From the NY Post:
HEDGE HORROR
SUBPRIME MELTDOWN COULD WIPE OUT BILLION$
As home foreclosures ricochet through Main Street in rising junk mortgage meltdowns, Wall Street is facing a separate barrage that could swamp its first rich victims – hedge funds for the wealthy.
The financial industry yesterday got more unhinged following a shake-up a day earlier when two credit-rating agencies stripped away the fragile masks of shaky mortgage securities, exposing their worthless sides.
The stunning formal disclosures, which eventually could affect as much as $2 trillion in various mortgage securities, is expected to trigger widespread revaluation of the paper, which some analysts believe could wipe out 40 to 50 percent of their values.
For hedge funds, it would mean having to cover losses by giving back money to clients, even if it means selling off other good assets at a discount to raise money.
“The hedge funds are so over-leveraged, they’ll be the first to crack,” said Peter Schiff, CEO of Euro Pacific Capital.
Even Wall Street banks such as Merrill Lynch are vulnerable, with analysts saying the crisis could wipe out $132 million, 1.6 percent, of its profits this year.
…
Alarms also were sounded yesterday for the nation’s banks when the Federal Deposit Insurance Corp. chief said it is looking “very carefully” at how many banks are holding junk mortgage paper, particularly a tainted and repackaged version of the risky junk bonds, known as collateralized debt obligations (CDOs.)
…
“Its going to get worse before it gets better. How much worse, I don’t know,” Bair said.
From the Wall Street Journal:
‘Margin Debt’ Hits Record
$353 Billion on NYSE
By PETER A. MCKAY
July 12, 2007; Page C2
Investors are borrowing record sums of money to finance trades on the New York Stock Exchange, according to data due out from the Big Board today.
NYSE officials attribute the trend to recent regulatory changes effectively allowing both small and big investors to take on more leverage, or borrowed money, from their brokers. So-called margin debt, a broad measure of leverage, jumped 11% to $353 billion at NYSE in May, up from nearly $318 billion in April.
Wall Street has had a love affair with leverage in recent years, typified by hedge funds and private-equity firms that make use of it to buy companies and stocks and bonds.
Is Chuck Prince still dancing?
From Bloomberg:
U.S. Foreclosures Jump 87 Percent as Lending Practices Tighten
The number of U.S. properties in foreclosure climbed 87 percent last month from a year earlier as home prices fell and lending standards tightened, making it harder for borrowers to sell homes and refinance mortgages.
There were 164,644 loan default notices, scheduled auctions and bank repossessions in June, led by filings in California, Florida, Ohio and Michigan that together accounted for half the total, according to RealtyTrac, a seller of foreclosure data.
The June foreclosure figure was 7 percent lower than that in May, when filings reached a 30-month high, Irvine, California- based RealtyTrac said. “Still, rates in most states remained substantially above last year’s levels,” James Saccacio, the company’s chief executive officer, said in a statement.
…
“We’re running much further ahead of what we had anticipated in terms of year-over-year,” Sharga said. “Historically, 40 percent of properties entering default make it as far as auction, with half of those going back to banks and the other half to investors.”
The real estate markets overseas particularly in Eastern Europe and Asia have been running away recently. Anyone has any opinions on how this subprime issue will impact those markets?
I posted this last night but many of the “regulars” did not seem to be online.
July 11th, 2007 at 9:46 pm
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
“Its going to get worse before it gets better. How much worse, I don’t know,” Bair said.
I agree. It will get worse. RE is done, toast. If Parcells was the RE coach, it would be benched/cut. This is yesterday’s news. The only people ignorant of this fact are existing sellers and realtors [not the ones on this board]. There are a myriad of mine fields out there, independent of but related to RE. These are of more concern, at least to me. I hate to repeat myself. However, we will be witnessing one of the biggest busts in the history of the markets. Bigger than the Nasbomb, multiplier effect. Greed/Fear, it works on both sides of the trade.
Financial stocks are sliding and credit default swaps spreads are widening. Comfortable?
Can anyone make a case that we’ve seen the worst in the RE market and it will start to improve by 4Q ’07?
Several here believe September will start a next leg down. Is there anything that might change that forecast? Is there a chance the subprime crisis will be contained and not spread further? Inventory is still high, but let’s say the Fed cuts interest rates in the fall, and oil prices decline (two big Ifs), might that bring some buyers out of the woods? What if the stock market tanks in the next six weeks and RE is seen as a “safe haven” again as it was after the 2000 dot.com market bust? What if more sellers start to capitulate, sales volume picks up and inventory starts to get worked off?
In sum, what could go wrong with the predominantly negative scenario most of see as the most likely one for RE over the next 9 – 12 mos?
Bost/clot: OMG!!!
http://www.nypost.com/seven/07122007/sports/mets/met_shake_up_mets_mark_hale.htm
Chi,
You beat me to the punch. I heard it in the car this morning. I almost crashed. He may be the best hitter on the bench. How long before he starts to whine about being a player/coach. Willie and Rickey? They almost have me now.
From MI Homes:
M/I Homes Reports Unit Results and Estimated Charges for the Second Quarter of 2007
Robert H. Schottenstein, Chief Executive Officer and President, commented, “Today’s announcement is further evidence of the challenging and uncertain conditions facing the homebuilding industry. Though we were slightly encouraged by our first quarter results — in particular new contracts and a reduced cancellation rate — conditions deteriorated in the second quarter as a result of the widely reported and well documented concerns over credit tightening and difficulties in the sub-prime market, excess inventory of new and used homes, and weakening demand. All of these factors have led to further price competition and margin compression in most of our markets.”
twice shy (7): Tell me again how a Fed rate cut is an option? The dollar is on the shakiest of ground.
The only way that oil prices are going significantly lower is in the face of a global recession. That ought to be good for real estate prices.
If the stock market tanks, the money that comes out will be heading for government securities, not illiquid real estate investments.
I heard the “Rickey Henderson” thing this morning, also. I don’t get it.
Only posting because I asked for more info on the LIZ layoffs yesterday.
From the Record:
Liz Claiborne closing warehouse
Liz Claiborne Inc., outfitter for career women, is closing its Secaucus warehouse and laying off the 54 workers employed there as part of a global restructuring.
The apparel designer said Wednesday that it plans to cut 600 to 800 jobs, or 7 percent to 9 percent of its non-retail workforce.
…
Liz Claiborne has notified the state Department of Labor and Workforce Development of its plans to permanently close its warehouse at 225 Meadowlands Parkway sometime between Aug. 3 and Aug. 17.
Forty warehouse workers and 14 managers will lose their jobs as a result of the closing.
gary Says:
July 12th, 2007 at 8:43 am
I heard the “Rickey Henderson” thing this morning, also. I don’t get it.
gary: I can see it now……”Carlos…Rickey says keep your hands back…”
chicagofinance,
lol! I just can’t figure this one out. I don’t think this relationship will last that long.
The ringing sounds you hear are the telephones at the offices of hedge funds as investors call seeking redemptions. These people don’t like to lose money, and with the leveraging that was taking place they may lose everything. Not all the subprime mortgages have to default to create economic turmoil.
I don’t like to say this, but I get the feeling some of these hedge fund guys are going to jump from buildings rather than face the music about how much money they lost.
This is going to get very, very ugly.
Lindsey Says:
I don’t like to say this, but I get the feeling some of these hedge fund guys are going to jump from buildings rather than face the music about how much money they lost.
Jumping off buildings is so 1920’s. Nowadays, they just move to their mansions in southeast Florida until the heat blows over.
#11 Rob: I have said it before,a nd I will say it again, there will be no rate cur this year period.
The extent of this debacle is nothing short of amazing.. From yesterday’s Financial Times:
Australian hedge fund warns about withdrawals
An Australian hedge fund manager with $1bn in structured credits and junk-rated loans warned investors yesterday it could restrict withdrawals to ensure its survival as it reported losses of 14 per cent in one fund in June.
Basis Capital, based in Sydney, said in a letter to investors it had been hit by “indiscriminate” repricing of “otherwise fundamentally sound collateral” amid the crisis in US home loans to less creditworthy investors. It said it had deliberately avoided the worst-hit 2006 subprime loans.
The warning that redemptions can be restricted comes as a series of hedge funds in the US and UK have run into trouble from the collapse in price of illiquid, or hard-to-trade, securities linked to subprime loans.
Restrictions on redemptions are closely monitored by hedge fund investors as an indication of trouble.
Any limit tends to prompt a rush for the exit by other shareholders, forcing a fire-sale of assets to raise cash to meet the pay-outs.
The dollar is worthless now, a rate cut will turn it into mere kindling.
They’ll blow the doors off this thing with a rate cut.
Why would they jump off a building it is not their money they lost. Those guys take 40% of the gains and zero percent of the losses. Nice deal.
Here is my new housing question. When I think housing has bottomed and I want to make cash and I can’t afford to buy properties what is the best way to do it when we hit bottom in 2008 or 2009, REITS, ETFs, CDOs, Builder Stocks, builder Bonds, MBS etc. Or perhaps stocks like Washington Mutual or Freddie Mac that have a nice yield.
#5 Rich Oradell is a good town on a whole. The taxes are high, but taxes in surrounding towns have gone up just as much if not more,and so their taxes do not look as horrible as they did.
They will be doing a property reassessment late next year,with the results released sometime in 09.
That should be interesting in light of prices now starting to decline. It is s train town, which makes the commute decet, although the service is limited.
The biggest issue now is the potential break up of the River Dell regional school system.
They are waiting for final approval form the state to pursue this (from what I understand it is rare for the state to say no). AT that point the measure goes to ballot (expected this Fall).
It willl probably end up being a very ugly fight with River Edge, but the elected officials in Oradell have a mandate from the residents to pursue this.
hov, new 52 week low, oh,my
Thanks 3B.
…but the elected officials in Oradell have a mandate from the residents to pursue this.
Probably stems from the high property taxes. Didn’t you mention that Oradell felt they paid more in to the school system than Rvier Edge?
OT but.. what’s your opinion, we’d like to know.
http://finance.yahoo.com/expert/article/careerist/38889
Rich in NNJ –
Here’s on of the more recent articles from the record about the Oradell withdrawal from River Dell:
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjcxN2Y3dnFlZUVFeXk0JmZnYmVsN2Y3dnFlZUVFeXk3MTYyODk5
John [23]
Then buy the dollar and sell currencies/gold.
All disclaimers apply.
What’s next, locusts, frogs?
Rat infestations vex Chatham
A series of rat sightings in residents’ yards in the past weeks have triggered a public awareness campaign by borough officials.
The health department has identified two infested areas: From Fairmount Avenue west to the Chatham Township border, and from Front Street and Woodland Road, south to Watchung Avenue.
…
First reports of rats began in the last week of June, with several complaints of infestation from homes around Washington Avenue School, borough administrator Robert Falzarano said on Wednesday.
Can anyone give any info on Harrington Park or Rivervale? Much appreciated.
#26 Rich Oradell deos pay more, a lot more. The funding is based on property asessment, which Oradell belives to be unfair ( I agree) river Edge sends over 250 more kids to the district, so it breaks out that the cost to educate a kid from RE is around 12k,a nd the cost to educate and from Oradell is over 18k.
Oradell wants to dissolve the district, they would keep the high school, RE would keep the middle school.
Oradell would send their kids to the middle school, and RE would charge per kid, and Re would send their kids to Oradell HS,and Oradell would charge per kid.
RE of course wants the status quo, it is expected that this new arrangement would cost RE tax payers over 2 million dollars extra per year.
The biggest probelm however is the recent renovations to the HS,which voters in both towns approved (over 26 million dollars)
How will that cost be factored in from RE’s perspective, since the HS will then belong to Oradell.
From Reuters:
Fed’s Kroszner-seriously mulling subprime rules
Federal Reserve Governor Randall Kroszner on Thursday said the central bank is studying whether it can write rules to shield home buyers with blemished credit without choking off lending.
