From the NY Times:
Why Home Prices May Keep Falling
By ROBERT J. SHILLER
HOME prices in the United States have been falling for nearly three years, and the decline may well continue for some time.
Even the federal government has projected price decreases through 2010. As a baseline, the stress tests recently performed on big banks included a total fall in housing prices of 41 percent from 2006 through 2010. Their “more adverse” forecast projected a drop of 48 percent — suggesting that important housing ratios, like price to rent, and price to construction cost — would fall to their lowest levels in 20 years.
Such long, steady housing price declines seem to defy both common sense and the traditional laws of economics, which assume that people act rationally and that markets are efficient. Why would a sensible person watch the value of his home fall for years, only to sell for a big loss? Why not sell early in the cycle? If people acted as the efficient-market theory says they should, prices would come down right away, not gradually over years, and these cycles would be much shorter.
But something is definitely different about real estate. Long declines do happen with some regularity. And despite the uptick last week in pending home sales and recent improvement in consumer confidence, we still appear to be in a continuing price decline.
There are many historical examples. After the bursting of the Japanese housing bubble in 1991, land prices in Japan’s major cities fell every single year for 15 consecutive years.
Why does this happen? One could easily believe that people are a little slower to sell their homes than, say, their stocks. But years slower?
…
Even if there is a quick end to the recession, the housing market’s poor performance may linger. After the last home price boom, which ended about the time of the 1990-91 recession, home prices did not start moving upward, even incrementally, until 1997.
From Bloomberg:
Bernanke Conundrum Threatens Housing on Mortgage Rate
The biggest price swings in Treasury bonds this year are undermining Federal Reserve Chairman Ben S. Bernanke’s efforts to cap consumer borrowing rates and pull the economy out of the worst recession in five decades.
The yield on the benchmark 10-year Treasury note rose to 3.90 percent last week as volatility in government bonds hit a six-month high, according to Merrill Lynch & Co.’s MOVE Index of options prices. Thirty-year fixed-rate mortgages jumped to 5.45 percent from as low as 4.85 percent in April, according to Bankrate.com in North Palm Beach, Florida. Costs for homebuyers are now higher than in December.
Government bond yields, consumer rates and price swings are increasing as the Fed fails to say if it will extend the $1.75 trillion policy of buying Treasuries and mortgage bonds through so-called quantitative easing, traders say. The daily range of the 10-year Treasury yield has averaged 12 basis points since March 18, when the plan was announced, up from 8.6 basis points since 2002, according to data compiled by Bloomberg.
“Volatility has increased dramatically and it seems to get more each day,” said Thomas Roth, head of U.S. government-bond trading in New York at Dresdner Kleinwort, one of the 16 primary dealers of U.S. government securities that trade with the Fed. “A lot of that has to do with uncertainty about whether the Fed will increase purchases of Treasuries. The market is looking for some change in the Fed’s plan.”
From Bloomberg:
Treasuries Fall for 3rd Day on Signs Worst of Recession Is Over
Treasuries fell for a third day before a government report this week that may show retail sales increased last month, adding to speculation central banks may start to raise interest rates this year.
Ten-year yields climbed to a seven-month high as futures that anticipate the Federal Reserve’s target rate show traders increased bets policy makers will raise borrowing costs before the end of 2009. Inflation expectations, as measured by the difference in yield between 10-year Treasury Inflation Protected Securities and regular notes, held near the highest level this year.
“The market is apparently buying a recovery story and that’s why bonds are suffering,” said Christoph Rieger, a fixed-income strategist in Frankfurt at Commerzbank AG, Germany’s second-largest lender. “I don’t share the greenshoot sentiment that’s currently spreading in the market. As previous cycles showed, improvement in leading indicators need not go hand-in-hand with a swift recovery. Growth will be anemic.”
From CNBC:
First Quarter Credit Card Delinquency Rate Jumps 11%
The delinquency rate jumped to 1.32 percent this year, from 1.19 percent in the first three months of 2008, TransUnion said. The statistic measures the percentage of card holders who are three months or more past due on their payments for cards bearing MasterCard and Visa logos, along with American Express and Discover cards.
The average total debt on bank cards also rose, jumping to $5,776 from $5,548 last year.
…
While delinquency rates typically rise in the first quarter, this year’s jump was higher, he said, in part because tax refunds were likely used to cover everyday expenses as the unemployment rate shot up.
Becker also noted that many workers who in past years received bonuses did not get that income, while others saw overtime wages slip. “A lot of the funding that would be available to pay down debt has either disappeared or was allocated to other uses,” Becker said.
From the WSJ:
Sunstone REIT Forfeits W Hotel
Sunstone Hotel Investors Inc. intends to forfeit the 258-room W San Diego to its lenders after its efforts to reach a compromise on the luxury hotel’s $65 million securitized mortgage failed.
Sunstone, a real-estate investment trust that owns 43 hotels, bought the W for $96 million in 2006 from a group led by developer Gatehouse Capital Corp. Since then, the slumping performance of the W San Diego and the broader hotel market has made supporting that mortgage a challenge for Sunstone.
Foreclosures and forfeitures of hotels are becoming commonplace in this recession, though a public REIT turning over a high-profile, luxury property still is rare. Default rates on securitized mortgages backed by hotels have risen sharply as travelers have cut back, occupancies and revenues have tanked and, subsequently, hotel owners have run into difficulty making their debt payments. To wit, 3.16% of securitized mortgages backed by hotels now are delinquent on payments as compared to just 0.44% at this time last year, according to Trepp LLC.
A recent report by the special servicer of the W’s mortgage, Centerline Serving Inc., noted that the W San Diego since 2007 has failed to generate enough monthly income to cover both its operating costs and its interest payments.
From the NY Times:
Groundbreaking Set for New Jersey Transit Tunnel Under Hudson
New Jersey officials have been planning the next train tunnel under the Hudson River for so long that it is already on its third name. This month, work is scheduled to begin on the Mass Transit Tunnel — formerly known as the Trans-Hudson Express and, before that, Access to the Region’s Core — more than 15 years after it was conceived.
A ceremonial groundbreaking was set for Monday alongside a highway in North Bergen, N.J., the site of the first small piece of what could be the biggest transit project in the country. The tunnel, which is expected to take eight years to complete, bears a current price tag of $8.7 billion. That is about $6 billion less than the so-called Big Dig highway tunnel in Boston cost but about $6 billion more than the project’s original price.
Bullshit again, Frank. You stated you were seeing 2% mortgage mods on trophy homes. This is a standard IndyMac mod. 2% is 2%…this is not. BTW, the deal you reference below is a total screw job for most borrowers. They’ll make a handful of payments, then default anyway.
Again, please produce evidence of 2% mortgage mods.
“They gave me 3 years @ 3.197% and then 6.25% fixed for the rest.”
