From the Wall Street Journal:
Fannie Mae to the Rescue
August 8, 2007; Page A12
With Wall Street openly lobbying for someone to ride to its rescue in the credit markets, the news is that Fannie Mae and Freddie Mac have offered to step into the breach — for a price. Their offer deserves to be treated with the same skepticism as their claims some years back about bullet-proof accounting.
The irony here is that Congress chartered Fannie and Freddie expressly to expand access to “affordable” housing. Yet the two mortgage giants have long sought their profit opportunities in the more credit-worthy segments of the market. Yes, their regulator requires them to do some business in the low end of the market, but the “low end” is defined pretty generously, and Fan and Fred have tended to do the minimum necessary to keep Congress and regulators off their backs.
In other words, the whole subprime lending industry, the securitization of those loans and their sale to investors is the product of private innovation. The same goes for so-called jumbo mortgages (which have been too big for Fan and Fred to securitize). Everyone agrees that there have been excesses in that market — for which these companies are paying a price in reduced earnings, or bankruptcy. But our point is that real expansion of available credit to less-than-ideal borrowers owes little to Congress’s favorite “affordable housing” giants.
Now, however, Fannie and Freddie are suddenly saying they can be white knights for a jittery, illiquid mortgage market. And no doubt with their government-backed borrowings, they could provide some liquidity in the short term. But their offer comes with a big catch. The Journal reports that Fannie has asked regulators to lift the cap on the size of their portfolios of mortgage-backed securities (MBSs).
Freddie, meanwhile, wants permission to buy larger mortgages than is currently allowed — so-called jumbo mortgages that, on account of their size, tend to go to the well-heeled. Because their mission is supposedly “affordable housing,” Fannie and Freddie are currently limited to buying mortgages of no more than $417,000. Their friends on Capitol Hill have been trying to raise this so-called conforming-loan limit through legislation, but Freddie Mac sees the current turmoil as a way to get access to the biggest mortgages and play savior at the same time. Beauty.
Regulators capped the companies’ MBS portfolios in the wake of accounting scandals, and the companies have wanted them lifted ever since. Amid the current widening of credit spreads, Fannie no doubt sees an opportunity to step in and grab market share that it has lost while the cap has been in place. But the types of loans Fan and Fred are likely to buy are not the ones that have been in distress recently, since those loans don’t meet their underwriting requirements.
From Bloomberg:
Toll’s Revenue Tumbles as Faltering Housing Market Cuts Demand
Toll Brothers Inc., the largest U.S. builder of luxury houses, said fiscal third-quarter revenue fell 21 percent as the faltering housing market cut demand.
Homebuilding revenue slumped to $1.21 billion in the three months ended July 31 from $1.53 billion a year earlier, the Horsham, Pennsylvania-based company said today in a statement.
Toll’s revenue has dropped for four straight quarters amid the worst housing slump in 16 years and tighter credit standards from the collapse of subprime lenders. Buyers are also delaying purchases on concern home prices will continue to fall.
“You need some confidence on the buyer’s part that when they do buy that home, it’s not going to go down in value,” Jack Lake, an analyst at Cleveland-based Victory Capital Management, said before the results were issued.
From NJ.com:
County officials call for bridge-repair funding
There is an urgent need to boost state funding for local bridge repairs, top county officials said.
Counties are responsible for thousands of bridges in New Jersey and officials claim maintaining them has become increasingly difficult amid diminished state funding help in recent years.
County officials planned to hold a news conference this morning in Trenton to discuss the status of Garden State bridge repairs.
County officials in New Jersey are the latest to focus on bridge conditions and funding needs after at least five people were killed last week when the Interstate 35 bridge collapsed into the Mississippi River in Minneapolis.
New Jersey Gov. Jon Corzine last week ordered a report on the conditions of all bridges in the state.
About 700 of 6,400 bridges in New Jersey are considered structurally deficient and 1,000 are considered obsolete. About 500 of the deficient and 700 of the obsolete bridges are owned by county governments. The state has 21 counties.
The New Jersey Association of Counties estimated it would cost more than $1 billion to repair the deficient bridges and $700 million to redo the obsolete bridges.
The state plans to spend $509 million this fiscal year on bridge repairs, with counties getting about $80 million of that money. Counties have only one other major revenue source _ property taxes, and New Jersey already has America’s highest property taxes.
From Bloomberg:
Fed Gives Weak Nod to Growth and Credit Risks: Caroline Baum
Fed to market: You made your bed, you lie in it.
That was the essence of the Federal Reserve’s message yesterday when it left its benchmark lending rate unchanged at 5.25 percent and said inflation remains the “predominant policy concern.”
Ever since the stock market started to get wobbly in late July, with losses in the Dow Jones Industrial Average exceeding 200 points some days, interest-rate futures markets got it in their head that Fed Chairman Ben Bernanke was going to bail them out.
The message yesterday was: Not so fast. Policy makers gave the weakest possible nod to the volatility in the markets and “tighter credit conditions for some households and businesses” without tipping their hand, or their risk assessment, away from inflation.
In the Fed’s view, the “downside risks to growth have increased somewhat” as the housing correction continues. Inflation in goods-and-services prices is still more troubling than deflation in asset prices (specifically housing). The decline in nationwide home prices has been mild to date, but it is certain to accelerate as the bloated supply of unsold homes comes face to face with reduced demand, with credit-tightening shutting some borrowers out of the market.
Welcome back JB
From MarketWatch:
Mortgage applications up 8.1% last week
The volume of mortgage applications increased a seasonally adjusted 8.1% on a week-to-week as interest rates on home loans fell, the Mortgage Bankers Association said Wednesday.
Also, total application volume for the week ended Aug. 3 increased 18.0% when compared with the same week in 2006, according to the MBA’s weekly survey. The year-over-year comparison isn’t seasonally adjusted.
Applications for both mortgages to purchase homes and to refinance existing loans rose last week, with purchase applications up a seasonally adjusted 7.4% and refinancings up 9.1% compared with the previous week.
The four-week moving average for all mortgage applications was up a seasonally adjusted 1.2%, the industry group said.
Refinancings accounted for 39.9% of all mortgage applications, up from 39.4% the week before. The share of applications that were for adjustable-rate mortgages nosed up to 22.5% from 22.3%.
Average interest rates on 30- and 15-year fixed-rate mortgages stood at 6.41% and 6.16%, respectively, for the latest week, down from 6.50% and 6.20% the week before. The rate on one-year ARMs averaged 5.69%, down from 5.73%.
The MBA’s survey covers about half of all U.S. retail residential mortgage originations.
Observations About the Housing Slump
Howard Silverblatt, S&P Index Analyst
Aug. 7 – The housing slump has now expanded beyond home prices and has impacted the general economy, the markets and has a growing presence in politics.
Regarding the original post “Bringing the punchbowl back” .. just goes to show you that there’s no such thing as a free market… when greed turns to fear on wall street, the investment backs all come crying to the fed, because no one is buying their dog and pony show… it just digusts me how all of these IBs talk up free markets and the benefits — and when they hit a downturn, they immediately start lobbying the fed for a bailout… a bailout from you and i and our tax dollars… does everyone see the deal? to keep the market liquid, Ben b backs off the regulators at fannie and freddie and in exchange they get to “to lift the cap on the size of their portfolios of mortgage-backed securities (MBSs)”…
Good to have you back.
Happy NY renter here … we just re-signed for another year (but it’s easy to opt out – just find another renter) and our increase in rent was a whopping … $77! Divided by two, that’s a $38.50 increase.
Had we moved to the burbs, I’d need a car, and $38 won’t even fill a tank of gas. Surely many will disagree, but in my four years living in NY, the statement ‘NY is the most expensive city in the country’ is not accurate. The keys of course are to cook dinner and bring lunch to work, take the subway when possible, and be married.
Because when you’re single, it’s easy to blow $100 a night when you go out drinking.
From the Washington Post:
Fannie, Freddie Aim to Ease Mortgage-Market Crunch
Some mortgage-industry players are hoping Fannie Mae and Freddie Mac will come to the rescue. Others see them as exploiting the situation to pressure regulators. And some say giving the companies a bigger role could have risky consequences.
Bill Fleckenstein, president of Fleckenstein Capital, a hedge fund manager who is betting against credit-industry stocks, said the market is going through a correction in which securitized mortgages that fueled the housing boom are being marked to their real value.
“There’s going to be a shutdown in the housing market. And Fannie Mae and Freddie Mac are not going to be able to bail it out, nor should they,” Fleckenstein said. “If Fannie Mae and Freddie or somebody bails out the housing market, then you tell me why we don’t start up Gambler Mae so that any lottery ticket owner, any football bettor, any guy at the track, any stock operator who loses money can get bailed out, too.”
Just curious, what’s your total rent payment and where located in NY?
Just trying to compare vs. people renting in the ‘burbs.
Press release from Experian:
Experian-Gallup Survey Shows 50 Percent of Consumers Are Uncomfortable Making a Major Purchase in the Next Three Months
According to the latest Experian-Gallup Personal Credit Index(SM) survey, 50 percent of consumers are uncomfortable making a major purchase such as a home, a car, major appliances or other significant items over the next three months.
In addition, consumer credit perceptions have been negatively impacted by the subprime mortgage market, the sharp increase in housing foreclosures and the recent surge in long-term interest rates.
…
Overall, about 52 percent of consumers surveyed feel the average price of homes in their area will increase over the next year, while 29 percent believe prices will remain about the same. Eighteen percent of consumers expect that prices in their area will decrease.
Among homeowners, 50 percent believe that average prices will increase, while 32 percent feel they will stay about the same.
grim: why don’t you re-boot the site…maybe when it comes back online this horrible guano virus will be gone….
I also want to log a complaint. I have found that the amount of articles and site moderation has drastically decreased over the last week. This morning seems a bit better, but I think we all agree that this situation is unacceptable and we deamnd better. Consider this constructive feedback. However, bear in mind that you have been warned.
Just trying to compare vs. people renting in the ‘burbs.
I attempted to put together a city/suburbs spreadsheet to allow for an apples/apples comparison of city versus suburb rental costs. Ended up being as complicated as the rent/buy spreadsheets that we worked on a here a few months back.
Many factors involved, many are not easily quantifiable. For example, what is an hour of commuting time saved worth? Much easier to put a dollar value on the savings from not operating two automobiles.
jb
The next shoe to drop?
From Bloomberg:
U.K.’s Subprime Crisis May Be Worse Than U.S.’s: Matthew Lynn
We are now all familiar with the damage that can be done to financial markets by a subprime lending crisis. Global equity markets have taken a battering recently because of concerns about U.S. home mortgages.
So which country is next?
The U.K. has had a property bubble every bit as crazy as the U.S.’s. Valuations were stretched, and lending criteria loosened. And now arrears are starting to rocket, even while the economy remains healthy.
Not only does the U.K. face its own subprime crisis, it could be far worse than in the U.S.
The latest figures on debts and mortgage arrears in the U.K. certainly make grim reading. Households “are getting into more trouble when it comes to their mortgages,” London-based consulting firm Capital Economics Ltd. said in a note to investors. “With higher interest rates yet to have their full effect, mortgage arrears are likely to rise further, while unsecured bad debt might start to rise again too.”
The signs of trouble ahead can be seen in the number of homes now being repossessed because their owners can’t keep up the payments. According to the Council of Mortgage Lenders, lenders foreclosed on 14,000 properties in the first six months of the year, 30 percent more than in the year-earlier period. That reflected “the impact of an increasing amount of subprime lending within the overall market,” the council said in a statement on the figures.
