Carnival

Good people, I accepted an invitation from Zillow to host the Carnival of real estate blogs. The focus of this carnival is on how buyers and sellers are coping with this market. So feel free to submit whatever you have written. However I am open to other entries regarding real estate. Click onto this link for more information on the carnival.

Random thoughts on a weekend.

Although it is too hot to blog, there are some things that have come to my attention.

War for Brooklyn

Despite the rich having the upper hand, the proletariat still rage on against the forces of gentrification in Brooklyn. Perhaps a peace treaty will be in order. As for those young people living a cliché of trend couture and ranting about how the locals have gone vichy. This is how you prevent from being steam rolled by the status quo. You get involved in community activism and pool your money together. Not by spending your nights drinking and smoking and acting cool.

H*****r is such a pretentious and cliche word that I refuse to write it out. I met a girl once who actaully identified herself as one which is akin to her identifying herself as a Valley Girl in the 80's. Even when I sarcastically asked what that meant, she was so wrapped in being part of that clique she proceeeded to lecture about the h****r ways. I despise that word so much that I refuse to type it out. I wish Hollywood would make a movie or tv show titled H******r in order to make it uncool.

Why so angry? Perhaps my rage stems from meeting somone who is a poseur from Quincy Massachusetts and actually declares themselves a h******r because they live in Wiliamsburg and work for minimum wage at some boutique that sells overpriced designer bags. Show me a Brooklyn H*****r wearing vintage clothing. And I will show you someone who can only afford to shop at the Salvation Army.

Jennifer Moore

A Jersey girl’s life is now a tragic milestone joining the club of other night life related murders. I think Rob the bouncer summed it up best.

When you're Bridge and Tunnel, as Jennifer Moore was, things get a bit dicier. You cross the river, you pay your toll, and you're part of the show until last call. After that, for us, there's a process involved. You need to get home, and home is hardly a short cab or subway ride away. No. It's more complicated than all that. And in the interim -- the time between, when commuter trains are caught, or cars retrieved -- shit happens. When you're young, and from the suburbs, and don't know where to legally park or how to get back to the PATH or the LIRR, you're exposing yourself to 4 am New York -- the Manhattan of Darryl Littlejohn, Steven Sakai and Draymond Coleman. The New York I remember.

As a child of the 80’s I was raised during that infamous era of New York City even when our mayor at the time was powerless to stop even people who were distrubing the peace. And even after Guiliani cleaned up the town, every now and then I am reminded of those dark days when I am in the presence of those that I wouldn’t dare turn my back on.

Rest easy Jennifer.

Wanted: Real Estate Reporter

Congratulations to the delightful and delectable Sara Clemence of Forbes. She has now been promoted to lifestyle editor at Forbes.

She's the one in the middle sandwiched between Joyce from the Hunt and Lisa from NYT.



Which means her position of Real Estate Reporter is ripe for the taking.

Real Estate Reporter
Publication or Company Forbes.com

Industry Magazine Publishing, Online/New Media
Benefits 401K, Dental, Health
Job Duration Full Time
Job Location New York, NY USA
Job Requirements Forbes.com seeks a brainy, ambitious reporter for a full-time staff job covering real estate. The job is on our lifestyle team, and will entail reporting and writing two to three online stories each week, including a long feature. The right person will be able to generate ideas, work a long list of sources, report a smart story and write it with flair--all, of course, on tight deadlines. Must understand how to use numbers in stories, be discerning and be able to come up with reliable methodologies for pieces like ''Most Overpriced Places'' and ''Most Expensive ZIP Codes.'' This can be a high-profile position, with the opportunity for media appearances. We're looking for at least three years of reporting experience; extensive real estate knowledge is not necessary as long as you can learn fast.
About Our Company Forbes.com is the home page for the world's business leaders and the No. 1 business site on the Web. We are among the most trusted resources for senior business executives. We provide the uncompromising commentary, concise analysis, relevant tools, community and real-time reporting business leaders need to succeed at work, profit from investing and have fun with the rewards of winning. Throughout the business day Forbes.com publishes more than 1,500 articles, delivering the best of Forbes journalism and that of its selected partners with all the immediacy, depth and interactivity that the Web allows. More people get their business news on Forbes.com than any other source in the world covering business, technology, markets, personal finance and lifestyle, with streaming video broadcasts several times a day. In 2005, Forbes.com was #2 on Adweek magazine's ''Website Hot List;'' and it was voted ''Best Media Website'' in 2003 by the Web Marketing Association. It was also min's Best of the Web winner for ''Editorial Excellence'' in the consumer category in 2003 and 2004. Forbes.com continues to set industry standards for its innovative advertising offerings, and for its award-winning journalism.

