From the Wall Street Journal:
Manhattan Shrugs Off Housing Downturn
Associated Press
January 3, 2008 12:10 a.m.
NEW YORK — Amid a housing slump that’s plaguing the rest of the country, Manhattan’s residential real estate market finished the final quarter of 2007 with record average prices, according to two separate reports released Thursday.
Prudential Douglas Elliman said the average Manhattan apartment price, which includes cooperatives and condominiums, jumped 17.6% in the fourth quarter to a record $1,439,909 from the year-ago period, while Brown Harris Stevens reported a 34% increase to $1,430,514, another record.
The median also rose, but not as sharply. Prudential reported a 6.4% increase to $850,000, and Brown Harris Stevens said the median price gained 14% to $828,000. The median price is where half sell for more and half sell for less.
When the average price outpaces gains in median price, that typically indicates higher sales activity at the top end of the market, said Brown Harris Stevens Executive Vice President Jim Gricar.
Sales of apartments over $10 million more than tripled during the quarter, while closings at the ultra-luxury apartments The Plaza and 15 Central Park West averaged $6.95 million and made up 7% of all quarterly condo sales, Brown Harris Stevens said.
Many foreign buyers, capitalizing on a weaker dollar, are snapping up some of these high-end condos in the city, Mr. Gricar said.
“I had a friend in town from London last week who said the market here was like a big 50% off sale,” Mr. Gricar said.
Meanwhile, Prudential said price increases on two- and three-bedroom apartments helped to push up prices overall. Prices on two-bedrooms jumped 22.1 percent, while three-bedroom apartment prices surged 39.8%.
Prudential Chief executive Dottie Herman noted that as more families stay in the city, instead of moving to the suburbs, demand for larger apartments is growing.
However, being a small island with a growing population is Manhattan’s greatest advantage. Unlike other markets nationwide struggling with a glut of unsold homes, Manhattan inventory shrunk by 13.5% in the fourth quarter from the prior year, according to Prudential Douglas Elliman.
“Across the country, houses are being built and inventory increases,” Mr. Gricar said. “In New York, it’s the reverse story. There’s simply no inventory.”
Prudential’s report is based on 2,518 home sales, while Brown Harris Stevens’ report tracked 2,531 sales.
“I had a friend in town from London last week who said the market here was like a big 50% off sale,” Mr. Gricar said.”
And, all those Londoners aren’t looking to live in Joisey.
Londoners have their own problems.
From Bloomberg:
Persimmon Falls as UBS Says Mortgage Crunch to Crimp Home Sales
Persimmon Plc declined in London trading after UBS AG lowered its rating on the stock, citing the prospect that tougher credit conditions by U.K. lenders will crimp sales of new homes.
Persimmon, Britain’s biggest homebuilder by market value, fell 32.5 pence, or 4.2 percent, to 750.5 pence as of 10:41 a.m. in London. Charlie Campbell and Mark Stockdale, analysts at UBS in London, cut the stock to “neutral” from “buy.”
U.K. house prices fell for a second month in December, indicating that higher credit costs are stifling a decade-long property market boom, Nationwide Building Society said Dec. 28. Prospective homebuyers face pressure after house prices tripled in the past 10 years. Persimmon builds homes in England, Wales and Scotland, from apartments for first-time buyers to luxury penthouses and family homes.
“The credit crunch has squeezed mortgage availability,” Campbell said in a note today. “We think it prudent to take the view that mortgage availability does not recover in time for the key spring selling season.”
U.K. Banks Plan to Tighten All Lending This Quarter
U.K. lenders told the Bank of England they plan to reduce the supply of credit to consumers and companies in the first quarter, threatening to deepen the economic slowdown.
Banks curbed secured credit for households “materially” and cut debt to companies “significantly” in the past three months, the central bank said in a quarterly survey conducted from Nov. 19 to Dec. 12. They plan to pare loans to those borrowers further, the report showed.
From MarketWatch:
Mortgage applications down 11.6% last week: MBA
Applications filed for mortgages fell a seasonally adjusted 11.6% in the final week of 2007 compared to the prior week as interest rates nudged lower, the Mortgage Bankers Association reported Thursday.
Last week’s volume was down an unadjusted 20% compared with the final week of 2006.
The latest data on mortgage applications came during a week shortened by the Christmas holiday, the Washington-based MBA noted.
Applications to refinance existing mortgages loan decreased a seasonally adjusted 15.4% on a week-to-week basis, while applications for loans to buy homes were down 8.5%, according to the MBA survey.
The four-week moving average for all loans was down 9.0%.
From CNN/Money:
How They Got Housing Wrong
Experts thought 2007 would bring a real estate recovery – not the worst collapse on record. What does that say about forecasts of a turnaround in 2008?
Before you put much hope in forecasts for a 2008 rebound in the battered housing market, consider this: A year ago at this time many top economists were looking for that recovery to begin in 2007.
Instead, the year saw historic declines in nearly every measure of housing strength and home building, and left a trail of predictions from some of the nation’s top economists that look – at best – foolish.
Former Federal Reserve Chairman Alan Greenspan and his successor Ben Bernanke, after reviewing home sales and mortgage rates in fall 2006, were hopeful that the market had bottomed out.
“It may be too soon to say that it’s over. It may not be too soon to say that the worst is over,” said Greenspan in an October 2006 speech in Richmond, according to press reports.
In a November 2006 speech, Bernanke said he saw some “encouraging” signs in recent housing reports.
“Although residential construction continues to sag, some indications suggest that the rate of home purchase may be stabilizing, perhaps in response to modest declines in mortgage interest rates over the past few months and lower prices in some markets,” Bernanke said.
But those signs of life were short-lived.
…
By the end of 2006 those futures were pointing to real estate price declines between 5 percent and 7 percent in those markets, Shiller said. That ended up in line with the 6.7 percent annual decline in the October reading of S&P/Case-Shiller home price index, which was the largest drop recorded in that 20-year-old price measure.
“I’m not normally an advocate of market efficiency, but there’s something to be said when you’re putting money on the line with your prediction, rather than just talking,” he said.
Those futures today are far more bearish about future housing prices than most current economists – foreseeing an additional 4 percent to 14 percent drop in prices over the next year.
“I don’t have any reason to doubt those forecasts,” said Shiller, who does not make forecasts of his own because of his work on his price index and with the markets.
Other economists who had warned of a housing bubble still saw their late 2006 forecasts underestimate the problems that lay ahead.
“A year ago I thought a drop in prices was inevitable, but I didn’t know if it would be a bubble bursting or the air leaking out of the balloon,” said Dean Baker, co-director of the Center for Economic and Policy Research. “At this point we’re seeing a quick meltdown.”
Baker’s forecast for the drop in existing home sales to 5.6 million homes was essentially spot on. But he underestimated the drop in new housing starts: He forecast 1.7 million and they are on pace to come in at between 1.3 million to 1.4 million.
The problems in subprime mortgages were foreseeable, Baker said. He added that those problems are likely to spread to prime mortgages given to people with strong credit histories. And that could mean that Freddie Mac and Fannie Mae, which have relatively little exposure to subprime mortgages, could need a bailout despite stock sales that executives say have raised the capital they need to weather the storm.
“People still haven’t caught up with the fact that this is a larger issue for the mortgage market as a whole rather than just subprime,” said Baker.
“A year ago I thought a drop in prices was inevitable, but I didn’t know if it would be a bubble bursting or the air leaking out of the balloon,” said Dean Baker, co-director of the Center for Economic and Policy Research. “At this point we’re seeing a quick meltdown.”
[4]
Depends on one’s definition of quick. I do agree, it’s spiralling out of control. However, this will continue for longer than most can envision.
Compliments of The Boss;
Baby this town rips the bones from your back
Its a death trap, its a suicide rap
We gotta get out while were young
`cause tramps like us, baby we were born to run.
Unfortunately, “The Bubble Nation” Article underscores the “Real Problem”. Ponzi Come On Down!
The propaganda that the subprime debacle is not enough to derail an otherwise healthy economy fades into the distance when we see all the kings’ men, the Treasury, the Office of the President and the Federal Reserve banding together. Somehow this simple “crisis of confidence” has manifested so much momentum that our largest investment banks have to offer loan-shark deals, to hard capital sovereign countries, just to stay in business. The economy is sound they all say, it’s only a flesh wound – keep buying.
The embarrassment is that the (government sponsored) American citizens’ mandate seems to be to consume, regardless of increasing debt levels or ability to pay. Businesses have grown to believe that expanding credit will always get them through tough times. Their new game plan is to offset all the bad credit by loading up the more creditworthy to carry the load; in much the same way Citi diluted its junk. I have personally received hundreds of dollars JUST to keep lines of credit open and/or float any credit balance at zero interest till the end of 2008. This is a sign of desperate times and a failed paradigm.
