From Barrons:
Why a Housing Recovery Is Far Off
THE SPEED OF THE DROP IN HOME SALES has slowed over the past few months, leading some commentators to argue that the housing-market crisis will soon be over. But it’s far too soon to start anticipating a recovery. In fact, there are solid reasons to think that the bottom might not be reached for a year or more.
The dynamics have changed since sales began to fall in the summer of 2005. At that time, the Fed was in the middle of its program to normalize short-term interest rates, which inexorably raised the cost of adjustable-rate mortgages. The flood of cheap ARMs when the fed-funds rate was very low was a key driver of the housing boom’s latter stages. Many borrowers who were lured into the market by the availability of cheap ARMs should never have been granted loans, but there weren’t many complaints at the time.
While demand was beginning to falter, home builders were still running at full tilt. The flow of new homes onto the market didn’t slow significantly until 2006’s second quarter. Partly because of the time needed to build homes, and partly because of many builders’ hubris, this slow response to falling demand ballooned inventory.
…
The key problem now is not the level of nominal mortgage rates, which are not particularly high by the standards of the past decade. Instead, buyers are backing off because the real mortgage rate has rocketed and continues to rise. At the peak of the boom, people essentially were being paid to buy a home. The average 30-year fixed mortgage rate in 2005 was a tax-deductible 5.9%. The Office of Federal Housing Enterprise Oversight says that home prices rose 10.7% that year.As long as buyers expected prices to keep rising, the implied real mortgage rate — home-price increase minus mortgage-interest rate — was minus 4.8%. This was an enormous incentive to borrow heavily to buy real estate. Result: a bubble.
But recently, the average 30-year mortgage rate was 6.5%, so with home prices up just 3%, real mortgage rates are now 3.5%. And with most potential buyers well aware of the huge excess supply of homes, there’s no reason to expect prices to rebound soon. A reasonable person might expect them to fall further, boosting the real mortgage rate further.
…
People don’t like to borrow to pay for a depreciating asset. Changing family or job circumstances will lead some to buy a home. But discretionary purchasers, including second-home shoppers, will be scarce for the foreseeable future.Over the past 30 years, there’s been a very close association between our measure of real mortgage rates and the pace of home sales, adjusted for the U.S. population’s expansion.
…
People with less-than-perfect credit are finding it hard to obtain loans at acceptable rates, so they’re apparently making multiple applications in the hope of finding a friendly lender. Thus, it makes sense to emphasize readings from the pending existing sales index and the National Association of Homebuilders’ monthly survey. Both are still deteriorating.If home sales do drop for another year or more, even at a slower pace, expect further pressure on retail sales of housing-related items, such as building materials, furniture and appliances.
At the same time, the end of the boom in home-equity extraction means that all consumption is vulnerable, even with employment and wages still rising. The early part of this year saw quite robust spending, but this should be viewed in the context of the biggest drop in gasoline prices in 20 years in 2006’s fourth quarter. Now that fuel prices have rebounded again, chain-store sales are suffering badly, and there is no reason to expect improvement.
In sum, the consequences of the bursting of the housing bubble will be felt for years.
From Bloomberg:
Why Haven’t Home Construction Jobs Disappeared: John M. Berry
Illegal immigrants may lie at the heart of one of the persistent puzzles of the U.S. labor market.
Overall payroll jobs rose by 132,000 in June, while the gains in April and May were revised to show 75,000 more jobs than reported earlier, the Labor Department said. The increase in jobs for the second quarter totaled 444,000, up modestly from the first quarter’s 427,000.
The unemployment rate remained at 4.5 percent, unchanged from April and May.
The mystery is why the collapse of the bubble in the housing market hasn’t been a much greater drag on payroll employment than it has.
“Something isn’t right,” said economist Ray Stone of Stone & McCarthy Research Associates. “We think that the BLS monthly payroll estimate is overstating the pulse of labor market conditions.”
From MarketWatch:
Barclays plans to exit subprime lending: report
Barclays PLC is planning to reduce its exposure to consumers with lower credit ratings further still as rising interest rates put the squeeze on the debt-laden Britons, The Sunday Telegraph reports.
A number of businesses selling so-called sub-prime loans and credit cards to consumers have been placed under review by the bank, the paper says. It also plans to exit all its sub-prime lending activities, it adds.
From Bloomberg:
Subprime CDO Losses Could Reach $52 Billion, Credit Suisse Says
Losses from bonds secured by U.S. subprime home loans may reach $52 billion amid rising foreclosures on the mortgages, analysts at Credit Suisse Group said.
Subprime defaults “are clearly a huge problem” for investors in collateralized debt obligations, Credit Suisse analysts led by Ivan Vatchkov in London wrote in a report. “But we do not think that they are a systemic one.”
Banks are unlikely to lose more than $10 billion on the CDOs they hold because they typically keep the least risky portions of the securities, the analysts said in the July 6 report. CDOs package bonds and loans into varying pieces of risk, using their income to pay investors.
Delinquencies and defaults on U.S. subprime mortgages will keep rising as borrowers who received loans with less rigorous checks miss payments, Robert Parker, vice chairman of Credit Suisse Asset Management, said on July 5.
Investor losses from CDOs could range from $26 billion to $52 billion over time, the Credit Suisse analysts wrote. Deutsche Bank said June 29 that losses from bonds backed by subprime mortgages may reach $90 billion.
Banks may face a bigger risk from the loans made to hedge funds that invested in subprime CDOs than from their own holdings of the securities, the Credit Suisse analysts said.
New Jersey comes in fifth in per-capita pre-foreclosures according to Foreclosures.com:
3 Out of 1000 Owners Have Lost Their Homes This Year
January – June 2007
Foreclosure Trends from ForeclosureS.com
Top 10 States (Preforeclosures)
State Filings Per Capita
Nevada 15,812 2.12 %
Florida 90,145 1.42 %
Colorado 20,879 1.30 %
Illinois 46,934 1.20 %
New Jersey 31,372 1.02 %
California 104,597 0.91 %
Arizona 17,077 0.90 %
Utah 5,061 0.79 %
Texas 40,025 0.70 %
Georgia 16,962 0.66 %
From the Monterey Herald:
RIPPLE OF FORECLOSURES BECOMING A RIPTIDE
Follow the ripple effect of foreclosures, and chances are the rings start at the lower end of the housing market: new subdivisions attractive to young families, and the less expensive neighborhoods in a region.
Those areas are often hardest hit by foreclosures because they tend to be where many first-time homebuyers start, said Dan Thomas, a certified public accountant with Thomas & Thomas in Newport Beach and a spokesman for the California Association of CPAs.
…
The reasons are plentiful, says Thomas.
As home prices soared here in recent years, home-buying got reckless. Money was cheap, and lenders looked for ways to make credit available to more people. New mortgages emerged with artificially low introductory rates; qualifications got loosened.
“No longer were people qualifying for loans that perhaps they could afford,” says Thomas. “There were more stated income loans, and without doing any paperwork to back it up, lenders were basically packaging loans pretty much based on people’s assertions that they could qualify.”
In the early 2000s, everybody wanted to jump into a home, or a second home, or investing in homes. Many of those buyers overextended themselves.
“It just seemed like it was a never-ending boom,” says Thomas.
Now that home prices are falling in some areas, stagnating in others, homeowners find themselves losing equity or without any equity left in their homes.
…
“It’s a terrible situation,” says Bob Hammel, an agent with Century 21 Scenic Bay. “People get wrapped around the axle because the properties are upside down; people owe more than they’re worth today.”
…
In the past, if people faced trouble with steep payments, they refinanced. That’s not a solution for many homeowners these days. Some have borrowed against equity, and many owe more than their house is now worth.
…
Frustrated sellers, stuck with properties that don’t budge, switch agents, pull their homes off the market, then relist them. Their houses wait and wait for sellers while their mortgage clock ticks on.
New Today! New York Times Talks Bubble
watch: http://www.paperdinero.com/BNN.aspx?id=261
Gretchen Morgenson, Pulitzer prize winning financial columnist with the New York Times, discusses at length the details of the housing and mortgage meltdown. Morgenson, in no unequivocal terms, correctly labels the housing run-up a “bubble” and a “mania” and also blames Wall Street backed easy lending, lightly regulated mortgage brokers, and lax rating agencies as a major cause. She further suggests that the decline will be protracted and “not pretty”.
Originally aired on: 6/29/2007 on Bill Moyers Journal
Running Time: 14 minutes 6 seconds
Morgenson does a great job explaining the issues in the Moyers interview. Simple, straightforward, and easy to understand. Just finished watching it, highly recommended.
jb
“People do not like to borrow to pay for a depreciating asset”. That says it all.
From the AP:
Pa. starts partial government shutdown
Gov. Ed Rendell said he was optimistic he and the Pennsylvania Legislature could soon break a budget stalemate that caused him to order a partial shutdown of government services today.
The furlough of about 24,000 state workers that Rendell announced just before midnight Sunday will have wide repercussions in the state, not least the closing of museums and parks at the height of the summer tourist season.
…
Rendell, whose last-ditch negotiations with lawmakers fell short of a budget deal that could have averted the furloughs and partial shutdown, said he hoped the budget impasse would be brief.
“I sincerely hope that this will be a one-day furlough and I have reason for optimism,” he said at a news conference outside his Capitol office Sunday night, but declined to discuss remaining areas of disagreement.
Any Sign of a Market for Sellers Returning?
http://finance.yahoo.com/real-estate/article/103192/Any-Sign-of-a-Market-for-Sellers-Returning?
Question: Dear Steve,
When will the real estate market regain momentum and become a seller’s market again?
— Khoi
Answer: …I stand with other industry observers who expect a mild turnaround by mid 2008 and even better results by spring of 2009.
Pleeaase.
3b Says:
July 9th, 2007 at 8:45 am
“People do not like to borrow to pay for a depreciating asset”. That says it all.
3b: huh? people buy cars every day
A report from Europe.
My brother lives in Sweden and there’s the house market is still hot. He has a small 3 bedroom/2 bath townhouse in the suburbs of Stockholm. He had an open house a month ago and received an offer of 1.9 million SEK which was 300K SEK less than what another similar townhouse sold for a month earlier. He took his off the market, put in some upgrades for 20K SEK like painting neutral colors, new tile in kitchen and repairing his hardwood floor. Put it out on the market again and got multiple offer and choose one for 2.5 million SEK with no contingencies. That is 370K USD.
chicagofinance Says:
July 9th, 2007 at 10:00 am
3b Says:
July 9th, 2007 at 8:45 am
“People do not like to borrow to pay for a depreciating asset”. That says it all.
3b: huh? people buy cars every day
I have even better one – people borrow money to buy Jewelery(Engagement rings) –
extremelly depreciating asset – unless you are buying something of historical value or unique gem – your diamond/engagement ring depreciated 50% the moment you signes at the dotted line.
Yet people still buying rings on credit…..
So I guess the answer would be: Cars are necessity and houses are not.
(Unfortunatelly in our culture diamond engagement ring in a necessity, and not buying it will cost you a marriage – or a lot of headaches from you wife and her family after the marriage)???
Financially if you are going to keep the car for a long time it beats “Renting” (leasing).
With houses right now it is exactly opposite.
Also car – you can take with you to any place you go, home – no such luck.
chicagofinance
A car is not an assett, it is a liability. Unless you buy some kind of classic, collectible car, your car will depreciate.
#13:
Agreed. While cars depreciate in value they are still a necessity. Unless of course you live so close to work you do not need this transportation.
Homes of course are NOT a necessity. One can easily rent rather than buy if they so desire.
Since when has depreciation ever stopped Joe Sixpack from overindulging?
It’s not so much that Mr. Sixpack doesn’t know what the concept means, it’s that he simply doesn’t care.
jb
Out of curiosity, how many people posting here (or lurking) already own a home or condo? Are you looking to move up, downsize, out of state or nothing at all?
From the Record:
Mortgage fraud rises alarmingly
Mortgage lender First Financial Equities of Teaneck made three refinance loans totaling $613,800 in 1999 to a customer who put up three housing units in Spring Valley, N.Y., as collateral.
Englewood lawyer William Dimin, an attorney for First Financial, said the loans went bad and the borrower, Hershy Walter, turned out to be “a fictitious person or the alter ego” of another individual living in one of the units.
“Clearly, mortgage fraud was involved here,” said Dimin.
First Financial tried suing its own loan officer last year in Superior Court in Hackensack to recover money it lost on the deal. The lender claimed in the lawsuit that the loan officer conspired with the borrower, the appraiser and the borrower’s attorney and others to falsify information on loan documents.
…
That legal mess is just one example of a troubling trend in the mortgage banking industry: Fraud is on the rise and hard to prove.
Statistics released this spring by the Mortgage Bankers Association showed the incidents of mortgage fraud or “material misrepresentations” on loan documents were up an estimated 30 percent nationwide last year from 2005.
That number is based on projections using fraud reports from loan originations that took place in the early part of 2005 and 2006, according to the Mortgage Asset Research Institute in Reston, Va., which prepared the annual “Mortgage Fraud Case Report” for the Mortgage Bankers Association.
Incidents of mortgage fraud in New Jersey more than doubled in the first quarter of 2006 compared with the same period of the previous year, according to the most recent statewide comparisons in the report.
So-called no documentation or low-documentation loans that require no pay stubs, W-2s or tax returns — often referred to in the business as “liar loans” — leave the door open to that kind of fraud, industry experts say.
