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Yes yes, I know.
I’m opening this thread because I’m travelling to Omaha tomorrow (today). My flight leaves at 6 am. Since I’ve got to leave for EWR around 4:30am, I’ve decided that sleep will be taking the priority for once. I do have a few minutes in Chicago, where I’ve got to switch flights, so I’ll be making every attempt to post new articles then.
jb
wtf!
bring back some steaks so we can have a bbq soon!
YOu guys should buy now, we have touched bottom. Don’t regret later!
Has anyone noticed the increase air traffic over the Pascack Valley with the new FAA change in flight plan? Will that change people’s minds about overpriced Bergen County?
#3 Oxymoron,
You’re looking at your RE charts upside down.
NAR Admits to Initiating Bush’s Mortgage Bailout Plan
Sep 07, 2007 — In a press release last week, the president of the National Association of Realtors applauded Bush’s FHA mortgage bailout proposal, and admitted that the Association has been pushing for the bailout since early 2007.
http://efinancedirectory.com/articles/NAR_Admits_to_Initiating_Bush%27s_Mortgage_Bailout_Plan.html?ref=patrick.net
The Warren B and JB Summit?
PS. Who Dey Baby, Who Dey?!?!
Uh oh.
Fed Officials See Threat in Housing Turmoil
WASHINGTON, Sept. 10 — Three senior Federal Reserve officials said on Monday that the turmoil in housing and mortgage lending had begun to threaten the overall economy, a condition policy makers have said is the crucial test for deciding whether to lower interest rates at their meeting next Tuesday.
http://www.nytimes.com/2007/09/11/business/11fed.html?_r=1&oref=slogin
Sep 07, 2007 — In a press release last week, the president of the National Association of Realtors applauded Bush’s FHA mortgage bailout proposal, and admitted that the Association has been pushing for the bailout since early 2007
How does a bailout help the NAR? I guess it might mitigate the damages when they are hauled in to testify before Congress.
Overall, I would think that anything that helps maintain artificially high home prices would only serve to hold down the number of transactions & therefore commissions for its membership.
I still talk to people — who bought in 1999 at 3x salary, of course — who think the market isn’t going to decline severely, and that I should just buy already.
It’s just amazing, really, the willful blindness.
#10 renting –
Here’s the press release.
Agreed. While no one wants anyone to lose their home unfairly, it seems some of the recommendations here will just prolong the housing crisis.
NAR President Issues Statement on Bush’s Proposed FHA Changes
WASHINGTON, August 31, 2007 –
Pat V. Combs, 2007 president of the National Association of Realtors®, released the following statement in support of Federal Housing Administration policy changes proposed today by President George W. Bush:
“The National Association of Realtors® strongly commends President Bush for his leadership in proposing a set of policies designed to ease the crisis in the mortgage industry and halt the rapidly increasing rate of foreclosures affecting many American families today.
“NAR has been advocating for many of these FHA changes since early 2007. In letters, testimony, speeches and meetings, we have encouraged both Congress and the U.S. Department of Housing and Urban Development to make meaningful changes to the FHA that would stem rising foreclosures.
“The proposed changes will allow more people to refinance with FHA insurance, like those that have fallen behind in their mortgage because of so-called “exploding ARMs.” Many families who have been making their mortgage payments at the starter rate but were unable to keep them up after the loan reset have been unable to refinance through the FHA, but with this increased flexibility, FHA can now help many more families in jeopardy of losing their home.
“We will continue to use our voice and presence in Washington, pushing Congress to act quickly to enact other FHA program changes that will help ease the current crisis and protect consumers. FHA modernization should include increasing loan limits, eliminating or reducing the amount of cash down payments required for FHA loans, establishing risk-based pricing, revising prepayment penalty regulations, and increasing loss mitigation efforts.
“NAR also supports separate legislation to abolish the mortgage cancellation tax that consumers are hit with when their mortgage is forgiven by their lender. NAR believes in a comprehensive effort to ensure this crisis will not repeat itself and alleviate the burden for many families who are currently facing the nightmare of losing their home.”
NAR and its 1.3 million members pledge to work with Congress to ensure that the rights of states are upheld in all industries, and that consumer rights are protected.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
http://www.realtor.org/press_room/news_releases/2007/nar_president_issues_statement_on.html
#11 Unrealtor
Yeah, the vibe out there definitely seems to still be somewhere between denial and anger.
It can’t be true.
I can’t believe it’s true!
From previous thread:
“Clotpoll Says:
September 10th, 2007 at 5:36 pm
lisoosh (64)-
HELOC is actually illegal in Texas.”
Even better. Turns out he was talking about draconian cash out refinance laws.
Either way, the idea of protecting a certain amount of equity seems to be a sound one. Maybe a little restricting to talented risk takers but useful for protecting the economy from idiots.
Sometimes and very rarely, academic economists make valid points: equilibrium and its cousin, mean reversion, are two points relevant to the market. Looking at the long-run relationship between real estate prices and income, the factor 3 has been fairly well established over 90+ years. Now that is equilibrium. And of course, if prices go up, they must come down: mean reversion. Remember pets.com???
HEY shouldn’t that read tues september 11, 2007.
Mortgage Mess Unleashes Chain Of Lawsuits
“When something goes badly on Wall Street, people wind up in court. And the subprime mortgage mess is no exception.
A consortium of investors is going after the collapsed Bear Stearns hedge funds. Home buyers, shareholders and investment banks have filed suits against more than a dozen mortgage lenders. A working group at the Securities and Exchange Commission is examining accounting and disclosure issues, as well as stock sales earlier this year by executives at companies that since have been ensnared by the subprime mess…
Securities lawyers are standing at the ready, with some firms creating special groups to focus exclusively on the mortgage mess.”
http://www.washingtonpost.com/wp-dyn/content/article/2007/09/10/AR2007091002327.html
http://biz.yahoo.com/ap/070910/consumer_credit.html?.v=9
“Consumers kept charging at a rapid pace on their credit cards in July although their overall borrowing slowed a bit.”
Or, the Fox version:
“Consumers Turn to Credit Cards in Wake of Unavailable Home Equity Lines”
http://www.foxnews.com/story/0,2933,296337,00.html
http://www.latimes.com/business/la-fi-creditcards11sep11,1,2192743.story?track=rss&ctrack=1&cset=true
“Credit card issuers try to stay clear of turmoil…
Although credit card issuers and other companies that lend to consumers have escaped the barrage of defaults that mortgage lenders have suffered, they’re nonetheless being more careful about who they lend to and under what terms.
Some card issuers are raising interest rates, and others are cutting back offers to less creditworthy customers or lowering credit limits. Personal and auto loans are also going through changes”
—–
Speaking of careful credit, I’ve seen something new (or never noticed this issuer behavior before).
Last week, one of my cards (the large snake that constricts) sent me a new terms letter.
Now, I don’t think I did anything wrong to incur the wrath of the issuer. But the letter changed my terms effective January 16th. New rates possible for two late payments in any rolling 12 month period, and other terms. The part that seems new is that they give me an opt-out option. If I send them a letter in writing postmarked before a certain date, I can refuse the terms of the contract.
But what happens if I do so? Do they cancel the account? Anybody know?
http://www.philly.com/inquirer/business/20070911_Agencies_agree_to_rules_on_subprime_mortgages.html
Agencies agree to rules on subprime mortgages.
Looking (6)-
Before everyone else piles on, I’ll state for the record that I’m a Realtor, and knowing that NAR cooked up the Bush bailout plan makes me absolutely sick to my stomach.
The most cynical and cruel thing about it is that it will only help about 27 people. The plan is utterly impractical and unworkable, as it flies in the face of both basic underwriting practice and (as befits Bush) common sense.
lisoosh (14)-
“…the idea of protecting a certain amount of equity seems to be a sound one. Maybe a little restricting to talented risk takers but useful for protecting the economy from idiots.”
Gotta love Texas. Speedy executions, lots of concealed weapons and gubmint-enforced protection of equity.
BTW…in Texas (as in Fla.), primary residences are not subject to liquidation in bankruptcy.
Clot, I’m still thinking about the bailout plan, and I’m not sure NAR actually cooked it up. From what I read, they were taking credit for getting it proposed, but I don’t remember them actually coming up with a document they drafted, etc., with the details specified. Was that posted somewhere?
22#, the bailout plan benefits NAR more than home owners. since most home owners bought homes beform boom, the current market cuts their profits by about 5% and takes them longer to get sold. but the activity in certain part of the country has been down 50%. it drives some realtors out of business.
Money Honey Turns 40 today:
http://www.crossingwallstreet.com/archives/2007/09/the_money_honey_1.html
JB – So you actually DO sleep from time to time – I was beginning to wonder…
Good news from Detroit: “Home Sales Up, But Lower Than Last Year.” There just has to be a pony in here somewhere.
I left this on another thread, but thought I would leave it here too for more advice (thanks to the poster who already left their opinion).
Question for everyone…we are new to North Jersey and are looking at homes in NW Bergen County, towns that are considered nice enough I guess.
We are so shocked at the stuff that we are seeing and the prices. Splits and ranches that are 600K! And are old, not in good shape, damp basements. And don’t get me started and how some people don’t even clean their houses to show them.
We have seen a few that are ok so all is not lost, but here is my question.
What is a reasonable offer these days? On one, the original list price was 610K, and I found a comp from 2005 that was 450K. I’m thinking that the 2005 price is where the current market should be and an offer of 450-475 is reasonable?
How do you submit an offer like this without insulting the sellers? I know that we just have to be ready to walk if they don’t like it but other than that, any tips?
Or am I totally crazy to think we can get them to come down that far. The thing is, I am honestly not trying to cheat anyone. It’s just that from my research, that’s what I believe these houses are worth.
Thanks for reading, any advice much appreciated! Ann
How do you submit an offer like this without insulting the sellers? I know that we just have to be ready to walk if they don’t like it but other than that, any tips?
Present it to the realtor. You’re not insulting anyone by making an offer, the BUYERS set the market, not the sellers.
You pay what you feel the house is worth, not what the seller wants in his pocket.
Ann,
Your conundrum is the whole reason for this blog. Most of the posters/readers here are in the same boat as you are and most of the regulars will tell you to hold on because we think prices will be dropping in the not too distant future.
Sellers in NJ have yet to come to the reality that the market has changed and that they can’t retire on the junky property they bought 15 years ago.
I for one am waiting until this time next year and hopefully the asking prices will be more in line with reality.
The part that seems new is that they give me an opt-out option.
The opt out provision is very standard.
If you opt-out, they close your account, but you can continue paying off your credit card under the existing terms until it’s paid off.
In some cases, if you call to opt-out, they will waive the new provisions.
Money Honey’s older than 40, though not by much. Brother-in-Law went to NYU at the same time she did (they shared a set of acquaintances). Honey was a Senior when BiL was a Sophomore; Brother-in-Law is 40.
Clot: Every industry lobby group helps frame legislative agenda in Washington. NAR is not different compared to AMA (for Physicians) or AFL-CIO (for Unions). Similarly, there are always opposing interest groups lobbying as well. In reality, only 2 things make things happen in Washington, either Association Lobby Group or Vote Bank Politics.
Unfortunately, for Bailout, you have both of them working in favour. I have no doubt that some kind of package will be signed into law, only questions are how large will it be, and whether it will help economy in long term or not.
honest-realtor Says:
YOu guys should buy now, we have touched bottom. Don’t regret later!
