Preliminary July sales and inventory data for Northern New Jersey is in..
The first graph plots the unadjusted sales data (closed sales) for the counties listed. Please note the lower bound of the graph, it is set to 1000, not to zero. I do this to emphasize the seasonal nature of the Northern NJ market.
(click to enlarge)
The second graph is another view at the sales data for the full year. Please note that this graph does cross at zero.
(click to enlarge)
The third graph displays only July sales, 2000 to 2007 YOY.
(click to enlarge)
The fourth graph displays an overlay of Sales and Inventory from 2003 to 2007.
(click to enlarge)
The last graph, new this month, displays the year over year change in inventory on a monthly basis.
(click to enlarge)
From the Financial Times:
Toll warns on deepening housing slump
The chief executive of Toll Brothers (NYSE:TOL) said buyer interest in its homes was at the lowest in 20 years in the last quarter, as the largest luxury home builder warned on Wednesday that the US housing slump might 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”, said Robert Toll, meaning that the company’s housing developments had received on average less visitors than at any time since it went public in 1986.
Mr Toll indicated he saw little prospect for improvement in the market in the near term.
July 2007 looms large.
Wow, those sales are just terrible…
JB, thanks again for providing these graphs. Very, very helpful!
From Newsday:
Delta Financial, LI subprime lender, puts off earnings report, stock hammered
By James Bernstein
james.bernstein@newsday.com
5:57 PM EDT, August 8, 2007
Delta Financial Corp. of Woodbury, which originates and sells sub-prime mortgage loans, yesterday abruptly postponed its second-quarter earnings report, stunning investors who were already expecting disappointing results.
The news sent shares tumbling. Volume was 15 times usual and the drop was 40 percent, or $3.20, to $4.75. For the year, it is down more than 50 percent.
The company, Long Island’s 20th largest in terms of revenues, announced on its website it was postponing its earnings release. It issued no press release or other type of communication to investors.
Delta’s unexplained earnings delay cames during a crisis in the mortgage industry. Dozens of lenders have gone out of business this year, including the now-bankrupt American Home Mortgage Investment Corp. that was until recently the sixth-largest company on Long Island and one of the top 10 mortage banks in the country. American Home began bankruptcy court proceedings Tuesday.
Larry Karpen, a Delta vice president, offered no reason for the postponement and declined to say when second-quarter earnings would be released.
Richard Eckert, who follows the mortgage-lending industry for Roth Capital Partners in Los Angeles, said the postponement came as a major surprise.
“I’m wondering what they know today that they didn’t know yesterday or two days ago,” Eckert said. “If they were planning to postpone the earnings report, why didn’t they issue a press release? Why wait until this morning? Why leave it for people to find out by themselves?”
Eckert said most investors were anticipating disappointing results, given the state of the mortgage industry. “But not to be told anything at all and have to wait until the last minute…”
“While not unprecedented, this behavior is rare,” Eckert said. Eckert said he has a hold rating on the stock.
The company’s earnings report was scheduled to be released at 8 AM Wednesday, 90 minutes before markets open for trading.
Delta had about $512 million in sales last year and it has about 1,395 employees.
Delta specializes in mortgages that do not conform to the standards of government-sponsored enterprises like Fannie Mae or Freddie Mac. It offers subprime loans to borrowers who may have risky credit.
However, the company focuses on fixed-rate mortgages and has steered clear of the type of loans that have gotten some other lenders into deep trouble this year. Despite some rocky periods in the past, Delta has said recently that it was safe from big problems.
In May, Delta reported lower earnings in the first quarter, a result of the slowdown in the housing market across the country.
Delta said it had earned $4.9 million in the first quarter, compared with $6.6 million in the same period last year.
“While we are not immune to the effects of the current challenging market conditions and potential future market disruptions, we believe we are well positioned to continue to grow as we believe the demand for sub-prime loans remains strong,” Hugh Miller, Delta’s president and chief executive officer, said in a statement accompanying the first quarter earnings report.
From Bloomberg:
Subprime `Tsunami’ Hits Asset-Backed Commercial Paper Market
Companies are extending payments on commercial paper backed by home loans for the first time as the subprime mortgage crisis spreads to debt perceived to be among the safest in the market, according to Moody’s Investors Service.
Units of American Home Mortgage Investment Corp., the residential-mortgage lender that filed for bankruptcy, Luminent Mortgage Capital Inc., facing margin calls from lenders, and Aladdin Capital Management LLC, this week exercised an option allowing them to delay repaying the debt, Moody’s said.
The three issuers are probably the only ones to defer payments since extendible asset-backed commercial paper was first sold 12 years ago, according to New York-based Moody’s. The failure of some companies to pay on time has cast a pall over the securities, which are considered to be almost risk free, said Lee Epstein, chief executive officer of Money Market One.
“The subprime tsunami has come to the beach, as it were, to the safest of the safe,” Epstein said. Money Market One is a San Francisco-based broker-dealer of short-term securities.
scribe (4)-
“If they were planning to postpone the earnings report, why didn’t they issue a press release? Why wait until this morning? Why leave it for people to find out by themselves?”
Maybe they needed enough time to beat it to Tierra del Fuego.
or to cash out their off-shore accounts before filing for bankruptcy protection.
egads.
sl
What’s still amazing to me is the volume under 2002.
NJ NAR Membership
2002 40546
2003 44819
2004 49596
2005 55382
2006 58082
I realize some of this 18k headcount is folks who just wanted to do their own transaction or watched a little too much HGTV, but still, it’s a lot of people chasing a lot less transactions.
From Bloomberg:
BNP Paribas Freezes Funds as Loan Losses Roil Markets
BNP Paribas SA, France’s biggest bank, halted withdrawals from three investment funds because it couldn’t “fairly” value their holdings after concern over U.S. subprime mortgage losses roiled credit markets.
The funds had about 2 billion euros ($2.76 billion) of assets on July 27, including 700 million euros in subprime loans rated AA or higher. The Paris-based bank said today that it will stop calculating the net asset value for the funds, Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia.
The bank’s announcement sent its shares down as much as 4.5 percent, pulled the benchmark European stock index lower by more than 1 percent, and helped U.S. Treasuries rally for the first time in four days. Bonds backed by home loans have lost value as late loan payments by borrowers with poor credit histories rose to the highest since 2002.
“The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating,” BNP Paribas said in the statement.
From Bloomberg:
NIBC Loses at Least EU137 Million on U.S. Subprime
NIBC Holding NV, a Dutch investment bank owned by a group including J.C. Flowers & Co., said it lost at least 137 million euros ($189 million) on U.S. subprime mortgage investments this year.
The company expects “further mark-to-market losses on our U.S. asset-backed securities investment book” after the first half, The Hague-based NIBC said in a statement today. Net profit for the first half declined to 3 million euros from 190 million euros in the same period a year earlier, the bank said.
“Severe instability in the U.S. credit fixed-income markets and continuous credit-spread widening have further increased the non-recurring mark-to-market loss on our U.S. ABS investment book,” Chairman Michael Enthoven said in the statement. “All other business activities showed healthy underlying growth.”
From Bloomberg:
Treasuries Gain on Signs U.S. Subprime Crisis Spreads to Europe
Treasuries rose after BNP Paribas SA, France’s biggest bank, froze three investment funds, reigniting concern the U.S. subprime mortgage crisis is spreading and prompting traders to seek the safety of government debt.
…
“Treasuries rallied because we have the news of the Paribas fund suspensions, which is an indication the subprime credit woes haven’t gone away,” said Marc Ostwald, strategist at Insinger de Beaufort in London. “No one’s going to be in a hurry to sell when we’ve got this sort of news flow in the background.”
Welcome back (with a vengeance!), Jim! What amazing charts…
ECB Lends Unlimited Cash at 4% as Money Rates Surge
http://www.bloomberg.com/apps/news?pid=20601087&sid=aCWlglzLiJNo&refer=home
The European Central Bank said it will launch an unlimited fine-tuning operation today to add liquidity at 4 percent after demand for cash in the European money market drove interest rates higher.
“Every bank is being suspected now, so no one is willing to lend money to anyone.”
JB,
I emailed you pics from KHOV’s West Paterson/Clifton project. Welcome back
From Bloomberg:
Lending Rates Rise, Overnight Dollar Libor Surges
The British Bankers Association said the overnight lending rate that banks charge each other to borrow in dollars rose to 5.86 percent today from 5.35 percent.
The so-called London interbank offered rate in dollars is the highest since the start of 2001.
The benchmark borrowing rate is rising on concern banks face growing losses on investments linked to U.S. mortgages. The European Central Bank said today it is “closely monitoring the situation and stands ready to act to assure orderly conditions in the euro money market.”
“Liquidity in the market has completely dried up as investors aren’t recycling their money back because of subprime concerns,” said Saher Bin Jung, a trader on the commercial paper desk at Commerzbank AG. “Levels have shot up dramatically since yesterday as issuers are trying to entice investors back.”
Bank of America Corp. and UBS AG said their overnight borrowing costs rose 65 basis points to 6.00 percentage points. Royal Bank of Canada said its costs rose to 6.00 percentage points from 5.37 percentage points. Barclays also said it needs to pay 6.00 percentage points to borrow overnight in dollars, up from 5.38 percentage points yesterday.
…
Three-month dollar Libor increased to 5.5 percent from 5.38 percent.
From the Trenton Times:
Budget divides council Dems upset by increase
In a contentious meeting fraught with political acrimony, the township council last night introduced a $45.6 million budget that carries a 43-cent increase on the municipal tax rate.
…
“We have proposed a budget that without unforeseen problems, will be a budget that will alleviate the need for emergency appropria tions in the future,” said John Barrett, the township’s chief financial officer.
The Democrat-controlled council wasted no time criticizing the tax increase tied to the budget, which was prepared by Ball, a Republican, and his administration.
“The amount of the increase in the expected taxes that will burden our taxpayers is unprecedented,” said Councilwoman Kathy Wollert, a Democrat. “There has never been a year we had that dollar figure.”
Administrators hope to reap at least $4 million in financial aid from the state to bring the tax rate increase down to 22 cents. “Even at 22 cents, it’s unprecedented,” Wol lert said. “If it goes to 43 cents, I can’t imagine.”
…
“They’re very eager for us to demonstrate our need to them,” said Barrett. A 43-cent increase would raise the municipal tax rate to $1.16 per $100 of assessed property value. It would mean the owner of a house assessed at the township average of $127,100 would pay $547 more in municipal taxes this year.
From the Montclair Times:
‘The Hollow’ residents petition for new assessments
Felix and Raquel Ocasio are feeling the financial crunch of their recently appraised William Street home, which had not been assessed since 1989.
The Ocasios have resided in Frog Hollow or “The Hollow” — a close-knit area — for nearly seven years. And, like many of their neighbors, found their third-quarter estimated tax bill to be unexpected.
“It was a shock, a total shock,” Felix told The Times.
The Ocasios now have to pay $1,000 more than they have in past quarterly bills.
“It’s something we didn’t budget for,” Felix said. “To come up with $1,000 each quarter is definitely a financial hardship for us.”
He maintains that Appraisal Systems Inc. (ASI), the company hired to carry out the revaluation, encompassed some addresses in small neighborhoods. Homes in The Hollow, however, were compared to properties on Claremont Avenue, Walnut Street and Valley Road.
“We could never get the prices that they assessed our house for,” Felix said.
…
“We are asking you to bring our assessments into line with the true market values of our homes, as was the intent of this reassessment,” Diane Galin of Central Avenue told the municipal government. “We ask that you look at recent home sales only within the Hollow when determining market value.
“Please help us protect the historic neighborhood,” Galin said. “We do not want to lose any more historic homes to developers, who tear them down and put up unattractive, multifamily homes that detract from the charm of our neighborhood.”
The Frog Hollow residents, who described their neighborhood as “a unique, stable place to live,” contend that there have been few home sales in their section of town, “making it almost impossible for us to appeal our assessments on an individual basis.”
Wow. Outstanding work. I’d make a projection for Nov/Dec, but the numbers could actually be decent if even 1/4 of the potential foreclosures happen.
Bigger fraud: David Lereah or barry bonds?
Started off the year fairly well…only to see sales deteriorate YOY in June & July. Very helpful to have such definitive, well presented figures. Thank you. I’m eager to know where we’re headed in Aug & Sept. Have you considered publishing data on contracts signed…a leading indicator of future sales?
Steve,
That data is available via spreadsheet, it can be found here. The contracts spreadsheet has not yet been updated for July. It contains both NJMLS and GSMLS contracts data.
https://njrereport.com/files/contracts.xls
jb
Wow did anyone notice the jump in LIBOR today. WOW!!!
“BNP Paribas SA, France’s biggest bank, halted withdrawals from three investment funds because it couldn’t “fairly” value their holdings”
#9,
It’s simple, mark it to the market. The top banks in the world are starting to sound like the trapped RE sellers.
Steve (19)-
Disagree on that. With HBs running a 30-35% cancellation rate, plus a significant number of resales that fall through due to buyer inability to secure financing, an “under contract” number would not be a reliable indicator of future closed sales.
And, closed sales are ultimately all that matter.
WOW. It looks like July,2007 sales are off approx 25-30% from July, 2002.
Question for JB, Clot, KL, BC Bob and other veterans of this blog.
What is the cost of getting a RE license? I mean both in terms of hours required to take classes/study as well as exam/licensure fee? Is there any annual renewal fee for the RE agent license?
I’m asking this because I’m wondering if the entry barrier/ cost is low enough to do just 1-5 transactions. I mean I’ll be buying my house in next 3-4 years and so will 3 other members of my immediate family. So will saving them (& myself) the RE agent fee worth it.
Another question – once you are a RE agent, can you somehow forgo the broker fee? I know that RE agent only gets the 1.5% of the 6% pie, but if I am doing the transaction for myself, can I somehow reduce the other agent/broker/my broker co. 4.5% fee?
