“If You Don’t Price It Right, It Won’t Sell”
The Home News Tribune reports from New Jersey. “There were 10,075 foreclosures in Central New Jersey last year, according to the JEC report. This means 1 in 87 homes, faced or are in the early stages of foreclosure, said JEC spokesman Israel Klein. ‘I don’t know what happened but this month, the number of calls…have really picked up,’ said Claire Lawrence, director of a housing counseling agency that serves Middlesex County and Franklin. ‘The problems are all over (the county).’”
“Lawrence said she is ‘dumbfounded’ at the extremely high mortgage payments people who come to her agency are expected to pay. Some, she added, are three to five months behind on those payments. ‘The problem is most of these people got into mortgages they can’t afford,’ she said.”
“Joe Petrucelli, an Edison mortgage banker, said risky mortgage loans, such as negative amortization loans, caused his mortgage business to drop by more than 50 percent a few years ago.”
“‘I wouldn’t sell the interest-only loans to people because they ratchet up,’ Petrucelli said. ‘What happens is, someone would get this comfortable feeling that they are only going to pay $1,500 a month but then it adjusts and ratchets up.’”
The Times Union from New York. “In the Capital Region, housing prices are dropping. The Greater Capital Association of Realtors says the median-sale price for single-family homes fell 7 percent in February from year-earlier levels. And Realtors say the inventory of houses here is growing.”
“‘People are going to have to come to the realization that prices are going to have to come down to get houses sold,’ said Mary Ann Larkin, a real estate agent in Sharon Springs. ‘There’s a tremendous amount of inventory, and the days of putting a high price on a house to see what buyers will pay are over.’”
“‘I’m definitely seeing price hesitation with buyers,’ said Latham Realtor Anthony Gucciardo. ‘If you don’t price it right, it won’t sell.’”
“In the Albany-Schenectady-Troy metropolitan area in February, 11.2 percent of homeowners with subprime loans were more than 60 days behind with payments, an increase from 8.5 percent one year ago.”
“In Glens Falls, 13.4 percent of such homeowners had fallen behind, the second highest figure in the state. Jamestown had the highest rate, with 14.8 percent of homeowners with subprime loans more than 60 days in arrears.”
The New York Post. “A startling 50 percent of homeowners in five of the city’s poorest neighborhoods are holding sub-prime mortgage loans, it was reported yesterday.”
“NYU’s Furman Center for Real Estate and Urban Policy said the percentage of home-purchase loans in the sub-prime category here more than tripled from 6.5 percent in 2002 to 22.9 percent in 2005.”
“The NYU study found that in 22 of the city’s 59 community board districts, more than 30 percent of all home-purchase loans were sub-prime. By comparison, the Brownsville section of Brooklyn, where the median annual income was $22,238, led the citywide list at 52.28 percent.”
“‘If [home-value] appreciation flattens out, you’re going to see a lot of homeowners going into distress,’ warned Furman research fellow Solomon Greene.”
“In many cases, sub-prime loans offer low two-year teaser rates that increase dramatically in the third year. They’re also tougher to refinance. ‘These homeowners could be stuck in very expensive loans,’ noted Greene.”
“Brownsville had the fifth-highest rate of foreclosure notices in the city, 30.5 per 1,000 occupied one- to four-family homes. Bedford-Stuyvesant had the most, 34.2 per 1,000.”
The Boston Herald from Massachusetts. “Hope is springing eternal for the Massachusetts real estate market as this year’s key spring house-hunting season gets under way. And this year, Realtors hope a good spring market will help home prices bottom out after some 19 months of declines.”
“But economists are less sanguine. ‘I’m thinking we still may see some more price weakness,’ said economist John Bitner of Boston-based Eastern Bank.”
“Bitner recently forecast that the subprime-mortgage industry’s sudden woes could mean Massachusetts home values won’t bottom out until at least this summer.”
“The good news? Pretty much everyone agrees that today’s soft market means great deals await this spring’s crop of house hunters.”
“‘I think buyers have a very strong hand right now,’ said Barry Nystedt, a Newton buyer’s agent. ‘It’s all about supply and demand.’”
“Unit 2, 71 Marion St., Somerville. Buyer Agents of Boston’s Gary Dwyer calls this $399,000 three-bedroom unit, located in a three-family near Inman Square, a ‘nice option for first-time buyers or growing families.’ He added that someone willing to close a deal quickly could probably ‘negotiate a nice price reduction.’”
“Nystedt likes this four-bedroom Nonantum home, which currently lists for $499,900. ‘Many folks would not believe you could get that much house in Newton anywhere (for the price sought),’ he said.”
“Atwood Ave., Newton. Nystedt considers this $799,000 four-bedroom a good deal because the owner has cut the asking price by $100,000. The Newtonville home has also been up for sale on and off for some five months, ‘indicating seller motivation,’ he said.”
‘Foreclosures increased in New York City from the fourth quarter of 2006 through the first quarter of 2007, according to a new report, with Queens leading the boroughs. New residential foreclosures jumped citywide 56.5 percent quarter over quarter.’
There has been some happy talk about Manhattan and “Brownstone” areas of Brooklyn. But this market is sinking from the outside in.
Manhattan is the “Alamo” of this meltdown. The last stand of this bubble. It seems like it will be the last, and biggest, domino to fall.
Last night I saw John Wayne heading towards the powder room with a lit torch.
LOL
ya - but there are some steps before the Alamo. Seattle has to start moving (down). It is nuts.
oh stop it is different here
blah blah blah
“The New York Post. “A startling 50 percent of homeowners in five of the city’s poorest neighborhoods are holding sub-prime mortgage loans, it was reported yesterday.””
Commence the rioting and killing.
the ghetto areas are going to get hit the hardest
my wife and i probably make 2-3x what most of these
“homeowners” do and i would not dare buy a 600k castle on 20-100 lot in queens
‘…56.5 percent quarter over quarter.’
