Monday, July 10, 2006

Revolving Debt Up 10%

From Marketwatch:

U.S. May consumer credit rises $4.4 billion, or 2.4%

Consumers took on a bigger-than-expected $4.4 billion more in debt in May, the Federal Reserve said, mostly in revolving debt like credit cards. U.S. borrowers pushed up overall outstanding consumer credit by 2.4%, or $4.4 billion, to $2.173 trillion, the Fed said Monday. Credit cards and other forms of revolving debt jacked up the overall number. U.S. consumers added $6.7 billion in revolving debt in May, up 10% from the prior month to a total of $812 billion. Nonrevolving debt like automobile loans, meanwhile, fell by 2%, or $2.2 billion, to $1.36 trillion

For those interested in a bit more data, the Fed Consumer Credit release can be found here:

CONSUMER CREDIT - May 2006

Caveat Emptor!
Grim

78 Comments:

Blogger chicagofinance said...

bad news - any regional data ;-)

7/10/2006 02:28:00 PM  
Blogger patient homebuyer said...

i am so glad i do not live on borrowed money

7/10/2006 02:31:00 PM  
Blogger grim said...

National City may sell some mortgage units

National City Corp., the No. 8. U.S. bank, said on Monday it may sell some mortgage lending units as soon as this summer to reduce its exposure to subprime lending as demand for home loans declines.

Analysts have long expected the subprime industry to consolidate as lenders shrink profit margins to chase a dwindling supply of loans, and amid concern that loan losses will rise as the U.S. economy slows.

"This is a strategic review to possibly reduce National City's presence in nonprime mortgage lending," spokesman Chris Kemper said.
...
In the first quarter, mortgage lending profit at National City fell 77 percent from a year earlier to $56 million.

At a Sanford C. Bernstein conference last month, David Daberko, National City's chief executive, said "it is true that the mortgage boom is over," and that in nonprime lending, "gain-on-sale margins have been competed away."
...
The Mortgage Bankers Association estimates that mortgage originations will decline 18 percent this year to $2.39 trillion, and fall further in 2007 as borrowing costs rise.

7/10/2006 02:34:00 PM  
Anonymous Anonymous said...

I offered 280K each for 2 properties asking for 500K in parsippany. The first realtor wrote to me that she think I might have a "typo". The second basically said the offer price is much lower than the asking price and they can't entertain it. remember, guy, they bought the properties for only 200K a few years back. Time for them to wake up to reality.

7/10/2006 02:38:00 PM  
Anonymous Anonymous said...

"Report: Consumer groups blast Fed
Advocates say report on credit card practices turns blind eye to problems that debt poses to many customers."


http://tinyurl.com/rco4m

7/10/2006 02:43:00 PM  
Blogger Richard said...

question. if i charge $1000 on my credit card in may, but pay it all off the next billing cycle, how is this counted in this type of survey?

7/10/2006 02:47:00 PM  
Anonymous UnRealtor said...

Do people who pay off their balance in full each month show up on these reports?

7/10/2006 02:47:00 PM  
Anonymous UnRealtor said...

"I offered 280K each for 2 properties asking for 500K in parsippany."


Nice. I think you're early, though, by about a year. Unless you specifically find a distressed seller.

7/10/2006 02:49:00 PM  
Anonymous UnRealtor said...

Richard, beat me by 2 seconds!

7/10/2006 02:54:00 PM  
Blogger NJGal said...

I wonder what's going onto these cards. If auto loans are down, people must feel like they have less disposable income (even though it's not really disposable when you need a loan for it, right?) Are they spending on consumer goods, or, as I suspect, using it for things they need to pay, like mortgages, food, etc.?

7/10/2006 02:55:00 PM  
Anonymous Anonymous said...

I can tell you every bill gets charged to my credit card. Cable, Phone, Electric, Car payment ect. This is because of the off we got for 3% of spending goes to our mortgage.. But we pay it off everymonth so it doesn't revoled.. So You can really charge anything these days.

7/10/2006 03:00:00 PM  
Anonymous Anonymous said...

