From CNBC:
Fewer in US Deem Homeownership a Safe Investment
Homeownership as an investment is no longer the rock-solid foundation for the American Dream it once was, according to a survey released on Monday by the firm the government created in the 1930s to promote homeownership.
ewer than two in three Americans now think owning their own home is a safe investment, down sharply from more than four out of five who thought it was a good investment less than a decade ago.
That attitude shift is likely to cause rents to rise as more Americans opt for renting over buying, according to the latest quarterly survey of attitudes toward homeownership from Fannie Mae, the largest provider of U.S. home mortgage funds.
The National Housing Quarterly Survey found just 64 percent of Americans think owning their own home is a safe investment, down from 70 percent at the beginning of last year and sharply lower than the 83 percent who thought it was a safe investment in 2003.
…
Duncan noted that borrowers are swinging back toward making home purchase decisions based on where they want to raise children and what kind of lifestyle they want, rather than on the investment potential.“Focusing on the whole economy, not just housing, there are some long-term benefits of that because it is likely to be a more stable environment than people acting on the temporary benefits and tax strategies.
So, it’s likely to lead to more stability for the economy,” Duncan said, adding that stability is also positive for housing in the long-term.
Nearly three out of four respondents to the survey said they think it will be harder to get a mortgage in the future, up from about two-thirds who thought so at the beginning of last year.
Still, 78 percent of respondents believe housing prices will hold steady or rise in the next year, up from 73 percent in January 2010.
From the WSJ:
Only 1 in 4 Got Mortgage Relief
Just one in four of the 2.7 million homeowners who sought to participate in the Obama administration’s signature mortgage assistance program have succeeded in getting their monthly payments reduced.
The rest failed to qualify for the program or were disqualified after they were initially accepted into the program, according to an analysis by the Wall Street Journal of data on applicants to the program newly released by the Treasury Department.
In all, about 680,000 homeowners who applied for the Home Affordable Modification Program, or HAMP, had received permanent modifications of their loans and were making timely payments or were still in the trial phase as of December.
Almost 6.7 million U.S. homes were lost to foreclosure, short sales or turned back to lenders between 2000 and 2010, according to Moody’s Analytics. Another 3.6 million could meet the same fate through 2013.
The White House launched the HAMP program in 2009 as a broad attempt to reverse the rising number of home foreclosures by reducing families’ mortgage payments, typically by lowering the interest rate and extending the term of a loan. But the administration’s strict eligibility criteria resulted in far lower participation than expected.
From Bloomberg, hat tip Chi:
Distressed Homes Sold at 28% Discount Last Year With `Bloated’ U.S. Supply
Homes in the foreclosure process sold at an average 28 percent discount last year and may continue to drive down U.S. housing prices as the supply of distressed properties grows, according to RealtyTrac Inc.
A total of 831,574 homes that sold in 2010 had received notices of default, auction or repossession, the Irvine, California-based data seller said today in a statement. Properties in distress accounted for almost 26 percent of all home sales last year, down from 29 percent in 2009.
A “bloated supply of foreclosures and weak demand from homebuyers” are depressing the market, James J. Saccacio, RealtyTrac’s chief executive officer, said in the statement. Residential real-estate prices dropped 4.1 percent in the fourth quarter from a year a earlier, according to the S&P/Case-Shiller index of home values in 20 cities.
“While accelerating foreclosure sales will help clear the oversupply of distressed properties and return balance to the market in the long run, in the short term a high percentage of foreclosure sales will continue to weigh down home prices,” Saccacio said.
…
Ohio had the highest average price discount for foreclosed homes at almost 43 percent, followed by Kentucky at 40 percent. Tennessee, California, Pennsylvania, Illinois, New Jersey, Michigan, Georgia and Wisconsin all had average distress discounts of at least 35 percent, RealtyTrac said.
From the LA Times:
Homeownership begins to lose its luster
Meredith Carr and Vince Melamed are just the sort of couple whom real estate agents have always counted on to buy a home.
Melamed is a successful keyboardist and songwriter who wrote hits including Trisha Yearwood’s “Walkaway Joe,” and Carr is a freelance editor. They owned a home in Nashville, Tenn., but when they moved to Los Angeles last year, they decided they did not want to tie up their money in real estate, or be on the hook for home repairs and upkeep.
“I never want to let the mortgage stand in the way of a business decision,” Melamed said. “I don’t want to be in a position where I want to buy a piece of equipment but I can’t because all my money is tied up in the house.”
Carr and Melamed are part of what many economists see as a larger trend. Skittish after seeing home prices crater and eager to put money aside for a retirement that won’t include pensions, working-age people are increasingly skeptical about buying a home.
Surveys tend to support the premise. Two-thirds of Americans still see a home purchase as a safe investment, but that’s down from 83 percent in 2003, according to a study by Fannie Mae. Homeownership has fallen to 66.5 percent of the adult population, down from 69.2 percent in 2004. A Harris Interactive polls says 70 percent of Americans aspire to own a home, down from 77 percent a year ago.
