“How many people should own homes, anyway?”

From the New York Times:

Home Not-So-Sweet Home

“Owning a home lies at the heart of the American dream.” So declared President Bush in 2002, introducing his “Homeownership Challenge” — a set of policy initiatives that were supposed to sharply increase homeownership, especially for minority groups.

But here’s a question rarely asked, at least in Washington: Why should ever-increasing homeownership be a policy goal? How many people should own homes, anyway?

Listening to politicians, you’d think that every family should own its home — in fact, that you’re not a real American unless you’re a homeowner. “If you own something,” Mr. Bush once declared, “you have a vital stake in the future of our country.” Presumably, then, citizens who live in rented housing, and therefore lack that “vital stake,” can’t be properly patriotic. Bring back property qualifications for voting!

Even Democrats seem to share the sense that Americans who don’t own houses are second-class citizens. Early last year, just as the mortgage meltdown was beginning, Austan Goolsbee, a University of Chicago economist who is one of Barack Obama’s top advisers, warned against a crackdown on subprime lending. “For be it ever so humble,” he wrote, “there really is no place like home, even if it does come with a balloon payment mortgage.”

First of all, there’s the financial risk. Although it’s rarely put this way, borrowing to buy a home is like buying stocks on margin: if the market value of the house falls, the buyer can easily lose his or her entire stake.

This isn’t a hypothetical worry. From 2005 through 2007 alone — that is, at the peak of the housing bubble — more than 22 million Americans bought either new or existing houses. Now that the bubble has burst, many of those homebuyers have lost heavily on their investment. At this point there are probably around 10 million households with negative home equity — that is, with mortgages that exceed the value of their houses.

Owning a home also ties workers down. Even in the best of times, the costs and hassle of selling one home and buying another — one estimate put the average cost of a house move at more than $60,000 — tend to make workers reluctant to go where the jobs are.

And these are not the best of times. Right now, economic distress is concentrated in the states with the biggest housing busts: Florida and California have experienced much steeper rises in unemployment than the nation as a whole. Yet homeowners in these states are constrained from seeking opportunities elsewhere, because it’s very hard to sell their houses.

Finally, there’s the cost of commuting. Buying a home usually though not always means buying a single-family house in the suburbs, often a long way out, where land is cheap. In an age of $4 gas and concerns about climate change, that’s an increasingly problematic choice.

And while we’re at it, let’s try to open our minds to the possibility that those who choose to rent rather than buy can still share in the American dream — and still have a stake in the nation’s future.

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313 Responses to “How many people should own homes, anyway?”

  1. grim says:

    From the Record:

    Years of risky gambles put state in $25B bind

    New Jersey’s pension fund is underfunded by at least $25 billion, according to the most conservative estimates of what’s needed to pay for benefits already promised to workers.

    Many say big changes are needed to right a system that’s costing billions to taxpayers who don’t get any of the retirement checks or free health insurance.

    How did it get this way? Here’s a look at the postponed payments, election-year offerings and other steps along the way.

  2. grim says:

    From the Wall Street Journal:

    More Bank Bailouts Ahead?
    If Lenders Can’t Find Buyers Or Raise Needed Capital, FDIC Could be Overwhelmed
    June 23, 2008; Page C10

    The Federal Reserve’s decision to take on $29 billion of Bear Stearns’s assets may soon look like chicken feed. If problems at U.S. banks worsen, the federal government — in other words, taxpayers — is likely to be on the hook for sorting out much of the mess.

    It isn’t that the collapse of any one, or even a few, of the thousands of mostly small and midsize retail and commercial banks across America would pose the same kind of threat to the financial system that the now-defunct investment bank did. And anyway, most have access to the Fed for emergency funding.

    The problem is that the other usual escape routes available to struggling Main Street banks are narrowing. It is getting harder to tap either new or existing shareholders for new funds to replenish bank capital. That is because practically all the deals that have been struck in the past few months — whether the sale of common stock or convertible bonds — have performed poorly. Those who bought stakes in Citigroup, Merrill Lynch, Wachovia, Washington Mutual and KeyCorp are underwater.

    Investors have tired of trying to call a bottom on bank losses. That is making them much less willing to take on more exposure. Bankers reckon it would now be tough to complete the deals they squared away as recently as a couple of weeks ago. It is a similar story across the Atlantic, where British lenders Bradford & Bingley and HBOS are both trying to finish big rights issues (sales of new shares at a big discount) with their stock prices sagging and investors already loaded up with paper sold by the likes of UBS and Royal Bank of Scotland Group.

    The mere whiff of a shortage of capital is now enough to send shareholders scampering for the exits. Citigroup’s stock fell more than 5% late last week after finance chief Gary Crittenden told investors the company probably would record more write-downs for mortgage-related assets — hardly a surprise.

  3. grim says:

    From MarketWatch:

    Shaky job market threatens housing recovery

    The housing slump, already shaping up to be the worst in a generation, still hasn’t run its full course, according to Harvard University’s annual report on housing, released on Monday.

    And if job losses accelerate in coming months, it could take even longer for local markets to regain their footing, said Nicolas P. Retsinas, director of the university’s Joint Center for Housing Studies. Job losses could be “the last shoe to drop, but a pretty heavy shoe,” he said in a telephone interview.

    The center releases its “State of the Nation’s Housing” report each year, and not surprisingly, the 2008 edition gave a grim prognosis for housing markets throughout the country.

    In short, local markets are dealing with drops in housing starts, new home sales and existing home sales — corrections that are rivaling the deepest slowdowns since the World War II era, the center reported. On top of that, the fall in home prices and the rise in mortgage defaults are the worst on record since the 1960s and 1970s. See the Joint Center for Housing Studies Web site.

    All this adds up to a downturn that is “the most severe that we have seen,” Retsinas said.

  4. grim says:

    From the WSJ:

    Mortgage-Securities Revival Proves Elusive
    June 23, 2008; Page C2

    The investors being counted on to revive the mortgage market are getting off to a difficult start.

    In recent months, a number of hedge funds have been dabbling in down-and-out securities linked to the fate of U.S. homeowners, including bonds backed by risky subprime mortgages. These distressed investors, as they are known, buy assets that others are afraid to touch in the hopes that prices will rise eventually. Economists and policy makers are watching their moves closely, because by putting a floor on prices, they can play a crucial role in ending the turmoil that has gripped the financial markets.

    So far, though, the going has been tough. Some funds have had trouble attracting investors, limiting their impact on the $1.3 trillion market. With house prices still falling and mortgage defaults rising, putting a value on mortgage securities remains a tricky endeavor. Beleaguered banks keep dumping more securities, potentially making cheap assets even cheaper and precipitating losses for the brave few who chose to get in early.

    “If somebody can pick the right spot there and can hold out long enough, there is definitely money to be made,” says Karen Weaver, global head of securitization research at Deutsche Bank AG. But “there is so much concern about further supply out there…that people are just wary of buying anything.”

  5. grim says:

    From the Record:

    Fed, local prosecutors team up to fight EnCap

    Federal and state prosecutors have joined forces in a probe of suspected corruption in the EnCap project, fresh off their successful double-teaming of ex-Newark Mayor Sharpe James.

    News surfaced last Wednesday that U.S. Attorney Chris Christie had turned his high-powered crime-fighting machine at the bankrupt Meadowlands venture and was sending out subpoenas to some of the project’s key players.

    Now high-ranking government sources with knowledge of the nascent federal investigation say Christie and New Jersey Attorney General Anne Milgram are working closely to carve up the workload in what could become the corruption-busting model for the future.

  6. grim says:

    From Reuters:

    No More Fed Rate Cuts, Says Moody’s: Report

    The U.S. Federal Reserve cannot lower interest rates at the moment, given high oil prices and the spectre of inflation, John Lonski, chief economist at Moody’s rating agency, told La Repubblica newspaper.

    “To stimulate a recovery, you need another reduction in rates, but the Fed cannot allow itself to do that at the moment,” Lonski said in an interview published on Monday in the newspaper’s financial section.

    “How can it (cut) with the price of oil at these levels, inflation threatening round the corner, the dollar which continues to fall?” Lonski said.

    Conditions for a recovery in the housing market are not even there in the distance,” he added, “the crisis has not yet touched bottom.”

    “No-one will risk buying a house anywhere in the United States … especially because they think … if they wait longer they will find it at a lower price. In a year, it’s highly likely the same house will have lost another 10-15 percent in value,” Lonski added.

    (emphasis added)

  7. DL says:

    “Consumer psychology is keeping buyers from buying today,” Ara Hovnanian, CEO of homebuilder Hovnanian Enterprises, said on CNBC Thursday. “Clearly mortgage rates are not the issue…Psychology is the biggest issue today.”

    In related news, Ara Hovnanian has been booked to appear on the Tonight Show where he will attempt to bend spoons with his mind.

  8. DL says:

    From the same link (7):
    Ken Baris, president of Jordan Baris Realtors in West Orange, N.J., says he put a deal together this week for a client selling to someone who decided to buy now instead of waiting for the sales price to drop, as they have been doing nationally. The buyer wanted to lock in the lower rate.

    “Now that the rates are actually increasing,” he adds, “the buyers are starting to do some math and figuring that higher rates over 30 years may be much more expensive than waiting for the value of a property to drop $50,000. As a result we are seeing an increase in activity.”

  9. grim says:


    …anything to create a sense of urgency in buyers.

  10. Pat says:

    I guess if Bank of America has Dodd add an amendment prohibiting refinancing for the next thiry years, then Ken Baris will have a point.

    Oh, but wait. That would limit transactions and fees.

    Oh, well, Ken. Try again.

  11. dukeb says:

    The biggest fear of the power-mongers is renters. We’re not only free to move around and find jobs or better places to live, but we’re also more free to rebel against tyranny. Though I think one of the main goals of touting home-ownership (or bondage if the “owner” has a mortgage) is simply to increase tax revenues and juice the economy–to the profit of those same power-mongers.

  12. Everything's Hobroken says:

    A main rent vs buy issue now is the fact that few expect to stay in the same job for their entire career. With this and school shopping down to the sub-district level, it seems likely that the time spent in a particular house will remain below the break-even time unless house prices drop to reflect the inefficiency of ownership for a mobile purchaser.

  13. BC Bob says:

    “Psychology is the biggest issue today.”


    Hey Ara, it’s the same damn psychology that drove this market to the moon, greed/fear. It has now reversed 360. Sorry, you can’t have it both ways.

  14. BC Bob says:

    “Now that the rates are actually increasing,” he adds, “the buyers are starting to do some math”


    I’ll take the 30% decline, prices, with 8% mortgage rates.

  15. grim says:

    C’mon Ken, still peddling that ol’ “buy now or you’ll be priced out forever” line? So 2005.

  16. bairen says:

    Dreams and nightmares are two sides of the same coin. Although it’s a lot easier to flip the coin from dream to nightmare, then nightmare to dream.

  17. x-underwriter says:

    George Carlin, the frenzied performer whose routine “Seven Words You Can Never Say On Television” led to a key Supreme Court ruling on obscenity, has died.


  18. DoughBoy says:

    RIP George.

  19. gary says:

    Hey Ken Baris, shut the f*ck up. You were part of the same scammers that drove the market up. Now we’re hearing about rising interest rates? Are you f*cking kidding me? You people are like androids.

  20. thatBIGwindow says:

    Oh man, I can’t believe he is gone :(

    RIP George – he was one of the best

  21. BC Bob says:

    Sad news, he was the best.


  22. njpatient says:

    Leesman just now:

    Job cuts are a localized problem. They’re going to be more of an issue in, for example, places near new york where people are going to be putting their houses on the market.

  23. #1 – From the article;

    In June 2001 under Gov. Donald DiFrancesco, a nearly unanimous Legislature approved the first significant change to the basic pension formula in 44 years, providing a 9 percent increase in pension benefits for more than 354,000 employees and 125,000 retirees.

    Does anyone know if these numbers are accurate? If they are, how does this state have 350k employees and what are they doing?

  24. DoughBoy says:

    Of my group of close friends, I’m only one of two people who are still renters. Even though all of the homeowners have now taken serious beatings on the houses that they bought in the last 2-3 years; they’re still trying to lambast me for being a ‘transient’.

    /shrug I’m a big fan of not having the cinderblocks tied to me that they have. I’m liquid and I’m mobile.

    When will they learn?

  25. chicagofinance says:

    BC Bob Says:
    June 23rd, 2008 at 7:33 am
    It has now reversed 360. Sorry, you can’t have it both ways.