Richard and Unrealtor:

www.philadelphiafed.org/pcc/DG192006April10.pdf

On G.19 there is no offset/reduction for "good payors". The assets are the assets as of the filing date, including amounts paid off during the grace period.

7/10/2006 03:02:00 PM  
Anonymous Anonymous said...

P.S. to chicagofinance

Assets (debt) listings by top banks are located in the Appendix.

7/10/2006 03:05:00 PM  
Blogger grim said...

Richard,

Included. The link already posted was the one I would have provided..

The official title of the G.19 statistical release is “Consumer Credit,” not “Consumer Debt” because G.19 estimates include some short-term extensions of credit on which no interest is assessed, such as those made to consumers who regularly pay their credit card balances in full. Consumer debt, on the other hand, is a subset of consumer credit. It includes only those extensions of credit that the consumer plans to pay back over time. In most cases, these long-term extensions are subject to interest charges.

7/10/2006 03:05:00 PM  
Blogger patient homebuyer said...

i also pay my bill in full every month, the credit card companies must hate people who do this no balances to raise the interest rates on

7/10/2006 03:12:00 PM  
Blogger skep-tic said...

anon at 3:38,

nice work. a while back, bidding below asking at all was "insulting."

now bidding more than 10% off is an "insult."

who knows where we'll be in a year.

it's amazing that these people think 20% yearly appreciation is normal, but the reverse is an impossible

7/10/2006 03:16:00 PM  
Anonymous Anonymous said...

No, patienthb, the line of credit itself is also important to the value of the lender.

Imagine two identical lenders. Exactly the same amounts issued in G.19. However, one has more "unused available credit" issued.

Which company's stock would you purchase?

7/10/2006 03:17:00 PM  
Anonymous Anonymous said...

Its the shifting of credit from Home Equity to Credit Cards. No more home equity to draw from, so lets go tap the cards.
It does take balls of steel to be fully indebted with HELOCs that were used to finance the RV,SUVs,boats,remodelling etc...and then to take in further debt at 21% credit card rates....
God Save this Country!

7/10/2006 03:34:00 PM  
Blogger Richard said...

HELOC rates are in the mid 8% interest rates on average right now. not so attractive but people are still doing it. know why? better than CC rates which are higher (except for teaser rates and existing balance transfers) but the core reason is they have to to maintain whatever lifestyle they have. if you didn't have 100% appreciation in 5-7 years in the bubbly areas but more like 60% we'd already be well into a recession IMO.

7/10/2006 03:44:00 PM  
Anonymous Anonymous said...

Does anyone know why this half-decent home (MLS 2281275) in Short Hills on Mt. Ararat road is looking kinda reasonable after a several price cuts to $595K?

SH

7/10/2006 04:00:00 PM  
Anonymous UnRealtor said...

"Does anyone know why this half-decent home (MLS 2281275) in Short Hills on Mt. Ararat road is looking kinda reasonable after a several price cuts to $595K?"


Because you've had a few martinis at lunch? :)

That entire street ran in the $300K range about 3 years ago. If you're into paying a $300K 'bubble tax' make a move.

7/10/2006 04:05:00 PM  
Anonymous Anonymous said...

Help! I'm looking at a beautiful 2-bedroom condo (1600 sq. feet) in Montclair with an asking price of $459,000. It's in a quiet, elegant pre-war building in one of the best neighborhoods in town. Should I wait for the price to fall, or are prices going to hold steady in this desirable town with easy access to New York?

Anybody have a clue?

7/10/2006 06:20:00 PM  
Blogger RentinginNJ said...

i also pay my bill in full every month, the credit card companies must hate people who do this no balances to raise the interest rates on

The CC company still makes money. Merchants are charged a commission for the priviledge of being able to charge your CC.

7/10/2006 06:50:00 PM  
Anonymous Anonymous said...

Help! I'm looking at a beautiful 2-bedroom condo (1600 sq. feet) in Montclair with an asking price of $459,000. It's in a quiet, elegant pre-war building in one of the best neighborhoods in town. Should I wait for the price to fall, or are prices going to hold steady in this desirable town with easy access to New York?

