Rich Dad Outlines Housing Market Bust
First, I must state that I don't particularly care for Mr. Kiyosaki. It's not that I don't like his books, or his approach towards investing, it's that I typically dislike authors of this genre. However, on occasion I make exception, and this is one of them.
From Yahoo Finance:
Booms, Busts, and Where Opportunities Occur
Over the years, I have read several books on the subject of booms and busts. Almost all of them cover the Tulip Mania in Holland, the South Seas Bubble, and, of course, the Great Depression. One of the better books -- "Can It Happen Again?" -- was written in 1982 by Nobel Laureate Hyman Minsky. In this book, he described the seven stages of a financial bubble. They are:
Stage 1: A financial shock wave
A crisis begins when a financial disturbance alters the current economic status quo. It could be a war, low interest rates, or new technology, as was the case in the dot-com boom.
Stage 2: Acceleration
Not all financial shocks turn into booms. What's required is fuel to get the fire going. After 9/11, I believe the fuel in the real estate market was a panic as the stock market crashed and interest rates fell. Billions of dollars flooded into the system from banks and the stock market, and the biggest real estate boom in history took place.
Stage 3: Euphoria
We have all missed booms. A wise investor knows to wait for the next boom, rather than jump in if they've missed the current one. But when acceleration turns to euphoria, the greater fools rush in.
By 2003, every fool was getting into real estate. The checkout girl at my local supermarket handed me her newly printed real estate agent business card. The housing market became the hot topic for discussion at parties. "Flipping" became the buzzword at PTA meetings. Homes became ATM machines as credit-card debtors took long-term loans to pay off short-term debt.
Mortgage companies advertised repeatedly, wooing people to borrow more money. Financial planners, tired of explaining to their clients why their retirement plans had lost money, jumped ship to become mortgage brokers. During this euphoric period, amateurs believed they were real estate geniuses. They would tell anyone who would listen about how much money they had made and how smart they were.
Stage 4: Financial distress
Insiders sell to outsiders. The greater fools are now streaming into the trap. The last fools are the ones who stood on the sidelines for years, watching the prices go up, terrified of jumping in. Finally, the euphoria and stories of friends and neighbors making a killing in the market gets to them. The latecomers, skeptics, amateurs, and the timid are finally overcome by greed and rush into the trap, cash in hand.
It's not long before reality and distress sets in. The greater fools realize that they're in trouble. Terror sets in, and they begin to sell. They begin to hate the asset they once loved, regardless of whether it's a stock, bond, mutual fund, real estate, or precious metals.
Stage 5: The market reverses, and the boom turns into a bust
The amateurs begin to realize that prices don't always go up. They may notice that the professionals have sold and are no longer buying. Buyers turn into sellers, and prices begin to drop, causing banks to tighten up.
Minsky refers to this period as "discredit." My rich dad said, "This is when God reminds you that you're not as smart as you thought you were." The easy money is gone, and losses start to accelerate. In real estate, the greater fool realizes he owes more on his property than it's worth. He's upside down financially.
Stage 6: The panic begins
Amateurs now hate their asset. They start to dump it as prices fall and banks stop lending. The panic accelerates. The boom is now officially a bust. At this time, controls might be installed to slow the fall, as is often the case with the stock market. If the tumble continues, people begin looking for a lender of last resort to save us all. Often, this is the central bank.
Stage 7: The White Knight rides in
Occasionally, the bust really explodes, and the government must step in -- as it did in the 1990s after the last real estate bust when it set up an agency known as the Resolution Trust Corporation, often referred to as the RTC.
(This list has been edited)
Caveat Emptor!
Grim
From Yahoo Finance:
Booms, Busts, and Where Opportunities Occur
Over the years, I have read several books on the subject of booms and busts. Almost all of them cover the Tulip Mania in Holland, the South Seas Bubble, and, of course, the Great Depression. One of the better books -- "Can It Happen Again?" -- was written in 1982 by Nobel Laureate Hyman Minsky. In this book, he described the seven stages of a financial bubble. They are:
Stage 1: A financial shock wave
A crisis begins when a financial disturbance alters the current economic status quo. It could be a war, low interest rates, or new technology, as was the case in the dot-com boom.
