From the Washington Post:
I am sick of everyone blaming the breakdown in the credit and housing markets on subprime loans. Subprime loans were certainly part of the problem, but they are a symptom of a deeper issue. What’s happening in the market today is not the bursting of a five-year bubble but the bursting of a 40-year bubble and the failure of the mortgage loan system to meet the needs of the marketplace.
The truth is that subprime lenders, by responding to demand, were the finger in the dike for the whole housing market. The real problem is affordability and the incongruity between incomes and home pricing.
Forty years ago, the median national price of a house was about twice the median household income. In some parts of the country, this ratio was closer to 1 to 1. Twenty years ago, the median home price was about three times income. In the past 10 years, it jumped to four times income.
But in most major economic centers, typical families haven’t been able to buy a home for anything near the national median price for decades. Try to find a single-family home in the D.C. area for the national median of $221,900. In the major markets, there is tremendous dependency on alternatives to the standard 30-year fixed-rate mortgage, which in turn has created a dependency on the least scrupulous mortgage companies and lenders.
…
Consider Silicon Valley, home to much of the driving force for our economy in the ’90s. Today the median price of an existing home in Silicon Valley is $775,000, but the median household income there is only $62,020. A home in the area costs almost 13 times annual income. Home prices in that market would have to drop nearly 70 percent or income would have to triple, and interest rates would have to stay low for the price-to-income ratio to reach a more affordable level. Here in the Washington metropolitan area, the median home price is about eight times the median household income. Income-affordability ratios are similarly out of balance in Boston, New York, San Diego and the other areas hit hardest by the current crisis.
From the NY Sun:
Big Drop Is Seen in Real Estate Tax Revenues
The city and state governments are bracing for a precipitous drop-off in the tax revenues they will receive from real estate transactions.
The city is forecasting a 39% decline in sales volume for all commercial transactions through 2009, and the median price of those transactions is expected to decline by 32%, according to its latest budget projections. Fewer sales at lower prices are leading to projections of declines of hundreds of millions of dollars in revenue derived from both the real property transfer tax and the mortgage recording taxes.
Since roughly 2002, low interest rates, a weak dollar, and rising office rents have paved the way for explosive growth in the commercial real estate market. The repeal of the “Cuomo Tax” on commercial real estate transactions 11 years ago increased the number of billion-dollar deals, which in turn helped fill city and state coffers.
In the last five years of the real estate boom, the real property transfer tax and the mortgage recording tax have been a windfall for the city and state, accounting for more than $4 billion in combined revenues last year.
From the Voice of San Diego:
Mortgage Distress Spreads Beyond Subprime
In the year since national spotlights became trained on problems affiliated with subprime mortgages, some pundits and analysts have made “subprime” synonymous with the entire crisis in the economy, the housing market and a lot of other, sometimes unrelated, issues.
But growth in late payments and foreclosures among other loans in San Diego County speaks to a problem that is far from contained to subprime, analysts caution.
Confirming a well-known trend, new data show that late payments and delinquencies on subprime loans in San Diego County soared between November 2006 and November 2007, according to FirstAmerican Loan Performance.
But in that same time, signs of distress also increased among the other 87 percent of outstanding loans in the county, those prime loans restricted to borrowers with very good credit.
“That’s the part we are all watching,” said Mark Carrington, director of analytical sales and support at First American LoanPerformance. “The subprime, that’s to be expected. What we’re watching is the prime delinquencies beginning to increase.”
From the NY Sun:
Options Are Studied Regarding Expected ‘Tsunami of Default’
Members of Congress will get input from local officials, lenders, and community groups today in assessing how city and federal efforts could help New York City weather the subprime mortgage crisis.
“We are at a critical juncture in the subprime mortgage crisis; by all accounts we are facing a tsunami of default,” Rep. Carolyn Maloney, who will chair the hearing at City Hall, said yesterday via email. “We need to focus on practical solutions to keep struggling New Yorkers from losing their homes.”
While many New Yorkers rent their homes and are not directly affected by mortgage issues, areas in boroughs outside Manhattan with higher rates of home ownership have been disproportionately harmed. Queens and Brooklyn had 5,461 and 4,858 foreclosure filings in 2007, respectively, compared with just 288 in Manhattan, according to the city’s Department of Housing Preservation and Development.
A report released in October by the Furman Center for Real Estate and Urban Policy found that in certain neighborhoods such as Jamaica, in Queens, and East Flatbush, in Brooklyn, the percentage of overall loans issued by subprime lenders was more than 40% in 2006. Minorities were disproportionately affected, with more than half of the city’s subprime loans held by African-Americans, Hispanics, and Asians. Overall, 19.8% of loans issued in New York City were subprime, versus 12.8% nationwide.
From Newsday:
Home prices will drop for 2 more years, experts predict
While the direction of the economy may lack clarity, the housing market, locally and nationally, is in decline. According to some experts’ predictions, home prices may continue to fall for another two years.
“We are way early in the curve in terms of the devastation to housing,” said Manhattan appraiser Jonathan Miller, executive vice president at Radar Logic, a real estate data firm. “I think we will see an acceleration of price declines on Long Island.”
Experts nationwide note that with an unprecedented price boom, as has been the case, comes the potential for sharp declines. Locally, prices may not fall as much as they might elsewhere — but Long Island is far from immune from the .national trend, they said.
Martin Cantor, director of Dowling College’s Long Island Economic and Social Policy Institute, suggests home prices on Long Island, which have fallen by 5 percent in Nassau County and 7 percent in Suffolk over the past year, could drop another 15 percent before prices stabilize. He predicted that the time a house spends on the market, currently under four months, will jump to seven months.
Some suggest price declines on the Island are worse than the data show. In many communities, prices are 15 percent off where they were a year ago, according to Home Buyers’ Resource Center broker-owner .Bethany Marten of Baldwin.
There’s some evidence that the region’s price declines could steepen even further.
Consider the ratio between home prices and incomes. As of December, Nassau’s median home price of $447,500 was 5.6 times the median household income in the county, while Suffolk’s $370,000 median price was 5.2 times income, according to Irwin Kellner, chief economist with North Fork Bank and Marketwatch.com. Two years ago, those ratios were even higher. But as the market becomes more balanced, and buyers have to meet more stringent lending criteria, the ratios will have to come down, Kellner said.
Nationally, median home prices are, on average, 3.2 times median household income, he said.
To get to a point where prices are four times incomes, median home prices would have to fall 24 percent in Suffolk and 29 percent in Nassau.
“By this measure, housing prices have a ways to go before people can step up and buy them,” Kellner said.
Sounds like a few agents were telling some whoppers at open houses yesterday.
They can talk all they want…nobody’s buying it. Literally.
Trend = friend.
BTW, Amy Winehouse looks like a vampire.
Had one agent say, “Please, buy this house” before I identified myself as an agent. To which she than replied, “Please, sell this house.”
Piece on “Recession Lightning” on ABC News this morning.
Here’s my hmmm question of the day.
A couple earns more than [to significantly more than] median for a town.
The couple pays 10% of gross for rent.
The couple saves a reasonable amount for retirement, contributes toward healthcare premiums at work, and pays a typical daycare or tuition expense for a child. They pay for inexpensive vacations and limit dining out.
How can they afford a house priced at four times their income if the mortgage payment with taxes is twice the rent paid?
I’m not getting the whole 4 times thing as affordable.
From the Record:
New Jersey’s Business Forecast 2008
It’s no secret that New Jersey has slow job growth, a tough business climate, little space for development and a sewage-grade political reputation.
So what does a mature, economically struggling state do when the national economy hits the skids?
The question will dominate New Jersey’s economic landscape this year as the country falls into what economists expect to be at best a slowdown, and perhaps a recession.
…
“It’s clearly going to be a challenge for the state to move forward,” said Joel Naroff, chief economist for Cherry Hill-based Commerce Bancorp.
“If the nation does go into a recession, then the question is: ‘Where is the state going to generate growth from?’” Naroff said. “And it’s tough to see where that could be.”
…
His confidence could soon be tested if Joseph Seneca, a Rutgers University economist, is correct. Seneca believes that a slowdown in the first half of 2008 is so certain it’s “baked in the cake.”
“Whether or not we skirt a recession nationally, there are going to be echo effects in New Jersey, resulting in slower employment and income growth,” said Seneca, the chairman of the New Jersey Council of Economic Advisors, an organization that reports to the governor.
…
The 1989-92 recession, although mild nationally, hit New Jersey hard due to the bursting of the state’s real estate bubble, he said. While the 2001 recession was less severe than others of the past for both New Jersey or the nation, it also did not yield the kind of job-creation rebound that followed previous economic troughs, Hughes said.
…
The state’s job growth even lagged behind the anemic national performance, growing by six-tenths of 1 percent compared to the 1 percent increase in the national workforce, Seneca said.
Hughes and Seneca attribute the slow job growth partly to the state’s long-term trend away from the creation of skilled, high-paying jobs.
They say job employment data show the state is now adding well-paid jobs more slowly than it is creating positions at the bottom of the wage scale. Seneca calculates that about one-quarter of the state’s 2007 job growth came in the high-paid sectors, and the remainder in lower-paid jobs.
The grim outlook was reflected by the Rutgers Economic Advisory Service, an analysis and consulting group at the university, which said in January that New Jersey is caught in the “economic doldrums.” The service predicted the state’s economy will perform worse than the rest of the nation’s through 2012.
Good to see the blog is still running on all cylinders. How many hits are you getting now James?
JayB
‘Where is the state going to generate growth from?’” Naroff said. “And it’s tough to see where that could be.”
[10],
Babies and immigrants.
“The service predicted the state’s economy will perform worse than the rest of the nation’s through 2012.”
Good Luck, goodbye, Bobby Jean.
Just a note about the piece above.
Consider the source.
“Banks are driving the cost of protecting corporate bonds from default to the highest on record as they seek to hedge against losses on collateralized debt obligations, according to traders of credit-default swaps.”
“Banks have taken losses, spreads are going wider and they are just cutting positions,” said Andrea Cicione, a senior credit strategist at BNP Paribas in London. “Lenders are probably reducing risk positions in a deteriorating credit environment by unwinding CDOs.”
“Banks are facing mounting writedowns on CDOs, securities that package credit-default swaps, bonds or loans, as the fallout from the collapse of U.S. subprime mortgages spreads across financial markets. The Group of Seven estimates banks worldwide will suffer writedowns of $400 billion on home loans, German Finance Minister Peer Steinbrueck said at a weekend meeting of officials and central bankers in Tokyo.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aUy4mptKrdjA&refer=home
To the property tax fighters (Stu/NJGator)
So, it sounds like your town revalued at the top of the market and your fighting the assessment based on the fact that your house isn’t worth what they said then anymore.
That makes sense. But if everyone was revalued at the same time (at the peak), why will they adjust one house? Shouldn’t they really adjust the entire town again? And if they adjusted the entire town, it wouldn’t make a difference on your tax bill (assuming everyone went down 10% or some number)?
I guess I’m wondering if your house fell more than everyone else for some reason or was higher than everyone else for some reason.
Anybody elseis seeing this:
I MIddlesex county in “second-tier” towns there are a lot of listings now in which “Sale & commission rates are subject to third party approval.”
Amongst lower priced homes short sales are at about 90%… I am almost tempted to lowball (I mean offers of 150K on 220K listed price home) – there are about 10 homes within two block radius either in FK or short sale…
Neighbourhood is not great but not horrible either (Chrime rates are low, Schools are ok).
I might just give up idea of buying in “Top-Tier” town for now, buy really cheap, live in it for 5 years, and by the time my baby goes to school convert it to rental, and buy another one.
I just can not bring myself to paying 300K for smallish, rundown cape-code (no basement) in “Top-Tier” town on a busy street, when I believe I can have bigger, better mantained house for about 150K right now(I know it will take few offers but I think I have a pretty good chance of short sale going through.!!!) …
Any downfall to this?? – except obvious everything goes to hell, and I am not able to sell/rent in 5 years. Mortgage will be really affordable. I am considering sending my kid to catholic school anyways….
Of course allbets are off if earth collides with asteroid or sun goes supernova :)
Annual income vs. home affordability as laid out in the Washington Post article is old school. The dolts in this country and others have once again allowed their ever-shrinking minds to be shaped by marketing and maxims, and thus a mortgage today is nothing more than a glorified lease–what’s the monthly nut? I say “home ownership” has never been lower and that it’s been dropping like a rock for those 40 years. Those who do not own their homes are simply renters…some with no deposits, some with huge deposits. (And for those who actually own their home, they always have to pay rent to the government for the land. At best, that’s a perpetual lease on the land with an option to transfer. Stop paying your land rent (er, property tax) and not only do you loose it, but you loose everything on it. Ownership? I guess the definition is really changing nowadays. And hell, why shouldn’t it? We all die of old age if everything goes well, so “ownership” is very temporary at best! (As an aside: Wow! This new coffee my wife made this morning is strong!)
I guess another quetsion – why are the short-sales/FK clustered like this??
Would you be worried buying a house in FK/short sales affected area??
It is My neighbour sold their house for xxxxxx in 2004 – everybody on the block will try to sell their house for the same or more in 2005 – and two years later buyers are in trouble all together as they all bought with Arms. Incomes are not very high as it is blue collar/non NYC commuting towns…
#17: For me, it isn’t about “owning” a house, it is about quality of life. I enjoy working on my house, swimming in my pool, and washing my car in the driveway. I also have a large workshop in my garage. I Couldn’t do that if I rented. If you don’t enjoy those things, then rent.
Ann 15 Wouldn’t everyones tax bill go down 10%.That would make a dif.They all pay less.
