From BusinessWeek:
Home sales, prices mostly fall in Northeast
Homes sales tumbled in most big Northeastern cities last month — with only Passaic, N.J., showing a healthy jump in activity — while sales of distressed properties dragged down median prices in the entire region, according to two reports released Monday.
Sales of existing homes in the Northeast declined nearly 12 percent in July from a year ago, the National Association of Realtors said. The median price in the Northeast was $278,700, down almost 5 percent from July 2007.
That reflected the national trend: sales dropped more than 13 percent year-over-year, while the median price decreased 7.1 percent to $212,000.
But the Associated Press-Re/Max Monthly Housing Report, also released Monday, showed July sales dropped by at least 20 percent in five of the nine Northeast cities tracked. The report analyzed home sales recorded by all real estate agents in those cities, regardless of company affiliation.
In the one bright spot, Passaic, sales jumped 38 percent over July last year. But the rapid sales pace could be stymied by glut of properties coming onto the market. The supply of unsold homes grew 32 percent to 10.6 months, and the median price slid 6 percent to $400,000.
FIRST!!! FINALLY!!!
Are foreclosures counted as sales in this report? I could not deduce the answer from the BusinessWeek article.
bruisy (2)-
Any report showing sales up? Assume foreclosures/REO are involved.
On an unrelated front, I have just turned on my TV, to be greeted by the rictus-faced Chris Dodd.
Man, that dude’s like a double shot of Ipecac.
My dream ticket: Dodd & Mozilo, as prison wives to a couple of 260-lb. musclehead lifers in Leavenworth.
Until then, I guess I have Kozlowski and Ebbers to warm my heart.
clot it was reported that 40% of sales were reo or shorts if we take that out of the mix
how do the numbers look.
Better than the con artists I’m watching on MSNBC right now.
Jesus. NBC has turned into Pravda.
Clot – WTF is up with SKF – looks like it is finding it hard to kick it into another gear. Methinks WAMU will provide the fuel soon enough.
vic (10)-
Watch the buying in SKF when financials are rallying. Every big dip in SKF just sucks in more money. My bet is that it’s the smart money.
If SKF wants to range from $125-$135 for a while, I’m ok with that. I took a little piece of my position and bracketed it with stops, which has been a fun play for the past 2 weeks. It has rebounded well from the $110s and only needs a drop of lighter fluid to go parabolic again. My sense is that some financial dolt will soon be playing with the Ronsonol a little too close to the grill.
When things get really nasty, I just remind myself of the nice portion of the index devoted to shorting some really putrid RE. It makes me feel warm and toasty inside and helps me sleep.
vic (10)-
We need to start a deadpool on WaMu and the other banks on life support.
Clotpoll Says:
August 25th, 2008 at 10:21 pm
vic (10)- Watch the buying in SKF when financials are rallying. Every big dip in SKF just sucks in more money. My bet is that it’s the smart money.
clot: Why don’t you just play roulette at one of those offshore internet sites? I see you buffered yourself with stops, but you are diluting that with correlated assets. I thing there are probably one too many chuckleheads here that have no f—ing idea how you hedged yourself. I wish you would just STFU about this….
thing = think
chi (13)-
Anyone who would try to do what I do is a chucklehead (make money aside). That’s why I disclaimer what I say.
My premise is simple: the banking and lending system in this country is a sham and fraud. Inasmuch as major real estate investment trusts, managers and builders are enmeshed in the shell game, I am indeed asset-correlated to the point of being Texas hedged. I am- also and sadly- okay with that.
Besides, if I’m truly wrong- and I tap out and hit 0 on my brokerage account- then my office should concurrently be teeming with walk-ins…holding 20% DPs in hand, 720 FICOS and verifiable income and assets. The hit I take on the SKF should be nicely offset by the simultaneous increase in my business.
As if.
WSJ
Leasing of Landmark Turnpike
Puts State at Policy Crossroads
By CRAIG KARMIN
August 26, 2008
DONEGAL, Pa. — Hobbled by the credit crisis, Wall Street firms and many state governments are hoping that a pockmarked strip of Pennsylvania highway could provide a road out.
Next month, the Pennsylvania legislature is expected to vote on a $12.8 billion deal struck between the governor and a group of private investors to lease America’s oldest major toll road, the 537-mile Pennsylvania Turnpike.
If it passes, the deal would be by far the largest ever of its kind in the U.S. Under these arrangements, known as public-private partnerships, investors lease or buy roads, bridges or other infrastructure, operate them independently and collect tolls.
A green light in Pennsylvania could bolster the political will of officials in other states trying to hash out similar deals. That in turn could jump-start projects in waiting, from Florida’s Alligator Alley to Chicago’s Midway Airport. Last month, New York Gov. David Paterson urged legislators to consider leasing some of his state’s roads, bridges and tunnels to help shrink a budget deficit projected at $26.2 billion by 2011.
Proponents say the lease approach could provide financial relief to state governments struggling with foreclosures, ballooning pension obligations and reduced tax bases. That’s not to mention crumbling roads — and lately, a drop in tax revenue to pay for repairs, owing to high gasoline prices that have reduced driving. The U.S. needs about $1.6 trillion in investment over the next several years to bring infrastructure conditions to acceptable levels, according to the American Society of Civil Engineers.
Pennsylvania’s needs rank among the highest in the nation; the state’s Department of Transportation estimates it will cost $11 billion just to repair the state’s bridges. Drivers complain about the turnpike’s potholes, insufficient shoulder room, and continual construction.
Pennsylvania Turnpike
Known as the nation’s first Superhighway, the Turnpike opened in 1940.
As much as states need money to fix their roads and bridges, Wall Street firms are eager to supply it. With the industry’s core businesses in distress from the credit crisis, so-called infrastructure funds — which have already raised more than $160 billion, according to Morgan Stanley — have emerged as one of the most promising growth areas in years.
Yet this hot area is already suffering growing pains. The end of cheap credit has forced all funds to borrow at higher rates, severely crimping profits at some of the leading infrastructure funds. The share price for Australia’s Babcock & Brown Ltd., one of the bigger publicly traded funds, tumbled 36% on Thursday to a record low after reporting a large decline in earnings, before rebounding. Shares of another Australian fund, Macquarie Group Ltd., have also sold off this year.
Those financial pressures are unlikely to affect the Pennsylvania deal, which already has a check in hand. But it might not have the votes to cash it. Gov. Edward Rendell, a Democrat who has championed the project, concedes that “the concept of leasing the turnpike is a decided underdog.”
Detractors, from the Turnpike Commission itself to labor unions, question whether the state is selling too cheaply. They also worry that jobs will be lost — under the proposal, union contracts are guaranteed only until 2011 — and that tolls will rise. The new operators can raise tolls 25% in 2009, then keep them in line with inflation every year.
More broadly, in a country that has often mythologized the car and the open road, the deal is sparking debate about whether America’s highways are too much a part of the national fabric to be controlled by anyone but the public. Adding to the backlash: Many of these private funds come from outside the U.S., where investors have reaped huge profits from rising oil and commodities prices and are looking for new places to put their money. The consortium vying to lease the Pennsylvania Turnpike includes Citigroup Inc. and Abertis, a Spanish toll-road operator.
Crowds opposing the deal have gathered along Route 209, in the northeastern part of the state, waving signs like “Pennsylvania’s Not For Sale,” as truckers honk horns in approval.
“Americans built this turnpike,” says Catherine Johnson, a nurse in Tarentum, Pa., who regularly drives the turnpike. “Why do we need someone else to operate it?”
The lease agreement is not the first time the nation has looked to the Pennsylvania Turnpike for a glimpse into the future.
The highway heralded a new era of transportation when it opened in 1940. A year earlier, a World’s Fair exhibit in New York sketched out an exciting vision of a publicly funded highway system that would crisscross America, connecting East to West. The exhibit, commissioned by General Motors Corp. and dubbed “Futurama: Magic Motorways,” enthralled an audience that still relied heavily on railroad travel.
The 160-mile stretch that initially connected the outskirts of Pittsburgh in western Pennsylvania with Harrisburg, the state capital, embodied that vision; it is often touted as the nation’s first superhighway. Service plazas along the road sold postcards, banners and other turnpike trinkets. Many drivers apparently saw it as an American autobahn; the turnpike’s wide, gently sloping lanes encouraged speed, and the road opened without a speed limit. A series of accidents eventually led to a 70-miles-per-hour rule.
Nearly seven decades later, the turnpike and other Pennsylvania roads are in worse shape than most. The state has 6,000 structurally deficient bridges. Pounded by harsh winter weather and hard-driving 18-wheelers, some 9,000 miles of highway are in poor condition, according to the state’s Department of Transportation.
“Seems like they are always having to do work on it, always having to fill potholes,” says Helen Elborne, a self-employed resident of Harmarville, in the southwestern part of the state. “There are a lot of accidents.” Ms. Elborne often takes the turnpike on trips to Ohio, where she says “the roads are better.”
Saving the Skyway
While private investment in state infrastructure has been around for decades in other parts of the world, it hasn’t caught on in a significant way in the U.S. State governments have turned instead to the municipal-bond markets for much of their funding. But this decade, costs for health care, education and pensions mushroomed.
Since 2005, eight states have enacted legislation enabling officials to sell or lease highway or transit infrastructure, bringing the total to 25 states, according to the U.S. Department of Transportation. Infrastructure funds recently acquired long-term leases for the Indiana Toll Road and the 7.8-mile Chicago Skyway bridge. Chicago has used about half of the $1.8 billion in lease fees to retire debt and to boost emergency reserves. It has also used the money to fund homeless programs and job-training initiatives.
In bad shape just three years ago, the Skyway itself has been given new life. Australia’s Macquarie Infrastructure Group and Cintra, another Spanish toll-road operator, together leased the bridge, filled in potholes and added electronic tolling that can process nearly triple the number of cars as the cash lanes can. They also installed reversible lanes, so that the bridge can better accommodate periods when traffic flows are particularly strong in one direction.
Abertis, the Spanish company hoping to lease the Pennsylvania Turnpike, operates motorways in the U.K., South Africa and Chile. It points to its other ventures in the U.S. as proof that it can turn around a sinking ship — or in one case, an airport. The company took over operations of the Orlando International Airport in Florida in 1996, paying $20 million for a 30-year lease and assuming $30 million in debt. Since then, it has invested $70 million on upgrades, from parking spots to expanding the gates. Last year, Orlando officials extended the lease for 30 more years.
In Pennsylvania, Abertis says it and its partners are committed to spending at least $11 billion on the turnpike over the proposed lease period. Its plans include wiring fiber optics and installing a series of tiny monitors and cameras across the length of the turnpike. Abertis says this equipment, combined with an independent fleet of roving patrol cars to supplement the state Highway Patrol, will enable it to detect accidents in five minutes or less. That could get help on the way faster, and warn motorists earlier to detour. Currently, Abertis says, it takes the Turnpike Commission up to half an hour to detect an accident.
Other improvements would be more subtle. Jordi Graells, managing director of Abertis, says turnpike workers now sprinkle too much salt on the roads before winter storms. Salt can enter the ecosystem, damaging trees and other vegetation. Abertis workers, he says, are trained to add just the right amount of salt to minimize the environmental effects.
Carl DeFebo, a spokesman for the Turnpike Commission, says, “When it comes to winter maintenance, turnpike crews do whatever it takes to keep the road open in the heaviest snow and ice storms.” He says the salt is necessary to de-ice the roads “despite some infrequent impacts to plants near the highway.”
Regarding accident detection, Mr. DeFebo says the commission uses the latest technologies and is working to improve incident detection and response times.
‘The Last Bastion’
The Turnpike Commission, which has operated the road for nearly 70 years and is run by officials appointed by the governor,
says it can fix the highway without foreign aid. It plans to invest $4.8 billion over the next 10 years, and a fiber-optic network is in the works, though “it is going to take some time,” Mr. DeFebo says.
The commission estimates the turnpike can generate $83.3 billion in revenue for the state over 50 years. But it first has to receive federal approval to add tolls to Interstate 80, which runs parallel to the turnpike in the northern part of the state, or that figure could be cut in half.
The commission, some charge, has another reason for not wanting to turn over control of the turnpike: The politically powerful group is often accused of filling jobs with friends or relatives of elected officials. “It is the last bastion of political patronage for both parties,” says Gov. Rendell. “Very few in politics want to mess up that arrangement.”
While the commission says it listens to lawmakers when filling job openings, “the turnpike is not obliged to hire referrals,” Mr. DeFebo says.
A Lucrative Prospect
When Mr. Rendell campaigned for the governor’s job in 2002, he promised to tackle the problem of deteriorating road conditions. But the legislature failed to enact funding measures during his first two years in office. The spike in oil prices made an increase in the gasoline tax politically untenable. Toll increases weren’t much more popular.
In 2006, when Indiana leased its toll road, “the governor said, ‘Why don’t we consider something like this?’ ” recalls Roy Kienitz, a deputy chief of staff.
That deal, which brought the state $3.8 billion in exchange for a 75-year lease, has helped shore up Indiana’s finances, according to Standard & Poor’s Corp. In July, the ratings agency upgraded the state’s credit rating to triple-A.
The lucrative prospect of running a turnpike more than three times the length of Indiana’s toll road quickly attracted myriad banks, funds, toll-road operators, law firms and other contractors.
But Gov. Rendell found little enthusiasm in the state legislature. Then in August 2007, the collapse of a Minneapolis bridge across the Mississippi River, with 13 deaths, sparked a nationwide re-examination of structurally deficient bridges. The tragedy brought a new sense of urgency to find funds for repairs, and the governor renewed his effort to lease the turnpike.
By early 2008, the field of bidders had been narrowed to two groups: the Citigroup-Abertis team and one led by Goldman Sachs Group Inc. In a second round of bidding, Pennsylvania gave the teams one week to come up with their final offers. The Citi group’s $12.8 billion bid won.
With less than three weeks to go until the Pennsylvania legislature returns from summer recess, Gov. Rendell says he plans to meet with as many lawmakers as he can to win them over. Most opposition comes from his own party. Prominent unions have also condemned the plan. The governor sounds less than enthusiastic about its odds. “This is very high on my list of priorities,” he says. “There’s still a decent chance it will pass.”
unmod?