Stage 2: Acceleration
Not all financial shocks turn into booms. What's required is fuel to get the fire going. After 9/11, I believe the fuel in the real estate market was a panic as the stock market crashed and interest rates fell. Billions of dollars flooded into the system from banks and the stock market, and the biggest real estate boom in history took place.
Stage 3: Euphoria
We have all missed booms. A wise investor knows to wait for the next boom, rather than jump in if they've missed the current one. But when acceleration turns to euphoria, the greater fools rush in.
By 2003, every fool was getting into real estate. The checkout girl at my local supermarket handed me her newly printed real estate agent business card. The housing market became the hot topic for discussion at parties. "Flipping" became the buzzword at PTA meetings. Homes became ATM machines as credit-card debtors took long-term loans to pay off short-term debt.
Mortgage companies advertised repeatedly, wooing people to borrow more money. Financial planners, tired of explaining to their clients why their retirement plans had lost money, jumped ship to become mortgage brokers. During this euphoric period, amateurs believed they were real estate geniuses. They would tell anyone who would listen about how much money they had made and how smart they were.
Stage 4: Financial distress
Insiders sell to outsiders. The greater fools are now streaming into the trap. The last fools are the ones who stood on the sidelines for years, watching the prices go up, terrified of jumping in. Finally, the euphoria and stories of friends and neighbors making a killing in the market gets to them. The latecomers, skeptics, amateurs, and the timid are finally overcome by greed and rush into the trap, cash in hand.
It's not long before reality and distress sets in. The greater fools realize that they're in trouble. Terror sets in, and they begin to sell. They begin to hate the asset they once loved, regardless of whether it's a stock, bond, mutual fund, real estate, or precious metals.
Stage 5: The market reverses, and the boom turns into a bust
The amateurs begin to realize that prices don't always go up. They may notice that the professionals have sold and are no longer buying. Buyers turn into sellers, and prices begin to drop, causing banks to tighten up.
Minsky refers to this period as "discredit." My rich dad said, "This is when God reminds you that you're not as smart as you thought you were." The easy money is gone, and losses start to accelerate. In real estate, the greater fool realizes he owes more on his property than it's worth. He's upside down financially.
Stage 6: The panic begins
Amateurs now hate their asset. They start to dump it as prices fall and banks stop lending. The panic accelerates. The boom is now officially a bust. At this time, controls might be installed to slow the fall, as is often the case with the stock market. If the tumble continues, people begin looking for a lender of last resort to save us all. Often, this is the central bank.
Stage 7: The White Knight rides in
Occasionally, the bust really explodes, and the government must step in -- as it did in the 1990s after the last real estate bust when it set up an agency known as the Resolution Trust Corporation, often referred to as the RTC.
(This list has been edited)
Caveat Emptor!
Grim
50 Comments:
Can't wait for this to happen (its malicious i know)...am tired renting...
Google Kiyosaki and MLM, and lots of dirt will come up about this cracker jack.
Here's a good example:
http://www.johntreed.com/Kiyosaki.html
The guy's a scammer. I watched his recent appearance on PBS, where he was selling his books and DVDs to suckers for $500. He called that price an "investment."
He droned on and on about how the key to success is to have assets. Seriously.
Then he said if your friends don't believe you can become wealthy, get new friends. Creepy.
He was like watching classic MLM scammers.
Also google Kiyosaki and Amway.
What stage of Hyman Minsky's seven stages of a financial bubble does everyone think we're in?
I think we're in early 4...
bobby
unrealtor,
Agree with you on Kiyosaki, I've read most of those sites and don't think too highly of him. I too believe that much of his background is fabricated.
FYI - I just heard on NPR's Marketplace Morning Report that real estate prices in the first quarter in Manhattan are up 10% as financial services professionals spent their bonuses. I think this information is consistent with what were are observing. A thin swath of the market is clearly still stimulated. While there are not many, there ARE people out there with coin.
