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From the WSJ:
Deals With Hedge Funds
May Be Helping Merrill
Delay Mortgage Losses
By SUSAN PULLIAM
November 2, 2007; Page A1
Merrill Lynch & Co., in a bid to slash its exposure to risky mortgage-backed securities, has engaged in deals with hedge funds that may have been designed to delay the day of reckoning on losses, people close to the situation said.
The transactions are among the issues likely to be examined by the Securities and Exchange Commission. The SEC is looking into how the Wall Street firm has been valuing, or “marking,” its mortgage securities and how it has disclosed its positions to investors, a person familiar with the probe said. Regulators are scrutinizing whether Merrill knew its mortgage-related problem was bigger than what it indicated to investors throughout the summer.
In one deal, a hedge fund bought $1 billion in commercial paper issued by a Merrill-related entity containing mortgages, a person close to the situation said. In exchange, the hedge fund had the right to sell back the commercial paper to Merrill itself after one year for a guaranteed minimum return, this person said.
While the Merrill-related entity’s assets and liabilities weren’t on Merrill’s own balance sheet, Merrill might have been required to take a write-down if the entity was unable to sell the commercial paper to other investors and suffered losses, the person said. The deal delayed that risk for a year, the person said.
In a statement, a Merrill Lynch spokeswoman said, “We don’t comment on specific transactions and we are confident in the appropriateness of our marks.”
At issue with any hedge-fund deals is whether there was an attempt by Merrill to sweep problems under the rug through private transactions kept out of view from investors. Some previous scandals, such as the collapse of Enron Corp. and the troubles of Japan’s financial system in the 1990s, involved efforts to hide problems through off-balance-sheet transactions.
From the Record:
Emergency tax cut advances in House
A huge increase in federal taxes that would hit North Jersey harder than the rest of the country could be prevented by a bill approved along party lines Thursday by the House Ways and Means Committee.
While they disagree on how to pay for it, leaders of both parties say they want to prevent an estimated 21 million taxpayers nationwide, including 1.5 million in New Jersey, from being forced to join those paying the alternative minimum tax, which is higher than the regular income tax.
…
The latest plan, crafted by House Democrats, would raise taxes on hedge-fund managers to make up for much of the lost revenue, a move the committee’s Republicans, President Bush and some prominent Senate Democrats do not support.
…
The House bill would continue for another year allowing a married couple to exclude $62,250 from the AMT, the same amount as last year. With no congressional action, that exemption would drop to its 2001 level of $45,000, which would increase both the number of people forced to pay the AMT and the amount paid by those already in that higher tax category.
Overall, taxpayers would owe an estimated $50.6 billion more. And many people would not find out they were facing a huge tax bill until they sat down next spring to figure their 2007 tax returns, said Rep. Bill Pascrell Jr., D-Paterson, a Ways and Means Committee member.
“People would be absolutely furious, as they should be,” Pascrell said Thursday.
New Jersey already has one of the highest percentages of taxpayers paying the AMT because the AMT formula does not allow for the deduction of property or state and municipal taxes.
From MarketWatch:
Moody’s places over $5 bln in debt on review for downgrade
Moody’s Investor Service on Friday was issuing a number of rating actions that had the net effect, through 5 a.m. Eastern, of putting over $5 billion in debt on review for a downgrade. Among the securities that’s on review for a downgrade are $201 million of AAA-rated senior secured notes from an E-Trade collateralized debt obligation. On the E-Trade review, the agency noted a deterioration in the credit quality of the transaction’s underlying collateral pool, which consists primarily of structured finance securities.
From MarketWatch:
UBS may take $5.2 bln Q4 subprime hit, Goldman estimates
UBS may take a subprime-related hit of $5.2 billion in the fourth quarter, according to Richard Ramsden, an analyst at Goldman Sachs. He calculated the estimated write-down based on the performance of credit-default spreads since the end of September. The impact would be a 2 billion Swiss franc loss within the investment bank, he added. Nonetheless, the analyst kept a buy rating on the bank, arguing that pressure to restructure the investment bank coupled with the outperformance of the private bank should lead to valuation support.
Note to GS, analyze your own holdings.
This one looks too good to be true, I’m thinking data entry error, but I’ll post it anyway.
MLS# 2349779 – Woodland Rd, Mendham Twp
Listed: 12/4/2006
OLP: $775,000
Sold Date: 10/30/2007
Sold: $453,200
5. GS if you’ll remember was shorting this stuff…LOL
MLS# 2440014 – Ranney Rd, Washington Twp NJ
List Date: 09/01/2007
OLP: $709,999
Reduced: $699,900
Sold: $680,000
Purchased: 3/15/2005
Purchase Price $670,000
Net after commission: $646,000
Loss: $34,000
Yeah, I love how they are the only one’s on the street that could have thought that up. Meanwhile they still have tons of that crap on their own books. Can they repeat their “magic” again?
grim Says:
MLS# 2440014 – Ranney Rd, Washington Twp NJ
Loss: $34,000
That’s small potatoes compared to what’s coming down the pipe. Those are the lucky ones
What about those 10/10 IO loans borrowers would use to make up for a 20% down payment to avoid paying PMI? Those are going to cause some hardship as well
I know I am the only one here who cares about the impact of Xanadu, but I will post anyway:
From the SouthBergenite:
” mammoth Ferris Wheel and Roller Coaster planned for the Meadowlands Xanadu project will be smaller than planned, in order to address a study by the Federal Aviation Administration (FAA).
The 321-foot Ferris Wheel and the 289-foot roller coaster would exceed “obstruction standards and/or would have an adverse physical or electromagnetic interference effect upon navigable airspace or air navigation facilities,” according to FAA documents.
The FAA recommended the Ferris Wheel to be dropped to 190 feet above the ground and the roller coaster dropped to 185 feet above the ground. ”
http://www.southbergenite.com/NC/0/542.html
Morning all :)
I find this statement amusing..
Otteau said that pricing a house a little below the competition not only catches buyers’ interest – it also reassures them that they won’t kick themselves later for overpaying if, as expected, home prices drift lower in 2008.
Drift??? is that how you describe the downward motion that occurs when you fall from a cliff? Kind of like describing child birth to mild discomfort if you ask me ( no i am not a woman, but i did watch my wife do it! PS it was pretty coll)
Grim # 8
I think i know this house. if it is the house i think it is then the house has a leaking oil tank under an addition that was added illegally. The owner offered to rent it to for peanuts on the basis that he would be tearing down the addition portion of the house and having to have the leaking tank removed and mitigated. He also mentioned he might be willing to sell for a very low price if you accepted the liability for the problem……
Payrolls up by 166K…
More winter food for the bears, go into hibernation already….
Jobs up 166,000 for October.
At least with the pregancy what got you there was a lot of fun doing (at least for the man), buying a house today is a sickening horrible event from the get go.
FYI – Some people on Wall St. at NYSE will get some sweet bonues – boooyaaaa!
NYSE Euronext (NYX:US) climbed $2.09, or 2.3 percent, to $93. The trans-Atlantic stock and derivatives exchange said third-quarter profit rose as credit-market swings spurred record trading of other securities. Excluding merger expenses, NYSE Euronext earned 76 cents a share, beating the 73-cent average estimate of 12 analysts surveyed by Bloomberg.
#16: How many of those jobs pay over 50k a year?
I have a question related to the follwoing news:
http://news.yahoo.com/s/ap/20071101/ap_on_bi_ge/fed_markets
What is meant by “Pumping $41B into US Financial System”?
In which forms Fed pumps cash to the system?
A house I remember had a leaky oil tank and was sold with the same deal. The owner dug it out and replaced took a day or two. The neighbor was concerned about the spillage called EPA who did a soil sample and the guy had to removed tons and tons of dirt, pay to have it taken to an expensive dump that takes hazmat stuff and then re-test and then pay for tons and tons of clean soil and a new EPA test. Plus the EPA website records every spill including oil tank spills so your house will be listed on the web site forever as the site of a toxic spill with a little note that is has been cleaned.
If you have the balls and want the house cheap, rat him out to the EPA and town zoning board and tax authorities and put him in a bind and come in as white knight and buy cheap. Any good slumlord would use that tactic.
Kettle1 Says:
November 2nd, 2007 at 8:29 am
Grim # 8
I think i know this house. if it is the house i think it is then the house has a leaking oil tank under an addition that was added illegally. The owner offered to rent it to for peanuts on the basis that he would be tearing down the addition portion of the house and having to have the leaking tank removed and mitigated. He also mentioned he might be willing to sell for a very low price if you accepted the liability for the problem……
How many of jobs make you say “would you like your value meal supersized?”
thatBIGwindow Says:
November 2nd, 2007 at 8:33 am
#16: How many of those jobs pay over 50k a year?
BC Bob Says:
November 1st, 2007 at 11:10 pm
chi, I think more is to come. Capit? Maybe when we get a huge down day[gap down] with monster volume.
Bost: I agree, but didn’t that happen yesterday? NOTE: I am a fundamental / buy-hold guy, so most technical jargon I get from the graybeards in my office from the old school.
Frank [15],
Avg hr earnings up 3.8%, yoy. With retail inflation, not hedonics, running close to 12% it looks like either the US consumer will go into hibernation or they will smoke their cc’s.
This situation is absolutely crazy. It’s amazing how negative talk turns into negative thought with result being the housing market being destroyed and major financial institutions under financial stress. In this country, all we’ve learned how to do is destroy ourselves. We’re our own worst enemy. To add brine to this wound, there are some who are absolutely giddy about the conditions in the housing market now. I continue to question the patiotism of those persons.
We can not have the real estate markets destroyed. The fed needs to lower interest rates drastically and take them to 0 if necessary. We may need longer term mortgages as well to stave off any collapse. I believe Japan has 100 year mortgages and we may need them here. This country needs to do everything it can to help those who’ve been the backbone of the economy here of late; the homeowners and the real estate investors.
Sellers can do a lot also by not giving away their house. There may be a need for a slight discount, but major slashes of more than 10% should not be done. The lowball vultures are circling and they need to be starved of any “food”. The real estate owning public must raise all kind of hell about this. It’s the only way we will defeat the negativity.
I love you man!
http://money.cnn.com/galleries/2007/autos/0710/gallery.chevrolet_malibu_review//index.html
This is for dreamtheaterer – CHEVY ROCKS> The new Malibu hit is out of the park and blew the doors off Accord and Camry. Read the just released review.
Professional and financial services are up considerably. Personally, we are busy than h*ll and many projects upcoming (I’m in IT for financials). This doom and gloom stuff is overstated. I’m going by what I see. As far as housing is concerned, I get listings everyday and they’re off 5% from peak and that’s where they’ll stay for the next five years. Factor in YOY inflation and you have your 20% – 25% discount.
Friends as well as ourselves looking to trade up are consistently dealing with other interested parties. Again, this is not Dayton, Ohio, it’s the NYC metro area.
#24: I know!! What a sad state of affairs :(
The only thing that consoles me is my worn copy of Rich Dad Poor Dad
“being forced to join those paying the alternative minimum tax”
Too late.
And the Republican plan didn’t do me any good last year.
Reinvestor:
I’ll help you do your part for the better good of America. How would you like to buy my house at the recently assessed price? I paid $480K and you can have it for $630K. No RE commissions either. Take one for the team and respond. The prop taxes on my
vj Says:
November 2nd, 2007 at 8:34 am
What is meant by “Pumping $41B into US Financial System”? In which forms Fed pumps cash to the system?
Veej: Fed creates money by taking in assets from banks and swapping it for cash. All they ask is for a specific type of collateral or better quality/liquidity. We are literally talking one day. The absolute place where the rubber hits the road. It is always taken for granted except for times like these……..think about your paycheck hitting your bank account……you always assume it is there, now imagine they stuck an illiquid MBS in there instead. Your bill collectors aren’t going to take that……it doesn’t seem like a big deal until to realize how quickly the works are gummed up exponentially….
The prop taxes on my
Weird..My posts are getting cut off.
Well you get the point. I hope?
24
“I continue to question the patiotism of those persons.”
You must work for Fox News.
Can you explain why costlier housing is a good thing?
reinvestor101 Says:
November 2nd, 2007 at 8:43 am
RE: OK, you put up one goal post….where is Boooyaa for the other….seriously, it is good to see you here…thank you for the alternative (and thoughtful) perspective….
29 stu
ROFLMAO – perfect!
But of course, he means YOU should overpay for HIS house, not the other way around.
#24
Really?
Destroy Real Estate NOW. Three groups of buyers, first time buyers, trade up buyers, trade down buyers who are retiring .
First two groups rising RE values hurt, now the last group not everyone trades down. The McMansion crowd retirement is based on selling the monster house and trading down. The “Levitown” crowd that has the Three bedroom 50 by 100 cute little cape that is easy to manage does not trade down, no mortgage, low taxes and not much maint. Where are they going?
So your right lets jack RE to the moon so the McMansion trade down crowd can cash out and screw the first time buyers and the couples in a small coop or house who are having their third kid and need a bigger place. Hey it is all about you.
Thanks NJPatient
” mammoth Ferris Wheel and Roller Coaster planned for the Meadowlands Xanadu project will be smaller than planned, in order to address a study by the Federal Aviation Administration (FAA).
That reminds me of the Spinal Tap movie when they had a Stonehenge that was only 2 feet tall
Well seems like lot of folks listing are expiring and may be going in hibernation for winter. GSMLS inventory now about 35.5K.
“This country needs to do everything it can to help those who’ve been the backbone of the economy here of late; the homeowners and the real estate investors.”
If only we’d done the same for the dot-com investors in 2000! Pets.com would be at $700 and everything would be great!
Irrational homeowners/RE speculators are in large part responsible for America’s current economic ills – they should get a cash bonus!
John 20
I don’t disagree, but somehow that reminds me of your story about the fella who wound up in the air duct.
#23,
“With retail inflation, not hedonics, running close to 12%…”
The Fed should raise interest rates to 7%+ to stop the fleecing of working Americans.
In the mean time buy any hard assets you can, including real-estate.
There is always someone trying to be “cute”.
If you want to sell you house, you should be on the front lines of those demanding that the Fed lower interest rates further. You should support the creation of longer term mortgages. You should support capitalism and not some communist system where everyone loses and has nothing.
stuw6 Says:
November 2nd, 2007 at 8:48 am
Reinvestor:
I’ll help you do your part for the better good of America. How would you like to buy my house at the recently assessed price? I paid $480K and you can have it for $630K. No RE commissions either. Take one for the team and respond. The prop taxes on my
“That reminds me of the Spinal Tap movie when they had a Stonehenge that was only 2 feet tall”
The ferris wheel might get trod upon. hopefully the gondolas will have room for big bottoms.
Reinvestor: We can not have the real estate markets destroyed.
How the heck in the world expensive RE good for US economy? In fact, the cheaper the RE gets the better are growth prospects, as people can spend money on things that help economy. Lowering RE prices will actually provide huge upside to economy, as many people who could not afford house before can afford it, and then they spend on many things like appliances, refurnishings, lawn movers etc…
Actually, I am ok with current prices, if somehow Feds can get 30year fixed to 4% range, then affordability will come back. If they cant bring 30 year to 4%, then prices should come in line to make housing affordable again.
Chi,
Could be. The volume was huge. I would not be surprised to see a vicious short term move up, especially if CP dances out this weekend [Kass]. What then?
During the last credit slow down, early 1990’s, the brokerage stocks sold less for book. We may see a repeat. What’s the prospect for earnings increasing? MBS and the vehicles created to buy them is buried, pe has slowed, m&a is down and lending to hedgies has pulled back.
They are all sh*tting regarding year end audits. You could input any IB name into the merrill story [1]. They are all offloading. I feel they will remain under pressure as long as they continue to conceal the real #’s. Simply tell us how much, what % is marked to the market, what % is marked to a model and record it. I can’t imagine what that result would be.
Note: Just an observation. Not talking any position.
“You should support capitalism and not some communist system where everyone loses and has nothing.”
Uh – YOU’RE the one who’s objecting to the results of market forces and asking for a gov’t handout.
#30
Thanks chicagofinance.
Got an idea…
“I believe Japan has 100 year mortgages and we may need them here.”
Just a brilliant idea, let’s go into a 17 year rut.
I can’t even respond to 50.5 today. However, I think the monte carlo simulation now indicates 25.25.
Bullspit. Market forces were working correctly before things got sabotaged. Sabotaged is not too strong of a term to use when we look at how widespread the impact is. Hell, the negativity has even affected money market funds. How is that a good thing?
njpatient Says:
November 2nd, 2007 at 9:08 am
“You should support capitalism and not some communist system where everyone loses and has nothing.”
Uh – YOU’RE the one who’s objecting to the results of market forces and asking for a gov’t handout.
“Actually, I am ok with current prices, if somehow Feds can get 30year fixed to 4% range, then affordability will come back.”
I disagree SG. The problem is the lack of the downpayment. Many of the contributors on this board are well to do. It is evident in the quality of the financial knowledge offered here. Knowledgeable people see a 4% mortgage rate and realize how great of a deal it is. My peers (on the other hand) don’t have the requisite 20% down let alone any savings for their kids. What is important to them is their fancy cars and their children’s dance and karate lessons. They’re still paying off their college loans and their children will have to pay their own way through as well. I think my peers represent the majority of society and us experienced people here are the minority. It is because of this that I don’t think a 0% interest rate on a mortgage would turn the housing ship around. Not when the average household income level is 60 to 70K, healthcare costs are doubling and wages are decreasing. The devaluing of the dollar is not helping either. Ben is in it to protect the wealthy, not the steerage. Don’t forget that.
I’ve got the preliminary October sales data for Northern NJ.
It’s abysmal, worst October in a long long time. GSMLS is showing October sales down 28% YOY.
Simply tell us how much, what % is marked to the market, what % is marked to a model and record it. I can’t imagine what that result would be.
BC,
The system won’t allow them to tell the whole truth and keep their jobs at the same time. But I agree that they should at least tell 75% of the truth and that will be bad enough.
MM
Hey #19 VJ, you can read more about how the Fed affects the money supply here:
http://www.federalreserve.gov/fomc/fundsrate.htm
Click on the document link on that page to read more about Open Market Operations, which is how they quickly inject or remove liquidity from the financial system.
You can’t make this up….”moxie”..shut-up you idiot, you just wanted your 15 minutes of fame…sounds like Vince McMahon…
Nov. 2 (Bloomberg) — Meredith Whitney, whose downgrade of Citigroup Inc. shares helped wipe out $369 billion in U.S. stock market value, said she was the only analyst on Wall Street with the guts to say the bank may cut its dividend. “No one had the moxie to put in print what I put in print,” said Whitney.
[edit]
Whitney, who is married to John “Bradshaw” Layfield, a former World Wrestling Entertainment Inc. champion and author of “Have More Money Now: A Common Sense Approach to Financial Management,”
[edit]
http://www.bloomberg.com/apps/news?pid=20601087&sid=aIM721WLQbGk&refer=home
Tell the truth and lose your year end bonus? Fat chance of that happening.
So which major banks do you think will collapse first?
#24 reinvestor
“We can not have the real estate markets destroyed.”
reinvestor – the real estate market was already destroyed with the lending practices of the last few years. what’s happening now is the fix.
i know, the medicine tastes bad, but ultimately it’s good for us.
How long is a long long time?
#59 was for grim, sorry forgot to paste/address.
BC Bob,
thanks for the clarification last night, I am a little weak in the futures arena…..
grim #53,
I must be living in a parallel universe. The only explanation I have is that there are are a number of trade-up candidates like myself who happen to see something that appears to be reasonably priced in a decent neighborhood and everybody jumps at it.
It seems like anytime I inquire about something that looks interesting, I get a response such as, “an offer has been made” or “it’s in AR or UC.”
#55. Thanks VMC.
gary #62,
Speaking locally to where I live, there is a lot of garbage that no one would want to live in, sitting on the market. That crap used to sell a few years ago.
What is going to happen to all the undesirable housing stock?
Reinvestor….
I think your ignorance (willful or not) of even basic market mechanics has reached such epic proportions that you have now collapsed to a singularity of stupid and will commence swallowing the world into your void of stupidity!!!
Kettle1,
Lay off the Star Trek reruns.
13 Kettle1.
LOL!! “Drift”, like the roller coaster drifts down the decline in the amusement park.
I have said it before that Otteau makes his living on the real-estate industry, so he has to try to dish out the bad news in the most positive way he can. Kind of like Greenspan’s “Irrational Exuberance”. Sure better than saying to sellers that you are F’d.
#24 reinvestor101
I fail to see how more debt in the form of exotic mortgages are going to help America.
The fact is the negative savings rate we have today and the bling bling lifestyle of living beond one means is hurting America more longterm.
Take mortgage interest rates to 0% and most of these “home owners” still either can’t afford the payments or don’t want to, now that they know home prices are falling.
Also, a high percentage of foreclosures now are on speculative homes; why keep paying payments on a property that isn’t cash-flow positive and is underwater. In much of Califorina, even in areas where we have already seen 25-35% price declines, the cost of home ownership is still 50% to 100% more then the cost of renting, even with mortgages at zero percent. What’s left, 50+ year amortization schedules? Isn’t that how we got here in the first place?
