From Bloomberg:
Home Prices in U.S. Fell Record 4.5% in Third Quarter
Home prices in the U.S. fell in the third quarter by the most in at least two decades as the subprime lending crisis caused sales to slump.
Home values retreated 4.5 percent in the three months through September from the same period a year before, the most since records began in 1988, according to a report today by S&P/Case-Shiller. It followed a 3.3 percent drop in the second quarter.
Prices will probably keep sliding as foreclosures force more properties on to the market and sales weaken as mortgages become harder to get. The slump threatens to slow consumer spending as fewer homeowners will be able to afford vacations, new autos or home improvement projects.
“Many house shoppers are going to hold off until they feel that markets have stabilized, and this will tend to prolong the price declines,” Robert Dye, a senior economist at PNC Financial Services Group in Philadelphia, said before the report. “As house prices fall, consumers feel less wealthy and more restricted in their discretionary spending.”
Home prices in 20 U.S. metropolitan areas dropped 4.9 percent in the 12 months ended September, the most since S&P/Case-Shiller began compiling the index in 2001. The decline followed a 4.3 percent drop in August.
Economists forecast the 20-city gauge would decrease 4.8 percent in the quarter, according to the median of 13 estimates in a Bloomberg News survey.
From MarketWatch:
Home prices falling at record pace in third quarter
U.S. home prices fell 4.5% in the year ending in the third quarter, according to the national Case-Shiller price index released by Standard & Poor’s on Tuesday. Prices fell 1.7% compared with the second quarter. It’s by far the largest price decline in the 20 years covered by the index. Prices had fallen 3.2% in the year ending in the second quarter. Prices fell in all 20 major cities in September compared with August, and were down 4.9% in the past year. Prices fell 5.5% year-over-year in the original 10-city index. The Case-Shiller index, which tracks multiple sales of the same homes, is considered by many observers to be the best gauge of national and metropolitan-area real-estate values.
From Standard and Poor’s:
From the Voice of San Diego:
Mortgage Fraud Hits the Courts
In one of the first local cases in a national crackdown on mortgage and real estate fraud, four people connected with a San Marcos realty office have pleaded guilty to charges that they went to great and illegal lengths to secure mortgages for financially unqualified consumers, thereby pocketing more than $1 million in fraudulent commissions.
In some transactions in the scam, the defendants used straw buyers — consumers with higher credit scores and bank reserves — to secure financing for other customers, fraudulently claiming those third parties would occupy the homes, according to prosecutors.
For others, the team altered financial information on loan documents to meet the lenders’ requirements, or created false employment information and posed as those employers when lenders called to verify. They submitted loan applications with inflated bank account balances falsely substantiated with fictitious bank statements.
They purchased and submitted to lenders letters from tax preparers that misrepresented consumers as business owners, deposited their own money into clients’ bank accounts to falsify certificates of deposit, and fraudulently sent lenders copies of social security cards altered to hide work restriction language, according to court documents.
Alejandro and Emilio Lopez, two owners of Century 21 Eldorado in San Marcos, headed the “Lopez Team” of loan officers, loan processors and real estate agents. Ravinderjit Singh Sekhon was a loan officer there and Linda Velasquez was the office manager, acting as translator for Sekhon with Spanish-speaking clients. All four pleaded guilty earlier this month to charges related to the scheme.
Obtaining financing from subprime lenders using so-called stated income or “no-doc” loans, the group fudged employment, rental, bank and even citizenship status information for more than 200 unqualified clients, brokering first and second mortgages for an average of $400,000 each, according to court documents.
…
The Lopezes and Velasquez are each charged with one count of conspiracy to commit wire fraud and face maximum penalties of five years in prison and $250,000 fines. Sekhon is charged with one count of wire fraud and faces a maximum penalty of 20 years in prison and a $250,000 fine. And the defendants have agreed to repay their illegal gains, a total of $1,070,000.
From the Conference of Mayors:
THE MORTGAGE CRISIS:
ECONOMIC AND FISCAL IMPLICATIONS
FOR METRO AREAS
Whatever you do, don’t look at the table at the top of page 5. It’ll ruin your morning.
Don’t look now: Here comes the recession
Even with a boost from holiday spending, the U.S. economy looks shaky, thanks to slumping housing prices, Wall Street woes and debt-laden consumers. How bad could it get?
http://money.cnn.com/2007/11/23/magazines/fortune/barr_recession.fortune/index.htm?postversion=2007112615
From the AP:
Moody’s Reviewing GMAC Rating
Credit rating agency Moody’s Investors Service said late Monday it is reviewing the rating of financial services firm GMAC LLC for a possible downgrade.
GMAC currently has a speculative-grade “Ba2” rating. The review was sparked by GMAC saying it would likely provide support to Residential Capital LLC.
Residential Capital, GMAC’s mortgage lending unit, currently carries an even lower “Ba3” rating. Residential Capital, like many other mortgage lenders, has been hit hard by rising delinquencies and defaults, especially among subprime mortgages _ loans given to customers with poor credit history.
If GMAC provides financial support for Residential Capital during the weakening market by leveraging its own credit profile, Moody’s said it would likely lower GMAC’s credit rating to match Residential Capital’s rating.
“In Moody’s view, GMAC’s high stand-alone leverage position has no capacity to provide un-backed support at the current credit grade,” the rating agency said in a statement.
JB[2]
Thanks for the report.
-Sapiens
This article alludes to a drop in property taxes, because property values are reduced, which makes no sense to me. When reevaluation occurs in NJ, the property tax rate is raised or lowered. The Municipality never gets less property tax?
Nov. 27 (Bloomberg) — The worst U.S. housing recession in 16 years will drive down property values by $1.2 trillion next year and slash tax revenue by more than $6.6 billion, according to a report by the U.S. Conference of Mayors.
California, the hardest-hit state, will suffer a $630.6 billion decrease in property values that will cut property tax revenue to local governments by almost $3 billion, the study found. The New York City region will see the greatest slowdown in the output of goods and services because of the mortgage crisis, according to the report.
Shiller is a bitter renter.
Abu Dhabi, 11% yield?
Wasn’t Chuck Schumer screaming about our national security being jeopardized with the sale of our terminals? Chuck, I can’t hear you.
Chuck & Frank are helping to sink an already bad market.The question is why?
Do they want to tank it to help Dems in coming election.Are they really that stupid to think the bill & letter help people short or long term.Schumer well yes, but Franks is not an idiot.This is the party for the little guy right.Yea sure.
I just can’t see the up side in this bill the market already corrected it.Now Chuck showing signs of fisical prudence,worried about gov spending if things go bad with Country Wide.
This guy never met away to spend he didn,t like.Very strange things going on in DC.What else is new.
From MarketWatch:
SUBPRIME TODAY 11/27
All your subprime news in one location at MarketWatch (the fact that they have daily reports speaks volumes).
#6, many places, unlike NJ, do not change the tax rate (mill rate) but rather gain increases via the increase in property value. They revalue essentially every year. Those municipalities have made a fortune lately. What they do now, I do not know.
NJ’s method is to not change the value of the property each year but rather raise the tax rate. The fact that many valuations are 10-30 years old will “protect” NJ munis from a drop. They would ust raise the tax rate anyway.
BC Bob Says:
November 27th, 2007 at 8:33 am
Abu Dhabi, 11% yield?
bost: you saw my comment last night? yeah….WTF!!!??
7#, chiller is not a bitter renter. he owns multi-million dollar home in LI and else where. but he certainly has agenda to promote his irrational index and book “Irrational Exuberance”.
Quote of the Day
“The subprime problem has been contained. It’s been contained on planet earth.” – Jim Grant, financial author and editor of Grant’s Interest Rate Observer. (Investor Insight.com, Nov. 26th)
Abu Dhabi needs cash to pay $7.5b bill so they sell oil right way. the oil futures are down $2 already.
With faked American prince chuck gone, now citi guys become literately royal employees.
http://globaleconomicanalysis.blogspot.com/2007/11/us-vs-japan-land-prices-autumn-2007.html?ref=patrick.net
“bost: you saw my comment last night? yeah….WTF!!!??”
Chi,
I didn’t see it.
bi,
Shiller is a bitter renter.
You seem to lack the ability to realize when someone is being facetious (and damn funny).
…he certainly has agenda to promote his irrational index…
So you think he cooking the numbers?
It is too late to sell and too early to buy I guess that is why we can all enjoy Christmas as there is nothing we can do about RE for now.
Rich in NNJ,
I don’t think Shiller is cooking the #s. Every index has something to quibble about. I am happy that we have another one to look at.
However, the Shiller chart that attempts to show a national home price trend across 3 centuries is one of the most ridiculous things I have ever seen. I am disappointed that it gets posted here so often.
If Shiller is “cooking the numbers”, it means that Standard and Poors is “cooking the numbers”.
Do you really think that is the case? IMHO, S&P has less of a vested interest to put on the apron than say.. the NAR.
AP
S&P: 3Q Home Prices Fall by 4.5 Percent
Tuesday November 27, 9:09 am ET
S&P Says 3rd-Quarter Housing Prices Dropped by Sharpest Rate in Index’s 21-Year History
NEW YORK (AP) — U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor began its nationwide housing index in 1987, the research group said Tuesday.
S&P also reported that prices fell 1.7 percent from the previous quarter, the largest consecutive quarterly decline in the index’s history.
The S&P/Case-Schiller quarterly index tracks prices of existing single-family homes across the nation compared with a year earlier.
A separate index that covers 20 U.S. metropolitan areas dropped 4.9 percent in September from a year earlier. A 10-area index decreased 5.5 percent from the previous year.
Goldman ups U.S. ’08 recession probability to 43% from 30%
#11 – My town basically reevaluates every year and only changes the tax rate for specific projects. They have had a bonanza. Interesting to see how they handle things over the next couple of years.
From: NJ.com
The Foreclosure and Subprime lending crisis; Hello
http://blog.nj.com/njv_john_atlas/2007/11/the_foreclosure_and_subprime_l.html
Nothing we don’t know already but I thought this is an interesting excerpt.
“What is at the root cause of the problem? Princeton economist and New York Times columnist Paul Krugman nailed it when he blamed the crisis on the conservative free market ideologists whose views have increasingly influenced American politics since the 1980s and who rule within the Bush administration. These people believe that government is always the problem, never the solution, and that regulation of private business is always bad. Lenders and brokers who fall outside of federal regulations made most of the subprime and predatory loans…”
by its methodology, it requires a lot of massage on the raw numbers. I would prefer raw numbers and have many breakdowns.
here is the link to your favorite chiller index:
http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_112766.pdf
when you look at city by city, all east coast cities are down less than 1% from hot spring quarter Q2 to slow Q3. it is statistically insignifant. by the way, why don’t they publish standard deviation for their numbers? and where is credit crunch?
bi,
Why doesn’t the NAR publish standard deviation and confidence interval estimates?
By the way, based on the data provided, it is impossible to determine statistical significance (or insignificance).
New York Metro (Commutable)
Aggregate Peak – June 2006 – 215.83
Current index – 206.28
The index has fallen 4.4% (nominal) from peak.
http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_History_112766.xls
From MarketWatch:
Home prices falling everywhere: S&P
U.S. home prices were falling in every region of the country in September, according to a closely watched index of home prices released Tuesday.
Home prices fell in September in all 20 major cities covered by the Case-Shiller price index, even in cities that had been holding up, Standard & Poor’s reported.
For the national Case-Shiller home price index, prices fell 1.7% in the third quarter compared with the second quarter, and were down a record 4.5% in the past year. It was the largest quarter-to-quarter price decline in the 20 years covered by the index.
In the 20-city index, prices fell a record 4.9% year-over-year. Prices were down 5.5% year-over-year in the original 10-city index, the largest drop in the 10-city index since 1991.
The last time prices fell so much, it took more than eight years for home prices to return to their peak level.
The Case-Shiller index, which tracks multiple sales of the same homes, is considered by many observers to be the best gauge of national and metropolitan-area real-estate values.
bi,
…all east coast cities are down less than 1% from hot spring quarter Q2 to slow Q3. it is statistically insignifant.
You’re right. Quarter over quarter shows a continuing DOWN trend that now sits at over 3% Y-O-Y in (what I consider) East coast cities. Which isn’t insignificant. Or if you prefer, insignifant.
bi (27)
Is it statistically insignificant that 20 of 20 cities are down?
#27 bi: So “Chiller” is wrong,and bi is right.
bi says:
“by its methodology, it requires a lot of massage on the raw numbers. I would prefer raw numbers and have many breakdowns.”
Perhaps so you might find a nugget of support among the boulder field of data that refutes your unscientific predictions?
please people, let him be…..
its ‘insignifant’ that bi is still in denial…the truth is in home values…
if bi is so optimistic, may he can buy my house! i am still asking 2005 prices +10% cause i want it that way!
this whole mentality will change and so will bi, he may be the last, but rest assured, he too will change..
can we call this as a RE bubble now?
Who’s this guy Chiller?
“can we call this as a RE bubble now?”
Not quite yet CAIBC. We have to see if there is a second leg up in the home valuation rally.
(wink)
bi Says:
November 27th, 2007 at 8:48 am
Abu Dhabi needs cash to pay $7.5b bill so they sell oil right way. the oil futures are down $2 already.
bi: NO
where is pret-a-manger when you need him?
speak!
can we call this as a RE bubble now?
CAIBC [36],
It was a bubble back in 2005/2006. Now its the beginning of the bust.
bi
“it is statistically insignifant”
This is a term of art. How do you know that down 1% is statistically insignificant?
“grim Says:
November 27th, 2007 at 9:25 am
By the way, based on the data provided, it is impossible to determine statistical significance (or insignificance).”
Exactly.
As always, bi is full of sh*t.
BC Bob, i agree its a now bust but some folks still dont believe that we were in a RE bubble! look at most of the sellers out there! we have to convince them of bubble first and then show them the bust!
i hope when the dust settles we still have some definition to ‘the american dream of homeownership’
Questions:
#1 I have a client that is very possibly going to dispose of a large real estate parcel…..has anyone ever conducted a “dog & pony” show for realtors? Is this considered bad form? Is there a good RFP out there for such a purpose? I’ve done the equivalent for banks and tech consultants, but I don’t know whether such an approach would come across as heavy-handed in this scenario.
