Labor Day Weekend Open Discussion
Observations about your local areas, comments on news stories or the New Jersey housing bubble, Open House reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let's have them. Also a good place to post suggestions, requests for information, criticism, and praise.
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For readers that have never commented, there is a small link on the bottom of each new message that reads "# Comments". Go ahead and give that a click, you might be missing out on a world of information you didn't know about. While you are there, introduce yourselves to everyone.
For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past 6 months. The archives can be found at the bottom of the right hand menu and are categorized by month.
166 Comments:
Look for new editions of Lowball! and Price Reduced! this weekend.
grim
That will be a future cover for BW.
BC Bob
Found this through the Seattle Bubble Blog. Yo Jersey represent!
http://www.realestateconsulting.com/hcb.html
for Grim
http://usmarket.seekingalpha.com/article/16200
-cs
Interesting link..
Light Crude (NYM)
($US per bbl.) 69.90
Looks like I am eating crow today.
But, don't be fooled either.
People are driving less & shopping less, and going further into debt.
Things are going to bite hard and soon. No matter what the damn fed says. You all better prepare yourself for the perfect economic storm that is brewing and heading our way.
This will make Katrina look like a kitten.
;)
SAS
I was going to buy sooner than later, but I think I will just wait in light of the news getting worse and worse for housing daily...
Chances are, you will not be alone in waiting because of the falling prices, which will just add to the downward momentum.
jw
Two observations:
1. When I first started looking for homes on the Garden State MLS (http://new.gsmls.com/public/), the results were listed with the newest listing appearing at the bottom. Then, a few weeks ago, I noticed they had switched the search results to list in order of price. I figured this was the realtors trying to mess with our ability to see which homes have been for sale the longest. This morning, for the first time in weeks, the search results appeared in what I believe was "date listed" order. Now, as of this afternoon, its back to price order. Any thoughts?
2. Some of the homes for sale have been listed for almost a year if not more. I have a feeling there were a lot of pre-retirees who thought they would retire a few years earlier since their homes went up in value 85% over the last 4-5 years. I don't think these listings are going to be delisted and reposted anytime soon since these are not people who are really looking to move. They tried to cash out too late in the game and will just sit and wait. On some level, that could slow the decline in actual prices. I wonder how many of the current listings are genuine "I HAVE to move" listings versus "Let's see if I can make a quick buck for fun".
Light Crude (NYM)
($US per bbl.) 69.90
Looks like I am eating crow today
SAS,
Homeowners better hope the price stays high. What will be the precusor to say $30-40 crude, worldwide recession????
BC Bob
Take a look at how many NJ cities are listed by money mag as top 25 safest;
http://money.cnn.com/magazines/moneymag/bplive/2006/top25s/safest.html
NJ is over half the list
Anybody care to speculate what the correlation is between this and the high taxes we pay here?
More cops equal lower crime and higher taxes
Did the BusinessWeek article in the previous post make anyone else almost nauseous ? I don't mean the FB stories, everyone here has been expecting them; but the accounting practices at the lenders that allow them to report the full payment amount as profit on an Neg/AM ARM even if they only recieve a portion of it.
For those who haven't read it, please do so. The implications are actually pretty staggering.
Also, given the pretty dismal reports from the retail/auto sector over the past few weeks what the hell is keeping the DJIA so high ?
One word to grubbers "DOOM"
The Home equity is just going POOOOOOOOOOOFFFFFFFFFF by the day week month. either accept it or ride it down to the rock bottom in misery.
How much will houses drop this weekend? 10%? 5%?
Don't miss out on selling cuz next week the price will be lower?
OOHHH NOO!!
PAPAPAPAPA
PANIC!
Q2 2005 to Q2 2006 NJ price is up 12.5%. (HPI calculator)
Bagholder fool buyers will be underwater from day 1 of ownership.
You want to be labeled a loser from day 1?
(HPI calculator)
Nice TRY!
You forgot to put the batteries in.
DUH!
From Inman:
Home-buying plans lowest since 1990
Consumers' attitudes about home buying remained low in August, with home-buying plans falling to the lowest level since 1990, according to a consumer confidence report.
Overall consumer confidence remains weak, but the pace of decline slowed significantly in late August from the July level, according to a survey released today. The overall confidence rebound was mainly due to the decline in gas prices since the start of August.
"Despite the remarkable resilience of consumers, the data does not indicate a renewed upsurge in consumer spending but that consumers will remain cautious spenders rather than engage in sharp recessionary cutbacks," according to Richard Curtin, the director of the University of Michigan's Survey of Consumers, which releases the report.
The clear exception involved housing. "Consumers held the least favorable home-buying plans since the low point in the 1990 recession, which indicates continued declines in sales of new and existing homes during the year ahead," Curtin said.
...
‘Housing is in freefall and that is the key to the economic outlook,’ he said.”
Uh Oh.
Lower prices today tomorrow and next week and next month and next year.
Bad News Grubbers.
POOOOOOOOOOOFFFFFFFF GOES THE EQUITY.
“It turns out that the anecdotal evidence for falling prices may be exactly right, because a large number of housing sale prices may be based on fudged numbers. That’s right, the last leg of Greenspan’s bubble may be collapsing under the weight of farcical accounting.”
Calculator broken indeed.
The 2006 Q2 HPI data won't be released by OFHEO until next Tuesday, September 5th..
OFHEO HOUSE PRICE INDEX TO BE RELEASED SEPTEMBER 5 (PDF)
grim
You could check the housing apreciation using:
http://www.ofheo.gov/Landing.asp
and then download the new calculator
http://www.ofheo.gov/media/pdf/test/HpiCalc_06Q2.jar
Batteries are in now; only that no so many people know about it and wait for Sept 5.
Ah, sneaky, thanks. Wish you would have posted that link up with your original reply.
Sure that data is correct pre-release?
grim
Massachusetts monthly decline in home sales the biggest in 11 years
Friday, September 1, 2006
Massachusetts home sales in July were off by 27 percent, the biggest decline for a single month since 1995, according to data released Tuesday by a group that logs all sales recorded at registries of deeds. Median prices for the month, compared to July 2005, were also down 6 percent for single-family homes and 4 percent for condominiums, according to The Warren Group of Boston, the publisher of Banker & Tradesman.
The median single-family home sale price in July was $339,000, while the median condo sale price was $277,700. In April 1995, single-family home sales declined by almost 30 percent. Data covering the first seven months of the year shows single-family home sales are down 13.3 percent, with prices off by 3.5 percent, to $332,900. Condo sales this year are down 9.5 percent, with the median condo sale price up $1.1 percent for the year.
"The July numbers are down, which we expected, but we still believe the slowdown in the state housing sector is not as dramatic as these numbers make it appear," Timothy Warren Jr., CEO of The Warren Group, said in a statement. "Monthly fluctuations can happen. We're not pressing the panic button yet, but we are watching the trend lines very closely."
Today is almost over and until Thursday nobody will work on it. All the data is in so ... I THINK nothing will change.
Rookie move by OFHEO, I'm pretty surprised they let that one lose. Most goverment agencies embargo their releases pretty tightly. I think you could be right, IT wanted to get a head start on the weekend.
grim
Anonymous said...
Q2 2005 to Q2 2006 NJ price is up 12.5%. (HPI calculator)
9/01/2006 02:31:53 PM
You failed to mention that Q3/Q4 was the top of the market. Even if you are correct what does the Q4-2005 to Q2-2006 indicate?? You could conceivably show a 12% increase in this time frame but a 6% decrease from Q4-2005. Sounds like you may be distorting/hiding the facts, like the BW article. Also, does this include the 50k in incentives on a 500k house, which is very common with H-Builders at the present time??? My accounting indicates this would represent a 10% price decline. The industry's accounting would result in this 50k being placed on some off-shore ledger, enronic. Go ahead and believe what you may. Maybe I'll even buy a POS and flip to you.
BC Bob
2005 q4 2006 q2
US up 3.4%
NJ up 4.3%
I'll let Grim interpret the numbers from now on. I have not made any comments and just reported the numbers.
You can download the calculator yourself and reach your own conclusion.
Cheers!
Just like the miserable weather last weekend, this weekend will be rain.
How does rain affect open houses? Do more or less people go and visit? Am curious...any opinions out there?
I prefer to visit houses on rainy weekends.
The desperation on seller faces brightens my day!
How does rain affect open houses?
The realtor sits inside by themself scanning the classified ads, looking for future employment, as compared to sitting outside by themself doing the same. At least there is one positive, they stay dry!!!
BC Bob
Myth #1: As long as job growth is strong, prices can't go down
You can almost forgive the bulls for stumbling over this one. In past housing recessions, prices fell sharply in markets with severe job losses, like Texas in the mid-80s and Boston in the early 90s.
But the argument that prices can't fall in a good job market doesn't make economic sense: To be sure, a strong employment picture helps demand. But if far more houses are pouring onto the market than can be absorbed by households lured by the new jobs, and if the sellers are pressured to sell, prices will fall.
That's precisely what's happening now in good job markets such as San Diego and Northern Virginia. In this boom, prices soared to such extraordinary levels that builders kept churning out new homes, and owners of existing houses threw a record number of units on the market to cash out. The supply grew so fast that demand, even in strong job markets, simply couldn't keep up.
As usual, for the believers, it's always easier to fall back on a cliché than read the warning signs.
Myth #2: The builders learned their lesson in the last downturn. They won't swamp the market with new houses when the market turns
You might call this the OPEC theory of homebuilders. The idea was that the builders wouldn't take a chance by building lots of unsold, "spec" units that could clog the market in a downturn. They had supposedly absorbed hard-won discipline from their excessive building in past downturns.
Well, it hasn't turned out that way. Builders are still pouring out near-record numbers of new homes as sales decline, assuring a further fall in prices. "Buyers" are walking away from deposits on houses that were supposedly pre-sold, forcing developers to throw them back on the market at a discount.
The problem is that even now, margins on new homes are still pretty good, though well below the levels of a year ago. As a result, builders will just keep building until those big margins evaporate. High prices are sewing the seeds of their own demise. They always do.
