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Re: The Upcoming RE Market Plunge
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Quote:
alb wrote:

Even if you mean "got cash under mattress": what if the mattress burns, or someone steals it, or the Federal Reserve does silly things and ruins the value of that cash?






Take the "Get Your Smokey On" Mattress Fire Pledge
I pledge to:

BE SMART WHENEVER I GO TO BED

To use caution and common sense before lighting any fire.
To understand that any fire I or my friends create could become a mattress fire.
To understand and practice proper guidelines whenever I or my friends create a fire in a bed.
To never, ever leave any fire unattended.
To make sure any fire that I or my friends create is properly and completely extinguish before moving on.
To properly extinguish and discard of smoking materials.
To be aware of my surroundings and careful when operating equipment during periods of dry or hot weather.
To speak up and step in when I see someone in danger of starting a mattress fire.

Posted on: 2008/12/11 13:08
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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So much for all you sheeple who thought they could talk their way out of the housing bubble bursting!

Posted on: 2008/1/14 19:23
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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another interesting article...

October 2007
New Jersey housing market skirts razor's edge
A modest number of foreclosures so far, but grim warnings emerge about the next 12 months
By John Celock


Jeffrey Otteau of the Otteau Valuation Group said the weak New Jersey market would suffer if there are many foreclosures.
While the number of foreclosures in New Jersey jumped this summer, the figure remains modest, and experts speculate that the short and medium-term impact will not be as destabilizing as elsewhere in the country.

Subprime mortgages have not been a common financing option in the Garden State. Indeed, experts say they were most heavily used in only a handful of disadvantaged neighborhoods in only a few counties.

Still, the state isn't in the clear. Even with the half-point interest rate cut by the Federal Reserve Bank in late September, analysts warn that thousands of families are struggling to make higher payments on their adjustable rate mortgages. This could lead to more foreclosures -- possibly as many as 7,000 to 12,000 -- in the next year.

"The Jersey market is weak but still has life," said Jeffrey Otteau, president of the Otteau Valuation Group, a New Jersey-based real estate research firm. "If all these foreclosures do occur, it could take several years for the New Jersey market to recover."

Bill Hanley, president of the New Jersey Association of Realtors, says the foreclosure crisis hasn't significantly dragged down prices. He remains bullish about buying opportunities.

"There are investors looking for foreclosures," said Hanley. "It's going to have a short-term effect. The one thing with real estate is, it's resilient. It will not be a disaster."

Altogether, banks initiated 215 foreclosures in New Jersey in July. That's 65 percent more than the same time last year.

Presently, about 72,000 homes are for sale in New Jersey.

Yet for now, the slightly worsening foreclosure news in New Jersey is countered by a positive indicator of real estate health. According to a September report by the Otteau Valuation Group, the unsold inventory of homes in the state declined for the first time in 2007.

While the decline was for less than one percent of unsold inventory, it suggests the impact of the subprime mortgage mess in New Jersey may be contained in a few specific communities.

A decline in the inventory of unsold houses is important because economists believe that as the choice of homes narrows, buyers become anxious to make purchases sooner rather than later, which further reduces inventory -- and can push prices upward.

Presently, the unsold inventory in New Jersey stands at 8.9 months. That's looser than during the boom times of recent years; in July 2005 the New Jersey inventory of unsold homes stood at four months.

In northern New Jersey, most of the foreclosures have occurred in heavily urban sections. In Essex County, where Newark is located, there were 435 foreclosures this year. Union County, home to Elizabeth and Plainfield, has had 415 foreclosures. Passaic County, which contains the depressed cities of Paterson and Passaic, has seen 321 foreclosures.

While Essex, Union and Passaic Counties are largely suburban, and have some of the wealthiest communities in the country -- including Short Hills in Essex and Summit in Union -- the depressed inner cities in those counties have seen homebuyers rely heavily on subprime mortgages, contributing to the rise in foreclosures statewide.

"Many of the people who did subprime were inner-city residents," said Hanley. "[They were] people who did not have any financial backing at all."

Hudson County, the site of Jersey City and the state's most urban county, is so far escaping the subprime crisis. That may be because many of the recent home purchases there have been by young professionals with higher salaries and better credit scores.

Data compiled at the end of July show New Jersey ranks 28th among states in terms of numbers of foreclosures. (Michigan is the state suffering the worst real estate unraveling, with one foreclosure for every 944 households). As of July, the national average was one foreclosure for every 4,637 households.

"Clearly while this exists in other states, it is still a small problem in New Jersey." Otteau said.

Posted on: 2007/11/2 17:42
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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Just the tip of the iceberg that a lot of guys in building industry were well aware of.


First American in mortgage fraud probe
By Ben White in New York

Published: November 1 2007 21:42

A major US real estate appraisal company was accused on Thursday of conspiring with one of the country’s biggest banks to inflate home prices in a scheme that New York state officials said helped fuel the mortgage crisis.

Andrew Cuomo, New York attorney-general, filed a lawsuit against First American saying its eAppraiseIT subsidiary gave in to pressure from Washington Mutual, the biggest savings and loans group in the US, to use a preferred list of appraisers who allegedly provided inflated values for homes.

