From MarketWatch:
Pending home sales fall 1.5% in December
Sales contracts on previously owned U.S. homes fell 1.5% in December, the National Association of Realtors reported Thursday, in a sign that home sales will continue to decline.
The pending home sales index, based on contracts signed but not closed in December, was down 24.2% from the prior year’s period. The index, which is considered a leading indicator of existing home sales, had also declined in November, after gains in September and October.
In November, pending home sales declined about 3% from the prior month, compared with the prior estimate of a 2.6% decline.
Sales activity is expected to remain soft through the first half of the year despite low mortgage interest rates, according to Lawrence Yun, NAR’s chief economist.
The aggregate existing-home price is expected to drop 1.2% this year, according to NAR.
From Bloomberg:
Pending Sales of Existing U.S. Homes Fell 1.5% in December
The number of Americans signing contracts to buy previously owned homes fell in December for a second straight month, signaling the worst housing slump in 25 years will persist well into 2008.
The National Association of Realtors’ index of signed purchase agreements decreased 1.5 percent to 85.9, the group said today. The drop follows a revised 3 percent decline for November that was larger than previously reported.
Today’s report reinforces concern that the housing recession will linger as foreclosures add to a glut of unsold homes. The housing slump is weighing on the job market and consumer spending, putting pressure on Federal Reserve policy makers to lowering interest rates further to keep the economy out of a recession.
“The housing outlook has deteriorated significantly and I don’t see a bottom on sales and starts until the middle of the year at the earliest,” Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis, said before the report. “And our outlook on home prices has gotten worse.”
Economists had forecast the index would fall 1 percent, according to the median of 33 estimates in a Bloomberg News survey. Projections ranged from a drop of 3 percent to an increase of 1.8 percent.
Compared with a year earlier, the measure was down 24.2 percent.
…
The Realtors lowered their forecast for existing-home sales in 2008 to 5.38 million from a January forecast of 5.7 million. Last year, 5.65 million homes were sold. Purchases of new homes will decline to 637,000 from 774,000, the group said today.Pending resales fell in three of four regions. Purchases decreased 3.1 percent in the West, 3 percent in the South and 1.7 percent in the Northeast. They rose 3.4 percent in the Midwest.
From the WSJ:
It Is an Inconvenient Truth: Houseless Isn’t Homeless
February 7, 2008; Page A17
At the inevitable risk of being accused of being heartless, may I suggest that losing one’s home is hardly the tragedy it is often made out to be, at least for subprime borrowers who had no business owning a home in the first place (“Politics & Economics: Lawmakers Offer Plans for Homeowner Refinancing,” Jan. 30). However unfortunate it is to lose one’s house, it is not, normally, equivalent to becoming homeless, just houseless. Having lost their houses (and possibly what little if any equity they may have accumulated), these people will return to the ranks of renters with a good deal better financial outlook.
My suspicion is that much of the bailout advocacy is motivated by the desire to bailout the lenders, with the borrowers a conveniently sympathetic cover story.
Robert Myers
New York
From Newsday:
LONG ISLAND DIGEST
Gov. Eliot Spitzer, responding to the subprime mortgage crisis, is working on legislation to require that delinquent borrowers be given a pre-foreclosure notice that would halt property seizures for a period while the borrowers work with their lenders and credit counselors to negotiate new mortgage terms. A top Spitzer aide said yesterday the pre-foreclosure notice was included in a bill still being drafted. He didn’t know when it would be sent to the Legislature.
“This would put the borrower on notice of the risk of foreclosure and advising him or her of the use of a [federal] Housing and Urban Development-approved counselor … or to reach out to the lender,” Banking Superintendent Richard Neiman told reporters in Albany. “In the event, they [borrowers] do reach out, the lender would be prohibited from initiating the foreclosure process for a period of time with the hope that they would use that period to seek modification” of the mortgage.
From the WSJ:
Rescue Plans Won’t Prevent Downgrades
By KAREN RICHARDSON, LIAM PLEVEN and CARRICK MOLLENKAMP
February 7, 2008; Page C1
Rescue plans are starting to take shape for struggling bond insurers, but they aren’t likely to prevent further ratings downgrades for many of the companies.
At least one such company isn’t waiting around. In an effort to raise capital, MBIA Inc. yesterday said it would issue $750 million of common stock, a bigger offering than the $500 million issue it had initially planned.
From Bloomberg:
S&P to Hire Ombudsman, Demand Disclosure in Ratings Overhaul
Standard & Poor’s plans to hire an ombudsman, demand disclosure of collateral that backs structured finance securities and change the way it measures risk in response to losses in mortgage-backed securities.
S&P also plans to increase investor education and reduce potential conflicts of interest by taking steps such as preventing analysts from covering issuers for more than five years, according to a news release e-mailed from the company.
The changes come a day after the International Organization of Securities Commissions in Madrid said S&P and rival Moody’s Investors Service may face a code of conduct prohibiting “advice on the design of structured products which an agency also rates.” IOSCO, the forum of securities regulators, also urged financial institutions to disclose their risk of losses from structured finance.
From the Philly Daily News:
Drop in housing sales means city’s losing tax $
The downturn in Philadelphia’s housing market – fewer homes changing hands, at lower prices – has created a growing hole in the city budget, likely to reach $10 million to $15 million by midyear.
Income from the city’s real-estate-transfer taxes has been running about $5 million below estimates for each of the past three months, according to figures provided by the city Finance Department.
“It’s hard to imagine we wouldn’t fall short of the $205 million in our revenue estimates,” said city Finance Director Rob Dubow. “When the current budget plan was put together [last spring], they expected a dropoff, but this is probably bigger than anyone anticipated.”
From the WSJ:
Senate Stimulus Bill Fails to Advance
By SARAH LUECK
February 7, 2008; Page A2
WASHINGTON — Senate Democrats’ plan to jump-start the economy failed to clear a hurdle, leaving in limbo the effort to provide rebate checks to millions of people and tax breaks to businesses.
Supporters of the Senate bill fell one vote short of the 60 needed to advance it, as most Republicans stuck together to oppose a plan for rebate checks of at least $500 to an estimated 135 million households in this election year. Eight Republicans broke with their leadership and supported the bill, including four who are up for re-election.
Senators still hope to send an economic-stimulus bill to President Bush by midmonth, though last night’s vote increases the chances the Senate will have to move closer to a House-passed package to meet that goal. A spokesman for Senate Majority Leader Harry Reid (D., Nev.) said the senator “is going to give Republicans another chance to reconsider their vote.”
The Senate bill, worth about $205 billion over two years, is more expansive than the $161 billion House measure. It includes a broader rebate for Social Security recipients and disabled veterans not reached in the House version. It also proposes an extension of unemployment insurance, a tax break for companies facing operating losses and a package of renewable-energy incentives that are set to expire.
From Thompson:
S&P cuts ratings on 8.92 bln usd of US CDO transactions
Standard & Poor’s Ratings Services said it has lowered its ratings on 8.92 bln usd of complex US debt securities.
The agency cut the ratings on 94 tranches from 17 US cash flow and hybrid collateralized debt obligation (CDO) transactions.
The CDO downgrades reflect credit deterioration and recent negative rating actions on subprime RMBS securities; and changes S&P has made to the recovery rate and correlation assumptions it uses to assess US RMBS held within CDO collateral pools.
From MarketWatch:
Loss at home builder M.D.C. widens to $281 million
Denver builder M.D.C. Holdings said its fourth-quarter net loss widened to $281 million, or $6.14 a share, from a loss of $6.46 million, or 14 cents a share, in the year-ago period. Revenue dropped to $785 million from $1.34 billion, and the company took pre-tax charges of $175.2 million for asset impairments and $7.8 million for write-offs of deposits and pre-acquisition costs associated with land option contracts the company does not intend to pursue.
From MarketWatch:
D.R. Horton swings to loss of $129 million
D.R. Horton, the country’s top builder by homes delivered, swung to a fiscal first-quarter loss of $128.8 million, or 41 cents a share, with revenue falling to $1.71 billion from $2.8 billion. The quarterly results included $245.5 million in pre-tax charges to cost of sales for inventory impairments and write-offs of deposits and pre-acquisition costs related to land option contracts that the company does not intend to pursue.
From CNBC:
Builder CEOs Talk: Too Bad It’s Nothing We Don’t Know
…
Both Mr. Eller of Centex and Mr. Miller of Lennar were not just friendly and accommodating, but also quite candid about the state of their industry and the near future of their operations. It struck me as pretty grim that they were willing to say out loud, to a reporter like me, that they see no light at the end of the tunnel.
Mr. Eller said this will ultimately be the deepest and longest housing correction since World War II. Mr. Miller said: “There really isn’t any visibility as to where the bottom is.” Both are looking to the stimulus package for help, not just to help buyers get back in the game, but to help companies like theirs generate much-needed cash.
Today the CEO of Toll Brothers Toll Brothers Inc, Robert Toll, said in preliminary quarterly results: “Based on current traffic and deposits, we are not yet seeing much light at the end of the tunnel.”
…
This will be one of the nastiest corrections the home building industry has ever seen. It’s unlike any other because it was not brought on by the economy, but by a wild, heady, unscrupulous mortgage market–and a willingness by builders to jump on the bandwagon and hammer away, even when all that tasty demand was clearly too good to be true.
when will hov file the 11?
Bank of England cuts 25 bps..
Regarding #1 from WSJ
Bravo -well written.
Comp Killer in Bridgewater
Purchase
1044 Tullo Farm Rd Feb 05 $802,000
Sold last week for $780,000
That 20K less, but including RE and other costs, you are easily talking 50K.
Let’s say Fitch cuts the rating of MBIA to AA but the other two rating agencies maintain AAA. Is MBIA still considered AAA?
European Central Bank holds key rate steady at 4%
(198) Skep-tic 2/6 (1) Grim
“Your zero equity @ss can suffer the indignity of going back to renting.”
“These people will return to the ranks of renters with a good deal better financial outlook.”
Once you lose your home, must become a renter again, work two jobs, and start over…the lesson really sticks. The lesson regarding ALL buying on credit really hits home.
And maybe, just maybe a new knowledge base regarding speculation will be passed on to the next generation ala the Depression Era survivors. Maybe not – but it seems like it is going to have to “hurt” on some level before the lesson is going to sink in and get passed on.
RE #1:
That’s the exact point. Replace eviction (i.e. a renter) with foreclosure and nobody would give a sh*t. They should call it what it is, a plan to bailout banks.
It’s all about the banks now. Will they get assistance and move on to do it again?
Meanwhile yeah people can rent and have you seen the price of rentals same as mortgages. This is not good.
You end up with a split rating, I’ll let the finance guys get into the details of how that is handled.
However, don’t neglect the impact to Fitch-rated, MBIA-insured securities.
If Fitch downgrades MBIA, that action would likely be followed by another ratings action to downgrade any Fitch-rated securities whose rating was predicated on MBIA insurance.
Take a look at the Fitch FGIC downgrade and the impact on Fitch-rated municipal bonds.
SG,
Is that considered martinsville or not?
thanks, afe
thanks grim.
“My suspicion is that much of the bailout advocacy is motivated by the desire to bailout the lenders, with the borrowers a conveniently sympathetic cover story.”
[1],
Exactly. Nobody, and I mean nobody; Fed, IB’s, MBS investors, Abu Dhabi, Bush, Hilary, etc.. care about the homeowners. It’s all about bailing out the banks and garnering votes.
It seems Wal Mart said people are using gift cards to buy food. Is this true?
The Boss;
“It’s gonna be a long walk home”
“Mr Buffett, known as the “Sage of Omaha” for his investment record, suggested that the banking fraternity has only itself to blame for its recent problems which have seen banks write off more than $130bn (£66.3bn) so far.”
“It’s sort of a little poetic justice, in that the people that brewed this toxic Kool-Aid found themselves drinking a lot of it in the end,” Mr Buffett said, making reference to the American soft drink.
“Mr Buffett also reiterated his negative views on the subject of the US dollar, saying that over the next five-10 years, the dollar could seriously devalue if the US trade deficit persists.”
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/07/cnbuffet107.xml
From the BOE. Do these guys [Fed&BOE] read from the same script?
“While inflationary pressures are likely to fade later in the year, measures of inflation expectations remain elevated, the bank said.”
From Bloomberg:
MGIC Says Sales May Fall as It Seeks to Reduce Losses
MGIC Investment Corp., the largest U.S. mortgage insurer, said sales may suffer as it seeks to reduce losses from covering loans to the riskiest borrowers.
Mortgage insurers, which reimburse lenders when borrowers don’t repay debts, have been pummeled by the worst housing slump in a quarter century. MGIC posted its first-ever quarterly loss in the July-to-September period last year and cut its dividend by 90 percent.
MGIC will scale back its coverage to borrowers with the lowest credit scores and whose loans account for the highest percentage of the home’s total value, it said. The company will also trim business in some of the worst housing markets. The changes will become effective on March 3.
“The company anticipates that these changes will negatively impact MGIC’s volume of new insurance written,” the Milwaukee-based insurer said today in a regulatory filing.
95 is the new 120…
Turmoil in the short end of the muni market.
http://www.bondbuyer.com/article.html?id=20080206H1RMEX0X&from=home
3b [30],
Troubling. It’s a total mess.
#31 BC Bob: Leaks spring everywhere> they try to lug one and thena notehr pops up. Failed Muni Auctions is a big, big deal. The last timw that happened was in 1990. I remember it well
grim Says:
February 7th, 2008 at 7:58 am
You end up with a split rating, I’ll let the finance guys get into the details of how that is handled.
grim: irrelevant except if covenants are violated….ratings have always been a guideline…the market is the real rating…the big change is getting to or leaving BBB- or A-1+ CP
From MarketWatch:
M/I Homes 4th Quarter Loss Widens On Charges Of $4.90/Shr
M/I Homes Inc.’s fourth-quarter loss widened to $68.5 million, or $5.06 a share, from a year-earlier loss of $11 million, or 79 cents a share, due to various charges totaling $4.90 a share. Results from the latest quarter included land-related impairment and abandonment charges of $104.9 million, joint venture investment write-offs of $4.3 million and severance costs of $3.1 million. The company reported a loss from continuing operations of $3.20 a share, compared with 99 cents a share, a year earlier. The Columbus, Ohio, home builder said revenue declined 23% to $340.5 million from $443 million.
BC Bob Says:
February 7th, 2008 at 8:52 am
3b [30], Troubling. It’s a total mess.