DON'T BUY A HOUSE NOW. YOU LOOK LIKE A FOOL AND WILL BE A BAGHOLDER UNDERWATER FOR YEARS.
iT'S OKAY FOR PRICES TO GO UP TO THE MOON BUT WANTING PRIVCES TO GO DOWN IS BAD?
NOT!
It's okay for prices to correct. the world won't end for most.
Chigaco,
Perhaps median shift based on changes in mix or reduced sales at the low end? I'm really beginning to dislike the statistic. It needs further breakdown to eliminate shifts due to changes in mix, etc. I'd love to see median reported by bedrooms (i.e. 1br, 2br, 3br+) or by total rooms (1-4, 5-8, 9+)..
grim
Grim
how about price per sq/ft... would that help??
bobby
The man to talk to about that would be Jonathan Miller of Miller Samuel in NYC. I believe his firm released the report that spawed that string of news. He's got a post on his main page about it.
Mr. Miller runs a blog that covers the NYC real estate market. It's actually one of the best real estate blogs period. I highly recommend you make it a regular stop if it isn't already.
Matrix
I believe that Jonathan is one of the few unbiased sources of information that exist within the industry.
grim
Hey, I have been following this blog for months, love it, and I am totally rooting for across the board price reductions. BUT, prices continue to go up, and people are still throwing $$ at crap houses (in the towns that I want to buy in). You can show me every study, financial analysis, whatever, but practically, things appear to be getting worse (yes, worse). PLEASE convince me otherwise, I am bummed.
grim:
great link
Yeah, I never listen to the headline anymore either.
I should treat this comments the same as I treat any financial reporting - give me the raw data, and give me the context.
Since my question got lost in the bickering yesterday, I'm reposting and hope you can help. Thank you to those who responded yesterday, I appreciate all points of view.
Since many of you have suggested that I send my kids to private school instead of buying in a better town (and doubling my mortgage payment) . . . . .
can you all weigh in on the topic of Catholic vs. Public for grammar school?
Thanks,
Karen
That % increase was on the high-end apartments in NYC... so guess what?... big wall street bonus = big soho or upper westside townhouse in NYC.
Karen,
Chicagofinance has written some great posts which (as I've understood them) suggest that it's not the "quality" of the school district per se that dictates a student's success as much as it is the involvement of the parents with that student (my apologies to CF if I've misunderstood). This certainly sounds like a rational position to me.
I'm the product of 12 years of Catholic school in New Jersey (K-11), followed by college at Rutgers. I also have a young brother who is still in high school and is a product of the Jefferson Township school system.
Personnally, I think that is religion is important to you than clearly sending your child to a Catholic school is preferable as the morality and prayer is frequently emphasized. However, in terms of quality of education, I don't think that Catholic schools are better (as a blanket statement). At Pope John, I feel like I had a mediocre and limited education compared to that of the folks I knew who went to Jefferson because Jefferson had a much broader range of classes to choose from. Jefferson had more advanced math classes, for example, probably because their student body was larger.
I left Pope John a year early and attended Rutgers because (among other reasons) PJ couldn't offer me accelerated classes that were worth sticking around for. So there's no truism that states that Catholic schools offer a better academic environment for kids, and my personal experience validates that statement.
Also, there were TONS of drugs at PJ because the kids had rich parents with lots of disposable income. Kids were also expelled or asked to leave the school if they were behavioral problems, so it's not like going to Catholic school made them more respectful.
I don't know much about non-Catholic private schools, but I really have to believe that as long as there's no violence or serious problems of that ilk in the school district then your kids will get a fine education if you are closely involved. They will excel on the SATs if you make sure they are studying for them and maybe even getting a tutor (which many kids in Catholic school need anyway).
Just my two cents...
Shailesh Gala said...
The folks in the town & politicians are willing to shell out $22 million of citizen's money to make sure no other development is allowed. This town already has minimum 5 acre zoning law per house. Now tell me why one house should need minimum 5 acres !!!...
These 5 acre zones are only justifiable if they are on septic systems. Otherwise it is exclusionary and subject to lawsuit like Mount Laurel. Then again the state is wishywashy on this topic wanting to promote low density in rural areas.
