Bits Bucket And Craigslist Finds For June 23, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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The vacation indicator is doing well. Last summer I took a trip to Alaska and the housing market collapsed. I am writing this from Vermont on my way to Nova Scotia and Prince Edward Island for a cycling trip. Fortunately, I have have puts on builders, Reits and regional banks. Last summer my account increased by a year’s pay during a two week vacation. I think that the unwinding of the subprime/housing bubble is stil in the early stages.
Bill,
please post observations on housing in the Maritimes. Have a good vacation.
Yes, I’d like to know about housing in the Maritimes, too.
I’d like to know how much building has been going on there since I have a house in Chester NS.
I’m jealous.
Me 2
I’ll be up there for a kayaking trip at the end of July so I’ll keep my eyes open as well. We hope to make some observations in the New England area also.
You’ll be shocked at how cold that water is, but it is a beautiful part of the world. I used to fly there from San Diego, diagonally across North America. Talk about two different worlds.
“You’ll be shocked at how cold that water is”
So cold, your feet get a toothache.
Wimps…I used to go in the Atlantic on our April school break, off the NH coast.
Course there weren’t a lot of people out there with me. Even the football players scrimmaging on the beach stayed out. LOL
I hated the water in San Diego/LA too. Way too cold. Gimme that 85 degree Florida stuff please.
I was banking on a global warming event prior to my arrival. Guess I’ll have to paddle faster :). We are going to spend a few weeks up in that area so I should get a good look around. If anyone has any recommendations on day trips or hiking/biking trails or other “must do/see” type things then I’d love to hear about them! Thanks in advance!
Addendum: please keep in mind I have a 3YO and two golden retrievers that I have to keep happy as well when making recommendations!
where exactly are you going to be? I know all the spots on the South Shore of NS
On your way back if you’re driving thru southern NH, Mt. Madnadnock is a great climb. Just stay in front of your 3yo once you’re past the treeline….so he/she doesn’t get too close to the edge. The views are beautiful. You may need to carry your child at some points but I have seen quite a few young children at the summit.
We are going around the whole perimeter of NS and up to PE island. I don’t have a hard itinerary since we mostly play it by ear but I have reservations here http://www.baddeckcabottrailcamp.com/
and over by Advocate Harbor.
Looks beautiful - Have a great trip!
You should plan a trip in the future up to Newfoundland, too. But hey, I’m Canadian, so I may be biased about Canadian vacations :))
Augur,
The Northumberland Strait is supposed to be quite warm-if you do go swimming, let us know.
Cold water? Clearly you haven’t seen the hype — warmest waters north of Virginia in the Northumberland Strait… if it’s on Wiki-p, it’s gotta be true, right?
http://en.wikipedia.org/wiki/Northumberland_Strait
My extended family’s from Inverness, Cape Breton. If you’re down that way, check out the Inverness Beach Village… gorgeous beach, nice cabins. Spent a family reunion there:
http://www.macleods.com/beachvillage.html
Not to be missed — make sure to take in a ceilidh (kay-lee) on your trip.
http://en.wikipedia.org/wiki/C%C3%A9ilidh
- Angus
Angus,
nice links, many thanks.
Thanks to all of you for the suggestions.
http://tinyurl.com/yvwxuc
TITLE: Bear Stearns to the Rescue—Sort Of
The firm’s plan to shore up two hedge funds hit by the subprime mortgage mess favors the one that’s in better shape
My gut says this is just a last ditch stop gap effort & if the bleeding continues “BS” will not be able to stop the slide the the little dutch boy putting his finger in the dike, only this time it does not end so nicely.
“If the prices of those securities broadly fall, Wall Street firms, hedge funds and other investors could suffer losses on their portfolios, cutting into profits.
Meanwhile, buyout funds that depend on the CDO market to help finance takeovers could have more trouble completing deals.
With Bear Stearns putting up big money to save a fund, those concerns are only mounting, an investor said.
“The fact that Bear Stearns is putting up more money might indicate that the market is too illiquid and that a number of players are trapped,” said Kyle Rosen, president of hedge fund Rosen Capital Management.”
http://today.reuters.com/news/articleinvesting.aspx?type=fundsFundsNews&storyID=2007-06-22T232827Z_01_N22483393_RTRIDST_0_BEARSTEARNS-HEDGEFUND-UPDATE-4.XML&pageNumber=3&imageid=&cap=&sz=13&WTModLoc=InvArt-C1-ArticlePage3
Sort of an eerie parallel to 1929. Didn’t a bunch of the big boyz keep putting up more money to stave off the inevitable, until they just couldn’t prop it up any more? JP Morgan comes to mind. Interesting that the firm bearing his name is a playuh.
Are we really on the eve of destruction, or is this a replay of the swoon we had in February from the subprime lender implosion ?
I expect a continued series of swoons followed by bailout attempts for the foreseeable future as the shock waves of the subprime implosion radiate through the financial sector against a bulwark of bailout measures. Subprime will not be contained, but the tsunami will be slowed down by containment attempts.
in 29 this was called “organized support.”
“…and that a number of players are trapped.”
Oh, man, do I love the word “trapped,” as applied to those greedy Wall Street a**holes. No mercy, no pity, nada. I’d spit in their tin cups.
I’m with you Chip. My schadenfreude meter is off the charts on this one. And it is personal.
I’ve never been the schadenfreude type. however, listening to these masters of the universe blow up a few days after reading “fooled by randomness” has changed things. this ciofi guy ran $20 Bil at one time and he is a supposed EXPERT! how is that possible.
anyways, I was digging in the yard and unexpectedly hit a deep vein of schadenfreude. should I mark it to model or market?
