From Globe and Mail:
No end in sight for U.S. housing slump
So much for the U.S. housing slump bottoming out.
Grim profit warnings yesterday from three companies whose fortunes are closely tied to housing – Home Depot Inc., Sears Holdings Corp. and D.R. Horton Inc. – suggest the trough may not come until next year.
Home prices are still falling, the glut of unsold homes remains ominously high, mortgage rates are creeping up and the mess in the subprime market is worsening.
And that, economists predict, could keep a lid on the U.S. economy for months. The economy grew at its slowest pace in four years in the first quarter – a miserly 0.7-per-cent annual rate.
Headlining the bad news on the housing front was Home Depot, which warned that same-store sales would fall by single digits this year, sending profits tumbling as much as 18 per cent. That’s roughly twice as bad as the home improvement chain had predicted just two months ago.
…
In a conference call with analysts, Home Depot chairman and chief executive officer Frank Blake insisted the housing correction is “pretty far along.”But, he conceded, “there is still correction that lies ahead of us.”
How much? Mr. Blake, who took over from ousted CEO Bob Nardelli earlier this year, said Home Depot is likely to face “continued headwinds” through the rest of the year and into 2008.
…
Some economists say investors should brace for the industry slump to last up to another year.“The housing correction, which looked poised to bottom earlier this year, is back on a downward course,” acknowledged Aaron Smith of Moody’s Economy.com in West Chester, Pa.
Carol Levenson of debt analyst Gimme Credit said Home Depot’s problems are further evidence of “dismal market conditions and the inability to predict an end to them.”
From the Wall Street Journal:
Thrift Regulator May Ban
‘Unfair’ Lending Practices
By DAMIAN PALETTA
July 11, 2007; Page A12
The federal regulator of thrifts is working on a proposal that could lead to a ban on lending practices the agency labels “unfair and deceptive,” several people briefed on the matter said.
If adopted, the proposal would be the most aggressive regulatory response this year aimed at tightening oversight of financial institutions, although it would cover just some of them.
Democrats in Congress have charged that federal bank regulators haven’t acted swiftly or strongly enough to curtail certain practices in the residential mortgage and credit card markets that they allege have led to high default rates and loaded consumers with debt.
Some of the practices under scrutiny could include prepayment penalties on adjustable-rate mortgages and higher interest-rate charges on one credit card if a borrower misses payments on a separate credit card.
The Office of Thrift Supervision, a division of the Treasury Department, has the authority to ban “unfair and deceptive” practices for the roughly 830 federally insured thrifts it regulates. The Federal Reserve has sole authority to issue bans on unfair and deceptive practices on the roughly 7,000 federally insured banks.
OTS Director John Reich had discussed using the authority for months, but decided to move ahead with the plan after a House Financial Services Committee hearing last month that focused on regulatory efforts related to consumer protection, according to a person familiar with the situation.
From the Wall Street Journal:
Ratings Cuts By S&P, Moody’s Rattle Investors
Critics Say Companies
Are Reacting Too Late
To Subprime Debt Woes
By SERENA NG and RUTH SIMON
July 11, 2007; Page A1
The widening meltdown in the subprime-mortgage market caught up with the nation’s two big debt-rating companies yesterday, with Standard & Poor’s and Moody’s announcing plans to downgrade hundreds of bonds backed by the risky home loans.
The moves jolted jittery financial markets as investors adjusted to the idea that the downturn in the nation’s housing market is worsening and that a rebound might be months away, at best. The Dow Jones Industrial Average tumbled 148.27 points , or 1.1% , to close at 13501.70 as investors fled stocks and low-quality bonds , and some of them criticized the ratings giants for being too slow to act.
From Forbes:
Pessimism Hits Housing Sector Again
Optimism in April and May that the U.S. housing sector might have been poised for a rebound has now given way to a new round of pessimism. Investors are worried that rising mortgage defaults and foreclosures may place additional stress on financial markets, increasing downside risks.
The risks associated with the meltdown in the subprime mortgage market were highlighted in the Bank for International Settlements’ annual report, released on June 24. The report expressed concern that mortgage credit standards had been eased too much; that greater securitization had distorted the incentives for mortgage originators to make prudent credit decisions; and that mortgage sector risks needed to be closely monitored.
Market observers are particularly worried that financial and economic trends could turn negative and reinforce each other in a vicious circle. For example, a jump in mortgage foreclosures could further depress housing prices, causing consumer spending to weaken, hurting growth, and at the same time causing risk premiums to soar, undermining private equity deals and hurting stock market valuations. If the effects of such a negative cycle were pernicious enough, a full-scale recession could not be ruled out.
From the Record:
EnCap blows key deadline
EnCap Golf Holdings failed Tuesday to meet a deadline to supply $16 million in additional security to ensure full cleanup of Meadowlands landfills, a New Jersey Meadowlands Commission spokesman said.
Asked what the state would do, commission spokesman Christopher Gale replied, “That decision is expected to be made [today].”
The lack of response by the developer — after repeated promises to commit the money — could provide the impetus for the state to pull the plug on the beleaguered housing and golf project in Rutherford and Lyndhurst. It has been stuck in state-declared default since May 22.
…
A spokesman for Pulte Homes, which has a $150 million agreement in principle to build 1,980 of the 2,580 homes scheduled for the first phase, recently expressed faith in the project.
“We continue to see this as a positive opportunity, not only for our company but also for the state of New Jersey and its residents,” Mark Marymee said. “We’re moving forward in our efforts to gain approvals and permits required for our contribution to this project — the residential construction phase, which we hope to begin as soon as possible after EnCap has completed all remediation work and delivers construction-ready land to us.”
EnCap has obtained only one of the dozen “No Further Action” needed from the state Department of Environmental Protection to complete its deals with developers. That permit is for a 4-acre lot that will be home to a 300-unit condo complex in Rutherford being built by developer Hugh DeFazio.
From the APP:
Fort engineers told: Start packing for Md.
The U.S. Army’s Communications and Electronics Research Development and Engineering Center wants to reassign a contingent of engineers to Aberdeen Proving Ground, Md., by this October, four years ahead of a federal deadline.
The group of 49 employees would be the first of about 750 employees reassigned to Aberdeen over the next three years. Cost of moving the 750 is estimated between $45 million and $49 million.
The move also is being planned before the Secretary of the Army has satisfied a requirement placed on him by the federal commission that approved Fort Monmouth’s closing.
For those wondering why I posted the above article.. Also from the APP:
Fort Monmouth, which is hosted by the towns of Tinton Falls, Eatontown and Oceanport, employs more than 5,000 people, generates $3.3 billion in economic activity and supports more than 22,000 jobs statewide.
Locally, the fort’s civilian employees account for about $260 million in retail spending in the three host towns, plus Little Silver and Shrewsbury, according to a study conducted in 2005. Losing the fort could also result in double-digit unemployment in some of those towns, the report said.
EnCap,
another example of the pick pockets in
trenton, feeding off the NJ taxpayer.
NJ, the long standing Welfare State.
Has everyone filed their rebate forms?
From MarketWatch:
GE may take around $200 mln subprime hit: report
General Electric may take a charge of no more than $200 million to cover for losses on subprime mortgages, The Wall Street Journal reported Wednesday, citing people familiar with the matter. In the first quarter, GE took a $500 million pretax charge for subprime losses. A company spokesman wouldn’t confirm that to the paper but noted that GE got “a fair deal” by selling subprime loans before the near-collapse of two hedge funds with subprime holdings. The spokesman also told the paper that any losses on underperforming assets could be offset by gains on the sale of other assets. GE reports results on Friday.
We are in uncharted territory with these
housing numbers. The subprime meltdown
adds fuel to the fire.
Will prices come down or will the
sellers continue to hold?
You better have staying power over the next
year or two.
Which pension fund will take the first hit?
I vote for Calpers taking the first hit, with New York and New Jersey right behind.
Encap, Xanadu, etc. These are wetlands, and should be protected, not developed. That entire area floods. Meadowlands should be home to turtles, birds, crabs, etc not 300 condo units in an already over-crowded area.
American Home Mortgage out on Long Island just fired two hundred people with no notice, OUCH!
John [12],
No problem, they can beconme a cop and make 200K.
Thanks for the tip John..
From Newsday:
American Home Mortgage lays off hundreds
American Home Mortgage Investment Corp., the Melville-based real estate investment trust, has laid off hundreds of workers without notice or even time to clear out their desks, current and former employees said this month.
…
There was no sympathy, no compassion,” said Richard Pascarella, 48, who said he was fired May 28 from his job procuring information technology equipment for American Home’s branches.
Pascarella, who worked at American Home Mortgage for nearly two years, said that at the time he was laid off American Home was still acquiring underperforming retail mortgage brokers – a key company strategy.
Bryan V. Davis, 30, who worked in telecommunications auditing for American Home, had been promoted shortly before he was fired this summer. He said his impression was that managers were told, “We’ve got to get rid of people, so if you’ve got anybody you want to get rid of, you can.”
Both described secrecy surrounding the scale of the layoffs and could only confirm the 10 or 20 that had occurred in their own departments and those where they had friends.
But several current and former employees, speaking on condition of anonymity for fear of reprisal, said there was a total of about 200 layoffs.
Hmmm, American Home Mortgage was who we went through to get our mortgage. We have a different bank now.
From Lennar:
Form 10-Q for LENNAR CORP
Outlook
The housing market continued to deteriorate throughout the second quarter of 2007. The increased supply of new and existing homes, as well as intensified competitor pressures to sell those homes, resulted in declining home prices across our markets. We continued to adjust pricing primarily through sales incentives to reflect current market conditions. While this allowed us to manage inventory levels, it also resulted in lower gross margins.
Our management team continues to focus on daily operations, our balance sheet first approach and refining individual asset strategies and values based on current market conditions. We are using the slow market conditions to refine our operating processes and improve efficiencies. We are continuing to focus on reducing SG&A expenses, reducing hard construction costs, driving sales, and managing our assets by reducing both land purchases and starts.