“We are looking very seriously at whether we can write rules that will be helpful to protect consumers in this market while maintaining responsible credit from responsible lenders that can be handled responsibly by people in this market,” Kroszner said in response to questions after an event sponsored by the New York Bankers Association.
Standard & Poor’s put on review for downgrade 600 subprime mortgage-backed securities; S&P
said basically that it would downgrade them, perhaps this week. Moody’s downgraded 400 subprime MBSs in its second wave of downgrades. Both moves focused on mortgages issued in late 2005 and 2006.
This is the first wave of downgrades of subprime MBS from S&P, and it concerns first lien mortgages.
S&P is also reviewing second lien mortgages and expects to announce the results of that review soon.
The moves by the two agencies did not affect triple-A and double-A rated MBSs, which are the largest segment of the MBS market. Press reports and the agencies stressed that they were downgrading only about 2% of the subprime MBS. But both rating agencies have downgraded or put on review for downgrade 20%-25% of triple-B tranches and that might cause some forced selling and more disruption in the market.
The rating actions also affect 45%-50% of double-B rated MBSs. S&P left open the possibility that some MBSs could be downgraded several notches. S&P also put on review certain CDOs that held the MBSs that S&P put on review for downgrade.
The downgrades are significant, but we have not changed our views on particular companies
because of them. We have become increasingly pessimistic about the outlook for subprime mortgages.
Investors have been expecting rating agencies to downgrade subprime MBSs for some time. The scale
of the downgrades has surprised investors, we think, and they are understandably concerned about more dislocation in the subprime mortgage market.
We think that there could be a third wave later this year — S&P may review Alt-A mortgages.
S&P is now more concerned about Alt A mortgages on the “lower quality end.” We think that this
could be the next shoe to drop, because Alt A mortgages have a lot of the same characteristics as subprime mortgages: little money down, no income verification, and floating rates. The main
difference is the FICO score, which is high (prime) for Alt A borrowers. But if fraud has made FICO scores less useful, as S&P indicated, then Alt A mortgages may perform worse than expected.
Oradell is a nice town. I used to work in Oradell and dealt with many of the residents. The word snooty comes to mind.
All eyes on Alt-A at this point.
jb
Good website:
http://dealbreaker.com/
3B, LurkerA and TBW,
Thanks for the info. It’s very informative!
RealNNJ,
I lived in Harrington Park for 9 years. It’s a great, quiet little town with an excellent school system.
The only difficulty is the ride to any major highway. But that’s what makes the town so quiet.
The town is surrounded by the reservoir (which made it difficult to travel during Floyd) that provides great views along Parkside Road.
There is a cargo train line cutting through part of the town which runs at all hours. Sometimes they can be very long (or just outright stop) and can add anywhere from 2 to 10 minutes to a commute.
Rich
#35 tbw True, some are, but believe me that disease has spread to River Edge as well.
And we all know people in Oradell are Ridgewood wannabees, and some people in River Edge are Oradell wannabees, and some people in New Milford think they are in Oradell.
#38 Rich You are welcome, it will be interesting to see how it all plays out. Kind of sad it got to this point.
But River Edge knew it was coming, and ignored it;which is typical for River Edge.
Rates up slighly this week. From MarketWatch:
Freddie Mac: 30-yr mortgage averages 6.73% vs 6.63%
Freddie Mac: 15-yr mortgage averages 6.39% vs 6.3%
Freddie Mac: 1-yr ARM averages 5.71% vs 5.71%
#38 – Rich, that’s one of the things I like about Oradell (and RE too) is that it’s not “right on the highway” but close enough to the parkway, 17 and 4 (and consequently 80 and the turnpike) that commuting isn’t terrible. That is, it doesn’t take 30 minutes just to get to the highway.
NW Bergen, Pascack Valley, all great towns if you can afford to bring 150 large to the table and can afford $4,300/month in PITI plus the monthly lease payments on her Lexus SUV and his BMW. It’s as simple as that. An average income of $200,000/year should handle that w/o a problem.
Patiently waiting..
Breaking News: Former Newark Mayor Possibly Indicted Today
U.S. Attorney Christopher Christie has scheduled a tentative press conference this afternoon for a major announcement regarding Sharpe James, the former mayor of Newark and a current state senator, according to one law enforcement source. The rumor circulating is that James, who has been the target of an FBI investigation, will be indicted.
Good morning all. I am learning so much from all of your posts. One question: How much of an effect, if any, will the subprime mess have on balanced mutual funds such as Vanguard Wellesley? I just checked its bond holdings and they look ok to me but I don’t understand its largest holding: “TriParty Repurchase Agreement (Goldman Sachs)” Please forgive my ignorance. Can someone enlighten me? Thanks!
#43 NW Bergen better than Pascak Valley IMHO. Lots of blue collar/Joe six-=pack, low to middle manager types or whatever you want to call them in many of these towns.
Its very easy to appear to be living large today. Appearances and reality two very different things.
Not too long ago, you could get a ranch in River Edge for about $150,000. Ahhh, the good ‘ol days.
And to think, the people who got their houses in River Edge before the run up in prices have been patting themselves on the back because RE turned from an average middle class town to an upper class town…in only 5 years
3b,
Ok, a mere $100,000 for Mr. and Mrs. Joe six-pack and one lease only on an Acura. :o
pesche,
This one is for you.
Drumthwacket searched after threat
State police searched Drumthwacket for three hours last night after receiving a report that a member of the Bloods street gang was going to “pipe-bomb” the governor’s mansion in Princeton, senior aides to Gov. Jon Corzine said today.
Shockingly me and my old civic with over 100k miles on it haven’t been kicked out of the pascack valley yet. Should I have been issued a leased Lexus at closing? I haven’t found it to be any more snobbish than any other areas in NNJ.
#47 tbw Yes many pat themselves on the back. But they aspire to be an upper middle class town, or believe (delude) themselves to be. The reality is quite different.
The town has seriuous issues,including of course the River Dell situation, but most people are uninformed or are in denial.
You could be like the people across the street from me and lease a $90,000 BMW and have an late 90’s American car as a 2nd vehicle.
i suppose that should be “my old civic with over 100k miles and i”
Regarding school district dissolution. If you move toward a per pupil and your demographic changes you are worse off. They tried to break up the regional school down in Island Heights but it was defeated because the town that stood to lose the most had the highest population.
It’s a no win situation unless you simply merge the towns together. Forget “shared services” just combine municipalities.
#50 lurker All of Bergen county is prestigious today.
Saw an advertisement for houses in Garfield some time back, with the tag line your opportunity to live in prestigious Bergen County.
#54 – ah yes, but of course. Prestigious bergen county. So silly of me to make that comment then, i suppose.
#52 tbw There you go, and you do not even live in prestigious sought after River Edge.
Garfield has many poverty areas.
#56: yes, but every time I see their expensive BMW I imagine for a moment that I am in River Edge again…
#54 In the case of River Edge and Oradell, RE will always haev more kids int he district,a s they have much mroe multi-family housing units.
As far as merging the 2 towns. I am sure River Edge residents for the msot part might not mind, because the thinking then would be we are even more prestigious. But Oradell would be shocked and horrified, and never go aolong with it, IMHO.
From FT.com:
Investors’ flight from risk picks up pace
By Paul J Davies and Gillian Tett
Published: July 11 2007 18:59 | Last updated: July 11 2007 22:24
Investors in European and US credit markets accelerated their flight from risk on Wednesday as the turmoil from the US mortgage markets continued to spill over into other asset classes.
The change in sentiment, which triggered sharp moves in credit derivatives markets, suggested that recent problems in the subprime mortgage sector could be spreading to other corners of the financial world.
….
Gerard Chaupin, European credit analyst at UBS, said: “Risk aversion is now the most-used word we hear.” He said rating agencies’ downgrades of instruments linked to subprime securities “may have been the straw that broke the camel’s back”.
Robert McAdie, global head of credit strategy at Barclays Capital, said: “Volatility is going to be here to stay for a number of weeks.” However, Wednesday’s rally in US stocks prompted some investors to conclude that the turmoil in the credit markets was unlikely to spread much further.
JPMorgan observed that swings in derivatives prices were so extreme they implied “scenarios in which the core of the global liquidity system suffers a serious assault”. But it stressed “the meltdown in the credit indices seem completely at odds” with trends in the real economy, implying it should be reversed.
http://www.ft.com/cms/s/c341c57e-2fd6-11dc-a68f-0000779fd2ac.html
From BusinessWeek Online:
Bloggers Downgrade Ratings Agencies
As investors began to sift through the fallout of Standard & Poor’s and Moody’s decisions to likely slash the credit ratings of billions of dollars of bonds backed by subprime mortgages, many finance bloggers are posing twin queries: “Why now?” and “What next?”
From Bloomberg:
CDOs of TCW Group, GSC Face Most Risk of Downgrade
TCW Group Inc. and GSC Partners created the most collateralized debt obligations that are now at risk of having their credit ratings slashed because they are backed by some of the worst-performing subprime mortgage bonds.
TCW of Los Angeles and GSC, a New York-based investment firm, manage 12 CDOs that will likely face ratings cut on a portion of the securities they issued, a report by Bear Stearns Cos. found. ACA Capital Holdings Inc., Harding Advisory and Tricadia CDO Management each have four.
…
TCW managed $27.6 billion in 29 CDOs containing asset-backed securities as of Dec. 31, according to S&P. Risk Magazine named TCW its 2006 “CDO Manager of the Year.”
…
ACA managed 12 so-called cash flow ABS CDOs and Harding managed 10. GSC and Tricadia weren’t among the top 25 managers, according to S&P.
“Our transactions have a high subprime percentage and we were affected by the agencies’ re-rating of subprime,” GSC Partners Managing Director Edward Steffelin said in an interview. The firm has “steered away” from securities backed by second- lien loans and mortgages to borrowers with good credit scores who decline to give information such as proof of income, he said.
The firm has “steered away” from securities backed by … mortgages to borrowers with good credit scores who decline to give information such as proof of income
read: Alt-A
jb
James Bednar Says:
July 12th, 2007 at 9:08 am
The extent of this debacle is nothing short of amazing..
grim: lots of sizzle…..let’s wait a bit for the meat…..the steak is still rare in the center
I knew this guy was kind of folksy and a flake…..I just didn’t know the guy was kind of folksy, a flake, AND AN IDIOT.
WSJ
Whole Foods Is Hot, Wild Oats a Dud — So Said ‘Rahodeb’Then Again, Yahoo Poster
Was a Whole Foods Staffer,The CEO to Be Precise
By DAVID KESMODEL and JOHN R. WILKE
July 12, 2007; Page A1
In January 2005, someone using the name “Rahodeb” went online to a Yahoo stock-market forum and posted this opinion: No company would want to buy Wild Oats Markets Inc., a natural-foods grocer, at its price then of about $8 a share.
“Would Whole Foods buy OATS?” Rahodeb asked, using Wild Oats’ stock symbol. “Almost surely not at current prices. What would they gain? OATS locations are too small.” Rahodeb speculated that Wild Oats eventually would be sold after sliding into bankruptcy or when its stock fell below $5. A month later, Rahodeb wrote that Wild Oats management “clearly doesn’t know what it is doing …. OATS has no value and no future.”
The comments were typical of banter on Internet message boards for stocks, but the writer’s identity was anything but. Rahodeb was an online pseudonym of John Mackey, co-founder and chief executive of Whole Foods Market Inc. Earlier this year, his company agreed to buy Wild Oats for $565 million, or $18.50 a share.
For about eight years until last August, the company confirms, Mr. Mackey posted numerous messages on Yahoo Finance stock forums as Rahodeb. It’s an anagram of Deborah, Mr. Mackey’s wife’s name. Rahodeb cheered Whole Foods’ financial results, trumpeted his gains on the stock and bashed Wild Oats. Rahodeb even defended Mr. Mackey’s haircut when another user poked fun at a photo in the annual report. “I like Mackey’s haircut,” Rahodeb said. “I think he looks cute!”
[edit]
#59 tbw: Well If you wait a little longer, you will get the chance to live in River Edge again.