Sometimes borrowers will lie on applications because they want to close the loan. Sometimes loan officers will falsify documents so they can be assured they will get the application past the underwriters and cash their commission check.
Now that the residential real-estate market has softened, those borrowers who lied to qualify can no longer count on reselling a house quickly at a price that will free them from debt.
Also from the link above:
New Jersey was not among the 10 worst states for mortgage fraud in 2006, but the state’s 250 percent increase in the first quarter last year was highlighted as being “rather large,” along with Arizona’s 213 percent increase. The states with the highest level of fraud in the early part of 2006 were Florida, California and Michigan.
The report said the most common types of fraud involved lying about employment history and about income, and the lying was done mostly on loan applications.
But fraud also was found on tax and financial statements and in deposit verifications and appraisal reports.
(emphasis added)
Wonder if perhaps the Ledger will follow that foreclosure report with a breakdown of where they are all happening in NJ. Very curious to find out what part of Jersey this is happening.
Friend of mine just lowballed some bank on a foreclosure property in Virginia. He figured maybe they’d accept if he paid cash. It’s a townhouse and i haven’t seen the listing. I’ll keep you guys on posted on what happens, if anyone cares. They plan on renting it out. I told him to wait … but you know how these lawyers are.
More signs-o-the-times…
Increasing Rate of Foreclosures Upsets Atlanta
ATLANTA — Despite a vibrant local economy, Atlanta homeowners are falling behind on mortgage payments and losing their homes at one of the highest rates in the nation, offering a troubling glimpse of what experts fear may be in store for other parts of the country.
http://www.nytimes.com/2007/07/09/business/09auctions.html?em&ex=1184126400&en=412ed903b6b636c4&ei=5087
Could it be also that without expected appreciation a lot of people are turned off from home buying due to hassle involved:
such as saving down payment, getting pre-approved for loan, spending time looking for house, scheduling home inspections, worrying about schools and resale values, home up-keeping and so on……
When you are buying a car there is a lot less hassles: you get credit right on-site of the dealership, you can easily look at 20 models cars /day, maintenance on car done at the mechanic and so on.
So it is not a borrowing for an asset which is turning people off – it is work needed to get into that home, without clear guarantee of pay-out.
Why buy a house if you expect to sell it in 5 years, and know that at current conditions you will at best break even????
Questions.
What is the worst case scenario you guys see?
How bad can it get, realistically?
13 – Al
Jewelry actually isn’t a depreciating asset … if you buy it from a small business owner. If you go to one of those stores in the mall, yes, you paid way too much. They have to cover overhead costs which are astronomical.
A very, very close relative has had a jewelry business for 25 years.
Hudson County office market on fire, according to article. BNP Paribas, Merrill Lynch, Deutsche Bank, Lehman are growing their presence.
“Leasing activity in Hudson County, located directly across from Manhattan, reached nearly half a million square feet, and the average Class A direct asking rent is $36.70, the highest for any office submarket in Northern or Central New Jersey.”
In other words, 2,000 good jobs (500,000 sf divided 250 sf per worker) are moving into Jersey City office space at rents that are double the rents elsewhere in New Jersey.
http://tinyurl.com/2mnzqv
An observation from Seeking Alpha on the Barrons article
“Summary: Interest rates on $800 billion in subprime loans will reset in 2007-2009, further endangering residential mortgage-backed securities. Originally constructed with premium AAA mortgage bonds on top, ‘mezzanine’ collateralized debt obligations in the middle, and high-risk, high-interest BBB and BBB- bonds on bottom, debt-rating agencies like Moody’s and S&P then sugar-coated mezzanine CDOs by rating 80% of them AAA, assuming geographical loan diversification and varying ‘slices’ of debt values would protect the structure. Torrential-growth CDO² (BBB-only securities), twice removed from the loan collateral, are teetering — just 5% in loan losses could render them worthless. Moody’s forecasts 2006 subprime mortgage losses of between 6%-8%; some foresee 10%. After Bear Stearns (BSC), and UK’s Caliber Global Investment subprime trouble, Canada’s CIBC now admits it owns $330 million of subprime securities. Debt insurers Ambac (ABK) and MBIA (MBI) own almost $1b and $800m respectively. Unlike the $150b U.S. Savings & Loan bailout, subprime infection is global: German state banks, Asian investment houses, hedge funds and Wall Street firms are among subprime holders. Now debt-backed takeovers are losing investor appeal, and the ABX subprime index has lost almost 50% since January. Investors will likely pursue debt-rating agencies for misleading ratings. Barron’s says subprime losses could surpass $100b.”
Jewelry actually isn’t a depreciating asset
I just had to up the insurance on my wife’s engagement & wedding ring because the price of platinum doubled since I bought them.
TO post 18:
First Financial tried suing its own loan officer last year in Superior Court in Hackensack to recover money it lost on the deal.
We need to see a lot more of this: personal responsibility by lending officer.
If they can not prove that they have checked documentation from borrower take their house/car from them.
Right now making loans is like a free candy for loan brokers: find borrower, sell your loan.
Get your few percent free and clear – no matter that you knew from the beginning that it was a fraud.
I have simple solution for dealing with Fraud and loose lending standards:
Make originating broker personally liable, with all his assets for 5 years on loans the brocker makes up to total he got for origination of these loans. (never going to happen)
Rant ON:
But again I complain about mortgage brokers while highest paid CEO’s are doing the same – artificially inflating earnings and company assets to via accounting manipulations or outright lies, get their multi-million bounces and leave the company.
Lack of personal responsibility will be the main cause of demise of American economy and Society…
Just look at NJ politicians: they would get state deeper and deeper indebt just to get re-elected. After they are gone who is going to cleanup remaining mess???
/Rant Off
pretorius,
The building I’m working in here in Jersey City was practically empty except for the three floors my company is occupying. In the last six months, 20 of the 30 something empty floors have filled up with financial/brokerage firms. We used to have the elevators to ourselves; not anymore.
RentinginNJ Says:
July 9th, 2007 at 10:40 am
Jewelry actually isn’t a depreciating asset
For thouse, who have to (Family emergency) sell jewelery in a hurry there are very limited options available, and you will see that you get back 30-40 cents/dollar spent.
Jewery stores make their money when they buy low, not sell high.
(such as buy gold for the price of metal and make it into a ring: instant 40-50% added value).
Anyways, back to real estate…
The higher the mark-up, the higher the incurred depreciation. The difference between retail (what your just paid) and wholesale (what the retailer would pay you for it if you traded-in right away) is your initial depreciation.
If you avoid a high mark-up on a commodity (haggle well on a new car) or buy a piece of jewelry from a referred friend (instead of Tiffanys), you lose less initially. But the asset is depreciating nevertheless.
gary (re: 17)
We own a home in Essex County, and have been looking to move to Cape May county–my wife’s a native Jerseyan, and we have family down there.
The taxes are far cheaper there (I know it’s all relative).
We almost bought a place last July, offered a bit below asking, and held firm. Glad we did.
We’re in the (way) below 500k market. My brother bought a condo closer to the stratosphere range a couple of years ago, but that market seems to be holding.
We check the Cape May county tax office regularly–homes are going for less than LP, sometimes much less so.
We are debating making an offer on a home as I write. Last year we would have jumped on it–now, surrounded by options and an increasingly soft market, no need to rush.
#23
I guess we can all imagine disaster scenarios, but I just don’t think things will play out that way. In the desirable areas surrounding NYC, I think we will see flat to slightly negative price appreciation over many years while wages catch up.
Oh, one more thing–when we ever do close on a home, I may need to send jb a nice bottle of Oirish whiskey–he has saved us a mint.
Sapiens Says:
July 9th, 2007 at 10:28 am
Questions.
What is the worst case scenario you guys see?
How bad can it get, realistically?
Crystall Ball “On”.
I am in camp of flat prices for 4-8 years – unless wages inflation picks up.
Crystall ball “Off”
Was browsing realtor.com yesterday – McMansions in Round Rock TX for 120-160K!
Why do I live in New Jersey again?
Probably the wrong forum for this, but since the topic is out there…
I never got the wife’s ring re-appraised / insured – can anyone recommend a reputable place to have jewelry appraised in NE/NJ?
skep-tic, Al, thanks for the replies.
I was up in Jersey for the holiday (July 4th) and was amazed by the many small businesses tha have closed their doors. Also, the taxes are just going astronomical. You have to leave Jersey for a while to really appreciate how oppresive the taxes are in NJ.
I am wondering if all those people commuting from Jersey to NY can keep the prices flat for the next few years.
-Sapiens
“Was browsing realtor.com yesterday – McMansions in Round Rock TX for 120-160K!
Why do I live in New Jersey again?”
Clean air and great driving conditions!
How does it feel to be on the other side of the trade?
hehehehe
I am wondering if all those people commuting from Jersey to NY can keep the prices flat for the next few years.
It is not people from NYC who are keeping priced flat – it is the home-sellers not willing to lower their prices. I know of a least 4 homes sitting empty for sale for over 18 month now.
Keep in mind that every year house stays flat in price it is effectivelly loosing 3% (at least) in true value.
Also in Mortgage Rates will go up – all bets are off.
#34
Seems we have the same handle ;) I rarely post, no big deal…
Good luck.
Interesting reading:
http://www.nj.com/newark1967/
Doyle (42)
Sorry about that–I’ll change mine.
It’s a slow day so here’s a little anecdote:
I recently put a bid in on a POS cape in a nice neighborhood in a less desirable school district. It’s a 2bd/1ba that hasn’t been updated since it was built. That’s right – everything original except the range, which looks like it was replaced in the late 70s. The only thing going for it is that it has good bones – the roof, HVAC, windows, etc were replaced as needed. Transactions are being handled by elderly owner’s greedy family. They listed at similar to what other homes in the neighborhood are selling for – that is, 3bd/2ba that have been updated at some point since the Eisenhower administration. Agent says “I explained to them they are asking too much. Put in whatever bid you think is fair” So I came in about 15k under what a comparable 2bd recently sold for. They came back at 10k less then asking. I told them to go fly a kite, and call back in january when they haven’t got any other bids, and they’re still shoveling 2 driveways…
Al -(41)
18 months? Wow, how many middle class people have the wherewithal to carry such an expense? Ouch.
pigpen #45
We recently did the same thing… lowballed bigtime on a cape that’s been on sale for a year with not one offer. The realtor was happy to get our 22% off lowball since she’s probably sick and tired of showing the house. Seller might come down 10% but we said no thanks, 22% off is our best and final offer. We’re in no rush!!! Gives us time to save up more money.
As many have noted, realistic sellers are selling quickly at high prices. I guess the sellers whose homes languish on the market don’t see the difference between their own homes and those that sell.
Most sellers apparently aren’t in a position where they are forced to sell. The economy is strong and people are employed. Fantasies of money for nothing die hard.
33- ‘Wages catch up?’ Just curious why this is your guess.
Take a look at Glen Rock. Median income is $110,000.
We make close to 200k and it is nearly impossible to buy a remotely decent house in that town. Yes it has nice schools, and yes it’s close to the city, but prices would have to drop by 200k to come back to reality.
That’s probably not happening.
And there’s no way wages universally will rise that quickly.
If I would be a realytor righ now I would not accept not-realistic listings.
But most of the realtors just want to get listing at any price and later on they might convince their client to lower the price.
But NO REALTOR will say “no” to new listing.
Al #13, an interesting thing about diamonds and the DeBeers cartel:
A quality 1 karat RBC (round brilliant cut) diamond runs about $10,000.
A quality 1 karat CZ runs about $3 (not a typo).
It will generally take an experienced jeweler several minutes to tell the difference between the two, short of using test equipment.
Yes it has nice schools, and yes it’s close to the city, but prices would have to drop by 200k to come back to reality.
That’s probably not happening.
And there’s no way wages universally will rise that quickly.
8 years at 3%/year: 26% increase in salary:
200K —–>>252K.
There is a difference between housing becoming “affordable” and housing being “cheap”.
there will be never cheap housing in NJ.
But in 8 years it might become more affordable.
The NY/NJ metro area is different than the rest of the country. I’m so tired of repeating this but it’s true. Jobs are here and desirable homes in decent areas will sell. The only way to play this game is to have at least 20% down or greater and/or the income to pay the bills. Money talks and bullsh*t walks… that’s the way it is here. If you were fortunate to buy at least 5 years ago, then you were lucky; if you didn’t, you got slighted. I wish I could say otherwise but it is what it is.
Prices will stay flat, at best, for the next couple of years. Save more money and pay down the house.
Since I have a few daughters it is safe to say I would have to dig deep in my closet to find the largest boot available if a guy asked my daughter to marry him and he had to borrow to buy the ring!!! You can get a nice sized ring in the Jewlery District for 6K, if you don’t have 6k in the bank you shouldn’t be getting married.
A rich man once told me only borrow to make money. Never borrow for things that lose money as you are only digging a deeper hole.
By the way the commmerical market is still hot. My company is looking for space, there is none downtown or midtown and very little in pavonia/hoboke. If you see something you have to jump on it and pay full market or it is gone. That is why CDO subprime residential real estate is all the bad news.
I don’t understand the “need a house in a good school district” mentality. True, we want what is best for our kids, but I know people who went to not so great schools and turned out just fine. The echo boomer’s offspring will continue to be spoiled, whining, etc when they are adults. I wonder how they will react when they learn they won’t be able to keep the same standard of living their parents had?
It’s different here! We’re bubblewrapped!