TO post 20 – If everybody;s assesment is lowered township will just raise tax rate.. Come on, they can not cut spending, espetially not in inflanatory period.
MLS ID# 2487998
please, could you help me with the address and some history ?
thanks
tbw,
I know a number of individuals who rent single family homes with swimming pools.
It is your choice of rental housing that limits what you can or can’t do and not the choice of being a renter.
Jill Previous Thread #244 – What that means is if you are really assessed above fair market value, you should file. If you’re successful, you would knock your assessment down to 95.77% of fair market value.
Al I hear you in my town the assesments are
stupid low they just raise the rate.How do you fight that.
shuck,
6 Pring Court
MLS# 2101692
Listed: 8/17/2005
List Price: $970,000
Reduced: $940,000
DOM: 184
Expired
MLS# 2487998
REO – Bank Owned
Wells Fargo – 10/11/2007
Listed: 2/9/2008
OLP/LP: $695,000
DOM: 2
Have fun with the taxes, $28,190
OLP/LP: $695,000
Have fun with the taxes, $28,190
WOW – 4% taxes!!! It’s like second mortgage for life!! but the one which will only go up !!!
#23: I am suprised that a landlord would actually let tenants swim in the pool, or even have a pool for that matter. Sounds like a huge liability for the landlord. Point is, if you rent a house there is a limit to what you can do. I know, I used to rent.
I’ve got a prior sale for the Pring Ct. property:
$550k in 1999.
Amazing, approximately 2% per year nominal appreciation from the ’99 purchase. In real terms, ’08 asking price is basically equivalent to the ’99 purchase price.
In ’99 the property taxes were $14,400, they doubled in under 10 years.
Amazing!
Ann #15 – It’s a bit more complicated than that.
First off, we really believe we were assessed over what we reasonably could have sold for back in 2006.
Secondly, I think the company that did our reval did a real crappy job. They way overassessed homes that were not renovated or improved based on the crazy prices people got for their granite/viking/subzero/jacuzzi tub flips. No one in going to bid $100,000 over asking on my home with the avocado and black tiled bathroom.
Third, I am seeing a signifiant amount of homes that sold for over $1,000,000 in our town since the assessment sell for $100,000 or more than their assessed value. So essentially the reval company gave some of the wealthiest members of our community big tax breaks that are being paid for by folks that are of much more modest means.
Finally, this is not the first time Montclair did a reval at the height of the market. Their last reval was done in 1989. The town didn’t lower assessments across the board or do a reassessment after that valuation. They simply lowered the assessments of those who did file an appeal. My husband and I, until the current reval, were paying higher taxes than many of our neighbors with larger homes (these homes were assessed at almost $100,000 more than ours this time around) simply because our previous owners never grieved their assessment while the owners of those homes did.
Sure, if everyone in Montclair appealed their assessments this year, most (with the exception of those who got a sweetheart assessment as part of the reval) would be successful and the impact on our taxes would probably be negligable. But most homeowners probably don’t understand that they can appeal and probably wont. By aggressively defending our assessment, we stand to do pretty well. Our home is a multi-family, so most of our buyers would view it as an investment property. If we are not agressive about keeping our assessment down, our market value would probably drop because it would be hard for a buyer to have positive cash flow on our home paying an inflated amount of taxes.
I don’t know what I am going to do with all of my spare time once this appeal is over : )
There was some discussion yesterday about odd asking prices. I have been told, (althogh I do not know if it is true) that certain combinatiosn of #’s mean good luck in some Asian cultures.
And so these prices are being geared towards Asian buyers or sellers.
Did I mention that my step-sister’s house burned down on Super Bowl Sunday? They live on the I-78/US-22 corridor. With insurance money in hand, they were able to lease a 5000 sq. ft. McMansion for one year, fully furnished, and now their son and daughter each have their own private bathroom. They were given a set amount a rent money from insurance and they found what the market would bear……insane…
To add, my mom and her husband slep over at their house 5 days after the fire in the guest room with its own bathroom. 4 bedroom and 6 bath room home….
#25 Mike – You can’t grieve the amount of taxes you pay. You can only grieve your assessment if it’s not fair. The only reason why I think we will do well is that we are now more over assessed than our neighbors.
Also this downturn in the market is not going to hit all homes evenly. Some of the more updated homes in our town are still selling with multiple bids over asking price. Those owners are not as likely to have a winnable appeal or to be able to knock as much off their assessments.
Our home needs quite a bit of work, so I think we stand to lose a lot more in market value compared to what we could have gotten at the peak.
I remember reading somewhere that the average number of assessment appealers is between 4 and 8%, although Montclair had an even lower number of appeals than average.
I suppose, those with more money than they know what to do with it don’t sweat a few K here or there.
Remember Ann, most are sheeple. If the gov’t says you must pay $10, then you must pay $10.
#25 Mike – Just to illustrate my point. The director’s ratio for Montclair for this tax year is 102.52. So the average home that sold in Montclair was overassessed by 2.52%. In my husband’s and my appeal, we are fighting for a reduction in our assessment of over 11%. If we successfully knock the assessment down that much, even if Montclair across the board lowered assessments 2.5%, we would still see a lower tax bill.
Hi –
I heard so much about renting on this blog. I’d love to rent, but I’m having trouble finding an on-line resource for finding rentals. Does anyone know of a great site for this in hunterdon county?
From ABC News:
Some Homeowners Use Arson to Avoid Foreclosure
Recession fears along with nationwide housing foreclosures have pushed some homeowners to take drastic and illegal measures.
Looking to cash in on their insurance rather than face foreclosure, some people have committed arson to avoid losing their homes.
Michigan authorities believe 38-year-old Sheryl Christman was one of those people, when she set her home ablaze Sept. 1. Christman was just three days short of foreclosure.
“It didn’t look like a typical fire. It didn’t look like something that caught on fire. It almost looked ignited,” one neighbor said.
Christman, who faces up to 20 years in prison, pleaded no contest in her case and has yet to be sentenced.
“I don’t know if she thought she was going to get the insurance money or what,” said Tonya Miller, of Nova Star Mortgage Co. “But she won’t. … It will go to the mortgage company.”
LOL regarding post # 38
Some Homeowners Use Arson to Avoid Foreclosure
Thats how we will get rid of excess housing – burn couple of millions of homes and it is all set. Insurance companies will go belly up – but who cares.
Dennis Gartman, commodity trading supremo, has comments in The Gartman Letter today on the US housing market:
“THE CHECK’S IN THE MAIL AND I’M GONA’ LIVE IN IT, HONEST: These are now the two great lies in the modern world, replacing others from the past. Interestingly, they both belong to sub-prime borrowers, many of which were speculators betting upon rising housing prices… a bet which went rather bad as we all know all too well these days. We have written, anecdotally, of the myriad waiters, shoe clerks, auto repair men, drug dealers, pimps and the like who learned very quickly how to “game the banking system” when the Countrywides and the like originated, then pushed, low-doc and no-doc mortgages.
“Now we know that our anecdotes were spot on following a very interesting article in yesterday’s Wall Street Journal entitled “Speculators May Have Accelerated Housing Downturn.” Our first response to the headline was, “We are shocked; shocked, that speculation in housing was taking place.” Like the Prefect of Police in Casablanca, of course we knew that speculation was the norm, not the unusual; we are “shocked, shocked” that the banks apparently did not… or if they did know, chose to turn their backs upon it. According to work done by Fitch Ratings, on what we shall admit is a rather small sample size, two thirds of the loans that had defaulted in the past twelve months were from borrowers who had promised they’d live in the homes they bought but who never had done so. Further, Fitch notes that perhaps 1 of 4 new home buyers from national builders were “specs” who had never intended to take occupancy of the homes they’d bought, and never had. Those unoccupied homes became non-performing loans very, very swiftly. 60% of the homes foreclosed upon in Las Vegas last year were unoccupied. We are “shocked; shocked” that people lied to their banks… just absolutely shocked.”
if you rent a house there is a limit to what you can do.
Okay, so I can’t paint my rental house neon green.
On the other hand, renting allowed by wife to take unpaid leave from her job when we had our baby.
#41 –
I’m bummed about renting too. But I don’t want to buy in this overpriced market.
It would be nice to find a home to rent with a five year lease. Where the owner gives you a budget for improvements.
Guy here at the office gets a rent discount from his landlord for remodeling his house. Landlord is covering all material costs, rent break is roughly 25%.
Landlord gets labor and renovations at a discount, he gets to play Bob Vila and choose/install finishes and fixtures.
Win-win?
Stu [40],
Are you a subscriber?
BC Bob,
Nope.
And another interesting one on Commercial RE
http://seekingalpha.com/article/63949-commercial-property-prices-continue-to-fall
grim –
That would be great. I wish there were more opportunities out there like that.
#37
GSMLS.com has a rental section. Craigslist is also a good source for rentals.
Does anybody know of a good web site that lists all the mortgage rates across the country at various banks? I want to refinance at some point (probably later this year) and want to compare rates.
Chi – Sorry about your step-sisters house.
Were they able to rescue their personal effects?
“Dennis Gartman, commodity trading supremo, has comments in The Gartman Letter today on the US housing market:
We have written, anecdotally, of the myriad waiters, shoe clerks, auto repair men, drug dealers, pimps and the like who learned very quickly how to “game the banking system” ”
I’d have a bit more respect for the guy if he wasn’t tying waiters and shoe clerks in with pimps and drug dealers. That is just tacky snobbery.
ReadyToBuy (42) says: “It would be nice to find a home to rent with a five year lease. Where the owner gives you a budget for improvements.”
Win-win it is. I currently pay my tenant who is a stage carpenter $50/hr for improvements he makes on our place. For the first two years of the lease, he turned an unfinished attic into an office and an additional bedroom. This cut his rent $100 per month and gave him much more apartment for the rental buck. He resigned a 2-year lease with me and offered to help me finish my basement at the same $50/hr rate and this took $200/month off of his rent.
Why is it such a win/win? Well, he gets to live in a significantly improved apartment at below market rent until his lease runs out. I get to claim less rental income (technically illegal, but so is doing improvements without permits) lowering my tax bracket and total income.
Of course come September (when his lease is up) he will most likely renew his lease with me, but I’m not sure if he can afford the increase that is coming because he did such an awesome job!
For bi From SeekingAlpha:
Homebuilders: The Real Deal or Just Another Bear Market Rally?
http://tinyurl.com/3x8o8g
#51
I guess he’ll have to come up with another ambitious improvement project.
bankrate.com
Everyone complains about property taxes and school taxes in particular. The amusing part is people with kids generally are a huge deficit to the school district and usually are the ones who complain the most. I pay 5K in school taxes each year and suck out 25K in school taxes cause I have kids in the public schools. The other parents are the ones bitching about school taxes while the dinks and sinks pay in and get nothing back and rarely complain, but then again working full time and not being active in the community they are just the robotic workers who subsidize the fertile masses.
#48
I think Bankrate.com has a pretty good list of rates.
30
Gotcha. Sounds like there were some irregularities in the reval process then. Especially on those 1M plus homes.
You should start a business helping people challenge their assessments or write a book about it! : )
20
I think if everyone’s value went down 10%, the taxes don’t change, they just change the tax rate. In other words, your percentage of the “bill” stays the same.
Back on the tax assessments,
In our new ‘hood, our house is assessed close to what we paid for it. But our next door neighbors paid $125K more last year, but their assessed value is near ours. So we are paying roughly the same amount of taxes as them. Do we have a case, and how would that work out? I guess the solution would be to raise our neighbor’s taxes to make things fair?
54 John good point. I’m amazed at some people without kids who live in the towns they do.
Steve:
The rates listed are not always terribly accurate on these sites. Especially since it is not clear how many points the rate is based on.
When searching for my mortgage, I ran the list at BankRate and called about 20 of them. There were so many loan sales people available (surprised?) that the whole process took about an hour and I was not put on hold even once. I imagine it would be about the same process today.
By the way, I went with E-Loan and was very satisfied, but be prepared for the mortgage broker to disappear until the eve of the closing day once you commit to them. The service prior to the commit is unreal. Once you make the commit, it’s as if the company went bankrupt :P
Stu, unless you are issuing a W2 for the rental income he saved and are witholding SS, payroll taxes etc and have permits and have re-zoned your house as commerical and notified your insurance and mortgage people that you have an employee in the house you are committing multiple crimes as well as tax fraud. Don’t worry if the guy is smart you will re-new his lease as he will just drop a dime on you if you did not. I know you know some of what you did is against the rules but add up all the infractions and you are talking a lot of legal expenses.
Stu Says:
February 11th, 2008 at 9:44 am
ReadyToBuy (42) says: “It would be nice to find a home to rent with a five year lease. Where the owner gives you a budget for improvements.”
Win-win it is. I currently pay my tenant who is a stage carpenter $50/hr for improvements he makes on our place. For the first two years of the lease, he turned an unfinished attic into an office and an additional bedroom. This cut his rent $100 per month and gave him much more apartment for the rental buck. He resigned a 2-year lease with me and offered to help me finish my basement at the same $50/hr rate and this took $200/month off of his rent.
Why is it such a win/win? Well, he gets to live in a significantly improved apartment at below market rent until his lease runs out. I get to claim less rental income (technically illegal, but so is doing improvements without permits) lowering my tax bracket and total income.
Of course come September (when his lease is up) he will most likely renew his lease with me, but I’m not sure if he can afford the increase that is coming because he did such an awesome job!
Has anyone any information (good or bad) on GMAC Mortgage ? or Wells Fargo Home Mortgage?
The Company that I work for has some deals with them, such as credits towards closing costs, preferential rates, etc.
But I would have to have to deal with a nightmare only cuz it gives you creadit for Closing costs.