As we look to our third quarter and the remainder of 2007, we continue to see weak, and perhaps deteriorating, market conditions. Supply and demand are continuing to shift in many markets, and we believe three things will have to happen before we see a stabilization and recovery in the market:
1. Inventories of both new and existing homes will have to stabilize first and then be absorbed;
2. The mortgage markets will need to settle, especially relative to the sub-prime market; and
3. Consumer confidence relative to home buyers is going to have to be restored.
If the market does not begin to stabilize and we see further deterioration in market conditions, this may lead to an increase in the supply of new and existing homes as a result of decreased absorption levels. Although the decrease in sales absorption may lead to higher sales incentives and reduced gross margins, it may be partially offset by our efforts to reduce hard construction costs and sales and marketing expenses. Reduced gross margins may lead to additional valuation adjustments in the future. Additionally, current market conditions may cause us to re-evaluate our strategy regarding certain assets that could result in additional valuation adjustments related to our inventory and write-offs of deposits and pre-acquisition costs as a result of the abandonment of option contracts. If market conditions continue to deteriorate, we may need to continue to negotiate the terms of our land seller notes receivable, which may result in additional write-offs in the future.
Additionally, with respect to the loans we originate on the homes we deliver, which are substantially sold in the secondary mortgage market, investor concerns about mortgage payment defaults could adversely affect the price for which we will be able to sell those loans.
Given uncertain market conditions, we continue to be unable to predict future results, but we currently expect to be in a loss position in our third quarter.
Anybody have a good link explaining how mortgage rates are linked to 10 year bonds yields and fed’s rates??
And how dollar decline can affect it.
I think with phsycological mark on GBP passed we might see some significant drops in Dollar value reative to some other currencies as well.
Anybody have crystall ball – are we to expect 30 years fixed to be in 10%+ range in couple of years?
I saw a commercial this morning – NBC nightly news is doing a piece tonight on foreclosures.
body have a good link explaining how mortgage rates are linked to 10 year bonds yields and fed’s rates??
Mortgages are repacked into bonds, which are sold to investors. The 10 year Treasury Note is seen by investors are a risk free investment. Because of this, a 30 year fixed mortgage would never really fall below the yield on the 10 year note. After all, why would an investor buy a mortgage backed bond (which has risk) if they can get the same yield risk free.
Investors, however, are often willing to trade some risk for a higher return. A mortgage backed bond offers a premium over a 10 year note in exchange for the higher level of risk. .
I think with phsycological mark on GBP passed we might see some significant drops in Dollar value reative to some other currencies as well.
The Canadian dollar is trading a $1.05 Canadian to $1.00 American. At the current rate, the Canadian dollar will be worth more than the American dollar before very long.
Maybe Canadian’s will start flocking to the U.S. to buy cheap drugs with their powerful Loonie.
Are Yields on Treasury notes set buy the goverment??
If so, when currency devalues would foreign investors demant higher yields from treasury and why hasn’t it happened yet?
And what about overnight borrowing rate set by Fed??
How does it relates to 10 years treasury note yields?
AL,
The fed sets the ffr. This affects the overnight lending rate, bank to bank. The market contols the 10 year.
And what about overnight borrowing rate set by Fed??
How does it relates to 10 years treasury note yields?
The Fed sets the overnight rate, which has a direct impact on short-term interest rates. Under normal circumstances, longer term rates will be higher than shorter term rates.
While the Fed doesn’t directly control the yield on the 10 year, they attempt to indirectly control it with the Fed funds rate. If they want to reduce borrowing & slow the economy, they raise interest rates, which should cause the market to raise longer term rates as well.
http://www.marketwatch.com/tools/pftools/default.asp?siteid=mktw
http://www.businessweek.com/the_thread/hotproperty/index.html
Manhattan: A World Unto Itself
Peter Coy
Manhattan seems to have looked at the national housing slump and said, “Nope. Not here. Not now.”
Here’s a link to a report on the co-op and condo market in the second quarter of 2007. Highlights of the changes from the same period a year earlier:
–The inventory of units for sale fell 31.5%.
–The number of sales rose 103%.
–The median sales price rose 1.7% to $895,000.
–The average price per square foot rose 5.2% to $1,139.
–The average sales price of a four-bedroom apartment rose 36% to $9.2 million.
RentinginNJ,
Canadians are happy to flock to Alberta where blue collar workers can double their pay and receive pay rises of 10% per year.
Alberta’s economy is the strongest in the world right now, but nobody in this country seems to notice. The reason is oil and gas.
The province possesses the reserves (2nd highest after Saudi Arabia), Edmonton is home to a free-market goverment that enables oil & gas companies to do make a lot of $, and Calgary is home to the corporate HQs of these intenationally competitive firms.
This leads to a booming economy, rising incomes, surging net worths – and significantly higher home prices. Check out the recent home price increases in Edmonton and Calgary. And Calgary price increases have actually slowed a lot.
http://www.royallepage.ca/CMSTemplates/AboutUs/Company/CompanyTemplate.aspx?id=1506
Is there any way to confirm a sale price as reported by the MLS?
I have watched several houses in the Briarcliff area of Westchester over the last year. Some of the houses sat on the market for greater than a year before selling. However, the sale prices for these houses seem unusually high given these homes’ general condition, the time the house was for sale, and the general market conditions (96% or greater than last asking price).
How probable is it that the sellers/agents are providing cash under the table or other means to artificially inflate the sale price?
Had an agent say “Maybe you’re not ready to buy”. Arrogant B!tch.
No, I’m not ready to become a bagholder.
Bagholders of the World Unite!!
Hey NYC Sergants just got a raise yesterday to 100K!!!!
My friend who is a NYC Fire Captain made 200K last year with OT!!
Plus free medical for life is worth at least 500K and the anuity they get that is there pension is worth close to a million at retirement. So that last year is a $1.5 million dollar payday!!!!!
BC Bob Says:
July 11th, 2007 at 8:20 am
John [12],
No problem, they can beconme a cop and make 200K.
How probable is it that the sellers/agents are providing cash under the table or other means to artificially inflate the sale price?
I personally know of a deal (Northern NJ) where the buyer was given a substantial decorating and landscaping allowance by the builder in order to keep comps elevated.
jb
At the height of the real estate boom, the land on which the Imperial Palace sits in Tokyo was “worth” more than all of the land in the State of California and Greater Tokyo was “worth” more than all of the land in the United States. Of course, all of the habitable land in Japan is equal to Connecticut and Rhode Island combined (since Japan is essentially a steep mountain range jutting out of the ocean deep). Our real estate bubble never got this extreme, but that is small consolation. And Japan was the world’s leading creditor nation going into its real estate bust and its people were savers…
New York Times Talks Bubble
http://www.paperdinero.com/BNN.aspx?id=261
Gretchen Morgenson, Pulitzer prize winning financial columnist with the New York Times, discusses at length the details of the housing and mortgage meltdown. Morgenson, in no unequivocal terms, correctly labels the housing run-up a “bubble” and a “mania” and also blames Wall Street backed easy lending, lightly regulated mortgage brokers, and lax rating agencies as a major cause. She further suggests that the decline will be protracted and “not pretty”.
Originally aired on: 6/29/2007 on Bill Moyers Journal
Running Time: 14 minutes 6 seconds
There’s a builder in Little Egg Harbor who is throwing in about 100k in incentives to move 3/4 bdr in the 390k range. he’s throwing in full, finished basements, upgraded kitchens, yada yada yada.
They are nice houses, exit 59 on the parkway is a bit south for us.
CNBC educational video on subprime loan CDOs and derivatives – a must-watch for HP’ers
So if you’re a hedge fund, how can you lose everything investing in subprime mortgages?
http://housingpanic.blogspot.com/2007/07/cnbc-educational-video-on-subprime-loan.html
Now you know.
“• Golden years — Ridgewood police Sgt. Paul Gilard retired on June 30, 2005. His total compensation for the year was $187,115, including a retirement payout of nearly $130,000. He’ll receive an annual pension of $73,000 for the rest of his life. He’s 48 years old. Rewriting Genesis — For police in Alpine and other towns, the week isn’t seven days, but six — four days on and two days off. The result is 17 extra days off a year, beyond holidays and vacation.
Hey in Tokyo cops get an annual wage of around 7.5 million yen. The average annual salary of someone in the private industry is just 4.37 million yen, according to National Taxation Agency figures,” Horikoshi says. “Police officers are clearly paid much more than the people they’re supposed to be protecting. Or, putting that another way, citizens are paying out that much because they expect the police to deliver. It would be entirely understandable for citizens to expect to be well protected by the police, at the very least.”
Hey NYC Sergants just got a raise yesterday to 100K!!!!
That includes benefits. It will also take until August 2010 to hit that number.
Chuck Prince, the CEO of Citigroup Inc. in a recent quote
“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”
Maybe they should be cops in Tokyo!!!!!RentinginNJ Says:
July 11th, 2007 at 10:17 am
Hey NYC Sergants just got a raise yesterday to 100K!!!!
That includes benefits. It will also take until August 2010 to hit that number.
Home Prices Expected to Recover in 2008 As Inventories Decline
WASHINGTON, July 11, 2007 – Home prices are expected to recover in 2008 with existing-home sales picking up late this year and new-home sales rising early next year, according to the latest forecast by the National Association of Realtors®.
Existing-home sales are expected to total 6.11 million this year and 6.37 million in 2008, down from 6.48 million last year. New-home sales are projected at 865,000 in 2007 and 878,000 next year, compared with 1.05 million in 2006. Housing starts, including multifamily units, are forecast at 1.43 million units this year and 1.44 million in 2008, down from 1.80 million last year.
Existing-home prices are likely to rise 1.8 percent to a median of $222,700 in 2008 after a 1.4 percent decline this year to $218,800. The median new-home price should rise 2.2 percent to $222,700 next year following a 2.6 percent drop in 2007 to $240,100.
“Markets that sharply reduce new construction in 2007 will generally experience respectable price increases in 2008,” Yun said. “Local conditions vary considerably, but with historically low mortgage interest rates this summer and sustained job gains, it could be a good time for first-time buyers with a long-term view to test the housing waters.”
http://www.realtor.org/press_room/news_releases/2007/hef_july07_housing_prices_recover.html
Yun seems to have taken over exactly where Lereah left off.
jb
Here’s the NAR press cycle repeated over and over again;
1. Things are expected to only get better.
2. We are suprised that things went down but they are expected to get better very soon.
#34 bairen – out of curiosity, which builder/development is it? if you dont want to say i understand, i was just curious b/c i know people buying down there and it would be interesting to know what sort of deal they are getting (i’m just being nosy, actually).