Myth #3: Low interest rates will keep values rising, or at the very least, put a floor under prices
What really matters for all assets, whether it's houses, stocks or bonds, is real interest rates - in other words, nominal rates after subtracting inflation. And real rates fell sharply starting in 2001. That caused a legitimate, one-time increase in housing prices.
The rub is that prices rose far more than could ever be justified by declining mortgage rates. That's where the bubble kicked in. Today's relatively low rates are not, and never were, a reason why prices would keep rising. Once real rates drop and stabilize, the impetus goes away - again, the gain is a one-time, not a recurring, phenomenon.
Today, real 10-year rates are still extremely low. They have nowhere to go but up. When the one-time gain of 2001-2004 reverses, housing prices could take a further hit.
By the way, a decline in rates due to a fall in inflation isn't the boom to real estate it's advertised to be. Sure, rates go down, but workers also receive lower raises. So the fall in rates turns out to be a wash. As for what matters - real rates - what goes down later goes up, and housing prices go in the other direction, namely south.
Myth #4: restriction on development in the suburbs ensure low supply, and guarantee rising prices
This argument ignores that the tough zoning laws and anti-development fervor have been a feature of America's tony towns since the early 1970s. The "not in my town" phenomenon is nothing new.
Sure, it's still difficult to get new building permits in suburbs of New Jersey, New York, Washington, Seattle and San Francisco. But America's housing market is extremely fluid. People move farther from job centers, and commute longer hours, to get bargains where housing is plentiful. Then the jobs move to the areas with the cheap houses. People in their 50s and 60s cash out early in San Diego and buy a bigger house for half the money in Texas or South Carolina.
And the cities are just as enthusiastic about developing blighted areas with new, tax-paying high-rises as the suburbs are slamming the door. In the New York area, Brooklyn, Jersey City and Hoboken - and even Manhattan - are sprouting more new housing than in decades, despite a job market that's hardly robust.
A year ago, the reigning cliché was that real estate had entered a new world of "no supply." Now, a record 3.85 million homes are up for sale, and buyers are getting scarce.
No, the world hasn't changed. And the myths haven't changed either. Next time, don't believe them.
I think this is something you will be hearing more of....spoke to my realtor this week. She has decided to quit the business. She is tired of sitting all day, alone, during open houses and not getting paid. Quote: "I could make more money bagging groceries". Sign o' the times.
:)
Still waiting to pounce when a good deal comes my way!
Has anyone who's seen the "Suzanne Researched it" ad not completely disgusted by it?
4:46
Your realtor friend is not alone. Skimmers are leaving. I have two who I know that are quitting to "go back to school."
It gets tough fast after 6 months and no big checks.
But on the other hand, I know an old stogie fart-type who's raking it in. He's putting more ads than ever in the paper. He showed us 12 houses last year. He's like a wolverine. Loves this type of market.
Pat
Here's the "Suzanne Researched This!" Century 21 commercial:
http://www.youtube.com/watch?v=Ubsd-tWYmZw
All in line with the NAR "code of ethics."
This comment has been removed by a blog administrator.
Anonymous said...
Myth #4:
[edit]In the New York area, Brooklyn, Jersey City and Hoboken - and even Manhattan - are sprouting more new housing than in decades, despite a job market that's hardly robust.
9/01/2006 04:12:40 PM
Anon - thank you for a lengthy post and a lot of analysis. I take issue with some of the facts that you cite, espcially this one among others. The job market, while not uniform across all industries and regions in the NYC-area is rocking. Many are doing OK, but some are seriously raking in bloated amounts of coin, and to some extent it does raise -not all boats- but more than just a few.
chicago
http://www.inman.com/inmannews.aspx?ID=56225
-cs
"Also, given the pretty dismal reports from the retail/auto sector over the past few weeks what the hell is keeping the DJIA so high ? "
Its called the Plunge protection team (i.e your tax dollars at work).
They also influence banking too.
More than I want to elaborate on this board. Don't want that horse head in my bed.
Also, pencil neck hedge funds with under table dealings play a role, and money is coming out of the housing market and finding its way back to the stock market.
;)
SAS
Boom and bust cycles
...The eternal truth in the investment world is that every asset class goes through boom and bust cycles, which typically last for several years...
Puru Saxena - Other articles
Thu 31 Aug, 2006
The eternal truth in the investment world is that every asset class goes through boom and bust cycles, which typically last for several years. However, it is ironic that toward the end of any bull-market, when the risk is extreme, optimism toward the booming asset-class is usually at a record-high. On the other hand, during the final phase of a bear-market, when the downside risk is limited, the asset that is selling at a huge discount is always neglected and hated by the public. The reason for this irrational behavior is that most people find it hard to foresee and accept change. The conditions that have been prevalent for a long time are considered to be permanent, and investment decisions are made accordingly.
In the late 1990's, the entire world was in love with the "new era," which was inspired by technology. Fund managers, economists, media commentators and even the shoeshine boys were drooling over the prospects of retiring young, thanks to their Microsoft and Intel shares. Of course, that turned out to be the worst time to be invested in the hype as the technology shares came crashing down to earth in March 2000. Back then, I recognized that commodities were on the bargain table relative to financial assets. Therefore, I started buying precious metals, but most people thought that the "Millennium Bug" had infected me.
"Why are you buying gold? I lost a lot of money in gold 15 to 20 years ago and I'll never touch it again," were comments I often heard. Once again, the great majority failed to identify change, thereby ignoring the birth of a new bull-market.
Once the great technology bubble burst and the United States slipped into a recession, the central bankers decided to fight the slump by lowering interest rates to a multi-decade low. In the United States, interest rates were pulled down to a miniscule one percent. As the cost of borrowing came down, Americans turned to real estate as the next sure thing. Real estate prices surged, as demand rose due to cheap and abundant credit. As home prices continued to rise, Americans started using their real estate as collateral to borrow money.
Falling interest-rates and appreciating home values also created an explosion in re-financing activity and the United States embarked on a gigantic spending spree. It is worth noting that over the recent years, Americans have extracted a ridiculous amount of equity from their homes. In fact, since the beginning of this decade - 4.6 trillion US dollars! To make matters worse, the negative personal savings rate in the United States highlights the fact that these loans taken out against homes weren't saved for the proverbial rainy day; instead the money was spent on consumption.
This recklessness has put the US economy in a precarious situation.
Interest rates are now rising all over the world. After a multi-month pause, I expect interest rates to continue their upward trend. So far, the Federal Reserve has raised rates 17 times to 5.25% and the impact is already being felt on American real estate. I'm afraid the property industry in the United States is falling into a serious recession. In June, new home sales fell to 1.49 million units, the lowest since November 2004. It's down 18.1% from the record-high of 1.81 million units during January 2006. Furthermore, the supply of US homes for sale has recently jumped to a multi-decade high. In summary, rising-interest rates are starting to bite into the real estate boom and trouble may be on the horizon.
I've been warning about housing for several months now and still urge you to get rid of your investment properties in the US. In my opinion, we are in the final stages of the housing boom and once again, the majority of people can't foresee this change. The warning flags are everywhere! Recently, the stocks of major US homebuilding companies declined sharply and I consider this an ominous development.
The S&P 500 Homebuilding Index is down 46.2% from its July 2005 record high! Such a major sell off in this sector is the market's way of forecasting deteriorating business conditions ahead in the real estate industry. Moreover, if US housing slips into a recession and prices decline, consumption will also be badly hurt due an abrupt ending of the refinancing boom. Remember, consumption accounts for roughly 70% of GDP growth in the United States and any slowdown in this department may send its entire economy into a recession.
Furthermore, it is my observation that apart from the United States, real estate is generally overvalued in the majority of nations. Due to poor wage growth and rising interest rates, housing simply isn't affordable anymore. It may deflate over the coming months as demand continues to evaporate. So, to reiterate, my sincere advice to you is to liquidate your leveraged properties and invest in the world of natural resources where the bull market is still in its infancy! A mega change is currently underway and over the coming years, I envisage major capital flows from financial assets to commodities.
posted by -cs
oh, that was from this link:
http://www.dailyreckoning.co.uk/article/31081006.html
09/01/2006 01:32:25 PM
Some of the homes for sale have been listed for almost a year if not more. I have a feeling there were a lot of pre-retirees who thought they would retire a few years earlier since their homes went up in value 85% over the last 4-5 years.
It goes both ways. i know of people who retired early in the hope of cashing in on their home appreciation.
Too add more to my last comment,
the plunge protection team wants to keep the Dow above 10,000.
So....watch the Dow when it drops near 10,000, you should see a spike.
but, there strategy could have changed as of late, last I got word...which was about 2-3 years ago, one of their main goals was to keep the Dow above the 10,000 mark.
Remember, Confidence is what makes all markets tick. for better or for worse.
now, back to my tomato soup.
SAS
PS. For all the book worms, review the Monetary Control Act of 1980. It has its hands in the RE market too.
Ah, but ponder the difference between confidence and greed.
What a difference riding a roller coaster makes if you first have two chili dogs, a pizza (or tomato soup), and three shots of tequila.
One without knows there is a drop. One with thinks they are heading for the bathroom.
Pat
Pat,
ahh yes...
I know what you are saying.
One can create confidence or lack of confidence with a mirage.
Greed is one of many results from what I wrote above.
SAS
I just so happen to be enjoying a bowl of tomato soup myself. I decided to pair mine up with a bottle of Magic Hat Fat Angel.
grim
But on the other hand, I know an old stogie fart-type who's raking it in
hey pat, its BM again.. who is this stogie-fart type.. can he actually work any wonders as a buyers agent?
--BM
{{{{People are driving less & shopping less, and going further into debt.
Things are going to bite hard and soon. No matter what the damn fed says. You all better prepare yourself for the perfect economic storm that is brewing and heading our way.}}}}
Where is this happening?? Certainly NOT in the NYC / Long Island / NJ area.
People are not driving less because the NYC pretty much sucks outside of rush hour and fares on the LIRR or NJ Transit are not much cheaper than driving and parking at a meter.