Breaking up…
Leasing of Landmark Turnpike
Puts State at Policy Crossroads
By CRAIG KARMIN
August 26, 2008
DONEGAL, Pa. — Hobbled by the credit crisis, Wall Street firms and many state governments are hoping that a pockmarked strip of Pennsylvania highway could provide a road out.
Next month, the Pennsylvania legislature is expected to vote on a $12.8 billion deal struck between the governor and a group of private investors to lease America’s oldest major toll road, the 537-mile Pennsylvania Turnpike.
If it passes, the deal would be by far the largest ever of its kind in the U.S. Under these arrangements, known as public-private partnerships, investors lease or buy roads, bridges or other infrastructure, operate them independently and collect tolls.
A green light in Pennsylvania could bolster the political will of officials in other states trying to hash out similar deals. That in turn could jump-start projects in waiting, from Florida’s Alligator Alley to Chicago’s Midway Airport. Last month, New York Gov. David Paterson urged legislators to consider leasing some of his state’s roads, bridges and tunnels to help shrink a budget deficit projected at $26.2 billion by 2011.
Proponents say the lease approach could provide financial relief to state governments struggling with foreclosures, ballooning pension obligations and reduced tax bases. That’s not to mention crumbling roads — and lately, a drop in tax revenue to pay for repairs, owing to high gasoline prices that have reduced driving. The U.S. needs about $1.6 trillion in investment over the next several years to bring infrastructure conditions to acceptable levels, according to the American Society of Civil Engineers.
Pennsylvania’s needs rank among the highest in the nation; the state’s Department of Transportation estimates it will cost $11 billion just to repair the state’s bridges. Drivers complain about the turnpike’s potholes, insufficient shoulder room, and continual construction.
cont’d
Pennsylvania Turnpike
Known as the nation’s first Superhighway, the Turnpike opened in 1940.
As much as states need money to fix their roads and bridges, Wall Street firms are eager to supply it. With the industry’s core businesses in distress from the credit crisis, so-called infrastructure funds — which have already raised more than $160 billion, according to Morgan Stanley — have emerged as one of the most promising growth areas in years.
Yet this hot area is already suffering growing pains. The end of cheap credit has forced all funds to borrow at higher rates, severely crimping profits at some of the leading infrastructure funds. The share price for Australia’s Babcock & Brown Ltd., one of the bigger publicly traded funds, tumbled 36% on Thursday to a record low after reporting a large decline in earnings, before rebounding. Shares of another Australian fund, Macquarie Group Ltd., have also sold off this year.
Those financial pressures are unlikely to affect the Pennsylvania deal, which already has a check in hand. But it might not have the votes to cash it. Gov. Edward Rendell, a Democrat who has championed the project, concedes that “the concept of leasing the turnpike is a decided underdog.”
Detractors, from the Turnpike Commission itself to labor unions, question whether the state is selling too cheaply. They also worry that jobs will be lost — under the proposal, union contracts are guaranteed only until 2011 — and that tolls will rise. The new operators can raise tolls 25% in 2009, then keep them in line with inflation every year.
More broadly, in a country that has often mythologized the car and the open road, the deal is sparking debate about whether America’s highways are too much a part of the national fabric to be controlled by anyone but the public. Adding to the backlash: Many of these private funds come from outside the U.S., where investors have reaped huge profits from rising oil and commodities prices and are looking for new places to put their money. The consortium vying to lease the Pennsylvania Turnpike includes Citigroup Inc. and Abertis, a Spanish toll-road operator.
Crowds opposing the deal have gathered along Route 209, in the northeastern part of the state, waving signs like “Pennsylvania’s Not For Sale,” as truckers honk horns in approval.
“Americans built this turnpike,” says Catherine Johnson, a nurse in Tarentum, Pa., who regularly drives the turnpike. “Why do we need someone else to operate it?”
The lease agreement is not the first time the nation has looked to the Pennsylvania Turnpike for a glimpse into the future.
It’s official: we’re now a bailout nation. Looks like the good ‘ol baseball diamond is the next battleground in the sheeplization of America. I only wish somebody would show this kid some film of Nolan Ryan:
NEW HAVEN, Conn. — Nine-year-old Jericho Scott is a good baseball player — too good, it turns out.
The right-hander has a fastball that tops out at about 40 mph. He throws so hard that the Youth Baseball League of New Haven told his coach that the boy could not pitch any more. When Jericho took the mound anyway last week, the opposing team forfeited the game, packed its gear and left, his coach said.
Officials with the Youth Baseball League of New Haven say they will disband Jericho Scott’s team because his coach won’t stop him from pitching.
Officials for the three-year-old league, which has eight teams and about 100 players, said they will disband Jericho’s team, redistributing its players among other squads, and offered to refund $50 sign-up fees to anyone who asks for it. They say Jericho’s coach, Wilfred Vidro, has resigned.
But Vidro says he didn’t quit and the team refuses to disband. Players and parents held a protest at the league’s field on Saturday urging the league to let Jericho pitch.
“He’s never hurt any one,” Vidro said. “He’s on target all the time. How can you punish a kid for being too good?”
The controversy bothers Jericho, who says he misses pitching.
“I feel sad,” he said. “I feel like it’s all my fault nobody could play.”
Jericho’s coach and parents say the boy is being unfairly targeted because he turned down an invitation to join the defending league champion, which is sponsored by an employer of one of the league’s administrators.
Jericho instead joined a team sponsored by Will Power Fitness. The team was 8-0 and on its way to the playoffs when Jericho was banned from pitching.
“I think it’s discouraging when you’re telling a 9-year-old you’re too good at something,” said his mother, Nicole Scott. “The whole objective in life is to find something you’re good at and stick with it. I’d rather he spend all his time on the baseball field than idolizing someone standing on the street corner.”
League attorney Peter Noble says the only factor in banning Jericho from the mound is his pitches are just too fast.
“He is a very skilled player, a very hard thrower,” Noble said. “There are a lot of beginners. This is not a high-powered league. This is a developmental league whose main purpose is to promote the sport.”
Noble acknowledged that Jericho had not beaned any batters in the co-ed league of 8- to 10-year-olds, but say parents expressed safety concerns.
“Facing that kind of speed” is frightening for beginning players, Noble said.
League officials say they first told Vidro that the boy could not pitch after a game on Aug. 13. Jericho played second base the next game on Aug. 16. But when he took the mound Wednesday, the other team walked off and a forfeit was called.
League officials say Jericho’s mother became irate, threatening them and vowing to get the league shut down.
“I have never seen behavior of a parent like the behavior Jericho’s mother exhibited Wednesday night,” Noble said.
Scott denies threatening any one, but said she did call the police.
League officials suggested that Jericho play other positions, or pitch against older players or in a different league.
Local attorney John Williams was planning to meet with Jericho’s parents Monday to discuss legal options.
“You don’t have to be learned in the law to know in your heart that it’s wrong,” he said. “Now you have to be punished because you excel at something?”
Copyright 2008 by The Associated Press
x
cont’d
Pennsylvania Turnpike
Known as the nation’s first Superhighway, the Turnpike opened in 1940.
As much as states need money to fix their roads and bridges, Wall Street firms are eager to supply it. With the industry’s core businesses in distress from the credit crisis, so-called infrastructure funds — which have already raised more than $160 billion, according to Morgan Stanley — have emerged as one of the most promising growth areas in years.
Yet this hot area is already suffering growing pains. The end of cheap credit has forced all funds to borrow at higher rates, severely crimping profits at some of the leading infrastructure funds. The share price for Australia’s Babc%ck & Brown Ltd., one of the bigger publicly traded funds, tumbled 36% on Thursday to a record low after reporting a large decline in earnings, before rebounding. Shares of another Australian fund, Macquarie Group Ltd., have also sold off this year.
Those financial pressures are unlikely to affect the Pennsylvania deal, which already has a check in hand. But it might not have the votes to cash it. Gov. Edward Rendell, who has championed the project, concedes that “the concept of leasing the turnpike is a decided underdog.”
Detractors, from the Turnpike Commission itself to labor unions, question whether the state is selling too cheaply. They also worry that jobs will be lost — under the proposal, union contracts are guaranteed only until 2011 — and that tolls will rise. The new operators can raise tolls 25% in 2009, then keep them in line with inflation every year.
More broadly, in a country that has often mythologized the car and the open road, the deal is sparking debate about whether America’s highways are too much a part of the national fabric to be controlled by anyone but the public. Adding to the backlash: Many of these private funds come from outside the U.S., where investors have reaped huge profits from rising oil and commodities prices and are looking for new places to put their money. The consortium vying to lease the Pennsylvania Turnpike includes Citigroup Inc. and Abertis, a Spanish toll-road operator.
Crowds opposing the deal have gathered along Route 209, in the northeastern part of the state, waving signs like “Pennsylvania’s Not For Sale,” as truckers honk horns in approval.
“Americans built this turnpike,” says Catherine Johnson, a nurse in Tarentum, Pa., who regularly drives the turnpike. “Why do we need someone else to operate it?”
The lease agreement is not the first time the nation has looked to the Pennsylvania Turnpike for a glimpse into the future.
The highway heralded a new era of transportation when it opened in 1940. A year earlier, a World’s Fair exhibit in New York sketched out an exciting vision of a publicly funded highway system that would crisscross America, connecting East to West. The exhibit, commissioned by General Motors Corp. and dubbed “Futurama: Magic Motorways,” enthralled an audience that still relied heavily on railroad travel.
The 160-mile stretch that initially connected the outskirts of Pittsburgh in western Pennsylvania with Harrisburg, the state capital, embodied that vision; it is often touted as the nation’s first superhighway. Service plazas along the road sold postcards, banners and other turnpike trinkets. Many drivers apparently saw it as an American autobahn; the turnpike’s wide, gently sloping lanes encouraged speed, and the road opened without a speed limit. A series of accidents eventually led to a 70-miles-per-hour rule.
Nearly seven decades later, the turnpike and other Pennsylvania roads are in worse shape than most. The state has 6,000 structurally deficient bridges. Pounded by harsh winter weather and hard-driving 18-wheelers, some 9,000 miles of highway are in poor condition, according to the state’s Department of Transportation.
“Seems like they are always having to do work on it, always having to fill potholes,” says Helen Elborne, a self-employed resident of Harmarville, in the southwestern part of the state. “There are a lot of accidents.” Ms. Elborne often takes the turnpike on trips to Ohio, where she says “the roads are better.”
Saving the Skyway
While private investment in state infrastructure has been around for decades in other parts of the world, it hasn’t caught on in a significant way in the U.S. State governments have turned instead to the municipal-bond markets for much of their funding. But this decade, costs for health care, education and pensions mushroomed.
Since 2005, eight states have enacted legislation enabling officials to sell or lease highway or transit infrastructure, bringing the total to 25 states, according to the U.S. Department of Transportation. Infrastructure funds recently acquired long-term leases for the Indiana Toll Road and the 7.8-mile Chicago Skyway bridge. Chicago has used about half of the $1.8 billion in lease fees to retire debt and to boost emergency reserves. It has also used the money to fund homeless programs and job-training initiatives.
In bad shape just three years ago, the Skyway itself has been given new life. Australia’s Macquarie Infrastructure Group and Cintra, another Spanish toll-road operator, together leased the bridge, filled in potholes and added electronic tolling that can process nearly triple the number of cars as the cash lanes can. They also installed reversible lanes, so that the bridge can better accommodate periods when traffic flows are particularly strong in one direction.
Abertis, the Spanish company hoping to lease the Pennsylvania Turnpike, operates motorways in the U.K., South Africa and Chile. It points to its other ventures in the U.S. as proof that it can turn around a sinking ship — or in one case, an airport. The company took over operations of the Orlando International Airport in Florida in 1996, paying $20 million for a 30-year lease and assuming $30 million in debt. Since then, it has invested $70 million on upgrades, from parking spots to expanding the gates. Last year, Orlando officials extended the lease for 30 more years.
In Pennsylvania, Abertis says it and its partners are committed to spending at least $11 billion on the turnpike over the proposed lease period. Its plans include wiring fiber optics and installing a series of tiny monitors and cameras across the length of the turnpike. Abertis says this equipment, combined with an independent fleet of roving patrol cars to supplement the state Highway Patrol, will enable it to detect accidents in five minutes or less. That could get help on the way faster, and warn motorists earlier to detour. Currently, Abertis says, it takes the Turnpike Commission up to half an hour to detect an accident.
Other improvements would be more subtle. Jordi Graells, managing director of Abertis, says turnpike workers now sprinkle too much salt on the roads before winter storms. Salt can enter the ecosystem, damaging trees and other vegetation. Abertis workers, he says, are trained to add just the right amount of salt to minimize the environmental effects.
Carl DeFebo, a spokesman for the Turnpike Commission, says, “When it comes to winter maintenance, turnpike crews do whatever it takes to keep the road open in the heaviest snow and ice storms.” He says the salt is necessary to de-ice the roads “despite some infrequent impacts to plants near the highway.”
Regarding accident detection, Mr. DeFebo says the commission uses the latest technologies and is working to improve incident detection and response times.
‘The Last Bastion’
The Turnpike Commission, which has operated the road for nearly 70 years and is run by officials appointed by the governor,
says it can fix the highway without foreign aid. It plans to invest $4.8 billion over the next 10 years, and a fiber-optic network is in the works, though “it is going to take some time,” Mr. DeFebo says.
The commission estimates the turnpike can generate $83.3 billion in revenue for the state over 50 years. But it first has to receive federal approval to add tolls to Interstate 80, which runs parallel to the turnpike in the northern part of the state, or that figure could be cut in half.
The commission, some charge, has another reason for not wanting to turn over control of the turnpike: The politically powerful group is often accused of filling jobs with friends or relatives of elected officials. “It is the last bastion of political patronage for both parties,” says Gov. Rendell. “Very few in politics want to mess up that arrangement.”
While the commission says it listens to lawmakers when filling job openings, “the turnpike is not obliged to hire referrals,” Mr. DeFebo says.
A Lucrative Prospect
When Mr. Rendell campaigned for the governor’s job in 2002, he promised to tackle the problem of deteriorating road conditions. But the legislature failed to enact funding measures during his first two years in office. The spike in oil prices made an increase in the gasoline tax politically untenable. Toll increases weren’t much more popular.
In 2006, when Indiana leased its toll road, “the governor said, ‘Why don’t we consider something like this?’ ” recalls Roy Kienitz, a deputy chief of staff.
