From HousingWire:
Refinance well drying up? Rising interest rates shrink pool of eligible borrowers, again
Recent reports from various analysts, including this one from Kroll Bond Rating Agency, suggest that 2017 will see smaller mortgage origination volume than 2016, thanks to the impact of rising interest rates on borrowers seeking to refinance their mortgage.
A report from Black Knight Financial Services last week showed that the pool of borrowers who had incentive to refinance shrank over the last several weeks as interest rates rose above 4%.
Now, thanks to another increase in interest rates last week, the pool of borrowers with incentive to refinance is now even smaller.
As Freddie Mac noted in its most recent report, the average interest rate for a 30-year, fixed-rate mortgage increased to 4.13% for the week ending Dec. 8, 2016. That’s up from 4.08% during the previous week.
Black Knight’s report last week showed that the number of potential refinance candidates dropped by more than 50% recent, as roughly 4.3 million borrowers were removed from the pool of potential refinance candidates.
That left just approximately 4 million borrowers who both benefit from and likely qualify for a refinance.
Now, according to Black Knight’s newest report, another 700,000 borrowers lost the incentive to refinance with the latest interest rate increase.
Per Black Knight’s data, there are now 3.3 million borrowers in the eligible to refinance pool, which means that 5 million borrowers lost the incentive to refinance since the beginning of November when interest rates began to increase.
According to Black Knight’s report, the refinance population has only been this low on two occasions in recent history: December 2013 and January 2014.
Interest rates at that time were above 4.4%.
Consequently, refinance mortgage origination volume in the first quarter of 2014 was the lowest in any quarter in the last 10 years, and 60% below the refinance mortgage origination volume in the third quarter of 2016, Black Knight’s report showed.
FRIST BICHEZ
I was thrilled to lock in at 3.875%. Some day when I sell, if the rates are substantially higher, it is what it is, meaning that the price point on a sale might be less flexible. This is why we diversify.
Heck years ago I thought 5.5% was a great rate.
Millions of owners will be hesitant to move if rates move to 6% again.
We begin the great rate prison. Low inventory for the foreseeable future.
For those with mortgages, moving up will be significantly more expensive, and moving down will not be as cost effective.
If rates do move upwards substantially, this will be the defining story for the next decade.
Grim,
On the train but all those thoughts went through my mind.
10 years ago we thought it impossible to both get our prices and get our rates – so I suspect many of us who bought are going to end up staying more than 10-15 years, or even more.
Rates will reduce affordability and potentially lead to falling prices in our area. Market is fragile in North Jersey and cannot handle the headwinds.
“Heck years ago I thought 5.5% was a great rate.”
That’s what I locked in the 30-year on my multi at. I later refied two more times.
No worries. A smart 37 year old financial analyst told me that NJ area is can’t miss due to its proximity to NYC and rates will only rise because economy is heating up. Wage gains are coming soon. He also said OTC penny stocks are the path to riches. His head seemed oval shaped but I think that is ok.
interest rate concerns are for peasants.
While it isn’t intuitive, there is no correlation between mortgage rates and home prices.
I’ll cite three examples.
Mid to late 90s, over a two year period there was nearly a full 3% rise in the 30 year while house prices rose. In the period leading up to 2000, there was a similar rise in rates over 2 years while prices rose. Also, the opposite is true, the period from 2005 until 2014, both home prices and mortgage rates both fell precipitously.
Thinking of the 30 year rate as the demand for mortgage lending, you would believe if demand for borrowing increases, so would rates (the price of borrowing). Based on pure supply and demand theory, you might expect both home prices and mortgage gage rates to move together.
Homes in NJ – money tossed out the window
A few years back I thought about it for a while and said the methodology was wrong, you actually need to compare the second derivative of both numbers, the rate of change in mortgage rates to the rate of chance of home prices, and you needed to exclude inflation from the home price numbers.
Even this showed no correlation, I even tried adjusting the mortgage rate for CPI to completely exclude inflation, and that didn’t yield any real correlation.
I think the best results were based on including inflation in both numbers – but that was light years from any real relationship or statistical significance. You could argue that all it said was that home prices are really correlated with inflation.
I could, however, yield strong positive and negative correlations if I manipulated date ranges and/or collapsed multiple years together. This is nonsense though.
I think I even did a very simple classification of -1, 0, and 1 – for the derivative decreasing increasing or staying the same – even this did not correlate.
Grim all that may be true. But house prices are a lot more expensive now than 20 years ago. Not to mention property taxes. And the economy was stronger as well. I would have to think that if eaters rise to 5 or 6 percent that would impact house prices. Rates will be what they are as well as property taxes. The only thing negotiable is price.
Not willing to throw in the correlation towel yet. Because, as we all know, this home has an inherent value of one and a quarter million dollars without the benefit of free money….
https://www.weichert.com/67308960/
Need more variables in addition to rates. I would throw in unemployment and some measure of income growth. Localized of course. Plus stock market.
These measures matter. Late 90s, rates could have exploded and I would argue it wouldn’t have had an appreciable effect. Stocks (wealth) were at all time highs. Earnings locally were exploding much faster than the impact of any rate rise on mortgage payments. Unemployment was sub 4%, a number not seen in a generation. And houses were at a lower base, relative to income.
My model would take a measure of median income to median home price (proxy for current affordability, the home price base), retail stock ownership (wealth), and the earnings growth relative to the prospective change in mortgage payment at each interest rate interval (are mortgage payment increases outpacing raises, or vice versa).