Shopping less?? That is a f**king crock. Most stores in Manhattan are packed and prices are definately higher than the last few years with much fewer promotions or discounts especially on clothing & electronics.
Since people willingly spend a few thousand every month for clothing and buy a new cell phone & IPOD every few months, they don't need to discount.
By the way, the recent economic data was better than expected and pretty much cancels any type of rate increase for the rest of this year at least.
e are going to see more of the same this year like have seen in this region since 2002:
Booming economic growth of 4% or greater GDP per quarter with inflation indictors moving lower. Ten year treasury will be at 4.00% or lower by year end. Oil will end year at around $35 a barrel and under $10 a barrel by 2008
'Non spectacular' job growth of between 100,000 - 200,000 per month but healthy wage gains and average income for the NYC metro region rising by double digits each year.
'Blowout retail sales' similar to the 2003-2005 3rd & 4th quarters. The thing is that with higher prices and few promotions than in previous years, holiday sales can easily rise 12% over last year.
{{{I'll comment on North Bergen which they listed; you cannot go 1 block without seeing law enforcement, it looks like a police state, especially on Fri or Sat. Is that comforting to you?}}}
And you see the same thing in Manhattan & most of Queens. Most have become glorified traffic agents pulling people over for the horrible crime of not wearing a seatbelt or even worse having a tail light out.
BM-- I'm in PA..Yes, this guy will do it if you are thinking PA for rentals.
Pat
I'm a big fan of this board and agree that the housing market is going to tank. However ... it looks like I'm going to buy a house now and would like opinions on whether to put 20% down or a lesser percentage.
Here's the backstory:
My spouse and I sold back in late 2002 (we thought that the market would go down by 2004!) and have been renting ever since. It was fine when it was the two of us but it's really difficult with a toddler (we're in a townhome community that is not kid friendly - no open spaces to play, far away from any parks, etc.). We've been looking at houses to rent or buy since January. The houses to rent are all pos - on busy streets or in bad condition. The houses for sale - well, I don't have to tell anyone here that the prices are grossly inflated. Also, I have some oddball requirements that essentially ruled out almost everything we've seen.
We came across a house that we both really like - meets my requirements, has good schools, is very close to where I work and a reasonable commute for spouse. We can put 20 percent down - essentially the profits from our 2002 sale - and still have some other savings besides. The mortgage with 20% down would be slightly more than double our combined gross incomes.
I know that it's a bad time to buy and am really struggling with this. The PITI would be more than our rent, but we would be getting more (a great backyard, etc., house in very good condition). My child is growing so fast I don't know how much longer I really want to wait to live in a place where we are all happy.
Would like to hear opinions on whether it's better to put 20% if we do buy or some lesser percentage and stash the rest of the 20% into something else. In particular, what are your opinions on putting some of the money into a hedge such as CME? Am seriously considering this but don't understand the mechanics or how much I would have to use to hedge.
BTW, we've been told by mortgage broker that we won't have to pay PMI even if we put less than 20% in b/c we have excellent credit and no debt.
Thanks in advance for any input you have!
anon 9/01/2006 08:12:51 PM,
In due time....in due time....
credit can't prop things up forever.
All these things you quote are due to credit and a negative savings rate.
Driving less? Maybe you may not notice in the NYC metro area commute, but go to other parts of the country. People are driving less, still alot, but far less than say a year ago.
We sometimes think the rest of the country is like NJ & NYC, but clearly it is not.
SAS
yes?
SAS
{{{We sometimes think the rest of the country is like NJ & NYC, but clearly it is not.}}}
You are soo right. Things that other people take for granted in the rest of the country (or west of the Delaware River) are expensive luxuries in thsi area.
Where else do people make in the six figures and continue to rent a shoebox sized apartment (which they want to believe is humongous & Huge & Loftlike at 800 square feet) or live with roomates until they are in their 30's or 40's???
Sure, you may make more money living here but it doesn't compensate for the outrageous housing costs + realtor fees in order to obtain housing (15% of annual rent), the high grocery prices (even though everyone in Manhattan seems to only shop at Whole Foods & D'Agostinos).
One more note to the anon fellow,
See my comments about confidence, or lack of confidence, and the mirage agencys put on in order to install confidence (or ruin it).
Anytime you read data (especially Fed or govt data), it should be taken with a grain of salt. People can always tweak data to say what they want....i.e....either build confidence.....or ruin it...
How do you know when a government economists is lying? They open their mouths.
Why do they lie...or cook the books to a certain degree? They want you, the consumer, to have confidence. Confidence that you will have a job tomorrow, confidence that you will go shoping tomorrow, confidence that you will fill up your gas tank.
Get the drift??
Yes, you can say I am crock of shit. Thats fine by me. I actually fell in a crock of shit once....long story....
May I suggest a book to this bog:
"Plato Republic Allegory of the Cave"
It pretty much sums things up in the UPPER layers of the buisness world.
;)
SAS
PS. Grim, It was tomato and garlic soup. Good Stuff.
8:55
You sound like you know what you are in for.
Are you afraid of a job loss?
Why is the amount down such a heart-wrenching decision? Is the decision something irretrievable you cannot change later, in other words..if you put more down, refi later?
If you are really asking if you should wait a year or two, then have you thought about renting the same home with the yard you are looking for until you are sure of your situation?
Not sure why you are agonizing.
9/01/2006 09:14:43 PM,
Yee....
I tell people all the time to move from this area. I say, if you move away, ballpark figure, your price of living will go down 50%, but your salary won't go down 50%. So, net, you are ahead, even with the salary reduction. This area ain't what it use to be, so just move away.
So, its worth the move.
Now now....before you boys jump on that comment. I am talking average joe that can take there job to anytown, USA.
Another thing about this area that people on this blog overlook is that in this area, alot of young people (not transplants, I am talking born and bred) still live with their parents. The family unit is not spreading out like it use too. Too exspensive, and those god damn kids can't but those $300 jeans when they actually have a rent to pay.
;)
SAS
My wife and I love New Jersey. We left SunShine State in spring after 10 years.
Reason one, diversity.
We were foreign born and feel more at home in New Jersey.
Reason two, Job oppertunity.
I've got a big jump in pay and she received 3 job offers in 4 days. You do not get that just in anywhere.
Third, we missed four seasons.
Four, we sold two houses in Florida just in time.
Five, we love the price slip happening in NJ. Just like when we bought ours in Florida. Builder gave out new Freezer/washer/dryer/fence upgrades etc.
I would not run from NJ, if the tax is too high, let's get involved to solve it.
Cheers. I will be enjoying open houses again this weekend, feel like in 90's again. Bargain hunting time, I have cash and all the time in the world.
9/01/2006 08:55:49 PM,
If you know the market is going to tank, why buy?
Yeah, it stinks living in townhouse or whatever in your situation, but getting yourself under water will hurt more, ruin your family, get you a divorce, and your kid will end up being bounced back and forth.
Think twice, sometimes its better to keep that thorn in your side because it acts like a cauterizing agent, and stops the bleeding.
You remove that cauterizing agent, you are going to bleed like a stuck pig. Get the drift?
Seriously consider moving out of the area, since you rent, you are not stuck, and with your cash, you can get yourself a nice house, good downpayment, and get a 15yr and life is good.
If you can't move, hold.
Hold that cash in a high interest savings account, and wait some more. Like shytown says " cross off 06 and beware of the false bottom".
I know having toddlers can sometimes make you think your invincible and think everyday will be great and peachy keen. So, be careful and think with logic and not emotions.
I have kids of my own. 5 kids, 3 different mothers. You don't think that causes weird feelings come holidays.... ;)
well, guess they ain't kids anymore, all in their 30's.
SAS
pat,
we indeed are. our lease ends in december and we're certainly looking to move (rent) into a 2/3 br w 2ba.
grim, can you pass on my info to pat please? would love to get in touch
--BMW
9/01/2006 09:54:26 PM,
Thats all fine and dandy, until the tax man comes ;)
Thats why I always hated Sunday mornings....I had to goto church with the worse hangover from partying like hell on Sat night.
;)
SAS
Am agonizing over amount to put down b.c I believe that it will essentially evaporate when prices tank. Figured it might make more sense to have the money appreciating while the house is depreciating. As to concern - there is always the possibility of job loss or need to relocate.
Re renting the house - we offered that and said we would either rent or a rent to buy (even offered 6 months rent up front) but the sellers wouldn't bite. In terms of purchase price, we did get some reduction of OLP, but nothing near 20 - 30%.
Another point...
"I would not run from NJ, if the tax is too high, let's get involved to solve it. "
There is an old saying we have in the states. It goes like this:
You can't fight city hall.
Like we use to say in the USMC during Vietnam :
wish for something in one hand and take a s**t in the other hand and see which one happens first.
;)
SAS
Anonymous said...
9/01/2006 08:12:51 PM
"Booming economic growth of 4% or greater GDP per quarter with inflation indictors moving lower. Ten year treasury will be at 4.00% or lower by year end. Oil will end year at around $35 a barrel and under $10 a barrel by 2008"
Your argument contains too many conflicting views. You sound like a new cheerleader for a goldilocks economy. Booming growth, lower 10 year yield and $10 crude??? Can you tell me where you you invest your $. I would love to take the other side of your trade. If we see $10 crude and 10 year under 4.00% we will be in the depths of a severe recession/depression. How do we attain economic growth in this scenario???
You also state "The thing is that with higher prices and few promotions than in previous years, holiday sales can easily rise 12% over last year".
What a crock of shit. How do higher prices and fewer promotions result in higher sales?? Where did you learn economics, at the local crack house??? Maybe you are just drnking some of that grim stuff,Magic Hat Fat Angel. Also how does higher prices bring down the 10 year??? By the way, I sent your post to some traders in the 10 year. They wanted to invite you into the pit. I can't print everything else they said. They need more like you!!!!!!!
By the way, SAS, you are right about the economic storm. The natives have been repeatedly warned. However, they have not/ won't heed the call to evacuate. They will hang in and try to weather the storm. Guess what, they don't know what is about to hit. Can anybody say another taxpayer sponsored bailout.