The economic downturn and stricter mortgage standards are driving much of that decline, but economists say there’s also a growing belief among many that they can live better by renting rather than straining their finances to buy a house.
Adding to that is a sense among many younger adults that they will need to move for their careers, making them hesitant to buy lest they be forced to sell at a loss.
“We’re becoming more of a renting/sharing society,” said David Sleeth-Keppler, a psychologist who tracks consumer sentiment for Strategic Business Insights. “People are staying less bogged down, in case something bad happens.”
From the NY Times:
F.H.A. to Raise Insurance Premiums
FEDERAL Housing Administration mortgages, the government-insured loans that have surged in popularity in recent years, will be getting slightly more expensive this spring.
The F.H.A. announced this month that it was raising the annual mortgage insurance premium for borrowers by a quarter of a percentage point — to 1.1 or 1.15 percent of the loan amount for 30-year fixed-rate loans, and 0.25 or 0.50 for 15-year or shorter-term loans.
The higher premium applies to F.H.A. loans taken out on or after April 18.
The agency called the change a “marginal increase” that would be “affordable for almost all home buyers who would qualify for a new loan.” But industry experts say that some consumers, especially those considered marginal borrowers, may now be prevented from buying or refinancing a property.
The annual premium for 30-year loans was already changed in November, to 0.85 percent or 0.9 percent; the level used to be 0.50 percent or 0.55 percent. (The annual premium for 15-year or shorter-term loans, previously zero to 0.25 percent, did not change at that time.)
“It’s going to make fewer people qualify” for the loans, said Michael Moskowitz, the president of Equity Now in New York. “It’s the equivalent of a quarter-point increase in interest.”
…
According to the housing administration, the new rate structure would raise the cost of a $157,000 mortgage, a typical F.H.A. loan amount, by about $33 a month, or $396 a year. The agency requires that all borrowers of loans it insures pay the premium. Consumers with non-F.H.A. loans who put down less than 20 percent are typically required by their lenders to take out private mortgage insurance, to insure the lender against the risk of default.
F.H.A. loans are typically taken out by those who cannot qualify under the stiffer down-payment and credit-score requirements of Fannie Mae or Freddie Mac, the government-controlled buyers of most loans.
The housing agency requires at least 3.5 percent, while Fannie Mae typically requires 5 to 15 percent, or more. Last November, F.H.A. began requiring a minimum credit score of 500, and for credit scores below 580 — a level at which Fannie and Freddie do not back loans — a 10 percent down payment.
Last year, more than 19 percent of all residential mortgages, and more than 30 percent of all home purchases, were made with F.H.A. loans. In 2005, F.H.A. loans made up just over 4 percent of residential mortgages, and nearly 5.6 percent of home purchases.
Good Morning New Jersey
Doesn’t napmeone have to own to rent from. On my way to Florida for work be back on Friday later all
Very tough to justify a big home purchase in NJ. As nice as it might be to feed the ego, it is really a one-way ticket to financial ruin.
I also think that the current remodel craze is one that should be examined. It will be tough to recoup those costs too at some point.
NEW YORK – Wall Street swindler Bernard Madoff said in a magazine interview published Sunday that new regulatory reform enacted after the recent national financial crisis is laughable and that the federal government is a Ponzi scheme.
“The whole new regulatory reform is a joke,” Madoff said during a telephone interview with New York magazine in which he discussed his disdain for the financial industry and for its regulators.
The interview was published on the magazine’s website Sunday night.
Madoff did an earlier New York Times interview in which he accused banks and hedge funds of being “complicit” in his Ponzi scheme to fleece people out of billions of dollars. He said they failed to scrutinize the discrepancies between his regulatory filings and other information.
He said in the New York magazine interview the Securities and Exchange Commission “looks terrible in this thing,” and he said the “whole government is a Ponzi scheme.”
A Ponzi, or pyramid, scheme is a scam in which people are persuaded to invest through promises of unusually high returns, with early investors paid their returns out of money put in by later investors.
A court-appointed trustee seeking to recover money on behalf of the victims of Madoff’s massive Ponzi scheme has filed a lawsuit against his primary banker, JPMorgan Chase, alleging the bank had suspected something wrong in his operation for years. The bank has denied any wrongdoing.
Madoff is serving a 150-year prison sentence in Butner, N.C., after pleading guilty in 2009 to fraud charges.
In the New York magazine interview, Madoff, 72, also said he was devastated by his son Mark Madoff’s death and laments the pain he wrought on his family, especially his wife.
“She’s angry at me,” Madoff said. “I mean, you know, I destroyed our family.”
Mark Madoff, 46, hanged himself with a dog leash in his Manhattan apartment on the second anniversary of his father’s arrest. He left behind a wife and four children, ages 2 to 18.
At the time of his suicide, federal investigators had been trying to determine if he, his brother and an uncle participated in or knew about the fraud. The relatives, who held management positions at the family investment firm, denied any wrongdoing.