    Bost: subtract 180….360 gets you back to where you started….

  26. chicagofinance says:

    When I hear Baris, all I can think about is Gene, Gene the Dancing Machine….

  27. John says:

    Times are tough when a major bank has a 12% coupon bond trading at below PAR!!

    NAT CITY PREF CAP TR BOND 12.00000% 12/31/2049
    Basic Analytics
    Price (Ask) 99.000
    Yield to Worst (Ask) 12.294%

  28. bairen says:

    #8 Kenny boy,

    Crunch the numbers for an additional 10 to 20% drop and having to resell in 5 to 7 years. Highly doubt today’s buyers will be thanking you in March 2011 to 2015 as they try to resell.


    If deals are so good, why aren’t you picking up some investment properties? Is it because they would still be cash flow negative? Or is it because you are a girly-man? Come on Kman, step up with your own money or shut up

  29. John says:

    The main problem with real estate is two fold, first people don’t want to catch a falling knife but secondly real estate is the second biggest asset class yet their is no way to hedge your losses. Stocks have stop loss orders, put, calls, shorts etc. Bonds have credit default swaps or hedging versus the cooresponding stock. But RE is like going to Vegas and playing one hand of black jack, you either make a killing or lose it all. Giving a first time home owner is putting every cent he has down and there is no way to hedge of course he is scared.

  30. John says:

    If you really thought re is bouncing back just buy the NCC bond at 12.5% and sit back for the next 30 years. Why do you think Citi is at 9% and NCC is at 12% because people with PhDs and multimillion dollar black boxes that crunch insane amounts of data see RE as still going down.

  31. prtraders2000 says:

    So I convinced the wife to rent for one more year, but with the agreement we would rent a house i/o an apartment. We looked at 7 places in Brick/Pt. Pleasant and a couple of observations:

    * there are way more rentals on the MLS this year as compared to last

    * the realtor fee down there comes out of the landlord

    * many of the rentals appear to be from 1st time landlords

    The place we may get was purchased by the owner in 2005 for $415,000 and listed this year for $359,000 before he decided to rent it out.

  32. thatBIGwindow says:

    If you don’t plan on selling your house, who cares about what it is worth?
    Do you just want to buy a house and then sell it in a few years to “move up”?
    The way this market is going, that probably won’t be feasable.

    I just think that some on here will simply never buy. There will always be a reason
    to not move forward, which is fine if that is your choice – rent forever. Many seem to confuse
    a house with an investment. It isn’t an investment, it is a place to live.

  33. Nom Deplume says:


    The CHC on E. Broad in Brigadoon sold. I met the new owner at the Y over the weekend. He was concerned about the traffic there as well, but decided to put up a fence.

    Trying to come in at 95% on another house in Brigadoon, near downtown. House needs some upgrade but great ‘hood. This house had 2 sales tank already (no pun intended) because they had an underground tank removed. Apparently never decomm’ed properly so some soil remed done. Not surprisingly, NJDEP won’t give a no-action letter w/o a water test. For some strange reason, seller is having issues with that. My response was “and that is my problem, why???”

    Seller says she will pull and re-list next year if she doesn’t get nearer her price, but with markets continuing to sag, and the testing issue not going away, I am not budging. Wife says she won’t go to the mat for any house, so it looks like seller gets to be a homeowner for another winter.

  34. John says:


    HA HA court ordered sale of Rolexs, what is next the Rolls and pied a tier

  35. Escape from NJ says:

    Chicagofinance (25)

    I agree. Gene, Gene reminds me of a real estate agent I met at an open house yesterday. All hell is breaking loose around her and she keeps dancing.

  36. BC Bob says:

    “Many seem to confuse a house with an investment. It isn’t an investment, it is a place to live.”

    It’s the biggest investment most will ever make in a lifetime.

  37. thatBIGwindow says:

    It’s the biggest purchase most will ever make in a lifetime.


  38. #32 – If you don’t plan on selling your house, who cares about what it is worth?

    I think for a large number of Americans the ever increasing value of their house was a substitute for wage growth. I’m betting they have become dependent upon MEW to get by. Even if they weren’t selling it was vital that their house was worth more this year than last to do a cash-out to get a new car, pay for the kid’s tuition, etc.

  39. John says:

    Re 131, because you are paying off a depreciating asset at 6.75% interest with 10K in taxes as opposed to investing in short term munis where you can get 3.75% tax free yield so in three years even if you did not save a dime more you would have an 11% more downpayment while homes have fallen another 15-20%. You are our 30% in just 36 months. Houses recover in an U shaped manner. There will not be a single day when everyone says BUY BUY BUY. You are better off wating till the U starts heading up and missing the bottom and buying your house and then selling your house. Right now if you buy you get stuck with your old house.

  40. John says:

    A house is not an investment!!!!!!!!!!!!!!!!!

    OVER TIME YOU ALWAYS LOSE MONEY!!!!!!!!!!!!!!!!!!!!!!!!

    Historically houses rise 3.5% a year, Historically mortgage rates are around 7%

    You are borrowing at 7% for something that returns 3.5% and then you have upkeep, taxes, and insurance.

    That said a house is an american dream, it is a lynch pin for stability and there is nothing like owning your own home. A house is like buying a new car and calling it an investment. Realtors made up that concept of it being an investment. Buying a POS cape in 2006 for 600K that rents for 2K a month with 8K in taxes in an INVESTMENT?

  41. grim says:

    I just think that some on here will simply never buy. There will always be a reason to not move forward, which is fine if that is your choice – rent forever.

    So they never buy, who cares. What I don’t understand is why you think that renting is somehow “backward” and that the act of buying a house is moving “forward”. Maybe in your case it was, or maybe you just need to justify your own buy decision, but don’t make the mistake of assuming that everyone is in the same position as you, or has the same goals, wants, or desires.

  42. bi says:

    “I doubt we’ve reached the point at which Obama’s tactical moves have metastasized into a character problem — but I suspect we’re getting close. Columnists like David Brooks and Michael Gerson, both of whom have had favorable things to say about Obama in the past (as have I), wrote columns on Friday that are evidence of how much things have changed when it comes to Obama. Even among our political class, Obama seems to stand out as highly ambitious, fairly ruthless, and utterly self-interested political figure. When John McCain says he would rather lose an election than lose a war, it is a believable claim. One cannot imagine Obama saying — well, sincerely saying — that same thing about anything. His political viability — a term once used by a young Bill Clinton — seems to matter above all to Barack Obama, dwarfing every other consideration.”


  43. thatBIGwindow says:

    A house will always cost more than renting if you include factors such as maint, NJ taxes, all the $$$ you put into something you own over the years. Why buy a house at all? If saving money is what matters, then rent forever.

    Obviously everyone here wants a house, correct?

  44. thatBIGwindow says:

    #40: I don’t think renting is “backwards” Home ownership isn’t for everyone, that is fine. It is funny reading the comments justifying why people are renting. Just as I am justifying why I bought.

  45. BC Bob says:

    “It’s the biggest purchase most will ever make in a lifetime.”


    Capital gains/losses are applicable.

  46. grim says:


    I own my secondary residence, but rent my primary residence.

    What does that say about me? Am I a renter or a homeowner? Am I backwards?

  47. thatBIGwindow says:

    grim, I don’t think people who rent are “backwards”

    I have family who rents, I understand it isn’t for everyone. What I meant by “moving forward” was more along the lines of deciding to buy rather than people who dont are backwards.

  48. BC Bob says:

    “Why buy a house at all?”

    Not the point, at least to me. The better question is why buy an overpriced, overbought, depreciating asset, in a declining market when renting wins hands down.

    If you don’t care about the prospect of losing 20-30%, if you have to sell in the next 3-4 years, I agree, step up.

  49. thatBIGwindow says:

    BC Bob: I agree, If you plan on selling in a few years, definately shouldnt buy now.

  50. bi says:

    Even liberal-leaning medias start to doubt Obama’s reform slogan:

    From CBS Face the Nation:

    Governor BILL RICHARDSON (Obama Supporter): Well, what Barack Obama has done is in
    the spirit of reform of the public financing system. Look at these statistics, Bob. He takes no
    money from…
    SCHIEFFER: Well, that–I mean…
    Gov. RICHARDSON: …from–no, I mean this.
    SCHIEFFER: He says, `I’m not going to do it’…
    Gov. RICHARDSON: He…

    SCHIEFFER: …and that’s in the spirit of reform? Now, really, Governor.

  51. DoughBoy says:

    The only reason I’d buy a house is if it hsa a big enough property for me to do exactly what I want in a house. To make the modifications that *I* want in *my* house.

    Renting is enough to get me by from day to day but it isn’t filling the part of the void that will make the place I live a home…. MY home.

  52. 3b says:

    #7 Psychology? Of course, alos inability to get financing.

  53. 3b says:

    #31 tbw: Sorry to disagrre with , you, but I do.

    Maybe you do not care, but in my travels, I have found that most people do care what their house is worth;even if they are not moving any time soon.

  54. 3b says:

    #53 Shoudl be in resposne to tbw #32

  55. chicagofinance says:

    thatBIGwindow Says:
    June 23rd, 2008 at 9:55 am
    Obviously everyone here wants a house, correct?

    tbw: No. I want to own things, but personally, I could not give less of a rat’s posterior about the rest of it. I want a place to live, good choices for education for children, a chance not to use my car for the most part, and a wine cellar…..you can stick the rest of it, and your nose, in your a%% and blow….

  56. thatBIGwindow says:

    3b: that is fine, everyone has their own perspectives

    but do we really ever own a house? With NJ property taxes the way they are, it seems we will always be paying a “mortgage” to the state.

  57. bi says:

    warning: this article is NOT from “fauxnew”:

    Obama is running as a reformer who is seeking to reduce the influence of special interests. But like any other politician, he has powerful constituencies that help shape his views. And when it comes to domestic ethanol, almost all of which is made from corn, he also has advisers and prominent supporters with close ties to the industry at a time when energy policy is a point of sharp contrast between the parties and their presidential candidates. In the heart of the Corn Belt that August day, Obama argued that embracing ethanol as a substitute for gasoline “ultimately helps our national security, because right now we’re sending billions of dollars to some of the most hostile nations on earth.” America’s oil dependence, he added, “makes it more difficult for us to shape a foreign policy that is intelligent and is creating security for the long term.”


  58. House Hunter says:

    Did anyone else hear on tv or radio news this morning that the NJ-NY-CT area is going to become distressed like a Michigan type downturn?
    Due to layoffs of big financial types…another words it is their turn type of sentiment

  59. Jaw says:

    TBW: should we also always buy something we want at any price as long as it’s not an investment?

  60. hirono says:

    RE: Bi

    Great sources, International Herald Trib and New Republic – hardly anything like Fox News?
    Are you afraid that Obama is going to seduce your wife?
    Stop crapping on our lawn.

  61. H says:

    Thats National Review.

  62. thatBIGwindow says:

    #59: If you find a house that is what you are looking for and you can afford it, why not?

    because it may lose value, because the property taxes may go up 200%, because a tree might fall on it…

    there are lots of reasons to not buy

  63. bi says:

    60#, just in case…

    “The International Herald Tribune is a widely read English language international newspaper. It combines the resources of its own correspondents with those of The New York Times and is printed at 33 sites throughout the world, for sale in more than 180 countries. The IHT is part of The New York Times Company. It has been based in Paris since its founding in 1887.”


  64. 3b says:

    #56 tbw: You are preaching to the converted.

    But we are in the monority. The whole conversation in my town up until recently over the last few years in my town at least has been real estate, real estate, real estate.

    OMG I bought my house at x, now it is worth x x3. I did an addition that cost 100k, but it deos nto amtter, becasue my house will now be wroth an additional 200k, and on and on and on.

    And every financial decesion that was made in my town regarding spending money on schools and other items, was based on it will make our houses worth even more, and so the increase in taxes is/was justified.

    The value of the house was everything, having a place to live was secondary.

  65. electricsheep says:

    We are considering bidding on a house in Glen RIdge, and shockingly, almost everything in our range (500K – 600K) goes for over asking.



  66. HEHEHE says:

    Congressional report re Strategic Petroleum Reserve – Pretty Good Overview:


  67. 3b says:

    #65 I am surprised that is still the case.

  68. thatBIGwindow says:

    #64: Yup, you can thank the greedy for the taxes based on their “A+++ Schools” which = $$$ for their equity.

    I wonder how many will sell?

  69. electricsheep says:

    3b –

    Me too. It’s the same thing in Montclair. too.

