From the WSJ:
As Home Rents Head Higher, Owning Regains Its Appeal
Climbing rents for apartments are combining with a continued decline in home prices to push once-reluctant home buyers into finally taking the plunge, say economists and real-estate agents, helping what appears to be a good start to the housing industry’s all-important spring selling season.
Although increased buying activity from investors and second-home purchasers are also factors behind the recent pickup in home sales, real-estate agents say they are fielding more calls from anxious tenants complaining about rising rents.
“The rental market has been incredibly hot,” said Ronald Peltier, chief executive of HomeServices of America Inc., which owns real-estate brokerages in 21 states. He says rising rents, coupled with slumping home prices and interest rates near record lows, are boosting demand for homes at entry-level prices.
Average apartment rents rose by 2.7% last year while the national vacancy rate dropped below 5% for the first time since 2001, according to a quarterly survey to be released Wednesday by Reis Inc., REIS a real-estate research firm.
…
Such increases are one reason why analysts at Zelman & Associates believe 2012 will be the first year since 2005 when the share of apartment renters that moves out to buy a house increases from the previous year. “The equation of renting versus owning is becoming much more favorable for owning,” said Ivy Zelman, the firm’s chief executive.
…
Nishu Sood, a housing analyst with Deutsche Bank DBK.XE who tracks housing costs, says that, historically, the cost to rent an apartment has been about 10% lower than the after-tax cost of owning a home. That rental discount began to fall in 2010 and disappeared entirely last year. By the end of 2011, Mr. Sood’s research found that the cost to rent an apartment was about 15% higher than the cost to own a home. Conditions are “overwhelming in the favor of buying now. It is unequivocal,” he said.
…
And for some renters, the housing crisis has shaken their desire to become owners. “If I was going to buy, I feel like I would be just in the same problem that other homeowners are having with the market,” said Laurel Slutsky, 24, who just renewed the one-year lease on her Chicago two-bedroom.“Right now, all my friends and I are hopping around neighborhoods, and I don’t see the benefit in buying and staying in one place.”
Good Morning New Jersey
A bit surprised to see that quote from Mrs. Doom.
There seems to be more positive news stories about the future of the housing market but only time will tell. Bottom? Overcorrection? Armageddon?
From the Star Ledger:
Once a modern marvel, Beacon of Jersey City sold after hitting rough times
For years, the Jersey City Medical Center looked down from its inner-city perch as the nearby waterfront was transformed from a gritty mix of rail yards and factories into a forest of high-rise condominiums and Wall Street back offices.
Downtown Jersey City, once a working-class neighborhood teeming with immigrants, also underwent a drastic conversion and today is a historic district with trendy shops and restaurants that cater to young professionals lured from Manhattan, Brooklyn and the New Jersey suburbs.
In 2005 George Filopoulos, a wealthy developer with strong ties to the Hudson County Democratic organization, bought the 14-acre property from the Jersey City Redevelopment Authority for about $7 million with the goal of sharing in the city’s rebirth.
Filopoulos promised luxury condominiums in the eight Art Deco buildings that make up the complex, which are on the national and New Jersey registers of historic places. They would feature an outdoor market, a rooftop restaurant and other amenities, including transportation to a PATH station and a parking garage.
The single biggest worry and toughest sell for what was renamed The Beacon Jersey City — whose imposing buildings vary from 8 to 22 floors — was the rugged neighborhood surrounding it.
Today the ornate 1940s-era buildings — whose very existence is a testament to the street muscle and political machine of the legendary Mayor Frank Hague — are only partly developed and face hundreds of millions of dollars in construction costs and an uncertain future.
…
Residents, some of whom have seen the value of their condos plummet from almost $500,000 to about $200,000, are pinning their hopes these days on a Connecticut-based company that bought the troubled complex from Filopoulos.
By early 2007 Filopoulos had reportedly spent $110 million renovating the first two towers, named Rialto and Capital, featuring a sauna, pool, gym and a small movie theater.
Sales were brisk at first, but as the economy faltered residents sensed trouble ahead. Renovation of a third tower, the Mercury, was halted in 2010 when credit dried up. Filopoulos began selling units through auction.
Struggling to pay off his loans and getting hit with tax liens, real estate records show Filopoulos quietly sold at least five of the remaining buildings for $47 million last December to Building Land Technologies of Connecticut.
…
Leon Potts, an insurance consultant who was among the first buyers in 2008, said he was attracted by the Beacon’s luxury, diversity and historic charm. Potts says in the early days there were parties by the grills on the marble terrace.
He bought his 1,000-square-foot condo for $484,600, records show. Two years later, a similar unit on the floor below his sold for $190,000.
“It is what it is,” Potts said. “He (Filopoulos) had to do some short sales, I understand that, but I love this place. They will have to carry me out of here.”
…
When Filopoulos bought the complex in 2005, the project was awarded tax abatements over 30 years, the most generous in the city’s history. It was also granted tax credits from the federal government because of its historic status.
“He tried to do all he could, but no one was spared by the economy,” said Lauren Fasano, vice president of the condo association. “It’s amazing that he was able to sell the place, and we are grateful.The alternative would have been worse.”
Tenafly – Price Reduced!
63 Homestead Rd, Tenafly NJ
East Hill ranch, 2,336 sqft, 0.87 acres
Purchase price: $1,160,000 (December 2005)
Original list price: $1,099,000 (July 2010)
Reduced price: $975,000 (August 2010)
Reduced price: $900,000 (July 2011)
Reduced price: $800,000 (October 2011)
Tax assessment: $795,200 (2011)
I caught the tail end of the Dave Ramsey show yesterday. Debtor called into the show about his underwater mortgage. He has the house rented but by a few hundred dollars less than the mortgage payment. Wants to know if he should cut his losses and do a short sale. Dave pretty much tells him to man up and pay the mortgage and try to sell it in 2013. Guy was like “but everybody says the housing market is going to keep going down.”
I’m thinking, the last time I listened to what everybody else was saying, I bought a house in 2006. Now its like the complete opposite.
Brian [6];
I generally like DR, but he has a serious soft/blind spot for real estate. Time and again he’s advised people underwater by tens or even hundreds of thousands of dollars to ‘hang on a year or two, until the market heals’. He’s implicitly predicting double digit annual appreciation for here on out — re-inflation of the bubble per se.
But, operating from cash rather than from debt is generally a good thing.
From CNBC:
As Foreclosures Stall Again, Warnings of Housing ‘Paralysis’
In an unexpected reversal, both newly started foreclosures and finalized foreclosures dropped precipitously in February.
So-called foreclosure starts fell 15.2 percent month-to-month. Foreclosure sales, the final stage of the process (not sales of already bank-owned properties) fell 19 percent month-to-month, according to a new report from Lender Processing Services.
Most had expected both starts and sales to ramp up, following the $25 billion dollar settlement between five of the nation’s largest banks and state attorneys general and federal agencies over the now infamous “robo-signing” scandal. The drop in finalized foreclosures was nationwide, in states where a judge is involved in the process as well as in non-judicial states.
“For both foreclosure starts and sales, we’re finding that so far, the sustained increase isn’t there, though we do see sporadic ‘bursts’ of activity,” says Herb Blecher of LPS Applied Analytics. “These are sometimes focused around particular investors (i.e., Fannie Mae and Freddie Mac foreclosure starts) and may reflect seasonal trends, loss-mitigation activities, legislative impacts, or other operational factors. We can’t say specifically what those bursts correlate to, because we just don’t see that in the data.”
This sudden stall, however, if prolonged, could lead to an overall drop in home sales, given that foreclosures are such a large share of the market. That has at least one well-known analyst warning of more problems ahead for housing.
