From the APP:
Outlook for 08 first half in N.J. not rosy
New Jersey’s business climate forecast remains chilly.
As they did a year ago, nearly half of the state’s businesses expect state economic conditions to weaken in the first six months of the coming year, while only 13 percent expect improvement, according to a report released Wednesday by the New Jersey Business and Industry Association. They are more optimistic about sales and profits for their own businesses.
However, the 1,300 businesses that responded to the annual survey expect the economic decline to be moderate, said Philip Kirschner, president of the NJBIA. Favorable business conditions peaked in 2005 and have declined rapidly since.
“Not only has business activity slowed since 2005,” Kirschner said, “but it has also fallen close to recession levels.”
…
The cost of running a business in the state was a main factor worrying respondents, with rising health care costs remaining the biggest problem.“Health care costs are just astronomical,” said Philip Brilliant, chief operating officer of Brilliant Lewis Environmental Services and former president of the Ocean County Business Association.
Matthew Wright, president of Apgar Bros. Inc., a Bound Brook trucking company, said, “Insurance costs are more troubling than fuel costs because we can’t control them.”
Businesses expect slow job growth as well. Sixty-one percent expect employment to remain the same, and only a quarter expect to increase hiring.
The state’s growth in private-sector jobs is about half the national rate, according to the National Bureau of Labor Statistics.
Jim Kocsi, district director for the U.S. Small Business Administration, said businesses are “cautious” about expanding because of an up-and-down stock market and a struggling housing market.
“We are in this hold mode right now where people are saying, “Maybe I should just lay low for a while and see which way this is breaking,”‘ Kocsi said.
From the Star Ledger:
INDUSTRY INSIDER: Bristol layoffs loom large
Employees of Bristol-Myers Squibb are bracing for word about the depth and breadth of a new campaign of layoffs and spending cuts.
The New York-based drugmaker, which has about 6,000 workers in New Jersey, has hinted for months the ax is about to fall. It plans to announce the cuts Wednesday at its annual investor meeting in Manhattan.
…
A UBS analyst, Roopesh Patel, predicts the company will cut 10 percent to 20 percent of its work force over the next three years and idle half its 38 manufacturing sites around the world.
Pharmalot, a blog owned by The Star-Ledger, reported recently Bristol-Myers would eliminate workers in public relations, legal, finance and compliance, and vacate several floors of its Park Avenue headquarters in Manhattan.
From Inman News:
Mortgage securitizations drop 23% in Q3
An estimated $476.6 billion in mortgage loans were bundled up and sold as securities to Wall Street investors during the third quarter, down 23 percent from the previous quarter, according to a report by the Securities Industry and Financial Markets Association.
Issuance of mortgage-related securities by “private-label” financers of mortgages and government-sponsored entities Fannie Mae, Freddie Mac and Ginnie Mae fell during the quarter on housing sector weakness and subprime mortgage market deterioration, the report said.
…
The 2006 vintage of mortgage-related securities “looks to be one of the weakest ever,” the SIFMA report said, noting that Standard & Poor’s downgraded $16 billion in residential mortgage-backed securities (MBS) in the third quarter, and $20.3 billion so far this year. Losses in the subprime MBS market could hit $150 billion, or 12 percent of the $1.2 trillion market, SIFMA said, citing a recent Deutsche Bank report.
Subprime MBS issues fell 65 percent from the previous quarter, to $26.2 billion, the SIFMA report said, citing Inside Mortgage Finance.
From the Star Ledger:
N.J. companies have mixed outlook
New Jersey companies are voicing strong optimism about sales and profits in 2008, while taking a dim view of the broader economic outlook.
An annual survey by the New Jersey Business & Industry Association found 57 percent of businesses see their sales increasing in the coming year, compared with 43 percent a year ago, and 51 percent see their profits rising, a jump from 37 percent last year.
But nearly half, or 49 percent, predict the state’s economy will worsen in the coming year; only 13 percent see an upturn in the state’s economy.
The September survey of 1,300 NJBIA members, dominated by small businesses with fewer than 50 employees, found a tad more optimism about the national economy, with 20 percent forecasting improvement and 43 percent seeing no change.
The NJBIA has surveyed its members for the past 49 years. The results reveal 2005 was the best year of the current expansion, which began in 2003.
If the companies’ optimism about their own performance pans out, 2008 could mark a turnaround from two straight years of weak economic growth, according to Philip Kirschner, president of the NJBIA.
“That is really the glimmer of good news in this report, and to us it’s a relief,” Kirschner said. “The numbers were so low in the last two years, that were they not higher for sales and profits, we would be looking at a recession.”
But isn’t it paradoxical for companies to be upbeat about their own future while taking a negative view of the economy?
“Companies tend to be more optimistic about their own businesses because they have more information about their own firms,” Kirschner said. “And it’s just the nature of the beast: It’s hard to be in businesses year after year if you’re pessimistic.
From Bloomberg:
E*Trade to Get $2.55 Billion Cash Boost From Citadel-Led Group
E*Trade Financial Corp., the U.S. discount broker grappling with mortgage losses, will get a $2.55 billion cash infusion from a group led by Citadel Investment Group LLC.
Chief Executive Officer Mitchell Caplan is stepping down and Chief Operating Officer Jarrett Lilien becomes acting CEO until a replacement is found, the company said today in a statement. Citadel, the Chicago-based hedge-fund manager run by Kenneth Griffin, will purchase E*Trade’s $3 billion investments of asset-backed securities for around $800 million.
Caplan’s efforts to convert the New York-based brokerage into a bank by tripling loans backfired as borrowers fell behind on payments and U.S. home prices slid. E*Trade reported its first quarterly loss in five years on Oct. 18 instead of the profit that analysts estimated. The company also cut its 2007 earnings forecast for the fourth time this year.
From the AP:
Sears Holdings 3Q Profit Plunges
Department store retailer Sears Holdings Corp., led by hedge-fund manager Chairman Eddie Lampert, said Thursday its third-quarter profit plunged due to a $223 million drop in gross margin, reflecting both lower sales and inventory-clearing markdowns.
…
Sales for the quarter ended Nov. 3 slipped 3 percent to $11.5 billion from $11.9 billion in the fiscal 2006 period.
…
Sears also warned it expects difficult economic conditions to persist in the near-term, with sales and gross margin likely continuing to be pressured through the rest of the year.
From MarketWatch:
American Woodmark profit drops, cuts guidance
American Woodmark Corp. said that second-quarter net income dropped to $1.15 million, or 8 cents a share, from $9.19 million, or 57 cents a share.
…
Sales at the manufacturer and distributor of kitchen cabinets and vanities declined 24% to $160.2 million due to falling remodeling and new construction sales. For the rest of the year, the firm expects that the continuing impact of tighter credit conditions and falling real estate prices will cause remodeling and new construction markets to remain subdued.
From the Record:
Builder accused of scare tactics
A property owner seeking to build on 35 acres of undeveloped wetlands recently sent out a flier that has residents criticizing the developer for using scare tactics as leverage.
The flier, mailed to residents living near the Soldier Hill wetlands, states that pollutants such as arsenic and lead could cause health problems and that newborns living nearby are at risk. The flier reached residents about two weeks after the developer posted signs on the property warning of contamination.
…
“We’re letting them know what’s in their back yard,” he said. “It’s unfair to say we’re doing scare tactics … it’s an education tactic.”
…
Opponents of Shamrock Creek’s proposed 144-unit housing complex contend that Kaufman is playing on residents’ fears to push the borough government into allowing development. Pat O’Brien lives not far from the land and hopes the borough takes the opposite approach.
Here are the some of the survey results from the headline..
Business outlook
Expectations for 2008 of more than 1,300 businesses surveyed by the N.J. Business & Industry Association:
• N.J. economy
Better 13%
Same 38%
Worse 49%
• U.S. economy
Better 20%
Same 43%
Worse 37%
• Your industry
Better 25%
Same 42%
Worse 33%
• Sales
More 57%
Same 22%
Less 21%
• Profits
More 51%
Same 25%
Less 24%
• Purchases
More 42%
Same 34%
Less 23%
• Employment
Increase 25%
Same 61%
Decrease 14%
Oil futures surge after pipeline explosion
http://www.marketwatch.com/news/story/crude-oil-futures-surge-after-explosion/story.aspx?guid=%7B388CB6C3%2DE833%2D4C6A%2D995C%2D145FCCC4CFF6%7D
Crude-oil futures rallied as much as $4 a barrel on Thursday, after an explosion and fire killed two workers and forced the closure of a pipeline that carries nearly a fifth of U.S. imports from Canada.
From the NY Sun:
Signaling Cooling Market, Prices Cut at New Developments
Roughly a dozen new developments have slashed their prices by as much as 13% over the last several weeks, one sign the slowing housing market is reaching New York City.
Developments in areas that began gentrifying in the latest real estate boom cycle, including Central Harlem, Chinatown, DUMBO, and Prospect Heights, are now cutting their prices to compete better, according to brokers representing the developments and statistics from the real estate site Streeteasy.com.
“We are obviously realists,” a vice president at Prudential Douglas Elliman, Larry Michaels, said after reducing the prices on six listings at 50 Orchard St., a new development on the Lower East Side. “In the current environment, people are shopping for apartments, versus six months ago, when people were just out buying apartments.”
…
“Any time you have a change — meaning a perceived change in psychology of the market between buyers and sellers — the first place you are going to see it is in newly developing markets,” a property appraiser and real estate researcher at Radar Logic, Jonathan Miller, said. For this reason, he said, up-and-coming neighborhoods “tend to have more of an inherent risk. Not all of the residential support services have been built up enough for the neighborhood to have its own legs, so to speak.”
…
“A lot of this is about staying alive,” he said. “You want to hang in the game, give an adjustment to your pricing and keep moving.”
Englewood Cliffs Comp Killer
520 Floyd Street
Purchased: 9/26/2006
Purchase Price: $790,000
Currently active, listed as:
MLS# 2733003
Original List Price: $899,000
Current Asking Price: $749,000
Interesting Franklin Lakes property, current asking is at the 2% annual appreciation level from a 2002 purchase.
Factor in inflation and this place is priced *below* 2002 levels.
MLS# 2734978 – 701 Sneider Ln, Franklin Lakes
Purchased: 5/20/2002
Purchase Price: $750,000
OLP: $1,099,000 (multiple relistings)
Current Asking: $825,000
Factoring in transaction costs, the seller is looking at breaking even after 5+ years of ownership.
anyone have info on MLS #2464536
…florham park
thankx
Has anyone noticed the huge jump in LIBOR today? Did something big happened?
Clotpoll Says:
November 28th, 2007 at 6:18 pm
BC (270)-
“Can’t wait for the soccer stadium to be finished there. Just think…we already have a built-in supply of potential hooligans and the means to get them liquored up quickly.”
Clot,
The Stadium has been delayed. It’s quite shocking to local officials, there was much more contamination in the ground than anticipated. Currently, there is not an estimate regarding the time frame to clean it up.
That’s OK, the hooligans are still invited. Hell, they can probably drink all night, in Harrison, for about 5 BP. They may decide to stay.
By the way, hooligans, has to go down as one of the best words ever.
Frank [14],
The ECB are easing terms, repos.
I’ve heard huge changes are in store at BMS, that is going to be very painful for that area. I feel for those folks.
On other less serious news, if by any chance the listing agent on the house I am looking at is reading this, I have a newsflash for you:
WALLPAPER IS NOT JUST “COSMETIC”
Sure, one random border here or there, not a big deal.
The fact that your clients decided to cover their entire 2,000 sf home in wallpaper in the eighties, including the stairwells, all four bedrooms, the bathrooms and the bathroom ceilings, is their problem, not mine.
If you tell me one more time how easy it is to get wallpaper off, and how it’s no big deal, I am going to sneak in your house and cover your house in it and see how you like it (I kid).
If it’s so easy to take down, why don’t the sellers just have a good old time and take it down. You told me that they have great steamers now yourself that makes it super easy.
In fact, if it’s so easy, why don’t YOU start taking it down Ms. Listing Agent. It will give you something to do while you’re sitting there during all those empty open houses with nothing to do. Try it, just one bathroom, maybe the one in the basement just to start.
Let me know how you like it.
JB [12],
Franklin Lakes under 2002, after factoring inflation? What gives?
By the way, I felt some seismic shift last night, [I didn’t stop off at a bar in Harrison]. In residential/commercial RE and PE, the power has shifted from the seller to the buyer since Captain Crunch.
“Sears Holdings Corp.’s fiscal third-quarter profit tumbled 99% after declining sales at both its Kmart and Sears chains led to steep discounts. The company doesn’t anticipate any significant near-term improvement.”
http://www.marketwatch.com/news/story/sears-holdings-profit-tumbles-declining/story.aspx?guid=%7B9D7AC54F%2DFDA5%2D494D%2D9EB0%2DB5DF625ACE0C%7D&dist=hplatest
10:00 – New Home Sales
Sales are expected to fall, after a surprise uptick in purchases during September. The annualized pace of sales was 770,000, from 735,000 in August. Even so, sales were off 23.3% from a year ago.
One reason to discount the September gain is that the Census Dept. figures count signed contracts on new home sales. However, the figures do not reflect buyers backing out of deals. That’s occurring more often now, with some home builders reporting cancellation rates above 30% and 40% of late.
With sales still forecast to fall, builders will need to rein in building activity, which will result in residential construction subtracting from economic growth once again this quarter. Further price cuts are also likely, especially by builders that are short on cash.
Salty,
Not much to say, 1 day on market. Address is 32 Keyes. No prior listings or history, no photos on the MLS.
Guessing it was purchased in ’87, based that on the mortgage records.
THIS IS FUNNY
http://blog.inman.com/inmanblog/2007/11/tons-of-all-cap.html
Clot,
If you and BC are going to Harrison count me in!
KL
“NJ business activity “fallen close to recession levels””
If things are so bad how come the traffic is getting worse and worse? Are people just driving around looking for work?
I think people are being forced to drive/travel further to find a job.
Frank,
If things are so bad, how come the 3Q GDP is 4.9%?
520 Floyd Street, Waldwick NJ
Purchased: 12/22/2005
Purchase Price: $575,000
List 5/10/2007
Original List Price: $599,000
Expired 11/11/2007
Current MLS# 2733003 11/17/2007
Original List Price: $519,000
Current Asking Price: $479,900
Active
One-Month Libor Soars as Banks Seek Year-End Funding (Update1)
By Gavin Finch
Nov. 29 (Bloomberg) — The cost of borrowing euros for one month rose by a record and dollar loans jumped the most in more than a decade as banks sought funds to cover their commitments through to the start of next year amid a squeeze on credit.
The London interbank offered rate that banks charge each other for euro loans that only come due after the end of 2007 climbed 64 basis points to 4.81 percent, the British Bankers’ Association said. The rate charged for dollars jumped 40 basis points to 5.23 percent.
The fastest increase in bank lending rates reflects growing concern about the strength of financial institutions after more than $60 billion of writedowns this year linked to U.S. subprime- mortgage defaults. Losses may rise to $300 billion, according to the Organization for Economic Cooperation and Development.
“The increases we’ve seen in borrowing costs cannot be simply explained away by year-end pressures; this is a full-on credit crisis,” said Stuart Thomson, who helps oversee $46 billion in bonds at Resolution Investment Management Ltd. in Glasgow, Scotland. “There’s no end in sight either. It’s a really unpleasant picture.”