Bernard Madoff has maintained that his family didn’t know about his Ponzi scheme.
Madoff is a sociopath. His family most definitely knew. In fact I personally know someone who sat through a Madoff presentation and knew something was amiss after about 10 minutes. It wasn’t rocket science.
Bernie may be a sociopath but he knows a ponzi scheme when he sees one;)
#3 – Homeownership begins to lose its luster
Ah, that was what I was waiting for. The masses are looking away from home buying. Another year and it will be time to do some serious shopping….
In case you were busy watching Dancing With The Stars, it is clear now why Harry Markopolous’ warnings got little play at the SEC:
Madoff victims’ trustee seeks payouts from family of David Becker, SEC general counsel
http://www.washingtonpost.com/wp-dyn/content/article/2011/02/23/AR2011022306509.html
It’s a good thing we have big brother SEC here to “protect” us from fraud.
“Very tough to justify a big home purchase in NJ. As nice as it might be to feed the ego, it is really a one-way ticket to financial ruin.” Amen
The tax ball & chain from a home in NJ will drag one to the bottom of the ocean (or lake for you inland folks). With stagnant incomes and high unemployment, how can the state or municipalities think they can continue to raise taxes? Have there been any estimates as to what point in the future, there will not be enough cash to pay pension benefits? At the present time, is there enough revenue coming in to cover the current pension liabilities and if not, where are they currently getting the money?
I agree with the article but this site’s headline (“Homeownership Goes The Way of the Hula Hoop”) is a bit misinformed; Hula Hoops have made a HUGE comeback…I am NOT kidding. In fact, I was at a friendly gathering yesterday where THREE people were using hula hoops and 2 of them take weekly hula hoop classes.
Anyone have any opinions on Oakhurst?
I hear hula hoop yoga is on fire.
14- A lot of us are wondering the same thing. Article today in the Star-Ledger about thousands of state workers heading for the exit doors before their pensions vanish. I am so glad we bought our NJ house decades ago, basing our payments on only one person’s salary, not both of ours. Gives us a lot of breathing room. I grew up renting and renting isn’t the worst thing you can do in life.
Mocha says:
February 28, 2011 at 8:59 am
Anyone have any opinions on Oakhurst?
NJ Coast knows it like the back of her hand…..she will probably chime in….she also has access to the MLS and has lived in the area for 30 years so she can provide context to almost every property….
I hope the next place I rent has a view of the Alps.
clot: trying again…..do you know anything about creating a solar energy collection point on a farm; also there is an outfit in Central Jersey that I would want an opinion on……
Anyone, background is solar projects in NJ?
Essex says:
February 28, 2011 at 9:04 am
I hope the next place I rent has a view of the Alps.
I hope the next place I rent has a view of you……
http://www.youtube.com/watch?v=5OSlj_J6CCQ
chi (21)-
Sorry, didn’t see this the first time around. Talk to Rich Gorde or Nelson Ferreira at:
Ferreira Construction
31 Tannery Rd.
Branchburg 08876
(908) 534-8655
http://www.ferreiraconstruction.com/main/31Tannery.html
The penultimate Marc Faber rant:
“All who enjoy hearing a meaty Marc Faber fire and brimstone sermon, that cuts through the bullshit, will be happy to know that the Gloom, Boom and Doom author conducted a 40 minute interview with the McAlvany Financial Group, which covers all the usual suspects: gold, silver, precious and industrial metals, the “crack up boom”, the future of the Ponzi and capital markets in general and much more. Of course, it wouldn’t be a Faber interview without the requisite soundbite: “I think we are all doomed. I think what will happen is that we are in the midst of a kind of a crack-up boom that is not sustainable, that eventually the economy will deteriorate, that there will be more money-printing, and then you have inflation, and a poor economy, an extreme form of stagflation, and, eventually, in that situation, countries go to war, and, as a whole, derivatives, the market, and everything will collapse, and like a computer when it crashes, you will have to reboot it.” Of course, on a long enough timeline…”
http://www.zerohedge.com/article/marc-faber-i-think-we-are-all-doomed
from above Faber interview,
In fact, I could make a case that gold, at this level of $1400 an ounce, is cheaper than in 1999, when I look at the unfunded liability growth of the U.S., at the credit growth of the U.S., and at the household growth, and at the money printing, and at all the wealth creation that happens in China and Russia.
Thsi is even better then watching Stat punch the weak BS Lebitch brought to the rim last night.
Fuzzy little bears…with enhanced production qualities:
http://www.youtube.com/watch?v=kiNQB28c0YY
make (25)-
I am now excited about the Knicks.
Every single investor in Madoff should have known. His “strategy’ involved purchasing Puts and Calls on stocks. If his strategy was executed he would have been one of the largest buyers and sellers of Options on the CBOE, American, Philly Options exchanges etc. Madoff never purchased a single option and no one at a single options trading desk or exchange ever heard of him.
This is similar to when the con man bought the islanders without a nickle in his pocket, people want to believe something so badly they overlook even the most basic facts.
