Saturday, January 28, 2006

Weekend Open Discussion

Open Discussion for this weekend.

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.

In particular, I'd like to put out a request for comments on the Hoboken and Jersey City markets. There have been many stories/rumors about certain message boards that cover that area. Lets have the dirt, inquiring minds want to know.

Have a nice weekend everyone!

Caveat Emptor!

Friday, January 27, 2006

The Housing Bubble Week In Review

Ameriquest Agrees to $325M Settlement

The investigation found that salespeople at Ameriquest had concealed interest-rate and loan costs during the loan process, pressured appraisers to inflate the values of borrowers' homes, and engaged in other high-pressure tactics to close deals, a statement from New York Attorney General Eliot Spitzer's office said.

Appreciation stagnates in many markets

What is real estate worth in a market with a glut of homes for sale, and where re-listings with price reductions are becoming routine? That's the question facing buyers from Southern California to Arizona, to Florida and north to New England, all of which are experiencing declines in appreciation rates and sagging sales.

The answer often comes from someone they may not see, much less know by name: The appraiser hired by the lender.

For sellers, appraisers' opinions of property value in softening markets can be pails of ice water: Sorry, but your house is worth $100,000 less today than it was last summer or spring.

Prospect of housing downturn casts pall over US economy

Mr Morris says a "bubble zone" has been created where house prices are overvalued by 35-40 per cent, equivalent to $6,000bn. Although this bubble could take time to deflate, Mr Morris warns that "the consequences of a punctured housing bubble could be traumatic". Even a soft landing of zero house price growth, he says, will dry up the mortgage equity withdrawal that has fuelled consumer purchasing. Consumer spending makes up two-thirds of the US economy.

"There are already signs of softening in the new homes market in the US if you look at prices and the number of sales. That is going to hit discretionary spending," says David Bowers, chief global investment strategist at Merrill Lynch.

US home building tumbles in December

Housing starts have fallen in two of the past three months. In December, starts plummeted throughout most of the United States. A 21.7 percent drop in the West marked the biggest percentage decline for that region since February 1999, when starts dropped 24.7 percent.
Total single-family starts dropped 12.3 percent in December while groundbreaking on multifamily units jumped 10.2 percent.

Permits for future groundbreaking, an indicator of builder confidence, fell 4.4 percent in December.

U.S. Economy: Home Resales Fall to Lowest Since March 2004

Sales of previously owned U.S. homes fell more than forecast last month to the lowest level since March 2004, evidence of the end of a five-year housing boom that will slow the economy.

Vegas Condos Go Cold

Now that several high rollers in the Las Vegas condo-hotel game, with properties linked to the likes of Michael Jordan and Ivana Trump, are either folding or selling their holdings, a growing number of players are losing their taste for big bets on high-rise residential real estate development.

Home investors, flippers may fade away

"The stats that we've all seen show anywhere from 15 to 25 percent of all home purchases right now are from investors and second homeowners," said Robert Foregger, chief strategy officer at EverBank in Stowe, Vermont.

"If you revert to the mean, you could have somewhere between maybe 10 and 20 percent of the market that could really just dry up," he said. "If it does, it has the potential to put more downward pressure on prices."

Home prices get even more overvalued

The level of over-valuation matters in three ways, according to Ingo Wenzer, president of Local Market Monitor. The higher it is, the greater the risk of it correcting; the greater the correction can be; and the longer it will take to return to present-day prices after they fall.

"Once markets are overpriced by 40 percent or so, the risk is pretty high and the adjustment can take five to 10 years," said Winzer.

Home sales continue to cool

Industry insiders blame the shift in the local market in part on the flight of speculators and investors, estimated to have been as much as one-third of real estate players in recent years.

The lack of action has caused some small-time investors who bought homes during the last six to 18 months hoping for a quick profit to suddenly look for an exit that just isn't there at price they expect.