Today is the first day on which a cash loan of one month will cover a borrower’s needs through the end-of-year holiday period.
“Things aren’t getting better, cash will be extremely tight at least into year end,” said Andy Chaytor, a fixed- income strategist at Royal Bank of Scotland Group Plc in London. “There is a heavy cash requirement.”
The cost of borrowing dollars for three months rose for the 12th day, climbing 4 basis points to 5.12 percent. The three- month rate for euros increased 3 basis points to 4.78 percent.
Demos defined middle-class households as those whose income is approximately between $40,000 and $129,000 (based on a family of four), whose head of household is between the ages of 25 and 64, and excludes those who held more than $500,000 in net financial assets (the top one percent).
A 129K family of four and a 40K family of four are considered the same. Crazy
I thin all htis talk about GDP doies nto really matter. What is the “REAL” difference between +1% GDP and-1% GDP??? Massaging numbers!!!
Just get us higher inflation and you instantly in megative GDP. Lower inflation number down – and you are in positive.
I think real Indicator on how economy is doing should be % of GDP coming from manufacturing. Untill this % starts to raise – we are in recession. 30% is wayyy too low for a healthy economy.
http://money.cnn.com/2007/11/16/magazines/fortune/stanleybing/101293787.fortune/index.htm?postversion=2007111609
good stuff
What i meant to say was, people are traveling further to get to work. Those who always worked in NYC may not be familiar but all those getting laid off in middle NJ are finding jobs around NYC.
October foreclosure filings surge
More than 50,000 lost their homes in October; foreclosure rates expected to rise in 2008 as adjustable-rate mortgages reset.
John,
That Bing piece is great.
Jobless claims hit 352.
It looks like 350 is the breaking point. [source CR – graph last updated in Jan 2007]
http://photos1.blogger.com/x/blogger/2825/754/1600/680149/WeeklyClaims0107.jpg
Go figure, from Bloomberg:
U.S. Initial Jobless Claims Climb to Nine-Month High
The number of Americans filing first- time claims for unemployment benefits rose more than expected to the highest in nine months, pointing to further slowing in the labor market.
Initial jobless claims increased by 23,000 to 352,000 in the week that ended Nov. 24, the most since February, the Labor Department said today in Washington. The number of people staying on benefit rolls was the highest in almost two years.
Companies are axing jobs as the worst housing recession in 16 years and record energy costs drag down growth, economists said. A slowdown in employment would remove what Federal Reserve Vice Chairman Donald Kohn yesterday called a “pillar” of support for consumer spending, which makes up two-thirds of the economy.
“Employment growth has been slowing,” James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, said before the report. “Given the turmoil in financial markets and lower confidence readings recently, additional labor market weakening is credible.”
“If things are so bad, how come the 3Q GDP is 4.9%?”
JB,
Why is the street clamoring for a rate cut.
No talk about this snippet from above:
Citadel, the Chicago-based hedge-fund manager run by Kenneth Griffin, will purchase E*Trade’s $3 billion investments of asset-backed securities for around $800 million.
$3b ABS portfolio dumped at $800m? 70% loss?
JB [37],
That seismic shift from sellers to buyers, that is qualified buyers.
# njpatient Says:
November 28th, 2007 at 11:41 pm
292 clot
Damn if that isn’t as big a bubble as RE. The college racket has got to give soon – I think the cost to value ratio is even worse than residential RE in 10/05.
Patient,
This is going to be a huge issue in the near future, we have already gotten to the point where a B.S. in engineering will only get you in the door. a B.S in engineering has traditionally held a fair amount of weight but from where i sit in the industry that may get you in the door but it wont get you much further. I see industry now starting to consider engineering degrees more or less the same as say biology. That is not a knock on bio, but in a technical field there is indeed a difference. Overall Its a combination problem. Between the combination of globalization which drives companies to minimize costs (technical expertise cost less overseas)and the deluge of people going to college just because they are expected to, the actual value and utility of a degree has very much been reduced.
On a side note, people need to get over the stigma of being in a trade such a welding or electrician. these fields are looked down upon yet they have more job security and can have better pay then many office jobs. 2 buddies of mine, 1 an electrician, another is a specialized welder both make over 80K/yr. i’d say they have outsmarted the history/poliSci major that is making 40K doing some random office job.
From HousingWire:
FDIC: Provisions for Loan Losses Failing to Keep Pace with Delinquencies
The FDIC’s Quarterly Banking Survey for the third quarter, released today, covers quite a bit of ground on the mortgage markets; but perhaps the most telling is a section in the report that says loss coverage ratios are the thinnest they’ve been in nearly 15 years — in spite of nearly historic increases in loss provisions.
Insured banks and thrifts set aside $16.6 billion in loan-loss provisions during the quarter, the most since the second quarter of 1987, and the second-largest quarterly loss provision ever reported by the industry. Third-quarter loss provisions stood at $9.2 billion, 122.4 percent more than the industry set aside in the third quarter of 2006.
…
“The industry’s reserves for loan and lease losses increased by $5.7 billion (7.0 percent) during the quarter, as insured institutions added $5.9 billion more to reserves in loss provisions than was removed by charge-offs. The growth in reserves was the largest quarterly increase in 18 years and caused the industry’s ratio of reserves to total loans and leases to increase for the third quarter in a row. However, the increase in reserves failed to keep pace with the sharp rise in noncurrent loans. As a result, the industry’s “coverage ratio” declined from $1.21 in reserves for every $1.00 of noncurrent loans to $1.05 during the quarter — the lowest level for the coverage ratio since the third quarter of 1993.”
Clot,
“If you and BC are going to Harrison count me in!”
KL
KL,
If Clot comes, I can arrange for a police escort from the Path to the bar. If anybody else decides to show, I’ll arrange for a caravan.
All can view the tract of land, right next to the Path that town officials are convinced will rejuvenate the town. They try to tell me that Harrison will be the next Hoboken/JC. I tell them that the Passaic River does not command the $’s that the Hudson does. Although, you may get to see JB rowing right by your window. It will either be a monumental success or a colossal failure. I don’t think there will be a middle ground. I do know that they get decent $ for rentals in Harrison.
Do you hear anything from agents/clients regarding this?
http://www.nytimes.com/2007/02/21/nyregion/21harrison.html
Interesting bit on the calculated risk site… Apparently they posted the wrong graph ( one of the ones that people love to use to point out the bubble. take a peak
http://tinyurl.com/b3kq4
WSJ: Incorrect Home Price Graph
WSJ Case-Shiller GraphThe WSJ included this graph in a story on consumers: Consumer Gloom Adds to Recession Risk
The problem with this graph is that this isn’t the Case-Shiller U.S. Home price index; this is the year over year graph for the Case-Shiller Composite 10 price index.
This minor mistake does help understand the differences between the various price indices. Case-Shiller has indices for 20 cities, plus two composites: one for 10 cities, one for all 20 cities. They also offer a quarterly U.S. National home price index.
The following cities are included in the Composite 10 and includes many of the more bubbly areas: Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, Washington DC. This is what the WSJ presented.
Case-Shiller U.S. Home Price index vs. Composite 10 Click on graph for larger image.
This graph compares the Composite 10 index to the Case-Shiller U.S. home price index. Note that the National price index is stair stepped because it is only available quarterly (and plotted monthly).
That extra few percent per year in the Composite 10 doesn’t look like much, but it definitely added up!
Now to complicate the graph, lets add the Composite 20 (started in 2000) and the OFHEO Purchase Only home price indices.
Case-Shiller and OFHEO Price Indices The larger the geographical coverage, the less the appreciation.
The OFHEO index lags the Case-Shiller index because it covers the entire nation (Case-Shiller is not really national), and OFHEO is probably also impacted by the use of conforming loans only.
kettle,
Believe me, the guys that have been in the trades for life want to keep the stigma alive and well. Last thing they want is a bunch of lazy hacks coming into the field thinking a black seal is the next series 7.
I don’t know many plumbers or electricians that haven’t done fabulously well for themselves.
I joke with my father, he pushed me to excel in school so I didn’t have to “dig ditches”. Joke was on me, the ditch diggers have made a mint over the past 10 years.
#37 – Wow, I hadn’t noticed that when I skimmed the article. That’s getting to be some real money right there.
Grim #7
grim Says:
November 29th, 2007 at 7:23 am
From the Record:
Builder accused of scare tactics
A property owner seeking to build on 35 acres of undeveloped wetlands recently sent out a flier that has residents criticizing the developer for using scare tactics as leverage.
How does telling people that these wet lands are heavily polluted convince anyone to build homes on them? constricting homes does not remove the pollution, shortly after construction was done you would probably be able to detect the pollutants in both the soil of the homes yards but also in the dust in the air. Construction on this site would only spread the pollution, not correct it. There is no way that the developer would pay for a proper remediation, that would be hugely expensive. ( these people do realize they live in”Dirty Jersey” right??)
#45 kettle; I am still surprised that in this environment there are still builders in north Jersey looking to build condos,as the area is saturated,and in Paramus no less. Which is crowded and congested to begin with.
Al # 29
If you dont like the governments offical “funny” numbers then take a look here
http://tinyurl.com/zyey9
This guy calculates the number without the massaging. Its an interesting comparison. Yes i post this link every so often, no i am not associated, it just good info, and was just updated for the month of Nov
M3 is about 15%
GDP is about -2% as opposed to 2%
CPI is at about 2% as opposed to 11%
3b,
A good builder can still profit in this market. A smart builder can build and profit in any market. Margins on new construction in this area are roughly 30% (my own estimate based on discussions with small/mid sized residential contractors).
I know a builder who started on a residential project on spec 2 months back. Crazy right? Nope, the lot was purchased in 1996 for just about nothing. He had crews that were slowing, and didn’t want to cut back their hours or lay off. In his case, the project made sense. Took a look at recent new construction comps. He could probably undercut by 10-15% and still make the margin I quoted above.
“If things are so bad, how come the 3Q GDP is 4.9%?”
FED needs to raise rates by 100bp now!!!
#43
Grim,
I’m not so sure about that… my cousin is a union electrician (NYC) and he has been laid off of jobs on and off for years. He often tells me that when strolling through offices watching young guys and good looking gals “working”, that he wishes he could do it all over again.
My uncle has been an underwater welder, NYC fireman, ironworker, etc., and he is still up on those beams with bad knees in his 50’s. He is killing my nephew to excel at his ivy league school. He wouldn’t even let him work with him over the summer, didn’t want him getting hurt on the site.
I know you can do well in these trades, but it’s not easy. I was raised with the “digging ditches” style as well, and I am happy I was.
Kettle,
From the article:
“Louis Kaufman, a spokesman for Shamrock Creek LLC, said the developer is simply informing the public of the land’s condition and is willing to remediate the wetlands if permitted to build there.”
3b,
Profits can be made if the the right type of housing is built to meet the demand.
But I doubt the town’s residents want this development built. It’ll be interesting to see how this pans out.
Rich
Doyle,
Sorry, should have qualified. I’m talking about those who have started and own their own companies. A big caveat, I know. It is probably more appropriate to look at these people as entrepreneurs, and not tradesman.
#51 Rich: I just wonder what kind of demand is out there for more condos,a as I belive that is what the developer wants to build.
Doyle,
I would not disagree with anything you said. But the point remains that half the clowns in college do not belong their. The current setup has devalued a bachelors degree to the point where a master is what a bachelors used to be . College is not the answer for half the clowns there, trades make a lot of sense for some people whether its because you happen to be talented at the trade or you might actually enjoy it more then paper pushing. You also have practical skill that you can use in your personal life. Colleges love the fact that everyone is expected to go to college now. What used to be learning institutions have become “profit centers”. The rate of idiot college grads combined the average annual tuition increase of 8% (tuition doubles every 9 nine years at that rate)leads me to believe that college has become just another for profit business!
#48 grim: True. I guess it all depends on when the land was purchased.
And once built as you say the builder can under cut surrounding properties as far as price.
I just wonder how profitable it is now to build say 200 condos on land that was purchased over the last few years, although I guess they can always be rented.
Grim, got it. I know a guy in NJ who started a trade company with a pickup truck and a tiny crew about 30 years ago. He had no trade skills whatsoever, just a business sense. He now holds a major contract with Newark Airport (has for many, many years) and lives in a beautiful home on a large piece of property in Bernardsville.
Not too shabby.
I wouldn’t mind being a finish carpenter or cabinet maker. Making custom furniture would rank higher, but I know I lack the artistic skill required.
Rich,
maybe i am to cynical, but i would be highly skeptical of any cleanup done by the builder. I have seen this done before and its almost always a shame of a clean up. You would need a carefully worded cleanup contract that includes extensive oversight of the builder.
Kettle1,
Maybe a masters degree matters in some professions. But in my business, real estate investment, people don’t care about your degrees.
The president of the last company I worked at didn’t go to college. Nobody cared.
#39 Kettle:
In UK now the trend is towards trades, people rushing to become qualified plumbers and HVAC techs. With their housing boom, that was where the money was.
Hubby has friend with landscaping business here in NJ, sometimes he helps him out. Two of the nicest houses he saw belonged to a guy who specialized in showers and another who was a tiler – all wealthy from the boom. Don’t know if they put away a nest egg to deal with hard times though.
From New York Times:
http://www.nytimes.com/2007/11/29/business/29lend.html?_r=1&th&emc=th&oref=slogin
From MarketWatch:
Builders slash prices to boost sales in October
Builders slashed prices at the fastest pace in 26 years in October, boosting sales of new homes from a much lower level of sales in September than was originally reported, according to Commerce Department data released Thursday. Sales rose 1.7% to a seasonally adjusted annual rate of 728,000 in October from a downwardly revised 716,000 in September, which was a 11-year low. September’s sales pace was originally reported as 770,000. August’s sales were also revised sharply lower to 717,000 from 735,000 estimated a month ago, and 795,000 estimated in the first release. Sales are down 23.5% in the past year. The October sales pace was much weaker than the 740,000 expected by economists surveyed by MarketWatch.
From Bloomberg:
U.S. New-Home Sales Lower Than Forecast in October, Prices Fall
Fewer-than-expected new homes were sold in the U.S. in October even as prices dropped by the most in almost four decades, deepening the real estate slump that threatens to stall economic growth.
A total of 728,000 new houses were purchased at annual rate, compared with a median forecast of 750,000 of economists surveyed by Bloomberg News. The figure was up from a revised 716,000 pace in September that was the lowest in almost 12 years, the Commerce Department reported today in Washington.
The collapse in subprime lending and turmoil in financial markets are projected to extend the housing recession well into 2008. Some economists now forecast the world’s biggest economy will grow this quarter at less than a fifth the previous three months’ pace, prompting the Federal Reserve to lower rates.
“The market isn’t close to hitting bottom,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said before the report. “Many people looking to buy can’t because of tightening credit conditions, and those that can, are holding back for fear of buying a depreciating asset.”
The median price of a new home dropped 13 percent, the most since 1970, to $217,800 in October from a year earlier.
Economists forecast new home sales would decline to a 750,000 annual pace from an originally reported 770,000 rate the prior month, according to the median of 71 estimates in a Bloomberg survey. Forecasts ranged from 705,000 to 785,000.
re: (41)
Applied development is behind the Harrison Commons project. They put up some of the uglitest high rises in Hoboken.