Thanks in advance.
I’ve got to agree with Clot (#23), I’m beginning to see a disconnect between contracts and sales. I’m beginning to doubt the usefulness of contracts as a leading indicator unless we have definitive data on resale cancellation rates.
While year-to-date contracts have been running slighly under 2006 pace (down 1-2%), year-to-date sales have been running signifanctly lower (down 8%). Contracts are simply not materializing in sales.
jb
Just read an article on cnn finance about rates increasing on the jumbo mortgages.
I understand this will inadvertantly help in bringing down prices of the higher end houses (700k – 1mil segment). How much % fall should we expect in this segment in next 6 months – 1 year?
From Bloomberg:
ECB Lends 94.8 Billion Euros as Money Rates Surge
The European Central Bank loaned an unprecedented 94.8 billion euros ($130.2 billion) after demand for cash in the European money markets drove interest rates higher.
…
In a statement today, the ECB said it was providing emergency funds “to assure orderly conditions in the euro money market.” It allotted 100 percent of the 49 bids at a fixed rate of 4 percent.
It was the first operation of this type since the attacks of Sept. 11. A day after the attacks, the bank allocated 69.3 billion euros, followed on the Sept. 13 by a 40.5 billion euro award.
“The British Bankers Association said the overnight lending rate that banks charge each other to borrow in dollars rose to 5.86 percent today from 5.35 percent.
The so-called London interbank offered rate in dollars is the highest since the start of 2001. ”
This is terrible news for people with sub-prime ARM loans. Most loans reset based on the Libor rates. It will also impact confroming ARMS as well.
att Says:
I understand this will inadvertantly help in bringing down prices of the higher end houses (700k – 1mil segment).
Jumbo mortgages are anything over $417,000. That means prices of $450,000 and up will be affected, which pretty much covers most of the decent houses in NJ
From Reuters:
Mortgage delinquencies spreading — AIG
Residential mortgage delinquencies and defaults are becoming more common among borrowers in the category just above subprime, American International Group said on Thursday.
In a presentation on its subprime exposure, AIG, the world’s largest insurer and one of the biggest mortgage lenders, said total delinquencies in its $25.9 billion real estate portfolio were 2.5 percent.
It said 10.8 percent of its subprime mortgages were 60 days overdue, compared with 4.6 percent in the category with credit scores just above subprime, indicating that the threat to the mortgage market may be spreading.
(emphasis added)
data on contracts signed…a leading indicator of future sales
I have to agree with Clot and JB as well.
This was true up to 2005 and maybe even part of last year but with the number of units I see fall out of contract this past year on a monthly basis I think at best you could call it a possible leading indicator of future sales.
Rich
lurky (25)-
Don’t bother. Any traditional company that thinks you’re coming in only to trade your own account either won’t hire you or will impose such a punitive split, it won’t be worth your time.
29,
Many don’t know that they have an arm. Most have no clue what libor is. It is going to get real ugly in the next 6-9 months.
x-underwriter.
Is 417K number – the max. limit for the sale price of home or the max for the mortgage amount to qualify for fannie mae/freddie mac?
If it is just the mortgage amount, wont most of the people buying a 500K house just come up with 80K downpayment to avoid the ‘jumbo’ premium??
MO (29)-
“This is terrible news for people with sub-prime ARM loans. Most loans reset based on the Libor rates. It will also impact confroming ARMS as well.”
Not to mention the junk bond market! Lots of slop out there just saw the spread blow out some more.
“The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating,” BNP Paribas said in a statement.
oofa.
#34,
Third quarter resets are looming large on the horizon.
https://www.njrereport.com/images/armresets.gif
jb
Something ugly is going on in the markets this morning..futures are way, way down.
Anyone seen/ tried the site hungryagents dot com? From other blogs, people were able to interview buyer side RE agent and get upto 58% commission back from the agent.
I know, I know – seasoned agents like clot would argue that these are newbie agents or desperate RE agents. But if an agent is ready to put in all offers( even lowball) and shows me houses while I do all my research myself, wouldnt it be worth it to get cash back from RE agent?
Thoughts / Comments?
It’s simple, mark it to the market. The top banks in the world are starting to sound like the trapped RE sellers.
#22,
You ain’t kiddin’. From MarketWatch:
AIG owns $94.6 billion of residential mortgage investments
Residential mortgages are 11.4% of AIG invested assets
AIG sees no need to sell any investments in “chaotic” market
Fed is adding reserves.
longtimelurker,
As Clot says no broker is going to take you on if you only plan on trading your own account.
And from what I understand you have to attend training and pass another test to gain a broker’s license.
wouldnt it be worth it to get cash back from RE agent?
NJ real estate licensure law prohibits any non-licensed individual from receiving any commission on the sale of property. These kinds of cash-back deals are considered commission, and are not allowed in this state.
The best an agent can do is cut their own commission, or cut the commission payable to their side (broker and agent). However, if the sales prices doesn’t drop by the same amount, the discount goes to the seller, not the buyer.
jb
#35 att Depends on how many people can up with an 80K down payment. My bet would be the average person cannot, coem up with that kind of cash any time soon.
HEre is the link from other site that I referred to in my post # 40:
http://www.mymoneyblog.com/archives/2007/05/finding-a-home-buyers-agent-commission-rebates-interview-questions.html
Funny thing is that some RE agents commented on that blog expressing their shock and concern at such big cashbacks for buyers. Here’s an excerpt from one of the RE agent who commented on that site (post #2):
”
I can understand sellers being picky, after all, it’s their equity they are using to sell the home, but these programs to cheapen the buyers experience really worry me. I really have yet to see how this benefits consumers. ‘Hungry agents’ is right, most people have a hard time breaking even in the business, not to mention trying to pay their bills. This type of thing will eventually go the way of the Dodo once all the people who have under cut the market to the bone get undercut themselves and have to work elsewhere.”
Well – the only thing I can say is free market will find a way that is most efficient.
att Says:
August 9th, 2007 at 8:51 am
x-underwriter.
Is 417K number – the max. limit for the sale price of home or the max for the mortgage amount to qualify for fannie mae/freddie mac?
If it is just the mortgage amount, wont most of the people buying a 500K house just come up with 80K downpayment to avoid the ‘jumbo’ premium??
80k downpayment??? LOL no wait, ROFL!!
how about cash back at closing/0% downpayment?? less than 3% downpayment for more than 60% loans closed in last 3 years??
And from what I understand you have to attend training and pass another test to gain a broker’s license.
A bit harder, since you need to have 3 years full-time experience to qualify for a broker license. The difficult requirement is the fact that you need to operate your own agency, and their are strict regulations surrounding location and operating hours, etc.
It’s highly unlikely that someone who attempts to open their own agency will break even doing a handful of sales for friends/family.
jb
Is 417K number – the max. limit for the sale price of home or the max for the mortgage amount to qualify for fannie mae/freddie mac?
$417k is the current conforming loan limit for a one-unit property.
jb
Goldilocks is just fine, pay no attention to the emergency actions this morning by the ECB and Fed. Economy is strong, move along, nothing to see here. God bless and keep spending.
jb
http://www.state.nj.us/labor/warn/2007/07-07warn.htm
check this out – why is STOP & SHOP laying off massive amount of people?? are they in trouble – it is not like they are paying their people good money anyways…
Statistics have been showing that downpayments have been getting smaller and smaller. 5% is typical for a first time buyer. At $450,000, that would put you at $22,500 down with a $427,500 mortgage which is a jumbo.
Get ready for another bloodbath today. Overnight rates have spiked 200bps.
sorry 20bps.
Fed injects $12b in temporary reserves.
jb
JB #17 – I live in Montclair and can attest to the problems with the recent reval. The arbitrary neighborhood designations were a real problem for us. Our very modest multi family home was included in a neighborhood that had some high end single family homes sell for really high prices (gut job flips with viking ranges, sub zero, granite, redone bathrooms, etc). The assessors did not seem to factor in a premium for those types of luxuries into their values. Our assessment was based on the sale of these homes, even though they are in no way comparable to ours (nothing in our home has been renovated since the 1950’s). We were initally assessed for easily $75-100k more than we can hope to sell our home for.
Meanwhile multi family homes within just a few blocks of our home, but in a different “neighborhood” assessed for $100-$150k less than us.
We have comps of multi family homes near ours, where ASI assessed them for more than our home, yet they sold for $50k less than our assessment. We are currently waiting for our day in State Tax Court to appeal our assessment.
Interestingly enough, I have found while checking 2007 sales of higher end homes, that many of these homes have been selling for way more than their new assessment (quite a few assessed 100k or more below sales price). It looks like ASI has left quite a deal of valuation on the table for these homes, and the tab is going to be picked up by the middle class homeowners who will be paying more in property taxes to make up for it.
Next year will be an interesting year for tax appeals in Montclair. Our valuation date is Oct 1, 2006. Theoretically, home prices will be falling, and state law does not allow for any homeowner’s assessment to be more than 100% of FMV. Also, if many of the homes that sold this year are assessed below sale, we might see a director’s ration of less than 100% for the town, which means that folks who appeal successfully could actually bring their assessment below market value for the 2008 tax year.
Clot (#33) Rich(#43), JB (#48).
Thanks for your replies.
But if getting a RE license to do transactions for yourself/ your family is almost a waste of time, why do most people who do it, do it?? (Just curious).
Also I see that you mentioned most ‘traditional RE co. wont hire that agent’. What about non-traditional co. such as Foxtons or something else – since most of the agents there are newbies anyway. Cant that guy just work at one of such non-traditional companies and try to cut the fees in the transaction everywhere?
Also JB (post #48) – It is my understanding that you became a RE agent to work part-time doing deals for friends/family. How come it is worthwhile for you, and not someone else who wants to repeat what you did? (Is my understanding about your motive incorrect?)
Great charts JB.
Compared to 2004, Inventory up 62% , Sales down 22%.
2004:
Peak Inventory: 16,000
Peak Sales: 3,600
2007:
Peak Inventory: 26,000
Peak Sales: 2,800
#25 longtimelurker,
The cost is a few grand as you have to pay for the class and then $160 for a salesperson license and then $100 each year for renewal. Go to http://www.state.nj.us/dobi/recfees/htm for further info.
The main cost is your time going to the classes, it’s like taking a full college course, it’s not like one saturday afternoon and you’re done.
Clot has more insight into RE shops than I, so it may be hard to join a place only to sell your own house (I think some places also require you to be in the office a few hours a week to answer the phone).
Then again, if you could still get the broker his share without them doing much, they may not care. I have a friend who has their own shop and said they’d be willing to let me get my license and then work for them to sell my own house and friends etc without having to do “office hours” etc.
I’d like to do it, I just don’t have the time for the classes.
Also, the standard is no longer 6%, but 5%.
#56
It definitely can be done. I purchased my home in Oct ’06 for what I considered to be under market value (Estate sale, discount broker, etc). I was able (with the help of an experienced attorney) to reduce my assessed value to less than what I paid for the property. The house two doors down recently sold this month for $85K over what I paid for my house and that house is smaller. The whole thing is kind of a joke. My assessors main worry was lowering my assessment so much that others might notice and do the same (thus increasing his workload). He cared more about that then the actual comps in the area. Only through determination can you get them to cave. They want those tax dollars as much as you want to keep your hard earned money!
we’ll have to see how today’s market problems play out. it could be an isolated event or a sign of further things to come. remember it’s august so many heads are on vacation and volume is thin. also we’re not talking about bnp paribas going out of business it’s just a couple of funds they can’t price. if this pattern plays out beyond today and more funds start announcing similar problems we could be looking at some serious trouble. time will tell.
#44: “The best an agent can do is cut their own commission, or cut the commission payable to their side (broker and agent). However, if the sales prices doesn’t drop by the same amount, the discount goes to the seller, not the buyer.”
We did this with our first house. Our agent “gave us back” 1%, but it was shown in the purchase price. *sigh* That was a $1350 savings back then!!
56 NJGator,
I don’t know if it’s the rule of thumb, but when my town did a reval back in 2004, they were below market by like 10-20% across the board. The assessment # really doesn’t matter, what matters is what your assessment is relative to your neighbors and others in town. If you and I have the same exact house it doesn’t matter if we’re both assessed at $100 or $200 as long as we’re both at the same $ and it’s similar to other houses in town.
I don’t know the real answer, but I thought they put the assessment lower than true MV so that when people complained, they could easily point to examples of houses that sold for above the assessment and that way homeowners really couldn’t complain. The only complaint would be for comparable assessments.
In my town I know they had a week where you could go meet with the assessors before they were finalized and argue your case. I went just for the hell of it and got a few $ off even though my assessment was below MV and I really didn’t havbe much of an argument for comparables, but they still threw me a bone. Did you have a similar thing? What was the outcome? The assessors will allw you to use comparable asssessments while the tax board only wnated comparable sales (which are higher than your assessment and therefore tough to argue).
>>folks who just wanted to do their own transaction or watched a little too much HGTV
it’s going to be a breath of fresh air to see all these house related channels go bye bye as the fad for RE subsides. the ‘innovation’ around these shows is akin to the reality tv series just stupid after a while.
it could be an isolated event
A meteor hit the earth 65,000,000 years ago; that was an isolated event also and we sort of know how that one ended. :o
I receive MLS e-mails for Millburn/Short hills.
Today I received one that was bank owned. This is the first time I saw a bank owned property in Short Hills. (My parameters are under 930K).
Richard Says:
August 9th, 2007 at 9:37 am
we’ll have to see how today’s market problems play out. it could be an isolated event or a sign of further things to come. remember it’s august so many heads are on vacation and volume is thin. also we’re not talking about bnp paribas going out of business it’s just a couple of funds they can’t price. if this pattern plays out beyond today and more funds start announcing similar problems we could be looking at some serious trouble. time will tell.
