From the NY Times:
Housing Affordability Improves
TRADITIONALLY, there is happy news about the residential market in springtime — always its busiest season. Here is this year’s bulletin: Home prices have declined so much in the state that average buyers can actually afford to buy houses (if they can get a mortgages, of course).
Also, as of the latest statewide report from the Otteau Valuation Group, there were six towns with less than six months’ worth of unsold inventory. (But there were also six others with enough houses on the market that it would take 99 months — more than eight years — to sell them all at the current pace.)
These tidings may seem underwhelming in their gladness, but they are the most salutary available as prices continue to slide and the inventory of houses for sale blips upward this season, according to the market trend analyst Jeffrey G. Otteau.
House prices right now are descending at the rate of about a percentage point a month, according to Mr. Otteau, whose company is based in New Brunswick. At seminars that he conducted for brokers in March, Mr. Otteau predicted an additional nine point drop in prices by the end of the year, and no likely upturn until 2010.
…
Back in 2000, the index was pegged at 122 percent, meaning a buyer with the median income earned 22 percent more than needed to own and maintain the median-priced home. This assumes that housing costs 30 percent of income, which is a standard assumption, Mr. Otteau explained in a recent telephone interview.By 2005, when housing prices were reaching their peak, the median buyer could afford only 92 percent of the cost of owning the median home, he said, and by 2006, it was only 81 percent.
In 2007, when prices fell, “affordability” was back up to 87 percent, and by June 2008, housing was again 100 percent “affordable,” under the formula.
Now, Mr. Otteau said, the market has “overcorrected,” and this will continue. The index is 107 percent and rising.
He also suggested that towns that have commuter rail stations — Montclair, for instance, has three — continue to be in the best position to attract buyers, once the economy improves and the New York metropolitan area stops “leaking jobs.”
…
ased on the most recent Otteau market report, the six communities in the state with the shortest time frames to sell their inventories — and therefore the healthiest markets — were Midland Park, Fanwood, Dumont, Boonton, Hanover and New Providence. Of those towns, all but Dumont and Hanover have train stations.The six communities with the 99-month inventories are Alpine, Garfield, Oradell, Avalon, Lavalette and Seaside Heights. They are among the most affluent communities in New Jersey, the nation’s second-wealthiest state, Mr. Otteau noted. “This is understandable,” he added, “because homes that are less affordable, those priced above $1 million, are the ones sitting on the market the longest.”
Statewide, there is a 42-month inventory of homes priced above $1 million; for listings at $2 million or more, there is an 84-month (seven-year) supply, he said.
Frist????
Damn you to hell, Plume!
I whip you with the lash of Mike Morgan:
Banksters, Economic Royalists and the Wall Street Elite seem to be firmly in control of the economy and main stream meadia. Nothing being planned or implemented is targeting the average American. Nothing. In fact, what is being done is nothing more than heaping further rewards on the Banksters, Economic Royalists and Wall Street elite . . . at the expense of Main Street.
Two Choices – Do you remember what I said in August? I said we had two choices. We could pay the consequences and enter the Depression proud and strong, and came out standing tall . . . as Americans. Or, we could allow King Henry and his Band of Merry Thieves to suck the life blood out of us, so when we did come out of the Depression, we would be naked, bloodied and on our hands and knees begging for scraps of food from King Henry and his Band of Merry Thieves. Our hopes of Obama turning things around have been smashed. He’s not only following King Henry’s lead, but he still has King Henry’s men firmly in control of the crisis.
Must See – William Black – Bill Moyers did one of the most important interviews of his career. It’s too bad it will be buried in oblivion. He actually only asked a handful of questions, but William K. Black picked up the ball and just laid it all out better than anyone has to date. Unfortunately, very few people will see this. You would think the main stream media would jump on this stuff, but they are too busy trying to put lipstick on this pig –
http://www.pbs.org/moyers/journal/04032009/profile.html
William K. Black suspects that it was more than greed and incompetence that brought down the U.S. financial sector and plunged the economy in recession – it was fraud. And he would know. When it comes to financial shenanigans, William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s, has seen pretty much everything.”
Link to entire MM Sunday, 4/5 screed:
http://tinyurl.com/cfh9sx
Like Elizabeth Warren, William Black should be ignored by no one. This is a guy who knows fraud when he sees it: he was the “sheriff” for the S&L crisis and wrote the definitive book on what really happened (The Best Way to Rob a Bank Is to Own One). CV:
“William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teached economics and law at the University of Missouri — Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics.
Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement.
Black developed the concept of “control fraud” — frauds in which the CEO or head of state uses the entity as a “weapon.” Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae’s former senior management.”
Clot:
Just bought my final 1/6th position (plus a little more) in SRS back at 39.90 in premarket. I want to be in it as earnings season unfolds. That’s it for me.
From HousingWire:
Viewpoint: Discovering Second Liens
Read the Wall Street Journal today, and you’d think that regulators and financial markets just now figured out that second liens are a real problem in attempting to put together criteria for cookie-cutter loan modifications. The story says that the Obama administration’s Making Home Afforable program has “hit a stumbling block” and that the Treasury is “scrambling to address the problem” of second liens.
The reason? Second lien holders aren’t required to participate in the loan modification plan the administration outlined in early March. (Oops.)
But the suggestion that this is a new problem that nobody saw coming is absolutely horrible reporting — worse yet, it does a disservice to the analysts that did great work to highlight the very problems with the plan that now have investors in a lather.
…
While it’s clearly true they didn’t see it coming, it’s probably far more accurate to suggest that the current spat is the latest proof of two seemingly immutable facts surrounding efforts to ’solve’ the nation’s mortgage crisis: first, that regulators and financial authorities don’t understand all that well what they are trying to fix; and second, that as a result, any fixes that are offered up have the very real potential to do more harm than good.
From the San Fran Chronicle
‘Bailout psychology’ destroying the economy
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2009/04/05/INR316Q4F5.DTL
From HousingWire:
New Mortgage Rules Take Effect in Pennsylvania
As Congress considers its own national options for regulating the mortgage industry, states have already begun to clamp down on key lending practices in response to the nation’s mortgage and housing crisis. Pennsylvania is the latest state, with new regulations going into effect this month governing mortgage disclosures and practices.
…
The rules are contained in a new regulation that requires mortgage companies to document income, fixed expenses and other relevant financial information to determine if the borrower has the ability to repay the loan; the new regulation effectively outlaws stated income lending within the state.
“Stated income loans present opportunities for abuse on both sides of the transaction,” Kaplan said. “The new documentation requirements will go a long way in reducing the potential for fraud and dishonesty.”
The new set of regulations wer published in the Pennsylvania Bulletin on December 20, but most mortgage companies were given 90 days to begin complying with the new documentation and disclosure requirements. Violators now face fines of up to $10,000 per offense which, according to Kaplan, are some of the stiffest penalties in the country.
What’s wrong with this statement from the article?
“Back in 2000, the index was pegged at 122 percent, meaning a buyer with the median income earned 22 percent more than needed to own and maintain the median-priced home …. Now, Mr. Otteau said, the market has ‘overcorrected,’ and this will continue. The index is 107 percent and rising.”
So the index was at 122 before the bubble, but somehow it has “overcorrected” by getting back up to only 107? This is bubble mentality.
Thomas Kunz, CEO Century 21 is on C-SPAN now saying it is the best time in a generation to buy real estate.
second first!!!!
CEO of Widget, Inc is on CNBC right now saying it is the best time in a generation to buy widgets.
I’ll tell you what it is, it’s the best time in a generation to throw some bucks in the tip jar.
[2] clot
You aren’t the first to express that sentiment. You won’t be the last.
As for Black’s comments, I haven’t read or listened to them, but it occurs to me that the “fraud” this time around will be harder to identify and prosecute. A FIRREA II will certainly close the proverbial barn door, but unless there is garden-variety fraud, then the creation of investments that systematically loot banks by extracting the value in the form of risk swapping may be hard, if not impossible, to prosecute. In the S&L crisis, there was garden-variety fraud of a nature that was easy enough to go in and find, and eventually prosecute. I did play an (infinetismally small) role in that. This time around, I think it will be tougher, and we will see more forced deals where those that made out will simply knuckle under rather than fight a protracted, expensive legal battle (in fact, this is how a lot of the “convictions” in the last bank crisis were obtained).
[8] grim
Glad I sold in Philly before it got harder and more expensive to get a mortgage (and when I could get peak prices). Soooo glad.
“Hidden Pension Fiasco May Foment Another $1 Trillion Bailout”
http://www.bloomberg.com/apps/news?pid=20601109&sid=alwTE0Z5.1EA&refer=home#
http://dailybail.com/home/bank-bailout-news-tarp-oversight-chaperone-elizabeth-warren.html
Clot – (122) (123)
I just hope Elizabeth Warren doesn’t give up in frustration. She has no real power (Congressional Oversight Committee chair.) Maybe enough constituents will have voiced their opposition to “business as usual” so some Congress people will listen. She sure is mad and talking.
