Saturday, March 04, 2006

Weekend Open Chat - Why are you here?

Now that my weekly sit-in for Grim is just about done; I'm opening up this thread for open discussion, but mainly to find what; who are you and what brings you here?

We definitely have a very broad range of individuals who visit, read, and post here. I was just curious to see the different varieties of people we have here, and why everyone is so interested in real estate.

I'm Richie, 31, married, and a first time home owner since 2004. My day job is in computer consulting. I'm interested in Real Estate mainly because of my father. He's a contractor/builder who's been in the business since the late 70's so over time I've learned a lot from him when it comes to the industry. I hope to expand my ownership to more then just the home that my wife and I live in. Since my dad has been through this market once before; he knows exactly how bad it can get. He said it was ugly when real estate was sour in the late 80's/early 90's and he thinks that it's going to be just as bad this time around.

I did not start paying attention to real estate until 1998-1999 when I started saving up enough $$ to purchase something. Through my father's advice, I picked up an empty parcel of land at the end of 1999. The land stayed vacant until 2003 when my wife and I started construction on our new home which is where we live today.

With some more money saved up now; I hope to increase my stake in real estate once prices become reasonable by purchasing more land or buy getting some rental property.

So everybody, introduce yourself!

Friday, March 03, 2006

More Media Coverage on the Sloooooow down

I can remember 6 months ago where the headlines on were "Housing Craze".. The tide is now turning, and I just caught this article on their site...

How a housing downturn could roil economy

It's about time main stream media caught on. I still think there's a big tendency on the part of media companies to side with their advertisers and not write negative articles, but sooner or later they have to be 'fair and balanced' so here we go...

There is no question the housing market is slowing. Sales of existing homes fell for a fifth straight month in January, and sales of new homes unexpectedly fell 5 percent, despite unusually warm winter weather that should have spurred some house-hunting activity.


"There is complete harmony among the indicators as far as what's happening here," he said. DeKaser calls it the beginning of what he expects to be a two-year decline in housing sales and construction, although he does not expect "broad-based" price declines because labor markets are still growing.

Hmm; some labor markets are growing, but what happens to all the labor involved with real estate, construction, lending industries, and retail sectors that rely on the housing industry?

More than 40 percent of the dollar volume of new loans has been made with adjustable mortgage rates in recent years, compared with less than 20 percent in the early 1990s. As interest rates rise, many owners who stretched to buy a house will find themselves facing higher and possibly unaffordable payments. If housing prices turn down, some owners could find themselves "upside down" on their loans, owing more than the house is worth. A a true housing bust – comparable to the collapse that deflated tech-stock values in 2000 – holds the capacity to "cripple the banking system," Kasriel said. That would make it difficult for the Federal Reserve to revive flagging growth since banks would be hard pressed to loan money even if rates were falling.

This is the paragraph that really worries me. The amount of creative financing that has been advertised, pushed, and peddled on people who don't have a clue. It's still happening today. Everytime I visit the fax machine at work, there's a "spam" fax advertising a low 1.25% mortgage rate.

My feeling is that with such a sharp run-up, there's no time for a "soft landing". That's what everyone wants to see, a soft landing, but how many "normal" years of appreciation would it take for us to reach the insane prices of homes today?


PS: Grim comes home soon!

Thursday, March 02, 2006

State unemployment nearing national level

Some more news for NJ's economy, we're losing more jobs and hitting the national unemployment level..

State unemployment nearing national level

Between January 2005 and January 2006, the U.S. unemployment rate fell to 4.7 percent from 5.2 percent, while unemployment in New Jersey rose to 4.6 percent from 3.9 percent.

This surely is not good for NJ's economy or the housing market. That's a pretty big increase in unemployment over a year that was fueled by consumer spending and a growing real-estate market.

According to the report, most jobs were lost in transportation, utilities, and retail trade. I find that hard to beleive with all the increases in my electric & gas bills.. Where was the greatest increase in jobs? Construction...


PS: Grim Come Home!