  70. grim says:

    We are considering bidding on a house in Glen RIdge, and shockingly, almost everything in our range (500K – 600K) goes for over asking.

    Just a side note, Rhodes Van Note has been copying the Burgdorff underpricing routine. The asking prices you are looking at are significantly under recent comps, and are set that way to create a bidding war. Keep this in mind if you are ever interested in a Burgdorff listing that looks “too good to be true”.

  71. 3b says:

    #68 tbw; Except now it is coming to back to bite them. Because in addition to the housing bubble burst, which has happend in River Edge too. The town now has the added burden of having the 3rd highest property taxes in Bergen County.

    How many young couples wnat to start out paying 10k a year in taxes on a modest house on a 50×100 piece of property?

    With prices coming down now people can look in other towns say like in NW Bergen instead of River Edge, with good schools, and lower property taxes.

  72. grim says:

    It’s not so much that they are selling for over asking, more so that asking price is unrealistically low. There is no better position to be in as a seller.

  73. PGC says:

    #57 Straw2 – The other one

    Repeat after me “Not all Ethanol comes from corn”

    Anything with a sugar can be turned into ethanol. Those Midwest farmers could use the corn stalks to make ethanol.

    Here is the only “Straw” argument I support.

  74. thatBIGwindow says:

    #71: It is a shame…River Edge used to be a nice middle-class town which turned into faux upper middle class seemingly overnight.

  75. John says:

    You bet school taxes are going up!!!!!! I went on a class bus trip with my kid recently and the bus company was kinda not nice. Class president told me the school district locked in bus rates for the 2007/2008 school year around two years ago and everyday the bus company is losing money as the fuel costs has doubled. She said when it renews this summer they are going to jack rates to cover 2007/2008 losses and at least break even in 2008/2009. School taxes are already set for 2008/2009. But in 2010 they are going to jack school taxes to pay for bus fuel, school heating bills and school maint vehicles fuel.

    Wait till next year and watch your taxes skyrocket. They will be lotsa screaming people at the budget meetings.

  76. jamil says:

    Good luck for people in MA. They may succeed in their efforts against the state spending and getting rid of state income tax. Of course, all kind of harassment and sabotage expected from the usual suspects.

    “We collected over 22,117 raw signatures from around the state, sufficiently distributed to meet the state’s requirement that no more than 25% of them may come from any one county. We should end up with plenty to meet the 11,099 certified signature requirement – with a kevlar cushion to slow the challenges from the teachers’ union.
    We’re jumping through the last legal hoops necessary to get on the ballot.

    We already told you about the legal hoops we had to jump through last fall to get the first 76,000+ certified signatures.

    We turned in these additional 22,117 signatures to 319 different town clerks June 18th.

    Now we’re waiting for the town clerks to certify those signatures so we can turn them into the Secretary of State by July 2nd. That wouldn’t be very hard – except the town clerks don’t have to give us back our petitions until just two days before July 2nd”

    When in NJ ?

    inch by inch

  77. 3b says:

    #74tbw: Yes taxes almot doubled in about 5 years or so. The ironic thing is, that the schools IMO were better 10 years ago, when we were happy being a middle class town.

    However, people are slowly starting to realize that the emperor (the town), has no clothes.

    Perhaps just being middle class for us will become popular again, because the pretend scenariois not working.

  78. grim says:

    Pretending to be rich is expensive? Who coulda knew?

  79. 3b says:

    #75 John: It is their own fault. Ironically, you will see the biggesst cheerleaders for spending, in the past, are now going to become the angriest at the out of control taxes.

  80. thatBIGwindow says:

    …well the last five years it was easy to pretend you were wealthy.

    I will never forget the years I spent in World Gym in Paramus. Tons of young professionals driving new Land Rovers, Mercedes, etc wearing designer workout clothes. I felt quite poor…quite poor :'(

  81. bairen says:

    Looks like I just got a hole in my $300 jeans.

    Does anyone make a $48 patch for these jeans? Or should I convert them to $300 shorts?

  82. watergapnomad says:

    Study: Real estate market will grow long-term

    Monday June 23, 7:56 am ET
    By Beth Braverman, CNNMoney.com contributing writer

    The current housing market is bleak: home prices and sales are plummeting, foreclosure proceedings are skyrocketing and mortgage rates are on the rise.

    When will things be better?

    A new study from the Joint Center for Housing Studies of Harvard University, “The State of the Nation’s Housing 2008,” finds the country poised to see an increase in housing demand over the next decade.

    “The good news is that we still have a growing population,” said Nicolas Retsinas, director of the Joint Center for Housing Studies and one of the study’s authors. “As long as you have more households, more people are going to need places to live.”

    Social trends – people getting married later and divorced more often – are making single-person households the fastest growing household type, the study finds. In addition, a long-term net increase in potential home buyers will be driven by demographic factors: the aging of “echo boomers” into adulthood, an increased life expectancy for baby boomers and projected annual immigration of 1.2 million.

    From 2010 to 2020, the number of households in the United States will grow by an average of more than 1.4 million per year, the study finds.

    Unsold homes block growth

    Still, before the housing market can turn around, it must first work off the record numbers of unsold homes on the market. From 2005 to 2007, the number of new and existing vacant homes for sale rose 46% to 2.12 million.

    The nationwide glut of unsold homes has hit the real estate market hard, forcing down sale prices, stemming new construction and leaving millions of homeowners with properties worth less than the value of their mortgage.

    In early 2008, the nation had an 11-month supply of unsold new homes and a 10.7-month supply of existing single-family homes, according to the Harvard study. A six-month supply of existing homes is considered a buyers’ market. Reducing the current supply will require price declines, a decrease in interest rates, employment growth, a return of consumer confidence and the revival of accessible mortgage credit.

    A reduction in new home construction is another key to decreasing inventory, Retsinas said. Privately owned housing starts fell 3.3% to a seasonally adjusted annual rate of 975,000 in May from 1 million in April, according to the Commerce Department.

    A sharp drop-off in housing starts has precipitated housing turnarounds in previous bubble-bust cycles, said Karl Case, a Wellesley College economics professor and a co-founder of real estate consulting firm Fiserv CSW. Case also sees long-term growth in the housing market and agrees that immigration and other demographic trends will help fuel a long-term recovery.

    “If household formation continues at pace, prices will recover and starts will rise again,” Case said.

    In the housing bust of the early 1990s, cities with big immigrant populations, like Los Angeles, recovered more quickly than other metropolitan areas, like Boston, with lower foreign-born, said Case.

    “Not all immigrants buy houses, but many immigrants buy houses,” Case said. “That has a positive effect on the prices in a market.”

    Regional recoveries

    Retsinas said parts of the country, such as the Northeast, with fewer vacant homes could see signs of a recovery in spring 2009. He was less sanguine about markets like the Southwest, where excessive overbuilding at the height of the market means it could take two years or more to sell off excess inventory.

    Recovery in the Midwest represents that biggest challenge, because the housing downturn there stems from regional economic problems beyond overbuilding.

    “They’re not reacting to an overheated housing market there,” Retsinas said. “They live in an economy that is shedding jobs.”


  83. John says:

    June 23 (Bloomberg) — Goldman Sachs Group Inc. reversed its May 5 recommendation for investors to add to U.S. financial and consumer stocks, conceding it was “clearly wrong” about the prospects for both groups.

    Goldman advised investors to “underweight” the categories by allocating less to them than their weightings in the Standard & Poor’s 500 Index. In May, the world’s biggest securities firm boosted its rating on financial companies to “neutral,” or market-weight, and assigned an “overweight” recommendation to consumer shares.

    “We boosted our consumer discretionary and financials weights in May on the belief the sectors would benefit from bank recapitalization and fiscal stimulus,” New York-based analyst David J. Kostin wrote in a note to clients today. “Our thesis was clearly wrong in hindsight.”

  84. skep-tic says:


    “All this adds up to a downturn that is “the most severe that we have seen,” Retsinas said.”

    and yet, two years ago, this guy said there was no bubble.

  85. AL says:

    toshiro_mifune Says:
    June 23rd, 2008 at 9:48 am
    #32 – If you don’t plan on selling your house, who cares about what it is worth?

    I think for a large number of Americans the ever increasing value of their house was a substitute for wage growth.

    That is all you need to know about last 5-7 years.

    Increased housing prices made everything more expensive.

    And now we are finding out that without HELOC’s we can’t even afford gasolone to drive to work….

  86. grim says:

    From the JCHS (Harvard)

    The State of the Nation’s Housing 2008

    Joint Center tends to lean towards optimism. Really not a surprise after you see who funds the Center.

  87. grim says:

    and yet, two years ago, this guy said there was no bubble.

    I wonder if there are political motives behind both his denial of the bubble, and his acknowledgement of a crash. Seems even more plausable when you factor in the motives of his funding.

  88. skep-tic says:


    “A main rent vs buy issue now is the fact that few expect to stay in the same job for their entire career.”

    agree. only makes sense to buy right now if a big portion of your industry is located in one place, such that you could switch jobs and not be forced to sell your house

  89. grim says:

    Just a few of the JCHS sponsors:

    Fannie Mae
    Federal Home Loan Banks (FHLB)
    Freddie Mac
    National Association of Homebuilders (NAHB)
    National Association of Realtors (NAR)

  90. re 53, 57 etc
    If I didn’t already know, I would ask why you post seemingly endless references to hacks and vision-free pundits.

    Please try expressing an orignal thought. Your current posts are hackneyed and excessively boring.

  91. grim says:


    Two years ago, it was in the interests of their sponsors to peddle the “no bubble line” and maintain the frenzy. Today, it’s in the best interests of their sponsors to peddle the “housing crash” line, in an attempt to push for pro-housing legislation and bailouts.

  92. Imus says:

    #70: So true. That Montclair listing scheme (price low to attract multiples) is the WORST. Be very wary.

  93. grim says:

    Worst from the perspective of buyer, *BEST* from the perspective of seller.

  94. skep-tic says:

    I don’t really care whether you think a house is an investment or consumption (I personally think it is a bit of both), but either way, why pay more than you have to?

  95. HEHEHE says:


    You don’t understand, it has the word Harvard next to it, so you know anything that is said must be true.

  96. njpatient says:

    42 bi

    They say the same thing about everyone in that magazine, don’t they?

  97. thatBIGwindow says:

    Still checking the MLS, pretty much nothing great $350,000 and under.

    I suspect by this time next year there will be many decent houses in good towns on the market under $350,000

  98. Jill says:

    1) Regarding Obama/financing: Obama didn’t pledge to participate in federal matching funds; he agreed to do so IF HIS OPPONENT would do the same. Given that McCain is already an election law criminal because of using federal funds as collateral for his campaign loan and then claiming he’s opting out for the primaries (which he is NOT allowed to do), I think it’s pretty disingenuous for the National Review to be getting its collective panties in a twist about this — unless it finds a campaign funded by $5 – $100 donations by individuals that threatening (which it should).

    If you want a beef with Obama, try complaining about how he seems to be willing, along with his House compatriots and plenty of Dem Senators, to flush the 4th Amendment down the toilet.

    No on to a more fun subject — home seller delusion.

    Check out MLS #2821050. This house has been on the market for the better part of a year for close to a million and a half bucks. This realtor usually does great photos, but even she can’t put lipstick on this particular pig. It looks like the house isn’t even finished yet. Certainly the exterior isn’t. It has no driveway and the so-called front yard is full of weeds. And yet it’s being advertised as having “custom landscaping.” This was your standard bash-and-build, and maybe the builder is planning to landscape to buyer spec, but meanwhile this is a brick shell with raw sheetrock inside, no driveway and no landscaping, that this guy is trying to get $1.499 million for. On a street where this is the most expensive home by far and across the street are $400,000 (and dropping) capes.

  99. kettle1 says:


    from yesterday regarding mining.

    if you want to see how much of the coal in the US could be mined google “mountain top removal”.
    Tn there is the little problem that burning coal dumps significant amounts of radioactive material down wind from where ever it is burned.


  100. grim says:

    Dylan in Asbury?

  101. DoughBoy says:

    I thought it had to have (AP) next to it for it to be true.

  102. Clotpoll says:

    big (56)-

    Even if you rent, you are paying taxes: your landlord’s.

    However, whatever portion of your rent may be going to pay the landlord’s taxes is probably nowhere near enough to actually cover them, as rents are low (and probably goin lower) all over NJ.

    Assume any upside-down seller who is renting out a property right now is in a serious negative cash flow situation.

