you?
“Yeah, so? What does that have to do with you?”
I also intend not to sell for a loss. DUH!
21 W. Bayview was bought in 2005 for 600K and sold for 1.95M???
Dear Robert Troll,
I can not answer for average home “in” Alpine as per forbes, just averaged sold and it goes like this:
June 05-06 28 sold average 6,235,179 81% of asking
June 06-07 14 sold average 4,251,429 87% of asking
Median is a different figure. It also tells a story. Median 06-07 3,600,00
Median 05-06 2,700,00
KL
“21 W. Bayview was bought in 2005 for 600K and sold for 1.95M???”
That is what the records say.
Alpine mansion listed for $49 million!!!!!
http://njmls.com/cf/details.cfm?mls_number=2726107&id=999999
Robert Troll
Land sales are not included, these figures I have posted were SFH only – perhaps their was a knockdown, I will let you know 14 or 28 sales are not that many that I can’t look them over, also $1.00 transfers as you call them are not included, as my figures are strictly sales thru the MLS.
KL
Thanks rhyming realtor.
Perhaps the median price in Alpine will skyrocket when this $49 million baby gets sold:
http://njmls.com/cf/details.cfm?mls_number=2726107&id=999999
Thanks rhyming realtor.
IE I was wrong…
I also intend not to sell for a loss. DUH!
I you receive asking on your home now you WILL be selling for a loss on your investment.
If you receive…
Robert,
One of the first sale histories that I checked of the examples you gave was
50 Snyder- what a great example of 80’s real estate debacle
Active 8/1987 999,500
reduced 2/1988 959,900
active 11/1988 895,000
active 7/1989 775,000
reduced 8/1989 725,000
Oh lets rent it 9/1989 $3800
Active 5/1990 725,000
Active 5/1991 695,000
Active , reduced , active reduced -yada yada
Until it sold for $ 525,000 1993
Let’s see I wondered what it sold for in 1987??
KL
How could someone as dimwitted as our troll even have found this site?
Perhaps the median price in Alpine will skyrocket when this $49 million baby gets sold:
Perhaps if we put wheels on my Grandma, she will become a bicycle…
What a dope
Judicious (193)-
Correct me if I’m wrong, but was my suggestion to put all your eggs in the REIT basket…or in any other sector? Did I say put all your “house money” in one place? I don’t think so.
I think my comment was a comparison of REITs vs T-bills as something that might be a superior investment. At the time, these issues were experiencing capital appreciation plus, of course, regular dividends. Yes, T-bills are ultra-safe, but what you see is what you get.
BTW, if you’re buying your house in a few months, I wouldn’t recommend putting ANY of your downpayment in stocks. You have a major purchase looming and don’t need to risk anything.
If, however, you are a LOD charter member and are preparing to wait until the next coming of Jesus before you buy, something a little more venturesome than T-bills might be in order.
If, like many of us believe, the real rate of inflation is anywhere from 6-9%, your coupon on a T-bill is only slowing down the erosion of the value of your savings.
FYI,
Anyone after an iphone, Apple says all of their stores in NJ will have them when they open tomorrow at 9 a.m.
Clotpoll said: “BTW, if you’re buying your house in a few months, I wouldn’t recommend putting ANY of your downpayment in stocks. You have a major purchase looming and don’t need to risk anything.”
Clotpoll – I suggest you go back to 4/01 and take a look…you *did* recommend just that. Of course, that was after you asked me if I was 80 yrs old for suggesting the T-bill option.
3 months later, your option is down over 12 points, ouch! I’ll let you know where it’s at in another 3 months.
See ya.
Judicious (218)-
Bullsh**t. Here’s the entirety of my post of 4/1/07 which is germane to your argument:
“Judicious (451)-
Depends on your timeframe for holding the property. If you’re looking to flip, this isn’t the best time to own a home. However, if your timeframe for ownership is 5 years- and out- you’ll likely ride out the current unpleasantness and be fine on the other end. I’m not at all an advocate of looking at a primary residence as a pure investment vehicle; there is an investment element, but there’s also the comfort and satisfaction of ownership. If your current position is that of having half a mil sitting in the bank, I’d think one of the things you might want to do is quit making a landlord rich. I fully understand why some of the wealthier posters here cashed out a butt-load of equity in ‘05-’06 and went into rentals; the amount of equity they had accrued was beyond their wildest dreams and was significant enough to fuel other investments…or create an instant reservoir of massive savings. This, though, is not your situation. Your 500K does not represent the end result of money put to work. One might even say that if your 500K is in traditional savings-type vehicles, it is not keeping up with the real rate of inflation.