Anybody have a clue?

7/10/2006 07:20:58 PM



You can buy a small house for that amount or a little more. What you spend in a "fee" can be put towards a mortgage which is tax deductable. Also, think about the tax reassessment--this wil raise your tax bill, and possibly your maintenance--condo or co-op?

Want a condo? Go to Hudson County where you may be able to re-sell or rent if these go south--and they will.

Good luck.

7/10/2006 07:55:00 PM  
Anonymous Anonymous said...

To Anonymous at 7:20pm

You're paying $287.00 per square foot! Pre-war? Which war? do you realize how OLD that building is? You can probably build a custom home (on actual land) for slightly higher than that per sq ft amount... think about it...

7/10/2006 07:57:00 PM  
Anonymous Anonymous said...

This report doesn't surprize me. People just spend more than they earn. This is crazy and not good. We don't produce anything, we have nothing to sell. So we have credit to take its place.

This picture gets worse by the month. Debt is the achilles heel. If one is in debt, I suggest reduce your lifestyle and get out of debt.

We are really lucky we have the reserve currency of the world, but how long can this last? In my opinion, I really don't see it being too much longer. We are going to be challenged on this one, trust me.
Thank god we have a strong military or else it would have been done already.

I can't stress this enough fellow bloggers, if you are in debt, really, really come up with a plan to get out. Perhaps even try to sell your house while the prices are still overvalued. You don't want all your net worth tied up in housing anyway....

ok,

SAS

7/10/2006 08:08:00 PM  
Blogger RichInNorthNJ said...

I don’t know if you need to have a login to read this MarketWatch commentary by Paul Farrell.

America's savings hoax exposed

“OK, let's stop the charade and admit the truth. Why does America have a zero savings rate? Because America has no savings policy. Period. For more than a decade, Washington, Wall Street and Corporate America have favored a national spending policy at the expense of a national savings policy.”

7/10/2006 08:11:00 PM  
Anonymous Anonymous said...

I went house shopping this weekend, and met up with an old Realtor friend. His advise: Do not buy, do not bother looking, give it a rest and see me next Fall.

This explains why he sold off all his investment property last year--too young to retire.

7/10/2006 08:16:00 PM  
Anonymous Anonymous said...

yeah Rich,

That was a good article. That joe is on the money.

remember.....wall street, the politicans, multinationals, and the banks will do anything in their power to keep you and I from our money. There worse than the red light district in Shanghai China.

SAS

7/10/2006 08:18:00 PM  
Anonymous Anonymous said...


Toll Brothers outlook now stable, was positive - S&P

7/10/2006 08:40:00 PM  
Anonymous Anonymous said...

Toll Brothers outlook now stable, was positive - S&P

"The outlook revision is due to negative new order trends that have been deeper and broader than anticipated during the early stages of the overall housing market correction, precluding an upgrade in the near term," S&P said in a statement.

"Given the longer construction cycle for Toll's luxury homes, these trends are likely to pressure profits for several quarters," S&P said.

Cancellation rates among U.S. home buyers are running above last quarter's levels as the housing market slows, Toll Chief Executive Robert Toll said on June 27.

7/10/2006 08:43:00 PM  
Anonymous Anonymous said...

GSMLS score - 31,575 and counting:)

100 more added today.

7/10/2006 08:45:00 PM  
Anonymous Anonymous said...

Anon @ 3:38,

You mentioned about offering 280K on 500K homes in Parsippany.

Note that even distressed home buyers / foreclosure specialists (sometimes called "predators" and rightfully so) offer 65-72% of the current appraisal value in cash outright.

Also, I don't understand your justification that they (the current owners) brought the property for $200K a few years ago. Are you suggesting that a maximum return-on-income law be passed in the US (for instance - many Islamic countries have particularly harsh laws for transactions that charge any interest) ?


CNS

7/10/2006 08:45:00 PM  
Anonymous Anonymous said...

Deal or no deal? Closing in 2 weeks.

