Buyers Don’t Feel The Price Is Right
A report from the New York Post. “Mayor Bloomberg provided the answer yesterday to the question that’s on a lot of New Yorkers’ minds: Are housing prices here going to drop? Yes - with an important qualifier - was the mayor’s assessment. ‘I think you can expect real-estate prices to fall,’ he said. He added, ‘We’re part of America and what happens in the rest of the country’s economy is going to have an impact on our economy.’”
“The mayor pointed to new data released this week by the MLS of Long Island, which reported that the median sales price of a home in Queens dropped last month to $446,000 from $480,000 in the same period last year.”
“Jim Walker, a 30-year veteran of the real-estate industry, said prices have indeed fallen in Queens, but not as much as in Nassau and Suffolk counties. Walker suggested the downturn would bring the city’s overheated property market back to reality.”
“‘It’s an adjustment we have to go through because the market was artificially inflated,’ he said. ‘We’ve experienced appreciation [in some areas] of 25 percent a year. That’s not normal.’”
From Newsday in New York. “The number of Long Island homes for sale grew by 7.6 percent, but it was the smallest increase since the boom began deflating in 2006 and houses piled up on the market, according to the third-quarter report commissioned by Prudential Douglas Elliman.”
“Considering that inventory went up by 75 percent two winters ago, the latest figure may be a tantalizing indicator of more stable times. ‘It’s still a little early to see if it’s an upturn,’ said Jonathan Miller, executive VP at Radar Logic, which compiled the report, including data for Queens.”
“Dottie Herman, Prudential’s CEO, saw the slower growth in inventory as a sign that more sellers are lowering prices to reflect reality. ‘Buyers are out there,’ said, ‘but they’re not buying, because they don’t feel the price is right.’”
The Brooklyn Daily Eagle from New York. “Prices were cut on 15 of the 230 new condo projects in Brooklyn within the last two months in neighborhoods like Park Slope, Williamsburg, Downtown Brooklyn and Dumbo, and more reductions could come as thousands of recently-constructed units compete for buyers, according to the New York Times.”
“Absorption rates have also increased, according to David Maundrell, president of Williamsburg brokerage AptsandLofts.com, who said a 55-unit building there may take 14 months to sell out as opposed to eight months a year and a half ago.”
“Greenpoint and Williamsburg have 2,274 apartments under construction and another 9,571 in the planning stages, according to the Times, and Joe Chan, president of the Downtown Brooklyn Partnership, has said there are 14,000 units in the works in Downtown Brooklyn.”
“In Park Slope, Brooklyn Heights and Fort Greene, experts seem to agree that, generally, buyers are gaining leverage in Brooklyn as more units come on the market.”
The Boston Globe from Massachusetts. “Massachusetts will impose some of the nation’s most stringent regulations on the mortgage industry in an effort to curb practices that have led to record numbers of foreclosures.”
“Lenders and brokers will be prohibited from arranging loans that they do not have a ‘reasonable belief’ the customer can repay, using available information about the borrower’s financial circumstances to make that judgment.”
“‘There’s been mortgage after mortgage where there’s clearly been no ability to pay,’ she said, citing one example where a borrower had a monthly income of $1,800 and received a loan with a monthly payment of $7,000.”
“‘It cries out for some reasonableness here,’ she said.”
“‘If these rules were in place five years ago, I think it would have gone a long way toward preventing some of the horror stories that we hear happening in the marketplace now,’ said Representative Ronald Mariano, awho chairs the financial services committee and has helped shepherd the bill.”
The Street.com on New Jersey. “The subprime mortgage crisis that dragged the country’s housing market down this year hit our family’s pocketbook in a big way. How big? We came up $140,000 short of our expectations.”
“Our perceptions of property values during 12 years as homeowners were guided by the unrealistic frenzy of a hot seller’s market. But a surprising development unfolded after listing our home in West Windsor Township, N.J., in April: nothing.”
“We had braced ourselves before listing our house in a sagging real estate market, knowing we’d have to lower our expectations about the sales price. That didn’t stop our stomachs from churning, however, when we finally agreed to a sales price that was substantially lower than where we started.”
“Our desirable town was a hub for corporate transferees, attracted by its top-rated schools and proximity to New York City commuter trains. The nation’s economy wouldn’t affect us as much, we reasoned.”
“The sea of for-sale signs in our community should have been a warning sign. Comparable homes we visited in order to price our own competitively had already been sitting for weeks.”
“Price proved to be what ultimately mattered in this market, as perhaps in any market. The small upgrades that real estate experts suggest owners make to enhance a home’s appeal were also irrelevant. Prospective buyers didn’t seem to notice the shiny cabinet hardware or new ceiling fan.”
“The most difficult part of selling was absorbing how quickly and drastically the market was falling, from soft in April to historic lows within a few months.”
“Our home’s value peaked at over $800,000 in 2006, nearly twice what we paid seven years ago (even we had commented on the absurdity of the home being worth so much). In that context, letting it go in the high $700,000s seemed fair. But we lowered the price another $25,000 after a few weeks passed with just a trickle of interest.”
“The process wore us down, enough to tolerate a second price reduction, down to $749,900. But interest, not offers, was all we attracted as the ‘resale inventory’ (other homes for sale in the same price range) ratcheted up to 15 in our community.”
“Some neighborhood houses, meanwhile, finally sold in the $680,000 range, the first scary indication that we’d have to let the house go for less than we imagined. Our bottom line sales price of $725,000 was slowly slipping away, we realized, as we lowered the price yet again.”
“The chance to unload our house, for $650,000, finally arrived in August. Even our buyers claimed to be hurting, falling stock prices consumed a chunk of their anticipated down payment, necessitating a low offer, they said.”
“We’ve moved on, to a different state with lower property taxes and real estate values. Friends who asked if we bought a bigger house were surprised that we did not, another choice that helped us make the most of the cash that we managed to net from the sale.”
“We had braced ourselves before listing our house in a sagging real estate market, knowing we’d have to lower our expectations about the sales price. That didn’t stop our stomachs from churning, however, when we finally agreed to a sales price that was substantially lower than where we started.”
Boo friggin hoo for you. The winage hurts my skull.
“Friends who asked if we bought a bigger house were surprised that we did not, another choice that helped us make the most of the cash that we managed to net from the sale.”
The beginnings of a return to sanity?
I don’t know. They jumped right back in at the height with no bottom in sight. They traded falling knives. Lower values don’t necessarily mean better deals.
She seems to be walking the line between bragging & whining pretty well - Even ends with a little laugh about her new yard.
She bought the house 7 years ago for around 400k, sold for 650, netted 250k tax free. And her complaint is what, exactly?
her complaint probably is about how that 250k is already spoken for. I’d wager that there is debt.
I see debt people everywhere.
I’m in agreement Catherine. I think there may be a few exceptions but generally speaking most are up to their eyeballs indebt a ‘la Stanley Johnson in that commercial. One notable exception…. I work with dozens of unionized construction guys and you’d be surprised how frugal many of them are. For the most part, the 30something and up are very careful with money. I don’t see that tendency with other folks.
Skilled union labor usually isn’t dumb. If they were, they’d be working dead-end retail or as construction scabs or cooks or whatever. Also, people don’t expect them to spend big, so it’s easy for them to live frugally. Ditto with their wives and children.