Tx
Went to a couple of open houses yesterday for the first time in a while. It appears that the sign-in sheets have had decent activity but the prices are just still too high although, they would’ve been 50K to 75K higher 12 to 18 months ago. It’s a start, but we need to go another 10% to 15%… at least.
The realtors asked me if I had to sell which I responded to with a “yes” but quickly let them know that I want to sell my house not stick a sign on the front lawn for months on end. My feeling… we need to see some capitulation intensification this spring into summer.
Then, we all go in like sharks blind-siding a group of pup seals frolicking in the surf.
today’s early morning sell-off was reacting to obama’s big win in weekends. clearly the market is not confident in what he can do if he wins the general election.
#63
Clearly.
17 and 19
There is a difference between renting and owning. Especially if you have kids. For example, the people who sold us this house rented it out for a year and a half because they thought they were coming back from their relo. So the family who was in here got booted out when we bought it. Also, already, I’ve painted and done all sorts of nice things regarding decorating that I would never do in a rental. Renting with pets is also a pain, finding a place that will let you have pets, that has a proper yard with a solid fence, etc.
If you have kids, renting is an even bigger pain in the neck. Moving with kids sucks, and once you start acquiring a lot of furniture and all sorts of things, it can get very pricey or painful, depending which route you go. And of course, switching kids out of their schools is also not optimal.
Don’t get me wrong, I think renting can be smart and if people want to rent right now instead of buy, that could be smart, depending on the situation. But to say that renting and owning are completely equivalent isn’t true.
354 John: That is debateable, as far as who complians and who does not.
Many times the Seniors are singled out as those who complian, and yes they do, but there are also many with children in the districts that also complain about the taxes as you said.
However, there are also those who do not complian at all, who simply believe that the more that is spent on the schools,the more that gurantees their property values.
Robotic workers, or people who do not have the ability to think for themselves, and question.
I am one of those who complain, only because I believe that in many intances school spending is out of control, and we are more interested in bells and whistles (plant and facilities), than in education.
But then I have actually been involved in the school sover the years, and have so many times been the only person at a BOE meeting.
My problem with the local BOE, is the arrogance that is displayed by some members, and the belief that we know what is best for you. It is simply infuriating.
They talk about young families moving to town,and the quality of the education etc. Sadly I believe some are more concerened with the value of their property ,and hence have their own agenda. I suspect some will be gone as soon as their kids are finished with the system.
We will nto have young families moving in, when property taxes on a POS cape, are fast approaching 10k a years.
63
I can’t believe my party is really thinking about nominating Obama. Ugh. I think if he gets the nom, I will stay home for the first time.
A quick and purely anecdotal story about the shore area…
I spent a good portion of Sat. in Asbury Park. I used to live not far away in Ocean but hadn’t been back in a few years. I have to say that the drive through Oakhurst and Ocean twp. was revelatory. It seemed about every 5th house was either “for sale”, “for sale, reduced!” or “for sale/for rent”. Adding to this were the yellow signs with red lettering that took me a bit to realize were bankruptcy sales. I must have seen about 7 – 8 of these.
Oakhurst and (most of) Ocean are middle class/working class towns. Nothing fancy but a decent place to live and raise a family, real backbone of America type of places. If these towns are any indication of what the rest of the country is like we are in some very serious trouble. I knew it was bad out there but Sat. made me think it may be much worse that even I thought.
It was also interesting to note that there are now fsbo’s in Deal.
#60 John
“you will re-new his lease as he will just drop a dime on you ”
I think we have to rethink that expression not that the phone companies are pulling out of the payphone sector and any call from a payphone is about 75c to connect.
Did you make it to the Fortunoff carpet sale?
From Bloomberg:
AIG Discloses `Weakness’ in Derivative Accounting
American International Group Inc., the world’s largest insurer by assets, fell as much as 6.1 percent after auditors found a “material weakness” in how the company values its credit-default swap portfolio.
#63 Bi,
market is down this morning for the same reason that it’s been down for the last 3 months…
and not because of what Obama does.
Is there any hope for this guy?
HA HA – AIG FAILED SOX!!!!!! The reporter BTW has one stupid name, if you read it quick is looks like Huge Son, hope he isn’t fat. Then again I had a lady who worked for me once whose last name was Ho and her grandfather’s first name was Fat, Now that was one kooky obit when Mr. Fat Ho died.
AIG Discloses `Weakness’ in Derivative Accounting (Update1)
By Hugh Son
Feb. 11 (Bloomberg) — American International Group Inc., the world’s largest insurer by assets, fell as much as 6.1 percent after auditors found a “material weakness” in how the company values its credit-default swap portfolio.
AIG hasn’t yet determined the decline in value that will be included in its 2007 financial statements, the New York-based insurer said in a regulatory filing today. The firm dropped $2.87 to $47.81 at 9:36 a.m. in New York Stock Exchange composite trading.
The company, which has units that originate, insure and invest in subprime loans, has declined about 30 percent in the past year. AIG said in December that the value of the “super senior credit derivatives” declined by about $1.1 billion in the first two months of the fourth quarter.
“AIG is still accumulating market data in order to update its valuation” of the portfolio, it said in today’s filing.
Thanks for everybody’s help on the interest rates. Looks like rates are at about 5%. Here’s another useful link for trending: http://www.mortgage-x.com/general/average_rates.asp
Basically I want to lock in something like 4% for as long as I can (I’m at 6.125% now). I guess I’ll have to wait for more rate cuts. My hope is that these rates will bottom out really low.
Anybody know how low they went back when Big Al was cutting rates like a maniac? I’m seeing numbers of like 5.8% for 30 year fixed, but I thought they went lower than that. Any predications how low they might go this time?
tosh,
I love driving through the shore towns. I’ll go all the way from North Jersey down to LBI without hitting a highway for more than a few miles at a time, and only because there isn’t any alternate route. I always enjoy driving through Deal and Asbury, but my favorite part is always driving along the cliffs above Sandy Hook near Atlantic Highlands.
Good morning all :)
it was good to meet some of the various personalities over the weekend, it seemed to be a good time for all.
I was talking to a friend who works on wall street and he suggested that i keep an eye on japan as they may be the next big hit with balance sheet surprises and the have apparently been a significant soruce of liquidity recently
ChiFi or anyone please feel free to comment on this
Dan Says:
February 11th, 2008 at 9:57 am
Has anyone any information (good or bad) on GMAC Mortgage ? or Wells Fargo Home Mortgage?
Dan – I had a good experience with WF. I was referred to them by a colleague who used them twice before. I was a customer of theirs for six years, had a 30-yr fixed which I refinanced to a lower rate before eventually selling in December 07. The re-fi process and sale were likewise smooth. I’d be happy to refer you to a contact there if you need it.
Property taxes on a pos cape of 10K sometimes make perfect sense. Look at Levitown Long Island, Those little shoebox capes are loaded with Irish, Italian, German, blue collar 30-40 something families with 3 kids each on average. Even though the houses are worth peanuts the cost of garbage, schools, libraries etc. are high due to the size of the population. If they had nice houses and same amount of people on each block it might make the 10K taxes easier to swallow but the costs are still the same. It is only getting worse. 2007 was one of the highest birth years of all times in the USA. Watch out 2012 when all those kids hit your public schools all at once.
#74 – I grew up not too far away from the Atlantic Highlands and Sandy Hook. I know the area you’re talking about well.
I almost got a condo in that big tower that over looks Sandy Hook and the Highlands.
grim Says:
6 Pring Court
Have fun with the taxes, $28,190
This place is probably assesed at close to $1,000,000. Question, If I buy at $695,000 will the town automatically re-assess the property and lower taxes? I think that’s an issue facing many people that buy today, or in the future where the sales prices is less than the assessed value. How hard will it be to get the town to lower the assessment. I’m sure many towns will be hesitant to do so.
Kettle1 (75):
http://seekingalpha.com/article/64052-is-japan-subprime-s-next-flashpoint
#78 John: I read an articel regarding that min- birth boom, and it is just that a mini-birth boom.
The average size of the typical family (non-immigrant) is still declining. # kids is a lot today.
The reason taxes ar so high, is becasue so much at least in (north Jersey), has been spent on school spending, bells and whistles.
#79 The town will not automatically reasses the property value down. if you do not question it, neither will they.
x,
2007: Assessed at $247,500, tax rate is 11.39%.
2005: Assessed at $247,500, tax rate is 9.85%
1996: I believe the tax rate was roughly 6 and a 1/4.
#57 – Ann – You can’t grieve your neighbor’s assessment. All you can grieve is if you are overassessed relative to the town as a whole or assessed above true market value. For towns that have not done a reval or reassessment in years, you’d have to prove you assessment is 15% over the common level, which is tough.
We paid more taxes than our neighbors for years, but never had an opportunity to file an appeal because we wouldn’t be able to approve that our true market value was outside the upper limit of the ratio.
71#, in general i agree. but the market reacts events in short-term basis. hillary clinton is the most business-friendly candidate among remainings in both parties. i would not bet long before next tuesday.
I’m surprised the article does mention the fact that the average home SIZE almost doubled in the past 40 years… Surely that must account for part of the price increase, not to mention the increased cost in construction costs due to much stricter codes and higher level of amenities.
Steve [73],
I think 30 year rates bottomed around 5-5.25 in 2004. Don’t be so concerned with what the fed is doing. Watch the 10 year. By the way, last week’s auction results were abysmal. Investors are starting to demand higher long term rates to compensate for future, higher inflation.
G$ (76):
My current mortgage was sold by E-Loan to WF. WF has been a very good company to work with. The funny thing is, when pricing out mortgages, WF was about 1% away from what E-Loan offered. I really wanted to go with them because they had an amazing Upromise offer where they would give me like $4,000 towards my child’s education if I went through them. Did the math and it was definitely not worth it. I think Upromise is now giving .25 to .35 with certain brokers/bank on refi’s, mortgages, etc., so don’t give up free money.
I guess some banks find it cheaper to buy loans from the brokers than to seek them out themselves.
“hillary clinton is the most business-friendly candidate among remainings in both parties.”
bi,
Stop your nonsense.
toshiro, grim: Over the weekend I noticed on one of the realtors websites they listed what looked like a big increase in pre-foreclosures in some surprising towns such as Cranford.
I did a quick and very unscientific search of county records and they have been big increases in lis pendens/foreclosure fillings in the two counties I checked, Union and Morris.
In Morris, filings (lis pendens and foreclosures) went from about 450 in January 2007 to 760 last month.
In Union (just foreclosures) it went from 177 in January 2007 to 274 last month.
363 tosh
The yellow and red signs you saw in Ocean and Deal are all Solomon Dweck’s properties. Keen Realty is handling his sales you can look them up on line.
And for the moonshine, rocking chair and cane set, Levon Helm of The Band will be at the Paramount in Asbury Park this Saturday.
regarding property taxes.
In principle i think they should be abolished. Put a “town” tax in their place. But a property tax essentially removes any real property rights. for all intents and purposes the only difference between a renter and an owner is whether you rent from an individual or the state.
One question i have had for while and may actually sit down and researching the near future, is what happens to the concept of economies of scale with regard to residential services?
It should cost less per person to do garbage collection for a town of 10000 as compared a town of 50000 that have the same land area. Maybe economies of scale do actually apply, but in the cursory looks at town budgets i have not been able to see it.
89#, why it is nonsense? this is a woman who sit on the walmart board, guided walmart growth before she became the first lady of arkansa; this is a woman who turns 10K into 100K in short period time trading futures on CME before many folks here know what futures mean. this is a woman from a middle class chicago suburb family, went to yale and succeed in private law practice before moving to politics.
Disclosure: i voted for romney.
I am wondering if Citi’s auditors, KPMG are going to fail them too!!! D&T does Merill, and E&Y does Morgan Stanley so those two will have a fairly close call, should be a fun week, lots of 302/404 sign-offs happen soon, the big four works Presidents day and Saturday’s in busy season so next week during the short 4 day week I bet we get a bombshell from another FS company. I think the second bombshell will be time to buy a Morgan, Chase, Merrill or a BAC cheap enough with a high enough yield that you can ride it as a long term holding.
AIG said its auditors, PricewaterhouseCoopers, concluded that the company had a material weakness in its internal control over financial reporting relating to the fair valuation of credit default swap portfolio obligations of AIG Financial Products Corp.
“hillary clinton is the most business-friendly candidate among remainings in both parties.”
Look how business friendly W. is and look where that has gotten us.
I agree with BC. Stop the nonsense.
lisoosh Says:
February 11th, 2008 at 9:37 am
Chi – Sorry about your step-sisters house.
Were they able to rescue their personal effects?
Mostly no, but they did have a strong box in the basement with important papers, and they were able to retrieve the hard drives on computers. I think the biggest loss is that the daughter who is 10 years old is an accomplished artist, and her bedroom was a total loss. She has refused to see the house.
#91 – njcoast – Thanks for the info!
“this is a woman who turns 10K into 100K in short period time trading futures on CME before many folks here know what futures mean”
bi,
Stop, you have the whole floor here hysterical.
WOW – I didn’t know Hillery was a woman!!
bi Says:
February 11th, 2008 at 10:36 am
89#, why it is nonsense? this is a woman who sit on the walmart board, guided walmart growth before she became the first lady of arkansa; this is a woman who turns 10K into 100K in short period time trading futures on CME before many folks here know what futures mean. this is a woman from a middle class chicago suburb family, went to yale and succeed in private law practice before moving to politics.
Disclosure: i voted for romney.
It should cost less per person to do garbage collection for a town of 10000 as compared a town of 50000 that have the same land area
Why????
ML Says:
February 11th, 2008 at 10:28 am
I’m surprised the article does mention the fact that the average home SIZE almost doubled in the past 40 years… Surely that must account for part of the price increase, not to mention the increased cost in construction costs due to much stricter codes and higher level of amenities.