I have to wonder if Geithner went on “Face the Nation” Sunday with his tough talk about bank execs losing their jobs because he knows he has to explain his support of obviously failing institutions with incompetents at their helms…at least to Warren anyway.
“Potential PBGC problem: $13.5 billion GM liability”
http://www.pionline.com/apps/pbcs.dll/article?AID=/20090406/PRINTSUB/304069981/1072
Sean (7) – Very good article.
“The administration keeps talking about a credit crisis, but there isn’t one. Banks are lending. If you want a mortgage and can pay it back, you can borrow at low rates today. You can finance a car at low rates for seven years. But most Americans don’t want more debt because it is a debilitating path to poverty. The average American family already pays 14 percent of annual income in interest to banks.”
http://www.latimes.com/classified/realestate/news/la-fi-harney5-2009apr05,0,2295101.story
“Bill would fundamentally reform home mortgage industry”
Mortgage Reform and Anti-predatory Lending Act of 2009 H.R. 1728 – What do you think of this Clot?
Grim, anyone
Can you tell me where i can find median NJ home price data for the last 10 – 20 years? Are there multiple sources i could build this data from?
Email from a economist.
This Indicator Says Home Prices Are Nearing a Bottom
I ride my bike to work, always taking the same route. I pass the same 100 or so houses every day. This week, I noticed two new properties have come on the market. One of these houses is on the beach. The owner has posted a large billboard on the curb. “Foreclosure Sale,” it announces. “Online Auction.”
Every week I see new for-sale signs along my route. This is the first auction notice I’ve seen. And although it’s an ugly, worn-out old house, it’s on prime beachfront property.
Most Americans gauge real estate using the same process I use on my bike. They talk to their neighbors, they notice for-sale postings along their street, and they watch local news reports.
From this “bicycle-seat view,” it appears to the average American that the bear market in real estate in still in full swing and getting worse by the week.
Here’s the thing: Trying to predict trends in the real estate market by watching house prices is like trying to predict the stock market by watching CNBC. It doesn’t work.
Houses are illiquid assets. It can take months for homeowners to accept their houses have fallen in value and lower their prices. Many potential sellers have mortgages larger than the value of their homes. They can’t sell. Banks have it even worse. It takes an average 15 months for a bank to sell a property after the first missed mortgage payment. Many foreclosures haven’t hit the market yet.
House prices are what economists would call a “lagging indicator.” They are slow to react to new trends in the market. For forecasting purposes, they are useless.
To judge what’s really going on in real estate, you need a leading indicator. My favorite leading indicator to assess the housing market is the price of lumber.
Homebuilding and remodeling account for 66% of total lumber consumption in the U.S. The lumber market is a small, illiquid market, so it’s sensitive to any changes in supply and demand. In the last cycle, for example, lumber prices peaked in May 2004… two years ahead of house prices.
If house prices are going to turn up, you’ll see it first in the lumber price… and that’s what’s happening right now.
In the last three weeks, the lumber price has soared 29%… after making a “quadruple bottom” at $140 a contract. Last week, it broke out to a new high for the year.
http://stockcharts.com/charts/gallery.html?$LUMBER
This is incredible strength in a market you’d think would be dying. If the trend withers, expect lower house prices ahead… But if it continues, expect a bottom in home prices within the next 18 months.
Rich,
Heard the same story two years back when lumber prices were through the roof. We had a lumber trader here who claimed that high lumber prices indicated housing strength. A week later, lumber prices began to plummet. As did concrete, PVC, copper, etc.
So much for lumber as a leading indicator of anything.
Needless to say, Mr. Lumber never showed his face around here after that.
Same can be said for the dope who was pimping HOV here for weeks on end.
I would say that lumber is a coincident indicator that rides along closely with new home construction.
Lumber as a leading indicator of existing home sales? Makes no sense at all. You’d be better off looking at furniture sales, or moving trucks, or carpet installations, etc.
Bailouts are a leading indicator of elections
Heck, the best leading indicator of sales is contract activity.
Pending sales/contracts are tightly correlated with closings, 2-3 months out.
We’ve got a perfect leading indicator already, why bother with lumber?
Especially with so many mills closing down. Higher lumber prices now are more indicative of supply changes, not demand changes.
Stu (5)-
To the moon, Alice.
re:12
Grim;
As you know, I have not made public announcements when I have contributed. This is for several reasons. Others probably act in a similar way.
I have been thinking that perhaps you should consider a merit tag for posters based on contributions (both financial and informational value)
Many sites use this method to encourage support.
Besides, lumber was higher at the end of 2008 than it was now:
http://www.nahb.org/generic.aspx?genericContentID=527
April 3rd 2009, $202 per 1k bf
April 4th 2008, $239 ”
April 6th 2007, $281 ”
April 7th 2006, $358 ”
April 8th 2005, $417 ”
April 9th 2004, $420 ”
Lumber is PRIME!
What rebound? Lumber is selling at HALF it’s previous peak…
escapee (10)-
The CEO of Century 21? Suzanne’s company? C-21, subsidiary of the toxic Realogy “family” of companies?
The Realogy that on March 26 did this (from the WSJ)?:
“Today is a day many have dreaded. It’s the first day that a company has actually used a much-maligned financing structure that allows them to pay debt with debt.
The company is Realogy, which runs real estate franchises. Interest was coming due on its bonds. So Realogy, which doesn’t have a lot of cash to throw around right now, decided to take advantage of a payment-in-kind toggle to pay down the interest with more debt, according to Dow Jones Newswires.
So what’s the problem? Wouldn’t anyone like the chance to push off a heavy payment a little longer?
That’s precisely the problem. Once upon a time — even as recently as 2006 — a company like Realogy would have tripped its covenants with its lenders. In turn, the lenders would pull the company back to the negotiating table to talk about new terms, and a signal would go up to start examining why the company couldn’t pay its interest bills.
That is no longer true. Now companies could theoretically walk around like zombies until they are actually past the point of saving and past the point of restructuring. Realogy may not be in that state right now. But wouldn’t it be nice if the lenders knew that for sure?”
I still don’t get why home prices are so high in NJ… the place has basically become a communist police state in the last 30yrs. When I visit family, I get taxed, tolled, and see 15-20 cop car speed traps in a weekend. I’ve not seen that many in 4yrs in PA. All my family is process of leaving. What is left there? I only see emply office buildings, potholes and entire towns taken over by illegal aliens. Seriously, I see permanent downside to NJ home prices…these homes should peal back to 1990 levels.
I kind of like the anonymous donor methodology currently exhibited. Frist, who needs a smiley face or star next to their name. Second, I probably wouldn’t qualify for one.
Correction, the lumber guy was from back in ’06.
Damn, time flies.
BC Bob says:
April 3, 2007 at 1:02 pm
David [113],
Lumber:
Around the 4th quarter of 2006, someone on this blog, stated that housing had bottomed. According to them, the bull market in lumber was an indicator. Unfortunately, if they had a position, at that time we were approx 35% off the highs and trending lower. Let’s just say that that I did not concur. I posted a few charts. Subsequently, we have not heard back from the lumber bull.
Cindy (19)
Will have to examine that and get back to you.
I can tell you right now that if there’s no reference to better registration and oversight on mortgage initiators, I don’t like it.
If the first point-of-contact with the borrowing public is someone who only has to produce a copy of his drivers’ license in order to work (currently NJ’s only “requirement”), nothing will get better.
If these people have to be educated, licensed and monitored, things will get much better.
Re: 30
I beg to differ
Cindy (19)-
Of course, when Phony/Fraudy/FHA sink back into insolvency and commercial RE completely collapses, mortgage reform will become a moot issue.
The entire mortgage market will be destroyed, and we’ll be starting over from scratch.
This is incredible strength in a market you’d think would be dying. If the trend withers, expect lower house prices ahead… But if it continues, expect a bottom in home prices within the next 18 months.
On the topic of lumber contracts. I still have three vacant townhomes next to mine and there are many more vacancies along the street. The lumber industry is going to be in trouble for a while. I wouldn’t read too much into lumber contracts improving…they likely always improve in the spring.
Don’t forget that stimulus money is probably starting to stream in too.
12 – Grim, I put a tip in the tip jar a few days ago. Maybe you need a tracking chart like Wikipedia or a thermometer – fundraisers seem to like those.
16 – The Two-Income Trap is a great book. Not too wonkish with a good mix of statistics. Made we swear to buy using one income.
grim (24)-
Funny how everybody focuses on supply. Is it because they know already that if you look at demand, it’s Tom Joad time?
‘boken (34):
Sounds like a PIA to maintain. But don’t worry. Once SRS goes to 1,000, I will earn a smiley or star.
I will not hit the tip jar until grim sends me Applebees’ coupons in return. :)
Just joking. I owe you, big time.
Re 30+
The merit tag is not for the benefit of the poster, it is for the benefit of the site and provides a to help new visitors separate the wheat from the chaff.