Bullshit again, Frank. You stated you were seeing 2% mortgage mods on trophy homes. This is a standard IndyMac mod. 2% is 2%…this is not. BTW, the deal you reference below is a total screw job for most borrowers. They’ll make a handful of payments, then default anyway.
Again, please produce evidence of 2% mortgage mods.
“They gave me 3 years @ 3.197% and then 6.25% fixed for the rest.”
Suing to complete the project or looking for a way out?
“But now, two decades after the trade center was proposed in 1989, its New York developers are suing the city and three community groups, alleging that the high-rise vision was razed by a brand of neighborhood parochialism and political cowardice unique to Philadelphia.”
http://www.philly.com/inquirer/local/20090608_Builder_s_ambition_hits_Phila__ceiling.html
#5 – I thought that the tunnel project was originally part of a Moses plan at one point.
For those of us watching NYC the NYT has an article on the fall out in Billyburg.
tosh (10)-
Guess pret’s prediction of college grads, subsidized by their parents’ sea of cabbage, didn’t quite come true.
Just another of his asinine predictions gone terribly awry.
A follow-up winner quote from the NYT article;
Man sized bond of the day. 4,300 bps over treasuries, risky enough.
RESTAURANT CO SR NT 10.00000% 10/01/2013
Price (Ask) 35.000
Yield to Worst (Ask) 45.745%
CUSIP 761253AD5
As parents see their own nest eggs dwindle, they are realizing they have to hold on to what they have. The adult children they are supporting are not going to ever pay them back or have the capability to give their aging parents any help.
Tosh & Clot,
Between home and stock depreciation, 401-k’s becoming 201-k’s, pension fund underfunding, social security’s future blow-up…the bank of mommy and daddy’s future does not look too bright.
re #10 Tosh – look out below in Hoboken, same gig as Williamsburg.
“Why Home Prices May Keep Falling ”
This is the best news I have seen in years, lets hope that people switch to renting. Rents will go up and I can make a killing doing it so. Let’s hope Shiller is correct.
#11 – Guess pret’s prediction of college grads, subsidized by their parents’ sea of cabbage, didn’t quite come true.
It did last a long time though, and seriously distorted the market. I spent a few years wondering how people with bartending/indy magazine editing/freelance graphic design jobs could ever afford the rents in Williamsburg, the LES, etc. Then I found out that, obvs, they couldn’t and were living off of Mom n’ Dad.
If Brooklyn RE pricing has to revert to what those recent college grads can actually afford the fireworks should be amusing.
Clotpol and BC Bob Bond of the Day!
GAYLORD ENTMT CO NEW SR NT 8.00000% 11/15/2013
Price (Ask) 84.014
Yield to Worst (Ask) 12.841%
367905AB2
From Bloomberg:
HSBC Unit Said to Stop Financing for Investors in Hedge Funds
HSBC Holdings Plc’s U.S. securities division will no longer extend financing to hedge-fund investors to leverage their investments, a person familiar with the company’s plans said.
The bank is halting the financing by its structured-funds products division and eliminating an unspecified number of jobs in New York, said the person, who asked not to be identified because the information hasn’t been made public. The group reports to Steven Phan, global head of the investment access and solutions groups in London, the person said. Phan declined to comment.
#20 – uh oh.
the media/financial press is working on over drive and hiring more and more psycholoigists to help them to do write ups.
if you think recession is over, and think Bernake is on your side cause of a 60 minutes interview.
you best wake up, and wake up fast.
its far from over.
SAS
and you better hope you don’t get old and need health care…
cause ain’t going to be available for you.
oh yeah, we are out of a recession. lol, yeah right Larry & Curly.
better out down those McDs 1/4 pounders and eat some cantalope.
SAS
For some reason when I read Frank’s posts I’m reminded of Monty Python’s Argument Clinic. It’s contradiction for contradiction’s sake.
Good Luck cutting off the broke kids who are used to an expensive lifestyle. Out in a rich neighbor hood on LI three years ago a few parents got together and cut off their spending daughters from new coach bags, latest IPODS, Cell phones, designer clothes etc. and put them on a budget. Guess they thought girls could go back to Kohls clothing and a night out being walking to the local pizza joint for a slice or a blockbuster night. Well most of the girls were from dual income parents and their houses were empty from 3pm to 6pm daily. The HS girls quickly figured out they were giving away something they could sell. So parents were confused for awhile how their girls could keep spending like crazy after they cut them off until the boys parents kept complaining the kids were hitting them up for money left and right and hocking everything they own on ebay, well the girls cut off every boy in HS cold turkey and were charging for BJs, god bless free market capitalism. Like a drug addict once you get used to a certain lifestyle you will do anything to afford it. Parents may not have the gots to cut off little susie’s rent in williamsburg when rather she moves home she starts stripping and doing lap dances or dealing on the side.
actually the recession ended in May, the govt has yet to figure out the numbers.
i never did like Wrong Island.
: )
SAS
anectdata
MIL just laid off.
sl
It is time for them to suck it up and pay their own way. Too many kids seem to think that their parents’ success somehow should shine down on them (the kids) and allow them to succeed without taking the steps to do so.
Giving the kids a helping hand is one thing. Putting them on the payroll to allow them to frolic after college is absurd.
I don’t understand the thinking that leads one to whore oneself for a Gucci bag.
26#, is is close enough to my prediction made last december. as we enter the second half of this year, beta play will be over. you cannot make a killing by longing or shorting leveraged etfs. financials may still over-perform general market for a few percents but the days of UYG from $1.5 to $4.5 are over. Now it is the time you need seek alpha.
#26 john: If you say so, but the unemployment did not end.
“were charging for BJs,”
Ohhh no, what’s the planet coming to?
17: Don’t be so sure rents will go up as bagholders desperate to try and stop the bleeding compete for tenants.
#34,
Have you been to CA or NV lately? I suggest you get out little more.
Shore Guy, back in 1960s, 1970s, and early 1980s kids did not get any allowances and jobs were very scarce, kids in HS and College needed money and pretty much back in the day most kids, scalped tickets, sold drugs, sold beer at beach, stole radios/hubcaps, worked at flea market selling hot goods, worked in bars or all night gas stations or did dangerous side jobs that no one wanted, sold term papers, sold bongs, sold dead tapes, etc. On top of that we drove cars with no insurance and 4 bad tires and lousy brakes. I don’t think todays overprotective parents will go for that.
How times have changed, back in the day you could do all the activities listed above in a single day when you were 18 and unemployed in the summer.
Shore Guy says:
June 8, 2009 at 9:15 am
It is time for them to suck it up and pay their own way. Too many kids seem to think that their parents’ success somehow should shine down on them (the kids) and allow them to succeed without taking the steps to do so.
Giving the kids a helping hand is one thing. Putting them on the payroll to allow them to frolic after college is absurd.
Frank,
Are you on that buy a foreclosed home and rent it back to the illegals game plan?
McD’s warning about missing earnings due to FX issues? ruh-roh.