The U.S economy has been made into a voracious credit pyramid desperately needing bigger bubbles just to stay afloat. This is the consequence of the illusion we have been sold – perpetual prosperity. Propping up asset bubbles with more fiat money ultimately threatens not more just inflation but a rapid deflation when the music stops. The dollar retracing the past 40 years’ growth is mainly due to the realization that financial engineering was accepted as organic growth. It wasn’t and the jig is up. The extent of that failed paradigm finally resulted in issuing mortgages like after dinner mints and showed just how desperate we have become to simulate (no T) growth.
Does anyone know of site similiar to this one that is FLA. specific.Bro wants Mom to buy house there I say wait a year or rent.
Going to need some hard data.I’m already doing research found some good stuff but if you have a site please forward.Here is a good one I read today .http://www.seekingalpha.com/article/58744-is-it-time-to-start-looking-for-a-bottom-in-the-housing-marketu they get it.
That didn’t paste right.I see we all have been reading the same stuff this morn from the postings.You guys might have read it already easy find on Alpha.
State Street Investment Chief Resigns After Losses (Update1)
By Edward Evans
Jan. 3 (Bloomberg) — State Street Corp., the world’s largest money manager for institutions, said the head of its investment unit resigned after the company set aside $279 million to cover legal costs from losses on subprime mortgages.
William Hunt, chief executive officer of State Street Global Advisors, stepped down yesterday, the Boston-based company said today in a filing with the U.S. Securities and Exchange Commission. James Phalen, 57, was named interim CEO of the unit, which oversees about $2 trillion.
State Street in November replaced Paul Greff, head of fixed income at the fund unit, amid losses caused by the collapse of the subprime market. The investment unit manages about $200 billion of fixed-income assets.
“We have reviewed the actively managed fixed-income strategies at State Street Global Advisors that contained investments backed by subprime mortgages,” Chief Executive Officer Ronald Logue said today in a statement. “We have established this reserve to address legal exposure and other costs relating to these strategies.”
Net income will be between $3.42 and $3.45 a share and return on equity will be about 13 percent in 2007, Logue said. Operating profit will be between $4.54 and $4.57 a share, he said. That compares with an average estimate of $4.19 a share, according to a survey of 18 analysts by Bloomberg.
State Street faces at least three lawsuits filed by clients who accused the firm of breaching its fiduciary responsibilities as a fund manager. Each claims that investment strategies sold as low-risk led to substantial losses because of investments in mortgage-backed securities.
Logue said the company will defend itself against “inappropriate claims” stemming solely from changes in market conditions.
Title Missing From (6)
From Seeking Alpha:
Pedaling Prosperity Propaganda: Rhetoric of Depression?
Of course Manhattan keeps going up even on Gossip Girls it is clear to see the one poor kid in class is so broke that he has to live in Brooklyn.
Anyone else need to look up “Gossip Girls” to understand that?
I guess I don’t watch enough TV, or hang out with enough teenage girls.
I really hope you have a daughter, but even that doesn’t explain why you know so much about that show.
Bloodbath in Winter 2007 Says:
January 2nd, 2008 at 10:39 pm
Chifi, were you the one who earlier in this thread talked about loading up on bonds? Not sure who it was, but curious why bonds, and why now. it’s probably too late to ask this … will just try tomorrow
BB: bonds come in all sizes and flavors….there is not just any one way to answer that question….also, your AGI will dictate “To MUNI or Not To MUNI”…some of the best deals are based on the selloff in this area…..you can check some closed-end stuff trading at discounts….
DO YOUR OWN RESEARCH OR SUFFER ACCORDINGLY…..ANY QUESTIONS, PLEASE ASK YAN
I have a few daughters, it is the best show since the OC went off the air, OMG.
afe Says:
January 2nd, 2008 at 11:13 pm
no in middletown..chifi had suggested at some point on here.
afe: glad you had fun…nothing like bringing a suitcase for your money and leaving with an empty suitcase
My personal financial advice, try to keep the bar tab in line….it makes the process go more smoothly……it is also a bad thing thing when you spend more on liquor than food.
12
i only some what knew the reference because of the huge billboard in times square. but i think the “John’s” should identify themselves more clearly so we know where the schizophrenic posts are coming from.
I was secretly wishing that someone in the gift giving queue was going to give me a certificate to Nicholas versus the unmitigated parade of useless crap that was foist on me.
I was the nut talking about bonds back in August. In state muni’s have a very favorable TE yield right now on a historically basis, some short term IG bonds like CIT or Cap One or Citi have a lot of default risk priced in but only going out one to two years you should be safe and there are some interesting convts or pref’s of the financials that after the YE numbers come out may be worth sticking your toes in. That plus until the next rate cut some banks still have 5% FDIC CD’s.
If you have a pile of cash and you are not buying until 2009 or 2010 and you don’t want the downpayment in stocks you won’t have the deal you had in 2007 where you could leave it in a ING/HSBC on-line FDIC high rate money market. Pretty much in Jan you need to get some six month to two year rates locked in as it looks like 99.9% rate cut end of month and 50% rate cut at the meeting after that. 3% MM rates in the summer will have you kicking your self when you could of locked in 5% in Jan. On FDIC CDs if you buy them through a BD you can sell on open market with no penalty and if rates fall they will actually be worth a little more than you paid for you when you sell it.
I am 100% for stocks long term. But if that nut is for a downpayment and you are sitting on the sidelines waiting for a bottom don’t get caught with a crap yield cause you could not pull the trigger given Mr. B telegraphed these cuts from all the way back in August.
dreamtheaterr Says:
January 2nd, 2008 at 9:09 pm
Chifi, I think you misconstrue how an index fund or an ETF might be being used by us mediocre investors. I am an agnostic indexer; I use a combination of index funds, ETFs, and actively managed funds BUT with certain criteria: No loads, low expenses, no 12b-1.
……but that again puts us into the circle of active versus indexing, which is something you and I should respectfully disagree to, at least on this RE blog.
Yan: We can “agree to disagree”, but personally I don’t appreciate the passive-aggressive tone of your post.
First, my original post was intended as a joke to needle you, so I was surprised that you reacted so strongly…fine.
Second, I bristle at your assertions, because you are not really responding to my comments. You constantly shift the focus away from investment strategy and toward aspects of implementation, such as loads, fees etc…..if you think they are intractably intertwined, fine, but I would strongly defend that they are not.
Third, I find the way you portray investing offensive in the same way clot would have attacks on realtors offensive….the basic implication is that the act of investment advice is useless to you in whatever form it may be offered regardless of value added……
Finally, I would submit that you are the equivalent of a tech consultant with a huge and high paying gig at Philip Morris who constantly rails against cigarettes and the people that sell them….the height of hypocrisy.
As a “mediocre investor” I sleep better at night knowing that my portfolio will perform in line with the market indices than if it were in the hands of an active manager.
(4)
Those futures today are far more bearish about future housing prices than most current economists – foreseeing an additional 4 percent to 14 percent drop in prices over the next year…
The CME futures which correctly predicted the decline in the S&P/Case-Shiller home price index should be cited more often, not the cookie cutter chief economic officers with no skin in the game. If history repeats itself then expect an additional 9-10% price drop for 08.
Am I the only one not excited about dollars earning 5% for the next few years? I’d probably be better off stuffing my mattress with Euros.
The Europeans looking to invest in New York should remember Japan’s experience during the last boom.
From NYTimes, 9/12/1995
http://query.nytimes.com/gst/fullpage.html?res=990CE1DB113FF931A2575AC0A963958260&sec=&spon=&partner=permalink&exprod=permalink
The Mitsubishi Estate Company of Japan plans to walk away from its almost $2 billion investment in Rockefeller Center, the Hope diamond of world real estate.
…
Mitsubishi’s sudden decision to exit Rockefeller Center is the most striking in a string of recent retreats from the trophy properties stretching from New York to Honolulu that Japanese companies acquired during a real estate binge in the 1980’s.
“Am I the only one not excited about dollars earning 5% for the next few years?”
Stan,
You’re not alone. No need to go into a tirade, I have said enough regarding the topic.
Special purpose ETF’s by themsleves are often not a good investment, where the real value lies is in their hedging capabilities. A company can take an ETF tied to RE or even Gas or Oil and through listed equity options transactions apply an inexpensive hedge without the bother of the futures markets. For instance Amex just created a listing for Trading of Units of the United States Heating Oil Fund, LP and the United States
Gasoline Fund, LP, now a oil delivery company or a small gas station chain can literally figure out the hedge they need an go online an buy an inxpensive put or call. You could even do that an hedge your own heating oil costs.
