The Nu-ILX Real Estate Crash Thread

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Safe Ground in a Housing Market Meltdown?
By Dean Baker
t r u t h o u t | Columnist

Wednesday 14 March 2007

As reports of problems in the mortgage market build, the number of people who view a collapse of the housing market as a serious possibility is growing rapidly. At the moment, the surge in defaults is taking place primarily in the sub-prime market, which is composed of borrowers who have poor credit histories. However, the problems are likely to affect the broader housing market and the economy as a whole before the end of the year.

The basic story in the sub-prime market is straightforward. Mortgage bankers were anxious to sell mortgages even when they knew that the borrowers could not make the payments, because they derive their income from selling the mortgage, not holding it. Hundreds of thousands of low- and moderate-income homebuyers were lured into buying homes by discounted "teaser" rates on mortgages. These teaser rates would reset to market rates, typically after three years, at which time many borrowers would be unable to make their monthly payments.

As long as house prices keep rising, everything works fine. Homeowners can always borrow against their equity to make their monthly payments, or they can sell their home, pay off the mortgage and pocket whatever gains they may have.

However, in 2006, supply finally outpaced demand, and home prices began falling. This led to a huge surge in defaults in the sub-prime market. As a result, some sub-prime lenders have gone bankrupt, and many others are leaving the business or radically curtailing their lending. The same thing is happening in the Alt-A market, which consists of borrowers with somewhat better credit ratings, but still below prime.

The housing optimists claim that the problems in the mortgage industry will be restricted to these sectors and will not spread to the larger prime market. However, the sub-prime and Alt-A markets together accounted for 40 percent of the market in 2005. If lending in these sectors is sharply curtailed, then a huge portion of potential homebuyers will be excluded from the market. According to an analysis from the Bear Stearns investment bank as many as 1.1 million potential homebuyers may be excluded from the market in 2007 because of tighter credit conditions.

While home sales did cross 8 million in 2005, as recently as 1995 the number of homes sold in a year was under 5 million. There is no way that 1.1 million potential buyers, or even half this number, can be excluded from the housing market without a substantial impact on house prices.

It is also important to remember that this credit tightening is occurring against a backdrop in which house prices are already falling. The median house price nationwide fell by more than three percent over the last year. On the supply side, the inventory of unsold homes is up by more than twenty percent from last year. In addition, a record high percentage of these homes are vacant. The vacancy rate of ownership units is more than forty percent higher than in any prior housing slump.

This describes a scenario of more downward pressure on prices, which will lead to more defaults and foreclosures. This in turn will lead to further tightening of credit and more homes being subject to distress sales through foreclosure.

All the experts who used to insist that this scenario could never happen are now insisting that the scenario does not describe the situation in their favored housing markets. While each local market does have its own dynamic, the run-up in housing prices was nationwide. Not everywhere is going to experience the same decline, but there will be few, if any, areas that escape unscathed. The fact that a particular metropolitan area has a sound economy with a healthy labor market should offer little solace - that doesn't mean that house prices are not overvalued.

The tech bubble in the stock market provides an appropriate analogy. While the largest overvaluations were in the tech sector and especially in the dotcoms, virtually all stocks had become overvalued. As a result, there were very few stocks that did not experience a sharp price decline from 2000-2002. The fact that a company had strong growth and solid profits didn't matter - overvalued stocks still fall when a stock bubble collapses. Similarly, overvalued houses will fall in price when the housing bubble collapses.

The vast majority of metropolitan areas are likely to see a fall in housing prices over the next few years, with the biggest declines likely occurring in the areas that had the largest run-ups (largely the two coasts). Few people will be insulated from the impact, just as very few stockholders were unaffected by the 2000-2002 crash. Don't let the happy-talk real estate peddlers tell you otherwise.

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer (www.conservativenannystate.org). He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. You can find it at the American Prospect's web site.

― Hurting 2, Wednesday, 14 March 2007 15:02 (eighteen years ago)

I thought that provided a pretty good insight. I mean I was already betting on a crash, but 1.1 million potentially excluded buyers against 8 million or so sales (or was it fewer than that in 2006?) - HERROES!

― Hurting 2, Wednesday, 14 March 2007 15:21 (eighteen years ago)

God, I hate the sub-prime market, it makes my life hell.

― Masonic Boom, Wednesday, 14 March 2007 15:23 (eighteen years ago)

once ditech ran out of cable TV ad money you knew shit and fan were gonna have a meetup

― TOMBOT, Wednesday, 14 March 2007 15:24 (eighteen years ago)

[Removed Illegal Image]

A minor note, but this sounds slightly off to me - in a crash stocks don't only fall because they're "overvalued" but because panic sets in.