#2 How does compensation work for referrals among realtors within the same company? As an example, if I know Grim Bednarski who works for the national brokerage Dewey, Cheatum & Howe (DCH) in the Clifton office. I have a property in Oshkosh and I know that DCH has an office in Oshkosh. However, if I call Bednarski and he sends the referral to DCH in Oshkosh, what happens in terms of attribution/compensation?
Thanks for any and all responses.
44#, right now you cannot convince sellers to believe it is a bubble. People who bought 14 years ago realize it is best long term investment; people who bought 7 years ago think they are born at the right time; people bought 2 year ago think they need a place to live any way. Remember on average occupation length of residency is about 7 years – you may need to wait another 3 years for that.
bi, interesting train of thought (may work from a sociology point of view) but what any of that have to do with the current RE market and prices that ‘BUYERS’ are willing to pay for a home! sellers can think all they want but when it comes time to sell (7 years or not) its the buyer that sets the price not the seller, right?
Totally off-topic, but too good not to post….
Want to know which presidential candidate holds your views? Take this short ‘quiz.’
http://www.wqad.com/Global/link.asp?L=259460
Chifi,
I am flattered that you miss me.
I have already gone on record with my 2007 NJ home price forecast. It is -5% to +5%. I have said many times that the NJ home market will be “stagnant” for several years.
So far, I haven’t seen anything that changes my outlook. There are several credible home price indices, and Shiller’s numbers tend to be a little lower than other reliable figures, such as OFHEO.
It is important to realize the bias of this site. For every “comp killer” in the suburbs, there is a Hudson County condo that was bought at the same time and flipped for a profit in 2007.
Very good chance the comp killer gets posted here. Zero chance the successful condo flip gets posted.
Speaking of OFHEO, big news..
Loan limit to stay same for Fannie, Freddie in 2008
Fannie Mae and Freddie Mac will have to operate under the same federally mandated loan limit in 2008 as the mortgage giants did this year, the companies’ regulator said Tuesday.
The maximum value of a single-family mortgage eligible to be purchased by either company will stay at $417,000 for the third straight year, according to the Office of Federal Housing Enterprise Oversight, known as Ofheo.
#49 pret; Stagnant? Oh yes it will be stagnant after prices finish theri decline, just like last time.
But hey what do I know, I only lived through the last one in the NYC area, the area I was born raised and grew up in.
Give it some pret, you are still wet behind the ears.
#50 pret Why are you so obsessed with Hudson county, and successful condo flips.
You are looking in the rearview mirror, lets see hoa many successful condo flips there are next year,and going forward.
48 Peace
Interesting. But how did they decide which of Romney and Giuliani’s various positions on any one issue was the one to credit as the correct answer?
Wow…weren’t they expecting 91.5? 87.3 does seem like a significant surprise to the downside.
I also heard a reporter on Bloomberg mentioning the flaw in the unemployment numbers. The two surveys they use are showing a wider discrepancy with each subsequent report. The survey in which they poll businesses is not showing nearly as great a drop as the survey in which they poll households. They think the difference is attributable to the lack of small companies that are surveyed. These small companies tend to go belly up during recessions, so their numbers go uncounted. During the last recession, the household survey numbers appeared to be a rock solid predictor of the pending recession.
Article on Consumer Confidence is below…
Consumer Confidence Tumbles in November
Tuesday November 27, 10:31 am ET
By Anne D’Innocenzio, AP Business Writer
Consumers Confidence Drops in Nov. to Lowest in 2 Years Amid Higher Gas, Slumping Housing
NEW YORK (AP) — With Christmas only a month away, American consumers became more pessimistic about the economy in November, sending a widely watched barometer of confidence to the lowest level in two years.
ADVERTISEMENT
The New York-based Conference Board said Tuesday that its Consumer Confidence Index dropped to 87.3, down almost 8 points from the revised 95.2 in October. It was the lowest reading since 85.2 in October 2005 when gas and oil prices soared after hurricanes flooded New Orleans and shut down a large chunk of the nation’s oil refineries. It also marked the sharpest drop since September 2005 when the index plummeted 18 points from the previous month. Analysts had expected a reading of 91.5 in November.
“Consumers’ apprehension about the short-term outlook is being fueled by volatility in financial markets, rising prices at the pump and the likelihood of larger home heating bills this winter,” said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement.
The Present Situation Index, which measures how shoppers feel now about the economy, fell to 115.4 from 118.0 in October. The Expectations Index, which measures shoppers’ outlook over the next six months, declined to 68.7 from 80.0.
For retailers, the downbeat report on consumer confidence further fueled concern that the holiday shopping season will be weak. Retailers struggled with disappointing sales this past fall, and while many retailers were encouraged by better-than-expected sales for the official start of the holiday shopping season, it was the fat discounts that lured consumers in. The big worry is that shoppers will take their time returning to the stores this holiday season amid worries about higher gas, an escalating credit crisis and a slumping housing market.
One bright spot has been the labor market, which has held steady, but the latest report shows growing concern about job security.
The consumer confidence report — derived from 5,000 responses through Nov. 19 — showed that shoppers’ outlook for the labor market was more pessimistic. The percent of consumers expecting more jobs in the months ahead fell to 10.8 percent from 13.3 percent, while those anticipating fewer jobs rose to 23.1 percent from 20.2 percent. The proportion of consumers expecting their incomes to decrease in the months ahead rose to 11.0 percent from 9.1 percent.
(not work safe -editor)
http://www.reuters.com/article/newsOne/idUSN2638979720071126
Just so twisted I had to post it.
I have already gone on record with my 2007 NJ home price forecast. It is -5% to +5%.
-5 to +5% … that sounds like a NAR forecast :)
#50 Pret
The Pro Real Estate Voice (BUY NOW! BUY ALWAYS!) was well represented when James started his blog over 2 years ago. There wasn’t a burning need for a Pro Real estate blog, as NAR press releases were turned into instant headlines by the NYT et al.
“-5 to +5% … that sounds like a NAR forecast :)”
I can’t remember – does the NAR give such a broad range?
#49 pret I have already gone on record with my 2007 NJ home price forecast. It is -5% to +5%. I have said many times that the NJ home market will be “stagnant” for several years.
That is your prediction,and yet here is what a Realtor has to say about what has been happening in Edgewater with the coop/condo market, right next to Hudson Co, but of course in prestigious Bergen Co. He says final sales price are down 10.18% from Oct, 2006.
“There are currently 161 Condo, Townhouse and Co-op units for sale, compared to 139 units available as of October 31, 2007. Currently, the average asking price is $ 697,218 a 1.59% decrease from the average asking price of $ 708,478 on October 31, 2006.
A total of 175 Condo, Townhouse and Co-op units have been sold from January through October 2007 with the average sale price of $ 605,173. During the same period last year, a total of 139 units have been sold with the average price of $ 708,478. Currently, 91 Condo, Townhouse & Co-op units in Edgewater are under contract.
Conclusion:
Current Edgewater availability is similar to the previous year levels but more properties have been sold this year. While asking prices are only 1.59% lower then last year, the final sale prices are 10.18% lower then last year. These numbers represent very active market where sellers see strong demand but buyers are able to negotiate significant price concessions.
These are the Realtor’s comments A/O 11/02/07.
Stu
Alon the same lines. The method used to calculate employment #’s assumes a certain # of jobs were created and does not verify whether they were actually created or not. More happy #’s from the friendly government that is their to protect you. (sarcasm off)
Confused, #6
You said:
This article alludes to a drop in property taxes, because property values are reduced, which makes no sense to me.
Confused, I think what they’re talking about is that the number of foreclosures will mean a greater number of homeowners who can’t pay their property taxes. Therefore, tax collections will decrease.
NAR spins any number as being within estimates.
NAR ‘refines’ their target every month. Pret put out a range that encompasses all possible revisions.
The price decline is much worse than what the Case Schiller index shows. I know of around 50 listings prices at between 100K and 300K below 2005-2006 prices in great neighborhoods that are for sale, a lot are short sales that drag on and on with the bank. I am seeing them all over the place since October. Even once a selling price is agreed upon the bank must approve of the buyer and all that jazz and get the seller to sign all types of legal releaases. This type of sale take a bit longer. These sales are going to hit the numbers in a big way in the 1Q of 08. Dead of winter in a weak market in a bad bonus year. Yea tony NJ/LI will get spanked. We need another 10 to 20% off in the hot towns to attract buyers. That POS McMansion thrown up in 2006 for 1.2 million won’t get me excited at 5% off. Big deal. Give me 20% and I might go to the open house, give me 25% I might make an offer, give me 30% I am writing a check.
What are people’s predictions for RE for 2008? For the entire year (2008 v. 2007), I’ll say (1) between -3% and -7% (per Case/Schiller); (2) between -2% and -6% (per OFHEO) and (3) between 0 and -3% (NAR).
Pret, I don’t recall that you had your +5%/-5% prediction pegged to any particular price index, so, even with that broad range, there’s no way to determine whether you were right.
#65 njpatient: I think the numbers will be much higher, I am seeing some asking prices in the small areas I follow, back to 2004 levels, asking and I might add sitting, or should I say rotting.
50#, pret, i would add this:
For every “comp killer” in the suburbs, there are 100 homes in the suburbs sold at prevailing market price, that is -5% to 5% from 2005 level.
Pret, I don’t recall that you had your +5%/-5% prediction pegged to any particular price index, so, even with that broad range, there’s no way to determine whether you were right.
… or wrong. But perhaps that was by design.
2008 CONFORMING LOAN LIMIT $417,000 [source cr]
http://www.ofheo.gov/newsroom.aspx?ID=397&q1=1&q2=None
The FHFB reported the decline in the average price was $10,685 or 3.49 percent, from $306,258 in October 2006 to $295,573 in October 2007. The combined two-year decline is now 3.65 percent.
68 grim
I was being polite (I’ll try to stay in character next time).
Ok, one of the stupid people here still considering buying right now : )
Question for all of you realtors …
Is it acceptable to ask for the age of house components before you put an offer in? I know that these generally get revealed during the inspection, but I would like to know before we make offers. I thinking things like furnace, AC, windows, deck, driveway…
I asked for these things casually, and was told “that is something that comes out in the home inspection” which is, of course, to the advantage of the seller.
Thanks!
“For every “comp killer” in the suburbs, there are 100 homes in the suburbs sold at prevailing market price, that is -5% to 5% from 2005 level.”
Of course there are, bi. Oh – would you mind showing us a few of these (I won’t hold you to producing a hundred for each comp killer grim has posted, but how about a couple dozen)?
You don’t have any?
I didn’t think so.
71 Ann
I ain’t no realtor, but seller’s can’t be picky in this market. If you want to know, ask, and if they’re so afraid to tell you that they entirely refuse, then maybe it’s not a good idea to be making an offer on that house.
“It comes out in the inspection” is not a worthwhile response from your perspective, unless you’re going to sign a contract that gives you a right to walk away if certain components are “too old”.
Flipping in Hudson County
The main reason you see successful flipping in Hoboken and maybe JC is because of the timing of new construction. Take Maxwell place for example. Many contract were signed in 2004 and early 2005 for the first phase. Between 2004 and early 2007, while the building was going up,prices continued to rise allowing for a profitable flip. In short, new construction was bought at 2004 prices and sold at 2007 prices. Toll Brothers didn’t and couldn’t raise prices on people who signed a contract in 2004 for 2007 delivery.
Now, I seriously doubt anyone would argue that a condo bought in 2006/2007 from a flipper that contracted in 2004 is making any money on their subsequent flip.
Also, if you want to see where prices are heading on the Hoboken waterfront on a existing (not new construction) basis, then look at the North Constitution. On a square foot basis, and based on actual trades, prices are 5% to 10% lower compared to late 2005 early 2006 peaks.
In summary, new construction flips in Hoboken are making money for those that contracted early with Toll or other early(before a shovel ever touched the dirt) but no one going into contract now can expect a profitable trade.
No bid
UPDATE: Regulator Says 2008 Loan Limit To Stay Same For Fannie, Freddie
ovember 27, 2007: 10:08 AM EST
WASHINGTON (Dow Jones) — Fannie Mae and Freddie Mac will have to operate under the same federally mandated loan limit in 2008 as the mortgage giants did this year, the companies’ regulator said Tuesday.
The maximum value of a single-family mortgage eligible to be purchased by either company will stay at $417,000 for the third straight year, according to the Office of Federal Housing Enterprise Oversight, known as Ofheo.
Ok, one of the stupid people here still considering buying right now : ) Is it acceptable to ask for the age of house components before you put an offer in? I know that these generally get revealed during the inspection, but I would like to know before we make offers. I thinking things like furnace, AC, windows, deck, driveway.
I always ask, and on top of that if realtor does not know then I ask to speak to seller directly. If realtor won’t give seller info look it up on propery shark. Plus the offer to buy the house is only first offer, I will continue to try and knock off the price if things need fixing. Plus go knock on the neighbors doors and see what type of people live there and ask questions about the seller. Run a TRW on the seller too and do a background check to see if he needs to sell.
I
Why the hell would you sign a contract without an inspection? Just put a deposit and sign a binder so you can back out. It is a weak market. “It comes out in the inspection” is not a worthwhile response from your perspective, unless you’re going to sign a contract that gives you a right to walk away if certain components are “too old”.
#25 yeah right, blame the banking deregulation on Bush….
http://www.fool.com/news/1999/foth991027.htm
Whether or not a 1% decline is meanigful seems dependent on a number of factors including the time value of money and whether one has a pressing need to own a home at a particular moment.
With inflation running at say 3%, a 1% decline in home values nets a buyer a loss of 4% (not counting closing costs, and other costs of ownership). If one is involved in a job transfer, etc, and NEEDS to buy in a given geographic loction, that loss may not override the 4% loss.
Still, if the expectation is that prices are likely to drop rather than remaining nominally flat, a smart “buyer” will not throw money into a depreciating asset (I know we do it all the time with cars, but we tend to view them diferently than houses). I have no idea what hom prices are going to be one year from now, but I am willing to bet that even parking $ in a 1% passbook account would net a buyer less total loss of real value than one will suffer from buying RE right now.
I was loking at some “get away” places this weekend. As nice as they were, I am not going to pay $800k for something that could be worth only $560k (assuming GS is correct and NJ drops 30%) 3 years from now. Better to put the $160 downpayment into an account that just keps pace with inflation during that priod, and use the money that would have gone to interest to pay for cruises, and villa rentals inthe islands for a few weeks each year.
