From the Wall Street Journal:
Moody’s Faces the Storm
Shares Could Come Under Fire as Ratings Are Questioned Anew
By KAREN RICHARDSON and SERENA NG
July 10, 2007; Page C1
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.”
Bearish investors are betting that Moody’s shares will tumble as the company’s lucrative business in providing ratings for structured debt products, such as collateralized debt obligations, or CDOs, could dry up due to fears spreading from rising defaults in those mortgages extended to borrowers with poor credit histories.
Together with some analysts and academics who believe the rating agencies played a key role in the subprime crisis by giving high ratings to thousands of bonds that fell quickly in value, some short sellers also are wagering that legislators, regulators and disgruntled investors will shake up the existing oligopoly structure and put an end to its fat margins and profits.
“It’s a great business model as long as you can get people to pay for it,” says James Chanos, president of Kynikos Associates, a New York hedge fund with about $3 billion in assets that specializes in short selling. Mr. Chanos, among the most vocal of Moody’s critics, is known for having bet early against Enron. “If they have no predictive power over that which they’re rating, then why bother?”
…
Many of Moody’s ratings for subprime debt represent “shoddy goods,” according to Joseph Mason, a professor of finance at Drexel University. “If the quality of the good isn’t going to be maintained by the producer, then it has to be maintained by a regulatory authority,” he adds.In a paper co-written with Joshua Rosner, an independent research analyst, Prof. Mason argues that the ratings agencies — including Standard & Poor’s Corp. and Fitch Ratings, as well as Moody’s — are deeply involved with investment-bank underwriters in structuring pools of assets, which places them in a more active role than simply publishing opinions on the creditworthiness of the underlying assets. The ratings companies have stated that they don’t advise on the structures, but do provide guidelines on how pools of assets can be set up to achieve good ratings.
…
The argument against ratings agencies appears to be gaining traction, at least in Ohio. The state’s attorney general, Marc Dann, is investigating the role of the credit-ratings firms, including Moody’s, to determine whether they have any culpability in the subprime-mortgage breakdown.Moody’s says it can’t be held responsible for drops in market value of certain assets. “Our ratings predict the probability of default. We do not offer views on market pricing and valuation,” says Linda Huber, chief financial officer of Moody’s. “People enter the market and trade these securities at their own risk.”
From Bloomberg:
Home Depot Cuts Forecast on Unit Sale, Housing Market
Home Depot Inc., the world’s largest home-improvement retailer, cut its forecast for annual profit because of the sale of the HD Supply unit and the slump in the U.S. housing market.
Earnings per share will drop between 15 percent and 18 percent in the current fiscal year, the Atlanta-based company said today in a statement. Home Depot forecast a 9 percent per- share profit decline before announcing the sale last month of HD Supply, which contributed more than 10 percent of sales.
Home Depot agreed to sell the contractor-supplies unit to three buyout firms for $10.3 billion to focus on retail stores, where sales and customer service have lagged behind Lowe’s Cos. The company said today it’s pressing ahead with store openings even as the housing-market decline curbs demand for renovations.
“While we expect the housing market to remain challenging for the rest of 2007 and into 2008, we plan to continue our reinvestment plans,” Chief Financial Officer Carol Tome said in the statement.
From CNN/Money:
Handicapping housing’s recovery
The last time Fortune checked in with Bob Toll, founder and CEO of luxury-home builder Toll Brothers, was in April 2005, when we dubbed him the “new king of the real estate boom.” The moniker seemed apt: Toll Brothers was reaping record profits, and the company’s stock chart looked like Cisco’s in the late 1990s, with shares soaring 470 percent in less than three years.
Needless to say, much has changed since then. The homebuilding industry is mired in a slump – sales of single-family homes dropped 16 percent in May, hitting their lowest levels since 2001, and the stock prices of Toll Brothers and most other homebuilders have been halved (citing a glut, competitor KB Home saw quarterly revenue fall 36 percent last month). Fortune senior writer Jon Birger recently spoke with Toll about housing’s uncertain outlook.
How bad is it out there?
I don’t see the market getting better until, at the earliest, April of 2008. But I do think that when a recovery occurs, it will be much quicker than it has in the past because of pent-up demand. You’ve got decent job growth, low unemployment, low interest rates, great corporate earnings reports and tons of money being created and sloshing around the world.
…
Some analysts think new-home prices would have fallen even further if not for all the incentives – high-end kitchens and the like – that builders are offering.
When you start selling homes for $400,000 that were $500,000, all the homeowners who paid $500,000 are going to be in your sales office complaining, saying, “Why are you doing this to me? Why don’t you just put a sign on my lawn saying, ‘I’m a schmuck?’ ” So you’ve got to give incentives instead of lowering prices because you don’t want to be rude, crude and barbaric to your clients.
Continuing on yesterday’s education discussion.
What is general opinion on Part-time Vs Executive MBA?
The obvious difference is time (part-time taking longer) & cost (executive one costing double). I am struggling to select between the two.
Credit agency warns homeowners
http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10450622
Warnings of a potential collapse in the housing market in New Zealand have emerged in a banking report from Moody’s Investor Services in Sydney.
A leading Auckland apartment realtor is also warning that “a chill” is about to descend on the market and is suggesting to homeowners that now might be a good time to sell “with our masters in Wellington hellbent on making you suffer”.
Being in IT I can tell you that most companies nowadays will not promote/hire at the director level and above without a degree and they do prefer MBA’s.
Interestingly enough, if you are willing to work at a non-director level, some companies will pay for your master’s and reward you at the end with a promotion if you’ve proven yourself. My company also offers bonuses (not big one’s).
#3 – Does your employer offer any reimbursement? If they do then I’d recommend the executive one. If not, start at the part time, maybe once they know you are going to school at night they will encourage you to get the executive one and give you incentive.
Thanks MrsP.
Is there any difference in quality or content of education between Part-time Vs Executive one?
http://www.mcall.com/business/local/all-economy710.5935767jul10,0,2405347.story
“U.S. rebound may be bumpier than Fed expects
Tighter credit extending beyond mortgages, analyst says.”
I’m not posting the link for the data or theories stated, but for the paper that picked it up. Mom & Pop are reading more and more about this.
http://www.msnbc.msn.com/id/19650867/site/newsweek/
“A famed Wall Street strategist says he’s haunted by today’s parallels to the bust 20 years ago, even knowing history is no guide.”
guy last night,(doctor)told me. BergenCounty
real estate never a bad investment,
friend of his sold his house in a month, at
just about asking.
He also told me, never going to be more land.
so much for folks being scared by this downturn.
From MarketWatch:
D.R. Horton reports 40% drop in quarterly orders
D.R. Horton reported that orders for the third quarter ending June 30 dropped 40% to 8,559 homes, or down 47% to $2 billion by value. The cancellation rate at the Fort Worth, Tex.-based builder was 38%. “Market conditions for new home sales declined in our June quarter as inventory levels of both new and existing homes remained high, and we expect the housing environment to remain challenging,” said Chairman Donald R. Horton in a statement. It expects a profit before impairments, but a loss after including those impairments, during the June quarter.
pesche [9],
Heard the same rhetoric in the mid-late 80’s.
Bernanke on inflation today. I guess it will be brief. What inflation is there to discuss?
SG Says:
July 10th, 2007 at 7:03 am
Thanks MrsP. Is there any difference in quality or content of education between Part-time Vs Executive one?
SG: Part-time programs tend to have younger students [late 20’s] and executive programs usually require professionals with 10 years of work experience. As such, executive programs tend to me a bit more “clubby” [considering the price, they should be]. However, the more rigorous academic experience is probably with the part-time program.
Ultimately, you learn just as much from your classmates [in a good program] as the professors, so a community based program SHOULD provide better value. In that sense, part-time programs really do not offer that feature.
Ultimately, both options do not stand up to the overall experinece of a campus MBA.
Doctor states real estate never a bad investment, doctors are notoriouosly bad businessmen/woman due to severe God complex = real estate bad investment. Which we all know at the moment anyway.
Thx. Chicago.
I guess for now considering the costs, I will have to choose part-time.
BC Bob Says:
July 10th, 2007 at 7:56 am
Bernanke on inflation today. I guess it will be brief. What inflation is there to discuss?
Gallon of milk went from 1.99$ in January to 2.85 yesterday. Same store, same brand, same grade.
But wait food does not count!!!
It is not like you have to buy it.
(Of course food raises due to biofuel and ethanol.
But you know what:
– once that farmer sold milk for 2.85$ he is not going to lower the price.
– I think soon it will be a good time to become farmer. – may be I should buy myself few hunders acres farm in Wisconsin – for a fraction of a cost of cape cod in NNJ?!
-I think the Biofuel and Ethanol are biggest idiosyncrasies we have right now (I would say idiotism, but it is politically incorrect!!!) they cause huge run up in prices for food produce all around the world, benefits for global warming are unclear – in reality it might make it worse at the end – with Brazilians farmers now encouraged to cut more Amazon forests to grow sugar cane – it might be a lot more damaging than we know.
To POst #13
I was told many times that MBA is as good as connections you can make while you are studying.
From the AP:
State Senate Democrats Hold Hearing on Subprime Homes
State Senate Democrats are holding a series of hearings on the subprime mortgage market in New York.
The first hearing was held Monday at the Bedford-Stuyvesant Restoration Corporation in Brooklyn.
City officials, banking industry and housing groups gave testimony during the hearing.
There has been a recent spike in foreclosures, especially among homeowners who took out subprime loans.
The higher-priced loans are aimed at people with tarnished credit or low incomes who are considered risks as borrowers.
I can’t believe I missed a discussion on Gewurtz last night. I am so in the mood for Thai food and a nice Gewurtz now. Not so good considering it’s 8:32 am.
Al,
You’re preaching to the choir.
If you are permanently fasting, don’t drive nor heat/cool your house then inflation will not be an issue. McMansions shoud be knocked down, in Jersey, and used to plant grain.
I know most of you are business types, any opinion of a Masters in Nursing to be come a NP?
Despite they way my posts sometimes sound I do not want to go corporate and “chase the money”
#2 So if there is all this pent up demand admist all this good economy, and low rates, than why all the inventory?
I’ve got three questions for Bob..
1) How do you define “pent-up demand”?
2) How is this “pent-up demand” being measured, what is the methodology?
3) Where’s the
beefdata?jb
If you are permanently fasting, don’t drive nor heat/cool your house then inflation will not be an issue. McMansions shoud be knocked down, in Jersey, and used to plant grain
Sugar Cane!!! It is surelly warm enough.
Was this the rumor on the street last night?
From Bloomberg:
S&P May Cut Ratings on $12 Billion of Subprime Mortgage Bonds
Standard & Poor’s may cut credit ratings on $12 billion of bonds backed by subprime mortgages, citing expectations that losses will continue.
The bonds are from 612 classes of residential mortgage- backed securities, S&P said today in an e-mailed statement. Ratings on collateralized debt obligations that contain the mortgage bonds are also under review, S&P said.
S&P May Cut Ratings on $12 Billion of Subprime Mortgage Bonds
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSxd8EdM_qyc&refer=home
>>
Frank,
You were right
“I can’t believe I missed a discussion on Gewurtz last night. I am so in the mood for Thai food and a nice Gewurtz now.”
Oh sadness. At least you can have one when you want. I have so many nice bottles of wine just waiting out these 9 months. It kills me to have to turn down my summer whites.
