From Bloomberg:
Wealth Evaporates as Gas Prices Clobber McMansions, SUV Makers
Homeowners in the exurbs aren’t the only ones whose assets have taken a hit because of the surge in energy costs. Companies such as General Motors Corp. and UAL Corp. are writing off billions of dollars in plants and equipment that are no longer viable in an age of dearer oil. The destruction of wealth and capital will weigh on U.S. growth for years to come.
“Our whole economy reflects the relative costs of energy: the cars we drive, the houses we occupy, the kinds of factories we have and the equipment in them,” says Dana Johnson, chief economist at Comerica Bank in Dallas. “I’m expecting relatively large changes in all of these things.”
The loss of wealth could be a double whammy for the U.S. economy. In the short run, it depresses demand as homeowners save more and spend less, and companies fire workers. Longer run, it curbs productivity growth, as firms shift their focus from increasing worker efficiency to reducing energy costs.
…
“At $4 per gallon gas, $125 per barrel oil and $10 per million Btu natural gas, a lot of activity becomes uneconomical,” says Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania.The lifestyle of the exurban commuter may be one casualty.
Emerging suburbs and exurbs — commuter towns that lie beyond cities and their traditional suburbs — grew about 15 percent from 2000 to 2006, nearly three times as fast as the U.S. population, as Americans moved further out in search of more affordable houses or the bigger ones that are sometimes derided as McMansions.
“It was drive until you qualify” for a mortgage, says Robert Lang, director of the Metropolitan Institute at Virginia Tech in Alexandria, Virginia. “You can’t do that anymore. Your cost of transportation will spike too much.”
…
Nationwide, home prices in neighborhoods with long commutes and no public transportation are falling faster than prices in communities closer to cities, according to a study by Joseph Cortright, an economist at Impresa Consulting. For example, his study found that prices in distant suburbs of Tampa fell 14 percent in the last 12 months, versus a 9 percent drop in areas nearer the city.
…
“The decline in almost every case is worse in the suburbs and exurbs than it is in close-in neighborhoods because transportation costs are so much more of a factor,” says Cortright, whose Portland, Oregon, firm studies regional economies.
Frist?
From the WSJ:
LandSource Chapter 11
May Hit Calpers
By MICHAEL CORKERY
June 9, 2008; Page B3
A partnership that involves the nation’s largest pension fund and owns 15,000 acres of land outside of Los Angeles has filed for bankruptcy-court protection, representing one of the biggest land deals to sour amid the housing bust.
The Chapter 11 filing by LandSource Communities Development LLC late Sunday is a potentially costly and embarrassing blow for the venture’s main investor, the California Public Employees’ Retirement System, known as Calpers.
The bankruptcy filing in federal court in Delaware means Calpers could lose much of its $970 million investment in the venture, which it made through an investment vehicle in February 2007, only months before land values plunged. At the time, the venture’s assets were appraised at about $2.6 billion. Earlier this year, the value had shrunk to $1.8 billion.
“It’s not a surprise that LandSource has been affected by changes in the housing market,” Calpers spokeswoman Pat Macht said in an interview Sunday night. “This will allow LandSource to modify its debt and continue to operate.” Ms. Macht declined to comment on whether Calpers expects to recoup its investment during the venture’s reorganization. “We just have to wait and see what happens.”
Sorry about the late posting, I’m still in central time.
Sign on the entrance doors at Wal-Mart.
“Consumption of alcohol on these premises is a crime (misdemeanor).”
The stars at night!
Are big and bright!
From Gallup:
Four in 10 Americans See Their Standard of Living Declining
Ignore the first bar chart, the table is more interesting.
JB {5],
The standard of living of a mistress is declining;
http://womanofexperience.blogspot.com/2008/04/great-mistress-fire-sale.html
From the Philly Inquirer:
Editorial: N.J. Layoffs
New Jersey passed a smart law last year requiring companies to give workers notice before they get laid off. Unfortunately, in its first big test, the law failed to provide the intended protection.
Last month, Burlington County’s Jevic Transportation Inc. abruptly closed its doors. More than 1,000 Jevic employees were stunned when they reported to work May 19 to learn that it would be their last day of employment.
The workers were sent packing with no severance pay, health benefits or heads-up to find other jobs. Many had worked for the company for 10 years or more.
The new state law – as well as a federal law – requires companies with at least 100 employees to give 60 days’ notice of any layoffs. But the federal law has a loophole that Jevic invoked when it laid off its workers.
Jevic officials, who did not return calls for comment, cited an exemption in the federal law that waives the layoff notice for businesses that are seeking additional financing to right themselves.
The tougher New Jersey law, passed last December, lacks the financing exemption and raises the amount employees can win in a lawsuit. The law allows for exceptions only in extreme cases, such as war, fire or floods
…
This is where state officials could step in and toughen New Jersey’s layoff law to better protect workers in the future. Legislators could put the burden on the state – and not wronged employees – to enforce the law.
As it stands now, the onus is on the individual workers to get Jevic to pay up. Most individuals – especially those who just got laid off – have neither the money nor the time to seek justice in court.
Indeed, only about one-third of companies nationally comply with the federal notification law, according to government estimates.
State Labor Commissioner David Socolow calls the Jevic shutdown “very troubling.” State officials are trying to help employees land new jobs and secure medical benefits.
The state passed a well-intended law; now it needs to find a way to enforce it. Otherwise, employees will continue to get kicked to the curb with no notice.
I like the CEO of Lehman selective memory. “First every quarterly loss as a public company” Well I do recall in the late 80’s Shearson Lehman Hutton lost one billion one year back in the day when a billion was a huge amount of money. Lehman also lost money lots of times when they were private, heck they were in business private during the great depression. So I guess never lost money in a quarter since we were public as a stand alone company only is what he is bragging about!
“I am very disappointed in this quarter’s results. Notwithstanding the solid underlying performance of our client franchise, we had our first-ever quarterly loss as a public company,” said Chairman and Chief Executive Richard Fuld Jr
Pending Home Sales due out at 10am.
From Bloomberg:
Pending Resales of U.S. Houses Probably Decreased in April
Fewer Americans probably signed contracts to buy previously owned homes in April, the fifth decline in six months, signaling no end to the housing slump, economists said before a private report today.
The index of pending home resales fell 0.5 percent after a 1 percent drop in March, according to the median forecast in a Bloomberg News survey of 29 economists.
Falling home prices, higher mortgage rates and a weakening job market are discouraging buyers, indicating declines in housing will continue to hurt economic growth. Mounting foreclosures are also putting even more houses on the market as sales fall, signaling property values will keep falling.
“The bottoming process is going to be drawn out,” said Aaron Smith, an economist at Moody’s Economy.com in West Chester, Pennsylvania. “There are considerable headwinds and, with interest rates rising, those headwinds recently have gotten more pronounced.”
njpatient Says:
June 9th, 2008 at 8:27 am
Frist?
Bill….
grim Says:
June 9th, 2008 at 8:33 am
Sorry about the late posting, I’m still in central time.
SHUT UP SLACKWAD!
Re the “Drive until you qualify” article:
Did we really think oil would last forever? I remember being in middle school when I learned that oil was a fossil fuel and non-renewable, it struck me then that we use it way too much and we are going to have problems one day. I thought that the problems would start when I graduated high school but my estimate was off by about 10 years. Living in the suburbs and having no choice but to drive everywhere always left me frustrated because if your car broke down, you were out of luck. Seeing cars that got 8 mpg made me shudder but I kept my mouth shut because it was a source of pride for some people to see how few mpg they could get in their vehicles. Americans who had never traveled outside of America didn’t really understand the concept of riding a bike is what you do to transport yourself, not get skinny in spinning class.
It’s funny to see all the articles and hype now about oil and driving and dying exurbs when a fifth grade gryffindor could have told you that a non-renewable resource doesn’t last forever!
#5 grim: and the next 4 wiull not admit it.
Fed Not in It to Back a `Strong Dollar’ Policy: John M. Berry
June 9 (Bloomberg) — Let’s get one thing straight: The Federal Reserve isn’t going to raise interest rates to back a “strong dollar” policy.
The dollar’s value isn’t a central consideration in the Fed’s interest-rate policy deliberations. Only on rare occasions has it ever been, such as in the late 1970s when the country was having difficulty financing its current account deficit.
From USA Today:
Come look at this house, get a bottle of wine
How desperate are some home sellers in this time of sinking prices?
This desperate: Around the country, some homeowners and their agents are now offering shoeshines, bottles of wine and other freebies to anyone who shows up to tour an open house. Used to be, such freebies would sometimes be thrown in for those who bought a home. Now, they’re often offered to those who are just browsing. In some cases, the freebies also go to Realtors who tour homes for sale.
From the IHT:
Lehman reports $2.8 billion second-quarter loss
Lehman Brothers Holdings, on of the largest U.S. securities companies, reported a $2.8 billion second-quarter loss Monday and said it would raise $6 billion in capital in a public offering.
Lehman sold about $130 billion of assets, including commercial and residential mortgages, as well as real estate, during the quarter, the New York-based bank said Monday. Lehman had $786 billion of assets at the end of the previous quarter.
Shares of Lehman, the largest underwriter of mortgage-backed assets before the market froze last year, are down 51 percent this year.