From the Record:
Shortage of spots makes it tough to use mass transit
Alise Connolly should have caught the 8:29 a.m. train to New York on a recent Tuesday. Equipped with a parking permit, she pulled into the Radburn station with 14 minutes to spare.
The parking lot closest to the station was full. So was every space on an adjacent street. Finally, she gave up and drove to a different station.
“I have been here 14 years, and every year it gets worse,” said Connolly, who works at a podiatrist’s office in Manhattan. “I get to work 45 minutes late because of the parking situation.”
The parking lot should be one of the easier stops on the crowded and occasionally stressful journey to work. But at some North Jersey train stations and bus stops, mass-transit customers are confronting a dearth of parking, despite NJ Transit’s addition of 5,625 new spaces over the past five years.
…
Dave Fantau recently switched to the Radburn station because it was closer to his home in Wayne. But the only spaces he could find at 7:10 a.m. were too far from the station.
“[Borough officials] said they would give me a non-resident permit for something like $95 for the rest of the year,” said Fantau, a national sales manager for a packaging company. “I sat there picturing myself in the snow or rain, being drenched by the time I got to the train.”
He decided to pay a nearby gas station $125 a month to use its lot instead.
“If I was going to move right now, I would be looking at where is it commuter-advantageous,” Fantau said. “I am obsessed with this and look at it all the time.”
…
Parking is a particularly closely held commodity on the Pascack Valley Line, where many towns have reserved their lots for residents. Fifteen of the line’s 25 lots are reserved for locals. At the seven stations north of River Edge, only 164 spots are reserved for people who don’t live in the towns.
River Edge holds an annual drawing for the 135 parking permits it awards for the North Hackensack station. Diane Jiggetts, an Englewood resident, said she had entered the drawing three times, and won a permit once.
“You have to mail it in and wish and pray,” she said. “And you do pray, because you want to just pull in and find parking.”
From the Record:
Weighing emissions and economic impact
New Jersey businesses studying the impact of the new state law designed to combat global warming fear it could cost them more than a little green.
Although the law contains no specific demands on business, leaders envision higher energy and transportation costs, and pressure to upgrade manufacturing, heating and other systems, once the details are rolled out.
The law requires New Jersey to cut emissions of carbon dioxide and other greenhouse gases to 1990 levels by 2020. The state must cut emissions to 80 percent of the present level by 2050.
Clifford F. Lindholm III is CEO of Passaic-based Falstrom Co., which makes precision steel parts and fittings for the defense and aerospace industries.
Emissions are not a big part of the business, he said. But the natural gas-based heating system for the company’s 120,000-square-foot plant would probably need to be brought in line with any new state mandates, he said.
The 70-employee company’s welding, painting and metal cleaning operations all use a significant amount of electricity, and so would be affected by energy price increases, he said. And increased trucking costs would push up the cost of bringing steel from Pennsylvania and shipping finished goods around the country, he said.
But most worrisome, said Lindholm, is the fact that New Jersey’s pollution control measures are now more stringent than those of neighboring states. Only Minnesota has a law as tough, though eight other states are considering similar bills — among them Maryland, Connecticut, Rhode Island and Massachusetts.
“That puts New Jersey at a competitive disadvantage compared to other states,” he said. “At the end of the day, New Jersey will have to find some way to absorb or comply with the costs of dealing with that legislation, whereas competitors, or business in other states don’t have that cost of business.”
Toll Brothers’ Revenue Declines 21%
As Contracts Fall in Shaky Market
By JOSEE ROSE and JUDY LAM
August 8, 2007 6:21 a.m.
Luxury-home builder Toll Brothers Inc.’s home-building revenue fell 21% in its fiscal third quarter, as contract signings continue to drop.
For the quarter ended June 30, the Horsham, Pa., firm said home-building revenue decreased to about $1.21 billion from $1.53 billion a year earlier, as net signed contracts declined 31% to $727.1 million from $1.05 billion during the year-earlier quarter.
Toll Brothers said the fiscal third-quarter cancellation rate was 24%, compared with 19% in the fiscal second quarter. Third-quarter cancellations were 347, the lowest in a year. Backlog for the quarter fell to about $3.67 billion, down 34% from $5.59 billion in the year-ago period. And Toll Brothers signed 1,457 gross contracts in the quarter, a 17% decrease from 1,760 gross contracts signed a year ago.
“We believe significant pent-up demand is building, based on solid demographics, a decent economy and still-strong employment,” Chairman and Chief Executive Robert I. Toll said in a written statement. “However, we caution that, with the uncertainties roiling the mortgage markets right now, the pace of home sales could slow further until the credit market settles down.”
“In the near term, tightening credit standards for borrowers should reduce the pool of potential buyers: liquidity and affordability issues may impede some customers from closing, while others may find it more difficult to sell their existing homes,” Mr. Toll said.
Toll Brothers estimates pretax writedowns related to operating communities, land and land options in the third quarter will be between $125 million and $175 million. “Given the current state of the market, we are not comfortable giving earnings guidance,” the company said in the written statement. The company is slated to release its complete results for the fiscal third quarter on Aug. 22.
As problems in the subprime mortgage sector force lenders to tighten credits, housing analysts are fretting that banks will also clamp down on lending to some builders — squeezing them of cash just when they might need it. Last week, Beazer Homes USA Inc. was beset by rumors that it might be filing for bankruptcy-law protection after banks cut the company’s credit line in half. Beazer firmly denied the rumors.
The stricter lending standards will also likely weaken the housing market further by reducing demand for homes and nudging some people who can’t refinance toward foreclosure. Higher foreclosures add to a glut of homes on the market in most of the country. Last week, the National Association of Realtors said inventories of unsold homes stood at about 4.2 million, along with more than 500,000 new homes on the market. That is enough to last about 8 1/2 months at the recent sales rate; a supply of five to six months generally is considered balanced.
#11 52% feel that the average price will increase this year. Too bad the pollster did not asky why, they feel that way.
Does feeling that make it true, does it make one feel better?
Lastly, where the _____ else are the Chinese and everybody else gonna go? The USD is the world’s reserve currency and there’s no other currency that’s going to rise and check the USD, particularly since oil is traded in USD.
From 50.5, post #283, last night,
You are actually kidding, right? The dollar is approx 35% off its 2002 high, in an past environment of rising rates and tough talk from the fed. I guess you haven’t been paying attention to OPEC and Russia regarding pricing oil in other currencies. Also, you must be missing what’s driving the currencies. They have additional backing besides a good faith and promise. In addition to this, China has been and will continue to diversify. Why would they continue to add to our securities amid constant calls for a wider band and louder chants of protectionism. Is this any way to treat our bankers? Chuck Schumer and Hillary, be careful what you wish for.
The dollar is the biggest problem we are currently facing. However, nobody is talking about it. RE, done, toast, see you in 2011-2012. If the fed lowered they would pummel the dollar. Opec would then cut production to compensate for their value lost. Then we are paying thru the roof for gas and heating oil. Is this your agenda? The poor souls that can’t filp their flop, and you want to kick them when they are down. That does not sound very American to me.
The fed’s charter is not to protect flippers that flopped, the delusional and hedgies. Their actions should be following their words. The markets are tired of their verbal gibberish. They should raise before inflation gets uglier. Blow out all the crap and move on. Everybody will be better off in the long run.
By the way, I didn’t make up 50.5. It was my quants model.
What was the breakdown on yesterday’s comments, by the way? What percentage came from troll/guan/duck? Ludicrous. If he insists on monopolizing the conversation, then there is a solution for that.
China threatens ‘nuclear option’ of dollar sales
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml
From Reuters:
Minister says sensible for KfW to pull out of IKB
German Economy Minister Michael Glos said on Wednesday it would make sense for state bank KfW to withdraw from troubled lender IKB once the latter has been reorganised.
“Then I would personally regard it as sensible for the state to part with the stake,” Glos told reporters.
KfW owns 38 percent of IKB and pledged last week to take responsibility for an 8 billion euro ($11.04 billion) guarantee given by the lender for now uncertain U.S. investments.
IKB, Europe’s highest-profile casualty of problems in the U.S. subprime mortgage market, is setting up a crisis task force and has said it will put more of its high-risk investments onto its balance sheet.
Welcome back, JB.
If I may piggyback on Blood’s post and add to the NY vs. suburb rents.
I’m in NYC but it’s still a suburb as far as I’m concerned. I’m not sure if we’re going to renew our lease as there are issues here I’m not thrilled about. But they are one of the only dog friendly rentals here so that still makes it the front runner. One year renewal increase would be $27.37 a year or 2 year increase would be 52.45. We pay $912 and change a year for a small 1/1.
Differing from Blood’s post, in that because we live where we live and work where we work, we both need cars so that adds a cost with car payments (mine just paid off) and insurance. Now because of my new job, we will both have to pay tolls as opposed to just one of us and mine will cost twice what his toll payments are. Also, in our hayday, we went out together and easily blew $200 drinking. Now I have no tolerance so $20 is a big night for me.
I brownbag it to work and cook as often as possible. But in this weather, I will not spend 2 hours in the kitchen. I’m sure the chauvenists know where they can stick it.
Homebuilders performance chart from BW:
http://www.businessweek.com/table/07/0802_homebuilding.htm
It used to be more affordable to live/rent in NYC. In the last 10 years the number of rent stabilized apartments that have been deregulated is staggering. Since rent is usually your single largest expense it makes a huge difference to a lot of new yorkers when thousands upon thousands of rent stabilized apartments leave the rent rolls by either being made into condos or being brought up to market rent. I had a great 2 bedroom on 18th street in Manhattan and lived there for 8 years. As soon as I moved out late last year the LL deregulated the place (by making improvements). This is a huge factor in the skyrocketing rents that the city (especially Manhattan) is seeing. That apartment was at such a reasonable rent (started at $1200 incl utilities) and only went up a small percentage every two years that it allowed me to save up for a home purchase. Without that benefit I would not have a home right now (not necessarily that bad of a thing I fully admit). There are only so many bankers and corp lawyers in the city. Even now with the last three weeks of credit market turmoil my banker friends are already preparing themselves for a cut in their numbers this year. 2008 could be the year Manhattan finally comes back to reality and maybe rents will too. My old apartment was recently put back on the market after deregulation for $3850 a month. Wow.
>>We pay $912 and change a year for a small 1/1
what borough do you live in? sure doesn’t sound like manhattan unless you live in a project.
>>My old apartment was recently put back on the market after deregulation for $3850 a month. Wow.
yep that’s about what a 2 bedroom should run you in that area these days. decent sized 1 bedrooms are $2700+ not on the outer fringes of manhattan. you got lucky with rent stabilization but those situations are quickly being relegated to the history books.
Mike 26-
I think once rent gets to $2k, they can deregulate. Thankfully we are far from that. The only way this place will come close to being able to charge 2k in rent is if they built a train leading from right outside the door to Manhattan in 15 minutes.
Anyway, sounds like you had a great deal. We need a bigger space but if we can hold out and stay here a little longer, our savings will be that much more.
No Richard it’s not Manhattan and its not the pj’s either. I live in SI.
Regurgitator (from yesterday):
“…the fed should be concerned about inflated prices as far as staples are concerned, but they’re not supposed to be deflating bubbles. They’ve established a precedent with helping markets over troubled spots and they can’t change course on that. That is now a part of their duties and many are going to hold them accountable for doing their duty.”