This rendering of the Passaic waterfront looks like some kind of nightmarish Venice.
http://www.tortigallaschk.com/images/THUMBS/50163/resource/screen_75910.jpg
For some reason I do not see the high end Wall Street NY commuter wanting to buy a place here even though it has a 20 minute commute to downtown. The view of downtown Newark from your High Rise condo window is just not the same Condo view over the Hudson River to NYC.
Sean,
The architect deserves credit for adding some yellow clouds in his rendering.
To the eairler post wallpaper is easy to take down. My father owned a wallpaper busniess for 20 years. There is a trick to taking it off very easily. Spray Vinegar on the wallpaper wait a few minutes and poof its like magic
BC Bob Says:
November 29th, 2007 at 9:13 am
They try to tell me that Harrison will be the next Hoboken/JC. I tell them that the Passaic River does not command the $’s that the Hudson does.
Bost: I kind of view Harrison as the next Cambridge….the Passaic has more of the majesty of the Charles than the sheer robustness of the Hudson. Grim rowing crew on a brisk morning would complete the vision…..
pretorius Says:
November 29th, 2007 at 9:58 am
Kettle1, Maybe a masters degree matters in some professions. But in my business, real estate investment, people don’t care about your degrees. The president of the last company I worked at didn’t go to college. Nobody cared.
pret:……ah…finally we have clarity…..you are no huckster….you are not wet behind the ears…..you are a full-blown Guyanese Jim Jones Kool-Aid drinker…….bless y’all
“The view of downtown Newark from your High Rise condo window is just not the same Condo view over the Hudson River to NYC.”
Sean [64],
I am in total agreement. I argue the same with people in that town all the time. However, if you can rent out a 2 bedroon, in a 2 family, for $1,300-1,500 per month with a 15 minute walk to the Path, what rent you get for a condo at the foot of the Path station? That said, the tenant will be living on top of a toxic dump.
I don’t recall who posted this yesterday — “Rents increased 1.4 percent on average to $64.08 a square foot from September, the second-smallest month-to-month increase since June 2006” but it prompts a basic question. I am not into commercial RE at all, and I recognize that this is a “Dick and Jane” level question. When one refers to the rent per square foot for commercial space is that per month or per year?
As far as college degree – I would agree that in USA right now there are simply too many people with BS, MA, MA, PhD…… There aren’t enough jobs for all of those people. In addition anybody higher than BS is facing a competition from foreign highly qualified workforce.
I am one of these foreigners who got the job, my wife is 5th generation American citizen, with PhD degree and she can not get a job in her field for over a year.
SO in my family it is kind of funny… We decided to have a kid since she weren’t getting any interest.
A year later -she got couple of phone calls from perspective recruiters from… PA not NJ. that is after over 200+++ job applications she actually was qualified for, judging by job descriptions. Ohh yes, her field is biochemistry – just 15-20 years ago NJ was capital of the world in her field.
Right now she is not listed as unemployed due to US unemployment rules – if you quit your job to move 2000+++ miles to live with your husband – that’s automatically disqualifies you as unemployed. She is not counted in ANY governmental statistics and yet she’d been looking for a job for over 18 month now.
I wonder how many people are in the situation like this one???
If you have a kid and a husband who makes above average wage in NJ – wife working and making under 50K just does not make any financial since – higher taxes, a lot higher expenses…
In my opinion there is huge number of unemployed people who is not “suitable” for unemployment benefits and therefore omitted from statistics.
Regarding “trade profession” – yes a lot of people made a killing in the last few years… A lot of them will have no business now as housing boom is clearly ending…
Shore Guy,
Per year. In California though, the custom is to quote rents on a per month basis.
New Home “Sales” (actaully contracts, not sales): It’ll be interesting to see how many of these make it out of contract to an actual sale. Right now about 40-50% fall out of contract.
3b,
(53) If priced right, I’m sure they would make good “starter” homes. Most condos built in the area in the last few years have been “high” end. And those that purchased the exisiting “low” end ones during the peak will be forced to either match the “new” pricing or not sell.
Kettle,
(58) I think the point of the article is that the contamination isn’t that bad and the developer is using it as a scare tactic. “Your child is in danger as he/she lives near toxic waste, let us build and we’ll clean it up.”
Rich
Chifi,
Are you attempting to say that degrees matter in real estate investment industry?
OT….
Not that we all didnt know that the media has become almost entirely sensationalism, but look at the following headline…
Missing Kan. student may have been porn star
USA Today – 7 hours ago
why is her profession of choice a news headline, would the still have a headline about her profession if she worked as a telemarketer?? this is ‘entertainment” not news. it drives me insane
#54
Kettle,
I hear ya and don’t know how to handle that problem. However, I don’t see things changing anytime soon. If / when you have a kid, I bet you will bust your hump to put them through school as well (even if you don’t think they belong), on the off chance that they will grow in school – get their degree – get into a good field – and succeed. I think in this day and age parents are willing to sacrifice financially to give their kids a shot. I have seen many cases of kids (including myself, my wife and my two college roommates) that have not done well in high school because they were lazy or whatever, but got to college and the light bulb went on. We are now all successful in different fields, and had we not gone to college that may never have happened. I have also seen the opposite, many of my buddies exceled in high school and went to college only to drop out, or finish and then loaf around or end up in a trade that they did not need a degree for.
So I have no idea what the answer is and don’t dispute anything you’ve said, but I just know that I am going to push my kid to go to school and hope that the bulb goes on. Which seems to be what every other parent does, and the cycle continues to every college’s benefit.
pretorius Says:
November 29th, 2007 at 10:21 am
Chifi, Are you attempting to say that degrees matter in real estate investment industry?
no
OT….
Not that we all didnt know that the media has become almost entirely sensationalism, but look at the following headline…
Missing Kan. student may have been pron star
USA Today – 7 hours ago
why is her profession of choice a news headline, would the still have a headline about her profession if she worked as a telemarketer?? this is ‘entertainment” not news. it drives me insane
Chifi,
Then what were you trying to say? I didn’t comprehend it.
(78) Really?!
Read it again, slowly.
It was more of a general statement about understanding your perspective on Real Estate. It’s like asking me about finance MBAs…you are just not going to get an unbiased answer.
John Says:
November 29th, 2007 at 8:39 am
Demos defined middle-class households as those whose income is approximately between $40,000 and $129,000 (based on a family of four), whose head of household is between the ages of 25 and 64, and excludes those who held more than $500,000 in net financial assets (the top one percent).
A 129K family of four and a 40K family of four are considered the same. Crazy
________________________________________________
Obviously they need to abandon that “everybody is middle class” claptrap, but region DOES make a heck of a difference. I’m originally from Missouri, and while a family of four making $40k won’t be living in the lap of luxury there, they would arguably be living a lifestyle comparable to a family of four making $80-$100k here. The COL is just so much lower, housing especially–if you can maintain a stable income, you can actually live quite comfortably on $40-60k there.
http://www.nytimes.com/2007/11/29/business/29lend.html?_r=1&ref=todayspaper&oref=slogin
November 29, 2007
As Lenders Tighten Flow of Credit, Growth at Risk
By PETER S. GOODMAN
Credit flowing to American companies is drying up at a pace not seen in decades, threatening the creation of jobs and the expansion of businesses, while intensifying worries that the economy may be headed for recession.
The combined value of two leading sources of credit — outstanding commercial and industrial bank loans, and short-term loans known as commercial paper — peaked at about $3.3 trillion in August, according to data from the Federal Reserve. By mid-November, such credit was down to $3 trillion, a drop of nearly 9 percent.
Not once in the years since the Fed began tracking such numbers in 1973 has this artery of finance constricted so rapidly. Smaller declines preceded three recessions going back to 1975; at other times such declines tended to occur in conjunction with an economic downturn.
Policy makers at the Federal Reserve are growing increasingly alarmed about the problem, which is an outgrowth of the woes of the housing and mortgage industries. Just yesterday, the Fed’s vice chairman, Donald L. Kohn, said that the latest market turbulence appeared to be reducing credit to businesses and consumers, hinting that the central bank, in response, was prepared to cut interest rates further.
Mr. Kohn’s unexpected pledge that the Fed would pursue “flexible and pragmatic policy making” that might help counter the trend and shore up the economy spurred a rally on Wall Street that sent stocks soaring. The Dow Jones industrial average jumped 331 points, to 13,289.45, while the broader Standard & Poor’s 500 index climbed 2.86 percent, to 1,469.02.
For now, though, the situation is looking bleaker for many businesses. Already, companies in everything from furniture manufacturing to Web site design are tightening their belts, delaying expansion and scrambling for other sources of cash.
“This is a very big deal,” said Andrew Tilton, a senior economist in the United States Economic Research Group at Goldman Sachs. “You’re basically crimping the growth of the more vulnerable companies. If they can’t borrow the money, their options are much more limited. They’d have to have less ambitious hiring plans, buy less machinery and cancel projects.”
Two years ago, in what now seems like another era, Carmen Murray easily borrowed $100,000 from a local bank to finance her company, Rodeo Carpet Mills, which makes high-end rugs in an industrial stretch near Los Angeles. Getting a check was as simple as returning a mass-mailed flier.
pre,
From NJBIZ:
With Tight Talent Supply, Brokerages Broaden Hiring Pool
Real estate services firm Cushman & Wakefield of New Jersey recently made two unlikely additions to its brokerage team—Glenn Talavera, a former top ranking New Jersey state trooper, and Glenn Williams, former general counsel of telecommunications services firm Net2Phone in Newark.
“The skills they bring are transferable to a real estate services setting,” says Gil Medina, managing director of Cushman & Wakefield, pointing to their leadership experience and a “structured approach to problem-solving.”
Medina says because of limited supply he now looks more actively beyond conventional hiring corridors to fill senior commercial brokerage openings at his East Rutherford firm. “New Jersey has about a thousand licensed commercial real estate brokers,” he says, “and that number hasn’t changed much.”
82 stuck in moderation
From MarketWatch:
House price index falls for first time in 13 years
A closely watched quarterly house price index dropped for the first time in 13 years, marking the third weak housing-related report of the week.
U.S. home prices were 0.4% lower in the third quarter than in the second, according to the house price index published Thursday by the Office of Federal Housing Enterprise Oversight.
Measured on an annual basis, prices were up 1.8% in the third quarter, the government office said. But that’s the lowest annual increase since 1995.
Economists surveyed by MarketWatch were expecting the index to climb by 0.4%.
I am looking to buy in central NJ….Jackson area. Any ideas how RE market it doing there??
Chicagofinance,
I’m not jealous of people with fancy degrees. I have a masters degree. People don’t care. It doesn’t matter.
Look at this press release. Kid recently hired as chief investment officer for billion dollar global real estate investment company. That is a million dollar job. He is 29 years old.
He doesn’t have a masters degree. It doesn’t matter.
http://tinyurl.com/create.php
Sorry, here is correct link.
http://tinyurl.com/2hrvf9
Pre,
It’s not about the degrees, it’s what you do for a living that shows your bias.
From Bloomberg:
U.S. Home Prices Drop for First Time Since 1994, Ofheo Says
U.S. home prices declined for the first time since 1994 in the third quarter as foreclosures increased and lenders tightened mortgage requirements, according to a government report.
Prices for previously owned single-family homes fell 0.4 percent in the period, compared with the second quarter, the Office of Federal Housing Enterprise Oversight said today in Washington. Prices rose 1.8 percent from the same quarter a year earlier.
Home delinquencies have risen to a five-year high and 40 percent of U.S. lenders have raised their standards on mortgages for prime borrowers, their most creditworthy customers, according to Federal Reserve data. Foreclosure filings almost doubled in October to 224,451, according to Irvine, California- based Realtytrac Inc., a seller of delinquency data.
Lenders began offering more mortgages without documenting borrowers’ income as the inventory of unsold homes started rising in 2005. They also marketed more loans with low introductory “teaser” rates to lure homebuyers. Those mortgages contributed to higher foreclosures beginning in the third quarter of last year.
Housing plunged deeper into recession in September as sales of previously owned homes fell 8 percent to an annual rate of 5.04 million, the fewest since records began in 1999, the National Association of Realtors said on Oct. 24.
Doyle # 76
You put forth a good description of part of the problem. Primary education (up to and including highschool) in this country is severely broken. Our education system is geared to produce “workers”, not thoughtful intelligent individuals. You are pointing out that college is an opportunity to try and make up for some of the deficiencies in primary education. This is like putting you finger in the dike when you see a leak.
I actually have a 5 month old son. I may change my mind over time, we will see but at this point i do not believe i will push him into college. I will push him to find something both sustainable and tolerable. By that i mean if he wants to study psychology, then you had best plan on getting a PhD otherwise you will be bagging groceries with an undergrad in psych. if he wants to be an artist/actor then i want him to understand what he is getting into and have a plan for supporting himself when out of work. My general philosophy is that life/happiness is not about money. Money is just a tool to achieve and ends. if you can make boat loads of money and love what you do then GREAT. but many people focus solely on money and send the majority of their lives doing something they hate just for the paycheck. College will not buy you happiness or success. Like money, college is a tool. Just because you went to college ( i.e have a tool in your toolbox) does not guarantee that you will use it to its full potential or that it will provide you with happiness/success. Please not that happiness/success is defined differently for everyone. the key is that you know what you personally define as happiness/success and find a way to achieve it, whether you are a financial baron on wall street or sipping a beer on a beach in the islands as a dive instructor.
On a side note: i was i the USVI this past summer and met a dive instructor. turns out he was in finance on wall street until 3 years ago. he got sick of the rat race and said that he has never been happier once he figured out what he really enjoyed and stopped chasing the $$$ just for the sake of it. he was an interesting guy.
re (74)
For realtors degrees do matter! If you have a degree from the Parisian Beauty Academy or the Roman Academy of Beauty Culture or even the Capri Institute you are highly sought after, and will make an easy six figures and eventually drive your clients around in an E Class Mercedes.
#81 “Demos defined middle-class households as those whose income is approximately between $40,000 and $129,000 (based on a family of four), whose head of household is between the ages of 25 and 64, and excludes those who held more than $500,000 in net financial assets (the top one percent).
”
From where I sit, this might define lower-middle-class and middle-middle class.
It is not uncommon for solidly-middle class folks to have net worth into the 3-4 million range. In current dollars, just to live a decent middle-class lifestyle in retirement, say pulling in $75,000/ year (not exactly living like Trump) one needs a minimum of $1,875,000 in income-earning investments. One cannot draw out more than 4% of the value of investments as income and expect them to last a lifetime. Add in $500K for a middle-class house and you have someone with 2,375,000 in net worth.
This is NOT for any kind of high-flying lifestyle. From where I sit, one cannot be considered lower-upper class until one has a net worth of around $10MM. Where the middle-upper class begins and ends and where the upper-upper class begins (ther land of the Buffets etc.) I leave to others.
i think it is quite reasonable for those in the upper-middle class to have several million in assets. One need only spend a little bit of time in a 10,000 foot apartment on 5th avenue, and those living there, to realize that having a $1MM house in bedminster, a Mercedes, and a $500K boat down the Shore does not upper class make. It is nice, to be sure, but it is not upper class.
Rich in NNJ,
Cuz I work in real estate, I’m biased?
I’m just calling it as I see it and backing it up with some evidence.
Chi/Clot,
Does the Abu Dhabi Investment Authority now replace the Citi[Citi Field], for the name of the new Mets park?
