How To Make Lose a Fortune

From Fortune (Hat tip Shore!):

Why the housing bulls are wrong

A number of notable investors presented thoughtful and well-researched ideas at the Value Investing Congress last month. The one idea that we would take the other side of, though, was one from Bill Ackman of Pershing Square Capital, which was unveiled in a presentation titled “How To Make a Fortune”: to go long U.S. housing. To state it bluntly, we think Ackman is wrong on housing.

According to several reports, his thesis on U.S. housing focuses on a few key points. First, affordability is at its highest level in decades due to low mortgage rates. Second, household formation will rebound and go back to long-term trends, which suggest growth in demand. Third, supply of housing, which Ackman admits is high, will start to decline since builder production rates are as low as they have ever been. Finally, he believes the downside in housing is limited because at a certain price, institutions could step in and soak up the excess inventory.

To be fair to Ackman this is a secondhand summary of his ideas, but we wanted to address some of these key points and highlight where this thesis falls short.

First, credit standards are higher and lenders typically require larger down payments and more upfront points, which increase the “all-in cost” of a house. (If the consumer can get a loan at all.) Second, we believe, based on our supply and demand models, that home prices will fall another 15% to 30%, which implies that the U.S. housing stock is actually overpriced. Finally, and most importantly, our analysis actually shows as houses get “cheaper,” or more affordable, demand goes down.

As we’ve highlighted in the chart below, based on our proprietary census work, household formation has turned negative for the first time ever. This is attributed to the fact that individuals are getting married at later and later ages. In fact, we have seen a growth of 1000 basis points in unmarried people aged 25-34 over the last decade. As these people get married less frequently and later, it has a commensurate impact on household formation. In the shorter term, unemployment is also a key negative catalyst for household formation. If the long-term trend in the chart below tells us anything, we shouldn’t look at history as a guide for future household formation.

Despite new homebuilding rates being at all time lows, we have seen no meaningful improvement in the national housing inventory overhang. In the chart directly below, we highlight months of supply of homes on the market. Currently, there are almost 11 months of supply on the market, which is near the highs of 2008. Specifically, there are now more than 4 million housing units on the market, a number that’s been accelerating throughout the year.

While on a limited basis, small funds have been created to buy housing stock, we have not seen institutions stepping up on a larger scale to buy houses. The primary reason for this is that individual homes don’t lend themselves to purchases of scale due to their localized nature. Each and every neighborhood is unique and has its own attributes from which value must be determined and researched.

Also, the management of single family housing as an asset is labor intensive as it relates to managing the rentals of these properties. Further, a wide-scale institutional buyout of housing stock would require banks to suffer massive losses on their loan books – a scenario that they have been avoiding the entire time, as evidenced by the growth in average number of days homeowners spend in foreclosure (which is also impacted by other factors such as moratoriums and litigation).

As the housing river cards continue to show their data, it is becoming increasingly clear that U.S. housing is no bargain.

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119 Responses to How To Make Lose a Fortune

  1. Housing is dead for 20-40 years. First, mf’er!!!

  2. Grip it and rip it. Oblivion, dead ahead.

  3. Confused In NJ says:

    Looks like the modern saw “Perception Is Reality” is starting to fall apart, as people look behind the curtain and see who Oz really is.

  4. Mike says:

    Outsourcig jobs at lower salaries + higher municipal taxes= lower house prices Sorry to sound like a broken record Welcome to the new norm

  5. grim says:

    I hear the malls are mobbed already. Every spot at Willowbrook mall was taken before 8am.

    What recession?

  6. Fast Eddie says:

    There are absolutely no permanent positions in the IT industry for large corporations. Everything is a temp position on a per diem basis. As for the business units, they are still contracting and the mid-level VPs and Directors are being eliminated slowly and steadily. This is going to continue unabated across all industries with no end in site. Job growth is null. As for salaries, the NJ median salary in 2000 was around 58K.

    In 2005, it was around 65K; an increase of 12% roughly while house prices increased by 88%. This doesn’t even include the 30% to 40% rise in property taxes. Now, please tell me, what f*cking graduate degree do I need to conclude that house prices still have to fall at least another 20%. That’s a bare minimum. Please tell me, who’s hiring or expanding business? Who’s ramping up? The answer? No one. We’re in the 4th or 5th inning.

  7. Mr Wantanapolous says:

    Fast Eddie [6],

    It’s the new business model, everybody is a free agent, with no benefits. By the way, get to work.

  8. Xroads says:

    Hosing came up yesterday with family member/realtor and defense now is people just didn’t know. My reply was basic math and common sense can take you a long way. She then tried to blame it on generation y ( 35 year olds ) to which I said plenty of booms got slaughtered! It was an act of greed by most involved. Sure some didn’t know better but most were calculating their new found wealth home equity

  9. Mr Wantanapolous says:

    “defense now is people just didn’t know”

    X [8],

    Well, “people” are just plain idiots. The housing bust was an easier call than dot com. Unfortunately, nobody rings a bell at the top. Then again, the sheeple would complain that they were deaf and weren’t alerted.

  10. grim says:

    Inbox Assault Spam Friday

  11. Fast Eddie says:

    Wantan [7],

    I need a day to veg out and contemplate where it all went wrong! lol! Besides, I’m the only American guy in a sea of Asian Indians, I have no one to talk to regarding football and turkey!

  12. Outofstater says:

    #5 The traffic guys in Atlanta are giving reports on all the area malls. It’s nuts. People will get up at 4am and fight the crowds to save a few bucks on stuff they don’t need but won’t save a few bucks day to day by altering their lifestyle a little. I don’t get it. Sometimes I think it is a social thing – like watching those contests on television – people do it to have something to talk about later. Shopping and television. How shallow can we get?