Where, in the Federal Reserve Act of 1913, is the above stated as a duty of the Federal Reserve? Here’s a link to the Act, in its entirety. Please wake us when you’ve found that mandate:
http://usgovinfo.about.com/gi/dynamic/offsite.htm?site=http://www4.law.cornell.edu/uscode/12/ch3.html
Just started looking at the July data (GSMLS).
One word, ugly.
jb
Welcome back Grim!
Don’t be tease. Give us some info. BTW, when is lowball due out?
lostinny, you said:
I think once rent gets to $2k, they can deregulate.
Yes, that’s called “luxury decontrol.” They can also de-regulate if the tenant earns $175,000 or more in two consecutive years.
Grim,
Welcome back.
In your absence, the trolls have been calling Rich in NNJ a Communist/subversive for posting his “sold” data.
I agree with comrade chicagofinance – #12.
#34 Comrade Scribe: I hope you do not mind, but I am also now using the commrade title. I like the sound of Comrade 3B
I’ve got the data graphed, will post later this evening.
Nothing we don’t already know.
Earlier in the year, I had made a prediction that I expected the decline in sales to flatten by mid-year. Unfortunately, we’re not seeing it happen yet. In fact, the steepness of the decline in July sales was rather surprising, I didn’t at all expect it.
The silver lining is that inventory pace continues to slow. However, if the sales pace continues to drop, absorption rates will continue to move higher. Further investigation is required to determine whether the pace of new listings is slowing or if expirations and withdrawls are increasing.
jb
#31 Communist!!!
#33
They can deregulate once rents get to $2K AND you make over $175 for two consecutive years. If you don’t make that much your apartment will not deregulate until you move out even if your annual increase takes you over the $2K mark.
If you are near that $2K mark and you know your landlord will hit you with an income verification when you hit $2K in rent I suggest having your employer delay payment of a bonus or two till after the new year so as to not have two consecutive years above $175K.
Bloodbath in Winter 2007,
Other tips:
-Cut open the toothpaste tube – voila another 3 brushings weeks worth of paste. Savings $1.50
-Add water to ketchup bottle – Savings $2.
Seriously, are you vying for the cheapest blogger award or something?
Interesting comments from Dean Baker.
Surge in Mortgage Applications is NOT a Surge in Mortgages
The headline writer at USA Today got it wrong today. We don’t know that “home loan demand surges as interest rates drop.” The article reports on a large increase in the Mortgage Bankers Association weekly mortgage application index.
I am usually a big fan of this index as an up-to-date source of data on the current state of the housing market. However, recent numbers are likely skewed upward for two reasons. First, while the association gets data from close to half of all mortgage lenders, subprime lenders are under-represented in the index. This means that an important segment of the mortgage market that is contracting rapidly is not getting weighted properly. In addition, some applicants who might have otherwise gone to subprime lenders not included in the survey, are now going to members of the MBA, because the subprime lenders have shut down.
The other reason why the applications number is likely skewed upward is that mortgages are being denied with far greater frequency than was the case a year or even six months ago. While the overwhelming majority of applications were approved last year, the percentage of denials is far higher now. This means that the same number of applications corresponds to fewer mortgage actually being issued. In principle we can adjust for this change if we have current data on the success rate of applications, but lacking this information, we really can’t make good comparisons between periods in which the success rate of mortgage applications is likely to differ substantially.
James Bednar Says:
August 8th, 2007 at 10:08 am
Hurry up! I assume you are jet lagged, so you were up at 2AM. That is 8 hours, and all you have posted is a bunch of second hand nonsense. Where is the original content? Where is the customer service? Where is the communist propaganda? We sent you on a fact finding mission to the Eastern Bloc to meet with our Comrades and you give us nothing!
some people want to go to Graceland to see the King…….you have no idea
http://en.wikipedia.org/wiki/Image:LeninMausoleumEntrance.fullres.jpg
`Mortgage Disruptions’ Will Deepen Housing Slump, Realtors Say
By Kathleen M. Howley
Aug. 8 (Bloomberg) — Stricter lending standards and a widening credit crunch will deepen the U.S. housing slump, the National Association of Realtors said.
Sales of previously owned homes probably will fall 6.8 percent to 6.04 million in 2007, the real estate trade group said today. That’s more than the 5.6 percent decline it forecast a month ago. New-home sales will fall 19 percent, the group said, above its month-ago estimate of 18 percent.
“Mortgage disruptions will hold back sales over the short term,” Lawrence Yun, an economist for the association, said in the report.
Re renting in NYC –
A few weeks ago I asked the posters on this board for advice about finding a rental in NYC – got lots of good advice – thanks!
We finally found a 2BR in Manhattan for my son and a roomate (students) for $3300 – no fee. It may sound high, but little by little I came to the realization that all the apts. that were listed for less really didn’t exist, or were in less desirable areas, or tiny – and even a lot of these were well over $3000.
What I found was that it’s better in some ways that rent stablization is going away. There are more market rate apts. available. Don’t get me wrong – I would love to find a cheaper stabilized apt. but I don’t think that would have been the outcome. For example, if the kids didn’t find anything, they could have always gone to Stuytown. Now that it’s deregulating, there are always apt.s avail. (fully renovated – no fee apts).
As far as the whole process of finding an apt. in NYC – it’s awful. I found that the brokers show you properties that you could find yourself with no fee. I was willing to pay a fee (15% of 1st year!) if the brokers had an apt. that was exclusive, but it just didn’t happen. Several brokers we went with were showing apts. I already knew about with no fee. One was going to show me Stuytown!
“Mortgage disruptions will hold back sales over the short term,” Lawrence Yun, an economist for the association, said in the report.
What a crock!!!
These mortgage ‘disruptions’ are corrections that will not reverse themselves for some time, if ever again.
JB,
Check your email
From Reuters:
Impac seeks to reassure investors
Embattled mortgage lender Impac Mortgage Holdings Inc. on Wednesday sought to reassure investors after an analyst speculated the company might file for bankruptcy if additional funding does not materialize.
Impac this week stopped funding Alt-A loans, its chief mortgage product, but said it would continue writing loans eligible to be sold to government-sponsored agencies.
Those new iMacs sure are sexy.
jb
From Reuters:
Home sales to slip further this year
The pace of U.S. home sales will fall further this year than earlier expected, but prices will drop less sharply than previously thought, a leading real estate trade association predicted on Wednesday.
The National Association of Realtors trimmed its sales forecast for the sixth straight month but pared back its predicted drop in existing home values.
Existing-home sales should hit a pace of 6.04 million units this year, down from the 6.11 million units it predicted last month.
That number is still above the 5.75 million-unit annual rate that the trade association reported for the month of June. In a statement on Wednesday, the NAR’s chief economist, Lawrence Yun, predicted “a modest upturn for existing-home sales toward the end of the year.”
Prospective homeowners have faced tougher lending standards in recent months as investors have pulled funding from the once-hot mortgage finance market.
Yun said the recent disruptions “will hold back sales over the short term, but long-term fundamentals are favorable,” particularly the growing U.S. population.
The national median sales price for existing homes should ease by 1.2 percent to $219,300 this year, the association concluded. Last month, the trade group said prices should slip 1.4 percent.
The median new-home price will probably fall 2.3 percent to $240,800 this year, the NAR said in its monthly economic outlook.
JB is a Columnist!
Anyone notice how pleasant the blog is in the mornings?
‘boken (53)-
Yeah. Troll’s in his coffin.
Richard, did your cronies short your gem RSF? It’s down 10% today.
Time to double down, eh?
How do students afford 3300 a month???
Mike,
Thanks for the clarification on $2,000 in rent AND $175,000 in income. I didn’t realize it had to be both.
I’m nowhere near either, but always good to know these things.
tcm,
Congrats. The going rate seems to be right around that level now.
thatBIGwindow Says:
August 8th, 2007 at 11:33 am
How do students afford 3300 a month???
Bank O’dad
Also, never buy sugar, salt or napkins when you can get them for free.
#56: I guess people must really love their kids…
Oh bother..
From MarketWatch:
Schumer calls on regulators to head off subprime spillover
Sen. Charles Schumer, D-N.Y.. called on federal regulators to take steps to avert more declines in home prices and possible damage to the overall economy. In a letter to the heads of the Federal Reserve, Treasury Department and other regulators, Schumer said they should do “whatever is possible” to boost mortgage liquidity and prevent a spike in foreclosures. Government-sponsored enterprises Fannie Mae and Freddie Mac could be part of a plan to head off foreclosures, Schumer wrote. Fannie reportedly asked its federal regulator to allow it to buy more mortgages, which could boost liquidity in the market.
Way to go Schumer, throw more good money after bad. Nothing is going to stop the rot. Might as well start a bonfire with the dollar bills…..
“which could boost liquidity in the market.”
#59,
You just have to laugh.
Print, print, print and print some more. Then watch the dollar go bye-bye. Got gold?
All disclaimers.
I agree with Chucky-boy. We do not have enough risk concentrated on the books of Fannie and Freddie yet.
Liquidity, the cause of, and solution to, all market problems.
(Apologies to H. Simpson)
jb
Re: “luxury deregulation”–
do they start to measure the 175k income after increase over 2k, or do they perform some sort of lookback? I am fortunate and lucky enough to make substantially in excess of that amount for the past several years (and will hopefully continue to do so), and my current stabilized lease expires in May ’08 (currently just under 2000/month). Would I still have two more years of rent stabilization?
We hope to be in a house by then, but would love some flexibility if it looks like early ’08 is just “falling knife” time?
Thanks,
Eagle
Those new iMacs sure are sexy.
And I thought that was a made-up stereotype ChiFin had for you…
I personally think it’s much easier to come out ahead renting in the suburbs vs. the city.
first of all, your rent is going to be much cheaper. rent for a 2BR apt in a nice town should be no more than $2400 per month. Compare this to $3500 per month in the city.
second, there is way less temptation to spend money in the suburbs. there just isn’t nearly as much to do. I have basically stopped going out to dinner and bars.
Third, no city income tax.
Yes, you have to get a car and buy train passes, but I think the savings from the three above items dwarf any additional costs.
10 – First two years in Gramercy park in a smallish apt with a ‘kitchenette’ and 2 bedrooms (one pretty small) that was about 1600/1700 a month. Hey, i was single. Who needs a dishwasher?
Next two years in Brooklyn (dishwasher!) in the Cobble Hill/Boerum Hill area. We’re two blocks from (big time!!) hollywood stars Heath Ledger and Michelle Williams. We’re in much bigger two-bedroom (by NY standards) apt that is probably 750 sq feet. Still, we have 80% of our wedding gifts at her mom’s house.
“Yeah. Troll’s in his coffin.”
Clot,
Massive landslide?
“-#56chicagofinance Says:
August 8th, 2007 at 11:35 am
thatBIGwindow Says:
August 8th, 2007 at 11:33 am
How do students afford 3300 a month???
Bank O’dad”
BINGO!!!!!!!!!!!!!!
“thatBIGwindow Says:
August 8th, 2007 at 11:38 am
#56: I guess people must really love their kids…”
Another Bingo!!!!!
Yes, I really love my kids. Also, I was lucky enough that my son got a full academic scholarship – unfortunately though, the school only has dorms for freshman – otherwise, I would have insisted that he stay in the dorms – which, by the way, are really no bargain in NYC – only a little cheaper than apts (probably more if you share an apt room).
The way I figure it, because of the zero tuition bill, I can afford the rent for now – otherwise it would have been a no go.