I must confess I was thinking of Marie Antoinette’s suggestion to “Let them eat cake” this morning as I read the story about the Blackstone IPO.
It’s a new era - again!
Blackstone Group IPO 6th-richest in U.S. history
By Joe Bel Bruno
ASSOCIATED PRESS
June 23, 2007
NEW YORK – Blackstone Group shares rose 13 percent in their stock-market debut yesterday, as investors scrambled for a piece of the sixth-richest initial public offering in U.S. history.
Chief Executive Stephen Schwarzman now controls a firm whose market value stands at about $38 billion. His personal wealth also skyrocketed, with a 24 percent stake in Blackstone’s management partnership worth about $8 billion, on top of the roughly $449 million he was expected to cash out in the IPO.
Exuberance about the booming private-equity industry overshadowed mounting criticism of the lavish lifestyles of top executives from politicians, labor unions and the media. The strength of Blackstone’s debut marks a coming of age for the once-secretive industry, as it joins Wall Street’s publicly traded, top-tier investment houses.
“This is a new breed of publicly traded financial firm,” said Matthew Rhodes-Kropf, a professor of finance at the Columbia Business School. “Once the market demonstrates its appetite for this type of investment, we’re going to see all the biggest and the best go public – even after the incredibly negative press it has generated.”
http://www.signonsandiego.com/uniontrib/20070623/news_1b23black.html
how can these big players essentially hide the value of these securities? I heard there is about a trillion of these out there. how is it that public companies can sweep this under the rug? how can they hide these loses? how can they value them with models and not by the market? you can bet 100% that they all pretty much thought these were worth a lot more than they thought.
how can they do this to shareholders of public companies?
John Law: Its called Delaware Corporate Law. It is so corporate biased that it will allow executives of a company to hid the fact that they’ve breached their fiduciary duty to their shareholders until the day of reckoning and they when they must disclose they will be shielded by the “business judgment rule” because they did the appropriate legal fandango in order to get off scot free with with all the shareholder’s money!!
Joe — Thanks for the enlightening explanation of why there are so very many “Delaware Corporations” w/NYC corporate headquarters. For more on this sordid subject, read the following:
Delaware corporation
From Wikipedia, the free encyclopedia
A Delaware corporation is a corporation chartered in the U.S. state of Delaware. Delaware is well known as a corporate haven, and thus, over 50% of US publicly-traded corporations and 58% of the Fortune 500 companies are incorporated in the state.[1]
http://en.wikipedia.org/wiki/Delaware_corporation
I don’t understand why some smaller outfit doesn’t a) throw out to the market some bad CDO’s, b) let the market mark the value lower - to their real worth, c) setting a chain reaction that lowers the value of many other CDOs, and then d) $hort the hell out of the stocks that own many of the toxic CDOs.
I think the answer to your question is subtle: You would need to find somebody in the CDO market who is not compensated by a percentage of assets managed.
Bear Stearns raises subprime exposure
By Ben White and Saskia Scholtes in New York and James Mackintosh in London
Published: June 22 2007 21:09 | Last updated: June 23 2007 01:29
Bear Stearns raised its exposure to subprime mortgages on Friday, confirming it would extend $3.2bn (£1.6bn) in secured loans to one of its two in-house hedge funds suffering from bad subprime bets.
The announcement drove down shares in Bear and other investment banks, helping push the Standard & Poor’s 500-stock index down about 1.3 per cent.
The news came at the end of a week in which Bear struggled to satisfy creditors who have seized some of the funds’ assets.
Banks including Merrill Lynch, JPMorgan and Cantor Fitzgerald have sold some of the collateral. Under the terms of the loan, first reported by the Financial Times, Bear agreed to provide a $3.2bn credit line to its High-Grade Structured Credit Strategies Fund.
The loan did not address problems faced by the closely related but larger High-Grade Structured Credit Strategies Enhanced Leverage Fund, which borrowed at least $6bn from banks to make bets on the subprime market.
http://www.ft.com/cms/s/9eac9336-20f6-11dc-8d50-000b5df10621.html
from the latest earnings release Bear Sterns…
Average customer margin debt balances for the quarter ended May 31, 2007 reached a record average of $95.4 billion, up 40% from an average of $68.4 billion in the quarter ended May 31, 2006. Customer short balances averaged $101.9 billion during the second quarter of 2007, up 27% from an average of $80.2 billion in the second quarter of 2006
next quarter on quarter number should be interesting….
Casey Serin says he has been offered $100,000 for his blog. Here is what he wants to do with the money:
“….Alternatively, 100 grand can produce some SWEEET passive income if invested into a nice equity fund with monthly returns of 5% or more. That would accomplish my passive income goal I set back in 2000 when I graduated high school.
This income would give me some peace of mind for once and help me start paying down debt as well as focus on other income producing activities.”
OMFG, this guy is unbelievable. TxChick, can you point Casey to a nice “equity fund” returning 5%/month. LOL, maybe a nice Bear Stearns opportunity???
I’m sure the people at Exurban Nation will “point” his creditors to this windfall, where it will be quickly swallowed.
I would recommend the Long Island Lost Super Sweet Securities Fund. This fund, open to deposits by failed flippers, guarantees a 5% return per month. The guarantee is ironclad for 40 weeks. Better yet, if the promised returns are not provided during the guarantee period, the low 0.1 times assets annual management fee will be waived.
5% monthly? that’s 60% a year and three times the interest rate charged by credit card companies! this kid is blowing smoke!
