Essex Fells Comp Killer

Today’s Comp Killer* comes to us from Essex Fells, NJ.

This home was purchased in June of 2006 for $2,700,000:

GSMLS# 2205254- 15# Oval Road, Essex Fells NJ
List Date: 11/17/2005
Original List Price: $2,950,000
Purchase Date: 05/03/2006
Purchase Price $2,700,000

It returned to market a bit more than a year after it was purchased:

GSMLS# 2418069
List Date: 06/18/2007
Original List Price: $2,795,000
Sale Date: 10/29/2007
Sale Price: $2,500,000

In Summary:

Purchased: 05/03/2006
Purchase Price: $2,700,000

Sold: 10/29/2007
Sale Price: $2,500,000

Commission: 4.5%
Post commission: $2,387,500

Estimated Loss > $313,000
Estimated Loss > 12%

* Note: Not all properties featured in Comp Killer would be used as comps in the case of a formal appraisal. Short-sales and foreclosures, because of their pressured nature, are not typically used as comp sales for an appraisal. In typical mark-to-make believe fashion, appraisers don’t consider ‘forced’ sales to be representative of the market.

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252 Responses to Essex Fells Comp Killer

  1. grim says:


    Alcatel-Lucent trims 4,000 more jobs

    Alcatel-Lucent this morning announced a management overhaul and said it plans an additional 4,000 job cuts to combat a slowdown in the telecom gear business.

    The layoffs, which will occur through 2009, are in addition to 12,500 job reductions the company previously announced by the French telecom gear maker Alcatel after its acquisition last year of New Jersey’s Lucent Technologies.

  2. grim says:

    From the Times Trenton:

    State fails to retain top talent

    Eli Mordechai said he was trying to entice a University of Pittsburgh scientist to leave an $85,000-a-year job and take a $120,000-a-year job at his Hamilton company, Medical Diagnostic Laboratories.

    “He said, ‘I can’t make it on a buck twenty in New Jersey,” Mordechai said. “I can make it on $85,000 a year in Pittsburgh.”

    While doubtless many people would love the opportunity to turn down a six-figure job, Mor dechai said the high costs of housing and taxes are causing the state to lose out on attracting or keeping the brain power that life science and high-tech compa nies in New Jersey need. “I want to hire 600 scientists in the next five years,” Mordechai said, “but where are they going to live?”

    Mordechai’s lament helped to put a face on the body of data re leased earlier this month by Rutgers University economists James Hughes and Joseph Seneca: That New Jersey’s high cost of living and perceived governmental hostility towards businesses are not only preventing the state from growing, but forcing people to actually flee the state.

    In their study, Hughes and Seneca pointed out that in 2002, the state gained 74,000 private- sector jobs but by last year that figure had dwindled to 24,000. New Jersey’s private-sector job growth is at 0.5 percent, whereas in Massachusetts and Connecticut it is 1 percent. “They are growing twice as fast as New Jersey,” Hughes said.

    The numbers that are growing in New Jersey are those of people leaving the state. In 2002, the state had a net loss of 24,000. By 2006, that figure had skyrocketed to 73,000.

  3. grim says:

    From the AP:

    Fed Expected to Cut Rates for 2nd Time

    With oil prices soaring and the housing market sinking, the Federal Reserve is likely to combat the economic turmoil with more interest rate cuts.

    Federal Reserve Chairman Ben Bernanke and his colleagues were wrapping up a two-day meeting Wednesday and many economists believe they will announce that they have decided to follow September’s half-point cut in the federal funds rate with a quarter-point cut at this meeting.

    They are going to cut rates,” predicted Mark Zandi, chief economist at Moody’s “The economy is weakening and financial markets remain unsettled.”

    Many analysts said this rate reduction probably will not be the last either, as the central bank keeps reducing rates to help the economy overcome a host of problems.

  4. grim says:

    From MarketWatch:

    Refinance applications up 9.2% last week: MBA

    The volume of mortgage applications filed last week increased a seasonally adjusted 3.8%, driven by a rise in refinancings, the Mortgage Bankers Association reported Wednesday.

    Application volume for the week ended Oct. 26 was up 19.5% compared with the same week in 2006 on an unadjusted basis, according to the group’s weekly survey.

    For the second week in a row, an increase in refinance applications offset a decrease in applications for mortgages to buy homes. Applications to refinance existing loans rose a seasonally adjusted 9.2% on a week-to-week basis, while mortgage applications to purchase a home eased 0.7%.

  5. Fencesittingjack says:

    now that the money losing seller found a inpatient buyer maybe keep this house on the radar screen to show that by not waitng and getting a low price more losses will incur at a future date. Does not seem like much of a drop in price.

  6. crossroads says:

    so how will the .25 cut help me?

  7. Homer says:

    To a post from yesterday about raising prices commuting into NYC.
    I think we need to raise prices into NYC much higher than 8.00. I think we need to raise bus prices and train prices too. Honestly if we need to start cutting spending in this state, lets downsize NJ transit. Get rid of all these buses outside of Bergen and hudson county, cut back on most of the trains that run into the city.
    I don’t think its right on how convienent they are trying to make it to commute to the city from everywhere. Its absurd that they try to make it easier for people to live here and work in another state. Kinda sad if you think about it. As opposed to finding ways to make it easy to commute the state needs to find a way to attract businesses into NJ. We are trying to fix problems in this states and all the government seems to do is make things worse.
    So stop trying to entice NYC commuters and worry about enticing businesses to come to NJ.

  8. BC Bob says:

    “BofA Prime Brokerage Chief Quits”

  9. Frank says:

    “N.J. to vote on tax relief funding”

    I love how NJ will make everyone pay their 7% sales tax to help out people that can afford a home. What about the renters? Pay up!! Only in NJ the poor will subsidize the rich. That’s what NJ is all about.

  10. Frank says:

    Raise the Hudson River tolls to $50, you’ll see less stupid people sitting in traffic at the Holland Tunnel every morning.

  11. RentinginNJ says:

    “He said, ‘I can’t make it on a buck twenty in New Jersey,” Mordechai said. “I can make it on $85,000 a year in Pittsburgh.”

    He is wise to stay in Pittsburg. He is much better of with $85k there as opposed to $120k here. The cost of living here is about double in NJ once you figure in housing costs. $120k (unless you bought a home before 2002) is just an okay salary here. Of course, the federal govt. sees $120k as a very good salary (true in most places) so many of the tax breaks are phased out. Even in NJ, your property tax rebate gets scaled back after $100k.

    “I want to hire 600 scientists in the next five years,” Mordechai said, “but where are they going to live?”

    The biggest barrier in NJ is housing costs, which I believe will work itself out, followed by taxes, for which there is no hope.

    Your choices are:
    1)wait it out and hope the cost of living situation improves
    2)pay more (tough in a competitive environment)

  12. Homer says:

    Hey maybe bi will get her oil prices actual $30.00 a barral read this article

  13. BC Bob says:

    “Clotpoll Says:
    October 30th, 2007 at 11:08 pm
    Just put a home I started at 449K in July under contract for 355K.”


    What were the 2005 comps? Whay type of a house, bdrms/bthrms?

  14. RentinginNJ says:

    What about the renters?

    Renters below $100k get a rebate too.

    The problem that I have with the so-called tax relief are the phase-out levels.

    A young couple making just over $100k and renting doesn’t qualify for the renter’s rebate. They make too much. However, they probably can’t afford a house on that level of income. And, even if they could afford a house, they would be considered “too wealthy” for the full 20% break…on a house they can’t afford to buy anyway.

  15. Richie says:

    Forget comps in today’s market.

    The market today will determine the comps. It’s what someone is willing to pay.

  16. Salty Steve says:

    I’m looking to buy a house between now and 2 years from now. Ideally, i’d like to buy a house now, but i’m continually hearing that now is not the right time.

    Here’s my question:
    I’m investing about 25% large caps, 25% international and 50% money market/bonds.

    If i’m betting the housing market is going to dump and possibly bring on a recession, shouldn’t I be near 100% money market and that would put me in the best position to buy a house in the next two years?

  17. kettle1 says:

    Voters will get to decide whether to amend the state constitution to dedicate one cent of the state’s 7 percent sales tax to property tax relief through a ballot question next week.

    Is the general population of NJ really that STUPID!!! How is paying one tax in order to decrease another relief? its not, its called sleight of hand, and anybody with a 5th grade education should be able to figure that out. grrrrrr frustrated with the stupidity of NJ voters

  18. John says:

    Re: While doubtless many people would love the opportunity to turn down a six-figure job.

    Pittsburgh is actually really nice. I was there last year. They totally cleaned up the town from the steel mill days and there were tons of 1920 to 1950s executive steel mill mansions still in existence selling for the price of a cape in Bergan country. They have major sports teams and a nice down town. Wicked cool I was in an office building that faced three river stadium where they had a conference room with huge windows and you could see the day games right from the room. It is a great value for real estate. Meaning it is cheap but unlike Detroit and Clevlend which is cheap it is not a hell hole.

  19. Homer says:

    Another thing tax payers have to pay for:;jsessionid=11ZyHyzFGv1xZXQvd8nNRhX1LJjmNLJXpSGLkc7f3CVLlTvr1hy2!-1222301417?_nfpb=true&_pageLabel=pg_article&r21.pgpath=%2FTRN%2FHome&r21.content=%2FTRN%2FHome%2FTopStoryList_Story_806878

    Libertarian seeks taxpayer cash to ‘rescue’ him from obscurity:

    Libertarian Assembly candidate Jason Scheurer of West Windsor wants taxpayers to ante up $50,000 because News12 New Jersey didn’t put him on TV.

    “People are dying in Iraq for democracy and we don’t even have it in our own backyard,” Scheurer said yesterday.

    Under the Clean Elections Act, a candidate can get “rescue money” if he is ridiculed in a political advertisement paid for by some group not directly affiliated with the candidate’s rival.

    Scheurer, a professional money manager, said he was effectively ridiculed when he was excluded from a debate televised last Thursday over News12.

    The telecast featured only the two Republican Assembly candidates in Mercer County’s District 14, as well as the two opposing candidates on the Democrat slate.

    His exclusion, Scheurer contends, might as well have been a slap in the face by the station, which is not affiliated with any of his rivals. And now he wants money for his own TV spot, or something comparable, in time to run before the election.

    Rescue money for independent candidates can range up to $50,000, and that money comes directly out of the taxpayer’s pocket — not out of the pocket of whatever group offended the candidate.

  20. grim says:

    From MarketWatch:

    U.S. economy grows at 3.9% pace in third quarter

    U.S. economy shook off the worst housing downturn in a generation to grow at a 3.9% annual pace in third quarter, the best performance in six quarters, the Commerce Department estimated Wednesday.

    The increase in gross domestic product was better than the 3.4% gain expected by economists surveyed by MarketWatch.

    Growth was well-balanced in the period from July to September, with strong contributions from consumers, exports, capital spending, military spending, and inventory building. Housing investments continued to be a major drag on gross domestic product.

    Despite rising worries about commodity prices, the GDP price index, the broadest measure of price changes in the economy, rose just 0.8% annualized, matching a nine-year low. Inflation hasn’t been lower since John F. Kennedy’s administration.

    Consumer prices rose 1.7%, while core consumer prices, which exclude food and energy prices, rose 1.8%, just within the Federal Reserve’s target zone.