#65
If your LL is on the ball and your apartment could rent for a lot more than $2K then I would expect a form the second you renew your lease when it goes over $2K. Once your rent is $2K or over your LL can send you a form that asks you to detail the occupant’s income. The LL can go back the two prior years, hence there is no waiting for your current lease to expire before the LL can commence his/her investigation. You have to basically furnish W2s and pay stubs for all occupants. If you are well above $175K for the last two years then I would enjoy that low rent while it lasts. The LL would have to be a complete idiot (or a lazy SOB) to not start this process when any of their apartments hit $2K. In the old days (even 4 years ago) this was not a probable event. The last 4 years have seen massive increases in rent and thus massive increases in decontrolled apartments in NYC. Once LL gets luxury decontrol approved by the state your rent go to whatever he/she wants it to be. Try to negotiate a fair rent given the condition of the apartment beforehand.
BC (70)-
One can only hope.
#69/72 BC?Clot: Unfortunately he will be back. If we all myself included would ignore him, perhaps he would go away. I try, but sometimes I slip. Double the resolve.
#67 Skep
first of all, your rent is going to be much cheaper. rent for a 2BR apt in a nice town should be no more than $2400 per month. Compare this to $3500 per month in the city.
Yes, you will come out ahead in the burbs.
second, there is way less temptation to spend money in the suburbs. there just isn’t nearly as much to do. I have basically stopped going out to dinner and bars.
Not necessarily. Outlet malls make you pile up on junk, since you think you’re getting a ‘deal’.
Third, no city income tax.
Yes, you save on city income tax, but NJ gets your for other stuff like for SDI, etc
Yes, you have to get a car and buy train passes, but I think the savings from the three above items dwarf any additional costs.
I would differ here. If you and spouse/partner work, that’s 2 cars required. I am guessing it’s at least $1,500 a month for 2 reliable $20K cars after car payments, depreciation, insurance, gas and repairs. People tend to underestimate how expensive having even a basic car is, especially when a lot of miles are put on it due to long distances people commute. Having to replace a car every 5 years instead of 7-8 because of putting in 20K miles a year makes a big difference in allocating money for a down payment for a house, versus saving for the next car.
From Reuters:
US regulators underestimate subprime risk-Schumer
U.S. financial regulators may be underestimating the real risk of a spillover of the subprime home loan crisis into the broader mortgage and consumer credit markets, Sen. Charles Schumer said on Wednesday.
The New York Democrat, in a letter to the heads of seven regulatory agencies, including the Federal Reserve and the Office of Federal Housing Enterprise Oversight, asked them to report to Congress on the extent and consequences of the mortgage and credit market problems.
“This development may cause additional damage to the housing market, and to the entire economy,” Schumer, chairman of the Senate Banking subcommittee on housing, said in the letter.
…
Schumer said he is concerned about the inability of potential homebuyers with sound credit histories to obtain mortgages due to the current round of credit tightening.
He called on regulators to take “prudent” steps to prevent the crisis from deteriorating further.
“Federal regulators should consider devising an action plan — in conjunction with the government sponsored enterprises … — to help prevent the spike in foreclosures that is anticipated and preserve liquidity in the secondary mortgage market,” Schumer said.
From MarketWatch:
Luminent Mortgage gets default notices from 2 repo lenders
the U.S. housing crisis. David Richards, in Barron’s, tells us that compared to the raging elephant of global economic boom, the American housing industry is nothing more than a bothersome gnat.
It is only 6% of the U.S. economy, he says. Of the worldwide economy…it is insignificant.
We reported yesterday that U.S. housing represented more than 10% of the U.S. economy – a $1.5 trillion industry in an $11 trillion industry. The difference in the numbers probably comes from a difference in definition. Are REALTORS part of the housing industry? How about the people who make 2 x 4’s?
Yesterday, we noted that Weyerhaeuser (NYSE:WY) reported an 89% decline in earnings. Today, we follow up with the latest figures from the wall board industry. USG Corp. (NYSE:USG) dominates sheetrock. It is a beautiful business; wall board is too bulky and too low-margin to entice foreign competitors. That’s why Warren Buffett bought a big stake in the company. But when building turns down in the United States, USG’s market disappears. It says net income is down 68%.
Meanwhile, the people who put up houses are going up in flames. It’s the “Bonfire of the Builders,” says BusinessWeek.
And here we pause…and gulp.
By the time BusinessWeek gets onto a story, it is usually too late to profit from it. If BW is announcing the bonfire of the builders, maybe it is time to buy?
On June 19, 2007, the U.S. Census Bureau released the residential construction report for May 2007. It showed that housing starts are down 24.2% year over year…permits are down 21.7% year over year and completions are down 19.3% year over year.
In addition, the Census Bureau report showed that permits are plunging, inventories are rising, and to look for a decline in construction jobs.
Survival Report’s Mike Shedlock noted, “Given that housing permits tend to lead starts (and starts provide jobs), the signs are all in place not just for a continued housing recession, but also for a full-blown severe consumer-led recession. I’m still on recession alert.”
Meanwhile, a cousin reports from Maryland that his business – installing septic systems – has fallen off. “I used to have 50 jobs backed up…now I’m going from one to the next, and happy to have work.”
How big will the problem be? The last crisis in the property market occurred in the early ’90s – both in America and in Britain. In the United States, the Resolution Trust Company was set up to sort out about $300 billion in bad loans. But that was when America had an economy of only about $7 trillion. Today, U.S. GDP is closer to $11 trillion. Back then, consumers had only about half as much debt. And the housing boom of the ’80s was nothing compared to that of the last 10 years. This blow-up is likely to produce a couple trillion dollars worth of casualties…and a long period of rest and rehabilitation for housing values.
“The Great Unwind May Be Here,” says the Wall Street Journal. We did not read the article. We didn’t think we needed to. We’ve been asking the same question already.
When people talk of ‘unwinding’ they are usually referring to the carry trade – speculations involving borrowing in a low-interest currency and placing the money in higher-yielding investments. Typically, the carry trader borrowed yen and bought New Zealand bonds…or maybe U.S. dollar collateralized debt obligations.
So far, the New Zealand bonds are still making their coupon payments as promised, but other things have begun to go wrong. Mortgage backed securities, for example, have proven no more valuable than the flakey mortgages that backed them. And the yen (JPY) has begun to move up. Having borrowed yen to gain leverage, the carry trader is, effectively, short the Japanese currency. If it goes against him, he can lose big. So many speculators are faced with unwinding their positions.
But there is a larger unwind going on. It is what happens at the end of the credit expansion.
Little did they know it, but ordinary Americans were conducting a carry trade of their own. They borrowed from mortgage lenders at 6% or so…and invested the money in houses, which they thought were going up at 10% to 20%. The trade was a good one as long as houses kept rising. When housing stopped rising, they went into ‘negative carry’ and many soon found the burden just too much for many of them to carry at all.
By the way, we reported that the big hump in mortgage resets would occur in October of this year. Not so, says our old friend John Mauldin. Instead of peaking out at $55 billion worth of mortgages subject to upward adjustment in October of this year, John says the total gets bigger…reaching $110 billion worth of mortgages to be reset in March of ’08. Thereafter, the numbers go down.
Not surprisingly, a lot of housing speculators are eager to unwind their positions before the carry gets any more negative. Others wait…and have their burthens reduced, courtesy of the bankruptcy courts and foreclosure proceedings.
The U.S. housing industry may be insignificant to the worldwide economic mega-boom, but it is hardly insignificant to the U.S. economy. As we mentioned yesterday, a substantial decline in housing is like a substantial leak on a big ship. Once she starts taking on water, the whole boat sinks lower. As long as seas remain calm, she can stay afloat for a long time. But as soon as a storm brews up – it’s every man for himself.
respectfully disagree with renting in burbs v city
We probably have a unique situation where wife has a car allowance from her job, plus they pay for the parking spot. So there’s that. My commute to work is a quick 36 minutes. got lucky in that i dont have to change subway lines and it goes right to my office.
Now married, i’ve cut back on drinking, so at nights, i drive into the city to go out with friends. parking’s easy at night – though weekends can be difficult so i usually cab it, and i can expense those through work.
Another plus to having the car – drive to price club and load up on groceries twice a month.
Things i dont have to worry about that help with saving:
-car payment
-gasoline
-EZ-pass for going into the city
-car insurance
-nj transit fees
-nickle/dime house things that a house has but a apt doesnt
#74
I don’t think you need 2 $20k cars. First, there are many towns with apartments that are walking distance to the train. Second, even if you are not within walking distance, why do you need a nice car simply to drive back and forth to the train station?
We have 1 nice car and 1 POS that is driven by me a total of 3 miles per day back and forth to the train. Not a lot of wear and tear on this car and I feel like I should be able to keep it for decades at this rate.
From MarketWatch:
Luminent Mortgage gets default notices from 2 repo lenders
Luminent Mortgage Capital Inc. said Wednesday it has received notices of default from two repo lenders. The San Francisco-based the home-loan investment company said in a statement that it is continuing to “vigorously explore all of its alternatives with respect to its sudden liquidity issues resulting from the unanticipated and extraordinary disruptions in the secondary mortgage and national real estate markets.” Luminent shares plummeted 75% on Tuesday after the company warned that it’s been hit by lots of margin calls as the secondary mortgage market “seized up.” Luminent shares were halted in Wednesday afternoon trade, up 28% at $1.38.
Never mind about Real Estate……………
ALL should read Rachel’s posted article about the REAL THREAT to our country: CHINA !!–An EXCELLENT Eye-opener–Especially for the FOOLS out there that think that both the ‘serviced-based’ and “shifting-around-money” Wall-Street economy is a great way to go !!
___________________________________
Rachel Says:(post #21)
August 8th, 2007 at 9:02 am
China threatens ‘nuclear option’ of dollar sales
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml
____________________________________________
Commanderbobnj sez: Ever since President Nixon “opened” up Red China to U.S. trade in the early 1970’s we have been behind the ‘eight-ball’as far as a so-called ‘balance of trade’ with that Communist Nation—-Our Industry has declined so much since then that I personally think that we will never recover !! And I ask everyone here: “How are we ever going to supply our Military with the necessities to DEFEND US if we don’t have the basic means to build the weaponry for our armed forces ?”……….After all, the BASIC PURPOSE of our Federal Government and our President and Congress is to DEFEND our Nation against ALL enemies both Foreign and Domestic………….Can ‘you’ still defend the USA with a gutted and RUSTED industrial base ??–I think NOT !!
Where is CHINA ‘going’ with this HUGH build-up in their economy during the past 30 years ? Do you really think that they will use their new-found financial power for ‘peaceable uses’ ??–I think NOT !!
Remember (For those of you who payed attention in your World History High School and college classes) that is took JAPAN about FIFTY YEARS to go from being ‘outed’ from Medieval-ruled Japan by Commodore Peary in the 1850’s (the 19th-century version of Mr. Nixon) to modern Japan, ‘westernized’ enough to battle with an up-to-date army (and especially Navy) to DEFEAT Czarist RUSSIA in the 1905 Russo-Japan War—–Japan felt strong enough to ‘annex’ Korea in 1910 while the rest of the world did nothing to stop them——-Will anyone stop Red China from ‘annexing’ Taiwan ? when they feel that they have the financial and military power to do so ?——–History has a strong tendency to repeat itself…
Twenty years from now some of you will wonder what the HELL happened to the ‘good’ things that made the USA the USA that we take for granted Now and assume will ALWAYS exist for You, your children and your grand children
Food for thought fellow citizens and numerous ‘Comrades’……..
