Weekend Open Discussion

This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing market, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.

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330 Responses to Weekend Open Discussion

  1. grim says:

    If they can make up their own “holiday”, so can I.

    I hereby dub ever Sunday in March and April, “Stay home Sunday!”

    Stay home with your family, friends, and loved ones! Throw a party, invite some friends over, play with the kids, whatever, just don’t spend your day with a Realtor.

    A quick look at the APP shows a number of similar advertisements passed off as news. Is the print world really so bad that you need to pimp yourself out to the real estate business?

    From the APP:

    ************* Real Estate celebrates Super Sunday Sale

    ************* Real Estate announced its Super Sunday Sale scheduled for Sunday will be an ideal opportunity to obtain an exceptional value given today’s historically low home-mortgage interest rates.

    The 16 offices of ************* Real Estate will hold open house events from 1 p.m. to 4 p.m. Many sellers of these homes will offer buyers significant price reductions or up to 3 percent of the selling price toward the buyer’s closing costs during the Super Sunday Sale. Offers will be received at their reduced price or concessions until 6 p.m. this Sunday.

    The Super Sunday Sale offers buyers seeking a great deal a day of touring open houses. Prospective home buyers will appreciate the varied selection of homes reduced for this one day. ************* Real Estate sales associates will be on hand at the open house events to answer questions.

    “This is a day to bring along that person whose opinion you respect or need to purchase your dream home,” said *************, president. “You won’t want to miss the opportunity that our Super Sunday Sale offers.”

  2. bairen says:

    Grim, your idea sounds great.

    ****** Real Estate wiffs of desperation. 3% towards closing costs and only till 6PM that day? I’d rather go to a park with my kids thank you.

  3. grim says:

    From BusinessWeek:

    How the Super-Rich Buy Homes

    It’s not easy for a movie star, basketball player, or corporate chief to buy a house without attracting a bit of attention.

    It requires ingenuity—and help from pricey lawyers—to keep the paparazzi, celebrity bloggers, and stalkers guessing. Last year movie star couple Brad Pitt and Angelina Jolie failed to hide their $3.5 million purchase of a 19th century house in New Orleans’ French Quarter. News got out despite real estate records that listed the buyer as the “Mondo Bongo Trust,” a reference to the Joe Strummer song, Mondo Bongo, which Brangelina danced to in the 2005 movie Mr. and Mrs. Smith.

    Other stars have hidden behind trusts with such clever names as “Ingodwe Trust,” “I before E Trust,” “Poopie Trust,” “Senior Moments Trust,” and “Thank You For the Trust Trust” (used by the late actor Heath Ledger), according to Bob Goldsborough, the blogger for bigtimelistings.com who has become an expert at unmasking celebrity home transactions.

    “They don’t want people to be able to find them,” Goldsborough says. “It drives them nuts when we put the name of their trust on a blog.”

  4. grim says:

    From the WSJ:

    OPINION
    Our Financial Bailout Culture
    By ETHAN PENNER
    April 11, 2008

    Last week’s congressional hearings on the Bear Stearns “non-bailout” were fascinating, and frightening. Our leading financial regulators said the Federal Reserve’s unprecedented action was necessary to ensure the stability of financial markets, which would have melted down had nature taken its course.

    When asked by the committee if opening the Fed borrowing window for investment banks (which was done later) could have saved Bear, New York Fed President Timothy Geithner responded that “We only allow sound institutions to borrow against collateral,” thus implying that Bear was not sound. That raises the question of when Bear became unsound, especially in light of the public statements about the company’s strength by their CEO only days earlier. If Bear was undercapitalized and overleveraged, shouldn’t red flags have gone up long before?

    Sen. Jim Bunning (R., Ky.) asked the regulators how the solvency of a single financial institution could threaten to bring the entire market to its knees. The regulators’ reply was to hang their heads and pledge more and better oversight.

    The unstated premise is that, with better government oversight, we would not be suffering today’s bear market and financial chaos. Of course, during the previous outsized boom, no one was calling up his congressman to complain that home values were appreciating too quickly. Meanwhile, they drained that appreciation regularly through refinancings to pay for vacations, new cars and other pleasantries, all of which created the prosperity for which politicians were pleased to take credit.

    Leverage – and the rapid creation of dollars – fueled the boom we all seemed to love. But leverage cuts both ways, accentuating the benefits of a bull market and the pain of a bear market. The lesson we all must take away now is that leverage is not a one-way path to wealth with no risk of loss.

    Homeowners must learn that there are risks to using a home as an ATM. Investors who borrowed to flip condos must learn the downside of such risk. Individuals who steered money from insured bank deposits into uninsured money market accounts to pick up 1% more yield – like the institutional investors who purchased complex securities with little due diligence – need to know that in an efficient market, extra yield means extra risk. Those who played the derivatives market, focusing more on computer-driven pricing models and less on managing counterparty risk, must pay for that oversight. And, much as it is impolitic to say, people who took money from lenders and signed without considering how they’d repay those loans must also be held accountable.

    In one of this year’s primary debates, Ron Paul said it is not the president’s job to run the economy. I’d add that it is not the government’s job either. It is each and every citizen’s job to manage our own affairs, make our own decisions, bear the fruits or painful consequences and learn our lessons.

    The free market is the essence of our society’s strength and is rooted in the Lincolnian precepts of accountability and responsibility. When decisions are made and actions taken (or not taken), there are consequences. These consequences are models for us to learn from and serve to stimulate social growth and advancement.

    Mr. Penner helped pioneer the application of securitization technology to real-estate finance as CEO of Nomura Capital.

  5. grim says:

    From Bloomberg:

    Mizuho Profit Drops by 50% as Subprime Losses Swell

    Mizuho Financial Group Inc., Japan’s second-largest bank by revenue, posted a 50 percent drop in full- year profit after losing $5.5 billion on mortgage securities, the most reported by an Asian company.

  6. grim says:

    From ABC2 Baltimore:

    Home Sales Down in Baltimore

    The number of homes sold in the Baltimore area was 34 percent lower in March than the number sold during the same month last year.

    According to the Metropolitan Regional Information Systems, the average sale price for a home in March was just under $298,000, a three percent drop from 12 months ago.

    Sales fell most sharply in Baltimore City and Howard County, the area’s cheapest and most expensive markets.

  7. grim says:

    Mortgage downgrades go global..

    S&P Cuts Rating on A$5 Billion Australian, NZ Bonds

    Standard & Poor’s lowered the credit ratings on about A$5 billion ($4.6 billion) of Australian and New Zealand residential mortgage-backed securities in the first cut to the nations’ home loan bonds from the U.S. housing collapse.

  8. grim says:

    From the Economist:

    The long hangover

    IT MAY not be official but it is increasingly obvious: America’s economy has slipped into recession. The latest labour-market figures—a jump in the unemployment rate to 5.1% and the loss of 98,000 private-sector jobs in March, the fourth consecutive month of decline—point to a shrinking economy. So do surveys of manufacturing and services. So does Ben Bernanke, chairman of the Federal Reserve. On April 2nd he told a congressional committee that output was unlikely to “grow much, if at all, over the first half of 2008 and could even contract slightly.”

    The hangover’s duration will depend on many things, from the strength of foreign economies to the degree to which American firms cut jobs and investment. But top of the list, given the recession’s origins in the property bust and the credit crunch, are the fate of the housing market and the resilience of consumer spending. On both counts, the odds are against catastrophe but on a lasting headache.

    By many measures the news from housing is still getting grimmer. Housing starts are at less than half their peak, and builders are continuing to cut back. Although this has begun to reduce the stock of unsold new homes, the frailty of demand means that supply still vastly outweighs sales. At 9.8 months’ worth of sales, the stock is at a 26-year high. The official overhang of existing homes (which excludes those repossessed) is not much lower. The excess of supply over demand means that the fall in house prices is accelerating. According to the S&P/Case-Shiller index, house prices are 13% off their peak. They fell at an annual rate of 25% in the three months to January.

    The drop in house prices so far has left some 9m people, or 10% of all those with mortgages, owing more than their houses are worth. Among all mortgage borrowers, 6% are behind on their payments; among subprime borrowers, 17% are in arrears. Lenders are already foreclosing on more than 1m homes. The pessimists expect these figures to climb much higher, adding to supply and further depressing prices.

    Despite these hopeful signs, house prices will continue to fall until the excess inventory is worked off. Even the cheeriest analysts expect that average house prices will continue to fall this year. Worse, house-price deflation is only the first element of a quadruple whammy that is thumping American consumers. The other three elements are tougher credit conditions; a deteriorating labour market (with unemployment on the way up and wages slowing); and high commodity prices pushing up the cost of fuel and food.

  9. grim says:

    More on the Jefferson County bankruptcy..

    Largest U.S. Municipal Bankruptcy Looms in Alabama: Joe Mysak

    They’re talking more about Chapter 9 municipal bankruptcy in Jefferson County, Alabama, the home of the largest city in the state, Birmingham.

    Who can blame them?

    The county is now being whipsawed by an ill-thought-out debt policy and the collapse of the bond insurers. Credit-rating downgrades all around have triggered a series of events that are no longer in the county’s control, leaving it at the mercy of securities firms that have little room for maneuver themselves.

    The Jefferson County bankruptcy, if it comes, and it’s hard to see how it can be avoided, will eclipse that of the 1994 filing by Orange County, California. “Derivatives” are at the center of both death-spirals.

    Orange County invested in them — securities whose value was tied to other securities and markets. The county investment pool, which for years spun off handsome returns for the school districts and local governments that were its participants, found itself holding a bunch of junk when its investors asked for their money back

    The bankruptcy will be the biggest in the municipal market’s history by virtue of the county’s debt load, according to the News. Jefferson County has $3.2 billion in sewer debt; Orange County lost $1.6 billion in its investment pool. I’m sure the matter will be debated. I’m also sure Orange County will be happy to pass the crown to Jefferson County.

  10. thatBIGwindow says:

    Re: Super Sunday Sale

    If a house is for sale and no one wants to pay the price they are asking, does it still sell?

  11. readytobuy says:

    anyone here of this first time home buyer rebate being considered in the house?

    to these rebates usually cover the whole year (retroactively)?

    i’m in lawyer review now (got a great deal), but thinking of prolonging my closing to avoid missing out this newest and latest potential handout.

  12. grim says:

    No such thing as “overpriced”, it just hasn’t found “the right buyer” yet.

  13. BC Bob says:

    “************* Real Estate celebrates Super Sunday Sale.”

    3% discount? Is this a typo, someone forget the zero after the three?

    I would rather go to Kelly’s and have a reuben.

    “This is a day to bring along that person whose opinion you respect or need to purchase your dream home,”

    Can we all bring Grim?

  14. BC Bob says:

    Can I bring Soros to the super event?

    “I consider this the biggest financial crisis of my lifetime,” Mr. Soros said during an interview Monday in his office overlooking Central Park. A “superbubble” that has been swelling for a quarter of a century is finally bursting, he said.

    http://www.nytimes.com/2008/04/11/business/11soros.html?scp=2&sq=hedge+funds&st=nyt#

  15. BC Bob says:

    “Sen. Jim Bunning (R., Ky.) asked the regulators how the solvency of a single financial institution could threaten to bring the entire market to its knees”

    Come on Jim. Maybe you should go back to the mound. Can someome bring JP’s derivatives book to the Senator?

  16. BC Bob says:

    “Jefferson County has $3.2 billion in sewer debt”

    Classic. You couldn’t come up with a better product name. I wonder if the salesperson termed this when he made his/her presentation. The entire world has bought the same debt.

  17. grim says:

    readytobuy,

    Are you talking about the Fossella/Pascrell proposal?

    IMHO, dead in the water. I estimated the cost to be between $30 and $40 billion. No way the government is going to simply hand over a $10,000 tax credit to anyone buying a home. This doesn’t do anything to fix the problem, this is just another attempt at a price control, and price controls fail. At best this proposal increases home sales, which benefit the Realtors.

    Say, I wonder, do you think the Realtor and NAHB lobbies might be behind this one?

  18. BC Bob says:

    Ask Nixon about price controls.

  19. Clotpoll says:

    grim (1)-

    This thing is DOA. Once again, instead of dealing with the market in a head-on, forthright manner, we’ve decided to obfuscate and spin.

    We’re peddling false hope to sellers and false bargains to buyers. Too bad the only people who don’t realize everybody’s wise to the game is us.

    Realtors could be going a long way to help fix things and to ratchet out the same excesses of leverage in residential RE that exist in every nook and cranny of the economy. Instead, our solution is to try and pretend it’s still the good old days of 2005.

    The more we bleat, the more the public senses our anxiety.

  20. Clotpoll says:

    Drat. #19 moderated.

  21. BC Bob says:

    Why doesn’t our govt hand over a 10K tax credit to those that save? After all, our esteemed Hank told the Chinese, with a straight face, that Americans will increase their savings.

    Why are we penalizing savers? The majority of Americans own their homes and are fiscally responsible. If you are buried in debt, does a percentage point really matter? On the flip side, if you are a saver, you are getting screwed. If you work for an importer/exporter or multinational firm, currency stabilization is of more importance, your job, as compared to lower rates.

    The fed is simply pushing the wrong string. As they lower, credit conditions are becoming tighter. The fed is strictly stroking their member banks. Hopefully, keep them breathing as they attempt to steepen the yield curve. Oh, the fed is also rewarding those that are long tangibles. Other than that, John Q is screwed.

  22. RentininNJ says:

    If they can make up their own “holiday”, so can I.

    Why limit it to just one day?

    Didn’t you get the memo from Century 21? April is Open House Month!

  23. Cindy says:

    (20) BC Bob – agreed.
    I was taught you reward good behavior and punish bad. I don’t get it.

    Also, why haven’t the lower comps on the books had more of an impact? What is taking so long?

  24. Sean says:

    GE is down 10% in pre-market trading, not a good omen for the markets today.

  25. John says:

    right now they are trying to get us not to save. BTW yields are up in munis, corps, perfs etc and I don’t see anyone jumping in to save. People are not buying houses, cars, skipping vacations, jewlery buying less fuel, skipping starbucks etc. and you want the govt to encourage even less spending? That idea is a good four years too late.

  26. grim says:

    Why limit it to just one day?

    I wish I had an advertising budget.

  27. PGC says:

    #17 grim
    “No way the government is going to simply hand over a $10,000 tax credit to anyone buying a home.”

    Do I still get $7K credit for my REO purchase… :*)

  28. grim says:

    PGC,

    Actually, I’m wondering how they define “foreclosure or near foreclosure”.

    Does REO count? Or do you need to bid at auction? When you buy REO, you aren’t buying a property in foreclosure, or from a distressed seller. You are buying a property owned free and clear from a fairly wealthy establishment.

  29. grim says:

    Likewise, what does “near foreclosure” mean, and what specific test is performed to establish that condition? Seems fuzzy to me. Fuzzy + $7,000 = Fraud + Abuse

  30. BC Bob says:

    What are the implications when our market position changes, supporting a weak dollar? What a bunch of BS. Take the NAR, Bush, Fed and the spin masters on WS and blow the doors out.