  103. njpatient says:

    98 jill

    darn tootin’

  104. BC Bob says:

    “Still checking the MLS, pretty much nothing great $350,000 and under.”


    In 2005 the mendoza line was 500K. I guess prices are declining.

  105. CB in SJ says:

    Not only that, BI’s comments seem totally irrelevent to this discussion group. I should point out that this entire financial mess (not just housing but also in the dollar, commodities, jobs, etc) seems to have developed over a period of time when Republicans were in charge of Congress and the White House, or at least 6 of the past 8 years.

    re Bi: “Your current posts are hackneyed and excessively boring.”

  106. Tom says:

    One thing I noticed is that NJ has a very negative view towards renters. I’ve even heard landlords talking negatively about renters saying stuff like well if they were good people with good money why would they be renting and stuff like that.

    I’m originally from NYC where the ratio of renters to homeowners is about the reverse of NJ so I found it odd.

    I’m surprised how people essentially regard their “clients”.

    When you can put 20% down on a home and rent it out at more than your mortgage, taxes and insurance so that you can actually make a profit then I think housing will be reasonable. The lending world is going to have to change for that to happen.

    There was a NYT article I think was linked in one of the comments on this site. There was a waitress, I think single, who was making $40k a year. She bought a house for around $250 or so. Right there that’s over 6 times her yearly income. She wound up refinancing and cashing out a few times until the amount she owed was over $400k. That’s 10 times her yearly salary.

    She mentioned how the house put her three kids through college and now she is facing foreclosure.

    It’s just insane what was going on and people thought this was ok?

  107. lisoosh says:

    To those who chimed in (tcm, patient) I decided to take the job offer.

    It’ll be a tough adjustment and I think Mr. Lisoosh will have trouble adapting, and if gas rises too much more too quickly I may regret the decision. But on the other hand, in tough economic times, it would be foolish to kick a gift horse in the teeth and try to steal its saddle.

    They are even letting me do a couple of weeks training, here and abroad, and then take off the entire summer with the kids. Not many places I can think of would be that accomodating.

    Wish me luck.

  108. Clotpoll says:

    gap (82)-

    “Joint Center for Housing Studies of Harvard University…”

    These are the brainiacs who concluded- in the middle of the bubble- that there was no housing bubble.

  109. Clotpoll says:

    boken (90)-

    Funny, eh? It’s tempting to just ask bi to stick to stock-picking.

    His picks are both funny and profitable (if you take the other side of the trade).

  110. Clotpoll says:

    Imus (92)-

    Then why does such a tiny fraction of the homeowning public in NJ pursue this strategy?

    I suggest deliberate underpricing to every seller I work with. Only a fraction ever take me up on it.

  111. jcer says:

    bairen, what ever happened to wearing clothes until they disintegrate. But then again I guess I am just cheap, $30 jeans wear em until they fall apart, they are comfortable too. You can’t take that too far ie. going out to someplace niceish worn clothes are a no go as they are at work but many a times they are acceptable. People really do dress to well, expensive while kicking around on the weekend.

    But hey I got money in the bank!!! Rather than in the hot jean commodity market.

  112. bi says:

    105#, CB, you are contradicting yourself..
    if you thought this housing mess was devloped entirely by republican white house and congress, how come it is irrelevent to this discussion?

    > Not only that, BI’s comments seem totally irrelevent to this discussion group. I should point out that this entire financial mess (not just housing but also in the dollar, commodities, jobs, etc) seems to have developed over a period of time when Republicans were in charge of Congress and the White House, or at least 6 of the past 8 years.

  113. thatBIGwindow says:

    From the NJMLS general posting board:

    “Unbelievable opportunity. Just back on the market…buyers could not document income…Builder is looking for offers and is anxious to build someone their dream home”

  114. make money says:

    From Peter Schiff’s Newsletter..interesting summary

    In 1958 the U.S. enjoyed a standard of living so unmatched that the rest of the world still lived in the Stone Age by comparison. Our per capita income was so far ahead of our nearest rival that it seemed impossible that any other nation would ever catch up. Today not only is per capita income in the U.S. barely in the top ten, but we are being rapidly overtaken by countries that up until a few years ago were barely discernable in our rear-view mirrors. When it comes to economic performance during the past 150 years, the U.S. is the Big Brown of economies. 1858-1908 was the Kentucky Derby, 1908-1958 was the Preakness, and 1958-2008 was the Belmont Stakes.

    Not only did the U.S. surrender a substantial lead, but in many respects our current standard of living is lower than the one our grandparents enjoyed. Sure we have a few more gadgets, larger televisions and more prevalent air conditioning, but the quality of life has actually declined. In the 1950’s, the average man earned enough money to fully support a wife and four kids, all while saving for retirement and paying off his mortgage. Today the average man can barely support himself. It takes two bread winners in most families to make ends meet, and that is assuming only two children. Even with both parents working, the typical mortgage on the family home will never be paid off and retirement is now a pipe dream. Flush with high pay, low debt, and a strong currency, the Ugly American in the 1950’s could vacation in Europe like a king. Now he can now barely afford the gas for a day trip to a Six Flags theme park.

  115. electricsheep says:

    grim (and others) –

    regarding the underpricing. If the house is assessed at 515K and they are asking 549K, do you think they still consider the 549K number “under priced?”

  116. Jill says:

    Tom #106: You’re right about this. When we were renting, even though we had never had an accident, we were put into the assigned risk pool for NJ car insurance (this was in the late 1980’s to early 1990’s). Our insurance agent flat out told us that insurers regard renters as “transients” and “irresponsible” as opposed to homeowners.

  117. ricky_nu says:

    what is this big deal about towns going from being “working class” to “upper middle class”?

    I’ll tell you, I live in one of these “upper” towns, and trust me, it is over-rated. Most of the people are crotch-sniffing a@@holes, and are not really a lot of fun. Save your money and spend it where it really counts (good house, good schools, good people).

  118. John says:

    The price cheap cause a bidding war strategy works good without a realtor. The realtors will track your price history once it is in MLS plus you are giving up 6% with that strategy. I think if people want to sell they should find the cheapest comp to their house on the market and price it ten % cheaper and spend a grand on advertising and do a two day open house to max traffic. Even invite buyers brokers and pay the fee if you have to if it beats the non fee offer. But a lot of people get very nervous at that technique and everyone thinks their house is worth more than it is.

    A realtor told me this weekend and that buyers only care about price, they won’t even look at houses that aren’t priced right. There is no more show them a higher priced house and they will fall in love with it.

  119. CB in SJ says:

    BI #112. You never mentioned housing, nor could one reasonably infer you were somehow dealing with housing in your posts. If anything, I think I was being charitable in trying to figure out some relevance to your post. Was I right? Are you somehow trying to distract us from the true cause of this mess by bashing Obama?

  120. jamil says:

    “#32 – If you don’t plan on selling your house, who cares about what it is worth?”

    This is how I always felt. However, how many people know that they are going to live there the next 30 years.
    On average, people live only 7 years in a house (move because of relocation, divorce, trade up etc).
    You can plan for upgrading, ie buy a house that is good enough for the next 30 years, but you can not easily prepare against job loss or divorce, which may force you to sell. So, I understand people still care about the value of their house, even if they don’t intend to sell..

  121. electricsheep says:

    john –

    Thanks. What I am finding is that the houses are still priced above the assessments, yet the realtors are still talking about “bidding over asking” to be sure to beat out the other bidders.


    I know that assessments aren’t everything, but two houses we are considering in Glen Ridge are priced well above their recent (2008) assessments. One is assessed at 515K with a 549K asking and one is assessed at 567K with a 629 asking (though this one has been sitting at the OLP since the beginning of may).

  122. John says:

    Re 122, even funnier most houses for sale at over the assesment price have outstanding tax greivances where the owner is claiming the house is worth less than the current assessed price.

  123. electricsheep says:

    John –

    So true. I know someone who recently sold her house in Montclair for 899K. She listed it for 959K even though that was about 100K over the recent assessed value.

    She appealed the tax assessment (850K) claiming that they “over” assessed.


  124. John says:


    The entire 45 page harvard RE study is a good read.

  125. njpatient says:

    119 CB
    Yeah – you were right.

  126. njpatient says:

    119 ricky

    “I’ll tell you, I live in one of these “upper” towns, and trust me, it is over-rated. Most of the people are crotch-sniffing a@@holes”

    You must be neighbors with Richard in Brigadoon?

  127. Pat says:

    John, I just scanned it. I wanted to get a feeling for the dramatic turnaround from their 2006 report. You should go back and read it someday. It’s a great study in groupthink and academics completely missing reality.

    On this report, I get the feeling they’ve been spending too much time reading wikipedia: “US Housing Bubble.”

  128. njpatient says:

    “it would be foolish to kick a gift horse in the teeth and try to steal its saddle.”


    Best of luck

  129. Hobokenite says:

    An 8% to 10% decline in rental rates will give apartment hunters the upper hand over landlords and brokers this summer, the New York Post reported. The summer usually sees an increase in prices for rentals, as college graduates flood the city. This year, the shrinking job market has contributed not only to a smaller pool of interested renters, but bigger discounts on apartments as landlords seek to stay competitive.


  130. DoughBoy says:

    So we’re seeing a drop in home prices and a drop in rent also? With the number of people who cannot/will not purchase, shouldn’t the rent INcrease?

  131. Clotpoll says:

    John (123)-


  132. John says:

    does anyone have a listing of home sales in last year from ho ho kus for a two bedroom house?

  133. SG says:

    Rent Vs Own equation.

    The RE bubble has been global phenomenon. Just to give folks here some perspective from my home town, Bombay/Mumbai India. The home price are so out of whack with reality in that town.

    The house which rent for $400, costs $250,000 to buy. Still you have realtors telling, the time to buy is right now, as prices are going to go up.

  134. kettle1 says:

    regarding the doom and gloom RBS prediction of the fecal matter hitting the fan this fall…

    if they are right then that could be the beginning of a deflationary depression. and yes i said depression. That would wipe out a lot of people as that $500,000 loan is suddenly a heck of a bigger debt when deflation hits.

  135. Sybarite says:


    “Forbes Magazine has consistently ranked New Vernon, NJ – Zip Code 07976 – as one of the 25 “most expensive” zip codes in the country!”

    How is that a selling point?

  136. John says:

    I see it every day.In nassau county all homes are assessed every year to their market value. I always check the assessed value versus sales value. People pricing above Jan 2008 assessment who are grieving their assessment happens a lot.


    Clotpoll Says:
    June 23rd, 2008 at 12:41 pm
    John (123)-


  137. Hobokenite says:


    So we’re seeing a drop in home prices and a drop in rent also? With the number of people who cannot/will not purchase, shouldn’t the rent Increase?

    All other things being equal, yes, you would expect that. But a weakening economy leads to less demand for both rentals and sales.

    So the 200 X monthly rent pricing (already a bubbly indicator) may soon be 250.

  138. Nom Deplume says:

    On Obama,

    Read today’s article (sorry no time to get link) on CNN/Fortune about Obama. He admits that he was blowing smoke on NAFTA back in the Ohio primary (consistent with Goolsbee’s assurances to the canadians that it was “political posturing”). Now he is billing himself as a friend to business.

    Not everyone is buying. Today, Larry Lindsey on CNBC openly intimated that Obama’s tax policies would drive financial business to London due to tax considerations alone.

  139. schabadoo says:

    Can anyone find out if 17 Excelsior Place in Butler closed? If so, is the price public?


  140. grim says:

    Think that the NAHB timed this press release to coincide with the JCHS release?


    WASHINGTON, June 23 – The National Association of Home Builders (NAHB) has initiated an all-out effort to get Congress to pass badly needed stimulus legislation that will help stabilize the economy and housing market and assist millions of current and potential home owners. A central component of this legislation is a temporary home buyer tax credit to stimulate home purchases by qualified first-time buyers.

  141. NNJ says:

    Stu, but who will rent it with the crazy rent laws in mumbai. I think the rents are much higher than that.

  142. make money says:

    regarding the doom and gloom RBS prediction of the fecal matter hitting the fan this fall…

    if they are right then that could be the beginning of a deflationary depression. and yes i said depression. That would wipe out a lot of people as that $500,000 loan is suddenly a heck of a bigger debt when deflation hits.


    With the risk of getting kicked out of you Domenica Safe heaven I disagree.

    It’s going to inflationary depression. That’s going to wipe out the middle class and their savings and their standard of living.

    Life will be like this. We’ll enjoy a 2M cape but it will take 25K to fill the refrigirator.