Wall St lower amid banks’ losses - Nov-02Bank shares lead Asia lower - Nov-02Comment: Central banks should prick asset bubbles - Nov-01Charles Pretzlik: Barclays hit hard - Nov-02Western banks suffer big losses - Nov-01Monolines left reeling by domino effect - Nov-01WaMu allegedly profited from the scheme because it allowed the lender to close more home loans at greater values. eAppraiseIT in turn became WaMu’s biggest client, according to the lawsuit. “We tend to look for cases that are emblematic of systemic industry-wide fraud and we believe this case does that,” Mr Cuomo told a news conference.

WaMu, which at the end of last year had $346bn in assets, was not named as a defendant in the suit. Mr Cuomo said this was in part because of jurisdictional questions about his office’s authority over federally regulated banks such as WaMu.

WaMu said: “We are suspending our relationship with eAppraiseIT until we can further investigate the situation. We have absolutely no incentive to have appraisers inflate home values. In fact, inflated appraisals are contrary to our interests. We use third-party appraisal companies to make sure that appraisals are objective and accurate.”

First American said the complaint was based on a few emails taken out of context and “has no foundation in fact or law”.

It added: “The programme called into question today by the attorney-general has been vetted and approved by the federal regulator responsible for oversight of such programmes.”

WaMu shares closed down 8 per cent at $25.75. First American shares closed up 1 per cent at $30.50.

In announcing the complaint, Mr Cuomo said: “The blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market. By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion.”

Mr Cuomo’s complaint includes e-mail messages from First American and eAppraiseIT executives that he said demonstrate the pressure from WaMu to inflate values.

Posted on: 2007/11/2 17:12
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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"The true test of a first-rate mind is the ability to hold two contradictory ideas at the same time." F. Scott Fitzgerald

Many posters have suggested that the housing market in JC is going to crash and at the same time it is going to drive out all the creative types and low income families because of its success.

Intellectually, this is possible.

But economically, it does not make any sense.

Posted on: 2007/9/8 16:13
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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I'm not so sure that the top end of the residential real estate market will continue to do as well as it has in the last 5 years. The current financial crisis is hurting Wall St. and resulting in diminished bonus expectations. As Wall Street goes, so goes the NYC real estate market...

Quote:

fat-ass-bike wrote:
The 'top' end of real estate will always do well - A new millionaire is made every 30 minutes in the US. (they don't mention how many bankrupts every 30 minutes)

So there is a shortage of top end big ($) money inner city apartments.

Its the average ($) homes and apartments the fluctuate and suffer the most with inflated prices and interest rates.

Posted on: 2007/9/5 5:22
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Jersey City - New Construction - Real Estate Prices
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Has the following occurred to anyone:

Some of the new developments in the area (Liberty Harbor North, Gulls Cove and the many others) are artificially raising their real estate prices from what they might have been charging a year ago. By artificially raising I mean that the prices are being put higher when under normal conditions they might be lowering the prices. Why would they be doing this?

As it becomes possible for buyers who purchased at lower prices to walk away (for example because of clauses in teh contract dictating when the property can close) there is a rational for previous purchasers to not do so if the pricers are now higher.

But what if they Developer had lowered the prices since the initial contracts had been signed? There is now an incentive to cancel the contract and buy elsewhere or renegotiate a lower price.

With the rage about the new property being put up in Jersey City has anyone considered this and the many other factors which could contribute to a decline in prices?

Posted on: 2007/8/27 2:52
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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I don't get two things:
1. why would it be such a big deal to live near a stadium ("honey, what should we do tonight?" "let's go and see two amateurish pro teams playing whatever sport, including soccer")
2. why is Tazmanio so happy. At least because many, if not most people here, are renters.

Posted on: 2007/8/23 17:32
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Re: The Upcoming RE Market Plunge
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Posted on: 2007/8/23 16:25
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Re: The Upcoming RE Market Plunge
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Quote:

JSalt wrote:
If you're going to use pompous German expressions you should at least spell them correctly.

Anyway, if things are really as bad as you seem to think, Taz, we're all going to suffer from the result, not just the over-leveraged and the greedy.


Those of us that started planning ahead when they saw the herd running for the edge of the cliff might not do too badly

Besides, I gladly share some of the pain (which will no doubt happen as the politicos make things worse by trying to bail-out the gamblers) just to see the idiots that spawned this bubble brought low...

Depression anyone?

You're looking at what will be in all likelihood the worst case of home price deflation since the 1930s...


Cheers,


Posted on: 2007/8/23 2:58
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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The 'top' end of real estate will always do well - A new millionaire is made every 30 minutes in the US. (they don't mention how many bankrupts every 30 minutes)

So there is a shortage of top end big ($) money inner city apartments.

Its the average ($) homes and apartments the fluctuate and suffer the most with inflated prices and interest rates.

Posted on: 2007/8/21 11:27
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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So you are saying Harrison will be the "it" area around 2030?

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I think Harrison is already getting more pricey. They are putting the Red Bull Park soccer stadium in there and lots of housing...