  13. grim says:

    I hear some idiot rammed his car into another idiot’s car in a Walmart parking lot last night for “stealing his space”.

  14. Shore Guy says:

    “I hear the malls are mobbed already.”

    No matter how bad things get, people will always stretch to make certain hoiday fests seem as close to “normal” as possible, in order to provide relief from the day-to-day grind. Spending money on things is at the heart of Christmas for some people. I don’t think that stuff matters all that much but, as long as people have access to instant loans via credit cards, they will overspend in order to create their “ideal” holiday. What they have left over to get them through the rest of the year is another thing — they will cross the broken water heater or transmission when they get there.

  15. At least the Irish still have their hurling.

  16. What a sad reality, that we are getting better at offering advice to lose money from experience far more than how to earn it. Hope 2011 turns us around.

  17. Essex says:

    Just dropped $450 at REi…feeding a coop feels gooooooood. Now hitting the trails for a MTB ride. Laterz!

  18. Fast Eddie says:

    Marketing psychology, catering to the masses. Buy now or be priced out forever. Unless you’re a teenager, why would anyone stand in line for anything unless you’re dying or starving.

  19. Mr Wantanapolous says:

    Shore [14],

    They may default on their mortgage, not their cc’s. That’s their lifeline.

  20. JJ says:

    Fast Eddie;

    Issue is there is a pyramid scheme that has always existed in corporate america, however, people in the 1999 to 2007 bubble era bought the story from realtors buy as much house as the bank will lend you money for as home prices only go up and as your career progress and you move up the ladder home prices will become affordable.

    The truth is look at the amount of people working registers and stocking shelves at any store today and compare it vs. the 2-4 jobs in stock that pay a fair wage. Most people will never get that upper job. Buying a huge house in your mid 20’s to early 40″s assumed you would be a 50 year old SVP in a corner office one day.

    The only honest place I ever worked was public accounting, the year I made Manager they flew the 500 of us nationwide who got the promotion to Florida. National Partner had us all stand and commend us for being the 500 best and brightest staff in the whole company, out of thousands and thousands of staff people we were the 500 smartest and hardest working, Then he said I want you to look around, really look at everyone in room. After we had a good look, he said 90% of people who make manager do not make Partner, 90% of the people in the room will either be fired or quit in next five years. If you think you can work harder than 90% of the people in the room you got a good shot at Partner, if not enjoy the week in Florida and start making other career plans.

    A realtor will tell a young Manager, you are making Partner in Five Years, buy a 1.5 million dollar home. And even if you don’t you can always sell home at a huge profit.

    Fact is homes sometimes go down in value, and 90% of lower/middle manager never get that big job.
    Fast Eddie says:
    November 26, 2010 at 9:21 am

    There are absolutely no permanent positions in the IT industry for large corporations. Everything is a temp position on a per diem basis. As for the business units, they are still contracting and the mid-level VPs and Directors are being eliminated slowly and steadily. This is going to continue unabated across all industries with no end in site. Job growth is null. As for salaries, the NJ median salary in 2000 was around 58K.

    In 2005, it was around 65K; an increase of 12% roughly while house prices increased by 88%. This doesn’t even include the 30% to 40% rise in property taxes. Now, please tell me, what f*cking graduate degree do I need to conclude that house prices still have to fall at least another 20%. That’s a bare minimum. Please tell me, who’s hiring or expanding business? Who’s ramping up? The answer? No one. We’re in the 4th or 5th inning.

  21. Shore Guy says:

    “That’s their lifeline.”

    Everything now seems to require plastic, so, I guess I understand that.

  22. Shore Guy says:

    I got an invite to hear this at the Turkish Airlines Flight Training Centre in Istanbul. I’m not sure whether I am going to go, but it sounds interesting:

    “Zvonko Busic, having served 32 years in prison for his role in the 1976 hijacking of a TWA jet in support of Croatian independence from former Yugoslavia, has agreed to address the Violence in the Skies seminar, where he will explain why he and his colleagues hijacked the aircraft, how they did so, and describe how the two-day incident – which started in New York and ended in Paris – unfolded and concluded. “

  23. Mr Wantanapolous says:

    “The only honest place I ever worked was public accounting”


    F-Ing hilarious. Take a step back; Arthur Anderson convicted of obstructing justice in the Enron case, accounting fraud at Worldcom, Global Crossing, Tyco, just to name a few. Present day, the biggest scam going; FASB. Honest? Yeah, I also heard that Baghdad Bob was the 2nd coming of Mother Teresa.

  24. dan says:

    The most arrogant and condescending people I ever worked with were at AA. During the enron fiasco, a college roomate of mine who had worked for Andersen Consulting and I met up at the Monkey Bar in midtown for a lot of beers and I argued why AA was going down. They had earned their collapse as far as I was concerned.

  25. JJ says:

    Dan AA consulting is still in business it is called Accenture and is actually a good place to work.

    AA NY office got blindsided by whole Enron thing, everyone in NY was doing their job and the folks in Texas caused the firm to go down.

  26. AA blindsided in the Enron fiasco?

    If so, they were too stupid to survive.

    In the words of Barbara…bitch, please.

  27. I sold the houses of a couple of AA guys back in the day. They were both more lizard than human.

  28. BlindJust says:

    Indeed. I’ve had 6 different managers in 2 years. Most were given notice mid December. However, all found consulting positions within 3-6 mos. One even recently received a ft offer.

  29. Mr Wantanapolous says:

    Accenture is a business and technology consulting firm, that split from AA in the 80’s. At that time they were called Anderson Consulting, subsequently changed to Accenture.

  30. Mr Wantanapolous says:

    NY got fcuked by Texas? I thought all the talent was in NY?