People who are FORCED to buy because of special circumstances will always be there. Still, I do not see them driving the RE market higher or even stablizing prices in the short or medium term.
For those of us who are looking for opportunities for non-primary-residence properties, I do not see any reson to go any higher than .55 of market high prices, and even that may be overpaying.
“On a square foot basis, and based on actual trades, prices are 5% to 10% lower compared to late 2005 early 2006 peaks.”
“In summary, new construction flips in Hoboken are making money for those that contracted early with Toll or other early(before a shovel ever touched the dirt) but no one going into contract now can expect a profitable trade.”
“No bid”
r [74],
The teflon coated gold coast?
77 Not looking to sign a contract without an inspection contingency. Yikes.
I would just like to know how old everything in the house is before we put an offer out there, to decide if we even want it at all and of course, to make an appropriate offer depending on how used up the components are.
I asked this question of my realtor and was told that all of that info comes out during the inspection. So I was just wondering if it is uncommon to get these types of questions answered before making any offer.
It would be nice if there was some standard form that sellers would fill out with this information on age.
81 Ann Says:
November 27th, 2007 at 12:07 pm
77 Not looking to sign a contract without an inspection contingency. Yikes.
I am with you Ann. We have always required not only an engineer’s inspection, but also a pest inspection, and, an inspection of any fireplaces. As a result, we backed out of one deal, and later on were able to get large concessions from a seller.
Here ya go bi, a BIG 1.5% / year increase
15-47 Elmary Place, Fair Lawn NJ
Purchased: 1/27/2005
Purchase Price: $335,000
Listed 2 times prior starting at $448,000
MLS# 2715273
OLP: $419,000
LP: $399,000
Sale Date: 11/26/2007
Sale Price: $345,000
But than again there is this one…
2185 Lemoine Ave, Fort Lee NJ
Purchased: 6/30/2005
Purchase Price: $335,000
Sale Date: 11/19/2007
Sale Price: $265,000
#81 –
Ann –
when i showed interest in a house, i usually got a sellers property condition disclosure statement. it seems to be a standard form, and has tons of information. i learned from the people on this board not to rely on it in place of an inspection – which makes sense, but i still like it, because it helped me to determine roughly the age/condition of important items in the house etc.
“People who are FORCED to buy because of special circumstances will always be there. ”
I ask because I can’t think of any – what are some circumstances in which people are forced to BUY (i.e., where renting would not suffice)? I can think of a dozen circumstances in which people would be forced to SELL, but precisely none in which they would be forced to buy.
What bubble??? We are in a whole new paradigm!!!
:p
t c m 81
We have the standard disclosures, that tells you all the big stuff like asbestos, radon and termites, but it doesn’t have much on condition and age. I guess if anything was new it would be written real big on the flyer!
85 njpatient
I agree, there aren’t any circumstances where one is forced to buy. You can always rent.
The downside is renting is kind of a PITA when you know eventually you want to buy and you can feel like your life is on hold, especially with kids.
83#, anybody here have access to MLS for middlesex county? you will find tons of them in the same development sold with 2% range from 2005.
Here is an example. type in
“29 BERKSHIRE WAY, East Brunswick”
in
http://www.nj.com/news/bythenumbers/
you will find dozens of them in the same neighborhood selling around 600K.
9/11/2007
29 BERKSHIRE WAY, East Brunswick
$629,000
…
9/9/2005
63 BERKSHIRE WAY, East Brunswick
$585,000
7/29/2005
48 BERKSHIRE WAY, East Brunswick
$620,000
housing is not bubble in NJ area. if it is, i would be the first one to call it. for the record, i am calling commodity bubble.
bi,
We just sold 4% above summer 2004 and 7% below 2005 in a town very similar to E. Brunswick.
I guess that would put the comp in winter 2004. Way below the summer of 2005. We didn’t even list near the summer of 2005 comp.
And OIL will hit 40$ soon – any day now…
njpatient Says:
November 27th, 2007 at 12:21 pm
“People who are FORCED to buy because of special circumstances will always be there. ”
I agree tht for most peope renting will be an option. There are, on the othr hand, people who have high-level jobs who NEED (because of spouse or certain entertainment/status requirements of the job) to be in a certain geographic area, where there may or may not be suitable rental space. My thesis was not that buyers will always be there, but to the contrary and that sitting out and renting, especially when prices are declining, makes gret sense.
91 Al
Oil at $40. I buy that. A big jug of olive oil seems to be headed there. Well, at least the first cold pressed stuff.
Chong Says:
November 27th, 2007 at 12:25 pm
What bubble??? We are in a whole new paradigm!!!
:p
c: I know someone that got whacked…I know other guys that have stopped returning my phone calls for now….how go things in your feifdom?
#89 bi: housing is not bubble in NJ area no its not bubble, it is baloooon!!;that is now popping.
bi,
Are all houses in a neighborhood priced exactly the same?
86 chong
haven’t seen you fer a bit – cheers
From the Staten Island Advance (Hat tip Ben Jones):
Investors avoid foreclosure auctions
Attorney Steve Soren was set to start a foreclosure auction in Supreme Court one morning recently, but he needed bidders.
Soren, the court-appointed referee for the public sale of a house at 237 Clove Rd., stood alone in a hallway alcove on the bottom floor of Supreme Court. When an out-of-breath bank representative showed up shortly after the scheduled sale start time, the auction could finally begin.
But in the absence of other buyers, the sale was merely perfunctory. The only bid came from Downey Savings, which already held the bad debt on the property. The starting bid, also known as the upset price, was $296,406.
“Going once, going twice, sold to the bank,” Soren, a real estate attorney, told an imaginary audience.
Three more brief auctions followed; they were identical to the first except for the names of the court-appointed attorneys and banks.
…
“It’s usually troublesome because now you have this property and there is no equity in it. Now what’s going to happen with it?” said Jessica Davies, publisher of Profiles Publications Inc., which provides information on foreclosure auctions to paid subscribers.
“The smart investors look at everything before they make a decision. If these investors didn’t show up to bid on these three properties, there was for a reason it,” she added.
87
“The downside is renting is kind of a PITA when you know eventually you want to buy and you can feel like your life is on hold, especially with kids.”
Sure – I rent and have several kids and eventually want to buy, but (unlike our friend bi), I think it’s an even greater PITA to light $50K (or $200K, as the case may be) on fire.
grim (28)-
“Why doesn’t the NAR publish standard deviation and confidence interval estimates?”
Lawrence Yun hasn’t yet taken the class that teaches how these calculations are made.
His schedule right now is heavy on marketing and public relations.
I’ve also heard rumor that personal hygiene is next on his course list.
#92 shore
I did follow your general point (and agreed with it) – was just focusing on that detail…
“for the record, i am calling commodity bubble.”
What do you mean “for the record”? You’ve been wrong in flagrante on this point for months now – we’re all aware of your position.
BTW – how much skin do you have in that game now? And how much have you lost so far?
location, location location …
Interesting
Three firms have paid 27.9bn rupees ($701m; £339m) for six acres of land in Mumbai, in what is India’s biggest commercial land deal.
http://news.bbc.co.uk/2/hi/business/7114852.stm
“I’ve also heard rumor that personal hygiene is next on his course list.”
That could be a rough take-home exam…
I personally don’t talk to renters, what is the point. I also don’t talk to subprime people either, they are going get foreclosed on anyhow. Actually I skip the old people too as they will soon be dead.
http://www.nypost.com/seven/11252007/business/mondo_condos_810486.htm
Condos go begging in NYC!!! Oh My God!!
Ann (71)-
Always perfectly ok to ask those questions.
A good Seller Disclosure should answer a lot of those questions for you.
BTW, the home inspection should be the only thing you rely upon in terms of understanding the real working condition of items in the home. I don’t see how that benefits the seller.
Bi,
if you remember our previous wager, i also specified that oil would hit $100 before 08. We are well on the way, any day now really…. if you guys think Oil is fun, I am guessing that most people will be quite unhappy with gas prices next summer, seeing as we are in a low demand period and production still hasn’t kept up with demand. $4+ gas for summer 08???
vj,
RE crash in India will make US market correction look good.
“for the record, i am calling commodity bubble.”
bi,
For the record, shut the hell up, step up to the plate and short the crap. I’ll take you to the floor and hand your order to the clerk. Remember you need margin $, they will not take a no money down order.
Need Help……wifey is itching to pull the trigger and buy a house, I’ve been able to disuade her for quite sometime now using information provided by this site. So, she went out this weekend and looked at houses, while I stayed in to watch Eli blow himself up, and to my dismay she found one. The house is newly built, new foundation, one of those tear downs and build new.
My question is how and if I can lowball this seller?
Most of the posts here say to lowball by 25% off the 2005 prices, but this is a newly built home, would 25% off still apply?
Thanks
3B…Please refrain from posting articles from the Post. It is a well known fact that they create their own news stories.
96#, good question to mr. chiller
grim-
bi’s posts have now lost their only remaining redeeming quality: their ability to entertain.
He has devolved into a sort of Rain Man, self-stimulating via a series of repeated “predictions” that have zero basis in fact.
Please ban this man. The spirit of Christmas demands no less!
“for the record, i am calling commodity bubble.”
Bi, for the record, I am appointing you Honorary Idiota of this blog.
110#, bob, did you remember i called long tech and short oil? i did it in small amount. back to re.
From the Star Ledger:
Key N.J. legislator says gas tax hike must be considered
A key New Jersey lawmaker says the state must consider increasing its gasoline tax.
New Jersey hasn’t boosted its 14.5-cent-per-gallon gasoline tax since 1988, giving it the nation’s third lowest gasoline tax.
Spyder [111]
When you go look at the house the next time, bring some mice from the local pet store (couple of dollars each). When your wife is not looking, let them free in the kitchen. This should keep you renting for at least another six months.
114, clot, i did not get it. why you guys can keep hyping commodity and bashing housing but i cannot offer opposite views?
25% off 2005 prices? Doesn’t anyone believe in the phrase history is doomed to repeat itself….
1989: Prices are very expensive; affordability an issue. Sales slow and prices drop. Mention of risky loan types.
Gee doesn’t this sound like our Exotic mortages right now?
———————————
1990: Prices take a serious plunge. One article claims that housing booms are a bad thing and we should hope prices stay low. Increasing mortgage rates are blamed for the bust. The word “recession” is mentioned. Gloom and doom.
Hmmm again its those mortage rates and hey doesn’t recession sound familiar?
————————————-
Skip ahead
1993: It’s definitely a buyer’s market. Some people are saddened by the fact that current prices are 50% of what they were in the 1980’s.
Prices dropped 50% so everything else from previous years seems to be in sync with the housing market now. So since the peak of the market was 2005 take 50% off that and that will give you true price.
People can say prices will not or cannot fall that much. People say things are different now, but it looks to be pretty similar. So once prices are 50% off 2005 prices, than it will be a good time to buy.
1997: Finally, housing has recovered.
Both Disclosure Statement’s & Home Inspection can be faulty. The last house I bought had three hairline vertical cracks in a Toll Brothers Concrete Basement Foundation. The Disclosure Statement said “No Water Problem”. The Structural Inspection said “Normal Settlement Cracks, No Evidence of Water”. Three weeks after closing I was out $4K for Waterproofing of the three settlement cracks, one of which did leak. I was not surprised as my own Personal Inspection expected to have a Basement leak. A home inspection cannot detect problems, which are not readily apparent, in a finished construction home.
bi 113,
I asked shiller. They use something called the “Repeat Sales Pricing”. I guess that concept is alien to you and NAR(R).
122#, Repeat Sales Pricing? the same house bought in Q1, sold in Q2 and then bought again in Q2 and sold in Q3?
108#, kattle, you may be right. you are better than me in prediction, even on the size of the bubble. but a bubble is a bubble.
bi,
Please take the time to read and understand the methodology before making comments.
S&P Case Shiller HPI Methodology
123#,
If you have the time, go read how the shiller index is composed. Read carefully, understand completely and then please comment.
You sound like a caged rat trying to get out. The cage is tight and Shiller doesn’t like rats.
Ann,
Re your disclosure question:
We looked a house once where the seller’s agent said that exact remark to me as I looked around the walls to see how many outlets were in each room (the bedroom had 1 outlet!)…
Anyway, he said…”you’ll find out all this stuff during the inspection….” to which I replied “Well, if you’re restricting me from looking at this house, I guess there won’t be an inspection…” and with that I turned around, and walked out. I was done.
Needless to say I’m sure the sellers were freaked as we had already discussed price (nonchalantly) and this was our second visit.
We bought another house, much better! (But still only 1-2 outlets per room…. :)
is anyone having issues with ING lately?
transferring money out is taking a lot longer than usual
and so the steady plunge towards 4pm begins…
re: (117)
NJ ranks about #3 in nation for State and Local tax burdens and #3 in the nation for lowest gas tax. Instead of consolidation of services and reducing taxes the legislature is only moving towards increasing taxes again. The smoke and mirrors here is that they want to increase the gas tax to fix aging bridges and roadways.
Corzine is trying to cut the debt by proposing selling everything nailed down and not nailed down and he has asked his staff to propose cutting 3 billion for the budget this year. Of course that was before the election.
Corzine will try to push forward spending cuts, but now that the elections are over the low-life, corrupt weasels in the legislature will work against the Governor’s efforts and find ways to spend even more money on themselves and their special interests.
And just like he did during the state shut down over the sales tax increase a couple summers ago, Corzine will cave in to the legislature.
As usual we will be worse off then when we started.
Evans says recession remains unlikely given rate cuts
Ony 5 Fed banks supported rate cut in late Oct: minutes
7 Fed banks wanted to hold rates steady in late Oct: minutes
The article is very long. But it is very clear that this methodology also has many limitations. One obvious one is that it is subject to larger statistical error due to limited sample size. that is why i call it statistically insignificant when the change in mean is so small.
http://www.allbusiness.com/north-america/united-states-missouri-metro-areas/4493312-1.html
“In addition to these two problems, the repeat sales methodology has several generic limitations and drawbacks. First, the repeat sales methodology can only estimate an index of the price level rather than the price level itself. The reason has to do with the statistical properties of the underlying regression equation. (10) Hence, for understanding, say, the affordability of housing, the repeat sales methodology is not helpful.