BC Bob
8:55, if you are going to be in the area for a good stretch and your jobs are secure, you should buy. Sometimes what we buy with our money is happiness and contentment. Your family life is important and childhood fleeting. You are buying leisure and family time by keeping your commute short. It doesn't sound like you are stretching to make this purchase. There are some points in our lives where improving quality of life is just gonna cost some money. If you spend a lot of time at home, and will enjoy caring for a home, I say go for it.
BC Bob,
yes, I do believe an economic storm is coming, don't know when it will make landfall, but I am picking it up on the radar.
here are some 6 points that I see, that I don't like, which is making this storm brew.
1) Consumer debt (CC cards are the devils tools)
2) Low consumer savings rate (or should I say negative).
3) Trade imbalance (foreigners don't like to see this, who the hell buys those T bills? the god damn chinese)
4) Federal budget (pork spending run a muck).
5) Lose of job base (manufactoring job base gone, and being replaced with credit cards, which lead to #1 and the housing bubble).
6) Oil dependence (OPEC & hurricanes).
If these issue don't get addressed sooner rather than later, were fucked. Plain and simple.
I didn't even mention health care system collapsing and social security....gone.. thanks to those politicans whom silently took from the social security to make it look like we had a government surplus and not a deficit. Remember, what I said about data.....always take it with a grain of salt. Just like when they counted the military as employed...another trick.
;)
SAS
BTW, we've been told by mortgage broker that we won't have to pay PMI even if we put less than 20% in b/c we have excellent credit and no debt.
I suggest you put down 5% and use other people's money to make money. There may be some negative people here that suggest that you don't buy, but don't listen to them. You've got your family to take care of and there should be no fear of buying. Interest rates are still relatively low and it's a good time to buy. Good luck!
" Interest rates are still relatively low"
Interest rates will change, but the principle amount is forever and does not change.
What is the #1 reason for divorce?
money
Hell, even if you bought the thing out right today, it will be worth less tomorrow.
Nobody knows your situation but you. All I say, from outside the box looking in, especially when toddlers are involved. Decisions tend to me made with emotions and not common sense and you never want to make a monetary decision with emotions. Think really...really hard.
If I told you to buy this widgit today for 300$, knowing tomorrow there will be a 40% off sale. Wouldn't you wait till tomorrow?
Or would you say, "oh hell....the kids are crying and I want it now, because hey....I have 300$ in my pocket, so lets just get it over with now". I think you are smarter than that, and you would say, "Johnny...you have apple juice at home so zip it....and we will come to this store tomorrow when the widgit is 40% less, and with the extra money left over, I can goto the Victoria Secret and get a gift for your mother so I can get some hankey pankey tonight.
Please tell me you would choose the hankey pankey.
;)
SAS
"And the cities are just as enthusiastic about developing blighted areas with new, tax-paying high-rises as the suburbs are slamming the door. In the New York area, Brooklyn, Jersey City and Hoboken - and even Manhattan - are sprouting more new housing than in decades, despite a job market that's hardly robust."
Have you walked through Hoboken lately? It is not a "blighted area."
It's filled with rich people, all the way pushed back to the cliff to Union City, and the only struggling they're doing is pushing their $1,200 strollers or walking their $3,000 dogs between BMWs and Mercedes.
Parts of Hoboken feel like Soho these days.
I've lived here for 7 years, always assuming that at some point I could buy a place.
Now I'm leaving.
My wife and I make a pretty damn good living, but we don't have the 550-800K you need to get a 900 square foot 2 bedroom.
And those places are selling like crazy. Not to the house poor either, these are displaced New Yorkers who have no idea what to do with their money.
It's hard to accept that there are people out there make 5, 6, 7 times what you do... But they exist.
The areas around New York City just aren't going to be affected the way all you bubble watchers think it will be. There's just too much money in that city.
9/01/2006 11:34:09 PM,
One thing to keep in mind about Hoboken.
People there are not as rich and trendy as you may think, if they were, they would live SOHO, and not Hoboken.
Its what they call "sloppy seconds".
SAS
"The areas around New York City just aren't going to be affected the way all you bubble watchers think it will be. There's just too much money in that city."
Survey says......XXX
Wrongo.....
Anonymous said...
9/01/2006 11:34:09 PM,
One thing to keep in mind about Hoboken.
People there are not as rich and trendy as you may think, if they were, they would live SOHO, and not Hoboken.
Its what they call "sloppy seconds".
SAS
9/01/2006 11:46:05 PM
grrrrrrrrrrrrrrrrrrrrr.....
SAS,
Amen to that. You hit the nail on the head when you talk about govt data. Doesn't anybody start to wonder when economic reports no loger include m3????
Your most ominous point is our trade deficit and the foreign holders of our notes. We continue to consume,consume while the rest of the world is producing goods and services. If we slow down and our dollar gets hit, what incentive do foreigners have to finance our debt?? The central banks around the world have slowly begun to diversify out of the dollar. If you think I'm wrong, (not SAS), go pull up a dollar chart. Foreigners will demand higher rates to compensate for their currency conversion loss. We are screwed either way, inflation will drive up our long term rates. The market will punish the fed if inflation is rearing its ugly head and the fed stands pat. If the fed reacts accordingly, what will this do to our housing market??? It's a very shitty feeling when your strings are pulled by foreign countries. We are in one giant mess. How long can we go on robbing Peter to pay Paul??? If it wasn't for our military we would be more screwed than we already are.
BC Bob
{{{One thing to keep in mind about Hoboken.
People there are not as rich and trendy as you may think, if they were, they would live SOHO, and not Hoboken.
Its what they call "sloppy seconds".}}
Sorry but no. You are probably refering to Jersey City (especially downtown) which is for people who are rich but not rich enough to afford Hoboken.
Even Jersey City rents & prices have become steep. The shittiest one bedroom apartment in the heights or in journal square is well over $1,500 a month, and you can't even touch a small one bedroom condo for less than $300,000.
Soho is hugely overrated and nothing more than a roofless shopping mall and mecca of overtrendy, overpriced restaurants for the B&T crowd from the New Jersey suburbs of Monmouth &
Bergen County.
Of course what is there to do in NJ in during the Fall & Winter EXCEPT for Shopping at one of the many malls?? There are no decent cities or things to do anywhere but shop & spend thousands on consumer toys & clothing every week.
{{{It's hard to accept that there are people out there make 5, 6, 7 times what you do... But they exist.}}}
And unfortunately they make up most of the population of the NYC metro area which includes NNJ & Long Islandthese days where everyone is walking around in their $300 Jeans, $100 Shirts & $500 Shoes.
Diversify out of the US dollar..... maybe directly buying the Euro, etc is risky (ask Warren Buffett) but buy unhedged foreign stocks and bonds.
Remember, the US stock market accounts for little over half the world's market cap. So by not buying international, you are effectively overweighting the US. Just ask Japanese investors of the past decade what happened to their stocks and real estate.
A good place to start would be a foreign ETF or index fund. For the wealthy guys out here, DFA mutual funds gives you access to segments of the international market, for example Emerging Markets value.
Life can be simple....if we try a bit.
1. Keep 3-6 months emergency fund in cash.
2. Don't carry credit card balances.
3. Fund your Roth IRA every year to the max; $10 a day to save ain't that much. And all tax-free withdrawals during retirement....especially knowing that taxes will surge in the coming future to pay for all unfunded liabilities.
4. Don't try to keep up with the Joneses - have simple, genuine freiends.
5. Ignore the talking heads of Wall Street spewing out financial porn....they want your money to pay for their Jaguar leases, not to grow your money.
6. Stay married if you can. A divorce is a 50% haircut for your portfolio - worse than any bear market.
Enjoy the long weekend folks!
{{{The areas around New York City just aren't going to be affected the way all you bubble watchers think it will be. There's just too much money in that city.}}}
You are absolutely right. This has affected the entire NYC metro area not just the 5 Boros, but Northern NJ, Long Island & the Northern Suburbs.
If you want to find a place you can afford & still live within 3 hours commute to Manhattan, the only place that comes to mind is upstate NY north of Dutchess county. Everywhere else requires a salary of $250,000 or more to even qualify under any lenders program.
You just cannot survive in this city or even feel accepted or feel like you fit in somewhere unless you make well in the six figures.
Even if you make in the six figures, you are expected to live the 'Paris Hilton' lifestyle where life revolves around spending money on overpriced designer clothing, driving expensive cars and spending thousands on designer bags & shoes every week.
{{{Life can be simple....if we try a bit.
1. Keep 3-6 months emergency fund in cash.
2. Don't carry credit card balances.
3. Fund your Roth IRA every year to the max; $10 a day to save ain't that much. And all tax-free withdrawals during retirement....especially knowing that taxes will surge in the coming future to pay for all unfunded liabilities.
4. Don't try to keep up with the Joneses - have simple, genuine freiends.
5. Ignore the talking heads of Wall Street spewing out financial porn....they want your money to pay for their Jaguar leases, not to grow your money.
6. Stay married if you can. A divorce is a 50% haircut for your portfolio - worse than any bear market.}}}
You can't do that if you live in the NYC metro area and make less than $150,000 a year.
It just is not possible to fund any type of retirement account after witholding taxes or even having enough left over to buy anything other but the most basic health insurance policy & the most basic car insurance coverage.
How about moving out of this area to a more affordable part of the country where you don't need to make $150,000 a year as a single person to 'just make ends meet'
#4 is completely impossible. Most people are completely shallow, materialistic and judge you by what you wear & what you drive.
Anon 9/02/2006 01:01:23 AM:
If you want to live 'simply' where you actually watch what you spend and have a budget (that includes other things besides clothes, rent & restaurants) then you are living in the wrong place.
I read here and on craigslist how people with 'modest' incomes in the high five figures think they are doing well because they watch their money. But I say that it isn't possible unless you want to live like a hermit & the only vacation you can afford is a day trip to coney island by subway.