“Through relentless meddling with delusions that ‘foreclosures are bad,’ they effectively destroyed the macro housing market,” says California-based mortgage analyst Mark Hanson, referring to government intervention in the housing market. “Contrary to popular thinking, the eradication of foreclosures will lead this housing market into paralysis, not recovery.”
Wednesday, April 4, 7:01 AM MBA Mortgage Applications: +4.8% vs. -2.7% last week. Thirty-year fixed mortgage rate with conforming loan balances ($417,500 or less) decreased to 4.16% from 4.23%.
$100K NEW JERSEY PENSIONS ‘CLUB’ STATE RETIREMENT FUNDS Investigative Report by Mark Lagerkvist
Call it the $100K Club — an elite corps of retired public employees that’s growing bigger, younger and richer at the expense of the New Jersey retirement system.
The number of retirees collecting more than $100,000 a year from state pensions jumped to 1,244 last year, up 28 percent from 2010, according to New Jersey Watchdog’s analysis of state data.
“Special retirements” by police and fire employees — some as young as age 43 —account for half of the increase. It is really special for those who game the system.
New Brunswick Police Director Anthony Caputo, for example, retired at age 47 to draw a $115,019 annual pension. On his way out, he collected $376,234 from the city for unused vacation, sick and personal time.
One year later, New Brunswick rehired Caputo as police director — the same position — at a $120,000 salary. For one job, he receives two checks, totaling $235,019 a year. Caputo did not respond to a request for comment.
For a privileged minority of public employees, benefits are so generous that many become pension millionaires without double-dipping. Meanwhile, state retirement funds face a deficit estimated from $36 billion to $144 billion.
Joseph Blaettler will rake in more than $4.5 million from the Police and Firemen’s Retirement Fund, if he reaches age 80, his statistical life expectancy.
At age 46, Blaettler began pocketing nearly $135,000 a year in retirement checks when he stepped down as Union City deputy police chief in 2009. Blaettler — now a private investigator — gets the biggest pension New Jersey pays to any retiree under 50.
“Politicians created this system, and I simply accepted what they gave me along the way,” wrote Blaettler in an email to New Jersey Watchdog. ”If taxpayers want to get angry with someone, they need to ask their local and state politicians how they allowed the system to get to the point it is at.”
New Jersey Watchdog found 56 other $100K Club members who retired in their 40s. (See list below.) All are PFRS pensioners who worked for local or county governments and took advantage of the special retirement rule, available only to eligible police, prosecutors and fire officials.
The rule allows them to retire at any age after 25 years of employment. Their pension pay ranges from 60 percent to 70 percent of their highest salary under the state’s formula.
Of the $100K Club’s 1,244 pensioners, 552 — or 45 percent — belong to PFRS. Special retirements account for 479 — or 87 percent — of those six-figure pensions.
The club also includes 383 retirees from the Teachers’ Pension and Annuity Fund, 253 from the Judicial Retirement System and 99 from the Public Employee Retirement System.
No one from the State Police Retirement System made the $100K Club. SPRS’s top retiree, William Malast, fell short with $97,897 a year in pension pay.
Not surprisingly, the biggest pensions often go to public officials who received the largest salaries.
Robert Mulcahy hit the jackpot, when he was fired as Rutgers University’s $341,250-a-year athletic director in 2008. He was forced out after a university audit found secret deals and off-the-books spending by his regime.
Mulcahy received a severance package that cost Rutgers more than $600,000. Under the agreement, the state university paid:
$511,875, equaling 18 months of Mulcahy’s salary,
$60,000 in bonus money,
$18,000 in automobile allowance,
$13,950 for country club membership dues, and
$15,000 to pay Mulcahy’s lawyer for negotiating the agreement.
Because Mulcahy was paid in one lump sum, he was free to start collecting a $162,399 annual pension from PERS the following month. It is the second-largest retirement benefit paid by New Jersey.
Thanks to Gov. Chris Christie, Mulcahy is back in state government.
Last year, Christie appointed Mulcahy to the Casino Reinvestment Development Authority, which manages and invests hundreds of millions of dollars in state gaming taxes.
Mulcahy is vice chairman of CRDA. Authority officials say he chose not to receive a salary, set by statute at $18,000 a year.
Mulcahy could not be reached for comment.
# # #
$100K CLUB MEMBERS WHO RETIRED UNDER AGE 50
Name Retire Age Pension/YR Employer at Retirement
BLAETTLER, JOSEPH J 46 $134,773 UNION CITY NOVICK, CRAIG R 47 $126,210 FRANKLIN TOWNSHIP (SOMERSET MURRAY, JOSEPH A 46 $121,937 PATERSON CITY OREILLY, MICHAEL J 49 $120,134 JERSEY CITY FIRE DEPT. PECKERMAN, MICHAEL A 48 $120,015 PARSIPPANY TROY HILLS TOWNSH MANGARELLA, PETER J 48 $116,407 NEW BRUNSWICK CITY CAPUTO, ANTHONY A 47 $115,019 NEW BRUNSWICK CITY MORAN, ROBERT 49 $114,990 ENGLEWOOD CITY CUNNING, EDWARD T 49 $113,913 HOBOKEN CITY ZISA, FRANK C 48 $113,355 HACKENSACK CITY DUNTON, CHRISTOPHER L 49 $110,800 JACKSON TOWNSHIP REGINO, DANIEL 48 $109,245 TENAFLY BOROUGH MAYER, ANTHONY G 45 $108,579 HILLSIDE TOWNSHIP WRIGHT, ROBERT 47 $108,513 PARAMUS BOROUGH NEWMAN, DAVID 48 $108,228 JACKSON TOWNSHIP SMITH, BRIAN P 49 $107,685 PARAMUS BOROUGH SMITH, MARK A 48 $107,683 BAYONNE CITY ROMAN, RICHARD 47 $107,485 HACKENSACK CITY CRAMPTON, PETER J 45 $106,925 PATERSON CITY TIERNAN, PAUL M 49 $106,701 TEANECK TOWNSHIP SCHWARTZ, ROBERT A 49 $106,701 ATLANTIC CITY DAUBER, JOHN L 48 $106,128 EDISON TOWNSHIP MCDONALD, EDWIN J 44 $106,075 PERTH AMBOY CITY CROTHERS, THOMAS R 48 $105,980 EAST BRUNSWICK TOWNSHIP BRINGA, ALBERTO L 47 $105,333 WEST NEW YORK TOWN LOMIA, FRANK 48 $105,061 HACKENSACK CITY SALIM, JOHN R 48 $104,951 HACKENSACK CITY CATANESE, JOSEPH J 48 $104,668 NEW BRUNSWICK CITY DEPOLO, DANIEL J 48 $104,570 POINT PLEASANT BEACH BOROUG RICHMOND, GARY 47 $104,460 NORTH BERGEN TOWNSHIP STOLTENBORG, RICHARD J 49 $103,908 RIDGEFIELD BOROUGH CLAYTON, TIMOTHY J 46 $103,815 WALL TOWNSHIP MARKULIC, DONNA L 46 $103,540 HOWELL TOWNSHIP HAILEY, KEVIN C 49 $102,988 CAMDEN CITY PARKER, LARRY D 44 $102,861 STAFFORD TOWNSHIP GUTCH, JAMES F 49 $102,644 JERSEY CITY HARGIS, EDWARD G 45 $102,561 CAMDEN CITY KLOOS, WILLIAM D 49 $102,521 NORTH BRUNSWICK TOWNSHIP ORIENTE, MICHAEL 47 $102,432 NORTH HUDSON REG FIRE & RESC PARREY, ERNEST T 47 $102,428 TRENTON CITY TURNER, MICHAEL 47 $102,303 HOBOKEN CITY PALOTTA, JOHN 47 $102,276 BERGEN COUNTY GOLDBERG, BRUCE R 49 $102,234 HACKENSACK CITY THOMPSON, JOHN P 49 $102,100 RUTHERFORD BOROUGH SABO, STEVEN M 49 $101,954 ENGLEWOOD CITY OSINSKI, WILLIAM D 46 $101,868 HACKENSACK CITY CZULADA, THOMAS J 47 $101,543 BERGEN COUNTY MCGORTY, THOMAS 48 $101,405 WEEHAWKEN TOWNSHIP TREANOR, JOSEPH M 43 $101,356 UNION CITY QUIDOR, STEVEN 46 $101,211 NORTH HUDSON REG FIRE & RESC CUNNING, DANIEL A 48 $100,958 HOBOKEN CITY JANZEKOVICH, ROBERT J 46 $100,782 EAST BRUNSWICK TOWNSHIP DAINO, DANIEL 48 $100,751 NORTH BRUNSWICK TOWNSHIP OWENS, PATRICK J 48 $100,453 SOUTH BRUNSWICK TOWNSHIP LEE, DONALD J 49 $100,353 HACKENSACK CITY PADO, KENNETH L 46 $100,336 NORTH BRUNSWICK TOWNSHIP LANDAU, ERIC 48 $100,328 MARLBORO TOWNSHIP HERVEY, STEVEN J 48 $100,104 FORT LEE BOROUGH
New Jersey Watchdog’s research focused on retirees from public employment who receive more than $100,000 a year in retirement pay from the state pension system. Disability pensions and benefits for survivors were not included the study.
