From the LA Times:
Is America really pro-bailout?
President Bush announced his intention last week to reach out a hand to the “many Americans” who “may have been misled” in the sub-prime mortgage market. Two days earlier, presidential hopeful Barack Obama called for fining “predatory lenders” to bail out “hoodwinked” families. L.A. City Councilman Richard Alarcon wants a $5-million revolving fund to “help homeowners on the verge of foreclosure.” The news media report on families losing homes, disabled owners facing foreclosure and newlyweds being tossed into the street.
Here’s one tale of sub-prime woe you may not have heard. Casey Serin, a twentysomething real estate investor in Sacramento, bought eight houses in four states with little or no money down, couldn’t sell them and couldn’t pay the mortgages, and so naturally began losing them to foreclosure. He then began keeping a self-pitying online diary he called Iamfacingforeclosure.com.
…
“It is amazing all the sympathy we are seeing from politicians for people who knowingly took out loans they couldn’t afford, often lying on their applications to do so,” commenter “srl” posted at the LA Land blog I write for the Los Angeles Times. “Usually,” added “Brian,” “when the facts are examined closely, we find people who . . . took a chance that house prices would keep rising, that they could remodel the kitchen, buy the truck and the motorcycle, put it on the credit card and pile that debt into the next refinance. .”You can find thousands of similar comments on scores of “housing bubble” blogs. I asked Patrick Killelea, whose blog (patrick.net) has long predicted the current housing crisis, to quantify his readers’ feelings about a bailout. “It is easy to quantify,” he replied. “100% against.”
How can these people oppose helping out their fellow Americans? Easy. Many or most of them saw this crisis coming years ago — not through any real estate wizardry but by observing the signs that have been in front of us through most of this decade. In large parts of the United States — and in all of Southern California — the housing market turned into an obsession, a mania. So when the mortgage industry nearly collapsed this summer, Americans were fully versed in 100% financing, “liar loans,” “teaser rates” and “flippers.” There was no mystery here, no unforeseen “perfect storm.”
And yet now, just as the market is starting to cool and possibly provide buying opportunities, many of these folks — especially those patiently waiting out the bubble — find themselves crashing a pity party for the very buyers who priced them out of the market. They are furious that the government appears interested in supporting overextended borrowers and high prices, and they cite data to support their position. According to the California Assn. of Realtors, 41% of first-time California home buyers in 2006 put no money down. The median down payment for first-time buyers was just $10,000. No wonder LA Land commenter “jbunniii” writes: “No bailout is needed — most of the borrowers in trouble didn’t put any money down in the first place, so they will lose nothing by walking away.”
You don’t have to accept all of these arguments. There is no doubt that some big lenders confused and, in some cases, defrauded borrowers, with the tacit approval of Congress, the Bush administration and regulators. It’s also notable that “bubble bloggers” are not disinterested parties. Many are hoping that prices will fall so they can buy.
But it’s striking how little attention the views of the anti-bailout bears have gotten. Politicians, by rushing to the defense of recent home buyers, give the appearance of endorsing price stability at historically high levels. This makes little sense in Los Angeles, which ranks among the least affordable markets in America when housing prices are matched against income levels. Why should government favor today’s owners over tomorrow’s buyers?
Casey’s Blog if he was bale to flip them all:
ImARichYoungManCheckOutMahBeema.com
Dude, Where’s My Bailout?
An open letter to Fed Chairman Ben Bernanke, Treasury Secretary Henry Paulson, and Senate Banking Committee Chairman Chris Dodd
http://www.businessweek.com/magazine/content/07_37/b4049050.htm
>>
Can FHA insure my Chinese equity investments? :)
How did you get onto that LA Times article so quickly???
From Bloomberg:
Homeownership Reached Apotheosis in 21st Century: Caroline Baum
Homeownership has long been considered a desirable goal. Put a person in a home of his own, the thinking goes, and he starts to care about the quality of local education, maintaining a drug- and crime-free neighborhood, and the appearance of his property and the block on which he lives. (See Summers, Lawrence: “In the history of the world, no one ever washed a rented car.”)
Once the government decided homeownership was in the public interest, it went about making it more affordable. Mortgage interest and real estate taxes are deductible. The first $250,000 of profit ($500,000 for a married couple) from the sale of a home you’ve lived in for at least two years is exempt from capital gains taxes.
Government-sponsored enterprises (Fannie Mae and Freddie Mac) were created to expand the flow of funds available for mortgages and to help lower the costs of buying a home. (The latter assertion has come under scrutiny.)
The Federal Housing Administration insures mortgages. The Office of Fair Housing and Equal Opportunity, part of the Department of Housing and Urban Development, administers federal laws that ensure equal opportunity for potential homeowners.
…
While the federal government’s involvement in housing dates to the 1930s, the early 1970s saw a “big push for low-income homeownership,” says Michael Carliner, formerly an economist at the National Association of Homebuilders and now a consultant on housing economics. In “the most ambitious effort to subsidize homeownership to date,” HUD provided low-rate mortgages to low- income households to purchase homes, he says. The program was abolished in 1994.
“I was always skeptical of the idea of getting marginal characters into home loans,” Carliner says. “You’re not doing any favors by putting someone into a house they will lose.”
That’s exactly what happened during the first few years of the 21st century, when ultra-low interest rates and rapid home- price appreciation conspired to turn the residential real estate market into a casino.
No one, it seems, was denied credit on the basis of race, religion, age, sexual orientation — or income. In many cases, lenders misrepresented the terms of the loans, borrowers lied about their income, ratings companies were slow to recognize the risk, and investors behaved as if there wasn’t any, gobbling up collateralized mortgage and debt obligations that carried a gilt- edged AAA-rating.
…
If it seemed too good to be true, it was. Rising real estate prices were the glue that held the whole Ponzi scheme together, allowing unqualified borrowers to acquire equity in their homes and access to more credit.
Now that home prices are falling, credit standards have tightened, borrowers are defaulting, banks are foreclosing and investors are seeing losses, our elected representatives are shocked to find there’s gambling going on in the casino!
The proposed solutions range from the truly terrible (shifting the liability for predatory lending to the investor, which would shut the mortgage market down as fast as you can say “sell”) to the harmless (education and counseling for potential homebuyers) to the necessary (some degree of regulation for non- bank lenders).
…
“The bottom line is these proposals will have a limited impact and will not materially alter the vicious cycle of higher delinquencies, tighter credit conditions and lower home prices,” says Andy Laperriere, a political economist at the ISI Group in Washington.
At least they have the advantage of making it seem that Bush is “doing something.”
Maybe the root of the problem is the inherent conflict when it comes to homeownership. On the one hand, “we want to make sure borrowers aren’t taken advantage of by predatory lenders,” Carliner says. On the other, we want to put the American Dream within everyone’s grasp.
“There were strong voices not so many years past encouraging banks to reach out to bring more people into the financial mainstream,” says Wayne Abernathy, executive director for financial institutions policy at the American Bankers Association in Washington. “Banks have done that with positive results.”
This piece is right on, and I think politians better get their feet back on the ground and look both ways before crossing bailout avenue. I’ve never voted as a 1-issue person (gun control, abortion, religion, etc.), but that will not be the case here. Regardless of almost all else, I will vote AGAINST any politian who favors any type of artificial assistance to home “owners”. And that’s a fact, Jack!