Single-family house prices fell nearly 12 percent in December

The median home price for a single-family house in San Luis Obispo County fell nearly 12 percent in December, or more than $70,000, but local real estate professionals warn that it is too early to determine if the market is headed downward.

The $534,930 median home price -- the statistical point where half of the homes sell for more and half for less -- declined 11.6 percent from the November price of about $605,160, according to the California Association of Realtors.

McCains having trouble selling mansion

Sen. John McCain, R-Ariz., tests the declining real estate market as he tries to sell his recently price-reduced $3.75 million Phoenix mansion.

The 11,000 square foot estate, with its nine bedrooms and eight bathrooms -- and eight surveillance cameras -- has been on the market for three months.

Only six prospective buyers have checked it out, the Arizona Republic says. That led to a half-million-dollar price cut.

State's Housing Starts Fall for First Time in 10 Years

New home construction in California fell last year for the first time in 10 years and could drop more sharply this year, according to a report released Thursday that provided the latest sign of a cooling real estate boom


It's not the end of the world — just the first signs that the housing bubble is beginning to deflate.

That's the verdict economists delivered yesterday on the data that show an unexpectedly steep slump in the sales of existing homes in December — despite a decline in mortgage lending rates that might have helped cushion such a decline.

Existing-Home Sales Slide

In a report yesterday, Goldman Sachs Group Inc. said the December figures suggest that "housing market conditions are deteriorating rapidly."

The $7,000 drop in median home price from October to December, Goldman Sachs said, is the largest two-month drop in prices in years and must be taken seriously as a "potential sign of a sharper-than-expected weakening in the U.S. housing market."

Centex says demand slowing

There's no question demand is slowing in certain markets, such as Phoenix and Washington, D.C., executives said. Cancellations ticked up 175 basis points to 27.2% in the fiscal third quarter ended Dec. 31.

Unraveling the Pyramid

This issue is systemic industry-wide, as the entire process from the regulators to the lenders to the third party interactions of the loan officers and the Realtors/builders is broken. It certainly will take a collaborative effort from the entire industry to unravel the pyramid of bad practices that have occurred over the past ten years.

Smart Investing Amidst Real Estate Mania

The angry readers should draw insight from something Warren Buffett said: "For some reason, people take their cues from price action rather than from values. What doesn't work is when you start doing things that you don't understand or because they worked last week for someone else."

Personally, I would say, "The dumbest reason to buy anything is because the price is going up." Yet that's what people do when they invest. They generally don't buy high-priced things when they shop.

We all know a real estate crash is coming. The problem is we don't know when.

Realtors' Lereah: Housing To Make 'Soft Landing'

And Lereah declared that the market adjustment was in fact expected, "with a soft landing in sight for the housing sector." The normalization should give investors and industry players hope, one presumes, as he added that, "The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead."

Caveat Emptor,

December New Home Sales

From Reuters:

Dec new home sales climb; record sales in 2005

Sales of new U.S. homes expectedly rose 2.9 percent in December as mortgage rates dipped, but home prices fell for a third month and the number of houses on the market hit a record, according to a government report on Friday.


Wall Street economists had expected sales to slow slightly in December to a 1.225 million unit pace.

While sales rose in December, the inventory and price data suggested some cooling in the housing market.

The number of new homes on the market at the end of December climbed 2.4 percent to 516,000, marking a new high. At the current sales pace, that represented 4.9 months' supply.


Here is a link to the dataset (warning, it's in Excel format):

New Residential Sales December 2005

Sales in the Northeast dropped a staggering 23.3% in December. However realize these numbers are subject to large revisions as well as subject to high levels of error.

Median Home prices have been falling rather dramatically, in fact, the December 2005 Median Home Price of $221,800 is below the December 2004 price of $229,600.

U.S. Median Sales Price
Dec '04 $229,600
Aug $240,100
Sep $240,400
Oct $237,500
Nov $226,800
Dec $221,800

U.S. Average Sales Price
Dec '04 $284,300
Aug $295,000
Sep $299,600
Oct $291,400
Nov $286,000
Dec $272,900

Caveat Emptor!

