“There are going to be no happy endings here”

From the Wall Street Journal:

Inventories of Homes Rise Sharply
By SUDEEP REDDY
August 28, 2007; Page A2

U.S. sales of existing homes fell slightly in July, but a surge in inventories set the stage for a steeper slump and sharper price declines in the months ahead.

After the credit crisis that hit financial markets this month, U.S. home sales are expected to drop further as tighter lending standards and a pullback by mortgage firms keep potential buyers on the sidelines.

Sharply rising inventories are a sign of homeowners trying to sell their homes before prices tumble more, said Joseph Brusuelas, chief U.S. economist at consulting firm IDEAglobal.

“There are going to be no happy endings here,” he added. “It’s the last days of the old order.”

Existing-home sales slipped 0.2% in July to a seasonally adjusted annual pace of 5.75 million homes, the lowest in five years, the National Association of Realtors said yesterday. The median sales price dropped to $228,900, down 0.6% from the July 2006 level, which was the highest on record.

Inventories of homes for sale jumped 5.1% to 4.59 million, or about 9.6 months of supply at the current sales pace. A supply of about six months generally indicates a balanced market.

The tightening of credit markets became most severe in mid-August. That means the full effect may not be seen until sales figures for September are released. The Realtor group’s figures reflect transaction closings, which mark the end of the buying process.

The problems may be most acute in the markets for lower-end homes, which tend to go to less credit-worthy borrowers, and for higher-end homes that require buyers to take out so-called jumbo loans. Rates for such loans, which exceed $417,000, jumped sharply this month.

Even before the market turmoil, inventories were expected to rise sharply into early next year as homeowners increasingly default on loans.

Sellers could face price declines of as much as 10% in the next six months as the market settles, said Joshua Shapiro, chief economist at consultancy MFR Inc. in New York.

“To sell cheaper homes, prices need to be slashed even more because demand is falling off,” Mr. Shapiro said. “If the bottom is falling out of the lower end of the market, it’s going to have to affect the middle, which affects everything above it.”

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326 Responses to “There are going to be no happy endings here”

  1. James Bednar says:

    From the Asbury Park Press:

    Public benefits, wages becoming too costly

    Decades ago, the wage disparity between the private sector and government was a fact. That is not the case today. New Jersey government workers were given a package that included attractive benefits and job security. The scales have tipped too far the other way.

    State workers decry anyone who suggests the scales be rebalanced, shouting these benefits were promised to them years ago. No one is suggesting the benefits be taken away, but modifications need to be made in the interest of all the citizens of New Jersey. What the public is calling for are moderate raises and that state workers pay part of their medical benefits, just like the rest of us who are footing the bill.

    I read with disgust Aug. 21 that Rutgers University faculty will get 6 percent-plus annual raises over the next four years. This pales besides the private sector, which is receiving between 2 percent and 3 percent annually. To add insult to injury, they are receiving eight weeks of paid family leave after having a child. And they do not have to contribute one penny to their health insurance.

    Some will say this was done so the salary and benefits are on par with public universities in other states. But the residents of those states are not paying the fees and property taxes we pay.

    Our state’s government workers have to realize that the pie is only so big. Keep being self-serving and you will find yourself without any pie at all. Realize concessions need to be made before an emergency rears its ugly head.

  2. James Bednar says:

    From the Star Ledger:

    Teacher raises hover above 4% as talks continue statewide

    In an early barometer of teacher contract talks and school spending as a whole, new pacts so far include salary hikes averaging more than 4.5 percent for this year, according to groups on both sides of the bargaining table.

    At least half of the state’s 200-plus districts with expired contracts remain in talks to work out new agreements, a typical number for late summer. No impending strikes or severe job actions are expected for the start of school next week.

    Of those that have been settled, the newest contracts show raises stabilizing in the mid-to-high 4 percent range, if not creeping slightly higher.

    Even though this is well down from the raises that neared double-digits in the late 1980s and 1990s, it’s certain to run up against the state’s new 4 percent spending cap on districts, not to mention the political rhetoric out of Trenton that’s pressing for tighter controls on school spending to help contain property taxes.

  3. James Bednar says:

    S&P Case Shiller Home Price Index due out at 9am.

    jb

  4. James Bednar says:

    From the NJVoices blog:

    NJ hospitals rank dead last

    It comes as quite a shock to learn that New Jersey hospitals rank 51st out of 51 (fifty states and the District of Columbia) in patient safety incidents. The ratings come from HealthGrades, the nation’s leading healthcare rating company, which ranked Minnesota Number One and New Jersey dead last.

    According to Healthgrades, there were an astounding 1.24 million patient safety incidents among the 40 million hospitalizations covered under the Medicare program in the U.S. from 2002 through 2004, costing Medicare $9.3 billion in excess costs over the 3-year period.

    A separate study by Healthgrades found that 195,000 deaths were caused in 2004 alone as a result of what were described as Preventable Medical Errors (PMEs). PMEs include patient falls, leaving something (such as a sponge) in a patient’s body, giving the wrong prescription drug to the wrong person, and surgery on the wrong part of the body.

    New Jersey has been attempting to deal with PMEs since the passage of the Patient Safety Act in 2004, but a new dispute has erupted over proposed regulations under consideration by the State Dept. Of Health and Senior Services (DHSS).

  5. James Bednar says:

    From the Jersey Journal:

    MANZO: SEND IN GUARD

    Call in the National Guard.

    That’s Assemblyman Lou Manzo’s proposal to help local law enforcement put the kibosh on gang activity in neighborhoods across the Garden State, including his hometown Jersey City.

    Manzo directed the state Office of Legislative Services yesterday to draft a resolution to urge Gov. Jon Corzine to deploy the New Jersey National Guard, at the request of local governing bodies, to assist municipalities in combating violent criminal gang activity.

    “In certain areas, even in Jersey City, gangs have taken over areas,” Manzo said. “They (the National Guard) are going to come in with heavy infantry and they are going to take the scum off the streets and put them in jail cells where they belong.

    “The idea here is to work in concert with the local police,” Manzo added. “There would be training with local police.”

    But Jersey City’s mayor and actual Guard members gave Manzo’s idea their own gang sign: a resounding thumbs down.

    “We are not a city under siege,” Jersey City Mayor Jerramiah Healy said in a statement. “In fact, crime has dropped steadily here the last 18 months.”

    “We do not need a military presence,” Healy added. “The governor, should a catastrophe or major disaster occur, already has the power to call in the National Guard. And I’m sure he’d do so if a crisis ever escalated beyond the grasp of local law enforcement.”

    Guards at the Jersey City Armory said Manzo’s idea could backfire.

  6. BC Bob says:

    “We are not a city under siege,” Jersey City Mayor Jerramiah Healy said in a statement. “In fact, crime has dropped steadily here the last 18 months.”

    One would not know if they are sleeping naked on their front porch.

  7. Essex says:

    It is a shame that our hospitals here suck so badly….and they apparently do. My experience backs this blog entry up and thankfully the issues were not life threatening, they were however preventable….someone had better take action on this, because the statistic is not only dangerous, but embarassing to the state.

  8. BC Bob says:

    “Blight moves in after foreclosures”

    “Untended properties become eyesores. Then there are the uninvited guests: mosquitoes, vandals and squatters.”

    “In another Los Angeles cul-de-sac, this one off Coldwater Canyon Drive near Beverly Hills, the neighbors have the opposite problem. Here’s a foreclosed house that should be empty and isn’t.”

    “The mansion in question was bought by a man in early 2005 for $1.4 million. By last fall he was gone and the property was in foreclosure.”

    “HSBC, a major lender that was carrying the biggest note on the house, asked Leo Nordine, a real estate agent who specializes in foreclosures, to represent it for sale.”

    “Nordine went to check out the property and realized that people were living there. He left them a polite letter on the kitchen counter. There was no response to that letter, nor to follow-ups that he mailed.”

    “Neighbors, who asked that their names not be used because they were worried about their safety, said the occupants were a group of men apparently in their 20s and 30s. The men take the trash out every week, but that was the only good thing the neighbors had to say.”

    http://www.latimes.com/business/la-fi-vacant28aug28,0,1813154.story?page=1&coll=la-home-center

  9. RentinginNJ says:

    “There are going to be no happy endings here,” he added. “It’s the last days of the old order.”

    I disagree.
    A happy ending will be when a family can afford a decent home without a life of serial refinancing; spending sleepless nights praying that interest rates stay down and home prices stay up so they can continue to play musical chairs with their mortgage.

  10. Bloodbath in Winter 2007 says:

    Wow. Kind of makes you wonder … debt … hospitals … awful taxes … why would anyone want to live in NJ when PA is such a short drive?

    Anyone here live in Bucks County? Are the schools THAT impressive?

  11. James Bednar says:

    All eyes on subprime.

    From Reuters:

    OPEC says subprime crisis clouds demand picture

    OPEC Secretary-General Abdullah al-Badri said on Tuesday that the subprime crisis in financial markets has made it very difficult for the group to gauge demand for crude but supply levels were adequate for now.

    “The situation in the past couple of weeks has become a lot more serious,” Badri told Reuters in an interview.

  12. Comrade 3b says:

    Newsweek has an article today regarding the decline in Wall St Bonus Money this year. I have seen this time and time again.

    http://www.msnbc.msn.com/id/20414777/site/newsweek/

  13. rhymingrealtor says:

    From last night,

    Recently they have come out with some “exclusive listings” which allows them to market the houses without the house getting added to mls which starts the clock ticking for “days on market” which really makes no sense to me

    BB,
    Exclusive listings when put into the mls, show dom as actual dom, they will for the day they are put in show up in the “hotsheet” but thats it. The only exclusive listings I have had were at the request of the owner for various reasons.

    KL

  14. James Bednar says:

    From MarketWatch:

    Carlyle fund gets second bailout in a week

    Shares of a $18 billion Dutch investment fund run by a Carlyle Group affiliate dropped Tuesday after it received its second bailout in a week, prompting an apology from its chief executive — and a warning that the current round of credit-market problems are worse than the problems that brought about the demise of Long-Term Capital Management nine years ago.

    It’s fully drawn down a $100 million loan that Carlyle Group issued last week and has agreed to borrow another $100 million.

    The fund pointed to a “modest” decline in the fair value of AAA-rated, U.S. government-issued mortgage-backed securities that it holds as well as an increase in the collateral that lenders have been demanding.

    He also said conditions are worse than in October 1998, when the Federal Reserve intervened to compel banks to bail out Long-Term Capital Management.

    “Unlike 1998, the market for AAA-rated U.S. agency floating-rate capped mortgage-backed securities issued by Fannie Mae or Freddie Mac was materially affected by recent events and the market for repurchase agreements secured by high-quality, agency-issued mortgage- backed securities experienced instability,” Stomber told investors.

  15. BC Bob says:

    “Investors in private equity funds who’ve enjoyed large returns like these during the buyout boom should brace themselves for a fall.”

    “Buyout firms relied on cheap debt in the past two years to finance the biggest deals of all time, often paying premiums of more than 30 percent for companies. Now, as the subprime mortgage meltdown rattles credit markets, firms will have to sell their companies to buyers who no longer have access to low- cost loans. That will cut the sale prices of the companies and slash the buyout funds’ returns, billionaire financier Wilbur Ross says.”

    “When it comes time to resell these investments, we’ll likely be in a very different rate environment,” says Ross, whose New York-based WL Ross & Co. focuses on distressed assets such as auto parts makers. “The implications for returns could be substantial.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a8zVwfHSWWwg&refer=home

  16. Richie says:

    Wow. Kind of makes you wonder … debt … hospitals … awful taxes … why would anyone want to live in NJ when PA is such a short drive?

    24 hour diners
    Convenience to malls, airports, etc
    Proximity to large companies (ie: employment)
    Diversity

    As much as I hate the high taxes/cost of living, it’s extremely convenient here and there are plenty of opportunities here if you play your cards right.

  17. Kettle1 says:

    When you put all the pieces of the puzzle together I’m not sure what the light at the end of the tunnel will be. confider the following:

    -Dollar is devaluing/M3 is increasing and it could be argued that it is doing so dangerously especially if the fed starts cutting rates again

    -There is currently a near record inventory in the NJ housing market and it appears that this trend is developing nation wide

    -Easy credit has dried up as of the august storm and wont be coming back anytime soon. CC debt may be the next storm as shown by some of the articles posted on this board.

    -Consider that the first Baby Boomers become eligible for retirement benefits as of June 2008. This has serious consequences for both the state and the nation. Entitlement benefit costs that the state and Feds pay out are going to skyrocket. This ultimately means a moderate to drastic increase in taxes. Take a look at this clip if you are interested in a little more info on the details of the 800lb gorilla in the room that is being ignored (warning, the very end of the clip has some political propaganda tossed in, but the 1st 2 3rds are a 60 minutes clip and reliable info)
    http://www.youtube.com/watch?v=KGpY2hw7ao8

    – As the baby boomers begin retiring a large number of the second homes that were purchased during the current bubble as well as a large number of primary residences owned by baby boomers that want to downsize and use the equity as a retirement fund will be coming onto the market in a wave of inventory.

    – Don’t forget that the Boomer greatly outnumber the younger generations. So who is going to buy all of this inventory???

    Considering these points and considering that we assume the current market would begin to level out/turn around in 4-7 years (arguable either way, then how does the market turn around with a new influx of housing supply where the sellers are planning and using the proceeds as retirement income and probably not willing to be as realistic with pricing since they planned on a growth market for retirement income?

    Some data:

    Fast Facts: Baby Boomers by the Numbers:

    * The United States experienced an explosion of births after American soldiers returned home from World War II. Sociologists define those born between 1946 and 1964, or those who are currently 40-58 years of age, as “Baby Boomers.”
    * During the Baby Boomer years, approximately 76 million American were born. Today, this represents 28 percent of the American population.
    * In 1957, 4.3 million babies were born in the U.S. This is more than any year before or since.
    * A second boom has not occurred as Boomers reached childbearing years. Boomers waited longer to have children and many have not had children. Many experts say the Baby Boom phenomenon is a one-time event.
    * After the Boomers came the era of the Generation X’ers. There are about 41 million Generation X’ers in the United States. Generation X’ers were born between 1968 and 1979.