My real estate contact tells me the market is dead, houses that are gling UC in mnay cases are falling through (financing issues).
And most telling of all, nobody talks real estate any more.
From MarketWatch:
U.S. mortgage rates reverse course
Long-term mortgage rates did an about-face this week, moving upward due to a favorable June employment report and robust consumer credit growth in May, Freddie Mac’s chief economist said Thursday.
…
The jump in mortgage rates nearly eliminated declines made in over the past three weeks, he said.
The 30-year fixed-rate mortgage averaged 6.73% for the week ending July 12, up from 6.63% last week, according to Freddie Mac’s weekly survey. The mortgage averaged 6.74% a year ago.
Freddie Mac forecasts the 30-year fixed-rate to stay around its current level for the rest of
the year, Nothaft said.
The 15-year fixed-rate mortgage averaged 6.39%, up from last week’s 6.30% average. The mortgage averaged 6.37% a year ago.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 6.35%, up from last week’s 6.29% average. The ARM averaged 6.33% a year ago.
Only 1-year Treasury-indexed ARMs held their ground this week, averaging 5.71% — unchanged from last week. The ARM averaged 5.75% a year ago.
…
Taking a look at the bigger picture, Nothaft said Freddie Mac is predicting continued weakness in the housing market in the second half of the year, “with 2007 total home sales and housing starts hitting 5-year lows.”
The ‘interesting’ lending methods still continue. Now 2 people I know, who were denied by at least 1 lender each have gotten approved for aprox 45% of income with 0 down schemes… paying ‘asking price’ for houses that are still, in my mind, overpriced.
Both require considerable work to make them reasonable living environments.
We’ll see how they’re doing in a few years, but I thought lending was supposed to be tightening up.
#69 dough: it is tightening up, unfortunatley it is nto eliminated ,yet.
SO do we now have a stock market bubble again. Since October 2002 it is straight up, that is coming up on a five year bull!!!! I think that is what is paying for those BMWs. Real Estate is dead and the bubble money just switched back to stock when housing died, when the second shoe drops and stocks take a dip where will everyone go to catch the next bubble!! Next week everyone will getting their second quarter mutual fund, 401K and brokerage statements and can pat themselves on the back with their “paper gains” and max out their credit card all over again!!! All the bubbles have to burst at once to get the fools to stop the gambling. Look at option exchange volume it is at all time record high with most of the flow coming from naked retail trades, “bet it all on 21 black”.
for those of you seeking Bergen County.
Wallington,Garfield,Lodi,Englewood,Fairview,
Palisades Park, offer a wonderful entry
level opportunity.
“Outofstater Says:
July 12th, 2007 at 10:20 am
Good morning all. I am learning so much from all of your posts. One question: How much of an effect, if any, will the subprime mess have on balanced mutual funds such as Vanguard Wellesley? I just checked its bond holdings and they look ok to me but I don’t understand its largest holding: “TriParty Repurchase Agreement (Goldman Sachs)” Please forgive my ignorance. Can someone enlighten me? Thanks!”
Outofstater, Wellesley Income is among the most conservative balanced funds going around. Their largest bond holding is a very small percentage in their entire bond portfolio of 300+ bonds. I don’t think the subadvisors (Wellington Mgt.) would have made any aggressive bets, given the conservative shop they are.
The Tri-party Repurchase Agreement holding of $322 million is a very small portion of its $13.4 billion in fund assets.
Usual disclaimers apply.
#71
John,
You use more EPPP (exclamation points per post) than anyone I have ever seen. I picture you guzzling coffee and standing in front of your computer screen as you pound away at the keyboard.
;)
Re: Income – The last few months in the wall street journal and the NY times I have noticed several times when they refer to someone as having a “respectable” income they now use the term “mid-six figures” as I guess the 100K to 399K crowd who are in the low six figures no longer have a respectable income.
So now we went from 200K is the new 100k to 500K is the new 200K!!!!! But then again I see many 1,500,000 houses in 2007 that were only 500k houses in 1997 so I guess you do need triple the income just to break even.
I have preliminary GSMLS sales data for June.
The numbers are grim, June sales were down approximately 15% YOY and near 30% from the peak set in 2005.
jb
what are all your thoughts on Glen Rock? snobbish? ridgewood wannabees? prices too high? oradell is too close to paramus and good luck getting around that town with all the crazy mall traffic…someone should shut those malls down!
77 – Glen Rock touches Paramus too, just so you know. I find it easy to avoid the Paramus traffic – there’s never a need to go on Rt 17 on a Saturday, almost all the stores are accessible by back roads, should you need to go to one.
Glen Rock – the taxes are insanely high and prices are high too. Good schools. I think it’s a cute town, too.
I AM ON MY TENTH CUP OF COFFFFFFEEEEEE!!!!!!!!!!!
http://www.csmonitor.com/2007/0402/p13s01-wmgn.htm
lerkerA et all,
Are Glen Rock Schools the best in that area? i know the taxes are high but its the ‘cuteness’ of the town that attracts the other half…and i guess considering that the nearby towns (except for Paramus) all have high taxes to begin with, Glen Rock may be a good town to raise a family in? thoughts?
Time for caution. Lighten up ever so slowly.
Housing is toast. Got it .
GOT IT!
Bring on the carnage.
“Real” house sellers should start to panic now….. meaning lower your price aggressively until you get a buyer.
Bababababa
BC (9)-
I’d rather see Rickey at the plate any day over Franco.
And I’m willing to bet “Rickey wants to play baseball”!!!!!!!!
Uh oh..
From Reuters:
Moody’s raises loss expectations on subprime loans
Moody’s Investors Service on Thursday said it is raising its expectations for losses on several types of subprime mortgages, which could affect its ratings for securities backed by these risky loans.
Nicolas Weill, team managing director and chief credit officer at Moody’s, said Moody’s is increasing its loss expectations for newly originated loans by 10 percent, and for other loans to as high as 25 percent.
“Right now we’re experiencing unusual market conditions,” said Richard Cantor, team managing director at Moody’s. The number of subprime mortgage securities downgraded has “no precedent,” Cantor said.
Rob (11)-
A massive “flight to quality” in US Treasuries forces an “insurance” rate cut to keep the short end of the curve from going totally out of whack relative to longer maturities.
Not my thoughts…the above came from Bill Gross.
#85 Clot: can you refresh/discuss a little more your thinking/ predictions for 20 to 30% leg down in prices come Sept of this year? Thanks.
Will post the June GSMLS data later tonite
jb
JB (78)-
That’s a pretty tantalizing message. Do you think you’ll have anything ready before you head to Poland?
JM
grim (49)-
Did the property taxes go up on the Bloods’ clubhouse?
It is nice to be in a position as a potential FHB but renting very cheap in a nice place, in the town I want to live in, and be able to wait until sellers are ready to understand that their 2-3 bed, 1.5-2 bath, small whatever isn’t worth a bazillion dollars.
We’ll see how prices and supply looks in a year or so.
JB
sorry. you must have posted right before i did.
JM
#81 It is hard to define “best”. When you look at the ones considered or determined best via test scores, and then compare them to surrounding towns that may not be considered “best”, you will find in mnay instances that that the differences are not that great.
For instance compare Paramus and GR is it worthe the difference in price and taxes to choose GR over Paramus.
Oh and by the way paramus is now “prestigious” too, just not as much as GR, I guess, that is of course if you listen to the local Realtors.
#81 – i think the assessment of whether they are the “best” in the area is very subjective and the answer will depend on who you ask. from what i hear the schools are excellent, i have no idea how they directly compare to the adjacent towns.
other than the taxes and high cost, i think it’s a cute town and likely very family-oriented.
As someone who spent their first 15 years of life in Bergenfield and the following 15 in Oradell, think I may be able to offer a unique perspective on the blue collar/white collar town differences. I realize Bergenfield has changed a lot recently, but in my days the kids used to chase all the immigrants back into Teaneck with bats and chains. The community was pretty diverse economically, college professor, two auto mechanics, truck driver, accountant, traveling salesman, teacher, lawyer, all living in perfect harmony… ha!
Oradell was and is more white bread/white collar. I never considered the people there snobby, just high maintenance. It is filled with the kind of mothers who take their 11 year old daughters to the salon so they can get pedicures together. What I found crazy, they saw as some sort of mother-daughter bonding.
#94 Bergenfield never recoverd IMHO from those HS suicides 20 years back, ironic since that only 1 of the 6 or 7 who committed suicide actually lived in Bergenfield.
Somehow this translated into problems with the schools, and than the flight began,and has not stopped. The taxes are also very very ugly.
I was in BF a few days ago around 7 PM driving south on Washington Ave,and there was not one person on the AVE,and traffic was non-existent. It was like a ghost town.
#94 I do nto find them snobby on a whole either. It has been my experience that the people in River Edge are the ones who have the problem with people from Oradell.
I have never heard any one from Oradell make negative comments about RE or its residents, cannot say the same for RE.
That being said however, I do not belive that Oradell would ever choose to merge with RE.
“for those of you seeking Bergen County.
Wallington,Garfield,Lodi,Englewood,Fairview,
Palisades Park, offer a wonderful entry
level opportunity.”
Are you an idiot? Many of these towns are not entry level. Palisades Park is full of expensive duplexes that all the Koreans buy up and Englewood is not cheap, it has very high taxes. Fairview…. you might as well buy in Union City.
Talked to this about the wife last night:
Looking to buy our first home. With the market being crap, and likely to be crap for 4-5 years, we’re wondering … what’s a smarter move, buying a house now that you think you would like to live in for the next 20-30 years, or buying a starter place now for 6-7-8 years, and then upgrading?
The problems are: we’ve been able to save tons in the last few years for the 20-30% donwpayment … with a house and kids in the next eight years, that won’t be possible.
BUT, right now we can’t go over the 450k/500k mark, and is what we’re getting for that price going to be something we’ll want to raise the kids in?
My parents still live in Oradell and they do find the Oradell residents snobs, but my parents are actually the snobs, so it’s a little of that pot calling the kettle black scenario.
I wish the residents of Oradell had an alternative with regard to the scholl issue. I don’t really feel they do. Taxes are outrageous.
3b (86)-
Here’s the bullet version of my “next leg down” scenario:
1. This Fall, all the sellers who have pulled the “For Sale” sign out of the ground- hoping for a Spring rebound- won’t. Time’s up.
2. Why is time up? Take your pick: life circumstance, impending foreclosure, the realization things aren’t getting better anytime soon.
3. As REO/foreclosed homes increasingly work their way into the marketplace, those homes become the new comps. Unavoidable.
4. When you look at RE busts in past years, the first phase is marked by a standoff between buyers and sellers: prices decline only slightly, as sales volume dries up and inventory rises. When it becomes apparent to all involved that these trends are in place, the second phase occurs: a rush to the exits by sellers. This is when the bulk of the downward move in prices occurs. I believe we’ve reached that point. Buyer sentiment is entrenched, and the subprime meltdown (and incipient credit crunch) should be the catalyst that triggers seller panic.
tough spot (97)-
I wouldn’t expect 4-5 more years of crummy market. We’re already two years into this one, and I’d expect things to start turning in another 2- 2.5 years. The average downturn since WWII has been something like 54 months in duration.
Spot (97)-
In addition, you may be catching a “bottom” if you purchase sometime next year. The last phase of this bad market will be price flatness after the bottom is established.
Does anybody have any thought/warnings about North Plainfield?
Clot [99],
Complacency
Denial
Concern
Fear
Panic
How’s those LOD’s looking?
http://www.trulia.com/home_prices/New_Jersey/Bergen_County-heat_map/
here is the list of recent average sale prices in Bergen by zip code
I saw a fort lee forclosure sale on CL today
I guess you guys were right, it’s not different this time.
Much respect to you all
#67 3b: I don’t think I will ever live in River Edge. Taxes are simply too high. Two people in River Edge that I know of are selling their houses. One wants to move into an apartment, and the other bought a house in Paramus.
