From Bloomberg:
U.S. Foreclosures Jump 57% as Homeowners Walk Away
U.S. foreclosure filings jumped 57 percent and bank repossessions more than doubled in March from a year earlier as adjustable mortgages increased and more owners gave up their homes to lenders.
More than 234,000 properties were in some stage of foreclosure, or one in every 538 U.S. households, Irvine, California-based RealtyTrac Inc., a seller of default data, said today in a statement. Nevada, California and Florida had the highest foreclosure rates. Filings rose 5 percent from February.
About $460 billion of adjustable-rate loans are scheduled to reset this year, according to New York-based analysts at Citigroup Inc. Auction notices rose 32 percent from a year ago, a sign that more defaulting homeowners are “simply walking away and deeding their properties back to the foreclosing lender” rather than letting the home be auctioned, RealtyTrac Chief Executive Officer James Saccacio said in the statement.
“We’re not near the bottom of this at all,” said Kenneth Rosen, chairman of Rosen Real Estate Securities LLC, a hedge fund in Berkeley, California and chairman of the Fisher Center for Real Estate at the University of California at Berkeley. “The foreclosure process will accelerate throughout the year.”
…
About 2.5 million foreclosed properties will be on the market this year and in 2009, Lehman Brothers Holdings Inc. analysts led by Michelle Meyer said in an April 10 report. U.S. home price declines will probably double to a national average of 20 percent by next year, with lower values most likely in metropolitan areas in California, Florida, Arizona and Nevada, mortgage insurer PMI Group Inc. said last week in a report.Borrowers who owe more on their mortgages than their homes are worth may be buffeted by increasing job losses in a “very substantial recession,” Rosen said. About 8.8 million borrowers had home mortgages that exceeded the value of their property, Moody’s Economy.com said last week.
“At least 2 million jobs will be lost because of this recession, so we’ll get a cumulative negative spiral,” Rosen said. “A normal recession is 10 months. We think this one may be twice as long.”
Bank seizures climbed 129 percent from a year earlier, according to RealtyTrac, which has a database of more than 1 million properties and monitors foreclosure filings including defaults notices, auction sale notices and bank repossessions. March was the 27th consecutive month of year-on-year monthly foreclosure increases. In February, foreclosure filings rose 60 percent.
From Reuters:
Foreclosures jump 57 percent in last 12 months
Home foreclosure filings surged 57 percent in the 12 month-period ended in March and bank repossessions soared 129 percent from a year ago, as homeowners struggled to make mortgage payments, real estate data firm RealtyTrac said on Tuesday.
For the month of March, foreclosure filings, default notices, auction sale notices and bank repossessions rose 5 percent, led by Nevada, California and Florida, RealtyTrac said.
The rise in March to filings on a total of 234,685 properties followed a 4 percent decline in February, RealtyTrac reported.
RealtyTrac said the peak has yet to be reached.
“What we’re really looking at is ongoing fallout from people overextending themselves to buy homes they couldn’t afford and using highly toxic loan products to get into the houses in the first place,” Rick Sharga, vice president of marketing at RealtyTrac, based in Irvine, California, said in an interview.
“We’re going to see quite possibly a record amount of foreclosure activity in the third or fourth quarter,” reflecting sharp payment increases on adjustable-rate subprime mortgages in May and June, Sharga said.
From RealtyTrac:
Foreclosure Activity Increases 5 Percent in March According to RealtyTrac(R) U.S. Foreclosure Market Report
RealtyTrac(R) (http://www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its March 2008 U.S. Foreclosure Market Report(TM), which shows foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 234,685 properties nationwide during the month, a 5 percent increase from the previous month and a 57 percent increase from March 2007. The report also shows one in every 538 U.S. households received a foreclosure filing during the month.
…
“The March numbers show that overall foreclosure activity so far this year continues to run nearly 60 percent above the levels we saw last year,” said James J. Saccacio, chief executive officer of RealtyTrac. “On a year-over-year basis, default notices were up nearly 57 percent and bank repossessions were up nearly 129 percent, but auction notices were up only 32 percent, indicating that more defaulting homeowners are simply walking away and deeding their properties back to the foreclosing lender. This deed-in-lieu-of-foreclosure process allows the lender to take possession of a property without putting it up for public foreclosure auction.”
Inflation number due out today,afterwards I plan on watching another fairy tale from Disney. My metric is take their number add
7.% & that is being conservative.
Gartman on Squawk, holding forth on metals. Great stuff.
Clot 4 ditto
From Bloomberg:
Swaps Tied to Losses Transformed Into `Frankenstein’s Monster’
The credit-default swap market has become a lesson in being careful what you wish for now that Wall Street has taken $245 billion of losses partly tied to such exotica.
Rather than dispersing risk and lowering borrowing costs as former Federal Reserve Chairman Alan Greenspan predicted, the contracts have exacerbated the debt crisis. What was intended as a way for lenders to protect against defaults spawned a market covering $45 trillion of bonds and loans where no one knows how much is traded and speculators who bet on deteriorating credit quality end up forcing that reality.
Grim –
Thanks for the info on that money merge account program, after considering what the mortgage professors website had to says about it, it really does sound scammy and anyone can do pay down quicker with a little discipline.
From the Allentown Morning Call:
Credit crunch pinches projects
Not long ago, Bethlehem was anticipating the $300 million transformation of Martin Tower, Easton was expecting conversion of Pomeroy’s to rejuvenate its downtown, and Allentown’s downtown revival seemed likely in the $25 million redevelopment of the mothballed Americus Center hotel.
But the past year has proved how fragile redevelopment can be when its hopes are rooted in speculation and its promise in the generosity of detached investors. When the Americus deal fell through two weeks ago, it cast light on similar projects that the current credit crunch has left in limbo.
Ambitious and expensive plans to transform the iconic Martin Tower and the historic Americus into luxury condominiums are now among a growing list of projects that banks may be wary about backing.
”Before all this, you had money chasing deals, but now all that money has dried up,” said Embassy Bank CEO David Lobach. ”There is no money for speculation development right now.”
Retail blues.
From New York Times:
http://www.nytimes.com/2008/04/15/business/15retail.html?_r=1&th&emc=th&oref=slogin
(7) Drew – I read the posts from yesterday.
If at all possible… Simply budget extra each month.
First I changed to a 15-year @ 4.75% then I began paying more monthly. Forget what they SAY your monthly payment is…add a few hundred each month. Put it in your budget that way and stick to it.
Some mortgage statements require that you indicate it is “extra on principal” or they will add it to your impound account.
You asked “Why would you NOT want to pay off your mortgage?” Some like to claim the interest to reduce their taxes but if you are nearing retirement as I am – you just want to pay that mortgage off.
Lowball offers on the rise.
From New York Times 3/16/08:
http://www.nytimes.com/2008/03/16/realestate/16cov.html?fta=y
“Why would you NOT want to pay off your mortgage?”
I know a number of recent purchasers that have just about wiped out their savings by buying.
Obviously, a risky position to be in, an extended job loss or medical emergency might push them right into foreclosure.
In the past, it was easy to sign up for a HELOC, and use that HELOC as your ‘cushion’, but with so many lenders cutting off HELOCs lately, you just can’t bank on that.
For those folks, building their reserves back up is more important in the short term than paying off their loan early. Sure, paying off their mortgage early is in their best interest, just not right now.
Those who have locked in very low rates over the past few years might be seeing higher rates of returns from their portfolio. Thus, cashing out investments to pay down the mortgage isn’t the best use of capital. Of course, risk plays a major role here.
Lowball offers on the rise.
I’m on page two. I had dreams of being page one, above the fold, but I guess I just don’t rate.
“Rather than dispersing risk and lowering borrowing costs as former Federal Reserve Chairman Alan Greenspan predicted, the contracts have exacerbated the debt crisis.”
[6],
If AG was paying attention to this blog, he would have been made aware that risk is sold out the front door then enters again thru the back door. AG forgot to address the other side of the equation.
I was watching Headline News this morning and their usual finacial talking head came on spewing about foreclosures. They cut to the stock footage and it is Ridgewood cop posting a default notice on the door. If any one is still home they probably will replay it every half an hour. I caught the addresss as 106 and Ridgewood NJ. I can not remember the street name. I guess it is different here.
“U.S. Foreclosures Jump 57% as Homeowners Walk Away”
Forget about stigma. The fed’s actions have now made this acceptable. If the fed can lend hundreds of billions to WS and accept garbage as collateral, why can’t the homeowner get a reprieve?
Recent homeowners are now walking. In the near future it will be in vogue, to dump and jump. However, at that time, homeowners will be running away.
(12) Grim
Sure, my CPA thinks I’m crazy to be paying off my home when I could be putting that money to better use elsewhere. I don’t care. My retirement check will be so meager that if I have to pay a mortgage payment with it, I’ll be seriously strapped. Everyone’s situation is unique. For me personally, the security of knowing I’ll own my home when I retire is what matters.
Kettle,
Our crude oil/dollar discussion;
“Prices are high…because of the devaluation of the dollar. There is a direct relationship,” Khelil said, estimating that for every 1% decline in the value of the dollar in the past two years, there has been a $4 increase in the average oil price.
“We would be lying to ourselves if we say to the world, ‘well, if we increase oil production, the price will go down,'” Khelil said, pointing to how OPEC’s decision to raise output by 500,000 barrels a day last September did little to stem crude’s climb.
“All you have to do is look at the dollar index over the past two years and see the fluctuations in the oil price to see the direct relationship – that’s the biggest impact,” he said.
http://www.tradingmarkets.com/.site/news/Stock%20News/1354617/
From Bloomberg:
Wachovia Has Earnings Estimates Cut By Oppenheimer’s Whitney
Wachovia Corp. had its earnings estimates cut by Oppenheimer & Co. analyst Meredith Whitney after the fourth-largest U.S. bank posted an unexpected first- quarter loss and sold shares to replenish capital.
Whitney cut her fiscal 2008 earnings estimate to $1.70 a share from $2.70, citing the share sale, which diluted existing stock by about 15 percent, and credit losses linked to the U.S. subprime slump.
“Defer interest payment”
I like that.
“Homeowners defer mortgage payments”
Doesn’t sound so bad when you put it that way.
Linens ‘n Things to defer interest payment
Linens Holding Co., known as Linens ‘n Things, said Tuesday that it will defer a quarterly interest payment of about $16.1 million to the holders of its senior secured floating rate notes due 2014. The home-furnishings retailer also said it is talking to a noteholder committee about restructuring its capital structure. “Despite the strides that LNT has made to improve the operational side of its business over the past two years, these measures have not produced acceptable financial results,” said Robert DiNicola, chairman and chief executive officer. “The increasing deterioration of the credit markets and the residential real estate meltdown, both stemming from the turmoil in the subprime mortgage market, and the resulting downturn in consumer spending, especially in the home sector, have combined to create additional and acute financial challenges for the company and the retail sector as a whole.” A recent Wall Street Journal report said that Linens ‘n Things may file for Chapter 11 bankruptcy protection.
OT: (but with desperation)
I desperately need the services of a reputable computer person.
(Dont ask why) I need to restore my Outlook 2003 from a backup file that is stored on a portable media drive.
Unfortunately I(ran a recovery program)that reset my computer to its original settings(at purchase)
Fortunately I backed up the computer just a few hours earlier on a removable media drive.
Unfortunately my (newly reset)computer isn’t letting me restore Outlook files from the back up and I don’t have a clue how to fix it.
Help??
sl
Headline PPI through the roof
Here is something else to make purchasing homes in Ocean County all the more attractive.
http://www.app.com/apps/pbcs.dll/article?AID=/20080415/NEWS/804150424&referrer=FRONTPAGECAROUSEL
# 21 You should be able to copy your pst file into the one where the reset pst file is stored.
From MarketWatch:
U.S. March PPI up 1.1% vs. rise 0.4% expected
U.S. March core PPI up 0.2% vs. 0.2% gain expected
U.S. March PPI up 6.9% year-over-year
U.S. March core PPI up 2.7% year-over-year
U.S. March crude goods PPI up 8.0%
sl,
Did you back up outlook as a PST file? Can you navigate to that drive and see if you can find a PST file?
From MarketWatch:
New York factory sentiment surges in April
Encouraged by stronger orders and shipments, manufacturers in New York state were once again positive about the economy in April, the New York Federal Reserve Bank reported Tuesday. The Empire State index jumped by nearly 23 points in April to 0.6 from negative 22.2 in March. Readings over zero indicate more firms are optimistic than are pessimistic. The shipments index also rose by 23 points, rising to 17.5 from negative 5.2. The new-orders index climbed into positive territory at 0.1 from negative 4.7 in March.
Cindy, but is your CPA biased? My CPA neighbor recommends the same thing to clients however he got licensed years ago from some rinky dink insurance broker dealer to sell mutual funds and he will then invest that money for you and earn a commission.
The other issue is if you don’t prepay you have to invest those funds in tax friendly investments that can earn a profit. Remember pre-paying may be a lower rate of return but it is risk free return. Also I know tons of people who have money in ING at 3% taxable who don’t want to prepay a 6% mortgage. If you are in 30% tax brack you are really only earning 2.1% at ING and that 6% mortgage is really 4.8% after backing out the tax break so you are bypassing 4.8 ror for 2.1, also that little bit of ING interest you earn at ING if you are hovering in the low 200’s in salary may push you into AMT which will be a bad thing. Finally someone in the Max tax bracket gets the most bang for the buck with a mortgage, but Joe Blow 90K a year with three kids and a dog is actually getting a lot less of a tax break with the same size mortgage. Pre-paying is about crunching the numbers and anyone who says you should not pre-pay does not know what they are talking about. Heck I read somewhere that a decent amount of homeowners take the standard deduction so they don’t even get a write off for a mortgage.
Cindy Says:
April 15th, 2008 at 8:07 am
(12) Grim
Sure, my CPA thinks I’m crazy to be paying off my home when I could be putting that money to better use elsewhere. I don’t care. My retirement check will be so meager that if I have to pay a mortgage payment with it, I’ll be seriously strapped. Everyone’s situation is unique. For me personally, the security of knowing I’ll own my home when I retire is what matters.
If you connect the backup drive and it is recognized as a removable drive in windows explorer you should be able to search for “.pst” and then just copy the desired one and replace the overwritten one. My suggestion would be to first copy the backup one to your desktop and then disconnect the backup drive. Then, whenyour backup is safe, copy from your desktop to the location where your recently-overwritten pst file is.
#21 – This link has a handy guide in for Outlook restores and backups.
Any of you lads willing to help out this lass with a place to stay if the housing problem gets worse for her?
http://www.nytimes.com/2008/04/14/business/worldbusiness/14real.html?em&ex=1208404800&en=ddcb233e7e3b3153&ei=5087
#23 – Shore
In addition, troopers issued 13,000 tickets in March to drivers talking on cell phones. I don’t have link. Heard on radio last week. Getting money from every nook and cranny is the motto.
#31 – I think I could manage. In the interest of international relations and all.
# 32 I don’t get the people who insist on holding a phone to their ears while driving (sometimes while holding a cup of coffee in the other hand or putting on lipstick) when a hands-free earpiece is so much more convenient and costs so little.
# 33 That’s the spirit. I am all for international relations, but Mrs. Shore might kill me if I tried to lend a , um, helping hand. Gald to see there are other selfless folks out there.
re: Forclosures
I heard James Saccacio the CEO of RealtyTrac on Bloomberg radio this morning, he stated that banks are on track for over a million REO homes by the end of this year.