Essex says:
February 28, 2011 at 7:01 am
Madoff is a sociopath. His family most definitely knew. In fact I personally know someone who sat through a Madoff presentation and knew something was amiss after about 10 minutes. It wasn’t rocket science.
And you wonder why Montclair leads Essex county on tax increases.
http://tinyurl.com/misguided-montclair-mayor
I don’t really agree with the premise of the article. I had a different view of housing 15 years ago when I bought my first condo which I sold two years later and the same holds for now which is just pray to break even. The person I’m buying my townhome from bought theirs in early 2002, did a kitchen renovation and I’m guessing after real estate commissions and fees is breaking even or down a little. If I need to do the same in seven or eight years, I’m just hoping to cover the fees, a new deck and a partial bathroom renovation.
This view, however, got thrown away in the last ten years when everyone wanted to become a flipper or decided that bloated home equity lines to pay for Graydon and Ellery’s sleepaway camp and the monster SUV to take them to and fro were a god given right.
Stu: Was yesterday Selection Sunday? I can’t find that grid on ESPN….
29.Libtard says:
February 28, 2011 at 9:54 am
And you wonder why Montclair leads Essex county on tax increases.
What about those of use who aren’t looking at a house as an investment? What about thsose are looking to make a home out of the house?
For me, I’m not looking about the possible return on the house. I’ve been very fiscally sound, I’ve got a good down payment, I’ll be able to pay the house off completely (barring any tragedy) in short time, and I’ve prepared for the purchase. I’m going to purchase a house in the next year because I want a place that is mine, that I can customize and make into a place that fits me rather than having to conform to the requirements or wishes of a landlord.
One example of something that would make my quality of life better and me more happy:
I’d like a nice soundproofed media room wired with a tasteful TV, sound system, every gaming console I’ve purchased since I was a kid, the HTPC, etc. I don’t want to have to worry about what’s going to happen when the landlord sells the place or my lease runs out. Nothing on credit. Nothing installed by anyone other than myself.
(8)
If someone is choosing to remodel thinking/assuming/needing to recoup the costs, they are delusional and stupid.
One should remodel for a need or want in which they can afford.
Crap!!! Just checked balances and saw that I got stopped out of SLV. Motherfcuking manipulators.
I know I am a damn fool for using trailing stops, but I felt I needed the insurance. Problem is, this is the third fcuking time I got stopped out of a metal position on a freaking manipulation. Even when I expanded my stop range to avoid it.
Did I make money? Yes, but I am leaving too damn much on the table.
[33] Joyce
Unless you plan to stay and enjoy your remodel, you are doing the next owner’s remodeling for them. When we bought this place, we looked at what needed doing right away, and did it so that we get the benefit.
Now we are looking at more cosmetic remodeling, but have to decide if we are staying put first. If we aren’t staying, we aren’t spending.
[32] dough
Makes sense only if you have a very long time horizon, and more sense if your kids will be there as well. In a highly-mobile environment, ownership makes little sense. Further, with the proposed tax changes, I have been saying that home ownership and marriage may not make sense for high earners unless the primary earner is in a traditional family structure and is tied to a geographic area where opportunity abounds.
Even my situation is a cautionary tale. I bought on the premise that I would be working in this area indefinitely, and that my wife’s industry would still be centered here. Neither premise turned out to be correct.
Look at pro athletes. The smart ones don’t own where they work. The future model will be owning the Nompound and renting the townhouse.
Meanwhile, I saw a survey that indicated more than 50% of Chinese thought that property would be their best investment alternative for the next 12 months. Stocks and gold came ahead of bank accounts. Wealthy people over there love to collect empty bare concrete apartments. They don’t even rent them out, just hold them to sell at a higher price. On my recent trip there, property was the main thing people seemed to discuss, reminded us of US in 2005-6. Wife says we can sell the apartment we bought for a profit before it’s even completed. We could be condo flippers! I said great, as long as you promise not to reinvest in another one. (I let her buy a small apt in a secondary city where we have family mostly to throw her off the trail of more expensive and scarier apartment investments in Shanghai – much like I let her lose a small amount of money investing in Lucent in 2000 to teach her a lesson and to keep our real money out of the tech bubble).
Comrade,
See this article on stops:
http://falkenblog.blogspot.com/2011/02/stop-loss-myth.html
“Was yesterday Selection Sunday?”
March 13.
clot: specifically this sub?
http://www.vanguardenergypartners.com/
I was making a joke….
39.Lone Ranger says:
February 28, 2011 at 11:13 am
“Was yesterday Selection Sunday?”
March 13.
Fancy remodels are like cars, everyone knows you take a hit as soon as you spill the first drop of sauce on the new counters.
(32)
“…rather than having to conform to the requirements or wishes of a landlord.”
You know your deed will list you as tenant. Town building code/rules/reg’s … you don’t own anything.
re # 20 – Essex as I have recommended to you before go jump off a cliff already.
http://www.youtube.com/watch?v=LMbeGJQFFqo
More like virgins
grim says:
February 28, 2011 at 11:36 am
Fancy remodels are like cars, everyone knows you take a hit as soon as you spill the first drop of sauce on the new counters.