Reech: agreed
>>Goldilocks is just fine, pay no attention to the emergency actions this morning by the ECB and Fed. Economy is strong, move along, nothing to see here. God bless and keep spending.
i would agree. the fed and ecb are providing liquidity to balance the market due to particular events. i see nothing to get your panties in a bunch over. as i said if this becomes more widespread then concern should mount.
Richard (#68)
I think JB was being sarcastic. You obviously missed it.
Richard
Bought & Sold on HGTV just had an interesting show on a beautiful house in short hills on almost an acre of land. Started at $1.829 and literally had no bites. All the agents agreed that it was a good price. Lowered to $1.69 when the show ended. This must have taken place last fall, when the real drop started. If Short Hills can get hit, what hope do the rest of us schlubs have?
tcm,
Here is the history:
MLS# 1663028
List Date: 2/18/2004
List Price: $1,394,876
Reduced: $1,275,000
DOM: 276
Expired
MLS# 2254564
List Date: 3/8/2006
List Price: $1,150,000
DOM: 82
Expired
MLS# 2293943
List Date 6/28/2006
List Price: $1,150,000
Reduced: $1,050,000
DOM: 78
Went U/C, never closed
MLS# 2433677
List Date: 8/8/2007
List Price: $899,900
Please ignore these graphs and data. They key things to remember when buying a house is:
1. Immigrants are coming to this country with 700K stuffed in suitcases to buy cruddy capes.
2. They don’t make land any more.
Right Reechard??
jb,
Do you have any info on the following below? This was a flip and it just fell off the radar a few months ago.
3 Meadow Lane
Montvale, NJ
Thank you!
#71 jb
thanks
From MarketWatch:
Whatever happened to mark-to-market
Marking to market. Don’t those words mean anything?
To BNP Paribas, which on Thursday became the latest in Europe to freeze funds invested in asset-backed securities, evidently not. See related story.
No doubt there are few more suspensions of ABS funds to come.
One has to wonder why this is acceptable behavior. True, these asset-backed funds weren’t available to the retail public; it’s institutions that are taking it on the chin. (More evidence, of course, that having more assets to play with doesn’t make an investor any more sophisticated.)
And in Europe, there are a number of rules, both formal and in practice, on fund governance. For example, one of the BNP funds that was frozen was run under Luxembourg’s rules; another under France’s.
But whether legal or not, it’s outrageous for a fund manager, as BNP Paribas did, to stomp its feet and say, “our assets have to be worth more than that!”
At the moment — taking BNP at face value — even asset-backed securities that aren’t likely to default aren’t worth much of anything. To which the proper response should be…so what? If the French bank thinks they are underpriced, they should go out and buy more ABS, as they would if they thought, say, Bear Stearns was underpriced.
Anyway I was reading the article on Toll’s earnings and what stuck me was that 43% of their sales is to Alt-A borrowers. Given that the Alt-A spigot has been shut, this should have a major negative impact on the future earnings of Toll. They also mentioned that they are having difficulty finding enough suckers (sorry investors) to buy the mortages they originate in their in-house lending arm.
gary,
Was it 3 or 5?
jb
Whatever happened to mark-to-market?
Same goes for Home Sellers too. They have a price in their head and refuse to recognize the changing market place at their own peril.
jb,
It was definitely 3.
Richard,
Volume is light and WS is on vacation? What the hell are you talking about? Volume is thru the roof, pull up a chart on the financials, H-B’s, multi-nationals, etc… I get it, your book is blowing up, head to the beach? Your are kidding, right? Vacations are cancelled, desks are occupied. That is of course, except Jimmy Cayne. He may still be arguing about his golf score down at Deal.
You’re right, Paribas is not going down. Some solace for the investors in the funds.
Anybody who buys a home right now in this turbulent market deserves what they get……I predict an additional 20-30% reduction in true value from peak to trough. The panic out there is accelerating!! rightfully..
No immigrant comes here with 700K stuffed in their suitcases! If they had that much money, they’d stay back home. Most probably, they come here to work, save and send back 700K.
But seriously, financial engineering (think 0% APR for cars, IO, hybrid/option ARMs, refis, etc for houses) brought too much demand forward by a few years. As a result, there is a vacuum being created by a dearth of buyers. Without the greasing (cheap money), there are even less buyers.
Spreads have blown, reducing the FFR ain’t going to cut it. All it will do is give a dollar a nice spanking.
#80
Jimmy has been on vacation for a long time.
One time a few years ago I was in his office to help him out with something and he was eating his breakfast off of the fanciest silver platter I have ever seen. I greeted him good morning and then went about my business, one thing I did notice was the rag he was reading while eating his breakfast. Financial times, WSJ, Barrons? No, No and No.
It was the glorious NY Post. Absolutely priceless. I wish I had a cell phone camera with me at that point. Maybe if the guy ever picked up the WSJ he would have had a clue as to what was going on in the world. The only thing the Post will get you is the latest arrest/imprisonment involving Britney/Lindsay/Nichole.
From MarketWatch:
More cost-cutting announced at Option One Mortgage
H&R Block Inc. disclosed that further cost-cutting is happening at its ailing Option One Mortgage Corp. business ahead of the unit’s planned sale.
H&R Block didn’t provide details of the planned cuts by year-end in a filing with the Securities and Exchange Commission, but noted they should be made by year’s end. The move was made Monday, the company said, to expand an ongoing restructuring at Option One.
H&R Block said in April the unit would be sold to private equity firm Cerberus Capital Management LP for $300 million less than the value of Option One’s tangible net assets at closing. On Jan. 31, that level was $1.27 billion.
Ahead of the deal’s anticipated closing this fall, H&R Block said in May it would cut about 615 jobs at Option One amid lower loan demand and the value it could get from investors on new mortgages.
H&R Block also said in Thursday’s SEC filing that Option One “may commit to additional restructuring actions.”
In addition, the unit’s sale is still hoped to be completed by Halloween, though it may get pushed back to the end of the year.
The lending market has been walloped by the tightening of lending standards and a significant drop in investor demand for home-related loans.
Re: Mark to Market
This sort of reminds me of my very first job on Wall St. millions of years ago.
I worked in a retail branch of a brokerage in downtown Manhattan with a bunch of old time brokers.
A customer called up and wanted to sell shares of a stock that was listed in the pink sheets.
After the broker called the traders, he got back to the customer and told him that no one was making a market in that security.
I couldn’t understand it at the time. My brain couldn’t fathom how on Wall St. there wasn’t a market in something. Maybe I misunderstood what it meant to say “no one is making a market” – so I asked. The old broker just turned to me and said plainly, “no one wants to buy these.” He made it perfectly clear.
It was a learning experience.
what a goldilocks day! Dow down 1% but HOV up 8%, BZH up 10%, DHI up 1%, TOL up 1% …
bond yield resumes its move to my target 4.5%. BTW, fed fund futures priced 100% rate cut in September. Crude down $1.25 to 70.90. Everything is moving as expected.
what’s the address for that house in Short Hills? Main road? What are the taxes?
Mike NJ [80],
Great story.
Richard [68],
JB threw you a fastball right down the middle of the plate, you whiffed.
bergenbuyer #63: My town was revalued last year based on comps prior to October 1, 2006. We too had the opportunity to meet with someone from the valuation company, but there was nothing significant (other than few updates other than structural ones like upgraded electric, new furnace, new siding, windows, gutters) that I could give them to appeal my assessment. Of course they refused to budget an inch. So now I am paying taxes based on a peak-price assessment, and there has been so little movement in houses like mine that I have no more recent comps to work with. Our appeal window is February-April, so we’ll have to see what it looks like by then next year.
From the Boston Globe:
Mortgage seekers caught in squeeze
A growing credit crisis is prompting lenders across Massachusetts to cut back suddenly on new loans, making it difficult for even creditworthy borrowers to get mortgages and causing some home sales to fall through at a time when the housing market is already slumping.
…
Some borrowers who would have previously qualified are now being rejected for jumbo mortgages, while others are paying higher interest rates, mortgage bankers and real estate agents said. Rates for jumbo mortgages increased more than three-quarters of a point over the past week, to 7.875 percent, said Sushil Tuli, president of Leader Bank in Arlington. Meanwhile, rates on mortgages below the jumbo threshold, so-called conforming loans, have held steady or dropped slightly in recent weeks.
Keith Shaughnessy, president of Foundation Mortgage Corp. in Littleton, said the mortgage market “is moving right beneath our feet. The new story is people with good credit are now having a tough time getting a mortgage.”
From the PA Post Gazette:
Broker: Lenders ‘tightening screws’ on home buyers
Chuck Sanders, chief executive officer of Penn Hills-based Urban Mortgage, a mortgage broker specializing in helping home buyers with blemished credit histories, summarized the impact of the turmoil in mortgage markets with one word: “Ow!”
While severely distressed lenders have stopped making loans altogether, Mr. Sanders said, the truly painful part is that lenders who remain solvent are “really tightening the screws” in qualifying customers. In July, six of 25 loans that he had expected lenders to make to his customers fell through.
“It’s a rough market; there’s no way around it,” he said.
Like Mr. Sanders, Joel Kaufman, president of Pittsburgh National Lending, works primarily with subprime lenders. When he saw problems developing in the subprime market several months ago, his South Side-based company changed its approach to getting customers qualified for loans. In the past, Mr. Kaufman would submit a customer’s loan application to a single lender, then submit it to a different lender only if the first one did not work out.
Now, he said, “We like to submit our loans to at least three different lenders” from the outset.
…
And the worst may be yet to come.
Mr. Sanders believes that “a couple more national major lenders” may close their doors, and he hopes, “optimistically,” that the turnaround may come in the second quarter of 2008.
“But I’ve heard doomsday as far as three years out,” he said.
Mr. Hoffman’s projections are not that dire, but they are not cheerful, either. He noted that there could still be half a trillion dollars’ worth of adjustable rate mortgages waiting to reset over the next year or so, loans “that are going to see the interest go up, and not by a little.”
“I’m not convinced the housing market will hit bottom any sooner than a year from now,” he said. Meanwhile, he expects local home sales to drop by 3 percent to 4 percent this year, and prices to drop by 2 percent to 3 percent.
i read story a few weeks back that most sub-prime and alt-A stuff were sold to overseas investors. i would expect more news to come from europe, japan and china. but japanese will probably not admit it but just swallow it like wasabi.
your panicking bc. what else is new.
Rich,
BC is right. Everyone is working due to the fact that everyone is worried. Scared to go on vacation and come back to find out you’re pig that got slaughtered.
However, I’m really enjoying the summer. Better get out there cause it’s already mid august and there’s only a few weeks left.
BTW, I normally loose a tennant every month due to the fact they decide to become homeowners. I haven’t lost any since MAY. It seems like there’s a pent up demand for renting these days. Maybe it’s time for another small increase. That Bentley is looking better and better.
Quick Question to Jb, or Clot or anyone who has knowledge of this.
Assuming my rate reset today and I can’t afford they new pmnt. How long does it take for the foreclose to go through the whole process in both NY and NJ. I know someone who I sold a 32 FAM in Astoria in 2005 and he bought it with a 3% down and IO only loan that has reset 2 month ago. I heard through the grapewine that he’s late on the mortgage and today he contacted my realtor “friend” to put in on the market. The realtor called me and wants to know if I want to buy it back before he puts in on the market.
From the WSJ:
Anxious Builders Pile On Incentives
Perks, Price Cuts Become More Lavish
As Developers Grow Increasingly Desperate;
Would You Like a Pool With That?
By JEFF D. OPDYKE
August 9, 2007; Page D1
With the housing market looking increasingly frail, home builders and real-estate agents are going to new extremes to attract buyers, dangling lavish incentives and slashing prices.
In Boca Raton, Fla., Gordon Homes is offering to pay two years of property taxes and insurance — worth as much as $150,000 on houses priced as high as $2.5 million — for buyers of completed homes at its upscale Azura development. In Richmond, Va., Orleans Homebuilders Inc. is offering “Sizzling Summer Sale Savings” that include as much as $100,000 off the cost of upgrades ranging from granite countertops to a conservatory. And in Medford, Ore., Diane Adams, a real-estate agent, is offering to pay four months of mortgage payments on the $975,000 house she and her home-builder husband constructed on 20 acres near Crater Lake.
“I’d also negotiate a lower price, too,” says Ms. Adams, an agent with Re/Max International Inc. “I just want this house off our books.”
http://online.wsj.com/article_print/SB118661750287092393.html
Minorities gain in Central Jersey
The Asian and Hispanic populations of Somerset and Middlesex counties are growing, and the population of Union County is more than 50 percent ethnic minorities for the second year in a row, according to 2006 U.S. Census bureau data released today.
Somerset County’s Asian population saw an increase of more than 2,800 people from 2005 to 2006, rising to 41,653 out of a total county population of 324,186.
The growth of the county’s Asian population was ranked 38th largest among that of more than 3,000 counties nationwide in terms of number, and 27th in terms of percentage of population, Census Bureau spokesman Robert Bernstein said.
Middlesex County’s Asian population grew by 510 people from 2005 to 2006 to 148,509 out of a total population of 786,971.
That county’s Asian population is 19th largest in the nation and 10th largest in terms of the percentage of the total population that is Asian.
In 2006, 18.9 percent of the county’s total population was Asian, alone or in combination with other races, Census Bureau demographer Greg Harper said.
Third quarter resets are looming large on the horizon.
Option ARM Question on the chart JB posted …(repost from the other day)…
The Credit Suisse ARM reset schedule shows the bulk of Option ARMs resetting in a 3 – 5 year time period.
http://www.itulip.com/images/armadjust.gif
On first look, one could conclude that “at least we have some time before we have to deal with Option ARM resets”.
Option ARMs really have 2 interest rates though.