I even knew a family that sold their house in RE a few yrs ago because they couldn’t afford their close to 20k a year taxes (big lot + in ground pool)
They moved to Westwood.
“I saw a fort lee forclosure sale on CL today”
Share the link with us please…..
#99 Clot: As always thank you.
If this comes to pass, which I think it will (see my 50K is the new 5K reduction from yesterday), then a good many people will be upside down for a long time.
Those that can hold on and pay their mtgs will be OK (except they will be in their houses a lot longer than they may have envisioned) For many others, it will be quite devastating.
(101)
Clotpoll Says:
In addition, you may be catching a “bottom” if you purchase sometime next year.
So what you are saying is your’re expecting the bottom to hit sometime next year? Once we hit bottom, I don’t care how quicky the price rises because it will be years before I sell. Right now, I’m anticipating hitting the market in August 2008. Sound good to you?
Has anybody with children thought about living in a town with an average school system to avoid the “keep-up-with-Joneses” culture that characterizes most of the towns with the best school systems?
In other words, has anybody who could afford to live in Oradell or Millburn considered living in Rutherford or Maplewood instead?
To add to #86:
There are still a significant number of resetting ARMs to work through:
https://njrereport.com/images/armresets.gif
It can be argued that we’re beginning to see the fallout of these resets in the subprime and Alt-A market. If this is the case, the worst really is yet to come.
ARM resets will peak this November, and will remain elevated through 2008. Unless rates drop dramatically, I can’t see inventory and foreclosure pressures abating.
jb
In other words, has anybody who could afford to live in Oradell or Millburn considered living in Rutherford or Maplewood instead?
I suppose it’s easier to be the richest guy in a ‘poor town’, than the poorest guy in a ‘rich town’.
jb
Why would someone who can afford Oradell live in Maplewood? It borders Newark. You can’t get much worse than that.
#73 Thank you dreamtheaterr. I’m a little skittish these days. With oil prices up and refinery problems and Al-Qaida regrouping in Pakistan, and hurricane season upon us and now this subprime mess, well, it all feels very iffy out there, like there’s a storm just over the horizon.
#106/107 tbw: I understand, that is what used to make RE so desireable IMHO, the value you got for the money (prices/property taxes) that is simply no longer there. I have no doubt prices will fall (and big), but the taxes are here to stay.
The town/residents made soem poor decesions IMHO over the last few years,and will be paying for them for years.
I too know somebody who moved from RE to Paramus (kids were very young). Bigger house, bigger property and taxes almot 40% less, and (horrors) the schools are just as good.
JB [111],
Is there a double hickey coming with the 2/28’s? 2004’s adjusting for the 2nd time and the 2005’s for the first?
#110 pretorius: Reasonable question, hoever that attitude has IMHO permeated all towns, even to the point of my part of town is better than your part of town.
James Bednar Says:
I suppose it’s easier to be the richest guy in a ‘poor town’, than the poorest guy in a ‘rich town’.
I thought you should always look to buy the dumpiest house on the block rather than the other way around
Rutherford and Maplewood aren’t poor towns. I just checked and median family income in these towns is 50% higher than the national average and significantly higher than the New Jersey average. However, Rutherford is slightly below average for Bergen County.
Probably the people who are busy keeping up with the Joneses think they’re poor towns, though.
BC,
#111 graphs only the first reset, and does not include any subsequent resets.
jb
110 – I actually know many people who would rather have a nice house in an ok town then be in the “best” school district. It’s just a matter of priorities/preference.
having said that, rutherford is really cute. i have no idea how the schools are, but i dont think they’re bad.
#98 They have no alternative,and quite frankly they are right. It is a matter of simple fairness.
Re #112,
The right neighbourhood, street and house can make a ‘rich town’ feel really down-to-earth homey.
pre,
It was a generalized statement about “keeping up with the Joneses”.
Personally, I’m a big fan of Rutherford. It’s got a train (and bus), close to NYC, it has a nice downtown, and a good mix of restaurants. Best of all it’s got an active rowing club (NEREID) that gives a sizable membership discount to residents.
jb
>>The numbers are grim, June sales were down approximately 15% YOY and near 30% from the peak set in 2005.
means little if you have a particular town in mind. let’s take my town (westfield). right now in the $500k-$1.1 million range there are 87 available, 8 in attorney review and 49 under contract. i don’t have actual sales ytd. surveying the 87 available they largely fall into overpriced splits and bi-levels and/or in the worst part of town. some new construction with most being overpriced. anything in a decent part of town priced closed to peak prices is selling relatively quickly (
#124 JB One stop to Hoboken form Rutherford,and yes it does have a real nice downtown,and taxes are much mroe reasonable. And for those who care about such things its HS was Blue Ribbon, back in the day.
If my circumstances were different I would definitely look to move there.
>>I suppose it’s easier to be the richest guy in a ‘poor town’, than the poorest guy in a ‘rich town’.
the worst scenario if you want to sell your home.
Anybody have an opinion on Beazer homes?
Any info is appriciated.
Some towns also have really distinct neighbourhoods. Maplewood (even Millburn to a lesser extent) has three or four really different areas in terms of type of housing, social, economic, ethnic and other factors.
#124 Westfield=Brigadoon.
Richard #126,
which one is worse?
>>It is nice to be in a position as a potential FHB but renting very cheap in a nice place, in the town I want to live in, and be able to wait until sellers are ready to understand that their 2-3 bed, 1.5-2 bath, small whatever isn’t worth a bazillion dollars.
good for you but not an option in every town. in my town only houses for rent and that will run you $2500 for the minimum place if you can even find one which isn’t cheap.
>>which one is worse?
richest kid on the block. less buying pool.
Rutherford,
Beautiful old victorians, great restaurants, quick commute to NY, downtown train. Dry town, Blarney Station right across the tracks in ER.
JB, [119]
Thanks. I wonder if the 2nd round of resets is significant?
>having said that, rutherford is really cute. i have no idea how the schools are, but i dont think they’re bad.
not good either. it’s up and coming though. i like the downtown and the commute to the city is great.
>>Some towns also have really distinct neighbourhoods. Maplewood (even Millburn to a lesser extent) has three or four really different areas in terms of type of housing, social, economic, ethnic and other factors.
very true however you end up meeting all your town neighbors at the middle school. this is why many families will opt to live in a neighborhood through grade school that has some other distinct advantage (commute, etc.) then pick up and go somewhere else once middle school approaches. can’t tell you how many times i saw this when searching for a house years ago. this is quite prevalent in places like maplewood.
Richard,
Westfield (via GSMLS)
Active Listings
June 2006 – 243
July 2007 – 274 (12% increase)
New Listings
June 2006 – 67
July 2007 – 71 (6% increase)
Under Contract
June 2006 – 36
July 2007 – 33 (8% decrease)
Sold
June 2006 – 46
July 2007 – 49 (7% increase)
Average Sold Price
June 2006 – $982,107
July 2007 – $816,916 (17% decrease)
Median Sold Price
June 2006 – $787,000
July 2007 – $728,000 (7% decrease)
Sold DOM
June 2006 – 45
July 2007 – 63
Absorption (based on contracts)
June 2006 – 6.75 months
July 2007 – 8.30 months
jb
Seems like “cool” towns with ok/good schools (e.g. Montclair, Glen Ridge, West Orange, Maplewood, South Orange) are still gaining in popularity with young transplant couples willing to but in an “improving” area…or they lack enough local knowledge to understand the difference between parts of these towns. I’ve seen a few houses moving in parts of those towns that my in-laws vetoed when we were looking.
#138 – you might not want to include Glen Ridge in that group. They pride themselves on how excellent the school system is. It’s house they justify the crack-smoking property taxes.
>>good for you but not an option in every town. in my town only houses for rent and that will run you $2500 for the minimum place if you can even find one which isn’t cheap.
No, not an option in every town. In the area which I want to live, it was perfectly acceptable. I fell into a really sweet deal with a great landlord that is really flexable. The School system isn’t the best but also doesn’t suck and there are enough kids around for my rugrat to have friends within walking distance.
Now I can sit back and wait. If something comes along that is really worth buying, I have that option, but realistically I don’t see any examples of that becoming available for at least another 12 months.
As interest rates have begun to creep upwards now is proving to be great time to buy or sell a home in Westfield and it’s surrounding communities. 30 year fixed rates are hovering between 6.5% and 6.75%. Supply of homes available for sale has increased. Home prices are adjusting on a daily basis. Buyers are now coming up to the plate and making serious offers which are being accepted.
We are seeing an increased number of home sales priced up to $900,000. Above that has slowed down substantially. Current activity for single family homes is as follows from May 1, 2007, through July 1, 2007:
WESTFIELD:
ACTIVE LISTINGS: 202 up from 195 (25 up from 20 price $0 – $499,999) (47 up from 39 – $500,000 – $699,999) (32 down from 37 – $700,000 – $899,900) (31 up from 28 – $900,000 – $1,199,999) (24 up from 22 – $1,200,000 – $1,399,999) (9 down from 13 – $1,400,000 – $1,599,999) (13 up from 12 – $1,600,000 – $1,799,999) (9 up from 8 – $1,800,000- $1,999,999) (4 no change – $2,000,000 – $2,499,999) (3 down from 6 – $2,500,000 – $2,999,999) (5 down from 6 – $3,000,000+)
IN ATTORNEY REVIEW: 13 up from 12
UNDER CONTRACT: 91 down from 92
CLOSED: 74 since 05/01/2007 ( 10 closed $0 – $499,999) (20 closed $500,000 – $699,999) 17 closed $700,000 – $899,999) (9 closed $900,000 – $1,199,999) (18 closed $1,200,000+)
EXPIRED: 10
#140 Dough I think it will work out fine for you. And I think it will be sooner rather than later, probably no later than 12 months.
Tough Spot, you said:
July 12th, 2007 at 12:22 pm
Talked to this about the wife last night:
Looking to buy our first home. With the market being crap, and likely to be crap for 4-5 years, we’re wondering … what’s a smarter move, buying a house now that you think you would like to live in for the next 20-30 years, or buying a starter place now for 6-7-8 years, and then upgrading?
Tough, I could tell you all sorts of stories about people I know who bought “starter” houses in the late 70’s, mid-80’s, early 90’s …and they’re still there … because rates soared, the market tanked …
It’s dangerous to assume that you’ll be able to sell and upgrade when you want to.
And none of the people I know are sorry that they weren’t able to upgrade. With time, all of them did major additions or improvements.
But later in life, it’s a relief not to have a big mortgage/big property tax payments.
#135 Blue Ribbon?
One seller got lucky on a 3/2 split I saw last summer in Westfield southside. OLP was $539, first reduction last Oct. to 529, listing withdrawn over the winter.
Relist 3/07 for $525k. Bingo! Closed sale in June for $515. Good condition, quiet street, nice yard.
Conclusion, there are still a few buyers willing to pony up in this market (at least in Westfield).
shakey leggs, you said:
July 12th, 2007 at 1:11 pm
Anybody have an opinion on Beazer homes?
Any info is appriciated.
Do a Google News search on Beazer. There have been some recent stories about their mortgage subsidiary and lawsuits from people in North Carolina.
http://www.myrtlebeachonline.com/business/story/121703.html
“Outofstater Says:
July 12th, 2007 at 12:57 pm
All things must pass. Think of what the stock markets have endured in the past 100 years, from the Great Depression to 2 World wars, through a Cold War and the latest war on terror. This too shall pass.
Stick to an asset allocation diversified globally that allows you to sleep well at night, i.e. test your ulcer index. And remember that more money has been lost preparing for a bear market than actually lost in a bear market.
From the Economist:
Another pounding
WHEN the man approaching you is wearing boxing gloves, it makes sense to duck. The crisis in the American subprime-mortgage market was clearly visible months ago. Too many homebuyers with a poor or non-existent payment record were lent too much money. But when the rating agencies on July 10th finally got round to acknowledging the problem, investors were clobbered. Shares briefly wobbled and the dollar sank. Swap spreads, a measure of risk aversion, reached their highest point since 2003. Credit derivatives, where much of the financial innovation in recent years has taken place, recoiled (see chart). Investors flocked to the haven of Treasury bonds.