Some elements of the late 90s are present now, but enough are different. I have no hard data but recollection suggests current affordability is much lower. Personal earnings growth now is dismal, and although markets are at all time highs the difference now is that the largest population cohort, instead of hitting their maximum earnings years and adding to wealth, are pulling back and earmarking current wealth for imminent retirement costs and college expenses.
Rates will matter locally, especially for hysterically overpriced POS like above. Maybe not a 100-150bps increase, but we break 6% and there is no way there is a floor underneath these types of properties anywhere near that ask.
And just for kicks the ultimate unknown variable is that given the current debt/Fed situation the ability to influence rates, of which the Fed never had true control, is now absolutely uncertain. Any move may be abrupt and unforeseen. We’ve had a 90bp increase in slightly more than two months. That’s fine for a ten year moving off 1.60%, what happens to housing when that occurs with the ten year at 5%? Not in Kansas any longer Toto.
Nice 3b. You said in five lines what I took five paragraphs to say lol.
I agree with no correlation theory. The only correlation I’ve been able to find is distance from train station with direct service into NY Penn. And the worse the trains get, the more valuable these houses become.
Based on your logic, please explain the rise of Canadian real estate. Are they making more money than Americans? How come their prices are so high? You can’t use avg wages to justify real estate prices, it just doesn’t work. Esp with the amount of income inequality, the top 50% are much better off than the bottom 50%. What’s the home ownership rate, 62%? So why are we including the wages of the bottom 50% when it comes to home prices. A better measure would be to figure out the avg income of the top 50% and based prices off this. Still, that’s not even close to perfect.
3b says:
December 13, 2016 at 9:44 am
Grim all that may be true. But house prices are a lot more expensive now than 20 years ago. Not to mention property taxes. And the economy was stronger as well. I would have to think that if eaters rise to 5 or 6 percent that would impact house prices. Rates will be what they are as well as property taxes. The only thing negotiable is price.
Amen.
“I agree with no correlation theory. The only correlation I’ve been able to find is distance from train station with direct service into NY Penn. And the worse the trains get, the more valuable these houses become.”
” The only correlation I’ve been able to find is distance from train station with direct service into NY Penn. And the worse the trains get, the more valuable these houses become.”
This too. Someone posted a nj.com link here with an interactive price gain map from pre-2006 to now. The darkest swath (highest gains) was literally the Morris and Essex line which received the Midtown Direct in that period.
Still, all the proximity does is ensure you are best of worse. IIRC the change for those areas from peak 2006 to now was slightly positive, in the area of 2%.
Rates at 6%, yes, those homes will perform better. They’ll only be off 15%.
http://www.bankrate.com/finance/mortgages/rising-rates-lower-house-prices.aspx
Trying to ignore confirmation bias, one might presume that more expensive homes will fair better when interest rates are higher since buyers are more likely to have a larger down payment resulting in a lesser impact from the higher interest rates? Or am I just overthinking this?
HAMILTON – The school superintendent is doing damage control after a teachers’ lounge joke went public. So, instead of one measly news article, the story went statewide yesterday. At issue is a handwritten message in permanent marker on a whiteboard, saying teachers: “Always Give 100% at Work: 12% Monday, 23% Tuesday, 40% Wednesday, 20% Thursday and 5% Friday.” Last week, The Trentonian printed an article and photo, prompting Superintendent Thomas Ficarra to denounce it as an “embarrassment,” and – in case you’re wondering – say it’s “definitely not board of education policy.” The teachers’ union president said the “fun gesture” isn’t new, it’s been there for years because it was “so hard to erase.” Sure, budgets are tight. But time for a new whiteboard?
I am not stating that your analysis is wrong, but one of your inputs is.
Mortgage rates are priced off the UST 10……few mortgages make it to the 30 year mark…….so mortgages rates do not respond purely to demand, but function more as a derivative of overall UST 10 levels…..the spread from UST 10 to the mortgage product is driven more by demand……and government interference such as Fannie/Freddie….
check out the section “Fixed Interest Rate Mortgages” here….
http://www.investopedia.com/articles/pf/07/mortgage_rate.asp
Grim says:
December 13, 2016 at 9:14 am
While it isn’t intuitive, there is no correlation between mortgage rates and home prices.
I’ll cite three examples.
Mid to late 90s, over a two year period there was nearly a full 3% rise in the 30 year while house prices rose. In the period leading up to 2000, there was a similar rise in rates over 2 years while prices rose. Also, the opposite is true, the period from 2005 until 2014, both home prices and mortgage rates both fell precipitously.
Thinking of the 30 year rate as the demand for mortgage lending, you would believe if demand for borrowing increases, so would rates (the price of borrowing). Based on pure supply and demand theory, you might expect both home prices and mortgage gage rates to move together.
If the rates hold back the housing market, guess what? They will lower it. They would not raise rates right now if they will hold back housing. Rising rates are a direct result of a stronger economy. And don’t tell me they are raising rates just for the sake of raising rates. How long have they been held down? How long have people claimed that they would never rise again. The rising rates are writing on the wall for a much stronger economy. I just hope they didn’t overheat it by holding it down too long. Just my opinion.
Grim all that may be true. But house prices are a lot more expensive now than 20 years ago. Not to mention property taxes.