― Hurting 2, Wednesday, 14 March 2007 21:31 (eighteen years ago)

is it wrong for me to hope for this crash? it may be the only way I can afford a home in SF. (SF has its own unique housing market issues, of course...)

― Shakey Mo Collier, Wednesday, 14 March 2007 21:36 (eighteen years ago)

ha ha -- [Removed Illegal Link] -- in time to give some juice to his serious underdog presidential candidacy! (this shit's almost enough to make me turn republican, if i thought that it had a snowball's chance in hell in passing.)

p.s. hurting: i actually drove past velocity in hoboken today (don't ask why) -- the flippers who bought them shits is SERIOUSLY screwed.

― Eisbaer, Wednesday, 14 March 2007 21:37 (eighteen years ago)

http://www.bloomberg.com/apps/news?pid=20601087&sid=a1x64z58hsB4&refer=home <-- the dodd article

― Eisbaer, Wednesday, 14 March 2007 21:37 (eighteen years ago)

is it wrong for me to hope for this crash?

All the lottery-ticket condo buyers were hoping for the market to get so hot you couldn't afford it, so I hardly feel bad for those people. Course there are obviously a lot of people I will feel bad for, and ultimately it will be bad for the whole economy. I feel lucky that I rent cheaply, live below my means, and have a job that is not tied to real estate or construction in any way.

― Hurting 2, Wednesday, 14 March 2007 21:42 (eighteen years ago)

I go up and down on how much sympathy I have for people who make bad financial decisions - I hate the mentality that a single purchase/investment will be the ticket to wealth, but I also recognize that there's a whole industry out there convincing people to have that mentality.

― Hurting 2, Wednesday, 14 March 2007 21:44 (eighteen years ago)

seriously, i really don't have too much sympathy for those who will be seriously underwater when this bubble crashes. seriously, i am a fucking LAWYER in new york city -- and i CANNOT afford a decent condo in the city where i live (let alone manhattan). the only things in my price range are shitty, overpriced walk-ups with NO resale value whatsoever -- i really don't think that you have to be warren buffett to see the folly of paying BMW prices for the real estate equivalent of a used honda civic.

i will be really good and pissed if any congressional "relief" ends up bailing out these subprime shit-shops like New Century or Countrywide -- where was the congressional bailout for pets.com?!? -- or any of the smug flippers who read one too many robert kiyosaki rich dad/poor dad books. they may have to, to stave off a financial collapse. and we're on the hook for all of this shit anyway (i.e., ginnie mae bonds are backed by "full faith and credit" -- read, U.S. TAXPAYERS -- i.e., FUCK YOU, PAY ME).

― Eisbaer, Wednesday, 14 March 2007 21:44 (eighteen years ago)

http://thehousingbubbleblog.com/ has become daily reading for me.

― Elvis Telecom, Wednesday, 14 March 2007 22:13 (eighteen years ago)

(xpost) Well yeah, but the rest of the country isn't Manhattan.

― Hurting 2, Wednesday, 14 March 2007 22:23 (eighteen years ago)

it isn't just manhattan (or the NYC metro area) that's like that. if anything, the metro areas for LA, phoenix, and san diego ... and probably the entire state of florida ... are even worse re: absurdly overvalued real estate, overabundance of speculation and flipping, etc.

also, upon re-reading my post i realized that it sounded whinier than i intended. when i mentioned that despite my job i couldn't afford somewhere that i consider nice in the city where i live, i meant that as much as that someone with an occupation (and presumed income) like mine cannot afford acceptable real estate and that it's even WORSE for people making less money (short of taking out suicidal mortgages). OK, i am also really pissed that i can't afford something nice too -- but y'all get the idea. not to mention that any bailouts means = TEH PRUDENTARE GETTING PLAYED FOR SUCKAS, SO THE DONALD TRUMP-WANNABE IMAGINARY PLAYAHS WON'T LEARN SHIT IF THE GOVERNMENT INTERVENES BEFORE THEY LOSE BIG.

― Eisbaer, Wednesday, 14 March 2007 22:39 (eighteen years ago)

I guess I've met enough people who aren't exactly wannabe Donald Trumps and who have extended their finances too far to make a purchase - granted they may have been a little overoptimistic, but it's not easy to know what's realistic in terms of potential gains/losses especially if one doesn't follow that sort of thing a hobby and if there are all kinds of people whose job it is to convince you to make unwise financial decisions.