They aren’t building any more land
Real Estate only goes up
Easy way for Joe 6-pack to become a billionaire
Every one needs a place to live
Better buy now or be priced out forever
You can buy a house with no money down
Live off of the appreciation
“Whitney, who is married to John “Bradshaw” Layfield, a former World Wrestling Entertainment Inc. champion and author of “Have More Money Now: A Common Sense Approach to Financial Management,””
A financial manager AND WWE “wrestler”? The mind boggles.
“What’s left, 50+ year amortization schedules? Isn’t that how we got here in the first place?”
Hey, it’s essentially what most are doing with their credit cards, but only these interest rates are closer to 20%. Did you see Mastercards latest earnings report?
syncmaster Says:
“How long is a long long time?”
And I thought you were just having a zen moment.
Thatbigwindow #12,
“I know I am the only one here who cares about the impact of Xanadu”
I also care.
Xanadu needs to attract fashion retailers in order to succeed. These shops pay the rent and attrac high-income customers several times per year. So far the developers have signed zero of the leases. The best shop they have is Children’s Place.
Entertainment detracts from the shopping experience and is usually a bad investment. It attracts lower-income customers and they visit once per year, at most. Think Great Adventure.
By the way, did anybody listen to the TCO earnings call? TCO owns Short Hills mall and said that retail sales were flat there in the 3rd quarter.
So I was listening to an interview with Corzine this morning and the a’hole wants tax payers to cough up 450 million for stem cell research. Truly insane. Our state is so screwed. NYC gets bloomberg, NY State gets Spitzer and we get this f’k face !!
So NJ residents have to deal with higher property taxes, increase in tolls, NJ Transit and path fares, and this pr’k wants us to cough up 450 mil for Stem cell research.
For all those hippie’s out there, I am not against stem cell research, I am not even against some public money being channeled into it, I just don’t think that the NJ residents can afford this from what is left after the elected officials and public employees take their share of our taxes !
I like how there is no mention of better than expected jobs report on this blog today.
Syncmaster #64
This is what happens
http://tinyurl.com/25etl2
Syncmaster #64
This is what happens
Chart
http://tinyurl.com/25etl2
#26 gary what makes you say the doom and gloom stuff is overstated, when this is just really getting started?
You are busy so that means things are fine? not being sarcastic, just asking.
An increase in professional and financial sector jobs what exactly is that, the proverbial 200K a year job on Wall St, or the bank teller.
Then of course the health care and education sector, are the 200K jobs there?
Education, teacher, or class room aid, health care, nurse or home health attendant?
Not to be rude, but you have a house, you want a move up house, but you will not buy until you see the asking prices to your liking, and then at that point you will sell your house?
And then your friends who are always up against this up against what?
Have they bought, did they sell, or are they too annoyed that asking prices have not come down enouigh yet?
Its strange, you acknowledge there is/was a bubble, yet you claim that it will not pop because this is not Dayton.
Well it popped before? and prices declined substanially, I lived through it, along with many others.
If its not going to pop, why? Every one makes 200k, we are close to NYC, every one wants to live here?
Job numbers were up for 166k, and therefore housing prices will remain high in North Jersey> If the number was low would you have said still does not matter, prices in NJ will remain high? So good news, bad news, prices in NJ will always reamin high ?
I heard the Corzine interview as well. He is very good at deflecting tough questions. NJ is SO screwed with him at the helm. I can’t wait to see how he plans on cutting the > 3 billion budget deficit. Maybe he’ll sell our schools with the turnpike and the GSP? He’ll call it something like asset monetization. What a major prick! I have written numerous letters to him calling him the greatest political coward of the last 100 years.
sorry for the double post, but here is another funexample for you Syncmaster
Vacant pools leave neighbors swimming in mosquitoes (usatoday)
http://tinyurl.com/39twej
Star Ledger:
Working day after holiday outrages state employees
http://www.nj.com/news/ledger/jersey/index.ssf?/base/news-8/1193983151128580.xml&coll=1
An informal survey: Do you get Friday off for free?
I don’t!
Watch as Corzine collapses and gives them the day off. Who wants to bet me that he caves?
whether its 100% or 50 year amrotization terms, the problems lay in underwritting. if you want to recapture the fading alt-a market share simpy require:
680 + credit, full documentation of income/assets, caps at 40 DTI, and show 6 months of reserves.
People who can qualify deserve the opportunity to own a home.
Oh, and Syncmaster, I am a biochemical engieer, so you should probably expect regular nerdy comments. FYI
Well seems like lot of folks listing are expiring and may be going in hibernation for winter. GSMLS inventory now about 35.5K.
Tough to say. That happens at the start of every month as lisitng expire. I tend to agree though, many of those expired lisitngs will hibernate for the winter in hopes of a better spring.
100 comments before 11:00am? Crazy..
Ron Pauls press release on yesterdays rate cuts, for those interested
Statement on Federal Reserve Rate Cut
October 31, 2007
For immediate release
Washington, DC – Congressman Ron Paul, ranking member of the Subcommittee on Domestic and International Monetary Policy (DIMP), and a nationally recognized expert on monetary policy, issued the following statement regarding the Federal Reserve’s decision to again lower interest rates:
“ America ’s economic difficulties, especially the problems in the housing market, are the direct result of the Federal Reserve’s inflationary policies. In the past year, we have seen MZM grow by 12%, yet the Fed continues to inflate the money supply. While prices for gold, oil, and staple commodities continue to rise, the purchasing power of the dollar for all Americans continues to fall. Inflationary monetary policies created the problems in the economy we are seeing, and these problems will be made worse, not better, by more inflation. Today’s action by the Fed is very bad news for American workers and retirees who are about to get hit with yet another jump in prices.
Make no mistake, the problems faced by the American people are not caused by unscrupulous mortgage brokers or the rising price of oil. These are symptoms of an economic disease caused by a spendthrift Congress enabled by loose monetary policy. Too many pundits praise the weak dollar as benefiting exporters, but they fail to see the harm done to thrifty, hard-working Americans. Rather than continuing to pursue a policy of easy credit and increasing debt, we need to return to a sound monetary system.”
October ’07 contracts (GSMLS) are running 16.5% under October ’06 contracts. Spreadsheet will be posted later in the day.
Uh-oh! Markets not reacting well to the jobs report.
12; 73
I care too, but can’t opine.
3b,
There is/was a bubble but I’m not convinced the same conditions that apply to the rest of the country also apply here. I’m reading one thing and I’m witnessing something else.
Of course I’m annoyed that the prices are not to my liking, who wouldn’t be? I see all these beautiful homes on beautiful pieces of property down south and out west and then I look at listings locally and I want to puke…. for 10K plus in taxes no less.
No, I don’t make 200K, I’m in the IT end of things. We don’t command the same respect as the brokers and advisors. :)
Again, I’m going by what I see and after two years from the peak, things haven’t changed much. There is solid competition for decent homes in decent neighborhoods and it’s frustrating because you save, invest, have better than 20% for DP and that’s still not enough to cut it. Who wouldn’t be p*ssed?
I’m simply calling it as I see it.
An amusement park in the Meadowlands appears only slightly less dumber than a hockey team in Newark. What’s next…a pawn shop in Princeton?
This country needs to do everything it can to help those who’ve been the backbone of the economy here of late; the homeowners and the real estate investors.
Comrade RE Investor,
I find you absolutely hilarious. You wrap yourself in the flag and claim to be a red-blooded American, but the only thing red about you is your communist views. You are truly a left-wing communist.
Communists believe that we should all be “in it together” and that we should socialize our problems. This is exactly what you want to do. Help RE investors and devalue our dollar to bail you out.
The reason why communism failed is because it created a highly inefficient economy with no rewards or punishments.
In a free market system, risk and losses are an important part of what makes our system work. The housing bubble inefficiently directed capital away from innovation, investment in our infrastructure and real growth and into granite countertops and stainless with money we borrowed from Communist China.
The great thing about free markets though, is the fact that they are self correcting. The correction happening now in housing is necessary and a good thing for the country. There will be near term pain, but we will be better off in the long run.
You took a gamble speculating on houses, it didn’t pan out, get over it. The great thing about this country is that you can dust yourself off and start over. But just don’t turn to communism, you’ll be sorry in the long run.
Gary,
Have patience.
i honestly hope that the fed feels really silly for cutting rate. the fed gave in to the street’s pressure and what did the street do?
This situation is absolutely crazy. It’s amazing how negative talk turns into negative thought with result being the housing market being destroyed and major financial institutions under financial stress. In this country, all we’ve learned how to do is destroy ourselves. We’re our own worst enemy. To add brine to this wound, there are some who are absolutely giddy about the conditions in the housing market now. I continue to question the patiotism of those persons.
The talk didn’t destroy the financial institutions. Their risk analysts did not do a good job weighing the risk of some of the mortgages they made.
Uhh, patriotism has nothing to do with Economics.
We can not have the real estate markets destroyed. The fed needs to lower interest rates drastically and take them to 0 if necessary. We may need longer term mortgages as well to stave off any collapse. I believe Japan has 100 year mortgages and we may need them here. This country needs to do everything it can to help those who’ve been the backbone of the economy here of late; the homeowners and the real estate investors.
I’d suggest you research more before you make such great statements. The 100yr mortgage was a failure in Japan. They already tried that to save their real estate crash, and it failed. Any person with sound mathematics would see that a 100yr mortgage is the worst possible move you can make.
Sellers can do a lot also by not giving away their house. There may be a need for a slight discount, but major slashes of more than 10% should not be done. The lowball vultures are circling and they need to be starved of any “food”. The real estate owning public must raise all kind of hell about this. It’s the only way we will defeat the negativity.
Most sellers don’t have a choice.
stuw6 #93,
I hear ya and quite frankly, I don’t have a choice. :)
#90 gary: I am not seeing the soldi competition, inf act I am not really seeing any thing going on now.
If you ahev 20% down you will/are in a good position. There are soem of these popel who are still ou there buying that you see, well you haev to ask yoruself, how many could possibly be left.
I have a good friend of min (wall st recruiter, for one of the big street recruiter firm’s) she told me last night, they are dead,,and teh layoffs are coming fast and furious.
Yes the peak was in 2005, but it was off of the largest real estate bubble in history, it took time to get up there, it takes time to get back down.
Last tiem around very similiar big run up, euphoria, then quiet. Buyers disappeard, nothing selling. Sellers refusing to drop prices, and then they came in waves.
I cannnot see why it will be any different this time. Of course we are not Dayton, we were always more expensive,and always will be, but we are not bullet proof.
If come Spring time, we do not see substanial price declines, I will be bring the keg to your house;its on me.
here’s the thing… if you believe the official numbers from the gov’t, we are sort of in a best case scenario right now. Strong GDP growth, strong job creation, moderate inflation and housing market tanking. I know just about everyone here is skeptical of the official numbers, but it is interesting to consider nonetheless. While part of me would love to see house prices drop 20% overnight, at times I feel like we are really in the sweet spot right now, but that if the economy deteriorates further, it will be counterproductive for first time buyers
387 grim listing contracts, or sales contracts/ (sorry)?
#91 stuw6
The pawn shops are coming to a town near you.
Anyone have info on MLS ID# 3019748 in Jackson? Something seems strange about it, awfully inexpensive for the size, but the picture is lousy.
http://homes.realtor.com/search/listingdetail.aspx?sby=6&lid=1090363317&sid=#Detail
I’ve mentioned my basis for price and I’ve heard others as well, but I’d like to ask again and get a summary. What do you think is a fair price to get us back in line with the normal rate of price appreciation?
I’m of the thought that 2000 or 2001 prices plus 5%/year for inflation should be about today’s price. Anyone agree/disagree?
what’s the correlation between post #85 & #87?
j/k
3b,
Believe me, I’m wishing, hoping and praying that I’M the one buying that keg!! It’ll be one of the happiest purchases I’ll ever make!
#102
bergenbuyer– I think final sale prices are probably 5-10% below peak right now. I think another 10-15% will do it. Probably puts us back to 2003 level. May go a bit lower, but I would be comfortable buying for the long term at that point
bergenbuyer 102,
I agree.
my rationale is that we were definitely in bubble territory once the funky loans took over (last two years of appreciation). prior to that (2003 and earlier), it’s pretty debateable whether prices were based on fundamentals
#104 gary: OK You buy the keg, I will bring the red cups, only one cup per person, and you have to put your name on it!!
#107 I agree, except I say 2002 or earlier 2003 and going forward was definitely IMO bubble territory.
In View Of current market state it would be fitting to add list of REO-bank web sites
And auction web sites to the tabs on the main page:
Some of them to start with:
Sheriff sales/Auctions:
http://www.sheldongood.com/njah.php
http://www.co.middlesex.nj.us/sherifffc/foreclosures.asp
Bank REO’s:
http://apps.indymacbank.com/Individuals/Realestate/Search.asp
http://www.banking.us.hsbc.com/HICServlet?cmd_PropertySearchDefault=cmd_PropertySearchDefault
http://www.premierereo.com/reo/consumerSvlt//nav/ConsumerNavL1.jsp/requestPage/consumer/PropertySearch.jsp
http://www.ocwen.com/reo/residential/res_reofindbystate.cfm?proptype=VA
http://mortgage.chase.com/pages/other/co_properties_landing.jsp
http://www.reoexperts.net/
http://www.countrywide.com/purchase/f_reo.asp
http://www.citimortgage.com/Mortgage/Oreo/SearchListing.do
http://bankofamerica.reo.com/search/
By the way – Wells-Fargo REO has a lot of properties for sale in NJ…..
also, real or nominal? If a house sold for $500K in 2003, would you pay $500k today or inflation adjusted $500K which would be about $600K at about 5% inflation?
I’m talking inflation adjusted 20-25% discount from peak
Any idea why the 10yr is up on such inflationary data?
since we’re playing make-believe, I’m thinking 2011 for a bottom
For Reinvester.
You are the typical Amercian Homeowner who is in over his head. You bought more than you could afford as the Fed inflated the hosuing bubble and you went along for the ride with millions of other Americans. This time around, your type bought no doc, no money down, no interest, adjustable ARMs thinking that RE would continue to appreciate at double digits.Over the past years, the Fed had removed money from the system driving up rates – deflating the bubble. The Fed and money supply is everything. Period. Now the free market capitalists are selling RE because of the homeowners are in over their head and defaulting on homes, home equity etc. Perhaps if the American consumer stopped borrowing from his home to buy that new Escalade with 20inch rims, we wouldn’t be in this mess. Fact: RE is and had been deflating. Fact: After Japan’s RE bubble popped, they went into Recession (depression) for almost 2 decades. Real estate collapses are never good but the market has to work through this mess by purging bad decisions/investments. Just because this board is talking real estate down, it doens’t transalate to lower prices.
Skeptic, i agree with your guess
A 17 year slump is better than the alternative. I’m certain the the Japanese model is being studied as it should be to address our situation.
BC Bob Says:
November 2nd, 2007 at 9:14 am
“I believe Japan has 100 year mortgages and we may need them here.”
Just a brilliant idea, let’s go into a 17 year rut.
I can’t even respond to 50.5 today. However, I think the monte carlo simulation now indicates 25.25.
There are no more 100 year mortgages in Japan. When they did them during the last RE Bubble they were called “grandchildren” mortgages. Your heirs were liable for the mortgage. So If you bought lets say in 1989 at the peak of the market when you were 60, upon your passing your kid got stuck with it and then his kids. Japan has now declared that illegal. With 35 yo home buyers in a country where men live to 80 at best, giving 100 year loans to people with 45 year lifespan does not make much sense is a country where RE downturns can last almost 20 years. But what the heck bring it over here, BONY and CHASE got to have their 200 year aniverseries already so who cares if they get to see their 300 year aniversery. Let that bozo get his paperthin sheetrock Toll Bros. McMansion. What the heck. There are only like 186,000 workers at Chase so who cares if they go under.
bergenbuyer: What do you think is a fair price to get us back in line with the normal rate of price appreciation?
I’m of the thought that 2000 or 2001 prices plus 5%/year for inflation should be about today’s price. Anyone agree/disagree?
I disagree. I think you need to start from 1995 or so. IMO RE was underpriced for sometime after previous bust (i.e. from 1995 to 1999). It is natural for boom and bust to overextend.
ROFL
2012 RE bottom!!!
3116 reinvestor: So while things were “great”, the free markets were wonderful, now the situation is reversed, and we must do teh patriotic thing and bail you and others out?
Where is the free market now? What a cry baby!!
Rates at 0 would certainly be inflationary, especially with Oil (the lifeblood or any economy) at $100pb. This would only drive rates higher and $ lower causing a spiraling problem. From Econ 101 – I think this is called the Fischer Effect.
Please not 2011. My wife will absolutely kill me if we have to stay in what is essentially a rental unit for an extra 2 years. I guess anything nearer the bottom is better than where we are now.
SG, if RE was udnerpriced in 1995-1999 wouldn’t you be starting too low if you went to a 1995 price and then increased it 5% a year?
I have a problem going back to 1995 as well since there starts to be too many additions, updating etc, it’s hard to get a gauge on what a house really looked like and was worth. 2001 is hard enough.
The Two rules of slum lord real estate from the movie “The Super”
Alway buy under the “three D’s”
Divorce, Death or Dispair.
What do you do with a building once you own it?
Absolutely F##kiing Nothing!!
Now you know everything you need to know about real estate!
#118 SG So where would that bring us now price wise in your opinion?
since we’re playing make-believe, I’m thinking 2011 for a bottom
I’m thinking longer.
I think we will see this decline as a three-phase event:
1) Small declines as homeowners resist lowering prices, as they wait for “what they deserve”. (phase coming to an end).
2) 2 years or so of “panic” – sizable declines as those who can’t hang-on are forced to sell and many others simply give up and hope of a recovery & sell.
3) Long period (5-8 years or longer ) of stagnant prices as those who refuse to sell at a loss, or are underwater but have the means to ride it out, sit tight and wait for inflation to catch up to their price.
I’d say 2001 prices + 3.5% appreciation/year. 5% is a bit too much. (3.5%/year is already more than average salary growth)
“Alway buy under the ‘three D’s’
Divorce, Death or Dispair.”
Great advice. Buy from people who need to sell. This group includes homebuilders.
They will let you steal their properties. The rest of the sellers won’t let this happen. They’ll just take their place off the market.
I don’t understand that jobs report. The news is filled with layoffs left and right, but yet we’re adding jobs?
reinvestor: dude…I’m an IT guy and even I know you’re talking crap. Are you trying to sell a house? Is that what those tears are for? You can not count on housing to drive the economy b/c it doesn’t produce anything (besides carbon). Under normal circumstances & adjusted for inflation, it’s a cost center not a profit center (unless it’s investment property). The situation you’re presenting will also drive a larger wedge between the upper and lower classes, virtually eliminating the middle class. And screw the first time home buyer, right? Who needs ’em… They don’t ultimately drive the market do they? Everybody currently owns a house in the US. It’s like the game of musical chairs where nobody loses.
(using a Sam Kinison voice) “WAKE UP!!!!”
Texas (2nd largest state) and San Francisco Bay Area (4th largest metro area) are booming. So are North Carolina and Seattle.
The jobs are being added in these places faster than they’re getting cut in New York and Detroit.
SS [130],
How many were created by the birth/death quant model?
Reinvestor101
I am just taken back by you idiotic comments on here. You blame sites like this for the market crashing. Do you even think before you speak or just talk out your a@@? If it wern’t for Exotic mortages the market would have crashed a few years ago. Do you even have any common sense? I mean I like different opinions and to hear both sides of arguments.
But you are just an idiot. If you want to make your case against us, do some research.
The market is crashing becuase people cannot afford the prices. If the average income is 65,000.00 in NJ than most people cannot afford these price.
Think before you speak…IF thats not so hard for you to do
ReInvestor:
I wonder what you gonna say in 2011 when everyone is crying poverty and Homes become an unwanted commodity like ’95-’99.
If you crying now, what are you gonna do when blood is in the streets. Just to prepare yourself mentally you should watch 300.
You and Stan O’neal have one thing in common. You got caught holding the bag while your pants were down.
enough said.
The Two rules of slum lord real estate from the movie “The Super”
Alway buy under the “three D’s”
Divorce, Death or Dispair.
What do you do with a building once you own it?
Absolutely F##kiing Nothing!!
Now you know everything you need to know about real estate!
I love it!!
reinvestor101
#24 you’re insane
#44 you’re still insane
#51 you really need help
Reinvestor101:
Congratulations, you’ve past the denial stage and are now at the anger stage. Good job, whatever mess you got yourself into just accept it and move on. You have convinced me to wait even longer to buy house as this mess has just begun.
*Residential construction employment declined 21,500 in October, and including downward revisions to previous months, is down 221.9 thousand, or about 6.5%, from the peak in March 2006. (compare to housing starts off 30%+).
The initial benchmark revision shows the loss of an additional 8,000 construction jobs, but the initial report doesn’t breakout residential construction.