Data are from state pension records provided by the New Jersey State Treasury. Pension amounts are current as of December 31, 2011.
The above table lists employees who took “special retirements” before age 50. The retirement ages are accurate within a six-month margin of error. State and local government agencies consider release of exact birth dates as an unwarranted invasion of the personal privacy of public employees.
http://newjersey.watchdog.org/2012/04/02/100k-club/
Used to be that the teacher married to the cop was a sob story of financial struggle and dedication to public service.
Or at least, that’s what they all wanted us to believe.
First
Hiii five
http://online.wsj.com/article/SB10001424052702303816504577319610705525288.html?mod=googlenews_wsj
NJ least corrupt. Presented without comment
14 – So what? We bribed them.
The rent vs. buy equation leaves out if you buy a 500K place that is cheaper than renting a 500K place it sounds like a clear win.
However, you are at risk of losing 500K, your investment, RE taxes can skyrocket and maint cost of owning can be a killer.
The rent vs buy equation is not applicable in north jersey. Compare the monthly rent to the monthly mtg pymt. Than add another 1000 dollars a month or more for property taxes.
grim one of my friends growing up is a cop (now a captain) in the BC hellhole I grew up in. He bought a house in Franklin Lakes when he was still walking the beat and his wife is a stay at home mom.
Nope nothing wrong with public employee compensation or the retirement system. move along nothing to see here.
If politicians wanted to fix it they could, but no one slays the sacred cow.
3B [17],
You read my mind.
A house that we looked at 3 weeks ago and actually discussed the possibility of making a bid on just dropped in price by $45,000. The taxes are $13,800. Like I said, we thought about it. The realtor emailed me last week and wanted to know if I was interested. I told her the albatross is the taxes. This is one example of many houses that will drop in price like a rock; thus, setting the bar lower and lower. I guess the pain of being underwater, facing foreclosure, possessing negative equity and flirting with bankruptcy is worth it for the sake of the children. Right? Right? I Said, RIGHT?
In BC, Cops, Teachers and Wall Street Workers make good salaries. Growing up the ladies wanted to be a teacher and marry a guy who works on wall st or is a cop.
Pharma used to be huge, but that is dying off. Plus Cops over extend themselves as they have no concept to compare salaries to and quite often they think they are rich. When they are not. The Manager of a Burger King making 80K a year thinks he is rich as everyone around him makes 10K a year. A cop at top pay making 150K a year thinks he is rich when other Cops make 90K. Meanwhile I know people who are Big 4 Partners, and MDs on Wall Street when their salary fell to 300K a year in 2009 who were wearing shirts twice to save on dry cleaning, skipping oil changes, returning cans, using coupons as 300K felt like they were broke.
Painhrtz – I ain’t dead yet says:
April 4, 2012 at 9:04 am
grim one of my friends growing up is a cop (now a captain) in the BC hellhole I grew up in. He bought a house in Franklin Lakes when he was still walking the beat and his wife is a stay at home mom.
Nope nothing wrong with public employee compensation or the retirement system. move along nothing to see here.
If politicians wanted to fix it they could, but no one slays the sacred cow.
$13,800 taxes for a 4 bedroom house, on a nice plot in a good school district is par for the course.
gary says:
April 4, 2012 at 9:16 am
A house that we looked at 3 weeks ago and actually discussed the possibility of making a bid on just dropped in price by $45,000. The taxes are $13,800. Like I said, we thought about it. The realtor emailed me last week and wanted to know if I was interested. I told her the albatross is the taxes. This is one example of many houses that will drop in price like a rock; thus, setting the bar lower and lower. I guess the pain of being underwater, facing foreclosure, possessing negative equity and flirting with bankruptcy is worth it for the sake of the children. Right? Right? I Said, RIGHT?
from yesterday:
(Fabius)
“GWB threw the 4th under the bus.”
Yes, and the horrific Supreme Court sits idly by in the name of national security. Pure garbage. And Obama and all Congresses since have continued to renew the laws that gut the 4th amendment protections. No mention of them? How much more will it take to convince you that there is no major differences between the two big parties? They are criminals selling their services everyday.
“I think of it in terms of Jefferson. I believe the constitution has to evolve to stay relevant. Especially in the past 50 to 100 years it has not kept pace with society and technology. It has been pulled in so many directions in 200 years that we should question if it is still effective.”
I couldn’t agree more. But the constitution is not a living document. If it was, then it is meaningless. Why write laws, rules, and procedures down if we will just interpret them in any way we please? Yes, the constitution has to evolve, but it must be properly amended not ignored.
“The argument is that as healthcare makes up 18% of our economy, the Commerce Clause comes into effect.”
All economic activity makes up 100% of the economy, therefore Congress can do ANYTHING they want… sound good? The Federal Government has the power to regulate interstate commerce, commerce between the states. How is someone going to a local doctor, hospital, or clinic involving any interstate parties? And throw in the fact that you could be in an area where you can’t buy out of state health insurnace… it’s a nonsensical argument. I should also mention that direct actions taken by the Federal and State governments are the reason costs continue to spiral upward and consume 18+% of the economy. Congress claims it’s trying to solve problems of it’s own making: inflation, cost-shifting, health insurance tied to employer, etc … utterly pathetic.
re: # 6 – Brian there is no fuel for the housing asset bubble. All they (Fed and Congress and POTUS) have manged to do is slow the burn from a sudden conflagration in 2008 to a slow burn in 2012. It is still slowly burning down that is. They only way to reflate housing again is to open the flood gates to NINJA loans, coerce the appraisers, and start up the next generation of MBS and convince the markets to start buying them again. That is not going to happen, not in our lifetime anyway. It will be another generation before we see another housing bubble.
The next bubble may be micro cap IPOs aka “Penny Stocks” that is if Wall St and their lobbyists can convince Congress to loosen the SOX and fraud accounting rules in the new JOBS bill.
You can read about the legislation here.
http://dealbook.nytimes.com/2012/04/03/from-congress-a-law-befitting-a-sausage-factory/
Joyce may I also add the following medical costs go up for additional reasons including
unecessary tests to have doctors CYA their careers from medical malpractice
Fraud how many have heard this story “I got billed from a doctor at X hospital visit and I never even saw them”
Wife received three bills from docs who weren’t in the room or saw her for the twins delivery. I know I was with her the whole time, but we have HBCBS so good insurance everyone lump on for a paycheck
Uninformed patients who go to the doctor for everything from a hangnail to a splinter.