Bost: it is times such as these where the indexers are publicly exposed as frauds and mindless lemmings…..don’t tell them though…they will be too busy patting themselves on the back for their expense ratios, while worshipping at a bastardized and blasphemed version of the very research the hold so dear…
Deutsche Bank Chief Says Monoline Crisis Could Be `Tsunami’
By Aaron Kirchfeld and Andreas Scholz
Feb. 7 (Bloomberg) — Deutsche Bank AG Chief Executive Officer Josef Ackermann said rating downgrades at bond insurers pose risks that could match the U.S. subprime market collapse.
“It could be a tsunami-like event comparable to subprime,” Ackermann said in a Bloomberg Television interview in Frankfurt today. Deutsche Bank, Germany’s biggest bank, is “well positioned” with its so-called monoline insurance risk, he said.
MBIA Inc., Ambac Financial Group Inc. and Financial Guaranty Insurance Co. may lose their AAA ratings because mortgage-backed securities they’ve insured have declined in value. Ratings on $2.4 trillion of debt that the industry guarantees would be thrown into doubt if the downgrades expand.
Downgrades may also force banks to write down $70 billion, Oppenheimer & Co. analyst Meredith Whitney has said.
From Gloomberg:
Exploding ARMs Disrupt Bernanke’s Drive to Calm Credit Markets
Joe Ripplinger took out a $184,000 mortgage in 2006 and makes his payments every month.
Now he owes $192,000.
The 66-year-old Minneapolis house painter has a payment- option adjustable-rate mortgage. It allows him to write a check for $565 a month even though he owes $1,300. The difference is added to the mortgage, and when his total debt reaches $212,000, or after five years have passed, his monthly minimum will jump to about $2,800, which he can’t afford.
“We’re barely making it right now,” Ripplinger said.
The estimated 1 million homeowners with $500 billion of option ARMs are beyond the help of interest-rate cuts by Federal Reserve Chairman Ben S. Bernanke. While subprime borrowers face an average increase of 8 percent or less when their adjustable- rate mortgages reset, option ARM homeowners may see their monthly payments double after their adjustments kick in.
“We call them neutron loans because they’re like a neutron bomb,” said Brock Davis, a broker with U.S. Express Mortgage Corp. in Las Vegas. “Three years later the house is still there and the people are gone.”
Once option ARM borrowers’ loan balances reach a predetermined limit, called a negative amortization cap, usually 110 percent to 120 percent of the mortgage amount, their payment rates immediately increase. They also automatically shoot up after five years. Otherwise, increases typically are capped at 7.5 percent of a borrower’s initial payment per year.
“These could be called long-fuse, exploding ARMs,” said Kathleen Keest, former assistant Iowa attorney general and now senior policy counsel at the Center for Responsible Lending in Durham, North Carolina. “I’ve heard people say they are the most complicated product ever offered to consumers. They are the real liar loans.”
The loans accounted for 8.9 percent of the almost $3 trillion in U.S. home loans made in 2006, up from 8.3 percent in 2005, according to an estimate by industry newsletter Inside Mortgage Finance.
One in five option ARMs packaged into bonds last year covered more than 90 percent of the home’s value and required no proof of a borrower’s income, according to a Jan. 22 report by New York-based analysts at UBS AG, Europe’s largest bank by assets. Two percent required no down payment at all from the borrower, the analysts said.
Chi [35],
The only index that I follow is the RPI, college hoops.
Confused [36],
I’m long apple carts.
Ok, who bought the $70k tax lien on Wesley Snipes house in Alpine? Clot?
From Reuters:
Regulators should allow bond insurers to fail: Ackman
WSJ
Will New Rules On Mortgages Help Borrowers?
Bill Seen Likely to Encourage Lower Rates on Bigger Loans, But Benefits May Be Limited
By SARA MURRAY and JONATHAN KARP
February 7, 2008; Page D1
grim: I’m surprised you passed over this one
My suspicion is that much of the bailout advocacy is motivated by the desire to bailout the lenders
I think that’s partially true. While a bailout is probably not in the economic best interest of distressed “owners”, lumpen voters want it anyway.
The rational decision would be to allow the bank to foreclose, go rent, repair your credit, save some money & buy back in in a few years when your credit is better & you have some savings.
The alternative is to negotiate some workout deal that puts you just shy of the breaking point so that you can struggle to make payments on a house whrere you own more than its worth.
BC Bob (39)
“I’m long apple carts.”
That cracks me up…
Did you see my California bumper sticker:
It isn’t very nice though….
Vote for Monica’s Boyfriend’s Wife
from grim # 37
The 66-year-old Minneapolis house painter has a payment- option adjustable-rate mortgage. It allows him to write a check for $565 a month even though he owes $1,300. The difference is added to the mortgage, and when his total debt reaches $212,000, or after five years have passed, his monthly minimum will jump to about $2,800, which he can’t afford.
Any bank that is handing out loans like this to the average joe needs to be left to deal with the consequences all by themselves.
The person is an idiot for taking the loan and buying into the so called “ownership society” ( or is that the “renting from the bank society”), but the bank is even worse, they were greedy, pure and simple. any body who can handle a checking account should know that this type of loan to anybody but a select few is going to be a statistical failure. I say jam it right back down the banks throats and the banks that dont go under might be a little less greedy in the future.
aboutourtown.com updated again. Two transactions stand out, both townhouses purchased in 2005 in Pway, sold recently. First townhouse sold for 4.9% more than purchased. Second sold for 11% more than purchased.
One more entry I found interesting – 80 Chariot Ct (brand new construction) sold by builder for $259.9k. I don’t recall any unit in this complex selling that low, but I may be mistaken.
cf,
Post it up, I missed it.
I realize why I missed it, I usually just search for “subprime” on WSJ, not “mortgage”.
Will New Rules
On Mortgages
Help Borrowers?
Bill Seen Likely to Encourage
Lower Rates on Bigger Loans,
But Benefits May Be Limited
By SARA MURRAY and JONATHAN KARP
February 7, 2008; Page D1
As Congress moves to lower borrowing costs on so-called jumbo mortgages, lending experts caution that the benefits to borrowers may be limited.
Jumbo mortgages, or loans greater than $417,000, normally carry interest rates of about 0.25 percentage point above smaller, so-called conforming mortgages. But the current credit crisis and turmoil in the mortgage-securities markets have widened this premium to as much as a full percentage point, pushing up borrowing costs for people in higher-priced homes.
As part of a broader economic-stimulus package, lawmakers are considering allowing Fannie Mae and Freddie Mac to purchase or guarantee mortgages larger than $417,000, the current cutoff for conforming loans. That in turn is expected to encourage lenders to charge lower rates on the larger loans, because the loans would have the implicit backing of the federal government. The pending legislation would temporarily boost the cap for Fannie and Freddie to as much as $729,750, especially in places like California and along the East Coast where housing prices are much higher than the national average. The new caps would be based on the median home price in certain areas, rather than the current flat national cap.
“The goal is that if you allow the agencies [Fannie and Freddie] to act as the credit guarantor…it helps kind of prime the pump of liquidity,” said UBS AG analyst Eric Wasserstrom.
But mortgage experts caution that the benefits of lower interest rates on certain jumbo loans could be tempered by various factors. Additional fees could be imposed on the loans to compensate for added risk, pushing up their cost to consumers. And the temporary fix is scheduled to expire at the end of this year, offering only a narrow window for borrowers unless that date is extended. What’s more, lower rates won’t be of much help to homeowners interested in refinancing if their house is now worth less than the size of their mortgage.
…
But rates on mortgages newly eligible for Fannie and Freddie’s guarantees aren’t likely to fall to as low as rates on smaller mortgages, mortgage experts say. Ajay Rajadhyaksha, head of U.S. fixed-income strategy at Barclays Capital, expects the legislation will bring rates on these large mortgages within 0.20 or 0.25 percentage point of the rates on conforming loans, but not all the way down. The average rate on 30-year fixed-rate conforming loans was 5.74% as of Tuesday, according to HSH Associates. For jumbo loans, the average rate was 6.86%.
…
Based on the latest Federal Housing Finance Board data, likely beneficiaries will be borrowers in much of California, including the San Francisco, San Jose, Los Angeles and San Diego areas. Other areas likely to benefit include Washington, D.C., and surrounding suburbs; New York City and areas from western Connecticut to northern New Jersey; the Boston area; and the area around Naples, Fla.
What we are seeing in this market (and have seen throughout history) is that while people are quite capable of logical decision making, logical decisions are often passed over for the emotional or popular decisions. Isnt it funny though that banks are terrified of people making logical decisions to walk away from a debt ridden house that they have no equity in?
i.e Rentings comment at # 43
The rational decision would be to allow the bank to foreclose, go rent, repair your credit, save some money & buy back in in a few years when your credit is better & you have some savings.
(cont)
Among other things, Fannie and Freddie, which already have boosted fees they charge for guaranteeing mortgages, could impose even higher fees to guarantee the bigger mortgages. The bill allows Fannie and Freddie “to be increasingly selective about what kind of business they choose to do and at what pricing,” says Mr. Wasserstrom, the UBS analyst.
An open question is whether Fannie, Freddie and the investment firms that deal in mortgage securities will package the newly guaranteed loans in securities separate from today’s conforming loans. Homeowners with larger mortgages tend to behave differently than conventional mortgages below the $417,000 level, mortgage experts say. For one thing, they’re generally quicker to refinance when interest rates dip, which makes these loans less attractive to investors in mortgage-backed securities. These homeowners also tend to borrow a higher proportion of their home’s value.
Experts in and out of the government say that pooling much larger mortgages — the $600,000 or $700,000 sort — with smaller mortgages could have an unwelcome side-effect. It could end up boosting the rate that homeowners with the smaller mortgages have to pay, because it would increase the perceived risk for the whole package of loans.
“If you cannot sell these loans in the secondary market. then this whole initiative pretty much falls by the wayside,” says Mr. Rajadhyaksha, of Barclays Capital.
From MarketWatch:
A dismal January chills retailers
With few exceptions, it was a miserable start to 2008 for U.S. retailers: Many of the biggest names in the sector on Thursday posted January sales numbers that were even worse than already-grim Wall Street forecasts.
Judging by the numbers, Americans cut back sharply on their spending last month, pinched by high gasoline prices, the credit crunch and fears that a recession is imminent — or perhaps already here.
Forgot to post this yesterday. I wonder if Argentina and Costa Rica going to go this way.
http://www.guardian.co.uk/spain/article/0,,2251639,00.html
afe #21: That is close to Martinsville boundary, but has Bridgewater Zip code.
#49 JB
You have to have a pretty sizable income to take a 700k mortgage. Isnt the idea to get people to buy what they could afford ? What percentage of the population can afford 5k a month just on the mortgage/taxes.
“may I suggest that losing one’s home is hardly the tragedy it is often made out to be, at least for subprime borrowers who had no business owning a home in the first place”
YES!
“these people will return to the ranks of renters with a good deal better financial outlook.”
DARN TOOTIN’!
“My suspicion is that much of the bailout advocacy is motivated by the desire to bailout the lenders, with the borrowers a conveniently sympathetic cover story.”
His suspicion is my conviction.
Summary of MGIC changes:
http://www.mgic.com/pdfs/Customer_Letter_02-06-08.pdf
Like I said, 95% LTV is the new 120% LTV.
8, 9, grim
DR Horton and MDC Holdings taking writedowns?!? I don’t believe it! bi said there would be no more writedowns!
“Mr. Eller said this will ultimately be the deepest and longest housing correction since World War II. ”
Pretorius, educate this guy for goodness sake.
cf says
grim: irrelevant except if covenants are violated….ratings have always been a guideline…the market is the real rating…the big change is getting to or leaving BBB- or A-1+ CP
Hi cf,
Does this mean any downgrade of a monoline is irrelevant until the monoline misses a payment?
14 SG
I understand that people like the Tullo buyer/seller take a bigger loss when you factor in transaction costs, but as a buyer looking for comps, the only thing that’s relevant to me is the actual price of the house. To that extent, I think incentives and related items can go into the comp killer analysis, but transaction costs (including agents’ fees) should not.
NAR Press Release
February
02/07/08
Existing-Home Sales to Hold in Narrow Range, then Begin Upward Trend
A continuation of soft market conditions is forecast for existing-home sales in the months ahead, with improvement expected by the second half of this year if loan limits are increased, according to the latest forecast by the National Association of Realtors®.
Hope those loan limits go to 11.
WASHINGTON (MarketWatch) — Sales contracts on previously owned U.S. homes fell 1.5% in December, a sign that home sales will continue to decline, the National Association of Realtors reported Thursday. The pending home sales index, based on contracts signed but not closed in December, was down 24.2% from the prior year’s period. The index, which is considered a leading indicator of existing home sales, had also declined in November, after gains in September and October. In November, pending home sales declined about 3% from the prior month, compared with the prior estimate of a 2.6% decline.
From MarketWatch:
Pending home sales fall 1.5% in December
Sales contracts on previously owned U.S. homes fell 1.5% in December, the National Association of Realtors reported Thursday, in a sign that home sales will continue to decline.
The pending home sales index, based on contracts signed but not closed in December, was down 24.2% from the prior year’s period. The index, which is considered a leading indicator of existing home sales, had also declined in November, after gains in September and October.
In November, pending home sales declined about 3% from the prior month, compared with the prior estimate of a 2.6% decline.
Sales activity is expected to remain soft through the first half of the year despite low mortgage interest rates, according to Lawrence Yun, NAR’s chief economist.
The aggregate existing-home price is expected to drop 1.2% this year, according to NAR.
December pending home sales in the Northeast down 1.5% since November, down 26% year over year.
Down 26% year over year.
26%
http://www.realtor.org/Research.nsf/files/PHS.pdf/$FILE/PHS.pdf
From MarketWatch:
U.S. in mild recession now, Global Insight says
The U.S. economy has slipped into a mild recession, said Nigel Gault, U.S. chief economist for Global Insight. In a research note released Thursday, Gault said he’s forecasting a 0.4% drop in gross domestic product this quarter and a 0.5% decline next quarter. Growth should bounce back in the second half of the year, he said. The Federal Reserve is expected to lower the federal funds target rate from 3% to 2% by the end of April, Gault said.
30 3b
great article
Maybe we should have only one scale, perhaps, or maybe I should get a second scale in my bathroom “hey, maybe today I’ll get on the LIGHT scale and lose a couple of pounds!”
Re #1
Renting is ok. Although perhaps we need more affordable housing options.
We are bailing out the businesses, as usual.
Add in an election year to boot.
From the Global Insight release, sorry I don’t have a link, only the email.
Over the Edge
The weight of evidence now suggests that the economy has slipped over the edge into a mild recession for the first half of this year. Global Insight now expects GDP declines of 0.4% in the first quarter and 0.5% in the second. Growth should rebound to 3.4% in the third quarter and 2.7% in the fourth when monetary and fiscal stimulus kicks in, but then slip back below 1.0% in the first quarter of 2009 as the boost to consumer spending from tax rebates fades.