I hate to say this, but if he stuck the 100K in a daytrading account, I could turn better than 5% per month for him, even after I paid myself. Not that I would EVER do that.
All right, txchick, where do I sign up?
Hey, well, will you do it for any of US???
The taxes would eat you guys alive. Casey has losses to offset against.
Nonsense: if I wanted to limit my income just to limit my income tax, then I would … own a house!
bet a lot of folks here might be carrying forward 6 figures in losses…….oh the joy of the dot com mania. it just keeps on giving
$100K = $1M in intraday BP. 5%/month = 5K per month divided by 20 trading days/month. If I couldn’t do that, it would be time to find another line of work.
Sorry, but no one can make 5% a month consistently. If they could, they would own everything in the world in 30 years.
Okay, if you say so . . .
Last comment on this. I don’t know if I could do it for 30 years. Probably not. And it is not glamorous It’s the worst kind of grubbing and scalping you can think of. I’m talking 20-50 trades a day or more trying to get $50 - 100 on the winners and lose no more than that on the losers. It’s not fun, it’s boring and irritating. But to me, it’s less boring and irritating than putting up with some jackass boss at a W-2 job.
and I have “repaired” a couple of dotcom-era accounts already and turned them back over to the owners, who proceeded to allow their brokers to blow them up again. Go figure.
Sorry, but no one can make 5% a month consistently. If they could, they would own everything in the world in 30 years.
For those that like calculation: The actual return would be about 79% annually which results in a total return of 42,476,396x after thirty years. Therefore, starting with a mere $10K would give you about $425B.
I think we can safely conclude that nobody has achieved that in the last thirty years. But who knows, the next thirty might be different. Maybe it’ll even be Casey.
Yep. Sorry, chick - you cannot make me 4.2 trillion dollars (before taxes) in 30 years… with 100k today.
5% monthly=
300% in 2years
24,000% in 10 years.
Hahahahahahahaha.
Or you could have just bought the Google IPO and done nothing.
Wow, I am very impressed but I would bet that less than 3% of all the peple who jumped into day trading are in your league and 75% never made a living
Trust me, I took some ass kickings on the way to learning how to make a living at it. It wasn’t just show and go like some people think it is. It’s a 10-12 hour/day job if you hope to do it for a living.
“Last comment on this”
3 post later
“Trust me”
The Chick posted 3 more and I wish it had been 30 more. I enjoy reading every post she writes.
I’m glad he isn’t jumping on this. He might get a better offer. (Ha ha ha typical. Or: Lie lie lie, typical.)
I’m sure there are lots of investors out there that could make money through “iamfacingforclosure.com”, after all, it is a growth industry!
Housing sales indicate heyday has passed
Burlington Free Press
“Allen’s firm reported Friday that sales of single-family homes decreased 23 percent in Vermont in the first four months of 2007, compared with the same time period in 2006. In Chittenden County, the decline was 25 percent, he said. It’s the second year in a row in which he’s seen sales decline after a boom in the first half of the decade..”
“Those figures don’t match those amassed by the Northwestern Vermont Board of Realtors. Kathy Sweeten, executive vice president of the board, said the number of sales recorded by real estate agents increased 6 percent from last year to this year while sale prices dropped slightly.”
Two questions: 23% drop from YTD 07 to YTD 06, what’s the % drop from YTD 07 to YTD 05? And, how does the NWVBR gather its statistics? FSBOs can’t account for a 29% spread between the two numbers.
$3.2 Billion Move by Bear Stearns to Rescue Fund
Includes:
“By the end of the day, out of the $850 million in securities that Merrill had put up for sale, only a small portion actually sold.”
This is the first MSM article I can recall where they say they couldn’t sell the rest, not that they chose to only sell a portion.
I don’t know about you all, but I am freaked! If this starts effecting more and more hedge funds… We’re going to wish we get just a resession.
What I really like is that BS only put about 1% of its own money in these funds. They new it was junk and sold it to everybody else.
PAUL B. FARRELL
‘Where are the customers’ yachts?’
Can’t buy? Charter a fund manager’s for only $750,000 a week!
By Paul B. Farrell, MarketWatch
Last Update: 7:51 PM ET Nov 27, 2006
ARROYO GRANDE, Calif. (MarketWatch) — Some things never change. This script was written long ago, in Fred Schwed’s humorous 1940 classic about Wall Street’s insatiable greed. The message rings as true today as back then, when America was still smarting from Wall Street’s disastrous 1929 crash. Schwed explains the origin of his title, in an “Ancient Story:”
“Once in the dear dead days beyond recall, an out-of-town visitor was being shown the wonders of the New York financial district. When the party arrived at the Battery, one of his guides indicated some handsome ships riding at anchor. “Look, those are the bankers’ and brokers’ yachts. ‘Where are all the customers’ yachts?’ asked the naïve visitor.”
http://tinyurl.com/38ydkt
“I don’t know about you all, but I am freaked! If this starts effecting more and more hedge funds… We’re going to wish we get just a resession.”
Theoretically, under “normal” circumstances, yesterday should have been “Black Friday”, complete with a 1929 style panic, no?
All those “investors” would have been wiped out. And then what?
OH, NO! That would mean “the wealthy” wouldn’t have been able to let their bounty “trickle down” to the masses.
Well, they don’t do much “trickling down” to begin with and maybe that’s the beauty of it, in the end. What would REALLY happen if the individual investors in these funds saw their money “vaporize”? Yawn. The local Maserati dealership would get a few cancellations on back orders. Institutional investors, now that’s another story. Pension fund managers would have some ’splainin’ to do. BofA? Now THAT’s where the real action would be.