The long term trend of a reduction in standard of living of Americans will continue. While the obvious effect of this is lower incomes, smaller homes, the less obvious is an increase in price to income ratios.
Nationally, price to income ratios continues to skyrocket. So yes, while we are high, everyone else is high on a relative basis too.
Also, remember that low price to income ratio isn’t indicative of a strong or healthy market, but a deteriorating one – Detroit is routinely cited as one of the lowest price to income ratio markets. The highest ratio markets tend to be the strongest – for example – San Fran.
Exactly what I have stated on this blog, but was put down for. Think what you want to think, but I know what I’m talking about.
“”Rates tend to rise because, in a relative sense, the economy is doing well, incomes are going up, people can afford more and they’re willing to take out a larger mortgage. Intuitively, you’d think that if interest rates go up, of course, house prices go down. But they don’t,” Palim says.
“The bottom line is that other factors (like a stronger economy) have a bigger impact on house prices than changes in mortgage rates,” blogger Bill McBride writes in a post on his financial blog, CalculatedRisk.com.”
STEAMturd recounting the circumference of Hillary’s Meaty Cankles. says:
December 13, 2016 at 10:48 am
http://www.bankrate.com/finance/mortgages/rising-rates-lower-house-prices.aspx
Note about bond spreads…..if a typical spread on a mortgage bond is about 175 bps, then the spread is more meaningful when the yield on The Ten moves from 150 to 250 versus 450 to 550…..
A similar effect is seen during the recent Trump effect on the market. The talking heads are foaming at the mouth on the move from 150 to 250, meanwhile, High Yield paper has barely budged….why? Because the selloff in UST’s is in the face of strengthening business conditions, which have a much smaller impact on High Yield that has spreads of 400-800 bps.
They who? The Fed? It doesn’t control mortgage rates. The market? It will do whatever the fcuk it wants.
Lost says:
December 13, 2016 at 11:01 am
If the rates hold back the housing market, guess what? They will lower it. They would not raise rates right now if they will hold back housing.
http://www.nj.com/traffic/index.ssf/2016/12/zombie_driver_law_inches_closer_to_life_in_nj.html
‘Zombie’ driver law inches closer to life in N.J.
Lawmakers scored a small victory against zombie drivers after a bill advanced Monday that requires the state Motor Vehicle Commission to check databases to make sure licenses and registrations aren’t issued to dead people.
The bill was proposed last year after a March 2015 audit revealed that the MVC issued 300 documents to individuals who used the social security numbers of people that the federal Social Security Administration listed as being officially deceased.
The only thing I see overheating is the gerbil in your head. You are like the reverse conspiracy guy except that you put absolute faith that illuminati have it all controlled and with your best interests at heart. There may be some new territory coming blumpy and a roadmap may not exist.
Isn’t this the premise of a movie with Bruce Willis?
Tywin says:
December 13, 2016 at 11:10 am
Lawmakers scored a small victory against zombie drivers after a bill advanced Monday that requires the state Motor Vehicle Commission to check databases to make sure licenses and registrations aren’t issued to dead people.
If the market in north jersey is fragile according to 30 year. And I know my town is pretty much stuck at 2003 04 levels when rates were under4 percent. Now I am to believe that if rates climb to 5 or 6 no impact on house prices? Because all of a sudden the economy will be booming and money will be falling like manna from heaven and all is well? I am not buying it.
Not a single THX Certified movie theater exists in NJ?
http://www.thx.com/consumer/movies/find-a-thx-certified-cinema/?address=New+Jersey%2C+USA&distance=25
This may explain why people are moving out.
Incomes are not rising in NJ. A rate increase would be an additional headwind.
“if a typical spread on a mortgage bond is about 175 bps, then the spread is more meaningful when the yield on The Ten moves from 150 to 250 versus 450 to 550”
Good point. Problem is current home pricing is still off the 3.25% 30 year mortgage of October. We’re at 4.25%, only 175 bps away from 6.0% 30 years. The difference in nominal does matter.
Consider my million and a quarter shack above – which is so appropriate as it captures proximity since the price can’t be driven by the homeowner installed tiny mossy paver patio, the 7,000 sq ft lot (that’s lot, not house), or the double beds in one kid room. (Which btw, wouldn’t one expect kids to each have their own BR at a one and a quart purchase price…no matter).
Let’s say John Homebuyer puts $500k down (which likely would mean him getting full value on his shack first, but ignore that inconvenience for the moment). Takes a $700k mortgage.
Mortgage nut spread between October’s 3.25% 30yr and a 6% 30 yr is about $14k annually. Is that enough to spike the price? With that patio and two kids to a room? On that lot?
I truly don’t know, and it may very well vary person to person. But I do know if you were considering that house in October, and the 3.25% 30 yr was your borrowing limit, at a 6% 30yr you need to shave $192k off the mortgage to keep the monthly nut the same. That is a 16% decrease from current price for anyone considering the house.
Real estate purchases are not inelastic in the face of rising rates, particularly at higher nominal levels.
You are absolutely right, but don’t sit here and act like the fed has no impact on mortgage rates. The fed directly influences the bond market, which influences the mortgage market. It’s all about inflation. Fed sees inflation and starts raising rates, usually the mortgage will follow, not always in the short term, but almost always in the long term.
chicagofinance says:
December 13, 2016 at 11:09 am
They who? The Fed? It doesn’t control mortgage rates. The market? It will do whatever the fcuk it wants.