SG,
I was in the exact same quandary a few years ago when I was choosing between the two. My employer would not really pay for anything so the cost of the Ex MBA was almost 50% more than the part time program (it was also shorter). Now that I am done I have the luxury of hindsight. I chose the part time program since it was closely modeled after the full time program. The Ex MBA program was filled with “Executives” much older than me (29 when I started) and they seemed to have different agendas. My part time program was filled with people who were a few years older than the full timers, but they were still very interested in networking and learning new things. If you want a new job after your education, pay close attention to the part time placement stats (ignore the full time). These are your most important stats. Ex MBA programs offer little to no placement after your degree since most companies foot the bill for the program. My program was modeled after the full time and had the exact same curriculum as the full time program. Networking is key to any MBA program and you don’t want to just attend class and go home. Look for programs that foster this atmosphere. Although I did end up staying in my original line of work after graduation, I had the option to switch if I wanted to. As was said before, to get the full experience of an MBA, go the full time route. I was pulling 60-70 hour weeks on top of the 20 hours a week I had to put in for school and it was a brutal 2 years. That being said, when I was done I had 1/3 the debt of the full timers that took off work to go to school. I not only paid for 1/2 of my schooling (took out govt loans for the rest) but I also saved some money as well. Feel free to email me for any advice boomer98 at gmail.com
#27 NJGal
Is it sad (or indicative of the fact that perhaps I have a problem) that this is one reason (in a very long list of reasons) that I’ve been putting of the conversation with my husband about getting me getting pregnant? I can’t imagine living without wine for 9 months. So I completely sympathize with you.
Ha! Not a bad reason at all Lurker and not indicative of a problem – but then, I have the same “problem” so who knows:) I had an old lady at a BBQ say to me the other day, “What, you’re not drinking? Honey, I had 4 kids and I drank through every pregnancy! There’s nothing wrong with it!” And she’s married to a doctor. Gotta love the old timers.
I feel like once I am in month 8 or 9, a glass of wine on the weekend is not a bad thing. Heck, in Europe they tell you to limit yourself to one a day or a few a week, depending on the country. One a weekend won’t be terrible.
It’s funny that you say that because a friend of mine, while pregnant, once told me “you won’t want wine anyway because when you’re pregnant it’s not going to taste good” and then proceeded to have half a glass with dinner!
And I agree, one glass, later on, is probably ok – my problem is that I usually can’t have only ONE glass, especially if it’s good, so perhaps when I’m pregnant I should start drinking terrible wine and then I’ll be ok.
NJ Gal and Lurker
I felt for my wife and so I went without for about 4 months. I couldn’t take it any longer and started having a few glasses on the weekends recently. She has a sip now and again but has been really good. I feel for you guys.
Al Says:
July 10th, 2007 at 8:25 am
“-I think the Biofuel and Ethanol are biggest idiosyncrasies we have right now (I would say idiotism, but it is politically incorrect!!!) they cause huge run up in prices for food produce all around the world, benefits for global warming are unclear – in reality it might make it worse at the end – with Brazilians farmers now encouraged to cut more Amazon forests to grow sugar cane – it might be a lot more damaging than we know.”
Totally agree, I never understood the obsession with biofuels. You are still burning something, and the amount of fuel that goes into the production of biofuels is ridiculous.
It is more about subsidizing farmers and providing car manufacturers with the means to keep up business as usual more than anything else.
They need to spend more time thinking outside the internal combustion box.
#32 Mike NJ
I’m not pregnant right now, but the thought of no wine for 9 months is terrible to me.
That’s great of you to do that for your wife. I once suggested to my husband that when I am pregnant he might want to cut out the Jameson and Guinness in sympathy of me, and he laughed!
lurkerA, NJGal,
Europe is definitely a lot less restrictive – both in regards to alcohol and caffeine. When my doctor got all “don’t do XYZ” I freaked, until I started chatting with my also pregnant sister in the UK. They are fine with limited caffeine (back to a nice homemade latte every morning – lots of milk) as well as moderate alcohol, which I didn’t want anyway, but sis drank the odd beer or glass of wine and all three of her kids are perfect.
My worst craving was for sushi and brie, which I did resist, but it killed me.
The developers of this house:
(a) Ran out of brick just before the national brick shortage started?
(b) Designed the home with the lucrative bi-polar disorder niche market in mind?
(c) Have no taste whatsoever
or
(d) All of the above?
http://tinyurl.com/2m574z
Can anyone tell me how long MLS #2422305 has been on the market? A realtor just called me saying it was way underpriced (15 to 20% below market). Could this be a relisting?
Off topic-
I’ve been fighting for two days with a series of HP printers. I’m just trying to set up a home network printer and it seems like HP just makes it difficult. HP all-in-one’s come with these large software packages that need to be installed for simple printing applications. Has anyone given up on HP printers because they have become too complicated?
Also I’ve had it with Windows. Too many viruses. I’m thinking of going with a Mac. Can this operate on the same network and our existing Windows machines? Do any of you use Macs? What are the downsides to using Macs?
The home with the highest listing price in U.S. history just hit the market this week. It’s in Beverly Hills and you can buy it for a mere $165 million. Get that joint MBA/JD and maybe you will be able to afford it….
http://www.dailybreeze.com/news/articles/8405587.html
From FT.com:
Fed shift provides backdrop for Bernanke
By Krishna Guha in Washington
Published: July 9 2007 22:59 | Last updated: July 9 2007 22:59
Ben Bernanke will on Tuesday deliver a speech on inflation forecasting that will be closely watched for clues as to the Federal Reserve’s evolving thinking on how to explain its policy objectives to the markets and public.
It comes in the wake of an apparent shift in emphasis in recent speeches by other Fed policymakers, who seem to be talking more about headline inflation and less about core inflation.
Historically, the Fed has emphasised core inflation, which excludes volatile food and energy prices, as a good guide to future headline inflation.
The latest Fed statement on June 28 also took a step in the direction of lessening the emphasis on core inflation by no longer providing a running commentary on whether its level was “elevated” or not, and refocusing attention on “inflation pressures” in general.
Meanwhile, Fed policy-makers have continued to debate the merits of seeking to drive inflation towards the midpoint of a 1-2 per cent range, which depends in part on the rigidity of inflation expectations and how the Fed seeks to explain its inflation objective.
The shift towards talking less about current core inflation and more about future headline inflation helps explain the Fed’s focus on inflation risks.
http://www.ft.com/cms/s/2672f2a8-2e65-11dc-821c-0000779fd2ac.html
What are my options if landlord doesn’t fix AC unit after two days? It is really very hot in the house.
Can i get the AC repaired and withhold the cost from my monthly rent?
All opinions are welcome.
d2b Our all in one was a nightmare with XP to get the scan function to work. 2 hours on the phone with “Billy fom Bombay” Cleared up the issue. It has been working perfectly since. I do hate the intrusive software bundles that came with the thing but since we had an HP computer most of their junk was on there already.
Pregnant mothers are insane these days. (no offense to the posters here). The media have whipped women into a frenzy about what they can & can’t have, how much fluids they must intake, how many hours a day they can stand upright, etc.
“SLICED COLD CUTS WILL KILL YOUR BABY!!!!!”
If there’s 1 thing that humans have been doing right for hundreds of thousands of years – it’s bearing children.
Think about it – the first human primates ate raw meat, picked berries, and drank out of a stream. just 200 years ago, women were giving birth on the wagon train on the way out west. even 50 years ago women smoked, yes SMOKED, while they were pregnant. It’s laughable to me that today’s american women worry about eating unpasteurized cheese, and drink exactly 128oz (or whatever insane number their doctor told them) of fresh spring water each day. Do you think mothers-to-be in uzbekistan, dubai, or cambodia are closely monitoring their intake of bottled evian, and eating a steady diet of clean-room sterilized food?
Forgive me for sounding crass, but folks need to lighten up.
I say cheers, drink that glass of wine, and enjoy life.
lisoosh –
yeah, I know that they are much more liberal over there about those sorts of things. I still don’t know how comfortable I feel about it. But then again, I’m not pregnant so i can drink as much wine and eat as much brie (though I prefer other soft cheeses to brie) as i want :)
From Bloomberg:
States Push Ahead With Subprime-Mortgage Laws as Congress Lags
By Alison Vekshin
Enlarge Image
Minnesota Attorney General Lori Swanson
July 10 (Bloomberg) — State lawmakers, faced with a record number of constituents who may lose their homes, are pressing to pass their own laws to halt mortgage-lending abuses, saying they can’t afford to rely on the U.S. Congress to act.
Legislators in some 30 states have introduced about 85 bills to protect mortgage borrowers from deceptive-lending practices, foreclosure or fraud, according to a Bloomberg analysis of data from the National Conference of State Legislatures.
“The states are going ahead and doing what they think is in the best interest of their citizens,” said Minnesota Attorney General Lori Swanson. “Hopefully, the federal government will act, too, but the states aren’t waiting.”
The initiatives are raising the stakes in a long-running battle over who should take the lead in protecting consumers. Mortgage lenders want federal law to override state statutes, saying multiple laws interfere with their efficiency. State officials counter that they often have stronger enforcement.
Lawmakers from Illinois to Maine are proposing statutes that would bar lenders from making loans they don’t believe a borrower can repay and ban penalties for prepayment of loans. Some want to offer loans to homeowners on the verge of foreclosure. In the most extreme case, they would jail those who show a pattern of engaging in mortgage fraud.
Meanwhile, congressional action so far has mostly been limited to hearings on the subprime crisis, which has forced at least 60 mortgage companies to halt operations, go bankrupt or seek buyers since the start of 2006, according to Bloomberg data.
No Action
As many as 700,000 homeowners were in the foreclosure process in the first quarter of this year, according to the Mortgage Bankers Association.
Still, the two key congressional committee chairmen haven’t introduced bills addressing the issue. Senator Christopher Dodd, head of the banking committee, is pressing the Federal Reserve to issue new rules protecting consumers from predatory lenders. Representative Barney Frank, chairman of the House Financial Services Committee, said he’s drafting a measure to curb predatory mortgage-lending practices.
Banking agencies, criticized for failing to protect consumers, directed mortgage lenders to toughen standards in new guidelines issued June 29. Subprime lenders should verify income levels and consider potential interest-rate increases when judging whether homebuyers can pay off loans, the Fed, the Federal Deposit Insurance Corp. and other regulators said in the guidelines.
`Resistance’
North Carolina Banks Commissioner Joseph Smith said the federal government has been an obstacle.
About 35 states already have some laws against predatory lending. The state efforts to regulate the subprime market “have been met with resistance or indifference from federal regulators and even Congress,” Smith said at a March hearing of the Senate Banking Committee.
There were “few, if any, significant consumer-protection enforcement actions” by the federal government, he said.
Mortgage industry lobbyists counter that a patchwork of state rules makes it hard to operate across state lines.
The Mortgage Bankers Association, a Washington-based trade group representing such lenders as Countrywide Financial Corp. and Wells Fargo & Co., is blanketing Capitol Hill with calls for a federal law that overrides state statutes.
“For us, that’s been the price of admission, the price of support,” said Kurt Pfotenhauer, the MBA’s lead lobbyist. “That’s what brings our industry to the table with Congress.”
Industry officials cite a 2002 Georgia law that assigned liability for bad loans to those in the secondary market who buy mortgages from lenders to package and sell to investors.