    “U.S. President George W. Bush has reiterated to the chairman of euro zone finance ministers that a strong dollar is in the interest of the U.S. economy, a statement issued after their meeting in Washington said.”

    http://www.reuters.com/article/marketsNews/idUSL1085585020080410

  31. Stu says:

    (Real) Inflation Adjusted House Prices

    http://www.in2perspective.com/nr/stats/-real-inflation-adjusted-house-prices.jsp;jsessionid=94BF0FAE4731F357B18D0013099356EF

    This is a very cool graph.

    And in market news. GE’s earnings missed by around 20%. Revenue was short too. Between Alcoa, GE, and BBBY, this earnings season is looking way worse than anticipated. Walmart is doing a little better though. To be expected when people are going broke I guess.

  32. Stu says:

    FYI, that cool chart is UK housing prices, but still pretty interesting.

  33. kettle1 says:

    31 stu

    from that graph it looks like prices should settle somewhere back around 97-2000 prices!

  34. Stu says:

    Market futures are the worst I’ve seen in a while. Will the PPT show up this morning?

    08:30 am : S&P futures vs fair value: -14.4. Nasdaq futures vs fair value: -18.5. It is shaping up to be a sharply lower start to the trading day. March import prices rose 2.8% month over month, which is larger than the expected 2.0% increase. Year-over-year, imported prices are up 14.8%.

  35. BC Bob says:

    Grim [29],

    You have to dig deep into their model and decipher this. Sounds like a major stroke job to me. Does anybody really feel that our “leaders” can come to some accetpable agreement, without major layers of pork, and then successfully implement it? How is our govt responding to New Orleans?

  36. grim says:

    From MarketWatch:

    U.S. import prices rise 2.8% in March

    A surge in prices for imported petroleum pushed prices of goods imported into the U.S. higher by 2.8% in March, the most since November 2007, the Labor Department reported Friday.

    The overall increase was more than anticipated. Economists surveyed by MarketWatch had been on the lookout for March import prices rising by 2.2%.

  37. Mikeinwaiting says:

    A few excerpts from my reading this morn.

    http://seekingalpha.com/article/71885-the-two-housing-crises
    That’s our acute housing crisis: The rapid, ongoing decline is residential real estate prices. But there’s another, more chronic crisis out there: Our excessive allocation of resources to residential real estate in the first place. Partly a function of public policy (i.e., the home mortgage interest deduction, local governments’ dependence on development fees, local officials’ dependence on developers’ campaign contributions) and partly (more importantly?) a function of our acquisitive culture, we’ve devoted far too much of our national wealth to our personal castles.

    http://seekingalpha.com/article/71940-the-folly-in-calling-a-housing-market-bottom

    Meaning: while there are things we can do to mute the magnitude of the housing crisis and mitigate the impact on individual families, we won’t see a recovery until the correction runs its course. Furthermore, recovery is a misnomer in the sense that we’re not going to return to ’03, ’04, etc, but rather the housing market will return to the pricing levels and rates of appreciation seen prior to the boom.

    http://seekingalpha.com/article/71834-fed-notes-indicate-economy-s-troubles-aren-t-over

    Do you feel we’ll see the end of the housing crisis at some point in 2008?

    We might see an end of the decline in housing starts later this year, but a quick rebound is very unlikely. Housing prices are still way too high relative to historical measures like price to rent, home values as a percent of GDP, and median price to median income. Look for prices to continue to decline for the next few years – not months, years

    But as we all know “Now is a great time to buy!”

  38. Stu says:

    Kettle1 (33):

    “from that graph it looks like prices should settle somewhere back around 97-2000 prices!”

    If the 3x income thang does occur, that would probably be about right.

    Anecdotally, my wife and I have been reviewing listings for over a year now. I know it is not scientific, but listing prices are definitely coming down. What used to list for $650K appears to be closer to $600 now and likewise what used to list for $625 seems to be going for about $575K. I made a back of the hand estimate at the start of our search in early 2007 for our 2nd property that what was $650 at the peak will be had for $500K by the fall of 2009.
    When we bought our multi in Montclair in Sept. of 2004, we had the 5-year plan in effect. Surprisingly, everything seems to be aligning just right.

    BTW, we are mostly looking in train towns such as Summit, Millburn, Chatham, and Madison. Really want to get out of the tax hell of Essex county. Might consider Livingston, East Hanover, South Orange (if we find the steal of the century).

  39. Ready to Buy says:

    grim [17]-

    “Are you talking about the Fossella/Pascrell proposal?”

    Yes. But I understand a portion of this may survive as a compramise with the senate bailout package. I agree that it will do nothing. I’m just greedy, and wonder whether I’ll miss out on this if I close on a home in June.

  40. BC Bob says:

    Chi [39],

    Was Bill Buckner wearing that jersey?

  41. 3b says:

    grim: Thanks for the information I requested last night on River Edge sales 07/08. Nice to see the declines in black and white so to speak. Thanks again.

  42. gary says:

    Buckner should throw out the first pitch when the new Mets stadium opens.

  43. kettle1 says:

    BC Bob,

    it is starting to look like New orleans and katrina could be the defining characteristic of how our government operates for the first decade of 2000’s. Will they get their act together? unlikely, to many monied interest would lose out.

  44. BC Bob says:

    Stu[34],

    Does this mean Bergabe will step up to the plate with a surprise .75 cut? That seems to be the pattern.

  45. Richie says:

    Soros is a genius. We also praise him for his support of Solidarity in Poland.

    Sometimes it pays to be a bear and not drink the kool-aid that everyone else is drinking.

    -R

  46. Mikeinwaiting says:

    Kettle 33 That’s the ticket 97-2000 prices.
    We should touch on them but it will take time. As you & I have already agreed on the boomers putting more downward pressure in the future it would not be wise to pay more.

    Grim is 37 in mod?

  47. BC Bob says:

    “Buckner should throw out the first pitch when the new Mets stadium opens.”

    Gary,

    Sorry. The date is reserved for Sheikh Zayed bin Sultan Al Nahyan.

  48. Stu says:

    ChiFi:

    Too funny!

    Forget the jersey, can we bury Willie Randolph in the cement of the new Citi Park?

  49. Stu says:

    Futures still dropping and it looks like my prediction of WAMU being the first major to suffer the bank run still has hope.

    09:00 am : S&P futures vs fair value: -14.8. Nasdaq futures vs fair value: -27.0. A bearish bias persits in futures trade. Goldman Sachs cut its earnings estimate on Washington Mutual (WM) and recommended selling its shares short, according to Bloomberg.com. Goldman believes WaMu will post a loss of $3.30 per share this year, compared to its previous forecast of a $1.00 loss, according to the report. Just last week WaMu raised $7 billion in capital in an effort to shore up its balance sheet.

  50. grim says:

    If you haven’t listened to the tune, Mondo Bongo by Joe Strummer (Clash/Pogues) and the Mescaleros (#3) is a fantastic tune.

    I normally wouldn’t have posted that kind of trash, but when I saw the Strummer reference, I had to.

  51. Shore Guy says:

    # 1 just don’t spend your day with a Realtor.””

    Au contraire mon ami. Some real estate agents make very good footstools. Inasmuch as many of them bring little of worth to the table with respect to a realestate transaction, I think it is our duty to find some use for them. I vote for footstool. Some others may go for umbrella/coat rack. The key, regardless of how you put these unfortunates to work, is to find some useful purpose for them.

  52. kettle1 says:

    Mike

    isnt it amusing that all of these so called expert economists and various planners in the government cannot see any of this coming and are constatntly SURPISED by the numbers?? Yet a message board full of slacking housing jihadists have apparently consistently called the numbers before they happen. maybe we should all recieve honorary “chief economist” titles?????

    Regarding the boomers, you know that some of the bigdogs in the government are well aware of what this wave is going to do to both economic and housing markets, yet you will not here anything about it or see any measures taken until after the fact. But of course you cant mention any of this you might startle the sheep away from american idol.

    isnt it impression how willfully ignorant people can be even when it is against their own best interest?

  53. Sean says:

    re: (30, 35)

    Our lame duck president is incapable of doing anything unless he decides to park himself up Nancy Pelosi’s ass.

    Right now Bush should be polishing up his golf clubs and applying for his Presidential Pension, and do nothing more.
    Any more intervention from our government is only going to make things worse.

  54. kettle1 says:

    sean,

    good point, remember the scariest thing you can ever here is “Hi, i am from the government and i am here to help you!”

  55. gary says:

    kettle1 [53],

    Hey, you’re starting to sound like me. ;)

  56. kettle1 says:

    gary,

    we all need role models right :)

  57. BC Bob says:

    kettle [53]

    The experts on WS are not surprised. They need the naive and gullible to buy into their slop. After all, how do they unload their positions. The govt? Totally clueless to market conditions.

  58. Shore Guy says:

    # 54 Consider:

    1) The president asserts that he has complete and unfettered authority to utilize the military anywhere and for any reason and congress cannot stop or hinder him in role as Commander in Chief;

    2) The president asserts that the 4th Amendment does not apply to domestic military operations.

    Putting aside the issue raised by Posse Comitatus with respect to the domestic use of military forces within the United States (Does anyone doubt that the president would do anything than ignore the restrictions without so much as a microsecond of doubt, and without concern for the implications for the republic?) we have an Administration that believes that the president can use the military at will and that it need not adhere to one of the most important protections guaranteed by the Constitution.

    Are any of our homes safe anymore? Our own George the Third (Geo Wash=1, Geo HW Bush= Geo 2) bears a lot in common with the one we sent packing over 200 years ago.

  59. 3b says:

    #53 kettle: True.

    And we encourage the rest of the world to be just like us.

  60. Dan says:

    I thought I’d share this one with you:

    MLS 2440515
    LP 549k
    OLP 650k
    taxes $16,000 (ouch)!

    The Morons bought it in 2006 for $726,635

    So in $177k less than what they bought it for. And if you ask me, no way it is worth 549K.

  61. Shore Guy says:

    # 61, Factor in the interest, taxes, and insurance during the period they have owned it. Ouch! And I bet they have not even gotten kissed during this, um, process.

  62. grim says:

    BC,

    Look to Gross and PIMCO for a superb example of this. When Gross began proposing government bailouts of the housing market, I had a hunch that they were buying distressed mortgage debt in major volume. As time went on, his calls grew pretty darn loud.

    From Pimco in March:

    When I’m Sixty-Four

    Ultimately government programs which support private credit market assets may be required in order to prevent an asset deflation of significant proportions. Authorities must act quickly, with a shot of adrenalin straight to the heart of the problem: home prices. Since homes are the most highly levered and monetarily significant asset that American consumers own, if they decline much further they will drag the rest of the economy with them. Supporting home prices goes counter to the thinking of Republican orthodoxy. President Bush and Treasury Secretary Paulson argue that markets must “clear” in order to avoid similar mistakes made by Japanese authorities in the 1990s. Yet we may have passed the point of no return for “clearing” markets. Home price declines of 20% are in fact much more of a shock to the American economy than the popping of the Internet bubble and NASDAQ 5000, because the amount of homeowner leverage is so much greater. A 20% negative adjustment not only wipes out all ownership equity for millions of Americans, it turns their homes “upside down” – incentivizing them to let their gardens grow weeds instead of lettuce. The decline needs to be stopped quickly in order to avert additional crises.

    Where you sit is where you stand…

    Pimco’s Gross Holds Most Mortgage Debt Since 2000

    Pacific Investment Management Co.’s Bill Gross lifted holdings of mortgage debt in the world’s largest bond fund to the highest since 2000, while putting on the biggest bet against government debt since at least the same year.

    The $125.1 billion Pimco Total Return Fund had 59 percent of assets in mortgage debt in March, up from 52 percent the prior month and 23 percent in March 2007, according to data on the Newport Beach, California-based firm’s Web site. The fund’s cash position dropped to 32 percent, the lowest since July 2006, from 34 percent in February.

  63. BC Bob says:

    shore [59],

    We are adding, at a feverish pace, to our strategic petroleum reserve, despite record prices. Some argue that we should be releasing reserves, to help stem the rise in prices. Also, today, Israel tanks moved into Gaza. Possible, near term, action against Iran?

  64. vmex says:

    Hi all, I’ve been reading this board for a while now and I had a question about foreclosures and how it affects the price of a listing?

    There is a property that was for sale that I looked at and was interested in buying and as I as doing my research on it I found that it was listed for auction on July 15th at a sheriff’s sale. For considerably less then what he was asking (obviously).

    But I guess my questions is how can it still be listed if it is going for auction? How should my bid price be affected given this new information? If I should bid at all.

    I spoke to my realtor about this and he said that it doesn’t really mean anything that it is going up for auction that it is still the owners decision of what bid to accept and that just because the price is listed at the auction is significantly lower then the price that the owner is asking that he doubts that it will sell at that price even at auction.

    So I was confused and I’ve learned a lot by reading this blog, and I figured I would ask you all you for your opinion.

    Thanks in advance for your help. Sorry I don’t have the MLS number handy.

  65. BC Bob says:

    JB [63],

    Exactly. He could give 2 s*its about the housing market and distressed homeowners. You preach where you sit.

  66. Mikeinwaiting says:

    Grim 51 I thought the same thing,saw the movie a few weeks back worth watching just for that tune & her dancing.

  67. Shore Guy says:

    # 64 As a preface, I am a lifelong Republican and a former Reagan appointee, that said, the current Administration scares the he!! out of me and anyone who is not concerned about its extraconstitutional power grabs has either not been paying attention or has not considered what happens should an “evil Democrat” or some Nixonianly(I just made up that one)-deranged person take over the office some day.

    I would not be the least bit surprised if a few weeks after the election the president launches an assault on Iran, if only to bind the next administration to carrying out thie current administration’s goals. They are a crafty bunch with no scruples.

  68. grim says:

    vmex,

    The dollar amount associated with the foreclosure auction is the judgement amount, it is the outstanding balance of the lien being foreclosed upon.

    It isn’t a “sale price” nor does it reflect any kind of “market value”. It is the outstanding balance on the lien.

    Realize, there could be additional liens on the property whose balances are not reflected in the judgement amount. If there is a second lien, you better believe that lienholder will be bidding for the property in an attempt to recoup their loss. Remember, the second lienholder is in the first loss position.

    The dollar amount isn’t what you should care about, what you need to care about is whether they can make it to the closing table. By the time you get through attorney review, have inspections done, mortgage in place, you’ll have invested a significant amount of time and money in the deal. If it falls apart, and the home gets to auction, you lose.

    Are you already in love with the house? Or can you play hardball?

    The seller is obviously distressed, and facing sheriff sale, why not push hard and see what kind of sweetheart deal you can get. But realize, the deal isn’t done until you walk away from the closing table.

  69. Sean says:

    re: (50 ) Stu

    I love how GS is actively calling on people to short WAMU in the press. They and their hedge funds must be ratching up the leverage. We should see allot of press and perhaps even a staged bank run on WAMU to really get things going.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aZny6proOOlQ&refer=home

  70. Shore Guy says:

    # 69 “Are you already in love with the house? Or can you play hardball?”

    NEVER enter any business negotiation (including a home purchase) unless you are prepared to walk away. Being able to walk away creates power. If one falls in love with a home and it becomes “The One,” one’s ability to negotiate effectively evaporates. There is no “one perfect house” for anyone. The minute one starts beliveing there is that person will soon find themselves bent over a straightbacked chair saying “thank you, nay I have another?”