One of the towns I am considering buying in, will be conducting their property tax reassessment next year.
Any thoughts on how this might be conducted, in an environmet of decling prices? The town I live in now did theirs at the peak.
The rationale used for that reval was that the proverbial POS 50 year old capes were not paying their so called fair share of taxes,and to make a long story short, many of those houses ended up having huge increases, while the larger houses updated etc although increased, the increases were lower,
So now it appears that their is absolutely no rationale to how property taxes are computated (size of house amenities).
My concern is that we plan to purchase a smaller house (do not need the big one any more, been there, done that)on smaller peice of property, with “reasonable” (hah hah) taxes, with the reval we may then find that we are being taxed the same or clos to a much larger house with more amenities.
In case anyone is interested, here is a PDF of Goldman Sach’s Oct 21 report on Kalifonia RE overvalued 35-40%
http://tinyurl.com/yp7jvm
#129 They’ll just take their place off the market, assuming they do not need to sell.
124 bergen
agree
I’d tend to go back to somewhere in the 98-2000 period and adjust for inflation
Whoever said there’s a lot of work in IT this year is right. 2007 has been one of my busiest years and the project pipeline appears unending.
This isn’t exactly a revelation, but I think the percentage of uncoventional mortgages in a given area is basically the best indicator of how big a drop in prices you can anticipate. So, for example, a places like Cali where unconventional mortgages totally dominate the market could see 40-50% drops. I think the share of unconventional mortgages is far smaller in the NY metro area, consequently, I think that prices are closer to fundamentals
#132
So what is that saying? That we really only added 57K jobs?
based on the GS report, people looking for CFC bottom should look at california market..
well, lets lighten things up a bit shall we. A headline in todays news
Drinking beer after exercise found to be better for you than drinking water
I would guess that shore real estate will tumble at least as much if not more than other housing, given its run-up in pricing the last few years. Seems that other factors could weigh on this as well:
As Beaches Erode, So Do Solutions
On North Topsail Beach, N.C., an 11-mile stretch of barrier island, condemned houses rise from the surf line at the island’s north end. Standing on the deck of a modest home surrounded by dilapidated properties, Rebecca Hodges said that she voted for a $34 million referendum in November 2006, even though she was not sure if she and her husband, Robert, could afford an annual assessment in excess of $3,000.
“The price scares me,” she said. “But losing the beach scares me even more.”
Despite threatened homes, voters turned down the referendum, 74 to 26 percent. Later, some homeowners and town aldermen argued that the vote was not representative because of 723 registered voters, only 356 cast votes. This decided the fate of more than 2,000 property owners, many of whom live out of town.
Continued at:
http://www.nytimes.com/2007/11/02/travel/escapes/02sand.html
The problem with projects in the pipeline is they can be canceled.
I’d say 2001 prices + 3.5% appreciation/year. 5% is a bit too much. (3.5%/year is already more than average salary growth)
Don’t forget to factor property taxes into the equation.
As buyers and lenders sober up and start thinking rationally about the cost of ownership, higher property taxes will factor in to what a buyer is willing and able to pay.
Property taxes in many NJ towns are up 60% from 2000 levels. In 2006, the median property tax bill in NJ was $5,773. Assuming this is up 60% from 2000 levels (true inmany places), property taxes for the median family increased by $2,165 since 2000.
During the same period, median income in NJ increased from $55.2k to $64.5k. Based on a traditional 28% of income going toward housing “affordability guideline”, the median family has $217 more per month to spend on housing today versus 2000. However, $180 of this increase in pay (83%) gets eaten up by property taxes increase. Meaning the median NJ family can’t afford much more house in today compared with 2000 due to higher taxes.
To reinvestor101:
Please keep your posts coming! Do not be discouraged by the naysayers here. Ya gotta believe!
#142
Sync, I agree. Our company seems to have no problem spending money on new IT projects. CRM, middleware, CLM, and so on. Not to mention I’m getting calls just about everyday from headhunters looking to place SAP functional people for all modules. Glad I decided to get out of accounting and go into IT. (although pret does have me on a CFA kick)
Same game. It will overshoot way down past fundamentals.
#150 # CB in SJ Says:
November 2nd, 2007 at 11:42 am
To reinvestor101:
Please keep your posts coming! Do not be discouraged by the naysayers here. Ya gotta believe!
You know, i have been trying this whol “just Believe” thing for years, but sadly heidi klume has yet to stop by for an evening of animal lust…. :(
Informative and I agree with these “4 Stages of Housing Bust”
http://www.rgemonitor.com/blog/roubini/223214/
Hope is a terrible investment strategy.
But do higher property taxes really matter?
Most towns out in the sticks the single largest employer in town is the school district and local govt. Those people don’t mind the higher taxes as the higher taxes are used to pay their salaries, free medical for life and pension. Think about it, all the schools were built in the 50’s and 60’s and have no mortgage and pay no RE taxes yet expenses rise each year.
The poor folks in town don’t own their home and the richer homes in town are own by the high salary non govt worker type. So jacking taxes sticks the guy with the expensive home the most and moves it to the teachers in town with less expensive homes.
All the teachers in my town who lives in Capes vote yes to the budget every time even though they get slightly higher taxes.
Your math proves the opposite of what you are saying. Lets say I bought a typical 300K home with nothing down in 2000 when the rate was at 8%, my mortgage was $2400 a month and my taxes were $500 a month for a total of $2,900 a month.
Flash forward to 2006. I refinanced when rates were 6% so my mortgage is now $1,800 a month but my taxes are now $200 a month higher and are now $700. So my monthly nut is now $2,500 hundred a month, so I am paying $400 hundred a month less than 2000. But wait now you say my income went up from 55K to 65K, wow that is another $800 a month I have in my pocket. So I am ahead $1,200 a month with my higher taxes. Booo YAAA.
Re Property taxes in many NJ towns are up 60% from 2000 levels. In 2006, the median property tax bill in NJ was $5,773. Assuming this is up 60% from 2000 levels (true inmany places), property taxes for the median family increased by $2,165 since 2000.
During the same period, median income in NJ increased from $55.2k to $64.5k. Based on a traditional 28% of income going toward housing “affordability
Yesterday the consulting economist at our firm pointed out 2 things about the unemployment rate/jobs reports – loads of construction jobs have been lost, but this doesn’t hit jobs numbers because a lot of these jobs aren’t on the books (under the table/illegal aliens). Another is that the labor force itself is shrinking. People have dropped out of the work force and aren’t even looking anymore.
In Westfield, would you buy, or rent?
This is new construction, 4bd 3.5bth
MLS#2441929 for sale – $1,229,000 (taxes TBD)
MLS#2447404 for rent – $6000
Let’s see, if I had the $245K to put down, and could get a jumbo for the other $983K @ 6.5, that would run me $6200 a month. Plus what has to be $1000 a month in taxes.
I think I’ll rent for another year, just not this one.
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.
… the labor force itself is shrinking. People have dropped out of the work force and aren’t even looking anymore.
I always hear this. Who are these people? I don’t know anyone who just gave up looking. As long as there are bills to pay, you need income. Unless you’re eligible for social security/pension, I don’t see how you can just decide to not work anymore. A roof over your head and food on the table aren’t optionals, are they?
John,
I’m curious, what is your general stance on the current housing/economic mess. From your posts you seem to be straddling a bear/bull position. Just curious, your posts seems to drift back on forth on the matters. Not an knock on you, just an observation.
Oh..and has anyone called out bi for oil being above $90.00 for more than 5 days?
161 Sync,
A buddy of mine works it what you might call a gray market (Ok, mostly black but a little gray)so technically he would never show up on employment numbers. WHile he does very well and is most likely well above average, with internet business booming, how many people run under the radar with web business?
VMC,
The last press release from the NJ Department of Labor and Workforce Development illustrates this pretty well.
http://lwd.dol.state.nj.us/labor/forms_pdfs/lwdhome/press/2007/1017UnemploymentTables.pdf
September 2006 Unemployment 4.6%
September 2007 Unemployment 4.3%
More people must have been working, right?
September 2006 Employment – 4,317.4
September 2007 Employment – 4,318.2
(in thousands)
Hmm, pretty flat employment growth to move the unemployment rate down 3 clicks..
What else could have changed?
Sept 2006 Civilian Labor Force – 4,527.4
Sept 2007 Civilian Labor Force – 4,513.0
14,400 fewer people in the labor force?
There we go, the unemployment rate went down because there are fewer people in the labor force.
The decrease in unemployment, 15,500, was primarily due to people either leaving the state, or not actively looking for jobs anymore, not due to the miniscule increase in jobs.
NEWS FROM REUTERS This Week
Hedge Funds Deals Postpone Merrill Losses – WSJ
GMAC Has $1.6 Billion Loss on Mortgages, Is Downgraded
Credit Suisse Third-Quarter Writedowns Hit Investment Bank
N.Y. AG Sues First American, Unit in Mortgage Probe
Bear Stearns CEO Says Pot Smoking Story Untrue
Credit Crunch Slicing Wall St. Out of M&A Process
Bank of America CEO Committed to Investment Bank
U.S. 30-Year Mortgage Rates Lowest in Nearly 6 Months
Merrill Sues Over Racially Denigrating E-Mails
Citigroup Enters Pact to Buy Rest of Japan’s Nikko
Markets Crisis Takes Toll on Deutsche Bank
Lehman Private Equity Sees Credit Crunch Benefits
Merrill Lynch CEO O’Neal Retires
UBS Third-Quarter Loss More Than Expected, Fourth Quarter Seen Better
Bear Stearns Hedge Fund Investors Eye New Control
ABN Buyers Juggle Job Cuts, Keeping Star Bankers
Bank of China Books $322 Million on Subprime; Profit Up
UBS Confirms Third-Quarter Pretax Loss, Warns on Writedown
Ex-Countrywide VP Settles Insider Trading Charges
Merrill’s Own Subprime Warnings Unheeded
Bear Stearns to Cut About 300 Jobs
Lehman Raises Fund to Buy Leveraged Loans
Double-Digit California Home Price Drop Seen
Japan’s MUFG to Boost Subprime Write-Downs Sixfold
#163 TJ
Yes the other day he admitted he lost, but sticks by it going down over the next quarter
Has anybody kept track of the total amount of write downs so far? it has to be approaching 100 Billion
“Kettle1 Says:
November 2nd, 2007 at 11:35 am
well, lets lighten things up a bit shall we. A headline in todays news
Drinking beer after exercise found to be better for you than drinking water ”
LINK PLEASE!!!!!!!!!!!!!
“TJ Says:
November 2nd, 2007 at 12:14 pm
Oh..and has anyone called out bi for oil being above $90.00 for more than 5 days?”
No.
Where is that bad boy?
What’s the rent roll rule again? The purchase price should be no more than X times the rent roll?
#165
That’s a great post, grim. Really gives the picture.
“From your posts you seem to be straddling a bear/bull position.”
kettle,
He’s not straddling anything. He’s just standing in deep piles of ….
Kettle1 Says:
November 2nd, 2007 at 12:13 pm
If you bought pre 2002, put 20% down and were able to refinance at a lower rate without taking a cash out you are so ahead that housing is and will be a great investment. So there I am a bull.
I am a bear on post 2002 purchases, first you pulled money from stocks and bonds (just before they went on a tear from 2003 right to 2007) and bought a house at a high price with a high mortgage. Remember, you pay back triple what you borrowed, a 600K POS cape that you took a 100K home equity on to remodel puts you 700K in the whole and will cost you a total of two million over 30 years. A 35 yo who has to pay back two million between 35 and 65 will have to skip saving for his kids college and his retirement or just put himself in more debt. It is a no win situation and people did it cause houses kept coming up and they could care less about a monthly loss as long as someone would buy that pos for 50% more in two years.
Going forward I am a big bear on RE for the next 12 months, after that cherry picking the dream house is ok as you can’t time the bottom, but POS run of the mill capes and splits on bad streets that people snapped up in 2004 are going to have a 3-7 year bottom. I am also worried about bear trap false bottoms. I rather wait and miss the bottom then jump into a bear trap. Buying a dream house at a good price won’t make you as much as other asset classes but still it a good investment and buying rental properties with positive cash flows are ok. But we are not there yet. I love the term INVESTMENT PROPERTY. when it has a 3k nut and rents for 2K, I see that a lot. But it will change, you can only wait out a downmarket in an affordable primary residence or a rental with breakeven or positive cash flow. Right now we have lots of flippers, people in over their heads and negative cash flow investment properties where people are just hanging on. That has to be cleared before we can turn, it will happen but the sellers are their own worse enemy, only they can make it quick and right now they are hanging on even if they risk bankruptcy.
John,
I’m curious, what is your general stance on the current housing/economic mess. From your posts you seem to be straddling a bear/bull position. Just curious, your posts seems to drift back on forth on the matters. Not an knock on you, just an observation.
Beer After Exercise May Be Better Than Water, Study Finds
http://www.foxnews.com/story/0,2933,307518,00.html
#157 John,
If you bought in 2000, refinanced to a lower rate later & didn’t cash out your equity, then yes, you are way ahead of the game despite higher taxes.
My post was really referring to first time buyers. Due to higher taxes, a first time buyer’s buying power isn’t much different today versus 2000.
While the 2000 buyer you described is quite well off, what happens when they decide sell? Who is their buyer and what can they afford? If they are selling to a first time buyer, their sale price will be affected by what first time buyers can afford to pay. If they are selling to a move-up owner, their buyer needs to sell to a first time buyer affecting how much they will be able to pay.
Poll Time.
If you had the choice, would you work for:
A> Hedge Fund
B> Securities/Trading Firm
C> Pharmaceutical
At this point in time I think buying a home and acquiring massive amounts of debt was actually a very smart move.
For this to be true, inflation would need to show up in incomes. So far, this hasn’t happend.
3b Says:
November 2nd, 2007 at 11:08 am
One of the towns I am considering buying in, will be conducting their property tax reassessment next year.
What town? If I recall correctly from some of your previous posts I think we’re looking in the same towns. Thanks.
Alternatively, is there a place where you can find out who is reasssessing and when?
Richie #177,
Which of them is in Jersey? You couldn’t pay me enough to commute into the city.
Pharma is most likely to be in my neck of the woods, so I pick that.
I always hear this. Who are these people? I don’t know anyone who just gave up looking.
No, but people can leave NJ, taking then out of the NJ labor force.
RentinginNJ #181,
Yeah I was thinking nationally. Not too many people emigrate out of the US (except some retirees).
NJ Patient
the beer link
http://tinyurl.com/yuha78
For this to be true, inflation would need to show up in incomes. So far, this hasn’t happend.
Everyone in the labor force should change employers over the next 6 months. There’s no better way to get a real raise.
# Richie Says:
November 2nd, 2007 at 12:37 pm
Poll Time.
If you had the choice, would you work for:
A> Hedge Fund
B> Securities/Trading Firm
C> Pharmaceutical
working in C considering move to A/B
# 3b Says:
November 2nd, 2007 at 10:55 am
#118 SG So where would that bring us now price wise in your opinion?
Good Question. I had to go back and get data to answer that question.
I got Home Price Index (HPI) data from 1995, and applied CPI + 1%, 2%, 3% rate to that. The chart on following link shows all these 4 lines. What I have read from Dr. Schuller and others is that historically RE moves 1.5% higher then rate of inflation. I feel in NNJ & CNJ that rate is probably closer to 2% or 3% (depending on what you like). Looking at the humbers, from historical perspective, 2003 end or 2004 prices should be correct number for today. At the least paying anything about 2004 prices is out of whack from Historical perspective. By the same token, IMO when we reach HPI to 2004 level, we may have almost reached the bottom.
http://geocities.com/skgala/hpi_cpi.htm
184
actually doing that today, got 20% increase that way :)
Never got a change to give everyone a Halloween treat so here goes:
October Sales Sneak Preview
Discuss the October horrorshow.
#177
B> Securities/Trading Firm
Job A may not be around in a year or two.
Job C Usually less $ and boring IMHO.
#185 B kettle: B. is laying off now (see one of my earlier posts, re: wall st recruiter), and I would certainly imagine C. is or will be as well.
3b
would look at moving for about 2 years, i will assess then if there has been a recovery for those groups
meant ” i would not start looking for about 2 years”
#179 bergenbuyer: The town I live in (River Edge did it in 2005). The town that I am considering in addition to RE, is Oradell, and their reassessment will be conducted in 08.
I do not know of any particualr resource to find out which town is or will be doing it, but you can call the tax office in any town you might be considering, and they can tell you.
So I hear the yellow stuff is trading over $800..
194
I am a strong bull on gold until next fall, that my call
#177
Agree with #189, Job B offers the best overall risk/reward ratio. Who do job C when the bonus will not be there during the good times and you will get cut just like in jobs A and B in the bad times. Job A has too high a risk for my risk premium, especially when job B pays 90-95% as much for much less risk.
my 2 cents.
BREAKING DOWN THE NUMBERS
Here’s how the average tax bill in 2008 would change under Rangel’s proposed tax reform bill.
Income Avg tax change % change
Over $500K +$11,497 +6%
Over $1M +$101,082 +10.4%
$200k-$500k -$3,582 -4.5%
$100k-$200k -$1,569 -4.8%
$75k-$100k -$532 -2.9%
$50k-$75K -$158 -1.3%
$40k-$50k -$84 -1.1%
$30k-$40k -$64 -1.3%
$20k-$30k -$85 -3.5%
$10k-$20k -$162 -24%
Under $10k -$47 -19.8%
#177
Worked as consultant in all types. Now sattle at B as perm. Like it.
Gold will continue to rise until the FED starts to raise rates.
From MarketWatch:
WaMu vulnerable on securitized mortgages?
Washington Mutual may have to set aside some $412 million to $2.1 billion in extra reserves if a lawsuit filed by New York state’s attorney general against the mortgage lender succeeds, a Keefe Bruyette & Woods analyst estimated on Friday.
#188 Grim, re October’s sales. That is a horror show. But there was a lot of weather in October. Too much darn weather.
#176 rent Just a personal observation, every buiyer I know that has purcahsed since 2000, and for that matter before 2000, has done major renovations/expansions to their houses, and every single one has at least one home equity loan/HELOC, some more than one.
I also know a good few who are using their equity to pay for their kids college too.
Some 2000 and before buyers I am sure are fine, it is my own unscientific observation that many probably are not.
When you give up looking for a job you are taking out of the work force and unemployment figures. My wife could not keep her last job due to the kids, but she could not find a child friendly employer or a decent part time job so she quit and is not counted as unemployed.
My neighbor got laid off in 2002 and has not since worked, doubt he is looking, he is just sponging off his wife. He is not in the workforce or unemployed. Millions of people are in this boat. The govt figures are also massaged for birth and death rates and other nonsense. Take it with a grain of salt. They also revise it months later and that does not make the newspaper so todays number might be changed in a few weeks and no one will care.
But there was a lot of weather in October. Too much darn weather.
Wasn’t it the warmest October in years?
Kettle1 #187,
You da man (or woman)! I’ve done it a few times myself and I am yet to make a move that I ended up regretting.
Kettle1 185,
Go for it. I made the same move, and it was worth it.
New Jersey is no longer a pharma hub. The state-of-the-art manufacturing is done in other countries (Ireland, Singapore, Puerto Rico) and the best research is happening in places where the best and brightest scientests want to live – West Coast, Boston, around London.
Big pharma is an industry in decline. The real excitement is at smaller firms in California and Boston.
At the same time, New York is the world’s #1 to be if you want to work at an innovative investment firm.
Syncmaster #184.
I agree. Only other ways to make a lot of $ fast is to be an entrepreneur or work on Wall Street. Wall Street firms have no problem giving a 25 year old a 100% raise or paying him $200k. Big pharma would never do this.
John #197,
Over $500K +$11,497 +6%
Over $1M +$101,082 +10.4%
$200k-$500k -$3,582 -4.5%
$100k-$200k -$1,569 -4.8%
$75k-$100k -$532 -2.9%
$50k-$75K -$158 -1.3%
$40k-$50k -$84 -1.1%
$30k-$40k -$64 -1.3%
$20k-$30k -$85 -3.5%
$10k-$20k -$162 -24%
Under $10k -$47 -19.8%
LOL 100K-500K does better than 20k-75K??? Messed up, if true.
#162 sync: I know a least 3 guys late 40’s/ early 50’s, who had good long term careers, who were down sized, after many years in one plcae, and struggled to find otehr employment, a merry go round of shor term jobs here and there.
Any how after soemt iem when the reality hit that they could no longer find a steady Corportate job, 9 to whenever, they dropped out.
What is saving them, are spouses who have decent/ good jobs, and they take odd work here and there as they find it, but effectively they are out of the labor force. These are college+ people. So it is out there.
jb [194],
805.90
#209 Yep they have no probelm doing it, and they have less of a problem taking it away. Pret you have yet to see a bloodbath on Wall St, trust me when you do, and at some point you will, it will sober you right up.
3b [213],
I can’t begin to tell you the calls that I am receiving. You are right, it will be ugly.