A second limitation is that the number of observed repeat transactions is small compared to the total number of sales transactions (which is used in the average price methodology). In one study of house price appreciation in four metro areas from 1970 through 1986, the number of usable repeat transactions was just 4 percent of total observed transactions (Case and Shiller). (11) In other words, the usable number of repeat sales was just 4 percent the total number of sales. Other studies have found somewhat higher repeat sales shares: 11 percent (Case and Quigley) and 38 percent (Hwang and Quigley). Even the largest of these represents an important loss of precision in estimating a housing price level.
A third limitation is that a repeat sales index is subject to continual revision. That is, an initial estimate of the rate of house price appreciation between any two periods will continually be revised. The most intuitive explanation follows from houses whose “initial” sale is in the reporting period. The prices of such houses are not included in the estimation until a “repeat” sale occurs. Only then does the price appreciation of such houses affect the estimate of the initial reporting period’s aggregate index level. As a quantitative example, consider the growth rate from 2005 Q2 to 2005 Q3 based on the Office of Federal Housing Enterprise Ovesight (OFHEO) House Price Index (HPI), one of the two repeat sales indices described below. Based on data through 2005 Q3, it was estimated to be 11.9 percent (annualized). But based on data through a year later, it was estimated to be 13.9 percent. This two-percentage-point change is on the high side for such revisions. Moreover, revisions of growth rates over longer periods, such as a year or more, tend to be even smaller. “
1989: Prices are very expensive; affordability an issue. Sales slow and prices drop. Mention of risky loan types.
Gee doesn’t this sound like our Exotic mortages right now?
Of course in 1989 a “risky loan” was considered a relatively vanilla adjustable rate mortgage (ARM) with good credit and a respectable down payment.
bi (119)-
“…why you guys can keep hyping commodity and bashing housing but i cannot offer opposite views?”
You offer no documented facts to support your “predictions”. That was ok, as long as your posts were amusing; however, they have now lost even their entertainment value.
Off with your head.
#128 ING: I’m transferring $$ IN and it is taking 1 week
I can’t believe this, but I am actually going to agree with bi. I think we are closer to a commodity top (mostly across the board) then a bottom. I don’t see how commodities can keep their relentless march upwards if we (U.S. consumers) slow. I don’t care how “global”, the world has seemingly become, U.S. consumers are still a very important part of global gdp. Just look what the subprime mess has done to European lending institutions. The ECB had to inject more liquidity there than the Fed has injected here in the States. If we slow, Europe will slow and the EMs will slow. And if that happens, commodities will decline.
We’ll see,
DebtVulture
Of course in 1989 a “risky loan” was considered a relatively vanilla adjustable rate mortgage (ARM) with good credit and a respectable down payment.
—————————————-
So if that was the case in 1989 that people did have good credit and respectable down payments and prices dropped 50% off the peak
than prices will drop a minimum of 50% because of all the back door lending.
cont’d:
And the fact that bad credit and no down payment was ok.
That explains why the bi-duck index has a clear advantage.
Commodity pricing – Just wait for fed to lower the rate again…….. Oil-producing countries are not stupid and they see very clearly that US is trying to inflate it’s way out of national debt (so far quite successfully I must say).
re: (136)
Commodities have been rising for the last 6 years mostly do to the weakening dollar and demand from Asia.
You can expect the dollar to continue to weaken and the flight to commodities will continue as it is a hedge.
bi,
Good link, it covers the shortcomings of all of the price indicies (Not just Case/Shiller).
bi,
Your link points to inherent issues with three methodologies. How come you didn’t list the problems found with the NAR price measure?
Did you skip this part?
“Notwithstanding these problems and limitations, the repeat sales methodology remains an excellent approach to estimating national house price appreciation. There are currently two main publicly available repeat sales indices of U.S. housing prices: the OFHEO HPI and the Standard and Poor’s/Case-Shiller National Home Price Index.”
Keep sticking your head in the sand, but remember it’s not only getting colder but the tide is coming in as well.
bi,
Regarding sample size, please see:
http://www2.standardandpoors.com/spf/pdf/index/cs_salepaircounts_112766.xls
The most recent index for our area was based data from 13,292 sale pairs.
I’m planning to move out of Hoboken in a few months. When discussing this over the Thanksgiving break, I had a few bag holders ask me why I plan on renting instead of buying.
I’ve taken the route of just smiling and saying that i’m not sure where I want to put down roots rather than pummeling them with facts about the market.
Am I being cowardly? What do you all do in such situations nowadays?
#71 Ann
You can also ask for the average monthly electrical and heating bills…all standard info to potential buyers prior to the recent “bubble.” Used to be included in the sell sheets of yore.
Absolutely OK to ask age of furnace,hot water heater, roof, oil tank and its location, windows, etc…
Lincoln78:
I give them the old 30% off speech. They usually just cringe. I then show them the rollercoaster ride on Utube.
From MarketWatch:
Oldies but goodies
If it sounds too good to be true, it probably is. Many people bought more house than they could afford and as a result were unable to hold on to it when conditions changed.
What goes up must come down. One reason people did this is that home prices were rising faster than personal incomes for a number of years, but that could not go on forever, as we know now.
Home is where the heart is. Forgetting that a home is first and foremost a place to live, many people began thinking of their houses as investments and thus took risks they might not otherwise have taken.
…
What, me worry? Home prices have gone up every year since the Great Depression and will continue to do so as far as the eye can see, so it’s OK for me to spend more than I earn, since all I have to do to make up the difference is take out a home-equity loan.
This time it’s different. There may have been all kinds of bubbles in the past, but this can’t happen to housing, since all real estate is local, and, at any rate, people need a place to live (see Home is where the heart is, above).
There’s a sucker born every minute. These are the folks who believe that “this time it’s different.”
78 (145)-
Be aware that your friends and relatives on both sides of the housing issue probably have a tremendous degree of self-interest (stupid as that may be) tied up in your decision.
Why bother answering those questions? What you do is nobody’s business…unless they’re helping you finance your decisions.
chicago,
You know these guys?
http://www.dealbreaker.com/images/entries/deutsche%20bank%20alex%20brown.jpg
The dollar decline has contributed to less than 30% of the rise in oil over last couple months. I am counting on the rest of the world slowing as we slow, the dollar decline to ease, and China to slow down after the Olympics to all hit commodities. I don’t really have a big bet on it though, unlike my shorts on financials & housing.
TO Lincoln78’s post 154 – I stopped talking RE with family/friends/co-workers last year.
I had – “you are crazy thinking that real estate (no wait – REAL ESTATE) will go down” looks and “well, there is no way housing will go down Where I Live” answers coupled with upset reactions from so many that it was just not worth it.
Now, when I am actually thinking there might be some opportunities to buy everybody thinks that I am crazy to even be looking…..
Too bad I can not buy untill my job situation will be a bit clearer (I might need to move in the next 6 month or might not even had a job – we will see).
If I do loose my job – you can be sure my next job will be not in NJ.
146 Sassy,
Thanks, good reminder to ask for utility bills!
Reassuring to hear that this kind of info exchange was standard before the bubble.
Sometimes I feel like I’m living in some bizarro universe trying to buy right now.
I read all the news and stuff here and then when I go out to see houses, it’s a time warp. Everything is still priced at peak prices and my realtor keeps saying that once the spring comes prices are going to go UP.
Thanks!
145 – I’ve stopped talking about real estate with friends/family. The last time i mentioned it to a relative i heard this: “What?! Prices aren’t going down. The news you read clearly says the opposite of the news I read.” I also had a friend try to convince me that foreign billionaires are helping to drive prices up in Brooklyn.
So, rather than frustrate myself to the point of insanity, I just don’t do it anymore.
my realtor keeps saying that once the spring comes prices are going to go UP.
The Realtor(tm) isn’t providing economic commentary, s/he is trying to get you to buy.
This is a standard sales tactic, it’s called creating a sense of urgency, and it works very well. The goal of the tactic is to use emotion (fear?) to get the buyer to move on the deal.
If she told you prices were going to be the same, or even lower, that creates the opposite scenario. No longer is there any sense of urgency, even worse… there may be a benefit to waiting.
Which means no sale, and no commission.
Regarding those online savings (ING/HSBC). Ever notice that the transfered $$’s move from your vanilla checking account (as example) one day and hit your online account in about 6 days. So within those 5 days, where the hell is the money? Do these online banks actually receive the ACH that first day and use those funds without paying interest for 5 business days? Shady!!
As far as asking for age of major systems in the house – I asked every single home-owner last year – they were very open and always tried to answer to the best of their ability. aAlso I always asked about heating bills.
For towns I am looking at – central NJ – asking prices are about 10% off from same time last year (but they were wayy to unrealistic last year),
I can not say much about actual contract prices.
My OBSERVATION – probably not very accurate – the only starter homes which are moving are either the perfect updated brand new appliances/roof/everything – priced at average or Foreclosed/bank owned properties priced at about 25-30% discount – but they usually need so much work that since I am not in construction and I would not even know where to start to make them livable (major stuff – roof, heating/electric/windows/walls/mold…). I would be interested in buying one of thouse at may be 50% off – at 25% off you will be a lot worse after hiring contractors than if you’d bought a fully updated ones.
43 Walnut Ave, Bogota NJ
Purchased: 2/20/2005
Purchase Price: $423,000
Listed numerous times starting at $494,900
MLS# 2741479
OLP: $379,900
LP: $362,000
Active
———
115 Elm Street, Fairview NJ
Purchased: 7/26/2004
Purchase Price: $365,000
Purchased: 6/17/2005
Purchase Price: $410,000
Listed numerous times, current listing
MLS# 2740317
OLP: $449,000
LP: $390,000
Active
#144 grim
bi didn’t know that because he was looking at data from half a year ago and recommending we do the same.
Typical.
SS…
AppleBank of NY has been fantastic for me. Plus if things get screwy I can protest outside of one of their branches. Their ACH times have always been 3 days or less in and out for me.
Ann,
…and my realtor keeps saying that once the spring comes prices are going to go UP.
Find a new agent as it sounds as if your current one is looking out for THEIR best interest, not yours. They just want you to buy. If your agent wanted to be more tactfully honest they would say they didn’t have a clue as to where prices are headed.
skep-tic Says:
November 27th, 2007 at 1:51 pm
is anyone having issues with ING lately?
transferring money out is taking a lot longer than usual
________________________________________________
Really? I jut transferred out Friday, and it hit my checking today.
consensus view of the extended skep-tic clan over Thanksgiving was that one should hold off buying for at least a year. major difference from last year where the question was why are you still paying rent?
the real estate never goes down myth has been busted, if nothing else
“my realtor keeps saying that once the spring comes prices are going to go UP.”
Grim, Rich, I agree, agent is representing agent for sure here. No offense to any of the good company here, but I’ve never met an agent who wasn’t representing anyone but themselves. It’s the nature of the beast.
Al, I do believe that homeowners are overall more than willing to give you information on age of systems and components. I know I always was. It’s the realtor I’m finding that may not be as willing to go get the information. It’s too bad that this sort of disclosure isn’t standard.
Bi,
Keep up the good fight.
These guys want us to goose step and fall in line with their thinking. It can be expected that any deviation will be met with attacks. We only need to witness what they did to one of their own a few days ago (Homer)who had the termerity to express a view not commonly held. If they go after one of their own like a pack of raveneous dogs, you can imagine what they’ll do to you or I. Note what Clod is suggesting below.
Clotpoll Says:
November 27th, 2007 at 2:13 pm
bi (119)-
“…why you guys can keep hyping commodity and bashing housing but i cannot offer opposite views?”
You offer no documented facts to support your “predictions”. That was ok, as long as your posts were amusing; however, they have now lost even their entertainment value.
Off with your head
stu-
What rate are you receiving from Apple?
“reinvestor101 Says:
November 27th, 2007 at 3:51 pm
Bi,
Keep up the good fight. ”
50.5,
Good to see that you are still breathing.
I don’t like this one bit. Why did this have to happen? How do we know that Al Queda doesn’t own Citigroup now?
This is what happens when negative talk is allowed to become reality.
DUBAI/LONDON (Reuters) – A $7.5 billion Abu Dhabi deal to buy Citigroup Inc shares may have created a model for acquisitions by Gulf and other emerging-market investors scouring the ruins of the U.S. mortgage crisis for bargains.
The Abu Dhabi Investment Authority (ADIA) sought no role in managing Citi, allowing the world’s wealthiest sovereign fund to invest as a saviour of the largest U.S. bank without the risk of being perceived in the United States as an Arab predator.
Investors from Dubai to China could be considering similar deals with cash-strapped U.S. banks, hoping to ride a recovery in their stocks and avoid the political barriers that could have been thrust in their path in better times, analysts said.
“There will be more such investments,” said Giyas Gokkent, head of research at the National Bank of Abu Dhabi. “The other buyers will likely play the same white-knight role,” he said of other Gulf Arab investments in Wall Street firms.
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20071127&id=7857284
Ann,
If your realtor is giving you a “don’t worry now” approach adn that things will come out in the inspection and not event rying to get the info for you, ditch ’em. If they try nad the seller won’t give anything that’s not their fault, but not even trying is ridiculous. They should try to get every piece of information you ask for.
Linc (145)
You are being politic — and believe me, that’s a good thing. I kind of reached a crossroads about the gloom enveloping housing and RE: I’ve ceased beating friends and relatives about the head with statistics learnt hereabouts (even though I find them compelling AND credible), and instead am touting this blog’s comment boards as a great resource for restaurant recommendations, inside jokes about $300 dungarees, and to commiserate about the ’07 Mets.
“I Kind of.” Ugh, that’s what I get for typing while on the phone with the missus…
Al, I do believe that homeowners are overall more than willing to give you information on age of systems and components. I know I always was. It’s the realtor I’m finding that may not be as willing to go get the information. It’s too bad that this sort of disclosure isn’t standard.
Dich this realtor – he is lazy and does not want to work – it is one phone call to seller!!!
“This is what happens when negative talk is allowed to become reality.”
50.5,
That is what happens when your tier 1 capital is is approaching threshold levels.
I saw this last week when I was walking to get coffee. I never noticed it before, and I started laughing. Then I felt like a loser when I realized why.
http://www.brigadoonopticians.com/
“Klaus-Peter Müller spent the better part of a decade working in the New York branch of Commerzbank, the German bank he now heads as chief executive. His daughter was born in Manhattan, and he has kept close ties to the United States.”