No, she specifically says that they didn’t do that. Further, she says they moved to a less expensive region and didn’t go hog wild with a McMansion, so that they could bank a lot of the profit. I’m sure it was distressing to have to keep lowering the price, but in the end she seems to have a pretty good attitude, I’d say.
Jeez… you made the effort to offer your retort on this same thing in two different threads. Is the broad in the article your wife??
I don’t really see any whining or complaining in the article. If any of us had been in that situation, we would consider ourselves fortunate to have cashed out prior to a crash. I say “kudos” to those that are smart enough to realize that prices are going down and cashing out while there is still significant profit. I’d bet that 99% of the people on this blog would do the same in their situation.
Be thankful and not greedy when you are blessed.
“…that 250k is already spoken for.”
“I see debt people”
LMAO
my thoughts exactly… geez… $250K profit in 7 years, boy things are really out of wack.
So her house went up 63% in 7 years instead of the normal 14-21%. What the h*ll is she whining about. That’s a lot of profit.
I agree. We made good profit on our home, moved to a better area and paid less than we would have if we stayed in our old state..However, we have had people move, upgraded to a unaffordable home and it was a complete waste. Here your dollars go a long way. Had my mom’s neighbor move to NC with a “but I need a million dollar home because I already live in a million dollar home..” mentality… Well that million dollar home is worth about $800K and the million dollar home in NC is up for sale.. I mean really like you needed a million dollar home in NC???
Classic loss-aversion psychology. She had already mentally “booked” that $400k in gains and despite experienced a phenomenal effort-free 63% profit just for holding an asset 7 years, she views it as a “loss”. This provides a perfect example of why many sellers refuse to lower their price (until they have to).
Exactly. Imagine if this couple had found a mutual fund that paid a steady 7% after taxes for seven years. They’d be all over themselves with what financial geniuses they were.
I get to see our Jersey friends in a couple weeks. It should be sweet. It was at their house over Christmas that I almost got in a fistfight with their neighbor. The loudmouth jerk, and yes he is a loudmouth jerk, gave me the “my house is worth so much money” bulls–t and then told me, “you’re throwing your money away on rent.” I wonder how much bragging he is doing about his home value now. His house in a down market will be almost impossible to sell. It has a hill that 98% of all buyers will dismiss immediately. Bwahahaha, fat boy, good luck with your retirement plans.
Don’t forget to throw in the gratuitous “you’re still throwing your money away on a depreciating house?”, and “sell now or be priced in forever”, and “you can always refi the interest rate but never the principal”, and “I’m buying a new Lexus with all the money I saved by renting”.
And… you might want to wear some body armor
.
“Our desirable town was a hub for corporate transferees, attracted by its top-rated schools and proximity to New York City commuter trains. The nation’s economy wouldn’t affect us as much, we reasoned.”
J6P mentality - this downturn only affects everyone else.
My take is the 19% off the peak in this case pretty much reflects reality.
Unfortunately, there’s probably another 20% to go….
Not in Suffolk and Nassau Counties. There is more like another 40% from where we are at.
Don’t see it yet…maybe 20%
Quote:
#####
““We’ve moved on, to a different state with lower property taxes and real estate values. Friends who asked if we bought a bigger house were surprised that we did not, another choice that helped us make the most of the cash that we managed to net from the sale.”
Notice the last sentence: “we managed to net from the sale”… S.O.B is making some money from the house that they had lived in. And they freaking whine… Man, why do God let people like this alive on this Earth ? This is an affront to the value of mankind !
Exiter;
Boo friggin hoo for you. The winage hurts my skull.
You’re killin me!! ROYFLMAO
:):):)
–
‘Buyers are out there,’ said, ‘but they’re not buying, because they don’t feel the price is right.’
It was the psychology of sellers that led to the run away price bubble and now it is the psychology of sellers that will lead to protracted decline in prices.
Jas
Fear and Greed are the dominant emotions in almost all people. And when you think about it, greed is just another form of fear - the fear of missing out.
“Fear is the mind killer”
Fear is what you make of it.
“greed is just another form of fear”
I thought that fear was just a form of ‘anxiety’.
So does that mean that greed is just another form of anxiety?
Give these sellers some valium.
“Fear is the little death”
I love that novel… Frank Herbert’s Dune for all who don’t recognize it. One of the best space operas ever written.
“It was the psychology of sellers that led to the run away price bubble”
Wrong. It was the spychology of the seminar indoctrinized BUYERS that led to the runaway price increases. Once that had been going for a while the media blitz began for existing “owners” to pull out “equity” through HELOCs. The majority of buyers have been the driving force in this bubble. It’s just that on the way up a major portion of them were speculators, meaning ordinary people who purchased payed way too much. But nobody made them. Now on the down side buyers are still driving things - it’s just that “owners” are screwed and can’t come down on their asking price because they owe way more than the house is worth and have no cash reserves to pay the difference. But don’t mistake low sales volume to mean buyers aren’t in the driver’s seat.
‘Buyers are out there,’ said, ‘but they’re not buying, because they don’t feel the price is right.’
No jerk, they don’t qualify anymore to buy. Their incomes are too low for your house prices.
I thought the definition of “buyer” was “one who bought”.
I think he needs to rephrase that to “potential buyers, who might buy if they could get financed”
What are the new terms, 110% down, 30% interest with a credit score of 2000?
“‘It cries out for some reasonableness here,’ she said.”
Reason isn’t always a fellow traveler with Ableness…
Been doing an unscientific check of craigslist for many months now — using search term “sale” and then “reduced” for nyc and nyc-area listings.
Numbers in April 2006 measure around 3,000 “sale” and 300 or so “reduced”
Just yesterday, “sale” and “reduced” searches yielded over 9000 and over 900, respectively -three times the amt of listings in April 06
What may be happening here is what happened in Fla about 6 months ago — listings are ballooning, with no hugely significant price cuts (a lot of listings seem inflated on purpose, because they know buyers will ask for deep cuts from the start)
But with this much inventory pouring in, and loan money tightening significantly — it’s just a matter of time - months possibly-before resistance to large price drops ends. The disparity between median income and house prices is enormous here - specially in the boros. There’s no other way to sell houses now.
Housegeek, I have been following the rental listings on Craigslist in the Sacramento area. The number of listings for SFR housing is up 100 to 125% since April 2007. Prices are all over the board (just like for sale inventory), but the properties that are renting are the competively priced houses.
I believe it will be 2 more years of downward pressure on rentals and sales in this area. We are seeing “price reduced” listings on the rental side.
Jingle, good point about rentals - I’ve also been noticing an increasng # of new luxury condos that have apts for rent. I predict this will happen faster as more of these come to market -there just aren’t enough qualified luxury buyers in the city to support high-priced condos. What amuses me from my Brooklyn perspective is that condo owners are trying to get 4000-5000 per month for rentals. Good luck finding and keeping such a tenant at that price in this market…with such strategies, our windows in NYC will get just as dark as those Miami high-rises
I like searching the word “desperate” on Craigslist RE. The # of these listings have SOARED over the past year!!
–
“Massachusetts will impose some of the nation’s most stringent regulations on the mortgage industry in an effort to curb practices that have led to record numbers of foreclosures.”
Yes, yes, we know the routine — Close the barn door after the cattle is out. Ain’t the system great.