Regardless of your political views. This is one scary article. It redefines the term “Lame Duck”
http://www.guardian.co.uk/usa/story/0,,2161205,00.html
jb,
that piece is right on….the only way we can stablize this now would be for sellers to drastically reduce prices and build confidence back into the RE market…
that would require greedy sellers to lower their prices – i dont think that will happen – they have been too brainwashed for these past 5 years!
its a shame that its come to this…with all the smart folks running this country i cant believe that no one paid attention to the problem that was just over the horizon..i wonder if the fact that the country was so preoccupied with the war machine and the spark it gave to the economy that we forgot to see it???
CAIBC
From MarketWatch:
First American To Cut 1,300 Full-Time Jobs In 3rd Quarter
First American Corp. said it plans to cut 1,300 full-time jobs in the third quarter in addition to the 600 jobs that were cut in the second quarter. The Santa Ana, Calif., real estate-related business information company said the cuts will save it $108 million a year. First American had 2006 revenue of $8.22 billion. The company said it will also cut $16 million in perks and executive benefits in the third quarter.
This is a really scary article. It’s title: “Can the Mortgage Crisis Swallow a Town?”
http://www.nytimes.com/2007/09/02/business/yourmoney/02village.html
You have to wonder how ‘little’ press all of the people against the bail out through the coming months.
Are we really that much in the voiceless minority where noboby is going to speak out against the BS bail out?
Nothing to worry about, NJ is creating jobs…
Help Wanted
The Prudential Center arena is almost complete. But before the region’s first new arena in more than 25 years opens in Newark next month, about 1,000 jobs from chefs to security guards to box office staff need to be filled.
AEG, which manages the arena, is looking to fill the 1,000 mostly part-time jobs paying anywhere from $10 to $15 per hour with a job fair at the New Jersey Institute for Technology in Newark from 9 a.m. to 4 p.m. Thursday and Friday.
About 90 percent of the positions are part-time, said Adams. But the arena, which will host the Devils, Seton Hall basketball, the New Jersey Ironmen, an indoor soccer team, concerts and other family events, could be open for 150 to 175 events per year.
#7 CAIBS “that would require greedy sellers to lower their prices – i dont think that will happen – they have been too brainwashed for these past 5 years!”
If they want to sell, they will have to lower theri prices, asimpl as that.
Life goes on. Some people can sit for years with a house and not sell it, (which is just plain stupid, but they can), others for whatever reason or reasons will have to sell. Just be patient, its already happening (price declines)
I don’t know PGC, the President sounds like a regular guy to me. My own father is nearing retirement and he doesn’t have a clue what he’s going to do with himself.
I would argue that America would be better off if Jimmy Carter had decided to stick to building low income housing and not attempt to continue his record of foreign policy “successes”.
CAIBC – Lowering prices won’t do the trick, and that’s because it’s much, much tougher to get a loan these days without putting 10-20% down.
And while there is no way to determine how buyers are saving … my guess is that many buyers don’t have that yet. That guess is based on nothing (then again, i don’t think anyone could find proof that buyers have saved money).
This coming from a guy who has saved 20% down on the house we want. But we won’t be buying in 2007, that’s for sure.
From Bloomberg:
NovaStar Auditor Raises Doubt About Mortgage Lender’s Survival
NovaStar Financial Inc. canceled a rights offering designed to raise cash for the subprime mortgage lender and said its auditor expressed doubt about the company’s survival.
Deloitte & Touche LLP told NovaStar it wouldn’t be associated with the rights offering unless the Kansas City, Missouri-based company made additional disclosures, according to a statement distributed by PR Newswire. The changes would include “an explanatory paragraph about the uncertainty of NovaStar’s ability to continue as a `going concern,”’ the company said.
The company also will cut its retail lending staff to about 125 people from the current 400, the statement said.
with all the smart folks running this country
That was sarcastic right???
KL
So we are past the magical 9-1-07 date. The next big housing date will be 9-11-07. That is the day the backruptcy attorneys will be putting two billion of AHM Alt A mortgages on the block all at once in a public auction. That will provide a market price to those iliquid instruments just in time for the external auditors of other firms holding toxic Alt A to price as of 9-30-07 (quarters end) the garbage on their books.
chicagofinance Says:
September 2nd, 2007 at 11:19 am
Outofstater Says:
September 1st, 2007 at 8:58 am
I know you guys all love NJ and you’re just a short train ride to the city but for everyday quality of life, you might want to look south. Atlanta has a good economy with jobs that pay enough to afford a nice lifestyle because the cost of living is so low.
So what does MARTA stand for Moving AF******* Rapidly Through Atlanta? Nuff Said
http://www.msnbc.msn.com/id/20546324/site/newsweek/?from=rss
GREAT ARTICLE
I think that the “what should I do in retirement” thoughts should be shelved. He should focus on the fact that he continues to be CinC for the next year and a half. There is no time for complacency, melancholy or apathy. He has responsibilities that he has to face. While the ship may not be going in the right direction, he needs to make sure he is steering it in some direction.
From MarketWatch:
U.S. July construction spending falls 0.4%
Spending on U.S. construction projects fell 0.4% in July to an annual rate of $1.17 trillion, with a 1.4% decline in spending on private residential projects leading the way, the Commerce Department reported Tuesday. The decrease marked the first drop in construction outlays since January and followed a revised gain in June of 0.1%. Compared to this time last year, construction spending is off 2%. During the first seven months of 2007, construction spending was 3.4% below the same period in 2006.
From Bloomberg:
Construction Spending in the U.S. Declines Most Since January
Spending on U.S. construction projects unexpectedly fell in July by the most since January, indicating that the homebuilding slump continued to hold back economic growth at the start of the third quarter.
The 0.4 percent decline followed a 0.1 percent gain the prior month, the Commerce Department said today in Washington. Figures for June were previously reported as a drop.
Homebuilders are scaling back to try to trim the glut of unsold residential properties even as companies are still adding offices and factories. The downturn may steepen as lenders make it tougher and more expensive to get financing following the sell-off in credit markets in August.
“We’re looking at a pretty dismal start to the quarter,” Ryan Reed, an economist at National City Corp. in Cleveland, said before the report. “Growth will get absolutely no help from residential construction.”
Economists had forecast total construction spending would stay unchanged after the 0.3 percent decline originally reported for June, according to the median of 54 forecasts in a Bloomberg News survey.
…
Private residential construction spending fell 1.4 percent in July, the 17th straight monthly decline, after a 0.6 percent drop in June, today’s report showed.
Non-residential construction, including public projects, advanced 0.6 percent, after rising 0.6 percent in June. It was up 14 percent from July 2006.
Public construction increased 0.7 percent, helped by work on hospitals and schools. Private non-residential construction rose 0.4 percent.
From MarketWatch:
U.S. Aug. ISM manufacturing index 52.9% vs 53.8% in July
The nation’s manufacturers cut back production in August, the Institute for Supply Management reported Tuesday. The ISM index fell to 52.9% in August from 53.8% in July. The decline was about in line with expectations. The consensus forecast of estimates collected by Marketwatch was for the index to slip to 53.0%. Many economists were worried that there could have been a steeper decline because of the recent financial market turmoil. Readings above 50 indicate expansion, while readings below indicate contraction. New orders fell to 55.3% in August from 57.5% in July. The employment index rose to 51.3% from 50.2%. The price index fell to 63.0% from 65.0%.
Spending on U.S. construction projects fell 0.4% in July to an annual rate of $1.17 trillion, with a 1.4% decline in spending on private residential projects leading the way, the Commerce Department reported Tuesday.
If construction spending falls in July then what happens in Dec, Jan, Feb. March months?
There is gonna be many plummers, carpenters and electricians on the unemployment line.