7 months ago I was able to get into a pre-construction for townhouse/condos in Belleville Twp. Signed contract to purchase an Montclair END Unit for 350,900. Seemed like a great idea at the time. The pluses ++ new construction, got in early, end unit, close to NYC, etc ++ The same model right now is selling for 373,990 + end unit premium 12,000 = 385,900. Thats a 35k appreciation.

I elected not to lock-in an interest rate and I'm going to pay for that (6 3/4) rate. The big question I have is where is the market heading for townhouse/condos? I'm not looking to make a huge profit from this but I'd like to live in the place 3-5 years and leave with a decent return on my investment if not just break even. Reading through this site has put a bit of fear into my purchase. Is this a risky move even considering the equity gained up to this point? Will result in my not being able to get out with my shirt in 3-5 years? TIA for any thoughts.

7/10/2006 08:48:00 PM  
Anonymous Anonymous said...

Deal or no deal? Closing in 2 weeks.

7 months ago I was able to get into a pre-construction for townhouse/condos in Belleville Twp. Signed contract to purchase an Montclair END Unit for 350,900. Seemed like a great idea at the time. The pluses ++ new construction, got in early, end unit, close to NYC, etc ++ The same model right now is selling for 373,990 + end unit premium 12,000 = 385,900. Thats a 35k appreciation.

I elected not to lock-in an interest rate and I'm going to pay for that (6 3/4) rate. The big question I have is where is the market heading for townhouse/condos? I'm not looking to make a huge profit from this but I'd like to live in the place 3-5 years and leave with a decent return on my investment if not just break even. Reading through this site has put a bit of fear into my purchase. Is this a risky move even considering the equity gained up to this point? Will result in my not being able to get out with my shirt in 3-5 years? TIA for any thoughts.

http://www.centexhomes.com/New-Jersey/361331_Plan.html

7/10/2006 08:49:00 PM  
Anonymous Anonymous said...

Townhome purchaser:

Can you stay there or rent it out instead of selling 3-5?

7/10/2006 08:55:00 PM  
Anonymous Anonymous said...

Interesting ad I saw this week. A pretty popular local (PA)agent is advertising now to buyers that they guarantee AT LEAST $5,000 negotiated discount on your home purchase.

Who the heck are they working for?

Ha.

Pat

7/10/2006 09:03:00 PM  
Anonymous Anonymous said...

@cns
this is not anon @ 3:28

Are you suggesting that a maximum return-on-income law be passed in the US

It seems like the sellers assume that a law backing 20% year over year increase in property value has already been passed into law. I don't see anything wrong in anon 3:28's justification.

many Islamic countries have particularly harsh laws for transactions that charge any interest)
Can you please name a few of these countries? I can probably borrow money from them to pay off my $300 jeans.

7/10/2006 09:05:00 PM  
Anonymous Anonymous said...

Can you stay there or rent it out instead of selling 3-5?

Yes, I can.

7/10/2006 09:09:00 PM  
Anonymous Anonymous said...

Anon at 10:52,

I agree with you about seller's expectations being over-realistic. You would pretty much expect me to be on the side of the underdog i.e. anyone who is on the wrong side of a lopsided deal because of circumstances.

Shariah does not permit interest to be charged. But the brilliance is how it is applied in Islamic countries. They do not define interest as interest - preferring to call it lease payment (or something else to that effect).

CNS

7/10/2006 09:11:00 PM  
Anonymous Anonymous said...

Blogger's quest ends with keys to house
Montreal man vowed to barter one red paper clip up to a new home

http://www.msnbc.msn.com/id/13804920/

7/10/2006 09:11:00 PM  
Anonymous Anonymous said...

CNS, The market is falling. The flippers are desperately trying to find the next guy to hold the hot potato. Hopefully, you are not one of those desperates. The price is determined by how much the buyers are willing to pay, not by appraisers or the greedy sellers. When it was seller's market, they ask for whatever price they want. Now it is buyer's market, we can offer any number we deem fair.