Palmetto,
I asked KIA about the timeline on marking to market these unsold CDOs…not public info, and depending on the financial terms, they can apparently be held in a sort of limbo. The Brookstreet stuff from yesterday went for 18cents on the dollar. Until they are actually sold, they’re just sort of floating there, like an unexploded Hindenberg.
So then it looks like 18 cents on the dollar is market at this point? I guess the “Masters of the Universe” have created the ultimate black hole.
Y’know, maybe some day, someone will come up with the novel concept that investment dollars might do well in a productive enterprise that actually provides something of value that enhances the lives of people. You know, something besides weaponry and poison pharamceuticals.
That’s an interesting coincidence. 18% is the wholesale/fire-sale value of precious gemstones, relative to GIA appraisal.
Where are you getting that? GIA only grades stones, they do not put a dollar amount on their certificates. There is no set percentage of wholesale value to diamonds and gemstones either.
Jim — not true — the GIA “appraisal” is the value used by insurance companies to ensure that they receive a super-comfy return on their premiums. The fine print: an insurance company has the right to pay you the insured value of the lost stone OR to replace the stone with one of equal or greater “value.” It is one of the biggest snookers of all time, insurance-wise. Try to reduce the coverage on a gemstone with an insurance company — impossible. Try losing a 2-carat-plus diamond and collecting cash. No way, no how. You will receive a “better” diamond, instead.
Long ago, I had to dump a half-million dollars’ worth of gemstones my sister took in a scam for a commercial property she owned. By exceptionally good fortune, a former jeweler worked for me at the time. After selling one of the stones via consignment, at 18% of GIA appraisal, I determined that I (she) would be far better off donating the gems to a tax-exempt that would not re-sell them. Turned out that Stetson University has a gemological museum and they agreed to keep the stones rather than re-sell them (that is a KEY point, tax-wise). My sister doubled her benefit, because of the marginal tax rates in the 1980s, over selling them at the fire-sale price.
After that, I never again bought my wife a gemstone and will not. They are a scam of major proportions, IMHO, at least at the retail level.
Jim — I have another example of my point, if you are still tuned in.
If you are too pussy-whipped to see straight, buy a gemstone — otherwise, treat them like a vial of ebola.’
The Email from the Brookstreet CEO (it is quoted on the Ocregister “Mortgage Insider” blog) mentions that the company that hit them with the margin calls is a subsidiary of Fidelity Investments.
I seem to recall a lot of posters in this weekend’s “Topics” thread mentioning their corporate pension options were from someone called Fidelity.
Would these by any chance be one and the same?
Yes, that is the same company. However, since all I have in my 401k is their international stock fund, my money probably isn’t at risk.
All the news about BS about bailing out its hedge fund has been about the SMALLER of the 2 funds. The meltdown is contained ??? HA!
They injected 3.2 Bil of their own capital which is a significant amount of BS shareholder’s equity 30 - 40 % ???. Me thinks BS will run out of dough if they try the same stunt on the bigger fund “High Grade Structured Credit Strategies Enhanced Leverage Fund”.
As I understand the issues, it was the bigger fund that had its collateral seized by Merrill Lynch. They say the fund has at LEAST 6 Bil of debt. Rosta ruck sweeping this pig under the rug guys !
Bear may have prevented a wider meltdown — and kept many of the subprime bonds from plunging in value in a fire sale. Its injection of money also will help bring order to the market and pay back loans made by other big Wall Street banks to the Bear-managed hedge fund called the High-Grade Structured Credit Strategies Fund — though prospects for a sister fund that relied even more on debt, the High Grade Structured Credit Strategies Enhanced Leverage Fund, remain in doubt. The firm, whose move helps preserve its reputation, eventually might even make some money from the struggling investments. And late Friday, as rivals continued to sell or wind down their positions with the one fund, it became clear that Bear may only need to lend $2 billion or less.
IllinoisBob — no offense, but you sound as if you might be on the wrong side of the bet. Is your observation purely academic, or do you have money at stake?
The point is 100% academic. I have no $ (+ | -) on BS
Christ, you smell the fear… they are preparing for the bloodbath now, knowing this was probably just a brief stay… part of me wants to short the indexes, part wants my money out of BofA, in cash…
Billions pledged in fund bailout
Subprime mortgage failures have damaged investments
By Julie Creswell
and Vikas Bajaj
NEW YORK TIMES NEWS SERVICE
June 23, 2007
Bear Stearns Cos., the investment bank, pledged up to $3.2 billion in loans yesterday to bail out one of its hedge funds that was collapsing because of bad bets on subprime mortgages.
It is the biggest rescue of a hedge fund since 1998, when more than a dozen lenders provided $3.6 billion to save Long-Term Capital Management.
The crisis this week from the near-collapse of two hedge funds that Bear Stearns managed stems directly from the slumping housing market and the fallout from lax lending practices that showered money on people with weak, or subprime, credit, many of whom are now struggling to stay in their homes.
Bear Stearns averted a meltdown this time, but if delinquencies and defaults on subprime loans surge, Wall Street firms, hedge funds and pension funds could be left holding billions of dollars in bonds and securities backed by loans that are quickly losing their value.
http://www.signonsandiego.com/uniontrib/20070623/news_1b23bear.html
I was talking to my better half on our morning walk about this mess and I have a few questions that I hope someone can answer. I know that a CDO is hundreds of mortgages tied together in order to obtain a certain yield for an investor. One question I have is: are the individual mortgages sliced up? In other words is my triple A rated mortgage sliced up into to ten segments that go into a tranch? And what happens if one of these mortgages in a tranch is foreclosed on? Does the whole tranch fail?