Contact Human Resources
Email Address jobs@forbes.net
Address 90 5th Avenue
New York, NY 10011 USA

Special Instructions No phone calls, faxes or mailed resumes, please!

INCLUDE SALARY EXPECTATIONS PLEASE!

This is a great position to get, especially now since changes are occuring in the market. Not only do you get a front row seat of the market imploding but you also get to work one of the greatest editors ever. So don't be shy. Send your credentials in and see what happens.

And to the person who gets this job, I just want to let you know that Sara is a very nice person so please be an asset or else I will have to throw a bag of fish heads at you.

ARMagedon: The new credit cards

When I read this article, it just made me realize how screwed we really are. In a nutshell, people are getting asses kicked by their higher mortgage payments due to their crazy ass interest only or ARM mortgages. So what they do these geniuses do. THEY REFINANCE WITH THE SAME TYPE OF INTEREST ONLY OR ARM MORTGAGE! In other words they are simply rolling their debt into another mortgage. It seems they have confused mortgages for credit cards.

Can any of you tell the future? Because I can't.If I did I sure as hell wouldn't be writing this blog. BUT THESE ROCKET SCIENTISTS ARE COUNTING ON APPRECIATION! You never ever count on appreciation with real estate. There are alot of monkey wrenches that can be thrown into the real estate game. And I don't care if you have triple digit appreciation. If you have a ton of debt attached to that house you won't see a dime and hell you might even owe more money to the bank when you sell.

It is frightening that despite the cooling of the market there are still alot of people who are making the assumptions that they will not sticking around long enough for the payments to kick up higher which is why they use an ARM or interest only mortgage. They assume they won't be living there for that long and can simpy sell and pull up stakes.

Here's a problem with that logic. If there are no buyers who are willing to pay your asking price then you can't get your money. In affect your money is locked up in your house. If you throw the appreciation card at me, well guess what, it is not worth it to any buyer if rates are too high to get a good mortgage for them to buy your home.

What really made my blood curdle was this part.

But the refinancing also represents a doubling-down on a bet that housing prices will continue to rise on the West and East Coasts and in other hot markets. If the value of the home falls closer to the amount of the loan, that could curb the ability to refinance, and may prompt the homeowner to either invest more in the home or to sell it.

Still, borrowers like Mr. Perry say the loans make sense because in a few years they plan to move to another home, earn more or refinance again, often using the same assumptions they made when they took out their earlier loans.

With his new loan, his third adjustable-rate mortgage, Mr. Perry, a former technology project manager, cashed about $200,000 out of his home’s equity and is investing it into his four-year-old financial planning business. “I could have sold my house and made my family move,” said Mr. Perry, 42, who lives with his wife and a 3-year-old son in Danville, about 20 miles east of Oakland. “But I didn’t do that. I said, ‘Look, I want to start a new business,’ and this product allowed me to do that.”

He said he was taking on more risk than many of his clients would be willing to because he believes his business will continue to grow. After spending 15 years in the technology industry, which put him on the road constantly, Mr. Perry said that being self-employed allowed him to spend more time with his family, which he also expects to grow. As far as the house, he said: “I am not going to be here for 30 years. Why is it important to have a fixed mortgage?”

He better pray to god that his business does well because he is playing russian roulette with himself and his family's future. If the market REALLY takes a huge tumble and value drops, even if he does liquidate he won't have enough to cover his losses. AND REMEMBER EVERYTHING IS DUE ON SALE!