The Downturn Is Broadening. With housing activity and prices yet to hit bottom—and still falling sharply—the downturn is now spreading more broadly through the economy. The consumer has long been under stress and is now showing signs of cracking. Spending started the holiday season well, but then tailed off, and reports from retailers for January have been worse still. Vehicle sales were sharply lower in January. We expect consumer spending to be roughly flat in the first half of the year. Worryingly, employment growth has continued to fade and turned slightly negative in January.
An ISM Shocker. The most striking evidence yet of recession was the collapse in the ISM nonmanufacturing index during January, which pointed to a contraction in most of the service sector. Taking this index at face value would suggest a severe recession, but we are reluctant to draw this conclusion from one, possibly rogue, monthly reading. While we would not base a recession call on the ISM index alone, it is in effect the final straw, following quickly behind the January employment report and the latest Federal Reserve survey of bank lending practices, which showed credit tightening sharply and broadly. It is true that not all indicators are showing recession—the ISM’s manufacturing index actually rebounded above the 50 threshold in January, helped by very strong export orders—but the weight of the evidence now points downward. Foreign trade remains a crucial plus, though, preventing a steeper downturn.
And now this:
Beazer Homes Survey Finds “Smart Time to Buy” Sentiment Prevails Among Experienced Homebuyers
Despite all of the negative commentary about the housing and credit markets, 64 percent of Americans believe that for those with good credit and a down payment “this is an ideal time to buy a home,” according to a study commissioned by Beazer Homes, one of the country’s top-10 homebuilders. Perhaps with an eye toward the future, 24 percent of survey respondents — from Gen Y to Baby Boomers — say they plan to buy a new home in the next two years either as a primary residence or second/vacation home.
More at:
http://www.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20080207005158&newsLang=en
“James Bednar Says:
February 7th, 2008 at 9:23 am ”
Who IS this guy????!?!
For those looking for “Northern NJ Pending Home Sales”, the contracts spreadsheet has been updated for GSMLS. Still working on NJMLS.
https://njrereport.com/files/contracts.xls
A formal post/analysis will be provided, but I just wanted to get the numbers out.
According to GSMLS contracts data, pending home sales for Northern NJ fell ~36% in January.
“Additional fees could be imposed on the loans to compensate for added risk, pushing up their cost to consumers.”
hmmm – someone was saying this around these parts just the other day….
“study commissioned by Beazer Homes,”
A study commissioned by Stu suggests now is the best time to PayPal me $100.
First Macys takes a sales hit now down-marker Wal-Mart. If ever there were a clear indication that consumers are at the end of their proverbial rope, this is it. If people have to pull-back spending at places like K-mart, Wal-Mart, etc. what are the odds that they are flush enough to either buy a starter home or trade up. Folks are hunkering down, either because their debt load is forcing them to or because of fear of the near-term future.
Psssssssssssssssssssssssssssssssssssss more air comes out of the RE bubble, and I think I will go to Europe this summer instead of buying another weekend retreat place. ’09 is the new target, methinks.
http://www.cnbc.com/id/23044689
Wal-Mart, Other Retailers See Dismal Sales in January
Providing further evidence of a slowing U.S. economy and a more cautious consumer, Wal-Mart Stores and other retailers reported one of the weakest months of retail sales in years.
“Everyone’s being hurt right now,” said Dana Telsey, chief research officer at Telsey Advisory Group, in an interview on CNBC’s “Squawk Box.”
“We really haven’t had a time in quite some time where we’ve had every sector from luxury goods to hard-lines to soft-lines to department stores all being weak at the same time,” Telsey said. “The slowdown of the consumer is occurring, and I think we’re going to see this continue, probably into February and March. March comparisons are very tough.”
[snip]
From the AP:
Pending Home Sales Fall in December
Industry data released Thursday show pending U.S. home sales fell 1.5 percent in December to the second-lowest reading on record, another indication that the housing market is worsening.
The National Association of Realtors said its seasonally adjusted index of pending sales for existing homes fell to a reading of 85.9 from a downwardly revised November index of 87.2. The reading was just short of the record low of 85.5 it hit in August, at the peak of the worldwide credit squeeze.
Analysts had predicted the index would rise to a reading of 88, according to the consensus forecast of Wall Street economists surveyed by Thomson/IFR.
JB (72),
Would you like me to update NJMLS “fer ya”?
Re: 74:
My sentiments exactly, Stu. A study funded by homebuilders has as much credibility as the nonsense that the NAR spews out. Maybe even less, if that’s possible.
“64 percent of Americans believe that for those with good credit and a down payment “this is an ideal time to buy a home,” according to a study commissioned by Beazer Homes,”
hoodafa,
Confirmation that this market is going lower.
70 hoodafa
How scary is that? Imagine how much worse it will get when that 64% finally gets disabused of the notion that there’s never been a better time to buy.
Nope – we’re nowhere near the bottom yet.
Actually you have those numbers already, don’t ya.
ChiFi (35)-
Garbage in, garbage out.
Rich,
That would be great. I know I have Bergen (from you), but not sure about the other counties.
74 Stu
Post of the morning.
BC beating me to the punch again at 79/80
grim (40)-
White men can’t jump.
# 45 Amen
TO Grims post # 57:
Excert freom PDF:
Restricted Markets
We are further modifying our Restricted Markets policy (originally announced on Nov. 30, 2007). While we will no longer require reducing maximum LTV/CLTV by 5%, we are establishing specific underwriting guidelines for loans insured in Restricted Markets. MGIC’s list of Restricted Markets is posted on our website, www,mgic.com/restrictedmarkets.
Standard (A) guideline changes in Restricted Markets:
• LTV/CLTVs of 90.01%-95% require a minimum credit score of 680.
• LTV/CLTVs of 90% or less require a minimum credit score of 620.
• The maximum LTV/CLTV for condominiums is 90%.
• The maximum LTV/CLTV for MGIC’s SingleFile program is 95% and a minimum credit score of 720 is required for all LTVs.
The following are not eligible in Restricted Markets:
• LTV/CLTVs greater than 95%
• Expanded Criteria (A-) product
• Reduced Documentation (Alt-A) product
• Investment property loans
• Cash-out refinances
• Potential negative amortization, including Pay Option ARMs
And Finally:
Restricted markets in NYC/NJ:
New Jersey
12100 Atlantic City-Hammonton, NJ
20764 Edison-New Brunswick, NJ
35084 Newark-Union, NJ
36140 Ocean City, NJ
New York
35004 Nassau-Suffolk, NY
35644 New York-White Plains-Wayne, NY-NJ
I’ll let you know when I’m done
This just in:
Tony Romo is still a ______.
Thanks Al, I didn’t catch that. I’m slacking the morning.
The changes regarding soft/declining markets policies haven’t been getting much media attention lately.
90: nayhole
“According to GSMLS contracts data, pending home sales for Northern NJ fell ~36% in January.” – grim
Because it bears repeating
“Tony Romo is still a ______.”
Gary,
…..and the Pats are still 18-1.
Does anybody have the history of this listing? Is this a short sale?
Listing Number: 2800113
Despite all of the negative commentary about the housing and credit markets, 64 percent of Americans believe that for those with good credit and a down payment “this is an ideal time to buy a home,” according to a study commissioned by Beazer Homes
And we have aboiut 68% home ownership rate – coincedence??? – or all home-owners truly believe that it is good time to buy, and people who are not home-owners do not believe this????
#75
My New Year’s resolution was to give up Walmart. Perhaps I’ve started a trend.
#1 Houseless isn’t Homeless
The only reason I bought our 1st home was because in our area (downtown JC) buying was cheaper then renting (2000). It was a purely financial decision. The tax deduction on interest payments tipped the scale; dubya had just upped the AGI limit for deducting student loans (i.e. effed me and all other advanced degree graduated badly). Perhaps I should now send him a thank you letter as things turned out well as a result.
#97
graduated = graduated
Obviously not Liberal Arts
#97
graduated = graduates
Obviously not Liberal Arts
“And we have aboiut 68% home ownership rate – coincedence???”
Al,
Good point.
# 55 “You have to have a pretty sizable income to take a 700k mortgage.”
I just DO NOT GET this emphasis on buying the biggest home one can afford to finance. The Mrs. Shore and I can afford to cover a $700k mortgage, but would never do it. From where we sit, it is far better to purchase something that one can buy outright or to finance a smaller purchase and pay it off quickly.
$700k at 5% for 30 years results in nearly 3,000 per month is interest payments alone. Add the higher property taxes to that type of home and the amount of “vaporized” money is just astounding. I for one would rather achieve true ownership of a property quicker, with the saved interest going to build real wealth (not the appearance of wealth), and a better overall lifestyle.
Our kids used to think that it was odd that we live in mid-level housing given where we are financially; however, recently they have begun to talk about how much better it is to love in a paid-off house, to have college money at thr ready, and to have no no debts and emergency cash at hand. I think they understand what matters better than many adults.
#64 “The aggregate existing-home price is expected to drop 1.2% this year, according to NAR.”
If NAR days this, how bad must it really be? They have been so far off and with an optimistic bias for so long. I would not be surprised to see prices off by 10-12%.
BC Bob,
That “18-1” is a tragedy of Epic proportions for that town. It will be talked about forever.
#101 Mr. Shore
A lot of people (not us) feel they are buying tomorrow’s price with today’s money, and therfore will make out in the long run buying the most house they can afford. I think here is some truth to this if you stay in the home for 30 years – avg is 7. Sadly, I’ve heard this more then once from people.
#88
Link to MGIC Restricted Markets (moved from article posted above :
http://www.mgic.com/pdfs/Restricted_Markets_02052008.pdf
I think the full state restrictions of:
Arizona
California
Florida
Nevada
are kind of funny. Not sure how long before all 50 are listed.
Shore # 101
hey be careful there buddy or i might have to label you an economic terrorist. How do you think we drive the consumer economy to ever greater heights? Convincing people to commit ungodly percentages of their income to debt maintenance with little or none left for savings is what makes this country great! are you an economic terrorist Shore guy???
SARCASM OFF
# 104 “A lot of people (not us) feel they are buying tomorrow’s price with today’s money”
I agree they are doing this. The sad thing is that they do not consider the opportunity cost of those decisions.
grim…from that WSJ article….
Experts in and out of the government say that pooling much larger mortgages — the $600,000 or $700,000 sort — with smaller mortgages could have an unwelcome side-effect. It could end up boosting the rate that homeowners with the smaller mortgages have to pay, because it would increase the perceived risk for the whole package of loans.
“If you cannot sell these loans in the secondary market. then this whole initiative pretty much falls by the wayside,” says Mr. Rajadhyaksha, of Barclays Capital.
[continuing] was not aware of these dynamics, but it makes logical sense…..law of unintended consequences…more prima facie evidence why government intervention can often wreak havoc, and the stupid beltway folks should stop pandering….
It is simply too difficult to live below your means in an area so driven by conspicuous consumption.
Beazer is right, I keep hearing this particularly from people who already own homes. Many people THINK it is a good time to buy. To them they see inventory and price reductions of 10%, before this massive bubble a 10% price reduction would have been a great deal. Also low interest rates cannot hurt. Also this same majority THOUGHT home prices would never fall!
To this I typically mention that within a 5 mile radius there are 5000 homes/condos in some stage of default/foreclosure. The tune begins to change. Your average joe is not aware of the extent they think that sub-prime, crazy arm loans were limited to the ghetto. The mindset is well the foreclosures have already happened, when the truth is there is such a backlog less than 5% are on the market and they are not selling. When the foreclosures really start to hit the inventory in 6 months downward pricing pressure will begin, now we are just seeing the psychological effects of the subprime burst and the impending recession, wait until the dagger stabs the market in the heart. My guess is by October we will see some real fire sales. Buyers need to hold the line, the fed should give up trying to save the banks and the housing market, it is inevitable they have already let this bubble get to far and should have ended it in 2004-2005, prolonging it will only make it worse. It is time for the chemotheropy, we need to get sick before we get healthy.
Pending or “under contract” sales for January for Monmouth county according to the Monmouth county MLS-
2008-322
2007-484
2006-445
2005-479
2004-538
# 105 What was it that the Shrub said after 9-11, the best thing people could do was go shopping. Pathetic. It will be a good thing to see W head off to Mill Road next January, even Hillary would be an improvement.
njrebear Says:
February 7th, 2008 at 9:57 am
Hi cf,
Does this mean any downgrade of a monoline is irrelevant until the monoline misses a payment?
bear: “missing a payment” is an ACTUAL default…an issuer of a debt security can be in “technical default”, meaning you are current with payments, but there exists terms or stipulations in the contract (i.e. covenants) that the issuer violates…..one such example of a technical default may be vilating certain capital ratios etc.
Of more import, are the guidelines that debt investors must follow. As an example, you might be running a money market fund, and are forbidden to invest in paper below a certain rating. Ultimately the market is in charge opf setting prices, but you have a separate party (i.e. the rating agency) that can function as traffic cop.
This environment sounds stupid and stilted until you realize that there has to be SOME guidelines for investors. The biggest problem is that people misunderstand the role of the rating agencies. I would say that they are there to provide high level guidelines, while most idiots think they are some kind of insurance policy…..
OH AND WHO IS TAKING A $700k LOAN
A 700k Loan @ 30 yr 6% fixed gives these numbers
Monthly payment $4,196.85
Total Payments over life of loan
$1,510,867.32
Total Interest Paid
$810,867.32
As shore guy said, has this person ever considered the Opportunity cost? For my example assume a 20% down payment and the home would cost 875K.
bear: to clarify
default technical default
BUT if the holder of the paper wants to treat a technical default as an actual default, they are free to do so. In many instances, it may not make economic sense. It may just provide pressure for the issuer to clean up their act.
default “does not equal” technical default
Hey Clott
I came across this yesterday, just in case you dont already have one.
Survival Rifles
http://tinyurl.com/2ta6j9
nwbergen (95),
SLD 25 PAGE DR $270,000 4/5/2001
2723038 (212 DOM)
ACT 25 PAGE DR $489,000 6/5/2007
W-T 25 PAGE DR $489,000 7/7/2007
BOM 25 PAGE DR $489,000 8/20/2007
PCH 25 PAGE DR $439,000 8/23/2007
ACT* 25 PAGE DR $439,000 11/6/2007
U/C 25 PAGE DR $439,000 11/20/2007
W-U 25 PAGE DR $439,000 1/2/2008
2800113 (New broker & agent)
ACT 25 PAGE DR $339,000 1/2/2008
Taxes: $8,540
Mortgage $243,000 3/30/2001
Deed $270,000 3/30/2001
Mortgage $280,000 5/25/2005
Mortgage $365,400 8/23/2006
What’s with the numbers??? Is it 35 or 10?