“Incomes are not rising in NJ. A rate increase would be an additional headwind.”
My wage income is not keeping up with tax increases in NJ. Hasn’t been in the last ten years. Only through frugality have I been able to maintain my savings rate. If it were not for my stock investments in my two investment clubs, my IRAs and my 401K, I’d be in big trouble. The only interest bearing debt I carry are my two mortgages and they will be done in 9 years. Do you all ever wonder what the other 95% who are living check-to-check will do?
Dow 20k today or what?
Mine is. My wife’s is. Our spending power has been increasing on a regular basis. So I wouldn’t state that all incomes are not rising in nj. Once again, I guarantee the bottom 50% in nj bring it down. They have no skills, no way in hell of purchasing a property, hence, their earnings should not be taken into account in real estate.
How about Yome yesterday, his son is making 200,000 at 29. This evidence alone blows smoke into the face of people that claim millennials can’t afford to buy houses. The millennials that can’t buy houses have no employable skills, are uneducated, and have doomed themselves. The rest of the people in the economy are taking full advantage of their current state. They are killing it!
All this focus on a bunch of people with no skills that were never going to be in the position of owning a house or moving out of their parents basement. They are losers and are getting killed in the game of competition brought on by capitalism.
D-FENS says:
December 13, 2016 at 11:38 am
Incomes are not rising in NJ. A rate increase would be an additional headwind.
I hear that. The only way to give yourself a raise is to pay off debt or jump jobs. Changing jobs gets harder as you get older. I thought nothing of it when I was younger and had no kids. Today it’s a stress bomb.
STEAMturd recounting the circumference of Hillary’s Meaty Cankles. says:
December 13, 2016 at 12:00 pm
“Incomes are not rising in NJ. A rate increase would be an additional headwind.”
My wage income is not keeping up with tax increases in NJ. Hasn’t been in the last ten years. Only through frugality have I been able to maintain my savings rate. If it were not for my stock investments in my two investment clubs, my IRAs and my 401K, I’d be in big trouble. The only interest bearing debt I carry are my two mortgages and they will be done in 9 years. Do you all ever wonder what the other 95% who are living check-to-check will do?
Well, THIS explains a few people here.
http://www.cnn.com/2016/12/12/health/psychiatric-drug-use/index.html
Note to Otto: Increase your dosage.
What change in metrics results in the lower standard of living? That’s probably the right one.
Unless Trump’s presidency is the greatest in recent American history, I don’t see a plan that results in substantially more affordable housing (e.g. Lower Prices).
DFENS
“Changing jobs gets harder as you get older. I thought nothing of it when I was younger and had no kids. Today it’s a stress bomb.”
And depending on your skill set, well nigh impossible. The wife is in pharma and just took a GC spot; she did it in part to keep doors open in the future as the age threshold for a GC is much higher than a senior attorney. As for me, I’m with most in my cohort: have to be a SME if I have any hope to move up or even around.
“How about Yome yesterday, his son is making 200,000 at 29.”
Donkey Kong, while that is admirable at 29 using a rule of thumb of 2.5x for a mortgage gets $500k. Even assuming somehow he was able to save, after tax, an amount equal to 20% only gets him another $125k.
That’s $625k of purchasing power. Happy shopping.
Any millennial, or anyone sentient, seriously considering the type of home they could currently buy for that amount in the face of rising rates (which disproportionately affect the first time buyers needed to take them out) needs a parent to give them a swift kick in the butt.
http://www.deptofnumbers.com/income/new-jersey/
New Jersey Real Median Household Income Trends since 2005
The current median household income for New Jersey is $72,222. Real median household income peaked in 2008 at $77,476 and is now $5,254 (6.78%) lower. From a post peak low of $71,093 in 2011, real median household income for New Jersey has now grown by $1,129 (1.59%).
Picketty demonstrated this in his book. Growing your income today requires capital. You can’t just rely on labor income to grow your wealth. It’s all about putting capital to work. You seem to be doing well. Proof it can be done.
“My wage income is not keeping up with tax increases in NJ. Hasn’t been in the last ten years. Only through frugality have I been able to maintain my savings rate. If it were not for my stock investments in my two investment clubs, my IRAs and my 401K, I’d be in big trouble. The only interest bearing debt I carry are my two mortgages and they will be done in 9 years. Do you all ever wonder what the other 95% who are living check-to-check will do?”
Speaking of Trump…anyone else find it funny that Steins recount efforts resulted in a higher margin of victory for Trump in WI….and stricter Voter ID laws in MI?
This is counting EVERYONE. It’s been proven over and over again, this new economy is growing income inequality. Those people in the bottom 50% are the people dragging this number down. Not the professional class who attained an education and employable skills. So don’t look at this data and then draw the conclusion that everyone is worse off. It’s not the truth.
D-FENS says:
December 13, 2016 at 12:12 pm
http://www.deptofnumbers.com/income/new-jersey/
New Jersey Real Median Household Income Trends since 2005
The current median household income for New Jersey is $72,222. Real median household income peaked in 2008 at $77,476 and is now $5,254 (6.78%) lower. From a post peak low of $71,093 in 2011, real median household income for New Jersey has now grown by $1,129 (1.59%).
Two income households?
What about investment income?
I bought a 650,000 dollar home at 31 in much worse economic conditions.