That would be a 500% annualized rate of increase in foreclosures. Please convince me I am making a calculation error; otherwise I will have to conclude New York City’s housing market is in a free fall.
(1.565^4-1) X 100% =
Don’t forget the bailout. Once the federal government takes over the monthly payment on millions of loans, the RE market should be in great shape. Buy any house you want - the more expensive the better, since you won’t have to make the payments and sit back and enjoy the ride. I am kidding of course, but that is the ONLY bailout plan that will stop the wave of foreclosures building on the horizon. Speaking of waves, I heard that when the Tsunami hit, many saw the waves way off in the distance, and did not think much of the fact there were monster waves breaking a mile out and continued enjoying the beaches - welcome to the world of foreslosures. Close your eyes and say “this is not happening”
‘Several Demo-ratic members of the committee, including Sen. Charles Schumer of New York, called for hundreds of millions of dollars in new federal aid for homeowners at risk of foreclosure.
“We’d like to start doing something very quickly,”said Schumer, chairman of the Joint Economic Committee, which released the report.’
I would like to point out the irony of Demo-rats falling all over themselves to patch together a preemptive foreclosure bailout. The economy is doing fine by all reports, and there is no looming crisis other than the hobgoblin with which Demo-rats are menacing the U.S. voter population. Above all, there is no principled reason on which to base a foreclosure bailout; it is all about stealing from those who did not buy stuff they cannot afford in order to reward the folly of those who did. Excuse me while I go throw up.
Chances are the people they’d be stealing from would be Republicans, as they seem to be more financially responsible people, so it works out perfectly.
GS,
Why are you trying to turn my blog into a partisan thing?
Dont’ forget. Schumer lives in Park Slope. Surrounded by these FBers in nearby neighborhoods, you don’t think he possibly could GAIN from a bailout of his neighborhood?
“Why are you trying to turn my blog into a partisan thing?”
Ben — my apologies if I come across that way (and I will respect your wishes hence forth). However, the silence on bailouts from the right side of the aisle is deafening. I would argue that by trying to make political hay before most U.S. voters are even clued in to the subprime mess, the Senators from the left side of the aisle are turning the bailout issue into a partisan thing.
I agree with Stucco. If Republican Senators start squawking for a FB bailout, it will not go unnoticed by the posters on this blog.
“Chances are the people they’d be stealing from would be Republicans, as they seem to be more financially responsible people, so it works out perfectly.”
Ahem…and what do you have to say about the current administration’s fiscal responsibility? Keep politics out of it. Or at least consider the difference between correlation vs. causality.
By the time this is all over we will find out that the stupidity of this disaster cuts across all political lines. I predict the Democrats will try to bailout their welfare constituency. The Republicans will try to bailout their fatcat constituency. They all stink.
I do believe I was the first on the HBB to start throwing out the “partisan” label. That was towards DavidCee and Joe Momma. I agree with Ben that partisanship on the HBB will make anybody look silly. I don’t want the name of NYCityBoy attached to either party.
NYCityboy, truer words have never been spoken. I am a staunch Republican, but I fully expect the GOP to cravenly sign onto a bailout when all is said and done. They won’t be enthusiastic supporters, but they’ll be supporters, no question about it.
As soon as the foreclosure wave hits the exurban McMansions and the GOP’s white, working-class base, just watch — you’ll discover that the GOP can be every bit as skilled at class warfare and pandering as the Democrats.
It really isn’t a partisan thing.
“However, the silence on bailouts from the right side of the aisle is deafening.”
You are correct. On the other hand, that silence can be read in two other ways as well:
1. The Republicans have no plan. (Heard that one before?)
2. The Republicans want to capitalize on continuing mortgage fraud.
See, I can spin it anyway I want. That’s why its not helpful to point fingers.
Now, how about some price declines?
Partisan politics = sheeple
sleepless:
I realize the current administration is spending money like drunken sailors, but I would differentiate between R voters and politicians. In deference to Ben, I’ll drop the subject.
“It really isn’t a partisan thing.”
I am resolutely opposed to foreclosure bailouts, no matter which party supports them. The only reason for me to point out that only the left side of the aisle is currently talking “bailout” is my hope that pols on the right side of the aisle will take notice and position themselves in opposition. This is a divide-and-conquer strategy, not partisan politics.
As a practical matter, it seems like the adoption of the “PayGo” rules for pay-as-you-go spending could block almost any action. This is because the changing economic circumstances plus the drain of waging war mean that the budget is tight if not negative to begin with. Pressure to “fix” the Alternative Minimum Tax situation is about to result in anything undefended being cut and some kind of new tax or tax rate or code adjustment coming up. The government will certainly attempt all kinds of wrongheaded market manipulation, but the extent to which hands on all sides are tied is quite remarkable.
My question would be : is there any way to stop this? Funding a bail out of flippers would really chap my caboose. Will complaining to the elected officals make one wit of difference here? Or is it inevitable that we are going to get some sort of stink burger shoved down our throats?
“Will complaining to the elected officals make one wit of difference here? Or is it inevitable that we are going to get some sort of stink burger shoved down our throats?”
It’s inevitable. Our whole political system is corrupt. It has nothing to do with party lines, and everything to do with special interests. All politicians are puppets for the corporations and whores for votes. Campaign finance reform is the only way to do away with the menu of “stinkburgers”.
The bailout will be delayed for a year at least while they debate what to do…then it’s the election. By then 2M people will be forclosed and it will be too late.
The “rescue” package will probably be low income loans to new forclosed people which will prop up the housing market.
“1 in 87 homes” in foreclosure? Can this be right? That’s a huge number…What’s going on in New Jersey - Soprano’s withdrawal?!
Houses in the bad parts of Harrison, New Jersey were going for $350,000 in the summer of ‘05. If you know the area I don’t need to write any more.
I don’t know that area, but I do know houses here in Compton are up to 500K. Same idea.