New home builders have been giving larger and larger incentives in the past year to move their new home inventory.
Is there a way to track this or will the public continue to be misinformed about Avg Sales Prices/Median Prices/etc?
And are there any realtors out there telling their clients who have homes for sale to lower their prices…not because of lower prices advertised, but because the realtors themselves know the incentives/deals people are getting.
It’s amazing that two years ago today, at the peak of the real estate mania, Hovnanian (HOV) was trading at $70 a share. It currently sits at $15 and change, down 75% from its peak.
jb
Does anyone have any additional information on the Liz layoffs?
grim:
http://en.wikipedia.org/wiki/United_States_housing_market_correction
#43,
Not sure of the name, I know it’s off of Radio Rd, less then 2 miles from Stewart’s
Root Beer on Main St. It’s across the street from a VFW or Foreign Legion post.
I’ve been there a few times. Very nice houses. We have freinds and family who live inthe area so we’ve dropped into the place out of curiousity.
also this….
http://en.wikipedia.org/wiki/United_States_housing_bubble
#48 – right near the golf course?
Let’s not worry about trivial things like housing inventory at about 9 months supply at the end of the peak housing season, implosion of the sub-prime market, hopeless forecasts from Home Builders, etc.
Remember:
1. Thousands of very rich immigrants are coming in every day and they need homes to buy.
2. Real income growth (negative that is)
3. They don’t make any more land in NJ (but inventory of homes on the market keep rising).
4. Real estate will NEVER decline in value (hee, hee).
5. Wall street bonuses. (2007 won’t be a 2006).
#46 800 employees from what I understand.
From Calculated Risk:
Alt-A: The New Home of Subprime?
UBS has a report out today (not available on the web) which suggests the possibility of an alarming trend in recent (2007) RMBS issuance: while subprime issuance has dropped, as we expected, and “agency” issuance (the GSEs, mostly, are meant by the rather old-fashioned industry term “agency”), particularly of fixed-rate loans and the better quality hybrid ARMs, is edging up as a share of the market, which we also expected, non-agency Alt-A is actually increasing as well, which is somewhat more surprising. At the same time Alt-A volume is creeping up, its credit quality shows some signs of deteriorating. The implication is that loan production that would, last year, have ended up in a subprime security is migrating into Alt-A securities.
Al Says:
July 11th, 2007 at 9:08 am
And what about overnight borrowing rate set by Fed??
How does it relates to 10 years treasury note yields?
AL: general rule of thumb is that FF only DIRECTLY affects rates up to 2 years out.
The easiest way to get your head around the markets is to think about everything as a continuum. There is no black and white / right or wrong. Just actors constantly making decisions on the margin.
Two concepts that may help you a bit:
1. Liquidity Preference
http://william-king.www.drexel.edu/top/prin/txt/money/QT7.html
2. Preferred Habitat / Market Segmentation
http://findarticles.com/p/articles/mi_m0OGT/is_1_1/ai_113563586
grim unmoderate
If you are really interested, consider buying books written by Frank Fabozzi.
If you are REALLY interested, consider attending one of these tutorials…..
http://www.frankfabozzi.com/
re: #28 cash back at closing
Is anyone even making offers anymore that don’t include a cash back refund (or similar improvements allowance) post close?
When some friends of this blog finally announce to the world how they sold their homes for ask +5%, you can be sure you will never be able to verify how much money was exchanged under the table to “buy” the comp.
Call me stupid, but if I was a seller why would I continue to leave my asking price at some level that hasn’t generated any interest near asking (ie an offer). It’s one thing to try at a certain price that you’re hoping to get, but if you listed 2-3 months ago and you’re still asking $X why wouldn’t you drop the price?
If you’re just now getting the news that the market is dropping and looks to continue to drop for “at least” until 2008 why leave your price at $X.
The upside of price increases are slim to none and at least a year away, the downside could be anything. It could be 5%, it could be 50%.
I just don’t get it, why wouldn’t you want to be ahead of the curve, yet it seems like only 1 in 50 sellers drop their price significantly and then they sell. Everyone else is just stuck in sellers purgatory.
Any sellers out there want to help me understand? Do you believe prices are going to rise? Are you hoping to get some misinformed idiot to buy at your current price? What’s your thinking?
Realtors- what’s your take? Do you clients that are trying to sell but they’re too stubborn to lower their price? Do you suggest pricing ahead of the curve for a quick sale, but no one agrees with you? I know the higher the price the higher the commission, but considering your take is typically only about 1.25-1.75% you’d probably prefer a quick sale than one that takes 6 months for an extra 10%.
>>The Canadian dollar is trading a $1.05 Canadian to $1.00 American. At the current rate, the Canadian dollar will be worth more than the American dollar before very long.
i bought a sizable amount of canadian dollars a few years ago through everbank and i’ve done quite well as of late. i love everbank as it allows you to have exposure to other currencies.
#46 James,
I work for Liz, and am listening to the analyst meeting right now. But so far, they haven’t told us anything that can’t be read on Bloomberg.
But so far it’s what #52 (3b) says, 800 people (mostly senior management) and 16 brands being sold or shut down.
#58 All good points. As far as price increase, not happening nay time soon. more decliens, than flat for years.
#58.
Why? Because:
-My house is different
– My town is different
– My street is special
– My purchase price plus all the improvements I made (at cost, no depreciation) is all I am asking for
– The schools here are very good
– I am only 10 min, 15 min, 20 min from a train line
– This is not a subprime neighborhood so the news related to that market won’t affect me
– My neighbor sold for more just 6 months ago and my house is nicer
– The right idiot buyer hasn’t found my house yet
– I have to sell for at least $xxx in order to pay off my HELOC
It only takes one sale every three months in a neighborhood at peak or peak+ price to make a seller believe that rumors of the housing markets death have been greatly exaggerated.
JB any ststs yet for second quarter 07 vs 06?
Call me stupid, but if I was a seller why would I continue to leave my asking price at some level that hasn’t generated any interest near asking (ie an offer). It’s one thing to try at a certain price that you’re hoping to get, but if you listed 2-3 months ago and you’re still asking $X why wouldn’t you drop the price?
Over the past 5 years, these types of pricing errors were quickly corrected by a rapidly appreciating market. Why drop the price when you can just wait for the comps to increase around you? They were, in essence, asking tomorrow’s prices today. If they didn’t sell today, they just had to wait until tomorrow.
jb
3b,
GSMLS? No, not yet.
jb
#62 True, and that unfortunatley keeps prolonging the agony.
However I do believe we will be seeing the last of the sub-prime borrowers pushed out of the market.
If the “street” no longer buys these things, that market dries up completely.
As far as sub-prime not being an issue in their town, they might be very surprised.
I was amazed at the amount of sub-prime mortgages that were utilized in 05,06, in my “prestigious” minutes from NYC Beregn county town.
#65 JB njmls?
62 and 64, I know those are some of the general reasons and I agree with you, but are there any sellers out there that can give their personal response.
You had a reason why you priced it at $X and not 10% lower than $X when you started off. You’ve probably re-evaluated your pricing since then. What’s been your conclusion to leave it at $X (or you did some token $5K price drop to “refresh” your listing, which is basically still $X).
It’s mid-July, the prime selling season is over, you have a little over a month to sell before you hit the slower Fall/Winter market when prices were typically lower than the spring even in 2004-2005, what are you waiting for?
bergen, you make many assumptions in your message. who’s to say someone won’t see the value of a particular property and be willing to pay more than a competing property that on the surface seems the same? not all properties are created equal even if they are a 4BR, 1.5BA on the same lot size. sometimes even something as simple as how the house flows or the fact that one has a stucco ceiling and one doesn’t can change what one perceives to be the value of a place. not every aspect can be categorized and valued and the amount a buyer would pay for one thing over another is purely up to the tastes of the individual. now if the asking price and time on the market deviate significantly (relative term but you get my drift) from competing properties your chances of selling at that price point diminish.
Richard Says:
July 11th, 2007 at 11:21 am
>>The Canadian dollar is trading a $1.05 Canadian to $1.00 American. At the current rate, the Canadian dollar will be worth more than the American dollar before very long.
i bought a sizable amount of canadian dollars a few years ago through everbank and i’ve done quite well as of late. i love everbank as it allows you to have exposure to other currencies.
Reech: You are a tired act, and further, you have been eclipsed by duck as the eminent troll.
I bought a sizable amount of duck and your bull$hit and you know what that is worth. The only thing you know about exposure is done with a trenchcoat.
#69 Richard: Although there is some truth to what you say, the reality is similar houses should be seliing for around very similar prices.
Is a better flow wroth 50k or stucco ceiling, are there people out there who will pay that extra premium, sure although there numbers are diminshing.
From Reuters:
ABX drops further after record closing low
Benchmark ABX indexes opened lower on Wednesday, following Tuesday’s sharp selloff and record low close, after major credit rating agencies started to cut ratings on $17.3 billion of subprime mortgage securities.
…
“The market is nervous after yesterday’s massive selloff on the rating actions. We’re opening weaker,” an ABX trader said.
billz (44)-
I have a client who bought in a new development and never moved in. Every time the builder jacks up his incentive list, we drop our price some more (twice in three months).
It’s becoming a game of “how low can you go”. The funny thing is, several potential buyers have gone to the builder, threatened to buy my listing, and used that threat to dig even more concessions out of the guy.
So sad, it’s funny.
Richard- I’m not just talking about comparables, your initial price was hopefully based off of some comparables. “This house compares well with mine and it sold for $500 a few months ago and there’s another similar house for sale now at $520, but mine has a nicer kitchen than both so I’m going to try for $525” or whatever.
If I was selling a house, I would’ve priced it against comparables back in February right at the start of the spring season. March came and went, same with April, May and June.
It’s now mid July and whether I’m still at $525, $520, $490, whatever; it still hasn’t sold. Whether I still think I compare well against other homes no one has bought my house or made an offer close to asking.