Real esrate not safe? Phooey. What is NOT to like about an investment which:
needs constsnt repairs and updates in order to hold value
must be insured to prevent one from getting wiped out in a tort action
can be taxed without limit
can be taken away to build a park, road, or to allow a condo developer to build something that makes him/her millions.
is rather illiquid
requires spending large sums on support systems, gas, water, etc., in order to have any utility
Again, I ask, what is NOT to love about parking huge sums of money into such an “investment”?
http://www.nytimes.com/2011/02/27/magazine/27christie-t.html?_r=1&src=me&ref=general
How Chris Christie Did His Homework
Joyce Number 43 Got that right especially when the reaper comes. Spend it now or someone else will spend it for you
shore guy are you describing wives or real estate?
I find this comment from Mushnick utterly fascinating….
d) Did Selig assign (chi -note italicized in column) new general manager Sandy Alderson to run the Mets, perhaps with an idea of him becoming the club’s custodian given where they’re headed? Or will that happen, either way?
47. Actually he missed a couple of classes.
My wife’s cousin’s son…..
http://www.youtube.com/watch?v=FLqxfoKDinQ
Let the damm Europeans invade Libya already we don’t need to be involved. The 27 EU member states have an active troop strength of 1.8 million with 4.5 million reservists and a budget of 400 Billion. They have 7 aircraft carriers and over 3,500 combat aircraft. They do not need our help.
WASHINGTON (Reuters) – The U.S. military is repositioning naval and air forces around Libya, a Pentagon official said on Monday, as international demands intensify for an end to Libyan leader Muammar Gaddafi’s decades-long rule.
Juice Box,
Givrn Hess Oil’s Lybian holdings, I suspect the US wants to be involved in order to retain a seat at the table when the end comes for the Col.
16.Mocha says:
February 28, 2011 at 8:59 am
Anyone have any opinions on Oakhurst?
Oakhurst is a large diverse section of Ocean Township. Properties for sale range from $199,000 to $2,990,000. Among the subsections of Oakhurst is the Sephardic community, some just for the summer and others year-round. The lesser valued summer homes tend to be rented to Monmouth University students with all that entails. There is not a Hispanic/Black section except for the Middlebrook Apartments and Continental Gardens that are west of route 35.
The schools are considered good by many people who value predominantly white classrooms but they manage to crank out more than their share of drugged up, alcoholic, dumbed-down losers. And for that plan on paying higher property taxes than the surrounding towns.
Good points- close to the ocean, close to rt 18 and Parkway.
Prices are falling in Oakhurst like everywhere else. Here are the last 3 sales.
510 Elizabeth St
List- 3/20/09-$479,000
Closed-2/17/11-$379,00
Previous sale -4/23/95- $160,000
501 Freehold Ave.
List-7/01/08-$424,900
Closed-2/16/11-$324,500
Previous sale-8/02/05- $380,000-
150 Idlewood
List-12/27/05-$699,900
Closed-2/03/11-$419,00)
Any other questions? Get my email address from Grim.
51. Especially this one:
http://tinyurl.com/6kjf4os
Juice,
You think the Europeans would actually get their hands dirty by leading an occupation force (i.e iraq 2.0) into Libya? The local erupoean muslim populations may not appreciate that.
Ket,
The other thing is that, while the Europeans have a decent-sized military force, when combined, they lack the airlift capacity and expediationary experience tht we have in abundance.
Shore 59
You have to start sometime. Jump in the water is fine!
Juice;
What do you think AFRICOM was formed for????
grim,
hooping classes are big in NYC. I have 2 hoops. It’s surprisingly hard to keep them up and moving – takes lots of skill and energy. Great aerobic exercise.
re: #55 – This piddly amount of Oil is not worth more American lives. Let the Europeans spill some blood this time around they have allot more skin in the game in Libya than we do.
Libya exposure for US firms ranges from 2-16% of oil output: Oppenheimer
New York (Platts)–25Feb2011/533 pm EST/2233 GMT
The exposure of US companies operating in Libya ranges from 2.4% to 16.8% of their oil and liquids production, according to numbers provided by Oppenheimer analyst Fadel Gheit Friday.
By Gheit’s count, Hess produces 23,000 b/d of Libyan oil, or 7.5% of the company’s total oil and liquids production. Marathon produces 46,000 b/d in Libya, 16.8% of its total oil and liquids output, Gheit said.
Meanwhile, 7% of ConocoPhillips’ production portfolio is Libya-generated at 46,000 b/d, Gheit said. About 2.4% of Occidental Petroleum’s portfolio is Libya-sourced at about 13,000 b/d, Gheit said.
Excluding Oxy, US companies — including Hess, Marathon, and ConocoPhillips — have declined to recently comment on the current status of their Libyan production efforts as tensions there accelerate.
Thanks Coast.