{{{I have been thinking about buying a gorgeous older condo that is huge and great location in Hoboken (Ive lived here decade, owned two condos so far)
I thought that with the market tanking, people away on vacation that I could work ou a nice deal.}}}
Yeah good luck with that!! You think you can 'work out a nice deal' when someone from Manhattan will come along and offer 20% more than the asking price AND be able to put down at least 20% if not more.
The market is NOT slowing down here, and the market for condos is still extremely strong.
But you know this since you 'owned two condos' here before..
What are you doing now?? Paying some outrageous rent for a shoebox believing in this mythical market correction where there is nary a scintilla or iota of evidence...
1:30:46 may wish to read the Otteau Report posted a few days ago.
Of course, if you prefer the purely visual:
http://photos1.blogger.com/blogger/2475/2448/1600/IMG_2063.jpg
Sorry, this hould work:
http://tinyurl.com/l5sbq
http://tinyurl.com/l5sbq
That is too funy!!!!! LOLOLOL
Anon who's agonizing about how much to put down,
Am agonizing over amount to put down b.c I believe that it will essentially evaporate when prices tank. Figured it might make more sense to have the money appreciating while the house is depreciating.
I'm not a financial person but I think your quote above strongly suggests that this is not the time time to buy--regardless of how much you put down.
Why take out a mortgage for possibly tens of thousands more than you have to? You're child doesn't care if you own or rent. Why not rent a house in a nice neighborhood/school system for a year or so, keep your $$$ in a liquid, high-yield savings vehicle (e.g., ING Direct) and see what happens in the market?
And correct me if I'm wrong about this, but I thought everyone had to pay PMI if they put down less than 20%. Unless the realtor/mortagage agent indicated you could take out a piggyback loan and avoid PMI??? This is what I was being "talked into" by my realtor and their mortgage broker two years ago (I didn't do it!). Keep in mind that the piggyback loan is an adjustable rate loan (really a HELOC) and this could affect your monthly payments if interest rates continue to rise.
Hope this helps.
We are in situation similiar to anon 8:55 agonizing homebuyer and would appreciate some comments.
We have been looking to buy as our personal circumstances (baby) and our nyc rent(3500) make buying seem like the right thing to do.
Just made an offer that was accepted; Original asking was 699K and after some back and forth we have an accepted offer for 640K.
We can put 20% down with a 30 fixed. We were told anything less down and you have to pay PMI or get a piggy back loan.
Our combined gross is a bit over 250K so we can easily make our payments(3200 per month)and taxes (9300 annual).
Expect to be in the house for 6-7 years. House is move-in condition with nice yard for the toddler and cuts my commute by 40 minutes each way. (I work in NJ but live in NYC).
I think that the paper value of our house will fall in the next few years but we do need a place to live, and after all the numbers are crunched out for taxes, maintanence etc, buying this house is actually cheaper than renting for us.
We havent signed the contracts yet, and aside from inspections havent put any deposits down.
Should we back out while we still can?
What is pulling at you to change your mind?. Did the inspection turn up something costly or opened your eyes to the true condition of the home?
Just wondering.
Roadtripboy and others - thanks for the comments. Agree that the kid doesn't care if we rent or buy BUT mom and dad do care whether house, backyard, etc. are safe and in good condition, not on a busy street or next to major hwy and commute is reasonable and we just can't seem to find that with a rental house. Trust me - we've been looking!!
Appreciate the heads up on PMI/hidden HELOC issue. Will confirm with mortgage broker. Spouse was relaying conversation so I just go info second-hand.
Back out. You are throwing money out in the garbage.
The part that concerns me is that you'll only be in the house for 6-7 years.
Why? What happens in 6-7 years?
grim
FYI.
Commercial advertisements or business-related requests are not permitted here.
grim
Worth a REPEAT!!!!!!!!!!
" Interest rates are still relatively low"
Interest rates will change, but the principle amount is forever and does not change.
What is the #1 reason for divorce?
money
Hell, even if you bought the thing out right today, it will be worth less tomorrow.
Nobody knows your situation but you. All I say, from outside the box looking in, especially when toddlers are involved. Decisions tend to me made with emotions and not common sense and you never want to make a monetary decision with emotions. Think really...really hard.
If I told you to buy this widgit today for 300$, knowing tomorrow there will be a 40% off sale. Wouldn't you wait till tomorrow?
Or would you say, "oh hell....the kids are crying and I want it now, because hey....I have 300$ in my pocket, so lets just get it over with now". I think you are smarter than that, and you would say, "Johnny...you have apple juice at home so zip it....and we will come to this store tomorrow when the widgit is 40% less, and with the extra money left over, I can goto the Victoria Secret and get a gift for your mother so I can get some hankey pankey tonight.
Please tell me you would choose the hankey pankey.
;)
SAS
HAHHAHAHAHHAHAHA!!!!!!!!
BOOOOOOOOOOYAAAAAAAAAAAA
Bob
I hear you, SAS, but the thing is - how long will the wait be? Unlike your example where you know that the widget sale will be tomorrow, this thing might grind on slow and ugly over the next few years. Who knows how old the kid will be before we see significant price changes? Family cramped and miserable in the meantime. Cramped and miserable does not a happy marriage make.
The question is, if one decides to buy a depreciating asset for personal reasons, is it better to sink money into it knowing it will disappear or use the money to hedge? Wish there were home price insurance we could buy, but there isn't yet.
there is such a thing as home price insurance
it's called buying substantially
below your means
25% haircut on $650,000 is $162,500
25% haircut on $400,000 is $100,000
you didn't need to spend $650k for a safe back yard, who are you foolin? you did it for other reasons
Workers lose traction over past 10 years
Despite strong productivity growth, wages don't keep pace and fewer workers receive health and pension coverage.
I wasn't going to renew my lease which is up in December because we really wanted to buy. DH's car just died so we got him a new one- below cost. Looks like things are bad everywhere. We're signing the lease for another year and we'll see where the market is then. While I'd love to lock my interest rate, I'm not sure it's worth locking for a year. What do you think?
9/02/2006 09:07:55 AM
I agree.
Interesting piece from Reuters.
Can't rule out China hard landing: Bernanke
Chairman Ben Bernanke said in a letter obtained on Friday that chances of an economic crisis in China were low, but that the possibility of a "hard landing" for the economy could not be dismissed.
"We believe that the chance of a Chinese economic crisis is very low for the foreseeable future," Bernanke wrote in a August 30 letter to Senate Banking Committee Chairman Richard Shelby.
"Although the banking sector is burdened with an enormous and probably growing stock of problematic loans, the government possesses sizable resources and is unlikely to allow the banking system to fail," Bernanke told the Alabama Republican. He also said Beijing's large foreign exchange reserves made a currency crisis unlikely.
"However, we do not entirely discount the possibility of a 'hard landing,' in the form of significantly slower growth, as authorities attempt to reduce investment growth from its current rapid pace," he wrote.
The Fed chief said the rapid pace of investment in China was leading to overcapacity in some industries and likely adding to bad loans already on bank books.
I just disagree with SAS, who hasn't been condo-bound with a toddler for a long time, if ever. Sometimes we should spend our money, and providing a comfortable home in which to raise a toddler may be one of those times. It would be different if this were a financial stretch, but it isn't. People buy expensive, depreciating assets like cars all the time, and they go into debt to do it. But I expect they get enough pleasure out of that Lexus or BMW to justify the cost. People also spend money on entertainment and travel which have no residual value, at least in the financial sense. Securing comfortable, safe and enjoyable living space can have value outside the investment equation, especially for the working parents of young children who are usually shifting consumption patterns, at least temporarily, away from travel and entertainment and toward homelife. There are times when being able to play catch in the backyard before dinner is, as they say, priceless.
That said, I would be inclined to wait until the market flatlines for the winter and/or you get a chance to see if anything interesting shows up in the post-Labor Day inventory boost--which with a little luck, will prompt post-Labor Day price drops.
An even more interesting piece out of the ledger this morning.
New law requires faster payment to state's construction contractors
Calling it the most important union legislation he has enacted this year, Gov. Jon Corzine yesterday signed a bill that requires faster payment to construction contractors.
"People ought to get paid. It's not that complicated, in my view," the governor said as he signed the bill in Cherry Hill during the 112th Annual Labor Day Observance of the Southern New Jersey AFL-CIO Central Labor Council.
Under the new law, people, businesses or government agencies will have 20 days after a job is done to review the bill, question any part of it, and submit in writing reasons for withholding payment. Once both sides agree on the bill, the property owner would have an additional 10 days to settle up. The total period between presentation of the bill and payment cannot exceed 30 days. Contractors can begin charging interest once the one-month deadline passes. Previously, the deadline was 60 days.
KL,
he he...your right about that. I did say it wrong.
Guess in nam, we just got the idea, because we were too busy worried about taking a bullet.
thanks,
SAS
from grim's post 9/02/2006 09:18:20 AM
...the government possesses sizable resources and is unlikely to allow the banking system to fail
Does "resources" include US bonds? If so, is there a chance that China could flood the market with US treasuries?
9/02/2006 08:58:54 AM,
How long to wait? Mm...yes, that is the question everyone wants to konw, and there is no answer because nobody has a crystal ball.
I understand the cramped feelings.
I lived in a trailer with no money when I came back from the war. Until the bull market in the metals hit and that changed everything.
I still say consider moving. There are alot of good places to live outside of NJ that the RE market is more stable, and one can still have a good job and great schools.
What is wrong with renting a house?
You kidding, people are trying to rent out houses because they ain't selling, so people need to do something. You say you don't want to piss money away on rent, but buying a house today is pissing the money away, but you have a chain to the urinal and can't leave the latrean.
I would just hate to see you stuck in a position that there is no way out and live with regret your whole life.
Regret is the worse feeling in the world.
SAS
Ditto
babababa
"Wish there were home price insurance we could buy, but there isn't yet."
9/02/2006 08:58:54 AM
Short housing futures. The smart $ is short this market. At least that is what the futures market indicates at this time.