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AEG announces Red Bull Park groundbreaking plans
Construction of new home of New York Red Bulls MLS soccer franchise, concerts & events will begin in Harrison, New Jersey in September

HARRISON, New Jersey - The official groundbreaking ceremony for Red Bull Park, a 25,000-seat soccer stadium to be developed as a major component of the three-million square foot Harrison MetroCentre, will take place on September 19, 2006 at 11:30 AM it was announced by Nick Sakiewicz, president of AEG New York, developers and managing partners of the outdoor venue.

When completed in summer, 2008, Red Bull Park will be the home of the New York Red Bulls of Major League Soccer, concerts, international soccer matches, special events and other sporting competitions. AEG has recently developed and operates similar world-class "soccer specific" stadiums such as The Home Depot Center (Carson, California) and Toyota Park (Bridgeview, Illinois).

"It's awesome to be finally breaking ground for the construction of what is going to be a very special stadium and surrounding development," said Sakiewicz. "Red Bull Park and Harrison Metro Center will be a place where soccer and entertainment lives. The rich soccer history in the area combined with the tremendous access to this location makes this the perfect place to build Red Bull Park."

Recently, Hudson County, New Jersey and the Town of Harrison, New Jersey completed the sale of $39.4 million of revenue bonds to finance the land acquisition necessary for the development of the Red Bull Park. AEG's partner on the stadium development is Red Bull Company Limited, the Austrian company that produces the world's leading energy drink as well as operates the New York Red Bulls soccer franchise since acquiring it from AEG earlier this year.

The $100 million state-of-the-art stadium will feature a 360 degree 'European"-style roof/canopy covering the majority of the seating area, spacious locker rooms, sound and lighting systems specially tailored to the unique surroundings of Red Bull Park, the finest turf to create soccer's best pitch and well-appointed hospitality areas featuring 63 luxury suites positioned only 12 rows from the playing surface.

Advance Realty Group's multi-billion dollar Harrison MetroCentre, will feature 3 million square feet of office space, 3,500 residential units, 300,000 square feet of retail space, and over 10,000 decked parking spaces when completely built-out.

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I wonder who'll be taking the PATH out there?

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Quote:

alb wrote:

One thing that could happen is that Newark could leapfrog over Jersey City in terms of desirability.

Newark is further from Manhattan, but the great thing about it is that it's still cheap enough that interesting people can afford to live there.

Along the same lines: if any part of Jersey City is going to be a great place to live 20 years from now, it definitely won't be the waterfront. The waterfront is the "grandpa and grandma dentist office land" of the 2020s. It will probably go through a re-discovery period in the 2030s or 2040s, but (assuming a lack of global warming or nuclear cataclsyms) it seems obvious that Journal Square and the Jersey City Heights are the cool neighborhoods of the late 2010s and the 2020s.

Posted on: 2007/8/21 1:45

Edited by GrovePath on 2007/8/21 2:39:13
Edited by GrovePath on 2007/8/21 2:43:47
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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Quote:

JSalt wrote:

Jersey City just isn't developing in the same way, and at this point I don't think it's going to - we're getting cheap-looking condos, ok overpriced restaurants, and our music and art scene leaves much to be desired.


One thing that could happen is that Newark could leapfrog over Jersey City in terms of desirability.

Newark is further from Manhattan, but the great thing about it is that it's still cheap enough that interesting people can afford to live there.

Along the same lines: if any part of Jersey City is going to be a great place to live 20 years from now, it definitely won't be the waterfront. The waterfront is the "grandpa and grandma dentist office land" of the 2020s. It will probably go through a re-discovery period in the 2030s or 2040s, but (assuming a lack of global warming or nuclear cataclsyms) it seems obvious that Journal Square and the Jersey City Heights are the cool neighborhoods of the late 2010s and the 2020s.

Posted on: 2007/8/21 0:46
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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I wouldn't assume speculation isn't a factor in Manhattan, it's just that it's more likely being done by international investors and wall streeters, and they probably aren't taking out *exotic mortgages* and/or being forced into foreclosure at this point.

I'd say it's easy to assume that as long as Manhattan keeps rising, Jersey City will see some benefit, but I wouldn't assume the benefit will be proportional. Manhattan remains one of the most desirable places to live in the world. Parts of Brooklyn are starting to join it. Jersey City just isn't developing in the same way, and at this point I don't think it's going to - we're getting cheap-looking condos, ok overpriced restaurants, and our music and art scene leaves much to be desired. And we don't have a Brooklyn Museum or a PS1 level attraction to anchor the area.

Bargain hunters and people priced out of other boroughs will continue to seek refuge here, and that will keep the market afloat as long as Manhattan is strong.

Posted on: 2007/8/20 23:53
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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I guess my question is, how much a part of the Manhattan market is JC - are we similar to the desirable areas of Brooklyn? Notice that the words speculation and flipping never appear in the article - would they in a similar article on JC.

Posted on: 2007/8/20 23:20
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The Manhattan Real Estate Slump That Wasn’t
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The Manhattan Real Estate Slump That Wasn’t

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Damon Winter/The New York Times

By TERI KARUSH ROGERS
Published: August 19, 2007

IT wasn’t supposed to happen this way.