From Reuters:
S&P cuts D.R. Horton, Pulte debt into junk territory
Standard & Poor’s on Friday cuts its ratings on D.R. Horton Inc (DHI.N: Quote, Profile, Research) and Pulte Homes Inc (PHM.N: Quote, Profile, Research) into junk territory, citing the vulnerability of the home builders to the deteriorating housing market and macroeconomic conditions.
Both builders were cut one notch to “BB-plus,” one level below investment grade, from “BBB-minus.” The outlook for both companies is negative, indicating an additional cut is likely over the next two years.
3b,
Sure I have. I was looking for a job in 2002 and was negotiating an offer with a major bank. The offer was pulled when the bank announced layoffs.
C – Pharmaceutical.
Female, young kids, Biomedical degree.
Pharm companies are more family friendly and my background is more suitable.
I might have gone for B if I was 22, single, wanted to work long hours in a male dominated environment and liked finance.
For bucks now I am looking at entrepreneurship. Long hours and headaches but at least they are my headaches. And no long useless meetings.
Never got a change to give everyone a Halloween treat so here goes: Discuss the October horrorshow.
I’m sticking to my view that we will get a sub 1000 number in the near future. Volume is going to drop off a cliff, unless there is a sharp reduction in price. But the sellers are too obstinate…
RentinginNJ #181,
Yeah I was thinking nationally. Not too many people emigrate out of the US (except some retirees).
True. But I don’t think the total national labor force is shrinking.
There are, however, shifts between states.
NJ was one of 9 state that saw a declining workforce. All other states & the U.S. as a whole saw increasing numbers.
#207 But there was a lot of weather in October. Too much darn weather.
Wasn’t it the warmest October in years?
Yes Grim, it was. But not optimally warm for sales. Everyone knows that if an appropriate October chill had been in the air, home sales would be through the roof. I would have bought 2 of them.
Not even the NAR could blame the weather for this. I shouldn’t “call a bottom” on how low they will stoop. All bottom predictions for that and the market have been premature.
I shouldn’t “call a bottom” on how low they will stoop. – great line
RentinginNJ #219,
I’ve heard that as well. Do you have a link handy
220 – it was too nice out. Who wants to shop for a house when the weather is so nice?
I was going to buy a house in Brigadoon, but I sat on the beach instead.
Maybe I’ll buy one in November. Unless it’s too cold and rainy.
john 206
that’s right (I have a relative who is a public policy analyst specializing in welfare effects who is always explaining this effect).
I don’t mind the bottom-calling since these bozos are eternal optimists. But what’s with always having the phrase ‘unexpected decline’ in the headlines…WTF? It’s fricking in your face the past few quarters, nothing unexpected about the declines in volume and price.
Completely OT, but this should qualify for Finance question of the week:
I’ve never owned an ETF, but I am anything but a newbie to the market. (I am 66 now.) How about a suggestion for an ETF, or ETFs, that accomplish the following: S&P 500 returns; virtually risk-free income producer; and downside protection. I am seeking investment suggestions, not a suggestion to see a wealth management advisor.
Huh?
dreamtheaterr Says: November 2nd, 2007 at 2:05 pm Completely OT, but this should qualify for Finance question of the week: I’ve never owned an ETF, but I am anything but a newbie to the market. (I am 66 now.) How about a suggestion for an ETF, or ETFs, that accomplish the following: S&P 500 returns; virtually risk-free income producer; and downside protection. I am seeking investment suggestions, not a suggestion to see a wealth management advisor. Huh?
yan: was this post from here? There is only one answer….a variable-equity annuity, and you will pay dearly for the insurance……for some people, there is no other answer…..I have yet to meet one, but that won’t stop a broker from selling the annuity though…..
Be careful, Fidelity and Schwab are on the cusp of marketing a bunch of optical illusion products designed to trick people into thinking they are getting what this guy is asking for…….
Ok I have been holding off on this for a while. but here goes.
Standard disclaimers on. This is my opinion.
The low dollar is not all doom and gloom as the rest of the world will have to come in and support it. The strong EUR or GBP is hurting their economies as it hurts their balance of payments. If a currency is too strong, foreign countries will not buy their exports or invest in their economies. A good example of this is Seagate. They announced this week that they are shutting down their UK manufacturing sites as it is now too expensive to run. The UK gets hit twicew as it loses the jobs in an economically depressed area and loses the revenue from the export of the disk drives. While some countries will decouple, the dollar still runs the black markets and in countries such as Vietnam, is still the prefered currency of day to day life. I think we are starting to see a return of the offshored work as the cost of doing business outside the US is too expensive. Unless you are a Haliburton where most of your customer base is outside the US, the IT helpdesks and the car parts will be back onshore soon.
The chances of a PetroEuro are very slim. The Euro is not a mature enough currency to support it and will not be able to cope with the pressure when the EUR loses strenght to the other currnecys. The only other economies that could support Petroleum are China and Russia. That is a political non starter.
#225 I also love (HATE) when an alleged reporter mimics a line like “housing slowed last month due to problems with sub prime lending”. Or some other singular cause. Right, so once we get all that squared away, its back to business as usual.
Variable annuities. Thats some scary stuff. Ever see the commissions on them and the early termination fees? These investment vehicles aught to be illegal!
NAR Public Ad Campaign:
If you’ve been waiting for the
right time to buy a home,
you should know the facts
about homeownership. Right
now, interest rates are still at
historic lows, conventional financing is available, and FHA-insured
mortgage applications are on the rise. The more you know, the more
you’ll realize it’s a decision you shouldn’t postpone any longer.
On average, the value of a home nearly doubles every 10 years.1
That’s a return most investments can’t match. During the past three
decades, home values have increased an average of 6.6% per year.2
And because most buyers invest only a small part of their home’s total
value in a down payment, their return on that initial investment is much
greater, thanks to the power of leverage.
The average homeowner today has 36 times the wealth of the
average renter.3 Homeownership is key to climbing up the economic
ladder. When you own a home, you’re essentially paying yourself and
building up equity. Not to mention the tax deductions only owners can
claim, such as property taxes and mortgage interest.
Sixty percent of the
average homeowner’s
wealth is their home’s
equity.4 Very few people
look back and regret their
decision to purchase a home. Historically speaking, homeowners that
are in it for the long haul will build equity. In fact, home equity is the
largest single source of household wealth for most Americans.5
Of course, a home is much more than a way to accumulate wealth.
It’s a place to enjoy your lifestyle and your loved ones. What other
investment can claim that?
The best way to evaluate your situation and options is to contact a
REALTOR®—a member of the national and your local association of
REALTORS ®. They can provide solid advice on local market conditions
and can help you find the home you’ve always wanted. Every market
is different. Contact a REALTOR® today.
Chifi, the question was posed on SmartMoney.com
Kettle – I currently work for an investment bank. I’ve worked at various houses for about 8 years now. I cannot advise against it strongly enough. I have now idea what pharma is like, it may be just as bad so take this with a grain of salt.
However, you might like it if you enjoy;
-Mind-numbing and senseless bureaucracy. Think masses of paperwork for every tiny little change that needs to be done. Half the time filling out the requests for approvals takes longer than whatever you need to do. Not to mentioned the 6 – 8 “risk managers” who are in charge of this stuff and don’t really understand the technical aspects. Need to quickly add a route? Oh no my friend, that needs to be approved by dept A, signed in triplicate by group B (who hates dept A) and reviewed by the cisco guys, who are out this week.
-A reliance on out of date tech. Seriously, you have no idea how much of the trading done in the world is still running over DECnet and dependent on VAXes. I’m dead serious on this. Also, 9.6 lines, we still got `em.
-Obscene hours. Once your route add has been approved of course it has to be done after trade hours, preferably on a weekend. However, there’s a work freeze tonight/this weekend/decade, and if the floor is big enough someone is always trading somewhere.
-Frat boys. Stop by the FX desk, this is where they all went after college. They’re just as dumb now too.
I could go on but I think you get the idea. I’m seriously considering leaving and moving on to greener pastures.
RentinginNJ #219,
I’ve heard that as well. Do you have a link handy
http://www.bls.gov/news.release/laus.t03.htm
on the property tax issue. I actually don’t think it’s a major deterrant to sales. it’s all a matter of what the alternatives are. property taxes are high in the suburbs of NYC as a whole, with the exception of CT.
I do think that CT siphons some sales off of Westchester due to the property tax issue. But all of the other commutable suburbs are basically in the same boat with respect to property taxes.
Also, you have to think of who the typical suburban buyers are. They are people with kids. Schools in the NYC suburbs are very good on the whole. For what most people pay in taxes, they could never buy such a quality education for their children on their own in the open market (private schools). Two kids in a quality private school would be $50,000 per year. So I think most people moving to the NYC suburbs make this calculation and are willing to live with the taxes. For those without kids in school, it is just absurd and there is no economically good reason to deal with it.
“Before Alex Rodriguez opted out of his contract with the Yankees earlier this week, the team was told that it would not be able to meet with the third baseman unless it presented an offer of at least $350 million, sources say. “
toshiro_mifune Says:
November 2nd, 2007 at 2:36 pm
t: grass is always greener…….
#237 – ChiFi – This could very well be the case.
From Reuters via CNBC:
Foreclosures Could Remain High for 18 Months
The rate of foreclosures in the United States will remain higher than normal for the next 18 months as the current home loan crisis plays itself out, a senior U.S. Treasury official said Friday.
“A rising foreclosure rate during a housing downturn is not surprising, but largely because of lax underwriting in recent years, especially in the subprime market, a higher than usual number of homeowners will face delinquency during the next year and a half,” Robert Steel, undersecretary for domestic finance, told a congressional panel in prepared remarks.
236
Yak
OT, but here’s a fun blast from the not-too distant past. Anyone want to guess how much bi lost? (oil was at ~$85 on 10/16 when he promised to act on his own investment advice).
“bi Says:
October 16th, 2007 at 1:18 pm
while i called oil peak many times, today is the day i am taking action”
toshiro_mifune Says:
November 2nd, 2007 at 2:36 pm
-Frat boys. Stop by the FX desk, this is where they all went after college. They’re just as dumb now too.
t: But, but…but doesn’t Bost work on the FX desk?????!!!!!!!
http://www.youtube.com/watch?v=ihd4G9XxJOc
toshiro_mifune
In a previous weekend thread, i threw out that i am looking at jumping into Quant. Without restarting the whole conversation, pharma now bores me, its similar in a lot of ways to what you described. I enjoy high level modeling ( both financial/engineering/biological) are all very similar at the base level)
#233 toshiro_mifune
I subcontracted a lot at the big IB’s in London in the 90’s. I always remember the big storeroom off the trading floor where they stored the spare hand sets for the phones. On Black Wednesday when the UK came out of the ERM, the FX traders were bouncing the phones off the desks and they ran out of spares. At that point I swore I would stay working in the back office and stay away from the Front Office.
#243 kettle1 – Developing models might be a bit different. I’m on the RMDS end (this probably means nothing to anyone) which can be quite a bit different as well supply trade data directly to the floors.
#244 PGC – That sounds exactly like the end of the .com boom. I suppose my problem is that the front office has now invaded the back office.
I actually don’t think it’s a major deterrant to sales. it’s all a matter of what the alternatives are
As you said, I think there are people with kids that see high property taxes as the cost of tuition to in a good school district.
This, however, is only one segment of the market. As you note, NJ property taxes are“ absurd and there is no economically good reason” to pay them if you don’t have kids. Much of the population doesn’t have school age kids and are electing to leave the state. This does affect sales.
Also, for many middle class first time buyers, it’s not a question of trading off high taxes for good schools in a top-tier town, but rather putting up with ridiculous taxes on a starter cape in a town with so-so schools. The alternative may be to relocate to a top tier town in a more affordable state or simple relocate to a more affordable state & use the house and tax savings for private school, if you so choose.
Also, as lenders again begin to assess what a buyer can afford (what they are willing to lend) taxes will come into the equation & reduce a buyer’s affordability.
“The low dollar is not all doom and gloom as the rest of the world will have to come in and support it.”
“The strong EUR or GBP is hurting their economies as it hurts their balance of payments.”
[228],
Scenario 1: Suppose one day you wake up and the world markets are crashing. European firms are reporting much lower earnings than expected as the result of a crumbling dollar. The dollar becomes the culprit for market unrest. How does our stock market react?
Scenario 2: These same firms are raising prices to compensate for the their currency loss. We pay up, inflation rises. Our purchasing power is obliterated.
Scenario 4: I don’t know if you mean CB’s will intervene to support the dollar? If yes, they would have a better chance of trying to straighten out Todd Marinovich. Currency intervention is a band aid. It may prop it up the dollar for a short period of time. However, world traders will stuff it in their face. The only measure that will support the dollar, long term, is sound fiscal/monetary policy, aka Paul Volker.
Scenario 4: Opec despises a crumbling dollar. Most of their imports are in euros, yet they get paid in dollars. Crude goes to $115-118? At the same time refineries are running at approx 86% capacity. A cold spell hits. Don’t cringe when you open your heating bills.
Just an observation.
Chi [242],
But I was smarter when I was in college. I bartended in downtown Beantown and went on weekend trips to go see Flutie. Why did I ever leave that?
Dreamtheather, test drive that 2008 Malibu this weekend and get back to us on Monday how it compares to that Korean Tin Can you are driving.
dreamtheaterr Says:
November 2nd, 2007 at 2:05 pm
Completely OT, but this should qualify for Finance question of the week:
I’ve never owned an ETF, but I am anything but a newbie to the market. (I am 66 now.) How about a suggestion for an ETF, or ETFs, that accomplish the following: S&P 500 returns; virtually risk-free income producer; and downside protection. I am seeking investment suggestions, not a suggestion to see a wealth management advisor.
Huh?
#245
Definitely not lost on all of us. I worked on TIB/Triarch for a good 6 or 7 years at a few majors.
I will vouch for those who extol the virtues of pharma benefits. My wife works at Pfizer and she just had to redo her health care for the family. $70 a month for full family coverage. Now that is not bad at all. They even have a pension that pays you your salary after 29 years or something like that. Those are benefits that we just don’t have at the major banks. The pay is of course very different but if you can partner up with someone then I have to say doing a dual A/C or B/C is the way to go. The one thing I noticed about pharma is the pay scales. They have their scales for each position and they rarely deviate from them. At the banks almost every position has a lot of leeway if they like you to give you what it will take. Remember this, the money gets old in 5 minutes though. The work and the benefits are what keep you working.
Question for the Blog on the Bernanke rate cut…
Is Ben Bernanke a pushover; a lapdog who will do what Wall Street wants him to do, even cutting rates despite decent employment numbers, decent economic growth and high inflationary concerns (gold, energy, food etc.)?
Or;
Does Ben Bernanke share the same view of housing that many people here have (despite publicly being more sanguine)? Essentially that housing will continue to deteriorate. Price drops & foreclosures will accelerate and it will ultimately be a major drag on the economy. The situation will is dire enough that he feels compelled to act now, despite the risks?
Scenario 4: Opec despises a crumbling dollar. Most of their imports are in euros, yet they get paid in dollars. Crude goes to $115-118? At the same time refineries are running at approx 86% capacity. A cold spell hits. Don’t cringe when you open your heating bills.
Bost: OPEC guys are not so happy, because they know the longer prices stay north of $80, and further north of $100, the more feasible alternative energy sources become. Once that genie is out of the bottle………
Oil shale, they used to laugh…..no way we can refine oil shale….it would cost $100 a barrel, it is economically unfeasible…..oh really?
#247 BC Bob
Not sure what you mean with Scenarios, but I’ll address the points.
1. Yes, the market will crash, but a lot of the companies earnings would have been based on the fact the host currency was strong. So the weak dollar helped them.
2 This is my point. We don’t buy because the price is too high, so we seek a cheaper alternative. As the costs are lower back home, it might be better to source localy.
3 Its not that the CB’s will intervene directly to support the dollar, they will move their own interest rates to stop their own enconomy overheating, and make the country look more attractive for investment.
4 Oil is expensive and supply can’t meet demand. There may be some arbitrage on the triangulation of the currencies, but it works out a wash. In fact, having the dollar in the middle will keep EUR to local ccy in check, if it was straight EUR to local, the EUR will strenghten even more.
RentinginNJ Says:
November 2nd, 2007 at 3:53 pm
Question for the Blog on the Bernanke rate cut…
rent: the problem is that the moil may have cut too far up toward the torso…..are his kids adopted?
Mike NJ #250,
Work and benefits, yes. To that I’ll add workplace flexibility (WFH, skip out for a few hours to get the car inspected, etc.) and management that you can actually talk to as added benefits that make a really good workplace.
# stuw6 Says:
November 2nd, 2007 at 2:19 pm
Variable annuities. Thats some scary stuff. Ever see the commissions on them and the early termination fees? These investment vehicles aught to be illegal!
Stu,
The regulators at a lot of different levels – Federal and state – have been cracking down hard for quite a while on the sale of variable annuities to senior citizens.
“Its not that the CB’s will intervene directly to support the dollar, they will move their own interest rates to stop their own enconomy overheating”
PGC,
That’s not supporting the dollar, this will cause a more rapid/pronounced dollar decline, widening interest rate differentials.
Renting # 251
Is Ben Bernanke a pushover; a lapdog who will do what Wall Street wants him to do, even cutting rates despite decent employment numbers, decent economic growth and high inflationary concerns (gold, energy, food etc.)?
Or
Bernanke is generally in the same position as Volckler was. Vernanke knows the current situation better then we do (or so i hope). The issue is,is he willing to take the heat from both the politicians and the public who will brand him a traitor and a failure when he jacks up rates. Realize that the correct action at this time ( a rate increase) will be very ugly. There is to much excess in the market and it has to be purged. The public and the politicians are not prepared to accept the pain that comes with the correction. Bernanke may or may not be a push over, the problem is you need someone with a set of steel balls to take the right steps, because everyone will coming for his head for the next several years, until the market correction ended, then like volkler his genius would be recognized.
WSJ
Citi to Hold Emergency Board Meeting
By DAMIAN PALETTA, ROBIN SIDEL and DAVID ENRICH
November 2, 2007 4:04 p.m.
Citigroup Inc. board members are expected to gather for an emergency meeting this weekend, two people familiar with the matter said.
It wasn’t immediately clear what the meeting would address, but the subject of further writedowns could come up.
Citigroup has lost nearly a quarter of its market value since Oct. 12, the Friday before it reported its third quarter earnings had slumped 57%, depressed by mortgage defaults and this summer’s credit scare. The bank’s shares were down 1.4% Friday at $37.99.
In reporting its third-quarter earnings, Citigroup warned that it endured a surge in late payments on consumer mortgages in September, costing the bank $3 billion in higher losses and reserves against future bad loans and hurting the value of loans Citigroup hopes to sell to investors. Chief Financial Officer Gary Crittenden said the trend is likely to continue.
Citigroup also booked $1.56 billion in pretax losses tied to loans and subprime mortgages that were to be repackaged and sold to investors.
The results turned the screw on Citigroup Chief Executive Charles Prince, who was already facing pressure from investors to get revenue up, cut costs and demonstrate that Citigroup’s financial supermarket model pays off.
John Says:
November 2nd, 2007 at 3:39 pm
Dreamtheather, test drive that 2008 Malibu this weekend and get back to us on Monday how it compares to that Korean Tin Can you are driving.
Mr. Douche, I’ve got better things to do on a weekend than test-drive. I buy a car once a decade…. maybe when 2015 come around, the Malibu will be in a museum.
You can be assured that arrogant pr1cks like you convince me not to subsidize your sorry *ss by buying American cars. Now please stick to RE, your posts at least are worth pondering over, instead of the racist garbage your spew out every weekend.
Kettle1:
You could not have explained it better. Politicians no longer make decisions that benefit their constituents, especially long term decisions. Instead, they make short term decisions that allow them to save face and further their political longevity. When was the last time you heard a kid say, “I want to be president when I grow up.” The world we live in is truly sad.
dream #260,
Excellent response to the nazi douche.
#257 BC Bob
Its not supporting the dollar, it is devaluing thier own currency to slow down their own economies.
PGC,
If they raise rates it will support their currency. The dollar will get crushed, unless we are raising in tandem. Why do you think they have held off, from raising, across the Pond? Coordination.
JB,
$810, in electronic trading.
#259 kettle: Also we need to look at just how decent are the employment numbers, and are they perhaps yesterdays news.
The whole credit cruch thing did nto strt getting interesting if you will, until Mid August or so, picked up spped in Sept, and progressively got worse through Oct.
In other words, at the first signs of trouble there were not instant lay offs.
Perhaps (with the exception of a few posters here), the reality is setting in on the “street” and dare I say even the public (as far as the housing market,finally), that we are are really in some deep poop here.
And today’s “good” employment number was a last hurrah, in other words going forward, the problems we are seeing are going to start being reflected int the employment numbers, in short unemployment will be rising going forward.
http://townhall-talk.edmunds.com/direct/view/.f160df5
John Says:
November 2nd, 2007 at 3:39 pm
Dreamtheather, test drive that 2008 Malibu this weekend and get back to us on Monday how it compares to that Korean Tin Can you are driving.