  31. All the real NY talent works for Brian Sack.

  32. Was at my nephew’s in NYC yesterday for turkey. City really starting to have a 1979 look to it.

  33. Romeo's Gift Baskets says:

    It really is simple, the baby boomer generation want to sell their house to someone with a boomers’s income. Of course why would any boomer buy since they are trying to downsize. And of course gen X and especially gen Y don’t earn enough to buy a small non-updated house, which was built in the late 60s, requiring lots of repairs, and thousands in RE taxes. Unless we come to the median national sold house price level, it’s going to be a very long time before houses start selling again.

  34. JJ says:

    As sad as it sounds, most Men in their 20’s and 30’s are not “real men” in the eyes of the older generation.

    Married 35 year old men who can’t support their wife and have to pimp her out at some crap job while their snotty germ filled little 1-3 year old rots in day care or is watch by an illegal nanny or worse by grandparents called back into childcare duty for free since their lazy x-box playing nose picking no good son or son-in-law can’t support a wife or kids.

    Plus 20/30 something men are dumb and lazy a powerful combination. They may own a house, but have lawnservice, don’t know how to fix a car, don’t know how to do even basic home repairs, heck they even lease cars. Too confusing to own a car for their little minds. They can’t fix it and don’t know how to sell a car.

    Their wives since they work, don’t cook, don’t clean and have maids. Wives are resentful they have to work and refuse to take over Christmas, Thanksgiving etc so there old parents are still hosting holiday while their free loading 35 year old married kids with children sit on the couch. Some of them are too lazy to send out holiday cards without Mom harrasing them or even into remembering to do Christmas shopping.

    Yet these same people will march into my office and tell me how great they are. A man or a women who supports his or her family, makes a holiday, keeps a clean house, knows how to do home repairs and fix a car, helps his parents out, AND does a good job at work in his 20’s or 30’s gets respect. The rest are just jugglers doing everything half ass

    Xroads says:
    November 26, 2010 at 9:30 am

    Hosing came up yesterday with family member/realtor and defense now is people just didn’t know. My reply was basic math and common sense can take you a long way. She then tried to blame it on generation y ( 35 year olds ) to which I said plenty of booms got slaughtered! It was an act of greed by most involved. Sure some didn’t know better but most were calculating their new found wealth home equity

  35. Fast Eddie says:

    Lamar [32],

    The real 42nd street, ala the 1970s. Jimmy Breslin would be proud:

  36. Shore Guy says:

    So, I hear that Brazil is sending troops into the slums. It should be an interesting Olympic Games when they host.

  37. Fast Eddie says:

    Romeo [36],

    In the immortal words of Mr. Wantanapolous: “Sell? Sell to whom?”

  38. Schrodinger's Cat says:


    re the Nigel farage piece from yesterday:

    that was f’ing great. The look on some of those ministers faces was fantastic

  39. Confused In NJ says:

    Their wives since they work, don’t cook, don’t clean and have maids. Wives are resentful they have to work and refuse to take over Christmas, Thanksgiving etc so there old parents are still hosting holiday while their free loading 35 year old married kids with children sit on the couch. Some of them are too lazy to send out holiday cards without Mom harrasing them or even into remembering to do Christmas shopping

    Interesting, after 43 Thanksgivings we solved the problem this year by taking the whole crew out to dinner. This way Mrs Confused didn’t have to Cook & Serve, with the kids running around the kitchen, and her yelling be careful it’s hot. Was very pleasant and well worth the money. We definately have enough to cover us through 12/21/2012.

  40. cobbler says:

    The Cat [41]:
    Europarliament is second only to the U.N. for the worthless speechifying. Read my China trip report on yesterday’s thread and weep…

  41. Essex says:

    37. Perhaps in the households of the mentally challenged. FWIW most places that value education and achievement would find that particular line of thinking moronic.

  42. Confused In NJ says:

    12 stitches for Obama after errant elbow in hoops

    WASHINGTON – President Barack Obama needed 12 stitches in his lip after taking an errant elbow during a pickup basketball game Friday with a group of family and friends visiting for the Thanksgiving holiday, the White House said.

    First word about the injury came in a statement from press secretary Robert Gibbs nearly three hours after the incident saying that Obama was inadvertently struck by someone’s elbow. The individual was not identified.

    Obama received the stitches under local anesthesia in the doctor’s office on the ground floor White House after he returned home. The medical unit that treated Obama used a smaller filament than typically used, which increases the number of stitches but makes a tighter stitch and results in a smaller scar.

    The president had gone to nearby Fort McNair to indulge in one of his favorite athletic pursuits, a game of basketball. It was a five-on-five contest involving family and friends and including Reggie Love, Obama’s personal assistant who played at Duke University.

    Obama emerged from the building after about 90 minutes of play, wearing a short-sleeve T-shirt and gym pants, and was seen dabbing at his mouth with what appeared to be a wad of gauze. A few hours later, reporters who had gathered on the White House driveway for the arrival of the Christmas tree, saw the president in an upstairs window, pressing an ice pack against his mouth before he stood and walked away.

    “After being inadvertently hit with an opposing player’s elbow in the lip while playing basketball with friends and family, the president received 12 stitches today administered by the White House Medical Unit,” Gibbs said.

    Obama’s motorcade obeyed all traffic stops, the custom for nonofficial trips, during the return to the White House.

    In February, Obama, 49, was deemed to be in excellent health and fit for duty after his first medical checkup as president. Doctors reported then that Obama had yet to kick a smoking habit, takes anti-inflammatory medication to relieve chronic tendinitis in his left knee and should make dietary changes to reduce his cholesterol levels.

    Obama was told to return for another physical exam in August 2011, after he turns 50. In addition to regular pickup basketball games, Obama is also an avid golfer.