I don’t feel bad because these are the same guys who charged an arm and a leg to do simple work. They were charging Lawyer and doctor hourly rates to do anything.
Good luck charging those rates in the next 5 years.
Interesting piece from the Herald News down a bit on the main page. I’ll repost some of it here..
Fewer sending cash home, agencies say
Late summer is usually a time when Jose Cordero of Passaic sends extra money home to his family in Mexico.
There are school registration fees, student uniforms and supplies to buy — expenses that run about $600 for his four school-age children.
When work is steady, Cordero wires home about $300 every week to 15 days. But the past few months he’s barely managed to send $150 to $200 at irregular intervals.
“The past three months have been really slow,” said Cordero, 38, who solicits work as a day laborer by the Passaic Home Depot. “There’s not much work, and when there’s no work, there’s less money to send, and everything else goes down.”
Late August and early September are the busiest times of the year — second only to Mother’s Day and the Christmas season — for money transfer agencies with largely Mexican clientele. But several agencies said they have noticed a drop-off in business in recent months.
“I’ve been working here for three years, and this is the worst year I’ve seen,” said Maribel Hernandez, who works at Calixto Express, a money transfer agency in Passaic. “The regular customers are sending with less frequency, and they are sending less money.”
Hernandez said she started sensing a downturn about three months ago.
“Here, at this agency at least, it’s off about 30 percent,” she said, “enough to be something we’ve noticed.”
I’m looking at the preliminary August contracts data from GSMLS right now.
The numbers are so bad, I’m wondering if there are potential errors involved.
GSMLS is showing August contract-sales down approximately 19.5% across Northern NJ.
Passaic, Somerset, Sussex, and Union showing contract-sales declines of greater than 20%. Union showing the worst decline, contract-sales down 26% in August.
Perhaps we are seeing the first indication of the problems created by the credit crunch in August?
jb
Of course, I am absolutely opposed to the bail out. But hey, if they are going to do it, what about the guy put 15% down towards a conservative home with a 30 yr fixed ten years ago who now finds himself unemployed and barely scraping by? Why should he be ignored because he used a brain when buying and financing his home? If anything, he actually owns a portion of his home as opposed to most of these fools who put no money down and only paid toward interest.
Here is the xls spreadsheet for those interested:
https://njrereport.com/files/contracts.xls
We’ll get some confirmation on whether or not the figures are accurate once I (or Rich) compile the NJMLS contracts numbers for the same period.
jb
jb (26 and 28),
Are those bad August numbers, if accurate, a result of the credit market turmoil or do you think part of a larger decline?
If largely due to credit market turmoil, does this suggest some demand will just be pushed into later months, i.e., will winter be a little bit busier as some of the contracts that fell through because of the credit turmoil get resolved?
yes, people are going to take the family
to downtown Newark,
Who’s kidding who.
This will wind up like the Newark Bears.
James Bednar Says:
The numbers are so bad, I’m wondering if there are potential errors involved.
Jim, I was an underwriter back in 2003 during the refinance boom. In July of that year, we were so buried that they were literally throwing money at us to work extra hours to catch up. I was working 90 and 100 hours a week and raking in the $$$. It was ridiculous and had been that way for several years. If I had said at that time that we’re going to be sitting with nothing to do by the end of September, everyone would have said you’re smoking something.
In August 2003 the rates went up and sure enough, we were twiddling our thumbs by September.
I’m witness to how things in real estate can turn on a dime.
We’ll see how your validation works out, but I for one won’t be shocked to see the drastic change you’re foretelling today.
Also have the preliminary August sales numbers, will post those tonite.
jb
wow – down 27% in Union. I wonder what happens if you take out Westfield, where I’m sure there was a tremendous increase. Probably Westfield was up 20% and the rest of Union was down 45%.
“Also have the preliminary August sales numbers, will post those tonite.”
Hee! Can’t wait to see them
Thanks, jb
#29
I think there has been a pent up lack of demand. People have been getting on the RE bus for the sole reason that they don’t want to be the only one left behind, despite knowing that the whole thing is lunacy. The credit mess allows all the folks out there looking for an excuse not to buy (e.g., “husbands-of-suzanne-researched-this”) to not buy.
A bubble is about pschiatry, not economics. The credit mess is the sharp slap to the face that wakes up the general public to the truth.
To borrow an oft-used analogy, Wile E. Coyote has just looked down.
Now comes the fall.
jb,
As for the august numbers; I’ll add my two cents. I really don’t think there were reporting errors.
I’ve been looking at hotsheets the past month (specifically for multifamilies, the same trend would probably apply for SFH) and the amount of under contract and sold properties is tiny, especially relative to the amount of new listing and price changes.
er, psychology…
JB, just a question …
do you believe once agents see these contract #s for August, they will implore their clients to drastically lower prices?
Or is this the type of information they’d sooner NOT share with sellers, out of fear that the sellers will panic?
No on both counts.
jb
#39 JB Why no on the first count?
From the Federal Reserve:
Federal Financial Regulatory Agencies and CSBS Issue Statement on Loss Mitigation Strategies for Servicers of Residential Mortgages
The federal financial regulatory agencies and the Conference of State Bank Supervisors (CSBS) on Tuesday issued a statement encouraging federally regulated financial institutions and state-supervised entities that service securitized residential mortgages to review to determine the full extent of their authority under pooling and servicing agreements to identify borrowers at risk of default and pursue appropriate loss mitigation strategies designed to preserve homeownership.
Significant numbers of hybrid adjustable-rate mortgages will reset throughout the remainder of this year and next. Many subprime and other mortgage loans have been transferred into securitization trusts that are governed by pooling and servicing agreements. These agreements may allow servicers to contact borrowers at risk of default, assess whether default is reasonably foreseeable, and, if so, apply loss mitigation strategies designed to achieve sustainable mortgage obligations. Servicers may have the flexibility to contact borrowers in advance of loan resets.
Appropriate loss mitigation strategies may include, for example, loan modifications, deferral of payments, or a reduction of principal. In addition, institutions should consider referring appropriate borrowers to qualified homeownership counseling services that may be able to work with all parties to avoid unnecessary foreclosures.
http://www.federalreserve.gov/boarddocs/press/bcreg/2007/20070904/attachment.pdf
#39 JB Why no on the first count?
You don’t really think that agents are looking at this data, do you?
jb
Any agent worth their salt knows what is going on in the market, they don’t need the numbers to tell them. Those that aren’t are in denial, and choose to remain blissfully unaware.
After juggling 15 calls from debtors, creditors and clients, Seither lays the phones aside and delivers a pep talk to herself.
“I’m not a real estate bum,” the president of Executive Preferred Properties announces. “I wear diamonds, Rolexes and necklaces. I’m a classy Realtor.”
jb
But aren’t you an agent? How can they ignore this?
Seems like the kind of thing that would help someone track trends and help them do their job better.
In my job, i want to be armed with as much information as possible.
“You don’t really think that agents are looking at this data, do you?”
LOL!
I’d love to hear reactions from Clot and Rich
James Bednar Says:
September 4th, 2007 at 10:51 am
I’m looking at the preliminary August contracts data from GSMLS right now. The numbers are so bad, I’m wondering if there are potential errors involved. Perhaps we are seeing the first indication of the problems created by the credit crunch in August? jb
grim: My [idiot] brother was trying to close a buy transaction in Tacoma WA in the third week of August. I don’t know the details, but I have the understanding that his closing crapped out. He was renting and sitting on his down payment, but I am almost sure that he took his mega-down payment and stuck a jumbo on top of it so they could buy something expensive. Just an anecdote, but I would assume the disruption may have cause more havoc that anything else. As a result, it is possible that Septemeber numbers may be inflated. Morons will eventually call the bounce some time of recovery, but it would be just a technical shift of deal flow to the following period.