For you Lereah fans.
http://davidlereahwatch.blogspot.com/
AC
Grim, first off thanks for making a blackberry friendly site. I read nnjb during my daily commute and am thumb typing this comment now.
For the most part I agree with the other commenters, but one thing I appreciate from his first book is that he recommends seeking the truth out for yourself through due diligence and not just by hearsay which we know is all too common in the real estate world.
I also share the frustration of the earlier commenter who's sick of hearing about new condos (particularly L.I.C., NYC) selling out 80% of their units in one weekend. I have been looking to buy in Bergen, but these prices still seem very bubbly to me.
In a weird way, we are all a bunch of believers living in a world of lunatics waiting for judgment to be handed down.
"This town already has minimum 5 acre zoning law per house. Now tell me why one house should need minimum 5 acres !!!"
Because that's what the residents decided they want.
"Of course the article has nothing to do for residential real estate, but it just goes to point that we have RICH towns controlled by RICH folks, who wants to ensure that MIDDLE class can not live along with them !!!"
Who better to decide how a town should be run, than the residents of that town?
They want 5 acre lots, because it's nice to have homes spaced out, instead of piled on top of each other on 50x100 lots.
No one said life is fair. If you don't want to live there, look in another town.
Many of your posts seem to exude a sense of entitlement. To me America is not about entitlement, but about working hard to achieve your goals.
Where's stage 6.5? That's the stage when people realize their over their heads and jump off skyscrapers (in this market, condo towers)..
ha ha ha...
You think that's funny? How old are you?
Karen,
I also have to agree with skeptic that your comparison must be based entirely on the schools. The small loving environment with a religious base can mean a wonderful feeling of security and safety for a little person. I think kids do well not only based on parental involvement, which is key, but also being in a comfortable environment where they are more individually cared for.
As a feminist, I am a HUGE believer in single sex education for both girls and boys. Newsweek just published an article a couple of months ago "Boys in Crisis" which highlights some of the benefits. Google single sex education and I am sure you will find great information or look up "The National Coalition of Girls' Schools".
Although we are not even Catholic we investigated many Catholic schools for our own children.
Things to look for....some private schools do not always provide smaller classes and teachers are paid less with fewer benefits. It is imperative to visit, meet the staff, and observe the students.
You will most likely as a mother get that "sixth sense" feeling in your gut whether a school is or is not the right fit for your child.
I had many presuppositions about certain schools, but after visiting, knew immediately which were right or more importantly not right for our children. Basically- you just can’t get everything you need to know from the brochure! Listen carefully to how the staff describes and talks about their children and how the children are spoken to. Visit, Visit and Visit again!
Only you can provide yourself the answer, go to the school and you’ll know.
please read folks !!!
Housing Bubble Trouble
Have we been living beyond our means?
Karen,
Also to add to what Michelle said, Some Catholic schools to not offer the number of AP courses you may find in public schools. The number is maybe not as important as the level, as a child can really only take so many AP classes a year. If your child is strong in math and they do offer AP calculus, it will not be the right school for you. Look closely at the curriculum and college placements.
oops- last post was supposed to read- if they are strong in math and the school does NOT offer AP calculus, it will not be the right school.
Shailesh
"The folks in the town & politicians are willing to shell out $22 million of citizen's money to make sure no other development is allowed. This town already has minimum 5 acre zoning law per house. Now tell me why one house should need minimum 5 acres !!!
Of course the article has nothing to do for residential real estate, but it just goes to point that we have RICH towns controlled by RICH folks, who wants to ensure that MIDDLE class can not live along with them !!!"
Readington's origins are as a farming community. I do not think the citizens are rich, I think they are trying to preserve the rural feeling and integrity of the area. Drive around and look at the homes in Readington, these folks are not elitists.
The citizens don't want to see the Mc Mansions going up on little third acre lots which is happening all over White House Station and Flemington. It is weird to drive through miles of gorgeous farmland and come across a community of new developements, with the homes sitting right on top of each other on a third of an acre. Neighbors staring face to face as they sit next to acres of open land. It looks ridiculous and in a way seems a little sad.
Should we give up all green spaces for affordable housing?