    Obama had no public events scheduled during the long holiday weekend.

    His stitched lip, however, could make for some interesting small talk on Tuesday, when Obama is to meet with the congressional leadership. The session originally was announced for Nov. 18, but was delayed after Republicans, who will control the House and increase their numbers in the Senate come January, said they couldn’t accommodate the president.

    Medical help is always nearby for U.S. presidents. A doctor or nurse is stationed at the White House around the clock and accompanies the president in his motorcade and aboard Air Force One.

    Recent presidents have had a number of medical scares.

    George W. Bush choked on a pretzel and briefly lost consciousness, falling and hurting his head. Bill Clinton had surgery and used crutches for months for a torn tendon in his knee when he stumbled on steps at the Florida home of golf pro Greg Norman.

    The elder Bush, George H.W. Bush, was hospitalized for an erratic heartbeat while jogging at Camp David, a problem later diagnosed as a thyroid ailment. The senior Bush also collapsed at a state dinner in Tokyo, which the White House blamed on an intestinal flu.

    Jimmy Carter fainted briefly while jogging near Camp David. Ronald Reagan was shot in the chest in a 1981 assassination attempt.

    Former Vice President Dick Cheney, 69, has had five heart attacks since age 37. He had surgery this year to install a pump to help his heart work. Cheney said he has congestive heart failure.

  43. Barbara says:

    37. JJ

    I really can’t argue with any of this.

  44. Barbara says:

    I know a guy who owns a couple condos AC. Hes not over his head yet but says that the building (which is historic and beautiful) is crumbling because owners are not paying their fees, and are foreclosing as well so its a downward spiral. Anyway, The Chelsea, a designer hotel close buy is going well with its 5th floor club, big crowds and they are trying to open in it a boutique casino. Of course the big boxes are against it but it could really change that city in a big way if you can get the young crowd away from the seniors.

  45. BlindJust says:

    May I ask why any 5BR home would have 5 baths?

  46. BlindJust says:

    I grew up, in a family of 5, with 3 br and 1 bath.

  47. Punch My Ticket says:

    That was then and this is now.

    We deserve it all.

  48. BlindJust says:

    Call me “conservative”, but all I’m looking for, w/ my 5 member family, is a 3K sq ft, 4 br/2.5 ba on a 1+ ac plot.

  49. xroads says:

    I spent the holiday with “educated people” 2 master’s degrees (education), 2 bachelor’s and an RN associate’s degree and me the union idiot. I was the only one to see anything wrong in housing and I have to say I don’t know if its because I don’t have an education or what but these educated people can’t admit they were WRONG! We can’t even bring it up to the couple in foreclosure ( 3 years this coming March). They couldn’t blow their horns loud enough on the way up. church mice now.

    37. Perhaps in the households of the mentally challenged. FWIW most places that value education and achievement would find that particular line of thinking moronic.

  50. Essex says:

    53. Uh yeah. Ur real mensa material.!

  51. xroads says:

    maybe i should change my name to scarecrow. just meant that it not just the unedumacated who fit the description in jj’s #37 comment as you implied at #44.

  52. BlindJust says:

    X – While I have 2 BS’ (MA/CS), 1 MS (MIS) and 2 MBAs (FIN/MGT), I will be the first to admit that edumacation in no way indicates degree of common sense.

  53. Frank says:


    This is a great article but it leaves out one key variable that is very important if you live in the NY/NJ area… “Taxes!” (More specifically: “Real Estate Taxes!”)

    According to multiple government statistics, the economic downturn has resulted in the average loss of approximately 12.5% for the private sector worker. However, government employees have seen no loss in their compensation and benefits. In fact, for most public sector workers, they still continue to get their union-backed and contractually guaranteed raises, constantly driving the cost of government up in a real estate market that continues to push down.

    If you take a look at the NJ single family residences in the MLS that have been on the market for the longest periods of time, including foreclosures, you’ll often notice a common thread that shows a large percentage of them have very high real estate taxes that can’t be afforded by the average person.

    Keep in mind that the cost to buy the house is just the beginning of the problem. Once you buy the house, you have to take into consideration “the cost of keeping the house,” after it’s purchased.

    Do the math… A $300K mortgage (after coming up with your 20% + closing costs) on a 3 bedroom home that has $6K a year in real estate taxes is approximately $2,300.00 in monthly payments. In what world is that logical, especially when rents for 3 bedrooms in most NJ communities are significantly under $2,000.00 per month?

    Someone has to do something about this state’s tax foundation or this state is on its way to bankruptcy. Cutting government spending by cutting atomic programs is a bandaid, government salaries and compensation need to be adjusted downward to match the economic trends. In fact, I believe that government pay grades should be tied directly to the economy, ensuring that they go up or down with the performance of the country.

    Anyhow, thanks to NJReReport for the article.

    My Best,


  54. BlindJust says:

    X – and while JJ did have a point or two, his deliver, as usual, could be a bit pointy haired. Essex was simply “pointing” that out.

  55. BlindJust says:

    Government compensation should be tied to a combination of the economy, their “team” and their individual performance as in the private sector.

    My municipality is doing something about taxes … they’re re-assessing!

  56. Confused In NJ says:

    More than 1 in 3 SAfrican men admit to rape: study

    JOHANNESBURG – A new survey says more than one in three South African men admit to having committed rape.

    A 2010 study led by the government-funded Medical Research Foundation says that in Gauteng province, home to South Africa’s most populous city of Johannesburg, more than 37 percent of men said they had raped a woman. Nearly 7 percent of the 487 men surveyed said they had participated in a gang rape.

    More than 51 percent of the 511 women interviewed said they’d experienced violence from men, and 78 percent of men said they’d committed violence against women.