    No Depression though as jobs will hold up just standard of living will be equivalent of a third world country.

    Dollar will buy nothing.

  143. 3b says:

    and assit current and potential home owners.,

    Potential home owners do not need assistance. Just further price drops will be just fine. Thank you NAHB for your concern. We will take care of ourselves.

  144. DINJ says:

    Just had a lowball accepted..we may be creating a comp killer….

  145. make money says:

    Financial firms will die and Wall Street will be outsourced to Shangai, Mumbai, Dubai and Chicago commodities trading will end up in St. Petersburg.

  146. kettle1 says:

    This is from wikipedia

    The deflation of the Great Depression, as in 1836, did not begin because of any sudden rise or surplus in output. It occurred because there was an enormous contraction of credit (money), bankruptcies creating an environment where cash was in frantic demand, and the Federal Reserve did not adequately accommodate that demand, so banks toppled one-by-one (because they were unable to meet the sudden demand for cash— see Fractional-reserve banking). From the standpoint of the Fisher equation (see above), there was a concommitant drop both in money supply (credit) and the velocity of money which was so profound that price deflation took hold despite the increases in money supply spurred by the Federal Reserve.

    if we assume that this description is accurate then we are in serious trouble. The FED has been pumping money in to the economy until the printing presses are red hot, yet wealth destruction in the form of write downs continues. job markets are contracting and credit is being rescinded. How much faster and how much more money can the FED create without sparking off runaway inflation? Does the FED even have a way out at this point? The FED has pumped the markets up so high buy not allowing recessions to remove the various investment detritus as one would normally that there may be no solution now.

  147. John says:

    I love it 1975 Pricing!!

    Auto makers’ shares fell again Monday after General Motors Corp. (GM) and Ford Motor Co. (F) led the market Friday to its lowest close since mid-March, with GM’s shares hitting their lowest level since Jan. 3, 1975.

    GM was recently down 6.4% to $12.91 and earlier dipped to $12.78, approaching a 33-year low of $12.56. Ford dropped 7.8% to $5.36.

  148. bi says:

    140#, nom, this may be the article you are referring to:

    Obama: NAFTA not so bad after all


  149. grim says:


    You are hereby banned from starting or participating in any political discussions on this site.

  150. make money says:


    Just had a lowball accepted..we may be creating a comp killer….

    If your offer got accepted then it’s not a lowball it’s the best offer the seller got and hence current market price.

    Good luck and congrats.

  151. HEHEHE says:

    It’s going to start as an inflationary recession and migrate into deflationary depression:


  152. DoughBoy says:

    So, lets hear the worst case scenario… be sure to leave no stone unturned. How bad could it be and what will the affected parties be dealing with?

    How do renters with decent nuts squirreled away do?

    how do the friskies eaters do?

    Bag holders?

    Lets hear it!

  153. kettle1 says:

    make Money,

    dont worry i encourage dissenting opinions, that wont get you kicked out.

    I think that we will see a significant run up in inflation followed by a drop into deflation. we are seeing the inflation now but when the FED printing presses crash we will see a deflation happen as banks lock down capital and credit.

  154. thatBIGwindow says:

    #154: Well, I am sure there will be a few on this site who will be quite happy then. They will all say their “I told you so”‘s and talk about not buying houses.

  155. skep-tic says:


    “Two years ago, it was in the interests of their sponsors to peddle the “no bubble line” and maintain the frenzy. Today, it’s in the best interests of their sponsors to peddle the “housing crash” line, in an attempt to push for pro-housing legislation and bailouts.”

    Grim– totally agree. It is an embarassment that Harvard allows its name to be associated with this group

  156. Nom Deplume says:

    Latest broker b.s. story:

    Agent we met at an OH agreed to rep us. Found an interesting house, not too overpriced for neighborhood, and decided to make offer under asking. Agent said we had to raise; I said I was concerned about taxes going up in the future and that the entire state of NJ is a declining market. She said, not true, Brigadoon, among others, are not declining. She was adamant about that. Still, I see houses in Brigadoon languishing and prices dropping.

    She also told us last week that the house we viewed was never going to drop price, that the sellers were not going to lose money so their price was sticky. Today, another agent pointed out to us that it reduced by 20K.

    Wife sent agent an email, indicating her “disappointment” and subtly suggested that, if we bid, it would be through another agent, instead of letting Coldwell get both sides.

  157. make money says:

    How much faster and how much more money can the FED create without sparking off runaway inflation? Does the FED even have a way out at this point?

    Feds does have an answer. INFLATION. Wipes out all debt while maintaing a working economy.

    Everything they have done since Bernanke took over has been towards a slow devaluation of our currency. That’s Ben’s idea of getting out of this mess. He even preached this in tokyo way back when he schooled the Jap bout their lost decade.

    The man studied the Great depression and believes it could have been avioded if they had trashed the dollar for a peiod of tim and then built it back up ala Paul Volcker.

  158. Nom Deplume says:

    [150] bi,

    no, it was different. an interview. Gotta run to court in New England so no blogging until wednesday.

    Peace out, all.

  159. SG says:

    Senate weighs major NJ housing reform

    TRENTON, N.J. – The state Senate is ready to consider revamping affordable housing laws.

    The Senate on Monday is expected to debate legislation proponents contend would make housing available to all throughout the state.

    Critics contend it would spark costly suburban development.

    The Assembly already approved the bill and Gov. Jon S. Corzine supports it.

  160. John says:

    Comp killer? To me that would be 2002 prices or better.

  161. SG says:

    Emotional debate on NJ borrowing

    But the plan to borrow $3.9 billion for schools could spark the most emotional debate.

    Corzine and urban legislators want the Legislature to approve the borrowing to restart a stalled school construction program.

    But other legislators want the borrowing presented to voters. The state Constitution generally requires voter approval for state borrowing, but the state Supreme Court in 1998 ordered new schools be built in the state’s poorest cities.

    The state spent $8.6 billion on school construction without finishing all the work. The program was stalled by mismanagement, but Corzine told the high court he would try to get money approved by month’s end to restart the program.

  162. Tom says:

    142 grim,

    It’s funny that builders as well as others in the re trade want congress to push legislation to help them out. They came into an inflated market and and want to pass the burden onto the average citizen rather than take their losses.

    If the government really wants to stimulate the economy in general as well as the housing market, they should really focus on things that will make people’s money go further not find ways to make people have access to more capital that they will have a hard time paying back. That’s how we got in this mess in the first place.

  163. NJGator says:

    Not everything in Montclair is going for overasking these days:

    Montclair Heights Prices Reach New Lows
    Monday, June 23, 2008

    Prices at The Heights at Montclair, the development on the old Montclair Hospital site, started back here at a list price of $1,349,990 (for #24, the Chamonix). #24 sold last October for $994,990. Since then, the houses have sold at prices that have gone lower and lower. #22, the St. Moritz model went for $725,000 in February; #18 (also a Chamonix model) went for $640,000 in April.

    The listing price has dropped now to $699,900; see interior photos here. http://new.gsmls.com/public/getMediaReport.do?mlsNum=2519008&imageCount=10

    Meanwhile, Montclair’s newest development, the Commons at Bay Street, is scheduled for occupancy this November; 2 bedrooms are listed here for $639,000.


  164. scribe says:

    conference tomorrow – Securities Industry Financial Markets Association – includes:

    What is that House Really Worth?

    Valuation is front-and-center – how are methodologies changing, and what is to come?


  165. njpatient says:

    124 electric

    She should get fined

  166. scribe says:

    Also, Investment News has a live webcast:

    Real Estate
    Market Pulse

    Listen to what the experts are saying about
    the opportunities in today’s tumultuous
    real estate market.

    Tuesday, June 24, 2008
    4:00 – 5:00pm Eastern Time


  167. chicagofinance says:

    jcer Says:
    June 23rd, 2008 at 11:53 am
    bairen, what ever happened to wearing clothes until they disintegrate.

    jc: I am wearing a pair of Florsheim wingtips I bought in 1997. Yeah I dropped $110 at the time, but you take care of the things and replace the right pieces. They were made to last.

  168. njpatient says:

    Harvard no longer qualifies as part of the academy. It is now merely a massive hedge fund with extra tax breaks that has a closely held portfolio company in the education business.

  169. CB in SJ says:

    I hope it is OK to quote other blogs here. This is from Richard’s Real Estate and Urban Economics Blog:

    “Richard Green is a professor of real estate, finance and economics at the George Washington University.

    “Over the past six years, the price of gasoline has risen about $2 per gallon. What does this mean for relative urban land prices?

    “Let’s say the average household makes five one-way trips per day–for work, shopping, entertainment, etc. Let’s also say that the average car gets 20 mpg in city driving. Each mile of distance to work, shopping, etc. is therefore now 50 cents per day per household more expensive than before. A household living immediately adjascent to work and shopping should then be willing to pay $5 per day more in rent than a household 10 miles away compared with six years ago, all else being equal. This becomes $150 per month, or $1800 per year. Assuming a five percent cap rate for owner occupied housing, this translates to $36,000 in relative change in value. Given that the median house price in the US is about $220k, this is kind of a big deal.”

  170. njpatient says:

    132 dough
    A small portion of first-timers purchase in NYC. It is mostly a rental market at the lower end.

  171. njpatient says:

    136 ket
    Yes, which is part of the reason why our overlords are intentionally erring on the side of more inflation rather than less

  172. NJGator says:

    122 Electric – The new assessments in Glen Ridge are a crock. The town deliberately lowballed everyone to avoid the appeals mess they have in Montclair. We have friends in a lovely home in the south end of town that were assessed at less than $390k. They purchased the house in 2004 and added central air and made many updates afterwards. Now I know the market has declined recently, but nice, updated homes are not going for under $400k in Glen Ridge yet.

    If you like the south end area of Glen Ridge, there is a listing on Maolis that has been active for a few weeks at $549k. I have not seen the inside of the house, but I can vouch for the neighbors. We have many friends on and around that block, and they are a great group of young professionals with young kids. That neighborhood also did really well in the revaluation and the house that is on the market, by my calculations is going to get a really nice tax cut.


  173. bi says:

    170#, njp:
    It is now merely a massive hedge fund with extra tax breaks that has a closely held sour grapes?

  174. skep-tic says:


    “So we’re seeing a drop in home prices and a drop in rent also? With the number of people who cannot/will not purchase, shouldn’t the rent INcrease?”

    a lot of people move to NYC area because of a job. No job = no move.

  175. njpatient says:

    146 DINJ

    Congratulations! Excellent news.

  176. grim says:

    #146 – Shush, no details. Sellers prowl here.

  177. Sean says:

    re: #2

    The FIDC has taken out full page ads in Business Week, The Wall Street Journal and other print to toot their own horn this week for their 75th anniversary.

    Seems like they are prepping the business community for a rash of bank failures.

    I’ve NEVER seen the FDIC advertise. This is ominous to say the least.

  178. njpatient says:


    “Does the FED even have a way out at this point?”


    This has been another edition of Easy Answers To Easy Questions

  179. make money says:


    I own some property in Montenegro. After the 1979 earthquake that decimated the town the FEMA equivalent was giving away credit to built the town. My dad took the money and built several resort type properties.

    The actual pmnt were supposed to start 10yrs later.

    After 10yrs when the pmnts started my dads equivalent of the all the loans combined was a dozen eggs.

    This hyperinflatin was achieved due to war monger president and printing press in overdrive in addition to a huge national debt.

    All the factors are the same the only difference is scale. The only industry that thrived was tourism.

    Remember Guns or Butter?

  180. njpatient says:

    151 grim


  181. grim says:

    re: FDIC

    I really hope they don’t sponsor an arena.

  182. jcer says:

    Chicago, I agree entirely. Unfortunately with shoes quite frequently being made in China, it is harder and harder to get a quality pair of shoes for $150. But the other part of it is you don’t replace clothes until they are worn out. My brother in law cycles out his old clothes and buys new every 6 months. I have the shirts I bought at Brooks Brothers 2 years ago, they are still fine. He spends 15k a year on clothing if I spend $1500 it is a lot.

  183. njpatient says:

    151 doughboy

    As I’ve been saying since last August, it’s going to be very very very very bad.

  184. DINJ says:

    Grim, I doubt these sellers will be prowling :)…
    John #162 From what I could gather we are getting it at a 2002 price.

  185. DoughBoy says:

    185. I’ve been lurking and occasionally posting for quite some time now.

    Specifically who gets burned bad, worse, worst and HOW?

