From the NYT:
Deciding Whether to Buy or Rent
IN today’s market, with uncertainty the sole certainty up ahead, the age-old question — rent or buy? — becomes increasingly perplexing.
For example, in New Jersey, where average home values rose slightly only to drop precipitously last year, and where an additional 6 percent overall decline is predicted for 2011, is it even possible to discern which choice might be better?
Yes, said one market expert, after he crunched fresh numbers. Despite unusually severe fluctuations and distress in the New Jersey marketplace, the analyst, Jeffrey G. Otteau, concluded that it is a better deal to buy, as long as one holds on to the property for several years.
Using calculations based on sales data, Mr. Otteau deduced the following: After four years, the buyer of a $400,000 home, putting 3 percent down and obtaining a mortgage at 4.83 percent, will start to come out ahead of a renter paying $2,000 a month.
The gain in the fourth year is only about $7,000, once expenditures on maintenance, insurance, taxes and mortgage are figured in, said Mr. Otteau, whose company, the Otteau Valuation Group, provides monthly trend reports to the real estate industry.
But after 10 years, and assuming a 2.5 percent average increase in value, the homeowner comes out $97,516 ahead.
A property value increase of that amount per year is a “very conservative” prediction, Mr. Otteau said, and several brokers in the northern part of the state agreed with him.
“If you buy a good property in a stable community,” said Karen Eastman Bigos, who heads the Towne Realty Group in Millburn, “with today’s bargain prices and interest rates, it is virtually guaranteed that value will rise by more than that.”
…
The calculations indicated that a buyer making a 10 percent down payment would gain slightly less than a buyer paying 3 percent — mostly because of the home mortgage deduction on income taxes. (With a larger mortgage comes a larger deduction.)
first
From the Record:
2011: Experts not predicting housing rebound
Is 2011 the year that the long-battered housing market will finally rebound? Probably not — at least not in a big way, analysts say.
A couple of factors point toward stirrings of life: low mortgage rates, more affordable home prices and an uptick in job creation. But the negatives are also powerful. The job market is expected to remain weak enough to sap the confidence of many would-be buyers, and foreclosures will continue to pour onto the market in 2011.
Credit remains tight, both for builders and home buyers.
The housing market can’t recover “until you see consumer confidence come back, and that won’t happen until you see real job creation,” said Rick Sharga, a senior vice president at RealtyTrac, which follows the foreclosure market nationwide.
Patrick O’Keefe, an economist with the Roseland accounting firm J.H. Cohn, said that in a normal economic cycle, housing supply and demand would have gotten into balance by now.
But there’s “an almost unbridgeable gap between potential buyers and sellers,” he said.
“Large numbers of sellers are in a situation where their mortgage is underwater — where, to sell, they would have to go to the closing with a check,” he said. “And buyers either can’t afford the asking price or can’t qualify for a mortgage.”
For all these reasons, some analysts are not predicting a return to a normal housing market until around 2014.
(cont)
Home prices, which have slid about 19 percent in the region and about 29 percent nationwide from their peaks in mid-2006, may fall another 5 to 7 percent in 2011, several analysts said. Others predict flat prices; no one expects them to rise significantly. The main reason is an unemployment rate that is now over 9 percent, and is expected to stay stubbornly high in 2011.
Losing a paycheck — or just the fear of it — keeps potential buyers out of the housing market.
Values have returned to the levels of 2003 nationally and 2004 in the region. They leveled out in 2010, shored up by a federal tax credit that has expired.
Patrick Newport, an economist with IHS Global Insight, thinks home prices will decline 6 to 7 percent nationally in 2011 because foreclosures will continue to create a glut on the market. Foreclosures tend to depress home values because they usually sell at a steep discount — often 20 to 30 percent or more, according to several studies.
Stan Humphries, an economist with the real estate website Zillow.com, expects prices to hit bottom in 2011, but warned homeowners not to expect a V-shaped recovery.
“Prices are going to be flat for three to five years,” he said.
While lower prices are tough on homeowners watching their equity slip away, they offer buyers the chance to get into homes that would have been out of reach a few years back.
homes are fairly valued,
Bullsh1t. Tell us this story same time next year when median prices are 10% lower than current levels. And we’ll post that “silly” 100 year trend line chart next year as well. You know, the one that means absolutely nothing. Afterall, who needs actual data when heresay and talking points work so much better. I know; it’s different here, they’re not making any more land, Manhattan is closer to Upper Haughtyville than ever before. And word has it that it’s contained to subprime. LMAO!! Next!!
The Otteau piece is interesting, but there is no background on the calculations and assumptions used to support the thesis.
The only assumption I caught was the assumed low single digit home price appreciation, and a tiny down payment. Perhaps the biggest variable in such a question is how much would a home buyer need to spend on home repairs. That can make a huge difference, and can vary widely from home to home, and person to person.
All the talk of what is holding back the housing recovery and little to no mention of FNMA, FHLMC and FHA. Virtually every 3.5% down loan made by FHA in the last 5 years is underwater. FNMA & FHLMC are in crisis. There is almost no mortgage market without government support. Tough to be an optimist.
Life is good (if you work for the Government)
“The housing recovery has stalled, but the gravy train rolls on for the government-appointed saviors of the housing market, Fannie Mae and Freddie Mac. The top executives of the taxpayer-backed companies stand to make millions of dollars in salary, deferred pay and long-term incentive awards for 2010 – including substantial sums that are performance-based, at least in name. Fannie (FNMA) CEO Michael Williams and Freddie (FMCC) chief Charles Haldeman each stand to make some $6 million this year, going by company filings that broadly outline 2009 pay and 2010 guidelines”
Using calculations based on sales data, Mr. Otteau deduced the following: After four years, the buyer of a $400,000 home, putting 3 percent down and obtaining a mortgage at 4.83 percent, will start to come out ahead of a renter paying $2,000 a month.
There are so many holes in this statement, I don’t know where to begin.
Public Workers Facing Outrage as Budget Crises Grow
FLEMINGTON, N.J. — Ever since Marie Corfield’s confrontation with Gov. Chris Christie this fall over the state’s education cuts became a YouTube classic, she has received a stream of vituperative e-mails and Facebook postings.