    Results from the 2004 Del Webb Baby Boomer Survey
    Fast Facts about Housing:

    * 36 percent of Boomers will move or plan to move when they become Empty Nesters. When they retire, 55 percent say they will move.
    * Of the Boomers who moved or will consider moving once becoming Empty Nesters, roughly one-third (36 percent) will move more than three hours away. Upon retirement that number climbs to 51 percent.
    * 26 percent of Baby Boomers will consider purchasing a home in an age-qualified Active Adult Community. Roughly one-half (51 percent) are not sure whether or not they would make this purchase and 24 percent would not consider buying in an active adult community.
    * Of Baby Boomers who are considering purchasing a home in an age-qualified active adult community, 30 percent prefer a community in an urban location. Additionally, 29 percent want a community that maximizes local natural benefits; 22 percent like an active adult community located within a multi-generational development; 6 percent want a small to mid-sized community with golf; 5 percent choose a country-club setting and 3 percent prefer a large community with golf.
    * Boomers are more than twice as likely as those aged 59-70 to prefer an Active Adult Community that is part of a multi-generational neighborhood.
    * Boomers who moved or will consider moving from their old Empty Nest cite wanting a smaller house (44 percent) and one that requires less maintenance (44 percent) as their top reasons for moving. Upon retirement, they say maintenance will be the paramount issue in choosing a home (62 percent), but they also will want a smaller home (23 percent).

    Population stats:
    http://factfinder.census.gov/servlet/GCTTable?_bm=y&-geo_id=01000US&-_box_head_nbr=GCT-P5&-ds_name=DEC_2000_SF1_U&-mt_name=DEC_2000_SF1_U_GCTP5_US9&-format=US-9

  18. James Bednar says:

    From Standard and Poors:

    The S&P/Case-Shiller® U.S. National Home Price Index Posts a Record Annual Decline in the 2nd Quarter of 2007

    New York, August 28, 2007 – Data through June released today by Standard & Poor’s for its S&P/Case-Shiller® Home Price Indices, the leading measure of U.S. home prices, shows continued negative annual returns in the U.S. National Home Price Index, the 10-City Composite and the 20-City Composite, as well as 15 of the 20 metro area indices.

    —-

    New York Area prices down 3.4% over the past year.

    jb

  19. James Bednar says:

    From MarketWatch:

    U.S. 2Q home prices down 3.2% vs. year ago: Case-Shiller

    U.S. June 10-city home price index off 4.1% in past year

    U.S. June 20-city home price index off 3.5% in past year

    Home prices fall in 15 of 20 cities in past year: S&P

  20. stuw6 says:

    cnnMoney:
    Credit card defaults keep rising, report says

    http://tinyurl.com/ynjrdr

    “American consumers are defaulting on their credit cards at a sharply higher rate compared to last year, in what could be another consequence of the recent subprime mortgage market crisis, according to a report published Tuesday.”

  21. James Bednar says:

    From Bloomberg:

    U.S. Home Prices Fell by Record in Second Quarter, Index Shows

    Home prices fell by a record amount in the second quarter as sales fell and mortgage lenders made it tougher to get a loan.

    Home values dropped 3.2 percent in the three months through June from the same period a year before, according to a report today by S&P/Case-Shiller.

    The report suggests that sellers were taking further steps to attract buyers even before the recent rout in credit markets. Tighter loan restrictions, a result of delinquencies and defaults that have driven some lenders out of the market, will probably extend the two-year housing slump and apply more pressure to prices, economists said.

    “Given the tightening in underwriting standards and the credit freeze, it’s going to be very difficult for buyers to purchase homes,” said Mark Zandi, chief economist for Moody’s Economy.com in West Chester, Pennsylvania, before the report.

    The report also showed that prices in June in 20 U.S. metropolitan areas fell 3.5 percent from a year before. The decline compares with a 2.9 percent year-over-year drop in May.

    The June index covering transactions in 20 metropolitan areas showed that home prices declined 0.4 percent from a month earlier, following a 0.3 percent decline in May. The figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes.

    “The pullback in the U.S. residential real estate market is showing no signs of slowing down,” said Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, said in a statement.

  22. Bloodbath in Winter 2007 says:

    Valid points, Richie. I’ll raise you …

    *24 hour diners – Obesity, diabetes, general unhealthiness
    * Convenience to malls, airports, etc – all airports suck and are never on time, malls are generic and overcrowded)
    * Proximity to large companies (ie: employment) – yippie! bureaucracy!
    * Diversity – 1 out of 4 ain’t bad

    Nah, I’m just extra crabby this morning after working from 9 am to 130 am. Yes, really. Fortunately, i have the day off today.

  23. James Bednar says:

    From MarketWatch:

    Home prices down 3.2% nationally in past year

    U.S. home prices fell 3.2% in the second quarter compared with a year earlier, Standard & Poor’s reported Tuesday. It’s the largest decline ever in the 20-year history of the Case-Shiller home price index. Meanwhile, prices fell 3.5% in the past year in 20 major cities and 4.1% in 10 major cities. Prices fell in 15 of the 20 cities, with prices down 11% in Detroit. Prices have risen 7.9% in the Seattle metro region. The Case-Shiller index tracks multiple sales of the same homes, and is considered by many observers to be the best gauge of national and metro real estate values.
    (emphasis added)

  24. It's over grubbers Prices are plunging says:

    Good morning starving friskie eating bunch.

    You played a big role in making this mess not suck it up. Now you must convince the same boneheads you guaranteed profits to lower their exorbitant prices so they will sell.

    baaaaaawahahahahaha.

  25. Clotpoll says:

    kl (13)-

    For a Realtor to talk a homeowner into putting his house into the most non-competitive bidding environment possible (an exclusive listing)- at a time when the market is bursting with inventory- is, to me, the definition of malpractice.

  26. James Bednar says:

    The Macromarkets site is swamped, I’ll upload the most recent Case Shiller dataaset (XLS) as soon as I can download it.

    jb

  27. It's over grubbers Prices are plunging says:

    BAAAAAAAAAAWAHAHAHAHAHAHA

    Bob

  28. make money says:

    for those of you who are onsidering lowballing the sellers.

    http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/HowToLowballAHomeSeller.aspx

  29. It's over grubbers Prices are plunging says:

    Three cheers for the first time buyers with an attitude.
    Go Gett’em!

    Mak’em pay especially the friskie eating bunch that kicked, stomped and lied to 1st timers for years.

    It’s payback time.

    BAAAAAAAAWAHAHAHAHAHAHAHA

    Bob

  30. James Bednar says:

    From Reuters:

    House prices slumped 3.2 percent in past year: index

    House prices across the nation declined by 3.2 percent in the second quarter from a year earlier, suggesting the housing downturn has deepened, according to the S&P/Case-Shiller U.S. National Home Price Index.

    The national index, which measures all nine U.S. Census divisions, fell to 183.89 last quarter from 189.93 in the same period in 2006, S&P said in a statement.

  31. DoughBoy says:

    I have to agree with 16 on the reasoning. I’m from NJ and I recently had the chance to move to Oklahoma where 100k could have gotten me a very nice house on a good sized lot…. and that’s it.

    I like the fact that people come here to vacation and I LIVE here. Going to the beach isn’t a vacation for me, it is what I do after work.

    If I want to go; NYC, Philly, and AC are all very short drives.

    Cultural diversity, business opportunites, etc.

    There are a lot of reasons I like it here and most likely won’t ever leave.

    I just hope and wish that the number of people that see the really eFF’ed up issues of corruption and all that happens in this state because of it can continue to grow, be more vocal, and actually get something done to bring this great state back in line with some semblance of reality.

  32. It's over grubbers Prices are plunging says:

    make money Says:
    August 28th, 2007 at 9:17 am

    a useless article. the sellers are the ones backpeddling. No need to waste your time.
    of course one must do their homework.

    The seller and realtor do not deserve to no know anything what you are thinking. keep emotions and info to yourself.

  33. stuw6 says:

    Market futures are looking pretty bad today. Housing report will only add to the downward pressure. This could get ugly!

  34. BC Bob says:

    “This could get ugly!”

    stu,

    Going forward; fugly.

  35. Clotpoll says:

    Booyah (32)-

    That sounds very tough and all…but, just like sellers in the up market who kicked buyers to the curb- only to watch all their potential buyers go in another direction- buyers who do the same right now run the risk of simply having the seller slam the door on a do-able deal.

    You can have all the disrespect you want for sellers in private. In public, the only way to force-feed a bitter pill is to coat it with sugar. Buyers have plenty of leverage right now, and it’s only increasing. There’s simply no upside in being a d*&k about it.

  36. Comrade 3b says:

    #25 clot: I think your Sept 1 date may look to be coming true, at least in the towns I follow.

    4 new listings came on the market yesterday, in one of the 2 towns I follow, 2 in the other town. For that town it is a lot in one day. They now join all the other lsitings that have been sitting all Spring and Summer.

    Interesting though the mid 400K’s are now getting closer to the low 400K’s, high 300Ks.

    And I suspect there may be much more inventory to follow. This thing appears to be playing out quicker than I would have thought.

    I think the credit crunch did it, and you have said in the past that things would trend down slowly, unless something dramatic happened (the credit crunch is dramatic).

    Thank you again for all your thoughtful insight.

  37. chicagofinance says:

    It’s over grubbers Prices are plunging Says:
    August 28th, 2007 at 9:12 am
    Good morning starving friskie eating bunch.
    “boneheads” baaaaaawahahahahaha.

    BB: I love the word “bonehead”. It always has more meaning than “chucklehead”.

  38. chicagofinance says:

    It’s over grubbers Prices are plunging Says:
    August 28th, 2007 at 9:12 am
    Good morning starving friskie eating bunch.
    “boneheads” baaaaaawahahahahaha.

    BB: I love the word “bonehead”. It always has more meaning than “chucklehead”.

  39. rhymingrealtor says:

    Clot (25)

    I agree, however, I am sure, you have in your many years run into sellers who, “know better than you” and have asked you to “exclusive list” I have, and it’s very hard to tell a “know it all” they don’t. Having said that, there are a few different reasons they want to go exclusive. I don’t agree with them, but I do as requested, for an agreed upon time frame.

    KL

  40. BC Bob says:

    “Interesting though the mid 400K’s are now getting closer to the low 400K’s, high 300Ks.”

    3b [36],

    Ditto, in my area. Funny thing, they are not moving at the new price. If they go under contract, they are back on the market in 4-6 weeks. The storm clouds, which we have been discussing for the past year, are now beginning to collide. If there was a betting line, the under would rule.

  41. scribe says:

    Clot, KL

    Do you think that a lot of the expired/withdrawn listings will be coming back on the market after Labor Day?

  42. HEHEHE says:

    “- As the baby boomers begin retiring a large number of the second homes that were purchased during the current bubble as well as a large number of primary residences owned by baby boomers that want to downsize and use the equity as a retirement fund will be coming onto the market in a wave of inventory.”

    This is very poignant. I had a friend who works at a quant fund who told me something similar regarding the stock market and how our generation benefits from the float of the baby boomers retirement money in the market. As that starts coming out it should lead to a downward pressure on the market. Not necessarily a crash but downward pressure over time. I wonder how many of them moved their money out of stocks after that dot.com boom into RE in the hopes of boosting the retirement funds.

  43. James Bednar says:

    From the AP:

    Housing Prices: Steepest Drop in 20 Years

    .S. home prices fell 3.2 percent in the second quarter, the steepest rate of decline since Standard & Poor’s began its nationwide housing index in 1987, the group said Tuesday.
    The decline in home prices around the nation shows no evidence of a market recovery anytime soon.

    MacroMarkets LLC Chief Economist Robert Shiller said the declining residential real estate market “shows no signs of slowing down.”

  44. MLS Inquiry says:

    OK, Rich or JB, Now I’m begging for MLS info on
    2410655

    Specifically, was it listed before this mls number under another number, and if so, at what OLP? Thank you very much, in advance.

  45. Comrade 3b says:

    #43 BC BoB: I meant to say that too, same in my town, the new prices are not moving inventory, and the UC’s coem back on the market after financing comes through.

    Psychologically I think it is significant, that we see pricing handles with a 3 again, and I suspect we will see much more going forward..

    Its funny as a local “knowledgeable” realtor told me a couple of years ago, you would never again see the day in my premier Beregn county town houses in the 300’s.

  46. Comrade 3b says:

    #49 Sorry should have said after financing falls through.

  47. HEHEHE says:

    Minyan Mailbag: A Bird’s-Eye View of the Credit Conundrum

    http://www.minyanville.com/articles/TGT-SEC-Fed-credit-debt/index/a/13898

  48. rhymingrealtor says:

    2410655
    Sold 8/10
    $428,000
    OLP
    $459,000
    DOM 52
    8 Gallaway
    Did not check History

  49. Rich In NNJ says:

    MLS Inquiry,

    Again, I can’t help you as it must be a GSMLS number.

  50. Rich In NNJ says:

    Consumer confidence is down to 105 from 119

  51. RentinginNJ says:

    There’s simply no upside in being a d*&k about it.

    I think that is sound advice.

    So, what do you recommend for increasing your chances of getting an aggressive offer accepted? Do you just lay it on ‘em? Do you offer an explanation? Do you leave the offer open for a while (i.e. feel free to shop it around, I think you’ll find it’s the best your going to get) or do you give them a “take it or leave it”.

  52. stuw6 says:

    On the lowball, I would write a letter explaining why the price is fair using a lot of tact.

  53. Clotpoll says:

    scribe (44)-

    Hard to get into the head of a seller who’d allow his home to expire or withdraw in this environment. Maybe those are mostly sellers who don’t really have to sell.

    I think this Fall’s new listings will be fresh, motivated meat.

  54. BC Bob says:

    New 52 week low, HOV.

  55. MJ says:

    5 year low..

  56. Clotpoll says:

    renting (55)-

    I don’t ascribe to the theory of writing letters, attaching comps and attempting to “educate” the seller with a lowball offer. It reeks of pissing on someone’s foot and trying to tell them it’s raining. Only a moron of a seller would believe the buyer has his best interests at heart. The comping and educating should be done by the seller’s own agent. That’s the fiduciary relationship, anyway.

    On the other hand, “take it or leave it” is an attempt to pin a seller into a choice that’s easy to make. About 100% of the time, the seller leaves it…AND will usually then proceed to act against his own self-interest rather than deal with that buyer again. The ultimate goal for the buyer is to get the house…so why pursue something that’s almost guaranteed not to accomplish that goal?