I am not suggesting anything. What I am saying is when you gamble, you should not expect to win all the time. In that sense, if the owner is asking for 500K for a property he bought at 250K 3 yrs back, the buyers have all the right to offer 280K or even 200K. There is no law saying that the sales price has be higher than the purchase price.

haha, market is falling like a rock. Let's celebrate our patience.

7/10/2006 09:11:00 PM  
Anonymous Anonymous said...

Townhome purchaser who can rent out if not sellable 3-5:

Various available NPV comparative tools are available for you to determine the necessary rent.

http://www.goodmortgage.com/Calc_investment_property.htm

Sounds like you need to do some number crunching, with various tax increase assumptions and association fee scenarious.

7/10/2006 09:19:00 PM  
Blogger Grim Ghost said...

anon are those real townhouses @ Belleville ? They look more like partial townohouse/condos to me (where you have someone staying on top of you). That means you don't have an attic. It also doesn't look like you have a basement to finish.

Not to knock it, but the place looks small for that price in Belleville, which is not a great town. I guess you do have the commute though, and I don't know about the surrounding area.

7/10/2006 09:21:00 PM  
Anonymous Anonymous said...

Anon @ 10:11,

I have no vested financial interest in RE now (I would be objective if I did have an interest in RE).

Yes, I know sellers got over their heads in the past 2-4 years. But the sad irony is this - no one can prove a point to the "real a****le" sellers because they have their financial act together. They can demand and hold out for outrageous prices.

More often than not, the buyers take out their frustration on the sellers who are on the edge of a financial crisis - who also tend to be nicer, more generous kind.

CNS

7/10/2006 09:43:00 PM  
Anonymous Anonymous said...

Grim,
Its exactly as you said. Small (1300sq ft) but easy commute to the city.

7/10/2006 10:12:00 PM  
Blogger RentinginNJ said...

I'm not looking to make a huge profit from this but I'd like to live in the place 3-5 years and leave with a decent return on my investment

No one can predict the future, but I’d be really concerned about your timeframe. Even in a normal market with normal appreciation, conventional wisdom would suggest renting over buying if you have a short timeframe.

This, however, is not a normal market. Most would agree that the days of unstoppable appreciation are over. It’s just a question now of soft landing or crash & burn.

Housing bubble tend to play out over the course of years. We could well be seeing the bottom in 3-5 years. In fact, most ARMs were issued in 2005 and peak mortgage defaults tend to occur about 3 years later.

I see two options; bail out now while you stand a reasonable chance of not losing your shirt or be prepared to ride out the storm for longer than 3-5 years (maybe 10 years).

7/10/2006 10:16:00 PM  
Anonymous Anonymous said...

Deal or no deal? Closing in 2 weeks.

Many informed people on this blog believe we will see a market bottom in 3-5 years -- a drop of 30 to 40% below today's price. It is quite possible that it could take up to 10 or more years for prices to return to breakeven as it did for some in the last bubble.

Look at grim's chart and calculate the probabilities for yourself:

http://www.youdovoodoo.com/80sbubble.htm

JAY

7/10/2006 10:17:00 PM  
Anonymous Anonymous said...

JAY,
Appreciate your input. The one thing I did notice about the chart is that no matter where you bought in the last 25 years, if you held on you made a profit to date.

Meaning, if in 3-5 years we do see a decline in house price as in the 1980's I could always rent it out and wait for the next bubble. I just have to decide if I'd be happier with that scenario or possibly waiting a couple years to buy.

I'm still leaning toward going ahead with the purchase at this point.

7/10/2006 10:31:00 PM  
Anonymous Anonymous said...

Meaning, if in 3-5 years we do see a decline in house price as in the 1980's I could always rent it out...

You should do a projection of what you estimate rents will be for your unit in 3-5 yrs., and deduct your monthly projected costs at that time (mortgage, maint. fee, taxes, insurance) to make sure you won't be cash negative for years to come...

JAY

7/10/2006 10:39:00 PM  
Blogger RentinginNJ said...

The same model right now is selling for 373,990

By “selling for” do you mean, a buyer recently purchased a unit for $373,900 or;
Do you mean a unit is on the market for $373,900, but it hasn’t sold yet.