Corzine and Taxes - Perfect Together

New Jersey voters fell hook, line, and sinker for Corzine's promises of lower property taxes.

Are more taxes in N.J.'s future?

Budget fixes: spending cuts, tax increases

Corzine urged to hike taxes

Aides to Governor Corzine are recommending a range of new taxes on clothing, cable television and Internet purchases as well as possible layoffs to help plug a $6 billion hole in the state budget.

The advisers, in a six-page draft report, are also suggesting a higher gas tax, a slice of 401(k) earnings for state coffers and a temporary tax surcharge to raise money immediately. They say they want an end to "illogical loopholes" in the income tax code.

"The fiscal health of the state of New Jersey has plunged perilously close to ruin," the draft says. "In two short decades, under both Democratic and Republican administrations, the state has gone from a financial powerhouse to a financial basket case."

Corzine has said the state budget will fall about $6 billion short of its anticipated $28 billion spending needs. Moreover, the Transportation Trust Fund, which finances multimillion-dollar highway projects, and the state workers' pension fund are heading toward insolvency. The state has racked up nearly $30 billion in debt and has another $30 billion in liabilities, the aides concluded.

The document makes no specific proposals for dealing with spiraling property taxes throughout the state, but it does assert that the plan could lay the groundwork for comprehensive and long-lasting property tax reform. Failure to enact fundamental changes would lead to "grave consequences, including ... skyrocketing property taxes," it warns.

Corzine had campaigned on a platform of property tax reform. Although he refused to make a "no new taxes" pledge, he often said he had no intention of raising taxes.

The draft report Thursday led critics to compare him with former Gov. Jim Florio, whom voters punished in the early 1990s for declaring a new tax on toilet paper and other staples, plus raising the sales tax rate 1 percent.

"Corzine has broken Jim Florio's record," Wilson said. "In just eight days after taking office he's announced perhaps the most significant tax increases in a long time."

Caveat Emptor!

Thursday, January 26, 2006

Housing costs are major burden for Long Islanders

Poll: Housing costs are major burden for Long Islanders

A majority of Long Island residents say they have trouble making monthly rent or mortgage payments and may move to an area with lower housing costs and property taxes, according to a new poll.

The Rauch Foundation poll said 56 percent of those surveyed said they were likely to move in the next five years in 2005, up from 45 percent in 2004. Fifty-four percent of Long Islanders reported difficulty making monthly rent or mortgage payments in 2005, up from 47 percent in 2004, the poll found.

Some 1,215 Long Island residents were interviewed by telephone between June 7 and August 1 for the poll, part of the foundation's Long Island Index reports on public policy issues. The survey, released Thursday, had a margin of error of plus or minus 2.8 percentage points.

The full text of the Long Island Index report can be found here:

Long Island Index 2005 - PDF

Caveat Emptor!

Wednesday, January 25, 2006

NAR Predictions Worthless

From the NY Times Walk-thru blog:

How Good are the Realtors’ Predictions?

Hats off to writer Damon Darlin for taking the time to compile the NAR estimates released over the past few years. Here is some of the article:

What actually happened in 2002: There were a total of 5.6 million existing-home sales in 2002, up 5 percent from the previous record of 5.3 million in 2001.

NAR was off by 6.4 percent.

What actually happened in 2003: There were a total of 6.1 million existing-home sales in 2003, up 9.6 percent from the previous record of 5.6 million in 2002.

NAR was off by 14.2 percent.

What actually happened in 2004: Existing single-family home sales surged in 2004, well above the previous record set in 2003, according to the National Association of Realtors. There were a total of 6.7 million existing-home sales in 2004, up 9.4 percent from 2003. This is the fourth consecutive annual record.

NAR was off by 14 percent.