    Presenting the offer with little fanfare and little talk- and nicely indicating that you’re willing to leave it on the table- is a powerful way to present a lowball. You’re coming from a position of strength, you’re not insulting anyone, and you’re quietly making a big bet with the seller that you’re the best chance at a sale he’s gonna see. The minute a party to a negotiation starts talking a lot, leverage begins to accrue to the counterparty. It’s appalling to see how many agents ignore this most basic of negotiating concepts.

    A lowball buyer should have a cordial, professional and reticent relationship to sellers. It’s the seller’s job in this market to figure out the buyer and his motives…not the opposite.

  57. Comrade 3b says:

    #60 Clot: I would think sellers would find the letter writing thing very condescending. Even if the seller is clueless, nobody likes to be told that.

    How long would you leave the offer open?

  58. Mike Elliott says:

    RentinginNJ: Every situation is different, and the ability to feel your way through it is invaluable. Buyers have the upper hand now, but I’ve found many sellers haven’t really grasped the gravity of by just how much yet. A couple of my sellers have stood fast on their bottom line with a lowball offer six weeks into their contract only to find out they’re not getting any more offers for it six months later. A couple others have taken offers $50K below their asking price knowing that the probability of getting anything better was very low. A good rule of thumb right now is to never take your offer off the table and be open to negotiation.

  59. hoodafa says:

    Has this been posted already?

    AP: Residential Construction to Drop

    NEW YORK – U.S. residential housing construction will continue to contract throughout 2007, according to an industry analysis by McGraw-Hill Construction.

    The firm’s Construction Outlook Midyear Update, released Monday, forecast total new construction to drop 6 percent to $641.4 billion, with an expected increase in commercial construction more than offset by the troubled residential sector.

    McGraw-Hill Construction said an increase in single-family housing construction will not occur until 2008 “at the earliest.”

    More at: http://www.forbes.com/feeds/ap/2007/08/27/ap4056868.html

  60. dreamtheaterr says:

    Clot & Chifi, I replied to your posts on the Otteau thread.

  61. lostinny says:

    60 Clot
    I agree. I think that writing comes across very differently the speaking and it makes it very easy to misunderstand what the intentions are. In reality, you could be the nicest person in the world but your money is your money and you’re not going to give a seller extra money because you’re nice- you do it because that was the agreement that you came to. You could write the seller a long letter but I think Clot is right- its going to be condescending. I mean do you really need to tell a person their kitches and bathrooms are outdated, the wood paneling is gross, the carpet smells and the grass is overgrown? That is for their agent to do.
    So Clot, how long would you leave a lowball offer open? A week, month, no date but a right to pull it if the buyer finds something else?

  62. Everything's 'boken says:

    60
    Great advice. There have been examples on this blog where this has been done (accidentally?) and the sellers came back later.

    Whether the offer still makes sense then is a different issue.

  63. Kettle1 says:

    #45 HEHEHE

    I dont claim that my experience is representative of the local region, but several older couples that i know as well as my own parents unfortunately have done exactly that (counted on home appreciation as a retirement investment) So my personal experience makes me think that when the bulk of the baby boomers really start to move you will see a large number of upset/disappointed retiree’s who have significantly less money then they thought and a softening market due to the increased inventory from their mass movement

  64. wating for a meltdown says:

    question….We all have been hearing lately that many resets are due in the coming months. I seem to notice that sub-prime is always linked to these resets. My question is why is it that only sub-prime loans are affected?
    One would think many Prime or Alt loans where also issued with these low teasers?

  65. BklynHawk says:

    Clot/KL-
    Love to hear your thoughts on lostinny’s question in 65.
    JM

  66. BklynHawk says:

    #68 ARM’s are mentioned frequently in reset conversations, as well.

    JM

  67. Kettle1 says:

    Also consider that when the boomers begin to move which is projected to begin in the next 2-4 years that an increasing money supply(M3/inflation) is going to have a pronounced effect on fixed incomes. A working stiff may have an increasing income to help offset inflation but that SS check an you bank account are going to have little protection from inflationary effects.

  68. njpatient says:

    jb – I know you defend the fella, but I was interested to see yesterday that Otteau was his usual optimistic self.

  69. scribe says:

    AP
    Sector Snap: Mortgage Banks
    Monday August 27, 2:52 pm ET

    Some Banks Better Positioned Than Others to Survive Mortgage Fallout

    NEW YORK (AP) — Not all bank mortgage portfolios are created equal, a security analyst said Monday, adding that the sector’s current turmoil will reward banks entitled to a mortgage borrower’s first payments and punish rivals that have to wait for second payments.

    As the decaying credit quality and subsequent fallout in the credit markets take their toll on banks, Friedman Billings Ramsey analyst Gary B. Townsend wrote in a research report that some banks are in better shape to weather the storm than others.

    http://biz.yahoo.com/ap/070827/mortgage_banks_sector_snap.html?.v=1

  70. Kettle1 says:

    For the experts out there (Clot JB..)

    Has there been any real analysis of what effects the upcoming Boomer move might have on the market? NJ may not be Florida but i would guess that no location will be free from its effects

  71. Everything's 'boken says:

    re 45 67
    Yes. I am not sure why this has not been understood. This is why we don’t need illegal immigrants. Granny and gramps will be picking lettuce.

  72. Comrade 3b says:

    #72 Nj ptient: Mr. otteau will keep singing till the Titanic (real esate sinks), what else can he do.

  73. scribe says:

    Business Week cover story:

    SEPTEMBER 3, 2007

    Slide Show: A History Of Hubris

    Graphic: A Growing Subprime Web

    COVER STORY

    Not So Smart

    It’s Out Of Bernanke’s Reach

    Bruce Wasserstein: “Expect Lots More Embarrassment”

    Main Street Is Fed Up

    In an era of easy money, the pros forgot that the party can’t last forever.

    The boasting and bluster that marked the just-ended era of easy money varied depending on the speaker and his stake in the boom. But the underlying message was consistent: This time it’s different. When it came to the hazards associated with borrowing, the old rules no longer applied.

    http://www.businessweek.com/magazine/content/07_36/b4048001.htm?chan=top+news_top+news+index_top+story

  74. BC Bob says:

    “British investors are among the big losers from a disastrous Bear Stearns hedge fund which was allegedly wrongly marketed by the Wall Street bank as a “safe, high-quality” investment, according to a lawyer representing furious punters.”

    “In a circular distributed in October, customers were told 90% of the money was in triple-A or double-A rated securities. Recently clients were assured its exposure to sub-prime mortgages was up to 7%. Yet it was subsequently revealed to be between 50% and 60% according to an initial complaint filed with the US National Association of Securities Dealers’ arbitration tribunal.”

    http://business.guardian.co.uk/story/0,,2157183,00.html

  75. njpatient says:

    #35 Clot

    “There’s simply no upside in being a d*&k about it.”

    Words to live by, and applicable to any situation.

  76. Kettle1 says:

    JB does this meet the rules, its an amusing cartoon about subprime, worth a look.

    http://www.mortgageloanplace.com/blog/2007/08/28/a-subprime-realization/

  77. Clotpoll says:

    3b (61)-

    Mike’s advice in #62 is mine. Don’t limit yourself by placing a kill date on it. The seller should be on full notice that you might find a house you prefer in the intervening time. That is implicit in the manner in which an offer of this kind is presented.

    There are situations in which a fill-or-kill date is appropriate, but not in this one.

  78. scribe says:

    Clot, you said:

    Presenting the offer with little fanfare and little talk- and nicely indicating that you’re willing to leave it on the table- is a powerful way to present a lowball.

    Yes.

    And I would add – know that the property has been on the market long enough for the seller to be willing to consider a lowball offer.

    And know what you want – focus. And be willing to wait.

  79. Richard says:

    in regards to baby boomers moving, some will stay, some will go. not everyone has the same needs and desires. i have three older couples around me all older but aren’t going anywhere for a variety of reasons so to try and time some mass migration like geese heading south for winter is silly.

  80. PGC says:

    Here are a few thought for discussion.

    With Lowball offers, it comes down to one thing. Need to sell vs Want to sell. If I need to sell, I have to consider the offer, if I want to sell I can let it pass. I don’t have to counter I can just reject it.

    With Buyers market vs Sellers Market, Two things. If the sellers arn’t putting the properties on the market, beyond new construction, there is no inventory to buy.
    This might change in the next few months, but balance that against, most buyers are usually sellers. For all those people upsizing in the good times will now be downsizing in the bad times. The chain of the 1.2M Mac Mansion to the $750K McM to the $500K Ranch to for the $350K Cape to the 2 bed condo to the one bed to the rental.

    The ones makeing out on this are the few sitting on the sides waiting for the bargains and the ones holding low overhead rental property that makes a profit on a market level rent.

  81. Clotpoll says:

    Kettle (74)-

    They’re not all moving on the same day. The boomer thing will be a slow drip. Take into account that boomers will not go straight from a 4 BR Colonial into Sunrise Senior Living, either. They may transition thru 3-4 different homes and locations before settling down.

    My experience so far is that boomers are the easiest sellers to deal with…especially if they’ve been in their homes for 10+ years. Today’s prices are still far in excess of their wildest dreams…and they are astute enough not to want to stop their lives just to wring another 50K out of a house sale.

  82. njpatient says:

    #60 Clot

    “The minute a party to a negotiation starts talking a lot, leverage begins to accrue to the counterparty.”

    And this should be aphorism #1 in any negotiating class. You’re on a roll.

  83. Clotpoll says:

    I may not have said this for at least 2-3 weeks, but:

    How can it be a buyers’ market when 3/4 of what is an already-microscopic buyer pool can’t sell their current homes?

  84. Richard says:

    nothing like looking at your stock positions home page and seeing red all over the place.

  85. CAIBC says:

    as buyers we clearly have the upper hand now…patience and bit of research will get us the price we want…and guess what, we will also be able to save money for our future and not have to spend so much for a home in this area!

    the big problem i see are the TAXES!

    Question – will the taxes go down if house is assessed at less value based on this downturn?

    CAIBC

  86. njpatient says:

    “My experience so far is that boomers are the easiest sellers to deal with…especially if they’ve been in their homes for 10+ years. Today’s prices are still far in excess of their wildest dreams…and they are astute enough not to want to stop their lives just to wring another 50K out of a house sale.”

    I had gotten the same impression, which leads me to believe that boomers are the crowd most likely to cause comps to plummet.

  87. t c m says:

    #55 renting –

    i agree with clot on the letter of explanation thing. when i sold my house, several years ago, there was a buyer who wanted my house, but didn’t want to pay the price. he kept coming back to look at the house and finally he came to me with this letter telling me all the things wrong with my house, and why i should accept his offer. it just really pissed me off, and i remember my husband said that the house is for sale for anyone EXCEPT him.

    we didn’t even care if we ever sold the house. the letter came across so insulting. keep in mind though, it was when the market was turning in a good direction, so we didn’t have a hard time finding another buyer at our price.

  88. Comrade 3b says:

    389 CAIBC: No. The town will simply raise the tax rate. ALl towns need to collect the same amount of money every year as per their budget, that will not change.

    Unfortunately IMHO a lot of cluless local officials made spending decesions (referendums) based on the premise that real estate would only go up.

    The thinking went something like this OK so your taxes will go up another 600/700 dollars, but just think your 500k house will be worth 600k next year, and most people bought that, as witnessed by the massive amount of spending referendums approved over the last few years.

    Homeowners will be stuck the high taxes now, a double hangover if you will, high taxes and falling prices.

  89. Aaron says:


    24 hour diners
    Convenience to malls, airports, etc
    Proximity to large companies (ie: employment)
    Diversity

    Wow, sounds like consumer paradise, greased with debt.
    I am so glad I escaped.

  90. Bloodbath in Winter 2007 says:

    Just one guy’s opinion:

    Here’s my problem with lowballs now: house has been on the market for months at 700k, and they lowered to 650k. You think 600k is a ‘steal.’ So you offer that.

    They reject it. In six months, they will come to you and say, ‘hey, that 600k sounds good.’

    Uh, hello, idiot … that 600k is now 575k.

    Just be patient people … I think any house you are looking at now will be 25k/50k LOWER in December. And maybe 100k lower by April 08.

    The winners will be those who wait. (Assuming you can)

  91. CAIBC says:

    Comrade, any idea what towns have these stupid officials that made these decisions? dont tell me all of them?

    i am a first time home buyer waiting on the sidelines – been waiting for 3 years now! the price of the home i can see will come down but it doesnt make sense for me to buy a 400K home with a 12K tax bill, does it? and this bill will only keep going up?

  92. dreamtheaterr says:

    Geez, Blackstone a third off since debut. You think the Chinese are happy?

  93. BC Bob says:

    “When the music stops in terms of liquidity, things will get complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

    Chuck Prince, Citigroup

  94. Seneca says:

    Anyone care to explain this from the Courier Post article JB posted below the main article today?

    “In South Jersey Shore communities, both prices and volume gained, with the median home price up 4.4 percent to $251,000 on sales of 1,111 homes, a 17.2-percent increase in volume over 2006.”

  95. Bloodbath in Winter 2007 says:

    Everybody keeps talking about the buyers … people, WHO HAS SAVED THAT 10% DOWNPAYMENT?

    Why do you think all these houses ‘go under contract’ and then re-appear on the market? It’s likely because the liar loan market has dried up and you actually have to put money down and show you can afford a house to buy it.

    If you think there are all these ‘buyers’ sitting on the sidelines, i’d chop that # in half. And then half it again. And that’s probably the number of people who can afford a 10% downpayment on all these overpriced houses. (I have no evidence to support this, other than our low savings rate: http://www.csmonitor.com/2007/0802/p02s01-usec.html)

    * PS – If you’re trying to sell a 600k+ house, good luck. Even if somebody has 20% to put down ($120,000), then they STILL need a jumbo loan (7.5 % rate), and that puts the mortgage at … $3350 a month (per bankrate calc – 30 yr fixed, 7.5 rate).

    This fictional owner will love the 50k paper loss come April 08.

  96. Comrade 3b says:

    #95 CAIBC: I cannot tell you which towns make better decesions than others. My own un-scientific observation is that the “wannabe towns” at least in Bergen Co, appear to be the ones who approve what I consider to be reckless spending. This IMHO is done in the belief that it will enhanc/improve the towns status and or reputation/cachet/desireability.