  71. Shore Guy says:

    may, even

  72. kettle1 says:

    BC Bob,

    While GW would love to go into iran, i disagree with your hypothesis. In my opinion there are enough people in the administration and at high levels of the military that are well aware that we would get our military crushed by going into iran. I am not saying that theur military is stringer theno urs, but our military is so over taxed and so over extened that we are in no condition to fight an enemy like iran. Without writing a book we could do serious damage to iran, but it is highly probable that they could could actually end up doing more damage to the US then we could to Iran. This may not be immediately obvious, but do some googling on the war games we have run on a US Iran conflict. The organizers had to restart and rig the war games for the US to come out on top!

    My opinion is that we have filling the strategic reserve because cheney and friends are well aware of the looming oil supply “issue”. Basically now is the cheapest time to buy oil and from here on out oil is only going to get more expensive. There could still be flair ups in the ME such as with lebanon or with the Palestinians, but i think someone has been holding bush back on Iran,.

  73. grim says:

    From MarketWatch:

    April UMich consumer sentiment 63.2 vs. 69.5 in March

    The U.S. consumer sentiment index fell to 63.2 in April from 69.5 March, according to a Friday report from University of Michigan/Reuters. Sentiment fell to its lowest level since March 1982. Economists surveyed by MarketWatch were looking for an April result of 68.8.

  74. 007 says:

    Planning to buy a house and live there for at least 10 years. (still renting)

    Trying to find the fair value of a house NOW, and 10 years later.

    Can I use the price of, say, 1998, and calculate the current price with 4% yearly appreication?

    Any suggestion are welcome.

    Thanks,

    007

  75. vmex says:

    Grim,

    Thanks for the reply…

    It’s a nice house I’m not in love with it but my family is. I put in a bid for the house last month before finding out this information with what I felt was a reasonable offer. The owner laughed and said he had another offer that was higher.

    Last week my realtor called me and said that he got a call from the listing agent wanting to know if we were interested as the other deal fell through. So I said my offer hasn’t changed and if anything got weaker. The owner is still unwilling to budge and then I found the sheriff auction listing.

    Oh well you would think he would be more inclined now to move from his listing point but he still said my offer was too low.

  76. Shore Guy says:

    # 73 ” i think someone has been holding bush back on Iran,.”

    Were this a normal administration, I would suspect your assesment would be accurate. This is not a normal administration. Generals and Admirals who disagree with the prevailing orthodoxy within the WH are thrown over the transom and those who remain have gotten the message.

    If, on December 1, 10, or 15 the president resolved to begin bombing Iran the only way that the military could have any chance of preventing the action would be a mass resignation of general officers who go to the press with specific information as to why they are leaving. If we bomb and launch cruise missiles, is there anyone who thinks that the Iranian forces will stay on their side of the border with Iraq? We are overextended in Iraq and an invasion from the east will only serve to form a pincer. We would then be obliged to throw everything into the fight, and NO new president would have any ability to pull out without looking like we got our @$$ kicked. It is a brilliantly-evil way to end a disasterous administration. I hope I am wrong but I have had enough conversations with folks within DoD, CIA, and on the Hill to conclude that it could happen. The more Geo II is trying to salvage his reputation in historyu, the more dangerous he becomes. God help us all. If we get involved in such a fray, inflation will make housing a royal mess.

  77. Stu says:

    vmex,

    You should go to the auction and see if anyone bids. If they do, offer one dollar more.

  78. Shore Guy says:

    # 76 I never saw the movie before, but it works for me.

    # 77 “The owner is still unwilling to budge and then I found the sheriff auction listing.”

    I would give the seller a “Syms offer.” You know Syms, right? The price tag shows the price today, what it will be next week, and so on. I would say my offer is $x, 24 hours from now the offer will be no better than $x-(pick a number, say $5,000) and if you wait a week, the offer will be no more than and give an even lower number. They are on the ropes, and it is only business, nothing personal. And, remember, take the canollies.

  79. vmex says:

    I’ve never been to an auction and have been contimplating going just to see how crazy they are.

    Now I have a reason to go.

  80. grim says:

    You should go to the auction and see if anyone bids. If they do, offer one dollar more.

    It is in your best interest to determine the existence and value of any outstanding liens on the property prior to doing this. Otherwise, you’ll be purchasing the responsibility for those other liens as well. Surprise!

  81. chicagofinance says:

    Stu Says:
    April 11th, 2008 at 9:10 am
    ChiFi: Too funny! Forget the jersey, can we bury Willie Randolph in the cement of the new Citi Park?

    S: Mushnick in the Post

    It’s starting. That same existential chatter heard last season among SNY’s Gary Cohen, Keith Hernandez and Ron Darling as to who (Carlos Delgado? David Wright?) could or should emerge as the Mets’ clubhouse leader in pursuit of playing hard, focused-on-fundamentals baseball, was resurrected during Wednesday’s telecast.

    Sure, such a “team leader” is nice to have. But not for nothing, fellas, doesn’t such a job description belong, first and foremost, to the manager?

  82. Al says:

    Stu Says:
    April 11th, 2008 at 10:23 am
    vmex,

    You should go to the auction and see if anyone bids. If they do, offer one dollar more.

    Before you do so:

    Make sure to check the title information of the property – at the local clerk they will have all liens and judjements against the house – you might be in for a big surprise… Also…

    Without home ispection are you sure you want to put a bid in??

  83. vmex says:

    How do you determine that are those public records also?

  84. Shore Guy says:

    # 82 “Otherwise, you’ll be purchasing the responsibility for those other liens as well. Surprise!”

    The RE version of the Crying Game.

  85. Al says:

    Some semingly small problems might run into ten’s of thousants and prevent you from getting a CO

  86. Mikeinwaiting says:

    Grim 76 That was me on the dance. The video doesn’t do it justice to small.Thanks, just the same ,love that tune.

  87. skep-tic says:

    I’ve been trying to figure out why our politicians are so intent on bailouts when multiple polls have shown that the majority of Americans are against them. Also, it seems to me that for every financial institution a bailout would help, there is a corresponding firm that would be f@cked which is on the short side. The economic stupidity of these bailouts is obvious, but I think they are an equally collasal political blunder

  88. Al says:

    Funny – drumrolls:

    Welcome to the new home of Garden State MLS’ public search engine. Currently, there are 34,970 properties advertised for sale in NJ on our site. For Residential Properties that are Multiple Listed with Garden State, 99% are available to be searched on this site. To search for your next home in NJ, just click here.

  89. grim says:

    Sorry about that, distracted this morning.

  90. Al says:

    vmex Says:
    April 11th, 2008 at 10:34 am
    How do you determine that are those public records also?

    I think ALL title recors are kept at local county clerk – Am I right?

  91. BC Bob says:

    “Basically now is the cheapest time to buy oil and from here on out oil is only going to get more expensive.”

    kettle,

    I guarantee the crude market would sell off on this scenario, release reserves and at the same time, constructively, support the dollar. Not verbal crap. The price of crude does not only include the obvious fundamentals/technicals. It is also a major dollar play.

    Crude is not only traded on commodity desks, it is traded on the banks currency desk. It is basically another currency. Put up a chart of crude and the dollar. Now calculate how much the price of crude is warranted, based on fundamenatls as opposed to the decline in the dollar. On the flip side, at this time, who in DC cares about our dollar.

  92. spam spam bacon spam says:

    I’m mired in real estate agent heII…

    #$&*(!?%

    Does anyone here have access to Costar, Loopnet, etc?

    I found a nice commercial space for my business locally and called the listing agent; he’s super nice but gawd awful slow. Been waiting on a proposal for 2 (!!) weeks now.

    Anyhoo, I’ve held several conversations with him, emailed lots of junk back and forth, but he is now telling me he also has a “national” company interested in the space; they were interested before the previous tenant signed, and are still interested a year later after the first tenant defaulted on it’s lease (just 2 weeks ago.) My discussion w/ him yesterday leads me to believe he’s enamored with national companies…he said he advised the landlord the local co that defaulted was a worse option that the nat’l co, “but no one listened to him”…

    So…

    Do I believe him?

    Next issue…

    I’ve talked to the landlord’s own employee, his property manager, in the past.

    I’m *ABOUT* to go over this agent’s head to contact the property mgr directly, but I know I’ll piss off the agent (he’s a kid driving a beemer, gawd help me) and I *may* get told by the prop mgr that they only work thru the ageny, and defer me back to the agency/agent, in which case I’ll NEVER get the space :)

    If I hire an agent on my own behalf, what would I be getting? Nothing? An “in”?

    So, all you negotiators….what would you do?

  93. Shore Guy says:

    #88 Those are some breasts you have there Mike. Very impressive. All our wives should dance so well.

  94. chicagofinance says:

    Stu: re PIMCO….you were talking about the fees a few weeks ago in that new Frankenstien fund Bill Gross is constructing…regardless…you can see PIMCO Total Return is a godsend. There is a going to be tough sledding in the fixed income market once rates move upward, but he is well positioned to at least get some of the spread tightening when it happens. Recognize the easy money is over, and given his objectives, just to break-even or lose slightly in a mean reversion fixed income environment is hitting a home run.

    If you use this information in invest, you may consider yourself the mental equivalent of a gastric bypass, where the connections between your Autonomic Nervous System and your high lobes are rerouted so that the end of your large intestine feeds directly into your cognition.

  95. MT says:

    #4
    Beautiful Statement!

  96. Mikeinwaiting says:

    Very funny Shore! You know what I meant.

  97. Stu says:

    ChiFi 97:

    Speaking of fees. I closed out a managed (terribly) RBC IRA to transfer it into my Ameritrade IRA. Keep in mind, they charge a $45 annual maintenance fee on it and I haven’t moved the money in 7 years. Well the fee to disburse it so I can redeposit it into my TD Ameritrade account was $150.

    I recently sold off 40K of a mutual fund held by JanneyMontgomeryScott. They charged a fee of $80.

    I’m in the wrong business.

    And I’m watching PFATX like a hawk.

  98. make money says:

    Spam Spam,

    Find out who owns the property and “bump” into him. Always go for the decision maker and make it feel and look accidental play the destiny card.

    MM

  99. Shore Guy says:

    # 98 Dang, and I was really looking forward to meeting you at the GTG, lol.

  100. njpatient says:

    68 shore guy

    You’re singing my song.

  101. gary says:

    007,

    Can I use the price of, say, 1998, and calculate the current price with 4% yearly appreication?

    Yes! Yes and Yes! That’s exactly where the price should be. If the sellers and/or sellers agent gasps and claims to be insulted, then move on.

  102. Shore Guy says:

    102

    Just dont expect me to dance like Mike.

  103. njpatient says:

    89 skep

    “The economic stupidity of these bailouts is obvious, but I think they are an equally collasal political blunder”

    Agreed. Mrs. Patient and I have been saying the same for awhile now.

  104. Mikeinwaiting says:

    Shore 68 78 I’m also a lifelong Republican.
    He better not, even a novice at assessing the military situation would see this as a disaster. No one could be that stupid or care so little for his country to make that move. That being said I’m in fear of it happening just the same.We already are in deep sh*t, this could bring us down, very scary.

  105. spam spam bacon spam says:

    Thanks, make…

  106. Mikeinwaiting says:

    Granted I dance better than most Republicans!

  107. Hehehe says:

    Kettle,

    My question to you is do you think Bush and Cheney’s recent visits to Saudi Arabia are all about seeking an increase in oil output or for paving the way for an Iran invasion?

  108. njpatient says:

    “All Things Considered, April 9, 2008 · Amber Barbosa didn’t graduate college. But she did get an education — by working for the now infamous subprime lender New Century Mortgage Corp.

    Barbosa was a quick study: A few years later, she struck out on her own as a mortgage broker.

    “In 2006, I made close to $500,000,” she says. Not bad for a 28-year-old with no college degree.

    By then Barbosa, who was living outside of San Francisco, had a nice boat, a 27-foot Bayliner. She had several houses, a Mercedes and a Cadillac.

    “I was riding around in my ’07 Escalade,” she says. “God, I had three properties at the time — one right on the water with ocean access, another property worth $800,000.”

    NPR checked the property records, and Barbosa really did own those houses. Since the crash of the housing market, though, she says she has pretty much lost everything. “

  109. njpatient says:

    Shore, Hehehehe, Kettle, Mike

    Why do you think the Centcom commander who publicly opposed Bush on Iran “resigned” last month?

    http://www.motherjones.com/mojoblog/archives/2008/03/7524_antiiran_war_ce.html

  110. Hehehe says:

    Grim,

    You are a good man, an intelligent man, but please do not mention Joe Strummer’s time in the Pogues, it makes my stomach curdle. Waiting For Herb is/was sacrilege!! I will always love him for his time with the Clash and Big Audio Dynamite but what the Pogues did to Shane MacGowan was ridiculous. “He was too drunk for our band?” BEING TOO DRUNK IS YOUR BAND’S WHOLE SCHTICK!!!

  111. Shore Guy says:

    # 106 “He better not, even a novice at assessing the military situation would see this as a disaster.”

    He does not care. He believes that God is on our side and will save the day. He is not a rational thinker.

    # 111 I know why he left and it was a resignation in name only. I have contacts with CENTCOM and he was shoved off the plank and resigned just before hitting the water.

    General officers who speak up get cashiered. It has been “our way or thge highway” from day one of this Administration. We cannot expect rational thinking to prevail. It is absent.

  112. lostinny says:

    Hehehe 113
    You are so right!

  113. chicagofinance says:

    Stu: actually, you know what is screwy? This approach COULD have a limited shelf life of possibly a decade or 15 years more, because the indeces used are publicly available. As more and more people begin to use the same strategies, by no arbitrage, you drive the outperformance out of the model. Luckily, this model is rather arcane to the point of being inpenetrable to most of the public. However, it is why, as currently constituted, vanilla indexing is garbage, and DFA is structurally superior.

  114. kettle1 says:

    93 BC

    I am not sure i understand your point. The dollar is falling, oil is going up and conventional world wide oil production has plateaued for the most part.

    By “sell off” do you mean that people would dump oil on the market? If so i disagree (acknowledging i am a financial laymen)There are plenty of people willing to snap up any excess capacity if it really existed..

    We are/have entered an energy plateau. This is a very risky situation, as a small shock in a non-critical part of the oil market can cause a severe event, very similar to how the credit crisis has been tripped.

  115. skep-tic says:

    WTF is this guy doing? Looks like I may vote Libertarian..

    from the WSJ

    McCain, in Shift, Asks Government
    To Step Up in Housing Crisis
    By LAURA MECKLER and ELIZABETH HOLMES
    April 11, 2008; Page A6

    John McCain called for an aggressive federal government role aimed at stabilizing the housing market, rejecting a largely hands-off approach he outlined two weeks ago.

    The likely Republican presidential nominee’s prescription included a heavy dose of policy more typically associated with Democrats, as he sought to show voters he understands their economic pain. Most significantly, he urged the federal government to guarantee new mortgages for homeowners at risk of foreclosure.

  116. grim says:

    From Bloomberg:

    Washington Mutual Falls on Short Sale Recommendation

    Washington Mutual Inc.’s full-year loss will be wider than first estimated, according to Goldman Sachs Group Inc. analysts, who recommended selling the shares short. The lender declined as much as 6 percent.

    “Given WaMu’s disproportionate exposure to states” where home prices are forecast to decline, Goldman expects losses between $17 billion and $23 billion, the analysts wrote. Washington Mutual may have a $14 billion provision charge in 2008, the analysts said.