Commanderbob
P.S:– If you are interested is ‘seeing’ where the U.S. domestic Commercial/Industrial power tool industry is ‘heading'(IMHO)–Check out the Harbor Freight tool store in Saddle Brook on Market street. If you don’t already know about that company, All types of imported CHINA tools at Cheap and I mean CHEAP prices……….I can’t see domestic brands–Craftsman and Milwaukee– still having U.S. factories operating here in the near future with all these tools from China being sold here at such give-away prices…
TCM
Congrats on finding an apt. If I had a kid who got into cooper union I’d be thrilled to drop 2K per month on his rent as well. For the area, 3.5K for a 2BR is pretty reasonable, rents (and the price of everything else) are totally nutty in and around NYU-ville.
Question for JB:
Did you read anything in the overseas papers about the impending housing issues in the US? Anyone talking about it over there? Just curious.
3b (74)-
We need a Troll 12-step program.
Troll Rehab!
Step 1- admit that responding to the Troll is a problem.
Step 2- realize that posting fact and/or sound reasoning will not stop a Troll from posting unsubstantiated blanket statements.
Re that is why this bonehead does not have a down payment. Paying two car loans to drive to the station, so if I am running late am I supposedly to carefully open my door of my nine year old Taurus so I don’t ding his little precious new car, NOT.
Yes, I really love my kids. Also, I was lucky enough that my son got a full academic scholarship – unfortunately though, the school only has dorms for freshman – otherwise, I would have insisted that he stay in the dorms – which, by the way, are really no bargain in NYC – only a little cheaper than apts (probably more if you share an apt room).
Re kids in luxury apartments with mommy paying. You don’t owe your kids nothing, I guess you will be putting the downpayment down on their house too. You sound like the NYU professors who put their daughter up in a luxery apartment with free rent and then went overseas, cause she deserved some time alone in the city. Well we all know how that worked out this week. I have a pet peeve with parents babying their children. Now places like Goldman Sachs have Mommy and Daddies requestion to attend orientation when their kids get a job after school.
From the NY Post:
TRUMP MORTGAGE FLOP TIED TO CREDENTIALS FLAP
As the mortgage mess widens, Donald Trump has pulled the plug on Trump Mortgage less than two years after its launch.
Plagued by bad timing and the disclosure that the firm’s chief executive, E.J. Ridings, had inflated his credentials, the outfit never came close to reaching its financial goals, according to a report today in Crain’s New York Business.
Instead of doing $3 billion in deals as promised, it barely reached the $1 billion level, the report said.
Trump played down his role in Trump Mortgage, saying it was just a licensing deal and he didn’t have an ownership stake.
Trump is, however, licensing his name to First Meridian Mortgage, a lender that is being renamed Trump Financial.
#44 TCM
just to add to your post: and stuytown used to be a good deal even the market rent apartments were a steal relative what else was out there but last year they even jacked up the market rents a ton. Our 2 bedroom went from 2750 to 3500.
#49 Skep
I’d go one step further and say that in the burbs, you really only need one car so long as one spouse works in the city and you have easy train access. That’s even more true if both work in the city.
Step 3- Realize that he is just another
f%$#%# borrower
384/85 I am in!!!
Step-4 Realize that attempting to help trolls by simplifying reality makes you facilitator.
I’m with you guys – whoever is driving the car to the station really only needs one thing in that vehicle: air conditioning.
It does seem silly (to me, at least), to be driving a 20k car to the station, where it sits all day in the sun and gets beat up.
I’m thinking it’s a point A to point B car, nothing flashy, probably in the $4-7k range. But that’s just me. The other places it’ll go are the gym and grocery store.
Step 5: Realize that Troll is on skid row. The harder part is deciphering whether it’s his brain or house on skid row.
Hanover Capital Mortgage Holdings Announces Postponement of Earnings and Earnings Conference Call
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/08-08-2007/0004641853&EDATE=
John A. Burchett, President and Chief Executive Officer stated, “Recent
turmoil in the capital markets and certain demands on our liquidity have
necessitated the Company to re-examine its position regarding declines in
the fair value of its available-for-sale portfolio of subordinate mortgage
back securities collateralized by prime mortgage loans. The underlying
conditions allowing inclusion of the declines in other comprehensive income
and not net income has to be re-evaluated as well. If this non-cash charge
is included in net income rather than other comprehensive income, it will
not have an impact on book value.”
Hanover Capital Mortgage Holdings, Inc. is a mortgage REIT staffed by
seasoned mortgage capital markets professionals. HCM invests in prime
mortgage loans and mortgage securities backed by prime mortgage loans.
From the WSJ:
Existing-Home-Sales Forecast Lowered
By BENTON IVES-HALPERIN and JEFF BATER
August 8, 2007 12:01 p.m.
The National Association of Realtors again lowered its forecast for existing U.S. home sales in 2007, but said the market wasn’t likely to suffer any further sharp downturns.
…
In its latest forecast for the real estate market, NAR on Wednesday projected that existing home sales will fall 6.8% this year to 6.04 million, compared with its previous forecast of a 5.6% decline.
The outlook for new home sales continues to worsen. The NAR said new home sales are likely to fall 19.0% to 852,000, compared with the prior forecast of a 17.7% drop.
Food for thought fellow citizens and numerous ‘Comrades’……..
Commanderbob
gee, Commanderbob thinks we really are Communists! :)
bob, you have to be around these parts on a regular basis to know what the joke is … the trolls have been calling Rich in NNJ a Communist/subversive for publishing his “sold” data that show prices going down …
F*%$ this “comrade” stuff. I wanna be the boss!
Don’t turn around, uh oh…
“Realize that Troll is on skid row”
skid row? that’d be an improvement considering his house collapsing into the Hudson.
RE:comrade scribe (#96)sez:
“…Commanderbob
gee, Commanderbob thinks we really are Communists! :)…”
_____________________________________________
Commanderbobnj sez: No, No, I don’t think that you guys are communists…I ‘get’ the joke—I just threw that ‘Comrade’ thing in for fun…I can’t be serious all the time, you know–
“It does seem silly (to me, at least), to be driving a 20k car to the station, where it sits all day in the sun and gets beat up.”
Completely agree. Having said that, I used a $20K car as an OTD price for a reliable car used for long commutes that most people do in NJ. People who live walking distance to a train station and drive a beat up for a 2-3 miles commute are an exception, not the norm.
I rent in City Island. It’s a little out of the box, but I think it is one of the best values out there. I rent an older 2 bedroom home, basement, washer/dryer, 2 car garage, and small yard for 1,700. I’m one block from the express bus that takes me one block from my office near 42nd street in 45 minutes on normal days. The bus runs me 170 a month after you take transit checks into account. The only problem is that the express bus runs only twice in both morning and evening rush hours. If you miss those, you have to take the 6 or the Pelham Bay express bus to Pelham Bay Park Station and take a local from there. That takes about 1hr 15 minutes. I actually like that it takes 45 minutes. The bus is comfortable, uncrowded (Never sit next to someone) and 45 minutes is perfect for a nap. Other than the weekends in the summer when the entire Bronx heads to City Island to eat fried seafood, it is quiet, safe, and quaint.
“Don’t turn around, uh oh…”
Rob [98],
LOL.
#15,
This is bunch of BS, my bus is empty every day, on the way in and out.
Credit Worries Swirl Around GMAC
By Nat Worden
TheStreet.com Staff Reporter
8/8/2007 7:52 AM EDT
URL: http://www.thestreet.com/newsanalysis/automakers/10372974.html
Cerberus Capital Management may be celebrating its historic acquisition of Chrysler after turmoil in the credit markets delayed the deal, but no champagne is flowing for the private-equity firm’s other landmark purchase in Detroit.
GMAC, the finance arm of General Motors (GM) that is 51%-owned by Cerberus, is facing worries in the derivatives markets about bankruptcy at its mortgage-lending unit. The price of credit protection for GMAC’s mortgage business, Residential Capital, or ResCap, soared by more than $100,000 a year on Friday, as measured by the credit default swaps market.
“ResCap is trading like it could fail sometime this year,” says Justin Monteith, an analyst with KDP Investment Advisors, though he adds that he doesn’t expect that to happen.
The credit default swaps market is an immature market, prone to irrational swings as a sudden spike in uncertainty can breed fear among traders. Such fears have spread like wildfire as evidence mounts that credit defaults in the so-called subprime lending market are spilling over into consumers with stronger credit histories, calling into question the reliability of credit ratings on which investors have relied.
Last week, GMAC inspired some confidence with its second-quarter results, despite a 63% year-over-year drop in net income. Excluding a loss of $254 million from ResCap, GMAC’s earnings were only down 30%. And though ResCap was in the red, its results marked a vast improvement from the $910 million loss it posted in the first quarter.
GMAC attributed ResCap’s latest loss to “severe illiquidity in the nonprime mortgage market.” On a conference call with analysts following the release, its chief financial officer, Sanjiv Khattri, sought to assure investors that ResCap’s troubles were contained to its subprime business.
James Leda, analyst with Merrill Lynch, said on the call: “In the past, you’ve said that the losses have been contained to the nonprime portions of the portfolio. Is that still an accurate statement?”
Khattri replied, “Yes, it is. Obviously, even within the prime, though, there is severity issues. So the severity is across the sector. But in frequency, I think that’s broadly a fair comment.”
ResCap CEO Jim Jones followed up that answer by saying: “I’d say that the one exception attendant to that is probably second mortgages, where we’ve seen a significant weakening in the second category. I think in that one it’s more of a frequency issue. We were already pretty deep on the severity side.”
Khattri also said on the call that ResCap will have sufficient liquidity to operate through the current U.S. housing downturn.
“Conditions in the market are quite severe,” he said. “If the pressures continue, we expect ResCap’s liquidity and capital position to be sufficient to operate through the cycle.”
GMAC spokeswoman Gina Proia says the company stands by those comments.
Investors are no longer finding comfort in the notion that lending problems are contained to the subprime market. Already, Countrywide Financial (CFC) , the biggest independent mortgage lender, has said the troubles have spread to borrowers with more-solid credit records.
On Monday, American Home Mortgage (AHM) , once the nation’s 10th-largest mortgage lender, filed for bankruptcy. Almost none of its $58.9 billion in home loans from 2006 were made to subprime borrowers.
Argus Research analyst Kevin Tynan says brokers at American Home were not checking the credit quality of home buyers when they made loans, and he says the same could be true at ResCap.
“It’s probably a lot worse than we’ve seen in the numbers so far,” says Tynan. “The problems we’ve seen at ResCap are in subprime, but in the days of easy money, I don’t think anyone was really checking anything anyway. They weren’t doing income checks. They were lending money to anyone who could fill out the form.”
The period of record-low interest rates in the early part of this decade spurred a boom in the U.S. housing market that supported consumer spending and economic growth. Now the housing market is slumping, and borrowers who took out loans in the period are having trouble paying their debts.
“It wouldn’t surprise me if there was billions in bad auto loans at GMAC too,” says Tynan. “You can’t tell me that if you walked into a dealer’s showroom in the days of easy credit and you were of less-than-good credit quality, they weren’t going to sell you a car somehow anyway to get a car off the lot. I’m sure there are a lot of bad loans out there that still haven’t been realized.”