I can envision a center field similar to Kaufman Stadium [KC]. The main differences, there will be a hill of sand, accompanied by a pipeline and a fountain of oil.
One troubling issue, no alcohol served at the new park. However, if you are a season ticket holder and pay in gold, you are invited to come aboard the new Boeing’s for a flight to Bahrain after the game. You can party like a sheik, unlimited alcohol and hookers.
http://newyork.mets.mlb.com/nym/ballpark/citifield_overview.jsp
#92
Kettle,
Again, I agree with what you said… However, 95% of kids in High School have no idea what they want to do with their lives. So, let’s say your kid is 17 (congrats by the way) and does not know what he wants to do. And, maybe you don’t necessarily think college is for him. What are you going to do? I don’t know you, but I suspect in that situation you would push him towards college and cross your fingers.
Now we are right back to the cycle I was writing of earlier. I have no answer for it, but I see why it continues.
what now Says:
November 29th, 2007 at 10:36 am
I am looking to buy in central NJ….Jackson area. Any ideas how RE market it doing there??
what now:
I have a client who is a realtor there…she is very nice and smart lady…if you want to give her a call…contact grim and I will forward you the info…..
Shore Guy Says:
November 29th, 2007 at 10:31 am
82 stuck in moderation
________________________________________________
Yes, “middle” and “moderate” tend to go together.
Hat tip to ron over at CR for posting..
The line between prime and subprime is quickly fading. Perhaps it never even existed…
Kathleen Pender: Wells Fargo woes show breadth of mortgage meltdown
On Tuesday, Wells Fargo said it will set aside $1.4 billion for home-equity loans it expects to go bad in 2008 and 2009. What it didn’t say in its news release was that these are not loans to borrowers with subprime credit scores.
“This was a prime portfolio,” Wells Fargo spokesman Chris Hammond says.
The average FICO credit score for all Wells Fargo home-equity loans is 750, well into prime territory.
The midpoint of all credit scores in America is 723. Only 40 percent of credit scores are 750 or higher. Subprime starts in the mid-600s and goes down from there, according to Fair Isaac, the company behind FICO scores.
(emphasis added)
Homer #66
Thanks for the tip on the wallpaper. Sounds easy enough, but some of the stuff I’ve read sounds like you can run into nightmares like multiple layers, people who didn’t prime right, wall defects that the wallpaper is covering up sometimes damaging and having to redo drywall, not mention possible mold issues underneath.
I really don’t think wallpaper is a cosmetic problem. Cosmetic is just not liking the color of something. If it’s so easy, why don’t sellers just do it?
Thanks for the tip though!
From Reuters:
Subprime burns hole in German state bank lenders
The credit storm continued to wreak havoc in Germany on Thursday with the country’s largest state-owned regional lender unveiling a $1.2 billion hit from investments linked to risky U.S. home loans.
LBBW said that it expected problems linked to subprime mortgages would cost it around 800 million euros ($1.2 billion).
Separately, it emerged that SachsenLB, a rival state regional lender, had been gutted of capital after its investments linked to subprime turned sour.
Who says the U.S. isn’t a manufacturing economy any more?
We manufacture high margin bad debt and export it worldwide.
Our second major export is dollars. We’ve found our solution to the overwhelming empty container problem. It seems that it is more economical for us to fill them with dollars and ship them back to their place of origin.
96 bob
What about public lashing, cutting off arms and legs? :)
Love it, just love it. Clot, I need to borrow that cheese grater.
Santiago: I’ll leave before moving
Police Director Joseph Santiago says he would quit as Trenton’s top cop if he is forced to meet demands that he move into the city.
Santiago said he has to remain at his home in Stirling, Morris County — nearly 50 miles from Trenton — for personal reasons he cannot disclose.
BC Bob Says:
November 29th, 2007 at 10:52 am
Does the Abu Dhabi Investment Authority now replace the Citi[Citi Field], for the name of the new Mets park?
Bost: ADIA Field has a better ring….no bat day…instead AK-day
http://kalashnikov.guns.ru/models/ka118.html
Has anyone here heard of the plan to use the old Scrub Oaks Mien in minehill nj as a water storage facility? This should interesting, sounds liek it has merit, but also has problems. I would guess that it would ultimately drop property values in the immediate vicinity of the old shafts which run for some distance outward from the mine ( i think i read something like 2+ miles)
Gmaps link to the general vicinity of mine
http://tinyurl.com/3bz3mc
#102
“gutted of capital.” OK, someone come up with a scarier phrase than that one!
Cuz I work in real estate, I’m biased?
Well, you’re getting closer. Mostly because you call yourself a RE investor.
I’m just calling it as I see it and backing it up with some evidence.
I think your vision is clouded by your small area of concentration.
And don’t get me wrong, I believe profits can still be made in RE, but the fact is that the market is contracting. Deals will be made, some will win and some will lose. But prices are and will continue to come down.
Rich
#109 Rich So if you work on the “street”, can you be baised and believe that stocks only go up, bonds only up, commodities only go up?
How come its a given that in the world of stocks and bonds, it is a given that there will be bulls and bears, yet somehow in the real estate market there can only be bulls, and if you work in real estate you can only be bullish.
Ann #101
You are correct regarding Wall Paper, especially wall defects. Also the wall paper glue is ideal for mold and insects like fire brats which eat the glue. One house I looked at had one room, the pantry, done in heavy wall paper. Turns out a structural problem existed below the room, causing them to change it from a laundry room to a papered pantry. Below the room was a new concrete column, used to correct a large crack in the poured foundation.
“How come its a given that in the world of stocks and bonds, it is a given that there will be bulls and bears”
3b,
On WS,IB’s, there are only bulls, hedge funds there are bulls and bears.
“gutted of capital.” OK, someone come up with a scarier phrase than that one!
HELOC’ers “gutting equity”.
JB [103],
We have become masters of financial engineering and press releases. Unfortunately, we have developed toxic derivatives and the press releases have been nightmarish, both are included in our top exports. That’s OK, when we are dancing along the bottom, the fed speaks and all our troubles vanish.
http://dailyrecord.com/apps/pbcs.dll/article?AID=/20071129/UPDATES01/71129010&GID=Gwv+GtvrfxyzQzCj/7QPEB1GSjmkL17DAwe8gViauFA%3D
My apologies if this has been posted before (I googled it on this blog and it didn’t hit). I just find this historical trend data fascinating:
http://krugman.blogs.nytimes.com/2007/10/27/some-housing-pictures/
CB [116],
Thanks.
Do we have a dead cat bounce in 2009 and then more pain in 2010/2011, resets?
Unlike wall street no degree is needed in RE, just keep saying it is a great time to buy AND a great time to sell.
Regarding doing what you want in your career as I was telling my niece who was graduating college with some type of engineering environmental degree thst she better enjoy it while it lasts cause you won’t be doing it too long.
The reason I said that is that two things will happen to here.
If she has more than one child she will statistically be out of the work force over 11 years and it is hard to get back into an engineering type job after that many years out
If she stays in the workforce by the time she is 35 she will be management doing reviews, budgets, project tracking, and assorted death by powerpoint activities.
I still don’t understand why parents pay for college degrees where there are no jobs. They are setting their kids up for failure and to be a future burden on their spouses.
I remember what my my buddy from SJU told me when I asked him why he majored in Accounting? Dad told him I will pay for Accounting, Law or Pharmacy at SJU and if your don’t want to do that you better move out right now and don’t you think of taken anything from my house on the way out the door. He picked accounting as at the time it was only a four year degree and trudged through it.
Well he is an E&Y Partner now making half a million a year with a pretty blonde wife and a beautiful home on the north shore of long island.
Why is it today no parent has the balls to say things like that? Who the heck is paying for all those six figure theology, sociology, philosopy liberal arts and history degrees? A bunch of idiot parent are.
As my Mom once put it, “you can major in anything you want when you are in graduate school and you are paying for it and you are not living here anymore”
“chicagofinance Says:
November 29th, 2007 at 10:23 am
pretorius Says:
November 29th, 2007 at 10:21 am
Chifi, Are you attempting to say that degrees matter in real estate investment industry?
no”
My only contact tends to be with the large REITs, and I can tell you that their executives all have higher degrees. It certainly matters on some level.
“Unlike wall street no degree is needed in RE”
John,
Take a walk on the Merc. Do a survey and let us know how many traders have a college degree. Yes, it’s not an IB. However, the coin made down there, the last few years can rival 90% of those at IB’s.
#112 BC: I spent a long time in the Municipal bond busienss,and there were good years, and bad years, we never denied the existence of that, and we always managed to make moneuy.
Made absolutley no sense to deny the reality, it made far more sense to figure out how to make money in that environment.
My point with all of this is it is pret’s belief that because he works in real estate he has to be baised and say prices cannot go down.
Kind of like a Buddy of mine when we graduated from college, took a job with one of the tobacco companies, and then started to tell us all how there was no real proof that cigarettes caused cancer.
We cured him of that nonsense in short order.
Yea I was over on a tour of the NYMEX last summer and saw tons of tony barony GED guys waving their hands who are all going to get axed next year when it gets automated. My first job on wall street the two VPs I worked for had HS degrees when we went under one became a bus driver and the other bought a laundermat. They worked their way up from being runners and clerks at 18 all at same firm but the days of Sandy Weill moving from Runner to CEO are behind us.
John,
Take a walk on the Merc. Do a survey and let us know how many traders have a college degree. Yes, it’s not an IB. However, the coin made down there, the last few years can rival 90% of those at IB’s.
Actually cigarettes are great, they lower our taxes, kill off a lot of would be SS people before they can collect. Plus they raise the collective IQ of society by killing off the trailer trash. You have to believe in your product. The CEO of Philip Morris does not smoke does that make him bad!!! I can be pro choice without having an abortion!
Kind of like a Buddy of mine when we graduated from college, took a job with one of the tobacco companies, and then started to tell us all how there was no real proof that cigarettes caused cancer.
“Yea I was over on a tour of the NYMEX last summer and saw tons of tony barony GED guys waving their hands who are all going to get axed next year when it gets automated.’
John,
The floor is basically done, at this point. However, if those Tony guys were members, they walked out with a yacht of cash, when the NYMEX went public. Now, they start hedge funds and hire guys with that college degree.
Grim – I would love to know what your builder friends cost/SF is. I suspect that the profit margin has been 50% over the last few years, but that is changing. Heck, raw materials like 2×4 wood and sheetrock is 1/2 the price it was a year ago. That will make for new home inventory comp killers (I can now build it cheaper than you did a year ago). I hav seen people in my town buy a lot for $700k, build a $1m house, and routinely ask $2.5mm, 50% in my book. These are starting to trade for $2.1mm nowadays though.
John
” Re engineering… If she stays in the workforce by the time she is 35 she will be management doing reviews, budgets, project tracking, and assorted death by powerpoint activities.”
This is why i am currently planning on getting out of the field. I have just recently realized how painful slow death by powerpoint can be :( Unfortunatly changing fields is easier said then done, you defiantly have a “momentum”factor to overcome. Didnt someone on this board jump from engineering or another technical field to finance?
kettle #126,
Don’t forget death by Excel. The harder I try to stay technical, the more I am asked to just be a meeting host and Excel monkey.
98 thanks will do!!!
3b Says:
November 29th, 2007 at 1:04 pm
#112 BC:
My point with all of this is it is pret’s belief that because he works in real estate he has to be baised and say prices cannot go down.
3b: The logic you reference is backward…..pret is, in my opinion, overly optimistic and suffering from confirmation bias AND I find it elucidating that he works in RE Investment.
http://jec.senate.gov/Documents/Reports/10.25.07OctoberSubprimeReport.pdf
A nice read for a cold evening, while sitting next to a fire.
sync,
cani ask what you do?
John: (In general) I think you can approach college in two ways: pre-professional degree; training your mind to think.
Unless you go to a top flight college or a lesser college that has serious academic standards, I agree with your opinion about wasting time on a uselss BA/BS.
However, if you have been to places where your intellect is really challenged, then the subject matter is irrelevent. Put it this way…have you ever had a job where it didn’t matter how hard you worked…..you had to be able to think and communicate efficiently or else you were doomed?
Think of it like a sales job….you have to be a salesman for one CRITICAL hour in a two week span, and that defines success.
Translate that into an intellectual and analytical idea SALES job. I would rather have a kid who aced sociology at a competitive school that some kid studying for his CPA……you either hear me or you don’t on this one.
OT, but check out the fun times in Palm Beach. That there is some super condo flippin’!
http://www.palmbeachpost.com/business/content/business/epaper/2007/11/29/a1d_homesales_1129.html
”
Prices of existing condos in Palm Beach County plunged 30 percent in October – the sharpest annual decline since the Florida Association of Realtors started tracking them in January 2006.
The median price of an existing condo in Palm Beach County was $158,900 in October, the association said Wednesday, down from $225,500 in the same month last year.
Palm Beach County has a 35-month supply of existing condo units, McCabe noted.”
Thank G*d RE is local!
kettle #131,
IT.
“Unless you go to a top flight college or a lesser college that has serious academic standards, I agree with your opinion about wasting time on a uselss BA/BS.”
Chifi, in this one area I disagree – where you get your undergraduate degree does not matter anymore – Mrs. Patient will direct me to a study (last year, I think) that shows this. I’ll try to post it later.
Where you get your JD/MBA/MD matters somewhat more.
Of course, in the NYC area there are scads of people who think that the secret to success is to get into the 92nd St Y preschool, and if you can’t manage that you’ll eventually starve to death in a gutter.
NJ education info.. Great for parents bad for the NJEA propaganda
Please vist….. http://www.learndoearn.org
Better yet, if you want a reality check visit ….
http://www.learndoearn.org/WorldClassStudents2/College-information/NJ-Public-College-info.pdf
nwbergen…I never could really grasp the reason that NJ folks – with all their apparent wealth – would even send their kids to NJ colleges when Pennsylvania was so close.
When I was young and knew-it-all, more than just a few of us thought the only place anyone could seriously consider attending college in NJ was Princeton…, oh, and that other school we always beat the cr@p out of at Beaver Stadium.
“The housing crisis that has held both Wall Street and Main Street in thrall this year will worsen in coming months, homebuilding executives said on Tuesday.
At a conference in Las Vegas, chief executives of major US homebuilding companies said rising foreclosures and tighter lending standards would aggravate an already bad situation.”
“[Next year] is going to be worse than 2007 for us and for the industry in general,” said Donald Tomnitz, chief executive of DR Horton.
[Edit] Tomnitz did state, in early 2007, that the rest of 2007 would suck. How does he now term 2008?
http://www.ft.com/cms/s/0/16505568-9d5b-11dc-af03-0000779fd2ac.html?nclick_check=1
Bloomberg is reporting that Florida has suspended withdrawals from its investment pool for schools and local gov’ts after redemptions sucked 44% of its assets out. $3 billion was taken out today (can that be right?) CNBC (I know. I know.) says the suspension will last til at least Tuesday.
Does quoting Tomnitz get you stuck in moderation?
All this hullabaloo about college degrees…
I’m a perfect example of the path from HS to trade to “doing not so bad”… whereas my BF from HS went to Kean to major in English Lit and when I ran into her some years later, I was already in my own business and she was making gift baskets at Pino’s in Highland Park…she said she couldn’t find a position with her degree so was going to go back to get a Master’s so she could teach…(to which I thought: “teach other kids in the same dead-end degree program so they won’t be able to get jobs, either…”)
Anyway, I’ve not been held back by having a HS diploma only, although I’ve been self employed for almost 20 yrs, so I can’t say what the employer market would think.
