Preliminary October sales and inventory data for Northern New Jersey is in. Please note that this data is subject to revision.
The first graph plots the unadjusted sales data (closed sales) for the counties listed. Please note the lower bound of the graph, it is set to 1000, not to zero. I do this to emphasize the seasonal nature of the Northern NJ market.
(click to enlarge)
The second graph is another view at the sales data for the full year. Please note that this graph does cross at zero.
(click to enlarge)
The third graph displays only October sales, 2000 to 2007 YOY.
(click to enlarge)
The fourth graph displays an overlay of Sales and Inventory from 2003 to 2007.
(click to enlarge)
The last graph displays the year over year change in inventory on a monthly basis.
(click to enlarge)
Has anyone looked at the North/Central NJ part of this Housing Price Correction Calculator yet?
http://tinyurl.com/23bnke
From Reuters:
Citigroup CEO quits, bank may face $11 bln writeoff
Charles Prince resigned on Sunday as chairman and chief executive of Citigroup Inc, as the bank said it may write off $11 billion of subprime mortgage losses, on top of a $6.5 billion write-down last quarter.
Robert Rubin, the former U.S. Treasury Secretary who had chaired Citigroup’s executive committee, was named chairman, while Sir Win Bischoff, who runs Citigroup’s European operations, was named acting chief executive.
Citigroup said it expects to write down $5 billion to $7 billion after taxes — roughly three or four months of profit — for its $55 billion of exposure to U.S. subprime mortgages.
The write-down equals $8 billion to $11 billion before taxes, and may rise if markets worsen, the largest U.S. bank said. Citigroup’s previous $6.5 billion write-down related to subprime mortgages, loan losses and other debt.
Wow.
It looks like we skipped the fall and moved right into February.
You can’t blame the weather either.
Prior to August, the correction had been relatively “orderly”, with the numbers worsening, but not falling off a cliff. The September and October numbers appear to break the “orderly decline” trend.
Are these numbers an anomaly? Or, do they represent the beginning of the next leg down?
Anecdotally, I have noticed a shift over the past couple of months in how housing is discussed in the media. I hear fewer predictions of a quick turnaround (under a year) and less talk of how we are “dancing along the bottom”. Instead, I hear more talk about “housing won’t recover until at least …. “ and talk of the downturn “intensifying”.
Jumbo loans still scarce in high-cost areas
California prices could plunge 35%, costing $2.6 trillion in lost wealth
WASHINGTON (MarketWatch) — Home buyers with the very best credit are still having a difficult time getting mortgages in California, raising concerns that the real estate market in the nation’s most populous state could fall much further, sending home values spiraling lower and toppling the state’s economy into recession.
While most of the attention during the housing slump has been directed at subprime mortgages given to those with weak credit histories, California and other high-cost regions have a different problem: Prime borrowers with excellent credit who’ve used subprime-style gimmicks in combination with jumbo loans to overpay for their homes.
“Until investors have the confidence that when they buy a mortgage-backed security they’re truly getting what is stated in the packaging, the improvement will be very slow and gradual,” said Greg McBride, senior financial analyst at Bankrate.com. “The concerns that mortgage-bond investors have don’t go away overnight.”
Crawford said Alt-A loans are being written at about a third of the pace of six months ago, and subprime originations have plunged 90%.
According to preliminary data from DataQuick Information Systems, the number of jumbo loans written between mid-September and mid-October fell by 43% in four major California counties that relied heavily on jumbo mortgages. And that was after statewide home sales fell by nearly 27% in September compared with August.
In a recent research note, analysts at Goldman Sachs said they believed these loans pushed California home prices to levels 35% to 40% higher than justified by other fundamentals. “We expect home prices to return to normalized levels,” wrote James Fotheringham and his colleagues at Goldman.
If Goldman is right, the typical home-owning household in California has about $200,000 less in home equity than it thought it had. Instead of living in a home that’s worth $589,000, it’s probably worth $380,000.
The high priced areas on NNJ and CNJ are probably not that different compared to CA.
Sales will continue to crash until prices become more affordable.
Bottom line homes will sell at much lower prices.
From the WSJ:
Banks Fear Democrat Bids
To Aid Mortgage Borrowers
By DAMIAN PALETTA
November 5, 2007; Page A6
Some major U.S. banks are concerned an effort by Democrats to help mortgage borrowers avoid foreclosure could lead lawmakers to scale back tough bankruptcy overhauls adopted two years ago, when Republicans were in power.
To help address defaults and foreclosures on subprime mortgages, lawmakers are pushing a bill that would allow bankruptcy judges to rework the terms and conditions of loans. Consumer groups have gotten behind the effort, and caught the ear of some Republicans from districts seeing mortgage problems.
The banking industry said such changes could dry up mortgage funding and make the cost of owning a home more expensive for all borrowers. “The bill will create risk — and the markets will respond to that risk by increasing the interest rate or the down payment that homeowners pay,” said Scott Talbott, senior vice president of the Financial Services Roundtable, an industry group.
Also worrisome for banks is the belief the bill could lead lawmakers to revisit a law intended to prevent borrowers from declaring bankruptcy to wipe out credit-card and other debts that they could afford to pay.
nice declines.
you gotta love it.
sas
From MarketWatch:
Investors brace for more subprime pain from Europe’s banks
European investment banks Monday were roiled by renewed concerns over how much more pain the subprime and credit crises will cause after U.S. banking giant Citigroup Inc. admitted it will write off up to another $11 billion.
Investors are pulling back and growing very cautious as the problems appear to be spreading rapidly, analysts said. Third-quarter earnings from UBS AG, Deutsche Bank AG, and Credit Suisse Group last week failed to allay worries that most banks took enough in write-downs to put the problems adequately behind them, and many of the banks are seeing their credibility questioned as more and more details seep out, they say.
In Europe, Germany’s Deutsche Bank AG is seen among the hardest hit, despite posting a 31% rise in third-quarter net profit last week and reiterating financial targets. Zurich-based UBS AG, which is wading through the subprime positions of a failed in-house hedge fund, may also be brought “precariously close” to the minimum amount of equity it must hold, ABN Amro analyst Kinner Lakhani said.
“We do believe there is still very large incremental charge-offs in the fourth quarter related to subprime risk in the sector among some European banks,” Morgan Stanley analyst Huw van Steenis wrote in a note to investors.
From Bloomberg:
Paulson’s Focus on Subprime `Excesses’ Shows His Goldman Gorged
Treasury Secretary Henry Paulson says the U.S. is examining the subprime mortgage crisis to ensure that “yesterday’s excesses” aren’t repeated. He could be talking about himself and his former firm, Goldman Sachs Group Inc.
Paulson, 61, doesn’t mention that Goldman still has on the market some $13 billion of almost $37 billion in bonds backed by subprime loans or second mortgages that it created while he was chief executive officer. Those bonds have an average delinquency rate of almost 22 percent, higher than the average of other subprime bonds from the period, according to data compiled by Bloomberg.
Goldman, the most profitable investment bank, was one of 14 primary dealers of U.S. Treasuries who contributed to a three- year binge as $1 trillion of subprime mortgages were packaged and sold to investors. The value of its remaining subprime bonds trails Lehman Brothers Holdings Inc.’s $33 billion, out of $106.8 billion created during Paulson’s years at Goldman, and Morgan Stanley’s $28.8 billion, out of $82.5 billion.
“He should admit to having been involved in creating the problem that we have now,” said Representative Brad Miller, a North Carolina Democrat, who introduced a bill Oct. 22 to make firms packaging subprime mortgages liable for bad loans in some circumstances.
…
Starting in March, Paulson said the damage was “largely contained” and was no risk to the larger economy. When other credit markets began to be affected, he and others began pushing for solutions.
“I can’t help but notice that when middle-class homeowners were losing their homes to foreclosure, he was pretty nonchalant about it,” Miller said of Paulson. “But when Wall Street CEOs start seeing trouble in their absurdly complicated financial instruments built on the mortgages of middle-class homeowners, he feels their pain.”
…
The average delinquency rate for subprime bonds sold from May 1999 through June 2006 is 19.3 percent as of yesterday, according to data compiled by Bloomberg. Among the top 20 issuers that have more than $5 billion outstanding, Goldman’s GSAMP ranks ninth with 21.7 percent for delinquencies of 60 days or more, foreclosures or real estate that has been taken away from borrowers.
That rate is higher than for JPMorgan, with 20.8, and Citigroup, with 19.9 percent, according to data compiled by Bloomberg through October. Goldman’s delinquency rate is lower than the 26.2 percent for bonds in Deutsche Bank AG’s ACE trust, as well as 25.1 percent for Barclays Capital’s SABR and 23.8 percent for Merrill Lynch’s MLMI.
The $915 Billion Bomb in Consumers’ Wallets
by Peter Gumbel
This past summer’s subprime meltdown involved about $900 billion in now-suspect securitized debt, reckless lending, and consumers who buckled under the weight of loans they couldn’t afford. Now another link in the consumer debt chain – credit cards – is starting to show signs of strain. And the fear that the $915 billion in U.S. credit card debt (an uncannily similar figure) may blow up has major financial institutions like Citigroup, American Express, and Bank of America strapping on their Kevlar vests.
First Citigroup, reporting a 57% decline in earnings, cited higher consumer credit costs and said it would put aside $2.24 billion in loan-loss reserves to cover future defaults.
In describing the situation to analysts, CFO Gary Crittenden said Citi’s credit card holders were beginning to increase the balance on their cards or take cash advances on those cards for the first time – behavior that, in his experience (which includes seven years as CFO of American Express), can translate into future trouble. Citi said the change in loan losses was “inherent in the portfolio but not yet visible in delinquencies.”
Then American Express said that it too was seeing “signs of stress” and would boost its loss reserves in its core U.S. card unit by 44%. Capital One, Bank of America, and Washington Mutual all said they are bracing for a 20% or higher increase in credit card losses over the near and medium term.