    Other towns that have their reputation if you will have no problem voting down budgets and or referendums if deemed excessive.

    They are not worried about what people will think if you will.

    Some of the mostt desireable towns in Beregn county, have some of the lowest taxes, go figure.

  97. HEHEHE says:

    If you have your cash in a “Money Market Fund” you may want to read this article and take a look at your prospectus. Turned out the Schwab fund I was in had huge chunk of it’s holdings in asset backed securities. I am sure they are all rated “AAA”.

    http://www.minyanville.com/articles/OLTCX-money+market-commercial+paper-fund-risk/index/a/13899

  98. DoughBoy says:

    #98 Seneca:

    I’d love to know which of those “South Jersey Shore Towns” they’re talking about. I consider myself to be one of the future FHB that is looking in the Central/Southern shore area and I see drops in prices, lots of stuff that has been on the market 25+ weeks, and very little dropping off the market that doesn’t get relisted after a short time.

  99. ThrilledRenter says:

    24 hour diners
    Convenience to malls, airports, etc
    Proximity to large companies (ie: employment)
    Diversity

    What diversity? The wealthy towns are lily white. The low-income towns are very segregated. The number of nice, middle-class, truly diverse towns in NJ is pretty small, at least these days.

  100. Kettle1 says:

    Forgive my ignorance here but i have always rented so have never been over interested in town politics and operations…

    Is there a mechanism for a towns population to challenge local tax expenditures and or repeal them outside of having to wait until you can vote someone else into office and hope they do it?

  101. CAIBC says:

    care to list some of towns with lower taxes?

  102. Richie says:

    What diversity? The wealthy towns are lily white. The low-income towns are very segregated. The number of nice, middle-class, truly diverse towns in NJ is pretty small, at least these days.

    There’s your diversity. I never said it was all in one town.

    Man, what a buncha whiners you all are! You’ll all be renters forever!!!!!!!!!!!!!!!!!!!!!!

    Leave NJ you whiners!!!!!

  103. Kettle1 says:

    I just looked at the tax data for Morris county

    http://www.co.morris.nj.us/freeholders/countybudget.asp

    and it appears that their tax rate has generally decreased in recent history while expenditures have gone up. The difference looks like it is made up by the increasing property assessments. If this trend is commom in most towns, then budgets could get a little dicey in the near future

  104. ThrilledRenter says:

    There’s your diversity. I never said it was all in one town.

    Richie, well in that case, the country club up the street is diverse too! After all, they have white members and black employees. What a diverse place that is! Super. Thanks for clearing that up for me.

  105. JBJB says:

    [105]

    Middletown (Monmouth Co. where I now rent), is actually somewhat resonable. For up to a 1/2 acre, 300-500k house you would pay 4-6k. Properties from .5 to 1 acre and 500-600 k would be 6-8K. Properties from 600-800K are usually on larger lots and taxes can shoot up to 10 or 11K. Million dollar homes exceed 12k up to 25 k. Also depends on Middletown South or North Schools, and prices are dependant upon location to the NJT station (which has ample parking, a 1 hour 5 min express jounresy to Penn) but these are some general ranges. Middletown also has acess to 3 ferry terminals (Belford, Atl. Highlands, and Highlands) w/ 35-45 min trips to lower Manhattan, 45-55 mins to E. 34th.

  106. schabadoo says:

    24 hour diners
    Convenience to malls, airports, etc
    Proximity to large companies (ie: employment)
    Diversity

    Wow, sounds like consumer paradise, greased with debt.
    I am so glad I escaped.

    Yes, easy access to jobs, a diversity of dining, and all NYC has to offer is such a downer.

    Go visit my buddy out in Lock Haven Pa, it sounds more your style. Just don’t get hungry after 9:30 or it’s off to the truck stop out on the highway.

  107. john says:

    Ok, two years ago my POS split was worth 600K (I paid 280K) and the trade up house I wanted was worth 1.2 Million. A lousy 200k to 300K more just buys an extra bedroom and 10 feet of plot so you have to pay up to trade up otherwise it is not worth it.

    Therefore every dollar my house falls the house I wants falls two dollars. I am doing a jig as home prices go down, the more I lose on the house the better. I bet there are plenty of folk like us.

    Problem is us folk are in no rush to buy so we want hope sellers until the bank is selling their foreclosed home.

  108. James Bednar says:

    From NJ.com:

    NJ loses top spot for household income

    New Jersey lost its position atop the nation’s list for largest incomes.

    U.S. Census data released this morning put Maryland at the top of the national rankings, with New Jersey falling to second.

    New Jersey’s median household income increased by about $3,800 to $64,470 in 2006 from $61,672 in 2005, according to the data. But that was not enough to stay ahead of Maryland, which had a median household income of $65,144 in 2006.

    Rounding out the top five were Connecticut, Hawaii and New Hampshire — all in the same rankings they held a year ago.

  109. Kettle1 says:

    Speaking of diversity, a recent harvard study showed some interesting trends.

    A recent study by harvard…

    E Pluribus Unum: Diversity and Community in the Twenty-first Century The 2006 Johan Skytte Prize Lecture

    * Robert D. Putnam 1*1Harvard University and University of Manchester * Harvard University and University of Manchester. E-mail: robert_putnam@harvard.edu

    Abstract

    Ethnic diversity is increasing in most advanced countries, driven mostly by sharp increases in immigration. In the long run immigration and diversity are likely to have important cultural, economic, fiscal, and developmental benefits. In the short run, however, immigration and ethnic diversity tend to reduce social solidarity and social capital. New evidence from the US suggests that in ethnically diverse neighbourhoods residents of all races tend to ‘hunker down’. Trust (even of one’s own race) is lower, altruism and community cooperation rarer, friends fewer. In the long run, however, successful immigrant societies have overcome such fragmentation by creating new, cross-cutting forms of social solidarity and more encompassing identities. Illustrations of becoming comfortable with diversity are drawn from the US military, religious institutions, and earlier waves of American immigration.

    Study can be found in the following for those who have access

    Scandinavian Political Studies

    Volume 30 Issue 2 Page 137-174, June 2007
    http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-9477.2007.00176.x?prevSearch=authorsfield%3A%28putnam%29

    News article about the study
    http://www.boston.com/news/globe/ideas/articles/2007/08/04/the_downside_of_diversity/?page=1

  110. Comrade 3b says:

    #105 caibc: Allendale, Wyckoff, Franklin Lakes, Montvale, Park Ridge, Mahwah,and Paramus.

    Now compare these towns (including schools,general property sizes) to Emerson, New Milford, Oradell,River Edge and Wash Twp to name just a few.

  111. CAIBC says:

    John,

    great so the 450K that you will get for your POS Split you can get put down for a 700K (used to be 1.2M) – thats good for you..
    i do see a small problem though..you better think about fixing up your POS Split otherwise another ‘not so’ POS Split will be taken by the few buyers that are around for the 450K.
    I am guessing then that your 450K POS Split is really targeted towards first time buyers right? oh i see another problem, first time home buyers can probably only afford 350K since wages havent gone up that much since you paid 280K for it…
    just becuase you think you can 600K for a POS Spilt doesnt mean you will get it! that scam is over and buyers are more aware!

  112. Comrade 3b says:

    #112 OMG!! not number one any more, falling Wall St bonus money, could this just all be a bad dream, OMG ??!!

  113. schabadoo says:

    What diversity? The wealthy towns are lily white. The low-income towns are very segregated. The number of nice, middle-class, truly diverse towns in NJ is pretty small, at least these days.

    I’m not sure where you have lived, but go visit some other states. A few years ago my friends in Richmond were so excited to get a bagel shop in their town. They thought it was so NY.

    In my lily-white town I’ve got a Polish deli, sushi, Indian, Korean, Thai, southern bbq, and others I’m probably forgetting.

  114. rhymingrealtor says:

    Brooklyn hawk,

    The Answer from me would be:
    no date but a right to pull it if the buyer finds something else

    An offer not accepted does not tie the buyer to anything, so why not leave until you(or whoever) does find something else.

    L

  115. rhymingrealtor says:

    oops

    KL

  116. Rich In NNJ says:

    Thrilled,

    What diversity? The wealthy towns are lily white. The low-income towns are very segregated. The number of nice, middle-class, truly diverse towns in NJ is pretty small, at least these days.

    As opposed to where else, North Carolina? Ohio?

    For an area (as we are not a city) we feel are diverse compared to many other suburban states.

    Rich

  117. Comrade 3b says:

    #104 NO, all you can do is support the candidates who want to cut spsending. Perhaps with the down turn in real estate, we will finally start to get people running for office who understand that high property taxes are destroying our state, and compromising our children’s future, and ability to live here if they desire.

  118. stuw6 says:

    Richard Says:
    August 28th, 2007 at 11:38 am:

    nothing like looking at your stock positions home page and seeing red all over the place.
    ———————————————

    SRS is up another 3.4% ;)

    OK, that’s all from me for now. I feel like I’m playing the don’t pass at a craps table in AC.

  119. RentinginNJ says:

    question….We all have been hearing lately that many resets are due in the coming months. I seem to notice that sub-prime is always linked to these resets. My question is why is it that only sub-prime loans are affected?
    One would think many Prime or Alt loans where also issued with these low teasers?

    Subprime loans carry the highest credit risk and therefore carry the highest interest rates. In order to make the loan affordable to the subprime borrower, the fixed rate portion of the loan needs to be short. A lender will often tell a borrower, “don’t worry; make your payments on time, your credit will improve and then you can refinance into a better loan”.

    Prime and Alt-A resets are coming too, just a little later. Their better credit allowed the Alt-A and Prime borrower to get a longer “fixed” period at a more reasonable rate.

  120. scribe says:

    Richard, #83

    My parents thought about moving to a warmer climate, but they couldn’t bear being separated from their grandchildren.

    My brother is thinking about moving to DE when they retire in 10 years, but the caveat is – when the kids get married and have kids, they’ll want to be near their grandkids. They may stay put or move elsewhere, depending on where the kids settle down.

    I would say that the No. 1 thing for seniors is proximity to their grandkids, and the No. 2 is proximity to their own kids. If you live long enough, you’re going to need help at some point.

  121. skep-tic says:

    I agree with not explaining a lowball, but I don’t see why you wouldn’t put any expiration date, even if it was distant. Why should a seller need more than 1 month to shop your offer? If they cannot make their mind up in a reasonable amount of time, then they are probably not worth dealing with. I see no advantage to hanging your offer out indefinitely while the market is heading down rapidly

  122. AL says:

    Richie Says:
    August 28th, 2007 at 12:45 pm
    What diversity? The wealthy towns are lily white. The low-income towns are very segregated. The number of nice, middle-class, truly diverse towns in NJ is pretty small, at least these days.

    There’s your diversity. I never said it was all in one town.

    Man, what a buncha whiners you all are! You’ll all be renters forever!!!!!!!!!!!!!!!!!!!!!!

    Leave NJ you whiners!!!!!

    Don’t you worry – We are leaving NJ in a hurry. Just be careful of what are you wishing for – who is going to pay those property taxes once all middle-class young people will leave???

    Good luck supporting NJ government and state employees – the highest paid government employees in the world!!!

    Remember that you posted this, when in 20 years you will be sitting in your “premium Town “ in NJ surrounded by ghettos…

  123. Comrade 3b says:

    #113 JB My post is in modeation, did I say soemthing I should not have.

  124. scribe says:

    Skep-tic,

    So you don’t make someone feel crowded.

    If it’s a serious lowball, it may take time for the reality of a changing market to sink in.

    Focus on what you really want – whether it’s a particular town or a particular house or type of house.

    There’s a period of re-adjustment.

    Everything changed so rapidly, with prices doubling.

  125. ThrilledRenter says:

    #118 – I didn’t realize we were comparing NJ to Ohio, but stating things that make NJ a great place to live. The NJ diners are GREAT, not because other places don’t have them, but because they are just simply a terrific thing to have- independent of anything else.

    I would argue that, while it may in fact be more diverse than Ohio, NJ is not a bastion of diversity. And I’d probably put NC in the same category as NJ.

  126. syncmaster says:

    schabadoo #115,

    In my lily-white town I’ve got a Polish deli, sushi, Indian, Korean, Thai, southern bbq, and others I’m probably forgetting.

    People in NJ take all that for granted.

    My neighborhood is very diverse but oddly enough that seems to drive away the white residents. Seems to me that there were a lot more white people around 10 years ago than there are today.

    Maybe they all moved to Westfield *sigh*

  127. ThrilledRenter says:

    #117 – I guess I do have higher standards for diversity. I was talking about people, not food. Like the types of kids my kids would be playing with at school, that sort of thing. An all-white town that has ethnic food just isn’t diverse in my opinion.

  128. Comrade 3b says:

    Self-Segreagtion is not just practiced by white residents. All groups are guilty of it to one degree or another.

  129. AntiTrump says:

    #89: CAIBC Says:

    Taxes will go down only after the last liberal politician has been eliminated. Given that this scenario is unlikely, home prices will have to adjust downward to reflect higher prices. Even a couple of hundred dollars increase in taxes a month lowers affordability.

  130. RentinginNJ says:

    #104 NO, all you can do is support the candidates who want to cut spsending.

    The problem is that small town politics are usually dominated by special interests. In a small town, the local police, fire departments, DPW and teachers, along with their families, represent a significant block of voters. Add to that parents of school children who fear their child’s education would suffer if they voted no, and you can see why it’s hard to affect change. The only real anti-spending voting block is the seniors. Everyone else complains, but typically sits on their a55 on election day.

    I had a small town mayor tell me once that he knew the fire department didn’t need a new $600k truck, but if he said no, he would have 100 angry voters in an election where the turnout is only a couple thousand.

  131. Comrade 3b says:

    #131 Unfortunately in mnay instances you will see the kids from the same group congregate only with each other, I have seen it many times.

  132. AntiTrump says:

    It’s funny how these funds who hold sub-prime mortage backed assets first come out and say that they are fine as the paper they hold is AAA rated and then a few weeks later, bam !! they are down 25%.

    So much for AAA rated Junk !!

  133. RentinginNJ says:

    My neighborhood is very diverse but oddly enough that seems to drive away the white residents

    It’s a well documented phenomenon called “white flight”.