– A teaser rate that serves as the basis for the minimum payment (say 1.99%).
– A second, much higher, rate is the actual interest rate used to calculate the full payment to amortize the loan (maybe 8%).
The teaser rate (1.99%) is often fixed for the first 5 years and is likely what is reflected in the chart.
HOWEVER, the teaser rate can expire before 5 years if the loan reaches its negative amortization cap (recast trigger). If you only make the minimum payment, you defer interest. You can only build up so much deferred interest before the loan is recast and the minimum payment option goes away and you are required to make the full payment. Higher underlying interest rates could
Is my understanding correct?
If so, how many people make only the minimum payment? (I think it’s a lot)
How many of these loans will actually make it to 5 years and how many will hit a recast event before 5 years?
From Bloomberg:
Housing and Consumer Weakness Will Cut U.S. Growth
The U.S. economy will grow less than previously forecast as a rout in subprime borrowing hampers consumer spending, according to a survey of economists.
Growth will slow to an average 2.6 percent annual pace in the second half of the year, 0.2 percentage point less than economists forecast in July, according to the median of 66 estimates in a Bloomberg News survey taken Aug. 1 to Aug. 8.
Rising delinquencies in the subprime mortgage market are prompting lenders to limit the availability of credit, which may mean Americans buy fewer cars and spend less on vacations. The slackening expansion won’t force the Federal Reserve to lower interest rates for the rest of the year as officials stay focused on taming inflation, economists said.
“The longer the housing downturn goes on, the more spillover there will be,” said Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts. “The Fed doesn’t have a lot of room to maneuver because inflation is still at the high end of what they want to see.”
Global Insight reduced its growth forecast for the last six months of 2007 by a quarter percentage point.
Much of the projected slowdown in spending stems from the tumult in the subprime mortgage market, which is weighing on home values and delaying a recovery from the 18-month-long housing slowdown. Lenders such as Wells Fargo & Co. and Wachovia Corp. are raising rates and restricting access to loans even for some of their most creditworthy borrowers.
From Marketwatch:
Freddie Mac: 30-year mortgage averages 6.59% vs 6.68%
By Gabriel Madway
Last Update: 10:18 AM ET Aug 9, 2007
SAN FRANCISCO (MarketWatch) — The benchmark 30-year fixed rate mortgage average fell in the week ending Thursday to 6.59% from 6.68%, according to Freddie Mac (FRE62.29, -0.35, -0.6% ). The mortgage agency said its weekly survey showed the 15-year loan also dropped, to 6.25% from 6.32%. The 1-year Treasury-indexed adjustable rate rose to 5.65% from 5.59%, while the 5-year hybrid ARM averaged 6.33%, up from 6.29% last week. “Interest rates on prime conforming fixed-rate mortgages eased further in the past week, according to the primary mortgage market survey, even though other sources such as HSH Associates reported that jumbo fixed rates increased by a quarter percent or more last week,” said Frank Nothaft, Freddie Mac chief economist, in a statement. “Job creation fell short of market expectations, with 92,000 jobs added in July, the smallest gain since February, and June’s number was revised down by 6,000. In addition, the unemployment rate ticked up for the first time in four months to 4.6%.”
# bergenbuyer Says:
August 9th, 2007 at 10:25 am
“what’s the address for that house in Short Hills? Main road? What are the taxes?”
10 Nottingham Rd. Off Old Short Hills Road. I’m pretty sure it’s a nice location.
The description says it needs lots of work. Also:”UNDERGROUND STORAGE TANK REMOVED AND SOILS REMEDIATION COMPLETED. NO FURTHER ACTION LETTER IS PENDING BUT UNAVAILABLE. SELLER WILL NOT PROVIDE NO FURTHER ACTION LETTER.”
The listing says the taxes are $18990 –
Bush on CNBC now talking about Housing. On Role for Govt, he kind of ruled out bail out, talked about Financial literacy etc… On Decline or Softlanding, he said he was told its going be soft-landing in housing.
thanks for the address tcm
From Marketwatch:
CURRENCIES
Yen surges across-the-board
Credit fear resurface after BNP Paribas announcement
By Wanfeng Zhou, MarketWatch
Last Update: 10:46 AM ET Aug 9, 2007
NEW YORK (MarketWatch) — The yen surged across-the-board Thursday as credit market worries took the center-stage once again, leading investors to flee riskier assets funded by cheap borrowing in the Japanese currency.
French banking group BNP Paribas said Thursday that it has suspended three funds with exposure to the U.S. credit markets as it has become impossible to accurately value them after “the complete evaporation of liquidity.”
“Once again the currency markets were roiled by the continuing fallout from the sub-prime crisis,” said Boris Schlossberg, senior currency strategist at DailyFX.com.
http://www.marketwatch.com/news/story/currencies-yen-surges-amid-renewed/story.aspx?guid={4E3BA9E2-A5ED-48C5-AC43-B7188FDA5199}
Bush on Fannie Mae & Freddie Mac’s request to increase the allowed limit, said he wants congress to focus on reforms which help GSE’s focus on their main goal. It definitely seem he is not all go-go on the request.
Regarding the Nottingham listing, prior listing descriptions contain statements regarding considerable mold damage. I believe that property will require considerable work to be considered habitable. One listing description also makes a comment about the slate roof needing to be replaced.
jb
gary Says:
August 9th, 2007 at 9:56 am
jb,
Do you have any info on the following below? This was a flip and it just fell off the radar a few months ago.
3 Meadow Lane
Montvale, NJ
ACT 3 MEADOW LN $549,900 2/19/2006
SLD 3 MEADOW LN $520,000 4/17/2006
“SUPER NEW REMODEL BY LOCAL BUILDER”: New kitchen & baths, new roof & deck, added A/C, striped wood floors and other cosmetics
ACT 3 MEADOW LN $699,000 7/20/2006
PCH 3 MEADOW LN $689,000 9/28/2006
PCH 3 MEADOW LN $679,000 10/13/2006
ACT 3 MEADOW LN $675,000 11/15/2006 (relist before EXP w/same agent & broker)
PCH 3 MEADOW LN $669,000 12/28/2006
ACT 3 MEADOW LN $665,000 2/27/2007 relist before EXP w/same agent & broker)
ACT 3 MEADOW LN $649,000 4/10/2007 relist before EXP w/same agent & broker)
SLD 3 MEADOW LN $627,500 6/22/2007
#106 –
yikes
I thought slate roofs were supposed to last forever?
Here are the descriptions:
—
Tudor Colonial, needs extensive work.All original,slate roof needs to be replaced. Sold “as is” Call for combo
—
Tudor-needs exten.work-possible enviromental mold problem,possible plumbing issues. All certifications and testing respon. of buyer. All original. Slate roof needs to be replaced.Sold “as is”. Call Listing Broker for Combo. All contracts require proof of funds.
—
BANK OWNED PERFECT TUDOR WITH OLD WORLD CHARM. NEEDS LOTS OF WORK TO BE SOLD AS IS CONDITION. BUYER RESON. FOR ALL TOWN REQUIRMENTS. POSSIBLE INTERIOR MOLD.
$19K in taxes, ouch
“your panicking bc. what else is new.”
Richard.
LOL. That depends on your definition of panic. I’m sitting here with my feet up on the desk blogging.
The Times had this story this AM about Bush:
Bush Faults Easy Money for Volatility
WASHINGTON, Aug. 8 — President Bush, seeking to reassure Americans about the economy and combat Democratic criticism of his policies, said on Wednesday that recent financial market turbulence was not a cause for worry but a natural adjustment from the improvident lending of recent years.
Speaking at the Treasury Department, with Treasury Secretary Henry M. Paulson Jr. sitting across the table and reporters seated in a circle around them, Mr. Bush said that his economic advisers would be “paying close attention as the market begins to readjust its assessment of risk” in housing and other sectors.
The president said he also discussed with Mr. Paulson and other cabinet members the possibility of tax cuts and reduced regulations aimed at overcoming what some see as a weakening of the competitiveness of American capital markets compared with those overseas. But he was cautious about saying what he might propose.
[snip]
It was an unusual presentation for Mr. Bush, both politically and economically. Presidents are usually advised not to wade into discussions of markets at a time when they are so unpredictable and anxiety-inducing.
Mr. Bush’s suggestion that the recent housing declines should be seen as a normal market correction from past excesses and that the government should avoid interfering with the process carries political risks at a time when some people are losing their homes, lending institutions are shaky and Democrats are demanding action.
http://www.nytimes.com/2007/08/09/business/09econ.html?ex=1344312000&en=74df24206bde06ec&ei=5088&partner=rssnyt&emc=rss
Rich In NNJ,
Thank You!
House sounds haunted
The Nottingham house truly is a money pit. Wow. Those are some super scary descriptions!!
Whether BC is panicking is debatable, but volume and whether traders are in town is not. Plenty of guys we deal with have canceled trips or come back early to deal with this.
Replace “Probable Interior Mold” with “Requires full interior gut job”
Oh my.
I thought slate roofs were supposed to last forever?
If properly maintained, slate can last very long. If not, and the roof is left to leak, the underlying roof structure will decay. At this point, you’ll need to remove the slates, repair the underlying structure, and relay the slate that can be salvaged. I can only guess the cost to do this would be considerable, mainly due to the labor involved.
Acid rain did a number of many old slate roofs.
jb
“BNP Paribas SA, France’s biggest bank, halted withdrawals from three investment funds because it couldn’t “fairly” value their holdings”
#22 BC Bob
Great line on this at Atrios is “Translation: when you’ve got something that no one will buy, it’s pretty hard to say what it’s worth.”
AntiTrump Says:
August 9th, 2007 at 10:01 am
Anyway I was reading the article on Toll’s earnings and what stuck me was that 43% of their sales is to Alt-A borrowers. Given that the Alt-A spigot has been shut, this should have a major negative impact on the future earnings of Toll.
AT: I listened to the call. The Alt-A’s are people with the requisite credit score and income, but Bobby Boy said flat out that these people underreport their income (e.g., IRS) and do not want to represent it formally in any context. He is likely speaking the truth, but he doesn’t need to be such a crass, saw-off POS.
Also, Bobby Bob had a new twist with his “grading system” of markets. He used it before, but he clearly defined it on the call this time.
F market is dead.
F- market is dead, but cancellations cause spec inventory to come back.
FWIW – he gave Las Vegas an F–
LV should be “F–“
LV should be “F minus minus”
Police arrest 15-year-old boy in Newark slayings
#95 Make Money:
The guy who bought the 32 Fam from you (assuming the story is true) was just being optimistic. He was doing 32 families a favor by renting it out below his true cost and hence subsidizing their rent.
It would be unpatriotic to profit from his misfortune. Please give him a loan instead.
#102 SG Says:
“he was told its going be soft-landing in housing.”
He was also told that there was WMD in Iraq
OT,
Barry tops Hank and who gets the ball? A New Yorker with a Mets Jersey. In addition to that, he was shielded by his buddy, who jumped into the fracas, like going after a fumble. He was wearing an A-Rod Jersey [it couldn’t have been another jersey?] The biggest event in SF history and 2 beer guzzlers from NY, there on a whim, come away with the prize. They have the audacity to make jokes about stick-ball? They can give back their rented kayaks, go sip wine in Napa or paint a portrait in Sausalito. The left coast got hosed by NY.
By the way, is there any truth to the rumor that the baseball has subsequently blown up to the size of a basketball?
New Jersey Real Estate Report: Real Estate, Politics, Baseball, and Trolling Bagholders
Can Someone please provide some feedback…
Quick Question to Jb, or Clot or anyone who has knowledge of this.
Assuming my rate reset today and I can’t afford they new pmnt. How long does it take for the foreclose to go through the whole process in both NY and NJ?
Anti#126
Making profit is the most patriotic thing you can do in this GREAT Capitalistic Nation. My wife loves me netter when I turn in a profit. LOL
I wish Bonds the Ginormous all the best. I hope he hits 2,000 home runs. If MLB is going to put on a farce, they should do it right.
“From the WSJ:
Anxious Builders Pile On Incentives
Perks, Price Cuts Become More Lavish
As Developers Grow Increasingly Desperate;
Would You Like a Pool With That?”
#96
But Duck says that’s not happening. Are those filthy communists at the WSJ lying again??!?
New Jersey Real Estate Report: Real Estate, Politics, Baseball, and Trolling Bagholders
AND
RE investors who are forced out of the industry due to lack of opportunities to make money.
njpatient [120],
How true.
From Fitch:
Fitch U.S. Subprime RMBS Rating Action Recap: Aug. 9, 2007
The following is a summary of the total rating actions taken by Fitch Ratings as of Aug. 8 on U.S. Subprime RMBS transactions that were placed ‘Under Analysis’ on July 12, 2007.
The ‘Under Analysis’ list of 170 transactions had heavy concentrations of bonds originated in 2005-2006. All rating actions, criteria and special reports on the US Subprime market are available at http://www.fitchratings.com/subprime.
…
Summary:
–Transaction Reviews Completed: 106 of 170
–Affirmations: 1009 classes (outstanding balance: $86 billion);
–Downgrades: 546 classes (outstanding balance: $10 billion).
Bergenbuyer #63 – We met with the valuation company and only managed to get them to reduce our assessment by $21k. We are still overassessed. We did not file a formal county board appeal because the assessment company only gave us our final numbers 2 weeks before the April 1 filing deadline. We did not have enough time to research comps and file a formal appeal. We also mistakenly assumed that we would have to pay for an appraisal as well as pay the appraiser to appear at the hearing. That was too steep a cost for us based on what we thought we could save at the time.
Luckily for us, our town is so poorly run, that they certified the original assessment to the county and then had to file an assessor’s appeal to lower the assessment to the new value assigned by ASI. We tried to appear May 1 to contest that. The county wouldn’t hear it, but the county tax administrator told us that the county board would issue a judgement and we were entitled to appeal that judgement to the state tax court.