What actually happened in 2005: There were 7.1 million existing-home sales in all of 2005, up 4.2 percent from 2004.

NAR was off by 9.6 percent, and guessed the direction wrong.

So what have we learned?

Caveat Emptor!

Northern NJ Weekly Residential Inventory Update

Northern New Jersey Residential Inventory (SFH, Condo, Coop)

Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, and Warren Counties
1/18 - 11696
1/25 - 11931 (2% Increase, 8.3% since January 1st)

Bergen, Essex, Hudson, and Passaic Counties
1/18 - 5565
1/25 - 5691 (2.2% Increase)

Hudson County
1/18 - 1782
1/25 - 1744 (2% Decrease)
(Hudson County listings increased on both GSMLS and NJMLS)

Caveat Emptor,

Existing Home Sales Fall 5.7% In December

From Bloomberg:

U.S. December Existing Home Sales Fell 5.7% to 6.60 Mln Rate

Sales of previously owned homes fell in December for a third straight month, evidence that housing demand was starting to falter at the end of a record year.

Home sales fell 5.7 percent to a 6.60 million annual rate, the National Association of Realtors said today in Washington. Sales, which have been slowing from a record monthly pace reached in June, still finished 2005 at an all-time high of 7.072 million.


Sales were expected to fall to a 6.87 million annual rate from 6.97 million in November, according to the median of 59 estimates in a Bloomberg News survey of economists. Forecasts ranged from 6.75 million to 7 million.


The supply of homes for sale, another measure of housing demand, fell to 2.796 million in December from 2.924 million the month before. That represents 5.1 months' worth at the current sales pace, up from 5 months' worth in November.

The NAR December EHS data can be found here:

NAR December 05 EHS

In the Northeast sales were flat in December, however, compared with last year sales were down -3.5%, the second highest behind the West that came in at a -11.4%.

Median Home Price has fell again in the Northeast to $245,000 in December from a high of $254,000 set in August. This represents a decline of approximately 3.5%.

Caveat Emptor!

Foreclosure Primer

It seems many readers here have questions about the foreclosure process and more specifically, how to purchase homes in foreclosure. While I'm certainly not qualified to offer up advice on the process, someone who is has offered up some information that might answer your questions. Rick Sharga from RealtyTrac has provided me with a document that outlines the purchase process and includes some tips on how to go about purchasing foreclosed properties. This site has no relationship with RealtyTrac, nor will it in the future. But since Rick did approach me with information that I feel is helpful for readers, I'm going to forward it on to you. I've taken the liberty to trim down the article, if you would like the entire document, just reply to this post with your email address or email me directly.

Caveat Emptor!

What is a foreclosure?

Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice. The foreclosure process can end one of four ways:

1) The borrower/owner pays off the default amount to reinstate the loan during a grace period determined by state laws. This grace period is also known as pre-foreclosure.

2) The borrower/owner sells the property to a third party during pre-foreclosure. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.

3) A third party buys the property at a public auction at the end of pre-foreclosure.

4) The lender takes ownership of the property, usually with the intent to re-sell. The lender can take ownership through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction. These are also known as bank-owned properties.

Pre-Foreclosure (NOD, LIS):
Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property. The borrower/owner can walk away with something to show for any equity in the property and avoid a bad mark on his or her credit history. The buyer has time to research the title and condition of the property and can realize discounts of 20-40 percent below market value.

Auction (NTS, NFS):
If the loan is not reinstated by the end of the pre-foreclosure period, potential buyers can bid on the property at a public auction. Buyers often are required to pay in cash at the auction and may not have much time to research the title and condition of the property beforehand; however, a public auction often offers some of the best bargains and avoids the unpredictability of dealing directly with the borrower/owner.

Bank-owned (REO):
If the lender takes ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction, the lender will usually want to re-sell the property to recover the unpaid loan amount. The lender will probably make sure the title is clear for any buyer, but the potential bargain is typically less than a pre-foreclosure or auction property.