Marie Corfield, a teacher in Flemington, N.J., challenged Gov. Chris Christie over state education cuts at a town hall meeting in September. Their tense exchange was posted on YouTube.
“People I don’t even know are calling me horrible names,” said Ms. Corfield, an art teacher who had pleaded the case of struggling teachers. “The mantra is that the problem is the unions, the unions, the unions.”
Across the nation, a rising irritation with public employee unions is palpable, as a wounded economy has blown gaping holes in state, city and town budgets, and revealed that some public pension funds dangle perilously close to bankruptcy. In California, New York, Michigan and New Jersey, states where public unions wield much power and the culture historically tends to be pro-labor, even longtime liberal political leaders have demanded concessions — wage freezes, benefit cuts and tougher work rules.
It is an angry conversation. Union chiefs, who sometimes persuaded members to take pension sweeteners in lieu of raises, are loath to surrender ground. Taxpayers are split between those who want cuts and those who hope that rising tax receipts might bring easier choices.
And a growing cadre of political leaders and municipal finance experts argue that much of the edifice of municipal and state finance is jury-rigged and, without new revenue, perhaps unsustainable. Too many political leaders, they argue, acted too irresponsibly, failing to either raise taxes or cut spending.
A brutal reckoning awaits, they say.
http://www.nytimes.com/2011/01/02/business/02showdown.html?_r=2&nl=todaysheadlines&emc=tha2
If Otteau says it is so,it must be so.
Previous thread;
“Now day’s home prices are on very high rise. So they cannot be easily be buy. So they are difficult to buy due to very high rate.”
Is Bi back for the New Year
“If you buy a good property in a stable community,” said Karen Eastman Bigos, who heads the Towne Realty Group in Millburn, “with today’s bargain prices and interest rates, it is virtually guaranteed that value will rise by more than that.”
Nasquack was also a bargain at 3,500.
Otteau, homes are fairly valued, it is a new year & the shills are out in force. How many bottoms did Otteau call, lost count. Let us take a deep breath And remember, the calls on this site have been much more accurate. By Aug. Otteau will be changing his tune & random posters with the NY is different theme will be hiding under the rug. A true classic“with today’s bargain prices and interest rates, it is virtually guaranteed that value will rise by more than that.” she will eat her words. My god these people are clueless.
I know its been said here before but it needs to be said again. Property taxes are the wild card! What is # is Otteau using for taxes?
“But after 10 years, and assuming a 2.5 percent average increase in value, the homeowner comes out $97,516 ahead.
A property value increase of that amount per year is a “very conservative” prediction, Mr. Otteau said, and several brokers in the northern part of the state agreed with him.
“If you buy a good property in a stable community,” said Karen Eastman Bigos, who heads the Towne Realty Group in Millburn, “with today’s bargain prices and interest rates, it is virtually guaranteed that value will rise by more than that.””
Otteau’s assumptions are probably overly aggressive as usual but at least he is calling them for what they are: Assumptions. And to be fair, his prediction last year is the most accurate of everybody’s on this whole board so far.
But Karen should not even be allowed to make a bold, assenine statement like that. If RE was regulated by SEC, she would be in handcuffs right now. This is one reason why the whole RE industry needs massive regulation overhaul. We blame banks for giving mortgages that buyers request but it’s absolutely criminal that an idiot salesperson is making guarantees about future prices, which even if it does turn out to be half true, could not possibly be substantiated without a wish, a prayer and a huge shot in the dark.
Here is her profile: http://trghome.com/agents_Profile.asp?id=1
Otteau’s statement us so broad as to be useless.
How many banks are still handing out loans at 97% LTV and 4.x% rates? How Many people have the credit score and income to meet the loan quality requirements from the banks that may be dumb enough to hand out 97% LTV loans.
There is a subset in our region who would fall into this group but a minority.
“Last year, 70 percent of municipalities saw increases of their property tax levies of 3 percent or more, the analysis shows. More than half raised their levies by 5 percent or more. More than 100 towns saw double-digit increases in local taxes. Only about 60 towns saw their municipal taxes — which account for roughly 29 percent of property tax bills — stay level or drop. Overall, municipal tax levies in the state rose 7 percent.”
http://www.nj.com/news/index.ssf/2011/01/taxes_new_jersey_municipalitie.html
#17 – Cat “banks that may be dumb enough to hand out 97% LTV loans.”
That would be FHA at 96.5% LTV
Neanderthal and anyone else who cares to answer:
a number of people argue for housing prices continuing their climb and as good inflation hedges. First, please explain the general scenarios that allow first time buyers (which fuel the move up transactions) to continuing to pay ever higher prices as property taxes ate set to go up and wages stay flay or decline due in part to global wage arbitage.
Secondly, assuming some model of inflation does generate continuing increase in prices, barring hyperinflation how did that mortgage protect you when utility costs and taxes will jump up as well.
As JJ has pointed out, grab a tax free bond at 2% and rent.
“how long can we really expect rates to stay that low. On top of that you still need the base incomes to support the mortgages. Don’t forget about much tighter lending standards”
Shcrod, i think there is a good chance that if we dont get economic recovery, we can keep rates very low for another 10-15 years. If the feds can push mortgage rates down below 4.25% i think they can create inflation and house price appreciation in the 2-3% per year range.
The median income thing is not an immediate factor, because people will just spend more of their income on housing if they dont have alternatives. Many people dont even consider renting a choice and as far as i can see, it costs nearly as much to rent as buy since all the foreclosed and laid off people are flocking to renting and the homes are being hoarded and kept empty by banks.
And the bank lending standards is innocuous since fha loans are still being given out like candy…. 3% down. no problem.
“Shcrod, i think there is a good chance that if we dont get economic recovery, we can keep rates very low for another 10-15 years. ”
An economic recovery isn’t a necessary condition to bring about higher interest rates.