    With inflation or hyperinflation, those with decent nuts in the bank are WORSE than those with all the debt, no?

  186. njpatient says:


    “decided to make offer under asking. Agent said we had to raise; I said I was concerned about taxes going up in the future and that the entire state of NJ is a declining market. She said, not true, Brigadoon, among others, are not declining. She was adamant about that.”

    Should have fired her on the spot.

  187. bairen says:

    #111 jcer and njp,

    Does having your clothes ruined due to infant/toddler’s repeated vomiting count the same as disintegrate? My son took out most of my shirts and a few pants.

  188. Sassy says:

    Hold off, you still have potty training to go thru!

    The hidden costs of having a child!

  189. njpatient says:

    175 bi

    What’s your point?

  190. 3b says:

    #186 DINJ: Congratulations. It has always been my contention that prices would revert back to around 2002 levels.

  191. Doyle says:



    What is your opinion (or general consensus) on North vs South GR? I don’t know all that much about the town, but I seem to like the North end better just from driving around. I am curious if one end is preferred more than the other for any particular reason?

  192. jcer says:

    Yes, ruined clothing should be retired. I am just disillusioned with the consumerism in US. People today buy way more unnecessary stuff while living a lower standard of life than my parents generation. I just dislike consumption for the sake of consumption or to show off wealth that you don’t really have.

  193. RentL0rd says:

    I just gave a check for ~4.5 grand for my two kids’ summer camp.

    Not hidden charges anymore :(

  194. lisoosh says:

    Looked at northern Somerset county rentals (just in case, as moving for a new job is easier when you rent :-) ).

    Noticed TONS and TONS of Bedminster rentals – very overpriced rentals and just the kind that “investors” pick up as an assumed sure thing.

    Would think there will be a lot of for sale signs up there soon, and a lot of hurting homeowners elsewhere watching their “sure thing retirement fund” swallow money.

  195. lisoosh says:

    RentL0rd Says:
    June 23rd, 2008 at 2:13 pm
    “I just gave a check for ~4.5 grand for my two kids’ summer camp.

    Not hidden charges anymore :(”

    What is really sad is that 4.5 large isn’t bad. Some places it is 5k EACH. $10,000 just to keep the kids busy while we work. Lovely.

  196. NJGator says:

    193 – I’m not a “Ridger” myself – Stu and I live in Montclair, but we have quite a bit of friends our age (mid 30’s, small kids) that have bought there and are very happy. As long as you’re not exteme south (East Orange border), you’re fine. Some of the homes on the south end are also quite close to the Bloomfield train station, which is great for commuting.

    My guess is that the North End is more prestigious, but there are some gorgeous large homes on the south side too.

    Another thing to consider is that taxes seem to be lower in the south end, which is not a small issue in a town where the taxes are so high.

  197. Commanderbobnj says:

    My comment/post #197 is “awaiting moderation”—can you please ‘release’ it ?
    Thanx, Bob

  198. Commanderbobnj says:

    Eh,—- It’s post/comment # 195

  199. njpatient says:

    187 dough

    If there is inflation, you want to be holding debt.

    If there is deflation, you don’t.

  200. John says:

    2002 prices rock, but I am holding onto my Dow 10K hat and hoping for 2000 pricing!!

    At least with summer camp you can use flex spending. America is the only country that subsizes parents so they don’t have to watch their own kids.

  201. DoughBoy says:

    I’m not seeing 2002 pricing. In 2002 I could have gotten this sweet little apartment in RedBank for under 90k. It sold in early 2007 for north of 300 WITHOUT the garage. Somehow the guy who owned it originally still owns the garage.

  202. Doyle says:

    Thanks NJGator, I knew you weren’t in GR, but could probably shed some light.

    My wife and I are early 30’s, small kid, and considering GR.

    Thanks for the info.

  203. grim says:


    How small is small? I’ve talked to folks that say that Forest Ave School is more desirable than Linden. I don’t really understand what the big deal is, since Forest and Linden are K-2 only. By the time the kids hit 3rd, they are in the same schools.

  204. John says:

    Great, lets get consumers to take on more debt, interest free but still debt. I can’t wait till no-interest financing on homes.

    June 23 (Bloomberg) — General Motors Corp., trying to spur U.S. sales after a 16 percent slide through May, tomorrow will begin offering no-interest financing for as long as six years on many 2008 cars and trucks.

  205. DoughBoy says:

    6 year, no interest financing from chevy? What’s ford gunna do?

  206. CB in SJ says:

    #195 Bob: You forgot the S&L meltdown of the 80s, the trillion dollar war in Iraq (how we gonna pay for that?), a ballooning deficit. I am not saying the Dems haven’t created messes as well; I think pols in general are either misguided or crooked. But this overarching arrogance amongst many conservatives that they have all the answers is just too funny to me. At they very least they have no better solutions than the “Liberals” they seem to be obsessed with.

  207. DL says:

    Why buy when it is cheaper to rent? For my parent’s generation the underlying assumption for purchasing a house was that it provided a home for a family while being a tax-advantaged long-term investment; making mortage payments was a painless substitute for saving and any appreciation was icing on the cake. The new mentality brought an entirely different line-up of players to the market that pushed out the old logic. Home ownership became a way to stay ahead of inflation, increase personal wealth, and finance a life style that some thought was their right. The old logic won’t apply again until the air gets let out of the bubble.

  208. ricky_nu says:

    127 nj patient

    hahah – maybe, but I am not impressed with it all. I have told wife, I am willing to move in order to be happy with those who surround us.

  209. Nom Deplume says:

    [188] Patient,

    “Should have fired her on the spot”

    This is forthcoming. She still represents the recently reduced house (which I now find out was u/c at one point–I can’t fault her for that since it is her listing) so I may yet have to deal with her across the table. Still, I may use another broker on that, just to ram the point home.

    BTW, guy who is buying East Broad is new arrival who wanted to be situated before school year started and was worried about inventory in Brigadoon. And he also told me he went through about 8 or 9 agents–guess they kept trying to blow smoke up his a$$, hoping he wouldn’t notice.

    Agents: Smoke smells, and since our azzes are not usually on fire, we tend to notice.

  210. grim says:


    When will the legislators be floating the bill that prohibits unbridled real estate speculation?

  211. grim says:

    Speculators driving up the price of homes is good.

    Speculators driving up the price of energy is bad.


  212. BC Bob says:

    “Speculators driving up the price of homes is good.
    Speculators driving up the price of energy is bad.


    When speculators drive up the price of stocks and RE it’s called a bull market. On the flip side, if the same occurs in commodities it’s called manipulation.

  213. RentL0rd says:

    John #204, there is a limit to the tax break.
    When you fall over a certain tax bracket you get no tax break for your kids expenses.

    It’s probably more expensive and less parent-friendly to raise kids here than anywhere else in the world.

  214. Doyle says:


    Grim, my guy is two, so it would be Forest or Linden. I thought I heard that too, as in “Forest Ave School” on certain listings. I don’t see how there could be that much of a difference.

    I went to a mid-tier public school and did okay, either one in GR would be a step up in my eyes.

  215. make money says:

    6 year, no interest financing from chevy? What’s ford gunna do?

    Fords number one in Brazil and russia and number 2 in All of Europe. The’ll focus all of their efforts there. I have them as on of the biggest turnaround stories in 3-5 yrs.

    Great long time buy.

  216. John says:

    In your parents day tax rates were higher and 401Ks, Flex Spending, 529s etc. did not exist and only like 200 people in the US was in AMT so everyone could deduct RE taxes. Everyone had a pension and SS and got married young. Very few people traded up. Your neighbors were your neighbors for life. That house you bought at 27 was paid off by 57 and you had SS and Pension rolling in and life was good.

    Plus a stay at home wife in the 50s and 60s it was beaten into them having your own home ment security if you husband ran off or you got widowed. A stay at home mom at 50 with four kids in a rental who become a widow was doomed but that same Mom with a Levitown cape bought 25 years earlier could hold onto her little inexpensive house and weather the tough times.

  217. Commanderbobnj says:

    CB: (#210)—- Don’t get me wrong—I am NO apologist for the present Republicans in power—I certainly do not agree with the Bush Administration on most things–especially with the conduct of this war !—-What I am saying is that the liberal democrats had ‘set the stage’ during the past 60+ years for the wasteful BIG BROTHER programs that we are now paying for in out-of-control government spending.
    These foolish D.C. Republicans -(once they got control of Congress)-just took that ‘ball’ and ‘ran with it’.—It is apparently very hard to turn back the tide of liberal government “giveaways” that the citizens have come-to-expect. —-This administration is in no way old-line politically Conservative (like I am)….They are a total disappointment to most citizens on the right. I believe that early-on the “true” Conservatives in congress should have rebelled against these so-called “neo-conservatives” as soon as the congressional budgets were way out of place ! And if Bush had any brains, he would have vetoed most bloated congressional spending bills arriving on his desk…

    The present lack of true leadership in Washington D.C. is disgusting and disheartening and is going to set the stage sadly-(IMHO)-for a NO-BOMA administration that will be much worse for the daily financial lives of most posters here.

    –For the sake of the nation–I truly hope that I am wrong…..


  218. make money says:

    When speculators drive up the price of stocks and RE it’s called a bull market. On the flip side, if the same occurs in commodities it’s called manipulation.

    In addition, we give capital gains tax relief for the RE seculators. I love it.

  219. John says:

    If you do it through work in a spending account and either both spouse work or your spouse medically cannot care for the kids summer camp is viewed as day care and is tax free money regardless of income.

    RentL0rd Says:
    June 23rd, 2008 at 3:26 pm
    John #204, there is a limit to the tax break.
    When you fall over a certain tax bracket you get no tax break for your kids expenses.

    It’s probably more expensive and less parent-friendly to raise kids here than anywhere else in the world.

  220. Tom says:

    I’m going to disagree here. I don’t think it’s speculators driving up the price of housing. I feel it’s only a small number of people that do that.

    The majority of the new purchases were from people that wanted to own a home and were banking on it being a good investment.

    Unless you’re talking about speculators in the secondary mortgage and derivative markets. Then I might by that. That seems to be the cause of the problems in my opinion.

    That’s the reason that so many loans were originated. With so much access to capital, the housing market boomed.

  221. NJGator says:

    219 – Doyle – I don’t think Harvard will discount your little one in 16 years because they only went to Linden Ave school : )

  222. RayC says:

    225 Many people weren’t banking on it being a good investment, they were banking on it being a GREAT investment. And why shouldn’t they have, when there were 10 TV shows about people making gobs of money by buying a house, painting it, and selling it for 10% more.

  223. alia says:

    re: glen ridge listings… i really like

    and the price has been reduced 20k since it was listed. beautiful pics.

    shame its next to the railroad tracks. (still, if we weren’t committed to waiting at least 11 months, i would be sorely tempted. we could totally afford ear plugs with that small a mortgage.)

  224. Tom says:

    re: glen ridge

    Something about homes with spinning wheels in them makes me think they’re haunted.

  225. Pat says:

    Tom, I was so on that, thinking that the agent made a mistake not getting rid of the wheel.

    Those things are definitely not home sellers.

  226. Pat says:

    But I went through a house that was worse, I swear, it had that Chuckie doll …not rugrats.

    It was the evil one. And it was in this little back bedroom under some eaves.

  227. Tom says:


    I agree. The shows didn’t help and I sometimes wonder if they sprung up in reaction to the market or if they started becoming more prominent in an effort to keep the market going.

    I watched some because they were funny. A couple of the people on the A&E house flipping show were involved in some major controversies. Lies, decption and lawsuits. Fun stuff on some other blogs. There were a few legitimate people on Kirsten Kemp’s show and the Trademark people weren’t complete vultures. The majority seemed to do well because of the market. They probably could have burnt down the house and sold it at a profit. And in some cases, that’s exactly what they should have done.

  228. RentL0rd says:

    Here’s what I was refering to in terms of limits to how much tax credit you can get for day care expenses:


    The maximum amount of pre-tax money that can be run through a child-care reimbursement account each year is $5,000 per family. You and your wife can each participate in your employer’s plan, but the total set aside can’t exceed $5,000.

    If your child-care expenses exceed $5,000, you can claim the child-care credit for up to $1,000 of expenses above $5,000 paid via the reimbursement account(s). The limit for the child care credit is $6,000. You claim the credit on Form 2441 — the same form you must file to demonstrate that you qualify to treat funds run through the reimbursement account as tax free.

  229. RentL0rd says:

    additionally, Uncle Sam’s Child Tax credit is not for higher income parents

  230. SG says:

    Very interesting perspective on US Economy.