That deal, which brought the state $3.8 billion in exchange for a 75-year lease, has helped shore up Indiana’s finances, according to Standard & Poor’s Corp. In July, the ratings agency upgraded the state’s credit rating to triple-A.
The lucrative prospect of running a turnpike more than three times the length of Indiana’s toll road quickly attracted myriad banks, funds, toll-road operators, law firms and other contractors.
But Gov. Rendell found little enthusiasm in the state legislature. Then in August 2007, the collapse of a Minneapolis bridge across the Mississippi River, with 13 deaths, sparked a nationwide re-examination of structurally deficient bridges. The tragedy brought a new sense of urgency to find funds for repairs, and the governor renewed his effort to lease the turnpike.
By early 2008, the field of bidders had been narrowed to two groups: the Citigroup-Abertis team and one led by Goldman Sachs Group Inc. In a second round of bidding, Pennsylvania gave the teams one week to come up with their final offers. The Citi group’s $12.8 billion bid won.
With less than three weeks to go until the Pennsylvania legislature returns from summer recess, Gov. Rendell says he plans to meet with as many lawmakers as he can to win them over. Most opposition comes from his own party. Prominent unions have also condemned the plan. The governor sounds less than enthusiastic about its odds. “This is very high on my list of priorities,” he says. “There’s still a decent chance it will pass.”
Trust among banks remains low even after the Fed cut its target rate for overnight loans to 2 percent from 5.25 percent in September and created three emergency lending programs, including the Term Auction Facility, or TAF. In total, the Fed has provided almost $1 trillion of emergency loans.
link
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5B1EgdRFF4M&refer=home
a look at american mcmansion tracts future?
Buildings razed turning British cities into ‘bombsites’
http://www.telegraph.co.uk/news/uknews/2607108/Buildings-razed-turning-British-cities-into-bombsites.html
If WaMu goes under, does that mean my mortgage disappears? Weeeeeee!
I kid.
“A new report by affordable housing advocates found that 34 New Jersey towns fighting the state’s recently revised quotas are mostly wealthy suburban enclaves seeking to exclude lower-income residents.”
http://hosted.ap.org/dynamic/stories/N/NJ_AFFORDABLE_HOUSING_NJOL-?SITE=NJCAM&SECTION=HOME&TEMPLATE=DEFAULT
One of the reasons we’re looking to buy in Cherry Hill, NJ is because we fit the demographic in terms of income, professional background, age, and education. We thought about buying on the Main Line outside Philadelphia because of the lower PA property taxes but felt we might have a hard time fitting in with established families. I wonder if there is any information on how the families are doing that relocated to towns as a result of COAH.
Kettle: ref your mention in the previous thread about Boston; we have a friend in Boston who has told us the same thing, excellent hospitals. What we learned from our comparative experience in Germany and the NJ that included three surguries, five months of chemo, and one month of radiation (currently in remission) is that regardless of the country, you can’t blindly go to any doctor or hospital and assume all care is top quality. You have to perform due diligence.
“A new report by affordable housing advocates found that 34 New Jersey towns fighting the state’s recently revised quotas are mostly wealthy suburban enclaves seeking to exclude lower-income residents.”
http://hosted.ap.org/dynamic/stories/N/NJ_AFFORDABLE_HOUSING_NJOL-?SITE=NJCAM&SECTION=HOME&TEMPLATE=DEFAULT
One of the reasons we’re looking to buy in Cherry Hill, NJ is because we fit the demographic in terms of income, professional background, age, and education. We thought about buying on the Main Line outside Philadelphia because of the lower PA property taxes but felt we might have a hard time fitting in with established families. I wonder if there is any information on how the families are doing that relocated to towns as a result of COAH.
Kettle: ref your mention in the previous thread about Boston; we have a friend in Boston who has told us the same thing, excellent hospitals. What we learned from our comparative experience in Germany and NJ that included three surguries, five months of chemo, and one month of radiation (currently in remission) is that regardless of the country, you can’t blindly go to any doctor or hospital and assume all care is top quality. You have to perform due diligence.
“In the eight-county Philadelphia area, sales declined 22.6 percent in July from July 2007. The average price dropped 2.5 percent, to $234,000 from $240,000, according to Prudential Fox & Roach HomExpert Report, based on Trend Multiple Listing Service data.”
http://www.philly.com/inquirer/business/homepage/20080826_Home_sales_down_in_Philadelphia_area__up_for_U_S_.html
yesterday i was accused by stu for not engaging serious discussion but just for small talks. here is an article from stu’s favorite website.
mccane ad claimed it was cut off at $32,000. factcheck.org says $41500. the difference is not that big for majority active memmbers on this board.
“The resolution Obama voted for would not have increased taxes on any single taxpayer making less than $41,500 per year in total income, or any couple making less than $83,000. The $32,000 figure is approximately the taxable income of a single person making $41,500 per year, after all deductions and exclusions.
Obama’s vote (for a non-binding budget bill) does not change the fact that his own tax plan would provide a tax cut of $502 for a non-married taxpayer earning $35,000.
”
http://www.factcheck.org/elections-2008/the_32000_question.html
yesterday i was accused by stu for not engaging serious discussion but just for small talks. here is an article from stu’s favorite website.
mccane ad claimed it was cut off at $32,000. factcheck.org says $41500. the difference is not that big for majority active memmbers on this board.
“The resolution ODrama voted for would not have increased taxes on any single taxpayer making less than $41,500 per year in total income, or any couple making less than $83,000. The $32,000 figure is approximately the taxable income of a single person making $41,500 per year, after all deductions and exclusions.
ODrama’s vote (for a non-binding budget bill) does not change the fact that his own tax plan would provide a tax cut of $502 for a non-married taxpayer earning $35,000.
”
http://www.factcheck.org/elections-2008/the_32000_question.html
Welcome to the ‘hood DL. I’ve started a Philly thread on Phillyblog.com if you want to take part in masochistic beating I take for holding my position that Philly is not impervious to declines. You’d be shock how many people think differently.
http://www.phillyblog.com/philly/general-discussion/61187-exploiting-philly-real-estate.html
DL Says:
August 26th, 2008 at 6:40 am
“In the eight-county Philadelphia area, sales declined 22.6 percent in July from July 2007. The average price dropped 2.5 percent, to $234,000 from $240,000, according to Prudential Fox & Roach HomExpert Report, based on Trend Multiple Listing Service data.”
http://www.philly.com/inquirer/business/homepage/20080826_Home_sales_down_in_Philadelphia_area__up_for_U_S_.html
Frank Says:
August 25th, 2008 at 4:46 pm
Homes are selling for 2005 + 10% in my town.
What town is that?
Rich
Rich 31 Fantasy Hills NJ. Just south of Fairytale Forest across the imaginary bridge.
Besides, if I’m truly wrong- and I tap out and hit 0 on my brokerage account- then my office should concurrently be teeming with walk-ins…holding 20% DPs in hand, 720 FICOS and verifiable income and assets. The hit I take on the SKF should be nicely offset by the simultaneous increase in my business.
Amen brother Amen. If were wrong than we’re back in business. If we’re right then we could be a dream ticket in 2012 Make Money/Clot.
If we loose we can still run and win in Albania.
#31 Rich: It is in The Twilight Zone, where every day is 2005.
32 Mike
That’s my town!
Bi:
I truly couldn’t understand what you posted, but am impressed that you have swayed from the pages of chinadaily and the NYPost to factcheck.org, albeit for a short while.
Isn’t it refreshing to read a source that is truly non-partisan. I only wish the demand for such unbiased news sources was greater.
Honestly BI, I don’t care who you support or what party you are trying to promote. What I can’t stand though is the petty krap that 25 cent rags thrive on and you choose to post to this board. It’s almost as if their intent (and inherently yours) is to keep the stupid stupid.
Make/Clot:
I’m pretty sure ChiFi’s fear is that one of you will get sued when a moron on this site follows your investing advice straight to the cat food aisle. I think he is only trying to look out for you. I don’t think he necessarily disagrees with your investment strategy.
After a conversation I had with him at the grasshopper GTG, I have toned down my investment advice and feel better for it. If you guys want to shoot the sh*t about investment strategies, it would be better to do it over a game of poker than on the NJREREPORT.
#36 Stu Agreed. I am not a fan of either party or candidate, but the hypocrisy of the Republicans is sickening.
John Kerry has a wealthy wife he is attacked by the Republicans, as a kept man out of touch. The Democrats attack McCain, and his 8 houses, and the Republicans cry he is just living the American dream.
make money Says:
August 26th, 2008 at 8:46 am
Besides, if I’m truly wrong- and I tap out and hit 0 on my brokerage account- then my office should concurrently be teeming with walk-ins…holding 20% DPs in hand, 720 FICOS and verifiable income and assets. The hit I take on the SKF should be nicely offset by the simultaneous increase in my business.
Amen brother Amen. If were wrong than we’re back in business. If we’re right then we could be a dream ticket in 2012 Make Money/Clot.
If we loose we can still run and win in Albania.
albani & clot: I appreciate you guys disclosing your natural hedges. It makes complete sense as far as I’m concerned. Just realize that not everyone is positioned the way you are and you guys are enthusiastic because heads you win and tails you win. Not everyone reading has the means or access to replicate your approach, and if they take only part of it, they might find themsleves f—ed like a $2 wh)re…
make [33],
Need a campaign manager?
Stu: great minds think alike ;-)
Just take a load off. From The Big Picture;
http://www.youtube.com/watch?v=712kRqri2No
no kidding. frank is living in hazlet. bob posted a house he owned before he became a hedge fund guy.
bi [42],
Hedges, as in a landscaper?
#42 bi,
That was a sweet house though. I’m so partial to double wides (houses, not women)
RE: 32, 34 and 43,
Hah!!!!!!
http://www.cnbc.com/id/26404629
15.4% DECLINE LAST MONTH!
BC [39],
sure why not. after all you are the one that has created this monster afterall.
Blogers Revolution!
#47 make: Not in frank’s town they are up plu 10% from 2005.
From
http://www.cnbc.com/id/26404629
“Sales have rebounded in many markets in the West and Florida recently where prices have tumbled, but it is too soon to call a bottom for those regions, Realtors’ chief economist Lawrence Yun said. “There is still too much uncertainty,” he said.”
Say T’aint so Larry.
#20
Let the kid play! tell the others to kid(man)UP… seriously, if these parents protect their young any more they’ll be raising jelly fish.
#16 chi-town
what happens when Korea buys the NJ Turnpike?
From AP via The Record
Mortgage fraud soars by 42% in first quarter
Reported incidents of mortgage fraud jumped 42 percent nationwide, with Florida reporting the highest number of cases, according to industry data released Monday.
…
The most common mortgage fraud cases included misrepresenting income, employment history and debt and assets. Maryland, for example, had an unusually high percentage – 69 percent – of its cases involved in tax return and financial statement misrepresentation.
…
The increase in reported incidents comes as lenders raise credit standards to curb rising foreclosures. Critics charge the industry for being too lax in qualifying risky borrowers during the boom, which fueled an overheated housing market.
Hey folks, I am getting nervous. When you said to put money into hedges and CDs, I bought Boxwood and Springsteen. Lots of both. Was that NOT what you meant?
#51
I suspect there is no increase in mortgage fraud, just a willingness of people to look for or see it. An “if a tree falls in the woods…” kind of thing. If someone lies on their mortgage app and nobody cares….
I think they meant Privet and Led Zeppelin.
FNM reporting that serious delinquencies rose in June to %1.36 from %1.3 in May.
No idea of what July was like, though they did hint earlier in the month it was bad.
No link yet, info via Reuters.
Shore (53),
Exactly. And now the banks are wondering why they can’t get any apples from that tree.
“what happens when Korea buys the NJ Turnpike?”
Kimchee in the rest areas I would presume!
anyone catch both O’s and M’s economic advisers on Squawk Box this morning? It seems both are on board with bailing out Fannie/Freddie AND the Big Three automakers (under the guise of “promoting alternative energy”).
this country is seriously becoming a joke
#56 Stu,
korean BBQ would be a big upgrade over what is supposed to be food now served at the rest areas.
Stu LOL
Stu, this is a serious topic from your favorite huffington post:
“According to a recent analysis by the nonpartisan Tax Policy Center, Odrama’s tax plan would add $3.4 trillion to the national debt, including interest, by 2018.”
http://www.huffingtonpost.com/2008/08/10/post_149_n_117999.html
“what happens when Korea buys the NJ Turnpike?”
The NJ state trooper with a radar detector is replaced by this;
http://jungsoo.free.fr/Korean%20army.jpg
Get where we’re coming from? Essentially, the dollar has enjoyed nothing more than a massive global support operation and equities little more than a pronounced period of short-covering in consequence. Fears regarding the outlook for corporate earnings are running high, but fears regarding a possible dollar collapse are running higher still. Think we’re wrong? Here’s the data. According to the Federal Reserve itself, on 16th July it held $2,349bn US Treasury stock on behalf of overseas central banks (The Fed holds debt instruments in custody for global central banks and reports the amount it holds weekly). At the end of last week that figure had risen to $2,401bn, an annualised increase in excess of 38%. This rate of increase is significantly in excess of the rate of dollar take-up associated simply with a walloping trade deficit. This level of take-up smacks of aggressive intervention in the currency markets.
http://www.moneyweek.com/news-and-charts/economics/diversionary-tactics-or-simple-coincidence-27025.aspx
#60 bi,
That’s still a much slower rate than the current doofus in chief.
And no, I’m not for O or M.
I’ve decided to vote for Jon Stewart.
This is what I have been telling you folks here all the way: the best veep for odrama is a teleprompter.
In a live satellite speech tonight to the Democratic National Convention in Denver from a home in Kansas City, ODrama said: “I’m here with the Girardo family here in St. Louis.”
http://www.news-leader.com/apps/pbcs.dll/article?AID=/20080825/BLOGS09/80825054
Does anyone have realtime market information? I just heard a news report that the Dow is down 200 points byt the delayed reports online show -9.
66#, shore, dow, s&P are almost flat. that was yesterday’s number
Shore dow down 12.62 now.
That may have been yesterday’s news.
Nice public service, reporting YESTERDAY’S number well after the markets opened for a new trading day. Yeesh.
Disclaimer:
Do not take investment advice from me I am not an investment professional
It was the 10:00 news update all of a few minutes ago.