“The median income thing is not an immediate factor, because people will just spend more of their income on housing if they dont have alternatives”
median income is a factor. if median income was on the rise by %10 or so wouldn’t people continue to buy houses? what was the tipping point for housing? it seems it was a mixture of all the things the cat mentioned. getting rates down below %4.25 won’t help the rising property taxes or the commodities bubble we are facing. $4 per gallon gas is going to hurt a lot of people
We moved to NJ in August after selling our condo in manhattan. We are currently renting for many reasons but primarily b/c we haven’t found a house we love for the price we’re willing to pay and I’m in no hurry to buy a depreciating asset in an environment of inevitable property tax increases. However, in regards to Otteau’s point about the money one saves on the mortgage deduction- I have two issues-1- isn’t a large part of the deduction eliminated by the AMT?
2- who knows if there will even by a mortgage interest deduction in the future–keeps coming into cross-hairs of deficit cutting hawks.
any comments?
all: there is certainly a renewed push to buy as a 2011 resolution; regardless of all this white noise…..one can posit any type of bullshite case about rent versus buy / this and that …however, someone needs to provide grounds to suggest that there will be APPRECIATION in prices from here….for the life of me, I can’t think of one fcking scenario where that flies…..so if the question rolls around to “why should you buy?”…flat out there is no compelling reason to believe that the market will move away from you while you wait; so in essence….doing nothing is a compelling course of action since it is doubtful one would ever regret it….
“An economic recovery isn’t a necessary condition to bring about higher interest rates.”
i realize its a possibility that rates spike but i dont think there is a high chance that we get a popular substitute for treasuries in the next decade.
“if median income was on the rise by %10 or so wouldn’t people continue to buy houses? ”
I dont think that you can draw a conclusion about housing prices only by looking at income since home prices depend on the rate of increase of wages and other consumer goods, and also employment and stock market performance and supply of new and used homes and rentals too.
In an extreme example to make the point, suppose we bulldoze 500,000 sf homes in NJ today and then over the next 6 months median income declines by 5-10%, home prices will still go up. Well maybe they arent demolishing homes but the banks are hoarding them and it creates the same effect.
24: No.
1- isn’t a large part of the deduction eliminated by the AMT?
“someone needs to provide grounds to suggest that there will be APPRECIATION in prices from here”
Chi, Inflation is one scenario where we could get appreciation and reversion to the mean at the same time. If CPI increases at 8% per year and home prices continue to increase at 4% per year, for example.
Another scenario is simply an economic recovery with low inflation where unemployment starts going down to 7 or 8%. We cant rule that out.
Also, if fed pushes mortgage rates down to 3% i think it could spark a decent rally in home prices for a couple more years.
Although i choose to rent, i can think of a million reasons why people choose to buy. Most home owners accept that homes cost more to own than rent but buy into the idea that a home is more than a place to hang your hat and count your equity. Ownership seems more like a lifestyle that provides memories for families and emotional certainty. For many people its a life goal to be a home owner from which the draw confidence and fulfillment. When i talk to friends and people who dont know much about finance they are oblivious to the entire housing bubble. They think it was something that happened 5 years ago and could care less what their home or their neighbors is worth this month. All they know is they have to come up with $2,800 per month piti for the next 28 years of their lives and many dont even consider a home to even be part of their financial portfolio.
Owning is also a method of forced savings. Sure, you could do better in a whole bunch of investments, but so many people live check to check and get nothing in return for their rent. True, you might not see any price appreciation, but same goes for renting. I also won’t be booted from my home when my landlord decides to sell or becomes a slumlord. Some people buy BMWs, other buy Hyundais. Neither will appreciate in value and one is a hell of a lot cheaper to get you from point a to point b.
We can argue the merits of renting vs. owning for ever.
For all the soccer fans out there, espn 2 is running 30 for 30 – the two escobars tonight at 7. Highly recomend it.
“Also, if fed pushes mortgage rates down to 3% i think it could spark a decent rally in home prices for a couple more years.”
you think the fed can hold rates down at %3 for a couple of years?
“I dont think that you can draw a conclusion about housing prices only by looking at income since home prices depend on the rate of increase of wages and other consumer goods, and also employment and stock market performance and supply of new and used homes and rentals too.”
I was simply saying median income is an immediate factor. stagnant income is reducing buying power along with a host of other things as stated earlier. cops, teachers and gvt workers are all facing lower annual raises or freezes( private sector already going through this) with rising costs in taxes, utilities…. how is this not an immediate factor?
Sure income is one of the factors but when considered amongst all the other factors that effect home prices I think you may be overemphasizing its importance, especially over the short and med term.
And yes I think that fed is showing recklessness necessary to hold rates down very lower for many more years than we think is possible.
More than 1,000 dead birds fall from sky in Ark.
BEEBE, Ark. – Wildlife officials are trying to determine what caused more than 1,000 blackbirds to die and fall from the sky over an Arkansas town.
The Arkansas Game and Fish Commission said Saturday that it began receiving reports about the dead birds about 11:30 p.m. the previous night. The birds fell over a 1-mile area of Beebe, and an aerial survey indicated that no other dead birds were found outside of that area.
Commission ornithologist Karen Rowe said the birds showed physical trauma, and she speculated that “the flock could have been hit by lightning or high-altitude hail.”
The commission said that New Year’s Eve revelers shooting off fireworks in the area could have startled the birds from their roost and caused them to die from stress.
Robby King, a wildlife officer for the agency, collected about 65 dead birds, which will be sent for testing to the state Livestock and Poultry Commission lab and the National Wildlife Health Center lab in Madison, Wis.
Rowe said that similar events have occurred elsewhere and that test results “usually were inconclusive.” She said she doubted the birds were poisoned.
Wonder what the impact on home values is if your house is covered in dead birds?
Home prices have a lot farther to fall. In Chatham for example, there is a knockdown on Huron listed for $1.15M. The owners have severe disconnect as comps point to a price of $850-900K. Nicer homes that are totally done have sold for $980K to $1.1M. As long as sellers have this disconnect in NJ the market will continue to be clogged with unsold homes.
Even in strong markets you have dilusional sellers. Got to focus on sold comps.
Besides, high asking prices could mean sellers are confident, not desperate.
high asking prices could mean sellers are confident, not desperate.
High asking prices mean sellers are f*cked bag holders.
Nice read on increasing property taxes in NJ. Be sure to read all of the comments there are quite a few from the taxpayers and teachers and cops.
http://www.nj.com/news/index.ssf/2011/01/taxes_new_jersey_municipalitie.html
“i realize its a possibility that rates spike but i dont think there is a high chance that we get a popular substitute for treasuries in the next decade.”