You and Bi-curious need to get together, start your own real estate company, and then come back here and gloat about all the money you’re making in real estate
#27, Ann: There MUST be some fresher comps than from 2005. Take into consideration the state of the current market, present mortgage rates and offer a reasonable bid. People on here will tell you to wait, wait, wait…but making a purchase decision in a down market is very difficult to time. One can get a good deal in ANY market. If you make an offer that the seller thinks is too low, then see what their counteroffer is. And always put a time limit on your offer so the broker cannot shop it around all weekend and try to build up hype for the house. That offer sounds low but good luck.
#22 Clotpoll Says:
September 11th, 2007 at 7:02 am
‘Looking (6)-
Before everyone else piles on, I’ll state for the record that I’m a Realtor, and knowing that NAR cooked up the Bush bailout plan makes me absolutely sick to my stomach.
The most cynical and cruel thing about it is that it will only help about 27 people. The plan is utterly impractical and unworkable, as it flies in the face of both basic underwriting practice and (as befits Bush) common sense.’
Hey Clotpoll, everyone ultimately is an individual, and your thoughtfulness always separates you from the pack.
Ann,
610K? i say forget it!
i too am looking in BC….patience is the key here…why stop at 2005 prices? the percentage rise from 2001 to 2005 was astronomical given incomes haven’t kept up with these prices! if you are a first time home buyer (like me) – you should wait if you can, since i believe there will be good deals to be had starting sometime next fall…..
if you really really really want this house (i mean all the moons are perfectly aligned here) present all your research and make sure your realtor is in line with you as he/she presents your offer to the seller’s realtor…basically sellers realtor will have to convince the seller – thats what it boils down to…
i for one havent really seen anything in bergen county that i even worth me putting an offer in…
Good luck…
CAIBC
… the Bush bailout plan makes me absolutely sick to my stomach.
The most cynical and cruel thing about it is that it will only help about 27 people. The plan is utterly impractical and unworkable, as it flies in the face of both basic underwriting practice and (as befits Bush) common sense.
Clot,
No to be overly cynical; but I wonder if this is really the point?
Obviously no reflection on you as an NAR member, but the NAR was a huge housing cheerleader, even once they knew that things were heading south.
Politically, they almost have to get behind something at this point. So, they get behind the most impotent and ineffective plan possible. This way they can claim they are doing something to help, but in reality, they are looking for a fast correction to the transactions (an commission checks) flowing again.
Bill would let Fannie, Freddie buy more loans
Measure sponsored by Sen. Schumer targeted at refinancing subprime loans
By Robert Schroeder, MarketWatch
WASHINGTON (MarketWatch) — Mortgage-buyers Fannie Mae and Freddie Mac would be able to buy more loans in an effort directed at helping both subprime borrowers and high-cost home markets under a bill introduced Monday by Sen. Charles Schumer.
Under the New York Democrat’s bill, about $72.5 billion would go toward refinanced mortgages for borrowers whose loans are about to reset to higher rates.
The bill allows Fannie Mae and Freddie Mac to buy more mortgages in an effort to pump liquidity into the mortgage market. It lifts the cap on their mortgage portfolios by 10%, which Schumer says will free up about $145 billion to purchase new loans.
The measure “will deliver a shot in the arm that could make refinancings possible for tens of thousands of Americans trapped in the subprime mess,” Schumer said in a statement.
At the same time, the bill allows the companies to buy loans that cost more than $417,000, which would free up liquidity in higher-cost areas of the country.
The Bush administration has denied requests by Fannie Mae and lawmakers to let Fannie and Freddie buy more loans. Both companies have operated under limits since accounting problems have been exposed and they get back to regular financial reporting.
The increases on the portfolio caps and loan limits would expire after a year.
Schumer’s is the latest proposal from Washington to rescue subprime borrowers. A bill introduced last week by Senate Banking Committee Chairman Christopher Dodd, D-Conn., would ban prepayment penalties and prohibit “steering” of customers to higher-priced loans. The Federal Housing Administration is changing its mortgage insurance program to allow more people to refinance with FHA insurance if they fall behind on adjustable-rate mortgages.
A Fannie Mae spokesman had no comment about the Schumer bill. But the company has pushed to have its portfolio restrictions loosened.
“Times like these reaffirm the need for Fannie Mae,” Fannie’s executive vice president Thomas Lund told attendees Monday at a Lehman Brothers conference.
Earlier Monday, the companies’ regulator said Fannie and Freddie will only purchase securities backed by subprime loans if the mortgages comply with new federal standards aimed at preventing high-risk underwriting
question for the RE agents – I asked my agent (has shown us ~8 properties in 8 months) to send me comps for a condo complex where we stopped in an open house on Sunday. I could find just one sale in the complex for the past 6 months, so asked her to go back 2 years. She responded thusly:
“comps from 2 yrs ago won’t have a bearing ont the comps for this home. Assessments only use 6 or so months back. I will look into the comps & get them to you”
Is there some difficulty in going back further than 6 months, or is it simply a matter of typing in an early search date?
One comp isn’t much to go on (BTW that sold for $360k in April, this same size condo is listed at $390 (OLP $410)).
Am I off base here in wanting to see more comps from this particular condo complex (about 25 units, surrounded by either row-homes or large early 19th century mansions so other comps aren’t actually that comparible)??
thanks!
Kurt
there must be 5,000 split levels for sale in Northern NJ right now. Make your offer on one and if the seller is “insulted,” move on. One great piece of advice I’ve learned here is that you are not going to educate someone who doesn’t want to face reality.
Lets talk about something else:
What excactly sets mortgage rate right now???
It is obviously not an Fed’s overnight rate – as in the 2002 i think it was something like 1% and mortgages were still around 6%.
So why would rate cut help real etstae market???
All it would do is cause inflation and in course of frew years slowly bring RE market down to earth in real dollars, while nominal dollar decline will be minimal.
Also: As permy experience right now even with tight job market wages are not raising…. so actually for few years intull inflation pressure will force companies to raise salatries lowering the rate and increasing inflation will actually loewr amout in nominal $ people can spend on houses.
Bail out – well if goverment bails out home-owners in some form – it will create next wavw of buying (literally 2-3 month of frenzied buying) and after that in a year new huge wave of default with full expectation of another goverment bail-out…
So really I do no see a way out for RE market right now. Right now patience pays – take your money and invest them into a stock market – good Mutual fund, rent and wait for 2-3 eyars.
#11 Unrealtor: still talk to people — who bought in 1999 at 3x salary, of course — who think the market isn’t going to decline severely, and that I should just buy already.
The last thing they want is prices to coem down, of course that is what they will say, if you and me, and others would just buy now, perhaps the down turn could be lessened. That is their thinking.
Do they cancel the account? Anybody know?
Hi Pat,
I got the same notice and the way I understood the opt out was – you send letter, they cancel account (charging privileges), you pay off at original terms.
KL
#41 Al The bailout is all smoke and mirrors, there will be soem tinkering here and there, but in the end, almost nothing.
And for the bubble popped coasts it means nothing, prices will continue to decline.
Kurt,
If I understand you correctly, she has agreed to send them to you, but questions your reasons for wanting them? The only thing that matters in a changing market is the last 3 months or far enough back to get sale data if no sales in that period. Are you trying to see if they are trending down? or if they were actually selling for less 2 years ago? It is no extra trouble to get 2 years back or 5 years back.
KL
#36 CAIBC since i believe there will be good deals to be had starting sometime next fall.
I belive there will be good deals starting right after the holidays (early jump on another dead Spring 08 market), and continuing into the rest of next eyar.
Is it just me, or are splits considered less desirable?
I’d prefer a cape or ranch.
Ann,
With all due respect, if the prices in NW Bergen County appear to be too steep for your liking, perhaps you should focus on some other towns in Bergen County. There are a number of nice, family-friendly towns that have substantial inventory and decent schools. As I’ve been told many times by realtors and others, towns in Upper and NW Bergen are and always will be very competitive. Prices in those areas will remain flat at worst for a number of years before rising again. Why not check out towns in Pascack Valley, they have good schools and the train is right there?
if you like BC. Check out Lodi,Garfield,
Englewood, Lynhurst,
desirable BC towns.
45: KL – I don’t really know what she agreed, when she returns my phone call I’ll find out.
My motivation is essentially to see a larger pool of comps so that I could make a ‘lowball’ offer on their $390k asking.
I know there was at least one other sale recently that isn’t shown in Zillow, seem to remember a $350k asking so the sale price could be lower.
This condo has the 17 year old kitchen appliances, bathroom fixtures, etc and of course I won’t know what the comps had in terms of interior upgrades, but I can’t justify $360k+ on a place that really needs $40k+ in upgrades to bring it up to snuff.
thanks for the reply
Kurt
comrade 3b, i fear that sellers will still be ‘high’ on prices even through this holiday season…i believe the only way to convince somebody is if they see it happening to someone around them – or if CNN starts to plaster bubble bursting headlines – which they wont do since the holiday season, sales will all be what the news is going to report….
regardless, the earlier sellers start to realize, the better it will be for the entire economy – i think this blog can agree on that…
bottom line, start keeping your eyes peeled starting at the end of the holidays, i guess….
i am waiting for the POS Capes to starting pricing in at POS Capes prices(lets say 3X average incomes) at most
49#,
if these are desirable BC towns, all towns in NJ except abbott districts are desirable.
>if you like BC. Check out Lodi,Garfield,
Englewood, Lynhurst,
desirable BC towns.
that last part got cut off from my entry…
i am waiting for the POS Capes to starting pricing in at POS Capes prices(lets say 3X average incomes) at most 300K…
CAIBC
KL – what timing, she just emailed me more comps.
There was another sale in April, for $320k
perfect
I think I’ve said this before, but I don’t think big price declines are going to show up in the nicer parts of NYC metro area until job losses mount. I think big layoffs are imminent unless the credit situation improves soon (within the next two months). I am just hopeful that I make it through to enjoy the RE bargains
Slightly off topic, but what is everyone’s feeling on the amount of down payment you should put on a house? Is there a general best case % range?
If you can put down 50% of the purchase price, should you? Should you just buy in cash?
Should you only put the traditional 20% down?
Obviously the lesser the downpayment, the greater leverage, which could create greater profits in a growing market.
The flip side is that if the market does tank to 75% off 2006 prices and you only put 20% down, you have less skin in the game and you could walk away (ditching the house ont he lender), or be in a better position to take adavantage of some bailout plan. This gets sticky and is a little unethical.
Any thoughts?
#55 skeptic: I disagree, there are tons of nice houses available now in nice NYC metro areas for sale, but little buyer interst. Plus tightening lending standards, that now require a down payment. so even if soem wnat to buy now, they cannot.
The only way to get that interest is for houses to become more afforable fro qualified buyers.
That comes with price declines. At some point sellers will give in and sell at lower prices, to get on with their lives.
#48 gary; prices in nw Bergen are falling too, and will continue to fall, no area is immune, I know you do not believ that, but it is true.
Ann ……….prices’s will drop back to 97-99
You are making extremely generous offer.
#57 3b– yes, there is a lot of inventory and increasingly fewer buyers, but we all know that prices how not come down very far in the aggregate, at least in comparison to how high they rose. We have just made it through the second major selling season of the downturn (at least on a transaction basis) and prices on the whole are certainly within 10% of the peak and probably even higher than that.
I do think that the acceleration of the mortgage mess in last couple of months has probably speeded things up a bit (though there is a lag in the official numbers), but you must admit that so far, price declines have been very slow, especially given the speed of the runup.
This credit crunch has changed the landscape in a big way, but perhaps the biggest way is the effect it could have on local employment. Because as it stands right now, prime buyers can still buy with 10% down at pretty favorable rates.