I agree, it is funny
Does anyone know how the primo towns did during the late 80s-early 90s RE crash? I'm talking of towns like Short Hills, Livingston, Montclair and prime locations in Manhattan?
I think there is some solid work done on this blog but, maybe, just maybe, it looks like people are zoned in on the negative RE trends (there are plenty, of course) and reinforcing each other's beliefs and are blocking out all other trends/news.
To get the hard data, you would need to start digging through tax records of sales that took place between 1989-1991 and then again somewhere in the 1994-1997 timeframe.
You could also stretch that out, but the longer the timeframe the more significant the inflation impact will be.
Anything else is purely subjective.
Unfortunately, it's not easily done.
grim
Here is one example I just dug up.
50 New England
Summit, NJ
Sold 1/5/1988
$435,000
Sold 8/11/1995
$450,000
Now factor in inflation and closing costs. Given 3.5% inflation/appreciation and 5% closing costs, the break even price would have bene $580,000.
Another good way to find declines is to look at condos or townhomes. These give you a better look at the "timeline", however you need to be careful about differences in units. That aside, lets look at the history of:
28 Morris, Summit NJ
1987 $203,000
1988 $265,000
1988 $265,000
1990 $275,000
1993 $215,000
1993 $216,000
1994 $210,000
1996 $202,500
1996 $210,000
1996 $225,000
1997 $200,000
1998 $245,000
2000 $275,000
It took a bubble to bring the prices back up to a break even point.
grim
Summit house closes well under asking:
MLS 2241060
20 Ascot Way, Summit
List price: $559,000
Closed at: $520,000
Close date: Mar 29, 2006
http://pictures.gsmls.com/MediaDisplay/12/hr3547312-0.jpg
A great article.
Thanks Grim.
"That is one UGLY house."
There are a lot of ugly houses in Summit. Often times, there are decent looking houses sitting right next to some 1950s disaster, such as this one:
http://www.realtor.com/Prop/1052742885
Which kills both houses. These trailers / shoeboxes are scattered all over the place in Summit.
Then there are sections of Summit where there are nice, older homes on larger lots.
I think from an architectural perspective, Summit as a town is about a 4 out of 10 in my book, given the high number of clunker houses scattered around.
Note: the REALLY ugly white house is listed for $130K more than the recently-sold house you thought was ugly.
http://www.realtor.com/Prop/1052742885
All that can be yours for $650K! Make an offer, quick!
We all talk about the future RE bust and that many people will find them sell upside down or under water – when it happens we are going to have a new meaning for “scuba diver” = gimmicky mortgage holder
(scuba – self-contained underwater breathing apparatus)
Some homeowners struggle to keep up with adjustable rates By Noelle Knox, USA TODAY
Mon Apr 3, 7:00 AM ET
For 45 years, Robert and Lorraine Brown have lived in their ranch-style home in Florissant, Mo. One of their four children was even born there. But for the past eight months, the couple have been locked in a sleep-wrecking race to keep up with their rising mortgage bills. They've switched to cheaper phone service, cut back on groceries and sometimes put off ordering medicine.
When they refinanced their home two years ago to pay off some bills, Robert, now 78, was working as a deliveryman. But his employer went out of business last April. Now he and Lorraine, 72, a retired nurse, are both seeking work. The rate on their mortgage has jumped from 7% to 10.5%.
"We were having a hard time meeting bills at the time we refinanced. It seems once you get behind, you do desperate things to catch up, and you never do," says Lorraine, trying to hold back tears. "At the time of the loan, they tell you, 'Well, it may go up, but it's probably going to go down.' You want it to be so, so you believe it."
They feel alone, but they're not. America's five-year real estate boom was fueled partly by a tempting array of cut-rate mortgages that helped millions of Americans qualify for home or refinance loans. To afford soaring home prices, many turned to adjustable-rate and other, riskier loans with low initial payments. The homeownership rate hit a record 70%.
Now, the real estate market is cooling, interest rates are rising and tens of thousands more Americans are starting to have trouble paying their mortgages. Nearly 25% of mortgages - 10 million - carry adjustable interest rates. And most of them went to people with subpar credit ratings who accepted higher interest rates, according to the Mortgage Bankers Association.