Just a year ago, as real estate brokers fretted through an ominously quiet third quarter, many Manhattanites waited for the housing market to reverse its madcap ascent and fall into line with the rest of the country.

But something happened on the way to the Great Manhattan Housing Slump. After what brokers optimistically termed a “pause” in the second half of 2006, buyers swarmed into the market. The torrent was so intense that by the end of this past June, it was clear that an astonishing gulf had opened up between Manhattan and nearly everywhere else.

On the national level, sales of existing homes slowed by 17 percent in the second quarter of 2007, compared with the second quarter of 2006, while inventory swelled by 16 percent, according to figures provided by the National Association of Realtors. New homes fared even worse: they fell by almost 19 percent, according to Commerce Department figures.

In Manhattan, by comparison, sales of new and existing apartments more than doubled. In a trend that could shift quickly in light of the recent problems in the credit and stock markets, inventory shed a third of its bulk. It dropped to 5,237 units, despite the influx of several thousand new condos, according to Miller Samuel Inc., the Manhattan appraisal company

Prices have been starkly different as well. By last month, the national picture was so dire that Angelo R. Mozilo, the chairman and chief executive of Countrywide Financial, the country’s largest mortgage lender, said things had not been so bleak since the Depression.

Cut to Manhattan. After a boom with annual price increases of 20 percent or more ended in mid-2005, prices have continued to rise over all, but not as sharply. In the second quarter of 2007, Miller Samuel said the average sale price of a Manhattan studio climbed 16.5 percent compared with the second quarter of 2005. The average for a one-bedroom climbed by 18.4 percent and a two-bedroom by 5.9 percent.

Apartments with three bedrooms, which make up about 6 percent of the market but appeal to an ever-more-moneyed class of buyers, rose by 17.9 percent in the same period.

Major brokerages, including Halstead Property, Bellmarc Realty, Brown Harris Stevens, Prudential Douglas Elliman and the Corcoran Group, say they are recording sales and profits that rival boom-time results. In fact, Douglas Elliman and Corcoran predict that this will be their most lucrative year by far.

Whether this momentum can be sustained remains to be seen, particularly in light of the recent gyrations in the debt market, which have led to a reduction in the availability of large mortgages and to an increase in their rates. A deepening credit-market crisis and national housing slump could squeeze the economy, the stock market and bonus pools.

“For the first time in over a year, there is some negative talk — about the credit markets and whether or not this will permeate the New York City real estate market,” said Pamela Liebman, president of Corcoran. “As of right now, it hasn’t. There has been no slowdown.” She said the biggest concern among her agents is finding enough inventory to satisfy demand.

But a buying binge alone does not a housing boom make. “I’m still not characterizing the market right now as a housing boom except in the upper echelon,” said Jonathan Miller, president of Miller Samuel.

So how has Manhattan (and, to a lesser extent, sought-after pockets of Brooklyn) managed to avoid a slump?

“Obviously, the market was helped first by the rumor and the reality of bonus money,” said Frederick W. Peters, president of Warburg Realty. He was referring to the fourth straight year of substantial bonus increases, particularly on Wall Street, that along with a rising stock market helped push buyers off the sidelines at the end of 2006 and caused some agents to cancel their winter vacations.

“But I also think we’re just in one of those demographic upswing periods,” Mr. Peters added. “More people are moving into the city, fewer people are moving out, and the rental market got much tighter over the course of 2006, which once again made buying a more attractive option. You put all those things together, and the market sort of entered the narrow part of the hourglass.”

There were other factors to consider, too. Tourism is at record highs, and the local economy is doing well in general. And it’s nearly as hard to find premium office space or a spot in private school as it is to find a family-size apartment.

But that’s exactly what more and more families have set their sights on.

It has been years since Samantha Kleier Forbes, a broker at Gumley Haft Kleier, lost a client to the suburbs. “My last casualty was in ’04,” she said. As two-career couples work longer hours and as the city grows safer and more family-friendly, there is a big demand for large apartments like Classic 6’s — a two-bedroom apartment with living room, dining room, kitchen and maid’s room (where children can be found bunking like sailors).

Families who want to stay, brokers say, are only one segment of the more stratified and well-heeled masses clamoring for a piece of Manhattan. While the dollar’s seemingly endless slide may have crimped the foreign vacation plans of many Americans, the purchasing power of Europeans has strengthened. They are increasingly matched, if not outmatched, by buyers from countries like China and India. And foreign buyers find Manhattan real estate very appealing when they compare prices in other large international cities like London.

“I’ve had 20 percent more business from international clients in the past couple of years,” said Sallie Stern, a senior vice president and managing director of Brown Harris Stevens. “They probably account for 30 to 35 percent. It’s a world market now.”

Shaun Osher, the chief executive of CORE Group Marketing, which is handling 11 condominium projects in Manhattan, said the number of foreign apartment-seekers had doubled since the end of 2005. Foreign buyers now constitute 5 to 10 percent of the sales in the buildings marketed by his firms.