I’ve almost paid off my house in Hunterdon County, (20 years EARLY), have a small nest egg that’s about 1/2 the price of my house and I enjoy my work.
I also set my own hours, ride my horses when I want to and employ both a housekeeper and a farm hand. So, I’d say, life is goog for me. I like my life and really, that’s the most important thing. Sure, money greases the skids, but it’s not the end-goal…
Would I have been better off with a degree? I don’t know. But I do know that the college courses I started for mechanical engineering were NOTHING like I had envisioned and hence, dropped out. I love to work with my hands and when I realized that I would be driving a desk, I was out of there :)
I do exactly what I want today, I have a knack for it, I’m good at it and I get to have my company pay for my “toys”.
They were worried about a run on the pool… Nothing like a run to turn those mythic models into an ugly reality.
I thought it would be a smaller bank by now. Definitely not a state fund.
spam – sounds like you’re right on top of life.
Pat,
Why do I have this terrible churning in my gut when I think about NJ fund exposure.
wow
#101 Wallpaper
It definitely does matter how the wallpaper was applied. I tried to strip the wallpaper off the walls in a bathroom and wound up taking the drywall paper with the wallpaper. Since it is a bathroom with high moisture, it looks like we’ll definitely have to replace the drywall in those areas. We were hoping to just remove the wall tile (1950s light green) and replace that but, in some areas where we pulled off the tile, that also took the paper off the drywall. At least we can replace it with the more moisture resistant board.
because NJ’s been way, way too quiet about things.
It’s like when the boss is away and all is quiet on the Western Front.
It’s better to have crashing and banging and know where you stand in the battle.
it’s getting bad. so bad that there will likely be another rate cut. which means it’s time to bid up those stocks.
bad news is good news
good news, obviously, is good news.
G*d bless America.
Grim,
Just sent you a chart showing trend in New Jersey home prices. Time period is 1980 thru 3Q2007. Data is from OFHEO.
Could you post it here when you get a chance?
From Bloomberg:
Florida Suspends Withdrawals From Investment Pool
Florida officials voted at a special meeting to suspend withdrawals from an investment pool for schools and local governments after redemptions reduced assets by 44 percent in the past month.
The pool had $3 billion of withdrawals today alone, putting assets at $15 billion, said Coleman Stipanovich, executive director of the State Board of Administration. The board manages the pool along with other short-term investments and the state’s $137 billion pension fund.
“If we don’t do something quickly, we’re not going to have an investment pool,” said Stipanovich at the meeting in the state capitol in Tallahassee. The fund was the largest of its kind, managing $27 billion before this month’s withdrawals.
Re: “I employ both a housekeeper and a farm hand. So, I’d say, life is good for me.”
Wow you got someone to clean your poop and your horses poop!!! Not that is living it up!
Even better that a rap singer with a white butler.
looks real bad up in Beantown.
“The number of homeowners receiving foreclosure notices each month now almost equals the number of home sales across the state, said Tim Warren, chief executive of the Warren Group, publisher of Banker & Tradesman.”
http://news.bostonherald.com/business/real_estate/view.bg?articleid=1047506
http://online.wsj.com/public/article/SB115853818747665842-kChmVyLXSEX6r5nHSVKwfSqtIJg_20070917.html?mod=rss_free
“Any College Will Do”
pre,
As you wish:
https://njrereport.com/files/NJ_OFHEO_data.xls
Pat [143],
I thought the same.
nice…
Florida freezes withdrawals from $15 bln state fund
Mrs. Patient is smart and beautiful. Here’s a brookings article on the study I mentioned earlier:
http://www.brookings.edu/articles/2004/10education_easterbrook.aspx
“Krueger and Dale studied what happened to students who were accepted at an Ivy or a similar institution, but chose instead to attend a less sexy, “moderately selective” school. It turned out that such students had, on average, the same income twenty years later as graduates of the elite colleges. Krueger and Dale found that for students bright enough to win admission to a top school, later income “varied little, no matter which type of college they attended.” In other words, the student, not the school, was responsible for the success.”
“Florida freezes withdrawals from $15 bln state fund”
They’re gonna need that money to prop up the prices of those Palm Beach condos.
Thanks Grim.
People should click on the Summary tab to see the home price chart.
The chart helps to remind people what happened last time. What happened is that NJ home prices were stagnant for several years.
There wasn’t a statewide crash in prices. I agree that condo prices went down a lot. But it is revisionist history to use tired condo anecdotes to support the case that NJ home prices crashed in the late 1980s.
Won’t be much money left to bailout homeowners if we’re on the hook for those pensions too.
Given a choice between bailing out the pensions and bailing out the flippers, my money is on the pensions. Err, I mean my tax dollars will go to the pensions..
Njpatient,
Thanks for posting that study. That is why I will be happy to send my kids to Rutgers College or another state’s flagship public university.
Thanks folks for all of the wallpaper tips!
Our current wallpaper dilemma is irrelevant now as our offer just got rejected.
They are priced at 4% above peak, OLP was 10% above peak.
We offered them 15% off current list price or roughly a 2004 comp which is what we sold our previous home for (in a week or two).
30 day close, 20% down, no contingencies. House has some big yucky projects (windows, kitchen is ransacked, wallpaper everywhere as I mentioned and every single inch of flooring needs to be replaced).
Been there over 30 years. House has been vacant for eight months as they are elderly and off in “one-floor living.” We are the first and only offer they have had in eight months.
It’s also currently up for rent for $1500 dollars less a month than it would cost to buy it.
They sent a special message back to us that they were insulted.
Oh well. Good luck to them.
163 Ann,
If that is the house you want, and nothing else catches your interest in a month, I would go back to them with an even lower offer. Insult or not, the longer it takes them to sell the less it is worth.
162 pretorius
Yes, but how many years will for pretorius jr to graduate?
No pretorius jr yet. But he’ll graduate in college in 4 years. No 5 year plans allowed for my kids, unless they’re in one of those 5-year programs like pharmacy.
“stagnant for several years”
So, according to your chart, there were no nominal price increases for almost 10 years and no real price increases for 15 years.
It wasn’t merely stagnant, however, as there was a peak to trough dip of 8% in nominal terms over two years and 29% in real terms over eight years (again, according to your chart).
So, if last quarter was the first dip, according to OFHEO.
So, pre – are you predicting 10-15 years with no returns on residential RE? Are you predicting real devaluation of 30% as of eight years out?
You may be a RE bull, but that sounds pretty bleak to me.
Speaking of bonuses (and you know we were) comes this:
http://money.cnn.com/2007/11/29/news/economy/bonuses/index.htm?postversion=2007112911
But only 3 percent of companies surveyed said they would increase bonuses this year, said job placement company Challenger, Gray & Christmas, which issued the survey.
The good news is that few – only 3 percent – said they’d be canceling bonuses for 2007.
Just over half – 55 percent – of the companies surveyed said they planned to award bonuses at year’s end, while 14 percent distribute bonuses at other times of the year.
“Yearend bonus recipients can thank a relatively robust economy that lasted through the first three quarters,” said John A. Challenger, CEO of Challenger, Gray & Christmas, in a statement.. “Even over the last couple months, the impact of the housing market collapse appears to be contained in the home-building and financial sectors.”
“As a result, bonuses appear to be intact. This probably will not be the case a year from now,” he added.
“Been there over 30 years. House has been vacant for eight months as they are elderly and off in “one-floor living.” We are the first and only offer they have had in eight months.
It’s also currently up for rent for $1500 dollars less a month than it would cost to buy it.”
Oh my. They’re scrood. I agree with Shore – they’ll get over their hurt feelings soon enough.
Ann #163 – A few months ago my husband and I put an offer on a house, very similar to your situation in regards to house condition and price. It had been on sale or a year with no offers. They rejected our offer and, like you, we were told they were “insulted.” The listing expired and the house is still sitting there empty. We have since decided to rent a bigger, nicer house for $1900/month. The mortgage on that other house would have been around $2800/month. We are now investing that extra $900!
Further to 167, pardon the stray paragraph that I left in there.
“So, if last quarter was the first dip, according to OFHEO.” – your model would say that the real through at 29% down would come in 2015 and residential RE “investors” would, on average, make their first real dollar in 2022.
Impressive.
Njpatient,
I’m not trying to predict what home prices will be in 2022.
Just illustrating that prices didn’t crash during last downturn.
The reason I added the line that adjusts for inflation is because somebody demanded it – some people here enjoy suggesting work for me. It is not because I think it is the best way to look at home prices.
“The chart helps to remind people what happened last time. What happened is that NJ home prices were stagnant for several years.”
pre,
I owned during this time, I don’t need a chart. If you didn’t need to sell you were fine. However, I saw marriages go kaput, families split, there was real fear. Keys were dangling in the mailbox. Condos were selling at 30-40% off peak and SFH, approx 20% off. I was in Essex County at that time.
Also, it is meaningless to compare different cycles. It’s like comparing Nasdaq 2001 to 1987. Hard to believe but you actually needed to prove you had a job, income, a dp [20% or pmi], good credit and 28/36, at that time. In some cases, you needed to prove that you had 6 months of payments in the bank. Banks wanted a cushion in case you lost your job.
Comapring these cycles is similar to comparing spring training to the world series.
BCBob #15: “Hooligans” is right up there with “persnickety.”
“Just illustrating that prices didn’t crash during last downturn.
The reason I added the line that adjusts for inflation is because somebody demanded it”
29% down sounds pretty bad to me; I guess it depends how you define “crash”.
I believe that I may have suggested the inflation adjustor at some point – the difference between the 8% nominal drop and the 29% real drop is pretty significant.
“some people here enjoy suggesting work for me.”
And in all seriousness it’s appreciated.
OFHEO NJ – Nominal
Peak 1989.Q4
Trough 1991.Q3
Nominal Home Price Decline 8%
OFHEO NJ – Real
Peak 1988.Q2
Trough 1996.Q4
Real Home Price Decline 29%
S&P Case Shiller NYC – Nominal
Peak 1988.September
Trough 1991.April
Nominal Home Price Decline 15%
S&P Case Shiller NYC – Real
Peak
Trough
Real Home Price Decline
(in progress)
174 Jill; 15 BC
Speaking of enjoyable words, the following is from a WAPost contest (add, subtract or change one letter from a real word and define the result). This is NOT off topic, as you’ll see in #1. I think I like #8 best.
1. Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period of time.
2. Ignoranus: A person who’s both stupid and an a$$hole.
3. Intaxication: Euphoria at getting a tax refund, which lasts until you realize it was your money to start with.
4. Reintarnation: Coming back to life as a hillbilly.
5. Bozone (n.): The substance surrounding stupid people that stops bright ideas from penetrating. The bozone layer, unfortunately, shows little sign of breaking down in the near future.
6. Foreploy: Any misrepresentation about yourself for the purpose of getting laid.
7. Giraffiti: Vandalism spray-painted very, very high.
8. Sarchasm: The gulf between the author of sarcastic wit and the person who doesn’t get it.
9. Inoculatte: To take coffee intravenously when you are running late.
10. Hipatitis: Terminal coolness.
11. Osteopornosis: A degenerate disease. (This one got extra credit.)
12. Karmageddon: It’s when everybody is sending off all these really bad vibes, and then the Earth explodes, and it’s a serious bummer.
13. Decafalon (n.): The grueling event of getting through the day consuming only things that are good for you.
14. Glibido: All talk and no action.
15. Dopeler effect: The tendency of stupid ideas to seem smarter when they come at you rapidly.
16. Arachnoleptic fit (n.): The frantic dance performed just after you’ve accidentally walked through a spider web.
17.Beelzebug (n.): Satan in the form of a mosquito, that gets into your bedroom at three in the morning and cannot be cast out.
18. Caterpallor (n.): The color you turn after finding half a worm in the fruit you’re eating.
First of all – great data post Pretorius.
What your post is telling me IS THAT FOR THE NEXT 5 YEARS THERE IS NOT A SINLGLE REASON FOR ME TO BUY A HOUSE…..
Buying costs at current prices are are outright 30% more than renting – and thats with 20% deposit and you are also giving up interest on your deposit….
Also count in maintenance and 6% loss (or 10% selling costs like some people estimate).. SO after mantaining a house for 7 years, paying 30% MORE than renting giving up interest on my deposit and loosing at least 6% (in NJ it is about 1% extra outright due to state taxes share).
Sorry but your post scares me a lot more than 10-30% decline in a year or two and after that “normal” inflation adjasted growth……
I’d much rather fund my 401K/Roth IRA for thouse 5-7 years… and in the end still be in the same position but with a lot bigger retirement funds…..
“(in progress)”
*refresh*
*refresh*
*refresh*
*refresh*
Dude no matter how you will twist it – rents must be higher that cost of ownership. Untill this will change – housing market is dead…..
“pretorius Says:
November 29th, 2007 at 2:28 pm
Njpatient,
Thanks for posting that study. That is why I will be happy to send my kids to Rutgers College or another state’s flagship public university.”
I agree. We’ll see how much things have changed in a dozen years when this will actually start to matter for the Little Patients.
Al,
I agree that there is a chance we are in for 10 years of stagnant prices.
grim 161
“Won’t be much money left to bailout homeowners if we’re on the hook for those pensions too.”
I was being sarcastic at 159, but you and I must have been separated by a sarchasm.
“Given a choice between bailing out the pensions and bailing out the flippers, my money is on the pensions.”
Darn tootin’!
174 Jill; 15 BC
Speaking of enjoyable words, the following is from a WAPost contest (add, subtract or change one letter from a real word and define the result). This is NOT off topic, as you’ll see in #1. I think I like #8 best.
1. Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period of time.
2. Ignoranus: A person who’s both stupid and an a$$hole.
3. Intaxication: Euphoria at getting a tax refund, which lasts until you realize it was your money to start with.
4. Reintarnation: Coming back to life as a hillbilly.
5. Bozone (n.): The substance surrounding stupid people that stops bright ideas from penetrating. The bozone layer, unfortunately, shows little sign of breaking down in the near future.
6. Foreploy: Any misrepresentation about yourself for the purpose of getting laid.
7. Giraffiti: Vandalism spray-painted very, very high.
8. Sarchasm: The gulf between the author of sarcastic wit and the person who doesn’t get it.
9. Inoculatte: To take coffee intravenously when you are running late.
10. Hipatitis: Terminal coolness.
11. Osteop*rnosis: A degenerate disease. (This one got extra credit.)
12. Karmageddon: It’s when everybody is sending off all these really bad vibes, and then the Earth explodes, and it’s a serious bummer.
13. Decafalon (n.): The grueling event of getting through the day consuming only things that are good for you.
14. Glibido: All talk and no action.
15. Dopeler effect: The tendency of stupid ideas to seem smarter when they come at you rapidly.
16. Arachnoleptic fit (n.): The frantic dance performed just after you’ve accidentally walked through a spider web.
17.Beelzebug (n.): Satan in the form of a mosquito, that gets into your bedroom at three in the morning and cannot be cast out.
18. Caterpallor (n.): The color you turn after finding half a worm in the fruit you’re eating.
kettle1 #54: You’d think someone who went to college would know when to use “there”, “they’re”, and “their.”
grim – you can delete 177 now that I figured out why it was in moderation and re-posted it with an asterisk in the proper place.