#140 Dough Seriously, do not sweat the school thing.
At the end of the day how successful your child performs ins chool will be up to the effort made by you and your spouse. I have seen it time and time again.
From Bloomberg:
U.S. Foreclosure Filings Jump to Record in First Half
Mortgage foreclosures in the U.S. jumped to a record in the first half as rising interest rates and falling home prices battered homeowners.
Almost 926,000 foreclosure notices were filed, 56 percent more than a year earlier and the most since Irvine, California- based RealtyTrac started tracking the data in 2005.
http://news.yahoo.com/s/ap/20070712/ap_on_re_as/china_cardboard_buns
Makes you wonder what the electronics are made from?
My friend has a great house in Maplewood, great location, and has done a beautiful job with it. Bought at the end of ’02, so she’ll see some appreciation even with having done work. That said, they are currently trying to determine when to move – a) the house is getting to small and more importantly b) they have no intention of sending their kids to the middle or high school (most especially the high school). They’ll move to Summit or Short Hills or Millburn eventually – they don’t really see Maplewood as a long term option.
Clot,
Frankly, I think we’re closer to the top than you think. How else could you possibly explain such nonsense?
Hudson guy, pimp your cave
Surrounded by his wife’s flower wallpaper or plush pink upholstery, the man of the house may sometimes find it hard to feel like just that – the man of the house. But a new national television show wants to bring a little more testosterone into the homes of New Jersey men.
“Man Caves,” which will air early next year on the DIY network, is the “Extreme Home Makeover” for the guy’s guy and will spotlight the Hoboken and Jersey City area, according to Kevin Morra, the show’s executive producer.
The “Man Caves” construction team, along with hosts Tony Siragusa, a former NFL lineman and FOX sports commentator, and Hoboken resident Jason Cameron, will help New Jersey men create the ultimate guy hangout space, Morra said.
A “man cave,” Morra explained, is a male getaway, where men can escape their wives’ Pottery Barn decor or just kick back with a cigar.
“Together with our expert construction crew and our hosts we build out this amazing guy space that’s an aspiration for every guy in the country,” Morra said. “When men watch this show, it’s something they can only dream about.”
According to Morra, New Jersey is the ultimate place to find manly men in need of man caves.
ALL DISCLAIMERS APPLY;
“With U.S. homebuilder confidence slipping to a 16-year low in June and subprime contagion fears omnipresent, no one seemed to notice when Toll Brothers reported a 93.5% increase in its ‘Provision for inventory write-downs/write-offs’ for the six-months ending April 2007. However, as the losses and/or inventory write-downs at Toll and other builders mount in the coming quarters, the carnage could prove difficult to ignore. After all, following more than a decade of truly spectacular gains, the good times for U.S. homebuilders are over.”
WHERE ARE ALL THE HOMEBUILDER BARGAINS?
by Brady Willett and Todd Alway
FallStreet.com
July 12,, 2007
With U.S. homebuilder confidence slipping to a 16-year low in June and subprime contagion fears omnipresent, no one seemed to notice when Toll Brothers reported a 93.5% increase in its ‘Provision for inventory write-downs/write-offs’ for the six-months ending April 2007. However, as the losses and/or inventory write-downs at Toll and other builders mount in the coming quarters, the carnage could prove difficult to ignore. After all, following more than a decade of truly spectacular gains, the good times for U.S. homebuilders are over.
As one of the most hated and heavily shorted industries today, there will undoubtedly be terrific bounces in homebuilding stocks going forward. Moreover, if builder’s can somehow smoothly manage a wind-down in operations and/or the ‘great’ U.S. housing bust proves less than great, there is the possibility, however remote, that front running such bounces could be a worthwhile pursuit.
But alas, to analyze the homebuilder group based upon speculations of a forthcoming ‘bottom’ in the housing market could prove exceptionally dangerous. Quite frankly, with business fundamentals unlikely to improve until at least spring 2008, dancing in homebuilder stocks is probably best left to speculators and/or thrill seekers. This conclusion noted, researching and watching the group requires no upfront fees, and could help pave the way for an opportunistic closing tomorrow.
“From a basic book value perspective U.S. homebuilders are already in the kill zone, with 6 out of the top 12 companies currently trading below tangible book value. However, given that this is an industry that has grown without taking any breaths for more than a decade, the trailing book value figures could prove very misleading. Remember that we are less than two reported quarters into the bust, an exceptionally difficult phase to comprehend.”
“The U.S. housing market spent the last U.S. recession kicking off an unprecedented boom and in 2005/2006 a massive wave of speculators entered the real estate market. Realizing that unsustainable booms inevitably turn to busts, and that many speculators and ill-fated borrowers have yet to face the music, conjuring up images of a bottom in 2007 is impossible to do.”
[Edit] Bust. Their words, not mine.
http://www.financialsense.com/editorials/willett/2007/0712.html
From CNN/Money:
Manhattan parking spot going for $225,000
Parking spaces in New York cost as much as $225,000 and could soon be going higher still, putting the cost for the prime spots above the price tag of the typical U.S. home price.
Manhattan real estate agent Tom Postilio said there is a waiting list of seven or eight people hoping to pay $225,000 for one of five private parking spaces that has been approved in the basement of 246 West 17th Street, a 34-unit condo development scheduled for completion next January.
sharp james indicted..
very nice, after he looted for many yerars.
wonder if their will be a perp walk,or if
jesse and the rev. will show up.
#155 Sounds like the last insanity before the correction comes to Manhattan too.
Rutherford has an excellent center of town with great restaurants. Drive around Rutherford, take a look at the houses. By no means would I consider it a “poor” town. The way it worked in Rutherford back in the day is as follows: The upper class who (most) owned factories in East Rutherford lived in their huge Victorians in Rutherford. Most of the workers lived in East Rutherford where the houses are from the same era, only smaller and on smaller lots.
From the Economist about US RE market. The whole article is about Asian RE market, but following comments about US were made.
Across the globe, studies show that in the long term the main driver of house prices is income. The ratio of average house prices to average incomes is currently flashing red in America, Britain, Spain and quite a few other developed countries where it has soared to record highs—ie, above levels that preceded previous crashes.
In contrast, in America, house prices have risen three times as fast as real incomes.
http://www.economist.com/finance/displaystory.cfm?story_id=9440844
pesche, [156]
Great news. Do they repossess the yacht?
“James is currently pursuing a lawsuit in Superior Court in Newark, claiming that his $360,000 yacht had a faulty engine that caught fire last May. In a letter to an insurance company named in the lawsuit, James lamented he “lost an entire yachting season.”
“How does he afford a yacht, a Rolls Royce and expansive real estate investments on a public salary?”
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXkyNjMmZmdiZWw3Zjd2cWVlRUV5eTY5MjU1NTUmeXJpcnk3ZjcxN2Y3dnFlZUVFeXk5
x (109)-
I’ve been engaging in some pretty out there guessing games the past two days on this board. I really have no special insight into anything; just intuition, based on past experience and today’s facts.
August ’08 is just too far out to even speculate. If that’s your time frame, go for it.
3161 Clot: August 08 is my deadline if you will too.
Clot (161)
August ‘08 is just too far out to even speculate.
You’re right. Many things can happen over a year that we can’t even imagine today. I’ll just keep socking it away and shaking my head at realtor.com until it all makes sense.
Another pounding
Jul 12th 2007
From The Economist print edition
Problems in America’s housing market begin to undermine confidence in the global credit bubble.
The RMBSs are in turn divided up and placed in instruments called collateralised debt obligations or CDOs. These were sold to a wide range of investors, depending on their tolerance for risk. One set of securities, known as an equity tranche, pays the highest returns but is the first to suffer if the underlying bonds default; other securities offer a much lower yield but a triple-A credit rating, because a lot of defaults would be needed to trigger losses.
The result of this process has, in theory, helped the market. Bank failures have been at the heart of most financial crises. But instead of the banks taking the first hit from mortgage defaults, the pain will be spread round the financial system.
However, nobody knows where the risk now lies. Many of these securities are illiquid, so regular prices are not available. Indeed, highly rated CDO tranches may still be owned by banks that do not have to put a value on these securities. They may not recognise the problem until they are forced to by auditors or by ratings downgrades. On July 11th Moody’s said it may cut its ratings on tranches of 91 CDOs worth about $5 billion. “My initial analysis suggests we could see massive cumulative losses into the double-A tranches of many RMBS-backed CDOs,” says Mr Rosner. (Double-A tranches, as their name suggests, are just below triple-A.)
(Whole article is better read).
http://www.economist.com/finance/displaystory.cfm?story_id=9482868
Clot,
By the way I just noticed your boy Johnny Winter and his brother Edgar are playing in September. I think it was Starland Ballroom
Newark,
they will burn the town down if they try
to put this thief away. I wonder if he
took the desk with him.
Clotpoll Says:
July 12th, 2007 at 11:45 am
Rob (11)- A massive “flight to quality” in US Treasuries forces an “insurance” rate cut to keep the short end of the curve from going totally out of whack relative to longer maturities. Not my thoughts…the above came from Bill Gross.
clot: no
#149
I’m not worried about the schools too much, I just know the area (grew up here) and I know which schools are definate no-gos.
I’m glad to see all the talk about Rutherford. I was raised in Rutherford and attended the public schools from K-12. I have never wanted to live there because it is such a small town and I know everyone. However, now that I can afford one of the top towns in BC or Essex I still find myself looking back in Rutherford. The main reasons (as mentioned by others) are the commute to NYC (for both my wife and I), lower taxes, the sports recreation program for kids, and the small town / dry town feel. My parents could have afforded a “top town” also, but they both grew up in the city with nothing so they thought Rutherford was heaven when they bought in 1975. Oh, and they’re still there. I don’t know where I’ll end up, but my wife has been pushing for Rutherford from day 1. If you are looking for a solid town, solid schools and great people than I strongly suggest taking a look at Rutherford.
My 2 cents.
ChiFi (167)-
If everyone starts piling into Treasuries, what’s going to keep rates propped up on the short end?
Richard #136,
Yes, I’ve seen that too. Also seen that play out after kids finish high school…in the “good’ high school areas.
Doyle [169],
Also, one of the best high school f-ball coaches in the state, Mike Sheridan, St. Mary’s. That’s from a competitor.
BC, I know him quite well… I went to RHS, but grew up playing f-ball with his nephews. Do you know the f-ball history of the Sheridan’s?
Talk about some f-ball lineage.
Lurker #139,
LOL.
I heard the school system there is great only if you kid is top 10% performer. Special needs and average kids need not apply.
#174 – that’s more than possible, but I can’t understand what justifies how insane their property taxes are. It makes the rest of the state seem almost reasonable.
Doyle [173],
Yes. The Fighting Irish and The Screaming Eagles of BC.
By the way, we [high school] had a great f-ball and b-ball rivalry with the Gaels.
Well since we are all PhDs, good looking and rich on this thread I am sure all are kids are in the top 10% anyhow.
par4156 Says:
July 12th, 2007 at 2:25 pm
Lurker #139,
LOL.
I heard the school system there is great only if you kid is top 10% performer. Special needs and average kids need not apply.
CNNMoney.com
Manhattan parking spot going for $225,000
Thursday July 12, 11:38 am ET
http://biz.yahoo.com/cnnm/070712/071207_parkingspots.html?.v=4
Can I park my trailer there???
Yes, Grandfather at ND and sons at ND (captain), BC, Minnesota…
“had”?
I meant Father at ND. Grandfather to my buddies…
RE: “Real estate hitting bottom in 2008”
History says the bottom is in 2011, 3 years later:
http://graphics.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
Okay, I’m sorry, but I haven’t heard any discussion of this yet or defense of NJ’s finest young person…
http://www.tmz.com/2007/07/12/miss-new-jersey-exposes-blackmail-pics/
From Reuters:
Republican lawmaker introduces subprime legislation
The top Republican on the U.S. House Financial Services Committee on Thursday introduced legislation that would create a national registry and set new standards for mortgage originators in response to the subprime mortgage crisis.