[36]Nom
The horizon is forever. The houses that I’m looking at are the typical houses that our parents liven in, raised families in, and now are dying and their kids who bought the McMansions are dumping them as fast as they can to people like me. I’ll gladly take a comfortable home, fix it up and make it something that fits me and my family without the thought of letting it go.
FWIW: I’ve seen parents from Oakhurst send kids to both Ranney and CBA for high school…..
56.NJCoast says:
February 28, 2011 at 12:15 pm
The schools are considered good by many people who value predominantly white classrooms but they manage to crank out more than their share of drugged up, alcoholic, dumbed-down losers. And for that plan on paying higher property taxes than the surrounding towns.
Essex: where are you my little muffin top?
66. In ur head corksniffer.
Most of you fail to recognize the standard model of buying & the buyer is what’s flawed, not the notion of home ownership in NJ. Too many live at their level of credit and that regard, tend to secure mortgages close to what their max approved level is by default – almost without question. “How much can I spend”? instead of “How little can I spend and be content” and work from that base line. Few even bother to research or assess anticipated utility bills prior to buying a McMansion or even what snow removal might cost you for your driveway and walk way with a local private contractor if even 5 storms hit for a given winter. People willingly enter the contract uninformed of aspects of cost, numbers that can be forecasted with decent accuracy.
Most people know the diamond industry is founded entirely on ‘perception’ and relies entirely on culture buying into the hype, the marketing (drinking the kool-aid). Real Estate had a healthy component of a similar business model injected in it the last decade.
I am buying a ‘short’ /pre-foreclosure right now in NJ and paying 65% of the judgment and about 47% of the price the previous owner paid 6 year ago. I’m qualified for 3X the mortgage I am getting. I’m not buying what I want, one example would be the house does not have a fireplace. It’s a ‘want’, not a ‘need’. What I need is an excellent school district for my two toddlers so the $12K/yr in property taxes is okay for me.
When buying a car, some people only need and want good safe reliable basic transportation. The house I am buying is like a Honda Accord. I did not need 3,000 sq’, a pool, marble this, stainless steel that. You’ve heard “people succumb to their carnal desires”?, well they do that in home buying all the time, instead of being prudent and measured. NJ is not the problem, irrational or disconnected buyers who drank the real estate kool-aid are…
hey guys, first time poster…been reading daily for 2 years, so a long overdue “tip of the cap” to you all. Sold April 2010 thanx to a lot of you and of course, the FTHB tax credit. Been rentin and waiting. Coast, wife and I are targeting the se Monmouth/ue Ocean County areas (Howell, Farmingdale, Tinton Falls, etc.). I’m guessing your in the know on these based on your comments above. If possible, I’d love to get your thoughts/perhaps permission to email you…thanx for any info in advance.
Anybody got any good Ridgewood comps?
Would much appreciate it.
Gary and Relo-
If you can believe it, our offer was rejected on 21 Skytop Ridge in Oakland, NJ. The seller’s agent “claims” they have accepted another offer that was close to asking. Incredible. With those taxes $15K (and yes – $110 a month association fees, and lets not forget the $100 monthly sewer fee), I am shocked someone offered that close to asking price. Ah, a fool is born every day…
69.BearsFan says:
February 28, 2011 at 12:45 pm
Bear-
I’d be happy to help you with info. Get my email address from Grim.
Cheers.
In whatever town you are looking to buy……..How many decent homes are out there to actually rent? Or are the decent homes so expensive that you are essentially paying (bailing them out) someone’s mortgage?
I don’t understand who would buy a 6000sf, million dollar, three bedroom house in a 55+ community in NJ. I also don’t understand why a home with 3 bedrooms would have 4.5 bathrooms. My guess is that there’s a full bath in the basement along with a room that they don’t call a 4th bedroom, but I don’t see the floor plans for that floor.
http://www.khov4seasons.com/Home/NJ/NF/QuickDeliveryHomes/NOTTINGHAM053/_Properties_AUTH.htm
If I was 55+ and had an extra million, I’d be planning a quick getaway from NJ, not strapping myself in.
(68)
you couldn’t find a honda accord to lease?
72. thanks Coast, will do.
andrew 68-
Very true. It is this additional consumption that sucks away at the wealth when people are paying an extra $400 to $500 per month in higher taxes, electric, and gas.
#16 Mocha,
I loathe Ocean Township. I grew up in Long Branch and would rather have my kids grow up in Long Branch then Ocean.
WSJ Website
I don’t think this hit any print edition, so it may actually skid under the radar….
HOMES
FEBRUARY 27, 2011
Why 2011 May Be the End of the Housing Crash
By SIMON CONSTABLE
There might finally be some good news this year about the nation’s dismal housing market. Or, at least, the bad news could stop.
Either way, it will be welcome relief for current homeowners as well as for potential real-estate investors. Reasons to be optimistic have been sadly lacking since the housing bubble burst in 2006.
For sure, last week we learned the widely watched S&P/Case-Shiller home-price index fell 1% in December, its fifth straight decline. The index tracks 20 major markets.