LOL, and the size ove Average Cape-Code Built in 1932 is doubled as well?? Because their prices are doubled in last 10 years!!!
80% of stock in NJ are houses build before 1960!!!
Find better argument.
Stu Says:
February 11th, 2008 at 10:37 am
Look how business friendly W. is and look where that has gotten us.
Stu: you need to qualify that statement. Anyway, as most of you are aware, I am completely neutral (if not neutered) on topics political. However, it occurred to me over the weekend, that from a foreign policy standpoint, I think Obama may be our best chance to negotiate with the actors in the Middle East and South and Southeast Asia. That said, it remains to be seen whether his lack of experience will doom him to be another Jimmy Carter of the domestic front….
grim Says:
2007: Assessed at $247,500, tax rate is 11.39%.
2005: Assessed at $247,500, tax rate is 9.85%
1996: I believe the tax rate was roughly 6 and a 1/4.
So West Orange increases the tax rates rather than increasing assessed values?
#102
I think that’s the way most towns work. Assessed values are revised periodically, not annually.
#93 – bi – You can’t possibly be that naive.
disclosure:I’m planning for an armed insurrection.
bi,
Do a little homework. Compare her platform regarding captial gains, dividends, personal income and corporate tax to McCain’s. After you sit down and take a few tylenol’s, turn the page to protectionism.
The think I don’t like about Obama is his wife, what a bitch, makes Hillery seem like mother theresa. I know, I know the wife should not matter, but come on now. In spite of what most people think about George Bush most people think his wife is a classy lady, Mrs. Obama loves to stick her foot in her mouth, it is all me, me, me, then a distant second her kids, a distant third her husband, and then if she has a spare minute or two a week she can think about being first lady.
Both McCain and clinton scare me. I may have to tell the wife we are moving to costa rica
kettle [107],
They all scare the hell out of me.
I’m planning on either Panama or Costa Rica. Maybe we can get a package deal.
you guys know that clintons are liars in campaign but who elso is not in politics? since they are liars, their policy will not be the same as what they said before election.
#108 Bc Bob: What can you say about McCain?
He said economics is not really his thing, and he has never been really able to get his hands around it. But he did buy Greenspan’s new book.
Not that Romney was great, but I think he would have been a better choice than McCain for the Rebublicans.
ChiFi: Here is my selfish qualification for the results of W’s business friendliness…
http://tinyurl.com/2vdhfd
Then there is his whole environmental record, but you would have to turn your monitor sideways to plot the bottom of that chart.
One of my happiest moments in his presidency was when Whitman bailed on him for his lack of listening. It appears the buffoon only listens to Jesus, and that took TWO tries.
#100 AL
“LOL, and the size ove Average Cape-Code Built in 1932 is doubled as well?? Because their prices are doubled in last 10 years!!!
80% of stock in NJ are houses build before 1960!!!
Find better argument.”
I was not talking about the local markets.
The author was making a point about the national median price doubling in the past 40 years relative to income.
Yet, s/he doesn’t mention the fact that home size has doubled and codes have become much stricter.
And I’m sure there have been a lot of houses built or expanded/renovated in the past 10, 20, 30 years to have impact on the median price.
BC Bob Says:
February 11th, 2008 at 7:46 am
Good Luck, goodbye, Bobby Jean.
One of the most underrated songs from The Boss!
From Bloomberg:
Bond Insurance Turns Toxic for Munis as Rates Soar
Bond insurance sold by MBIA Inc., Ambac Financial Group Inc. and Security Capital Assurance Ltd. is backfiring on counties, universities and hospitals across the U.S., more than doubling some borrowing costs.
Park Nicollet Health Services in Minneapolis may pay an extra $5 million to $6 million this year, about a quarter of its operating profit, because interest on $375 million in floating- rate debt doubled in the last six weeks, said Chief Financial Officer David Cooke. The rate on $98 million insured by Ambac climbed to 6 percent on Jan. 30 from 3.06 percent on Jan. 2.
“We’ll have to reduce our capital expenditure program, which means less equipment, less modernization of facilities,” Cooke said in an interview. The hospital paid Ambac to “count on that AAA insurance for 30 years. Now it’s going away on us.”
Investors are shunning insured bonds after three of the biggest guarantors, owned by Ambac, Security Capital and FGIC Corp., were stripped of at least one AAA credit rating amid losses on debt tied to subprime mortgages. Interest costs on floating-rate bonds sold by more than 100 governments, hospitals and colleges rose as much as 7 percentage points since the beginning of January even as the Federal Reserve lowered its benchmark rate for U.S. borrowing by 1.25 percentage points.
AL,
Services do not (usually) work on a 1 to 1 scale. If i increase my town population adn therefor garbage generation by 10%, i do not necessarily need to increase my garbage collection staff by 10%. Each team ( say 1 driver, a garbage collection truck and 2 garbage collectors) is available for 8 hrs per day. In the low population town a larger % of the 8 hrs is spent driving and less time picking up garbage. Their pickups/ hour is low. in the high population town you will have a much higher pickups/hour and therefore in theory a higher work efficiency. This description is grossly simplified, but it shows the general concept. Virtually all local services should fall into economies of scale, from utilities to garbage to social services.
Economy of scale definitely exists when it comes to gov’t services. Take a look at CT. Taxes much lower than NJ, Westchester and Long Island. The reason is that the towns are bigger, schools districts are bigger, police and fire departments are bigger. Probably the same number of teachers in the classroom, police on the beat, but significantly fewer Vice Superintendents of Schools and Asst Chiefs of Police making $200k+ along with their staffs each making $80k+ with full pensions and benefits for life.
Bob 108
Costa rica has no standing army ( panama does), that makes for a much more stable environment in general.
but hey lets go get our own little compound! We could probably get a few other people from this board and get a heck of a package deal on a quaint little costa rican compound :)
102 X – West Orange has not undergone a reval since the mid 1980’s. They are under order from the Essex County Board of Taxation to do one for tax year 2009, so they should be doing home inspections this year.
After the revaluation they will update the tax rate to reflect the new valuations…and of course raise the tax rate afterwards since this is Essex County.
When Montclair did their reval, the tax rate equivalent for 2006 changed from $5.36 to $2.01…but our tax rate for 2007 was actually $2.15. The 14 cents was the tax hike for 2007.
So if your home was underassessed before the revaluation, you had to absorb the tax hike in addition to you reval tax increased. Montclair was so late with their reval that homeowners who saw an increase had to eat the increase for 2007 in 2 payments instead of 4. Our elderly next door neighbors had been paying taxes of just over $10,000 prior to the reval. Their 3rd quarter tax payment was over $5,000. I thought my neighbor was going to drop dead as soon as he saw the bill.
Kettle1,
I don’t mean to sound overly pessimistic, but economies of scale don’t work very often when the government is involved. Economies of scale are obtained when there is a profit motive involved. If one never has to balance a budget and can always raise taxes to cover the shortfall, then why worry what is costs to haul garbage?
#76 G$, # 88 Stu
Thank you VERY much for the information., TX!!!
someone said clinton was the first black american president. the recent poll said over 80% blacks voted fom obama. clearly hillary is not the first black first lady.
however, it seems that clinton administration was the first jewish administration. here is a list of jews in clintons administration:
madeleine albright, secretary of state
william cohen, secretary of defense
roert rubin, secretary of treasury
george tenet, cia director
samuel berger, adviser of national security council
jenet yellen, adviser of national economic council
……
toshiro
You should have kept going south towards Belmar, Spring Lake and Sea Girt. My wife and I went to brunch at Kleins in Belmar Sunday and took Ocean Ave home. I’ve never seen so many 7 figure homes for sale.
Between 1st and 16th Ave in Belmar there was at least 6, probably another 15 in Spring Lake, just on Ocean Ave. I really wanted to roll up on a $10 million open house (!) in a Civic, but my wife wouldn’t let me.
My dad told me that when he was looking for the house I grew up in in the late 60’s, he went to a realtor in Montclair because the asking prices seemed reasonable. He said he looked at the taxes they were charging and walked out. Taxes in that area have always been bad. Now they’re just plain sadistic. It’s a shame because I’d love to live in that town (area). I rented in Upper Montclair 5 years ago and loved it.
S&P DOWNGRADES AMERICAN
INTERNATIONAL GROUP OPINION
TO SELL FROM BUY
Recent Price : $45.14
Recommendation:
AIG disclosed in an 8k filing this morning that its auditors found a “material weakness” in how the company values its credit default swap portfolio. As a result, AIG has not yet released its year-end 2007 financial statements and has not disclosed when it plans to do so.We find this development very troubling, and believe AIG management will have an extremely difficult time regaining investor confidence. Our $43
target price, cut today by $26, assumes stock trade at 1.1X est ’08 tangible book value, a discount to peers that we think warranted in light of these disclosures.
TBW #19: Exactly. We rented until we were 41 years old. I don’t know about anyone else, but to me, renting always seemed transient. I never felt I could paint, hang pictures, decorate, or really settle in, as long as I was living in a place on someone else’s whim. Even after eight years in our last place, I still felt transient because we were in a 2-family house where the landlord was a heart patient.
The other issue where ownership is better is pets. Fewer rentals than ever allow any kind of pets, even cats. We have always been scrupulously clean about our cats, and the idea of being over 40 and having to say “Oh, pleeeeez, Mr. Landlord, I promise I’ll be good! Can I PLEEEEEZZZ have a kitty?” is repulsive. Sorry, but give me a place of my own where I can keep 2 cats and a clean litterbox or a dog or two and no one cares as long as it doesn’t infringe on their yards.
#116 skeptic: Exactly. Look at the taxes in Ridgefield Ct, a very desireable town in every way,and taxes are 30 to 40% less and more, then your typical town in Bergen County.
re: property tax appeals/revaluations. When towns haven’t done a reval in a while, the state tells them to do one. From what I heard from my assessor, this happens when state notices that sales prices have become wildly out-of-sync with current assessments. Also, when you appeal your taxes, you cannot compare assessments, only existing sales relative to your assessment.
re: garbage collection. Not every municipality collects garbage. In my mother’s town, residents must hire private companies for garbage, which is pretty pricey, btw. Town only does recycling.
Yankee [113],
One of my fav’s.
Hi Kettle post # 115: – I am sorry but read your original statement (post #92) very carefully…
We are greeing that bigger towns with higher population density are more economical…
I wonder – not enough LSAT/GMAT/GRE prep courses?? (sorry I am currently preparing for one of those courses therefore I am annoyed and grumpy.)
P.S. I almost got in huge trouble: I was typing bigger towns in my sentence above, but mistyped and INSTEAD of letter “b” I typed letter next to it: “n”. Now replace letter “b” in phrase – I come out as huge racist..
And it is very easy as they are next to each other on the keyboard, and Spell-check does not catch it as both are valid words…
I wonder how many people who type without looking got in trouble because of this??
#127 – The state or county tax boards step in when there is a big deviation (I think +15%) between sales price/assessment ratios. If they start seeing some sales at 40% ratio and some at 20% ratio they know that the assessments need to be equalized to make all tax payers pay their fair share. There are towns in Essex County that actually have a Chapter 123 ratio of 12 or 13% meaning that the assessment of the average house is only 12% of what it sold for. As long as everyone really is close to that 12% there is no reason to go through the expense of a revaluation because the net effect on most peoples taxes would be 0.
NJGator #30: Avocado and black tile? Are you sure it’s avocado and not seafoam green? Mine is black tile with seafoam (lime?) green top half-width tiles and the same green tub. The previous owner dropped something in the tub so it has a mammoth chip in it that I can’t find a patch for. I’m seriously considering applying to be on “Save My Bath” on HGTV and letting them redo it. In my town, the lower-end homeowners got screwed because prices rose faster and by a higher percentage for lower-end properties. We got a 15% tax increase, they got cuts. Bushonomics at work.
Dan: I have a mortgage with Wells Fargo. I’ve refinanced with them twice. We ended up with them after we refinanced the first time and the mortgage was sold to Norwest, who I guess was taken over by WF. We did one refi with them from 20 @ 6.75 down to 15 @ 5.75, and the second time we refinanced with them (from 15 @ 5.75% to 15 @ 4.75) I called them and gave them the 4.75 figure that I’d gotten from another company and asked if they’d meet it. They had the do-it-yourself refi package — $350 application fee, no closing costs, just fill it out, have it notarized, and they’ll take care of the rest. It was easy as pie. They credit promptly and my only beef with them is that they charge you 10 bucks to pay online.
The income to price ratio is perhaps the one single data point that I have hung my hat on during the entire boom/bust cycle. Seems like housing in NJ is closer to 10:1 than 3:1 (where it should be). I will not buy until I see that ratio at a much more sane level…..
#127
My parents’ town is the same way. Every homeowner is responsible for conracting their own garbage service. Seems extremely inefficient to me. You could potentially have 5 different garbage trucks servicing one street with 5 houses on it. Absurd.
My parents actually drive the garbage to one of their other properties that has municial pickup when they are going to that property for other reasons, so they have avoided having that expense so far.
They also try to compost as much as possible, which helps reduce the garbage volume.
regrading economies of scale
Stu,
yes i know that governments are ALWAYS inefficient, but it would be nice to see some basic level of competence ( yes i know, tis is NJ what am i thinking)
127 peace,
I am also familiar with that, i was using garbage as an example. The main point being that as a town grows, the tax burden per person should generally drop, not increase. that is if you actually ran a government in a reasonable manner
Hey Jill you get a Golden Star from me on this one:
The other issue where ownership is better is pets. Fewer rentals than ever allow any kind of pets, even cats.