That is allot of inventory, maintenance, taxes etc.
Something has to give, and the only thing left to give are the prices.
Thats is unless the banks want to bulldoze all of those homes and take a writedown.
thanks everyone,
I’m on my laptop right now.
After doing a bone-headed maneuver like resetting my computer – a 3 a.m. panic event after downloading a supposed codec correcting program when my windows media center kept giving me an error message — long story short- I F*d up.
– I am really skittish about trying anything on my own at this point.
I desp. need a computer person – I’m willing to hire them – for this and future problems – any recommendations?
Thanks.
sl (too cowardly to mess with my computer again.)
Political patronage? In Jersey? No, say it ‘taint so. I wonder if any polysci or economics professors at Rutgers or Princeton have quantified the effect of the patronage, the duplication of costs, etc inherent in the fractured political organization of NJ municipal government.
http://www.app.com/apps/pbcs.dll/article?AID=/20080414/NEWS/80414055
TRENTON — A state workers union is calling on the governor to cut the nearly 300 politically appointed state jobs before the state closes parks and lays off unionized workers to help balance the budget.
According to public records, those politically connected jobs — with an average salary of $75,000 — cost taxpayers more than $22 million annually.
The 298 nonunion jobs are spread across 22 departments and commissions and include 46 people earning more than $100,000, according to figures obtained by Communications Workers of America Local 1034 through an open public records request.
Mark Perkiss, a state personnel spokesman, said the posts have no job descriptions and cover various purposes.
CWA Local 1034 president Carla Katz said Gov. Jon S. Corzine’s administration should eliminate them as its looks to cut spending.
The administration wants to save $4.5 million by closing nine parks and laying off 100 park workers.
“It is outrageous to propose closing state parks and cutting the jobs of workers, such as parks customer service reps earning $35,000, while hundreds of political appointees who are getting fat salaries and have no job descriptions stay untouched,” Katz said.
In New Jersey state government, a political appointee is generally someone hired by the governor’s administration, often due to political connections, rather than a unionized worker who must earn promotions and pay increases through civil service testing.
“It’s shameful that political patronage remains alive and protected while hardworking state workers are shown the door,” Katz said.
[snip]
Something has to give, and the only thing left to give are the prices.
Keep in mind we’re talking macro data here, foreclosures across the entire nation. Yes, foreclosures are high in NJ, but we’re not seeing the same kind of fallout as the major bubble markets (California, Nevada, and Florida) and to some extent the rust belt. However, while we may not feel the brunt of the first order impact, we’ll certainly feel the second order effects. In fact, most of these second order effects (higher unemployment, tighter credit, etc) will be felt across the country.
Real estate might be local, but credit and the economy has gone national (some would even say global). As the world grew smaller, we all grew more tightly coupled.
(28) John
I guess what I’m saying is my strategy is working for me – given my set of circumstances….it might not for Drew or others.
Soon, I too will take the standard deduction – my interest will be too low for me too itemize…but it just isn’t enough of a difference to dissuade my decision to pay off my mortgage early.
# 37
Just think of it as making a really bad move with a woman. You have already F**ked up, and things cant get much worse. Might as well give it a go.
Re: #13…
Don’t feel bad Grim…it was that article in the NY Times that got me to become a loyal follower of your blog…I haven’t missed a day since reading that article…and I am one of only a few woman that are loyal to this blog…girl power!
This could be good news for people trying to fight excessive spending, and thus increasing taxes, in school districts.
http://www.app.com/apps/pbcs.dll/article?AID=/20080414/NEWS/80414054
TRENTON — Tests found elevated lead levels at some New Jersey athletic fields made with artificial turf.
State health officials say they found lead levels eight to 10 times higher than allowed in soil when they randomly tested two dozen turf fields around the state.
Among the fields found to have elevated lead levels are Frank Sinatra Park in Hoboken and The College of New Jersey’s Lion’s Stadium Field in Ewing.
The state’s epidemiologist is asking the federal Consumer Product Safety Commission to investigate.
Health Commissioner Heather Howard says the New Jersey findings could have national implications.
It’s not known how easily lead from turf is absorbed by the body. Specialized tests on the high-lead turf samples are expected early next month.
Let me have a show of hands. Who here is benefiting from lower FED lending rates?
WASHINGTON (AP) — Inflation at the wholesale level soared in March at nearly triple the rate that had been expected as the costs of energy and food both climbed rapidly.
The Labor Department reported Tuesday that wholesale prices rose by 1.1% last month. That was the second biggest increase in the past 33 years. Analysts had been expecting a much more moderate 0.4% rise in wholesale prices.
Core inflation, which excludes energy and food, was more moderate last month, rising by just 0.2%, down from a worrisome 0.5% rise in February.
maybe Jon and Carla can have a little
chit chat about jobs and other various interest which include New Jersey’s future
together.
A new house in my neighborhood came on the Mkt this last weekend and the open house was packed…I mean packed..anyone else notice packed open houses Bergen this last weekend???..oh it’s another overpriced 40 year old house that needs work…sound familiar?? Oh yeah that could be my house..
Now, an “on topic” post
My accountant’s daughter lives in CA. She and future husband are trying to buy there. She has a house picked and is trying to get a mortgage for over the 417K jumbo amount.
Yesterday he told me that in San Diego (where the house is) they (mortgage co.) are not honoring the larger mortgage as a “non jumbo” amount and insisting she take the 417K limit and HEL on top for the rest and increase her DP by 5%.
I didn’t know what to tell him. It sounded fishy to me although the rate did seem reasonable 417K at 5.75% no points. The HEL amount of course is higher.
They both have perfect credit.
Any ideas?
sl
I’m not sure if anyone has posted it before, but you can get spreadsheets of “mortgage conditions” for NJ from the Federal Reserve Bank of New York.
http://www.newyorkfed.org/regional/subprime.html
Laurie [46],
Yes, I noticed it also. I don’t know what it means or what it indicates. All I know is that the price for anything considered decent is still near peak highs.
# 47 Rent.
#21 – sl
http://www.geeksny.com/
Re:47..a lot of CA has been redlined…big risk for lenders means no loans being made…too much risk…she’s lucky anyone will even consider the mortgage…it’s not that the buyers don’t have good credit,it’s the falling values of those San Diego houses..
JoeR,
That site is a tremendous resource. I tried for months to get access to LoanPerformance data, but the cost was just too prohibitive.
Compare August 2007
http://www.newyorkfed.org/regional/NJ.xls
With February 2008
http://www.newyorkfed.org/regional/NJ_Feb.xls
The increase in delinquencies, foreclosures, and REOs is surprisingly sharp.
Cindy Says:
April 15th, 2008 at 8:51 am
…but it just isn’t enough of a difference to dissuade my decision to pay off my mortgage early.
C: you go girl!
#49 gary: I saw that this past weekend too. But in the hosue we were looking at, it was all neighbors and other people from town. I know most of them, some if only by sight.
But I agree prices are still too high. A few houses in my town have gone UC, and I am following those (with the assitance of grim and rich), to see if thery actually close.
Re: #13…
That article in the Times is what led me to this blog also…and I’ve been hooked ever since. Keep up the good work all!
P.S. Speaking of Lowball, think we’re due for a new entry Grim.
“Let me have a show of hands. Who here is benefiting from lower FED lending rates?”
Stu [44],
Those that are long tangibles.
Take a look at the deterioration in the percentage of owners current on their mortgage.
NJ – From the links above.
Alt-A Fixed
Aug 07 – 93%
Feb 08 – 89%
Alt-A Adjustable
Aug 07 – 90%
Feb 08 – 82%
Subprime Fixed
Aug 07 – 84%
Feb 08 – 78%
Subprime Adjustable
Aug 07 – 67%
Feb 08 – 53%
I’m shocked, shocked to see how quickly Alt-A and Subprime portfolios are deteriorating in NJ. This was over a 6 month period.
Earning season is here, these should be good calls. After the phone number if there is something for example Wamu that is the passcode for call, not all companies require a passcode to listen in.
Big Bill Bernakee will have lots of info at his fingertips come April 30th rate cut decision based on all the important 1Q numbers will be out.
Washington Mutual b 15-Apr 6:30 PM (1.40) 888-391-7808 Wamu
Wells Fargo 16-Apr 8:00 AM 0.57 877-660-6853 280321
JPMorgan 16-Apr 9:00 AM 0 .64 888-228-5274
Capital One 17-Apr 5:00 AM 1.45 800-289-0561 041708
Merrill Lynch 17-Apr 8:00 AM ( 1.99) 888-810-0245
SLM Corp. 17-Apr 8:00 AM 0.40 877-356-5689 42085031
CIT 17-Apr 9:00 AM 0.60 866-831-6272 CIT Group
KeyCorp 17-Apr 9:00 AM 0.35 800-811-0667 8335433
PNC 17-Apr 10:00 AM 1 .18 800-990-2718
Citi c 18-Apr 8:30 AM 877-700-4194 37239818
Bank of America c 21-Apr 9:30 AM 0.41 800-894-5910 79795
SunTrust 22-Apr 8:00 AM 1.02 888-972-7805
Re:15…I’m watching the Headline News this AM waitting to see the Ridgewood foreclosure story but what I keep hearing is the “boy with the butter knife in his head” story….EEEEWWWW…give me my foreclosure story!!!
Does anyone have a link to a graph showing the 2nd wave of mortgage resets for 2008?
(40) Cindy I am in the same case my mortgage is too tiny to get past the standard deduction ( but I am not paying 10-15K a year in interest and getting back 25% on it )
I’m 28 and the pre-payment route happens after everything else that needs to compound for 25-35 years is fully funded.
Secondly I know in a couple years I will be selling and going from the little-apartment-that-could to a SFH so I know the money will only be locked up for another couple years. Versus like my Mom’s house which the money is locked up until the taxes force her out.
# 54 Cindy and Chifi
I understand the reasoning of those who say use the leverage on the home to free up $ for investment elsewhere, but I reject it for a primary home.
First, ones main house is not just an investment it is one’s nest, where one provides safety and stability for one’s family. Anything that adversly affects that safety or stability is bad for the family.
Second, the rate of return on prepaying a mortgage is pretty darned good and it is risk free. If one has a mortgage of 6% and is paying 30% in taxes, one would need to earn out-of-sight returns in a taxable investment (and take on large risks to do so) to come out equal. I would argue that the rate of return on prepaying a mortgage is even far greater than that, at least in the early years. If one looks at an am schedule, and one pays not only the current month’s payment but also the next month’s principal payment, one gets an instant return on that investment equal to the interest that need not be paid on that scheduled payment for the next month. This can be several multiples of the amount of principal paid. Try getting that kind of return risk free.
When it comes to second homes or investment properties, if one wants to do things differently, go for it. But, for one’s primary home, getting it paid off has huge benefits that cannot be captured on a balance sheet.
Too early to tell, but we may just see a resurgence of the mortgage burning party.
(Yes, there really was such a thing)
NAHB trolling for a bailout.
Why do they send me these press releases anyway?
NATION NOW IN MILD RECESSION, SAYS NAHB CHIEF ECONOMIST
WASHINGTON, April 15 – The deepening slump in the nation’s housing markets has seriously eroded consumer sentiment and pushed the economy into a mild recession, according to the chief economist for the National Association of Home Builders (NAHB).
“The worse-than-anticipated housing downturn, combined with systematic weakening of the labor market and rapidly rising energy and food prices, has taken a heavy toll on American consumers,” said NAHB’s David Seiders. “It’s now clear that we have entered what we anticipate will be a mild recession, running through the first half of this year, and there are substantial downside risks to this economic scenario.”
To guard against a longer and deeper downturn, Seiders said that Congress should take immediate steps to stimulate the economy through actions specifically targeted at improving the ailing housing market — such as a temporary home buyer tax credit, modernization of the Federal Housing Administration and oversight reform for the housing-related government sponsored enterprises.
“Stopping the downward trend in housing prices is key to bolstering consumer confidence as well as mortgage credit quality, and a temporary home buyer tax credit is the best way to do that,” he noted.
Given the ongoing erosion in housing finance markets and buyer demand, Seiders has adjusted NAHB’s official housing forecast to indicate continuing downward movement in housing starts through the end of 2008, bringing the decline for the year to 30 percent. A month ago, Seiders expected housing starts to bottom out in the third quarter, with a 27 percent decline for 2008.
“This change in our forecast indicates that, barring immediate action by Congress to stimulate housing and the economy, the housing sector will continue to be a serious drag on economic growth until the beginning of 2009,” Seiders said.
“Stimulus bills recently passed in the Senate and the House Ways and Means Committee are welcome steps in the right direction. This is one instance where prompt and appropriate efforts by the nation’s lawmakers could make a significant difference in limiting the depth and duration of the economic downturn.”
I want 200K credit for buying home!!!
How about instead of people working goverment just will send everybody 100K – ReIn50.5 would love it!!!
BTW – yesterday we had some discussion about food shortages – I will nto happen in USA, right??
In my costco they have a note limiting number of bags of rice one customer can buy… Sign of time to come?
# 64 We opted to do ours quietly and to avoid highlighting the fact that we had paid off our last debt. There is so much debt amongst the relatives and friends, we did not want to call attention to the the payoff.
#65 – “Stopping the downward trend in housing prices is key to bolstering consumer confidence as well as mortgage credit quality, and a temporary home buyer tax credit is the best way to do that,” he noted.
Me: Was he bitchin’ when home prices skyrocketed, disregarding any fundamentals and became unaffordable to middle class? Shut up.
grim – mortgage deterioration.
That’s great data. Is that publicly available?
still_looking Says:
April 15th, 2008 at 8:49 am
I desp. need a computer person – I’m willing to hire them – for this and future problems – any recommendations?
I make house calls in North Jersey for residential and small businesses in Somerset, Morris & Essex counties but will travel elsewhere. I also have plenty of references if you would like.
If you would like an estimate, shoot me an e-mail. I am assuming Grim can forward it to you if you would like.
Food shortage is so bad in Haiti they better have good locks in the zoo. Zebra burgers would be pretty tempting to me after living off a handful of rice and a cup of dirty water, also a few of our porky pig kids vacationing down in those all inclusive resorts in Haiti better watch out. Little fat and juicy plump 10 year old Britney cooked proper over a charcol oil drum and jerk seasoned can be pretty delicious. I Guess Britney would taste like Kobe Veal. Just serve the meat pink as we all know how much our little princess love the color pink.
Shore (38)-
Nice to hear from concerned citizen Carla Katz again.
The only thing I want to hear coming from her is when she’s gonna sell the pictures to The Enquirer.
[sarcasm off]
This will be in the new edition of MBA textbooks.
Liar Loan
A category of mortgages known as low-documentation or no-documentation mortgages that have been abused to the point where the loans are sometimes referred to as liar loans. On certain low-documentation loan programs, such as stated income/stated asset (SISA) loans, income and assets are simply stated on the loan application. On other loan programs, such as no income/no asset (NINA) loans, no income and assets are given on the loan application form. These loan programs open the door for unethical behavior by unscrupulous borrowers and lenders.
These loan programs are designed for borrowers who have a hard time producing income and asset verifying documents, such as prior tax returns, or who have untraditional sources of income, such as tips, or a personal business. These loans are called liar loans because the SISA or NINA features open the door for abuse when borrowers or their mortgage brokers or loan officers overstate income and/or assets in order to qualify the borrower for a larger mortgage. Low-documentation mortgages usually fall into the Alt-A category of mortgage lending. Alt-A lending depends heavily on a borrower’s credit score (FICO score) and the mortgage’s loan-to-value ratio (LTV) as tools to determine the borrower’s ability to repay the mortgage.