But that figure belies real reasons to be optimistic, according to some experts. If they are right, it might make sense to jump into real estate. The trick is avoiding getting burned again, and it doesn’t necessarily mean owning a home.
First, let’s recap the economic signs a bottom is close.
Houses Are a Good Deal
Housing is the most affordable it has been in decades, according to analysts at Moody’s Analytics. They don’t just look at house prices. They also look at incomes.
Nationally, the cost of a house is the equivalent of about 19 months of total pay for an average family, the lowest level in 35 years. Prices usually average close to two years’ pay, although that varies nationally.
At the peak, midway through the last decade, a home in Los Angeles cost the equivalent of 4.5 years’ pay. The average price has since fallen to just over two years’ income now. That’s well below its pre-bubble average of 2.6 years. This means average Los Angeles homes are cheaper in “real terms” than they were typically during the period 1989 through 2003.
The opposite is true around the Washington beltway, where it will take 26 months of pay to buy a home, versus the historical norm of 22 months.
“Pricing is down so much in some markets that when you analyze renting versus owning it makes much more sense to own,” says Michael Larson, a real-estate analyst at Weiss Research in Jupiter, Fla.
It is definitely bullish. But what about timing?
“Housing prices will probably bottom in 2011,” says Scott Simon, a managing director at money-management firm Pimco in Newport Beach, Calif. He foresaw the housing crash, helping his firm dodge losses that plagued Wall Street.
Mr. Simon says prices might dip another 5%. Still, in the scheme of things, that’s small. Consider this: In some markets, home prices have fallen by half or more since 2006.
For instance, in once-hot Miami you can snap up an average house for under $166,000, according to recent data from the National Association of Realtors. That’s down from $371,000 in 2006. Another 5% drop would take it to $158,000.
Investors Stepping Up
Here’s another sign the market is nearing a bottom: Investors have started to buy up houses and condos, in some instances paying entirely in cash. That’s a far cry from the heady bubble days when borrowed money seemed the key to riches. The bubble-era speculators who got burned tended to buy at the peak and borrowed heavily to do so. When the crash came, they quickly saw their wealth erased.
Take Miami again. Last year, more than half of all transactions were made entirely in cash, according to a recent report in The Wall Street Journal. That compares with 13% of deals in the last quarter of 2006, the height of the bubble. Similarly, in Phoenix 42% of sales in 2010 went to all-cash buyers, up threefold since 2008.
It’s a sign that these investors are betting on a rebound. Investors buying at current prices are looking for deals, or so-called bottom fishing. They typically like to pay entirely in cash (or with a relatively small loan) to speed up transactions. That can be vital for an investor wishing to lock in a deal fast.
If this is a turn in the market, then it might make sense to go out and buy a home. But, warns Pimco’s Mr. Simon, “buy in areas you really know.”
Plan to Stay Put
Buy and hold. While the good news is that the worst of the housing crash might be over, the bad news is that the fast gains of the glory days of 2005 and 2006 won’t be back any time soon. So to cover the costs of buying and selling, and what could be a prolonged recovery, plan to own for more than 10 years, explains Jack Ablin, chief investment officer at Chicago-based Harris Bank.
Also remember that borrowing money to buy a house can still be risky. If you pay for a $100,000 property with $20,000 cash and borrow the rest, a dip in the value of $20,000 would leave you with zero equity. On top of that, you’d have to pay to maintain and repair the property, something not necessary when renting.
Home Buying Without a House
There are other ways to benefit from a real-estate rebound than directly buying a house. Such investments include stocks, mutual funds or exchange-traded funds. Unlike homes, which typically cost tens of thousands of dollars, these financial investments can be made in smaller amounts and typically are easy to sell.
Weiss Research’s Mr. Larson says although new homes are oversupplied, home builders might benefit from a rebound as the situation rights itself.
Rather than pick individual stocks, he says, it probably makes sense for small investors to pick broader investments that hold many different stocks. In particular, he points to the SPDR S&P Homebuilders ETF (XHB), which tracks a basket of home-builder stocks.
Mr. Larson also highlights specialized mutual funds such as the Fidelity Select Construction & Housing fund (FSHOX), which tracks home builders as well as home-improvement retailers like Home Depot and Lowes that would also likely benefit from a housing recovery.
—Simon Constable is author of the forthcoming book “The WSJ Guide to the Fifty Economic Indicators That Really Matter: From Big Macs to ‘Zombie Banks,’ the Indicators Smart Investors Watch to Beat the Market.” simon.constable@dowjones.com
#74 A. West
I don’t get that either. Maybe they are downsizing from a 10,000 sq ft house in Chatham?
Silver seems to go up everyday.
anybody know a website to get free list of foreclosures or short sales ?
not something that will take me to a pay site
mostly looking in englewood and tenafly
Re: article in #2
“Homes in the foreclosure process sold at an average 28 percent discount last year and may continue to drive down U.S. housing prices as the supply of distressed properties grows, according to RealtyTrac Inc.”