More prima facie evidence that Wharton grads are idiots.
#43 No, but i would think the better ones as discussed are in the know. I would think at the end of the day these people want transactions flowing again, rather than stale over priced listings.
More prima facie evidence that Wharton grads are idiots.
maybe,but everyone of them I know is freaking loaded.
More RE related job cuts.
http://today.reuters.com/news/articlebusiness.aspx?type=bankingFinancial&storyID=nN04418920&WTmodLoc=InvArt-R2-IndustryNews-2&from=business
Be careful with these products. You are not bulletproof!
Challenge for ETF Trading: Bumpy Markets Gum It Up By DIYA GULLAPALLI
September 4, 2007; Page C1
During recent market swings, investors buying and selling many of the newest exchange-traded funds have encountered a major snafu — wide trading spreads.
ETFs are like index mutual funds but trade on exchanges like stocks, making them subject to “bid-ask” spreads, or gaps between the price buyers are willing to pay and sellers are willing to accept. Widening spreads can eat into an investment.
“Big ETF spreads are a cost people did not anticipate,” says Dan Dolan of the Select Sector SPDRs line of ETFs. Generally, they “should not be there.”
Large, widely traded ETFs haven’t been as susceptible, but smaller, less widely traded ETFs have had a tougher time. Spreads detract from one of ETFs’ biggest advantages over regular mutual funds — the ability to actively trade them throughout the market day.
[edit]
Investors, of course, want the smallest spreads possible. “But if you happen to be selling, and it’s on a day the market is deteriorating,” you have to choose between accepting the bigger spread, or risking a bigger loss by sitting on the sidelines, says Tom Lydon, president of Global Trends Investments in Newport Beach, Calif.
[edit]…..some ETF watchers say the issue could worsen as hundreds of new ETFs gear up to launch in coming months. Many of the newest ETFs focus on narrow market niches. Their low trading activity could become an issue with such funds.
Such trends, combined with other issues like small assets under management, could mean that “eventually you’ll see some consolidation or shutting down of ETFs,” says John McGuire, a partner at law firm Morgan, Lewis & Bockius who works on ETFs.
ETF providers note that besides trading volume, issues like market volatility, or risk, and the amount of trading in the fund’s underlying investments can affect spreads. Spreads can also be affected if some of those holdings are traded in overseas markets, which might be closed during the U.S. trading day.
[edit]
njpatient (47)-
Good agents have known what’s going on for some time. The rest remain blissfully clueless.
The ranks of the clueless are thinning, though.
Regarding pent up demand, just my 2 cents. I know several families (at least 4) who want to purchase ASAP, but are looking to see when the market stabilizes. And I get the feeling that a number of people on this board are in the same boat (having saved $$ and waiting for time to purchase). And if you are looking to buy in towns like Summit/Short Hills, there is almost always some pent up demand (small supply).
#53
“Good agents have known what’s going on for some time.”
True enough or you guys wouldn’t be here.
“The rest remain blissfully clueless.
The ranks of the clueless are thinning, though.”
This was really my question, I guess: what percent were clueless/in denial in, say, February, June and now September of this year?
I kind of get the impression it’s something like 80%; 40% and 10%, respectively
http://www.bankrate.com/brm/static/mortgage-analysis.asp
The benchmark mortgage rate has fallen in five of the last six weeks, and home prices are falling, too.
…
The median used-house price in March was $217,400, according to the Realtors, and in July, the median price was $228,900. In Bankrate’s survey, the 30-year fixed averaged 6.19 percent in March and 6.77 percent in July.
…
Let’s say two homeowners bought median-priced houses — one in March and one in July. Each put down 20 percent and paid the average mortgage rate for the month. The March buyer pays $1,064 per month in principal and interest, and the July buyer pays $1,190, or $126 more. That difference buys a lot of lattes.
Imus, you might say that I’m in that boat. I have the cash saved up to put down a large amount on a house. And I was actively looking for awhile about a year ago.
However, I likely won’t be buying until 2010 now, and at this point, almost certainly not in New Jersey even when I do.
I’m a prime buyer, and I’ve left the field for a LONG time.
I don’t see this pent up demand at all. And as prices continue to fall, people will be more and more scared to drop their hard-earned cash into a rapidly depreciating asset.
We can leave aside that, for home-ownership to return to historical norms, a lot FEWER people will be owning homes than currently.
And those folks getting foreclosed on? They’ll be renters.
And many of the folks who want to buy now? No longer an option. They can’t get the credit they could a year ago.
No – there is no pent up demand.
#54 There are over 100 houses/condos for sale in Summit right now (gsmls).
Seems like eniough inventory for me to take care of some of that so called pent up demand.
#57 nj: Just curious, why 2010, and why not in NJ?
#26 JB Says:
“Passaic, Somerset, Sussex, and Union showing contract-sales declines of greater than 20%. Union showing the worst decline, contract-sales down 26% in August.”
Surely this can that be? The mid-town direct runs through union county and with the high paying jobs created in NYC, you would think that we we can continue to see 20% YOY price gains?
#17 John-
How about September 13th when Freddie and Fannie change their guidelines?
JM
I love when people say they have a big downpayment and then say 20%! That is not a big downpayment and until recently was the absolute minimun required to get a mortgage. Plus back in day my bank wanted a minimun of 25% down to get a coop loan. Plus what about the 2.5 rule. You have to be making a hunk of change to buy a home in NJ with 20% down and stick in the 2.5 rule.
Looks like NAR has limited options to get this gravy train rolling again. I suggest they change their add campaign to adjust sellers expectations to the new reality.
I suspect most sellers wouldn’t want to hear the truth from an honest Realtor and would give their listing to the idiot who they hope will get them their fantasy price.
Bloomberg:
Feldstein Warns of U.S. Recession, Urges Fed Rate Cut
http://www.bloomberg.com/apps/news?pid=20601087&sid=au8Ca.tahpMQ&refer=home
Understood what you are saying njpatient. Guess it depends on one’s circumstances. The familes that I know who are looking do not have the luxury to wait until 2010. Ideally, everyone looking will find what they need at a price that works for them. Cheers.
#62 John: with a 20% or more decline in prices, and a 20% down payment, things will be back in sync again.
“I love when people say they have a big downpayment and then say 20%!”
Assume you’re not referring to me, John.
“The familes that I know who are looking do not have the luxury to wait until 2010.”
No rentals available?
Anecdotal Brigadoon update:
I placed an offer on a small Cape. Charming, well-maintained and realistic asking price.
The fortunate seller had another bid besides mine, which suspended our negotiations as I tabled my bid first.
Listing agent asked for “best and final.” I sweetened my offer, which included 20% down and no property to sell. Other bid was identical! After a half day’s deliberation the other bid was selected.
So there’s the proof. Brigadoon is immune to the ongoing RE slump. Lots of qualified buyers floating around ready to pounce, just sitting on 100s of thousands in cash. You heard it here first and not even from Richard. From a grumpy old bear no less.
On Saturday, drove through Kinnelon and I mentioned that I saw a “Bank Foreclosure” sign on a property (on Kinnelon road).
I drove through another section yesterday (Boonton road) and saw a ridiculous amount of houses for sale– almost all of them 2-3 houses away from each other.
For my tastes, Kinnelon is a bit too “woodsy” for me and a bit too far for convenience to the rest of my family, but talk about a selection of homes.