  117. kettle1 says:

    HeHe

    i would agree with your implication that the recent meetings in Saudi were not over oil. oil may have been discussed as a secondary issue, as it is quickly becoming apparent that the saudi’s do not have the (recoverable)reserves they claim to have.

    I base my opinion on bush and cheney on the fact that he apparently went into iraq because it was deemed feasible if condition were JUST right. Of course they werent and here we are today, but that caveat gave him an open door. Of all the strategic and tactical simulations and war games on US V iran i have read or heard of, the only way the US comes out on top is with the use of NUKES.

    I have read opinions put forth by military commanders ( and i agree) that the US invading iran could very well spark WWIII.

    What i see as more likely is that isreal strikes iran by hitting its reactors and military bases. In this case GW’s meetings in Saudi are to ensure that the saudi’s and other ME players do not retaliate against isreal.

  118. RentininNJ says:

    Can I use the price of, say, 1998, and calculate the current price with 4% yearly appreication?

    The biggest problem in today’s market is that Realtors® and sellers alike both see home prices in context of previous comparables (over the last few years) & peak prices rather than fundamentals. They list a house for 5% or 10% under 2005 peak prices and really think that is a great deal. They don’t understand why buyers aren’t falling over themselves to buy a home at “10% off”.

    What they fail to realize is that 2005 peak prices are completely arbitrary. Peak prices had no grounding in fundamentals or any kind of reality. Peak prices are simply the point where an irrational runaway market ran finally out of steam, where there were no more “greater fools” to perpetuate the Ponzi scheme.

    Until sellers realize that pricing a home 10% below a meaningless and arbitrary price is a flawed strategy, the market will continue to remain in a funk.

    Long term home prices are based on affordability and what local incomes will support. The market will recover when either:
    1)Realtors/sellers completely forget what houses sold for in 2005 and adjust their pricing strategy to reflect the fundamentals.
    Or more likely
    2) They continue to discount from peak prices until they accidentally bump into prices supported by the fundamentals.

  119. Hehehe says:

    Kettle,

    Sounds good, and a lot more likely. I just have nightmares of Cheney sitting at a desk redrawing maps of the entire Middle East because he thinks the Brits did a sh*tty job because they didn’t know where the oil was all located:)

  120. gary says:

    They continue to discount from peak prices until they accidentally bump into prices supported by the fundamentals.

    And that price shall be ~4% YOY appreciation starting with the comps for 1998 and calculated accordingly

  121. skep-tic says:

    #121

    “The market will recover when either:
    1)Realtors/sellers completely forget what houses sold for in 2005 and adjust their pricing strategy to reflect the fundamentals.
    Or more likely
    2) They continue to discount from peak prices until they accidentally bump into prices supported by the fundamentals.”

    probably the same thing as #2, but my guess is that people will keep pricing as they always have (based on comps), but that the comps are steadily moving lower due to the fact that a high portion of sales are in some degree of distress. so within 6 months, 2005-2007 prices will be completely irrelevant

  122. BC Bob says:

    “By “sell off” do you mean that people would dump oil on the market?”

    Kettle,

    NO.

    When I say sell off, it’s in regards to prices. Look at an overlay of crude/dollar,charts, since 2001. What % of the price, crude, is solely attributed to the dollar. If the dollar index was at 120, 2001 level, do you really believe that crude would be at $110? Many in the industry attribute $30-35 strictly to the dollar. I am not arguing supply/demand. Simply, an exchange ratio with the dollar.

    Currency pairs are traded 24 hours a day; USD/GB, USD/JY, USD/BP, etc.. Well, there is another quasi currency pair traded, USD/Crude.

  123. RentininNJ says:

    “Given WaMu’s disproportionate exposure to states” where home prices are forecast to decline

    Most of WaMu’s loans are in California, but NJ/NY is number 2 on the list.
    They hold $2.05 billion in subprime loans and $5.33 billion in Option-ARMs in NJ/NY.

    (WAMU 2007 10-K warning pdf)
    http://investors.wamu.com/Cache/5688478.pdf?FID=5688478&O=3&IID=102028&OSID=9

  124. Stu says:

    116: ChiFi

    “This approach COULD have a limited shelf life of possibly a decade or 15 years more, because the indeces used are publicly available.”

    I agree. The greater the success of the strategy, the shorter the shelf life.

  125. Stu says:

    A lot of politics here today. No?

  126. grim (63)-

    Anyone who ignores or dismisses what Bill Gross does, does so at his own peril.

  127. Stu (79)-

    Sight unseen, I’d bet the upset price on that house is far greater that current market value.

    Let it go back to the bank for $100, then approach the bank before they have to spend money cleaning it up and getting it ready to sell. Bet they’ll be all ears…

  128. vmex (81)-

    They are not crazy these days. 95% of everything foreclosed goes back to the bank for $100 in my neck of the woods.

    If you are not experienced in sheriff sales and the bidding process, I’d strongly advise against using this as an “opportunity” to learn how.

    As the old saying goes, if you look around the room and wonder who the dupe is…the dupe is probably you. The few guys who will be plying their trade at the sale will inevitably be seasoned professionals who can remove your skin with a butter knife.

  129. grim says:

    Anyone who ignores or dismisses what Bill Gross does, does so at his own peril.

    Wasn’t really a statement about whether he is right or wrong, moreso a statement about giving serious consideration to the financial motives of the talking heads. It’s always been the case, albeit in a subtle way. Recently, it seems to have become the only way. Anything to get a soap box off of which launch a Jim Crameresque rant.

  130. nemo says:

    #31 Stu
    Nice stat, I think this is what I am expecting, a correction will not happen this year like a lot of people think. I believe this will gradually take about 3 years. I have been lurking and posted a few time on this site for about 2.5 years and I really wonder if all you think corrections will come sooner than later? I know there are some desperate people out there that will sell at a lowball price but the general consensus of home owners think that they should not loose money on their homes so they won’t sell now, they will keep their homes. I believe this will take awhile and I will be here in another 3 years talking about it still.

  131. make money says:

    vmex,

    If the lien on th ehouse is substancially below what it’s worth then the odds are super high that it won’t make it to the auction.

    Stay in touch with the HO and his realtor. Let him know that you are interested and that you can close fast. DO NOT give him a price as you will probably hurt yourself. Just express interest and then lower your offering price last minute and be prepared to walk away. If you position yourself like this, chances are it could fall in your lap for cheap.

    Good Luck and stay away from the auctions as it’s mostly lemons that end up there.

  132. GOPWTF says:

    I love all the “I am a Republican, but oh noes Bush hate teh Constitution!” postings here and elsewhere.

    Yeah, it’s almost as if the people who supported the party that focused its efforts on demonizing its political opponents as traitors, fifth columnists, weaklings (www.democraticunderground.com/articles/04/09/07_purple.html), and worse are suddenly shocked … SHOCKED! to learn that there might be exceptions to Godwin’s law.

  133. Secondary Market says:

    #94. I have access to loopnet. Post the address and I can dig up some info. Or contact grim for my email.

  134. Jamey says:

    121:

    (Nods head in mute assent.)

    Well stated! I will credit you when I repeat your statement, which will be often.

  135. BC Bob says:

    nemo [133],

    I’ve said from day 1, 5-7 years from peak-trough.

  136. 3b says:

    #138 BC Bob: And in your estimation, what time frame are we at now as far as the trough?

  137. 3b says:

    #133 nemo I do not think it will take another 3 years for really significant declines. I would expect to see those over the next year, what with a recession, and ever tightening lending standards. The final bottom then would be in about 2 years.

  138. BC Bob says:

    3b [139],

    If you are a seller, it’s the O F*ck stage. If you are a buyer, it’s the tread carefully stage.

  139. grim says:

    Nice volume on GE today

  140. New in NJ says:

    I just did my online check-in for tomorrow morning’s Continental flight to Heathrow. I didn’t do an actual seat count, but the 767 looks to be about 1/4 full. I’m just saying.

  141. Essex says:

    141….And if you are Jim McGreevy….it’s Friday Fun Day!

  142. BC Bob says:

    “Nice volume on GE today”

    JB,

    ….and Goldman cuts to hold. Great job.

  143. Stu says:

    I agree with 3B. The end of the price deterioration should occur around the Autumn of 2009. Fortunately for me, that is when I plan to buy :P

    Of course, I expect housing prices to remain flat for a long, long time afterwards.

    The way I see the 5 steps of grief:

    1. Denial – Everyone who purchased a home between 2002 and 2006. “Home values will always increase. That’s why I’m buying at 6 times my income.”

    2. Anger – 2007 The year of the subprime meltdown. “It wasn’t my fault!”

    3. Bargaining – 2008 minor price adjustments, but still few sales “I know the markets collapsing, but I’m sure I can at least get 2007 prices…no?”

    4. Depression – 2009 Sellers carrying costs erode what little optimism was left. “Ahh cr*p, looks like I did way overpay!”

    5. Acceptance – 2010 “Grim was right, 30% off of 2005 prices will get me outta here.”

  144. 3b says:

    #141 BC Bob: Translated would I be wrong in considering we are about 1/2 way there from peak to trough?

  145. Essex says:

    Stu,
    I think you are over stating the whole scenario…..got to a place like Livingston….and you are still seeing bidding wars. I have seen sales/contracts occur in my patch as well. Good properties at ‘fair’ prices will still sell. But then you know that, you are still priced out.

  146. Stu says:

    3B – we are in the middle of the 4th.

    Unfortunately, Heilman just started warming up in the Met’s bullpen.

  147. BC Bob says:

    Stu [146],

    -complacency
    -concern
    -fear
    -panic

    I don’t sense fear from sellers. Realtors, chime in?? Me thinks we have awhile for this baby to fall. The duration and severity will be greater than most can imagine.

  148. Mikeinwaiting says:

    Don’t forget the wild card, the gov bailout.This could prolong the agony.

  149. BC Bob says:

    3b,

    IMO, we are are on mile 12 of a 26 mile marathon.

  150. Stu says:

    Essex (148):

    I’m not really priced out per se, merely not willing to overpay.

    Sure some houses still cause bidding wars. These are well kept, well located homes, most likely in areas of similar homes. But when the overstretched homeowner whose home is not as well kept and not as well located decides to lower his price enough to get a sale, eventually the higher priced homes won’t sell as well since it makes significantly more economic sense to pay to improve upon the lower priced home. This will become especially more true as contractors start slumming for work.

    Just give it some more time.

    The house 3 down to the right of me was withdrawn. Great location, completely refurbished (home depot style though) but couldn’t get their price. I didn’t expect a bidding war, but I figured the flipper would give up some of their margin. Time will stop the few bidding wars that remain. I’m not terribly surprised that the Northeast is holding up as well as it is. It always seems to be the last to drop, but often the last to recover. At least that’s what I remembered about the job market during the ‘real’ Gulf War years. Remember Operation Desert Storm?

  151. R Patrick says:

    What is your downpayment in?

    CD’s, Bonds, ect?

    I have no clue where to store the money…

  152. kettle1 says:

    125 BC

    Thanks, I see your point. The change in brent crude from jan 06 to present is +22% and the change in the dollar index from jan 06 to present is -40%.

    To be clear, do you disagree with the supply/demand argument then?

    I would counter that oil has gotten more expensive regardless of currency. you are not limited to due oil in US dollars, even if the majority of purchases is in US dollars.. You know that better then i do

  153. House Hunter says:

    #75 007…I have thought along those lines in the past, issue is that there are times when there is no appreciation at all. Like the late 80’s until early 90’s my husbands townhouse went no were for 6-7 years, then it ran up. Hard to tell what will occur in the next 5 to 10 years in this environment

  154. 007 says:

    #103 gary, thanks.
    #156 House Hunter,
    Agree with you totally. But now I really have to buy (renting now, lease is over), and I anticipate the house will do down in the next 3 years, level for 5 years, and up again, hopefully.

    Hopefully, the correction will be average out in the next ten years.

    007

  155. BC Bob says:

    “To be clear, do you disagree with the supply/demand argument then?”

    kettle,

    No. I agree 100% with the fundamentals.

    Yes, oil would have become more expensive despite the exchange rates. However, where would it be if you calculated 2001 cross rates, peak of the dollar, with today’s crude supply demand? The weak dollar may be responsible for 20-30%, just a guess, of the price for today’s crude. The dollar is a major factor.

  156. BC (150)-

    Two camps of sellers now:

    1) Forced sales
    2) Non-forced sales

    The forced sellers are easy; it’s my way, or the highway.

    The non-forced sellers? The minute I hear “we need”, “won’t accept less than…”, “our neighbor got” or “we don’t have to sell”…I stand up, shake their hands, wish them well, ask them politely not to list their homes and bid them a good day.

    I also follow up all my appontments with a memo stating my price opinion, what I said during the conversation and what the seller’s reply was. In about 6-24 months, I’m gonna be digging them up and relying on them heavily.

    Many of the listings I began rejecting 18 months ago have yet to sell. Funny how many people who allegedly don’t have to sell will keep their homes listed for 18 months.

  157. RentininNJ says:

    Could someone kindly post address, OLP & DOM for MLS# 2479871

  158. skep-tic says:

    #159

    so Clot, given that a high percentage of all sales right now are distressed, isn’t it the case that bubble comps are rapidly becoming irrelevant?

    I personally think that 2008 is the big down year, with 2009 slightly more down, but stabilization happening toward the end of 2009

  159. kettle1 says:

    BC,

    Thanks for the enlightening discussion. I agree with you, but did not realize the extent of the influence of the dollar. :)

    Grim,

    Once again its a great blog you have here, always something new to learn from one of the posters

  160. Essex says:

    159…ask them politely not to list their homes –what an arrogant windbag….follow up with a memo…I’d probably run you out of my house just for being a dooshbag…and tainting the chi of the place…

  161. Essex says:

    159…ask them politely not to list their homes –what an arrogant windbag….follow up with a memo…I’d probably run you out of my house just for being a dooshbag…and tainting the chi of the place…

  162. grim says:

    Rent,

    29 Vista, $398,000, DOM 79.

  163. Essex says:

    If the homes you are interested in come down to the price point the people on the board are willing to pay…..my guess is that economy will be so bad….the people on the board won’t qualify to buy either.

  164. kettle1 says:

    skeptic,

    my original guess for the “stagnation” point was 09, but the more i observe how this is developing, i am now thinking that we wont bottom out into a stagnation until 2011/12. We have gone to high to come down that fast. While the market could come down that fast if not interfered with, the gov et al is doing everything they can to stop it. They cant stop it, but the can prolong it and in my opinion make it even more painful.

  165. kettle1 says:

    167 essex,

    i dont know, it seems as though a significant portion of the poster have a significant Dp. Even if the economy is wrecked, people with 20% and little debt will be solid gold to a bank

  166. Essex says:

    169…joblessness. which is a real threat to anyone in a piss poor economy….seems to be the real issue.

  167. Skep (162)-

    I wouldn’t go that far. True distress sales, while proportionately high these days, do not dominate the market. They are more of an influence than many would care to admit, but the vast majority of Americans who own homes have equity and pay their mortgages on time.

    The problem lies in those who are forced to sell because of life circumstance or other normally-occurring personal situations. Far too many of these people are not facing complete ruin if they can’t sell…just a severe crimp in lifestyle, either now or within the next 5-10 years.