Jas
Jas;
I was thinking the same thing. Where were these dip weeds when all this stuff was happening?
She also said “Lenders and brokers will be prohibited from arranging loans that they do not have a ‘reasonable belief’ the customer can repay, using available information about the borrower’s financial circumstances to make that judgment.”
Wow, cutting edge financial strategy for Mass. Mortgage Brokers!
Thats your state govt, looking out for you. I’m gald I live in Florida where only people that can afford it were given mortgages.
“We’ve moved on, to a different state with lower property taxes and real estate values. Friends who asked if we bought a bigger house were surprised that we did not, another choice that helped us make the most of the cash that we managed to net from the sale.”
Waaaah!! - You still made $250,000 (gross) in 7 years…
Yeah, but you need to deduct the cost of the new cabinet hardware and the new ceiling fan…
Those are some interesting developments in the NY area.
It is only the start. There will be years of bottom calling and hand wringing. These people are leveraged like almost no other area. Destruction is on the way and these dumba$$es don’t realize, or can’t let themselves realize, the true nature of this beast. Pass the Jack Daniels. The CityBoy is thirsty.
“Buyers Don’t Feel The Price Is Right”
Somebody get Bob Barker out of retirement, Stat!
I don’t FEEL anything other than contempt for the REIC and all its brain dead participants. I do THINK and CALCULATE that prices far outstrip underlying value.
“The price is wrong, b***h!”
/Adam Sandler
A lot of spam this AM. Please check back if you have trouble posting.
Ben,
Is there any pattern to the spam?
Listening to Bloomberg this morning, I’m thinking the bulls have a few reasons to want to silence us bears.
Seriously, we’ve gone past the point where I entertain counter arguments that homes could go up. How many days in a row does J6P need where stocks go down due to the housing market before he realizes the housing market sucks.
Got popcorn?
Neil
The 60 second patch we put in stopped 95% of it, so if I see a lot now they must really be pushing it at us. Still, spam hasn’t knocked a server out since the fix, so I’m not worried.
What makes you think j6p even knows what the stock market is?
As stated above, to J6P the stock market affects everyone else. On 9/11 I had a conversation with a colleague (college educated, btw) who said “who cares about NYC, it won’t affect us here”, and he returned a blank stare when I said to think about the stock market and economy. Again - it only affects everyone else (until it affects you).
Spam is desperation food, and the Spam they’re trying to pull, is just as desperate.
I once met a former KGB agent (the USSR was still around). He told me that spam was the favorite food of the masses there. He called it ’spam meat.’
Karl: [Eating potted meat] I reckon it tastes alright.
my health kids are doing a project on food groups and one of the kids asked if spam was meat… I told her I didn’t really know… it looks like meat
Spam is made by Hormel. They are based in Austin, MN. In Austin they pronounce Hormel like “normal”. The Hormel strike in the 1980s was probably the most bitter and violent strike in Minnesota history. That’s what I know about Spam.
Treet sucks!
hotairballonguy,
This may provide an answer for your health kids about spam. http://www.cusd.claremont.edu/~mrosenbl/spamfaq.html
Ben
Oddly, spam is also a big favorite of the locals in Hawaii. I grew up there and most places, spam was one of the choices for breakfast meat - along with the usual sausage, ham, bacon. I used to love having a spam musubi (riceball) for lunch at the beach. Still trying to figure out if there’s a connection between Hawaiians and the KGB though.
Careful…
Cagey B is listening, Comrades
Raw Spam with a piece of pineapple and a Ritz cracker. It is really good. No joke!
My mom would sprinkle brown sugar on the slices of Spam add a piece of pineapple and heat it up in the oven. One of the few things all of us kids loved to eat.
“…(the USSR was still around). ”
It still is. A rose by any other name…or in this case manure pile.
I eat spam meat almost every day at lunch. Costs $15 for 8 cans at Costco, lasts for a couple of months. Me being Russian probably explains it (please note that I don’t have an affiliation with KGB).
Max, I give you a lot of credit. But then again, every Russian I’ve known has been a real tough cookie.
Eating Spam makes you tough? Maybe if you suck the slimy yellow juice from the top of the can but not just eating Spam. It’s the 30 below zero (Fahrenheit) that makes you tough. Spam is just a bonus.
Chuck Norris eats spam.
Always wondered what that slime is, could never figure out. Maybe gelatin?
About subzero temperature and toughness - when I mention here I’m from Siberia, it sends chills down people’s spines, but the joke in Russia about the Siberians is that it’s not that we are tough, it’s just that we wear warm clothes - which is true. I remember when we moved to California (Bay Area), I was trying to fit in by wearing t-shirts and shorts in January, and people, seeing my blue lips in the morning would wonder how come I ain’t so tough. I had to explain that it’s all a hoax, and we just wear fur coats, etc.
I smeared spam all over the front of my house hoping it will bring good luck with the sale. The two dozen St Josephs that I buried just aren’t doing the trick.
Max,
I got the impression from the Russian foreign exchange student my daughter dated in high school that Siberia was a pretty boring place and they mostly drank a lot and kicked a lot of @ss. Is it true?
Chuck Norris eats spam.
ha ha, no aladin, it goes like this:
Spam doesn’t eat Chuck Norris; Chuck Norris eats spam.
I can just imagine him sneaking up on a potted meat.
Wickedheart,
drinking and kicking @ss - yes, but it wasn’t that boring. But I grew up in a big city, so that might be different.
The Spam connection between Hawaii and Russia is World War II. The U.S. shipped lots of food to the Soviet Union since the Germans occupied the best farmland in the USSR. Hawaii got Spam because it was headquarters for the US Pacific fleet.
Worth $400K in 2000, then worth perhaps $500K in 2007. The $800K was an illusion to everyone who didn’t sell at the peak without buying something else at a similar inflated price.
They didn’t lose $150K. Some knife catcher lost $150K.
“Our desirable town was a hub for corporate transferees, attracted by its top-rated schools and proximity to New York City commuter trains.”
Yes, it is near the last stop on the commuter train, and ideal for those willing to make a 2 hour commute. Many of those living in the area do so because one spouse works in NYC and the other in Philly, a mere 90 minutes away by commuter train. And some work at office parks in the area, which was rural until a 1980s boom and now has absolutely hellish traffic after a development boom that overwhelmed the infrastructure.
I once commuted an hour each way. Never again.
Heh, I just turned down a job offer with a 90 minute commute one-way, 45 minutes driving, 45 minutes on the T. Cool company, six figure salary plus bonus, but I would have gone from a 15 minute commute round trip to 3 hours round trip.
I did that long commute for 4 years in my late twenties… now that I have family/kids, the extra money just doesn’t seem worth it.
agreed. you can always make more money later in life but yer kids only grow up once.
being a parent is one of the most wonderful things that has happened to me & no amt of money can ever tempt me to
to trade my precious time for some high priced job that robs me of their youth.
and I’ve had offers. plenty of em.
no thanks.
I moved my office to my personal residence 15 years ago…My commute is about 40 feet…Best move I ever made….
My commute’s shorter than your commute ;). At most, it would be 30 feet.
lol @ “shorter”
Seemed for a while it was a badge of pride to drive a long ways - I worked with people bragging about driving 2 hrs each way in a V8 truck. They are pretty mum now, or have traded for small car. Either way, commuting is a race to the bottom. It’s 1.1 miles for me 3 days a week.