JB,
Check your email
Rich
Anti (63)-
That’s changing too. Anyone who needs to get things done- pronto- doesn’t want to be rah-rah’d and yes’d into a shallow grave.
20% down on a $600,000 piece of sh*t leaves you with a PITI of approximately $4,000 per month which is no problem because the standard 2.5 annual salary means your household income is $240,000 which we all know is the median salary in Upper Eatme, NJ.
wice shy Says:
September 4th, 2007 at 2:27 pm
Anecdotal Brigadoon update:
Other bid was identical! After a half day’s deliberation the other bid was selected.
So there’s the proof. Brigadoon is immune to the ongoing RE slump. Lots of qualified buyers floating around ready to pounce, just sitting on 100s of thousands in cash. You heard it here first and not even from Richard. From a grumpy old bear no less.
2x: I say you are not out of the game until the place closes and it is for certain off the market. Of course I am a charter member of the LOD.
3B “nj: Just curious, why 2010, and why not in NJ?”
I very much doubt we’ll see anything resembling a real turn-around for RE before 2010, and I’m more inclined to think 2012-2013.
As to NJ, it was just convenience to the paying gig. I won’t need the gig for that much longer, and there are places I’d rather be (no offense intended to NJ).
Off topic but…
for all the diversity/ immigration discussion that have popped up lately, i found this on reddit. No flame war intended
Mexican president promises to fight for the rights of Mexicans in the US, says “Mexico does not end at its borders.”
#73 gary
lol
oh man…
Imus,
Richard also knows 4 other people who want to buy.
Gary you need at least 800K so the house is not falling down and they will be 16k combined taxes and insurance each year. The best rate possible on a jumbo is 7.5% with 20% down gives you $6,100 mortgage payment, even someone making 180K a year is only bringing home 9K a month in their check so you need at least a base pay of 250K+ a year to swing it with 20% and pray your bonuses are good.
gary Says:
September 4th, 2007 at 2:43 pm
20% down on a $600,000 piece of sh*t leaves you with a PITI of approximately $4,000 per month which is no problem because the standard 2.5 annual salary means your household income is $240,000 which we all know is the median salary in Upper Eatme, NJ.
Any time I’m driving around the state on a weekend, I like to stop and grab the FSBO sheets from the boxes on the front lawn. Later, Mrs. Njpatient and I read them to each other (-dramatic interpretation-) and laugh.
Found a place on the north side of Brigadoon that cracked me up. It’s a “three bedroom” (that’s two on the 2nd floor and one in the attic). Unfinished basement. Lot size not mentioned. CAC? Who knows!! Style? “Colonial.” But it does have a lovely pool.
$895K.
If you have occasion to drive by Cory Place, have a glance. I’m still getting a chuckle out of it several days later.
“Richard also knows 4 other people who want to buy.”
Four people here, four people there…pretty soon you’re talkin’ about real demand!
This was a funny post … but Gary, did you remember to fact in the jumbo mortgage angle on this loan? Because 20% down on 600k is only 120k … still leaves the mere mortals needing that jumob loan at 7.5 % …
# gary Says:
September 4th, 2007 at 2:43 pm
20% down on a $600,000 piece of sh*t leaves you with a PITI of approximately $4,000 per month which is no problem because the standard 2.5 annual salary means your household income is $240,000 which we all know is the median salary in Upper Eatme, NJ.
Darn, John beat me to it.
At any rate, anyone who says that there won’t be massive problems for houses in the 600k range simply isn’t running the numbers.
I just saw some guy on CNBC say there’s a 30% chance of a recession (some on this board, me included, think it’s more like 75%). Even if you make 250k-300k, do you really want to jump into a new house with massive payments of 6k a month when you really don’t know if your job is that secure?
#80 NJ Patient: We sold FSBO and I’m not sure why you would take a brochure if you weren’t seriously shopping for a home. People who are selling FSBO are paying for their marketing and I’m not sure why someone would be so mean as to take a brochure just to laugh at it. Maybe you and your wife should get out more.
And the most ironic thing is, despite the fact the we bought our current house 7 years ago with 20% down and rode this so-called equity train, we STILL, couldn’t sell our house and use the equity plus our original 20% to buy a hunk of sh*t. This, with a 6 digit combined income as well. You know why? Because people are f***ing morons and instead of telling the fat, greedy sellers and realtors to eat sh*t and die, they surrendered and took it right up the yazoo. And the muncipalities are just adding to the humiliation because they tricked you into thinking that your police force and school district are better than everyone elses and keep raising the taxes because you keep paying. BWAHHAAAAA!!!! What a f***ing comedy. You wanted the house? You got it. Good luck with that ball and chain and it’s just another reason why the majority of cows are just that; because they follow the herd right into the gates of the slaughter house.
Pre Foreclosure Question!
I am looking at homes (not in NJ, but in Florida). As you can imagine, there are TONS of what people are listing as “pre foreclosures”. My realtor advised that these are people that have begun to default on their mortgages, but have not yet missed 3 payments.
My question is this: how negotiable are these homes at this stage in the foreclosure process? Are you negotiating with the seller or the bank? I am eyeing a home that is for sale for $450K, which is a stupid amount of money in Florida, and want to lowball $225K. Any chance in a pre-foreclosure situation?
>>Perhaps we are seeing the first indication of the problems created by the credit crunch in August?
i had reported here not long ago a realtor friend who works in bergen county. when the credit crunch popped up she said almost overnight transaction activity ceased in the affluent BC towns she works in. she told me a couple of examples of couples with good income and jobs getting turned down for loans. could be something to this.
#80 NJ Patient: We sold FSBO and I’m not sure why you would take a brochure if you weren’t seriously shopping for a home. People who are selling FSBO are paying for their marketing and I’m not sure why someone would be so mean as to take a brochure just to laugh at it. Maybe you and your wife should get out more.
I don’t see how that is mean. What’s the harm of taking one brochure? I’ve taken plenty in my life for products I never planned on buying.
It’s not like he said he took all the brochures, set them on fire, rang the doorbell and ran off. But, if he did that, I definitely want to see the YouTube.
#84 juxtaposes well with #85.
JLB, that’s just one of the many problems with selling FSBO, isn’t it? Too greedy to be able to stand the loss of a couple of brochures, and too greedy to lower the price.
They’re going to lose a hell of a lot more than the cost of that brochure (ten cents?).
I wish I could say it wasn’t true, but the bailout is coming.
Homeowners are 2/3 of the population. People are obsessed with their houses.
Homeownership is deeply symbolic of the middle class and it is so easy for a populist candidate to appeal to people’s fear that the big bad bankers are coming to take their homes.
We are in the early innings of this collapse and already the calls for a bailout are widespread. They are coming from both wall st and main st and neither Democrats nor Republicans can afford to ignore both.
Politicians have a huge incentive to focus on the problem of the moment rather than to think about the long term consequences. Our government has consistently sold out the younger generation for decades and I see no reason why they would make an exception in this instance.
By the way, nice of the LA Times to jump on the side of common sense now after pumping up housing for 10 years
i know a couple of people looking for houses in my area but the selection is ‘uninspiring’ so they’re waiting for new inventory. on another note there’s a new construction not far from me that i found out was originally listed for $1.8 million and had a buyer but fell out of contract i believe due to financing. it’s now down to $1.2 million and still no bites. i believe the builder spent about $1.125 million for the job.
site is slow not sure if this went through
i know a couple of people looking for houses in my area but the selection is ‘uninspiring’ so they’re waiting for new inventory. on another note there’s a new construction not far from me that i found out was originally listed for $1.8 million and had a buyer but fell out of contract i believe due to financing. it’s now down to $1.5 million and still no bites. i believe the builder spent about $1.125 million for the job.