What really happens when you play games with the laws of supply and demand?
We all have a front row seat to now witness a well deserved comeuppance here in NJ.
Couple housing supply and demand with the Unions who will be rioting soon, the out of control gov’t spending at all levels and the fact that many companies will simply vanish causing unemployment to skyrocket and we have the makings of a a epic of Homeric proportions.
Something has to give.
laurie (46)-
Lions circling the wildebeests. No more, no less.
Several of my agents held houses open last weekend and got good crowds. Followup reveals these prospects to be: a) sitting on their hands; b) not even aware whether they qualify for a loan; or, c) need to sell their current home in order to move.
Mortgage question,
I am wondering if this scenario is at all possible. When a bank folds and liquidates it assets (mortgage holdings), it sells them for a percentage of what they are worth to another bank. Right?
Prior to the sale of the banks debt can you negotiate to pay them an amount that is less than the balance owed. I am also assuming that this may be difficult as banks purchasing the debt pay for the potential interest gained but if the transaction is for pennies on the dollar this may be worth while.
Has this ever been done on this level?
sl (47)-
They should find another mortgage broker. I’m not up on the particulars of San Diego (and it may be classified as a “declining market” by Fannie), but there’s gotta be a better deal than that available.
Fannie/Freddie/FHA limits there have got to be higher than 417K these days. A quick Google shows them to be in the high 600s.
TJ,
I’ve heard it talked about before, it certainly sounds like an intriguing business model. However, implementation is likely to be difficult unless we’re talking about whole loans. Securitization has changed the dynamic entirely, and investors (banks included) are holding slices of mortgage portfolios. The dynamics of each individual slice are predecated on the performance of the entire portfolio. You can’t simply liquidate portions of the pool without changing the pool. Because of how widespread ownership of the pool is, trying to get approval would probably be very difficult. This is the same reason why principal writedowns or individual rate cuts aren’t happening for securitized loans.
It is, however, a very interesting arb.
Colonel Klink will be up this morning on the mound pitching. This time he is pitching for the Hedge Funds.
He will be tossing lots of screwballs. Apparently they are now recommending that the Hedge funds should disclose hard-to-value assets and approve“comprehensive” investor disclosure in the same manner as public companies.
All voluntary of course, not that the Hedge Funds many whom are offshore would follow any new disclosure laws passed by Congress on this subject.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aUQmgahsb7_4
Don’t know why i torture myself looking at the GSMLS every other day to see houses still ridiculously priced. I feel fairly strongly that the market will revalue and prices will decline significantly over the next year. I should just step away from the keyboard, go outside and enjoy the great day and come back next Sept to see more material drops. Though can’t peel myself away from this blog because of the great comments and info.
BD (57)-
I’m very pleased with my margin interest rate right now. :)
The only way to buy commodities is with somebody else’s money (though most of the merc exchanges don’t seem to agree with me anymore on that point). ;)
All disclaimers. As the owner of a RE company, I’ve become familiar with the term, “nothing left to lose”. If I crap out, I may have just gotten to the point I’m already headed to a little faster.
Clot, we went to an interesting open house in a snooty town. Money pit historic place priced to move.
I was the only one who ventured down into the basement.
It tells you a lot when there are lots of people, but no cars parked, and Gladys Kravitz doesn’t care to go read the label on the side of the furnace.
Shore (69)-
As in, you didn’t want them hitting you up for loans?
John (73)-
Anywhere in Haiti you can pick up some Chianti and fava beans?
clot
do you think carla makes house calls?
as a decorator of course
Wholesale inflation spiraling; oil @ $113.
Time for a rate cut.
mark (87)-
If she is, I hope she photographs her work.
Make Corzine, Booker, et al sweat a little bit.
Mortgage reset graph.
http://bp2.blogger.com/_nSTO-vZpSgc/R_HlCECrufI/AAAAAAAACZE/E1WPLRuaWmY/s1600-h/Mortgage-Rate-Resets-1.png
Hard Place Says:
April 15th, 2008 at 9:52 am
Don’t know why i torture myself looking at the GSMLS every other day…
I know how you feel, but keep looking. My search started in early 2005 (of course I was totally priced out of the marked). I stared at GSMLS hotsheets everyday for 2 years. In mid/late 2006 when things started to turn, I waited for prices to drop. By mid 2007 when prices were not normalizing, I took action. I went out and made offers based on my home price estimates. I averaged about 20% under asking. A dozen offers and 6 months later I now own a home.
Has anyone ever heard this before? I haven’t.
Middlesex, Somerset and Hunterdon County — sometimes described as “New Jersey’s Money Belt”
http://www.thnt.com/apps/pbcs.dll/article?AID=/20080415/NEWS/804150401/1001
Joe R #53,
Thanks a million for posting that link. This data is amazing and If I was Ben and I was looking at some counties in Florida and California I’d quickly hand in my letter if resignation and go back to my teaching days at Princeton.
One question though. This data is as of December 2007. Are they quaterly updated, or monthly and when is the next update available.
Thanks again. You’re the man.
Has anyone seen this home?
GSMLS#: 2478597
It’s in Basking Ridge for 1,449,000. And although it is on 3+ acres the lot has to be 100 feet wide. Also, if you drive past the house, the front yard is in someone elses backyard.
Depending on access, those types of properties are sometimes referred to as “flag lots”. It’s not an uncommon type of infill development. Especially in areas that had large lot sizes, but relatively narrow frontage.
Easy to sell off the back few acres and allow for a driveway, via easement, that skirts the property line.
Grim #58,
With these types of deliquent and default rates and inflation, Why is the ten year at these levels? This is the anly thing that I can’t make sense out of.
The only decent explanation is that noone will dare park any US dollars at your local MBS and CDO chop shop they tend to pick up US treasuries.
How long is this gonna last? a perfect storm is still brewing for housing and double digit interest rates will cripple this economy.
That’s when Gold holders are GOLDEN.
# 85 Clot,
No. Not that I would lend money to anyone other than my children.
The real issue is that 1) there is a real hostility out there towards people that have their economic house in order and 2) we do not want to foster the impression that we are doing better than we are — we are frugal and deny ourselves things in order to be where we are, but I get the impression people think we are rolling in dough.
TJ – I lowballed a couple places in late 2005. I was looked at and treated like I was satan’s spawn. Luckily my realtor was my uncle who was on my side about the prices being out of control and bought into my lowballing. He sends me updates in my area from time to time, but I tell him i don’t have the energy to go from place to place to lowball. Instead I’ll wait until sellers get closer to rational and than throw in some lowballs. I told him I want only short sales or distressed sellers, because that is the only deals that will get done that are closer to my perception of the market. Even than I told him unless it’s a super deal, more than likely I’m waiting until 2009 or 2010.
“we are frugal and deny ourselves things in order to be where we are, but I get the impression people think we are rolling in dough.”
I’d much rather roll in dough than be buried in debt.
Flag lots –
Those are a bit strange. My uncle the realtor has a neighbor on a flag lot in his back yard. he lives in Harding on a huge lot. His neighbor has an easement for a driveway. Everytime his neighbor orders pizza, it goes to one of the two fronting houses. The house in the back has almost a carriage house like feel. That doesn’t appeal to me as a home buyer.
““It’s shameful that political patronage remains alive and protected while hardworking state workers are shown the door,” Katz said”
Never before has a quote been placed in print with more shades of irony.
From MarketWatch:
Loan originations seen slumping 20% to 40% this year
The fallout from the subprime-led credit crunch is expected to result in less lending through 2009, a new report says, as loan originations this year are seen falling 20% to 40%.
In addition, a near-term recovery among housing or its loans isn’t likely until at least next year as default and foreclosure rates continue to rise.
The findings from Celent, a financial research firm part of Marsh & McLennan Cos., sees originations of $1.4 trillion to $1.9 trillion in 2008 as lenders continue tightening the screws on who gets money and how much.
The report, in particular, says “many lenders will severely restrict” loan making to their retail outlets, further squeezing the third-party makers of loans who get their funding from banks. Such lenders aren’t expected to “stage a comeback” until late 2009.
Celent also anticipates the carnage to result in further consolidation in the financial services space, with stronger firms buying the loan porfolios of the weak.
Meanwhile, subprime originations aren’t seen exceeding $200 billion until 2011; by comparison such lending topped $500 billion annually from 2004 through 2006. As such, lenders will be competing for borrowers with higher credit scores, meaning those “prime” customers will benefit from lower interest rates.
#97 – Shore
Discreet celebration is best. Jealousy oftentimes hides behind congratulatory wishes.
To Al, Mitchell and whoever interested on land investment. I can beat $2000/ac. I bought timber land in south VA less than $1700/ac. There is a beautiful creek at the end. So it could be vacation land too.
My point yesterday was, I could live in that house with 6 ac land, and enjoy my small farm with tax benefit. I know RE market is down, but the land will balance the loss.
Stu,
“Better to go to bed hungry than to wake up in debt.”
I’ve seen this attributed to Thomas Jefferson, but I’m not sure that is the case.
Greenspan – Not sure if this was posted
There’s just one problem with Alan Greenspan’s attempts to defend his record on the financial crisis: The former Fed chairman is guilty as charged.
http://www.foreignpolicy.com/story/cms.php?story_id=4278
#97 shore:The real issue is that 1) there is a real hostility out there towards people that have their economic house in order.
Real, genuine, and bitter. Not only that, but because we decided not to partake in the madness, we are now blamed for the fall out that is occurring as is so vividly portrayed by recrybaby
Syncmaster,
In the late 1990s, a couple of Rutgers guys coined the term Wealth Belt to decribe suburbs in northern and central New Jersey. They said this part of state was notable for high incomes & great jobs.
In the late 1990s, housing prices didn’t rise very much in this part of the state. The subsequent boom can partly be explained by home prices going from too cheap to correctly priced to overpriced.
Lots of Wealth Belt companies (AT&T, Merck, Lucent) are in various stages of evaporation or relocation out of New Jersey. Today, same Rutgers guys are talking a different story about the Wealth Belt.
I used to work for one of these companies. They simply couldn’t attract talent to the New Jersey exurbs, and the good people they convinced to move there quickly realized their mistakes and quit. Company reacted by shifting investment to environments (Boston, California, Europe) where they could attract and retain the smartest people.
http://www.heldrich.rutgers.edu/uploadedFiles/Publications/WealthBelt.pdf
# 105 It could not (well should not) have been Jefferson, as he lived beyond his means his entire life and died deep in debt.
Can someone look up the details for me on 2507858?
http://new.gsmls.com/media/getImage.do?mlnum=2507858&res=highres&num=3
Do I get to keep the Vette, power shakes and the lighted wall art of the Manhattan skyline with purchase? Will people continue to pop out of the various doors and stand in the driveway after I move in or is that just until the circus clowns move out?
[47] Look for a different lender.
I found the new conforming loan limit illusory since the rate is much higher for dollar one over 417K. Some lenders will raise their limit but I found only one to go to 500K on the base rate for conforming. Still, the bank rate was attractive as to the conforming loan so I priced a loan for 417K and a HELOC with a lower rate than the mortgage for the difference.
35 Shore
I was once in the back of a van driving around one of the islands off Puerto Rico when the driver stopped by the side of the road and bought a beer from a guy on a bicycle. He was driving while drinking the beer that he held in his left hand, and although I was in the way back I could see that my friend in the front passenger seat looked terrified. We were on a windy road with the ocean down an unprotected embankment on one side, so it wasn’t an optimal situation, but I figured one beer probably wouldn’t do too much damage.
It was when we were exiting the van that I understood why my friend was so pale: the driver had only one arm.
He’d been steering with his knee.
Hard Place,
Lowballing in 2005, that was ~3 years ago. I would have looked at you as if you had 3 heads.
but I tell him i don’t have the energy to go from place to place to lowball
What are you jogging to these places?:) Take an hour to go look at the place, sign a document, say the offer is non-negotiable and go home.
I would say it took maybe 16 hours to put in ~10 offers and “negotiate” with two. I estimate 100K in potential savings. That is $6,250/hr.
I am assuming that dealing with a distressed seller or a short sale is much more time consuming than signing paperwork and walking away.
# 107 A very good friend went off on me one day because I answered “No, I pay off my credit card bills when, or before, the come in” when he said the following to me: “Oh, right, like you don’t carry a $20,000 (or maybe it was $15,000, the point is the same) credit card balance like everyone else.”
Anyone here take the 194/324 trains from the Route 23 Transit Center to NYC? What are the commute times like coming home at 5:00-6:00pm?
For the trips I’ve taken home between 3:00-4:00pm it’s not bad, just trying to gauge what it’s like after that time. Long lines? Crowded buses?
Any comments/opinions appreciated. Contemplating a couple of positions in Midtown and would like to gauge the commute experience. I’ve taken the train from Lincoln Park but it’s not feasible for midtown commuting; only downtown NYC/Jersey City.
-Richie
“I’d much rather roll in dough than be buried in debt.”
Stu,
I’d rather be a chicken than a dead duck.
BC,
how about a Golden goose?
Shore Guy,
Hah, that is great. I have gotten the same thing sooo times. And the story ALWAYS goes like this.
Me: No we don’t have CC debt. Why would you spend money you don’t have or can’t pay back.
Them: (The usual response) Just you wait. You don’t always have the money to pay for everything you “need”.
Me: Like that cup of Starbucks in your hand or the new overpriced super stroller you just bought or the car that you deserve or that last vacation because you have to go somewhere when you take vacation at work.
From the NY Times article:
“Consider Britain, which had one of Europe’s most robust housing markets, with less of an oversupply than in Ireland or Spain.”
I guess you could say that, compared with Ireland and Spain, real estate in Britain is extremely affordable.
#106 he he:Too bad Greenspan couldn’t bring himself to follow the sage advice of one of his predecessors at the Fed and “take away the punch bowl just when the party was getting good.”
Good article. The only thing I would add, is I believe it was Greenspan himself who said back in 1996 that the job of the Fed was to take away the punch bowl just when the party was getting good.”
make [117],
hear,hear.
Regarding credit card balances, I was surprised to learn that only 17.3% of cardholders pay off their balance in full each month.
I had assumed that the percentage was much higher.
No link to the Moody’s piece, but CR has the text..
http://calculatedrisk.blogspot.com/2008/04/moodys-credit-card-charge-offs.html
The percentage of credit card balances being paid fell to 17.3% in February from 17.7% a year earlier. That was the sixth month in a row that the rate fell from the year-earlier period.
Also from NY Times:
“The Sbarras gambled by offering $287,000 for their house, which was listed at a reasonable $329,000.”
How does journalist Lisa Prevost conclude that $329K would be a reasonable price? I don’t know, because she doesn’t tell us. Just another example of media talking down real estate, I guess. Like the opening paragraph of the article (you can see her anti-seller bias so clearly, can’t you):
“WHAT image does the term “lowballer” conjure up for you? A smirking bottom feeder in a bad suit?”