Our kids have been here a month and have already had 4 doctors visits. It is ridiculous. If patients went to see a doctor when they truly needed to it would also bring insurace rates down.
The uninsured are a red herring when it comes to what drives up costs.
I get that. My point was that the debtor was acting because everybody says housing will just continue to go down. Didn’t everybody say housing would just continue to go up in 2006?
Juice Box says:
April 4, 2012 at 9:41 am
re: # 6 – Brian there is no fuel for the housing asset bubble.
Talk about denial!! I was on the local patch site for river edge reading the numerous comments regarding the just completed reassesment. One posteer believes that prices in town have only fallen 5 to 7 percent from the peak!!!!! But I guess its better than the poor fool who last year said they went up 26 percent from 2010!!!!
re # 18- Painhrtz – re: Politicians – Can you see why Christie is positioning himself to get out?
At the current burn rate on the NJ Pension funds will go bust in perhaps six years unless apple stock goes up to $1000 a share. The Bottom line for NJ is no more accounting tricks either they have to start putting in billions a year to fund the plans or cut benefits in half for everybody including current retirees. There are nearly 800k plan participants and the have to come from the municipalities as well, which means forget about the 2% cap.
What politician is going to want to deal with that? Here is the latest fund report.
http://www.nj.gov/treasury/doinvest/pdf/directorreport0112.pdf
Brass Balls,
$13,800 taxes for a 4 bedroom house, on a nice plot in a good school district is par for the course.
Fine. Then the house will sell for 50% of peak bubble price. Think I’m kidding? Wait.
http://nj1015.com/what-should-you-do-about-gang-activity-in-your-town-audio/
Not in my town . I’m in Bergen County
re: #26 – Brian “Didn’t everybody say housing would just continue to go up in 2006? ”
No not here, and other places, if you stick around here long enough you will learn that maybe you should not always run with the herd but chose a bit of a contrarian approach.
Gary and I are doing tag-team duty today:
Brian:
He was probably the same moron who subjected his family to the financial burden of a bubble-top mortgage acting purely on the blind advice of some self-professed expert who appeased his defense mechanism of rationalization. Who cares what everybody says? If it smells like sh*t, don’t step in it. Simple, no college degree required.
I keep going back to this but it truly astounds me: My friend bought a house on the advice of a middle aged mother turned realtor with little to none grasp of the English language. She showed him a piece of paper printed on a blotchy inkjet showing a skyward housing trajectory. How stupid – I repeat how f*king stupid – do you have to be to look at this paper, look at the person who just handed you this, nod in agreement and sign on the dotted line for, what is likely to be, the biggest purchase of your life. UFB.
So it’s no wonder these guys call up some TV or radio show, asking for the next hot tip in an attempt to have someone else clean up a mess that is theirs to begin with. If you have to call a show to ask “What’s next?” you’re doomed to begin with because your housing purchase was Darwinian in nature.
3B – more hopium in the land of the unicorns? No worries NYC commuters will save their housing price values just like every other commuter town in NY Metro, and all of those foreclosures well they will be rented out by the town to deserving low income government workers like cops and firemen.
25
Pain,
You’re right. The steps taken which have disconnected people from the true cost (or what’s billed in total) of the healthcare products and services completely eliminates price discovery.
I said nothing about price. But for instance I have three kids in public schools, garbage, fire, roads, library etc. It is near impossible to do that for under a certain amount. The issue is Higher taxes on a home should equal lower prices on a home.
Look at coops. A coop with 2K a mont maint is much cheaper to buy than a coop with $500 a month maint. Yet a home with 2K a month taxes barely has much of a price difference than a lower priced home.
I looked in RVC long island recently and 1.2 million dollar homes that are on 80×100 plots with four bedrooms have 32K in taxes. These same houes in 1998 had 12K in taxes and were priced at 600K. Prices doubled in 14 years and Taxes almost tripled. It cant keep up. Town cant cut taxes at this point, but these homes should only really be 400K when you consider the taxes alone are a mortgage payment.
gary says:
April 4, 2012 at 10:17 am
Brass Balls,
$13,800 taxes for a 4 bedroom house, on a nice plot in a good school district is par for the course.
Fine. Then the house will sell for 50% of peak bubble price. Think I’m kidding? Wait
Juice that is why I think he is angling for the VP spot regardless of what comes out of his bovine mouth. Isreal trip is a little too well timed, plus he already has an attack dog rep. A Biden Christie VP debate would be pretty funny the dummy vs the bully.
Anyone left that is productive in this state is going to be footing a massive f*cking bill. We should just declare bankruptcy and be done wsiththe future obligations. F*ckem all
A BSD such as yourself with kids in public schools? I don’t believe it.
You do make some good points though. It is precisely for this reason that any rent vs. buy article is not applicable to the state of NJ. You can rent a nice place, invest your DP elsewhere (hopefully wisely) and sidestep downright punitive RE tax burdens and pricing uncertainty.
#33 Juice: Of course, but can you believe after all that has happened etc. that there is someone who believes this!!! I mean is the guy living in a vacuum???? Just a cursory look around would have told him prices have fallen much further than that. Reading the Sunday Record, looking at local listings, asking prices, sold prices, talking to w neighbor etc. It is in my mind shocking that this person is that clueless, and thinks prices have barely fallen in River Edge
Freedy we can do a lot about gang violence in this state daisy cutter the cities, legalize and tax the holy hell out of drugs and finally fix the stupid gun laws in this state
re #39 – pain – daisycut the cities? The gangs live in the burbs now, cities are way too expensive these days.
If the conventional wisdom is that you must own for 7-10 yrs min. to overcome transaction costs and make owning a good deal, if things continue to get worse, even at the glacial, slow-motion train wreck that the housing market has been thus far, 7-10 years in you’re sunk. Consider that even 2008 buyers, by which time the bubble was past its peak, are now 7 years later firmly underwater if they have a need or desire to sell. Not just underwater by their realtor and moving fees plus money spent on decorations and upgrades, etc. – all of which would have been the case given the short-term nature of their ownership, but they have suffered a loss on the underlying asset.
Maybe this is a feature, not a bug?
Balls [35],
I know you said nothing about price, I am. The wild boar fell in quicksand, he’s been sinking for the last 5 years and has a few more years until his carcass hits bottom. It can’t be both ways. Decoupled property taxes and bubble prices don’t mix. The prices are falling and will continue as taxes rise on top of a job recovery on life support. The fat, dumb b@stards can blab all they want but their POS will only sell for what anyone with two f*cking brain cells are willing to pay.
redux [41];
“7” should be “4”, mutatis mutandis.
re # 37 – Zieba – BB won’t admit it but he almost succumbed to the bubble frenzy and bought a McMansion in Jersey. His wife wanted the granite island kitchen with the open floor plan instead of the 1950s galley kitchen they have now in his Long Island Levvitown era cape. His latest ramblings are just mental bargaining, he knows his decision to keep his cash and his cape are probably the best decision he has made since he decided he did not want the two for one special down by the Javitz after a long night partying with John Gotti’s niece at the old 1018 club back in 1988.
Maybe this is a feature, not a bug?
If you bought in NJ in the late 80s, you didn’t see real appreciation until the 00s. The bubble didn’t bring a windfall, just an exit strategy that didn’t involve a check book. Although I suppose time, and 10+ years of mortgage payments, probably helped a bit as well.
#42 gary: Well if you bought in River Edge, you would only be down 5 to 7% from peak; I have been informed of this.