We’ve already had better substitutes since late 2008. They are called dividend paying stocks. When treasuries hit 2%, companies slashed dividends and in the end, yielded 7% at the time. Anyone who bought in is earning much much more than 7% today.
Opportunity costs? Maintenance? Transaction fees on purchase, and sale? Property taxes?
http://www.cnn.com/2011/US/01/02/new.york.snow/
If true, this doesn’t sound good.
Whipped,
Paying a dollar to get $.40 back still leaves one out $.60.
grim (5)-
Sadly, I have come to believe that the “assumptions and calculations” Otteau use are related to entries on the “credit” side of his checkbook…if you get my drift.
The Titanic has just about gone vertical here. The market is dead. Completely dead. Sales will continue to trend down; prices will plummet even faster.
No one will be spared.
30 year (7)-
The Rethuglicans talked tough about reining in Phony/Fraudy/Ginnie.
Now, as the next Clowngress is about to begin, they are already backing away from it. The three giant septics will continue being tamped full of as much crap as they can accept. They will then fail, and nobody “could have seen it coming”.
Doom is imminent.
I love your site, but honestly tell you that you need more for him to monitor those who commented with your records
gator (10)-
Thanks for posting her info. Time for me to give that leech a piece of my mind.
whipped (24)-
You are 100% correct. Welcome to New Jersey.
chi (25)-
The only reason to buy is if the buyer fully understands that housing is CONSUMPTION, not an INVESTMENT. Flowing from that understanding, a home purchase becomes a choice to “have things your way” within the parameters of household dollars allocated to having a roof over your head more than some sort of guesstimation of whether one is “buying at the bottom” or buying at a price that will allow for some windfall profit to be reaped at some vague future date.
None of us know whether the market has bottomed or when it will bottom. None of us can predict where taxes will go and how fast. Those two facts alone have kept professional RE investors out of the NJ market, so how in the world can Fred and Ethel arb this thing?
Tyler Durden’s take on 2011: no matter what happens, we’re fuct.
“The United States and its leaders are stuck in their own Catch 22. They need the economy to improve in order to generate jobs, but the economy can only improve if people have jobs. They need the economy to recover in order to improve our deficit situation, but if the economy really recovers long term interest rates will increase, further depressing the housing market and increasing the interest expense burden for the US, therefore increasing the deficit. A recovering economy would result in more production and consumption, which would result in more oil consumption driving the price above $100 per barrel, therefore depressing the economy. Americans must save for their retirements as 10,000 Baby Boomers turn 65 every day, but if the savings rate goes back to 10%, the economy will collapse due to lack of consumption. Consumer expenditures account for 71% of GDP and need to revert back to 65% for the US to have a balanced sustainable economy, but a reduction in consumer spending will push the US back into recession, reducing tax revenues and increasing deficits. You can see why Catch 22 is the theme for 2011.”
http://www.zerohedge.com/article/guest-post-2011-year-catch-22
Lamar 49
fcking hilarious! And yet J6P is more interested in dancing with the stars.
Welcome to the next act in the death- and eventual corpse mutilation (by GS & JPM)- of BAC:
“Bank of America Corp. said it will take a $2 billion impairment charge on home loans and insurance and a $3 billion provision for repurchase obligations to government sponsored entities Freddie Mac and Fannie Mae. Oddly enough this is precisely in tune with what Zero Hedge predicted three months earlier, namely that BofA’s massive underreserving will mean a surge in charges and write offs as the bank scrambles to reconcile its insolvent books with reality.”
http://www.bloomberg.com/news/2011-01-03/bank-of-america-sees-2-billion-charge-on-home-loans-insurance.html
Loose Christian movement says End of Days in May
RALEIGH, N.C. – If there had been time, Marie Exley would have liked to start a family. Instead, the 32-year-old Army veteran has less than six months left, which she’ll spend spreading a stark warning: Judgment Day is almost here.
Exley is part of a movement of Christians loosely organized by radio broadcasts and websites, independent of churches and convinced by their reading of the Bible that the end of the world will begin on May 21, 2011.
Well, now we know the End Date of 12/21/2012 Begins 5/21/2011! Good to have a start & stop date.
confused (52)-
No matter the outcome, the world has been spared the possibility that Ms. Exley will reproduce.
Here is a question, an interesting question, kinda. Went to look at a beautiful house on Sunday, couple was very down to earth, owner had dirty jeans and dirty sweatshirt as if he was working around house andwife in a painters smock, guy was 72 and is moving out of state to be near grandkids.
Any how they bought house brand new back in 1980, guy looks like he spared no expensive keeping it up, in last three years alone he did, new roof, new anderson windows, new siding, new instalation, new boiler and put a painters studio/Den above garage with new bathroom and while he was at it put a new MBR bathroom. Homeowners, wife claimed they planned on dying there which is why they did so much work as they love the house. I can tell as everything was first class. However, nothing gaudy or fancy and the bathrooms that were original from 1980 were still in perfect shape and clean. The couple loved my kids, my three year old daughter for whatever reason when we were saying goodbye thought is was like a family party and on her own went over to the Grandma who owned house and hugged her goodbye and I saw her heart melt. Guy is building another huge house out of state, and has money to burn it appears judging from the custom nusery, super high end childrens toys and pool built for kids, all for one grandchild that occassionally visits. That is money to burn.
Here is question what % of people who build a house, love a house for over 31 years and painstakingly renovated and kept a house in perfect shape right down to smallest detail would sell to a nice family similar to theirs, same religion, same nationality, same hobbies and would be an integral part of town that I found out they are very active in. Women who is an artist even handpainted wonderful disney scenes in nursery and basement that I said I would not change and my three year old jumped up and down and said can this be my room I love the drawings.
I know they have no other current offers, but while I was leaving there was another person who looked at it, from what I could tell was an asian women with an infant, out of state plate plates, husband not with her, maybe an executive transfering to town. Anyhow obviously the kid can’t talk and the women looked at house but I could tell she was just looking to buy a house not buy a home. Also did not strike me as a garden painter homemaker type person.