Finally, if nothing else, we’re on the cusp of seeing a goodly number of income properties that should offer the potential for nice cash flows come on market.
And if that doesn’t float your boat, check some of the better-performing REITs (real estate investment trusts) out there. Commercial, apartment, mall and hotel REITs are on a nice run, and the top issues sport very nice, reliable dividends. My favorites would be: BXP, VNO, HST, HOT, CT and GGP (although not limited to those).
All disclaimers.”
ChiFi called “troll” on you during that thread of 4/1/07, and I’m calling you one now. That you can take a (fully-measured) suggestion I made three months ago and inflate it into a call to go all-in on one investment sector is nothing more than a cheap attempt to undermine my credibility.
And…where have you been in the intervening three months? Making some sort of contribution here? Or waiting for a nice time to pop an out-of-context bomb on me? You are a pissant and a fool. Your comments are false and misleading and represent the sum product of a lazy and conniving intellect. A 12% short-term loss in one sector of a well-balanced portfolio is not cause for alarm for someone who has a $500,000 bankroll, so why the sudden need to re-appear and take shots at me?
BTW, you’ve got a nice entry point for REITs right now…why don’t you take the plunge?
#201
I have been wearing platforms that truly dwarf those celebrities’ for years when I’m out at nightclubs. Maybe if I stop wearing them prices will come down. Next time I go out, it will be a good old pair of veggie Doc Martens.
I don’t get it….some guy decides to literally follow thoughts from Clotpoll on a blog, buys a few stocks and is down 12%. And wakes up after THREE months to complain. Long holding period, eh?!
Common sense should dictate that if you’re close to a house purchase (anything less than 3 years), your down payment should not be in stocks – period. The day you bought any REITs, you pretty much exposed yourself to an asset class that has had a stupendous run the past 5 years and actually yields less than T-Bills right now.
Judicious, you have no one to blame but yourself.
interesting link from housing panic:
http://www.realestateconsulting.com/local/local200706.html
Does anyone know whatever happened at the Velocity auction?
re: Velocity Auction
Only 9 of the 40 units were sold. The other 31 were taken off the market because the developer was not happy with the prices.
“What a dope”
Why am I a dope? Jealous that you can’t afford the house? The house will get sold. It’s only a matter of time.
” The house will get sold.”
why don’t you go buy that house?
After all this house will get sold and the selling price will never go below the purchase price.
Nice way to make a million or two. This way you don’t have to worry about selling your existing POS.
“After all this house will get sold and the selling price will never go below the purchase price.”
The house does not have a purchase price. The 60 acre property was bought for $58 million last year, the most expensive home sale in the U.S. last year. The developer, Richard Kurtz, is now selling 15 acres of the 60 acre property for $49 million. So, even though he is selling for less than what he paid, he is still left with 45 acres of prime real estate that he will devleop and sell at a later date. Not bad….
Not bad if he sells the mansion with and 15 acres.
Duh! If you buy that 15 acre plot for 49 mil, then you can sell it for even more. More as in a million or two.
Someone with your financial aptitude should play the big game. Get rid of your existing POS.
Midnight Says:
June 28th, 2007 at 10:41 pm
“THe rates are rising so what the hell is the point to wait out and watch home prices fall?”
Maybe you should wait but maybe not. MHO FWIW. If you’ve run the #s, saved up 20%, used a 30 year fixed. . . i.e. done a THOROUGH non-emotional cost analysis. I.e. calculate what happens if housing drops 10%, stays flat, goes up 2% vs. how much you save if you rent, how much comparable rent is. Can you rent a lot cheaper and live happily? Do you have kids . . . do you need the extra room in a house, yard for the kids. What does a comparable place to rent go for? Are you planning to stay there more than 3 years, preferably more than 5. What adv. dis. if you rent for cheap save up more and buy later, etc.
That is A LOT of work to do, and if you do it and it makes sense to buy then no one on this board can tell you yeah or nay.