At some point logic has to kick in. “If no one wants to buy my house at $X, what’s the reason?” Maybe I believe it’s one of the things Seneca mentioned in #62, but shouldn’t I at least throw in “it’s not priced right.”
Then maybe a little more logic kicks in…”the spring season is over, I missed the ‘best time to sell’ sure I could leave it at $X, but if no one wanted it at $X when I had the best chance to sell, how am I going to get $X in the slower months?”
“I don’t care that I still compare well with others still listed, they’re not selling either. I’m better off dropping my price now and getting ahead of the curve.”
Isn’t it that simple?
#68 With the exception of “the duck”, I do not believe there are any sellers on this forum.
Why would they mingle with us dirty renter losers? It is becasue of us that their houses are sitting.
#74 True, And 6 months ago in this environemt is now ancient history.
Wow!
From Boston Ch. 5:
Subprime Lender To Cease Foreclosures
The state has reached a deal with a subprime lender that has agreed to immediately halt foreclosures on its mortgage loans in Massachusetts.
Attorney General Martha Coakley announced a preliminary agreement with Fremont Investment and Loan.
The lender will halt foreclosure proceedings to provide the attorney general’s office a 90-day period to review individual cases. The state can then object to any foreclosure where it finds evidence of unfair or deceptive lending practices. Fremont would pay the costs of the loan review process under terms of the agreement.
Coakley’s office warned Fremont weeks ago of its intent to take action against the lender if it failed to address allegations that some of its practices violate state law.
ChiFi #70,
C’mon dude, how can you begrudge a guy making a few bucks on currency trades? I mean, most of us rubes think currency trading is for pros, dominated by computerized trading systems. I’ve also heard it entails a significant amount of risk and is hard for the individual investor to do successfully. I guess Richard knows his stuff or got lucky.
From the Office of the Mass. Attorney General:
http://www.ago.state.ma.us/sp.cfm?pageid=986&id=1950
#73 Clot,
Do you think you’re priced right? Have you considered jumping ahead of the builders incentives in hopes that will be sufficient to get one of those potential buyers to buy from you instead of the builder?
JB, if you’re already dead, can you feel pain?
#74 It is that simple, its sad the sellers do not get it, but eventually they will.
3b,
I’m looking to sell somewhere in the next 6 – 18 months.
bergen (58)-
“Realtors- what’s your take? Do you clients that are trying to sell but they’re too stubborn to lower their price? Do you suggest pricing ahead of the curve for a quick sale, but no one agrees with you? I know the higher the price the higher the commission, but considering your take is typically only about 1.25-1.75% you’d probably prefer a quick sale than one that takes 6 months for an extra 10%.”
If a client of mine won’t come to market within a range I find acceptable, I won’t take the listing. If showings lag and offers do not come within 30 days, I suggest repricing…fast. Until showings become regular and steady, I continue to counsel repricing. If a client can’t deal with that, I give him back his listing.
My constant suggestion? No matter how much of a bath you think you may have to take in order to sell today…it pales in comparison to what’s coming.
bergen (80)-
We are ahead of the builder’s incentives right now.
Unfortunately for both of us, we’re playing a game of catch the falling knife.
Anybody ever watch the exec hirings and changes over the last year…say since last September?
Have you noticed where the running hoards of execs came from? Compared past employers to the current downgrade list?
The people making the decisions knew. It wasn’t that the models choked on soft data. That’s an excuse spewed to journalists by the clean-up crew.
Bob, if you watch the employment changes, you don’t need to read a blog or have a crystal ball to get ahead of the curve.
#69 Richard: Although there is some truth to what you say, the reality is similar houses should be seliing for around very similar prices.
Is a better flow wroth 50k or stucco ceiling, are there people out there who will pay that extra premium, sure although there numbers are diminshing.
I agree.
I think of a particular home’s value in terms of a range that is:
– at a premium to comparable, but not quite as nice homes and
– at a discount to comparable, but nicer homes.
There is some wiggle room within this range depending on a particular buyer’s taste and perception of value, but in an efficient market you won’t see a whole lot of deviation from this range. As the upper and lower boundaries move up and down, so will the value of your home.
If this weren’t true, there would be no reason for appraisals or tracking comps. It would just be every house for itself.
3b (66)-
Just had breakfast with a Wells Fargo guy this morning who explained to me how he and his underwriters can jam a 95% LTV/stated income thru their system…at a minimum 680 FICO!!!
Like that post above, it just goes to show that subprime is still out there. It just has a new name: Alt-A.
Reuters
U.S. home loan demand climbs even as rates surge
Wednesday July 11, 7:05 am ET
By Julie Haviv
NEW YORK (Reuters) – U.S. mortgage applications rose last week, fueled by increased demand for home purchase loans even as interest rates hit their highest level in nearly a year, an industry group’s data showed on Wednesday.
http://biz.yahoo.com/rb/070711/usa_mortgages_mba.html?.v=3
#83 gary: I knew you were looking to sell at some point, but right now you are not, although you appear to be reasonable as opposed to would be sellers right now.
For instance, I have a family friend who is looking to sell redid whole house 5 years, kitchen redo alone was over 50K.
Husband got down sized, kids are getiing older, taxes are getting higher. They figure they will sell the big house and downsize. (should of done it 2 years ago).
He is adding on the cost of the renovations to his fantasty asking price, and than adding from there.
So the kitchen redo at 50K plus 10 to 20% on top of that 50K.
When I pointed out the fact that the kitchen was now 5 years old, he had no idea what I was talking about, and so I let it be.
This is the mindset that unfortunately is still out there.
Ugly charts galore here from Credit Suisse:
http://www.recharts.com/reports/CSHB031207/CSHB031207.html
Sorry if a repost
#88 Clot Ell we are getting there ( I guess)now these buyer have to come with 5%,a nd I assume closing costs. But still scary,reckless stuff.
#84 Clot, I wish more realtors did that, we’d be at a market equilibirum today instead of some future unknown date that NO ONE can predict. Thanks for the reply, good luck with that house, get your client to pass that hot potato off to someone else quick.
U.S. home loan demand climbs even as rates surge
What this doesn’t tell you is that rejection is much more common, so subprime buyers often need multiple applications to find approval. This will boost the applicaitons number.
chicago, i won’t denigrate myself to your level. consider yourself ignored.
3b,
Gotcha. And yes, I will be very realistic about what my house is worth. I’ve got my neighbors son and a cousin-in-laws Mom interested when we decide to pull up stakes.
Clotpoll Says:
Just had breakfast with a Wells Fargo guy this morning who explained to me how he and his underwriters can jam a 95% LTV/stated income thru their system…at a minimum 680 FICO!!!
Clot, Alt-A has done this type of deal for years now. That’s why I keep wondering when the Alt-A market is going to blow up
>>I guess Richard knows his stuff or got lucky.
i really don’t see what the big deal is. i’ve traded with everbank for years in various currencies. that’s why they exist to open up the opportunity to the masses. a weak dollar policy has been in effect for years so i don’t see where i knew something other people didn’t.
>>There is some wiggle room within this range depending on a particular buyer’s taste and perception of value, but in an efficient market you won’t see a whole lot of deviation from this range.
what do you think the range is in terms of %?
3b (92)-
Nope. One thing I forgot to mention on that Wells Fargo thingy…NO required proof of reserves!
Friggin’ Russian Roulette with five barrels loaded.
#48 I think you’re talking about that nieghborhood where the original builder ran out of cash with many of those houses sitting vacant and unfinished for quite some time. Now the ‘new guy’ is coming in and trying to unload the existing, but newly finished, units before he goes the same way as the last guy.
#101 – doughboy – do you know which neighborhood that is?
#58 Adding to your comment on dropping price. If there is one thing more stupid that not dropping the asking price on a house that has been sitting for months on the market without generating any buyer interest is dropping the price by an insignificant amount relative to the asking price. I see some people drop the asking price on a million dollar home by 10K? Do they really think that a buyer who can shell out a mill will change his mind now that the price is 990K?? Who are these realtors?
x (97)-
I have a pal in the secondary market who tells me that some selected late-’06 Alt-A MBS have an 18-20% 60 days delinquent rate.
Anybody have the data to plot the spread between the 30 Year mortgage rate as published by fredddie/fannie and the 10 Year Treasury?
Just curious to see if there is a spread widening trend ? I see the flight to safety for treasuries has lowered the 10 year yield to a bit over 5% but has the the spread changed?
Anti,
Realize there might be another reason for those “insignificant” price changes. A new technique, really.
Agents/Sellers will drop the price by some small amount so that the home falls into the top-end of a lower price range search. For example, dropping the price of a home priced at $502,500 to $499,900. This is usually combined with the good old “.99 trick”.
It really is amazing that online search criteria can actually impact pricing decisions to this extent.
jb
#50 lurker,
I’m not sure how close to golf course it is. I know there’s another development on the road that runs from the parkway exit 59 to Rt 9/downtown Little egg Harbor.
Clot, I was wondering what were the factors that have changed your view (in becoming more bearish), i.e. from the Chinese water torture type decline to almost 20-30% declines you think is possible.
That’s a rout in the making, isn’t it? Any timeframes how this second leg down will play out?
bergen (93)-
But, Realtors (as a group) NEVER will do that, so our markets move at a glacial pace. In times like these, most agents will “buy” the listing, and just start pounding away for price cuts three weeks later. The old saying is, “you can’t get a price reduction on a listing you don’t have”. Unfortunately, the public accepts this…and appears not to have any problem at all with the fact that agents who play this game have broken faith with sellers. How anyone can believe anything that comes out of an agent’s mouth once this gambit has been brought to light is beyond my comprehension…but it happens every day.
#101, #102,
i think you’re thinking of the developer along the road that runs from the parkway exit 59 to Rt 9. I think the original builder went bust and someone else took over.
bairen – thanks, i know there are a ton of new developments down there. i haven’t been down there in ages, but i was referring to the holly lakes development. most of the houses (in phase 2) seem 1-2 years old, yet there are a TON for sale. just curious if that’s what you were referring to.