From the Schumer proposal:
“The increases on the portfolio caps and loan limits would expire after a year.”
If the increase in the portfolio cap expires next year, what happens next year? Does that mean Fannie and Freddie are tapped out if they don’t sell all the excess? If they need to get rid of all the extra loans (to reduce to the original cap), doesn’t that put upward pressure on mort. rates?
Also, does the provision allow Fannie and Freddie to refinance all the risky loans that can’t be paid back even with a better rate? (all the people who bought houses that were just too expensive regardless of a higher rate reset).
also, raising the loan amount over 417K temporarily just causes a mini panic to buy before it goes down again – (although i guess it could also cause a mini panic to sell before the limit reverts back)
in any case, i think all this tinkering with the markets causes strange behaviors and leads to more problems – or maybe i’m just not getting something.
Countrywide Financial is seeking a second multi-billion dollar bailout plan, as it continues to struggle because of the global credit crunch and a contracting U.S. housing market, the New York Post reported on its Web site on Tuesday.
The mortgage company is working with investment bank Goldman Sachs Goldman Sachs and law firm Wachtell Lipton Rosen & Katz to structure another strategic investment similar to the deal it struck with Bank of America Bank of America CorpBAC
49.58 0.62 +1.27%
I love it. Mozillo is a pimp. A true Capitapist. Stock is at $16.50 today and BoA has rights to it at $18. One word,
Bagholder.
where is the inventory built-up? i tracked a few central jersey towns and found out it went down even after 9/1 ARMs re-set.
8/07/2007 2441
8/21/2007 2371
9/11/2007 2202
towns are:
marlboro
princeton
cranbury
plainsboro
west windsor
east brunswick
south brunswick
Ann- prices are falling, it happened, it is happening and will continue to happen. If you’re comfortable where you are and do not need to move immediately you need to find out who the real sellers are.
If you’re looking at 10 houses, I bet 3 are stubborn and won’t budge more than a few bucks, 4 are willing to come down 5-10% and the last 3 are willing to come down 10-20%. It all depends on the urgency of the seller.
If you’re urgent to move, you may not get the exact house you want at the exact price, but unless you make an offer you’ll never know what the lowest price the seller will accept.
This is another reason why prices have not dropped, no one is making offers. If I was selling a house why would I drop my price if my realtor thinks I’m priced right, other comparables are priced in my range and no one has told me (ie made an offer) that it’s worth less. Sellers need encouragement, if you get enough people bidding $450 on a house listed at $600, the seller might realize he’s overpriced.
Get out there and make your bids, you decide the value of what you think the house is worth, the asking price should not affect your offer.
NO AREA IS IMMUNE!
Comrade 3b,
NW has always been an area for the “high fliers”. Sure it’s a very desirable area, and very competitive and for those with assets and income. The person who posted said they were schocked at what is available for 600K. Of course. It’s not the Disney discount family package, it’s the Floridian with the amenities. Perhaps with a substantial number of pink slips on Wall Street, you might get a bargain, otherwise, it’s not going to happen.
Hi everyone, thanks for all your opinions. So, so helpful. I’m the poster from #27 above who wrote about seeing the splits for 600K this weekend up in NW Bergen County.
To #29 x-underwriter, I totally agree with you that sellers have not come to reality yet. We saw quite a few houses that were empty this weekend. Also, we overheard agents at open houses telling our agents that we were the only people to come through all day. the agents at the open houses seemed slightly edgy and nervous.
To #34 Imus, yes, you are right, fresher comps are in order. That was the only one I could find in the neighborhood that was the same model.
To #36 CAIBC, you are right. 2005 was the peak. I should be looking at prior years, before the run-up that started in 2001 really.
To #47 twice shy, I totally agree with you. No offense to anyone with a split, I’m sure they are lovely, but pricing a split the same as a cape or a ranch doesn’t make sense to me. They are much smaller.
To #48 Gary We need to be in NW Bergen for personal reasons and we really like it up there.
Thanks so much to everyone for your perspectives on this. It’s good to hear there are other buyers out there that are just surprised at these prices too.
Pretty scary chart that depicts GDP vs Home Prices. We are far from the bottom.
http://www.housingbubblebust.com/Fed/GDPvsHSG.html
Gary, we haven’t named specific towns so we could be speaking of different places, but USR, FL, Wyck, etc have all seen price drops and I’ve personally seen price drops on houses I track of over 20%, those are more rare, but typically I’ve seen 10-20% drops since the peak. I’ve also seen asking price drops of 10-15% and the houses are still sitting, so final sale prices dropping another 5-10% in the next few months to get a sale seems very possible.
Also, in my opinion the $500K range in that area was the bottom and people rarely went below that so you had everything from old 2 bed ranches on a 50×100 lot asking $550 to 4 bed colonials on a 1/2 acre asking $625. Big diff in house quality, but small diff in $.
The bottom floor of $500 has been broken and now there are a lot more houses in the $400’s. Prices are coming down.
Can the realtors on this board look up how long the following house has been on the market (it’s in Florida, and currently in foreclosure).
MLS F846108, Address: 1534 NE 16th Terrace, Ft Lauderdale, 33304
Sorry, off topic.
I am stuck in selling my house (no, I am not a flipper, but my situation asked me to sell)
Everything went through fine except the Radon. The radon inspection company measured 12 pC/L. Of course buyer want mitigation. I lived there for 5 years and was concern about Radon, so I brought a electronic radon meter which tells me the average of 3 days radon concentration. Normal readings are between 1 to 4 with a few days of 6. I understand that Radon concentration also depend of weather. But it should not be 12.
I was wondering if I should ask for a second measurement, but this will definitely prolong the transaction. And my agent suggest not to.
I am also thinking if the Radon company has a “real” reading, as they do Radon mitigation business also. But I have no proof. I don’t even know if their machines are calibrated correctly or there is any government regulation on them.
As far as I know, no one in our complex (Edison) install any Radon migitation system. Anyway, I am stuck. Not good to sell in buyer market with the might be “greedy” Radon company.
69#, radon migitation is not expensive. i would just spend 1K to $1500 to install randon migitation and move on.
Realtors slash forecasts for this year and next
Housing starts expected to fall to 16-year low in 2008, NAR says
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) — The U.S. housing industry is in for a much deeper downturn, the National Association of Realtors said Tuesday as it slashed its forecasts for home sales and construction for this year and next.
Housing starts are now expected to fall 24% this year and an additional 8% next year to 1.26 million, about 10% less than the realtors’ forecast from just a month ago. That would be the lowest since 1992.
Starts of single-family homes are projected to fall 26.5% this year and an additional 11% next year to 954,000, about 11% less than last month’s forecast. It would be the lowest total since 1991.
New home sales are projected to fall 24% this year and an additional 7.4% next year to 741,000, about 13% less than the forecast a month ago. That would the lowest since 1995.
Existing-home sales are projected to fall 8.6% this year and rise 5.8% next year to 6.28 million, about 2% less than last month’s forecast.
The median price for existing-homes is expected to fall 1.7% this year to $218,200 and rise 2.2% next year to $223,000.
NAR predicting doom and gloom. They’re must be pushing for a bailout.
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B76609E02%2DE743%2D4519%2D9413%2DFD58CD298D7E%7D&siteid=mktw
70#, when i bought my current residence, the radon reading was just 4.8 pC/L but the seller agreed to install radon migitation device and it cost less than $1500. The area near Pway in Edison is high but other area is low.
27
If they don’t want to sell, you can’t stop them (~YB).
bergenbuyer,
Yes, those are the towns I had in mind when referring to NW Bergen. By any chance, do you have the MLS numbers of some of those houses that dropped 10% to 20%? Thanks.
Sure, here’s 2:
2618179 – USR was $995 sold for $799 that’s 20%
2610293 – FL was $1.1M sold for $750 that’s 32%
Ann (27)
Laugh at the current prices and return to your apartment. Wait 5 months and then return to the chase. If you can be patient, I implore you to wait.
Prices will sink come October/Nov when foreclosures flood the market. Even if the bailout happens, it will not save everyone.
Once foreclosures go up, sellers will be forced to lower prices.
bergenbuyer,
Sorry for being a pest, do you have anything that was listed in the 600K – 700K range that was dropped substantially? Thanks again.
77#,
i bet it won’t happen. even if the reset forces forclosures, it will take 1 yr or two. on the other hand, incoming rate cut will change market psychology completely.
the bail-out plan makes home buying better
than call options – your max loss is limited.
the buyers will jump out from sideline and grab whatever left after spring selling season.
> Prices will sink come October/Nov when foreclosures flood the market. Even if the bailout happens, it will not save everyone.
Sorry, I didn’t track that price range as much.
This is opinion and I don’t have MLS #’s to back it up, but I bet the decreases in %’s were less in the 500-600 range as I mentioned before since 500 was “the bottom.”
I would think people’s perception would be, why spend $550 for a POS 2 bed ranch, when I can buy a 3 bed split on a bigger piece of land on a side street for $50K more. “I’ll stretch a little more than I should, but I get more house for my money.”
So I bet that that 600 price range may have held it’s ground better. But once one price range changes, all price ranges change, whether it’s plankton from the bottom or whales from the top, the middle will eventually be affected.
Bi – You keep ignoring one key aspect to all of this: the US has a zero (or negative) savings rate. You now need 10%-20% down to buy a house. Not to mention great credit.
Not to mention that most NJ houses will require a JUMBO mortgage … and that 7.5% rate hasn’t come down yet. Even if it comes down to 7%, that’s still massive.
You clearly are an optimist, and that’s fine, but i also think you need to be a realist.
81# jumbo rate is around 7% already.
source: bankrate.com
LOAN TYPE TODAY+/- LAST WEEK
30 yr fixed mtg 5.93% 6.10%
15 yr fixed mtg 5.60% 5.77%
5/1 ARM 5.95% 6.13%
30 yr jumbo 6.92% 7.11%
5/1 jumbo ARM 6.44% 6.55%
#12
“NAR has been advocating for many of these FHA changes since early 2007.”
hmm. Let’s go back and see what NAR was telling the public in January and February of 2007, all the while apparently singing a very different tune to the FHA.
Anyone for pulling NAR quotes from that time period?
81#, this savings rate is another myth. If it included mortages as debt, i agree it would be zeros or negative averaged nationally. but the buyers are the buyers with savings. a chinese couple just bought my next door house for the price close to $800K moving out their appartment.
More propoganda from the NAR.
Can someone please explaing how they can predict that median home prices will increase by 2.2% in 2008. The NAR predicts that housing starts in 2007 will be down 24% and 8% in 2008. Sales will be down 24% in 2007 and 7.4% in 2008.
I am confused…….
#84 bi -“this savings rate is another myth”
Are you on crack?
It’s not some made up number by some dude on a blog, it’s comes from the U.S. Commerce Department’s Bureau of Economic Analysis, do you think they just made up the number?
The number doesn’t mean that everyone has a neg savings rate, but for every retired person that makes $100 and spends $200, there’s a 30 yr old making $100 and spending $200. I got news for you, 80 year olds aren’t first time buyers.
#20 Pat
“The part that seems new is that they give me an opt-out option.”
This is not new – they can’t bind you to a unilateral contract. If you opt out, they may cancel your card or, if they like you, keep you on and leave you under your previous terms.
Wouldn’t hurt to call and ask them.
#84
They are exceptions, not the rule. As a side note, I don’t know what the value of adding the ethnicity of the couple was in your post.
#27 Ann
“What is a reasonable offer these days?”