If you are keeping a certain amount in cash then yes 5% is exciting. I remember once doing an audit and a client had 200 million in cash. A little further research showed she wanted 10% in liquid investements and had an almost two billion portfolio. If she got 3% or 5% on that cash it is a big deal. One of my many many jobs I had in my life was managing a bond portfolio for a year or so, this aint 1992, 1994, 1996-2001 where you just went long this is a kooky market so there is pretty much no way to break 5.5% without taking on a lot of risk. For the stars to align and for RE to really fall in 2008 we need a recession and a stock and commodity market meltdown and then cash will be king and there will be real bargains in 2009 in RE. If you think that will happen 5% is good. I remember in 1992 I had a friend who started at the fed back in 1987 and did not get paid much and had a lot of restrictions on investments and keep it all in T-Bills when everyone one got wiped in the stock, RE and Junk Bond Collaspe of 1987 to 1992 his cash was king and be basicaly went from an apt to a mansion in 1992. Will history repeat, who knows.
“If you are keeping a certain amount in cash then yes 5% is exciting.”
If one gets excited about negative real returns.
#22
You mean you don’t already? I just got my Irish Citizenship this past week. The way the US economy is going I just may have to move the family to the EU soon.
So if inventory in Manhattan is decreasing, and the market there continues to stay strong, doesn’t that mean that houses in prime time NJ commuting towns will continue to maintain their values (at least relatively to other areas)?
#29,
I think so. A strong Manhattan RE market only helps the NJ commuting towns. The relative value placed on my house is in direct correlation to the affordability of the Manhattan market. All of the people on my block were Manhattanites who decided either the prices were too high for the space they wanted or that they needed a house to live in. It can only help if the $1 million apartment in the city barely buys them a crappy 2 bedroom when they can get 4 bedrooms and 2 1/2 baths on a main line. I think Manhattan will buckle under eventually but as long as it stays strong train towns out here have a better chance. There is a house a few doors down from me that is for sale now. It is very similar to my house and so I am anxious to see what it goes for. Right now it is listed for ~25% over what I paid for my place a year ago. Strange times we live in.
#7 Mike: Thanks for posting this (the link did work for me, not sure why). The best quote: ‘And real-estate brokers who live to sell, promote, and market are constitutionally disinclined to hear anything but good news.’
This reminded me of the recent poster in this blog who claimed that the real estate woes were being caused by the negative press coverage. If so, then the pen is mightier than exotic financial instruments!
From Big Builder website:
http://www.bigbuilderonline.com/industry-news.asp?sectionID=363&articleID=634675
Re: I think so. A strong Manhattan RE market only helps the NJ commuting towns.
Using that theory the Bronx is the next Harlem!! NJ is way down the food chain when it comes to hip euro trash crash pads.
I did not know that the Levitt company (as in all the Levittowns) was still in business, but they were until just recently:
http://video.on.nytimes.com/?fr_story=5567a861813bf8e9a2a3da636567b0a3661a329e
If link doesn’t work, just check front of NY Times page.
Cash’s three puposes for me are so you can assess funds in a down market without selling stocks/commodities at the worst time, have some money on the side lines in case a buying opportunity or special situation presents itself or you are very close to a short term goal so as buying a house or paying for college.
You still should manage that money to get as much as possible with safety and liquidity. 3% versus 5% is a big deal. Take Chase which has a trillion dollar BS, they always have a spare few billions laying around in cash and the treasury function is extermely important, doing a riskless colalteral sec lend on a gvt issue just to get a few extra bps may not be much to you but in the multi billion world it is huge.
#28
Now that you have your Irish Citizenship, you can apply for Mexican as well.. just in case, you’d like to leave your options open!
#34
I read that article on the commute this AM. That’s sad, a lot of hard working people’s deposits gone POOF…
Herring123 Says:
January 3rd, 2008 at 9:08 am
As a “mediocre investor” I sleep better at night knowing that my portfolio will perform in line with the market indices than if it were in the hands of an active manager.
Fishman: precisely why I posted the comment last night about did the portfolio manager “cheat”? There is nothing worse than Beta being passed off as positive alpha. The idea being that you are being sold that your investment is correlated with a certain risk, but in reality your portfolio manager cheats (e.g., style drifts) so you appear to outperform, when in reality you are being bait and switched.
The upshot? You are intending to diversify to reduce risk and maintain return, when in reality, you are more concentrated (hence correlated) than you would have otherwise targeted.
I am please when someone has suceeded in performing well (i.e. Yan), but when you investment absolutely blows away an index (U.S. Large Cap Growth returning 25%+ in 2007), some spanner is goofing around…..
BTW – I don’t give a crap what the publicly disclosed documents say about the portfolio, my colleague used to be a mutual/hedge fund CPA, and he knows all the tricks……
I agree with John. The outer boroughs of NYC are already experiencing quite a bit of pain, same as all of NJ. The pain spreads concentrically, and is still more evident in Union or Middlessex than in Bergen or Essex. Manhattan has a number of particular traits that protect it a lot better than ANY NJ location. However it is a mistake, for example, to think that people emigrating from Manhattan to Northern NJ are going to compare prices between both places as if they were comparable. I mean, compare the charm of Greenwich Village to that of Secacus. Also, who has ever overheard two europeans at a pub swooning over the possibility of living in Rutherford or Fair Lawn? It’s their loss, I guess, but the point is that the fantasies and desires that, to a certain extent, may shield Manhattan prices are not at work anywhere else.
They went bankrupt and the SOBs were advertising Bonds in $100 increments for “investors” with a high yield direct from their company in Newsday back in the late summer and fall complete with a cut out application and all you had to do is attach a check. I wonder how many old folks sent checks in thinking Levitt is a safe company and meanwile they were now a Florida home builder on the verge of collaspe. Now that they are under all those old folks who may have been confused thinking it was some type of risk free CD are out the money.
okok back to serious matters.
so my friend claims the guys at GS had Gossip Girl going on the plasmas.
also- why is it in the show- they always portray dan as living in “williamsburg” yet the pan shots are always of the brooklyn bridge and what looks to be dumbo. and aren’t dumbo lofts getting ridiculously expensive?? between his loft and his dads enormous studio, how does that even remotely qualify him as being poor? GG is misrepresenting bk as being affordable.
dan should live in white plains and take the metro north to school everyday. that would at least justify the shots of GC they always show in the commercials.
okay on that note i love GG. xo xo
Re Foreign Buyers:
If the dollar is going to go lower or at a minimum not increase any time soon, AND prices are going to decrease isn’t kind of stupid to buy now?
CB in sj 34 Those guys should be shot & then hung.On top of that John has them screwing more people over with bonds.I wounder who was in charge over there.Lets sic Cuomo on them.
HEHEHE Nobody said they were smart.But at 50% of they can’t get hurt to bad either.
I don’t think you can get your Mexican citizenship from a grandparent like you can for your Irish citizenship, but I could be wrong. Either way, no Mexicans in my family tree so I am out of luck.
Again, I am describing factors that are in play for my town (Secaucas it is not). Young professionals move to my town mostly from NYC. Every single person on my block that has moved in the last 5 years has looked at NYC prices (where they were living) and then compared them to what they could get in a nice train town. I don’t need to speculate about what moves houses in my town because I see it with my own eyes. You don’t need Europeans to price up places in NJ, you just need them to move prices up in NYC and thus the flow of money will move outward to the burbs.
ChiFi (17)-
You don’t define lobster poached in a pot of butter as being useless crap? :)
ChiFi (19)-
“…the basic implication is that the act of investment advice is useless to you in whatever form it may be offered regardless of value added……”
And, it’s disingenuous for someone who feels investment advice is neither useful nor needed to be in pursuit of such a plodding, self-defeating strategy. The idea that one can achieve a niggling return- without the aid of advice- is akin to what the owner of the Pirates said to Ralph Kiner when he asked for a raise:
“Son, we can lose 100 games without you.”
Gossip Girl, Hah.
My wife makes me watch the show. Okay, Okay; I know you are all going to say, “Surrrrrre!”, so I must confess it is partially true. That being said, can anyone tell me why the VanderRich lady had to choose between Dan’s dad and getting married to that creepy dude. She could have just said no the the engagement, right? But I guess the theme of being torn between love and money would not develop into a deeper emotional plot.
Any ideas? XO XO
Herring (20)-
Then you are at the mercy of a cruel, capricious master.
All disclaimers.
BC (27)-
Like owning used Charmin.
Baseball on the coldest day of the season so far is the only thing that will carry me to pitchers and catchers report…..
#45 Mike: One can argue that layoffs on Wall St will affect Manhattan reale state prices, which in turn could affect NJ commuter towns.
NJ communter towns may suffer less than other areas, but they will certainly suffer.
Economic slow down/recession, will also ofg course have an impact.
grim, i thought contributors to this blog talked about RE and related finance….GOSSIP GIRL?
what’s this world coming to?