Dream (108)-
Somebody asked me that late last night on yesterday’s thread. I answered at 5:30 this AM, so here it is again:
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.
“Jackson, HUD Secretary, Says 20% of Subprime Loans `Pretty Bad'”
http://www.bloomberg.com/news/av/
Insignificant price drops is a recipe for chasing the market down. It’s like taking a loss on a trade gone sour. You bought high and you lower the ask price ‘just a little’ hoping that some bid will trigger your sale. A rush of sell orders comes (think new homes and people who have to sell) and you will lower your price again by ‘just a little’.
The novices hoping for their house to sell are going to be taken to the cleaners.
#112
Your right, Holly Lakes is the place with 100k incentives. I just Googled it and the directions on their website match, right off radio rd.
barien – any clue as to how long they’ve been offering those incentives?
it’s so interesting to me that they are so new and yet so many are for re-sale (or so it seems), makes me wonder what those buyers were thinking…
bergenbuyer,
In response to your posts about dropping prices what I’ve observed in the towns I watch in Morris County, is that buyers are taking their time in making offers, and the homes that have gone under contract after 2 or 3 months have done so with little or no reduction in asking price. By little reduction I mean $10k – $30k for homes priced in the $500k – $600k range. July seems to be totally dead so I think some sellers may just be waiting until late August or whenever the fall season starts before lowering. In talking to realtors the showing traffic has slowed dramatically in the last few weeks and I haven’t seen any new homes under contract in almost a month now.
“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.”
Thanks for the advice, but I do not hold open houses. Never have, never will.
“When I pointed out the fact that the kitchen was now 5 years old, he had no idea what I was talking about, and so I let it be.”
Since when is a 5 year old kitchen “old?” And how dare you say “old.” It is 5 years YOUNG!
#100 Clot Scary. What will it take for these guys Wells Fargo) to stop that kind of madness?
Robert Troll Says:
July 11th, 2007 at 1:08 pm
Thanks for the advice, but I do not hold open houses. Never have, never will.
Duck: the only thing you will be holding is a bag
Great post regarding the NAR release over at CR:
http://calculatedrisk.blogspot.com/2007/07/those-wacky-nar-forecasts.html
jb
“New home builders have been giving larger and larger incentives in the past year to move their new home inventory.”
Not on the NJ Gold Coast. On the GC, most developers cancelled incentives and raised prices. Good luck getting the time of day from K Hov and Bob Toll.
“Is there a way to track this or will the public continue to be misinformed about Avg Sales Prices/Median Prices/etc?”
There is no way to track incentives being offered by developers. They are off the books.
“And are there any realtors out there telling their clients who have homes for sale to lower their prices…not because of lower prices advertised, but because the realtors themselves know the incentives/deals people are getting.”
No.
#106 JB I remember seeing similar things during the last bust.
But back then it went like this.
For instance, a house would start at 184,900, no interest, drop the price to 179,900, psychologically that made a big imapct on people, only 5k but it did, you are in the 170K’s now.
If that did not work, then drop it to 174,900, then psychologically you are close to the high 160K’s.
So for todays Realtors and Sellers, 50K price drops will be the 5k price drops of 15 years ago.
Going from 500K to 490k, means nothing today, its equivalent to 15 years ago when some sellers dropped from 182,900, to 180K, insignificant.
50k is the new 5k in price drops.
#116 lurkerA
My parents know someone who sold a year or so ago. They bought when the place was first breaking ground. It appreciated so much they sold it and bought a place further west.
I realy don’t how so many can afford a 400k mtg in that area. There are not enough high paying jobs. Your looking at 90 minutes minimum commute to work in Philly or North Jersey. And there are lots of new devlopments in the Little
Egg Harbor area too.
“I have a client who bought in a new development and never moved in. Every time the builder jacks up his incentive list, we drop our price some more (twice in three months).
It’s becoming a game of “how low can you go”. The funny thing is, several potential buyers have gone to the builder, threatened to buy my listing, and used that threat to dig even more concessions out of the guy.”
Luckily I do not have to compte with new homes. There are new houses under construction in the area, but they never go on sale. I think the people who plan to live in them are the ones who are building thesm because, once they are completed, they immediately become occupied. No for sale signs.
Clotpoll Says:
July 11th, 2007 at 12:43 pm
I have a pal in the secondary market who tells me that some selected late-’06 Alt-A MBS have an 18-20% 60 days delinquent rate.
If Alt-A goes the way of Sub-prime, any ideas as to what the price tag for that will be? The combination will be staggering and I’m truly nervous.
#125 yeah, that’s exactly why im so curious. i mean, $350k for a brand new 4 bd/2.5 bath colonial is a great deal, except when you figure that there are absolutely no jobs anywhere nearby. so im wondering if these are “shore houses” for most of the buyers, or what.
if they bought more than a couple of years ago they probably did make money, but there are a bunch that were built in 2004-2006 that are now for sale, im guessing by the original owners, and they’ll likely lose money. that’s why im wondering what made them buy (though likely the answer to that is “stupidity”).
From Reuters:
Moody’s may cut $5.0 bln of CDO RMBS tranches
Moody’s Investors Service placed 184 tranches of collateralized debt obligations backed by residential mortgage-backed securities under review for a possible downgrade on Wednesday, affecting $5.0 billion of securities.
Moody’s said the CDO tranches affected were rated “Baa” or lower and the move follows cuts it made on Tuesday to 399 RMBS secured by subprime mortgage loans. Moody’s also placed 32 additional issues under review for downgrade on Tuesday.
“The rating actions taken today were based on the CDOs’ current respective portfolios and the CDOs’ structures,” Moody’s said. The rating agency said it was reviewing whether current ratings assigned were still consistent with revised loss expectations.
Moody’s said it expects to resolve the current ratings reviews over the next few weeks.
“Had an agent say “Maybe you’re not ready to buy”. Arrogant B!tch.
No, I’m not ready to become a bagholder.”
I’ve come across that.
And also, “Maybe you should look in another town.”
It’s a play at your ego, and it’s probably a result of NAR (?) training at those quarterly realtor meetings.
“When some friends of this blog finally announce to the world how they sold their homes for ask +5%, you can be sure you will never be able to verify how much money was exchanged under the table to “buy” the comp.”
I will tell you right now, I am not offering any incentives. What you see is what you get. And for the most part, sellers of existing homes do not offer incentives. That is mainly for new construction. I have viewed other properties and not a single seller is offering anything. The only existing homes offering incentives are the ultra high end ones: $2.5 million + There is a house in Cresskill listed for $5.4 million. The owenr is giving away $100k in incentives to the buyer.
From the cover of New York Times:
CAN’T SELL YOUR HOME? MAYBE IT’S PRICED TOO LOW.
By David Leonhardt
July 11, 2007
http://www.nytimes.com/2007/07/11/business/11leonhardt.html?_r=1&ref=realestate&oref=slogin
bairan & Lurker A:
I have a house on Tuckerton Beach and know Holly Lakes well – it can hardly be considered a “shorehouse.” In terms of the lack of jobs, most of the people that live down there year round work for the casinos at Atlantic City.
3b: Remember those new construction McMansions on Valley Road and that one on Van Saun Court? Well, they all sold. The one on Van Saun Court sold for somewhere in the 800k range.
Robert Troll: In this case, the builder did a FSBO thing to sell the houses. I am bewildered why anyone would buy these poorly built cheap monster houses. Not only that, the tax bill was already over 9k a year on the tear down ranch which was 100% original since it was built. I can only imagine what the new tax bill will be. Probably around 20k/yr
When I originally listed my house for $999k, I was thinking of giving the buyer a brand new Mercedes Benz, but my realtor said it is better to offer nothing and have a lower price. Even if I gave away a $100k Mercedes, I would still be ahead of the curve. And just imagine the traffic I would get: Free S Class. Come and get your free S Class…..
Yes, a free S Class.
Kind of like the “free” garden hose I got that came with my house. My $280,000 garden hose for the next 30 years.
Consumer borrowing posts big increase in May
HOme equity ATM has runout – now it is time for Credit Cards:
http://www.msnbc.msn.com/id/19681193/
Couple of exerts:
The Federal Reserve reported Monday that consumer credit rose at an annual rate of 6.4 percent in May, far above the small 1.1 percent gain of April.
The increase was propelled by a surge in the category that includes credit cards, which rose at a rate of 9.8 percent in May after having a tiny increase of 0.2 percent in April. The jump in credit card debt was the largest since a 14.5 percent rate of increase in November
and
“We think that people who had been refinancing their credit card debt into home equity loans are finding that harder to do now,” Wyss said. That would explain part of the big rise in credit card borrowing in May, he said.
There are other sellers here: Gary and Starting Over.
From Reuters:
U.S. FDIC chief looking at banks’ CDO exposure
The Federal Deposit Insurance Corp. is looking “very carefully” at banks’ exposure to collateralized debt obligations (CDOs) tied to subprime mortgages and whether rising default rates may creep into higher-rated CDO tranches.
“We’re going to see more downgrades,” FDIC Chairman Sheila Bair said on Wednesday, referring to a slew of CDO downgrades announced on Tuesday by two major credit rating agencies.
…
“I think the question is, to what extent is this going to creep into the higher-rated tranches. Most of these securitizations are over-collateralized but giving rising default rates and the fact that a lot of these loans haven’t reset yet, it could creep into the higher-rated tranches,” Bair said after addressing a Washington meeting of the New York Bankers Association.
“We’re certainly looking at CDO exposures (of banks) very carefully and monitoring whether they could creep into higher-rated tranches,” Bair said.
…
“It’s going to get worse before it gets better. How much worse, I don’t know,” Bair said. “Going forward, investors really need to be paying attention to what they’re buying. And rating agencies need to be carefully evaluating these mortgages backing these pools.”
Where is Booya Bob? We need him to confer the title of Honorary Bagholder to Donald the Troll.
110: No, I know the one you’re talking about. That isn’t the one.
I can’t remember exactly where it is, but:
If you get off on exit 58 (southbound), go to route 9, make a right, pass the lake (and Stewart’s RootBeer) and I think they’re right there between Radio Road and Center St.
I would rather be a bag holder than the guy who sells his house for a $100k + loss.