Know a girl that I went to high school with that purchased a 1.2 million property in wayne. Know anther one that was 3 years younger than me, that bought a property for close to a million in wayne. Millennials buying properties you claim they can’t afford.
A lot more money out there than you care to realize.
“Donkey Kong, while that is admirable at 29 using a rule of thumb of 2.5x for a mortgage gets $500k. Even assuming somehow he was able to save, after tax, an amount equal to 20″% only gets him another $125k.
Forgot to mention the biggest part. What about the money these millennials are getting from their rich baby boomer parents? You are looking at this too simply, but go ahead and bet that real estate prices will drop. I’ll take your bet depending on the location.
Grim, ChiFi;
I’ve mentioned/asked this before, but it seems a good time again — If I hold a 3% bond in a 6% environment, I have to sell it at a discount in the market to cash out. 3% on $400k principal over 25 years pays $1,900 a month. If the environment moves to 6%, I’d have to discount that note to $295k to give the buyer an equivalent yield. Compare to a bank/CMO Trust holding a 3% mortgage with 25 years left to run in a 6% environment — they get paid at par. WTF?
Is it possible to negotiate a discount on (our) rock bottom notes when it comes time to sell? That might make some short-timers a little more willing to move and loosen up inventory.
Or, is there a play to be made on that? Sell the house for $400k; invest $300k into 25 year bonds and let the coupons pay off your $400k debt and profit $100k? I guess the bank holds the hammer to restrict transfer of the property — no one does wraparound mortgages anymore.
“I bought a 650,000 dollar home at 31 in much worse economic conditions.”
Try to keep up Spanky.
Worse economic conditions had lower prices and declining interest rates. We’re talking about today.
Buy a $650k house in 2011? A lot more purchasing power, decent enough properties out there. Rates? Trending downward.
Today? Purchasing power stinks, rates jumping (not trending) higher.
Night and day. Apples and oranges. Get it, Mr Analyst?
I thought Nana sold him the house at a steep discount. How does that translate to economic prosperity for the state of NJ?
D-Fens. Those NJ numbers are astounding. Here are some more. Median home value in NJ is 250K. Average property tax is $5.5K. Average owed on a mortgage $212K. Average homeowner is paying about $1,700 a month or $20,400 per year for mortgage and escrow. Uncle Sam is taking about $20K. So that household has about $30K left to live on. Average NJ household has $8,500 in credit card debt. There goes another $1,500 in annual debt service. Family is down to $28,500 K to live off of for a year. 2.7 people per average household in NJ. That’s $10,500 per per person or $203 per week. Won’t be eating out much will we?
“What about the money these millennials are getting from their rich baby boomer parents?” Which ones? I tend to see a correlation between rich parents and terribly performing kids (entitlement) and the vice versa of poor parents with highly performing kids (understand value of hard work). Quite frankly, the numbers say there are not that many rich parents to go around anyway.
“I thought Nana sold him the house at a steep discount. How does that translate to economic prosperity for the state of NJ?”
Not sure how it impacts NJ, but Nana’s prosperity is probably pretty good. Especially when you consider that she probably pulled a quick one on Pumps.
Lost not all these boomer parents are rich. Many of them have little to nothing saved for retirement. And still have big mortgages and spend like drunk sailors. You really do live in a fantasy world.
A growth industry in NJ……
http://nj1015.com/see-where-the-liquor-is-made-in-new-jersey/
The influx of distilleries was kickstarted in Aug. 2013 when Gov. Chris Christie signed a measure into law that allowed smaller distillers – those who produce 20,000 gallons or less of liquor per year – to purchase an annual license for $938, a significant drop from the $12,500 per year price tag that applied to all distillers no matter the production volume.
My math was not too bad. In 2013, NJ’s average household disposable income was $46,778.
I see kids pooling their money with friends to afford an apartment. What stops them from doing the same in buying a house,if the SFH laws can change? This is done in Asia.Maybe,the share of a co owner can be sold instead of selling the whole house. Just a thought.
Some foreigners do it now
” And still have big mortgages and spend like drunk sailors. You really do live in a fantasy world.”
I know way more of these and way less of the rich ones. You would be surprised how many people living in million dollar homes have million dollar debt loads. It’s about the trophy wife, the fancy car and life’s too short for most of them. Then you read about how the dad jumped in front of a train. Know of three of these cases in Montclair alone.
Lib happens frequently enough on the pascack valley line too. I am amazed at stories I hear that turn out to be true and people who gave every appearance of having money who don’t.
Lost with all due respect for yome s sonX don’t use wall st as an example its the exception not the rule. And one year you can have an 80 or 100k bonus the next year no bonus. Seen it happen over the years.
“You would be surprised how many people living in million dollar homes have million dollar debt loads. It’s about the trophy wife, the fancy car and life’s too short for most of them.”
One of my businesses sells higher ticket items. $4k off the top, another $2k-3k in required ancillary. No financing option.
You would be absolutely amazed how many and who have financial issues. We collect, but mind numbing.