Just for kicks – I had to look this up…
http://www.cwtv.com/shows/gossip-girl
you have got to be kidding people!!!!
clot: one of the gifts I gave this year was METS MONEY…..a HUGE hit!
FYI – it was to the brother of the SNY studio guy Matt…..
GG (41)-
I have a 14 y/o daughter who forced me to watch GG a couple of weeks ago.
I think I lost about 15 IQ points; and I’m pretty sure I sustained permanent damage to my cerebral cortex. Talk about a POS…
With respect to pret…..I am surprised at the strength of the Manhattan market.
I will say though (as noted by some), absent property owners are bad for the city, as they turn neighborhoods into ghost towns for the majority of the year, and make small businesses in those areas unsustainable.
Clotpoll Says:
January 3rd, 2008 at 11:20 am
GG (41)- I think I lost about 15 IQ points; and I’m pretty sure I sustained permanent damage to my cerebral cortex. Talk about a POS…
clot: I don’t really watch TV anymore, but the stupidest show and most effective human fly-paper is that moron-fest Deal or No Deal. Nice silicon though….
It was a lifestyle choice, that good looking photo guy from Brooklyn with a washed up band and a beat up car can’t provide the lifestyle. However, it is creepy that the bedhopper and my favorite GG are to be under the same roof. Also what is with that guy taking the fall for the key, as if!
My wife makes me watch the show. Okay, Okay; I know you are all going to say, “Surrrrrre!”, so I must confess it is partially true. That being said, can anyone tell me why the VanderRich lady had to choose between Dan’s dad and getting married to that creepy dude. She could have just said no the the engagement, right? But I guess the theme of being torn between love and money would not develop into a deeper emotional plot.
Any ideas? XO XO
I’m proud to say today is the first time I ever heard of the Gossip Girls.Thank the lord after that trailer, moronic dribble!
http://www.cwtv.com/thecw/gossipgirl-uppereastside
in my second life I can afford a GG apt on the upper east.
XO XO
ChiFi (57)-
Obviously, you have not viewed the intellectual train wreck known as America’s Top Model.
I’m pretty sure Tyra Banks is a bot.
No worries, real TV is back on 1/6. The new season of The Wire premieres on HBO.
mike (59)-
“Thank the lord after that trailer, moronic dribble!”
I think the word you meant to use is “drivel”… :)
yeah , GG always leaves a few holes and questions here and there. like that episode with Nate’s dad. Why do they call him the captain? An investment banker with a cocaine problem (thats so 80s!) and what self respecting banker makes a pitch (to blair’s mom) with the promise of a family heirloom?? wouldnt she have made multiples of that if she went with a bulge bracket instead of a boutique (which i’m speculating is the type of firm “the captain” runs) ??
And then there’s the guy from the hedge fund wooing Blair’s mom. Why couldnt they have updated it and made him a partner from a PE firm?!
Anyways- guess this is why ppl have this love hate guilty pleasure thing for GG. Xo Xo
Anyone know what happened to this POS in Brigadoon. It was on the market for months. Looks like listing expired and All Towne pulled their lawn signs.
MLS# 2420867
If it weren’t for Comedy Channel I wouldn’t watch TV either. But by pure coincidence I saw this in the Daily Record online immediately after reading the comments about Deal or No Deal…
http://www.dailyrecord.com/apps/pbcs.dll/article?AID=/20080103/COMMUNITIES10/801030340
Also what is with that guy taking the fall for the key, as if!
Ohhhh, that is the plot thickening.
And what is with everyone on here bashing the show based on previews/trailer. I guess you all read Playboy for the articles right:)
Also, I am in my late 20’s which, for me, makes it “less creepy” than watching it if I was much older. Also “less creepy” would apply to having teenage daugthers and like to spend some family time with them:)
By (65)-
Expired on 1/1/08.
#57 chicago,
The woman who cuts my hair is the mother of one of the Deal or No Deal models. Very sweet Italian woman from Elizabeth. She keeps a picture of her daughter on the mirror. Holy smokes..she is a beauty. I believe her name is Marisa.
Clot Immediate IQ loss after watching trailer.Yes you are correct.You see its true
there is the proof.
I would like to look in Marisa’s briefcase! Just cause Howie doesn’t like to touch them doesn’t mean the rest of us have that phobia.
If the foreign speculators were to exit the Manhattan market, I wonder what would happen to prices.
There is a large luxury apartment building near my mother (in midtown East).
I had always wondered how they could manage to stay afloat with so many unlit windows at night.
Then I figured out that these apartment were probably purchased by foreign speculators who aren’t there most of the time.
Since most Co-ops make it difficult to rent out apartments, these are generally not income producing investments.
I can’t wait to see gen Y as adults…and gen Z
by then, the pool of baby boomer and gen x money will have dried out leaving them without the funds necessary to keep the same standard of living they had as kids
http://en.wikipedia.org/wiki/Gossip_Girls
in case you need to catch up.
Hi, can anyone get me the street address of GSMLS # 2460687 ? This is in Pway.
Foreign speculators often include the rich from countries such as Venzula and Columbia. Many of my old clients of those countries had apts in NYC they only visit 1 -3 times a year with lock box bill pay features at a nearby friendly bank paid via the “envelope system”. They are afraid the govt will one day take their money and steal their assets so RE in NYC is a safety net to retain value and a place to escape. That bill pay feature is interesting cause in Columbia they read your mail and if you buy expensive stuff via credit card you will get a luxery tax or get it stolen. These guys buy stuff in NYC on CC that are bill pay in NYC so their home countries are kept in the dark. Their is a lot of stuff that makes sense when you know the deal but if you are looking at empty windows it is confusing. Plus a 400K two bed from 1996 is now two million who needs rental income. From a coop board they are dream owners, they pay cash and via lock box bill pay maint is paid automatically meanwhile they are shipping in for common charges for things they rarely use.
#73
Good thing I was born in ’79. Screw all those Generation Y’s and Z’s. No, but seriously, coulnd’t “they” have thought of a better name for the generations after X? Like Generation Bling or Generation Flipper.
MY goodness Johh plot summaries.We will be dumbed down to the point that we believe the
NAR.Why did I open that.
Gen Y should be renamed Gen Waaaah. That’s all they do. They whine and moan. Someone call the waaaaahmbulance.
TJ: It amazes me to see 12 yr olds with Burburry scarves and Coach bags, Ugg boots, etc
…not to mention $2,000 Hanna Montana tickets. People really need to learn to say “no” to their kids.
WTF is Gossip Girl? No, wait, don’t tell me. It sounds too sick and depraved to even want to know.
#62
Amen Doyle, hands down best show on TV
HEHEHE,
By far, nothing else compares…
It is too late for Gen Y, most will die off in Champagne Supernovas like Britney and Paris will do by 2010.
Gen Z will replace the Mexicans who are leaving in droves. The only jobs for them will be dishwasher technicians and janitorial or landscape engineers.
If you ever read curbed.com they mention Gossip Girl quite a lot (I should mention I’ve never seen it) mainly b/c they make fun of how it portrays the different parts of the city and who is from where, etc. (as mentioned by someone else, the “poor” kid is from Brooklyn).
So, it IS related to RE :)
That’s a joke by the way.
Wife & daughter going to Hanna next week.Albany 2 tickets 290 good seats.I drive & go to hotel bar!They are 2000 around here so hence Albany.Stay over, gas,& food still save a bundle.
Sorry no Ugg boots here not worth it Bass Outlet for us.Good shoes reasonable price.
Shore 82 Don’t open any links to find out I hope I’m in time.You do not want to know.
and we have jsut began 1st q in 2008 ? more to come???
Jan. 3 (Bloomberg) — State Street Corp., the world’s largest money manager for institutions, said the head of its investment unit resigned after a $279 million writedown to cover legal costs from losses on subprime mortgages.
yep, i debated it & i don’t care what ’08 has to offer i’m not buying & will rent a better place for the next two years… it’s going to take that long for the wobbly bottom to drop.
Foreclosure write-off:
– “The tax relief is scheduled to expire at the end of 2009”
PMI:
– “also extends a tax deduction for private mortgage insurance through 2010… homeowners with adjusted gross income of $100,000 or less; homeowners with AGI of up to $109,000 can take a partial deduction”
Homeowners with forgiven loan debt get timely tax break
http://c-n.com/apps/pbcs.dll/article?AID=/20080103/BIZ01/801030344/1019
By SANDRA BLOCK
GANNETT NEWS SERVICE
call them generation KY cause they are going to get screwed.