“An auction of 35 one- and two-bedroom condominiums in the community of Summit Park, located at 412 Morris Avenue in Summit. Ten condominiums will be sold absolute, regardless of price. Ten condominiums will be sold absolute, regardless of price. Originally priced from $549,000, suggested opening bids are from $150,000.”
source: http://www.c-n.com/apps/pbcs.dll/article?AID=/20080207/NEWS01/802070325/1006/NEWS01
My bet is the 10 haven’t been converted.
“Due to the nature of the condominium conversion process and very strong demand for these units, we can not guarantee that all types of units will be available at all times. ”
source: http://www.crgliving.com/locations/summit/
i predict the following:
dude, it was $549 but i so saved $150k & got it for 400k!
Can someone explain this to me? I am have a difficult time figuring this out…
DUKE (20-1)42 47 89; UNC (21-2) 39 39 78
[113] But you have to consider the person’s income. What if the family is earning enough money to make that payment and have money left over at the end of the month?
Rich,
I suppose that a mortgage of $420,000 in 2008 isn’t possible for them?
Thanks cf :)
What if the family is earning enough money to make that payment and have money left over at the end of the month?
This statement makes baby Jesus cry.
Chifi
It means Duke is back in it.
118 chifi…
looks like duke whose record is 20-1 beat unc whose record is 21-2…
final score 89-78…
duke scored 42 and 47 for 1st and 2nd half, respectively…
unc scored 39 in each half…
was it just a rhetorical question?
108
“It is simply too difficult to live below your means in an area so driven by conspicuous consumption.”
I agree that we have a consumption problem around here, but part of the extreme expense of living here is just trying to buy a house in a decent town so your kids can go to school in a system that hasn’t been infiltrated by gangs yet.
[122] Why Grim? There are people out there that earn enough money to afford larger mortgages as there are that don’t. You can’t even say it should be a % of income because as the income goes up the % can be higher. For example a couple earning 6K a month should not use 50% of their income on housing, but a couple earning 20K a month may well consider 50% and have 10K left over.
Fortunately, I’m not at the low end, but unfortunately I’m not at that high end either. Kinda caught in the middle.
#106 shore guy “A lot of people (not us) feel they are buying tomorrow’s price with today’s money”.
I do nto think most people even think like that, becasue they do not have a clue. They jsut think they are getting a deal.
#125 Ann: Agreeed, but conspicious consumption si still a problem. Just look at the cars average people are driving today.
People feel that once they are in these so called better towns, they have to look, and act, and drive if you will the part.
Jam,
The reason lies in the difference between “can” and “should”.
The monthly-payment-mentality has blurred the difference between the two terms.
[127] I agree. I was lowballing homes and now that prices are falling they are getting near the $ I am/was willing to pay when I thought I would be getting a deal. Now I’m rethinking things. Is it that I’m gun shy of buying in this market or is it that the lower prices I’m seeing are still inflated? I have not answered that question yet.
Jam
A 700k Loan @ 30 yr 6% fixed gives these numbers
Monthly payment $4,196.85
Total Payments over life of loan
$1,510,867.32
Total Interest Paid
$810,867.32
ok, so lets be conservative…. assume property taxes cost 1200/month. so the total monthly house payment would be $5,396.85. Now assume that the house payment is 30% of this families income (net). that gives the following numbers
monthly house note + taxes
$5,396.85
Net Monthly Income (assume 33% payroll taxes)
$17,989.50
Gross Monthly Income
$26,850.00
Gross Annual Income
$322,200.00
Sorry, but there are not that may people, even in the NY/NJ area pulling those kind of numbers.
arguments for buying most expensive house you can afford:
1. real estate is the only investment most people can make in which they can employ substantial leverage. makes sense to do this in a rising market
2. inflation
3. expected long term income growth
4. living below means has potential costs: longer commute, poorer schools, less safety (busy street, crime, environmental issues)
128 re cars and conspicuous consumption
Yeah, I agree. There is a pressure to look good.
I also think that having two parents working has hurt all of us. Houses would be a lot cheaper, they would have to be, if one parent (usually the mom) stayed home with the kids at least until they were in school like people used to do. Especially since these years coincide with the years that people try to buy a house.
kettle– you do not need to make $322,000 to afford a $700,000 home. As Jam mentioned, as incomes rise, people can (and do) afford to spend a larger percent of their income on housing
[129] I understand the difference, but the probelem is that if you look around northern bergen county – and I’m sure you have – you see that most of the towns where you would want your children to live have decent home prices above 700K. I’m not talking about Lodi and Garfield. Wyckoff, Ridgewood, Glen rock, Mahwah, Ramsey etc.
Unless you are looking for a 2 or 3 bedroom cape good luck. Also if you find something cheaper you WILL have to put money into the place.
So I may want to live in one of those towns and take on only a 250K mortgage but I can’t. So my choice is pay more or look elsewhere. I’ve lived up here all my life and my work is here and my work involves community contacts etc. I’m kinda stuck. So I can, but I shouldn’t but I must.
132 skep-tic
Interesting points. I think that younger people starting out should avoid underbuying. Don’t buy rather than underbuy. If it does mean stretching a little bit to get a house they can literally stay in forever, that is better than buying something that they can’t stay in forever (due to possible life events like having a slew of kids, getting married, etc).
skep,
$700k loan, not home. Could very well be a $1.2m home with a $500k dp, $900k home w/ $200k down, etc etc.
munirail!!!
wha’d i say?!
monorail!!
wha’d i say?!
genuine, monoline, bailed-out bond insurer!
The big threat of muni debt
Here’s how that scenario is likely to unfold.
http://articles.moneycentral.msn.com/Investing/SuperModels/TheBigThreatOfMuniDebt.aspx?page=1
…
JUNE 13, 2005
How the Garden State Dug a Hole
excerpt:
These bonds –- sometimes called POBs — are general obligation debt much like any other municipal borrowing, but they’re issued in order to put the proceeds into the pension funds, not the general government coffers.
http://www.businessweek.com/magazine/content/05_24/b3937088.htm
135 jam
You aren’t asking for a lot. You just want your kids to be able to go to school without a gang problem. It’s not being a snob. You’re not alone, believe me.
sorry for messing up the rotation.
2 in moderation, 118 & 139
Jam,
I agree, that if you are pulling in 20K a month then go for it ( although i still think that it would be a poor decision given the opportunity cost of having that money locked up in the house). The problem is that you have people making way less then that looking at those numbers! And on top of that you have the whole affordability issue in NJ
JB,
You should have the updated contracts info
[134 and 137] I’ve done the math for the 700K home:
Rate 5.75 30 year fixed with 20% down(you can find it) = 3270/month plus 1K a month taxes for a total of 4270. Add in insurance etc and lets say 4400.
At 250K a year that’s about 12500/month in net income (without discounts for 401K/pensions etc)
That leaves about 8100 net/month in left over income or 97K/year. Not bad
At 200K a year that’s about 10K/month leaving 5600/month available or 67K. Also possible.
jcer (109)-
In order to cure the patient, you have to kill the patient.
arguments for buying most expensive house you can afford:
1. real estate is the only investment most people can make in which they can employ substantial leverage. makes sense to do this in a rising market
2. inflation
3. expected long term income growth
4. living below means has potential costs: longer commute, poorer schools, less safety (busy street, crime, environmental issues)
arguments against buying most expensive house you can afford:
1) Leverage cuts both ways. Leverage is great during an up-market, but can be suicide in a down-market.
2) Deflation (falling home prices)
3) Short-term uncertainties (economy, job, health, children).
4) living above means has potential costs:
insufficient retirement savings
insufficient “rainy day fund”
insufficient college savings
inability to handle short-term shocks
Vodka (116)-
My survival gun is a Winchester 22/410 over/under. Worked when I was 12 years old, works now. You need the .410 option to bag small game birds.
A 410 on tight choke- even using birdshot- will also get the immediate attention of human intruders.
“DUKE (20-1)42 47 89; UNC (21-2) 39 39 78”
Chi,
It means Clot is held hostage in his room, in a fetal position. When requested, his wife leaves a bottle of knob creek at the door.
144 jam
I agree that it is possible. But we seem to be missing each others point. I agree with your point. Mine however, is that the majority of NJ make substantially less then 200K. Now consider your dilemma of finding good schools and nice neighborhoods in bergen for less then 700K. This is a serious issue, as you are pricing the majority of the population out of a reasonable quality of life. This is also tied into consumerism. Everyone has to decide for themselves how to manage their money, but is it really necassery to spend every penny just to be nicer newer flashier then the neighbors? This is the sort of behavior that has gotten us into the current economic hole that we are in.
ChiFi (119)-
The Heels will be there when it counts.
Looks like Roger Clemens is really getting called out on it by Brian McNamee.
McNamee has apparently turned over to the FBI syringes he kept since 2000-2001 that apparently have Clemens blood on it.
Clemen’s has been busy getting face time with the Congressman tyring to do additional damage control.
http://news.yahoo.com/s/ap/20080207/ap_on_sp_ba_ne/bbo_steroids_clemens
Chewing on a $700K mortgage is doable, if your income source is stable, e.g. doctor, lawyer, indian chief. If it’s chancy, e.g. regular wall streeter, one has to wonder do I have 30 years at that rate, and if not, then what?
BC (148)-
Not last night. With Lawson out, I had no expectations. Dook just spread us out and went to work. I watched USA-Mexico and only switched over for a couple of minutes.
Let’s see Dook play like some Italian pro team in the tourney & see how far it gets them. They will get hammered…and in an early round.
Does it make me less of a person that I took Dook +3.5?
The problem with some of these monthly payment calculations is that your are assuming that property taxes will remian flat. I would argue that your property taxes in NJ are going to increase at a pace greater than incomes increase over the next 5-10 years. How do think the state is going to keep the welfare spigot going? It has been proven over and over agian that there is no political fallout for this whatsoever. This tax money is essentially pissed down the drain of Trenton, does nothing for your equity position, and the services will continue to get worse. I would say that the biggest risk to the first time homebuyer in NJ is not asking prices, interest rates, or schools, it’s the uncertianly in the NJ legislature on how they are going to keep the the welfare state afloat and growing. The first place they will look is real estate taxes (or someother real estate related tax), and the sheeple will keep electing the same scumbags.
#146
grim– I agree with your points as well. I only wanted to point out that there are some legit reasons why so many people stretch and there are costs to not stretching for a house when everyone else in your income range does so. unfortunately, the minimum price point for quality in this area is so high that the costs of not stretching often make buying impractical (i.e., we could all buy in the ghetto, but what’s the point?).
Ridgewood
SLD 495 ALPINE TER $750,000 7/27/2005
SLD 495 ALPINE TER $725,000 2/6/2008
[149] Ok, we are not missing each other’s points although we may have different ideas of what is a quality house and what is not.
For instance:
Newer, nicer and flashier?
MLS numbers:
2747080 – no garage 3bd 2 1/2 bths on a corner
for $699,000
2709429 – 3 1/2 bths. also 699,000
2740042 – 4 2 bths 759,000 backyard on 208 South.
I wouldn’t buy any of these.
From MarketWatch
No bang for the bucks
Surveys find most Americans will use stimulus rebate for debt, savings, not spending
The government’s efforts to stimulate the U.S. economy by doling out checks to workers could backfire, according to two surveys asking consumers what they will do with their checks.
Nearly three-quarters of those asked on both surveys said they will either pay down debt or save any money sent to them as part of an economic stimulus package. The remaining quarter indicated they would spend the money, which is the goal of the program.
More at the link above,
Rich
Jam (158),
Sorry, but asking prices aren’t going to bolster your argument. These people can ask $1M, doesn’t mean someone will pay it.
Rich
“Does it make me less of a person that I took Dook +3.5?”
Clot,
Yes!! That’s sacrilegious.
Ok, who bought the $70k tax lien on Wesley Snipes house in Alpine? Clot?
Hey Grim,
Can you educate us on how this process works and when/how they will be able to assume ownership of his house in Alpine?
This news about the possible drop in the FFR to 2% by end of April – what exactly will this affect? I haven’t seen any changes in credit prices since the latest 2 drops. How long does it usually take these changes to trickle into the markets (excluding mortgages). ie personal loans, auto loans, credit cards, etc. For example, I’ve been trying to sell my truck but have had no takers. I would have thought that the lower rates would help the cause, but it clearly hasn’t. When I purchased the thing last April I had to talk the buyer into selling it to me b/c of other interested parties (same offers)…damn have times changed, and in only 9 months!!
JB,
#163 in moderation. Was it the ed reference?
Romney out.
BC (161)-
Hey, it wasn’t a win bet on the money line (which was a tasty +160). I thought taking the points was a disciplined and reasoned compromise.
Hell, even my Mom knew Dook was going to win that game.
96:
Or conversely, Al, 4% of all homeowners already regret their decision…
Okay, Shore, we get it. You’re rich.
make (162)-
Tax certs pay a coupon to the holder. They are sold in a reverse auction (bid down form 18% interest) process.
It is usually impossible for the tax cert holder to foreclose, unless the property’s owner has died intestate. Every once in a while, though, a house will fall thru the cracks and the cert holder can pull off a foreclosure.
skep-tic Says:
February 7th, 2008 at 11:42 am
“arguments for buying most expensive house you can afford:
3. expected long term income growth”
I always have a problem with 3. What about unexpected illness or death, unexpected unemployment, stagnant income growth, technological changes, industry changes, outsourcing, kids, divorce – you name it.
Frankly I’ve always viewed expected or anticipated income growth to be a form of gambling.
I prefer living with my means now frankly. Increased income can be used to update or extend a home, savings, vacations or other lifestyle enhancements, or early retirement.
It’s a bit like salt in food – better too little than too much, you can always add more but can’t take it out.
139
“Main Street’s still all cracked and broken.”
“Sorry, Mom, the Fed has spoken.”
Monorail. Monorailllll. MONORAILLLLL!
“Main Street’s still all cracked and broken.”
[172],
The Boss spoke about this same subject;
“Now Main Street’s whitewashed windows and vacant stores
Seems like there ain’t nobody wants to come down here no more
They’re closing down the textile mill across the railroad tracks
Foreman says these jobs are going boys and they ain’t coming back to your hometown”
You forgot these reasons to buy the most expensive house you can afford
5) Realtor makes more at closing
6) Banks makes more on interest
7) State makes more in Sales tax
8) Town takes in more property taxes
does anyone have any suggestions for areas to look at if i wanted to hop across the border into PA?