Hello everyone
I know you’ve been around the real estate market longer than I have and I some questions. First of all, all things considered, if you have two kids and are in a good school district, aren’t taxes of about 13K reasonable per year? I mean, that’s paying like 7K for elementary school, right? Because friends in the city, if they want a decent private school have to pay 20K. If you want public school, you have like 3K-4K in taxes with your own place. So the real difference is 10K to have two kids in a decent school vs the average NYC public school. And obviously the cost is a lot less compared to private. Is this the right way to think of it?
The only room in my POS house that is nice is my kitchen. The kitchen in my house was only orginally 10×11 but a prior owner did a 11×11 bump out in 1969 making kitchen 21×11. However, the kitchen was never updated. It had a puke green broken dishwasher a mustard yellow half broken stove, cabinets and formica that was burned and cracked and the floor had several big crack and half the outlets did not work due to alum wiring sparkeing. I got like 20K off house due to kitchen. My wife then spent 35K guting the whole thing and making an amazing kitchen. You rarely ever see a small split with such a huge up to date kitchen. The real cost was the blow out and another owner put new windows in kitchen. To do kitchen today with a blowout, new windows and what my wife did would easily cost 150K at least. Considering I nickled and dime everyone and did project a few weeks after 9/11 when everyone was slow even back then 35K was cheap. To this day people come in and go wow. When my wife is househunting she wants a new kitchen or a large out dated kitchen. Usually it is a small outdated kitchen. That sucks. Even if house is perfect the kitchen is the deal breaker.
I know several people in my town who makes 300K to 800K who live in homes currently valued at 400K. Funny they live in house that costs only six months income.
Juice Box says:
April 4, 2012 at 10:49 am
re # 37 – Zieba – BB won’t admit it but he almost succumbed to the bubble frenzy and bought a McMansion in Jersey. His wife wanted the granite island kitchen with the open floor plan instead of the 1950s galley kitchen they have now in his Long Island Levvitown era cape. His latest ramblings are just mental bargaining, he knows his decision to keep his cash and his cape are probably the best decision he has made since he decided he did not want the two for one special down by the Javitz after a long night partying with John Gotti’s niece at the old 1018 club back in 1988.
Duck [47];
What about the years after the kids finish school? Private/parochial tuition ends, the taxes don’t. And NYC prices are not at all the right yardstick to use for comparison. Why not compare based on cost per sq. meter in Tokyo or Zurich? Then even Manhattan looks cheap, right?
Funny you mention Zurich, just the other day I was speaking to a colleague who relocated from Switzerland, but they were originally from Belgium I think.
They thought $1m was reasonable for the size home they purchased.
When I asked them about property taxes, they asked me if I ever heard about VAT.
re # 47 – Duck “the right way” you mean “it’s for the children”
As Gary Would Say “Sell To Who? WARN Notice – April 2012
COMPANY CITY EFFECTIVE
DATE WORKFORCE
AFFECTED
Novartis Pharmaceuticals Corporation East Hanover 06/08/2012 35
Novartis Pharmaceuticals Corporation East Hanover 06/08/2012 5
Novartis Pharmaceuticals Corporation East Hanover 06/08/2012 32
Novartis Pharmaceuticals Corporation East Hanover 06/08/2012 1380
Novartis Pharmaceuticals Corporation East Hanover 06/08/2012 45
Novartis Pharmaceuticals Corporation East Hanover 06/08/2012 27
Novartis Pharmaceuticals Corporation East Hanover 06/08/2012 93
Not bad out of the 1900 announced in January only 1600 are from New Jersey
Juice,
Yes. My mom and dad did the same for me. I want to do right by them and by my kids. I know there’s a lot of debate on what a good school is, but I’d like to exert every reasonable effort to do so. Now if living in NYC costs me like 3K for decent two-bedroom plus private school, while living in decent school town costs me like 4K for PITI+ other house costs, the additional 10K-12K for taxes, even at 2%-3% up every year doesn’t seem to onerous, right? I’m replying earnestly here because I know all the sarcasm about doing it for the kids … but I’d be paying at least 30K-35K in a couple of years if I stay in the city. Of course, I know you’ll tell me, NYC public school never hurt anyone. But leaving that option out for the moment, is my calcuation correct?
50 – did he also add “and the petrol here is so cheap that the money i am saving there is like another income”
Anon,
I recognize that; which is why if we buy a house the PITI must be reasonable (relative to income of course) and I do have some certainty about the job (nothing’s 100% I know). And we do watch all the ratios (savings, etc). This behavior will not change whether we’re renting or buying (i.e. keeping things reasonable). So i’ve tried to narrow it down that really the extra cost is about 15K (reasonable) -20K (worst case)a year in terms of taxes and other house related costs for the next 7 years. Maybe I’m the only one who can answer that question. Thanks anyway.
Bronx High School of Science rocks. NYC has stelth taxes unless you make under 100K that NYC income tax is a killer. Other thing is the five dollar cans of tuna, drycleaning etc. all that stuff.
I think public schools are great. My kids know Hindus, Muslims, Jews Born Agains, Blacks, Spanish, Indians etc. All people they have to deal with once they hit the workfocre. You cant send a kid to lilly white private school or insulate them in a mosque. They dont work well in real world. Example I worked with an Indian, whe did extremely rude things on a daily basis. Baby Shower where she put Cash only no boxed gifts on invites. Thought Jesus was made up like Santa Claus, Scheduled a lunch in a steakhouse during Lent on A Friday which was also a Jewish Holiday.She had no concept of american culture. Yet she is born and raised in NJ. She had the credentials on paper but could never get ahead. If she went to public schools and had non-indian friends growing up it would have greatly helped her. ALthough after she told me I will be turned into a bug if I ate a hamburger it was hard to listen to her presentations afterwards.
Duck Vader says:
April 4, 2012 at 12:32 pm
Juice,
Yes. My mom and dad did the same for me. I want to do right by them and by my kids. I know there’s a lot of debate on what a good school is, but I’d like to exert every reasonable effort to do so. Now if living in NYC costs me like 3K for decent two-bedroom plus private school, while living in decent school town costs me like 4K for PITI+ other house costs, the additional 10K-12K for taxes, even at 2%-3% up every year doesn’t seem to onerous, right? I’m replying earnestly here because I know all the sarcasm about doing it for the kids … but I’d be paying at least 30K-35K in a couple of years if I stay in the city. Of course, I know you’ll tell me, NYC public school never hurt anyone. But leaving that option out for the moment, is my calcuation correct?
What the heck does your income have to do with price of house? Whether you make one million or 100K a year the house has to be a good investment. Donald Trump once said I may be a Billionaire but I would never spend five bucks for a pack of gum. One should never let income have anything to do if something is a good value.
Duck Vader says:
April 4, 2012 at 12:40 pm
Anon,
I recognize that; which is why if we buy a house the PITI must be reasonable (relative to income of course) and I do have some certainty about the job (nothing’s 100% I know). And we do watch all the ratios (savings, etc). This behavior will not change whether we’re renting or buying (i.e. keeping things reasonable). So i’ve tried to narrow it down that really the extra cost is about 15K (reasonable) -20K (worst case)a year in terms of taxes and other house related costs for the next 7 years. Maybe I’m the only one who can answer that question. Thanks anyway.
Brass,
My income tells me the price that I can afford, not the price of the house per se. If I earn 100K, I’d be unable to afford a 700K house (at 80% LTV) no matter how well-priced that house is. Someone in the real estate business might be willing to take a risk on that house on the expectation of selling it or renting it out, but that’s not where I make my money; I work elsewhere.
That’s why I was saying the PITI must be reasonable relative to my income; it’s not about the price of the house but the reasonableness fo the price relative to my income and spending.