Funny how blumpkin beats the drum against rich elite keeping the common man down yet sees no common man in his world. In the last 6 months, my wife (college recruiting) and my sister (acctng. a/p) were let go from their jobs. These are basically low income jobs at small places so should be stable Neither performance related but dept. restructures. I was nearly the third as I got a WARN notice two months ago but was one of lucky few to re-land internally…maybe only one out of the 70 people let go recently. We are all college educated with years of business experience so his stupidity continues to astound. There is no wage inflation and solid paying jobs are harder and harder to find. I spent three months looking and low ball salaries and temp contracts are still the norm in banking. One day, it will come for you blump. Your boss will realize that they could pay someone far less or outsource. You think 5% yearly raises are normal? People on this blog are light years ahead of you intellectually and they are showing the struggles. Keep living in the bubble though
I am not amazed at all. I’ve seen too many families go from supposed riches to rags. They never stop to save any of their wage gains. Or in many cases, they can’t tell their partners or children no. I have no sympathy for them. For I could have gambled and lived that way as well. But the odds are terrible.
“Billy Ray Valentine: Yeah. You know, it occurs to me that the best way you hurt rich people is by turning them into poor people.”
I see kids pooling their money with friends to afford an apartment. What stops them from doing the same in buying a house,if the SFH laws can change? This is done in Asia.Maybe,the share of a co owner can be sold instead of selling the whole house. Just a thought.
Some foreigners do it now
How depressing. Just what we need, another third world ideology.
Bystander his stupidity continues to astound. Could not have said it better.
She is not a real poster! It’s an attempt at satire! Stop responding!
Hey, how is that Xanadu/Swampland/Mall of East Rutherford thing doing?
Fast I don’t know. I think he may in fact be real.
“Hey, how is that Xanadu/Swampland/Mall of East Rutherford thing doing?”
About as well as the Newark Bears Stadium.
He’s real.
What I get from these numbers, the recovery is almost completed and growth is soon to follow. You guys look at these numbers and trash them, but forget that we went through the worse economic period since the great depression. What were you really expecting? And do you expect bad times to last forever…..I sure as hell don’t. Heard that line way too many times and it never happens. The sky is always falling to some people.
“New Jersey Real Per Capita Income Trends since 2005
The current per capita income for New Jersey is $37,245. Real per capita income peaked in 2008 at $38,727 and is now $1,482 (3.83%) lower. From a post peak low of $35,927 in 2011, real per capita income for New Jersey has now grown by $1,318 (3.67%).”
The price of the license was irrelevant.
It has everything to do with the fact that we can sell retail and distribute wholesale.
They seriously can’t find another job? I call bs. They are being picky or aren’t trying hard enough. If they truly have employable skills, why aren’t they working? Unemployment rate is really low for college graduates. So what’s the problem?
Bystander says:
December 13, 2016 at 1:33 pm
Funny how blumpkin beats the drum against rich elite keeping the common man down yet sees no common man in his world. In the last 6 months, my wife (college recruiting) and my sister (acctng. a/p) were let go from their jobs. These are basically low income jobs at small places so should be stable Neither performance related but dept. restructures. I was nearly the third as I got a WARN notice two months ago but was one of lucky few to re-land internally…maybe only one out of the 70 people let go recently. We are all college educated with years of business experience so his stupidity continues to astound. There is no wage inflation and solid paying jobs are harder and harder to find. I spent three months looking and low ball salaries and temp contracts are still the norm in banking. One day, it will come for you blump. Your boss will realize that they could pay someone far less or outsource. You think 5% yearly raises are normal? People on this blog are light years ahead of you intellectually and they are showing the struggles. Keep living in the bubble though
Fast Eddie says:
December 13, 2016 at 1:53 pm
Hey, how is that Xanadu/Swampland/Mall of East Rutherford thing doing?
https://www.bloomberg.com/news/videos/2016-12-12/american-dream-mall-whose-dream-is-it-video
The income quintiles do tell a different story, with the top 40% of households doing better (especially the top 20%, who are doing SUBSTANTIALLY better), and the bottom 60% doing substantially worse.
Bifurcation and an elimination of middle class.
However, we’ve said this from day 1. There is no such thing as a median house, and based on the quintiles data, it appears that the median household doesn’t exist either.
Realistically, it’s the household income of the top 3 quintiles that drive home prices, and the top quintile who drives home prices in the most desirable areas.
Evidence for this – in the 2014 ACS – NJ’s top quintile had a homeownership rate of 88%, compared to the bottom quintile with 36%.
Hot off the press: http://www.nj.com/news/index.ssf/2016/12/njs_poverty_rate_takes_on_water_while_atlantic_city_drowns_census_shows.html#incart_river_mobileshort_home_pop
Lost it really depends on your field and what you know. The job market for college educated general skills type of people is poor. The issue at hand is that they get laid off making 75k-125k and can only find jobs pay 40-60k which they won’t even get hired for as they are likely over qualified. Offshoring, outsourcing, and the decimation of manufacturing is killing the middle class, which is causing bifurcation with a small wealthy contingent and large poor contingent. Grim is absolutely right that between people in third world countries(with huge populations) will to do the same work for 1/20th the price and automation that the middle class is under significant stress. You can see this based on the NJ housing market, try to sell in Wayne, you’ll see the housing market is weak. Only super premium towns, the favorites of the NYC crowd(small apt in manhattan or brooklyn yields a large home), and true trophy properties are moving at a good clip, everything else is slow. Rates will definitely cause further housing market oddities and prices will not decrease so readily causing a shortage of inventory, those who need to sell will take a beating, the market will look odd and it will be totally dependent on the demographics of the town you are in.