It’s just that, 16 hrs spent on the weekend trying to tell stubborn sellers the market has changed. I’ve got better things to do. If only the internet could be used to place in bids to cut the effort. I could put in 10 bids in 16 minutes. Seller gets to choose the highest bid from existing buyers. That’s why houses just linger, because there is a buyer’s strike. Now I only look at a place, if it’s absolutely a house I can see me living in. In the last 6 months, there has only been 1 house. Seller was fairly reasonable w/ pricing. I think it sold at 3-5% off ask. I put in at 15% off ask. It’s okay, though I’m still saving money renting and other houses will come up.
To phrase that differently, 82.7% of your neighbors are carrying a credit card balance.
#118
I’m surprised so many of you talk about $ amongst friends / family. My Dad taught me not to talk about it, and I don’t discuss it with my friends AT ALL. I’ll talk to my parents about it a bit, give my bro some advice now and again, but that is all. My friends / fam know I won’t discuss it, and it never comes up.
It helps avoid a lot of awkward conversations and leaves more time for beer and sports arguments.
3B,
Wouldn’t doubt it one bit
make [117],
“I didn’t get a harumph outta that guy.”
Regarding credit card balances, I was surprised to learn that only 17.3% of cardholders pay off their balance in full each month.
Do you really thing that Mastercard and Visa are only a transaction play and not debt heavy.
I have a small short position on this. (All Disclaimers)
Isn’t Bergabe the Golden Goose?
“It is outrageous to propose closing state parks and cutting the jobs of workers, such as parks customer service reps earning $35,000, while hundreds of political appointees who are getting fat salaries and have no job descriptions stay untouched,” Katz said.
I have a better idea. Cut the appointees and the park workers.
Here’s even a better idea. Shut down all of NJ government workers (except for essential operations) without pay for July and August. See if anyone notices. Repeat yearly.
Regarding open houses: Can’t speak to that because I didn’t accompany my friend this weekend, but I do know that quite a few houses in my neighborhood that were sitting for at least six months have gone under contract in the last week or so.
OTOH, the POS capes are starting to show up in listings. The maintained, but not updated ones are being advertised as “sold as is” and are in the $429K-$439K range and they go up from there. A lot start out as FSBO and within three weeks they have a realtor sign out front.
make money Says:
April 15th, 2008 at 10:20 am
That’s when Gold holders are GOLDEN.
albani: just my opinion…most of the USD short trades are well into their latter stages…it includes gold, but also a lot of other STUFF out there that you would not suspect….essentially everything you see working from mid-Oct 2007 to now is just going to simply stop working….I wouldn’t go out and dump stuff…but back away from things gradually by the time we get to the beginning of 4Q08….I am being vague on purpose….
TJ “Just you wait. You dont always have the money to pay for everything you need.”
Those who have been here awhile know that I grew up poor, and when I came out of college I was poor. My attitude has been, when one is poor is the WORST time to put things on plastic. Now, there were times when I needed an alternator, tires, etc. BUT those were things needed to make money. New jeans, albums (back in the day), concerts, vacations, etc. were different and not worthy of being charged. I love the concept of layaway, even if done with one’s self, and have always had an account used for accumulating money for “desired” purchases; that way I earn interest while “paying off” the item rather than accumulating greater debt.
#123 njpatient: Yes. Then of course we have the realtor in that same article who says some people (low ballers), have no shame.
Of course nobody was talking about sellers having no shame when they were asking and getting ridiculous prices for their 50 year old POS Capes.
Hey it was just the market. Now when the shoe is on the other foot people have no shame.
i meant 194/324 buses
make money Says:
April 15th, 2008 at 11:06 am
Regarding credit card balances, I was surprised to learn that only 17.3% of cardholders pay off their balance in full each month.
Do you really thing that Mastercard and Visa are only a transaction play and not debt heavy.
I have a small short position on this. (All Disclaimers)
albani: MA and V are transaction networks (i.e. toll takers). They do not issue cards. They would be hurt by reductions in spending to the extent that their gross transaction revenues would drop, defaults are not part of the business model. AmEx has BOTH….it is a network and an issuer. You don’t have a Visa from Visa…you do have an AmEx issued by AmEx.
#134 – “albums (back in the day)”
Man, how young are you? Like 76-78?
Federal Energy Subsidies Report:
http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/index.html
Doyle,
I think not talking about finances with friends and family is completely outdated.
Discussing finances only betters us as a society so that we may teach and learn from others. What would be the point of not discussing finances? Not to stir up jealousy or the fact that one may be ashamed of their salary?
I discuss salary with co-workers and those in the industry all the time that is how I/we stay competitive.
And as far as learning things from your parents, smart people listen and learn from others, but true intellects use what they learn to make the best decisions for themselves.
From the 3/16 Lowball NYTIMES article:
Please tell me someone knows if she sold her house or not? She thinks her town is immune.
You certainly won’t get Carleen Lekelly’s house in Basking Ridge, N.J. Since Ms. Lekelly put the four-bedroom colonial on the market for $885,000 last November, she has received a couple of offers in the low $800,000 range.
Her response has been matter-of-fact: with new bathrooms and granite in the kitchen, her house doesn’t deserve discounting, and more important, she isn’t under any pressure to move. Ms. Lekelly politely suggests that lowballers look elsewhere.
“I truly believe there are certain towns that are going to keep their values,” she said. “There are people that think they can go in anywhere and just lowball — I think it’s kind of silly.”
Student loan bailout?
US Sen Dodd To Seek Fed, Treasury Boost Of Student Loan Liquidity
Sen. Christopher Dodd, D-Conn., said Tuesday he will ask the U.S. Treasury and Federal Reserve to inject liquidity into the asset- backed-securities market for student loans to prevent the financial crisis from engulfing lending for college tuition.
The chairman of the Senate Banking Committee said he will send a letter to Treasury Secretary Henry Paulson later in the day to direct the Federal Financing Bank to purchase participation interest in pools of newly originated student loans backed by the federal government.
Dodd said he would also write to Fed Chairman Ben Bernanke to allow student- loan-backed debt to be used as collateral for the recently created Term Securities Lending Facility.
Dodd, in a hearing on the student loan market, said the situation has yet to reach crisis level since he isn’t aware of any students being unable to get a loan. But he warned that a “potential student loan credit crunch may be looming.”
# 18 BC Bob,
Interesting article. However i still think that there are very real supply issues involved. I will try and through a few charts together tonight to demonstrate my point. But once again, thanks i was not aware of how strong the currency aspect may be.
#140
TJ,
To each his own… just said I don’t do it w/friends and fam, peers in your industry is entirely different. There is plenty of room to learn and teach (when someone is looking for help) without getting into a discussion at a bbq with friends.
My personal opinion is it stirs up nothing but trouble and I would rather not discuss it. I said I was surprised so many do it. If you feel you are bettering society by talking about your salary with your friends than so be it.
I worked briefy at both Mastercard and American Express. When I worked at Mastercard during college it was a money printing machine. Back then merchants paid a fee on every transaction, customer paid $50 bucks a year to keep the card, Customer mailed in check at least a week or two before due date to avoid getting hit with massive late fees, and “affinity cards: cards with a team name name etc. paid licensing fees. Of course licensing fees were out of Luxenburg fictional facility where IP Tax rates are 6%. The final insult was mastercard processed the billing and AR for all the small banks that issued cards and charged them back for the clerks time with a profit. Basically cash in the door, no cash out the door.
I worked second shift during summer at Mastercard ESBA, Eastern States Bankcard Associaton Lockbox processing. All checks this side of missippi river go to ESBA lockbox, all states west of Missipppi went to WSBA lock box. Well we used to send a huge truck full of checks before midnight to the Fed everynight to start collecting interest immediately on the check payment while we dragged our feet paying vendor. Then the people who kept a balance we nailed for 21%. Mastercard math stated cost of dealing with balances at most was mainly 3% default rate, 7% Cost of funds (rates were higher then). So it cost 10% to mastercard to lend at 21% so it was 11% risk free as default rates were calculated in. Then they had a “hard opt out: formula for people who hit their radar as potential defaults, jack your annual fee, interest rate, late charges sky high. Theory is one of two things would happen you would be a fool and pay the huge fees and be a huge profit short term which would cushion the loss when you would default or you would cancel your card go to a competitor’s card and let them eat the loss. Life is good.
Over at Amex I remember when Ken Chenault worked in Legal and lived in Westberry Long Island, Amex still had MSOC (Merchandise Sales Operations Center) and TRS (Travel Related Services) in Great Neck (now in Tampa), Ken would work out of there some Fridays in the summer and even though he was already a Harvard Law Graduate and high up in the company he would rush to open doors for the clerks and knew everyone’s name down to the lowest mailroom boy and said hello to everyone. Ken is a class act all the way, it is a mircle someone like that got to be CEO in America.
Please tell me someone knows if she sold her house or not? She thinks her town is immune.
No, it continues to fester on ForSaleByOwnerDotCom at $885,000.
ShoreGuy,
I grew up in a shore town, Toms River. My family didn’t have much money. I had hand-me-downs from my cousins since I was the oldest. There were periods of time when we had foods stamps. Bag lunches and lunch tickets were the norm at school when everyone was going out to eat.
I freaking busted my but in HS to get into a top college while having 2 jobs, helping my parents pay bills and buying my own car. I worked 30 hours a week while at college and took out loans (my only current debt excluding mortgage) b/c I knew it would pay off.
The problem today is with late Gen X (ME) and Gen Y is the fact that the boomers created a generation of financially established Gen X/Y’s that other Gen X/Y’s try to keep up with. On top of that there is this whole ridiculous materialistic push driven by ease of credit.
And since no one talks about money, no one knows that others are in debt, or their parents paid for half their house or that their grandparents cut them a nice check every year.
145 john
Yes, as to the miracle.
kettle [143],
I totally agree with the supply/demand picture. The dollar just represents another component to the equation.
Regarding supply;
http://www.finfacts.ie/irishfinancenews/article_1013303.shtml
albani: just my opinion…most of the USD short trades are well into their latter stages…it includes gold, but also a lot of other STUFF out there that you would not suspect….essentially everything you see working from mid-Oct 2007 to now is just going to simply stop working….I wouldn’t go out and dump stuff…but back away from things gradually by the time we get to the beginning of 4Q08….I am being vague on purpose….
Albani,
Thanks for the heads up. I’m i’m not smart enough to realize what you are saying.
as far as Credit cards are concerned who do you think is gonna continue to lend Americans US dollars when the culture here is that we walk away from our homes proudly and with our heads up high.
Japanese would consider suicide before defaulting on their loan. The land of rugged individulaism and self reliance is now a bail me out or I’ll just walk away nation.
Credit cards will be taken away from us slowly hence transactions will slowly diminish.
So how much do you make and what industry are you in?
“I discuss salary with co-workers and those in the industry all the time that is how I/we stay competitive”.
John,
125K not including bonuses and benefits. IT Consulting. 7 years out of college.
“I’m surprised so many of you talk about $ amongst friends / family. My Dad taught me not to talk about it, and I don’t discuss it with my friends AT ALL. I’ll talk to my parents about it a bit, give my bro some advice now and again, but that is all. My friends / fam know I won’t discuss it, and it never comes up.”
Suze Orman says to TALK ABOUT IT! TAKE AWAY THE STIGMA.
If nobody talks about it, then how come everybody knows who to go to when they need help? Somebody’s talking, that’s for sure. Think about your own family…even if people scurry out to the kitchen to whisper behind closed doors, the deal still gets done, right?
TJ I know the area pretty well. Which HS school did you attend and when did you graduate?
East ’97, you?
All aboard the bailout train..
“A deep recession could force mortgage-finance titans Fannie Mae and Freddie Mac to require a federal bailout large enough to hurt the U.S. government’s top-grade credit rating, Standard & Poor’s warned Monday.”
http://money.cnn.com/2008/04/14/news/economy/fannie-risks.ap/index.htm?section=money_latest
Grim..re:#146
Thanks for the update on the house for sale by owner. She really came off as a piece of work in that article.
TJ, not bad at all!! Salary 4X your age in pretty much what it takes to be upper middle class in NY/NJ, that is a good base. Most six figure earners count bonus in the formula getting a good base early is important.
Problem is I am finding out that to afford that Basking Ridge Mansion and two new German cars in the driveway you really need Salary 10X your age which is very hard to do.
Re: NY Times article on lowballing.
The woman from Basking Ridge, NJ who politely refuses out of hand an offer in the low 800’s, may soon be kicking herself, as the RE prices accelerate to the downside.
I was old in ’97, lol, but I did used to know a guy who coached down there: Pete Bush. I lost track of him some time ago. Was he there when you were?
“but back away from things gradually by the time we get to the beginning of 4Q08….I am being vague on purpose….”
Chi,
I would love to respond. However, would need to know what drives your sentiment first.
#153
Pat, again, I said I don’t talk about it. And, to make this clear, I don’t take financial advice from my parents, quite the opposite actually. There are plenty of places to do research and seek out financial advice without asking my brother in law, who tells me how cheap it is to lease a jet ski.
My point was that I can get my information outside of a family / friend setting. And I don’t think it does anybody any good to discuss how much money they make with friends. Unless it is a career / peer discussion that is to your benefit.
Just my opinion.
#21
sl –
Make sure you have the PST on your backup drive.
Run Outlook on the restored PC – it’ll create a new PST file. Overwrite the new PST with your back up PST.
Should be in /Documents and Settings//Local Settings\Application Data\Microsoft\Outlook\Microsoft\Outlook
Doyle [162],
I don’t discuss it either.
I suspect the desire to be seen to be doing better than one is doing or to try to keep up with those age peers whom one thinks are doing better has contributed to the RE bubble.
[47],[79] Clot
I just got off the phone with JP Morgan Chase rep and he told me that all of NJ is classified as a “declining market” and JPMC will require at least 10% down on any loan. He also confirmed that the cap increase from 417,000 is essentially useless right now and is not being honored by the banks. He stated that it’s almost a guarantee (according to Chase) that any house purchased in NJ today will be worth at least 10% less this time next year, thus they are requiring the extra money down. He advised me to do anything possible to get the loan amount below 417K with as much down as possible if you want to get a good deal. I was thankful for the candor. This should add some fuel to the lowball fire in NJ, especially for 1st time buyers.
#161 BC Bob: Some talking head on Kudlow (forget the name ) last night,said all will be well by begining of July…..08! Yes believe ot or not.
Says the recession will be over by then. I was still under the impression that we were still discussingg whether we were officially in one or not, but what do I know.
But who cares,all good by July……08!!
#164
Thanks BC, thought I was on my own out here…
157 Laurie
I say several of us offer her a severe lowball, always in the same amount, one at a time, over the course of a couple weeks. Say, $487,326.00.
#166 JBJB: good information thanks.
BC Bob (161):
“but back away from things gradually by the time we get to the beginning of 4Q08….I am being vague on purpose….”
If I was to guess what ChiFi was driving at, it would be the historical length of recessions combined with unprecedented economic stimulus reduces the likelihood of further downside to our markets. Plus, once the market gets comfortable with 0% interest rates, the upside to commodities will be limited as will the downside to the dollar.
The U.S. is sucking big time economically, but we are still an economic powerhouse on the global level. The market will eventually bottom and start moving upwards again, and I wouldn’t want to be anywhere near gold when all of the hedgies head for the exits.
#164 BC Bob: Neither do I, but soemtimes not discussing it makes it a problem too with other people.
Just look at how St.Thomas More paid for his silence.
Bush Releases $200 Million in Food Crisis Aid
Where does the he and the congress get this authority to provide charity with our money.
We have the right as individuals, to give away as much of our own money as we please in charity; but as members of Congress we have no right to appropriate a dollar of the public money.