Foreclosure Overview


Buying a Foreclosure Property Below Market Value: Five Tips from the Pros
By Jim Saccacio, RealtyTrac Chief Executive Officer (This version has been edited)

House hunting can be a very daunting experience, especially in today’s real estate market. Both investors and home buyers have been priced out of the market by escalating costs, and good real estate deals are increasingly difficult to find.

But there are bargains out there, for people who know where to look.

“For people willing to do some homework, the foreclosure market offers some of the best opportunities in real estate today,” explains James J. Saccacio, chief executive officer at RealtyTrac, the leading online foreclosure marketplace.

“Foreclosure properties can be a terrific investment, or give home buyers a much more affordable option than traditional properties,” notes Saccacio. “But they’re not a way to get rich quick, and a foreclosure purchase needs to be approached in an educated, intelligent manner.”

Saccacio offers five tips to help you close a deal on a foreclosure property:

1. Learn about the different types of foreclosure properties, and the foreclosure process.

There are three basic types of foreclosure properties, representing different stages in the foreclosure process: notice-of-default (NOD) and notice of trustee sale (NTS), which are both pre-foreclosure properties; and real-estate-owned (REO), a foreclosure property which has been re-purchased by the bank.

For most consumers, buying a pre-foreclosure property from a private homeowner is the best option. It’s important that both the buyer and the seller see the situation as a win-win situation, in order to ensure a smooth process. In this case, the seller is able to get out from under a mortgage without destroying their credit rating, the lender is saved the time and expense of foreclosing on the property, and the buyer gets a below-market price on a home.

Foreclosure auction sales are typically the domain of the professional investor. These properties are formally in default, and sold to the highest bidder at an auction. Buyers are required to be physically present at the auction, and must pay 100% of the sale price in cash, on the spot. Though foreclosure auctions can offer significant savings, they are not for the feint of heart or the uninformed. Unless the buyer is already familiar with a particular property, there is usually little time to examine it. And the buyer will be competing against professional investors—and sometimes even the lender—at the auction.

Once the lender officially reclaims a home, it becomes a real-estate-owned property (REO). While REO properties typically offer more time for evaluation and a more standard bank-managed transaction, their prices are usually very close to full retail market value.

2. Secure financing early

It’s important for a buyer to be pre-qualified before engaging in discussions with a seller. This ensures that the buyer is in a financial position to purchase the property, and is in the strongest possible position to negotiate. It’s best to work with a lender who understands the foreclosure process, and can guide the buyer through certain steps, such as ensuring that a property is FHA-compliant. Another reason to consider pre-qualification is that not all lenders finance foreclosure properties. Having approved financing in-hand makes negotiations with both the seller and the lender easier, and may even make it possible for the buyer to simply cure the default and take over the existing loan to reduce loan processing fees.

3. Engage a real estate agent as a “buyer’s representative”

Most people hire a real estate agent to sell their home. These “seller’s representatives” are charged with making the sale and negotiating the best deal for their clients. “Buyer’s representatives” have the home buyer’s interests at heart, and are charged with finding the right property and negotiating the best price for their clients. Picking the right real estate agent will make a buyer’s life much easier. There are agents who specialize in the foreclosure market, with specific experience in REO properties. Look for an agent with foreclosure transaction experience, as well as knowledge of local, regional and state laws. But it’s also important to consider the agent’s knowledge of the area; their ability to close a deal; and their access to other professionals (attorneys, lenders, mortgage and title professionals) to ensure that the buyer is in good hands.

4. Do your homework

Stocks offer higher potential returns for investors than traditional savings programs, but are also riskier. Similarly, purchasing foreclosure properties is somewhat more risky than buying traditional real estate properties, but offers much higher potential savings. With the right examination and due diligence, buyers can significantly reduce the risks. It makes sense to give any property under consideration a thorough examination. Here are eight steps for doing a professional-level exam.