    The Game Is Over, There Won’t be a Rebound

    by Mike Whitney

    From the U.S. vantage point, supporting the dollars exchange rate by the traditional method of raising interest rates would have a very negative effect on the stock and bond markets and on the mortgage market.

    Higher rates and a stock-market downturn would lead foreign investors to sell U.S. securities, and likely would end up hurting more than helping the U.S. balance of payments and hence the dollars exchange rate.

    On OPEC: For over 30 years they have been pressured to recycle their oil earnings into the U.S. stock market and make loans to U.S. financial institutions. They have taken large losses on these investments (such as last years contributions to bail out Citibank), and are trying to recoup them via the oil market.

    If America conquers Iraq and forces the Oil Agreement through, U.S. companies will be able to grab the world’s largest available pool of oil for a generation, and U.S. officials can use the oil weapon against oil-deficit countries. Last week the U.S. oil firms managed to bump Russia’s oil industry out of the Iraq picture, reversing the trend that had been developing under Saddam.

  231. RentL0rd says:

    apologies for my off topic posts!

  232. John says:

    LONDON: The dot-com boom and bust shook the global economy almost a decade ago. Last year the credit crunch seized up financial markets. Now an oil price bubble might wreak more havoc.

    A rapid price increase, big investment inflows and a chorus of bullish analysts are just some of the characteristics of the oil market that have echoes of the Internet crash of 2000.

    In the dot-com era, securities analysts and strategists talked of a new economic paradigm created by the Internet and high-tech companies. It did not matter that many “New Economy” companies had barely any revenue or profits.

    This time analysts and economists point to a structural shift in the price of oil. Supply will struggle to keep pace with huge demand growth from China and India for years to come.

    The word bubble has started to appear regularly in investment bank research and in the media, given the virtually uninterrupted climb in oil prices this year.

    “Bubblemania” was the title of a Barclays Capital note published earlier this month.

    If oil were to reach $150 a barrel, it would bring the market capitalization of oil and gas equity in the S&P 500 to more than 25 percent, exceeding the valuation of technology stocks at the peak of the dot-com bubble, Deutsche Bank estimated in a research note.

    “The obvious parallel in our mind is we think oil is overvalued where it is priced based on the underlying fundamentals, which is a parallel to the dot-com boom and bust,” said Michael Waldron, an oil analyst with Lehman Brothers.

    Oil has doubled in price in the past year and has climbed 40 percent since the start of 2008 to nearly $140 a barrel.

    The Nasdaq, where many dot-com companies listed, hit a peak of more than 5,000 in March 2000. But by the end of that year it had halved in value.

    Some predict a similar fate for oil.

    “If there is a genuine downtrend in industrial growth, there is going to be a fall,” said Sunjoy Joshi, a former Indian Oil Ministry official now at the International Institute of Strategic Studies in London. “If that happens then you can expect a fall as sharp as the rise has been, maybe even sharper.”

    Politicians in the United States and Europe, facing protests over high fuel costs, blame speculators for the price hike.

    The speculators they point to are hedge funds, investment banks and even pension funds, which have moved into oil and other commodities in search of portfolio diversification.

    In 2003, 10 investment banks paid out $1.4 billion in a settlement linked to conflicts of interest in equities research after a regulatory crackdown that followed the dot-com crash.

    U.S. politicians are already looking at possible curbs on pension funds, institutional investors and investment banks in the crude oil futures markets.

    One proposal would ban pension funds and institutional investors with more than $500 million in assets from futures markets and another would set trading limits on investment banks.

    Barclays Capital has estimated investment flows into commodities totaled about $225 billion at the end of the first quarter this year.

  233. CB in SJ says:

    #222 OK, Bob, I see your point, but you seem intent on laying most blame on the “Liberals” and bashing all those to the left of Rush Limbaugh. The rhetoric has truly gotten ugly. Most people in the US are close to the middle on things. The art of diplomacy and civility has been lost. Greed and vitriol are bringing this country down. The housing market is the canary in the coal mine; the first of many wrenching changes we will see in the future.

  234. Doyle says:



    Didn’t think so :)

  235. alia says:

    180: njp: lol… it may be the nj real estate and great depression/inflation report, but at least i get to laugh while rome burns…

  236. kettle1 says:

    heard on the radio this morning that the price of corn is now due to speculators as well…. so i guess that speculators have been the cause of everyones problem????

    say hello to the new boogieman, his name is speculator

  237. still_looking says:


    A history lesson from Commanderbobnj.
    Who knew it would be our government?

  238. make money says:

    Indymac now at $1.35!!

    Is this the first regional bank to implode? Will BoA or Wells Fargo pick this up for $2.00 ala Jamie Dimon with Ben backstopping it with another 30 Billion.

    When it comes to IndyMac, What’s the trade?

  239. BC Bob says:

    “the one year chart is sad.”

    make [244],

    Blame it on speculators, short sellers.

  240. lisoosh says:

    RentL0rd Says:

    “The maximum amount of pre-tax money that can be run through a child-care reimbursement account each year is $5,000 per family. You and your wife can each participate in your employer’s plan, but the total set aside can’t exceed $5,000.”

    $5000 per child would be more realistic.

  241. John says:

    FDIC Receivership where the common stock is wiped out. Only trade I can think of is long bonds and hedge verus stock in case of bankruptcy.

    When it comes to IndyMac, What’s the trade?

  242. SG says:

    Blame central banks, not speculators for oil price

    David Uren, Economics correspondent | June 23, 2008

    THE price of oil is unlikely to be reduced sustainably either by Saudi Arabia increasing its production or by mad Austrian schemes to tax speculators out of the oil market, both of which got an airing at the oil summit in Jeddah at the weekend.

    As was the case in the 1970s, the oil price is rising in response to a falling greenback and rising inflation at the end of a long period of economic expansion.

    Slower world growth, lower inflation and a firmer US dollar would set the market back to rights. The question is whether that can be achieved gradually or will be forced through the shock of a global recession. Politicians would like a simpler solution.

    Periods of increased trade and globalisation increase demand for energy and, since supply cannot respond quickly enough, bring higher prices in their train. Higher energy prices become caught in the momentum of inflation, which becomes self-perpetuating as negative real interest rates develop. Inflationary cycles have typically ended with recessions following currency and banking crises. The high oil prices of the 1870s, the late 1920s and the early 1970s were all accompanied by a period of financial turmoil. Jaffe and El-Gamal contrast the movement in the price of gold with that of oil. Gold is the classic hedge against inflation and was the central measure of value until the collapse of the Bretton Woods agreement on global currencies in 1971. They suggest that if you focus on gold as the measure of value, the volatility caused by loose monetary policy in a dollar-centred world becomes apparent.

  243. John says:

    Re 246 – Even worse people like me with a stay at home wife are not even allowed to use the child care reimbursement account. Only dual income get a tax break for camp.

  244. make money says:

    BC Bob Says:
    June 23rd, 2008 at 4:35 pm
    “the one year chart is sad.”

    make [244],

    Blame it on speculators, short sellers

    Yeah that seems to be like the theme of the day. Tommorrow?

  245. njpatient says:

    235 SG

    “If America conquers Iraq and forces the Oil Agreement through, U.S. companies will be able to grab the world’s largest available pool of oil for a generation, and U.S. officials can use the oil weapon against oil-deficit countries. ”

    Ridiculous. This is NOT a war for oil.

  246. grim says:

    There is oil in Iraq?

  247. njpatient says:

    237 john

    “The Nasdaq, where many dot-com companies listed, hit a peak of more than 5,000 in March 2000. But by the end of that year it had halved in value.
    Some predict a similar fate for oil.”

    So the bearish case for oil has been reduced to the hope that it will crash all the way to a level that’s 350% of historical norms?!?
    How far we’ve come…

  248. electricsheep says:

    NJ –

    We also live in Montclair and were considering both towns until recently … we’ve really been leaning toward Glen Ridge.

    We checked out the Maolis house. Nice layout downstairs (lr, dr, kit, family room, office). The upstairs had two larger bedrooms and then two smaller ones. It would suck for our youngest who would be the one who gets the shaft.

    The attic could be redone, though.

  249. electricsheep says:

    I have heard similar things regarding the forest avenue and linden avenue schools. I just can’t get too worked up about it. And I hope to never be one of those parents who do.

    I’d be happy with either.

    I care more about having an office (I am a frustrated couch copywriter with two energetic boys) than I do the schools. Bad, huh?

  250. Son of CommanderBobNJ says:

    to CB in NJ:
    a point of order, this is not a “$1 trillion” war in Iraq. Since- “What is the cost of the Iraq and Afghanistan wars? To many, the answer, at least from 2001 through 2007, is $473 billion — about a quarter of total defense expenditures over those years. It has averaged less than 1 percent of GDP.” Fox news article by John Lott dated 16 Jun 08. Please check your facts before you toss out numbers and $$$’s.

  251. Clotpoll says:

    John (138)-

    Great, but that’s not NJ, and that’s not how it works here.

  252. Laughing all the way says:

    This may anger some folks as the topic of what cops and fireman make in NJ …

    My wife is driving in NJ – in Hunterdon County – and she just saw a brand new, 350E Benz with a State Fire Department license plate.

    Fireman driving Benzes?

  253. Tom says:

    By the way, thought you guys might chuckle (or cry) from this.

    Some of the search terms that lead people to my site. These are just some but there are similar ones.

    – cashing out on a house and foreclosure are you responsible
    – i owe much more than my house is worth should i let it be foreclosed
    – how do i know if my house is being foreclosed

    I saw the last one a few times. Scary.

  254. NJGator says:

    Electic – thanks for the heads up. If that house sits, we just might have to consider making a lowball offer on it. We are ‘one and done’, so 2 good sized bedrooms are enough for us. The others would just be offices/guest rooms.

    It is a really great family oriented street. Nice neighbors and plenty of little kids.

  255. njpatient says:

    256 commanderbob

    “Fox news article by John Lott ”

    I’ll leave Fox News alone on this one, but you should be aware that John Lott is one of the biggest shysters out there in terms of data-fakery. I’m pro-gun, so I want the same outcomes that guy does, but when you’ve been caught faking data results as often as he has you need to stop putting your name out there. His getting caught in a high profile and very embarrassing cases of sock-puppetry didn’t help, either.

  256. afe says:

    clotpoll (257)

    I am not jumping on the John bandwagon, in fact I never know what he is yapping about, but seriously how does it work in NJ? Esp. Somerset county?


  257. njpatient says:

    256 commanderbobJR

    It depends what you’re including in “costs”. Here is the case for the $1 trillion war.
    Here is the case that it is a $3 trillion war:

    CB in NJ was being perfectly polite. I’m not sure that “Please check your facts before you toss out numbers and $$$’s”
    was necessary.

  258. njpatient says:

    256 commanderbobJR

    It depends what you’re including in “costs”. Here is the case for the $1 trillion war.

    CB in NJ was being perfectly polite. I’m not sure that “Please check your facts before you toss out numbers and $$$’s”
    was necessary.

  259. njpatient says:

    p.s. Here is the case that it is a $3 trillion war:

  260. willwork4beer says:

    213 Nom

    LMAO Almost sprayed beer all over my screen… ;)

    Agents: Smoke smells, and since our azzes are not usually on fire, we tend to notice.

  261. Fiddy Cents on the Dollar says:

    When they tell you it’s not about the oil…..you can most assuredly guess that oil is involved somehow.

    “While its proven oil reserves of 112 billion barrels ranks Iraq second in the work behind Saudi Arabia, EIA estimates that up to 90-percent of the county remains unexplored due to years of wars and sanctions. Unexplored regions of Iraq could yield an additional 100 billion barrels. Iraq’s oil production costs are among the lowest in the world. However, only about 2,000 wells have been drilled in Iraq, compared to about 1 million wells in Texas alone.”

  262. t c m says:

    #107 – lisoosh

    “……..and then take off the entire summer with the kids. Not many places I can think of would be that accomodating.”

    that’s amazing!

    not to belittle your concern about being 45 minutes away from your kids, because I know that can cause some stress, but if you wait for everything to be exactly exactly perfect before you take an offer, you may end up never working. also, once you get in, and if you show they can’t live without you, then you may be able to get even more flexibility.

    good luck!

  263. Stu says:

    May 19, 2008 – I said,”I give him one more month before he flat out states that a vote for Obama will result in another 9-11.”

    Damn…I was off by 4 days!