Sapiens #23 writes:
“How bad can it get, realistically?”
Not sure about “good” or “bad” but using the prior two boom/bust cycles as a guide, this bust will unfold in both duration and magnitude to where the boom began in 1997:
http://graphics.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
Translation: 30-40% declines, lasting until about 2011.
And given the exotic financing used for this boom/bust, that’s probably on the optimistic side.
#49
Bloodbath-
I’m in agreement with Al here. My guess is that absent a fairly deep recession, it will take years for prices to come back into balance.
While I wish that this weren’t the case, we are coming up on 2 yrs into the housing downturn and prices still only moving downward gradually in this area.
I wonder what will happen next that hasn’t happened already to bring about the big drop everyone is hoping for.
In Glen Rock the salaries of the 35-45 male college educated peak salary buyers are more than that. The Mediam is just the Median with retired people, younger people and people who are unemployed, working off the books and have tax exempt income that does not show up in the medium. The mediam of the peak earning group is most likely 200K right now.
33- ‘Wages catch up?’ Just curious why this is your guess.
Take a look at Glen Rock. Median income is $110,000.
AL – And you’re assuming that in 8 years housing prices won’t go up at all?
As for the folks leaving an empty house on the market for 18 months, the only thing i can assume is a) the house is so old there’s no mortgage anymore, b) we’re talking about millionaires.
Clearly, these people don’t need to sell. And they’re delusional, too.
AL – And you’re assuming that in 8 years housing prices won’t go up at all?
Pretty much – that is if mortgage rates, and wages inflation will stay as they are now.
If you really want housing to crash pray that Hillary Clinton gets elected President!!!!!!!!
Jewelry actually isn’t a depreciating asset…until the marriage runs out
As for the folks leaving an empty house on the market for 18 months, the only thing i can assume is a) the house is so old there’s no mortgage anymore, b) we’re talking about millionaires.
Clearly, these people don’t need to sell. And they’re delusional, too.
One property is REO, according to realtor bank is not willing to drop the price, despite the fact that place need complete gutting and remodeling – all walls are buckled, water damage, leaking roof, and such.
Two more places are Estate sales – not updated since 1950’s with Original Appliances.
However families are not selling below 2005 comp prices. (despite the fact that 2005 places might have being freshly remodeled.)
One more house was delisted as seller could not sell intime to prevent FK. – they were UC but foundation had serious water damage and bankdid not approve a short sale.
(what single mother of 2 working as sales associate at Macy’s were doing with 300K mortgage is beyond my understanding. Yes you guessed it – 2 year Interest Only Loan..)
That last one was a pity because it was fairly nice house, and it drawn close to full price (not from me) offer untill basement issues were discovered. Now it is going through FK.
#62 John,
Why do you say that? Just curious.
#58 skeptic: There has been some discussion whether the peak was 05,or the begining of 06.
Assuming it was 05, perhaps 06 was the year of denial/delusion, that carried over into 07.
Now that we are at the end of the 07 selling season, we can see that so much more has transpired since this time last year.
And the inventory continues to grow.
The significant price declines will start in 08 into 09.
This is similar to what happened last time, the peak 87/88. Status quo in 89, significant price declines started in 90/91.
If I am wrong, and it really is different this time (which I do not believe), than I will nto be buying;its just not wroth it.
Gary #29,
Thanks for that tidbit. Do you know if the new occupants have relocated from somewhere else or if they are newly created jobs?
>>True, we want what is best for our kids, but I know people who went to not so great schools and turned out just fine.
i also know some high school drop outs that ended up fine as well but that’s not the point. you want to afford your children the best opportunities to succeed.
#55 tbe There is the myth of the good school district, and then the reality.
The reality in BC is that the difference between the ones deemed “good:,a nd the ones not, is in many cases minimal.
One final point is quite a few parents look for good assuming that they then do not have to do any thing to ensure their childrens success in school. ” Isn’t that why we pay these prices taxes”?
#66 #3b– right, but in the early 90s there was a pretty sharp recession. without a similar recession this time, not sure why we should expect anything other than the slow bleeding we currently have
#53 gary So it was not different here 5 years ago? It has only become different now?
And yet we have all that inventory sitting out there. How come people are not snapping it up?
Like I have said in the past too bad you do not rememebr the last down turn.
#70 skeptic: True there was a sharp recession last time, but there was not the recklessness that we have had this time around.
Like I have said in the past, you really had to qualify for a mortgage back then.
And people were nto as quick to borrow and have hoem equity loans and HELOC’s, and big lease payments etc.
Much of this so called good economy is being driven by the use of credit, that cannot continue indefinitely.
If I am wrong, and it really is different this time (which I do not believe), than I will nto be buying;its just not wroth it.
Same here. I’m giving it until the end of 2008. If I don’t see significant progress on price reductions by then, I’m going to start looking at relocation.
Yes a housing crash would be poetic justice for many.
#48 skeptic Define high prices?
There’s a house on my block that’s been sitting empty since Dec. ’06, after sellers found buyers, but the sale fell through.
They had to move since they had already closed the sale on their next ‘bigger and better’ house. (They had boasted quite a bit about this)
It’s gone down from 515K, to 505, 495, 475, now 460 and still counting.
The house has gone into such disrepair, that also has to be affecting the value. 3 foot high weeds in the front and back, front wooden steps beginning to fall apart, etc. Seems like they’ll be chasing the market on down.
I do wonder how they must be hurting from carrying the two mortgages. It must be painful, and you don’t hear a lot of stories about this yet.
Maybe homeowner’s pride prevents them from discussing this too much?
The NY/NJ metro area is different than the rest of the country. I’m so tired of repeating this but it’s true.
Gary,
I’ll agree with you that to some extent it really is “different here” in the NY/NJ metro area. However, in 2000, prices in New Jersey were already high when compared with the rest of the country. “It’s different here” was already factored into home prices before they doubled.
In fact, I would argue that it’s “less different” than it used to be, especially in NJ. High tech jobs are leaving and being replaced by jobs in retail. NJ (& areas like it) no longer has a monopoly on the country’s highly educated workforce.
To me, it’s not so much an argument of whether or not “it really is different here”, but rather what has changed since 2000 to make it so much different that it justifies the doubling of home prices since that time?
RentinginNJ Says:
July 9th, 2007 at 12:59 pm
If I am wrong, and it really is different this time (which I do not believe), than I will nto be buying;its just not wroth it.
Same here. I’m giving it until the end of 2008. If I don’t see significant progress on price reductions by then, I’m going to start looking at relocation.
Lol I am willing to give it untill middle of 2009. With every year my rent will be cheaper and cheaper….
the leverage on a macro level does seem insane, I agree. but let’s focus on what we’re all talking about.
just about everyone is looking for the same thing– a 4 BR /2 Ba colonial on a quiet street in a good school district within 1 hr of Manhattan.
These houses are still selling quickly for close to peak prices in short amounts of time. Subprime / Alt A are not derailing these sales. There are clearly people around who have the money to buy at peak prices.
I agree that there probably aren’t enough of these people to absorb all of the inventory that is out there. But there does seem to be enough to absorb the choice properties.
#75 3B– by high prices, I mean within 10% of the peak.
just about everyone is looking for the same thing– a 4 BR /2 Ba colonial on a quiet street in a good school district within 1 hr of Manhattan.
I am not lookign for one. I do not care about Manhatten, I do not need 4Bed/2Ba colonial.
Not everybody in NJ works in Manhatten, even more importantly – not everybody who works in NYC works in Manhatten. Common Myth.
And about middle class in NJ in theirs 35-40 making 200k+…… BS
Ahh and let’s not forget wealthy foreigners pooring into NJ standing in line and begging home sellers to sell them outdated cape cod in BC for a millions of dollars.
3b Says:
“The reality in BC is that the difference between the ones deemed “good:,a nd the ones not, is in many cases minimal.
One final point is quite a few parents look for good assuming that they then do not have to do any thing to ensure their childrens success in school. ” Isn’t that why we pay these prices taxes”?”
Good point.
I checked out school districts ranging from the top to the middle (missing out the obvious turkeys) on Schoolmatters. There you can break out school grades and ratings according to demographics and socioeconomic standing.
What was really interesting was that when you compared kids from similar backgrounds (demo. and econ.) their scores were almost identical, even comparing “top” schools and ones down at 150/200 out of all in NJ. One school looked awful until it turned out that the district had an exceptional special ed program, especially for kids with autism. So many families had moved to the district in order to get their kids into the program, the lower scores had dragged the whole number down. Factor those classes out and the school scores rose dramatically.
You got to love False bottoms claims made by the RE industry and morons who bought too high. What were they thinking?
I so glad I didn’t fall for that nonsense.
>>What was really interesting was that when you compared kids from similar backgrounds (demo. and econ.) their scores were almost identical, even comparing “top” schools and ones down at 150/200 out of all in NJ.
yeah ok. so everyone should move to newark and attend their schools because it just doesn’t matter. ignorant.
#81 Al– I’m sure it’s been said before, but if I didn’t work in Manhattan, I wouldn’t live anywhere near NYC. the reality is that NYC commuters drive up prices in the suburbs even if not everyone who lives in the suburbs works in Manhattan
Re: #1
“As Immigrant Workers Increased, Native Employment Declined in Georgia”
http://www.cis.org/articles/2007/georgiarelease.html
The Washington Post recently ran a long story on how foreclosure rates were hitting the immigrant community particularly hard in the DC area. Herndon VA was mentioned as having either the highest or second highest forclosure rate in the area. Herndon, a formerly sleepy little town in Fairfax County VA, has been inundateed with immigrants, many illegal, over the last few years. Herndon voters replaced a mayor and all but one town council member because these officials supported a day laborer site over the objections of many towns-people.
I suspect what has happened in GA, like VA, is roughly this:
First, there was a large increase in immigrants, again many illegal, in GA. This is pointed out in the CIS article, as is the fact that these immigrants appear to be pushing less-skilled natives out of jobs. These newly unemployed – who as we know would eventually drop off the unemployment records even if they don’t find a job or if they find a job that pays much less – would find themselves less able to keep mortages current, even if they had no problems before. A couple of months out of the job market can put a low-paid worker in grave financial shape, even if he later gets another job with comparable pay.
Then, some of the newly arrived immigrants buy with sub-prime mortgages, often with little or no investigation as to their ability to pay and with little money down. The reality is that they are initially able to pay because the teaser rate is low and they increase income by combining 2 or 3 families into a single family house or by renting out rooms to single men. This is what was going on in Northern VA, much to the neighbors’ dismay.
Finally, the housing boom slowed down, and these immigrants found themselves in a bind because their renters – often construction workers – were working less and often so were they. Additionally those initial low, low interest rates started to climb.
The WaPo mentioned a couple of instances where the immigrant “owners” simply walked away from their houses and returned to their own countries. I assume the lending institutions will have to sort these out.
The natives are already in their country – the US – and may well find that they have lost their homes of many years and that they can no longer afford to buy a home because housing prices, lower than a few months ago, are still too high.
It is very difficult not to think this is also the reason why hundreds of thousands of prime age American workers would suddenly drop out of the labor market.
“Yes it has nice schools, and yes it’s close to the city, but prices would have to drop by 200k to come back to reality.
That’s probably not happening.”
This will ahppen. Prices wil come down by $200k… on $6 million mansions.
From Bloomberg:
U.S. Housing Sales to Tumble to Six-Year Low on Rates, Defaults
U.S. home sales in 2007 will drop to the lowest level since the start of the five-year housing boom in 2001 as mortgage rates and foreclosures increase, according to a forecast by Freddie Mac.
Sales of new and previously owned homes probably will total 6.28 million, according to the world’s second-largest mortgage buyer. That would be the lowest since 6.20 million in 2001. Residential lending will drop to $2.75 trillion, the lowest since 2002, the McLean, Virginia-based company said in today’s forecast.
Buyers are finding it more difficult to finance purchases because of higher mortgage rates and stricter lending standards, Freddie Mac said. The average U.S. rate for a 30-year fixed rate home loan probably will be 6.7 percent this quarter, according to the forecast. That’s the highest level of 2007 and half a percentage point above the 6.2 percent average of the first three months of the year.
“Several risks — the elevated levels of homes for sale, recent increases in mortgage rates, and rising foreclosures of subprime borrowers — point to continued weakness in the months ahead,” Freddie Mac Chief Economist Frank Nothaft said in the forecast.
“Prices will stay flat, at best, for the next couple of years. Save more money and pay down the house”
Flat…??
what are u smoking?
Prices are dropping and the Panic will be here come fall.
2008 is real misery for you grubbers. Count on it.
babbabababa
BOOOOOOOOOOOOYAAAAAAAAAAAA (sick moaning 1/2 yell)
Bob
Re: And about middle class in NJ in theirs 35-40 making 200k+…… BS
I did not say middle class of NJ salaries, just average salaries of peak earners buying trade up houses in Glen Rock. A 22yo couple fresh out of school living at home and dating are making 60K one year out of college if they got into a good company, that is 120k a year. You are telling me that same couple 15 years later are not making 200K, no way. If the husband makes under $120 his wife is working or he has side income. If the wife is staying at home living in Glen Rock with the SUV, disney vacations and childrens parties he can’t be making much less than 200K. Plus I am not talking just work income, I include all investments which is interest, stock sales and bonuses.
http://efinancedirectory.com/articles/Renters_Unite%21_Let%27s_Pop_this_Real_Estate_Bubble.html
just average salaries of peak earners
I am pretty sure that average salaries of Peak Earners are a lot higher CEO would get millions of dollars….