I could tell 100% in a bidding situation in a tie I would win, big deal. However, I can’t match a rich out of state executive with re-location money in cash. If I was to get house the seller would have to in my estimate take 50-100K less to sell to me. On a high end home this is only like 5%.
Do you think someone would sell me a house for less than top dollar because I would keep it as is, keep it in perfect shape and the people would know the house was in good hands??
I know it happens, my sister got her house for 100K less than market as the owner loved his two next door neighbors and was filthy rich and thought the right person in house was more important than highest bid. Did my sister get lucky, I mean I don’t hate my neighbors, however I don’t even like them. But around 10K is the most off I would give for a nice family, I need like 100K off the high price for this to work. I am putting in an offer anyhow and will throw in some stuff that shows I deserve house, trouble is most people get really rich by not giving away money so it may not fly.
I love the socialogical factor of putting in a bid. I believe the right fit buyer deserves to pay less. I know it works with classic cars. Don’t know if it works as much on houses.
Wrong again fukwad….
Lamar Asperger says:
January 3, 2011 at 6:47 am
grim (5)- Sadly, I have come to believe that the “assumptions and calculations” Otteau use are related to entries on the “credit” side of his checkbook…if you get my drift.
The Titanic has just about gone vertical here. The market is dead. Completely dead. Sales will continue to trend down; prices will plummet even faster.
No one will be spared.
http://www.youtube.com/watch?v=iitTKH-AHe8
MEA gives the finger to town taxpayers. Refuses to reopen contract. Among money saving suggestions to save their raises – cuts to special education and pay cuts for everyone else. It’s all for the kids, you know.
http://kids.baristanet.com/2011/01/montclair-education-association-will-not-open-negotiations/#more-6954
chifi, you are starting the new year like getho crazy my borther
Confused In NJ says:
January 3, 2011 at 8:16 am
Loose Christian movement says End of Days in May
crap…my birthday is in June
Loose Christian movement
BTW…WTF does this mean?…..is it a description of stool or rather promiscuity?
re: # 52- May 2011? I would say May 2013 is more likely. It’s possible there could be allot of solar activity coming up. If you watched the movie 2012 the earth’s crust became loose do to increased solar activity. I would not say that the earth’s crust is going to shift like in did in the movie but we are headed into a new solar cycle, and some strange things could happen to make it seem like the end of days.
Google the Carrington Event of 1859. Something like that could happen by May of 2013 and we might see enormous electric currents being generated from a solar activity. Trillions of dollars in damages to electrical transmission wires and electronic equipment even when it is shut off.
Imagine fires springing up all over the planet as an massive electrical surge sets millions of homes and buildings on fire, the telephone lines and internet destroyed so there are no land line or cellular communications, all government services including the military would be overwhelmed. Things could devolve quickly to make it seem like the end of days if we see another Carrington Event and it would be worldwide.
re # 52- re: # 52- May 2011? I would say May 2013 is more likely. It’s possible there could be allot of solar activity coming up. We are headed into a new solar cycle, and some strange things could happen to make it seem like the end of days.
Google the Carrington Event of 1859. Something like that could happen by May of 2013 and we might see enormous electric currents being generated from a solar activity. Trillions of dollars in damages to electrical transmission wires and electronic equipment even when it is shut off.
Imagine fires springing up all over the planet as an massive electrical surge sets millions of homes and buildings on fire, the telephone lines and internet destroyed so there are no land line or cellular communications, all government services including the military would be overwhelmed. Things could devolve quickly to make it seem like the end of days if we see another Carrington Event and it would be worldwide.
JJ: At the end of the day, the real question is whether the asian chick was a hot MILF?
JJ says:
January 3, 2011 at 9:25 am
Here is a question, an interesting question, kinda.
I know they have no other current offers, but while I was leaving there was another person who looked at it, from what I could tell was an asian women with an infant, out of state plate plates, husband not with her, maybe an executive transfering to town. Anyhow obviously the kid can’t talk and the women looked at house but I could tell she was just looking to buy a house not buy a home. Also did not strike me as a garden painter homemaker type person.
I could tell 100% in a bidding situation in a tie I would win, big deal.
Do you think someone would sell me a house for less than top dollar because I would keep it as is, keep it in perfect shape and the people would know the house was in good hands??
Grim # 60 in Mod
chicagofinance says:
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January 3, 2011 at 9:38 am
JJ: At the end of the day, the real question is whether the asian chick was a hot MIL-F?
JJ says:
January 3, 2011 at 9:25 am
Here is a question, an interesting question, kinda.
I know they have no other current offers, but while I was leaving there was another person who looked at it, from what I could tell was an asian women with an infant, out of state plate plates, husband not with her, maybe an executive transfering to town. Anyhow obviously the kid can’t talk and the women looked at house but I could tell she was just looking to buy a house not buy a home. Also did not strike me as a garden painter homemaker type person.
I could tell 100% in a bidding situation in a tie I would win, big deal.
Do you think someone would sell me a house for less than top dollar because I would keep it as is, keep it in perfect shape and the people would know the house was in good hands??
Just one of those pancake ass ones. Nothing to write home about. I sold a house to chinese people once, non-emotional.
chicagofinance says:
January 3, 2011 at 9:39 am
chicagofinance says:
Your comment is awaiting moderation.
January 3, 2011 at 9:38 am
JJ: At the end of the day, the real question is whether the asian chick was a hot MIL-F?
One can only hope that jj’s prospective home purchase moves to the offer phase.
Can’t wait to see “granny” get all hard-assed when jj tries to drop his lowball on her.
There are no friends in real estate.
Still, I bet Granny wouldn’t tell jj to go schtup an onion.
#54 Go for it. It sounds like you’ve found the perfect house for your family. I know what you mean about classic cars – the owners will “interview” prospective buyers to make sure they sell to someone who will love the car as much as they do. Owners of houses they love probably do the same. If you walked in the door and your first impression was “this is the house for me,” then buy it, even if you have to pay more than you’d like. You’ve already run the numbers. Go with your intuition. Sounds like your three year old did.
This young guy has the best deal in NYC on rent and is still not happy tries too off himself by jumping 9 stories but survives. I was paying more back in 1990s for a crappy roach infested Hells Kitchen Apt.