Spencer Bachus, of Alabama, said in a statement that his bill, called the Fair Mortgage Practices Act, would curb unscrupulous lending and increase consumer protections.
The bill would set licensing standards and a national database for mortgage brokers and others who sell home loans.
Loan originators would have to submit to a criminal background check and FBI fingerprinting and loan originators convicted of fraud would not qualify under the new licensing standards, according to the legislation.
The bill also would require mortgage lenders to weigh a borrower’s ability to repay the loan and would restrict penalties against homeowners who refinance out of a high-cost loan. Those two provisions are already integrated into new subprime principles set by bank regulators last month.
From CNN/Money:
Wall Street: target of housing lawsuits
Lawsuits blossomed after Enron Corp.’s collapse, many targeting the energy giant’s bankers. Wall Street firms could again become the bull’s-eye for investors seeking recourse from the subprime mortgage debacle.
…
Investors ‘are going to be looking for deep pockets where they can maximize their recoveries,’ said Rick Antonoff, a New York-based lawyer with Pillsbury Winthrop Shaw Pittman, which has a group of lawyers assigned to subprime mortgage litigation.
Homeowners are suing lenders. Shareholders are suing collapsed mortgage companies. Investors in complex mortgage securities are starting to sue big Wall Street banks. Those investment banks are turning around and suing the mortgage companies.
Court filings show numerous recent cases related to the troubled mortgage market. The NAACP sued a dozen mortgage lenders Wednesday in U.S. District Court in Los Angeles, claiming the companies discriminated against blacks by steering them into higher-interest subprime loans while giving more favorable rates to white borrowers.
159 SG. I’m not sure how accurate a representation this article is. There seems to be a lot of liquidity slooshing around in Asia reportedly from hedge funds and Middle Eastern oil money. Many are buying up multiple units in apartment blocks. It’s suspiciously sounding like the pre 1997 stock market crash, albeit with hot money chasing a different and less liquid asset class.
#181 The bottom is 08, but it hits bottom in 2011?
Lurker #175,
Those taxes have exerted some downward pressure on prices in the last 6-9 months. In some instances 30% under 2005 peak!!! I watched a “450K” asking price house in the south end of town fall over 100K in 6 months. Initially caused shock and horror…
#191 – that’s not at all surprising!
http://www.nj.gov/oag/newsreleases07/pr20070712a.html
TBW from your post #158 I am getting the impression you are from the area that I call home- southern bergen/western hudson.
Doyle 169,
While I longed to get away from where I grew up I ultimately ended up back here. There is something to be said when your kids go to school with kids of kids you went to school with. Also when you register for school, sports, anything boe or town related and everyone who works there knows you, it can be so much easier. Of course not knowing a soul can be nice sometimes too!
KL
John #181,
sorry. I forgot.
Are there any decent family towns with “bad” school systems? I have yet to hear of anyone w/school-aged kids tell me their town has crappy schools. Are the teachers really all that different from Hanover vs Bedminster vs Franklin Lakes? Can’t you still get bad teachers in top schools? Is there a state cirrculum that is followed for the majority of the kids that aren’t gifted or in special ed?
I can’t imagine unless you live in an area like Newark or Patterson the experience is going to be all that different for most kids who fall in the middle of the herd.
I am being sincere with my questions. I went to private schools until college so don’t understand all the hoopla over finding the best public schools.
I have a very delayed reaction sort of question…
if one had a mortgage through one of these sub-prime lenders that closed their doors, what happened to their mortgage? did they get bought out by another lender? or are they somehow screwed.
just reading something that made me realize i never knew the answer to that … thanks!
ac: Agree with you. I am originally from Bombay where prices zoomed 100% in 1 year. Majority of new units are not selling though. Most business folks I met there say, they don’t understand how Builders can stay holding onto vacant properties. The answer was large Hedgefund investing in Builders. The builders paid them 8% to 10% returns, which is very very low compared to rates charge by Indian banks. I think lot of hot money has been invested in last few years in RE market in India. This is not at all supported by Income growth. Whenever it will crash, it will be ugly.
Rhyming #194,
I do go back and forth with this quite a bit. I can see the benefit of both scenarios. My wife is not from NJ so it does not matter to her, but I am just not ready to make that decision yet I guess.
All in due time ;)
Curious about people’s opinion of West Orange. As a Bergen guy for all my life, I know nothing about Essex county, but WO is exactly half way between my job and the wife’s and we are starting a family and will be buying somwhere in the vicinity next summer.
#196,
“good” schools distrcts are better at keeping problems quiet and thus keep property values higher. IMHO.
#200 – i have a bunch of friends that moved to WO in the past few years. mainly they moved there b/c they were priced out of bergen county and they liked WO. i dont quite understand that b/c taxes in WO are ver high and housing prices arent that much lower.
having said that, all of the people that i know who moved there fell into exactly two categories: 1. those that planned to send their kids to private school and 2. those that planned to move elsewhere before their kids were school aged.
#201 True.
SG [198],
The whole world is on steroids. It’s one mammoth, linked trade.
#198 SG: How the hell can people afford to buy a flat in Bombay? The price escalation is absolutely ridiculous, and the affordability issue is even worse than Manhattan.
I don’t really buy into the argument that not-so-good schools have a larger portion of bad teachers. I think the quality of kids within the school (over the years) help shape the quality of the schools. And it so happens that nicer areas tend to have parents that care more and invest (financially and otherwise) more into their kids education. Naturally, the better teachers will flock to the quality schools.
Sky is the limit
#200,
West Orange in my opinion is the most equitably diverse town in Essex county. By that I mean the biggest issue as far as being different is do you live “up the hill’ or “down the hill” (closer to downtown). You can find a wall street banker, teacher, doctor, cop, waitress, lawyer and bus driver living on the same street. Primary schools are good (some excellent), middle school average but improving, high school is about 90 in the state out of 350 or so. Good private schools too. A few ‘incidents” recently on one of the main drags but WO is generally safe. Lots of recreation oppertunities. Taxes slightly better than Montclair but keep an eye out! take a look at WESTORANGEWATERCOOLER http://groups.yahoo.com/group/WestOrangeWatercooler/
to get an idea about what’s going on in town.
#204 BC
yeah, WTF is up with the stock market? Consumers are charging more on their credit cards at retail, and this is a good thing?
RE: WO,
slightly better schools in some surrounding towns (at least west and north)…but something about WO…it seems like it’s a social experiment in tolerance.
3B#46 RE: Pascack Valley: Low-income middle managers? That’s a hoot. “Upper-blue-collar”, maybe. The Pascack Valley is very livable, largely due to lower taxes than comparable towns. Of course, this will all change when the FAA reroutes flights so we have 600 jets a day flying 4000 feet over our heads.
ToughSpot #97: What do you regard as a house to raise 2 kids in? A McMansion where each kid has his own bathroom and no one has to even see each other? I live in a dormered Cape Cod w/4 bedrooms and 2 full baths. The previous owners raised two kids in my house. My next door neighbors have a tiny 3BR ranch. They raised their 2 kids in that. What constitutes a house to raise kids in?
I may be in the market for a condo.
“To meet the storage needs for this year’s mammoth corn crop, Corn Belt cooperatives are turning to an alternative grain storage option.”
“Condominium grain storage, developed in the early- to mid-1980s, has seen a resurgence in popularity in recent months. A condo system offers an alternative to on-farm storage: A cooperative builds specific storage facilities, usually anywhere from 500,000 to 700,000 bushels each, with each site’s capacity parceled out into increments that are sold to individual farmers as shares.”
http://www.agriculture.com/ag/story.jhtml?storyid=/templatedata/ag/story/data/1184010808683.xml&catref=ag1001
Clotpoll Says:
July 12th, 2007 at 2:10 pm
ChiFi (167)- If everyone starts piling into Treasuries, what’s going to keep rates propped up on the short end?
clot: ? speak’em da’ Inglese
#206 Not always true, more than a few parents in the nicer areas feel that becasue they paid so much for their house and or pay so much in property taxes, than thats all they have to do.
The rest, and I mean th rest is up to the schools. This attitude is more prevelant than you think.
par4156 Says:
July 12th, 2007 at 3:54 pm
RE: WO,
slightly better schools in some surrounding towns (at least west and north)…but something about WO…it seems like it’s a social experiment in tolerance.
WO: parts of it are nice, but stay away from any property that has easy on/easy off I-280.
The strip mall on Prospect and Eagle Rock is the most bizarro around. Whole Foods and KMart….Blue Bloods and Bloods all mixing it up…..lots o’ fender-benders between BMW’s and Pontiacs.
#206,
I agree to an extent, however, lots of “average” districts have really good teachers. The thing is a district with 5% less wealthy, ESL parents can have tons of “top performing” students and the 5% of kids “pull down” the scores according to State tests. These distrcts sometimes have more students taking and passing AP classes, but those high school equivalancy test scores muck it up. Sometimes these districts produce the most innovative and cutting edge programs…a good example of this kind of thing is Maplewood…WO too.
“According to Morra, New Jersey is the ultimate place to find manly men in need of man caves.”
I thought that was called “the basement.” :)
Today’s DJIA – jesus cristo!
206 – I don’t think it’s necessarily safe to assume that better teachers flock to better schools. I’m only basing this on the teachers that i know, but a lot of good teachers would rather teach in not so great school where they feel they can make more of a difference (whether or not they actually do). not to mention, a lot of teachers don’t want to deal with parents calling them up everyday asking why their kid only got an A-, since they deserve an A+.
#215. True. another example of 3 or 4 distinct neighbourhoods in one town.
From NJ.com:
Legacy ‘forever scarred,’ Christie says
Sharpe James, the legendary Newark mayor who spent a quarter-century as a dominant force in New Jersey politics, was charged this afternoon with defrauding taxpayers by secretly collecting hundreds of thousands of dollars in municipal land sales and billing the city for vacations with female friends.
Ending a nearly three-year FBI investigation, a federal grand jury in Newark indicted James on 33 counts that include conspiracy and mail and wire fraud.
The 86-page indictment said James, 71, arranged for the city to sell municipal real estate at a steep discount to a Newark businesswoman, Tamika Riley, then secretly shared in the profits when Riley sold the parcels to developers.
Prosecutors also accused James of using city-issued credit cards to pay for lavish trips he took with eight women, including Riley, to places including Martha’s Vineyard, Rio de Janeiro, the Dominican Republic and Puerto Rico. The credit card charges – hundreds between 2001 and 2006 totaling more than $58,000 – covered hotel rooms and luxury suites, meals and fine dining, airfare, car rentals, tickets to sporting events and other expenses, prosecutors said.
In handcuffs and leg irons, James arrived just after 3 p.m. at a hearing before a packed, overflowing courtroom. The 15-minute appearance before a federal magistrate took place in a courthouse two blocks from the City Hall office he occupied for 20 years.
“it seems like it’s a social experiment in tolerance.”
Simply the best description that I have ever heard regarding WO.
JB [221],
….. and on the 40th anniv of the Newark riots.
Do you think this was timed?
jb
285 points up for the Dow. Join the party and stop worrying about housing. The U.S is a 10 trillion $ economy(I think) and the world ecoonomy is much much higher. I don’t know the exact number. But my point is the subprime crisis is a small percent of the world economy. We have billions of people emerging from poverty and spending on goods and investing. This is the time to be in the stock market rather than wait for a collapse which will happen, but God only knows when. Maybe in 2015 but you might miss countless of opportunities to make money along the way.
BOOOOOYAAAAAAAAA
http://sports.espn.go.com/mlb/news/story?id=2934227
I wonder where Sharpe James REALLY lives. I can’t believe he parked a Rolls Royce in Newark!
chifi, #218
Do you think the upticks in CSCO and INTC are sustainable?
I was early and got lots of share splits. Is this where holding on all through the downturn might actually pay off?
All disclaimers.
NIIIIICE!