Now as for houses being investments, I don’t look at them that way. Maybe I should. But my dad has been living in the same house since 1968, and he’s now in his late 70s. He saved well; never thought of the house as a cash pile down the road. So now he’s fine, in the same house where he and my mom live, taxes are easy for them.
I may be naive, but that’s my view of a house, not as an investment; because I wouldn’t be able to liquidate it whenever the opportunity presents itself.
duck (47)-
It’s all good, until your kids graduate from that Blue Ribbony skool system with the reasoning facilities of Piltdown Man.
Greetings from Maui.
I’ve followed the constitutional law debate with some interest and a bit of amusement. inasmuch as the debate reflects opinions, I’m gonna stay out of it.
interesting tax story that I heard from a guy on the beach. Guy he knows in seattle is selling his business. But first, he renounced his u s citizenship and his uk citizenship. no I don’t necessarily believe this guy has the story straight because you can’t avoid taxes on the sale of business simply renouncing citizenship unless you valued the business at a very low figure beforehand. perhaps he did but it is endemic of a trend I foresaw
Not to mention that your two little Piltdown Men will leave NJ to go to college…never to return, because they will never be able to come back and find employment adequate enough to allow them to live anywhere remotely as nice as you do.
failing forward
I assume the average person in a blue ribbon town in NJ is making at least 500K a year. Your roads are paved with gold out there.
Duck Vader says:
April 4, 2012 at 1:01 pm
Brass,
My income tells me the price that I can afford, not the price of the house per se. If I earn 100K, I’d be unable to afford a 700K house (at 80% LTV) no matter how well-priced that house is. Someone in the real estate business might be willing to take a risk on that house on the expectation of selling it or renting it out, but that’s not where I make my money; I work elsewhere.
That’s why I was saying the PITI must be reasonable relative to my income; it’s not about the price of the house but the reasonableness fo the price relative to my income and spending.
Now as for houses being investments, I don’t look at them that way. Maybe I should. But my dad has been living in the same house since 1968, and he’s now in his late 70s. He saved well; never thought of the house as a cash pile down the road. So now he’s fine, in the same house where he and my mom live, taxes are easy for them.
I may be naive, but that’s my view of a house, not as an investment; because I wouldn’t be able to liquidate it whenever the opportunity presents itself.
BB #48: So who did this fabulous kitchen?
grim (50)-
Great. Maybe the Belgians and Swiss can swoop in and buy 200k or so units of REO and save our RE market.
jill (65)-
Ikea.
School funding hearing date set (River Dell school funding) I wonder how many prospective buyers are even aware of this controversy?
http://www.northjersey.com/topstories/oradell/146105445_State_sets_hearing_for_Oradell_s_appeal.html?page=all
My friend used to be the math department chair at BHSOS until he moved on to teach in Scarsdale.
Brass Balls says:
April 4, 2012 at 12:48 pm
Bronx High School of Science rocks.
#47 Duck: The blue ribbony schools are no big deal.I am not saying they are bad, not at all. But for all the taxes you pay and the rah-rah about the schools,you would think we should be turning out Rhodes Scholars, and lots of kids heading off to the Ivies. And that is not the case at all.
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Thanks 3B. Uhh, not easy decision at all. I know you guys look at the tax bill of 13K and see it as preposterous. I’m now looking at elementary tuition next year at 18K for my school age kid. And I’m pretty sure it’ll be 20K each by the time by 2014. Ugggh. I want to justify it saying that it’s not that big a drop off if we go NJ…. anyway, thanks.
My wife. She designed it, shopped for cabinets, countertops, faucets, granite applicances, OMG arguing with contractor only places as we had contractor number. From Brooklyn to Suffolk and Internet stuff came stacked up in Garage and living room till demo day with no dumpster to save on fee, to moving beams to upgrading to 220 while every F bomb in world being thrown around by crew, planty of butt cracks showing, a mason who does best work high as a kite, a contractor whose kid was born still borne in midsts of it all. And finally a heated arguement with the contractor guy involved curse words in front of a 2 and 4 year old till he said I can beat the crap out of your or punch you in the face so you better get your husband to come home and deal with this. Unless he is some type of puXXy you need to put a diaper on every night. Me and him hashed it out man to man, kitchen finished on time in budget and was beautiful just like the womens’ kitchen who recommended him. I was like to women afterwards, OMG it was a huge circuis Plus the guy was six foot three inch 240 pounds nasty, a yeller and he had a whole crew with him and we almost had a fist fight. Well women said it sounds just like when he did my kitchen but he is the best. Recess a beam, 220 box, subfloors demo work was like a bad eposide of HGTV. I love hte added stress when I hired a granite guy on my own and electrician on my own and was subbing out all over and having them work together. And that my friend is how you get a great kitchen.
Jill says:
April 4, 2012 at 1:05 pm
BB #48: So who did this fabulous kitchen?
I was about to lock in a 15 year conforming at 3.0% yesterday until Ben f_ckin Bernanke opened his mouth.
Any seller that hasnt sucessfully appealed their property taxes might as well bulldoze their house to the ground. Who cares about the price? Its the dam taxes.
I actually get insulted by sellers who think someone wants to buy their over taxed sh_t box so they can get bailed out of their tax burden as they approach retirement. Generation Y is saddled with nondischargeable Sallie Mae debt for life. Generation X is sitting in circa 76 crap boxes, while trying to keep Grandma from eating pet food. Generation Z will probably be cannon fodder in the next concocted war. The boomers are going to drown thanks to the anchor of property taxes tied to their ankles. Fixed income, inflation, Obamacare, and rising taxes is a death cocktail. Boomers might want to invest in toe tags.
#72 Duck: I sympathize with your situation. The only thing with private school tuition is that once it is done, you are done, period. With property taxes it is never ending, and we went form having little control to know control, as now we no longer can vote on the budget is they stay withing the 2% cap. Even when they were passed in the past and voted down, and then reinstated after an out cry from so called informed residents, at least we could make our opposition known. Now that right has been taken away. Also the residents who rah-rah the most about schools are the loudest, and almost always the least informed, and many times downright clueless.
Many budgets school spending referendums were approved over the last 7 or 8 years in the mistaken belief that the more we spend, the better the schools, the higher the property values. Well many towns spent themselves into oblivion.
#74 He took the punch bowl away; bid lower on any house you are thinking of buying.
3b (76)-
Stay in NJ, and you’ll be spending the rest of your life in oblivion.
3b (77)-
Too bad Bernank hasn’t figured out a way to trigger a perpetual stock market rally, while simultaneously shanking commodities. Just like somebody at ZH said, he’s laying the groundwork for the next big collapse.
I won two years in a row grieving taxes. I am shooting for year three. 12 years ago I bought home for 280K utlizing my own theories I figure house is worth 292K. At best the POS should only rise 1K a year. I then back into my number. This year if I lose I am going to the Assessment Review Board where you pay a fee. I want to go down in a blaze of glory before I stop my grieving process. It does not even matter if they only lower assessed value by one dollar. It is still a victory. Also even if it is a small amount if you win every year eventually you are very low.
#79 There: Well it proves that the rise in the market (as many here have been saying) is just based on nothing more than 0% interest rates and the assumption of unending QE. Take it away and you have what we have yesterday and today. And if rates continue to rise, than by by to the so called recovery.
It will be so much easier when we just admit it’s Depression II.
Duck Vader,
…the additional 10K-12K for taxes, even at 2%-3% up every year doesn’t seem to onerous, right?
Why certainly! Because when it was at 4K to 5K just a few years ago, we all know the quality of education was lack-luster at best. Now, at 10K to 12K, the children are really smart!! Just what until you see how brilliant the children become when the average taxes reach 18K per year in 2016!