IMHO, a reasonable offer is one that, if accepted, will not make you sick to your stomach at the prospect that the home could lose 10% of its value in each of the couple or three years. So, for that reason, I don’t think a realtor should blink at an offer that is at 15% below comps (not asking, but RECENT comps), and even then, I would be dead certain that you don’t plan to move again soon (by which I mean before 2017) before you pull the trigger.
That’s just my two cents, and all disclaimers apply.
86#, i did not say it was made up here. a lot of people think the methodlogy of calculating savings rate is out-dated.
http://seekingalpha.com/article/36867-us-savings-rate-based-on-outdated-methods-of-calculation
Coming to a bergen county town near you: JUMBO JETS.
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXkzJmZnYmVsN2Y3dnFlZUVFeXk3MTkxMjI3JnlyaXJ5N2Y3MTdmN3ZxZWVFRXl5Mg==
http://www.saverocklandairspace.com/
#90 bi-
Those arguments mainly apply to people who already have some kind of wealth or assets. I bet most first-time buyers don’t fall into those categories, and they seem to be a main driving force in the RE market.
Honestly, think about first-time buyers specifically. Over the past few years, part of what fueled the growth and appreciation was the ability of many first-time buyers to enter the game with all of the loose and creative lending products. This situation no longer applies.
You need cash now. A decent amount of cash. And good credit. I think it will only be a matter of time before we see a truly large drop in prices, but I think it’s mostly inevitable.
Even if fed cuts, the credit industry has been spooked enough to not revert back to the loose standards of the past few years, hence creating a bottleneck in the entry of 1st timers to the market.
#56 Bergen
“Slightly off topic, but what is everyone’s feeling on the amount of down payment you should put on a house? Is there a general best case % range? If you can put down 50% of the purchase price, should you? Should you just buy in cash?”
The answer to this question is rate-dependent. Back when you could get a 30-year fixed at less than 5% you wanted to put a hell of a lot less down. Back in the 80s when rates were through the roof, a lot more.
It’s really fact-specific.
Also, there’s the risk-aversion factor, so the answer isn’t purely an economic one either. There’s the simple issue of what makes you comfortable personally.
88#, while i was not intend to add/reduce any value by stating ethnicity in my post, i am not a person to be politically correct in every sentence. i just state as detail as i knew.
#69: Air out your basement and get another reading with the window open.
njpatient- thanks, I’m just looking for opinions or if anyone has ever heard of a rule of thumb, I know I haven’t.
94#, this is cheating. FYO, a modern radon detection device records radon level hour by hour for 24 to 48 hours and will detect this kind of cheating easily.
#84 bi
“81#, this savings rate is another myth.”
No. Simply put, that’s wrong. The savings rate is what the savings rate is (which is to say, negative). Whether or not YOU, in all your glorious economic expertise, think that a negative savings rate matters for purposes of predicting where the real estate market goes is a a different question. However, the savings rate is not a mythical beast. Such an animal exists, despite your ignorance of it.
#88
“As a side note, I don’t know what the value of adding the ethnicity of the couple was in your post.”
Sadly, I think I do.
Sadly we all know that easy credit will come again in another generation. Mortgage products that we consider exotic have been around for decades; the only difference is that they have been marketed to average joes instead of people whose situations may require an exotic mortgage. Interest only mortgages make sense if you’re in a situation where your income is a sure bet to rise, and these loans were marketed to people like medical residents and recent law school grads who may be temporarily poor. Now they’re marketed to assistant managers at big box retailers and dental hygienists. Same applies for no doc loans – traditionally for self-employed folks or people who wish to avoid stating their true cash flow – and now marketed to everyone.
The bubble years made down payments almost quaint, and it basically erased my savings. In 2003 I could have put down 20% on something only to get outbid by someone willing to drive off the cliff. In 2004 my 20% down was now only enough to cover 15% thanks to exploding appreciation, and again I could not compete against someone willing to commit financial suicide.
Sorry… got into full rant mode there. When trying to evaluate a down payment, it’s a question of figuring out how much of a monthly payment you want vs. the comfort and/or utility of having the cash available for other stuff. Since I most likely will be just shy of 20%, I will probably put down in the 10-15% range and retain some cash for emergencies and other goals.
bi Says:
September 11th, 2007 at 9:59 am
where is the inventory built-up? i tracked a few central jersey towns and found out it went down even after 9/1 ARMs re-set.
8/07/2007 2441
8/21/2007 2371
9/11/2007 2202
Dude…you crack me up. I have called you out on this before and now it is even worse. First off, you go to Realtor.com, type in the city select the state and you get a number to appear on the screen, jot it down and say that this in the “inventory” of unsold homes. But what you are forgetting is rentals. Now, I am not saying that rentals have made the 200 unit decrease, IF and IF in fact your numbers are real for post 9/11 dates. I am here to point out that they are probably crap.
First, the towns you selected are the same as the ones you presented in your previous post more than a month ago. The difference this time is you left an additional 7 or so towns out of this list (monmouth junction, plainsboro,etc.), probably the ones where inventory increased. Which leads me to believe…You select the towns that work in your favor!
Second, I do not think anyone on here can track the Realtor.com inventory for the dates you posted, hence…We have to trust you!
Third, again I am calling shenanigans and labeling you njrereport’s “Lazy Statistician”
Question for the financial guys. The savings rate does not include pre-tax retirement accounts, right? With pensions being a thing of the past (for the most part) and the importance of 401k’s, IRA’s, etc. Isn’t the savings rate a bit misleading when viewed today versus historically? I am not talking about how this will affect the housing market as I feel pre-tax retirement accounts should not be used for down payments (IMO). As an example, when my wife and I were working our way up in our 20’s we were not making much $ and therefore not saving much money on an after tax basis. However, we were both contributing 5% to our 401k’s at all times. So that would not be reflected in the savings rate, right?
Just curious about the savings rate data independently.
Exotic mortgages have been around for a long time but have only been available to people with good credit, high verifiable income and or assets.
The difference this time was that the government rewriting bankruptcy laws signaled to lenders that they could lower their credit standards when selling these loans.
I have been tracking the same place (Fair Lawn) and the same price range (300 to 400K) since mid 2005, with increasing dedication. Yes, yes, it is not the most desirable town and the price range is the bottom of the entry level. I should be ashamed of myself. Well, this is the news: in Aug. 2005 the absolute cheapest were at 340K, either ruinous 3/1 ranches whose occupants didn’t take the trouble to pick up their dirty clothes from the vomit-colored carpet before taking pictures of the bedroom, or slightly bigger capes with no pictures whatsoever and sold “as is”. Right now, those kind of offerings are running at 299K and below. You can find clean and relatively renovated (although very small and old) capes for 340. There’s plenty 4br/2bt for 399K and falling. And most sales end up being for 8% below LP, on average. Basically, the supply is very uneven, mixing sellers who face reality and those who don’t, but the fact that you get AT LEAST 10% more value (I would say 15%) for your money than in Aug. 2005 is unmistakable.
—–Money Honey’s older than 40, though not by much. Brother-in-Law went to NYU at the same time she did (they shared a set of acquaintances). Honey was a Senior when BiL was a Sophomore; Brother-in-Law is 40.—–
She graduated college in 1989, something 40-year-old friends of mine did. As this was 18 years ago, your BiL was 22 as a sophomore?
#90 bi
Thanks for the old news. Here’s a better explanation:
http://www.frbsf.org/publications/economics/letter/2002/el2002-09.html
That the savings rate may be understated as a result of accounting practices is irrelevant given that the accounting practices remain consistent and that investment resulting in capital gains wasn’t invented when the housing bubble burst.
Because of the consistency in calculation, we can conclude that the fact that the US savings rate has not been this consistently low since the Great Depression is a Very Bad Thing.
Your point was irrelevant.
First time buyers with a substantial down payment are a rarity unless their parents help out, or they’re making serious big bucks. Why? Think of the huge student loans and credit card debt out of college. Think revolving car loans. Think a big fat wedding. Then think house down payment along with setting aside for retirement funds. Then think 529 if kids come along. Now juggle all this together and demarcate a portion for a house down payment, closing costs and furnishing. It’s asking a lot.
Unless you’re the exception and saving 20% or above of your gross income each month, it’s going to take a while to amass a down payment for the NJ area and buying within 3x annual income. And when you buy, you’ve just tied your entire net worth to your house. Start praying it keeps pace with inflation thereafter. Perhaps stick some gold bars in your basement.
If one aim to retire around 65, using a 30 yr fixed and if you buy at the age of 35, you’re still retiring with a paid off house. Why the hurry to buy?
#100 TJ
You are right, and bi is, as always, horribly wrong. But let’s just add the most important point here: inventory numbers are seasonal. Inventory ALWAYS drops at this time of year. However, for a number that matters, look at YOY. Bi won’t do this for two reasons: (1) he doesn’t have the info and (2) because you’d see that inventory as of 9/1/07 is MUCH HIGHER than inventory as of 9/1/06, which was in turn much higher than 9/1/05.
There is a massive inventory glut, bi’s inability to understand basic statistics notwithstanding.
JB has posted the YOY numbers in beautiful charts many times. Bi pretends not to be able to read or remember.
What is wrong with Fair Lawn? It is a decent town.
#101 Doyle
“With pensions being a thing of the past (for the most part) and the importance of 401k’s, IRA’s, etc. Isn’t the savings rate a bit misleading when viewed today versus historically?”
No – because DB pensions weren’t taken into account, had a higher value than today’s 401(k)s (just ask GM) and have in essence been replaced by 401(k)s. As a result, any understatement of savings on an accounting basis has been reduced, not increased.
100#, 107#,
(1) i agree i did not keep last year’s number; but
(2) i don’t agree sep. 2007 number is much higher than sep. 2006. i drived around these areas and saw much fewer for-sale signs than 2006. take the example of a townhouse developement i posted yesterday, i saw about 12 for sales in total 200 homes in early august (most of them came up to market in june and july) and thought maybe this time it was real glut but half of them are gone by now.
any body in middlesex county here please post honest observations.
(1) he doesn’t have the info and (2) because you’d see that inventory as of 9/1/07 is MUCH HIGHER than inventory as of 9/1/06, which was in turn much higher than 9/1/05.
Home Buyers price out of mortgage
Bloomberg Video:
http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vH2LtKHXhafg.asf
“i don’t agree sep. 2007 number is much higher than sep. 2006. i drived around these areas ”
Facts, bi, facts. I don’t care where you drived around.
The plural of “anecdote” is not “data.” Let’s be clear that the backup for your economic “data” is “crap I’m pulling out of my a$$”.
#4 re: Pascack Valley. I live there, and I’ve noticed increased air traffic in the last YEAR, though some of that may be attributable to Teterboro. From what I’ve heard, the impact really won’t be felt until 2011. The mayors of Pascack Valley towns are hiring lawyers, but I doubt it’ll do any good. (For the record, we bought in 1996.)
Home Buyers priced out of mortgage
Bloomberg Video:
http://tinyurl.com/2kjyaa
“Lazy Stats” – the artist formerly known as “bi”
James Bednar Says:
September 10th, 2007 at 10:51 am
“[edit]…
Bi, please take care to limit the BS you post.
jb”
Please remember.
#109
NJ Patient,
What’s DB? And, is that a known fact… that pensions nationally had a higher value than today’s 401k’s?
Thanks
Defined Benefit, got it.
JB’s graph is nice. but you are only interested in the towns you want to bi/sell. i believe most people come here is not to be a re market commentator but to look at opportunity. if you want to buy in short hills you don’t care how much inventory built up in newark.
