At A Point Of Correction
A report from Newszap Delaware. “Local homes staying on the market longer and for-sale signs advertising ‘reduced prices’ are clear indicators the housing boom of recent years is drawing to a close. ‘The big party is over,’ said Edward Hammond, a member of the Kent County Association of Realtors.”
“Dee Hake DeMolen, president of the association, said the boom of the past few years was an anomaly and could have never lasted long term. ‘It can’t continue,’ she said. ‘It is just a physical impossibility in our marketplace.’”
The Record from New Jersey. “Hoping to profit from a red-hot housing market at the Jersey Shore, Jamie Errico bought a cottage two blocks from the ocean in Bay Head in 2004. She tore it down and replaced it with a 4,600-square-foot Victorian, planning to flip the property.”
“‘A couple of years ago, anything on the Jersey Shore that was halfway decent was selling as fast as you could put it on the market,’ Errico, of New York City, said recently.”
“But the house has been for sale for nearly two years, though Errico has cut the price to $1.495 million, from $1.69 million. Errico recently decided to rent it out while she waits for a buyer.”
“As summer draws to a close, it’s clear that the real estate frenzy has ended at the Jersey Shore, with the leveling off of the wild price rises of the early part of this decade. ‘Prices have come down a bit,’ said Karen Symington of Re/Max Limited in Brick. ‘The cost of housing just skyrocketed, and now we’re at a point of correction.’”
“Statewide, house sales volume this year is running about 20 percent lower than in 2005. Prices at the Shore have fallen about 5 percent or less from their peaks in 2006, according to data from Realtors.”
“Tony Belli, president of the Ocean County Association of Realtors and an agent in Lavallette, said condo sales seem to have been hurt more than single-family homes. For example, in Ocean County, condo sales this year are running at half the rate of 2005, and prices are down about 14 percent in that period.”
“‘It’s not a bad market, it’s a market that’s trying to correct itself,’ Symington said. ‘History runs in cycles, and so does real estate. This is probably the best time in eight years for buyers. It truly, truly is a buyer’s market.’”
“In Brielle, The Robertson Douglas Group dropped the price of its 18 waterfront town houses on the Manasquan River. The town houses went on the market with a starting price of $975,000; now they start at $825,000. Earlier, the developer had offered a boat as an incentive to buyers.”
“Hovnanian Enterprises of Red Bank, the state’s largest homebuilder, estimates that its Shore sales volume is down 30 percent to 40 percent from the peak in 2005. ‘Our biggest challenge continues to be our prospective purchaser selling their existing home,’ said Barry McCarron, president of Hovnanian’s Coastal Division.”
“Hovnanian has cut prices or added incentives to a number of its Shore communities, adding up to total discounts of 5 percent to 15 percent, depending on the location. And it has dropped plans for several developments it had planned to build in Monmouth and Ocean counties.”
The Press of Atlantic City in New Jersey. “K. Hovnanian is holding its first-ever “nationwide” sales event this weekend. Through today, K. Hovnanian is offering discounts at all of its residential developments.”
“A sampling of price reductions in the area includes: as much as $81,887 at Hidden Pines and Oak Manor in Egg Harbor Township; as much as $60,000 at Manors at Freedom Hills in Barnegat Township; as much as $106,609 at Tides at Seapoint in North Wildwood; as much as $51,000 at Four Seasons in Galloway Township; and $43,000 off the last home available at Four Seasons at Mirage in Barnegat.”
“Michael Skea, VP of sales and marketing for the New Jersey-southern New York region, said K. Hovnanian discovered two things about the market in the past couple of months. One was that many buyers are selling their house first and then looking for a home they can move into within 90 to 120 days. The other is that pricing the homes correctly ‘dramatically increased the number of prospects visiting a community.’”
“That led to the first companywide sale. ‘It has taken quite a while to determine the right pricing for each community, but now we think that we’re there,’ Skea said. ‘I believe the right pricing will drive this event.’”
“‘In January and early February, there was a psychological malaise, and just when we were starting to overcome it, the subprime crisis arose almost simultaneously,’ he said. ‘Now we’re finding that malaise starting to be overcome again, notwithstanding the number of stories about the terrible state of the housing industry.’”