Gary,
That is a concern; but again an annual increase of 3% in taxes of 13K, for the next 10 years vs. paying $40K for private school for the next 10 years (and that’s obviously going to move up as well) seems a bit one-sided. But as others have said, the cost is there even after kids leave school. So maybe the best option is to ascribe some form of advanced value to the subsequent taxes (e.g. staying in jersey another 7 years after high school for both kids) to the school years. thanks! maybe that works.
Does anyone here send their kids to private school, in the city or NJ. What’s the average annual rate of increase like?
Meat [82];
It will be so much easier when we just admit it’s Depression II.
You mean “The Awesome Depression”. The first one may have been great, but this one is >AWESOME<. I look forward to the stories I'll be able to tell my grandkids.
http://online.wsj.com/article/SB10001424052702303816504577322030435262896–LESS.html?mod=house#%2F1
Duck [84];
You do like so many others in blue ribbony train towns do. Two telltale signs on the lawn come May: “Congratulations, Graduate!” right next to “FOR SALE BY BROKER”.
#84- Duck – private school tuition goes up about 3-4% per year here in Bucks County.
Duck Vader – if you are going to move to the burbs you will move, nothing will change that except for perhaps $8 gas and high crime. The bitching about the taxes here is just a way of saying you aren’t getting what you are paying for. I am in your situation, I do not want to move to the burbs but with kids and all it gets very expensive and the public option looks very cheap in the burbs for the blue ribbon towns. Just don’t plan on retiring there is all.
A coworker’s son graduates high school this year, his ex-wife already has her the house up for sale, and is moving to Florida this summer. She is actually leaving her two sons behind one just graduated college and cannot find a job and the second one will be headed off to some school out west. No way she will stay with high taxes and all on one income it is just too much. My Co-worker is mid fifties and is now thinking of doing the same. His 2nd wife a teacher in a bluest of blue ribbon towns and can retire in perhaps 2 more years. He is getting ready to sell his place and skip town too.
I would think if they all leave (the boomers) then perhaps the younger kids can get jobs becuase right now their prospects are bleak.
Moose, I’ll probably stick around for a few years. Just so the kids have something to come home to regardless of where they go to college. Someplace familiar.
Livinginpa. Thanks. The school my daughter is in went from 17.5 to 18 for 2012-13.. And they already said “we recognize the tough …” They see green shoots, I think they’ll aim for 19 next year.
Juice; yes, there’s a fair amount of uncertainty about how to get out once the kids are done. But I wanted to do the numbers. My dad once said that a budget is a plan in numbers. And I’ve done that ever since.
Duck Vader,
Does anyone here send their kids to private school, in the city or NJ. What’s the average annual rate of increase like?
Yup. NJ – Private high school – 12K per year.
#89 Juice:I would think if they all leave (the boomer’s) then perhaps the younger kids can get jobs because right now their prospects are bleak.
They won’t get the salaries, that can cover the 12K plus a year property taxes. If people in their peak earning years are complaining about high property taxes, what the young couple starting out, and throw in child care and many with student loans. The blue ribbony and other towns (with high taxes) are pricing themselves out of existence. I have heard stories (don’t know if they are true) whereby people are renting out an extra bedroom in the house to help pay the property taxes.
Duck [90];
Yep, just like your parents did (mine, too). Trouble is that I (we?) can no longer afford to do so. Worse off than your parents across the board — the Locust Generation will go down in history as the first Americans in a century to leave the country worse than they found it. The “me” generation, indeed.
re: #91 – Duck the thing is the taxes the 2% CAP in NJ is a lie there is massive unfunded pension liabilities for the now retiring government worker boomer generation. They outflows are going to trash the pensions and the taxpayer (the local property taxpayer) will have to make up the difference. There is a real chance we could see 8-10% annual increases in muni taxes over the coming six years or seven years in NJ unless there is a bailout or massive pension cut or as I said earlier Apple stock goes up to $1000 a share. I don’t see any scenario happening other than tax increases.
#90 Duck: If you are getting a quality product in the private school it might be worth it. I would try and compare the quality you are now receiving with private vs. what you would get in one of the blue ribbony towns.
“It will be so much easier when we just admit it’s Depression II.”
Clot, so true……
We will have skyrocketing inflation with 70s salaries. Perhaps we can all go back in time to hang out with girls with Farrah haircuts, t-shorts and cutoff jean shorts.
89 – good news…if they all want out and start flooding the market with their “shadow” inventory we can finally start to put some more downward pressure on the prices…which will make the exorbitant taxes a bit more stomach-able. Bring it on.
I forget when I last said this, but I’ve just been reminded that all houses have the same answer to “How much money does it cost?” — All of it.
3b 93 you beat me to it . Juice if they take their jobs they can not afford it either based on 3b’s sound reasoning.
PS Believe it or not been out with my tour guide looking at houses up here. In most cases with zero down taxes exceed mortgage. Yes this will work out well.
95
Its so important to pensions to keep the stock market going up – Apple at $1000/share may not be that far out of reach. Just look at what every QE gets us:
http://www.businessinsider.com/liquidistas-vs-fundamentalistas-2012-4
Just play along with their thinking – why fight it.
re #102- The pension formulas were adjusted during the Floria, Whitman, etc administrations to expect 8.5% yield annually over the last two decades. That did not happen now they are doubling down.
It is either Apple stock $1k, DOW 30k or $20k a year in taxes for NJ on a 50 x 100 lot with a 70 year old house.
Here is the report on their investments.
http://www.nj.gov/treasury/doinvest/pdf/directorreport0112.pdf
It is really a Hobson’s choice.
103
I’m thinking Dow 20k will solve a lot of problems and if not kick the can a whole lot further down the road. They’ve been doing it for several years now. It took me a while to figure it out thinking corporate earnings and growth are the key (silly me) its all about the FED – they want the market to go up.
Pensions generally are not adjusted for inflaton. The cops who retires on a 10K a month tax free pension is doing great. Untill the Price of Milk hits ten bucks a a gallon and new tires for his car is 5k.
Stocks really need to take off. Used to be long term AAA corporate rated bonds paid 7% and DJIA went up 10% each year. I prudent fund 50% long term AAA bonds could easily get 8.5% year. Trouble now is there is no such thing as AAA paper and even run of the mill A rated paper aint paying no 7%, they need to either buy junkier bonds, put more in stocks or increase funding. All three will cause pain.
The junk bond market needs to stop rising, level off, stay where it is. One last run up will get it to bubble levels and a crash will follow. Which in turn will hurt equities as it will cut off financing. But pensions cant buy T-bills, CDs, A rated Munis, MBS backed by Uncle Sam or A rated Corporates as the yield is so low, risk on trade.
Ask the guy with the (Ikea) kitchen (the one worth $150k that he only paid $35K for) he knows the impact of a 40% rise in the 401k’s out there. (The kitchen where he almost got into a fist fight with his contractor) He knows and actually has smart insights.
re: #106 – John prob is the bump from hundreds of billions in stock buybacks is wearing off and like crack heads if they don’t get their QE fix the markets tank. Dysfunctional is a word that every economist uses these days, the talking heads on TV don’t even mention we have 1 million less jobs than we did in the year 2000 and 30 million more people in this country.
DOW 20k would be nice, I am going to write Bernake and tell him to let the traders on the beach know it is now time to start buying.
The real fix will be when we get Romney in and then start up a penny stock IPO bubble and another War, until then it is just trading sideways as we run the deficit straight up for another year and another trillion or two.
107
The markets aren’t going up because of stock buy backs – they’re going up because of free FED money. The challenge will indeed be weening them of the “crack”. My sense is given the alternatives they’ll find another way to give us a QE. Seems to me the only thing that would prevent that is 4% or so of GDP growth. We’re running a deficit of $1.2 trillion or so – that’s $100 billion or so a month – that what gets us our 2% growth now.