Where do you work? Generally.
107 Chi
“Experts in and out of the government say that pooling much larger mortgages — the $600,000 or $700,000 sort — with smaller mortgages could have an unwelcome side-effect. It could end up boosting the rate that homeowners with the smaller mortgages have to pay, because it would increase the perceived risk for the whole package of loans”
I’ll have to go back and look, but I believe I was saying exactly this back when the raised limit was first being pushed.
112 chi
exactly right, and to draw the further roadmap for njrebear, when monolines lose their rating, the bonds they insure lose their rating, you could, for instance, trigger a new capital ratio requirement which, if not met, would constitute a contractual event of default
“if the holder of the paper wants to treat a technical default as an actual default, they are free to do so. In many instances, it may not make economic sense.”
We’ve already seen these contractual rights waived in the last couple of months.
#175
Kettle: I think it totally depends on your commute. I know Bucks county is pretty nice, but that’s way down here near western central NJ.
right now i am near the rockaway area, but my living location is pretty flexible, i was thinking north of philly and south of stroudsberg
#175
Kettle,
Don’t know if Salisbury Twsp is too far for you (straddles 78 and parts have an Allentown address). Check out lvarmls.com and choose Salisbury school district. My cousin lives there and I have always looked at houses online. The prices are good, taxes are lower than here and the school district is good. Oh, and it’s right near Dorney Park. You have to be really careful with the schools in PA. Friends moved to Bethlehem and had to send their kids to private high school.
my main constraint would be that i cannot go to deep into philly as Mrs kettle wants to stay in a reasonable distance to her family
http://philadelphia.craigslist.org/apa/563327133.html
Kettle, for perspective, from that house, it’s an hour to the intersection of 1 and 287, if you leave by 6:45 am.
Driving home, it’s worse. You have to get on 1 by 4:30 or leave after 5:30. Fuggetabout Friday night.
But at least you’d be able to get to know the terrain.
It’s a bit like salt in food – better too little than too much, you can always add more but can’t take it out.
Throw in a potato. That will absorb the salt.
Just think the goverment could come up with a plan like “A potato in every pot”
I am getting ready to change/leave my current field, so the commute is a somewhat secondary issue
Romney just bailed out. Guess Chavez as a write in is my only choice.
Actually i plan on private school for baby kettle, but that is still a few years out, he cant even walk yet.
#181
That sounds like Bucks County would be perfect then. Take a look online, and you might be able to find some info.
The drawback to the area is the lifeblood to NJ is Rt. 202, which gets some pretty bad traffic.
#188
There is Moravian Academy in Bethlehem.
134 Ann
“I also think that having two parents working has hurt all of us. Houses would be a lot cheaper”
Agreed. Prices go up when more money is available. It’s analogous to the credit bubble, really.
Not that I make judgments about who should stay home, because I don’t.
confused,
i say we start a gorilla campaign for chavez. As someone said before, i would vote for him just to see the face of the US oil barrons when he nationalized them
further, there’s a game theory/prisoner’s dilemma issue with the one vs. two working parent question:
If mine were the only household with dual incomes, it would be great for me, because my household has increased income without a corresponding increase in prices. But if everyone is dual-income, then we get the price increase, and thus every household works twice as hard without increasing their effective income.
So it makes sense on the individual level to be dual-income, but not collectively. And since this isn’t a collective decision…
#193
And it really screws us single-folk…
Kettle, then by all means, stick to the good school districts with the lowest taxes, unless you love the city life. The more north you go above Philly, the more rural, for example, Doylestown & Quakertown.
Council Rock, Pennsbury (northern end) and many of the school districts in upper Bucks are great. Get your test scores at http://www.pde.state.pa.us/k12/site/default.asp?g=0
Go to kw for real estate listings that are searchable by school district…they show taxes as the last line item.
Great private schools around there. Check out the George School.
Great private schools around there. Check out the George School.
thanks for the comments all, just trying to get a basic feel for the idea :)
191 njpatient
I don’t make judgments about who should work or not either. I don’t work outside the home, but I’m grateful that I was allowed to go to college and have all that comes with that privilege.
It’s the two income trap:
“In the face of such hardships, many families have sent both parents into the workforce to try to make ends meet. After all, surely if both parents work full-time it shouldn’t be hard to ensure financial security, right? Wrong, say authors Elizabeth Warren and Amelia Tyagi, in their book, The Two Income Trap. Two-income families are almost always worse off than their single-income counterparts were a generation ago, even though they pull in 75 percent more in income. The problem is that so many fixed costs are rising — health care, child care, finding a good home — that two-income families today actually have less discretionary money left over than those single-earner families did. As the authors write: “Our data show families in financial trouble are working hard, playing by the rules — and the game is stacked against them.”
http://www.motherjones.com/news/qa/2004/11/10_400.html
kettle1
We did the math on Bucks County and it wasn’t much better than Mercer County. It is lovely out there. Sounds like you’re doing private school though, so you should be a bit more free in terms of town choice. For us, we were looking for good school districts, and the one town that made sense was Newtown, in the Council Rock school district. When we did the math, we wouldn’t have been ahead of where we were in Mercer County, and my husband would have had a heck of a commute to boot. Houses were not any cheaper there and the taxes were even steven. Again, this was against Mercer County, not Northern NJ.
171 ‘soosh
“It’s a bit like salt in food – better too little than too much, you can always add more but can’t take it out.”
Years ago, my mother was making regular salad and fruit salad for a get-together, and accidentally threw a giant handful of finely chopped scallions into the fruit salad. Quite a job for this little boy to pick all of those scallion particles out. At least it wasn’t salt.
More on the trap:
“A big part of the two-income trap is that families have basically bid up the cost of living. Housing is a big example. A generation ago, an average family could buy an average home on one income. Today you can’t do that in three-quarters of American cities…
A lot of that has to do with public schools. As confidence in the public schools has dwindled, people are bidding up the prices on homes in those school districts with good reputations; so for a typical family, the only way to afford one of those homes is to send mom to work…
Of course that’s where you see the trap. If families were simply sending Mom into the workforce and using that money to build their savings, or to have more fun, or to go on more vacations, you wouldn’t see the same kind of financial trap…”
Ann , Nj patient
Not tog o to far afield, but the prisoners dilemma is also an issue on a society wide scale. In theory, you ( as in society) should use technological advances to automate more menial tasks while giving people more free time to explore personal development/interest. Instead, the opposite has occurred. More work is expected from each individual as technology has increased the productivity per given work time. So instead of technological advances freeing the human race from labor that is the utopian vision, technological progress has simply added more chains. Although i would point out that technological progress itself is not responsible for this, but our financial system is.
Multiple income households are new?
My mother, along with her mother, both worked like hell to buy their first house together in the 60s. My grandmother, a single mother, put my uncle through high-school during that time. It was unheard of that two women would purchase a home, so they needed to borrow from someone in the community willing to lend to them.
After high-school graduation, my uncle shipped off to the Navy and sent his checks home to help pay the mortgage. When my father came over from Europe a few years later, the 3 of them worked to pay the house off.
I’m not sure what multiple-income-less world you guys grew up in, but this is the world I grew up in.
“68% of African American children are born out-of-wedlock, 45% of Hispanic children, and 25% of White children. ”
http://thepage.time.com/transcript-of-romneys-speech-withdrawing-from-the-race/
Lets turn this snowglobe and look at it from the back.
Two to three generations ago, the stay-at-home had a taxing job. Taking care of the homestead and/or the farm and/or schooling the children. It wasn’t until after WWII that the “Mom” turned into June Cleaver and bridge club with a ton of free time on her hands.
Technology removed those necessary jobs (have you ever tried to wash clothes using a ringer-washer? ), freeing up the stay-at-home from all but the child care task and a thirty minute dinner prep.
So it is reasonable to expect a Mom to stay home all day, or would that be an undue burden on society? [Having to foot the bill in terms of higher wages paid for one person productivity?]
Just trying to counterpoint.
if anyone was wondering what prisoners dilemma is….
from wikipedia
In game theory, the prisoner’s dilemma (sometimes abbreviated PD) is a type of non-zero-sum game in which two players may each “cooperate” with or “defect” (i.e., betray) the other player. In this game, as in all game theory, the only concern of each individual player (“prisoner”) is maximizing his/her own payoff, without any concern for the other player’s payoff. The unique equilibrium for this game is a Pareto-suboptimal solution—that is, rational choice leads the two players to both play defect even though each player’s individual reward would be greater if they both played cooperate.
In the classic form of this game, cooperating is strictly dominated by defecting, so that the only possible equilibrium for the game is for all players to defect. In simpler terms, no matter what the other player does, one player will always gain a greater payoff by playing defect. Since in any situation playing defect is more beneficial than cooperating, all rational players will play defect, all things being equal.
In the iterated prisoner’s dilemma the game is played repeatedly. Thus each player has an opportunity to “punish” the other player for previous non-cooperative play. Cooperation may then arise as an equilibrium outcome. The incentive to defect is overcome by the threat of punishment, leading to the possibility of a cooperative outcome. So if the game is infinitely repeated, cooperation may be a subgame perfect Nash equilibrium although both players defecting always remains an equilibrium and there are many other equilibrium outcomes.
“Kelly Says:
February 7th, 2008 at 12:50 pm
You forgot these reasons to buy the most expensive house you can afford
5) Realtor makes more at closing
6) Banks makes more on interest
7) State makes more in Sales tax
8) Town takes in more property taxes”
I’ll throw in another one:
9. So everyone can look at you and think you are more successful than you really are.
make,
One of my editors was telling me about buying tax liens.
It’s vague, but apparently, if you buy the lien, when the house is sold, the buyer has to pay you back the entire amount with interest, and the interest can be substantial.
Also, he said that searching for the tax liens is somehow more labor intensive so there are fewer professional investors.
I have no idea as to how you would pursue this.
But maybe someone else knows more.
[160] I understand that asking prices aren’t selling prices. Also, there are many unsold homes in these areas. I don’t have mls access, but I have seen the mls and have seen the sold listings. Many of the sold prices are for houses that are similar to what I put up. If you think you can get a 4 bedroom house in one of the towns I mentioned for 500 or even 600K, show us.
jam,
What is wrong with those houses in Wyckoff?
Rumors abound regarding the miscalculation of ISM.
Not paying 700 for a house without a garage and two rooms on the first floor.
Not paying the prices I listed for three bedroom houses.
So, I’m not buying until prices come down.
jam,
How much are you going to net from the sale of your current home?
(Playing counterpoint here)
#210 jam
Kinda ugly, quick-and-dirty, but sure:
$600,000 Mahwah, 133 2ND ST, C/C (5,3)
$525,000 Glen Rock, 70 BROOKFIELD AVE, S/L (5,2)
$379,999 Ridgewood, 215 S BROAD ST, COL (5,2)
$599,000 Ridgewood, 105 SOMERVILLE RD, C/C (4,2)
$590,000 Ridgewood, 365 PONFIELD PL, COL (4,3)
$580,000 Mahwah, 10 MALCOLM RD, RANCH (4,3)
$580,000 Ramsey, 316 N ISLAND AVE, B/L (4,3)
$580,000 Ramsey, 30 HOPPER TER, B/L (4,2)
$575,000 Ridgewood, 239 CIRCLE AVE, COL (4,1)
$565,000 Wyckoff, 457 JAMES WAY, S/L (4,2)
$562,500 Ridgewood, 81 PERSHING AVE, COL (4,2)
$560,000 Ridgewood, 616 MORNINGSIDE RD, CONTP (4,3)
$555,000 Mahwah, 20 KAREN DR, B/L (4,2)
$550,880 Ramsey, 15 BALFOUR LN, C/C (4,3)
$550,000 Ridgewood, 474 SHEFFIELD RD, COL (4,2)
$550,000 Ramsey, 45 ARLENA TER, C/C (4,2)
$545,000 Ramsey, 99 PINE ST, CONTP (4,3)
$539,000 Mahwah, 106 THIRD ST, B/L (4,1)
$535,000 Ramsey, 112 OAK RIDGE RD, COL (4,3)
$530,000 Ramsey, 230 CHURCH ST, COL (4,1)
$526,200 Ridgewood, 253 BROOKSIDE AVE, B/L (4,2)
$521,500 Ramsey, 8 GRANDVIEW TER, S/L (4,1)
$517,500 Wyckoff, 262 FRANKLIN AVE, C/C (4,1)
$515,000 Glen Rock, 69 FERNDALE AVE, COL (4,1)
$505,000 Mahwah, 50 BEVERIDGE RD, RANCH (4,2)
$505,000 Ridgewood, 694 MIDWOOD RD, C/C (4,2)
$495,000 Ramsey, 117 FUHRMAN AVE, COL (4,2)
$490,000 Ridgewood, 687 EASTERN CT, C/C (4,2)
$489,000 Ramsey, 60 DAVIDSON AVE, C/C (4,1)
$470,000 Ramsey, 49 POPLAR ST, C/C (4,2)
$469,900 Wyckoff, 95 EDISON ST, COL (4,2)
$465,000 Ramsey, 99 CENTER ST, COL (4,2)
$463,000 Wyckoff, 177 ELMWOOD PL, C/C (4,1)
$452,500 Ridgewood, 654 MIDWOOD RD, C/C (4,1)
$450,000 Glen Rock, 30 BROOKFIELD AVE, RANCH (4,2)
$450,000 Wyckoff, 389 KINGSTON ST, COL (4,2)
$449,000 Glen Rock, 24 ROCK RD, COL (4,1)
$440,000 Ridgewood, 610 ROBERT ST, C/C (4,1)
$416,250 Ridgewood, 329 FRANKLIN AVE, COL (4,1)
$390,000 Wyckoff, 7 WARD AVE, C/C (4,2)
Houses in “Wyckoff, Ridgewood, Glen rock, Mahwah, Ramsey” which sold for less than $600k, with at least 4 bedrooms. These are since July (as far back as my buyinginbergen data goes).
Wyckoff isnt prestigious enough for most 30 somethings. And schools…well, only the best will suffice, because we all know that good schools = free ride to Fordham
grim: They said “’m not talking about Lodi and Garfield. Wyckoff, Ridgewood, Glen rock, Mahwah, Ramsey etc.”, so I took Wyckoff as the start of the “good towns” (IOW, nothing wrong with it)
216 I’m a picky person for my money. No c/c no b/l. Also no busy streets. But thanks for that info.
Grim: I sold in June and am not in a lease.
216 just by rough estimate that removes about 30 homes from your list.
When trying to decide on having one parent stay home, there are other considerations than monthly cash flow. Missing out on 401k contributions when you’re in your 20s and 30s can wreak havoc with your retirement egg growth – if a parent decides to return to the work after a 5 or 10 year absence, it’s hard to play catch-up. Also since we don’t have universal healthcare, it makes sense to have two sets of benefits available, so that if the husband loses his job (and healthcare) the wife’s benefits could be accessed.