As a person with a dog I will agree wholeheartedly
I am at a point when rentals are severely limited because of dog. BUT right now there are so many underwater houses from flippers/investors for rent that I have my choice.
In early 2006 I struggled to find any place which would allow dogs.
My town just did a revaluation and my neighbors that did not let the assessor in to their house got much higher appraisal that the one that did let them in. The appraisals were higher by as much as 20%. Be careful out there.
Jill #131- It’s definitely avocado and we even have a tub and toilet to match! Our main tile is avocado with the black half tiles rimming everything as trim. The stuff goes 2/3 the way up our walls. I think you can get replacements from Home Depot, but these colors are “exotics” and you will have to pay extra for them. I look forward to the day I can take a sledgehammer to the whole thing.
The same thing happened in Montclair but more with the mid-tier properties – homes that were not updated, but not in the worst areas of town. There is definitely a wrong side of the tracks (quite literally) in town. Those homeowners saw reductions in their tax bills, as well as the high end homeowners, but those of us in modest, unupdated homes got screwed.
In the last reval, the improvements were assessed at much higher than the land. In this reval, our improvement assessment did not even double, yet our land assessment increased 5 fold! One of the points we are trying to prove through our appeal is that the company who did the revaluation did not properly weight the value of improvements in the recent sales and thus overassessed our land. I think we have some strong proofs for this, but all that counts is what the town attorney and ultimately the judge think.
#136 Frank – That’s because state law allows the assessors to assume the highest value for improvements, etc if they are denied an inspection. They assume you are hiding something from them.
Can I ask a naive question about revals?
Let’s say my town hasn’t done one in a while and the last assessed value of my home is $x. then i get reval’ed and the assessed value is now 2 times the previous assessed value. do my property taxes double? or does the tax rate then change and my taxes go up some other huge amount (that isn’t double).
139 Lurker – It depends on how the values of the town as a whole went up. If the average was 2xs previous assessment, then your taxes stay the same. If the average increase in assessment was 1.5x then you will see a tax increase. If the average increase in assessment was 2.5x you will actually see a decrease.
140 – NJGator – thank you, that actually makes sense; I hadn’t thought of it that way at all.
NJgator
Shucks, oh well. If I can’t lower our taxes, I was at least hoping to increase their taxes this year, in all fairness. Would make for some fun times living here for the next however-many years.
Consolidation of municipalities in NJ would be great, in theory. It will not work here because our Gov, both mint and ‘ner are owned by the unions. They will not allow this cost savings you speak of, could Suburban Bergen, Morris, or Essex counties have region police forces with regional command and satellite offices? Yes, but even if it did happen the unions would insist the staff size remains constant and the number of captain, chiefs, etc remain the same.
The problem with NJ is the same problem large corporations get into too many commanders not enough soldiers. Really we could do with a third as many administrators what we need are good dedicated teachers, police, firemen, etc. In general they know how to do their job, and the administrators could handle 5 times what they are handling in Bergen county.
I think the reality is that the unions need to be reformed cut off etc, politically of govn’t is too weak to do so. While I am not anti-union and believe people need to be fairly compensated, the unions don’t seem to understand the economic reality of the situation. Hence in detroit they negotiated themselves into unemployment.
Obama has two half-sisters and five half-brothers.
I wonder when we get close to election if we will get some dirt on his brothers and sisters?
Re: Switching from oil to gas heat
We just got our last estimate and it looks like an oil boiler wins. The estimate for the oil boiler was $4,975 and the estimate for a gas boiler was $6,822 which did not include removing the oil tank. Just the fact that we are replacing a 55 year old boiler should save us some money on fuel.
williow,
if you havent already, take a look at condensing boilers.
Condensing boiler manufacturers claim up to 98% thermal efficiency of fuel conversion can be achieved in normal domestic use, compared to 70%-80% with a conventional design. Typical condensing boiler efficiencies are around 90%
bi Says:
February 11th, 2008 at 11:13 am
however, it seems that clinton administration was the first jewish administration. here is a list of jews in clintons administration:
madeleine albright, secretary of state
william cohen, secretary of defense
roert rubin, secretary of treasury
george tenet, cia director
samuel berger, adviser of national security council
jenet yellen, adviser of national economic council
bi: just shut up right now…..I have no clue what kind of idiotic point you are try to make here
#142 Ann – That would be fun. Heck I want to throw the sweetheart assessments the rich folks got at the town’s attorney during our settlement talk just for fun – or maybe I should just send the data to the Star Ledger. I’m sure they’d love to strum up some class warfare in Montclair.
Stu Says:
February 11th, 2008 at 11:00 am
Come on guy…
Stock market does not equal business conditions.
Yes they are related.
Yes they are causated, but they are not the same.
Sans the banks and sundry overleveraged firms, corporate balance sheets are the best they have been in a long time.
If you don’t understand this fundamental truism about the current environment, then you are overconfident in your abilities.
cf #147: I think he’s trying to say that the Jews run everything. It’s going to be a long few months, with people like bi saying either that Hillary is an Israeli mole trying to infiltrate our government or that Obama is an Islamofascist (sic) mole trying to infiltrate our government or that McCain is a commie North Vietnamese mole trying to invade our government.
can someone direct me to what they consider to be the best article written on the current housing bubble in NJ? I know there are hundreds, but I’m looking for something recent that puts the argument that we’re in a wildly over-priced market.
Anyone who is willing to start a comment with “The Jews” or “List of Jews” is looking to pick a fight with me……
Off-hand, I have no idea what the hell BEING JEWISH has to do with anything unless you are Borat.
Bi is like the village idiot in a really bad kung fu movie. Ignore and move on. That’s all you can do
chifi,
there have been several articles lately about how many people with dual citizenship (israel/US) are in the highest positions of power in the US and how that implies a conflict of interest.
Not necessarily my opinion, just putting info out there.
#153 –
well said…. now, let’s get back to business — can you help me w/ my question in #151?
kettle1 Says:
February 11th, 2008 at 12:34 pm
chifi, there have been several articles lately about how many people with dual citizenship (israel/US) are in the highest positions of power in the US and how that implies a conflict of interest. Not necessarily my opinion, just putting info out there.
ket: funny how that little postage stamp of a country is such a hot button, while there are plenty of other more important examples that are ignored……reeks of prejudice and opportunism…
150#, Jill, don’t put your words to my mouth. I have nothing against jews or blacks. just want to point the fact as it is. like it or not, the race is still an issue in politics. ask those 80% of blacks who voted for obama if they will still vote for obama if he is not half-black.
106 She certainly raised two well behaved young ladies.
The craziest sounding internet rumor I ever heard, that actually proved true, involved her.
http://www.snopes.com/politics/bush/laura.asp
can you help me w/ my question in #151?
Go back and look through the main pages of this blog and see what Grim has put up. You’ll have to decide what’s the best article. There’s so many at this point that its complete overload. What’s a good news source is purely subjective. I’d stick with Wall St Journal or the Economist.
#151 ready: I think that is old news by now. The bubble phase is over, we are now in the decline stage.
It is just that so many sellers and or realtors refuse to admit it.
vodka (107)-
Costa Rica for me. Quite a community of American expats on the Pacific coast, too.
Grim
“Have fun with the taxes, $28,190”
thanks a lot for the info
wow! in this area you r lucky if you finf a renter for $3500!
this is what is going on in wEST oRANGE AREA
regular average taxes are 14k and you can rent it for $2500
in condos , you pay like 400 maintenance fee
How much shlould be the real value of these properties ?
ChiFi:
“Stock market does not equal business conditions.”
I know that. And I also know that I could never get one past you. I was simply being selfish (which I proclaimed). As long as I get to keep my job and the market goes up nicely, I’m that much closer to retirement at 45. That is what ‘I’ care about.
As to the financial health of businesses, if they would just stop buying back stock and start reinvesting in themselves, they might actually experience growth and economies of scale. Instead, they all seem to be waiting for another 9-11 in hopes that they can simply acquire their competitors for pennies on the dollar. The book values I am witnessing across the board are unreal. Businesses are just sitting on wads of cash. This is why I like what Verizon is doing so much (as discussed at the GTG). They really took a gamble with the fiber rollout, but are setting themselves up for exponential growth. AT&T is just sitting on their sweet ass buying back shares to artificially inflate their EPS.
“If you don’t understand this fundamental truism about the current environment, then you are overconfident in your abilities.”
Nah, my abilities are fine, evidenced in my bottom line. Of course, I do appreciate the way that you are willing to speak your mind, even if it means pointing out the weaknesses in others that most don’t want to hear. There are seriously not enough people in this world who are willing to say things like they are.
#160 – any great articles on “the decline stage”?
Al (16)-
Why not wait until banks have to eat those homes in foreclosure?
Believe it or not, some lenders (not the big outfits, but the smaller ones) are rejecting short sale proposals.
Once a house gets foreclosed and goes back to the bank for $100, it’s funny how quick the lender gets real about getting it sold. Amazing that it takes such a monumental screw-up and lapse of judgement to trigger an acceptance of reality.
Anyone else reading this one yet?
https://njrereport.com/files/consequences.pdf
The Consequences of Mortgage Credit Expansion:
Evidence from the 2007 Mortgage Default Crisis*
Atif Mian
University of Chicago Graduate School of Business and NBER
Amir Sufi
University of Chicago Graduate School of Business
January 2008
Steve (48)-
“Does anybody know of a good web site that lists all the mortgage rates across the country at various banks? I want to refinance at some point (probably later this year) and want to compare rates.”
Might wanna keep that list narrowed to lenders that are NJ-chartered. If a lender isn’t chartered in NJ, disclosure of prepay penalties in mortgages is not required.
Have helped a lot of people re-fi over the years who had NO idea they had a pre-pay clause in their loans. The online outfits (E-Loan, Lending Tree, etc) excel at this scam.
clot 167
“disclosure of prepay penalties in mortgages is not required.”
Pure ignorance on my part, but how can you bind someone to an unwritten contract the existence of which has not been disclosed?
“Have helped a lot of people re-fi over the years who had NO idea they had a pre-pay clause in their loans. The online outfits (E-Loan, Lending Tree, etc) excel at this scam.”
All you have to do is read the documents which you are signing. Are the sheeple really so lame as to not spend the ten minutes to read the papers on a 300K+ loan?
bi (85)-
“hillary clinton is the most business-friendly candidate among remainings in both parties. i would not bet long before next tuesday.”
I think bi is Amy Winehouse. Utter crackhead.
bi don’t wanna go to rehab…he say no, no, no.
Long xhb is like drawing on a crack pipe…
“All you have to do is read the documents which you are signing. ”
Thanks, stu. That counts as disclosure in my world.
(93)-
bi: world’s first Mormon crackhead?
“Disclosure: i voted for romney.”
How credible is this report?
“Sergio Portilla of West New York is the proprietor of his own bus under Community Line Service. Driving a daily bus route from Journal Square in Jersey City to Manhattan, he’s noticed a substantial decrease in volume. He blames the plunge on the increased numbers of people being fired from their jobs in New York.”
http://www.hudsonreporter.com/site/news.cfm?newsid=19277959&BRD=1291&PAG=461&dept_id=523590&rfi=6
Has anyone seen this kind of slowdown in NJ/NYC?
Stu Says:
February 11th, 2008 at 12:47 pm
ChiFi: Nah, my abilities are fine, evidenced in my bottom line.
S-Man: You had me with everything until you spit this out. Irrelevant. The rest of it is spot on. What is the old cliche? “…everything works until it doesn’t…”
One comment…..keep an eye on risk and correlation. You may be underappreciating a little bit of both of these in your machinations. Remember, if you are “most of the way there”, then you should be ratcheting risk down….
Just a third party’s opinion who has no skin or interest in your game. That said, you are way more on top of your stuff than most.
bi (121)-
Albright didn’t discover she was Jewish until halfway thru Clinton’s term.
She was adopted and raised Catholic.
chi (175)-
But, look what high correlation has done for bi!
chicagofinance Says:
February 11th, 2008 at 10:38 am
“Mostly no, but they did have a strong box in the basement with important papers, and they were able to retrieve the hard drives on computers. I think the biggest loss is that the daughter who is 10 years old is an accomplished artist, and her bedroom was a total loss. She has refused to see the house.”
Sorry to hear that they lost so much. It is amazing how much emotional energy becomes tied up in stuff. I think the worst would be losing things like family photos and videos (pre electronic era), and the other items that remind us of different people and times in our lives.
Hope they can put their lives back together quickly. And at least THEY are all OK, can’t stress that enough.
patient (168)-
Not sure I understand your question. Just mentioning that non-NJ-chartered lenders don’t have to disclose prepay penalties in a TIL statement.
So if Sammy Davis was alive I could run him for President and he would clean Obamas and Hillerys clock.
One thing McCain has going for him is that his father in law was a Beer Barron!!! That is just so cool, plus McCain makes the best tator tots going, any guy who loves tator tots and beer has my vote, plus his current wife is a hottie!
kettle – you would have to go head to head with me as well on the whole Israeli conspiracy crap too, and I have been blogging on THAT topic for years (elsewhere of course). The actual President is practically in bed with the Saudi royal family but it’s all a secret conspiracy anyway.
Feel free to e-mail grim to forward to me and I will happily deconstruct every bit of nonsense you have ever seen.
Don’t forget, I lived there for many years and have many many contacts in Arab nations. I’ll put first hand experience up against the conspiracy crowd any day.
Does that make her one of those Jews for Jesus?
But seriously, what religion is she now, is she still catholic or is she jewish?
Clotpoll Says:
February 11th, 2008 at 1:13 pm
bi (121)-
Albright didn’t discover she was Jewish until halfway thru Clinton’s term.
She was adopted and raised Catholic.