I will say though I have learned in life there are very few . . . VERY FEW “last chance”, “if you miss it you will regret it for your the rest of your life” things out there. Chances are very good, very good that if you run the #s and it doesn’t make sense to buy, that you will be able to find a home that you love just as much or even better down the road. There is almost ALWAYS another chance another house, another opportunity. Sometimes not (very, very rarely) . . . but that’s where doing your hw. and researching on your own and not taking realtwhore crap comes in. If you’ve done enough hw. (historical hw too, not just current market), you’ll know. Biggest thing you can’t let your emotions rule you, you have to control your emotions. Buying a house is emotional and it plays a big part . . . but if you are looking to not get screwed you have to control them.
Facts we currently know. a) We are in a housing decline. b) Historically housing cycles are 15-18 years, we had ~7 up years and maybe 1-2 down years. Historically speaking it prob. won’t turn around for another 2-3 years. c) Interest rates are indeed low, prob. trending higher. d) How much it goes down (already down 10% from peak) and how high rates go is really a crapshoot.
Clotpoll –
I read your rebuttal and I must tell you, it was a bit weak. Go back and read what I was suggesting and how you insulted me (no surprise that didn’t get copied and pasted in your post above). You then came up with your “much wiser” investment alternative for holding a down payment while riding out the correction. I was just letting you know how it was doing and making the point that it wasn’t a wise choice for a person in my situation. If the REITs you suggested surge in the next 3 months then good for you. If not, it’s not a big deal to me as I don’t own any of them.
By the way, you and Chi-Fi need to chill out. Just because someone has a difference of opinion doesn’t mean they are a “troll”. Are you guys that wound up over a stupid blog? Get a life.
From the Star Ledger:
Lavish lifestyle financed by Ponzi scheme millions
For a time, Mario Figueroa lived well. Really well.
He drove a Mercedes-Benz sports coupe. Had a 62-foot yacht called Private Equity. Lived in a $2 million home in Old Tappan. Visited private gambling clubs in London.
It was a lifestyle, however, that was financed with the pilfered cash of overseas investors, authorities said. Two years ago, Figueroa admitted leading a $20 million Ponzi scheme and boiler room operation, and pleaded guilty to conspiracy and securities fraud in federal court.
He agreed to turn over the yacht, the estate, 10 high-end watches and other valuables — more than $8 million in all.
Now, living with his parents and second wife in Hackensack, Figueroa asserts he’s in financial ruin. Unable to meet his financial obligations while earning $16,000 a month as a mortgage loan officer, Figueroa last week filed for Chapter 7 personal bankruptcy protection.
Figueroa, 36, also filed for bankruptcy protection in 1999.
“The mortgage business is really tough right now,” said Mary Ellen Tully, his bankruptcy attorney. “He needs a fresh start. He wants a fresh start. That’s really the purpose of any bankruptcy filing.”
Figueroa’s bankruptcy petition lists $6,030 in assets, including $4,700 in a checking account and $200 in clothing, while his liabilities are $4.5 million. The vast majority of that debt — more than $4.3 million — stems from a civil lawsuit in which a default judgment was entered.
Regarding Clot & # 191
Come to think of it, he’s hired back. Approx 3 weeks ago he told me that he was now in a large cash position. Thought risk/reward, at this time, did not warrant being long stocks. As a matter of fact, he was negative all asset classes. Again, at this time. A possible top of the market, short or long term, BX or Clot’s call 3 weeks ago?
From The New York Times today:
A False Sense of Security? You Must Own a Home
THE wonderful world of leverage has lifted homeownership to near-record levels, and we thump our chests with pride at the prosperity and middle-class life that possessing a home implies. Hovering in the background, however, is a glaring statistic: Never before have homeowners actually had such a small ownership stake in the houses they occupy.
The reason is debt. Home prices have gone up a lot, but borrowing against homes has gone up even more in almost all of the last 20 years. “Owners’ equity,” as the Federal Reserve calls the difference, is gradually eroding — a detail that millions of families ignore, focusing instead, perversely, on the rising dollar value of their homes.
More at: http://www.nytimes.com/2007/07/01/business/yourmoney/01view.html?_r=1&ref=business&oref=slogin
(Subscription may be required)
Excerpt from the NYT story above:
…
There is less market value to borrow against in the event of such setbacks and less cash from a forced sale, particularly if the sale comes as home prices are falling, squeezing owners’ equity from the other end.
Just such a squeeze appears to be under way as home prices level off and begin to drop. The stake that families have in their homes fell faster in the 12 months through March than at any time since the early 1990s, the Fed reports. At the end of the first quarter, the nation’s homeowners owned, free of debt, only 52.7 percent of their dwellings, down from 54.1 percent a year earlier and 57.5 percent at the start of the century. The decline occurred even though owners’ equity, measured in dollars, rose by an astonishing $4.3 trillion since 2000. Unfortunately, mortgage debt rose by $5 trillion.