164 BC
168 Doyle
Youse guys aren’t alone – we’re the same way in the Patient household (as were my parents and Mrs. Patient’s parents). I don’t feel quite as strongly about it as Mrs. Patient does, but my experience is that a lot of unpleasantness can crop up when the topic turns to money. Like TJ, I would discuss with peers at work, as that is necessary, and I will give caveated advice to family, if asked, but am unlikely to bring it up on my own.
On a discussion board, different topic entirely.
#169
Patient,
Did you see the pics of the house? C’mon how bought $499,999 and not a penny more :)
“Just look at how St.Thomas More paid for his silence.”
That was about money?
DMan
forgot about the granite.
My bad.
“Says the recession will be over by then.”
3b [167],
The same pundits that said there was no housing bubble and consumer resiliency would ward off any possible recession.
#176 njpatient: No. But his silence cost him his life.
“Pat, again, I said I don’t talk about it.”
Doyle of the stigmatized money discussions, I heard you the first time. Having a vagina doesn’t mean my ears are plugged.
I am simply attempting to draw reasons from you….not excuses or solutions to a problem. Being able to obtain financial research outside of family is a solution to a problem, not a reason.
Simply repeating yourself doesn’t further convince me that your path is the path to financial enlightenment. Yes, of course I agree that you CAN obtain financial research outside of family. Obviously, to you, discussion of money within family is a problem.
Why is it a problem that needs a solution?
Pat, again, I said I don’t talk about it.”
Doyle of the stigmatized money discussions, I heard you the first time. Having a v@gin@ doesn’t mean my ears are plugged.
I am simply attempting to draw reasons from you…not excuses or solutions to a problem. Being able to obtain financial research outside of family is a solution to a problem, not a reason.
Simply repeating yourself doesn’t further convince me that your path is the path to financial enlightenment. Yes, obviously I agree that you CAN obtain financial research outside of family. Discussion of money within family is a problem for you.
Why is it a problem that needs a solution?
Recession is not gonna be over anytime soon and if you think that the FED took all the systemic risk with the Bear bailout you’re mistaken.
#180
Crafty Pat.
I don’t have any problems, however I’m avoiding them, that’s my reasoning.
I never claimed a path to financial enlightenment, maybe you misread.
Congrats on the v@gin@.
TJ, Shore Guy. I went to Manchester Twp. H.S. just down rt. 37. That should tell you I grew up in a similar or below income bracket. All of my friends and I thought only the rich went to T.R. North or East.
178 BC
“The same pundits that said there was no housing bubble and consumer resiliency would ward off any possible recession.”
That’s how we roll these days. When anything goes horribly wrong, we find the person responsible and put them in charge of fixing it.
I don’t know how to unsh*t the bed, but I do know that, if we don’t want sh*t in the bed, the first thing we need to do is identify the sh*tters and remove them from the bed.
149 BC Bob
While there are many effects at play in oil prices, A large portion of what i have been reading reminds me of the RE articles saying there wasnt a problem with RE in 2006. Its my feeling that the “powers that be” are well aware of our energy situation and are cheerleading all the way to the point where wylie coyote looks down and see’s that he has already gone over the cliff….
“I wouldn’t want to be anywhere near gold when all of the hedgies head for the exits.”
Stu,
5/06-6/06
3/17-31/08
re: (178)
The pundits you are referring too are know as the “flying monkeys”.
Larry Kudlow a self proclaimed supply-side economist does not even belive we will be out of this mess by the end of this year, nevermind July. He is running out of flying monkeys who still have a positive spin on things, so any old quack can get time on his show now.
183 secondary
I grew up on the upper west side of manhattan, less than a block from Central Park.
We did our clothes shopping at Act II (that’s the second-hand store that was on Madison at the time) – my dad duct-taped his shoes together, and our 18 year old car had a scenic view of the highway through the hole in the floor of the back seat.
A lot of folks are going to be surprised when that neighborhood returns to the way it was (although one must remember that, in the late seventies, New York was not a financial center).
Cue john with a story about how, when he was a kid, the poor people in his neighborhood used to eat the lower middle class people in his neighborhood (because the other poor people were to skinny to eat).
patient [184],
Let an ax murderer determine his own sentence.
kettle [185],
I agree.
#167 BC Bob:The same pundits that said there was no housing bubble and consumer resiliency would ward off any possible recession.
Yes. And Kudlow continues to reccycle them over and over again on his show. Its very entertaining.
Although I must say that Mr. Kudlow’s bullishness seems to be somewhat waning of late.
185 kettle
I agree. There has been a definite dollar effect on oil, but I doubt, if the dollar took the right medicine and regained its strength, that oil would fall below $75 at the lowest, and would thereafter continue to rise.
I think we’re at or near peak, and the CEO of shell oil agrees with me (he says 2015):
“Regardless of which route we choose, the world’s current predicament limits our maneuvering room. We are experiencing a step-change in the growth rate of energy demand due to population growth and economic development, and Shell estimates that after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand.”
#187 sean: I have noted that Mr. Kudlow’sbullishness seems to be waning. He finally seems to be somewhat acknowledging that all is not well.
Question for the economists on the board.
When someplace like egypt bans food (rice) exports prices go up. In a situation where a country makes enough food internally to be self sufficient would this same effect still occur? i.e the US imports food, but we actually make enough to be self sufficient. so if for some reason the US decided to ban food exports, but supply was sufficient to fully provide for internal demand, would you see the same effect as the situation in egypt?
njpatient – I grew up in the Bronx, if we ever met anybody living on the upper west side we called them the Jeffersons back in the 1970s, even though the song said east side.
I watched an old 1970s movie last night about NYC with an actor portaying Ed Koch (who was running the city from bed) and what it was like to live in NYC back then.
The place was nuts.
179 3b
I was joshing – I know it did. He’s one of Grandma Patient’s greatest heroes (even though Grandma Patient is Anglican).
Haven’t turned on CNBC in years.
It is the New York Post of investment advice. I would bet that in the next few years, they will start having miniseries.
NJ patient 191,
Another nail in the coffin of housing. As we hit peak oil (peak energy?) the cost of heating, cooling, and lighting the average 3000 SQFT Mcmansion is going to quickly become prohibitive!
re: kettle1 The economist in me says game over with no chance of starting over.
If the US decided to ban food exports there would be WWIII stating with Mexico invading the USA and a long nuclear winter following that war.
Sean,
there would certainly be other effects, but i was curious about what the “textbook” effect would be
BC Bob Says:
April 15th, 2008 at 12:00 pm
“but back away from things gradually by the time we get to the beginning of 4Q08….I am being vague on purpose….”
Chi, I would love to respond. However, would need to know what drives your sentiment first.
Bost: I am voracious consumer of opinions and data….one thing I want to hear is a particular subject mentioned…that says something to me “…people (in the know) are talking about it (whatever IT is)…” then I want to hear WHAT they are saying “…people are talking about it and they are roughly saying the same thing…”
It is not obvious that the subject matter or the expressed opinion is the same, because you are hearing different people discussing the detail of discrete situations. However, once you see linkage and connect the dots….there are certain broad themes that begin to emerge…
You’ve been pounding gold for years…if you go back and look at my posts from a couple of years ago, I was pointing to financially robust large cap global companies with hefty non-USD exposure. WHY? It is what I heard in aggregate……what I hear now is that certain trades are really crowded….
Falling home prices may just be the least of our problems..
Loan Demand `Outstrips Supply,’ SLM’s Remondi Says
The shortage of student loans will become increasingly evident as demand builds next month, John Remondi, chief financial officer of SLM Corp., told a U.S. Senate committee today.
“For the current academic year lending season, we are facing a scenario where demand for student loans will significantly outstrip supply,” Remondi said in testimony to be delivered today to the Senate Banking Committee. “The gap between available loans and the demand for them could manifest itself as early as May.”
The panel is considering the effect of the credit crunch on the student loan market. At least 50 lenders have ceased writing some form of student loans as the cost of raising money in the asset-backed market has skyrocketed.
Senator Christopher Dodd, the panel chairman, said today that “the withdrawal of these lenders, the ongoing turmoil in U.S. credit markets and the illiquidity in the student loan market have fueled concerns that a potential student loan credit crunch may be looming.”
njpatient Says:
April 15th, 2008 at 12:38 pm
183 secondary I grew up on the upper west side of manhattan, less than a block from Central Park.
Which high school?
From MarketWatch:
U.S. home builders’ index remains at 20 in April
U.S. home builders remain discouraged about their industry, but attitudes didn’t worsen in April, according to the monthly sentiment index released Tuesday by their trade group. The National Association of Home Builders/Wells Fargo housing market index remained at 20 in April, matching analysts’ expectations and close to the record low of 18 reached in December. The index shows that about one in five home builders has a positive view of the industry. Sentiment among builders has been at or below 20 since September.
Bost: I am voracious consumer of opinions and data….one thing I want to hear is a particular subject mentioned…that says something to me “…people (in the know) are talking about it (whatever IT is)…” then I want to hear WHAT they are saying “…people are talking about it and they are roughly saying the same thing…”
It is not obvious that the subject matter or the expressed opinion is the same, because you are hearing different people discussing the detail of discrete situations. However, once you see linkage and connect the dots….there are certain broad themes that begin to emerge…
You’ve been pounding gold for years…if you go back and look at my posts from a couple of years ago, I was pointing to financially robust large cap global companies with hefty non-USD exposure. WHY? It is what I heard in aggregate……what I hear now is that certain trades are really crowded….
ChiFi my Albani friend.
I’m NOT as smart as you are and a SIMPLETON.
Either you bet on Black or your money is on Red. You sound like Greenspan with all this financial jibberish.
Are you long or short on Gold my Albani friend? Period.
Do you really think that by 4th quater we will be out of this recession?
How do you hedge against iflation?
#188
6 degrees of njrereport.com, I lived on the upperwest side my freshman year of college. 79th and Amsterdamn with the likes of Tony Randell, Madonna and Robin Williams.
I was still 17 for the first month of college, and was completely enthralled by the neighborhood and truly felt proud of myself that this was my first step out of the “pinelands”. No matter how difficult school got I made sure to push through it knowing it was the only way out of home.
Sounds like somebody’s getting as nervous about the infomercials as I am.
We may be early, but I’d rather be way off the island than enjoy a last afternoon in the sun before the eruption.
202 chi
Lenox
205
it got nicer quickly (although Tony Randall had been there for donkey’s years).
208. it was 1995.
funny story: i was in line at chemical bank and an older man with a leopard print fur coat was in front of me and when he turned to leave, i was like wtf…that is the guy from the odd couple.
#195 njpatient: He is one of my hero’s too.
Did I just hear oil is at $113? What was it the day Bush took office?
#194 sean: Bronx boy here too.
Hey chicago finance, in the last month PR bonds have picked up almost 50bps in yield over same rate/maturity NY/NJ bonds what is up with that?
ShoreGuy,
Pete was a year or two older than I was. I didn’t wrestle, but he went to states all the time I believe. I knew a bunch of wreslters though.
Ah, the mark of IT, we all do it in IT because we know if the new guy is getting X we can get X+10 because we provide greater value. Most companies do not give their employees raises in IT to bring them up to what new hires in a similar job role gets. By finding out what the company was willing to pay someone else you can get a good idea of how much you can get. Other fields are different because employees are more readily replaceable, IT is different because once the lead developer leaves the system goes down and no one knows how to fix it.
Secondary,
I love to find out what other peoples perceptions are. We (East) always thought North was a bunch of the rich kids. We also didn’t really know much about the HS’s outside of TR because we had so many to worry about), so I didn’t know much about Manchester except not to speed.
pretorius #108,
Thanks for that link. The following text was interesting. I see the move towards higher-density housing all over the middlesex county area, so the authors prediction on that count appears to be quite prescient. I also found the comments about urban NJ’s reliance on the financial sector interesting.
The relevant excerpt…
As the thundering baby-boom herd stampedes into the new millennium, advanced middle age cannot be avoided. As their children fly from the parental nest, baby boomers will increasingly become empty nesters and a new housing era will emerge in New Jersey and America: the era of “empty-nesterhood.” Rattling around in their McMansions—among the most deeply feathered nests in history—post-middle-age baby boomers will begin to make new housing choices, with “trading up” succumbing to “resizing.” While this new housing future has not yet been fully invented, it may well
portend more compact communities…
…
As a result of over 100 months of sustained national economic growth and the swing in relative location costs, New Jersey’s cities are experiencing a recovery of private-sector investment and economic development. This is most apparent along the Hudson waterfront from Fort Lee south to Liberty State Park spanning the towns of Edgewater, West New York, Weehawken, Hoboken, and Jersey City. In addition, Newark is also experiencing private-sector development on a large and highly visible scale led by public and private partnerships and focused around commercial office construction, the New Jersey Performing Arts Center, higher education and science and technology linkages, and residential construction. There are also signs of emerging private investment in
Elizabeth. In all of these areas, the cost equation for businesses and individuals locating in New York or in ever further receding suburban New Jersey is moving in favor of urban New Jersey.
…
Several caveats are in order, however, before declaring the golden renaissance of urban New Jersey and the stalling of the Wealth Belt growth engine that has dominated New Jersey economic development for the past quarter of a century. First, the national economic expansion, now in record length territory, is showing signs of classic problems — rising wage costs, slower productivity growth, the stirring of inflation, and interest rate increases. Any significant slowdown of the national economy will inevitably affect New Jersey, and the past record of the differential effects of national economic slowdowns on urban vs. suburban New Jersey are clear. Namely, urban New Jersey has been the first region to feel the negative effects of national economic malaise and the last to experience the benefits of recovery. It is worth noting that the late 1990s boom of the Hudson waterfront region was anticipated with private investment and development in the late 1980s only to be devastated by the severity of the national recession manifested with a vengeance in New Jersey.
Second, much of the current urban boom is focused on the financial industry with spillover demand for housing and business locations by the New York financial sector. The past record of the cyclical effects of a capital market downturn is one of severe damage to incomes and employment of those dependent on this sector.
John,
Well, I don’t have a mansion, rather a ranch and both my cars are far from German. But I did work hard to get there.
In reality, much do the dismay of Gen Y’ers, like my little brother (personal rant), I will have to work hard to get 10X by either going back to school and getting my MBA or getting the 5 million in Angel capital I need for my super top secret business plan. If this board is still up in a few years I may ask if anyone wants in:)
I did not eat skinny kids but I do recall that since we got no allowance or snacks we were always looking for money. When I was 6 and my brother was 8 he had the bright idea of swipping my father’s shoeshine and going down to Fordham road in the Bronx to shine shoes, since he was old he would get the customers and I would do the shinning cause at 5 I was still cute in Bronx years. We ended up hitting Irish Bars and making some good coin till the Irish Bartenders chased us down the block. Made enough coin to replace shoe polish, get some piza and play some pinball. I think today they would have called child custody.
Chi,
I hear you regarding crowded trades. My antennae was raised in Feb-March, gold.
What ultimatley drives trends are the underlying fundamentals. At various times, within the trend, markets become overbought/oversold. Vicious moves, counter-trends will occur. This acts as a relief valve, allows markets to unwind, throw the late comers under the bus. Markets need this and ultimatley embrace it. Subsequently, the trend may continue with much less hype/sponsorship.