`Virtual Shutdown’
The result “was a virtual shutdown of the subprime lending business in Georgia until the law was amended the next year,” Michael Decker, a managing director at the Securities Industry and Financial Markets Association, said at a June 14 Fed hearing.
Consumer advocates want a federal law that allows stronger state laws to remain in effect.
North Carolina’s 1999 predatory-lending law, considered one of the toughest in the nation, hasn’t driven lenders away, said Mark Pearce, deputy commissioner of banks.
“A handful of lenders said they were pulling out of North Carolina,” Pearce said. “They’ve all come back.”
The state activity this year is keeping “the pressure on for some kind of federal action,” said Gillian Metzger, a constitutional law professor at Columbia University in New York.
A measure pending in Missouri would restrict prepayment penalties on loans. An Illinois bill would require that lenders offer prospective borrowers loans without prepayment penalties.
Helping Homeowners
Some states would establish foreclosure-prevention plans, including a Massachusetts bill that establishes a fund to lend up to $25,000 to homeowners facing foreclosure.
A Maine law allows the state housing authority to make loans directly or hire lenders to pay off a mortgage for a homeowner at risk of foreclosure.
Michigan and Arizona would classify mortgage fraud as a felony and impose criminal penalties. The penalties in Michigan would include prison and a fine of up to $100,000 for someone with a pattern of engaging in fraud.
“Legislators are seeing things on the ground, and they have constituents who are coming to them and showing them problems,” said Chris Kukla, a director at the Center for Responsible Lending, a Durham, North Carolina-based consumer group. “That’s why you are seeing state legislators jumping to act.”
Reisling? Do I hear anyone for a good Guerwuztraminer? a little on the sweet side I know…
OMG! the stuff I learn on this blog!
Thanks Chi,
On my honeymoon we went to napa valley and had that wine, we bought countless bottles to have in our hotel, and lately I have been looking for but couldn’t rememberwhat it was called but I thought if I see it I will remember, but I did not. It seems *Not* remembering is becoming more commonplace these days (-:
That is now officially on the menu for my saturday night scrapping party ( hubby and kids going to Mets game).
Thanks again
KL
As I keep telling my wife, there just arent’t enough psychos out there to satisfy every woman’s anxiety about some axe murderer/rapist breaking into the house when a window is open.
The media has whipped every one up into a state of panic about everything, including what not to ingest when you’re pregnant.
Commons sense doesn’t sell on the 6:00 news or dateline.
Can anyone tell me how long MLS #2422305 has been on the market? A realtor just called me saying it was way underpriced (15 to 20% below market). Could this be a relisting?
8 days, not a relisting. Agent remarks say this property is being sold “as-is”:
Large level lot. Sold “as is”. Buyer responisble for CO/smoke etc. Sold strictly “as is” – buyer responsible for smoke/CM/fire ext. certification. No show till July 9
jb
raeb Says:
July 10th, 2007 at 10:29 am
What are my options if landlord doesn’t fix AC unit after two days? It is really very hot in the house.
Can i get the AC repaired and withhold the cost from my monthly rent?
All opinions are welcome.
Did you send a notice to your landlord about not working AC in WRITING with CERTIFIED MAIL?? Or you can get him to sign dated copy of your complaint stating that you expect it to be done in 24 hours otherwise you will pay for repaires and deduct it from Rent.
But most important – you can do as you sai but you have to have your complaint about AC not working dated and in writing, signed by landlord( or apt manager).
#46 – Gewurtz from California? Really? Try some from Alsace and I promiss you that you will never ever want one from California (though I’ve had pretty good Gewurtz from Wash. state and Oregon, it’s too warm in California, i think, for that).
And I promise to stop the wine posts. Really, I do know that this is a real estate forum :)
d2b I love macs, I switched from Windows and I love it
Al,
I have recorded email communication with my landlord.
“And I agree, one glass, later on, is probably ok – my problem is that I usually can’t have only ONE glass, especially if it’s good, so perhaps when I’m pregnant I should start drinking terrible wine and then I’ll be ok.”
Ha, I am the same way, so I cut it. But really, I am not craving it. My tastebuds are all weird. But maybe I will – as someone said to me, if you want a glass so badly that it’s driving you nuts, have a small glass with food. And in any event, a friend of mine had a craving and indulged and it tasted terrible to her. So you never know. I like the more European relaxed attitude about it, but then again, Europeans tend to do most everything in moderation so it may not be as much of a worry to their docs, whereas we’re culturally ingrained to be gluttons (and I am indeed a wine glutton, so being careful is probably better).
Mike, that’s nice of you. My hubby barely drinks but we’ve had some weddings recently and I’ve been subjected to the lovely odor of Dewars as I’ve been designated driver numerous times. I am a little bitter about it, to say the least. I hate being the only sober one – especially at family functions, when you realize just how annoying your family actually is!
The only reward thus far is that my daughter is kicking the crap out of me. That’s kind of a nice feeling:)
wine wine wine! That’s all you people do! wine cuz you can’t find a house! Wine cuz milk is $3 a gallon! Wine cuz you don’t have your MBA, PHD, MCSE, etc.
You’re all a bunch of winers!!
(sarcasm intended)
I am not sure about email communication. It should be OK but I am not 100% sure.
Usually if I have problems I always hand deliver signed copy to my landlord and make him sign my copy – works as a charm.
When I did it first, my landlord looked at me as I was an alien, but he signed, now they are asking other tenants put their problems in writing as well.
Dollar-Yen
NJGal – should i ever be pregnant, I’ll probably have to cut it out completely, because I’m not sure I could do it in moderation. Lucky for me, I cut caffeine out of my diet years ago (well about 90% of it), so at least I won’t have to go through that.
Regarding Biofuels – has anyone checked out how research on Jatropha Curcas seeds are progressing? These seeds are supposed to yield something like 10 times the oil that sugar cane and or corn can yield. Not to mention they have quicker regeneration time and no affect on food supplies. This stuff is basically a weed that grows on the sides of roads in India – however people are farming it now.
Thanks James,
This is the same agent that told me over the weekend now is the best time to buy since prices will go back up in September. I’m done with this agent.
“D.R. Horton Inc., the second-largest U.S. homebuilder, will report a third-quarter loss after orders plunged 40 percent and said it sees no sign of a housing rebound.”
“D.R. Horton said orders dropped in every region, with the biggest declines in California and the northeast. The average price for its houses slid 12 percent to $233,672.”
“We believe housing operating fundamentals are likely to get worse before they get better given still significant levels of oversupply, coupled with first full-quarter impact from the subprime debacle and the corresponding tightening in underwriting standards,” Robert Stevenson, an analyst at Morgan Stanley, said in a report today. He rates D.R. Horton shares “equal weight.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=a2BKGssI3.EQ&refer=home
From Reuters:
US SWAPS-Subprime fears push spreads to 4-year wides
Spreads on 10-year U.S. interest rate swaps expanded on Tuesday to their widest levels since the summer of 2003 on fears of a spillover effect from problems in the U.S. subprime mortgage market.
The yield premiums on 10-year swaps over comparable Treasuries grew to 66.00 basis points from 64.00 basis points late Monday. The last time 10-year spreads were at this level was nearly four years ago, according to analysts.
Swap spreads are considered a gauge of the market’s risk appetite.
Hi All
Anyone know the trend at south brunswick / Princeton / West Windsor markets ? I see that homes are listed at almost the same prices as 6 months back but does anyone know what price they are seelling at nowadays ? Which is the best source to check comps without going through a real estate agent ?
Also does anyone know how bad the subprime / ARMS resets will hurt the NJ market ? I hear folks saying it will not hurt the prices in NJ market.
Thanks.
bairen, 37:
I don’t know about MLS details, but looking at that house on Trulia, it looks like it’s located right next to the train tracks.
#63 fanshawe,
would that make it “close to NYC transportation?” :)
I would also be interested to hear if anyone went from Macs to Windows? You always hear of people converting to Macs. How about the other way around?
BC Bob Says:
July 10th, 2007 at 10:45 am
Dollar-Yen
That was one quick move, wasn’t it?
I convinced my wife’s mother to go Windows when her iMac (the colored, bubble variety) started having problems. She gave it a try for about a year. In the end she gave up and bought a new 17″ iMac.
jb
From Reuters:
S&P may cut $12 bln worth of subprime-related debt
Standard & Poor’s may cut $12 billion of subprime-related debt on expectations for an 8 percent drop in U.S. home prices and more defaults on home loans, the rating company said on Tuesday.
The classes of affected securities include 612 residential mortgage debt backed by U.S. subprime loans. S&P also announced changes to its rating methodology and is reviewing its ratings of collateralized debt obligations, S&P said in a statement.
The projected fall in home prices would exceed the record 6.5 percent drop between 1991 and 1992, making subprime loans issued in late 2005 and 2006 particularly vulnerable, David Wyss, chief economist at Standard & Poor’s in New York, said on a conference call. Subprime loans are extended to borrowers with spotty credit histories.
“The housing market is doing poorly,” said Wyss, who also expects a 10 percent drop in housing starts.
“The levels of loss continue to exceed historical precedents and our initial expectations,” S&P said in a statement. “At this time, we do not foresee the poor performance abating.”
…
S&P said it underestimated loss rates of the subprime loans that back CDO debt structures. The situation will get worse before it improves, the rating company said.
“This could be important,” said Lou Brien, a strategist with DRW Trading Group in Chicago. “Keep an eye out for the other rating agencies to follow suit.”
…
“On a macroeconomic level, we expect that the U.S. housing market, especially the subprime sector, will continue to decline before it improves, and home prices will continue to come under stress,” S&P said.
“That was one quick move, wasn’t it?”
Dream,
Breakneck. Let’s see if BB trys to prop up the dollar [inflation gibberish] with his wind.
From Reuters:
ABX subprime index plummets on S&P rating move
A downgrade warning by Standard & Poor’s sent the benchmark ABX subprime index into a precipitous plunge to a record low on Tuesday, traders said.
“The index sold off by over 6 points after S&P’s rating action. The bid to offer was about 3 points wide. Right now the message out there is don’t trade unless you absolutely need to,” said Mike Kagawa, portfolio manager at Payden & Rygel in Los Angeles.
…
The ABX 2007-1 “BBB-minus” index, which references risky home loans made in last year’s second half, fell 6.5 points to 49 from 55.5 on Monday, traders said.
A downgrade of that size and magnitude would trigger severe losses as investors who are prevented from holding anything other than investment grade issues would unload their holdings en masse, market participants said.
Regarding the Home Depot guidance (or lack of) today, what is striking is that in just 2 months, there has been a futher deterioration in fundamentals more than management initially anticipated in housing.
Definitely no bottom calling here….
Lurker, I did the same with caffeine (cut out about 90%) and I really don’t miss it at all. Caffeine has no health benefits – wine, on the other hand, has several. Or at least, that’s my justification.
plummets
precipitous plunge
trigger severe losses
And people say *I* am trying to scare the market?
jb
From Bloomberg:
Canada Raises Rate, Says Further Move May Be Needed
The Bank of Canada raised its benchmark interest rate for the first time in more than a year and said a “modest” tightening may still be needed to slow inflation.
Policy makers pushed the target rate for overnight loans up by a quarter point to 4.5 percent, the highest in six years and 75 basis points less than the Federal Reserve’s target. All but one economist in a Bloomberg News survey predicted the increase.