“When you look at hotel rates and what it costs to come into Manhattan, it makes sense now to buy a pied-à-terre,” he said.

Besides foreign buyers, brokers say, more parents are snapping up apartments for their children, and some retirees are choosing Manhattan over the likes of Boca Raton.

“The baby boomer generation isn’t ready to give up and live in a swamp,” said Darren Sukenik, an executive vice president of Prudential Douglas Elliman. In fact, they are living the lives their nearby children would like to lead if only they weren’t working so hard, he said.

Meanwhile, renters have emerged as a force in the market, particularly for entry-level apartments. “Rents are rising again, and that pushes people back into the condo and co-op market if they have more than a one- or two-year time frame for living in Manhattan,” said Stephen G. Kliegerman, the executive director of marketing for new developments at Halstead Property.

Fanning the flames have been job and population growth, historically low interest rates and a trove of personal wealth minted by hedge funds, private equity firms and, to a lesser extent, the investment banks that serve them. Add to that the psychological comfort of knowing that Manhattan flourished after the Sept. 11 terrorist attacks, and further, that it appears to have shrugged off a national housing slump.

Even the condo glut that so many real estate executives feared has turned out instead to be a boon of sorts. “If we didn’t have new development coming on at the pace we did, we’d have a chronic shortage across all sectors, and we’d see 20 percent price growth,” said Mr. Miller, the appraiser.

Mr. Peters of Warburg Realty agreed. “You can’t even imagine how awful it would be,” he said. On the other hand, he added, things may feel pretty awful already for buyers who want a prewar apartment, since inventory in this sector continues to evaporate. In the last two years, co-ops, about half of which were built before World War II, have slipped from 63 percent of the market to 47 percent as new condos have been built, Miller Samuel said.

“There are so many new units coming on the market and being sold, but the real heart and soul of the co-op market is really depleted,” said Barbara Fox, the president of the Fox Residential Group, a Manhattan brokerage.

Consequently, brokers say, many prewar apartments in good condition, along with family-size apartments of any vintage, are being snatched up in bidding wars whose aggressiveness outrivals those of two years ago.

“The new rule is that there are no rules, and when you’re lying bleeding on your way to the emergency room, you’re still shouting, ‘Higher offer, higher offer!’ ” said Julie Friedman, a senior associate broker at Bellmarc.

She was among the many brokers who said that “best and final” offers have largely become neither, with buyers and sellers routinely negotiating after another bid has been accepted. “You remind sellers that there is a moral component, but my duty is to get the highest amount, and ‘moral’ and ‘the highest amount’ don’t necessarily overlap,” she said.

Some brokers complained that the demise of the sealed bid, which has been replaced over the last two or three years by e-mail offers to the seller’s agent, has further undermined fair play. “Buyers don’t trust them as much,” said Michele Kleier, president of Gumley Haft Kleier.

Whether Manhattan continues to be the land the slump forgot or is merely sunning itself before a hurricane is something of a guess. A strengthening dollar, a severe terrorist attack or a national economy hobbled by housing market woes could inflict blows of varying strengths.

More immediate is the worry about the availability of credit. “While I don’t think we were propped up to the extent other markets were by subprime and adjustable-rate mortgages, it does make credit hard to get for everyone to some degree,” said Gregory J. Heym, an economist for Brown Harris Stevens and Halstead Property. “Most people are probably expecting mortgages to be tougher to get.”

Mortgage lenders everywhere are going back to pre-boom lending standards, so obtaining a mortgage is harder for buyers with pockmarked credit or sketchy employment. But there is no panic over rising mortgage rates on jumbo loans (those exceeding $417,000), at least not now.

Large lenders like Chase and HSBC that typically sell mortgages after they make them can no longer do so because the credit crisis has dried up the secondary market, said Jeffrey Appel, a senior vice president and the director of new development financing at the Preferred Empire Mortgage Company in New York. Many large institutional lenders have raised their rates as a hedge against uncertainty, but rates at smaller regional savings banks, the so-called portfolio lenders who hang on to their loans, have hardly budged.

Last Monday, Melissa L. Cohn, the president of the Manhattan Mortgage Company, the largest residential mortgage broker in the New York, New Jersey and Connecticut, said her best rate on a 30-year $1 million mortgage was 6 7/8 percent, offered by a portfolio lender. And her worst rate, offered by a lender that sells mortgages on the secondary market, was 8 3/8 percent.

“Despite this incredible hysteria,” Ms. Cohn said, “there’s plenty of money for qualified borrowers.”

The credit-market meltdown could yet cloud Manhattan’s real estate prospects because of stock-market jitters. And an end to the leveraged buyout boom, if that happens, could trigger layoffs on Wall Street and eat away at bonuses.

But the fiscal year is far enough along that financial services workers can expect gains of 10 to 15 percent when bonus season rolls around later this year, said Alan Johnson, the managing director of Johnson Associates, a Wall Street compensation consultant. The real pain, if there is any to be felt, would come in the 2008-09 bonus season, he said, and a year or two later for private equity firms, which typically make their profits several years after a takeover.

“Pay is going to probably drop, but if it’s dropping from a really, really high level, we’re probably not going to have any charity dinners for these people,” Mr. Johnson said.