"Within the last year, I would say 60% to 70% of calls to our hotlines are issues related to ARM (adjustable-rate mortgage) loans," says Chris Krehmeyer, executive director of Beyond Housing, a non-profit group that offers homeownership support services in St. Louis. "That's significantly higher than in years past, because the ARMs are coming home to roost."
Last week, the Federal Reserve raised interest rates for the 15th time since June 2004 and signaled that at least one more increase is likely. That trend is ominous for borrowers who were seduced by adjustable-rate loans that offered interest-only payment options or teaser rates below 2% or that let the borrower pay less than the interest owed. They will face bigger payment shock once their loans reset to higher rates.
The number of borrowers in trouble will rise this year and peak in 2007 and 2008 as the largest number of mortgages reset to higher rates, according to First American Real Estate Solutions, a real estate data provider.
Already, in West Virginia, Alabama, Michigan, Missouri and Tennessee, about one in five homeowners with a high-interest (subprime) ARM was at least 30 days late at the end of last year, according to the Mortgage Bankers Association. After 90 days, the foreclosure clock starts ticking.
Most of those foreclosures are related to job losses in auto and garment factories; higher mortgage payments were often the last straw.
What worries experts such as Christopher Cagan at First American Real Estate Solutions are the adjustable-rate loans made in 2004 and 2005, at the end of the housing boom. These loans were concentrated in the hottest markets, such as California, where about 60% of all loans last year were interest-only or payment-option ARMs. That's the highest such rate in the country.
Of the 7.7 million households who took out ARMs over the past two years to buy or refinance, up to 1 million could lose their homes through foreclosure over the next five years because they won't be able to afford their mortgage payments, and their homes will be worth less than they owe, according to Cagan's research.
The losses to the banking industry, he estimates, will exceed $100 billion. That's less than the damage from the savings-and-loan crisis in the 1990s, which cost the country $150 billion. "It will sting the economy, but it won't break it," he says.
'What can we do?'
In the Atlanta area, credit counselors for The Impact Group say 85% of their calls are now related to ARM or interest-only loans. The calls start "when the statement hits them with the new monthly payment," says Marina Peed, executive director for the non-profit group, which offers homeownership education, counseling and financial services. "They are calling and asking, 'What can we do?' "
The call volume jumped after January, as holiday credit card bills, higher gas bills and rising mortgage payments hit some borrowers at the same time.
When Paul and Sandra Wilson moved from California, where they couldn't afford to buy a home, to Georgia in May 2004, they bought a house with an interest-only loan. But Paul, 52, has had a tough time finding work, and they lost most of their savings in a business venture. They refinanced to an ARM with a lower rate but one that reset every six months and that charges a $20,000 penalty if they refinance within three years.
The loan broker "convinced us that it was in our best interest, and in most likelihood within six months our financial situation would turn around and we were going to look at selling," says Sandra, 53, a former law enforcement officer who is disabled.
In less than a year, their loan payment jumped from $2,275 to more than $2,800. The couple filed for bankruptcy and will lose their home next month. "This was our fourth home," Sandra says. "It's not as if we weren't aware, but we'd never had an adjustable-rate mortgage before."
Banking regulators are concerned about risky loans made to people with precarious finances or those who didn't understand the complex terms and the peril they could face if interest rates rose.
In December, regulators proposed new guidelines for mortgage lenders to crack down on loose lending practices. The rules would require better risk disclosure and a fuller analysis of the borrowers' ability to repay the loan through maturity - and at the highest rates allowed under the loan terms.
Bank trade groups complained that concerns were overblown. "We do not believe it is appropriate or possible for the lender to dictate the best mortgage products for individual consumers," America's Community Bankers responded.
No matter what the final guidelines say, they will be too late to help people such as Susan Cambero. She got into trouble after she took out an equity line of credit on her home in Lilburn, Ga., to pay off her car and other bills. As a single mother with total income of $38,000 a year, including child support, she never would have been able to qualify for the $57,000 line of credit from a conservative lender. That line of credit, when added to the balance on her fixed-rate mortgage, totaled $10,000 more than her home was worth.