From MarketWatch:
Moody’s downgrades Lehman to negative from stable
Ratings agency Moody’s Investors Service on Monday lowered the rating outlook on Lehman Brothers Holdings Inc. to negative from stable after the bank said it will raise $6 billion in new capital and expects a $2.8 billion loss for the second quarter. The ratings agency said it made cuts because of “concerns over risk management decisions that resulted in elevated real estate exposures and the subsequent ineffectiveness of hedges to mitigate these exposures in the recent quarter.” The firm noted that Lehman’s rating will stabilize only after the bank returns to consistent profitability and continues to reduce it outsized commercial and residential mortgage exposures.
It is a nice gesture to leave a bottle of sparkling wine for the new home owners, but for visiting an open house? how about lowering the price?
Lehman trims earnings estimates for KeyCorp, Fifth Third
08:46 a.m. 06/09/2008 By Riley McDermid Provided by
NEW YORK (MarketWatch) –Lehman Bros. Holdings Inc. (LEH) on Monday slashed its earnings estimates for several large cap banks on continued worries about weakness in the housing market and increased severity in real-estate related credits.
“Lehman reports $2.8 billion second-quarter loss”
Just a couple of weeks ago they stated somewhere between $300-700 million. Either things are deteriorating rapidly or they were lying. An IB lying? Can’t be.
Oil Traders Face New Regulation
Lehman bonds all across the board are 8% and up. Good Luck.
A bottle of sparkling wine at closing means you overpaid and you are a sucker.
My brother in law had the person he sold it too climb a ladder and insert the garden house through an upstairs window to flood out the place the day before closing while they were at work. The noisy neighbors called the cops and the joker had to close and pay for the repairs he caused himself.
The guy I bought from was so mad at the price he agreed too, he refused to give me the alarm code and left rotten food and pub hairs all over the place.
I got an ok price, but the dope wanted to close quick to pay bills and then rent it from me for two or three months while he looked for a new place. Houses were rising 5K a month and he was renting it from me for 2K a month, he was out 7K a month for three months after closing!
Either way no bottles of sparkling wine, leave that to the suckers.
SO who’s to blame for the record high fuel prices? BLAME WALL STREET
The US Commodity Futures Trading Commission (CFTC), which oversees oil trading, exempts these firms from rules that limit speculative buying.
This exemption is traditionally reserved for airlines and trucking companies that need to lock in future fuel costs.
Moreover, the CFTC has waived regulations on US investors who trade commodities on some overseas markets. So these investors can accumulate large quantities of the future oil supply by buying them from lightly regulated foreign exchanges.
Investors have become such a force on commodity markets over the past five years that their appetite for oil contracts is as big as China’s over the same period, said hedge fund manager Michael Masters, who testified before the US Congress on the subject last month.
Americans who had never traveled outside of America didn’t really understand the concept of riding a bike is what you do to transport yourself, not get skinny in spinning class.
I am moving closer to work – about 7 miles from work. I am ready to ride my bike. however – I will get killed, if I ride my bicycle on NJ roads.
I hope to see urban planning with real bike path networks throughout the country.
P.S. Rining bicycle to work today would b fine, it is riding it home at 100F would not be fun, but I would do it.
DJ CNBC’s Faber: Lehman To Price $6B Offering At $28/Share
Riding your bike to work in NY/NJ would be career sucide.
In Germany for instance many companies have lockers, gyms and showers on premise for employees. My friends in Frankfurt who ride to work in a company that requires suits it is a breeze they ride in to work pre-shower in shorts and t-shirts in summer. Then they go straight to their shower and get dressed and put suit on. They leave their five suits and ties at work and just transport back and forth the dirty white shirts and underware for cleaning.
I just don’t see the US ever getting to the level where aspiring VPs and SVPs can ride in all sweaty in their schwinn and not be considered a kook in the next ten years. A prius yes, schwinn no.
Word/ Phrase of the Day
Alpha
In the 1999 comic movie The Spy Who Shagged Me, fictional spy Austin Powers has his “mojo” stolen by a Dr. Evil. With his mojo gone, Powers seems to lose his manliness, decisiveness and vitality. Don’t ask what mojo is. The term is as obvious as it is imprecise. In finance, we have a similar term, alpha. Alpha is to a portfolio manager what mojo is to Austin Powers. Unlike mojo, we can precisely define alpha. It is a risk-adjusted performance metric (RAPM) obtainable through a regression of a portfolio manager’s returns against those of a benchmark. But this doesn’t capture the significance of alpha to the investment community or the emotions it engenders. There are lots of RAPMs out there, but there is only one alpha. You never hear portfolio managers boasting about their Sharpe ratio over beers.
Alpha was defined by Michael Jensen (1968). He was investigating the emerging efficient market hypothesis and wanted to determine whether mutual fund managers’ historical returns indicated an ability for some, at least, to outperform the overall market. A simple approach would have been to compare mutual fund annual returns to annual returns of the market portfolio, which might be represented by some broad index, such as the S&P 500. Such a comparison could be misleading because it doesn’t take into account risk. Sharpe (1964) had recently published his capital asset pricing model (CAPM), which indicates that a portfolio’s expected return will increase with its systematic risk (beta) according to the formula.
Nice article. With this Newsweek is standing apart from PPT media spin.
Why It’s Worse Than You Think
For months, economic Pollyannas have looked beyond the dismal headlines and promised a quick recovery in the second half. They’re dead wrong.
From the Record:
N.J. financial sector takes a beating
After two months of flat figures, New Jersey’s job market faces an uncertain future: Will it decline further or stay where it is?
Some indication may emerge later this month, when the May job numbers are released.
But it’s already clear that the state’s financial industry is taking a beating and doing even worse than Wall Street.
New Jersey financial firms have lost 11,900 jobs – about 4 percent of the sector’s workforce — since the sector peaked in December 2005, according to figures from the U.S. Labor Department. The sector has shed 7,600 jobs in the past year.
New York State, meanwhile, has lost 6,100 financial services jobs, or less than 1 percent of the sector workforce, since it peaked in June 2007.
“The volume of deals is off so much that there just isn’t as much need for workers,” said Mark Vitner, senior economist at Wachovia Corp. “It’s a pretty big hit for New Jersey, because it’s not only jobs, but high-paying jobs.”
The figures offer the starkest evidence of the impact of the housing market decline and the subsequent subprime meltdown and credit crisis on New Jersey’s economy.
…
“What we see is that it’s on a high-level plateau,” said Rae Rosen, an economist at the Federal Reserve Bank of New York. She said she believes there may be some “further nominal weakness in employment, but not too much.”
In contrast, James Hughes, dean of Rutgers University’s Edward J. Bloustein School of Planning and Public Policy, said he expects the state to suffer significant job losses in the coming months.
Whichever prediction is correct, the financial industry appears set to lose more jobs.
Sean Maher, associate economist for West Chester, Pa.-based Moody’s Economy.com, said the loss of New Jersey-based financial jobs is just the start of the industry’s deeper job hemorrhage.
“It’s a kind of natural reaction for these companies to downsize their remote back-office locations in New Jersey first,” said Maher. He said financial firms try to cut administrative jobs, rather than revenue-producing functions, first.
“Now they are running out of room to cut jobs there,” he said. “So more of the cuts are going to have to come in Manhattan.”
Economy.com predicts New Jersey could eventually lose another 6,000 financial jobs and New York could lose nearly 40,000 more.
That’s no surprise given the recent bloodletting on Wall Street, some of which has likely not yet filtered into the job figures for either New Jersey or New York.
The cuts include 15,900 layoffs announced by Citigroup, 9,000 at Bear Stearns in the wake of its acquisition by JP Morgan Chase & Co. and 3,500 at Morgan Stanley.
The recent New Jersey layoffs, as reported to state labor officials under the federal WARN Act, include: 200 at Englewood-based Affinity Direct LLC; 140 from JP Morgan Chase’s facility in Woodcliff Lake; 139 at Florham Park-based Aurora Loan Services, a Lehman Brothers subsidiary; and 94 at Morgan Stanley in Jersey City.
John,
I just don’t see the US ever getting to the level where aspiring VPs and SVPs can ride in all sweaty in their schwinn and not be considered a kook in the next ten years. A prius yes, schwinn no.
With the advent of green building it is possible. It may take another 10-20 years, but one of the points for LEEDS qualification is providing bicycle storage and shower/change facilities for employees. So for the buildings that qualify as LEEDS, this is a easy/cheap way to get the points.
Well if we’ve already moved toward accepting that a Prius is cool, then maybe another 10 years from now bikes will be cool as well. Or when $10/gallon hits, whichever comes first.
I agree about not being able to ride in traffic. Here in Nashville I too will get injured on a bike, even though everywhere I need to travel is under 6 miles from home. Even as a pedestrian it’s scary, too many people yapping on cell phones not paying attention to people in crosswalks.
I just don’t see the US ever getting to the level where aspiring VPs and SVPs can ride in all sweaty in their schwinn and not be considered a kook in the next ten years. A prius yes, schwinn no.