  134. Comrade 3b says:

    #134 I agree, although after this real estate down turn, people might finally wake up.

    Spenidng more does not mean you get more.

  135. schabadoo says:

    Re: 131

    I guess I do have higher standards for diversity. I was talking about people, not food. Like the types of kids my kids would be playing with at school, that sort of thing. An all-white town that has ethnic food just isn’t diverse in my opinion.

    Then what’s your point? Moving to Pa to become more diverse? Down south? In what world would this make any sense?

  136. ThrilledRenter says:

    #139 – So you think your town is diverse because of the food? I’m trying to understand YOUR point.

  137. Bubbling says:

    Buyers just be patient…..inventories are growing…and prices’s are just starting to come down. I agree with bloodbath!!!

  138. stuw6 says:

    [140] ThrilledRenter Says:
    August 28th, 2007 at 1:41 pm

    #139 – So you think your town is diverse because of the food? I’m trying to understand YOUR point.
    ———————————————
    So should I be worried about my town? A Mongolian BBQ is opening up here!

  139. schabadoo says:

    Re: 140

    Working off of:

    Wow. Kind of makes you wonder … debt … hospitals … awful taxes … why would anyone want to live in NJ when PA is such a short drive?

    Food and diversity were mentioned and debated. Compared to NJ, PA is Salt Lake City.

    So again, what is your point?

  140. Clotpoll says:

    BC (97)-

    When the music stops, you must dive into one of the remaining chairs.

    -Clotpoll

  141. ThrilledRenter says:

    #142, We could also say that NJ is better than Florida because NJ has so many mountains (well, compared to Florida).

  142. Eagle says:

    Could anyone with MLS access give the address, sale and listing history for the following Ridgewood house?

    Ridgewood, MLS 2733447, 4 bed, 3.5 bath, list for 1.19 million

  143. dreamtheaterr says:

    Am curious, is Westfield = Wannabe White?

  144. schabadoo says:

    #144

    Ummm, yeah.

    You go say that.

  145. gary says:

    About Seven months ago, we saw a house in the “Caldwells” with a ‘for sale by owner’ sign on the lawn. Nice looking home, quiet street, kids’ play sets in a lot of the other yards so we took down the number and called. No reply. A few days later, tried calling again. No reply. OK, forget it.

    Yesterday, a woman calls and says, “I know you left a message months ago, I had to put everything on hold as my house down the shore wasn’t ready.” Sounded like an older woman, very nice, lengthy conversation. We figured the asking price was somewhere in the low 600’s. Nope. Asking price is $799,900. Go ahead, say it: SEVEN HUNDRED NINETY NINE THOUSAND DOLLARS. Thank you very much and…. buh bye.

    I’ll say it again: save…. your…. money. Everytime I read about housing horrors, it appears that the Silicon Valley area and Northern New Jersey have exceptions attached. It’s not going to change that much. Maybe 10% off peak but offset by outrageous property taxes that will slowly climb despite a mountain of rhetoric by the ivory tower charlatans in Trenton.

    Until the Star Ledger, Bergen Record, etc. have the words “crash”, “panic” and “housing” in the title, nothing will change.

  146. john says:

    BAA3/A- 629 22237LNR9 COUNTRYWIDE HM LN NT 3.250 05/21/08 8.519(M) 96.375

    Dont see investment grade short term bonds trading like this unless shit is about to hit the fan.

  147. dreamtheaterr says:

    You know what makes this area of the US great? Food! I can’t think of any other place in the world where you can sample food from all over the world.

    Food is a big part of many cultures. In India, you can travel from one state to another and the food habits/taste change quite a bit; not all food is spicy. But the only way to sample cuisine from another country was to go to a very upscale restaurant in a big city.

    But the US is unique. That’s why I loved to stay in Queens – the choices available for authentic cuisine were unbelievable and prices so reasonable. But please, type of food available in a town does not equal diversity.

  148. ThrilledRenter says:

    #147 – Let’s just agree to disagree. Go order some jamaican jerk chicken and pat yourself on the back for living in such a diverse town.

  149. schabadoo says:

    But please, type of food available in a town does not equal diversity.

    What’s funny is that you say this while living in Queens…

  150. stuw6 says:

    Fed minutes: response needed if conditions worsen
    Tuesday August 28, 2:01 pm ET

    WASHINGTON (Reuters) – The Federal Reserve acknowledged at its last regular meeting that a policy response might be necessary if financial market conditions worsened, minutes of its August 7 meeting, released on Tuesday, show.

    “Members expected a return to more normal market conditions, but recognized that the process likely would take some time, particularly in markets related to subprime mortgages,” the central bank’s policy-setting Federal Open Market Committee said.

    “However, a further deterioration in financial conditions could not be ruled out and, to the extent such a development could have an adverse effect on growth prospects, might require a policy response,” the Fed said.

  151. Aaron says:

    Go visit my buddy out in Lock Haven Pa, it sounds more your style. Just don’t get hungry after 9:30 or it’s off to the truck stop out on the highway.

    The horror of it all. I didn’t think of that; without a diner to stop at I will have to saw my leg off and eat that instead.
    Frankly thats a better fate than being surrounded by mall zombies.

  152. chicagofinance says:

    for clot’s southern fried sensibility
    http://www.youtube.com/watch?v=lj3iNxZ8Dww

  153. MJ says:

    Are you guys talking holistic diversity here

  154. john says:

    Who says diversity is a good thing when it comes to neighborhoods. A recent study shows it is a bad thing. Diversity at work is good and in schools are good, but people want to live on a block with people like themselves, what is wrong or racist about that, it is just human nature. Look at the most liberal white democrats in the world and you won’t see any with black son-in-laws, is that racist, nope! Fact of the matter when you stand on your front lawn and look up and down your block that is the real value of your house. A great house in a crappy block is not worth much. I lived in a very diverse block once, 90% of people did not speak english and since there were greeks, italians, spanish, hindus, muslims etc. on the block no one got along and no one could really talk or communicate with each other, however the restaurants were good!!!! My brother was shooting blood out his arm after a severe cut and kncocking on a few doors with no one opening and the ones who did not speaking english was enough diversity for him. Luckily he called 911 before he banged on a few doors of our floor of apartments.

  155. syncmaster says:

    Jamaican jerk chicken, mmm mmm mmmm.

  156. schabadoo says:

    #147 – Let’s just agree to disagree.
    Oh definitely. After #144 I knew there was no hope.

    Go order some jamaican jerk chicken and pat yourself on the back for living in such a diverse town.

    Instead of going Pa and eatting pizza in the whitest state in the area?

  157. Richie says:

    Don’t you worry – We are leaving NJ in a hurry. Just be careful of what are you wishing for – who is going to pay those property taxes once all middle-class young people will leave???

    Good luck supporting NJ government and state employees – the highest paid government employees in the world!!!

    Remember that you posted this, when in 20 years you will be sitting in your “premium Town “ in NJ surrounded by ghettos…

    No matter where you go, you’re going to pay taxes, and you will be supporting the government. Deal with it. No matter where you go, you will have your ‘ghetto’ towns. The grass isn’t necessarily greener everywhere else. Yes, the costs of taxes are high here, but the potential to make a good living is also better then most places.

    You choose where you want to live and you make the best of it. If it doesn’t work out, you can always say you tried to make the best of it.

    When I meant diversity, I meant diversity in many different fields. People, companies, opportunities, cities, weather, etc. Sure, if you want a laid-back life you can easily survive anywhere else. If you are a go-getter, you live somewhere where you can get ahead and make a life for yourself and excel in life.

    In the end, you just have to remember that you have it better then most people in this world.

  158. Clotpoll says:

    ChiFi (155)-

    Hey! That’s my cousin.

    Of course, half the state of SC is my cousin.

  159. schabadoo says:

    #154

    Oh yeah, few minorities, awful food, no jobs, no entertainment…you’ll love it.

  160. Clotpoll says:

    ChiFi (155)-

    Nothin’ there that couldn’t be fixed with a rope and a pair of pliers.

  161. Clotpoll says:

    doo doo (161)-

    Yeah, but ammo’s cheap there.

  162. chicagofinance says:

    more for clot

    From Hedge by Moral Hazard
    http://www.youtube.com/watch?v=LtcnXLDnXvs

  163. syncmaster says:

    In the end, you just have to remember that you have it better then most people in this world.

    I’ve been to Indian villages and slums in Indian cities. I’ve witnessed poverty that makes our urban poor appear wealthy.

    Trust me, if you start comparing yourself with them, you’ll have no drive at all. You could be at the bottom of the US economic ladder and still be better off than they are.

  164. Rich In NNJ says:

    Eagle,

    SLD 201 HAMILTON RD $485,000 10/15/1997

    ACT 201 HAMILTON RD $1,190,000 8/15/2007
    Taxes: $16,434
    Lot Dimensions: 75 x 150

  165. Comrade 3b says:

    #148 gary With all due respect why can you not be patient, the credit crunch has jsut gotten underway, its simply going to take more time.

    Becasue one woman is asking 799K, mens nothing will change, its like you will never be convince, not sure why you do this to yoruself.

    People have to haev down payments again, the funny money loans have just about vanished, if this doe not convice you, nothing ever will.

  166. schabadoo says:

    Yeah, but ammo’s cheap there.

    Always startling to see everyone heading out at 4:30am with their guns during hunting season, especially if you’re just getting in.

  167. Aaron says:

    #161 Actually I split to NM, made a lateral job move.
    I entertain myself racing motorcycles in the desert, mountain biking, skiing/snowboarding (world class conditions), or just exploring.
    As far as Jersey goes I miss striped bass fishing and bagels…that’s it though.

    Some of the areas here have the highest concentration of PHDs in the world and it is not as backwards as many think.

  168. syncmaster says:

    Highest concentration of PhDs? I’ve heard the area around Los Alamos Labs has that.

    Kind of a narrow economic base, though, isn’t it?

  169. Aaron says:

    Kirtland AFB is a huge presence in ABQ, there are numerous science programs and several other government agencies.
    They are opening a bunch of movie studios here … health care is big because it is a popular retirement area.

  170. NJ Buyer says:

    James,
    Will you be posting an updated Lowball Report for Bergen County? I tried to use the CONTACT button but it did not work. Thanks Much

  171. Bloodbath in Winter 2007 says:

    all disclaimers apply as usual … but anyone have thoughts on Leucadia?

    been monitoring a group of stocks, waiting for them to drop, didn’t know if anyone did this.

    does anyone here do one of those stock groups where everyone pools some loose change and buys stocks? My friends are considering it for this fall … when the market tanks as the housing industry crumbles.

  172. stuw6 says:

    Bloodbath [173]:

    I’m currently secretary of the “Mad Loot Investment Club”. I founded it a little of 2 years ago to teach my friends how to save and invest.

    Our investment style is pretty conservative in that we only invest in companies that show 5 years of growing earnings and sales, but education is the main goal.

    If you were seriously interested, I could forward to you some more information.

    http://www.bivio.com/mlic/

  173. gary says:

    Comrade 3b,

    We seem to re-hash the same thing over and over, don’t we. LOL! I think we have to differentiate our thought process. My point is the most desirable areas are and always will be in demand through any market condition. Even throughout the easy money giveaway of the last few years, the majority of the graphs and data I’ve seen here and elsewhere have shown that buyers in the “snootyville” areas have put at least 20% down and have substantial assets.

    Yeah, there’s plenty of capes and small splits in Southern Bergen and Passaic, take your pick. They will drift lower and fall back in line. There’s a big gap separating these homes on 50 x 100 lots compared to the bigger splits, CHC’s and raised ranches on the 100 x 150 pieces of land in those “sought after” towns.

  174. CAIBC says:

    why cant we just get whatever price we want!

    http://news.yahoo.com/s/nm/20070828/ts_nm/world_firearms_dc

    hahaha….at least we are the best at something right?

  175. skep-tic says:

    #128
    I know that (usually) the point of making a bid is to make a deal, but I just don’t understand this concern about offending the seller or giving him/her unlimited room to get comfortable with your lowball.

    Give the seller a month maybe two to think it over. If he is not ready to move by then, it’s probably not worth waiting. I mean, are you willing to wait a year? Who knows where the market will be 6 months from now even. There is a ton of inventory and if a seller gets offended then he is just not paying attention

  176. make money says:

    seems like the Fed’s major isssue still is Inflation. bad news for all financials.

    http://www.marketwatch.com/News/Story/Story.aspx?column=Market+Snapshot

  177. t c m says:

    #175 gary –

    your right – it’s the same argument over and over again. but what do you have to say about the last paragraph above:

    “To sell cheaper homes, prices need to be slashed even more because demand is falling off,” Mr. Shapiro said. “If the bottom is falling out of the lower end of the market, it’s going to have to affect the middle, which affects everything above it.”

    that’s what i thought – i just don’t see how less desirable areas can fall in price without affecting the neighboring more desirable areas. i don’t think any area operates in a complete vacuum.

  178. stuw6 says:

    NEW YORK (MarketWatch) — U.S. stocks extended a second day of losses Tuesday after commentary from the Federal Reserve failed to confirm thoughts of a rate cut ahead, adding to bearish sentiment that included a drop in consumer confidence and the value of homes.
    “It’s a dangerous game we’re playing, especially if the Fed doesn’t follow our script,” said Art Hogan, chief market strategist at Jefferies & Co. of market assumptions the central bank would trim the Fed funds rate at least 25 basis points.

  179. make money says:

    that’s what i thought – i just don’t see how less desirable areas can fall in price without affecting the neighboring more desirable areas. i don’t think any area operates in a complete vacuum.

    WESTFIELD does!!!

  180. njpatient says:

    #126 Al

    “Leave NJ you whiners!!!!!

    Don’t you worry – We are leaving NJ in a hurry. ”

    Agree – let’s not be too quick to tell folk to leave NJ – they may do just that, contracting the tax base and taking their cash out of the region.

  181. Eagle says:

    Rich,

    THanks for MLS!
    Eagle

  182. Comrade 3b says:

    #175 gary We must be looking at different graphs, and the family member I have in the business has never seen a 20% down payment (in 5 years) (unless the proceeds were from the sale of another house).

    There are starter houses in all towns, including Upper Snoburbia and Brigadoon.

    To think that there is an unlimites supply of buyers out there with 10 to 20% to put down right now is just not the case, IMHO. It takes time and discipline to save that type of cashe, plus closing costs.