John: I can’t comment on any Korean vehicles, but I believe you recently bashed Toyota and other foreign cars while promoting GM. If you can seriously tell me that GM makes better cars then Toyota, then I truly believe you are out of your mind. I don’t care it Toyota’s are made in Japan or on US soil. Don’t care. Oh, and my disclaimer is a doozy:
My wife works for GM, I own one, and my other car is a Toyota. I will never by a GM again…
You should be a fly on the wall during car discussions in my kitchen ;)
I love my Hyundai and I hate bigots.
Friend…Morgan Stanley…whacked 30 minutes ago…..
chifi,
What was his title/department?
#264 BC Bob
I think they are going to have to lower their rates. I think we are looking for the same thing from two different angles.
I have to say, Grim dropped some bombshells today. Well, they would have been bombshells several months ago.
-A US Treasury official says foreclosures will remain higher for the next 18 months.
-GSMLS showing October sales down 28% YOY.
-UBS may take a subprime-related hit of $5.2 billion in the fourth quarter.
If I had just woken up from my Memorial Day bender, I would have expected the stock market to crash on such a day, but it went up 27 points?
#231 tbw In a word, shameless, nah pathetic.
gary Says:
November 2nd, 2007 at 4:42 pm
chifi, What was his title/department?
Dir-CMBS
http://money.cnn.com/galleries/2007/autos/0710/gallery.chevrolet_malibu_review//index.html
I am stating a fact that the 2008 Malibu is better than the camry. Here is the proof.
I had a 1996 Camry bought new, 48k miles I dumped it, new motor mounts, exhaust, steering, timing chain, lock, seatbelt all broke plus brakes needed changing every three 20k miles. The review of the 2008 malibu is brand new. Your wife should be fired from GM. Mitsubishi makes crap cars and when I did consulting work there, they all drove them to be loyal to the company. I think Ford, GM and Chrysler should ban cars from their employee parking lot that were not made by the employer. If the employees are worried about driving lemons well they should just make them better.
Now I am a racist for supporting American products. I was the first to admit GM cars stunk for over 20 years, but I have to give them the props when the props are due the 2008 Malibu, Acadia and CTS are great cars and consumber reports and JE Edwards agrees with me. Now back to real estate.
When I first discovered this site (forgot how long ago), someone had posted that WaMu would be toast. At that time, I thought the chances of that happening was ridiculously impossible. I no longer think that way.
Not too long ago, President Bush gave a speech in which he used the term “soft-landing” to describe the future of RE market. That statement, IMO, is just as warped today’s employment numbers. Sugar coating.
#216 pret: You were looking for a job, but you were not in the middle of a blood bath, some of us have seen more than one.
Like I said unless you have lived through one…. what can I say.
Look the “street: has been excellent these last few years up until very recently, but that is now changing, and I believe that you might want to have a healthier respect for that.
Perhaps living through one will help you see that.
That is why,and I do not mean to be offensive, but sometimes your constant pratteling on about the “street” and NYC and 200K jobs for all gets a little weary especially to a native, who has been on the “street” 20+ years.
This area has suffered economic decliness in the past, and will suffer them again in the future. We are not bullet proof.
regarding the jobs numbers, from the NY Times
“Some analysts saw distortions in the data, questioning an increase in administrative jobs. Others said that most of the job gain came from an estimate that the Labor Department makes each month about how many jobs were added by new businesses, known as the “birth and death” model. The Labor Department did not actually find evidence of these jobs; it assumed they were created based on historical patterns.”
article link
http://tinyurl.com/39kgcd
Chifi,
I know plenty of people in the CMBS market – originators, lawyers, and borrowers.
They all tell me that business will pick up in the spring, after banks find a way through the backlog of loans.
Doesn’t sound like Morgan Stanley believes this.
But a lot of these people deserve to go. They were making loans to buyers of New York office building buyers at 0.5 debt service coverage ratios.
“test drive that 2008 Malibu this weekend and get back to us on Monday how it compares to that Korean Tin Can you are driving”
This remark is in line with John thinking that buying a Hyundai (made in South Korea) is supporting nukes (made in North Korea). If I compare a 2008 technology GM car with a V6 engine to a 2001 technology Hyundai with a 2 liter 4 cylinder, of course I’d prefer the GM. But what do you expect comparing a product to something which is a completely different beast?
And John, the Korean tin can is voted the best used car bet in the entry level category by Edmunds. So go shove it….
3b,
How do you define a bloodbath? Is 2007 a bloodbath? Was 2001-2?
G-D Damn Boys, The NY times just got caught sugar cating an article. The story i linked to in 278 was edited
from:
“Adding to the uncertainty about the report, most of the job gain — 103,000 of the 166,000 net new jobs — came from an estimate that the Labor Department makes each month about how many jobs were added by new businesses. The Labor Department did not actually find evidence of these jobs; it assumed they were created based on historical patterns. In October, for instance, it assumed that new businesses in the construction sector added 14,000 jobs and new financial services businesses added 25,000. Given the weakness in these sectors right now, it is possible that these numbers will be revised down later.”
to
“Some analysts saw distortions in the data, questioning an increase in administrative jobs. Others said that most of the job gain came from an estimate that the Labor Department makes each month about how many jobs were added by new businesses, known as the “birth and death” model. The Labor Department did not actually find evidence of these jobs; it assumed they were created based on historical patterns.”
flolow thsi to see original article
http://tinyurl.com/3cy988
i have to credit Reddit in finding this
pret,
2001-2002 was mild.
#268 Doyle I own a Toyota first non-American car had, or should say my wifes car.
Prior to that, Dodge Mini Van, dead at 61k miles, prior to that Sable Wagon, dead at 48k miles.
Never again will I buy any from an American company .
kettle [278],
Distortions? In our govt data? Are you drinking too much vodka today?
Great assumptions, financial jobs are getting whacked, construction and manufacturing continue to lose. However, almost half of the birth/death jobs, created in the last 6 months, came from these areas?
Marked to a model, ex food & energy, hedonics, birth/death, enhanced fund, etc.. Total bunch of do-do.
#281 2001 was mild, and shallow, ended quickly, and contianed in many respects.
I am talking about mass wholesale dismissals, from top to bottom. Talk to some of the old timers where you are now, they should remember.
FWIW, pretorious, I know that the NYC law firms that were heavy into ABS are making many of their capital markets lawyers do litigation right now.
pretorius Says:
November 2nd, 2007 at 5:01 pm
Chifi, I know plenty of people in the CMBS market – originators, lawyers, and borrowers.
They all tell me that business will pick up in the spring, after banks find a way through the backlog of loans.
pret: I don’t disagree with you, but this guy was telling me everything was fine and business would pick up in the spring as late as mid-August.
Skep-tic,
The associates who worked in ABS are doing stuff in other groups and their former bosses in ABS are doing a lot more pro-bono.
233-toshiro_mifune
Sounds like NYC Education.
#284
3B, My GM is at 36k and is a piece of sh*t.
I’m done, don’t care what wifie says…
#279 pret: They all tell me that business will pick up in the spring, after banks find a way through the backlog of loans.
A little healthy does of skepticism won your part is warranted don’t you think.
So all they have to do “is find a way through the backlog, and its all over. is this hope on their part?
I wonder what they might say when you are not around? And some of these plenty of people that you know, are not their compadres in other firms responsible for much of this mess in the first palce?
And Gee I wonder what “that way” might be.
Level 3 chimera under fire….
http://www.thestreet.com/_yahoo/newsanalysis/wallstreet/10388207.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
November 2, 2007, 5:28 pm
A Princely Sendoff for Citi’s Chief?
Posted by Dana Cimilluca
Should Citigroup CEO Chuck Prince get the boot, he would not leave empty-handed.
According to our read of Citigroup’s proxy statement filed back in March, Prince would walk away with as much as $40 million in previously unvested equity awards. (Though that number could be lower given the swoon in Citigroup’s stock and it’s based on the amount of equity that was unvested at the end of 2006.) In addition, the present value of his accumulated pension benefits was nearly $2 million.
A princely sum indeed, but nothing like the $161 million ex-Merrill CEO Stan O’Neal was granted upon his “retirement” this week. Why? Prince’s options awards are almost all under water, after a 32% plunge in Citigroup shares this year. (That slide of course is what got him into this fix in the first place, of course.) With the stock at $37.94, all but one option award is out of the money. And the award that is in the money was already exercisable.
There is no guarantee, of course that Prince will resign at the emergency board meeting Citi has called for Sunday. But by one quirk of the logic of 21st-century U.S. corporate governance, it may be easier for the board to let Prince go than if he had a mammoth package like O’Neal’s or that of ex-Home Depot chief Bob Nardelli. A more reasonable pay package for Prince could make it easier for directors to let him go.
251 renting
good question
Not sure of the answer
Here’s a true story that could only happen in Brigadoon:
I’m a long-time tenant, as many here know (and yes, haven’t posted in a while.) Next door is an Italian family that I’ve seen around but never bothered to introduce myself. Well, one day out front I happen to run into the old man, the patriarch. After some chit chat, he’s amazed to find out we’ve been neighbors 14 years. Then he tentatively wonders if I’d like to sell him the house. I let him know I’m a renter but should I move I’ll let him know as my landlord might be interested.
He says he’d be happy to rent or buy. Bought his daughter a house down the street a few years ago for $140k cash. Helped his son buy another one around the corner. Wants to move another son who lives maybe 5 minutes away into his house and he and the wife downsize into mine.
Turns out he couldn’t be nicer, does any kind of work on, in, or around a house you’d want and built his own from scratch. So I’ve got “lease breaking” insurance when and if I leave. I’m still shaking my head in disbelief. He speaks fluent Italian, but his English is good and he seemed quite sharp. He told me the local real estate market will start to recover in 2010, so I guess we can bank on that. He’s in his seventies I’d guess and has been around awhile.
“I always hear this. Who are these people? I don’t know anyone who just gave up looking.”
Living solely off one spouse’s income, or moving back into their parents’ basement.
… or just moving out of state.
From the Reckoning; Sorry for the length.
Mortgage delinquencies doubled last month compared to the year before. That’s not a good thing.
The Dow fell 362 points yesterday. That’s not a good thing either.
The Fed pumped $41 billion into the financial system yesterday…and that’s probably a terrible thing.
The Fed does not toss out $41 billion lifelines unless someone is actually drowning. And if our suspicions are correct, a few big financial institutions might be at risk of slipping under the waves.
As detailed in several recent editions of the Rude Awakening – (in particular, “SIV Positive ” and “Bail Out Nation “) many large financial institutions are gazing around desperately for lifelines, but the financial markets stubbornly refuse to provide them.
The vast community of investors worldwide is refusing to finance mortgage-backed-securities of any size or description or credit-rating. That’s why the Federal Reserve is in bail-out mode. The Fed’s $41 billion of repo activity yesterday was the largest such injection since September 2001 (think 9-11). Tellingly, the Fed’s maneuver yesterday occurred amidst rumors that Citigroup might cut its dividend to preserve capital. And – oh by the way – the Dow tumbled 362 points on the back of a brand new interest rate cut that was supposed to make everything all better.
But the rate cut did not make everything all better. It did not make anything better…because it can’t. A rate cut cannot convert a defaulted subprime mortgage into a valuable asset. It cannot convert a AAA-rated CDO full of toxic, overpriced garbage into an actual AAA security…and most of all, a rate cut cannot convert liars into truth-tellers.
We don’t know where all the liars might be; but we’re pretty sure that many of them draw paychecks from the financial institutions that hold lots of mortgage-backed securities. As the mortgage market proceeds from bad to worse to catastrophe, we’re pretty sure that many officers of financial institutions are not telling the whole truth and nothing but the truth about the value of their mortgage-backed securities.
Rather than fessing up to massive mark-to-market losses, many finance companies are resorting to desperate rescue plans of one sort or another. Citigroup’s “crisis management” strategy, for example, seems to consist of showing up on the Treasury Secretary’s doorstep with a bouquet, a box of chocolates and puppy-dog eyes.
Secretary Paulson has responded with sympathy and billion-dollar rescue plans. But these efforts cannot possibly replace the entire capital markets. Not even the U.S. Treasury and the Fed combined can replace the capital markets. (Some folks in Russia tried that tactic a few years back and it did not work very well). For as long as Treasury and the big banks continue to play “Hide the CDO,” the capital markets will remain on strike. As long as governmental agencies and major finance companies collude to conceal the fair-market value of mortgage-backed securities, the market for these securities will continue to spiral toward disaster.
In this context, Citibank’s prospective dividend cut assumes a mock-heroic stature. The dividend assumes a seeming importance much greater than its actual importance. Citi’s dividend is more symbol than substance. Why? Because Citigroup is probably facing a crisis far more serious than whether to pay its shareholders 5.6% per year or 4.6% or zero percent. All totaled, Citigroup dispenses almost $10 billion per year in dividends. So a modest dividend cut would only yield two or three billion dollars. That’s real money. But the big bank might need even “realer” money – the kind that only a complete elimination of the dividend would yield.
Best case, Citibank will not be extending vast amounts of credit any time soon, nor will Bank of America or Countrywide Financial or any other major American lending institution. Worst case? Don’t even ask.
This is where the real problems begin.
Without fresh credit, what will become of the American consumer? How will the American consumer continue to over-leverage himself? And what will become of the American economy without millions of over-leveraged consumers?
“I am talking about mass wholesale dismissals, from top to bottom.”
If this happens, then everyone living in the NY metro is f’ed. I try and take a balanced view of the upside potential coupled with the risks. I was on the middle-management track in big pharma, so I know that the low risk, low reward environment is not for me. I’ve built a net worth cushion so I’m prepared when I get fired.
“Talk to some of the old timers where you are now, they should remember.”
I don’t live my life worrying about another 1929 or 1986. Anyway, the only 2 old timers where I work took a few risks and are worth in the mid 9 figures today.
As of a week or so ago, managers across Citi divisions have been told to cut $800 million in expenses out in the next two months – including canceling all travel not involving client contact.
It will be an interesting weekend, indeed.
from the NY Lawyer, Oct. 29:
“Firms like Cadwalader, Wickersham & Taft — which handled $106 billion worth of mortgage-backed securitizations as underwriter’s counsel in the first half of 2007, as much as the firm did in all of 2006 — are insulated to some degree with countercyclical practices, like bankruptcy. (Cadwalader did not return calls seeking comment for this story.) But smaller niche firms are more vulnerable. About half of McKee Nelson’s 200 lawyers, and almost 40 percent of Thacher Proffitt & Wood’s 350 attorneys, work in structured finance.”
pretorius Says:
November 2nd, 2007 at 6:02 pm
“I am talking about mass wholesale dismissals, from top to bottom.” If this happens, then everyone living in the NY metro is f’ed. I try and take a balanced view of the upside potential coupled with the risks.
pret: What is your major malfunction Private Pyle? NYC =/= i-banking….only a myopic i-banking moron would think that i-banking tanking takes out the whole city. Remember….you people all move in the same circles, read the same stuff, buy the same stuff, see the same people……that is why you perceive omnipresence…..grow up and simultaneously wise up……..don’t get me wrong, it will hurt us, but give it up please….
Citi’s Prince to Offer to Resign
By DAMIAN PALETTA, ROBIN SIDEL and DAVID ENRICH
November 2, 2007 6:15 p.m.
Citigroup Inc. Chief Executive Charles Prince will offer to resign on Sunday, according to people familiar with the matter.
The development comes as board members are expected to gather for an emergency meeting this weekend, people familiar with the matter said. The meeting comes amid worries of further writedowns and pressure on Mr. Prince.
Chicagofinance,
Chill out. Clearly, I was downplaying 3b’s case.
And I’m not a banker.
pretorius,
What part of NY/NJ did you grow up in?
#300 pret Nobody said you should spend your time worrying about 1929 or 1986 as you say. I woule counsel however that you not ignore it
However, it was 1987, and in addition to 87 we had 1989, 1991, and 1994, late 1996 into 99, and of course the dot com melt down.
You are the typical not form the NYC area, who is now the resident on all things NYC and its environs, including the steet.
You want to last in the business more than 5 years, best you learn a slittle skepticism,and a little cynicism, and some humility.
And when some CMO guy you know tells you all will be well in the Spring, best you take that with a grain of salt, better yet a shaker.
The fact that you take at face value what these people told you shows that however, intelligent you might be, you are nonethless immature and naieve, and arrogant. That is a dangerous mixture. Many of these CDO tyoes and their support people ( lawyers etc), are going to be out on the street, many are.
See that is the thing pret when you are making your firm money, you are powerful, but when things blow up, they will cut you faster than you can fart. Today you are the darling, tomorrow the poster child of failure.
If you last in this business pret, I can gurantee that you will have some war stories in the years down the road.
HE (9)-
Wait ’til GS reports their next quarter. That’ll be the first one that you can see the full extent of the sausage they own.
And the gas that sausage has created.
vodka (13)-
That’s old news from Otteau. A seller must price SIGNIFICANTLY below competition in order to then draw a suck-ass offer from a sketchy, barely-qualified buyer. However, I like the mix of people I’ve been across the table from lately: good, family folks who intend to be in the homes 5+ years and are not doing anything more exotic than FHA to get in the door.
I’ve been light on posting here, because I’ve been able to clear my end-of-summer inventory this week by employing that tactic. All contract prices have been 20-30% off the ’05 peak. That means we’ve got a good 20-30% to go before we hit the bottom of the crater.
I can also report that the REO mills are buried. The lawyers are so behind, they can’t get the closing instructions or numbers out in time. That’s an ominous tell for what lies ahead.
I feel like a legit Realtor again. The “order-takers” have been blown out, and skill must be exercised to make a closing happen. It’s the RE equivalent of the buzzard feed after the wildebeests get wiped out in the savanna.
Good times.
My new hero is Jim Rogers. He’s giving it to Kudlow right now, telling him that people are sitting in jail right now for doing the same thing the gubmint is now actively encouraging banks to do.
douche 50.5 (24)-
Thanks for your latest missive from Idiotville.
Please pick up a crack pipe. It will make you feel better.
25.25 (46)-
“You should support the creation of longer term mortgages.”
That’s right…pay even more interest. Create more opportunities for fraud.
You are a pluperfect moron. I’m an RE bull, and all you’re doing here is making my job harder to effect sensible sales now and deliver a credible message in the future…when there will be wider opportunities for the buying public.
Now hitting the wires that Prince will quit on Sunday afternoon.
I won’t be switching away from Pats-Colts.
CP…another one hoist by his own petard.
Or, as Chucky D said…just another victim, kid.
12.125 (53)-
“Hell, the negativity has even affected money market funds.”
I thought that happened because certain MM funds engaged in illegal dabbling in SIVs and dubious commercial paper.
Then again, all these problems could be due to my sour attitude.
The news said the Pats-Colts game is to be blacked out in the NY market – they’re going to show a colorized edition of “Heidi” instead. :o
tcm (60)-
That’s a bitter medicine…and I am the pharmacist.
lisoosh (72)-
Look at some of Layfield’s stock picks at thestreet.com. Then, check out Lenny Dykstra’s.
312 clot
You know what I love about you? Yer a sophisticate/philistine, by which I mean you’re able to break that bottle of Ridge off at the neck and attack somebody with it.
Huzzah!
Orion (276)-
WaMu was my call to bite the dust. I stand by it.
Hank Greenberg loaded up for a proxy fight at AIG.
“My new hero is Jim Rogers. He’s giving it to Kudlow right now, telling him that people are sitting in jail right now for doing the same thing the gubmint is now actively encouraging banks to do.”
Kudlow needs a blow. He could probably use a break, too.
Did I say “a”? I meant “some.”
2x (296)-
I’d make book on that guy’s take.
93….An amusement park in the Meadowlands appears only slightly less dumber than a hockey team in Newark. What’s next…a pawn shop in Princeton?
NOT AS DUMB as you think….doncha think those rich kids need cash for blow….pawn those signet rings and ascots!!!
patient (320)-
God’s wrath upon the Philistines, as laid down by Samuel Jackson in Pulp Fiction:
“The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men. Blessed is he who in the name of charity and goodwill shepherds the weak through the valley of darkness, for he is truly his brother’s keeper and the finder of lost children. And I will strike down upon thee with great vengeance and furious anger those who attempt to poison and destroy my brothers. And you will know my name is the Lord when I lay my vengeance upon thee.”
276…..When I first discovered this site (forgot how long ago), someone had posted that WaMu would be toast. At that time, I thought the chances of that happening was ridiculously impossible. I no longer think that way.
+++++++++++++++++++++++++++++++++++++++++++
that was me Orion….karma is a bitch yes?
Where is BI,oh it doesn’t matter John is here.
Kettle I believe you posted book on history of finance yesterday, will be picking it up.Thanks!
Clot you’re my hero.
Heavy stuff CLOT.I thought I had the world ending,at least ours.Long live the empire!
#307 gary He didn’t.
njpatient, I liked “a” better. And you said it so off-handedly, like you deal with these dipsticks all day and know exactly what the issue is. ;)
mike 329
glad i could be of assistance :)
So O’neal this week, Prince this weekend, how much longer does smoke ’em Jimmy Cayne have??