# 70
The way the professionals have been doing of late the disclaimer should also be:
“Do not take investment advice from me I am an investment professional”
re: #62 HEHE It’s China.
HSBC Bank’s currency team in Asia has concluded that China’s central bank is in effect forcing commercial banks to build up large dollar reserves.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/26/ccchina126.xml
NJGator noticed the city flub last night committed by 0. It was an honest mistake and I highly doubt he is senile yet. Probably just a bit tired.
On the other hand, when M said “General Petraeus jogs around baghdad EVERY DAY without any protection,” it was not a flub. This was an outright lie stated to fool the dumb American (who takes politicians at their word) into believing that everything is just peachy over in Iraq.
I’ll take the city flub any day to an outright lie with intent to deceive.
I was also impressed by how wholesome his children are. A far cry from the George’s runts.
Sean,
Re 73 thanks for the article, good stuff
#73 – Thanks Sean, good article.
I haven’t been paying close attention to China, anyone else have insight/info;
FTA;
During the first half of this year, about 67,000 small and medium-sized companies went bankrupt throughout China, leaving more than 20m people out of work,” said the National Development and Reform Commission. “Bankruptcies of textile and spinning companies have numbered more than 10,000. Two thirds are on the brink of bankruptcy.
Well, that can’t be good.
Does anyone know how NYC did?
S&P/Case-Shiller composite index of 20 metropolitan areas slipped 0.5 percent in June from May, bringing the measure down 15.9 percent from June 2007.
re: #76
China’s central planners and policymakers so far profess little concern about the plant closings and unemployed.
The closures are mainly hitting lower-value, labor-intensive exporters.
Beijing now wants cleaner industries that produce higher-quality items for the local market like cars,planes, biotech products and software.
They also are going through a labor transition of sorts since a tough new law now requires Chinese companies to provide employee benefits including pensions, guarantees of collective-bargaining rights, and to hire for the long term.
Low cost manufacturing is going to move elesewhere it always does, heck it may even end back here in NY Metro area where allot of it was done in the first place.
Either way we are in for massive inflation.
Can you say 放棄?
Does anybody have a link to which regional banks might have the largest exposure to FRE/FNM preferred cr@p??
Stu,
““what happens when Korea buys the NJ Turnpike?”
Kimchee in the rest areas I would presume!”
ROFL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
hi, my name is Nurburgringer and I am a Knucklehead.
I am a stock market newbie, yet dropped $5000 on SKF at $135 per after reading about it here. I did, however, do about 15 minutes of additional research on the web before hitting the “buy” button on E-Trade.
I hit ‘rock bottom’ after watching the savings account interest rate for the ~$90,000 I had saved as a down payment for my first house drop to 2%. I should have put it in a CD long ago, but foolish me held out hope that I’d find a great deal on a great house as soon as I locked it in…
Oh yeah, my modest 401k account (maxed out contributions for the last 3 years), despite having moved a good chunk into bonds, has brought in a scintillating -9% return YTD, so I felt enabled to roll the dice as it were; how much worse could SKF do?!
Anyway, in no case will I sue Clot or anybody else should housing and the banks miraculously recover overnight, sending SKF to hit my stop price of $100, for a loss of ~$1300.
It’s just that I’ve had this nagging feeling that many things in this country are FUBAR, and while I don’t relish cheering for bank failure, layoffs, etc, since I’m not in the repo business why not play around with a “make the housing and financial crisis work for YOU” investment?
thanks for listening
I put my life savings into alpo and friskies. there are a lot of old boomers around and the SS checks are gonna be getting tight when TSHTF. Of course i am also hedged with Fancy Feast. That way if the economy magically recovers i still win as all the old boomer Cat Ladies buy tons of fancy cat food (i.e fancy Feast) for their 62 cats
re: #81 Nurburgringer
I put down 4K last week on the blackjack table at the Borgata last weekend and I walked away a winner up $3k, but I don’t always do.
Treat the stock market as gambing, since it never will be a sure thing especially when the game is rigged as in the case of the financials.
From MarketWatch
Home prices fall a record 15.9% year over year
U.S. home prices fell at a record rate in June, putting more pressure on an already-fragile financial system.
The Case-Shiller index of 20 major metropolitan areas for the month fell by 15.9% from June 2007, Standard & Poor’s reported Tuesday.
#82 – i still win as all the old boomer Cat Ladies buy tons of fancy cat food (i.e fancy Feast) for their 62 cats
I’ve been plowing cash into kittywigs.com as I think the ROI is a bit better.
Has the world come to an end yet? Did I miss the catastrophe? BTW, we now have a 2nd position available in our group to go along with the first one we still haven’t filled due to the apparent lack of technical skills required. That, and my company, a global financial firm, has plans to rent yet another floor to expand their IT capabilities.
Oh, and did I mention that I opened a fresh batch of listings this morning and noticed that the asking prices look very similar to those of a few years ago? Perhaps I should sell off some assets, liquidate a few odds and ends, raid the kids’ college funds and hold up a liquor store to go along with my white collar salary to buy the over-priced POS in Graydon and Ellery’s town so I feel like I belong. Well, it is very competitive here you know.
But fear not, because the other shoe is about to drop any moment now in North Jersey…. no really… seriously…. no really…. I ain’t kidding. UPPP… THERE IT IS!! No wait…. not yet…. seriously though….. it’s coming…. really…. I really mean it…. you’ll see.
i love cat ladies.
Disclaimer:
Do not take investment advice from me I am not an investment professional
Gary,
What are they paying for the IT position?
#86 gary,
I think you missed your true calling. What that is I don’t know.
re: #86 – Gary how many IT and back office jobs has your company outsourced to India in the last 3 years? Also what percentage of H-1B holders do you have on staff currently and has that percentage grown over the last 4 years?
Another point, offices still need a local admins and keywackers someone is needed to run down the hall and check to make sure the dufus in accounting didn’t unplug his monitor cable again.
Sean – exactly, it’s playing around (with a stacked deck I know) nothing more.
I still think about the night a few years ago $200 turned into $1800 at a $15 table at Ballys during one magical shoe (virtually all the aces came out in the first 2 deals, so on a weird hunch started betting $50, then $100 a hand, doubling and splitting left and right, all the while pocketing blackie after blackie). Was kinda fun scattering 18 Benjamins onto the bed when back in our room.
I’m still up overall at AC BJ tables from that one night.
If SKF shoots to $200per that’ll seem like small change, if not, BFD.
This picture was taken 4 blocks from where I lived when I grew up….
http://www.viewsof.com/usa/newyorkstate/newyorkcity/queens/flushing/nyny9812fl7.jpg
“#86 gary,”
“I think you missed your true calling. What that is I don’t know.”
Signal caller for the Gints?
Increase in mortgage fraud?
What I’m getting is you guys think that there was always this base level of mortgage fraud and it hasn’t changed over the last few years and just recently bankers and the bankers association started giving a cr@p about mortgage fraud.
Frankly I’m thrilled that Maryland has come in third place on mortgage fraud because it at least means that someone is doing their job. On the other hand this issue makes me a bit peeved at the whole industry and makes me never want to buy a home. Why are there not more penalties for misrepresenting income/assets on financial documents? Why are these people still allowed to urinate on the housing industry.
I wasn’t paying attention to the sequence of events that created this mess but mis-stating income certainly shouldn’t have been one of them.
One of the advisor groups being retained by the KDB to evaluate Lehman includes one of my best friends from the old neighborhood. He went to Chicago undergrad and Harvard Law. His mom owner a nail salon and his dad ran a dry cleaners. No joke.
Gary, as long as there is business there are great demands for IT. Additionally in the downturn with all of the activity and legal issues that are sure to occur with brokerages both IT and compliance/legal departments will be very busy gathering data for discovery.
owner = owns
Anyone hear how Grim is doing?
#94
that is what America is all about. unfortunately, some people want to penalize people like this for their upward mobility.
my worthless opinion…
Housing prices in NJ and other places that are currently holding up will fall off a cliff one Fannie and freddie fold. If fannie and Freddie go under before Xmas then expect spring to be a disaster.
Ket,
But think of all of the people who will benefit by not having to buy walpaper. They will be able to spruce up the home by wallpapering with Fannie and Freddie stock certificates and bonds.
Kettle, I agree if we see any greater issues with fannie and freddie banks will become even more stringent with their lending procedures are there is a much greater chance they will be stuck with the loan, 2% fed funds rate be damned we will see 8-9% mortgage rates as the norm.
wallpaper, even
shore 97
how grim is doing??? did something happen?
again, you have to look at the numbers under the headlines. the home price did appreciate in NEW YORK metro and these areas: Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver and Minneapolis.
http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_082653.pdf
how much of the current GSE spread is due to uncertainty re: their rescue? once the rescue happens, isn’t it conceivable that the spread will shrink?
As has been pointed out here by many, the government interference and propping up of failed businesses is doing nothing but prolonging the pain as Mr Market WILL win in the end. How about we ask the people of new orleans how all of that government support worked out?
BC Bob [92],
Omaha! Omaha! 3! 16! 3! 16! Hut! Hut!
# 101
It would be interesting to crunch the numbers to see how increased interest rates affect various RE markets. In some places where prices are pretty low, I suspect a 50% increase in interest rates will kill the market. In places like NJ, where prices are so high, as interest rates go up and it forced downward price pressure, there must be some range where the increased mortgage rates are more than offset by the decreased price — even calculating the increase in mortgage interest. Has anyone here run (or know of) any such calculations/projections?
#104 – bi – Do you mean the %.2 MOM increase for May/June. Kind of outweighed by the %7.3 decline YOY, don’t you think?
#107 Now that’s what i’m talking about.
Gary, You could take over for the angry ranting guy on Conan. You are much funnier.
#104 bi,
When you were in school, did you ride the BIG YELLOW BUS or the little yellow bus?
YOV is past. MOM is a new trend. this is basic.
for example, boston area is in strong recovering mode. NY metro will follow.
#105 bi: Gee well, they did not increase in my premier Blue Ribbon close to NYC Bergen County train town.
We even have listings with a 3 handle again in my town, something the local realtors told me we would never see again.
“Denver and Boston were the best performing markets for the month, returning +1.5% and +1.2%, respectively. Both these markets have had three consecutive months of positive returns. They are outdone by Charlotte and Dallas, however, which have recorded four consecutive months of positive returns. Although there are some improving regional numbers, the picture of the overall residential real estate market remains weak.”
Charlotte and Dallas seem to be showing 4 months of price gains beating out Denver and Boston even though they showed the highest gains in this report.
Bi 104
regarding home prices: I think you have the same problem that we all have on this board from time to time. You dont see the forest for the trees. If you zoom in to far into any picture the data loses significance. A smooth table top looks like the grand canyon at microscopic level.
NY, Charlotte, Dallas may be up 1-2% but look at the core fundamentals of the housing market. Easy money is gone, the job market is contracting overall, and we are in a recession AT BEST. As clot and other point out regularly RE transaction never go to 0.
When credit is available and people can actually put down a 20%DP then we can talk about housing moving up. So e-mail me in about 6-10 years. RE is a slow motion bubble, its not the stock market.
bi (104),
again, you have to look at the numbers in the report. the home price did’nt appreciate in NEW YORK metro and these areas: Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver and Minneapolis year over year.
Who cares about month to month when discussing a seasonal business?
Merrill, Wachovia Hit With Record Refinancing Bill (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7snTaUmiwnw&refer=home
#114 bi; Why would the NYC metro area have to recover, if it is your contention that they have not declined in the first place.
Oh and when did MOM replace YOY as the new trend indicator? Can you provide us with proof on that.
As far as Boston, it was one of the first bubble areas in the north east to pop, that happened during the last real estate bubble/pop in Boston as well.
And the recovery as you call it is led by sale of foreclosed bank owned homes. Nice article in today’s NY Times business section discussing that.
At least be hoenst like frank and admit you bought in 2005.
bi (112),
YOV is past. MOM is a new trend. this is basic.
This isn’t fashion we’re discussing. I know you’re smarter than that. Nice try at “spin”.
Although I agree with Bi that it isn’t raining everywhere I don’t think that fact directly translates to a recovering NY metro. I would have to examine the underlying causes for the increase in the Boston market.
Kettle I completely agree with you on the housing market being dominated by large economic factors cause by the social failing of the US. The fact that a few of the regional housing areas on C/S index can improve despite a struggling financial sector might show something crucial about the American economy.
New orleans in the barrel?
http://www.nhc.noaa.gov/refresh/graphics_at2+shtml/144112.shtml?5day#contents
say hello to Gustav:
THE OFFICIAL INTENSITY FORECAST IS INCREASED AND NOW CALLS
FOR GUSTAV TO BE A MAJOR HURRICANE IN THE NORTHWESTERN CARIBBEAN
SEA. IT IS WORTH NOTING THAT BOTH THE GFDL/HWRF FORECAST SHOW AN
EVEN STRONGER HURRICANE. MOST INDICATIONS ARE THAT GUSTAV WILL BE
AN EXTREMELY DANGEROUS HURRICANE IN THE NORTHWESTERN CARIBBEAN SEA
IN A FEW DAYS.
I understand that MoM numbers don’t mean much and that YoY numbers go a lot further in seasonal buisness.
There is still some good information comparing across the indicies in the C/S index for the same MoM numbers. The fact that Boston did better in the MoM numbers then NY metro does provide some information. The seasonality of the data doesn’t come into play when comparing two cities that experience the same type of seasonal discrepancies.
Nicholas (123),
True for Boston, that market has been depressed for a long period while NYC prices were still rising 3 years ago.
If you do a search on Boston real estate I’m sure you can find articles referencing their decline before CA, NV, FL and other markets reported weakness.
The other markets never had a run up in prices comparative to NYC.
HEHEHE Says:
August 26th, 2008 at 12:08 pm
Merrill, Wachovia Hit With Record Refinancing Bill (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7snTaUmiwnw&refer=home
HE: I sent this article to a portion of my client base. If we are going to try and forecast the coming of a real full-blown credit crunch, here is the way to do it. We should be monitoring this area for developments.
What we have seen so far in the way of credit restriction is really not as bad as it could be. Clot-phobia withstanding…
Chi,
I agree thus far, but at some point the runts of the litter aren’t going to be able to afford the increasingly loan sharkesque rates they’ll likely see.
I dont know, it seems to me that a 7.3% decline YOY doesnt seem like that much given how much bad news there is everywhere and how long its been coming; markets, credit, jobs, recession etc etc.