In handcuffs and leg irons, James arrived just after 3 p.m. at a hearing before a packed, overflowing courtroom.
#228,
LOL…then you’d be shoked that Newark probably has more Mercedes and BMW’s than….USR or Millburn. There are some people that value a nice car more than where they sleep.
scribe Says:
July 12th, 2007 at 4:23 pm
chifi, #218 Do you think the upticks in CSCO and INTC are sustainable? I was early and got lots of share splits. Is this where holding on all through the downturn might actually pay off?
All disclaimers.
scribe: I don’t want you to perceive me as blowing you off, but I can’t answer that question in this forum. I apologize.
chifi,
No prob. Understood.
Good Teachers make a Good School District is a myth. In the book Freakonmoics they reference the desegregation of the Chicago School Districts. The Chicago “bad” inner city school versus the “good” nearby suburban school switched students so the kids in the bad school could get access to the good school teachers. Guess what!!! The good students who went to the bad school stayed good and the bad students in the good school stayed bad. Stupid Students who live with Crack Head Moms don’t get much better with a better teacher, it has to happen at home!!
BuyNextYear Says:
July 12th, 2007 at 3:49 pm
Re: I don’t really buy into the argument that not-so-good schools have a larger portion of bad teachers.
“This is the time to be in the stock market rather than wait for a collapse which will happen, but God only knows when.”
Truth be told, I feel kinda silly today. I’m in my mid-20s, hold a good job, work hard, saved a bunch of money in my brokerage account, 50% total bond market index and 50% stock indexes, since I’m trying to save for a down payment and dont want to take more risk than I should, and days like today make me wish I were more aggressive.
Still, market timing is kinda crazy. Saying its time to throw your money at stocks now is akin to Time Magazine proclaiming in late 2005 “Is housing the greatest investment ever?” I’m not saying the market’s going to crash anytime soon. Just that many people who try to time the market fail.
#227…sorry.
285 points up for the Dow. Join the party and stop worrying about housing.
Party like it’s 1999!
oops…
jb
#211 Jill I said low to middle manger types in many of the Pascak Valley towns, and I stand by that statement.
As far as low taxes with the exception of Montvale, the Pascak Valley is not better tax wise than many other BC towns.
#233 John, absolutley correct.
It seems that NJ big city mayors are all corrupt. Just the other month, the mayor of Jersey City was found guilty of punching someone. He got off with a fine.
thanks to everyone for the WO opinions. I’ll have to take a closer look…
#236 JB One steel company buys another and sales at Wal-Mart are up, throw in an increas in exports, and its time to rock !!! Nothing else matters;housing is yesterdays news.
west orange? stay away, the ghetto is creeping in from the east and make no mistake it’ll continue. same as south orange though they seem to be holding their own a bit better with the influx of ethnically diverse white collar professionals. i mean the train ride just can’t be beat.
>>They’ll move to Summit or Short Hills or Millburn eventually – they don’t really see Maplewood as a long term option.
that mindset is becoming more prevalent for maplewood and south orange.
Troll [239],
That one was a classic. Down at Barry’s Tavern, Bradley Beach. Owned by his siter and all the cops and officials in town hang there. It’s a combo Jersey City/Bradley Beach bar. Google it and read some of the articles. Pure theatre.
real estate seems so last year while looking at the stock market. does anyone else feel we might be looking at a psychological mindset switch back?
OT: I just finished seeing SiCKO….
good grief.
sl
That’s sister.
Maplewood is not a good place to live. It borders Newark. I can’t see how people choose to live in Essex over Bergen, except if they go to Essex to get more for their dollar. I would never move to Essex. YUCK!
#245 Richard Yes I do, it feels better too.
The way housing is going down and stocks are going it won’t be long before my 401k will be worth more than my house. If that happens to enough of us our house will no longer be our largest investment and will be less important to how “rich” we feel which is what drives spending.
I would hate to live in Newark, it borders that crap hole Maplewood.
>>Maplewood is not a good place to live. It borders Newark.
the ‘old timers’ fled maplewood long ago to parts north and west. what’s moving in now are the younger families from brooklyn and other urban parts who see maplewood as the perfect diverse community with some urban traits with a great commute to nyc. gay population is on the rise as well.
I’ve never been to Maplewood, but listening to all of you I’m completely baffled. Apparently it borders Newark, schools are shady and the taxes are high. So why do so many people from NYC want to move there? I know a number of families who live there and a few looking.
Is is just the commute? Or the “trendy” factor as someone said earlier?
#250 Then we are back to the late 90’s again, and here we go again?
“who see maplewood as the perfect diverse community with some urban traits with a great commute to nyc. gay population is on the rise as well.”
There we go with the diversity again. Ever notice that most of the people who are so pro diversity live in mostly white neighborhoods?
What housing. Housing is old news. Enjoy the stock market. With so much liquidity floating, it would be stupid not to invest some of your money. From 1990 to 1999, the stock market was on a bull run and every day there were people who believed a crash was imminent. In the meantime, people became millionaires and those who cashed out, made out like a bandit. This bull run will 2 times biggen than that and so will be the crash. But fortune favors the brave who attempts to venture out to make some money, rather hide underneath the couch.
Make money!
And yes, you are right about urban traits in Maplewood Richard… like high speed police chases in Newark spilling over into Maplewood. Who needs Los Angeles? We have Maplewood!
I guess the rising tide is not lifting all boats, only yachts.
“Mortgage foreclosures in the U.S. jumped to a record in the first half as rising interest rates and falling home prices battered homeowners.”
“Foreclosure rates in “most states remained substantially above last year’s levels,” RealtyTrac Chief Executive Officer James Saccacio said in a statement.”
“We’re running much further ahead of what we had anticipated in terms of year-over-year,” Sharga said. “Historically, 40 percent of properties entering default make it as far as auction, with half of those going back to banks and the other half to investors.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=adIQXu4IeMsA&refer=home
Why Maplewood?
Note the elapsed time between points:
http://tinyurl.com/yqujzs
#242,
but dosen’t living ‘up the hill” make it safer???
ChiFi (213)-
Sorry. If longer-term Treasury rates begin to fall as a result of a flight to safety, it’s not going to be good to see a FFR still parked at 5.25%. What will give?
From Fitch:
Fitch SMARTView: 170 U.S. Subprime RMBS Transactions Placed Under Analysis
Following its monthly surveillance review, Fitch Ratings identified 170 U.S. subprime transactions among its $428 billion rated universe of subprime transactions as ‘Under Analysis’, indicating that Fitch will be issuing a rating action over the next several weeks. The total amount of bonds rated in the BBB category and below, which are the ones most likely to face rating actions, is $7.1 billion, representing 1.7% of Fitch’s rated subprime portfolio. A total of 1,106 subprime transactions were designated with a SMARTView date of July 12, 2007 indicating that no immediate action is necessary based on Fitch’s analysis of the June remittance report data.
From Fitch:
Fitch Places 19 Structured CDOs on Watch Negative Due to Subprime Exposure; CDO Methodology Revised
Fitch Ratings has placed 33 classes from 19 structured finance (SF) CDOs on Rating Watch Negative (RWN) for potential downgrades. Fitch also maintains RWN on eight classes of four SF CDOs which were placed on RWN June 22, 2007. These actions are a direct result of collateral deterioration, specifically subprime RMBS, whereby significant portions of the portfolio have been downgraded, placed on RWN or ‘Under Analysis’ by either Fitch, Moody’s or S&P in recent weeks. Fitch
people…people,
look there are parts of maplewood that border irvington and Newark. A bit tough. But there’s also Maplewood Village and other parts that ARE nice.
Also, Essex copunty has some of the nicest towns in NNJ. It’s not all Newark, Irvington etc you know.
http://en.wikipedia.org/wiki/Image:Essex_County%2C_New_Jersey_Municipalities.png
#251. Funny.
Maplewood’s border with Millburn Township (Short Hills comprises most of Millburn Township) is longer than Maplewood’s combined border with Newark and Irvington.
#255 –
“There we go with the diversity again. Ever notice that most of the people who are so pro diversity live in mostly white neighborhoods?”
That’s because minorities in those neighbourhoods don’t meet the sterotype.
Really about 1/3 of Essex county (square miles not population) is rough an tough. the rest is middle class, middle class wannabes and wealthy.
From NJ.com (the press release is linked above):
14,000 Ameriquest consumers eligible for payback
Attorney General Anne Milgram announced today that approximately 14,000 Ameriquest Mortgage Co. consumers in New Jersey are eligible to receive a total of $11.7 million in restitution from Ameriquest and its related companies as part of a national settlement that resolves allegations of predatory lending.
Milgram said her office and the state Department of Banking and Insurance began sending letters and claim forms to eligible New Jersey consumers earlier this week. To participate in the settlement and receive restitution, eligible consumers must mail completed and signed forms to the Settlement Administrator by September 10, 2007.
Eligible New Jersey consumers who borrowed from Ameriquest and were impacted by questionable business practices – practices that have been eliminated or modified as a result of this agreement – are now closer to receiving restitution if they are participating in the settlement,” said Milgram.
“We take the threat of predatory lending very seriously, and we are pleased that through this cooperative effort we were able to recover funds for consumers who were victimized in this instance,” said Department of Banking and Insurance Commissioner Steven M. Goldman. “We remain vigilant in our efforts to prevent this conduct, and we urge any consumer who believes they may have been subjected to predatory practices to contact us with their concerns.”
As long as we are on the bordertown topic. Any thoughts on Plainfield/North Plainfield?
ridiculously wealthy. just drive through Millburn, Essex Fells or Glen Ridge when you have nothing better to do on a Saturday afternoon.
North Plainfield is sketchy. Appears to be much nicer than Plainfield but has the Pocono/Allentown PA curse…GANGS! Gangs with better taste in housing.
The Sleepy Hollow and Netherwood sections of both have some absolutely beautiful old homes.
jb
Chicagofinance #259,
Thank you for the commute post. It is even more relevant to home values and quality of life than people think.
Is there a shorter commute to Manhattan than this?
Itineraries from PABT to S MARGINAL HWY & BLVD EAST
ITINERARY – 1
Depart: PORT AUTHORITY BUS TERM [41ST & 8TH ENT](On 166 Cresskill)
05:30 PM
Arrive: BOULEVARD EAST & MARGINAL RD.
05:37 PM
“Is there a shorter commute to Manhattan than this?”
Old topic; Rutherford
Re: N Plainfield. Also take a look at the fllod zone maps in both those towns. JB is right though, N plainfield does have really beautiful homes. I thought about buying an investment proerty there…the houses are really nice especially considering the price.
flood
JB [269],
$900 each? Am I missing something?
“Truth be told, I feel kinda silly today. I’m in my mid-20s, hold a good job, work hard, saved a bunch of money in my brokerage account, 50% total bond market index and 50% stock indexes, since I’m trying to save for a down payment and dont want to take more risk than I should, and days like today make me wish I were more aggressive.”
Pooch, what if the opposite happened today? How would you feel if the market closed 3% down?
What timeframe are you looking at to eventually buy a house? If you already planned on having an X dollar amount you need to save a few years from now, you could be more aggressive and have a slightly higher stock allocation so that you don’t feel like you’re leaving money on the table. But in a month/quarter where stocks might take a dip, be prepared to save a little bit more to compensate for the dip in your down payment amount you aimed to have by the end of the quarter.
Also, how much would it matter to you if you needed to delay buying a house by a few months because the stocks took a dip, and you needed to play catch up?
I also think it would be unwise to confuse the downturn in residential RE with the stock market. US Large cap growth is no longer slumbering.
Clotpoll Says:
July 12th, 2007 at 5:08 pm
ChiFi (213) – Sorry. If longer-term Treasury rates begin to fall as a result of a flight to safety, it’s not going to be good to see a FFR still parked at 5.25%. What will give?
clot: The Fed is in the midst of trying to jawbone lending standards. Why would they take steps to promote greater liquidity? Lenders make money by borrowing short and lending long. In more synthetic circles, they create theoretical margin in which one of the inputs is interest rates. Keeping the curve inverted helps to keep the theoretical “big stick” in their hand. Believe me, I’d love the Fed to loosen, because the Dow would hit 15,000 in a flash, or course chaos would also result after the sugar-high.
of course
clot: to answer your question directly…..who cares what it looks like? Don’t confuse concurrence with causation.