I agree, but for different reason. Doing that in NYC would be impossible, but it is possible when corporate offices are coming up in suburbs. But in NJ, we just don’t allow building of houses as they send school going kids, but offices are fine, as they give large share of taxes without baggage of kids. If we had allowed denser housing near corporate offices, it would make sense to large number of folks. May not be VP and SVP but many rank and file employees.
RE: fuel
Test rode a Sachs Madass this weekend:
http://www.gekgo.com/sachs_madass.html
~$1800 out the door, <50cc so no motorcycle license req’d, can ‘park’ on sidewalks with bicycles, 30 mph limiter than can be removed in 2 minutes for 40mph, supposedly 90mpg+, “big block’ motor kits to boost output to to 5hp and 50mph!
You know those stickers import car tuners (and some pickup-trucks) used to like, with a cartoon character urinating on the brand name of a hated rival? The scooter had that, but the logo for “Exxon” was receiving the golden shower…
On post #32, Here is great example. This is Google maps link to Merrill Lynch’s Hopewell campus. Just zoom out few more clicks and you can see no housing around such a large campus. If there was denser housing around, many folks would take bike, if not at the least they would be driving much less.
http://maps.google.com/maps?f=q&hl=en&geocode=&q=Hopewell,+NJ&ie=UTF8&ll=40.301131,-74.806938&spn=0.007233,0.018797&t=h&z=16
From MarketWatch:
Bond-insurer downgrades to force bank write-downs: analyst
Oppenheimer & Co. analysts led by Meredith Whitney on Monday said the recent ratings downgrades of bond insurers MBIA Inc. and Ambac Inc. could hit some Wall Street firms. In January, Oppenheimer had estimated financial institutions would incur more than $40 billion in write-downs as a result of the potential downgrades. To date, Citigroup Inc., Merrill Lynch & Co. and UBS have together taken close to $10 billion in mark-downs against their monoline exposures, the analysts said. “Today, with increased disclosure from the companies under our coverage, we believe that just for Citigroup, Merrill Lynch, and UBS, the collateral damage could be in excess of an additional $10 billion; however, we note that such an estimate remains a moving target due to the volatility inherent in the credit markets,” they wrote in a research note Monday.
This desperate: Around the country, some homeowners and their agents are now offering shoeshines, bottles of wine and other freebies to anyone who shows up to tour an open house.
I went to an open house yesterday and all I got was a free bottle of water!
It was an overpriced bi-level in Parsippany that needed a ton of work. They were asking $469k. It has been on the market for a year and just had it’s first $6k price reduction. It was a good size and in a nice area. For $390k it would have made a decent fixer-upper.
Love the blog. A real education. Thinking of returning to NJ after 33+ years in Europe. This is a great way to get caught up after being away for so long. Saw the following in the Courier Post:
CHERRY HILL — The 1969 price tag on Polly and Tom Yarnall’s home-to-be on Weston Drive was a mere $42,000, and annual property taxes were $1,497.18.
“Those were the days,” Tom Yarnall sighs sitting beside his wife in their modest living room, while planning their 50th wedding anniversary on June 28.
In the years since the purchase, the value of the house has increased considerably, as have the taxes.
This year, the fixed-income Yarnalls are paying $9,500 and by next year, they could see their property taxes increase to five figures, or more than one-quarter of their annual retirement and Social Security income, Yarnall said.
All Cherry Hill property owners should see an increase in their July property tax bills, but if significant cuts to township and school budgets aren’t made, the next bill in January could soar. Since the increases are spread out over the fiscal year, the bulk of the increase comes later.
In a township where nearly one of every three residents is 55 and older, the latest round of increases is forcing tough times to get tougher.
The township announced a 13.6-cent raise last month in its preliminary property tax rate, about a 22 percent increase, which should reach mailboxes in July. The average $140,000 homeowner should see a $150 increase in taxes.
This is combined with a 4-cent raise to the emergency services share of the tax bill, or about $60. A 9-cent increase in the school’s portion of the bill is also coming, meaning an additional $126. The only reduction is in Camden County’s share, which has dropped 2 cents, for a savings of about $28.
All told, the average homeowner should budget at least $336 more for the upcoming fiscal year, beginning July 1.
The Yarnalls could see a two-to-threefold increase above the average.
“When we were working, we would usually get a modest little increase each year, but you can’t make it up now,” Yarnall said. “We thought we were on a tight budget three years ago. Man, now we’re digging into our savings.”
Yarnall, 76, said he and his wife, 73, have a 10-year savings cushion, but the couple is scared their bank account bottom line might fall short of their life line.
The couple eats at home more. They’re not taking trips. Yarnall isn’t purchasing two of his prescription medications because they’re too expensive.
Like many seniors, the only asset in the Yarnalls’ portfolio is their home, so they don’t want to give it up, but the option is on the table after the latest increases.
Coupling these taxes with the rise in cost of everyday items is exacerbating the problem. The price of regular gas for the region has increased about a dollar in the last year.
This is coupled with a 5 percent increase in the cost of food, 4.3 percent increase to health care costs, a 3.2 percent hike to education and communication fees and a 1.2 percent bump in recreation costs, according to the April Consumer Price Index report.
“I feel we have always been conservative with money. Now we feel like we’re being chased out of our house,” Polly Yarnall said. “We don’t want to be a burden to our kids.”
Township leaders didn’t decide in favor of the increase casually. In the past three years, the township has requested only penny increases in the tax rate to balance the budget.
Council President Steve Polansky characterized the efforts as being almost too fiscally conservative.
“When you look countywide, we’ve historically had the lowest tax rate in Camden County. That’s not changing with the current levy,” Polansky said. “Perhaps in trying to maintain that, we may be overly aggressive, and we’re stuck with an increase because we haven’t traditionally done the raises we needed to.”
Business Administrator Maris Kukainis said the bulk of the preliminary $6 million tax levy increase is coming from nearly $1 million in additional insurance premiums, as much as a $1 million reduction in state aid, an additional $700,000 for state pension payments and $1 million less in revenue from the downturn in the economy.
Dan Keashen, a spokesman for Mayor Bernie Platt, said the township has often been creative, but forces were out of their hands, mainly, the state and energy costs. He called it a “perfect storm.”
“Trenton has put a gun to our head,” Keashen said. “The mayor is mad as hell that he has to put anything like this to the public. Any increase is absolutely painful.”
Four employees have already been laid off by merging the human resources and finance departments, and two more layoffs are likely, Kukainis said. The township has a work force of about 300, Keashen said, the lowest number in seven years.
In addition, Cherry Hill should save money after implementing its new recycle program, meaning less landfill and fuel fees. The information technology services are being shared with the township’s fire district. All cost of living raises are tied to the consumer price index measuring inflation on consumer goods. And the township is aggressively going after tighter labor contracts.
A review of classes and events township wide is also ongoing to cut costs, Keashen said.
Officials with AARP, with 1.4 million New Jersey residents over 50, criticize the state and local governments for not capping taxes for seniors and making them pay an unfair share of the budget.
“One of the hard parts of being 70 years old, you cannot easily go out to get a job to pay the bills,” said Doug Johnston, governmental affairs manager for New Jersey AARP.
“It’s disturbing that state and local governments would so cavalierly increase taxes without regard for low-income people and particularly seniors living on fixed incomes. The reality is that seniors are going to suffer.”
But not all seniors are frustrated with the township.
Irene Burke, who acts as the chairwoman of Cherry Hill’s Senior Advisory Board, doesn’t want to pay higher taxes, but she sees the staff making efforts to cut.
“I think the township is working harder than any other entity we have to give our taxpayers the best for their dollar,” said Burke, who has lived in the township for 42 years. “Seniors get more for their dollar than any other community around us as far as services.”
The Yarnalls said they are not suffering as much as other families, particularly those with poor health. But they’re barely able to pay the bills now, while they are healthy. This may not be true as they reach their upper 70s.
Still, the township feels that people live in Cherry Hill for a certain quality of life, and cutting more would impede the reputation for the quality of life provided in the township.
“Nobody wants to see taxes go up. I certainly don’t. I have to pay the same taxes. It hurts me as much as everyone else,” Polansky said. “We’re at a point where any further cuts are going to impact very critical services, and it will be visually noticeable by the residents.”
He emphasized, however, that the township is still trying to cut.
…also, we went near the end of the open house and were the only people who showed up all day. The realtor blamed the heat.
From MarketWatch:
British wholesale inflation at record pace
A record jump in wholesale inflation in May sent the British government bond yields soaring and lifted the pound Monday on ideas the Bank of England will find itself unable to further cut interest rates in coming months despite fears of a major economic slowdown.
The price of goods leaving British factories rose at an annual rate of 8.9% in May, the largest jump since the current statistical series began in 1986, the U.K. Office for National Statistics said Monday.
FYI
Bergen County NJMLS Pending Homes Sales for April (and Sold)
Year #Sold #U/C
1998 749 1060
1999 642 1015
2000 569 925
2001 532 861
2002 849 1035
2003 676 987
2004 761 1070
2005 811 1092
2006 613 878
2007 682 843
2008 493 732
*U/C = Under Contract (Pending)
WASHINGTON (MarketWatch) — An index of sales contracts on previously owned U.S. homes rose 6.3% in April from the prior month, the National Association of Realtors reported Monday. The index, which is considered a leading indicator of existing home sales, was down 13.1% from the April 2007 level. By region, the April pending home sales index fell only in the Northeast, with a 1.9% decline. The index rose 13.0% in the Midwest, 8.3% in the West and 4.6% in the South.