22yo couple fresh out of school living at home and dating are making 60K one year out of college if they got into a good company, that is 120k a year. You are telling me that same couple 15 years later are not making 200K, no way.
Average american moving every 7 years… Changing jobs every 5 years. How many middle class jobs got outsourced abroad or moved away from NJ???
15 years ago 40K was good salary, so that young couple you are talking about (The one which is 35-40 now) was making 80K. Than kids appeared – wife quit her job for a while, husband got laid off and struggled to fing similarly paid job – they are making 120K right now with both parents working.
But wait – you said Glen Rock.. You are right…. Glen Rock is special!!!
Everybody there makes at least 200K and companies standing in long lines to hire someone from Glen Rock for 300K.
Richard:
“yeah ok. so everyone should move to newark and attend their schools because it just doesn’t matter. ignorant.”
You know what Richare F**k you. I specifically said leaving out bad areas and mentioned difference between top and middle.
You’re a snobish a$$.
grim: unmoderate?
How can we talk about lack of affordability in NJ when there are tons of people buying $1 million + condos on the Gold Coast? Prices now are as high as they have ever been.
pigpen,
can you tell us how much the asking price was for the cape you put a bid on? also, location? if you don’t want to give town name, perhaps the county?
just trying to compare to capes I see for sale in morris county.
“Since I have a few daughters it is safe to say I would have to dig deep in my closet to find the largest boot available if a guy asked my daughter to marry him and he had to borrow to buy the ring!!! You can get a nice sized ring in the Jewlery District for 6K, if you don’t have 6k in the bank you shouldn’t be getting married.”
This makes me laugh – my husband invited my dad to lunch when he was planning to propose to “ask for my hand.” My father just assumed he was going to ask him to borrow money to buy the ring. My poor husband was almost insulted but you can never be mad at my dad since he’s way too nice a guy – he wasn’t assuming it because of my husband’s personality or anything, but because he figured we young people didn’t have much cash. He was pleased when he realized that was not the case!
I was curious to know the status of 2 homes in Alpine. Neither are on the market so I wanted to know if they were sold or withdrawn. The first one is 1002 Closter Dock Road (2 family) and the other home is on DuBois Avenue. I do not know the house number. 1002 Closter was $985,000.
Thanks!
Un-
I remember when (20 something years ago) my husband and I were getting married, we were paying our own way for everything and did not live at home with parents ( he had none) a ring was, what I felt to be a shared expense because what was his was mine (-: We bought a small not the best quality ring. It was fine I had always wore wild costume jewelry ( I still have unusual taste)
I lost it in a public restroom less than a year later. I did not replace with a real diamond, I got CZ in a couple different wilder styles,& there was no way anyone can tell, but when I got compliments I always said thanks! its fake!
Now however I have excema and am unable to wear any rings even my wedding band. The things most people think are important when they are getting married turn out to be insignificant quickly.
Looking,
I know first hand of an example of a house being purchased before the sale of the first home, the first home was forclosed on. Original asking price was 399,000 sold 18 mos later reo june of 07 for $310,000 and they still own the new house. That may be the case that you’ve noted
KL
NJGal–
Do you feel as though the house you ended up buying was anomalous for northern Westchester in terms of the pricing, or were you seeing many similar houses in that range? thank you
59 – John, what’s your source for the salaries of 35-45 year olds in Glen Rock? Is this stuff you’re just coming up with or can you back it up with facts?
Actually, go to Indeed.com or sixfigurejobs.com and you find tons of high paying jobs. Companies are looking for 200K people and can’t hire them. Problem is many people spent their 21-40 years old part of their career drifting and now that they are old enough for that corner office they are unprepared. I have worked at dozens of companies that pay for MBAs, MS, certifications such as CPA/CFAs etc, had internal networking opportunities, company picnics and charity events,mentoring and the list goes on and their is a group of people who think they BS/BA and a good day of work is all that is needed and they dont need any of the above. Well those days are over, I think the trade-up crowd are the go getters. They may be jaintors sons but you know what this is America and the people who do the work and play the game get the corner office and the guys on the coach drinking beers after work should not complain as they had their chance. My 45 year old friend is getting turned down for jobs left and right and the employers all tell her the same thing, 24 years out schoool with no masters and no certifications make you unqualified to be head of department and underqualified to be a worker in the department -NO SOUP FOR YOU! As my old boss said when I told him I do a great job everyday and I deserve a good raise – He said “that is why I don’t fire you” Bonuses, big raises and promotions are for the extra things you do not for doing the job I already pay you to do. OUCH!
From CNN/Money:
Mortgage resets: Record bill coming due
More than two million subprime adjustable rate mortgages (ARMs) are poised to reset at much higher rates in coming months, worsening an already suffering housing market.
Borrowers who took out hybrid ARMs in 2004 and 2005 to secure low “teaser” rates for the first two or three years of the loan may see their monthly mortgage payments climb by 35 percent or more.
…
Consumer groups and politicians worry that hundreds of thousands of subprime ARM borrowers will be unable to keep up with their mortgage payments and will lose their homes.
“In October alone more than $50 billion in ARMs will reset,” according to Mark Zandi, chief economist and co-founder of Moody’s Economy.com. That’s a record, according to Zandi.
A buyer in 2005 with poor credit and limited means might have signed on for a $200,000 2/28 hybrid ARM, locking in a fixed rate of 4 percent for two years. After paying $955 a month, his bill would now be set to spike to $1,331, a 39 percent increase.
Until recently, rising home prices bailed out many ARM borrowers in trouble. They could raise cash with cash-out refinancings or home equity lines of credit. If worse came to worse, they could sell the house and get some money back.
But prices have stabilized or slipped in many markets.
As a result, Doug Duncan, chief economist for the Mortgage Bankers Association (MBA), is expecting as many as 600,000 home owners will get into trouble with perhaps half of them actually losing their homes.
One of the reasons for the worsening situation, according to Zandi, is that just as the number of subprime ARMs being underwritten was reaching a high, the quality of loans was hitting new lows.
“There were increasingly poor quality loans made starting in the spring of 2005,” he said, “with the poorest of all made during the fall of 2006.”
For those looking for more info on first time ARM resets:
https://njrereport.com/images/armresets.gif
jb
john,
MS/MBA is the new BA/BS.
jb
Are you wondering what mom should be paid for her work as mom? Salary.com has valuated the “mom job” of both the Working and Stay-at-Home Moms! Based on a survey of more than 40,000 mothers, Salary.com determined that the time mothers spend performing 10 typical job functions would equate to an annual salary of $138,095 for a stay-at-home mom.
See my wife alone makes over $138k a year!!
You are so right, MS/MBA is new BA/BA!!! Why so many people who work at companies that pay for them don’t have one is a mystery to me. You need one just to teach Kindergarten.
My mother has an associate’s in nursing. Companies offer her jobs less than 48 hours after she puts in a resume. A BS would not bring her that much extra money so it is not worth pursuing.
“See my wife alone makes over $138k a year!!”
That is excellent. Have her fill out a 1040 or else she will be charged for income tax evasion.
Lately there has been a lot of discussion around here about a mysterious invasion of 30 something’s with their $200k household incomes driving up property prices.
According to the Census Bureau, in New Jersey in 1999, 133,000 households across the state exceeded the $200k income threshold. In 2005, this number climbed to 190,000, an increase of just 57,000 households in a state with over 3 million households. These income statistics are in nominal dollars, so inflation played a big part in brining more households over the $200k threshold. A household earning $170k in 1999 would be in the “over $200k” category today just be keeping pace with inflation.
But “Bergen County is different,” you say? Same trend applies there as well. 24,000 households over $200k in 1999, increasing to 31,000 by 2005. An increase of 7,000 households in a county with 330k households.
To put this perspective, if every new “two-hundred-thousandaire” in Bergen County created between 1999 and 2005 purchased a home, they would account for just over 2% of the homes in Bergen County.
Just out of curiosity, an impromptu poll.
Can I have a show of hands of those who hold advanced degrees? If so, what degree(s) do you hold?
jb
I have 2 Master’s degrees.
jb,
MBA
Oh if we have to specify then I have an MA and an Ed.M.
i have a master’s
I have an MS and am currently working on an MBA.
jb
MBA
I have a GED
how classy!
MBA
No advanced degrees here. Total loser.
B/S and M/S in C/S
:-)
MBA/JD
I have a PHD from the university of Mars.
MS, PhD.
MS molecular biology, I apire to be a 200K a year houshold. As long as I don’t get outsourced first.
JB I still owe you pics of the HOV development in West Paterson. Going to try this week.
MS and MBA….for now.
JD here (I think I may have mentioned previously I am an attorney)
real classy lisoosh lol!
mba. what a waste. you actually get dumber once you complete this degree.
High School Diploma. Once I had 5 years in IT the lack of a degree was never an issue.
Master’s.
Just an MBA – We sure are purty smart people!!
Richard
My brother-in-law recently got his MBA from Wharton and made over 400K last year in a VC firm. I think we would disagree with you.
“mba. what a waste. you actually get dumber once you complete this degree.”
I’ll likely go the JD route once I finish the MBA.
jb
JB,
have you considered adding the JD as a joint program with your MBA?
MBA
JD
MS in Engineering..next up MBA…
Joint JD/MBA is the way to go. $40k less tuition, plus you’ll be able to start earning money a year earlier.
Just make sure you pick your school carefully. Some schools manipulate their employment stats. Not good to be $150,000 in debt and unable to find a job.
oh btw…’Better Half’ and I – both 29 make 170K combined..first time homebuyers, renting right now…is Glen Rock even in the reach for us? really nice town would like to move there…cant fathom spending $4000 of our monthly income on a home – mrtg + TAXES? is something wrong here? have i landed on the wrong planet? Country? State? County? Send me back….
An MBA is like everything else in life….you get out of it what you put into it. 2 years and $100K to fund it and I am happy. I will have made my investment back in 2 years with a better job and the rest is gravy.
JD. I’ve been lurking for the past couple of weeks or so. My wife and I are closing on a house on Monday after an extensive 3 year search. I always feel like I am the median NJ homebuyer. This site has been extremely helpful and to an extent, everybody’s opinion sounds just about right. Thanks for describing me to a tee!
w/r/t the number of high income households:
again, I think the sheer number of high income households is less relevant than the percentage of recent buyers that are among this group.
I think this is really what the argument is about– can recent buyers really afford these prices, or are they using insane amounts of debt?
phd
JD
is the rule still 25% of your income to housing?
I’m happy to work in a field where an advanced degree is not at all necessary. You just need to graduate college and get your foot in the door. After paying your dues, very strong 6-figure salaries are common (especially on the sales side where $200k on up is normal).
This is in NYC, I live in NJ.
I have a JD and my wife has a M.Ed. Everyone I know either has an advanced degree or is in the process of getting one. For the guys, this means JDs and MBAs (I know a couple of people who’ve dropped out of med school to pursue these routes as well). I guess this means we’re all fairly uninteresting, but when it comes down to it, everyone is just trying to make a good living.
MikeNJ… is that mcj50?
interesting item from the WSJ:
“U.S. consumer bankruptcy filings in June were 37.1% above last June’s levels, but are running sharply below the 2005 pace, the American Bankruptcy Institute said . . .
Consumer bankruptcies surged in 2005 in anticipation of a change in federal law that took effect in October 2005. “Underlying concerns of high debt loads are still a constant, pointing to rising filings in the future,” said Samuel J. Gerdano, ABI executive director . . .
Meanwhile, U.S. consumers borrowed double the amount Wall Street was expecting for May as credit-card use climbed at the strongest rate in six months . . . The 9.8% increase was the biggest since 14.5% in November.”
So with all these advanced degrees and the general disbelief that many young-ish couples bring $200k to the table, is it that none of you are actually making much money or just shocked that other people might be making as much as you? I suspect it is the latter, considering that a lot of people here are looking in the $600k+ range for houses.
MBA
#149 ??
The question of an advanced degree or not comes down to identifying what you want to do, then figuring out if the advanced degree is the way to get there. If you want to do job X which requires a JD, then you sign up to take the LSATs and that’s it. I was considering an MBA but I couldn’t answer the question of what happens after getting the piece of paper, so for now I’ve opted to not become one of the many downloading their MBAs from University of Phoenix. I’m relatively happy with my current position, but I don’t see it leading to a corner office for a decade, if ever. I will make some kind of a transition at some point in my career, and luckily since I’m a saver, if it requires time out of the work force, I can do it. I don’t need a BMW and a Patek Phillipe to feel happy.
#129
Like many of Richard’s dumb-dumb Westfield neighbors, I dun did get me one of them thar MBAs. Since gradumacation, my reading level dropped down to the 5th grade level, I forgot my Fourier inversion theorems, and my front tooth started to rot.
Dang.
#103 – honestly your old boss was an a$$. If he/she denied raises while admitting you were a great performer then they have no business being a boss. Go test the market and find out you can get paid more then bossy will be singing a different tune. Great performers should be kept happy. As my Dad said recently (with blackberries and remote desktop services, being the norm) “chase the money because you will put in the hours no matter what the job.”