ARMageddon

Damon Darlin ‘s article on variable rate mortages provides another forecast of the impending doom that stalks the real estate market.

As home prices appreciated from ridiculously high to unbelievably higher, more Americans began using mortgages that allowed them to buy more house for less of a monthly payment. Next year, a large portion of those rates move up and homeowners who opted for the exotic mortgages could find their payments doubled. Talk about bloody. They need to find a way to minimize the pain.

Nothing short then two percocet and bottle of wine will minimize this pain.

With more homes on the market, prices could begin to fall. That reduces home equity — the difference between the amount borrowed and the total value of the home — and could force people whose loans change in 2008 and 2009 to consider selling, further accelerating the drop in prices. Some of those cities with the highest proportions of interest-only loans are also at the greatest risk of falling prices.

As we all know adjustable rate mortgages should definitely be considered the next big bad but it seems a lot of us had no idea what they were getting into. Yeah, these people bought a lot more house for less money but they were counting on appreciation which is as far I am concerned akin to day trading but on a much more slower scale.

Mortgage lenders, however, say they are not worried. Economists say even the worst-case outcome will not have much impact on the overall national economy. Christopher L. Cagan, director of research and analytics at First American Real Estate Solutions, points out that mortgage industry losses of $110 billion spread over several years would amount to a mere 1 percent of the total national homeowners’ equity of $11 trillion and a hiccup in the gross domestic product

I am not an economist. In fact I barely passed that class in high school but I have no idea what the f**k this guy is talking about. All I see is really big numbers and that really scares the crap out of me.

As far as I am concerned Cagan’s statement doesn’t really give me a lot of confidence because he doesn’t seem to be addressing what is going down in the world. First of all oil prices are getting ripped everday because of mounting tensions in the middle east and recently a member fed reserve bascialy that America’s is on the path to bankrupticy. I am sure those homeowners who will have decide to whether to eat or pay the mortgage will take Mr. Cagan’s words to heart.

The mortgage industry is not worried about payment shock. Why?
“It offers an opportunity,” said Brad Brunts, managing director of portfolio management at Citi Mortgage, a unit of Citigroup.
He, like others in the mortgage industry, sees the higher payments as a boost to the flagging mortgage refinancing business. Lenders will adjust about $500 billion in mortgages this year and $700 billion next year, according to Freddie Mac, the quasi-government agency that repackages mortgages for investors. Expect to find the mailbox stuffed with refinancing offers.
Mr. Brunts said only a minority of mortgage holders will face real problems. Most will successfully refinance and though they will pay more, he thinks they will be able to make the payments.

Of course the mortgage industry isn’t worried. Their not the ones holding these mortgages. Their job was done after the deals were closed and the papers were signed. After they collected their fees they had these suckers bundled off and sold to Asia. They already made their money. If people start to default on their mortgages, it’s not their problem it’s the banks.

As for the refi option, well its not an option it is more like a financial death sentence becasue homeowners will be refing at a much higher rate and when they decide to sell any equity that have will probably be wiped out. And don’t get me started on home equity loans.

Over at the Big Picture they did an excellent analysis of the Damon’s article and there was one aspect they pointed out that wanted me to make hurl.

So while the majority of homeowners (and therefore, the lion's share of consumers) are likely safe, there is still the Real Estate market to consider:
In any speculative market, one of the key risks is forced sales. In equities, its when the margin clerks walk around a firm, literally hitting bids indisciminately. Its as per legal/regulatory requirements -- if you don't have the cash in the acocunt -- WHACK!
The scenario laid out above is similar -- on the margins, a small number of speculative defaults lead to forced liquidations.
Since the marginal speculators helped drive prices skyward, its no surprise that the double whack of the loss of speculative buying plus forced selling can impact a neighborhood or even a region (I'm thinking Miami condos and houses in las Vegas) quite strongly. The key determinant as to the impact on a region will be the percentage of people whose "mortgage exceeds the value of their homes, or whose debt payments exceeds 40 percent of incomes." These people may be unable to refinance, and will be ripe for foreclosure.
Note that mortgage delinquencies and foreclosures remain low nationwide, including the areas where prices appreciated the most.