Stu (169)-
Yes, the sheeple ARE that lame. Also, if things like prepays aren’t disclosed, the first time the buyers sees these clauses are when they’re sitting at the closing table.
Many buyers just don’t assert their rights and- for whatever reason- will sign away, just to keep the process moving.
John – Laura Bush would be much improved if she would stop injecting her face with that toxic cr@p, at least enough to allow herself to express emotions.
lisoosh (184)-
I think hubby Bush is the emotional constipate.
lisoosh Says:
February 11th, 2008 at 1:25 pm
John – Laura Bush would be much improved if she would stop injecting her face with that toxic cr@p, at least enough to allow herself to express emotions.
Cindy McCain is right behind on that continuum
“The bond insurers used to have sound business models that simply charged a fixed fee to municipal issuers that have very low historical default rates, particularly when compared to their corporate bond counterparts. But then like everyone who reaches for just a little bit extra, they wandered off the reservation and into the world of structured finance (a.k.a. leveraged finance). Soon they were insuring tranches of CDOs, CDO Squares (leverage on leverage on leverage), and other structured finance deals for higher fee levels. These new types of insurance brought in higher revenues and magically their earnings jumped which caused their stock prices to soar. One hundred dollars invested in MBIA stock at the end of 1999 would have been worth just more than $200 by the end of 2006, while the same amount invested in the S&P 500 would have only been worth just less than $100 (not accounting for dividends)!”
http://www.minyanville.com/articles/CS-C-db-MBI-WB-bcs/index/a/15847
“Has anyone seen this kind of slowdown in NJ/NYC?”
I don’t usually post these kinds of non-scientific anecdotes, but the traffic on the GSP in Essex county on my way home from work has been significantly lighter than it was last year. I do like it this way ;)
And ChiFi, I do appreciate all of the advice. In my 17 years of individual equity investing, I made a ton of financial mistakes. Some were more costlier than others. If there was one thing that I pay the most attention to, it is not to trust any financial advice you receive for free, and be skeptical of the paid advice as well.
It’s like the guy selling you stock picks for $50/month. If he was that good, he wouldn’t have to sell anything. He could just act on his own advice. Same with the sports bettors, real estate moguls, etc. I can’t believe Trump is even doing it now.
So we clott and BC Bob in on the costa rican compound. Any body else want to join us?
http://tinyurl.com/2dwvhs
How about this clott 67 acres in the central pacific region in jabillo, puntarenas
Gotta love the Dow.
Add B of A and Chevron. Drop Honeywell and Altria. Pure madness.
vodka (189)-
I’ll patrol the perimeter.
Wouldn’t it be cool if the indexes were never changed?
Wouldn’t it be cooler if they were abolished?
“Not sure I understand your question. Just mentioning that non-NJ-chartered lenders don’t have to disclose prepay penalties in a TIL statement.”
I was confused – thought that you meant the penalties didn’t even have to show up in the contract – I’m back on the road now.
Lisoosh,
I am not suggesting any thing w/ regard to various conspiracies involving the US and israel. That is a topic i tend to stay very far away from on the web. That is just too loaded of a discussion to have on the web. My previous comments were no reflection on my personal opinion on the matter, just throwing out some of the random crap i come across in my daily trawling of the web
grim —
you must have a favorite, respected article on the housing crises — something that wraps it all up in one article.
I’m putting together an argument for a low bid to a seller, and want to include some press
BREAKING NEWS:
A Defense Department analyst and two Chinese nationals were accused of selling military secrets to China, the Justice Department said. Separately, a former Boeing engineer was charged with passing space shuttle secrets to China. Full article coming soon.
I thought Jesus was American?
“So we clott and BC Bob in on the costa rican compound. Any body else want to join us?”
I may. Uncle Patient is already there.
HEHEHE Says:
February 11th, 2008 at 1:43 pm
I thought Jesus was American?
No but Jesus (pronounced hey-ZOOS) is a Puerto Rican…..
I’m putting together an argument for a low bid to a seller, and want to include some press
I suggest that you use an alternate approach.
196 Ready to Buy
Jumping in here with some (unsolicited) advice as someone who put out a few “lowballs” while buying…
Most likely, IMHO, nothing a buyer says or includes in the offer will change a seller’s mind. They are either ready to sell and face reality or not.
We put in an offer where we told our agent why it was what it was (house needed work, we laid out what it needed and how much it would all cost). All we did was argue back and forth for days. They argued it was in move-in condition, we argued that it was a fixer upper. What a waste of time. We could have just written the number down on a napkin and got it all over with in an hour.
Anyway, just my opinion! Good luck!
Stu (s-man) Says:
February 11th, 2008 at 1:33 pm
“Has anyone seen this kind of slowdown in NJ/NYC?” I don’t usually post these kinds of non-scientific anecdotes, but the traffic on the GSP in Essex county on my way home from work has been significantly lighter than it was last year. I do like it this way ;)
S-Man: my silly anecdote was that the number of Lincoln Town Cars, cabs, and livery cars on the Pulaski Skyway returning form Newark pick-up had reached a critical mass during PM rush on Thursday and Fridays. It got to the point last February-June where I was saying “WTF is this?” as I sat in traffic at 7:30PM. I made a mental note and wondered if it meant something…it did……bloated expenses and a cash-to-burn mentality…..
how so? do you think making this arguement is countere productive. we’re not dealing with realtors.
you recommended knocking on doors, and we did it this weekend — actually my wife did — more guts than me. We told 15 homeowners that we’re interested in buying there home, and dropped another 20 letters off.
It worked! We’ve had 4 call backs already… hoping to skip the realtors all together.
ChiFI
Not really news. China has been buying secrets as fast as they can for the last 5 – 10 years and the pentagon has been very lax because of the fallout that would hit them if the actual scale of the selling of national secrets was put in public view.
On a sencind note, all i have to say about stealing space shuttle secrets is HAHAHAHAHA. 90% of the shuttle is 70’s tech. One of the only new aspects of the shuttle are the main engines (the cluster or engines on the back of the actual shuttle itself), which are some of the most advanced rocket engines in the world. This is funny, because it would be cheaper to use easily available off the shelf tech to build an orbiter then to try and copy off the space shuttle. that is why NASA is going back to an apollo type design for its next spacecraft
#201 grim
my response is above…
Stu already plans to retire in CR and has seriously pondered purchasing some land about 20 miles aways from any other human there. Of course, If I read your smoke signals, I’ll call off the dogs ;)
I asked a local homeowner what he paid in property taxes the last time I was down there. Guess what he said? His beach front shack owes less than $100/year and the local beer, Imperial, is not half bad.
stu/chi,
just to contribute my anecdata, my commute (mosly GSP/78) has gotten noticeably lighter this year.
I was attributing it to the cost of gas, but who knows.
#146
Kettle,
We’ll look into that – thanks.
how so? do you think making this arguement is countere productive. we’re not dealing with realtors.
IMHO, the probability of insulting the seller is very high with that approach. If you are presenting an offer to someone who you approached, do it in a personable manner.
Just passed my desk. Headline regarding the stimulus package;
“Biggest subprime loan ever”
#210 – grim
In writing, in person, or over the phone?
clot #191
I’ll provide the minor emergency medical care
sign us up.
sl
grim Says:
February 11th, 2008 at 12:55 pm
Anyone else reading this one yet?
https://njrereport.com/files/consequences.pdf
The Consequences of Mortgage Credit Expansion:
g: I’ll review it some time, but not this week.
stu,
be aware of the property laws/rights down there. there are some key differences and it can be easy to get burned from what i have heard. there are very liberal squatters rights in CR and other potential pitfalls
From Marketwatch:
Hands off financial markets: White House
The White House sent a message to Congress that it is not eager to see legislation aimed at greater oversight of financial markets and banks in the wake of the credit squeeze that began last August.
Beyond taking steps to help homeowners facing foreclosure, and reforming Fannie Mae and Freddie Mac, “the best course of action is often to simply allow markets to adjust,” the White House economics team said in the latest Economic Report of the President sent to Congress on Monday.
Although financial firms have taken billions of dollars in losses since August as a result of little-known and incredibly complex derivatives, the White House does not agree with some commentators who have labeled financial innovation as dirty words.
“Markets naturally self correct, rewarding good strategies and punishing bad ones. Government actions may be less effective at differentiating between the two and may prevent markets from creating products that benefit consumers,” the report concluded.
Policies that seek to protect market participants “from the discipline of market risk” would only delay necessary adjustment and raise concern that investors would come to expect a rescue, thus encouraging risky behavior.
“Markets naturally self correct, rewarding good strategies and punishing bad ones. Government actions may be less effective at differentiating between the two and may prevent markets from creating products that benefit consumers,”
Is that a joke? The government is so involved in our economy that if this was a prostate exam we would be choking on the gloved hand
ChiFi:
So sorry to hear about the fire. Your step-sister and her family might want to consider talking with a therapist to try to work things through. (I hope the therapists on this board will chime in.)There is a relatively new field of psychology that deals with disasters. I attended a seminar given by a woman who started at Mount St. Helens and went on to Oklahoma City, the WTC and Katrina. Her main point was that disasters run along a continuum of severity but the same coping skills can help no matter where your “disaster” falls. It might be worth considering.
“be aware of the property laws/rights down there.”
That is good advice Kettle.
When I lived in LA, I went to a friends place down in Mexico almost once a month. The crib was midway between Rosarita and Ensenada. About 3 years into their 99 year-lease (can’t legally own land near the coast) a different person claimed to own the land. Well they then had to pay the new land owners. Then a few years later, another rightful owner showed up. At this point, the leasers were all pissed and decided not to pay. Well one of the homeowners ended up dead from a mysterious bullet a few days later. At that point, my friend simply walked away from a terrible (but beautiful) RE investment.
I recently read an article in the NYT (I think), about how bad it has gotten down in Baja between Ensenada and TJ. Tourism has dropped to almost none after a recent wave of crime (rapes, kidnappings, murders, etc.)
Foreign ownership has it’s limitations I suppose.
Recession? who knows. The problem with predicting a recession is it is tough to do. Take me for instance, the RE crises had no effect on my personally but this year no jewlery for valentines day, my jeweler might think it is the recession, but at 900 an ounce gold my wife and I think it is crazy to spend a grand for a little tiny piece of trinket, I ain’t buying a car either, could it be recession, nope, lots of discounts usually happen when sales go lower so better to wait, that plus cars run better nowdays, my ten year old cars runs fine, buy a new home, nope, prices are falling why not wait, plus socially it is not like three years ago when everyone congratulated your purchase now you are considered and idiot. Go overseas on vacation, nope weak dollar makes it crazy to go to London for ten dollar beers. A lotta if not most people in my town are cutting back but for the most part they are like me or they are already extended. The job market is pretty good and rates are low. But if people don’t want to buy that is hard to change with a $600 check.
Clotpoll Says:
February 11th, 2008 at 1:27 pm
lisoosh (184)-
“I think hubby Bush is the emotional constipate.”
Probably. She definitely humanizes him, no doubt about it. And I was pleasantly surprised by an interview I saw with Jenna Bush, much better than anticipated and presumably her mothers influence. I just wish she’s cut out the Botox, she can hardly move her mouth any more.
kettle – quite wise to avoid the topic. I wade in out of some misplaced sense that common sense HAS to be injected somewhere and it is a topic I know volumes about. Emotionally exhausting though.
On condensing boilers – VERY common in the UK, fabulous things.
3b – didn’t you say you would be in Edinburgh this year? Looks like I will be in that vicinity around Festival time.
2008 NJ Monthly High School Rankings:
http://njmonthly.com/articles/towns_and_schools/highschoolrankings/top-high-schools-in-new-jersey.html
NJGator,
One question: you said in an earlier post that in Montclair there was a pretty obvious “wrong side of the tracks”. I’m aware of the difference, generally speaking, between Upper Montclair and the area around downtown. Are there differences within the area surrounding downtown, too?. Let’s say if you’re considering a 20 block radius around Bay St. or Walnut St. train stations, is there a “better side of the tracks” to look at? Thanks a lot. I’m very interested in Montclair.
http://www.smartmoney.com/tradecraft/index.cfm?story=20070205
If Obama wins it will be like Cory in the house times two with Mrs. Whitney Houston, I mean Mrs. Michelle Obama as the first lady. I love her recent speech where she bitched that her husband leaves dirty socks out, smokes and is sloppy and she don’t like it. The she said her career comes first even ahead of her children, she is lucky her Mom moved in to raise the kids as she is too busy off on her career to do it. Then she says her two daughters are more important than her husband. Barrack most likely has a little doggie bed in the kitchen as he is low man on the totem pole, Barrack is more whipped than kunta kinte.
lisoosh
i might actually be interested in discussing the us middle east ( including israel) issue, but only face to face. it usually turns out to be a very interesting debate when you can do so with an intelligent individual who doesn’t just spew newsspeak(TM)and doesnt see the issue as black and white. Plus its too easy to loose subtle meanings on when typing a disvussion
Bi 224,
Thanks. Anybody have comments on Shawnee and Manasquan high schools?
They are the so-called comps for my town’s high school.
177#, clot,
in g.w. bush’s first term, the only person in the inner circle of his administration is press secretary ari fleischer. it is in totally opposite to clinton administration. i am wondering if this has any correlation with the fact that most jewish people are voting for democrats.
Q for clott, grim or whoever.
If i use a realtor to buy a home, to whom does their fiduciary responsibility lie? is this nay different then a buyers agent?
226 john
kunta kinte?
Do you think maybe you could have worked a few more racial references in there?
bi, your prejudice is expected, on the other hand.
There weren’t any orientals included :P
226 (translated)
“John no like brown people.”