Also, I can’t think of many Chief Executives at my recent companies that held anything more than a bachelors. There was an article about this in the WSJ – most CEOs do not hold advanced degrees and most did not go to Ivy league schools. My advice – if the state or U.S. government mandates that you need to pass an exam to get the license then this certification is more crucial than a MBA from Montclair State. Companies can’t offshore these jobs. The rest are headed somewhere else in the world.
fanshawe,
– Check out post #110…I don’t think a lot of people (in the big picture) really are bringing $200k to the table. The numbers simply don’t support this idea of an onslaught of young couples with $200k incomes driving up home prices. There aren’t many more two-hundred-thousandaires compared with 6 years ago when home prices are half of what they are today. I have an MBA, but my wife has a very average job with a very average income.
– This blog does appear to have a well-educated readership, but this poll is not scientific and is subject to a significant amount of self-selection bias. I’m sure if you stumbled upon the clubbin’ at the Jersey Shore chat room on AOL you might conclude that no one in NJ has an advanced degree.
153: Your comments were right on par with someone I know who also uses that handle.
Renting..I was thinking that the informal poll shows that some repetitive posters have degrees but that it doesn’t say much else.
Hopefully, people with opinions and information will post in spite of their degrees.
Sorry, not me. At least I know there is someone out there that thinks the same as I do!
#157: I also agree that this blog has a very large helping of self selection bias.
Dare I say it? MFA in theatre.
RentinginNJ, 157:
Agreed, in the big picture there is clearly not an onslaught of $200k earners driving up prices.
I just think there are more $200k families competing for these $600k+ houses in desirable towns than people here think there are. People here continue to quote “median household salary” of desirable towns (which generally seem to fall around $120k) and compare their income to the median and wonder why prices are so high.
Median household salary of a town overall is irrelevant. It’s the median household salary of the current buyers that are important and what will drive prices in this downturn.
BSEE – Never used it. Whole career in business then finance.
OCC Insights Looks at Foreclosure
Prevention
The Office of the Comptroller of the
Currency (“OCC”) published an Insights
report entitled, “Foreclosure
Prevention: Improving Contact with
Borrowers,” on June 26. The report
reviews strategies that banks are using
to prevent foreclosures in order to
mitigate credit losses.
The report concludes that banks have
found that keeping borrowers in their
homes is the best way to mitigate
credit losses, preserve customer
relationships, and maintain stable
neighborhoods. In many cases, the
best approach to facilitate this goal is to
have borrowers and loan servicers
communicate in order to determine the
borrowers’ options and best course of
action.
The Insights report found three main
strategies in use around the nation for
reaching borrowers who are late on
mortgage payments. The first two
involve direct customer contact by the
loan servicer or a nonprofit counseling
agency. The third strategy depends on
the delinquent borrower using a toll-free
telephone number to call either the loan
servicer or a housing counseling
agency.
Best practices included training
personnel in customer friendly outreach
as well as how nonprofit counseling
agencies can assist them in this activity,
providing servicer training for
counseling agencies on acceptable
options and outcome related to
delinquent borrowers, and paying
incentives to staff members based on
the number of successful workouts
they complete.
The OCC and the Federal banking
agencies are encouraging financial
institutions to work with homeowners
who are unable to make their mortgage
payments. The agencies have stated
that institutions will not face regulatory
penalties if they pursue reasonable
workout arrangements with borrowers.
Bear in mind – a young couple pulling down $200K can quickly become $100K [or whatever proration] if one spouse exits the workforce.
Another thing, spending money is exponential in a sense as you move up the ladder. You move to “that town” and you suddenly find that the cost of everything incidental, and subsequent incremental decisions, can quickly jump up expenses.
Things to avoid: McMansions, boats, ordering bottles of wine with dinner, expensive cars that are replaced more than once every six or seven years.
P.Th.D.
I have a Masters
For the record, there are a helluva lot of people in NYC, and commuters, making a helluva lot of money. However, what a good chunk of these people don’t realize is that the clock is ticking on their careers, and they may be permanently unemployed from the NYC financial community by a structural downsizing. There are A LOT of people not originally from this area. If the money dries up and they cannot find work, then there is NOTHING keeping them here.
It is just not obvious now, but it will be eventually.
P.Th.D., now there is one I didn’t expect to see..
jb
#162
fanshawe– I agree and this is the mystery number that we’re all looking for. Does any RE outfit do surveys of incomes of buyers by town? What about mortgage companies? You would think that someone would have this info.
median income figures are outdated and probably do not reflect the income of recent buyers
An education does not necessarily mean people do not do stupid things directly in their line of work or outside of it. The perceived know-it-alls are sometimes the most dangerous intellects.
I think I have learnt more from people who hit the streets for their daily jobs than some professors in their ivory towers muttering theorems.
RE: Renting [157]
The numbers simply don’t support this idea of an onslaught of young couples with $200k incomes driving up home prices.
“Statistics can be made up to prove anything, 14% of people know that.”
– Homer J. Simpson.
“P.Th.D., now there is one I didn’t expect to see..”
Low overhead, high margins…
MS in IT
Will pursue eMBA if I get sponsorship (Not likely for a few years)
172 – I like..
“The average human has one breast and one testicle. ~Des McHale”
“Do you feel as though the house you ended up buying was anomalous for northern Westchester in terms of the pricing, or were you seeing many similar houses in that range? thank you”
I would say anomalous. On one hand, there were, and are, a lot of other homes listed in our price range (700-850) in our school district, many of which have been on the market a while, and a lot of which have seen price reductions. So the inventory is there. However, looking at “real” comparables – similar number of beds/baths, lot size, home size and location, however, there were few that were similar, most especially b/c ours was in excellent move in condition – they had just painted it, it had new central air, they had just landscaped, finished the basement, etc. The other homes just could not offer any of that – they were in crap shape, not attractive to look at (lots of raised ranches and splits; ours is a colonial) and would have required a lot of work. Even in this market, our house was listed a little low, and we still got it for under asking, because they needed to move quickly (we still don’t know why, and they sold it only 2 years after buying it and for the same price). It’s in an amazing location (2 minutes from train) on a cul-de-sac and is in a very private setting for a home in a neighborhood. Not a huge lot for the area (a little over half an acre), but decent for those of us who don’t like to do too much maintenance. The real thing that told me we got lucky was that there were 3 bids on it, and considering the inventory, we definitely know it was a) a deal and b) a good house.
Had the market been hot, or had they not needed to move quickly, I think it would likely have been priced at least 50K higher to start with, if not more.
dreamtheaterr, are you British or Canadian by any chance?
Seneca, were you wondering about the “learnt” as well?
PS, since we’re doing degrees, I have one useless English B.A. and a J.D. Hubby has a B.S. (ha) and a J.D.
I knew people who did the dual JD/MBA – smart, but I think it makes the best sense if the school you choose has equally prestigious law and business schools. Ours didn’t, but that said, if you do very well in law school and get into a big firm doing corporate work, you can make the transition with your business degree to one of your clients doing non-legal work, like someone I know did.
Pat: I was. Even if dream is true red white and blue, I won’t go after such low-hanging fruit as middle school English teachers.
#170 skeptic 70% of all homeowners in Bergen county have incomes of 100k or less.
I love Homer!!!!
“Statistics can be made up to prove anything, 14% of people know that.”
– Homer J. Simpson.
Seneca, I am Indian (as in Indian curry). Why the curiosity?!
Does any RE outfit do surveys of incomes of buyers by town?
The Census Bureau does it by town every 10 years.
The American Community Survey (part of the Census) does it each year for all counties and select cities
Come on guys, be serious. I doubt most of you have the advanced degrees you claim you have. If you did, you would not be buying POS capes.
Was anyone able to get the status of the 2 homes in Alpine? (see post #99)
2005 Bergen County Income Distribution
Total households……332,223
Less than $10,000……15,151
$10,000 to $14,999……12,624
$15,000 to $24,999……23,393
$25,000 to $34,999……25,118
$35,000 to $49,999……39,556
$50,000 to $74,999……57,051
$75,000 to $99,999……42,726
$100,000 to $149,999….60,293
$150,000 to $199,999….24,961
$200,000 or more……..31,350
dream, British-influenced (assumption on my part) spelling of “learnt” rather than the American form “learned” in your earlier post. No big whoop.
Is an MS in management from NJIT worth the money?
But what is the income level of people who bought houses in Bergen in 2004 to present. It has to be higher.
#170 skeptic 70% of all homeowners in Bergen county have incomes of 100k or less.
What’s the purpose of having a JD and MBA? If your working as a lawyer, you do not need an MBA. If your working in business, you do not need a JD.
NJgal,
If you dont mind me asking how much did your house cost you? And how did you get it for below asking if there were 3 bids?
thanks
are you being serious?
“Robert Troll Says:
July 9th, 2007 at 4:55 pm
What’s the purpose of having a JD and MBA? If your working as a lawyer, you do not need an MBA. If your working in business, you do not need a JD.”
i had a couple of mba’s working for me. they were paid 35-50% more than the bachelors and no degree counterparts. they were all in all less capable and eventually fired all of them. the most important trait in a worker is experience and street smarts. you just can’t learn that stuff in school.
#190 Well according to people I know in the business not really. Lots of Joe Six Pack types making 50k to 60k a year buying 500k and more homes.
Most with little to no money down.
Seneca, I was taught by Jesuit Brothers (Irish) for 12 years…I guess that’s where the ‘learnt’ came from!
I’d be whipped if I didn’t get my spellings correct.
“are you being serious?”
Tell me why a lawyer with an MBA is better than one without an MBA. Tell me why a criminal defense attorney should have an MBA.
“If you dont mind me asking how much did your house cost you? And how did you get it for below asking if there were 3 bids?”
750. I think that our bid came in first and they had started negotiating with us and b/c it was a stressful situation for them (again, reasons unknown, but we think divorce) they wanted to get it done with. They kept the others as back up bids. I assume also that the other buyers were like us – not stupid enough to bid asking or over. I would assume the others either bid below us or around a similar number so it wasn’t as though anyone was there offering an amazing “over ask” amount, or I suppose the sellers would have taken it. But I think the timing stress was more of an issue for them anyway, since they were clearly not going to be getting more than they paid for it a few years ago in any event.
And seriously, Troll, what degree do you have since you doubt everyone here has what they have? I have a JD – sorry that it bugs you for some reason. And I did not buy a POS cape.
>>There are A LOT of people not originally from this area
it’s amazing how transient NYC really is. much more so before i lived there and got to know the ‘local’s.
“Tell me why a lawyer with an MBA is better than one without an MBA. Tell me why a criminal defense attorney should have an MBA.”
Because a lawyer with an MBA can do both legal and business work for whatever company he or she joins, and can have a better understanding of the legal issues involved in their business dealings. Hubby is working right now for a CEO/Master of the Universe type guy who has a JD and an MBA – I’m fairly certain he’s proud of those degrees and finds them useful (and no, he does not live in Cliffside Park).
I have a BS
“and no, he does not live in Cliffside Park).”
What’s that supposed to mean? Explain it to me simple since I don’t have an advanced degree….
#189 , You need to do research on placement rates and think about what you hope to get out of the degree. I had the option of going to a CUNY MBA for 25% of the cost of a big time MBA. I chose the big time MBA and all its costs. Was the education alone really worth 4X the cost, no way! It was good, don’t get me wrong but the CUNY school was also very good and I have always heard good things about it. You pay the difference in $$$ for the name factor and the networking. If you think the Mgmt degree will get you a better job and you have a realistic plan on how to get it then it is merely a simple cost benefit analysis. NJIT is a good school that I would liken to the CUNY school I was looking at. If they have a stellar placement program and you think if you do well you will land your dream job that pays you enough to earn a decent return on your time and $$ investment then I say go for it. Even better, try and get your employer to pony up some cash to help you out. Also don’t forget to write off the degree as an unreimbursed business expense (what is not paid of course by your employer). Do not think there are people beating down doors just because you have an advanced degree. Experience is the most important thing and the degree only adds substance to your resume and tells your employer you are invested in the game I like to call “Working stiffs of America”
O.K., so we’re all a bunch of lying losers, Robert. Let’s move on.
Tell us how to fix the affordability problem around here.
And focusing on your particular house in your single town doesn’t count.
With all the brainpower focused here, how come we can’t figure out a way to get more sellers to start posting here?
rhymingrealtor Says:
July 9th, 2007 at 2:20 pm
I know first hand of an example of a house being purchased before the sale of the first home, the first home was forclosed on. Original asking price was 399,000 sold 18 mos later reo june of 07 for $310,000 and they still own the new house. That may be the case that you’ve noted.
Yeah, I thought about the possibility of them having to go into foreclosure. But what if they were depending on that money to put into the new house?
My degree is a BFA. Haven’t seen the need yet for MFA/MA, not relevant to the work that I do, actually counterproductive. When I see the need to get the extra degree, I figure then I’ll go for it.
#194 – Richard, maybe you need to work on your hiring skills. Saying all MBAs are superior to employees without MBAs is about as intelligent as saying “mba. what a waste. you actually get dumber once you complete this degree.” Broad strokes make for an ugly canvas.
#197 – You don’t understand why a Corporate Development Exec with a JD/MBA looking to grow a Fortune 500 business overseas or attempting to navigate a heavily regulated industry might be superior to someone with ‘just’ an MBA or ‘just’ a JD? Really?
You don’t understand why a criminal defense attorney specializing in white collar crime might be superior to someone with ‘just’ a JD? Really?
RE: NJGal [200]
Which “Masters of the Universe” guy? Stinkor? Lockjaw? Man-E-Faces?