I have only one word. BOHICA.

Apartmentratings to the rescue.

Those crazy kids from Apartmentratings have done it again and whipped up not one, not two but three online tools to help you navigate your way in the jungle of rentals.

Want to get organized before you move? Well with the help of Google, Apartment ratings has developed a special moving calendar which will manage your search and your move. And here's completely astonishing fact, According to the Census Bureau, the most popular month for moving is July.

Want to know if you are paying too much for rent? Think your rental agent is a back stabbing bastard who would probably sell his or own mother's uterus for a bucket of cheese fries? Well with this online tool is crazier than snakes on a motherf**king plane. This Zillow for rentals will allow you to get a better idea of what the market is offering in rents and figure out if your landlord is on the money or just smoking crack.

And for those of you who have still no idea how to go about with your apartment search, Apartmentratings has another badass set of tips that will help you get through the process.

Probably the best tip was this one.

Look for a condo for rent. Some condo investors bought with the intention to flip, but now cannot find a buyer. If they are paying back a mortgage, they may be motivated to rent it quickly to avoid losing more money.

If you can figure out what type of mortgage the condo owner has then you can estimate how hard press they are for a cashflow.

Rest in Peace

God rest your soul Dr. Bartha. May you find the peace in the afterlife you could not find here.

Suicide is not a solution

The Dead Poets Society is brilliant film starring Robin Williams as a vibrant and unconventional teacher who seeks to enlighten his students through poetry, which include a very young Ethan Hawke.

The movie turns tragic when Neil Perry played by Robert Sean Leonard realizes that he does not want to become a doctor but his father played by Kurtwood Smith, of Robocop fame, refuses even the thought of compromise. Robert Sean Leonard’s response is putting a bullet in his own head.

When I saw this with my mother back in high school, she raised an interesting question regarding Neil’s suicide which was what could have Neil done differently. At first I wasn’t sure what she meant, I mean there is probably a million ways to induce your own death and I never thought of my mother as morbid. But then she clarified stating was there another way for Neil to resolve the dilemma he was in?

We bounced ideas of what Neil could have done. My mother was more practical she thought Neil should have contacted Robin Williams for guidance. I was a bit more creative and suggested that he joined the circus. The point of my mother’s question was to show that Neil did not have to kill himself.

Which brings me to the tragedy of the attempted suicide of Dr. Nicholas Bartha.

From what I gathered from the media this was a very troubled man who felt he was pushed to the brink when his beloved home a symbol of his stature and his accomplishments was to be liquidated and the profits were to be given to his wife due to a divorce judgement.

I shed no tears for this man. His life was crumbling before his eyes but he had a lot more than I did. He could still eat and had the resources to find another roof over his head. He had also had children. There is a multitude of people who have far less than him and you don’t seem them blowing up their houses.

For f**k’s sake, this man is a doctor. A f**king doctor. In certain parts of the world, doctors with an American background are considered to be gods. He could have easily ditched his wife and moved to Tahiti were he could have hooked up with a harem of beauties that would continuously blow him while he was seeing patients. Even a fraction of his salary would have allowed him to live like a king as an expatriate. Hey douche bag. Next time you want to throw your life away make sure you hand over your medical degrees to me. I’ll put it to better use.

What is even worse is that a Jennifer Panicali, a young lady who was on her way in making a huge difference in the world, was maimed and nearly killed because of Dr. Bartha’s negligence. Bad enough you want to kill yourself but then you drag some innocent bystander into your hell. What kind of f**king a**hole are you?

Who am I to pass judgment? I am not judging him. I am just presenting a fact. He was not a poor man and he was not being tortured at Guantanamo Bay. Any demons that were inflicted upon him were purely mental and came from his own personal life. These issues could have been resolved through conventional means not firebombing.

In college I knew two guys in my dorm who killed themselves in a span of three months. These were healthy and popular young men who had their whole lives in front of them, but for some reason or another they opened up a window one morning and tossed themselves out onto the pavement.

If they were out to solve something, I am not sure what the hell it was beasue all they left were more questions for all of us. And it sure as hell didn’t solve anything for their friends and families.