― Hurting 2, Wednesday, 14 March 2007 22:43 (eighteen years ago)

i will be really good and pissed if any congressional "relief" ends up bailing out these subprime shit-shops like New Century or Countrywide

Hugely OTM. The fuxx0rz knew what they were doing. 'Course the realtors assoc. will trot a parade of hardworking low-income families in front of Congress in hopes of scoring Federal dollars with which to keep the train rolling, but given that an (beyond irrational) expectation of continued high returns was the only thing that could justify current pricing, a "crash" is the heathiest thing that can happen. The smart money got out by the end of last year.

Piggington is my bubble blog of choice. The charts'n'graphs tell a pretty clear story about when, how, and WHY prices got so out of line with incomes.

cf. risks of a decline

PS - as someone who's been on the outside in California looking in because I'm old-fashioned enough not to be interested in a 0-down interest-only ARM, I will be flag-burning pissed if any of my tax dollars are thrown down the well to delay the inevitable.

― rogermexico., Wednesday, 14 March 2007 22:47 (eighteen years ago)

granted they may have been a little overoptimistic, but it's not easy to know what's realistic in terms of potential gains/losses especially if one doesn't follow that sort of thing a hobby and if there are all kinds of people whose job it is to convince you to make unwise financial decisions

Agreed that there's been a lot of shady dealing helping to overextend honest folks, but the math on this hasn't been exactly rocket science: Check the price vs income charts in the Piggington links above and the impossibility of continued appreciation will make intuitive sense pretty easily.

Unfortunately, honest folks getting overextended strikes me as a really bad reason for the EVEN MORE HONEST folks who understood what they could and couldn't afford to start shelling out to pay for other people's houses.

― rogermexico., Wednesday, 14 March 2007 22:51 (eighteen years ago)

As a wholesale mortgage underwriter who worked shitloads of overtime from '02-'04 and general loan proc from '04-'05, I like to think I helped this happen.

― kingfish, Wednesday, 14 March 2007 22:56 (eighteen years ago)

also, if the housing bubble blogs -- and more importantly, the stories to which they link & discuss -- are at all reliable, the insane property valuations have been fueled at least partly by outright fraud. i mean, we have things like no-stated-income loans (a/k/a "liar loans"), reports of fraudulent high-ball property appraisals by appraisers, lax-to-nonexistant underwriting procedures for loans, etc. all of which have helped fueled grossly overpriced property values, almost like a feedback loop. i will really be pissed off if such fraudulent conduct -- which, again, hurts people who are honest and prudent with their finances -- gets swept under the rug if there is any sort of bailout.

and you can be damn sure that the developers, the sub-prime lenders, the realtors, et. al. who fueled all of this insanity will be among the loudest voices crying for "relief."

― Eisbaer, Wednesday, 14 March 2007 22:56 (eighteen years ago)

almost like a feedback loop

Almost? The only thing supporting prices was the expectation that prices would go EVEN HIGHER!!11!1ONE! Which is as close to a PHYSICAL impossibility as economics gets. The upshot being that even if you were living in your home, if you bought in the past two years you were speculating.

and you can be damn sure that the developers, the sub-prime lenders, the realtors, et. al. who fueled all of this insanity will be among the loudest voices crying for "relief."

It really will drive me to murderous rage, I fear.

― rogermexico., Wednesday, 14 March 2007 23:03 (eighteen years ago)

Hell, in LA, make that the past four years...

http://piggington.com/images/primer/lapricetoincome.gif

― rogermexico., Wednesday, 14 March 2007 23:04 (eighteen years ago)

our mortgage is from Countrywide, but it's fixed at 6.5% thank god. What happens if they go bankrupt? some other bank buys their mortgage and we just pay them? or do we lose our home?

― sleeve, Wednesday, 14 March 2007 23:16 (eighteen years ago)

Hmm - I'd think some other bank would take over your mortgage. I REALLY don't have much knowledge of that area, but it'd hardly make sense that debts to a bankruptcy company would just disappear, being as that company's problem is a lack of money and that you are paying them money.

― Hurting 2, Wednesday, 14 March 2007 23:21 (eighteen years ago)

thanks! also for this thread and the links. I do work in the construction business so it is of keen interest to me.

have to say that I always ignored the inflated value of our house (it went up about $40K in the last six years). the fact that it was an unsustainable bubble just seemed so obvious.