Alhough this thing could just keep getting worse.
#128 ADA: I would say it is much worse than the numbers portray. Mix of housing sold and all the rest influences that number too.
Regarding the housing recovery:
Does housing being “In recovery” mean that the houses have to go to meetings and follow a 12-step program? Will the homes that were sold at inflated prices need to make amends by going around to the poor saps who spent too much and offer a sincere apology (refund?) to them?
“Hello. My name is POS Cape, and I am a crashaholoc.”
“Hello, POS Cape”
# 127 ” dont know, it seems to me that a 7.3% decline YOY doesnt seem like that much given how much bad news there is everywhere”
Except tht much of what was driving housing prices in many areas was 1) speculators/flippers buying because they had every confidence that they could turn around and sell at a profit and 2) people jumping in with exotic mortgages or falsified loan documents because they feared being priced out and having every confidence that prices would rise fast enough to bail them out of what was an otherwise bad economic decision.
With the “automatic” price increases gone, and some declines creeping in, the momentum that kept demand up will slow. That will very likely have pronounced effects over the span of 2-3 years.
Gustav predicitions…
http://www.nhc.noaa.gov/refresh/graphics_at2+shtml/144112.shtml?table#contents
Doesn’t look good for the off shore oil and natural gas platforms in the gulf. But lets build some more.
Are we not just seeing seasonal adjustments in the Chiller report? I would wait about 6 more reports before I would call the bottom in housing.
gary,
I know someone with serious IT skills who might be available.
No one has answered the question about how Grim is doing, but when it’s possible, email him for my email.
Boston in recovery?
Report: Mass. home prices post steep July decline
August 26, 2008
The median price of single-family homes in Massachusetts fell 12.3 percent in July, marking the sharpest decline in monthly home prices since it began tracking the housing market in 1987, the Warren Group reported today.
http://www.boston.com/business/ticker/2008/08/report_mass_hom.html
Odrama lost 6 pts in Florida last month…
The survey suggests that the Arizona senator has a four point lead, 47 to 43 percent, over Odrama in Florida. Last month Odrama had a two point lead in the state that decided it all back in the 2000 election.
In Ohio, the Quinnipiac University poll puts Odrama up by one point, 44 to 43 percent, over McCane, down from a two point lead in their last survey. That’s a statistical dead heat.
The Illinois senator has a 49 to 42 percent advantage in Pennsylvania. That seven point lead is unchanged from last month.
http://politicalticker.blogs.cnn.com/2008/08/26/race-tight-up-in-battleground-states/#more-14391
is it generally known that the NAR President is named Richard F. Gaylord?
For those who believe these latest numbers represent the turning point in property values, I suggest you immediately run out and purchase a home before interest rates skyrocket and property values begin accelerating to the upside.
I’ll be confidently waiting until January of 2009 to buy mine.
# 136
Interesting data, bi. Has anyone seen a state-by-state analysis — including the associated electoral votes? With M up in FL, and MO, and if he picks Ridge and can pull off PA, it could be tough for O to win enough electoral votes, even if he wins the popular vote.
BI:
I have a nice poll to show you, but you probably won’t like the results when I shove it up yer a……..
This is just in…
WTF! M leads O by 2 pts, first time since gallup daily tracking began.
http://www.gallup.com/poll/election2008.aspx
I’ll be confidently waiting until January of 2009 to buy mine.
Meant to say January of 2010.
Skep-tic,
Thats interesting that Massachusetts housing is down but Boston is up.
One reason could be Rural-to-City migration. Another reason could be that C/S only looks at sale-over-sale data and a lot of cheap housing has come on the market in Mass. A third reason is that Boston RE data is being corrupted and we should throw out that data point in the C/S index.
So many things to ponder….
i once read that in order to accurately track the housing bubble, boston would be the lead barometer for collapse and recovery. i can’t reference the source so this was basically a useless post. but i read it a couple of years ago…
#143 Stu: Sping/Summer of 2009 for me. Bargains will abound!!!!
if by 2010 I’m sitting pretty and mortgage free or just about in my newly purchased and remodeled 4 bedroom/3 bath, 3 story victorian in Hisotric-Train-Town-of-my-Choice-With-Great-Schools
I’m going to have to take this board out to dinner. By “dinner” I mean the only restaurant left in town since all others will likely be boarded up or bombed out do to the fallout, economic and/or nuclear.
I’m looking forward to it.
*hugs all around*
3134 Stu; I believe we will see the bottom towards the end of 2009. Than flat for years;and years,and probably some more years.
Barbara [146]
Taco Bell?
After the restaurant wars they all will be named Taco Bell.
Looks like the lawyers, re agents, and Wall st wannabees have fled this blog.
they could not take the heat bi and others have generated.
Real Estate Outlook: Prices Stabilizing
by Kenneth R. Harney – Tue, Aug 26, 2008
The economy continues to send mixed messages — some encouraging for real estate, some not — but this week the positive are edging out the negatives.
Take housing prices for example. The research company with the largest database of ongoing real estate transactions – First American CoreLogic, which tracks property values in thousands of Zip codes and neighborhoods – reports that nominal price drops have “stabilized” in 883 core-based statistical areas, showing no declines in the past two months.
Why’s that important? Because flattening out is what we need before we can see a cyclical turnaround — in other words, where even in the hardest hit local markets in California, Florida, Arizona and Nevada, prices have hit bottom.
They’re not likely to drop much further, and in some parts of California are now at such bargain levels that large investors are prospecting for entire packages of houses — ten or more in some cases — to buy in bulk and rent out.
Gary Crabtree, an appraiser in Bakersfield, California, told Realty Times that he knows of one investor who has a standing order for 20 houses that fit specific price and locational characteristics that he wants to purchase.
The National Association of Realtors sees similar bottoming out — even the first signs of turnaround — in a number of key markets in the U.S. In its latest quarterly report, home sales were up year-to-year in 26 percent of all states and 35 percent of metropolitan statistical areas.
Biggest price jumps were in Yakima, Washington, where the median was up 8.9 percent, Binghampton, New York, up 8.7 percent, and Amarillo, Texas, up by 7.2 percent.
On the other hand, the Realtors also reported the national median sales price was down by 7.6 percent from the second quarter of 2007, and now stands at $206,500.
In other key economic developments: New housing starts fell by three percent last month – which is only logical given builders’ still bulging unsold inventories.
And mortgage rates took a dip this week to an average 6.47 percent for 30 year fixed. Fifteen year rates slipped below 6 percent to 5.99 percent. New loan applications for FHA mortgages to purchase homes rose slightly, according to the Mortgage Bankers Association of America — even while applications for conventional home purchase mortgages from Fannie Mae and Freddie Mac dropped for the week.
http://realestate.yahoo.com/info/news/real-estate-outlook-prices-stabilizing;_ylt=AppzDKtVfd28bPVpUsj.wjekF7kF
Prices are stabilizing, nothing to see here, go about your buisness buying houses.
Above article provided by RealtyTimes.
“they could not take the heat bi and others have generated.”
[150],
Is bi picking stocks again? I must have missed the “heat”?
Taco Bell, sounds good. Reservations required though, I’ll call now.
I get hot every time I read one of BI’s posts.
Ooh la la!
Nicholas@149
great ‘demolition man’ reference. If we start seeing three shells in the crapper and repealed ammendments for arnold watch out
“Prices are stabilizing, nothing to see here, go about your buisness buying houses.”
[152],
We ahve been stabilizing/at or near the bottom for the past 1-1/2 years.
The depths of the bust will be directly proportionate to the delusional excesses that preceded it. Chuck Prince was also dancing, last year. Unless history is no longer a prologue to the future, this bust has a long way to go. Buckle up.
Shore #130
Agreed, but I dont think NYC had as much speculation as other areas and coop boards kept risky loans in check for the most part. I’ve been waiting to buy in Manhattan for years and nothing I want is coming into my price range.
“Except tht much of what was driving housing prices in many areas was 1) speculators/flippers buying because they had every confidence that they could turn around and sell at a profit and 2) people jumping in with exotic mortgages or falsified loan documents because they feared being priced out and having every confidence that prices would rise fast enough to bail them out of what was an otherwise bad economic decision.”
#155
then you should spell you name correctly
STEW
I think Boston RE has benefitted in a lot of the same ways as NYC RE in recent years due to the improvement of the city as a place to live (lower crime, etc) and a general shift in preference toward urban living among certain groups. It does not surprise me that Boston proper would decline less than Mass in general, or even less than Mass suburbs. I know two people who have bought places in Boston in the last year and it remains relatively affordable compared to NYC.
Anecdote for the day.
I was walking my dog around 8 am this morning in our middle-upper middle class neighborhood in NE Monmouth Co. I counted no less than 10 homes undergoing renovation projects of varying degree, but not one for sale sign. From landscaping to paver driveways, to pools (why install a pool in September?) and additions, it seemed like there was a contractor van in every driveway.
The one foreclosure property I was aware of has a new owner (I assume it was a new owner), who was having new siding put on and a pool installed.
Perhaps folks are starting to put money into existing properties instead of trying to trade up?
FOMC Minutes
http://www.federalreserve.gov/newsevents/press/monetary/20080826b.htm
Skep
Agree on Boston affordability vs NY/NJ. My bro lives in an affluent suburb about 8 miles from downtown. He has a smallish CHC on ~.2 acres, paid ~800K at peak, his RE taxes are 4k a year though. The services and schools are much better than just about any NJ suburb, so the idea that taxes here need to be 15k a year is absurd. We have considered moving for a few years now but we haven’t been able to both find jobs we would want, then the baby came and we stopped looking . As the wifey are in biotech/medical fields we assume we will eventually end up in Boston or San Diego.
JBJB– it is funny because you talk to people in Boston and they complain about how expensive it is, but NYC just blows the doors off of it (I guess Londoners feel the same way about NYer complaints). I still think Boston will go down further, but I think it is probably a year to 18 months closer to the bottom than the tri-state area
#161: same here in West Essex
oops, where did that sea of wealth go???? anyone? pretorious?
Glub, glub, glub: 40% of stock options are underwater , 1 in 10 essentially worthless
The plan was simple earlier this year at most large companies where top brass and rank-and-filers found themselves holding worthless stock options: Wait and hope investors send prices back up.
Now it may be time for Plan B. Stock options are currently underwater at nearly 40% of Fortune 500 companies, compared with about one-third that had worthless options during the first quarter, according to data compiled for Financial Week by compensation consultants Steven Hall & Partners. And many of those options are well into the abyss: One in every 10 companies now has options that are more than 50% underwater.
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080825/REG/860774
Oh, look at that, someone is actually acknowledging the situation! while this may be in the UK< we are in the same boat
British economists focus on avoiding depression and deflation
On Friday morning, at 9.30am, something changed. One of the scariest words in the orthodox economic vocabulary lost its taboo status. Britain is almost certainly already in the first stages of recession.
That much became clear after the Office for National Statistics revealed that, rather than growing slightly in the second quarter of the year as was previously thought, the economy stagnated for the first time since the early 1990s. The majority of leading City economists think the next move will be down, and that a recession is all but inevitable.
The big worry has shifted from the R-word to the D-words: depression and deflation. Both are a real – if remote – possibility, and much depends on the response of both the Treasury and the Bank of England if the UK is to avoid them. It may even be in their power to prevent this from turning into a deep 1990s-style recession instead of the preferable shallow dip in performance.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/26/ccecon126.xml
Skep
Yea, I think you get a lot of young people who come to Boston from the mid-West and South for college and jobs so they are blown away with the cost of living comparisons, but coming from NJ/NY Boston seems like a bargain. Too bad the winters really, really suck.
Not to mention, outside of the nitwits in Cambridge, Boston is very business friendly, and will continue to add good jobs in the coming years where the opposite will be true here, at least in NJ.
Here are some strategies for RE agents to help them with the current downturn.
The title of this article is ‘Simplify to Multiply: Do Less and Make More”. I will translate since it is a long article.
“Simplify to Multiply” Strategy #1: TAKE MORE TIME OFF
Instead of wasting your precious hours at the office not making sales spend that time somewhere else not making sales. It is less stressful.
“Simplify to Multiply” Strategy #2: SHORTEN YOUR DATABASE
Don’t focus on the growing number of houses that keep spilling onto the market like sewer bubbling onto the streets from a backed up septic tank.
“Simplify to Multiply” Strategy #3: STREAMLINE YOUR WORK PROCESS
Don’t complicate your life with many needless steps like trying to generate new buisness. Instead skip right to the good parts like standing in the unemployment line.
“Simplify to Multiply” Strategy #4: SYSTEMIZE YOUR SCHEDULE
Each week dedicate Monday-Thursday in planning the activities of the next week so that you get a head start. This optimizes your work week so you don’t spend your time driving around using precious fuel.
http://realestate.yahoo.com/info/news/simplify-to-multiply-do-less-and-make-more;_ylt=Ank7OvUuSP33ExQyZC6w3pukF7kF
Skeptic,
Regarding boston. While boston may be ahead in the RE cycle, they are not done yet. Boston still has very real affordability issues as well as planning issues. In order to brin gin the tax money some towns such as waltham ( inside the 128 circle) have built out their towns willy nilly with little actual planning. I was at a town meeting where the town council actually said the plan was to grant pretty much every building permit to keep the tax $$ flowing. Traffic in these areas is horribly snarled and there is going to be delayed cost as the local infrastructure is already old and taxed and will not handle the sudden buildout for very long.
All of this plays into housing as many towns right outside of boston may be headed for NJ type taxes due to the poor planing.
The boston area also had southern NH as a pressure relief valve but many people are starting to rethink that 1.5 hour commute (similar to PA)
There are many local issues as i am sure you are aware, but boston is not in the clear anymore then NYC
Ket
You may be right about MA moving towards NJ like taxes, but there is one big differnece. Their government is not nearly as corrupt and the electorate is much more engaged and educated. They will only except taxation up to a point afterwhich there will be another Tea Party.
#269 Nicholas
I read that article and couldn’t figure out if I should laugh or throw up.
More boston and affordability:
Mass (boston) is experience a net exodus of people under 35. The cost of living is still way out of whack even if not as bad as NY/NJ.
Whether you get hit with a 5 megaton nuke or a 10 megaton is somewhat irrelevant as you are really in the same boat either way.