Harrison is right next to Kearny. Kearny, NJ is the epicenter of the Sopranos. The spot where they do all the Satriali’s shooting is on Kearny Avenue just up the road from Harrison. There is a PATH stop in Harrison but the area is very working-class. The old homes going for $350,000 shouldn’t be going for a penny over $150,000 at the most.
I was in South Jersey in mid-January. It seemed like every third place was for sale. Severe pain is on the way for Joisey.
I was in South Jersey in mid-January. It seemed like every third place was for sale. Severe pain is on the way for Joisey.
A Joisey contractor I know has cut his hourly rate from $55 to $37 - And the slowdown has just begun.
http://www.ocar.com/members/statistics.aspx
Its taking a while to unravel, but it looks as if the trainwreck is just around the next bend in the tracks. Builders are still falling over each other in what seems to be a race to build out every parcel of land that can hold a starter castle. They are now working on blasting rock outcrops away to make room for the foundations on some of the steepest slopes in the region. Meanwhile, back at the ranch the inventory rises like the tide and the sales are slowing to a crawl.
But don’t worry, Bloomberg says inflation is completely contained for all the important things like yachts and Ferraris. That’s a relief…
“That would be a 500% annualized rate of increase in foreclosures. Please convince me I am making a calculation error; otherwise I will have to conclude New York City’s housing market is in a free fall”
Free fall with 554 forclosures in a city of 8 million people? I don’t think so.
From the same article:
Also, New York had high foreclosure numbers in early 2005, at the height of the housing boom, higher than what the city’s experiencing in early 2007, when the boom’s supposedly over. And, Manhattan continues to have fewer foreclosures than the other boroughs, especially Queens and Brooklyn, which continue to lead the city.
Most (not all) Manhattan housing stock is in co-ops. Co-ops have demanded much more conservative financing than banks have. I’m sure they didn’t all stay totally true to 20% down payments, but nothing like the rest of the world. And they are VERY strict about letting owners rent out places. Many won’t let you buy at all unless you are going to live in it right away and they MIGHT allow you to rent it out if your circumstances change and you have to move - one or two years. And your renter has to pass muster with the co-op board including an interview and so does a potential buyer.
That being said, if the investment bankers are hurting, the mid to upper level stuff will be hurting for buyers. And if the rest of the country is in a recession, there will be fewer boomer parents staking their kids downpayments and cosigning on the lower level stuff.
It is going to take a while, but it will come. When I was renting a studio (from the co-op with the single most liberal rental policy in the city), by the time I moved out I could have bought a comparable unit for 40% of what my landlord paid for it.
“Free fall with 554 forclosures in a city of 8 million people? I don’t think so.”
Apples to Oranges, once again. They are only talking about a tiny piece of that 8 million people when referring to 554 foreclosures. Plus, when you take the number of people they actually are talking about, you must divide by at least two (not one person in each household) - get it?
homeprices adjusted for inflation 1890 to present, graphed as if it were a roller coaster…..check it out its pretty cool.
http://generationrisk.blogs.money.com/2007/04/05/real-estate-that-last-dip-could-be-a-doozy/#comments
can’t happen here
“LA LA LA LA LA Jeffrey is talking but I am not listening”
queens has almost 2 million people and there were 554 foreclosures in 1Q. i live in queens. only thing that changed is that buyers now want a livable place when they buy. no panic here so far. even for sale signs are few and far between because most homeowners bought a long time ago over here
When wrecks in East New York started hitting 500K and the NY Times was running big articles on ushwick as the next hip spot, I knew NY was toast - glad I sold at the top. The outerboroughs will get crushed as the entire immigrant population was sold on “RE only goes up” and the vast majority used suicidal/liar products to get in the game. Firm I do work for does lots of Taxi medallion closings (Medallions are another NYC bubble) and they are foreclosing left and right - these medallion owners (immigrants mostly) were, to a “T” - RE Ladder climbers in Brooklyn Queens & Bronx.
i’ve looked on ACRIS before and according to my not very scientific research of looking up records of for sale ads from craigslist i didn’t see that much liar/suicide loans. probably around 10%.
Maybe the sample is too small - acris is very inefficent way to sample large data - although my comment may be based on small sample also - I say this based on the clientele that my friend, a title closer, sees. She does maybe ten closings a week & she estimates 7 out of ten deals she has done in last 2-3 years (crazy bubble high point) were some form of exotic & I would think they have to be for a Taxi driver to be buying 2nd or 3rd home for 500K plus.
taxi medallions are a way to launder money in NYC. immigrants who come here with a lot of money from property and wealth unfriendly countries buy the medallions because then they don’t have to put the money in the bank and have the IRS find out about it.
there are a lot of russians in brooklyn who amassed a lot of money in the old country. how is a mystery to most people including some of their family members. favorite laundering techniques are RE and taxi medallions. in RE it’s condos and SFH since you don’t need to declare your income like in a co-op.
low documentation loans have been in NYC for decades. my inlaws bought their house back in the 1990’s on a so called liar loan. reason is there a huge number of small mom and pop businesses in NYC and most of them are heavily cash based.
percentage wise the foreclosure numbers are up by a lot, but when you look at the fact that there is more than 8 million people here they are tiny.
dba, you sound a lot like UES. I smell a troll. Debunking everything about NYC. Is it different there???? Give me a break.
What’s going to happen to them? I’m just wondering how different socio-economic groups are going to feel the coming pain. (I posted a little about how the coming pain might manifest in Suburbia-land.)
I think many will be stunned that the streets weren’t paved with gold after all.
But those who lined their pockets with it will be “golden”, pun intended.
These dopes bought a house that they can’t afford. House prices are artificially inflated due to these dopes and the unethical REIC.
Now let them all sink together.
“Bitner recently forecast that the subprime-mortgage industry’s sudden woes could mean Massachusetts home values won’t bottom out until at least this summer.”