If there is an international precedent the U.S. should be watching, it’s actually that of the U.K. British consumers are just as overstretched as Americans, but since the real estate market there rose faster and fell earlier, they’re about 18 months ahead in the credit cycle. Since the last quarter of 2005, credit card delinquencies and charge-off rates in Britain have risen as much as 50%, forcing banks to take huge write-offs.
It’s a sign of the times that, according to one survey last month, 6% of British homeowners have been using their credit cards to pay their mortgages. That’s suicidal, of course, given that credit card interest rates are more than double even the heftiest mortgage. Keep your fingers crossed that it’s not a trend that crosses the Atlantic.
Those numbers make me wonder how bad things are going to get this spring. You are likely to have three times the inventory and even less buyers, especially if the Wall Street layoffs pick up, which seems inevitable.
American credit card debt will be next as consumers try to stay afloat & keep their homes.There wiil be some lag time as rates reset, this spring will be bad.I take no joy in this, as some gleefully post, this painful but necessary correction.As I posted chart resets will come back with a vengence 2010-2012 for more pain.Bottom a long way off.
info#2458080 thank you
Mike — damn straight….I wonder was it the same Harvard MBA (joking) who came up with the concept of …. ‘hey, lets charge people who cannot pay their bills…..more….?!’
We’ll see how that business plan works out for those guys….my guess is that those business units are now….in a bind….shall we say.
Jonathan, love them charts!!! They really do “Tell All” about current housing situation. Any idea of what impact will be there for NJ after pending resets? I believe they are due Nov./ Dec.2007.
Don’t forget the Bankruptcy bill the finance/banking industry got passed a couple years ago. It made it much harder for individuals to write of debt in bankruptcy. They knew this was going happen eventually.
Before everybody jumps on me ,most here understand this is a necessary thing and provide info & insight others seem angry & delight in this very bad time in our country.I would like to buy a home at a good price but take no joy in what it will do to others.Look at the big picture its going to be a very sobering good time to buy.
Guys I key slow not to postings 13 or 14 some get touchy when I observe that they seem gleeful about situation.So hence # 15.
mikeinwaiting…schadenfreude is something both sides of a trade can dish out, and something that goes around and comes around.
It’s communication, and it teaches.
SO does Citi go up on the Prince firing or sideways on the fact they have to write down another $11B?
delight in this very bad time in our country
I feel this problem exists across boundaries.
rebear I agree, tend to just look at US.This being said world wide recession or just us.Tough time to invest at a loss where to go with capital,not looking to make a killing 6% would be ok.I play it safe this is my dp on house not my long term play.
Clotpoll Says:
November 4th, 2007 at 11:21 pm
Steve (523)- The only person besides Rubin that could ably interim through the mess at C is Buffett. And, Buffett’s already done his “good citizen” turn at Salomon.
clot: the talking heads are saying that Rubin has to get kicked to the curb. He is part of the wrong-headed thinking team that supported Prince down the rabbit hole.
The #1 guy people seem to want is Thain, successor to Grasso at the NYSE and Goldman alum.
HEHEHE Says:
November 5th, 2007 at 7:41 am
SO does Citi go up on the Prince firing or sideways on the fact they have to write down another $11B?
hehehe: you now have Citi and Merril come clean….regardless of the gyrations here, the more important larger issue is the extent that the other buggers start to feel the stress to “come clean”. The bull$hit-O-meter is weighing-in at a -coupletons-
Wow, Prince gone. This got serious pretty quick for Citi.
Chifi, any thoughts? If I remember correctly you weren’t exactly president of the ‘Chuck
Prince fan club’.
give new meaning to the phrase (duetsche) “Mark-To-Model”
http://www.bloomberg.com/apps/news?pid=20601109&sid=aeNqAOY4dNJE&refer=home
toshiro_mifune Says:
November 5th, 2007 at 8:04 am
This was in the hopper for awhile…already in 2006 people were teed off…and 2007 was the self-proclaimed “no excuses” year. The gutless ol’ boys club there (including Rubin and empty suit Dick Parsons) were completely exposed once Merril sacked O’Neal. I mean at least O’Neal was running a successful company. Dick Parsons? How is he supposed to vote to run off Prince for failing to run a hodgepodge of loosely related companies stuck together with spit-and-glue, when he’s been lying throuhg his beard at Time-Warner for years. You can’t be on record for that level of hypocrisy no matter how much you are getting paid.
Mike [15],
I don’t take delight in it either. However, if you see the muck, right in front of your eyes, you better adjust. You either pile in for the ride, sit out or go the other way. Who the hell wants to be a # in the final statistics?
Stocks Set to Tumble at Open
(WSJ) Stock futures dropped sharply Monday, with financial turbulence back in the news as Citigroup said it would have to write down up to $11 billion more of risky securities than it previously estimated, leading Chief Executive Charles Prince to step down.
About two hours before the start of trading, Dow Jones Industrial Average futures had fallen 104 to 13538. The S&P 500 futures lost 12.3 to 1505.3, and Nasdaq 100 futures dropped 18 to 2205.5. Changes in futures do not always accurately predict early market moves after the opening bell.
Citigroup will be the focus of markets after announcing that Mr. Prince would step down as chairman and CEO. Robert Rubin, the former Treasury secretary, will be come chairman, while Citi’s European head, Win Bischoff, will be interim CEO. Citigroup also said it would have to write down another $8 billion to $11 billion in the value of the $55 billion of subprime-related securities it holds, but insisted it would retain its dividend payment.
Shares of Citigroup, making their Tokyo debut, rallied 5%. But markets and financial stocks elsewhere dropped, in particular in Hong Kong where the Hang Seng dropped 5%. The FTSE 100 slipped 1.3% in London.
Citigroup rivals including Merrill Lynch, Bear Stearns, Credit Suisse and Barclays were all the target of brokerage downgrades on Monday.
Stocks closed Friday on an upbeat note. The Dow industrials gained 27.23 to 13595.10. The S&P 500-stock index added 1.21 points to 1509.65, and the Nasdaq Composite Index advanced 15.55 to 2810.38.
In economic news, the Institute of Supply Management’s nonmanufacturing index is due for release at 10 a.m. Eastern, and there are two speakers from the Federal Reserve due to deliver speeches.
The euro was trading slightly weaker against the dollar, while the dollar declined against the yen. Gold futures fell $3.20 to $805.30 an ounce, and crude-oil futures slipped $1.51 to $94.42 a barrel.
Among stocks to watch, Kraft Foods is close to a deal to sell its Post cereals business to Ralcorp Holdings Inc. for about $2.8 billion, people familiar with the matter said. A sale would be part of Kraft’s push to get rid of slow-growth assets under CEO Irene Rosenfeld.
Ford Motor reached a tentative accord with the United Auto Workers, including a memorandum of understanding to set up an independent health-care trust for retired workers.
Shares of Chinese energy conglomerate PetroChina tripled in value after its trading debut Monday in Shanghai, as it surged past Exxon Mobil to become the world’s most highly valued company by market capitalization.
Real-estate financier Gramercy Capital agreed to buy American Financial Realty Trust, a real-estate investment trust that specializes in properties leased by financial institutions, for about $1.1 billion in cash and stock.
Burger King Holdings’ fiscal first-quarter net income rose 23% amid gains from its longer hours and expanded breakfast menu, as well as tie-ins to the “Simpsons” and “Transformers” movies. Revenue increased 10% to $602 million.
In major market action:
Stocks gained. On the New York Stock Exchange Thursday, 1,507 stocks advanced and 1,720 declined, on composite volume of 1.7 billion shares traded in stocks listed on the exchange.
The dollar was mixed. The euro was at $1.4513 from $1.4437 late Thursday, while the dollar was at 114.84 yen from 114.53 yen.
Bonds gained. The benchmark 10-year note added 6/32, or about $1.875 for every $1,000 invested, yielding 4.326% Friday. The 30-year note advanced 7/32, yielding 4.624%.
mikeinwaiting Says:
Wimp, I hope there is blood freely pouring down the streets of Bergen County. Lets have one or horrific years in RE and get it over. I don’t want a 17 year Japanese real estate horror show.
November 5th, 2007 at 7:09 am
Before everybody jumps on me ,most here understand this is a necessary thing and provide info & insight others seem angry & delight in this very bad time in our country.I would like to buy a home at a good price but take no joy in what it will do to others.Look at the big picture its going to be a very sobering good time to buy.
JB,
As ususal, thanks for the charts. Too bad BIA wasn’t around. I would live to hear his
interpretation. The bulls have nothing to fear, the Super Bowl is approx 90 days away.
All of you are so unpatriotic!!
You communists!!!
You are so un-american!!!
#30
Richie….its called capitalism……..
Contracts spreadsheet has been updated for GSMLS and NJMLS:
https://njrereport.com/files/contracts.xls
Some fun with contracts/sales correlations..
https://njrereport.com/files/morris.xls
#32,
YTD contract numbers do not look bad given what has happened in the market. I would expect a lot worse.
YTD doesn’t look terrible because first quarter contracts came in relatively strong, but that strength has since faded. In order to judge the impact of the credit crunch on the market, you should be focusing on the end of Q3 and of course October, but certainly not Q1.
Frank [34],
Good thing you don’t work for a hedge fund as a momentum trader.
I saw this as in yesterday’s Sunday Record, by a Realtor in Oradell, in prestigious Bergen County.
” FACT. According to the the njmls service, 36% of all homes that have sold in Bergen county in 2007, havle sold at higher prices than 2006….So act fast!”
You can trade momentum? What about inertia?
3b Tell me you are making that up, was there a follow up ad about the other 64%?
Wow, middlesex county really went into the toilet in Sep/Oct! I wonder why.
No, wait. I know why.
#39 Ray: NO! Actually I was shocked when I saw this, and could not belive that this realtor would print it, but she did.
Grim, the charts look very pretty. it would be more helpful if you can bucket by the scales: preminum towns, middle-class towns and discount towns since most people here are interested only the first two categories.
http://www.longislandbubble.com/bubblemap.php
This is amazing, can we do it for NJ. This really shows the history how long houses are on market, price cuts and flippers in one map by town.
bi,
Who decides which town is in which bucket?