Why do I have such a hard time explaining that to people? I talk to those who plan on doing 1, 1.5, 2 hours each way with a new job (or do it already), and say “what are you, crazy?”. They always insist that they “have” to do it.
Since when do they have to? That’s the most ridiculous thing. Nobody has to do anything. Live near work is one of my principles.
Anywho, keep commuting those long distances, suckers!
“Live near work” — easily accomplished if one is a renter! but homedebtors who change jobs have a problem.
I sold my 5br home and left my corporate job in St. Paul, MN to move to CA. Got here and wanted to live on less, keep my savings, and pursue hobby/sport
Got a job doing the sport i love, put a LARGE uh, TRAILER at the airport in the IE, and my commute is 20 feet (plus a ride to altitude of 12,500 feet) I will buy again, but for now, the difference in rent money pays for my training, and I can wait it out, and not blow my savings in a piece of crap in the inland empire!
Yep, these are the kind of people who show up at work with a cold/flu, because they ‘don’t want to let the side down’.
Stay at home and come back once you’re not infectious, eedjit.
Ben, at least half my co-workers travel 45 minutes or more. Some commute up to 2 hours each way. There is no job worth it. This city is full of morons that will sacrifice their quality of life for a buck. I’d rather bus tables and eat Spam (all Minnesotans like Spam, especially fried with ketchup) than do what these fools do. They justify it by saying, “I get more for the money” where they live. Ridiculous!
I guess I’m one of the morons - commute 50 min one way, in the morning, 30 min back in the evening. This is perhaps the farthest I will commute, ever, it already pisses me off major time. Here in SF BA is normal, somewhat, and by local standards my commute is not that far - people drive for 2 hours one way from Tracy all the way here. That is just crazy.
The moron tag would go to the 2 hour commuters, not the 30 minute commuters.
Cambria to Van Nuys
Top that.
I knew a guy that did it 3 times a week.
The worst is when it takes nearly an hour to go 17 miles in LA. Recently finished 2 years of commuting from desert to Riverside. The drive is an easy freeway 50 mins except due to too many bottlenecks and big rigs takes 1.5 hours in am and a little less in pm. You don’t realize how commuting is sucking the life out of you until you stop.
Max,
I used to commute from SF Peninsula to Livermore for a job many years ago. Round trip was 100 miles a day. I lasted a year. This was going against commute traffic. After that my longest commute has been 20 minutes each way.
What do you do now? Telecommute?
Mr. Nosey : )
I commute 33 miles each way. Takes 30 minutes. Set the cruise at 78 (to save gas) and listen to the radio all the way. Once in a while I have to change lanes, once in a while I have to slow down to 65 because a truck is passing another truck. But not everyday.
Hi Tom,
Not being nosey at all.
No telecommuting. Just live 10 mins away from my job. Work for a large biotech company.
I take 35-40 minutes just to get into Boston from 5 miles away. But, because it’s not driving (bike, or walking/subway) its not dead time.
I’ve only had to drive to work a total of about 3 years in all. Cannot. stand. it.
I never lived more then 2 miles from work. If my car broke down I could could walk or ride a bike. I also always chose to live east of where I worked so the sun was at my back going to work and going home from work. Just lucky I guess.
As much as we like our place in the The Valley, the husband misses being able to walk to work.
As it is, his commute is only 17 miles each way- however he works in Santa Monica, so the chances of us buying a place withn walking distance, at least this century, are minimal.
What’s funny is Warren Buffet could buy a turd and people would all of a sudden go long turds.
–
The world is full of followers and gurus are in constant demand.
Buffett has under-performed the long-term US Treasuries since Apr’98. In 2010 the US Treasury out-performance should hit 400%.
By 1997, Buffett was more than fully discovered and so end was near. Looks like China and India are more than fully discovered too.
Jas
Buffett has been saying the same thing about himself for a while, that Berkshire, and thereby himself, may underperform in part because of it’s size.
You are correct, still, I doubt those who bought him in the 60’s and 70’s are complaining.
–
I was a big Buffett fan and still am when it comes to straight talk. He is a good man, but his time is past. He should sell businesses, or do IPOs, and return money to shareholders. Sorry, taxes should not be the reason for not doing the right thing.
Jas
Huh? This makes no sense. He’s always been a fairly conservative investor, with the exception of his (successful) reinsurance business.
And people tend to *not* to heed him! The P/E ratio on BRK.A is 16.48 with an EPS of 7,822.11.
Compare that with “fad” stocks, like Apple! (With a company whose CEO is a hair’s breadth of going to jail) with a P/E of 48 and an EPS of 3.54. Yet I run into many a stupid person who will buy Apple stock today because they think the company is somehow “cool”.
(BTW: Apple is destroying American culture and the world. I was nearly sickened a couple of months ago, while traveling through Gouda (Holland) walking by a Church while a 400 year old Carillon was playing. There was a kid, an American, on vacation with his family. He wasn’t listening to the sounds of Gouda–he was listening to Tupac or Fiddy-Cent, or some other crap in the iPod that was stuck in his ears.)
Anyway, off my Apple soapbox. My point is that BRK.A seems like a much better buy than what most people consider to be a “hot stock” and the world isn’t beating down a path to buy it.
Back during the 1999 “dotcom boom” while all my friends were telling me to buy Cisco, DIG, Sun, etc. I’m glad I stuck to principles and the only individual stock purchase I made was BRK.A, which went up 300% since then.
Nobody listens to Warren Buffet. That’s what’s so odd. I know people who have credit card debt, but decide to buy GOOG stock at 600. How stupid is that? (Stupid because you’d pay off your credit card debt before making a speculative stock investment.)
This wasn’t a knock on Buffet but on those who follow him blindly and ride his coattails without ever really thinking or doing research before making a very important and somewhat risky decision. People do that with houses too you know?
People do that with houses too you know?
Agreed! (But for most of the FBs, as has been well noted here, they had no skin in the game–no money down–and will actually do quite well if they just walk away from it all.)
Yeah when I was in Rotary one of the other clubs brought a South American exchange student for us to fawn over and he couldn’t find it in himself to take out the ear buds.
If someone’s trying to talk to me while they have those in their ears, I ignore them until they take them out.
yeah, Steve Jobs & Apple really sucks in how it has made the dominant technology advances of my lifetime . . . the Apple II, Mac Plus/Laserwriter, NeXTSTEP, the Mac II, the Powerbooks, and most recently the iPod touch, a frigging 3/8″ thick touch panel running a full-bore Unix & an evolved NeXTSTEP environment! Every other palmtop is Toys-R-Us compared to this guy.
AAPL’s got a $160 pricepoint because people are expecting the company to continue growing at 16% YoY. It’s the only tech company that even has the potential to do this.
Ben, keep up the great work. We are still not out of the insane world yet.
The Village Voice has given out it’s “Best of New York” awards. And winning the Best Place To Get Murdered, Raped, Or Robbed In The City: East New York, Brooklyn.
http://www.villagevoice.com/bestof/2007/category/people/133
Not to long ago, houses there were selling at $500K. Lots of foreclosures there now.