Lena #86
“I am eyeing a home that is for sale for $450K, which is a stupid amount of money in Florida, and want to lowball $225K. Any chance in a pre-foreclosure situation?”
No chance. Seller likely needs $450K or something pretty close to it so as not to be upside down. If you go under the number they owe the bank (minus expenses and imputed income), then it’s not really worth it to them to sell – they’re better off handing the key to the bank
#90 skeptic: even if it is coming, at the ned of the day I do not see it helping the housing market (keeping prices high).
The party is over, and I believe most people will never look at real esate the same way as they did for the last 5 years or so for a long,long, time.
#88,#89: You misunderstand, it’s not that you took one brochure it is that you are so heartless to take it just to laugh at their house and their hard work. Maybe you don’t have abundance in your life because you are spending your time jealous of others and not focusing on how you can better your life, just a thought!
My question is this: how negotiable are these homes at this stage in the foreclosure process? Are you negotiating with the seller or the bank? I am eyeing a home that is for sale for $450K, which is a stupid amount of money in Florida, and want to lowball $225K. Any chance in a pre-foreclosure situation?
A lot of factors at work here, but the biggest is that the bank most likely owns this home, NOT the people living it in. So even if you went to them and gave them 225k, that still would leave them deep in the red (assuming they bought in 2004-now.
Two ways i can see that working: the note has 300k left on the mortgage, and you offer the bank 225k CASH (maybe they take the loss if you offer cash) … or the owners have lived in the house for 30 years, have no mortgage, and anything they sell for is a bonus. Even then, wouldn’t they just counter with 300k?
Guess I’d need to know a bit more about the situation …
#94 – I agree. I simply don’t see how even the most brilliant and creative of gov’t employees (e.g., Bush) could come up with a way to make 2/3 of the population whole for the loss of, say, 20% of the value of their house.
That’s a LOT of taxes!
The current owners bought in 2004/05, very high (like $455K). I don’t get it – if the bank owns the property, why wouldn’t the bank take whatever they can get for it? Better $225 than nothing, right?
#75 NJ So you do not see prices declining until 2012/2013, or are you saying you do not wantt to buy in the next couple of years, and risk prices falling further, and than not recovering until 2012/13?
ChiFi #74,
My agent will be watching for the official U/C.
I probably lost the bid because I’m a charter member
of the LOD too. I was at least hoping some other astute buyer from the blog beat me out as this one could’ve been a sweet deal. We’ll see what happens.
#99 3B
I see prices declining precipitously over the next 6-30 months, and then leveling off (i.e., not keeping pace with inflation) for a period after that that depends on the length and precipitousness of the initial plunge. In any event, I think that anyone who buys now or during the next four months (at a *minimum*) is lighting cash on fire.
My question is this: how negotiable are these homes at this stage in the foreclosure process? Are you negotiating with the seller or the bank?
You should ask the seller if they have looked into a short sale with their bank. If not, walk away. They are probably looking to cover their oversized mortgage. The place will be overpriced, but the seller won’t have much wiggle room.
If the bank is okay with a short sale, the bank will need to approve of any offer.
I see the think tank is up and running, busy solving more of the pressing issues of the day.
re: bailout
I think it’s feasible. 200 million people are not going to require one. It is only people who bought during 2004-2006.
There were roughly 20m existing homes sold in this period and 4m new homes. A bailout would probably not encompass all of these people since many can actually afford their homes. But even if a relatively large portion of them did become eligible (say 10 to 12 million), the gov’t could probably afford it. Keep in mind that the gov’t wouldn’t buying these homes, probably just allowing people to refinance into a low, fixed rate mortgage.
The point is, it is do-able. And what is most problematic about it is of course not the bailout itself, but the expectation it will create in the average person (that the gov’t is there to act as a backstop for housing). If anything could reignite insane appreciation, this is it
The logic of a lender adjusting a mortgage up for someone with a shaky financial sheet is almost obscene and laughable….it is as if greed on the part of the lender, and desperation on the part of the buyer create an ‘opportunity’ to randomly screw someone….anyone to make a buck. I for one am pleased as punch to see the doors close on these scumbag banks. Good riddance.
#104 “If anything could reignite insane appreciation, this is it.”
Which leads me to believe the bailout will be more symbolic at best.
What mesaage would this bailout send to the markets, to buyers of our debt etc.
Do people then move on to the next great investment scheme, and we have yet another bailout?
We will become an absolute joke of a country.
“”You don’t really think that agents are looking at this data, do you?””
Hey! I resemble that remark.
KL
“Oh I say and I say it again…
You been had,
You been took,
You been hoodwinked,
bamboozled,
led astray,
run amok!”
(I could only find the movie sound, would like to find the real speech…)
#101 NJ that anyone who buys now or during the next four months (at a *minimum*) is lighting cash on fire.
Agreed, there is absolutely no reason to buy now at all. Rentinfg is a viable IMHO option for msot people, regardless of their family situation.
I think that unfortunately we already have lost a lot of the world’s confidence and admiration… Are we now the country where we fight arbitrary wars against innocents….we borrow ourselves into oblivion and loose our homes in record numbers…. where we cannot create a decent domestic automobile…and we are all armed and killing each other in record numbers. What-a-Country….
RentinginNJ,
YES! They are doing a short sale (at least that’s what my realtor said).
What does that mean?? That the bank has to approve offer, not the owner/seller?
If so, does that change the situation, and make it more feasible that it could sell for $225K vs. asking price of $450K?
“skep-tic Says:
September 4th, 2007 at 3:55 pm
re: bailout
…The point is, it is do-able. And what is most problematic about it is of course not the bailout itself, but the expectation it will create in the average person (that the gov’t is there to act as a backstop for housing). If anything could reignite insane appreciation, this is it”
Agreed. I wouldn’t limit the side effects to the housing market. It may prevent the general public from learning the lesson that it should be learning.
That your signature on a piece of paper signifies that you UNDERSTAND and AGREE to the terms set forth.
twice shy Says:
September 4th, 2007 at 3:47 pm
ChiFi #74, My agent will be watching for the official U/C.
I probably lost the bid because I’m a charter member of the LOD too. I was at least hoping some other astute buyer from the blog beat me out as this one could’ve been a sweet deal. We’ll see what happens.
2x: any chance that they were trying to rope-a-dope you? Is it possible that the seller was looking to price aggressively and attempting a bidding war. When it fell flat, they rather withdraw than face reality. Again, you’ll never know unless it resurfaces.
Either way, you did it right…..
#111
Yes, the bank has to approve the sale. Think about it, if the seller sells the property for less than they have on their mortgage then who makes up the difference now that the property is sold and the bank no longer has claim to the property as collateral on the loan? The seller does not want to kick in the difference I guarantee you that. So there is something called a short sale where the bank realizes that it is in its best interest to sell through the buyer at a possibly lower amount than the bank is owed on the note. The bank does this because the foreclosure process is long and expensive for it and it does not want to own a house and the upkeep that is included in a home. The owner probably owes near your 450K number and no bank that I know would ever take a $225K loss on that. The foreclosure process is not that expensive. They may accept high $300’s but it all really depends on comps in the area. If comps are at or close to the mid 400’s then why would you expect to get the property for $225K? The bank is probably willing to deal but that number is ludicrous, provided comps are at or close to the asking price.
#110 Essex Agreed.