The monthly payments for the equity line have more than doubled in four years, to about $400. (She also has a $700-a-month mortgage and hefty credit card bills.) "I can pay it, but I have nothing left over to eat," says Cambero, a contract analyst for a computer company. "I'm going to lose my house."
Some success stories
There are few resources to help homeowners in dire financial straits, but there are some. The Homeownership Preservation Foundation offers free credit counseling and referrals, 24 hours a day, seven days a week (888-995-HOPE, or 888-995-4673). And NeighborWorks America, a national non-profit that supports homeownership and financial literacy, has member groups in every state.
One of its members, Neighborhood Housing Services of Chicago, has been receiving about five calls a day since January from borrowers who are falling behind on ARMs.
Marilyn Maxwell is one of their success stories. She refinanced her loan in 2002. Maxwell, 58, is a former U.S. postal worker who's living on disability payments from the government. She agreed to an ARM that reset every six months.
She kept up with her payments on her house on the southeast side of Chicago until last April, after her daughter, who was helping Maxwell pay the mortgage, lost her job. Last week, Maxwell refinanced her home with the help of Neighborhood Housing Services. She got a 6.8%, fixed-rate loan, plus grants to help make long-neglected repairs.
"I'm getting a new roof as we speak," she said.
The Browns in Missouri also have had a happy ending. The lender, Saxon Mortgage Services in Texas, declined to discuss the Browns' case with USA TODAY last week. But within 24 hours of a call from a reporter, Saxon agreed to give the couple a fixed-rate loan at 7%.
"I'm so elated," Lorraine said.
I live in Fort Lee too.
Center Ave
I bought my 2br, 2bath condo back in 1999 for 185k, The previous owner bought it back in 1989 for somthing like 225K. An identical unit just below me sold last year for just over 400k.
Grim,
Excellent point, concerning that Summit house. Prices do go down in even good towns. It happened before and it will happen again. It just depends how willing you are to wait it out.
Thanks Grim! I'll have charts and fresh data for the custom data section of my web site within a week as well as the final pdf (the pretty version of the report). I'll let you know on http://matrix.millersamuel.com
Best, Jonathan Miller
grim
great example on the 50 new england ave summit house or townhome. Live in summit and have heard from many of our older friends that it took 5-7 years for people to make their money back after the late 80's bust! This confirms it. It is going to be much worse this time.
Also agree there are a lot of "ugly" neighborhoods in Summit.
Homes in these "undesirable" neighborhoods are selling(well not selling right now)for more than gorgeous homes on desirable streets four years ago.
No NYC newbie money is going to pay 600k for a house in east summit- it would be like driving a buick instead of a BMW- It won't impress their friends which is the whole point in overpaying for a house right? 600K used to buy a gorgeous 1930's original 4 bedroom near prime schools and parks.
Inventory is rising! DOM is rising. Prices are soft.
I have to say this again, properties are being clearly priced artificially low to keep up the bidding wars and illusion of mania.
A house on a prime street 5 bedrooms 3 1/2 bath is priced 25K less than the itty bitty 3 bedroom/3 bath that sold last year across the street? The new construction house, also 5 bedrooms is listed at$645K higher?
Who better to decide how a town should be run, than the residents of that town? They want 5 acre lots, because it's nice to have homes spaced out, instead of piled on top of each other on 50x100 lots.
Why should the other residents of town have any say in what I do with my 5 or 10 acre lot ? Who better to decide than I ? If they want their homes spaced out, they can avoid subdividing their lots.
Many of your posts seem to exude a sense of entitlement. To me America is not about entitlement, but about working hard to achieve your goals.
I think its people using zoning ordinances that have a sense of entitlement, frankly. Zoning most definitely drives up housing costs.
"Why should the other residents of town have any say in what I do with my 5 or 10 acre lot? Who better to decide than I?"
That's not how things work. Don't like a town, look elsewhere.
"If they want their homes spaced out, they can avoid subdividing their lots."
That's like sitting with someone who is smoking during dinner, with them unable to understand why you can't enjoy the meal. What individuals do, affects others. Some people may like to have a rusty pickup truck on cinder blocks sitting on their front lawn, but most towns have rules against this, for the good of all the town's residents.