  264. grim says:

    From MarketWatch:

    UPS drops bomb after hours

    United Parcel Service Inc. said late Monday that it was slashing its second-quarter profit outlook, squeezed by soaring fuel prices and a sluggish U.S. economy.

  265. lisoosh says:

    tcm – I KNOW!!!. It really is amazing. They are so decent I’m not sure what to make of it. My last employer treated people like meat!

    And you are absolutely right – this is a good job working for what appears to be incredibly nice people in a great environment. Apart from the commute, I couldn’t ask for a better reintroduction to the working world. Sure, something more “perfect” could come up, but maybe I would be looking for another year, especially in the current environment. So once I got past my fear (and my husbands panic), I am beginning to feel pretty good about it.

    My biggest worry now is that I won’t be able to deliver up to expectations.

  266. njpatient says:

    “My biggest worry now is that I won’t be able to deliver up to expectations.”

    Every day I expect them to march into my office and say “we’ve discovered that you’re really a musician. Get OUT!”

  267. t c m says:


    well, that feeling always happens –

    i’m sure they interviewed many people, and if they picked you, then they believe you’re a good choice. trust them.

  268. kettle1 says:


    the people who want all the oil in Iraq may end up being somewhat disappointing. While Iraq does have very significant reserves, there was a report recently by a group of geologists that described how the US governments “assumed reserves” for Iraq was based on grossly inflated evidence and the real reserves were probably significantly less. Although do remember that significantly less when talking about MASSIVE oil reserves is still very large. However the point, is that as usual the numbers being thrown around are 50% hot air

  269. kettle1 says:


    just downloaded firefox 3 and it rocks, noticeably faster then firefox 2.x for anyone who was curious

  270. lostinny says:

    271 Patient
    Imagine what they’d find out about me. :)

  271. lostinny says:

    I think you’re going to be fantastic. Just do what you do let them be impressed with you.

  272. kettle1 says:

    make money,

    back to inflation/deflation….

    The reason i suggest inflation followed by deflation is that the fed is running the printing press wide open to prevent a 30’s style depression. the difference is that we are now a global economy and our financial rot has already spread through the financial markets of the world as can be seen by the housing bust impact in international banks.
    When the fed really sparks off runaway/hyperinflation you will really see some serious write downs write offs as people try to cut themselves off from the US. this wave of debt destruction will spark deflation as the job market will collapse due to collapse of the primary global markets.

    /armchair economist off

  273. Fiddy Cents on the Dollar says:

    ketel1 :273

    Mid-East Oil Reserves….the Saudis haven’t released any verifiable oil reserve data in 20 years. And the Iraqi oil program is in the Stone Age, relatively speaking.

  274. kettle1 says:

    careful fiddy , you will get me started ;)

    saudi’s oil reserves are in very deep trouble, those bottomless wells are starting to sputter a bit

  275. njpatient says:

    pump some more water
    they’ll be just fine….

  276. kettle1 says:

    you mean we cant run a car on dirty salt water NJP?

  277. PGC says:

    NJ stroller and diaper report brings you the bargain of the week.

    ShopRite are doing a great deal this week. Spend $75 on products from Kraft P&G or General Mills and get a $25 gas card for BP or Shell. The list of items that qualify Tide, Cherios Bounty and the like.

    For those with small rugrats the deal is sweeter. They have boxes of Pampers with $5 off, so 4 boxes cost $79. That qualifies for an extra $10 Baby Bucks coupon. If you take the Baby Bucks there and then, you will drop back down to $69 so you need to buy some more products from the flyers to get back over the $75 limit or hold off on the coupon until your next shop.

    Back to RE.

  278. Stu says:

    PGC, you sound like NJGator (my wife).

  279. PGC says:

    #248 lisoosh

    I might have the opposite problem this year. I budgeted for $5K but as a result of moving we will come up short. I am having issues finding part time help to eat up the balance as most part timers don’t want to go on the books. I can’t find good full time help that just want the summer months and its not worth paying an agency to find someone for a temporary gig. Third rugrat is due in the next few weeks so we can’t even commit to summer camps as the kids will be going to NY for a few weeks.

  280. PGC says:

    #285 Stu

    I am always looking for a bargain.

    On a happy note, my Prius is probably worth more than I paid for it new. The ex Hummer driver in this news report is funny. I think he says he was paying $2400 a month in Gas.


  281. DINJ says:

    Our short sale is out for attorney review.
    Any pitfalls to look out for?

  282. skep-tic says:

    Is there a second mortgage?

  283. rhymingrealtor says:

    Are you the buyer or the seller DINJ?

    If the buyer , you may end up not getting the house after many months in this process, please be aware of that.


  284. Clotpoll says:

    afe (262)-

    Most NJ towns do assessments every few years and re-value intermittently in between (some towns, like Bridgewater, do a multi-year, “rolling” re-val when times are good). There is a mandate all over NJ to assess homes at 100% of market value, but this is a pin-the-tail on the donkey game, at best. Various tax rate/ratio schemes also add unneeded layers of complexity and imprecision to the whole process.

  285. Clotpoll says:

    lost (277)-

    Sheesh. Better not start talking about The Vault your first week on the job. :)


  286. Clotpoll says:

    Congrats to Lisoosh, that is!

  287. Clotpoll says:

    Fiddy (280)-

    “And the Iraqi oil program is in the Stone Age, relatively speaking.”

    All signs pointing toward an eventual Mad Max scenario…

  288. Clotpoll says:

    DINJ (288)-

    Does either your agent- or the other agent- know how to submit and negotiate a short sale package? If not, your deal is DOA.

    Also, has there been any talk of letting the attorneys try to get the short sale approval? If so, cancel the contract now. It will never happen.

    Not to be a wet blanket, but getting short sales approved is a MF of a job. And, two mortgages on the property make it about 5x as hard.

  289. skep-tic says:

    “getting short sales approved is a MF of a job.”

    but if Prince is doing the short sale, it is a Sexy MF of a job.

  290. bairen says:


    congrats on your new job.

  291. njpatient says:


    You’re drunk!

  292. kettle1 says:


    the disaster i am waiting to see unfold is large scale defaulting on credit cards. given current bankruptcy laws, these are secured debts. the question is will the congress step in and provide an out, similar to the debt forgiveness loophole they recently handed home loan defaulters.
    Heck, if that happens i might go on a quick buying spree then default. regardless. any such scenario would break what ever is remaining of the US economy.
    This scenario cannot be avoided. credit card debt is growing at record rates and is at record levels. it is 2 maybe 4 years at the most before begin to see the cascade of credit card default. that is when i batten the hatches

  293. RentinginNJ says:


    How much room does a bank typically leave themselves on a short sale? (If there is such as thing as typical for a short sale).

    The house I’m looking at was purchased in 2005 for $487k. I was foreclosed on in January. The bank listed it and accepted a $390k bid. It fell through (buyer couldn’t get financing). The bank now has listed at $380k and has said they prefer a July close.

    I want to bid $355k, no contingencies, as-is, prequalified & with a 20% cash DP, prepared for immediate close.

    If it’s even possible to handicap, what are the chances of the bank hitting my $355 bid? Do banks typically counter offer or is it normally a “yes or no to the bid?

  294. Clotpoll says:

    rent (301)-

    Sounds like this property has gone from a short sale to REO. No hard-and-fast rules or percentages on REO…it really depends on the lender and how fast they want to get this house off their books (some banks are just as delusional as individual sellers these days!).

    A decent rule of thumb is that an individual bank will accept around 80% of their most recent PBO, but that is a very “ballpark” number.

    Good luck.

  295. lisoosh says:

    tcm, lost, bairen, etc. Thanks.

    PGC – Congrats on the anticipated new addition. I hear 3 is a very joyful handful.

    Clot – My boss is my age, many others much younger and apparantly squeeky clean. I think the Vault was both before their time and out of their league.

    Patient –

    “Every day I expect them to march into my office and say “we’ve discovered that you’re really a musician. Get OUT!””

    Yeah right, you high powered workaholic lawyer you.

  296. lisoosh says:

    bairen – aren’t you job hunting? How’s it going?

  297. randyj says:

    i’m going to rent Mad Max… it is ridiculous how prescient that movie may be LOL

  298. kettle1 says:

    mad max…..

    The story is set in Australia in the near future, depicting a poorly-funded police unit called the Main Force Patrol (MFP), which struggles to protect the Outback’s few remaining townspeople from violent motorcycle gangs. The film depicts the future Australia as a bleak, dystopian and impoverished society that is facing a breakdown of civil order, the causes of which are not detailed in this film but which Mad Max 2: The Road Warrior explains as being caused by widespread oil shortages and Mad Max: Beyond Thunderdome explains resulted in a nuclear war following the shortages. The film introduces a young MFP police officer, Max Rockatansky (Mel Gibson), who is considered to be the MFP’s “top pursuit man”.

  299. chicagofinance says:

    jcer Says:
    June 23rd, 2008 at 2:09 pm
    People today buy way more unnecessary stuff while living a lower standard of life than my parents generation. I just dislike consumption for the sake of consumption or to show off wealth that you don’t really have.

    jc: How do you think I feel? People pay me to lay it on the line for them, and then I have to tell it like it is. Ain’t pretty….even worse when one spouse is hiding stuff from the other………….

  300. Mr Doughnut says:

    The “Costs of Outsourcing” can be equated to: “He Who Laughs Last Laughs Best”

    When jobs were cut and wages reduced the financial companies, developers, and realstate refused to take an equal reduction in earnings. Now they are getting their cut handed to them by something called Math. We get less you get less real simple.

  301. Mr Doughnut says:

    Companies bring H-1B labor which eliminates job opportunities for US born. The firms control housing renting it to their cheap labor. This rental of housing violates single occupancy laws. Clearly any sign placed out front advertising the rent of these properties alerts the Town to the intent of the owner. Any ad in the newspaper aluding to the rent of a room ect is admission of intent to break the law and will be reported to the authorities

  302. Mr Doughnut says:

    Coming soon documentation of Employers employing illegal aliens.

    You have to have a SS#
    How did they pay them?
    Will realstate be seized to pay Income Taxes? What is the address of the aliens? Coming soon!

  303. Laurie says:

    RE Post #287…Hummers…last summer a few miles from our home I noticed a strange parking lot being built…for one thing it was huge and it had high walls and it had security cameras all over the place…curious..who would build such a high security parking lot?? Upon completion the lot was filled from one end to the other with brand new….Hummers…fresh from the factory to a local parking lot…perhaps they should be more concerned with theft if the lot was full of Prius’s..

  304. SG says:

    I normally don’t like to paste large section of articles, but I think this one deserves good read. The whole notion of Economic Cycle is debunked. Come to think of it, I am still waiting for Nasdaq 4500, as the cycle is long overdue since 2002. Where is it?

    The idea that we’re even in a business cycle is whistling in the dark. To think of the economy being in a cycle is to imply an automatic recovery is in store. This free-market idea was developed at the National Bureau of Economic Research by opponents of government regulatory policy. The fantasy is that the economy oscillates in a fairly smooth and regular sine curve. But this always has been a fiction. 19th-century writers didn’t speak of economic cycles, but rather of periodic financial crises. There is a slow buildup, and a sudden plunge, so the shape is ratchet-shaped. Today’s plunging real estate and stock market prices are not a self-correcting ebb and flow in which downturns set in motion automatic stabilizers that produce recovery. Each U.S. recovery since World War II has started out from a higher level of debt. The result is like driving a car with the brakes pressed more and more tightly. Alan Greenspan at the Federal Reserve flooded the banking system with enough credit to enable debts to be carried by borrowing against the rising price of homes and office buildings, corporate stocks and bonds. In effect, the interest charge was simply added onto the debt balance. But now prices are falling, leaving families, companies and many Wall Street firms with negative equity. Asset-price inflation fueled by the Federal Reserve is giving way to debt deflation. Today, the prospects are dim for paying off debts out of further price gains for homes and real estate. Speculators have pulled out of the market and as late as 2006 they accounted for about a sixth of new purchases. The United States and other countries have reached the point where interest and amortization payments are absorbing the entire economic surplus of so many individuals, so many companies and so many government bodies that new construction, investment and employment are grinding to a halt. Families, real estate investors and companies are obliged to use their disposable income to pay their creditors. This leaves them without enough money to sustain the living standards of recent years and they no longer can wipe out their debts by declaring bankruptcy as in times past, because Congress has passed the harsh bankruptcy law that credit-card and bank lobbies paid them to pass. This means that there won’t be a rebound, and it will take longer than 2009 to recover.


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