“Through September 9, the notorious 75th Precinct, located on Brooklyn’s eastern border, again led the city in rapes, assaults, and robberies, and it’s tied for first in murders with Brownsville’s 73rd Precinct, which in all likelihood is experiencing a spillover effect due to an effort to reduce crime in the Seven-Five by flooding the precinct with cops. Despite two years of “Operation Trident,” so far this year there have been 306 more violent crimes reported in East New York than in any other precinct in the city. The good news is that the NYPD’s website shows that violent crime is down 2 percent in the 75th Precinct this year compared with 2006, including a 6.4 percent drop in assaults. What isn’t listed on the website, however, is that shooting incidents in which people were wounded are up more than 12 percent. The half-full analysis: Baseball-bat and knife attacks must be down. The half-empty take: The CompStat sergeants who monitor and modify criminal complaints need another supply of erasers, fast.”
But a bargain compared with less murder-intensive parts of Brooklyn, which are a bargain compared with Manhattan, which is a bargain compared with London. It’s different here.
“And winning the Best Place To Get Murdered, Raped, Or Robbed In The City: East New York, Brooklyn.”
My mom is from East New York. People do not understand that it was always a poor neighborhood, and there was always violent crime. Violent crime has risen everywhere since that period. Anyone who thinks they are “safe” anywhere, or even wants to be, is a sucker.
I just took the train with my wife and walked her to work (health clinic) by that precinct this week for a 2-day rotation. As soon as we got off the C train (day 1) we heard/saw sirens/cops. A group of guys were getting hemmed up and bagged. What a husband I am for letting her work there on Day 2. Never again.
“But they’re not bulding anymore land…”
What the hell is wrong with these people who sold their house for $650K? If I read the article right, they bought for 400K 7 years ago.
They’re acting distraught over the fact they “lost” 150K because there was a period of time when they fantasized that their house was worth 800K?
And this is *news*? (As in a newspaper would report on it?)
This is the new type of bragging! It makes these people feel rich to speak of losing $150K, as if they were some jet-setting playboy who just got the short end of a big deal, or blew it in Monte Carlo.
Thestreet.com used to be a good site with actionable information. Now it’s a joke.
Hence Minyanville being what The Street was? Except it’s a helluvalot funnier.
Oh, no, TSCM never achieved the useability of Minyanville. That’s a premier site and always will be, I’m sure. I hope they get an IPO out of it and make a fortune.
Generating a profit on a housing sale is requiring the purchase be made earlier as every month passes and prices drop.
Dollar slide:
http://quotes.ino.com/chart/?s=NYBOT_DX&v=w
Can someone reproduce a chart on the dollar in the months leading up to the 1987 stock market crash? Just wondering.
Try this one :
Link
It appears the dollar had spiked in 1985 and fell sharply in the year preceding the 87 crash. I don’t have enough information to form an opinion as to cause and effect here…
Rocky Horror Picture Show
lets do the loan dance again…
“‘If these rules were in place five years ago, I think it would have gone a long way toward preventing some of the horror stories that we hear happening in the marketplace now,’ said Representative Ronald Mariano, awho chairs the financial services committee and has helped shepherd the bill.”
But then you all wouldn’t have been “rich homeowners”. Would you?
NYCityBoy has the biggest f—ing smile on his face this morning. Bloomberg says prices are going down. Perfect! I wonder how many co-workers won’t be able to look me in the eye when I go back to work next week? They have been so tremendously wrong. I won’t rub it in unless they ask for it and then I will make them cry like little girls. Life is good!
Rub their noses in it. It is sooo fun.
I give you credit for even taking up the conversation with them.
(when bubble mania was in full effect)
I went on record in the fall of ‘05 and never once backed down or hedged. It was just crazy here at the time.
I have 4 friends who live in NYC. The prices are so insanely high. That’s comparing it to our prices out here in CA. Even rent is ridiculous. If prices come down, it will ultimately be better for their economy because simply put- it really and truly is completely unaffordable there.
You Californians forget one thing. You must add housing and transportation together to get a person’s true monthly nut. We pay a lot in rent and then my wife and I get $76 (pre-tax) monthly unlimited Metrocards. We probably average about $30 per month on top of that for miscellaneous trips. That is about $150 per month when you include the tax benefit. What does the average California couple pay for transportation? It makes your housing look even more foolish.
Renting in NYC is much more affordable than owning. Plus smaller places mean we buy less “stuff”. I would like to know what that saves us.
It really depends. I commute an obscene amount of miles to my job. There is indeed a commuter train that runs out to the town I work in. It costs roughly $4 a day. I’ll use myself for example though. We carpool in a small car that gets around 30MPG. Weekly I will spend around $40 on gas. But if you subdivide it between both of us, that’s $20 a person. Not too bad considering I drive around 80 Miles a day.
Rent is also has an extreme variation here. While SF the city is around $1,000 per 1 bedroom avg, the East bay is half that. It takes maybe 15 minutes to drive to SF, so it isn’t like you’re driving from NY to NY. We pay $1,400 for a 4 bedroom house that we’re actually sharing with one other person. So out of pocket, we pay $1,150 a month between the two of us, or $575 each. Thus our total living expenses are actually quiet low. We could live even cheaper if we took the commuter rail, but I guess we’re too lazy.
Rent is actually a pretty good deal in most parts of CA. Some say that it is on the rise, but I’m not seeing it yet.
You don’t have a car payment, car insurance fees, maintenance fees? That is amazing. Do you ride a gas can to work?
The car is 12 years old and paid for. I’ve never had a wreck, so the insurance is less than $55 a month. It is a Toyota and never actually had serious problems. I actually maintain it myself as I am mechanically inclined, thus maintenance is a minimum.
I see where you’re coming from, which is that you’re automatically assuming that public transit must surely compensate for the expenses of owning a car. I lived in Boston for 3 years. I used public transit exclusively and know the costs of using it. I can tell you that this assumption isn’t exactly true. There are too many variables involved. Yes- I can almost guarantee that the vast majority of people on the Northeast pay more than I do whether they take public transit or not. The expense of the East Coast was what drove me away in the first place. If I was still living there, I would not be in near the financial shape I am now.
I would say that living a suburban lifestyle in greater NYC (and working in Manhattan) would be hellishly more expensive than anywhere in CA. Here in DC, we manage to get the worst of both worlds, somehow…
I would love to pay $150 a month for transportation. With the cost of a car, gas and repairs it’s way more than that. Gas alone is over $150 a month for 2 of us, and that’s mostly for work.
I dunno… I grew up in the South where things were insanely inexpensive circa 1996. You could buy a whole freakin’ house for 30k or LESS. Gas was 89 cents a gallon, food was cheap, ect ect. I moved to Boston in 98′. I had been paying $200 a month for a whole house in TN. In Boston I was paying $750 for a 1 bedroom, crappy, drafty apartment. Food was more. The cost of living was more. Everything was more more more. Plus coming from an area that usually got down to maybe 35 degrees in the dead of winter to a place that regularly got below zero was a big nasty change.
The month a graduated college, my rent shot up to $850. I just said screw this and moved to CA. Yes- I’m kind of bitter about it, hence my perhaps unfair assessment of the Northeast. Even today I have no desire to live there.