That's not how things work. Don't like a town, look elsewhere.
Sorry, but if I have a large lot, and I want to subdivide it, its not the townships business to tell me I can only have 5 acre lots. That is an illegal taking of my property, expressly forbidden by the US constitution. The fact that are you willing to support such an illegal action indicates a statist mentality.
Some people may like to have a rusty pickup truck on cinder blocks sitting on their front lawn, but most towns have rules against this, for the good of all the town's residents.
You are not taking away someone's property value by telling them they can't have a truck there.
"That is an illegal taking of my property, expressly forbidden by the US constitution."
Which article of the Constitution says 5 acre lots must be subdividable?
"You are not taking away someone's property value by telling them they can't have a truck there."
No, you're taking away the property value of everyone else by having the truck there, which is why towns implement various ordinances.
I don't think we'll agree on this topic...
Which article of the Constitution says 5 acre lots must be subdividable?
Amendment 5 " nor shall private property be taken for public use, without just compensation."
If you say that my lot cannot be subdivided into say 1 acre lots and can only be subdivided into 5 acre lots, you have taken away the value of my property, and it is taken an illegal taking. Naturally, fascists like yourself defend it.
"Amendment 5 " nor shall private property be taken for public use, without just compensation."
No one is taking anyone's property.
"If you say that my lot cannot be subdivided into say 1 acre lots and can only be subdivided into 5 acre lots, you have taken away the value of my property"
But if you subdivide your property, you are taking away value from your neighbors. But it's obvious you don't care about your neighbors, or your town, only yourself.
"and it is taken an illegal taking."
Not at all, the town creates the property ordinances -- i.e., LAWS.
Don't like a town's laws, live somewhere else.
"Naturally, fascists like yourself defend it."
Nice, now I'm a "fascist." I guess when facts and logic don't support your claims, just resort to ad hominem...
No one is taking anyone's property.
Of course they are. They are reducing the value of my property by zoning into these huge lots.
But if you subdivide your property, you are taking away value from your neighbors. But it's obvious you don't care about your neighbors, or your town, only yourself.
No, I'm not. They can sell their property also. They can subdivide to their hearts content.
My neighbors can look after their own lots. I don't begrudge them what they can do with their lots.
Not at all, the town creates the property ordinances -- i.e., LAWS.
Sheesh. who do we have here ? Judge Dredd ?
No law or LAW if you prefer can override the supreme law of the country, the Constitution. And if you don't like it, live somewhere else. The old Soviet Union might be to your liking.
There is considerable legal debate going on as to how much zoning constitutes an illegal taking. A number of cases have also reached the Supreme Court. Its quite possible that a new Supreme Court could overrule some types of zoning as an illegal taking. In that case, the government will have to pay for it.
And if you don't have a house, you should be thrilled at that prospect. Zoning drives up housing prices for everyone.
"No law or LAW if you prefer can override the supreme law of the country, the Constitution."
Heh, you've already erroneously tried to cite the 5th Amendment, which you thought supported your case, and it actually did not.
I suppose next you'll be telling me that you don't like the 15 foot setbacks required by your town, so you're going to build right up to the property line so everything looks like Staten Island, and to hell what your fellow town residents think, and to hell with local laws.
Heh, you've already erroneously tried to cite the 5th Amendment, which you thought supported your case, and it actually did not.
Guess you can't read.
Its not just me dumbo. A lot of legal firms are debating exactly what constitutes a "taking" and its quite possible the new Supreme Court will take it up. It is a matter of some debate and has been for a while.
If you knew anything about the law (or anything at all) you would know that.
nd to hell what your fellow town residents think, and to hell with local laws.
And in your case, to hell with the Constitution. Sheeple like you would have been more at home in Nazi germany or Communist Russia, doing exactly what the LAW says.
So am I a "fascist," a "dumbo," a "sheeple," a "Nazi," a "commie," or a "dumbo fascist Nazi sheeple commie"?
I suppose next you'll be telling me that you don't like the 15 foot setbacks required by your town, so you're going to build right up to the property line so everything looks like Staten Island.
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