RentinginNJ Says:
June 9th, 2008 at 9:46 am
…also, we went near the end of the open house and were the only people who showed up all day. The realtor blamed the heat.
You should respond. “Actually I think it is from the chill. The chill in the housing market.”
WASHINGTON (Reuters) – Pending sales of previously owned U.S. homes unexpectedly rose in April to their highest level in six months, a real estate trade group said on Monday.
The National Association of Realtors Pending Home Sales Index, based on contracts signed in April, increased 6.3 percent to 88.2 from an unrevised 83.0 in March. Despite the uptick, sales were 13.1 percent lower than a year ago.
Economists polled by Reuters before the report were expecting pending home sales to decline 0.5 percent.
The association’s chief economist Lawrence Yun said regions of the country that have seen sharp price declines, like the West, are now seeing a sales recovery.
“Bargain hunters have entered the market en masse, especially in areas that have seen double-digit price declines,” he said in a statement
“entering in masse”????
Can I get his job? After all not to many places you get good $$$ for sounding like an idiot!
From Bloomberg:
Pending Sales of Existing Homes in U.S. Unexpectedly Rose 6.3%
More Americans unexpectedly signed contracts to buy existing homes in April, led by gains in the Midwest and West that signal lower prices are making real estate more affordable, a private report showed.
The index of pending home resales rose 6.3 percent to 88.2, the highest level in six months, following a 1 percent drop in March, the National Association of Realtors said today in Washington.
The drop in property values may be starting to lure some buyers who are able to qualify for loans, signaling purchases will improve in 2009. Still, stricter lending rules, the recent increase in mortgage rates and continued pressure on prices from mounting foreclosures will probably keep some buyers away for much of the year.
“We’re bouncing along the bottom,” Russell Price, senior economist at H&R Block Financial Advisors in Detroit, said before the report. “Even though home prices have come down quite a bit, people that would normally be pulled into the market based on that are still having trouble finding loans.”
Economists projected the index would fall 0.4 percent, according to the median forecast in a Bloomberg News survey of 32 economists. Estimates ranged from a drop of 1.5 percent to a 1 percent gain.
Pending resales were still down 13 percent from April 2007, today’s report showed.
The measure increased 13 percent in the Midwest and 8.3 percent in the West. They rose 4.6 percent in the South and decreased 1.9 percent in the Northeast.
Fear has not yet gripped commodities market
What people do is hold on due to these fears. In their subconscious mind they rather by wrong along with everyone else than possibly be wrong all alone. They then rationalize holding on by convincing themselves that the bulls are right – that a second half economic recovery is going to happen, that real estate has bottomed, that the election will help – they grab on to any argument and turn their eyes away from the realities of a tapped out consumer, high oil prices, and real estate prices that won’t bottom out until at least late 2009.
These people then end up selling near the bottom in pure panic when the market forces them to sell. We’ve already seen three bouts of selling panic in the past year. They came last August, January, and March and now the market is setting itself up for another one.
Raul,
In order to understand Yunnie and the Realtors, you first need to understand the single most powerful force behind real estate sales, a sense of urgency in a buyer. Everything, I mean everything, is geared towards creating and maintaining a sense of urgency in the buyer until you can bring them to contract. Once the sense of urgency is gone, the deal is as good as dead. Yun and the rest of the Realtor Goons realize this, thus every press release and public comment is geared towards eliciting fear in buyers and reigniting the sense of urgency that has been lost in the market.
From the Newsweek article:
“Lawrence Yun, chief economist at the National Association of Realtors, tells NEWSWEEK that “home sales and prices in most of the country will improve during the second half of 2008.” (Yun is the Little Orphan Annie of forecasters. He’s always sure the sun will come out tomorrow.) “
College commute today
NCAA
No Cars At All
Everyone go to the Hamptons already?
Weren’t sales down over 13% from April 07.
Oops they forgot about that at the NAR.
“Pending Sales of Existing Homes in U.S. Unexpectedly Rose 6.3%”
How about calling a bottom for housing market?
OT: I’m at jury duty….on my cellphone…trying to read the blog…..I need a blackberry or something else…this is painful….. :-(
sl
In order to understand Yunnie and the Realtors, you first need to understand the single most powerful force behind real estate sales, a sense of urgency in a buyer
I agree, but I just can’t understand why you would continue to pursue a failed strategy. Realtors haven’t instilled a sense of urgency among buyers (despite frequent calls of a “bottom”). All they have done is lose credibility with buyers and give sellers false hope. “If I can’t sell my home, I’ll just wait to the second half of the year when prices pick up again”.
Wouldn’t it make more sense to instilling some urgency in sellers? “Better sell now of you could be stuck in the home forever!”
‘Riding your bike to work in NY/NJ would be career sucide.’
The problems here also include cross-river transportation. Although often ignored, the PATH understandably forbids bicycles during rush periods. If I lived in Manhattan, I’d be tempted to locate near the Hudson River bike path since my office is adjacent to Battery Park, but of course, there are no showers at the office and no safe bike storage.
This compares to the stodgy midwestern town of Madison WI where in-building showers, bike storage, and safe bike paths are a commonplace and many at management level ride to work.
“According to the NAR…” LOL!! Every time I see that expression, I laugh my @ss off. It’s like a punch line in a joke.
Too bad so many NJ/NYC commuters bought in the Pocono’s in the bubble years. I wonder how that is panning out with fuel costs?
26…riding your bike to work today would just be ….suicide…..(too darn hot outside)
Since the housing bubble brought up many areas and “up and coming” towns, how do you think these “up and coming” areas will end up? I don’t suppose many can afford to sell their Pocono, North Arlington, Fair Lawn, West Milford (just some examples) homes and move into an Oradellesque town. Do you think these people will stay put because of financial reasons or try to sell and move?
Opinions??
Poconos was a losing bet from the beginning….an outpost of cookie cutter homes…no area jobs to feed the population. And a bunch of folks with balloon payments.
“How about calling a bottom for housing market?”
Frank [50],
We just busted thru the all time bottom, largest yoy decline, previously recorded during the big one. Now, that’s a bottom.
In summary, how do you all feel “starter towns” end up?
The stars at night!
Are big and bright!
Deep in the heart of Texas!
I can’t believe no one followed up with that!
Q. What does a NJREREPORT reader and a 90 year old flasher have in common?
A. We both love to show our low balls.
John,
You’re 90?
Any idea when the May sold numbers will hit? How bad is it?
Calculated Risk Rebuttal:
DataQuick recently reported a similar pickup in low end areas of California – mostly from the sale of REOs (Lender Real Estate Owned):
[T]he swell in transactions mainly reflects more sales of homes under $500,000 in inland areas where depreciation and foreclosures have been greatest …
Post-foreclosure homes continued to play a major role in the Southland market. Of all the homes that resold in April, 37.5 percent had been foreclosed on at some point in the prior 12 months, compared with a revised 35.8 percent in March and 4.6 percent a year ago. Across the six-county area, “foreclosure resales” ranged from 26.9 percent of resale activity in Orange County to 52.7 percent in Riverside County.
Anyone know anything about the “Larchmont Estates” in Union in Union County. We’re looking at a house there tomorrow night and it’s priced at $350,000 and i have a feeling we may be able to bring them down to our cut off of $320,000. Of course the listing says “Prestigious” Larchmont Estates and when people believe their own hype it’s usually trouble…
MLS # 2519021 Any info or history is greatly appreciated. Also if anyone can i’ve been told that this house (Which looks excellent) have been listed for about 400 days, any info why? Or just stubborn sellers? MLS # 2517198
Thanks!
[57] Essex,
This was a problem pre-boom too. I represented a bank that had lots of loans in the Poconos and they were getting pasted in the 90’s and the pre-boom.
[66] Joey,
Ask them what is prestigious about Union. I am not from here, and have been looking for about 5 months or so, but Union never struck me as “prestigious.”
BTW, I love to ask realtors direct questions like that in person. They won’t tell you to pound sand, but watching their ears smoke while they try to formulate some sort of response is priceless. Then, if they come back with something, and I have a factual response (something like, “but aren’t XXX schools ranked dead last in the county?” or “didn’t the council just approve a tax increase?”), then they just stammer and shut up.
[59] Big,
I will defer to Grim and the true experts, but I theorized that there would not be uniform declines, nor would the percentage decline line from blue ribbon towns to slums be a straight line down either. I expect that starter towns will take it on the chin more so than the next tier up. Thus, if Upper Haughtyville is off only 5%, then the next tier, Lower Haughtyville is off 8%, the third tier, starter towns, might be off 15%. You would see a big step down in percent loss after the top tier towns, kind of like a cliff.
My $0.02. Now I gotta get back to work.
Yeah, from what i can see Larchmont is the only area that is “prestigious” Probably because it’s on the border of Springfield and the grammaer schools are in Battlehill. Although i’ve never been there the house looks very nice and unique. Most of Union is actually very good and i’m only sticking to those very good areas.
Chi (11)-
Thanks for the Gartman the other day.