My bigger fear with rates is the impact on the commercial real estate market, without super low rates real estate development becomes somewhat uneconomic given construction costs, this will be felt throughout the states economy(construction and the trades are a big part of NJ’s middle class and unions have protected their wages some). Also what happens when the property magnates have to roll over their loans in 5-7 years? I think we are going to see real estate guys try to deleverage before they are forced to. The rates are a risk to a fragile economy as the spreads narrow WS will have less to play with, NYC Metro is about to join the recession the rest of the country has been in if rates rise much higher, my guess(WAG) is the 10yr at 4% is a death knell for the economy.
Exactly. You can’t sit here and use income data for the entire population to judge where prices are going or the general health of the market. That’s insanity.
“Realistically, it’s the household income of the top 3 quintiles that drive home prices, and the top quintile who drives home prices in the most desirable areas.”
“Evidence for this – in the 2014 ACS – NJ’s top quintile had a homeownership rate of 88%, compared to the bottom quintile with 36%.”
You know, I used to try and address this huge problem with inequality, but was accused of being a social!st. I was digging my hands in other people’s pockets. So I became sick of being called a social!st and started to ignore income inequality.
I’m in the top 7% income wise in Bergen county, so why should I continue to worry about a problem that is actually helping me. Is it good for the overall economy…no. Is it good for society….no. Is it good for people in the top 20%, hell yea. It is reducing my competition significantly, so why should I complain. The middle class is already dead in north jersey. You either have it or you don’t. Just like you stated, show me a median house or median income family in northern nj. It does not exist.
Look at the ac article. Almost half of that population is living in poverty. Even if you wanted to offer them jobs, wtf can they do? So I really don’t care about the U6 numbers for unemployment. Those people who haven’t found a job by now are never ever getting a job again. The national economy and state economy transitioned, and these people got left behind. They should have went back to school or did something to give them some type of skill in this new economy.
This isn’t the first time this happened and it won’t be the last. You know how many people lost their jobs based on the domestic system of production when the factory system was created at the onset of the industrial revolution? They either picked up and totally changed their lives by moving to a city to work in factory for significantly less money, or never worked again. Transitions suck and a lot of people never recover from it, but the new generations adapt and are stronger than ever. This is exactly what is happening in our lives right now. We are going through the same transition caused by the industrial revolution, but this time it’s called a “green revolution.” Make no doubt about it, we are going through a major technological change in our economy. It just so happens that very few people realize that we are indeed going through a revolution driven by advances in technology.
grim says:
December 13, 2016 at 2:40 pm
The income quintiles do tell a different story, with the top 40% of households doing better (especially the top 20%, who are doing SUBSTANTIALLY better), and the bottom 60% doing substantially worse.
Bifurcation and an elimination of middle class.
However, we’ve said this from day 1. There is no such thing as a median house, and based on the quintiles data, it appears that the median household doesn’t exist either.
Sent from my iPad
Jcer, good post.
I think the problem your post alludes to is the fact that people were getting paid big bucks for minimal skills. You had a bunch of IT guys with basic skills killing it in the 90’s and early 2000’s. Did they think that would last? Did the finance guys making big money at the banks for minimal skills think it would last? Did lawyers think their gravy train would last? Technology changed these people’s lives. If you think your job can somehow be taken over by automation, start looking for a new job NOW. Also, def start working on increasing/getting a new skill NOW. Problem is, people see the writing on the wall, but do nothing about it. They wait to lose their job and then cry they don’t have the skills necessary to get a new one. If you can’t find a job, I can’t say this enough, you LACK THE SKILLS TO GET A JOB. These people should just be happy that they were able to get the compensation they were receiving for their skill set. It’s obvious your skills are lacking when you can’t get another job. Skills are always needed. That’s a fact.
Tywin,
There are hardly any THX certified cinemas anywhere. Only 1 in Hollywood, looks like 5 total in all of California.
IMAX seems to be increasingly popular theater brand.
But if you really want good theater performance, get a 100 inch screen/projector combination with a bunch of quality speakers and subwoofers in your home and put it in a light-controlled room. A good home theater can fairly easily beat cinemas on picture and sound quality.
If you considered yourself highly skilled in 2008, but couldn’t find a job after your company went under….that’s understandable.
It’s now almost 2017. If you haven’t been able to get a job by now, there is no hope. You clearly lack the skills to get a job. So I don’t believe anyone that comes to me saying they have all these high skills, but can’t find a job. Doesn’t work in 2016. Worked in 2008, but not now. Plenty of opportunities for individuals with employable skills in this current economy.
Lost I manage developers and even run of the mill software engineers(Trained people with experience but not incredibly technically skilled, salary range 90-125k) are not easily employable any longer, unless you have top skills your job is going offshore or to a visa holder or some combination. A lot of the people who worked for me who were on the chopping block took a very long time to find new employment and took pay cuts to boot. A lot of people I went to high school, lost their jobs in the recession and never really recovered and are making less today, there has been no recovery for many people who are not high skill employees. Good middle class jobs in this area tended to be tied to WS operations and technology, and firms have decided to cut costs, so there is some nearshoring (cheaper markets, NC, TX, OH), offshoring, outsourcing, etc happening in most large firms. Only the high value work(trading, I/B, etc stuff is being kept locally and then it is only super skilled people) I was a software developer in I/B for a while(2013) and it was a bad joke, I was the 60th person who interviewed for the Job, when we hired another person it took nearly as many interviews to find the candidate, they want a subset of a subset and are willing to pay a premium but for anything else it is pushed to the cheaper markets(15k per year for a developer in Bangalore).