· Identify desirable neighborhoods – Identify specific neighborhoods where you’d like to live or own a home. This will limit your search to a manageable size for you and your real estate agent, and give your a sense of relative property values.

· Cast a wide net – There are a number of Web-based services that can put hundreds of thousands of foreclosure properties at your fingertips. Since the best savings are often found in pre-foreclosure properties, it’s important to check the percentage of pre-foreclosure (vs. REO) properties in any database before subscribing.

· Determine the property value –Look at the original purchase price, and recent comparable property sales to determine the current value of the property.

· Find out the amount in default and the remaining loan balance – In order to determine a reasonable offer price, you’ll need to know—at a minimum—how much money it will take just to satisfy the debt to the lender.

· Run a legal and vesting report – Before purchasing any foreclosure property, make sure it is free and clear of any bankruptcies, tax liens or other financial liabilities.

· Assess the condition of the property– If at all possible, visit the property, ask your realtor’s opinion, and review pest and structural reports to make sure that the property is in acceptable condition, or to determine how much of a rehab budget you’ll need to build in to your deal.

· Build a positive relationship with the seller – Before purchasing the property, try to make sure that you’re entering into a win-win situation with the seller, so that they’ll do what they can to make the process easier and leave the property in good condition

· Leverage your timing – Knowing when a property is going to be auctioned gives you an extra bargaining chip when negotiating with the seller or the lender.

5. Make a realistic offer

Despite what you may see on late-night cable TV, investing in foreclosure properties isn’t a sure fire “get rich quick” formula. Lenders aren’t likely to give properties away, particularly in a real estate market where prices continue to rise. And homeowners in financial distress may be difficult to deal with, particularly early in the foreclosure process. The keys to a successful foreclosure property purchase are diligence and patience.

As a rule of thumb, the best savings can be made at the pre-foreclosure stage, where home owners can avoid a foreclosure and lenders can save the time and cost involved in going through the process. Another critical point in the process is immediately prior to the auction date, when all parties might be most open to a last-minute solution. It’s not unusual to save from 10-30% of the market value on a foreclosure property, and certain properties offer savings of 50% or even more. An educated buyer—one who knows how much is owed on the property and what its market value is—can usually come up with a realistic offer; one that offers significant savings, while meeting the requirements of the lender.

Tuesday, January 24, 2006

FDU Survey Finds New Jersey Economic Outlook Deteriorating

From the Star Ledger:

Biz Buzz: Jerseyans not too thrilled with the economy

A survey by researchers at Fairleigh Dickinson University finds New Jersey residents are scaling back their expectations for the economy and for their own economic well-being.

"Their enthusiasm about future prospects for their financial position and for business conditions in the state has been tempered by the events of the past year," says James Almeida, chairman of the department of marketing and entrepreneurial studies at FDU's Silberman College of Business.

Last year, 52 percent of those surveyed were bullish about their financial future, but this time it slipped to 42 percent. About 30 percent said they worry their finances will deteriorate during the next year, versus only 19 percent a year ago.

Caveat Emptor!

One In Every Hundred New Jersey Homes Is In Foreclosure

RealtyTrac released the year-end data from their 2005 U.S. Foreclosure Market Report on Monday, showing a 25% increase in nationwide foreclosures over the year.

National Foreclosures Increase in Every Quarter of 2005 According to RealtyTrac(TM) U.S. Foreclosure Market Report

"Overall U.S. foreclosure numbers climbed steadily over the course of the year, with more new foreclosures reported in every quarter," said James J. Saccacio, chief executive officer of RealtyTrac. "This trend appears to be moving the real estate foreclosure market back to its historic levels."

Other states with foreclosure rates ranking among the 10 highest nationwide were Georgia, Arizona, Indiana, New Jersey, Ohio and Tennessee. All of these state documented annual foreclosure rates of at least 1 percent of total households and reported new foreclosures increasing from the first quarter to the fourth quarter.