Thanks
Each tranche is not tied toparticular mortgages. The calculation for who gets paid doesn’t point to specific addresses or number of underlying loans. So all of the money received from all of the mortgages is pooled, then that money is distributed to whoever is first in line to get paid. Simmilarly, all of the losses taken out of the person who owns the equity tranche, or out of a PAC account. So the investors in the CDO don’t actually own any mortgages themselves, they just own the right to cashflows, like a bond.
I’m always happy to see Vikas with another byline in the NYT. He was a business reporter for years at the Morning Snooze and worked a bit on a situation I was peripherally involved in with a failed telecom here. He was a good reporter.
The subprime meltdown, continued
Bearish turns (Sounds like Bear Stearns…)
Jun 21st 2007 | NEW YORK
From The Economist print edition
A prominent hedge fund’s implosion revives fears about the poisonous influence in America’s subprime-mortgage market
http://economist.com/finance/displaystory.cfm?story_id=9378742
For anyone in the NY & Northern New Jersey areas:
A new edition of Lowball! has been posted. Some good lowballin’ goin on in Northern NJ!
http://njrereport.com/index.php/2007/06/23/lowball-may-23-june-23-2007
MLS Town % off OLP $ off OLP
2278330 Millburn Twp. 30.7% $980,000
2353613 Millburn Twp. 25.8% $695,000
2364757 Westfield Twp. 16.4% $550,000
2338355 Harding Twp.* 11.6% $550,000
2301093 Millburn Twp. 16.2% $549,000
2388811 Harding Twp. 8.5% $500,000
2285801 Franklin Lakes Boro 23.3% $465,000
2304099 Morris Twp. 26.4% $395,000
2259194 Millburn Twp. 23.2% $370,000
2318656 South Orange Village Twp. 26.0% $351,081
2322698 Chatham Twp. 16.7% $349,900
2321368 Bernardsville Boro* 8.6% $300,000
2317805 Morristown Town* 15.8% $299,900
2354827 Westfield Twp.* 15.3% $295,000
2273782 Franklin Lakes Boro 14.8% $279,000
2336362 Glen Ridge Boro Twp. 27.2% $272,000
2337789 Essex Fells Twp. 13.4% $267,530
2040082 Montville Twp. 32.8% $262,000
2267873 Franklin Lakes Boro 20.3% $243,000
2371402 Kinnelon Boro 12.3% $240,000
Nice work!
Northern New Jersey is toast. I’ve posted about that before. Our last trip out that way showed the levels of inventory and denial are getting to record levels. A quick calculation would make me think that some of these areas could drop by 50% and finally be in line with economic reality.
2040082 Montville Twp. 32.8% $262,000
My dad built a house for us there when we were kids. He used to commute from there to Manhattan, can you believe it? It was on acreage and at least 2500 square feet. He paid about 25K to build it I think and I saw it a couple of years ago for sale at over $1M.
The commute from Jersey is awful. I don’t care what anybody says. Unless you are in Hoboken or Jersey City, directly off the PATH, you are not as close to your job in Manhattan as you think. Nearly all Jerseyites that work in Manhattan commute at least an hour each way. That commute can include a subway, a train, a bus and then a car. Put a snowflake in the air and the system just stops. I think people in this area are crazy for sacrificing their life the way they do for their commute. Montville doesn’t look too bad but I don’t know what Jersey Transit train you take. He must have really loved you kids.
this was in the 1960s, it was probably not as bad as it is now.
I live in NJ in one of the pricier towns and inventory is piling up like I can’t believe! Since September of last year (when I started to notice) there have been around 25 houses for sale along the main rural roads on my commute to work. The same houses are still for sale with “Price Reduced” signs and even more homes are being put up for sale every week. A quick drive down some of the side streets last Sunday revealed even MORE homes for sale. You can pick ANY location in my town (and probably county) and find a home for sale within 100 yards.
The sad thing is that prices aren’t coming down fast enough. Sellers are in denial and aren’t lowering their prices enough.
“You can pick ANY location in my town (and probably county) and find a home for sale within 100 yards.”
Thanks for the great visual yardstick — a good way to measure the volume of for-sales, assuming you have a rough grasp of the density.
Anyone have metrics like this for long island? inventory seems way up (based on mlsli.com) but I can’t translate to months… asking prices do not seem to be dropping still but I am waiting and hoping…
Lowrydr, I noticed that November of last year was the first time that I saw a lot of “For Sale” signs in the yards of New Jerseyites. Our trip last month showed that it is really piling up. The buzz phrase is, “you just have to be patient. Eventually it will sell.” Please define “eventually”.
The donald doing things “his way”
http://www.huffingtonpost.com/huff-wires/20070622/people-donald-trump/
I’d approve that flagpole, on the condition that the Donald sit on it and rotate.
The CCC will neuter Trump…
God, how I’ve grown to hate spoiled, rich people. They need more to worry about.
you’re living in the wrong city then
I love this city. I just hate most of the people.
Not the “renting” kind…
“The biggest-ticket item of the summer seems to be yacht rentals, where the average budget is $446,000. But only 14 of the 301 partners in the survey plan to rent a yacht. The rest of them probably own.”
http://www.forbes.com/wallstreet/2007/06/21/hedgefunds-wall-street-vacations-biz-wall-cx_lm_0621hedgefun.html
If you can’t bilk the kids any more, bilk the seniors:
http://www.dallasnews.com/sharedcontent/dws/bus/stories/062307dnbusrealtors.36d6fad.html
“The 5 percent to 7 percent commission that clients typically pay real estate brokers on a home’s sale covers the program’s basic costs, though there are separate charges for such services as moving and estate planning.”
quite a bargain…..