  21. mr potter says:

    #16 Salty Steve

    I am no expert but whatever cash you need for the home purchase should be liquid(money markets/bonds). The remainder should be invested based on your risk tolerance. Just my opinion

  22. BC Bob says:


    Very troubling. It’s a constant debate, in my household, does 30-40% off 2005, warrant buying for the long term in this state. Good quality, high paying jobs continue to flee the state. In addition to this, we are unable to attract new talent/businesses. Does the next generation start their careers in another locale or do they shack up with Mom and Dad? Not to forget, the boomers. Do they stay put, retirement, and pay ludicrous, jumbo sized taxes?

    Trenton is out of control. What realistic structural changes are forthcoming? We are looking down the barrel of close to $100 billion in unfunded pensions and lifetime benefits. This will only continue to grow. The fate of the state is a colossal albatross.

  23. chicagofinance says:

    grim Says:
    October 31st, 2007 at 6:02 am
    Alcatel-Lucent trims 4,000 more jobs

    grim: they still had at least that many people working at that company? Who knew?

  24. kettle1 says:

    Homer # 12

    Good article in brief, but they have missed out on a lot of the technical challenges. The picture is not as rosey as they make it sound. There is indeed a large quantity of oil down there, but it is not light sweet. consider the following excerpt:

    In the 1930s, US oil was easy to recover. In many cases it was almost at the surface and had an EROI of 100:1.(2). It has since declined, depending how one measures it or who one talks to, in the range of 10-15:1. As it gets deeper, harder to find, more viscous, higher sulfur content, etc, the EROI will continue to decline. A typical refining efficiency is about 10:1, so the total refined EROI of our precious liquid fuel is still between 5-10:1.

    oil shale has an estimated EROI of 0.7-10:1 add to that the refining EROI (10:1) and the total EROI starts to approach 5 and below. once we go below 5 EROI the extraction of oil only makes sense at very high prices. The $30/brl number that the article threw out is high suspect. $30/brl is what it cost to sink a well into a Saudi type field. The oil shale process is much more energy intensive and i have never seen real estimates of less then $60-80/brl

  25. gary says:

    Why doesn’t NJ just keep creating state and muncipal jobs. That will increase their tax base and the plebs will have full pensions, full medical, etc. Sort of like a job ponzi scheme. I bet we can keep that bubble going for a loooong time!! :o

  26. kettle1 says:

    #22 BC Bob

    All very good questions. I am being faced with those myself, unfortunately i dont think that there are any answers right now. I think the average NJ resident is going to have a rough time over the next 10 yrs, while some will do OK to very well for themselves depending on how they are prepared and what sort of niche they may have found.

  27. grim says:

    From Bloomberg:

    Defaults on Insured Home Mortgages Rise 22 Percent

    U.S. homeowners defaulted last month on 22 percent more privately insured mortgages than a year earlier, an industry report today showed.

    The number of insured borrowers more than 60 days late on their payments climbed to 54,699 in September from 44,791 a year earlier, according to monthly data from the Washington-based Mortgage Insurance Companies of America. The defaults represented a 4.9 percent increase from a revised August number, while 2.9 percent fewer loans returned to good standing.

    MGIC Investment Corp., the largest U.S. mortgage insurer, and No. 2 PMI Group Inc. reported their first quarterly losses as publicly traded companies this month on higher costs to bail out lenders from bad loans. Mortgage insurers help reimburse banks when borrowers don’t pay.

    “The speed and the depth of the deterioration we saw in the third quarter, and in particular the month of September, was greater than we had expected,” PMI Chief Executive Stephen Smith said in a conference call yesterday after reporting a net loss of $86.8 million.

  28. Pat says: have your Comp Killer of the Moment.

    I have my “Route 1 Recession Reality Show.”

    Today’s indicator comes to us from beautiful central NJ. There’s a special program down here at a well-known college. It’s for returning nurses – folks who have been out of nursing for more than ten years.

    Huge chunk of them were in real estate.

    Before that,

    You can track the economy by the people returning to recession-proof professions. In four years, these same folks will be jumping ship into biotech.

  29. Al says:

    You can track the economy by the people returning to recession-proof professions. In four years, these same folks will be jumping ship into biotech.

    I am afraid they would be moving to China and India then… Biotech in USA is disappearing fast, with double speed in NJ.

  30. DE says:

    The economy grew at a rate of 3.9% so why is the fed going to lower rates, why? What happens when the economy stops growing, will the fed start to give money away?

  31. 3b says:

    #17 kettle The general voters of this state I believe generally are that stupid.

    ALl you need to do is attend a Mayor/Council meeting or BOE meeting, if there is a major issue in the town etc.

    Listen to the majority of the residents speak, and marvel (shake your head) at their understanding and intelligence.

  32. 3b says:

    #20 Inflation hasn’t been lower since John F. Kennedy’s administration.

    Really? It sure did not seem that way when I paid for groceries in Shop Rite last night.

    $100 2 bags, and it was just picking up a few things, not the big grocery shop.

  33. John says:

    Each job on Wall Street results in two more jobs in the city and 1.3 jobs in the suburban area in which the Wall Streeter lives. According to NY State Comptroller Thomas DiNapoli. There are close to 200K employees on Wall Street and the average bonus was around $138,000 last year.

    So those 200,000 jobs resulted in over an additional 600,000 jobs so in total close to a million people in the tri-state areas jobs are tied to wall street.

    That is why suburbia encourage transportation to NYC. First of all you are gone all day and NYC gets stuck protecting you and throwing out your garbage etc. all day and second of all the fact that you go out and get money from NYC and bring it back to their town allows them to have useless politicans on the payroll and keeps all the childcare and service industry jobs flowing.

  34. skep-tic says:


    good point– strong growth, weak dollar, high CPI– yet another rate cut, and another one coming in December. we are really playing with fire at this point with the dollar.

  35. John says:

    FYI the purchase price an individual home is not much of an indicator, people overpay and underpay all the time. In fact the assessors office out in Nassau County does not even count how much you paid for your home when they assess it. Theory is why should someone who underpaid get a tax break and why should the idiot who overpaid get screwed a second time with higher taxes.

  36. HEHEHE says:

    Re 30:

    You took the words out of my mouth

  37. 3b says:

    #22 BC Bob: we havs the same debate, its not the prices that concern me (they are dropping), but the out of control increase in property taxes each year.

    And what appears to be the complete apathy and or clulessness of people, (at least in my are), regarding the complete fiscal mess that NJ is in. To me it is shocking.

    Beacus of our family responsibilities (one child still in HS), and closenesss to elderly parents,a nd of course my job in NYC, we are probably forced to stay.

    But I have to tell you there are times where we just look at each other and say why would we want to buy another house in this area?

    There really does nto appear to be any upside, except not having to live with white walls.

  38. Rich In NNJ says:

    From Reuters (via Yahoo)

    Weyerhaeuser profit hurt by housing slump

    NEW YORK (Reuters) – Weyerhaeuser Co (WY.N), a major U.S. forest products company, said on Wednesday its third-quarter net income fell more than 50 percent, as the slump in the U.S. housing market hurt log prices and demand for its wood products.

  39. HEHEHE says:

    A sign of things to come as the market worsens: condo projects switching to rentals??

  40. 3b says:

    #35 John: It is a very good indicator as far as where prices are going.

    One can safely say that on a whole, nobody underpaid from 2003 through 2005, maybe the begining of 2006.

  41. Pat says:

    Al 29, I don’t know if you’re old enough to remember the amount of resources this great land of ours dumped into the space program in the 60’s in a panic bid to play catch-up.

    Feathers are going to be flying around here in about three-four years. The cash will be literally thrown out of Wall St. windows at any company with the words VAX, GNE, Stem, etc. in their name.

  42. SS says:


    It’s not just this state, it’s everywhere. Most of the successful, intelligent types are usually working and don’t have time to attend local muni meetings. This is very unfortunate considering it’s the local level that has the greatest impact on a person’s life.

    On the economy… I’m no economist so forgive me for not understanding, but the figures that make up the growth number (3.9% in this case), where do they come from? I see “military spending, exports, capital expenditures”, etc…how much of this is comprised of Government spending (our tax revenue) and borrowed money? Is this really a good measure of the economy? I can see how exports impact us, but the other areas I don’t follow.

  43. chicagofinance says:

    If you are a regualr reader of this blog, this article about MasterCard’s 3Q07 results should be consistent, even though it seems ostensibly counterintuitive…..

  44. Rich In NNJ says:


    the purchase price an individual home is not much of an indicator…

    Not much of an indicator of what?
    Tax assesment? Then yes, I agree.

    But if you mean the housing market, you don’t think someone selling for a loss isn’t an indicator? Grim and I have posted multiple examples of this. When compared to getting “asking” let alone multiple bids that drives the price past the original asking price… big indicator.


  45. Pat says:

    cf..they’re going to take market share.

    BofA is desperately raising penalty charges and holders are jumping ship. Nobody likes getting two letters right before Christmas that detail your 32% interest rate if you have two lates in a 12-month.

    The letters even smell like fear.

  46. 3b says:

    #42 True, but people need to start getting involeved, becasue as it stnads now, the inmates are running the insane asylum.

    As far as the growth in GDP, if I had to guess I would say this may be the last hurrah, as far as that number being so high.

    And if a big chun of that number comes from military spending well in my mind, that is nothing to cheer.

    But I am hard pressed to see how the Fed can lower today, assuming that the Fed is still data driven, although now we have this insurance policy Fed, where the theory is make a cut now, to gurad against trouble down the road. (I thought they did that in Sept)

    I am starting to believe that the Fed is just making it up as it goes along.

    The other problem with a cut today, is that the “street” then will be clamoring for another one in December, and so the Fed becomes beholden to the “street”.

  47. anotherone says:

    If I have to buy a $500k house in Essex or Bergen (put aside the argument for renting), what should I project to be the worst-case scenario for price reduction, if I had to sell in 5 years? Any thoughts?

  48. SS says:

    Did anyone watch the Dems debate last night? How about the UFO comment by Dennis Kucinich! He should just throw in the towel now.

  49. gary says:

    The economy picked up speed in the summer, growing at a brisk 3.9 percent pace, the fastest in 1 1/2 years and an impressive performance even as a credit crunch plunged the housing market deeper into turmoil.

    Hey Bernanke, I guess that inflation fighting mantra was just rhetoric.

  50. HEHEHE says:

    Homer #12,

    As Kettle explained heavy oil/oil sands is more expensive to extract and process. Those expenses will be reflected in higher oil prices. There’s no debate that the oil is usable/extractable it’s just that it means the end of cheap oil.

    Moreover the whole technology will safe us thing is bunk. They’ve gone from vertical to horizontal drilling which has increased the amount of oil retrieved from a particular deposit in a quicker fashion. The problem is that when you remove oil in this fashion evidence shows you reduce the TOTAL amount of oil you can extract from a deposit over its lifetime.

    The consequence of this is that while it makes short term economic sense to do this in the long term you are shooting yourself in the foot.

  51. SS says:

    IMHO, I don’t think people really care anymore. I can remember my Grandparents being involved in the local volunteer fire department, board of ed, aux police, etc. They had American flag wall paper in the house, steel eagles decorating the outside of the house, flag poles, and so on. There was definitely more pride shown by those who had a greater stake in the growth of this country. That’s gone now. Todays immigrants show the pride of their own nations but not the US. I see more south American rear view mirror flags than ever. I’m just as guilty – but I do own a RL American flag sweater!!

  52. HEHEHE says:

    Re 48:

    Have you seen that dude’s wife? She’s smoking. Especially compared to him.

  53. 3b says:

    So we had various people yesterday stating we are going into a recession, we are in a recession.

    Today we have GDP figures at 3.9%, Recession, no recession?