Re. lumber:
Don’t forget, much of the increase in building materials sales, especially plywood, from a few years ago was due to vast quantities being diverted to Iraq as part of our attempt to keep people from shooting at us by rebuilding the nation.
sure it has been posted, but whoa
http://www.usatoday.com/money/economy/2009-04-05-scrip_N.htm
A small but growing number of cash-strapped communities are printing their own money.
Borrowing from a Depression-era idea, they are aiming to help consumers make ends meet and support struggling local businesses.
anyone in bucks county want to start printing with me?
‘boken (41)-
This blog already has its own metric for baseline acceptable human intelligence:
Its name is bi.
“The merit tag is not for the benefit of the poster, it is for the benefit of the site and provides a to help new visitors separate the wheat from the chaff.”
“Made we swear to buy using one income.”
The refugee from Lawrence, Ks has hit the nail on the head. Even two-income families should not rely upon more than one of the existing incomes when `determing housing affordability. Better to rent comfortably than over extend to buy. If nothing else, the second income can provide a pathway towards accelerated repayment.
clot, have you seen a more insane soccer goal than this?
http://www.youtube.com/watch?v=ZQyPhR_UBuA
ridiculous skill level
I stated on the other thread; I went to a number of open houses in Ramsey and Wyckoff yeasterday. Two were in attorney review after being listed less than 2 weeks but they held the open house anyway. The one house went for 10K less than asking as I simply asked and she told me.
All houses had other people looking when we were there and the sign-in sheets were full. Again, I know it was a nice day and everyone was out so take it for what it’s worth. I’ve said it before: desirable homes in sought after neighborhoods in Northern NJ are going to sell for a commanding price regardless of economic conditions. We are the last area in the country to feel the effects and for lack of a better term, are “insulated”.
People want to live in these towns in Northern/NW Bergen Cty. It’s always been that way and always will. When I finally land another position, my current abode gets listed and we make the move as prices in these areas are going to stay flat for a few years at best. Since this is still a real estate blog, I’m reporting on my observations.
Yikes,
The Peoples’ Republic of Ithaca has a long history of printing its own. Of course, the community is further left of Beijing, it seems, but it does have some decent lunch places.
Lumber? Lumber?
You gotta be kidding. The bulls have stooped to the bottom of the barrel with this one. Lumber is currently below 2000 prices. The industry has been decimated. Of course you’ll get a bounce. There is much less supply on the market. How about the beginning of slumpflation? An indicator for the bottom in RE? Better luck flipping a coin.
Lumber is currently 60% off it’s peak price.
http://charts3.barchart.com/chart.asp?jav=adv&vol=Y&grid=Y&divd=Y&org=stk&sym=LSK9&data=H&code=BSTK&evnt=adv
some good advice from Tucson:
***********
it doesn’t matter what you paid, or what you put into it, or what you’d like to get for it,
if you want to sell it, the only thing that matters is what buyers are willing to pay for it.
http://thetucsonfoothills.typepad.com/thetucsonfoothills/2009/04/it-doesnt-matter-what-you-paid-or-what-you-put-into-it-or-what-youd-like-to-get-for-it.html
“The one house went for 10K less than asking as I simply asked and she told me. ”
Gary,
Have you ever had an agent tell you this information before closing? I have asked on any number of occasions and the agents were, wisely, unwilling to share the information. If for some reason the deal falls through, a potential buyer armed with the knowledge of the last accepted offer is in a nice position for bidding upon relisting.
I don’t mind “disclosing.” I view this service provided by Grim as a high-quality subscription to breaking financial/RE news.
I was trying to donate $100 twice a year but cut back on my most recent donation. (Sorry Grim – unavoidable.)
I wanted Grim to be able to depend on an established time frame for my donations so I settled on March (after taxes) and October (before the holidays.)
I’m very pragmatic.
Shore,
I believe that most of the estimations on housing affordability are done with average household income not average main-bread-winner income.
I don’t think that a reversion to the one household – one income model is in the cards for Americans. Possible but unlikely.
“All houses had other people looking when we were there and the sign-in sheets were full”
Gary,
Were they carrying suitcases of cabbage?
(35) Clot – That and the fact that there has been no talk of prosecuting the fraud that has already occurred.
Shore Guy,
This is the first time a realtor has revealed that info. There were 3 or 4 other times when I was at an open house when the place was in AR. When I asked the other times, the reaction I got was as if I threw holy* water on satan*.
#45 – Shore – Even two-income families should not rely upon more than one of the existing incomes when `determing housing affordability
Doing so would positively devastate residential real estate.
I’m not saying that this doesn’t make sense, it does. If most families were to follow this advice it would hammer pricing down though.
BC Bob,
I’m just calling it as I see it.
William Black, from earlier this AM. I think he should be interviewing personal food tasters…he’s saying some very provocative things (and I like that!):
http://tinyurl.com/cewggn
Posted Apr 06, 2009 10:00am EDT by Aaron Task
The bank stress tests currently underway are “a complete sham,” says William Black, a former senior bank regulator and S&L prosecutor, and currently an Associate Professor of Economics and Law at the University of Missouri – Kansas City. “It’s a Potemkin model. Built to fool people.” Like many others, Black believes the “worst case scenario” used in the stress test don’t go far enough.
He detailed these and related concerns in a recent interview with Naked Capitalism. But Black, who was counsel to the Federal Home Loan Bank Board during the S&L Crisis, says the program’s failings go way beyond such technical issues. “There is no real purpose [of the stress test] other than to fool us. To make us chumps,” Black says. Noting policymakers have long stated the problem is a lack of confidence, Black says Treasury Secretary Tim Geithner is now essentially saying: “’If we lie and they believe us, all will be well.’ It’s Orwellian.”
The former regulator is extremely critical of Geithner, calling him a “failed regulator” now “adding to failed policy” by not allowing “banks that really need desperately to be closed” to fail. (On Saturday, Geithner said on Face the Nation, if banks need “exceptional assistance” in the future “then we’ll make sure that assistance comes with conditions,” including potentially changing management and the board, but did not say they’d be shut down.)
Black says the stress test must also be viewed in the context of Geithner’s toxic debt plan, which he calls “an enormous taxpayer subsidy for people who caused the problem.” The fact bank stocks have been rising since Geithner unveiled his plan is “bad news for taxpayers,” he says. “It’s the subsidy of all history.”
I might start donating if I were to receive invites to GTG’s but have yet to be notified of a single one. I don’t even know who this Grim character is, for all I know he could be using my $$ to fund bank bailouts.
Btw, I’m due for a trip to NJ sometime soon to have my semi-annual meeting with my boss.
Nicholas,
The “estimations” out there may be based on “household income.” That said, just because “the world” says, “It is okay, go ahead and rely upon both incomes when calculating your affordability” does not mean that it is prudent to do so. Remember, just a few months ago, really, “the world” was bullish about the future of RE and saw it as a no-lose proposition. I did not buy that proposition, and I still do not buy the proposition that a couple should count on having two incomes when calculating home affordability.
When couples do this, they just push more money into the market, which pushes prices up — affordability does not change. It is analogous to what has happened with college tuition; the cost of college skyrocketed in tandem with the expansion of loan money to go to college.
yikes (46)-
The best part was Klinsmann’s face after the goal. Looks like he just ate a poop-covered centipede.
But everybody knows soccer is boring…
Shore,
I agree with you. I was just stating that I didn’t think the status quo would change anytime soon.
I also agree with Tosh, a change in the status quo would result in lower productivity (GDP) for the US and a further drop in RE prices.
gary (47)-
Many investors are piling into financials and HB stocks over the last week or so, too.
Housing is also not immune to vicious bear market rallies. However, they are always two things:
1. Overstated
2. Short-lived
BC (54)-
Signatures on contracts trump signatures on open house sheets.
“Doing so would positively devastate residential real estate.
I’m not saying that this doesn’t make sense, it does. If most families were to follow this advice it would hammer pricing down though.”
I suspect it would also vastly improve peoples’ lifestyles as well. I am not saying both partners should not work, just that they should put the second income into things that provide a better return on quality of life.
I for one like our house. Do I wish I have a bit more space, and little changes here or there? Sure I do. That said, we were unwilling to mortgage more than 2.5 times a single income when we bought. Consequently, we ended up with a smaller place but we paid it off many years in advance, we get to divert massive sums to retirement savings, we take fantastic vacations, and have never lived with any fear of debt or falling housing values — which only really matter if one is either overloaded with debt and in danger of being unable to make the payments or if one needs to sell to relocate for work or retirement.
Hey folks! NJMLS is now giving the option for realtors to display addresses on their public listings. This is a major step forward.
I’m just calling it as I see it.
Gary,
I’m noticing an interesting trend in closed sales too.
Properties that are selling seem to have not traded hands in a dozen years or more.
I must have gone through about 500 sales this weekend, the majority of them didn’t even have a prior sale listed in the tax records.
I can only assume that these are long-term homeowners with a boatload of equity.
Why are these houses selling? I’ll bet that it is because they’ve got the equity to be able to underprice the short-term owners.