…
Did not realize this NYT story was already posted on the home page….sorry about that!
Looks like the contained Subprime / CDO
mess may not be so contained after all.
Another hedge fund may be in trouble. This ought to be an interesting week.
http://www.brokeruniverse.com/hearing/
A quick explination on CDO’S and what is
happing now in these markets for those interested.
http://video.msn.com/v/us/Money.htm?g=8bb0832c-6cfc-4cac-b372-ee332fb41838&t=s216&f=15/64TodaysPick&p=hotvideo_money top ten&fg=
Anyone have any info on the following MLS in Edison?
MLS = 715062 originally listed for 729k
then dropped to 719k
Is it under contract or withdrawn?
thanks in advance.
afe
another mls id for the above mentioned property was also 2382997 (if i am not mistaken).
thanks again.
Another layman question for the finance experts –
Does the new and increasing velocity of aversion to some high risk investments, e.g. derivative products with high exposure to mortgages and other heavily real estate investment leveraged companies (note Blackstone Group’s share price is now below the original offering price), mean that conservative long term investments like family owned (and live in) housing will stabilize faster than many here originally thought?
Gretchen Morgenson’s article on the front page of the NY Times business section made me think that risk aversion is on the rise big time and perhaps long term holding will become more attractive and expensive. If this happens, I think it will slow the decline in housing prices, keep inventory relitively high and perhaps create a new equlibrium in the housing market…wiping out mostly investors and not necessarily home owners.
JM2cents…
I just wanted to say its erie how this bust is playing out just like the late 80s and early 90s bust, based on the compilation of nytimes articles created by JB.
Specifically, in 1989 the nytimes reported how there was concern about defaulting home loans; in 1990 it started posting articles about how its sometimes better to rent than buy; and in 1990 it started covering the increasing popularity of resorting to auction in order to move homes.
Obviously whether the subprime mess can be contained is getting a lot of news coverage; somewhat recently the nytimes explored the rent or buy equation; and though auction fever hasn’t hit NY yet, its hit other parts of the country and the Velocity Auction in Hoboken got a healthy amount of press coverage.
Thoughts?
Don’t like Bermuda? Here’s another sand and sun spot…
http://www.nytimes.com/2007/07/01/business/yourmoney/01cay.html?_r=1&ref=business&oref=slogin
“the Velocity Auction in Hoboken got a healthy amount of press coverage.”
The Velocity auction only took place because the original buyers backed out and it is in the ghetto. It was one of a kind. You will never see another auction like it in the future in this area. Other Hoboken buildings are selling very well and developers have increased their prices from when sales first started.
“somewhat recently the nytimes explored the rent or buy equation”
Once agian, you are spreading misinformation. Consider this round 2 of “Spot the BS”
When Renters Reach the Breaking Point
Some feared that if they bought, the market would fall. Others simply put off the hassle of buying for as long as they could. Not surprisingly, the situation has given landlords the upper hand, and the opportunity to raise rents significantly on market-rate apartments in the face of one of the tightest markets in many years.
Now, many tenants are crying uncle. If they don’t want to buy, they are fleeing to Brooklyn and the other boroughs. If they want to stay in Manhattan, they are deciding that with rents climbing, it makes financial sense to take the plunge. In some cases, they are buying after outgrowing their current apartments. In other cases, they are buying with the hope that they can sublet if their lives change.
In the last year, rents for market-rate apartments in Manhattan have jumped as much as 20 percent, or nearly three times the standard 5 to 7 percent increases seen each year in the last 15 years, said Fritz Frigan, the director of sales and leasing for Halstead Property. “Rents heated up so much that people said, ‘At this level, we’re better off buying,’ ” Mr. Frigan said.
Dr. Carl Gerardi, a 39-year-old urologist in private practice in Manhattan and Westchester County, lives in a one-bedroom apartment in TriBeCa. But when the rent jumped late last year to $6,000 a month from $5,000, he decided that he had had enough.
http://www.nytimes.com/2007/02/25/realestate/25cov.html?ex=1183435200&en=de56d09bf79688f3&ei=5070
Home the wife and I were interested in came back onto the market this weekend. We were considering making an offer, but decided to let it sit for a bit longer before doing so. It went through a number of price reductions, not to mention it was on the market for about 6 months.