    Does the GDP # matter at this pint, since much of that growth was over the summer,and the landscape has changed so much since then?

  54. SS says:


    Yea I noticed that last night…she’s not bad. You know that if those two ever get into the White House they’ll convert the rose garden into the cannabis garden. Then you’ll have tons of UFO sightings over the DC area being reported.

  55. John says:

    Rich In NNJ Says:
    Yes pulling an individual house and comparing the purchase price to the sales price means not much to me. Could be an idiot overpaid from a flipper and hired a bad RE to sell it and got screwed both times. My new neighbor paid 50K more than an identical house that sold on my block in the same month. If he sold for a 50K loss in realty that is meaningless, he overpaid 50K from the get go. I am more interested on a macro basis like the schiller index.

    October 31st, 2007 at 10:06 am

    the purchase price an individual home is not much of an indicator…

    Not much of an indicator of what?
    Tax assesment? Then yes, I agree.

  56. kettle1 says:

    # 29 AL

    Biotech is dead in NJ, and over the next decade will fade in boston NC and Cali. But it will not die in those three places. Biotech is heavily entrenched in those areas’ as it is a support intensive indusrty (i.e it requires a large number of supporting smaller industries around it, usually specialized services). The only pharma or biotech left in nj is just a ghost and will not last as a major player in the long term.

  57. HEHEHE says:

    My one concern re NJ and the upcoming presidential election is if Clinton wins will it be back to business in usual in this state?

    You know Chris Christie is going to be removed or leave.

    They likely will put in place somebody who is, how shall we say, less interested in the ethical/criminal lapses of the politicians of this state.

    Will it be a slip back to the Toricelli days where little or no questions are asked?

  58. thatBIGwindow says:

    # 31 AMEN!!

  59. John says:

    Chase mortgage originations rose 35% in third quarter
    08:07 a.m. 10/31/2007 By Greg Morcroft Provided by

    NEW YORK (MarketWatch) — J. P. Morgan Chase (JPM) said Wednesday that its mortgage origination rose 35% in the third quarter from year-ago levels, reaching $39. 2 billion. “Chase’s increased lending – and competitors’ pullbacks – boosted Chase’s market share of mortgages and home equity to 9% in the third quarter, up dramatically from 5. 7% a year earlier,” the company said.

  60. jmacdaddio says:

    MSN had a good article recently about the concept of “starter cities”. More young people are giving up on places like San Fran, NYC, Boston, etc. and starting their lives in cheaper Southern or Midwestern cities. It makes sense, because if you can buy a house or a condo at a young age, the equity will help when you make the move to an expensive place. The people I know who bought in NJ during the boom fall into three categories: folks who relied on crazy loans, folks who relied on mom and dad to fund the down payment, and folks who sold homes in cheaper states and folded the equity into homes here.

  61. Joeycasz says:

    So what time is Bernake going to be throwing money out of a helicopter today?

  62. chicagofinance says:

    the answer is disclosed at 2:15PM EDT

  63. John says:

    The concept of starter cities makes no financial sense. If you start a job fresh out of school at 21 at a good paying job, big 4, consulting, wall street, banking or insurance you can just go on craigs list or village voice or through connections and snag a share in a NYC rent stablized apt and start paying your 1K a month rent without a car or any real transist expenses and split utilities. Then you can move up the ladder quickly in the home office and easily be VP by 30. Plus you can bang out a NYC MBA on the company dime, If you move to the middle of nowhere to buy a cheap house you also get a cheap salary and then when you are 30 and ony making 70K how the heck are you going to transfer to a high paying job in NYC with no local connections or NYC experience. Pre 2002 that is how people did it in NYC. It is a RE bubble thing that everyone under 30 had to own a coop or condo or you were a loser. In the 90s with the stock market banging out 20% a year and safe bonds even paying 7% with RE chugging along at 5% what was your incentive to sell your stocks and buy RE? Very little. In 2002 with stocks sinking like a brick and RE rising young people plowed into real estate and now that is like so 2004, my idiot friends have all moved on to Oil, tech, China and Precious metals and could care less about that old news RE bubble.

    Plus there is still that attitude you have to EARN IT. I want someone who spent their 20’s working their tail off at some demanding NYC firm, I don’t want some laid back dude from the surburbs working 9-5 with a ten minute commute waltzing in my office looking for a big time job. They can stay in Milwaukee or wherever, interesting enough I had a client in Milwaukee who for “real” jobs they recruited from Chicago or NY as the local bumpkins had no real world experience.

    If stocks truly tank and big ben pushes rates so low that my bonds cds are back to nothing yea I can see RE getting a little MOJO, but for now it is a suckers game.

  64. make money says:

    Do we have a consensus of a 1/4 cut at 2:15PM?

    Does anyone on this blog expect anything different? They shocked us with the .50 when most exoected him to stay put and only a minority expected a 1/4.

  65. DINJ says:

    Happy Halloween everybody!!
    Could someone please provide an address/info for gsmls #2437302

  66. crossroads says:

    make money

    fed does nothing today.

    I believe in conspiracy theory. they the fed didn’t want to cut so they dressed the GDP # up so they can hold.

    w/ recession looming they need all the room they can get for future cuts. hold today .cut down the road.

    the last cut was to save credit markets it didnt work. so why cut now?

    according to GDP economy is strong.

  67. kettle1 says:


    has an interesting idea, but i think that bernanke is to beholden to wall street and will cut, so that he can say that he is doing his part.

  68. SG says:

    Very nice article today in Washingtonpost. The site requires registration.

    Time to Stand Up to Wall Street

    By Steven Pearlstein

    Think about that for a minute. If the Federal Reserve were so worried about a major U.S. recession that it embarked on a series of interest rate cuts, do you think rational investors would be pushing stock prices to record highs both in the United States and abroad? Or piling into highly cyclical commodities futures? Or trying desperately to complete highly leveraged corporate buyouts at premium prices?

    Of course not. If a recession were on the horizon, they’d be selling stocks, not buying. And the interest rate spreads between risk-free Treasury bonds and the bonds of private companies whose risk of default would increase with recession would be widening, not narrowing.

    In fact, Wall Street has largely discounted the risk of recession, just as it has discounted the risk of inflation, discounted the rise in oil prices and discounted the fall of the dollar. In short, it remains in deep denial about the fix that it is in.

    Sure, Wall Street’s executives and traders are painfully aware of the $30 billion dollars in write-offs that have cut deeply into this year’s profits, or wiped them out completely.

    They know that the chief executives of Merrill Lynch and UBS have already lost their jobs, along with the heads of investment banking and risk management at several of the larger houses.

    They know that the rating agencies are in the process of slashing the credit ratings of hundreds of billions of dollars in mortgage and other asset-backed securities from AAA to junk.

    And they know that if Citi and other big banks can’t refinance the hundreds of billions of dollars of short-term IOUs issued by their off-book, offshore entities, they will have to incorporate those entities into their books and write off billions of dollars more.

    All of which is why they are so desperate for someone to step in and magically make it all go away. Now desperation has turned to hope, hope has crystallized into expectation, and that expectation — of a Fed rate cut — has been priced into every stock, bond, commodity future and credit derivative.

  69. kettle1 says:

    regardless of rate cuts or no rate cuts, the FED alone cannot save the economy or US dollar. The FED has a definite effect, but rampant consumerism has to stop for the dollar to become strong and the economy to stabilize. At this point a good recession will only help us. Its kind of like going to the dentist. You know that the dental work will hurt and fear it, but you also know that you will feel much better afterwards. you also know that if you dont go that tooth ache turns into oral surgery!

  70. Joeycasz says:

    Thanks Chifi–

    This may have been asked but i’ll ask again. If there is a recession just when do we all think it will happen?

  71. kettle1 says:

    #71 Joey,

    We are already into a recession Joey, at least the very early stages of it. Right now you are just seeing fancy numbers games to keep things looking rosey

  72. make money says:

    regardless of rate cuts or no rate cuts, the FED alone cannot save the economy or US dollar. The FED has a definite effect, but rampant consumerism has to stop for the dollar to become strong and the economy to stabilize. At this point a good recession will only help us. Its kind of like going to the dentist. You know that the dental work will hurt and fear it, but you also know that you will feel much better afterwards. you also know that if you dont go that tooth ache turns into oral surgery!

    Great point. I love the analogy.

  73. make money says:

    If Ben stay’s put does DOW drop 200 or 300 today? Does anyone dare hold a short position after what he did to hedgefunds last month.

    I’m itching to make a call. really itching.

  74. RentinginNJ says:

    My one concern re NJ and the upcoming presidential election is if Clinton wins will it be back to business in usual in this state?

    I think a Clinton win would actually be good for NJ. The problem with NJ is that we are so out of step with the rest of the country. Our official state policy is to be anti George Bush. I’m no big Bush fan, but I also know it’s no way to run a state. Bush is against stem cell research? Well then, NJ will fund it…at the taxpayer’s expense. Bush won’t address climate change? Well then, NJ will go it alone…at the taxpayer’s expense.

    A Clinton win would reduce or eliminate this polarization between NJ & the Federal government. Maybe then NJ could be a little more introspective & start focusing on its own problems. Maybe then a liberal electorate could start thinking about what is best for NJ rather than “sending Bush a message”.

  75. PQG says:


    Steven Pearlstein is a deeply cynical man. What has Wall Street ever done to engender such cynicism?

  76. anotherone says:

    It’s revealing to me how strong the quantitative financial focus of this group is. I tend in that direction myself, but, when applied to housing, largely discounts all of the “soft” ownership factors and the concept that FMV is not an approximation of “value to me.” If you love a house, and the buyer refuses to sell at anything less than a premium over market (based on comps and subsequent resale), you can still have made a rational purchase based on the value of the particular home to you.

  77. RentinginNJ says:

    If Ben stay’s put does DOW drop 200 or 300 today?


    What concerns me is that there is even a debate over this.
    A choice between a 200 or 300 point drop in the down or;
    $100 oil, a loss of credibility at the Fed, further weakening of the dollar & a serious risk of inflation seems like a no brainer to me.

    That being said, I think Bernanke will give Wall Street what they want…another 25 basis points.

  78. make money says:


    I agree with you. I’m just trying to see if there is an opportunity for a quick trade here.

  79. Stu says:

    I’m itching to purchase some more SRS again, but not until after the cut this time. Bernanke killed me the last time. It wouldn’t surprise me much if he went .5 again. I plan to hold my shorts till the temporary bounce from this meeting (and cut) prices in. Then I’m of to the races.

    Disclaimer: I am related to BI.

  80. kettle1 says:

    Rent # 78

    said it before and i’ll say it again, we will hit $100 oil before Jan 1 2008

  81. Pat says:

    “…you can still have made a rational purchase based on the value of the particular home to you.”

    . . .
    Cool. Just don’t try to sell it in a year and come here and betch&moan about us stubborn buyers.

    You make your bed, YOU wash the sheets or whatever.

  82. anotherone says:

    I don’t know how anyone could complain about buyers not willing to pay what they are asking. When you are selling, it is just about price. No buyers equals too high of a price.

  83. syncmaster says:

    Since there’s been some conversation on the “starter city” concept, I figured I’d post the article being discussed:

    Get ahead in a starter city

    By Kiplinger’s Personal Finance Magazine

    I just moved from Palo Alto, Calif., to Baltimore.

    No, I’m not crazy. Just broke.

    I lived three years in Palo Alto, enjoying the beautiful weather, a pristine neighborhood and close proximity to family. But I soon realized that if I stayed, it would be nearly impossible to reach my financial goals.