The great (and sad) thing about a JD as opposed to an MBA is that even if you are less capable and more street smart, you can’t practice law without it.
“Just like a lawyer, you did an excellent job of dodging my question as to why criminal defense atttornreys should have an MBA. You should make partner since you are so smart.”
They don’t. Enough of an answer for you? It was a stupid question because we’re clearly not talking about people who want to do criminal defense.
Don’t be so bitter just because you have neither of those degrees and resent those people out there who have taken the time to get both. What you might find even crazier, since apparently those of us with degrees are so stupid, there were actually surgeons and other doctors in my law school class.
“You don’t understand why a criminal defense attorney specializing in white collar crime might be superior to someone with ‘just’ a JD? Really?”
I do not recall Johnny Cochran having an MBA.
“Which “Masters of the Universe” guy? Stinkor? Lockjaw? Man-E-Faces?”
Ha, hubby would likely say Lockjaw. This guy is quite a character. But brilliant.
Heck, even the BFA was counterproductive to a certain extent. It took me years to shake off some of the art techniques and ‘constructive’ criticism I received, and find my own voice.
#211
It’s Johnnie Cochran Jr., not Johnny.
Johnnie represented OJ, Michael Jackson, Sean “Diddy” Combs, Tupac Shakur among others. Murder, child molestation, stolen weapons, etc. were not ‘white collar crimes’ last time I checked.
NJgal,
Your sellers might have picked you because they felt that since you and your husband were lawyers, you were a good bet in terms of being able to line up the financing to get the deal done.
Or maybe they just liked you better.
on the income issue again– senior citizens are about 30% of the population, but their income is pretty irrelevant when discussing house buyers.
There may not be a huge difference between the region now vs. 5 yrs ago, but there is a big difference between now vs. 30 yrs ago when many of these people bought.
Again, I am not saying that everyone is making 200k. But it is a stretch to believe that the median house buyer during the past couple of years in Summit or wherever is making the reported median income for that town.
Certificate: Advanced Studies in Beer.
RE: NJGal [210]
That’s good. Much more pleasant to deal with than Stinkor, I imagine. Though I wouldn’t want to ask either for a raise.
NJGal,
Thanks for the info. Where you ended up is actually one of the areas we’re thinking about down the road when our lease is up in 2009. What you’re reporting has been my impression as well from looking online– the updated colonials in nice neighborhoods with good train access around 800k do not stay on the market long.
Good luck with your new home and congrats
Having a JD/MBA is not going to get you into an Alpine mansion. Want to live large in Alpine? You better have a Grammy award and a top selling rap album.
Robert, I cannot believe you are real.
Every comment you post shows a greater and greater lack of understanding.
RE: scribe [213]
That is definitely not the case. My wife and I are both attorneys and I feel that two of our offers fell through because we were both attorneys. Everyone thought that we would begin to harp on every little detail when all we wanted was a house. Even our own attorney recommended not buying a certain house because of little flaws that we were comfortable with on the off chance that we would sue him for malpractice if the little flaws turn out to be big flaws. It felt like everyone around us were on eggshells.
Since there alot of lawyers here:
This is hilarious (since he failed by less than 2points) and why lawyer get a bad rep.
Man Flunks Bar, Sues Massachusetts for $9.75 Million Over Gay Marriage “Trick” Question
New York Lawyer
July 9, 2007
By The Associated Press
BOSTON — A man said he failed the Massachusetts bar exam because he refused to answer a question about gay marriage, and claims in a federal
lawsuit the test violated his rights and targeted his religious beliefs.
The suit also challenges the constitutionality of same-sex marriage, which was legalized in Massachusetts in 2003.
Stephen Dunne, who is representing himself in the case and seeks $9.75 million, said the bar exam was not the place for a “morally repugnant
and patently offensive” question addressing the rights of two married lesbians, their children and their property. He said he refused to
answer the question because he believed it legitimized same-sex marriage and same-sex parenting, which is contrary to his moral beliefs.
Dunne, 30, was denied a license to practice law in May after scoring 268.866 on the exam, just shy of the 270 passing grade.
His lawsuit against the Massachusetts Board of Bar Examiners and the Massachusetts Supreme Judicial Court also claims the state government is “purposely advancing secular humanism’s homosexual agenda.”
The “disguised mechanism to screen applicants according to their political ideology has the discriminatory impact of persecuting and
oppressing (Dunne’s) sincere religious practices and beliefs” protected by the First Amendment, and was “invasive and burdensome,” according to
the lawsuit filed last month.
Dunne’s telephone number was unlisted. He told the Boston Herald he has a law degree from a Boston law school and is attending a Boston business school.
Officials with the state bar would not say how much the questions are worth or how the tests are scored, and the court also declined to
comment.
David Yas, editor of Massachusetts Lawyers Weekly, said the suit was “idiotic” and that Dunne was “completely missing the point about what it means to be a lawyer.”
“Knowing the law has nothing to do with agreeing with the law,” he said. Yas said if Dunne really believed the question was improper, he should
“answer the question correctly, get your law degree and use it to argue for what you believe in.”
Lee Swislow, executive director of Gay & Lesbian Advocates & Defenders, said Dunne is trying to use a legal question to advance a political
agenda.
“The bar exam was a test of whether he knew how to apply domestic relations law, and he refused to answer,” she said. “Now he’s suing, and
I think that makes him a loser.”
MBA-Finance
If you have a MBA from a Ivy league school, I would say you can easily get a $200k+ job at graduation.
grim: unmoderate?
There is no affordability problem to fix!!!!! Houses today relative to income are very affordable. The problem is people think they now have some God given right to a house. Back in the 1940s to 1970s when a lot of us was raised parents lived in apartments or govt sponsored coops while they saved many years for a house. Now kids want a 4 bedroom three bath house they day they are married and when they can’t afford it at 27 they claim their is an affordability issue. My parents bought their first home when my sister was 14, brother was 13, I was 11 and my younger sister was 7 and we were considered normal.
Chairman,
Wow. Hadn’t occurred to me that people would be so wary of lawyers as buyers.
If you have a MBA from a Ivy league school, I would say you can easily get a $200k+ job at graduation.
Sure, if you want to be a management consultant that lives out of a suitcase, or an i-banker that works 6 3/4 days a week…
#222 John– I don’t think that is the case. While I agree with you that there are a lot of people making good money in the area, it also seems clear to me that the area is far less affordable than it once was. The average blue collar family 30 yrs ago could buy a house if they worked hard enough. Outside of gov’t jobs, I don’t think blue collar families have a shot around here today.
Re people being wary of lawyers as buyers…
I had a relatively tough time finding an apartment in manhattan to rent upon graduating from law school because me and my roommate were both lawyers and evidently newbie lawyers are difficult tenants, especially when the property isnt in perfect shape.
unmoderate?
Another reason why the affordability factor is a myth is that many people want to bypass the starter home and go right to the McMansion. They do not want a house that needs work on a main street. They want a new house on a cul de sac. They do not buy what they can afford. If you can only afford $700k, you do not go around looking at $900k homes with the idea of putting in an offer for $700k. But, yet, many people on this site do that and that is why you become bitter when realtors won’t present your crazy offer.
Robert Troll Says:
July 9th, 2007 at 5:05 pm
I have a BS
Duck: You should expunge the indefinite article from your statement.
Robert Troll Says:
July 9th, 2007 at 6:35 pm
unmoderate?
Duck: For many of us, ignorance is bliss.
I like this blog a lot, but is there another place where people actually discuss home buying in NJ, towns in NJ, trade visit info, etc? I feel like I am almost at the right place.
I don’t see much about what to do if you “have to buy” right now because you are moving into one of these oft discussed areas–except for the lowball info which is great, and the stories of routinely offering 22% off LP.
I have an interesting tidbit to share. I don’t know if some of you remember that my mother ended up renting directly from the owner of a new construction condo last year after clearing up an exciting case of bait/switch by the realtor who was asked to show the unit.
Well my mother asked the landlord whether she is planning on renewing the lease in a few months or whether she is planning on selling the unit…she says “uh, no we won’t be selling right now, this is not a seller’s market”…maybe the message is getting through to some…unfortunately for her, if she ends up waiting, she is going to find a worse market, especially with new construction, great % of flippers in the complex, and 55 and over community which limits who you can rent to/sell to.
Same complex, at least 10-12 units for sale including the builders’. Checked out one of the lower end models (300k) which has been vacant for the last year except for a few months. The owner/seller tells us what every potential landlord in that complex told us, “yeah, I am selling it now because my mom decided she did not want to move here..she is moving to phoenix, florida, etc. ” Can we say, I am a wanna-be-flipper but can’t bear to admit that I am an “investor” in this market. Sad.
afe
By the way, BA in poli sci in the year of the Bicentennial.
What’s striking is that you young’uns are expected to have much more in the way of advanced degrees. Much more time, much more of an expense.
Renting in NJ may be my new favorite poster. Outstanding stats.
No advanced degrees here, but who knows down the road. We pulled in about 200k last year and probably will do slightly better this year (fingers crossed).
That said, we are putting our max at 400k for a house, and that’s why we’re strugging to find something. But we’re willing to wait it out. We know we want to have kids and that’s why we’re not going to reach at a 600k place. Even if we could put 200k down.
Maybe we can inch up to 450k and put 25% down. But asking prices are definitely coming down.
And what’s the line from Vanilla Sky? “I just think good things will happen if you’re a good person with a good attitude.”
chifi, no. 232
:)
CPA, MBA, JD, working on LL.M. You can never have too much education.
Robert Troll…well, if you tell me to offer list price in this market, I am going to assume you are from the NAR. :)
The sheets I have gotten from GSMLS clearly show props that have been reduced considerably from their OLP (and yes, those houses may be near a huge quarry, but I’m still hoping).
oh and to add to the discussion.
ms & phd, hubby too.
I am not saying to offer list price. But you should remeber that most homes that are SOLD go for within 5% of list price.
RE#206
Tell that to the color school.
bloodbath,
we are in a similar position, and with home prices stagnating for the next who knows how long, do you really want to keep putting in more of a downpayment into what is effectively a depreciating asset & increasing the opportunity costs.
makes no sense at all.
Lukas,
The problem with most other sites is that they are low-traffic, so your questions may go unanswered for some time (if answered at all). The only suggestion I can make is just fish for comments here and see what you catch.
Don’t make the assumption that this site is anti-purchase, we’re not.
jb
ANd don’t be fooled by huge price drops. These homes were drastically overpriced to begin with. THere is a home down the street form me. Originally listed for just over $1 million, recently reduced to just under $840k. There is no price drop because the home is now priced at where it should be. There are a lot of artificial price drops in this market that confuse buyers. Pricing your home $100k more than what your realtor says it is worth and then reducing it $100k does not really count as a “price drop.”
“Don’t make the assumption that this site is anti-purchase, we’re not.”
Sorry JB, but I would beg to differ. While you are not anti-purchase, there are a lot of users here who are. This site does have the potential to scare potential buyers out of the market.
“You can never have too much education.”
I think that, when you have more degrees than fingers on one hand, then you might have too much education. Society does not need professional students….
jb, I didn’t think this was an anti-purchase site at all. I had been reading it for the economic take on NJ, but not for actual “house shopping” info.
Now my wife took a job out on 78, so, yeah, I am one of those NYC-ers that people keep talking about.
Robert Troll…you’re last point about large price drops is well taken.
For some schooling seems to have no beneficial effect.
Ha…did you see that…”you’re last point” instead of “your last point.” No advanced degrees here :)
“Robert Troll…you’re last point about large price drops is well taken.”
I’m glad that someone here values my advice. I have to admit that I overpriced my home… as in $150k more than what my realtor said what it was worth. I did this because I saw listing prices for comparable homes that were considerably more than what my agent suggested to list at. I got fooled by all the agents who “bought the listings” This is when realtors tell a potential seller that hosue is worth more than what it really is on order to get them to list with them.
I thought my agent was trying to cheat me and deliberately underprice the house so that he could make a quick buck. Well, it turns out he was right. When I first met him, he told me right off the bat that he does not “buy listings.” When I sold in Manhattan, I had a realtor who bought my listing. He deliberately listed the apartment for about $100k more than all the comps in the building in order to get me to sign with him.
#236 Bloodbath– I think it’s great that you choose to live below your means, but you must agree that most people are not going to restrict themselves to 2X their income when looking for a home. If you are looking in areas where people have similar incomes to yours, you should not be surprised that there is nothing in your price range, because most of these people are willing to spend 4X their gross income
#247,
If your employer pays for at least one degree, why not?
The world needs more educated people and less ignorant people.
Lukas,
If you want to learn how NOT to buy real estate, head on over to http://www.iamfacingforeclosure.com
Lukas Bux, did you check any of the forum posts at city data?
http://www.city-data.com/forum/new-jersey/
This year units in Bergen County are selling around 8.5% off last listing, average price.
2007 Average List Price: $632,400
2007 Average Sold Price: $578,868
Robert…I have already visited there and found it darkly comic. The lasting impression was not so much about him, but about how eager people were to lend him money.
What is your source Rich?
moderated
Lukas, have you tried
http://tinyurl.com/2thw55
Once again, Rich comes with stats actually back up an argument.
One last time, just in case you missed the first 30:
1) Look at the last housing downfall in the 90s. Over the course of a few years, prices went down significantly. Next time a realtor tries to sell you on, ‘we’re bubble proof’ or whatever, print out one of the great maps JB has linked. And remember – this is the biggest housing run up in the nation’s history. What goes up … you get it.