3B #68,
Am I reading the funding issue correctly: Currently each town’s taxes essentially funds 50% of the school. If they were to change to a per pupil cost, River Edge would be 60% responsible compared to Oradell’s 40%. I’m basing that on this from the article…
“Last year, Oradell sent 644 students to the district; 988 came from River Edge.”
A 5% stock downturn is called correction/consolidation. 10% people get antsy and jawbone. A 15% market downturn and QE3 is a done deal.
re: #108 -John disagree if you pulled the hundreds of billions of inflows into stocks via buybacks we would still be at DOW 9k.
111
I guess you’re right in that buying stocks is buying stocks regardless of the buyer. Chelsea vs Benfica right now and just a screamer from Meireles.
No IKEA cabinets for me. They are way too expensive. They are a rip off as they come disassembled. Given hourly rates in New York/New Jersey to pay the crew to assembly them would double their cost. Plus too many things can go wrong, what if parts are missing or damaged. I hade mine delivered from a wholesale contractor only place 1/2 mile from house and installed during business hours. If something went wrong we swapped out in a matter of a minute. I did unassembled kitchen cabinets myself in my laundry room. Put a row up. It took as long to assemble as to put them up on wall. If I paid someone I would have to pay double. It took twice as long.
John says:
April 4, 2012 at 4:04 pm
Ask the guy with the (Ikea) kitchen (the one worth $150k that he only paid $35K for) he knows the impact of a 40% rise in the 401k’s out there. (The kitchen where he almost got into a fist fight with his contractor) He knows and actually has smart insights.
Regardless of excess liquidity, buy backs, only place to get yield, good value, rising dividends etc. it does not matter in one sense. If you stayed on sidelines last six months afraid of stocks you were punished with zero return on money versus almost a 30% rise in money. Retail investors only can take so much punishment.
Juice Box says:
April 4, 2012 at 4:28 pm
re: #108 -John disagree if you pulled the hundreds of billions of inflows into stocks via buybacks we would still be at DOW 9k.
Its sounds like you got the redo kitchen “thingy” figured out. Again I have to say that your insights and understanding of financial issues is impressive as well as “real” and look forward to reading any thoughts you have.
114
I’m sorry I was addressing you “Brass Balls” in my last post -(there’s no other name you feel comfortable with?)
#09 Pete: It would be on a per pupil cost, so Oradell would pay only for their students, and River Edge for theirs, River Edge sends 344 more students, which they would have to pay for in their entirety. It would kill River Edge tax wise.keep in mind River Edge already has one of the highest property taxes in Bergen county.
BB – yes very hard to make money even when you aren’t on the sidelines. I missed the first part of the run up in 09 after dumping everything in Nov 07, lately I have been a stock picker. I don’t like being a stock picker it keeps me up at night reading up on companies like Jim Cramer does and with the buy and hold NASD rules I have to keep my chips on the table sometime longer than I might like.
In my next life I want to a kept man.
Penny stock bubble…mmmmm.
That would mean dusting off my Tradestation credentials.
Anyone have the scoop on the employment report on Friday? Im trying to decide to lock or float a refi.
85,
The taxes across the river in PA are moving in NJ’s direction. There is no escape except nomadic activity.
AG – Have fun, it’s a bit addictive if you are waiting to lock:
http://www.mortgagenewsdaily.com/mortgage_rates/blog/
http://www.dailymail.co.uk/news/article-2123686/Worlds-tallest-tree-house-reaches-stories-high.html
I disagree with you. There is wholesale issuing of paper with the purpose of placing equity into corporate treasury. Same as when the U.S. money center banks issued equity for cash, the bonds issued are IN PLACE with very low handles. It is a meaningful step. While bogus, the valuation floor under equities exists and will not be taken away because the cheap money has pulled from out in the market and incorporated into the capital structure of said firms.
John says:
April 4, 2012 at 4:19 pm
107 The markets aren’t going up because of stock buy backs – they’re going up because of free FED money. The challenge will indeed be weening them of the “crack”. My sense is given the alternatives they’ll find another way to give us a QE. Seems to me the only thing that would prevent that is 4% or so of GDP growth. We’re running a deficit of $1.2 trillion or so – that’s $100 billion or so a month – that what gets us our 2% growth now.
124
If it were that easy stocks would never go down (en-mass).
I repeat:
http://www.businessinsider.com/liquidistas-vs-fundamentalistas-2012-4
Hi, My name is Anus. ChiFi recommended this joint. Nice to be here!
youtube.com
Nein, Nein, Nein! Everyone should go to college for degrees in the Liberal Arts and take out 100k in loans to fund it. We can’t have people learning trades!
In Germany 60% of German high school grads choose vocational over academic education…
http://www.npr.org/2012/04/04/149927290/the-secret-to-germanys-low-youth-unemployment
Juice [128],
In retrospect, the day after high school graduation, I would’ve hooked up with a master electrician, learned everything I can and obtained my license. I have one electrician in the family and my next door neighbors sons have their own electrical business. All are very successful and were/are immune to economic downturn. Colleges and Universities are like Casinos; all the hype and glitz exists for one purpose: to get your money. Unless one plans to be a doctor or lawyer, it’s a scam. It’s no wonder Germany can stand on its own.
Bobcat Goldthwait Director/Writer of this new movie.
God Bless America
http://www.youtube.com/watch?v=ul4CZrnEFxU
From Jim Rickard’s testimony March 28th 2012 to Congress.
“The United States, indeed the world, is mired in a swamp of seemingly
unpayable debt. In these circumstances, there are only three ways out – default,
inflation and growth. The first is unthinkable. The second is the current path of
the Fed although it can only be pursued in stealth. The third is the traditional path
of the American people. Growth does not begin with consumption, it begins with
investment. Only when private productive investment is encouraged and pursued
does consumption follow as the fruit of that investment.
America’s retirees and near retirees are ready, willing and able to provide the
prudent savings needed to fuel investment and growth. All they ask in return is
stable money, positive returns and a friendly investment climate. The Fed’s policy
of money printing and negative returns is anathema to investment and growth.
Until the Fed’s war on savers is ended and reversed income security for retirees
will be an illusion. ”
http://banking.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=2c5813a9-ee07-4b2d-b463-4e8eb1c4c9d3
Maybe for tomorrow:
http://www.reuters.com/article/2012/04/04/us-foreclosure-idUSBRE83319E20120404
Americans brace for next foreclosure wave
7:09pm EDT
By Nick Carey
133,
Thats juicy for tomorrow. I might have to get some beers for that one.
bb (105)-
And with that statement, you have just outlined how Bernank and his gang of thugs will take us all back to the 16th century.
“Trouble now is there is no such thing as AAA paper and even run of the mill A rated paper aint paying no 7%, they need to either buy junkier bonds, put more in stocks or increase funding. All three will cause pain.”
juice (107)-
You forgot the part where Romney forms a squadron of Waffen SS-like Mormon storm troopers and sends those South Park guys to a re-education camp.
gary (129)-
Germany will be brought to its knees by trying to bail out the periphery. Although I think there will be a nasty insurrection (and a hasty exit from the Euro) once everybody there realizes Merkel is willing to sell them all down the river.
you guys are a TRIP!
you want to go online to REALTOR.COM, be able to search all the listings, see pictures, be able to pick up the phone to see a house, find something you like, and then when it comes to purchasing, you don’t want to pay a commission.
YET YOU DID NOTHING BUT CONSUME SERVICES PROVIDED BY THE REAL ESTATE INDUSTRY! you did nothing yourself. you did not “find the house yourself”. someone else did, and got the seller to sign a contract, and got the listing in place, put photos online, built the technology to share listings, but the technology that allowed you to browse online, etc etc etc. what you did was sit on your ass and click your mouse
what a trip!
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