In the case of gold/dollar, these trends have been in place since 2001. Sure they become oversubscribed, gold declined over 20% in 2006 amd most recently, approx 16%. The market senses the extreme bullishness and reacts accordingly. However, gold, the long term trend will stay intact until there is a severe shift in the fundamentals. That would require concrete fiscal constraint and responsible monetary policy. As long as the clowns in DC spend like drunken sailors, [no disrepect to drunken sailors], and Bergabe allows the margin clerks to twiddle their thumbs, the underlying fundamentals are intact for gold.
To sum it up, I agree with you when markets become overcrowded a reaction is forthcoming. However, a flush out of the late participants does not spell the end of a trend. Only a change in fundamentals can determine this.
#217: I don’t know about that, most of the McMansions in my neighborhood are not occupied by boomers; they are occupied by Gen-Xers in their mid 30’s – early 40’s who bought them the minute the first baby was starting to walk and the second baby was a bun in the oven. Because after all, how can you raise children in a house where they might have to share a bathroom and clean up their toys because they don’t have a dedicated playroom?
Syncmaster,
The report was written in 1999. Two years later we were in recession.
Wealth Belt office buildings emptied out as jobs drained out of these suburban locations.
Meanwhile, urban New Jersey experienced its brightest period in decades. Look at where the state’s largest office building developer, SJP Properties, is allocating capital these days. SJP is building office buildings in Hoboken and New York, not the suburbs.
that’s disrespect.
make money Says:
April 15th, 2008 at 1:10 pm
Albani: I was answering Bost’s request for info…
Are you long or short on Gold my Albani friend? Period. LONG, but with a substantially smaller position that I have had for several years.
Do you really think that by 4th quater we will be out of this recession? NO
How do you hedge against inflation? WHATEVER YOU FEAR, BUY IT.
pret #222,
Sure. The boom in those areas has been centered around the financial sector, correct? What do you think about the authors statement that dependence on that sector has historically been very volatile?
… much of the current urban boom is focused on the financial industry with spillover demand for housing and business locations by the New York financial sector. The past record of the cyclical effects of a capital market downturn is one of severe damage to incomes and employment of those dependent on this sector.
214 The Pete Bush I was talking about would have been around 50 back then He gratuated back in 68 and was a coach down at TR East. The one you knew may have his son.
Grim 220 stuck in moderation
BC Bob Says:
April 15th, 2008 at 2:12 pm
Chi,
Bost: you are closer to a desk that I am….do more people think the way you do or not?….I am guessing you are one of many (of the masses), as opposed to the lone wolf in 2005….isn’t most of the money already in? The USD-short trade can have fundamentals, but Gold does not. Gold is gold. People can use it as a proxy to be short-USD, but the investment in itself is not an exclusive short-USD trade, meaning there is certainly positive correlation, but ultimately is there clear (strong) causation?….of course yes, but is feels more like a substitution…..
Note: I am not pounding the table here that I know about what I am talking. This opinion is stated at 2:30PM on 4/15/08 and has the shelf life of a mayfly. Also, if you use it to make investment decisions, you will have your financial situation instanteously converted to the personal profile equivalent of Linens-‘N-Things.
John Says:
April 15th, 2008 at 1:40 pm
Hey chicago finance, in the last month PR bonds have picked up almost 50bps in yield over same rate/maturity NY/NJ bonds what is up with that?
JJ: First….I assume it is merely a technical abnormality without knowing the details, but second, speaks clearly no? NJ=mierda;NY=Spitzer….ON THE MARGIN of course….50 bps is noise in such thinly traded markets….
Maybe Carleen should check out the comps in Basking Ridge.
http://newjersey.craigslist.org/rfs/627470288.html
She will be lucky to get low 800’s.
TJ,
T.R. East equaled surfers and rich kids with beach houses.
Little did I know about about section 8 back then and shuttling Seaside Heights kids over to your school.
You and I were in HS at the same time. I played baseball so we had stereotypes for all of the schools in the conference. MonDon was by far our biggest rival and snobbiest.
In re speeding: Yeah, when I visit my folks I make sure I’m 5mph below the allowable speed. It’s still pretty obnoxious, although I know more cops in the dept from H.S.
sync, #217
“Rattling around in their McMansions—among the most deeply feathered nests in history—post-middle-age baby boomers …”
All the baby boomers I know bought in the 1970’s and 80’s, and even if they intended to trade up from “starter” houses, a lot got trapped by sky-high interest rates (late 1970’s/early 80’s) or the market crash (late 80’s/early 90’s).
By the time they started building McMansions, it was by-and-large too late to trade up.
bts,
Has that realtor reached puberty?
Although it cover CA, not NJ, interesting nonetheless:
“Just two banks, Washington Mutual and Countrywide, wrote more than $300 billion worth of option ARMs in the three years from 2005 to 2007, concentrated in California…The really amazing thing is that the meltdown in California is already happening and virtually none of these loans have yet reset.”
http://www.slate.com/id/2188982/
[69] Shore Guy…
You need new friends.
Seriously.
I am not joking.
We had good friends like that. Poor credit and all that. They were even using 2 year old son’s name and wrecking his…
It got so we couldn’t enjoy our successes with our friends for fear of dampening their already low spirits. Time after time after time we would gather and not be able to say what good things were going on in our lives… it became a toxic friendship, unbeknownst to them.
We started being “busy” for get togethers and eventually worked our way out of their inner circle…
PS-husband remarried to new wife who handles money with care, they now are doing much better than he and wife #1. What a pleasant change!!!
Syncmaster,
The 2001-2002 recession was devastating to employment and incomes in the New York financial sector. But things quickly bounced back, which is one reason why people seem to have forgotten how sharp the fall was.
Meanwhile, employment in Wealth Belt industries such as pharma and telecom also got smashed by the recession. In contrast to the New York financial sector, it never came back.
Plenty of apocalyptic headlines about layoffs appear in the mainstream media. But if you look at the actual data, and I do, it becomes clear that the New York financial sector job losses happening today are modest compared to the 2001-2002 experience.
This helps explains why housing and office markets in Hoboken and Jersey City remain a lot healthier than Wealth Belt markets.
Jill (221):
I guess I go against the grain a bit, since I didn’t get the McMansion. I’ve got two kids (27 month and 4 month old) and live in a 2BR about 900 sqft in NYC. Luckily I have 2 BR’s, but the shower in the other bathroom is not functional yet (getting someone to fix it next week). I’ve been living like this since last year and previously was in a 1BR walkup until my oldest was 16 months. We get by w/out a dedicated playroom, a dedicated dining room, a dedicated family room or a garage. Sure life may be a bit easier w/ the extra space. But my commute to work is about 20 mins door to door, instead of an hour plus. The extra time I spend mostly with my kids/wife and sometimes with friends after work. I have a car, but have to take a train to my garage since it’s cheaper. I only use the car on the weekends anyway, so I sacrifice time there. Would I be in this situation if prices were more reasonable. Probably not, but I’d rather be space wise uncomfortable, rather than fret over my financial situation.
Are you long or short on Gold my Albani friend? Period. LONG, but with a substantially smaller position that I have had for several years.
at around $900 I backed the truck in and loaded all my Swiss CD’s that matured last month.
That’s just my personality when I know I’m right then I’m all in. If I’m not sure then I’m on the sidelines.
Never in the water only half way.
Scribe 234
They are off by 1 generation. Gen X is the group that has predominantly snatched up the mcm ansions. gen X is often considered to cover the years 1965 to 1982.
“This helps explains why housing and office markets in Hoboken and Jersey City remain a lot healthier than Wealth Belt markets.”
So far!
pretorius Says:
The 2001-2002 recession was devastating to employment and incomes in the New York financial sector. But things quickly bounced back, which is one reason why people seem to have forgotten how sharp the fall was.
But economies don’t just “bounce back” because they bounced back in the past. What are the factors that lead you to believe that the foundations of the economy in this region are essentially sound and that we are only experiencing a temporary cyclical blip, rather than a fundamental sea change?
Stu,
He does look pretty green, but I commend him for having ‘relatively’ realistic pricing for his listing.
For the rice eaters.
http://www.bloomberg.com/apps/news?pid=20601012&sid=aPCj9THhyY4M&refer=commodities
#232
That house is nicer than Carleen’s
http://www.forsalebyowner.com/listing/01FFA#
Hard Place, hey rich guy fix your own shower!!!
Actually I do my own repairs but just once I was having the kitchen gutted and redone cause it was way too much for me. That week I was working till 11pm everynight and could not get to a minor repair. Well my wife decided to me nice and ask the contractor who was tearing apart my kitchen to do it so I would not have to do it on the weekend after working a 80 hour week. Well the contractor says “what is you husband a baby?” When she mentioned I was working late which is the only reason she asked he then said “do you also want me to change your husbands diaper since he is such a baby”, then the rest of they guys laughed. Well long story short I fixed the thing my self and the next day when my wife mentioned she did not like that type of talk they did not show up the next two days leaving me with no kitchen. Why anyone in their right minds would hire someone to do a small repair is beyond me. Windows, roofs, kitchens and boilers I am forced to hire these idiots but to voluntarily bring them into my house.
kettle1 [241]: Yes, but it’s just SO much easier to blame the boomers for everything.
Scribe is right about what most baby boomers were buying; they were buying pre-existing homes in the 1970’s and 80’s. I know because I was making peanuts in those days and renting when my friends were living at home and saving money to buy houses or buying them and paying 18% interest on their mortgage. NO ONE knocked down a small house and built a bigger one in those days. What people did who “made it” was trade up.
I remember when I was a kid hearing my parents talk about having a $25,000 house at their income level but dreaming about a $35,000 house, which would have a second full bath and maybe a pool in the backyard. But that was something you didn’t get until/unless you could afford it. Now everyone at every income level feels entitled to a marble entry foyer with bridal staircase and “gourmet” kitchen in which to pack Lunchables for the kids’ lunches and slap pizza slices onto a paper plate for their dinner.
I have zero sympathy for their financial problems. The only reason we bought a house the size we did (4 BR/2 BA dormered cape) was consideration of resale. And its dead-end street location.
Chi [228],
I’ve been in gold since 2003. I would say I’m an outcast. Many more are of the belief that paper is the way to go. I like it that way.
Money is a medium of exchange, it has value and can be exchanged for goods and services. The US dollar is a medium of exchange. Although you may not be able to buy certain goods and services with gold, it can easily be exchanged for US dollars. In the future, if gold is not widely accepted and can not easily be conveted into a local currency, the tide shifts.
Gold is the defacto currency. I never bought it as a commodity. Every currency trading desk, also trades gold, on the same desk. It’s not buried on the commodities desk. As long as it’s traded as a currency, it will follow the same fundamentals. Gold will become more valuable as long as cb’s continue to inflate. It has broken out versus all currencies. Has gold really become much more expensive or has the dollar become terminally sick?
“gourmet” kitchen in which to pack Lunchables for the kids’ lunches and slap pizza slices onto a paper plate for their dinner.
I know someone who did a $150k kitchen remodel and doesn’t ever cook. Take out and eat out, every night. The fancy kitchen is for looking at.
“What are the factors that lead you to believe that the foundations of the economy in this region are essentially sound and that we are only experiencing a temporary cyclical blip, rather than a fundamental sea change?”
New York has been the finance center of this country since independence. This status has been maintained through stuff a lot worse than the current crisis.
Hard Place – I feel your pain concerning the frustration of overpriced listings.
On the other hand – the 900sf you have in NY has probably prevented you from spending a fortune on all of the junk that seems to come with small kids (most of it unneccesary) when you have lots of space to fill, most of which is tossed quickly as they grow so fast.
I am frequently amazed by the rooms full of useless toys I see in some friends houses. Usually ignored because the kids just have too much stuff. It’s just money thrown away.
File this one under no S*&*T Sherlock.
http://www.cnbc.com/id/24127027
pretorius Says:
April 15th, 2008 at 3:14 pm
““What are the factors that lead you to believe that the foundations of the economy in this region are essentially sound and that we are only experiencing a temporary cyclical blip, rather than a fundamental sea change?”
New York has been the finance center of this country since independence. This status has been maintained through stuff a lot worse than the current crisis.”
Two problems with this theory:
1. It presumes the continued success of finance as an industry in it’s present form.
2. It ignores the recent and continuing globalization of that industry.
234
I’ve been to a block party for a McMansion development that is populated by an even number of boomers and Xers.
The bubble is not a generational phenomenon, IMO.
238 pretorius
I was under the impression that, although as you say things snapped back, that the jobs lost in 2001/2 were not fully recovered. Perhaps that is an incorrect impression.
Baby Boomers are the greatest generation ever, just ask one of them.
ShoreGuy,
Okay, I know the Pete Bush you are talking about. Well, here we go. This is digging back in the memory archives but this is what I know and remember.
Pete was a gym teacher at HS East and coach. He got busted for fooling around with a young student. He was then sent to the intermediate school (East) to teach gym and coach were, as I recall quite vividly was a “DB who was more than flirtatious with 13-15 year olds”
John,
Far from rich… Instead of fixing it myself, I’m getting the second best thing. My father-in-law is doing it. He knew I was a big baby when it comes to repairs and he still let me marry her. I do at least change my own oil & filter in my car…
Last time I tried fixing something was when I was 8. My Atari was in pieces all over my living room floor.
Pre 251
I would suggest that the current crisis is actually larger then the majority of crises that have occurred in american history. The crisis we are entering was triggered by housing but goes much deeper. the US dollar is in trouble, energy prices are set to sky rocket, the global financial industry is quit wobbly at the moment etc.
I might even go so far as to suggest that the mythical American Way of Life TM may be coming to an end. Consider all the the mini crises that are convering at the same time:
-un-affordable housing across the nation
-The US is in danger of losing its AAA rating due to becoming a debtor nation
-Real inflation of 15+%
-real unemployment of 10%
-30 TRILLION in unfunded MEDICARE liability
-We are entering the beginning of the boomers moving off of the tax roles as entitlement and government spending is at an all time high
-Erosion of civil liberties ala patriot act.
the deconstruction of american industrial capacity due to globalization
Now consider that due to the wonders of globalization no market is safe. The markets of the world are intimately tied together unlike previous national crises, where international/foreign markets would have offered the potential for protection
(this is officially my Apocoliptic post of the day)
Pret,
NYC & Finance. Agree w/ what lisoosh said in 254.
Citibank just said the $330billion muni auction rate market is pretty much dead and will not be revived. Been that way for months.
Confucius says: When the sun rises in the West and sets in the East you will get a bailout.
http://www.marketwatch.com/news/story/frustrated-chinese-investors-hope-vain/story.aspx?guid=%7B3C72D2E9%2DE9BC%2D43FB%2D97BA%2D261701D15D96%7D
Secondary,
I ran track so didn’t really know of the stereotypes and competitions. But I was one of the surfers. The section 8’s in Seaside were somehow pawned off on Central Regional at some point. Mon Don chicks were crazy but great and the guys were dilinquents (my perception).
My perception of the schools:
East: Normal
North: Rich
South: Ghetto
MonDon: Rich w/ Problems
251 pretorius
“New York has been the finance center of this country since independence. This status has been maintained through stuff a lot worse than the current crisis.”
Absolutely true – you sound like me with that quote. That being said, NYC was a sh*thole from 1970 the early ’80s, and even in 1990 there were 6 murders a day. It can presumably return to that state without ceasing to be the financial center of the country.
The “resident tourists” who make up most the citizens of Manhattan today would crap themselves and flee in horror if that happened.