“The good news? Pretty much everyone agrees that today’s soft market means great deals await this spring’s crop of house hunters.”
“‘I think buyers have a very strong hand right now,’ said Barry Nystedt, a Newton buyer’s agent. ‘It’s all about supply and demand.’”
BUY NOW, AND CATCH YOURSELF A FALLING KNIFE.
No kidding GS. Is anyone else frustrated with these continuous comments from Realtors that now is a good time to buy because of a meaningless price reduction? Prices are still 5-10X income and the ability to leverage into one of these stupid deals is quickly subsiding (thankfully) due to BK mortgage companies. The focus HAS to come back to affordability using the abandoned metrics of the 80’s (LTV, debt to income, etc). Until the articles start referencing good deals using reliable yardsticks, these “now is a good time to buy” articles are meaningless and merely a ruse to suck in more uneducated buyers!
Instead of trying to rally political support for a bailout (at the expense of individuals who had nothing to do with the subprime mess), maybe all these consumer watchdog groups could do something useful and threaten class action suits against all the lying REIC shills who are saying “now is a good time to buy.” Because until affordability is restored, this will continue to be a lie used to lure GFs into buying homes they cannot afford, at a high risk of future financial misery and eventual foreclosure.
maybe all these consumer watchdog groups could do something useful and threaten class action suits against all the lying REIC shills who are saying “now is a good time to buy.”
agree again
“Is anyone else frustrated with these continuous comments from Realtors”
—————————————
I’m really frustrated that every time I turn on the TV there’s a commercial every 10 minutes.
I’m really frustrated that not every light I come to is green.
I only find humor and extreme self-serving statements in what Realtors say. I don’t get frustrated. However, when I see pessimistic statements by the REIC (that are occurring with more frequency lately), I take this seriously. When they give up and stop trying to fool the public, you know that housing is deeply into a crisis.
I’m not sure that the 80s can be considered any more of a benchmark of normality than our current decade. Mortgage rates, well into double digits were bumping up against usary laws, still an issue since most loans were done by intrastate lenders.
Right, the Bitner forecast (no bottom till “at least this summer”) caught my eye, too, as the dumbest or most dishonest in today’s post. You and Neil and I have repeatedly noted how subprime ARM resets (and total ARM resets) that are just beginning to increase will continue to increase until the end of 2007, and since foreclosure takes a while to develop, there is little likelihood that the damage will peak before the summer of 08.
Testify Brotha!
I figure this downturn is just to prove that not understanding non-dimensionalized ratios means that a FB is stupid.
Please vote for the YKYAAFB when… thread for the weekend.
Got popcorn?
Neil
that’s sistah, actually; guess i may have to change screenname to az_lendress, but it sounds so much like laundress…
Funny, too.
so how many are the realwhores buying ?
fair question
This Nystedt guy must be new to Newton. I’ve never heard of him.
Guess he gets to find out for himself what it was like in 1994. (1994 was the year my parents tried to sell their Newton SFH.)
Hmm, this Schadenfreude tastes bad.
Steven Colbert has recently been doing parodies of realtor optimism on his show; it’s been pretty freakin’ funny! It looks like awareness of industry propaganda is finally beginning to seep out of the blogosphere …
‘I’m thinking we still may see some more price weakness,’ said economist John Bitner of Boston-based Eastern Bank.”
“Bitner recently forecast that the subprime-mortgage industry’s sudden woes could mean Massachusetts home values won’t bottom out until at least this summer.”
Another courageous, certain prediction from the dismal sciences.
How about “Utter carnage for years to come…”?
How about “Utter carnage for years to come…”?
Was thinking about this just this morning. In my area there is a trend downward, but inconsistency in the way sellers are pricing their homes. Some are still holding out for 2005 prices, and a few GFs have paid 2005 minus 5 %. They walked away thinking they got a super duper deal.
I don’t think reality will even begin to set in until autumn of this year. Next year the ugliness will begin. How to define ugliness? I don’t know. For some around here it will be a simple matter of cutting back on their Starbucks latte consumption. Some teenaged dependents may actually be required to go out and get a job, or their Jeep Commander will be taken away. Certainly there will be foreclosures where none were expected.
There is a lot of discretionary income floating around here. It will be interesting to see which outlets that serve that income will be the first to feel the pain.
It’s true, Phillygal, that our individual observations often diverge from the data. Recently I’ve been frustrated looking at local listings, because it seemed that prices were going up! But in today’s paper they quoted a year-over-year 9% price decrease in my city compared to last year. So yesterday I was frustrated by reading the local listings, this morning I was happy about the falling median local prices, this afternoon I’m frustrated by the rising stock market. It’s hard to be a bear.
I was thinking similar thoughts Phillygal.
I got my first post grad job in ‘83 in 4 mos. I never personally was hurt by the ‘87 or ‘94-5 slowdowns because the Needham, MA company I worked for was growing like gangbusters.
The ‘92 slowdown I did notice because I worked for a small family business. People were getting laid off left and right although I survived until responding to snippy salesperson putdowns in kind.
She was their top salesperson so that wasn’t so smart…But, it didn’t matter. Within a week I had another job paying much better and sans snippy salesperson.
Personally we did not slow our spending…all us crazy renters. The cost of living to income ratio for most left plenty to have pretty regular doses of fun or expenditures. So will it be worse than past slowdowns? Posters here have convinced me but I’d guess most people only are afraid if bitten before.
Or too smart to know better before being bitten the first time (not to say those that have are not smart
)
Just realized that didn’t sound right. Guess I’m not so smart after all
Gary Dwyer knows it’s dire but…
He added that someone willing to close a deal quickly could probably ‘negotiate a nice price reduction.’”
Nudge, Nudge
Wink, Wink
Say No more…
Know what I mean?
Alas…
Sellers aren’t ready for fair price reductions. So no point being on the sidelines. Come up to the stands and chear on the teams getting pounded into the mud.