I will tell you right now, I am not offering any incentives. What you see is what you get.
Does that include the bright red leather couch?
3b (120)-
The funny thing is, Wells Fargo is supposed to be the stodgy, conservative player in the residential game.
# 133 Chairman,
Holly Lakes seems like a very nice place. I just can’t imagine enough people work in the area to carry a 400k mortgage. There are lots of developments from Little Egg Harbor to the south and west. No way all of them work in the casinos. And they are not shorehouses. You have to drive at least 20 minutes to get to LBI.
NNJ & CNJ has very little new construction. Came across this site that keeps track of all new constructions. It is amazing though how much new construction is happening in PA and South Jersey. I wonder how they can sell SFH for 500K+ in towns that are so far away and no real high income.
http://www.ryvenco.com/new-homes-map.html
#133 chairman,
I know it’s not really a shorehouse, that’s why i put it in quotes, but since any jobs are a pretty long drive, i guess i’m trying ot understand the logic.
also, based on pictures of the development, it looks like the houses are really close together (at least for my taste).
CAN’T SELL YOUR HOME? MAYBE IT’S PRICED TOO LOW.
So does this mean I need to raise my price? :)
Re Richard and his currency trading
I don’t see why buying foreign currency CDs through Everbank is so unbelievable. Anyone regular reader of personal finance blogs or finance forums has known about the ability to do this for quite some time.
Perhaps he’s stretching the truth a bit re his success at this (disclosing success stories but not losses) but I think most people are guilty of this (everyone thinks they’re an “above-average” investor).
#133 tbw The one on Beech Drive sold for 785K, UC Feb 28 07, SD April 30 07.
The other one on Oak also sold at 785K, UC March 27, 07, SD 5/18/07. There was another one down there that went UC at 849, back on market this past Monday at 849K.
There are approximatley 12 Mc Mansions for sale in RE right now, with around another 5 or 6 under construction, which I assume will be coming on the market soon.
( I guess there are still some one truck builders out ther who do not know just how much the market has changed.)
And of course we still have the new condos for sale on KKR 689k 2 beds, 713 3 beds, they are going up fast and furious, with just sheet rock between each unit.
Yuck, the Jersey shore. I am thinking of going to the Hamptons later this summer. I would never go to the Shore. It’s like spring break in the summer.
#149 3b – are you kidding? those condos on KKR in RE (on the corner of RE Ave) are gonig for $689k???!! i was just saying to my husband that they are in the weirdest location and I can’t imagine they would be that expensive. I guess i was wrong!
I wonder if Richard is that currency trader who live in Alpine and tore down all those trees on public property so that he could build a tennis court. WOW Richard, I never knew you were that rich. I hope you can afford that $2.7 million fine…
#151: But it is River Edge, and it is near the train to NYC
#153 – ah, yes, of course.
un (130)-
“It’s a play at your ego, and it’s probably a result of NAR (?) training at those quarterly realtor meetings.”
Hey Un, I’m gonna guess you’re not- and never have been- in sales. However, your newfound awareness of sales techniques is not akin to the discovery of the Rosetta Stone. OF COURSE IT’S AN EGO TRIGGER! Most effective selling is (or, it’s an attempt to trigger fear of loss in the customer).
And, where can I find those quarterly NAR meetings? I’m not aware of those programs.
Clearly the Jersey Shore isn’t sophisticated enough for your distinguished taste.
I spent many a summer in the Hamptons since we had a house there growing up. I can honestly say I love Spring Lake just as much as the time I spent in East/West Hampton. The people are very nice and the beaches are also great. Much less of an attitude on the NJ shore as well. I guess Donald loves hanging with the Blue Blood.
You had a house in the Hamptons Mike? Wow! You must be loaded. What are you doing renting? Rich people do not rent.
#157
Donald loves the hamptons, he’s thinking of the big tips he’ll earn for busing tables and wiping windshields :)
I own my friend. I enjoy reading about real estate. I was a renter 9 months ago so I can sympathize with them. No one wants to buy a depreciating asset on leverage. There is a time though when life must go on and owning that house is the only real option (wife, kids, etc) and we pulled the trigger. My only advice, bid low and find an estate sale that has been sitting for a while.
As for you, I wish you luck in finding your buyer.
“Even if I gave away a $100k Mercedes, I would still be ahead of the curve. And just imagine the traffic I would get: Free S Class. Come and get your free S Class.”
That’s if you can find a dummy wanting to finance a car for 30 years on a mortgage.
Robert Troll Says:
July 11th, 2007 at 2:26 pm
You had a house in the Hamptons Mike? Wow! You must be loaded. What are you doing renting? Rich people do not rent.
Duck: My friend rents a house for the last couple of Augusts in Southampton for $30,000. Each of the last few Januarys he has poked around to buy out there and stated emphatically…”idiots”.
Why is buying in the Hamptons stupid? Home values there are skyrocketing. There is no slump there.
Observing an ego play in sales is hardly a “newfound” observation, but thanks for the usual non sequitur.
I was simply stating Parasite Tour Guides, like used car salesman, implement the tactic.
Burgdorff, at least, has the meetings, and all their realtors are required to attend.
Chicago,
Your friend is right on there. That $30K house is probably a few million at least to buy, if not 5. Your carrying costs on houses out there is huge. Pool cleaning, landscaping, mtg, taxes, etc. I can’t see the massive run up continuing for much longer out there. The time to buy was in the mid-late 80’s into the early 90’s. A friend of mine bought a $5M “tear down” which consisted of a small 3 bedroom “pool house” and a perfectly nice main house. He knocked that down the main and built a nice mini mansion on the water 5 houses down from the Maidstone. Total in cost was 6 million or so. The darn thing is worth $35-45M now. Talk about a great return.
Mike,
I was just curious as to why you went against the advice of 99% of the people here and bought? Aren’t you worried that your home might not be worth today what you paid for it 9 months ago?
Pooch123 Says:
July 11th, 2007 at 1:52 pm
Re Richard and his currency trading
I don’t see why buying foreign currency CDs through Everbank is so unbelievable. Anyone regular reader of personal finance blogs or finance forums has known about the ability to do this for quite some time.
Perhaps he’s stretching the truth a bit re his success at this (disclosing success stories but not losses) but I think most people are guilty of this (everyone thinks they’re an “above-average” investor).
Pooch: because currency trading is a zero-sum game, and the way to make money is to be a market maker taking embedded profit margin on the bid-ask spreads. Anyone’s “call” is a massive bunch of guesswork. See how many people got burned betting against the USD a couple of years ago. The guy is full of it.
Understand, I don’t contest that he may have made money. However, from my perspective, he is making a tacit admission of clueless idiocy in a public forum. I guess this behavior is consistent with my expectations.
#151 Yes the 2 beds are 689K, and the 3 beds 713. The “historic” stand alone unit is also 713K
If you want the real top of the line, than across the street at the castle condos (to the left of these) you can buy the penthouse for 1.3 million, or rent (if you must) for a mere 6k a month.
Not really. The house two doors down with the same specs (fixed up a bit more but does not have a family room like we do) just sold (this week) for approximately $100K more that I paid last October for my house. Like I said, I needed to move from the city and it was my time. I found a Foxtons house that the local realtors were literally shunning and I came in 5% below asking (It was reduced ~75K in the 6 months on the market). The sellers accepted my bid immediately and it was smooth sailing. If my house does decline in value I have plenty of equity in it to absorb any movements. Based on very recent comps and given the $30K I put into the place to bring it into the 21st century (paint, wood floors, new basement), the house wold bring me about $130K over what I paid for it, so that is $100K in my pocket before realtor fees. Why did I buy? because I got a great deal.
At the end of the day that is all you can ask for. I was not about to delay my life and stay in a cramped apartment in the city any longer. If the market really crashes and I lose all my equity when we go to sell then so be it, at least I won’t be alone. Misery does love company!
A house is an asset like everything else. It can go up and it can go down. No one can take away the great times we have had in our home during the last 6 months with our new neighbors and all the kids on our block. That has been priceless.
#153 tbw, And it is blue ribbon, and it is bubble wrapped,and all the people make 200k a year. And it is the only town that is tight knit, family oriented and friendly. And prices cannot go down, even though they are.
That last paragraph sounded like an NAR commercial, sorry.
#168 – to be fair, that one across the street looks pretty cool, but the location is terrible. i hate that intersection and avoid it at all costs.
anyway, those are obscene prices for that terrible location, in my opinion. i wonder what they will sell for.
#169 Mike Sold for, 100k more as in the house closed for 100k more, or is it still under contract?
#154 Yes and do not forget that;it really is different here (not).
#172 IMHO I do not think he will get any where those prices, simply becasue there are other condos in town in better location, in the 400k to 500k range, and they have been sitting, including a couple that are bank owned.
I suspect that he will end up renting them, as the land was purchased years ago during the last down turn.
#175 3b – I suspect that you are right. I’m looking forward to seeing how it plays out. Maybe ill even go to an open house for fun.
#173, the close is tomorrow. The house will close for $100K more than I paid. That is of course no guarantee that my house would sell for a similar price but the house specs are nearly identical. They have a few positives in their favor and I have another set of positives in my favor which is why I say they would net out even.
Re: 131,
sellers of existing homes in NNJ offer incentives all the time. Closing costs, cash for “needed” repairs, warrenties, upgrading the landscaping etc have been popular for some time. Only difference is that the incentives aren’t advertised and buyers need to ask. It can be suprisingly easy to get some of these “incentives” even on a reduced price offer. It’s one of the reasons some people don’t think prices are falling as the selling price may look like only 5% under asking. In reality the price may be 10-15% under.
It may also be why some existing home sellers are keeping the prices high; they expect to reduce the price and offer “incentives”.
“See how many people got burned betting against the USD a couple of years ago.”
Plenty, except Richard.
Look no further than Warren Buffet. He blew $800 million (if I remember correctly) taking a position against the USD. He exited his positions and now takes exposure through buying equity stakes outside of the US. Case in point – Iscar. There must be plenty of others acquisitions in the pipeline….
To me, what sounds fishy about Rich’s story is that he is clearly a personal finance junky. Yet currency trading is inconsistent with a typical personal finance junky’s “trading profile” ie most are index fund loving diehard Bogleheads who shun speculation of any kind.