260 ket
“I would suggest that the current crisis is actually larger then the majority of crises that have occurred in american history.”
Without question.
260 ket
looking at your list, you should add:
– a financial grid in danger of systemic collapse.
Njpatient, kettle, lisoosh,
Do you think current crisis is worse than Great Depression or Civil War days?
Nj patient,
I think that what is often forgotten is that the wealth and success of the boomers and the subsequent effects arose in significant part from a confluence of events largely centered around WWII. Many of those events were not replicated again.
#258 I don’t think it would be the same guy. The one I knew was a special ed teacher.
“Sean Says:
April 15th, 2008 at 3:20 pm
File this one under no S*&*T Sherlock.”
Sorry, Sean – no can do. That filing cabinet is chock full, dontcha know.
SOx is a real threat to NY as a financial center, well anyplace in the U.S. for that matter.
pret 267,
the potential exists for the current crisi to become worse then the great depression, we will have to wait and see as we are only in the 1st quarter of the game right now.
I would actually enjoy debating the current situation in relation to the civil war, but that is to philosophical and complex debate to be had here.
I think that the current crisis will end redefining the US in many ways by the time we have recovered ( not just the housing crisis, but the whole package)
bankers should always be involved in the relvant industry:
http://tinyurl.com/6gupro
# 268 Bingo. At the end of the war we were the only industrialized nation standing with an unscathed industrial base. We got fat and lazy, did not care about quality and other fundamentals and allowed the rest of the world to catch and in many ways pass us; although we cling to a myth that we are superior in all respects. We now lagg in wealth, in health, in lifespan, and a host of areas where most Americans would likely say we are leaders.
We got great by doing the kind of things that makes a nation great. We will not stay great unless we continue to do those things.
I was listening to Bloomberg radio at 8:35 this am. The announcer (not a guest), was reading a report on CPI, and explained to us listeners that the CPI omits food and fuel costs because they fluctuate too much to be included accurately.
Talk about drinking the Kool-Aid. If wild fluctuation is a problem, I guess there might as well be no more stock market reports. The sudden fluctuations make it too volatile to predict, we should ignore it. Oh wait a minute, I believe that last part.
There’s no vitriol in this forum today. We need to kick it up a notch. I feel like I’m sitting with my mother in law having a cup of aromatic tea watching a made-for-TV movie on the f*cking Lifetime channel. I want everyone to go to a few open houses this weekend and see what $500,000 gets you. Make sure you bring a gas mask because I can assure you that the cat p*ss smell will be so bad that one careless spark will level the house.
We have lotsa work to do here, folks. Forget the all this musing nonsense and reminiscence twaddle. I want to hear how somebody did a 20% lowball with a 24 hour fill or kill. C’mon, put down the quiche, smear some mud on your face and act like a lion circling the wounded foal.
Photo and caption in this article should be posted in all NJ government offices.
Good job, NJ state government, for putting this corrupt mayor behind bars. Keep up the good work.
http://www.nj.com/southjersey/index.ssf/2008/04/former_carneys_point_mayor_sen.html
Mini-GTG on Thursday featuring myself, kettle, and sybarite, at the Harvest Moon in New Brunswick, 6 pm, assuming the world hasn’t run out of oil by then. All are welcome.
njpatient (264) –
I pass through all parts of NYC from time to time. I have to say in the lesser parts of Queens, I’m starting to see more people sleeping in the subway stations as shelter. Just last week, I saw the usual non-institutionalized homeless guy I always see and also two day laborers who now use the subway station as a proxy shelter. They had a shopping cart w/ their belongings and a case of beer. They were all passed out. This wasn’t the case several years ago when times were better. Things are getting uglier on the fringes from that street view…
263.
Too funny. Manchester was all of the above.
274 in moderation
Jmac,
I see we settled on a time? :)
6pm then!
Gary –
You’ve got me fired up. What I will do is:
1) Look on the GSMLS to find homes I like
2) Look up the address/owner on the tax records
3) Go buy some stamps.
4) Type up a letter offer w/ a lowball bid and contingent on home inspection and give them my email address.
5) Put on my flame retardant suit and wait for response…
Put on my flame retardant suit and wait for response…
You can borrow mine, it’s already broken-in.
Gary???
http://tinyurl.com/3mdyn2
#261 hardplace: And some of the large bank corporate trust departments who hande the bookekppeing side of that product has already dismantled their muni- auction areas
That market consisted of high net worth individuals and corportations that used it to manage money. All on the premise that this product was just like money market instruments, and of course they were in a differeent time;that time is over.
gary, I hit the trenches last weekend and my bayonet is still at the cleaners.
Can I just send .wav files of laughter to realtor and craigslist e-mail addresses?
offical lowball(er) dress code in NNJ?
http://tinyurl.com/7bul7
Grim,
You can borrow mine.
You must have an industrial strength one considering all the heat spewed your way, however I’d borrow it only if you have a spare one. Wouldn’t want to leave you unprotected in the $hitstorm you face daily.
Hard Place [283],
Borrow the $2 bill that was taped to the Bear entrance, place on the for sale sign?
SAN FRANCISCO (MarketWatch) — Washington Mutual Inc. (WM:Washington Mutual Inc
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WM 10.64, +0.29, +2.8%) reported a big first-quarter net loss late Tuesday as the lender suffered from the mortgage meltdown and broader credit crunch. The Seattle-based company lost $1.14 billion, or $1.40 a share, in the period, vs. net income of $784 million, or 86 cents a share, during the first quarter of 2007. WaMu said it set aside $3.51 billion of provisions to cover potential loan losses as the economy weakens and home values continue to slide. That’s more than double the amount the lender set aside in the fourth quarter of 2007. The company also said it closed a previously announced deal to raise $7 billion from a group of investors led by private-equity firm Texas Pacific Group. WaMu shares climbed 1.3% to $10.81 during after-hours trading on Tuesday.
BC Bob – ROFLMAO!!!
There would be a bank run on $2 bills in NNJ.
#251 pret: We can debate whether there is a sea change or nor occuring.
And yes NYC has always been the center of finance in this country.
That however does not mean that NYC and its environs will not suffer price declines in real estate (it already is).
As far as the sea of smart people in this area, well all I can say is look at the mess many of these so called smart people have gotten us into.
Almost bringing our financial system to its kness, is nothing to be proud of
#238 pret: The 2001-2002 recession was devastating to employment and incomes in the New York financial sector. But things quickly bounced back, which is one reason why people seem to have forgotten how sharp the fall was.
As you have been repeatedly informed in the past, the early 90’s recession was much worse for the financial industry in NYC than 01/02.
There are those of who were actually in the business at the time.
I would also point out that in the 01/02 recession we did not lose the fifth largest IB in the country (Bear Stearns).
Nor did we have the same sytemic risk IMO and vulnerability that we face this time around.
“And yes NYC has always been the center of finance in this country.’
3b,
Investment Bankers- Shanghai, Dubai, Mumbai or Bye, Bye.
#295 BC Bob:And yes NYC has always been the center of finance in this country.’
I should have added that could always change.
“Nor did we have the same sytemic risk”
3b,
He wouldn’t know the difference between systemic risk and the turnip truck that dropped him off in NY.
73: If I didn’t know better, I’d say John is testing our tolerance before he decides whether to come out as a cannibal/child murderer-American.
April 2008 edition of Real Estate New Jersey just landed on my desk.
There is a table in there that shows office vacancy rates by county. Vacancy in Hunterdon = 32.7% Vacancy in Hudson = 9.3%.
Here is the source of the data.
http://www.sitarcompany.com/_includes/pdfs/rutger_reports/Sitar%20Rutgers%20Report%20Q42007.pdf
Can’t imagine where they get that idea, Mr “I Like to Announce (Repeatedly) to Random Strangers on a Message Board That My Annual Vacation Budget is $50k.”
Gary
Sir Yes Sir!!! You got me going, I’ll hit an open house.
But seriously, that tea sounds delicious, what flavors do you have?
I was watching a listing where Guy reduced the price by 20K and wrote comments that price reduction was till April 13th. Today he raised again the price by 20K. What a douchebag !!! If you did not get any offer with 20K less price, you are going to get now.
Jamey how dare you imply I don’t like children!! When properly cooked and seasoned they are postively delicious!!
John – I wouldn’t want to get on your good side…
“I just had an old friend for dinner” – Hannibal Lecter…
Hmm I guess the Developer is motivated. Personally these units were way overpriced for East Orange
http://newjersey.craigslist.org/rfs/643202667.html
When I lived on 26th and Lex and took the N/R on the other side of the park I would walk around Madision Park at 8am rather than go through it. When I was late in the morning I would cut through very quickly as all the bums and drug dealers were still there. Anyhow my brother lived on 25 and Lex and one day he cuts through the park and as he is passing a drug addict just waking up the druggie whips out a big knife and stabs to death the business man who made the mistake of following my brother on the cut through. On the corner of 31 st to 24th on Park their were four hookers on every corner every weekend. Plus we had a lot of SROs and crack houses. When CSFB announced they were opening up in the old met life building the whole neigborhood changed. Nothing like hitting the diner at 7am on Sunday while a tranny cops a squat on your stoop in torn fishnets and makes a nice yellow stream for you to jump over. Sleezest place was a bar on Lex by 26th a few doors down by me. Afterhours hang out for hookers and pimps, 8am on a satuday that place was crowded as the girls came in to cough up their split with the pimps and gargle down some whisky to get the latex powder taste out of their mouths.
Kooky part it was all on my block and we all were neghborly enough. The working girls, crack heads and pimps would all say hi to us rent stablized residents. Of course coming home with a date you had some splaining to do.
You couldn’t pay me to live in East Orange.
You couldn’t pay me to live in East Orange.
Rich,
That’s next. For now you can live there for free.
John –
Manhattan is a sterile version of its former self. It’s definitely not as gritty with the buggy/yuppy set around.
pretorius Says:
April 15th, 2008 at 3:46 pm
Njpatient, kettle, lisoosh,
“Do you think current crisis is worse than Great Depression or Civil War days?”
I would think that different would be a better term than worse. I imagine that a lot more people died during the Civil War, and a lot more people were homeless or on bread lines before the social safety net.
I do think that the US is hitting the end of the line credit wise and a serious retraction is required.
In terms of my own personal experience, I have lived through a recession which led to massive unemployment (up to 35% in some towns) and a huge change in infrastructure and employment base from mining and heavy manufacturing and precision engineering to light electronic assembly and services. I have seen an entire generation of men NEVER really get back to peak earning power and huge swaths of a nation take 20-30 years to recover. I have seen real bread lines and violent clashes with police and entire communities and towns torn to shreds.
So based on my personal experience, the much lauded recession of 2000-2001 is Coors next to Trappist Triple Ale. In other words, no more than pee in a bucket. I do think it will get very much worse, especially for people who can’t retrench and get out of their rigid mindsets about how the world is.
jmacdaddio Says:
April 15th, 2008 at 4:01 pm
“Mini-GTG on Thursday featuring myself, kettle, and sybarite, at the Harvest Moon in New Brunswick, 6 pm, assuming the world hasn’t run out of oil by then. All are welcome.”
Hm. Now that is actually in my neck of the woods. Just need to work out where to leave the sprogs.
Lisoosh,
I think you are from somewhere in UK.
What has happened in Southeast England since that time? That is the part of the UK that is comparable to this area.
pretorius Says:
April 15th, 2008 at 5:59 pm
Lisoosh,
“I think you are from somewhere in UK.
What has happened in Southeast England since that time? That is the part of the UK that is comparable to this area.”
From the North. And during that time the South suffered too, though not as much. But that is irrelevant. The point is that change is tough, true change in the economic base is devastating.
You appear to be a very analytical person. One who likes numbers and patterns and cold hard data. All quite laudable in their own way. But it leaves you with big spaces for both human nature and true systemic change.
Lets look at a different pattern, maybe one you can understand better. At the beginning of the 20th century, the United Kingdom was a world power, maybe the preeminent one. The center of an enormous empire, with successful industries and rich cities. Even in the middle of the century, Sterling was still the currency of choice, it was hugely devalued during the Thatcher years when trying to get inflation under control. The UK has never regained its position as the world leader it once was.
Look at China, huge thriving cities of millions, not 40 years ago were fishing villages with less than 40 homes.
Look at Japan. 20 years ago it looked like they were going to take over the world.
Look at Vietnam. Not that long ago the US was retreating, communism sliding in, the country devastated. It is one of the fastest modernizing nations in the Pacific. It has the fastest growing middle class and the largest improvements in living standards in the region.
The Rust Belt wasn’t always the Rust Belt. Who could have guessed 40 years ago the demise of the American auto industry.
Look at the mansions of Pittsburgh.
And before you start idolizing the UK, or London, the economy there is built on a bigger house of cards than you can even imagine. Just watch as the sh*t hits the fan there.
Yesterday evening I was in a drugstore in Warren. I overheard a women saying she couldn’t sell her house in Bernardsville, even at a small loss. She said there was no interest.
Favorite after hours places in Manhatten back in the day: Mud Club, CBGBs, Club Thirteen, The Nursery, The Roof Top and my personal fav, Rosies, which was a closet size dive at 38th and 9th.
Ask me for stories at the next GTG.
#315 pret:But their tremendous human capital advantage matters more than ever and it isn’t going away.
So some of that same tremendous capital that created the financial mess we are now in, can now clean it up for us?
From Reuters:
S&P may cut $57 bln subprime debt, reviewing loss
Standard & Poor’s on Tuesday said it may cut $57.1 billion of subprime-related debt due to continuing delinquencies and a worsening outlook, the rating company said.
S&P will likely lower many of the ratings over the next few weeks because monthly performance data shows delinquencies and foreclosures continue to rise for deals issued in the first half of 2007, the rating company said.
“Today’s rating actions incorporate our most recent economic assumptions and reflect our expectation of further defaults and losses on the underlying mortgage loans,” S&P said in a statement.
S&P said it is reviewing loss expectation for more than 17 percent of U.S. subprime debt deals issued in the first half of 2007, due to the latest delinquency trends, loan risks and deterioration in the rating firm’s macroeconomic outlook.
It is also reviewing its rated collateralized debt obligation transactions with exposure to the affected U.S. subprime mortgage debt and will take action in a few days.
Is $57,100,000,000 a big number? I can’t tell anymore.
# 303 Bernase sauce is a popular choice.
# 316 In later years did you ever see Maul Girls at CBGB?
3b,
“So some of that same tremendous capital that created the financial mess we are now in, can now clean it up for us?”
In the late 1990s, Silicon Valley vaporized billions, if not trillions, of shareholder wealth. Just a few years later, Silicon Valley has already recovered. Median home price in San Jose metro hit a record high ($845,300) in 4Q07.
Likewise, the New York financial industry has just destroyed a lot of wealth. I’m confident it will bounce back too.
#319
If that actually happens, that would translate to over one year’s worth of the usual 1 billion Friday losses. Takes the fun away up front.
#318
Let me guess. From AAA down to AA?
grim [319],
No, it’s not a big number because we live in the most prestigous area on the planet. In fact, if a nuclear war were to take place, only two things would survive: cockaroaches and house prices in North Jersey.
grim,
un-moderate me, pleeeeze. :)
#319
My number is bigger than your number: $120,000,000,000.
Wachovia now expects as much as 8 percent of its $120 billion in so-called option adjustable-rate mortgages to default over the life of the loans. The bank’s previous estimate was for losses of less than half that. Even that may be optimistic, said Beacon’s Thornberg, a lecturer in economics at the University of California at Los Angeles.