A few anecdotes I heard this weekend that give us a glimpse into the future of our economy:
1. My friend’s dad owns a convenience store in the Bahamas that caters to tourists. He says business hasn’t been this slow since right after 9/11.
2. My Wall St friends said they have never seen it this bad (granted they started in ’02 after graduation). They also all agree that bonuses this Feb are going to be much smaller.
3. While talking about the state of our economy with one finance friend, he validated that the general public is oblivious and spending like crazy. He said he was in Bloomingdales this weekend and it was packed with people buy, buy, buying.
4. I was at a work event on Sunday and overheard one vendor say to another: “good luck next weekend…” When I asked about it he said his company is laying off a bunch of reps next weekend.
Scary times ahead. Buckle up!
“Grim, the charts look very pretty. it would be more helpful if you can bucket by the scales” [#42]
JB,
It would also be helfpul if you can stand on your head and spit out gold coins.
What I have been hearing from sellers:
That they are convinced there are no buyers out there anyway so why bother lowering prices, they’ll just hang on. Some realtors (not all) are feeding this too.
It may take a while for the reality to actually set in.
JB, I’ll hold your legs.
Who decides which town is in which bucket?
A Westfield bucket and and a lower tier bucket with all other towns.
lisoosh Says:
It may take a while for the reality to actually set in.
Hang in there. I’ve been watching a bunch of properties that just droped by $50,000 in the last month or two.
Right now its a state of confusion because nobody wants to accept that they aren’t going to sell it at that price. Another 8 months of sitting there and watching the news reports and the fog will clear from everyone’s minds
Take this place for instance
Raritan Twp., NJ 08822
MLS ID# 2409768
Price just reduced from $439 to $399…10% reduction.
I’m going to say it’ll be worth $360 in another year, which is in my price range
http://homes.realtor.com/search/listingdetail.aspx?ctid=25877&ncs=74545%2c24739%2c106377%2c28474%2c23832%2c76265%2c8839%2c29269%2c80196&ml=3&mxp=27&bd=4&typ=1&sid=9916a752c300452d86bf6517c97ddfdb&pg=7&lid=1081907074&lsn=63&srcnt=70#Detail
John: This is amazing, can we do it for NJ. This really shows the history how long houses are on market, price cuts and flippers in one map by town.
I actually made a meshup with Google maps with GSMLS. Unfortunately, GSMLS had a link that provided address information, which has been since stopped. If Address information was public, it would be easy to put together the map.
#46 BC Bob: What Bi is saying basically, grudginlgly, is that perhaps, just perhaps, maybe, possibly we will see some price declines, but they will only be in the poor/blus collar towns, and nowhere else.
you just acnnot win, and youc annot argue, after my melt down with pret (my fault), I have just come to that conclusion.
These people will be in absolute complete denial, until the bitter end.
As I have alwasy said, sometimes you just have to have lived through a down turn, to understand,and perhaps to be humbled.
I have nothing but deep respect to those like grim, and others on this site, who although perhaps never having experienced a recession/housing down turn, have a healthy respect and understanding for what has happened before,and understand fully that it can happen again, or should I say is happening again.
Proximity to NYC, and great muuseums and fine dining, do not stop recessions and housing busts.
As we are writing anecdotal stories,
Was at graduation party over the weekend, where met a neighbour who also is realtor. Another friend told him, he was thinking of selling his house. The spin continued,
Town has best schools.
It is holding up good.
More immigrants want to move in.
All you need is just 1 buyer.
Only thing was, he mentioned, pricing right is the key.
Could someone provide me with GSMLS historic listing info on #2447200? Thanks in advance.
#50 X- I’m going to say it’ll be worth $360 in another year, which is in my price range.
I do not think you will haev to wait that long, I would say before the Spring 08 market, perhaps before.
You mean that baklava I had for dessert last night isn’t going to immunize me from a recession? What ever happened to truth in advertising!
SG #53,
It’s still true about immigrants though. I go to these desi parties and everybody wants to own in Monroe, East/South Brunswick, Pway, Edison near Metro Park. What is up with that. I live here and I think it sucks.
357 They may want to live there, but they have to be able to pay the current asking prices, and of course be able to qualify for financing.
anotherone,
Not much history.
Prospect Street
Listed: 09/24/07
OLP/LP: $549,000
DOM: 42
syncmaster Says:
What is up with that. I live here and I think it sucks.
I agree. I grew up in Morris County and now live in P’way. Everything there is just blechh!!!
The immigrants can have it if they want. Middlesex county is an overcrowded dump.
x-underwriter,
The only thing I like about P’way is the location (I’ve never had to drive more than 20 minutes for work) and proximity to good Indian food. I can do without the traffic though.
grim Says:
November 4th, 2007 at 7:33 am
Clot, Two years ago, I was repeatedly told that sellers would not sell at a loss. They would simply keep asking prices high and wait the market out, or they would simply not sell.
Now, a day doesn’t go buy that I can’t pick at least a handful of these out of the hotsheets. I’m not talking about paper losses either, I’m talking about selling prices under purchase prices, the hard-dollar kind of losses.
I saw this trend first start at the upper end of the market. When I posted those listings, I was told that the phenomenon had to do with “rich people” simply not caring. They had so much money that it didn’t matter. But now I’m seeing it bleed down into the lower priced tiers. I’ve pulled the mortgage documents surrounding many of these sales, and have found enough evidence to support both your points, flips that flopped, and mortgages that have become unbearable. Again, two years back I was told that no rational seller would ever sell at a loss. Today, losses have become commonplace. But alas! Losses are “only minor”, can be explained by “short-term ownership in a normal market”, or were because the owner “overpaid”.
I’m still sticking to my original pompous prognostication of 25-30% 2005 pricing in real terms. I’ve not yet seen anything that would cause me to change my position in either direction.
grim: this post from yesterday morning resonated with me….in a sense you are seeing a the clear relativism displayed through the passage of time by RE Bulls in the face of mounting evidence.
If you can identify the spread between the RE Bull case and “reality”, as you see comments made over time, you can recalibrate to a greater anecdotal market read.
As we know, the ones with the greatest feel for the market [RE agents] are loathe to share their insights in an unbiased manner. To the extent that you can recalibrate their comments [excepting clot/KL et al.], you really can draw some meaningful conclusions.
(61) syncmaster
I just found a really good Dim-sum place called Wonder Seafood on route 27 yesterday. Ambiance was like Edison DMV but it was authentic Chinatown stuff.
Ambiance was like Edison DMV
LOL!
Anyone see this on Yahoo?
http://news.yahoo.com/s/uc/20071102/cm_uc_crpbux/op_334275;_ylt=AsyHuVX.ZKYQtDF6JB4p2UcE1vAI
Sinking Currency, Sinking Country
Fri Nov 2, 3:00 AM ET
The euro, worth 83 cents in the early George W. Bush years, is at $1.45.
The British pound is back up over $2, the highest level since the Carter era. The Canadian dollar, which used to be worth 65 cents, is worth more than the U.S. dollar for the first time in half a century.
I usuually go to the Jewish/Japanese joint off the NJT for good eats.
I actually recently ventured into some of the Hispanic places in Bound Brook, they hardly speak any English in lots of those stores, but the rice and chicken is great!
Any info on MLS ID# 3019748? It is being sold “as is”. Thanks!
John Says:
I usuually go to the Jewish/Japanese joint off the NJT for good eats.
What’s the name?
Any info on mls 2440344?
Thanks,
afe
#50 X- I’m going to say it’ll be worth $360 in another year, which is in my price range.
Just make sure the groooovy mirror is included in the sale!
“I usuually go to the Jewish/Japanese joint off the NJT for good eats.”
Judo Bagels?
Mike NJ Says:
Just make sure the groooovy mirror is included in the sale!
I love that every friggin’ room has red curtains and carpet too!!!
#62
There is another similar phenomenon pertaining to the “location location location” mantra. Ultimately, no one disputes that location plays a role, but the battle of meaning has been following a one-way shift.
At one point, it is “Everyone wants to be in U.S.” The concensus seems to be U.S. real estate only goes up. (Because we are not Japan).
Then there is a retreat–maybe not all U.S., only the Mid-West or South will get it because the Rust Belt has real fundamental economic problems. The rest of the U.S. is fine.
Then “Location” becomes a discussion of states: This state has the industry base, that state has
smart people. If you are in the Tri-States, etc, you are fine. That phase quickly passed.
States becomes undefensible–then we have cities and regions. This city will hold up because it is on a communiting line, that county has better schools. Upperville is nice. Location location location.
Now, some houses around Upperville is dropping price. But fear not, “Location” comes to the rescue. THOSE houses are on the wrong side of the town, on the wrong block, near a busy corner, facing the wrong direction naturally deserves a lower price.
People can debate about what makes a location good or bad ad nauseam. However, the field of the definition battle is consistently moving to a narrower and narrower definition of “locality.” The rhetoric shift speaks a clear overall message.
44#, conceptually everybody here understand which town is premium and discount and in between. here is an example:
premium: apline, millburn, westfield, ridgewood, harding, princeton, essex fells, ….
middle class: east brunswick, edison, east handover, montclair, marlboro, middletown,…
discount: newark, trenton, irvington, new brunswick, paterson, …
you may also want to have a seperate category “gold coast”
actually it is easy. you can just bucket it by average income per capita for each town.
374 duckweed AMEN.
S&P has a report out on rising delinquencies in the CMBS sector. Up 16% in the 3rd qtr. largest rise in 3 years,
Uh oh.
Sorry no link folks, if you have Xtra you can find it though.
from CraigsList:
$700000 We Must Sell This House
beautiful 5 bed, 3 floor colonial in excellent location with excellent schools. flat street, wraparound porch, driveway, gagrage. come with you best offer, no reasonable offer turned down, but please no lo balls, nothing that would put us in a position where we owe the bank. photos can be see on the mls. just type in hastings and b/w 800 and 700k. if interested please call….
bi #75,
New Brunswick? Have you seen some of the new condos? They’re pretty expensive.