“K. Hovnanian couldn’t help contributing to such media coverage this week when it reported a quarterly loss of $80.5 million, having taken a charge of $108.6 million for land-deposit writeoffs and reductions in land values.”
The Morning Call from Pennsylvania. “Buried deep among the multitude of numbers in the state Labor Department’s monthly unemployment report recently was this fact: The Lehigh Valley’s work force is stagnant.”
“That’s relatively shocking, considering the tremendous migration of people into the Lehigh Valley in recent years. That migration has been the main driver of the local economy, responsible in part for skyrocketing home prices, high consumer prices and the exploding number of restaurants, retailers and other service businesses that have cropped up.”
“The sluggish work force growth may signal, though doesn’t conclusively prove, that the en masse flocking of people to the Lehigh Valley from New Jersey, New York and the Philadelphia region has ended.”
“The slowdown is something real estate agents have noticed for months. ‘We have seen it in the trenches, that migration has slowed,’ said Clay Mitman, president of an Easton agency that traditionally has had a large portion of clients moving from New Jersey.”
“Slower housing markets outside the Valley are the primary reason, he said. ‘Two years ago, if someone had to sell their house in New Jersey [to buy one in the Lehigh Valley], you didn’t care because you knew it would take them three days. Now it could take three or six months, or not sell at all.’”
“The number of out-of-state home buyers might have started going down as early as summer 2006 when gas prices spiked, said Mark Molchany, president-elect of the Lehigh Valley Association of Realtors. ‘When gas hit $3 a gallon last summer, it was like somebody closed a door,’ he said, adding that repeated media reports about a slow housing market scared a lot of would-be sellers into staying put.”
Bloomberg reports on New York. ” The cost for 30-year fixed-rate jumbo mortgages, those exceeding $417,000, has increased more than one percentage point since March to about 7 percent, data compiled by Bankrate.com show. August rates were the highest since December 2001.”
“Prices may start to drop in the New York City metropolitan area beginning in the fourth quarter of this year and continue falling 1 percent to 7 percent per quarter through 2008, according to estimates from economist Mark Zandi.”
“Meghan Fajardo of New York City ran through two mortgage brokers and multiple lenders as interest rates rose to more than 7.25 percent from 6.25 percent for her $680,000 condominium in the Windsor Terrace section of Brooklyn, New York.”
“Fajardo closed on the 1,100-square-foot apartment on Aug. 9, agreeing to a 30-year fixed-rate loan at 6.875 percent with terms that call for her to pay interest only for the first 10 years. She initially planned to pay down the principal too. In the end, that would have been too expensive.”
“‘It was a shock to me,’ she said. ‘I wasn’t really following the market that well.’”
“Four business days after the loan closed, the same mortgage Fajardo got from Countrywide had a rate of more than 8.5 percent, said Robert Raush, her broker in Manhattan.”
“In East Hampton, New York, real estate broker Diane Saatchi of the Corcoran Group just dropped the price on a four-bedroom classic 1910 house to $2.2 million from about $2.6 million. She had been trying to sell it for 10 months.”
“‘People are adjusting their dream prices back to reality,’ said Saatchi. ‘If they want to sell in this market, they have to drop the price.’”
The New York Times. “During the recent boom the best indicator of value became ‘what houses are selling for’ — another variation, in other words, on the greater-fool theory, which holds that commodities are worth only as much as someone else will pay for them and that someone (a greater fool) will always be willing to pay more than the last buyer.”
“To anyone who shopped for a home in a booming metropolitan area over the past few years, though, this was also the defining conundrum of the era: an apartment or house couldn’t possibly be worth the stratospheric asking price — but then again, maybe it could. Wouldn’t that have to be true if six bidders were considering buying it?”
“In New York City, builders are finishing about 30,000 new units a year, which is one and a half times the rate at the start of the boom. Logic suggests that so much new housing, along with tighter credit markets, will dampen both supply and prices.”
“My friend Jim, who lives in Brooklyn and whose house has appreciated to about seven times what he paid for it in 1994, recently told me about watching a house-hunting show on HGTV with his 10-year-old son. The episode featured a couple who had $435,000 to spend on a good-size house.”
“My friend’s son shook his head. ‘No way,’ he said. ‘That’s just wrong. You can’t get a house for $435,000.’ Well, not in Manhattan or brownstone Brooklyn. At least not anymore. And at least not yet.”