When Cerberus bought its majority stake in GMAC, ResCap was the only part of the company with investment-grade debt ratings from major credit agencies. GMAC’s ratings were previously reduced to junk status, along with the rest of its parent, GM. Cerberus hoped it could restore the finance company’s ratings to investment grade in order to lower its borrowing costs and boost its profitability, but that hasn’t happened yet.
ResCap continues to enjoy investment grade ratings from Fitch Ratings, Standard & Poor’s and Moody’s.
“There’s a big divergence between those agencies and the market,” says Sean Egan, president of Egan-Jones Ratings. “Investors do not trust these ratings right now.”
GM already took a $115 million charge in its first quarter on losses tied to ResCap, and it could take more hits from additional troubles. As for Cerberus, the GMAC concerns come just as the firm prepares to overhaul Chrysler, which, like GM and Ford (F) , has seen sales slide amid competition from foreign competitors.
Having once pledged to keep Chrysler’s management team in place, the firm on Monday announced the surprise hiring of Bob Nardelli, the much-criticized former CEO of Home Depot (HD) , to take the helm at the automaker.
Nardelli said Monday that he approves of restructuring plans that are already underway at Chrysler and that he plans to continue them. Chrysler plans to cut 13,000 jobs and make a $3 billion investment in engine systems designed to improve fuel economy. The company lost more than $1 billion last year as consumers steered clear of its trucks and SUVs amid high gas prices.
The company also hoped to win concessions on labor costs from the United Auto Workers in its ongoing negotiations with the union over a new master labor contract. Chrysler’s former CEO, Tom Lasorda, will stay on as the company’s president and vice-chairman. With his close ties to the UAW, he will continue to lead the labor negotiations at Chrysler.
Cerberus has made nine other acquisitions in the U.S. auto sector over the last five years, according to research firm Capital IQ. In addition to Chrysler and GMAC, it owns auto-parts makers Tower Automotive and Collins & Aikman.
“After things settle down at Chrysler, Cerberus will probably look to sell off auto brands and other assets that it can get a good price for,” says Adam Sussman, analyst with the Tabb Group. “Then it could consider downsizing and combining certain portions of its auto-related holdings, and I also expect it to look for opportunities to move manufacturing overseas where it can take advantage of cheaper labor.”
#97 Clot; Than you need to be Chairman Clot. I will remain Comrade 3-B. Although for my military wing I am partial to Commander ZERO, also goes with the asset less, dirty cooties infested renter.
On a side note> My next door neighors who purcahse 2 years ago, (proud owners) Are now in to week 4 of not mowing their lawn.
Clot-
Are sellers aware of what’s happening in the mortgage market? If they are, they must be pretty worried.
Bagholderus Maximus:
334 White Oak Ridge Road
Short Hills, NJ
Sale History
Jul 18, 2001: $195,000
Nov 02, 2005: $925,000
(Not a typo.)
The new Trump Financial site looks terrible, under construction or not.
http://trumpfin.com/
Looks like a rushed hack-job to me.
jb
>>Richard, did your cronies short your gem RSF? It’s down 10% today.
i haven’t bought yet. i was waiting for another leg down. this might be it. i did pick up some BGY though at a bit above $18.
you people should all get a room. your self congratulatory praises on your similarities is pathetic.
skep (108)-
My sellers are. Of course, one or two of them are still in a state of denial.
#112 Remember Richard, you counter-revolutionary, you once were one of us.
At least we have a sense of humor. You on the other handcan ofthen be quite pompous.
ALL POWER to the RENTER LOSERS!!!
#87 John says:
“Re kids in luxury apartments with mommy paying. You don’t owe your kids nothing, I guess you will be putting the downpayment down on their house too. You sound like the NYU professors who put their daughter up in a luxery apartment with free rent and then went overseas, cause she deserved some time alone in the city. Well we all know how that worked out this week. I have a pet peeve with parents babying their children. Now places like Goldman Sachs have Mommy and Daddies requestion to attend orientation when their kids get a job after school.”
You don’t seem to be in touch with going rents in Manhattan. It is by no means luxury. It is the cost of going to school in Manhattan – period.
Having said that, you’re right, I don’t owe my kids ANYTHING. And they don’t owe me anything either – but hopefully we will be there to help each other out when we are able. If I had the type of kid that took my sacrifices for granted, I wouldn’t help pay his college expenses – thankfully, that’s not the case.
Your post also implies that the NYU student who got murdered got what she deserved because her parents paid for apt. You must be a very bitter, small minded, weirdo.
Existing-Home-Sales Forecast Lowered
By BENTON IVES-HALPERIN and JEFF BATER
August 8, 2007 1:46 p.m.
WASHINGTON — The National Association of Realtors again lowered its forecast for existing U.S. home sales in 2007, but said the market wasn’t likely to suffer any further sharp downturns.
Meanwhile, U.S. wholesalers saw their inventories increase during June at a rate higher than expected, while sales rose even faster, the government reported Wednesday.
In its latest forecast for the real estate market, NAR on Wednesday projected that existing home sales will fall 6.8% this year to 6.04 million, compared with its previous forecast of a 5.6% decline.
The outlook for new home sales continues to worsen. The NAR said new home sales are likely to fall 19.0% to 852,000, compared with the prior forecast of a 17.7% drop.
Lawrence Yun, NAR’s senior economist, said the market was likely to be relatively stable going forward, suggesting that the worst drops in activity are behind the housing sector.
“Existing-home sales should be relatively stable over the next few months, holding in a modest range, with some pent-up demand growing from buyers who’ve been on the sidelines,” Mr. Yun said in a statement.
Mr. Yun continued to forecast a relatively mild upturn in housing activity towards the end of this year and going into 2008.
“A modest upturn is projected for existing-home sales toward the end of the year, with broader improvement to include the new-home market by the middle of 2008,” he said.
NAR said existing home sales will rise to 6.38 million in 2008, still well below the record 6.48 million sold in 2006. New home sales, on the other hand, are likely to stay depressed through next year, at a level of 848,000 in 2008, down from previous forecasts for 878,000.
Mr. Yun said the housing recession has helped trim some of the speculative fat from the marketplace. “Serious buyers today have a long-term view of housing as an investment — speculators have left the market,” he said.
The national median existing-home price is forecast to slip 1.2% to $219,300 this year, and then rise 2.0% in 2008. The median new-home price is expected to fall 2.3% this year to $240,800, and then rise 2.3% next year.
Inventories Increase
Wholesale inventories rose by 0.5% to a seasonally adjusted $398.49 billion, after climbing at the same, unrevised rate during May, the Commerce Department said.
The 0.5% increase in June inventories exceeded Wall Street analyst expectations for a 0.4% advance.
Sales of U.S. wholesalers rose by 0.6% in June to a seasonally adjusted $359.45 billion after surging an unrevised 1.3% in May.
The amount of goods on hand relative to sales didn’t budge. The inventory-to-sales ratio measures how many months it would take for a firm to deplete its current inventory. The ratio held steady at 1.11 in June.
On a year-to-year basis, sales were 8.1% higher, while inventories rose 6.3% since June 2006.
Wholesalers’ inventories of durable goods — meant to last three or more years — remained flat in June, after increasing 0.4% in May. Automotive stocks increased 1.3% after rising 1.2% in May; year over year, auto inventories were down 2.7% from June 2006. Inventories of metals increased 0.5%.
Durable goods sales rose 0.7%, after going down 0.4% in May. Auto sales decreased 0.2% but electrical sales rose 1.0% and computer equipment surged 5.4%.
Nondurable goods inventories increased 1.2% in June. Petroleum stockpiles rose 2.2%. June nondurable goods sales increased by 0.5%. Clothing sales rose 2.8%.
is that the first time I have ever heard sour news from the NAR?
…NAR on Wednesday projected that existing home sales will fall 6.8% this year to 6.04 million…
Looking at Calculated Risk’s blog the existing home sales number will be more like 5.86 million.
And that’s assuming the remainder of the year’s sales are the same as the first six months.
Rich
# Richard Says:
August 8th, 2007 at 2:09 pm
you people should all get a room. your self congratulatory praises on your similarities is pathetic.
Can’t, saving for a downpayment!
With this boom in RE, we will have a whole generation of slaves working very very hard to meet mortgage payments and interest on an asset that does not appreciate that much.
Hehehe.. good for me. I am sitting on a beach drinking pink lemonade with assets yielding predictable cash flow and working very hard for me while my brethren are working 60 hrs/week to meet mortgage payments.
#112 Richard
‘bye then.
Comrade 3b
Buy a big bag of salt and pour it all over your neighbor’s lawn. There will be no more lawn to mow in about a week!
Video from PBS Newshour:
http://pbs-newshour.onstreammedia.com/cgi-bin/visearch?user=pbs-newshour&template=play220asf.html&query=*&squery=ClipID:1+VideoAsset:pbsnh080707&inputField=&ccstart=598665&ccend=1300204&videoID=pbsnh080707
From Inman:
Reflections on mortgage rescues and remedies
As I indicated in my column Tuesday, the current trials and tribulations of the home mortgage market stem from a re-pricing of risk. There is no shortage of mortgage money — quite the contrary; an army of loan providers out there are desperate for customers. The problem is that some kinds of customers are no longer eligible under the new rules, and others who remain eligible must now pay a much larger premium over the best price than was the case earlier.
An industry that had become conditioned to rules that allowed most anyone to get a loan now must turn customers away. This is painful, just as denying a heroin addict the fix to which he had become accustomed is painful. But we try to be compassionate with addicts and help them make the transition to a normal life as easy as possible. Is there something that can be done to make the market’s transition less painful?
Some are proposing that the Federal Reserve step in to lower interest rates. There isn’t a lot of scope for that because mortgage rates today are only about 1 percent above their lowest point reached in mid-2003. Further, the Fed has many more things to consider in setting its policy targets than the transitional pain of the home loan market.
But even if the Fed viewed pain relief in the home loan market as a priority, lowering the general level of rates would mainly help the mortgage borrowers who don’t need help. Lowering rates will not affect the investor guidelines that have made some borrowers ineligible. Those who have become ineligible under the new rules would remain ineligible. Rates in the high-risk niches that are still being priced probably would fall a little, but nothing to match the previous price increases.
In short, there would not be a lot of benefit to set against the costs of changing Fed policy to one that is more liberal than the Fed would have selected otherwise.
I hear rumors that Fannie Mae and Freddie Mac have proposed that they be allowed to help by making loans they are not now authorized to make, specifically “jumbo” loans larger than their current limit of $417,000. The agencies would dearly love to get out from under that limit, which is going to run through 2008 and maybe even beyond if housing prices don’t recover.
But there is no shortage of money for jumbo loans, the shortage is in the higher-risk niches, some jumbo but many not. A credible offer by the agencies would be to make loans in high-risk niches that the private market has now placed out of bounds, and/or to offer better prices in high-risk niches that the agencies believe are being overpriced. In either case, the agencies should define these niches exactly as they would appear in their underwriting manuals, and provide credible evidence that the niches are closed or overpriced.
I’m not sure that, even if the agencies provided an explicit and valuable quid pro quo, the deal would be a good one. Fannie and Freddie are already far too big. If it were my call, I would freeze their loan limits forever so that their market share (and political clout) gradually declined. If the limit were raised instead, there should be an attached sunset clause that automatically terminates the authority after a specified period, such as 12 months.
Fixed PBS Newshour link:
http://pbs-newshour.onstreammedia.com/cgi-bin/visearch?user=pbs-newshour&template=play220asf.html&query=%2A&squery=+ClipID%3A1++VideoAsset%3Apbsnh080707&inputField=%20&ccstart=598665&ccend=1300204&videoID=pbsnh080707
The new Trump Financial site looks terrible, under construction or not.
http://trumpfin.com/
Looks like a rushed hack-job to me.