That seems to be the pattern people are only going to be here if they need to be here and everyone else will be somewhere cheap.
Lost: very arrogant response on your part but not surprising. Let’s see how you fare should you ever have the misfortune of being laid off particularly if it happens when you hit 40 or over which for you I understand is right around the corner being 37. A little self- awareness goes a long way. Something you are lacking.
If you considered yourself highly skilled in 2008, but couldn’t find a job after your company went under….that’s understandable.
It’s now almost 2017. If you haven’t been able to get a job by now, there is no hope. You clearly lack the skills to get a job. So I don’t believe anyone that comes to me saying they have all these high skills, but can’t find a job.
I couldn’t find a job as a chemist in 2008. I didn’t sit around. I became a teacher. Kept looking for better opportunities but they never came. In fact, the factories just keep moving their operations out of NJ. Out of all my friends from grad school, I fared the best. They got their foot in the door with lower paying jobs after a year or two of searching. These people would have commanded an 80 to 90k salary in years past. They are stuck working at 55k.
Worked with Greg and his guys for a few years, good guy, banked a ton of cash when he sold to Oracle. Was a major powerhouse in Bozeman.
http://www.nj.com/education/2016/12/stevens_institute_gets_largest-ever_donation_from.html#incart_2box_nj-homepage-featured
Look at employment by educational attainment for a different view on the bifurcation.
I believe the current national rate for college grads is 2.3%, and it’s even lower for post grad and professional degrees.
Didn’t finish high school? 7.9%.
Dufus, plenty of people can find a job but how many can keep a job long term. I know plenty who are on their third layoff since 2009. It is not their skill or performance. It is that companies now see you as strictly a cost and constantly evaluate (incorrectly) their headcount needs. I worked as consultant back in 2006-2008 and was always quoted daily rate (ie get paid x amount per day rather than hourly). Now, 80% of job reqs want hourly rate. I can assure you that being managed hourly will not be a positive for your income. There will be no OT. Unrelated project overruns? Cut their hours back asap. This is called instability in the job market.
grim – My 1987 Mortgage was at 9.25% and that was a 1 year ARM! I think 30’s were like 11%.
If someone gave me great odds on a long shot bet I might put a few shekels on the Fed not raising rates tomorrow for just this reason.
We begin the great rate prison. Low inventory for the foreseeable future.
So you want to be on the national stage for your 15 minutes of fame? Watch out what you wish for.
http://www.zerohedge.com/news/2016-12-13/exposed-anti-trump-elector-chris-suprun-paid-ashley-madison-while-bankrupt-and-marri
Sometimes things go the opposite you way you might expect them to go. Let’s think about Boomers with no mortgage, close to, or just did retire (Ridgewood and Glen Rock types for example). Add in a bunch Seniors in the same boat. They may be mentally moving out already. Let’s say rates do rise and we have an awful and cold Winter. A bunch of $600-900K houses go on the market, perfect in every way…no buyers. What happens next? Do they just keep paying their high taxes even though their kids are grown and wait for another cold Winter or do they start dropping prices trying to be first to the exit? The demo I’m talking about doesn’t have another decade in them to wait for another 2005-6 to resolve.
For those with mortgages, moving up will be significantly more expensive, and moving down will not be as cost effective.
Welcome to the Hotel New Jersey
Such a lovely place
(Such a lovely place)
…
“Relax,” said the night man, “We are programmed to receive
You can check out any time you like but you can never leave”
10 years ago we thought it impossible to both get our prices and get our rates – so I suspect many of us who bought are going to end up staying more than 10-15 years, or even more.
Maybe I was just too early with this?
The Original NJ ExPat says:
June 9, 2014 at 2:06 pm
[28] – I think the qualified sellers, those with lots of equity, will be the first to blink and that will be the tipping point. As wealth and equity leave the neighborhoods, only to be replaced debtors, the prices will start a long slide. Those that can will hasten to the exits, those that can’t will just watch it all turn to sh1t around them. Suburbs = future ghetto.
The stare down between buyers and sellers has been going on for 6 mos. now and very few buyers have blinked.
30 year – that’s how I see it.
Rates will reduce affordability and potentially lead to falling prices in our area. Market is fragile in North Jersey and cannot handle the headwinds.
Blumpkin – You believe in ” no correlation to facts theory .”
Lib – What about buyers where the large downpayment is supposed to come from the sale of their “reasonably” priced Home?
Trying to ignore confirmation bias, one might presume that more expensive homes will fair better when interest rates are higher since buyers are more likely to have a larger down payment resulting in a lesser impact from the higher interest rates? Or am I just overthinking this?
Prices are approaching the “foolish zone” in many towns — you know the place where if you buy like eddie you will never get the $$ out of it….
Ex pat well lost proved 30 year wrong! And what does lost know about real estate except for the fact that he has been doing it for a living for years but who cares lost says he is wrong.
30 year is a trusted news reporter. Blumpkin is a fantasy novelist with limited grammar skills and uninteresting storylines.
Ohhhh Caaaa-na-daa
http://www.macleans.ca/economy/economicanalysis/canadas-housing-market-looks-a-lot-like-the-u-s-did-in-2006/
http://globalnews.ca/news/2909453/canadas-housing-market-nears-extreme-bubble-warns-ex-lehman-brothers-trader/