Jimmy better have the bong out!Its going to be a rough ride out the door.
Sussex county getting hit hard.I do not have access to re agent data base but keep tabs on GSMLS site.Taxes more than double in my town in 10 year period,surely not helping.If this is just the begining it will be very ugly up here.
Willing to travel want a bargin check it out,but wait to buy.
3b you have a serious drink problem.
Try some mulled spice wine with the fire going.No problem at all!
“Wait ’til GS reports their next quarter.”
Clot [309],
Over $70 billion of their trading inventory was classified, level 3. There is no means to price this $70 billion utilizing market data. It will only get worse, as writedowns continue. No wonder the Goldman branch office in DC, formerly known as the US Treasury Dept, is concocting absurd plans to launch nothing more than a hospice care fund.
GS in trouble, as some said yesterday something afoot.Big trouble for all ,Ben & Paul trying to help.I don’t think it will work.So much for best of bred GS.
Let’s hope they fail in bail out,we need to get this stuff out over & done with.Pull that band aid off fast,can only hurt to keep it in the closet.I would say these big guys on street would know that,unless its so bad they can’t.O’boy are we all in deep sh#t!
>>In Westfield, would you buy, or rent?
good luck laying down roots in westfield as a renter. let me know how you do.
Hey Reech, you’ve been gone a while. My downpayment residing in RSF has been blitzkrieged in half since you recommended it. Any suggestions how I can double it to get back to break even? Does your pal Kelsoe have any more tricks up his sleeve?
Clotpoll Says:
November 2nd, 2007 at 7:33 pm
My new hero is Jim Rogers.
You ain’t kidding. Clot, I was reading some stuff he recently commented about on Seeking Alpha. It was enough to make my hair stand up……. that until the IB’s don’t clean up their books big time, things are going to continue to be bad for these guys.
343#, sell RSF and roll it to DUG -:)
seriously i think you should be better off if you think your personal investment in the same way as institutional. when you don’t feel it good, write it off.
all disclaimers apply.
231#, did they mention interest rate is going down, down, down to under 3.14%?
rate cut starts to work. sales pending just in a week, 180K over 2005 reassessed value!
MLS #: 5169067 DOM:11
“You don’t want to give money away”
http://online.wsj.com/article/SB119405087481781173.html?mod=yahoo_hs&ru=yahoo
Countrywide Financial Corp., in August told her she would first need to fall two months behind on payments. So last month, she stopped paying. “I don’t have any option but to stop paying,” she says.
Countrywide disputes Ms. Cooper’s version of events, saying in its files there isn’t any reference to telling her that she needs to be two months behind. “We have been informed that Ms. Cooper is seeking to sell the home,” a Countrywide spokesman said. “We continue to pursue this course as a possible satisfactory solution.”
..
Elizabeth Schomburg, senior vice president of the Family Credit Counseling Service in Chicago, says about 10% to 20% of some 1,000 families who sought help from the nonprofit agency last month were current on their mortgages and thus considered by lenders as “ineligible” for loan modification.
http://online.wsj.com/article/SB119405087481781173.html?mod=yahoo_hs&ru=yahoo
From the WSJ:
Double Squeeze for Homes
Pressed Borrowers Find
Help Only After Falling
Behind on Mortgages
By LINGLING WEI and JAMES R. HAGERTY
November 3, 2007
Struggling homeowners seeking mortgage relief from their lenders say they are hearing a tough message: We can’t help you unless you first fall behind on payments.
That is putting borrowers in a bind, given that defaulting on a mortgage triggers all kinds of headaches.
Consider Sharon Cooper of Lynn, Mass., who wants to sell her home. The problem: She now owes more than the house is worth, so she asked her lender to allow a “short sale” — selling it for less than the amount due, and forgiving the rest — to avoid foreclosure.
She says the lender, Countrywide Financial Corp., in August told her she would first need to fall two months behind on payments. So last month, she stopped paying. “I don’t have any option but to stop paying,” she says.
Countrywide disputes Ms. Cooper’s version of events, saying in its files there isn’t any reference to telling her that she needs to be two months behind. “We have been informed that Ms. Cooper is seeking to sell the home,” a Countrywide spokesman said. “We continue to pursue this course as a possible satisfactory solution.”
As past-due home loans keep piling up — and some two million adjustable-rate mortgages prepare to adjust higher in the coming year — mortgage companies are reaching out to borrowers in hopes of fending off foreclosures. On the other hand, they remain wary of cutting the interest rate, extending the term or forgiving debts, as long as borrowers are still current on their payments.
“Most companies are not giving people loan modifications until they are late on their loans,” says Stephanie Porta, an Orlando, Fla., organizer for the Association of Community Organizations for Reform Now, or Acorn, a community-activist group.
…
Mortgage servicers have to make sure they can “defend” the actions they take to help prevent foreclosures, said Steve Bailey, head of Countrywide’s loan-administration division, in a recent interview. Often, he said, those investors ask: “Are they truly not able to pay?”
Still, Mr. Bailey said, “To recommend someone to not pay is a bad recommendation.”
He acknowledged that Countrywide is “significantly more open” to modify loans for borrowers who have already fallen behind. The reason: If “you’re current and trying to renegotiate the existing contract, that’s not fair to the investor” in the mortgages.
Other servicers agree that it is more difficult, though not impossible, to rework loans while borrowers are still paying. Investors are concerned about “frivolous or dishonest claims of financial stress,” Countrywide said in a statement.
rate cut starts to work.
Was this the same cut which was accompanied by the Fed acknowledging that the housing correction was “intensifying”?
From the LA Times:
Mogul’s advice to Realtors: Don’t keep your day job
Even Realtors can lose faith in the housing market.
Speaking to a gathering of industry professionals Friday, longtime California real estate titan Fred C. Sands called the housing market “pathetic” and said some agents needed to start looking for other work.
“If you’ve been in it for five or six years and are barely making a living, you might want to think about what you were doing before and get back into it — you can come back in a couple of years,” Sands told members of the California Assn. of Realtors meeting in Universal City.
In the short term, the local real estate market “is not going to get better,” Sands said.
He added that he could speak with candor because he was no longer in the home-selling business. Sands now leads Vintage Capital Group, an investment firm that focuses on commercial real estate development.
Such frank remarks are rare at gatherings of famously upbeat real estate agents, but Sands said those in the business needed to remember the last slump and realize “the last five or six years were not normal.”
The soaring market of a few years ago will be followed by a correspondingly sharp decline, he said: “The longer the up cycle, the more excess there is, and the worse it is for what follows.”
3102 Rio Vista Drive, Mahwah NJ
1/1 Condo
MLS# 2502188
Purchased: 3/9/2005
Purchase Price: $309,900
MLS# 2735064
Sold: 11/2/2007
Sold Price: $305,000 (Reduced from $351,900)
Loss after commission: $17,000
19 Rivervale Rd, Park Ridge, NJ
3/3.1
MLS# 2505281
Purchased: 5/2/2005
Purchase Price: $690,000
MLS# 2741932
Under Contract: 11/2/2007
Went under contract with an list price of: $679,000
Loss after commission if sold at asking: $52,000
389 Cambridge Dr, Ramsey NJ
2/2 Townhouse
MLS# 2600806
Purchased: 7/13/2006
Purchase Price: $385,000
MLS# 2736683
Under Contract: 11/1/2007
Went under contract with an list price of: $374,900
Loss after commission if sold at asking: $29,000
55 Briar Ct, Hardyston NJ
3/2 Townhouse
Purchased: 5/25/2005
Purchase Price: $460,148
MLS# 2446223
Sold: 11/1/2007
Sold Price: $420,000
Loss after commission: $61,000
Grim, could you also express those losses in percentage terms? The homes were held for less than three years. Three out of four of those are less than 8% loss. Is that really so abnormal?
Grim a comp in my area #356 right down the road. Thanks for one up here in moumtains of jersey.By the way still to high for this area,you could have a 3 or 4 bedroom colonial for less.
Re: #341 “a hospice care fund.” Brilliant.
Seeking Alpha:feds halloween trick check out graph at end almost same amount of resets 2010-2011 as 07-08 with a deep drop of in between 09.
This will be seen as end of slump but wait 2010 to 11 it starts all over again.No doubt gov will bailout these people with tax payers money.It will not be politically possable to let this happen again.
Grim can you post it or link.Scary stuff!
From Seeking Alpha:
The markets confirm the trend. As our chart above reminds, there’s been no reward for anything other than embracing risk.
Alas, bull markets in everything at this late date are increasingly worrisome, even if the rear-view mirror suggests otherwise. Oil, to cite an increasingly obvious example, moved above $96 a barrel on Thursday, to cite one example. The longer the party goes on in everything, the bigger the potential correction in something will be.
But for the moment, the party rolls on.
http://static.seekingalpha.com/uploads/2007/11/2/arms.jpg
[img]http://static.seekingalpha.com/uploads/2007/11/2/arms.jpg[/img]
Here is the graph hope it goes through. (Not sure if HTML or BBCode is allowed)
Wells Fargo REO
Got this one today:
34 Goltra Drive, Basking Ridge
2,300 sq.ft., $569,900
property id: 0130639115B
David #357,
That’s right, go get’em David!! We all know real estate never goes down!
Read much, gary? Where did I say RE never goes down? I said I think basically flat prices before transaction costs over a 2-3 year period is normal. It’s not exactly evidence of RE going over a cliff. Doesn’t mean I’m saying it won’t.
I’m sure Ben, Paul & worst of all Barney Frank are aware of #’s.If we get a dem in 08 we will be paying for their mistakes for sure.
Vote Ron Paul?, wish this guy had a chance we need a shake up in D.C.
Suzanne researched this one, we can do this!!
http://homes.realtor.com/realestate/north+caldwell-nj-07006-1086831838/
Gary 839,000 for that, your kidding right.
Citi’s Prince Plans to Resign
Citigroup CEO Charles Prince plans to resign at a board meeting Sunday. The meeting comes as the company faces further losses to the distressed mortgage market and an SEC review into certain off-balance-sheet deals that are at the heart of a banking-industry rescue plan. Shares fell 2% but rose 3.1% after hours
mikeinwaiting #367,
Notice the banner that reads “Unbelievable Price”? They aren’t kidding, are they? And the remarkable thing is, there will be an idiot who will get this gem for the high 700’s and boast to family and friends about the great deal he/she got. After all, it is prestigous North Caldwell!
oops sorry for the repost!
FINALLY!!
If Wall St really gets tanked and we start getting even a moderate amount of job losses on a wider basis, we could end up with just enough of a perfect storm to start *really* accelerating the downtrend in housing.
All the risk factors have been there for some time, we’ve just been lucky up to this point that the job losses haven’t kicked in. Pretty scary stuff.
Clot (322), JPMC may be just the one looking to pick up WaMu at a true fire sale. I knew folks from JPM who fled to Seattle over the past couple years, the smarter ones got 2-year severance clauses should Dimon or another suitor come calling.
Gary. these people kill me.You would think someone who can afford that price has a good job,educated & a brain!Stupid well off people I guess.
Grim 353-5. Why do you focus on people losing $ when the large majority of sellers are making $?
http://tax1.co.monmouth.nj.us/cgi-bin/m4.cgi?&district=0906&block=20&lot=3.11&qual=C2503
Bought in June 2007, and flipped for asking a month later. Marketed without a broker through a Kannekt message board.
366 ohh yeah they are still dreaming ..stuck in 2004 !!!
Pret, with all due respect, my personal experience is that 3b has some real wisdom in those words. I’ve been through a couple of dark times on the Street plus three mergers, and the extent to which they slash-and-burn is truly a humbling experience.
When it’s time to cut, merit often means little, the consultants come and create a blast crater in the org charts, with little understanding of the businesses or individuals involved.
I’ve seen the more devious take over HR for a couple months, secretly alter performance reviews and then offer just enough token severance – knowing the cost and time to get a lawyer to fight becomes a remote option. Similarly showing up at a cancer patient employee in the hospital, to let them know they were terminated and health benefits ending. It was beyond horrendous. Simply, there are no bounds.
Or seeing distraught HR folks asked go fire all their colleagues and friends for days on end, only to come back to office on the “last” day and get axed themselves (because the senior guys didn’t want to do the dirty work).
Once the reality sets in, MDs desperately fighting for jobs 2 or 3 levels beneath their title and comp, and worse yet are the more junior/mid level folks who hadn’t yet had time to get some $$ in the bank, still with large student loans and not that much of a cushion to outlast the downturns. Many get wiped out, move home or just leave NYC altogether.
As you mention yourself, in the last 2001-2003 timeframe even written offers were getting pulled, unheard of especially in a “shallow” recession.
During every good time on the Street, I figure you have 4-5 good years to get your sh*t together to prepare for the next round of dark days. And, if you happen to be approaching a less-than-youthful age, you can be permanently out the game, so one has best be figuring out that exit strategy long before you have hit the half century mark, have a big mortgage and a couple kids.
If one earns their battle scars, there is reward, but it comes with plenty of very real risk. Is it worth it? That’s one I still haven’t figured out.
16 Brock Lane, Mount Olive NJ
Purchased: 5/18/2005
Purchase Price: $395,000
MLS# 2436629
Sold: 11/2/2007
Sale Price: $375,000
Loss: 5%
Loss after commission: 10%
Real loss: 15%
13 Riverview, Lodi NJ
Purchased: 8/16/2006
Purchase Price: $391,400
MLS 2442710
OLP: $399,000
Current Price: $354,900
DOM: 54
Active – Currently for sale
Current asking is 9% under purchase price.
Loss at asking, after commission: 13%
After accounting for inflation: 15%
57 Chicago, Piscataway NJ
Purchased: 6/21/2005
Purchase Price: $375,000
MLS 2458751 (2359280, 2428062, 2327139)
Original List Price: $395,000
Current Price: $355,000
Active – Currently for sale
Current ask 5% under purchase
Loss at asking, after commission: 10%
After accounting for inflation: 14%
#348 For those of us who do not know tell us how the cut is working, As the Fed Acknowledges it takes months for ths cuts to work their way through the system
#339 pret; Go play with your transformers, and watch your Frankenstien videos.
#357 David: The point is so many have said for so long, that there would be no loosses, that real estate never goes down, period.
% $? Well the $ loss puts it more in perspective, he lost 10% or he lost 50K.
Also this down turn is just getting started. I just don’t know who much more you guys need to see and hear, before realizing its getting ugly ou there.
374…..damn.
Sounds like you have a book there….a bleak one….but hey!
##74 Steve: I can see you know exactly what I am talking about, until young pret lives through that, he is just another naieve silly kid form the mid-west or wherever he is from, who thinks he knows it all.
#381 esses: it has happened before, it will happen again, a very humbling and sobering experience.
Those listings are either from today’s or yesterday’s hot sheet, all fresh.
#375 grim There you go again, with all your doom and gloom trying to destroy the real estate market.
Clot #311,
Just came from an office training session where our broker relishes the oppurtunity to let us all learn ( any one less than 10 years)
what it’s like to work. Learn the skills that made their way to the curb during this last run-up.
KL
#380 3b:
OK. I was never one of the people saying that RE never goes down. What I’m saying *now* is that +/- 10% on a house is not unusual in any 2 or 3 year period in any normal market. Grim, how many 10% gains are you ignoring?
Adding on the commisions and “inflation,” and quoting in dollars rather than percent isn’t putting it in persepctive, it’s blowing it out of proportion.
bi Says:
November 3rd, 2007 at 12:06 am
343#, sell RSF and roll it to DUG -:)
Bi, at the rate you’re going, you’ve DUG yourself a huge hole.
“Grim 353-5. Why do you focus on people losing $ when the large majority of sellers are making $”
Pre,
True. If you bought pre bubble, haven’t sucked the life out of it and have it priced right. Why don’t you listen to what Clot says. He is selling property at 30% off 2005. Don’t start with your proximity to NY crap. Clot’s region includes the highest median income in the State of NJ [by county].
BC Bob,
How many “30% of 2005” examples can you produce?
Three out of four of those are less than 8% loss. Is that really so abnormal?
Most people don’t pay for their house in cash, they use a mortgage. Gains and losses are multiplied through the magic of leverage. A small percentage loss can mean real money.
Take Grim’s example in #356.
Purchase Price: $460,148
Sold Price: $420,000
Loss after commission: $61,000
Let’s say a first time buyer put down 10% on this house.
– They lost their entire $46,000 down payment (which was probably their life savings).
– They lost any closing costs they paid
– They still need to bring a $15,000 check to closing.
Is that really so bad? I think so.
Essex(381) & 3b(382),
For me, the worst has always been seeing good, honest (but perhaps too trusting) people lose their jobs & even their lives destroyed, especially if they’d been loyal 20-30 year employees from a past generation when the rules were different.
They simply didn’t expect it, couldn’t adapt, marriages wrecked. The wonderful HR tradition of walking people out with security guards, after granting them a mere 15-20 mins to absorb it all and clean out their desks. I’ve seen people have mental breakdowns on an open floor, in front of all their colleagues, just no dignity.
I often think, if I hadn’t seen the worst of it in my late 20s – the anger and stress of it all probably would have given me a heart attack nowadays.
The lesson I learned, sadly, is that you should have little allegiance to firms, only to your colleagues and friends you respect- because that will be one of the few things to endure. The Street is definitely a mercenary economy, as it were.
There of course comes plenty of intellectually challenging & interesting work in the investment biz – but it should be tempered with the knowledge of the very real downside, which at times can be outright inhumane.
Steve
#391 Renting:
That particular scenario is bad, if that is indeed what happened. Once again, my point is that this can happen in 30 months in normal maket conditions.
Steve [374],
How right you are. I sat thru 2001-2002 and saw co-workers getting chopped on a monthly basis. How about walking to your desk only to be greeted by security, ushering you out. It’s beginning to happen. This pup is just starting to bark. I can’t tell you how many calls I get, from huge former earners, now looking for anything. Same story, big mortgage, private schools, tapping savings and extreme tension setting in. It actually is quite sad. It could happen to me any day.
Funny how those not employed on the street seem to to know it all. Last year, the bulls were making arguments that the record bonus $ would save RE. It was actually quite comical. Sharks on WS, arbing for fractions, the sharpest of the bunch, yet they would pay bubble prices for an extremely overbought, overpriced asset. How asinine is that?
The same individuals are claiming that the worst is behind WS, stating that layoffs will not be significant. OK experts. Go take a walk on the floor of an IB, go thru the m&a, pe, mbs, securities lending and structured finance areas. How about bankers twiddling their thumbs and associates playing with excel programs, trying to look busy. They are walking on egg shells, day to day.
Maybe those that are looking from the outside in should just concentrate on their own hide.
“How many “30% of 2005″ examples can you produce?”
Pre,
Personally, I have had the opportunity to buy 3, 2 of them short sales, 30% off 2005 comps. These are out of a total of 6 properties that I have viewed in the last 2 months. However, why overpay? Also, ask Clot. He deals with it day to day.
Unless you are BIA, take a look at Grim’s charts. Then, simply from econ 101, make an educated guess, going forward.
So when is the blood on the streets going to pick up? Pre or Post x-mas?
bc bob,
where are you buying? I’m starting to see drops but not that much. I do think its coming w/ a recession and a whole lotta trouble
With all the write-offs, it’s shaping up to a brutal time for NYC real-estate, given the level of write-offs, Wall St. firms will layoff what they have hired in the last 5 years or more. I would estimate 200K+ people.
Ohhh well, skiing season is coming up.
BCB(394),
That’s how it starts of course. The calls, the ancedotes, the gut intuition that something just ain’t right. Like the water getting sucked off the beach before the tsunami. Trust me, I really hope it’s all wrong.
But c’mon- a super conduit to prevent marking your sh-t to market? Where did they grow these geniuses? Might as well wave a flag over the NYSE saying WILL WORK FOR FOOD
The top guys are getting taken out by boards stacked with their own cronies- so how can anyone be deluded into thinking they’re safe?
A month ago, a senior HF friend that’s heavy into CDOs tried to price their stuff from a top desk, in fact the guys knew it the best since they’d help do the deals.
– “How much for XX?”
(thinking worst case, 70-80cents on the $)
– Trader: “Five”
– “What do you mean FIVE?”
– “That’s what we’ll pay. At most”
[Five cents on the dollar for “top” rated stuff]
– “Fine! F— you, give me everything you have like this at that level and I’ll buy it all you!”
– “Uh, well….”
__________________
What worries me, isn’t whether we’ve all made the right call on RE for the past few years
it’s that a year from now, it just won’t matter.
Yeah Steve…..I spent 11 or so years in tech….two IPOs…a couple of start-ups….I made some strange choices, but in the end an look back and say I enjoyed most of it. Working in the field was the best for me….that way I was removed from the office environment…But I did work in the NYC office of a big internet consulting firm (a very prominent high flyer) and that was interesting. Oh well. What goes up sometimes comes down….Google $900 anyone?
cross[397],
Don’t know where/if I’m buying. I am looking in a 10 mile range of the Meadowlands, not east though.