Obamma promises jobs? Ok, perhaps I’m just not looking in that correct area; can someone tell me where to apply for one of these jobs?
http://news.yahoo.com/s/ap/20090608/ap_on_go_pr_wh/us_obama_stimulus
#37,
Illegals are the best renters, if they don’t pay you terrorize them with deportation.
“Illegals are the best renters, if they don’t pay you terrorize them with deportation”
You are a sorry excuse for a human being.
“frank says:
June 8, 2009 at 8:43 am
“Why Home Prices May Keep Falling ”
This is the best news I have seen in years, lets hope that people switch to renting. Rents will go up and I can make a killing doing it so. Let’s hope Shiller is correct.”
Dude you are about as stupid as they come. Rents are dropping as hard if not harder than housing prices.
We’ve heard this same stat before, but last time it was 1 in 10, now 1 in 9 are on food stamps.
Renter #41
I suggest you don’t take the comments at face value. There may be some attempts at humor — not everybody can match John’s record.
S
#42 – I have been shopping for apartments in NYC recently. Rents are still pretty high, and as the summer time approaches they are doing well. For example, Rockrose’s Hudson Yards building which recently started renting is filling up very fast. They rented 7 apartments on a random Tuesday I went.
Mind you they are offering 2 months free on 14 month lease.
Food Stamps are BS, the waldbaums in Forest Hills Queens always had the BMWs and Mercedes pulling up with their stamps. The real poor have pride and rarely accept handouts, so in fact a rise in foodstamps would mean a rise in scammers not a rise in poor people.
They are also taking a lower quality of tennant, my laid of friend rented an apartment in a brand new building last month, she has no job and no income and not that much in the bank. Back in 2007 she would have been laughed at trying to rent a 2,500 a month apt.
Alap says:
June 8, 2009 at 10:55 am
#42 – I have been shopping for apartments in NYC recently. Rents are still pretty high, and as the summer time approaches they are doing well. For example, Rockrose’s Hudson Yards building which recently started renting is filling up very fast. They rented 7 apartments on a random Tuesday I went.
Mind you they are offering 2 months free on 14 month lease.
tosh (18)-
When I got out of college (1980), the NYC rental market wasn’t subsidized by mommy/daddy. A gazillion people- me included- paid rents commensurate with our incomes.
It wasn’t much.
John (19)-
Sorry. I don’t feel like lending money to Opryland.
‘Don’t Ask, Don’t Tell’ Policy Left Intact by U.S. High Court
Those guys are true heroes, back in WWII you always heard of guys falling on grenades to save the troop and what a job it was for the mortician to get the body ready for the wake, now with the new gay friendly army I heard it is even harder on the morticians, if fact one gay jumped ass first on the grenade and it took almost six weeks for the mortican to get the smile off his face.
John (25)-
It would’ve been more heartwarming if you’d posted that thought on Sunday AM.
seneca (38)-
Everybody on the planet was expecting MCD to blow past the number.
That’s gonna spook a lot of people.
Green shoots, indeed.
Alap,
I looked at that building. It’s nice but there’s nothing near the place.
That’s the whole monkey business with the real estate industry. Nobody can accept that rental and sales comps need to go down so they throw in all the free months rent etc.
John –
I find it hard to believe that you are an accountant. Hard numbers never seem to figure into any of your “analysis”.
Great news. Oblamma & Timmay now declare themselves King and Prince of America.
This should get interesting once CRS goes directly to the gubmint, hat in hand.
“In this sense, the US will be forced to provide unlimited DIP funding as industry after industry discovers it is insolvent and the whole debate over whether the current economic crunch is liquidity driven, is concluded in favor of the rational minds, and lenders discover they have no recourse, not even with the Supreme Court Of The U.S.”
http://zerohedge.blogspot.com/2009/06/obama-claims-tarp-issue-is-out-of.html
vic (54)-
Yeah, but I bet he can tell you exactly where to go to get a BJ from a hot HS girl on LI.
what do you do when the pink slips far outnumber the green shoots?
sl
Did anyone go to the REDC auction yesterday??
It was on fire, people were bidding on homes like it was 2005.
Where’s the recession??
Just in case anyone’s wondering, mortgage rates went up some more today.
We may get a second repricing before the day’s out, too.
C’mon Bergabe…run the doomsday machine harder!
sl (57)-
Weave them into a blanket, and suffocate Frank with it.
“what do you do when the pink slips far outnumber the green shoots?”
John,
Is this the same broad who purchased a shiny new BMW/Infinity a while back?
I know such a person. In fact, I know of a few people like this. One of them is carrying 15K in college debt, iced (albeit generic) Rolex on her wrist, lives at home and leases a loaded CLK.
I was driving down the BQE this weekend counting all the late model cars passing me by. At one point I looked over at a loaded, pristine, sports package, dark grey 2009 C class driven by two OG hood rats (obviously not giving it away for free) and I just laughed.
This bubble has created many humorous characters; home-livin-WS-wannabees, germany sedan drivin hood rats, trustafarians in billyburg.
Time for a reeeeeeee-wind!
I can corroborate John’s food stamp story. You should see the types of cars food purchased via stamps ends up in!
last sentence was in reference to Brighton Beach.
Listening to some of these commentators on tv and radio looking for the bottom on both real estate and the general economy reminds me of the anxious kid in the back seat. You know, the one who keeps repeating:
“Are we there yet?”
PA only gives UE benefits on debit cards. Last week someone bought a pair of expensive glasses using one at my second job.
A picture is worth a thousand words?
http://d.yimg.com/a/p/rids/20090606/i/r657478751.jpg?x=400&y=261&q=85&sig=.vqQ3jvjzcswIsd_1BY3hg–
U.S first lady Michelle Obama and France’s First Lady Carla Bruni-Sarkozy attend a ceremony to mark the 65th anniversary of the D-Day landings in Normandy at Colleville-sur-Mer cemetery, June 6, 2009.
Carla Bruni is a crack ho.
in re food stamps: apparently it’s the new rage with hipsters.
– ironic mustache
– vintage t-shirt
– drink PBR
– use food stamps
– always know mom and dad will bail you out.
http://www.nytimes.com/2009/06/08/nyregion/08trustafarians.html
Parental Lifelines, Frayed to Breaking
By CHRISTINE HAUGHNEY
Published: June 7, 2009
For the past five years, Ernie DiGiacomo has been able to count on parents to guarantee the $1,500 to $2,500 rents he charges for the 15 apartments he owns in Williamsburg, Brooklyn. When he called renters who had missed payments, he often heard, “My parents will send you a check.”
But in the past six months, the parents are pulling back financial help, he said, and as a result, he has watched more renters move out.
“Most of them are moving back with parents,” Mr. DiGiacomo said.
…
For 18 months after graduating from Colby College, Jack Drury, 24, lived the way many Williamsburg residents do: He followed his passions, working in satellite radio and playing guitar. He earned money as a bicycle messenger and, on occasion, turned to his parents for money.