Then again, housing prices ( except rent) are equally stupid out here. You talk to any Southerners like myself with their experiences living in places that have at least reasonable levels of living expenses and you’ll get incredulous questions of WHY anyone would pay to live somewhere that has nasty winter weather and high prices to boot. I guess we’re put together differently. Sorry if I stepped on any toes!
Jetson, I’m right with you.
I moved to Florida in 2000 from the midwest. I was amazed how cheap things were here - I was making a great salary and paying less for housing, food, utilities, etc than I was in the corn belt - the only additional expense was car insurance. Then this housing bubble came and changed it all, and prices on everything have increased substantially. I noticed yesterday my old apartment was for rent: I paid $600 a month in 2000 for the place, and it’s renting right now for about $650, down from $800 in 2005.
I sympathize with some of what you’ve said, jetson_boy. I moved from Mass to Calif in 1992, when state income taxes in MA were still 12% on “unearned” income beginning with dollar number one. Mass taxes changed, so that part’s not so bad, but I would never live there again. Maine is great for summers, winters I’m still trying to figure out. Calif has no doubt improved now that one would not be subjected to everybody’s bragging about the value of their houses.
Wait, so your car savings is … at $20/person, which is what the train costs, but without all the depreciation on your car … less that zero? Car repairs aren’t cheap!
Plus, the depreciation on YOU from all that driving. You can sleep on the train (or eat breakfast, or read the paper), duh!
Hope you like high blood pressure … it’s an occupational hazard for me (bus driver). Why anyone would sign up for that when you don’t have to is beyond my puny comprehension.
PS: you can get a certain amount of your monthly transit fares pre-tax through the Commuter Chek program AND you can also usually get a break on your car insurance. Think about it.
I gotta say, with Boston, the T is not the be-all and end-all. The Census reveals that more Bostonians WALK to work than take the T every day.
My little sister has lived and worked in Boston for years and walks to work every day. For a while she was working in the Longwood Medical area and living in Cambridge Central Square and with the red and green lines it took just as long to take the T as to walk, so she walked.
She had a bike, but sold it to me (in Amherst, MA, at the time) because it was too scary to ride a bike on Boston city streets. During daytime hours she goes almost everywhere on foot.
Bostonians–like my great aunt and uncle in Back Bay–do a lot of walking. It’s the transplants, tourists, urban poor, and college students who do most of the “rapid transit” riding. Even the commuter rail riders mostly walk to work from South Station. (And why not, when the Financial District is at most 5 minutes away?)
Why wait until they ask for it? Make them cry like little girls immediately. Do it alphabetically, because being organized is good.
Smirk and enjoy it.
But a surprising development unfolded after listing our home in West Windsor Township, N.J., in April: nothing.”
“We had braced ourselves before listing our house in a sagging real estate market, knowing we’d have to lower our expectations about the sales price. That didn’t stop our stomachs from churning..”
My stomach churns at the thought of spending $729K for a house in NEW JERSEY.
My stomach churns at the thought of spending $72,900.00 for a house in New Jersey.
My Stomach churns when I hear the words: ” New Jersey”
Wow. That is funny.
interesting tid bit i learned recently. out of the 15 or so states the CDC has in their Autism study, NJ has the highest autism rate per 1000 children.
“‘If these rules were in place five years ago, I think it would have gone a long way toward preventing some of the horror stories that we hear happening in the marketplace now,’ said Representative Ronald Mariano, awho chairs the financial services committee and has helped shepherd the bill.”
These rules couldn’t have been in place a few years ago because the laws of the land at that time were that (1) House prices appreciate insanely every year (2) A homeowner can always refinance and pull out equity.
I think because the above laws were repealed recently the politicians are coming out of the woodwork saying “if…” etc. in order to look smart.
Before the
sigh…if only!
Lonestar injects 100M into Accredited.
http://www.bizjournals.com/dallas/stories/2007/10/15/daily5.html
Comment by BubbleViewer
2007-10-18 07:37:34
Fear and Greed are the dominant emotions in almost all people. And when you think about it, greed is just another form of fear - the fear of missing out.
“Fear is the mind killer”
YAYYYYYYYYY!
Squeallllll! You quote The Book! HooooraaayyyYYYYYYY! I’ve waited for forever to hear Dune quoted! Oh, what a happy day for me!
Anyhow, fear and greed are not my dominant emotions. I have plenty of all I need. Therefore cheerful malice is free to take position one.
And the more I read articles about ‘how quickly and drastically the market is falling’, the cheerfuller I get.
“Fear is the mind killer”
Nice Dune quote!
You’re sadistic. Good thing I’m not a masochist.
No, that’s a bad thing you’re not.
Oh! Oh! ummmm… no.. not into buying a house anytime soon using a toxic loan with a prepayment penalty.
One of my favorite books. Now I’ll have to go pull it out and read it again.
I LOOOOOOVE Dune. My favorite sister and I have it memorized. Not the whole series, just book 1. At Christmas time we have a family talent show and a favored event is when she and I take turns being Paul Mu’ad Dib and the Reverend Mother, etc. We never be Irulan, of course, because she is an annoying candy*ss gossip. But everyone else.
Another talent is ‘free form criticism’, at which we both excell. But my point is–Dune is IT. We tried to get my brother to make us some stillsuits, and hey! In Utah they’d be a good thing, actually–but we changed our minds after the first explosion and loss of body bits and then made him stop. No stillsuit manufacturing for him. He can get back to work on his homemade submersible for Utah lake.
Ahhhh. Dune.
Wish someone would invent a Stillsuit - the perfect gear for next year’s Burning Man.
Tell your brother to get the plans out again - he’d make a killing.
This is tragic. They could have made $400K, but they only made $250K because they did not sell during the peak of 2005-2006. Let’s bail them out with the taxpayer’s money — NOT!
“We’ve moved on, to a different state with lower property taxes and real estate values. Friends who asked if we bought a bigger house were surprised that we did not, another choice that helped us make the most of the cash that we managed to net from the sale.”
People like these concern me. Where do you think they moved to? Probably NC, SC, TN, GA, or who knows?-TX. I have know clue why anyone in their right mind would want to live anywhere in the Northeast these days. NY, NJ, MA… Those states are going to get hit hard with a recession. With the exception of NYC, Most Northeastern states are overpriced and overtaxed. They are losing their economies to lesser expensive areas, have an aged population, have an unfriendly environment for business, and to top it all off- they have crappy weather. It was mentioned a week ago that NJ alone has lost over a million people. It makes me wonder how long it will be before NC or GA becomes another area that will look essentially like any other Northeastern region.
(With the exception of NYC, Most Northeastern states are overpriced and overtaxed.)
NYC taxes and real estate prices are higher than anywhere else in the Northeast. If you are referring to property taxes, which are low in NYC for 1 to 4 family homes, don’t forget the local income tax that more than offsets the savings.
Where do you think they moved to? I think they all came to AZ and are on my tail on the highway. In a Escalade “truck” with a banner on the back windshield that says “Fiesta Balloons - Helium and balloons for sale”.
I have to agree that overbuilding is becoming a issue with GA..that is why I am happy I moved to a city that wants to maintain that open ranch feel..they limit the size of homes and homes must be built on a min of 1 acre lots…with min removal of trees…
“I have know clue why anyone in their right mind would want to live anywhere in the Northeast these days. NY, NJ, MA… ”
For people retiring with plenty of money, MA is a great place to live. Quite enjoyable actually.