But then again, not everyone conforms perfectly to that profile. Though I’m a diehard indexer myself, I’ve been guilty of following the proverbial “hot tip” myself every once in a while, but not on a scale that really matters…
#176 lurler Are you from the area?
3b – i live in the general area, yes.
3812 Then you know just how horrible the lcoation is, but you can walk to the train,and that makes it worth 200k more, at least.
#183 – yes, easily $200k more b/c of the walkability to the train.
This is too funy
http://homes.realtor.com/search/listingdetail.aspx?cmid=1083483%2c1083487%2c1083519%2c1083521%2c1083616%2c1083638%2c1083688%2c1083723%2c1083738&mnp=23&mxp=29&bd=1&bth=1&sqft=1&typ=1&pfbm=20000&sid=e5047b2acb204b36985fd6959df8e96d&pg=2&lid=1083632352&lsn=13&srcnt=125#Detail
From the AP:
Mortgage Worries Hit Alt-A Market
Shares of some mortgage lenders fell Wednesday as investors worried that problems in the subprime mortgage market could spread more widely in the industry.
“If it gets worse, the next area to see losses and price declines is the alt-A market,” said Bose George, an analyst at Keefe, Bruyette & Woods Inc.
cs 185-
I hope they’ll share some of what they’re smokin1
Re – CAN’T SELL YOUR HOME? MAYBE IT’S PRICED TOO LOW – I can see that – went house shopping in a rich neighborhood recently and most people think any house less than a million has to be a piece of crap so no one will look at it. People walk into the realtor and give a price range they want to pay. If pricing falls their price range remains the same they just get a better house for the money.
That Free 100K mercedes is a smart deal, you can get a no money down subprime buyer who can keep the Benz after the bank takes back the house, riding to the poor house in style is what I like to see. Even better why don’t you get a homeless man to buy your house on a subprime loan at 200K more than it is worth with nothing down and kick him back 5K at closing and don’t tell him he can live there. That way you can live for free tillt he bank foreclosures and then buy it back on the courthouse steps for 500K less than you sold it!!!
Actually I know a true story about guy who bought a house in the Hamptons in the worst condition possible for 250K off. He went to the realtor and asked him to assemble the worst collection of tenants that have a history of wrecking houses together into a summer share house. He then rented it to them for 30K the kids burned and destroyed the house and then he snatched their deposit and did an insurance claim and got it completely redone and sold it in the spring for a 300K profit!!! Now that is a shady but smart guy.
#185
That “house” looks like a converted chicken shed. You can get a really nice pre 40’s colonial in caldwell for under 500k. Good luck to that fliiper and his chicken shack, I think we are running out of GFs.
3b: Do you have an MLS # for the stand alone “historic” house? I looked, but couldn’t find anything.
my sentiments exacly. It’s such a bad scene when u see stuff like this. Looks like I won’t be buy until 2008.
tbw The 3 beds are listed under the following njmls #’s.
2715732
2715824
2716201
2717102
Does not indicate which # applies to the stand alone “historic” house.
Oh and please refer to the development by its proper name, which is “The View at River Edge.”
http://realtytimes.com/
HA HA This is a pro feel good realtor sponsored web site all about housing going up up and up. It is a buyers market so buy buy buy
#191 Which post are you responding to?
I happen to think that a few wealthy folks choose to rent for various personal and financial reasons. The super rich, for example, may maintain a year-round suite in a luxury hotel of their choice. They may also own mulitple properties, or not, depending on their preferences. If you’re not family oriented, or single with a lot of money, renting can be fun. Back in the 70s, before many of you were born, I lived in an apartment building where the late Don Ho rented his penthouse for many years, maybe even up to his death for all I know.
re: #185
That palace has 3 baths! You don’t think three baths is worth that asking price? I can’t help wondering where the 3 baths fit? Seems like 1 1/2 would’ve been fine, except maybe the owner gets sick a lot and needs a bathroom right at hand.
What’s the issue with Richard being long the loonie? I’ve been short the dollar index for approx 3 years. Flat now. Will get short again if certain technical indicators are violated.
>>Yuck, the Jersey shore. I am thinking of going to the Hamptons later this summer. I would never go to the Shore. It’s like spring break in the summer.
agree 100%
>>What’s the issue with Richard being long the loonie? I’ve been short the dollar index for approx 3 years.
same here, a bit shorter in duration though. i have positions in a couple of currencies but i also created a custom basket for fun. overall to date i’m up some but fortunes quickly change in this market.
191 responded to 187 regarding 4:20 ;)
#185
That house is magical. When you look at the second picture and move on to the third, you see the exact same room, but the walls change colors.
Why is everyone so down on the NJ shore? I have done both – had family with a Hamptons house (Hampton Bay) and one with NJ shore house (Avalon). I prefer the shore anyday – more towns to choose from so way less crowded, way fewer wannabes than the Hamptons (which consists MAINLY of wannabes now) and more relaxed generally. And the traffic getting to the Hamptons is unreal. A beach vacation is for chilling out, not pretending like you have more money than you really do.
The Hamptons has more charm and is prettier in many areas, but that’s not really enough, especially if you have kids.
Many incentives out there are a con game. Builders, such as Toll, are offering incentives that were always standard features on their homes. Take a look at this idiot who thinks she got a good deal. She got AC and sod. The last time I checked, these were all standard features when you buy a luxury house!
http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=azJPMYd1ec3M
“More than half of builders, 55 percent, are offering free upgrades such as marble countertops, fireplaces, hardwood floors, or garages, up from 37 percent a year earlier, he says.”
Last time I checked, all new houses had garages. Come and buy my house. I am giving away a roof for free!! The best incentive in town!!!!
Jersey Shore? What’s wrong with Spring Lake/Sea Girt.
The woman I mentioned above is a bigger idiot than I thought. Look at what she said at the end of the article:
“Without the incentives, I don’t think I would have bought a new home,” says Whitaker, who’s buying from Winnick Homes LLC, based in Bingham Farms, Michigan. “I couldn’t pass it up.”
Great, she bought a house because someone offered her a measley $5k in incentives. Buy a house for $2 million and maybe the seller will give $10k in incentives.
“For now, builders will have to tempt buyers with sprinklers and microwave ovens.”
This is great. If I buy a new house today, I will get a free microwave…. A savings of $60!!!
#202
Agreed.
I didn’t know Hampton Bays were considered the real Hamptons but I did love Eds Bay Pub back in the day in Hampton Basy
Bridge Hampton is the best. There is a house there currently listed for $75 million. It has its own PGA golf course in the back yard.
John, how are they not the “real” Hamptons? I consider everything out in that general area “the Hamptons” unless it’s way far out like Montauk or North Fork.
Maybe he’s one of those wannabes…?
#195 twice shy:
I am not wealthy enough to maintain a year-round suite in a luxury hotel of my choice, but I still rent.
Given the recent pull back, I could easily afford a house of my choice, but I still choose to rent since I would like to put my money into something that will build wealth for me in the longer term. In my view housing will give negative real returns for the next couple of years. I will let my Landlord subsidize my living costs for now.
I am trying to get some businesses of the ground and would rather keep my capital for that.
twice shy Says:
July 11th, 2007 at 4:10 pm
I happen to think that a few wealthy folks choose to rent for various personal and financial reasons. The super rich, for example, may maintain a year-round suite in a luxury hotel of their choice.
Agreed. I used to work in luxury hotels in the Middle East. One client (obscenely wealthy, 9 figures and up, stadiums and museums named after the family) lived half the year in our hotel and the other half at the Waldorf. She was single. I think she liked the company and the liveliness, she would hang out at the bar a lot.
I have a mansion, forget the price
Ain’t never been there, they tell me it’s nice
I live in hotels, tear out the walls
I have accountants pay for it all
Joe Walsh.
# [post from yesterday, the 10th] Tom Says:
July 10th, 2007 at 10:50 am:
>>>Anyone know the trend at south brunswick / Princeton / West Windsor markets ?
Tom — Sorry not to have posted yesterday. I have just bought in Princeton (I would have preferred to have waited for a year but circumstances have conspired to make buying at this moment in time the only real option for me).
Generally speaking, asking prices have come down about 5 percent in the past year, at least in my range, which is at the entry level ($500,000 to $600,000) in this market.
My approach was to tell my agent that I felt the housing market was in freefall and that I only wanted to deal with sellers who appreciated that fact. I also did a fair amount of internet sleuthing on sellers, to the extent that I could, to distinguish those sellers who were likely to have a realistic understanding of the current market from those who had no clue.
I started seriously looking around March. I was very interested in a duplex that was the right size and the perfect location for me. However, the seller was recalcitrant in her ideas about what her property would fetch. In the end I didn’t even make an offer on the place, because I was sure she would reject it.
Instead I got, for significantly less than her asking price, an entire house on a beautiful lot that, though not as centrally located as I would have hoped, is still very close-in. I am guessing that I got the property for about 10 percent less than it would have sold for last year.
I was told that there were other offers, one of which was more than mine, but I held firm to my original offered and refused to go up. (I also offered excellent credentials as a buyer).
I’m bracing myself for the 20-30 percent drop in prices to come but planning to stay in the house long enough to smooth out the coming downhill rollercoaster ride in prices.
If it had been at all realistic for me, I would have rented for another year. Many properties have been on the market for a long time but continue to have unrealistic asking prices.
Alas, I know nothing about New Brunswick/West Windsor, but you should check out
http://www.wwptoday.com/
I am not that familiar with the site but I have run into some vigorous discussions there, via Google, about real estate in the area.
The best real estate site for searching in this area is http://www.prudential.com. You have to register (I must admit that, privacy freak that I am, I gave a legitimate email address but an expired phone #; I get new listings via email but no solicitations on the phone ;-) — also have to admit that my agent is with another realty company).
Best of luck ~ Cass
>>I wonder if Richard is that currency trader who live in Alpine and tore down all those trees on public property so that he could build a tennis court.
no that isn’t me.