But as the recession deepened last fall, his parents had to cut the staff at their event planning company to 30 workers from 50.
…
The real estate market, too, is shifting as wealth evaporates. Ross Weinstein, a managing partner of the Union Square Mortgage Group, has worked with hundreds of Williamsburg apartment buyers in the past two years.
“A lot of the money came from family,” he said. “That piece, it’s gone for a lot of people.”
In the boom years, Mr. Weinstein said, 40 percent of the mortgage applications he reviewed for buyers in Williamsburg included down-payment money, from $50,000 to $300,000, from parents. About 20 percent of the applications listed investments that gave the young buyers $3,000 to $10,000 of monthly income.
But in the past two months, Mr. Weinstein said, he has handled two to three deals a week in which the parents cut back their down-payment help.
The number of sales in Williamsburg dropped nearly a quarter in the first three months of this year compared with the same period a year ago, according to HMS Associates, a Brooklyn appraisal firm. And in three recent cases, Mr. Weinstein said, owners sold their apartments in short sales — selling for less than the bank is owed, to avoid foreclosure — because they were no longer receiving parental help.
…
Eric Gross, 26, a construction worker, was going to buy, with help from his father, a $600,000 one-bedroom condo with city views at Northside Piers, a luxury building, he said.
But his father, who works in the auto industry, said he had to reduce his contribution. “He’s pulling back the lifeline,” Mr. Gross said.
So Mr. Gross is scaling back, shopping for a $300,000 apartment…
RE: Carla Bruni is a crack ho.
Sporting a fine exterior, though.
Bruce update:
So, at 12:02 p.m. NO TICKETS LEFT, at least for Friday. What a friggen joke. That was via telephone. Computer connection kept bombing out.
12:02 was the time hanging up, BTW, not calling.
kettle1 and veto–
your research on the below thread is outstanding. A couple of things jump out at me as being really surprising:
1. similarity in scope of the 80s bubble and the current bubble. I was under the impression that the current situation was really unprecedented, but it appears that it may not be. Although there does appear to be significantly more leverage this time around due to the rapid growth of HELOCs.
2. Long term trend of 6.5x income for local house prices. I thought it was much closer to 4.0x. In any case, your research proves that waiting for a 3.0x multiple or less is probably a waste of time.
6.5 income? That is suicide, and not painless.
At least it is if one is putting 20% down and financing 80%. If one is paying cash or just financing a smaller portion of the home, larger multiple may work, but no way is financing 4, 5, 7, 7X income a reasonable move.
34: Yes and yes. FL too. But my reponse was mainly referring to locally.
Shore– I think what the 6.5x long term trendline indicates is that the median income family is not the typical homeowner in NJ.
#72 skeptic:Long term trend of 6.5x income for local house prices.
I can’t see how that would be possible.
#68 qwerty: He went to collge to be a bicylce messenger?
ok buying a house at 6.5 your income is risky but homes selling at 6.5 average income so what. also if 60k is average income that only equals a 390K house. People just stay home a few years after college or rent a one bedroom for a few years after marriage and that is a pretty easy goal, you just need a big downpayment. I househunt ocassionally and the trade up town I like guess what people buy the houses that are on a nice plot, have good sq footage and are reasonably priced pretty quick, the dogs still sit. It is mind boggling but there is a lot of cash out there.
Notwithstanding the blah nature of my posts (which are intentionally so), my firm has instituted a social media policy that permits use of social media but is so vague as to what is, or is not, objectionable conduct that I must err on the side of caution and refrain from posting. Therefore, I have decided that I will only post from home, and my sock will have to go dark during business hours. So sastry, victorian and schabadoo will have to mock each other (and, of course, John, Frank and bi) as I will be joining a certain patient in the largely inactive column.
Doesn’t mean I can’t lurk though.
Skeptic, 72 shore 73
point # 2 home price/income ratio…
The 6.5 ratio is HPI which is different them home price / income
take a look:
http://tinyurl.com/o268qq
I only had enough data to do home price/income for the state of NJ back to 1999. The Nj median home sales price / NJ Median Household Income was at about 3X before the current bubble started. HPI appears to be about 6/6X median home price.
Also note that the 3X ratio is a ratio of the full purchase price to gross income, not the mortgage to income ratio
3b (78)-
Bet that guy can cook a righteous bong hit, too.
Note to self: eliminate Colby College from my kids’ lists.
A funny thing happened on the tickket line. We had multiple lines and multiple computers going.
The computers kept allowing a ticket selection then returning a 404 error.
The automated phone lines reported no seats available.
One of the phone lines, one of us pressed a wrong button and got in que for a live person. We kind of forgot about that line then heard someone saying, hello, hello….
The live person line, about 25 minutes after the automated line said “no tickets,” had a couple of nosebleed seats.
I don’t know if we will use them, but, we have them, anyway. And at face value, were less expensive than a pair of shoes.
plume (80)-
Tell your superiors that I invite them to take their social media policy, sit on it, and rotate.
Social media policy = thought police
re. 6x etc. For those of us who are earning two, three, or more times median income, 3x income or less should be within hand in NJ. And, since these incomes are higher than most parts of the country, it should make nice second/third homes very affordable as this all plays out.
The 3x is important on a micro level, not a macro one.
#70 John: nobody making 60k year should be buying a 390K house, and I do not think there are any lenders out therre any more doing those kinds of deals.
Nom, buy a personal BlackBerry and stay conected. Or go Gator’s route and do the Treo/Pre thing.
“the median income family is not the typical homeowner in NJ.”
Agreed. And why should they be? Homeownership has always skewed toward rtelativedly-higher income families. Very few folks at minimum wage ever were home buyers.
Issuers Credit Card Reductions and Eliminations:
http://www.creditslips.org/creditslips/credit_debit_cards/
Interesting that the banks would be cancelling these cards with so many green shoots ahead
I gave up on Bruce after a lackluster Giants Stadium show in 2002 – or was it 2003? His audience seems to be graying as well.
#81
“The 6.5 ratio is HPI which is different them home price / income”
Kettle– thanks for the explanation. As I said, I was pretty surprised by what I thought (wrongly) that number meant.
What is the HPI index?
SHore,
the problem is that home ownership has been artificially pumped to record highs for our area. All data points to home ownership rates returning to normal levels, and it will be very messy.
(see the tale of 2 bubbles doc my Veto and I for the data)
83 Congrats Shore! Which day did you get?
Skeptic,
The HPI is the governments version of the case shiller index. However they define their geographic regions differently. The HPI index veto and I used was the HPI index for the state of NJ. We also compared it to other local HPI indexes such as the NJ-NY index, NJ-PA Index and the S&P CS metro Ny index.
The comparison on on the last page of our report.