New Jersey Forclosures - 2005
Q1 6482
Q2 9165
Q3 5991
Q4 13487
Total 35125 (108% Increase)

More than 1 in 100 New Jersey homes were in some state of foreclosure last year. The spike in Q4 should be a good indicator of the recent trend. As prices fall and rates increase or adjust the figure will only grow higher.

Caveat Emptor!

Just How Far Down Can Home Prices Fall?

From CNN Money:

Home prices get even more overvalued

Overall, 37 markets were found to be severely overpriced, which meant that they were at least 15 percent more expensive than they should be, and only 6 were underpriced by 15 percent or more. Fifty-seven were deemd to be farily priced.


The level of over-valuation matters in three ways, according to Ingo Wenzer, president of Local Market Monitor. The higher it is, the greater the risk of it correcting; the greater the correction can be; and the longer it will take to return to present-day prices after they fall.

"Once markets are overpriced by 40 percent or so, the risk is pretty high and the adjustment can take five to 10 years," said Winzer.

Local Notables:
Atlantic City, NJ 41% Overvalued
New York, Northern NJ 43% Overvalued
(remember these are statistical areas, not actual towns)

Caveat Emptor!

Thanks to Judy for sending this link in.

Monday, January 23, 2006

If we can't convince you to buy a home, we'll scare you into it.

The recklessness within the real estate industry continues to amaze me. If a historically low interest rate was the fuel behind the red hot market, riskly lending was most certainly the accelerant. There isn't a week that goes by that doesn't leave us with yet another alarming statistic that further illustrates the precarious situation in the real estate market. Just when you thought that the real estate industry was starting to change their tune, an article like this comes out.

Ten Ways To Accelerate Your Mortgage Application

The Feds are out to corral lenders they say are making too many risky loans and the recent bridle on rising mortgage rates likely will only temporarily reign in the trend of higher mortgage interest rates.

You may have some time yet before lenders withdraw some risky loans or tighten underwriting rules, but not much. Meanwhile, mortgage rates can and do turn on a dime -- and that can cost you.

Such volatility in the mortgage market behooves you to speed your mortgage application through the pipeline. The faster you get your loan approved, the better shot you'll have at the home you want.

Other Fed actions, including the Federal Reserve's ratcheting up benchmark interest rates, likely will pressure mortgage rates to resume their rise if not until spring buying ensues. Last year, mortgage market monitors predicted rates would be at or above 6.5 percent by now.

The best way to deal with so much uncertainty in the mortgage market is the fast way.

Hey, Mr. No Money Bankrupt Credit Risk. Didn't you hear the gubment wants to take away the easy money? You know that nobody on gods good earth is going to give you a dollar when this thing is over, so you better do your gettin' while the gettin' is good.

C'mon now. Hurry it up. It's your last chance. The door is closing on you. Once the "Fed" tightens the reigns you'll never own a home. Come on. Why are you still here? Get out there and buy a home now or you'll never own one.

The article ends with the obligatory "mortgage how-to" in an attempt to instill credibility into a piece that is clearly nothing more than scare-tactic propaganda. Just keep reading this piece over and over. Pay close attention to the wording and tone being used..

"The feds are out to corral lenders ..."

"... that they say are making too many risky loans"

"You may have some time yet ..."

"... the better shot you'll have at the home you want"

"Little more than a month remains. "

"The best way ... is the fast way"

Caveat Emptor,

Sunday, January 22, 2006

Exodus From New Jersey

From the NY Times (Registration Required):

An Exodus Driven by Home Prices

A quest for affordable housing is driving an increasing number of young people, families and empty nesters from the New York suburbs to destinations near and far, a review of migration data by The New York Times shows.