79#, there are always some exceptions when you do breakdown. if the sample size is big enough, the error will be small.
bi #80,
All I’m saying is NB is in a different category than Irvington and Newark. NB is on the way up. I remember how it looked 10 years ago and I know how it looks now. Big difference.
bi (42)-
The only thing around here in a bucket is your head.
Sales are way down from 2005, but many houses are still selling. I wonder if it is just the overpriced sellers who are the loudest in complaining?
Also, anyone have thoughts on TJ’s post from the weekend? I’m not a finacial guru but it does seem like the Fed is pursuing a private agenda of sneaking in inflation while publicly pretending to fight it. This would reduce the deficit in real dollars and reduce pension obligations (assuming they are tied to the bogus inflation indexes).
“TJ Says:
November 2nd, 2007 at 12:11 pm
At this point in time I think buying a home and acquiring massive amounts of debt was actually a very smart move.
The way I look at it, the load of money I have been saving is going to be worthless.
The load of debt that everyone is holding onto, is going to soon to mean nothing.
Am I wrong about this? Savers loss, debtors win.”
Re 78:
“nothing that would put us in a position where we owe the bank”
Isn’t that THEIR problem and not a buyers?
From Minyanville: Poor Ben
http://www.minyanville.com/articles/bernanke-fed-hobson-housing-banks-DJIA/index/a/14742
bi,
I’ve tried it before. You run into issues where towns straddle those (not quite) logical breakdowns. This makes classification incredibly time consuming.
Take Montclair for example, and only because you listed it. You say that Montclair should be listed as “middle” town. I vehemently disagree. Montclair can’t be simply bucketted into a single clasification, as the town displays a striking disparity between sections.
The areas around Highland, North Mountain, Upper Mountain (Upper Montclair) simply cannot classified along with the Downtown and Southern sections. They are entirely different in terms of housing stock, pricing, demographics, etc.
Ideally, we’d need to split this town across multiple categories. However, in order to do this, every single sale would need to be analyzed in terms of geographic location, etc.
Heard today that Citi’s estimated CDO exposure is around $55 billion.. still room for more writedowns!
The question I’ve had, actually, is more regarding these SIVs. Technically, at least to hear Citi senior execs tell it, they will not bring those $80bil on the balance sheet and they’re not obligated to absorb the losses.
So, why bother with the $100 mil Hospice (copyright 2007 BCB) bailout fund? To avoid SIVs dumping their stuff and driving down prices on the Citi on-balance sheet $55billion?
#84
HEHEHE– yeah, that’s exactly what I thought. I also think the ad is a nice anecdote of the stickiness of prices on the way down– many buyers are reluctant to accept the fact that they may have to do a short sale.
#83 Stan:Sales are way down from 2005, but many houses are still selling.
I would say some houses are selling, but many? Not in the areas I follow.
I am still amazed that here we are in November, and hosues are still coming on the market, something I have not seen in years past, this close to the holidays.
lisoosh (47)-
“…That they are convinced there are no buyers out there anyway so why bother lowering prices, they’ll just hang on. Some realtors (not all) are feeding this too.”
Sellers and agents who buy this line of thinking probably also believe in parthenogenesis and intelligent design.
There’s not a piece of real estate on earth that won’t draw a buyer…as long as it’s positioned and priced right.
#82 clot: Any comments on my #37 post ?
I need a barf bucket.
3b (91)
:-O
x (50)-
You should be able to score that home for about 365K TODAY!
From an article in marketwatch.com regarding C
“The company also said its so-called level 3 assets as of Sept. 30 were $134.84 billion. Level 3 assets are holdings that are so illiquid or trade so infrequently that they have no reliable price, so their valuations are based on management’s best guess.”
I won’t be suprised that these get marked down too in the future.
Sales fall to zero? Won’t ever happen.
x (60)-
Agreed. Middlesex Co sucks. All of it.
86#, i agree with your monclair analysis. some other towns will fall into that also. but if you can have the database as you described, it will be very valuable for youself – i guess you will be doing better than that east brunswick guy.
Anyboy know if Park Ridge is in a flood plain? I know about a decade ago Westwood suffered some real damage. My reason for asking is I actually see on the NJMLS what appear to be two half-way decent colonials in that town for around $500k, one better thant the other, but figured there must be something wrong. They would have been asking high $500’s to mid $600’s only 6 months ago.
The center appears to be dropping out of Bergen county.
#93 clot: :-O ? Translation please?
40#, you don’t have hard data to support your claim. i know east brunswick and south brunswick are doing well; the new developments in monroe even do not consider free-upgrade; forget about reducing price; centreplace in south ediso (condo) sold out all in $450 range for phase I and raising price for phase 2……
#99 Theo: As far as park Ridge, doe not know about the flood plain.
But as far as small town stupidity, it is up there.
A couple of years agao, the town was approached by Pascack Valley Regional HS, and offered the chance to merge theri HS with them.
Pascack has a lot of extra space,a fetr doing a recent addition, and since it is e regional school, more resources, (course offerings sports)
Park Ridge HS has less then 300 kids, this years graduating class was around 60 kids.
Any how the PR Board of Ed, convinced residents that this would be armageddon, and the residents voted it down.
Shock. Shocked, as in, I can’t believe people can say things like this without fear of legal action.
However, they can. It’s a vague, unqualified statement of opinion, and RE/mortgage people make them all the time. All people can do is tend to their homework and be wary.
Ultimately, the puffery now all seems like trying to stop a runaway train with a plywood barricade. This thing is headed one way, and those in my business more resemble the band on the Titanic than legitimate businesspeople.
Theo,
If you have the MLS numbers I can give you more info on those properties.
Rich
#103 clot: I was shocked too, especially considering the Realtor/Broker is in the business a long time,and after an apparetnly sucessful career with a national outfit, opened her own business a couple of years ago.
I would have thought that she would be one of the Realtors in the vanguard of educating sellers that things have changed,and as such they need to price their homes realistically/competitvely.
So if she is employing such nosnense, one can only guess what the newbie Realtors out there are doing.
Rich #104
Thanks #’s 2734952 and 2736726
Hi guys,
How is the KHOV development in rt46 parsippany doing? If anybody has sales info,
please post here.
Thanks
Grim and follow RE Brokers/Agents here on this site,
I am a reader for very long time, thanks to a lot of wise huys who contributed a lot of great thoughts and links……I know it’s bad time to get into RE biz, but still I would ask you guys to give us some advises (couple of mom-workers got cut from job).
To join a RE agency, what is the better choice at this very monent: getting bigger %, or going to bigger named with much less % back to agent? Why?
Thanks in advance!
ML
Clotpoll Says:
You should be able to score that home for about 365K TODAY!
maybe $325 next summer. I’m still holding out until I hear the bottom is near
the inventory in central jersey keeps going down in last 2 weeks:
10/23/2007 2369
11/5/2007 2239
the towns are:
east brunswick
south brunswick
plainsboro
west windsor
cranbury
princeton
montgomery
marlboro
it includes rental properties so you can get a better picture of local real estate market.
Subprime bailouts: Chump check
Responsible loan payers are crying foul about the breaks that delinquent borrowers are getting.
http://money.cnn.com/2007/11/01/real_estate/Countrywide_bail_out_bashers/index.htm?postversion=2007110511
X [111],
I was waiting for the backlash from recent buyers who opted for a fixed rate. Here it comes.
bi,
compare oct 31 with Nov 1.
bi Says:
November 5th, 2007 at 12:27 pm edit
the inventory in central jersey keeps going down in last 2 weeks:
Please don’t repeat this every day from now until February.
Inventory normally goes down this time of year, that isn’t a surprise.
The real question is: Is inventory falling faster or slower than it did last year and the year before?
Why do you think I waste my time graphing the change in the rate of inventory addition/subtraction in the graphs I posted above?
https://njrereport.com/images/oct07_invpace.gif
bi,
re: #101
Is this the place you are referring to about South Edison condos?
http://www.lennar.com/realdeal/#Edison
From what i see they just chopped 40K off the list price for these condos and they are in the 250-285K range.
I don’t get all the hype over Centreplace in Edison. It’s right off Woodbridge Avenue, next to MCC. IOW, high traffic area which attracts a lot of young rash drivers. It’s way too close to Raritan Center, another magnet for high traffic. And of course, a lot of rentals in the area, which means.. we all know what that means.
There’s a reason no one developed housing on that site before.
Theo,
FYI
ACT: Active Listing
PCH: Price Change
ACT*: Active – Under Attorney Review
Here’s the History and Tax info on each listing:
2734952
(Outside 100 & 500 yr floodplains)
ACT 58 N MAPLE AVE $535,000 8/27/2007
PCH 58 N MAPLE AVE $529,000 9/15/2007
PCH 58 N MAPLE AVE $519,000 9/22/2007
PCH 58 N MAPLE AVE $498,500 10/18/2007
Tax Info
$6,062.40
Deed $0 11/21/2002
Mortgage $205,000 11/21/2002
———–
2736726
(Outside 100 & 500 yr floodplains)
ACT 26 N 5TH ST $529,000 9/9/2007
PCH 26 N 5TH ST $509,000 10/7/2007
PCH 26 N 5TH ST $499,000 10/12/2007
ACT* 26 N 5TH ST $499,000 10/18/2007
Tax Info:
$8,404.20
LisPenden $265,000 10/13/2006
Fair Lawn
SLD 8-21 HENDERSON BLVD $542,500 6/16/2006
SLD 8-21 HENDERSON BLVD $525,000 11/2/2007
Interesting listing for those looking in the Hackettstown area.
55 Scenic Court (Brook Hollow)
Purchased: 7/27/2005
Purchase Price: $435,000
Currently listed, MLS# 2418915
OLP: $458,900
Current Price: $424,900
DOM: 137
Active
wow, that one is fair lawn is not even worth 525,000….i cant believe some poor soul actaully paid that much for that house….
that seller lucked out! got out of that mess!