The interesting thing about opinions, even those strongly held, are some are right and some are wrong, regardless of how fervently we believe in them. It sure would be nice to know which ones are universally right, but we rarely have access to the complete set of facts, to make that determination.
231#, patient, from what i posted here, you can see i don’t hold prejudice. i am just throwing out some facts, which may not be pleasant to some people.
232#, stu, if you are refering to bush’s first-term cabinet. it included secretary of labor elaine chao, who moved to u.s. from taiwan with her parent at youth and married with current senate minority leader mcConnell, and secretary of transportation Norman Mineta, a japenese descent. on the other hands, you can argue that these posts are not in the inner circle.
Wow John,
I worry about Obama being elected because my own people generally are racist nuts.
Thanks for proving me right.
Oil saw 94.50 today. I thought it was in the 80’s? ;P
You know what I always find strange?
People seem to be more tolerant of racial differences than they are of religious differences.
For example, we’ll elect a black president, but are trying as hard as possible to limit stem cell research or to add prayer to schools, or limit womans reproductive rights.
Talk amongst yourselves.
R Patrick Says:
February 11th, 2008 at 3:13 pm
Wow John,
I worry about Obama being elected because my own people generally are racist nuts.
Thanks for proving me right.
At least 618,000 Americans died in the Civil War, and some experts say the toll reached 700,000. The number that is most often quoted is 620,000. At any rate, these casualties exceed the nation’s loss in all its other wars, from the Revolution through Vietnam.
The Union armies had from 2,500,000 to 2,750,000 men. Their losses, by the best estimates:
Battle deaths: 110,070
Disease, etc.: 250,152
Total 360,222
The Confederate strength, known less accurately because of missing records, was from 750,000 to 1,250,000. Its estimated losses:
Battle deaths: 94,000
Disease, etc.: 164,000
Total 258,000
I assume your own people were descendants of the Confederate Soldiers and not the majority Union Soldier casualties? Just curious as to what group are generally racist nuts? I’ve never met them.
stu,
consider this….
UPDATE 3-Venezuela threatens to stop US oil sales over Exxon from reuters
Dubai: Gulf Arab oil producers are more likely to revalue their dollar-pegged currencies unilaterally and the longer plans to introduce a single currency are delayed, US investment bank Morgan Stanley & Co. said.
BP has warned staff against creating electronic documents on unpublicised problems with a key component of the much-delayed Thunder Horse, the world’s largest floating oil production platform, as continued troubles with its US operations plague the UK company.
all is not well in wonderland
racist nuts do not discriminate! they are part of all groups and races’.
Stu Says:
February 11th, 2008 at 3:20 pm
You know what I always find strange?
People seem to be more tolerant of racial differences than they are of religious differences.
For example, we’ll elect a black president
________________________________________________
“We” will? I guess you’ve been reading a different blog today. I think it’s more likely that people are more sensitive to prejudice towards their own group than to others, so they notice it more when their own group is marginalized or insulted, and decide that people are less tolerant of them than of other groups (who they feel are perhaps “justifiably” disliked).
So frequently I find that it is racists who tend to point out examples of racism.
stu,
examples of racism or discrimination are to easy. Every race or ethnic group has committed some sort of atrocity in their history, whether it be mass slavery/genocide/etc. No one is innocent so pointing fingers at individual historic events is somewhat pointless. The only constructive point in discussing these events is to understand them in a historical context so that we can try to overcome whatever the driving force may have been that allowed that t occur.
Stu Says:
February 11th, 2008 at 3:30 pm
So frequently I find that it is racists who tend to point out examples of racism.
________________________________________________
That’s my point. That doesn’t mean the people pointing it out are wrong, just that they usually have their own prejudices.
So I think we can all agree upon one thing then.
We must boot John from our race.
whats your race stu? statistically a large % of “black” people are part “white” and vice versa in the US due to historical mingling. I.e obama, he is half white. those darn labels just keep getting the way……
by the way, the question is rhetorical, just meant to point out the superficialality ( did i make that word up?) of the common race debates you hear
I’m only playin’
My ethnic background is half german/half russian.
The religion I was born into and raised to be was Judaism.
I see myself now as an American mutt with my own faith system.
NJ government workers to enjoy Tuesday day off as others toil
TRENTON, N.J. (AP) — Millions of Americans will head to work as usual Tuesday, but New Jersey’s state workers won’t be among them.
New Jersey will be among five states that closes its offices Tuesday to honor Abraham Lincoln’s birthday.
Most states merged Lincoln’s birthday with George Washington’s birthday as part of President’s Day, which will be celebrated on Feb. 18 this year.
NJ government workers to enjoy Tuesday day off as others toil
NJ IS truly the welfare state.
Unfortunately, NJ has great restaurants too.
Stu (s-man) Says:
February 11th, 2008 at 2:59 pm
“There weren’t any orientals included :P”
fyi, stu…
“orientals” is not pc… asians is the correct term now…
248 Stu, I assume your own faith system is fully tax-exempt. If not, please fill out the forms.
– Tom Cruise
[250] But they worked the day after Thanksgiving. Glad to see Corzine has it all running smoothly.
some enterprising young men going to college in DC started their own religion based on beer, filled out all the forms to be considered a tax exempt religious group and sold their house to the tax exempt religious group. The town challenged them in court and lost!
But they worked the day after Thanksgiving. Glad to see Corzine has it all running smoothly.
The unions have been asked in the past if they wanted to trade the day after Thanksgiving for Lincoln’s B-day. They said no, because the gov. typically gave themn the day after Thanksgiving off anyway, even though it wasn’t in the contract.
254 Was one of them named Homer? Or Kettle?
256
no comment
here’s a state, broke, dead broke, but don’t matter to the arrogant state workers.
screw the taxpayer,,, and by the way we want more, we’re underpaid.
NJ an original and on going Welfare State.
the funny part was that the court based their decision on the fact that the young men living in the house did community service projects twice a month and documented it. the fact that beer was a sacrament was irrelevant.
Gas tax proposal gains support from Codey
TRENTON — Democratic senators today said increasing the state’s gas tax and [Editors Note: Put on your laughing caps] cutting state spending could ease Gov. Jon S. Corzine’s proposed highway toll increases.
With opposition building to toll increases unveiled on Jan. 8, alternatives are being weighed by lawmakers.
…
To do that, Corzine wants to increase tolls 50 percent in 2010, 2014, 2018 and 2022.
…
Sen. Raymond Lesniak, D-Union, said the 2022 increase could be eliminated by
increasing the state’s 14.5 cents per gallon gas tax by 10 cents now and five cents in 2013. Doing so, he told The Associated Press, would allow the state to pay for transportation work for decades.
…
Lesniak also said the state should immediately boost tolls by 50 percent … rather
than 50 percent in 2010 … to pay for widening toll roads and fixing bridges on them, two key needs often cited by Corzine that Lesniak thinks the public would accept.
…
“I don’t think anyone is going to oppose alleviating congestion, and certainly no
one is going to oppose making our bridges safe,” Lesniak said.
…
In addition to the toll increase, Corzine also plans to control state finances by
freezing spending in the coming budget and restricting future spending and state
borrowing. The spending freeze, Corzine said, will mean $2.5 billion in “very harsh”
budget cuts this year. [Editors Note: Oh, I see, in NJ simply not increasing spending equals “very hard” budget cut]
…
http://www.app.com/apps/pbcs.dll/article?AID=/20080211/NEWS/80211020&referrer=FRONTPAGECAROUSEL
Ready (196)-
Forget the article. If you present something like that to a seller, you’re as good as doomed. No matter how good your offer, that seller will burn his house down before he sells it to you.
ready (204)-
So, you’re going to educate this seller in person? That should go really well.
“OPEC could switch to euro pricing within 10 yrs – secretary general
http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=0fa10387-aefd-4a51-9a37-4f11de1f1da6
still (213)-
“I’ll provide the minor emergency medical care…”
Mr. Ready to Buy might need some of that medical care, once he presents his manifesto to the seller he wants to lowball.
A buyere should never try to convince a seller to sell at a lower price. It won’t happen.
Th eseller will only lower the asking price if there a specific time priod elapsed and there are no offers.
The only way to convince a seller to lower the price is to wait. Sit on the sideliness and when they contact you say I told you so and now I need an extra 15K lower. That’s it.
Clot,
How long do you leave a lowball offer on the table for?
Do you force them to “take it or leave it”? Or, do you give them some time to digest it, shop it around and perhaps come to the realization on their own that this may be the best offer they get?
Anyone who likes to read about those spying on the US from the inside should simply google “Sibel Edmonds”. Lots of fun stuff there, truthful or not.
In other news of the world –
I just discovered this weekend that NJ Transit is now running those spiffy new double-decker trains on the NEC line.
I’ve seen those previously on the LIRR.
Home prices in the state of denial
By Chris Isidore, CNNMoney.com senior writer
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.
Hugh Moore, a principal at Guerite Advisors, a research and financial advisory firm, said he wasn’t surprised by the denial demonstrated in the survey results. He said research into previous housing busts shows homeowners are slow to accept that their home has lost value.
“It’s a visceral reaction; you lock into the highest price you ever heard, and you’re going to hang onto it,” Moore said. “It’s a grieving process. First you go through denial and disbelief. Acceptance is the last step you get to.”
Moore said it’s important to remember that only a small fraction of homeowners try to sell their home in any given year, and unless they are trying to get new financing or a home equity line of credit, there’s no reason most will be confronted with the decline.
Rent (266)-
For the reasons you mentioned, I leave it on the table and walk away. The only caveat is that the offer would be withdrawn if my client finds another home.
No power play, no posturing. Just absolute confidence that my offer will be the best- and probably, only- offer the seller will get.
Few words and total confidence really rattle sellers.
#270 -Clotpoll – I have a question about this tactic. What if I left an offer on the table, and when the seller gets back to me 7 weeks later, I no longer feel the house is worth the original offer? A lot can happen in 7 weeks.
It also seems like some expiration date would be useful as an indicator to the seller that the market is rapidly deteriorating.
Artemis (271)-
7 weeks is about one second in RE terms.
If you want to play the “now I’ve changed my mind…I’m offering less” game, go ahead. However, don’t be surprised when it doesn’t work (because it doesn’t work).
The fact that I don’t indicate an expiration date- or condition the offer in any way- is what rattles sellers. You might think conditions imply strength, but they actually imply weakness.
When I lowball, I follow a very exact procedure that has worked on numerous occasions. I don’t deviate from it, because it works. I’ve gotten it so honed that there’s very specific language that I use (and language that I purposely don’t use). That’s not to say that there’s other approaches that will be equally-successful…I just don’t use them.
“When I lowball, I follow a very exact procedure that has worked on numerous occasions. I don’t deviate from it, because it works. I’ve gotten it so honed that there’s very specific language that I use (and language that I purposely don’t use).”
Clot,
Would you mind sharing the details? If you already have posted them here, could you do it again?
I understand you might not want to give away your method though.
Based on your comments, it seems like you believe that a buyer gains little buy insulting the seller, and a hostile approach to negotiations doesn’t get a buyer very far. I agree.
to second clot here – I would agree about the general tactic: few words and confident demeanor. And Artemis; we made a lowball offer last year that was not accepted, where the seller came back to us and eventually (a few weeks later) offered to sell at a few pennies more than our offer. We were no longer interested. You seem to suggest that this is an unfortunate outcome for the buyer, whereas I find it difficult to express the degree to which I’m grateful that those fools didn’t take our offer.
Every Thanksgiving for the rest of my life I’m likely to raise a glass to those sellers.
clotpoll,
if you would be so kind, would you share your tactics with us here? i agree with keeping the words short and to the point but how would one convey to the seller that your price comes well informed and void of any market overspeculated prices? through your realtor
thanks
CAIBC
Clot,
Thanks for the tips on lowballing. I had a feeling attaching a time limit to an offer would only make the seller wait until the day passed just to see what you do. I’ll read this blog daily to see what other lowball tips emerge. (Like I wasn’t going to hit F5 every 15 mins anyway.)
pret (273)-
That’s the long and the short of it. We all sometimes forget that no matter how strong our positions are when we negotiate, if the other party isn’t allowed a way to save face and at least hang onto the illusion of empowerment, the counterparty will actually cut his own throat rather that comply.
#272 – Thanks for responding. I have no interest in playing “games.” I simply don’t want to lock myself into an offer that might make sense before the spring buying season begins but no longer makes sense after a poor spring for the RE market.
I’m not really afraid of appearing weak or strong. If they want to deal with me because I have indicated interest in buying their house and I have the money, they are welcome. If not, I don’t care. I just don’t want to pay more than I think the house is worth at the time that I go under contract.
BTW, when you say you don’t “condition the offer in any way” do you also mean no inspection or mortgage contingency?
I need some arguments to use in talking both a newly divorced friend and her 22-year-old daughter out of buying homes right now and waiting a year. Friend is renting an apt., daughter lives with dad for now and wants to move out. I think they should wait a year. Can anyone give me some concrete stats that I can use to show them that now is not the time to buy? Daughter can only afford cheap 1BR condo, which means if she wants to move she’s going to have a terrible time selling it.
CAIBC (275)-
“…how would one convey to the seller that your price comes well informed and void of any market overspeculated prices…”
That’s the kind of thing you DON’T try to impress upon the seller. It is irrelevant. Qualifying statements weaken offers, not strengthen them.
The only thing of relevance is that a written offer from a qualified buyer is on the table. Period.
Art (278)-
Don’t take away your inspection or mortgage contingencies. By “conditioning”, I meant weakening thru superfluous explanation.
#281 – Got it. Thank goodness.
Question I recently put in a bid on a house and another home that I liked came back on the market. My realtor put in the second bid but with the “apology” that her clients were bidding on two houses at once.