“She also said a dispute with his landlord — who she said wants to evict him from the $572-a-month, rent-stabilized unit that technically belongs to his parents — had been weighing on her nephew.”
Read more: http://www.nypost.com/p/news/local/manhattan/man_owes_life_to_best_sacks_ever_hV7fCH75uRPkc3YbsaiiIK#ixzz19zACiFfB
OOS [68];
Your audition tape for NAR sales pitch of the year in the sucker-punch/heart-strings category has been received, and quite well done. However, as you know, the committe must review hundreds of thousands of applications before making its decision. We thank you for your interest.
Sincerely,
Lawrence Yun
NAR Chief Economist
Nom [prev. thread 105];
…renting a one-way truck in NC to drive it all home.
Reminds me of the U-haul index – it compares where people are moving to/from by the relative cost of a one-way rental in eitehr direction between each city pair. If it coincides with recent early census data returns, they should be paying people to take a truck OW from NC to NJ.
In case you didn’t get the memo Re: equities, the rule of thumb is no longer BTFD.
Now it is JFB.
Re [prev. thread – 149];
I hate to reach back to the last thread for this, but I must say how impresses I am that the author was both so drunk ~36 hours after midnight to believe what they wrote yet congent enough to type it. Well played, sir.
Please show me the $400k house I can buy in a nice town (someplace Graydon M. Ellery, III would live) that has a comparable rental at $2000 a month. In my experience, the ratio is closer to 550-600k / $2000 month.
250k – Housing rentals I have seen in Montclair/GR are more like $3000/month+. $2,000 will get you a very modest apartment in a decent neighborhood here.
And for that amount, you are paying your own utilities, lawn care, snow removal etc on top of the rent.
JJ,
I don’t think you can make an assumption about their emotional attachment to the house. Maybe he hates his current neighbors, maybe he doesn’t. Maybe he think the town is going to heck and wants to cash out. If all his friends around there are gone, he may have no attachment left. For all you know, they might be moving out of state and will never visit the area again (based on what I read). Too often these are one-off transactions. Maybe you need to know if the couple will still have ties in the area after they sell.
neanderthal
from last night: #33
“Sure income is one of the factors but when considered amongst all the other factors that effect home prices I think you may be overemphasizing its importance, especially over the short and med term.
And yes I think that fed is showing recklessness necessary to hold rates down very lower for many more years than we think is possible.”
http://globaleconomicanalysis.blogspot.com/2011/01/consumer-becomes-consumed.html
“Once home prices exceed people’s ability to pay for them and/or home prices exceed the cost of renting, crashes are all but inevitable. I do not care what commodity prices are or how many people allegedly want to move someplace (think Miami, Phoenix, Las Vegas, Vancouver, Sydney, Shanghai), home prices exceeding rental prices or wage growth by multiple standard deviations is a sign of a bubble that will pop.”
This was your original comment: #21 ” The median income thing is not an immediate factor, because people will just spend more of their income on housing if they dont have alternatives.”
I’ll go with Mish on this one.
anyone else notice that the MLS system has changed (not njmls.com, but the one the brokers use nj1.xmlsweb.com), they seemt o have tried to make it like Zillow (map views of properties), but also have destroyed some of the functionality?
when this site is no longer available than it’s time buy
JJ, (54)
That doesn’t look like your own post. It lacks your writing style. The real JJ wouldn’t have failed to hypothesize about the real reason the sister got $100k off her house. You would also never admit that some working mom has more cash than you do to buy a house. Particularly since you say that you’ve been selling off your junk bonds lately with nothing very good to replace them. And you would recognize that sellers don’t walk away from an extra $50k because they like you better than some working mom with a cute baby. Assuming they love their own grandkids more than your kids which they met once.
Just wanted “to buy a house not a home”? Give me a break. Sellers are supposed to give discounts for the emotional depth and committment to the community of their buyers? I just sold my old house last year and I really don’t care if my old neighbors don’t like their new cross-dressing lez couple with their 12 adopted Kenyan tribal children doing native dances on the front yard. Well, my range of indifference would be about $1000 on that one. These days what people really have to worry about is whether buyers have cash to close and will get the financing done.
Your right, I was thinking more of there emotional attachment to home. My wife actually told me when we sold she would never sell to someone who did not love her kitchen, the thought of someone ripping it out after all the time and effort not to mention the 50K it cost would be disturbing. Also before I met her she sold a house in the early 90’s when it was impossible to sell, she had one buyer only and even that was a loss, she had to get out before the loss got worse or was a BK, buyer She had to live there for another 60 days after she sold house and before close, the neighbors cursed her and yelled at her for a few weeks before she got out of there. She said I am willing to take 20K less than deal with that again.
January 3, 2011 at 11:17 am
JJ,
I don’t think you can make an assumption about their emotional attachment to the house. Maybe he hates his current neighbors, maybe he doesn’t. Maybe he think the town is going to heck and wants to cash out. If all his friends around there are gone, he may have no attachment left. For all you know, they might be moving out of state and will never visit the area again (based on what I read). Too often these are one-off transactions. Maybe you need to know if the couple will still have ties in the area after they sell.
You are not a good neighbor. I just spoke about this at work to one guy and he was like I could care less who I sell to as long as they pay me the most. I bet if his neighbors knew he would sell to a pedophile, meth lab, homeless shelter, drugdealers, slumlords etc for an extra $500 bucks when they move they would stop talking to him. I am not talking crazy money. My wife had people on her front lawn screaming at her that she was a bitch when she sold. The day she sold the neighbor to her right and nieighbor to her left house fell around 20K in value. They were older Italian folks Just saying the best was when the Italian guy was screaming at her how his house is going to crash in value at least 20K, wife threw back remember when I was hauling packages, trying to cut my lawns, shovling snow and struggling trying to maintain a house and you just sat there on your porch not offering to help, well that cost you 20K as I don’t feel I owe you nothing.
at A.West says:
January 3, 2011 at 11:25 am
JJ, (54)
That doesn’t look like your own post. It lacks your writing style. The real JJ wouldn’t have failed to hypothesize about the real reason the sister got $100k off her house. You would also never admit that some working mom has more cash than you do to buy a house. Particularly since you say that you’ve been selling off your junk bonds lately with nothing very good to replace them. And you would recognize that sellers don’t walk away from an extra $50k because they like you better than some working mom with a cute baby. Assuming they love their own grandkids more than your kids which they met once.