…
Canada’s move today leaves the Fed as the only Group of Seven central bank that hasn’t increased rates this year. The Bank of England last week lifted its benchmark rate to a six- year high 5.75 percent, and the European Central Bank raised rates in June before leaving them unchanged July 5. The Bank of Japan pushed borrowing costs higher in February.
“Some modest further increase in the overnight rate may be required to bring inflation back to the target over the medium term,” the Ottawa-based central bank said today in a statement.
I went from Mac to Windows and now I use Ubuntu, trying to save money.
NJGal – I like your justification :) I don’t miss it either, I have no problem with the occasional iced tea or coke zero, but I was never a coffee drinker so it was never really an issue (and I just have to have my JD and cokes in moderation LOL).
jb #73,
But yet, each time I inquire about a house, I seem to get a response more times than not stating that “it’s under contract” followed by “at or near asking” followed by “a few days on the market”.
James, what can you tell me about 17 Prescott, Montclair. Thanks.
“Right now the message out there is don’t trade unless you absolutely need to”
[70],
…..and if it’s mandatory, bend down and kiss your #ss goodbye.
JB [73],
If they don’t wake up scared they are either spending too much time watching Oprah or delusional, or both.
65-
My wife was forced by her company, kicking and screaming, to switch from a Mac to an IBM 10 years ago. Her company finally relented and gave her a Mac Powerbook about a month ago. She has been inseparable from it since.
As a confirmed Windows user, I throw up my hands.
JM
Raeb – # 41
Check out the “Using the rent to make repairs: repair and deduct” section in this link.
http://tinyurl.com/2fku4j
James, what can you tell me about 17 Prescott, Montclair. Thanks.
Sir, yes sir.
MLS# 2417694
Under Contract
Listed: 06/17/07
LP: $669,000
DOM:13
Prior sale:
MLS# 1531867
Sold: 06/26/02
Sales Price: $616,000
DOM: 15
jb
Thank you, jb! 13 DOM, lol!! Why am I not shocked?
#81 JB So the seller this time around is flat at best from the purchase price in 02;assuming it sold at full price.
#83
Adjusted for inflation, that ask represents roughly a $20k loss in real terms (not including commission) over 5 years.
That listing will sell for over asking, no doubt about that.
jb
ppl think macs are easier to use and that’s the end of it. once the trouble starts, you’ll see how un-“friendly” it really is. with windows, chances are the fix is right on their website. if not, ask the kid who fills up your gas and he’ll probably know how to fix your problem.
as far as software is concerned, if you don’t mind having to buy everything then macs are fine. say you bought a new camcorder and it came with video editing software that’s a piece of junk, if you have windows you’ll find a ton of free software that would meet your needs. macs are obviously the best with photo, video, graphics, etc. but you’ll have to buy apple’s stuff.
Has anyone taken a look at the Bergenfield market? Seems like their taxes are just as high as River Edge. Currently 172 houses sitting on the market in good ‘ol Bergenfield.
Well, I have had it with this market. I did the amth and with the $3k I recently had to spend on a new central AC and the higher mortgagae rates, I can no longer afford to sell my house at the current price so I will be increasing the asking by $30k immediately.
*Bangs head against keyboard*
#84
JB,
Why would they list that house so close to it’s 2002 sale price? Is this a case of the that Realty Office in Montclair trying to get a bidding war going? I think you mentioned this before at some point… just curious.
Troll,
I have refused to respond to your crap. I’ll bend this time.
Nobody really gives a s*it about your central air, int only/arm, a flip that flopped or your pint sized backyard. It’s really simple, step up to the plate and sell or shut the f*ck up and suck in in for the next 5-7 years.
BC Bob,
Nobody really gives a s*it about your opinion. Giving a house away is not considered selling it.
My wife hasn’t had any drinks since December 2005, with just a few exceptions. She gave birth in October 2006 and has breastfed since…..believe me, she had a glass of red wine every day and on bad days, she needed a Tanqueray martini, no vermouth, straight up with 3 olives.
If you are going to breadfeed, then you need to add those months onto the end.
One tip: to aid milk production, you can have a full Guiness in the late afternoon in the 30 minutes after a full feed [not joking].
breadfeed = breastfeed
I am also raising the asking price out of spite because I am sick and tired of being taken for a ride by realtors and “buyers” for the last 11 months.
# Robert Troll Says:
July 10th, 2007 at 12:08 pm
Well, I have had it with this market. I did the amth and with the $3k I recently had to spend on a new central AC and the higher mortgagae rates, I can no longer afford to sell my house at the current price so I will be increasing the asking by $30k immediately.
C’mon. They teach you why this wont work in ECON 101
“Nobody really gives a s*it about your opinion.”
Troll,
It’s not an opinion. If you have ever bought/sold a stock, a currency or a commodity you would understand. Don’t be a d*ck for a tic. Sell to the market or bunker down, while you wait for your asking. Simple concept to comprehend. That’s why it’s so complicated.
“C’mon. They teach you why this wont work in ECON 101”
Sorry, but I do not have a fancy mancey MBA. Besdies, someone who will put in an offer when the price is $869k will also put in an offer when the price is $899k.
I do not need to “sell to the market.” I am not desperate to sell. No pending foreclosures….
Does anybody have any theories on how all the financial happenings today will affect the 30 year fixed rate? I’m closing on Monday and haven’t locked down a rate. It was at 6.75 when I applied and I was told it probably would not get higher than that.
Any input is appreciated.
Even if women today want to drink wine or coffee or eat sushi, they have to watch out for the “pregnancy police.” My sister-in-law, who recently gave birth, was constantly chastised by strangers for doing anything remotely resembling any of those taboo things, i.e. drinking a soft drink from a bottle resembling a beer bottle, drinking decaf coffee, standing too close to a sushi restaurant. People who would normally sit by quietly while you get hit by a bus now feel the need to scold you for drinking a can of Coke on a hot day.
#89
if that house has no defects, is on a quiet street with a decent lot then it will go for over 700K easily.
people are still bidding 100K over on desirable montclair houses.
AP
Treasurys Up Sharply on Housing Concerns
Tuesday July 10, 11:26 am ET
http://biz.yahoo.com/ap/070710/bonds.html?.v=4
“I do not need to “sell to the market.”
That’s great. Get comfortable and enjoy the view.
We’re in a recovery right now, that is if one believes, as do the Chinese, that “crisis” is just another word for “opportunity.”
Trolly (#94) That’s it, buddy, you show ’em! raise the roof on the sucker. Show those non-existent buyer’s who’s the pretend boss!!!
BC Bob – “Never argue with a fool. Someone watching might not be able to tell the difference.”
I wish I had quoted that to myself yesterday.
Robert Troll = perfect case study for folks doing their thesis/dissert on investor psychology.
“What goes up, must come down
What must rise, must fall
And what goes on in your life
Is writing on the wall”
From Alan Parsons Project….
Chairman – the 10y has been fluctuating wildly but I dont think you’ll be able to do better than 6.75 that soon. If anything, rates have gone up since you locked. I use Pentagon Federal Credit Union’s 30 yr fixed 0-point rate as a barometer for the overall market since they have a reputation for low closing costs and low rates, and their current rate is 7%. This has been an enormous climb in rates, it wasnt too long ago when PenFed was offering 6% 30-year fixed 0-point loans.
BC Bob, I’d like to add a corollary to your Troll postulate, Sell to the market or bunker down, while you wait for your asking: “and, for the love of Jebus, stop whining about it.”
Thanks, Pooch!
Just received another bit of bad news – the property tax on the house has gone up $200 a quarter, or $800 a year. So much for that property tax cut, thank you Comrade Corzine.
I am also raising the asking price out of spite because I am sick and tired of being taken for a ride by realtors and “buyers” for the last 11 months.
Donald,
Have you every considered just staying put? Why are you putting yourself through this? Your house won’t clear the market. If you are so financially secure, just take it off the market and enjoy the place. In about 7 – 10 years, depending on inflation, you should be able to get your asking price.
Sorry, but I do not have a fancy scmancey MBA.?
Go to the library and pick up a book on economics
Besdies, someone who will put in an offer when the price is $869k will also put in an offer when the price is $899k.
Doesn’t work that way. You will turn people off before they even have a chance to see McDuck Mansion at Cliffside Park. They will see the overpriced listing and move onto the next on in under 5 seconds.
#100
So if that’s the case, than wasn’t it really listed too low? I haven’t seen the house, it just seemed low but I guess they really wanted to move it quickly.
And apparently they did.
if that house has no defects, is on a quiet street with a decent lot then it will go for over 700K easily.
Location is good, I wouldn’t consider it “Upper Montclair”, but being right off Ridgewood Ave and a block from the GR Country Club, the location “ain’t too shabby”.
jb
If you think the debates on this blog can be acrimonious, nonsensical and uncivilized, you should see the forums of pregnancy and baby-related sites. You haven’t seen the mud get slung until you browse through certain topics like “is it OK to drink while breastfeeding”, “can I eat Subway sandwiches for lunch” and “natural childbirth is best unless you want your baby hooked on narcotics from day one”.
My personal take on the whole thing is moderation, moderation, moderation.
Re chifi’s #92, there are more studies that prove alcohol does not increase milk production and may actually inhibit let-down than prove that it helps. (Mennella is the big researcher in this field.) I am not making any judgments here, just making the point that if you read every study and opinion on any child-bearing or child-rearing topic, it will make your head spin. Use common sense. Mom’s need not deprive themselves of the simple pleasures in life but if drinking wine is like eating potato chips to you and you can’t have just one, you might need to give it up for a short while.
#86 tbw Actually there taxes are probably higher than River Edge, and the the town is in a rapid downward spiral (IMHO).
Ben Speaks:
http://www.federalreserve.gov/boarddocs/speeches/2007/20070710/default.htm
#84 JB What makes you say that? Are there still bidding wars in Montclair. IMHO it is way over rated and over taxed.
#118 3b: Bergenfield has always been a dump. And yes, it is progressively getting worse
Robert:
This one is 100K less and looks similar.
http://njmls.com/cf/details.cfm?mls_number=2719972&id=999999
#116 And Dumont. but of course never River Edge, we are the best of the best.
The problem is with the rating agency’s model is based on data from the previous year. I guess the thought would be in an appreciating market, the bonds in theory would perform better than the model, making the agencies look good.
The bonds issued in 2006 are based on a model utilizing data from 2005 (peak?). 2006 was obviously a bad year and the rating agencies will need (forced actually) to revise their ratings at a faster pace than they normally would because of the depreciating market. I would imagine this is a similar fault with predictive models used by NAR and the homebuilders who continued to forecast a rosy picture in 06’ despite actual evidence to the contrary.
Don’t feed the troll.
3b: I keep hearing bad things about Dumont. I always thought Dumont was much safer/better than Bergenfield. What is so bad about Dumont?
Seems like many Prestigious Bergen County towns are going down down down.
#117 SG: Its butt ugly. What is the story with no furniture? No money, or do they prefer the minimal look;real minimal.
Right now, this thing is under construction in “the slum.” ENJOY!
http://www.cliffsideparkonline.com/chamber/main.html
#121 tbw BF just spread.
that house looks staged. No pictures on the walls, just minimal furniture probably aimed at marketing an ugly house.
“What is the story with no furniture? No money, or do they prefer the minimal look;real minimal.”
At the time the photos were taken, all of my IKEA furniture was still in boxes and need to be assembled (Just joking) HA HA!
“Cliffside Park Towne Center”
Towne? Cliffside Park is in England now??