    A quarter of the women interviewed said they’d been raped, but the study says only one in 25 rapes are reported to police.

    A survey by the same organization in 2008 found that 28 percent of men in Eastern Cape and KwaZulu-Natal provinces said they had raped a woman or girl. Of the men who had committed rape, one third did not feel guilty, said Rachel Jewkes, a lead researcher on both studies.

    Two-thirds of the men surveyed in that study said they raped because of a sense of sexual entitlement. Other popular motivating factors included a desire to punish women who rejected or angered them, and raping out of boredom, Jewkes said.

    “Rape is completely trivialized by a great number of men. It is seen as a legitimate activity,” she said.

    Jewkes believes South Africa’s history of racial division and associated trauma is part of the reason of the high incidence of sexual violence in the country.

    “Apartheid has contributed to culture of impunity surrounding rape in South Africa,” said Jewkes. Men who were abused or experienced trauma during their childhood are much more likely to rape, she said, adding that apartheid destroyed family life, fostering violence and anti-social behavior.

    The apartheid period also saw very little enforcement of common law, which has contributed to a culture of impunity, said Jewkes.

    “We need to start interventions in childhood, focusing on building a more empowering childhood environment in South Africa, especially for boys,” she said, “and we need to make it worth their while for women to report sexual violence.”

    The new study, conducted with a gender rights advocacy body, is the first community-based study of its kind with women in 12 years.

    The group hopes to replicate the study across southern Africa.

    Interesting that the study places no blame on the rapist.

  57. BlindJust says:

    A razor would be rather “empowering”.

  58. safe as houses says:

    #57 Frank

    Please do tell us where we can rent a 3 bedroom house in North Jersey for significantly less then 2k a month. Or at least point out the towns we can do this in that aren’t full of gangs and illegal aliens and have schools we’d want to send our kids to?

  59. Barbara says:

    yeah, I’d like see some of these 3 bedroom under 2k rentals too…

  60. grim says:

    Please do tell us where we can rent a 3 bedroom house in North Jersey for significantly less then 2k a month.

    yeah, I’d like see some of these 3 bedroom under 2k rentals too…

    Why did you guys pick up on that, and not on:

    A $300K mortgage (after coming up with your 20% + closing costs) on a 3 bedroom home that has $6K a year in real estate taxes is approximately $2,300.00 in monthly payments.

    We’re talking a $375k 3 bedroom with 6k in taxes? Where exactly does this mythical beast live?

    Sounds like he is talking about Averagetown, or perhaps Mediantown, a place that exists, but that you can’t actually buy or rent in. Especially when we’re talking about areas with incredibly high levels of bifurcation or skew, as is NJ.

    According to the NAR, median price for a 3 bedroom in Northern NJ was $319k in Q2, 2010, $246k if you look at the statewide number. I suppose I could ask the NAR the same question, where exactly can I find this $319k 3br that isn’t in/or a shithole?

    The real unicorn here is someone buying a $375k home with a $75k down payment.

  61. grim says:

    From the WSJ:

    Fannie, Freddie Recommend Foreclosed-Property Sales Resume

    Fannie Mae and Freddie Mac have begun telling real-estate agents nationwide to resume sales of foreclosed properties that had been suspended after document-handling problems surfaced over the past two months.

    Fannie said Friday it had lifted a moratorium on foreclosed-property sales following a review of the affected properties it has acquired and after consulting with its government regulator, the Federal Housing Finance Agency. It was unclear how quickly sales would resume because loan servicers are still completing their reviews of paperwork.

    “Our decision was motivated by several factors including the protection of buyers with title insurance, the negative impact lingering foreclosed properties has on neighborhoods and the cost burden that is placed on taxpayers when [bank-owned] sales are suspended,” said a Fannie Mae spokeswoman.

    Fannie and Freddie owned nearly 240,000 properties at the end of September, valued at nearly $24 billion. Difficulty selling those homes could lead to higher carrying costs for the mortgage titans. Delays also could prompt buyers that had been under contract to lower their asking prices or to walk away from deals.

  62. grim says:

    From the WSJ Real Time Economics Blog:

    Number of the Week: 492 Days From Default to Foreclosure

    492: The number of days since the average borrower in foreclosure last made a mortgage payment.

    Banks can’t foreclose fast enough to keep up with all the people defaulting on their mortgage loans. That’s a problem, because it could make stiffing the bank even more attractive to struggling borrowers.

    As a result, banks are taking progressively longer to foreclose. The average borrower in the foreclosure process hadn’t made a payment in 492 days as of the end of October, according to LPS. That compares to 382 days a year ago and a low of 244 days in August 2007.

    In other words, people who default on their mortgages can reasonably expect, on average, to stay in their homes rent-free more than 16 months. In some states such as New York and Florida, the number is closer to 20 months.

  63. safe as houses says:

    #64 grim

    I’m starting to see 3 bedrooms on busy roads listing for 379 to 400k with 7 to 8k in taxes.
    Here’s one listed on Livingston ave in Livingston at 379k with 7k in taxes.

  64. Confused In NJ says:

    64. Grim

    Here’s one that’s nice & exceeds your criteria;

  65. grim says:

    Anyone else snicker when they hear the QE moniker applied to the bailout?

    Didn’t the original Queen Elizabeth (QE) catch fire and sink in the Hong Kong harbor?

  66. grim says:

    Greenwich Township? Why not just cross the bridge at that point?