Tell the Little Patients’ to skip college and hire a “farm hand”. No offense meant Spam Spam, I don’t hear that term often, I got a kick out of it.
Oh, and “Death by Powerpoint” was my second favorite today.
now, now, Jill – kettle was in the sciences, not the humanities.
And at least he doesn’t use “ur”…
“Tell the Little Patients’ to skip college and hire a “farm hand”. No offense meant Spam Spam, I don’t hear that term often, I got a kick out of it.”
Given that they’ll have seen “The Princess Bride” approximately three dozen times by then, I’m sure that they’ll be easily convinced.
Or was that a “farm boy”….
Speaking of Rutgers, they’ve started working this week on the Livingston campus of RU in Pway. Apparently, the vision is to have a shuttle connecting the campus with Edison train station and turn the campus into a hub (in RU) for Professional education offerings.
It’s a far cry from the “College Town” plans they talked about a few years ago, but good nevertheless. There’s a lot of wasted potential there, IMHO.
Sync,
I agree. Rutgers deserves credit for scotching the college town idea and building dorms in downtown New Brunswick instead.
pret #191,
I went to RU, they need more dorm space on the Pway campuses too though. A lot of programs (like Engineering on Busch and Business on Liv.) have most of their classes on the Pway campuses and taking a bus from NB is a PIA.
BC 173
“Comapring these cycles is similar to comparing spring training to the world series.”
How ’bout this:
http://money.cnn.com/2007/11/29/news/economy/newhome_sales/index.htm?postversion=2007112912
“The report showed that the median price of a new home sold in October plunged 13 percent from year-earlier levels to $217,800. It was most severe year-over-year drop since September 1970, when the median price was only $22,600, or less than the cost of a typical new car purchase today.”
OFHEO NJ – Nominal
Peak 1989.Q4 (245.3)
Trough 1991.Q3 (226.1)
Nominal Home Price Decline 8%
Recovery 1997.Q3 (243.8) – ~8 years
OFHEO NJ – Real
Peak 1988.Q2 (162.4)
Trough 1996.Q4 (115.8)
Real Home Price Decline 29%
Recovery 2003.Q2 (161.0) – ~14 years
S&P Case Shiller NYC – Nominal
Peak 1988.September (85.54)
Trough 1991.April (72.29)
Nominal Home Price Decline 15%
Recovery 1998.May (85.52) – ~10 years
S&P Case Shiller NYC – Real
Peak 1987.October (80.44)
Trough 1997.March (54.59)
Real Home Price Decline 32%
Recovery 2002.June (80.59) – ~15 years
(need to check this, don’t have my datasets with me, just did it quick and dirty)
hey grim – did you fumigate this place with Troll-B-Gone today? Not one of the usual suspects around (50.5, by, reech)…
Not to worry though, home prices didn’t really fall.
#173 BC Bob: I saw the same things, and with Coops/conods 50% off fromm their highs,and even more.
Single family homes 30 to 40% off, and this at a time when you still had to qualify for a mtg, and there was none of this no money dowm,I/O, negative amoritization, no doc, pick a pymt and all the other toxic c_rp that there was this time around.
Plus HELOC and Home Equity loans were rare, not the norm like today.
This denial by pret can be infuriating at times. He is not even from the NYC area, yet he claims to know what transpired last time.
What could he possibly know, not from the area,and at the time it happened he was watching Thomas the Tank.
Now he is in the NY area, and watching too many re-runs of Friends.
#163 Ann: Insulted? Tell them their asking price is insulting.
How can I be in denial?
After all I’m the one who put together the historical analysis of NJ home prices. I personally searched for the peaks and troughs and calculated the increases and decreases.
I admit that I don’t know all the anecdotes. But I know the data as well as anybody else.
#160 pret: They crashed, I lived through it,are you callimg me a liar?
3b, can you back up the “crash” claim with data showing broad 20% or 30% declines?
I say that the last boom was followed by a long period of stagnant prices. I back it up with data.
RE colleges.
Agree with the others on the good State schools.
My principal is that I will fund 4 years at a state school. If they want fancy, they will have to get fantastic grades and get a scholarship. Or pay for it themselves.
John’s comment regarding raising the collective IQ of society is incorrect. The current executive. legislative and judicial branches of government have the fewest smokers in history, and the fewest government officials able to chew gum and walk at the same time. If the current non smoking government were in power during WWII we would be speaking German and Japanese today.
John Says:
November 29th, 2007 at 1:09 pm
Actually cigarettes are great, they lower our taxes, kill off a lot of would be SS people before they can collect. Plus they raise the collective IQ of society by killing off the trailer trash. You have to believe in your product. The CEO of Philip Morris does not smoke does that make him bad!!! I can be pro choice without having an abortion!
Kind of like a Buddy of mine when we graduated from college, took a job with one of the tobacco companies, and then started to tell us all how there was no real proof that cigarettes caused cancer.
Speaking of Friends, I always found it annoying that they lived in such nice, huge apartments on virtually no income.
Um Patient,
Monica’s apt was passed down from her Grandmama and was rent-controlled… I mean geez, did you even watch the show?!?!
#200 pret: You data means nothing to me. I have first hand knowledge.
I bought my first house in 1987 at peak, sold it 10 years later for $2500 less than I purchased it for.
While I stayed and paid off the mtg, the exact same houses were selling for anywhere from 25% to 35% less than what I paid for mine. I followed the market closely. People were doing jingle mail left and right. Prices declined, oh and interest rates did too.
And I know many other people, who can tell the same story, seeing as we lived through it.
Doyle #204, LMAO
3b #205,
I bought my first house in 1987 at peak, sold it 10 years later for $2500 less than I purchased it for.
Just to put this in perspective, $2500 is what percentage of the price you initially paid for the house?
53 Forest Road, Allendale NJ
Purchased: 8/27/2007
Purchase Price: $850,000
List 10/16/2007
Current MLS# 2742039
Original List Price: $869,000
Current Asking Price: $819,000
Active
#198 pret; You are in denial, because I and others are telling you it happened.
Grim has himself illustrated it time and time again, and yet you appear to be telling me that what I know, and what I witnessed and experienced did not happen.
Do you think I am just making it up?
2b,
Where is the data? The fact that it fails to appear diminishes the credibility of your point.
Maybe you simply lived in submarket that was hit especially hard. But please give us some data.
#207 About 1.3%
“I mean geez, did you even watch the show?!?!”
Only when Mrs. Patient made me watch. Maybe I should have paid better attention…
OK grim:
Ready for some Hall & Oates…..
whoa here she comes
watch out boy she’ll chew you up
whoa here she comes
she’s a maneater….
http://www.heritagehouserealtors.net/AgentPage.asp
I didn’t know I was supposed to ask your permission to absent myself from this board. Some of us don’t have limitless damn time to sit here and watch you act like a weasel. Perhaps unbeknownst to you, there’s life outside of this blog that some of us need to attend to.
You’re sick, go take two bottles of aspirin and call me in the morning.
njpatient Says:
November 29th, 2007 at 3:50 pm
hey grim – did you fumigate this place with Troll-B-Gone today? Not one of the usual suspects around (50.5, by, reech)…
Chi,
Your link is lacking. Need a name…
My curiosity is peaked.
Life outside this blog? I shudder to think.
It reminds of a scene from “Cheers” where the whole gang went into an unfamiliar bar and all the patrons shouted out “Norm!”. Norm just said, “hey, I have a life you know.”
3b – 1.3%? A quick glance at pret’s spreadsheet tells me your outcome isn’t exactly entirely at odds with the data he presented.
For example, from pret’s sheet, nominal prices:
31-Mar-88 – 238.2
31-Dec-96 – 235.6
That’s about a 1.1% decrease.
My math is sh1t so if I made a mistake in here (again), please point it out.
214#, My English is very limited. But i know you are right since he is a patient.
From TheFreeDictionary.com:
pa·tient (pshnt)
n.
1. One who receives medical attention, care, or treatment.
…
> You’re sick, go take two bottles of aspirin and call me in the morning.
njpatient Says:
November 29th, 2007 at 3:50 pm
hey grim – did you fumigate this place with Troll-B-Gone today? Not one of the usual suspects around (50.5, by, reech)…
# 174
Wern’t the “Persnickety Hooligans” a punk band from Cambridge, MA?
Thanks everyone.
Yankee Gal, wow, that house is still sitting there empty? Nice. But they’ll get their price, it’s just that there are no buyers right now : ) Glad you found a rental you like. Good for you.
3b, that’s right, I am insulted by their asking price. I really think their realtor did them a huge disservice by starting out with a peak plus 10% price back in April, if in fact she came up with that number.
All of the emotions involved in real estate are so interesting to me. Sellers can’t be objective because it is their house. Realtors are often emotionally attached to their areas too and own property in their area, exacerbating the attachment. Apparently they were crushed and insulted and they are old, which is supposed to make me feel bad or something. It’s so overly dramatic, cry me a river. It’s just business.
“I say that the last boom was followed by a long period of stagnant prices. I back it up with data.”
pre,
If I paid attention to the cpi data, inflation would be costing me 1-2%, yoy. If I believe the bls reports, we are adding jobs, birth/death, in construction and financial services. Funny thing, the bls has no clue where these created jobs are located.
You can go by the data. I don’t have a problem with that. However, ask anybody that bought in the mid/late 80’s and sold in the early 90’s. They will laugh at you if you bring up stagnant prices. It was the great condo bust. As a matter of fact at that time, the word strictly utilized was condo. Somewhere around 1992-1993, they were then referred to as condominiums.
#217 sync: The point is prices fell, I was able to ride it out,and make the best of it, by paying off the mtg quickly.
Others werw not so fortunate. If I had to sell, I would have taken a big hit.
If I had waited,I would have saved a large amount and/or have been able to buy a bigger/better house.
The point is prices fell, and substanially.
BC Bob,
The only reason I put the cpi data in the analysis is because somebody requested it.
But it is interesting to look at home price growth across cycles in real terms.
NJ has been doing 2% real. I think it’ll be closer to 0% for next cycle because state’s economy isn’t an outperformer anymore.
That’s right Bi, being a “patient” and having various and sundry ailments go hand in hand. Rather than be a good patient and medicate himself, he prefers to rage around causing problems. He’s the first one to complain whenever we post something and then wants to get his damn panties in a bunch and start pouting when we post nothing. I don’t know what the hell his problem is.
Let me tell you something Inpatient. No one is going to diaper and powder you just because you missed out on buying a house. Get over it.
bi Says:
November 29th, 2007 at 4:47 pm
214#, My English is very limited. But i know you are right since he is a patient.
From TheFreeDictionary.com:
pa·tient (pshnt)
n.
1. One who receives medical attention, care, or treatment.
…
> You’re sick, go take two bottles of aspirin and call me in the morning.
njpatient Says:
November 29th, 2007 at 3:50 pm
hey grim – did you fumigate this place with Troll-B-Gone today? Not one of the usual suspects around (50.5, by, reech)
#220 Ann: Agreed. But i would not hold my breath as far as those owners getting their price.
There are no buiyers now, and I do noe see any indication that there will be more in the near future,as the market continues to deteiorate,a nd credit continues to tighten.
And as far as these sellers loving their house and the emotion, then why are so many of their houses dupms.
I do not want to hear that they are elderly. My parents are elderly,and their house is updated, and immaculate, it was always their pride and joy, after us kids of course.
3b [205],
Yes, jingle mail was the tune of the day. I forgot about hel and 2nd mortgages. You are right, they were rare. Today a hel is as common as a passbook savings account. The problem today, as house prices decline, the debt, used to furnish the house, pay for the hummer, exotic vacations, etc…, remains intact. Some hangover, no?
Interesting, less than 3/4% return per year
156 Pershing Ave, Ridgewood NJ
Purchased: 6/14/2004
Purchase Price: $566,000
List 11/29/2007
MLS# 2747150
Original List Price: $579,000
DOM: 1
Active
#226 BC: Massive hangover.
In the movie Hanah and her sisters, the movie was filmed inside Mia’s apartment that she paid a few hundred a month for under rent control and she charged a few thousand bucks a day for the location and pocketed it all. She since go thrown our due to income limits. Now that was a good deal.
Pre,
Can we talk S&P Case Shiller, or is this discussion OFHEO only?
S&P Case Shiller showed a 15% decline over the same period (where OFHEO shows an 8% decline).
Who is right, and who is wrong? Was the decline 8%, 15%, or somewhere in between?
Grim,
I’ll go with somewhere in between.
But I don’t think we should search for the peak and trough numbers and then characterize the market using only those numbers. It makes for an interesting soundbite but causes people to miss the bigger picture.
For example, I wouldn’t argue that the last bust lasted 1.75 years, even though that was the amount of time between the peak and the trough.
Instead, I describe the last bust as lasting almost a decade. The chart clearly illustrates this.
The S&P Case Shiller Tiered Index gives us a little insight into where declines might have been seen in this area, or where they weren’t seen.
Some things to keep in mind with S&P Case Shiller (as well as OFHEO). These indexes are looking at SINGLE FAMILY HOMES *only*. This point needs to be stressed. We’re not looking at condos here.
Low Tier (Under $354,768)
Peak 1988.10
Trough 1992.3
Decline 14.95%
Mid Tier ($354,768 – $512,608)
Peak 1988.9
Trough 1991.5
Decline 15.22%
High Tier (Over $512,608)
Peak 1988.9
Trough 1991.4
Decline 15.36%
Aggregate
Peak 1988.9
Trough 1991.4
Decline 15.49%
Rich In NNJ Says:
November 29th, 2007 at 5:06 pm
Interesting, less than 3/4% return per year
And that is a BEST case assessment of the return, ignoring commission payments, time value of money, etc. Of course RE is more than just an investment, so, maybe the family got value for its loss of $, but….
Grim, could you post a chart of the Shiller NYC #s?
Give me a few minutes, I’m searing tuna.
I’m searing tuna.
LOL.
re 215, 219 and 225
Sorry everybody.
My bad.
Ann,
Removing wallpaper from an entire house would be an exhausting project.
I removed wallpaper from a long entrance hallway – about 17 feet long x 8 feet high – and it was a royal pain.
I did it via the hot water and vinegar in a spray bottle method, to save the cost of renting a steamer (which wasn’t cheap).
You have to soak it, score it, and scrape it off. And then you have to scrub down the walls to remove the remaining paste. And repair the walls …and paint …
If I saw wallpaper all over the place, I’d walk away.
Maybe it’s a blessing in disguise that your offer was rejected.
And all of the floors, too, and the windows?
It sounds like the house hasn’t been updated in a while.
My guess is that the inspection would have turned up other things that need to be replaced/repaired.
“Let me tell you something Inpatient. No one is going to diaper and powder you just because you missed out on buying a house.”
Of course not. They’re going to buy me a drink and toast my good fortune.
https://njrereport.com/images/spcsnytier.gif
“Who is right, and who is wrong? Was the decline 8%, 15%, or somewhere in between?”
And can either be described as “stagnant”, let alone the real declines (29% even according to OFHEO)?
3b, 225
Their price never existed and they will never get it. It’s not worth a dollar until you sell it, right?
scribe, 238 that wallpaper removal sounds awful. Wallpaper should be illegal.
I do believe this rejection is a blessing in disguise.
Tell the Little Patients’ to skip college and hire a “farm hand”. No offense meant Spam Spam, I don’t hear that term often, I got a kick out of it.