Looking at the short-termers, loads of them are comp-killers (see the prior two threads).
“Signatures on contracts trump signatures on open house sheets.”
Clot,
On average, over the years, what % of RE buyers are present homeowners? Moving up, transferring, scaling down, etc..
Shore,
I’m not an economist but I’m pretty certain that women entering the workforce in the US contributed to the ability for us to wage a massive war at the same time maintaining production levels during WWII.
Post war we were one of the only countries to continue to use women in industry positions next to men effectively giving us a further production advantage over other war-ravaged European countries.
I believe that women in industry have contributed to the dominance of the US in global markets. I also think that it reduced the quality of the family unit. As a consequence we have larger houses, more cars, better education systems, and for the most part stability.
Each household has to set their own priorities and if “things” are valued more than “family”, well you know the result…
Clotpoll,
The areas I’m referencing have always held up. The quality of life and school systems have the best resources… not my rules, just the way it is. Late 2009 and early 2010 is probably the best one could ask for as far as bottom timing is concerned because it’ll stay flat at the very least for a few years after.
Just an update. To those of you who helped me with my decision to pursue home ownership this year….thanks. i decided to put it off for a couple of years to save up more money. With that said, i am debt free for the first time in my life (since acquiring my first credit card at the age of 18). My savings account took a big hit but i think i can live with that. it just feels really good to finally be debt-free.
as a side note, i was thinking about all of the comments i got regarding my questions about whether or not i should buy a home or not. The fact that not one person said i was in a good position to buy a home right now just showed me how truly expensive housing is in NJ. The budget i was going to allow myself was $275k and everybody told me i was nuts (even with an annual income of $110k). I know $110k isn’t that much money for a family of 4 but it’s probably the top 10-15% of income in NJ which means 85-90% of NJ can’t afford a $275k home either.
Gary,
I agree with you. Saw an open house in westfield yesterday, place cut its offering by 185k, I thought it was a good deal, evidently so did everyone else.
That said, the price is much lower than its competition, which is why it will sell.
If I thinks a good deal, so will many other people out there.
#66 – Shore – I suspect it would also vastly improve peoples’ lifestyles as well.
You would get no argument from me on this.
“I must have gone through about 500 sales this weekend, the majority of them didn’t even have a prior sale listed in the tax records.”
One wonders if buyers should direct RE agents to only show them such houses. If they did, perhaps the falloff in foot traffic would shock more of the short-term owners into pricing to the market, not to desire.
re: the affordability issue. it is all a matter of perspective. most people still do not accept the idea that real estate can lose value. they still think this is a temporary phenomenon. as an example, I was at a wedding over the weekend and people I talked to could not believe that I am still renting. They think this is the buying opportunity of a lifetime. Of course, all of these people bought during the bubble. But the point is that, not only do they think RE will rebound in a year or to to what they paid, they think it will go higher after that. So you have the people like on this board who are sitting on the sidelines thinking RE really hasn’t come down very much, but 2/3 of people who are owners think it has come down massively and is actually undervalued. Someone is very wrong.
grim [68],
So, that means that those short-termers are going to have to capitulate sooner or later? And that means that inventory is going to increase as the short-termers finally concede which drives more homes onto the market thereby dropping prices further? Correct?
“i am debt free for the first time in my life ”
Congratulations! Now, the key is to stay that way and to divert every spare dollar into the downpayment/emergency fund. Now sit back and watch prices drift downward.
#72
“The budget i was going to allow myself was $275k and everybody told me i was nuts (even with an annual income of $110k). I know $110k isn’t that much money for a family of 4 but it’s probably the top 10-15% of income in NJ which means 85-90% of NJ can’t afford a $275k home either.”
**********
I don’t think the issue was so much your income as it was your lack of savings. A $275k home should be affordable for someone making $110k. But your larger point that most housing is unafforable is still true.
“Treasury extends deadline for toxic asset program
Treasury extends deadline for toxic asset program, loosens criteria for participation ”
Wonder why?
#77
“So, that means that those short-termers are going to have to capitulate sooner or later? And that means that inventory is going to increase as the short-termers finally concede which drives more homes onto the market thereby dropping prices further? Correct?”
***********
I actually think the denial is so deep that few people will accept the lower prices unless they are forced to (job loss). I know one guy who came to his senses and sold late last year for a small loss. He is renting now but relieved that he got out when he did. Most people are not able to see things so objectively.
I know $110k isn’t that much money for a family of 4 but it’s probably the top 10-15% of income in NJ which means 85-90% of NJ can’t afford a $275k home either.
W8ting,
I’m in the same boat as you in terms of income and I came to the same realization. Housing is overpriced, no doubt.
Think about it a little bit further though. although you make more then 90% of people, the homes that cost more then 275k$ should represent 10% of where people live, including condos, appartments, townhomes, trailer parks, and those that are homeless who live by the river.
Try looking at it from that angle and you will see that housing is overpriced but not as much as you think. We are going to be entering a period where housing values will fall below their statistical price points.
Skep,
It comes down to these views of the RE market:
Did home values go from irrationally-low numbers to correct numbers and now drop to irrationally-low numbers; or,
Did home values go from correct numbers to irrationally-high numbers and now drop to closer-to-correct numbers?
How one views things will determine what they are inclined to do.
Stu,
C’mon, you know the answer. The demand is so great they felt compelled to extend the sale at Crazie Timmy’s for a few more days. Remember, at Crazy Timmy’s the policies are in-san-e!
#72 – W8TING – i am debt free for the first time in my life
Congrats! The thing about being debt free is that you tend to want to stay that way, at least I do. I cleared out all of my debt a few years ago and it was an incredibly freeing experience.
Another thing I noticed was that I made more money than I thought I did. All cash spent servicing debt really added up, I just didn’t notice exactly how much until it was gone.
Clotpoll says:
April 6, 2009 at 9:00 am
Damn you to hell, Plume!
I whip you with the lash of Mike Morgan:
clot: This foolishness reeks of whining. He’s feeling the heat big time. Bill Moyers needs a mental enima….
“The areas I’m referencing have always held up. Late 2009 and early 2010 is probably the best one could ask for as far as bottom timing is concerned because it’ll stay flat at the very least for a few years after.”
What are the areas you are referencing? Prices might have not gone down much but they are decreasing–I am not sure how you can make this claim.
re #72 W8TING – congrats on no longer being a debt serf. You said you had 8k in credit card debt. If you had instead took 18 months to be rid of your debt by paying it off $500 per month (and not charging any more) you would have paid $906.89 with an interest rate of 14%.
So think of paying your debt off early as real income savings of about 2% towards your down payment of say $45k when you are ready to buy when prices finally bottom out.
The challenge for you now is to sock away about 15k-20k a year.
http://www.city-data.com/city/Ocean-Grove-New-Jersey.html
A decent resource.
in mod
W8TING – “You da man!”
“Did home values go from irrationally-low numbers to correct numbers and now drop to irrationally-low numbers; or,
Did home values go from correct numbers to irrationally-high numbers and now drop to closer-to-correct numbers?”
*******
Shore– I agree that this is the issue. But I am not sure that everyone thinks of the housing market in this way. Most people I think just get to a certain point in their lives and believe they must buy. They don’t even ask whether houses are fairly valued– they just look at what is out there and do the best they can. If they ever get around to asking the questions you wrote, they of course conclude that what they paid was a fair price because they rejected some places and chose the place they now own. But most never even considered rejecting the entire lot, and based on my experience many people think doing so is sort of offensive— like by failing to buy by a certain point you are questioning society’s basic values (akin to the reactions people have for people who don’t have TVs or are vegans).
“As a consequence we have larger houses, more cars, better education systems, and for the most part stability.”
Umm, is this bizarro world. No one can afford those larger homes. Hell, they can’t even afford the cars. And don’t get me started on the education system. I’m teaching at Rutgers right now and I can actively see the decline in the education system occurring right before my eyes. If you want my opinion, the quality of your kid’s education declines by about 5% every year.
Sean: Actually that $8k balance i had on my card had a fixed rate of 2.99% til paid off so the interest didnt really concern me. The reason i wasn’t paying it off was i thought it was worth paying a small amount of interest on it so i could have some cash in my bank account in case i lost my job or something. i’d rather use cash for emergency funds instead of tapping into another credit card.
The challenge definitely is to try to save $20k a year but it’s still hard for me since i’m paying $800/month towards my parents’ rent (since they have very little income).
http://www.city-data.com
For those who have not seen this before, it provides some decent baseline data.
Shore 66
Do you know what would happen to american productivity if the focus was shifted to family well being as opposed to maximizing personal consumption through dual income families?
That would a economic nuclear event. No politician would back that if they wanted to stay in power.
Ben,
My statement was a comparison against other countries. Just because people cannot afford homes now doesn’t mean that the homes that were built and being lived in the US are not larger then those of other countries.
I met a guy from Ireland, he about crapped his pants when he saw how large the average American house had become. He was also impressed by all our trees.