“California real estate remains in total free fall with foreclosures accelerating at a phenomenal rate in the past two quarters,” he said. “The real pain is just starting to come out right now, though it was imminently predictable a year ago.”
Wachovia’s nonperforming assets, for which it doesn’t collect interest, totaled 1.7 percent as of March 31. “In the 1990 recession, NPAs got to 3.1 percent, so if Wachovia is one of the companies worst hit in this cycle, their nonperforming assets could more than double from here,” said James Ellman, president of San Francisco-based Seacliff Capital LLC, which manages about $200 million.
Aside from home lending, Thompson is scaling back Wachovia’s corporate and investment bank as demand for packages of home loans and other complex securities shows no sign of rebounding. Wachovia is cutting 500 jobs in the unit, bringing to more than 1,000 the number of positions eliminated since early 2007. The bank said it had 121,890 employees as of Dec. 31, 2007.
To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net
Last Updated: April 15, 2008 16:39 EDT
Let me guess. From AAA down to AA?
My issue isn’t with the downgrades or the total amount, but with the vintage.
First half of 2007 already showing losses worse than original expectations?
The housing slump was clearly underway, mortgage lenders were discussing tighter lending standards.
So what happened?
Grim, I somehow ended in mod. No idea how.
Do research for banks’ performance at:
http://www.ffiec.gov/UBPR.htm
Can we look at New York City’s position as world financial center in the context of the post WW2 world economic condition?
A colleague refuses to even discuss the position of NYC without citing the post-ww2 economy (he is a european, if that matters). The rest of the developed world was in shambles, but NYC and the US wasn’t. Where was London, Europe, Japan after WW2? There is much to be said for the growth of the U.S. as a manufacturing superpower due to the widespread destruction of manufacturing capacity worldwide.
So much for that advantage, the rest of the world caught up while we were sleeping.
#326,
How dumb can Wachovia be? They are still originating pay option loans in CA. Does the bankruptcy court need to persuade them to stop lending to people that can’t pay it back??
#330
Example: Wachovia
Tier One Capital
12/31/07 13.95
12/31/06 41.25
Ouch.
Citi to disband management committee.
From Dealbook:
http://dealbook.blogs.nytimes.com/2008/04/15/citi-to-disband-its-management-committee/index.html?ex=1365998400&en=5e50cb4340bf51ea&ei=5088&partner=rssnyt&emc=rss
#333,
I love Wachovia, I will buy a new house with all my put earnings on this sucker.
pretorius #299,
Thanks for that link. Interesting information!
Vacancy in Hunterdon = 32.7% Vacancy in Hudson = 9.3%.
When comparing counties of the Wealth Belt vs those of the Mature Core Metropolis, Hunterdon does stand out as having much higher vacancy rates than the rest of the Wealth Belt. Monmouth County, also part of the Wealth Belt, actually outperforms Bergen and Passaic, two Mature Core Metropolis counties.
Is it possible that instead of a rise of the Mature Core and a decline in the Wealth Belt, we’re actually seeing a realignment of both? Middlesex and Mercer are also doing not nearly as bad as Somerset and Hunterdon are. Something to think about. Perhaps the categories from the 1999 study don’t mean much anymore.
Speaking of Citi, thought this was odd.
Wells Fargo To Acquire Deposit, Loan Accounts From Citibank
Wells Fargo & Co. (WFC) will acquire consumer and business deposit accounts and loans, totaling $500 million in deposits and $60 million in loans, from six northern Nevada and two California locations of Citigroup Inc.’s (C) Citibank unit.
Terms of the transaction weren’t disclosed.
Wells Fargo, a San Francisco financial services company, said the former Citibank customers should expect to conduct banking business as usual.
299 pret
What parent corp publishes Real Estate NJ?
302 SG
Are you sure that wasn’t Duck?
304 Hard
That’s a couple lecter references in 24 hrs (clot was a4king about fava beens earlier)
#321 pret:In the late 1990s, Silicon Valley vaporized billions, if not trillions, of shareholder wealth. Just a few years later, Silicon Valley has already recovered. Median home price in San Jose metro hit a record high ($845,300) in 4Q07.
Is that some kind of justification? Do not worry the same talented morons who almost bought the financial system to its knees (and may still end up doing so),were just kidding, they did not mean to?
But don’t worry these same critters will bring it back,and all will be well? Sorry kid that does not work for me.
As far as Silicon Valley real estate do not know enough to comment, only to say it too will fall in price.
No area is immune from the laws of common sense.
#318 grim: the first half of 2007.
The first freaking half of 2007!!!!!
This one is surprising.
MLS# 2504429 – 134 Glen, Millburn NJ
4/2 cape on an 85×123 lot, current asking is $479k, down from $494k.
Current price is on the 4% trendline from 1986.
Priced well, or not?
I’ll mention that it was listed as high as $599,000 last year.
The first freaking half of 2007!!!!
What is the range on that, from 9 to 16 mortgage payments in total?
People are going into default on their first half 2007 purchases in approximately 9-16 payments?
So much for cushion.
JB [331],
It took a depression and 2 world wars for the dollar to replace the BP as the world’s reserve currency.
Funny you should mention WW2. The Reckoning discussed the same today;
http://www.dailyreckoning.com/
Hard Place (124)-
Grow up, and get real. F*#k “if only”. Nobody can put offers through the internet, and it’s not happening anytime soon.
You have money, help and time. Others here have pulled off successful lowballs; why can’t you?
If you’re going to get a deal, you’re going to have to work for it. Don’t like that? Then just pay the asking, and shut your mouth.
Dman (141)-
That broad is dead woman walking.
And, she doesn’t even know it.
grim (146)-
“Fester” is a word I use on an almost daily basis.
Look at how this boil on my hand continues to fester…
Vic (156)-
Can any of us be surprised at this news?
Fannie/Freddie are just giant future bankruptcy/bailout vehicles. Nothing more.
JBJB (166)-
I think your Chase guy is overstating it a tad.
You have to remember that Chase was- and is- more oriented toward “A” paper and has never tolerated the same kind of risk as other mortgage lenders of its size.
In general, what the rep told you is true; however, other lenders may be more willing to work around some of the sticking points Chase will not.
Of course, JP Morgan/Chase has enough derivatives exposure to annihilate civilization if it starts to go sour…I’m in no way praising them by stating their mortgage ops are a cut above.
BC (187)-
“I wouldn’t want to be anywhere near gold when all of the hedgies head for the exits.”
I want to be right in the channel of gold river EXACTLY when all the hedgies are getting blown out/margined out.
Love those dates you provided. Two once-in-a-lifetime chances to get long gold (no pun) for a pittance.
3b (193)-
There’s not enough coke in Peru to keep Kudlow up through what’s about to happen.
make (205)-
My .02 USD is that gold isn’t done until we’re over the top on the inflationary upslope and free-falling on the downside of good, old-fashioned, 1929-style deflation.
A serious and protracted deflationary crisis- with an attendant dryout of credit markets- may be the only event that truly restores any real strength to the USD.
That, or we repeal Bretton Woods.
And, going back to the gold standard would be a bellwether bull event for gold.
Not that this could/would ever happen.
Long time reader. First time commenter. Big Fan.
I was wondering if someone here could give their honest opinion on MLS#: 2504145. It was for sale in 2005 for the same listing price but sold for 510K. And we all know what 2005 was like.
I spent the better part of the last two weeks convincing my mother who has made oodles in the stock markets over the last few years to move her assets out of the stock market and to safety. She is loaded with lots of stuff that has been taking a beating, not like any sector is doing well right now anyway. Her advisor Ameriprise has been giving her the old weather the storm routine, with no analysis to back things up.
I pulled up the China Shanghai index chart for the last year. Nothing like a 40% decline in 6 months to change someone’s mind real quick.
Pret [315],
“tremendous human capital”
Are you marking this to the market or to a fairy tale model?
The first freaking half of 2007!!!!
Crazy Grim!
BC/Clot: My use of the term hedgies was in reference to non-institutional investors who have been buying gold to hedge against inflation. I agree, that if the margin calls are coming in against hedge fund managers, then yes, swimming in the gold river would be intelligent. I would probably just be short the indexes personally.
3b Says:
April 15th, 2008 at 4:14 pm
#261 hardplace: And some of the large bank corporate trust departments who hande the bookekppeing side of that product has already dismantled their muni- auction areas. That market consisted of high net worth individuals and corportations that used it to manage money. All on the premise that this product was just like money market instruments, and of course they were in a differeent time;that time is over.
I can speak to this. I work in a leading Corp Trust shop in the Muni Group & sit around the corner from the Auction Rate Group. That group has been absolutely insane for the past couple of months. All of my muni clients who had debt in ARS mode have already or are in the process of converting/redeeming. Although we have not begun actually dismantling our auction group, I don’t think they’ll be around much longer.
Ville,
Property taxes on that place were $9k in 2005. Taxes are now at $12k.
Almost a $300 per month increase in property taxes? And here I was thinking that only landlords raised the rent.
They overpaid in ’05 and are trying to get out. My evidence for this is the fact that they are paying a 4% commission to the buyer’s agent, a significant premium to market. Maybe I’m wrong and they are just generous.
306 john
Now THAT is the NYC I know and love!
overheard a co-worker today on the phone with fidelity. Apparently they recently looked at their investments and noticed that one/some of their investments were tied to some of fidelities products that have been frozen as they are taking significant loses. Long story short, they are very upset as they are close to retiring and it doesnt sound good for this person.
Clot –
Grow up, and get real. F*#k “if only”. Nobody can put offers through the internet, and it’s not happening anytime soon.
You have money, help and time. Others here have pulled off successful lowballs; why can’t you?
If you’re going to get a deal, you’re going to have to work for it. Don’t like that? Then just pay the asking, and shut your mouth.
As a business person in real estate, you should be listening to homebuyers gripes. What’s with the arrogance? Foxton’s may not have been a success, but there was a market for their service. It just wasn’t developed enough, nor was their model perfect.
Unfortunately the towns I’m interested in have remained stubbornly high unlike some of the fringe or further towns from NYC. Sometimes it’s better to be patient. I’m willing to sacrifice now and enjoy living life in the city than mortgaged to the hilt in the burbs, even though I’m a bit cramped. So for you to tell me to just pay asking and shut my mouth, I say to u “F-off”.
Is it naive to think someone can’t make an offer to a homebuyer with only the aid of a real estate lawyer? Information on home sales and prices are now publicly available on the internet, community information is also available. Realtor’s are becoming slowly irrelevant for the diligent ones willing to do some research. Realtor’s are a good fit for those who don’t want to do any work at all. FSBO can work. I have publicly listed real estate rentals on Craig’s list. If you give a renter good information about your rental, you don’t need a real estate broker to lease your space. Not the exact equivalent as selling a space, but it is a comparison.
Wow, nice Relo deal in Morris Township.
MLS# 2493434 – 37 North Star Drive
Purchased: 4/30/2002
Purchase Price: $589,000
Current asking: $585,000 (OLP $634k)
DOM: 47
Current asking is at the 2002 price. This place would need to be near $690k just to break even with inflation.
regarding train towns…
Most of us here are familiar with the “death of the suburbs” concept. Assuming this model comes to fruition, then train towns could gain an even greater premium, at least relative to the surrounding areas.
315 pretorius
If all that stands between NYC and oblivion is liberal politics, then the city should have gone underwater years go.
ket,
The new tunnel will throw a monkeywrench into that mix. While the northern lines have access to midtown through Secaucus junction, they’ll get one seat Midtown service once the tunnel opens. Once they do, how will the current “train towns” justify the premium?
Paterson is prime!
315 pretorius
Further, in M&A, one learns that no asset is more fleeting than “human capital.”
grim,
re: new tunnels.
I remember researching about the timelines for these tunnels and you may have to wait another 7-10 years before this opens. For my situation, I’ll take the sure thing (i.e. existing lines)
I see lisoosh has been busy pre-empting all my points.
Again.
Your tax dollars at work:
Epps’ pay would climb to $275G in 3 years
http://www.nj.com/news/jjournal/jerseycity/index.ssf?/base/news-6/1208154341273760.xml&coll=3
Monday, April 14, 2008
By KEN THORBOURNE
JOURNAL STAFF WRITER
Good morning, boys and girls. Can you count to a quarter million?
Jersey City Superintendent of Schools Charles T. Epps Jr. is expected to ink a new three-year deal this week that will pay him $252,000 a year starting July 1, bump him up to $260,000 next year, and pay $275,000 the third year, according to persons familiar with the negotiations.
The agreement represents a roughly 4 percent hike for the 63-year-old schools chief who’s been hauling down nearly $242,000 a year, including his $1,000 a month housing allowance, for running the state’s second-largest school system.
“I think that’s kind of a lot of money, while teachers go underpaid,” School 11 parent Frank Ramos said about Epps’s anticipated pay raise. adding: “I didn’t even know he was the superintendent.”
No school official would confirm the new salary figures, and through his spokesman, Epps would only say, “There is no finalized contract as yet.”
A public hearing on the new pact is scheduled for Thursday, 5 p.m. at School 11, 886 Bergen Ave., when the attorney who negotiated the deal on behalf of the school board is expected to make a presentation.
Even before the anticipated raise, Epps was one of the highest-paid public officials in Hudson County, out-earning both Jersey City Mayor Jerramiah T. Healy ($118,000) and Hudson County Executive Tom DeGise ($133,000).
But compared to other superintendents, Epps’s deal represents the going rate. For example, the superintendent of Newark – Marion A. Bolden – makes $270,000 a year.
And West New York’s schools chief Robert Van Zanten is paid $231,000 a year to run a 7,000-student district that is less than a quarter of the size of the Jersey City school district, which has 30,000 students. Union City’s schools boss Stanley Sanger is paid $202,000 a year in a district with 11,000 students. North Bergen Superintendent Robert Dandorph earns $198,000 a year for running a 8,000-student system.
“This is one position throughout the nation that has been able to command these kind of salaries,” said Mike Yaple, spokesman for the New Jersey School Boards Association, which is also a headhunter for school bosses.
“Around 1990, the typical support search yielded 100 applications,” Yaple said. “Now if we get one or two dozen, you are doing well.”
As teacher salaries rise, administrative and superintendent jobs become less attractive, he said.
Besides, Yaple added, superintendents don’t get summers off.
# 337 “Speaking of Citi, thought this was odd.
Wells Fargo To Acquire Deposit, Loan Accounts From Citibank….consumer and business deposit accounts and loans… from six northern Nevada and two California locations of Citigroup Inc.’s (C) Citibank unit.”
Grim,
Nothing odd about it at all, actually. C has been ditching some outlying low-population and low-marketshare markets for some time now. A year or two ago I noticed that some Citi locations I used to use in Upstate New York were being operated by a different bank.
337 grim
Do the math.
356 clot
Kudlow blows.
Clotpoll Says:
April 15th, 2008 at 9:44 pm
make (205)- My .02 USD is that gold isn’t done until we’re over the top on the inflationary upslope and free-falling on the downside of good, old-fashioned, 1929-style deflation. A serious and protracted deflationary crisis- with an attendant dryout of credit markets- may be the only event that truly restores any real strength to the USD.
clot: lighten the f— up….!?!?!
Fiscal crisis? What state fiscal crisis?
http://www.nj.com/news/index.ssf/2008/04/governors_schools_to_be_scaled.html