2) Asking prices are coming down as stubburn sellers FINALLY realize that they won’t be able to sniff 2005 sale prices their neighbors got. If we’re only in the start of the downfall and we’re in the peak season, what’s going to happen this winter, when sales are historically slow? They’ll fall further.
3) This stuff about first-time buyers being greedy wanting a good school district and on a cul-de-sac, etc is complete BS. We work hard, we save money, and we’re educated about the market. We’ll get what we want, we just have to be patient. The bagholders who NEED to sell will flinch. This winter, I predict.
4) This may peeve realtors, but if my agent won’t present an offer, I’d take it upon myself to write a note telling the owners that they can either listen to my offer for 50k/100k off now, or they can try to sell it to me for 50k/100k off in Jan. 08. Because as this great site has chronicled, asking prices in Bergen County are going down by 6k-10k a month.
Affordability vs. Value — You know, people are always talking about affordability but that is like a statistical measurement of the median house price vs. the median income…or some such calculation. In the end, it just kind of shows how the demographics are changing in your town–who can and can’t afford to buy there.
What really bothers me is the issue of “value.” My wife and I gave the our agent/broker an upper limit of 700K and I am really disappointed what they have come back with. My wife would throw 700K at the first broker who would make the whole issue of moving go away, but I keep looking for value for the money. I kept telling her we’ll get more for our money in NJ than in NYC, but it’s not THAT much more. At least the property is yours, though. :)
Where have you been looking?
jb
“This stuff about first-time buyers being greedy wanting a good school district and on a cul-de-sac, etc is complete BS. We work hard, we save money, and we’re educated about the market. We’ll get what we want, we just have to be patient. The bagholders who NEED to sell will flinch. This winter, I predict.”
No you won’t. Even in this market, you will still need to make compromises. If you want everything under the moon, you need to be preapred to spend at least $1 million. Buyers in this price range have the most flexibility. As you work your way down the property ladder, you lose power. Sorry, but that is the way it is. My agent frequently sells homes for under $500k throughout Bergen and most sell for 5% off asking price or even for full asking. His higher end listings often become stale, in contrast. He recently had a $500k listing in Fairlawn sell within a week of going on the market.
This site does have the potential to scare potential buyers out of the market.
You have no idea how many “potential buyers” were scared into buying by the real estate industry and media. Many of these buyers had no business doing so, but they thought if they didn’t buy immediately, they’d never be able to own.
The misinformation peddled by the real estate industry and media is staggering.
All of my clients, past and present, read my site.
jb
1) Look at the last housing downfall in the 90s.
**again, we had a serious recession in the early 90s. Do you think a recession is on the horizon? If not, don’t you think the early 90s comparison falls apart?
2) Asking prices are coming down as stubburn sellers FINALLY realize that they won’t be able to sniff 2005 sale prices their neighbors got.
**Not sure sellers actually accept this. Some do, but recent surveys posted here suggest that most homeowners still think their house will be worth more in a year.
3) This stuff about first-time buyers being greedy wanting a good school district and on a cul-de-sac, etc is complete BS. We work hard, we save money, and we’re educated about the market. We’ll get what we want, we just have to be patient. The bagholders who NEED to sell will flinch. This winter, I predict.
**I agree that 1st time buyers aren’t greedy, but what is so special about this winter that will provoke mass capitulation?
4) This may peeve realtors, but if my agent won’t present an offer, I’d take it upon myself to write a note telling the owners that they can either listen to my offer for 50k/100k off now, or they can try to sell it to me for 50k/100k off in Jan. 08. Because as this great site has chronicled, asking prices in Bergen County are going down by 6k-10k a month.
**I would be tempted to do the same, but keep in mind that they have to agree to sell to you. Harder to get someone to agree if they don’t like you. Why not just make offers yourself without making future predictions?
Pat…thank you.
Just because you work hard does not mean you are entitled to the perfect property. I worked ahrd and save a lot. When I tired to buy a 2 bedroom apartment on the upper east/west side, I was unbale to buy anything. Even if I did find soething I could afford, I doubt the baord would approve me. Sometimes you have to accept that you are not going to get everything you want. Bloodbath reminds me of a kid in a toy store who wants to buy everything in the store.
I think Bloodbath wants good value for his/her money also.
I seriousy think that first time buyers today are greedy. It seems that in order to have a decent chance of selling, you have to have all this high end overpriced garbage in your house (ex: granite, stainless steal appliances, oak cabinets, etc.) Buyers today want everything, but they do not want to pay for it. I actually had one prospective buyer who did not want my house because he said he would have to spend $200k to make it “liveable.” What a clown.
I definitely agree that you have to get the seller to liek you if you want your offer accepted. I have some buyers who have been playing games for nearly a week. When I ask the realtor when they are going to make an offer , she keeps saying “tomorrow.” Well, now I am going to play games too. I am not going to sell the house to them for one dollar under asking price.
I think it might be time for another get-together.
jb
Robert, do you think buyers today are any more greedy than say, 5 or 10 years ago, perhaps its just more evident because the housing market is so slow…
I think in general to the extent that me and my peers are “greedy” it has less to do with an updated McMansion-style kitchen and more to do with fundamental expensive-to-fix problems, like outdated plumbing or electrical systems…
Putting granite counters and new GE profile appliances in such a house is the equivalent of putting lipstick on a pig. Its even worse, because you know those new appliances are being built into the asking price, and you never wanted them in the first place.
Nobody used the word ‘perfect.’ Of course concessions need to be made. In any price range, from 200k to 2 million.
I love how it’s the buyers who are greedy when x house has been on the markets 8 or 10 months with nary an offer. Who’s greedy now?
I bought new construction out of state in 2005. Enjoyed the paper profits each month (hey, another $20k! This is great!). And then in the summer of 2006 i saw everyone putting their place on the market and panicked. I shoved mine on the market as the Fall was arriving and based on advice from family, put it on the market at a ridiculously high number.
No offers came.
Worried i would become a bagholder, two weeks later i dropped the price 30k (against the wishes of my agent, who was a relative). Instantly got bites (three). One guy offered me 15k less than my asking price (i practically jumped at it reading all the doom and gloom here and elsewhere) but the agent told me to ask for 10k more, and the buyer went ahead with the deal.
The moral of the story: if you dont want to get left holding the bag (as i nearly did – it was an investment property), you lower the price and sell. If anyone doubts my story, i would gladly tell it to JB off the record via email for him to check it out.
Don’t know about you guys, but unless stats or links are behind statements such as ‘x house sold in a week’ then I’m not buying it. Talk is cheap.
The word has it that S&P will announce BIG rating changes tomorrow. It could be a very ugly day. Did anyone hear anything about it yet?
Ratings on what? Debt?
frank … link?
http://www.haloscan.com/comments/calculatedrisk/397379077454961075/#290846
fitch action on Structured Asset Security Corp. (SASCO) residential mortgage-backed certificates:
To Robert’s point…there seems to have been/is a herd mentality among buyers and sellers regarding all these “extras.” I don’t know where it stems from (existing home sellers trying to keep up with new home sellers?), but you can find stuff all over the internet about getting buyers’ attention by redoing kitchens and putting in stainless appliances and all that. I am not looking for, or would be swayed by any of that stuff ( I kind of agree with the lipstick on a pig theory–if it has to be redone, let ME redo it my way).
With regard to the story about the person who said they’d need to put in $200K to make the place liveable…I think I married that woman. :) But I love her anyway.
I don’t have a link, it’s just a word on the street. I would hope others would know more.
From the AP:
May Consumer Borrowing Jumps 6.4 Percent
Consumer borrowing posted a hefty increase in May, reflecting the biggest jump in credit card debt in six months.
The Federal Reserve reported Monday that consumer credit rose at an annual rate of 6.4 percent in May, far above the small 1.1 percent gain of April.
The increase was propelled by a surge in the category that includes credit cards, which rose at a rate of 9.8 percent in May after having a tiny increase of 0.2 percent in April. The jump in credit card debt was the largest since a 14.5 percent rate of increase in November.
…
The size of the increase was nearly double what economists had been forecasting, although they were looking for a rebound from the sluggish performance in May, when the 1.1 percent rise in overall credit was the smallest gain since a 0.1 percent rise in October.
David Wyss, chief economist at Standard & Poor’s in New York, said some of the surge in credit card debt reflects the fact that it is getting harder to get home equity loans with banks tightening up on standards and home values not soaring as they did during the housing boom.
“We think that people who had been refinancing their credit card debt into home equity loans are finding that harder to do now,” Wyss said. That would explain part of the big rise in credit card borrowing in May, he said.
This is where those dudes on CNBC come in and tell you that most people pay it all off at the end of the month so it doesn’t matter.
frank (275)-
zzzzz…more slamming the door shut after the horses have left the barn.
All over now but the crying. Moody’s and S&P should be ashamed of themselves. The air of collusion hangs thick over all the CDO world.
… MD
(sorry I’m late… just got home from a hellish day in the ‘pit’)
sl
Everybody on the street knows that if the worst CDO tranches were exposed to the open market, that slop wouldn’t draw a nickel on the dollar.
hey Clot… see the new shiny mls # (and same old price/agent?) (readington)
sl
re #272… hell, yeah!
sl
grim (272)-
I’ll bring the Krylon and bags of glue. Found an abandoned high-rise yet?
kl (286)-
I took a peek when you mentioned it last week.
Those guys are slow learners.
I think it might be time for another get-together.
Actually, I was recently thinking about that myself as I would like to make it this time.
But (there’s always a “but”) it’ll have to be soon (the kid is due around the 25th) or closer to mid-August/September if I’m going to make an appearance.
Otherwise, pick any watering hole you like and I’ll be there!
sl, if you eat little parts of a popsicle stick by accident and feel it all the way down, does it help more to have red wine, or Miller Lite?
This blog does appear to have a well-educated readership, but this poll is not scientific and is subject to a significant amount of self-selection bias.
Renting,
Perhaps it appears that way because the readership without degrees are not so eager to post that fact, considering the overwhelming degree holder responses.
I do not have a degree. I was however the first in my family to graduate High School. My mother quit high school at 16. My father has an 8th grade education. I have 3 sisters 1 brother, I am the oldest the youngest sister is now attending college. My mother did not work, my father supported our family as a blue collar worker. They owned 2 homes a small colonial and then a slightly bigger colonial. I work, my husband works (6) days. We can not afford the small colonial, we have 2 children.
KL
Pat,
Hendrick’s gin.
Probably won’t help move the popsicle fragments but if you drink enough, you won’t care.
Rich
I was in Princeton over the weekend and drove down Prospect for kicks. Was reminded of an incident where entirely too much gin was consumed. Vowed that night (well, early the next morning) never to let gin touch my lips again.
jb
Yeah, KL. I think so, too, about the degrees. But if the silent majority didn’t post before, and didn’t know, what’s the difference?
My father never finished 8th grade. My mother did finish high school.
I’m the youngest of 10. My 27 year old sister raised me after my parents died.
Hendrick’s….we only have some cheap Seagrams right now. Will it work?
um…popsicle stick?? red wine?? beer??
are you searching for pain control or something… ya lost me there.
sl
If you have truly impaled your esophagus (or throat for that matter) with popsicle stick spikes… Hie thee to your nearest ENT (ear nose and throat doc) and get them out before you end up with an abscess (pharyngeal abscess: bad. mediastinal abscess: *really* bad.
sl
Pat (296)-
Might I suggest a little chilled Everclear?
A delightful dram!
“I’m the youngest of 10. My 27 year old sister raised me after my parents died.”
“If you have truly impaled your esophagus…”
This is a truly interesting board.
given enough advance time, the wife and i would try to attend. curious to meet these esteemed real estate superstars. you guys have no clue how much you’ve helped … and we haven’t even bought a place!
sl (298)-
Grain alcohol won’t cure that?
Another day, another esophageal foreign body…
sl (298)-
How would a sword-swallower handle this dilemma?
It’s not that bad, I hope. It only hurts bad right at the thyroid. I was actually eating one of those home-made lollipops. As I was walking down the stairs, a chunk broke off with part of the stick attached, Swallowed the thing whole and could feel the tear.
The worse part is the nauseated feeling thinking about eating wood.
the last esophageal foreign body was a chunk of not-chewed-enough chicken.
Pediatric nasal foreign bodies are my personal fav.
Grain alcohol cures many things….this require antibiotics (not that the alcohol buzz would hurt ya ;-)
Much better than grain alcohol? Propofol a/k/a “milk of amnesia” Best conscious sedation agent *ever*.
sl
Why do I always type things and then regret it as soon as I hit [Submit]?
sl (306)-
I wanna be sedated.
-Joey Ramone
Still Looking…why anyone with Diprivan in the house would be reading this board is beyond me…
I’m interested in the get together. Hopefully its on a day and time I can make it.
Pat (307)-
I bet all the best stuff here gets posted by people who hit “Submit”, then cringe.
you probably have just a scrape from the stick… but, in all fairness? You also could have a piece of stick in there.
Some ENTs have a (sp?) Machiedoscope — a flexible scope that they use in the office and look down into the pharynx.
If it’s esophageal (and further down) you need a GI to pop a scope in an look.
Any sort of esophageal or pharyngeal puncture can be a problem. Not to mention that stick has to get “through and out”
I had a guy who accidently swallowed a toothpick… It eventually worked it’s way to the rectum but went through the wall of his colon — he had a surgery to clear the pick, the abscess and needed intravenous antibiotics…
sorry for the long post.
sl
sl (306)-
Bring some of that “Milk of Amnesia” stuff to the get-together.