The last few years, which have been full of fraud, have definitely gone all haywire but I stand by my “in general” statements about US prosperity.
US Recovery Is Far Off, Banks Are ‘Basically Insolvent’: Soros
Topics:George Soros | Western Europe | Eastern Europe | Economic Data | Economy (Global) | Economy (U.S.)By: Reuters | 06 Apr 2009 | 10:17 AM ET Text Size The U.S. economy is in for “a lasting slowdown” and won’t recover this year, while “the banking system as a whole is basically insolvent,” billionaire investor George Soros told Reuters Financial Television Monday.
[snip]
http://www.cnbc.com/id/30069223
Nicholas, I agree before the bubble even 2002-2003 the educated class/successful small business owners in the us lived better than the equivalent class elsewhere. What we have been witnessing is a dilution of the blue collar middle class, it has been disappearing.
Nicholas, I agree before the bubble even 2002-2003 the educated class/successful small business owners in the us lived better than the equivalent class elsewhere. What we have been witnessing is a dilution of the blue collar middle class, it has been disappearing.
OT – Anyone know of a cool antique/curiosity shop in the Monmouth County area?
I know about the antique store in Red Bank, and they have some beautiful stuff, but it’s all very expensive.
I suppose I’m really looking for a thrift store, but a big one with lots o’ stuff.
Any suggestions would be appreciated.
Tosh,
There is a place in Asbury, on the south side of town, on Cookman. There ia also an entrance from Lake.
Speaking of Asbury. it is probably not a good sign for a development when a link a developer puts in its website is no longer active:
http://www.metrohomesllc.com/html/pesperanza.html
#102 – I know exactly where you’re talking about. Thanks!
Tosh,
The other thing that is pretty interesting is the big sale in Ocean Grove each year.
Tosh
There are a couple of them a little farther south in Point Pleasant. I can’t comment on them much, my wife goes, I go to Frankies and eat a burger and drink beer while she shops.
93….Ben, your study of one is fascinating. Thanks.
“I met a guy from Ireland, he about crapped his pants when he saw how large the average American house had become. He was also impressed by all our trees.
The last few years, which have been full of fraud, have definitely gone all haywire but I stand by my “in general” statements about US prosperity.”
It’s all an illusion. Well, maybe when you compare us to Ireland, because Ireland’s in no better shape.
#105 – Thanks again!
#106 – Thanks!
At last, one more house in Ohio will soon be available for sale:
http://uk.reuters.com/article/usTopNews/idUKTRE5353SF20090406
From the Star Ledger:
N.J. budget analysis sees $100M deficit in Corzine’s plan
Gov. Jon Corzine’s budget will run a $100 million deficit instead of the $500 million surplus he predicted, according to a budget analysis released today.
David Rosen, budget and finance officer for the nonpartisan Office of Legislative Services, told the Senate Budget and Appropriations Committee that revenue projections included in the $29.8 billion budget Corzine presented on March 10 may be too robust according to a consensus of economic reports the office used for the analysis it presented this morning.
“Based on our numbers the $500 million would be wiped away,” he said.
The state constitution does not allow deficit spending and a revenue shortfall would require additional cuts to a budget that is already more than $3 billion smaller than the budget approved last year.
Rosen also said the $500 million surplus Corzine included in his budget is already smaller than the surplus the office would like to see.
Face of the recession…
http://www.nytimes.com/2009/04/06/nyregion/06bigcity.html?_r=2&scp=1&sq=betty%20wales&st=cse
Lovely, lovely lady. I remember being complimented by her a few years back about how nice my sweater was. I whispered and told her it was from Kohl’s and only cost me $5 on clearance (not something you want to brag openly about at 4×2). She then went on about how expensive it is to shop these days at Brooks Brothers for her nieces and nephews. Really drove the point home for me that I am clearly a fish out of water!
“93….Ben, your study of one is fascinating. Thanks.”
This is not a study of one. I went to the same schools as my younger brother and sister. The education I received was far superior to the ones they did. My fiancee worked in two public schools. One of them was among the “best” in the state. The school was pathetic. Education in this country has been on a the decline for about 30 years. The past 8 years, it has been in free fall mode, despite your property taxes being jacked up every year to support this nonsense. I now deal with these kids at the University level. 5 years ago, they came into school with a much better foundation than they do today. I’m run a Chemistry Lab and the performance has become so bad that I, for the first time, started grading grammar and spelling on their lab reports. When 50% of your class cannot write a coherent sentence or calculate a simple percentage, there is a serious problem.
It’s not a mystery to me to see how these people signed these stupid mortgages. They didn’t understand the math and they probably couldn’t even read and comprehend their contract if they wanted to.
chi (86)-
Do you think William Black needs a mental en%ema, and if so, why?
113….You may be right. I wonder about it too. I would say that in the future an international education will be more valuable than most. Kids with a worldview and real skills will be in demand. We have an anti-intellectualism in this country that is costing us dearly. But the schools have never been the primary educator of kids. The parents are where kids get their ideas and work ethic. Schools are secondary to the home in most cases.
Ben,
The world is full of stupid people. I heard a joke once that says, “God must love stupid people, he made so many of them.”
I can say that I have worked and still work with amazingly bright people (American’s). When I graduated with my undergraduate degree in 2003 I am happy to report that I worked with many very bright students.
I think what you are recently experiencing is the large number of people who SHOULDN’T be in college on a merit basis but are there because of the new found MEW money during the housing bubble.
Don’t let these recent events cause you to give up on being an educator of Americans. Keep fighting the good fight, it will get better.
http://uk.reuters.com/article/marketsNewsUS/idUKN0638816620090406
Are Patterson and Corzine in some sort of a secret competition to see which is most inept?
Some interesting nuggets from the below article:
In metro Atlanta, more than 50,000 people — a 10-fold increase over last year — filed appeals ahead of the April 1 tax deadline. The result was long lines of grumbling taxpayers. Little wonder: A survey released Tuesday said average home prices in Atlanta are down to 1996 levels.
In Nevada’s Lyon County, appeals are up 30-fold.
The National Taxpayer Union, an antitax lobbying group in Washington, claims that as many as 60 percent of homes in the U.S. are overassessed. For the 722,000 homes in New Jersey that are potentially overassessed, average savings on the tax bill could equal nearly $2,000, according to the website
As Home Values Fall, Property Tax Revolt Brews
In many cities across the US, homeowners are filing record numbers of assessment appeals, wanting their property taxes to reflect their shrinking value of their houses.
http://abcnews.go.com/Business/Economy/story?id=7254270&page=1
4×2??????????
maybe if you send a nice letter to jon
he will send you check?
afterall,, he got Carla off
From Gators tax reassessment article:
“It is a question of fairness, says Gene Burleson of Atlanta, who stood in line April 1 to appeal his assessment. His house has lost 25 percent of its value since it was last assessed, he adds: ‘I’m just trying to insulate myself from coming tax increases.'”
Of course, if everyone has their homes reassessed down their rates will have to rise. In the final analysis it is not the value of the home that drives the tax bill but the municipal/county budget.
“he got Carla off”
I hope so, they dated long enough.
anyone catch this post on clusterstock?
http://www.businessinsider.com/real-estate-broker-claims-nyc-isnt-like-other-markets-2009-3
in a nutshell its about how our area is “different” and prices won’t go down like other areas
Shore – Get with the lingo It’s 4 Times Square :)
[124] gator
I never heard it called that, and I would have a reason to know if it was. Must just be on the Conde Nast floors.
Shore Guy 121 – Only the case if things are declining equally. If some houses only dropped 10% and his dropped 25%, he would still see some sort of relief.
And there are taxing jurisdictions, outside of NJ that actually place restrictions on the amount the tax rates or assessments can rise each year.
Clotpoll says:
April 6, 2009 at 12:48 pm
chi (86)- Do you think William Black needs a mental en%ema, and if so, why?
clot: I will go search for my orignal posting. I guarantee I used the words adverse selection….or made the equivalent point.
Nom 125 – The Skadden folks are way too serious.
From the businessinsider.com article: “New York is one the epicenters, if not the primary epicenter, of all global intercourse”
This is indeed where the global economic scr-ew-ing began.
Shore – did you see my missive from last night? Do I qualify for official Shore Guy PIA status? If not, I will just have to work a little harder!
clot: wrong person sorry….
Gator,
I am all for a global (as in townwide/statewide) reassessment and then imposing caps — perhaps with the possibility of exceeding them via a supermajority referendum to deal with exigent circumstances.
I did not, Gator, but, I trust that you have joined the club. Just don’t forget to keep the secret handshake, well, secret. Also, wear the pin proudly.
#123
“in a nutshell its about how our area is “different” and prices won’t go down like other areas”
***********
I am sure this guy is sincere in his belief but he is clearly a moron if he cannot see the difference between when he bought his first place in 1993 and now. 1993 was a buying opportunity because people like him could actually afford to buy. This guy should ask himself if his 1993 self could afford to buy a similar place today. The answer is definitely “no” and that tells you everything.
prounounced four-ex-two or four-by-two?