7/10/2006 10:40:00 PM  
Anonymous Anonymous said...

RentinginNJ,

Thats the 'selling price'. 5 or 6 Montclair units just closed in another building so I'm going to try and find out what they actually closed for... I assume that information can be found from the town hall?

On another note if you call Centex interested in that unit they tell you that if your not on the VIP list you can't get that unit (sold out). I've noticed that model has increased about 10k over the last 2-3 months. I can only assume when they get to the next building to close they raise the selling price. Again I have no evidence of how much the first units have closed @....

7/10/2006 10:55:00 PM  
Blogger Space Ghost said...


5 or 6 Montclair units just closed in another building so I'm going to try and find out what they actually closed for... I assume that information can be found from the town hall?


It typically takes a while for closings to show up in town hall. Also,if they closed now, the unit was sold several months back, so it doesnt tell you much about current prices.

Not everyone on this blog thinks we're going to see a huge drop. I predict stagnation for a few years, but not a big drop.

If you do sell, I would suggest going back to the builder and seeing if they will take it back for a premium. If they actually have a shortage of these units, they might go for it.

Otherwise, you would have to pay 5% to a realtor and that would eat up most of any presumed profit.

If you like the unit, the commute and everything else, and feel comfortable with that debt, keep it

[ Previously known as grim ghost, changed name to avoid confusion with grim]

7/11/2006 12:23:00 AM  
Blogger Roadtripboy said...

Patient Homebuyer,

Re: paying your credit card bill in full each month.

Yes, the credit card companies don't like customers like us.

They actually refer to people who pay their bill in full each month with the ironic moniker, "deadbeats"!

7/11/2006 12:37:00 AM  
Blogger grim said...

Anonymous,

The following units are for sale at Essex Park:

MLS# 2264523
601 Tami Court
Original List: $362,000
Reduced to: $359,900
List Price: $349,900
DOM: 97

MLS# 2278446
611 Tami Court
Original List Price: $369,900
Reduced tp: $359,900
Current Price: $349,900
DOM: 57

I believe both are Bellwood units, however realize that both are selling for below the listed price of $356,990 on the Centex site. Both descriptions state they are selling at below pre-construction prices.

grim

7/11/2006 06:26:00 AM  
Blogger grim said...

Listed on GSMLS.

grim

7/11/2006 06:27:00 AM  
Blogger chicagofinance said...

"Appreciate your input. The one thing I did notice about the chart is that no matter where you bought in the last 25 years, if you held on you made a profit to date."

1. Did you? Think about that one.

2. Is that justification to buy under current market conditions? What you are considering is theoretical. Is that a course of behavior that you would actually follow?

3. 3-5 years? Sounds like a good candidate for renting. Of course, in these times, too many people have drunk the Kool-Aid.

4. My professional opinion is that within your 3-5 year timeframe you have a uncomfortably large chance of being underwater on a condo in that area. You could do fine, but I actually predict almost no chance of any upside worth your time [financially that is - not considering psychic value, which may be the most important thing for many]


I think people are too fixated on what was the purchase price and what was the sale price anyway. The decision is always "what is the best option RIGHT NOW", not thinking about where you were.

7/11/2006 07:13:00 AM  
Anonymous Anonymous said...

Space Ghost,
No, that building closed June 27th and it is the first building with Montclair units. I would say that gives me a good estimation of what they are selling for right now.

Grim,
Thanks for that info. Keep in mind that they have raised the Belwood sales price over the last few months from 323k to 356k. So those people selling at 356k are making a profit. That is... if they do manage to find a buyer.

7/11/2006 07:22:00 AM  
Blogger grim said...

One correction, it's 610 not 601.

The Asking prices for both units are $349,900.

612 Tami was listed on GSMLS as well, it has since been withdrawn.

707 Tami is for rent.

304 April was available for rent, it has since expired.

grim

7/11/2006 07:33:00 AM  
Blogger delford said...

Tis was not just a a bubble, but ratehr absolute insanity. There will be no quiet peacful stagnation over 3 to 5 years.