My wife and I like both so we would be happy with either. I have not inclination to just bid on one at a time and see not reason why I shouldn’t. In fact, it kinda makes it easier to stick to a position.
Is it some kind of real estate agent no no?
especially when you are submitting lowballs I might add.
When I lowball, I do so stating that the amount offered is where I feel the house should be priced. The trick is that I honestly believe that is not only what the price should be, but it is also what I’m willing to pay.
It obviously hasn’t worked yet, but I haven’t overpaid (at least by my standards) by chasing an “overpriced” home.
You have to be comfortable with letting it go and confident enough that something equally as good or hopefully better will come out “next week”. Without that confidence you cannot succeed.
From Forbes:
MGIC imposes stricter loan requirements
The nation’s leading mortgage insurer, MGIC Investment Corp., plans to limit its exposure to weaker housing markets by demanding higher credit scores and larger down payments.
Starting March 3, the company said it will require at least 5 percent down on homes in so-called restricted markets. They include the entire states of Arizona, California, Florida and Nevada and major metro areas such as Washington, D.C., Detroit, Chicago, Boston and Atlanta.
Homeowners hoping to insure condos will have to put down 10 percent.
Home buyers typically must get mortgage insurance when they put down less than 20 percent of their home’s value. When borrowers miss payments, as more have been doing, the insurers pay lenders. If homes end up in foreclosure, both lenders and insurers lose money.
MGIC’s changes will affect business in four full states and about two dozen markets in 14 others, along with the District of Columbia. MGIC expects the new requirements to result in the issuance of fewer new policies, according to its filing with the Securities and Exchange Commission late last week.
The company will also decline to insure mortgages requiring little or no documentation, or investment property loans in the restricted areas.
The Milwaukee-based insurer will require higher FICO credit scores as well. Homeowners in the restricted markets who put at least 10 percent down will have to have FICO scores of at least 620 out of a possible 850. If they put less down, their scores will have to be at least 680.
Here is a full list of the MGIC markets that will be affected:
http://www.mgic.com/pdfs/21121027.pdf
For NJ:
Essex
Hunterdon
Morris
Sussex
Union
Salem
jam (283)-
It is considered unethical, but it is not illegal for an agent to do this.
Quite honestly, I disagree that this is unethical. However, make sure your agent doesn’t inadvertently walk you into binding agreements to purchase two houses. This happens more often than you might think.
Clotpoll Says:
February 11th, 2008 at 5:43 pm
pret (273)- We all sometimes forget that no matter how strong our positions are when we negotiate, if the other party isn’t allowed a way to save face and at least hang onto the illusion of empowerment, the counterparty will actually cut his own throat rather that comply.
Clearly one of the strongest pieces of business strategy that has appeared on this blog in several months. Taught verbatim in MBA level -negotiation classes.
This tactic is takes on even greater importance in the purchase and sale of a small business. We’ve had to save some clients from advice dispensed by overly analytical “bean counter” CPAs and borderline personality disorder lawyers. You really do need finesse, even when you have the hammer….
I have told so many people about this blog. I am now getting frustrated – I will stay with it because I do know that many good posts come out of it. – but please can we get back to the true reason it was created – to talk about real estate. I would love to see a comp killer more often – like i used to…
290 aardvark
I just counted back 22 consecutive posts prior to yours, all addressing real estate.
#283, 288
In my view, bidding on multiple houses is simply the mirror image of a bidding war. In bidding war, multiple buyers bid a house up. In bidding multiple houses, multiple sellers bid a house down.
Because of this symmetry, I don’t see why it would be unethical at all (in fact the buyer is being nice for giving the overpriced seller an oppportunity to come back with a lower price, instead of completely passing on the house). Is that wrong?
292
I agree. I don’t understand how it’s unethical either. Considering you can dump each other in attorney review for any reason, what’s the difference.
My goodness. It’s about time someone stated the obvious. I laugh everytime I here CNBC or Bloomberg pundits say that the consumer is less willing to spend money when the reality is the consumer has no more money to spend.
295
I think the word you were looking for is “loser”.
Looser is something that would describe someone who’s had a couple of drinks. Although maybe that was what you meant.
CNBC reporting Macklowe just served Notice of Default….must be a lot of zeros on that piece of paper!
Steve
Yes the depression is here for a while.
Yes traffic is 10% less or more when I travel the roads of North Jersey.
Yes lots of people being laid off.
How do I know, because I’ve worked in North Jersey since 1980 for various civil engeering and construction companys.
This time around is worse than the 89 to 92 recession.
Forty years ago, the median national price of a house was about twice the median household income. In some parts of the country, this ratio was closer to 1 to 1. Twenty years ago, the median home price was about three times income. In the past 10 years, it jumped to four times income.
A very good point was made this weekend, that maybe the Housing Environment has changed such that most people will no longer be able to truely own, rather they will be long term house renters. Similar to people leasing that expensive Hummer, rather then buying the Carolla. Maybe that’s where we’ll see the new generation 50 year mortgages.
Read on a StreetEasy forum this weekend, banks increasingly (following on FNMA guidance) pulling mortgage financing for new construction in NYC, unless the building is 90% sold, and in some cases applying this to jumbos as well.
Apologies if this was covered earlier, but has anyone heard this reported? Seems to be a pretty omninous sign for those still in “immune” camp….
____________
“….In addition to the 90% presale, FNMA also requires control of the HOA be turned over and the building be 100% complete.**** This will pose HUGE problems for developers who will try to continue closing projects floor by floor, while still gutting some areas of the building…. HSBC instituted these new guidelines for ALL of their products, both conforming and jumbo. Less lenders means less available funding, less funding means less buyers, less buyers means less sales…”
From the WSJ:
Macklowe Receives Default Notice
As His Debt Negotiations Stall
By JENNIFER S. FORSYTH
February 11, 2008 8:04 p.m.
New York developer Harry Macklowe was served a notice of default Monday and the possibility of a foreclosure action loomed larger as his negotiations with his lenders over $7 billion of debt on seven Manhattan buildings bogged down, according to two people familiar with the matter.
Vornado Realty Trust, a New York-based real estate investment trust that holds some of the subordinate debt, is now the most strident opponent of the workout plan, according to these people.
Because no agreement could be reached by all the lenders to give Mr. Macklowe an extension on his $3.1 billion in debt on four of the seven properties, a special servicer sent out a notice of default, according to the two people. That move set in motion a series of actions that could lead to a foreclosure action.
Mr. Macklowe bought the seven Manhattan skyscrapers from Equity Office Properties Trust a year ago in a blockbuster deal for $7 billion. But all of the financing was done in short-term debt that was due Saturday and he was unable to pay off the loans.
The developments Monday will surely prove to be a disappointment for Mr. Macklowe because he already had worked out an agreement with his primary lender, Deutsche Bank, which holds the senior debt on the properties. Moreover, most of the lenders on the subordinate debt — called mezzanine debt — also had signed on to the agreement by Monday. The agreement called for Mr. Macklowe to retain title of the buildings, but essentially gave control to Deutsche Bank so they could be sold.
Vornado has balked on the agreement because it holds the junior-most slice of debt, according to people familiar with the matter. Vornado executives believe if the buildings are sold now, the price would be considerably less than Mr. Macklowe bought them for one year ago, wiping out Vornado’s investment.
Deutsche Bank had divided up the portfolio and sold subordinate debt on four of the seven properties. A Deutsche Bank spokesman and William Macklowe, Mr. Macklowe’s son and president of Macklowe Properties, declined comment. Vornado could not be reached.
Whoa. lots of activity here. Couldnt agree with you more…great post!
ChiFi (289)-
Kill with kindness.
duck (292)-
IMO, it’s not wrong at all. However, NAR has some curious ethical tenets that don’t seem to take into account that it’s the agent’s priority to pursue a vigorous representation of the client, rather than compromise that effort by showing undue consideration to the agent across the table.
I would certainly not want to be the one buying real estate from Sam Zell.
Random anecdote, couple years back he was invited to a client event to speak on RE- pretty conservative crowd, he shows up in a t-shirt, cap and jeans.
Caused some grumbling to be sure, but I didn’t hear of too many getting up to walk out the door…
(300)-
“Vornado has balked on the agreement because it holds the junior-most slice of debt, according to people familiar with the matter. Vornado executives believe if the buildings are sold now, the price would be considerably less than Mr. Macklowe bought them for one year ago, wiping out Vornado’s investment.”
Gotta love this: Vornado, just like the residential lenders who made ill-advised HELOCs and second mortgages, tries to deliver a big eff-you to the senior lienholder. They figure they may not get paid anyway, so they throw around their weight and obstruct the process until the senior position offers them something to shut up and get out of the way. A very high-stakes form of blackmail.
I have been searching for a single house in the areas of Westfield, Mountainside and Berkeley Heights in Union County. Most houses with last sale years around 1998 to 2001 have listing prices doubling the last purchase prices, plus 50 to 100 K, which I assume is for the updating/renovations. These prices translate to about an average of 9% yearly appreciation.
I am wondering if such appreciation rate is normal in these good communities. Or are there any statistics about housing appreciation rate in NJ area during the time period when this bubble was created?
Thanks!
Donald HD
Steve (304)-
Old adage: when Sam Zell is selling, you shouldn’t be buying.
A canary in the mine shaft anyone?
http://www.nj.com/news/index.ssf/2008/02/atlantic_citys_losing_money.html#preview
Funny how the article and the comments all blamed PA competition, the internet, the smoking ban, and labor unions. When people feel the need to cut back, even the less savvy among us will think twice before blowing a few hundred dollars on an Atlantic City weekend. The end of the housing Ponzi scheme is the culprit IMHO. When your POS Cape in Edison isn’t going up 20% annually, and you think your job is going offshore or down South, you’re not going to A.C., plain and simple. I put my 2 cents in on nj.com for this article – 10:03 P.M. in case you want to have a peek – and it’ll be funny to see how the readership over there reacts.
With all the talk of low balls, could someone tell me this: how to make an offer if you are not using a realtor? do I need to fill in a standard offer/purchase form used by a realtor, and where to get it?
#307 jmac
– A canary in the mine shaft anyone?
On a complete side note: I have been wondering why my wife and I have been receiving coupons from Bally’s nearly daily. This started around late November and has not let up. Every other day we get 2 separate coupons mailings (one for each of us). Like a free $10 coupon would make us take the 2 hour drive there on a Tuesday. It would cost us more in gas than we get back. And yet they keep coming.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a49qI9Pv1Bx4&refer=home
Six U.S. Banks Plan New Efforts to Stem Foreclosures (Update1)
By Alison Vekshin
Feb. 11 (Bloomberg) — Bank of America Corp., Citigroup Inc. and four other lenders will announce new steps tomorrow to help borrowers in danger of default stay in their homes, according to three people familiar with the plans.
The banks will offer, on a case-by-case basis, a 30-day freeze on foreclosures while loan modifications are considered, two people said on condition of anonymity. The initiative will apply to customers who are 90 days or more late on their loan payments and include prime borrowers, as well as those with poorer credit histories.
The move follows pressure from Treasury Secretary Henry Paulson, who last week urged lenders to follow through on earlier pledges to modify loans. Democrats in Congress at hearings the past two weeks called for stronger actions, complaining that the number of homeowners receiving relief so far has been insufficient to avoid a wave of foreclosures.
[snip]
sorry if this was already posted.
sl
WSJ
One new area to look for: Spending by wealthier consumers on high-end rides such as GM’s Cadillac CTS and Escalade. They’ve been sources of strength, but cracks are showing. Sales of luxury autos by BMW, Ferrari, Lexus, Jaguar and Porsche slid in January. Meantime, confidence of high-end consumers is softening.
Nearly 60% of consumers with annual incomes of $75,000 or more said they didn’t plan to increase their spending in February from January, according to the Discover Card U.S. Spending Monitor, a monthly telephone survey of 15,000 adults. That was up from 45% the previous month.
“I’ll provide the minor emergency medical care…”
Clot said: Mr. Ready to Buy might need some of that medical care, once he presents his manifesto to the seller he wants to lowball.
steak over the eye a la Fred Flintstone?
ya want mercurochrome or merthiolate with that???
or a torniquet?
BTW: correct about REIT. Unfortunately, they’ll have my shares back when they pry my cold dead fingers from them :) [yes I represent the buy-and-hold type]
Hey, some women bargain shop for shoes, I bargain shop for shares!
sl
2b or not (308)-
Pardon the shameless industry plug, but your question indicates that you might be better off consulting a Realtor (a good one, like the Grimster, that is).
You’re about to spend a very large amount of money. If you aren’t familiar with the mechanics of offering for real estate, a little professional consultation will take you a long way.
well done Grim. Not one comment from you while the thin skinned folks were battling back and forth. You must have enjoyed that! Who would’ve thought politics could bring out the REAL personalities (LOL). It was like watching a school yard fight. This was the most entertaining string I’ve seen on this blog yet. Wow!
Hello!
A subprime mortgage lead carries an increased risk, and this increased risk translates into higher prices. A subprime mortgage lead wishes to qualify for a subprime mortgage only because they have failed to qualify for a prime mortgage. The fall from prime mortgage lead to subprime mortgage lead is usually the direct result of a low credit score.Thanks!
314 par
Actually, grim was moderating. I guess you didn’t notice.
Lazy. All of you.
306
Sounds like how much everything went up during those years, not just in those towns.
Right now, most sellers are still pricing at peak prices, which was in 2005/06. From what I’ve seen (and just done), houses are selling around 2004 (so maybe 10% off peak prices) prices so far, but who knows, it could go lower.
#319 Ann but who knows, it could go lower.
On its going lower, absolutely no doubt there.
NJP,
i guess…
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