    In other words, lots of people based their future financial planning on obtaining a sale price which represents an all-time high (i.e., 2005 prices). As these people are increasingly forced to accept less, the reverb gets transmitted throughout the larger economy.

  168. reinvestor101 says:

    You nor 3bonehead have any idea of what you’re talking about.

    Stu Says:
    April 11th, 2008 at 1:25 pm
    I agree with 3B. The end of the price deterioration should occur around the Autumn of 2009. Fortunately for me, that is when I plan to buy :P

    Of course, I expect housing prices to remain flat for a long, long time afterwards.

    The way I see the 5 steps of grief:

    1. Denial – Everyone who purchased a home between 2002 and 2006. “Home values will always increase. That’s why I’m buying at 6 times my income.”

    2. Anger – 2007 The year of the subprime meltdown. “It wasn’t my fault!”

    3. Bargaining – 2008 minor price adjustments, but still few sales “I know the markets collapsing, but I’m sure I can at least get 2007 prices…no?”

    4. Depression – 2009 Sellers carrying costs erode what little optimism was left. “Ahh cr*p, looks like I did way overpay!”

    5. Acceptance – 2010 “Grim was right, 30% off of 2005 prices will get me outta here.”

  169. sx (164)-

    Arrogant windbag? Kill yourself. Why does a homeowner need to come on the market at some whacked out price? He does himself no favor, while at the same time helping to swell the inventory of homes priced-to-fantasy.

    What’s better: getting an honest opinion you may not like from an agent who’s willing to tell the truth (and, walk away from a bad listing proposition)…or a pole-axeing from Mr. Market, when the hungry hordes of buyers never materialize for Homer and Marge’s little slice of cabbage-reeking heaven?

    Just so I have this straight: I’m a douchebag if I do take on a stupid proposition, and I’m a douchebag if I walk away.

    You’re free not to like me- or what I say and how I say it- but your position is both untenable and disingenuouos.

  170. BC Bob says:

    “169…joblessness.”

    Essex,

    In that case, hopefully they are renting. Depending on the economic situation, one may discover that their best option is relocating. It is then easy to pick up and move on. Who wants to be stuck holding an illiquid asset saddled with rising taxes in that environment?

  171. (172)-

    Speaking of douchebags…

  172. skep-tic says:

    #167

    “If the homes you are interested in come down to the price point the people on the board are willing to pay”

    Essex– I think you mistake the prevailing view of posters here as something way out of the mainstream. In fact, if you look at most recent analysis, the consensus view of the entire financial community has come around to where people on this board have been for over a year (20-30% off peak prices). This prediction is not premised on economic collapse (it would be much worse if it was)

  173. grim says:

    Just doesn’t feel like a Friday without a billion dollars worth of mortgage downgrades…

  174. grim says:

    NEW YORK–(BUSINESS WIRE)–

    Fitch Ratings has taken the following rating actions on three Fremont Home Loan Trust mortgage pass-through certificate transactions. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed from Rating Watch Negative. Affirmations total $955.4 million and downgrades total $704.2 million.

  175. sx (165)-

    90% of the homes I enter have all the “chi” of a chunk of plutonium.

    It’s the rare seller I encounter now who’s selling because he has lots of equity, dry powder in spades and a burning desire to trade up to a good bargain.

    People looking to sell right now are all telling stories that end the same way. The final destination is the same; only the routes taken seem to differ.

  176. gary says:

    And not only does Homer and Marges house reek of cabbage, but most of the time you can pick up that vintage bouquet of Schlitz leaching from the pores of the walnut paneling adorning the living room walls circa the lunar expedition epoch.

  177. grim says:

    Almost a billion, now it’s a Friday.

    NEW YORK–(BUSINESS WIRE)–

    Fitch Ratings has taken the following rating actions on three Merrill Lynch Mortgage Investors (MLMI) mortgage pass-through certificate transactions. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Affirmations total $352.3 million and downgrades total $134.1 million.

  178. gary says:

    I have another idea for my open house tee shirt:

    “Hey Suzanne, Research This!”

  179. kettle1 says:

    from the timesonline (UK)

    The message from this comparison can be summarised as follows: the boom in the British housing market has been much bigger than the one in America. And the long-dreaded correction in British house prices has hardly even started. So if you believe that events in America since house prices peaked there about 18 months ago could accurately be described as a “crisis” or even a “disaster”, you had better reach for the Book of Revelations to find an appropriate word for Britain’s economic prospects in the next year or two.

    lets make some money and start shorting UK housing. Any good UK housing short ETF’s?

    A rhetorical question, not looking for financial advice

  180. grim says:

    Damn we’re close, $140 million to go, c’mon Fitch..

    Fitch Affirms $64.8MM & Downgrades $21.6MM from 1 SURF 2005 Subprime Transactions

    Fitch Ratings-New York-11 April 2008: Fitch Ratings has taken the following rating actions on one Specialty Underwriting and Residential Finance Trust (SURF) mortgage pass-through certificate transaction. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Affirmations total $64.8 million and downgrades total $21.6 million.

  181. kettle1 says:

    If that times article is accuarte, then maybe Pretorius really is ahead of the curve in findng RE in the UK!!! ;)

    were you building a list of future foreclosures you might like Pre?

  182. Stu says:

    What happened?

    Did the PPT leave work early to beat the traffic?

    Additionally, you know things are getting bad, when ReInvestor shows up to call people names, but doesn’t even try to make a point.

  183. Wag says:

    Stu (186) – Empty barrels make the most noise.

  184. njpatient says:

    167 Essex

    Just to summarize your point:

    Lower house prices will make it _more_ difficult for the posters on this board to buy.

    Am I misstating your thesis in any respect?

  185. skep-tic says:

    it will be interesting to see the position of London vis a vis NYC after the UK goes through the maelstrom

  186. njpatient says:

    170 essex

    I, of all people here, am most inclined to agree that employment generally will be a drag on the economy, but what percentage of the folks on this board do you predict will lose their jobs? 8%? That would be high. If 5% of currently employed people nationwide lose their jobs over the next 18 months, that would be a huge amount.

    Artificially high home prices do no one any good, and if the US economy is dependent on the pretense that homes are worth more than they actually are, then we’re all f*cked anyway.

  187. BC Bob says:

    “Did the PPT leave work early to beat the traffic?”

    Stu,

    I sense trouble come Monday.

  188. njpatient says:

    176 skep

    You’re right, of course. I would also add that the fundamental forces of a market economy dictate that, no matter how bad the economy gets, housing prices should (absent a bubble, speculative frenzy or other stupidity) come to rest at a level where people can afford to buy them.

    If there is a massive depression and Americans generally become a poverty stricken people, then prices will fall drastically more than the 20-30% which you rightfully point out is the current consensus range.

    In the meantime, we must merely contend with the intellectual poverty of recoward101.

  189. grim says:

    There we go, got my billion in downgrades.

    Fitch Affirms $1.5B & Downgrades $422.2MM from 7 HSBC 2005 Subprime Deals
    11 Apr 2008 3:36 PM (EDT)

    Fitch Ratings-New York-11 April 2008: Fitch Ratings has taken the following rating actions on seven HSBC Home Equity mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $1.5 billion and downgrades total $422.2 million.

  190. njpatient says:

    182 gary

    That’s a winner!!!

  191. Stu says:

    BC Bob:

    Trouble for the Longs or the Shorts?

  192. Stu says:

    Impact of 8 months of unprecedented economic stimulus…

    http://finance.google.com/finance?q=INDEXDJX:.DJI%20INDEXNASDAQ:.IXIC%20INDEXSP:.INX

  193. Hehehe says:

    “Impact of 8 months of unprecedented economic stimulus…”

    Yeah but right now Paulson’s rubbing Bergabe’s shoulders saying “just think how bad it would be if we hadn’t done anything”

  194. grim says:

    From Reuters:

    Congress study: Housing aid wouldn’t help economy

    WASHINGTON (Reuters) – U.S. lawmakers’ plans to aid troubled homeowners would likely help prevent many foreclosures but wouldn’t stop the freefall in home prices or stabilize the economy, a congressional report said on Friday.

    A plan from Democratic lawmakers would have the federal government buy up troubled loans once the loan amounts were reduced by the original lender.

    “Such actions could help reduce the number of foreclosures… (but) would significantly shift the risk involved in mortgage losses from the current lenders and investors to taxpayers,” said a report from the Congressional Budget Office, which gives nonpartisan research advise to lawmakers.

  195. grim says:

    (cont)

    The report found that the plan “might break a downward spiral in which foreclosures put houses on the market, pushing down house prices.”

    Still, it warned that the plan would not be sweeping enough to restore the housing market or ailing economy.

    “If the objective is to arrest the decline in house prices, however, the policies are less likely to succeed,” the report finds.

  196. pretorius says:

    Kettle1,

    Wow, you remember lots of stuff about me.

    Actually, I was in the UK checking out commercial property investments. Wasn’t there to buy a house.

    But thanks for the article. It should remind people that house prices in the US are extremely affordable compared the UK.

    The median house price to median income ratio is 5.5 in the UK versus 3.6 in the US. No market in the UK is lower than a 4.4, but there are more than 80 US markets where houses trade below this multiple.

    Here’s a neat report that compares housing affordability in the US, Canada, UK, Ireland, Australia, and NZ. It is where I got the data from.

    What do people here believe is the cause of the UK bubble? Can’t blame that one on Greenspan or Lereah.

  197. kettle1 says:

    Pre,

    I was poking fun in the best of intentions, dont take me to seriously :)

  198. waters says:

    007 Says:
    April 11th, 2008 at 10:18 am
    Planning to buy a house and live there for at least 10 years. (still renting)

    Trying to find the fair value of a house NOW, and 10 years later.

    Can I use the price of, say, 1998, and calculate the current price with 4% yearly appreication?
    ———–
    I think that’s a reasonable way to look at it, Although it does yield some scary numbers in terms of how far prices need to fall.

    I set up a spreadsheet with the Case-Shiller monthly price indexes, taking the average of Boston and NY to get a northeast composite. In Jan 98, the Boston-NY average index was 81.3. In Dec ’07, it was 183.2. A 4% growth rate from Jan 98 to Dec ’07 would yield an index of about 119.8. So under those assumptions real estate was about 53% overvalued in Dec ’07.

  199. skep-tic says:

    OK, so people were talking about the Newport mansions the other day… as an example of what can happen to real estate in a real depression, Rosecliff in Newport was constructed in 1898-1900 for a total cost of $2.5 million. It was later sold (in substantially deteriorated physical condition) for less than $100,000 (according to what a historian on a tour told me last year).

    http://tickets.newportmansions.org/mansion.aspx?id=1001

  200. kettle1 says:

    Pre,

    in my opinion the cause is the same as in the US Excessive debt levels required to support inflated prices. if you go down another level, then it would be the banks taking full advantage of various off book investments the same way the US banks did. Hand out money like its candy then pass the risk on to someone else’s books and walk away with a fat bonus.

  201. skep-tic says:

    “What do people here believe is the cause of the UK bubble?”

    same general cause worldwide– speculative mania fueled by loose credit

  202. Pat says:

    007, the starting point should be 1999.

    If you can find houses with closings between March 10, 1999 and June 26th, 1999, you have found your compass.

    Please, no applause for my very easy answer, njpatient.

  203. gary says:

    waters [203],

    Why do you think I’m such a maniac about housing. If pictures can say 1000 words then that Case-Shiller chart tells 1000 stories. People cannot see the contrast unless it’s laid out in front of them. The shock has worn off long ago. The plebs have become indoctrinated and they don’t realize how skewed and warped the prices of homes have begun. I absolutely refuse to buy until prices fall back in line with the mean trend line.

  204. BC Bob says:

    patient [190],

    Well said.

    From approx 1998 to the beginning of this credit crunch, the masses have consumed based on asset appreciation. After the dot com bust the recovery was built on the foundation and roof of the housing, debt, and credit bubble. Housing and consumption were the drivers of our economy from 2002-2007.

    We now face the head winds of a housing bust, higher energy prices, steeper food costs, run away health care costs, tightening credit, rising taxes, significant declines in real employment, and falling real wages.

    We have encountered major declines in factory, retail, construction, airlines, and auto industry employment. The fallout on WS is just entering its initial stages. How does the employment picture support housing prices?

    There are no more fed bubbles to create. Excuse me, they are creating a commodity bubble. Unfortunately, the masses don’t have a line of credit to draw upon against their soybeans, corn, crude and gold.

    We have witnessed the greatest expansion of money growth, credit and debt in our history. Now the worm turns, it will take years for this to unwind. There will be shoes dropping every month. Not a good time to be unloading an overpriced, overbought, illiquid pos.

  205. Essex says:

    188…..well……think about this….prices are down to levels where people here say OK, I can get that $750k place for $35ok (which btw is everyone on here’s wet dream)….my guess is that if prices are that ‘low’…they’ll be a ton more pain to accompany it. Thesis ‘Is’…unless you are sitting on a fortune, your livelihood is still tied to the economy…if it is that bad…’you’ the wisher of fortunes so bad….might also be affected.

  206. gary says:

    begun = become

  207. skep-tic says:

    pretorius– did you see this part of the report you posted?

    “Least Affordable Markets: The least affordable markets are generally in California, Hawaii, the US
    East Coast, Australia, the United Kingdom, New Zealand and Canada’s province of British
    Columbia.”

  208. BC Bob says:

    “Can’t blame that one on Greenspan or Lereah.”

    pret,

    Are you delusional. Same credit/debt bubble, created by the cb’s around the world. Who created the carry?

  209. 3b says:

    #200 pret: And according to my relatives in England and the Republic of Ireland prices are falling in both those places as well.

    They were playing the easy money game across the pond too.

  210. njpatient says:

    “It should remind people that house prices in the US are extremely affordable compared the UK.”

    LOL

  211. 3b says:

    #213 BC Bob: Do not strain yourself BC;its imposssible reasoning with him.

  212. schabadoo says:

    Can someone tell me if gsmls# 2506438 actually increased its listing price? I believe it was just relisted.

    Thanks.

  213. njpatient says:

    210

    So yes, lower prices will make houses less affordable?

  214. skep-tic says:

    here is a London/NYC comparison from the report pretorios posted (median multiple):

    United States New York, NY-NJ,-CT-PA 7.0

    United Kingdom London (GLA) 7.7

    London is less affordable than NYC, but not dramatically so

  215. BC Bob says:

    “Trouble for the Longs or the Shorts?”

    Stu,

    If I was long, over this weekend, I would be, being nice, in an uncomfortable position. I sense Monday morning trouble for the longs. That said, watch the futures Sunday night. The PPT may be active.

  216. njpatient says:

    200 pretorius

    “Actually, I was in the UK checking out commercial property investments. Wasn’t there to buy a house.”

    And how did that go?

    “It should remind people that house prices in the US are extremely affordable compared the UK.”

    Which is why you flew all the way to the UK to look at properties?

  217. grim says:

    schabadoo,

    Listed with a new agent, price increased $1,000.

  218. 3b says:

    #190 njpatient: Artificially high home prices do no one any good, and if the US economy is dependent on the pretense that homes are worth more than they actually are, then we’re all f*cked anyway.

    Young pret please pay attention to the above. that one sentence sums it all up.

  219. scribe says:

    BC, #220

    Why?