When I see people who have more in this world than most and decide to do something this stupid, it seriously pisses me off because there are others out there who done some more with those opportunities that are wated on others.

The irony of this whole situation is that by blowing up his house he probably gave his ex-wife even more money due to the development possibilities.

Appraiser Jonathan Miller, who valued the property at $4 million in 2002 - during the Barthas' contentious divorce proceedings - agreed that similar-sized townhouses in the area are "worth nearly twice as much today."

And, with a new 8,000-square-foot house built on the site, it could sell for about $15 million, real-estate agent Toni Simon of Halstead Properties told Bloomberg News.

Of course that was never Dr. Bartha's intention.

He also wrote, “When you read this lines your life will change forever. You deserve it. You will be transformed from gold digger to ash and rubbish digger.”

Yeah. You really showed her.

PropertyShark on the Today Show

It seems now that Katie has left the building the Today Show is doing all sorts wacky things. Remember my previous entry being utilized for dating and all types of hookups? Well Kelly Kreth has informed me that the Today show caught wind of tje CNBC segment and will be showing tomorrow. It seems Kelly Kreth Kommunications is really working overtime.

Btw, Kelly wanted you all to know that she is not as fat in person as she is on tv.
Don't fret Kelly. We all know tv adds about 15 pounds.

PropertyShark on CNBC

I got this from Kelly Kreth

Kelly Kreth and PropertyShark will be on CNBC's Power Lunch Today 12-2pm EST

Am I stupid? No you are not.

Below from a reader that was feeling a bit edgy about a purchase. It has been edited to protect the identity of the reader.

am i stupid?

My family and I are moving to NYC We are about to go into
contract on a coop. in a really nice area or just over 1 mil -- we can
afford to pay the mortgage, but barely. Are we gonna get creamed?
Would we be better off renting for two years and then looking to buy?
What do you say?

This was my response.

First of all you are not stupid. You are in fact showing a tremendous amount of intelligence by asking whether this purchase is viable for you.

Since I do not know your financial situation and the specifics about your apartment, I am going to make some assumptions. If I am incorrect, please feel free to address them with me.

We are entering a buyer's market with rising interest rates and more inventory hitting the market every day. What makes things particuarly interesting is the new attitude that "there is a mortgage for everyone." Those of us that are armed with interest only and balloon mortgages are now walking into the heart of darkness and it is unlikely some of them will find the light. Yes. I read alot of comic books.

Market conditions do play a key role in your purchase however who you are and your circumstances are also important factors.

In your words you state "we can afford to pay the mortgage, but barely."
What type of mortgage have you chosen? If it is a fixed rate mortgage, what measures are you going to take insure that you make those payments? If you decided to utilize an adjustable rate or interest only mortgage have you done the numbers to see how high the payments will be once rates rise? And when they do, do you have the income to cover those payments? Does your income stream have the stability to cover these contingencies? What other investments do you have that can be liquidated to pick up the slack? It is imperative to get an idea of your financial health.

You mention you have a family. I am assuming your household contains offspring. How many children do you have and what are their ages? If you have newborns, you maybe paying for a nanny, unless either you or your spouse are staying home. If they are entering preschool or private school that's more money out of your pocket. And don't get me started with tuition for college. Along with the mortgage payment, this will be also taking a big chunk out of your budget.

Here's the brightside.

Thanks to the population, that area has gentrified into a very family friendly environment. It also has some really good public schools with a great family community that can assist you with your household needs. So you have followed one of the cardinal rules of real estate which is to buy to sell.

Renting is good since it is gives you flexibilty. However that is two years of equity you will never see again. And there is definitely a psychological aspect to owning that is not only beneficial to you but for your entire family.

Regarding the popping of the bubble, there are those who are convinced that New York City is prepared to weather the storm and upon looking at these articles below it seems its position in the real estate world has been elevated.


Top Executives Return Offices to Manhattan

Paying Any Price to Live Here


However there are others who feel that the future of NYC is not so bright.