I am in my forties now. As I was accumulating wealth (by renting and investing in stocks), I was thinking that we’d move to a cheaper state after retirement. But lately, with our nest egg growing larger by the week, not so worried about taxes and living expenses anymore. My wife & I will retire in MA itself. Boston is great. Everything is in walking distance. Beaches and mountains are all close by if you love nature. So many university students are around that the place always keeps humming. And, we love the fact that every little town has public library, sometimes multiple libraries in each town.
Question…don’t think of yourself on this one…but..if the whacky mortgage products suddenly re-appeared do you think joe public would ignite the housing market again knowing what they know now about these type of mortgages? just curious
Yes, of course they would. People will believe anything they see on TV. If all those circus shows about flipping homes, or making a cool million selling real estate becomes a frequent occurence, then yes- people will fall back into that same logic.
The good news is that even as we speak right this minute, banks, lending agencies, and financial institutions are getting burned on Wall Street.So these loans will not be anywhere close to being available for a long time. The next big bubble will be about as far away from Real Estate as possible.
Always lots of idiots chasing the “big” bucks.
Apparently mortgage applications are up…but fortunately most of the idiots are being turned down. Mostly.
Clarification: by “most of the idiots” I mean the $0 down crowd, not most applicants (though arguably most buying now are in fact idiots)
Can’t you just click on an add banner somewhere and fill out a few lines of personal info to be counted as an “applicant”?
I do notice Lending Tree ads that used to always pop up when I logged on are almost totally gone now. They only come up occassionally.
i still wonder if its the escalation in prices that created these products or vice versa. They only became popular the last few years. Ya like whacky…its a jersey thing btw. Lay your jersey questions on me and i can give you an honest answer because this is not the state i grew up in and know. It is out of control.
I believe applications also include refinances. Lots of ARMs blowing up, and people will need to shop around before they find someone who can bail them out, if anyone can.
Personally I think the “applications” statistics, without additional info on what types of mortgages are being applied for by whom and how many are being rejected, is pretty worthless.
That’s like asking what if the Internet bubble suddenly re-appeared in 2002, along with venture capital financing, stock “analysts” using la-la land valuation estimates, et cetera.
The wacky (although I like “whacky”, with the entendre of buyers getting whacked) mortgage products were both a cause and an effect of the bubble. They were a product of their times, and they can’t exist in a vacuum.
What’s typical of Wall Street is the desire to move into “stable” sectors in the event of a recession or downturn. Post dot-com, Real estate was “safe”. Now that it isn’t safe anymore, the search is on…
What has me scratching my head is why people were so willing to pay anything close to 4,5, and 600k for houses in NJ, NY, MA, or any other Northeastern state. That whole chunk of the country is going to get hammered in this recession. High home prices, high business taxes and the fact that the weather just plain sucks there puts that region in a very precarious, uncompetitive predicament.
whoops. My comment got repeated above. Sorry folks.
That’s okay. I enjoyed reading your sentiments twice.
Why were people willing to pay anything close to 4, 5, 600K for houses? Silly question. Don’t you know the price of real estate ALWAYS goes up?
>>”The small upgrades that real estate experts suggest owners make to enhance a home’s appeal were also irrelevant. Prospective buyers didn’t seem to notice the shiny cabinet hardware or new ceiling fan.”
This is one of my peeves. You hire real estate agents and promise them tens of thousands of dollars if they sell your house. Then they turn around and tell you all the money you have to spend to ‘improve’ the sailability of the house. ie, making it easier for them to sell the house.
Hey, &*$^*%, I’m paying you good money. You told me you were the selling expert. YOU sell it as it is, at the price you agreed on. Got a problem? Let’s see YOU invest a little in your deal…
I have never had that problem with RE agents. Have used them only three times in 30 years, so I don’t know much … but the advice I got from them was mainly to price reasonably and to offer owner financing if I could (which I did). Two of the three specifically advised me NOT to make “improvements,” which they said would not pay in the end.
In another jolt to the downtown real estate market, a newly built, upscale condo complex on Boston’s waterfront is being foreclosed on by its lenders.
The 11-story Harborview complex in the Charlestown Navy Yard is slated to be sold at auction Nov. 8, a move that comes after the upscale project opened with a thud this summer.
Amid a sluggish real estate market, the project ultimately failed to sell any units, prompting the development team, which includes Trammell Crow Residential, to explore its options.
The project’s builders recently put the whole 224-unit complex up for sale as a rental project, and will continue to field offers until the auction. Amenities include water taxi service, a common roof deck and a waterfront park.
http://bostonherald.com/business/real_estate/view.bg?articleid=1038838
This would seem like a pretty decent area for this kind of yuppie development. Don’t know what the pricing was but I think this complete failure pretty well reflects what’s going on for most of the Boston market.
I lived in Boston for a few years. The problem there is the local economy. There was a big hope that it would become the equivelant of Silicon Valley for the East Coast. That never really happened. The other problem is that it is a relatively young city due to all the colleges. With the higher house prices, many who graduate simply move out of the area. Simply put- there isn’t an economy in place to support the prices.
Damn! 0 for 224! That’s actually pretty astonishing, and worrisome.
“Amenities include water taxi service, a common roof deck and a waterfront park.”
Yep, all the necessities of life.
Question folks: we all believe in personal responsibility and most agree that those that acted stupid and/or greedy deserve what they get. Yet, the most common advice I see here for those who are now suffering for their stupidity is to walk away from their obligations. I understand how it makes sense financially, but what happens to personal responsibility?
Chaos theory, the new “reality” show.
I don’t know if the desire on this blog is for individual homeowners to act responsibly. If they bought at prices that are higher than they could afford, then the already got themselves into a situation where their lack of responsibility landed them in a pickle.
The overwhelming focus of this blog ( correct me if I’m wrong) is to push home prices lower, or at least to economically sensible levels. If that be the case, then someone walking away from their home means it will be repossessed by banks sooner, which means a swift move to the auction block or a fire sale, which ultimately has an immediate effect on local housing prices. These effects lower the price, hence mission accomplished.
Should they be responsible and take 3 jobs to barely stay afloat? Probably. Would that cause prices to lower quicker? Not likely. So if they want to walk away, then that’s fine with me.
For myself, I’d much rather have someone negotiate a short sale and never have a foreclosure.
Actually houses would come on the market sooner if people did walk away. It for eliminate all the steps needed for foreclosure, such as missing 3 payments, etc.
Frame your question in another way. What happened to the fiduciary responsibilities of mortgage brokers, RE agents, hedge fund managers etc? It didn’t exist, thats what happened to it.
That personal responsibility/integrity/honesty line of shit is a two way street that seems to have been characteristics expected of J6P but not our leaders in the business world for far too long now.
In the end, you have to do what’s best for numero uno. And really, “jingle mail” is simply the quickest, most efficient way to bring on the inevitable results of bad decisionmaking. Dragging things out for several years before the inevitable foreclosure doesn’t really help the bank that much.
The banker men just need to come up with a new brand of fire and brimstone to keep the FBs chained to their depreciating homes. FICO score is losing its punch. What next? Debtor prisons? Religious appeals? What?
I believe in personal responsibility but this thing got so out of hand with the negligence of the other players in this event (lenders, investors, brokers) I just don’t see the point in expecting ONE party to “suck it up” and eat ALL of the mistake.