By then, too, the flow of new development is expected to slow significantly, judging from the dwindling number of construction permits filed this year. To the extent Manhattan’s housing market is threatened by a weak national economy and by declining bonuses, said Mr. Miller of Miller Samuel, “then the fact that we have a lower level of supply coming on would help keep the market from correcting.”

Neil Binder, a principal in Bellmarc Realty and a 30-year industry veteran, typically views upturns with a jaundiced eye. But in a residential market with tight supply and intense demand, he doesn’t see Manhattan’s real estate karma changing anytime soon, even in the face of mortgage-market turmoil.

“My brokers are saying their biggest frustration is to have buyers when there’s no product and that there’s nothing out there but new construction,” Mr. Binder said. “We may have bumps, but I don’t feel the underpinnings are weakening. My biggest problem this month is that I have all my salespeople taking vacations because they made so much money. My East Side office is a ghost town.”
New York Times Link

Posted on: 2007/8/20 20:54
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JC sales up 12%: Softer landing - NJ's housing market is surviving better than rest of the country
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The Star-Ledger has a look at the housing market today, and finds that most real estate agents are grim. There are too many houses on the market and not enough buyers. There are 72,000 unsold homes in New Jersey right now, compared to just 39,000 in June 2005. Statewide, the number of homes contracted for sale dropped by 5 percent from May to June. But in Jersey City (and Hoboken), sales activity is actually up by 12 percent.

----------------------------------------------------

Softer landing

State's housing market is surviving slump better than rest of the country

Thursday, August 16, 2007
BY SAM ALI
Star-Ledger Staff

The busy spring real estate season is now officially over and the results are in: The housing market is still in a funk.

Across the country, sales of existing homes, as well as the median home price, fell during the second quarter as lenders tightened their borrowing standards amid fears delinquencies and foreclosures will rise further, according to an industry trade group.

The National Association of Realtors said yesterday that, nationally, existing home sales -- which generally account for 85 percent of all home sales -- dropped nearly 11 percent in the quarter from April through June, while the median price of a home dipped 1.5 percent, to $223,800.

In New Jersey, the housing market saw a 6.2 percent drop in existing home sales compared to the second quarter of 2006, while the median price of a single-family home in the Northeast fell 0.7 percent, to $298,000.

So, why are real estate brokers like Pat Hoferkamp, president of Parsippany-based Burgdorff ERA, smiling?

"Last year was the third best year in Burgdorff's history in terms of homes sold and, quite honestly, I feel very good about this market," Hoferkamp said. "Things are happening. People are buying homes. We've got busy open houses. I expect to do what we did last year, if not increase our business."

SPLIT PERSONALITY

Is Hoferkamp talking about the same New Jersey housing market?

The answer is yes and no.

That's because when it comes to real estate, New Jersey has a split personality.

Talk to real estate agents who sell homes along the state's commuter rail lines -- where 12 of Burgdorff's 14 offices are located -- and the news is all good.

Talk to agents anywhere else, and, well, the news is predictably glum.

Consider this statistic: The inventory of unsold homes in all of New Jersey has soared to a record 72,000 homes, compared to only 39,000 in June 2005, said Jeffrey Otteau, president of East Brunswick-based Otteau Valuation Group.

That represents an 8.5-month supply -- which means if homes continue selling at their current pace, it would take that long for demand to catch up.

But in towns like South Orange, Summit, Montclair and Morristown, which are along the main branch of New Jersey Transit's Morris and Essex line, it's another story.

For example, Montclair has just a three-month supply of unsold homes on the market, according to Otteau. Chatham, only two months.

The number of homes contracted for sale in prime markets in Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Somerset and Union counties declined by only 1.7 percent from May to June, compared to 5 percent statewide, Otteau said.

Most notable in this group are places like Jersey City and Hoboken in Hudson County, where year-to-date sales activity is running 12 percent ahead of last year, he said.

Looking ahead, Otteau expects this trend will only accelerate, with communities near direct-to-Manhattan rail lines seeing the strongest price increases once the market recovers.

The primary reason is job growth: Employment in Manhattan is expected to grow from 2.7 million to almost 3 million over the next two decades -- with over half of this growth in Midtown, according to a NJ Transit study.

One in four Midtown workers come from the suburbs -- nearly half of those crossing the Hudson River from New Jersey or Orange and Rockland counties in New York, according to the NJ Transit study.

"Once again, Manhattan is king as it relates to the New Jersey housing market," Otteau said. "That is what will drive our housing market going forward."
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LIMPING ALONG

But the broader housing market -- both nationally and across New Jersey -- still appears to be limping along, and experts are predicting the current slump will drag on at least until mid-2008 and possibly longer.

Perhaps the biggest unknown: Whether foreclosures in the "subprime" mortgage market and the wider credit crisis will worsen or level off in the coming quarters.

"The fact that credit has tightened considerably, that affordability is expected to stabilize at a substantially lower level than a year ago, and that inventories remain high, there is little in the way of upward pressure on house prices," said Celia Chen, an economist with Moody's Economy.com, a West Chester, Pa.-based research firm. "Markets that are currently weak will likely stay so for another year."