Got popcorn?
Neil
Had an interesting talk with a friend the other night. The discussion got around to the state of the housing market. His elderly dad died some years ago, and his equally elderly mother stayed in the house for a couple more years before she sold and moved to a progressive care facility in 2002. He managed the sale of the house. He said there were numerous offers, and EVERY OFFER proposed 100% financing. He also told me that he knows several people in his office of engineers and other tech types who admit they are facing serious obstacles to keeping their homes. I explained the “serial refi” phenomenon and he was dumbfounded.
“He also told me that he knows several people in his office of engineers and other tech types who admit they are facing serious obstacles to keeping their homes.”
The myth out there is that those on the lower end of the pay scale are the only ones in trouble. Many middle & upper middle class people made some really stupid descisions.
maybe that’s why all these politicians are calling for a bail-out. They need it for their own mortgages!
Ha ha, THEY are not the middle class, THEY are the oligarchs.
Most politicians are middle class, generally upper (as in, they had a comfortable upbringing), with little real power. They’re puppet men, the slaves of the monied.
Of course they are calling for bailout, as so many politicians are real estate agents in their day jobs or work in closely related fields. They are about to taste poverty for themselves, and they’re afraid.
Politicians, especially on the federal level, have to raise millions to stay competitive in the elections. Hate to blow your bubble, but DC is not your typical city council.
The federal politicians tend to be a pretty economically diverse group going in, but once they’re there they receive the good investment opportunities, the book deals, the speaking tours, and a fabulous lobbying job on K Street after they’re turned out of office.
We have an office next to a payday loan company. I’m told that many of the people using this service are lawyers and even doctors driving shiny new $50,000 cars, not the down-and-outs that you’d expect.
If you read “The Millionaire Next Door” it talks about how millionaires are not the ones you would expect, the people with the fancy cars and professional jobs are often pretenders, the guy next door driving the 10 year old Chevy might be far richer. In my case it’s true
One of my vivid childhood memories is of walking into a bank with my dad, who was still in his work clothes. The tellers looked down their nose at him…until he pulled a roll of Bennies out his job khakis. (At a time when a hundred dollar bill had some purchasing power. What can you get today for $100…the “privilege” of parking in a Center City garage for two days?)
a bank teller looking down on you. i get the same thing sometimes. i go to a local fidelity branch near my office
and the pretty damn good looking girl behind the counter ignores me. then i give her my check for deposit and she see’s i have a nice cash position, her whole attitude changed and she wants to set up an appointment with one of the salesguys. and btw i drive a 5 year old car paid in full.
i see people and every penny they have is on their person, blackberry,ipod.laptop, jewelry, lexus etc etc
im so impressed
But you know what’d be nifty? If all those OC realtors had to dump their fairly new Lamborghinis for 75% off. I’ll wait.
The interesting thing is that many women feel a natural attraction towards those who they *** perceive *** as wealthy. Just as men are biologically inclined to be attracted to women who would be good child bearers, the theory is that women are inclined to be attracted to men who can support the family. In the modern world this relates to a showing of wealth. The ironic thing is that in many cases those who show wealth are not the ones who are truly wealthy. They are the ones who waste money on things that are not productive for the family. The family unit is much better off if the guy gives up material things for himself so he can provide for his wife and kids. The guy driving the Mercedes is probably less likely to do that.
JJ: my sons will agree with you that young women are looking for money. As for that being a “natural” urge or men being “biologically attracted to women who would be good child bearers”, I think that those innate urges have been overwhelmed by other, more prurient urges.
“We have an office next to a payday loan company. I’m told that many of the people using this service are lawyers and even doctors driving shiny new $50,000 cars, not the down-and-outs that you’d expect. ”
Reminds me of that Boiler Room line, “They may drive a Porsche but they don’t have ten bucks to put in the gas tank.”
I just loved the scene where they’re in one the the broker’s (Vin Diesel’s) huge house that the guy has never bothered to furnish.
ok, having never bought a house I have to ask this question.
Why would the SELLER care what kind of financing the BUYER was going to get? As long as the buyer shows up at closing with X dollars why would the seller care where it came from?
In this case the seller didn’t care. The sale settled without a problem. My friend, being the extremely frugal type, was simply amazed that apparently no one had any cash for a down payment.
The SELLER doesn’t care, except, now, when the SELLER looks at the BUYERS financials, and sees $412 cash on hand and “pre-qualification” for some nasty, exploding 100% LTV loan, the SELLER is going to have to decide whether the BUYER will actually be able to close the deal. If you accept a contract like this, your house is off the market until the deal officially closes, or implodes, as the case may be. It’s a real risk for sellers in a deteriorating market.
As a seller, if you don’t want to be paying for 2 places at once, you might want to be leaning toward a sale with a person who is least likely to lose financing before closing.
Today, a seller might care - if the loan is too exotic, it might have gone away by closing day.
nyc it’s a normal thing that as part of your offer there is a mortgage preapproval and a credit check. this way the seller looks at all the offers and decides which one is the safest and the highest probability of closing. not the highest offer.
happened to me in 2003 when i bought. my first offer was rejected because someone else offered more money. turns out the financing fell through a month later and the seller called me. by that time i was in contract for another place across the street and he had to list it all over again
“happened to me in 2003 when i bought”
THAT’S what I’ve been looking for. . . a reason that you seem to cheerlead NYC. Bought in ‘03?? You’re f’d, my friend.
why is that? prices for most of the queens RE market are inline with incomes here.
“prices for most of the queens RE market are inline with incomes here.”
Oh really? So, you are saying that most family incomes in Queens are 120-150K plus? That is what it would take to support 600K mortgage at 6% on a 30 yr fixed rate, assuming 30-35% income for housing. Anything less than 700K in Queens these days is a tiny little sh*tbox in a marginal-bad neighborhood. Or maybe you are talking about raising your family in a 200K starter co-op, apt.? That is not living, that is a hard time sentencing. I say NO WAY.