Any adjective works, as long as it's not "strong"
Current conditions in market invite many descriptions, few of them positive

Some argue that we are entering a new dark age for real estate.
Who is right? I don't know. By the time the smoke clears and we see who is left
standing, it'll be too late to do anything.

I have to acknowledge one thing which is New York City is a different animal comparing to other markets like Buffalo. If you were considering to buy in Buffalo, I would tell you to kiss your ass goodbye. I have nothing against Buffalo, afterall they invented a great way to eat chicken. But greasy chicken bits dripping with hot sauce is not enough to bring people to their city unlike New York City which has tons of people coming in everyday.

So what should you do? I don't know. I am not you. That is a decision that you and your spouse need to make. But what is important is that you have a strategy. So talk to your mortgage broker, ask them what the worst case scenarios are. Ask for comps from your real estate broker. Figure out if this is the right price for this apartment.

And remember. You are not stupid. By doing your due diligence you are not only protecting yourself but fufilling your responsibilties as a provider of your family. If anyone thinks otherwise tell them to go to Buffalo.

Grunt

As you may have noticed I did not lobby the reader to make any particular decision. That they needed to figure out if making this purchase was in their best interest and they are the only ones who can make that decision.

I take a very conservative approach on real estate purchases, particularly with where the market is now heading these days. However I understand the subjective nature of real estate. People have to analyze the risk and reward ratio and see what decisions work in their favor.

You must be the best judge of what works in your favor because you are the one utlimately bearing the burden of buying a home. Thefore it is in your best interest to lighten the load as much as possible. Remember. There is no substitute for self preservation.

Even with current market conditions, there is nothing wrong with pursuing a good deal. Just make sure it is a good deal.

Propertyshark: The next JDate.

Thanks to Kelly Kreth those crazy guys from Propertyshark have found another way to utilize their website to map out where the single rich boys and girls are. This perfect for those of us seeking a sugar daddy or mommy and want to avoid working as a stripper and sucking face with a rich octogenarian. All you need to do is turn on Propertyshark and map out your search. So golddiggers, start your engines!

I think this a great idea, hopefully Propertyshark will exercise restraint and avoid creating maps like "Michael Jackson's Playground" or the "R.Kelly Water Tour."

And what about Kelly?

How did Ms. Kreth fare? The map directed her to
Manhattan's West 70s, where she met a man of means.
They briefly dated, Ms. Kreth says, but "it didn't
work out. So now I'm still single

Oh Kelly. Do not fret. There is a nice Jewish doctor out there waiting for you.

Mates of Means
July 5, 2006; Page A18

A Brooklyn research firm has found a subject perhaps
hotter than where to find the best real-estate
investment deals: where to find the highest
concentration of wealthy single men and women.

PropertyShark.com was co-founded nearly four years ago
by Ryan Slack, who earned his M.B.A. at Stanford
University, to provide investors with information such
as foreclosures and building descriptions on
commercial and residential properties in major U.S.
cities. Then, earlier this year, the firm's publicist
-- Kelly Kreth, 36 years old and recently divorced --
suggested as a joke that the company use the search
service to isolate neighborhoods with the most rich
men.

That led to a service for others who scour
PropertyShark "man maps" to find neighborhoods loaded
with, well, loaded single men. Now it is expanding the
service to offer maps suggesting where to hang out to
find wealthy men and women in Boston, Miami and
Seattle.

A couple hints: In Boston, singles looking for wealthy
men should check out Battery Street, Tileston Street,
Clinton Street and Butler Row. Seattle's area around
the Washington Park Arboretum attract the most rich
single women. Miami's well-off single men are
concentrated in South Beach and around the La Gorce
Golf Course.

The maps rate neighborhoods by prevalence of single
men and women and categorize them with titles like
"meat market" and "girls night out," depending on the
prospects. Dollar signs are superimposed over the most
promising areas.

The service, which is free once a person has
registered on PropertyShark.com and clicked on the
desired city and map, has helped raise awareness for
the company's original, subscription-based
property-data business.

How did Ms. Kreth fare? The map directed her to
Manhattan's West 70s, where she met a man of means.
They briefly dated, Ms. Kreth says, but "it didn't
work out. So now I'm still single."