Just wanted “to buy a house not a home”? Give me a break. Sellers are supposed to give discounts for the emotional depth and committment to the community of their buyers? I just sold my old house last year and I really don’t care if my old neighbors don’t like their new cross-dressing lez couple with their 12 adopted Kenyan tribal children doing native dances on the front yard. Well, my range of indifference would be about $1000 on that one. These days what people really have to worry about is whether buyers have cash to close and will get the financing done.
A West never care about a working Mom’s money. Just saying. Two guys at a football game bragging Guy A makes 550k a year, Guy B makes 650K a year and Guy C makes 75K a year in a clerks job with some fat ugly wife making 600K brags, jointly with my wifes income I make 675K, the other two guys are laughing.
Judging from my poll today, most people wont give hardly any off for the better family, but there are a few maybe 5-10% who will, so I will lowball anyhow given I am the best family for house and hope the seller is in the 10% mode. It worked for my friend on his Porsche 911 in mint condition, sell knew he was a porsche nut who would take care of his baby. Guy actually refused to trade it in on his new Porsche as he could not bear to leave it to chance who got his baby.
I would sell my house to a meth dealer today.
Is it any surprise that the most expensive small towns in the U.S. are concentrated around New York City, San Francisco, San Jose, Seattle, and Palm Beach? These are, after all, some of the most concentrated pockets of wealth in the world, homes to billionaires and movie stars. But which of these privileged enclaves are the priciest?
http://images.businessweek.com/ss/10/01/0119_most_expensive_small_towns/index.htm
New Jersey Towns
#26 – Saddle River
#40 – Sea Girt
#45 – Spring Lake
The American Dream.
The AMERICAN DREAM is a 30 minute animated film that shows you how you’ve been scammed by the most basic elements of our government system. All of us Americans strive for the American Dream, and this film shows you why your dream is getting farther and farther away.
Maybe they should show this video to the NAR.
http://www.youtube.com/watch?v=Kv2oCXbW4r0&feature=player_embedded#
JJ,
If the owner is very involved in the actual mechanics of the sale, like a FSBO, or rent to own, then personality may count. Write them a letter or make a video and send it to them and their neigbors telling them what wonderful people you are and how they should be honored to have you in the neighborhood. Leave out the part of your past about cleaning stuff off the “crush valour” in the back of the car. If they are planning to continue playing bingo with their neighbors, or they and their neigbors are racists, then that may also be significant and affect who they sell to. On the other hand, they might hate the discount’s effect on local comps (and their future sales values) more than they would have hated having an asian mom (which will probably help boost future school test scores and make the town more prestigious).
I think in many home sales, the realtor tells the sellers to stay out of the house when they show it, don’t come to the closing, etc. Basically they only see them at the inspection, if then. Most of the information is conveyed via realtors, and it’s about offer price and ability to close. I actually never met or saw my buyers, but the guy was supposedly a married accountant with kids moving up within the same town. I gave them a 52 inch big screen (rear projection) tv for free because I didn’t want to move it. The biggest present to them was that I always tried to fix things right in that house.
If a neigborhood is so low priced that low-lifes can afford to move in, there’s not much to do about it. That street will have a date with destiny.
A West, I already met the owners. I need to look a man in the face on deals. Heck when I bought my last house, in setting the price I called owner up directly, I have his address, his phone number what is big deal.
The sellers realtor worked out great when playing bad cop I used the realtor to convey info when playing good cop I called owner up directly. Realtor bitch about fence off property line, me tell the owner how much I love his pato set and Pool and can I have them for free.
This house is selling for 600K over assessed value so that won’t bother neighbors if it goes for only 400K over assessed value.
what recession?
I went to Hoboken bakery yesterday (Carlo’s cake or something). It was raining, line outside was at least 150 people waiting to get in to spend money. Apparently, the owner has some sort of TV show about cakes. Ok cake, nothing special. Bakery stayed open extra hour since so many people still in line (though there wasn’t much available to buy..) I heard the scene is similar every day.
ace of cakes
GM hit 38 today!!!!, CHIFI whose your daddy?
jj (88)-
Even when you’re bending him over? That would take some sort of telescoping mirror.
“I need to look a man in the face on deals.”
Carlo’s has always been nothing special…..seeing these lines in Hoboken now is just surreal…..
Forgive me if this was already posted:
Ex-Treasury chief Paulson loses $1 million on DC home
http://www.reuters.com/article/idUSTRE6BT3YI20101230
Poor guy.
I met the Cake Boss in person. The dude is real people. I know nothing about the Ace of Cakes. I do know that anyone who pays that kind of money for cake ought to invest in Liberty Medical.
re # 95 – Current Treas Sec home value is down at least $300k in value on his Larchmont NY home. Bernake place down in DC bought during peak is down $200k in value etc.
No worries for them they are going to drive prices higher with lower interest rates!
“FREEHOLD TOWNSHIP — The new social-services clients are easy to spot in the waiting room of the Monmouth County welfare office.”
“They are dressed in designer clothes, some in fur coats and shiny jewels, remnants of the money they used to readily spend on appearances. Some even come from Colts Neck, Middletown, Rumson, Sea Girt and other havens for the upper class.”
http://www.app.com/article/20110102/NEWS/101020354/1004/NEWS01?source=nletter-news
From Bloomberg:
How I Missed the `Housing Recovery’ of 2010: Caroline Baum
When I saw the headline last week, “Housing Recovery Stalls,” my first reaction was to kick myself for having missed yet another milestone in the U.S. economy’s long rehabilitation process.
Then I came to my senses. What housing recovery? If there is, or was, one, it is nowhere to be found in the data. Homebuilder sentiment, new home sales and single-family housing starts, which, in that order, lead the complex of residential real estate indicators, are bumping along the bottom. There was no recovery to stall.