“Commerzbank’s chief, Klaus-Peter Müller, said bankers did not understand mortgage securities and relied too much on ratings.
Mr. Müller is unsparing in his criticism of American mortgage-market excess, which has mutated into a trans-Atlantic financial crisis, nearly ruined two German banks and, he predicts, will wreak more havoc in the investment portfolios of other European banks.”
http://www.nytimes.com/2007/11/27/business/worldbusiness/27subprime.html?_r=2&ref=business&oref=slogin&oref=slogin
I’m not sure if this news is reliable –
S&P Equity Research Downgrades Morgan Stanley (MS) to Sell
S&P Equity Research Downgrades Merrill Lynch (MER) to Sell
http://www.haloscan.com/comments/calculatedrisk/3272425766254544834/?a=53704#355228
I’m with Ann — I feel like my life is on hold with renting (sold last April). We made a super lowball bid last week on a house and the owner said she didn’t want to counter. It’s a nice house, but it’s on railroad tracks, has old bathrooms and kitchen. It’s also empty and been on market for more than three months (last listing expired and is now with new realtor at lower price). We offered about 25% under second price — did we insult her? Should we go back with a higher bid? The original offer was just a starting point.
25.125 (168)-
“I don’t like this one bit. Why did this have to happen? How do we know that Al Queda doesn’t own Citigroup now?”
Al Qaeda normally thrives in an environment of panic, uncertainty and instablity. I’d say that’s a pretty good description of C these days.
BTW, if you really care so much about terrorist infiltration into US business interests, why don’t you sell your car, buy a rickshaw and cut off the little trickle of USDs they get directly from you?
And- while you’re at it- pay your damn mortgage.
Off with your head, too. Although it should take a mighty crowbar to pull it out of your a$$ first.
Re: #150
Yummy, especially the Bentley.
On a more serious note, an interesting development.
Family member is selling house in SoCal and there’s been zero action in 3+ months.
It’s listed with Prudential and today, 108 salespeople showed up for a realtor’s open house.
Reason: Corporate headquarters handed down instructions that all salespeople in the region were required to view all homes listed by Pru. The initial realtors’ open house one month ago only 3-4 salespeople showed. Interesting.
Yes, I’m still breathing and there’s no doubt that some here probably dream about me pushing up lillies. They want to see me dead. That ain’t gonna happen.
BC Bob Says:
November 27th, 2007 at 3:58 pm
“reinvestor101 Says:
November 27th, 2007 at 3:51 pm
Bi,
Keep up the good fight. ”
50.5,
Good to see that you are still breathing.
re (180)-
I don’t want to see you dead. I want you silenced.
You think you’re advocating the bull viewpoint on RE. I am a RE bull, and people like you cause the public to view people like me as a clown. Not leveling with people is the worst thing one can do as a merchant (note the fury of all the people here who haven’t been treated honestly), and you’re not helping at all.
I’ve also come to doubt that you’re even here to add serious counterpoint, as you- along with bi- cannot substantiate your silly pronouncements with even a scintilla of evidence.
So, how underwater are you?
#177 IMHO, you should discipline yourself with regards to my life is on hold belief.
What exactly does that mean, you get up every morning you do what you have to do,and you live your life.
You would do that whether you rented or owned, how exactly does owning not make your life feel like it is on hold.
The novelty of buying will wear off, as in the end it is 4 walls and a roof.
The foolishness of over paying, well that lasts forever.
By the way I would never buy near rail road tracks, location, location, location, why even consider buying in that location in this environment?
Switching gears here, I’ve noticed mortgage rates ticking down on the big sites like Bankrate and on Bloomberg’s tracker. Does anyone have any current quotes for 30 yr fixed loans?
mac (183)-
5.75%…with 720+ FICO and 20% down.
Economist L. Bates put this together some years ago. Not bad.
The Federal Reserve.
“Monopoly Men”
http://tinyurl.com/yro6lm
SAS
“They want to see me dead. That ain’t gonna happen.”
Not me. I just wonder, when I’m negotiating with you, do I have to get on my knees to look at the whites of your eyes.
186
LOL
What is this I hear about Freddie Mac cutting dividend by 50%?
#177 –
i agree with 3b in #182
sometimes i feel sort of in limbo but if you think it through, it really doesn’t make sense. the only thing i’m really not doing now, that i would normally do if i owned, is spending time and money fixing up my house. i don’t get such a big kick out of that stuff anyway, so it’s worth it for me to wait.
if you really want to feel your “life is on hold” it’s more likely to happen if you buy in this market, at these prices, and find yourself underwater. then you will not be able to move if you want to for some reason, or have to. you’ll be stuck –
From MarketWatch:
Wells Fargo to take special $1.4B provision to up reserves
Wells Fargo to tighten home equity lending standards
Wells Fargo provision due mostly to home equity losses
From Bloomberg:
Wells Fargo Plans $1.4 Billion Charge for Bad Home Equity Loans
Wells Fargo & Co., the second-largest U.S. mortgage lender, will take a $1.4 billion pretax charge in the fourth quarter because of increased losses on home equity loans.
The charge reflects “the higher losses the company expects in this portfolio because of further deterioration in the outlook for the housing markets,” the San Francisco-based bank said in a regulatory filing.
177 leavingqueens
Hey, you made your offer, she made her choice. I would move on to another house.
We are also considering putting in an offer on a house at about 20% of original list price, or 12% off current list.
I am 100% certain it will be rejected outright. House has been on the market for 8 months, and vacant for six and the owners bought it 35 years ago and are now in assisted living.
At this point, I believe that most sellers need to do the price reductions themselves; they don’t want a buyer telling them they are delusional.
Off with your head, too. Although it should take a mighty crowbar to pull it out of your a$$ first.
Now THAT’S funny!
http://www.streetinsider.com/Downgrades/S&P+Equity+Research+Downgrades+Merrill+Lynch+(MER)+to+Sell/3154301.html
S&P Equity Research Downgrades Merrill Lynch (MER) to Sell
We are cutting our 12-month target price by $20 to $48
http://www.streetinsider.com/Downgrades/S%26P+Equity+Research+Downgrades+Morgan+Stanley+%28MS%29+to+Sell/3154339.html
S&P Equity Research Downgrades Morgan Stanley (MS) to Sell
We are reducing our target price by $15 to $45
ChiFi #174-
Do they have a branch in Westfield?
John
tcm [189],
I agree, I don’t get a kick out of climbing ladders either. I have owned for 20 years, up until 9/2005. I can’t even begin to tell you how much I enjoy the freedom of not being attached to a house. I have not been in Home Depot for the past 2 years. Many just compare the cost of renting/owning and never take into consideration the cost and time of maintaining a house; landscaping, roof, electrical, leaky pipes, clogged drains, painting, wallpaper, sidewalk cracks, ants, bats, furnishings, cosmetics, etc…. Just as you finish one project another one pops up. Icing on the cake? As a reward for all your hard work you receive a notice of a 5-10% tax increase.
“Wells Fargo & Co., the second-largest U.S. mortgage lender, will take a $1.4 billion pretax charge in the fourth quarter because of increased losses on home equity loans.”
[191],
The imaginary wealth goes puff. However, the debt remains.
Dear Clod:
I believe you mentioned in your latest diatribe that you are a real estate bull. I would have never guessed that at all. Judging from a recent post from you, it appears that you are really a self styled “revolutionary” looking to overthrow the government. That would make you a little more that a closet radical of the most dangerous variety. Moreover, you appear to have a streak of meaness unrivaled by anyone else on this board.
Richard, Bi and I have produced boatloads of evidence in support of our positions, but you don’t want to accept it, so it doesn’t matter what is posted.
Finally, Clod, since when have you required help to look like a clown? You’re doing that quite well without assistance. Actually, you’re doing so well, I thought of actually having you provide some entertainment at my daughter’s upcoming birthday party. Please advise regarding your availability.
Thanking you in advance,
R. E. Investor
Clotpoll Says:
November 27th, 2007 at 5:02 pm
re (180)-
I don’t want to see you dead. I want you silenced.
You think you’re advocating the bull viewpoint on RE. I am a RE bull, and people like you cause the public to view people like me as a clown. Not leveling with people is the worst thing one can do as a merchant (note the fury of all the people here who haven’t been treated honestly), and you’re not helping at all.
I’ve also come to doubt that you’re even here to add serious counterpoint, as you- along with bi- cannot substantiate your silly pronouncements with even a scintilla of evidence.
So, how underwater are you?
That is NOT funny. That is mean.
Rich In NNJ Says:
November 27th, 2007 at 5:31 pm
Off with your head, too. Although it should take a mighty crowbar to pull it out of your a$$ first.
Now THAT’S funny!
grim Says:
November 27th, 2007 at 5:24 pm
What is this I hear about Freddie Mac cutting dividend by 50%?
grim: probably true, but it might just be a one-shot deal…..they are cuffed not so much due to market based illiquidity , but rather stringent regulatory guidelines that are non-negotiable and unfinessable in the short-term. They aren’t dealing with living breathing people, but rather the legislative and executive branches of the federal government.
“Richard, Bi and I have produced boatloads of evidence in support of our positions,”
50.5,
Besides waving your flag, what boat contains this evidence? The Titanic?
Looks like today’s mini rally will be destroyed by the big financial firm downgrades. In August, we talked about a market correction which didn’t immediately occur, until yesterday. Yesterday it was the DJIA. Tomorrow it will be the Nasdaq and the S&P.
We need not debate the likes of the ReInvestors and the BIs of this blog.
We merely need to sit back and watch their nightmares become realities.
SRS to 150 by New Years Eve.
This is bad, very bad.
grim Says:
November 27th, 2007 at 5:28 pm
From MarketWatch:
Wells Fargo to take special $1.4B provision to up reserves
Wells Fargo to tighten home equity lending standards
Wells Fargo provision due mostly to home equity losses
pulling directly from source
11/27/2007- 11:18am S&P DOWNGRADES SHARES OF MERRILL LYNCH TO SELL FROM HOLD ( MER 52.91 ) : We believe further deterioration in the mortgage securities market has put further downward pressure on the value of ABS CDOs on the balance sheet at MER. Remaining net exposure to these products at the end of Q3 was more than $21 billion, and we expect additional write-downs in the range of 25%-30% of these assets in Q4. We are reducing our Q4 and ’07 EPS estimates by $3.06 to losses of $1.82 and $0.17, respectively, and lower our ’08 EPS estimate by $0.98 to $7.62. We are cutting our 12-month target price by $20 to $48, 1.3X projected book value, a discount to peers. /M.Albrecht
“These guys want us to goose step and fall in line with their thinking.”
I see reinvestor is back and calling us all Nazis.
Nice.
What a coward.