TXChick has located The Joker, from the old Batman series. Good work. Just looking at that woman makes you want to give her a big “kaplow” right across the kisser.
“bilk the seniors”
Wall Street is all about stealing from the unwitting to pay the superrich. Back in the olden days, I think finance had something to do with productive activity. No mas.
Oh, did anyone see 20/20 last night on ABC? Entire program devoted to different aspects of real estate. I was sort of watching out of the corner of my eye while doing paperwork, so I’m fuzzy on many of the details. But I loved the story about the KB Home development built on an old WW2 practice bombing site. The Army Corps of Engineers was able to dig up the bombs beneath lawns and yards, but there’s nothing they can do about the bombs underneath houses, patios, roads and sidewalks.
Link, for anyone interested. Some guy still preaching about getting rich on real estate. Sigh. I guess the seminar Santas are here to stay.
http://abcnews.go.com/2020/?CMP=google_branded&partner=google&gclid=CLfv_bOz8owCFQzXgAodDR6dDA
Yeah, I saw it. KB Homes was sued succesfully for “willfully and knowingly” selling properties they knew to be dangerous. Unexploded ordinance is still under the sidewalks and under the homes and unretrievable by the Army Corp. So KB paid about 63k on the 100k for compensation…the families are stuck forever in unsellable, dangerous homes. Gotta love those public homebuilders.
Luckily, Texas changed the law two years ago to prevent home builders from ever having to pay out such compensation again.
I suppose if you are really underwater on the KB-Ordinance Ranch development, a plastique coffee table may have to come to the rescue…..
FIRE IN THE HOLE!
Parts of Newport Coast have methane gas deposits equivalent to bombs under home properties. Sage Private School sits atop one of these deposits and IIRC the OC Register reported that this deposit is equivalent to a 150 lb bomb.
~Misstrial
How about using the Taj Mahal for a symbolic feature for the McMansions. Taj Mahal - saw Bill Clinton on TV saying, “there are 2 kinds of people - those have seen the Taj Mahal, and those who haven’t. I personally have seen it and words can not describe it, it looks magnificant. But most important, IT IS A TOMBSTONE - A GRAVESITE.
Many people have purchased their McTaj and are now buried financially in it. One big difference. The Taj Mahal was built well, 400 years and still standing. Can’t say the same for many of these McTajs. The mortgage will outlast many of the houses.
A week or two ago someone here on the blog called one of these things a “Garage Mahal.” I’ll remember that tag for life.
Down in the hills above Pleasanton, I went to a garage sale. The owners had advertised it as an ‘estate sale’, I guess because they live in a McTaj on a hill and figure it’s their estate, so they sold their junk in front of the garage and called it an ‘estate sale’.
“estate sale” tends to be used liberally to describe a garage or yard sales, even at suburban homes.
It seems to be regional thing.
Or if someone died there. Estate sale of their possessions.
Don’t forget the Faux Chateau.
FB story from the Outer Banks of North Carolina.
A friend is renting from a modern day Donald Trump. This guy sounds pretty shrewd to me. He bought this little house on the Outer Banks about 3 years ago for a mere pittance of $380,000. It was an investment property. He has been renting to my friend for $1,100 and then $1,200 per month. That is some great investment he found.
My friend gets a call a couple of weeks ago. It turns out the Donald wannabe has a 3 year ARM that is about to reset. There are two options. 1) He can have his rent raised to $1,600 per month. That still doesn’t cover a whole lot of anything at $380,000. OR 2) He can buy the house. He will even give him a deal at $359,000. I told my friend, “you’d be a fool not to buy at that reduced price” (actual event did not happen).
My friend decides to do a free appraisal.com appraisal. They contact the owner to see if it’s okay. He gives permission and asks for his own copy of the appraisal. The appraisal values the house in a range of $290,000 - $320,000. Can you imagine the look on the FB’s face when he saw that? I bet he screamed, “those f-ers don’t know what the effenheimer they are doing.”
Of course my friend is not even considering the buying option. Remember that this house is bringing in $1,200 in rent. I don’t care what multiple you use, this guy is hosed. He should try to throw it on the market and get whatever he can. Unfortunately, there are tons of houses already on the market that aren’t moving. Who would have thought?
I hope my FB story helps to make your day a little bit brighter. It sure made my day brighter when I heard it. “But the Outer Banks are different.” Bwahahaha.
Hope there are plenty of vacancies around so your friend can move and leave little Donald holding an absolutely empty bag (assuming rent increase is not justified by comps).
Well, based on rent, I’d appraise it at $180k. With 20% down and a 30-year fixed, it will *just* be cash-flow positive.
At $1600 or $1200?
$1200
Let’s see - There is a certain type of business equipment for which demand exceeds supply, so I borrow money to buy some and lease it out to a manufacturer. Suddenly, the equipment becomes readily available and much of it is going unused. My lender raises my interest rate and so I demand a 33% increase for the rent of the equipment from my lessee even though there is plenty of the equipment available. WTF?