Really, one would think that engineers and tech types would be smarter than this. I don’t expect them to know high finance, but one would think that these blatenetly high prices would at least raise enough of a red flag to make them go looking online. (that’s how I ended up here.)
On the other side though, an engineer friend told me last month that he thinks everybody’s office door is too small for their heads. The lure of that Lexus/Escalade must be just too much for their newly inflated egos. After all, today’s decently-paid engineer was yesterday’s geek who didn’t get any in high school.
My experience differs. I am an engineer and work with all engineers and scientists. With one exception, no conspicuous consumption at all, and the one who is guilty of this is regularly ridiculed behind her back. YMMV.
It’s not lack of intelligence that is the problem, but greed for profit and fear of missing the boat … Many smart people do foolish things out of fear and greed. That is why a free market of rationally self-interested individuals is not always a useful concept. Real markets are not driven by people with rational self-interest.
Real markets are not driven by people with rational self-interest.
That is a gem of a statement.
the highest up engineers in my office, a land development company, all drive the normal cars. its the younger kids like me that would be buying the nicer cars and stuff like that. i also heard this is pretty common at the local architects as well. I am 28 and bought an ‘03 Acura RSX because it was right in the perfect price range for when I started working 4 years ago. But my thing is that I am into cars, which is why I have no idea why people drive BMWs slowly???? All these powerful machines on the road and never used. What a shame.
Now we have the copy guy working in the office with a new car and lakers season tickets. How in the world??? Receptionist owns a large house. How in the world??? I dont understand any logic in this place.
And we are probably as close to seeing whats going on in the development industry. probably about 5-10 years before these huge developments start to go into final engineering and being built. Its weird how I seem to be the only one really asking about whats going on and what they think the market it like. So this is how I could see any type of job be getting into the market right now. Yes my coworker did put an offer in yesterday, but I think there are some situations that if you can ride out whats happening that you will be fine. Obviously we have been laughing about ARM’s and stuff like that for the last 3 years.
“‘03 Acura RSX ”
I had an ‘02. I miss that car so much it hurts.
oxide, I think this will be one of the realizations that comes from this bubble– greed cuts across every type of label you can apply to people. I think we’ll find that there is a pretty uniform distribution of greed among race, class, religion, political persuasion, profession, etc etc.
Some people, a lot of people it seems, hear that siren song ‘Easy Money’ and they just start drueling and slobbering down on hands and knees.
True - one of my best friends has Heloc’s his way up to 600K mortgage on a house he paid 300K for 9 years ago - I finally got him to get into a fixed rate mortgage & a promise that he wouldn’t refi again - but his house is waterfront in LI & he repeats the “There’s only so many waterfront homes, it’s different here” mantra & quotes the ONE house that sold for 900K 2 years ago, even though there are loads of them on the market now & not selling at 700-800. I truly hope he doesn’t get wiped as he is a great guy & has a nice family. It’s toughto see your friends getting into these situations - he makes waaay more than me & really doesn’t live that extravagantly, but those LI taxes must be killing him.
I hope he has good insurance too. Isn’t LI about due for one of those Nor’easters that follow on the heels of a FLA ‘cane?
There’s been some doozys in the past.
His insurance with Allstate went way up last year when they decided to spread their “Florida exposure” by upping all waterfront policies nationwide - even though Allstate Florida is a “Pup” company & the mother company is insulated - more insurance lies & thievery….
“In Glens Falls, 13.4 percent of such homeowners had fallen behind, the second highest figure in the state. Jamestown had the highest rate, with 14.8 percent of homeowners with subprime loans more than 60 days in arrears.”
“… the Brownsville section of Brooklyn, where the median annual income was $22,238, led the citywide list at 52.28 percent [% being subprime borrowers].”
******
Glens Falls, Jamestown, Brownsville
“Nice” to see the Kool-Aid was apportioned *everywhere* in New York State.
Nystedt considers this $799,000 four-bedroom a good deal because the owner has cut the asking price by $100,000.
Reminds me of my wife’s mentality when she buys things on sale at a high-end store. $100K off of a home that is $200K over priced is no bargain.
Good deal? I wouldn’t pay a penny over 400K for this overpriced POS! That’s a small house in a sos-so part of Newton. The greedy seller should have priced it at $1,299,000 originally. Then it would be an even better deal now. Wow! 500K off!
sos-so = so-so
newton’s fourth law!
like Needless Markup (Neiman Marcus) having a 10% off spring zing sale. Oh, boy, now that purse is only 900 bucks instead of a 1000….
Why is Imploder pricing purses at Neiman Marcus? Sorry man, that just made me laugh…
You hit my number. When I sought it I thought $600,000K for a house in decent condition in a nice place like Newton might be fair.
Houses in Newton really shouldn’t be so high any more, because MCAS destroyed a lot of what made the Newton school system special. My parents are still there because they have a special needs child. That’s the only reason. If your child is normal, don’t be fooled. The Newton school system of yesteryear has been dismantled piece by piece.
“Buyer Agents of Boston’s Gary Dwyer..”
Buyer Agents of Boston looks to be a new firm. What do you think their name is trying to convey? Is that name a smack in the face to the world of realtors?
It’s nice to know that there is now a firm where the agents make money on how well you do, not just off making sure the transaction happens no matter what the price. Oh wait….
I once (foolishly) used a buyer’s agent; lost a great house (a true pre-bubble bargain) to the listing agent’s buyer. A true buyer’s agent today should either tell his clients to wait, or bid 50% of the asking price.
Mikey(2): Sorry to give you a hard time, but how did you lose the house? Usually people lose a house when they bid lower than the other buyer (I’ve done that a lot, only didn’t consider it a loss if it was priced too high.)
Long story… the short story is that the seller’s agent’s buyer was a cash-rich contractor who outbid me beyond what I was able to afford.