Been busy lately.
was the RE bottom this weekend? Dang I missed it, guess I just wait another ten years to the next bottom.
Hey guys, just a quick question: does anybody know of a trustworthy blog about New York City real estate? One which doesn’t uphold the myth that Manhattan is invulnerable and that foreigners are waiting on the sidelines to snatch every tiny pied-a-terre as soon as there’s a 2% reduction, etc.
Thanks a lot.
was the RE bottom this weekend?
No further price declines?
Maybe you should go sit next to Bi’s $40 oil.
C’mon guys, didn’t you get the memo? Everything s fine, we are back to normal. Pre-existing home sales are up. We can all go home now, the decline is over.
The Next Real Estate Crisis
but I theorized that there would not be uniform declines …. I expect that starter towns will take it on the chin more so than the next tier up.
I agree. If you look at the Case-Shiller tiered home price data for the NYC suburbs, you can see that lower-end houses got bid up the most during the bubble. This seems to make sense. As housing got more expensive, people got priced out of the high end first. By 2005, middle to upper middle class (especially first time) buyers that would normally buy mid-tier to upper-tier homes, are now in bidding wars with each other over starter capes.
I have friends with very respectable incomes desperate to win a bidding war on a 1940’s POS starter cape, lest they be priced out forever. After all, once they were “in”, they could always use their growing equity to trade up in a few years. This segment has the farthest to fall.
A bit off topic but I feel the need to share.
I attended my cousin’s dance recital yesterday in the absolutely gorgeous new auditorium at Mount Olive High School. But what really blew me away was the fact that there were three… THREE… huge, high-def flat-screen TVs in the lobby. WHY does a high school need three huge flat-screen TVs in the lobby? Especially that one, where taxes are through the roof in town and the school’s reputation isn’t even that good?
“Analysts Stink…Listen to Bloggers”
http://hf-implode.com/viewnews/2008-06-08_AnalystsStinkListentoBloggers.html
#76…from the link you posted
Among the states expected to be worst-hit is already battered California….but California won’t be alone. Homeowners are also frighteningly vulnerable in states such as Arizona, Florida, New Jersey, and others.
Are there any stats on how many option ARMS we have here in the garden state?
Clotpoll Says:
June 9th, 2008 at 11:45 am
Chi (11)- Thanks for the Gartman the other day.
Been busy lately.
clot: Thanks for mentioning that commentary, because ultimately, out of all of the analysis I have heard, it is the one of the most insightful (I almost wrote “inciteful”) pieces of information I’ve seen recently. It makes the most sense. Ultimately, technical analysis shoudl dominate the price action, because there is a melt-up in progress – duration unknown.
VPs and SVPs in New Jersey don’t ride bicycles to work, they buy Harleys and ride them to work. There must be 4 or 5 of them in the parking lot where I work, and none of them belong to the rank & file. They are all toys for the suits upstairs who ride them in order to maintain their street dred, and it helps them to believe that they aren’t stodgy penny-pinching 50 year olds who are quickly becoming their parents.
#73 – Marito – I’d suggest curbed.com but they tend to be mkt cheerleaders. They are very amusing though.
Thanks again to Rich for helping with the Bergen County numbers. I also added some more data that shows the house price to income ratio historically has not been affected by the prime rate to any meaningful degree.
Also, if you were a median American family, with a median American income that bought a median American home in 2006 and had an average household budget, you’d be in the red even before you pay your property taxes or homeowners insurance.
Does anyone know the mls site for nyc?
#85 – Maria – From what I understand there is no mls for Manhattan.
marito,
Try
http://www.nychousingbubble.blogspot.com/
WaMu = Bhoo hoo
Sorry, I was looking more for queens, ny
What bottom?
I’ll skip right over the fact that the Northeast saw a 1.9% seasonally adjusted decline in April and point to the 12.2% decline that the NE saw on a year over year basis (the more important number).
How does the fact that pending sales in the NE are down 12.2% in the past year point to a bottom?
Not to mention the fact that we’re now in a period where we’re compounding year over year declines in pending and closed sales.
Am I allowed to play the NAR game where I compare against some cherry picked benchmark in the past?
How about this one?
Pending home sales April (SAAR) were more than 25% below the pace seen in 2005.
Yup. Oil dropped down to 136. Looks like a top to me!
“How does the fact that pending sales in the NE are down 12.2% in the past year point to a bottom?”
JB,
When one buys peak prices they tend to distort the #’s. Just a pipe dream turning into a nightmare.
grim,
I agree we’re nowhere near a bottom. To be inline with a sustainable house price to income ratio home prices in Bergen County will need to come down around 30%. That’s not factoring the effects of the increasing price of oil and gas or the job losses.
If you own a home now that you need to sell I think the best thing to do is determine the real market value, list it at least 10% less than that and hope for a bidding war to bring the price up. At least that’s what banks have been doing in some markets with their REO’s.
From the AP:
Grocery store liquor sales pushed in N.J.
New Jersey lawmakers on Monday advanced long-debated plans to allow beer and wine sales at grocery stores, but the bill’s leading backer is unsure about its future.
While 45 states allow such sales, New Jersey limits supermarket chains to two total liquor licenses. It also mandates the liquor be sold separately from groceries, usually in an adjoining store.
With support from major supermarket chains, the Senate Economic Growth Committee released legislation that would allow supermarkets to own more than two licenses and sell beer and wine.
maria– i’m in queens, too!–my friend who just bought here, when working with a realtor, just got sent links to realtor.com. i know there is a long island mls, but i have yet to see something for the 5 boroughs. (between realtor, zillow, and property shark she gets a lot of data…)
From MarketWatch:
WaMu shares slip after analyst’s loss projections
Shares of Washington Mutual Inc. were off more than 11% in afternoon trading Monday after UBS analyst Eric Wasserstrom raised his forecast for mortgage losses. The analyst estimated the struggling bank will suffer $21.7 billion in mortgage losses through 2011, ahead of WaMu’s guidance of between $12 billion and $19 billion. He forecast total credit losses closer to $27 billion, including mortgages.
Here we go…he’s working very hard to lose my vote.
BREAKING NEWS
Barack Obama, presumptive Democratic nominee, calls for Congress to inject $50 billion into economy to counter downturn. More soon.
I’ll vote for him if I get only one of those 50 billion.
$50 Billion, no problem. We MAY have to tax the rich to do so.
Can’t we just print it?
x (97)-
“Barack Obama, presumptive Democratic nominee, calls for Congress to inject $50 billion into economy to counter downturn. More soon.”
Will that injection be via hypodermic needle, turkey baster…or the same truncheon now used to tamp down all the sh*t we’ve already disgorged?
I’ve narrowed my list of expatriation-suitable “bailout” countries some more. Opinions, please:
1. Argentina
2. Brazil
3. Chile
4. Costa Rica
Uruguay
Excellent idea. Although Obama did just say he wuld impose a windfall tax on oil companies. Lokks like they will be declaring “our worst quarter ever” s soon as that happens.
WOW we are back to 1992 prices.
Washington Mutual Inc. (WM US) declined 10 percent to $6.75, the lowest since May 1992. UBS AG analyst Eric Wasserstrom said the Seattle-based company’s mortgage-related losses will exceed the lender’s forecast. Wasserstrom cut his 12-month share price target to $8.50 from $11.
WaMu shares slip after analyst’s loss projections
Those old guys in the commercials don’t look so dumb now!
Has anyone ever posed the question as to whether the last government rebate did anything to prop up the economy?
They’re doubling down on their investment before even checking to see if it does any good.
The economic stimulus rebate was a fraction of housing price increases, let alone gas prices. I doubt it did anything meaningful for the economy.
“The exceptionally early Easter meant that all the holiday disruption was in March, so April had more selling days than usual,” said High Frequency Economics’ chief economist Ian Shepherdson, who expects the May data will reflect a sharp drop.
#101 – I’m thinking something more like Gaugin and retiring to the S. Pacific.
Costa Rica is supposed to be beautiful though.
The old catch 22 of rebate checks, in the Tri-state area to qualify for a rebate check you had to earn under a certain amount however with the stricter income requirements to buy a home the odds are most people who got a rebate check could not afford a new home anyhow. They are wasting the rebate check on electricity, gas and food.
“The economic stimulus rebate”
V*agra,[have to avoid moderation], lasts longer.
re: 101
How come nobody mentions Canada?
#112 – How come nobody mentions Canada?
It’s filled with Canadians ;)
[112]
Why not Canada?
1. Taxes worse
2. Tax information sharing agreement with US
3. Extradition treaty with US.
Obama taxes the oil companies and the people who voted for him get to pay for it. Corporations don’t pay taxes, the masses pay taxes.
A billion years ago…I rode my bike to work…from Long Branch to Shrewsbury. It’s do-able.
As far as offices near houses, it’s NIMBY.
For YEARS, people didn’t want icky, yucky nasty businesses near their homes. As a result, we have town master plans that have retail, commercial and industrial zones located away from residential areas.
God forbid the gentrified see a truck go past their manicured lawn.
This article may have been posted already – didn’t see it after a quick scan:
http://tinyurl.com/5zxehu
U.S. Vultures Are Nesting
“General predictions about the trajectory of home prices suggests that some of these buyers may be jumping the gun. The National Association of Realtors said it expects home prices to drop 8.4% in the first half of 2008. The industry group is then predicting a 4.4% rise in 2009.”