Anecdote from yesterday. I was out playing golf on a public course near my house in Memphis. Tee off and had a wicked hook into the backyard of one of the houses. I hoof up there ( trying to lose some pounds ) and see the lady sipping coke in the shade, dressed like a realtor with all the bling , standing next to the obligatory SUV. She asked what i was looking for ( As if she did not hear the golf ball hitting the iron fence and rolling 30 yards in front of her ). I pointed to my ball and asked nicely if i could have it back “please”. She said something to the effect ” That is the name of the game honey , go buy another ball ” in the best sugary insincere tone i guess she had .
I was not sure what her problem was and i almost told her to choke on it but i wanted to focus on the game and was not in the mood. But it just proved my observation to someone else a couple of weeks earlier ” People who play golf don’t live on the course and People who live on the course do not play golf”.
You HAVE to see this:
http://www.youtube.com/watch?v=bJmkpSOMyUA
OMG that was hilarious.
HILARIOUS!!
lol. We lived in a townhome overlooking the 7th green at a country club. Although we are not golfers, it was no big deal to have someone come looking for their ball. Matter-of-fact, our windows got hit on a few occasions (3x) and the windows never broke.
What would amaze me was the hardiness of the golfers: wind, light rain, moderate mist, even light snow - they’d be out there on the course. Some gofing buddies were all walkers and carried (or to be exact, marched) their bags (ex-military types), others rode the carts (always), others walked with wheeled club bags, just amazing all the different sorts of golfers.
This realtor (@sshat) must be a newbie to the CC scene. :/
~Misstrial
I’ve been known to make a few putts on North Carolina’s white “greens” in February…
David Bach is pretty good about his financial advice, except for the house bit. Here is the results of a survey from that site from the comment posted above.
In his book “The Automatic Millionaire: Homeowner” David Bach shares his idea that diving into homeownership is the best way to save money and invest.
Do you feel comfortable buying a home in today’s market?
Yes. Saving by buying instead of renting seems like a smart way to climb the real estate ladder.
26
I don’t know. Depends on the property.8
No. I don’t want to risk losing money if the market falls.5
Total Vote: 39
Not a scientific survey.
Bought my first house on a 5 year ARM in 2001. Housing costs were up $500/month from renting (without including any maintenance.) Principle payment “savings and investment”: $150/month + tax savings of $63/month (above standard deduction).
I guess the appreciation is what makes this such a good “savings and investment.” Luckily, David Bach has come around at the right time of the cycle to explain all this investment glory to the GF’s.
He is no doubt correct in some aspects. I’m sure it is easy to make a small fortune with a housing investment in 2007… by starting with a large fortune.
Not sure if this is the right place for this, but…
We were looking at checking out the foreclosure auction scene. To see how it works and what happens and so forth, but we’re having a hard time finding out exactly when and where auctions are held. We always hear about them after the fact, but can’t find out prior when they are going to take place. We live in Colorado, Denver area, can anyone suggest a good place to search for these auctions or a place to call to find out information?
Thanks in advance!
Try calling the court clerk.
All the best to you.
~Misstrial
Our local newspaper (Washington Post) carries clerk of the court sales. Try the local paper.
Our lease is over next month and so I went rental shopping here in southern NM.
After being mentioned as a concern by some tenants here on the Blog, and after giving the security deposit trust account some thought, for us, I decided that it would be best to do the following to protect ourselves from questionable LLs:
(NOTE: On Rental Application forms, in the past, we have not been giving out our SS#s. Instead, I put: “Social Security numbers will be provided upon acceptance of tenancy.” AT THE SAME TIME, we provide new TransUnion credit reports with our Socials blacked out or whited out with Liquid Paper Tape.
The purpose of the Applications is to gain credit report info. Best thing is to provide it ourselves. BTW, LLs have never turned us down – as a matter of fact, they like having an instant credit report immediately available since finding good tenants is tiresome and time-consuming for them.
We always under-report income on rental apps. They can’t find out anyway. Remember this one important thing: as tenants, more info and money and information is demanded of us than sub-prime borrowers. Ads for these sorts of loans are still seen today. Amazingly.
If we decide to give our SS#s (depending), we write this statement on the top of the form in all caps:
“The personal and financial information provided on this form are to be used solely for the purpose intended and for no other purpose.”)
1. Security deposit: If there is reason to be concerned, pay as low a security deposit as possible. Rentals that are new and possibly bought to be flipped are featuring very low security deposits: I am seeing $200 - $300 security deposits for some rentals. If this is the case, insist upon a month-to-month rental. If the LL refuses, look elsewhere.
2. We are renting from established LLs who have a professional licensure and a registered business. In other words, by being dishonest, they have something to lose (such as business and professional licenses).
3. If there is a realtor involved in property management, that, in this case, is a good thing, since they would have something to lose as stated in #2 above.
In another post, I will give Addendums that we use to further protect ourselves.
~Misstrial
I almost never give my SS# to anyone. Instead, I fill in the truth, “The SS# was never meant to be used for identification.” I’ve never had anyone give me grief for me not giving it.
Everybody just wants to help everybody get wealthy, right Mr. Bach? I still do not know why there is a stigma about renting other perhaps it telegraphs that a person does not want to commit many years to something:
http://abcnews.go.com/2020/PersonalFinance/story?id=1978618&page=1
Yahoo shows a giant spike in volume on the Dow yesterday, 120 million shares all within the last few minutes (when the Dow sharply dropped 30 points). Anyone hear anything about that?
Mortimer Duke: Turn those machines back on!
Maybe it was some weird Dow/Russell (which was rebalanced yesterday) pairs trade. Hahahah.
I did not hear that there were any stocks changed in the Dow?
I think that increase in volume is something interesting.