>JB has posted the YOY numbers in beautiful charts many times. Bi pretends not to be able to read or remember.
Bi,
Which facts do you want? I have GSMLS open right now and can run any report you would like. Would you like July vs. August 2007, would you like August 2005 vs. August 2006 vs. August 2007, or I could just report numbers after I drived all over for a few hours.
#118 bi-
I think you’re missing the point. The point is that the YOY trend is what is significant, not the August – september trend.
I’d be willing to bet that the YOY numbers in almost every town will follow the same overall pattern.
Bi..Okay..give me the towns people want to buy in and I will give you YoY right now.
119#. fair. please post the numbers for the following towns in middlesex county:
edison
east brunswick
metuchen
south brunswick
plainsboro
#116 Doyle
DB is short for “defined benefit”. The traditional pension plan is a defined benefit pension plan under which an employer promises an employee a retirement benefit of a specific amount, based on such factors as years of service and age at retirement (hence, the benefit is “defined”). A 401(k) plan is a DC plan (i.e., “defined contribution”), where the amount of the benefit is based on the amount contributed by the employee (and, if there is an employer match, by the employer) and is dependent on the return on your investments held in your account.
In a DB plan, you get X dollars on retirement regardless of the ROI of the pension fund. In a DC plan, the dollars you get are dependent entirely on the ROI of your specific investment choices.
I don’t have numbers, I confess, but you just ask your parents or grandparents what they think has happened to pensions. I would think that the average value per employee of 401(k) benefits (and remember, participation is elective) is substantially less than the value per employee of DB plan benefits used to be (where coverage of all full-time employees was mandatory).
Let’s also remember that medical benefits are not taken into account in determining the savings rate. Retiree medical benefits used to be a common benefit, with a large value as it relates to the concept of “savings.” Now, retiree medical as an employee benefit has been all but phased out other than for the rare union worker here and there. The calcs don’t take into account this de facto reduction in personal savings either.
#103 marito Fairlawn is a good town, and so are the schools, in fact Fairlawn HD ranked 61 in NJ Monthly for 2006, River Dell HS (my town) a supposed Blue Ribbon ranked 60th in the same survey.
Plus Farilawn taxes are much more reasonable than many other towns
bi #118
“JB’s graph is nice. but you are only interested in the towns you want to bi/sell. i believe most people come here is not to be a re market commentator but to look at opportunity. if you want to buy in short hills you don’t care how much inventory built up in newark.
>JB has posted the YOY numbers in beautiful charts many times. Bi pretends not to be able to read or remember.”
I trust you checked whether Short Hills inventory is lower than it was in 2006? Actually I’m guessing you haven’t. Care to check now, or should I do it for you??
Bi is right. The personal savings rate is a useless statistic.
A person who saves 15% of his income into a 401(k) retirement account and spends the rest has a personal savings rate of 0%, according to this flawed metric that mainstream media journalists love to cite.
This person’s economic savings rate is, in economic reality, closer to 25%: saves 15% of income + earns capital appreciation on investments that equates to additional 10% of income.
Not sure why njpatient posted a link to a report that contradicts his point, although it was a useful report. Here are key quotes from the report:
“personal saving rate gives an incomplete picture of household savings behavior”
“empirical evidence to date suggests that to a large extent the low personal saving rate in the U.S. economy is a systematic response of households to changes in its fundamental determinants, most notably the increase in financial wealth”
“the current low personal saving rate would not represent a problem that is overhanging the U.S. economy, but is instead a manifestation of a more efficient deployment of the economy’s resources”
125#, i don’t have resource. please post it.
pretorius, if you had bothered to actually read what I wrote, you would understand why I posted the link. Pointing to 401(k)s doesn’t do the trick, as we’ve already discussed ad nauseum. The trend over time with consistent measure is what matters, and the trend over time is that personal savings is at an all time low. Hence, it’s irrelevant what the absolute number is.
How’s the flipping going?
TJ – I’m posting on bberry – can you drop in Short Hills inventory for August 05/06/07 for me, with thanks in advance?
Doyle/njpatient
One of many sources:
http://www.bc.edu/centers/crr/issues/ib_52.pdf
You can refer to the references listed toward the end of this report for more details on DB v. DC and also IRAs, which exceed the DC holdings.
The document includes a table of assets, but be careful not to equate the db assets listed with projected liabilities (expected pensions).
#64 gary actually far fewer people than you think work on Wall St, who live in those towns.
The NJ towns where many of the big bucks people lived, were Summit, Millburn, Madison Chatham, and yes Brigadoon, Bedminster etc.
The big Wall St town in Bergen was always Ridgewood.
The NW Bergen towns will drop too, regardlees of Wall St layofffs or not.
Look at all the inventory in Wyckoff for instance, grant it some of it may be junk, but over 100 houses for sale in that town is a lot, where are the buyers?
Then go look at SR, USR, and FL, and, Alendale, tons of inventory, where are the buyers?
I wished I saved the Bergen Record (Sunday) articles I had that did the stories on people losing their home in the early 90’s and utilizing food banks.
Many of these people portrayed lived in the NW Bergen towns.
I gurantee you Gary no area, no area is immune.
Personal savings – touchy issue. Either way, nobody has any clue whether or not buyers have money. Guess that’s just a fact we’ll have to deal with.
My opinion is that most buyers don’t have the 10/20% saved right now. And they wouldn’t be able to but now or this fall if they wanted to.
I base this on nothing except reading article after article about how we’re a nation of credit, how everyone took out equity in the house in the last few years (money they all have to pay back), and how jobs are being slashed left and right.
Feel free to disagree.
Thanks NJ Patient. I would guess the mandatory coverage of a pension versus the elective (401k) would automatically lean heavily in favor of pensions having a higher historical value.
Thanks Pat.
relating to house purchases, the most relevant savings number right now would be the savings outside of retirement plans of 25 to 40 yr olds since these are your 1st time buyers and 401ks aren’t really available for downpayments. I am going to go out on a limb and guess that this age group on average has very little in the way of such savings, but I would be interested to see any stats that showed otherwise.
Njpatient,
Thank you for your interest in my financial affairs. I am pleased to report that I earned triple digit IRRs on the 2 condos that I flipped in 2007. The only condo that I currently own, which I stole from a desperate seller last year, I live in as my primary evidence.
By the way, although my personal savings rate using the convential metric has always been close to zero, my net worth has never been higher.
I believe that I speak for many New Jerseyans when I state that maximizing my net worth is more important than maximizing personal savings rate.
Saving 10% of income into a savings account and relying on pension benefits is the old-fashioned way. Maxing out the 401(k) and employee stock purchase plan, while deploying home equity into investments that generate high IRRs, is the way I like to do it.
If you must use a jumbo loan to buy your 700k mcmansion … why would you buy now, if you’re constantly being told that rates are going to be cut?
if rates are going to be cut – as everyone thinks – on the 18th and then again in December (or whatever), why not:
a) wait for prices to come down, since they are
b) wait for rates to come down
# 135
Why do you need stats? I’m sure bi will jump in any second with evidence of certain ethnic groups having huge amounts of cash waiting to jump in and buy.
skep-tic,
I have borrowed from my 401(k) twice to buy real estate. I had to pay back my account with a below market interest rate, but there were no penalties.
Both times, I borrowed at approximately 5% and deployed the proceeds into investments that earned >100%.
#139
I doubt the majority of home-purchasers will be taking that route.
Wow, just got a listing from my realtor…PRICE REDUCTION it said..when i looked – the price came down by 5K!!!!! i am sure the offers are going to come in hard and heavy now!
Does this mean that the seller has had no offers or lowball offers all this time? what would lowering 5K do for you as a seller?
I have borrowed from my 401(k) twice to buy real estate. I had to pay back my account with a below market interest rate, but there were no penalties.
No penalties? I’m not so sure.
Your contribute to your 401(k) with pretax dollars. When you borrow from a 401(k), you repay the loan in post tax dollars. When you withdraw from your 401(k) in retirement, you will pay taxes again on the same money.
– You contribute $1 (before taxes)
– You borrow $1
– You need to earn earn $1.25 to repay that $1 (after taxes)
– When you withdraw that $1 in retirement, you pay another $0.25 in taxes.
138#, i would not say certain ethnic groups have huge savings but i would think recent tech immigrants may have better savings rate for two reasons: 1) they don’t have college loans; 2) they have been forced to save for 3-5 years when waiting for green cards.
#130 Pat
Thanks! Great stuff and fascinating.
Here it is.
Listings 07/06/05 | Med Sales Price
edison 197/174/91 235K/335K/389K
e. brunswick 81/76/17 365K/452K/410K
metuchen 26/32/21 199K/379K/302K
s.brunswick 78/108/48 565K/415K/682K
plainsboro 8/3/6 320K/445K/347K
Total 390/393/183
As you will see this is a small sample for a single month comparison and it is hard to see a trend for bull or bear in the past year. Inventory appears to be the same. However, with the exception of S. Brunswick, it appears that the Median sales price is much lower. Does this mean house prices are falling? No if more less expensive houses have been selling and expensive ones not and Yes if the same types of houses have been comparatively selling. Again, you have to look at a larger sample to draw solid conclusions. However 2005 paints a much different story.
But, alas, for all intents and purposes, you can say, based on this sample, inventory has remained the same YoY in the month of ’06 to ’07 for the towns that you selected.
However, before you go off saying that these areas are bulletproof, let me say this. If you were to do a Jan ’07 to August ’07 vs. a Jan ’06 to August ’06 comparison, it paints a different story.
Cumulatively inventory of active listings for ’07 vs. ’06 for those towns has been: 382 for ’07 and 302 for ’06. A 20% increase in inventory.
TJ/M/28/Married/Consultant/Renting/Saving/Access to GSMLS:)
#139- Coming from a future potential homeowner, I don’t see myself borrowing against my 401K to buy a house. Just don’t see it 8-(
#136 pretorius
“relying on pension benefits is the old-fashioned way. Maxing out the 401(k) and employee stock purchase plan […] is the way I like to do it.”
You are aware, I hope, that a 401(k) plan IS a pension plan? As is an ESPP, or 423 plan?
skep-tic,
Family wealth is increasingly tapped for downpayments by the 25-40 folks. I sold a condo to a kid in his mid 20s who made a 40% downpayment. Since I negotiated with his mom more than him, I assume his parents helped him out.
I know those “millionaire next door” authors do not like this trend, but that has not stopped the trend from accelerating.
In addition, my father-in-law has repeatedly asked to give me $ for a down payment. I do not want or need his $, so I politely decline, explaining that I am grateful for his generous offer but that somebody of my resources doesn’t need his $. However, lots of people in my circumstances would take the $.
bi:the bail-out plan makes home buying better
than call options – your max loss is limited.
First of all you are mistaken,and second of all yeven if it were true, that would not be a good thing for house prices. Best you think this trhough some more grasshopper.
pretroious –
care to tell us how you borrowed against your 401k with no penalty? a link would be nice.
Bernanke says, “In fact, there is no obvious reason why the desired saving rate in the United States should have fallen precipitously over the 1996-2004 period.”
Huh?
145#, TJ, your number must be wrong. i think total number is much bigger than this. maybe you need to look at NJMLS in addition to GSMLS?
Thanks,
To be fair, if the money pret borrowed earned him 100% ROI, then who cares if he takes a small hit on taxes?
If someone could format that would be appreciated.
Bi, would you like me to run more numbers? I am more than happy to do some statistical analysis of NJ towns.