    The first time home buyer is effectively in many instances shut out of the market, the credit crunch, demise of sub-prime was the last straw.

    It affects all towns and all houses from the POS Cape to the mega mansion.

    All qulified buyers have to do is be patient,and jump in at a point they might feel comfrotable with.

    No area is immune, thats the nosnese we have listened for so long fromm the uber Bulls.

    What many of us belived would happen is playing out. I just do not see the casue for despaitr on your part, but we are entitled to our opinions of course.

  183. njpatient says:

    “My neighborhood is very diverse but oddly enough that seems to drive away the white residents. Seems to me that there were a lot more white people around 10 years ago than there are today.

    Maybe they all moved to Westfield *sigh*”

    This kinda sounds like the point Thrilled was making, sync

  184. t c m says:

    “Give the seller a month maybe two to think it over.”

    a month or two? wow – i haven’t bought a house in a while, but is that how it’s done? i would have thought they should come back in just 2-3 days.

  185. njpatient says:

    #139 schab

    I thought Thrilled’s point was that NJ isn’t diverse. Pointing out that PA isn’t diverse isn’t much of a riposte.

  186. Comrade 3b says:

    It’s a dangerous game we’re playing, especially if the Fed doesn’t follow our script.

    You go tough guy, Hey Fed you better do this or else!! Or else what? Suck it up creampuff

  187. njpatient says:

    #146
    Yes

  188. schabadoo says:

    Pointing out that PA isn’t diverse isn’t much of a riposte.

    If we ignore the OP that mentioned fleeing to PA, then you’d be right.

  189. stuw6 says:

    175/179 Gary/TCM – During the tech bubble, home sale prices and rents in the SFO/Palo Alto area reached such high numbers that the local press started reporting that the unbelievable demand for housing would supersede any future drop in property values. Two years later, one could rent an apartment for 1/3rd of what it went for 2 years earlier.
    I never saw a housing market as hot as that area ever. If you think Northern NJ is immune, then you are blind.

  190. Richie says:

    Any fund recommentations? Need to contribute to my SEP-IRA.. Something moderate…

  191. pesche says:

    dow down 200 secure all foreign objects

  192. njpatient says:

    #159
    “No matter where you go, you’re going to pay taxes”
    Have you checked out property taxes in New Hampshire lately?
    Just sayin…

  193. gary says:

    t c m,

    You’re right, no area operates in a vacuum. While the so-called lesser desirable areas drop, the more affluent areas will stay flat, at worst. That expanded, country cape with a stone fireplace in Wyckoff is not going to go at rock-bottom prices. I don’t care what the market is like. Whether it be inheritance money, two white-collar earners or a freakin’ lottery ticket, that house is moving for top dollar.

  194. MLS Inquiry says:

    rhyming,

    thanks for the mls – appreciate it

  195. stuw6 says:

    192: VSMGX

    Or leave it in Bonds until the economy stabilizes.

  196. pesche says:

    free fall, trading collars now in

  197. njpatient says:

    #190
    “Pointing out that PA isn’t diverse isn’t much of a riposte.

    If we ignore the OP that mentioned fleeing to PA, then you’d be right.”

    That OP was Bloodbath, not Thrilled, so asking Thrilled what his/her point was in suggesting PAS doesn’t make any sense. Thrilled didn’t suggest PA.

  198. make money says:

    I knew the last couple of weeks was the calm before the storm. DOW will take a beating for the rest of this week and next.

    CFC is back to $19. When CFC goes down to $10 BoA is gonna have to get in line to collect that 7.5% interest from CFC.

    11.5B two weeks ago. 2B last week. Who wants to lend them some money this week.

    We’re in for some nasty weather if the consumer slows even a little.

  199. stuw6 says:

    Gary [195] Says: That expanded, country cape with a stone fireplace in Wyckoff is not going to go at rock-bottom prices. I don’t care what the market is like. Whether it be inheritance money, two white-collar earners or a freakin’ lottery ticket, that house is moving for top dollar.
    ———————————————
    It will go for less than it is going for today. Percentage-wise, the drop might not be as great, but an ebbing tide drops all ships.

  200. gary says:

    stuw6,

    It hasn’t changed much, has it.

    http://homes.realtor.com/prop/1087713447

  201. stuw6 says:

    Investors…Keep taking the advice of the wealthy spinsters on Wall Street. They’re glad you’ll be left holding the bag for them.

  202. stuw6 says:

    That’s actually a pretty good deal there Gary.

    I almost purchased a home in Silver Lake (gangland Los Angeles). I curse myself every day for not bidding higher!

  203. Rich In NNJ says:

    Gary,

    The housing market in one town doesn’t consist of one unsold unit.
    If you want to make a case, use sold data and more than one unit.

    Rich

  204. schabadoo says:

    Thrilled didn’t suggest PA.

    Sure seemed to defend it; saying NJ isn’t diverse with the OP talking about PA vs NJ.

    And it’s still a weak argument: New Jersey isn’t diverse? Compared to what other state? People/environment/jobs/etc?

  205. t c m says:

    #195 –

    gary,

    i’m not saying that they have to hit “rock bottom”,(whatever that means) but that doesn’t mean they will stay flat either. how can you be so sure they will stay flat?

    given the choice, there are going to be some people who chose the lower priced, larger home in the less desirable area, over the higher priced puny home in the more desirable area. if they did it before, when prices in the less desirable area were high, why not now, when they’re lower?

    while the tightening of credit seems like it has hit the lower priced areas more up to now, don’t you think that the credit crunch for mortgages over 417K and the requirement of a substantial downpayment will have an impact?

    i understand your frustration – maybe i’m just too hopeful.

  206. njpatient says:

    OP didn’t mention diversity. Thrilled didn’t mention PA. That’s a pretty tenuous connection.

  207. schabadoo says:

    #208

  208. Comrade 3b says:

    #195 gary “Whether it be inheritance money, two white-collar earners or a freakin’ lottery ticket, that house is moving for top dollar”.

    Wyckoff dropped before, it will drop again too, oh,and the way there are 100 houses for sale in Wyckoff right now,(njmls).

  209. schabadoo says:

    #208

    This seems like a lot of work to say that quoting a reply to the OP has nothing to do with the OP.

  210. scribe says:

    MARKET SNAPSHOT

    U.S. Stocks slip further after Fed fails to reassure

    Wall Street hit with drops in consumer confidence and home prices

    By Kate Gibson, MarketWatch
    Last Update: 3:18 PM ET Aug 28, 2007

    NEW YORK (MarketWatch) — U.S. stocks extended a second day of losses Tuesday after commentary from the Federal Reserve failed to confirm thoughts of a rate cut ahead, adding to bearish sentiment that included a drop in consumer confidence and the value of homes.

    “Market participants are disappointed about the fact that there wasn’t even a small minority seeking a shift to a neutral policy stance, let alone an aggressive approach to dealing with the brewing credit crisis,” said Tony Crescenzi, bond strategist, Miller Tabak & Co.

    http://www.marketwatch.com/News/Story/Story.aspx?column=Market+Snapshot&print=true&dist=printTop

  211. njpatient says:

    “This seems like a lot of work to say that quoting a reply to the OP has nothing to do with the OP.”

    Seems like a lot of work to say that a quote from person A is attributable to person B.

  212. stuw6 says:

    Hey…Where’s BI on a market day like this? Fuel up, Real estate down, gold up. 1 for 3 not bad.

  213. pesche says:

    At what point does Trenton offer
    Tax relief to the home owners who are left?

    Otherwise will their be an exodus?

  214. BC Bob says:

    “Hey…Where’s BI on a market day like this?”

    Bi and Biluva went for a walk in the park, trying to sort things out.

  215. pesche says:

    Has Sen. Craig been on the Jersey Turnpike?

  216. bi says:

    216#, is it a good market? 10 yr yield down to 4.52%. we are 4 months ahead of schedule.

  217. njpatient says:

    bi, remind me when oil is going to hit $40?

  218. Essex says:

    All the talk of an exodus is fine and dandy if you have work in other states (that pay the type of sky high wages you can make here in some fields) or if you want to move to Manhattan and pay $$$ for a closet…..you decide.

  219. John B says:

    Break out the bubbly !

    Up nicely on 1000 shares of SRS!
    I’ve protected my IRA/401ks accts with T-bills, Gold, and SRS.

    Thanks boys!

    When is the next TARA get-together?

    Johnny B

  220. James Bednar says:

    From the AP:

    Impossible to Track Troubled Mortgages

    It’s hard to know how scared to be if you don’t know the size of the threat. No, not terrorism, housing.

    The U.S. mortgage-lending business is a sprawling, varied enterprise that no one regulator oversees, making it impossible to know how many mortgages or lenders not insured by the government are in trouble.

    Even worse, no public records are available to show who holds the trillions of dollars worth of mortgages that investment banks pooled and sold as securities to investors around the globe. The value of many of those securities plunge as mortgage defaults soar.

    “You can’t get your arms around the size of the problem. … I don’t think that anybody knows that number,” said David Jones, president of Denver-based consulting firm DMJ Advisors and a former Federal Reserve economist.

  221. RentinginNJ says:

    Say it ain’t so…

    N.J. no longer richest state, Camden no longer poorest U.S. city

    MOUNT LAUREL, N.J. (AP) — New Jersey is no longer the nation’s wealthiest state and Camden is no longer the nation’s poorest city, according to federal data released Tuesday.

    The Garden State’s median household income of $64,470 is second to Maryland, where the median household income is $65,144.

    More data next month will show the housing costs in the state. In recent years, New Jersey’s income has been about 33 percent above the national average. But housing costs have been 50 percent higher and New Jersey has the highest property taxes in the nation — an average of $6,330 per homeowner, or twice the national average.

    “We have very high incomes,” James W. Hughes, the dean of the Bloustein School of Planning and Public Policy at Rutgers. “And you can’t afford to live here.”

  222. bi says:

    Regarding this morning’s SPCS index, you have to read the table line by line. Two major cities, Boston and San Diego, are considered as leading indicators. Aparrently, they are in recovery mode but it could be held off by august credit crunch. but don’t worry. Incoming fed fund rate cut will offset the impact in some degree.

    Boston 171.30 0.2% 0.8% -3.7%
    San Diego 231.37 -0.2% -0.4% -7.3%

  223. Comrade 3b says:

    #195 gary: One final note. I wish I had kept copies of the Bergen Record from 92-94,the Sunday edition.

    There used to be stories in there of people who could not sell their houses, lost jobs and all the rest.

    There were instances where people in Wyckoff (OMG!!) and Ramsey were using local food banks, because that is how bad things got for some people, even in those BC towns.

    Would not be surprised if the The Record brings that feature back over the next year or so.

  224. Comrade 3b says:

    #224 bi “Incoming fed fund rate cut will offset the impact in some degree.” How pray tell?

  225. BC Bob says:

    “216#, is it a good market?”

    Bi,

    Depends on one’s position. If you are short and/or collecting premium, then you would say the market cooperated.

    By the way, why are you so bearish. You act like the sky is falling.

  226. syncmaster says:

    Two major cities, Boston and San Diego, are considered as leading indicators.

    Not challenging you, but who considers them leading indicators? Please provide a source for that assertion.

  227. bi says:

    #195, i cannot speak on bergen county. but as long as IT outsourcing to india becomes more and more insourcing from india, the areas along northeast corridor will be doing fine. if you don’t believe me, take a test right now and ride NJ transit to trenton and you will see over 70% riders looking like recent immigrate from india. Disclaimer: i like indians.

  228. Comrade 3b says:

    #224 bi: You do understand that part of the reason for today’s sell off is that the street was not reassured that the Fed will cut come Sept 18, based on the release of their minutes for August 7, wherby they state their main concern is stilll inflation. You do know that, well don’t you? Dont’ You?

  229. James Bednar says:

    Missed what seemed to be a very interesting day, I’ve got to schedule fewer meetings.

    jb

  230. Comrade 3b says:

    #229 bi So Indians over pay? Are you saying Indians will over pay, or are you saying that Indians do not know any beter and will over pay?

  231. bergenbuyer says:

    Gary- No town is immune, no price range is immune, everyone will be affected, some more than others, but no one is immune.

    We’re all witnesses.

  232. bi says:

    3b, you cannot just listen what they said. you have to watch what they did. they did once a few days ago and they will do it again. today’s drop is mainly a excuse from dropping consumer confidence number and downgrades on financials such as LEH, GS, BSC

  233. CAIBC says:

    indians have a tendency to pay what ever it takes to have a better house than than their friends! its a status thing…indians always compete with each other, whether its who has the better job or house! i say this because, lets just say, i know a lot of indians. disclaimer : i too like indians, have a lot of indian friends….

  234. Comrade 3b says:

    3235 Does not mean they will over pay though.

  235. scribe says:

    From the Blown Mortgage blog, re Deutsche:

    In a letter to brokers dated yesterday MortgageIT, a subsidiary of Deutsche Bank, announced it is no longer originating or funding subprime loans.

    http://www.blownmortgage.com/

  236. Comrade 3b says:

    #234 bi: as A along time observer of the Fed, please don’tell me what how I need to interpert what they do. Fed Minutes have been and will continue to be critical in determiong the mindset of the Fed.

    And do not for one minute think that Bernanke will be held hostage to the street.

    And if they do cut, it will be symbolic at best, throe the street a bone perhaps. Then what, how deos this save the real estate market.

    You need to at least make some attepmt at presenting a coherent arguement. 10 yr at 4.50, then what? It appears you are just babbling to babble.

  237. CAIBC says:

    like i said, its a status thing….and yes, they would overpay, although they do assume less risk than my non indian friends…they have the almost 20% down and go with a traditional mrtg..
    a few of my friends have bought within the past year despite of the fact the prices were ridiculous! why, becuase one of the friends bought late last year and everyone else had to stay in the game!

    CAIBC..

  238. BC Bob says:

    “today’s drop is mainly a excuse from dropping consumer confidence number and downgrades on financials such as LEH, GS, BSC”

    [234]

    An excuse? The financials make up approx 25% of the market cap of the S&P 500. You want to just dismiss it as an excuse?

  239. Rich In NNJ says:

    At this point I don’t know why people even bother responding to bi. I think he’s only expressing what he wishes will happen.

    Oh yea.