Okay, then here is your subset:
$525,000 Glen Rock, 70 BROOKFIELD AVE, S/L (5,2)
$379,999 Ridgewood, 215 S BROAD ST, COL (5,2)
$590,000 Ridgewood, 365 PONFIELD PL, COL (4,3)
$580,000 Mahwah, 10 MALCOLM RD, RANCH (4,3)
$575,000 Ridgewood, 239 CIRCLE AVE, COL (4,1)
$565,000 Wyckoff, 457 JAMES WAY, S/L (4,2)
$562,500 Ridgewood, 81 PERSHING AVE, COL (4,2)
$560,000 Ridgewood, 616 MORNINGSIDE RD, CONTP (4,3)
$550,000 Ridgewood, 474 SHEFFIELD RD, COL (4,2)
$545,000 Ramsey, 99 PINE ST, CONTP (4,3)
$535,000 Ramsey, 112 OAK RIDGE RD, COL (4,3)
$530,000 Ramsey, 230 CHURCH ST, COL (4,1)
$521,500 Ramsey, 8 GRANDVIEW TER, S/L (4,1)
$515,000 Glen Rock, 69 FERNDALE AVE, COL (4,1)
$505,000 Mahwah, 50 BEVERIDGE RD, RANCH (4,2)
$495,000 Ramsey, 117 FUHRMAN AVE, COL (4,2)
$469,900 Wyckoff, 95 EDISON ST, COL (4,2)
$465,000 Ramsey, 99 CENTER ST, COL (4,2)
$450,000 Glen Rock, 30 BROOKFIELD AVE, RANCH (4,2)
$450,000 Wyckoff, 389 KINGSTON ST, COL (4,2)
$449,000 Glen Rock, 24 ROCK RD, COL (4,1)
$416,250 Ridgewood, 329 FRANKLIN AVE, COL (4,1)
I’m no expert on the “busy streets”, but I’m sure that there is something in there which you’d take as evidence that such as house can be bought for under $600k.
Of course, seeing the OLP’s would be even better… but I Am Not A Realtor (thank god!)
bewm – you are all right. Ok I will admit it – I want a bigger house than the ones you have listed.
Brookfield, Rock, Franklin, James Way face or back up to busy and in some cases hiways. I have little kids and when I spend that kind of money I’d like them to be able to ride thier bikes outside without the extra real fear of major traffic.
#222: Forget about the house on Broad street in Ridgewood. Right by the railroad tracks, not a prestigious part of town at all.Whoever bought that house is probably ashamed that they live on the wrong side of the tracks.
Their kids probably wont get invited to Ridgewood play dates either :(
[224] That’s right. If you pull up each of those houses you are going to find: rail road tracks, highways, busy roads, houses in need of major repairs, no garages. In short while they may seem “affordable” they are not worth the prices paid or asked.
Pat,
I would argue that you cannot look at things from a primarily “productivity” point of view and have a reasonable picture. Business sees things from a productivity point of view, but you and me as humans are primarily focused not on our productivity, but our quality of life.
…another thing you won’t find with any of those houses is granite or stainless steel – the benchmark of class
…feeling particularly poor having grown up next to a set of freight rail tracks.
jam [219],
I don’t blame you one bit, it’s f*cking bullsh*t. These home sellers can all go f*ck themselves. I’ll also be d*mned if I’m going to pay those dream prices for their POS capes and bi-levels. They’re f*cking stoned. And I can guarantee, they will capitulate LONG before I will. Hey sellers, did you see the charts posted here yesterday?
Another person I know gets whacked due to credit market implosion, although this one was from a completely unexpected source…..my old “big boss”….and a super conservative guy….this one doesn’t pass the smell test, he sounds like a scapegoat….
WSJ Bristol-Myers Seeks Treasurer
Impairment Charge On Bad Investments Prompts Search
By PETER LOFTUS
February 7, 2008; Page B5
Bristol-Myers Squibb Co., recently burned by bad investments, is seeking a new corporate treasurer, the drug maker’s chief executive officer said yesterday.
“I’m a big believer in accountability, and we’re looking for a new corporate treasurer and a couple of people under him,” CEO James Cornelius told a Merrill Lynch conference in New York in remarks that were available live over the Internet.
Last week, the New York company announced that it had recorded a $275 million impairment charge in the fourth quarter because some of its short-term investments dropped in value amid the recent global credit-market turmoil. The charge contributed to a net loss for the quarter.
Mr. Cornelius called the soured investments “an absolute surprise.” He conceded that “had I been smart enough to ask about that in detail in the fourth quarter, I’m not sure we would have avoided the loss completely, but maybe we would have minimized it.”
A spokeswoman for Bristol-Myers Squibb said the prior treasurer, Edward M. Dwyer, had left the company. Mr. Dwyer couldn’t be reached to comment. The spokeswoman said the company couldn’t comment on individual employees, but that “actions up to and including termination of employment have been taken” in connection with the investment losses. The company now has an interim treasurer.
Gary,
Have you sold your house yet?
Rich
#229: :hug: I feel poor when I am driving my 8 year old car with 100,000 miles while others in my age group are driving new Acuras, BMWs and such. I suppose they are the truly wealthy ones
my comment at 227 is in reference to pat at 206
…feeling even worse that as a kid I actually *played* on the railroad tracks.
I feel dirty. Will buying my kid a Bugaboo make up for it?
re: 209
Scribe re: NJ Tax Liens
http://www.target.com/gp/detail.html/602-9426871-3762203?asin=1893978001&afid=yahoosspplp_bmvd&lnm=1893978001|How_to_Buy_New_Jersey_Tax_Liens_that_earn_18:_Books&ref=tgt_adv_XSNG1060
The Tide is turning.
http://articles.moneycentral.msn.com/Investing/Extra/ToyotaPriusSalesPassFordExplorer.aspx
P.S. I own one of each.
235 yes Grim.
Rich [232],
It’s not up for sale yet. I’m waiting. When the sellers sober up, then the wife and I will decide what to do.
gary Says:
February 7th, 2008 at 2:50 pm
jam [219],
I don’t blame you one bit, it’s f*cking bullsh*t. These home sellers can all go f*ck themselves. I’ll also be d*mned if I’m going to pay those dream prices for their POS capes and bi-levels. They’re f*cking stoned. And I can guarantee, they will capitulate LONG before I will. Hey sellers, did you see the charts posted here yesterday?
________________________________________________
You’re right about price capitulation, but the reality is that people are willing to pay a premium to live in the “good schools/ homogenous/’best'” towns, and unless that reputation deteriorates, their RELATIVE costs are not going to come down.
It’s different for people like my husband and I; we don’t have kids and just want a old, well-maintained house in a quiet area that isn’t literally dangerous–the end. Despite what people here seem to believe, there is quite a bit to choose from in BC between Saddle River and “the ghetto,” so all people like us have to do is be patient. For parents depending on public schools or the “right” kind of playmates for their kids, they face a much tougher challenge.
Sean,
That 18% rings bells. That’s what my editor said.
Make, I think that once you buy the lien, you have to keep up the tax payments until the house is sold.
I drive a 12 year old car and bought a bugaboo. When you sell the Bugaboo on Ebay after 3 years of use, you get back over 80% of what you pay. Essentially, What cost $700 you can usually get back $600 for. Mine is going up for sale this Spring.
So for $100, I got to utilize the Benz when I could have spent the same amount on some hard-to-push POS Graco.
It’s all in how you look at things.
[244] Well said.
J.B., go on and blast away.
It does help, I think. A year or so ago when a brother died and another had a heart transplant, it helped me coming here and bashing everyone over the head.
emigrantdirect just dropped its rate to 3.6% from 4.05%.
Tax liens. Before you go buying them I would talk to an attorney who knows something about them – they are kind of tricky.
I’m still at 4.25% at TheAppleBank for Savings.
Has always been higher than the big boys/ING/Etrade/Emigrant etc.
Are gracos really that hard to push?
#217 tbw free ride to Fordham.
Since when did Fordham becomw prestigious?
That is too funny!! I have to tell my Fordham grad friends that one. They will get a kick out of it.
re: 241 ad 246 tax liens in NJ.
You have to bid them down from 18%. The winner is the one who bids the lowest percentage, and you might have to wait years for the property to sell.
You are not buying the property, just the lien so no property taxes to pay. It is just a waiting game.
#212 BC Bob Rumors abound regarding the miscalculation of ISM.
Up or down?
Stu,
I definitely need to check that one out.
I agree that Gracos are hard to push and POS, but there are lots of great strollers that don’t cost $700 before any accessories!! Also, bugaboo is fine if you’re only having 1 kid, or not having kids close together, but a single stroller that costs more then 90% of high end doubles is a bit absurd. BTW – I could write a book on strollers.
#206 Pat
WTF! So long as you don’t eat crap dinner prep is at least 30 minutes. If you don’t eat crap grocery shopping becomes a full day affair, because butcher, baker, fruit and veg are no longer on same street. And, car seats and other safetly devices (which are good) have nearly crippled parents in terms of time taken for just about anything.
222
Oh lord, I think I was in all of those houses. Most I would say are fixer-uppers (need at least 50K to at least come into the 80s).
Gary (239),
Oh, I was under the impression that you were under contract… guess I got you mixed up with someone else?
Rich
Actually, many were being marketed as teardowns.
We do a lot of beach trips with my son and no other stroller can handle the sand, end of story.
Try to sell your $100 graco!
I’ll take the bugaboo.
Resale value must be taken into consideration if you truly plan to resell something.
Otherwise, I would be just as skeptical as the rest of you. If you guys want, I could load the old Frog into the truck and bring it to the GTG on Saturday for you all to test drive. Being that I consider all of you good friends, I’ll offer it up for $550 :P
203 right on. like blackberries. have they really helped us?
3b [251],
Higher. Probably some long s#cking on a bad trade. The dow shot up almost 200 points, at that time.
another comment regarding prisoners dilemma also from the wiki
Iterated priosners dilemma; two players play Prisoner’s Dilemma more than once in succession (that is, having memory of at least one previous game), it is called iterated Prisoner’s Dilemma. Amongst results shown by Nobel Prize winner Robert Aumann in his 1959 paper, rational players repeatedly interacting for indefinitely long games can sustain the cooperative outcome
Axelrod discovered that when these encounters were repeated over a long period of time with many players, each with different strategies, greedy strategies tended to do very poorly in the long run while more altruistic strategies did better, as judged purely by self-interest.
This describes the housing fiasco rather well. Instead of everyone cooperating and maintaining reasonable prices for homes, people went for short term gain and paid massive prices expecting large short term gain, when everybody would have benefited more in the long run by a cooperative group strategy.
ECB may cur rates.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBJBTUw5SVhM&refer=home
Stu et al
regarding strollers. First, did you know that the bugaboo was the result of a college seniors design project? secondly forget the stroller man me and the wife just have a plain black diaper bag and carry babby kettle in either a sling on in a Baby Bjorn. Note that the cheap baby bjorn will give you a sore back as it puts all of the load on your upper back, but the higher end one rocks. it fits almost like a vest and keeps the weight more on you hips. The baby bjorn method works great as there is never a concern about terrain or small isles, the baby goes whereever i can go :)
204 grim
There have always been multiple income households, single parents and working women of course.
When I was growing up, some of the moms worked, but the ones who did went to work once all the kids were in school, if at all. Most worked some sort of part time job too, extra money, not mortgage money. So houses were usually bought when there was only one income in the family, when the family was starting out. Unlike today, where people are bidding up the prices because of the two incomes from the start, hence the “trap”.
But when the baby is 2, the Bjorn don’t get worn. ;)
Ann Says:
February 7th, 2008 at 3:52 pm
204 grim
There have always been multiple income households, single parents and working women of course.
When I was growing up, some of the moms worked, but the ones who did went to work once all the kids were in school, if at all. Most worked some sort of part time job too, extra money, not mortgage money. So houses were usually bought when there was only one income in the family, when the family was starting out. Unlike today, where people are bidding up the prices because of the two incomes from the start, hence the “trap”.
________________________________________________
I agree to an extent, but it isn’t merely that housing prices have been bidden up; it’s also that wages have stagnated and for many demographic segments, actually declined. Additionally, wages have become substantially more unstable, which has strongly undermined the average wage-earner’s ability to maintain payments on long-term debts/”investments” like mortgages. All things being equal, I’m not sure that even with fewer women in the workforce and less of the “bidding war” phenomenon if the average single-income household would be able to afford the average single-family home today.
Kettle1, I wasted a gift of a Kelte backpack. Probably used it 5 times. Although it is by far the easiest way to transport child by foot, my kid just seems to like to walk more than be carried. Not that I’m complaining about it, but it does slow ya down a bit. My wife used the Bjorn. We are in the world’s largest baby toy/accessory/clothes swap group I know. All of us probably end up buying about 1/5th of what a loner parent would need to buy.
Stu is a big fan of the second hand!
When I was looking for homes 1 year back the realtor gave me some nice one or two page print outs which had all details about a home including the front picture. Which website can i get these all details on a home. OR only realtors get to see all the details and what we see is filtered info ?
Stu,
The thing handles well, I’ll give it that.
I don’t even have a kid and I was impressed. I’m a tech geek who enjoys high quality and smart engineering, so I’m attracted to products like that. I have no doubt it could handle three kids and still be a hand-me-down in good shape.
However, it has since transcended from being a good product to being a status symbol, and that is where my criticism was directed.
Stu
I am with you in the second hand department. My son is about 7 months and i think we bought him clothes for the first time last week. We also have a kelty backpack that baby kettle is just getting big enough to go into. I expect to continue using it, but only time will tell. I use it with my 2 and 3 yr old niece/nephew all the time when i helping out with them. Mrs kettle and i inherited a graco, and i didnt really care for it, but it is certainly functional. However, we have almost never used the graco as baby kettle is usually strapped to daddy kettle whenever we go out. i personally could not justify 700-900 for a stroller even if it has a good resale value, but thats me.
this is what baby kettle rides in
http://tinyurl.com/34jbjj
Valco Runabout or Mountainbuggy are hands down the best in the sand. Valco turns into a double when #2 arrives. Mountain buggy does not fold down well.
If we weren’t on #3 we might have sold the Valco, and probably would have gotten 75% of purchase price, near 100% on accessories. Have already loaned out the bassinet a few times (that part only used 3-4 months/child). Friends are eyeing toddler seat, but will have to get their own.
FYI, bugaboo resales have dropped a little since bugaboo has introduced new lines of colors. The ‘status symbol’ looses some value when it’s clearly a 3-4 year old color.