From the AP:
Area home sales plunge; Paterson among hardest hit
Home sales in urban parts of New Jersey, hit hard by the subprime mortgage lending crisis, are reported to have fallen significantly, with Paterson experiencing one of the greatest drops.
The number of urban home sales dropped 34 percent during the first six months of the year as compared to the same time period in 2006, according to a report by the Star-Ledger on Sunday.
“Every upswing has a downswing,” said James Hughes, dean of the Rutgers University, Edward J. Bloustein School of Planning and Public Policy. “And we’re in the downswing.”
…
James Bednar, a residential real estate agent from Clifton who runs the blog New Jersey Real Estate Report, said it may be difficult to pinpoint all the reasons why Paterson and some other cities have seen such a huge drop-off in home sales. Changes in the mortgage market, the affordability of homes and the desirability of certain areas are all possible factors in the decline seen in the housing market.
“No areas have been spared,” Bednar said. “During the boom, there was lots of hope that Paterson would gentrify and see the rebirth that Jersey City and Hoboken saw, but that sort of rebirth never really manifested itself in Paterson.”
To spur the market, officials should look to fostering redevelopment to attract new and younger buyers looking for an urban market, he added.
In June Chuch Prince of Citigroup said “As long as music is playing, you got to get up and dance”. Fast forward 4 months, his head got chopped off while dancing. What a difference 4 months made. I wonder how may sellers are still dancing.
Maybe he’ll be featured in an upcoming episode of Pants Off Dance Off.
This is ripping to shreds by Keith Olberman. He officially owns Rudy Guliani.
I’ve never seen anything like this. It’s very entertaining.
http://www.youtube.com/watch?v=KKM9Zw6xKvo
CAIBC,
It was rebuilt from the foundation up in 2006, but I agree. It’s not ascetically pleasing at all.
I think they reason they “got out” was the tax jump for ~$3k to ~$10k!
Rich
John #28Being a boomer I have lived thru bad times before have you,I don’t think so.There will be blood on the streets and having sold at the top & now renting I will profit from it when I buy.This is business,having a sense of empathy for others is called being a mature man not a wimp.
Can anyone give me info on #2458080 thank you
From MarketWatch:
Subprime woes could get worse before better: Fed’s Kroszner
The rate of deliquencies and foreclosures in the subprime mortgage market could get worse before getting better, said Federal Reserve Governor Randall Kroszner on Monday. “All indications are that housing activity is continuing to weaken,” and therefore house prices are likely to remain sluggish, Kroszner said in a speech to the Consumer Bankers Association. In addition, many of the initial teaser rates of subprime mortgages have yet to expire, and once they do that will boost the monthly minimum payment for many financially strapped homeowners. Anecdotal reports suggest that only a limited number of homeowners have requested loan workouts or modifications, he said. The banking industry should come together and develop subprime loan modifications “to help large groups of borrowers systematically,” Kroszner said.
Bednar picked by the AP!! Well La-Dee-Da!!!
Cool JB AP
You MUST be standing on your head spitting coins.
“Bednar picked by the AP!! Well La-Dee-Da!!!”
That is nothing, BI is a regular contributor to the National Lampoon!
Rich, you’re not eating microwave lasagne and chewing while you type, too, are you?
122#, how can the median price be up slightly when we are seeing housing crash every day here? something must be wrong.
The median sale price for a home was $335,000 across the state. That was $5,000 more than in 2006.
“James Bednar, a residential real estate agent from Clifton who runs the blog New Jersey Real Estate Report”
[122],
And I thought the name was changed to the NJ Vulture Fund Report.
grim (115)-
You can’t reason with an idiot.
mike,
83 Sammis
Purchased: 11/26/2002
Purchase Price: $255,000
MLS# 2264507
List Date: 04/06/06
OLP: $389,900
LP: $379,000
DOM: 405
Withdrawn
MLS# 2458080
List Date: 11/1/2007
OLP/LP: $285,000
DOM: 4
Active
Don’t have any details but I believe it might be a short sale/pre-foreclosure.
AP identifies Grim as part of the REIC:
“James Bednar, a residential real estate agent from Clifton…”
Congratulations…I think.
“You can’t reason with an idiot.”
Sort of like our congress’ dealings with our president, no?
Pat,
Tarzan find it hard to read and type today, drop many letters, very tired, boy up TOO early, make noise like Cheeta
bi Says:
November 5th, 2007 at 1:30 pm edit
122#, how can the median price be up slightly when we are seeing housing crash every day here? something must be wrong.
I’ve been working on a new post over the past week. It’s a look at why simple descriptive statistics can be misleading when the mix of underlying assets shift.
Measures like median and average are poor indicators of appreciation, but because of their simplistic nature, are commonly used. Median and average can be horribly misleading in certain circumstances.
Instead, I propose that the only way to gauge appreciation or depreciation in the face of market turmoil, is a repeat sales measure based on comparable properties. Unfortunately, such a methodology is terribly complicated and time consuming.
#141 grim: And you expect him to undestand this?
AP identifies Grim as part of the REIC
Shh, don’t let the bulls know. It’s more fun when they think I’m anti-RE.
Thanks grim, wife likes that one I’ll keep an eye on it should be priced about 230 to move up here.Hey you made the papers is that good or bad ,well congrads anyway.
bi Says:
November 5th, 2007 at 1:30 pm
122#, how can the median price be up slightly when we are seeing housing crash every day here? something must be wrong.
Bi, say you have 5 houses to sell priced at $199K, 200K, 300K, 400K, 700K. Median is $300K (mid-point).
For arguments sake, say all the houses are flipped the next month except the $199K house because there was no-entry level buyer. Now calculate the median price for the 4 higher priced houses… it just went up $50K.
122#, how can the median price be up slightly when we are seeing housing crash every day here? something must be wrong
The low could mean that less transactions are taking place at the low end of the market. Low end transactions bring down the median price.
For example, assume 5 houses sold in 2006 for:
A $300k
B $400k
C $500k
D $700k
E $900k
The median price is $500k
In 2007, these 5 houses come back on the market at 10% off, but the low-end house doesn’t sell.
A – No sale
B $360k
C $450k
D $630k
E $810k
The new median price is $540k
There have also been average and median price shifts due to the teardown phenomenon. There exists the risk that we could confuse an increase in median/average prices for appreciation when what really happened was a change in underlying housing stock.
5 homes in mythical town “X”.
$100k
$200k
$300k
$400k
$500k
Average $300k
Median $300k
A builder buys the $100k property, tears it down, replaces it with a $500k property.
$200k
$300k
$400k
$500k
$500k
Average $380k
Median $400k
In this case, the median and average price would have risen, even though the other properties saw no appreciation over the period.
I say dream/renting are colluding to provide too much common sense.
Bi?
Clotpoll Says:
November 5th, 2007 at 11:51 am
“There’s not a piece of real estate on earth that won’t draw a buyer…as long as it’s positioned and priced right.”
I agree, and I am sitting tight and letting that little nugget sink in with sellers before I start to move. No point in visiting their properties and getting their hopes up. Like X, I view summer 2008 as time to do some serious shopping. Maybe I am typical and there will be a dead cat bounce, but I am looking for a long term home, so that is OK.
I go into some more technical issues in my piece. Mainly, with sales significantly off 2005 highs, sample sizes are getting so small that it is difficult to make any kind of inference about the larger population with any decent amount of statistical confidence.
We can hoot and holler about the median price being up or down a few points in Upper Haughtyville, but when that number is based on 4 sales taking place, we are talking about one hell of a stretch when we try to make inferences about the entire town.
Sales are down so sharply in some areas that in order to get enough data to create any kind of statistical analysis, you’ve got to look at halves/years, not months.
Sosueme
x-underwriter Says:
November 5th, 2007 at 10:46 am
John Says:
I usuually go to the Jewish/Japanese joint off the NJT for good eats.
What’s the name?
There have also been average and median price shifts due to the teardown phenomenon.
JB,
There was an article out within the past few days describing how certain NJ shore towns were bucking the trend of falling prices. They cited Asbury Park and Atlantic City in particular as cities where median prices were still going up. Of course what it really happening is that the underlying housing stock is changing. Relatively expensive condos are being added to cites that formerly had mostly lower cost housing.
X – #51, #112
I’ve noticed that house dropping (I told you I was looking in similar area). My husband likes that faux Tudor look. I want a bigger lot though.
Great CNN article, that woman would fit right in here!
O.K. First one who posts a picture of a postcard they receive from a realtor advertising a “recent” sale (from like, last December) wins.
This was a ploy used in Bucks Co. 4th Q ’06, so you folks should be seeing these things up there about now.
Actually when I was watching extreme makover home edition last night I kept thinking why was this guy getting a new house cause he made a mistake in buying the house. Millions of peoples will lose homes in the next two years and the quick we get them out the better. Look at Citigroup stock, it got its chopping over the last few days and now it has stablized, we need that in RE.
mikeinwaiting Says:
November 5th, 2007 at 1:21 pm
John #28Being a boomer I have lived thru bad times before have you,I don’t think so.There will be blood on the streets and having sold at the top & now renting I will profit from it when I buy.This is business,having a sense of empathy for others is called being a mature man not a wimp.
Supermodel Bundchen Joins Hedge Funds Dumping Dollars
http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aEpCkdSWhjrg
New condos in New Brunswick (Spring St, Heldrich) are listed for sky-high prices. Does anyone know if they are moving?
NB has tons of inventory in other developments away from the train station. It looks as if every other unit in the Hampton Club (out on 27 by the bus depot …. very sketchy) is up for sale.
grim (15)-
Absent adequate sample size, one must price to trend (if even discernible) rather than price to comp.
Extremely illiquid markets are always prone to gapping bid/ask spreads and order imbalances. RE is no different in that regard.
jmac #157,
I’ve heard from people who claim to know that condos near the station are moving. Those further out, not so much.
I heard another highrise is gonna go up (or already has?) on George Street near the intersection with Livingston. That part used to be seedy, but is nicer now.