  67. Mikeinwaiting says:

    Grim 64 You can get that 375 home here in the hinterland, but even here you will be waiting for the unicorn for 6k taxes. My rental is being sold (Mcmansion) 500k, less that 4% down taxes about15k how about that for an anchor. Financing? owner owns out right holding whole note. Boy is that guy f**ked, meet him wife & 2 kids when I showed it. Gave them all the numbers 6k yr heat 300 month avg. electric. In addition landscaping over 2 ac. park like property (full time job to do this yourself plus ride mowers 2 kinds due to hills), driveway requires plowing, other wise you can snow blow till dinner (not getting to work). Did I mention over 500 in mulch each year plus costs on built in pool. He works across the Tappan Zee bridge in Westchester, fellow seemed very intelligent, guess I was wrong!

  68. Confused In NJ says:

    71.grim says:
    November 27, 2010 at 7:48 am
    Greenwich Township? Why not just cross the bridge at that point?

    That would be Easton, not recommended, try Forks or Palmer.

  69. safe as houses says:

    #72 Mike

    That guy is looking at $4,500 a month at least for PITI + utilities. Cable and cell phone another 200 to $300 a month at least. Commuting costs and increased wear and tear on cars, plus all the grounds work. And he can’t even play produce the note with MERS if he gets in a jam. They probably need 150k a year on 1 income to live paycheck to paycheck, and over 200k on 2 incomes. And even those numbers are probably too low if he’s planning on saving for college, retirement and taking a vacation every year or 2.

  70. Fast Eddie says:

    grim [64],

    Why did you guys pick up on that, and not on:

    A $300K mortgage (after coming up with your 20% + closing costs) on a 3 bedroom home that has $6K a year in real estate taxes is approximately $2,300.00 in monthly payments.

    LOL! Oh man, this is classic. Yeah, I’ll find you a $300,000 home but that property tax figure is so 2002. Tack another $2500 onto that tax figure and let me show this lovely home in the Hillcrest section of Paterson. Oh, and can I take a look at that pre qualification letter again? You did say you have at least $80,000 liquid, correct?

  71. grim says:

    From NJ Newsroom:

    N.J. court blocks foreclosure over lack of documentation

    The mishandling of mortgage records has thwarted another attempted foreclosure in New Jersey, and this time the case has multi-billion-dollar implications for a major lender.

    In U.S. Bankruptcy Court in Camden, Chief Judge Judith Wizmer rejected an attempt by failed lender Countrywide Home Loans, now a part of Bank of America, to foreclose on a Haddon Heights property.

    The problem, as Wizmer pointed out in her opinion, is that Countrywide, one of the firms at the center of the subprime mortgage scandal, represented that it had sold the mortgage to the Bank of New York and was acting as the loan servicer.

    But Countrywide never gave Bank of New York the original document or an allonge, an attachment for endorsing the transaction, the judge said.

    During the proceedings, bank representatives told the judge that was common practice before Countrywide, on the verge of going under, was absorbed by Bank of America in 2008. But failure to pass along documentation of transactions violates laws in New Jersey and across the nation. Without a chain of possession and endorsements real ownership of notes becomes clouded.

    “The fact that the owner of the note, the Bank of New York, never had possession of the note, is fatal to the enforcement,” Wizmer wrote.

    In what the judge politely described as “a bizarre twist,” Countrywide submitted a certificate stating the original loan note had been lost so the allonge could not be attached, but at almost the same time told the court that it had the note. In the wake of the discrepancy, the bank “asked the court that the Lost Note Certificate be disregarded,” Wizmer said.

  72. Fabius Maximus says:

    Safe, it is not a unicorn. You have to put the work in to to dig out what you need. There are some gems out there.

    Does this meet your criteria?

  73. Fabius Maximus says:

    I worked with a lot of Anderson Consultants over the years and they were always referred to as the Androids.

    JJ is right. they cull the herd. Every year they hire the best grads they can find and on the other end 5-10% of the firm get cut. This sets up the situation that has been discussed here before. You get a lot of Ivy league that are book smart, but in real life are dumb as rocks. They get a few years getting pimped out to projects and then get the boot a few years later. The fact they have AC on their resume will get them through the door for most jobs. They end up in nice middle management jobs in their client base.

    I was working with one guy who was supposed to be building a server for me. I found him in a machine room huddled with a copy of Basic Unix Adminsitration trying to work out how to add a user. Learning on the job at a cost of $100 an hour to the client.

  74. Fabius Maximus says:

    How to boost the sales of 3D TV in time for the Superbowl. Anyone see the demo in Best Buy with Fergie?

  75. safe (74)-

    If that guy sends his kid to a public school there, you can nix the college savings.

  76. Fast Eddie says:

    Fabius [81],

    That does look like a nice deal for that town. It translates into a list price of a little over 400K at that rate. But, a seller will have the b@lls to list that house at 600K plus which means we still have a long way to go on price declines.

  77. Any ideas on this, BC? Somebody big really standing for delivery soon?

    “In addition to the rout in the ES, VIX and GC which we pointed out earlier, there were some additional fireworks behind the scenes in today’s after hours session. The CBOE Gold Volatility Index, the ^GVZ plunged by the most in over a year, as the index hit an all time low of 15.92 without the underlying making much of a notable move. The most curious aspect of the trade was that the entire dump occured in the AH session. Many were left scratching their heads over what caused this monstrous unwind in long vol positions: was this the unwind of a massive long ES/short GC arb? We don’t know, although if rumors that a major fund is planning to stand for delivery of Dec gold turn out to be true, then obviously someone got confirmation today. Keep a close eye out on the GVZ. Should this price level persist on Monday, then the front futures contract will likely surge.”

  78. safe as houses says:

    #81 Fabius

    I like that one much better then the cape from Parsipanny.

  79. safe as houses says:

    #80 Lamar,

    Should the guy drop his dental plan too? :P

  80. BlindJust says:

    Here’s a 3bd/2ba in Hanover Twp for $290K. Taxes $3,757

  81. Fast Eddie says:


    Every time I click on your links, I’m getting a property search page. Where’s the house?