Trump can’t even turn a profit in a CASINO. I can’t see how he’ll do it in lending. How many casinos lose money?!@#
X
3b you never say anything of value i usually just skip over anything with your name on it.
Grim (124)-
To follow up on this Inman News article, I’m just not seeing this supposed “mortgage meltdown” trickling into conventional product.
I’ve reviewed today’s rate sheets, most of which have only a few repricings (even though the 10 has made a big move above 4.85%). Yes, anything other than prime jumbos has disappeared…yes, several outfits have quit writing seconds (Nat City, Option One)…yes, anything veering toward Alt-A or subprime is either gone or priced into the stratosphere.
However, pricing has been very consistent since Aug. 1 on conventional product…and we can still place a jumbo via an outfit like MortgageIT for well under 7%.
Somewhat off topic, does anyone have a good recommendation for a practical book about managing your finances?
>>I am sitting on a beach drinking pink lemonade with assets yielding predictable cash flow and working very hard for me while my brethren are working 60 hrs/week to meet mortgage payments.
yup i’m on the beach too but also own a house and am paying off my mortgage every month and getting tons of tax deductions. the system is purposely rigged to benefit homeowners in the long run so please get a clue.
Richard #130
Please understand the difference between Assets and Liabilities before you reply to my post.
BC Bob Says:
August 8th, 2007 at 1:47 pm
“Don’t turn around, uh oh…”
Rob [98], LOL.
NOTHING BEATS THE ORIGINAL
GLORIOUS!
http://www.youtube.com/watch?v=uGEEBUupVAw
Also, how can you be on the beach and paying of the mortgage at the same time.
You are working your a$$ off, aren’t you ??
hehehe
#127 Ricahrd: Ditto for you Richard, ditto for you.
How did I know ChiFi would be an 80’s monster?
Rob Says:
August 8th, 2007 at 3:49 pm
How did I know ChiFi would be an 80’s monster?
R: more EuroTrash than pure 80’s
#128 Clot: now if we only had the buyers who could utilize the convetional products.
Grim (124)-
The really scary thing about the whole mortgage crunch is that Vito and Joey (aka Fannie Mae and Freddie Mac) are dying to dive into the breach and “save the day”.
Both these GSEs are on shaky ground, both in terms of regulatory oversight and fiscal credibility. Franklin Raines and the recent accounting scandals are still fresh in everyone’s minds. Why let these foxes loose in the henhouse again…especially with greater discretionary powers, such as taking on jumbos?
tcm,
Welcome to the world of Manhattan real estate. The place where phantom apartments dominate the classifieds, where realtors control buyers and renters by keeping them on a tight leash, and where there are fewer vacant rental apartments than parking spots.
Clot,
Good time to be a prime borrower looking for a conventional loan.
jb
Renting in NYC.. I never rented in Manhattan, I always figured any place that rents for more than 25% of net is too expensive, and even back in the mid-’90s 1brs were well over 40$ of gross. Rented in Ft. Hamilton Brooklyn and St. George SI, pretty happy with both except for extended commutes..
Paying $2k to live in the burbs? That better be a 2br townhouse or better!!
Playing the tax juggling game in NYC can be pretty tricky, NYC income vs. property tax is rigged in favor of those under $100k (or it was when I lived there): in the ‘burbs you pay more property tax (part of your rent) than income tax, in the city it’s vice versa.
Then again, I’m glad I left.. Gettin paid the same I was in NYC, but got the 3/2 townhouse for the same rent as a 800sqft 1br on Staten Island. Insurance for both bike and car costs less than just the car on SI. Income tax is lower (though Wilmington gets its 1% payroll jack) and no sales tax.
ps: I actually got to visit a friend who just moved to mid-to-northern Dutchess Co, he’s paying $16k/yr in property taxes?! He shouldn’t have bought, but he never asked me.. And now he’s got a kid on the way, and the local schools up there are _not_ that hot.. Or rather the schools themselves aren’t that bad, but the kids are missing a few too many teeth if you know what I mean…
Rachel Says:
August 8th, 2007 at 3:41 pm
Somewhat off topic, does anyone have a good recommendation for a practical book about managing your finances?
Ranges from the painfully basic to rather insightful…..can’t beat the price though
http://www.amazon.com/Journal-Complete-Personal-Guidebook-Guidebooks/dp/030733600X/ref=pd_sim_b_4_img/105-7796535-7046866
Rachel Says:
August 8th, 2007 at 3:41 pm
Somewhat off topic, does anyone have a good recommendation for a practical book about managing your finances?
Rachel, you might be better off googling and gathering nuggets of information off a few sites. Try Smartmoney’s Personal Finance section – it’s a good starting point, with useful calculators also.
109:
UnRealtor, possible that house was in bad shape in 2001 and was fixed by 2005?
That section of Short Hills is pretty nice…
#128
is MortgageIT an anomaly? I’ve read several articles during the past couple days that claim jumbo rates are averaging closer to 7.5%
Clot,
Good time to be a prime borrower looking for a conventional loan.
jb
Question is.What are you going to buy and how much will you have to overpay.
#146 MM No need to over pay, just wait, simple as that. IMHO there will be lots of good buys over the next year or so. The real estate party is over.
3b (137)-
They are there. Right now, there’s a couple in my conference room, presenting an 80/20 offer.
They are up against another buyer, offering at identical terms.
Funny, though…the listing agent has disclosed to us that neither offer is near full price. Lots of multiple offers lately like that.
Like I said, it’s dead cat ’til Sept. 1.
#148 Clot: 80/20: Conventional?
skep (128)-
Don’t know. Another broker, using the same wholesale product, might put more margin (or fees) on top of that price.
In this environment, that’d be stupid. A prime jumbo borrower can shop hard and negotiate hard for great terms. A lender with someone in front of him fitting that profile runs the risk of never seeing that borrower again if he quotes too high a rate.
3b (149)-
Vanilla as they come. Their lender even offered them a piggyback second…which they turned down (rate= 9%).
I’d turn down that second, too.
#15 Clot; I am sorry am I misunderstanding? So they are putting money down (20% dwn pymt, 80% loan?, but becasue of their credit quality they could have gone with a piggyback? Sorry it has been a long day/week.
9% Ouch!!
Clot – just curious … what’s the price range on the house these people are bidding on?
Just wondering if people who are currently buying are going low end (lower than 500k) or middle (501k-700k).
Rachel (129):
“Your Money or Your Life” by Joe Dominguez and Vicki Robin offers an interesting look at personal finances:
http://www.yourmoneyoryourlife.org/
Despite its being touted as a 9 step program, I think its real value is the authors’ take on money and time.
It may spout off what seems obvious to the moneyfolks here, but it opened up my eyes years ago.
Bob Toll grades the markets:
Massachusetts and Rhode Island are F-,
Connecticut’s an A, New York suburbs is a C- but in the last 4 weeks has gone down to a D, but it’s C- on an 8 week basis. City Living which is our tower business in New York is a B+ and City Living in New Jersey, that’s Hoboken and Jersey City a B+. New Jersey suburbs is a D+, C-. Michigan is an F+. It’s not totally dead. Michigan actually is a better market than Vegas. Illinois is a D+, Minnesota is an F. Philadelphia suburbs is a C; Poconos an F. Delaware a B-, Maryland shore as
opposed to Washington, DC Maryland is a D+, it’s up a bunch. Northern Virginia, Washington, DC
a D+, still dancing off the bottom but stayed there and stabilized there. The Maryland Washington, DC market is a C-. In the south Raleigh is a D, a significant change. North Carolina Charlotte is a C+. Hiltonhead is an F+. Florida I gave you but I’ll give you again, central Florida F, lots of cancellations; east Florida Gold Coast F-; Florida north, that’s Jacksonville, D+; Florida Tampa, F-; Florida west coast with lots of cancellations F-. Austin, Texas, C-; Dallas, Texas lately D+; San
Antonio, D+. In the west, Northern California, C-; southern California D+; California Palm Springs
D-; Arizona D-; Vegas, F–; Reno, F; Colorado now F+, down from a C-“
Who gets a mortgage anymore, how quaint?
“Question is.What are you going to buy and how much will you have to overpay.”
Overpay? The cows are coming home.
Unrealtor, you said:
334 White Oak Ridge Road
Short Hills, NJ
Sale History
Jul 18, 2001: $195,000
Nov 02, 2005: $925,000
Maybe someone paid $195,000 for a knock-down and built a much bigger house?
#155
CT is an A? not sure what part of CT he’s looking at. lot of inventory sitting despite price cuts in fairfield county
Real estate goes online
Find out how this couple saved $26,000 by selling their house without the help of an agent.
Another GOLDILOCK day! Dow up 153 pts. Homebuilders UP 7.25% (it is real or bull’s propaganda). back home, HOV up 20% (no buffet hype this time). I guess we should wait bloodbath in Summer 2700.
“Goldman rumours are that their hallowed Alpha fund is struggling and partners are looking at their retirement bonuses dwindle away but crossing fingers that the thing doesn’t blow. If Goldman cannot run a hedge fund, then what chance do the rest of us have?”
“Inflation is a good reason to keep rates up. But why was there no mention of the USD being worthless or the huge trade deficit? Maybe the US has always fended off these foreign issues because whatever it does, the world follows.”
“This time is different because the EUR is becoming the world’s leading currency and the US don’t know what to do. When countries like China, with its huge reserves of USD start offloading them and treat it as just another basket currency, then the US needs to adopt a different economic approach. Like putting rates up. Why anyone would think rates should go down because a few LBO arrangers have nothing to do and consumers are complaining that their credit card bills are too high is crazy. With a negative savings ratio, rate increases will encourage people to save for their retirement. This spending boom has got to stop.”
“Of course the biggest threat is OPEC pricing oil in EUROS. That would heap serious inflation on the US. OPEC are restricting output to keep oil prices up because the USD is a third world currency and everyday it gets less value for each barrel of oil and this will continue until the USD appreciates against the rest of the world’s currencies. Hence Bernanke cannot possible decrease rates.”
“The Man and the Fed are frozen. They do not know what to do, so they do nothing.”
http://fintag.com/
“UnRealtor, possible that house was in bad shape in 2001 and was fixed by 2005?”
Nope, it’s still the same dump it was in 2001, now vacant since 2005.
An “invester” bought it.
“Maybe someone paid $195,000 for a knock-down and built a much bigger house?”
Comrad Scribe, the same crapshack stands.
I think the plan was to build a new house there (a sign used to say “New Construction Coming Soon!” and now a sign says “Land for Sale”).
But the 2001 seller already took all the equity — $730K in 4 years — and the “investor” got left holding the bag.
I don’t think I’ve seen a more absurd transaction than this — people simply lost their minds.
Thanks everyone for the advice on personal finance books. I probably should have stated it wasn’t for me, but my bf’s brother who works for Centex. He is totally in debt and living paycheck to paycheck with $37 in savings. Now with a wife and kid he needs to get this right…and possibly start looking soon for another job.
Rachel
From MarketWatch:
AIG’s mortgage insurance unit hit by housing market losses
American International Group said late Wednesday that its mortgage insurance business lost $78 million in the second quarter from continued weakness in the housing market. The Mortgage Guaranty unit reported an operating loss of $78 million in the period, vs. a profit of $110 million a year earlier. The domestic second-lien business was the primary contributor to the decline in operating income, AIG explained. However, the company said its domestic first-lien business also experienced an increase in incidence and severity of losses.
jb,
It is so nice to see you posting again. Welcome home.