Pat Says:
November 5th, 2007 at 2:13 pm
“O.K. First one who posts a picture of a postcard they receive from a realtor advertising a “recent” sale (from like, last December) wins.”
Haven’t seen that yet but I did get a postcard in the mail from a realtor stating that YES I was in fact “invited” (or was it allowed?) to visit his upcoming open house.
I gave him points for effort.
syncmaster Says:
“I heard another highrise is gonna go up (or already has?) on George Street near the intersection with Livingston. That part used to be seedy, but is nicer now.”
Already gone up but not quite finished. I think they are targeting corporate rentals.
They are working leaps and bounds to improve New Brunswick. Great restaurants in that area. The trouble is that the less “pleasant” population is moving nearer to me!!
Hiram Square townhouses were asking $800k not long ago.
re: 156 bearish on the dollar
do you think this type of realization, with regards to the dollar, will have an impact on the seemingly infinite demand, that we constantly hear about, for nyc real estate by foreign investors?
Pat Says:
November 5th, 2007 at 1:29 pm
Cool JB AP You MUST be standing on your head spitting coins.
pat: I’m not impressed. To quote Dice….”I want you to eat a dozen apples and $hit a fruit salad…..now THAT is a trick…”
Drove by a bunch of open houses in Madison, just to get an idea of what prices are looking like compared to last year. The homes priced to good to be true, all had serious issues such as under power lines, or in an area zoned multi-family. Something we never experienced before was a realtor listing a townhome, but not advertising it as such. That is just rude in my opinion.
Overall, I would say that prices were slightly lower than in the spring of this year, but there was absolutely no traffic whatsoever at these open houses. Didn’t bother looking at any of the 600K+ POS capes listed, but I imagine they were ghost towns as well.
I suppose it is never a good sign to see the realtor hosting the open houses peering out the front door at a road noticeably absent of parked cars.
Gaging by our house hunt yesterday, it’s gonna be a long time before any inventory gets absorbed. We can only hope that the sellers will eventually realize that their prices are still insane.
#157,
Spring St. has been for sale for over 2-years now. Most of the inventory you see for sale is still being offered from the developer, Boraie. Also, property taxes are astronomical in New Brunswick. Last I heard the only unit that has sold in the Heldrich Center was the penthhouse unit. There are only something like 35 units in the Heldrich though. They were going ultra-lux with hotel amenties including 24-hour concierge service, room service from the hotel’s restaurant, and full access to the spa.
Am I calculating this right, 17 months of supply for the market Grim’s covering?
Should we have calls on when it will hit 24 months? I say May ’09. (random guess based on adding one month per each month from now until May).
lisoosh Says:
(I told you I was looking in similar area). My husband likes that faux Tudor look.”
That’s why I posted that example for you.
I used to live in Montclair and I’m a total sucker for the real tudors there. Won’t find them out in Hunterdon though…especially in that price range.
“I want a bigger lot though.”
I take it you’re not the one out there cutting the grass!!!
http://www.nj.com/hobokennow/index.ssf/2007/11/the_next_hoboken_a_contender_d.html
The next Hoboken: A contender drops out?
Usually we only hear about the “next Hoboken” candidates – there were articles this weekend making the case for two perennial candidates, Jersey City and Newark.
Rarely do we see stories that proclaim a city has lost its “next Hoboken” status, but we found just such a story today in the Bergen Record – which actually was a follow-up to a story that was on NJ.com yesterday. The article says the housing slump has put an end to Paterson’s bid for a rebound.
According to the NJ.com article, Paterson saw a 57 percent decline in home sales during the first six months of the year as compared to the same time period last year. Sales also dropped 59 percent in East Orange, 41 percent in Elizabeth and 37 percent in Newark.
“Every upswing has a downswing,” said James Hughes, dean of the Rutgers University, Edward J. Bloustein School of Planning and Public Policy. “And we’re in the downswing.”
James Bednar, a real estate agent who runs the blog New Jersey Real Estate Report, said the dropoff put a quick end to Paterson’s hope for being the next Hoboken.
“No areas have been spared,” Bednar said. “During the boom, there was lots of hope that Paterson would gentrify and see the rebirth that Jersey City and Hoboken saw, but that sort of rebirth never really manifested itself in Paterson.”
GO GRIM
Clot –
What is with REmax and the sign in thing on each website to see photos? I realize they want buyers info, but it actually puts me off from dealing with them.
lisoosh #161,
They are working leaps and bounds to improve New Brunswick. Great restaurants in that area. The trouble is that the less “pleasant” population is moving nearer to me!!
As an RU alum, I feel good when I see NB improving so much. Can’t explain it, I just do. I wish it was like that when I went to school. Agreed about the restaurants, Makeda is awesome.
I hear you, though, on the less pleasant population moving outwards. The recent bout of gang problems in Franklin Township (somerset county) has a lot to do with that. And P’way is gonna build low-income housing in the Possumtown section, I’m hearing most of those residents will be coming in from NB as well. Oh well, that’s the price we pay for progress. A rehabilitated NB can do wonders for the entire region.
x-underwriter Says:
“I used to live in Montclair and I’m a total sucker for the real tudors there. Won’t find them out in Hunterdon though…especially in that price range.”
No. REAL tudors are hard to find. Very elegant though.
“I take it you’re not the one out there cutting the grass!!!”
Actually, I want a mini-farm, goats, chickens (to eat the ticks), fruit trees and so on. Fancy lawns aren’t really an issue. I also need a barn and a big garage for the business. That is why Hunterdon is of interest, although there are some suitable areas in Western Somerset. I’m not in the range of some of the stunning properties out there (and they do exist). The ones I can afford right now have poor housing stock. I don’t need a palace as I’m into sustainable living (blah blah blah), but livable and not in need of $200k of work would be nice.
AvalonBay, an apartment landlord traded on the NYSE, discloses some operating stats each quarter. These #s are interesting to look at because they reveal what is happening to apartment rents across several markets. Plus, the sample size (>30,000 apartments) is large and the stats are professionally prepared.
A few tidbits about average rents (from page 29):
US overall +6.3%
Northern NJ +6.8%
Central NJ +0.7%
http://www.avalonbay.com/pdf/10-31-07_8K.pdf
Funny the one year old Hoboken condo I am renting only went up 2.5%.
#170 sync: Yes, and it seems for every are that might regentrify, another area goes down.
But I have to say NB looks wonderful, it has a whole new feel,and the city has a lot of history.
Visible separation is now taking place between Hudson County and the rest of New Jersey.
Mack-Cali, an office building landlord, also reported very strong leasing results for the company’s Hudson County buildings, compared to the rest of its New Jersey portfolio.
NB condos are either high-end luxury developments aimed at luring NYC dwellers or affordable but located in “less than desireable” areas. If there was anything non-luxury located near the train and downtown area, I’d buy a unit in a heartbeat.
From Reuters:
Snow: Housing to hurt US economy for much of 2008
Housing sector weakness could cut U.S. economic growth to about 1.5 percent in the next few quarters, but strength elsewhere should help avoid a recession, the top executive of private equity firm Cerberus Capital Management LP said on Monday.
“The economy has to weaken; it inevitably has to weaken,” said John Snow. “The fall in housing prices is going to take a toll on consumption.”
His comments came at an Executives’ Club of Chicago event. In a follow-up interview, the former U.S. Treasury Secretary told Reuters his 1.5 percent U.S. economic growth forecast was for the “fourth quarter and a good part of 2008.”
Although housing will act as a drag on some sectors such as construction, Snow said the U.S. economy was “inherently resilient.”
He was critical of the “looser and looser lending practices” and the complex and opaque financial structures that resulted in the subprime mortgage crisis.
“In my view we are only just beginning to see the adjustment in house prices,” Snow said in his speech. “I don’t think it is going to come to an end anytime soon.”
Hehehe,
Thank you for that tidbit. Anecdotal evidence is nice, but the AvalonBay figures are a better indicator.
Savvy apartment landlords know that the expenses can be high when a renter moves out (vacancy, marketing, repairs). So they typically raise rents a lot more when a new renter moves in, compared to a renewal with an existing renter.
And you’re the chief communist/terrorist here. Don’t try to be cute with your imitations. There’s a real problem here with supporting this country with the almost gleeful cheerleading of the reversal in the real estate makets. You’re worst than bin laden, Lenin and Mao combined.
Unlike you, I have faith in this country and this will be overcome and when it does, many here will be eating crow.
Richie Says:
November 5th, 2007 at 8:46 am
All of you are so unpatriotic!!
You communists!!!
You are so un-american!!!
I’m not the one who’s underwater, therefore I can imitate who I please.
Pat
I had a postcard from a comp killer in the complex I rent in. The neighbors are annoyed when one house sold for a small gain over the 2003 purchase price. Another is listed for just over their 2003 price. It wipes out the 40% gain most of the recent listings are looking for.
“Unlike you, I have faith in this country and this will be overcome and when it does, many here will be eating crow.”
If we keep thinking like you reinvestor101, we’d be lucky to be eating crow. I’m thinking eating pigeon would be more likely.
Lisoosh,
I prefer Tudors, too. This one is for sale near me. Probably will sell in the $800s.
http://tinyurl.com/2em3bl
3 family? Condo Conversion!
Down on Wall Street this morning there were smoking hot girls all dressed in Black on every corner handing out invitiations to the Grand Opening Sales Event on Nov 7th of the new W Hotel and Residences. It is on 90 West Street,
How can it be exculsive yet hand out fliers to everyone who walks by.
wnyresidences.com
3b #174 & jmac #176,
Have you guys read the pie-in-the-sky study on creating a Light Rail Transit system for the greater New Brunswick area? It’s just a study but if NB’s regentrification turns out to be sustainable, who knows. The study is even part of the city’s master plan.
Grim,
Lots of people been doing that in Weehawken recently. I thought it was a stupid idea until I saw how much some of the apartments sold for.
Check out 6-8 Carroll Place.