Businesses are also having problem recruitng and maintaining younger talent as they see hoe much it costs to life within a reasonable commute to work and see that they can get similar jobs with a better quality of life elsewhere. This has been a hot topic in the boston area for 1 – 2 years now. Companies from the midwest, NW, SE have been poaching younger talent aggresivly for o ver a year . They offer a lower salary but a higher % of take home due to lower costs of living and a higher quality of life.
You also have to consider that the boston area, while having its own arrogance isnt quite as hungup on itself as NY/NJ. The people are also much more life oriented (i.e personal quality of life, being active etc). Due to this the 35 and under crowd seem to put a higher value on quality of life and less value on living in the boston version of brigadoon ( that would be welsley, newton and a few others)
Federal regulators say U.S. banking industry profits plunged by 86 percent in the second quarter, as slumps in the housing and credit markets continued.
Federal Deposit Insurance Corp. data show federally-insured banks and savings institutions earned $5 billion in the April-June period, down from $36.8 billion a year earlier.
The roughly 8,500 banks and thrifts also set aside a record $50.2 billion to cover losses from soured mortgages and other loans in the second quarter.
The FDIC says 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the prior quarter and the biggest tally since mid-2003.
Who has the hookup to the MLS listing service?
Thanks!
jb 171
they may not have much choice as they have some of the oldest infrastructure in the country and have built out the area with abandon. While the taxes may not hit quite NJ levels, infrastructure such as sewage, water, power are not generally optional. Alot of the towns have been deferring doing such upgrades and are running the systems to failure. Its more expensive to replace them at failure instead of in an orderly manner in a planned timeframe
If that article provided any meaningful information then I am sorry to say your “self-management” skills were already in the pooper.
It feels similar to an article I once saw in a magazine at the end of the grocery isle: 5 ways to reduce the pain of shaving your face, ouch!
1. Wet your facial hair.
2. Use shaving cream.
3. Use a quality razor.
4. Make sure your razor isn’t dull.
5. Use aftershave.
I just find it hard to believe that there would be someone out there that shaves and would benefit from this type of instruction. Likewise, I find it hard to believe that the Simplify to Multiply article helps anyone who manages thier own time.
Booya,
Link to your banking article please?
“they may not have much choice as they have some of the oldest infrastructure in the country and have built out the area with abandon.”
what about thewhole big dig boondoggle? the largest public infrastructure project in us history.
Can anyone give me an address for MLS ID# 2520967?
I mean, you wouldn’t think that a realtor site would list the f*cking taxes or address or any other information. Why should they? I would email the realtor but they’ll only ask how much blood I’m willing to spill and which sibling I’m willing to sell for the privilege of their “services” and the honor of living in a town close to Graydon and Ellery.
Who says they are not building starter homes anymore. Just check out these gems in SF.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/08/24/BUTM12GQMI.DTL&type=realestate
Home, small home: 250 square feet in SoMa
New condo development targets young first-time buyers without too much stuff
James Temple, Chronicle Staff Writer
Sunday, August 24, 2008
It’s about the size of seven ping-pong tables – and all yours starting at $279,000.
A San Francisco design and development firm has begun marketing 98 tiny condominiums – ranging from 250 to 350 square feet – at the Cubix Yerba Buena building in SoMa.
Appraisers still getting pressure on prices
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/08/24/RE9512D5H3.DTL&type=realestate
Kenneth Harney
Sunday, August 24, 2008
(08-24) 04:00 PDT Washington — Have the real estate valuation shenanigans and inflated home appraisals that characterized the boom years disappeared from the marketplace?
Are mortgage loan officers and realty agents – even individual home sellers – continuing to influence or attempting to interfere with appraisals despite new federal rules that ban such behavior?
Ask appraisers, and many will tell you it’s still business as usual. Attempts at encouraging inflated appraisals continue to be commonplace, though in some cases the techniques have become subtler.
“Absolutely, appraisers continue to get pressured” to hit the numbers needed to push transactions to closing, said Bill Garber, government affairs director for the Appraisal Institute, the country’s largest professional organization representing appraisers.
“The office manager asked me directly: ‘If I sent you out to appraise a million-dollar home and the comps (comparable values) only came in at $800,000 … but in your heart you knew it was worth a million dollars, what would you bring it in at?”
Tsourounis said he told the manager that “the market is full of million-dollar houses selling for $750,000. Why should I be responsible for adding one more foreclosed property to the already growing list?”
“Not surprisingly,” he said, he’s never heard back from the lender, never received an appraisal assignment. “Was that a form of interference? You bet it was,” said Tsourounis. “It was just a little subtler, a little less direct, than it used to be.”
JB
The bigdig boondogale is so big it doesnt need mentioning. The development issues are not obvious to someone not familiar with the area. Oh and watch out for the 5 ton cement panels falling from the roof of the tunnel! (not a joke)
Both NJ/NY and Mass (Boston) have very similar issues. One of the core issues is that the younger generation, the prime tax base is leaving both places in droves. This is a stealth problem that will not manifest itself until it is too late. As the older generation moves into SS and retirement/reduced employment the generation that would have picked up the tax burden is drastically diminished as they have all left. You are going to end up with brazilification to varying degrees, a concentration of the rich and poor but no middle class.
bill clinton became mccane’s newest surrogate. i am wondering if they made a deal to help her to retire her campaign debt.
He said: “Suppose you’re a voter, and you’ve got candidate X and candidate Y. Candidate X agrees with you on everything, but you don’t think that candidate can deliver on anything at all. Candidate Y you agree with on about half the issues, but he can deliver. Which candidate are you going to vote for?”
http://thehill.com/campaign-2008/bill-clinton-in-denver-again-undercuts-obama-2008-08-26.html
Has anyone here had any experience with business brokers? We have identified a business that would be a perfect fit, but it’s listed at a broker for too much money. This seems to be a trend with this industry. It’s worse than residential because there are very few comps.
It’s so overpriced that I don’t even think we can start a serious dialog. Any thoughts on this type of listing/broker?
kettle1 Says:
August 26th, 2008 at 2:52 pm
ket the boston area is different….they have a ready supply of young talent constantly replenishing the area as it is a major college town….other than Rutgers and Princeton, we have a vast morass of vacuous morons and people who only settled in NJ for a job that no longer exists and likely will not in the future…..
Fannie and freddie being pushed off the cliff?
Fannie-Freddie crisis spreads
The crisis gripping Fannie Mae and Freddie Mac spread across the financial system yesterday as JPMorgan Chase warned of a possible $600m (£323m) loss from its holdings of preferred shares in the two mortgage financing groups.
JPMorgan said it would write down the value of its $1.2bn of preferred shares in Fannie and Freddie by half. Banks and insurers own most of the $36bn in preferred stock in Fannie and Freddie, and JPMorgan’s announcement will raise pressure on other holders to make similar writedowns. Preferred shares are a hybrid of debt and equity and are attractive to investors because they pay interest above equivalent debt instruments.
No other bank has written down the value of its Fannie and Freddie preferred shares, and only a few have revealed their holdings. Philadelphia-based Sovereign said last week that it held more than $600m in Fannie and Freddie preferred stock.
http://www.ft.com/cms/s/0/2705764c-7305-11dd-983b-0000779fd18c.html
Bill Clinton in Denver again undercuts Odrama
By Sam Youngman
Posted: 08/26/08 01:47 PM [ET]
DENVER — Bill Clinton appeared to undermine Sen. Barack Odrama again Tuesday.
The former president, speaking in Denver, posed a hypothetical question in which he seemed to suggest that that the Democratic Party was making a mistake in choosing Odrama as its presidential nominee.
He said: “Suppose you’re a voter, and you’ve got candidate X and candidate Y. Candidate X agrees with you on everything, but you don’t think that candidate can deliver on anything at all. Candidate Y you agree with on about half the issues, but he can deliver. Which candidate are you going to vote for?”
Then, perhaps mindful of how his off-the-cuff remarks might be taken, Clinton added after a pause: “This has nothing to do with what’s going on now.”
JPM has written down its preferred stock in Fannie and Freddie by 50%!! what choice do the other banks now have but to write down as well. Lets see if this triggers a wave of small bank failures given that a number of smaller banks have significant holdings in F&F
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080825/REG/860746/1036
Fannie and Freddie equity has been falling across the board as investors gear up for a possible federal bailout of the government-sponsored entities. “Worst case scenario is if the government wipes out all the common stock and preferred stock” for Fannie and Freddie, said Samuel Caldwell, an analyst at Keefe Bruyette & Woods. “The market is currently discounting the risk that something like that happens.”
Mr. Caldwell and his colleagues have been kept especially busy recently asking banks to reveal how much they have in Fannie and Freddie shares. By some estimates, banks may hold as much as half of the roughly $36 billion in Fannie and Freddie preferred equity.
Analysts agree that the problem is worse on a relative basis at smaller regional banks than it is at larger banks. Companies are not required to disclose their holdings, but some have already taken write-downs this year. While J.P. Morgan’s loss is quite manageable, Mr. Caldwell noted, at only 1% of its tangible capital, smaller regional banks may not be able to recover from dramatic losses.
FDIC: Bank Profits Fell by 86 Percent in 2Q- AP
U.S. banking industry profits plunged by 86 percent in the second quarter and the number of troubled banks jumped to the highest level in about five years, as slumps in the housing and credit markets continued.
CHiFI 186
ket the boston area is different….they have a ready supply of young talent constantly replenishing the area as it is a major college town….other than Rutgers and Princeton, we have a vast morass of vacuous morons and people who only settled in NJ for a job that no longer exists and likely will not in the future…..
I disagree. Yes they have a more active talent pool because of the schools, but they still have a net loss of people coming out of those schools. The last time i really paid attention ( last November) there were still regular news stories about the problem and about how smaller companies were having a hard time getting started as they could not get people to stay in the area. yes they are better off then NJ, but they have the same net migration issue.
#189 kettle1
It’s amazing how those bankers are monkey see-monkey do on the way up and now on the way down.
#184 nicholas: So listen to your heart, it know mroe than the comps. You just have to love real estate. Even up to the bitter end, there are those in that industry who continue to play games.
Yes, Mass has been experiencing an outmigration of young people, but as Chicago pointed out, there is a constant source of replenishment from the universities. Most do not stay, but some do and that is better than most places (especially since these people are educated).
Also, I think if you work in one of the higher income industries in Boston, your alternatives are somewhat limited. Biotech– your alternatives are San Diego (more expensive), northern VA (about the same) or the research triangle in NC (cheaper for now, but gap is shrinking). If you work in finance or related industies (e.g., law), your alternatives are NYC, Chicago, SanFran. Boston stacks up pretty well on a cost of living / quality of life basis. And of course there is academia, which is a big industry there as well with great job security.
http://www.twincities.com/business/ci_10283731?source=rss
Bankers worry as commercial real estate loans wobble
By Louise Story
New York Times
Article Last Updated: 08/23/2008 03:17:32 AM CDT
As the value of home mortgages crumbles by the day, Wall Street has hoped that commercial real estate loans would stay clear of the storm.
But bankers believe the headwinds may be shifting after a large apartment complex in Harlem warned last week that it might not be able to make a $225 million mortgage payment by September.
A default by the complex, the rent-regulated Riverton Apartments, a 12-building residential development constructed after World War II, would be New York’s largest in the current housing crisis.
—
Loans made for commercial real estate are typically among the safest, because a building can be used as collateral and big property developers generate income from the investment.
But cracks began to emerge late last year, when Morgan Stanley reported write-downs of $400 million in commercial mortgage losses.
—
“The risk here in commercial real estate is what happens when those loans mature in two, three, four, five years?” said Nick Levidy, a managing director at Moody’s Investors Service.
“When these loans come up for refinancing, unless the credit markets improve significantly, the terms will be quite different.”
Commercial real estate hurting? Who would’ve thunk it ;)
Ket
There are literally hundreds upon hundreds of start up companies in Boston working in biotech, pharma, medical devices, elctronics, IT, clean tech, solar, wind, i.e. the technologies of the future. I think you can likely count the start ups in NJ on one hand. The only gowing industry in NJ is the state payroll. Boston indeed has may similar issues compared to NJ, but it sure seems to be tackling with them in a much more intelligent and thoughtful approach.
185
A business generates cash, no? You would commonly bid on a multiple of that expected cash flow, right? Depending on the business you could go anywhere from 1X to maybe 10X expected yearly cash flow. The key is to properly gauge future revenues post purchase. What method are they using the value the business?
skeptic.
what you say is acurrate. But i have 2 points that we seem to be dancing around.
1: the net flux of younger people (35 and under) is out of the state and city
2; if the only people staying are in higher paying jobs you are going to see a stratification of the city (beyond what may exist) and a general degradation in quality of the are as well as a degradation of the tax base.
I am lazy right now, but the stats show a solid exodus of younger people. If 1000 leave and only 700 take their place you soon have a big problem as who pays the taxes?
The income of the city is based on the younger middle class as they reach prime income.
This is an issue all over the country as we see the “graying of america”
ok, end of boston debate!
yes new people come because of the schools, yes they have a growing industry, multiple actually. the point was that boston has structural instabilities just as NY/NJ does while also having additional positive factors.
we all seem to more or less agree on the general concept i believe.
http://www.ohio.com/business/27342894.html
Real-estate appraisal system called crippled, understaffed
Associated Press review finds gaps in safety net for home-buying market
By Mitch Weiss
Associated Press
As soaring home prices set the stage for America’s great housing meltdown, a critical step in making sure those home sales were a fair deal — the real-estate appraisal — was undermined from within.
After the nation’s last major banking disaster, Congress set up a system to catch rogue appraisers. Their game: inflating the value of homes at the direction of equally unscrupulous real-estate agents and mortgage brokers, whose commissions are determined by the size of the deals.
But a six-month Associated Press investigation found that the system is crippled by both the bumbling of its regulator and their inability to effectively punish those caught committing fraud.
And despite ample evidence appraisers are pressured into inflating home values — sometimes to prices in support of loans that are more than buyers can afford — the federal regulators charged with protecting consumers have thus far made a conscious choice not to act.
”The system is completely broken,” Marc Weinberg, who was acting director at the federal agency charged with monitoring the appraisal industry, told the AP before he retired this year. ”It’s amazing that the system ever worked at all.”