Oh, and “Death by Powerpoint” was my second favorite today.
LOL…actually “Death by Powerpoint” was a hit with me, too…
And actually, we don’t know what to call our “farm hand”. He’s not a groom, not a caretaker, not a handyman… he’s just a laborer who comes and cleans/feeds the farm animals everyday…and does a great job, so maybe I’ll promote him to “chief-tetrapod -sustenance-giver”…
Gotta get bid’ness cards made up for him now…:)
grim Says:
November 29th, 2007 at 5:27 pm
Give me a few minutes, I’m searing tuna.
grim: sounds like a euphemism for “hiding the salami”
This is less about RE specifically than it is about MBS and just how bad some of this sh*t is (the political angle is a sideline, here):
http://thenexthurrah.typepad.com/the_next_hurrah/2007/11/tommy-k-and-the.html
“One company alone had purchased over 100 of the loans in the secondary market, with an average loan amount of approximately $500,000. That publicly traded and federally chartered bank thus had approximately $50,000,000 in loans that were potentially worthless because, as a result of Kontogiannis’s scams, none of the mortgages were recorded in primary position as the bank had assumed. That, in turn, meant that if any of the loans defaulted, the bank would not be able to foreclose on any real property and thereby recoup any of the losses. Needless to say, the impact of such losses would be profound both on the individual bank and on the shareholders of the company. Even scarier, that bank may have since purchased many more such loans from Kontogiannis.”
chicagofinance Says:
November 29th, 2007 at 4:27 pm
OK grim:
Ready for some Hall & Oates…..
whoa here she comes
watch out boy she’ll chew you up
whoa here she comes
she’s a maneater….
http://www.heritagehouserealtors.net/AgentPage.asp
under assoicates…click for B and then click the picture of Bornhoeft and read the description…..
for the word “Notorious” substitute –
pre-pre——pretorius
http://www.youtube.com/watch?v=ytWIZHxolI0
4-11 Lambert Road, Fair Lawn
Purchased: 6/6/2005
Purchase Price: $372,900
MLS# 2397650
OLP: $389,900
LP: $369,900
Sold: 11/29/2007
Sale Price: $330,000
Pre-commission Loss: $42,900 (11%)
Another high profile Wall Street head is pret-a-manger……
http://www.bloomberg.com/apps/news?pid=20601103&sid=azYGlC5zrYJU&refer=us
Chifi,
I have that song in my ipod. I will listen to it tonite.
I’ve loved that guy’s stuff ever since I saw the Juicy video. Probably that’s on youtube.
P.R.
E.T.
O.R.
I.
U.S.
you jus
never
buy
Ann & Scribe:
I once was looking at a house that was completely ENCASED in wood. (Pine).
Paneling, trim, the deck outside that covered every inch of grass, the ceilings, walls, the kitchen back splash, you name it…. pine boards of all varying themes.
The kicker was, they had never sealed, stained or otherwise placed any product on it. The wood was warped, faded, cupped, splintery (walking on the deck required logging boots)… it was a nightmare that I still can remember vividly :)
Anyway, so the homeowner, who was “hovering”, wouldn’t be offended, I just said “I think the home suffers from lack of too much updating”…
They weren’t sure what to think, so the awkward moment was diffused.
15 Overlook Terrace, Bloomfield
Purchased: 9/16/2005
Purchase Price: $332,500
MLS# 2432976
OLP/LP: $334,900
Sold: 11/29/2007
Sale Price: $320,000
Pre-commission loss: $12,500 (4%)
If found this on Trulia…
528 County Road 579, Hampton NJ 08827
MLS# 2422602
http://www.trulia.com/property/1043442527-528-County-Road-579-Hampton-NJ-08827
Bought 2/15/07 for 600K
Listed now for 519,900K
Yikes!
spam re pine encasing
AWESOME
That goes under the category of what I call, “Because he could.”
One might say, why would he do such a thing?
Because he could.
Some people know how to put tile in. So everything that can be tiled is tiled. Some know how to put in Pergo, so Pergo it is. Some have a jigsaw, perfect for putting up amateur built-ins. And some of us know how cut and paste, hence the wallpaper epidemic. And some of us are talented with the pine.
pretorius Says:
November 29th, 2007 at 5:58 pm
Chifi,I’ve loved that guy’s stuff ever since I saw the Juicy video. Probably that’s on youtube.
pret: sorry dude, wrong decade, wrong city, wrong accent……diddy and that no class Brooklyn hack are useless……
1391 Pompton Ave, Cedar Grove
(Short sale)
Purchased: 7/12/2006
Purchase Price: $350,000
MLS# 2436344
OLP/LP: $319,000
Sold: 11/29/2007
Sale Price: $300,000
Pre-commission loss: $50,000 (14%)
“Pre-commission loss: $50,000 (14%)”
$50K?
$50K?!?
That’s all???
C’mon – that’s no big deal – just ask bi.
(actually, grim, you may have subtracted wrong?)
Sorry for the mixup.
But those rapper guys are proof that we live in a great country. Where else could they become rich with that stuff? Only in America.
Ann,
Yeah, we’ve all been in houses where to husband (usually) is a proud owner of a wood workshop somewhere and hence, the reason for the (usually) 1 room in the house that has been completely encased in wood, usually on a slant of some angle, it’s “smooth” lines ;) interrupted only by a fanciful octagon or 5…. complete with trim to match. And then, as if he couldn’t hear the poor trees scream “For God’s sake, man! Stop already!”… it would be decorated with wood projects such as bird houses, handmade furniture (stained to match), wooden garden whirlygigs and wooden children’s toys that, of course, are all “for sale”…
Where else can you make a $500k profit on an home and pay zero tax? Where else can you take out a massive HELOC and write off the interest?
Only in America. I love this place.
Yes, and then the writeup purports that this wood room is a “rare find.” Not a lie.
I saw a house recently where the guy knew how to whittle ducks out of wood, in addition to installing wood trim, built-ins etc. One room became the mallard showcase which the wife tried to work with by putting up..
Mallard wallpaper.
(actually, grim, you may have subtracted wrong?)
Math was correct, typo on the sale price. It sold for $300k, not $310k.
BTW, I’ve been in a training session all week one block from Wall Street so I haven’t had a chance to really view or post. I know, you’re all heart-broken.
Anyway, I received a letter today from my mortgage company and my taxes are going up again starting 1/1/2008. It’s an annual ritual and I’m beyond outrage and have moved on to bemused lunacy. So now, my taxes are roughly $8,150 per year up from around $4,900 in year 2001. This is for a sh*tty little cape on a 50 X 100 lot.
I’d like to tell you that things will change for the better but they will not. Again, I read a couple of days ago in one of the financial periodicals that the prices of houses will fall in just about every area in the nation with the exception of the S.F/Silicon Valley area and the NYC suburbs including Northern NJ. The factors stated are strong job numbers and higher income.
We have the fortune or misfortune of living in the wealthiest area of the world. This is not my opinion, it’s a fact. The loss of a few hundred jobs here and there are not going to make much of a difference.
It bothers me that some hard-working souls driving a truck or fighting fires or teaching elementary school kids can barely eek by just to pay the bills and barely have enough to buy a POS starter home. It really drives me nuts. Unfortunately, this appears to be the new paradigm for living in this area. If it wasn’t, why would I be paying over $8,000/year in property taxes?
The bottom line is if you want to have a half-way decent home in this area, you either need to increase your income or be prepared to put better than 20% down. All the wishing, praying, hoping and schadenfreude in the world is not going to change it.
I’m sure I’ll be repeating this mantra in another six months from now and I sure as h*ll wish I could say otherwise.
261#, as i said yesterday, people who bought 7 years ago feel they are born in right time and right place. they are paid to live comfortably each day.
#259 –
That’s like saying that because lots of Nigerians get rich scamming stupid Americans that Nigeria is a great country.
Gary The majority of people can’t afford these
homes & taxes.So as taxes aren’t going down that leaves only 1 other thing to change the price.The # of people making over 175 to buy these homes isn’t enough to sustain the recent market uptrend.Bubble bursting.
Bernanke hints of further rate cuts
http://news.yahoo.com/s/ap/20071129/ap_on_go_ot/bernanke_3
147 Cambridge Ct, Clifton NJ
(Short sale? Error?)
Purchased: 4/12/2004
Purchase Price: $279,000
MLS# 2426580
OLP: $359,900
Sold: 11/29/2007
Sale Price: $237,500
mikeinwaiting,
Prices will stay stagnant for the next few years as inflation eats away 3% per year in nominal terms. The inventory will work its way out, it’ll just take a while. This area is a magnet for the best and brightest, there will be enough wealth to at least sustain it. I say this as very matter of fact. I myself have to fight like h*ll in my industry to compete, stay current and stay forever young. There’s a tidal wave of talent and the numbers to support it. I’ve been talking to people here in the financial district all week and I haven’t heard any doom and gloom at all.
“Where else can you make a $500k profit on an home and pay zero tax?”
pre,
I wonder how many, who have bought in 2004-2006 and are trying to sell now, are enjoying the 500k tax break?
Jill 184,
sory, butte wen eye am tieping on a randum blog at wurk i dont spend two much tiem woreing about my gramer
1 Parkside Terrace, West Paterson
Purchased: 6/16/2006
Purchase Price: $435,000
MLS# 2436182
OLP/LP: $399,000
Sold: 11/29/2007
Sale Price: $382,500
Pre-commission loss: $52,500 (12%)
#264……………Hey Gary………….totally agree with you about the whole scene here. Our taxes went from $6-10k but that was from 02….until today…and some folks on our street pay 12-14k…and beyond. There are things that I would do, like blow up the attic into a big suite, but fear the repercussions…in a sense the taxes put a damper on home improvement for fear of increases with increased square footage. As far as your statement about teachers and firefighters….yes, I believe it is very difficult to achieve a middle class existence here for the under $100k set….$100k is a living wage now….as inflated as that is…and a comfortable wage is over $200k — and even that requires restraint. All I can say is that the folks that do those jobs are ‘gold’…and let’s hope the state can keep their pension commitments — because these people are NOT getting rich and deserve something for their service.
“I’ve been talking to people here in the financial district all week and I haven’t heard any doom and gloom at all.”
Gary,
You didn’t stop by my office. Obviously not Goldman [housing forecast] either.
Essex,
Yup. I get the feeling that a lot of those reading this blog believe through some sort of osmosis that things are going to change drastically in their favor. I wish they would but my tea leaves say otherwise. It’s just the area we live in. What can I say, I see it all around me.
31 Tall Oaks, Vernon
Purchased: 7/6/2005
Purchase Price: $365,000
MLS# 2406099
OLP: $347,900
LP: $337,900
Sold: 11/27/2007
Sale Price: $309,900
Pre-commission loss: $55,100 (15%)
On an unrelated note….is anyone as annoyed as I am that they are putting a poor teacher in a Sudanese prison for 15 days because she named a teddy bear Muhammed?
I am started to think we need to increase bombing campaigns to give some of these countries something else to do with their time.
BC Bob,
I was sitting on the steps at Broad and Wall today right under the statue of George Washington eating my lunch. I pass through that area a 100 times a year for what seems like forever and the energy and architecture still blows me away.
820 Passaic Ave, Linden
(short sale)
Purchased: 11/8/2006
Purchase Price: $337,000
MLS# 2427965
OLP: $278,975
LP: $258,957
Sold: 11/29/2007
Sale Price: $259,000
Pre-commission loss: $78,000 (23%)
Grim that is the house I posted last night on my old block.My numbers were 350 purchase 300 sold so works out the same.
2 The Arbors, New Providence
Purchased: 10/2/2006
Purchase Price: $405,000
MLS# 2403527
OLP: $419,900
LP: $399,000
Sold: 11/29/2007
Sale Price: $399,000
Pre-commission loss: $6,000 (1.5%)
That was # 277
1 South Locust Lake Road, Hope
(REO)
Purchased: 12/17/2003
Purchase Price: $290,000
MLS# 2344781
OLP: $389,900
LP: $299,900
Sold: 11/27/2007
Sale Price: $245,000
Loss: $45,000
Just a note, at 15% below the 2003 purchase price, this is one of the deepest discount properties I’ve seen yet.
313 Ohio Ave, Pohatcong NJ
Purchased: 8/3/2005
Purchase Price: $305,000
MLS# 2446277
OLP: $304,900
LP: $299,000
Sold: 11/29/2007
Sale Price: $281,500
Pre-commission loss: $23,500 (8%)
38 Bonn Place, Weehawken
Purchased: 10/22/2004
Purchase Price: $454,000
Sold: 6/25/2007
Sale Price: $830,000
Pre-commission gain: $376,000 (83%)
Tax on capital gain: $0
23 Regency Place, Weehawken
Purchased: 11/18/2004
Purchase Price: $1,500,000
Sold: 9/10/2007
Sale Price: $2,325,000
Pre-commission gain: $825,000 (55%)
Tax on capital gain: I don’t know but I wouldn’t mind paying it after that gain
It’s not about how wealthy this area is. All the towns rose together and they are all going to fall together. Depending on how much money they make, people will optimize their amount of house that you can afford with school district, etc.
When people who bought 5 years ago paid practically half the amount and have the same education level and job status, we’re just not doing it. Born at the right time is a great way to put it.
That’s what has happened here and the scales have tipped. It doesn’t matter where you are on the ladder. The person making over a mil a year is just as reluctant to buy right now the person making 75K.
“All the towns rose together and they are all going to fall together.”
I disagree. Some areas are getting hit a lot worse than others.
Posts 286 & 287 show that some places are doing ok.
These just keep getting worse and worse.
Folks, these are all off today’s hotsheet.. One day of sales. There is no cherry picking going on here.
39 Port Colden Road, Washington Twp
(REO)
Purchased: 8/26/2005
Purchase Price: $235,000
MLS# 2375419
OLP: $209,000
LP: $169,000
Sold: 11/19/2007
Sale Price: $169,000
Loss: $66,000 (28%)
288, i hope it is not too personal. i recall you just sold your home. when did you buy?
Grim,
I cherry picked 286 & 287 from a list I posted yesterday. That list had every sale (except $1 sales and between family) from last 6 months in which previous sale took place from 2004 to 2007. Not a single comp killer.
How do you explain that?
Pre,
I’m picking these off today’s hotsheet. I’m only halfway through the 108 sales that were logged in *today*.
I’ve posted 11 short sales, reos, and losses out of 108 sale listings on GSMLS.
More than 10% of the sales listings logged in today are showing distress, and I’m not even done yet.
Grim, why no comp killers from Hudson County?
I checked out some buildings today that I passed on when I was looking in 2005 for new construction condos to flip.
Places I thought were overpriced back then have been flipped for huge profits this year.
Grim,
I do the same; just grab them off the hotsheet. I remember when the Sold column prices were always red (sold above asking).
Seems every sale is a lowball excluding the ones where the home was completely renovated or knocked down and a new home was built.
Pre,
Are the ones you listing the original structure?
Back to the Ranger game…
grim, i randomly put a few of them from these comp killers to google map. most of them are either on busy street or shaddy houses in expensive area.
Rich in NNJ,
Yes. The data source I use discloses when home has been substantially improved or is foreclosure.
I included these disclosures in the list I posted yesterday.
Cause Hudson County is Bubble Proof you lucky bastard. Now keep ionvesting!
pre,
Because I don’t have access to the Hudson County MLS. I only pay for GSMLS and NJMLS.