What am I not getting?
Bloomberg tv and radio speak all day about CDO’s, RMBS, sub-prime mess, faulty hedge funds and yet, the DOW up 285 pts?
Doom & gloom about housing everywhere does not seem to be affecting WS. Is there a disconnect? I just don’t get it.
>>There we go with the diversity again. Ever notice that most of the people who are so pro diversity live in mostly white neighborhoods?
no though it sounds like a pop shot at liberals.
Having shopped for a house in NJ for 2 years, it is really hard to NOT live in a mostly white neighborhood. The idea of diversity might just be an yawner for Robert, but to some people it is a real issue. It sounds like he thinks if you aren’t moving into Newark or Camden you aren’t REALLY looking for diversity.
Will the real estate spin doctors come out with the stock market is surging, economy is good, peoples 401k’s are up (so they feel good), rates are still low. Now is a perfect time to buy?
Regarding Oradell and the Regional District situation:
I believe the story linked to in post 28 gave some erroneous information and it is very important.
The story said:
A majority of voters in the regional district would have to approve the plan.
Oradell would likely have to rely on high turnout to counter the edge in voter registration in the larger River Edge.
Unless something changed in the last five years, that is incorrect. It takes a majority of voters in each town in the district so turnout in Oradell doesn’t matter unless they somehow manage to vote in River Edge.
My apologies if this was mentioned earlier.
For all the hype about Rutherford, i would like to point out it was 88th in the NJ Monthly rankings of pubic schools in NJ.
http://www.njmonthly.com/topschools/hslist3.lasso?-MaxRecords=50&-SkipRecords=50&-SortField=rank&-SortOrder=ascending&county=&high_school=
With that being said … my financial advisor grew up in Rutherford. He went to college with my brother. He’s smart and makes good money. He’s helped me tremendously.
3b [286],
You are named the spokesman for the NAR. The ambush may be enough for a 2nd dead cat bounce.
Perfect market timing, buy and sale.
“General Electric Plans to Seek Buyer for Subprime Mortgage Unit”
http://www.bloomberg.com/apps/news?pid=20601087&sid=a6HGTx3_EgOs&refer=home
Doyle,
Maplewood has cheaper homes compared to Summit, Chatham, Madison, Millburn, etc. Homes have nice character. But schools not the best, and more crime. Sorry but true. Heard enough folks talk about home break ins, burglaries. Even parts of Millburn that border shady spot of Maplewood. I know it well, drove through Maplewood everyday to Seton Hall, sometimes home late at night. Springfield Ave at night you don’t want to walk on.
#289 BC It would be nice to avoid a second dead cat bounce so we can get this over with already.
As BOYYAAAA says our patience must be rewarded;we have been patient long enough.
#287 And of course people in RE will vote almost unamiously to keep the status quo, but that does not end the process.
The people I know in Oradell say the town plans to fight this every step of the way,”they are tired of paying for more than their fair share.
The new addition on the grammar school in RE, enraged and energized them to resolve this once and for all.
#289 BC Ambush?
3b,
you are going to have to be patient for a MUCH longer time until you get even the slightest award.
Orion Says:
July 12th, 2007 at 6:25 pm
What am I not getting?
Bloomberg tv and radio speak all day about CDO’s, RMBS, sub-prime mess, faulty hedge funds and yet, the DOW up 285 pts?
Doom & gloom about housing everywhere does not seem to be affecting WS. Is there a disconnect? I just don’t get it.
Orion: to make a long story short…the bad news wasn’t bad enough….people expected worse
#295 People expected worse? Well they ae going to get it.
If people expected worse, why do I feel like it’s the part where everyone holds his or her breath…
My internal self-safety gauge is swinging over to clownfish from sponge, CF.
Two months early.
Re Post 98:
Tough Spot
I’m not going to try and guess a bottom or anything else, (I’m more a macro guesser than a micro guesser) but as they say on Wall Street, right now, “the trend is your friend.”
Take your time, pay attention, and don’t do anything until you start liking what you see in your price range. If you’re lucky and smart, you can even wait a little longer, get a house you like at a price even better than “the most you want to pay,” and have some extra left over for all of the “unexpected expenses.”
It’s a funny thing about houses, even though there are always “unexpected expenses,” no one has yet figured out a way to expect them. Be a pioneer, be the the first to expect the unexpected.
Don’t get fooled by WS. Bad news can be good news, good news can be bad news. The market is anticipatory. After awhile the news becomes old, [or as Chi pointed out, not as bad as expected] and a new set of parameters are in the spotlight. It doesn’t necessarily mean they are right. Obviously the big houses that bought subprime firms in the last couple of years were wrong.
Remember, the stock market is the last gig left. They will fight tooth and nail to keep it going. Overseas economies and the dollar probably will remain the main driving force for this market. That is until another mine erupts.
S&P pulled the trigger.
S&P cuts $6.39 bln in mortgage-backed securities
Rating agency Standard & Poor’s said late Thursday that it downgraded $6.39 billion of subprime residential mortgage-backed securities after warning earlier this week that cuts were coming.
…
Of those, S&P cut ratings on 498 classes, it said on Thursday. S&P had placed another 70 classes of RMBS on CreditWatch for possible downgrade before this week. On Thursday, the agency said it was downgrading 64 of those classes.
The 562 downgrades affect roughly $6.39 billion in rated securities, or 1.13% of all RMBS first-lien subprime mortgage collateral rated by S&P between the fourth quarter of 2005 and the fourth quarter of 2006.
S&P’s announcement on Tuesday, and similar downgrades unveiled by rival agency Moody’s Investors Service, were a dramatic sign that subprime mortgage woes aren’t going away any time soon and could prolong a downturn in the housing market.
More on GE from the WSJ:
GE to Sell Subprime Mortgage Unit
By KATHRYN KRANHOLD
July 12, 2007 9:17 p.m.
General Electric Co. plans to sell its subprime mortgage unit, which will effectively take the conglomerate out of the mortgage business in the U.S., according to a person familiar with the matter.
The person said GE, Fairfield, Conn., has retained Morgan Stanley to seek a buyer for the unit, known as WMC Mortgage. The person said GE planned to invest the proceeds in a higher-growth consumer-finance business. The planned sale was first reported by Bloomberg.
GE took a $500 million pretax charge in the first quarter for losses on subprime loans. GE is expected to take an additional charge for subprime losses in the second quarter when it reports results on Friday.
GE sold off roughly $3 billion in subprime loans in the second quarter and has reduced WMC’s workforce by more than half.
This snippet from the S&P press release was *very* interesting..
Additionally, the ratings on nine other classes were affirmed and removed from CreditWatch because they involve Alternative A mortgage collateral and were not intended to be included in July 10, 2007, action. These nine classes are from the following deals: GSAA Home Equity Loan Trust 2006-5, Lehman XS Trust 2006-7, and Luminent Mortgage Trust 2005-1, and will be addressed when Standard & Poor’s reviews transactions backed by Alternative A mortgage collateral.
I wonder when we can expect the statement on Alt-A..
jb
Bob, what happened to the “take your chips off the table” guy?
Come on…Latin funds at 60% 12 month? O.K., pour me another bubbly. I’ll stick it out witcha another coupla months.
Boy Plunger
Time Magazine
Monday, Dec. 09, 1940
ChiFi (282)-
I see your point; and the Fed is certainly trying to use talk (the last bullet left in their chamber) to impose some sort of lending discipline. However, if we begin to sink into a subprime-induced recession, a 5.25% FFR and a heavily-inverted yield curve don’t bode well for that recession being short. Instead, we could be looking at a late 70’s sort of “stagflation”: a pit of economic misery that the younger among us will find particularly distasteful. I remember it all too well.
grim (303)-
When we’re all selling pencils and warming ourselves around trash barrel fires.
>>Take your time, pay attention, and don’t do anything until you start liking what you see in your price range. If you’re lucky and smart, you can even wait a little longer, get a house you like at a price even better than “the most you want to pay,” and have some extra left over for all of the “unexpected expenses.”
what if your prediction never comes to pass?
“Bob, what happened to the “take your chips off the table” guy?”
Bob, what happened to the “take your chips off the table” guy?
Pat,
This could be another blog. I have been out of overseas[stock] markets. My chips are off the table there. That said, I’m not bearish on overseas economies. I am long certain stock and commodity sectors and short others. Playing stock vol short term.
All disclaimers apply.
call me cowardly
pulled out nearly all my nuts and socked ’em away for long term storage.
sl
sl..I personally would never call anybody in the nuts storage business cowardly.
Sometimes, I feel like this, though:
http://www.youtube.com/watch?v=4ikH9ZRcF2Q
All: To be clear, I have always maintained that RE was a swath, not the entire economy. When this craters, it will be deep. The reason that RE hurts so much is that the typical person has the bulk of their net worth tied up in their home. However, from the Street’s perspective, as long as the consumer empties their wallet consistently, they could give a rip if people destroy their lives in the process.
It’s called capitalism, and more brutally – natural selection
Just remember……Wall Street climbs a wall of worry…….if everyone was ecstatic about the market, then there wouldn’t be any new money to be put to work to drive the market higher…….the money would all already be in there……..
The theme is still intact…..Massive Global Liquidity
I see posts about Investors, wall street weirdos…For the life of me I cannot figure out what all the traders, investment bankers etc are going to do when the market continies to dwindle. I mean they have no other skills…They would never survive anywhere else. I mean they are the dumbest people. I support them so I know…
They think there PC is called a CPU…
They cannot figure out how to turn a computer on or off, and cant figure out why the “power button” on the monitor will not turn it off..yes its sad
There blackberry is there best friend and yet the cannot plug it in a sync it to there pc….
with any technology they need to be babied and have other show them how to do basic computer functions that everyone working in the world should know.
So whats left for these whiney snivling cry babies…Maybe they need to learn to say “would you like fries with that” or “Will that be paper or plastic” once the Wallstreet layoffs begin from the downward spiral they are heading in…No company will hire Idiots that cant even turn there pc on and off
Uh… right…
Commuters 316,
I’m an IT geek as well. Just because we don’t understand what the iBankers do doesn’t mean they don’t do anything.
Many doctors are even more stupid with computers.
Commuters (316)-
And…you might do well to invest in some remedial writing lessons.
#295 You are a ding dong who purchased in Cliffside. What in God’s name could you possibly know? Watch and learn grasshopper.
In the NY area RE is only the biggest chunk of net worth for the over 40 crowd. Half these bozo buyers from 2003-2006 have more net worth in their wallet than in their house. They only put 5% down and havbe no or negative gains in price. Even more scary there is a new trend of old timers in forecolosure. Around the corner from me a couple bought the house brand new in 1957 for 15k and fell on hard times a few years ago and yanked all the equity out and now lost the house which is now on the market by the bank for 600K. I have seen a couple of articles where they let elderly couples with SS checks as income pull out the equity and leave them with a 4K mortgage a month mortgage on top of another 1K a month in RE tax/heat/incurance. How the hell can they pay 5K a month. Pretty soon hosptial bills and expense eat up the cash out and the house is in foreclosure. My 401K in the last five years is up 100% just like everyone elses. Plus lots of companies cut costs on the raises by giving out restricted stock since 9-11 and guess what happended it backfired cause stocks are up 100% in the last five years and now people are sitting on lots of soon to be vested stock. For lots of people the house is now 3rd or even fourth on list of assets. Remember the only part of home equity that counts is the difference between current value minus mortgage and selling costs. For most bozos that ain’t worth of the price of Jets Season Tickets
RE All
: To be clear, I have always maintained that RE was a swath, not the entire economy. When this craters, it will be deep. The reason that RE hurts so much is that the typical person has the bulk of their net worth tied up in their home.