‘Some 4.52 percent of mortgage borrowers in New York State were behind in their mortgage payments in the second quarter of 2007, up from 3.86 percent from the same period a year ago, according to the Mortgage Bankers Association. Some 1.35 percent of loans were in foreclosure, up from .94 percent from the second quarter of 2006.’
Goofy friend of mine with more money than brains (a real estate attorney!), despite already being on the hook for two houses in Dallas, is heading to upstate NY in a few weeks (Adirondacks) to overpay for a “vacation” house there. Ludicrous.
Having just spent a few weeks in the Adirondacks looking around at the stupid prices there, I can second the notion that he is overpaying. They definitely have not gotten the memo yet on the housing crash.
1/2 acre lots with 120 ft of waterfront with a 60 yr old camp on it for 1.7million. Yeah, sure.
BTW, Here is the Mike Morgan report!
http://www.treasure-coast.us/weeklyupdate09-09-07
good reading, will the last homeowner in Florida please turn out the lights, upon leaving?
Despite Governor Crist’s threats to control the insurance industry and all of the other homeowner insurance nonsense coming out of his office, Nationwide Insurance is one step closer to leaving the State of Florida. They just announced dropping another 20% of policies coming up for renewal. Last month State Farm said it would drop 50,000 policies.
She. Compensating for the fact that she’s 50, fat, never married and never will be.
That should be on a t-shirt.
Ouch.
However, i noticed a trend amongst some yuppies in the seattle area. They have nice (over-paid for) houses where they continue to make improvements. However, they dont seem to have joy from the outcome. What good is it to have a fantastic kitchen, living room, and you are really not having fun?
Hopefully she doesn’t read this blog.
“‘It’s not a bad market, it’s a market that’s trying to correct itself,’ Symington said. ‘History runs in cycles, and so does real estate. This is probably the best time in eight years for buyers. It truly, truly is a buyer’s market.’”
I think it’s far from a buyers market in california.Here in arizona I would actually consider buying in some areas on the outskirts.Seeing homes from the 130’s which is not to bad to me.
“It truly, truly is a buyer’s market.”
Rule #1: Never trust anybody who uses the same adverb more than once!
She. Compensating for the fact that she’s 50, fat, never married and never will be.
Are you sure she’s not a cougar ?
he he he
She would be if all the prey were blind.
More like a hippo.
Actually, I would be if I weren’t married. he he
“Comment by txchick57
2007-09-10 08:03:59
Actually, I would be if I weren’t married. he he ”
TX, you know how much us “younger guys” admire you. When you talk about options, it makes my hair stand on end….
I’ve been meaning to ask you chick if you have any single available gal friends who are as intelligent as interesting as you are. Your RE atty. friend obviously doesn’t count……got any other ideas???
–
She needs problems to keep her mind off… And she has money yo buy them.
Too much money is almost as bad as too little.
Jas
“When you talk about options, it makes my hair stand on end….”
You sure thats h\your hair you’re talking about?
does that include the mold ?
homes in upstatew are free ,but the taxes and utilities are incredible
Thats all they need up there is a few more sneaker wearing fools from NYC.
I think it is good for such people as your goofy friend existing, because they prevent the housing market from crashing too hard.
NYC goofballs won’t stop the crash.
“A sampling of price reductions in the area includes: as much as $81,887 at Hidden Pines and Oak Manor in Egg Harbor Township; as much as $60,000 at Manors at Freedom Hills in Barnegat Township; as much as $106,609 at Tides at Seapoint in North Wildwood; as much as $51,000 at Four Seasons in Galloway Township; and $43,000 off the last home available at Four Seasons at Mirage in Barnegat.”
Dropping prices like a stone at this juncture merely tells the public that you’ve got (financially) damaged goods, nothing more.
Dropping prices when they are still far above traditional mortgage guidelines doesn’t move the goods either. Its going to take some time before J6P realize he must pay off the credit cards, live within means, and actually save a down payment!
Until then, its just schadenfreude.