Gary, you sound like a transformer.
I found The Millionaire Next Door interesting. The tone can be judgemental, but the lessons learned make it bearable to read. It won’t tell you specific steps to financial freedom, but it will give you a solid big-picture perspective.
Comrade Unrealtor:
Property Shark is showing 3 transactions in a couple of days along that stretch:
334 White Oak Ridge Rd 11/2/2005 $925,000
330 White Oak Ridge Rd 11/8/2005 $960,000
326 White Oak Ridge Rd 11/15/2005 not available
So maybe someone was buying up a string of properties for a larger project like an apartment complex or subdivision, and didn’t get the approvals or the financing.
The tax info is showing that the land has a higher assessment than the house – unusual.
Land market value $266,500
Assessed building value $87,300
Total assessed value $353,800
Comrade Scribe,
A builder bought up 3 lots, built houses on two, and the 3rd lot is the one in question.
The satellite photo tells the story:
http://local.live.com/default.aspx?v=2&cp=qsqrh78t4tw7&style=o&lvl=2&tilt=-90&dir=0&alt=-1000&scene=7901239&sp=Point.qsqsfr8t4tqj_334%20White%20Oak%20Ridge%20Rd%2C%20Short%20Hills%2C%20NJ%2007078-1158%2C%20United%20States___&encType=1
He built two McMansions, complete with ThatBigWindow over the front door.
Look to the right of the new foundations, the house with the brown roof it the one.
I never thought to check the prior seles for the other two lots. Let me see what comes up…
330 White Oak Ridge Rd
Sold Aug 1998: $315,000
Sold Nov 2005: $960,000
326 White Oak Ridge
Sold Jul 2001: $1 (inherited?)
Sold May 2005: $999,000
And finally:
334 White Oak Ridge Road
Sold Jul 2001: $195,000
Sold Nov 2005: $925,000
So the builder was on a rampage, buying up land/teardowns. Can you imagine selling a house for 4X what you paid in only four years?
At that rate, the house (and it’s a total shack) would sell for $4M in 2009.
Mania indeed.
I’ve lived in manhattan for the past 6 years and do not think it is the most expensive city in the country either. Sure there are a lot of fancy restaurants etc but those arent really a part of my day-to-day existence.
What’s the hell is all this comrade crap? Next damn thing you know, you guys will be calling each other mujahadeen. Hell, many of the posters here are strident real estate militants anyway.
BC Bob and Clod–I’ll get with both of you later. Please do try to get my handle correct. It is not 50.5 or regurgitator.
Large double digit gains are gone…
Oradell
SLD WOODLAND AVE $320,000 6/23/1989
ACT WOODLAND AVE $689,000 8/8/2007
(If they get their asking that’s a little more than 3% a year)
Norwood
SLD ROCKLAND AVE $547,500 6/30/2004
SLD ROCKLAND AVE $620,000 8/8/2007
(More in-line with a normal market, ~4.25% per year)
Washington Township
SLD SALEM RD $689,000 12/4/2003
SLD SALEM RD $825,000 8/7/2007
(Also in-line with a normal market, ~4.6% per year)
#161 bi: But 10 yr at 4.86 36bpd away from yout prediction of 4.50.
#183 Lot of junk in Cliffside Park for sale, a low end town in south BC. Those that know know, others ramble and dribble on themselves.
Comrade Robert said:
“This is exactly why the bus towns are better than the train towns. When you ride a bus, there is no parking your car. You just step outside and wait for the next bus! But, oh no, everyone wants to be in a train town…”
I guess you have never seen or heard about the bus Park and Ride lots in Jamesburg or Cheesequake.
Of course trolls agree, especially clones.
hou53, would you consider lowering your asking price if you dont get the price you originally listed for? just wondering on how a seller like yourself is thinking in the interesting market…
wow…did hou53 just magically disappear from this blog?
#179: I will lower my price but no more than 500k. I am not going to just give it away.
Hou53,
Yeah, the Proletariat. Those plebs can never compete with our haughty wealth. So, which country club do you and your associates gather? Perhaps we can meet over a flute of Remy sometime.
bi,
Are you the lumber trader?
http://us.ft.com/ftgateway/superpage.ft?…
The chief executive of Toll Brothers (NYSE:TOL) said buyer interest in its homes in the latest quarter was at the lowest in 20 years, as the largest US luxury home builder warned on Wednesday that the housing slump could get even worse.
Six weeks in the earlier part of the quarter, which ran until the end of July, saw the “lowest traffic on a per community basis that we have ever had”, Robert Toll said, meaning the company’s housing developments had received on average fewer visitors than at any time since it went public in 1986.
Mr Toll indicated he saw little prospect of improvement in the market in the near term
“BC Bob and Clod–I’ll get with both of you later.”
50.5,
Add BB to your list.
http://en.wikipedia.org/wiki/Image:Joe_morgan74-85.jpg
Cool. A 2nd baseman.
Мы будем сильны! Мы выдержим и нанесем поражение нашим противникам!
1,389 houses for sale in Bergen Co, 500K and under, as per the njmls.
3b (152)-
They have excellent credit, so the lender dangled a piggyback in front of them, which they wisely declined.
Unless you have top-tier credit, piggyback seconds are now completely out of the question.
Bath (153)-
A 290-ish townhouse.
Gary, here’s one we all want to post every now and then.
идиот!
Practically translates itself, doesn’t it?
Anyone have a comparison among Ridgewood, Ho-Ho-Kus, Glen Rock, and Upper Saddle River? (schools, shopping, safety, city services, commute to Manhattan, town “feel”). We are having some difficulty distinguishing, probably because we are not from this area originally-the only obvious distinctions are the train and bus situations. Also, would the residents of any of these towns be more likely to have a problem with us because we are Jewish?
Thanks,
Eagle
#162,
Like I said before if the Fed lowers rates, we may as well start learning Chinese or Spanish for that matter.
Car54 (181)-
“I am not going to just give it away.”
So, you’re going to choke on it instead?
The quote above has got to be the #1 dumbest thing sellers say. A seller may not like the way the market values his home…but market value is whatever a ready, willing and able buyer- not under duress- is willing to pay.
Stand your ground. I agree with your position to not just give your house away. If they want it, make them pay a fair price.
Hou53 Says:
August 8th, 2007 at 8:57 pm
#179: I will lower my price but no more than 500k. I am not going to just give it away.
175#, 183#, the homebuilder’s action today is too significant to be ignored. with bond yield went up 11 bps, it would normally hurt home builders a lot. in addition, bob toll gave dismal outlook. Howver, the market seems indicate that the worst is over. all homebuilders are on fire: LEN +4.5%, TOL +6%, DHI +6.9%, PHM +7.2%, CTX +8.2%, HOV +20%, BZH +25%. It gives a good indication that RE market is going up from here.
192#,
Eagle, you may find out some discussions in this link:
http://www.city-data.com/forum/new-jersey/
Eagle,
First off:
Also, would the residents of any of these towns be more likely to have a problem with us because we are Jewish?
No. It’s the NYC burbs, not Selma, Alabama.
Anyone have a comparison among Ridgewood, Ho-Ho-Kus, Glen Rock, and Upper Saddle River? (schools, shopping, safety, city services, commute to Manhattan, town “feel”).
Ridgewood, Ho-Ho-Kus & Glen Rock all have the train running through town. USLR doesn’t but it’s not far from R-17/Ramsey train station.
Ridgewood has the largest downtown followed by Glen Rock then Ho-Ho-Kus. No real downtown in USLR so no “town feel”.
All 4 towns have great schools and are safe.
Glen Rock (to me) seems to have the highest taxes.
I can’t speak to city services.
Here is NJ Monthly’s of the schools.
6 Glen Rock
7 Northern Highlands Regional (Ho-Ho-Kus)
24 Ridgewood
27 Ramsey (USLR)
bi (196)-
Great call [sarcasm on]. The short positions on some of these guys have dropped to under 20%! Good times.
I guess many hedgies have already covered their massive short positions and moved on to more recent road kill.
However, there’s still more than enough bad news and short interest to keep these guys stuck in the mud. When was the last time the HBs could sustain as much as a three-day rally?
This is the biggest load of crap that’s ever been posted to this board. This is an article replete with a lack of faith in our great nation, our economic system and the US dollar. Whoever wrote this is unamerican and by extension that includes you Mr $ 0.25
We not only have the ecomomic might but the big stick to back it up. If we need to start cracking some heads to get folks in line, so be it.
OPEC knows this and this is why they’re not about to start pricing oil in EUR. We will need to deal with that twerp, Hugo Chavez who’s trying to cut out the dollar. We need to continue our work in Iraq and Iran to not only clear out the militants but to show OPEC and everyone else what they need to do. We have the stick to make sure that the economic rules we’ve been working with stay in place. Gunboat diplomacy will keep the dollars from flying home which makes us less concerned about rates. This is unipolar world and we’re the “uni”
Russia is also a potential problem, but they’re mitigated as along as everyone stays in line.
BC Bob Says:
August 8th, 2007 at 5:56 pm
“Goldman rumours are that their hallowed Alpha fund is struggling and partners are looking at their retirement bonuses dwindle away but crossing fingers that the thing doesn’t blow. If Goldman cannot run a hedge fund, then what chance do the rest of us have?”
“Inflation is a good reason to keep rates up. But why was there no mention of the USD being worthless or the huge trade deficit? Maybe the US has always fended off these foreign issues because whatever it does, the world follows.”
“This time is different because the EUR is becoming the world’s leading currency and the US don’t know what to do. When countries like China, with its huge reserves of USD start offloading them and treat it as just another basket currency, then the US needs to adopt a different economic approach. Like putting rates up. Why anyone would think rates should go down because a few LBO arrangers have nothing to do and consumers are complaining that their credit card bills are too high is crazy. With a negative savings ratio, rate increases will encourage people to save for their retirement. This spending boom has got to stop.”
“Of course the biggest threat is OPEC pricing oil in EUROS. That would heap serious inflation on the US. OPEC are restricting output to keep oil prices up because the USD is a third world currency and everyday it gets less value for each barrel of oil and this will continue until the USD appreciates against the rest of the world’s currencies. Hence Bernanke cannot possible decrease rates.”
“The Man and the Fed are frozen. They do not know what to do, so they do nothing.”
http://fintag.com
>>flute of Remy
huh? that makes no sense.
173#, great post!
> What’s the hell is all this comrade crap? Next damn thing you know, you guys will be calling each other mujahadeen. Hell, many of the posters here are strident real estate militants anyway.
mujahadeen..was that from the movie, “Dune?”
JB,
First, welcome back!
Just curious, is there any type of functionality w/ the blog software to permit users to skip/block certain posters?
Just asking :)
Thanks for some help in trying to distinguish towns.
Eagle,
If you have a car I recommend grabbing a map and driving around on a Saturday or Sunday (due to Bergen County “Blue Laws” no retail sales/stores are open on certain items, so it’s deceivingly quiet beside the fact it’s summer) in each of the towns.
I’d also do a search on each town to find out about services and community organizations. All in all they Glen Rock, Ridgewood and Ho-Ho-Kus are great towns (USLR is also but as I said, no real “town feel”).
Best of luck,
Rich
#200 reinvestor; Ther is nothing worse than an uninfprmed ignorant patriot.