    My husband, Jeremy, and I were spending nearly half of his take-home pay on rent, our grocery bill was eating us alive and we couldn’t afford to buy a house. We didn’t have enough money at the end of the month to boost our retirement savings, start a college fund, pay down student loans or take a vacation that didn’t include a stop on a friend’s or relative’s couch. So we decided to pack up and start over in a more affordable city.

    You’ve heard of a starter home, a starter car, even a starter marriage (heaven forbid). The idea is to begin somewhere until you can afford to move on to something better. For young adults on their own, a starter city operates on the same principle. Starting out in a cheaper locale may be just the ticket to get your financial footing.
    The cost of living

    If you’re struggling financially, your location may be the culprit. Start your independent life in such metropolitan hot spots as Boston, New York, San Francisco or Seattle and you could live like a pauper, struggling to find the money to pay down debt, begin investing, buy a home or start a family. The cost of living in San Francisco, for example, is 83% higher than the national average, according to Sperling’s Best Places. New York is 65% above the average.

    In other words, the hype and romance surrounding these cities may not be worth the cost.

    Begin life’s journey off the beaten path, however, and you could live more comfortably and get your finances on track much more easily. That’s not to say you have to live in Mayberry. There are plenty of cities nationwide with a low cost of living, a booming job market and plenty of entertainment options. (We identify our favorites a little later and show you how to find a good match.)

    And you don’t have to make a long-term commitment, either. Three to five years may be all it takes to pay off your student loans, jump-start your savings and build the foundation to your career.

    Your starter city may even allow you to buy a home and build up equity, making it easier for you to buy a place in your dream location when you’re ready to move. But be warned: You may enjoy the lifestyle of your starter city — and the money you save — so much that you may not want to leave.

    It didn’t take long for Jeremy and me to learn firsthand that the San Francisco Bay Area wasn’t the friendliest place for cash-strapped young adults trying to get ahead financially. The median home price, for example, is nearly $850,000. (The national median home price is $223,800.)

    A 20% down payment would have cost $170,000. And even if we won the lottery and could scrape that money together, our monthly payment would still have been about $4,300, or $51,600 a year (considering a 30-year fixed-rate mortgage at 6.5%). And that doesn’t include the cost of property taxes, insurance and other extras that come with homeownership.

    Sure, with a higher cost of living comes a higher salary. But your extra pay may hardly keep pace with your expenses. For example, an entry-level accountant in San Francisco makes about $47,900 a year, according to the experts at In Austin, Texas, he’d make about $37,800 to start. That’s 21% less than his West Coast counterpart. However, housing prices in Austin are about 79% lower than in San Francisco, and the overall cost of living there is nearly half. So even on $10,000 less, he’s able to live much more comfortably.

    Favorite cities for young adults

    Kiplinger researched the best cities in the U.S. and came up with picks for different stages in life, from young singles to retirees. We looked at affordability, income growth, diversity and the so-called creative class — how many scientists, engineers, architects, educators, writers, artists and entertainers call that place home. For singles, we also looked for places with plenty of things to do. For young families, we also looked at crime rates.

    The top cities for young professionals:

    * Washington, D.C.

    * Denver

    * Austin, Texas

    * Raleigh, N.C.

    * Lexington, Ky.

    The top cities for young families:

    * Atlanta

    * Minneapolis/St. Paul

    * Des Moines, Iowa

    * Provo, Utah

    * Green Bay, Wis.

    Get more information on our criteria, and the crucial cost-of-living stats for each city in our Best Cities for Young Singles and Best Cities for Married With Kids slide shows.

    Make a plan

    As for my husband and me, we don’t plan to stay forever in Baltimore — probably five years tops. We figure that’s long enough to get our finances on the right track. In fact, we’ve been here only two months and we’ve already boosted our savings with the money we’re saving on rent — and we just bought a house.

    So far, we’re already on a better financial path and living a more-comfortable lifestyle.

    I know the decision to move may not be easy. Many young adults choose their addresses to be near friends and family or because they received dream job offers. I’m not saying that everyone should cut all ties and run. But if it makes sense for your personal situation, a short-term relocation could pay off big.

    It boils down to this: You can choose to scrape by in certain metropolitan areas, or you can build a financial foundation in an affordable starter city. If you can help it, don’t let your address stand between you and your goals.

    This article was reported and written by Erin Burt for Kiplinger’s Personal Finance Magazine.

    Published Oct. 18, 2007

  84. 3b says:

    #77 anotherone: You see that is the problem when purchasing a house, as much emotion as possible should be left out of the decesion (I konw, not always easy).

    However that being said, a big reason that people “love” their houses is the belief that the value will go up, or at least not go down.

    In addition their is the approval factor from family and friends, such as Oh you guys got such a great deal, or you say Oh My God, we are lucky we bought now, as if we did not we would be priced out forever, it is huge ego booster for a lot of people.

    It is my belief that if you have bought recently and now find out, that the house you “love” is worth 50 or 100K less, than that love may very well turn to hate.

  85. Jamey says:

    re: 7

    Good idea, Homer! NJ’s face would look much nicer after it cuts off it’s own nose.

    re: others:
    Sales tax v. property tax: At least I can make a consciouschoice to consume less. Rising taxes on a house? Notsomuch.
    Wife’s from P’gh. Amazing what the dollar can do for you there. Beautiful stone homes in great neighborhoods (with outstanding schools, e.g., Mount Lebanon) for under $300k; a three-floor townhouse rental in the Schenley Park section (near Pitt and CMU for $1200. $2 Rolling Rocks at any decent watering hole. It’s nuts! Consumer prices are comparable to N NJ, with gas and the typical market basket costing slightly more — much more for gas. But taxes are lower. P’gh DOES have a great regional culture — pro sports, well-endowed, world-class universities and hospitals, an AMAZING childrens museum, gigantic hoagies topped with fries and coleslaw, and so on. The jobs situation there, alas, isn’t that great — lots of service sector colossi like PPG constantly outsourcing and downsizing; reductions in home construction and renovation will essentially kill job growth.

    But, yeah, $85k/annum in Pittsburgh would go a lot further than, say, $120k in Summit. But, come on, it’s Pittsburgh. Besides, it’s too far from the ocean.

  86. 3b says:

    #70 kettle: People are horrified when others say we need a recession (which I believe we have just entered), but unfortunatley it is true.

    Anytime theri is recklessness in an econony, or out of contorl booms, than busts (recessions) have to follow, it is that simple.

    I find it far more horrifying that so many people over the last few years have been been on a debt binge, and even more horrifying its been encouraged, by those who allegedly should know better.

  87. anotherone says:

    3b (85):

    It just doesn’t make any sense to leave emotion out of it. Who would say that you should leave emotion out of your choice of clothes, car or vacation locale? Your house is your most expensive possession and you need to love it. I think the point you might be making is that the stakes are so high that finding out you over-paid can really offset that emotion. Agreed. That just counsels being sure that you know how much you overpaid in the first place because you loved the house, so that you are fully informed on your decision.

  88. 3b says:

    #66 according to GDP economy is strong. Yes, but those numbers ar old a lot has happened since the summer, which contains the bulk of those gains.

    It is doubtful in my mind that kind of performance can be repeated in the future.

  89. TJ says:


    I hear you!

  90. 3b says:

    #64 I am going with a 1/4, with an outside chance they do nothing.

  91. 3b says:

    #88 anotherone: I have no problem with loving a house per se. I do belive that people can make the wrong decesions based ont his love.

    It is one thing to buy a coat, only to find out that if you waited a week you could have gotten it $50 cheaper.

    Difficult as it may be, ido belive financial decesions are best made with as little emotion as possible, beccause at the end of the day it is 4 walls and a roof.

    Make the right financial decesion first if you will, fall in love with it later.

  92. grim says:

    Yeah, I’ve heard folks try to justify running up tens of thousands of dollars in credit card using “emotion” as the excuse too.

    I had to have it. No, no, I NEEDED to have it. No, wait, I DESERVED it!

    Nothing more apple pie than emotion-driven consumer purchases.

  93. kettle1 says:

    #88 anotherone

    This is not meant to be condescending, but the difference between the rich and the poor often comes down to emotion. I dont care how smart someone is; if you make decisions based on emotion (financial decisions) you will lose 90% of the time. A home is probably the single largest financial transaction the average person will ever undertake and as we are now seeing, this transaction can destroy you financially if you make poor choices. I would love to build a nice little 5000 SQFT custom home on 10 acres, and i absolutely know that i would be starry-eyed over the place after building it. However if the only way i can pay for it is with funny money loans and by using up any financial reserves that i may have, then i have made a very poor decision. When the bank comes knocking on the door for the keys or for a check i will still love the house, even as they kick me out…..

    on the other hand, a home is what you make of it. In the current market i have decided that i cannot afford to buy what i want for my family, so we rent. i want the picture perfect home just like anyone else. the difference is that i am not willing to compromise my financial security just so i feel all warm and fuzzy every time i look at my house.

    People who suggest that emotion should be part of a home purchase as simply consumers, not a “buyer”. a “buyer” looks at the product they would like to purchase and evaluates how it fulfills their current/future needs and at what opportunity costs. Remember, the emotional buyer almost always looses.

  94. anotherone says:

    3b (92) –

    The point is that buying a house is not just a financial decision. Most people, with less of a financial bent than this group, would never think of their house as 4 walls and a roof. You don’t fall in love with it later, just like you don’t fall in love with the 80 year-old bag you marry for money. As long as you are buying within your means and not relying on housing appreciation as a significant element in your savings plan, a financial loss is bearable. Finance is not the end-all-be-all, this is your home, your sanctuary.

    BTW, we are talking about relatively small percentage differences in houses compared to clothing markdowns. With modestly priced houses, I would think that even in a bad market 20% nominal devaluation is close to an outside number. Few people think you might be able to by the same house at 1/2 price in a year or two.

  95. kettle1 says:

    #95 another one
    a financial loss is bearable. Finance is not the end-all-be-all, this is your home, your sanctuary.

    This is how you make clott very very wealthy

  96. Mojo Jojo says:

    In doing calculations regarding what price of house is affordable, has anyone taken into account AMT and the possibilty of losing your mortgage deduction based on AMT calculations? It appears there is no way to determine if AMT will take a bite short of doing your taxes and the AMT calculations and finding out firsthand. Does anyone know a shortcut?

    I see that Congress is planning a patch for AMT this year and possibly a larger fix next year. AMT could certainly provide a nasty surprise to unsuspecting home buyers.

  97. kettle1 says:

    #95 anotherone

    I would think that even in a bad market 20% nominal devaluation is close to an outside number. Few people think you might be able to by the same house at 1/2 price in a year or two.

    Few people are actually aware of what is going on in the housing and financial markets. few people take the time to find information on their own and depend on the MSM (hahaha). a 20% decrease will be conservative at the bottom of the drop

  98. kettle1 says:

    #95 anotherone

    I would think that even in a bad market 20% nominal devaluation is close to an outside number. Few people think you might be able to by the same house at 1/2 price in a year or two.

    Few people are actually aware of what is going on in the housing and financial markets. few people take the time to find information on their own and depend on the MSM (hahaha). a 20% decrease will be conservative at the bottom of the drop.