S&P Research Notes
——————————————————————————–
HRB SNIC TRX AHONY RSO BF.B CNQ BVF TSFG CPWM VITL OVTI CUK CCL SHI SMTC ABX PTIE NOVL ORCL RHT MSFT JTX FCX PSS BE RY VSTA PBY ASTE KNX BHP RTP MSW VIP MBT SHLD SOLD ESRX NRF COO NVS FRED CSC AEO NOK PAS MS DLTR DKS HEI MER DHT OSG CSE TECD SFD TIVO GE SMG THQI MTH SPLS CWST AAUK BDN ATVI BRCD C ACGL AWH CBH NWL SNY HNZ TIE MRVL SNE MSFT TTC FMD SBSA EMC ITRN SIR MAXY SGP RSTO SHLD TI E TEF ETFC AMTD SCHW CNSL CTL PGSVY SLB DAI KEM GPS RDS.A CFC BRK.A SPLS FL ADI CHRS CDL IKN DE PDCO VRTX MRK LUK
11/27/2007- 5:25pm S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF H&R BLOCK ( HRB 18.96) : HRB has undergone significant leadership changes this month, including the resignation of its CEO and CFO, the introduction of interim successors, and the election of a new board chairman. We think such sweeping changes strongly signal that the company will focus on expediently completing the sale of its troubled Option One Mortgage unit, de-emphasizing its remaining consumer finance businesses, and concentrating on its tax preparation unit, which we think makes sense given HRB’s dominant tax preparation market share. We are maintaining our 12-month target price of $22. /J.Peters-CFA
11/27/2007- 4:40pm S&P REITERATES SELL RECOMMENDATION ON SHARES OF SONIC SOLUTIONS ( SNIC 10.37 ) : SNIC posts preliminary Sep-Q results amid an ongoing options review. We calculate a loss of $0.04 vs. EPS of $0.15, $0.04 worse than our breakeven estimate. Revenue fell 10% to $32.3M. Although we see sequential revenue growth in Dec-Q, we project higher operating costs and slower adoption of SNIC’s On Demand technology. We are cutting our FY 08 (Mar.) estimate to an operating loss of $0.07 from EPS of $0.01. We are keeping our 12-month target price of $8, based on an enterprise value of 1.4X our FY 08 revenue estimate, a discount to the industry average of 2.7X. /J.Yin
11/27/2007- 4:33pm S&P MAINTAINS HOLD OPINION ON SHARES OF TRONOX INC ( TRX 7.91) : We see challenging conditions for TRX into ’08 on housing slowdown. Q3’s $0.49 loss included reduced pigment profits, as lower domestic demand resulted in more eroding prices, and higher raw costs. TRX has expanded its cost cutting program 55%, including a 7% workforce reduction. TRX has achieved about $55 million in savings over the past year, as it continues to struggle since its formation in late ’05. We are widening our ’07 loss estimate by $0.50 to $1.20, before any land-sale gains, and cut our target price to $10 from $12 on a weaker outlook. /R.O’Reilly-CFA
11/27/2007- 4:06pm S&P REITERATES HOLD RECOMMENDATION ON ADRS OF AHOLD LTD ( AHONY 14.05) : We see ’08 sales growth of about 2% reflecting 2%-3% identical-store sales growth in Ahold’s U.S. operations, 3%-5% identical sales growth in Europe operations and recent divestitures. We believe a competitive pricing strategy should result in increased U.S. store traffic trends throughout the year. In Europe, we see margins stabilizing as comparisons become more difficult. Overall, we believe margins will widen slightly as a more competitive pricing position is offset by improving sales leverage. In all, we see earnings per ADR of $0.87 in ’08, up from our est. of $0.73 in ’07. /J.Agnese
11/27/2007- 4:06pm S&P REITERATES HOLD OPINION ON SHARES OF RESOURCE CAPITAL ( RSO 9.10) : At an investor presentation, RSO indicated that, from a credit perspective, its portfolio continues to perform well. RSO reiterated its belief that its $1.64 annual dividend is sustainable. While we believe the reinvestment features of RSO’s collateralized debt obligations will allow it some capital to reinvest as loans mature and prepay, we see limited access to new equity or debt financing, driving only minimal portfolio growth and flat quarterly EPS. We believe several specialty finance peers provide more attractive growth potential and a better risk reward profile than RSO. /J.Willey
11/27/2007- 4:01pm S&P MAINTAINS BUY RECOMMENDATION ON SHARES OF BROWN-FORMAN ( BF.B 70.98) : Ahead of BF.B’s Oct-Q report, expected on Nov. 29, we are raising our EPS estimate to $0.98 from $0.95 to reflect a slightly higher revenue growth rate on international strength. We expect that sales will be led by Jack Daniels and Southern Comfort in international markets, and strong Finlandia volumes. We look for gross margin to continue to be hurt in the near term by the addition of the recently acquired Casa Herradura brands, but we forecast improvement as BF.B betters pricing and mix. We are keeping our target price of $79, based on our DCF and P/E analyses. /E.Kwon-CFA
11/27/2007- 4:00pm S&P REITERATES HOLD OPINION ON SHARES OF CANADIAN NATURAL RESOURCES ( CNQ 66.08) : CNQ announced its 2008 budget today, which shows plans to reduce its natural gas production target by 12%, but increase its liquids production target by 3%. Updating our models for these changes, as well as changes to our projected crude oil and natural gas price estimates, we are raising our Q4 ’07 EPS estimate by $0.18 to $1.02, ’08’s by $1.12 to $4.51, and ’09’s by $1.31 to $5.74. However we are reiterating our 12-month target price of $80, reflecting discounted cash flow analysis and relative valuations. /T.Vital,S.Glickman
11/27/2007- 3:58pm S&P REITERATES HOLD OPINION ON BIOVAIL SHARES ( BVF 14.61) : We believe the likelihood of obtaining clearance for Wellbutrin Salt is now more uncertain, given a recent FDA ruling to delay its decision on the drug until 4/23/08 (four months later than expected). In July, the FDA gave the drug “non-approvable” status. We think BVF had been banking on the drug to salvage this franchise after generics erode Wellbutrin XL next year. On the plus side, we think BVF still has a decent pipeline, and a strong cash position. We are lowering our target price by $4 to $18, on revised forward P/E and DCF assumptions. The dividend is yielding 10.4%. /H.Saftlas
11/27/2007- 3:41pm S&P MAINTAINS SELL RECOMMENDATION ON SHARES OF THE SOUTH FINANCIAL GROUP ( TSFG 17.00 ) : We are keeping our sell recommendation based on valuation and our concerns about TSFG’s ability to attract deposits and declining credit quality. We are lowering our target price by $4 to $16, or 11.5X our $1.40 ’08 EPS estimate. By our calculation the industry multiple on ’08 EPS estimates is currently about 11.0X, down from a high of 14.0X at the start of the year, but still is above the high-single-digit multiples reached in previous instances of credit markets turmoil. Our slight premium to peers 11.5X multiple for TSFG reflects TSFG’s potential as a takeover candidate. /E.Oja
11/27/2007- 3:35pm S&P REITERATES HOLD RECOMMENDATION ON SHARES OF COST PLUS ( CPWM 2.98) : We expect CPWM to post an Oct-Q net loss of $0.78 on a 6% decline in same-store sales when it reports quarterly results on 11/29. The challenging environment for home furnishing retailers is unlikely to abate over the near-term, in our view, and we think CPWM will have to cut costs significantly in order to hasten its turnaround efforts. We maintain our FY 08 (Jan.) and FY 09 net loss estimates of $1.75 and $1.15, respectively. With shares trading at a price/sales ratio of under 0.1X, the risks of owning the stock are balanced, in our view, despite headwinds facing the firm. /M.Souers
11/27/2007- 3:34pm S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF VITAL SIGNS ( VITL 50.94) : We look for VITL, which plans to release its Sep-Q results on Dec. 11, to post EPS of $0.70 for the quarter, vs. $0.62 in the year-earlier quarter. We are encouraged by the large size and underpenetration of the single-use anesthesia, respiratory, and sleep apnea markets. We believe VITL has a strong product catalog and pipeline, and it should gain from hospitals’ moves to cut infections. But we see competition as intense. Meantime, we view favorably its efforts to cut manufacturing costs. We still see FY 07 (Sep.) EPS of $2.55, FY 08’s $2.85, and keep our $57 target price. /P.Seligman
11/27/2007- 3:32pm S&P MAINTAINS HOLD OPINION ON SHARES OF OMNIVISION TECHNOLOGIES ( OVTI 18.70) : OVTI is expected to report Oct-Q results after the market closes on Nov. 29, and we are projecting EPS of $0.37. We anticipate revenue growth of 30% from the last quarter due to strong sales of image sensors for handsets and notebooks. We are projecting only a moderate improvement in gross margin because of our view of deteriorating sensor prices and notable sales growth of sensors for lower-end handsets. We think cost containment will lead to higher profitability. We will provide an update following the company’s call. /C.Montevirgen
11/27/2007- 3:29pm S&P REITERATES HOLD OPINION ON ADSS OF CARNIVAL PLC ( CUK 43.25) : We look for five new Carnival ships to debut in FY 08 (Nov.), including the Queen Victoria in December. Also, two Iberocruceros ships have been added via a 75%-owned joint venture that closed in Sept. ’07. We are wary that a slower-growing U.S. economy may dampen cruiseship demand in FY 08. However, we expect that Carnival’s plan to implement a fuel surcharge will help ease pressure from higher fuel costs. We are lowering our FY 08 earnings per ADS estimate to $3.24 from $3.31 and our FY 07 estimate to $2.94 from $2.98, and we reduce our 12-month target price to $52 from $53. /T.Graves-CFA
11/27/2007- 3:28pm S&P REITERATES HOLD OPINION ON SHARES OF CARNIVAL CORP ( CCL 43.22) : We look for five new Carnival ships to debut in FY 08 (Nov.), including the Queen Victoria in December. Also, two Iberocruceros ships have been added via a 75%-owned joint venture that closed in September ’07. We are wary that a slower-growth U.S. economy may dampen cruiseship demand in FY 08. However, we expect that Carnival’s plan to implement a fuel surcharge will help to ease pressure from higher fuel costs. We are lowering our FY 08 EPS estimate to $3.24 from $3.31, and our FY 07 estimate to $2.94 from $2.98, and reduce our 12-month target price to $52 from $53. /T.Graves-CFA
11/27/2007- 3:25pm S&P MAINTAINS HOLD OPINION ON ADSS OF SINOPEC SHANGHAI PETROCHEMICAL ( SHI 58.50) : SHI posted Q3 net loss of CNY 94M vs. a loss of CNY 33M included refining losses caused by rising crude oil costs, which offset greater investment income. However, we are leaving our ’07 profit estimate unchanged as we anticipate SHI will receive a payment from the government to compensate for refining losses. Furthermore, based on an expected increase in petroleum product prices, we are raising our ’08 net income forecast by 37%, and our earnings per ADS estimate to $6.00 from $4.35. In addition, we are increasing our 12-month target price to $83 from $74. /L.Tan
11/27/2007- 3:24pm S&P REITERATES HOLD OPINION ON SHARES OF SEMTECH CORP ( SMTC 15.65) : SMTC is expected to report Oct-Q results today after the market closes, and we are projecting EPS of $0.17. We expect revenue growth of 15% over Jul-Q on strong sales of power management and protection products for the desktop and server, and notebook and PDA markets. We believe the company will gain market share in the protection space. However, we think gross margin will likely be negatively impacted by rising sales of lower-margin computer products. We will provide an update following the company’s call. /C.Montevirgen
11/27/2007- 3:23pm S&P REITERATES HOLD OPINION ON SHARES OF BARRICK GOLD ( ABX 40.57) : We continue to estimate operating EPS of $1.80 in ’07 and $2.15 in ’08. Our estimate for ’08 assumes rising gold prices and margin improvement in the company’s gold operations will offset an expected decline in the average price of copper. Long-term, we think ABX’s EPS should rise on a large reduction in its hedges, generally rising profits from copper, and a good pipeline of growth projects. But with modest upside to our P/E-based 12-month target price of $46, we would not add to positions. /L.Larkin
11/27/2007- 3:15pm S&P REITERATES HOLD OPINION ON SHARES OF PAIN THERAPEUTICS ( PTIE 9.97) : We expect results from a long-awaited pivotal Ph. III study on Remoxy abuse-resistant oxycodone painkiller to be released within the next few weeks. If the results are positive, and regulatory clearance is obtained, we believe Remoxy may eventually capture close to 10% of the $5B opiad drug market. We also expect late-stage clinical data from two other pain compounds, and Ph. I data on a monoclonal antibody treatment for melanoma. Our target price of $10 is based on cash per share of nearly $5, and estimated values of Remoxy and other R&D compounds of $3 and $2, respectively. /H.Saftlas
11/27/2007- 3:11pm S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF NOVELL ( NOVL 6.65) : NOVL plans to release Oct-Q results after the market closes Dec. 5. We are forecasting revenue of $243M, with growth from the Linux platform offseting a decline in Netware revenue. We expect adjusted operating margin to widen to 5.7% to reflect headcount reduction. While we see modest revenue growth in FY 08 (Oct.), we remain cautious due to economic uncertainty in the U.S., increased competition from Oracle ( ORCL 19.70) and Red Hat ( RHT 18.80) , and lower invoices from the Microsoft ( MSFT 32.90) partnership. We are keeping our 12-month target price of $7.50. /J.Yin
11/27/2007- 3:10pm S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF JACKSON HEWITT TAX SERVICE ( JTX 32.12) : Before one-time items, Oct-Q loss of $0.60 vs. loss of $0.46 is a penny worse than our estimate. Revenues fell 9%, though we note the quarter accounts for less than 2% of annual revenues. We still expect JTX to increase FY 08 (Apr.) marketing and advertising spending in order to acquire and retain customers, especially given recent legal and IRS issues that we think may have hurt the brand. We believe, however, that JTX has made significant progress resolving these issues, and, based on a lower risk profile, we are raising our 12-month target price by $4 to $35. /J.Peters-CFA
11/27/2007- 3:04pm S&P UPGRADES SHARES OF FREEPORT MCMORAN COPPER&GOLD TO HOLD FROM SELL ( FCX 87.92) : Our opinion change is based on valuation. We continue to estimate EPS of $9.68 in ’07 and EPS of $8.00 in ’08, assuming a decline in 2008 from 2007 for the average price of copper. Following a recent sharp decline in the share price of FCX, we believe the stock is now more fairly valued, currently trading at about 11X our ’08 EPS estimate. For the long term, we see the company’s EPS rising on a secular increase in the demand for copper With the stock trading below our 12-month P/E-based target price of $100, our opinion is hold. /L.Larkin
11/27/2007- 2:58pm S&P REITERATES BUY OPINION ON SHARES OF COLLECTIVE BRANDS, ON VALUATION ( PSS 15.25) : While we see limited integration risk between Payless and Stride Rite operations, we think a projected slowdown in consumer spending will add to PSS’s challenges of growing sales in an already tough U.S. footwear market. As such, we are cutting our FY 08 (Jan.) and FY 09 operating EPS estimates by $0.35 and $0.25, to $1.24 and $1.85. We are also lowering our 12-month target price on these high-risk shares by $9 to $20; a multiple of 11.0X, the low end of PSS’s historical range, applied to our FY 09 EPS estimate. We maintain our buy opinion on valuation. /J.Asaeda
11/27/2007- 2:52pm S&P UPGRADES OPINION ON SHARES OF BEARINGPOINT TO HOLD FROM SELL, ON VALUATION ( BE 3.23) : Following BE’s Q2 earnings on Oct. 22, the shares briefly rallied as BE became current with its financial reports. While temporarily current in its filings (the company expects its Q3 report to be late), but BE can sell shares under its various stock-based compensation plans, which can then be sold by employees. We think these sales have eroded the share price, which has declined by roughly 30% since October 23. On a revised peer-discount 11.8X our ’08 EPS estimate of $0.34, we reduce our 12-month target price $0.50 to $4.00, but raise our opinion on valuation. /D.Cathers