BC Bob
"the government possesses sizable resources and is unlikely to allow the banking system to fail"
Yeah, this sizable resources is called the printing press. If you run the printing press like mad, your dollars value falls.
Geez, things just get worse with each passing day.
SAS
Renting a house vs. buying.
I can appreciate your needs to get out of a cramped situation and have room for your toddler. You can do that without buying.
If you don't own a house but want to live in one you can either rent the house or rent money, if you are putting down 20% you are renting 80% of the money. To rent $ is to take out a loan. Simply, a mortgage is a money rental agreement. House renters take on no risk at all. However,money-renting owners take on huge risk at this time; the potential for huge drops in prices, cost of repairs, insurance, property taxes etc. What happens if you buy and subsequently discover that you are not thrilled with the area and decide you want to sell in 3-5 years. You may be listed on this site as a part of lowball. Look at this as risk/reward. What are you risking if you rent a nice, large house??? What are you risking if you buy,prices drop 20-40% and you need to sell. You may not foresee this now. However,things change over the years. You may decide in 4-5 years you want to get your toddler into a different school district, a job change, etc...
Good Luck in your decision, as long as you weigh all the variables/consequences then go with your gut.
BC Bob
To anon 9/1 2:05
More cops? maybe, but there are tons of other factors, including, for the moment, higher incomes from legitimate work and a relatively low unemployment rate.
People with money don't commit the kind of crimes that easily translate into safety issues.
Lindsey
Yeah, this sizable resources is called the printing press. If you run the printing press like mad, your dollars value falls.
SAS,
They are printing like there is no tomorrow. Just look at the dollar index, 30% off its highs. That's what happens when you have an overabundance of US dollars chasing goods and services all over the world. A massive over-supply depreciates its value.
BC Bob
Hi all,
I am the potential homebuyer at 6:36.
No, the home inspection was fine, this blog is giving me second thoughts since I agree with much of what is being said.
We plan on being in the house (3 bedroom 2bath 1850 sq feet) for only 6-7 years because we may outgrow it, plan on having another kid.
thanks
9/02/2006 01:12:46 AM
"You can't do that if you live in the NYC metro area and make less than $150,000 a year."
"It just is not possible to fund any type of retirement account after witholding taxes or even having enough left over to buy anything other but the most basic health insurance policy & the most basic car insurance coverage."
How bizzare is this???? Can't fund a retirement account on 150K a year??????? Is spending so out of control that this can not be achieved??? The more I read this nonsense, the more it looks like the 1920's. If people relly feel this way, they should first lie down and take a few Tylenol's. After that they find a vacuum and suck the shit out of their heads.
If you don't look out for yourself, who will?? Do you just want to be another govt statistic?? Pay yourself first, fund your 401k. If you don't have a 401k max out your IRA's. Force yourself to put a % away each paycheck. Aren't you your number priority??? Well step up to the plate and do it!!!!!!
BC Bob
"We plan on being in the house (3 bedroom 2bath 1850 sq feet) for only 6-7 years because we may outgrow it, plan on having another kid."
9/02/2006 11:42:07 AM
As long as you are prepared for a potential hickey of 20-40% in 6-7 years, and are comfortable with this, go do it. The fact that you are asking this board for their thoughts indicates to me that you are not 100% sure. You better be 150% positive. Good Luck!!!!!
BC Bob
thanks for your thoughts Bob,
You're right I am not 100% positive but I am prepared for the the 20% hickey.
I gues my thought is that if we stay put at 3500 a month in the city after 6-7 years we'll have paid 250K in rent which is more than the 20% hickey.
How bizzare is this???? Can't fund a retirement account on 150K a year??????? Is spending so out of control that this can not be achieved???
In the NYC, it is. The average person spends $2,000 a month or more in rent (66% of the population pays rent), and has a net worth of close to zero.
Of course when all your pay goes toward taxes, rent, clothing & hanging out (in that order) it is difficult to save anything for the future or even to consider moving out of your tiny shoebox apartment.
A good Ole deep recession is a great attitude adjuster. You'll learn how it is possible to live on less.
A nice attitude adjustment going to happen in REland to the Starving spinning realtors, builders, appraisors, mtg brokers landscapers plumbers you name it.
It is needed urgently.
Bababa
Bob
Babababa
BOOOOOOOOYAAAAAAAAA
Bob
House prices fell today and will fall tomorrow next week next month and next year.
Still waiitng for your Dream price?
Good luck riding this bear housing market down to the bottom.
How far is the bottom?
You may not want to know.
Babababa
Don't listen to "ReInvestor," he's trying to pump Greater Fools into debt slavery in a vain effort to stop the avalanche of RE market bad news we see each week.
How can you buy now? Look where we are:
http://tinyurl.com/e4so5
Buying now is crazy.
If I had to "buy now" (due to concerns with children, etc) I would pay the price and rent in a nice town.
Go to GSMLS.com and search for rental houses, there are thousands of nice houses for rent. Last year one guy had a $4,200 mortgage, and was offering to rent the place out $2,400. Which do you want to be?
What a load of garbage that you can't live in the area under $200k.
DH makes $75k as a mechanic. I stay home with 2 young kids.
We rent nice home for $1500 (less than taxes, association fees and interest on a mortgaged comparable home, so I am not losing anything).
2x 2003 cars, one bought new, one used plus a banger spare all paid for.
Both kids in private preschool.
Money in the bank.
Decent health insurance, 401k and buy IRA's every year.
Spent month in London last year on vacation.
How?
Don't spend money on crap like Starbucks (Wawa coffee is great), lunch at Panera and fancy manicures.
Buy kids clothes at Childrens Place and Old Navy.
Properly insulate home and set reasonable thermostat ($150 bill instead of $500).
Have normal friends who take kids to the park for a picnic rather than a theme park every weekend. Kids don't care.
Would I love a bigger home? Sure! But in a couple of years I will return to work, and house prices will be more reasonable. I have patience.
In the meantime, I just raise my eyebrows at acquaintances crying about being on the edge with their $3500 mortgage, $14000 annual taxes, $800 utility bill and $700 in monthly car payments. Both parents working to pay for it all and no one ever sees their kids. Illness, redundancy, recession or an affair and it all comes tumbling down.
What kind of quality of life is that?
RE: "6-7 years"
Where does 6-7 years take you on this chart?
http://tinyurl.com/e4so5
Massive equity loss, massive mortgage payments for those 7 years, selling for a tremendous loss.
You've just rented your house for $300,000+ those 7 years.
It's absolute madness to buy today!
Of course when all your pay goes toward taxes, rent, clothing & hanging out (in that order) it is difficult to save anything for the future or even to consider moving out of your tiny shoebox apartment.
9/02/2006 12:30:48 PM
If you gross 12k a month and pay 2k in rent, where the hell does the rest of your after tax money go. Hanging out???? If you require a private table with a $300 bottle of Grey Goose, so be it. Enjoy this, the hangover will be nasty!!! Clothing?? Hogwash!! You will not find any sympathy on this board if you make 150k and don't know how to save a dime. Just take care of yourself first! Question, is this more common that I think??? If yes, we are coming down harder than I can imagine!!!!!!
BC Bob
This cry bay crap from grubbing sellers and buyers who can't survive without 2-3 vacations a year is a big laugh.
Tighten your belt a little and cut back in eating some of that slop you eat out to often.
Plenty of cutting to be made to save some money. More important things in life then playing "Show & tell".
A good recession is a good attitude adjuster.
Lean Times are a coming Grubbing realtors. Be prepared...No commish last month...well then start reversing the BS and talk down the dreaming sellers so you can buy some canned beans.
Babababa
9/02/2006 12:30:15 PM
You have thought it out well. Best of luck.
BC Bob
"n the NYC, it is. The average person spends $2,000 a month or more in rent..."
The move out of NY City! Lots of places to rent in Nassau county.
BOOOOOOOOYAAAAAAAAA
Bob
9/02/2006 12:34:34 PM
How right you are. Instead of their $300 bottle of Grey Goose, let them sip on that cocktail!!!!
BC Bob
Wow....what a miserable weekend for starving No Commish realtors and grubbing "can't make the payments" and "it's not 2005" Sellers.
How would you like to be saddled with monthly slave payments eating up most of your monthly cashflow and NO bids???...absolutley NOOOTT"ING! The MISERY! The PANIC! The .....????????
It's Painful thinking about it!
This is why you think things out before signing the "slave agreement" and not being a Dummy.
Babababa
Enjoy the weekend at least to those that can.
The clock is ticking everyday. make the most of it. "Show & tell" is not worth it unless you can really afford it.
Bababababa
I have been away for a while... too busy at work to read blogs. I'm back today and am getting such great laughs out of this string. Thank you all, its just hilarious.
For the jerk who makes $150/yr and can't save a dime, no sympathy from me pal.... We both work and only gross $120K. And let me tell you, I don't have a Mercedes in my driveway, $300 jeans, I don't even like coffee, and Shop Rite has enough organic food to satisfy us (note Kosher food is pretty close to organic and much cheaper). Let me tell you that last year we paid about $26K for daycare for 2 kids, still paid our $1300 mortgage payment and I guess were able to still save $$ b/c we don’t have car payments. We don’t really go on vacation, but believe me, my kids are dying to go to Disney. They hear about it from all their friends… Its very hard to say no, but you can do it.
KL said "and let's no forget upkeep which generally runs 1-3% of price.
Find a cheaper rental."
And, of course, insurance goes up.
Hubby just got home from the store and said, "Hey, Hon..did you say that blue house on the corner had an open house on Tuesday with free lunch and Rita's Water Ices? Well, now it has a huge tree through the middle of the roof, too."
Don't forget about stuff like this when you're thinking about giving up renting for "the better life."
Pat
"A good recession is a good attitude adjuster"
I couldn't agree with you more.
There are an awful lot of people whom have grown up in the Greenspan era and think everyday will be the roaring 20s.
When this recession or depression comes (and its not if, but when), there will be alot of people in for a big surprize.
I hope you some of you out there like oatmeal, because that is what you will be eating 3 times a day when this does happen.
not good....not good at all.