    Disclaimer : I like idiots and have a lot of idiot friends

    Rich

  240. James Bednar says:

    There will be no more stereotyping past this point.

    jb

  241. CAIBC says:

    haha…thats good rich…

    need to sleep today off…its been a bad day both for me and for my investments

  242. Comrade 3b says:

    #241 CAIBC: Undestand, But very foolish on their part, IMHO

  243. biluva says:

    today’s drop is mainly a excuse from dropping consumer confidence number…

    hi bi!
    was wondering where you were! what do you think will happen to consumer confidence going forward? do you think goldilocks is still here? or leaving?
    thanks; you are a awesome forecast person!

    biluva

  244. dreamtheaterr says:

    (edited -jb)

    And on the outsourcing/insourcing thing, if the dollar continues to weaken against to the rupee, it might make outsourcing look a little less attractive. Either Indian BPOs see their margins under serious pressure, or they start billing the US companies more.

  245. bi says:

    240#, as a government agency, the first priority of fed is to protect american people’s property. at this time, it is their homes. if the real estate market is really going to colapse, which will certainly bring in recession, and fed feel they can avert it by cutting rates, they will do in nano-second. the second prioprity is also to protect american people’s property by fighting inflation so that your property (money) will not worth less.

  246. CAIBC says:

    comrade, trust me, they were warned….i even told them about this site! to them, i was probably just a bear in their bull RE market!
    no worries though, like i said, they assume very little risk, even if property values go down some, they are pretty much set (as long as they dont have to sell right away) eventually, these prices will come back up…eventually!

  247. CAIBC says:

    dreamtheaterr….lol…you know, you are right! never thought of that until you said something! lol, the temps are always a little extreme when we visit…lol

  248. James Bednar says:

    240#, as a government agency, the first priority of fed is to protect american people’s property

    The Fed has a dual mandate:

    1) Low inflation
    2) Full employment

    jb

  249. MJ says:

    “as a government agency, the first priority of fed is to protect american people’s property. at this time, it is their homes. if the real estate market is really going to colapse, which will certainly bring in recession”

    now you are talking..

  250. It's over grubbers Prices are plunging says:

    Welcome to hell grubbing starving friskie eating bunch.

    Read My Lips: IT IS GOING TO GET WORSE…MUCH WORSE!

    YOU MUST UNDERSTAND 3 WORDS: CUT PRICES FAST

    BOOOOOOOOOOOOOOYAAAAAAAAAAAA

    Bob

  251. biluva says:

    hi bi again,
    just question on this –
    as a government agency, the first priority of fed is to protect american people’s property. at this time, it is their homes.

    question is
    1) isn’t fed like central bank of US?
    2) what was american people’s property before they bought houses in recent years?

    thanks!

  252. bi says:

    253#, do we talk at the same thing? re colapse = recession = less employment. the order may be different, but it is the same.

  253. schabadoo says:

    This seems like a lot of work to say that quoting a reply to the OP has nothing to do with the OP.”

    Seems like a lot of work to say that a quote from person A is attributable to person B.

    Only if you can’t follow a thread.

  254. New Investor says:

    “It’s over grubbers Prices are plunging”

    My favorite poster. (Although a bit repetitive)

  255. BC Bob says:

    “2) what was american people’s property before they bought houses in recent years?”

    A tent, soon to be replaced by a bunker.

  256. biluva says:

    so fed protected american people’s tents too?

  257. biluva says:

    BC Bob-
    how?

  258. It's over grubbers Prices are plunging says:

    The Fed’s main job is to protect the integrity and value of our currency. AND THEY HAVE BEEN DOING A $#@! JOB OF IT ESPECIALLY GREENSPIN.

    It’s not to inflate asset values and bail out every dolt that has made IRRATIONAL financial decisions.

    The RE pimps want the bull but do not want to deal with the consequences of their greedy ways.

    Lets get this back to normal. Our economy is nowhere near normal right now. it is bloated and lopsided.

    BRING ON THE HOUSING DECLINE. IT IS GOOD FOR NJ AND THE US.

    BOOOOOOOOOOOOOYAAAAAAAAAAA

    Bob

  259. Comrade 3b says:

    #253 Obviously JB you are wrong, bi says so.

  260. bi says:

    243#, bob, the market went up almost 7% from recent low and it is always trying to find something as excuse to sell. that is what most of us here depends on for living.

  261. Comrade 3b says:

    #251 CAIBC: Eventually, they will but first they have to finish dropping, and they hav only really just started.

    And if history is any guide, eventually will equal about 10 years or so, and that is a looooong,loooong time.

  262. READ MY LIPS: CUT YOUR GRUBBING HOUSE PRICES FAST says:

    OR ELSE GO DOWN WITH THE SHIP.

    Know a feller that bought a co-op in 1988 did not BREAK EVEN ‘TIL ABOUT 2000.

    12 YEARS GRUBBERS. AND DURING THAT 12 YEARS THIS FELLER WAS UNDERWATER BY 50%. SO IT WAS NOT A FUN RIDE.

    1st timers bring on the attitude. the entitlement bunch think you have to saddle yourself with debt up to your eyeballs. You gotta tell’em NO MAAS. Tell’em to get another job or work a few more years.
    BOOOOOOOOOOOYAAAAAAAAAAA

    Bob

  263. make money says:

    bi,

    You’re the man. keep up the good work. show these bears that you can still make money in these conditions.

    by the way, did your arms reset yet? It’s gonna suck when they do. Until then, tell everyobe where the 10yr is gonna be come year end.

    MM

  264. Rich In NNJ says:

    I know, I know, it’s CNBC, but there’s a good discussion on housing going on right now.

  265. MJ says:

    looks like another bit of carry trade is unwinding..

  266. MJ says:

    MM, remember you came over shouting “immigrants, immigrants, Chinese, Indians..”

  267. BC Bob says:

    “243#, bob, the market went up almost 7% from recent low and it is always trying to find something as excuse to sell. that is what most of us here depends on for living.”

    Randolph Duke: Exactly why do you think the price of pork bellies is going to keep going down, William?

    Billy Ray Valentine: Okay, pork belly prices have been dropping all morning, which means that everybody is waiting for it to hit rock bottom, so they can buy low. Which means that the people who own the pork belly contracts are saying, “Hey, we’re losing all our damn money, and Christmas is around the corner, and I ain’t gonna have no money to buy my son the G.I. Joe with the kung-fu grip! And my wife ain’t gonna f… my wife ain’t gonna make love to me if I got no money!” So they’re panicking right now, they’re screaming “SELL! SELL!” to get out before the price keeps dropping. They’re panicking out there right now, I can feel it.

    [on the ticker machine, the price keeps dropping]

    Randolph Duke: He’s right, Mortimer! My God, look at it!

  268. Clotpoll says:

    bi Says:
    August 28th, 2007 at 4:47 pm

    240#, as a government agency, the first priority of fed is to protect american people’s property.

    Bi, please share with us the part of the Federal Reserve Act of 1913 that states this. I must be missing that page. Here’s a link to the whole act…so get cracking:

    http://www.federalreserve.gov/generalinfo/fract/

  269. bi says:

    248#, despite current volatility, goldilucks is still here. the stock market could move down another 10% before year end but the bond yield will keep going down. in addition, oil price will move down after hurrican season is over. i will not be surprised to see oil under $60 by year end. these two together will give NYC areas a big boost. By boost, i mean the number of sales, not necessarily the price. it will bring down the inventory levels to around 6 months from current level.

  270. bi says:

    273#, the page is here and the goal is here:

    maximum employment, stable prices, and moderate long-term interest rates.

    “The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”

  271. BC Bob says:

    “A Cheyne Capital Management Ltd. commercial paper program with as much as $20 billion in assets, including real estate securities, may liquidate because of losses, Standard & Poor’s said.”

    “The program, called Cheyne Finance LLC, is a structured investment vehicle that purchases securities by issuing short-and medium-term debt, S&P said in a statement today. It breached a test based on losses in the portfolio that may force liquidation, S&P said. London-based Cheyne Capital is the portfolio manager.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aVLykxsTPkGY&refer=home

  272. rhymingrealtor says:

    Did anyone but me tak so long to figure out biluva is ( bi-lover) duh – slapped head-
    For those of us like me, biluva you should have hypehenated.

    Thanks
    KL

  273. scribe says:

    Bost,

    Maybe you should clarify that that’s a scene from the movie “Trading Places,” where the significance is that the homeless guy can see clearly where things are going based on common sense vs. the bluebloods.

  274. rhymingrealtor says:

    Spelling issues too! My head hurts.

    KL

  275. Clotpoll says:

    moron (275)-

    So how do you extrapolate “protect property” from that?

    Why do I even respond to you?

    Know what? I could lay off with Ducky, and you aren’t half as entertaining as he was.

    You just died, in my book. Anyone in with me?

  276. Comrade 3b says:

    #273 Clot: looks like you loose,bi showed you, its right there in post 275.

    Ducky, bi, where do these guys come from?

  277. Comrade 3b says:

    #280 Clot Oh I am in, at least Ducky could be funny (not that I want him back).

  278. MJ says:

    did ducky ever sell..

  279. chicagofinance says:

    bi is a troll – a called him out a couple of days ago – you know me “the irascible albanian”

  280. NJGator says:

    Maybe things aren’t so ducky for ducky?

  281. BC Bob says:

    scribe [278],

    And who is Beeks? Happy New Year.

  282. bi says:

    284#, you always label people who disagree with you trolls. i am not a troll. i post what i know and what i feel is true

  283. njpatient says:

    #280; #282 Clot/3b

    Me three.

  284. bi says:

    281#, sorry i just cut and paste from clot’s link. but it clearly said stable price. of course, it includes housing price

  285. James Bednar says:

    The meaning of “troll” has been clearly defined here before. However, due to my own laziness, I’ll just refer to Wikipedia:

    http://en.wikipedia.org/wiki/Internet_troll

    An Internet troll, or simply troll in Internet slang, has come to mean someone who intentionally posts messages about sensitive topics constructed to cause controversy in an online community such as an online discussion forum or USENET groups in order to bait users into responding.[1] They may also plant images and data on networks that others may find disturbing in order to cause confrontation. They often change screen names or acquire multiple screen names to cause confusion and gain credibility by agreeing with themselves in forum debates.

  286. rhymingrealtor says:

    “”did ducky ever sell..””

    Withdrawn

    KL

  287. njpatient says:

    trolls often make arguments that are internally contradictory.

  288. njpatient says:

    “Withdrawn”

    He must be renting

  289. biluva says:

    i’m a luva not a trolla

  290. James Bednar says:

    From FT:

    Obama unveils radical mortgage plan

    Unscrupulous lenders who deceptively sold subprime mortgages to millions of Americans should be fined and the proceeds used to help bail out borrowers facing a wave of foreclosures, according to Barack Obama, the Democratic senator running to be his party’s presidential candidate.

    The proposal is among the most radical yet from a leading Democrat and comes as Washington tries to respond to a growing wave of foreclosures and a crisis in credit markets.

    Writing in today’s Financial Times, Mr Obama blamed lobbyists working on behalf of lenders for obstructing tougher regulation of the subprime industry, adding: “Our government failed to provide the regulatory scrutiny that could have prevented this crisis.

    Mr Obama said the government needed to “stop the unlicensed, unregulated, fly-by-night mortgage brokers who are hoodwinking low-income borrowers into loans they can’t afford”.

    He added that “Washington needs to stop acting like an industry advocate and start acting like a public advocate”.

    Curtailing undue corporate influence on policymaking in Washington is one of Mr Obama’s signature issues.

  291. James Bednar says:

    BC,

    “SIV” has entered the public lexicon.

    jb

  292. njpatient says:

    #258
    “Only if you can’t follow a thread.”

    Thrilled took pains to be clear that s/he was pointing out that comparing NJ to PA doesn’t change the nature of NJ. You’re trying to put words in Thrilled’s pen. If you’re not sure whether Thrilled was comparing NJ to PA, why don’t you ask Thrilled. I’ll bet the answer is “no.”

  293. Everything's 'boken says:

    It appears to me that there is circumstantial evidence that we have a clone. I think of them as Dewey and Louie.

  294. James Bednar says:

    From the AP:

    Fitch Downgrades Homebuilders

    Fitch Ratings on Tuesday downgraded several homebuilders, citing the challenging outlook for homebuilders in light of problems in the home mortgage industry and other factors.

    Fitch cut Hovnanian Enterprises Inc.’s issuer default rating, senior unsecured and unsecured bank credit facility to “BB-” from “BB+.” Fitch also cut the company’s senior subordinated notes to “B” from “B+” and Series A perpetual preferred stock to “B-” from “B+.”

    Fitch cut issuer default ratings, senior unsecured, and unsecured bank credit facilities for Centex Corp. and Lennar Corp. to “BBB” from “BBB+.” It also affirmed both companies’ short-term issuer default and commercial paper ratings at “F2.”

    Fitch downgraded issuer default ratings, senior unsecured and unsecured bank credit facilities of M/I Homes Inc. and Standard Pacific Corp. to “BB-” from “BB.”

    It also cut M/I’s Series A non-cumulative perpetual preferred stock rating to “B’ from “B+” and Standard Pacific’s senior subordinated debt to “B” from “B+.”

    The outlooks on both companies remain “Negative.”

  295. RentinginNJ says:

    Unscrupulous lenders who deceptively sold subprime mortgages to millions of Americans should be fined and the proceeds used to help bail out borrowers facing a wave of foreclosures

    Sounds nice. So, what are you going to do, seize their assets? A few Dell computers, a microwave and a water cooler? If you’re lucky, maybe some worthless mortgages that got turned back to the lender. That will help a lot of people.

  296. njpatient says:

    all the nine-to-fivers have disappeared again

  297. schabadoo says:

    f you’re not sure whether Thrilled was comparing NJ to PA, why don’t you ask Thrilled.

    I was more interested in their ridiculous assertion regarding diversity. PA is a nice contrast in that regard, don’t you think?

  298. njpatient says:

    “PA is a nice contrast in that regard, don’t you think?”

    To the extent that you’re trying to change the subject, yes.

  299. James Bednar says:

    RentinginNJ,

    He would need to include legislation that would establish assignee liability to all parties involved in the securitization and investment process.