To NRLN Grassroots Advocates:
On December 26, 2007, the Equal Employment Opportunity Commission (EEOC) published in the Federal Register its final rule that gives employers free reign to use age as a basis for reducing or eliminating healthcare benefits for retirees 65 and older. The EEOC’s rule is in response to a decision in the Erie County (PA) lawsuit in 2000 by the U.S. Court of Appeals for the 3rd Circuit. The Court ruled that the Age Discrimination in Employment Act requires employers to spend the same amount on health insurance benefits provided Medicare-eligible retirees as those received by younger retirees.
The NRLN believes the EEOC is misguided in its view that employers’ compliance with the Court’s decision would result in companies reducing or eliminating the retiree health benefits they were providing – leaving millions of retirees under 65 with less health insurance, or no health insurance at all.
The NRLN has had this issue on its plate since 2004. Here is some background:
The EEOC created the “proposed rule” in July 2003 and solicited public opinion before approving the rule in April 2004.
The NRLN issued a news release on 4/21/04 and sent messages to Congress opposing the “proposed rule” at that time.
The NRLN accused the EEOC of legislating, rather than upholding, the law.
The NRLN supported AARP’s decision to sue the EEOC at the U.S. District Court level. In February 2005, the federal judge temporarily blocked the EEOC rule. The same District Court judge who ruled in favor of AARP the first time later reversed her own decision.
AARP appealed the ruling to the U.S. Court of Appeals for the 3rd Circuit. The same federal appeals court that brought the Erie County decision in 2000 ruled in June 2007 that the EEOC was authorized to issue exemptions if a strict interpretation of the age discrimination law would be contrary to the public interest. “We recognize with some dismay that the proposed exemption may allow employers to reduce health benefits to retirees over the age of 65 while maintaining greater benefits for younger retirees,” the Court said. But it said the Commission had shown that the exemption was “a reasonable, necessary and proper exercise” of its authority.
The NRLN has commended the AARP for its filing of an appeal with the U.S. Supreme Court. The NRLN’s Washington, D.C. staff has met with AARP’s legal staff to see if they would allow the NRLN to file an amicus (friend of the court) brief. Eventually, the Lucent Retirees Organization connected with AARP’s attorneys and those from National Employment Lawyers Association (NELA). The LRO board has approved funding to support filing of the brief. NELA filed the amicus brief in the pre-certification stage of the legal proceeding, meaning the brief was intended to urge the court to agree to hear AARP’s appeal. They filed on the 12/20/07 deadline.
In spite of the U.S. Supreme Court deliberation as to whether to hear the case or not, the EEOC “issued” the final rule, making it effective last week.
Here is the game plan as the NRLN currently sees it:
The NRLN issued today the following news release. It will serve as a precursor to future lobbying for Congressional action, if necessary.
The NRLN 2008 Legislative Agenda that will be issued following the NRLN’s Annual Leadership Conference/Board Meeting in late January will feature this issue, the EEOC rule, as an action item.
Should the U.S. Supreme Court agree to hear the case, there will be another round of preparation and filing of amicus briefs, this time urging the Court to strike down the EEOC rule.
Should the U.S. Supreme Court refuse to hear the case or uphold the lower courts’ decisions, the NRLN will immediately lobby Congress for legislative change to reverse the EEOC rule. Congress threatened to do this earlier but may have to be persuaded again.
The NRLN will want to stimulate Congress to change the law that now grants the EEOC some latitude to make judgments like this “if deemed to be in the public interest.”
#90 ithink: it’s going to take that long for the wobbly bottom to drop.
No, less than a year before the bottom drops.
Americans Sold Out to Foreign Firms at Record Quarterly Rate
By Zachary R. Mider
Jan. 3 (Bloomberg) — Foreign investors exploited the declining U.S. dollar during the past three months to snap up American companies at the fastest pace in at least a decade.
Buyers from Dubai to the Netherlands accounted for 46 percent of the $230.5 billion of U.S. mergers and acquisitions announced in the fourth quarter, the biggest share since 1998 when Bloomberg started compiling the data. The total excludes $17.9 billion of so-called passive investments by state-run funds in Asia and the Middle East in U.S. banks, including New York-based Citigroup Inc.
The influx of overseas buyers cushioned a drop in domestic deals, as tighter credit markets ended the leveraged buyout boom that spurred record-setting takeovers in the first half 2007. Foreign acquirers, who stepped in as the dollar fell 10 percent against the euro last year, show no sign of losing interest, according to bankers and lawyers.
“In 2006 and the first half of 2007, it was cheap financing that allowed private equity firms to compete,” said Lee Lebrun, head of M&A for the Americas at Zurich-based UBS AG. Now, “foreign corporates with strong currencies” dominate, he said.
The dollar declined to $1.4967 per euro on Nov. 23, the lowest since the euro’s introduction in 1999, and traded at $1.4726 at 4:21 p.m. in New York yesterday. Analysts expect it to rise to $1.39 against the euro in the next year.
“With the dollar being valued the way it presently is, basic economics should lead us to expect continued strong foreign investment in the U.S.,” said Frederick Green, co-head of U.S. M&A at New York-based Weil, Gotshal & Manges LLP.
Turkish Chocolate
The quarter’s biggest transactions included Toronto- Dominion Bank’s takeover of Commerce Bancorp Inc., based in New Jersey, for $8.5 billion, and the $8.1 billion purchase of Chicago-based Navteq Corp. by Finland’s Nokia Oyj, the world’s biggest maker of mobile phones. Weil Gotshal advised Turkey’s Yildiz Holding AS when it agreed to buy chocolate maker Godiva from Camden, New Jersey-based Campbell Soup Co. for $850 million.
Non-U.S. buyers last year avoided the political controversy that plagued Dubai-owned DP World in 2006, when it added six U.S. port terminals with the purchase of London-based Peninsular & Oriental Steam Navigation Co. U.S. lawmakers, including New York Democratic Senator Charles Schumer, said Dubai’s ownership of the port operations could threaten national security, forcing DP World to sell them to American International Group Inc.
“In a post-Dubai Ports world, you’ve had two years that turned out to be record years for U.S. foreign investment,” said Ivan Schlager, a partner at Skadden, Arps, Slate, Meagher & Flom in Washington. “It really dispels the idea that the U.S. was turning inward. 2008 will shape up to be probably an even bigger year.”
Citigroup, Morgan Stanley
Schlager is advising Nasdaq Stock Market Inc. in a transaction that will result in Borse Dubai owning a minority stake in the electronic exchange. It won approval this week from the Committee on Foreign Investment in the U.S., which reviews purchases on national-security grounds.
Foreign companies were the buyers in $105.3 billion of the $230.5 billion of U.S. purchases in the quarter, Bloomberg data show. Overseas acquirers have accounted for just 18 percent of U.S. deals per year on average since 1998.
Some of the biggest U.S. merger advisers have themselves turned to foreign investors during the past three months to shore up capital depleted by losses on subprime home loans.
Citigroup, the biggest U.S. bank, raised $7.5 billion from Abu Dhabi’s sovereign wealth fund. Firms controlled by China invested $5 billion in Morgan Stanley and $1 billion in Bear Stearns Cos., and Merrill Lynch & Co. got $4.4 billion from Singapore’s government-run fund, Temasek Holdings.
Leveraged Loans Lose $28 Billion; Carlyle Is Punished (Update1)
By Pierre Paulden
Jan. 3 (Bloomberg) — For investors stung by $28 billion of losses on high-yield, high-risk loans, it’s payback time.
Creditors are making borrowers from Carlyle Group’s LifeCare Holdings Inc. to casino owner Tropicana Entertainment LLC increase the interest on their debt by an average 0.83 percentage point to change the terms of their loans, the highest price since at least 1997, according to data compiled by Standard & Poor’s in New York. The penalties are four times higher than six months ago, S&P said.
A total of 179 North American companies have a high risk of default or may need to change details of their debt agreements, Moody’s Investors Service said. Lenders are taking advantage of the distress to recoup losses after the collapse of the subprime mortgage market caused $551 billion of so-called leveraged loans tracked by S&P to fall below 95 cents on the dollar, from 100 cents before June.
A total of 179 North American companies – sounds like 179 shorts to me! Is that like 27 dresses?
ditto abt foreign cash flowing into the US-
but back to GG for a moment =) i think they should throw in an Arab girl and a Russian girl onto the cast of GG for good measure. They already have the Asian breaking ranks with the WASPs and surely the Russian girl’s life alone could provide enough material for a spin-off, just think about how “the captain’s” misdeeds would pale in comparison to the her father’s business dealings!!
xo XO
“chicagofinance Says:
January 3rd, 2008 at 11:22 am
With respect to pret…..I am surprised at the strength of the Manhattan market.
I will say though (as noted by some), absent property owners are bad for the city, as they turn neighborhoods into ghost towns for the majority of the year, and make small businesses in those areas unsustainable.”
and take foot-traffic off the streets, which makes crime more likely.