#136 pretorius
The thing is, you need to remember what you’ve posted here before. I’ll give you an example:
“pretorius Says:
August 21st, 2007 at 3:59 pm
CAIBC,
I’m one of the “low IQ bagholders” who bought in 2005. It was a new construction condo in Hudson County. Flipped it a few weeks after I closed to a buyer I lined up while the building was being built.”
It’s odd that, if you’d made mad cash flipping TWICE in 2007, you’d only have mentioned the 2005 flip. Or did you do the two 2007 flips after that comment three weeks ago?
Or are you just making sh*t up?
154#, first you have to get the number right. are there only 8 homes for sale for a town with 2-3 elementary schools?
plainsboro 8/3/6 320K/445K/347K
#59 skeptic: Because as it stands right now, prime buyers can still buy with 10% down at pretty favorable rates.
Question is how many are out there,(especially first time home buyers who are the foundation of the housing marker) who have the 10% down payment plus the good credit, tons of inventory yet no buyers.
I do nto think we are 2 years into this thing yet. The peak we seem to all agree was the Fall of 2005, and then basically flat for 2006, which is how it happend during the last down turn.
I really consider the down turn starting to happen last summer 2006 (some price drops),and continuing to the present.
So from the way I look at we are only about 1 year into this thing, and much more substanial price drops are on the way.
Its getting ugly, but it is only goingt o get really ugly.
#153
To be fair, we don’t know what return pret really made, and see post #155 for a question as to his truthfulness as a general proposition.
Sorry if this has been posted already:
http://biz.yahoo.com/ap/070911/housing_forecast_realtors.html?.v=8
#158
Good point.
NJPatient – In response to #129
I can do Millburn, not specifically Short Hills.
05/06/07 – Active Listing
151/183/131
05/06/07 – Med Sales Price
1.1/1.27/1.26
Millburn Year to Date listings are down about 15% and on par with 2005 while median sales price has stayed the same all 3 years.
161#,
1) while i don’t buy too much on median price, but it is not the same. 1.26M is over 10% higher than 1.1M;
2) current inventory number 131 is much lower than 183 in 2006, and even lower than 151 in 2005.
Schabadoo (104):
You’re sure Maria entered college at age 18, or spent only four years in pursuit of her AB?
BiL served in the Navy, so, yeah he was 21 when he started college. That’s not a problem for you, is it?
pre– I think it’s great that you made money by borrowing against your 401k, but this is not standard procedure (most financial planners strongly advise against it) and the money is withdrawn without penalty only if you pay it back (which must be done very quickly if you lose your job). It is a pretty risky maneuver and you are only able to borrow up to $50,000 without penalty, so the average person who does not have sure-fire 100% IRR investments waved in his face everyday, the potential vs. the risk involved is not usually compelling.
As for the parents giving money to kids bit, I know people who have received this, but most do not. Also, I wonder how much of this was itself one of the wealth effects of a rising RE market. Just as people used HELOCs to make downpayments on second homes for personal use /investment, so too did they use them to help their kids buy homes.
Marito
Fairlawn is a very nice town, as someone with children I want to see a good recreation dept, sidewalks and places kids can walk and ride bikes to. They also have a town lake. Good schools are important, but parental involvement makes the school enviroment what it is.
KL
Bi,
I do not have access to NJMLS, but if someone does, we can merge. But I am not sure the listings would overlap in anyway. Maybe a Realtor knows.
I also would not draw any conclusions from the number in Plainsboro.
Like I said, it is hard to draw any conclusions based on this sample. That is why, as a whole, I usually do large sample analysis like JB does for NNJ to draw my conclusions.
Njpatient,
Not sure why you spending time trying to track down my old posts. Anyway, for one of the condos, the construction began in 2005 and finished in 2007. I signed the contract in 2005, then sold it in 2007.
I described this transaction in detail in a post a while back. I couldn’t track it down. I realize it is rude of me to suggest work for you, but could you track it down and post it here?
Bi,
It’s true total inventory numbers are down.
But so are the sales. They’re way down and decreasing at accelarated rates.
Which should make you ask:
At current/decreasing sale pace how many months of inventory is out there in a specific region?
Compare that to 2006 and 2005. Then tell us we are at the bottom and inventory is drying up.
“Not sure why you spending time trying to track down my old posts. ”
only because they indicate that you are less than truthfull.
This is hilarious:
Apparently, this is all you need to get in order for your overpriced POS cape to sell
http://stjosephstatue.com/letters.mv
“Hello. We got the statue on a Thursday. We planted it in the ground on Saturday morning and had a buyer by that afternoon! We close in a few weeks. This act of faith works!”
pretorious,
How’s that housing bottom you called for the start of this year turning out for you?
Bi #162. Great job in breaking down those numbers for me.
I want to maybe make it clear why my wife and I are here posting on this board.
It seems like most of us on here are late 20’s early 30’s looking to purchase a home. Most of us probably make a decent amount of money. Personally my wife and I make mid 100’s. I make about 70% of that.
This would put me in the top U.S. wage earners category. If my wife and I purchase a home, with 20% down, which we have, how is it that I can afford some POS cape that was previously owned by degenerates or retirees? Make sense, NO. And if I were single and God forbid want to have a kid before I am 30 and have my wife not work; I am doomed. We did not bust our asses to go to top schools, land top jobs and live in someone’s trailer.
Now take into account, the school teachers, cops, those in retail. I feel for them.
All numbers aside, that is my statistical analysis for the RE market.
Njpatient,
You went on a fishing expedition which dredged up a tidbit of info that you attempted to present as evidence that I was making up stories.
I already explained the situation in post #167. It was a new construction condo. I bought in 2005 and closed both the purchase and sale in 2007.
3b has it wrong again. If he actually toured open houses or looked at the inventory, its all junk or something is undesirable about it. We are looking in those premium towns and have found that there is virtually NO quality listings coming on the market. FACT: People in Bergen County don’t have to sell if the job market is still stable. All bets are off if the employement drops.
maybe it’s just me, but im skeptical of anyone who comes on here boasting of making money. Not saying i doubt you pret … then again, i really dont care.
pulling out of your 401k for an investment is financial suicide. it’s not quite putting up the deed to your house on red/black in roulette, but damn if it’s not on the same path.
I must be writing some memorable posts or mayble folks like Hobokenite have very good memories.
Let me reiterate my outlook on the New Jersey housing market: we are in for several years of stagnant prices. Somewhere I think I went on record with a -5% to 5% range for 2007.
I do not expect double-digit declines to show up in the data, although the selection bias of many posters will spur them to use a few -10% comps to make the case that we’re experiencing broad double-digit declines.
Hobokenite, what is your outlook?
Re: 163
—You’re sure Maria entered college at age 18, or spent only four years in pursuit of her AB?—
Her birthday is listed at multiple sources as 9/11/67 , something which you dispute with ‘interesting’ evidence. Short of a copy of her birth certificate,how to establish her age? Looking at events in her life is one way. She reportedly graduated HS in ’84, college in ’89, which seem in line with her ‘disputed’ age.
—BiL served in the Navy, so, yeah he was 21 when he started college. That’s not a problem for you, is it?—
What’s more common, a 22-year-old senior or sophomore?
BTW, that’s some chip on your shoulder…
nnjbear … your id looks a lot like mine.
Bloodbath,
I didn’t make a withdrawal from my 401(k). I borrowed $ and paid myself back. The interest I paid went back into my account. Every 401(k) plan is different by the way. The first time I did it I didn’t have to pay any fees. The second time I had to pay a fee of about a couple of hundred dollars to the plan administrator.
By the way I generally ignore mainstream financial advice because it dwells on minimizing downside. At this point in my life, I am focused on maximizing upside, and I have been successful by borrowing in unconventional ways to buy and sell New Jersey real estate.
#176 pret:
selection bias of many posters will spur them to use a few -10% comps to make the case that we’re experiencing broad double-digit declines.
And those few -10$ comps cannot turn into many because you say so?
We are starting to experience broad double-digit declines, did you really think it would happen overnight?
It cannot, because there are still delusional sellers, and believers out here who believe all is fine.
Even with credit tightening, sub-prime melt down, bailout for bueyrs, Fed easing ,and all the rest.
And yet you are stating all is fine, all is well;no broad based double digit declines.
Talk about selection bias, how about just plain old denial on your part.
You never lived through a real esate down turn, obviously.
pretorious,
Your post was memorable because it was so funny. You based your prediction on lumber futures?
Were you by any chance one of the tools over on kanekt that was trying to persuade me that the housing market had hit bottom because Alan Greenspan said so?
My current theory is 10-15% down (for the year – not calendar year btw) based on the NY MSA Case Schiller index.
pretorious, are you continuing to buy in this market or are you on the sidelines ?
Has anyone taken the time to read JB’s article compilation posted here? For the sake of the board, please read it.
https://njrereport.com/80sbubble.htm
This should give everyone a good idea what was and of what is to come. Albeit there may be some differences this time, like the internet and the readily available data to “accelerate” the decline, but what makes people think this market is any different and that it is going to remain flat. JB’s article is what economists and lawyers call precedent. So naysayers, where is your precedent, where are you facts for predicting the future? We have history on our side. You have the NAR.
TJ, yes I have read that. Quite interesting and it is hard to argue with the facts. Here is another factual link that makes it very difficult to think that home prices will not spiral downward.
http://www.housingbubblebust.com/Fed/GDPvsHSG.html
Hi guys,
The reason I have been following Fair Lawn for 2 years is because I like it and know people who live there and like it, too. My comment intended to be sarcastic re: the fact that so many people in this forum consider “desirable” only the places were you cannot find anything under 500K. And Westfield, of course.
Hobokenite,
I admit it, I mentioned lumber once. I think the figure I used was spot prices, not futures. Anyway I was illustrating my point that some underwatched housing indicators had bottomed.
No, I am not one of the tools (what is a tool?) who opines about Greenspan or other Fed issues. Plenty of posters here already do that.
Mr potter #182,
I am looking but haven’t found anything. It is difficult to generate the IRRs I am after when it will be several years before price appreciation returns and even longer until the next peak is reached.
How about you?
Since everyone is throwing out reckless predictions: i feel that prices in 2008 will be -25/35% off 2005 asking prices.
So those houses that were on the market in 2005 for 800k, i think will be selling for as low as 580k. And the sellers who were trying to sell for 600k in 2005 will be now offering for as low as 390k.
(Also, I firmly believe that many sellers who put their house up in 2006 TRYING for 2005 prices based on comps will see their asking prices fall this far.)
Mostly, my conjecture is based on three things, feel free to disagree: 1) massive foreclosures in Oct/Nov/Dec that will drive down comps significantly, 2) buyers not having 10-20% downpayment and/or bad credit, 3) recession.
#174 nn bear: If you believe all is junk out there, then what can I say.
I have by the way done a few open houses, some were junk, many were not, at least according to my definition. But open houses are mainly for newbie home buyers.
I never said everything out there was junk, you did but if you mean to tell me thatt all 100 houses for sale in Wyckoff for instance
are junk, or have some defect, than perhaps as I have said you and I have different definitions of junk.
Or perhaps you are hoping to buy a million dollar house for 325K. Perhaps as a first time home buyer you need to manage your expectations. You than state that:
FACT: People in Bergen County don’t have to sell if the job market is still stable. All bets are off if the employement drops.
How do you know if they do not have to sell? People die, people get divorced, people transfer for jobs, the list is endless, and if as you s say they do not have to sell, well it looks to me that right now a lot of them certainly want to.
I would also suggets you take a look at the BC Sheriffs web site with all the forclosures that have taken place this year, and the many more that are coming up in the next few weeks.