;)
SAS
Isn't most of the growth in money supply caused by private banks issuing loans, not by the treasury printing money?
It seems that inflation of the money supply will only be stopped when lending standards tighten. The higher Fed overnight rate will help with this. It will also help when banks start propertly valuing risk, which won't begin until banks start to getting hurt by defaults.
"For the jerk who makes $150/yr and can't save a dime, no sympathy from me pal...."
9/02/2006 02:43:13 PM
Good for you!!!
These individuals that can't save a dime on 150k will be the first to look for a handout from the gov when they retire and don't have a pot to piss in. All I know, if this is more common than I think, it must be a good time to be a shrink in NYC!!!!! I would love to get their sorry ass on a couch!!!
Courtesy of the Eagles;
Sometimes we live our lives in chains and never know that we have the keys!!!!!!
Courtesy of me;
They are too busy trying to make a living to satisfy someone else, they never take the time to figure out how to make/accumulate $.
Off to LBI, hope it is not underwater!!!!!!
BC Bob
but believe me, my kids are dying to go to Disney. They hear about it from all their friends… Its very hard to say no, but you can do it.
..classic....i hope you save at least some money for their psychotherapy sessions later in life when they are telling their therapist their parents wouldn't even take them to disney!..the only ones in the class..oh the humanity! ha
Man! New listings keep flooding my daily emails from RE sites. It's not even the post-labor day rush.
If this keeps up prices will sureley fall with fewer buyers out there.
-cs
Grim
Do you know anyone who can help with pricing like from a few years before the bubble and how much the people origianlly paid? I am looking in Burlington and Mercer counties
Thanks
"Anonymous said...
but believe me, my kids are dying to go to Disney. They hear about it from all their friends… Its very hard to say no, but you can do it.
..classic....i hope you save at least some money for their psychotherapy sessions later in life when they are telling their therapist their parents wouldn't even take them to disney!..the only ones in the class..oh the humanity! ha"
Yeah, much better to have spoiled brats who don't understand the word "no" and expect to have every little thing handed to them on a plate. Can't see any problems there.
Rw
All this sounds awfully fishy
Todd
lisoosh said...
9/02/2006 12:54:42 PM
Stop talking sense, people will think you are nuts.
Anonymous said...
for Grim
seekingalpha.com
-cs
9/01/2006 12:56:55 PM
cs
That site doesn't specify whether they are seeking positive or negative alpha.
chicago
Todd,
Fishy? I would be happy to provide MLS info to Grim but do not want to make my identity public.
I watched the market for over a year and heeded much of the advice given on this web site.
What I learned was to price correctly in a declining market, to not over buy, over consume, and to save diligently. Beleive it or not there are some people who in this region are not caught up in impressing the neighbors.
Housing is consumption- not an investment. Now is not the time to buy if you are not already in the market. To make a smart trade is another story.
I learned from my parents how to maintain and present an immaculate home. My father is so anal he keeps a household excel spread sheet to include all maintenance, "pool service" down to a file "landscaping" which documents the dates/direction that he mows his lawn, fertilizes, pesticides, etc.
Ya sort of scary- I'll admit- but beleive me buyers can walk in and see the difference.
You guys have all seen the junk that's on the market. My parents said some of their neighbors who still beleive that their house is worth 50-60K more were questioning them on their price. "Don't you think you should ask for more?" NOPE! We are smart, not greedy and marketed our homes in a way that they were a value to someone who needed to buy. By not overpricing we did not sit on them while the market took a dive.
RW
lisoosh said...
What a load of garbage that you can't live in the area under $200k.
DH makes $75k as a mechanic. I stay home with 2 young kids.
We rent nice home for $1500 (less than taxes, association fees and interest on a mortgaged comparable home, so I am not losing anything).
2x 2003 cars, one bought new, one used plus a banger spare all paid for.
Both kids in private preschool.
Money in the bank.
Decent health insurance, 401k and buy IRA's every year.
Spent month in London last year on vacation.
How?
Don't spend money on crap like Starbucks (Wawa coffee is great), lunch at Panera and fancy manicures.
Buy kids clothes at Childrens Place and Old Navy.
Properly insulate home and set reasonable thermostat ($150 bill instead of $500).
Have normal friends who take kids to the park for a picnic rather than a theme park every weekend. Kids don't care.
Would I love a bigger home? Sure! But in a couple of years I will return to work, and house prices will be more reasonable. I have patience.
I feel like we have a bit in common. I make a similar salary and pay the same rent. Wife stays at hom with our 8 month - we prefer a single income to a dual income. Bonding time with our newborn is priceless and so worth it. We'll buy a house in 2-3 years when wife returns to work and prices are lower - she finishes her Masters degree this winter. We have an 05 Honda CRV fully paid off.
As immigrants, we life simply but we never feel deprived off anything. I don't feel inferior by shopping at Gap or Childrens Place. But we make sure we eat well at home since we're good cooks (eat out less though) and baby gets her organic food.
We made simple trade-offs and are happy. No need to impress any strangers......
"sold the house in one week with six offers, 100K over asking"
"Bought another house that had been sitting for awhile and got it well below original asking."
It sounds like you can flip houses until infinity. You must know something we all don't.
RW,
Sounds like all is well with you and you made some good move.
But use caution, unless your home is paid in full. Nobody is immune to the coming (or should I say its already unraveling) housing crash.
The only ones who are really going to come out of this housing crash without a cut will be the renters.
Yes, those silly people who "just throw their money away each month".
lol, so cliché....
SAS
anon 9:35
I am not a flipper. I lived in my home for several years and plan to stay in this one for ten to fifteen. Don't take one small excerpt from my posting and paint me as something I am not. What I am saying is that in this market it is important to price low- if you're overpriced you will be buried. If you price it lower than comps you will often get more interest and it will drive the price up. How is this not relevant to people who may be thinking of getting out of this market or downsizing?
"I hate quotations, tell me what YOU know" -EMERSON Let me tell you what I know, that a lot of you don't want to face. Don't hate me because I made a good decision. I am living proof that Grim's lowball tactic can work given the right circumstance.
Let me tell you something else I know- Many bloggers, (chicago, pat kl)bring relative and informative insight. A lot more of you waste a good part of your lives sitting here on this blog spewing negative and nasty remarks toward anyone selling or owning a home, or god forbid bringing you inforamtion contrary to what you want to believe. Many bloggers serve no other prupose than to criticize, judge and are simply hateful, bitter people.
This is weekend open discussion about what we have seen in our local markets is it not? One expample of someone who owns a home and is not in foreclosure does not bode well with your theory that absolutely nothing in this market is moving and not everyone is overextended-- so you attack.
You just don't get it. Obviously I am in total agreement that the ramifications of this housing boom are serious for our entire economy!
What separates me from many of you is that I do not wish to see others fail(which I agree is inevitable for many ARM holders).
Even poeple on this blog who try to show the least bit of compassion toward people who are in over their heads get comments like "Go back to watching Dr. Phil".. Nice???obviously some misogynist wife abuser who gains his power by bullying women on the internet.
Maybe if some of you spent half the time slinging your negativity and instead channeled your energy into charity work your lives would be different.
Grim is providing valuable objective information. His work on this blog should be considered a service to our community. Some of you could be more productive.
LIVE YOUR LIVES stop spending every hour of it worrying about Real Estate!
Signing off for good, had enough of the one sided forum.
RW
SAS,
I also think that renters will come out ahead. I wish I could be in their shoes.
Purchase price on new home is less than hubby's salary this year and will be paid off in two or three. He is also a former Marine. You guys are the best.
RW
The motleyfool.com people are usually pretty much on the level and they have joined the bubble-camp
http://www.msnbc.msn.com/id/14608814
-cs
http://www.rgemonitor.com/blog/roubini
page down to read what this NYU prof says. A little something for non-believers. This guy has nothing to gain and I doubt he would think a bubble is iminent if it wasn't!
-cs
{{{Two: Anyone know good websites for finding an apartmet in NJ?
Thanks in advance.}}}
There aren't any. Most apartments in Bergen County or Hudson county are in three words: Shitty Overpriced Crap. Of course rents continue to spiral higher & higher because they are still cheap compared to paying $3,000 for a tiny walkup in Manhattan + 15% brokers fee.
Marketed towards recent transplanted surburban college grads who can't afford Manhattan and think that the commute to Manhattan & number of starbucks are the only factors that are important.
Check out the crap on Craigslist that starts at $1,500 for a one bedroom in the bad parts of Jersey City (Heat and Hot Water are NEVER included anyway)
{{{{{What a load of garbage that you can't live in the area under $200k.
DH makes $75k as a mechanic. I stay home with 2 young kids.
We rent nice home for $1500 (less than taxes, association fees and interest on a mortgaged comparable home, so I am not losing anything).
2x 2003 cars, one bought new, one used plus a banger spare all paid for.
Both kids in private preschool.
Money in the bank.
Decent health insurance, 401k and buy IRA's every year.
Spent month in London last year on vacation.}}}}
Where exactly do you live in NJ that you (and "DH") can survive on $75,000 a year AND find a decent 'home' (not a tiny apartment???) for $1,500 a month??
I pay less than $1,000 in Queens, but only because of rent stabilization or else I probably would be paying closer to $2,000 a month.
A 401K or IRA is so unfeasible with the amount of money that is taken out in payroll witholding taxes for a single person if you make less than $100,000 a year. No wonder why most NY'ers are lifelong renters with a net worth of close to nothing.
stonepearl & RW,
I too have been reading this blog just about from its start and have to agree with you both concerning some of the people posting lately. Much too many personal attacks based upon ant type of opinion differences, the generation you’re part of, economic status, etc.
Most of the time I don’t bother to respond, but then again at times it just gets to be too much.
stonepearl & RW,
Add me to the list of people who think that the posters here consist of, to rephrase a famous radio show host, sixteen homebound agoraphobes with nothing better to do with their lives.