Wednesday, March 01, 2006

Mortgage rates fell, but so did applications...

I wish there was something more exciting to write about; although just another update on the status of mortgage applications.

MBA: Mortgage applications tick lower

Mortgage applications fell last week as lower interest rates failed to spur demand for loans to purchase homes, an industry trade group said Wednesday.


The 30-year fixed-rate mortgage, the industry benchmark, is substantially above its 2005 low of 5.47 percent in late June, but below its 2005 high of 6.33 percent reached in the week of Nov. 11.


Analysts say an increasing number of borrowers have been converting adjustable-rate mortgages into new fixed-rate loans as the difference between adjustable and fixed mortgage interest rates narrows. While this has been a factor behind the recent rise in demand for refinancing, it failed to spur activity last week.

So even with the rates on the 30yr mortgage declining slightly (.04 %) it failed to help with the current market situation. On the flip side; I'm sure the real estate industry would be ecstatic to report that Average home prices were up 13 percent in 2005.

Cute reading, but we all know that 2005 ended 3 months ago, and now we're dealing with an entirely new market.


Tuesday, February 28, 2006

Housing market in Shanghai collapses

I came across this article on my nightly news-check. Seems that a collapse is already under way on the other side of the world. Why should we be concerned? China has had a pretty strong economy over the past few years... a sign of things to come?

Once one of the hottest markets in the world, sales of homes have virtually halted in some areas of Shanghai, prompting developers to slash prices and real estate brokerages to close thousands of offices.

For the first time, homeowners here are learning what it means to have an upside-down mortgage -- when the value of a home falls below the amount of debt on the property. Recent home buyers are suing to get their money back. Banks are fretting about a wave of default loans.

See more from this brief at:

Asia News in Brief


Surprised? Existing Home Sales Down in January

Seems the economy is growing beyond expectations even with a decline in home sales. So what happened to real estate being the engine that was driving the economy? I guess everyone cashed out and is spending their profits elsewhere.

...Data from the National Association of Realtors showed sales of existing homes fell for a fifth consecutive month in January as the once-sizzling housing market cooled further.

Home sales down 2.8% in January

Even with the slowdown in sales, home prices held steady. The median price in January — half cost more, half less — was $211,000, unchanged from December.

Not here in NJ; we're atleast double that price.

Sales of both existing and new homes set records for a fifth year in 2005, but analysts believe sales of existing homes will fall about 5% this year as rising interest rates cut into demand.

Both declines were bigger than expected and occurred even though the weather in January was the mildest in more than 100 years.

Yes, we have to blame someone for the slowdown, so let's blame those interest rates. Obviously we can't blame the weather in January because it was the mildest in 100 years.


More Words of Wisdom: How to Bubble-Proof Your Home

Just two weeks ago, an article was posted up regarding an article by David Bach about why home owners get rich and renters stay poor in this previous writing by Grim: Homeownership Propaganda Machine Running Full Steam Ahead.

This morning I came across some new words of wisdom from David; mainly How to Bubble-Proof Your Home.

After my last column on home ownership appeared, I got a ton of e-mails from excited and upset readers. Many suggested that it's simply too late to buy real estate.

Well, I feel that it's never too late. The secret to real estate is timing, location, and financing. So, this column tells you how to protect yourself against a real estate slowdown.

I would really love for any real estate expert to elaborate more on the "timing" piece. According to most experts who have a vested interest in real estate, the timing is always "now". They never seem to mention that prices fluctuate and you should wait for a "lull" period.

If you talk to any seasoned financial investor, the strategy is "buy low, sell high". According to every person who is a broker/realtor or writes a book on buying real estate, the strategy is "buy now".


Monday, February 27, 2006

Sales of New Homes Decline, Inventory a Record

I am guest blogging for Grim this week while he's out of town. The housing starts number is out!

U.S. Economy: Sales of New Homes Decline, Inventory a Record

The total sales for for new homes is at a 1 year low, while inventory is at a record high..