I think there is a lot of stress out there. Coworkers are really jumpy and yet we’re at a stage of the project everyone should be excited about!?! Quite a few FB’s will be saved though; if you want to work 50% overtime, everyone can be shifted to a position that offers it. What a way to live… (I’m staying 40 hours/week… ok, another 8 casual overtime, but I’m not signing up for six day workweeks… when I know I’ll be mandated to in six months. Cest la vie. At least they pay overtime to all salary not on bonus packages.)
Got popcorn?
Neil
“Michael Skea, VP of sales and marketing for the New Jersey-southern New York region, said K. Hovnanian discovered two things about the market in the past couple of months. One was that many buyers are selling their house first and then looking for a home they can move into within 90 to 120 days. The other is that pricing the homes correctly ‘dramatically increased the number of prospects visiting a community.’”
I wonder what crack marketing research team discovered this? Lower prices attract buyers? This could change everything!
Holy Cow!!! What in the world?!? I guess this explains why this house has not been sold yet.
http://www.weichert.com/search/realestate/PropertyListing.aspx?P=13692257&cityid=9199&q=chesapeake+beach%2c+md
world’s most expensive house
When taxing authorities get the word that it has sold for a billion dollars, they’re not gonna settle for $233 a month!
The house must go WAY back to fit in those 20 bathrooms.
Toast, is Maricopa this bad? $61 per sq ft?
$239000 Quick Move In + 6 Bedrooms + Super Loft + 4 Bathrooms + 3900 SQFT
http://phoenix.craigslist.org/rfs/418461340.html
That is a pretty good buy I think.Maricopa is really hurting from what I hear.I know you can buy new homes from the 140’s there.
Yep, it’s getting crushed. The Kool-Aid is all gone.
I think this kind of pricing had got to bring up a bunch of immigrants from SoCal, where you can’t even get a double wide for this amount.
It also shows how low the builders can go. Way low.
Actually, that’s just the seasonal AC bill. The actual house price is $600k…
“The number of out-of-state home buyers might have started going down as early as summer 2006 when gas prices spiked, said Mark Molchany, president-elect of the Lehigh Valley Association of Realtors. ‘When gas hit $3 a gallon last summer, it was like somebody closed a door,’ he said, adding that repeated media reports about a slow housing market scared a lot of would-be sellers into staying put.”
Nice segway away from the real problems of real estate.
It’s gas’s fault.
Give Mark a break. Just last year, at the very peak of the market, he and some Realtor friends invested their life savings in the opening of “Power Realty”. Of course, things have ground to halt there, but as I was recently told, next spring is looking up!!!(LOL)
As for the gas price, I’m sure it is factor, a minor one though. I have neighbors in the LV who are driving over an hour each way (on a good day) to ‘work’ in NJ. That really starts to get old, especially when your house is losing value, your (former)home market is losing value, your kids don’t even know you, and the ol’ SUV is sucking up gas like it is going out of style…
After work, when I’m at home (commute distance: 1 mile) with a very cold beer in hand while grilling dinner for the wife, I think of them, stuck on an on-ramp somewhere, knuckles white with hate and fear while cursing the ‘traffic’. I smile.
After work, when I’m at home (commute distance: 1 mile)
ha - you have me beat by a mile and a half! I’m thinking of getting a scooter for the work commute.
I’m jealous! My commute: 70 miles (today was at autobahn speeds…). My wife’s: 3 miles. Sigh…
Note: I’m on temporary duty, so its not worth moving.
Why am I driving so far? Let’s just say the company made it worth my while and I really want more cash for my down payment.
Got popcorn?
Neil
I love the 20 stairs from my bedroom to my basement commute.
Working from home is the bomb.
Got you beat madpiper, I have a laptop an arms length from my bed which I grab after smacking the alarm clock around. Total time is about 4 seconds.
Got you beat, KirkH. My distance to work is zero. I’m retired. (Just kidding.)
“Prices may start to drop in the New York City metropolitan area beginning in the fourth quarter of this year and continue falling 1 percent to 7 percent per quarter through 2008, according to estimates from economist Mark Zandi.”
At max burn rate, your house will be worth bupkis, a little over 13 lucky quarters from now…
I’ve always pitied the Greater-Fool, but sold to them anyway…
“During the recent boom the best indicator of value became ‘what houses are selling for’ — another variation, in other words, on the greater-fool theory, which holds that commodities are worth only as much as someone else will pay for them and that someone (a greater fool) will always be willing to pay more than the last buyer.”