I initially came in as the sole bidder, just under asking price. The seller’s agent claimed that she was unable to reach the seller to communicate the offer; three days later, my agent called the seller’s agent to find out that the seller’s agent’s buyer submitted an over-asking-price offer which her client accepted. I actually called the seller and learned that she had been available to receive my offer when it was submitted - her agent just sent it to her later. Maybe she wouldn’t have accepted the offer, but I would bet that she would have received it on time if I had gone directly to her agent inste4ad of using my own agent (with whom she would have had to split the commission).
I see. I guess back then you wouldn’t have minded paying over-asking, because values were reasonable pre-bubble.
There is a local BA here that sounds just like all the other kool-aid folk.
True Confession: I used a buyer’s agent when I purchase the Arizona Slim Ranch. While I was initially impressed with him, my opinion changed after I found that:
1. The home inspector he strongly recommended failed to notify me of problems that cost almost $3k to correct. Can’t help thinking that the inspector gave this agent a nice kickback for the Slim-referral.
2. The Ranch had some problems after I moved in, but when I contacted the agent for help, it was clear that he just couldn’t be bothered with me.
So, I don’t think I’ll be using this guy again.
When was this? Was it during a bubble?
It was during 2004. And I house-hunted for almost a year and a half because I didn’t want to overpay.
Well I used a BA who was a personal friend, which eased my fears somewhat. I noticed that he said NOTHING bad about a property until after I said something. He gave no advice whatsoever on a bid, on the basis that it would be a conflict of interest. I made him contact masons and get a bid on some minor repair work found by the inspector. I figured that I should get him to do something to earn his commission.
‘The problem is most of these people got into mortgages they can’t afford,’ she said.”
Exactly.
From the same article:
“What we are facing is a tsunami of foreclosures,” said Sen. “Robert Menendez, D-N.J., who on Tuesday joined Sens. Charles E. Schumer, D-N.Y., and Sherrod Brown, D-Ohio, to rail against a mounting subprime mortgage foreclosure problem.”
And:
“Lawmakers like Assembly Deputy Speaker Neil M. Cohen, D-Union, are calling for a moratorium on subprime mortgage foreclosures, saying the subprime lending market is experiencing a meltdown and causing homeowners to drown.
“Without some form of government intervention, we will see a dramatic increase in the amount of subprime foreclosures in the coming months,” Cohen said in a letter to state Attorney General Stuart Rabner. “We have a responsibility to protect the people affected by these subprime loans gone bad…”
WTF?
We could give everyone a 500K line of credit on their credit cards. The economy would really boom, foreclosures would end and everythign would be the greatest ever! Imagine a world where you could buy whatever you wanted and just make your payments with your credit card. Welcome to the world of HELOC, or for those in OC - soon to be the world of HELL OC. A place where half the population sold thier souls and thier future for a quick buck now. - Oh yeah, their kids futures as well ….
Well what should one exects with a mentality of “the country is at war…go shopping.”
“We could give everyone a 500K line of credit on their credit cards. ”
——————————————
that was done 5 years ago. the money has all been borrowed and spent, now it’s payback time
I just got an offer to tap 84K out of the place where we live. Do you think the landlord will mind?
Very funny, gather-no-moss. I guffawed.
We have a responsibility to protect the people affected by these subprime loans gone bad…
RE: quote in previous post:
The best PROTECTION we can give these subrine borrowers is to allow them to go into foreclosure and thereby be protected from their own future financial irresponsibility. Nothing like losing a house to make you think before buying something you can’t afford.
Our system allows for foreclosure so that some one CAN loose a home and move on with their life and learn from their mistake. This doesn’t exist in Japan where the economy has been in deep recession since the 1980’s! Our system is SELF CORRECTING and should be allowed to function as such without “feel good” one size fits all solutions from a bunch of underinformed politicians. If these fools were smart enough to get in with 0% down, they will be smart enough to get back on thier feet again. Our system also accomodates those who can respond to this mess by INVESTING in distressed properties and returning them to the market as economically viable structures at a more resonable price. The markets don’t need our help or the government’s help to do its dirty work. This isn’t the first real estate bubble and will not be the last.
Excuse me, Mr. Cohen? These subprime loans did not “go” bad. The foreclosure was baked in the cake, as it were. Don’t believe me? Have a look at the FULL amort chart, not just the first two years.
And if anyone needs protection, it’s us SAVERS who need to be protected from being shafted, again.
I’d allow for a non-recourse jingle mail bailout, ONLY for first-time buyers who actually live in one home, and didn’t lie about their income. The flippers, trader-uppers, cash-outers, second homers, income liars, and investor realtors should be grateful to get a Rent&Ramen special.
“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.”
–H. L. Mencken–
Demo-rats are the chief purveyors of the subprime lending crisis hobgoblin. I guess they are too dumb to foresee their exposure to “kill the messenger” risk, not to mention future charges from the other side of the aisle that the supbrime mess was made far worse by Demo-rat interference in the free market. Politicians on the right side should take a firm stand against bailout proposals, as there is no principled reason to support them.
Criticize the Democrat bailout by all means, it is nothing more than headline grabbing and posturing by proposing things that will never come to pass. However, name calling is beneath you.
Can we just stop with “Demo-rat” stuff please, GetStucco?
Get Stucco comments = partisan
Most Realtors, corporations, banks, etc. are of the R-group. Alan greenspan helped one party with low interest rates and telling people to use ARMs when interest rates were extremely low. Most of these people continue to prey on those of lesser means.
There are a number of people on this blog who were ‘lucky’ to have sold high and laugh at the people who bought from them for being a GF.
Criticizing those who ‘trust’ a transaction like in the times of ‘hand shake’ deals is assuming they are stupid rather than trusting. Most people did not know banks are now the new ‘loan shark’ can can not be trusted anymore than any other seller. Well, after all of these shenanigans alot more people will not trust others.