“What worries me, isn’t whether we’ve all made the right call on RE for the past few years”
“it’s that a year from now, it just won’t matter.”
Steve [399],
I have stated the same on this site, since I first began to post. 30% off 2005? A freaking slam dunk. What was more troubling, at least to me. was the real storm brewimng
I submitted [402]by mistake, not done with the post.
The real storm coming, not RE, is much more troubling. Many will be blind-sided. Absolutely no clue whatsoever. Those in their 20’s and 30’s never experienced a recession. A major attitude adjuster is that light coming forward.
The clowns in power will try desperately to prevent it. Unfortunately, it is just prolonging the agony. The ramifications of their hideous actions, will be that much more severe. A Total Enhanced Return Fund? The only enhanced return will be the fees. Like I stated previously, it should be called The Hospice Care Fund. PT Barnum is twisting and turning in his grave.
So when is the blood on the streets going to pick up? Pre or Post x-mas?
Before.
The consultants claim that they are doing you a favor so that you don’t overspend for the holidays and then are left with the bill but without a job (I know someone who does this kind of work).
In reality, I think it’s probably because the severance packages hit the current year’s budget.
to pret, kettle and anyone interested:
don’t listen these scaring campain or you’ll be better off wraping up and back to where you originally from. you were not born or moved to this country living in fear everyday. did someone say the worst fear was the fear itself?
i have experienced voluntary and involuntary departure many times on the street and guess what? the only one involuntary departure openned up best opportunity in my career.
yes. wall street lay-off is sometimes unfair but that is not what you can do about. keep youself sharp and give your best shot. you will be doing great on the street.
Steve Says:
November 3rd, 2007 at 2:25 pm
Steve: The stuff I’ve been hearing over the last 72 hours is shocking to me. I am beginning to understand the ramifications a little better. Bernanke was being interviewed in November 2006, and he was asked what is the biggest threat…..he said it was investors using high quality CMO as de facto cash, when IT WASN’T, and levering the $hit out of it.
Fine, I understand that issue, and the fact that when spreads blow out, the multiplier effect on the leverage has a huge impact.
However, what I didn’t appreciate is investors and banks holding AAA/AAA- securities as cash, and being stuck with them at NO BID, or as reflected by Steve’s anecdote, effectively worthless. THEN the rating agencies are coming back ex-post and dropping them into junk etc.
F—?!?
RE: layoffs….when I was whacked in 2001 from a dot-com, I got screwed because I was third round and was thrown out there in the Summer. If I had been whacked with the first bunch in the fall 2000, there was still a lot of places to go.
Those on the Street at this juncture are kind of mid-stream. They would have been lucky to have gotten axed nearer to Labor Day…..now, there is plenty of company.
Good luck to everyone stuck in this situation…..I’ve been there….
Yeah I went right back to work after my package from the Consultancy….in fact the next place I went was Fortune 500, they were a mess though…big Enterprise Systems…which was where I was pre-internet craze….in fact 6 months later that place crapped out….handed out some decent checks…..and then I took the summer off….but uh oh…here come 9/11, and the whole economy froze…I took one more run at tech with a really small firm….hit two major home runs for these guys….and took a powder…..permanently. Never looked back.
“THEN the rating agencies are coming back ex-post and dropping them into junk etc.”
Chi,
Then the poop really hits the fan. As you stated, the leverage existes in the AAA and AAA-
exists
Bi (405) – Scare campaign? Try reality check. I had friends out of work- sharp, good skill set, polished- out for 2 years. See how things are working out with your spouse after that one. And if you haven’t seen people go through it, you have no idea how ugly it can be.
I myself was out for a year (single) in the last go-round, and I tell you your idea of risk gets a serious reasessment. I wish someone had laid it out for me when I came out of grad school.
Would I have made different career choices? I doubt it. But I would have been much, much more conservative in those early years.
Kind of like getting a 30year fixed instead of a no-doc, pay-option arm.
Kind of like getting a 30year fixed instead of a no-doc, pay-option arm.
(not that I got one of those, thank goodness)
“Bi (405) – Scare campaign?”
Steve [411],
Don’t waste your time. Another expert, looking in, from the outside.
ChiFi (406),
And yet all these shops just keep holding, hoping agianst hope that somehow a miracle will happen to restore some of that value.
But…if we’re out of miracles? What’s the saying – markets stay irrational longer then you can stay liquid? Even if you’re the biggest bank on the planet…
I try to touch base w/ contacts over at one of the larger institutional FI managers on the block (not PIMCO, but equivalent).
Lately, I can barely get them on the phone- even for regular business. It started in Aug/Sept, got a bit better, and now seems back to voicemail. Constantly. The one time I did get them on the horn, they were exhausted- continually reassuring clients that the sky isn’t falling, call after call. Except, I wonder. Hospice Fund came up (LOL great one BCB!), they were telling me how they think it could really help, blah blah blah.
This person, well, they’re very sharp- so I was surprised to hear this, because it didn’t sound right to me. I let it go.
But I wasn’t exactly reassured.
Wamu or SOV one or the other will get picked up by JPM in early 2008. Both saw subprime going, but both could not get out of way quick enough, both started diverisfying and cost cutting back in 2006. Countrywide on the other hand who knows? Trouble is knowing when. JPM is still trying to pick up a BD and Merrill is getting attractive but I don’t think Jaimie has the balls or he can get the BOD to buy in.
If Citi cuts the dividend all bets are off, FS will dive, but sometime in the weeks following may be the bargain of a lifetime.
In regards to GM, I am not buying any 08 GM, but since they do 4 year warrantis and 2 year smartleases and depreciate pretty good I will pick up an 2008 CTS in 2010 cheap with a two year warranty left. I may buy some GM bonds next week, they are still at 9% and I think what the heck a little 5 or 10K piece is worth the risk as they look like they can sell their way out of it and they stuck cerbus with half their GMAC crap.
http://www.nytimes.com/2007/11/04/realestate/04njzo.html?em&ex=1194235200&en=ce065fd02ea5ae2b&ei=5087
Harrington Park
SLD 93 BLAUVELT DR $700,000 7/14/2005
SLD 93 BLAUVELT DR $636,000 11/2/2007
Woodcliff Lake
SLD 12 MARZ DR $840,000 10/17/2005
SLD 12 MARZ DR $790,000 11/2/2007
#208,
“I know plenty of people in the CMBS market – originators, lawyers, and borrowers.
They all tell me that business will pick up in the spring, after banks find a way through the backlog of loans.”
I know of people at Merrill that tell me that the CDO business will pick in the spring as well.
Keep on waiting….
Heeeeee… Heeeeeeeeee…
#415,
Countrywide will be bought out by BofA at $8 per share, they have a $2B poison pill and no choice but to buy them.
Talking about bubble….
As soon as a carpenter starts investing in real-state on Wall St., you know it’s time to run.
http://www.nytimes.com/2007/11/04/realestate/04cov.html
bi’s comments remind me of Reechards from a year back. He would keep jumping in and saying that the real-estate correction was over. He even claimed that the worst with sub-prime is over and we are back to a normal market.
I am sure the Chuck Price and Stan O. don’t feel the same way. Neither do I.
There is still a lot of toxic stuff off the balance sheet and hidden under the carpet. Eventually the stench will become unbearable and it will come out in the the open. I don’t see real-estate get a pulse until another year or two at the earliest.
Bi:
You’r bosses at NAR managed to sucker many people into buying homes saying that immigrants were buying up all the land and increasing job and income growth will keep the housing market rising at a double digit clip for ever.
Now, we all no that the rise in property values were driven by cheap money courtesy of Greenspan and funny mortgages from your neighborhood wall-street banker.
As the NAR campaign goes: “Now is a great time to Bull-shit”
BC Bob,
How many “30% of 2005″ examples can you produce?
0
I can’t produce anything 30% off. I lied.
– BC Bob
The U.S is one fat, over consuming pig in terms of the waistline, RE, dollar value. everything will revert to the mean (whatever that point is)in the coming years. You can argue that all day long, but you can’t dispute what is self evident
Zack,
Home price appreciation reverts to the mean – that is 2% real returns.
I’ll take that today.
Zack,
I agree. Obesity epidemic is a national embarassment. Every culture has defects, and USA’s #1 defect is obesity.
Did anyone read this weeks “Ask the Realtor” in their local paper? I’ll sum it up for you:
1) The markets are returning back to normal.
2) This region will always be strong due to its proximity to NYC.
3) It’s a good time for both buyers and sellers.
4) The word “slowdown” is a media buzzword.
Isn’t it nice how the professionals keep us informed of market conditions? :o
Gary,
Nobody trusts what those realtors say. Renters who disparage realtors and NAR economists should STFU because such renters diminish their credibility when they pretend that people actually listen to realtors and NAR economists.
Very pathetic how renters must say bad things about bi in order to feel bigger. You critic losers (njpatient, 3b, bc bob) should stfu and contribute something useful once in a while.
Bi,
I agree what you say about getting fired and getting better job straight away.
The scaremongers attacking pretorius are clearly master middle managers who couldn’t find an equal job if they get fired.
Young stud hotshots don’t need to worry about being the Friday security escort because within 3 months they’ll be earning 1.5x their previous comp.
Ronan [425],
Go back and read #395. Take a deep breath and try to post something of any value, intelligence. Then sign your own name to your slop.
ronan Says:
November 3rd, 2007 at 7:22 pm
ronan: a lot of bold stuff coming out of your mouth…your only posts that don’t smack of ignorant arrogance are the ones related to the below topic In my opinion, I think you are right to question those representations.
Gloom and doom? I think what you misinterpret is what people say versus where people are placing their bets.
Ultimately, you are naysayer du jour and you are defending the neighborhood Ruben Sierra. What does this mean? Go ask Tony LaRussa….
ronan Says:
November 3rd, 2007 at 7:05 pm
How many “30% of 2005″ examples can you produce?
The only way those “young stud hotshots” are gonna earn 1.5x comps is if they pull out the chin strap and knee pads.
Still waiting for the 30%-off-2005 examples.
My money is not on BC Bob.
moronan says: Sorry Renters
Sorry that some of your renters cashed out on the top of the real-estate bubble.
Sorry that you get more house for the same money now than in 2005/6.
Sorry that you rent is much lower than the true cost of owning a similar place.
Sorry that you will get even more house for the same money next year.
Sorry that you no longer have bring an offer 50% over the asking price to the open house to be let in.
Sorry that you no longer have to compete with flipper with a zero down optional rate arm mortgage.
Sorry that you can actually make an offer below asking price and not be laughed at.
Sorry for not being able to participate as a seller/owner in the biggest real-estate slump in our history.
Sorry moronan, sorry.
What, are you jealous? Hey, we offered them cab fare but they were just muttering something about mommy through all the tears.
Just got back from Porcini in Totowa. Not bad, I’ve been there a few times before, but years back. My wife didn’t care for her dish, but I had a fettuccini boscaiola with mushrooms that was just fantastic.
Prosciutto makes everything better.
hey grim:
can you give me the address of GMLS #: 2441533
Thanks,
AT
Chuck Prince and Ron White, separated at birth.
http://online.wsj.com/public/resources/images/HC-FW545_Prince_20051026110700.gif
http://www.comedycontact.com/images/ronwhite.jpg
10 Commander Patrick J Dunn Court
from Marketwatch:
Jumbo loans still scarce in high-cost areas
California prices could plunge 35%, costing $2.6 trillion in lost wealth
http://www.marketwatch.com/news/story/scarcity-cost-jumbo-mortgages-portend/story.aspx?guid=%7B923EE799%2D2A5C%2D416D%2DBEAC%2DE4874C21098F%7D&dist=sp_inthis
from the article in #446
” 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.”
Does anyone deal with jumbos in nj are they as hard to get?
#367 – $869,000
This one is much, much nicer.
http://www.underwater-recovery.net/images/Palau-FnF/PALAU-Mandarin-Fish.jpg
U.S. Dollar, the new Xera
That’s a combination of Xerox, for the piece of Xerox paper that it is; lira, which in the past was one of the world’s chronically weak currencies; and, most importantly, the fact that it sounds like zero. That is ultimately where the xera is headed.
(excerpt from msn website)
Rich or grim,
do you have history on 78 woodcliff lake rd
– was sold at the courthouse for 1.2?
– did it ever sell again?
thanks in advance,
sl
anyone? help with an address for
gsmls 2430708
Thanks in adv.
sl
and yet another 2448264….
thanks yet again.
sl
SL,
What town is Woodcliff Lake Rd in? Can’t find that address in Woodcliff Lake in NJMLS.
Rich
Saddle River
SLD 78 WOODCLIFF LAKE RD $700,000 2/13/2001
ACT 78 WOODCLIFF LAKE RD $1,450,000 5/7/2006 (listed twice, house & land)
W-U 78 WOODCLIFF LAKE RD $1,450,000 6/16/2006
ACT 78 WOODCLIFF LAKE RD $1,500,000 9/1/2006 (as land)
EXT 78 WOODCLIFF LAKE RD $1,500,000 5/25/2007
Tax Records:
Deed $700,000 2/15/2001
Mortgage $612,500 2/13/2001
LisPenden $490,000 7/29/2005
thanks Rich,
Gee, I guess pricing it higher might get someone to buy it??
I was at the sheriff sale for that one. It was rather interesting. A junior lien holder (who was owed over 6 million) kept bidding the property up and up. He finally bailed at 1.2
Now it’s just yet another vacant house in Bergen Cty.
sl
ronan Says:
November 3rd, 2007 at 7:19 pm
Very pathetic how renters must say bad things about bi in order to feel bigger. You critic losers (njpatient, 3b, bc bob) should stfu and contribute something useful once in a while.
I love how these Johnny-come-lately to the forum come and say whatever they feel out of their pea-sized brain. Dude, how long have you been around this blog? Anything constructive that you have shared?
“My money is not on BC Bob.”
Little Seal [438],
Come up with a number that you would like to wager, just equal to a minimum of 500 oz of gold. If you win, you get paid in whatever currency you choose. If I win, only gold, euro, loonie. After you agree, I will provide you with the info and on Monday we will go to each town hall and pull up 2005 comps. Since I am not a manager, I can come and go as I please. Would you have to take a day, maybe call in sick? Remember, I said I had 3 examples, 2 of them short sales.
Come to think of it, before we do this why don’t you post a few paragraphs regarding your views on the RE market. You have posted abosuletly nothing, on this site, of any value whatsover. Did a Mack truck run you over and you landed here?
In addition to the above, I will invite Chi along. As a matter of fact, he can hold my collateral and yours. Despite the fact that Chi questions my integrity [Post #436], I have no problem questioning his. I trust him with my collateral.
Anxiously awaiting your response.
There is no need to get emotional with one another on this blog, just a forum for an exchange of ideas…
Just to be clear, I am, and have been, more of the bearish persuasion as it relates to real estate in the US. However, we should all remember that real estate is a great inflation hedge, IF you buy at the right time…
My family has some experience with real estate in the international space, some successful, many not (Please refrain from disparaging them. I’m just offering anecdotes as food for thought)
All of the following happened in Hong Kong:
-A two bedroom condo bought in 1998 may be nearing breakeven today (we received a bid last month).
-A really nice three bedroom condo bought in 1997 lost 50% of its value and was sold at the bottom in 2003. Since then, prices have rebounded by about 50% but remains underwater from where they were in 1997.
-A large condo in a very nice area was bought in 1986 was sold for a nominal 500% gain in 2004. Note that confidence in Hong Kong was quite low at the time of purchase, as England had just agreed to eventually handover HK to communist China.
In conclusion, real estate does go down if you buy at the wrong time (2005 in the US?), and even if you buy at the right time, the appreciation trails that of other options (like stocks). We don’t find too many real estate moguls in the top 20 list in Forbes…
IMHO, real estate’s role in one’s portfolio should be as an inflation hedge (if bought at sensible prices) and primary residence. There are better ways to get capital appreciation…
I think REInvestor101’s post sums up some of the myths that some segments of our economy would like to have the public believe. 100-year mortgages at 0% interest rates have actually been tried before, and it produced a real estate bear market and systemic deflation in Japan for almost two decades, uninterrupted…
The key issue is that it may be high noon for the Federal Reserve. If they let market forces work, there could be a politically unacceptable recession. But if they choose to inflate their way out of this, the US dollar could become worthless (think Weimar Republic). On balance, I think inflating will be the choice, as it will reduce the US foreign debt and budget deficit in one go. Which means, it may be wise to anticipate the next world reserve currency and stash some money there to maintain the value of your assets.
2448264 – 20 HIBBLER RD
2430708 – 27 Ramsey Road
From the Record:
Graduates are buried by debt
It’s no small thing to make it to the top of one of U.S. News and World Reports’ college lists. But the folks at Seton Hall University aren’t exactly celebrating their No. 1 national ranking for student-loan debt.
Sixty-one percent of students graduating from the South Orange campus have to pay back student loans — the average totaling $37,724, according to America’s Best Colleges 2008. The numbers are high but they are not an aberration. Nationally, nearly two-thirds of graduates of four-year schools have debt, according to the Project on Student Debt. That debt load averages $20,000.
Inventory dropped by 2% this week.
Is the RE market coming back to life??
kl (388)-
Did your broker share with you that top agents generally make more money in down markets?
david (389)-
If anything, Grim’s understating it. Why the hell are some of these people selling, after only owning the homes for 1-2 years?
There are two explanations:
1. Flippers who’ve run out of time/money and are forced to sell.
2. John Q, whose mortgages have reset. They’ve run out of time/money and are forced to sell.
We’re less than six months from this whole thing going parabolic. Amazing to see the denial that still exists.
One thing, though: more potential selling clients I speak with are cutting straight to the “how fast can you get me out” question.
BC (391)-
Thanks. All this is only about as obvious as a giant neck goiter.
My area- Hunterdon/Somerset- features 2 of the top 5 median-income counties in the US (and yes, both are higher than prestigious Bergen County). There are plenty of folks here sucking the big one…and more to come.
We’re taking the hit here now, due to our lack of proximity to NYC. However, I’ve seen this before. The downturn moves from the exurbs (Bucks/Easton/Poconos) toward NYC in concentric rings.
Give it 1-2 more years. This WILL hit prestigious Bergen County; this WILL hit NYC.
Frank,
Keep in mind two things:
1) End of month contract expirations – Most contracts are set to expire EOM, so we typically see inventory drop sharply in weeks that include the monthly turnover.
2) Typical seasonal trends – Although the seasonal trends do differ a bit from year to year, at this point we should be well into the winter pullback. I would have thought inventory would have pulled back a bit further at this point, but October weather has been good.
pret (392)-
Here’s one, just booked on Thursday (by me):
Hillsborough, asking 365K (reduced from 449K)
Under Contract for 355K
Approx 2005 Market Value: 500K
I don’t want to give the address, as it’s in atty review.
When you review 10 active listings in any given price range, you can’t look at the nine dopes who’ve been trying to sell since 2005, going thru multiple agents and numerous re-listings. You can’t look at the prices those nine are asking and even assume that those priced to the low side of the range have a chance to sell.
You have to go the the 1-2 sellers in any given price range who are managing to accomplish a sale. That’s where the story lies. Grim is giving you the evidence of what it takes to sell a house, right here and right now. There are NO record prices being set…unless you’re talking about records to the downside.
These facts are indisputable. Those who would argue otherwise reveal a thinly-disguised agenda.
If anything, Grim’s understating it. Why the hell are some of these people selling, after only owning the homes for 1-2 years?
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.
#459 Jon:
I think even the biggest bears on this forum, myself included are never saying that real-estate is a bad investment. Even as I sold in 2005, i have bought in other countries. I am still looking outside the US, where I think it makes more sense.
The general public has been brainwashed by the NAR into believing that real-estate is a guaranteed ticket to riches and every time is a best time to buy.
I think it is important for buyers/sellers to understand that real-estate like any other asset can destroy you financially if you make the wrong decision.
I suppose it is easier to post like bi or Reechard and keep repeating.
“Everything is fine. There is no real-esate bubble so, buy ! buy ! buy!”
Try this on for size (again, my listing):
Offer and acceptance: yesterday
Branchburg, 3 BR SFH, asking 379K
Reduced from 419K
Contract price: 365K, with 2K carpet/paint concession.
Seller had the home on the market in Spring ’06 with another agent for 449K and turned down a 435K offer, when she decided not to take the job transfer that had prompted her to list her home.
Nominal loss in value from Spring ’06 to yesterday (435K down to 365K)…16%.
Loss in value from ’05 peak (I’d peg that at about 460K)…21%.
bi (407)-
“…have experienced voluntary and involuntary departure many times on the street and guess what? the only one involuntary departure openned up best opportunity in my career.”
I’ve got it! You’re Chuck Prince.
Steve (413)-
Thanks for the stories. This is why I learned how to crank out food way back when…and why I went into RE instead of going to the Street.
No matter how bad times get, people gotta eat. And, RE agents do fine in down markets, once the deal flow normalizes.