I’ve used the bugaboo, and while it’s not terrible it’s not worth the money, and think it’s best suited for 40-something single child parents.
Were there 2 wage earners, per family, back in 2001-2002? If yes, what explains the increase of approx 100% in RE prices in this area from then until 2006/2007? Please, something other than proximity to NY.
Excellent point Bob.
Mind you this is anecdotal, but in the early ’90s when my friends and I were married (yes, I’m old) we were all two-income families and house prices were falling or stagnant, not rising.
BC bob,
#272 Easy money and HGTV.
[222]
I agree w/ Ann, we looked at some of those places and they were barely a step up from shanty town. I would argue that 3/4 of them are not real 4 BR either, and most are only 1 BA.
My wife and I both used to work in NYC, she still does, I now work in NW Bergen (we live in Monmouth Co. – Red Bank/Middletown area). I can’t even begin to explain the cult mentality among the NW Bergen homeowners in my new office. When I first joined the company, I mentioned to a few colleagues that we were considering a move from Monmouth up to Bergen. The next few days I was inundated with people telling me how this was such a great idea – “the schools”, “the access to the city”, yada, yada. People were emailing me contact info for various local realtors, offering to take me to lunch in Ridgewood, Glen Rock etc. Now some of this was genuine “welcome to the team” kind of behavior, and I was truly appreciative, but some were pushing the concept like they were selling me a used Tarus. I can’t tell you how many times I heard that real estate prices never go down here, or maybe prices will flatten a little, etc (w/ many citations to the rich Manhattanite itching to move to the boring suburbs). I got the sense that some kind of weird, subconscious collusion was going on.
After a few months it slowed, especially when I told a few folks that I expected prices to fall considerably in 2008 into 2009 so we were going to wait before purchasing anything. Not to mention, we toured many of the “prestigious” towns and came to the realization that the part of Monmouth County we live is actually much nicer than NW Bergen (our opinion), and the schools are probably just as good. Also, neither of us are originally from NJ so the prestige effect of particular towns doesn’t resonate with us anyway.
There is one very nice young lad in my office who was telling me that her folks had an investment home listed on the market in Allendale, she commented that it had been sitting for 3-4 months with no offers. I suggested that perhaps it was overpriced. She just laughed and said “yeah, but its Allendale!”
Attitudes are slowly starting to change, but is going to take a while longer. The people who paid those prices for the dumps listed in post 222, are really in for a world of hurt. I hope it was worth it just to say you live in some ficticious “prestigious” town.
I thought Ann’s point was that dual income couples have served to keep wages stagnant, since it permits employers to pay lower wages.
I didn’t think her point was that dual income couples have caused house price increases.
Stay out of Hunter’s way….cause he’ll mow you down………..
http://www.valcobaby.com/2006/single.htm
Could someone help me to find out history of #2486308? New on the market, but the photos seem like taken in the summer, suspicious…
249 LOL! Fordham. When I was at NYU I laughed my arse off at a hot rumor going around, undoubtedly by my fellow students who wanted to attend an Ivy League school, that NYU was being added to the Ivy league. I couldn’t belive they would take that seriously, but they did. Hey, we were kids. Well I was just told by a friend whose daughter was accepted at Fordham that “its not official, but is being considered as a new Ivy league school”.
Of course, while I’m laughing, one of them will cough up 8 Billion and they’ll be a new Ivy league school…
Once again not to stray to far afield…..
2 wage earners is about more then just an increased family income. I personally think that 2 wage earners has is a standard setup and expected in general, when historically before WWII and for a short time afterward 2 wage earners was the exception. Another importnant effect is the outsourcing of child raising. When the child gets dumped at day care for the first 4 years of their life and then heads off to school, only see the parents on the weekends and in the evening, there is an effect. I think that a large amount of the social changes we are seeing in the under 30 crowd comes from the social change of most children being raised by daycare, not by the parents. I was born in the late 70’s and from my experience, my generation was one of the first to see large scale day care.
249 LOL! Fordham. When I was at NYU I laughed my arse off at a hot rumor going around, undoubtedly by my fellow students who wanted to attend an Ivy League school, that NYU was being added to the Ivy league. I couldn’t believe they would take that seriously, but they did. Hey, we were kids. Well I was just told by a friend whose daughter was accepted at Fordham that “its not official, but is being considered as a new Ivy league school”.
Of course, while I’m laughing, one of them will cough up 8 Billion and they’ll be a new Ivy league school…
Funny to read now: an article (Nightmare Mortgages) from 2006 Buiness week. “Why are hedge funds willing to buy risky loans directly? Because they can demand terms that help insulate them from losses. And banks, knowing what the hedge funds want in advance, simply take it out of the hides of borrowers, many of whom qualify for lower rates based on their credit histories. “Even if the loan goes bad, [the hedge funds are] still making money hand over fist,”
http://www.businessweek.com/magazine/content/06_37/b4000001.htm
Oops, I re-read Ann’s post and she does think that dual income couples have enabled bidding up.
Pat,
I believe it’s not what Ann said but what she posted at 202 that started the dual income / home price discussion.
Rich
Damn, and I took such pleasure in pointing out your error!
jjb,
New on the market. Same owner since 95.
post 117 Rich
Thank you for the info.
grim: thanks.
Odd, how could the photos look like taken in the summer. May be they took the photos themselves in the summer…?
270 / 277,
This is what Luc gets around in: Stroller
Don’t worry, we line it with old newspaper so he stays relatively clean.
#282 Pat: I do not think it makes a difference. Dual income couples have been more the norm than the exception over the last 10 years or more.
#281 Fordham Ivy League, absolutely hysterical. it is a nice school do not get me wrong, but ivy League?
The only thing Ivy League about it is the price at around 42K a year (tuition, room and board).
Nice school, absolutely not worth the money however.
#288
Certainly possible. I’ve taken photos of my home with no current intention of selling. In addition, perhaps they were considering selling at the time, but only now deciding firmly to list.
Sorry #291 should have been in response to #279.
WASHINGTON (MarketWatch) — The Senate has passed a $150 billion economic stimulus package designed to provide a timely, targeted and temporary boost to the flagging U.S. economy. The Senate approved the measure, nearly identical to one passed by the House last week, on a 81-16 vote. The House will take up the bill quickly and is likely to send it to President Bush for his signature by the weekend. The plan would give tax rebates of up to $1,200 for households, with $300 more for each child. The full rebates would be sent to families with incomes under $150,000, including seniors and the disabled. The plan would also cut business investment taxes by $44 billion
I know some people on this board travel internationally on occasion. you might find this interesting
US Border Guards copy your laptop/ipod/camera contents.
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/06/AR2008020604763.html
Dinks suck –
JBJB-I grew up in prestigious Bergen Co. it is a nice area but it is really no different than the nice areas of Essex,Union,Middlesex, or Monmouth counties. The difference between Ridgewood(Bergen), Essex Fells(Essex), Summit(Union), or Rumson(Monmouth) is negligible at best they are all expensive, all have good schools, high taxes, and snooty people. The thing with counties that are a little further out is the McMansion effect as seen in Manalapan where some on my family lives. No offense to anyone but the monstrosity of giant new homes with bad styling/landscaping coupled with a lack or infrastructure or planning it might as well be an expensive part of Texas. But don’t be fooled most parts of NJ are not that nice every county has some crown jewels, Bergen has a lot of very nice areas and a lot of areas where the houses are very small. Would I take a house in Essex Fells, or Rumson over Allendale? hell yes! The big problem with Essex is the eastern communities boarder Newark/Orange and have troublesome schools otherwise they are great communities.
3b Says:
February 7th, 2008 at 4:55 pm
#281 Fordham Ivy League, absolutely hysterical. it is a nice school do not get me wrong, but ivy League? The only thing Ivy League about it is the price at around 42K a year (tuition, room and board).Nice school, absolutely not worth the money however.
3b: ultimately, it is these types of schools that are the real destroyer of the tapped out and underqualified students they spit out. These are the type of schools that produce vacuous unskilled white collar laborers with few prospects and 100K in debt. If you go to Fordham and are not able to pay full freight without loans, then you really should be going to a state school. It is a waste of money that you do not have.
From Bloomberg:
Security Capital’s Bond Insurer Loses Aaa at Moody’s
Security Capital Assurance Ltd.’s bond insurance units, hobbled by a decline in subprime mortgage securities, lost their Aaa credit ratings at Moody’s Investors Service.
Grim 204
“Multiple income households are new?”
“I’m not sure what multiple-income-less world you guys grew up in, but this is the world I grew up in.”
I don’t think I implied that this is new, or that I grew up in a multiple-income-less household, or at least I certainly didn’t intend to so imply, since neither thing is true.
Both of my parents worked throughought their entire lives, and they were both born well before WWII. My father’s a Brit, and his mother was “in service” (see “Remains of the Day”) before she was a WAC in WWI, where she met my grandfather. My mother’s mother went from being a part-time school-teacher to a full-time school-teacher after the kids left home.
At least as far as the US goes, it was a gradual thing during the middle of the 20th century, growing out of the Wars, that two incomes went from being unusual to usual, IMO.
Further, dual incomes in our family in the latter years haven’t caused any increase in house prices, since the immediate Patient clan tends to build their own houses (I’ll be the exception).
Grim 235,
Yes. You should feel terrible. No winners ever grew up near train tracks, busy roads, or flight paths. Nary a sound should cross by your house in these magical NJ neighborhoods.
Everyone wants be close to trains, buses and airports yet no one thinks a good life can be made near them. Lots of snobs on this board. I can’t think of one “commutable” home within my family where the sound of train or road noise can’t be heard. We must be lepers to the “noise free” people.
“…feeling particularly poor having grown up next to a set of freight rail tracks.”
Did you like that or dislike it, grim? Mrs. Patient grew up a short distance from the freight tracks as did my mother, who still talks about how she misses hearing the whistle at night coming through the Lehigh Gap.
speaking of overpriced colleges, I was doing the 529 calculation the other day, and determined that in order to have enough money saved for little skep-tic (who is on the way) to attend college in 18 yrs at a college which currently costs $40,000 annually with expected increases of 6% annually, me and mrs. skep-tic have to save $1200 per month (and get an 8% annual return) for the next 18 yrs! This is just for one kid
I think many mediocre private colleges are going to fold in the next 10 yrs or so as they price more and more people out.
230 gary
“I don’t blame you one bit, it’s f*cking bullsh*t. These home sellers can all go f*ck themselves. I’ll also be d*mned if I’m going to pay those dream prices for their POS capes and bi-levels. They’re f*cking stoned. And I can guarantee, they will capitulate LONG before I will. ”
SING IT!
Do you see the good times coming yet, Gary? The Jints won the SB and sails fell off the end of the table. It was a good January.
sales.
sheesh.
304 skep
“I think many mediocre private colleges are going to fold in the next 10 yrs or so as they price more and more people out.”
Yes. Reminds me that approximately half the private schools in Manhattan went under during the 1991/2 recession. There will likely be a lag this time, I would guess.
chi
“this one doesn’t pass the smell test, he sounds like a scapegoat…”
agree – guy wasn’t an NEO; CEO saying “maybe I should have known.”
smells rank.
#280 Ket – And in the late 70’s, early 80’s there was a social stigma attached to a mom staying at home with her children. A friend of mine was at a c0ckt@il party enjoying a conversation and when she was asked what “she did” and she replied that she was raising her children, the crowd around her started to back away. She never had the chance to drop the bomb:”My husband makes enough money so I don’t have to work. My family needs me more than they need the extra income.”
700 bucks for a stroller. Yikes. Grim, I’ll join you playing on the railroad tracks. We can wear old ratty clothes, take a lunch in a brown paper bag and we’ll have a great time being “poor.” (I always love hearing train whistles – really.)
Being a stay at home mom was a “social stigma” in the late 70’s – early 80’s?
… the crowd around her started to back away.
I think you’re taking that creative license thing a little far.
“I feel dirty. Will buying my kid a Bugaboo make up for it?”
LOL
BIGwindow, I just wrecked my 9 year old Saturn. Pat will remember that I replaced it with a Civic, which looks only slightly less shy parked amongst the Bentley’s and Jags in my midtown garage.
I wish I had my brother’s skills. He only recently stopped driving his ’74 Impala, which had over 300,000 miles on it. He had replaced just about the entire engine before he finally let it go!
304 Make sure they get into Harvard or Yale, they should be free by then if they keep getting pressure about their endowments and tuition.
Heh-heh, he said endowment.
276 Pat
My point was more that two incomes as people are starting out has helped drive up house prices.
Here’s a lowball for you:
58 Wellington, Short Hills
OLP $795,000
SP $600,000
290 3b
What about the 80s? That’s really when dual incomes took off and so did the
Oh, and I do believe that dual incomes starting out has contributed high house prices, but I didn’t write those quotes above, just pasted them. :)
316
Sorry, meant to say, what about the 80s, dual incomes took off as did house prices.
Prices really took off in the 80’s after interest rates fell from the double digits.
So..
If everyone in, oh, let’s just use good old North Jersey, starting buying houses with only one income instead of two like most people do, what would happen to house prices?
BTW, not saying dual incomes are the only thing inflating house prices, but that they are one contributing factor for sure.
speaking of planes, trains and automobiles, I note that somewhat recent changes to approach paths to Newark Airport have caused a number of flight paths to go directly over Brigadoon.
What a slum.
apologies if I missed this:
http://www.bloomberg.com/apps/news?pid=20601109&sid=aX74xQnVfBfI&refer=home
“We call them neutron loans because they’re like a neutron bomb,” said Brock Davis, a broker with U.S. Express Mortgage Corp. in Las Vegas. “Three years later the house is still there and the people are gone.”
The loans accounted for 8.9 percent of the almost $3 trillion in U.S. home loans made in 2006, up from 8.3 percent in 2005, according to an estimate by industry newsletter Inside Mortgage Finance.
“About $460 billion of adjustable-rate mortgages are scheduled to reset this year, with the next spike in resets coming in 2011, when $420 billion in mortgages will adjust to new interest rates for the first time, according to New York-based analysts at Citigroup Inc. “
“starting buying houses with only one income instead of two like most people do, what would happen to house prices?”
Ann,
Better yet, start buying houses without funny money. I know it’s a revolutinary idea, however buyers will have to start saving for a dp. Can Pavlov’s dog be retrained?
#319
I tend to agree with you. It’s extremely difficult to purchase anything on a single income. Even if that single income is only supporting a single person, let alone a spouse and/or a kid too.