#94 Duck
“I am also raising the asking price out of spite”
I always knew you had a good head for business…
#127 tbw Towne Centre, now it is.
The problem is with the rating agency’s model is based on data from the previous year
I do some work with economic models. The biggest problems I see is that these models assume perfectly rational behavior by all market participants. For example, they don’t model people who buy houses to flip and then hand the keys over to the bank if it doesn’t work out. They don’t model people lying about their income or appraisers inflating values.
Right now, the housing market is anything but rational.
River Edge > Cliffside Park > Dumont > Bergenfield
#121 tbw Drive through Dumont and see how dumpy it has gotten.
So many houses in disrepair, and the business district looks like something out of some poor rural town.
From MarketWatch:
S&P finally says subprime is mostly junk
Standard & Poor’s just drove a huge harpoon into the heart of the mortgage credit bubble and it’s going to take a long time to clean up the mess once the beast finally dies.
S&P, one of the three main credit-rating agencies that served as enablers of the subprime mortgage boom, announced Tuesday that it would lower its ratings on 612 bonds, a small portion of the mortgage-backed securities it had given its seal of approval to.
But the bigger news is that S&P isn’t going along with the charade any more. S&P said it would change its methodology for ratings hundreds of billions of dollars in residential mortgage-backed securities.
And it would review its ratings on hundreds of billions of dollars in the more complex collateralized debt obligations based on those subprime loans.
A lot of debt will be downgraded to junk status. A lot of that debt will have to be sold at fire-sale prices. A lot of pension funds and hedge funds that once thrived on the high returns they could get from investing in subprime junk will now lose a lot of money.
S&P’s announcement is a death warrant for the subprime industry. No longer will mortgage brokers be able to help buyers lie their way into a home. Fewer stressed homeowners will be able to refinance their mortgage, thus extending and exacerbating the housing bust.
“We do not foresee the poor performance abating,” S&P said. Prices will fall, and foreclosures will rise. More mortgage fraud will be uncovered as the tide goes out.
“that house looks staged.”
Thanks for the compliment. I did all the “staging” myself after watching many staging shows on HGTV.
#131 tbw Are you insane? that could never happen, oh and we are bubble wrapped, Blue ribbon, and all the rest.
River Edge, Simply the best.
Do not dare to disagree, no problems, no issues, none. If you complain about taxes than you must be poor, and lets get rid of all the seniors.
We are the best.
“River Edge > Cliffside Park > Dumont > Bergenfield’
HA HA! I’m willing to bet that most of you have never even been to Cliffside Park before.
If anyone has a access to the S&P report, I’d appreciate a copy.
jamesbednar at gmail dot com.
Will be kept private..
jb
dreamtheaterr Says:
July 10th, 2007 at 12:42 pm
Robert Troll = perfect case study for folks doing their thesis/dissert on investor psychology.
Yan: I don’t take him at face value.
To quote Martin L. Gore:
“I don’t know what I’m looking for anymore.
I just know that I’m harder to console….”
Mac vs. Windows.
Always had a Mac. Easy to use, easy to network and programs such as iDVD, iTunes, iPhoto and iMovie all built in and ready to go – the computer even recognizes your camera/camcorder the first time you use it, you don’t have to load any software at all.
I’ve never used Windows for Mac but if your files are all in that format you may have to bite the bullet and buy it. I do use Neo Office which is freeware and Windows compatible for e-mailed files but it can be a bit slow.
Only problem is Occasionally there is a website out there that is not compatable, but that is becoming more and more rare.
“Seems like many Prestigious Bergen County towns are going down down down.”
Dumont and Bergenfield were never “prestigious” towns. Some people get Dumont confused with Demarest, which is a thousand times better.
Oh, and some low end printers are not Mac compatable, but all the high end stuff is.
Really wish Apple still made a middle-ground desktop. Sorry, but I don’t buy into the all-in-one concept. Once you go into their “head-less” product line, you’ve got the Mini and the Pro, with a massive gap between them.
jb
BTW, my last Mac was a IIfx. Never could live up to the Amiga 2000 right next to it.
jb
On the new Intel Macs, you can install Windows as a separate parition or through virtualization software like VMWare.
“S&P’s announcement is a death warrant for the subprime industry…”
O.K. States can back down on the regulation now. Mr. Market is gonna swoop in like a turkey vulture, ram this guy in the helmet, throw him from his Harley, and then carry the whole mess off the highway.
From the Star Ledger:
Drowning in red, state goes deeper in debt
Even as Gov. Jon Corzine considers ways to extract billons from the New Jersey Turnpike to trim the state’s monumental debt load, officials this morning agreed to borrow an additional $150 million to pay for special needs housing.
The new loan will be repaid by motor vehicle fines paid by scofflaw drivers over the next 31 years.
It is the final installment of a $200 million plan lawmakers approved in 2005 to borrow against future motor vehicle fine revenues to develop apartments, condominiums and houses for individuals with special needs.
To date the program has supported construction of about 700 units of housing. A total of about 2,000 will be constructed with the full $200 million, Eileen Hawes, chief financial officer for the Housing and Mortgage Finance Agency said yesterday.
JB, I think the MacBook is meant to be the middle-ground computer. Among the younger generation, no one really buys desktops anymore except those who need the horsepower for work, in which case they go with the Pro.
I like this house:
It has it’s own private elevator inside:
http://njmls.com/cf/details.cfm?mls_number=2725280&id=999999
You’ve got to love it, this is what kind of public employee you can get for $100k these days:
http://www.captsleepy.com/pictures.htm
Well spent.
jb
“I like this house:”
I forgot to add that the house has been for sale for 3 years. OOPS!
Correction, $114k.
jb
Dink(80) & Al,
Thanks a lot. It looks like i’ll have to send my landlard a certified mail explaining my intentions.
Troll,
I dated a girl from Cliffside Park back in the early 80’s. I got jumped by three guys waiting for the bus to go home by White Castle. It was dicey then. Yup, I’ll drop 800 large to live in CP. NOT!!!
officials this morning agreed to borrow an additional $150 million to pay for special needs housing.
Does anybody know what this is?
And yes, there are still bidding wars in the most desirable towns. I have friends that lost out twice in the past year on two homes in North Caldwell and everytime we see something in Montclair/Glen Ridge that seems like something we’d be interested in, it’s gone.
bergenfield,cliffside park,
your really need spanish to get by
S&P downgrades makes it harder for Bear Sterns mid July State of Hedge Fund report to lipstick pigs.
dumont,garfield,lodi,wallington,all
nice bergen county towns. spanish needed
fanshawe wrote: “Among the younger generation, no one really buys desktops anymore except those who need the horsepower for work, in which case they go with the Pro.”
Does 35 count as “the younger generation” anymore? :)
I’m on my 3rd desktop, will be buying #4 later this year (quad core Intel) to replace the current Athlon 1700gHz from 2001 that is still going strong but doesn’t have the horsepower to edit the HD video from my Canon HV20 camcorder. A desktop still holds a big upper hand as far as ease of service/upgrading, and I don’t need the portability of a laptop (have a BB and a work LT for that).
#158: I thought Polish was the language of choice in Wallington… Seems like every week in the Record there’s some story of a crazy polak getting into a bar fight in Wallington
I thought Wallington was mostly Polish.
Either way, I would much rather live in a town like Allendale or Ridgewood, or HoHoKus rather than conjested Cliffside Park
While I love my laptop, I don’t feel very productive using it. Granted, it’s just fine for browsing through a spreadsheet, email, or PDF, but if I need to do real work? It just holds me back. I need a real keyboard (w/ mechanical switches), a good mouse, and a big monitor.
jb
take a ride over to wallington,, getting
the overflow from passaic,and paterson.
low taxes,,, for bergen county
2008 DOOM!
hehehehe
corzine to the rescue, everyone receive
the rebate form.
nice ,,, NJ the welfare state.
The borough of Rutherford is trying to prevent a 7-11 from staying open all night because they don’t want Rutherford being a night hangout.
Robert Troll,
Why not raise the price to 888k? It’s a very lucky number in chinese culture. Might get a Taiwanese, Singaporean, Hong Konger, Chinese to bid on it.
Many nicer houses in Allendale or River Edge in the $800,000 range. I would rather live there thanks.
Yes, Allendale or Ridgewood or HoHoKus is beautiful. And a desirable home on a desirable street will only set one back a mere $700,000. That’s a paltry $4,300/month in PITI after 20% down. Peanuts for living in sought-after, prestigious, toffee-nosed Northern New FleeceMe.
Gary,
Have you thought of buying in the Caldwell’s? Saw a few beutiful pre 1940’s colonials within a 2 blocks of the main street for under 500k back in Feb. Too long a commute for my wife though. Sigh.
Kurt, JB:
I agree, I’m a desktop guy myself. But I don’t think younger kids think the same way. We see computers as a way to be productive; they see computers as a lifestyle accessory: to log in to myspace, talk to friends on IM and share pictures and surf the web. You don’t need a desktop for that.
bairen,
The Caldwells would definitely be a consideration. Again, location is such a key. The next move I make is the last one until I retire or I’m dead so I gotta think about what the town is going to look like down the road. Those big old homes have so much detail and charm but it depends on the town. Honestly, I could probably get pocket doors and mahogany woodwork in Newark or Irvington but I think I’ll pass on those towns.
gary,
That’s how we view our next home purchase. We want to buy a house we can live in for at least the next 15 years. Would rather wait until 08 or 09 for our dreamhouse in the right town comes along then rush out and buy something that’s good enough.
#155 gary I am amazed that there still are bidding wars still going on in some areas.
You cannot get more foolish than that.
you hit it fanshawe – these days a laptop is a first and foremost a fashion accessory.
Wasn’t it a high school dristrict in NJ that recently axed a program ‘giving’ laptops to all students, because they found that 90% of the time spent on them was chatting/surfing/downloading, not actual schoolwork? Somebody made a load of money on that boondoggle…
“Either way, I would much rather live in a town like Allendale or Ridgewood, or HoHoKus rather than conjested Cliffside Park”
Oh really? While you won’t have congestion on the ground in those towns, the FAA is in the process of diverting air traffic to Newark over some of the prestigious Bergen County towns. If you buy there and that happens, your home will immediately depreciate at least $50k. Last time I checked, I do not hear the 7:15 pm flight from Heathrow to Newark every day…
>>Being in IT I can tell you that most companies nowadays will not promote/hire at the director level and above without a degree and they do prefer MBA’s.
i see the complete opposite and i personally don’t hire based on degree i hire based upon what people have gotten done.
3b,
I can’t explain it. Everytime I think I have it figured out, it changes. lol!
“We want to buy a house we can live in for at least the next 15 years.”
The average Americn stays in their house for only 7 years and that number is quickly approaching 5 years.
JB,
There are lots of laptops that have big screens. My HP laptop has a bigger screen than my desktop (17 inches vs. 15 inches)
>>Yes, Allendale or Ridgewood or HoHoKus is beautiful.
very true. almost bought a 5BR, 3.5BA in Hohokus a while back but got itchy fingers as the timing wasn’t right. if you can afford it it’s those are great places to bring up a family.
Troll,
I’d rather be dead in Wyckoff than alive in Cliffside Park. (cough…)
“bergenfield,cliffside park,
your really need spanish to get by”
Last time I checked, you needed to know Korean to get by in Cliffside Park.
re 168
The Chinese have lucky numbers that large?