The AP conducted dozens of interviews and reviewed thousands of state and federal documents, and found:
• Since 2005, at the height of the housing boom, more than two dozen states and U.S. territories have violated federal rules by failing to investigate and resolve complaints about appraisers within a year. Some complaints sat uninvestigated for as long as four years. As a result, hundreds of appraisers accused of wrongdoing remained in business.
• The only tool federal regulators have to force states into compliance is so draconian — it would effectively halt all mortgage lending in a state — that it has never been used.
• Both state appraisal boards and the federal agency charged with overseeing them are chronically understaffed, many with only one full-time investigator to handle the hundreds of complaints that arrive each year. Some don’t even have an investigator.
”The appraisal reforms of the late 1980s were good reforms,” said Susan Wachter, a real-estate professor at the University of Pennsylvania’s Wharton School of Business. ”But they were not sufficient to prevent what we have seen . . . because regulation without teeth is not regulation.”
—
But experts and industry insiders, including appraisers who feel betrayed by colleagues who don’t follow the rules, believe the failure to effectively monitor the real-estate appraisal industry contributed to housing’s collapse.
There is no doubt, Wachter said, ”that fraud has increased and appraisal fraud has increased in a way to exacerbate the problems.”
This is the way the system is supposed to work:
Typically, an appraiser receives an order from a real-estate agent, lender or mortgage broker to inspect a property. Based on a physical inspection of the home and comparable sales in the area, they develop an estimated value for the property. That figure is used by banks to set the home’s value as collateral for the mortgage loan.
Appraisers are supposed to come up with a value free of any outside pressure. But more than three dozen appraisers nationwide interviewed by the AP said they often felt pushed by a real-estate agent or mortgage broker to fraudulently inflate a property’s value. They supplied the AP with documents from lenders asking them to ”hit a number.”
”The higher the loan amount, the more money brokers and lenders make in the deal,” said Ray Haynes, an appraiser from Cherryville, N.C. ”And they threaten you. They say, ‘If you don’t play ball with us, we’ll go somewhere else.’ And they do. I’ve seen my business shrink. They’re all doing it. It’s hard to stay honest.”
Documents obtained by the AP also show that hundreds of appraisers complained to federal and state agencies about such fraudulent inflation of property values.
The appraisal system has broken down before. In 1989, Congress concluded that ”faulty and fraudulent appraisals were an important contributor to the losses that the federal government suffered during the saving and loan crisis.” And it passed the Financial Institutions Reform, Recovery and Enforcement Act.
Under the law’s reforms, a private group known as the Appraisal Foundation wrote the rules governing appraisers. The law also recommended that states begin licensing appraisers and disciplining those who break the rules.
A federal agency called the Appraisal Subcommittee, an independent federal agency that answers to Congress, would conduct field reviews and audits, and maintain a national registry of appraisers — including dossiers on those who break the rules. But problems plagued the system from the start. It took years for some states to set up the independent review boards to supervise appraisers or hire personnel to probe complaints.
The Appraisal Subcommittee is supposed to help states remove from the system those appraisers who agree to ”hit a number.” But it has only four employees to conduct field reviews and audits of 50 states and four U.S. territories, and hasn’t even had a permanent director since the agency’s former chief retired at the end of last year.
Following Weinberg’s subsequent departure in February as acting director, none of the agency’s current employees — including interim director Vicki Ledbetter — returned more than a dozen messages left by the AP over a period of several months seeking comment.
When the agency does find a state failing to follow the law, the only tool available to force compliance is a death sentence known as ”non-recognition” — a penalty that would ban all appraisers in that state from handling deals involving a federal agency.
”Do you know what that would have meant? The net effect is it would have effectively shut down mortgage lending in that state,” said former subcommittee director Ben Henson, who retired in December.
When field reviews began in the 1990s, states were repeatedly warned they were failing to comply with the law — warnings that continue to this day. But without the ability to issue fines or impose a less destructive punishment, the Appraisal Subcommittee is powerless. It has never taken any action.
In Ohio, the Appraisal Subcommittee found in 2005 that 40 percent of the state’s 199 outstanding cases were older than a year, many older than two. To help clear the backlog, Ohio began allowing appraisers to sign consent orders — a deal similar to a plea bargain in which an appraiser agrees to the facts of a case in exchange for a reduced punishment. That could be a short-term suspension, for example, instead of a license revocation.
In 2007, 148 appraisers signed consent orders in Ohio, up from 11 in 2006.
http://www.frontlinethoughts.com/
The cycle begins with denial, and ultimately ends up in despair. At first, the company denounces that anything is wrong, but Mr. Market has a way of sniffing out who is imitating Pinocchio. Ultimately, the company ends up in despair when they need/want to raise capital to just be able to function normally, but alas, they cannot because the window of opportunity to raise capital has shut…….
So now we have the recipe and an example for “Dead Men Walking”:
* Common stock too low to issue new shares.
* Preferred stock yield too high to issue new shares economically.
* Issuing debt is uneconomic.
* More write-offs coming in days to come.
* Business trends are awful.
* Denial.
Now that we have identified the “poster child”, let’s find a few more… Or sadly, more than a few.
Zions Bancorp
* Equity has traded down from $75 to $25.
* Tried to issue a $200 million preferred stock offering at 9.5% but only was able to sell $47 million.
* Their debt trades in the open market approximately 1,000 basis points above Treasuries, IF you can sell them, or 13 14%.
* They are geographically in Utah, but spread out to Florida, Nevada and Arizona at the top of housing to take advantage of great opportunities.
* They say they need $200-300 million capital. Good luck.
* They maintained their common dividend.
KeyCorp
* Common Stock has traded down from $40 to $11.
* Preferred Stock trades at 13%.
* Debt trades in the market at 10-11% dividend.
* Cut dividend in half in July, still yields 6.5% even while they lose money.
Fifth Third Bank
* Equity has traded down from $60 to $14.
* There are no preferred issues outstanding.
* Debt trades in 10-11% range if you can sell it.
* Cut dividend by 75%.
Washington Mutual
* Equity has traded from $40 to $3.
* No preferred outstanding except convertible preferred.
* Debt trades in the 20-25% range.
* Cut the dividend to $0.01 per share in April.
* Has admitted they will lose money for the next several years.
National City
* Equity has traded from $40 to $5.
* Preferred stock trades at 13-15%.
* Sold a huge amount of shares at $5 per share in April.
* Cut dividend to $0.01 per share in April.
Regions Financial
* Equity down from $40 to $8.
* Preferred Stock Trading at 10%.
* Debt trades in the 10-11% range, if you can sell it.
* Cut dividend by 75% in June.
* Needs to raise $2 billion, according to Sanford Bernstein.
General Motor/GMAC
* Equity has traded from $80 to $10.
* Preferred stock trades in 18% area.
* Short-term debt trades in 25-30% range.
* Long-term debt trades in 17% range.
* Eliminated common dividend in July.
Ford/Ford Motor Credit Co
* Equity has traded from $60 to $4.
* Preferred stock trades in 16-17% range.
* Long term debt trades in the 18-20% range.
* Eliminated common dividend in September.
Wachovia
* Equity has traded from $60 to $14.
* Issued a $3.5 billion “hybrid security” in February that now trades at 11%.
* S&P has stated they cannot issue any more hybrids.
* Sold 92,000,000 shars of a preferred stock in December at 8% that now trades $18 or 11%.
* Cut common dividend twice since February to $.05 a share or 90%.
* Debt trades at 9.5-10.5%.
CitiGroup
* Equity has traded from 60 to 9.
* Preferred Stock trades in 12% range.
* Outstanding debt trades in 12-14% range.
* Cut common dividend by 66%.
* Sold 91,000,000 shares of common at $11 in April 2008.
Who are in the “Limping but Not Dead Man Walking Crowd”?
These companies would include those that may be ‘too big to fail’, have enough quality assets to sell, a franchise that is worth something to an acquirer or could just be broken up into pieces. They include:
* Citi
* Merrill Lynch
* Morgan Stanley
* Suntrust
* Legg Mason
* Capital One
* AIG
* MetLife
* Prudential
I don’t understand how you are supposed to have any faith in the system full of corrupted people.
I can’t bring myself to buy a house knowing that the people who are to independently verify the value of the house are being “inspired” to lie about it and have no effective form of protection.
I also find it hard to believe that an appraiser that is discriminated against doesn’t somehow record the conversation or have an email trail that they turn over to federal regulators. How could this be an issue for so long without authorities being alerted.
A whole industry accepts corruption as a viable alternative because they don’t want to stand up for themselves?
Just plain and simple rubbish…
kettle– totally agree with your points above. There is and will continue to be increasing class divide in places like Boston as a result of the global phenomenon of specialized knowledge becoming more valuable and unskilled labor becoming less. In knowledge centers like Boston, this divide is becoming especially visible and will continue to get more so.
I don’t think there is any easy answer to this phenomenon. Our society is structured for an industrial economy where low skill labor could provide a secure lifestyle. Those days are gone, but our governance does not yet reflect this fact.
#203 Nicholas,
Articles like that are why I keep saying anyone involved in the RE industry needs to pass an exam like the Series 7 or Bar. Those who are found guilty of corruption/fraud like activity should be banned for life.
#205 banned for life from the RE industry that is.
I think that might make the RE offices even emptier though.
“Aug. 26 (Bloomberg) — Citigroup Inc., the biggest U.S. bank by assets, banned off-site meetings among investment- banking employees and cut back on color photocopying to reduce expenses as revenue declines.”
“Executives in the New York-based bank’s trading and investment-banking unit will need to ensure spending is “highly efficient,” according to an internal memorandum confirmed by a Citigroup spokesman in London today.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=an2sIjEb_VBU&refer=home
#209 BC Bob: reminds me of a bad year at Goldman some time back. where all the fresh cut flowers were eliminated from the reception areas.
Also the trading floor Partner’s secretary used to keep the pens and pencils under lock and key.
RTRS – S&P may cut Fannie Mae preffered stock rating to Junk. Cuts from A- to BBB-.
#207 BC Bob,
they could save a lot more by getting rid of the deadwood.
Also no more free coffee. Coffee is for closers!
I didn’t realize color copies could save that much.
renting 209,
hmm why did the tide go so far out to sea???
http://tinyurl.com/5hd68
207 BC
they should get one of these
http://tinyurl.com/5zubex
cheaper then a paper shredder for when the feds look for a scape goat
So do you advocate sitting down with your own independent appraiser and getting him in your pocket instead?
In this senario he would be free of undue influence and you could get a better sense of housing. Why not get three appraisers and average the results together?
No skin in the game for the lender means that he only wants the appraiser to meet the price target. The bank appraisal is a complete sham.
make (33)-
“If we loose we can still run and win in Albania.”
First thing we do? Put Albania on a gold standard.
Second? Sell naming rights to the country.
Stu (39)-
Thanks, but I’m not offering advice. That’s why I use disclaimers.
By being in SKF, I actually violated my own personal Rule #1, which is: don’t index.
All disclaimers.
The only investment advice I heed is bi’s.
He is dead-on as a contraindicator.
cooper (53)-
“…what happens when Korea buys the NJ Turnpike?”
I can get good kimchee at the rest stops?
Beaten to the punch at #60, I see.
I hate when I actually have to work. It’s cutting into my blogging time.
Can someone give me status on MLS 2506909 and MLS 2813459..Has either of them closed yet? If so.. Can I get the sales price please?
Thanks
nurburg (85)-
Just don’t upchuck if and when SKF hits $100. It might.
ADA,
“Agreed, but I dont think NYC had as much speculation as other areas and coop boards kept risky loans in check for the most part.”
Like most areas, a lot of the price increases in the housing sector was fueled by low and mid income families being able to borrow more money. There are quite a number of high priced buildings that didn’t have the poor moving in, but the middle class that did paid more than they normally would have to do so.
Now with Fannie Mae and Freddie Mac deciding not to buy subprime in NY, the market that kept reserves of lenders available for lending will not be as big. Along with the costs associated with doing business like they did in the bast catching up with them through defaults and foreclosures.
Wall St also has lost it’s taste for subprime loans based secuirities.
Overall, money at the banks is going to become tighter. That’s going to keep bringing house prices down.
161: went for a drive with the wife last weekend. we still like to “shop” although we bought near peak :(
eastern morris county has alot of the remodeling thing going on too. I wonder if it’s the previously super rich downsizing to smaller homes and having the cash to renovate???
bi (117)-
Please, please put down that pipe.
“YOV is past. MOM is a new trend. this is basic.”
Gary et al,
People are going to continually ask more than their house is worth. You’re not going to see a price you like, you’re going to have to bid on it and get them to come to you.
Quick Grabs (as I’m too busy to check all of them) from NJMLS for towns that “retain their value”:
Wyckoff, 222 FRANKLIN AVE
Orig List: $465,000 1/27/2008
Last List: $429,000 6/26/2008
SOLD: $380,000 8/26/2008
Woodcliff Lake, 135 GLEN RD
Orig List: $568,777 5/15/2008
Last List: $538,777 8/3/2008
SOLD: $505,000 8/25/2008
Tenafly, 3 MOUNTAIN RD
Orig List: $1,725,000 9/26/2007
Last List: $1,595,000 6/28/2008
SOLD: $1,200,000 8/25/2008
Ridgewood, 419 ALPINE TER
Orig List: $749,000 4/8/2008
Last List: $729,000 5/14/2008
SOLD: $690,000 8/25/2008
btw – oklahoma sucks. tornados, snakes and tarantulas. Housing market ..and houses suck.
Texas (san antonio) a little better…but just like Newark, all the redevelopment is squashed in 1 square mile. condos downtown are a steal…if you can find a job!
JBJB,
Regarding renovations…
Could be all the people who were making tons of cash during the boom having a lot of free time now and making improvements on their own homes.
Some people are fixing up their houses to increase their equity. In one Bergen County foreclosure the owner seems to be doing this to either sell off the home or be able to refinance to work out their bankruptcy troubles.
Could be that people have decided not to buy a new home and instead are fixing up their old homes too.
With builders/contractors not building new homes now, could be increase marketting towards renovations is paying off.
Could be any number of things.
#229 Tom:Overall, money at the banks is going to become tighter. That’s going to keep bringing house prices down.
Contrary to some of the babble that prices are reaching bottom. There can be not bottom until the credit crisis/tighterning whatever one wants to call it is resolved.
Than of course after the bottom is the lonng, long recoiver period of flat prices.
JBJB (166),
…it seemed like there was a contractor van in every driveway.