Houses being forclosed on from Garfield to Upper Saddle River,and many towns in between.
Fact is prices went down before in Bergen County, ALL of Bergen county.
Fact is they are going down now, and will continue to go down (perhaps not fast enough for your liking) FAct is I lived throught he last housing bust in Bergen County.
Fact is even if your employemnt is stable and you have a job but you are in over your head, you may still need to sell, especially with so many ARM resets that have already taken place ,and the many more to come.
Many of these resets are increasing mtg payments by $600/700 a month or more, so that job/s a homeowner has may not cover those kind of big increases.
Stable employemnt? Perhaps for now, but things in NJ was far as employemnt do not look good, at all, and that is yeat another fact.
To #69, I would never live in a house with a radon level of 12pC/L. That’s like smoking 12 ciggerettes a day!!!!! The number two reason for lung cancer in the U.S. is Radon gas. The weather doesn’t make a differance the level of gas coming in your home.. Radon is decaying Uranium coming throught the ground, Whatever your level is on the bottom floor it will be hald that amount on the next level. The gov’t says 5 pC/L is ok to live with but the realty is that you should get it as close to zero as you can.. 5 pC/L is like smoking 6 butts a day??? Usually women and children are exposed to radon the most because they tend to be in the house the longest period of time.. What happens is that the Alpa particles attach them selves to dust and them you inhale them and they sit in you lungs… Prolonged time (years) can cause cancer. I would never buy a house will 12pC/L mitigated or not.. maybe 4 or under and get it as close to zero as you can. good luck
Don’t know what a tool is?
http://onlineslangdictionary.com/definition+of/tool
Most broker customers couldn’t refinance: poll
NEW YORK (Reuters) – Some 57 percent of mortgage broker customers were unable to refinance their adjustable-rate loans to avoid higher monthly payments in August, suggesting the U.S. housing slump may worsen, according to a national survey on Tuesday.
Subprime borrowers had trouble refinancing mortgages because loan programs were no longer available, according to a poll of 1,744 brokers …
About 5 million adjustable-rate mortgages are slated to reset to higher rates in the next 18 months, according to Lehman Brothers. Economists warn the housing slump could deepen if those homeowners are unable to refinance loans under tighter underwriting guidelines and as home values stagnate or fall.
.. Commenting on business in the weeks ahead, 14 percent of brokers said they had no available lender for subprime loans at all…
“The question is not what home sales are doing now, but what will happen three to four months from now” as the lack of lender funding in August filters down, Popik said. Prime borrowers are so far less affected, he said.
ARMs resetting in the second half of 2007 top $220 billion, with $170 billion subprime, Lehman data shows.
…
Broker customers with subprime, or weak, credit faced the most problems, with 64 percent unable to refinance their ARMs in August, the survey said. Half of prime borrowers were turned away from ARM refinancing, it said.emphasis added
Countrywide Financial Corp. (CFC.N: Quote, Profile, Research) has sharply reduced its subprime lending, which may exacerbate refinancing troubles because many brokers were depending on the No. 1 U.S. mortgage lender, Popik said. Countrywide was the second most-cited lender that brokers would use in the future, behind First Franklin, which is owned by Merrill Lynch & Co.
…
The Campbell survey also found that a third of home purchase closings were canceled in August. Loan closings were canceled for 56 percent of subprime borrowers in the month amid failed approvals, while closings for 21 percent of home buyers with good credit were foiled.
Stupid question here.
How do you make passages of text bold or italicized?
Pretorious
I am on the sidelines and in cash. This cycle in real estate is very similar to the dot com bubble where prices went through the roof on the emotion of the “New Economy”. The Nasdaq crashed from 5,000 to 800 – quickly as it was an electronic trading environment. I think we will see the same depreciation but it will take longer as real estate is not a liquid asset like stocks but all the irrational ingredients of the price escalation are present like they were in 2000 for the Nasdaq
Just note on percentage since it has been thrown around.
The amount of a 100% increase on the way up is the same as a 50% decrease on the way down. (500k going to 1M is 100% increase, 1M going to 500k is 50% down).
The amount of a 25% increase is the same as a 20% decrease on the way down. (800k going to 1M is 25% up, 1M going to 800k is 20% down).
It’s just semantics. But buried in there is the idea that a small percentage loss on the way down wipes out larger percentage gain on the way up.
Returning to the 33% off peak favorite–that amount of loss corresponds to a 50% gain on the way up. (400k going to 600k is 50% gain, 600k going to 400k is 33% loss).
new investor
http://www.webmonkey.com/reference/html_cheatsheet/
Duckweed,
Thanks for highlighting that quirk in the #s.
#191 Hobokenite
Also another great source of information.
http://www.urbandictionary.com/define.php?term=tool
Pretorius — your theories sound spot on to me. Too bad you are getting abused because you have a different opinion. Maybe if you hid out in a rental unit and waited for 35% reductions you would get more respect (too bad THAT will never happen). Cheers…
196 –
Thanks!
bookmarked
Quick tale on a friend’s recent purchase:
He’s outside DC. We’d previously talked about investing together, but the hotels we were looking at were way out of our price range (his wife’s dad owns a bunch of crap in canada).
they’ve had some circumstances i wont get into here, but have been looking to buy for awhile. They see a few nice townhouses in the 500-575 range. their absolute max was 575k.
they find a place that he says is incredible, but the owner will absolutely not budge on 570 (he had it listed for 585 for 6 months). apparently, the owner had money and just didn’t care.
we finally see the place this weekend … wow. great place. hot tub on the deck, 3 levels of greatness, 3br/3 bath, finished basement, 2-car garage, a brand new kitchen, ceiling fans, hardwood … you name it, this place has it. The great thing is that they don’t need to put a dime into the place, except to furnish it. the townhouse was built in 2000, but walking in you would think it’s brand new (carpet in basement and upstairs is all immaculate, walls are spotless, etc).
he owns an investment condo in VA that’s costing him like $100 a month, which isn’t bad. he got an 80-10-10 with no money down (one of the 10’s, is at like 8.4 %, but he said it’ll be paid off in a few months).
Also … they closed JUST before jumbo rates spiked last month. my friend said that the woman – and her co-worker who wrote up the loans have both since lost their jobs (i think it was countrywide, no positive).
there’s no way this townhouse would have been 570k here …. if in Bergen, it would have been 650k, easy. yes, seeing it made us want to buy … but we must be patient.
Sorry if this is a repost but I know many here like myself are fond of the Arts & Crafs movement, Craftsman style, bungalows, etc.
Stickley Craftsman for sale
http://www.nytimes.com/2007/09/09/realestate/09NJZO.html?ref=realestate
great
p*rnphotos here:http://www.stickleyhomeforsale.com/
#199 waited for 35% reductions you would get more respect (too bad THAT will never happen). Cheers…
It won’t happen why, because you say so? Becuse you purchased recently?
You say THAT will never happen, and yet you visit this site. Interesting, I wonder why?
Comrade – wonder if he’s seen this:
http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
ok … taking off work early …
Imus,
Did you not happen to read the link to what happened in the 80’s?
Bloodbath, I’ve seen the chart a million times. But I’ve never seen the underlying data.
199#, i am telling this board again and again. this is not the same as dot com boom busrt. the run-up from 2001 to 2005 is just catch-up from lagging re market for the whole decade in 90’s. the people here keep telling me that the inventory is sky high. but when i ask for a few selected towns, there is no base for such claims. again, you have to look at town by town for inventory numbers. when you are acctually looking to buy, you will find it is hard to find a desirable one. if so, 2 or 3 people are ahead of you if you give an offer 5% away from ask.
pretorius Says:
September 11th, 2007 at 4:31 pm
Bloodbath, I’ve seen the chart a million times. But I’ve never seen the underlying data.
Well then you are plain dumb because JB posted it the last time you said the same thing. Crawl back under your bridge Troll.
#199: Did not realize you make the rules regarding who can visit this public blog (which I have been visiting since its inception) and for what reason. Purchased in 2000 and 2001. Why so angry? Just my opinions. Chill out, little man. Maybe you and Bloodbath should RENT a nice little vacation townhouse together in Fire Island…
203#, this chart is surely misleading. as a prominent economist, dr. bubble shiller certainly knows that you have to use log price for historical comparison. the happiness of $100 gain is much less in degree than sadness of losing $100. besides, the money is compound in time, which takes log form.
Tonight, I would like to create a chart of NJ home prices from 1980 through 2007 and post it here. I am getting tired of that ridiculous Shiller chart that attempts to show US home prices across 3 centuries. I think it would be more consistent with the purpose of this blog to post the NJ info in the chart form that some readers seem to prefer.
Before I do the work, can somebody tell me how I can post a chart here?
#206 bi:the run-up from 2001 to 2005 is just catch-up from lagging re market for the whole decade in 90’s
And the no money down, artifically low interest rates, sub-prime mtgs, loose to no lending standards, and speculators and flippers, had nothing to do with the run up?
You do have a beautiful mind.
Sounds good, you do that MORON.
Sounds good, let us know how that works for you Pre.
pre,
I encourage you to do so. Please correct for inflation, and it would be interesting to overlay salary/earnings data on a second y axis for the same period of time.
As far as posting a graph here, I think only jb has access to do something like that, and he is away at the moment. I think you would have to host the file and link to it, similar to that famous (infamous?) shiller chart.
#206 Bi
bi, I have to disagree. the run up in value of companies in the dot com era is very similar to the run up in values of home. Artificial market conditions. Venture capital money was near free at the time just like many of these mortgages. The big difference is that the decline in real estate will take longer as it is not as liquid an asset as stocks.
Inventory was so last year.
Now it’s number of sales and pending sales.
#208 Imus: never said I made the rules, as to who can and cannot visit this site.
You may have been here since this sites inception, I do not remember you,(not that that matters)
No anger on my part. I asked a simple question. You in typical fashion resort to name calling (typical for those who believe real esate prices cannot go down)
You are most certainly entitled to your opinions, but an opinion I believe has to be backed up by some facts, and stats, historical correlations, past history, independent sources etc; othewise it is worthless.
You like the other uber bulls make statements that prices wont go down, apparently because you own real esate.
And that reason and only that reason means prices cannot go down.
Now of course you cam accuse me and the other Bears of the flip side (prices will go down), and of course you would be right.
But that is the reson JB started this site, as a forum for like minded people to gather, away form the now ending (but still around) rhetoric of real estate prices never go down.
All is well simply buy a house and it will all be fine.
The difference here is that these opinions are backed up with facts, and stats etc, not simple rhetoric and or denial and anger, and some times just bizzare ramblings.
So again I ask if you do not believe the premise of this site that we were in a now ending real estate bubble, than why do you visit here.
Perhaps you wonder what if they are right, and I for one suspcet that is why you and a few others do visit this site.
But of course that is just my opinion.
There’s definitely room for both sides of the argument here, as long as the discussion can remain civil, intelligent and as factual as possible.
pretorius Says:
September 11th, 2007 at 4:41 pm
Tonight, I would like to create a chart of NJ home prices from 1980 through 2007 and post it here.
Quickly setup a yahoo account, upload it and provide a link. Easy as pie.
I am not being uncivil, somebody who makes the same illogical arguments again and again, demands information refuting it, is given it, then continues to make the same illogical arguments is a moron.
Part of the glut in homes is that most of the inventory is crap. Nice homes (inside and out) at reasonable asking prices keep getting sold a bit under asking … at least in the towns I’m familiar with. Really nice homes are even getting asking prices. Lots of young couples moving in too…with kids. A high percentage seem to be transplants from bigger cities (NY, Chicago, etc) with good jobs, high income and presumably savings…or some other form of equity.
p.s Maria is hot…I still have a crush!