I just spoke to a friend of mine who was successful with a REO deal in a Brigadoon type town in Monmouth county, 28% off the 2005 purchase price.
Regarding Manhattan RE prices:
The avg. price cited in article was pushed higher by sales of multi million properties.
I didn’t see mention of median price which might give a more realistic picture. As for the Manhattan market somehow supporting markets in NJ -think Bergen Passaic Essex- it’s not going to happen and never will. Quit dreaming. NJ market will continue to trend downwards for numerous reasons most of which a honest analysis would admit and I will not reiterate. If you bought in the last two or three years or refied cash out during the same time period you are foolish to expect the market to help you with rising
prices. That’s just how it is.
I just got this puked into my inbox….
btw, he’s spamming me…he got my email b/c I was asked by a family member of mine to help him sell his daughter’s horse…(horse was a bad investment and he needs to get out but wants top dollar….go figure.
(He’s in FL…must be awful SUNNY in his office… I understand real estate “business” in FL has sh*t the proverbial bed and is now starting to attract flies…)
We have seen a slow but steady increase in home purchase activity, particularly amongst first time home-buyers. This can be attributed to variety of factors that are occurring at once; lower interest rates, lower home prices, and cheaper insurance. The confluence of these factors coupled with the continued availability of 100% financing has brought people into the market for a home that was unimaginable a year ago. Additionally, as the sellers of these homes are finding buyers, they are now entering the move-up market and that should bode well for the broader market as well.
Interest rates have continued to be attractive with 30 Yr. fixed rate conforming loans hovering between 5.875 -6.25%, and 100% financing in the 6.25 – 6.75% range. Homeowners insurance has also gotten significantly less expensive, with new quotes averaging HALF of what they were just a year ago !! These factors have also led to an increase in refinancing activity.
Prices have come down on most properties in our market and we have seen a typical decline of 5 – 20%. It is a difficult position for those that bought at the market highs, but considering that South Florida real estate appreciated by 50-100% between 2000 and 2005, the decline was not only inevitable, but in the best long term interest of the market and economy. As the stock market has proved, nothing goes straight up forever. But if you look at the following chart of home values since 1890, it’s pretty clear that over the long haul real estate has proven to be a very successful investment investment.
(He then showcases Shiller’s info.)
I know I know….you’re all running out to buy a bigger home to SAVE ON HOMEOWNER’S INSURANCE!
Here you go, bi. He’s cheerleadin’for ya’, man…
Merril Layoffs:
http://www.dealbreaker.com/2008/01/layoffs_hitting_merrill_lynchf.php#more
From Reuters:
Consumers late payers on most loans since recession
Americans are falling further behind on consumer loans, with late payments rising to the highest level since the nation’s last recession in 2001, data released Thursday show.
In its quarterly study of consumer borrowing, the American Bankers Association said the percentage of loans at least 30 days past due rose to 2.44 percent in the July-to-September period from 2.27 percent in the previous quarter.
The delinquency rate, which covers eight loan categories, was the highest since a 2.51 percent rate in the second quarter of 2001. Late payments on some types of loans rose to levels not seen since the 1990s.
The ABA attributed some of the summer increase to rising oil prices and the inability of thousands of homeowners to keep up with mortgage payments.
“Those little expenses that keep sucking dollars out of wallets every month are what have the most impact on people’s ability to pay their consumer loans,” Chief Economist James Chessen said in an interview.
“My concern is that delinquencies will continue to rise, because the housing problem will worsen, and disposable income will not stretch as far,” he added. “Lenders will need to take a second or third look at any consumer loans they make.”
National scope, but still relevant to note….
WSJ
Home Prices Must Fall Far To Be In Sync With Rents
By GREG IP January 3, 2008; Page A2
U.S. house prices “likely would have to fall considerably” to return to a normal relationship with rents, says a study by one former and two current Federal Reserve economists.
The study, which doesn’t necessarily reflect the views of Fed policy makers, suggests prices would have to fall 15% over five years, assuming rents rose 4% a year. House prices would have to fall further if the adjustment took place more quickly.
The study tracks rents and home prices back to 1960 and found annual rents fluctuated at around 5% to 5.25% of home prices until 1995. At the end of that year, the average monthly rent was about $553 (or about $6,600 a year) and the average home price was about $134,000.
But starting in 1996, home prices started to grow much more rapidly than rents. By the end of 2006, they had more than doubled to an average of $282,000, while the average rent had risen 48% to $818. That drove the annual rent/price ratio down to 3.48%.
That means the rent/price ratio is about a third below its long-term average. To return to normal would require some combination of falling prices and rising rents. The paper suggests house prices would need to fall about 3% a year, if rents grew in line with their 4% average annual growth this decade.
Of course, the link between house prices and rents can remain out of whack for years.
The U.S. study is by Morris Davis, an economist at the University of Wisconsin-Madison and until 2006 a staff economist at the Fed; and Andreas Lehnert and Robert F. Martin, staff economists at the Fed.
The authors’ methodology was based in part on previously published work by Fed economist Joshua Gallin. The same approach is used by many other analysts, including the Congressional Budget Office, which arrived at similar conclusions.
In an interview, Mr. Davis said lower long-term interest rates can explain only a small part of the drop in the ratio. “To justify current price levels, you need rapid growth in rents.” But it’s hard to imagine the scenario that would justify such rapid growth in rents, he added. Indeed, it’s possible rents will grow more slowly than 4%, reflecting the overhang of unsold homes that might be rented out.
Mr. Davis said the authors postulated a five-year horizon for the rent/price ratio to return to normal by looking at previous downturns. “When a downturn begins, it will last for a while.”
Scenario:
Say I have a great credit score and have a $500K house I bought with 0 down/IO. My next-door beer buddy did the same too but lost his house recently (as in lost it earlier than me). The bank is now ready to accept $300K for it and get it off their books. Say I buy the house for $300K with the intention of never making a mortgage payment on my $500K house that has just seen a comp under cut it $200K. OK, my credit score is trashed but I have a mortgage that is $200K lower. Why won’t I take it? The IRS anyway doesn’t deem the $200K a forgiven loan.
Is it possible that people will do this on a larger scale in the future? And this wasn’t a subprime example….but prime.
dt,
Wasn’t there a post on Calculated Risk (taken from a broker forum) that was basically the same scenario?
anyone: has anyone futzed with H20 as an investment? If so, why?
Here it is:
http://calculatedrisk.blogspot.com/2007/12/let-short-sale-scams-begin.html
Dream sounds like a plan.I guess you would have to be crazy not to.On the other hand you would have to have some set to do it.
Grim, my friend emailed me a snippet from Seeking Alpha. I edited it to fit a hypothetical situation (sadly, a friend is pretty close it this too.).
So I guess this scenario has done the rounds in other blogs too, eh?
dt,
Sounds good to me. I am one of those idiots who put 20% down so can’t do it. You are just playing the game that the banks/brokers played. They allowed every moron with previous BKs, FKs and poor credit history to buy a home therefore scr$wing good, quality borrowers..so ‘eff em.
Dream,
My understanding from reading the debate on Caluclated risk about your scenario is that there is the potential for the bank to have real legal recourse against you. I am not clear on the details, but it sound like you may want to quietly consult an attorney well versed in the appropriate field before making any big decisions.
106
Yes, there was, which got quoted on some other blogs as well.
It seems like an obvious scenario, and in fact I can’t see any reason not to do it. I don’t think you need to buy a house from your buddy, either.
Another Short Sale in Rumson
Sold Nov 2006 $550,000
Sold Dec 2007 $460,000
Address is 16 Narumson St
if we are talking about ways to play the banks……
I have been a renter so far, so assuming i could still find a 100% loan, why not jump in now when i can do so without putting nay skin in the game. yes prices are dropping, but there could be an interesting middle ground there, because really, when is anyone going to be able to get 100% financing again?
ket,
Make some phone calls, let us know what rate you are quoted. I’ll do the same, I don’t mind the inquiries.
Grim,
I dont have any interest in playing that game, i tend to be rather conservative when playing with $$$ values higher then what my lunch might cost. Just thought i would throw something out there as i am sure someone has come up with a way to pull something off. Although i would imagine that it is either already to late to find 100% financing or very hard to do
Grim,
Another point to consider…. Having been in the military i am eligible for a VA loan. I have never looked into the details of the VA loan program but my understanding is that i could still access 100% financing with no PMI through that channel even if the average joe does not have that available.
If housing prices will continue to fall jumping out of a 500k house into a 300K house is still a bad idea. The 300K house will soon be a 250K house.