“It truly truly is a buyer’s market” (said Karen Symington of ReMax)
buyer’s market = sucker’s market
I have found that when people say “truly truly” you should start walking 180 degrees in the other direction…
Wouldn’t you bump into them then?
“I’m not Gay! Have never been Gay!” -”I have not had sex with this woman!”
Other examples of statements that are obviously not true.
“It truly, truly is a buyer’s market.’”
At this point when you read comments like this one, you have to shake your head and actually begin to feel sorry for people like this.
No, no, no. All you negative nellies are missing the point! This is the best time to jump off a cliff in EIGHT YEARS! The rocks at the bottom have never been softer!
K. Hovnanian discovered two things about the market in the past couple of months. One was that many buyers are selling their house first and then looking for a home they can move into within 90 to 120 days. The other is that pricing the homes correctly ‘dramatically increased the number of prospects visiting a community.’”
What a dumbass.
Truly dumb statement. But look into the first part, buyers are now waiting to sell their home. THEN they go looking for the next home. That is a HUGE psychological shift from even four months ago. When it goes to sell, rent for 3 to 6 months while looking (what my parents did in 1975), and then negotiating like an A$$, it will be a good return to rational prices. But it will take time.
Got popcorn?
Neil
But look into the first part, buyers are now waiting to sell their home. THEN they go looking for the next home. That is a HUGE psychological shift from even four months ago.
I’m not sure if it’s psychological or necessary. I’d guess most of them don’t qualify for a blanket or wrap-around mortgage anymore.
The New Jersey story: a 4,600 sq ft house at the beach? WTF! On what planet was that EVER a good idea?
Ever watch the Sopranos?
I live less than a mile from “White Caps”. I bike past it several times a week. There are miles of beach houses that size and bigger along the shore here. Here are just a few examples from one town in the area.
http://tinyurl.com/3cx2bz
Got hubris?
I should have noted that the beach house that Tony Soprano almost bought was named (i think) “White Caps”.
I have to admit that I would like to have a house on the beach. Maybe 1500 sf.
Jersey Shore RE will most likely take a harder hit than metro PHL. So you may be able to get a shore house for a decent price.
That’s nothing in Bay Head. To get a house ON the beach, 5-7 mil. And they all have minimum 8-9 bedrooms.
Oh, back in the early 90’s, these houses were going for 800k
Mercury News: Poor us, we need higher loan amounts.
http://www.mercurynews.com/opinion/ci_6850236#recent_comm
I might support that provided the federal government (taxpayer) was taken off the hook for any defaults by Fannie or Freddie.
“Mercury News: Poor us, we need higher loan amounts.”
I’ve got a better deal for the Bay Area other then raise the loan amounts (30yr @ 7% was norm for years); let the government cap the home interest deduction at the gov. $417K jumbo limit. Oooh I love hearing the screams in the night.
In essence the new max value of anything in the ‘burbs in the bay, is now worth not a Cent over $417,000…
“‘In January and early February, there was a psychological malaise, and just when we were starting to overcome it, the subprime crisis arose almost simultaneously,’ he said. ‘Now we’re finding that malaise starting to be overcome again, notwithstanding the number of stories about the terrible state of the housing industry.’”
He speaks as though the subprime debacle came out of nowhere.
Like a big Godzilla peering over the Manhattan skyline.
It started to rain, and right around the same time water began to fall from the sky. Now we are finding that the rain is beginning to be not raining so hard again, nothwithstanding all the reports of water continuing to fall from the sky.
He is full of it. ‘Now we’re finding that malaise starting to be overcome again, notwithstanding the number of stories about the terrible state of the housing industry.’ It has only begun, his company and the rest are not even clsoe to overcoming anything.
“He speaks as though the subprime debacle came out of nowhere.
Like a big Godzilla peering over the Manhattan skyline. ”
I hate it when that happens.
“Statewide, house sales volume this year is running about 20 percent lower than in 2005. Prices at the Shore have fallen about 5 percent or less from their peaks in 2006, according to data from Realtors.”
If true, sales are still at 80% of their peak in 2005, which by any standards is absolutely cranking and prices are within 5% of their peak in 2006 - Also cranking. I am surprised to hear realsotr comlaining as much as they do, unless of course ….. These numbers are nonesense. I know prices can be fudged with “median” stats etc, but is the lases at 80% of the peak true for Jersey?