Syncmaster,
A better plan would be a network of bike lanes. Not painted lines called bike lanes, but genuine bike-only lanes. It would be cheaper and could be effective in a town like New Brunswick where lots of college students and Mexicans live.
#186 sync: Thanks for the information. It is a city that deserves to come back, with like I said a whole lot of history.
Hopefully NB can hold onto to J&J.
I have seen the redevelopment plans for the College Ave campus of Rutgers, looks great.
On the banks of the old Raritan BOOM, BOOM, BOOM!!
Market from 2:30PM to now…..short covering?
pret #188,
Actually, I just ran into this blurb (see below) on njtpa.org. The scope they’re talking about goes well beyond just NB, to include residential areas in the other brunswicks, P’way and I think even highland park. Lot more than just college students and Mexicans, iow *rolling eyes*
Greater New Brunswick Bus Rapid Transit
NJ Transit is studying the development of a Bus Rapid Transit system for the New Brunswick area in Middlesex County. This study will focus on two corridors along Route 18 and Route 27, crossing at the New Brunswick rail station. These corridors would connect residential areas with downtown New Brunswick, the Northeast Corridor rail line, the five Rutgers University, New Brunswick area campuses and other destinations, as well as to the proposed Route 1 BRT system to the south.
3b #189,
I have seen the redevelopment plans for the College Ave campus of Rutgers, looks great.
Agreed. I love the idea of a no-automobile College Ave.
“There’s a real problem here with supporting this country with the almost gleeful cheerleading of the reversal in the real estate makets.”
Gleeful? Not yet, wait until this market really gets hit, 2008/2009. Then you may see some gleeful vultures.
Go talk to the IB’s. For some reason, liquidity has dried up for this sector. That is, unless you are putting down $ and have good credit. Not enough of these to plug up the countless holes in this dike.
Don’t bid until you have to get on your knees, to look down at the whites in the sellers eyes. Then tell them fill or kill.
#191 sync: Take it where its coming from, (regarding the comment about Mexicans).
#194 BC Bob Immediate fill or kill!!!
#192 sync: From what I understand, it is really supposed to happen; I am looking forward to that.
Secret room note…
Add this to your, now I’ve heard everything RE file:
http://news.yahoo.com/s/ap/20071103/ap_on_fe_st/odd_moldy_secret_room
JM
Sync,
Thanks for that info. The buses that I’ve been on in Middlesex County aren’t full, so I don’t know why more $ into buses would make sense.
And I’m a supporter of public transportation. I take it everywhere because I don’t own a car.
Planners sometimes think too idealistically about public transportation, leading them to allocate billions of $ stupidly – the Riverline connecting Camden and Trenton is an example.
The “college students and Mexicans” comment was a serious one. They don’t mind using a bicycle to get around, so an investment into New Brunswick’s bicycle infrastructure would not be wasted.
As a cyclist that has clocked more than 10k miles in a single year, I hate bike lanes.
Why?
Because by creating designated bike lanes you create an implicit restriction on the roads that I can ride on.
When a driver hits me, and is at fault, his defense will be that I shouldn’t have been riding on a road without a bike lane. Or, if I need to be out of the bike lane to pass a pedestrian, moving vehicle, car door, etc, the excuse will be that I shouldn’t have been riding outside the bike lane.
pret,
The rt 18 redesign has already created dedicated walking/biking trails across the raritan connecting the college avenue campus to the campuses in pway. When I drive over the lynch bridge, I frequently see people using the trails. So you may be on to something.
Grim,
I’m talking bicycle lanes for commuting around town (see photo). Sounds like you are a road biker.
http://www.streetsblog.org/wp-content/uploads/2006/11/IMG_0199-bike-lane_1.jpg
Although, I must admit, I don’t think I rode 1000 miles in the past year. Shame on me.
That 10k year was before I got married and started a blog.
I think you should be able to ride your bike anywhere, “Just Like A Car”.
But those damn pants… now those should be banned. Unless of course you’re a super hero.
145#, 146#, 147#, if the median price is down 2%, what would be your arguments?
Sync,
That is super news – both that the lanes were built and they’re being used. Gotta give the state of NJ credit for doing the right thing once in a while.
pre,
Those euro-style lanes will never happen in NJ. We don’t have the ability to widen these inner-city roads, so the only other option is eliminating on-street parking in order to gain the necessary space. You know how many on-street parking spots would be lost to create a bike-lane system like that? No politico would back an idea like this.
Grim,
I agree that it isn’t politically feasible to take away parking. But the photo clearly shows that on street parking has been maintained.
The bike lane was obtained at the cost of one lane of traffic.
“Makeda is awesome.”
Awesome Ethiopian food…I’ve lost track of the number of times I’ve eaten there.
I don’t know too much of the New Brunswick area but enough for a little observation. There seems to be a lot of development going on. But it becomes more apparent that there appear a clear demarcation between the have and have-nots. Go south of Robert Wood Johnson hospital on Rte 27, and you’d never want to take a wrong turn anywhere around there after dark. That whole area is God-damn awful until you get a good 2 miles south into North Brunswick. The north part of New Brunswick overlooking the river and along Rte 18 is where all the development is taking place. The only problem is that a few dogs take a pee and the whole place floods up.
My question is with all this development in New Brunswick, where is the erstwhile ghetto getting pushed to?
One last post from me on bike lanes. The”euro-style” lanes are being built as we speak in New York.
I acknowledge that New Jersey governments are inferior to New York City’s government. Still, the fact that New York can implement these lanes provides some hope for our state.
http://www.streetsblog.org/2007/09/20/nyc-gets-its-first-ever-physically-separated-bike-path/
Grim, OT regarding biking:
I’m in your hood, can you recommend a safe place to bike with kid in tow (bike-trailer)? Preferably on an asphalt road / trail with little or no traffic? I seem to recall a park I went to forever ago in the Great Notch area?
Any idea?
Grim, this you?
http://manazoo.com/wp-content/uploads/wtf.jpg
Passing out RE advice while on the road?
bi Says:
November 5th, 2007 at 3:59 pm
145#, 146#, 147#, if the median price is down 2%, what would be your arguments?
Bi, are you trying to bring out the accounting shenanigan in us? Which would you prefer – lower lows and higher highs or vice versa, to meet your 2% decline?
Investing in BRT systems is a waste. Hardly anyone rides the buses in Middlesex County except for those who have exhausted all other options. Are they seriously trying to get people to want to take the bus over driving down Route 1? Not going to happen.
Rail systems are a better way to go because development can occur in and around rail stops. It’s hard to change train routes once they’re set. Bus routes can be undone with the stroke of a pen – why would I want my business near one when a budget shortfall makes it harder for my customers and employees to get to my shop?
“IT’S TIME TO NOTICE THE BROKERAGE AND BANKING STOCKS IMPLOSION”
http://www.nypost.com/seven/11042007/business/its_time_to_notice_the_brokerage_and_ban_754577.htm
JB,
Forgot to ask you last night, was that you pulling into the Shannon Rose in a Van with Grim on the side??
KL
145#, 146#, 147#, if the median price is down 2%, what would be your arguments?
I’d say that median prices are an imperfect indicator of the direction of actual prices. It’s hard to say if this is meaningful.
In fact, I’d say that median prices probably actually underestimate how much prices have climbed in the past 6 years, especially on the low end of the market. As priced climbed higher and higher, sales were skewed toward the lower end (POS cape) of the market due to diminished affordability. POS cape prices in many instances may have went up by 150% or more.
If you look at the distribution curve of home sales, it is positively skewed (The average price is higher than the median), with a heavy concentration of homes for sale in the $400’s.
RentinginNJ,
What index (such as OFHEO, NAR, Shiller) do you like the best?
From housing doom blog
Pending Home Sales Report MIA
If you are wondering why you haven’t seen the Pending Home Sales Report yet….
Since its inception in 2005, the Pending Home Sales Report by the National Association of Realtors has been one of the earlier economic reports that we see every month. A cursory check of the NAR’s releases showed that with the exception of one release on the 6th, the report is always released between the 1st and the 5th of the month. This month however, with virtually no fanfare, the report has been delayed to be released with the housing forecast. This month that means the report will not be released until November 13th. December’s release has been moved back until the 10th. It appears from the 2008 release calendar that this change will be permanent.
I have seen no explanation for the delay given by the NAR, but I have to believe that in the euphoric days of 2005, releasing all those pending home sales early in the month was an opportunity to encourage buyers to buy before the bargains are all gone. To release it early now is probably discouraging already unenthusiastic buyers.
Look for November pendings to be less than inspiring for home buyers.
None are perfect.
Shiller – Probably best in class
OFHEO – Actually pretty good, they have long term data and are unbiased, but they only consider “conforming loans”, which is a problem in expensive markets. They also count refinancing in home prices, which tends to skew the numbers high, since refinancing are based on appraised value and not actually a real price that cleared the market, which tend to be higher. In many markets, the majority of data points are from refinancings.
NAR – Their numbers bounce around too much to be useful.
lisoosh (169)-
Jeez, just give a bogus name and e-mail. Most NJ Re/Max agents won’t spam you or bug you with phone calls, even if you use your real contacts.
grim (199)-
You own a gun now. You can do whatever you want.
Interesting news about the Pending Home sales report.
Initially, I had thought that Econoday simply got the date wrong. I never expected the NAR to *not* release a report on schedule.
#221
Unfortunately, so does my wife. Which means that I’ve got to do whatever she wants me to do.
dream #208,
My question is with all this development in New Brunswick, where is the erstwhile ghetto getting pushed to?
Franklin, North Bruns., Pway
From Reuters:
Banks tighten mortgage, commercial standards: Fed
Large banks reported tighter credit standards on nearly all types of loans in the past three months, taking a particularly cautious view of prime and “nontraditional” home mortgages, a Federal Reserve survey showed on Monday.
The tighter standards and more expensive terms are likely to exacerbate problems in the troubled U.S. housing sector, making it more difficult for distressed borrowers to refinance their way out of loans made unaffordable by interest rate resets.