John it may not be a bad idea, it is all about timing. Loans are only going to get tighter in the near future. So if you could still get the loan from the bank to day then it may be worth a shot because as the market continues to decline standards will become tighter and tighter. In the example of a house being purchased for 500K but now worth 300K and going down to 250K in 1 year; if you doubt you can get the new loan when the market is below 300K then that would be the time to doit. It seems to be a fairly similar judgment call to playing on the stock market
#116 Grim/Kettle1
I have been offered a no doc mortgage at normal rates by PHH as part of the VIP2 program. There is some funny stuff around if you have the credit score and the LTV looks good.
Dream, there will be no problem with your scenario. I expect Congress to pass a bill in 2008 that will make it illegal for a lender to discriminate against borrowers with a foreclosure on thier record.
Your hypothetical home owner could also live for free in his old house for a long time before the bank managed to kick him out. Why be in a hurry to buy something new?
#99 3b
“I just spoke to a friend of mine who was successful with a REO deal in a Brigadoon type town in Monmouth county, 28% off the 2005 purchase price.”
I just found out from my buyers agent that my bid was accepted for an REO in Bergan County I got it for a similar price. I will post details to the board after closing.
PGC,
Very nice, keep us in the loop even if details are thin.
From Inman:
Secondary market for alt-A loans shrinks in Q3
Fears of rising delinquencies and defaults on home loans that crippled the secondary market for subprime mortgages this summer have also caused a dramatic slowdown in issues of securities backed by so-called alt-A mortgages.
A new report by Standard & Poor’s Ratings Service shows quarterly issuance of securities backed by alt-A mortgages plummeted 64 percent in the third quarter of 2007, falling from an all-time high of $109.5 billion during the previous quarter, to just $39.3 billion in July, August and September.
Standard & Poor’s said it expects the trend to continue into the fourth quarter and into early 2008, as investor demand for mortgage-backed securities has fallen sharply and loan originators are focusing on loans eligible for sale to Fannie Mae and Freddie Mac.
The simultaneous tightening of underwriting standards and reduced demand from investors for alt-A loans “poses a threat to many borrowers who may be faced with the risk of loan rate reset or loan recast in the near term,” the report concludes.
While monthly alt-A issuance volume fell by more than 75 percent from June to September, the loans still accounted for 28 percent of total mortgage originations during the third quarter — about the same as two years ago, the report concluded. Refinance loans made up an increasing share of alt-A issuance during the third quarter, 25.1 percent, up from 15.1 percent in the same quarter a year ago.
…
Evidence that loan originators are tightening underwriting standards includes rising average FICO scores, falling combined loan-to-value ratios, and an increased percentage of loans requiring full documentation.
The average FICO score for alt-A borrowers was 712 during the third quarter, compared with 702 at the end of 2006. The percentage of alt-A borrowers with FICO scores below 650 dropped from 12.1 percent in all of 2006 to 8.5 percent in the third quarter of 2007.
The average combined loan-to-value ratio fell from 94.7 percent at the end of 2007 to 91.6 percent during the third quarter 2007. That means the average borrower with a second mortgage was required to have more equity in their home — 8.4 percent — compared with 5.3 percent at the end of 2006.
Loan originators required full income documentation on 22.1 percent of alt-A loans in the third quarter of 2007, up from 16.8 percent in the previous quarter, Standard and Poor’s found.
In the stock market you don’t buy on margin to make an investment in something you know is going to lose money. Plus when you leverage the damm investment has to grow at the rate of the loan just to break even. I still think you are better off saving each month and jumping in at a cheaper price, you will end up putting more down on a cheaper house.
John it may not be a bad idea, it is all about timing. Loans are only going to get tighter in the near future. So if you could still get the loan from the bank to day then it may be worth a shot because as the market continues to decline standards will become tighter and tighter. In the example of a house being purchased for 500K but now worth 300K and going down to 250K in 1 year; if you doubt you can get the new loan when the market is below 300K then that would be the time to doit. It seems to be a fairly similar judgment call to playing on the stock market
#123 PGC: Sounds good, I will do the same for the Monmouth Co property. Congratulations!
#124 grim.
Thanks, I had emailed you the MLS before the holidays. Did You get it?
John,
i do not disagree with you. I was exploring a scenario where you already “own” a home and are underwater by 100-200K due to dropping home values
Wow, this news is fascinating. Prices up over 20%.
I would say overall this is good news for NJ. It’s definitely not bad news.
130 Ann, What did I miss, what is up 20%?
Hey I just got off the phone with GS and they do not watch GG on the plazma over there. But my friend will watch the job board and if the job comes up she will apply.
DETROIT — The Ford Motor Company’s United States sales fell 12 percent in 2007, allowing Toyota Motor of Japan to replace it as the country’s second largest seller of vehicles.
It was the first year that Ford was not No.2, behind General Motors, since 1931.
131 RayC
“Prudential said price increases on two- and three-bedroom apartments helped to push up prices overall. Prices on two-bedrooms jumped 22.1 percent, while three-bedroom apartment prices surged 39.8%.”
#132
In a tip of the hat to today’s unsettled economic environment, they have stopped watching GG and started watching reruns of the Dukes of Hazard
Hi,
Off subject… can someone with access to MLS information (sales) look up the following house (in Westchester, NY) and advise the selling price? I believe it sold recently, within the past month.
I tried Zillow, but it didn’t come up.
Thanks!
Ooops, here’s the address:
212 Lawrence Avenue, Mamaroneck NY 10543
kettle #118
correct, you don’t have to pay PMI but you do have to pay the VA funding fee (2% or so?). You can be exempt from PMI & the VA funding fee if you’re over 30% disabled.
MR POTTER 114-
16 Narumson looks like an interesting case.
It appears to be a tear-down, that never materialized. The original sale for $550K on 11/2006 was a 1930’s ranch. What was currently marketed in MLS was a huge new Victorian, with plans viewable on-line. It is also being listed as a land sale.
I’ll have to ride by there in my travels to see if the ranch was razed (heh-heh….razed ranch)
#129
As loan volume declines, what will keep interest rates high?
Doyle & HEHEHE-
I couldn’t wait any longer for The Wire. I watched it last night. HBO releases to ON DEMAND the Monday before it airs on the regular channel. This season looks great.
#100 ..Joe you absolutely correct.
Manhattan taken out of n/e monthly reporting , NE prices’s are collapsing. It has always been this way!
Ben Stein on Kudlow almost lively tonight.
“As loan volume declines, what will keep interest rates high?”
[140],
The 10 year, fixed rates are pegged to this, is set by the market, not by volume of loans.
Another bank owned sale in Rumson.
61 Ward Ave.
Purchased 1/30/04 for $750,000
Mortgage- $749,000
Sold 12/13/07 for $560,000
…but new owners have $450,000 private mortgage at 18% per annum- what a deal!
“$450,000 private mortgage at 18% per annum”
Jeebus!
http://money.cnn.com/2008/01/03/markets/commercial_paper.ap/index.htm?postversion=2008010314
Commercial paper in early recovery
The coordinated plan of central banks is seen to have maintained asset-backed commercial paper market liquidity.
Speaking of Short Sales in Rumson.
There were 3 discussed on this board this week.
Did Ara “we’ve reached the bottom and its a great time to buy ” Hovnanian unload his riverfront estate yet ?
Re: 61 Ward Ave, Rumson
It’s one of those 1895 Victorian homes, 6 beds, 3.5 baths 3 stories of turn-of-the century elegance as only Rumson can do it.
Gawd, I hope they converted the coal burning furnace to something more modern!
When I look at the mortgage history, the previous owner had an All-Star team of Sub-Prime lenders in on this thing. New Century, First Franklin, USA Financial Services, Long Beach Mortgage. What a cast of characters!
ChiFi (107)-
Yeah. Veolia Environnement (ticker: VE), which is an international water company with an environmental/water purification aspect, to boot. Not a bad little play, and you get a decent dividend:
http://finance.google.com/finance?q=ve
I have always preferred VE to Suez (SZEZY) and Aqua America (WTR), the other big players in the sector.
vodka (117)-
100% financing is out there. You just won’t like the rate (double digits) or the proctological exam that comes with.
#130 Ann: I would say overall this is good news for NJ. It’s definitely not bad news.
Why would this be good for NJ?
vodka (118)-
Not exactly. VA loans have their entire MIP premium (the VA version of PMI) built into the prepaids. However, your PMI is tax deductible if your AGI is under 100K/year.
Go find your VA loan Eligibility Letter. Those mortgages are gold. Hell, they’re even assumable!
clot i wouldnt touch 100% financing, i was suggesting a possible scenario for the more financially daring among us. as i said before, if it costs more then lunch i tend to be fairly conservative with my finances
grim (124)-
The buzzards are starting to feast.
clot
how would the assumable loan work? Assume i currently own a house with a 200K VA mortgage and sell the home to another person. how do they assume the loan, i am not clear on the various implications.?.? thanks
Chi [107],
I own SBS, Brazil.
vodka (156)-
Simple as that, they pick up the loan at the point where you leave it. Your buyer continues to pay the loan from that point forward. Once you close, your name comes off the note and mortgage:
http://banking.about.com/od/mortgages/g/Assumable.htm
152 3B
I think that was a reference to the theory that expensive housing=good and less expensive housing=bad.