  99. grim says:


    Nice pitch, you use that one often? I’d suggest changing your wording a bit, though. Don’t use words like “financial loss” with clients, just pussyfoot around the concept. Focus on those intangible benefits of homeownership. I don’t have kids, but I’ll usually keep some kids toys in the back of the car when I talk with clients. If a husband is involved, a baseball bat or a football is a must. I’ll usually wait out front of the property tossing the ball. Then, throughout the conversation, I’ll drop hints about about going home to toss the ol’ pigskin around with by son (I don’t have a son, but that doesn’t really matter). If that doesn’t get those sucker renters hooked, nothing will.

  100. kettle1 says:


    Just as everyone else has at one point or another, i have made my emotional purchases…. There was that shiny new car, and perhaps a few to many lap dances that one night….. and in hindsight they were all a waste, the emotional warm and fuzzy was not worth the longterm (as it may relate) financial hit. The point being that failure is fate offering you a chance to learn.

  101. kettle1 says:

    and really, the lap dances were not worth that kind of money, i might as well have paid for the real thing, would have been MUCH cheaper (i.e i no longer drink tequila)

  102. Rich In NNJ says:

    SLD 495 ALPINE TER $750,000 7/27/2005

    ACT* 495 ALPINE TER $749,000 10/30/2007

    Think they got asking…

  103. 3b says:

    #95 anotheone: I am not disagreeing with you, simply offering my beliefs, an statting that people make the worng financial decesions based on emotion, and that is where many get into trouble.

    ” If I do not get this house I will die”.

    You emntion that if people buy within their menas then its fine, I agree, however one must ask ho amny bought within therir menas over the last few years.

    Why would any one resort to suicide loans when 30 yr FRM[‘s had a 5 handle?

    Becasue they loved the house, and the suicide loan was they only way they could get that house?

    Again even if people have the means and can bear the loss, they are not going to like it.

    I can gurantee that 99% of people ( I offer no sources, simply my belief in human nature), do not go into the purchase of a hosue with the idea that they could loose money.

    Again I do understand that buying a house without emotion involved is no easy feat. However first and foremost it should be a financial decesion.

  104. Rich In NNJ says:

    So that’s why you have the toys in the car. Whew.

  105. anotherone says:

    Despite what my posts may lead you to believe, I am just a potential home purchaser looking to get a house now (against my financial judgment) for a number of personal/family reasons. To some extent, I may just be trying to convince myself that the haircut my home will take after a buy it is not that important in the big picture.

    I am looking to limit my exposure a bit by buying a house about 60% of what I can afford and moving in 5-10 years.

  106. gary says:

    Rich 105


  107. 3b says:

    #103 Richie: A refresher please, does ACT mean attorney review?

  108. Rich In NNJ says:

    ACT*-Attorney Review
    ARR-Attorney Review

  109. 3b says:

    #106 anotherone: well i will give you my own personal experience.

    I bought my first house at the peak of the housing bubble in 1987, I sold it 10 years later, for $2,500 less than I paid for it, and that is not counting the improvements made on it.

    The difference then was a 20% down paymt (not bad for a guy just out of college if I say so myself) and actually qualifying for the mortgage was required,a nd no suicide loans.

    I think this time around is going to maket he last real estate bubble collapse look like a non-event.

  110. grim says:

    I’ll say one more thing on this, and I’m done. Too many people are emotionally attached to the concept of owning a home. Scratch that, too many are in love with the concept of owning a home.

    They aren’t in love with any particular home, and will usually fall in love with just about any decent house they see. They’ll sit around fantasizing about some 50’s-sitcom lifestyle that will never exist in reality.

    I see it all the time, fancy kitchens are a great example. “Oh, if I had a kitchen like this, I’d cook ALL the time,” is one I hear pretty often. It never happens. You see similar things happen with fancy backyard setups and swimming pools.

    When you propose to these kinds of folks that the rent an equivalent house, and I really mean equivalent house, the fantasy surprisingly ends. It just doesn’t conjure up the same level of fantasy and imagination. Surprising, since there is essentially no difference in the two scenarios.

    Falling in love with the idea is dangerous, especially if you fall in love with an idea that you can’t financially afford. “We’ll stretch,” they tell themselves. Just eat at home more often, fewer vacations. “It’ll all be worth it!”

    Until the day the furnace goes, or the toilet overflows, or the roof leaks. It gets a little worse when they can’t get that new car, new toy, or vacation. Or when they realize that they actually have to eat out less. God forbid they leveraged their life savings with a risky loan to get here.

    Reality sucks when the hangover sets in the morning after.

    I don’t have a problem with emotion being part of the buying process, but you’ve got to temper that emotion with a rational financial perspective.

  111. chicagofinance says:

    kettle1 Says:
    October 31st, 2007 at 1:48 pm
    Disclaimer:Just as everyone else has at one point or another, i have made my emotional purchases….

    December 2005, Depeche Mode first night at MSG…..I StubHubbed third row tix…….oh yeah……

  112. 3b says:

    Thanks Rich, would be a little easier if attorney review was ATR.

  113. 3b says:

    #111 grim: Exactly.

  114. gary says:

    grim 111,

    That might be one of the best posts I’ve ever read on this blog.

  115. anotherone says:


    I guess my hope is that we are already 18+ mos past the peak and I hope i won’t repeat your 80s-90s experience, though your story is sobering.

  116. chicagofinance says:

    FED goes 25 bps…

  117. grim says:

    25bps cut.

  118. syncmaster says:

    we are already 18+ mos past the peak

    I know that’s conventional wisdom but in my neighborhood we’re over 2 years past peak. Prices in the townhome/condo complex I live in (in Pway) peaked in the summer of ’05.

    I suspect there may be quite a few locales that peaked either before or after 2006.

  119. syncmaster says:

    Hmm a 3.9% increase in 3Q GDP and he felt the need to cut rates?

  120. make money says:

    Growth likely to slow as housing correction intensifies, FOMC says

    So much for the housing bottom.

  121. SG says:

    RE is in for a long slump, no doubt about it. Here is just another thought, why.

    Generally for most commodities, when prices go up, the demand reduces. While RE is opposite, when prices go up, more people want to get up on bandwagon and demand increases. Years from 2000 to 2005 are case in point.

    Now the question simply is what happens when people see prices going down? In other cases, the demand should have picked up, right. But again RE works in opposite manner. As prices are going down, the Demand will pretty much dry.

    Sellers should understand this difference of RE and price accordingly, or will be waiting forever.

  122. anotherone says:

    Different topic: I know that is a pretty brutish, rough attempt to assess home values based on very little information, but do you have a general feeling about whether the prices tend to be low or high (excluding the unusually properties w/ either great detail/charm or upgrades/additions)?

  123. Justin says:

    “Now the question simply is what happens when people see prices going down? In other cases, the demand should have picked up, right. But again RE works in opposite manner. As prices are going down, the Demand will pretty much dry.”

    I don’t know how true that is, I hear people at work talking about buying now because prices are down and so are rates.

  124. Stu says:

    Crude up to 94.25!!!

  125. make money says:

    In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 5 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Richmond, Atlanta, Chicago, St. Louis, and San Francisco.

    They have cut the rate at the window also? It’s funny no one is mentioning this.

  126. njrebear says:

    How many have used the window so far?

  127. Aaron says:

    I wonder if the value of the dollar is calculated into the GDP? If not the dollar slid more than 3.9%, so yes, we are in a recession.

  128. SG says:

    Justin: I don’t know how true that is, I hear people at work talking about buying now because prices are down and so are rates.

    There may be few, but Grim has consistently put data that shows demand going down by significant margin since 2005. IMO those are immature buyers, like the one John talks about 20 something, having gotten WS job and thinking they know it all, while in reality they have only seen boom time.

    I am sure many are looking, the question is will they make an offer. In Boom time, people did not have time to think because otherwise the house would be gone. At present, there is so much choice, one would say why rush? The number of houses on GSMLS is more then 35K, while I need only 1.

  129. grim says:


    Standard procedure, it would have been news if they didn’t. The discount rate typically floats at 100bps above the overnight rate.

  130. gary says:

    I’m still looking for someone to answer this question:

    Cutting the FED rates got us into this mess so cutting the FED rates will __________.

  131. pretorius says:

    Hehehe 39,

    “A sign of things to come as the market worsens: condo projects switching to rentals??”

    Absolutely yes. A couple of big projects have already gone rental (Cliffs Lofts, Velocity) and many more will do the same.

    A spectacular amount of condo overbuilding is happening in Jersey City right now, as developers continue to come out of the ground with foolish projects. These bullish developers will eventually turn bearish, especially when their lenders force them to climb down and rent their fancy projects. I think the only condo developer in that market with any discipline is Lefrak.

    In addition, many condo speculators and small-time condo developers are desperately looking for renters today across Hudson County. Their failed investments are slowly devouring their net worths. Eventually, they’ll give up and sell, and take the net worth hit all at once. They’re not ready to this yet, though. Apparently, these guys are betting on a 2008 rebound to stop the bleeding – when I offer to steal buy their condos, they always say no.

  132. Rich In NNJ says:

    …will have no effect on housing.

    Or is it affect?

  133. Pat says:

    Effect with an “E” makes change in me.
    Affect with an “A” makes an *ss of me.

  134. Pat says:

    or something like that.

  135. kettle1 says:

    Cutting the FED rates got us into this mess so cutting the FED rates will __________.

    devalue the dollar, continue to bail out the banks and ensure cushy parachutes for the FED members

  136. dreamtheaterr says:

    The rate cut has almost no frickin impact on the consumer…as in rescue those in a hole.

    I don’t expect my credit card rate to tick a pathetic 25 bps lower. Nor is a 25 bps reduction in my auto loan rate going to get me car shopping. And it definitely isn’t going to get me to fritter away my weekend looking at open houses.

  137. Hehehe says:

    Cutting the FED rates got us into this mess so cutting the FED rates will __________.

    Make people say nice things about you on tv.

  138. Pat says:

    SG 122. What you’re describing is the leverage effect.

    Any good with high amounts of leverage typical will see demand fall through the floor in periods of dropping prices.

  139. Zack says:

    Talking about emotional decisions and regrets, buying my shining flatscreen TV in 2002 for 6K $$ has left me 5 years later with a dusty little piece of TV worth only $500 and a missed opportunity to invest the $6K generally in the stock market compunding my loss. What a waste and I have learnt since then never to buy anything emotionally or out of impulse.

  140. Jamey says:

    Help is on the way for beleaguered homesellers:

    Only question is, will this precipitate the coming civil war between GOP freemarketers and the Religious Right?

  141. Stu says:

    Cutting the rate will allow our exports to sell better. That is truly the only benefit. Do you think the Bushes and Clinton’s cared about us? We’ll just keep getting the crumbs and will be happy for it.

  142. pretorius says:

    Cutting the FED rates got us into this mess so cutting the FED rates will __________.

    enable investors to earn higher levered IRRs.

  143. RentinginNJ says:

    January 31 FOMC Statement
    “some tentative signs of stabilization have appeared in the housing market”

    August 7 FOMC Statement
    “the housing correction is ongoing”

    October 31 FOMC Statement
    “reflecting the intensification of the housing correction”

    Notice the Feds view of housing has shifted from stabilization to an ongoing correction and now to an intensifying correction

  144. BB says:

    A little OT, but I heard today that Hoboken Floors in will be belly up by 11/29.

  145. RentinginNJ says:

    The Committee judges that, after this action, the upside risks to inflation roughly balance the downside risks to growth

    I take this to mean that barring any major shifts to the upside or downside, the Fed is done lowering rates.

  146. 3b says:

    #116 anotherone: Please keep in mind last tiem around we were in a holding pattern after the boom if you will.

    Much like we are seeing today.

    The party was clearly over, buyers were scarce, yet sellers refused to admit the music had stopped.