From the Star Ledger:
Music great Oates buys condo in Asbury Park
Lavallette has Joe Pesci, Mantoloking lays claim to James Gandolfini, and now Asbury Park can list John Oates among its part-time residents. Oates, half of the famed Hall and Oates singing duo, closed a deal today with Metro Homes Inc. to buy a two-bedroom, two bath condo in the yet-to-be-built Esperanza.
Did they intentionally design the thing to look like a cruise ship?
http://oceanfrontasbury.com/metro_homes_rising_02.htm
in RE to currency trading, i don’t trade like i’m supposed to. i guess it’s because i mostly dabble with play money because frankly i’m bored so trying to profile me is a wasted effort. i’ve been trading currencies like mutual funds, i just hold on to them.
>>Jersey Shore? What’s wrong with Spring Lake/Sea Girt.
those are the exceptions. very nice areas.
>>John, how are they not the “real” Hamptons? I consider everything out in that general area “the Hamptons” unless it’s way far out like Montauk or North Fork.
the Hampton Bays are generally not considered the Hamptons per se. That’s because it’s less ‘posh’ as many of the Brooklyn body builder cement head commoners go there to party. Those with money consider the Hamptons Bridge/South/East Hampton, Sag Harbor, Amagansett and sometimes Shelter Island areas.
I am currently looking into a pre-construction
home in southern nj (I know this isnt the right time to buy but it has become a neccesity). The builder is offering apprx 15k (whoppee!) in incentives. My question is….is the actual base price of the home negotiable? And if it is, can I get this reduced by a substaintial amount? My gut feeling says no…if they lower the price for me does this not set a new price level for the whole community? Thanks.
“I also did a fair amount of internet sleuthing on sellers, to the extent that I could, to distinguish those sellers who were likely to have a realistic understanding of the current market from those who had no clue.”
And how did you do that? Please share….
possibe new home buyer,
Builders do not like to lower base prices because, if they lower it for you, they have to lower it for everyone else. I know that the big builders like Toll and K Hov do not do this. However, if you are dealing with a little builder that is desperate for the money, you might be able to lower the price. It all depends on the builder.
“Did they intentionally design the thing to look like a cruise ship?”
JB,
Why buy a condo in a building that looks like a crusie ship when you can buy a condo inside of a crusie ship?
http://www.magellancruisecondos.com/
is the actual base price of the home negotiable?
Not knowing anything about you, the developer, or the development, I’d suggest attempting to negotiate. Simply because you have nothing to lose by doing so.
What is at stake for the builder? A buyer, and that’s a big deal in this market.
jb
From Reuters:
NAACP hits subprime lenders with class action suit
The National Association for the Advancement of Colored People (NAACP) on Wednesday filed a class action lawsuit against 14 subprime mortgage, lenders alleging they engaged in institutionalized, systematic racism.
…
The lawsuit cited data from the National Community Reinvestment Coalition showing that lenders on average made high-cost subprime loans to higher-qualified blacks 54 percent of the time, compared to 23 percent of the time for whites, even when the white applicants were less qualified.
“Builders do not like to lower base prices because, if they lower it for you, they have to lower it for everyone else. I know that the big builders like Toll and K Hov do not do this.”
[224]
Oh really?
“D.R. Horton said orders dropped in every region, with the steepest declines in California and the northeast. The average price for its houses slid 12 percent to $233,672.”
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aNRJasq5XTTQ
On another subject… builder CEO compensation:
Ara Hovnanian is getting ripped off. Only $1 million a year and $5.8 million in bonuses.
Bob Toll makes over $50 million!
http://www.forbes.com/static/execpay2005/LIR9QVQ.html?passListId=12&passYear=2005&passListType=Person&uniqueId=9QVQ&datatype=Person
http://www.therealdeal.net/issues/JULY_2007/1183155269.php
“readytobolt Says:
July 11th, 2007 at 9:46 am
Is there any way to confirm a sale price as reported by the MLS?”
Not unless you are a realor. The MLS is not a public databse. Even the realtors on this site might not be able to confirm the home sales in your area since you are in New York.
Un (164)
“Burgdorff, at least, has the meetings, and all their realtors are required to attend.”
Most traditional companies do have weekly meetings. That’s where they brainwash the sheeple, cross-sell affinity services, impart sales techniques that would make Willy Loman blush and generally teach agents how to fail. Then they all gorge on cheap, empty white carbs, pile into cars and caravan the new listings for the week. By the time that’s all over, the day is pretty much shot. That’s why these companies never require their 1 or 2 good agents to attend.
What is your point here? Most everything you detest about RE agency gets taught in these meetings.
Any RE office meeting that occurs more than once a year, doesn’t involve good, strong drinks and doesn’t revolve around a few simple ideas that both help customers and make money for the agent is no more than a brainwashing session.
HOME DEPOT has more problems than the housing crunch…for example, buy an item online….try to return it to a store (my what a convenient concept) but NO, online orders only go back via online returns…..shipping costs alone make that stupid. Companies who are unable — in this late term — to integrate online with brick and mortar, deserve to die….DIE HOME DEPOT DIE!~
Clotpoll, do you ever get a potentially useful idea from this blog?
Essex
If your purchase was large and its worth your time to pursue this, you should consider following the consumerist.com approach of handling corporate stupidity and kick your complaint up the management chain of command. See
http://consumerist.com/consumer/complaint-letters/how-to-launch-an-executive-email-carpet-bomb-259713.php
A good friend of mine got good results doing this with an (expensive) problem he had with Best Buy. Other consumerist readers have had positive experiences with this as well, the following is an example of it with Office Depot
http://consumerist.com/consumer/happy-endings/office-depot-executive-e+mail-carpet-bomb-scores-direct-hit-264500.php
goto lowes, hd suxit.
Pat (233)-
At least one or two a day. Literally. And not potential good ideas…practical, immediately do-able ones.
That’s why I keep coming back.
I know a lot of people here don’t like to give out their opinion…
but I’m curious to know what what the Bergen peeps think of Oradell in general.
Thanks
Gary – not sure if you are interested in any more info on 73 Gates, but I spoke with my friend who made a bid on it tonight. Apparently this one went for over asking. My friends bid full ask and lost it.
Pat (233)-
While I’m on record as saying that this board is not a proxy for the collective mind of the buying public, it sure is helpful to get a sampling from what is- at the very least- the most vocal and demonstrative portion of the contingent. I can’t help my sellers sell if I don’t see things thru the eyes of a buyer.
I’d come here daily for that alone.
From the WSJ:
Fitch Sees Rising Shakiness
In Commercial Mortgage Arena
By RYAN CHITTUM and JENNIFER S. FORSYTH
July 12, 2007
Defaults on loans backing commercial mortgage-backed securities could soon begin to rise, as some owners of buildings purchased for high prices find they were too optimistic about future market conditions, a credit-rating company warned.
In a report yesterday, Fitch Ratings said the fervid lending conditions from 2005 until early this year allowed landlords and real-estate developers to load up on interest-only loans and loans with high loan-to-value ratios that were underwritten with expectations for rent increases that appear “unrealistic.” While commercial rents are rising at the fastest levels in many years — especially in some of the strongest commercial markets, including New York and Washington — Fitch said owners have “overly optimistic expectations of future rental rates, sales growth and market growth.”
The warning comes as investors have become more cautious about financing these deals. In the last three months, lenders have pulled back somewhat, tightened covenants and required borrowers to put up more cash. Meanwhile, interest rates have risen, making it harder to use borrowed money to amplify returns. “It’s clearly had an effect on the number of people chasing deals,” said Colin Dyer, chief executive of Jones Lang LaSalle Inc., a Chicago commercial real-estate services company. “It’s taking deals longer to get completed, and it’s stopped price growth for now.”
As investing in commercial real estate has surged this decade and sales prices have skyrocketed, lenders competed aggressively to win market share. Some loans used so-called negative leverage — when a buyer’s debt payment is more than the income the property produces. In the past, banks underwrote loans based on current cash flow — typically the rents landlords receive from tenants. As the market heated up and banks competed against each other to produce loans, some began underwriting loans based on expected future income levels.
Even though lenders have turned skittish in recent months and have started to require more equity in transactions, the higher risk loans that were written previously are now working their way into pools of loans packaged into commercial mortgage-back securities — thus, raising the likelihood of higher defaults for the rest of 2007, said Fitch.
Some of these riskier loans, especially in the white-hot Manhattan office market had been based on the current pace of rent increases-about 25% in the past 12 months in Manhattan — continuing for 10 years or more. “It was not just one bank doing this,” Britt Johnson, a senior director at the ratings agency and a co-author of the report. “It was a common practice across originators.”
anyone else’s dehumidifier working overtime recently?
Does anyone here think that the ratings down grades are going to make to a media where it will be read and understood by most people? Like cover of Time? or Newseek. Maybe it should be on Oprah?
While there are some people who seek news wether it be good or bad, I feel most people don’t look for it.
I am in the industry, and found this blog by searching “real estate bubble” Because I thought something was going on. I have yet to find personally in my field anyone with knowledge of this potential train crash -for lack of a better phrase.
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When Joe6P can’t get a decent home loan…or gets blown out of a first home purchase because of qualification issues, everything that needs to be understood about subprime MBS downgrades will be perfectly front-and-center in the public consciousness.
You don’t need to understand the intricacies of the process to know that a bunch of Wall Street yahoos- trying to spin turds into gold- have screwed up your ability to put a roof over your head.
When this stuff finally makes the cover of Time…or gets shared on a “very special” edition of Oprah, all it will mean is that it’s time to buy again.
In my 20’s I rented a few houses in Hampton Bays and had a ball. After that we moved on to Southampton. Then I got a deal on a waterfront house in Hampton Bays that was once a bed and breakfast, waterfront, private beach dock and six bedrooms. We decided to throw a big party and no one East of us came because they don’t “do Hampton Bays”. Another insult to Hampton Bays is that the tony restaruants in Bridge Hampton have caller ID and won’t accept Hampton Bays, Flanders, or Springs Phone calls. The owners don’t want the Hampton Bays riff raff coming over.
ReNJGal Says:
July 11th, 2007 at 5:16 pm
John, how are they not the “real” Hamptons? I consider everything out in that general area “the Hamptons” unless it’s way far out like Montauk or North Fork.