    Once assignee liability has been established, any and all parties involved would become liable as part of the transaction.

    jb

  300. James Bednar says:

    FYI, if you were ever looking to drop an atomic bomb on the mortgage securitization industry, assignee liability would be it.

    jb

  301. James Bednar says:

    From the WSJ Real Time Economics Blog:

    Mortgage Crisis Spreads to High-Cost Real Estate

    The subprime mortgage crisis is spreading to a somewhat unexpected place: high-cost real-estate markets.

    As lending nationwide has rapidly gotten more restrictive for borrowers taking out large loans, expensive residential areas around the country have seen the pace of sales for homes above $500,000 fall off sharply during what should be one of the busiest seasons for buyers and sellers, mortgage bankers and realtors say.
    Even in markets where it’s too soon to get a true measure of the effects of higher rates — there is, after all, a built-in lag time between when mortgage applications are accepted and when they close — a sudden drop in confidence has cast a pall on home sales activity.

    And that, in turn, could put downward pressure on prices for higher-priced homes.
    To some degree the change is due to difficulty getting financing, as borrowers are finding fewer lenders willing or able to fund “jumbo” mortgages, loans for amounts greater than $417,000. Such loans are too big to be guaranteed by government-sponsored housing finance agencies Fannie Mae, Freddie Mac or Ginnie Mae.

    In New York, the most pronounced effect so far has been at the ultra high end of the market, for properties priced $25 million and above, said Dolly Lenz, vice chairman with Prudential Douglas Elliman.

    “Every single person I have at the highest end is on hold: they’re going to wait and see what happens,” she said. “It has nothing to do with them being able to afford” properties or not, Lenz added. “It’s a confidence thing. They somehow feel poorer. Whether they are or not

  302. schabadoo says:

    To the extent that you’re trying to change the subject, yes.

    Changing the topic from diversity to diversity?

    Solid stuff.

  303. Bubbling says:

    Essex must be realtor “not so busy”?
    Be nice and polite if you would like few clients to stop by!
    And remember ” change your tune”. Times have changed!!!

  304. Clotpoll says:

    Grim (296)-

    Even better, the “SIV-lite”.

    Sorta like a daisy cutter in relation to a neutron bomb.

  305. sas says:

    Dow 10,000 anyone?

    Pink slips may be in the pipeline on Wall St.

    sas

  306. sas says:

    the banks don’t want your OREOs

    sas

  307. 3b says:

    #306 “It’s a confidence thing. They somehow feel poorer. Whether they are or not.”

    Perhaps they are smart enough to know that if they do buy now, they wil not just feel poorer, but will be poorer, as the price drops are just starting.

  308. 3b says:

    #309 They have already started.

  309. njrebear says:

    3b,
    Are you talking about mortgage brokers?

  310. Richard says:

    people the fed has a bit of concern about inflation but make no mistake they have far more concern about the macro economic picture. if credit continues to remain tight and the economy suffers more they’re going to cut rates. i’m thinking a 25bps cut next meeting then another one the meeting after. they won’t panic with a bigger one time cut but they’re going to start easing.

  311. Zack says:

    How will easing the rates help. Everybody is broke and people who want to lend are sh*t scared of lending. I don’t see the connection.

  312. chicagofinance says:

    Everything’s ‘boken Says:
    August 28th, 2007 at 6:11 pm
    It appears to me that there is circumstantial evidence that we have a clone. I think of them as Dewey and Louie.

    Yo’boken: are those the robots from Silent Running? Remember when Bruce Dern always played the guy with the screw loose, two steps away from a nervous breakdown…..kind of like the HAL computer…

  313. scribe says:

    Bost,

    Beeks?

    Don’t know that one.

    Was he the butler?

  314. chicagofinance says:

    Isn’t Beeks the one with the crop report?

  315. chicagofinance says:

    Economists weigh in on the release of the minutes from the Fed’s Aug. 7 meeting, which don’t include any discussions related to the recent market turmoil or Fed action in the last two weeks. However, the report did offer some hints about the Fed’s intentions and outlook.

    Interestingly, despite a large volume of work on the limited inflation pass-through the U.S. economy sees from currency depreciation, the Fed noted the falling value of the dollar as an inflation risk in addition to falling productivity and the “continuing high level of resource utilization” (read: low unemployment rate)… The [minutes] may indicate a slightly higher bar for action than we had previously assumed as the concerns around inflation pressures are clearly widespread. Nevertheless, we believe that bar has been reached and look for the Fed to lower the Fed funds rate by 25 basis points at the September 18 FOMC meeting. –Drew Matus, Lehman Brothers

    Market expectations of a near-immediate fed rate cut are overblown and unjustified by underlying economic fundamentals. The first thing to consider in analyzing Fed action is to review Bernanke’s approach to policy making: he’s an academic, not a market practitioner… While reading FOMC minutes is always an exercise in shades of grey, it looks like the Fed is prepared to move towards a neutral bias, but is not ready to begin cutting the fed funds target rate. –Guy LeBas, Janney Montgomery Scott

    If nothing else, the Fed is stubborn in their forecast. Despite the recent turmoil in the financial markets and the ongoing correction in the housing market they continue to expect the economy to grow close to its potential rate (although that potential rate of growth has been downgraded slightly). However, they have finally begun to more explicitly acknowledge the downside risks to growth, both from housing and from deteriorating financial market conditions. –Steven Wood, Insight Economics

    A week of financial market mayhem was all it took to convince Fed officials that normal market conditions were not going to reappear without some policy assistance. In all likelihood, more assistance will be forthcoming, probably including further reductions in the Discount Rate, and possibly also a lower Fed funds target. –Joshua Shapiro, MFR

    There was an even greater shift in the assessment of risk than the statement indicated. Indeed, the staff forecast for GDP growth was lowered and the notion that deteriorating financial conditions would require a policy response was raised. Taken together with developments over the past three weeks — including increased financial market strain and a Fed statement shifting towards an outright downside growth bias — these dovish minutes should be seen as increasing the likelihood that the Fed eases [in September]. –Bruce Kasman, J.P.

  316. chicagofinance says:

    WSJ
    Countrywide Continues Slide,
    Leaving Questions of Value
    By JAMES R. HAGERTY and KAREN RICHARDSON
    August 29, 2007

    Bank of America Corp.’s $2 billion investment in Countrywide Financial Corp. last week was supposed to put an end to fears about the financial strength of the nation’s largest home-mortgage lender. So why does Countrywide’s stock keep falling?

    Countrywide’s stock price is down nearly 12% since the purchase of convertible preferred shares was announced last Wednesday. That’s largely because investors still don’t know how badly Countrywide has been wounded by the recent credit crunch. At a minimum, Countrywide faces a hit to near-term earnings; some analysts expect a loss in the current quarter. At worst, the company could be forced to dump assets at fire-sale prices or seek another emergency infusion of capital, potentially slashing the value of its stock further.

    “Two billion dollars from Bank of America is not a lot compared to what they may need,” says Stuart Plesser, an equity analyst at Standard & Poor’s in New York. (More on the Countrywide deal in Breakingviews column.)

    Though Countrywide bills the investment a “vote of confidence,” Mr. Plesser thinks the sale of preferred stock signaled distress. The preferred stock carries a yield of 7.25% and is convertible into a stake of about 16% of Countrywide’s common shares, at $18 apiece. The stock had been $36 only five weeks earlier, and Mr. Plesser doesn’t think Countrywide would have sold such a large stake at such a low price unless it needed cash immediately.

    Countrywide stock was at $21.82 just before the investment was announced late Wednesday afternoon. The stock then spurted to a high of $24.46 Thursday morning but has been falling since then. Yesterday, it fell 69 cents, or 3.5%, to $19.31 in 4 p.m. trading on the New York Stock Exchange.

    Part of the problem is that investors are in the dark. Countrywide’s latest profit guidance came on July 24, when it forecast that earnings per share this year would be between $2.70 and $3.30, down from $4.30 for 2006.

    Since then, a near-panic among investors has changed almost everything for mortgage lenders. They no longer can count on financing their lending through commercial paper and other short-term borrowing because investors are shunning those markets.

    Investors also are reluctant to buy most loans or mortgage securities that don’t come with the guarantee of government-sponsored investors Fannie Mae and Freddie Mac or insurance from the Federal Housing Administration.

    That leaves a question mark over the value of Countrywide’s holdings of loans and mortgage securities. As of June 30, the company had about $34 billion of loans that were due to be sold to investors. That includes prime-quality loans, subprime mortgages for people with weak credit records, and Alt-A loans, a category between prime and subprime.

    Frederick Cannon, an analyst at Keefe, Bruyette & Woods, says the total amount of loans waiting to be sold may now top $40 billion, given the current difficulty of finding buyers for many types of loans. Mr. Cannon says it isn’t clear what share of the loans can be sold to Fannie and Freddie or how much Countrywide may have to mark down the value of the others.

    Countrywide also had about $23 billion of “trading securities,” mostly mortgage-related, as of June 30. Mr. Cannon worries that some of these also may have lost considerable value. A Countrywide spokesman says the “overwhelming majority” of those securities are backed by Fannie or Freddie or the U.S. government, and there is “no serious impairment” to the portfolio’s value.

    In addition, Countrywide’s savings bank held about $15.7 billion of mortgage securities, excluding those guaranteed by Fannie or Freddie, and may have to mark down some, Mr. Cannon adds. The spokesman declined to comment.

    Analysts can only guess at what the value of Countrywide’s holdings might be at the end of the third quarter. But Paul J. Miller Jr. of Friedman, Billings, Ramsey & Co. says Countrywide may need to write down $1 billion to $2 billion in the value of loans that don’t fit the criteria for sale to Fannie or Freddie. Keefe Bruyette’s Mr. Cannon roughly estimates that Countrywide will have a loss of 99 cents a share in the third quarter.

    “What many people on Wall Street are trying to figure out now is: What will be the future profitability of this company?” says David Honold, a portfolio manager at Turner Investment Partners in Berwyn, Pa. Turner manages about $25 billion in assets and doesn’t own Countrywide shares.

    Countrywide is counting on its savings bank, along with Fannie Mae and Freddie Mac, to fund nearly all of its future lending by drawing on deposits and borrowings from the Federal Home Loan Bank system.

    Countrywide officials say the bank’s above-average interest rates on certificates of deposit and savings accounts are reversing a recent loss of deposits. New deposits have exceeded outflows so far this week, a Countrywide spokesman says.

    Meanwhile, Countrywide’s lending is expected to drop sharply, at least in the short term, as it avoids making loans that can’t be held as long-term investments or sold to Fannie and Freddie. The relatively conservative “conforming” loans that Fannie and Freddie buy tend to be much less profitable than the subprime, Alt-A and other “exotic” loans pumped out by Countrywide and other lenders until recently.

    Others worry about the $27.8 billion of option adjustable-rate mortgages held as investments by Countrywide’s bank. These loans, known as option ARMs, give borrowers the choice of making minimal monthly payments — no principal and even less than the interest normally due — in the early years. If they make those minimal payments, the loan balance grows, setting the borrower up for a sharp rise in monthly costs.

    It is unclear how well borrowers will cope once the higher payments set in. These option ARMs, many granted in 2004 and 2005 at the top of the housing boom, will be “stress-tested” beginning next year, S&P’s Mr. Plesser says.

    A “significant portion” of those option ARMs are covered by private mortgage insurance against losses because of defaults, the Countrywide spokesman says.

    If things get too rough for Countrywide, Mr. Plesser figures, federal regulators might arrange a rescue. Or Countrywide might raise cash by selling its large loan-servicing business.

    Investors may have to wait at least a few weeks for Countrywide to provide an update on its survival plans. An annual “investor forum,” due to be held Sept. 5 and 6, has been delayed until Nov. 12. Countrywide says its chief executive, Angelo Mozilo, is set to address another investor gathering in San Francisco Sept. 18. The host is his new protector-apparent: Bank of America.

  317. chicagofinance says:

    WSJ
    Tight Course Lies
    Ahead For Bernanke
    August 29, 2007
    Forget about Scylla and Charybdis. In the next few days, Federal Reserve Chairman Ben Bernanke has to set a course between market mayhem and the “Greenspan put.”

    The Greenspan put is the idea that, in times of crisis, the Fed will step in to bail out financial-market participants with lower interest rates, as it did in response to the Russian debt crisis in 1998, when Alan Greenspan was at its helm.

    The term was coined in early 2000 by Credit Suisse trader Steve Kim, then a derivatives analyst at Merrill Lynch, and popularized by Pimco economist and fund manager Paul McCulley. A put option insures investors against losses. Both men felt that the belief the Fed would similarly insure investors against losses whenever markets got rocky encouraged risky investment behavior.

    With markets again in turmoil, there’s been a cry from some Wall Streeters and corporate head honchos lately for the Fed to lower short-term interest rates to settle frayed nerves.

    The Fed took a step in that direction this month when it lowered rates on borrowing from its discount window. The more widely used federal funds market could be next. Fed- funds futures contracts, which price off of interest-rate expectations, show investors are nearly certain the Fed will cut its target fed funds rate by a quarter point to 5% next month.

    But as they head off to their annual symposium at Jackson Hole, Wyo., this weekend, Fed officials may try to disabuse Wall Street of the notion. As ING Investment Management economic advisor Jim Griffin recently put it, the Fed “doesn’t want to embed a ‘Bernanke put’ in market mythology, or otherwise validate the irresponsible lending that produced the current mess.”

  318. Clotpoll says:

    (295)-

    “Curtailing undue corporate influence on policymaking in Washington is one of Mr Obama’s signature issues.”

    This guy must have a death wish. The best thing that can happen to him is for Hillary to just start clobbering him from the git-go. Less chance of his being a target if he’s marginalized.

  319. Clotpoll says:

    ChiFi (320)-

    I guess this means no big Countrywide bash at this year’s NJAR convention.

    Bummer.

  320. UnRealtor says:

    Quote of the day:

    Joe Mason, an economist and professor of finance at Drexel:

    “I would argue that Countrywide is insolvent. Their only asset is their pricing platform, their business algorithm, and that’s not working. The next biggest asset they have is the toner for their copiers.”

    http://money.cnn.com/2007/08/17/real_estate/Fed_move_help_for_borrowers/index.htm

  321. Comrade 3b says:

    #315 Richard: Again, do nto be so sure abou that Fed rate cut, Bernanke may be a Volcker after all.

    I do not think he wants to be a pole dancer for Wall St.

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