Perhaps folks are starting to put money into existing properties instead of trying to trade up?
Or, these could be contractors with no work at home in houses they might not be able to afford?
#234 Tom,
I’m voting for stupidity/ignorance/denial “my house is different”
Nicholas (209)-
The appraisal industry cannot stand up for itself.
Their dirty little secret is: there’s no money in it. They are the pawns of all the other players in the game. Cooperate, follow orders or get killed.
Fed Officials Agree Next Rate Move Will Be Increase
“Although members generally anticipated that the next policy move would likely be a tightening, the timing and extent of any change in policy stance would depend on evolving economic and financial developments,” minutes of the Aug. 5 Federal Open Market Committee meeting said.
The minutes show a debate over the magnitude of the inflation threat, with two groups of officials making different judgments on the impact of the recent slide in commodity prices. Policy makers also diverged on whether financial turmoil continues to pose the risk of a more severe credit crunch.
The bottom? Hilarious. We are at record inventory levels, quickly approaching 5 mil, over 11 months of supply and credit is getting tighter ever day.
When inventory levels approach 2 mil, supply at 6 months and new housing starts at 750K, send a wake up call.
Until then a continuation of a slow unwinding process. Sorry Gary, no instant gratification. How’s declines of 5-7% a year, from peak, going forward 5-6 years? Drip, drip, drip.
The next move will be to hold the interest rate where it is.
Saying that the next move will be a rate increase is like saying it will be a sellers market next.
Another version of Paulson’s, failed, Super SIV? Another hospice care fund;
“Aug. 26 (Bloomberg) — Lehman Brothers Holdings Inc. may set up a company funded by outside investors to buy some of its mortgage assets, aiming to dispel concern the firm faces crippling losses, people familiar with the discussions said.”
“Investors in the new venture would also manage the holdings, which are linked to commercial real estate, the people said, declining to be identified because the proposal hasn’t been made public and no decision has been made about how to proceed. The New York-based firm had about $40 billion in commercial-mortgage assets as of May.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGn6anNv3FOU&refer=home
3b,
I’m guessing that after the election some of the magic being used to keep banks/houses afloat will taper off. The discount rate will start to go up and the GSE’s might get their bailout which will hurt a lot of banks.
The only thing that makes me think we might have hit bottom is that Yun said we’re not at a bottom.
Nice guy?
“Aug. 26 (Bloomberg) — Carteret Mortgage Corp., a closely held mortgage broker that originated more than $4 billion in loans in 2006, plans to close in several weeks, said Chief Executive Officer Eric Weinstein.”
“You should definitely seek other employment immediately,” Weinstein said in an e-mail today to the employees. “I would expect that you have about 30 days to close your loans before it starts getting bad,” he said, signing the note “Eric `Shut the Lights’ Weinstein.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aY6goQcpCr4U&refer=home
Bergabe’s chatter about raising rates ranks somewhere between a Wall Street CEO claiming their firm is fully capitalized and Skeletor babbling about a stronger dollar on the believability scale.
bairen,
From the news that came out jesterday regarding north jersey i think buyers and sellers are being fed crap to keep the market up in some places.
In Bergen the lowest income areas had the steepest declines in house sales, up to 70%. With these lower priced markets not contributing to the median price score, I think that’s why the prices reported for BC haven’t fallen that much. Looking at a smaller picture in a neighborhood to neighborhood or even single price drops, things aren’t as rosey.
Reality in the realty market isn’t setting in everywhere. Remembery real estate is local so the bubble will burst at differnt times in different places :)
[234], [236]
Yea, could be just one lucky day. The area we rent in is a mixed bag of middle/upper middle class, homes range form 450-950. I was more surprised about the lack of for sales. I think people know they have no chance of getting what they want/need for their houses so they are not even bothering. However, these folks have enough cash to do some nice upgrades. I wonder if contractors are offering discounts just to stay busy.
“Aug. 26 (Bloomberg) — Lehman Brothers Holdings Inc. may set up a company funded by outside investors to buy some of its mortgage assets, aiming to dispel concern the firm faces crippling losses, people familiar with the discussions said.”
“Investors in the new venture would also manage the holdings, which are linked to commercial real estate, the people said, declining to be identified because the proposal hasn’t been made public and no decision has been made about how to proceed. The New York-based firm had about $40 billion in commercial-mortgage assets as of May.”
________________________________________________
What a load of BS! Just another headline to keep them afloat for another few weeks. If this is the best they can do at the end of the quarter then they are in really serious trouble.
On the other hand, maybe bi and reinvestorX can get in on the deal….hmmmmmm
All Hype,
Translation, we’re looking to start a throw away corporation and find some idiots to invest in it so we can wipe the crap off our books. We’ll sell the bad debt for pennies on the dollar so the new companie’s shares will rise and we’ll cash out just before people realize what a crock it all was.
OT:
Was anyone aware that this song uses a sample of Diceman? I’m not joking. I became acutely incontinent. I hadn’t really considered it, but absolutely there is no question.
http://www.youtube.com/watch?v=GpPR9pN_49s&feature=related
228 Clot –
I probably will throw up in my mouth a little (if SKF hits 100). But at least I won’t regret putting in another $5k when it was in the teens!
Whatever’s up with Grim, best wishes to him.
Hope you’re enjoying the new Bavarian car.
Not that were considering one, but did you see that the General is dumping Hummer H3’s now for $22k? ;)
It’s the $62k Vette Z06s that are tempting me. Everybody selling used ones barked a collective $&@^#@!!! when GM announced that employee pricing…
Anyone see Cramer call a 3Q09 housing bottom tonight? Specifically, he said July ’09 will be the bottom according to the homebuilder stock charts. He’s really out on a limb on this one, even for a hamhead like Cramer. He started a countdown with 309 days to go.
#243 Tom: I think the GSE bailouts come in the next couple of weeks,Hnak and CO just will not be able to pull it out on those until after the election.
#240 BC Bob: Amazing isn’t it. Numb nuts calling bottoms, when lending standards are tightening every day.
Just in the last month alone, lending standards have probably tightened dramatically.
Many of the same clowns who denied a real estate bubble in the first palce, are now the same clowns saying we are near the bottom. Guess they were too young or too stupid to remember the last real estate bust.
3b,
“Those who cannot remember the past are condemned to repeat it.”
bairen (211)-
I agree. However, it will never happen. Believe it or not, the big RE companies apply constant pressure in NJ to continually dumb down the already incredibly lax requirements.
BC (242)-
These guys make take the moniker “The Big Shitpile” away from Ambac.
BC (244)-
30 days? Hmm…what happens in about 30 days?:
1) Multi-billion $$$ Phony/Fraudy rollover.
2) New housing bailout bill goes into effect.
Hmmm…
bolt (252)-
I really think that guy has an untreated severe head injury. I respect the money he made in his hedgie years, but the role he plays now is not terribly different than the one played by Weird Al Yankovic.
3b (254)-
Tightening dramatically? Hell, the 10-yr dropped under 3.80% yesterday, and all our lending channels UPPED their rates at midday.
Wait ’til Oct. 3, when the new housing bailout bill takes effect. The death spiral will steepen noticeably then.
Highlighted yesterday and repeated by another source for Wednesday…
WSJ
New Credit Hurdle Looms for Banks
By CARRICK MOLLENKAMP
August 27, 2008
U.S. and European banks, already burdened by losses and concerns about their financial health, face a new challenge: paying off hundreds of billions of dollars of debt coming due.
At issue are so-called floating-rate notes — securities used heavily by banks in 2006 to borrow money. A big chunk of those notes, which typically mature in two years, will come due over the next year or so, at a time when banks are struggling to raise fresh funds. That’s forcing banks to sell assets, compete heavily for deposits and issue expensive new debt.
The crunch will begin next month, when some $95 billion in floating-rate notes mature. J.P. Morgan Chase & Co. analyst Alex Roever estimates that financial institutions will have to pay off at least $787 billion in floating-rate notes and other medium-term obligations before the end of 2009. That’s about 43% more than they had to redeem in the previous 16 months.
The problem highlights how the pain of the credit crunch, now entering its second year, won’t end soon for banks or the broader economy. The Federal Deposit Insurance Corp. said on Tuesday that its list of “problem” banks at risk of failure had grown to 117 at the end of June, up from 90 at the end of March. FDIC Chairman Sheila Bair said her agency might have to borrow money from the Treasury Department to see it through an expected wave of bank failures. She said the borrowing could be needed to handle short-term cash-flow pressure brought on by reimbursements to depositors after bank failures.
As banks scramble to pay the floating-rate notes, they could see profit margins shrink as wary investors demand higher interest rates for new borrowings. They’re also likely to become less willing to make new loans to consumers and companies, aggravating economic downturns in both the U.S. and Europe.
“It’s going to be a bigger problem now than it was in the first half of this year, but it’s going to continue on for probably at least a nine-month period,” said Guy Stear, credit strategist at Société Générale SA in Paris.
By the end of this year, big banks and investment banks such as Goldman Sachs Group Inc., Merrill Lynch & Co, Morgan Stanley, Wachovia Corp., and U.K. lender HBOS PLC must each redeem more than $5 billion in floating-rate notes, according to a recent report from J.P. Morgan. Other big lenders such as General Electric Co., Wells Fargo & Co. and Italy’s UniCredit Group also face big bills in coming months, the report says.
Representatives of the banks said they’re fully able to meet their floating-rate note obligations, either because they’ve already lined up the necessary funds or because they have ample customer deposits they can tap.
The rates they’ll have to pay if they want to issue new debt will be much higher than they were back in 2006. In July 2007, the interest rates on banks’ floating-rate notes were only about 0.02 percentage point above the London interbank offered rate, or Libor, a benchmark meant to reflect the rates at which banks lend to one another. Today, that “spread” is at least two full percentage points for some banks.
As many banks compete for funds to pay off their borrowings, or sell assets to raise cash, their actions could exacerbate strains in financial markets. Banks that turn to shorter-term loans will have to renew their borrowings more frequently, increasing the risk that they won’t be able to get money when they need it.
The difficulties with the floating-rate loans can be traced to the onset of the credit crunch last year. At the time, bank-affiliated funds known as structured investment vehicles, or SIVs, were among the first to suffer. Those funds had been buyers of the banks’ floating-rate notes. But when SIVs were unable to find investors for their own short-term debt, the SIV market largely collapsed, taking a big chunk out of demand for new bank floating-rate notes.
Redemptions Loom
Most of the floating-rate notes are denominated in dollars. But redemptions of notes denominated in euros also loom for European and U.S. banks. In the final four months of this year, some €15 billion to €20 billion will come due every month, says Mr. Stear, the Société Générale strategist. That compares with some €7 billion to €15 billion that came due every month in the first half of 2008.
The crunch comes as problems in the markets on which banks rely to borrow money are showing no sign of abating. In one gauge of jitters about banks’ financial health, the three-month dollar Libor remains well above expected central-bank target rates for the same period.
Even at the higher interest rates, banks are having a hard time getting cash. The securitization markets that had allowed banks to repackage loans and sell them to investors remain all but shut. Banks today rarely make loans to one another for periods of more than a week, and even some so-called “repo” loans — in which the borrower puts up securities as collateral — are becoming more expensive.
At the same time, the pressures on limited resources of banks and investment banks are growing. Companies have been actively tapping bank credit lines set up before the credit crisis began, forcing banks to increase their lending at a time when they’re trying to reduce risk. A number of big financial firms, including Citigroup Inc., Merrill Lynch, UBS AG, Morgan Stanley, J.P. Morgan, and Wachovia, have agreed to buy back some $42 billion of so-called auction-rate securities amid allegations that they misinformed retail investors about the securities’ risks.
Central Banks’ Role
All the strains have made financial institutions increasingly dependent on central banks in the U.S., the U.K. and Europe for loans to make ends meet. Many banks have been packaging mortgages into securities to use as collateral for financing from the European Central Bank and the U.S. Federal Reserve. Questions are cropping up about how long central bankers should prop up financial markets, and whether banks in Europe are taking undue advantage of the central bank’s lending facilities.
To be sure, some banks are finding plenty of buyers for new debt. In July, Spain’s Banco Santander SA sold €2 billion of fixed-rate debt — an issue that was increased from €1.5 billion because of investor demand. In July the bank also increased the amount of short-term IOUs, known as commercial paper, it could sell to €25 billion, from €15 billion. If it sells the paper to pay off longer-term notes, that would significantly increase the frequency at which it would have to renew large chunks of its borrowings. A Santander spokesman said the bank is comfortable with its ability to meet its obligations.
Some institutions, such as Morgan Stanley in New York, are issuing new debt months ahead of major redemptions to ensure they have the money when they need it. In June, when Morgan Stanley reported second-quarter results for the period ended May 31, finance chief Colm Kelleher told investors that the investment bank had tapped the bond market to cover fiscal 2008 debt, meaning the firm didn’t have to use company cash. Those bond proceeds also could be used to pay more than $1 billion coming due in December, when the firm’s 2009 fiscal year starts.
UniCredit and San Francisco-based Wells Fargo said they had set aside money for the redemptions. HBOS said the debt repayment is “business as usual.” A Goldman spokesman said that the firm is focused on using long-term debt, and that Goldman is comfortable with its funding. A General Electric spokesman said the company has access to multiple lending markets and has completed 83% of its 2008 funding goal.
Other firms, such as Merrill Lynch in New York and Wachovia in Charlotte, N.C., have said they can tap customer deposits. Merrill, one of those worst hit by write-downs tied to mortgage-loan securities, has increasingly focused on developing its bank unit, which had $101 billion of deposits as of June 27, compared with $82 billion a year earlier.
A spokeswoman for Wachovia, which was hit by losses tied to the acquisition of California lender Golden West Financial Corp., said that 55% of the bank’s balance sheet is funded by core deposits and that the bank has the ability to “seamlessly handle the refinancing of short-term debt maturities as a result of our prudent liquidity planning.”
Home Summit blog Focus on China:
Looks like Chrysler is stepping up in- vehicle entertainment to the next level: WiFi wireless internet! According to Engadget, Chrysler plans on adding the capability to their next generation UConnect service (the name for their current Bluetooth capability) in 2009, and will offer 600- 800kbps down and 200kbps up speeds, which is a bit slower than most DSL and 3G cellular services. THe hardware will run about 500, and the service will cost about 29 per month. Seems alittle steep for somethign that you can…