#123 Short Hills Renter:
What you expect him to say? Remember these statements uttered a few years ago:
“No one ever lost a nickel in mortgage backed securities…”
“Buy now or forever be priced out….”
“The mortagae meltdown is contained to the subprime market…”
Again, what you expect him to say?
“Again, what you expect him to say?”
This works for me :
“Please. Please!. Please come buy from me. My children need shoes.”
chicagofinance says:
April 6, 2009 at 2:02 pm
clot: wrong person sorry….
clot: I take it back. The whole video is pathetic. Moyers is a pissbag. Black is making some serious and scandalous allegations. It is borderline libel if not clear libel. Greed and stupdity is not fraud with clear intent to defraud. The guy is selling a book. Moyers needs to be removed as a host.
#137 Shore Guy:
We have a winner!
Escape from NY.
http://zerohedge.blogspot.com/2009/04/new-york-to-become-ghost-town-after.html
Bill Moyers needs to be disemboweled.
Bill Black is a joke.
Mike Morgan is pathetic if he does not see this clearly for what it is.
“Cover Up” that is a serious charge…
YES IT IS
Yes, what we need is more questions along the lines of – “Please tell us again how great you are, Mr CEO”.
To be clear, Black is a stupid ivory tower bozo living nowhere and performing nothing, taking wild stabs at nothing purely out of context.
Black never worked in the private sector, or is conveniently ignoring that experience.
Chi,
I don’t think it’s libelous. Come up with a more rational explanation as I’d certainly like to hear. Why else is there a necessity for all the secrecy?
Nicholas,
there is no question that we have some really bright kids in our country. In fact, nothing is wrong with the kids, per se. The problem I have is that our education system is failing the kids. The ability of our population to learn hasn’t changed at all. If we simply made some nice decent reforms, we could revitalize the entire education system and things would go on for the better. The problem is, all I see from the DOE are steps in the wrong direction. Universal Pre-K, mandates to teach Spanish, no child left behind. I also have issues with the history books these kids read. It’s not their fault, they are products of the system. In this day and age, information is free, yet our general population is moving a direction where they are simply devoid of the truth.
“Black never worked in the private sector”
Chi,
Your point? How many years has Timmy served in the private sector?
Given that current employment is weak at best, many of these displaced workers will eventually find work in an alternative sector. What are your thoughts on the areas of industry that might serve as the next hiring wave?
I would think that if O puts our money where his mouth is – clean energy, transportation, & govt sector jobs will be gold.
chicagofinance,
I don’t think the video is pathetic. I’m in the camp that this this has either been the greatest bank fraud (i.e. banksters) OR that the banking industry is populated by idiots who should be removed.
Fraud or ineptitude?
I loved that guy at AIG who tried to give away his 3/4 of a million dollar bonus to charity rather then give it back to the US Gov. He tried to justify why his income and bonus was so large…absolutely pathetic. The whole banking game was rigged for individual profits and this guy was the best at playing the corrupt game, big whoop. Thats like saying “I drove the car really well until it wrecked.”
Black comes in with the AIG-bailes-out-Goldman-Sachs…
Minute 23…go watch…what a joke….
“Why else is there a necessity for all the secrecy?”
HEHE(146) –
Dude, common folks are not supposed to understand high finance. The only thing you need to know, that the government is working in your best interests. The confidence in the system is fragile because nobody knows what the assets are worth, the only way to resolve this is to make the system more opaque and put the govt guaranteed stamp on it and everybody will believe us.
BC Bob says:
April 6, 2009 at 2:28 pm
“Black never worked in the private sector”
Chi, Your point? How many years has Timmy served in the private sector?
Bost: I’m not critiquing Geithner. We have clot coming here and wasting time on Morgan and this useless blather, when he should be preparing for tonight.
147. There is nothing new here Ben. Nothing new at all. The bell shaped curve is a real b-i-t-c-h. Sucks I know. Same reason some people will be rich and others…not so much.
Nicholas says:
April 6, 2009 at 2:29 pm
chicagofinance, I don’t think the video is pathetic. I’m in the camp that this this has either been the greatest bank fraud (i.e. banksters) OR that the banking industry is populated by idiots who should be removed.
Nikos: Greed breeds idiocy, but you can’t just arrest the drug dealers or the cartel members. What about the people who grow it and use. The users are innocent?
Nicholas says:
April 6, 2009 at 2:29 pm
chicagofinance,
Fraud or ineptitude?
I loved that guy at AIG who tried to give away his 3/4 of a million dollar bonus to charity rather then give it back to the US Gov. He tried to justify why his income and bonus was so large…absolutely pathetic. The whole banking game was rigged for individual profits and this guy was the best at playing the corrupt game, big whoop. Thats like saying “I drove the car really well until it wrecked.”
Nikos: That guy wasn’t even that well paid considering his job. He was incompetent if he was responsible for the original decisions, but I doubt it. He was the plumber who was there to snake the toilets.
For Ben…
http://i170.photobucket.com/albums/u253/k_delavan/ill_be_a_stripper.jpg
“the only way to resolve this is to make the system more opaque and put the govt guaranteed stamp on it and everybody will believe us”
Yeah, good luck with that one:)
if you guys really want a big laugh, check out the Trulia sales data for Robbinsville. Apparently the sales dropped to “1” but they put the graph on a log scale so the next tick down was .1. I wonder if Robbinsville agents will give up when they officially have .1 sales for the month?
http://graphs.trulia.com/real_estate/Robbinsville-New_Jersey/graph.png?version=145&width=600&height=200&type=qma_sales_volume&city=Robbinsville&state=NJ
“Bost: I’m not critiquing Geithner. We have clot coming here and wasting time on Morgan and this useless blather, when he should be preparing for tonight.”
Chi,
I’m preparing for tonight.
By the way, BO and Bergabe also don’t have any private sector exp.. One should not be judged based on that.
Chi,
Yes, you can arrest the drug dealers and cartel members. This will send a solid signal to those who grow and use it that it won’t be tolerated.
The users will have to get their fix elsewhere. The growers will find other industries to work.
I don’t understand why you think that the government should support corruption or ineptitude, whichever it was that occured. In fact, I’m not even sure what you think we should do about what happened unless your advocating doing nothing.
Re: SRS
This couldn’t have helped its performance last week:
http://www.nakedcapitalism.com/2009/04/guest-post-wall-street-back-to-its.html
Stu, you have guts. I have added to my position but am starting to feel very ucomfortable. Lower highs and lower lows and all that.
To be clear, near the end Mr. Fatbeard is backtracking and saying that the administration is legitimately scared. WELL DOUCHEBAG, FEAR AND GREED IS MUCH DIFFERENT THAN FRAUD. OF COURSE SOMEONE SH!TTING IN THEIR PANTS DOESN’T SELL AS MANY BOOKS AS CALLING PEOPLE “BANKSTERS”.
THE GUY IS A USELESS CORN-FED BLOVIATOR….
Well, Hanky Panky had a lot of private sector experience. Funny, it did not seem to work out too well.
Also, at that time, all the “ivory tower blowhards” (Roubini, Krugman et al.) were completely against his plan.
Chi,
I take it you won’t be buying his book. I am still waiting for your more plausible explanation.
chi (138)-
I thought truth was the first-line defense against libel.
Is it untrue that WS banks demanded ever-increasing numbers of loans- of questionable provenance- to bundle into securities that collusory ratings agencies then stamped as AAA?
And, in stamping those MBS as AAA, was the investing public deceived as to the actual content of these securities?
Do you really believe that the ratings agencies (such as Fitch, the one mentioned in the interview), simply “forgot” to review ONE SINGLE LOAN FILE in the masses of crap they anointed with holy water? If so, then I guess we could say theirs was an error of omission (that is to say, they are simply goddamned idiots) as opposed commission (then, we can call them crooks).
Either way, it is not a pretty story.
Even if all the errors were of the “omisssion” variety, all the players should be shot at sunrise, so that they will be unable to further reproduce and further dilute the median intelligence of our already-too-stupid population.
chi (153)-
Don’t worry about me. All I need to prepare for tonight are two Knob Creeks and the channel changer, fused to my right hand.
“We have clot coming here and wasting time on Morgan and this useless blather, when he should be preparing for tonight.”
Anybody know why Mayo left DB?
“Bank Losses To Exceed Great Depression -Calyon’s Mayo”
http://online.wsj.com/article/BT-CO-20090406-707995.html
I have discovered recently that there is no problem on Earth that cannot be cured with whisky.
BC (168)-
Do I get the customary three guesses?
Guess #1:
Calyon is an outfit of mean, old meany short-sellers who are using their new analyst to talk down financials in order to line their pockets with ill-gotten gains.
Everybody knows the banks are all fine. The gubmint is watching them now. Everybody needs to shut up, apply for some more revolving credit, and buy a new house.
Once confidence is restored, all will be well.
Puh-leeze…
Everybody knows only short-sellers talk their own book.