“Meghan Fajardo of New York City ran through two mortgage brokers and multiple lenders as interest rates rose to more than 7.25 percent from 6.25 percent for her $680,000 condominium in the Windsor Terrace section of Brooklyn, New York. Fajardo closed on the 1,100-square-foot apartment on Aug. 9.”
Windsor Terrace hits close to home. I bought a one-family home there in 1994 for $209K. An identical one had sold for $300K seven years earlier.
“Agreeing to a 30-year fixed-rate loan at 6.875 percent with terms that call for her to pay interest only for the first 10 years. She initially planned to pay down the principal too. In the end, that would have been too expensive.”
The new loan isn’t any less expensive. It is a matter of paying now or later. When I got my 15-year fixed the APR was 7.0%.
Bottom line — that price should be one-third lower at least which, with a modest downpayment, would allow a conforming loan. And it should only be that high because interest rates are lower now.
Agreeing to a 30-year fixed-rate loan at 6.875 percent with terms that call for her to pay interest only for the first 10 years. She initially planned to pay down the principal too. In the end, that would have been too expensive.”
And these idiots are still buying. If you can’t afford the house payment, gee, maybe the house is too expensive for you. If she’s paying interest for 10 years, plus taxes and insurance, it has to be cheaper renting. Plus there’s no maintenance. Interest only loans should be stopped except for construction.
She prolly thinks she is so lucky to have closed four days before the interest rate went up. She does not know this yet, but she was very unlucky to have gone through with the closing. Like you said, she overpaid by at least 200 grand. Better off renting and saving the difference for a down payment a few years later.
Got 10% down?
WaMu Chief Warns of ‘Perfect Storm’
must read this blog
“Chief Executive Officer Kerry Killinger told the Lehman Brothers Holdings Inc. financial services conference today the bank may have to increase its loan-loss provision by $500 million. Previously the bank forecast provisions of $1.5 billion to $1.7 billion for the full year.”
“It now appears that housing and capital market corrections will be worse and longer lasting than even we expected,” Killinger said.”
Kerry Killinger, Killjoy
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVd5WiPryyok
I believe we will be hearing more from Mr. Killinger with similar pronouncements in the near future. Each at bat is worth at least one half billion dollars. Most expensive hitter in the majors.
Got 10% down?
His batting average looks to be at or around the Mendoza Line…
“It truly, truly is a buyer’s market.”
I think you’re really, really full of crap.
Analyst: Fed cut won’t help markets.
http://money.cnn.com/2007/09/10/markets/bc.apfn.liquidity.aheado.ap/index.htm?postversion=2007091008
Pretty much advises to just let this happen the way many posters think it should. Some people should lose their houses and some lenders should fold.
I caught this interesting article from the 9 Sept London Sunday Times. Our worthless MSM would never print this kind of revealing article here in the States.:
business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2412740.ece
“LEADING bankers are warning of the worst crisis in the money markets for 20 years, which will come to a head this week when $113 billion (£57 billion) of commercial paper – market IOUs – comes up for refinancing.
“The huge amount of commercial paper becoming due is the hangover from the crisis in credit markets that began with American sub-prime mortgages. …
“Now, even if they succeed in rolling over some of this paper this week, they will eventually be forced to take some of it – much of which is of questionable value – onto their balance sheets. To meet this potential liability, banks are hoarding cash and have stopped lending to each other. This has created a liquidity freeze. …”
The Dow and the market isn’t going to like this. We should get some screaming headlines later this week. Anyone taking bets on how far the Dow will drop by Friday?
Dow 12,700
A litte off topic, but as I was browsing through Business Week, it had an article in which Fed governor Mishkin was endorsing aggressive interest rate cuts to help stem the tide against housing price deflation. This got me wondering why so much concern about putative housing price deflation, but seemingly no concern about the housing price inflation over the past 6 years. I then recalled my father explaining the concept of owner’s equivalent rent and how that was the metric the Fed used to compute the CPI. During the run up, that metric barely nudged up and if someone looked closely, I would dare to guess that it hasn’t decreased substantially as housing prices are coming down. Any one asking this question in the MSM to the powers that be? They can’t have it both ways, disregarding the elephant in the room while they ride it on the way up and then crying for mercy when the elephant is stomping on their face on the way down.
but seemingly no concern about the housing price inflation over the past 6 years
Because the system is rigged so that politicians and the REIC benefit most from *rising* prices, not *falling* prices. When prices are rising, property taxes rise, which gives politicans even more money to waste and pass out favors/kick-backs. Rising prices also creates a sense of urgency among buyers, as they are afraid of being “priced out forever” or missing out on all that “sweet equity”. The resulting bidding wars/higher sales prices + higher sales volume = bonanza for agents.