Most realtors are like car salesmen and just have their hand in your pocket and will take you for all your worth if they can get away with it.
Those who were willing to finance, sell high, or in any way profit off of this incredible bubble for the last five years are all part of the problem and gloating about it shows their nature. The speculators (investors) drove prices up and drove most low income people out of the market until the banks came up with a way to really ’stick’ it to them.
The comments by others over the SOH in Florida is another one of those (I want mind and I don’t care about you) - the normal income people should not be driven out of their homes by specualative price increases - yes the results are those out of state have to pay more taxes - if you can afford that second home while the rest who live in florida on low incomes can not - then take the tax burden with it - let those with a normal income be able to buy affordable housing in the state again. If prices drop because the rich leave - then those left behind may be able to afford a home again.
Maybe they will stop selling off all the mobile home parks around the Nation where the elderly try to live on a limited income.
The Australian dollar hit a new high against the US dollar every single day this week. Now at 82.62 US cents. There is an AUD 10/15/15 bond issue that I will buy some more of on Monday. (Don’t like paying a lot of accrued interest, that’s why I’m waiting till Monday.) Any full-service broker can get these for you. Not phony-brokers like Fidelity. I believe the yield to maturity is closer to 6% than 5% in AUD, but of course this is basically a bet against USD.
Pimco’s input:
http://biz.yahoo.com/seekingalpha/070412/32187_id.html?.v=1&.pf=loans
“‘I wouldn’t sell the interest-only loans to people because they ratchet up,’ Petrucelli said. ‘What happens is, someone would get this comfortable feeling that they are only going to pay $1,500 a month but then it adjusts and ratchets up.’”
Right! And you wouldn’t sell them a credit card with a teaser rate that will ratchet up to 25%-30% either would you? You remind me of the saying “**it floats”.
I don’t know what Petrocelli was selling, but I did not find that competition from the neg-am sector cut into MY business at ALL. Maybe because I don’t charge any fees, except for $100 if I do the title and document work and recording myself.
If there is a massive bail-out for all the idiots who bought homes they could never afford I am actually going to shoot someone!
Houses here in Suffolk County long island have actually TRIPLED here in the last 5 years. If you read the “official” stats, they say houses here are up only 78%. I dont know where they get that from! I know people who bought houses for 150-180k in 2002 who have sold them recently for over 450k without significant improvements.
Would it really be so horrible for houses to fall to where an average salary could actually pay for a home comfortably? Is homeownership really worth forgoing retirement savings and becoming a slave to debt? God forbid companies give raises here to meet the cost of living. At least housing prices could return from the stratosphere.
forgive the rant… having a bad day.
liz&smudge
I say NO BAILOUT for the idiots who bought!
“Would it really be so horrible for houses to fall to where an average salary could actually pay for a home comfortably?”
Just wait until voodoo financing disappears. Once downpayments and documentation become the norm again, believe me, prices will have to align with incomes. People became “debt slaves” because they were allowed to borrow to the hilt and RE was the golden goose.
Not anymore.
As alarming as it is to hear, I wouldn’t worry too much about “bailouts.” There is really not much that can be done for the FB’s. There are do-gooder outfits that will refinance an exploding loan with “donated” money from big, commercial banks, but the payments on conventional, amortizing loans will still be out of reach for many, if not most. And there will never be enough cash available to make any difference in the housing markets as a whole.
IMHO, the only thing the government can do that would lighten the burden would be to relax tax liabilites for forgiven mortgage debt at foreclosure. Of course, in fairness, this would only apply to primary residence foreclosure and would NOT apply to anyone who owns more than one house.
No one in here would vote for me, but what the hey, maybe I should run for Congress?
And there will never be enough cash available to make any difference in the housing markets as a whole.
Exactly. Most of the proposals coming off the Hill mention amounts like $100 million. To the sheeple out there, a hundred-million sounds like a lot, but the politicians know that figure is just a p.r. stunt that will make the politicians sound good and caring on TV while doing nothing at all. Same idea as a state lottery–everybody feels good playing but only a few win.
The amount of ill-gotten-gain from this massive bubble outweighs what the Fed govt can do. It isn’t exactly in great financial shape, either…
DC_Too, a thousand signatures and $3K in filing fees gets you on the Nov. ‘08 ballot in Virginia. And having worked for a number of Members of Congress, you are just as smart–if not smarter–than they are. There are not a lot of sharp tools up there, if you know what I mean. Most of them have the same outlook on the world as our FBs.
We watched TV last night about a young man returned from Iraq with a severe brain injury. He lives with his parents, and the VA is footing the bill for all of the physical therapists, occupational therapists, and assorted specialists he needs for his slow recovery. The show estimated that $18 million will be required for his care in the coming years. That’s just for one young man. Kind of puts necessary spending into focus for me. How in the world are we going to do this? Bailouts for FBs are inconceivable.
Is homeownership really worth forgoing retirement savings and becoming a slave to debt?
I ask this every day. This mess brought the homeownership rate up 5% (from 64% to 69%). That was worth it? Really?
Was it worth it to book phony revenues and earnings in 1999 and 2000 and risk securities fraud and prosecution for a $1-2 increase in your stock price on earnings day? Sure, if you were holding zillions of free shares and cheap options and believed you were smarter than the regulators and public. See any parallel?
$400k for a crappy condo in Slummerville. No thanks…… This type of place was in the $100ks in early part of the decade.
Speaking of selling:
http://news.yahoo.com/s/nm/20070413/bs_nm/newcentury_dc;_ylt=Am.ZKeYtCpe858zFVk4V9Za573QA
from the article:
“and make $7.34 million of incentive payments to loan workers.”
————————————–
this is a major part of the lending problem. The wrong kind of behavior was incentivized. If you reward quantity of loans over quality you will get bad loan quality.
Speaking of selling..
http://www.businessweek.com/ap/financialnews/D8OFQV5G0.htm