Longs are rock-ribbed Americans who have the boldness of vision to see through fraud and insolvency to load up on companies that will end up rewarding them by blasting their equity stake to zero.
If an American throws himself on a grenade to save others, he is a hero.
What does this make someone who buys bank stock?
“Longs are rock-ribbed Americans who have the boldness of vision to see through fraud and insolvency to load up on companies that will end up rewarding them by blasting their equity stake to zero.”
ROFL!!!!
Here is Black talking a variation of the story he told to Moyers….sounds a little different here…useless tub of goo…
http://finance.yahoo.com/tech-ticker/article/225823/Mortgage-Fraud-Epidemic-How-the-FBI-Blew-It-and-Why-There's-No-'Perp-Walks‘?tickers=JPM,BAC,XLF,MHP,MCO,WB,FAS?sec=topStories&pos=8&asset=TBD&ccode=TBD
Come on Chi, more plausible explanation now, chop, chop!!!
HEHEHE says:
April 6, 2009 at 2:51 pm
Chi, I take it you won’t be buying his book. I am still waiting for your more plausible explanation.
He: What do you want? Maybe you misunderstand me.
Here is our Plankton theory,
Home Sales: Don’t Be Deceived by First Time Buyers
Residential real estate is a food chain. Somebody buys their first home and the seller of that home takes their equity from the pay-down of their mortgage and any appreciation in the house and uses that money to buy their first time move-up home. When they buy their first move-up home, the people they are buying from takes their proceeds and buys their second move-up home. And so the chain continues. Great.
But take a look at the people getting great deals on their first homes today. From whom are they buying their houses? From the bank or mortgage company or maybe from a distressed seller. Neither the bank nor mortgage company is going to use their money to buy a move-up home and they are not going to fuel the food chain. The distressed seller in some cases may go buy another house, but the chances of that happening are not great and therefore their sale does not get the food chain moving except in a few cases in a very nominal way.
In other words, when you look at an increase in people buying their first homes, and somebody tries to use that as “proof” that the market is bottoming, don’t believe it. Look instead at the sale of the first- and second- move-up homes …. when that increases it will be an indication that the food chain is really going and that the bottom is real.
HEHEHE says:
April 6, 2009 at 3:29 pm
Come on Chi, more plausible explanation now, chop, chop!!!
What do you want?
HEHEHE says:
April 6, 2009 at 3:29 pm
Come on Chi, more plausible explanation now, chop, chop!!!
What do you want?
A counter to the fat bearded guy. You attack his theory yet have no plausible alternative to offer.
Car lust time.
///M X5
How should home-price reports account for foreclosures?
S&P gauges home values within a market by looking at repeat sales of the same homes, rather than what happens to sell in a given period. Humphries noted that it includes sales of homes that have reverted to lenders through foreclosure, and those homes sell for significantly less than others.
Also, many of the homes now in foreclosure were ones that helped drive up values during the boom, Guarino noted. “If you have them on the way up, you have them on the way down.”
Traditionally, market value determinations are supposed to exclude sales with undue pressure, noted Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University. “Obviously a foreclosure is an extenuating circumstance and, by definition, therefore should be excluded from market price estimates.”
“Car lust time”
Grim,
anytime you wanna whip shitty in a parking lot in the M5, lets do it.
I have a favorite place to do it, but Mont Senior might chase us :)
SAS
From Bubble to Depression?
“Fund manager hit with civil charge in Madoff fraud”
http://news.yahoo.com/s/ap/20090406/ap_on_bi_ge/madoff_scandal_merkin
Well, the rich are now leaving NYC in droves in anticipation of the new taxes. Rush Limbaugh, Trump and others are out. I wonder who will end up paying for all those taxes? Somehow I doubt they are moving to NJ either.
TRUMP OUT OF NYC
“It’s very dangerous, what’s going on in Albany,” he ranted. “Rich people are going to leave this state — why should they pay New York State taxes on money they made out of state?”
http://www.nypost.com/seven/04062009/tv/trump_out_of_nyc__163107.htm
http://en.wikipedia.org/wiki/Pecora_Commission
Chicago – I pay very close attention to everything you say. I was prompted to check back on William Black. According to the PBS site, he teaches economics and law at the University of Missouri. Okay – You’d think he wouldn’t say anything libelous.
He called for there to be a Pecora investigation. (see Wiki post.) That seemed reasonable to me.
As I looked for postings on the Pecora commission through Google, I was repeatedly brought to the LaRouche Pac site. Yikes! – a former Marxist. Geez.
I hope Elizabeth Warren is successful in her bid to provide transparency to the situation. Most of us just want to be represented by advocates looking out for the taxpayer.
#182
“Traditionally, market value determinations are supposed to exclude sales with undue pressure, noted Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University. “Obviously a foreclosure is an extenuating circumstance and, by definition, therefore should be excluded from market price estimates.””
**********
kind of unbelievable that this professor of real estate would propose excluding roughly 50% of the sales that are happening right now from the data set.
He called for there to be a Pecora investigation.
I had to look at the wiki for this, but this is exactly what we should be doing. A public investigation to determine what happened and why is needed. Reagan called for a Presidential task force in `87. Why is there nothing begin called for now?
Cindy (187) –
Where does it say that William Black is a former Marxist?
Clot: I’ve found that a smooth Nero D’Avola grappa is a good way to start the morning, welcome the afternoon, and end the evening. We are soooo French Connection UK’d.
#190 – I believe she was referring to LaRouche as the Marxist, although he is far more amusing than just that.
there have been bubbles throughout history. they all attract crooks but are not themselves conspiracies.
HEHEHE says:
April 6, 2009 at 3:37 pm
A counter to the fat bearded guy. You attack his theory yet have no plausible alternative to offer.
HE: no conspiracy of fraud; instead MANY people lied or avoided pointing out the (IN HINDSIGHT)obvious because it was too lucrative or countercyclical to think otherwise. Is it the evil bankers? How about the evil EVERYBODY? But it is far too convenient to start pointing the fingers at those in important places, when in reality, scores are culpable. But that doesn’t play well with jokers like this guy.
Here is the self-selection/adverse selection vantage point. It is difficult for me to listen to this guy, because he is in academia for a reason. He shuns mainstream society and the business climate that results from it. Instead he rather make assertions that sound reasonable or even sensible from afar, or in a CLOSED SYSTEM of intellectual thought.
You ask me for alternative explanations, but in reality, this clown is the one with faux outrage and a soapbox who offers complaints and finger pointing without solutions.
He want scorched earth, but not because of bloodlust, but rather (as I asserted) his love on his own voice and to sell his book.
FAT USELESS SLOB
(190) 2 Cents
“Where does it say William Black is a former Marxist?”
Never said that.
is there a standard rule of thumb for what net salary is for incomes below 100K? i use 80% of gross, but that is just a personal WAG.
Any of the tax guru’s have input on this?
DL (191)-
If you’re to the point of doing grappa eye-openers, you’re way beyond me.
And I thought nobody was beyond me. :)
toshiro_mifune says:
April 6, 2009 at 3:55 pm
He called for there to be a Pecora investigation.
I had to look at the wiki for this, but this is exactly what we should be doing. A public investigation to determine what happened and why is needed. Reagan called for a Presidential task force in `87. Why is there nothing begin called for now?
tosh: fair question; and Black would scream conspiracy; I will extrapolate using the Barry Bonds steroid scandal as a source theory…….the FBI INDEEED is going after these guys, but they want to lay the plan perfectly; lots of people are in trouble, but they want to maximize the evidence and have a LOCKED-TIGHT set of indictment and prosecutions.
That stuff takes some time.
If we are sitting in the same position two years from now, then Black is right.
chi (194)-
The fact that there was a public complicit in the fraud and that ostensibly benefitted (at least in the short run) from the fraud does not mitigate nor dismiss the banks’ fraudulent behavior.
I feel very under-represented by my current senators and representatives.
four bad bear markets:
http://dshort.com/charts/bears/four-bears-large.gif
X6…is way way cool Grim.
And thus we have a perfect example of ‘why’ we spend money…not always rational but damn fun!
chi (194)-
His book is rather old. I think he has enough sense to know that whatever sales he generated probably peaked as some date prior to today.
He also made his bones helping clean up the S&L mess, so he has some working knowledge of how this stuff goes (or, more appropriately, how it doesn’t go). The S&L crisis has now been proved to have been a fraction of the size of the current meltdown, precisely because people like Black got it under control and developed mechanisms to bring problems to light.
Of this, I speak as someone knowledgable. The S&L/RTC workout was how I got myself going in this business. I daresay that no gubmint workout to a financial disaster has ever gone much better than that.
“He want scorched earth, but not because of bloodlust, but rather (as I asserted) his love on his own voice and to sell his book.”
That’s not what I gathered. You must have seen a different interview. Seems to me he just wanted the government regulators to investigate instead of sitting on their hands.