Methinks Ducky’s drinks will need a little “boost”.
yes… I know that cringe feeling… uh…all too…er, um… well.
eesh.
sl
For any possible gathering I suggest making the directions there as complicated as possible for the obvious reason.
house? Nope. In my ER? Yes.
long story short. needed upper and lower scoping… diprivan (propofol) was a godsend.
sl
Clot
Ducky’s drinks will need something. I’m not sure what you’re suggesting will be enough to appease the masses.
BTW, did you hear about the woman on trial for killing her (husband or son-in-law- I forget which) with antifreeze? Her lawyer wants the charges dropped because she said she didn’t want to kill him. She just wanted to hurt him.
sl (312)-
That’s just too much information :)
Ever hear the one about the constipated mathematician?
316 was in reference to Lukas post…
sorry…it’s been a skin-peelingly long day.
sl
Perhaps include a math puzzle that requires subtraction.
Just my two cents, re: the earlier conversation regarding education, it depends on what you’re after. I know a number of people from my college days who just got one degree after the other, with little true professional experience to back it up and a pile of debt. In terms of sheer economics, from a pragmatic standpoint it just didn’t make sense.
With the cost of education nowadays, getting multiple pricey degrees and expecting it to pay off in terms of earning power is an unlikely gamble. IMHO get a good solid grad degree from the best school you can get into/afford, choose an industry or business you’re interested in, and put in the years to learn on the job. Ultimately that experience will make you the valuable commodity which employers will pay for.
lost (317)-
In the mid-80’s, I spent several years as a director of a wine import company.
One year, several estates in Germany (not ones I rep’d, thank God) got busted “pumping up” their late harvest Rieslings with antifreeze. Evidently, it will make a decent sweet wine taste like something you’d pay $200 a bottle for.
The winemakers’ defense? The amount of antifreeze they used would only make consumers sick…not kill them!
Clot don’t tell me that. I love a good Reisling. But I’m wondering how much antifreeze I might be drinking considering the hangovers are just unbearable for me.
Clot: As you say, the ratings game is certainly a house of cards. I spent some time over at S&P (though not on the Ratings side of the house), but it’s a pretty simple equation to understand the inherent conflicts of interest. The $$ involved from Structured is unreal….which of course pales in comparison to the $$ in the hedge funds, where all the decent analysts run to after a couple years (unless they want to have an easy, pretty well paid life).
When I was younger, first working on the Street, I was absolutely incredulous to learn that firms would pay to get rated!! Ha. Boy, did I have a lot to learn-
Of course, no one wants to be the bad guy until the last possible moment, else when they downgrade, it of course forces all the pension fund covenants to kick in and start selling those lower rated securities, which leads to….
lost, if you limit it to two bottles a night, does it help at all with the unbearable hangovers?
You might try eating one slice of white bread and drinking two full glasses of water before going to bed if you’re actually drinking that much Reisling.
;)
Why Is Antifreeze So Delicious?
http://www.slate.com/id/2103821/
Pat
I have turned into an unbelieveable lightweight- in part because I don’t drink much anymore and have lost my tolerance. But right now, I have post concussive syndrome and no joke, I am completely drunk after 2 glasses.
So no, bread and water don’t help at all.
Steve, I cannot wait for the pension whining to start.
It’s gonna be better than waving Social Security reform in front of republicans next year.
“With regard to the story about the person who said they’d need to put in $200K to make the place liveable…I think I married that woman. :) But I love her anyway.”
The buyer who said that was a man.
Reisling? Do I hear anyone for a good Guerwuztraminer? a little on the sweet side I know…
Well, I still have not gotten my offer. My agent said that it was supposed to have been submitted tonight. Oh well, it looks like I am not going to sell the house to them for under asking price. Sucks for them…..
Chifi
Never tried it. But suddenly I want to go have a Franziskaner.
I was dying for a Riesling/Guerwuz about 4PM……chilled just right…..
inexpensive & gets the job done……….
http://www.maison-trimbach.fr/en_gamme.htm
ChiFi (330)-
Zind-Humbrecht, Weinbach, Schleret…great Vendange Tardive Gewurz that tastes great & will pickle your brain. A head-spinning concoction of super-high alcohol and about a cup of residual sugar per bottle. My kind of drink!
“I am not looking for, or would be swayed by any of that stuff”
Me neither. When I finally buy the next house, I intend to buy the worst house in all of Alpine. Outdated bathrooms? GREAT! Outdated kitchen? EVEN BETTER! Basically, I want to buy a house that evryone will think I am crazy for buying.
I was at Joe Canal’s and found a nice Gewurz. Got it twice. Chilean. Eight bucks.
The other day I had a craving for Weiss beer with syrup. I think that’s what it’s called here. They didn’t have any.
A long time ago, I drank Berliner Weisser mit Schoss on a very, very hot summer day on the way to a Bruce Springsteen concert in Hamburg. Raspberry syrup. Sounds terrible, but it was the best.
Why did the conversation switch from real estate to alcohol? Does anyone need the number to AA?
Abita makes a Purple Haze thats made with raspberry. I love it. But I can’t imagine very heavy anything on a hot summer day.
Robert Troll Says:
July 9th, 2007 at 10:56 pm
Why did the conversation switch from real estate to alcohol? Does anyone need the number to AA?
I need the number for the bar that’s still open in JC, serving Franziskaner.. ! All this reading made me thirsty! Unfortunately they all close down early in my little ‘hood…. oh yeah, and there’s that pesky factor called work that gets in the way, too :(
Sorry Steve, the only place I know that serves Franziskaner and is open right now is in SI.
Monks in Philly serves Franziskaner.
On (another) total aside, I’m at a wedding this weekend and talking to various people at our table, somehow Kearny comes up, I mention I’ve heard there’s a good fish and chips place called Thistle, stunned they looked right at me and said that was their family member’s (or good friend’s?) place!
I thought, BC Bob would be proud! :)
grim for tomorrow
Moody’s Faces the Storm
Shares Could Come
Under Fire as Ratings
Are Questioned Anew
By KAREN RICHARDSON and SERENA NG
July 10, 2007
Short sellers love to target companies heading into financial turmoil.
Now, some of those investors who bet on a stock’s decline are targeting a company that is paid to spot financial problems before they occur: Moody’s Corp.
But unlike some of the blowups in the recent past that the New York-based credit-ratings firm and its main rivals caught too late, such as WorldCom Inc. and Enron Corp., its profitability and cash flows remain strong. That makes it a tough stock to bet against.
Still, Moody’s and other credit-rating firms are again taking heat for the meltdown in the subprime-mortgage market.
“I think they did a bad job, but they’ve weathered reputational storms before,” says Glenn Tongue, managing partner at T2 Partners LLC, a hedge fund in New York that manages about $170 million. “There might be a black eye on the franchise associated with subprime-mortgage securitizations, but the business flow, and probably the liability, will be contained.”
Re: 342
Monks…mmm… haven’t been there in a while. Great place.
Yes, the thread is a little thirsty tonight.
Did somebody actually say Purple Haze?
O.K., Robert, I’m gonna finish my Pink Floyd song just for your 336 comment.
We don’t need no rate-u-cation.
We don’t need no Robert Troll ;)
No darn ceramic in the baathroom.
Flippa, leave those capes alone.
Hey, Flippa, leave those capes alone!
All in all, it’s just our cash in control.
All in all, it’s just our cash in control.
[This may have been done by somebody else somewhere else. If so, sorry, my subconscious stole your lyrics.]
Dedicated to Duck:
All the number keys hit with CAPS on….
!@#$%^&*()
ChiFi,
Just curious…. was that Moody’s article from WSJ?
thx
steve
With all due respect to JB, and reading back these posts, what was the point of asking for who has what degree? Who cares?
What does it say about a person’s character, the most important value, IMHO?
It seems to have polarized the board, and those that don’t have advanced degrees have felt compelled to explain.
ChiFi
I sympathize, the temptation to strangle the keyboard re Donald’s offer situation is great, but I need to control myself…
WSJ
Watching the lawsuits over subprime loans is going to be hilarious. All these fools who took out suicide ARMs will be portrayed as victims rather than idiots. check out http://www.jerseylegalforums.com
There is no affordability problem to fix!!!!! Houses today relative to income are very affordable.
John,
Can you kindly share your data source to back up this claim?
According to the Wells Fargo Housing Opportunity Index, the median family in the NY metro area can only afford 6% of the homes on the market. This is the lowest level of affordability since the statistic was tracking in 1991 and is the 6th least affordable market in the country. In a “normal” market, the index should be closer to 50%. The NY metro area has always been expensive, so a number in the 40’s would be reasonable for this area.
http://www.nahb.org/page.aspx/category/sectionID=135
Pat Says:
“A long time ago, I drank Berliner Weisser mit Schoss on a very, very hot summer day on the way to a Bruce Springsteen concert in Hamburg. Raspberry syrup. Sounds terrible, but it was the best.”
Dutch do that with Trappist ale – with blackcurrent syrup.
**Mortgage resets: Record bill coming due
Billions in subprime ARMs will be subject to higher payments.
By Les Christie, CNNMoney.com staff writer
July 9 2007: 5:20 PM EDT
NEW YORK (CNNMoney.com) — More than two million subprime adjustable rate mortgages (ARMs) are poised to reset at much higher rates in coming months, worsening an already suffering housing market.
Borrowers who took out hybrid ARMs in 2004 and 2005 to secure low “teaser” rates for the first two or three years of the loan may see their monthly mortgage payments climb by 35 percent or more.
http://money.cnn.com/2007/07/09/real_estate/resets_are_coming/index.htm?postversion=2007070914
“Basically, I want to buy a house that everyone will think I am crazy for buying.”
Donald, you’re already in that position.
Years ago when I rented Hampton Houses we asked our friend a lawyer to join our house. When she went to sign the lease the contract clearly stated no lawyers. Turns out the majority of summer rentals in the Hamptons will not allow a lawyer on the lease. Turns out lawyers sue for free and landlords have to pay to sue so since the lawyer pays no more rent than the next guy why take on the extra risk.
scribe Says:
July 9th, 2007 at 5:42 pm
Chairman,
Wow. Hadn’t occurred to me that people would be so wary of lawyers as buyers.
Yes the rich are different than us. Funny throw away line I overheard once was that a young new home owner was bragging about the great rate he got on his home mortgage and the blue blooded women said to him, “a mortgage, how cute do they still offer them” You guys are right about Alpine, newly minted millionaire rap stars plunk down checks.
I was at a party in Harrision NY last week of a big four Partner who was telling me he can no longer afford to buy in his own neighborhood, Joe Torre, Marriano Rivera and even Derrick Jetter very recently bought a weekend house nearby. Those guys just write a check for three or five million when they see what they want. It is tough for a lowly paid, 600K a year Big 4 Partner with kids and a stay at home wife to compete with!!
Re – According to the Wells Fargo Housing Opportunity Index, the median family in the NY metro area can only afford 6% of the homes on the market. This is the lowest level of affordability since the statistic was tracking in 1991
Since 1991 is the key word!!! 1991 was post RE crash and of course houses were affordable. If you went back to just 1988 you would see 300K crap houses in middle class neighborhoods for sale with 9-10 percent mortgages back in a time when 30K was a great salary for a married man, that was 10X income.
Back in the 1970’s when my parents bought their house, they could not afford repairs, color tv, had to change their own oil, dang I remember pushing my fathers car on line at the gas pump as doing the oil crisis he could not afford to idle the car and steak was for Fathers day. No one had credit and we had to pay by check of cash and if money ran out it ran out. Now you are telling me houses are less afordable today, with kids with cell phones, lexuses, vacations, designer clothers, Ipods, laptops etc coming whining that houses are unaffordable, get real. Just talk to anyone over 60. My mother-in-law tells me that she had to take in illegal tennants and her husband had to work six days a week for the first ten years of home ownership to afford the home. The bedrooms were rented out and my wife and sister slept in a makeshift bedroom converted from a dining room. I have 25 year old staff with their own homes and cars who go on vacation each year and dinner every weekend, oh yea they think housing is unaffordable, even though they could buy one at 24. Something our parents could only dream about as they paid their dues in cheap apartments while saving for their first home.
#359 I do not know wher you are John, but what you describe is not the real world.
Prices rose becasue of artifically low rates, lax or no lending standards, fear and greed.
That is what drove this bubble, not underlying fundamentals.
Trying to rationalize it away will not change that fact.
It was a bubble, just like before, and just like in other asset classes.
Thanks ChiFi… see it posted today…!
Another reason no one should get married until age 30. By the time you’re 30, the mystique of the diamond ring starts to dissipate — especially if you read about the DeBeers cartel and how they singlehandledly manufactured the notion of the diamond as a “precious stone.”
I got engaged with a $55 ruby ring from Fortunoffs. I’m still married 20+ years later. I wanted the guy, not the jewelry. Why do laundry and clean toilets and cook just to get a ring? You want a diamond, buy one. You want the man, the stone doesn’t matter.
If you married a guy who could afford a bigger ring you wouldn’t have to do laundry and clean toilets and cook!!!! It turns out that the more educated and sucessful a man is the more he helps out at home and if he is really rich your maid, cook and butler would do it while you meet the “ladies who lunch” at the Alpine Country Club.