The state tax court has a new “Differentiated Case Management Pilot Program”. Filing under this program only costs $35 for local property tax matters. The town is also required to hold a settlement conference with us before our hearing date. We are going to attempt to get the town to settle, since we will certainly win next year with falling prices.
During a reval, all assessments must be brought to 100% fair market value. When I challenge my assessment this year, I can’t point to the assessments of my neighbors, I have to deomnstrate what the fair market value of my home is. If I can convince the judge that my assessment is higher than market value, it must be lowered.
Outside of a revaluation year, there is something called Chapter 123 that comes into play.
See: http://www.judiciary.state.nj.us/taxcourt/dcmsmallbook.pdf
CHAPTER 123 RATIO AND PROTECTION
FROM DISCRIMINATION
The Director of the Division of Taxation determines for each
year the average ratio of assessed value to the true value of all real
property in each municipality. This ratio is known as the Chapter 123
Ratio, N.J.S.A. 54:51A-6. You can obtain the Chapter 123 Ratio for
your municipality for a particular year from the tax assessor.
Unless, for the tax year under appeal, there has been a
revaluation or reassessment in your municipality, the Chapter 123 Ratio
is used to determine whether you are entitled to a reduction in
assessment once the fair market value of your property is determined.
Chapter 123 provides that a taxpayer is entitled to a reduction in
assessment only if the ratio of the assessment on the taxpayer’s property
to the fair market value of the property exceeds the Upper Limit of the
ratio. If the ratio of the assessed value to fair market value is less than
the Lower Limit of the Ratio, then the assessment is subject to increase.
The Upper Limit of the Chapter 123 Ratio is the Ratio plus 15%
of the Ratio. If, for example, the Chapter 123 Ratio is 80%, the Upper
Limit would be 92% as determined by the following calculations:
(Ratio ? ) 80 X .15 (? 15% of Ratio) = 12
12 + 80 = 92 or 92%
The Lower Limit of the Chapter 123 Ratio is the Ratio less 15%
of the Ratio. If the Chapter 123 Ratio is 80%, the Lower Limit would
be 68%.
Before applying the Chapter 123 Ratio, the judge must first determine
the fair market value of your property. Once determined, the Ratio is then applied as in the following example Example:
If, in any given year, the Chapter 123 Ratio for your
municipality is 80% with an Upper Limit of 92% and a
Lower Limit of 68 %
and
The assessment on your property is $190,000
and
The judge determines the fair market value to be
$200,000
Then: To determine if the Upper or Lower Limit of the
Ratio was exceeded, the following calculation is performed
(based upon the example above):
190,000 ÷ 200,000 = .95 or 95%
Since 95% exceeds the Upper Limit of 92%, your assessment
will be reduced. To determine the new assessment value,
multiply the fair market value by the Chapter 123 Ratio:
$200,000 (Fair Market Value) X .80 (Ratio) =$160,000
Your assessment would be reduced from $from $190,000 to $160,000
I am hoping to use Chapter 123 to my advantage when appealing next year. If our town’s Director’s Ratio is below 100% while my home is assessed at over FMV, this would be an opportunity for me to get my assessment lowered even more.
make money:
Based on a research report that I read a few weeks back, it takes almost 24 months to foreclose on a home in NY State. The laws are stacked favorably against the lender.
It will be a while before many of these homes make it to the market.
Personally, I am still holding cash as I believe there will be much better buying opportunities for investors next year.
From 2005, I have been loosing bids on apt complexes to idiots who where buying investment buildings at negative cash flow either for condo conversion or to to the price appreciation wagon.
We all know that party is over and these properties will come back on the market, when some of these novice real estate investors understand what it means to be a landlord.
#130,
If you can afford your current payment but not the new one, just call the lender and they will gladly keep the rate the same (mod the loan). These days they don’t want foreclosures, they have enough of them.
138 Frank:
There are many restrictions to modifying the loan. If it has already been packaged and sold, it is next to impossible to mod the loan. If the bank still hold the loan in it’s books, they will be more than glad to prolong the inevitable.
#128 BC
I love it – laugh riot
Regarding the Ridgewood dramatic price drop I asked about (from 1.3 Million in Feb. 06 to 850k now). After falling out of contract, it is now back under contract to a new buyer.
TO the extent I alerted somebody on this site to this property, you are welcome. (seriously)
Eagle
“just call the lender and they will gladly keep the rate the same (mod the loan).”
#138 Frank
As the NY Times reported this week, this isn’t possible where your loan has been sold to a bunch of investors, none of whom has the power to negotiate with you.
#139,
You are wrong, deals allow for 5-10% modifications and rating agencies allow even more mods, so don’t be so fast with those foreclosures.
“Personally, I am still holding cash as I believe there will be much better buying opportunities for investors next year.”
Likewise
#142,
You still believe what NYTimes tells you?
Investors don’t have the power, but the servicer does. We mod loans all the time, and they are in the deal.
#145
No, as a general rule, I don’t believe what the NY Times tells me. They’ve been regurgitating unsourced spin on behalf of the Bush Admin for six years now, from Judy Miller’s stenographized reporting of Scooter Libby’s talking points on WMD to the current day foolishness that only Iranians are sophisticated enough to know how to build explosively formed projectiles. They’re very often full of crap.
They’re not the only ones reporting this particular point, however.
Frank:
This means that the correction will take even longer to play out as people will keep going back to the bank until the inevitable happens.
I am sure we all know the story of the chap who takes a home equity loan to pay off his maxed out credit cards? What happens next? In a few months maybe weeks, his cards are maxed out again and he has no home equity left.
People who are not financially smart will take a hit. The only question is when ?
#145,
The NYTimes story was true 2 years ago, in these desperate times for lenders, they’re willing to do anything but to sit on a foreclosure for 2 years.
#147,
Only time will tell when.
Here’s my observation (there’s really no point to it, i just thought id share).
There’s this house i drive past a few times a week. It was for sale in the spring and I was curious as to the asking price just b/c it was a center hall colonial but in a terrible terrible terrible location. It was listed in the low $500ks, i cant remember the exact number. As the months passed on, the for sale sign disappeared and they were doing some work on it. then, all of the sudden, it’s for sale again. clearly a flip. i was curious as to the asking price since it’s in a horrid location and even $500k seemed slightly unreasonable considering the location, no matter what the inside of the house looks like. Anyway, it’s relisted, and has been for a while i think, at $749k. I have no idea who they expect will spend that kind of money for a house that’s in the ideal location for a gas station or a dunkin donuts. it’s 2726987 by the way, in case your curious.
props to President Bush for slapping down the GSEs. they are part of the problem, not the solution
From Marketwatch:
Bush against lifting Fannie, Freddie mortgage cap
Says reform of government-sponsored mortgage buyers needs to come first
By Robert Schroeder, MarketWatch
Last Update: 12:26 PM ET Aug 9, 2007
WASHINGTON (MarketWatch) — President Bush said Thursday that he’s against letting Fannie Mae and Freddie Mac buy more home loans in an effort to prop up the sagging mortgage market, commenting that he prefers to reform the two entities first.
It’s “first things first” when it comes to Fannie and Freddie, Bush told reporters at a news conference. The two companies have been riven by accounting scandals.
http://www.marketwatch.com/news/story/bush-against-more-mortgages-fannie/story.aspx?guid={550D5AFD-3900-411A-8EA4-8CD2E28AD678}
# bi Says:
August 9th, 2007 at 10:24 am
what a goldilocks day! Dow down 1% but HOV up 8%, BZH up 10%, DHI up 1%, TOL up 1% …
bond yield resumes its move to my target 4.5%. BTW, fed fund futures priced 100% rate cut in September. Crude down $1.25 to 70.90. Everything is moving as expected.
———————————————-
Weren’t you short oil buy gold?
Gold hasn’t moved this year and is actually worth less since the devaluation of the green back. Oil is around 72 (a slight drop from its highs) but only needs the most simple Al Jazeera story or Nigerian strike to break 80.
Want to hear an accurate prediction? The S&P500 will not see 1550 for at least the next 3 years, possibly 5.
I’ve got news for you. The consumer has slowed spending. Why, because they no longer can borrow against their homes. No equity=no cash=no spending=no market.
#151
Agreed. Even a blind squirrel occasionally finds an acorn.
Investors don’t have the power, but the servicer does. We mod loans all the time, and they are in the deal.
Frank,
I agree, however, it’s not the first-order effects I’m concerned with, it’s the second-order. What happens when the next portfolio is pitched to investors? My guess is that they’ll demand a bit more yield to compensate for this new found risk.
Fool me once…
jb
Wow,
After 7 years in office I have found a 2nd action Bush has taken that I agree with. Besides extending the favorable tax status of dividends, not extending Fannie and Freddy to the jumbo markets is also a smart move.
Bush and smart in one sentence? Am I delusional?
To James: Please “unmoderate” Me (#146)
THANX
156
Did bush get some new economic advisors? What am I missing here?
Thanks Anti for your response. 2yrs.
I thought so myself but wasn’t sure. He’s cash flow for the first 2yrs IO pmnt was barely positive. Now it’s way negative. It’s gonna be hard to sell due the fact that he doesn’t have much equity in it and at the price I sold it it will generate a negative cashflow unles you raise rents 30%.
Considering all these rates resets that are happening in 2007, these will not trully affect the market and allow it to bottom until they end up in a foreclosure 2yrs from now.
So much for the much anticipated bottom in 2008.
Thanks CBNJ.
I’ve noticed the “fake” slate products gaining popularity lately. Granted, they don’t come close to the beauty and craftsmanship of a good slate roof, but they are damn close (and sure are prettier than shingle). The EcoStar products I’ve seem come pretty close.
jb
From MarketWatch:
30-year Treasury auction was ‘poor and sloppy’
A Treasury Department auction of $9 billion in 30-year bonds attracted disappointing demand. The bid-to-cover — or bids accepted to bids received — ratio was 1.57. The auction produced a high yield of 5.059% and a median yield of 5%. Te auction attracted a low 12.1% indirect bid, the category that includes foreign central banks. The auction result was “poor and sloppy,” said research firm Action Economics. “The poor results may weigh slightly on longer dated issues.” The benchmark 10-year Treasury note was last up 16/32 at 99 18/32, yielding 4.808%. The 30-year was off 4/32 at 95 14/32, with a yield of 5.049%. Before the auction, the 30-year’s yield was at 4.520%.
Hot off the rumor mill, from MarketWatch:
Black Mesa hedge fund warns of massive portfolio liquidation
Black Mesa Capital, a hedge fund firm that uses computer models to track down arbitrage opportunities, has told investors that at least one very large hedge fund or investment bank is liquidating “massive” trading portfolios, according to a letter the Santa Fe, NM-based firm sent to investors on Wednesday. That’s causing disruptions and triggering losses among other so-called market-neutral hedge funds, Black Mesa said in its letter, a copy of which was obtained by MarketWatch on Thursday. “Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before,” Black Mesa wrote. The firm’s hedge fund is down roughly 7.5% in August, through Aug. 7 and could be down as much as 10% since then, Black Mesa noted. The Wall Street Journal reported on Thursday that a hedge fund run by Goldman Sachs called the North American Equity Opportunities fund has sold some of its positions recently.
Slate roofs are actually much cheaper than shingle, but it takes about 50 years to get to the savings.
[162] All the market neutral guys say there is a big liquidation causing the pain, but nobody can put a name on it.
NOTE: China’s interference may notably dissipate after 2008 games. We discussed this issue about 7-8 months ago.
WSJ
Ahead of the Tape
by Justin Lahart
August 9, 2007; Page C1
[edit]
Farewell Greenspan Put; Hello China Put
Remember the “Greenspan put?” During Alan Greenspan’s tenure as Federal Reserve chairman, some investors came to expect the Fed to cut interest rates whenever markets wobbled, protecting them from big losses, the way a put option does.
The Fed rode to the rescue when markets went into convulsions in 1998 and 2001. Some hoped recent credit-market turmoil would get just such a response from today’s Fed chief, Ben Bernanke, at the central bank’s Tuesday meeting. Instead, he nodded at credit woes but said inflation was his bigger concern, leaving some investors crying for help.
The “private equity put” is also in question. The wave of private-equity buyouts, which has propped up stocks, has slowed to a trickle as buyout shops face trouble peddling junk bonds and leveraged loans to finance deals. Costly debt could also mean trouble for the boom in share buybacks, which are often funded with debt.
China may be the last domain for bulls looking for help from outsiders. China’s master planners seem intent on keeping its economy humming through next year’s Olympics in Beijing, which will help the global economy.
[edit]
154#, whats wrong with long gold short oil i made on aug. 3, 2007? still up 5% up to now. i am still betting oil go to $40+. both oil and gold are in usd. don’t worry about currency stuff. dow may test $13K before serious rally.
From Bloomberg:
Highbridge Hedge Fund Owned by JPMorgan Drops 5.3% in August
A $1.8 billion publicly traded hedge fund managed by Highbridge Capital Management LLC, a unit of JPMorgan Chase & Co., has lost 5.3 percent of its value so far this month.
The Highbridge Statistical Market Neutral Fund, representing about 5 percent of the New York-based hedge-fund firm’s $37 billion in assets under management, was designed using mathematical models to make money in rising or falling stock markets, according to fund documents. With the decline in the past six trading days, the fund has fallen 3.3 percent this year.
Credit markets have swooned and stock prices have gyrated, confounding hedge funds’ models, which aren’t actively managed. Goldman Sachs Group Inc.’s $9 billion Global Alpha hedge fund fell almost 12 percent in the two weeks ended Aug. 3 and has decreased 16 percent for the year, according to investors.
“If the conditions change, the models don’t work as planned,” said Luis Rodriguez, head of risk management for New York-based Manhattan Family Office LLC, which invests money on behalf of an undisclosed wealthy family.