I’m back and at the end of my rope.
Over two weeks ago my sellers accepted our offer (verbally) and proceeded to hold an open house anyway. Okay…lived through that and they finally accepted our bid a couple of days later. Since the end of June I have still been in contract review!! They are supposedly having a family feud regarding who gets what,etc but here we are…husband and I not looking at anything else and feeling pretty helpless.
Someone wire me some Xanax. Please.
A question for folks on board: We know there a tons of IO and ARM mortgage rates resetting in the next year or two. Will the adjusted mortgage rate be higher, given the sharp increase in risk in the past six months?
Rephrased (for the benefit of Mr. Duck), the question is: If an ARM (that adjusts today) goes from 4% to 7% given current credit conditions, will it adjust from 4% to 8% in 6 months from now (an increase in the spread by an extra 1%) due to extra perceived risk.
Time for folks to read the fine print on their mortgage papers??
At least I won’t get mugged by the air traffic
Gary [153] said:
I dated a girl from Cliffside Park back in the early 80’s. I got jumped by three guys waiting for the bus to go home by White Castle. It was dicey then. Yup, I’ll drop 800 large to live in CP. NOT!!!
I almost got jumped inside the same “White Casket” in CP back in the mid-90’s! There is actually a booth inside the place that is some kind of police post. As soon as one of the three guys pushed my shoulder, a police officer jumped out of the booth and cleared them out of the place. I wonder if they were the same guys – 3 Koreans, by any chance?
I’ve long since bailed on CP, too expensive, taxes too high. The wife and I are buying a 100 year old 5 BR, 2 BA victorian in Roselle Park, w/ a sunroom, a porch, new 200 amp electrical, new plumbing, all original details. Snapped it up the first day it was listed. Cuts my commute to the city from 2 hours down to 45 min. by train. Cut my wife’s commute from 1 1/2 hours to 25 minutes. I love Bergen, but this was too good to pass up.
AAW,
Did they seller sign the contract? Do you have a copy of the signed contract?
jb
gary: If you look at last downturn, it really happened after 2 years of peak. 88 was peak, prices went flat till 90, downward after that till 93, flat till 98. Considering that, you should definitely see large impact next year. The inventory still very high (GSMLS 35K+). The winter 2008 will be brutal for RE.
I am happy to pay more toward principal then upgrading and paying more in interest.
Well, I am looking for that 200K job. John are you hiring?
ad (187)-
Bail. Pull the offer & walk away. It’s not worth it.
If the place is ever sellable, let the sellers re-approach you. And, let them pay a price for their stupidity if you decide to try it again with them.
James,
I do not have it. They signed after I did and it went right into review. Havent’ been down to pick it up. Have me thinking.
Clot (193)
I am sunk because I love the house. Husband hot headed and ready to walk, I am the one who is attached to it.
“At least I won’t get mugged by the air traffic”
True, but having planes crash into your house is not pleasant.
Take a look at this, it just happened this morning:
http://www.myeyewitnessnews.com/news/local/story.aspx?content_id=f782d33c-42b7-4a1b-a151-42eae2e1fbb6
I came across this anecdotal lesson in economics and thought some people here might enjoy it in light of the issues that are frequently raised on this forum: high taxes, tax breaks and migration out of the State of New Jersey.
————————————
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it
would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that’s what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until on day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of
your daily beer by $20.”Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But
what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the
amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to
compare their savings.
“I only got a dollar out of the $20,”declared the sixth man. He pointed to the tenth man,” but he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than I!”
“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
#185 boken,
6 and 8 are very lucky numbers. 168 is a lucky number too (the # for my 888 post for Troll just noticed that), some Taiwanese websites/mom an pop shops use it in their name.
#196 Big mistake on your part.Listen to Hubby. Its just 4 walls and a roof. Do not be ruled by emotion. Walk, no in fact run away.
Ad (196)-
It’s a box. And…the only way you may ever get this deal rolling is to at least indicate you’re about to walk away.
Bogota and Hackensack are also lousy Bergen towns. Englewood just had a shooting the other day so you can add that to your list.
Fairview borders Cliffside Park
Hackensack has a nice area in it (Summit Ave)
That is about it though…
“Fairview borders Cliffside Park”
Maplewood broders Newark
You ain’t kiddin’.
jb
Great job making up stories about being mugged at the White Castle in Cliffside Park everyone. If you wanted to be good liars, you should have had the brains to mention the name of a business that actually exists in the town…
“Well, I am looking for that 200K job. John are you hiring?”
SG,
My brother in law is a police lieutenant, 20 years. He wants to know what town is paying 200k for a 3 day a week job?
chairman you’re only downside is you border elizabeth.
I would much rather border Fairview than Newark. The most serious crime they had recently in Fairview was a mother abandoning her child. Much better than drive by shootings…..
>>Maplewood broders Newark
east side of maplewood is steadily heading down the tubes. west side of town still holding up fairly well. same as west orange. remember folks the ghetto never goes out it only comes in.
Is it true that there used to be some sort of fence between Maplewood and Newark? What happened to it?
Gary #155
Gary, I believe you said your kids are in private school? Any reason you’re looking in Glen Ridge in particular? The reason I ask is I know they have notoriously high taxes, but also are supposed to have a great school system. Will your kids remain in private school if you land there? I believe you said your kids would remain in private school if you buy in Montclair and I know their taxes are high as well. Forgive me if I’m prying, I’m looking in the next few years and like Glen Ridge as well. My son is not school age yet, but I’m just curious what your mindset is.
Thanks for your thougts.
Allendale borders HoHoKus and Waldwick. No drive-by’s or abandoned kids there.
Clot,
I was always under the impression that if the contract was signed by both parties it was legally binding upon completion of the three-day attorney review period. Unless, of course, a written notice of disapproval was delivered (by either party, to the other party) during the review period.
jb
“Allendale borders HoHoKus and Waldwick. No drive-by’s or abandoned kids there.”
So why don’t you by in Allendale?
FYI: They have bears out there. Don’t let your kids outside unattended!
>>Is it true that there used to be some sort of fence between Maplewood and Newark? What happened to it?
there was some discussion about 15 years ago but it died. not sure why.
RE: Richard [207]:
chairman you’re only downside is you border elizabeth
I am very aware of that border. I found a place as far west and as close to the Cranford border as I could, though you can only go so far in a town that’s only a square mile. I also have Roselle to the south.
Not sure why?
Blacks in Newark outraged by suburban neighbors’ plan to fence them out with iron gate – plans to build fence around mostly white suburb of Maplewood in Newark, New Jersey
Jet, Jan 10, 1994
Black residents in Newark, NJ, are outraged by a plan to put iron gates around a predominately White middle-class suburb of Maplewood presumably to keep them out.
Maplewood plans to install the 8-foot-high, wrought-iron gates around a neighborhood in this township of nearly 22,000.
The gates are intended to keep out traffic and preserve property values in the neighborhood, which borders the poor, mostly Black city of Newark, Maplewood officials explained.
Only one of the proposed gates is on the Newark line; the rest would open onto streets in Maplewood which is 12 percent Black.
#214: I already own a home in Bergen County…not Allendale…Sadly, I can’t live too far north. Forces outside of my control.
HOV- $15.77, approx 75% off its high, just 2 years ago. H-B’s cutting prices dramatically, trying to survive. How many will be left standing? BBB-, backed by subprime, junk status. The financials are hanging on for dear life. Existing home sellers will avoid the blitzkrieg? Better chance that Duck can explain the short sale rule.
#209 Richard Agreed,and the high school is scary, lots of gang activity.
I’ve noticed that HOV is getting pounded worse than the other homebuilders. Do you think there’s a substantial risk the company will go the way of Kara Homes?
I think its interesting bc HOV went on a tear between 1998 and 2005, rising from $5 to nearly $80. If HOV survives this bust (while getting a clobbered in the process) it may be a good buy in like 2011, assuming history repeats itself…
Of course, there are a lot of “ifs” and if i grew the balls to eventually act on my insticts the Boglehead in me would never let me plunk more than a nominal amount on that instict
As always, all disclaimers apply…
#218 tbw Not sure where you live, but form prior posts it sounds like southern/central Bergen. Some very nice towns there, Wood-Ridge, Heights, the Rutherfords etc,and lower taxes than some supposedly more upscale northern BC towns.
Although I do agree, Allnedale and Wyckoff are beautiful
grim (213)-
You’re correct, but it’s hard to imagine one of the attorneys in this matter (especially the buyer’s, unfortunately) not disapproving the contract. It is a rare buyer’s attorney that does not start the review process by disapproving the contract.
Maybe I should tell my friends not to buy a condo on the upper east/west side since it borders Harlem.
“Some very nice towns there, Wood-Ridge,”
Wodd Ridge is going to have jumbo jets flying over it 24/7 in the near future.
Is it true that there used to be some sort of fence between Maplewood and Newark? What happened to it?
Maplewood & Irvington also erected temporary barriers during the Newark riots in 1967.
There should be an electric fence between Hudson and Bergen counties. All those yuppie snobs in Hoboken and Jersey City think they are better than Bergen.
Troll,
Don’t even think that you’re going to call me a liar. White Castle was there right by Nungesses and yes, I did get jumped.
Doyle,
My wife teaches at the same school where my kid (just one) goes to. We don’t want to yank her out as she likes it there and high school is just around the corner.
Troll,
Right, and if you fall down you’re in Cliffside Park.
#229
Gary,
Got it, thanks.
Doyle,
Further, I just always liked the charm and old houses in Montclair/GR. I know the taxes are killer but I’m looking for places that are likely to hold value down the road, too.
actually, Nungessers is in North bergen (Hudson co.)………Across the street–White Castle (scumburgers) is right on the Fairview/North bergen border…….
Not all crime in Fairview is dangerous. Fairview is the go to place for corrupt attorney generals!!!
http://en.wikipedia.org/wiki/Zulima_Farber#Fairview_traffic_stop_incident
Gary,
That’s what I love about those towns too, but the taxes scare me. Who knows where GR taxes are headed in the future.
Up, up and away…
Troll,
You gotta be nuts to want to drop 800K in Cliffside Park. End of story.
“You gotta be nuts to want to drop 800K in Cliffside Park. End of story.”
There are countless people who pay over $1.5 million for condos and McMansions in Cliffiside Park. A teardown sold last year for $2 million.
Ok, as a medical researcher (maternal and child health) I have to chime in here about the food limitations during pregnancy and breastfeeding. Brie is FINE as long as it is pasteurized. Deli meat is fine as long as it has been reheated to steaming. The only adverse effects of caffeine have been found
in amounts exceeding FIVE cups a day. And of course it is okay to have wine while breastfeeding. Just don’t get drunk (or if you do provide another source of food for baby -pumped milk or formula- until the alcohol has left your bloodstream.
http://www.cfsan.fda.gov/~pregnant/whillist.html
A guy in Montclair drowned his son in the bathtub a few weeks ago. Yikes, that place sounds like it is full of low class people.
Good for them, I hope they have bars on their windows.
There is a guy on kannekt who is claiming that Weehawken schools are just as good as those in Bergen. Didn’t he post here the other week? He is obvivously a condo flipper.
Wow..
From Reuters:
Moody’s cuts 399 mortgage bonds, most tied to subprime
Moody’s Investors Service on Tuesday cut its ratings for 399 residential mortgage-backed securities, citing higher-than-expected delinquencies in the underlying home loans.