Indeed, sales of previously owned homes were down in all sections of the country, the National Association of Realtors reported yesterday.

The hardest hit region was the West, where existing home sales fell 16.9 percent, followed by the South, where sales fell 10.7 percent, and then the Midwest, where home sales dropped 8.4 percent.

Here in the Northeast, existing sales fell to an annual pace of 1.05 million units in the second quarter, while the median price of a single-family home rose 0.7 percent.

Last week, the Realtors' trade group lowered its 2007 sales forecast, predicting home sales will hit a five-year low this year. The revised forecast calls for existing home sales of 6.04 million in 2007, down 6.8 percent from last year. That number would be the lowest since 2002, when sales hit 5.63 million.

However, Lawrence Yun, the group's senior economist, said he saw glimmers of hope in yesterday's data.

For example, compared with prices a year ago, home prices were up in 97 of the 149 metropolitan areas surveyed.

That represented price gains for 65 percent of the areas surveyed, an improvement from the first quarter of this year, when only about 55 percent of the metropolitan areas reported price gains from the same period a year ago. In the fourth quarter of last year, less than half of the metropolitan areas reported price gains.

"Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets," he said.

Otteau also sees a ray of light.

Although the housing market took a giant step backwards last week in response to lenders turning off the credit spigot, he said the inventory of unsold homes is increasing at a slower pace.

"From an inventory perspective, while the number of unsold homes continued to rise in June, that increase occurred at a slower pace than in the four preceding months," he said. "That suggests that inventory growth may be approaching the high-water mark."

Posted on: 2007/8/17 13:32
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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some of you guys need to put the crack pipe down.

The reality is very simple: bad wall street bonus = bad real estate market in nyc and jc.

NOONE knows yet how bad the credit problem will get, it could blow up into a full scale meltdown across all areas globally, there are certainly signs of it. If this happens, forget the wallstreet bonus, many will lose their jobs, which will cause a RE crash in nyc/jc. Yes a crash.

On the flip side, if the credit squeeze will die down after a month, then things will be back to normal. The RE market will not go up but wont drop as much either, probably just hanging in the void for a few years.

It all depends on the big guys on wallstreet, if they all rush for the door or stay calm and work it out.

at any rate the RE market may not go down, but there is absolutely no reason to buy a property right now.

To the person who said RE is a good investment, you cant be any more wrong. Think about it, if RE goes up even 10% each year, there will not be anyone left that can afford the price. Dont expect what happened last few years to come back in a long time.

Posted on: 2007/8/16 12:54
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Re: So much for all of you folks who predicted a JC/NYC RE Crash
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Ccitizen - Curious what your debate with Robert Shiller at YC was all about... Thanks...

Posted on: 2007/8/16 12:04
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Re: The Upcoming RE Market Plunge
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As the person who started this I have to say l love the tone of this thread. To me it means it's close to a time to make a great deal of money.

Do you want to make a bundle off the current relative over-reaction by the pundits and the media - I recently had the joy of ripping Robert Shiller a new one at the Yale Club over his inaccurate and false reading of the NYC RE market...priceless.

While the media is whipping things up into a frenzy who is starting to BUY?

Carl Ichan tried to buyout one of the largest builders in Florida. Warren Buffett is rumored to be looking at Hovanian - might not be true but he did buy Clayton (a huge builder of manufactured housing) when Freddie Mac was melting down. Hank Greenberg and Eli Broad each invested 1 billion each into subprime related deals this week...

Guess what all these men have in common? They are billionaires. They are buying when others are losing their heads.

Do you want to make bundle? Do you want to be smart and not a little lamb? This is what you should do in approx 6 months or so...not just yet

Buy long options on the Dow Jones Builders index!!!! Companies like Toll and Hovanian have weathered 18% mortgage rates in the 80's so believe me they are not going out of business this time around.

The time to buy is "when blood is in the streets."

Have balls and make a killing in 24-36 months. That's what the billionaires and I are setting up to do. What about you?

Posted on: 2007/8/16 5:52
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Re: The Upcoming RE Market Plunge
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It's funny to read about these real estate vultures that are propagating an air of pessimism. I feel that their chances of picking up a great deal are slim to remote.

A lot of property has changed hands over the last 7 years. Holding out for a price drop requires a seller to come to the closing carrying a check. It's not going to happen in large numbers.

People are more likely to use their ingenuity and rent or share out the property and hold on to what they have got. You'll only see price drops in situations where the seller is under extreme duress. (Or if they bought back in the mid 90's and can close the deal with a decent profit)

Of course, property will remain on the MLS for a longer amount of time, until the right buyer comes along. There are still buyers out there. There's a big wave of them after they prepare their taxes. They look for itemized deductions - and realize that they are flushing money down the toilet by renting.

The people who are really suffering are the realtors. They don't make money when buyers lose confidence and sellers play hardball. But they are part of the problem too. They need to address the commission that they charge and fire a lot of people.