Brooke Harlow, a spokeswoman for Highbridge, declined to comment.
CommanderBob,
Excellent timing. I’ve got my eye on a house with a slate roof and thought they were maintenance free.
Thanks again for the info!
Rich
Asked Tuesday…
Does anyone here have experience with professionally written resumes?
The next boom for builders may be complaints from angry homeowners
http://finance.yahoo.com/real-estate/article/103341/You-Call-This-a-Home?
James Bednar Says:
I’ve noticed the “fake” slate products gaining popularity lately. Granted, they don’t come close to the beauty and craftsmanship of a good slate roof, but they are damn close (and sure are prettier than shingle). The EcoStar products I’ve seem come pretty close.
Does anybody have an idea on the cost of these vs. shingle?
I also remember hearing that you can put the fake ones on a standard roof. If you go with slate, you need a very sturdy underlying structure. You can’t just tear off the asphault shinges and put slate on
stu Says:(#163)
August 9th, 2007 at 1:25 pm
“….Slate roofs are actually much cheaper than shingle, but it takes about 50 years to get to the savings….”
______________________________________________
Commanderbobnj sez: Maybe so, stu—But remember that the builder has to go from 16″-on-center 2X6″ roof rafters to 2X8″ or 2X10″/12’s in order to accommodate the extra weight (load) for using Slate instead of using the typical fiber-based 40/50 year shingles
The “fake” EcoStar slate shingles that JB mentions in post #160 is quite popular with deep-pocket homeowners who want that ‘slate look’ ,and they don’t have to worry about the roof weight problem that comes with putting on the ‘true’ Slate…
Commanderbobnj
They have been calling it the great ‘unwind’. Some thought it had to do with the unraveling of the yen carry trade, but it really has to do with the implosion of the hedge funds that were all in way too deep. When the market climbs 10% a year and you manage to pull in +50%, then I feel no sympathy for your greedy ass when your principal goes bye bye. Of course, expect a bailout as usual. It’s the hedge fund crisis all over again. Kramer knew it when he went ballistic on that video and the banks are going to feel it too. Remember the S&L bailout? When the banks get stuck with the carry cost for all of these foreclosed homes, it would not surprise me if a few collapse.
Look at it this way and please correct me if I’m wrong. A bank owns an ARM (no DP) or an IO loan on a 500,000 home. How much money did they make in the 2 years prior to the foreclosure. At 2% they made about $40,000. Now they have to pay at least $10,000 in property taxes and selling costs to get rid of the house, not to mention that it will most likely be worth only $400,000. I see a huge net loss for the bank. Look at the numbers of these loans issued recently. Wasn’t a third of all mortgages of this variety in the last 2 years and over half of all mortgages had less than 3% down. Even if only one quarter of these homes go into foreclosure, the banks are going to die.
I’m not trying to scare people, but I’m simply trying to learn how best to protect my wealth. The market is not looking too attractive to me right now so my money is in a bank that doesn’t mess with mortgages.
Eagle – Do you have an address on the Ridgewood house?
And that Short Hills ‘money pit’ … how far would it fall before somebody here jumped in and bought it?
$500k? Could it possibly fall that far?
There was a Star Ledger piece last year (featured on this blog in fact) about the Nottingham Rd house.
In addition to the mold problems, flooding basement problems, leaking slate roof problems, and leaking oil tank/EPA problems, a pipe burst and flooded the place for good measure.
There’s also no garage, no heating system, and no working bathrooms.
Tom Hanks made a movie about such a house:
http://www.youtube.com/watch?v=Oj15gi7x6mg
In regards to 10 Nottingham in Short Hills….
Here is a story about it from last August:
http://www.nj.com/news/ledger/jersey/index.ssf?/news/ledger/stories/083106_million.html
And a (small) photo of the place:
http://tinyurl.com/2z6zpy
Bank owned since July 2005.
“The poor results may weigh slightly on longer dated issues.”
JB [161],
No need to worry, it’s vacation time.
Homebuilders/Construction
Liquidity Issues Pulverize Tarragon
By Nicholas Yulico
TheStreet.com Staff Reporter
8/9/2007 1:06 PM EDT
URL: http://www.thestreet.com/newsanalysis/homebuildersconstruction/10373365.html
Tarragon is big developer in Hoboken. Could have a big impact on future development in the Northwest of town if they go belly up.
But Hoboken will never be affected!
Bah humbug.
Most retailers miss July sales expectations
http://biz.yahoo.com/rb/070809/retailsales.html?.v=5
So it appears that the mighty consumer is running out of credit. Who would have thunk it?
To Bloodbath (post 174) — I believe the “price drop” house is on McGuire Court, possibly on the corner of the cul-de-sac.
despite all markets is selling off, homebuilder stocks continue climbing on top of yesterday’s 7.25% gain. it clearly indicates RE market hit the bottom and is turning up.
Has anyone else noticed that the preliminary sales numbers on these graphs always look horrible only to be adjusted upward in the following months once the final numbers come in? Is there a reason that the sales numbers are being adjusted so drastically?
Compare may 07 in this graph to the graph above:
https://njrereport.com/images/may07_yoy.gif
Eagle,
FYI: You still have a shot…
ACT MCGUIRE CT $850,000 6/21/2007
ACT* MCGUIRE CT $850,000 6/26/2007 (Attorney Review)
U/C MCGUIRE CT $850,000 7/10/2007 (Under Contract)
BOM MCGUIRE CT $850,000 8/3/2007 (Attorney Review)
ACT* MCGUIRE CT $850,000 8/8/2007
Correction:
ACT MCGUIRE CT $850,000 6/21/2007
ACT* MCGUIRE CT $850,000 6/26/2007 (Attorney Review)
U/C MCGUIRE CT $850,000 7/10/2007 (Under Contract)
BOM MCGUIRE CT $850,000 8/3/2007 (Back On Market)
ACT* MCGUIRE CT $850,000 8/8/2007 (Attorney Review)
BI:
Before you call this the bottom, I invite you to look at the dead cat bounce that occurred in the homebuilders in April 2007. Had you bought then (BZH had climbed 27% off of it’s 24 month low) you’d be under water at a minimum of 20%. Had you purchased Beezer, you would be in the whole another 70% even after the past 2 days gains.
The moral of the story is…don’t be too quick to call a bottom.
185#, Rich, which town is this property located? thanks. under a/c in 5 days after backing to market? seems hot to me.
Has anyone else noticed that the preliminary sales numbers on these graphs always look horrible only to be adjusted upward in the following months once the final numbers come in? Is there a reason that the sales numbers are being adjusted so drastically?
Hence JB’s line:
“Preliminary May sales and inventory data for Northern New Jersey is in..”
Agents may be VERY late in entering their sales and post date the information.
June seems to be inline with previous data.
Has anyone else noticed that the preliminary sales numbers on these graphs always look horrible only to be adjusted upward in the following months once the final numbers come in? Is there a reason that the sales numbers are being adjusted so drastically?
There seems to be no rhyme or reason to the scale of the revisions. My guess is that it has to do with late sales entries. I’ve seen prior sales records added over a year after the sale took place.
Go back through the entire past list, you’ll see that some months had only minor revisions, while others were larger.
https://njrereport.com/images/feb07_yoy.gif
https://njrereport.com/images/mar07_yoy.gif
https://njrereport.com/images/apr07_yoy.gif
https://njrereport.com/images/may07_yoy.gif
https://njrereport.com/images/jun07_yoy.gif
https://njrereport.com/images/jul07_yoy.gif
jb
bi, yo’re giving Chameleon Lereah a run for his money for the number of times you’re calling a bottom.
June seems to be inline with previous data.
June revisions were minor this month.
jb
I am a pre-approved buyer, great credit, no debt, with 20% down looking for a home in the $570 price range in Bergen County. Sold our home in the West last year and have been living with family since. We have had contracts on 4 homes that have fallen through for various reasons (flooding basement on inspection day, oil tank removal gone bad) At this point we are thinking of renting and waiting out the market. It seems as if we would be crazy to jump in and buy. Thoughts?
Would it make sense to increase jumbo amount, but lower LTV for jumbos to say 60%?
#182 Good call bi.
My recommendation is to pile up on home builders stocks. Show these losers on the forum who’s da boss !
I have a question for Clot:
With all of the immigrant groups that are big buyers in NJ, are they equally affected by the mortgage meltdown, less affected, or more?
Are immigrants more likely to have subprime mortgages, or less likely?
I’ve been wondering about this for a while.
With one of our houses, a young immigrant couple had a very impressive downpayment – about 40%. So either they were great savers, or had some source of private financing, like family members.
Then again, the no down payment/no doc/low doc/stated income stuff might have made it more possible for recent immigrants to get into houses.
Your thoughts?
NJBuyer #192, it seems as if you would be crazy to jump in and buy.
James, (189)
I didn’t realize that the revisions varied that much month to month. I do have another question for you. Why did the 2006 sales numbers jump up for all months between march and april? Is that when the final numbers for 2006 came in? Do we expect this to happen with the 2007 numbers?
192#,
if you listen to 90% of bloggers here, you should wait bloodbath in winter 2007, or spring 2008, or winter 2008… IMO, you should try to find bargain in this environment. i would expect the market will be slow to the end of year but next spring could be a different picuture. since you sold your home last year, you should have some equity built up, it won’t be a big deal if the market goes down.
All disclaimers apply!
Why did the 2006 sales numbers jump up for all months between march and april? Is that when the final numbers for 2006 came in? Do we expect this to happen with the 2007 numbers?
I made a comment about this revision in April:
https://njrereport.com/index.php/2007/05/09/north-jersey-april-residential-sales
Note: GSMLS has revised a significant portion of the dataset. I’ve found revisions that go as far back as 2004. Graphs have been updated to reflect these historical revisions. I don’t have any information on why the dataset was revised, nor the source of the changes in sales volumes.
jb
dow down 308 pts!
>>It seems as if we would be crazy to jump in and buy. Thoughts?
um, you’re on a real estate bubble believing blog. your question is intellectually vacuous.
check this out..
http://www.marketwatch.com/news/story/mortgage-mess-spread-affect-consumer/story.aspx?guid=%7BB4187FC3%2D2A49%2D4C83%2D8AD9%2D91BC793A6C4E%7D&dist=hplatest
I smell a recession around the corner.
Run and Hide, homeowners..
>>NJBuyer #192, it seems as if you would be crazy to jump in and buy.
blood in the streets is exactly when you start prepping for some buys. with all the volatility i’d sit tight a bit longer but the time could be coming shortly to get into some positions you’ve been on a dip to buy.
“scribe Says:
August 9th, 2007 at 2:54 pm
I have a question for Clot:
With all of the immigrant groups that are big buyers in NJ, are they equally affected by the mortgage meltdown, less affected, or more?
Are immigrants more likely to have subprime mortgages, or less likely?
I’ve been wondering about this for a while.
With one of our houses, a young immigrant couple had a very impressive downpayment – about 40%. So either they were great savers, or had some source of private financing, like family members.
Then again, the no down payment/no doc/low doc/stated income stuff might have made it more possible for recent immigrants to get into houses.
Your thoughts?”
ALthough i’m not Clot, I do have opinion regarding this issue. From my experience, I’ve noticed that many immigrants are WAY more savings-oriented than the typical american citizen.
They may earn substantially less, but end up pocketing more due to their decreased propensity to spend.
I feel sorry for this Bull. Every time it stands up on it’s feeble legs,it gets smacked down by the bear.
Kind of reminds me of the the struggle in the first quarter of 2000 when people like bi thought that NASDAQ had hit the bottom only to loose their shirts when the market finally crashed.
Richard,
Seems to me that you might be confusing little Timmy falling off his BMX bike and skinning his knee for “blood in the streets”.
jb
depends on your definition of blood. i’m not looking at major indexes but particular securities. i’ve been prepped for a few weeks now and have only dipped in twice so far.
Thank you Bi an Unrealtor for your responses. We bid on a home a week ago. List price $599 we came in at $560. Seller countered at $590, we came back at $573. Just found out a few minutes ago, the seller turned us down, saying she wanted $575. Over $2k she is turning us down. Her problem is that the house was on the market last summer for $725, then went into contract in April for $600 only to have that buyer walk a week before closing since they couldnt sell their home. She thinks she has “given up” $150k since she had it on the market. We are walking away from this home, and hope that she will kick herself in 60 days when the home is still in on the market. The problem is that seller still think its 2004.
Police arrest 15-year-old boy in Newark slayings
How close is the Ivy Hill section of Newark to South Orange and Maplewood? I was under the impression it was basically right over the SO border.
jb
NJ Buyer,
Good for you!! And if they come back to you as early as tomorrow, your offer price just dropped.
STU,
T
he market is not looking too attractive to me right now so my money is in a bank that doesn’t mess with mortgages
Can you name a couple of banks that do not offer mortgages?
Rich- thanks for update- we are actually looking at houses in Ridgewood this weekend, so our agent may schedule a viewing (assuming they are still in attorney review).
And bi, although that house went back in attorney review “quickly”, it has been on the market for apprxoximately five hundred days (year and a half)
My point being, the sellers in Bergen County think that they are immune from the housing bubble and are unwilling to budge on price. We are going to rent and wait this out. Park our money in a nice interest bearing account and hope the market slides further and then swoop in for a great deal.
NJ Buyer — Don’t forget that mortgage rates were 25-50 basis points lower in April! The rate increase should justify the drop in prices. Stand firm and they’ll probably come back to you. Their broker will not be thrilled over the small difference and will try anything to get this done.
“since you sold your home last year, you should have some equity built up, it won’t be a big deal if the market goes down.”
from # 198,
????