Clot,
Look for countries with:
1. Strong bank secrecy laws
2. System that permits use of trust “protector”
3. Difficult for foreign parties to enter foreign judgments and attach property
4. No tax information sharing agreement
5. Non-OECD country
6. No or low taxes on companies doing business overseas or on trusts with foreign beneficiaries.
Uruguay too unstable; Brazil has no extradition, but Brazil and Argentina known to run presses nonstop. Costa Rica nice, stable, don’t know about the other factors.
Other good choices are Belize and Panama.
If foreclosures can’t be counted in determining comparables, according to the NAR, then shouldn’t we also eliminate forclosures from the count of total sales?
77 renting
exactly right – agree with that entire post.
I have an inkling to call over to the Cayman Islands Monetary Authority and ask who they want to see win the U.S. presidential election.
My guess – 100% for Obama.
78 Yankee
“WHY does a high school need three huge flat-screen TVs in the lobby?”
Because with the amount of taxes you pay, wouldn’t you feel stupid if they DIDN’T?
gary…
corporations pay taxes. I understand what you are saying, that more taxes on a corporation just means a higher priced product, however, when you correctly TAX a corporation for the “resources” it is removing/using/hogging up (any resource, doesn’t need to be natural…it could be people, labor productivity, land space, etc) then you can ask LESS from the taxpayer to pay for the repair and maintenance of the infrastructure it is using.
Did I make sense?
In other words, if you make profits from a business that uses our roads, our labor force/workers, etc, then you need to pay taxes to help repair the roads, help pay the workers some retirement monies after you have “used their good years up”, etc…
Who cares about the april blip. Interest rates are headed up and the expanded confirming jumbo mtg deal ends at year end. Good Luck in 2009 selling homes with 9% jumbos.
Futures trading showed a 42 percent chance of an increase in the Fed funds target rate by mid-September, up from 26 percent in the previous session. The S&P 500 has dropped 7.9 percent since September when the Fed made the first of seven interest rates cuts that have lowered the overnight lending rate between banks 3.25 percentage points.
I thought mortgage rates depended on 10 year rates and not fed rates?
Expanded mortage deal won’t get extended after 2009?
[115] gary,
The worst part (for us shareholders) is that the oils can’t simply avoid confiscatory taxes by doing an inversion transaction or merge with a foreign suitor to avoid confiscatory taxes. President Obama would exercise his FINSA/Exon-Florio power so fast to block any deal on “national security” grounds, it would never happen. Wouldn’t even get to CFIUS–he would do it himself.
In effect, Maxine Waters was right, that they would “sociali…” er, nationalize the oil companies. The Obama administration would enjoy short-lived success as tax receipts are up (from shareholders and capital) but when no one buys the stock and the U.S. oil can’t compete because it has no capital, the foreign integrated oils take more market share. And they will price for the tax.
No, if Obama wins, I am selling XOM and buying Petrobras or Total-Fina.
“General predictions about the trajectory of home prices suggests that some of these buyers may be jumping the gun. The National Association of Realtors said it expects home prices to drop 8.4% in the first half of 2008. The industry group is then predicting a 4.4% rise in 2009.”
Wishful thinking.
If foreclosures can’t be counted in determining comparables, according to the NAR, then shouldn’t we also eliminate forclosures from the count of total sales?
We should, NAR doesn’t. Because NAR needs people to have confidence in the market to help keep housing prices afloat. So they need to “truthify” their statistics.
#101
Belize
English is official language. Common law tradition (same as U.S./U.K.)
Guess who financed Lehman’s loss? New Jersey Division of Investment, a pension fund. Guess who’s going to pay for it all? NJ tax payers.
http://emac.blogs.foxbusiness.com/2008/06/09/breaking-down-lehmans-earnings/
Actually, I would look into Ireland as well. Flat tax. I believe you can get Irish citizenship if you invest a certain amount in the country
re: 128 Frank you beat me too it, but I will add some more info since I have been tracking the exploits of Corzine and what was an 84 Billion dollar investment fund.
Somebody put a straght jacket on Corzine already, the state of New Jersey now is buying a stake in Lehman Brothers.
From the WSJ today.
snip/
The firm had strong commitments from the New Jersey Division of Investment — which manages the state’s $80 billion of pension funds and recently invested in Merrill Lynch & Co.
snip/
My comment…
New Jersey bought a stake in Citigroup in and Merril Lynch back in January. At the time New Jersey already had 13 million shares in Citigroup and roughly 1.4 million shares in Merrill Lynch.
The division invested and additional $400 million in pension funds in Citigroup preferred stock and $300 million in Merrill preferred stock.
Citigroup’s stock is down about 30% since the deal in January then Merrill is also down as well.
The taxpayer will get screwed royally.
http://online.wsj.com/article/SB121300896698257001.html
Plume (118)-
Ixnay to Belize & Panama. If I’m an expat, I want decent soccer. I hear the over-65 set is flocking to Panama, though.
Not worried about the extradition thing. Yet.
Thornburg Mortgage Inc
Industry: Finance-Mtge Loan/Banker
Add Security to your Watch List
Trading Halted
RIP RIP RIP RIP – The Day the Jumbo Died!!!!!
Speaking of soccer, that a** Corzine showed his face on the field at Jints Stadium before the USA/Argentina game last night.
Ugh.
John (132)-
Thornburg not exactly a surprise.
News Flash:
$199 3G iPhone will save the U.S. economy, cure cancer, feed the hungry, and bring world peace.
#135 grim
But will still only be available on AT&T.
#119 njpatient: You know, you have to be difficult, don’t you.
But Grim it comes in white!
$199 for the new iPhone with GPS….lol most of the “tools” that bought the iPhone already have a GPS suctioned cupped to the windshield of their gas guzzler.
The next price point is free, just like the Motorola Razor phone. Motorola’s stock has dropped over 50% in the last year, might be time to sell AAPL.
All Disclaimers….
Anyone think the investments may be a strategic move as well to try to sway the companies to move over the river. Watch what happens in a couple years and see if any of these companies move an office to NJ. This happens a lot with pension investment money. Unions like the AFL-CIO use their huge pension funds to lend to deals that back union jobs.
140 – RE: talk of Lehman and ML getting NJ Pension Money.
None of the Wall St. jobs are unionized so there goes your theory, also imagine how many jobs you can create in NJ with 8 billion, you don’t need Lehman to do it for you.
But I think it’s funny that a pension fund is rescuing a firm that is foreclosing on homes of its members. It’s like paying the bandit to rob you.
Anyone think the investments may be a strategic move as well to try to sway the companies to move over the river.
I don’t think anyone considers the iPhone an investment. :)
You bring up a good point though but I’m not quite sure you hit the nail on the head. A lot of pension fund managers seem to follow the hot trends in an effort to get maximum gain rather than make sound long term decisions. When tech stocks were strong that’s where a lot of pension money was, when hedge funds were the thing pension money followed. Same with real estate.
This is not true for all pension funds but it seems the ones that show up in the news are led by wannabe day traders.
Too many Wall Street employees live in Long Island and other places north. They will not want want the extra commute to New Jersey or God forbid have to move here. The prime example would be Goldman Sachs which was supposed to build two 50 story building in Jersey City. Only one went up since the equity traders fought the prospect of working in New Jersey. They now have a “Venice” strategy with Ferry service between Jersey City and Lower Manhattan. The new building going up just north of the WTC will house the the bulk of their sales and trading departments.
Frank – not sure if you get the link. Unionized pension money lends money to make deals for union jobs. NJ pension money lends money to investment banks so they can create jobs in NJ. Technically the NJ pension should be independently investing and make investment decisions for the benefit of retirees, but who knows what backroom brokering can be going on. Especially w/ Corzine being former CEO of Goldman Sachs and John Thain formerly of Goldman Sachs being CEO of Merrill Lynch.
Washington Mutual …gone!
SAS
http://www.nytimes.com/interactive/2008/06/09/business/20080609_GAS_GRAPHIC.html#tab1
Impact of Gas prices
#145 sena; I remember the battle well, I was at Goldman at the time, while the Jersey City office was being built.
Most employees prefered to move to mid-town, and most of the movers and shakers with the exception of Corzine lived in Westchester or CT. plus one of the complaints regarding lower Manhattan was that it offered few amanities, well JC offered even less.
There was just no way these guys were going to bring clients to JC.
Skep,
I think that is right on Ireland, but it only makes econ. sense if you can renounce US citizenship. To do that, Congress is considering (or has passed) a new expat tax that requires a hypothetical sale of all assets as of the expat date. You pay tax on the gains, then you get to leave. But I don’t think that they did away with the Clinton 10 year rule, so you may get dinged there as well.
And here’s more salt in the wound: INS and IRS can use your expat status as a reason to deny you a visa in the future. So if Brother Billy dies, you may be barred from attending the funeral because you expatriated to avoid future taxation.
“Tim Geithner, president of the Federal Reserve Bank of New York calls for banking shake-up”
http://tinyurl.com/48ol8j
*Keep in mind this came out after the Bilderberg Meeting and people in attendance at this mtg were attendee list included Ben Bernanke, Henry Paulson, Jean-Claude Trichet the president of the European Central Bank, and Robert Zoellick the president of the World Bank.