I've seen Jersey City and Hoboken realtors expand their offices and increase their commission from 4.5% in 1995 to 6% in 2005. (FYI, it's 1-1.5% in the UK) Furthermore, with property tax being assessed based upon recent selling prices (in many townships), I feel that it is unfair that the realtors commission is not deducted from the HUD statement. Buyers are paying for that 6% perpetually - every time they make a property tax payment. The realtors’ commission should be exempt from taxation and the state needs to ditch this 6% curve.

Posted on: 2007/8/16 4:35
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JSalt wrote:


Anyway, if things are really as bad as you seem to think, Taz, we're all going to suffer from the result, not just the over-leveraged and the greedy.


Tazmanio already posted here that he sold all his RE a short time ago and is totally liquid. He is presumably waiting for a 50% correction in RE prices around here to pounce.

It may or it may not happen (if it does I'll be buying, too), but Tazmanio's been sounding like a friggin broken record.

Tazmanio, you think that if you keep posting your dire predictions you'll make the RE crash more likely?

Or are you trying to scare others from buying?

Why are you repeating yourself?

Posted on: 2007/8/15 22:02
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TaZMaNiO wrote:
This is the world's first Global Bubble...what we're witnessing is a slow-motion train wreck that will wipe out the market's excesses and return risk/reward back to the historical mean.

Gonna get interesting on Wall St.

Got Scheudenfraude?


The first Global Bubble? Hardly:
http://en.wikipedia.org/wiki/Economic_bubble

How quickly we forget about the SE Asia liquidity meltdown just a few years ago. While it's good to be skeptical, this one won't be that bad. Hedge funds and PE funds will get hurt, but they only own less than 5% of major companies anyway. Most of corporate America is flush with cash and getting a boost in overseas sales with a weak dollar. More likely, what we're seeing is an end to American primacy in the finance markets, at least for the short term. It will hurt the NYC area, but the overall economy is pretty strong.

Posted on: 2007/8/15 18:07
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This is the world's first Global Bubble...what we're witnessing is a slow-motion train wreck that will wipe out the market's excesses and return risk/reward back to the historical mean.

Gonna get interesting on Wall St.

Got Scheudenfraude?

Posted on: 2007/8/15 17:27
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Re: The Upcoming RE Market Plunge
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Jim Cramer is an annoying bigmouth who is always wise in hindsight. His show is the worst kind of public manipulation - it's just "boiler room" crap, really.

His ulterior motive is to encourage the post-Enron small investor back to the stock market by offering free advice. The power of the small investor is huge and for the last 7 years, he's safely been investing his money in bricks and mortar.

Admittedly, if you've over stretched yourself...you're a dildo. To the guy who just paid 6 Mill for two penthouses at 77 Hudson...I fart in your general direction.

But there is no finer investment than something as essential and controllable as a roof over your head and a 30 year plan to pay for it.

Posted on: 2007/8/15 4:29
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JSalt wrote:

The short version -- sub-prime meltdown -> credit meltdown -> wall street hurt -> wallstreeters lose jobs and/or income -> NYC RE market is not so immune to the crash after all


Seriously: that's the sort of "problem" that turns a lot of people into zillionaires.

The real problem here is the post by the homeowner who says the water table is now just 6 inches under his/her home.

If global warming or some other force is going to expose Jersey City and Hoboken (or New York) to frequent severe flooding, that's probably a much more serious challenge for the local real estate market than the usual ups and downs in the investment markets.

Posted on: 2007/8/15 4:09
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Re: The Upcoming RE Market Plunge
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Jim Cramer:

http://nymag.com/news/businessfinance/bottomline/35813/

The short version -- sub-prime meltdown -> credit meltdown -> wall street hurt -> wallstreeters lose jobs and/or income -> NYC RE market is not so immune to the crash after all

Posted on: 2007/8/15 2:28
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groovejet wrote:
Well, be sure to shoot yourself in the head first, you looser.

NY is projected to receive millions of people over the next 3 years and many hundreds of thousands will be settling in Jersey City.

Jersey City is the most cost effective place to live, directly adjacent to the big apple.

For all those procrastinators who shoulda, coulda, woulda bought an apartment....Get your checkbooks out and start writing those big rent checks, because current house prices are the new benchmark. Love it or leave it.


Uh, actually its projected to receive about a million people over the next 20 years. Millions in three years would be a bit unprecedented, dontcha think?

But hang onto that condo or real estate business or what ever it is you're so vigorously defending. I'm sure it'll be your golden ticket, just wait.

Posted on: 2007/8/9 4:05
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Well, be sure to shoot yourself in the head first, you looser.

NY is projected to receive millions of people over the next 3 years and many hundreds of thousands will be settling in Jersey City.

Jersey City is the most cost effective place to live, directly adjacent to the big apple.

For all those procrastinators who shoulda, coulda, woulda bought an apartment....Get your checkbooks out and start writing those big rent checks, because current house prices are the new benchmark. Love it or leave it.

Posted on: 2007/8/9 2:55
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elmagnifico wrote:

In other words I'm a f@cking MODEL citizen and most of you reading this are probably not even close to my standards or qualified to judge me. ...


um, sure you are.

Posted on: 2007/8/9 2:49
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