Fed Governor Randall Kroszner said in separate remarks that a smaller pool of funds available for refinancing subprime loans means that foreclosures and delinquencies are likely to rise in coming quarters.
“Conditions for subprime borrowers have the potential to get worse before they get better,” Kroszner told a bankers group in Washington.
The Fed’s October survey of senior loan officers showed that more than 40 percent of domestic banks polled had tightened lending standards on prime mortgages — mostly traditional fixed-rate loans made to borrowers with strong credit — compared to 15 percent in the Fed’s July survey.
Of banks originating non-traditional residential loans, 60 percent reported a tightening of standards, compared to 40 percent in July, the Fed said.
More than half the nine banks issuing subprime mortgages tightened standards for this troubled sector, about the same proportion as in the July poll.
Half of the domestic banks surveyed said demand for prime, non-traditional and subprime mortgages had weakened over the past three months.
I heard the ghetto is getting pushed to Westfield.
grim (223)-
Imagine how many married couples are better-armed and less intelligent than you & your wife.
gary (226)-
But not Reech’s side of town.
http://www.rottenneighbor.com/
Best EVER – you can post all your stinky neighbors on the web, I entered my zip code and a few stinkers were there.
Clot,
You own a gun now. You can do whatever you want.
He won’t be able to hide it in his bicycle pants… which I guess is a good thing as it can’t be called a concealed weapon.
#134
bi: look up the difference between median and mean. You will understand why the $5000 increase in median price is not relevant.
http://www.signonsandiego.com/news/business/calbreath/20071104-9999-1b4dean.html
price vs incomes
“Leslie Appleton-Young, chief economist at the California Association of Realtors, expects things to be tough this year and next. Inventory is building, but Appleton-Young said this can be easily fixed. ‘Our industry can control this by not taking listings from unrealistic sellers.’”
“So what’s coming? ‘It’s a pretty difficult environment now to come up with a forecast that’s right on,’ Appleton-Young said.”
“Maybe. But here’s mine. Our future, residential real estate wise, is cloudy with a chance for tears.”
Found this interesting. Maybe the NJAR should follow the same advice. eeehhh.
#218 Make Money
I thought the delay in the NAR propoganda machine was curious also. I did a back of the envelope on a ‘top ten’ community in NJ for October vs Sept. total transactions were off slightly but avg price was down over 100%. From $1.9M in Sept to $860k. I will go out on a limb and suggest that Jumbo loans are really hard to get right now – in any fashion.
John, that Website is very accurate. I thought it would be a bunch of Gladys Kravitz whiners.
I did my zip and thought of 5 or 6 houses we’ve become aware of over the last ten years…stuff like dead cats in the street near their home, perpetual yard sales, etc.
They were ALL there.
rich (230)-
There’s a double entendre somewhere in there, but I’m not touching it.
anti (231)-
Please stop torturing bi with things like facts.
Found this interesting. Maybe the NJAR should follow the same advice. eeehhh
Appleton-Young? She was one of the loudest CAR cheerleaders through the boom-times.
reposting from earlier
Grim, KL, Clot, etc. Do any of you have any info on mls# 2440344?
Thanks,
afe
Clot (236)
I thought that too but let my comment lie as I am tired to reword it.
But you’re very good; a less imaginative man wouldn’t have let that slip by.
You know the type, one who always stretches the neck hole of their sweater by two sizes every time they slip it over their head…
Another one bites the dust…
Beazer Sees 4Q Charge, Suspends Payout
http://biz.yahoo.com/ap/071105/beazer_outlook.html?.v=1
straddle (233)-
Don’t hold your breath waiting for this to happen in NJ.
It’s about time someone in RE said this, though. Imagine a market maker at the NYSE attempting- day after day- to make a market in C with a $60 ask. Ask as he may, nothing happens.
Unfortunately, too many agents can’t see the damage incipient in taking unsellable listings. They rationalize doing it by reasoning that they will use the listing to meet buyers…or hope that the seller will relent and price-reduce at a later date.
There is only one reason to take a listing: to sell it. Any other purpose is counterproductive; when enough agents engage in the practice, the entire market grinds to a halt.
afe (239)-
Sorry. Working on Apple OS right now & can’t access MLS.
Don’t worry people, Kudlow says all is well. And this whole Ciitbank thing is really annoying him. The economy is great!!!!
3b-
Kudlow and bi are trading bong hits.
thanks clot, no problem
Grim,
Thanks for your efforts, nothing like some graphs for perspective. October showing like February might make a noise loud enough to wake up realtors, though it’s not the way to bet (Clot and KL excepted).
If this didn’t get their attention, I’ve got a feeling November and December just might.
Booyaa’s bloodbath is on schedule for Spring 08.
btw… closing in on 250 comments after 548 this weekend.
This place is getting like one of Yogi Berra’s Manhattan restaurants, if it gets much more popular people might stop coming here because it’s too crowded.
Adding…
I would like to get on line for the gold coins
and, re posts 230 and 236:
Rich and Clot, I’m not sure you want to go there, but does the phrase “discernibly turgid” mean anything to you? Ever been to Mississippi?
244 –
“It’s the greatest story never told”
…or wait, maybe that’s the sound of the housing market imploding!
I’m waiting in the wings to buy a freakin’ place like this:
http://homes.realtor.com/search/listingdetail.aspx?ctid=88784&typ=1&sid=21ee3a32dbba4da3b50553b617d54ffd&pg=6&lid=1083914467&lsn=51&srcnt=120#Detail
…BUT at a reasonable price! PLEASE take a look at the kitchen here.. it’s priceless.
I got 250!
No I didn’t!
Salty Steve…is that new retro, or original?
It looks like somebody with OCD built it in 1970 and cleaned it perfectly every day.
Clotpoll Says:
November 5th, 2007 at 8:53 pm
3b- Kudlow and bi are trading bong hits.
clot: Kudlow has always been a pure powder man…….I think you are thinking Cayne…
queue the dramatic music:
WSJ
Lenders to Home Buyers Tighten Further
Stricter Rules Hit Borrowers
With Good or Bad Credit;
Higher Costs for Businesses
By SUDEEP REDDY
November 6, 2007
More banks are tightening lending standards for home buyers — even those with good credit — and raising borrowing costs for larger businesses, according to the Federal Reserve’s latest survey of banks’ senior loan officers.
The survey, conducted in the first half of October, involved 52 domestic banks and 20 foreign institutions. It was the Fed’s first poll of loan officers since the summer credit crisis. The Fed received the results by Oct. 18, ahead of last week’s policy meeting at which it cut its benchmark interest rate by a quarter percentage point to 4.5%.
[edit]
The Fed survey showed lenders’ growing scrutiny of real-estate loans and increasing caution about other types of lending.
About 40% of banks said they tightened terms for prime mortgages in the prior three months for people with the best credit records. That was up from about 15% in the previous survey in July.
About 60% of banks said they tightened standards on home mortgages classified as “nontraditional,” up from 40% in the previous survey.
[edit]
Lending standards on credit cards changed little, though some banks increased the difference between the rates they charge their customers and the cost of their funds. The Fed figures showed demand for consumer loans dropping as standards tightened, following the historical trend.
Responding to a special question in the latest survey, about 45% of banks said their volume of “jumbo-loan” originations — those above the $417,000 threshold set by regulators — had declined during the prior three months.
[edit]
You own a gun now. You can do whatever you want.
He won’t be able to hide it in his bicycle pants… which I guess is a good thing as it can’t be called a concealed weapon.
He could mount it on the handlebar next to the horn. If things get dicey, he could keep an extra clip of ammo in the front basket.
Here’s a revelation pulled from Roubini’s blog.
____________________________________________
Monday evening update:
Bernard – a contributor to the comments on this blog has provided further insights and data on the level 3 assets of some major US financial institutions. He says:
Look at the info Citigroup just filed with the SEC today: they have $135 BILLION in LEVEL 3 ASSETS.
I have a neat idea.
Why don’t we take every single major financial institution out there and then divide their total Level 3 assets by their equity capital base and make comparisons?
This will give us a better idea as to which of them may really remain solvent at the end of the day. Shall we?
Let’s have a look at Citigroup. Their equity base is $128 billion. Therefore, their Level 3 assets to equity ratio: 105%
How about Goldman Sachs? Level 3 assets are $72 billion, equity base is $39 billion. Their Level 3 assets to equity ratio is 185%.
Morgan Stanley: $88 billion in Level 3, equity base is $35 billion. Ratio: 251% (WOW!)
Bear Stearns: $20 billion in Level 3, equity base is $13 billion. Ratio: 154%
Lehman Brothers: $35 billion in Level 3, $22 billion in equity. Ratio: 159%
Merrill Lynch: $16 billion in Level 3, $42 billion in equity. Ratio: 38%
Here is the Level 3 assets to equity ratio summary:
Citigroup 105%
Goldman Sachs 185%
Morgan Stanley 251%
Bear Stearns 154%
Lehman Brothers 159%
Merrill Lynch 38%
This becomes very interesting now, doesn’t it?
Looks to me like Goldman Sachs and Morgan Stanley are by far in the WORST situation among the investment banks.
And yet the media is focusing all of their attention on Merrill Lynch—which actually has by far THE LEAST EXPOSURE of all of them. What a joke.
As I said before, the media should stop diverting attention and trying to make this into a “Merrill-specific” problem.
All of the investment banks are in deep trouble. These numbers should make that extremely evident. The deception must be exposed.
Written by Bernard on 2007-11-05 11:33:55
http://www.rgemonitor.com/blog/roubini/224871
So this may explain why Merrill has been one of the few firms to report huge losses:
” it is at least one of the few firms that has come out clean on this valuation game and put only 2% of its assets in the voodoo valuation model bucket; compare that with the 15% put by Goldman or the 13% by Morgan Stanley” (Roubini)
I can’t even fathom what’s coming down the pike.
Ed (248)-
Skin crawling…
Just curious, is there any data on prices anywhere? Are less houses selling, but at the same prices as they did before? Or are prices taking a hit too?