"I do think a lot of this movement - to Florida and the exurbs - reflects, in part, a 'housing affordability' movement, or what I have sometimes termed a 'middle-class flight,' " Prof. William Frey, a demographer at the University of Michigan, said in an e-mail message. "They'll move as far out as eastern Pennsylvania, or northern Connecticut. But many are probably looking at Sun Belt markets, including central Florida, Georgia, North Carolina."


But more people are leaving northern New Jersey than are arriving, and that gap is growing. The net migration from the older suburban counties of Bergen, Mercer, Middlesex, Monmouth, Morris, Passaic, Somerset and Union Counties was 26,889 taxpayers in 2004, up 75 percent from 1996. Essex County, which has a combination of urban and suburban populations, was not included in the analysis.


Or, as Mr. Joubert put it, "Compared to New Jersey, they are practically giving houses away down here."

I won't cut/paste the entire article here, but it's definitely worth the time it takes to register. Most interesting, I think, is not the middle class flight out of the suburbs, but the migration of the younger generation inwards to the city. Either way, it seems that Northern NJ residents want to live everywhere but here.

Caveat Emptor,

Thanks to Metroplexual for making us all aware of this piece.

Lowball! 1/16-1/22

Lowball! takes a look at home sales over the past week from a very different perspective. For those new to Lowball!, a lowball offer is when a buyer offers a significantly lower bid than asking in hopes that the seller accepts the offer. We take a list of home sales over the past week and pick out the sales that have the highest percentage difference between asking price and selling price.

Lowball! is to show buyers that the market has changed and buyers now have considerably more leverage than sellers. Just a short time ago, lowball offers would have been laughed at and discarded, however, not any more. The fact that so many under-asking offers are being accepted is clear proof that the market is changing.The list does not contain all sales, I hand-pick the most interesting sales from the list. These listings might be the highest dollar drops, biggest percentage reductions, or sales in towns that are thought to still be 'hot'. Please note, even with double digit percentage reductions, these homes are still incredibly overpriced.

Since so many readers were stopping by this weekend, I decided to get the newest edition of Lowball! out a day early. This is not a full week of listings so it's a somewhat shortened list. But don't worry, there were some great lowballs this week, pay special attention to the dollar reductions of the Chatham and Mount Arlington houses.

On to the list!

MLS# 2107679 - Chatham, NJ
List Price $1,325,000 (Reduced from $1,490,000)
Sales Price $1,000,000 (23.53% Lowball!)
$490,000 off Original List Price

MLS# 2096978 - North Arlington, NJ
List Pirce $390,000
Sales Price $300,000 (23.08% Lowball!)

MLS# 2083944 - Mount Arlington, NJ
List Price $1,200,000 (Reduced from $1,600,000)
Sales Price $950,000 (20.83% Lowball!)
$650,000 off Original List Price

MLS# 2102548 - Morristown, NJ
List Price $395,000
Sales Price $325,000 (17.72% Lowball!)

MLS# 2206022 - Clifton, NJ
List Price $349,900
Sales Price $305,000 (12.83% Lowball!)

MLS# 2073283 - Morristown, NJ
List Price $1,595,000 (Reduced from $1,699,000)
Sales Price $1,400,000 (12.23% Lowball!)
$299,000 off Original List Price

MLS# 2089621 - Little Falls, NJ
List Price $739,000
Sales Price $660,000 (10.69% Lowball!)

MLS# 2210288 - North Plainfield, NJ
List Price $329,900
Sales Price $295,000 (10.58% Lowball!)

MLS# 2222188 - Roselle, NJ
List Price $334,500
Sales Price $300,000 (10.31% Lowball!)

MLS # 2220013 - Kinnelon, NJ
List Price $995,000
Sales Price $895,000 (10.05% Lowball!)

MLS# 2200544 - Kinnelon, NJ
List Price $1,999,900
Sales Price $1,800,000 (10% Lowball!)

MLS# 2091699 - Montclair, NJ
List Price $849,000 (Reduced from $944,900)
Sales Price $765,000 (9.89% Lowball!)

Caveat Emptor!