    PS, I didn’t read all of the previous 219 comments so maybe I missed one.

  220. skep-tic says:

    “It should remind people that house prices in the US are extremely affordable compared the UK.”

    from the report:

    “The six least affordable markets are all in the United States”

  221. skep-tic says:

    “The 92 severely unaffordable markets include 30 in the United States, 25 in the United Kingdom
    and 25 in Australia, seven (7) in New Zealand, four (4) in Canada and one (1) in Ireland.”

  222. skep-tic says:

    p16

    “Unprecedented House Price Inflation: The extent of the housing affordability crisis is
    unprecedented. This is illustrated by Median Multiple data across 105 markets in the United States
    since 1980, as compiled by the John F. Kennedy School of Government of Harvard University.
    Between 1980 and 2000, there an average of less than two markets were “severely unaffordable”
    (Median Multiple over 5.0) each year.11 The peak was reached between 1989 and 1993, when from
    three to five markets were “severely unaffordable” out of 105. In no other year between 1980 and
    2000 were there more than two “severely unaffordable: markets. The highest Median Multiples
    reached during this period were 7.6 in Honolulu and 5.8 in San Diego.”

  223. chicagofinance says:

    Stu Says:
    April 11th, 2008 at 1:39 pm
    Essex (148):
    Just give it some more time.
    Time will stop the few bidding wars that remain. I’m not terribly surprised that the Northeast is holding up as well as it is. It always seems to be the last to drop, but often the last to recover.

    Stu: the silent cancer of the NE RE market is all of the whacking happening on the Street.

    LOSE YOUR JOB?

    The way I see the 5 steps of grief:
    1. Denial – I’ll find another job in 5 seconds.

    2. Anger – Why isn’t my BlackBerry humming? Everyone is a b-stard!

    3. Bargaining – I will accept a lateral move.

    4. Depression – I can’t find a seat at Starbucks. Ahh their WiFi is overloaded anyway.

    5. Acceptance – Fries with that?

  224. 3b says:

    #168 kettle; I diasagree. We are in a recession now, that IMO is only going to get worse.

    The substanial declines will be from now through next year. Then years of stagnant prices.

    But people like myself and others with big down payments, and absolutely zero debt will look as you said goleden to lenders, and to sellers who can, need, want, or have to sell.

  225. NNJJEFF says:

    Grim,

    can you give me info on #2715950
    I think it’s under atty review for an awful long time. wonder whether it’s close yet?

    Thanx in advance.

  226. pretorius says:

    Waters,

    Instead of attempting to come up with right valuation for New Jersey’s housing market by starting with the last trough, a better way is to start with the same point in the previous cycle.

    New Jersey home prices peaked in 1Q07, according to OFHEO. The peak of the previous cycle occurred in 4Q89. The S&P/C-S index can’t be used because it doesn’t go back across a full cycle.

    So let’s compare the most recent datapoint, 4Q07, to its counterpart in the previous cycle, 3Q90.

    Over that period, New Jersey home prices increased 147% – a 5.4% annual rate.

    Assuming that a growth rate of 4% is what fundamentals justified during the same period, New Jersey home prices are 25% overvalued today.

    It makes sense that New Jersey home prices rose faster than inflation during the last several decades. A 5.4% nominal growth rate equates to around 2% in real terms, which seems about right for a state that enjoyed a expanding economy, had a growing and prosperous population, and made it difficult to build a lot of new houses.

    However, we’ll be very lucky to see 2% real growth in home prices across the next cycle. Every time a new law is passed in Trenton, it becomes clearer that New Jersey is entering a long period of economic stagnation.

  227. 3b says:

    #167 exssex: 20 to 30% off of 05/06 highs, is not that a large a % considering how rapidly, and recklessly house prices went up.

  228. Al says:

    3b Says:
    April 11th, 2008 at 4:38 pm
    #168 kettle; I diasagree. We are in a recession now, that IMO is only going to get worse.

    The substanial declines will be from now through next year. Then years of stagnant prices.

    I do nto believe in 10 years of stagnant prices – I think job losses later this year will force capitulation late in 2009. Very few have resources to last for more than 3-6 month of un-employment.

    In addition – banks are finally starting to auction off REO properties – even in NJ. Check Wells Fargo REO web sites – I guess paying thouse New Jersey property taxes is getting expensive…

  229. spam spam bacon spam says:

    Gary:

    I got a house I *WISH* you could’ve seen…

    FSBO, about 10 years ago in Whitehouse Station/Somerset County area…

    Has 3 acres, I’m game, let’s go….

    Pull up, house is metal siding gone to seed hidden completely behind half dead pine trees. you know the look… you know you do… :)

    Anyway, we get a tour of the backyard first. It’s 3 acres of a FU***ING MAZE of cedar trees about 10′-15′ high… Old man says (get this) “It was all grass back here and one day I just decided to let ’em grow…”

    ***K me. Jesus, hasn’t this cat thrown up enough times going in mower circles for cripes sakes??? I wonder if he keeps a map. Or maybe he has bottles of mad dog stashed under certain trees hidden from granma…

    Gets better. Inside (only entrance from back of house is thru garage, weird) he’s added on ONE ROOM AT A TIME.

    So, what we have here is a SHOTGUN house sideways. All decorated in cheese smelling paneling from circa 1960’s…and that was
    gen-u-ine 1960’s… he was proud it had stayed exactly the same since his daughters moved out in 1967 and 1969 or thereabouts… Closets were furring strips with paneling. Paneling for doors. And each room accessed only by going thru all the other rooms before it…

    This guy had too much time on his hands…

    We ran.

  230. 3b says:

    #159 clot:Funny how many people who allegedly don’t have to sell will keep their homes listed for 18 months.

    Yes. I ahve always wondered about that as well;why even bother. 18 months!!

  231. Al says:

    However, we’ll be very lucky to see 2% real growth in home prices across the next cycle. Every time a new law is passed in Trenton, it becomes clearer that New Jersey is entering a long period of economic stagnation

    Stagnation – I would call it “soft contraction” – or buisness run away fron NJ ASAP situation.
    Stangation……… Do not make me laugh.

  232. pretorius says:

    Skep-tic,

    Please calm down. I read the report. I know what it says. You don’t need to post stuff from it every minute or two.

    People here are free to read the report. That is why I posted it.

  233. njpatient says:

    206 skeptic

    I do believe that was another episode of Easy Answers to Simple Questions.

    Thanks.

  234. BC Bob says:

    scribe [224],

    Just an observation;

    Big moves down across the board, closing on/near the lows. The market did not fade the bad news today. It has been ignoring bad news for the past few weeks. What made today different? In addition to this, the rally, from the March lows was on weak volume and failed to break the downward resistance line.

  235. shuky says:

    Grim

    could you help me to get info from
    MLS ID# 2470194

  236. 3b says:

    #157 007 Bought first house at peadk of least reale state bubble, sold it 10 years later at $2500 less than I paid for it. And that in a “prestigious” blue ribbon, Bergen Co. train town.

    And I belive our economy, state, and, country are in far worse shape than it was 15 or 20 years ago.

  237. skep-tic says:

    #231

    “A 5.4% nominal growth rate equates to around 2% in real terms, which seems about right for a state that enjoyed a expanding economy, had a growing and prosperous population, and made it difficult to build a lot of new houses.”

    what about the massive credit bubble between 2002-2007? take that out and what is your annual return?

  238. gary says:

    spam,

    Sounds like a gas mask special. I would’ve loved the tour on that one. I bet he needed to get top dollar on that gem. :o

  239. 3b says:

    #152 BC Bob:IMO, we are are on mile 12 of a 26 mile marathon.

    And picking up speed every day!! Half way and counting.

  240. njpatient says:

    233 Al

    “I do nto believe in 10 years of stagnant prices”

    I disagree with you and agree with a hybrid of 3B and pretorius on this one. I expect another two years of falling prices – sharp declines this year, smaller next year, followed by a long period of stagnation. I’m speaking of NJ here, and I think pret’s forecast for the state is correct in that we will not be seeing local economic growth (at least not that outpaces inflation and infrastructure/tax costs) for a very long time, and that’s without taking into account what happens when the boomers retire, nor does it consider whether the recent trend of declining population in NJ continues.

  241. chicagofinance says:

    pretorius Says:
    April 11th, 2008 at 4:39 pm
    Every time a new law is passed in Trenton, it becomes clearer that New Jersey is entering a long period of economic stagnation.

    pret: NJ, as noted by Al, is heading for economic retrenchment. There is no job formation or job maintenance within the state, and the financial sector (and related economic activity) is removing a number of the younger generation’s source for high income employment.

    401(k)’s are being tapped….IT’S HAPPENING…

  242. njpatient says:

    235 3b
    There’s a place near us that has been listed on and off with different brokers (and, for a time, FSBO) for almost two years, chasing the market down that whole time. It was originally listed for ~$1.3, and is now $899. Still it sits.

  243. 3b says:

    #148 Essex: Anybody taht gets in a bidding war now, is in a word foolish.

    And if sellers allegedly price it lower to start bidding wars,and there are still moronic buyers out there who will fall for thatploy, than more power to the sellers.And the buyers deserve to get hosed.

  244. pretorius says:

    The fastest home price appreciation experienced in the developed world happened western Canada, where a commodities boom is taking place but aggressive US-style lending is almost non-existent.

    Prices in Edmonton and Calgary were rising at a 40% annual rate last year. Now Saskatoon is rising at a 40% annual pace.

    My point is it is important to consider local economic conditions when evaluating real estate prices.

    Detroit and Cleveland prices didn’t go up when New York boomed. This difference is explained by major differences in local economic conditions, not major differences in interest rates or loan products.

  245. njpatient says:

    Also, let me reiterate that my long period of predicted stagnation follows a continued sharp fall. As many of you know, with respect to the economy generally, I think that the most gloomy of you are being decidedly optimistic.

  246. pretorius says:

    Chifi, Al, I think we agree – this state’s economy is going nowhere.

  247. Al says:

    To post 247 – can it be that there is just not enough people in NJ/North east to buy all thouse 600K and more houses??

    Incomes are not that high. NO employer stand in-line to hand me a 200K job and beg me to take it. not even 100K job….. (really, can you believe it?)

    So I’ say there is probably 50% of houses for sale in NJ are above 500K… Who is supposed to buy them???

  248. 3b says:

    #250 pret:My point is it is important to consider local economic conditions when evaluating real estate prices.

    Yes we understand that. And you of course must undestand that local economic conditions are declining in NYC and its environs as well.

    Which will make the decline in housing )which was happening with or without a reseccion) in NYC and its environs even more pronounced.

    Simple as that my child.

  249. 3b says:

    #248 njpatient: One by me listing expired end of March ( I guess), just came back on (drove by it last night). Come this August, it will have been on the market for 3 years!!!

  250. skep-tic says:

    #237

    well Pret, you posted a report as though it supported your claim that U.S. house prices are relatively affordable when compared with other countries. The report indicates exactly the opposite (unless you live in someplace like far upstate NY or Indiana) in a blatant way. If you actually read it as you say, then you were simply being disingenuous in making your original point.

    In addition, the report’s conclusion that the problem is lack of supply is plainly ridiculous given the current level of for sale inventory.

  251. Hehehe says:

    From The Ny SUN:

    Real Estate

    The Financing Market: Worst in 20 Years

    http://www2.nysun.com/article/74469

  252. grim says:

    From Bloomberg:

    Wachovia Tightens Standards for Home Loans Nationally

    Wachovia Corp., the fourth-largest U.S. bank, will require minimum credit scores for mortgage borrowers and will reduce loan-to-value ratios because of the weak U.S. housing market.

    Beginning April 26, the bank will rate markets as either “stable”, “watch” or “distressed” based on an index of home prices, the number of homes for sale and how quickly homes are being sold, David Pope, head of Wachovia Mortgage and Retail Credit, said in a memo to employees today.

    The bank will require borrowers in distressed markets to have higher minimum credit scores and to take on less debt in relation to the property’s value, Pope said. The new policy applies to loans that Wachovia holds on its balance sheet rather than selling to the secondary mortgage market.

  253. pretorius says:

    Skep-tic,

    My point is that house prices in the US are extremely affordable compared the UK.

    There are more than a hundred markets in the US, so it easy to find some that are unaffordable. It is just as easy to identify large, economically successful places like Atlanta and Houston that are extremely affordable.

    If supply constraints are a “ridiculous” explanation for affordability disparities, what do you think explains these disparities?

    By the way, it seems like you read the entire report. I’m glad you liked it.

  254. skep-tic says:

    there have been boom towns throughout history. look at the mining towns in the west in the 19th century or the oil towns in Texas in the 80s. these are not paradigms for the global real estate boom we have recently witnessed.

  255. prtraders2000 says:

    Can someone here tell me what 7 Cleveland Rd., Caldwell sold for? Sorry don’t have the MLS#.

    Thanks in advance.

  256. Rich In NNJ says:

    NNJJEFF (230),

    It’s still under attorney review, since Feb. 28.

    Shuky (24) / prtraders2000 (260),

    FYI: I have no access to GSMLS

  257. skep-tic says:

    pret– there are not simply “some” markets which are unafforable in the U.S. To quote the report, there is an “unprecedented” number of unafforable markets. Ten times as many as the peak of the last real estate cycle.

    Look at the unafforable markets in the U.S. Is there a shortage of houses for sale or too many?

  258. skep-tic says:

    regarding Atlanta, I know it is just an anecdote, but a relative of mine is currently trying to sell a place in Buckhead and the market is not great there

  259. njpatient says:

    “My point is that house prices in the US are extremely affordable…”

    Ridiculous, no matter what you compare it to.

  260. schabadoo says:

    Listed with a new agent, price increased $1,000.

    Thanks Grim.

    They’ve had an open house every weekend for almost nine months on this house with no interest. I think a realtor owns it too.

  261. chicagofinance says:

    The Worst Food in America
    Outback Steakhouse Aussie Cheese Fries with Ranch Dressing
    2,900 calories
    182 g fat
    240 g carbs

    It’s the caloric equivalent of eating 14 Krispy Kreme doughnuts, before your dinner arrives. Even if you split this “starter” with 3 friends, you’ll have downed a meal’s worth of calories.

  262. BC Bob says:

    he [256],

    From your post;

    “During my entire career of more than 55 years in real estate, I have never seen a dislocation of the capital markets of this magnitude,” the president and CEO of Silverstein Properties, Larry Silverstein, said during an appearance on my television show last week.”

    Ouch.

  263. chicagofinance says:

    pretorius Says:
    April 11th, 2008 at 5:08 pm
    My point is that house prices in the US are extremely affordable compared the UK.

    pret: come on man…..our gas is much less expensive too…what point are you trying make?

    You sound like Bob Toll in 2005 lecturing people that we should get used to spending 50% of our income on housing and having children live at home until they are 30.

  264. pretorius says:

    I don’t know the inventory figures for each market, but I doubt the supply problem is too bad in a lot of the unaffordable markets – like San Francisco, Honolulu, and San Jose.

    I’m sure there are plenty of houses available in Salinas though. That is a farming area where a huge part of the population is migrant workers and their descendants. These people can barely spell their own names so they’re not going to be able to comprehend mortgage docs. That is the ideal environment for mortgage fraudsters.