#114:
Because noone is buying in Florida, and the quality of buyers is not like what you see in the NY tri state area. People are not as likely to have the ability to get a mortgage today. Because investors are likely tapped out over here (you wouldn’t believe how many EMPTY condo developments are around – it’s NOTHING like the NY/NJ area, having just moved here from there).
And, some sites online said that banks are willing to take up to 50% lower than the remaining mortgage.
#116 “And, some sites online said that banks are willing to take up to 50% lower than the remaining mortgage.”
They may, just not yet, when they start getting pounded with inventory, then thwu will becoem much more flexible.
#116
It definitely does not hurt to try and yes I realize that Florida is up shits creek right now but most banks that I know would have a tough time writing off 50% of a note without at least trying to foreclose and sell for more. It all comes down to comps. If other properties are moving at reasonable prices then they will wait for a better offer or foreclose. If nothing is moving and things are getting real bad then absolutely put your offer in since it is better than nothing. Maybe you will get lucky and they will accept. Never hurts to try.
What would the property cost to build today of the land were worthless? That is always something to consider.
#115 3B
likewise
I don’t know about cost of the property to build today – how does that factor in?
My thing is this: we have a good deal of money socked away in the bank; I have my “2nd home” (vacation home, really my first home I ever owned, which I bought cheap in the Catskills cause I didn’t want to invest in those crazy prices in NYC/Burbs) rented out and more than covering mortage, and I know that the MAX I’ll pay for a house in Florida is $225K. So, why not throw it out there and see what happens. Worst case is I can’t get a house that good (ie, renovated with pool), and then I’ll know to start looking at stuff that needs some work.
I think you just answered your own question. Let is know if they accept the offer.
That’s what great about this board! It’s a sounding board and helps you figure stuff out!
I will keep you posted. First we need to see if we like the house anyway!
here’s the thing about our standing in the world vis a vis American politics: foreigners don’t vote.
We have well respected politicians in NY who openly taunt the Chinese (Schumer and Clinton), despite the fact that the Chinese could send us into an economic tailspin within the hour any time they chose.
We have others who talk of building a ridiculous massive wall along our southern border (as if we’re in a Dr. Suess story or ancient China), despite the fact that our economy as we know it would basically collapse without black market labor.
Why on earth would these people care about what the world thinks of a housing bailout?
We all know who it would hurt– foreign bond holders and Americans who save. But guess what: both groups are anathema to the current America as we know it.
http://www.youtube.com/watch?v=-cuRdIYrKE0&eurl=http%3A%2F%2Fhousingdoom%2Ecom%2F
Not sure if anyone posted this before but this piece from the Aug 31st WSJ editorial is pretty funny.
The Song of Bernanke August 31, 2007; Page A8
“And so did a cry of lamentation arise from the multitudes unto Bernanke: Spare us, Oh Lord, from the wrath of subprime.
From the House of Countrywide wailing was heard, from the land of Dodd and Schumer there was gnashing of polls, and from the Kingdoms of Bear, Lehman and Cramer the rending of fine Italian garments: Set your righteous hand, glorious and merciful Fed, against our enemies among the rating agencies, the risk-averse and short-sellers. In your power and majesty, you need only say the word and interest rates shall fall, liquidity like manna shall descend from the skies, and easy credit shall flow once again across the parched and barren land.”
ChiFi says:
“any chance that they were trying to rope-a-dope you? Is it possible that the seller was looking to price aggressively and attempting a bidding war. When it fell flat, they rather withdraw than face reality. Again, you’ll never know unless it resurfaces.”
The seller is an elderly woman. She wants an immediate close. But her agent is a shark. I suspected a “drama price” ploy right off and attempted to pre-empt it with a solid offer, ready to move. Much stalling and manipulation followed. Here’s the interesting thing: both “best and final bids” came in not only for the same purchase price but under ask by a small amount. The agent would’ve loved a bidding war but didn’t get it. I think there’s an outside chance that the winning bid went higher while I held firm (i.e., a competitive bid after all) but again, I won’t know until it closes.
#126 twice: “but again, I won’t know until it closes”.
To which I would add if it closes.
“Freaked-out lenders are ratcheting up requirements for minimum-credit scores and down payments. Kim Dicce, a Realtor in Tampa, where housing inventory is piling up, notes that lenders now seem to be requiring buyers in her area to put 15 to 20 percent down and have a credit score above 700.”
“‘Now we only have one third of the eligible buyers that we had before, and five times as many houses,’ she said.”
Yeah someone has a problem.
The buyer pool has just dried up so are house prices. Accept it or be stampeded.
It’s called reality.
BOYAAAAAAAAAHAHAHAHAHAHAHA
Bob
Not for nuthin’, but:
http://www.youtube.com/watch?v=biP2JOf5euo&NR=1
#94 – I agree. I simply don’t see how even the most brilliant and creative of gov’t employees (e.g., Bush) could come up with a way to make 2/3 of the population whole for the loss of, say, 20% of the value of their house.
The solution was invented way back in 1440; the printing press.
Hypothetically speaking…Inflation can get the job done. Most people don’t understand the difference between “real” and “nominal” prices. Joe Sixpack homeowner will only know that his home didn’t drop in price too far. He’ll complain about $5/gallon gas and $12 per pound chicken, but he won’t make the connection between those items and the price of his house staying up there.
The Pols will promise to investigate the oil companies & crack down on price fixing. They will hand out more food stamps as needed, but will claim victory in conquering the housing problem & preventing a recession.
Foreign holders of US debt will be the big losers. US holders of debt will see their earning get eroded by inflation, but overall will gladly accept these losses over the “R” word.
Guess we’ll find out on September 18th.
And, some sites online said that banks are willing to take up to 50% lower than the remaining mortgage.
What sites are these? And is this only in Fla? I have heard nothing like this, but definitely am interested.
Contracts spreadsheet has been updated with NJMLS data (hat tip to Rich).
We’ve got confirmation via NJMLS, there is no way we’d see a reporting error across two entirely different MLS systems.
https://njrereport.com/files/contracts.xls
jb
#123 skep
I don’t disagree with any of that, but I still don’t think there’s anything the pols can do that will actually stem the tide.
I’ll go ahead and add some historical GSMLS data to the contracts spreadsheet, only because I know someone will ask.
jb
Wow JB!!!
Those numbers are astounding.
Lots of inventory making its way back onto the MLS today.
jb
“Most people don’t understand the difference between “real” and “nominal” prices.”
This is why pretorius doesn’t post as much as he used to.
Thanks for the clip, Booyaaa.
Thanks for the numbers, JB.
Makes the evening less unpleasant.
Love those Excel files!
The economy is slowing, just look at the
Layoff comparisons from 2006 to 2007 for the last 2 months.
July 06 layoffs 410
July 07 layoffs 2506
August 06 layoffs 260
August 07 layoffs 901
http://lwd.dol.state.nj.us/labor/lwdhome/warn/2007/warnindex.html
In re: the credit crunch:
Having just made an offer, I can assure you that here in Brigadoon realtors are scrambling for the most solid gold buyers available. My agent’s office had a long meeting last week about additional requirements to qualify buyers, and the selling agent was singing the same tune: she wanted 20% down from the get-go.
I think we’re in a new world, at least for the next few months, and the repurcussions on the RE market have yet to be factored in. Although the sales volume tracking numbers JB has might be an early indication where we’re headed. Nothing wrong with keeping your powder dry and your credit score above 750.