    I do not believe we will see the significamt price decliness this time around until 08/09.

  147. Rich In NNJ says:

    From the Wall Street Journal (may have already been posted):

    When It Takes a Miracle To Sell Your House

    Owners, Realtors Bury Statues Of St. Joseph to Attract Buyers; Don’t Forget to Dig Him Up

    Cari Luna is Jewish by heritage and Buddhist by religion. She meditates regularly. Yet when she and her husband put their Brooklyn, N.Y., house on the market this year and offers kept falling through, Ms. Luna turned to an unlikely source for help: St. Joseph.

    More at the link above, Rich

    Nice one Pat!

  148. njrebear says:

    Dec. gold up $12.80 at $800.60 an ounce on Nymex

  149. kettle1 says:

    #142 Jamey

    So, lets assume that we all believe in religion and that religion is Christianity. Your telling me that GOD (in proxy by way of his saint)is invoked in such a manner where you gain access to his unlimited knowledge and power in such a way as to allow you to sell your house. And all of this becasue you buried an “Idol” in your garden. hmmmmmm i seem to remember something along the lines of…

    “You shall have no other gods before me. You shall not make for yourself a graven image, or any likeness of anything that is in heaven above, or that is in the earth beneath, or that is in the water under the earth; you shall not bow down to them or serve them; for I the Lord your God am a jealous God, visiting the iniquity of the fathers upon the children to the third and the fourth generation of those who hate me, but showing steadfast love to thousands of those who love me and keep my commandments.” (RSV Exodus 20:3-6)

  150. BC Bob says:

    You can continue to cut, increase the money supply, support equities through injections of money into the PPT and bail out the IB’s. How does that help mom and pop with their debts? How does that help them pay for rising healt care premiums, real estate taxes, tuitions, home repairs, groceries, etc..

    When the Master Architect’s decided to devalue over the past years, they have raised the cost of living for all. The con game continues.

  151. Hehehe says:

    Interesting reading, turns out the taxpayers ARE the mortgage loan lenders of last resort:

  152. John says:

    Depeche Mode

    True story it is “fast forward” in French, when band started out they were high as a kite in France and they took the name from the tape player they were using. They just thought it looked cool.

  153. MJ says:

    Dow is having fun trying to figure out if any more rate cuts left..

  154. jmacdaddio says:

    Regarding John (63)’s comments…

    Finance in NYC isn’t a guaranteed path to riches. For every junior banker pulling in 90k two years out of undergrad, there’s dozens of guys making cold call sales desperate to pass the Series 7. Big paychecks are needed in places like NYC, SF, DC, etc. just to stay on the treadmill. I’d rather make 50k in a starter city and have a few hundred left at the end of the month than make 90k in NYC and end up building a credit card balance just to keep pace. With NYC costs the way they are, you can answer a craigslist ad and bunk up with seven others and still have nothing left at the end of the month.

  155. John says:

    Actually the only real christian religion, believe in saints. The other kooky christian religions don’t. So if you are a Jehova, Christian Scientist or some born again nut the least of your problems in burying a 99 cent statue in your fron lawn.

    By the way Jesus thought John the Baptist was an even cooler dude then he was. Heck he invented the Baptism while Jesus was out carving wood with his Dad.

    kettle1 Says:
    October 31st, 2007 at 3:04 pm
    #142 Jamey

    So, lets assume that we all believe in religion and that religion is Christianity. Your telling me that GOD (in proxy by way of his saint)is invoked in such a manner where you gain access to his unlimited knowledge and power in such a way as to allow you to sell your house. And all of this becasue you buried an “Idol” in your garden. hmmmmmm i seem to remember something along the lines of…

  156. x-underwriter says:

    John Says:
    it is “fast forward” in French

    Thanks, I’ve always wondered what that meant

  157. BC Bob says:


    How right you are. In addition to this, does one assume that every college graduate wants to work on WS?

  158. kettle1 says:

    John 157,

    Religion and i have mutual disdain for each other, i was just being contrary

  159. ADA says:

    #97 Mojo Jojo

    You still get the mortgage interest deduction even if you are subject to AMT.

  160. John says:

    Re 156, who is talking junior bankers? I am talking run of the mill kids who start in Finance, Accounting etc and go to night school for their MBA and get VP of some cost center. Heck they can make 140K in their 30’s and if they are attached to a profit center another 50 to 70% in bonus which is around 200K. That still gives them around 120K more than the sticks which makes up for the high price of things. Plus their 401K, SS and Pension (if any) is based on salary so they will do much better at 65 than you will.

  161. x-underwriter says:

    jmacdaddio Says:
    I’d rather make 50k in a starter city and have a few hundred left at the end of the month than make 90k in NYC and end up building a credit card balance just to keep pace.

    Have a 100 hour high stress job in NYC and live in middle class home with 3 hours spent commuting.

    Have 40 hour week middle management job in “starter” city and live in upper middle class home 20 minutes from work.

    At the end of the day, is the NYC option really a better route?

  162. 3b says:

    #155 MK: I think the Fed’s statement pretty much says they arre doen for now (meaning nothing in December).

    Shall we start focusing on Jan 30, 2008, when they next meet?

  163. ADA says:

    #163 x-underwriter,

    I think you are ignoring the middle ground. In NYC, I have a 55-65 hour work week and a 40-45 minute commute to work, I think alot of people have similiar situations.

  164. njrebear says:

    When job cuts do happen, how does starter city job loss stack up against NYC?

  165. njrebear says:

    The feds have made a habit of saying something and doing something completely different.

  166. SG says:

    John: Aren’t the guys you mentioned, writing models and giving ratings to MBS’s ???

    I think the guys you are looking for are long gone. The Ivy league clad you talk about is reserved for folks who have no link to life on main street.

  167. skep-tic says:

    The starter city concept does not make sense. It’s difficult to leverage a job in a second tier market into a job in a top tier market down the line. I would never move to a place like Baltimore with the thought that one day I’ll return to NY. You move to a city like Baltimore only if you can deal with being there permanently.

  168. Clotpoll says:

    BC (13)-

    4BR, 2.1 BA split, great condition, 1/2 acre lot, Hillsborough. Close to 500K, slam-dunk, at the ’05 peak.

    Neighbors around us with POS houses not as nice as mine still asking 440K.

  169. Pat says:

    Depeche Mode. Dang. Another bubble of mine is burst. I always thought it was food-related.
    Like apple pie ala mode.

    Finally, a band who values dessert the way I do, I thought.

    Although, they WERE rather thin.

  170. Clotpoll says:

    salt (16)-

    Pray your money market fund doesn’t get tangled up in the commercial paper mess and end up circling the drain…

  171. x-underwriter says:

    ADA Says:
    I think you are ignoring the middle ground. In NYC, I have a 55-65 hour work week and a 40-45 minute commute to work, I think alot of people have similiar situations.

    Those hours are unheard of outside of this area. I know someone who worked in IT for Morgan Stanley some time ago. She took a job out in Silicone Valley and went from working into the wee hours to “it’s 5:00 and surf’s up!!!”

    Besides California, a 55-65 hour job outside of here will get you a much higher lifestyle than your’re probably getting here.

    New York prides itself at being the best but when everyone is that way, it turns into a rat race.

  172. Rich In NNJ says:


    I don’t believe Jamey was telling you anything about GOD, he was posting a link (as did I) to an amusing article that is housing related.


  173. kettle1 says:


    I know, guess i am feeling ornery today. stupid people F’in up my work

  174. BC Bob says:

    “Close to 500K, slam-dunk, at the ‘05 peak.”

    Clot [170],

    Approx 30% off peak.

    When I first posted on this site, I stated 30-40% off peak. Everybody [including the bulls] thought I was a Canadian bird. Who’s loonie now?

  175. John says:

    Nine to five pm in a dead end job in the middle of no-where is a living hell.

    When you are killing time – time is killing you.

    I worked at those places and staring at the clock is horrible. Ten hours of interesting work beats seven house of crap. Plus you are learning nothing all day.

    Plus no-one cares about you. I flew to tons of cities in the midwest when I did consulting and there was a big accounting, auditing or complaince blow-up. My favorite quote was in Milwaukee which had a big problem in their BD Sub, they said get someone from NY as they know their stuff out there.

    Crazy sterotypical stuff but think about it even CEOS in Milwaukee value a NY work ethic. That client was so out there the lady VP took out her knitting needles during a meeting!! Their SRO even told them to hire a NYC based compliance officer to replace the one they fired and they did. So what career track do the locals have their when they do a Wall St Tombstone for the head of jobs and bypass their own.

  176. x-underwriter says:

    “Clotpoll Says:
    October 30th, 2007 at 11:08 pm
    Just put a home I started at 449K in July under contract for 355K.”

    That’s amazing. My cousin lives in Hillsberry…bought a duplex (against my advice) in late 2004 for $389. I wonder how much that place is underwater now.

  177. crossroads says:

    now that the fed cut its 1/4 point does anybody feel housing is more affordable?

    do you think sellers will think they don’t need to cut their prices to sell?

    do you think oil will hit $100 by weeks end?

  178. x-underwriter says:

    John Says:
    Nine to five pm in a dead end job in the middle of no-where is a living hell.

    So John, You’re saying that nobody has a challenging enjoyable job unless it’s in New York?

  179. Aaron says:

    Being home to do homework and play with my kids is rewarding and enjoyable. It’s nice being home at 5.

  180. Clotpoll says:

    BC (177)-

    Only way to sell a house now is beat your competition to the bottom.

    No buyer is gonna pull the trigger, knowing that they’re taking a loss the minute the ink is dry on the closing docs…even if it’s a paper loss and they plan on living there another 10 years. Just too easy not to table the offer and keep waiting out the market.

  181. Clotpoll says:

    I defy any Realtor out there to tell me another way to effect immediate sales in this environment.

    And, the only kind of sale that’s worth jack to today’s “need to go” seller is an immediate one.

  182. Kurt says:

    John – Funny you bring up Milwaukee. I was just given the option to move there for my company (top 100 on Forbes Global). Other option is find another job…
    Other than the winters and distance to the ocean I wasn’t expecting to unearth much bad news until I took a look on RE is indeed cheaper out there, but property taxes most certainly are not! Seems like the whole city was very agressively re-assessed in 2006 – for a SFH or Condo in my range ($~300-325k) I’ll be looking at 5-8k/yr prop tax. Seems pretty steep to me considering I’ll be freezing my nuts off for 3 months every year…
    There are tons of trendy looking condos/converted factory lofts downtown (reminds me of a very mini Chicago the couple times I’ve been), lots of empty 2br/2bth ones languishing in the 325-400k range.
    I’ve found Milwaukeens more down to earth and less crazy drivers than tri-staters, and the homes/loft have more “character” IMO than ones in my range around here, so right now I’m still considering it. Not sure I can deal with a typical 6 weeks without the temp breaking 32 every year…

  183. Clotpoll says:

    Depeche Mode? I’d rather listen to my dog bark.

    Gotta go. I’ve got some apples that need razors. :)

  184. pretorius says:


    I agree with your comments about the advantages of New York City and the superiority of the city’s workforce. I worked for several years among hundreds of middle managers in New Jersey before moving into my current position in New York. The quality and motivation of the people is night and day.

    However I disagree with your view that, “Pittsburgh is actually really nice.”

    Pittsburgh is a failure. The city is shrinking as fast as Buffalo and faster than Cleveland and Detroit. It takes more than a prettified downtown and a few major sports teams to make a city great. People vote with their feet and their wallets, and people are quitting Pittsburgh in droves.