HPI data:
http://www.fhfa.gov/Default.aspx?Page=14
jm,
Last years Giants Stadium shows (First and last ones) were very good. Also, Fort Lauderdale last year was amazing, it was rescheduled from the show they were supposed to do the day after Danny died and was the last one before Europe. It was worth flying down for.
Boston this year was nothing special but Hartfore was a nice night out. I could do without Pete the Outlaw Cowboy Indian Maiden Hair Braider, but Seeds has been inspired.
I am hoping that by the time October comes around, he will be done promoting the insipid new album and be more focused on a retrospective show. If so, freed from both the new material and the political statements from last year’s tour, the set lists could be quite good. We shall see. Worse comes to worst, we have a night out.
I agree, back when I was dumpster diving for tires for my car and doing a lick and roll to get into a club the last thing I was thinking about was a house. Average income is a stupid metric as the 20% of lowest earners most likely are not in the hunt for a house.
My big questions is ther are tons of homes in NJ from one million to five million that people keep buying, who are these people?
Shore Guy says:
June 8, 2009 at 12:33 pm
“the median income family is not the typical homeowner in NJ.”
Agreed. And why should they be? Homeownership has always skewed toward rtelativedly-higher income families. Very few folks at minimum wage ever were home buyers.
Gator,
9th. Our seats are just north of the Hess refinery off of Rts 1 and 9.
BTW, we are still talking about those other ones. But, if someone else should emerge, go ahead and sell them.
“the problem is that home ownership has been artificially pumped to record highs for our area. All data points to home ownership rates returning to normal levels, and it will be very messy.”
That is just another way to say the market presents opportunities for the prudent.
Shore
The ownership data (page 9):
http://tinyurl.com/lzxf6x
notice that during the 80’s bubble the peak in home owner ship was significantly smaller then todays, most likely due to the lack of “creative” financing. The 80’s bubble returned to the median ownership rate.
if todays bubble returns to anything close to the median, then we will see a huge drop in ownership. This could have some definite exacerbating effects on the downturn.
Ket,
I don’t know how it can do anything but revert to mean. Three reasons come to mind, we have loss of creative financing and the ever-upward bubble (no punn intended) has burst, the people in peak earning categories see the need to save for retirement and, I suspect are less inclined to bet the farm on housing, demographically, I don’t know that there is the same demand for suburbal housing, which abounds here in NJ and so many other places as more and more folks rediscover cities.
my impression is that the above $1M buyers are mostly move-up. that is one reason that market is particulary weak right now. the other reason is that jumbo mortgages are so tough to get, making it harder for high income first time buyers to get into these properties. the people left over are those without another house to sell who have high income and lots of cash on hand, and these people, being prudent, are understandably reluctant to buy right now.
BC, Gator, et al., anyone snag Thurs or Fri tickets today?
Here is someone who perhaps should have paid more attention to price and income. Or perhaps he did not know that as frank tells us he could have refinanced into a new 2% option arm loan.
This house sold in March of 2006 for 740K. Incredibly it sold again 6 months later for 968K!! Yes folks almost $1,000,000.00. Well it is now bank owned with an asking price of 623K.
http://www.njmls.com/cf/details.cfm?mls_number=2925359&id=999999
so kettle– is your view that price to income will revert to 3.0x? If so, it seems that total decline in prices should reach something like 50%
#103 Shore
Thur still available, but I think I’ll pass. The Fri show would be good for nostalgia, but that’s about all. I’ll try for the late release tickets later.
News from the job front: I don’t know if mentioned this last week but, I received an email from a recruiter who told me not to email him any longer as it’s becoming “bothersome” as he already has my resume. I emailed him for a grand total of two times. I hope he doesn’t get “bothered” with a pink slip.
Nom de guerre
“I will be joining a certain patient in the largely inactive column.
Doesn’t mean I can’t lurk though.”
Lurk away, old pal.
The part that amazes me is that people are coming in to buy trade up houses without jumbos and without selling current homes. You can only write off a million dollar mortgage and you can go confirming for 629+100K home equity at close to equal 729. It is better off just to do the 729 cheap loan than go jumbo. Plus bridge loans are harder to get so you need to do this without proceeds from home you are selling. So people come in with 300k to 500K down without selling current home and have 100K left for renovations and 100K safety net in bank. Trouble is this crowd is just looking as we are all waiting for bigger better deal. If you are lucky to have that much cash you don’t want to blow it on one bad decision. That said when market turns up people may all jump at once for fear of living a life with no swimming pool and tennis court in their backyard.
skep-tic says:
June 8, 2009 at 12:51 pm
my impression is that the above $1M buyers are mostly move-up. that is one reason that market is particulary weak right now. the other reason is that jumbo mortgages are so tough to get, making it harder for high income first time buyers to get into these properties. the people left over are those without another house to sell who have high income and lots of cash on hand, and these people, being prudent, are understandably reluctant to buy right now.
Lurker sounds like he is going to have a windshield wiper on his computer screen.
SirRentsalot says:
June 8, 2009 at 12:56 pm
Nom de guerre
“I will be joining a certain patient in the largely inactive column.
Doesn’t mean I can’t lurk though.”
Lurk away, old pal.
Skeptic 105
Yes, The more interesting question is how much further then expected will prices need to drop. There is considerable downward pressure of wages and with globalization it is unlikely that they are going to increase in “real” terms anytime soon. If incomes continue to fall, so must the associated home prices to get to that 3.0/3.5 ratio.
Nom,
does a certain patient still lurk here???
Skeptic
In real terms i think that we could end up with a total of 60% off peak due to overshoot and, a shift away from consumerism, and falling wages. The catch is that i expect inflation to take off before we hit that bottom. So a casual glance would suggest that we never approached that point, while a “real” inflation adjusted view would show such a trend.
Just a guess.
kettle1 says:
June 8, 2009 at 1:13 pm
Just a guess.
ket: you have a gift for understatement…
Kettle no way, back in Feb/March/April I noticed all my daughters expensive kiddie party invitations grinded to a halt and moms in town were talking about cutting back, daughter was double booked parties in fancy places this weekend and parents were talking about tennis and science camps and summer vacations. We Americancs battened down the hatches and saved saved saved from October through April and we are sick and tired of cart coffee, dirty cars, pizza coupons and last years fashion, let the spending begin. The recession is over. Please God don’t ever ever let us have to drive 3 series or c classes again haven’t we suffered enough, surely a 2010 7 series and a new mcmansion is not much to ask for after the six months of hardship we have gone through as a nation?
skep-tic says:
June 8, 2009 at 12:53 pm
so kettle– is your view that price to income will revert to 3.0x? If so, it seems that total decline in prices should reach something like 50%
skep: yes…..wait to buy until you see this affect….
affect = effect
chifi, how you doing, clients must be finally happy with you!
btw 3x means 3x the income in the town you are buying in.
John says:
June 8, 2009 at 1:19 pm
chifi, how you doing, clients must be finally happy with you!