People need to understadn that, they rose that fast, they can and they will fall just as fast. Apllying laws of logic, and what happend after the last decline do not apply in this case.


I see a few possers here who predict a decline, but not a sever one, and I say to them why? ALl the ingredients for a big decline all all here, revolving debt up 10%, just add it to the stew, bye-bye real estate.

7/11/2006 08:28:00 AM  
Blogger grim said...

There was also an April court unit listed for rent/sale on craigslist..

grim

7/11/2006 08:38:00 AM  
Anonymous Anonymous said...

Grim,
I'll have to put my detective hat on and find out if/and how much those units are being rented for. Only thing is that there was only 1 Montclair unit that closed before these recent June 28th Montclair units closed. So I assume the ones for rent are all Belwood or Granville. Do you have a link to the craigslist posting?

7/11/2006 09:18:00 AM  
Anonymous UnRealtor said...

Two points on condo buyer:

* Condos always take a worse beating than single family homes in a market downturn.

* If you "break even" in 5 years, you have lost quite a bit of money: interest paid on the mortgage, closing costs, opportunity cost of not investing the money, etc, etc.

7/11/2006 09:31:00 AM  
Anonymous Anonymous said...

unrealtor,
Centex is paying for my closing costs as per the contract. If the market is in a downturn right now why has the selling price for my unit gone up? Also consider that if I was to rent in the current market conditions I would be paying $1000-1400 for an apartment a bit smaller then this condo.

The interest on my mortgage is about 2000-2100/mo which means I should see about 700/mo of that money back as part of my tax return. Meaning I am paying 1300 + taxes (no solid # yet) + homeowners ins. (?) + maint fee ($160) to live there. I'm guessing this is going to run about $500 more then renting per month after tax refund. Not that huge a difference wouldn't you agree?

7/11/2006 09:47:00 AM  
Anonymous UnRealtor said...

"If the market is in a downturn right now why has the selling price for my unit gone up?"

I thought you said asking price has gone up. Not the same thing as selling price at all.


"Also consider that if I was to rent in the current market conditions I would be paying $1000-1400 for an apartment a bit smaller then this condo."

But if your condo is worth $50,000+ less in 5 years...

You may be fine, but my point is to consider all costs associated with buying at market peak, especially if the value fo the property declines, as any objective observer would say is a likely (if not certain) scenario.

Wish you the best, and hope things work out well for you.

7/11/2006 10:18:00 AM  
Anonymous Anonymous said...

unrealtor,
Point taken. I am trying to weigh all the facts. Predicting what my condo will be worth in 5 years is just impossible. I can only hope the -$50,000 scenario does not happen.

7/11/2006 10:24:00 AM  
Anonymous Anonymous said...

I can only hope the -$50,000 scenario does not happen.

I think that would be best case - it's only a 14% drop from your purchase price of $350k, a tiny 2.8% p/yr over 5 years. I expect much greater price drops on condos. It could easily be double that.

JAY

7/11/2006 11:56:00 AM  
Anonymous Anonymous said...

Is this a risky move even considering the equity gained up to this point? Will result in my not being able to get out with my shirt in 3-5 years? TIA for any thoughts.


Get the hell out of this deal. What are you thinking?

7/11/2006 01:33:00 PM  
Anonymous Anonymous said...

Is this a risky move even considering the equity gained up to this point? Will result in my not being able to get out with my shirt in 3-5 years? TIA for any thoughts.


Get the hell out of this deal. What are you thinking?


If you read the last 20 posts you would know what I'm thinking. Perhaps if you provided some sort of reasoning as to why I shouldn't do it I'd be more inclined to comment. Duh?

7/11/2006 02:06:00 PM  
Blogger delford said...

anon: I would not do it. With all due respect condos are glorified apartments, nothing more.

In any real estate downturn they are the most affected, I personally know people including family memebrs who sold their coops/and condos for 50%, that is not a typo 50%! less than what they paid for them at the peak.