I don’t do nearly enough business in Hudson to bother paying for yet another MLS system.
Bi #277 was a real nice house on a quiet street,lived there 10 years.In country but
the decline is real for my area.
I’d pay for Monmouth/Ocean before I’d pay for Hudson. Last on the list would be the Middlesex MLS, even though lots of folks here are interested in that area.
#296 bi: Sure you did. We are to believe they are all on busy streets or shady houses. You just cannot admit that prices have, can, will, and are going down.
1091 Ash Drive, Mahwah
(Short Sale?)
Purchased: 9/15/2006
Purchase Price: $367,500
Currently active, listed as:
MLS# 2439202
Original List Price: $369,000
Current asking: $334,000
DOM: 92
(9% below purchase price)
#292 pret: How do you explain that? Assuming your information is accurate, I would explain it simply by saying it has not happened there yet.
But if prices are down 10% in Edgewater, since Oct of 06, they will certainly come down in Hudson county.
#303 Oh grim its probably on a busy street.
Done with today’s sales, 11/108 sales were distressed, about 10 more were a few dollars above original purchase.
Moving on to today’s price reductions…
#287 pret: God Bless him/her, but why anybody would pay that kind of money in Weehawken is beyond me. Weehawken!!
792 Park Ave, River Edge
Purchased: 9/20/2006
Purchase Price: $405,000
Currently active, listed as:
MLS# 2438705
Original List: $422,000
Current Asking: $377,000
(7% below purchase price)
http://www.marketwatch.com/news/story/montana-investment-fund-sees-withdrawals/story.aspx?guid=%7BF0D0A48E%2DC629%2D411D%2DB67C%2D30AB7D5D8BA3%7D&dist=hplatest
Montana fund sees $247 mln of withdrawals
Florida’s investment woes spark subprime fears in other states
306 21st Street, Irvington
(REO)
Purchased: 4/14/2005
Purchase Price: $140,000
Currently active, listed as:
MLS# 2448943
Original List: $98,500
Current Asking: $79,900
(43% below purchase price)
#276 gary: Why wouldn’t they change in our favor, they changed before, guess you were too young to remember the last down turn.
And if all is well as you seem to believe, why is all that inventory out there in every price range. Where are the buyers Gary?
291 bi, no personal feelings here.
We bought in 2001 and we just sold.
We sold for the 2004 comp plus a few %. We did not get what my neighbor got in summer 2005 with the same unit, about 8% less.
We did not even list at the 2005 comp, never mind 10% over the 2005 comp which is what many sellers are still doing.
Would we have made more money if we had sold in summer 05 like our neighbor? You bet. But that’s life and we choose to live in reality.
We were the last on the market and we were off in a few weeks.
There were homes in my development, just as desirable, sitting for months before us and no signs of going anywhere now. Why? They are priced too high.
This is the worst hotsheet I’ve ever seen.
Folks, I’ve looked at almost every single daily hotsheet from GSMLS and NJMLS this year. I spend at least an hour and a half each night looking at the listings. I look at tens of thousands of listings every year.
It’s been bad before, but never this bad.
14 Fernwood Road, Livingston
(What the heck were you thinking?)
Purchased: 1/22/2007
Purchase Price: $995,000
Currently active, listed as:
MLS# 2430585
OLP: $995,000
Current asking: $899,000
(10% under purchase price)
#270 gary: The with all due respect you are not talking to the right people.People in the know, people actually conducting the business, the traders, bankers, sales people.
175 Parker Ave, Maplewood
(REO, HSBC)
Purchased: 12/16/2004
Purchase Price: $490,000
Currently active, listed as:
MLS# 2445181
OLP: $476,500
Current asking: $441,900
(10% below 2004 purchase price)
#270 gary: Looks like you are driniking the same kool-aid as pret. ” This is the NY area, the talent the energy, the wealth,all will be well, its just an inventory problem.”
Next you will tell me, that wealthy people will buy their unemployed Ivy League graduate kids 700K condos.
Sorry I expected a little more from somebody who is actually form this area.
3b,
It’s shaddy, not shady. You know, as in fishy.
———-
Pre,
What data source do you use?
———-
Grim,
Yea, it’s pretty wild. I didn’t expect it to be that bad this quickly.
Of course it’s not as BAD as Gary would hope…
#267 mike: Forget it, gary has gone over to the dark side.
I’m done for tonite, this is just plain ugly.
My wife made cookies and frankly, I’d rather eat cookies then spend another minute sorting through this mess.
#264 gary: Guess we read different periodicals, as the ones I have been reading say the exact oppopite about NYC and its suburbs,including north Jersey.
Pret glad to hear hudson county bullet proof.Born & raised there.Worked RE back in 80’s in hudson cty.We thought the same thing, I was young like you.I was wrong & last time I went to visit mom the empire state building was in the same place & we got killed.Be careful guy,don’t buy save, those deals dry up very fast.Yes prices do go down on the gold coast.We called it that to.Sorry to say I don’t have old numbers for you but it can happen , it did & take from an old hand it will.Chi Fi was in grade school when I went to college so no graphs or numbers. Just been there done that be smart listen.
Gary [279],
Next time, knock on my door, corner of Wall and William. I need to hit you over the head with a 2×4, at least a Go-Go-Lak kick to the head.
JB,
You are as hot as a pistol. Pretty soon I may have to tie my boot laces.
pre,
Did you read R’s post[NO BIDS]yesterday regarding Hoboken?
#323 BC Can I help? I am on the corner of Liberty and Broadway.
BC (15)-
“The Stadium has been delayed. It’s quite shocking to local officials, there was much more contamination in the ground than anticipated.”
The real contamination will be when the Red Bulls hit that field.
I tried to name my soccer team Hooligans.
It was rejected by the club and the league.
Eventually you get what you deserve, not what you hope, dream, pray or wish for. Mr. Market does not give a hoot. Cycles come, cycles go. This one will be no different. Remember, it was not long ago, the nasdaq was the new paradigm. The Dow? Who cared, that was old school. Former plumbers and electricians were telling me that WB had lost it, he was not invested in tech. He was washed up, insignificant. Down 10%? No problem, just a correction, double up. Down 20%? No problem, triple up. Down 30%? No problem, take out a hel, buy more. Down 50%? I’m f*cked, margin call. What do I do now?
Markets giveth and taketh. This market gave much more than anyone thought possible, thank you. On the flip side, it will take back more than anyone can imagine. Buckle up, it’s the first few miles of the Indy.
Clot,
I finally uploaded the video of your last game..
http://youtube.com/watch?v=jxHKcfUO7yk&feature=related
“#323 BC Can I help? I am on the corner of Liberty and Broadway.”
3b,
Yes, tag team. By the way, I probably see you on the Path every day?
Vodka (39)-
I have watched a union electrician client of mine-through constant continuing education- come 4 units away from a degree in electrical engineering, all while consistently raising his pay grade and never missing a day of work.
He now has 35% equity in a nice condo, no debt and his choice of projects.
312#, i would think now it is the better time to trade up. in 2005, you would sell more but you ended up pay more. besides, if some good ones came out, 10 people lined up before you. acctually i like this market better since it allows you to think and make a selection.
BC (41)-
Next NJ REReport get-together should be in Harrison.
Perhaps after a few toddies, Grim can demonstrate the urban pentathlon to us. :)
I’ll bring the soccer ball.
And a pair of nunchuks.
314#, they might hit a lotto.
Frank (49)-
“FED needs to raise rates by 100bp now!!!”
That should make for a fun day in commercial paper markets.
The world according to Ben, from Bloomberg:
Bernanke Says Fed to Judge Market `Turbulence’ Impact
Federal Reserve Chairman Ben S. Bernanke said volatility in credit markets has “affected” the economy’s prospects and policy makers must decide whether the risks between growth and inflation have now shifted.
“The outlook has also been importantly affected over the past month by renewed turbulence in financial markets,” Bernanke said in a speech in Charlotte, North Carolina. “The committee will have to judge whether the outlook for the economy or the balance of risks has shifted materially.”
…
“The combination of higher gas prices, the weak housing market, tighter credit conditions, and declines in stock prices seem likely to create some headwinds for the consumer in the months ahead,” Bernanke said. “Continued good performance by the labor market is important for maintaining the economic expansion.”
Household spending data “have been on the soft side,” Bernanke said. “The committee will have considerable additional information on consumer purchases and sentiment to digest before its next meeting.”
From the WSJ:
Bernanke Hints Rate Cut Possible
Fed Chairman Predicts
More Headwinds Face
Consumers, the Economy
By SUDEEP REDDY
November 30, 2007
Federal Reserve Chairman Ben Bernanke, in a signal he is open to cutting interest rates, said the latest bout of turbulence in financial markets may put more strain on the U.S. economy.
In remarks prepared for delivery last night in Charlotte, N.C., Mr. Bernanke said the housing downturn and related mortgage turmoil are adding “greater than usual” uncertainty to the economic outlook. “These developments have resulted in a further tightening in financial conditions, which has the potential to impose additional restraint on activity in housing markets and in other credit-sensitive sectors,” he said.
314#, check it in realtor.com. if that is not an error, seems to me that $995K is obviously overpaid for that 3bd/2.5bth in that part of livingston in Jan. this year. i wouldn’t consider at this listing price
grim, Buddy, I’m glad you’re finally seeing the light.
Over here in PA, I count the # sales to bank as % of total, as well.
About ten percent in some towns since early summer.
I gotta get a new hobby!
Ann (220)-
“It’s so overly dramatic, cry me a river. It’s just business.”
Hey, Ann, the offer’s open. I can make you a very wealthy person. You’d be better than 95% of the agents out there on your first day.
grim (235)-
“Give me a few minutes, I’m searing tuna.”
Dilettante. :)
spam (243)-
How about “Mandingo”?
Has a nice ring to it…
Pat I keep an eye on PA RE in Miford Wallenpaupack area as that is close to work for me.What part of PA are you looking at.
grim (293)-
These REOs are gonna come fast & furious now.
Hey, Mike, I’m an eternal looker down here in Bucks County, but my cousin was the EMT dispatcher out on Wallenpaupack for years.
Nice place.
Knicks!!!!!
grim (330)-
The Jets should try to bring some of those guys over here.
Newest real estate catchphrase:
Bring your checkbook?
Creampuff?
Pride of ownership?
No…
Back to the bank it goes.
A comical thing about the Arbors in New Providence is full size closet doors, which when opened, are about 12 inches deep.
grim Says:
November 29th, 2007 at 7:32 pm
2 The Arbors, New Providence
Purchased: 10/2/2006
Purchase Price: $405,000
MLS# 2403527
OLP: $419,900
LP: $399,000
Sold: 11/29/2007
Sale Price: $399,000
Pre-commission loss: $6,000 (1.5%)
Clot, do you ever play “Rate the Crappy Marketing Schemes?”
http://philadelphia.craigslist.org/apa/492574868.html
Why, I’ll take two! Wait a minute, how come YOU’RE not buying?
“Next NJ REReport get-together should be in Harrison.”
Clot,
I don’t know if a country boy, like yourself, could handle Harrison. They tend to get you all liquored up in that town, and then there goes Clot.
http://www.youtube.com/watch?v=_HDLdPJQFtY
Pat, [347],
My eyes are going. At first, I read; “Hey Mike, I’m an eternal hooker down here”. Gotta get glasses.
hhheeehhheeee…Yup.
Pat (353)-
When you’re trolling for buyer clients on Craigslist, it’s not an indicator that your career has shifted into hyperdrive.
Grim,
I am a little slow w/ the analytical skills,but I have a good memory, and I live and work in a small town. I don’t have to run histories I know them. I see these homes come on every day these reo’s are coming fast and furiously. I have a listing I sold and am in the process of negotiating a short sale. It s@cks. I thought at the very least he would get out with nothing I never dreamed it would be less than nothing. There are at least 10 short sales going on in my office right now either buyer or seller. Considering how small my office is that’s significant.
KL
You know, it wouldn’t surprise me at all if somebody fessed up to that around here.
The stuff that comes out on this board…well, you can’t make this sheet up.
Pat (347)-
“…but my cousin was the EMT dispatcher out on Wallenpaupack for years.”
That must’ve been action-packed. Motorboats, guns, too much to drink and a bad season for the Eagles sounds like a combustible situation.
kl (358)-
The short sale is your friend.
Is this possible?
NYK (4-10) 16 15 10 18 59
BOS (12-2) 27 27 28 22 104
ChiFi (362)-
Coulda been worse.
Rhyming How did that chemical peel on floors work out?
Pat yes it nice up there & taxes are silly low.
http://www.realestateabc.com/homeguide/reo.htm
Re REO for those interested.
Mike,
Floor came out beautifull. Essentially the good spots came out great and the bad spots looke 100% better. Not really a chemical peel, its like a power scrub & finish Comes with a 5 year warranty. My girlfriend stop by as they were leaving and she’s having it done next week. I had also worked out a refferal arrangement with them.So good for me.
I guess we have a lot of late nighters tonight watching the Dallas/Greenbay game??
KL
302 3b Says:
November 29th, 2007 at 8:19 pm
#296 bi: Sure you did. We are to believe they are all on busy streets or shady houses. You just cannot admit that prices have, can, will, and are going down.
Am I missing something here? When these houses were sold before they were on the SAME street. Also, they would be comps for similar homes in similar locations, which I assume would eb busy streets. No?
302 3b Says:
November 29th, 2007 at 8:19 pm
#296 bi: Sure you did. We are to believe they are all on busy streets or shady houses. You just cannot admit that prices have, can, will, and are going down.
Am I missing something here? When these houses were sold before they were on the SAME street. Also, they would be comps for similar homes in similar locations, which I assume would be busy streets. No?
Christmas shopping.
Grim, thanks for all those listings. Just amazing. Hope you enjoyed those cookies.
287, 288 pretorius
I assume no money at all was invested in improvements on those properties.
Rich in NNJ,
Source is through Monmouth County Tax Board site. Link is on this site’s homepage.
Mikeinwaiting,
I’m not bullish on Hudson County home prices in 2008. That’s why I sold everything except my primary residence. I’m bullish compared to the swarm of bears on this site. I posted the Weehawken transactions because I did the work to find them, and I was tired of all the one-sided comp killer posts.
Njpatient,
Can’t know for sure how much $ was invested. I didn’t visually inspect the interiors before my post. But feel free to do that and let me know what you find. Seriously, the source I use is very good about noting when substantial improvements have been made. I disclosed this note in my post yesterday.
BC Bob,
Tried to find the post but couldn’t. You need to give me a better description. I did notice that chifi had numerous posts about youtube videos though.
327 3b
I used to be on the same corner!
“Former plumbers and electricians were telling me that WB had lost it, he was not invested in tech.”
True, BC. Every two-bit just-graduated jacka$$ thought they’d written the bible on the new era and were officially twice as wise as Warren.
“Over here in PA, I count the # sales to bank as % of total, as well.”
Pat – are you an RE agent?
“Is this possible?
NYK (4-10) 16 15 10 18 59BOS (12-2) 27 27 28 22 104”
Only because Robinson hit a 50-footer at the buzzer
Pret – you’re getting cranky.
Unclench.
NJpatient, are you being a wiseguy?
Real estate agent.
Do I SOUND like somebody with the social skills necessary to act cordially toward a FB for more than a fraction of a second, let alone sell their home?
I know my limitations.
Heh