JJ: It is freakin’ insane. It must be Barbara Corcoran calling me an idiot of national TV that closes the deal……
“BC, Gator, et al., anyone snag Thurs or Fri tickets today?”
Shore,
I got 2 for the last night, Friday, lower level. At 12:04, I got thru, online, inputed 4 tickets, best available. After the BS searching time, there were no tickets. I was ready to log off, decided to try for 2. Can’t believe that 2 lowers came up, around 12:20. 2 lowers at 12:20, yet nothing, anywhere, for 4 at 12:04?
I hate TM.
Shore 103 – I could have had seats in the sky for Friday, but opted not to purchase. I had a morning meeting run long, and couldn’t start trying to conenct until 12:10. I’ll stick with what I have the previous week.
FYI – I have had no issues connecting via the web and getting seats just by using a single computer. I didn’t try for GA, but was successful in getting the lower level seats last week when I was able to go online promptly at 10.
JJ: I freaking dying…..I have to buy a seven figure sum of individual NJ munis, and all I find is crap.
Which of the insurance backstops are worth depending on? I see some Berkshire backed stuff, but there is so little of it.
BC Bob says:
June 8, 2009 at 1:25 pm
“BC, Gator, et al., anyone snag Thurs or Fri tickets today?”
I hate TM.
Bost: I would log onto TM from time to time (2-3 times a week) randomly until the concert. They will just throw a couple of sections.
As an example, MSG show for DM. From the moment tix became available, the best you could pull was something UP and AWAY. A week ago, which is about a month after the initial sale and 2 months before the concert, Sections 79 & 80 were opened up. Those seats are probably the best seats in the house other than the front half of floors seats. In fact the fact that there is some elevation is pretty good. The only drawback is not being dead-on………fine, for some of you the other drawback is that it is a DM concert ;-P
John (96)-
There are not. The absorption rate stands at 40 months. Simply not true.
“My big questions is ther are tons of homes in NJ from one million to five million that people keep buying, who are these people?”
“Bost: I would log onto TM from time to time (2-3 times a week) randomly until the concert. They will just throw a couple of sections.”
Chi,
Bingo. I always get tickets as the show date gets closer. There are always ticket drops. A couple of times, I even got them at the box office, the reserved tickets that are not used.
They are famous for creating hoopla for multiple shows. They indicate sell out and most of the upper tiers are gone. Then when additional tickets are released those with the nose bleeds, purchase better seats. You will be able to purchase tickets for much less than face for any night, with the exception of the last night.
Although people are buying pretty expensive plays still. A house in Bradley Beach went a year ago for app. 750K and 10K in taxes. I was floored – bought by 2 sisters to rent out.
Saw a wreck sell for 535K with at least 150K in renovations, but at least it was very close to the beach and had a view of the lake.
“My big questions is ther are tons of homes in NJ from one million to five million that people keep buying, who are these people?”
Soybean traders?
Clot the over 600k segment how is that fairing.
mike (129)-
Slow, wrenching, torturous death.
However, all listing agents do report hopeful signs on that front.
Too bad none of these signs involve actual sales.
John– the thing is, basically no areas have median incomes above $150k. However, I do not think the 3x multiple really applies to all towns across the board. Some towns are probably much higher because people are willing to pay an added premium for the name, there is a substantial amount of old money, etc. So the income multiple is just one metric among many that should be considered
Here we go;
“In response to the ‘Buy American’ provisions of the U.S. stimulus package, Canada’s mayors narrowly passed a resolution Saturday that could potentially block U.S. companies from bidding on city contracts.”
“This U.S. protectionist policy is hurting Canadian firms, costing Canadian jobs and damaging Canadian efforts to grow our economy in the midst of a worldwide recession,” Perrault said.
http://www.cbc.ca/canada/british-columbia/story/2009/06/06/mayors-resolution.html?ref=rss
People need to be prepared for Leaner Times. Obama can facilitate this by bringing back the “Draft”. Nothing changes your perspective like a couple of years in the Army, with Room & Board as Compensation. Makes you appreciate, “A Lot Less”.
re: #115 – John Boy still longing for the days of old where any old cop, fireman, teacher or even Realtor could go out and lease a 7 Series with no questions asked.
FYI – The previous generation 7 series peaked in sales volume in the US back in 2002 at 22k units a year. So at most there were about 100k of them on the road in the entire US. It seems John’s town out in haughty long island where 97% of the wives don’t work accounting for about 20% of all BMW 7 Series sold nationwide.
BMW will be lucky if they move 12k of the 2009 7 Series this year, with the absence of the lease programs on these $85k cars, they only sold 648 for the entire month of May and 2,390 year to date.
http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=ind_focus.story&STORY=/www/story/06-02-2009/0005037137&EDATE=
I like the 7 series used in the Tranporter movie. how much for one of those used?
Sean I want a 7 series, I like the new 2010. I am buying one at auction in 2013. I think it is a big plus they are selling less makes it more desirable. I just want to avoid black as I see them used as cabs outside Goldman.
Re, 97% of the wives don’t work, should be 100%!!
This should help fertilize those green shoots…
‘Shadow market’ may undercut real estate rebound
Only 30 percent of foreclosed homes are currently on the market nationwide. Could the backlog of hundreds of thousands of empty or rented homes swamp recovery?
http://features.csmonitor.com/economyrebuild/2009/05/22/%E2%80%98shadow-market%E2%80%99-may-undercut-real-estate-rebound/?ref=patrick.net
Sean, when I am getting my free BMW oil change on Saturday I am going to nail them big time at the free breakfast buffet and use extra TP after a big dump, they will have to take a write-off for June if I stay for lunch. They also better do a damm good wash job on my baby too. VROOOOM> Donald Trump”s cousin personally is my service advisor.
I really don’t give two hoots but dang when I am there some asians and african americans getting their BMWs serviced really really get into ordering around the folks who work there like the king of england.
Think the banks can out wait Mr Market?
Foreclosures typically sell at a 31% discount to similar homes whose owners aren’t in distress
http://www.businessweek.com/the_thread/hotproperty/archives/2009/05/are_banks_keepi.html
ftalphaville has an interesting post on the underemployement theme that was discussed here late last year and is starting to pick up steam. I’d expect the NYT to bring it up sometime next year. The general idea of underemployment got some press coverage during the post .com bust.
shadow market is mainly junky neighborhoods.
Mish talks at Google
http://themessthatgreenspanmade.blogspot.com/2009/06/mish-talks-at-google.html
Pretty good. Talks about blogging, the economy etc
Gold for June delivery fell $10, or 1%, to end at $951.70 an ounce on the Comex division of the New York Mercantile Exchange, the lowest settlement price since May 21. The more active August contract lost 1% to $952.50 an ounce.
rates are rising inflation is in the air so why is gold falling?
how about that idiot google guy who drowned yesterday, talk about stupid.
RE: hurting Canadian firms, costing Canadian jobs and damaging Canadian efforts
Let’s end this already, there’s room on the flag for another star.