    Like many Midwestern cities, Pittsburgh produces a lot of nerdy kids, but most of them leave. It takes more than smart people to make a successful city. It takes rich people, and Midwestern cities don’t have many of these.

  185. Jay says:

    John Says:
    October 31st, 2007 at 3:25 pm

    Actually the only real christian religion, believe in saints.

    I think this will clear up any controversy once and for all:

  186. BC Bob says:

    “So John, You’re saying that nobody has a challenging enjoyable job unless it’s in New York?”



  187. BC Bob says:

    “No buyer is gonna pull the trigger, knowing that they’re taking a loss the minute the ink is dry on the closing docs”

    Clot [183],

    I stated this awhile ago, joking. The RE industry will come out with gap insurance. Maybe it’s not too far fetched.

  188. chicagofinance says:

    It’s fair to assume that this cut is more about demons yet to come than problems past. The biggest demon of all — weighing in at $10.1 trillion as of June 30 — remains the housing market. –Guy LeBas, Janney Montgomery Scott

    The financial markets have been like a playground bully, sitting on the Fed’s chest waiting for Ben Bernanke to hand over his Halloween candy. Well, today they got their wish… Looking ahead, the Fed adopted a neutral policy bias… This leaves us data-dependent as we approach year end… If the data come in softer in the next couple of months, as we suspect, then the Fed could be cutting interest rates again by the beginning of next year. –Thomas D. Higgins, Payden & Rygel

    Our calendar says today is Halloween but at the FOMC today is Independence Day… In many quarters, today’s funds rate cut was seen as preordained by the financial markets and, had they not cut the funds rate, the FOMC ran the risk of upsetting financial markets already frazzled by this summer’s credit market turmoil… The FOMC made it clear with their post-meeting statement that they, and not the financial markets, will be setting monetary policy from here on out. –Richard Moody, Mission Residential

    The Fed cannot close the door to more rate cuts — they will move if conditions warrant. However, policymakers clearly feel that they have already done a lot in an attempt to “forestall” the potential spillover of the housing slowdown. This should be a wake-up call for those who believe that more bad housing news is the key to more Fed easing. It is not. The Fed is well aware that the housing statistics will show significant further deterioration in coming months — it is the other indicators such as employment, retail sales and capital spending that will be the key drivers of the policy path from here. –Morgan Stanley Research

    This statement has all the subtlety of a sledgehammer. The FOMC has just stated unequivocally that “we think we are done easing.” Whether they are or not remains to be seen, but the message is loud and clear. –Stephen Stanley, RBS Greenwich Capital

    While not yet Mutiny on the Bounty, Tom Hoening’s vote against the additional quarter point cut is airing a growing minority view among central bankers that aggressive cutting of interest rates to rescue an ailing housing market may create even bigger inflation problems down the road. Indeed, oil prices and the U.S. dollar’s behavior of late does not provide much comfort to that dire forecast. While the rate cut from the Fed was largely anticipated by the market, the committee was clearly trying to dissuade the market from expecting more at the upcoming December meeting. –Scott A. Anderson, Wells Fargo Economics

    There was one hawkish dissent which likely represented a small group of dissenters. Further FOMC rate cuts, unless driven by an obvious, compelling economic need, seem unlikely… In our view, economic conditions will deteriorate enough in coming months to prompt a rate cut at the December meeting but, for that forecast to come to fruition, we need to start seeing more concrete signs of economic weakness soon. –Drew Matus, Lehman Brothers

    Higher prices for oil and other commodities has reignited inflation concerns, and the dollar’s plunge is the gorilla in the room that nobody seems to want to mention (probably one of the “other factors” cited in today’s statement)… Looking ahead, if growth slows as much as we believe likely, there will be considerable pressure on the FOMC to ease further. Whether they move again in December is uncertain, but at this stage we do think that the odds favor a bit more easing before this cycle is through. –Joshua Shapiro, MFR, Inc.

  189. SG says:

    On all this talk on Starter Cities, I think its easy to decide.

    If age 60 hrs and work = life then
    Follow John’s advice
    Find job in NYC, Craiglist Apt to Share
    Move to any mid-size city

    BTW: I have found bozos working on WS as well as in Midwest.

  190. BC Bob says:

    “It takes rich people, and Midwestern cities don’t have many of these.”


    Have you ever been to the floor of the CME or CBOT?

  191. MJ says:

    is today a good time to fill up gas..

  192. SG says:

    Those signs did not work.

    If age less than 30 and will work 60 hrs and work is life then
    ___ Follow John’s advice
    ___ Find job in NYC, Craiglist Apt to Share
    ___ Move to any mid-size city

  193. pretorius says:

    BC Bob,

    Was just there a few days ago but was a Saturday. The only people around the CBOT were cops in riot gear so I guess there was a protest going on.

    But yes, I concede that Chicago is a rich city. Michigan Avenue was packed and people were shopping. Nordstrom was the busier than any other store.

  194. BC Bob says:

    Dollar, new lows.

  195. BC Bob says:

    Pre [196],

    I argue with them all the time, on deaf ears. They state that Chicago is the financial capital of the world, not NY. When you look at the volume of business, S&P’s, Euros, 10 Year, Grains, etc.., they may have a point.

  196. lostinny says:

    Depeche Mode means fast fashion- which also happened to be the name of the magazine they took their name from.

  197. pretorius says:

    The only reason why Chicago is still relevant is because it is a legitimate global player in financial services (great in period of globalization when rich get richer) and it has tons of rich people.

    If it wasn’t for the finance industry, Chicago would be like any other Midwestern city – lots of middle managers running big corporations into from their offices in the suburbs, until private equity people from New York step in and fire them.

  198. pretorius says:

    Meant to write “running big corporation into the ground”

  199. pretorius says:

    Why has Fairfield County attracted so many high paying finance jobs (hedge funds, GE Capital, UBS traders) while New Jersey gets mostly back office positions?

  200. Bloodbath in Winter 2007 says:

    wanted to perhaps clear up some of these ‘NYC IS SOOOOOO EXPENSIVE’ myths. have lived in the city and now brooklyn for a total of 4 years come feb. 08.

    1) it is not THAT expensive to live in NYC. you just need to forget about material goods, avoid the lure of going out to dinners, and generally be frugal. it helps to have a smart, hard-working girl by your side who also is not addicted to clothes/shopping. i was doing NYC on 70k a year for two years with no problem

    2) i am not a wall street guy. as i said, im in the media and i freelance on the side and hustled so that i’ll make 100k-105k this year. still, im able to put $500 into a brokeridge account each month, and contribute 15% to 401k and save toward a house. also, i bought a house and flipped it in Florida during this time (only had to put 10% down).

    3) most companies offer pre-tax subway cards. i pay $76 a month for a subway card. that’s a helluva lot cheaper than what a car would cost between payment, gas, insurance, and misc stuff (one trade off is the gym, which i pay $72 a month for)

    4) highly recommend bringing your lunch. most people drop $10 on lunch everyday like it’s nothing. to me, that shit adds up. also should take advantage of free office coffee/tea, or, if you work at bloomberg, all the food and drink and snacks you can handle

    5) all this talk of Wall Street guys making like 200k a year is nuts. within 5 years those guys can stack the chips, move to PA or whatever and live like kings in a nice house and find a job making far less than that.

    6) also, i have curtailed boozing (since no longer single). it is not uncommon to go out thurs and then sat and look at your CC receipts to see you spent $150 partying. drinking is expensive.

    7) also, we’re moving out of the city in the coming months (could be next month, could be june, who knows, we’re not in a rush), and we’re skipping over NJ for PA. one of us will work, the other started a small business and will continue to freelance. wife’s parents, who have lived in NJ forever, are coming with us. NJ taxes their pension … not the case in PA.

  201. chicagofinance says:

    pretorius Says:
    October 31st, 2007 at 5:15 pm
    Why has Fairfield County attracted so many high paying finance jobs (hedge funds, GE Capital, UBS traders) while New Jersey gets mostly back office positions?

    pret: hard to answer that question, but the underpinnings were always that CT had no state income tax. It put Greenwich on the map as the first town over the CT border on the New Haven line. Eventually, many corporations set up corporate headquarters in Stamford and environs. Once the ball got rolling, it didn’t really matter that the state changed the rules. Having the LI Sound means that it is not landlocked.

  202. HEHEHE says:

    BC Bob Says:
    October 31st, 2007 at 4:54 pm
    “No buyer is gonna pull the trigger, knowing that they’re taking a loss the minute the ink is dry on the closing docs”

    Clot [183],

    I stated this awhile ago, joking. The RE industry will come out with gap insurance. Maybe it’s not too far fetched.

    Yeah the RE version of the Super SIV!!

  203. chicagofinance says:

    If you gather a bunch of suburbanites around, there is a pecking order of prestige:
    (1) Coastal CT
    (2) Southern Westchester (better near either water)
    (3) North Shore Nassau (better near water)
    (4) Northwest Suffolk
    (5) Northeast Bergen County
    (6) Northern Bergen County
    everything else

  204. pretorius says:

    Great list, chifi. I agree with it. I might replace 5 or 6 with western Essex County though. Short Hills and Montclair are prestigious and they have tighter links to New York than Bergen County.

  205. chicagofinance says:

    here….rich Wall Street bankers moved to CT and bought munis….

    Prior to 1991, Connecticut had a highly populist income tax system. Income from employment was untaxed, but income from investments was taxed at the highest rate in the United States: 13%. And this burden was further increased by the method of calculation: no deductions were allowed for the cost (for example, interest on borrowing) of producing the investment income. Under Governor Lowell P. Weicker, Jr., an Independent, this was reformed to the present system.

    This system prior to 1991 made it an attractive haven for high-salaried earners fleeing the heavy taxes of New York State, but highly unattractive for members of Wall Street partnerships. It put an enormous burden on Connecticut property tax payers, particularly in the cities with their more extensive municipal services. As a result, the middle class largely fled the urban areas for the suburbs, taking stores and other tax-paying businesses with them, leaving mostly the urban poor in the older, central areas of Connecticut cities.[citation needed]

    With Weicker’s 1991 tax reform, the tax on employment and investment income was equalized at a then-maximum of 4%. Since then, Greenwich, Connecticut, has become the headquarters of choice for a large number of America’s largest hedge funds, and Connecticut income from that industry has soared. Today the income tax rate on Connecticut individuals is divided into two tax brackets of 3% and 5%.[27] All wages of a Connecticut resident are subject to the state’s income tax, even when the resident works outside of the state. However, in those cases, Connecticut income tax must be withheld only to the extent the Connecticut tax exceeds the amount withheld by the other jurisdiction. Since New York state has higher tax rates than Connecticut, this effectively means that Connecticut residents that work in New York state pay no income tax to Connecticut.

  206. BC Bob says:


    Playing that vol? OOPS.

    “SAN FRANCISCO (MarketWatch) – Crude-oil futures closed up $4.15, or 4.6%, at a new record high of $94.53 a barrel on the New York Mercantile Exchange on Wednesday, after U.S. crude inventories dropped surprisingly in the latest week to the lowest in two years and the Federal Open Market Committee cut the fed funds rate by 0.25% to 4.5%. Crude hit an intraday high of $94.79 in electronic trading. The inventory report is “another bullish report for crude oil,”said James Williams, an economist at WTRG Economics, an energy research firm. “Since the Fed cut met expectations this is fairly neutral. The oil stock decline, not the Fed, is ruling today’s market.”