[324],
That’s revolutionary
As NJP 323 quoted & we have all seen the graph posted do we all wait for the 2nd shoe to drop.Or will the bailout of these loans be in place before it hits the fan again.
more legal layoffs in NYC (scroll up):
http://www.abovethelaw.com/2008/02/omelveny_myers_followup.php#more
FWIW, this is a top ten firm
In 2008 America, every Fairy Tale begins with; “If Elected I Promise”.
njpatient Says:
February 7th, 2008 at 6:09 pm
“speaking of planes, trains and automobiles, I note that somewhat recent changes to approach paths to Newark Airport have caused a number of flight paths to go directly over Brigadoon.
What a slum.”
Heh, heh. They actually moved us OUT of the flightpath (not that it was particularly noisy). I miss floating in the pool in the summer and looking up at the underbellies of the planes, especially 747’s.
I’m a bit of a plane junky, the best part of the Tunpike is passing the airport. And I’ll happily sit next to the window in the cafeteria at IKEA and watch the planes taking off and landing.
On the stroller debate. My neighbour has a Bugaboo and it is definitely sexy but unless you live somewhere seriously walkable it is a bit of a waste and Wife is right, there are lots of great ones that cost less.
Anywhere suburban a bigger consideration is how it fits into a car and how easy it is to set up with one hand. The one thing I never had and wish I had gotton is the Snap and Go. Fits with a basic car seat, you don’t have to wake the kid every time you get in and out of the car and doesn’t take up too much room.
I used the Bjorn a lot with my first but it is annoying if you want to shop in a mall. You can’t try on clothes and your hands end up full quickly.
Now 1 is 6 years and the other approaching 4. I just keep a small cheap umbrella stoller in the car “just in case”.
In London McLaren is the most popular – light and maneuverable and not too big. The only people you see with Bugaboo’s are the nannies. Guess the parents show their affection for their kids buy spending money rather than time.
Wow- so many “Debbie Downers” here today. Two incomes driving up prices, stratosphere college tuition, world coming to an end, better live well beneath your means, etc., etc. You young’uns are supposed to be optimistic and carefree.
House sales have fallen off a cliff in January and sellers’ capitulation will soon follow. I’m afraid some of you are in such a “woe is me” mode that when prices do come down you will be like deer in the headlights. Grim is doing a great job with this blog putting up comp killers and more lowballs are showing up. Granted it is not time for dancing in the streets but just like it was nearly impossible at the time to call the top they won’t ring a bell at the bottom either. Keep your eyes out for good deals starting to emerge.
Back when dinaosaurs roamed the earth in 1982, we bought our first house. The housing market was in the toilet, our parents said we couldn’t afford it,mortgage rates were 17%, a realtor told us we were crazy to pay THAT much for our white elephant home and we would never get our money back out. Granted there were times when we searched through our coat pockets for diaper money- but we were young and we managed to have fun through it all. As luck would have it we sold in 2004(without a realtor) and made 26 times what we paid for the house in ’82 (OK we did do a MAJOR renovation)and my husband was able to retire at 51!
Whenever you decide to buy it will be scary and there will be people that tell you can’t afford it,yada,yada,yada. I admit I was the conservative one that was always pulling in the reins on my Wall Street cowboy hubby, but sometimes you have to take risks.
Your time will come soon enough- just don’t be too busy stacking up canned food and water in your rented basements to notice when buying opportunities arise.
Gary cheer up!
#332 Coast –
Back in the day when you were young and fancy free, I bet you couldn’t imagine that you were just a hop, skip and a jump away from being an old fogy wittering on about the “youth of today’.
How does it feel? Need a rocking chair yet? Bottle of moonshine? Cane?
njcoast [332],
Gary’s all fired up! :)
332 coast
you’re of a certain age that didn’t have to take out $200K in educational debt. It wouldn’t bother me at all if I hadn’t had to do so.
You were fortunate to buy your first house at a time that was not the peak of a bubble, and to sell it at a time that was. If you were a first time buyer at the peak, instead of someone who was cashing out, what would you have done (remember, you have $200K in educational debt)? Would you have taken the risk of buying, hoping not to be a debbie downer?
I’m glad things worked out nicely for you, but it didn’t happen because you have a positive outlook or “took risks”.
And yes, grim does work hard on this site. That’s why I send him a little bit of change now and then, and the fantastic information that we are all lucky that he makes available to us is also why I’m not buying right now, even though if you look hard enough there are some decent bargains.
In another year, there will be more and better bargains still, of that I am certain. In fact, you could say I’m quite optimistic about it.
Iran isn’t wasting time. Maybe they have Sadams WMD’s
http://news.yahoo.com/s/ap/20080207/ap_on_re_mi_ea/nuclear_iran;_ylt=AqUDvxPVAgy3CENFPpzKLbKs0NUE
Lisoosh-
Touche! No rocking chair yet- I run my own company that keeps me too busy.
WASHINGTON (Reuters) – The House of Representatives on Thursday approved a bill to crack down on abusive marketing practices in the student loan industry and encourage colleges to moderate tuition increases.
Despite White House opposition, the House passed the bill, which would also simplify the student financial aid application process, expand funding for graduate student programs at colleges that traditionally serve minority students, and create new scholarships for military personnel and family members.
#334 nj patient: In fact, you could say I’m quite optimistic about it.
It is not even a question of being optimistic about it. It is an absolute fact, guranteed.
#332 nj coast: gary has a house.
#327 mike:Or will the bailout of these loans be in place before it hits the fan again.
Not going to happen.
#328 nj patient: more legal layoffs in NYC.
Don’t worry, I am sure pret can explain this away.
#316 Ann Agree to disagree. I think 2 incomes became more the norm in the 90’s, or at least from what I have seen on Wall St over the years.
I do not really belive 2 incomes drove prices higher. I think the influence is minor.
#298 chgo: Agreed 100%.
If you can put your boomer bashing aside and re-read njcoast’s post you can learn a little something.
Some of ya do come across real glum but in a decade or two when you’re njcaost’s age you’ll be telling youngers the same thing. “I’ve been through this before, I remember when house prices were sky-high but just hang in there blah, blah, blah.”
Remember, ’tis great to be.
On another note, I thought the discussions about what everyone was driving were ridiculous until a read the many posts where a bunch of guys went on about baby strollers.
hey there site, it’s been a while and am catching up on the posts of the last couple of days. the new job has put me in D.C., Philly and Boston and have been out of the loop.
but back to the college talk, my cousin went to Fordham and once described it as “sub-ivy” i laughed and said aren’t all colleges that are not ivy “sub-ivy”, he replied “you know what i mean”. ha!
335 NJpatient
I’m quite optimistic for you as well. And no if I were you I wouldn’t have bought in 2004. You all here are much smarter than I was buying my first house.
I’m just saying even if prices drop lower than you can imagine it will still be scary to make the commitment to buy your first house and some will never take the risk. I can see prices are trending downward. I too am looking to buy in the future. And yes there is a certain amount of luck- either good or bad- timing the purchase and selling of a home. So good luck to all!
On another note, I thought the discussions about what everyone was driving were ridiculous until a read the many posts where a bunch of guys went on about baby strollers.
LOL I was about to add my comment on stroller – mainly because my wife’s back is hurt and I ma the one who folds it, opens it and carries it around…
BTW – we have 3 strollers: umbrella stroller (9$ – for air travel, 9$ well spent), Graco 3 in 1 – with carrier snapping to stroller/car seat base, and running stroller – for hiking/walks in the park/walks..
I am sad as baby finally too big for Craco’s carrier and we can use only stroller part right now. It is great for shopping though.
with my masculinity satisfied by this post I am off for the night.
Ann Says:
February 7th, 2008 at 6:02 pm
So..
If everyone in, oh, let’s just use good old North Jersey, starting buying houses with only one income instead of two like most people do, what would happen to house prices?
____________________________________________
I know you don’t respond to me, but I’ll take a crack at your question. :-)
I think Elizabeth Warren’s thesis about the effect of dual incomes has some validity, but I think she doesn’t control sufficiently for one important factor: that household income in real dollars has not increased dramatically over the past 30 or so years. In other words, even though the average middle-class, married household has two earners now, those two earners aren’t producing dramatically more income than the average middle-class, single-earner household in say, 1978–they certainly aren’t producing anything like twice the income of the earlier single-earner household. That’s why I think the case for dual-income households being the root of the housing run-up is a little overstated.
http://tinyurl.com/yulzw5
weekly list of comm news
3b
“#328 nj patient: more legal layoffs in NYC.Don’t worry, I am sure pret can explain this away.”
I almost put that in the original post.
“It is not even a question of being optimistic about it. It is an absolute fact, guranteed.”
Without question.
Al (348), AL, AL!!,
I here ya!
Our son just out grew the Graco.
It was great, when he fell asleep in the car seat, just slide up the handle and carry the whole kit and caboodle into the restaurant.
Now, ya take him out of the car seat, he wakes up and you have to hope he’s going to be happy in the new snap on table thingie.
Ahem… did I tell you what I’m driving these days?
We’re buying a house in No Bergen with 1 income. I know a lot of SAHMs, most work a few hours a month doing something for extra money, but even less then ‘part time.’
Most of the SAHMs I know were high wage earners. Problem now is that with most demanding jobs the 40 hr work week does not exist. Two people working 40 hrs is doable, 2 people working 60+ hrs is.. well.. not for us.
I know a lot of Chinese & Indian families that live with their extended family, so childcare costs are not a huge issue. It’s a different way of life, and I respect that, but I’d take a smaller house with a reasonable mortgage over living with my mother or MIL anyday..
FYI, I joked with a friend that we’d have the only kids in N. Bergen that had to share bedrooms. That mostly comes down to the style of house that we like, and less with our decision for 1 parent to stay home. But sh1t if I was working we could afford 1 heck of a house.
Only thing that really k1lls me about N.Bergen, is that even when we’re paid in full we’ll need about $500k in retirement savings just to produce enough income to pay our property taxes. That’s at today’s figures. Chances are we will not be retiring here.
345 Rich
Who boomer bashed?
“in a decade or two when you’re njcaost’s age you’ll be telling youngers the same thing. “I’ve been through this before, I remember when house prices were sky-high but just hang in there blah, blah, blah.””
If you read njcoast’s post, you know that she bought at the bottom and sold at the top, so I don’t think she was saying “I’ve been through this before”.
Rich
“On another note, I thought the discussions about what everyone was driving were ridiculous until a read the many posts where a bunch of guys went on about baby strollers.”
The topic of strollers was first brought up by grim. He gets a dispensation.
#315 –
startingoverinNJ Says:
February 7th, 2008 at 5:57 pm
“Here’s a lowball for you:
58 Wellington, Short Hills
OLP $795,000
SP $600,000”
WOW!
do you think that this is true – is it possible that it’s a typo?
my realtor called about this house, telling me that it was such a great buy (at $795) – great street etc. and since it went under contract so fast, i just assumed that it went for asking – or close to it.
I’m not getting something.
Why are the discussions about cars ridiculous?
In fact, wasn’t a study done (now I’m going to have to search for the sucker) that showed the relationship between car styles and purchases to some five year economic projection?
For example, njpatient..what color HC did you buy? Do NOT tell me road dirt gray.
Bystander Says:
February 7th, 2008 at 5:30 pm
Grim 235, Yes. You should feel terrible. No winners ever grew up near train tracks, busy roads, or flight paths. Nary a sound should cross by your house in these magical NJ neighborhoods.
byst: The Port Washington branch of the LIRR ran right behind my apartment building.
My best friend when I was 10 years old had a porch that overlooked the ravine with the LIRR. One day I was in the courtyard of JHS 189 and I found an M-80 on the ground (i.e. = 1/4 stick dynamite). I went over to my friend’s house and we waited for a train to go by…..I lit the fuse and threw in down at the third rail. Anyway, there was a big boom and a huge spark off the third rail and all the lights on the train went out. We got scared as hell, turned off all the lights in his house and hid in the bathroom……..ah…latchkey kids in the late 1970’s…
Njcoast
“I’m just saying even if prices drop lower than you can imagine it will still be scary to make the commitment to buy your first house and some will never take the risk.”
I agree on the first bit, and clotpoll is somewhere nodding at the second bit.
#332 njcoast – says:
“As luck would have it we sold in 2004(without a realtor) and made 26 times what we paid for the house in ‘82”
“………..and my husband was able to retire at 51!”
njcoast – not a convincing argument in favor of buying now.
For all you Greenspan Playa Haytas….
a video
http://www.cnbc.com/id/23050803
BTW, not saying dual incomes are the only thing inflating house prices, but that they are one contributing factor for sure.
Between 2000 and 2006, home prices in NJ doubled.
In 2000, 54% of working age females were actually employed. In 2006, that number rose to 56%. In total, there were about 150,000 more working females in NJ in 2006 vs. 2000. This isn’t a very big increase in a state with 8.7 million people.
At the same time, real median household income was flat between 2000 and 2006. An increase in dual income households, if it happened in any meaningful way, would show up as increasing household incomes.
I think it’s safe to say that the an increase in dual income households did not contribute to the bubble.
http://tinyurl.com/2dvbvj
358 Pat
Royal blue
361 t c m
I didn’t say now is the time run out and buy- I merely pointed out that there could be buying opportunities coming up in the next few years that some will miss because they will always be waiting for prices to be even lower. And when prices do cycle down it is not always a bad idea to reach for that dream house- sometimes it does all work out in the end.
359
that’s a riot, chi
Was this already posted?
What slump? Homeowners in denial
Survey shows 3 of 4 homeowners believe their home has gained or retained its value, despite evidence of price decline.
NEW YORK (CNNMoney.com) — Despite numerous reports showing home values in historic decline, more than three out of four homeowners believe their own home has not lost value in the past year, according to an online survey.
The survey was conducted by Harris Interactive for Zillow.com, a Web site that gives estimated home values.
The survey of 1,619 homeowners found 36% believe their home has increased in value, and another 41% believe their value has stayed the same. Only 23% believe their home has lost value…
http://money.cnn.com/2008/02/07/news/economy/homeowners_views/index.htm?postversion=2008020715
Re: Housing market
Home sales have slumped across the US. Traditional means of selling a home no longer apply. Folks can now seek out other sellers here http://findtrademove.wordpress.com/
Pat (357),
In reference to these posts.
“I drive a blah, blah, blah.”
Who gives a rat’s arse.
Patient (really?),
I wasn’t adressing anyone in particular. And I should have said BEFORE anyone starts boomer bashing.
We get a new poster here who is basically saying that in their opinion many are rather pessimistic and continually rant and that poster happens to be older usually there is a rush to label and bash. All I’m saying is give them a chance before “you” (not you in particular) start down that path.
I starting to agree with Clot that many here won’t ever purchase. I don’t think as high as 60%.
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