    But inventory – if you can call it that – is a bigger problem in the affordable US markets such as Youngstown and Flint. Nobody bothers to market homes in those cities anymore. They simply abandon them, because residential land in these cities is worth close to zero.

    The long-term demand trends are positive in unaffordable markets, so those homes will be occupied as prices are cut and they become more affordable.

  265. chicagofinance says:

    WSJ
    Born to Renovate Springsteen’s Drummer, Max Weinberg, Has a Real-Estate Obsession
    By BEN CASSELMAN
    April 11, 2008; Page W1

    Bruce Springsteen and the E Street Band had just finished playing a sold-out show at Earls Court in London, and Max Weinberg, the band’s longtime drummer, was thinking about countertops.

    Specifically, Kirkstone countertops. Mr. Weinberg wanted the pale green stone for the kitchen in the house he was building back in New Jersey. He knew the stone came from England, and he noted a kitchen-supply store they passed on the way back from the concert. The next day, the store’s manager told him that it didn’t stock the material but suggested he try the Kirkstone showroom nearby. Mr. Weinberg paid a visit and had the stone shipped across the Atlantic.

    Mr. Weinberg’s Middletown, N.J., house is full of such stories: light fixtures picked up on tour in Milwaukee; heart-of-pine floors snagged at $8 a foot from a supplier in New Hampshire; William Morris-patterned wallpaper from the original producers in London. Some have a connection to where he found them; others are just good buys he finagled on the road. “I’d do great deals because I’d help [the suppliers] get tickets to the shows,” says Mr. Weinberg, who turns 57 on Sunday.

    Some celebrities are well known for their real-estate investing. Serial buyers such as Nicolas Cage, Ellen DeGeneres and Billy Joel have scooped up lavish spreads and then dumped them just as quickly, often at substantial profits. Mr. Weinberg is a different sort of real-estate obsessive, the sort who spends hours leafing through property records at town hall, who throws around names of architects the way most people throw around names of rock stars.

    Max Weinberg built his house in Middletown, N.J., in part by using materials he picked up while on tour.

    “If you ask somebody, ‘Give me the stereotypical description of a rock star,’ they would not say meticulous due diligence, understanding intricacies of zoning,” says Mr. Weinberg’s friend and attorney, Jerry Zaro. “It’s nothing for Max to go down to city hall and spend a day mired in their arcane regulations.”

    But Mr. Weinberg is moving from private real-estate enthusiast to developer, and the transition has stirred up a controversy. He plans to sell 22 acres of his 40-acre estate as a three-lot subdivision. His plan, filed with the township in 2002, drew an immediate outcry. Mr. Weinberg, who has served on the board of the Monmouth Conservation Foundation, came under fire for developing the land rather than preserving it. He was branded, in his own words, “an arrogant rock star.” A Newark Star-Ledger columnist called Mr. Weinberg a “symbol of hypocrisy” and said his professed environmentalism was “a way of feeling good without actually doing good.”

    Trudging across the property one chilly day recently, Mr. Weinberg brushes off the allegations that he’s a hypocrite. The conservation foundation, he says, has never been against development, just against thoughtless development. His project, he says, is “very conservative” — just three lots, with the maximum number of trees preserved.

    Not everyone was convinced. Neighbors criticized the plan for threatening one of the largest undeveloped spaces remaining in the area. Local planning authorities expressed similar concerns — but said they had little choice but to approve it since Mr. Weinberg had done his research, and the subdivision plan was done by the book.

    “I really feel this is not best for the area,” the Middletown Township Planning Board’s chairwoman, Judith Stanley Coleman, said at the time of the vote, according to the Asbury Park Press, a local newspaper. “But we have laws in front of us that we have to take into consideration, and that is what we have to abide by.”

    After the approval, the controversy died away — but it could soon make a comeback. Mr. Weinberg plans to put the 22-acre subdivision on the market this spring, asking $8 million for the three lots. (He says he hopes to sell them together but will entertain offers for them individually as well.) If Mr. Weinberg gets his price, he’ll make a handsome profit — he paid less than $1 million for the full, 40-acre property in 1997. “I wanted my children to be able to take advantage of my planning,” he says.

    But Mr. Weinberg says he also had another, more creative goal: He wanted to make something. When he bought the land it was overgrown almost to the point of being impassable. Mr. Weinberg says the first thing he did when he bought it was clear paths. “I wanted to see what I had,” he says. “I really wanted to do something with it.”

    That same impulse has lain behind Mr. Weinberg’s real-estate dealings for 30 years. He likes to look at land and envision possibilities no one else sees. Says Mr. Zaro: “I can look at a dense thicket of woods and he can envision a beautiful subdivision. He’s living in his canvas.”

    Mr. Weinberg has completed only one canvas: his 8,900-square-foot, seven-bedroom house. (The structure, separate from the land, has an assessed value of $1 million.) The house took two years to build — the family moved in on Christmas Eve 1999. It is full of personal touches: a fireplace made from “peanut stone,” a rough rock found in Monmouth County; a music room adorned with drum memorabilia, including a crash cymbal given to him by Ringo Starr; a movie theater with a “Creature from the Black Lagoon” statue cast from the mold used to make the costume in the movie; and a medieval-style wine room with a suit of armor, picked up for $100 at an antiques store in nearby Red Bank. “I’d never want to sell the place,” Mr. Weinberg says. “What would I do with all this stuff?”

    Mr. Weinberg may be proudest, however, of the house’s guts. The structure has a 15-zone heating system, meaning 15 rooms or areas can have their temperatures controlled individually. The system’s copper pipes line up neatly on one wall in the mechanical room. “Have you ever seen a cleaner mechanical room?” Mr. Weinberg asks, smiling.

    Mr. Weinberg made his first foray into real estate in 1977, when he bought the home he had been renting, a three-bedroom house overlooking the water in Atlantic Highlands, N.J. Mr. Weinberg paid just $48,000 for the property, but it felt like a big step; he was a 26-year-old rock musician, but suddenly he had a mortgage. He also was hooked.

    “I got my feet wet in real estate through that deal,” he says. “I loved that house. I loved the fact that I owned it.”

    It didn’t take Mr. Weinberg long to want more. He began planning out his dream house, a glass-and-steel home modeled after the work of Richard Meier, one of his architectural heroes. His cliff-top property was the perfect site, but he also needed the land below the cliff — the house would have its entrance atop the cliff and the rest of the house would extend down below. So Mr. Weinberg made his first trip to town hall and learned that the 1½ acres of land was owned by a woman in her 90s who lived in New York. Mr. Weinberg wrote her a letter and worked out a deal to buy the land for $8,500, he says.

    Mr. Weinberg never built his Richard Meier-esque house because he and his wife, Becky, decided they’d like to live on a larger property. In 1984, the couple paid $300,000 for a five-acre farm that was part of a development, also in Monmouth County, and learned a lesson that Mr. Weinberg hasn’t forgotten.

    The Weinbergs bought the property, part of a subdivision, from the developer, who initially planned to keep the farm for himself. The developer seemed impressive — he wore fancy suits and drove a Cadillac — but he was deeply in debt and needed to make a deal, Mr. Weinberg says. But Mr. Weinberg didn’t know any of that — and he didn’t dig into the deed records that might have revealed it. (Mortgages usually are attached to deeds.)

    After the deal was done, the seller pulled Mr. Weinberg aside. “You paid me too much for the house,” he told him. “I was up to here in debt. I needed the money.”

    “Why didn’t you tell me this 10 minutes ago?” Mr. Weinberg recalls asking.

    “That’s business,” the man replied.

    In the end, Mr. Weinberg made money on the deal — he sold the house for $590,000 in 1997, records show. But he knows he could have had the house for less, and he says he resolved never again to be out-researched on a real-estate purchase. He credits that lesson with helping him in later deals, from his current land, which he bought in a complex transaction involving a land swap with the seller, to a house he’s considering buying in Tuscany, Italy, for which he has studied up on wild boar, a local nuisance. (They can burrow, he has learned, but they can’t jump.)

    “My whole thing has been research,” he says. “All the answers can be found in city hall.”

    Mr. Weinberg has no plans to sell the New Jersey house, but he will be leaving it in 2009. “Late Night with Conan O’Brien,” the NBC show whose band he leads, will be moving to Los Angeles, and Mr. Weinberg will move with it. Mr. Weinberg has already been on house-hunting missions in Los Angeles — his broker there, Blair Chang, says they’ve looked at at least 100 homes so far.

    Mr. Weinberg’s real dream, he says, is to construct a house based on an unbuilt Frank Lloyd Wright design. He has scouted for land in Los Angeles to do so, and though he says he is unlikely to find a site in time to build a house before his move, he holds out hope for the long term. It’s a dream that Mr. Weinberg has had since he was a child, when he fell in love with Wright’s work while touring the Wright-designed Guggenheim Museum in New York, and one that he has nurtured through years with Mr. Springsteen’s band.

    “When I was out on tour, I had a lot of time on my hands,” Mr. Weinberg says. “And all I did was read books about architecture and how to build houses.”

  266. skep-tic says:

    “The long-term demand trends are positive in unaffordable markets, so those homes will be occupied as prices are cut and they become more affordable.”

    Agreed

  267. pretorius says:

    Chifi,

    My point is that there are plenty of affordable places to live in the US today. The same can’t be said for the UK.

  268. njpatient says:

    “The long-term demand trends are positive in unaffordable markets, so those homes will be occupied as prices are cut and they become more affordable.”

    So long as we’re in agreement that they’re “unaffordable” then we know that “prices [will be] cut” short term. (I admit that I’m uninterested in the “long term”).

  269. BC Bob says:

    “My point is that house prices in the US are extremely affordable compared the UK.’

    The chaps, across the pond, also have 2X worldwide buying power as compared to you. What’s your point?

  270. Rich In NNJ says:

    My point is that there are plenty of affordable places to live in the US today. The same can’t be said for the UK.

    So we should all move to the affordable areas…?

  271. pretorius says:

    Skep-tic,

    It is already happening. In Las Vegas, prices came down a lot. Now, inventory of unsold homes is dropping and sales volume is rising. The months of inventory stat still looks horrible, but it is getting better, not worse.

  272. skep-tic says:

    pret– I actually think we are pretty much in agreement. I do think RE is correcting quite rapidly and that most of the damage will be done by 1 year from now. Long term, I also agree about the global cities separating even more from the rest

  273. pretorius says:

    Skep-tic,

    I agree with the last sentence. But I don’t expect a 1 year price correction in New Jersey.

    Instead, I expect a multi-year period during which prices don’t move up or down very much. There will be plenty of so-called noise in the stats though, will plenty of ugly comps in the North Jersey suburbs and positive comps in other places.

  274. skep-tic says:

    regarding inventory, the WSJ has a useful interactive chart where you can compare cities (look about midway down the page on the left):

    http://online.wsj.com/real-estate?mod=2_2000

  275. stu says:

    I don’t see it Pret:

    “In Las Vegas, prices came down a lot. Now, inventory of unsold homes is dropping and sales volume is rising.”

    http://media.lvrj.com/images/2598331.jpg

    I don’t know Pret, looks pretty seasonal to me. And over half of the sales in Vegas in March were foreclosures/short sale variety.

  276. Hehehe says:

    BC,

    Yeah Pret may want to give that one a read, plenty of quotes in there for him to refute.

  277. shuky says:

    any records from
    MLS ID# 2470194 ?

  278. pretorius says:

    Stu, I’ll post a better Las Vegas chart when I have a chance this weekend.

  279. BC Bob says:

    “Instead, I expect a multi-year period during which prices don’t move up or down very much.”

    pret,

    We have seen prices increase approx 100% from 2001-2006 during a period of unprecedented credit/debt expansion. We are just in the beginning stages of worldwide deleveraging. You stated that you anticipate stagnant job growth in NJ. If you are correct as we enter this period of credit tightening/deleveraging, what fundamentals exist to support this extremely overpriced asset? What would support a consolidating market? One that is garnering no demand whatsover, on a relative basis.

    By the way, check your blackbox. The plethora of debt, weak foundation can not survive with just stagnant prices. The only manner this market can withstand a bombing is with continued appreciation. That’s how the blackbox was written. Unfortunately, for the bulls, that blackbox is now buried with Bear.

  280. Clotpoll says:

    BC (220)-

    “That said, watch the futures Sunday night. The PPT may be active.”

    Methinks the PPT is almost out of ammo. Pull a random 10-15 stocks out of the S&P 500, and give them a cursory vetting. “Overbought” is the word that comes to mind.

    Plus, lots of financial sector companies report next week. That should be some kind of ugly.

    All disclaimers. I have Britney Spears in a dead pool that also features Mike Wallace and Andy Rooney. From what I’ve heard, Brit’s feeling better.

  281. scribe says:

    BC,

    Thanks.

    But isn’t it true that right before income tax day the market is weak? ditto, retail sales.

  282. Clotpoll says:

    patient (221)-

    “Which is why you flew all the way to the UK to look at properties?”

    Pret may be a real-life George Costanza. I wish I could find some outfit to shoot me all over the world and let me come back and provide the kind of analysis you’d expect from a teenager.

    My take has changed. I think Pret is a rock star.

  283. lisoosh says:

    Essex Says:
    April 11th, 2008 at 4:17 pm

    “188…..well……think about this….prices are down to levels where people here say OK, I can get that $750k place for $35ok (which btw is everyone on here’s wet dream)…”

    Then it won’t be a $750k place. It will be a $350k place.

  284. lisoosh says:

    BC Bob Says:
    April 11th, 2008 at 4:15 pm

    ” Unfortunately, the masses don’t have a line of credit to draw upon against their soybeans, corn, crude and gold.”

    Don’t go giving the banks any ideas.

  285. Clotpoll says:

    BC (239)-

    Today, all the selling was on weak volume. Sell, sell, sell…and nary a buyer in sight.

    Fasten those seat belts next week.

  286. Clotpoll says:

    skep (242)-

    To our Pret, it’s only important to note precisely that Wil E Coyote is on the canyon floor.

    It makes no difference what kind of condition Wil E’s in- whether he’s become a slick of goo (due to high speed impact) or just standing there, intact, having meandered down a path along the cliff. HOW he got there is of no import…just that, well, he’s there.

  287. Clotpoll says:

    pret (258)-

    Atlanta is a cesspool of foreclosure and mortgage fraud. Try again.

  288. Clotpoll says:

    patient (273)-

    …because in the end, we’re all dead.

  289. Tom says:

    GWB’s new economic policy is named ‘No billionaires left behind’ !!!

  290. gary says:

    There’s an open house in Cedar Grove this Sunday for a 3/2 ranch with an asking price of…. get this….. $719,900. Let me sound it out for you: SEVEN HUNDRED NINETEEN THOUSAND NINE HUNDRED F*CKING DOLLARS for a sh*t ranch with 3 friggin’ bedrooms.

    I mean, what does this conversation sound like between the seller and realtor; between the seller and family and friends? Is there anyone close to the seller who’s saying, “listen Ted, quite honestly, don’t you think you’re a smidge high on your asking price?”

    Does Ted think this is a fair price for his double wide? What, they’ll settle for 700K and everybody will be happy? Or maybe, they’ll “sacrifice” the dump and let that young family “steal” it for 690K?

    See, this causes problems. Because it drives people like myself, the stubborn SOB that I am and the people on this blog, to dig in even further. I’ve already gone to the mattresses, it’s too late now.