I’m in good shape and still have my eyesight. Don’t think for a second I can’t envision myself slinging tuna tartare, cote de veau and roast duck somewhere downtown. I have dreams like that once every 2-3 weeks…and they aren’t nightmares.
I,m sure re guys out there could back this up.Most people list in an area about 6 months prior to now so most of listings expire (6 months) in this time period.As few have sold the drop might mean the inverse.Those who have to sell wil relist with new agent (kill the messenger)in next few weeks or in spring believing market will get better(a fools hope).The public is uninformed & the agents at least in my area seem to be in denial.They should be the ones to educate public as to outlook on re.
Clot, you’re overestimating the cycle time on that exurb to NJ move. I’m saying 6-8 more months.
Not to incur the Wrath of Clot, but I’m bringing up my car topic again.
Yes, I completed the dreaded task and bought one. I was mostly an online shopper, but I did have to hit a couple of dealerships yesterday to make sure I could drive the cars I’d priced out. Being 5′ tall has some advantages, but reaching gas pedals is not one of the them.
So I got my numbers, and first hit a CNJ Hyundai place. The V6 Sonata was a darkhorse candidate. Here’s the main point. We were the only shoppers excluding one very wealth Caddy buyer. Saturday at 1 pm. Saddest thing to see 7 warhorse salesmen sitting behind their desks.
We played the rest of the day and hit a Honda dealer at 5 pm, an hour before close. I drove home in a new Civic at 5:55. Wanted the Accord, but I was only 6 inches from the airbag, and that makes me nervous.
Two bits of data overheard in there. Sales are hugely down. Raise the eyebrows scary down. And lots of folks taking Civics instead of Hondas after the numbers run.
mike (448)-
There are some places in NJ to get decent jumbos…if you have a DP, and your credit is perfect.
Send my your e-mail thru Grim, and I can direct you to a couple of lenders.
ronan (438)-
If you’re still standing after your BC Bob wager, I’ll take your action out here. Same terms, I’ll take my payout in ducats.
I’ll even buy you a chunk of foie gras at the Plucky after we finish up in Somerville.
Moderated! Couldn’t have been the words f*&e gras, could it?
Pat (474)-
Car…talk…must…kill…barking…dogs…won’t…stop.
BC Bob and others: Can you describe the storm you see coming? Primarily Wall Street layoffs or a deep, global, life-changing recession? Do you think one of the major banks will fail? (Isn’t that what that $41 billion was about?) Why do I get the feeling that as soon as someone looks at all the off the books stuff and unpriceable stuff and yells, “The emperor is butt naked!” it will be game over.
Clot not in market for jumbo,trying to get a feel for nj market as all info about Cal.I thank you anyway for your offer of help.Would love to see #’s for NJ jumbos that were in there for Cal.O well ,thats life.Do you concur on my listing post?
(478)-
Totally concur.
Stephen King should be reading this blog for a new plot idea.
GSMLS # 2458080 info
Thank you in advance.
Another request:
GSMLS # 2447200 info.
Thanks.
Chi [436],
Since you feel that little seal has a valid question, I’ll answer you directly. No need to respond to some dolt, who appears on this site for the 1st time and offers up less than 10 words. In addition to this, the feeble minded signs another’s name to that same post. I really don’t need to waste my time with an ignoramus like that.
To reiterate, I said I had 3 examples regarding properties 30% off 2005. Two of them are short sales. Actually, I was wrong I came across 5 instances. I will post 3 of them. I will not post the short sales, I’m am currently talking to the banks, regarding these 2.
First one, the developer has reduced by 400K. I saw 2005 comps at 1.3-1.5M. Northern Valley Regional HS District.
http://homes.realtor.com/search/listingdetail.aspx?ctid=6701&mnp=38&mxp=38&typ=1&sid=b0bb4c92acb14df6a2e1a7679e6147f4&lid=1071802378&lsn=6&srcnt=7
Note: I am not promoting the town nor trying to justify current pricing. Just providing examples.
I don’t think you can include multiple links in one post. I will continue.
dreamtheaterr Says:
November 4th, 2007 at 12:18 am
ronan Says:
November 3rd, 2007 at 7:19 pm
I love how these Johnny-come-lately to the forum come and say whatever they feel out of their pea-sized brain. Dude, how long have you been around this blog? Anything constructive that you have shared?
yan: can we invoke some casino rules here? I was thinking about “no mid-shoe entry”…how about a new rule, if you have never posted, you have to put in a place holder, and wait for the next thread to start before you post…..worst example I can remember…..being hammered at FoxWoods about 15 years ago, and some jerk walks up with a purple and goes table max. He is deal 10/2……pulls a 9…..
Continuation;
Example # 2. 2005 comps, 600-700K. A 4 bedroom, 2 bath across the street sold for $667,900 in Nov 2005.
http://homes.realtor.com/search/listingdetail.aspx?ctid=84778&typ=1&sid=bd27e40917fe4cc3b1cf345ad3e1f964&pg=2&lid=1083241621&lsn=11&srcnt=97#Detail
grim: unmoderate
bost: chill….I just didn’t want to be a pure close-minded yahoo. I know there were examples, but I hadn’t seen the evidence. I know it was forthcoming……sorry about the game….sux
Last example;
I was very tempted. 2005 comps, $950K-1.3M.
http://homes.realtor.com/search/listingdetail.aspx?ctid=3094&mnp=34&mxp=33&typ=1&sid=1640250c14f54de591435cc5d4473859&lid=1082595811&lsn=6&srcnt=12#Detail
OK, that’s 3 for 3. If A-Rod could have done the same, the Yanks may have beaten the Tribe.
BC Bob Says:
November 4th, 2007 at 9:50 am
Continuation; Example # 2. 2005 comps, 600-700K. A 4 bedroom, 2 bath across the street sold for $667,900 in Nov 2005.
Bost: this one? If true, these people are in the process of being murdered…..sick!
Chi,
It wasn’t really directed at you.
Regarding the game; They went much further, undefeated, than I could have ever anticipated. They were not close to being the #2 team in the country. They really aren’t even a top 10 team. Up to this point they have over-achieved. A weak schedule also helps. I’ll be thrilled if they can finish the season with 1 or 2 losses.
JB,
Does the system allow you to post with multiple links?
2 links max, otherwise the comment will get pushed into moderation.
For those that think that NYC cannot be affected by any of the real estate issues, Bloomberg has warned that NYC is on the verge of a recession and is making cuts/plans accordingly.
http://www.nytimes.com/2007/11/04/opinion/nyregionopinions/CIcosts.html?ref=nyregionopinions
BC,
What street is that Belmar house on?
#495 – Bloomberg is a smart man. He anticipates the future and plans accordingly. We should all learn from him.
JB,
13th. I forget the cross street.
Glen Rock
SLD 28 AMHERST CT $680,000 8/2/2005
Listed twice before with multiple price drops, latest:
ACT 28 AMHERST CT $579,000 9/5/2007
829 13th ave BELMAR, NJ 07719?
BC Bob: Re: your post #485. if you have seen that house in Norwood, IMHO it is still overpriced. There was a one family house knocked down and 4 starter castles (pre-fab) are being put on that plot. Only 3 are built so far… each over $1m facing Old Tappan Road. You are so close to the other homes, it sort of reminds me of Staten Island. You can watch your neighbors doing their dishes from your living room. Did I mention there is also a flooding problem as the homes are below the road grade? They’ve been on sale for 2 years and no takers.
Scams target homeowners
Hundreds become victim to mortgage cons
Home News Tribune Online 11/4/07
By JASON METHOD
GANNETT NEW JERSEY
A national mortgage scam has ensnared hundreds of victims in 27 states, including at least 17 homeowners in New Jersey, Gannett New Jersey has learned.
A widow in Middlesex County, two mothers in Ocean County and a disabled Vietnam veteran in Delaware said they are among the defrauded.
“If I have to leave this house, I’d probably die,” said 62-year-old widow Rita Galgano of Old Bridge, who fears sheriff’s officers may arrive any day to serve an eviction notice because her home is in foreclosure.
An IRS search warrant obtained by Gannett New Jersey lists 256 affected properties stretching from Maine to Hawaii. The warrant identified 106 homeowners as victims and 99 third-party, or straw, buyers, who may have unwittingly propelled the fraud forward. Two dozen companies are also named, but it is unclear what their role was in the probe.
An FBI spokesman and an IRS agent last week confirmed the investigation into the companies and people behind what had been touted as a way for small investors to save financially strapped homeowners.
“It is a large and significant case,” FBI spokesman John Cauthen said. “We’re investigating with the full force and weight of the FBI.”
http://www.thnt.com/apps/pbcs.dll/article?AID=/20071104/NEWS/711040482/1001
Clot #464,
I have the same question. Why the hell are they selling in less than 3 years? You left out a couple of reasons though. For example: relocation; promotion; new baby.
Look. I’m on your side, as it were. I was screaming housing bubble for 5 years before it became “obvious.” We refused to compete with morons taking 3% teaser rates and stayed in a 1BR until our daughter was two.
Sure, I cracked early this year and bought a cape in BC (which is most certainly not a POS). But by then ARMs were done and I paid 8% off OLP. So there’s my anecdote.
The problem I have with all these anecdotes being posted is that context is missing. You can’t add “inflation” to the total price because inflation has also reduced the value of the amount financed. It may be safe to assume that a good chunk of equity was lost in these cases but you can’t be sure that was the seller’s main concern. Perhaps a corporate relocation was involved and the risk was to the employer.
So while my outlook matches yours and grim’s, I am looking for more intellectual rigor. That means statistics instead of individual data points, and normalizing data instead of quoting raw dollars.
thanks jb!
For those interested:
Englewood Hospital is holding a free prostate cancer screening. They will do a PSA test (prostate specific antigen) which in some but not ALL cases can help detect prostate cancer. the DRE (digital r3ct@l exam) but it can assist in screening those who are at higher risk. They also offer a physical exam by a urologist.
Info below:
Prostate Cancer Screening
Physician Prescription Required: No
Fee:No (ie free)
Date: Call
The screening will be done in two parts:
1 Blood work for PSA test will be drawn in the hospital’s Pre-Admission Testing area in The Berrie Center.
2 A physical exam by a urologist will be held in The Berrie Center
To take part in this screening you must be:
– Over 50 years of age & have not had an prostate exam in the past year
– 40 & 50 years old of African American descent
– Between 40 & 50 and have a family history of Prostate Cancer
Appointments are Required. Call 201-894-3456.
sl
Can anyone with access to realtor.com’s MLS tell me the story behind MLS ID# 804760? It’s priced below all other similar units in this complex and yet hasn’t moved. Also, if you can get me the address that would be awesome.
Thanks.
Oh this beautiful day
was not well spent
I had an open house
to which nobody went
I can’t for the life of me figure out why?
Could it possibly be the price is too High?
Were my signs and balloons, in the right place?
Oh the embarassment, the shame, the disgrace,
Next time I’ll do better and get a big crowd
I’ll hire a stripper, you will all be proud!
Any other ideas would be appreciated (-:
KL
“The analyst whose downgrade of Citigroup Inc sparked a broad stock market sell-off on Thursday said she has received several death threats stemming from her research, the Times of London said.”
“People are scared to be negative, especially when a company has such a wide holding,” Whitney told the Times of London in an article published Saturday.
“Clients are not pleased with my call and I have had several death threats,” she continued. “But it was the most straightforward call I’ve made in my career and I am surprised my peer analysts have been resistant. It’s so straightforward, it’s indisputable.”
http://www.reuters.com/article/ousiv/idUSN0419537820071104
2 open houses in my complex, balloons and all that. I was going to the store. The flock of well dressed potential neighbors ( or flippers looking to “famlily rent” ) in importaed cars was absent from previous years.
KL,
Maybe everyone was out running in the NYC marathon :)
Ok all you knowledgeable folks!
So if you really do need to sell these days, what year would you price at (01, 02, 03?)
I know you’ve all talked about this a million times, but help a rookie out.
Perhaps a corporate relocation was involved and the risk was to the employer.
Corporate relocations are always noted.
So if you really do need to sell these days, what year would you price at (01, 02, 03?)
That would be a terrible strategy, if you did that you might end up leaving money on the table. Simply undercut your competition, it really is all that is necessary.
Ann it is a ? that depends on where you are ,some areas have been more resilient to downturn than others.I would not presume to advise you.There are many here who could,but not with out alot more info.
Ann go with grim’s advice.Works for me.
Went to an pen house. noone else was on list. House prices was still about $100,00 over priced. duuuuhhhhhhhhhh. How dumb can realtors be? sit and sit in empty houses just to get some greedy home sellers listing.
WAKEUP!
message to realtors. I am a buyer but I will not buy unless the price is down alot from 2005.
Get the message?
Better wither talk some sense into sellers or DO N OT TAKE ON THE LISTING. WHY WASTE YOUR MONEY???
I still find the fundamental problem with the Real Estate Market is it no longer has Basic Rules. From an affordability perspective the old rules were (2.5 X’s Annual Salary) were norm for the (Amount of Mortgage) you could Safely Carry. Getting a Morgage required 20% Down Payment (Desirable) or you had to also pay for PMI (Undesirable). These Rules were from a time when Taxes and Cost of Living were substantially lower, which further impacts affordability. It seems like House Prices either have to drop to meet Buyers Ability to Pay, or Buyers have to make a Lot More Money. The answer can’t be Creative Financing. That’s Ponzi.
fencesitter and others…..question….let’s say you know you like an area….but comparing ‘like’ properties is tough….would you rather buy a place that had top notch renovations i.e. new kitchen and save yourself the hassle and expense or would you rather buy a place that needs these things and do it yourself? Just curious. Talk amongst your selves
Thanks to grim and others! So, to price below competition, by what %? We are currently priced about 5% below our competition.
Essex 518: We are in the process of trying to sell and when we do that, buy up. From what I have seen out there, I would definitely buy a house that was already renovated and in move-in condition versus one that needed work. Why? Because the ones that are a big, 1970s mess aren’t priced that much below the ones that have had work done. Plus, I also feel that people who have forty year kitchens and are asking top dollar may have let other maintenance go also and in general may be cheapskates who are going to be a PITA to work with.
Ahhh, out a family gathering today so everyone beat me to it. But, for the record BCB, I have another 500oz worth on you any day of the week!
It’s really not a gamble of course. And what a nice way it would have been, to spend a day off!
The funny thing is, whether it’s $300 jeans, Duck, or some of our current Emus, these folks come and go….
Essex Says:
November 4th, 2007 at 6:50 pm
Hi essex,
My opinion.
Do not do upgrades with cheap crap. It is total turnoff.I do not want someone elses design and taste. Better off leave it alone and reduce price more. Price to me is everything since prices are still to high. The days of installing some cheap home depot crap and then jacking up prices are long gone. Buyers today are much wiser, but more importantly they have to be able to afford it not like 2 years ago when free money loans were handed out like candy.
Fencesitting don’t get mad,just wait it out.Confused is not confused at all.With normal financing back prices will revert back to affordable level in line with NJ median income and I surmise alittle less due to higher taxes & cost of living.Lets not go to an open house till 8 months from now,then maybe we buy.
WSJ reporting tonight the losses could be an additional $8-$11 billion for C, Rubin taking over in the interim (which he reportedly did not want to do).
The bottom line is houses remain unaffordable for the avg family. So price is the major issue.
good luck. Due to this blog and others I have become more informed about historical house prices and just how out of whack they are with incomes today. I expect this to change dramatically next year.
mikeinwaiting Says:
November 4th, 2007 at 7:05 pm
thanks mike and good luck to you. All I want to do is buy a house and not go into debt slavery for the rest of my life.
This is why I learned how to crank out food way back when…and why I went into RE instead of going to the Street.
_____
Clot (472),
There certainly are many paths. I fell into the business myself, was originally headed to work in intelligence- but go figure, I had a Middle East specialty, at the time gov’t hiring was severely restricted; not a ton of demand for analysts or ops back then.
The irony on that one…
Can anyone tell me if this data is accurate?
‘The median sale price for a home was $335,000 across the state. That was $5,000 more than in 2006.’
source: http://www.wnbc.com/news/14507736/detail.html
What did this one start at? MLS #2406517.
Sadly, I know this family. What’s really sad is the cash-out-refi-mortgage-history. Their ARM reset, but they should own it by now.
Undecided if 355 is right then prices have a long way to go to fall in line with median income.With out funky loans this will happen.I also think it will take years for people to get back to idea of 20% dp.,they have to start saving for it that will take time.This will keep re sales slow for years to come.
typo 335 median price
# scribe Says:
November 4th, 2007 at 5:30 pm
KL,
Maybe everyone was out running in the NYC marathon :)
Actually I WAS out running in the marathon.
I saw lots of under-construction “luxury” condos in Brooklyn that were not there the last time I ran two years ago.
Ditto for 5th ave in the 120s.
Grim, #496
The address is 829 13th Ave., Belmar, closer to Main St.
MLS #20823790 (as of 6/3/07)
It was listed for $779,000.
Amid Turmoil, a Shake-Up at Citi
Citigroup named Robert Rubin chairman and Sir Win Bischoff interim CEO after Charles Prince resigned amid billions of dollars in losses on mortgage-related securities. The company is set to disclose that it will increase by as much as $8 billion the writedowns it has taken in recent weeks.
Hit 5 open houses this afternoon, most around the 2-3pm timeframe. We were the only visitors at 4 of them, second at 1.
Fencesittingjack Says: November 4th, 2007 at 6:39 pm message to realtors. I am a buyer but I will not buy unless the price is down alot from 2005. Get the message?
Better wither talk some sense into sellers or DO N OT TAKE ON THE LISTING. WHY WASTE YOUR MONEY???
Jack: you are Booya-Lite….
What did this one start at? MLS #2406517.
2308586 – $319,900 – 246 days
2396299 – $319,900 – 30 days
2406517 – $299,000 – 175 days
Hi, reposting this from earlier.
What is the address of MLS ID# 804760? That’s a realtor.com number. The URL is http://homes.realtor.com/realestate/piscataway-nj-08854-1089084015/.
Also, if possible, was this listed before at a different price?
I couldn’t find this on GSMLS.
Thanks.
grim,
537 is is awaiting moderation. Timestamp is November 4th, 2007 at 9:57 pm .
David (503)-
You want more rigor? Give it to yourself.
I bust it in RE the better part of 55-60 hours a week, and I’m neck-deep in crap. I know what I see, and I have 11 other agents who tell me the same stories about their clients that I’m hearing from my own. After 27-28 similar tales of woe, I’m willing to call that a trend…pardon my lack of footnotes and proper documentation.
Relocation? Surely, you jest. The only significant corporate relocation going on around here involves relocating employees from a building to a parking lot in 15 minutes- or less- with all their possessions in a plastic mail bin. I’m an ERC-compliant relo broker in one of the densest corporate centers in the world. We’ve done a grand total of ONE relo this year, to date.
The revolution will not be televised.
sl (504)-
“…the DRE (digital r3ct@l exam) but it can assist in screening those who are at higher risk. They also offer a physical exam by a urologist.”
DRE? That’s not what that girl in Tijuana called it.
kl (506)-
“Any other ideas would be appreciated.”
Stop sitting open houses.
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.
Steve (526)-
Looks like that joke’s on the gubmint. Guess they got caught naked shorting the whole Middle East.
Just breaking on the wires:
Contrary to prior reports, the new interim CEO at Citigroup is not Sir Win Bischoff, head of CitiEurope, but his cousin, Eric “Easy E” Bischoff, former manager of World Wrestling Entertainment. See link:
http://www.canoe.ca/Slam/Wrestling/Bios/bischoff.html
At the time of this announcement, Bischoff is rumored to be leaning toward installing Jimmy Snuka as head of Structured Finance and One Man Gang as COO.
However, Mr. Gang has issued a statement- through several of his colleagues- that he is happy with his current job as a guard on death row at the Louisiana State Penitentiary and will respectfully reject any offers that may be forthcoming.
OK Gil Scott Heron #538, get over yourself. All I wrote was a 5-10% price decline when holding less than three years is not unusual even in a normal market. I explained it twice already. I notice nobody whose feathers got ruffled for no reason has disagreed with it.
I have a friend who just got a job in CA and relocated. So now there’s two that we know of so far. Maybe if we ask a bunch more people…
Atlas Van Lines has results from a survey of 390 companies showing that corporate relocations have trended up in the period 2003-2007 and are expected to stay about the same next year. The Midwest and South are more common destinations than the Northeast.
The US Census Current Population Survey reports that 2 million employed civilians moved for new job or job transfer reasons between March 05 and March 06.
OK, I brought some rigor. Try it, you’ll like it.
Clotpoll Says:
November 4th, 2007 at 10:58 pm
sl (504)- “…the DRE (digital r3ct@l exam) but it can assist in screening those who are at higher risk. They also offer a physical exam by a urologist.” DRE? That’s not what that girl in Tijuana called it.
clot: the best post from anyone in weeks….
Clot, (#540)
[…sigh…] I gotta stop lobbing fastballs right over the center of the plate…. :-P
:-)
sl
btw: check your email.
Grim, thank you!