BuyNextYear,
No kidding regarding the rates in April. We had a home purchased with a 5.99 30year fixed, that fell through one week before closing. They removed a buried oil tank and it had contaminated the soil to the point of needing a lengthly water table test. We RAN, but at that point the rates were up to 6.375 so we had to shop for a less expensive home. That poor homeowner is sitting on an empty house (she is in a nursing home) that cannot be sold until the DEP gives her a clean title. My Ridgewood based realtor had 3 homes due to close in June that all fell apart. Not pretty.
So for all y’all who blamed Clinton for the Internet bubble, what do you have to say about the housing/credit sectors under Dumbya?
“um, you’re on a real estate bubble believing blog. your question is intellectually vacuous.”
Richard,
Let’s hear why he should step up and buy today.
I would hazard a guess that is is safer to park money in a money market fund at any of the bigger mutual funds (Fidelity, Vanguard, TIAA-CREF, T, Rowe offer fantastic 5%+ yields) even though they are not FDIC insured, rather than go through the headache of having your deposits disappear if a small bank goes under, though your deposits are FDIC insured.
Simpler yet, throw then into 90 day T Bills, rinse and repeat.
NJBuyer:
With all due respect to others on here, if you find a good deal, buy. Keep putting in smart offers. I have been reading this board for YEARS. The talk of blood in the streets, keep renting, etc. If I had listened to these guys years ago, I would still be renting (and probably still renting years from now). I hate to break it to you….you are never going to get a really nice house in Bergen for $475g…just not going to happen. Good luck to you.
Its amazing to hear the panic on this board because of the volatility in the stock markets lately. to put things in perspective, the S&P is still up over 1, 2, & 5yr time horizons. If you have your money invested for the long term, all this “noise” means nothing.
It just makes good talk that’s all….
“bi,” what’s your fascination with “finding the bottom”? Not that there’s anything wrong with it …
Just askin’
Let’s hear why he should step up and buy today.
Rates near historic lows.
Great selection of homes.
NAR says it’s never been a better time to buy or sell a home!
NJ Buyer – hang tight. Seller who wants you to walk over $2K in THIS market is not someone to keep doing business with anyway.
#225
LMFAO
sure is good to have you back, JB
Now, wait for Richard to agree.
224#, probably it would be better wording to say showing strength than bottoming out. but with all these negativities, it seems amazing that it went up on top of 7% gain yesterday (bond got killed yesterday).
Imus,
Agreed, Bergen County will never be an inexpensive place to buy. I purchased a home in Demarest in Oct 2001. If you recall that was another scary time to buy and I did alright when I sold it in 2004 to move West. The home that just bid on is a great house, but its in Midland Park and they are re-evaluating taxes next year. Also, if the seller is retreating over 2k, I can only imagine how painful the inspection process will be.
Panic? What panic? You sure you aren’t projecting emotions on the discussion?
jb
#222 put it quite nicely on when to buy.
#223:
If you open up your mutual fund statement you will see a disclaimer that says past returns are no guarantee of future performance.
Smart investment folks try to judge the future direction, but some people are too focussed on the past returns like s&p over, 1, 2, and 5 year horizons.
>>Ivy Hill section of Newark to South Orange and Maplewood?
it’s just south of seton hall a couple of blocks from valley st. that’s damn close to maplewood and south orange.
James Bednar Says:
August 9th, 2007 at 3:15 pm
Richard, Seems to me that you might be confusing little Timmy falling off his BMX bike and skinning his knee for “blood in the streets”. jb
grim: NNJ version of “blood in the streets”
The 12PM train from NYC/Newark pulls into Summit Station on a Tuesday, and more than a few banker looking types walk off with their briefcases inside a photocopy box which also contains a stapler, pictures of their family, and a mug that says “big swinging dick” on it.
that should be “photocopy paper” box
#234 funny
From Bloomberg:
Ohio Cuts $100 Million Refinancing Plan as Few Owners Seek Help
Ohio, the state with the third- largest number of foreclosures, cut a $100 million mortgage refinancing program because the plan came too late for some homeowners.
The Ohio Housing Finance Agency is planning to sell $25 million in taxable municipal bonds in the next several months, less than the $100 million earlier projected, Robert Connell, the agency’s debt director, said in an interview. The program is designed to help property owners get fixed-rate mortgages.
“We got a flood of early interest,” Connell said. “However, we found that an overwhelming number of those were beyond the point at which this program could be of any help.”
#232
no, its just to reassure people that a couple hundred point drop in the dow is no big deal. the markets go up and down….the rest is noise.
#226 – ..or maybe some sellers are not as desperate as many here think. . They are looking for the “make me move” price and can wait it out. The desperate ones are the ARM resetters or income reachers and only a small % have hit their stress level. It is coming but you have to wait another year or two.
Glen Rock
(who said Bergen sellers won’t reduce their price?)
SLD 28 AMHERST CT $680,000 8/2/2005
ACT AMHERST CT $669,000 2/13/2007
PCH AMHERST CT $659,000 3/14/2007
PCH AMHERST CT $639,500 5/4/2007
ACT AMHERST CT $609,000 6/4/2007
PCH AMHERST CT $599,000 8/9/2007
but with all these negativities, it seems amazing that it went up on top of 7% gain yesterday (bond got killed yesterday).
Very heavy short interest in homebuilders. Could be shorts covering.
#238
No
as a legal matter, it’s there to cover their butts for a time when someone loses their shirt.
Period.
I have a question for Clot:
With all of the immigrant groups that are big buyers in NJ, are they equally affected by the mortgage meltdown, less affected, or more?
For what it is worth, according to the discussion here:
http://forum.brokeroutpost.com/loans/forum/2/148195.htm
Immigrant groups would be disproportionately impacted by the subprime/alt-A meltdown. Not because they have bad credit, but rather because they have limited credit histories.
“It is coming but you have to wait another year or two.”
#239
I’d say November’ll do it. When folks see the returns from September, many will need to change their shorts.
Chi [234],
Just choked on my granola.
Did you see my Barry Bond’s post, #128
#245 re #234
Got me rolling as well.
maybe I’m wrong, but I don’t think this board existed before 2005. And I think few would disagree that 2005-2007 has been just about the worst period to buy a home in the last 10+ yrs
not everything is blowing up
http://news.yahoo.com/s/ap/20070809/ap_on_bi_ge/aig_subprime_exposure_4;_ylt=AlWrrGjdoKn1cdd9q1gjjhoE1vAI
#246 re #245 re #234 yes funny
Imus,
If I had listened to these guys years ago, I would still be renting (and probably still renting years from now). I hate to break it to you….you are never going to get a really nice house in Bergen for $475g…just not going to happen.
How do you KNOW that?
What’s a “really nice house in Bergen”.
Rich
BC Bob Says: August 9th, 2007 at 4:12 pm
Chi [234], Just choked on my granola.
Did you see my Barry Bond’s post, #128
Bost: high quality……nice Post back page..A-Roid
210/NJ Buyer – just curious about this house … do you have an MLS # or an address?
That sounds like a major bagholder who is upset about a paper loss. By my count, she’s got 3 weeks to unload that property before things get really bad. In January, she may not be able to get $550.
That’s why, if i were you, I’d just wait it out.
maybe I’m wrong, but I don’t think this board existed before 2005.
September 2005.
jb
James Bednar Says:
August 9th, 2007 at 4:20 pm
maybe I’m wrong, but I don’t think this board existed before 2005. September 2005.jb
grim: did you exist before 9/05?
just some bait: with recent volatility in equity market, is there any possibility that people will start to move money from equity to RE? a few weeks ago, S&P 500 almost doubled from its low in march 2003.
“bi Says:
August 9th, 2007 at 4:22 pm
just some bait: with recent volatility in equity market, is there any possibility that people will start to move money from equity to RE? a few weeks ago, S&P 500 almost doubled from its low in march 2003.”
I’m no pro trader by any means, but that sounds retarded to me. Isn’t most of the volatility in part DUE to the RE market??
“S&P 500 almost doubled from its low in march 2003.”
Rephrased, S&P 500 been sitting on its a$$ since March 2001. I don’t think most most folks are in a hurry to jettison equity for RE.
“is there any possibility that people will start to move money from equity to RE?”
You try it and let us know how it works out.
bi Says:
August 9th, 2007 at 2:24 pm
despite all markets is selling off, homebuilder stocks continue climbing on top of yesterday’s 7.25% gain. it clearly indicates RE market hit the bottom and is turning up.
Clearly, I just bought 5 houses. I’ve just added you to the list of poeple whom I won’t read their posts. Everyone should try it, I cut these 500 Comments posting down to like 150. It’s like the good ole days of 2006 before some of these trolls showed up.
On immigrant group questions:
There are 2 types of Immigrants. One coming on Family based immigration, second coming on Employment based immigration.
Family based ones are mainly Spouses, Childrens and small number of brothers and sisters. These is largest percent of immigrants (I believe about 75%). Since this group have support of someone already living here for long time, they have benefit of someone walking them thru home ownership process. Though many are not highly educated, so are not able to afford house quickly. But those who are educated and can make good money are able to afford quickly.
The second group, Employment based one is small percent (25%) but has good income. A good portion of them have dual income. The main issue for this group is getting Green Card, most are on employment visa. At present it takes 4 to 8 years. Most folks in this group don’t want to buy house while not having Green card. In last few years backlog has increased again, and hence many have had to postpone home buying decisions.
Both these group definitely save more then natives. Most drive old cars for first 10 years, don’t eat out much etc…
These are general observations, of course there are exceptions.
From Richard:
Richard Says:
August 9th, 2007 at 9:37 am
we’ll have to see how today’s market problems play out. it could be an isolated event or a sign of further things to come. remember it’s august so many heads are on vacation and volume is thin
From Bloomberg:
U.S. Stocks Tumble on Credit Concerns; Banks, Brokers Retreat
About 2.8 billion shares changed hands on the New York Stock Exchange, the most since July 2002.
Two-Year Treasury Yields Fall Most Since 2004 on Mortgage Woe
Treasury trading volume through ICAP, the largest broker of trades between banks, was more than 45 percent higher than the average over the past 20 days. By 4 p.m. in New York, $521 billion changed hands, compared with an average of $358.4 billion at the same time of day.
Oradell
(Odd, quite the turn over with no improvements, I’ll have to keep my eye on this one…)
SLD SUMMIT AVE $550,000 8/10/2005
SLD SUMMIT AVE $495,000 1/29/2007
ACT SUMMIT AVE $679,900 7/19/2007
PCH SUMMIT AVE $629,900 8/9/2007
Well, ok, I have been reading this site since 2005 (that is a several years). And I am quite certain, if you go back to the archives, you will see the “blood in the streets”, “bag holding” talk almost every day. Remember, spring of 2006 (supposed to be the big crash)?There will always be better times to buy, and you just have to bid smart and parce out the great deal. Also, I highly doubt that a couple of fired bankers will send the town of Summit into disarray and a firesale on properties there (and believe me, I am no Summit defender). When the market really gets soft, you will find deals in places like Maplewood. Again, just my 2 cents, no disrespect.
Oradell continued:
Ahhh, tax records tell the story.
The new buyer is hoping to sell the home for what the previous owner (who was under water) couldn’t sell it for. It’ll be intersting to see how they do.
Deed $550,000 8/10/2005
Mortgage $440,000 8/19/2005
LisPenden $440,000 2/16/2006
Deed $495,000 1/26/2007
“If I had listened to these guys years ago, I would still be renting”
I-Man,
Don’t know who you were listening to, here, years ago. I was a homeowner years ago. I think I found this site in early 2006. As a matter of fact,if I had listened to everybody, I would still be an homeowner. If I listened to Greenspan, my mortgage would probably have been an arm. If I listened to my mortgage broker, it would have been an I/O. If I listened to my car dealer, I would be driving a hummer, paid with my hel.
On another note, many friends are pissed at me. They state that I did not “convince” them to sell.
“If I had listened to these guys years ago, I would still be renting”
Best decision of my life actually.
Excellent points BC Bob!
JB [261],
They must be trading from the beach.
Imus: Try selling your home today on 2005 prices, there are 35K of them.
Most reasoned voice on this board have consistently told, RE is not Stock market. You are not going to have 3% drop in RE as you had in stocks today. You have to agree that affordability got out of what in 2004 & 2005. It’s common sense if people can’t afford house, you don’t have buyers anymore.
just some bait: with recent volatility in equity market, is there any possibility that people will start to move money from equity to RE? a few weeks ago, S&P 500 almost doubled from its low in march 2003.
Actually, in these turbulent times, I see a move towards cash; good ol’ fashion savings. Since your home will no longer do the saving for you and the stock market no longer looks like a sure bet, I expect to see personal savings return to historical norms. This will be good for the economy in the long term, but in the short term, it will mean a sizable reduction in consumer spending.
Dumont
tick-tick-tick
SLD GLEN AVE $425,000 8/1/2006
ACT GLEN AVE $439,900 6/23/2007
PCH GLEN AVE $429,900 8/9/2007
Glad it all worked out for you. Not looking to argue, just another point of view. Any decision to buy or sell, and your success in doing so, is deal specific. But, I think it would be hard to refute that if you bought a house in Summit in 2004 or 2005, you would make a decent profit selling that house now. And if you were renting in Summit since 2005, your rent is probably now $300-$500 higher. Am I wrong?
anything fishy about this or is it really just helping move things along?
“To help eliminate unnecessary delays at loan closings, appraisers should input “Any Qualified Veteran,” rather than the veteran’s name, in the borrower field of the appraisal report.”
http://www.homeloans.va.gov/new.htm
http://www.homeloans.va.gov/circulars/26_07_1.pdf
p.s. I also liked Bush giving Fran/Fred the smack down talk. If they were to take on jumbos there will def. be new plankton … at $600K.
#261 JB:
Why tire your fingers responding to Reechard?
His posts over the last couple of months have proven that he is a complete retard !!