The affected securities were issued in 2006 and are backed mostly by first-lien adjustable and fixed-rate subprime loans.
#238
Pump and Dump Baby… the wifie did plenty of that while breastfeeding ;)
From MarketWatch:
Moody’s downgrades 399 mortgage-backed securities
Moody’s Investors Service said late Tuesday that it downgraded 399 residential mortgage-backed securities because of higher-than-expected delinquencies on the underlying home loans. The rating agency also said it put 32 other residential mortgage-backed securities (RMBS) under review for possible downgrades for the same reason. The RMBS were sold in 2006 and are backed mainly by first lien adjustable- and fixed-rate subprime mortgage loans, Moody’s added.
From the WSJ’s daily market wrap-up:
“Today is just another series of reminders that the housing bust is still developing, and it has months, and even years, to play out,” said Bill O’Donnell, rate strategist at UBS. And “there might be fears of lending or risk contagion going past the mortgage universe and into other forms of credit.”
The markets were hurt buy S&P’s announcement that it had placed about $12.1 billion in mortgage securities backed by subprime loans at risk of a rating downgrade, saying the sector had performed more poorly than the rating agency expected. Shares of financial companies fell on the development, with Lehman Brothers Holdings down 5%, Dow components American Express and J.P. Morgan Chase falling 3.4% and 2.6% respectively, and Bear Stearns off 4.1%. The news sent the riskiest, triple-B-minus-rated tranche of the ABX index, which measures subprime credit risk, tumbling to a new record low of 49 cents from 55.5 on Monday.
“I think we’re going to be seeing [credit rating] downgrades, and we’re just seeing the start of it,” said Maryann Hurley, vice president at D.A. Davidson. “The problem in the subprime market is having a big impact. The whole uptrend in the economy that we saw over the previous year was due to loose credit standards — cheap and easy money that provided fuel for growth.”
If the S&P announcement was a shot across the bow, the Moody’s announcement was a bombshell. S&P put those MBS on a rating watch (potential for downgrade), Moody’s actually pulled the trigger and downgraded $5b worth. The Moody’s downgrade will likely be the story of the day tomorrow.
jb
Love the quote, emphasis added for effect.
From Bloomberg:
Moody’s Lowers Ratings on Subprime Mortgage Bonds, S&P May Cut
Moody’s Investors Service lowered the credit ratings on $5.2 billion of bonds backed by subprime mortgages and Standard & Poor’s said it may cut ratings on $12 billion as the companies seek to deflect criticism they were too slow to act as home-loan defaults rose.
Moody’s cut ratings on 399 bonds and said it may reduce rankings on another 32 securities. S&P is preparing to lower the ratings on 2.1 percent of the $565.3 billion of subprime bonds issued from late 2005 through 2006 because the housing slump is worse than the company anticipated. U.S. Treasuries rose, the dollar slumped and financial company shares led stocks lower.
Ratings changes “are going to force a lot more people to come to Jesus,” said Christopher Whalen, an analyst at Institutional Risk Analytics in Hawthorne, California. “When a ratings agency puts a whole class on watch, it will force all the credit officers to get off their butts and reevaluate everything. This could be one of the triggers we’ve been waiting for.”
Man what a crappy day for housing, it just doesn’t end.
From MarketWatch:
Ryland expects second-quarter loss of $1.25 to $1.35 a share
Ryland Group Inc. said late Tuesday it expects to report a second-quarter loss of $1.25 to $1.35 a share. The Calabasas, Calif.-based homebuilder said that due to “continued deterioration in the housing market,” it expects to incur $145 million to $155 million in pre-tax charges related to inventory impairments and write-offs in the quarter. The impairments are associated with assets in Arizona, California, Florida and Nevada. Excluding inventory impairments and write-offs, Ryland said it expects to a post second-quarter profit of 75 cents to 80 cents a share. In addition, the company said preliminary sales for the second quarter were 2,521 units, down 16.6% from last year, and cancellations were roughly 34% of gross orders, versus 35.9% a year ago. Preliminary closings in the period totaled 2,461 units, down 35.3% from 2006.
Pesche22 #156, 158,
Each of the towns that you listed has a Hispanic population that is smaller, as a % of total population, than Hoboken and Manhattan. Homeowners in Hoboken and Manhattan haven’t needed to speak Spanish to do extremely well during the past several years.
Housing’s Elusive Nadir
By TIM ANNETT
The housing sector’s plunge into the depths is beginning to feel like a journey toward the center of the Earth, with no end in sight.
Standard & Poor’s jammed a stick in the credit market’s spokes this morning by announcing it might downgrade $12 billion in securities backed by souring subprime mortgages. The ratings firm also let investors know that it was taking another glance at its ratings on collateralized debt obligations, which slurped up great spoonfuls of subprime mortgage-backed securities during the rah-rah days of the housing boom. S&P said that it was forced to act because losses from the subprime meltdown are worsening, and warned that the “levels of loss continue to exceed historical precedents and our initial expectations.”
[edit]
Predictably, those moves stirred up drama in many corners. The ABX triple-B-minus-rated index, a barometer of subprime credit-market risk, plummeted to a record low of 49 cents from 55.5 yesterday. The gauge has been sheared in half since January, and more turmoil appears almost sure to ensue.
[edit]
Wall Street leaders that plunked sizable wagers on the subprime market also absorbed a thrashing. Bear Stearns and Goldman Sachs Group saw their shares fall today 4% and 3%, respectively. Both companies saw their earnings damaged recently by the subprime squeeze; Bear had to sweep up after two internal hedge funds that got ransacked by their subprime plays. Lehman Brothers also got hammered today, falling by 5%
[edit]
More on the Moody’s action over at CR:
http://calculatedrisk.blogspot.com/2007/07/more-ratings-news-moodys-downgrades-399.html
I know a guy who works for Morgan Stanley in the real estate securitization area. I saw him last month and ask how things were going. He seemed completely unfazed. I have a feeling that there is a hell of a lot more complacency among the rank and file [junior and mid-level staffers up to age 35] in the financial sector.
If this comes unglued, I don’t think enough people are properly prepared.
Remember….thin swath, but a deep cut.
From Reuters:
Lawmaker may seek to curtail Fed consumer powers
The Federal Reserve Board should lose some if its consumer protection powers if it does not craft tougher rules on mortgage lending, a senior House Democrat said on Tuesday.
Rep. Barney Frank, a Massachusetts Democrat and chairman of the House Financial Services Committee, said the Fed did not use its authority to curtail loans offered to borrowers with damaged credit during the recent housing boom and needs to set tougher lending standards or face losing some of its authority.
“The Fed has the authority under the Federal Trade (Commission) Act to spell out consumer protection rules generally and they have not done that,” Frank said, after a speech to the National Alliance to End Homelessness.
“What we’re going to do … is give the Fed the ultimatum if they have not begun to spell out the rules under their authority then we will take it away from them,” he added.
If the Fed has not taken action by the fall, Frank said he would consider transferring the U.S. central bank’s power to regulate mortgage lenders to the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp.
-plummets
-precipitous plunge
-triggers
-come to Jesus
-slumped
-downgrades
-risk contagion to other forms of credit
-drys up
-cuts
-enter and trade at your own risk
-don’t trade unless you absloutley have to
Just a sampling of today’s quotes and descriptions. What else is there to say? Got Milk.
#252
Trust me, its MBS market is unglued right now. Whole loan purchases and securitizations are down considerably from last year and I wouldn’t be surprised if the volumes are down 15% to 20% compared to last year. The writing is on the wall…they don’t understand that’s its being written with their bl00d. Imagine Sept/Oct will be a tough month for them.
Barney Frank wants to give the auditor guy the reins? Wasn’t that the guy with the little glasses, the calculator, the big red pencil and some nasty things to say about lenders on NPR a couple of months ago?
At least someone is winning in this market
The meltdown in the subprime mortgage market has yielded strong gains for Paulson & Co., a hedge fund group that oversees more than $13 billion….The Paulson Credit Opportunities Fund surged 39.95 percent last month, giving it gains of some 129 percent in the first half of 2007 on bets the subprime market would decline, the source said.
http://www.reuters.com/article/bondsNews/idUSN1036654820070710
Another announcement from Moody’s, additional downgrades of second lien backed securities (the prior announcement was first liens):
Moody’s cuts second-lien subprime RMBS, raises others
Moody’s Investors Service took various rating actions on $1.6 billion of securities backed by subprime second lien mortgage loans on Tuesday.
Moody’s cut the ratings of 52 securities totaling $393 million while keeping 27 of those securities under review for further downgrade. It also placed an additional 23 securities, approximately $148 million, on review for possible downgrade.
Moody’s also upgraded 52 securities backed by second lien RMBS.
well, this will be a great opp. for the
bottom fishers. NJ , will not be the same
for a while.
Seems reality may be on the way for many
residents. Now, maybe Trenton will get
the message, high taxes,etc. not going
to bail us out of this one.
Could be a long winter.
Spring of 08, great buying opportunity.
BCBob, add this one too
“force all the credit officers to get off their butts and reevaluate everything”
Bost:
see above
– ransacked
– jammed a stick in the spokes
– exceed historical precedents
– sheared in half
New United Kingdom prime minister appears set to make housing his top domestic priority. UK official who is akin to our HUD secretary indicates that homebuilding should trump the environment and suggests boosting housing supply by making parks available to housing developers.
http://news.bbc.co.uk/2/hi/uk_news/politics/6288068.stm
“Spring of 08, great buying opportunity.”
I thought this winter prices are going to drastically fall? What happeneded to that prediction?
dream [260],
Just a smorgasbord of quotes and descriptions.
By the way, we [this site], talked about the dead cat bounce before it materialized[Jan,Feb]. We also discussed the potential consequences of too much liquidity chasing too few opportunities/yield chasers. The “isolated” smoke in the corner, cdo’s backed by subprime was hammered out for many months, prior to its “official” unraveling. The smoke and mirrors of mythical pricing, marked to a model,was chatted up here also. Is the NJRER a leading indicator?
Chi [261],
You got me at Guinness before breast feeding.
What a move by the 10y today – minus .121 – anyone wanna speculate as to why it dropped like a rock and/or the insane volatility.
I thought to the extent that there was speculation re interest rates, it was that they’d rise, not drop [i know the FF rate is not the same as 10y, but isnt there a strong correlation bw them?]
anyone wanna speculate as to why it dropped like a rock and/or the insane volatility.
Flight to quality on economic and financial (housing, retail, subprime) concerns? Investors and institution want to hold less risk, sell risky assets and buy treasuries. Price of treasuries shoots up on demand, corresponding yields drop. Perhaps some amount of expectation of lower short-term rates in the future..
jb
Well, it looks like my price increase is going to be delayed. Only a few minutes before I was going to call my realtor and give him the order to raise the price, the agent representing the buyers who were supposed to make an offer called and they want a second look at the house.
Does anyone know anything about River Vale?
Donald – are you going to tell them that they lost the opportunity to negotiate on price because they’ve been jerks?
I will let them negotiate, but I am going to be less flexible. Before I was willing to take up to $30k off the price, but now only $20k. Mortgage rates are higher so papa needs a bigger down payment for his shack in Alpine.
chi– I’m sure there is a lot of complacency among that set. I was seated next to a true c*ck at a wedding recently who was in CDOs. He thought all the subprime stuff was way overblown. oops.
Leading indicator? I thought this blog was a tribute to stopped clocks?