SAS
Nom Deplume Says:
June 9th, 2008 at 2:14 pm
Clot,
Look for countries with:
1. Strong bank secrecy laws
2. System that permits use of trust “protector”
3. Difficult for foreign parties to enter foreign judgments and attach property
4. No tax information sharing agreement
5. Non-OECD country
6. No or low taxes on companies doing business overseas or on trusts with foreign beneficiaries.
Uruguay too unstable; Brazil has no extradition, but Brazil and Argentina known to run presses nonstop. Costa Rica nice, stable, don’t know about the other factors.
Other good choices are Belize and Panama.
This is a bunch of crap. How in the hell can you seriously talk about abandoning your damn country. Undoubtedly, you, and by extension, Clod, are planning on stiffing the nation by not paying your damn taxes. As long as you’re a citizen, you’re supposed to pay the taxes wherever you reside in the world. Now it’s ok with me if you renouce your citizenship, but don’t try to move somewhere and keep a foot here so you can leach off the system. Don’t try to evade your taxes.
I don’t doubt JC provides less in terms of amenities than NYC, but I could see more of these back office deals happening to move some of the ops over. Once you get a critical mass, than some large firm will jump the pond. JC’s come a long way since the 80’s & 90’s.
IRS is a scam.
SAS
If I had money in WASHINGTON MUTUAL, I would do a good ol fashion bank run, and get the hell out of there. Its going to collapse.
SAS
JoeyCasz,
The Larchmont area has been one of Union’s good sections but I wouldn’t go so far as to say “prestigious.” In my opinion, the Battle Hill section is nicer because most of the housing is newer and Battle Hill Elementary School is located there. From the Larchmont area, the kids would have to cross Morris Avenue to get to and from school. From the mls listing, the photos of the Larchmont house look very nice. I hope it is not located on Liberty Avenue which gets alot of traffic. Just my opinion. Good luck!
Here is a novel approach. Tax everyone 15% on everything with limits on the low end.
We need simplicity above all else.
#153 Wh is really left to move theri back office operatiosn over there.
Merrill has a lot laredy down in the Princeton area. goldman has back office people in theri building in JC.
Citi has a big operation in Buffalo NY
Lehman? not that big of an operation to begin with.
#155,
I moved all my money to WASHINGTON MUTUAL, look at the CD rates.
My WAMU accounts are FDIC insured. If it fails the govt will just print money to pay me back!
“I moved all my money to WASHINGTON MUTUAL, look at the CD rates”
yup, I know. I think it may be a mirage.
“My WAMU accounts are FDIC insured. If it fails the govt will just print money to pay me back”
I hate to break it to you bloke. FDIC means nada ;)
SAS
My WAMU accounts are FDIC insured. If it fails the govt will just print money to pay me back!
Do you have any idea how long it takes to get your money back through FDIC? It could take over a year and buy the time you get it back you purchasing power will have collapsed.
Get out of the USD. Immediately.
What are the chance of this bill being passed.
http://www.app.com/apps/pbcs.dll/article?AID=/20080511/NEWS03/805110373
If they think a 7500 credit in taxes is going to help then they really are out of touch with would be buyers. I have been on the fence for about 5 years and because the thought of paying 2800 dollars a month did not make sense to me since I pay 1600 a month now. I would love to own a home but I don’t want to pay a fortune to live the American dream, home prices must come down, it is not right that I lived frugal (smart) enough to not get into a risky loan like others did and they get government help?
Some of Wall Street is unionized, DTCC is unionized, the damm clerks are lazy as can be.
Wamu business model is broken, they still have enough cash to burn for 1-3 years, most likely will end up a two buck chuck for chase. If you have under 100K at Wamus in CDs just let them run their course. The 3 month penalty ain’t worth it for the insurance in case you get stuck with FDIC plus you are giving up the higher rate on top of the three month penalty. That said I would not open cds or roll over cds until at least after they report second quarter numbers. That may be a very ugly quarter that may change your mind.
If you are really pro Wamu their bonds are paying 9%
Frank Says:
June 9th, 2008 at 3:35 pm
None of the Wall St. jobs are unionized so there goes your theory, also imagine how many jobs you can create in NJ with 8 billion, you don’t need Lehman to do it for you.
#164 John; DTC gets smaller all the time. Automation my friend. Back office jobs are a dying breed on the street, and have been for years.
Why does this seem a relevant counterpoint to pret’s “only the world’s best and brightest flock to NYC” reflexive rants? (just kidding)
ONE IN FOUR NEW YORKERS HAS HERPES: STUDY
http://www.nypost.com/seven/06092008/news/regionalnews/one_in_four_new_yorkers_has_herpes__stud_114751.htm
The union, jobs are in building and maintaining the buildings. Jersey City has 95% occupancy in Class A waterfront office space.
#167 jcer: No Wall St firm will ever move its front offcie to NJ, it will not happen.
26:
You’re wrong, John. Again.
Speaking from personal experience. But I guess you talking out your arse somehow trumps that. Of course.
#156
JoeyCasz,
The Larchmont area has been one of Union’s good sections but I wouldn’t go so far as to say “prestigious.” In my opinion, the Battle Hill section is nicer because most of the housing is newer and Battle Hill Elementary School is located there. From the Larchmont area, the kids would have to cross Morris Avenue to get to and from school. From the mls listing, the photos of the Larchmont house look very nice. I hope it is not located on Liberty Avenue which gets alot of traffic. Just my opinion. Good luck!
It’s two blocks over from Liberty and is on it’s own quite street with quite streets surrounding it. I’m not exactly sure where the middle school is but crossing over morris is what would have to be done for the battlehill elementary school like you said.
Who do you think said prestigious? The realtor :p
And thanks, we’ll see what they say with an offer $40,000 under asking.
Just looked at the CD rates at WaMu, both the traditional and online rates. In my zip code, way below average.
What are you talking about?
166…honestly I cannot fathom how they can estimate that with a population the size of New York. Come on.
Can anyone make sense of this $2.5 billion write-down by Gannett?
http://biz.yahoo.com/ap/080609/gannett_writedown.html?.v=2
172
Yeah, I also looked at WaMu’s rates and didn’t see anything spectacular. My HSBC savings account has a higher APR than most of those CD’s.
grim, 157 in moderation
The next price point is free, just like the Motorola Razor phone. Motorola’s stock has dropped over 50% in the last year, might be time to sell AAPL.
All Disclaimers….
motorola sell computers? bullish (still) on Apple, and wish i had bought more when it plummetted to 120 earlier this year
now its back at 180
That WaMu situation is scary … JB, you should set things up so you can spam concerned readers if ING or HSBC is about to go under.
You could save a ton of people!
tard (152)-
Idiot, I’m not looking to evade taxes. I’m thinking about leaving.
We’re going the way of Rome, the Ottomans, the Hapsburgs and the British Empire. I don’t care to stick around for the curtain call.
Chicken Little,
Be what your blog entries are, the sky isn’t falling. The best homes priced competitively and exceeding in presentation value are not only selling, but drawing multiple offers. The POS’s sit. Your “Comp Killers” are overpriced POS that were purchased in the boom, way too high, and remarketed within too soon a window. Viola, comp killer. Big f*ck*ing deal, who could NOT have seen that coming?
Keep renting. By the time your followers reenter the market, mortgage rate will have risen and they’ll be priced out again. Wah.
BTW, I have no idea what ramen noodles taste or look like nor will I ever.
No, the sky is not falling. But prices are.
I don’t know what the point of your post are. Sure, properly priced homes are selling, nobody is denying that. This blog started as a dose of reality back when the bubble was fully inflated, and all of the predictions have thus far proven correct.
And you’re right, Comp Killer were overpriced POS’s. That’s the point. Those properties actually commanded much more than they deserved during the boom years, and now are being priced to market.
As for who could not have seen this coming, tell that to the hordes of folks delinquent or worse on their mortgages.
Jeez, how embarrasing re 181:
No, the sky is not falling. But prices are.
I don’t know what the point of your post IS.
still, you blokes better look into getting out of WaMu. There are still plenty of good bank around.
Actually, all you blokes better get the ratings of your banks. If its avg or below, I’d get the heck out.
IMHO ;)
SAS
SAS,
Bringing the E60 this saturday?
#180 Big f*ck*ing deal, who could NOT have seen that coming?
People like yourself.
#1800 Beachfrontclueless:Keep renting. By the time your followers reenter the market, mortgage rate will have risen and they’ll be priced out again. Wah.
Who cares about mtg rates. Let em rise, 8, 9 % yeah I will take that right now.
For people here it is the value of the asset that matters. What a dope you are.
“Be what your blog entries are, the sky isn’t falling. The best homes priced competitively and exceeding in presentation value are not only selling, but drawing multiple offers.”
For the 20 years prior to 2000 the national house price to income ratio has always hovered 3.0 +/- 0.2. Since 2000 the ratio has risen to over 4.5.
The reason for the rise is that lenders were giving people too much money. More people could buy homes so price soared. The drop in oil prices in the early part of the decade as well as the lower interest rests helped out too.