  82. BlindJust says:

    Try these links:
    Here’s the house mentioned earlier w/ 4BR/5.5 BA

    And here’s the one in Cedar Knolls – 3 BR / 2 BA w/ the low taxes

  83. jamil says:

    you can’t make this up..

    Anti-violence activists arrested in Irvington for inciting riot

  84. grim says:

    Here’s a 3bd/2ba in Hanover Twp for $290K

    Hit the market last October at $384k, currently ARIP, but it’s a short sale so no guarantees it’ll even sell at that price. Owners owe around $350k on it.

  85. Dan says:


    You find that a lot with Big 4 managers or consultants. They won’t “do” journal entries or in the case of your consultants never worked on a system just told others what to do. But come on, the 90s was full of bullshit where someone with a community college degree got a month of training in some language or system and was hired for 90 to 100k on the spot.

  86. Shore Guy says:

    Speaking about how to lose a fortune:


    Then he drives 14 miles in an 11-year-old Ford Explorer to a sparsely furnished tract house that he rents for $900 a month on a dead-end street in McFarland, a smaller town. Just across the backyard is a shed that a neighbor uses to make cartridges for shooting the prairie dogs that infest the adjacent fields.

    It is a far cry from the life that Mr. Martin and his family enjoyed until recently at their Adirondacks waterfront camp at Tupper Lake, N.Y. Their garage held three stylish cars, including a yellow Aston Martin; they owned three horses, one that cost $173,000; and Mr. Martin treated his wife, Kate, to a birthday weekend at the Waldorf-Astoria, with dinner at the “21” Club and a $7,000 mink coat.

    That luxurious world was fueled by a check Mr. Martin received in 1998 for $14 million, his share of the $600 million sale of Martin Media, an outdoor advertising business begun by his father in California in the 1950s. After taxes, he kept about $10 million.

    But as so often happens to those lucky enough to realize the American dream of sudden riches, the money slipped through the Martins’ fingers faster than they ever imagined.

    They faced temptations to indulge, with the complexities and pressures of new wealth. And a pounding recession pummeled the value of their real estate and new financial investments, rendering their properties unaffordable.

    The fortune evaporated in little more than a decade.


  87. Shore Guy says:

    And this on bailouts:

    Yankees, just say ‘no’ to bailout-seeking Jeter

    Derek Jeter, the most stoic and regal of the 21st century New York Yankees, has very stoically, but not so regally, stuck out his hand and asked for welfare.

    Weak move, Captain. Weak.

    After the worst year of his career, at an age when steroid-free ballplayers erode like sandcastles, Jeter wants to be paid more than he’s worth. And he wants to be paid more than he’s worth for at least four more years. That’s the thing about reaching your hand into someone else’s pocket — if you’re gonna go for it, go ahead and go for it.

    Jeter’s going for it, baby. He’s trying to screw the Yankees like a Hollywood starlet.


  88. shore (93)-

    If Cashman had a pair, he’d let Jeter go and slot in whoever is their AAA starter…who is probably making the minimum. Let him become an anchor on some other team’s payroll, perhaps even a team within the division.

    When baseball players who defend “up the middle” go, they go. And go fast.

    Ultimately, it matters not. Baseball is a degenerate sport and will fail soon after the economy collapses and the violence begins.

  89. The only lifetime achievement awards are in the movie business.

    And, they give you all of 10 minutes at the Oscars and a trophy.

    Turning down 45mm for three years of non-performance is the height of idiocy and hubris.

  90. Essex says:

    Love it Lamar. Shows so much about the character of the modern hero.

  91. Safeashouses says:

    #93 Shore Guy

    one more reason why I quit following baseball.

  92. Dan says:

    This Jeter thing will blow over quickly. So far, I haven’t much except what I’d expect from people justifying their overpaid salaries and by that, I mean Jeter’s agent, Brian Cashman and Hank Steinbrenner. When Jeter starts threatening to leave to go somewhere else, this whole thing will have my attention. Clot, some would argue that Jeter has been a lousy defensive shortstop all his career, gold glove awards or not so his losing range wouldn’t be that big a deal. Even at .270 he’s one of the best hitting shortstops ever let alone the .300 plus he ususally puts up. I think this will end up around 4 years, 70 mill. I for one, could be one of those people dropping my ticket plan if Jeter isn’t back.

  93. Shore Guy says:

    If Bruce isn’t going to oblige with a Christmas show this yerar, I may need to start going to the airport for entertainment:

    A blogger and “se-x worker/pornographer” has jumped into the TSA fray with a new video making the rounds and crashing servers today. While this whole scandal has everything the media could possibly want these days (public anger, undertones of both se-x and government oppression), the woman, who goes by Furrygirl, has given the story the one thing it’s been missing this whole time, video of a lady in see-through underwear in the airport. Finally!


    The argument in the experiment is clear; the pat downs border on se-x, so why not dress appropriately?


  94. Shore Guy says:

    this one has sound, but is NSFW

  95. Confused In NJ says:

    I wonder what they paid Honus Wagner for his .328 Short Stop Batting Average.
    Wagner’s exceptional play enabled the Pirates to establish themselves as one of baseball’s dominant teams during the first decade of the 20th century. They won the National League pennant in 1901, 1902, 1903, and 1909, and they finished no lower than fourth in any season from 1900 to 1911. The Pirates lost the first-ever World Series to the American League champion Boston Americans in 1903. However, they defeated Ty Cobb’s Detroit Tigers in the 1909 Fall Classic, with the 35-year-old Wagner badly outplaying the 22-year-old Tiger great. Cobb batted a mere .231 during the seven-game Series, which was won by Pittsburgh. Meanwhile, Wagner batted .333 and stole six bases.