― sleeve, Wednesday, 14 March 2007 23:25 (eighteen years ago)

Sorry, that should have read "debts to a BANKRUPT company"

― Hurting 2, Wednesday, 14 March 2007 23:28 (eighteen years ago)

you'll probably be OK, as long as you're not delinquent on your loan. besides, there's a good chance that countrywide doesn't even own the loan anymore -- it may have been bundled up with other mortgages and sold on the open market as a "mortgage-backed security" and it's sitting in someone's mutual fund or pension.

here are 2 quick primers on mortgage-backed securities --> from wikipedia: http://en.wikipedia.org/wiki/Mortgage-backed_security and the SEC: http://www.sec.gov/answers/mortgagesecurities.htm

― Eisbaer, Wednesday, 14 March 2007 23:35 (eighteen years ago)

wikipedia link: http://en.wikipedia.org/wiki/Mortgage-backed_security

SEC link: http://www.sec.gov/answers/mortgagesecurities.htm

― Eisbaer, Wednesday, 14 March 2007 23:36 (eighteen years ago)

our mortgage is from Countrywide, but it's fixed at 6.5% thank god. What happens if they go bankrupt? some other bank buys their mortgage and we just pay them? or do we lose our home?

Your home is paid for - your debt is to Countrywide. So if they disappear and no other financial entity buys your debt (which is a Countrywide asset), you're home is free! But someone will buy the debt and happily accept your payments.

― rogermexico., Wednesday, 14 March 2007 23:36 (eighteen years ago)

er, xpost - funuilx

― rogermexico., Wednesday, 14 March 2007 23:37 (eighteen years ago)

is it wrong for me to hope for this crash? it may be the only way I can afford a home in SF. (SF has its own unique housing market issues, of course...)

Well, I don't want to say that it's morally wrong but I don't know if the logic behind what you're saying really holds up. I have lots of friends who are waiting and hoping for a crash so they can afford to buy but will they be able to afford it if prices are low but interest rates are high? Or will the housing crash have other effects on the economy that will mean people are still unable to buy? I don't know. And if not, then there are so many people out there who seem to be eagerly awaiting a crash that I don't see how demand is really going to change.

― walterkranz, Thursday, 15 March 2007 00:31 (eighteen years ago)

Demand probably won't change much - but supply is likely to as...
- speculator/flippers realize that the music has stopped and the only question is whether to take a little hit now or a big hit later
- holders of interest-only mortgages start having to pay down principle
- ARMs start flipping to market rates from teaser rates of e.g. 1.9%
- holders of interest-only ARMs... well, you do the math

While I'm among the plodding, money-under-the mattress folks who've been waiting on the sidelines saving for a down payment, I do agree that the overall consequences of a potential 45% drop will not be limited to the housing market (home equity was financing a lot of SUVs and plasma screens), and is therefore not to be cheered with unmitigated glee.

Still, fuck bailing out anyone who gambled and lost with my money :grrrr:

― rogermexico., Thursday, 15 March 2007 01:08 (eighteen years ago)

if it helps any, the real estate crash won't be sudden -- like a stock market crash. it's more like a tire slowly leaking air -- barely noticeable at first, but then unmistakable a good while later when you're riding on yer rims.

as for lower prices/higher interest rates -- hell, i'd just get a fixed rate mortgage and refi when rates decrease.

― Eisbaer, Thursday, 15 March 2007 01:21 (eighteen years ago)

Yeah, I guess supply is the issue and not demand. And interest rates are a non-factor. I'm just highly skeptical of all the people I talk to who are hoping to buy when the market crashes. Not that they should have bought during the bubble but I think there's a bit of dreaming going on.

― walterkranz, Thursday, 15 March 2007 01:30 (eighteen years ago)

http://i17.photobucket.com/albums/b84/bonddad/mr_housing_bubble.jpg

― Eisbaer, Thursday, 15 March 2007 01:31 (eighteen years ago)

xpost I wonder about that too, but your sample probably represents all your educated friends and not the majority of homebuyers. At the same time, your sample also more accurately reflects places where a large percentage of the population is highly educated, so who knows. But ultimately I think the phenomenon of the crash/rupture/whatever is going to outweigh the force of all the buyers waiting to get in. When the market is dropping, sellers are in a much bigger hurry to sell than buyers are to buy.

― Hurting 2, Thursday, 15 March 2007 02:47 (eighteen years ago)

It could be wishful thinking, but if it is I can just keep renting and I'm not left holding a financial timebomb.

― Hurting 2, Thursday, 15 March 2007 02:53 (eighteen years ago)

as for lower prices/higher interest rates -- hell, i'd just get a fixed rate mortgage and refi when rates decrease.

I've heard this advice before, but I'm curious how it works. What motivates the bank to negotiate a lower rate with you when they have you locked in at a higher rate?