HE3,
I wasn’t specifically directing my comment at you.
I don’t think insults need to be brought into the discussion, as moronic statements are overtly moronic in and of themselves.
no problem
#69 007
When I sold my house and moved to rental back in 2005, I ordered a Radon kit from the EPA. They had a 3 day test and a 3 month test.
See if you can find the link on their web-site:
http://www.epa.gov/radon/
pretorius: I had plotted this data based as reported by OFHEO for Newark MSA (which include NNJ & CNJ).
Along with then I also calculated affordability for house that costs 1000 times of HPI, to see relative effects on affordability.
http://www.geocities.com/skgala/newark.htm
I believe on OFHEO.GOV website, you can also pull up chart for given MSA.
hehehe,
he should’ve directed the post to you. Your childish name calling is distracting and adds nothing to the discussion.
SG
does this include real estate taxes in the affordability ?
#210
Pre,
just do the home prices….what is the point of adding salary data, etc if we don’t look at other factors such as mode and cost of transport, or improved efficiency of homes (lower heating/cooling bills), or for arguments sake, higher fuel costs? Do we know if the higher cost of fuel has eroded improvements in insulation efficiency? What about including the percentage of people that own their own businesses and work from home. What effect does that have. Kids…no kids? I could go on forever.
there’s really no way to conclusively show meaningful correlation unless you have a few weeks to collect all the relevant data and eliminate 95% of the bias. Then again, you could start by defining the output first like most of us here like to do and then pull the data that suits you best. Can anyone here define affordability?
objectively AND subjectively…
pretorius: Here is link to another analysis. This one was done to see affordability where home prices were today’s home price was kept to be about 500K.
http://www.geocities.com/skgala/affordability.htm
We have 2 extreme opinions on the board, where one group believes today’s prices are justfied and second group believes we are in bubble. My analysis tells me that reality is somewhere in middle. The affordability has definitely gone down in last 5 years, but still better then 80’s. I would classify last 5 years as boom if not bubble. There is no doubt affordability is has gone down, even when MSM was touting that low interest rates were making it possible for many to buy homes. I doubt home ownership percentages changed much in last 5 years in NJ area.
My personal thinking is 10% to 20% drop from peak, would be possible. Its tough to call on exact number. I would wait for up tick before making buy decision.
Thanks ADA. Moron.
Hehehe #207,
Could you link to the data underlying the Shiller chart that JB posted last time I asked? I never saw it.
Seperately, you wrote in the space of half an hour:
“you are plain dumb”
“Crawl back under your bridge Troll”
“you do that MORON”
“I am not being uncivil”
It is a questionable standard of behavior, especially when the most that is at stake is opinions about NJ home prices. Do you normally operate at this level?
rent (37)-
Except, the bailout won’t be a fast fix at all for the RE industry. If it’s effective, it’ll keep prices artificially high, and prolong the current standoff between buyers and sellers.
It’s like needing to puke and not being able to. That first upchuck brings a lot of relief with it.
pretorius Says:
September 11th, 2007 at 1:14 pm
Bi is right. The personal savings rate is a useless statistic.
A person who saves 15% of his income into a 401(k) retirement account and spends the rest has a personal savings rate of 0%, according to this flawed metric that mainstream media journalists love to cite. This person’s economic savings rate is, in economic reality, closer to 25%: saves 15% of income + earns capital appreciation on investments that equates to additional 10% of income.
Pretorius, if a person earns 10% ROI for that year on the 15% he has saved, his gross savings is 16.5%, not 25%.
mr potter: Unfortunately not. I did not find any reliable source for historical information.
In any case, even without taxes we can see affordability has come down significantly in last 5 years. With taxes it may even look little less affordable.
The graph basically proved to me that we were definitely in high Boom phase. It made me realize that MSM was not up to date with their reporting. They kept publishing NAR line that low interest rates was making it possible for many to buy homes, while reality was totally different. Without ARM loans folks would not have been able to afford the houses. With ARM rates no longer available at cheap rate, the effects are going to be seen.
I am not bullish on RE at least for next 2 to 4 years.
Could you link to the data underlying the Shiller chart that JB posted last time I asked? I never saw it.
Are you looking for something from me?
jb
Data on the S&P Case Shiller Indicies can be found either on the S&P Site, or the Macromarkets Site.
Otherwise, if we’re talking about Shiller home price bubble graph, the data is available at his site:
http://www.irrationalexuberance.com/Fig2.1Shiller.xls
jb
JB,
Where can I find the data that was used to create this chart? Somebody mentioned that you have already posted it.
http://www.nytimes.com/2007/09/11/business/11fed.html?_r=1&oref=slogin
Ok, got it.
“pretorius Says:
September 11th, 2007 at 4:31 pm
Bloodbath, I’ve seen the chart a million times. But I’ve never seen the underlying data.”
We examined underlying data in detail a couple of weeks ago, remember? That was when it turned out that you weren’t aware that inflation needs to be taken into account in comparing price increases across different eras.
#207
“Well then you are plain dumb because JB posted it the last time you said the same thing. Crawl back under your bridge Troll.”
That was what I meant to say.
#208 Imus
“Chill out, little man. Maybe you and Bloodbath should RENT a nice little vacation townhouse together in Fire Island…”
Nice.
Bigot.
#214
“Please correct for inflation”
He had a bit of trouble with this last time.
Pre, in case you didn’t bookmark the link I gave you last time you ran into this elementary econ issue, here it is:
http://www.westegg.com/inflation/
#206-
“the run-up from 2001 to 2005 is just catch-up from lagging re market for the whole decade in 90’s.”
bi-
if prices are just returning to where they should be because they were too low in the 90’s, then what’s causing all the problems in the mortgage market? are the bailout plans, countrywide layoffs, the bankrupt mortgage brokers, the foreclosures, bear stearns problems and all the rest an illusion? is it all pretend? a lie? it’s not really happening?
OT- Tech help anyone?
My PC is being repaired. So I’m now using a new iMac .
Problem: When I click on a link for Bloomberg, I get video but
no audio. Tech support at Apple told me that because
Bloomberg is primarily Windows based, I’m pretty much
sh*t out of luck. Was on phone with tech help for 2 hrs.
This is not what I expected to hear.
If anyone has suggestions, I’d appreciate it.
dreamtheaterr,
The capital invested in each previous year is also earning returns in the current year and should be added to savings in the current year.
My 401(k) has $100,000 in it on 12/31/07 and that balance appreciates 5% in 2008 – $5,000 in savings
I earn $100,000 in 2008 and put 15% of it into my 401(k) – $15,000 savings
I own a home that I bought for $100,000 which appreciates 5% in 2008 – $5,000 savings
Economic savings rate = [ $5,000 + $15,000 + $5,000 ] / $100,000 = 25%
Personal savings rate using conventional metric = 0%
#217
“You may have been here since this sites inception, ”
Nope – only a few weeks.
He came in with the “pent up demand” theory not long after his debut. Like bi, short on stats, long on anecdotes: “I know four people who…”
#221
“Part of the glut in homes is that most of the inventory is crap. ”
Maybe this is right. In any event, it’s irrelevant, because the answer is that prices have to fall or what’s out there won’t sell.
#226 ADA
Feel free to address Imus’s bigoted comments.
#246 pre
That’s all very nice, but it’s simply not what you said in your original post. Dreamtheater was right in correcting your math as set forth in your original post.
Thanks for creating a whole scenario with additional facts in which the 25% appears. That was useful.
‘Part of the glut in homes is that most of the inventory is crap’
What is the reason that this is different now? Hasn’t it always been true that buyers will go for a better property if the price is similar? Doesn’t this constitute prima facie evidence that prices at the low end are too high?
#251 ‘boken
agree – that was what I tried to say at 248, albeit less artfully.
‘Part of the glut in homes is that most of the inventory is crap’
This is what was known a mere two years ago as “prime flipping material.” Now it’s just “crap.”
#246 –
pre –
but you can’t use that “economic savings rate” money for a downpayment. isn’t that what the point was when bringing up the savings rate on this blog?
#254 tcm
“isn’t that what the point was when bringing up the savings rate on this blog?”
C’mon, tcm – now you’re using logic. That’s not fighting fair.
Let us all take a moment to remember the 9/11 fallen.
#221
“Part of the glut in homes is that most of the inventory is crap. ”
Overpriced crap. Horses for courses.
Crawl back under your bridge troll.
bi:
Guess you are new in town. This whole rich immigrant myth has been played out on this forum many moons ago. Go back and search the archives.
#245 Orion
It looks like most Bloomberg videos are WMV (Windows Media Video) – Try downloading WMP for Mac.
http://www.microsoft.com/windows/windowsmedia/player/mac/mp71/default.aspx
This may address the codec issue that you are experiencing. You do not need the player to run the videos, just the files that it installs in order to decode the audio/video within your browser. Tell me how that works.
#233 Clot :and prolong the current standoff between buyers and sellers.
And how wlong can that last? The whole market at a virtual standsstill, complete luanacy.
hehehe,
oh yeah, well my dad can beat up your dad. What are you 12? Get a life man.
ADA,
My dad has been dead for 14 yrs. Thanks for reminding me. You da man. Mr Cool.
no problem, too bad he didnt teach you any manners.
3b (261)-
It’s not gonna stand still long.
Too many sellers, out of time.
orion,
I don’t know if this will help as I’ve never “Mac’d”
What if you download Mozilla Firefox (a different browser) and see if you can view Bloomberg via that?
sl
I am sure this has beeen asked but what does “X” stand for in status in gsmls
#272
Pretty sure that means expired.
# Orion Says:
September 11th, 2007 at 5:55 pm
OT- Tech help anyone?
My PC is being repaired. So I’m now using a new iMac .
Problem: When I click on a link for Bloomberg, I get video but
no audio. Tech support at Apple told me that because
Bloomberg is primarily Windows based, I’m pretty much
sh*t out of luck. Was on phone with tech help for 2 hrs.
This is not what I expected to hear.
If anyone has suggestions, I’d appreciate it.
Sorry, i am late to the game but download this
http://www.videolan.org/vlc/download-macosx.html
VLC can play almost any file type, should solve your problem.
see this is why it doesn’t pay to have a mac. utility vs accessory
RE:…“Part of the glut in homes is that most of the inventory is crap. ”…
It seems you’re saying the same thing I am…here’s more detail on my thought process… my point is that…it’s the crap that’s over priced. during the run up in prices..lots of nice homes were available. the nice home comps made it easier for sellers of crap to get higher prices. now that most of the nicer homes are gone, the crap sellers still want to get the ‘nice’ homes prices. I’m not sure that nice home prices appreciated as much as the crap home prices…
lots of implications in this…
1.”poorer” crap home owners took the new found equity in their homes and over spent
2. nice home owners didn’t need to tap as much equity and are less affected by this market
3. the crap house owners are the ones flooding the market and in trouble
I’ll admit some nice houses are forclosing too, but much less…and, has anyone seen really nice houses stay on the market without getting sold longer than 2-3 months max. (I’m not talking about that $1-2m upside down boat in Summit/Millburn either).
#258. you’re right…but flippers got greedy and did sloppier and sloppier work constantly reducing quality and costs while trying to get the same high price.
why not spend 30K and make 50K profit…NNNOOOOO…i’ll spend 20K and make 150K. People eventually caught on.
now that more and more owners are their own contractor….do that kitchen, add a half bath etc…that low quality flip thing will take a while before it works on the masses again (sic)
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