Odd circumstances. Very dated property, but in excellent condition. A good size lot for the area, but the house is basically situated in the center of the yard, so there really isn’t a large “back yard”. The lot layout pretty much was a deal breaker for anyone with kids that had dreams of a big backyard. Oil tank, another red flag. Not to mention the fact that it needed both bathrooms gutted, probably the kitchen too. But heck, it had the best condition “Harvest Gold”, I’ve ever seen.
Anyway, we were both surprised it went UC about a month ago, but no loss at all. Many of those same negatives applied to us. It was expected to close this weekend, we were both very interested to see if the buyers lowballed.
Talked a neighbor yesterday, who told me he saw the agent drive up to the house early that morning and take off the UC sign. Piqued my interest since I was watching the hotsheet for the closing numbers just about the time we talked. Drove by, sure as heck, no UC sign.
Gave the listing agent a call, we talked before on a number of occasions, she was aware that I was representing myself in the transaction. She told me the buyers backed out because they couldn’t secure financing. It’s back on the market. She let me know that the sellers would pay to have the house converted to gas heat, as well as the tank filled/removed. A big sweetener for those concerned about the tank. She also let me know the seller’s kids were absolutely furious. They came up from out of state to clear the house out. She said they carted off some of furniture, but held an “estate sale” last week to clear out the rest.
She asked me if I was interested in making an offer.
No.. not quite yet.
jb
Hey JB,
Why don’t you come up to Cliffside Park and make me an offer???? The house you described sounds like a real dump, no offense.
On a completely different note (off topic at that), we still haven’t gotten our pistol permits. We’ve been waiting almost four months now. Talked to a town cop I know, he said we’d be lucky to see them in six.
jb
that big window
Florida and other plates also because insurance for a 17 year old driver can be 3 grand a year or more. So register the car and Grandma’s or Aunt Sallys in Mississippi or Florida and play 800 instead of 2-3G.
RE: 7
Can anyone tell me why I always see Virginia plates around here? I really doubt these people live in VA and are just visiting. Sounds like some kind of scam…
this may be it:
http://tinyurl.com/3aeyyd
grim (249)-
Your permit app is stuck behind all the Crips, Bloods and MS-13 (LOL!).
Pipe down, and wait your damn turn.
Or move to my part of the country…where a concealed, unregistered handgun is as American as baseball, apple pie and Chevrolet.
NJ- being a soc***ist state, doesn’t want guns in the hands of anyone except criminals.
Pistol permits JB? If you don’t feel safe where you live, perhaps you should seriously consider moving???? I believe that gun laws were toughened after the shooting at Virginia Tech so that might explain the delay.
I’m not that big of a fan of “under contract” and “sold” signs. When I sell or go under contract, this is the sign I intend to use:
http://upload.wikimedia.org/wikipedia/commons/5/50/USS_Abraham_Lincoln_%28CVN-72%29_Mission_Accomplished.jpg
Rahway?!?
Funny I just drove around there Friday night to take a peek and the new Savoy, park place ave and condo’s accross the street from the train station looks like a good idea… but man o GOD you look around a bit and straight up HOODLUMS are wandering everywhere…. A high rise condo would be OK but a ground floor townhome.. get the heck outa here.. one of these darkie hoods would crack my window, steal my window and rob me while I slept. Funny yet these crooks are charging hoboken prices for condos/townhomes in RAHWAY. I couldn’t make a left turn onto main so I had to cut into a side street to do a u`ie and jeeze I was in the projects! 1 block from the dam train station.. no way would I go jogging at night there… mineswell live across from the gateway center in Newark for 250,000 atleast there the cops are watching 24×7 and you can walk around the business district.
“darkie hoods”? Damn, you belong on a skinhead site.
Judicious
When I read your posts at #172 and #193, I get the impression that you have enough of an understanding of financial matters to not need to rely on the advice of an anonymous poster on a blog.
“Agreed, but why did you suggest that as a good place to park one’s savings for a down payment on a house that they may need in the next 2-3 years? Especially as an alternative to an investment that has a guaranteed return along with a possible tax benefit.
The quality of your above quote makes you appear disingenuous, IMO. Why would YOU park your savings for a house down payment that you may need in the short term (next 2 to 3 years)? Ask yourself your own question.
I agree with the troll assessment.