― Hurting 2, Thursday, 15 March 2007 15:11 (eighteen years ago)

That's true that banks have no incentive to renegotiate a lower rate with you - however, as long as you're not locked in to your current mortgage by high prepayment penalties, there's nothing to stop you with negotiating a lower rate with another bank.

― o. nate, Thursday, 15 March 2007 15:23 (eighteen years ago)

Ah I see - you get another bank to take over the mortgage.

― Hurting 2, Thursday, 15 March 2007 15:27 (eighteen years ago)

Well, actually I think they just loan you the money to pay the whole thing off. So the old mortgage goes away.

― o. nate, Thursday, 15 March 2007 15:36 (eighteen years ago)

Yeah, that's what I meant - I think.

― Hurting 2, Thursday, 15 March 2007 15:38 (eighteen years ago)

Re: average house price/median per capita income in LA, the long term average seems to be 140%. In the UK that's more like 350%, and right now it's running around 600%.

HI DERE IMMIGRATION LAWYER ONCE I FINISH PHD.

― caek, Thursday, 15 March 2007 16:11 (eighteen years ago)

Caek, you will end up spending the difference on your HEALTH INSURANCE PREMIUMS. For real. My mum spends more on healthcare than she does on property tax.

― Masonic Boom, Thursday, 15 March 2007 16:14 (eighteen years ago)

to revive this thread -- here is an excellent blog about real estate issues, from NYU/Stern Business School econ prof. Nouriel Roubini:

http://www.rgemonitor.com/blog/roubini/

― Eisbaer, Monday, 19 March 2007 18:34 (eighteen years ago)

I don't know much about this stuff, but it seems to me that refinancing is not always a wise course. When you refinance, you won't get any discounts on points for being a first-time buyer. The savings in a lower interest rate may not be enough to offset the closing costs of a new loan for quite some time. In general, it seems like people concentrate too much on interest rates and don't consider the break even point for higher points or potential tax credits for first-time buyers.

I am about to close a mortgage, and I was nearly enticed by a low interest, government subsidized loan. Then I realized that a regular interest-rate loan with a discount on points and a large tax credit is actually a better deal on a yearly basis. After adjusting federal income tax withholding to ease the month-to-month, my monthly finances are in better shape with the higher interest loan.

I'm not too worried about a major real estate meltdown, but I'm in a unique market - Honolulu. There are certain realities that will help maintain prices. But in general, I don't think people should let the market dictate important life decisions. Maybe it makes sense to sit out for 6 months to let the dust settle a little, but if you have the means and the desire to buy.... then do it.

― Super Cub, Monday, 19 March 2007 19:08 (eighteen years ago)

I'm not worried about this either, because I actually bought something I can afford and have no points and a 30 year fixed. And it's not like people have stopped moving to NYC.

― Yerac, Monday, 19 March 2007 19:21 (eighteen years ago)

wow, Nouriel Roubini's current lead post is awesome.

― kingfish, Monday, 19 March 2007 19:25 (eighteen years ago)

http://toothpastefordinner.com/031907/owning-a-house.gif

― kingfish, Tuesday, 20 March 2007 06:01 (eighteen years ago)

http://bigpicture.typepad.com/comments/images/2007/03/20/starts_20070319.gif

still waiting for the crashity crash to really hit home so I can afford something on the eastern seaboard (am not in market for fixer-upper like Lady Yerac above) - San Diego/Denver/Scottsdale foreclosures = a couple guys two hundred rows away beginning to think about doing The Wave

― TOMBOT, Tuesday, 20 March 2007 12:59 (eighteen years ago)

most econobloggers that I follow have almost completely abandoned the topics of prices/rates/inventory and are focused on trying to nail down the timing of the bottoms in construction employment and consumer spending, which seems to me to be a good sign that A) said bottom is not here yet and B) the shift to a buyers' market has already happened in most places - flippers can stick a fork in themselves, they're done

― TOMBOT, Tuesday, 20 March 2007 13:31 (eighteen years ago)

I'm picturing a beat-up jalopy with a bumper sticker that says "But my real estate market is crash-proof"

― Hurting 2, Tuesday, 20 March 2007 13:38 (eighteen years ago)

I just wish developers would quit with the fucking bullshit "incentives" and just drop the asking price already. There's too many realtors still out there who believe they can move inventory at the current prices, I suppose. Refusing to let the dream die.

― TOMBOT, Tuesday, 20 March 2007 13:49 (eighteen years ago)

I honestly don't know what'll happen over in my neck of the woods -- as OC is developer central I think the idea of them scaling back/dropping prices is like asking them to kill themselves. So I'll wait and be amused.