The ratio is going to have to come down. Not many people are talking about the house price to income ratio here in the US but in the UK where they are having a similar issue, it seems to be getting more press. One UK economy professor suggested people rent as rents are typically 30% less than what you would pay to buy.
I made pretty charts and posted it on a blog. Why haven’t I reached everyone? Stupid interweb not cracked up to all the hype. And get off my lawn you stupid kids!
“The best homes priced competitively and exceeding in presentation value are not only selling, but drawing multiple offers”
is that so? the current data doesn’t suggest this. Perhaps you can post your numbers?
“Big f*ck*ing deal, who could NOT have seen that coming?”
Everyone whom bought w/ no money down& ARMs.
“Keep renting”
I don’t rent, I bought some property when an ounce of gold bought the DOW, and played my cards right. Although, I did get burned on some property in London.
By the time your followers reenter the market, mortgage rate will have risen and they’ll be priced out again. Wah
One word: Arbitrage
http://tinyurl.com/zbm3b
SAS
debt is causing stess related issues in folks:
http://www.msnbc.msn.com/id/25060719/
same thing on cnbc
http://www.cnbc.com/id/25058848
btw-
I do love hard cider on a night like tonight along with a good Cuban stick.
(oh yeah, they are drilling off of Cuba too)
SAS
My time is spent best on other lucrative avenues rather than posting #s here. I can’t invest too much time baiting the locals. However it was immense fun revisiting this place just to witness the incredible rise.
Happy renting.
Keep dreaming.
What does the increase in sales mean to you bloggers?
Tem. u swing, then to fall, or is this the rebound the industry has been calling. The shore has not fallen greatly and I fear that if rates go up and prices stay as they are we will still be unable to find a home we can afford in the town we want. WHAT DO YOU THINK OF THE INCREASE IN SALES?? WILL THE NJ SHORE MONMOUTH COUNTY PRICES FALL ???????????
Increase in sales? You mean the 13% year-over-year decrease in sales? I think it shows that buyers are still in denial or ignore-mode here in NJ, much like yourself.
I am attempting to educate myself and today I read that sales were up over 6% and some thought it was the start of people sitting on the side taking advantage of low rates and decreasing sales , jumping back in? It does seem that the shore has not gne down as much as other areas I see many under contract signs??????
What does the increase in sales mean to you bloggers?
This blog is NJ focused. While NJ specific numbers were not published today, sales for the Northeast were down 1.9%.
Sales increased in the South & West mainly due to foreclosures hitting the market.
Thanks Renting in NJ
We are also renting, and at an excellent low price in an excellent town, so it is hard for us to jump in and over pay when our overhead is so very low.
I was thinking 6% NJ increase, thanks for the perspective on the number. You cannot time the market but we really want Monmouth County to come down to a point we can afford. I know several people that got fantastic deals in Florida but we do not want to live in Florida.
Several of our friends are choking on the taxes and monthly nut, we are free and happy and waiting…..
From the BBC
My favorite phrase from accross the pond.
http://news.bbc.co.uk/2/hi/business/7445324.stm
Thousands facing negative equity
House prices are down 6% in just the last five months, and the worst of the credit crisis – all that still lies ahead
Michael Saunders, Citigroup
More than 23,200 people who took out 100% mortgages in the year to 31 March could face negative equity, according to figures obtained by the BBC.
Falling house prices mean the amount borrowed could be greater than the value of their properties.
The data from the Council of Mortgage Lenders comes as figures show the housing market is slowing down further.
Separate housing figures suggest the number of transactions per estate agent
has hit a 30-year low.
These figures from the Royal Institution of Chartered Surveyors (Rics) come as banks are imposing stricter requirements on borrowers, in the wake of the credit crisis.
However, the 23,200 people who’ve taken out these 100% mortgages represent only around 2.5% of the total mortgages given out in that period, and a much smaller percentage of the overall number of mortgages in the UK.
Turned away
If a house loses its value it is not necessarily a problem unless the owner has to move, or cannot afford to pay the mortgage.
Daniel Smith is one of thousands of homeowners facing negative equity
In a rising market banks are prepared to lend 100% mortgages as there is little risk of them not getting their money back.
But as prices have been falling, the risks have increased and lenders are turning borrowers away if they don’t have a deposit.
There is a warning that the situation may deteriorate further.
“House prices are down 6% in just the last five months, and the worst of the credit crisis – all that still lies ahead,” said Michael Saunders, head economist at Citigroup.
He had predicted that house prices would fall by 15% in 2008 and 2009 but now he says that drop could be even greater.
Record low
The Rics survey showed that very few homeowners were moving house, with only 17.4 transactions per estate agent made in the three months to the end of May.
This was the lowest figure since Rics started collecting the data in 1978.
But, for the first time in 10 months, there was a decrease in the proportion of surveyors reporting house price falls.
Some 92.9% more surveyors said house prices had fallen during May, compared with those who thought they had risen. This showed a slight fall from the record 94.7% more who reported falls in April.
But Jeremy Leaf, of Rics, said that the slowing pace of decline could point to better news for homeowners.
“Maybe we are reaching the bottom of the market,” he said.
http://www.nytimes.com/2008/06/10/business/10housing.html?_r=1&ref=business&oref=slogin
F.H.A. Faces $4.6 Billion in Losses
The projected loss is the highest in the home loan program since 2004, and officials said the F.H.A. had to withdraw $4.6 billion from its $21 billion capital reserve fund in May to cover the costs. They said the agency, which is self-sustaining, would not need appropriations from Congress to remain solvent.
Beach Squalor (190)-
Thanks for reminding me why most people in my own business make me want to puke.
I’d love to show you a short sale I’ve got going right now: a truly nice home…that has multiple offers…none of which exceed the asking price, which I deliberately set probably 5-7% below the market.
Just like a nar to claim fast sales & multiple offers, without providing context.
Squalor (190)-
Take a look at Central Valley (CA), Vegas and S Florida.
Lots of multiple offers and a rise in sales in those places, too.
Gee…I wonder why?
Hell, sales volume is even up in Detroit.
http://www.recordonline.com/apps/pbcs.dll/article?AID=/20080610/BIZ/806100314
Home sales way down in Orange, Sullivan and Ulster counties compared to last May
http://www.globalinsight.com/Perspective/PerspectiveDetail12839.htm
BTW Grim,
The Robert Lang in the story is my brother in law. I have heard him using the term drive till you qualify for about 4 years.
#194 My time is spent best on other lucrative avenues.
Is that your part time job in Wal-Mart?
“Keep renting. By the time your followers reenter the market, mortgage rate will have risen and they’ll be priced out again. Wah.”
I really missed the Wah’s.
I hope rates go to 10%, blow out all the crap. This market is getting hammered. Higher rates will totally obliterate this charade. Final nails in the coffin. Fake wealth is being destroyed. Drip, drip, drip.
“My time is spent best on other lucrative avenues.”
Hope Avenue?
Is JB at the Brass Rail?
Clot,
Your entries can be of value until you lower yourself to the typical playground mentality that’s indicative of this blog when it comes to realtors.
I make you puke? You don’t know a damn thing about me and my vigilant representation of my clients. My buyers are educated from the point of dumbass real estate agent tricks (fear of loss, etc.) to inspection issues and beyond. How about this…every time I consider your representation on this blog I throw up in my mouth a little.
I don’t give a damn about Central Valley, Vegas, et al. Being such an experienced REAL-TOR with eons in the business you should know that real estate is LOCAL. Those areas are not my local market. My local market encompasses Morris County. AMD EVEN IN MORRIS COUNTY, THE DISCREPANCIES ARE HUGE BETWEEN TOWNSHIPS. You should know this.
I take a great deal of pride in my industry and how I conduct my business. You might do the same instead of slamming the business for the sake of the little popularity contest you have here on Chicken Little’s blog.
Yes, there are many agents out there that flat out suck. But there are also a great many that work above and beyond to see that their clients come out with the best deal possible. Stop sucking up for a change and represent that fact.
Beachfront dream…are you saying that because clotpoll consistently posts helpful responses that he is sucking up?
Or is it because he won’t accept a client contact from this blog?
If you post continuously, maybe you’ll also earn the popularity contest rights. Not everyone agrees with clot, so I’m not sure about the popularity statement, but most posters seem to respect him. There’s a difference between earned respect and kissing up popularity.
Are you the one I said was selling ’em like hotcakes at the shore? Maybe about a year or so ago? Ellen? Helen? Sally? Something like that? KL, you’re the memory lady. What’s this poster’s name?
#212: You may know your business, but you have no understanding of what drove the real estate market,including the market in your area.
I also suggest you brush up on economics in general, and take a look at what is happening to the fiscal situation in NJ.
You call people chicken little, because they will not buy now, just to pay you a commission?
That is pathetic.
Our hosting provider, Joyent, apparently took some kind of hardware hit today; they haven’ t said, yet, whether it was a disk or controller or…
The site njrereport.com is amazing site, thanks, webmaster. look at this [url=http://reminderroeb.150m.com/freedom_water_heater_state_manufacturing.html] freedom water heater state manufacturing [/url]
:)
The site njrereport.com is interesting site, respect, owner. But see this [url=http://jtttingktrea.150m.com/index.html] state water heater price [/url]