It would seem that there’s likely all sorts of internal email discussions that contradict what was being said publicly by these banks and ratings agencys over the course of the past five to ten years in regard to these CDO’s etc. It happens in all of these bubbles. People clearly aware of what they are doing is fraudulent but they keep doing it for the bonus etc. Those who raise questions are pushed to the side etc. It’s essentially Enron all over again but on a massive scale.
Drank an $8.00 wine (when purchased by the case) last night from Italy –
Marchesi di Barolo Maraia (which means “little rascal” in the local dialect – I’m reading from the bottle.)
Barbera Monferrato 2006
Imported by: Palm bay International, Boca Raton, FL
Bottled in Italy by Marchesi Di Barolo
loved it
Clotpoll says:
April 6, 2009 at 4:06 pm
chi (194)- The fact that there was a public complicit in the fraud and that ostensibly benefitted (at least in the short run) from the fraud does not mitigate nor dismiss the banks’ fraudulent behavior.
clot: CONSPIRACY of fraud?
(206) Chicago – I think I get your point. Ineptitude – yes, but to call it a conspiracy pushes the envelope and is grandstanding.
chicagofinance says:
April 6, 2009 at 4:15 pm
Clotpoll says:
April 6, 2009 at 4:06 pm
chi (194)- The fact that there was a public complicit in the fraud and that ostensibly benefitted (at least in the short run) from the fraud does not mitigate nor dismiss the banks’ fraudulent behavior.
clot: to reiterate; this situation is just the financial version of the way things have always been done in this country; we only have a better understanding because as a financial event, it has filtered through all of us; why all the outrage? Identify; move; attack….cast aside the old and find the NEXT…
A simple question – Why do most of the Bank CEOs still have a job when Rick Wagoner was fired (which I completely agree with)?
Cindy says:
April 6, 2009 at 4:18 pm
(206) Chicago – I think I get your point. Ineptitude – yes, but to call it a conspiracy pushes the envelope and is grandstanding.
C: If it was a conspiracy, don’t you think that Buffett and Gross would be in on it? Wouldn’t Harvard’s endowment be in on it? Look at the big PE firms, they got burned…..
2 Cents says:
April 6, 2009 at 4:23 pm
A simple question – Why do most of the Bank CEOs still have a job when Rick Wagoner was fired (which I completely agree with)?
Which ones?
Cindy (195) –
My apologies. It got lost in translation. So, nothing in that article casts a shadow of doubt on Black’s intentions.
this situation is just the financial version of the way things have always been done in this country
I disagree or rather I refuse to agree. Fraud and ineptitude are not acceptable.
209…because most of the guys at the banks (except Lewis at BA) got there right after the initial douchbag who handed the banks their asses left. Waggoner was there for eight years and couldn’t turn things around.
Chi (211) –
Vikram Pandit and Ken Lewis. In fact, all the banks who accepted TARP money should have their management fired. IF you had made that a pre-condition, we would have known the true state of the banks.
Of course, the government should guarantee all the deposits so as to prevent bank runs.
2 Cents – I’m rooting for Elizabeth Warren. I see her as the one public figure speaking up on my behave right now. She is working within the system that we must all live with everyday.
As I’ve stated before, I just hope she doesn’t give up in frustration.
Pandit wasn’t responsible. He may be purely ineffectual, but, he trying to win Texas Hold “em with Ace high….
Lewis has only been a stupid custodian of Bank of America’s investor’s assets. He himself is not a fraudster. He bought Countrywide, bad but ok. Only too late did he realize what Merrill was, but he didn’t realize that his choice was removed after the end of September 2008. Now the USG owns him. Why would they stick another patsy in there…..who would take the job anyway?
216. Rooting for her? Yeah she is a fine person. But what exactly is she in a position to do? It is clear no one pays any attention to her.
215. Eh. I don’t care enough about any of those banks to have major accounts or do business with them. Ever.
As for firing them. Again. Not really an issue for me. And I did not care enough about Detroit to buy one of their rattling cars…
Essex says:
April 6, 2009 at 4:33 pm
216. Rooting for her? Yeah she is a fine person. But what exactly is she in a position to do? It is clear no one pays any attention to her.
SX: You have the right idea. You can be knowledgeable without being emotionally invested.
From Calculated Risk –
When the government turns a deaf ear to the FBI, what do you do?
WILLIAM K. BLACK: The FBI publicly warned, in September 2004 that there was an epidemic of mortgage fraud, that if it was allowed to continue it would produce a crisis at least as large as the Savings and Loan debacle. And that they were going to make sure that they didn’t let that happen. So what goes wrong? After 9/11, the attacks, the Justice Department transfers 500 white-collar spec1alists in the FBI to national terrorism. Well, we can all understand that. But then, the Bush administration refused to replace the missing 500 agents. So even today, again, as you say, this crisis is 1000 times worse, perhaps, certainly 100 times worse, than the Savings and Loan crisis. There are one-fifth as many FBI agents as worked the Savings and Loan crisis.
from my perspective, Warren seems to diagnos the problem well, but her solutions are very heavy handed. she is in favor of regulating consumer credit to the degree that it would effectively eliminate the ability of all but the very rich to get loans.
Five Things: Who Will Punish the Bankers?
The French poet Charles Baudelaire wrote that pithy verse more than 150 years ago, long before the horrors of modern finance. Baudelaire was the French version of Edgar Allan Poe and, like Poe, he enjoyed the high-white scream of opium combined with large quantities of strong liquor, probably absinthe. While Poe died face down in a gutter, drunk, Baudelaire met his end in an insane asylum, semi-paralyzed by stroke. Which proves that in the end we all get what we deserve. Unless, of course, we are bankers.
http://www.minyanville.com/articles/index/a/22046
N.J. State Police sues to allow troopers to practice law
They were encouraged by superiors to pursue a law degree, they even received tuition reimbursement, but now New Jersey state troopers who moonlight as attorneys are prohibited from practicing law as long as they work for the state.
http://www.nj.com/news/index.ssf/2009/04/state_police_sues_to_allow_tro.html
NJ tax payers were actually footing the bill for this? this is nuts and hopefully the court throws this out.
http://dailybail.com/home/bank-bailout-news-tarp-oversight-chaperone-elizabeth-warren.html
Several of her videos are available here.
No one has listened to her – that is true.
But her questions regarding the lack of a strategy by Treasury are valid. He comments that a lack of a strategy going forward is bad for markets is valid. Her questioning why all banks received the same terms with bailout funds regardless of risk are valid.
Questioning why the bonus issue was not addressed before the fact – valid. IMHO.
My hope is that constituents of Congress will tire of her questions going unanswered and demand some answers and a policy – clearly stated and carried out – by Treasury.
O’bama has already been talked out of a Pecora style investigation and the new US Attorney General Holder said there would be no Wall St Witch hunt.
And Congress? Well anyone who has watched the Financial Services Committee hearings would tell you not to expect any real reform legislation to be coming down the pike soon, right now there is not too much legislation in the pipeline and nothing has hit the Congressional Union Calendar for a vote that has any teeth in it. Congress in fact right now is on vacation or Spring District Work Period through April 17th hence the rush to pass the budget last Friday night.
The current administration will just continue to blame any sort of problem on the previous administration, the blame game should work well for the next few years.
If you really want to find out what is going on write your reps a letter or email them asking them about their position on financial reforms. I have heard back from my rep on OTC Swaps regulation and I was told he supported it, if it ever makes it to the floor for a vote. Point was he did not express that it it would make it to the floor for a vote.
Menendez should be running around the state for the next two weeks as well, show up at one of his appearances and ask him a few questions. He is on the Senate Banking Committee and should have something to say since he is a cosponsor and is working with Dodd on the “Credit Card Accountability, Responsibility and Disclosure Act”.
Hold them accountable folks and ask questions.
http://www.reuters.com/article/gc03/idUSTRE51B71Q20090212
Sean – I saved this article you posted a month or so ago and have written regarding CDS. Thanks for all of the information.
5:30! Time to head home people. Good work today.
148. BC Bob says:
April 6, 2009 at 2:28 pm
“Black never worked in the private sector”
Chi,
Your point? How many years has Timmy served in the private sector?
—-
And what about our favorite ‘Community Organizer’? Did he ever ‘work’ in the private sector.
Up!
Chi (198)-
By the time the FBI has an airtight case against the banksters, they may already be dead.
We are going into a crisis 100 times larger than S&L with 20% of the number of FBI agents who were dedicated to financial crimes in 1990. After 9/11, virtually the whole financial crimes team was re-purposed to terrorism.
If you ever want to see a reader’s feedback :) , I rate this article for four from five. Decent info, but I just have to go to that damn yahoo to find the missed pieces. Thank you, anyway!
Some major errors in regard to the towns mentioned, Midland Park does NOT have a rail station. And sorry but Garfield, NJ is NOT one of the wealthiest parts of NJ. So these numbers and data a schewed and incorrect. The compiler of data does not know NJ very well…the soruce of this data is flawed therefore any numbers cannot be trusted.
RCLx5m comment4 ,