I know another guy who had a condo in Kearney purchased in 1987, could not unload it for years, finally sold it in late 200 for what he apid for it in 1987, that 13 long,long years.

7/11/2006 03:28:00 PM  
Anonymous Anonymous said...

delford,
Sorry I must disagree. I have seen no evidence that the housing market is going to take such a dramatic turn for the worse. I'm going to judge my purchase based on what other units are selling for in my development and what you can purchase for that same price in my town. And hope that rising interest rates will come to an end as the stock market is speculating. If thats the wrong way to go about it, so be it. I don't buy into the 'look the chart says this from the 80's theory'

7/11/2006 03:54:00 PM  
Blogger grim said...

If you don't mind me asking, what would constitute evidence to you?

grim

7/11/2006 04:20:00 PM  
Blogger chicagofinance said...

My last comments on the condo -

What makes it MORE risky is that it is:

1. a condo
2. in an area where SFH are the norm
3. in an area that is not a primary or even secondary choice [has allure due to affordability]

You are leaving yourself wide open.

Still, as long as you understand the risks, no one has the right to question your personal and informed decisions.

Best of luck to you regardless of what you choose.

7/11/2006 05:19:00 PM  
Anonymous Anonymous said...

anonymous,

I have worked in Belleville for the past ten years. I was raised in Nutley, so I am very familiar with the Belleville area. It's my old "stomping ground".

In my opinion, Belleville is on a serious downward trajectory, essentially becoming an extension of Newark. I understand there is a police substation in the high school to try to stem the crime and gang activity.

Frankly, when this bubble shakes out, I don't see anything in Bellevile (sic) selling for over $350K, much less a condo.

Just my opinion, and it is offered because you asked for honest advice.

Good luck to you.

jw

7/11/2006 08:22:00 PM  
Blogger Space Ghost said...

Anon, buying your Bellevile condo is not just a financial decision, its alifestyle decision. If you think you can take the debt and the possibility of being under for a while, you should go for it. Otherwise, no.

7/11/2006 08:23:00 PM  
Blogger Roadtripboy said...

Anon,

I've also seen sudden price increases on properties that I've been watching for awhile. I agree with some of the other posters who say that sellers are increasing asking prices because they know that they will need to negotiate in this market, due to the dramatic increase in inventory. They are hoping that the typical buyer will not be paying so much attention to this and they will be able to get their original asking prices after all is said and done.

Furthermore, what I've also noticed is that asking prices are frequently inconsistent and nonsensical. I've seen condos come on the market with asking prices higher than similar units which have been sitting on the market for months. Again, I think sellers really bank (pun intended) on the typical buyer being uninformed.

Good luck with whatever you decide.

7/11/2006 11:11:00 PM  
Blogger delford said...

anon: You say you see no evidence, well two things I see it all around, us I guess it depends what you are lookin at. Number two, I ams ure many people said the same thing last time when they bought their condos at ther peak,a nd crash they did, and in my opinion we are in much worse shape today as a nation then we were in the late 80's early 90's.

Finally Bellvill is on the decline, I would not buy there, if you must buy a condo, and you must buy now, look somewhere else, there are condos all over north Jersey. Good Luck.

7/12/2006 08:26:00 AM  
Anonymous Anonymous said...

delford,
Can you provide data to backup your statements? How is Belleville on the decline. Also keep in mind the townhouse I'm buying is new construction. You say there are townhouses all over NJ. Are they 20 minutes from NYC, new construction, across the street from a golf course, and have a community pool and can be purchased for less then 300's? If so please forward me the information ASAP!

On another note I went to the Belleville Twp Tax Office today and obtained the records of each unit that has closed to date. In March Belwood models closed for 300-315k. April saw closings of 315-328k. May saw closings of 320-340k. They did not have data for June's closings yet.

I will continue to gather data until closing. Hopefully I can find out how much the Montclair's in building 5 just closed. It appears to still be a healthy market to me (at least for new construction). I spent a few hours each day this week browsing MLS and I still feel like this is a good deal so far. I haven't seen any real data to tell me otherwise.

7/12/2006 02:33:00 PM  

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