Let's see: There's
--a conspiracy theorist who claims to have contacts high inside the military industrial complex;
--several brilliant market timers who sold real estate right at the peak of the market;
--an insane cackler who appears to suffer from keyboard stutter; and
--a delightful individual who boasts about acquiring "assets" from poorhouse-bound homeowners.
Kudos to Grim's efforts--but unfortunately, he seems to have picked up a band of people who would rather bully and rant than engage in productive discussion.
CUT AND PASTE FACTOID:
Please save this factoid whenever you see some rose-colored post about how nyc is different because there's so much money there:
As of 2000 census, median annual income for all of NYC:
$39,000
Median annual income for manhattan:
$47,000
Income has probably gone up a coupla percents since 2000, but that's all folks -income has never, nor will ever spike up enough to justify the ridiculous housing prices we have now. We are in a bad, bad bubble here in NYC - worse than the 80s. Wake up.
CUT AND PASTE FACTOID 2:
Median annual income for all NYC current homeowners:
$60,000
A jump from income of renters ($31000) but nonetheless FAR from enough to support high housing prices. NYC has been the victim of risky loans and mania mentality, just like a lot of other parts of the nation.
http://findarticles.com/p/articles/mi_m3601/is_30_50/ai_114631153
{{{As of 2000 census, median annual income for all of NYC:
$39,000
Median annual income for manhattan:
$47,000
Income has probably gone up a coupla percents since 2000, but that's all folks -income has never, nor will ever spike up enough to justify the ridiculous housing prices we have now. We are in a bad, bad bubble here in NYC - worse than the 80s. Wake up.}}}
That was from 2000. Six years ago. Things have changed completely in Manhattan and the NYC region in the past 5 years. Average income has jumped in Manhattan and all the other boros except for maybe the Bronx.
Outside of Manhattan, you see reverse white flight & immigration in places like Astoria, Jackson Heights & Woodside which have become like Brooklyn Heights & Park Slope. These people are NOT making $60,000 a year because they couldn't qualify for (let alone afford) anything in these neighborhoods.
Don't forget that the whole buying process is completely different in this region than in the rest of the country west of the Delaware river.
In the 5 boros of NYC most properties are co-ops & condos which require a minimum of 20% down + approval of the co-op or condo board.
Have you looked at closing costs in NYC??? Insane, total can easily amount to 10% of the total mortgaged amount.
Tell me, how are people coming up with over $100,000 cash for the downpayment on a 1 bedroom apartment and another $30,000 for closing costs???
{{{A jump from income of renters ($31000) but nonetheless FAR from enough to support high housing prices. NYC has been the victim of risky loans and mania mentality, just like a lot of other parts of the nation.}}}
I don't think so. The gap between the wealthy & poor is the greatest here than in any other part of the country.
Tell me, where in the 5 boros or on Long Island can one qualify for let alone afford to rent an apartment on an income of $31,000 a year???
You know that buying & renting an apartment is much different & stricter than in the rest of the country.
The documentation required to rent an apartment is greater than that to obtain a full doc mortgage in the rest of the country.. Plus, most landlords won't even consider you unless you have a FICO score in the 700's..
Anon 1:50:
Central Jersey. The rents are more reasonable than in the North. I rent a 2 bedroom house with huge rooms in a quiet neighbourhood. When I buy, I will buy something bigger but right now the kids are small and I want to keep costs under control. Take a look at the GSMLS, it is possible to rent a 3 bedroom house in a great school district for $2000.
401k is PRE-TAX, so not only is it a sensible investment vehicle, it reduces those payroll taxes you keep crying about. The best way to save is to remove the money from sight before you even see it or think about spending it.
It is perfectly possible to live on less than $100k, or even to raise a family on that amount as long as you set your priorities straight. The median income in Jersey is $60k, so as far as I am concerned, we have more than over half of the state and if I can't manage on that, then more fool me. I challange anyone to show me what they spend in a month on a line item basis, and I will show them how to save. If some people can get by on $30k, then the rest of us can do well on twice or more.
To all,
I can sum things up easily:
"Tell me what I wanna hear, or tell me nothing at all."
ahh, yes....
somethings never change, like human nature. This is why we have bubbles in the first place.
SAS
PS-
"a conspiracy theorist who claims to have contacts high inside the military industrial complex"
I have a strong feeling this fellow is refering to me, but I could be wrong.
Lets just say...I didn't spend all those years in the service bending over and taking orders and in the 80's I did defense contract work.
RW wrote:
"I watched the market for over a year and heeded much of the advice given on this web site." - 9/02/2006 08:00:58 PM
"Signing off for good, had enough of the one sided forum." - 9/02/2006 11:01:49 PM
Well, glad you took what you needed.
I found your post interesting, you shouldn't run away from a discussion. Many here are homeowners, and have much to add.
Anyway, best of luck in the new house.
dreamtheater
Yup, I think our situations are pretty similar. My kids are 4 and 2. Older one is about to enter the local school system, so I'm looking forward to those savings.
Of course things are a little tight, but I've managed to spend the critical early years with my kids and that is what was important to me. When I go back to work my income will double our take home and things should be fine, although first priorities are to fill up the kids college funds and to save more for a bigger down payment. We may rent a bigger home in our preferred buying town as we wait for the house prices to stabilize. My principle is that a couple should be able to live on the income of one, even if tight, so that if something happens they can keep their home and avoid bankruptcy. The second income is the gravy, nice vacations, an extra full bank account, more meals out, maybe private school for the kids, extra savings in the retirement account.
good article about nyc rents..
http://www.bloomberg.com/apps/news?pid=20601109&sid=a59NaxLBjmak&refer=home
my favorite quote..(by the way..those amounts are per month.)
"Shelley Saxton, director of New York real estate brokerage Brown Harris Stevens, said she no longer considers $10,000 to be high-end rent.
``To get the ooh-la-la, you are over $20,000,'' she said.
Now, no more talk about our inner child feelings and back to the topic at hand.
"London luxury home prices hit new highs"
http://tinyurl.com/pr3v5
*Seems the RE bubble has spread worldwide. I lost money on a flat in London that I once owned. Crap...wish I still had it today.
See, even people like your SAS has lost money on RE investments.
That is why diversification is key. To those whom have all their net worth in RE, use caution.
Take note RW, if you are still out there, that is why I said to you use caution. I was afraid that you may have all your net worth tied up in RE, and in this market, its a very dangerous play.
;)
SAS
The fundamentals in the NYC area have not worsened just changed.
Just shows that the market has shifted to favor rentals instead of purchases.
What I found most significant is that
The median rent is $4,000 for Manhattan south of 96th street while the vancancy rate is at a near record low.
People are just 'sitting it out' paying $3,000 & $4,000 a month for rent instead of $5,000 - $8,000 a month in total Mortgage + Maintenance thinking that the market will fall.
To even qualify to rent an apartment at $4,000 a month, you must make at least $160,000 a year.
Don't forget about the standard 15% realtors fee that is usually non negotiable and payable by the renter before lease signing..
Rents outside Manhattan are no bargain either.
In Queens, Nassau and Jersey City, the median is over $2,000 a month for what amounts to a crap shoebox apartment. Heat & Hot Water is NEVER included either outside of 5 boros of NYC and can add another $300 - $500 a month and more during the winter.
Central Jersey is a bargain?? Where in Central Jersey?? Likely south of the Raritan river and at least 30 miles away from the closest NJ Transit station.
Anon 10:14 most housing in NYC is not co-ops, it's sf homes or little multifamiles. You're thinking of manhattan, where most apts are actually rentals but most of HOMEOWNER apts are co-ops. NY Times corrected itself on that, if that's where you origninally got the figs.
Also I can assure you incomes have not gone up that much in 6 yrs (not nearly enough to justify 100-200 percent increases in house prices). If you have data to the contrary, bring it on.
House prices have exceeded incomes for years now, but in the past 3-4 have jumped to ridiculous proportions over income. Especially in outer boro areas. We are headed for a fall, no doubt about it.
Anon 2:22
I'm not going to tell you where in Central Jersey, as I don't think I would want you as a neighbour. Enjoy complaining about NY and your life.
Anonymous said...
The fundamentals in the NYC area have not worsened just changed.
Just shows that the market has shifted to favor rentals instead of purchases.
9/03/2006 02:22:08 PM
agreed - the money is there and the economy is strong [NYC and commutable distances]
anyone not willing to acknowledge this reality is not being objective
no matter - we are in a state of imbalance - let's be patient and see where this situation leads.....
Hey shytown...
I agree with you too. I think the nyc metro area economy is doing well, but alot of that is credit.
Sooner or later, someone has to pay the piper, and when that happens, we are looking at big recession.
I think the rest of the country is already heading there now.
We will see.
;)
SAS
Buyers Market?
This is often stated nowadays, but I would not consider it a buyer’s market by a long shot with the current obnoxious price levels. I believe that “THEY” are saying this to promote an ARTIFICIAL incentive to “KEEP things moving” in the market. You have to read between the lines.
{{{This is often stated nowadays, but I would not consider it a buyer’s market by a long shot with the current obnoxious price levels. I believe that “THEY” are saying this to promote an ARTIFICIAL incentive to “KEEP things moving” in the market. You have to read between the lines.}}
It is the same way in NYC in the sales & rental market. Totally obscene, 'obnoxious' (good word to describe) prices.
Look at the crap that is posted on Craigslist and the associated prices & rents especially in Jersey City, Astoria, & other 'trendy' neighborhoods.
$300,000 doesn't get you much unless you are are content with a piece of shit dollhouse in Nassau county that needs complete updating or for $350,000 you can get a one bedroom railroad style condo in a restored tenement building in the part that is now called 'downtown'.
Real Estate agents still think that we are in the market of 2004, but judging from the number of for sale & for rent signs around Jersey City it appears that it may not be the case.
And you are not supposed to ask questions either. Most won't give you specific info unless you sign a contract and hand over your 10% deposit which is locked into an escrow account
How much are houses inflated?
According to my personal observation:
185,000 dollar ordinary house in the NY/NJ area is going for 400,000 dollars.
Oh and this includes NORMAL APPRECIATION from 2000 to 2006
Buyer = sucker
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