11/27/2007- 2:43pm S&P REITERATES HOLD OPINION ON SHARES OF ROYAL BANK OF CANADA ( RY 50.20) : Ahead of RY’s Oct-Q earnings release, we are maintaining our EPS estimate of US$1.08 vs. US$1.08. RY is expected to record a $360M pretax charge in its capital markets segment related to writedowns of subprime CDOs and subprime residential mortgage-backed securities. Quarterly results should also include a pretax gain of about $325M related to its interest in Visa Canada. We expect RY to benefit from strong net mutual fund sales and growth in fee-based client assets in its wealth management business. We are maintaining our 12-month target price of US$57. /F.Braden-CFA
11/27/2007- 2:41pm S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF VISTACARE ( VSTA 7.66) : We expect VSTA, which has not announced the release date of its Sep-Q results, to post an operating loss of $0.03 for the quarter, vs. a $0.16 loss in the year-earlier period. Our estimate assumes progress in VSTA’s restructuring plan, which includes rationalization of the company’s hospice sites, cost reductions, process improvements and organizational streamlining. We are widening our FY 07 (Sep.) loss estimate by $0.05 to a $0.35 loss, but are keeping our FY 08 estimate of $0.25 EPS and our 12-month target price of $10, which includes a takeover premium. /P.Seligman
11/27/2007- 2:40pm S&P REITERATES HOLD RECOMMENDATION ON SHARES OF PEP BOYS ( PBY 13.43) : Ahead of Oct-Q earnings, to be released tonight after the close, we are maintaining our hold recommendation. We expect PBY to post EPS of $0.04 on a sales decline of 1.0%, as macroeconomic headwinds continue to hamper results. On the bright side, we think PBY continues to make strides from a profitability standpoint by limiting promotional activity, and we continue to favor the longer-term demographic trends in the auto parts retail industry. We are maintaining our FY 08 (Jan.) and FY 09 EPS estimates of $0.28 and $0.50, respectively, as well as our $17 DCF-based target price. /M.Souers
11/27/2007- 2:39pm S&P REITERATES BUY OPINION ON SHARES OF ASTEC INDUSTRIES ( ASTE 35.50) : After revising our growth and cost assumptions for ASTE, we are reducing our ’08 EPS estimate to $2.74 from $3.09 and our 12-month target price to $47 from $54. We expect the $286.5-billion highway funding authorization (SAFETEA-LU) to help drive growth in the asphalt and mobile asphalt divisions, and the strong demand for commodity metals and coal to drive growth in the mining and underground segments. These four units should, in our view, drive 20% and sales growth in ’07 and 18% in ’08. Our target price is based on our revised DCF and relative valuation analyses. /C.Lippincott
11/27/2007- 2:37pm S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF KNIGHT TRANSPORTATION ( KNX 14.47) : In light of recent industry data and S&P’s economic forecasts, we have turned more cautious on KNX. We continue to believe the company has among the most clearly defined growth plans within the truckload sector, but we expect near-term revenues and profitability to be constrained by difficulties in current freight markets. We are reducing our EPS estimate for ’08 by $0.10 to $0.84, and our 12-month target price by $2 to $17, on our revised DCF and P/E valuation models. We are maintaining our hold opinion. /K.Kirkeby-CFA
11/27/2007- 2:36pm S&P REITERATES SELL OPINION ON ADRS OF BHP BILLITON LTD ( BHP 71.81 ) : We forecast earnings per ADR of $4.15 in FY 08 (June) and $3.95 in FY 09. We believe earnings peaked in FY 07. We expect that projected declines in the price of copper and nickel will offset higher prices of iron ore and energy, resulting in lower earnings in FY 08 and FY 09. While we have a favorable long-term view of BHP’s proposed share-for-share merger with Rio Tinto ( RTP 427.60) , we think it would be dilutive short-term. With the ADRs trading above our P/E-based 12-month target price of $52, our opinion remains sell. /L.Larkin
11/27/2007- 2:21pm S&P DOWNGRADES OPINION ON SHARES OF MISSION WEST PROPERTIES TO SELL FROM HOLD ( MSW 10.44 ) : In view of tightened credit market conditions, we think MSW faces significant hurdles to completion of its potential sale to still-unidentified acquirers. The trust had previously hoped to complete the evaluation of offers by the end of October. We think operating conditions also remain difficult for its R&D properties in the Silicon Valley market. As a result, we are lowering our 12-month target price by $4 to $9, based on a multiple of about 16.5X our ’08 funds from operations per share estimate of $0.55, still a moderate premium to peers. Our opinion is sell. /R.Shepard
11/27/2007- 2:02pm S&P REITERATES HOLD OPINION ON ADSS OF VIMPLECOM ( VIP 33.84) : We think strong Q3 results posted recently by direct peer Mobile Telesystems ( MBT 87.50) bode well for VIP, as the Russian mobile market continues to experience strong industry fundamentals with higher average revenue per user and increased minutes of use. Given stable pricing and improved cost controls, we look for VIP’s EBITDA margin to expand materially. We are raising our ’07 EPS estimate by $0.05 to $1.35, and 08’s by $0.25 to $1.75. Based on revised relative analysis, to reflect our view of an improving operating outlook, we are lifting our target price by $10 to $35. /A.Bensinger
11/27/2007- 1:37pm S&P MAINTAINS HOLD OPINION ON SHARES OF SEARS HOLDINGS ( SHLD 110.97) : Ahead of SHLD’s quarterly earnings report on 11/29, we are trimming our Oct-Q operating EPS estimate by $0.04 to $0.48 on our expectations for seasonal apparel markdowns and lack of expense leverage off a projected 4.0% same-store sales decline. We are also cutting our full-year FY 08 (Jan.) operating EPS estimate by $0.25 to $7.75 and FY 09’s by $1.95 to $8.20 as we see a tough sales environment hindering ongoing efforts to drive growth through remerchandising. We are lowering our target price by $25 to $130 on blended revised peer P/E and price/sales valuations. /J.Asaeda
11/27/2007- 1:26pm S&P DOWNGRADES OPINION ON HOUSEVALUES SHARES TO STRONG SELL FROM SELL ( SOLD 3.60 ) : We believe ongoing turbulence in the residential real estate market could lead to further revenue declines and losses for SOLD’s lead generation business. A sizeable number of adjustable rate mortgages are slated to reset in 2008, and we look for a continued rise in foreclosures and further credit tightening by lending institutions. This could lead to an even longer slump in the real estate market and a sharper exit from the business by real estate brokers, SOLD’s core customers. We are lowering our target price to $3.20 from $3.50 on revised P/S analysis. /R.McMillan
11/27/2007- 1:19pm S&P REITERATES BUY OPINION ON SHARES OF EXPRESS SCRIPTS ( ESRX 65.00) : ESRX expects ’08 EPS of $2.80-$2.87, up from $2.28-$2.32 in ’07, aided by 2%-3% higher adjusted claims and share buybacks. ESRX also sees ’08 EBITDA per adjusted script of $2.50-$2.60 vs. ’07’s estimated $2.28-$2.35, driven by higher generic drug, specialty drug, and mail penetration. We think these ests are conservative assuming certain blockbuster drugs go generic in ’08, before their patent expiration dates. We are raising our ’08 EPS estimate $0.05 to $2.85, and our 12-month target price $8 to $75, based on a peer-level P/E-to-growth of 1.2X, assuming 22% 3-year EPS growth. /P.Seligman
11/27/2007- 1:09pm S&P REITERATES BUY OPINION ON SHARES OF NORTHSTAR REALTY FINANCE ( NRF 8.56) : At an investor presentation, NRF reiterates its focus on match funding its assets and limited exposure to debt rollover risk. While we see slower asset growth over the near-term, we view positively the more attractive spreads on new investments and the flexibility provided by reinvestment features in more than $4B of NRF’s CDOs. While we believe NRF’s ability to raise new equity capital is limited, we see its portfolio supporting current earnings and dividend levels. We expect an increased focus on asset management initiatives, driving fee income and higher return on equity. /JWilley
11/27/2007- 12:51pm S&P MAINTAINS HOLD OPINION ON SHARES OF COOPER COMPANIES ( COO 41.37) : Ahead of Oct-Q report, scheduled for post-close 12/11, we see mid-double digit sales rise, higher gross margin, and $0.67 EPS before extraordinary items. We also expect a drop in SG&A and a rise in R&D costs, both as a percent of sales, when compared to the prior year and to Jul-Q. While we view COO’s recent settlement of patent litigation with CIBA Vision unit of Novartis ( NVS 56.60) as positive, we still see the rollout and impact of Biofinity Silicone Hydrogel lens as gradual. We keep our enterprise value/EBITDA-based target price of $60, a discount to recent transactions. /JEnglander
11/27/2007- 12:42pm S&P MAINTAINS HOLD OPINION ON SHARES OF FRED’S INC. ( FRED 9.49) : Ahead of FRED’s quarterly earnings report on 11/29, we are trimming our Oct-Q EPS estimate by $0.02 to $0.14. The company reported that softlines had made up the majority of its $2M sales miss in October, and we think additional markdowns have been taken to help clear inventories. Given tough retail conditions and a likely slowdown in consumer spending, we are also cutting our full-year FY 08 (Jan.) and FY 09 EPS estimates each by $0.04, to $0.68 and $0.80. We are lowering our 12-month target price on these high risk shares by $1 to $11, based on revised peer-P/E valuation. /J.Asaeda
11/27/2007- 12:41pm S&P REITERATES HOLD OPINION ON SHARES OF COMPUTER SCIENCES CORP. ( CSC 50.89) : CSC announces that the SEC has completed its investigation into the company’s option-grant practices and the SEC staff will not recommend that any action be taken against CSC. The announcement removes a degree of uncertainty that was surrounding the company, but we would still not add to current positions, as CSC has, in our view, other issues to address, including an upcoming restatement of its FY 07 (Mar.) 10-K filing and the release of its Jun-Q results. We are keeping our FY 08 EPS estiamte of $4.13 and our 12-month target price of $60. /D.Cathers
11/27/2007- 12:13pm S&P REITERATES STRONG BUY RECOMMENDATION ON SHARES OF AMER EAGLE OUTFITTERS ( AEO 21.10) : AEO posts Oct-Q EPS of $0.45 vs. $0.44, in line with our estimate. Same-store sales grew 2%, vs. 13% a year-ago, driven by traffic gains despite decreased mall traffic, as average prices fell on mix and markdowns. Gross margin declined 210 bps despite lower product and transportation costs, as buying and occupancy expense rose with 60 new store openings (32 year-ago), and SG&A was controlled and declined 100 bps. AEO enters Jan-Q with strong inventory levels and continued Y-O-Y traffic gains. We are reducing our FY 08 and FY 09 EPS estimates $0.05 each, to $1.85 and $2.20. /M. Driscoll-CFA
11/27/2007- 11:59am S&P MAINTAINS SELL OPINION ON ADSS OF NOKIA ( NOK 38.03 ) : At next week’s analyst day, we expect NOK to raise its device operating margin target to 19% from current 17% level. But we see pressure on overall margins from increased competition, particularly in the high-end segments, and costs for the company’s new Internet services platform. We believe NOK will forecast mobile device volumes growth of 10% in ’08 but will issue caution due to prevailing economic conditions when it announces new industry and financial targets. We are keeping our sell recommendation, with downside to our 12-month target price of $32. /I. Soderbom
11/27/2007- 11:58am S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF PEPSIAMERICAS INC. ( PAS 33.17) : Before one-time realignment charges, Q3 EPS of $0.56 vs. $0.41 beat our view by $0.05 on better expense control and higher international profits than we had forecast. U.S. results continued to be unimpressive, with volume down 1.6%; more than offset by very strong international growth driven by acquisitions. On Q3 strength carrying over into Q4, we are raising our ’07 EPS estimate by $0.11 to $2.66, at the top end of new guidance, and our target price by $5 to $34. With PAS trading at a multiple ahead of its peers and historical average, we see limited appreciation potential. /E.Kwon-CFA
11/27/2007- 11:55am S&P DOWNGRADES OPINION ON SHARES OF MORGAN STANLEY TO SELL FROM HOLD ( MS 50.21 ) : We believe additional write-downs to its mortgage-backed securities portfolio may be necessary beyond those forecast by MS at the end of Oct. We expect a further deterioration in the ABS collateralized debt obligation marketplace to put additional pressure on fair value measurements, and we now look for a write-down of about $4.2B, up from $3.7B figure at Oct. 31. We are widening our Nov-Q loss forecast by $0.19 to a loss of $0.25 and cutting FY 07 (Nov.) EPS est by $0.19 to $5.98. We are reducing our target price by $15 to $45, 1.5X projected book value, a discount to peers. /M.Albrecht
Bob:
I am not going to go back and dig through all of the posts that have been made here. Suffice it to say that it’s been provided and summarily dismissed by most folks here.
BC Bob Says:
November 27th, 2007 at 5:53 pm
“Richard, Bi and I have produced boatloads of evidence in support of our positions,”
50.5,
Besides waving your flag, what boat contains this evidence? The Titanic?
11/27/2007- 11:55am S&P DOWNGRADES OPINION ON SHARES OF MORGAN STANLEY TO SELL FROM HOLD ( MS 50.21 ) : We believe additional write-downs to its mortgage-backed securities portfolio may be necessary beyond those forecast by MS at the end of Oct. We expect a further deterioration in the ABS collateralized debt obligation marketplace to put additional pressure on fair value measurements, and we now look for a write-down of about $4.2B, up from $3.7B figure at Oct. 31. We are widening our Nov-Q loss forecast by $0.19 to a loss of $0.25 and cutting FY 07 (Nov.) EPS est by $0.19 to $5.98. We are reducing our target price by $15 to $45, 1.5X projected book value, a discount to peers. /M.Albrecht
sorry for the mess
recognize SELL is 2-stars….the lowest rating is a Strong Sell
From PR Newswire:
Wells Fargo to Take Special Provision of $1.4 Billion to Bolster Reserves, Primarily for Home Equity Losses From Certain Discontinued Indirect Channels
…
Specifically, the Company will no longer originate home equity loans through wholesalers where the combined loan-to-value ratio of the first and second mortgages is 90% or higher, or where the second mortgage is not behind a Wells Fargo first mortgage. Also, as previously announced, the Company is no longer acquiring home equity loans through correspondent relationships, including other financial institutions and other mortgage companies. The portfolios that have been acquired through these indirect channels will be placed in liquidating status under the direction of a dedicated management team.
While the $11.9 billion of loans in this liquidating portfolio constituted only about 3% of Wells Fargo’s total loans outstanding as of September 30, 2007, the loans represent the highest risk in the Company’s $83.4 billion National Home Equity Group portfolio. They reflect a combination of the most recently originated vintages, with the highest combined loan-to-value ratios, that do not have the added protection of being behind a Wells Fargo first mortgage, and are largely concentrated in a few geographic markets which are experiencing the most abrupt and steepest declines in housing values.
cf,
Were MER and MS downgrades public knowledge before market close?
Who says a lower dollar doesn’t matter?
“Citigroup Inc., the biggest U.S. bank, is paying a “junk bond” rate to uphold Chairman Robert Rubin’s pledge to preserve the dividend and weather this year’s mortgage-market decline.”
“Citigroup shareholders are “ultimately the ones who are paying,” said William Smith, chief executive officer of Smith Asset Management in New York, which oversees $80 million, including about 70,000 Citigroup shares. “If you look at 11 percent, that’s basically junk bond yields, and so it’s great for Abu Dhabi.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=ay0lJXdH6wTk&refer=home
BC,
Can we sell Freddie Mac to Abu Dhabi too? Maybe we can work out a 2-for-1 deal.
JB [215],
I hear they have their eyes on the NJ Vulture Fund. Why wasn’t Chuck Schumer screaming today?
Clot,
Is that 5.75% 30 year fixed rate you’re seeing for jumbo or conventional? I’m seeing 6.5% 30 year fixed jumbo so maybe I’m not looking hard enough.