More at: http://www.bloomberg.com/news/2011-01-03/how-i-missed-the-housing-recovery-of-2010-commentary-by-caroline-baum.html
Anyone here start a betting pool on where metro area prices are headed this year?
interest rates up, RE taxes up, Oil prices up, all should hurt housing, wildcard is wall street is doing good, back in 1999 we had same situation but home prices headed straight up as a rising tide of stock prices lifts all boats.
jj (100)-
This is nothing like 2000.
Unless the point of similarity is the all-out effort by FedCo to stim another asset bubble.
re # 101 – JJ – get it right when you post on public internet forums. Wall street is not just doing good it is doing God’s work.
[52] confused,
Well, I had better enjoy my birthday party on the day before the predicted Apocalypse. A good gift idea might be ammo.
The latest version of God’ work:
http://boombustblog.com/media/wpmu/uploads/blogs.dir/1/files/2011/01/The-GSPFF-Goldman-Sachs-Powered-Facebook-Hedge-Fund1.png
re # 105- can’t wait till FaceBook is declared TBTF…….
Lamar,
Well the Fed is trying to create another asset bubble, but street consensus seems to be that all the fed gas will leak into emerging markets and commodities instead.
46. Careful a piece might be too much.
Making money and protecting people’s assets from evil doers is a very important job. Honestly I don’t know why everyone doesn’t work on wall street. It feels great to do a job that benefits man kind and pays well.
Juice Box says:
January 3, 2011 at 2:39 pm
re # 101 – JJ – get it right when you post on public internet forums. Wall street is not just doing good it is doing God’s work.
The deduction for mortgage interest is unaffected by AMT, however RE taxes can get affected by AMT, in very high RE Tax places like NJ AMT can make the deduction worth less as you can’t write off all of the RE taxes
whipped says:
January 2, 2011 at 4:36 pm
We moved to NJ in August after selling our condo in manhattan. We are currently renting for many reasons but primarily b/c we haven’t found a house we love for the price we’re willing to pay and I’m in no hurry to buy a depreciating asset in an environment of inevitable property tax increases. However, in regards to Otteau’s point about the money one saves on the mortgage deduction- I have two issues-1- isn’t a large part of the deduction eliminated by the AMT?
2- who knows if there will even by a mortgage interest deduction in the future–keeps coming into cross-hairs of deficit cutting hawks.
any comments?
109: It may be reduced in the case of interest related to home equity loan.
The deduction for mortgage interest is unaffected by AMT
This won’t end well…
http://www.realtor.com/realestateandhomes-detail/Summit-City_Nj_07901_M50782-99694
MLS ID 2801231
“Two-story colonial being converting from ranch home. Property will be sold as-is for $400,000 plus $225,000 to be paid monthly as renovation work is completed.”
HTJ: Shouldn’t they be paying you to take the place? I’m sure if the neighbors get wind of the prospect, they’ll pass the hat to cover your demands. Speaking of which, why aren’t the Jets paying you an appearance fee as well?
Good luck with the bid.
Time to stiffen the BK law again.
http://www.bloomberg.com/news/2011-01-03/u-s-consumer-bankruptcy-filings-rose-9-percent-last-year-to-1-53-million.html
dd (111)-
That is a spring-loaded, trip-wired bomb.
Actually, I am working with Jets on appearance fees, Fireman Ed gets like 100K a year.
Been googling the owners to find likes/dislikes, hobbies interest in an attempt to find overlap. If I truly am the right fit for house and neighborhood I say 100K off market price is a bargain. You only sell a house once, but when you sell to a truly exception person like myself it gives you bragging rights for life. Maybe not as exciting as meeting the Pope, but I am sure the Pope still treasuries the memory of the day he met me.
relo says:
January 3, 2011 at 5:40 pm
HTJ: Shouldn’t they be paying you to take the place? I’m sure if the neighbors get wind of the prospect, they’ll pass the hat to cover your demands. Speaking of which, why aren’t the Jets paying you an appearance fee as well?
Good luck with the bid.
115: Yes, rumor has it there is a picture of you hanging in theSacristy at the Vatican. The Pope taps it for inspiration on the way to celebrate mass.
DD [111];
Nothing communicates that the builder spared no expense to do things right like “Listing brokered by EZ Flat Fee Realty,LLC. List Your Home for $395.00!”.
The place looks like a boarding house (maybe it soon will be – two convenient private sub-bedrooms [formerly WIC] off the master bedroom).
“The Pope taps it for inspiration”
If you are referring to Vidalias, then you have more in common with the Pope than with Rex.
I heard someone from the press ask Rex if he had nice feet. Rex said, “I don’t know, I haven’t been able to see them since childhood.”
77 X. Mishe is a huge dikwad that is dead wrong at least once a day. I could create a blog like that easily. All he does is make up negative predictions and then exaderates them to the nth degree. Im not saying to buy now but please don’t base your house buying decision on that dude.
Back to the Pit.
I’m tired!
sl
93 chi. I think you’re referring to his cookies and coffee. The lobster tails and cakes were always best in the area for that style. But I think the lines have more to do with the entertainment value of his show. Plus when you get in there all the characters are in there working as if there is no show.
Juice. If we get solar blasted like that I wonder if home prices in nj will finally break trend and become affordable again? Or if nar will start marketing state as alternative to florida and jack prices up higher.
Jj sorry but I had to skip your posts today. The unnecessary details in the first sentance alone were giving me headache.
DD 111 – $625k to live in Slummit? What a deal!
One example from West Orange is a 2,269-square-foot house at 76 Winding Way that is for sale at $400,000, after seven months on the market and several price reductions. The house, a 60-year-old Cape Cod, has three bedrooms and two and a half baths, and it sits on 0.18 acre.
By comparison, a three-bedroom two-bath unit at Crest Ridge, a building with a pool and landscaped gardens, rents for $1,920; it offers 1,325 square feet.
Yes, and what are the property taxes on that WEST ORANGE house ? Apparently, just shy of 14000 a year. The owner paid 492 for it in 2005. So comparing this place where the payments would be around 3000/month to a 2000/month rental is silly, even by New York Times standards.
NJGator — that’s why a rental house in Montclair or similar is more like 3k/month. It’s actually 2k a month plus taxes (-;
One admits that our life is high priced, but we need money for various issues and not every one earns enough money. Thence to get good loans or just short term loan should be a proper way out.