They can’t have it both ways
Sure they can. After all it’s not *their* money –it’s yours.
You sure are cynical.
You say that politicians benefit most from *rising”, not *falling”, prices. However, if homes are now commoditized like any other consumer good (i.e., computers, cell phones and the like), then should the government step in to stop any price decreases in those markets? States won’t be collecting as much sales tax from the reduced prices (or similarly, reduced property taxes from falling home values). It seems that in the end, the number and relative % of commodities bought always turns out to be a zero sum game. Every commodity market wants an ever increasing share of the AGI pie. More pie anyone?
WOW! Just wow.
http://money.cnn.com/2007/09/10/markets/bc.apfn.liquidity.aheado.ap/index.htm?postversion=2007091008
NEW YORK (AP) — A widely watched banking analyst said late Sunday the best solution to the crisis plaguing financial markets is to let cash-strapped borrowers default and their lenders go bankrupt, rather than slashing interest rates.
Punk Ziegel & Co. analyst Richard X. Bove wrote in a client report the hoped-for cut in interest rates this month will do nothing to bring money back into the U.S. financial markets. Instead, Bove said, lower interest rates will send the dollar into a tailspin and wreak havoc in the job market.
“It is illogical to assume that holders of cash will have a strong desire to lend money at low rates in a currency that is declining in value when they can take these same funds and lend them at high rates in a currency that is gaining in value. By lowering interest rates the Federal Reserve will not stimulate economic growth or create jobs. It will crash the currency, stimulate inflation, and weaken the economy and the job markets.”
We may see the scenario play out. In fact, once net savers figure out that they aren’t going to get the lousy rate of return on U.S. assets they agreed to settle for, the FED may not be able to cut interest rates by cutting interest rates, the “condundrum” in reverse.
Look at the 1970’s. Volker had to get it under control and what did you see? Super High Interest rates. That’s what finally fixed the problem.
Maybe the FED needs to raise rates, not lower them.
foreign cd rates
dollar= dodo
http://www.everbank.com/001WorldCurrencyCDSingle.aspx?LinkID=Body1
I guess if you can’t make money tricking people in mortgages..you can make money tricking…
http://wcbstv.com/topstories/local_story_252232548.html
I _know_ there are people on this blog who predicted this sort of thing would happen to RE-types when the bust set in. Personally, I figured they’d end up on the “labor” side of the equation, rather than “management”…
“I’m in shock,” she said, “because these people were business people. I can’t believe they would be involved in prostitution.”
LOL that is all I have to say.
L O L
Hey TX, I hope your gonna loose some money on your CFC stock purchase. I mean that in a nice way as I am shorting it still.
On the house front, my mrs agreed to continue renting where it looks like we can get a great 4 bedroom house from a work collegue of hers. They are a looking for house sitters while they do a 2 year work assignment in Brazil.
The Morning Call? Allentown? Lehigh Valley?
Give me a break. The Lehigh Valley hasn’t had a ‘job boom’ in the last 35 years *at least*. Mack Trucks left 30 years ago. Bethlehem Steel was booming in the 1930’s. AT&T was strong in the 1950’s. Lucent was only ever a sick joke in some CEO’s mind. The Lehigh Valley never actually recovered from the Depression, to be honest.
Anyone who paid more than $200,000 for ANYTHING in that area has a lot more to lose than anyone with a home in New Jersey and New York. The Lehigh County/Northampton County area has been poor for the last 250 years. And before that, it was filled with Indians. And they never cared a whole lot about real estate, either. And like I’ve said before, the Lehigh Valley isn’t actually a commutable distance from NYC — you’d be better off living in Slouchville up in Rhode Island somewhere.
Good luck, people.