Twice shy ] Congrats…
Accroding to CR, price drops usually range over 3 years after RI has bottomed with the bulk of the drops a year after RI bottoms. RI for this cycle has not yet bottomed. It could be different this time but who knows?
http://bp2.blogger.com/_pMscxxELHEg/RtdcN0D6oVI/AAAAAAAAA2Y/aqVM8e-8eds/s1600-h/House+Price+RI+lag2.jpg
Just to clarify; the CONTRACTS.XLS file from JB is documenting actual sales contracts signed, out of attorney review, or….?
Thanks in advance.
Kass: Nine Reasons the Feds Can’t Save Stocks
http://www.thestreet.com/_htmlatb/newsanalysis/investing/10377640.html
My father did a small job for a realtor recently and he basically told my father that by next summer 2008 real estate here in NJ is going to skyrocket. All i could do was laugh.
My mother in law who just bought a townhouse in April 2007 told me her real estate agent said that this Summer that just past was going to be a huge success.
I’ve been laughing A LOT lately.
twice shy Says:
September 4th, 2007 at 2:27 pm
“Listing agent asked for “best and final.” I sweetened my offer, which included 20% down and no property to sell. Other bid was identical! After a half day’s deliberation the other bid was selected.”
************************
Twice,
This is exactly the situation we encountered in purchasing our home, albeit in Rockland County NY. Thank goodness for all the information and news I have learned by lurking on this site!
We too located a charming, yet realistically priced house. After lengthy discussion with our buyers agent, we placed a low bid (~10% under list) which to our relief the sellers countered. I can be a tad aggressive on the negotiation angle… We raised our offer slightly to be ~6% uder list.
Then, the ‘other buyer’ materialized and the listing agent asked for the ‘best and final.’ We said that our last bid was our best and final, and re-emphasized that we had the 15% down-payment and, as renters, could close in 4 weeks. After a nail-biting afternoon, our agent called to inform us that *our* bid was chosen!
The sellers wanted to move quickly, and that was worth more than $$ to them. We were anxious when several issues were uncovered during the home inspection, and the listing agent ‘let it slip’ that the other offer was higher than list whilst we were negotiating the house repair issues. But the sellers continued negotiating with us and paid substantial amounts for repairs.
The sellers timetable was brutal in that they wanted contract signed and mortgage approval letter in 10 days with an eye toward closing in less than 20 days. But we were up to the challenge. Then the last inspection revealed another flaw, and the sellers offered to pay our closing costs so that closing could occur on the accelerated time table. No worries here though, we have made the repairs, and the cost was lower than the estimate. :)
So thanks to JB, and all the regular posters for educating us in the mechanics and nuances of home buying! I had never in my wildest dreams thought that I would be able to negotiate this much on a house price while in a multiple bid situation!
But thanks to the information and analysis here, we knew that the intangible ‘able to close quickly, etc negotiation points’ might be worth $$. And the sellers were quite happy to sell to us. Their house had been on the market over 10 months, and they finally lowered the list price substantially which triggered the multiple bid situation.
Finally, as first-time home-buyers, we relied on our buyers agent’s market experience (she knew the market was changing) and her knowledge of the neighborhoods. We spent time finding just the one who could worked with us in this project.
Cheers!
KattyKay
/resume lurker mode
>>Agreed, there is absolutely no reason to buy now at all. Rentinfg is a viable IMHO option for msot people, regardless of their family situation.
then you lose choices. in westfield there are currently 14 houses for rent out of a 12k stock and the cheapest is at $1850. if you’re going to rent don’t talk about it as if it’s comparable benefits wise to buying.
My mother in law who just bought a townhouse in April 2007 told me her real estate agent said that this Summer that just past was going to be a huge success.
My wife’s parents are going through a divorce. My mother in law wasn’t sure if she wanted to sell the house and take her half of the money or buy out her husband’s half and sell in 5 years when she retires.
She asked a realtor friend for advice. The realtor told her, “wow, you should buy out your husband…your house will be worth a lot more in 5 years!”
dukeb,
Correct. The CONTRACTS.XLS file shows signed contracts sales that are out of attorney review and are now pending sales.
Rich
Congrats KattyKay!
JLB (84)-
And everyone knows that a yard box full of brag sheets is the most crucial part of the FSBO seller’s strategy (LOL). How dare people who may not be at interest level Defcon 5 presume to inconvenience a homeowner by snagging one!
Dude, you wouldn’t last until lunchtime of Day 1 in a real estate office. The public’s desire to waste our time dwarfs anything that they could do to a single FSBO.
Good God.
“wow, you should buy out your husband…your house will be worth a lot more in 5 years!”
I bet he’s hoping for this.
lena (86)-
The simple answer to your question is yes, pre-foreclosure is a point at which many troubled sellers are at their most vulnerable.
However, the fact that you are asking these questions is also a sign that you need to further study and master the process before diving in. If you’re not fully-versed in how to pull off a pre-foreclosure deal, you could be inadvertently buying yourself a big ball of hurt.
A good real estate investment club is a fine place to learn the ins and outs of purchasing at all stages of foreclosure. Google for one in your area.
JLB (95)-
An overpriced piece of crap with a delusional owner- trying to sell into this viper pit of a market on his own- is one of the few sources of laughter I have lately.
I find the owners’ relationship with reality moves in inverse proportion to the level of puffery and verbal diarrhea displayed in those brochures.
I had a wife call me this AM whose husband- selling FSBO- has held an open house every Saturday and Sunday for the last 19 straight weeks. No bites at all.
She wants to hire an agent to sell the house as soon as possible, but her hubby won’t budge. Now, the lady wants to know what to do next.
I told her to either: a) hit hubby over the head with a skillet, and lock him in a closet until he agrees to sign a listing contract; or, b) muffle him with an ether-soaked rag, and forge his name on a listing contract while he’s out cold.
Now I’m scared that she didn’t understand I was joking.
skep (104)-
Nah, I wouldn’t worry. Bush is just j—ing everyone off. Nobody’s gonna get much, if any, “help”. Nobody- even FHA- is gonna refi an upside-down property. Somebody please show me the math on how more than 400-500 families could possibly be helped here.
Just pandering and demagoguing, that’s all.
lena (111)-
No insult intended, but if you are asking these questions right here and right now…you need to step away from this situation and learn more about the process.
Buying distressed properties is not a good “learn-as-you-go” opportunity.
lena (116)-
“And, some sites online said that banks are willing to take up to 50% lower than the remaining mortgage.”
Other sites online also claim that smoking pot makes you smart.
Katty (146)-
What a great story! Good for you…and, congratulations.
There’s an example of what doing some homework and applying a little common sense can do for a smart buyer.
I’m going to start familiarizing myself with the process. I’m in no rush to put in an offer; I don’t care to wait a couple months before I put a bid in on anything, because NOTHING here is moving, so I know that time is on my side.
Thanks for the suggestion on the real estate “101”. I have a good friend who’s a real estate lawyer – I’ll probably hit her up for information as well.
#147 It is comparable, if the rentings tock is sparse in Westfield, there are the other surrounding towns.
I repeat there is absolutley no compeliing reason to buy now, if one does not have to.
channel.com disney jumpin
channel.com disney jumpin
Official Disney Channel.com site for Kim Possible. Play games, check out the photos, download wallpapers and icons, and e-mail your favorite characters!
Official site for the Disney Channel Original Movie High School Musical! Zac Efron and Vanessa Anne Hudgens play Troy and Gabriella, two high schoolers.
Official site for the Disney Channel Original Movie High School Musical! Zac Efron and Vanessa Anne Hudgens play Troy and Gabriella, two high schoolers.