    If the house was listed at a price based on intelligent, long term market fundamentals and listed at a price based on forces known to man on planet earth, perhaps these, (ahem…) sellers would actually have a bid!

    But they won’t, and no one reading this blog will make a bid and no one visting the open house will bid and no one reading the online listing will make a bid. So the house will sit… and sit… and sit…, and I will continue to enjoy the absurdity from the matresses and this will be yet another seller and realtor, who will drift into the next stage of denial.

    Tick….. tick….. tick…. tick….

  291. stu says:

    Gary,

    Let me know when you plan to attend another open house. I plan to be there to watch the verbal implosion.

  292. 3b says:

    #285 BC Bob: Becaue pret has this bizzare obsession with NYC and its environs.

    And this naieve belief that the area is so chock filled with wealthy and smart people, that these prices are warranted and sustainable.

    Even the demise of Bear and most of those 14k employees jobs has not caused him to perhaps revaluate his fairy tale.

  293. gary says:

    stu,

    I can’t even bring myself to attend these spectacles anymore. I mean, it’s obvious that these sellers and the realtors staging these “events” are looking to hook someone. I might as well just go to East 4th Street and Avenue D in the Lower East Side at about 3:00 AM. It’s basically the same thing isn’t it?

  294. Orion says:

    Shoes are dropping?

    I’ve heard so many economists/commentators talking about “the next shoe to drop”.

    Aren’t we at the point where boots are dropping?

  295. Mikeinwaiting says:

    Gary This one will make you feel better,of course you will never get to the city.

    http://new.gsmls.com/public/detailLst.do?mlsNum=2481371

  296. jamil says:

    “Why do you think the Centcom commander who publicly opposed Bush on Iran “resigned” last month?”

    I hope they find cure for Bush Derangement Syndrome. Maybe stem cells are the answer.

    Military cannot have officers who publicly undermine and speak against the Commander of Chief. It is the President who decides the policy, not military. (I’m sure Obama Admin would not tolerate disobedient generals either).

    As for Iran and Bush doesn’t care. Bush cares, perhaps too much. Iran is a dangerous country determined getting WMDs and destroying Israel and getting dominance in the middle east. If we don’t do anything, bad things will happen. There are no good options available anymore. Obama’s and Carter’s “let’s talk to Hamas and Iran” is naive and only helps the terrorists. I’m afraid that in the end Bush gives up and let’s his successor or Israel to deal with Iran. It will be a major war and US will be part of it (whether we want or not). Of course, in the land of Kos, Iran and Hamas are the good guys and US is evil.

  297. bairen says:

    #297 3B,

    What does Pret think is going to happen when the pharmaceuticals cut back in NJ and NYC and Wall St wacks 20% of its workers. Who is going to be around to buy overpriced houses?

    San Fran is down double digits YOY with a weakening dollar, I expect the same to happen to NYC any month, if the dollar manages to strenghten, look out below. Just wait till the dollar starts recovering (could be a lonnnnng wait), NYC won’t seem like a deal to foreigners anymore.

  298. Mikeinwaiting says:

    Sorry wasn’t quick enough.What’s with these GSMLS listing they don’t link.

  299. Sean says:

    Latest spam from Chase.

    At least they aren’t pitching to take a vacation on the house!

    Chase Home Equity Line of Credit with No Closing Costs and a variable APR as low as 4.99% for lines of $50,000 to $149,999 and 4.49% for $150,000 to $500,000.

    Pay Less:
    • Variable rates from .76% BELOW Prime
    • No application fees, no closing costs, no appraisal fees
    • Fixed-rate options available
    • Interest-only payments available for qualified lines

    Get More:
    • Lines available to $500,000
    • Interest may be fully tax deductible

    Do More:
    • Consolidate debt and pay off bills
    • Make home improvements
    • Make major purchases—autos, appliances, furniture—whatever you need!

  300. Frank says:

    In case someone has not noticed yet, Hoboken market is on a verge of collapse, inventory hit all time high of 609.
    Happy foreclosure.

    http://www.realtor.com/options/interimsearch.aspx?zp=07030&typ=7

  301. Orion says:

    Grim,

    This one’s for you (in honor of Friday):

    http://www.thesmokinggun.com/graphics/art3/0315062billion1.jpg

  302. Frank says:

    NJ RE agents were very busy this week, adding another 1500 units to already very high inventory. How about selling some of those empty houses?

  303. lostinny says:

    296, 298
    Stu, Gary
    I’m coming too. I need to see this. Maybe I’ll bring the t-shirts.

  304. bairen says:

    I should hit some open houses next month and use some zen like lines on the realtors.

    I had a few realtors say “This house is at a good price.”

    I smiled and said “I’m sure it is, but for who?”

    I get puzzled, sometimes dirty looks.

    I’ve announced a few times “Boy do i feel sorry for this bagholder” and “Is this priced in dollars or pesos?”

    Maybe we could do a GTG and hit some open houses wearing some of rentingnj t-shirts?

  305. njpatient says:

    301 jamal

    I assume “Bush Derangement Syndrome” is your freeper pejorative for the 75% of Americans who think he ain’t so great?

  306. HEHEHE says:

    “Frank Says:
    April 11th, 2008 at 9:01 pm
    In case someone has not noticed yet, Hoboken market is on a verge of collapse, inventory hit all time high of 609.
    Happy foreclosure.

    http://www.realtor.com/options/interimsearch.aspx?zp=07030&typ=7

    Thanks for the special bonus pic of JoeProp!!

    Amazing thing is the jackasses in Hoboken are still building.

  307. Frank says:

    How can people still be asking $500K+ for a little box in Hoboken? The reality will hit the street soon.

  308. Sean says:

    Frank,

    There are ads around Hoboken posted on telephone poles as FSBO.

    This is a nice place advertised in an old brownstone, 2BR with backyard on 11th and Hudson across from Maxwell place and get this $499 with a backyard.

  309. still_looking says:

    Late again to the party.

    #158 — YES!

    #159 — I admire you most because you are unfailingly, excruciatingly and (thankfully) honest!

    #162 — Optimist.

    #165/167 — wrong and wrong again. (sorry)

    gary = the new Booyah Bob :-)

    went house looking last Sunday. What a waste of gas/time/energy. We’ve decided to hibernate til Fall.

    sl

  310. njpatient says:

    Pretorius – what kind of bonuses do you think we’ll see this year?

  311. chicagofinance says:

    patient: immense….it says here….I will say that it hasn’t really hit NYC RE though….YET

    WSJ
    Wall Street’s Insecurity Cuts in Jobs, Bonuses Add to Ripple Effect; More Home-Cooking
    By IANTHE JEANNE DUGAN
    April 12, 2008

    Derek Thornhill never imagined he would be canceling vacations and cooking dinner at home to save money. In 10 years working at Bank of America Corp., he rose to become one of the company’s top equity salesmen.

    But in January, Mr. Thornhill was laid off — the day before he was expecting the annual bonus that typically accounts for 75% of his pay. Instead, he was paid 20 weeks of severance and a bonus that was only 5% of the previous year’s. People in his position typically earn roughly $500,000 to more than $750,000, including their bonus.

    “I not only lost my job, but I barely got paid for all the work I did last year,” bristles Mr. Thornhill, 34 years old, who has had no luck finding a similar job. Dozens of other laid-off workers said they are having the same problem, forcing some to consider lower-paying jobs or new professions.

    It is crunch time on Wall Street as the mortgage turmoil and a dearth of deals and credit lead to mounting job losses. Since last summer, securities firms have announced more than 20,000 job cuts, stretching from New York to London to Hong Kong.

    While U.S. securities-industry employment is still bigger than a year ago, in New York about 6,000 Wall Street jobs, or 3% of the total, have been lost since July, after adjusting for seasonal variations, according to Mark Zandi, chief economist and co-founder of research firm Moody’s Economy.com.

    “The job prospects for Wall Street through this time next year are about as bad as for any industry in the country,” Mr. Zandi says. “And people who hang on to jobs will suffer through less compensation. The Wall Street job engine won’t be going again until sometime in the next decade.”

    Throughout the U.S., the sputtering economy has claimed more than 85,000 jobs since December. Particularly hard hit are mortgage lenders, construction and manufacturing firms. As more securities jobs disappear, the ripple effect could hurt many other industries.

    Among the announced job cuts: Citigroup Inc. will get rid of more than 6,000 jobs, or 10%, in its capital-markets and mergers-and-acquisitions work force. Lehman Brothers Holdings Inc. is laying off 1,425 people, or 5% of its employees. Goldman Sachs Group Inc. went deeper than its annual routine of cutting the weakest 5% of employees.

    J.P. Morgan Chase & Co.’s emergency takeover of Bear Stearns Cos. is expected to cost at least half of Bear’s 14,000 employees their jobs, though no exact figure has been disclosed by the companies yet.

    “I have been stressed that it will happen to me,” says Carol Guenther, 38, an executive administrative assistant at Bear Stearns. She doesn’t know if her job is in jeopardy, but has been bracing for the worst since colleagues were laid off in July.

    Employees who keep their jobs will likely get much smaller bonuses, which typically can range from hundreds of dollars for assistants to millions for top bankers. Last year, bonuses declined only 5% to an average $180,420 per worker, according to New York’s comptroller.

    Wall Street turns in cycles of booms and busts. Thousands of securities employees were fired after the 1987 stock-market crash. There were mass layoffs after the dot-com bubble burst and the Sept. 11, 2001, terrorist attacks. Since 2003, though, Wall Street added 100,000 jobs as securities-industry profits surged.

    In New York, city officials expect to lose $2.6 billion this year in business and real-estate tax collections and $690 million in personal-income-tax collections, partly because of Wall Street’s turmoil. The industry represents 5% of jobs in the city, but 23% of income. “We are starting to see big cutbacks in luxury purchases: chartered yachts, expensive cars and the like,” says Milton F. Pedraza, chief executive of the Luxury Group, which conducts research in the high-end market.

    Some downsized employees are fighting back. John Harris, an attorney at Litowitz, Berger & Grossmann LLP, is representing more than a dozen former Bank of America employees claiming they were offered bonuses of only 5% to 10% of their pay. Mr. Harris has filed several arbitration cases against Bank of America. “These are people who worked more than 70 hours a week,” Mr. Harris says. “They never would have worked so hard, had they known” they weren’t going to be paid their full bonus.

    Bank of America has announced job cuts of about 3,650 employees since October. The bank won’t comment on individuals. But Jennifer DiClerico, a Bank of America spokeswoman, says bonuses are based on the company’s and the individual’s performance. Last year, Bank of America’s corporate and investment banking unit posted a profit of $538 million compared with $6.03 billion in 2006.

    Milind Parate, a 35-year-old analyst, was laid off from Bank of America, and his brother now is paying the mortgage on the Manhattan apartment Mr. Parate bought a few years ago. “I couldn’t imagine this a few years ago,” says Mr. Parate, who was promoted to vice president a couple weeks before losing his job. He wouldn’t comment on Bank of America.

    Despite great references and contacts, Mr. Thornhill has found jobs only at smaller firms. “It has been absolutely excruciating,” he says.

  312. gary says:

    My latest open house tee shirt idea:

    “Lowballers Have More Fun!”

    See ya’s all tomorrow. ;)

  313. chicagofinance says:

    These NYC jobs are not based in NYC, so don’t worry….

    WSJ
    Merger Power’s in London,
    Deutsche Promotions Show
    By DANA CIMILLUCA
    April 12, 2008

    The center of gravity in the mergers and acquisitions world just shifted a bit closer to London.

    Deutsche Bank AG, the German banking giant, announced Friday that Henrik Aslaksen and Brett Olsher will become the co-heads of its mergers-and-acquisitions advisory business world-wide. Messrs. Aslaksen and Olsher, who are both based in London, succeed Tony Burgess, who is also based there, and Jim Stynes, who is in New York.
    [edit]

  314. Steve says:

    Just back from a week or so in London on business… hadn’t spent a lot of time there before, but do have friends who absolutely love the place and have been there for many years.

    Always in the back of my mind thought I could end up our there for at awhile, but honestly I was beyond thankful to be back to NYC. It was so obscenely expensive (even compared to NY) I was simply shocked.

    All my expat friends getting paid in dollars there, are nuts IMO. They simply can’t save, even at “good” salaries… and housing? Yikes. People there I guess just accept being in servitude. Pretty scary, honestly.

    I have to say I thought the whole place was incredibly overhyped- way too much money (Middle East et al) chasing way too little supply. They all complained bitterly about the tube breaking down on a regular basis, the weather sucked, food is only so-so unless you love Indian. And that traffic congestion plan sure didn’t seem to do much as I was stuck in insane gridlock multiple times.

    A friend was moving out of his place, a decent 2 bedroom in a nice neighborhood, since the landlord announced he was jacking the rent up to well over $7k/month. No joke.

    A good 30%+ off NJ prices to buy here in a couple years, well, that won’t be so bad after all….

    Steve

  315. Steve says:

    Just an ancedote, seeing a lot of recently finished new construction that simply ain’t moving at all in JC – and realtors are posting 8-10 condo units at a time per building for “rentals” with broker fee paid as an “incentive.”

    That’ll do wonders for the owner-occupied values.. and many more highrises to come, including a big Hovnanian tower. Wonder if they’ll still be solvent by the time it’s done–?

    Also, our building (good neighborhood) recently told us they have a ton of vacancies as people who lost their jobs are just walking out on their leases.

  316. njpatient says:

    317 chi

    “YET”

    NYC is why many will be shocked by how bad 2009 is.

  317. njpatient says:

    “While U.S. securities-industry employment is still bigger than a year ago, in New York about 6,000 Wall Street jobs, or 3% of the total, have been lost since July”

    As we’ve discussed in many contexts, only the first half of 2007 was a financial success. Pretorius, you frequently point to employment numbers for calendar end 2007 over 2006, but as with the 2007 bonus numbers, the actual trend is disguised.
    The second half of 2007 was a disaster for the Street. 2008 will be far worse.
    By the way, one of the banks whose announced 2007 bonus was among those you often cited didn’t actually pay it out.

  318. njpatient says:

    I hope that attorney at Litowitz didn’t take that case on contingency. He won’t get paid.

  319. Jaywalk says:

    Question:

    If someone who lives in NJ and works in NY is laid off, which state counts him in its unemployment statistics?

    Thanks in advance.

    Jaywalk

  320. njpatient says:

    325 jay
    The state of residence. (Note that, in your example, the guy lives in NJ and works nowhere after the layoff – at that point, he has no connection other than to NJ).

  321. Jaywalk says:

    326 njp

    Makes sense. Thanks!

  322. njrebear says:

    njpatient,
    you mean ‘bone us’?

  323. bairen says:

    #317 “Milind Parate, a 35-year-old analyst, was laid off from Bank of America, and his brother now is paying the mortgage on the Manhattan apartment Mr. Parate bought a few years ago. “I couldn’t imagine this a few years ago,” says Mr. Parate,”

    Ironic how people who deal with money don’t have any of their own.

  324. Pat says:

    The quote I pulled was working 70 hours only to ensure a big bonus. WTF?

    How funny, from the point of view of someone who worked Big 6 in the late 80’s to mid- 90’s. Now that was grind. No bubble.

    How about working 70 hours to be sure you kept your job?

    Didn’t anyone tell them that it’s not the number of hours worked, but the results?

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