Goldman Sachs on Housing
http://calculatedrisk.blogspot.com/2007/11/goldman-sachs-on-housing.html
If the economy does enter a recession, prices could decline as much as 30% nationwide [Implies more in baloon areas like NJ]
From Reuters:
S&P cuts Axon SIV to default after deal liquidates
Standard & Poor’s on Tuesday said it cut its ratings on structured investment vehicle manager Axon to default, after Axon said the deals’ assets were insufficient to repay senior liabilities, triggering a liquidation.
The issuer credit rating on Axon Financial Funding LLC and Axon Financial Funding Ltd, known collectively as Axon, was cut to default as was the rating on Axon’s commercial paper, medium term note and subordinated mezzanine note programs.
The downgrade affects around $8.28 billion of senior debt and $890 million in subordinated mezzanine notes, S&P said. They also affect up to $20 billion of European and U.S. commercial paper and medium term note programs and up to $1.25 billion of a subordinated mezzanine note program.
“Mojo Jojo Says:
November 27th, 2007 at 6:14 pm
Clot,
Is that 5.75% 30 year fixed rate you’re seeing for jumbo or conventional? I’m seeing 6.5% 30 year fixed jumbo so maybe I’m not looking hard enough.”
Whatever it is, it’s a h=ll of a lot better than 11%.
“reinvestor101 Says:
November 27th, 2007 at 5:51 pm
That is NOT funny. That is mean.”
It’s amazing how reinvestor drops by, calls everyone Nazis, and 15 minutes later is curled in the fetal position whining like a hamster about people being mean.
My g*d what a loser.
mojo jojo that should be conventional.If not they would be lineing up at the door.Well small
line in this market.
Grim freddie mac did cut dividend by 50 but you get same amount of money due to stock decline.(source talking heads CNBC)
BC Bob (202),
Exactly.
re: MS Sell
Ha HA HA!
Wait while the stock drops from 70 to sub-50, then put in a sell recommendation.
Too funny.
I’m getting Verizon FIOS tomorrow. (It can’t be worse than Cablevision.) Anyone have any experience?
#199 reinvestor: You Bi, and Richard, The 3 Stooges.
We know that bi, is just delusional ans speaks in tongues, that only he can understand.
We know that Ricahrd bought at the top of the market in hwat he thought was the bubble proof town of Brigadoon, (Westfield).
What is your story, bought at the top? flip that flopped, used your equity as an ATM?
How could it be that a God fearing American capitalist as yourself is now crying and weeping to be bailed out.
Where is that rugged American individualism,and self responsibility?
You are a big boy now, time to accept you have made a mistake and stop looking for handouts from the government.
Peacenow,
FIOS ROCKS! The install can take a while, 6-8 hrs. The service itself is great. I often saturate my connection….for work ;) and i have never had verizon throttle the connection, ever with bittorrent. The only problem you may have is that sometimes the router the setup for you will randomly drop your internet connection, especially if you use bittorrent. The fix is to use your own router. Connect your router to the verizon router. so you plug your pc into your router and then your router into the verizon router. There is a lot of info on the problem out on the web. Just do a search for the router name and model once they install it. Its a small issue that is easily avoidable with fix i described. Overall cable cannot come even close to it!!! and no i do not work for verizon
Regarding Lincolns post about RE talk among family. ..
Most of family seems to be either deeply out of the loop or either well indoctrinated by the NAR. As i have mentioned B4 a family member is a CFO of a corporate real estate Company and he is just as indoctrinated as the rest. Every time we hangout i keep hearing about how i should by as much as possible and my increasing income will give me the breathing room over the next few years; this baffles me coming from a CFO who makes 4 times me and my wife combined. I generally stick with “we arent ready yet” the family will readily dismiss anyone who speaks ill or realestate (and no there are no RE agents amongst the clan)
#228 kettle: Sounds like your family is in deep denial, very foolish IMO.
227#, kettle, friendly question here: how much bandwidth do you need? what benefits does FIOS offer over cable? and the cost? I am using comcast cable during the day for streaming quote update and did not see major problem so far. but i would also consider other networking technologies.
Report: Foreclosures to Hit Metro Areas
By DAVID RUNK – 15 hours ago
DETROIT (AP) — Rising foreclosures will lead to billions of dollars in lost economic activity next year in the nation’s major metropolitan areas, but homeowners and financial institutions have the ability to work together to contain the effects, according to a report compiled for the U.S. Conference of Mayors.
The report was released Tuesday ahead of a meeting of mayors from across the country in Detroit, where they hope to create policy recommendations to help address the nation’s housing crisis.
Prepared by forecasting and consulting firm Global Insight, the report said weak residential investment, lower spending and income in the construction industry and curtailed consumer spending because of falling home values will combine to hold back the nation’s economic activity.
“The wave of foreclosures that has rippled across the U.S. has already battered some of our largest financial institutions, created ghost towns of once vibrant neighborhoods — and it’s not over yet,” the report said.
The biggest losses in economic activity are projected for some of the nation’s largest metropolitan areas. New York is expected to lose $10.4 billion in economic activity in 2008, followed by Los Angeles at $8.3 billion, Dallas and Washington at $4 billion each, and Chicago at $3.9 billion.
The report estimates U.S. gross domestic product growth in 2008 will be 1.9 percent, coming in about $166 billion — or one percentage point — lower as a result of mortgage problems. GDP is the value of goods and services produced and is considered the best barometer of the country’s economic fitness.
The report also projects property values will decline by $1.2 trillion in 2008, due in part to the foreclosure crisis, with drops in home prices across the U.S. averaging 7 percent. And it said the loss of property, sales and real estate transfer taxes will hurt local and state governments.
But homeowners, banks, holders of mortgage-backed securities and loan servicers can work together to ease the economic effects, the report said. Agreeing to new payment terms on some loans, for example, could make the difference between a family keeping a home and losing it in foreclosure.
“Such actions will help to lessen the number of foreclosures thereby avoiding the further negative effects on local housing markets and on the broader economy,” according to the report, titled “The Mortgage Crisis: Economic and Fiscal Implications for Metro Areas.”
The National Forum on Homeownership Preservation and Foreclosures, organized by the Conference of Mayors, includes discussions about the state of the mortgage industry, ways homeowners can avoid foreclosure, and strategies to keep foreclosed properties from dragging down the quality of life in neighborhoods.
Recommendations developed at Tuesday’s forum, which is closed to the media, are to be presented at a Conference of Mayors meeting in January.
“We’re coming to Detroit with a dogged determination to fight for the families in our cities, our cities and the national economy,” said Douglas Palmer, mayor of Trenton, N.J., and president of the mayors group. “We’re optimistic that we’re going to come up with models that will work.”
In addition to Palmer and Detroit Mayor Kwame Kilpatrick, who is hosting the gathering, mayors expected to attend include Jerry Abramson from Louisville, Ky.; Michael Coleman from Columbus, Ohio; Richard Kaplan of Lauderhill, Fla.; Brenda Lawrence of Southfield, Mich.; and Elaine Walker of Bowling Green, Ky.
The housing market slump has made it harder for financially strapped home buyers to sell their homes and avoid missing payments or losing their homes in foreclosure. Increasingly, many borrowers who took out adjustable-rate mortgages and other loans with monthly payments that increase after an initial period also are finding they can’t afford the higher payments.
Jim Diffley, managing director of Global Insight’s regional services group, wrote the report with his team and was to discuss the forecasts during the mayors’ meeting. He said the goal was to provide a broad look at the effect of foreclosures, a problem mayors are keenly aware of locally.
“This is not a new issue,” Diffley said. “We’ve know about it. It’s been swelling up.”
3B
Most of my family should be out of range of the housing fiasco. Both sets of parents have the homes paid off and no outstandingly loans, a couple renters, and the CFO who was at least smart enough to have paid a very large % of the home price in cash. The older ones who saw the late 80’s as adults dont seem to believe that could happen again ( well to that degree, they think we will see a slowdown/small decrease). the younger adults who were in highschool/elementary in the late 80’s have no plans to buy anytime soon and a couple in the middle somewhere are not in the mortgage game but blind to the depth of the problem.
“I am using comcast cable during the day for streaming quote update’
bi,
Turn the quotes off. Stop getting churned by short term moves/noise. However, if you must continue watching, just use yourself as a contrarian, go the other way.
BI
I had comcast for a while and found that they would throttle my speed if i downloaded a lot. I constantly stream music over several PC’s in the house, download lots of stuff not all pron :) and run newsgroups/bittorrent. I would be considered a heavy internet user. I have the 5mbps up/10 down plan and its nice to not have to worry about being throttled of swamping my connection. By the way Comcast has been caught illegally blocking bittorrent and does so as standard practice
25.125 (204)-
“This is bad, very bad.”
Hey, Re…Wells Fargo are the CONSERVATIVE guys. Now, please produce your “boatload” of evidence to refute their assertions.
Perhaps Wells is holding your HELOCs. Hey, you can always tell ’em they should’ve never given you the loans to begin with. Even if you’re still up the creek without a paddle, it’ll make you feel better knowing you’re not the only FB on their list.
As far as your birthday party goes, you don’t need me. It appears you already have more than enough Kool-Aid to serve everyone.
BC (216)-
The New Jersey Vulture Fund is not for sale.
Jojo (217)-
Most def. conforming, not jumbo, to get that 5.75% rate.
As we all know, conforming loans are much safer than jumbos.
Just ask Fannie and Freddie. :)
patient (221)-
“It’s amazing how reinvestor drops by, calls everyone Nazis, and 15 minutes later is curled in the fetal position whining like a hamster about people being mean.”
Kindly cease insulting hamsters by drawing comparison to ReTard 12.276.
Peace (225)-
I’ve come to equate anything with the name “Verizon” on it to the mark of the devil.
bi (230)-
“I am using comcast cable during the day for streaming quote update and did not see major problem so far.”
Perhaps those streaming quotes you’re getting are from the previous trading session.
That would partially explain the, er, questionable timing of some of your calls.
“The New Jersey Vulture Fund is not for sale.”
Clot,
Everything else is overvalued. When Abu Dhabi ran their simulations, they discovered that it is a bargain, the market has severely mispriced the fund. I hear JB is still dancing.
BC (241)-
“Everything else is overvalued.”
Sounds like a slogan!
234#, kettle, thanks. by the way, i am with your family members when it comes to housing -:)
“243. bi Says: November 27th, 2007 at 9:47 pm
234#, kettle, thanks. by the way, i am with your family members when it comes to housing -:)”
Except for the part where his family isn’t underwater and about to lose everything, eh?
From Citigroup Feels Heat To Modify Mortgages ($) in yesterday’s Wall Street Journal:
Ana Cecillia Marin, a 36-year-old single mother of three, owns a 20-year-old ranch house on a dusty, garbage-strewn acre in Palmdale, Calif. She says she earns $34,000 a year managing flower sales at a Los Angeles food store and selling clothes on the side. She bought her house in 2005 for $385,000. By taking out a first and second mortgage, she was able to buy it for no money down.
At first, her ex-boyfriend helped make mortgage payments, she says, but his construction jobs dried up. She hasn’t paid anything for months on the $76,426 second mortgage serviced by Citigroup, and she has also fallen behind on her $308,000 first mortgage, serviced by a unit of Bear Stearns Cos.
Ms. Marin says she got a foreclosure notice on her first mortgage. Judging from recent sales of similar homes in the area, it’s unlikely that Citi Residential will be able to recoup money owed on the second mortgage in the event of a foreclosure sale, because the first-mortgage lender gets its money first.
“I’m afraid I’m going to lose it,” Ms. Marin said recently of the house. Already, she had moved most of her belongings into a wooden crate in the yard. All that remained inside were the mattresses on which she and her children sleep.
njrebear Says:
November 27th, 2007 at 6:01 pm
cf,
Were MER and MS downgrades public knowledge before market close?
yes….I think they traded up or at least flat afterward……S&P ain’t so fab with the calls, so people reflexively ignore….that said, they uncover some good stuff from time to time, but they have also embarassingly shanked a couple dozen calls this year…
I know I brought this up a while ago…..but how sick-good is this song…
http://www.youtube.com/watch?v=8fZ86Fh0XPk
Didn’t know the thing about the video….
Pretty Noose is a song by the Seattle band Soundgarden. It appears as the opening track on their 1996 album Down on the Upside. It was released as a single in March 1996 and reached number 4 in the US Rock charts. Pretty Noose was nominated a Grammy Award for Best Hard Rock Performance in 1997.
A music video was made for the song, directed by Frank Kozik. However, MTV refused to air the full video, as it ends with an apparent murder. An alternate version was released, which simply features the band performing the song live.
According to frontman Chris Cornell, “Pretty Noose” is about “an attractively packaged bad idea.”
Kettle 245 How can they work that out she can’t afford the first let alone the second.
Why would anyone buy a house over 10x their income.Even at 4% just the first doesn’t work.Its a joke to expect the banks to fix this.Maybe they should give her the house &
write it off!Would that make Paulson happy.
From Citigroup Feels Heat To Modify Mortgages …
Ana Cecillia Marin, … earns $34,000 a year …She bought her house in 2005 for $385,000. By taking out a first and second mortgage, she was able to buy it for no money down
How can you possibly work out this mortgage so she can afford $385k in loans on a $34k salary?
Even if they dropped the interest rates to zero percent and Ms. Marin didn’t have to pay insurance & taxes, she would still be paying more than 1/3 of her income on principle alone.
At this point, I guess you stop paying and live rent free until the sheriff kicks you out. With all the foreclosures, maybe it will take a while for them to get to you.
Down on the Upside…man alive that was a favorite of mine. I used to listen to that on train into downtown Chicago from Lakeview all of the time…excellent.
Saw Soundgarden at Lollapalooza in 94….was about 5 rows from the stage in 3 feet of mud when they went on….lost a freakin’ loafer…yes a loafer in the muck and someone handed it to me….hilarious.
Clotpoll (239)
I used to equate Verizon with the devil, too, but that was before I experienced Cablevision. Now I search for more appropriate epithets.
Kettle1
Thanks for the info. Probably should’ve added that I’m a Mac person, and one with Vonage on top of that. Do tend to run iTunes radio all day, so glad you’re not reporting frequent outages. That (at least twice a week), and a lot of tv screen pixillation is why I’m switching.
I’d prefer reading in my native language, because my knowledge of your languange is no so well. But it was interesting!
I’d prefer reading in my native language, because my knowledge of your languange is no so well. But it was interesting! Look for some my links: