“Nothing To Lose By Demanding A Lower Price”
The New York Daily News. “Sorry, sellers - you don’t have the upper hand anymore. The city’s apartment buyers realize the market is tilting in their favor. Instead of frantically throwing themselves at the one suitable apartment they find, many are playing the field. If one seller doesn’t like their offer, so what? They’ve got other options.”
“Some buyers are still learning how to function in the new market environment. Broker Richard Ferrari says they should ask the tough questions, and keep pushing until they get answers they like. ‘Look out for your own interests,’ said Ferrari, a Prudential Douglas Elliman senior VP.”
“Don’t ask, ‘Is the price negotiable?’ Instead ask, ‘How negotiable is it?’”
“Most of the apartments Richard Ferrari has sold since Labor Day have gone for 90% to 95% of their asking prices. So, don’t be shy. As a starting point for negotiations, offer 15% less than the asking price, Ferrari said. ‘A buyer has nothing to lose by demanding a lower price,’ he explained.”
“Until recently, developers have been doctrinaire about not giving discounts. Now, many are willing to negotiate, but you have to ask. ‘The prices are no longer set in stone,’ said Bellmarc principal Neil Binder.”
“If the apartment’s in a development project, ask the builder to pay the real estate transfer tax. The tax is 1.825% of the selling price - almost $14,000 for a $750,000 apartment.”
“Don’t ask, ‘What will this apartment be worth in three to five years?’ No one really knows the answer to this question, Ferrari said. Don’t force the broker to fictionalize. The right question is, ‘What’s this apartment actually worth right now?’”
The Herald News from New Jersey. “The ‘For Sale’ sign is an unwelcome addition to Manuel Maldonado’s neat little yard. The Maldonados, like many other homeowners, faced financial difficulties and refinanced with a nontraditional mortgage, the kind of adjustable-rate loan that has inundated the market over the past few years.”
“Now, mortgage payments eat up Maldonado’s entire monthly income.”
“Equity Source Home Loans said the value of the Maldonado’s home had grown to $345,000. They offered the family a $230,000 adjustable rate mortgage, with monthly payments of $2,330, more than Maldonado’s take-home pay.”
“But Equity Source verbally promised them that they could refinance again in six months, the Maldonados said. With better credit, they’d get a lower interest rate and smaller monthly payments, Equity Source told them. The Maldonados signed.”
“Adjustable-rate mortgages have been around for years, but recently have shot up in popularity. When housing prices exploded in the early 2000s, mortgage brokers began offering them widely. The loans have proliferated in New Jersey because of rapidly rising home values.”
“Many of the loans are sealed with verbal promises that never pan out, says Christina Cowell, a New Jersey attorney specializing in predatory mortgage lending. It is geared toward soliciting business, Cowell said. ‘The loan officers are kids from off the street,’ she said. ‘They don’t know about banking law.’”
“Staying with the existing ARM was no better for the family. The loan will readjust in 2008 to a double-digit interest rate, and could go as high as 14.3 percent, according to the loan. If the Maldonados try to stay in their home with the existing loan, they could become one of a growing number of homeowners ending up in foreclosure.”
“According to a Fair Lawn-based company that tracks foreclosures, between September 2005 and 2006, New Jersey foreclosures increased by 71 percent. ‘The house is killing me,’ said Maldonado.”
The Asbury Park Press. “Kara Homes Inc. has virtually no chance of surviving in bankruptcy and should be liquidated, one of the home builder’s biggest creditors said in court papers.”
“East Brunswick-based Kara, one of Monmouth and Ocean counties’ biggest home builders, ran out of money and filed for Chapter 11 bankruptcy protection on Oct. 5. The company’s 22 affiliates, subsidiaries set up for each of its developments, subsequently filed for bankruptcy as well.”
“If the case is converted to Chapter 7, secured creditors such as North Fork Bank would be first in line to get paid. Some subcontractors who haven’t been paid and customers who have made downpayments but have yet to see their homes built, would be reimbursed if any money remains, experts said.”
“North Fork in court papers said it is owed $21.6 million plus interest and fees for loans it made to Kara for its Mt. Arlington project in Morris County. The bank said Kara has tainted its reputation so badly that it would have trouble selling homes even if it secured financing.”
Bruce Karatz is leaving KBHome.
http://biz.yahoo.com/ap/061113/kb_home_stock_options.html?.v=6
I guess he wants to get off the Titanic beforte ship sinks. Why should this captain go down with the ship?
“Women and Children first? Forget it, let me off this thing!”
before*
And is Robert Toll next?
Tom, yes… ,and 3 other executives from the Co. also are out.They’ve been back dating since 98′. Maximize profit at all costs huh? 100’s of millions isn’t enough. Anyway, that being the news today the stock is up another 70¢ as I write…..I give up.
Has there been a time in the entire history of the US stock markets when stock prices were less responsive to bad news than they are now?
GS, Beyond bewildered, even though you know the game is rigged. Bubble popping ,Profits down, internal corruption,=
prices up???
Yes, during the run-ups that occurred before every serious drop.
The home builders have major institutional sponsorship right now — not because their supporters are bullish about their businesses, but because Team Wall Street understands that they are crucial to underpinning the credit bubble on which our broader economic house of cards depends. To understand the wider significance of what’s happening, read the closing paragraphs of Doug Noland’s analysis on the Prudent Bear:
http://www.prudentbear.com/creditbubblebulletin.asp
Can you tell from these stock charts which builder’s CEO resigned over the weekend? Worse news = better for daily HB stock price movements (everyone’s a contrarian now!).
http://tinyurl.com/y4zw2n
Yup, that is pretty funny. Best way to enhance shareholder value: give the CEO the boot!
Notice how the sector as a whole has trouble hanging on to today’s gains. Certain players appear to be getting tired of “taking a bullet” for the good of the Team.
Who picks the winners in this Keynesian beauty contest?
Yes, Karatz made $150 million last year, and he screws the shareholders and employees with his backdating just so he can reap a few extra million. Greed knows no bounds evidently. Honestly, when you are making that much money, why would you play it off the straight and narrow? I guess I don’t understand because I’m not a greedy SOB like the builder CEOs. Let them all collapse, KB’s homes are among the worst anyhow. Shoddily built, and butt ugly to boot.
GetStucco: I hear you. The reactions are bizarre beyond words. Personally, I think we will see this kind of response until 2007. After that, look out below. I don’t have any technical reasoning for this, just my gut feeling. Eventually this game will stop and common sense will set in, probably driving the indexes down past the logical floor.
“After that, look out below. I don’t have any technical reasoning for this, just my gut feeling. Eventually this game will stop and common sense will set in, probably driving the indexes down past the logical floor.”
Bingo. Same here, just a gut feeling, but I’ve seen this all before, over and over and over and over…
“For whom the bells toll.”
He was thrown out. KB might go belly up but “luckily” for him, he engineered a nice soft landing for himself.
“The company said terms of Karatz’s departure are yet to be negotiated. Under the terms of his employment contract, he reportedly could get at least $61.9 million in severance alone”
“he reportedly could get at least $61.9 million in severance alone”
$61.9 million for being fired because he did such a bad job in hiding the fact that he was stealing from the company. If he wanted more money all he would have had to do is get his buddies on the board of directors to push up his bonuses, instead he does the stupid thing and does forgery.
“Why should this captain go down with the ship?”
That reminds me of a joke.
Jimmy Carter, Richard Nixon, and Ted Kennedy are on a ship when it starts to sink.
Jimmy Carter says, “Women and children first.”
Richard Nixon says. “Screw them.”
Ted Kennedy says, “Do we have time to?”
Thank you. I’ll be here through Saturday night.
LOL!!
I think most of the big HBs, while taking a bath right now, are still OK. Check out their 5 and 10 stock price charts. It’s the middle and bottom tier of builders that are in real trouble. Firms like Kara are already fried. Come spring we’ll see tons of smaller regional homebuilders pulling the plug. They are notorious for setting up complex coroporations to avoid personal responsibility should their businesses go belly up. gordo
Are you saying the big HBs did not set up complex coroporations to avoid personal responsibility? I thought that was part of the newfangled business model — keep up the appearance that all is well until the very day you pull the plug (a la Enron)…
GS, ..look how how much they sold during the peak last Jun-sept.
http://finance.yahoo.com/q/it?s=TOL
We have discussed that subject to death here.
The current question is whether the builders could have hit a temporarily low plateau from which they will resume their unprecedented bull run, as Gordo NYC suggests. My guess is no — there has been no capitulation on the builder stocks, not to mention the housing market itself, and unless this time is different, there will be one.
Interesting omission, though, as everyone who was reading here last summer knows that August 2005 was the month when Robert Toll cashed in the lion’s share of his chips. But August 2005 has been expunged from the data.
Kinda brings to mind those photographs from the former Soviet Union which later reappeared with some of the original subjects deleted.
23-Oct-06 TOLL ROBERT I
Officer 44,974 Direct Option Exercise at $0 per share. N/A
26-Sep-06 TOLL BRUCE E
Director 355,000 Direct Sale at $28.99 per share. $10,291,450
26-Sep-06 TOLL BRUCE E
Director 355,000 Direct Option Exercise at $4.88 - $4.94 per share. $1,743,0002
5-Jul-06 MARBACH CARL B
Director 600 Direct Disposition (Non Open Market) at $0 per share. N/A
28-Jun-06 TOLL ROBERT I
Officer 185,000 Direct Option Exercise at $4.94 per share. $913,900
No usually the rats leave the ship first before it sinks. What’s incredible is that the real estate bubble is worldwide, and it is maybe ten or twenty time bigger than the NASDAQ bubble in 2000. It’s fantastic what type of monsters, central bankers can create.
Got a new post up!
http://www.housingbubblecasualty.com
SoCalMtgGuy
A limo driver with a $3K monthly nut? Big mistake.
“But Equity Source verbally promised them that they could refinance again in six months, the Maldonados said. With better credit, they’d get a lower interest rate and smaller monthly payments, Equity Source told them. The Maldonados signed.”
I used to do appraisals for a mortgage company that used this line all the time.. I stopped doing business with them when I was told we need this value so they can refi latter on.. Some originators actually wanted me to do the appraisal high on the onset so six months later they could refi them using the same appraisal? I rode by there operation the other day and saw a tumble weed in the parking lot. I want to see owners of these mortgage companies get arrested…
“… I rode by there operation the other day and saw a tumble weed in the parking lot.”
BAHHAHHAHA!
You would think so, huh? And another perfect example of the dangers of using a home loan to retire credit card debt. Even if they defaulted on the CC amounts and dinged their credit, they would still have the house. Now they are considering leaving the country and splitting up the family!
If my wife had covertly charged over $80k credit card debt, I would absolutely split up the family!
The Maldonaldo’s deserve to live on the street. The state of New Jersey hands them $31,000 to buy a house. The unemployed wife racks up 80,000 in credit card debt. The husband didn’t notice. Didn’t she ever write a check from their account to their creditors to pay a bill? Did he ever notice? Where did she stash 80,000 worth of purchases? Did he ever notice?And I like this line from the article…”and then they discovered more credit card debt”. What, it just came upon them like a rash? These people are a perfect example of why these “first time homebuyer” programs should be canned. These people should never have had a house…they took 31,000 from the taxpayers, 80,000 from creditors, and additional moneys not even disclosed to other creditors…and the house cost 120,000. These people are greedy and dishonest to the bone–let them go live under a bridge.
Soon there will be plenty of tumble weed blowing around the SW desert McMansion ghost tracts whose purchases were facilitated by appraisal fraud.
“Tumble weed real estate” Now that would be a good company name.
I imagine you see so much crooked bs being an appraiser. I really don’t see how you guys can do an unbiased appraisal with all the pressure from realtors, lenders, brokers. The system is so corrupt right now it is scary.Basically a lot of people have been living off of home equity to pay down debt.Rob peter to pay paul, what a business model.
Like in Irak.
Certainly not a long term business model if you’re digging that deep for customers.
HonestAppraiser - Glad to hear they went belly up, they deserve it. The sad thing is, these sleazeballs were making big bucks and effectively blacklisting honest professionals such as yourself, while simultaneously setting up the market for future devastation. I do not understand why the industry has almost zero regulation. You have to be licensed to buy a client a lousy mutual fund or stock, but we have 25 year olds handing out $500K loans and then charging thousands for pushing paper. Back in the days of sound underwriting, mortgage bankers were fairly respectable. Now I see them as snakes that should have their heads chopped off. The mortgage guys that post here are an exception and this does not apply to them!
“Don’t ask, ‘Is the price negotiable?’ Instead ask, ‘How negotiable is it?’”
Oh for pete’s sake! What dolt is going to pose that question? That is yesterday’s tactic, when realtors were still convincing idiot buyers that this was just a mild correction. I would hope that most buyers in this market would have at least read a newspaper in the past 90 days.
Today’s tactic had better be a “take it or leave it” offer at least 50% below peak pricing or the buyer is just trading places with the FB. When is the MSM going to catch up with the reality of this market?
My thought Exactly. Who are these RE agents? Afraid to insult sellers? It’s a callous insult to the buyer to suggest how much of their money they should spend. Just another reason to push agents out of the transaction altogether. They are nothing but a costly expense and a barrier to getting the price where it belongs.
Won’t be ong before RE agent pictures in funny suits will appear right next to dodos and typewriters - Useless and EXTINCT.
Well said auger-inn…. The part that got me in Bens article was the bit about lenders hiring kids from the streets who didn’t know anything about banking laws .
Apparently these lenders wanted punks who would say anything for a easy buck commission as well as them not having knowledge so they could be puppets. Nobody can tell me that you don’t know what your staff is doing for most part .
To put someone on a loan pursuant a sales pitch that they could refinance in 6 months is what I have suspected all along they have been telling people .Only greed and expectation of appreciation would blind a borrower to that faulty logic .It only proves they were putting people on sh-t loans they really couldn’t qualify for with the promise that “real estate always goes up “.
Is there anybody in the business that simply told people that they could not afford a house ,or their income would not cover adjusted up payments on a adjustable ? I think many were in a greed/fear frenzy thinking appreciation would cover all sins .
Oh what a mess .
“Is there anybody in the business that simply told people that they could not afford a house?”
Apparently damn few from the looks of things.
It will be interesting to see how well these institutions are able to deflect responsibility for their misleading tactics.
What a mess is right!
In the full article about the Maldonado family the husband says:
Maldonado continues to come home each day to a household strangled by tension. He is bitter about ending up with such a bad mortgage.
“There was no one there to help me,” he said.
The article also says this is the reason they were in the position to refinance in the first place:
But the same year Maldonado bought his home, his wife had started racking up thousands of dollars in credit card debt while out of work.
In May 2005, creditors placed a $15,000 lien against the house on $80,000 of unpaid debt. The Maldonados panicked. But the house had grown in value, so they refinanced, using the equity to pay the debt.
I have absolutely no patience for this. $80,000 in credit card debt that they obviously weren’t paying? They paid it off with that refinance, then got this bad loan because they got into MORE credit card debt. WTF? It seems to me that some people think they should have everything they want when they want it, whether or not they can actually pay for it, and then they whine about no one helping them when it catches up with them.
I prepare bankruptcies for a living, and I come across this all the time. It’s so pretensious. The new BK laws allow a single person in NV about $950 for rent, about $1350 for a family of 4. Nearly all of my clients says something like “What do they expect me to do, move into an apartment?” I’ve had clients file bankruptcy, when they could have afforded to pay their debt all along if they weren’t renting in Summerlin for $2500 a month, and had moved into an apartment in the first place.
Then they whine about the BK laws.
No question the family messed up, but how can anyone make a loan where the payment is higher than the income?
Stated income probably. Just pull a number out of your @ss and well, hell, you are so nice that your approved. Oh remember, we are here to help you and your great happy family.
AGs and State Houses across the country need to stand up and get rid of these scummy lenders. First, they exploit the citizenry with vile products. Then, the lenders exploit the citizenry again through the taxpayer sponsored MBS lending system. They have no interest in serving the communities in which they operate.
These types of lenders are predators. We should have a zero tolerance policy for these scumbags. Repeat purchases should not even enter this industry’s lingo. Yet, lately that seems to be their modus operandi. They milk the same mark 2 and 3 times simply for transactional fees.
And how much money was donated by the lending industry to get these elected officials in to the State Houses? They are not going to bite the hand that feeds them. This is going to work itself out in the “mother of all crashes”.
It’s the american way!
sarcasm off.
Ben posts ” how can anyone make a loan where the payment is higher than the income? ”
There it is. This has past the usual housing boom/bust cycle. The root of the problem this time is fraud and lending.
This illustrates perfectly where the economy in general is headed. Once the HELOC/REFI $$$$ dries up, after an avalanche of foreclosures & BK filings, where will all the fuel come from to continue to drive our consumption?
Recession of ‘07?
“Recession of ‘07?”
‘08…these things take time to work through the system. Christmas ‘07 (a year from now) will be telling.
Your clients? LOL. I see you carefully avoided pretending to be an attorney by saying you “prepare” bankruptcies for a living. One of those “typing services,” no doubt. If you really knew what you were doing, you’d know these people don’t qualify.
You’re so mean to me, txchick. What did I do to offend you? I’m a trained paralegal. Not a typing service. And it isn’t up to me to decide if they qualify or not. I’m not allowed to advise them one way or the other. Their income decides if they can qualify for a 7 or 13, and the trustee decides if their bankruptcy will be granted. The same is true if the person hires an attorney.
how about some cheese to do go with the whine ?
What did I whine about? I asked if I offended her.
Don’t sweat it too much, she’s a day trader. They rank right up there with realtors
Tx - Chill. I agree with Shaunta on this. She didn’t say anything amiss here.
shaunta posts ” You’re so mean to me, txchick.”
Get over it, she treats all the help like that.
Good to know…i’ve only posted a couple of times.
Slow down txchick57. Too early for that crap.
Maldonado bought the three-story home for $120,000 in 1999, after living for years with his wife and four children squeezed into a one-bedroom apartment. He put down a $31,000 grant from Passaic’s first-time homeowners program for low- to moderate-income residents and $9,000 of his own money.
the American dream reached
But the same year Maldonado bought his home, his wife had started racking up thousands of dollars in credit card debt while out of work.
In May 2005, creditors placed a $15,000 lien against the house on $80,000 of unpaid debt. The Maldonados panicked. But the house had grown in value, so they refinanced, using the equity to pay the debt. Their monthly mortgage payments grew by $800 — tight but manageable for the family. Then earlier this year, they discovered additional credit card bills.
Then the wife threw it all away.
She found Equity Source Home Loans, a Morganville-based company catering to those with damaged credit. Equity Source said the value of the Maldonado’s home had grown to $345,000. They offered the family a $230,000 adjustable rate mortgage, with monthly payments of $2,330 — more than Maldonado’s take-home pay.
But Equity Source verbally promised them that they could refinance again in six months, when their bills were paid off, the Maldonados said. With better credit, they’d get a lower interest rate and smaller monthly payments, Equity Source told them.
Then a devil stole their souls after telling them lies.
The Maldonados devote more than 53 percent of their gross income to the Equity Source mortgage, according to the loan documents. There are no legal limits to debt-to-income ratios. But the mortgage documents don’t list the Maldonados’ actual income. According to documentation the Maldonados provided, the family pays 63 percent of its income to its monthly mortgage.
Really big lies.
This part kills me about those poor Maldonados:
Then earlier this year, they discovered additional credit card bills.
There’s something about the word “discover” that has an element of the unexpected or a surprise about it. For example, Christopher Columbus discovered America - of course, he thought he was discovering India.
The Maldonados seem to have forgotten that if you charge something on a card, you WILL get a bill. No discovery, no surprise, no unexpected “why is this in my mailbox” about it. I’m sure many on this board share my feeling that the “day of reckoning” is upon many of them (not us, of course).
The earlier one discovers the law of cause and effect, the better! What dolts.
Almost sounds like it’d make a good opera, though you left out the finale.
Act 1. The American dream reached.
Act 2. Then the wife threw it all away.
Act 3. Then a devil stole their souls after telling them lies.
Act 4. Really big lies.
Act 5. They start over where it all began, in a one-bedroom apartment, with both husband and wife working.
It kills me, it sounds like the Husband was very responsible and a hard worker, but his dumb ass wife charged them into oblivion. But if he was responsible he would have stopped the wife early on with the credit cards before it got out of control.
I’d alsolove to know what kind of wheels they drive around in. New ( 05-06 ) hummerrs or equivalent typr vehicles I’ll bet. Its true people want the best and they want it immediately. Geez, my father was in his 40’s before he ever bought a new car and didn’t get a larger home either ( family of 5 ) untill he was 45. Bigger place meaning 1500 sq ft.
finnman posts ” but his dumb ass wife charged them into oblivion.”
Kick her to the curb!
Wow , these borrowers really did make their bed . The lender that refianced them was getting the last money making shot on them before they would be forced to sell or go into foreclosure .
Really this borrower is a example of why lenders just needed to say “no’.
Wow. I rented a pretty nice house (4/3, 2500sf) for $1350 when I lived in Vegas. Last time I was there, I saw billboards advertising condos for sale for $800-900/mo. That’s pretty good living for BK.
“In May 2005, creditors placed a $15,000 lien against the house on $80,000 of unpaid debt. ”
How can the creditors get a lien on the house? I thought CC debt was generally unsecured?
*nearly all my clients SAY, not says…geez. Must have coffee.
Have you seen this Ben?
KB Home Chief Karatz Resigns After Stock Options Investigation
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayxhNGXRc5fw&refer=home
The amazing thing is that the Board put a stop to it. Don’t expect that to happen too often.
Don’t get carried away with the board’s attempt at appearing to be exercising vigilent oversight. The board is cooperating with the SEC. We might see some indictments before this is all over. We can only hope.
You raise a great question. More tax cuts, credits or anything the govt can do to get more money in your hands so you can run down to walmart and spend your way into happiness?
arizonadude: it is your DUTY as an American to go out and shop! We can’t let the terrorists win!
Only kidding, of course. What this really means is, please go out and use those credit cards buying cheap imported crap from Asia. If you don’t then everyone will see the emporer has no clothes, and we will all be f’d.
Kara’s “customers who have made downpayments but have yet to see their homes built, would be reimbursed if any money remains, experts said.”
HO HO HA HA HE HE
Again, aren’t deposits like this supposed to go into an escrow account? Or is that only in Cali?
“Don’t ask, ‘What will this apartment be worth in three to five years?’ No one really knows the answer to this question, Ferrari said. Don’t force the broker to fictionalize. The right question is, ‘What’s this apartment actually worth right now?’”
Ha. Don’t ask because the house will be most likely worth a lot less than what you’re paying in 3-5 years. Everyone should be asking themselves that question now, and running, not walking away.
Exactly. Agents & brokers don’t want you to ask that question because the answer will rob them of their commission.
‘The loan officers are kids from off the street,’ she said. ‘They don’t know about banking law.’”
Officers? WTF are you talking about?
Maybe they mean they hired a bunch of gang members ,wouldn’t be surprised .
RJ “The loan officers are kids from off the street,’ she said. ‘They don’t know about banking law.’”
Not knowing what you are doing has never stopped anybody before…. Never in all of my work life have I seen this ever stop anyone.
On a bigger scale do you think a minor problem like knowing what you are doing, or even knowing anything, stopped GWBush?
The investment advice that people were getting from the industry was just plain self-serving . Really ,when you buy a house you have to assume that it might not go up and it might go down ,so , long term affordability of payment is the primary concern .These lenders were acting like affordability was the least thing to be concerned with .
People telling people that big appreciation was in the bag was just not right .In fact, I have seen realtor codes of ethics that state in essence that realtors should not predict future gains and appraisers should not give greater current value based on a possible future gain . People really believe these projections of gains and apparently the Nation believed those predictions and now we have a national housing bubble popping .
Even the general approach is bad. Starting with the listed price and asking for X% off that price assumes that the listed price is a good starting point.
For the vast majority of home buyers, the starting point is what total cost do you have the highest likelihood of being able to afford over time while still meeting your main financial objectives.
If you can’t buy a house without baking in external factors like asset appreciation, interest rate forecasting, a rich relative who really loved you dropping dead, etc., you probably can’t afford the house.
If you can’t buy a house while funding your retirement, you probably can’t afford the house.
If you can’t buy a house without being certain that for the next 30 years, you can’t have any sort of financial surprises whatsoever, you probably can’t afford the house.
Not so hard.
I drink to that, wino
housegeek posts ” I drink to that, wino ”
Indeed buy that man a bottle of Shamripple” as Fred Foxx would say!
Yes offer less, 90 to 95% of the price yes … dumbass …
I’d start at 30% and go down as they negotiate more.
Cool.
Cow_tipping.
http://realtytimes.com/rtcpages/20061113_spiralover.htm
Lereah has be pounding his calculator this weekend:
“David Lereah, the chief economist of the nation’s largest trade organization, said 74 percent of the nation’s housing markets will once again be expanding “in a sluggish way” in 2007.”
Not 73%, not 75%, no: 74%. Now that’s science, when you can predict that accurately.
Ready for a bunch of new phrases from NAR?
Here we go:
“Mr. Lereah divides the country into five “divergent” sectors:
* Non-Boom Stallers, or places which never participated in the housing boom which began 15 years ago
* Non-Boom Gainers, or markets which didn’t participate in the boom but grew nevertheless.
* Boom Lites, or markets which shared only slightly in the boom.
* Average Boomers, or places which took part in the explosion but only on an average basis.
* Hot Boomers, or places where house prices jumped out of sight.
Only the last group, which represents 26 percent of the country, still has a ways to go to work their way back to normal, Lereah said at NAR’s annual convention here. “The correction is pretty much over with” for the rest, he added.
The economist would not hazard a guess as to how low prices would need to fall in the most overheated markets or how long it would take for them to hit bottom, saying it would be “pure speculation” on his part or that of anyone else.”
Wait, there’s more:
“He also said price corrections should be welcomed, not feared. “What gives health to the economy is sales — the number of transactions — not price,” he said. “Every 1 percent drop in prices qualifies 50,000 more potential purchasers.”"
“What gives health to the economy is sales — the number of transactions — not price”
I think he’s confusing the word “economy” with the word “Realtor(tm)”…
“Not 73%, not 75%, no: 74%. Now that’s science, when you can predict that accurately.”
That is the number the dart hit on the dartboard and so Mr. Lereah is going to stick with his proven methods.
“Most of the apartments Richard Ferrari has sold since Labor Day have gone for 90% to 95% of their asking prices. So, don’t be shy. As a starting point for negotiations, offer 15% less than the asking price, Ferrari said. ‘A buyer has nothing to lose by demanding a lower price,’ he explained.”
Probably not low enough. But let’s look at what jut happened. In the Real estate section of one of NYCs major newspapers a broker is on record telling buyers to offer 15% below asking to start and to expect 5-10% off of the asking price.
This article will be emailed around all over NYC by buyers. Wall street brokers will read this and not want to overpay by 10%. So they might even offer less to get a “better deal”.
So on a typical million dollar pad $50K to 100K is gone just like that. On a $1M apartment, the starting negotiation is now $850K . On a typical plainjane UES 1BR1BA coop listed at $700K, is now getting offers at $595K expected to sell at $630K to $665K.
This is big money being taken off the table. Ferrari is now sumultaneously hated and loved by readers.
Anyone here familiar with New Jersey politics? I heard that Corzine is going to try to reorganize school districts at the county level. Thus screwing everyone who paid a peremium to live in towns with good schools. Is this polictically possible?
They did something similar in Delaware, by bussing inner city children to suburban schools. So what happenned? Northern DE suburbanites hopped the border to SE PA, and contributed greatly to this area’s recent boom.
And the folks from DE who were seeking better schools for their children ended up contributing beaucoup bucks to the local tax authorities because for the most part they bought new construction.
So yes anything is politically possible. But look out for the repercussions if what you’re counting on is more tax revenue, or redistributing wealth.