  207. t c m says:

    i was in the gym and on one of the t.v.’s they had oprah on. her guest was suze ormon. it seems most of the people on this site are financially sophisticated enough not to need her very basic advice, but apparently many people could use it, since she is very popular.

    anyway, the subject was how americans are in debt over their heads. there were a few questions from people who couldn’t make their mortgage payment anymore – and one woman said that she couldn’t sell her house either. suze’s advice was clear: lower your price now – enough to sell your house.

    my point is that i don’t know how much more mainstream you can get with that message than suze ormon on oprah.

    i couldn’t watch the whole thing, unfortunately, because my meter was about to run out.

  208. lostinny says:

    tcm 210
    People are still very much in denial. While prices come down a bit in some areas, they are sky high in others. Properties will sit until sellers come back to earth, along with their prices. Suze Orman is great for reaching out to those at the most basic levels. But even she can’t seem to get the message across.

  209. Clotpoll says:

    BC (209)-

    I bet bi picked up some more DUG today. He probably figures buying double-short is like quadrupling down.

    If he actually trades, I’d pay serious money to peek at his brokerage statements. If his trades are graphed, they must look like Rohrschach tests.

  210. Clotpoll says:

    True story: I talked to an educated, sane person today (attorney for biotech company) who told me he has a safety deposit box full of ducats and Krugs.

    He figures when the poop hits the prop, he can launder them- piecemeal- while flying under the radar. Also figures he can use them for barter & payment.

  211. skep-tic says:

    #213– Krug champagne? Sounds like as good a replacement for dollars as any

  212. bi says:

    209#, 212#, do worry. i got it in monday at 38.30 and out 39.55 today after inventory number at 10:30. (i am not smart enough getting out befor that numbe but waiting for another opportunity.)

  213. BC Bob says:

    “I talked to an educated, sane person today”


    I don’t know why one would hold paper?

  214. BC Bob says:

    “When the music’s over, turn out the lights.”

    Jim Morrison, The Doors 1967

    “An increasingly recessionary looking U.S. economy will likely require 1% real short rates and 3½% Fed Funds in order to stabilize a potential growth contraction in lending not witnessed since the early 1970s or, to be honest, Roosevelt’s depressionary 1930s. We can only hope that Bernanke, Paulson, and their cohorts recognize the danger and that the music keeps playing with the lights still turned on.”

    William H. Gross
    Managing Director

  215. bi says:

    206#, in general, you can look at town-by-town in new jersey just by income per capita after removing some outliers.

  216. Frank says:

    All you bears can go into hibernation now, the economy grew at 3.9%, oil is at $90+ but gasoline prices are dropping. Keep wishing for a collapse but things will be just fine.
    Booooooyaaaaaaaaaa U.S. economy!!!

  217. 1987 Condo Buyer says:

    Well, gasoline futures are up about 30 cents froma few weeks ago..increases on the way

  218. 3b says:

    #219 Frank: You are too funny!! I suggest you read the very nice article in the WSJ today regaridng the increase in today’s GDP number that was released.

    To make it simple for you that increase was yesteray’s news, and you will not be seeing that repeated in the 4th quarter.

    And as I type this house price continue to drop,and the dollar continues to drop, but hey its the U.S economy, built on debt, backed by fear. And you are proud of this, very sad.

  219. 3b says:

    #206 chgofinance: You forgot Northern Westchester, as in Chappaqua, Bedford, Pound Ridge North Sakem etc.

    In my opinion much more cachet, then so. Westchester, and certainly more cachet then eastern Bergen, and more of the Wall St crowd.

  220. BC Bob says:

    “Keep wishing for a collapse but things will be just fine.”

    Frank [219],

    Just loking for a collapse in housing. Look at the atrocious results; sales, inventory, starts, permits.

    Economy? The empty containers building up at Port Newark? Cheer BRIC, they are the economy.
    I do agree, things are just fine. That’s if you are in the right sectors.

  221. njpatient says:


  222. njpatient says:

    215 bi
    I only harp on this because you’re a screaming moron, but what was the most recent date that you said oil would fall and this time you really meant it? Three weeks ago at $84?? Don’t make me go look it up and quote it back to you please – that much abject humiliation might be too much even for you.

    So how much did you invest??

    How much did you lose??

  223. John says:

    Nov. 1 (Bloomberg) — Hyundai Motor Co., South Korea’s third-biggest exporter, said the won will extend its rally from a 10-year high, hurting profit at the automaker that sells four out of every five cars overseas.

    A stronger currency means Seoul-based Hyundai will have to increase efforts to reduce costs, Vice Chairman Kim Dong Jin said. Hyundai’s business plan for 2008 assumes the won strengthens to an average 880 per dollar from the 900 level it used this year, Kim said. The won breached 900 yesterday.

    “The currency problem is the No. 1 obstacle, the No. 1 headwind for us,” Kim said in an interview in Seoul. “The currency problem is beyond our control, so the only solution is to lower costs.”

  224. chicagofinance says:

    Anyone hear Barton Biggs on Fast Money?

  225. BC Bob says:



    What the hey, someday bi will be right. Then we’ll hear I told you so. In the meantime, if he/she had been trading their slop, he/she would have already been carried out.

  226. Richie says:

    damnit! my savings rates are going to go down again!

    f u fed!

  227. John says:

    Milwaukee or the mistake by the lake is one interesting town. High re and personal income taxes but low salaries and house prices. Also no crime. However only Northwestern Mutual Insurance , Harley and Miller are the big employers in town. people I was working with at the insurance company for 30 years or so and were only around 51. told hard to switch jobs when there is only one big insurance company in town, you really can’t take that knowledge to Harley or Miller.

    Harley and Miller own the town. You don’t have to wear a Helmut to drive your Hog but your daughter on her pink bike on the sidewalk is required. Plus they have some great outdoor rock concerts by the lake with beer flowing left and right. Summer in only from July 4th to Labor day so for those eight weeks half the town is out at their cabin at the lake and no work gets done. I spent 16 weeks in Milwaukee on a project.

    People leave the keys in the car and wallets on the dashboard which is how safe it is. The Insurance Company had an honor system in the cafe, just throw the money in for what you purchased at breakfast. To top it off lunch was still free at the company cause the founder gave it out in the great depression for free and they are slow to change it back. Good eats.

  228. John says:

    FYI – Everyone I know who makes good money on wall street goes home by sixish. Work life initiatives took over and Gen x won’t work late. Even my goldman buddies don’t work that late. The companies in the surburbs are still pushing that myth that every single person on wall street works 100 hours a week so I can pay you half their salary and still come out ahead. I say work week hours have been dropping since 2003

  229. Pat says:

    bi, you have стойкость. какая досада!

    So, here’s to you, Mr. Piss Everybody off With my Stupid Investment Opinions!

    [I felt the need to put in a good word for kz before you completely blow its reputation.]

  230. njpatient says:

    213 clot

    When the End Times come (tongue halfway in cheek) we’ll want something with genuine intrinsic value. What better than booze (when the End Times come, I’ll certainly be wanting some tipple).
    To that end, my emergency trunk in the basement contains several gallons of water, several gallons of peanut butter, and four cases of Three Buck Chuck (just ask pretorius what the IRR on Three Buck Chuck will be if booze becomes the currency du jour – thru the roof, baby!). If that doesn’t carry us through a crisis, I don’t know what will.

  231. njpatient says:

    “The only reason why Chicago is still relevant is because it is a legitimate global player in financial services (great in period of globalization when rich get richer) and it has tons of rich people.”

    Like NYC? and both have the shipping industry? Except Chitown is a shipping hub for an otherwise landlocked populace that NY can’t ship to? And NY has to compete with Boston, Philly, DC, Baltimore while CHI has to compete with…..Cleveland?
    The financial industry isn’t the only game left in the world, and people still need basic goods.

  232. Clotpoll says:

    Krugs= Kruggerands

    Not Krug Champagne. That would be a nice thing to stash away, though. Swig some Grande Cuvee or Clos le Mesnil straight from the bottle during the end times.

    I’m not facing the mushroom cloud with nothing for the head but 3 Buck Chuck. :)

  233. Pat says:

    Richie, are we going to have another Friday Kaffe Klatsche to lament our Money Market rates?

    I was going to go out and buy a Honda Accord tomorrow.

    At this point, it’s a better inflation fighter.

    I keep cars five years. I think it’ll last five years and retain about half its value. My money market is losing about 6 percent a year adjusted.

    What do you think?

    Honda, Money Market. Honda, Money Market.

    I won’t have to check statements, move money or shop rates.

  234. Clotpoll says:

    Ugh…the only thing worse than the car talk here is Investment Strategies of the Geriatric.

    Next, people will be rating dim sum palaces and early-bird joints.

  235. Pat says:

    Hehehe…you know some of us will do this to piss you off now, right?

  236. Clotpoll says:


    Of course. A whole herd of contrarians here…

    BTW, my favorite dim sum is Silver Palace in Chinatown. Excellent chicken feet!

  237. Pat says:

    Not to mention the fact that you should be glad at least one future house buyer is keeping part of the downpayment safe.

  238. Pat says:

    Oh, and food is a better thing?

    One of my favs

  239. njpatient says:

    I was responding to skep-tic at 214, actually. On the merits, though, I can’t picture the world in which a piece of paper that says “I am a US Dollar” on it is worthless and a piece of paper that says “I am a [name of country] [name of currency]” on it has value. But perhaps I missed the bit in Revelations where it is explained that the End Times will not apply to the rupee or whatever.
    The Three Buck Chuck will be for bartering, you see. I will be chugging the Ridge, Rosenblum, Laphroaig and MacAllan.
    I’ll happily barter between my cellar and yours (given what I gather about your cellar). Bread, butter and gas will be acquired via Chuck trades.

    I’ll be getting my gas from bi. He knows where to get oil for $40/barrel.

  240. njpatient says:

    “Excellent chicken feet!”

    just another dude with a foot fetish…

    Pat – I’ll be “investing” in a Civic in the next couple of weeks. But that’s only because I totalled my Saturn last week.

    Good times…

  241. Pat says:

    Check out the Edmonds discussions. I don’t know if they’re real posters or plants, though, but I got a dealer and a price within the last two weeks that was about $750 lower than what I planned as my opening bid.

  242. Clotpoll says:

    patient (242)-

    The Clos le Mesnil is in my mental cellar…not my actual one.

    If I can sell, say, 47 houses next week, then I can buy a case of Krug.

  243. njpatient says:

    John, if you’re right, then I’m a sucker. I’m working 100 hours/wk and I’m Gen X.

    Then again, those folks are losing their jobs.

    I guess it’s not all bad.

  244. Fencesittingjack says:

    send paulsen a message to keep his slimy hands off the housing market and to let the free markets work just like they did when they went up to absurd levels.

  245. njpatient says:

    Pat – glad you’re still around, because 171 is post of the day.

  246. Pat says:

    Yeah, no bed for me.

    I was ransacking the five-pound bag of candy the little ballerina dragged home.

    I’m a hoppin.

  247. Pat says:

    “I totalled my Saturn.”

    Not to sound like an afterthought, njpatient, but you are O.K.? I mean, if you weren’t, you wouldn’t be hitting the car sharks so soon, right?

  248. njpatient says:

    I’m fine, Pat – thanks. You’d be surprised if you saw my ex-car, tho.

  249. Essex says:

    187….It takes rich people, and Midwestern cities don’t have many of these.


    WINNETKA, IL: Estimated median house/condo value in 2005: $1,159,900 (it was $756,500 in 2000)…Winnetka, Estimated median household income in 2005: $178,500 (it was $167,458 in 2000)…

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