He was able to get a handicap parking permit due his low IQ. He is mentally handicapped !
Lucky guy he is. Gets to park right in front of the super market entrance.
#263 We were just early, but much of what is happening now was discussed here on this site, before you saw it anywhere else.
The doom and gloomers it appears are turing out to be right, certainly not wrong.
If you have been renting since 2004, I do not believe you have missed or left anything on the table. In fact I am starting to see some houses listed in the areas I follow, at late 04 asking prices.
off the topic. in real life, people who make big money are nuts (or idiots or whatever you call) viewed from regular joe. don’t you agree?
#222 Imus As a a long time Bergen coutny owner, now renter, I hate to berak it toy you, but the market tumbled bad before in BC, and is again.
You need to take a look at the njmls and see quite a few really nice houses, in some really nice towns, all with asking prices now down to the low to mid 500k’s,.
Not far from you magic 475K. Not far at all, and getting closer every day. Party is over Imus, oh and do not forget what a dismal financil state our once great state is in.
“in real life,”
bi [275],
What the hell you think this is? A dress rehearsal?
off the topic. in real life, people who make big money are nuts (or idiots or whatever you call) viewed from regular joe. don’t you agree?
Can I made a book suggestion? Have you read Fooled by Randomness by Nassim Nicholas Taleb?
jb
Volume looks pretty strong to me;
http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=GS
279#, i read his more technical one called dynamic hedge. seems he is one too smart to make real money
#274-
Actually, I think I’ve seen Richard park in the “expecting women only” parking lot at the Garwood ShopRite.
BC Bob Says:
August 9th, 2007 at 5:04 pm
JB [261], They must be trading from the beach.
Bost: I agreed with Reech earlier. I think a lot of people at least planned to be away, and even if they are, they could still be working from a remote set-up. There is so much bandwidth in the air at the Hamptons that the hair stands up on the back of my neck :(
#282 That might explain his erratic behavior.
Hormones !
bi,
Ashley Revell, genius or idiot?
Man sells everything he has, takes his life savings ($135k), goes to a casino in Vegas and bets it all on a roulette spin (Red), he wins.
jb
chi,
I know a ton that either cancelled vacations or were away and now back. However, if they are away, they are in front of a screen. When Reech says vacation, I assume he means not trading. There is no way any responsible money manager, hedgie, etc is sipping tails on the beach, away from a screen, at this time, while the market is trading. The key there is “responsible”.
#281
clearly you read it but didn’t understand it.
You’re the guy who walks away from the roulette wheel with $10K in winnings and thinks you’re smarter than the guys who lost money.
The truth? You’re all stupid. Some of you just get lucky.
jb #285 – nice metaphor with the roulette. Takes a genius to think of something like that.
287#, i heard he hired a bunch of genius traders in greenwich betting on big gain on “unexpected events” by losing small amount each day. i don’t know if it works.
From MarketWatch:
NovaStar Financial Swings To 2nd Quarter Loss On Mortgage, Other Charges
Novastar Financial Inc. swung to a second-quarter loss of $52.9 million, or $5.84 a share, from a profit of $34.7 million, or $3.97 a share, a year earlier, due to pretax impairments of $116.9 million on mortgage securities, credit loss provisions and other items. Per-share earnings reflect the company’s July 27 1-for-4 reverse stock split. The Kansas City real estate investment trust’s revenue dropped to $130.5 million from $132.8 million in the year-ago period.
Man, you learn something on here everyday.
Great story on Ashley Revell, JB. Very cool. Never heard of the guy … but he’s on wikipedia. I just told a couple people in my office and they were shocked.
I’m way too cautious to do that.
From MarketWatch:
S&P: 76 ratings on 19 U.S. cash-flow, hybrid CDOs may be cut
Standard & Poor’s Ratings Services on Thursday placed ratings on 76 tranches from 19 U.S. cash-flow and hybrid collateralized debt obligation transactions on creditwatch with negative implications. The affected tranches have a total issuance amount of $2.16 billion, the agency said. Ten of the affected transactions are trust-preferred CDOs collateralized by trust-preferred securities issued by real estate investment trust transactions, S&P said. The remaining nine transactions are CDOs of asset-backed securities collateralized by mezzanine-structured finance securities, including residential mortgage-backed securities, the agency noted.
Can I made a book suggestion? Have you read Fooled by Randomness by Nassim Nicholas Taleb?
jb
Funny you should mention that. Am in the midst of reading it for the second time. Will follow it up with the Black Swan.
BC Bob Says:
August 9th, 2007 at 5:53 pm
chi,There is no way any responsible money manager, hedgie, etc is sipping tails on the beach, away from a screen, at this time, while the market is trading. The key there is “responsible”.
Bost: Like Cayne and Spector and their MF’ing Bridge Tournament.
>>About 2.8 billion shares changed hands on the New York Stock Exchange, the most since July 2002.
the #2 left in charge must’ve been living it up!
James Bednar Says:
August 9th, 2007 at 5:47 pm
bi,Ashley Revell, genius or idiot?
Man sells everything he has, takes his life savings ($135k), goes to a casino in Vegas and bets it all on a roulette spin (Red), he wins. jb
NJREReport equivalent = make money
>>Since your home will no longer do the saving for you
sure it will by paying off equity.
>>I know a ton that either cancelled vacations or were away and now back.
and i know many that didn’t. many were however prepped by those back at the fort and were on the horn today not because of bnp paribas but when some others started unwinding. best laid plans…
scribe (196)-
I dunno. Which kind of immigrant, legal or illegal?
Since gift letter requirements were waived several years ago, the source of DP funds doesn’t get questioned. A 40% DP is a powerful statement that indicates the borrower is unlikely to be subprime (more likely, he’s prime/stated or Alt-A/stated).
No questions asked on the source of cash for RE purchases is why you see so many drug gangs and other criminals moving into RE investment. It’s hands-down the best money-laundering vehicle in America.
Richard Says:
August 9th, 2007 at 7:07 pm
sure it will by paying off equity.
Richard, please do us all a favor and calculate how much equity is built in 5 years, assuming 0% appreciation. And please, none of that ‘you have to start some time’ bull.
Should have clarified – how much equity is built in the first 5 years of home ownership?
Kommisar Clot, you said:
It’s hands-down the best money-laundering vehicle in America.
Clot, a new marketing angle for the NAR? :)
From the Wall Street Journal:
Countrywide Hit by Credit Market Woes
By JAMES R. HAGERTY
August 9, 2007 7:39 p.m.
Countrywide Financial Corp. faces “unprecedented disruptions” in debt and mortgage-finance markets that could hurt earnings and the company’s financial condition, the Calabasas, Calif., lender said in a regulatory filing. (Read the SEC filing)
The company, the largest U.S. home mortgage lender in terms of loan volume, said reduced demand from investors is prompting it to retain more of its loans rather than selling them. The company also has been shoring up its finances. “While we believe we have adequate funding liquidity,” it said in a quarterly filing with the Securities and Exchange Commission, “the situation is rapidly evolving and the impact on the company is unknown.”
Payments were at least 30 days late on about 20% of “nonprime” mortgages serviced by Countrywide as of June 30, up from 14% a year earlier. Nonprime includes loans to people with weak credit records and high debt in relation to their income, as well as to people who don’t document their income or assets. On prime home equity loans, the delinquency rate was 3.7%, up from 1.5% a year before. For all loans, the rate was 5%, up from 3.9%.
In a sign of the growing difficulty in selling loans, Countrywide said that it transferred $1 billion of nonprime mortgages from its “held for sale” category to “held for investment” in the first half. Countrywide marked the value of those loans down to $800 million. It also decided to retain as investments, rather than sell, $700 million of prime home equity loans, marking them down to $600 million. Countrywide has said many of those home equity loans were second-lien mortgages used by people who put little or no money down in buying a house.
From Reuters:
Countrywide, WaMu say pressured by mortgage market
Two of the largest U.S. providers of home loans, Countrywide Financial Corp (CFC.N: Quote, Profile, Research) and Washington Mutual Inc (WM.N: Quote, Profile, Research), on Thursday said difficult mortgage market conditions are likely to hurt operations in the near term.
Countrywide, the largest mortgage lender, said it faces “unprecedented disruptions” in the debt market and secondary market for mortgages. It said these “could have an adverse impact on the company’s earnings and financial condition, particularly in the short-term.”
Washington Mutual, the largest U.S. savings and loan, said liquidity in the market for less-than-prime home loans and securities backed by the loans has “diminished significantly.” It said that while this persists, its ability to raise liquidity by selling home loans will be “adversely affected.”
The lenders offered their assessments in quarterly reports filed with the U.S. Securities and Exchange Commission.
…
Seattle-based Washington Mutual said the disruption in the subprime secondary mortgage market in the first half has “spread into markets for all other nonconforming residential mortgages.” It said it has been “impacted,” but remains “well-capitalized and its capital position is diversified.”
JB #303
RE: Countrywide SEC filing
“the situation is rapidly evolving”
in other words:
“Prepare to meet thy doom”
Ok .. i’m going to ask. Where is duck?
Did he foreclose or did the wall collapse?
After today, I am certain I will be buying a nice apartment in Hoboken or NYC at a deep discount. Just a matter of time.
JB- a house I have been watching suddenly lists its status as “T.” Could you tell me what this stands for? Thanks.
http://www.therealdeal.net/issues/AUGUST_2007/1185901111.php
August 2007
Prices up; sales now up, too
By Vanessa Londono
The bloom isn’t off the rose or, at least, the Apple. Recently released numbers show sales in the Manhattan residential market continuing at a strong pace. As a bonus, while there isn’t a housing boom these days, prices have been heading up modestly since the beginning of the year after dropping a bit at the end of 2006.
According to a second-quarter report by appraisal firm Miller Samuel, the number of Manhattan sales was up more than 103 percent from the second quarter of last year to the second quarter of this year, jumping from 1,934 to 3,939 transactions. There was also a 13.4 percent increase in sales over the first quarter.
In terms of prices, they are still slightly below what they were last summer. Only a year ago, sellers were asking high numbers like it was still the middle of the boom, and few buyers were biting. The price declines haven’t been on the level of those seen in the national market, however.
The average price of a Manhattan apartment in the second quarter of this year was $1.33 million, down 3.8 percent from the same time in 2006.
But prices have been rising since the beginning of this year. In the last six months, the average price of a Manhattan apartment has jumped more than 8 percent. The average price per square foot has fared even better, rising more than 13 percent since the start of the year.
#308
Temporarily Withdrawn
jb
I thought Countrywide said yesterday it had $42 billion in cash?
what gives?
JB- thanks!
“If I had listened to these guys years ago, I would still be renting”
Ironically enough my parents can’t sell their home in Bloomfield. They haven’t even received low ball offers. They own the house outright. Unfortunately they have been hit financially for personal reasons. Me and my wife rent, both have great jobs and we’re young (31 and 26) We’ll be moving in very soon to help out my parents and i can guarantee you while i wait even longer on the sidelines my bank account will never look better…because of renting.
Hey JB, ironically enough again, I just told that very same story about Ashley Revell to a co-worker today.
Also i don’t know if you designed this website from scratch because this real estate page has stolen it. Because i don’t know what the PCH acronym stands i found it while looking.
http://matrix.millersamuel.com/?p=448
here it is, from Wednesday, actually $52 billion
Aug. 7 (Bloomberg) — Countrywide Financial Corp., the largest U.S. mortgage lender, may need to shift to `more reliable’ sources of funding if turmoil continues in the subprime market, according to a report from CreditSights Inc.
The lender has drawn $52.7 billion from sources that may be restricted if worries about subprime mortgage defaults persist, New York-based CreditSights analyst David Hendler wrote in an Aug. 6 report. Countrywide has capacity to shift that funding into more certain sources estimated at $54.4 billion, he wrote.
and then a day later they discount their paper 20%.
An observation – why aren’t there calculators on the Web that allow people to input a negative appreciation rate for houses?
“the situation is rapidly evolving and the impact on the company is unknown.”
From # 303,
Meant to read; the situation is deteriorating rapidly and the imapct on the company is colossal.
dream [316],
You have to hire a quant for that. Better yet, just get your hands on their models and turn them upside down.
Quite simple really, the EU are bankrupt, there was a run on them and the ECB had to step in as lender of last resort.
Later today the BOJ halted their planned rate increased and made funds available to their overleveraged banks.
This is it people, when you can’t meet your obligations you are officially broke.
Let’s see how all this re-pricing works out.
Cheers,
-Sapiens
supporting links:
ECB Offers Unlimited Cash as Bank Lending Costs Soar
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFJrebey5MPE&refer=home
NAR-to-English dictionary, for listing statuses:
W – WITHDRAWN
T – WITHDRAWN
X – WITHDRAWN
Grim (303)-
Ow! That’s gonna leave a mark…
Damn! I just got my Acme French Blackbox in the mail today. It has a purty BNP-Paribas logo on the side.
And the danged thing is broke!!! Won’t do nuthin’. I try to run the Monte Carlo simulation, and the sucker keeps sayin’ “Tilt”.
Then, there’s this ticking noise coming from inside it…and, I can’t get it to stop!
What’s a coyote to do? I gotta git some sleep tonight!
Clot, waddya doin? No fools I know order the French version from Acme.
Get the Albanian version.
They tore out the drives and inserted the 1978 Dracula pinball machine in lieu of brains.
http://www.ipdb.org/showpic.pl?id=3072&picno=8630
James, Thanks for your reply & the spreadsheet. Regarding the viability of using contracts as a leading indicator of sales: contracts remain the most useful indicator available, especially if (as you suggest – 26) one multiplies the # of contracts signed by the inverse of the cancellation rate (which Clot’s anecdotal experience suggests is running at 30 – 35%). Also, changes in the number of contracts signed remain a useful indication of changes in future sales activity.