― Ned Raggett, Tuesday, 20 March 2007 14:00 (eighteen years ago)

I do wonder what the profit margins are like in these new-construction high rise condos - how much could the developers afford to drop their prices? I read that Downtown Jersey City has over 15,000 new units under construction or planned. Some of them won't be on the market for a couple of years, I guess, and perhaps in the long run demand in this area will continue to grow. Maybe the developers will delay completion rather than sell in a crap market, who knows.

― Hurting 2, Tuesday, 20 March 2007 14:10 (eighteen years ago)

What do you think the possibilities are of condo slums and nuisance properties? We already have a number of condo projects on hold around Minneapolis. I can easily see a number of these properties remaining vacant and uncompleted for years, stinking up the place.

― Fluffy Bear Hearts Rainbows, Tuesday, 20 March 2007 14:45 (eighteen years ago)

It's ALWAYS better to complete construction and just sell units at whatever price. Unless you're a total noob and you're fine with never ever trying to get a business loan again, then you can just file bankruptcy and go cry. For development companies that actually give a shit about cashflow from one year to the next, you've got to try and keep up payments, so taking the loss on some projects becomes a necessity. Business is business.

― TOMBOT, Tuesday, 20 March 2007 14:54 (eighteen years ago)

The Mortgage Lender Implode-O-Meter

― TOMBOT, Tuesday, 20 March 2007 21:12 (eighteen years ago)

hooo-wheee. somethin' bad is coming.

― kingfish, Tuesday, 20 March 2007 21:17 (eighteen years ago)

Wau I didn't even realize New Century had been #3

― Hurting 2, Tuesday, 20 March 2007 23:26 (eighteen years ago)

tombot 100% correct re: the ability of the big developers to sell properties even in dog markets -- the big boys (like toll bros, hovnanian, pulte, etc.) all probably have reserves on their books & have planned for that very eventuality. (though who knows for sure, esp. if some of the big lawsuits that i expect to emerge from this entire mess end up showing enron/tyco-style "accounting irregularities," even though w/ sarbanes-oxley those types of shenanigans are a bit more difficult to pull off.) the folks who are going to be royally fucked are the little guys -- small developers (like this small NJ developer, kara homes --> http://www.app.com/apps/pbcs.dll/article?AID=/20061111/BUSINESS/611110331 <-- whose death throes have been all over the state's papers and real estate blogs for the past half-year), flippers (good riddance to THAT bad rubbish), the non-developers/non-flippers who HAVE to sell for whatever reason, and any construction projects in marginal (read: SHITTY) neighborhoods (like the new condos in hoboken and jersey city right smack dab in those cities' ghettoes).

in places like jersey city, hoboken, and the outer boroughs, there are tons of overpriced, renovated walk-ups competing with the new "luxury" developments and folks who are leveraged up to their eyeballs and are trying to sell such properties are going be slaughtered.

― Eisbaer, Wednesday, 21 March 2007 04:42 (eighteen years ago)

<a href=http://www.app.com/apps/pbcs.dll/article?AID=/20061111/BUSINESS/611110331/'>Story about Kara Homes</a>

― Eisbaer, Wednesday, 21 March 2007 04:47 (eighteen years ago)

Kara Homes

― Eisbaer, Wednesday, 21 March 2007 04:52 (eighteen years ago)

hahaha, GE (through the wizad home loans brand) are just starting to offer the cheap rate for a year, no deposit loans here, like a week after they pulled the plug on the same thing in the US.

― haitch, Wednesday, 21 March 2007 04:53 (eighteen years ago)

I do wonder what percent of JC and Hoboken new construction condos are big vs. small developers. I know Toll, Hovnanian, Trump have projects going. Grove Pointe (hideous, poorly constructed condo dev. right on top of the Grove PATH station) is some company called SK Properties, which I don't know but at least sounds like it's big based on the Grove Pointe website's claims.

The one to watch (and perhaps the biggest debacle) will be The Beacon - 1000 units in a multi-building art deco complex that used to be a hospital. A 3/4 mile walk through dangerous streets to the nearest PATH station and abutting housing projects but asking almost downtown JC prices. As far as I can tell, developer Metrovest hasn't done anything this size before, just a few strip malls and some apartments in Orange.

― Hurting 2, Wednesday, 21 March 2007 05:13 (eighteen years ago)

hooo-wheee. somethin' bad is coming.

For those of you who don't fear teh charts'n'graphs, this month's much-discussed and very thorough Credite Suisse report...

http://www.billcara.com/CS%20Mar%2012%202007%20Mortgage%20and%20Housing.pdf

Summary for those who do: tip of iceberg, batten hatches, etc etc

― rogermexico., Friday, 23 March 2007 23:46 (eighteen years ago)

we've seen weirdness here because of all the wannabees that bought 600K homes in the more notable neighborhoods are nowing getting fucked because trying to get a fixed loan on that same amount is totally impossible for these folks... so what's happened is that they've gotten turned onto neighborhoods like ours that are close to the swank but closer to a regular working class neighborhood. we've actually seen our house prices go up because we live where those same wannabees can actually get a loan!

of course, i'm sure the downward waves just haven't hit. once everything gets cheaper in cooler areas, demand here will cool off. etc.

my fucking brother in law just bought a house WAY out of his range. fucking moron. with two shitty loans. you know listening to the news can't be comforting. i really hate to wish him badly, but if things work out for him, i'll never hear the end of it.
m.

― msp, Saturday, 24 March 2007 01:45 (eighteen years ago)

two weeks pass...

Some more great housing news!

― Ned Raggett, Tuesday, 10 April 2007 05:00 (eighteen years ago)

not to do an "i told ya so!" and i cannot read the future, but did i call this one or did i call this one?!?

― Eisbaer, Saturday, 21 April 2007 02:48 (eighteen years ago)

the King Rat leaving a sinking ship?

hehehe

― Eisbaer, Monday, 30 April 2007 21:00 (eighteen years ago)

http://iamfacingforeclosure.com/

― 600, Tuesday, 1 May 2007 09:45 (eighteen years ago)

http://farm1.static.flickr.com/174/466293417_be51322a73.jpg?v=0

lol@posedpic

― 600, Tuesday, 1 May 2007 09:48 (eighteen years ago)

Who in the hell would hand over their credit info for fake loans? Probably the same people who wire money to Nigeria.

― Ms Misery, Tuesday, 1 May 2007 13:15 (eighteen years ago)

I thought that was N. for a moment.

― Masonic Boom, Tuesday, 1 May 2007 13:16 (eighteen years ago)

N's long-lost russian/uzbeki cousin, perhaps?!?

― Eisbaer, Tuesday, 1 May 2007 14:10 (eighteen years ago)

graphic below is a rough "schedule" of ARMs resetting:

http://www.njrereport.com/images/armresets.gif

from the new jersey real estate report blog, courtesy of here.

― Eisbaer, Saturday, 12 May 2007 08:16 (eighteen years ago)

one month passes...

p.s. hurting: i actually drove past velocity in hoboken today (don't ask why) -- the flippers who bought them shits is SERIOUSLY screwed.

-- Eisbaer, Wednesday, March 14, 2007 9:37 PM (3 months ago) Bookmark Link

For you, Eisbaer:

Positive spin after condo auction cut

JARRETT RENSHAW
Jersey Journal
Tuesday, June 26, 2007

A much-hyped auction of 40 condo units located in Hoboken came to an abrupt halt Sunday when the developer stopped the proceedings after selling just eight units.

Erik Kaiser, of REMI Companies, said he stopped the auction at the Hyatt in Jersey City after bids on the two-and three-bedroom units at the Velocity complex were coming in lower than expected.

"We heard from a number of people who were interested in buying the two-bedroom units, but they were uncomfortable bidding on them," said Kaiser.

The lack of bidding led to lower-than-expected sales prices and Kaiser and his partners pulled the plug, confident that those who expressed interest would decide to buy the conventional way.

Kaiser said before the auction he had expected to unload all 40 units at the auction, but despite pulling the plug, he still called the event a success.

"It was a great marketing campaign. We got thousands of people to look us up on the Internet, hundreds of people coming to see the units and local, state and national press, so yes it was a success," Kaiser said.

The 128-unit Velocity is nestled in the underdeveloped southwest section of Hoboken, on Jackson Street between Sixth and Seventh streets.

Eight units - six of which were one-bedroom units - were sold for a total of $3.6 million. The cheapest unit, a one-bedroom, sold for $369,000; the most expensive, a two-bedroom, sold for $502,000, the spokesman said.

About 250 people attended, the spokesman said.

― Hurting 2, Tuesday, 26 June 2007 21:05 (eighteen years ago)

is buying property around boston/gloucester a good or bad idea right now? i'd appreciate any advice from someone in the know.

― darraghmac, Wednesday, 27 June 2007 12:55 (eighteen years ago)

I don't know much about that area, but here are a few things I think are always true.

Buying property anywhere is not a bad idea when

1) You can really afford the mortgage payments and other costs (taxes, maintenance, etc.) -- and this isn't predicated on some kind of ARM or similar loan where the payments could balloon after five years.

2) The monthly cost is not RIDICULOUSLY out of proportion with the cost of renting a comparable property (it will often be somewhat higher, but hopefully it's not, like, double).

3) You want to stay a while in the place where you're buying the property

4) You're not depending on the property as a primary investment (e.g. hoping to "flip" in a year or planning to retire off the profit you make)

― Hurting 2, Wednesday, 27 June 2007 13:02 (eighteen years ago)

thanks for advice.

my dad is moving to the area to work for the next four or five years, and it's probable he'll buy a bigger place than he needs and try to rent out flats or whatever. i was just wondering if there was a huge crash imminent- otherwise i think mortgage etc fairly witihin his means.

― darraghmac, Wednesday, 27 June 2007 13:26 (eighteen years ago)

Some cursory google news searching suggests the Boston market is falling, like lots of other places, and will probably continue to fall at least a bit more. Which means your dad could either wind up getting a good deal or "missing" an even better deal if he buys right now. But no one can know those things for sure, so ultimately best to just run the numbers and do what's workable.

― Hurting 2, Wednesday, 27 June 2007 13:35 (eighteen years ago)

that's what i thought.

he believes in those 'one purchase = lifetime security' deals mentioned above, so i may try to temper his enthusiasm.

thx again.

― darraghmac, Wednesday, 27 June 2007 13:40 (eighteen years ago)

three months pass...

THE GOLD COAST IS BURNING:

Major fire on Jersey City waterfront
by The Jersey Journal
Monday October 08, 2007, 10:29 PM

A major fire is lighting up the skies in Downtown Jersey City as the top floor of a building under construction at 77 Hudson St. burns.

The Jersey Journal's Michaelangelo Conte and photographer Reena Rose Sibayan are at the Greene and Sussex streets scene and will send in updates.

The project is the K. Hovnanian luxury condominiums that was in the news just weeks ago when it was learned that a record $6 million had been paid for a two-decker penthouse.

Channel 5 News is reporting that the Jersey City Fire Department has pulled all its people out of the building because the standpipe only goes up to the 15th floor and the fire is above that, on the 16th, 17th and 18th floors.

Falling debris, they said, also made it too dangerous for firefighters to be inside, so the 80 to 100 firefighters on the scene are fighting it from the outside.

The fire can be seen from Manhattan.

http://blog.nj.com/hudsoncountynow_impact/2007/10/z77hud1.jpg
(an old newspapermate of mine took this photo, coincidentally)

― Hurting 2, Tuesday, 9 October 2007 03:38 (eighteen years ago)

Now all of this might not mean anything, but it is kind of strange that a major fire broke out on the top floors of a Hovnanian site, just past where the standpipe goes, right around when Hovnanian is reporting losses and probably carrying too much debt.

― Hurting 2, Tuesday, 9 October 2007 03:39 (eighteen years ago)

photos are hella cool

http://blog.nj.com/hudsoncountynow_impact/2007/10/z77hud2.jpg

― Hurting 2, Tuesday, 9 October 2007 03:40 (eighteen years ago)

http://blog.nj.com/hudsoncountynow_impact/2007/10/z77hud3.jpg

― Hurting 2, Tuesday, 9 October 2007 03:41 (eighteen years ago)

"armenian lightning" LOL

also, i wonder if those obnoxious ads for 77 hudson that are all over the place will remain up.

― Eisbaer, Tuesday, 9 October 2007 08:55 (eighteen years ago)

one year passes...

2008 World Press Photo of the Year:
http://a123.g.akamai.net/f/123/12465/1d/www.calgaryherald.com/entertainment/foreclosure%20image%202008%20world%20press%20photo%20year/1286624/1286680.bin?size=620x400
The international jury of the 52nd annual World Press Photo Contest have selected a black-and-white image by American photographer Anthony Suau as World Press Photo of the Year 2008 it was announced on February 13, 2009. The picture shows an armed officer of the Cuyahoga County Sheriff’s Department moving through a home in Cleveland, Ohio, following eviction as a result of mortgage foreclosure. The winning photograph, taken in March 2008, is part of a story commissioned by Time Magazine.

― You just got HAPPENED (Hurting 2), Tuesday, 17 February 2009 16:34 (seventeen years ago)

http://www.calgaryherald.com/Entertainment/foreclosure%20image%202008%20World%20Press%20Photo%20Year/1286624/story.html

The Iraq echo is overwhelming and amazing imo.

― You just got HAPPENED (Hurting 2), Tuesday, 17 February 2009 16:34 (seventeen years ago)

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