Kind of funny. My wife is from Rural Northeastern PA. I went and visited her folks over a year ago. You’re right- there was seemingly nothing there in regards to a sustainable economy, but there were an awful lot of huge Mcmansion style houses with people commuting 2-4 hours to NYC EVERY DAY.
It makes you wonder if anybody making the decision to live that far out ever stopped to think about what they were doing to their quality of life just for a house. Beautiful countryside though.
You are dead right. I live in the Lehigh Valley and watched this bubble go crazy. Anyone who purchased a home between 1999-Present is basically, SCREWED! They overpaid 60-75% easily. Mark my words prices will be 1996 levels or before by the time this is over with.
These foolish commuters were suckered into the pyramid scheme like allot of other foolish people. Anyone who didn’t realize after the 1st year we had double digit growth of real estate prices, especially around here where there are no jobs too sustain that level (average family income is around 37k) average people can’t afford it. Correct me if I am wrong but geoprahically our location has stayed the same. If it wasn’t for a bigger bubble in NJ & NY these commuters would not have moved. They tried this in the poconos and prices jumped the same but feel back to pre boom prices real quick, remember, “WHY RENT” campaign? All that’s left up there is horrible gang infested schools and crime in a once beautiful place. Now it’s just a wooded Allentown or should I say little puerto rico?
One more thing, why buy a home you can’t enjoy? When you are driving 3-5 hours a day commuting and work say 8-10 hours that leaves you with 9 hours left. What kind of life is that? Tell you’re wife too find a boyfriend and the kids too find a surrogate father because you won’t be there. When you add the cost of needed a newer car (payment) say $350 a month then at least $700 -1k for fuel and oil changes(1 or 2 a month sometimes) you could have put that into a mortgage and stayed home. That’s another 200k in loans, how foolish these people must feel once they realize the commute sucks, house is now worth less than when purchased and the wife and kids don’t even remember you?
My in-laws live in the Lehigh Valley, used to go on and on about what houses are selling for in their neighborhood and the “upscale” stores that they were building there. What a laugh - their neighbors are all “upscale” blue-collar workers commuting 1-1/2 hours to NY, may, I would bet, losing or about to lose their shirts on the houses for which they overpaid. What goes upscale, must go downscale. There goes my wife’s inheritance, lol.
“Fajardo closed on the 1,100-square-foot apartment on Aug. 9, agreeing to a 30-year fixed-rate loan at 6.875 percent with terms that call for her to pay interest only for the first 10 years.
A ‘fixed-rate’ loan that calls for interest only in the first 10 years IS NOT A FIXED-RATE LOAN!!! JEEZ!!!
Talk about false advertisement.
A true fixed rate loan has a payment that NEVER changes thru the life of the loan.
““But the house has been for sale for nearly two years, though Errico has cut the price to $1.495 million, from $1.69 million. “”
Who would buy a $1.69 million dollar home two blocks from the Jersey Shore? Oops, I guess nobody, and it looks like they won’t buy one for $1.49 million either.
Bay Head is a private beach and one of the best in NJ. HOwever, I agree that that’s a little too much
“That led to the first companywide sale. ‘It has taken quite a while to determine the right pricing for each community, but now we think that we’re there,’ Skea said. ‘I believe the right pricing will drive this event.’”
Prospective buyers at said event will determine whether or not Hovnanian has achieved the ‘right pricing’. Anything else is hot air and propaganda.
“‘In January and early February, there was a psychological malaise, and just when we were starting to overcome it, the subprime crisis arose almost simultaneously,’ he said. ‘Now we’re finding that malaise starting to be overcome again, notwithstanding the number of stories about the terrible state of the housing industry.’”
Yes, it’s that ‘mailaise’ thing (paging Jimmy Carter…?) that’s impeding sales, not those troublesome nuisances like imploding credit markets, exploding foreclosures or overextended borrowers. And the timing of the ’subprime crisis’ is pure coincidence. Once we overcome that ‘malaise’ thing and the press starts reprinting our puff pieces verbatim instead of all those annoying ‘facts’, we’ll be right back to 20%/year and brisk sales again.
“Housing Market Slump Forces Couple To Open Brothel”
So. Life imitates art?
http://media.movieweb.com/dvd_art/full/54/100154.jpg