Does anyone know if this is saying the REO house sells for 28% less than the same house on the market or is its simply a comparison between avg price of all REOs v. avg price of all non-REOs?
Chifi, Remember 2009? Sadly I am parting with bank bonds today. Not much upside above par on a short term bond. These two junkers you most likely thought would be BK by 2011.
The junk bond market and investment grade market is overbought, munis are getting closer to fair value. And stocks and commodities are overvalued short term.
What to do, what to do.
YOU SOLD
989701AJ6 ZIONS BANCORPORATION SB NT 6.00000% 09/15/2015
Price: $101.1167
YOU SOLD
55259PAD8 M&I MARSHALL & ILSLEY BK MTNBE 5.00000% 01/17/2017
Price: $103.0227
71: Jay,
It may come back to you yet. If not, plenty of fish in the sea.
anybody know a website to get free list of foreclosures or short sales ?
http://www.bcsd.us/Sales_Data.aspx
May have been posted previously.
68: Andrew, further to your comments, check out the last ppg. re: FHA.
http://online.wsj.com/article/SB10001424052748704520504576162632959543492.html?mod=WSJ_hpp_sections_realestate
To doughboy (32):
February 28, 2011 at 10:45 am
What about those of use who aren’t looking at a house as an investment? What about thsose are looking to make a home out of the house?
—————-
As long as you maintain fiscal sanity and like the house you live in, just go ahead and do it. The worst are those who look at a house as a financial investment, where the sale will make or break their future finances. As long as you’re saving enough for retirement, your kid’s education and for your emergencies ex the cost of owning and maintaining, you will be fine. And no one can forecast the future, but if you’re thinking of staying in the house maybe 10 years and you think you have a reasonable shot at it, then there are going to be merits to owning.
Relo [87];
[cites WSJ article saying ‘buy now or you’ll never afford a mortgage again’ or some such clap trap]
… and I swear, my manager is going bat-sh!t crazy to let you steal this cream puff of a car at this price — this deal is only good today and expires if you walk out of that door…
Former SEC Lawyer Says Ethics Counsel Allowed Madoff Work
http://www.bloomberg.com/news/2011-02-28/former-sec-lawyer-says-ethics-counsel-permitted-his-madoff-work.html
Wink, wink, nudge, nudge …haha…get it…ethics…haha
89: I actually thought I put the “buy now or…” in my post. The irony of the article’s premise, to me, is that anything that inhibits the ability to borrow has a direct negative effect on the price a transaction would/could be consummated at.
At $31,500 purchase, I might agree. That’s not even the annual carry of P&I + RE Tax, and maybe throw in a HELOC, for a lot of folks in these parts.
http://www.bloomberg.com/news/2011-02-28/buffett-says-buying-his-home-for-31-500-was-third-best-investment-he-made.html
In other words, we’re going back to 1999. Love how these articles are written as if a seismic shift has taken place. No, its called “12 years ago”.
—–Nationally, the cost of a house is the equivalent of about 19 months of total pay for an average family, the lowest level in 35 years. Prices usually average close to two years’ pay, although that varies nationally.—–
Uhhhh…
The median income for family in USA is around $49k. Is this bloke claiming the national median for house cost is $79k ????
Weird
Any suggestions where to buy furniture?
Dedicated to everyone’s good buddy clot:
http://www.youtube.com/watch?v=qMc7dWLvJRs
Uncle Jay [71],
Let the other “buyer” have it. Good luck. Do NOT offer more than your price level – I don’t give a f*ck if there’s ten so-called buyers lined up. Wait, be patient and take the listing price with a grain of salt.
SG,
K&R sellouts, thrift stores, antique/vintage/2nd hand stores. Furniture at retail has a ghastly markup. Plus its fun to search around for unique pieces.
[38] west
Thanks, but I also think that there is some bug or logic in the algorithm that tilts trades toward the stop loss point. It’s as if the mere fact that a stop loss exists means that once someone puts in a limit order at your stop, once the price hits a point where your hypothethical sale price matches the limit order, it triggers.
At least that is how it seems.
[88] loderunner
At the extremes, the trend toward land and housing as less investment and more shelter/income production could conceivably bring back feudalism.
I could go for Lord of the Manor instead of Comrade Nom Deplume.
Can I hang myself with a Hula Hoop?
Debt [101];
Let us know how that works out for you.
Shore, thanks for posting the Christie article. It was a bit (ya’ think?) overboard in favor of Dear Guvn’r, but the phrases in there were extremely helpful to me.
The fat guy gets his schtick somewhere.
It’s time to move on to cures, dude. Causes only satisfy fsl. Anyways, I have a soft spot for fat guys who have been teased and look like all my brothers and who would roll their eyes and moan when they eat my spaghetti and meatballs. Look to major historic events and read interview transcripts. Stuff like NIH and early response to HiV. Avoid regrets. Really think about the impact in retrospect, and have an appreciation for the roles each individual will play in the results. It’s not the perfection you must achieve, but an acceptible application.