Higher mortgage rates and home prices will push down sales and may contribute to a slowing of the economy in the second half, economists said. Home construction may not add to economic growth this year for the first time in more than a decade, leaving homebuilders less optimistic.

With this being said, and the Economy seen rebounding strongly in 2006 I find it hard to believe that the "low interest" rates will continue to be a driver for the industry.

And finally, to quote the end of the article:

Housing affordability fell to the lowest level in more than 14 years last quarter and may decline further in 2006 as mortgage rates and prices continue to rise, according to the Realtors.


Sunday, February 26, 2006

Carnival of New Jersey Bloggers #41


Welcome to the Carnival of New Jersey Bloggers #41

Ok, everyone is probably wondering just what the heck is going on. Well, I'm not even that sure, but this is the fourty first Carnival of New Jersey Bloggers, and welcome. What the Carnival aims to do is to give some exposure to other local blogs you might have not found otherwise. Each week a new blog will host the carnival by posting up a series of links provided by other NJ bloggers. I'm sure you all get the point.

Just Added
Let me give this one more shot.

Enlighten-New Jersey discusses Federal Spending.

On the sociopolitical front, Jay Lassiter of Lassiter Space takes a virtual trip to Dubai.

Gil at Virtual Memories provides us with an interesting perspective on the Genome.

Jersey Goddess Nordette (now turned real estate goddess?) provided this link. I'm not even going to try to characterize this one.

Roberto at DynamicBuzz put up a very good piece on eminent domain in NJ.

The Jersey Tomato saw Billy Joel at MSG.

Tequila Shots for the Soul writes a handful of open letters. Very funny, worth the stop.

Dossy talks about Willy Nelson's new Cowboy Tune.

Debbie and Rich from "Down the Shore" invite you down for Pinball Fever.

Debbie Galant of Baristanet fame has a new novel out, Rattled, that looks to be getting some rave reviews. For those real-estate diehards, it's got McMansions and dishonest real estate developers as well, so you won't feel so left out.

Janet at The Art of Getting takes a look at the pop culture of teen stars.

Steven Hart over at the The Opinion Mill talks about a popular topic this week, politics, in particular a certain Wanker, John Dickerson.

Jeffery at The Contrarian gives us yet another perspective on the Port fiasco.

Real Estate
Real Estate Flipper Tom at Digital Breakfast has another installment in his series, 3 Alarm Fire!

Ken takes a hard look at the New Jersey School Construction Corporation at his blog, Smadanek.

Sharon mulls over the Transportation Trust Fund at the Center of NJ Life.

Paul at NJ Fiscal Folly says the underfunded budget is much worse than advertised.

Jay from Lassiter Space covers the New Jersey Supreme Court hearing Gay Marriage

Jim Testa at Jersey Beat rocks out with a piece on Steve Wynn

Joe over at Joe's Journal debunks some myths on Ethanol vehicles.

Tom Evslin shows you how to get your hands on the big VC bucks over at Fractals of change. Brings back memories of the roarin' 90's, you know, when we spent millions on parties to celebrate the fact that we purchased a domain name. Business plan? What? Sorry, we were busy working on the menu and buying Porsches.

Lynne gets her piano tuned at Shamrocketship. I'm not sure what else to say about this one, yet for some reason I'm compelled to read.

Ciao Pietro! Pietro at Mano a Vino Montclair takes you to Sicily. Unfortunately, it will leave you both hungry and thirsty.

Noreen discusses sexist remarks at her blog, Roderma.

Matt at The Daily Doormat has a great little bit for husbands that want to keep their wives in-check. That was a joke, however as we speak my wife is modifying that contract to suit me.

Tata at Poor Impulse control has something going on with Cats and Jello. You know it's really difficult to write a little something about every one of these.

Dimitri at Cobweb Studios shoots Eye Candy

Sorry if I missed anyone who sent me a link. Blogger seems to have an issue saving drafts and I lost quite a bit of work more than once.

Caveat Emptor!