I’d guess it’s short term traders like hedgefunds waiting for the late day spike to get out. It’s a given that the markets will recover, so they think. When there aren’t enough buyers it just plunges, as they don’t have the inkling or the capital to hold all those shares over teh weekend.
I still wouldn’t be surprised to see the market rally on Monday anyway. It’s so ingrained to buy the dips…It would take a long time to change pyschology.
Renters:
Many rentals that we are looking at have some sort of lease terms: 6 month being the minimum and most rentals are at least 1 year terms. Here is an Addendum that I put together for us:
ADDENDUM
The following terms and conditions are hereby incorporated in and made a part of the Residential Lease. Dated: (insert here), on property known as (write in address here) in which (write your name(s) here)) is referred to as “Tenant” and (write LL’s name here) is referred to as “Landlord.”
1. Tenant may terminate this lease Agreement upon 30 (thirty) days written notice, providing that, with such notice, Tenant gives Landlord a copy of a letter from Tenant’s employer stating Tenant is being transferred to another city or has been terminated from his/her employment.
2. Lease termination with 30 (thirty) days written notice shall include death or disablement of Tenant. The term “disablement” in this Addendum is defined as a disability necessitating a change of employment resulting in a marked loss of income or inability to be employed for (insert your name(s) here).
3. Surviving Tenant, child, or next-of-kin of aforementioned Tenant(s) shall provide Landlord with one certified copy of the death certificate(s) or an original letter from a licensed physician stating the status of disablement.
(Signatures of each party to the contract)
~Misstrial
That is fair. I’ve had good luck renting from private parties and not so good luck from corporations. The corporate contracts are so damn thorough - in my current lease, if I die, that’s not reason enough to break it. At least I won’t have to worrya bout it =).
My complex is going through turmoil right now, and they are enforcing the regs to a tee. I was forced to pitch a BBQ grill I didn’t want to store inside (with propane tank), and dispose of some pretty potted plants because ‘3 is the limit’. WHAT A CROCK!
Yeah, the corporate apts will generally refuse any addendum(s) to the contract that they did not draft themselves. They are worse than a HOA for nonsensical rules.
~Misstrial
http://money.cnn.com/2007/06/22/markets/markets_0405/index.htm
Jim Awad, Chairman of Awad Asset Management on hedge funds, subprim, feds, etc:
“This is not over yet,” said Awad. “We don’t know who’s involved, who’s not. The whole recovery has been built of confidence, leverage and cheap money. This has the potential to be widespread in terms of seizing up capital.”
I like that quote. Built of confidence, leverage and cheap money. Or he could just have said: house of cards…..
$125K haircut on a house that someone was crazy enough to buy for $625K back in Sept ‘05. Butcher block counters, anyone? New price $500K.
http://sandiego.craigslist.org/rfs/358525594.html
That house has to be going for over $300 per square foot. No way is that worth that kinda cash. Only a fool would buy that house. In my area that house would be under $140k. And I don’t live in Podunk!
‘Seller will entertain offers between: $500,000 - $562,500 ‘
WTF?
Very entertaining.
The MLS in Sacramento, California has a class of listings that are priced in a range, not just a List Price. This is how they phrase it.
It could be they do this in San Diego too.
It’s been this way in San Diego since at least late 2004. Just lately, I have seen this practice give way to listings that say “Price Reduced. Bank owned. Must sell now.” This newer type of listing rarely also states “Seller is willing to entertain offers on the range from…”
Submit an offer at 1/2 or at most 2/3 the low amount & wait for the call back. Banks don’t get “insulted.” (Well, their lawyers sometimes do, but it’s rarely by just telling it like it is… you have to really swing for the crotch to get us…
the swordfish is a nice touch.
Yeech
I took the virtual tour and almost drowned.
Adventures in Knife Catching or How I’ve Lost $30K+ commission in Just 4 EZ Months of Homeownership.
http://sandiego.craigslist.org/rfs/358557344.html
The owners moved in Mar. ‘07 and are promptly trying to cut and run for less than the $805K they paid for it. Comes with free military jet aircraft noise too.
I didn’t see an ocean from the picture. Is it past the freeway and houses as far as the eye can see, to be barely visible along the horizon?
Stand on the roof with a telescope on a haze free day. You might see a thin line where the houses stop, way out on the horizon. The Pacific Ocean is rumored to be out there. Maybe the new owners could pretend that the noise from I-15 below is the crashing of the surf.
Inflation
Core principles
Jun 21st 2007
From The Economist print edition
Bond investors are living in a world where nobody eats or drives
http://economist.com/opinion/displaystory.cfm?story_id=9366299
And gold investors are living in a world where jobs are not being outsourced and salary increases are double digit per year.
The effect of outsourcing on the gold price is to allow the Indians and Chinese to buy more gold. As for salary increases, they don’t matter much to the gold price. What matters is inflation and chaos, and those are in bull markets.
“Core measures are certainly useful if they can efficiently strip out price changes that are likely to prove fleeting, without losing track of underlying inflation.”
OK so that’s how they rationalize away reality.
Nice to know.
Thanks, GS.
~Misstrial
Ha!
http://www.slate.com/id/2168650
Good article, thanks. Who would have thought a private equity magnate would be such a dick?
“Will Inflate Stated Income for Food”
I don’t know HTML or tinyurl. But LOL!
http://vids.myspace.com/index.cfm?fuseaction=vids.individual&videoid=2017457579
Great article today in AJC paper here in GA where I relocated about the fleeing Floridians…
http://www.ajc.com/search/content/business/stories/2007/06/23/biztransplants0623a.html