In fact, I think it will be better for the economy as a whole if most of those on the margin, walk. Why? One of the big problems with having a basic human need eat up more and more of one’s income is that there’s less to spend and (hopefully) save/invest in much more productive fashion.
The investors in this trash simply don’t deserve to be paid for backing, basically, an enterprise that became OBVIOUSLY fraudulent over time. As much as anything else, they need to learn a lesson. Hopefully, one that one dramatically damage the rest of the economy in the process.
“In fact, I think it will be better for the economy as a whole if most of those on the margin, walk. Why? One of the big problems with having a basic human need eat up more and more of one’s income is that there’s less to spend and (hopefully) save/invest in much more productive fashion.”
I gotta say that is some warped logic. Those on the margin, who can least afford to lose what little they got should lose all but they who have the most should walk? Winner take all?
Please don’t tell me that is the Christian too.
whenever I see houses over $500,000 what comes to my mind is all the ancillary expenses that also increase, like taxes, insurance, etc.
just like owning a luxury car, a higher priced home carries with it the stigma of deep pocketed owners who can afford, indeed should expect, to pay much more than average for the same services elsewhere.
and if the owner was to question inflated invoices they are met with incredelous attitudes of: ” what do you expect, you own a MERCEDES(DR HORTON) … the price is going to be higher .. if you dont like it you obviously cant afford it” snotty reply.
sidenote: I’d wilingly do jail time for a few things, like stomping on a child molesting pervert bothering my kids, or anyone else that threatens my family’s safety, but cant see doing a 30-day stretch for backhanding some arrogant as*wipe with an attitude over a simple question!
Likewise for leaving a safety zone between cars ahead of me to avoid the overagressive dodge truck & bmw drivers … you can argue all you want but sometimes you just will not change a persons habits.
if their an as*hole in general by age .. oh, 32 or so, its usually ingrained forever, and a traffic argument is just pointless.
(this includes all those overagressive getaouttamyway Idont care abut traffic rules or courtesy because its a company truck construction/service vehicles.)
meandered around a bit / rant off
Speaking of aggressive, did you see the death of a man at, I think, a Minneapolis school. He got into a fight with another father who was also there for a conference. Apparently their 2 fifth grade sons had been in a fight at school and the parents were called in. Gotta love what parents teach their kids by example.
Ghost
no, didnt catch any news about that situation. just tragic & avoidable.
and like you said, really sets a hellova bad example for their children.
and at the school no less - holy cow!
people just really, really need to dial it down on the ” bad ass ” image. seems thats what we are becoming; image image image.
example: I noticed living in the barrioetto that some of the first things the new arrivals did was get a flashy truck, chrome rims, loud stereo w.oompah music, and brand new expensive looking clothes.
I’m sure after years of TV admiring the rich americanos they were just chomping at the bit to show they have made it too.
further on up the eco scale you have these idiots all wearing huge Gucci sunglasses, like that Montelongo chick. Seems to me the TRUE definition of fashion is not copying everyone else but making yer OWN UNIQUE statement. If everyon else is already doing it, already buying huge houses, huge cars, yadda yaddam, then yer just a lemming trying to imitate them, and you make me laugh when I see 100 soccer mom clones wearing the latest ‘ jennifer anniston ‘ or gucci sunglasses.
Sorry, but if yer really rich you dont need to flash it around, or try to impress anyone. You dont even need to be wealthy in goods to be content & secure with yerself. I’ve seen the poorest, humblest nomads in the Gobi with more class than these poser soccer moms here in Roseville or Granite Bay. Does the Dali Lama wear Armani ?!
Notice Sam Walton drove a beater Ford 150 truck all his life? He realized that you dont need to impress anyone with ‘ stuff ‘. Its your actions that truly reflect your self worth.
Hilarious - I don’t argue with anyone. Some moron tells me that home prices always rise and I just listen and nod in acknowledgement. It’s not worth my effort to educate the masses, and trying to use logic in an emotional argument is a guaranteed loser.
More power to you. Those that argue the point only bring more strife into the world. Better to stay confident with the truth above the fray. I love the information that this blog provides, but many times the “get back at the housing pumpers!” attitude that many posters have becomes quite tiresome.
My posts are not making the grade today, apparently. I must smell a little spammy or something?
Sprinkle some brown sugar on yaself and add a pineapple chunk.
Then you’ll get through, I bet. Popular! Popular!
Sometimes things get “hung” up.
“Lenders and brokers will be prohibited from arranging loans that they do not have a ‘reasonable belief’ the customer can repay, using available information about the borrower’s financial circumstances to make that judgment.”
If this is true, peak prices may be gone for good. If “financial circumstances” mean having a downpayment & cash reserves, little or no CC debt and a reasonable home price to annual income ratio, then prices will be dropping a whole lot more over the next few years.
“Reasonable Belief” sounds like a pretty loose standard. As long as income is enough above the monthly payment that a mouse could live you can meet it - not nearly what lenders would enforce if they were planning on holding the loan themselves. A standard based on that would have teeth.
So true. Securitization was the villain.
Hey you guys… check this out….. Fedex guy just delivered his daily stack of submittals to my office. Just for shits and giggles, I asked him if his delivery volume is down. He said yes, just in the last three months. But heres the best part. He says his brother on Long Island is a realtor and hasn’t “sold a house in over a year”….. I struggled to conceal my glee as it really was music to my ears.
I think it is better to walk away from the obligations. A home loan is a contract with a clear penalty (pay the loan back or we take your house). So, it’s not like you are taking advantage of some ambiguity in the situation.
It is also better for society. If people walk away from underwater homes and the banks take a haircut, they will be much more conservative in their lending. In fact, I bet this will be a more effective deterrent than any series of laws and regulations.
Unless you are fortunate enough to have a non-recourse loan, they can not only go after your other assets but also your future earnings (if your income was above the state median).
But what of those who refied and got and spent all the money - they get to just whine, complain and walk away with their ill gotten gains with no recourse?
Buyers all feeling alot of things these days, but catching a falling knife ain’t one of them.
All the Masochists have already bought. Don’t listen to Robert Troll.
My comments never seem to show up
“Absorption rates have also increased, according to [a broker], who said a 55-unit building may take 14 months to sell as opposed to 8 months a year and a half ago.”
That wouldn’t be my idea of an increase in absorption rates. This broker likes using 10-letter words without knowing what they mean.
My comments never seem to show up
same here
http://www.dailynews.com/breakingnews/ci_7208312
bad news for renters must not be wanted !!!! on the blog
The state’s second-most expensive market was the San Jose/Sunnyvale/Santa Clara metro area where the average rent soared 11.9 percent to $1,622 a month. The occupancy rate there dipped 0.4 percent to 96.8 percent.
It isn’t relevant. I saw a dozen stories on the web today saying rents were up in California, and almost every one almost reported the cause was a poor housing market and high foreclosures. It’s just a phase that every market goes through that eventually turns into a glut of rentals. I’ve documented it so many times in Florida. etc, that I thought anyone who can read knows it. But I guess you don’t read much. See ya troll!
dba That is becasue NJ does a better job at actually diagnosing autisim, as opposed to ignoring it like many other states. i will take NJ any day over some othe states, even with its problems