Folks somehow manage to understand that expensive milk, bread and clothing isn’t so great.
We need to get the media reporting on the value of “existing clothing” and “newly constructed clothing” – then when the cost of clothing goes through the roof (as it will in Paris and New York, because all fashion is local, natch) we can all cheer!
Bush and the PPT, this should be entertaining. Why do I picture 1976-1980?
“President George W. Bush will meet with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke tomorrow as he considers whether to announce a new economic stimulus package amid slowing growth.”
“This will be the first time in his presidency that Bush has met with all members of the financial working group [EDIT: PPT], Fratto said. Normally, Paulson briefs the president on the group’s activities, he said. The team meets formally about once a month, Fratto added.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aX7rP826NCTc&refer=home
clot
so i owe 200K on the house and sell it for 300K. The buyer would write me check for 100K and then pick up the 200K loan, correct???
vodka (161)-
That’s how it goes.
thank you clot
BC (160)-
Hoo-hah!
“The team meets formally about once a month, Fratto added.”
More than that, if you count the meetings at that lonely Carribean trading desk.
Why do I think all these meetings are like the meetings in Thank You for Smoking with the cigarette guy, the liquor lobbyist and the firearms guy?
My friends who have bought Manhattan apartments in the past few years always remark that “Manhattan is never going to lose value, so my apartment is just going to go UP UP UP!” They seem to have forgotten that when we were growing up in NJ in the 80s and early 90s, Manhattan didn’t have Starbucks on every corner and was a very different place. My dad tells me stories of apartments practically being given away during those times. It is interesting to me when I read about Peter Cooper Village and Stuy Town that once upon a time, Manhattan had a middle class too.
Is Manhattan really going to be immune to the bubble?” I would think there has to be a limit to the crazy run-ups there. Are we going to hit $1 million in the next 5 years for old tiny studios at the rate this has been going? But maybe that’s just wishful thinking and I’ll end up like the others living in a train town in NJ.
Clot [164],
The PPT and a Bush. This is great theatre in the making. Pee Wee Herman at the movies?
BC,
Got Nikkei?
I own in Westchester and have been looking to buy in Manhattan and waiting and waiting for prices to drop. One big reason why Manhattan has weathered a significant portion the storm is that subprime and creative loan products are virtually impossible to use. Co-ops (65% of the inventory) refuse buyers on the basis of wealth and credit scores and do more documentation than a lender. A significant number of co-ops refuse buyers that would like to finance their purchases or limit financing to 50% or less of the purchase price. There are few co-ops whose financing rules allow a downpayment of less than 20%.
Condos are typically easier, but they are more expensive as well. Typical condo financing allows 10% downpayment, but again that is a requirement and considering that the majority of condos cost more than $1MM, it’s difficult to get into them if you can’t afford them.
The late 1980s and early 1990s were very different in Manhattan. In the early 1990s Times Square was a cesspool, the east village and lower east side was a terrific place to get crack and raped, and you had to fear parks that weren’t part of southern central park. The city is very different now after all the work in the 1990s to clean it up. The east village and lower east side are now a hotspot of bars and restaurants, the parks are clean and many restaurants or bars, and times square is a tourist mecca. 1991 NYC has no possibility of comparing to 2008 NYC.
Lastly, rents in Manhattan are not nearly as low and out of whack as in the majority of the country. Typical 1-bedroom apartments rent for $3,000 to $3,500 per month and sell for ~$800,000, which is approximately 20 times annual rent. Rents skyrocketted in the past year, about 15% driven primarily by giant investors buying projects like the $5.4 billion purchase of Stuyvesant Town which was home to some of the cheapest well located apartments in the city. Tishman has since increased rents by as much as 25% on some renters, (mine went from 2750 to 3800 before I ran away to westchester) and caused ripple effect of renters scattering into the already saturated (99% occupied market).
grim, I’m in moderation.
JB [167],
I hope they enjoyed their extended holiday. I wonder which stopped trading today, their half day or limits?
I’m considering a property in Bergen County that is in pre-foreclosure. Wells Fargo holds the mortgage. The current listed price is approximately 90% of outstanding mortgage. Lis pendens issued in October. Is there a rule of thumb that banks use in determining the maximum loss they are willing to incur? Any input appreciated.
This blog keeps me informed about popular things.
Before this blog, I never heard of that comedian with the running for president skit and a book.
Now, this CC show.
Thanks, everybody. I can sound enlightened at work.
Dribble does NOT equal drivel???
Pat (172)-
You can take the girl out of Pennsyltucky, but…
Pat (173)-
When your Pennsyltucky cousin falls asleep in front of This Week in Pro Bass Fishing, and saliva starts to dribble down his shirt, it can also be called drivel.
In Pennsyltucky, a “Gossip Girl” is the one who’s rumored to be bearing the offspring of a relative who’s on an uncomfortably-close branch of a family tree that looks like the tree in A Charlie Brown Christmas.
…whose family coat-of-arms sports a liquor bottle and a handgun.
Clot, it’s my NEPHEW who sells the fishing thing…how did you know?
http://www.xavixstore.com:80/products/bassfishing.html
He’s under Play Video. Isn’t he a darlin?
And in defense of the state in which I pay my taxes:
Choke on these property taxes:
http://www.mlsfinder.com/nj_trend/kwsouth/index.cfm?action=email_listing_detail&property_id=5227879
By the way, I have all my teeth.
From the NYT:
Gregory J. Heym, an economist who prepared the reports for Halstead and Brown Harris Stevens, said that sales at those two buildings helped drive up average condo prices by $500,000.
…
That is not to say that these high-end transactions will shield Manhattan real estate from a slowdown in 2008.
Real estate brokers predict that sales prices may not keep up this pace through 2008 because more buyers could have trouble taking out large mortgages and some Wall Street bankers may receive smaller cash bonuses.
…
Median prices on two-bedroom Park Slope apartments dropped by 4 percent, to $637,000. Median prices for two-bedroom apartments in Fort Greene and Clinton Hill dropped by as much as 14 percent, to $462,000.
So what happens if you back out the 2 building sales (15 CPW and the Plaza)? And what’s happening to 1 bedrooms?
I just read the “80s Bubble” link on here. Answers my questions. Good info!
Chi,
I have been eyeballing ITT as a water play, jsut waiting for a decent pullback. There’s the CGW and PHO ETF’s too.
Presumption is a commodity play like the ag plays.
d2b Says:
January 3rd, 2008 at 7:03 pm
Doyle & HEHEHE-
I couldn’t wait any longer for The Wire. I watched it last night. HBO releases to ON DEMAND the Monday before it airs on the regular channel. This season looks great.
Thanks for the heads up. I’ll check that out tomorrow.
#177 …where a tube of that Kentucky Jelly doesn’t cover but one or two pieces of toast. What’s up with that?
(No offense, Pat, just couldn’t resist)
clot, bost, hehehe…i was fulminating over PIO….
http://www.powershares.com/products/holdings.aspx?ticker=PIO
if you dare invest in this product, I will track you down and disembowel you….
When I asked Madame Poot if I should buy $30k of PIO, she said, “Outlook not good… but it can still change…”
CF, are YOU Madame Poot?
http://www.usatoday.com/money/economy/housing/2008-01-03-real-estate-2008_N.htm?csp=34
“The biggest problem is the glut of homes for sale — more than 10 months’ worth. And about 2 million of those homes (about 2.6%) are vacant, with banks or builders trying to get them off their hands.”
So 2.6% (a tiny fraction) of inventory is REO. What will that be in June? 4% ?
ADA,
I still remember looking out of the bus window as it went along 42nd Street during our 7th grade field trip to the UN in the early nineties. Lots and lots of triple x signs everywhere and we were highly amused. I am amazed that 10 years later it had all been replaced by those bright neon signs for McDonalds and Cold Stone Creamery.
I will be waiting and saving my money with you.
144
Yes, but home loan originators might want to stay in business. They create money by making loans, do they not?
If loan volumes continue to decrease, is this not deflationary?
#171 Rob
We have an accepted offer on an REO, the bank listed the property just below the mortgage owed. The realtors will get 5% combined if we make it to closing. So the bank is stomaching a 5% loss + their costs over last 6 months. The original mortgage was 75/25; I would think a bank in a 90/10 situation would be prepared to take more then a 5% loss.
#165 & #168 Re: Manhattan
Let’s not forget about foreign investors. The US dollar is in the toilet. People spending GBP or Euros are looking at incredible bargains as compared with just a few years ago.