    Wagner continued to perform exceptionally well until 1913, when Father Time finally began to catch up to him. Yet, he still managed to hit .300 in somewhat limited action that year, thereby surpassing the .300-mark for the fifteenth consecutive season. Wagner’s batting average slipped to just .252 the following year, and he failed to bat any higher than .287 in any of his three remaining years in the league. After appearing in only 74 games for the Pirates in 1917, the 43-year-old Wagner announced his retirement at season’s end. He finished his career with a .328 batting average, 1,733 runs batted in, 1,739 runs scored, 3,420 hits, 252 triples, 643 doubles, and 723 stolen bases. At the time of his retirement, Wagner had more hits, runs batted in, runs scored, stolen bases, and total bases than any other player in history, to that point. Although he compiled many of his numbers while playing other positions, Wagner still has more hits, doubles, triples, RBIs, and stolen bases than any other shortstop who ever played, and his .328 career batting average is also the highest of any player who ever manned the position. In addition to winning eight batting titles, Wagner led the National League in runs batted in and stolen bases five times each, slugging percentage and total bases six times each, doubles seven times, triples three times, and runs scored and hits twice each. He knocked in more than 100 runs nine times, scored more than 100 runs seven times, batted over .350 six times, stole more than 50 bases on five separate occasions, and accumulated more than 20 triples and 200 hits two times each.

  96. Dan says:

    What a great line for the housing market even thought the guy’s talking about one house……..

    “It’s sad,” he said. “The grapefruit tree in front is dead, the grass has turned brown, and the shutters are starting to fall.”

  97. Dan says:


    I’ve heard the Honus Wagner argument before but to me falls short for several reasons. First, a good portion of his career wasn’t at shortstop. So far, Jeter’s played more than 400 plus games more at shortstop and he’s not done obviously. Second, he made a ton of errors at shortstop. He had seveal years of 50 errors plus. Heck, he even had 60 errors one year. In fact, it looked like they weren’t sure of the shortstop experiment for Wagner in 1901 and 1902 after fielding percentages as low as .900. Third, only one world series when they were a 16 team league without playoffs.

  98. Shore Guy says:

    True that may be but, Wagner’s baseball card will always be worth more.

  99. Shore Guy says:

    What’s in YOUR pot?

  100. dan (98)-

    All I know is that Jeter- had he decided to be a footballer- wouldn’t have made it past Serie B, League One, Bundesliga 2 or any other minor league jerkwater of world soccer.

    He has feet mired in cement and is the athletic equivalent of a well-tended slug.

  101. confused (101)-

    Not only did Wagner do all that…he did it during the dead ball era.

    Jeter cannot be ranked in the same group as Wagner, who is probably one of the best five players ever.

  102. Two seasons of 20+ triples pretty much says it all about Wagner. The list of players who did it more than once is pretty short, and it’s led by Ty Cobb and Stan Musial.

  103. dan (103)-

    I’d flip that argument and state that Jeter probably cannot play any other position. When he’s done, he’ll be done.

    I also don’t care how many errors Wagner made at short. His lifetime slugging percentage was .466, and his OPS was .857. Again, this was with a dead ball. These are simply mind-bending numbers.

  104. “I wish I could play like Honus Wagner. He was head and shoulders above the rest of us, could play any position and hit .340 standing on one leg.”

    – Babe Ruth

  105. shore (99)-

    She’s not hot. That’s worse than watching KD Lang get strip-searched.

  106. NJGator says:

    Montclair to refund $2.3 million thanks to successful tax appeals

    After numerous successful tax appeals, Montclair this year will have to refund at least $2.3 million in property taxes, half-a-million dollars more than the municipality paid in refunds last year.

    Due to changes made by the state Local Finance Board in 2009, municipalities can no longer borrow money to pay for the refunds, a change that will cause some pain for Montclair as it creates its 2011 budget, said Township Manager Marc D. Dashield.

    It will be difficult to refund $2.3 million in property taxes and still stay within next year’s 2 percent tax-levy cap, Dashield said. Under the old rules, municipalities only had to pay 5 percent upfront and could borrow the rest.

    Savvy residents learning about successful tax appeals and then instigating successful appeals themselves is what accounts for the high number of appeals in 2010, he noted.

    “Conventional wisdom would say this far out of a reval, your number should be going down,” said Dashield, referring to the 2008 town-wide property reassessment. “Montclair’s numbers are going in the opposite direction.”

    Township Attorney Ira Karasick is “getting a handle” on the costs associated with tax appeals, the manager said. Dashield added that he’s not clear whether the municipality will have to pay the $2.3 million out of the 2010 or 2011 budget.

    $2.3 million represents roughly $200 for every homeowner with an average $652,000 assessment.

  107. Dan says:


    Was Wagner a better hitter? Yes, or when Jeter ends his carrer, most likely although Jeter will have a good shot at more hits, runs scored and championships. However, I’m a little leery of concerning a guy’s stats from a hundred years ago with now. Jeter also has over 300SB and is known for being one of the fastest right handed batters to reach first. As for Jeter and other positions, he would have been a good center fielder, second or third and was known for having great range on texas leaguers hit out in shallow left or in the first row of the stands in foul territory.

    One thing I did notice about Wagner is that is you take away his years above 40, he was a .340 hitter. And if you want to make a case for Jeter, Wagner almost had a thousand hits after turning 36.

  108. Essex says:

    115. two hundred dollars per person is hardly worth the time spent appealing and definitely wouldn’t cover the attorney cost.

  109. Mikeinwaiting says:

    Essex 117 the $200 is the cost per home or reduction per home spread out over entire town, depending how you look at it. It doesn’t reflect actual savings in taxes for people that did appeal so attorney cost are a moot point.

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