BC (133)-
I fully expect to wake up one day and find they’ve revived Smoot-Hawley and the Gold Confisc@ation Act has been reinstituted.
vodka (138)-
Hey, that’s not fair. Those lenders are holding back the other 70% until the dry rot and black mold can more fully develop.
kettle1 says:
June 8, 2009 at 2:17 pm
Think the banks can out wait Mr Market?
Think you can post something on this blog that is not full of confirmation bias?
chi (148)-
So what’s the mastermind play the banks have up their sleeves here? What is it we’re missing?
Think Chi can be a pompous @ss?
“rates are rising inflation is in the air so why is gold falling?”
John-Boy,
It’s idiotic questions like this that cause me to constantly repeat the words used by Admiral Stockdale.
Gold is 6% off its highs. The dow approx 40% off. A better question; If green shoots is so apparent why the discrepancy in the spread?
RE: I want a 7 series, I like the new 2010.
The 2010 is less ugly than the current. However, “less ugly than the current” won’t translate into a $90K transaction for most.
Bangle, and corporate’s willingness to implement his “vision,” has decimated the entire line.
I believe he was booted 6 months ago. Their line will recover (if they’re willing to address it) in 5-6 years.
BC (151) –
You should be happy with statements like those, this means that the bull has a long way to go. I am hoping that more people feel the same way. Please give me a chance @ 850 :).
I spotted a 2010 7 near Alpine a few months back. I stared at the back of it for blocks and blocks before I realized that it’s not a Lexus. Ill designed lights and the so “right-now” chrome bar across back.
cHIFI
Apple unveils new 3GS iPhone
http://money.cnn.com/?cnn=yes
Want a supersized soda with that?
#152 – Bangle… has decimated the entire line.
My biggest problem has been the ever increasing porkyness of the 3 series. I was hoping the 1 series would shed a lot of that weight and get the company back to its 2002ti/tii roots. I actually yelled at my monitor when they released the stats on said 1 series and they were in the 3k lb region.
Maybe without Bangle around they will add lightness back in to the cars.
I was also under the impression he left voluntarily?
Pure lunacy; Ariel Atom 500.
Vic [153],
I agree. I actually hope it goes a lot lower. Then, borrow Hank’s/Ben’s bazooka.
“Think the banks can out wait Mr Market?”
hee – banks haven’t had to operate within the market in awhile, so I’m just not sure that the question even applies yet. (Leaving aside the little no-name banks that go under every Friday.)
“So what’s the mastermind play the banks have up their sleeves here?”
Clot
“Borrow” from you and me?
#127 Beach: for every 1 or 2 that sells, there are 15 or 20 that do not.
Here comes the blowout afternoon mystery buyer.
#141 John: Wrong.
who is this mystery buyer??
BMW is more about handling than speed anyhow and it is understated, it does not scream I have money, in fact a five series looks like any old plain boring four door sedan. But the right people know what you have.
Now back when I had my two door black dukes of hazzard car, that was a car, key to wicked speed in that baby was the bench seat and pop out rear windows (less weight then buckets and having roll down mechanism), additionally I was blessed with no AC and AM radio with no rear speakers, no air bags, anti lock breaks or cat covt etc. I basically had a V8 engine attached to rearwheel drive. My BMW is cute, but let me put it this way I recall some punk in a vette with his girl friend at a light down in Island Park diss me, I just said “lets do this” I smoked it big time and took him by a good 20 feet. The sheer excitment of grinding G60 bias belted tires on a rear wheel drive posi off a light praying to god you don’t fishtail the vette or a string of parked cars while wondering if the drum brakes are going to stop this beast was a pure insane joy. The BMW is cute to drive. Although one thing the BNW has is when I am going fast I don’t have to pray, once I was so stupid in another car I had a 1969 Buick GS, nice Earl Schribe blue, 350v8, booster shocks and triple leafs I had some brooklyn boys in a monte throw it down outside leonards of Great Neck, now that sucker did not back off till 120mph, when we both hit the brakes, of course in the rush I forgot I had the white cloth wear stipes on my bald used tires hanging out so it was not too smart. At least when we got the 67 firebird 400 cranked at 140mph one out on Sunrise at 5am around Hampton bays we had new tires. But man oh man don’t race a vette with two girls in your back with the top down, they were claiming they were yelling slow down, who could hear them, plus isn’t that the vettes job to slow down. Why is he throwing it down with a 350ci girls car anyhow, well the good news is only the slow one gets caught.
163:
Goldman Sucks quant funds, milking remaining money out of everyone before November collapse.
WTF, are you doing a history lesson here. New money I put into stocks and bonds in 2009 are way up, gold is flat.
Gold is 6% off its highs. The dow approx 40% off. A better question; If green shoots is so apparent why the discrepancy in the spread?
Just found this blog while searching for something else. Nice post. I’m subscribing to your feed.
HEHEHE says:
June 8, 2009 at 2:51 pm
Think Chi can be a pompous @ss?
HEHEHE: Here is information that is sourced from the wiki psychiatric definition of “delusion”
* certainty (held with absolute conviction)
* incorrigibility (not changeable by compelling counterargument or proof to the contrary)
* impossibility or falsity of content (implausible, bizarre or patently untrue)
Some of the posts here posit arguments that follow these definitions?
I guess then it is reasonable for me to allege that such people are pathologically delusional.
OR maybe I have no clue WTF I am talking about and just relied on a bunch of crap I cobbled together from the internet?
If pompous is a synonym for objective, then I plead guilty.
165:
Oh, I thought the Supreme Court ruled against the Indiana State Pension Funds for Teachers, Fire, and Police.
Chi,
You sound like an angry man. You need God in your life.
“New money I put into stocks and bonds in 2009 are way up, gold is flat.”
J,
WTF are you talking about? In early Jan, August/09′ gold was $810. Right now its trading at $953. Also, one item that you forgot. Gold futures are leveraged, approx 13-1. Go sharpen your pencil and figure it out.
You have 3 options with the market;
1] Go long with the trend
2] Go short against the trend
3] You have no idea what the F you are doing, then buy straddles.
If you don’t do anything then STFU.
“But the right people know what you have. ”
John, remind me which people are the “right people”?
I am enjoying how the MSM has finally given up trying to explain the market moves. After spending the entire day trying to ‘splain the move down, the stories are all just “market up led by financials” without any ‘whys’ or ‘how comes’. Its priceless really.
BC Bob with new money bought stock near bottom at end up Feb, up 60%, with new money piled into junk bonds at end of march up 40%. Overall I am up 50% this year. Heck I have lots of stock up 85% and bonds up 250% ytd. You are gambling on leverage, I am a play is safe sort of guy. Plus saying you are up that much does not mean much with out the dollar amount, my brother in law was bragging he bought Citi at one dollar a share and he snagged the bottom, my next question was how many shares and he said 400, big deal. BTW you and I are doing it totally different but the key is we are usually both right, one may make more than the other in profits but considering 99% of pros have been wrong it is amazing we have been right, even more amazing we are both right a lot on the long side.