“Japan, the largest overseas holder of U.S. Treasuries, should invest $700 billion of its currency reserves in higher-yielding assets such as stocks and corporate bonds, said Takatoshi Ito, an adviser to the prime minister.”
“Foreign currency reserves are assets that belong to our citizens,” Ito said. “The government has borrowed the money from the people and it is engaged in a kind of carry trade. So it has to show some higher return on the investment.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=at1OmRjIJsKU&refer=home
# skep-tic Says:
He thought all the subprime stuff was way overblown. oops.
I don’t think the people who handle this stuff have ever really even looked at a loan application, let alone know how to tell a good one from bad. All these people know is how to interpret bond ratings from the agencies and plug them into models and spreadsheets without really knowing what they’re trading…more interested in bragging about the their newest BMW or Rolex and being knowledgeable about wines. Trust me, I’ve met a few.
re 272, 256
Now I’m getting excited. Things are going the right way, that’s for sure. It is so amazing how inefficient the market is.
It was 252 and now 275 too! Great!
Severe bloodletting- with the aid of giant leeches- will commence Sept. 1.
Sellers will be rushing for the exit…but the exit will be the size of the eye of a needle.
#269
I live in River Vale. Very nice but, like most of northern BC way over priced.
What is special about Sept 1?
sync (280)-
After Labor Day, the number of buyers out there- which is already low- will dwindle down to practically nothing. The subprime metastasis should also be pretty much everyday news by then, too.
What is special about Sept 1?
The kids start school. Most parents don’t want to pull the kids out mid year.
RentinginNJ, Clot, thanks.
If lots of families stop moving in Sept because of school, wouldn’t that also mean that many of the families that are trying to sell their homes will take them off the market in Sept?
Last year listings peaked in September, then trailed off as sellers let listings expire for the winter.
Its a normal seasonal pattern and I would expect to see a similar pattern this year.
syncmaster Says,
You can check out the seasonal pattern on JB’s chart:
https://njrereport.com/images/may07_salesinv.gif
Pooch123 Says:
July 10th, 2007 at 7:26 pm
What a move by the 10y today – minus .121 – anyone wanna speculate as to why it dropped like a rock and/or the insane volatility.
Pooch: just to add to grim’s comments….flight to quality can take many forms, but I will describe a very straightforward example.
You hold investment grade paper [e.g. bonds] and you fear devaluation based on some news. You sell the investment grade paper and replace it with a similar duration Treasury. On a grand scale, the price of Treasuries tend to increase as demand rises, the prices of the investment grade securities drop and people sell them. Bond prices move inverse to rates. As a result, Treasury rates go down, investment grades bond rates go up.
Flight to quality, spreads to Treasuries widen….
“…models and spreadsheets…”
Yeah, but a person makes the final call. I don’t care how many kids sit around fiddling with models.
Clot,
I believe that you have become much more bearish on RE since when you first started posting;
is that fair to say and if so why is that?
(
I’m assuming you have always been aware of the subprime, affordability and inventory problems in the market.)
thanks
Inventory typically declines in the fall and winter, so waiting until then is not that great of a strategy because the main sellers who keep their homes on the market during this time are the overpriced ones. A lot of them might not have kids so the can move at their own convenience.
JB and ChiFi
Thanks for the explanation, i was a bit confused as to why there was a flight to “quality” since today’s major headline was that the dollar reached a new low against the Euro, so was confused as to why people were chasing treasuries. But I guess today was a big day re new economic information and there are a lot of reasons to move towards treasuries
… because the main sellers who keep their homes on the market during this time are the overpriced ones.
How did you come to this conclusion?
jb
I only ask because your statement runs contrary to typical seasonal trends in pricing. Q4 pricing (contracts signed in fall, early winter) tends to show weakness over the traditionally strong Q3 I can’t say I’ve ever looked at seasonal trends in asking prices, but it’s clear that median and average sold prices typically show a decline in Q4. That weakness traditionally carries into Q1.
So while it remains to be seen if asking prices are indeed higher (because of these overpriced sellers), but it’s clear that sold prices are lower. Draw whatever conclusion you wish (smaller homes sold, buyer pricing power, etc).
NJ Median Sales Price (NJAR)
2005
Q1 – $324,100
Q2 – $353,700
Q3 – $370,000 (Peak yearly price)
Q4 – $359,000 (Drop in med. price)
2006
Q1 – $356,700 (Continued weakness)
Q2 – $373,900
Q3 – $385,200 (Peak yearly price)
Q4 – $360,000 (Drop in med. price)
2007
Q1 – $361,300 (Continued weakness)
jb
Does the axiom that sellers want to be out by Labor Day hold true for condos? I’m watching a couple of buildings and so far no dice … I’m hoping to be out of the rent-paying business by Halloween.
Tonight on Nightline (Channel 7)
loopholes on getting out of a contract to buy a condo in a down market
They also added a special section to their website “Realty Check”:
http://abcnews.go.com/Nightline/
WSJ
S&P and Moody’s announced a wave of downgrades on bonds backed by subprime mortgages, a tacit admission that they had misjudged the risk of the securities. The Dow industrials dropped 148.27 points on the news to close at 13501.70. 10:32 p.m.
‘misjudged the risk’
There just might be a new phrase to replace ‘toxic waste’ soon.
Well, it looks like my price increase is going to be delayed. Only a few minutes before I was going to call my realtor and give him the order to raise the price, the agent representing the buyers who were supposed to make an offer called and they want a second look at the house.
I can only say HeHeHe and you think your pulling the strings……wrong! That my dear man is a classic. Might I suggest, because I have some sympathy for you, don’t have an open house this weekend, if they come too see your home this wednesday, and find out you are having an open house on sunday, you will not sniff an offer till at least next tuesday, even without an open house -that will probaly be the timetable. If their agent is worth his/her weight,they will also send them to the openhouse or go themselves toward the very end too see how many names are on your sign on sheet.
KL
Housing woes hammer Wall Street
By Adam Shell, USA TODAY
NEW YORK — The foundation of the Wall Street bull market showed some cracks Tuesday amid fresh signals that real estate woes on Main Street are inflicting a bigger-than-expected toll on consumers and lenders.
Mimicking the weak state of the real estate market, Wall Street saw its inventory of stocks “for sale” swell and its prices contract. The weakness was sparked by a stream of bad news that cast a spotlight on the mushrooming economic and financial fallout caused by rising foreclosures, loans gone sour and a growing glut of unsold homes.
Home Depot (HD), the world’s biggest home-improvement retailer, lowered its profit forecast for 2007 and warned of “continued headwinds” next year. Sears Holdings (SHLD), citing a sharp drop in sales of home appliances, said it would fall short of profit projections. Home builder D.R. Horton (DHI) said second-quarter orders dropped 40%, and nearly four in 10 orders were canceled.
Perhaps the biggest scare came from Standard & Poor’s. The bond-rating firm said it expects to cut, or lower, the investment rating on $12.1 billion in mortgage-related debt — 2.1% of the $565.3 billion subprime loan market. Subprime lenders cater to people with poor credit ratings. S&P fears that more people will have trouble making their mortgage payments amid the double-whammy of falling home prices and rising borrowing costs.
Moody’s Investors Service also lowered its rating Tuesday on 399 residential mortgage-backed securities issued in 2006.
The ratings downgrades follow the recent implosion of two hedge funds managed by Bear Stearns that got in trouble investing in risky mortgage-related bonds.
All the gloomy news crushed the Dow Jones industrials, which fell 148 points, or 1.1%, to 13,502.
The ripple effect should not come as a surprise, says Peter Schiff, president of Euro Pacific Capital.
“It amazes me how oblivious people are to how important the housing market was to keeping the economy going,” Schiff says.
He says the force behind consumers’ spending binge in recent years — the use of homes as ATMs and mortgages with low “teaser” rates that put more money in people’s pockets temporarily — are now reversing.
The ratings downgrades are worrisome because they could force Wall Street firms that own the debt to write down the value of the investments, says Henry Herrmann, CEO at Waddell & Reed. “The issue of credit exposure is a murky one and could touch off a whole new level of anxiety,” he says. That’s why shares of banks and brokerages fell sharply Tuesday.
Chris Johnson, CEO of Johnson Research Group, offers this warning: No investor is “insulated from the subprime mess.”
>>Maybe I should tell my friends not to buy a condo on the upper east/west side since it borders Harlem.
bad example. harlem these days is no newark and you’re talking about an urban area versus a suburb different rules.
Donald #268, #271 — tell those sellers to offer full price or get lost! Then call your realtor and raise the price another $50K.
Show those greedy sellers who’s boss!
Sellers will then know you’ll sit on the house another 8 months, until they meet your 2005 purchase price.
Market conditions are irrelevant, you deserve your 2005 price! Demand it!
http://graphics.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
“harlem these days is no newark”
Getting stabbed to death is the same in Harlem as in Newark.
The problem isn’t “urban” vs “suburban’, it’s the crime.
Good luck in either place after dark…
ABC News video report – how buyers can back out of a contract as the real estate market implodes:
http://abcnews.go.com/Video/playerIndex?id=3363431
A flipper is underwater, like Donald, about $100K.
ADA (288)-
I’m a long-term bull…just bearish for the near-term.
The facts speak for themselves. If the subprime CDO thing turns into a 120 BIL bust (an entirely plausible scenario, given that the entire subprime CDO market is around 550 BIL), that puts it at the same level as the S&L bailout in the early ’90s.
More important, those CDOs are backed by tens of thousands of individual loans…and possibly 25% of them are going to go belly-up. The homes- which will eventually be exposed for sale at deep discount- behind those loans are going to be tomorrow’s comps. This year, September will not mark the beginning of the usual seasonal decline in inventory, because for many sellers, time’s up. They cannot, for whatever reason, come off the market again and wait until Spring ’08. The herd-think amongst sellers is about to turn on a dime; by the time the subprime meltdown becomes daily news (again, think September), everyone out there will know that the big swoon is upon us. There will be a rush for the exits…but as BC has stated before, the doors will be shut. Game over.
I see Sept. 1 as the beginning of a quick, nasty next leg down that will shave another 20-30% off today’s prices. I also see (this isn’t my call, it’s Bill Gross’), the beginning of a series of “insurance” rate cuts by the Fed, as part and parcel of a massive flight to safety as the CDO contagion spreads to corporate bonds in general and the economy slides into a deep recession.
I love people who talk s%&$ about things they know nothing about. Apply that were necessary.
I see Sept. 1 as the beginning of a quick, nasty next leg down that will shave another 20-30% off today’s prices. I also see (this isn’t my call, it’s Bill Gross’), the beginning of a series of “insurance” rate cuts by the Fed, as part and parcel of a massive flight to safety as the CDO contagion spreads to corporate bonds in general and the economy slides into a deep recession.
Wow you are an optimistic one aren’t you??
I’d say calling 20-30% drop is a bit much. 5%-10% – may be.
3b: yes, I live in that area…much lower taxes than River Edge haha
#305 Al A 20 to 30% drop in rpices is very realistic, especially so since prices went up 20 to 30% a year for 5 years.
We are seeing 5 to 10% drops now, and they are not really helping to move inventory.
For instance a 500K POS Cape, 10% drop makes the POS 450K. Now same POS Cape with with a 20% drop makes it 400K, much more doable.
If this amrket is going to get moving again, you need price cuts in big chunks, of 100k or more, simple as that.