My big questions is ther are tons of homes in NJ from one million to five million that people keep buying, who are these people?”
the evil “speculators” that is.
JPM, GS, MS, Amex will be given back that damm TARP money soon and market can’t wait, today was a real bullish day when even SLM and GM can rise 30-40%. It will soon be M&A time baby, long term govt bonds are only going up as that bubble is deflating and people are becoming more aggressive and taking on more risk, there is not inflation, there is not deflation, goldilocks is in the building and she is smoking hot.
John,
Thanks for the market summary. I missed all of that.
#177 John:there is not deflation, goldilocks is in the building and she is smoking hot.
Sorry to see you are off your med again.
“Plus saying you are up that much does not mean much with out the dollar amount”
J,
Then I become another Richard. Where’s he?
Actually, I really don’t like talking about it at all. If you notice, the only time I address it is responding to other’s BS.
How can I be gambling if I am hedged? My price is locked in. The market could drop to $300 tomorrow, I wouldn’t care. On the flip side, if this did occur, where do you think the Dow will be trading?
You are right, there are many different ways to skin the cat. We just happen to be in different tranches.
The end is nigh…..
http://www.nypost.com/seven/06082009/news/regionalnews/high_line_park_finally_opens_on_manhatta_173203.htm
John (164)-
I just copied your #164 to the Quarterly American Journal of Poetry.
Hope you don’t mind.
You the man BC, actually I am on holiday from investing right now, not selling not buying, market has risen too fast for me, don’t think it is overvalued enough to get out, but the bargains are gone. Heck it has been 7 days since my last purchase.
I don’t hedge, I like to feel how cold the water is when I am taking a leak.
Do I get a prize for the longest sentence?
Clotpoll says:
June 8, 2009 at 4:30 pm
John (164)-
I just copied your #164 to the Quarterly American Journal of Poetry.
Hope you don’t mind.
This is cute…
http://www.newsday.com/media/flash/2009-04/46217527.swf
John (184)-
We’ll let the longest sentence stand.
Let it feel how cold the water is, so to speak…
Expect to see Ginsburg turn up dead very soon.
“I don’t hedge, I like to feel how cold the water is when I am taking a leak.”
Aren’t you sick of pissing on your own arm?
Boy, do I wanna see the members of SCOTUS weighing in on this Chrysler debacle…
From this layman’s POV, it’s a classic no-win dilemma for almost all of them.
Clot,
You didn’t think those egomaniacs were going to let a headline grabbing opportunity slip by did you?
A group of 10 large financial institutions submitted capital raising and governance plans to the Federal Reserve that would meet the agency’s goal of having the banks capitalized to survive an adverse future economic scenario, according to a Federal Reserve statement on Monday. The 10 institutions, including Bank of America, Wells Fargo and Citigroup, were required to submit their capital raising plans on Monday. “As supervisors, we will be working with the institutions to ensure their plans are implemented quickly and effectively,” the Fed said. As part of the government endeavor, banks must raise sufficient capital by November 9. The group have already taken steps to raise capital.
John,
Why do they need more capital? I thought they passed the stress tests?
John,
This market has been handing you opportunity after opportunity.
What are you going to do in a “normal” market? Back to the grind?
Frankly, based on the information you’ve posted, I’d think this bond market volatility has been treating you well, no?
“A group of 10 large financial institutions submitted capital raising and governance plans to the Federal Reserve”
J,
Any requirements to submit their off balance sheet debt, trillions? Is FASB getting itchy?
177 john
“JPM, GS, MS, Amex will be given back that damm TARP money soon”
What a bunch of BS. I’ve been hearing that for months and yet it never happens. Why do you think it never happens?
And quite apart from that, the TARP money is but a fraction of the handouts those folks have gotten (and I’m not just referring to the billions they got via AIG). They’ve been sucking at the taxpayer teat like blind pigs.
From Bloomberg:
Mortgage-Bond Yields Jump to Highest Since Fed’s Buying Plan
Yields on Fannie Mae and Freddie Mac mortgage securities climbed to their highest since Nov. 24, the day before the Federal Reserve announced plans to buy the bonds to drive down interest rates on new home loans.
Yields on Washington-based Fannie Mae’s current-coupon 30- year fixed-rate mortgage bonds rose 0.12 percentage point to 5.02 percent as of 3:23 p.m. in New York, according to data compiled by Bloomberg. That’s the highest since Nov. 24 and up from 3.94 percent on May 20, Bloomberg data show.
Yields on the securities rose faster than rates on benchmark Treasuries today because the U.S. central bank hasn’t taken action in response to soaring home-financing costs, which the Fed has been influencing through debt purchases in order to stabilize the housing market, said Walt Schmidt, a mortgage-bond strategist at FTN Financial in Chicago.
“The fact that the Fed has not come in and supported the ‘national mortgage rate,’ that has gotten the market spooked,” Schmidt said in a telephone interview today.
The difference between yields on the Fannie Mae bonds and 10-year Treasuries widened 0.05 percentage point today to 1.12 percentage points, Bloomberg data show. The gap, which grew to as much as 2.38 percentage points last year, contracted to 0.70 percentage point on May 22, the lowest since 1992.
SirRent [195],
If the FDIC, (TLGP), guarantee was taken away, they would be crawling back to DC.
BC,
I was just about to point that guarantee out. It’s what Goldman was pointing too as being the reason they’d be able to pay back the TARP money.
187:
lol….scary…but you know the way Clinton handled things…
May numbers!
Check back later.
199. Uncle Jay
Yes, both Slick Willie’s enemies and friends ended up dead…
John says:
June 8, 2009 at 3:47 pm
“Now back when I had my two door black dukes of hazzard car…..”
Awesome post. Pure John.
Like the Long Island James Joyce.
197 BC
“If the FDIC, (TLGP), guarantee was taken away, they would be crawling back to DC.”
Exactamundo, mon frere.
(Si, je parle francais et espanol, ma io non parlo italiano).
“May numbers!”
Ich freue mich darauf!!!
sheesh, can the Supreme Court finally step in and put an end to all this madness.
hard to believe this may be the first rights trampled since September 2008 that might require Constitutional review!!!!!!
get off your a$$es and do something old fart windbags!
“Check back later.”
It’s later.
SirRentsalot:
Onions don’t grow on trees.
damnit! Someone just sold me an onion tree for $50 yesterday!
Boy, when I catch that mother….
http://www.snotr.com/video/2630
Are women born this way? Yeah – pretty much. She just wants to be in on the conversation AND she apparently has a lot to say..
Pain Free with Magnets – Click on link to learn more.
Really cool blog. I found it on yahoo. I am looking forward to read more posts.
Can anybody tell me whats the best restaurant in New York for my honey moon? I going to married next month..
Thank you